Full text of Commercial and Financial Chronicle : August 5, 1948, Vol. 168, No. 4722

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Volume

168

Number 4722

'I--I;||I|, New York, N. Y., Thursday; August

Tiuman Again Urges
Inflation Controls

LC.C.

By ELISHAM. FRIEDMAN
Consulting Economist.
Chairman, Econometric Institute, Inc..

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Dr/Ropke

against scuttling of ERP through killing producby undue restriction of consumption. Scores "im¬
pertinence" of bureaucracy that deprives consumer of right to decide
what he can affords States austerity is cherished
by planners and
collectives, because it sanctifies their authority, making consumer,
the scapegoat of their, destructive policies!- Declares
way to cure

'

depression* as ominous. Contends regu¬
lated rails1 earnings are much less than regulated utilities1.
.Says

Harry S. Truman on
July 30 submitted to Congress the

Congress should specify a fair return on railroad capital and require
ICC to grant prompt, liberal rate increases when conditions
require.

port of the
Council of
Economic Ad-

visers,

(re¬

ferred to else¬

Railroads Demanded

a

-

crisis of balance of payments is to cut government expenses

Freight Rate Increase to Offset Rising Costs

July 3, 1947, was for an increase in rates total¬
ing, as later amended, 41% in the East and 31% in the West, and aver¬
aging about 29.2% after exceptions. The Interstate Commerce Com¬
mission granted increases in instalments of

10%

in October,

10%

to¬

gether

with

his

own

4%

rec¬

and)

after

com¬

which

he

just

request for

perma¬

cision

trols
in

the

over

C ommission

order

con¬

collapse and to insure the "recon¬
struction of a peaceful eWorld."

the

cases

Clisha M. Friedman

waited

The text of the President's

:

sage
%

follows:

the

C'J-

'

'-'

'>

Congress

States:

mes¬

'

'

,'

To

r

"s

•»

of

{

''

*

the

United

'

On Jan.

14, 1948, I transmitted
my annual Eco¬
nomic Report under the
Employ¬
ment Act of 1946. At the present
to the Congress

)stage; in economic

affairs

it

is

again desirable that the Congress
and the country be presented with

days and
from

22)

on page

an

av¬

220

extreme of 423 days

an

the

ICC

of

erage

date

of

request to

the
effective date of the increase.
;
The delay in granting the full
was protested
by two members of the ICC. Com¬

increases requested
missioner

should

think
few exceptions, the

a

be

allowed,

increases

the

justified/ and

fully

are

substantially,

sought,"

Com¬

missioner Mitchell stated, "I con¬
cur

.

.

because of the very ap¬

.

parent need for increased

(Continued

Havana

on page

e

r

kind

rubbish

was

we

are

face to face with

approaching disaster
only by the defensive campaign which
has been devised
by him. The disaster envisaged is com¬
prehensive and filial, embracing economic collapse, the end
of free enterprise, war, and ultimate
slavery to the Kremlin;
The President is, perhaps, not
quite so explicit in his warn¬
ings of catastrophe, but what, he says comes down in final
analysis to all this. From it all we can save ourselves and
the world if we
will, but we must not gag at the remedy
be averted

can

prescribed.

of

while

leather

.

out of the

question.
where
the

he
me!!

-

the

e

neat's

effect that

which

s

sell

worst

Sum

:!!,

only

could

past two*

But
all

do

Danish

ox-h ides

to?

I

go

asked

rather puz¬
zled. Some of

them arc

"

cer-

tainly made into portfolios, I was
told, but they are a luxury which
Denmark cannot afford today. S6
we export them all and you will
find the best Danish leather

goods

Now, of

Miller stated, "I

that, with
carriers

all

(Continued

the

sorry;

thing

de¬

29.
In the past 28
years
on
12

business

a

a

by

July

on

national; economy

forestall

to

in

nent

We See It

£The "Defense'' Against Disaster

been

made

the

w

increases have

re¬

his

legislation set*
ting / Up - tieW

A

As

respon¬
go.

was

the

These

executive

I President Truroa®

———

,

very

excep¬

tions.

'Jin

iterated

.

.

behind
counter

of 21.4%

erage

le': exchange rates

or

-—

i'n<

April, 1948,;
totaling an av¬

ommendations

ments,

pressure,

GENEVA, SWITZERLAND—The other day I asked in a Copen¬
a; portfolio because my old bne< had be¬
come too shabby and also because I
thought it a good idea to buy
such a thing in a country teeming*with cattle
The,young man

in

'and

in

inflationary

hagen department store for;

December,<£,:, j'.a... ■,•,,,;..: -u'<■.!|

issue),

!

sible for

The request filed

this

where

warns

tion incentives

Sees rail outlook in next

goods.
President

By WlLHELMi ROPKE, PHJ).

■

Professor at the Graduate Institute of International Studies, Geneva

Mr. Friedman points out, despite highest peace traffic in
history,
Class I railroads are reporting low earnings on net
plant investment.

by increasing supply of

Mid-Year Re-?

Copy

a

'

President says action should be

I cured

Price 30 Cents

'

Rate-Making Policy-Its! AUSTERITY—The International
EviliandRemedies
Crusade Against Lnxnties

j In submitting Mid-Year Report of t:
Councilof Economic - Advisers; $

| taken now to impose jnfl ation;
[curbs. Contends historically, no
|importanty inflation[has b een

5, 1948

there is

course,

good ground for believ¬

no

in Geneva.,,

-Really,

as an economist I

ought

ing that anything of the sort described by the Chief

to

Executive is in store for the world in the foreseeable

have been well acquainted with

future.

That

at

time

some

another depression all sensible

agreed.

men

When it will arrive is
(Continued

revenue

other

or

on

are,

we

matter

a

page

shall

we

are

have

known

(Continued

have

better.

I

on page

should

31)

sure,

about which

28)

State and

24)
Jr

Lithographing Go.

STATE

R. H. Johnson & Co.
Established

Municipal

MUNICIPAL

and

CANADIAN

1927

Bonds

SECURITIES

BONDS

INVESTMENT SECURITIES

Hirsch & Co.
Members

.

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Exchange i
and other Exchanges
'
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25 Broad St., New York
HAnovcr 2-0G00

Chicago

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Albany

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Harrisburg

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INSTITUTIONAL INVESTMENTS

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Montreal

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1-809

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THE CHASE

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DOLLAR BONDS

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Distributors of Municipal

Established

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SUTR0 BROS. & CO.
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when distributed r'

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FOREIGN

OIL COMPANY
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New York

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Private

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SNTTH & CO.

52 WILLIAM ST., N. Y.

OF NEW YORK

Scrantoa

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THE (UTKM/U. CUV BAHK HART

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request'

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and

other

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Principal Exchanges

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Boston'Telephone: Enterprise 1820
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& FINANCIAL CHRONICLE ?;

THE COMMERCIAL

(498)

2

Council of Economic Advisers

Halliburton Oil Well

Cementing Co.
Prospectus

Indiana Gas & Water

President it pictures "an unstable economy''and bolds; because of unchecked
inflation, "adjustments must be made.-eventually in order to assure sustained-prosperity*''
In section
dealing with issue between inflation and stabilization, Council warns effectiveness; of voluntary action
,3 V' ' \ / cannot* be' assured'without Wise and vigorous government action.

3 In jnid-yearreport to

Transmission

Texas Gas

BOUGHT—SOLD—QUOTED

Louisiana Securities

'

Bought—Sold—Quoted

In the "Report on the Economic Situation at Mid-Year 1948/' prepared by the Council
of Econoniic: Advisers, of whom Edwin G. Nourse is Chairman and Lebn Keyserling and

New York Hanseatic

Corporation

Steiner, Rouse & Co.

(which report, together with his own remarks uphold¬
toCongress;on July 30 by Bresi.-^
!.: ,
^eht;^Truman)V^^^Umm^loh; is made of present .and prospective, ernment surplus. The most impor¬
tant
John D. Clark the other members,

New York 5
Teletype NY 1-583

120 Broadway,
BAvclay 7-5660

Alabama &

Economic Situation

/, Sums Up

Request

on

Members-New York Stock Exchange

ing his program, were submitted

change in the Nation's Eco¬
Budget that is bound to

occur

die

Prospectus on Request

Members

last two years were

,

.

partly

'

BROADWAY, NEW YORK 5 .V-

Dr. John D. Clark
conditions under tfie heading, "The Nation's Economic
The text of this section! of the report follows:

economic

Budget."

Joseph McManus & Co.
Members

Exchange

New York Curb

Exchange

Chicago Stock Exchange
'

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BrWdway|New Y</rk

6

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Dfeby

result
When
inflated,

Bought

incomes

and

prices are
saving and taxes

,

the

Markets in

tend

increase.

to

Thus

^

was

due to increases

-

have

we

New

in

economic

our

structure

Members

Economic

Nation's

,

Budget

are

Teletype—NY 1-376-377-378

Ashland Oil & Refining Co.

approximately constant with 75%
and 71% for consumer income and
consumer
expenditures, 1 respec¬
tively.
These percentages, large

L

Stock

Common

income

consumer

Ass'n

York Security Dealers

as

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kind

a

-

Exchange Bldg*

N. Y. Cotton

YORK

NEW

9-8420
PITTSBURGH

DETROIT

CHICAGO

Y.

N.

4,

Green

Bowling

GENEVA, SWITZERLAND

Silver Creek
Precision

Corporation

Manufacturers of

Machine

sol

bullets per

Hession

the

Micro-

insecticidal

Billion

(One

second I

now

being shown

the Building Maintenance Supplies

at

Grand

Exposition,

Price:

£'entral

Approx. $2-— Data

on

Palace,
request

HEIMERDINGER& STRAUS
Members

New

York

Security

Dealers

Assn.

"Thus

it

seems

likely that ex¬

private

for

domestic
high

while the decline in gov¬
payments will be re¬
versed.
In the present situation

everything that can be pro¬
Adjustments that must be
■made eventually in order to as¬
sure

sustained

appearing

level,

checked

ernment

further

prosperity

in-the

of

un¬

By permitting

render the

we

future task of transition to

picture of an unstable
economy is presented eVeri more |
clearly when attention is focused!
upon the excess of receipts or ex-|

•

"The

-Debentures

ernment

BANKERS BOND ^

Budget

Nation's

maintained

"Both

a

first six

relatively large share in the total;
but there were quite substantial

Bldg.

LOUISVILLE 2, KENTUCKY

accounts in the

Economic

^

Floor, Kentucky Home Life

penditures.

international, and gov¬

business,

v

The Parker

domestic invest¬
relatively more
other major category in

Nation's

the

Economic

during

the

1948, the ex¬

in
international

*.

and

.

NATIONAL BANK
of INDIA, LIMITED

■

_

The Issue

<••>*

«

■'

*\

Inflation

Between
>

Head

FollowingTthe

was

net

largely
saying

in

Office:

26, Bishopsgate,
London, E. C.

Capital

Paid-Up

£4,000,000

£2,000,000
7__

£2,500,000"

and

sum¬

Bank
conducts
every
description
banking and exchange business

of

Trusteeships' and Executorships

mary of the economic situation,
the Council of Economic Advisers

also undertaken

discuss the impact of government
actions

on

prices

and wages, as
of the unset¬

other aspects

well

as

tled

issue

between

inflation

BUY

and

(Continued

on page

if

U.S. SAVINGS

BONDS#®;%MtoS

,

nearly $5.5 billion, as did the govr

Budget.

Government

Subscribed Capital-

The

foregoing

the

Branches in India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden
and Zanzibar; '

,LV'.

I

•

to

Kenya Colony and Uganda

.

Reserve JFund.;

Stabilization
V

Bankers
.

offset by
stabilization. Regarding the prob¬
plus the,
lem of checking inflation, the re¬
government cash surplus. Between,
port of the- Council states:
these two periods, the excess, of
the preceding pages, ' the
business- investment increased by IV "In
accounts

consumer

"Gross private
increased

than any

and

months of

business

the

these accounts;

ment

1947

of investments and exports

cess

changes in the relationship among

/ Bell Telej. LS 186

in

■

Y.

Tele.: NY 1-1872

con¬

a

of full

in the past. Large

Tel.: DIgby 8-0460

not

course

inflation.

inflation,

are

employment and Capacity j dition of sustained prosperity that
production, this makes for a situ-' much more difficult."
ation of inflationary pressure. 3 '
*
$

years

50 Broad St., New York 4, N.

for

and large business
investment
compete
with con¬
sumer
expenditures: for - limited
national resources..
The sum of

Bought and Sold

Long Distance 238-9

certain1

investment will continue at a

ment programs

Incorporated

appears

coming six-month period.; duced.

penditures

they are, are somewhat below
that
prevailed
in
most

peacetime

v

for the

national and international govern¬

Ashland Oil & Refining Co.

1st

and

those

Bought and Sold

m

therefore

ments

-expendi¬
tures. Their share in the Nation's
Economic
Budget total remains

New

[-■,•

Exchange

and other leading exchanges

and

construction

Members

York Stock

-

.

Troster,Currie&Summers
'

1856

.

Pancoaslal

'

Quoted

—>

H. Hentz & Co.

of

amounts

.

Primary

Sold

—■

Established

a

in new
of
automatic
emergency
brake
inventory ac¬
that helps to slow down inflation.
cumulation.
Present indications
izing the main trends in the flow are. that domestic investment wilF By reducing tax rates despite in¬
flationary
prospects,
we
have
of goods and purchasing power,1
continue on a high level during
acted like an engineer who re¬
and of relating these trends to
the remainder of the year.
leases
his
emergency brake—in
possible future developments.
"Net
foreign
investment de-i the face of an emergency.
The
"The Nation's Economic Budget
cllned by more than half during1
question for the coming months
total, representing gross national the first six months of 1948. The!
is whether once
again we will
income or expenditure, in dollar
increase
in Government foreign
permit a. price rise to balance the
terms increased by 7% from 1947
assistance during the second hali
Nation's economic accounts in the
to the first half of 1948 (annual
of-, the' year will, in large part precarious manner tnat is char¬
rate). ThfS is h £ate o£ increase take the form of grants, which are
acteristic of an inflationary move¬
soine^haJt^eIow^t|ie rise t|i^t took, reporde<£, in gpv^nn^eqt expendi¬ ment.
-'-v?
,
.
*
'
■
place In the! preceding year. /A; tures rather
tha^n :injv net foreign
"Looking at the Nation's Eco¬
large part of the increase; in 1948, investment. For this -reason the
nomic
Budget
from
the
longas
in 1947; |reflects - theorise;in
net foreign investment component
prices and wages; there was, how¬ of the Nation's Economic Budget range aspect of economic stability,
it appears also that major adjust¬
ever, also some increase .in the will
probably
not .» rise, ; even ments still remain to be made if
real flow of goods and services.
though the total excess of exports! a
The inflationary tendencies that
peacetime economy of sustained
of goods and services increases.
-prosperity is to be achieved. The
prevailed particularly in the sec¬
."Government
payments have sum total of business investment,
ond half of 1947 continued in 1948,
been declining since the war peak,
net foreign investment, and gov¬
though at a reduced rate.
and showed a further slight de¬
ernment expenditures will prob¬
"Comparing the composition of
cline during the last six months.] ably require a smaller share in
the Nation's Economic Budget in
Because of the increase in Fed¬ "the Nation's Economic
Budget to¬
the first half of the current year
eral outlays for defense and for-, tal than in recent
years.
That
with the preceding year, the simi¬
eign aid, and the continuing in¬ means that, in a future expanded
larities
appear
more
significant crease in State-local payments,
economy,, consumer
income and
than the changes that have oc¬
this trend, is likely to,be reyersed.j
expenditures will require a, larger
curred.
The largest items in the
An increase in government pay-!
share in order, to assure markets
convenient

a

This

Economic Budget
way of summar¬

"The Nation's

is

"

Leon H. Keyserling

; Edwin G. Nourse

New York Slock

Crampton Corp.

of the inflationary process.

2-7815

Tel. REctor

;

branch offices

our

Winters' &

large dollar amounts of indi¬
vidual, saving
and
government
cash surplus that helped to bal¬
ance the large excess investments
and
excess
exports
during the

New York Stock
New

Mobile, Ala.

^

Direct wires to

the

^CpONNELL&fO.
120

:

'

•>,

that

be 'recognized

should

"It

-;

C'v*V:".

>■
' >
Exchange
York Curb Exchange

present legislation for
period is that this

cash surplus will be
drastically reduced.
This means
that by necessity other items of
saving ' or excess of investment
must ?adjust- themselves
corre¬
spondingly.

Bought-"—Sold—Quoted

■

coming

NY 1-1557

HAnovar 2-0700

New Orleans. La. Birmingham, Ala.

government

Lonsdale Company

V*

under

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

V

nomic

J/.

Thursday,- August. 5, -

.»

,V

;;

26)

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Appliance Company
Common Stock

We Maintain American Markets For:
cision couplings,

is

Company

in

importantly from

\

program.

-

.

\

'

Current
vv

Price

•• V.

... •

about

'

:'C'

$8.00
•

dii Pont,

Canadian

HAncock
N. Y.

Oil

NEW. YORK' S, N; T.

Banks

l!■

Rights

:>•/.
per

».

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Botight-^-Sold-^-Quhted
j

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■

■.

Raw—-R©finect-----Iiiquid

■

St., Boston 9, Mass.

6-8200

Teletype BS 424

CAnal 6-8100 '




SUGAR

.

share

Homsey Co.

Telephone

1
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British Securities and r

|i||: GOODBODY #Coi||i||
Exchanges
-

31 Milk

STREET

Canadian (Mining;

(6-30-47) $9.60

Net current assets
t

W A I,L

-

value <6-30-47) $19.44

Book

Imperial

r
9 9

aircraft

expanded

LAMBORN & CO.,Inc.

i

Canadian Industrials

fittings and .valves,
position to benefit

I

t

•

Manufacturing complete line of pre¬

-

115 BROADWAY

f

7-OlDO
.

V~

V:

T '*3

NEW YORK 6, N.Y.

a
t

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.

V

' Teletype NY 1-672

Charles King & Co.:

Exports-^-Impdrts-r-Eutures V
,!?1

MembertN.Y. Stock Exchange and OtherPrincipal

i

ir-

<

Tv
;

•

Members

61

)^

Toronto

Broadway, N. Y.

Stock Exchange

!

WHitehall 4-8980

Direct ioire to Toronto

ypljtae 168' Number' 4722

THE

COMMERCIAL

I N D EX
Articles

and

News

Page

:

&

FINANCIAL

CHRONICLE

McCabe's Views

Credit f Curbs

on

1

AUSTERITY—The International Crusade Against Luxuries
—Wilhelm Ropke
4----.-—--.-—....Cover
The ICC

Rate-Making Policy—Its Evils

and Remedies

-

—Elisha

M.

Utilities—For Income

4

...

Present Inflation and President's
Program—Paul A. Porter._
Regulation and Natural Gas Company Investment
—Carl

C. Brown:

6

out¬

ference.

Board

Mutual Trust Funds—A New Medium
of Investment
—Edward M. Heffernan

on

combat this
As

Truman

a n

d

made

"some

personal

servations

Truman Again Urges Inflation Controls
Cover
Council of Economic
Advisers Sums Up Economic Situation.
2
Thomas B. McCabe, Chairman of Federal
Reserve Board,
Presents Views on Credit Curbs
3

0

Treasury Secretary Snyder Upholds Credit
Curbs
Allan Sproul, President
of N. Y. Federal
Reserve
on

8

Bank,

Credit Curbs....____________

8

In thus

_______

on

Trading

Financial Condition.r__

on

17

19

...

Proposed Financing for Pennsylvania
Turnpike Commission
"Now, Mr. Bowles!

19

(Boxed)2ft

Federal Reserve Bank Reviews
Gold Movements 20
George L. Bliss Warns
Taft-Ellender-Wagner Bill Will
Obstruct Rather Than Facilitate
New Housing
Output
22
Northern Trust Co. of
Chicago Analyzes Domestic Corporate ^
Issues Ji.
^
i
22
City of Brisbane Bonds Drawn for
Redemption
'

I'

-7-*--

27

had

proval

the

As We See It
(Editorial)

eBusiness

Man's

Cover
14

_______________

14

for

that

submitted

it

individual

favorable

would

be

Indications of Business
Activity

as

statement

The

37

~

Act

relating to

15

News About Banks and
Bankers—

17
40

,1

Dominion
Dther

The. COMMERCIAL

Other

s: Patent Office

';

Bank
.

.

WILLIAM B. DANA COMPANY, Publishers
:

25 >Pbrk

place;' Jtew

York

•325 D0

and
n»r

Monthly
•525.00

6,; N, Y.

per

Note—Qn

REctor 2-9570 to 9576

he rate

of

'

HERBERT D. SKIBKRT, Editor St Publisher

"

WILLIAM
WILLIAM

.

DANA
D.

SEIBERT,

•"

Governors

of

*,

'

-

as

one

*

'

Thursday

-

(general

issuer and
issue

and

news

every-Monday
market

—

trorei«n
account of the

exchange,

have

pro¬

fluctuations If
remittances for for

part

proposal

with respect to
is similar to that
the Board in April,

except that the increased -require*
ment's would be applicable only to
member banks, whereas the Board
had recommended that'
they he
made applicable to all commercial

This

is

a

Offices:

135

S.

La

the

We

CERTIFICATES

ad-

quotation

Salle

Refineries, Inc.

items

Capital Stock

Bond & Mtge. Guar. Co.

does

risen

should

not

At current offering price of

earnings

of

Copyright 1948 by .William B. Dana
".Company

are

Circular

as

25, 1942,
York.
N.
Y.,

ary

J879.
»

.

x
"

|

.

\

.

■

the

under
1
:
.

post

office

the

'

Act
.

'

'

at

of

high, whether

so

have

whether

or

What

has

realm

of

quences

spent

facts

is

should
the

pattern

been

'

.

Possessions, Territories and Members of
Pan-American tlnion^ $35.00
per 'year; In




Prudence Co.

request

and

be

One

the

is

borrowed
bank

vast

less,

of

our

in

the

Trading Specialists

the

with

All

UPSTATE

ac¬

important

creation

in

conse¬

of

our

sums

from

NEW YORK

vast

SECURITIES

.non-

other

lenders,

Tele. NY 1-1404

taxed

the

dealt

of

40 Exchange Place, New York 5
WHitehall 4-8957

national debt' resulted in a tre¬
mendous expansion of the
money
supply. 1 While the government
sums

supplied by the commercial
banking system. And let me say
right here that this natior) owes
were

debt of gratitude to commercial

a

GRODY & CO.
Members Natl. Assn. of Securities

bankers generally for their service

40

in the task

DIgby 4-3280

of

financing the

(Continued

Spencer

i r

New

Subscription Ratesr
v
■
^Subscriptions in United States,'U.- fii
Vv,'

36i/2%.

conceived.

done

fact

that

have

well

we

much;

so

and borrowed

was

must.

cordingly.

significant dif¬

Members New York Sto<fk

March
*

1

$6,

share

our

on

war'.

Dealers, Inc. -

Exchange Place, New York

5

Tele. NY 1-2698

page 28)

Winters & Crampton Corp.
•

:

'-f.

.

(

25 Broad

Newburger, Loeb & Co
Members' Hew

York

stock

Tel.» HA^rtover' 2r4300,

Exchange

1

15 Broad St,
14

Bell

NX 5
WHiteM4433f
Teletype.,NY. |-g03B
,

.

.

Yqelifingec } Members.New

,

Albany

V

-

i

' i

•

,

td; tlN»mci«l

2330

Teletype—NY 1-5
Glens Palls

-

Schenectady

-

Worcester

\

-'

Analyses available

C. E.

'York Curb -Exchanger

13(5. S, La Salle St., Chicago^
j.

I

Common

& Co.

Street, New ,York 4

' S'Tf :£,;r

Miles Shoes, Inc.

PREFERRED STOCKS

N. Y. Title & Mtge. Co.
.r

seoondTClass-matter Febru*
at

'

on

Per

interested in offerings] of

Lawyers Title & Gnar. €0,

...

-..Reentered

$2.70

amount to

require

High Grade Public Utility and industrial

Lawyers Mortgage Co.

St.,

Chicago 3, 111. (Telephone: State 0613);
1 Drapers*
Gardens, London, E. C., England, c/o Edwards <fe Smith.
f

J||

<

of

:
.

Tele. NY 1-2425

Leonard

last

(com-

news, bsink clearings,
and citv news, etc.)':-

Other

postage extra.]
—
Monthly

Record

year.

Both
com¬

v

Tel. HA 2-8080

TITLE COMPANY

records,, corporation
state

'<Foreign

Earnings

-

r

New York 5, N.V.

present
us tc
determine whether the debt should

consumer

program.

of

The solution of

problems

reserves

advanced by

banks.

J

■

Thursday, August 5, 1948

plete statistical
.

Quotation, Record—Monthly

year.

overall

The
bank

aign subscriptions and
advertisements muci
be made in New
York funds.

"

'

per .-year

year.

Publications

President

_

•'I

per

lion.

titles

-

Board

52 Wall St.

$250 bil¬

RIGGS, Business Manager

i'f

| Every
> yertising

§42.00

.

FIRST COLONY
CORPORATION

day,

a

be accurately summed
up.
Suffice it to say that our national
debt rose to
approximately $280
billion and is still above

credit

44

$38.00

in

never

<

is identical, except for the
date, with the bill passed by the
Senate, > and
acceptable
to 1 the

QUOTED

these prob¬

conceivable

borrowing

of

economy

included, perhaps could

more

of an
Canada,

Countries,

and

FINANCIAL CHRONICLE
Reg. U.

0f

all

were

we

"

Twice Weekly

if

cost

previously recommended

regulation

our own

financial, cost

ourselves

has

posed

...

:

.The

pro-

20

State of Trade and
Industry
I_II_ 5
Tomorrow's Market (Walter Whyte
Says) _________34
Washington arid You
Published

to

Gover¬

of

—

We

courageously

Title Two relates to-bank reserves,
As you gentlemen know, the

23

J

the Board

SOLD

—

car

system.

realize that

to Congress.
Title One relates to
regulation of consumer credit and

42

The

controls.

upon

whether

nors

26

Utility Securities..
Railroad Securities
Securities Salesman's Corner.
Securities Now In Registration.

credit

which

gram

43

Public

two

substance, part of the
prehensive anti-inflationary

5

economic

Forming

Corporation
BOUGHT

devote ourselves to the task.

we

"Anti-Inflation

are, in

£1

Observations—A. Wilfred May_____
Our iReporter's
Report.......
Our Reporter on
Governments.
Prospective Security Offerings

Metal

pressure*

economy musl

will not be solved

War;

1948" -includes

of

the

of
our

They will extend over a number
of years—how
many depends upon
how wisely and how

ap¬

;

proposed

Ig

the

war

lems

Anti-Inflation Act of 1948

7

concern¬

disrupting factors that

must

we

the Board is

of

follows:

12

Bargeron...

Mutual Funds
NSTA Notes

'■

that

for

pleased

Teletype N. Y. 1-714

credit control mech¬

our

and indeed upon the
economy pi
the world. If
history is a guide

8

Einzig—"Britain's Economic Defenses"
From Washington Ahead of
the News—Carlisle

Broadway

Bell System

oi

some

iandltnost costly^ War of al
time. Wl are faced with the
prob
lems of liquidating the effects of

proval, I telephoned Senator
Tobey about 10:00 p.m. and told

The

you

now
dealing; and for years
shall be forced to
deal» with the
monetary backwash of jthe great

mem¬

their

I

give

1908

Members N. Y.
Security Dealers Assn*
REctor 2-4500—120

are

view of the Board of
the

Pfd.

Established
1

important.

more

observations

at work in

affect

followed by a special
request from the President, I pre¬
pared a condensed statement of

that

on

most'

was

appear this morning.

34

Dealer-Broker—Investment Recommendations

;

ap1

I

are

est

and

&

Finishing Com. & Pfd,

J.K.Rice,Jr.&Co.

based on an understanding oi
the iact that the financial forces
generated in a great war are the

ator Tobey,

approval to

Com.

U. S.

be

.

Governors

United Piece Dye Works

of the

inflationary problems.
particularly a budget¬

Consideration
now

urgent' kjsistenc^ of Sen^

;he official

Corp.

anism.

16

Coming Events in the Investment Field

.

On the

STREET, NEW YORK

ing the impact of the inflationaryforces

until af¬

them

statement

to appear.

tim

Bookshelf..............

Canadian Securities

:

very

preparing for the House Banking
and
Currency Committee before
whom I was previously requested

obtaining

•

Banks and Insurance Stocks....

to

our

Now, I will

promised the Board that I
submit

stocks

Dorset Fabrics

these two titles of direct
to the System, I do not

my personal

bers by telephone last night. After

Regular Features

stating the views

surplus,

ary

the scheduled meeting of the
Board of Governors tomorrow, as

New York

~

Tobey

any appearance

would

WALL

for

■

with

Other areas,

ter

17

bad

as

Tennessee Gas Trans. Co.
Federal Water & Gas

on

solve

,

morning, I requested that he

postpone

Anti-

TaxvExempt...:

our

yesterday after¬

me

need

impression that
action in the credit field alone will

control

if I would appear before you

noon

14

World Bank Bonds Paid to
Foreign Corporations
in United States Ruled

World Bank Reports

Senator

kindly asked

15

Rep. Jesse Wolcott Offers Credit
Control Bill..!
National City Bank of New
York Scores Truman's
Inflation Proposals as
Contradictory..

011

credit

mechanism.

this

i__

_

Interest

9

ifnmediate

concern

complete statement of
Chairman McCabe, as released by
the Federal Reserve Board
follows:
When

Szymczak, Federal Reserve Board
Governor, Discusses
Economic Situation
!
*_
i
Walter E. Spahr Questions
Governor Dewey on "Sound
Money"

quite

obsolete

want to create the

Board

The

M. S.

r

the

buy here!

Texas Gas Trans*
Corp,

inflationary situation.

inflationary
forces
McCabe

we

horror

of

Telephone: WHitehall 4-6551

reserves.

_

B.

99

emergency measure, how¬
the bill would be adequate

concerning the
impact of the

Thomas

that

non-mem¬

additional authority to deal

b-

16

an

ever,
to meet the

addition

18

Porteous

no

some

banks to require that
they be
singled out to carry the additional
curbs -reserves
that may be necessary t<

President,

in

Plan—Richard M. Bissell, Jr.__

There's
as

inflation

by

16

FRANKENSTEIN

ber

-

not fair to
member banks in their

proposed
15

Salesman—Douglas K.

deeply that it if

competitive relations to

credit

13

Wherry

Gives Views

We feel

the

13

No Valid Reason for
Special Session
—Sen. Kenneth S.

Retail

System

lined the posi¬
tion taken by
anti

Market—Roger W. Babson...
President's Housing Program—A Paradox
—Rep. Everett M. Dirksen
:

a

Chairman of the Board of

new

MEETS

sum¬

Banking and Currency Committee

Governors of the Federal Reserve $>-

12

The Stock

EjjCA European Payments

statement to the Senate

a

11

...

If I Were

Treasury and Federal Reserve Board. Gives
of Federal Reserve views to House Committee.

July 29, Thomas B. McCabe, the

on

Congress Stands Against One Man Government
—Rep. Charles A. Halleck..'.

The

In

^

7

LICHTENSTEIN

urges team¬

work between
mary

...

AND COMPANY

on

.

6

Production Is Answer to Inflation—Morris
Sayre
Basic Terms and Objectives of EC
A—Paul Hoffman

Also favors reimposition of
wartime curbs

credit.
Upholds pegging of long-term government bond
yields, but favors rise in rates on short maturities and
consumer

.

4

...

and Profit—Mercer Hicks

i

3

[icHJEimer

-

Cur¬

necessary

to, check inflation.

;

i

Friedman.-^.-—_lr—Cover

The Special Session and Prices—Sen.
Robert A. Taft

New Chairman of Federal Reserve tells
Senate Banking and
rency Committee additional bank reserve
requirements are

i

.

(499)

t

.

■

on

->

request

i

t

Unterberg & Co.

Members N. Y. Security Dealers

61

•{:-•

'

■

Ass'ii

Droadway, New York 6, N. Y,

Telephone BOwling Green 0«3865
Teletype NY 1-1666
-

-

v

THE

(500)

4

Thursday, August 5, 1948

COMMERCIAL & FINANCIAL CHRONICLE

SpecialiSessionland'jPriceslS Utilities—For Income and Profit

The

By HON. ROBERT A. \ TAFT*

By MERCER HICKS

U. S. Senator From Ohio

Chairman, Board of Directors,
Eagle Fire Insurance Company of Newark

ascribes it not to failure
government philosophy.
Says nothing in President's program is of emergency nature and lays cause of inflation spiral to
Democratic Administration policies.
Holds President has power to reduce prices and says direct price
controls won't work.
Accuses President of advocating police state program, and concludes only recourse
of people against it is at the election in November.
Senate Republican leader, in commenting on special session of Congress,
of Eightieth Congress to enact legislation but its difference with President's

Writer stresses utilities

are underpriced in market and
high records in output and earning power.
Presents list of stocks affording safety and income to investor, with

do

reflect

not

new

likelihood

that the President may convene Congress in special session "on
There is no national emergency or extraordinary occasion today.
even refer to the critical situation in Berlin. This call was announced

The Constitution says

understatement of fact.

o'clock in

the.

morning

the

<$>-

;

leaders

on

and other commodities. Thus even

The President's

C onvention,

the,

his

philosophy between the President
and Congress. *The President would
fix wages, fix prices, expand gov¬
ernment spending, increase Fed¬
eral taxes, socialize and nation¬
alize medicine and generally regi¬
ment the life of every family, as

'•

for
re-

own

ele ction. In
t he

>

a mte

s

quarrel with the

is not its failure to
legislation, but a funda¬
mental difference in government
enact

s

Robert A. Taft

speech he de¬
nounced tne

well

the worst in his¬
in spite of the magnificent
cooperation he has received in
every phase of foreign policy and
in many fields of domestic policy.
The, session was called without
consultation with the leaders of
80th Congress as

agriculture, labor and in¬

as

dustry, and his proposals would
ultimately create an annual Bud¬

tory

billion.

$60

would

be

should

vetoes.

$23.86 a

make

Such

inflation

inevitable

the

1920,
were

they

per

are more

consumption
increased 150% since 1939.

Unfortunately

there

many

are

families who have the high prices
without sharing, adequately in the

income.

increased

This

Congress

Fed¬
Constructive legislation on eral
v);orker$ .iafhd I, believe that
lines which the President the
wages of all Workers should be

has been
him. It
difficult and dangerous to work
dare

not

did

to

veto,

criticized and attacked by
is

increased the salaries of all

increased at least in proportion to
the

cost

of

increase since
high prices
spell hardship for millions.
1939.

But

jegisMtion; today
can

such a
that only a

covers

wide field of subjects

studied

.be properly

and handled in any cue year.

It

would take at least six months to

give proper consideration to the
President's omnibus left-wing pro¬
We agree with, Senator
Barkley's statement made in the
Senate a month ago before poli¬
gram.

tics entered the situation:

have

"I

done

what I

could to

cooperate with the majority in
bringing about an adjournment
because I think if we sit here until

*An

can

ing .14 years.
We have determined, therefore,
that this session should be limited
to

July

28,

1948.

Art Metal Construction

short

period of perhaps two

Central III. Pub. Scrv.

Portsmouth Steel

Crowell-Collier Pub.

Texas Eastern Trans.'11

Administration

power

for

Sold

-

declined

market

value

in

about

6%

1947

trict

light and

was

in

"high records

a

steady

of

$5 to $7 billion a year. By mak¬
ing loans, the banks create money
use

in

%

105 West Adams St., Chicago
w

.

Teletype NY 1-672

^eekf jth$ J] Re^eiVe

Board

pointed, out that there have been

increases of $8 billion in two years
and

a

half stimulated by

ment action

I

;,

,

govern¬

gating money to bid
(Contiaucd 'on page 27)

as

the

of the New York Stock

Exchange,

states in part as follows: "It would
seem
obvious that man# addi¬

1947 and there is every indication
at present
that additional new

observer

tional appliances will go on to the

utility lines this
new

year

not only in

homes but in millions of

isting homes

as

well.

In the

ex¬

com¬

mercial field

new enterprises con¬
opened up requiring
utility services and usage by ex¬
isting customers increases."

tinue to

be

New standards of heating and
lighting are finding broad public
acceptance. Ventilating, air-con¬
ditioning and other contributions
to customer comfort are being in¬
creasingly installed in stores, thea¬
tres and public buildings.
New
and revolutionary processes in¬
volving heat-treating also open up
new vistas to the utility industry.

Living Electrically
In

a

recent publication

(EEI—

No. P.-6) The Edison Electric In¬
stitute stated: "Three wires enter

,

tion:

The Bullish Side

Consistent growth and relative
stability of earnings have charac¬
terized the utility industry over
a long period of years and have
led to widespread investor accept¬
of

ance

representative equities for

dependable income.
The

natural

gas

*

industry, for

example, has recorded successive
highs in both unit and dollar

new

volume

in

In

electric

each

year since 1938.
light and power
field, Charles E. Oakes, President
of the Edison Electric Institute,

the

said:

As for 1.948, the continued
rate of sales of electric appliances,
the

completion

of

new

home," and then raised the ques¬
"How completely do they
now
enable the family to 'Live
Electrically?'" "They supply cur¬
rent for lighting, cooking, waterheating,
refrigeration,
and
all
kinds of appliances," but, t con¬
tinues the report, except in a few
areas with mild climate,
"these
'three wires' do not supply space
heating," and then the $64 ques¬
tion: "What would it mean to: the
utility industry if they did?"

a

■

'

and establishes the conclusion that:

"Electrical Living*

residential

a

continued

high rate of

use

of

expan¬

electricity."

Appliance, Sales

22 million above the
a

; small

total

of

$529

service,

,

■]

1940 level

million,

for

i electrical^ items ^such^ as

will

i:i
!j

Objective and Potential
The

electric

revenue

Last year more than 42 million
("traffic", appliances were sold
for

the theme of

wires."

hours.
Record

electric

reach its ultimate goal when heat,
also
is
supplied via the three

factories

sion in the

^

many

it

and the increase of homes indicate

last

and

utility appli¬
kinds contribute

Discussing this subject, "The
Exchange," a monthly publication

set in a
number of different directions in

There has been a great expan¬
sion of mortgages for houses. Only

Quoted

Members N. Y. Stock Exchange and Other Principal Exchanges

,

.

comforts

ing devices into the home
pocketbook will allow.

were

one

the

help situation
exists, the average housewife
is eager to get as many labor sav¬
as

New High Records

New

of

With the domestic

industry.

power

with many new
electricity.
This
out of increasing

to the home.

of

year

of

ances

record
physical achievement for the eleca

grows

recognition

standing (a) an average increase
in. dividends of about 7% and (b)
that

using

conveniences which

notwith¬

1847,

put up today are likely

equipped

trend

15%. For example,

buying more goods to
force up prices.

Goodbody & Go.
115 Broadway, New York

since.

increase of bank loans at the rate

*Prospectus on Request




in

They have permitted

for

!

utilities

be

devices

fpar<?' "

Durez Plastics & Chem.

Telephone BArcl»v 7-01 OO

to

the

Our committees are care¬

Bates Mfg. Co.

;

that houses

18% in market value inx 1947,
utility, railroad, aviation, amuse¬
ment, rubber and other groups
declined about

field, gross busi¬

will grow as new homes are

constructed, and it is recognized

York

about

tion spiral today? It is the result
of many policies all sponsored by

Who is responsible fof the infla¬

ever,

Bought

New

advanced

puts it; "Confronted with these
accomplishments,
the
Investor,
like Byron, asked himself:
'How
should I greet thee?' and the an¬
swer
was:
'With silence
and

Responsibility for Inflation

the last 15 years. They vastly in¬
fully examining all of the Presi¬ creased the debt
before and dur¬
dent's recommendations to deter¬
ing the war creating huge amounfs
mine whether there are any mat¬
of money which is still coming
ters
which can be dealt with
into the market to drive prices up.
promptly on an emergency basis.
Immediately after the war they
The situation which gives con¬
adopted the theory that a general
cern to members of both parties is
20% increase in wages could be
the spiral of inflation resulting in
granted without price increase.
constantly higher prices. But of This theory was disproved even
by OPA which promptly had to
increase
coal
and
steel
prices
Prices have been chasing wages
Detroit Harvester

finish and

Systems,

a

weeks.

by Senator Taft
National and Mutual

Broadcasting

the

on

market. As

for not enacting the
they failed to enact dur¬

publicans
program

address

the

over

we

In the domesic
ness

-

if we sit
here between the conventions, or
after the two conventions, the en¬
tire time of the Congress will be
taken up with political bickering
and political legislation and po¬
litical oratory, and I do not want
that to be brought about. I want
what

ket exists.

high levels will be reached in
1948, for example:
most
ungrateful people in the
Total
output from generating
No Emergency in President's
world. He boasts of the fact that
sources
exceeded 305,000,000,000
Program
there has: been a tremeridous in¬ kilowatt
hours,
23,000,000,000
In the President's program there crease in the income of labor, and
mote than- in an# previous #ear;
is very little of an emergency na- claims that all workmen must be
vc Service was extended to about
ture.
Most of the social welfare
ungrateful if they do not vote the two million new customers, the
legislation proposed is of a per¬ Democratic ticket. In other words
largest increase in any one year
manent character which can be he claims credit for
high wages in the history of the industry;
considered more thoroughly next and
high farm income, and then
The
average
residential
con¬
winter. The Democrats controlled tries to blame the
Republicans for sumption of electricity rose to an
Congress for 14 years, professing the other -j side of, the picture, the all-time
high national average of
the greatest interest in social wel¬
high prices which must inevitably 1,435 kilowatt-hours.
fare legislation. Now they say that result from
high wages and high
These were but some of the rec¬
they failed to deal adequately with farm prices. Such a claim cannot ords set in
1947, yet they had little
social security, education, health be characterized otherwise than
appeal to, or reflection in, the
and housing and blame the Re¬
demagoguery.
securities

after the convention, or

to finish

listed

Exchange

the

out great public problems without
the slightest cooperation from a
The President boasts that there
of«partisan argument. The
hostile President.
The only way
has been a tremendous increase in
80th Congress enacted a tremen¬
this fundamental difference can be
farm income and says that if the
dous program of foreign and do¬
resolved is by vote of the people
mestic legislation and completed
farmers don't do their duty by the
at the November election.
Democratic Party, they are the
all routine and emergency matters

generally recognized as an extra¬
ordinary record of accomplishment.
Few realize that Federal

minimum of price risk

Situation

living

still

Looking Ahead

Large expansion programs are
now in progress to
take care of
greatly increased demands. A sub¬
stantial portion of needs can be
taken care of from public sale of
securities, for which a ready mar¬

petroleum,
automotive,
equipment and textile se¬

curities

;

1,000 people iii the
nation bought a "traffic appliance
last year and that retailers would
have to stock a greater variey to
meet the advance in competition.,"

While

Stock

12)

(July

out of every

An Out of Balance Market

farm

Chicago

industry spokesman predicted
appliances will break
all sales records iin 1948—that 310

iii relation to the general market.

earnings in 1920
week while today
than $52. Personal
expenditures have

in

"electrical

civilization, their historical
background of consistent growth
aqd stability^of earnings, ft is^our
considered opinion that the secu¬
rities
of
high grade
operating
utility
companies can now be
purchased at market prices in¬
a

appliances.

conference of dealers and

a

an

contributions to the needs of mod¬

is quite true that the

the

but
$26

At

executives

ern

has finally reached
level where it was in

same

hence termed "traffic"

tiles and other groups. By virtue
of their manifold and outstanding

volving

the spot while
the store, and

through

passing

food, shelter and clothing requires
no emphasis.
Marketwise, utilities have not
kept pace with the oils, rails, tex¬

increased

free

fraction

growth must keep pace with

of<S>-

average

weekly
from
week to $52.81 a week,

up
100%, and
earnings
have

.

liberal

debated from

viewpoint of the public in¬
terest.
In the 80th Congress our
debates
have
been
remarkably

Congress* the President delibe¬
rately omitted any reference to
the income side of the picture.
The fact is that the cost of living
for an urban family has gone up
72% since 1939, just before the
war.
But in the same period, the
average
hourly earnings of 13
million factory workers have gone

less than or 121%. It
expenditure price index

and

Legislation should he ^delibera¬
tive process, and every important
measure

frightful prices of meat,
people are eating
15% more meat per capita than
before the war. In his message to
American

get which could not be

permanent. The Congress be¬
Congress, after Congress had ad¬ lieves that progress must be made
journed with the full acquiescence and all our problems solved with¬
.and approval of the Democratic in the principles of liberty, equal¬
minority leaders.
We would be ity and justice to all men which
ifully justified in adjourning at guided this country for 150 years.
This difference, has resulted in a
ionce until the election is over.
constant
conflict,
resulting
in
Serious legislative problems
cannot i^e satisfactorily handled in many vetbes by the President, and
action: overriding
his
the midst of a political campaign. frequent

the

the

at

the

80th Congress

as a po¬

campaign

with

Congress

D e mocratic

in

Their efficient

needs

toasters, irons, etc., which the cus¬

Basis of President's Quarrel

ver

essential of every-day modern life is an

an

vital

modern
course the higher prices are caused
civilization, in peace and
in War.
Thus, the importance of
cooperate with directly by the greatly increased
the Utilities Industry becomes an
the other side to purchasing power ; of the people
fact
that
like
competing for all kinds of food incontrovertible
adjournment."

bring about an

Pr e sident's

are

and

tomer may buy oh

the

in

maneu-

growth

best to

my

political
speech to the

litical

they

say

adjourn the Congress, and I have
.

the midst of a

solely

To

tried

dent after two

t

of appreciation in market value.

|

try.

the Presi-

-

It would appear unnecessary to describe or emphasize the im¬
portance of Heat, Light and Power, the products of the Utility Indus¬

The Present did not
by

,

basic industry and cornerstone of modern

Holds utilities stocks

civilization.

extraordinary occasions."

;

as

tion

in

r

utility derives its

from the sale of kilowatt-

Average electric
the

home,

consump¬

heretofore
stated, made a new high record
last year (1947) of 1,435 kilowatthours

would

per

year.

increase

(Continued

as

Space heating
this average by
on page 31)

£ • £4

Volume 168

Number 4722

THE

COMMERCIAL

FINANCIAL

&

m

Harold Gleisberg

Observations

Electric Output

Carloadings
Retail

State of Trade

Food Price
•>

Industry^

By A. WILFRED MAY

Index

The Politicians Fire Two Economic Pot-Shots

J

has been made by this and other observers, of

Much criticism
the

output the past week experienced a slight
production as a whole holding steady
Order backlogs in some industries were
greater than in previous weeks and the general picture of employ¬
ment and payrolls was one of stability and peak levels.
j
..Wage disputes in the week arose in scattered areas, but in the
main, labor-management relations generally were good.
As in past
in

at

lines

some

high

a

with

being flung about like

economics

some

xV-

materials continued to

raw

obtain;':r;

V\-

*

»

:.c..

.-Y;Y

❖

.

,'■

=

specific commodities

According

the

to

Interstate

were

structure

raises

the

above that in effect last

included.

Commerce

added

an

still

not

was

costs of

7.8%

and the

As

was

commissioners who

labor.
■
sjs

.

80th

rather expected

Congress

22.6%

Since 21.4%

voted

the

enough to meet the carrier's needs to

materials and

;t;„ "

freight rate level

summer.

said

rise

offset

it

rising

President Truman's message before the

In the matter of controls for

consumer

credit, Thomas B. McCabe,

Chairman, and Marriner S. Eccles, a member of the Federal Reserve
Board, sought their reimposition along with authority to raise reserve
requirements of the Federal Reserve banks to curb inflation. Mr.
Eccles would not only apply these controls to member banks of the
Federal Reserve System, but to all banks as well.
*

in

trend

new

pass

mony

of

his

officials

and

advisers

Messrs.

as

but

from the viewpoint of the validity
arguments as political strategy, and
weighed by the public in the light of its own
individual political prejudices. Hence it seems
worthwhile to analyze at least a few of the cur¬
rent arguments according to their objective merits
for the consumption of that minor segment of the
community (like some of the labor group, and the
A. Wilfred May
Liberal Party) which, particularly because of the
Wallace-Communist splintering-off, is particu¬
larly confused, undecided, and open to objective enlightenment.
In this background let us take a look at two of Mr. Truman's
foremost proposals: re-imposition of the excess profits tax; and gov¬
ernment curtailment of consumer credit.
In addition to being the

largely

Canadian Pacific

these

of

•

Railway

Canadian Western Lumber

Noranda Mines, Ltd,

HART SMITH * CO.
6X WILLIAM ST., N. Y. 5

Bell

Teletype

'

Private
New York

HAnover 2-0980

NY

Wires

1-395 o

Connect

Montreal

Toronto

BOSTON

project reported as most likely of adoption (temporarily) at the
present writing, consumer credit regulation epitomizes, along with

%

Tuesday of last week dealing with inflation con¬
tained most of the proposals that business had counted
upon the
President stressing before the special session of
Congress.
Among
them were the proposals to rest®re the excess
profits tax, consumer
and bank credit controls, wage and price controls and
regulation of
margins in commodity exchange transactions.

The

a

one

>!'.

on

YYYy

forward

Porter, Bowles, Snyder, Eccles, McCabe, etc. Pre¬
sumably much more will be said thereabout,

Commission, the new
or $1,535,000,000
of this was granted
in three interim freight rate advances last
October, the railroads
gained 1.2% points ever their current freight revenues, the Inter¬
state Commerce Commission reveals.
The roads had hoped for
rate

a

special session of Congress. And much more can
pointing out the misstatements, errors,
inconsistencies running through the Demo¬
cratic party platform, the President's oratory in
Philadelphia and at the Congressional opening
last week, his Economic Report, and the testi¬

be difficult to

Scanning the recent long-range order of the Interstate Com¬
Commission on freight rates charged by railroads, water car¬
$67,400,000 a year
In the final ad¬
justments a number of reductions as well as increases in the maxi¬
on

"throwing of

and

:

riers and freight forwarders, it is found that
only
will be added to shippers' railroad freight bills.
rates

Chronicle)

Financial

be written

'VW^-' *
'•

merce

mum

territory"

level.

weeks and months

The

political football
which he had been associated for
from defensive
in the guise of his Philadelphia-platform call for the many years.

phoney

since President Truman's

Over-all industrial

to

OMAHA, NEB.—Harold Gleis¬
berg has become associated with
Kirkpatrick-Pettis
Co.,
Omaha
National
Bank
Building.
Mr.
Gleisberg
was
formerly
VicePresident of Greenway & Co. with

Auto Production

Business Failures

m
increase

(Special

Trade

Commodity Price Index
'

and

With
Kirkpatrick-Peftis Co.

Steel Production

The

and

5

(501)

CHRONICLE

*

*

■

«

business

the renewed gesture for excess profits, the demagoguery and contra¬

Thomson Electric Welder Co.

dictions running throughout the Administration's proposals.

(Sole Capitalization

The Easy Attack on Consumer

To

meet the

aim

Credit

Common Shares)

96,801

of

inoffensively putting on the show, in lieu
of the genuine steps of deflation—or even anti-inflation—jumping
on
consumer
credit represents an easy way out.
Catering to the
puritanic prejudice against borrowing, and and not ostensibly hurting
any pressure group, the move against instalment selling apparently
is regarded by the politicians as legitimate use of a convenient scape¬
goat, instead of a thoroughgoing self-disciplined attack on the real
inflationary elements in the situation. (Incidentally, even in the sphere
of political strategy the measure may turn out as a
boomerang; in
fastening the public's recrimination on the Republicans for a sub¬
sequent depressidp, because of. their present concentration on this
act of obstructing consumption and neglect of the more
popular sub¬
sidy proposals.)
Actually, restrictions on instalment buying represent the impo¬
sition of hardship on those consumers least able to bear
them, namely

incorporations turned mildly up¬
ward in June, following a rather
sharp dip in May and a slight
decline in April.
The June count at 8,550, compared with 8,246
in the preceding month.
It was, however, 4.2% below the 8,922
charterings in June of last year, according to the latest tabulation
by Dun & Bradstreet, Inc. Twenty-eight of the 48 states shared the; lower income^ groups who are unable to make cash payments
for autombiles and other durable goods—particularly at
present high
in the moderate increase recorded in June over
May. Compared prices.
Whether thus cutting off consumption and widening, the
With June a year ago, advances were listed in 19
states, against 27 gap between buying
power and prices is the way—or even a way—
declines, and two that showed no change.
>v
to attack "inflation", is highly
debatable, depending largely on the
IYYY'-Y'YY
■:
*
$
*
'V1.
definition of that concept.
Business failures increased in June continuing the general
up¬
If the instalment-control move is effective in its
purpose,
a
ward trend which began in the Fall of 1946.
Concerns failing dur¬ bust will be
brought about in the worst possible way, for (a) the
ing, the month totaled 463, a moderate increase above the May figure
wrong people will be discriminatorially hurt, and (b) none of the
of 426 and a considerable rise from the 288
reported in June a fundamental
elements of our inflation will have been eradicated;
year ago.
Although more failures occurred than in any other June
Oh the other hand, the policy may well be rendered completely
i«i the last six years, they were less than one-half as numerous
as
abortive through the consumers' substituted' devotion of his cash
in 1939 and 1940.'
■ vsavings to the acquisition of the goods.
Particularly to the extent
that Savings Bond redemptions are thus enlarged, will the generally
Increased
consumer
interest
in
Fall merchandise and final
clearance sales of some Summer goods the past week sustained inflationary condition of the country be aggravated (under any
definition).
retail dollar volume slightly above the level of both the
previous
Boom-and-Bust Confusion
week and the corresponding week a
year ago.
Moderate priced
This leads to inquiry as to the reasoning behind President Tru¬
therchandise made up a large part of consumer purchases.
man's basic contention that we must stop the price advance now
Total wholesale volume rose
moderately during the week, al¬ because of the boom-and-bust
principle that "the higher they go
though a slight decrease in some seasonal merchandise was noted.
the greater they must fall."
If the President will re-examine his
There was a continued favorable response
by many buyers to further own
assumptions here, he may realize that even he agrees that at
offerings of Fall merchandise and trading volume in some foods
some point production will catch up to effective demand, even with¬
increased moderately.
;
out the' price-ceiling device.
Whether or not Mr. Truman is con¬
sistent therewith in contending that price ceilings are the only way
STEEL OUTPUT OF INGOT CAPACITY SCHEDULED
to enhance such deflationary production (or whether he even really
SLIGHTLY HIGHER FOR CURRENT WEEK
wants it), he is definitely self-contradictory to his fear of "bust"
Steel buyers are turning in droves from rail to other
forms of in
trying to balance the situation by taking the instalment buyers
transportation wherever they can and steel

•

App. Book Value

•

App. Net Current-,.--:. $6.70

• App.

"...

Price.-

$4 Va

,

•App, Yields--—
based

on

$9.40

...

——10%
div. of $.45

1947

"

DAYTON HAIGNEY & CO., Inc.
75

Federal Street, Boston

:

Private New York Telephone—

WOrth 4-2463

DENVER

1XXXXIXXXXXXIIXXXXXXXJJ
'■ b yy--

vyi'

v.-f, k

•

:vv.:;-• '

CRIPPLE

..

•

CREEK

COLD

MINES

.

.

.

executives

areas

in

some

alarmed, the current issue of "The Iron Age," national
metalworking weekly points out.
But fabricators
facing higher
costs all along the line are
finding this a fruitful field for

cutting
"Ship as usual," but
many others are saying, "Ship via truck," that some mills have
been forced to allocate truck
shipments and charge extra for load¬
ing them.
The

majority still mark

their

orders,

so

Pressure for truck shipments is

(Continued

iv

.

PHILADELPHIA

SCR ANTON

ATLANTIC

It

must

1

other cities

j

'

-

/

-

other

OB8

the

national

income
.

N.

as

>

than

it

did

(Continued

.•

pre-war.
on page

Dravo

ALLEN TOWN
NEW

an

HAVEN

unlisted

to open

bur branch

a

leases

term

forty

company,

acres

records

Cripple
will grant long-

on

mines

with

supervision

from two

to

production)$4,000,000 00.

past

ranging

References

owners

well-located

to

exchanged. Engineering
if desired.
Write.

Joe Dandy Mining Company
31'5 Colorado Bldg.

Denver 2, Colo.

ST. LOUIS

,

Stix & Co.
INVESTMENT

SECURITIES

V

'

•:

STREET

OLIVE

509

constant

St.Louis1.Moo
Members St. Louis Stock

Exchange

And the total of retail
43)

>

;

NORTHWEST MINING
SECURITIES

Corp.

For

of

New

Bought—Sold—Quoted

Pac.

other

V

I

MEMBERS N.

Y.

SECURITY

DEALERS ASSOCIATION

Stree^^^^Vork^r N.?"Vy; P-;f.

\

of Orders
on

to

Floor
11:30

hours.

Sid.

r

Members Standard

Times

Sp-82

at

Stock

Exchange

Spokane
Brokers

•

10:45

CORPORATION

FREDERIC H. HATCH & CO.,
6 J/Wall*

from

STANDARD SECURITIES

secu-

York 8,

Exchange

A.M.,

McGraw (F. H.) & Co.

branches

Immediate Execution

Quotes call TWX Sp-43

or

Kingan & Co.

office managers;^

226, Church Street Station,
Y., Desk 36-J., v? Y v., .v: /;, '
^




financing is

consumer

Time Inc.

cities^; Complete services' and profitable situaBox

that

,

selling; and that credit terms have not been
expanded to form an inflationary factor. As a matter of fact, terms
have been voluntarily tightened and in the over-all quantitative
picture consumer financing amounts to a far smaller proportion of

Office in

of similar character?;

awa^ those selected

Address

-

properties,

in

Out-of-town Sales Representative Wanted
in

.

remembered

E

Old New York investment house jdoing
rities and
underwriting business, desires

.

be

long-term device

l>r

or

several

Creek

SPOKANE, WASH.

TRENTON

CITY

of

30)

Would you like to manage a Branch

>

out of the market.

particularly heavy in the Mid-

on page

LEASE

.

are

costs.

FOR

Long-established

YY

Belt Teletype NY: £697;

Y-..Y

-

Dealers

-

Underwriter* f \ ?

Peyton Building, Spokane

Branches at
'Vv..-')'• ' '
Kellogg, Idaho and Yakima; Wru:

6

(502)

THE COMMERCIAL & FtNANCIAt CHHCWICtE

Present Inflation and President's Program

Regulation and Natural
Gas Company Investment

By PAUL A. PORTER*
,

In statement

,

}

Special Assistant to President Truman

House Bankinjr mid Currency

to

^

Committ^ folrm£r OPA Adrainfe^

of

ousness

-{rBy CARL

inflationary situation, reviews course of price rises and warns if opposing action is not taken
a disastrous
depression will result. Lays -excessive demand as prime cause of rising prices, and outlines
nature of Anti-Inflation'and
jExcess Profits Tax Bills-proposed by President. Holds high prices are
cause

Defends
*

result of inflation.

as

mitted
will

appearing here

by the President

be

brief

prices

the prob¬
lems of infla¬

shown

and

officials

be

able

we

When

were

last

engaged

in

discuss.on of the renewal of
price controls under the OPA. I
regret, as I know you do, that
a

these problems of

inflation

which

high prices and

the

majority of

Congress then thought might solve
themselves
the

fact

are

still with

But

us.

that

these problems
an unavoidable
and upleasant
ality. cannot be ignored.

| The simple
country
trouble

is

i truth

in

rise in prices has
inevitable effect on the

is

that

more

are
re¬

the

economic

its

real

income

While

the

income

the

of

average

capita

per

from

man.

disposable

annual

rate

of $1,086 in the first half of

1946

to

rose

an

$1,273 in the first half of 1948.
rise

a

of

chasing

over

power

almost

15%, its real pur¬
has been cut by

10%.

The point I want to make is
that these price increases are not

pressures before it is too late.
The

country

perity.

an

something that happened only in
the

half

second

1946.

of

They

happened again in the second half
of

1947

when

rose

10%

rose

6%.

wholesale

and

prices
prices

consumer

They

happening
again now. Since the temporary
decline early this year, wholesale
prices

by

today

is

permit

in

unprecedented

the

pros¬

welfare,

By any index of material
the average
American

should

be

more

contented

than

over

before.
I
scarcely need to
point out that such is not the case.
This

is

an
uneasy
prosperity,
by fears for the future.

haunted

It is also an unfair
prosperity in
which the condition of
large groupswithin the country has become

progressively
of

good

worse.

times

and

the

our

and

This paradox
bad

tempers,

present

built

quite justified

fear

that

prosperity may be
quicksand, are primarily
in
one
fact: higher and

on

rooted

are

June

had

risen

3%.

go?

this inflationary spiral

Can

its

the

risk

the

people,

of

further

consequence

come

/that

There

some

of

is
us

prices an¬
brings out
the fact that every previous infla¬

nually
tion

since
this

of

1749.

It

character

has

been

Such

in

fact

process

may assume that

nothing
done about it and thus for-

j

can be

?

get the certain consequences.
for millions of
people these

But
con¬

sequences are vqry real today, as
they see their purchasing power

i ajnd living standards shrink.
*
.

V Let

The Price Spiral

us

review briefly the price

jhistory of

the last two

years.

prices have,

on

the

av-

*A statement made by Mr, Por¬
ter before the
Banking and Cur¬
.

rency
of

of

the

House

placing

a

•

.

.

ure

..

July 29, 1948, supplemented

portion of statement before

the Senate Banking and

Currency

more

the

Prices in general are rising now.
Recent

price increase?

and

wage

basic

industries

have

not

and business, accumu¬
during the war, have yet
been fully satisfied. The volume
of liquid assets in the hands of
individuals and corporations has
scarcely been dented. These and
similar factors portend continued

lated

inflationary

pressure.

Two years ago many people ex¬

pected

that

solved

by

inflation

increased

would

return and the
absence
r e




of

t ion

a

financ¬

ing. The Fed¬
eral

Power

C ommission

has

no

power

under the Nat¬

ural
to

on se-,

pass

issues

t h

as

Act

Gas

curity
e

SEC

.

has under the

for

value

and

the

stock

common

adequate reward to its stock¬
for
commitments
in
a

as an

Wasting asset industry." An attrac¬
tive

result

end

the

for

common

stock would not be

older companies in the
pipe line field indi¬
cates clearly what has been going
on.
For example, new pipe line
projects have capitalized them¬
against

natural

gas

selves with

stock

common

equity

ranging from 13% to 22%?, where¬
as the old companies are capital¬
ized/with
32%
to
85%) equity.
There also has been evidence that

number of the older systems

a:

turning to
instead of

are

senior financing,

more

from

170

equity financing

v'y,'"

■

■ — ■ ■

■

for

,

changing their capital structure to.,
a heavier proportion of debt.
,
V
The following
tabulation sets:
the

forth

ratios of

capitalization

-

both the new and the old natural

pipe line systems at Dec. 31,
as estimated.
El Paso NatGas Company, while arr old
company, has been grouped with
gas

1948,

■

ural

•

the

new

because its

ones

,

greatest,

expansion to Cailifornia is current¬
ly taking place.
\
j
A Means io

1

End

an

£

simple calculation of arith^
metic.it is apparent that with a
limitation of earnings, by a vari¬
ation in capitalization ratios, it is
By

a

the return to

possible to stretch
the

stockholders

common

wide
effect

capitalization ratios
been
prepared
ratios and

tabulation

a

has

of

assumed
It will be *

money costs.

that

noticed

old

of

selections

various

cn

a.

over

To demonstrate the

range.

pipe line

com¬

panies, which generally fall info a
capitalization category consisting *
of 15% to 60% debt and, 40% to ;
85%

equity,

are

in

a

from

range

under

>

of

•

of

depreciated

original

property.
that with

When it

on

cost

the
their

ings

considered

is

to

limitation

6%

a

6.6%

show
stock
10.5%,
earn-

to

able

earnings for their common

j

standard

capitalization ratios found in the
electric industry of 50% debt; 25%
preferred and 25% common'stock';
return

a

similar limitation of

a

on

-

.

earnings produces 13%' and more,
it is obvious that with the wasting
characteristics of the natural gas

-

:

in

at this

to

American
is

economy

as

action,

even

late

of total industrial

eral

can

take

place without

depression

ment.

The price

gen¬

and/ unemploy¬
increases which

80
70

In

shprt, period

a

within

period of a

a

successful ^readjustment will

•

And

believe

there
that

is

every reason to
prices will continue

to rise, unless we act to stop them.
Many people may take false con¬
solation in the hope that the peak
of the postwar "inflation has beer

price: readjustments
prospect.

are

now

It is true that there

iti
are

require the
cattle and dairy

building

up
This

of

herds.

takes

should

be

the

remembered

favorable

And it

time.

feed

that

Pacific Lighting
outhern

conditions.

while

The

the-problem;

The

t

*

President

has o»*tliopd

a

in

his

certain

factors; such

as the

grain

.

,

cori-

{Continued,

on page

35)

38

42 1

16

42

c---—

-

38

49"
51

United Gas

48
28

52
72

v

14

86

>

Gas„

Star

Lone

—

Consolidated Natural

-Includes

f

'

.

85%
-

30 n.
-

'

.' -

New

Line!

50. \

>

—80'
•r

<.

1.

.

,

v

....

■.

.

.• •

..

-W

;

•>,

'

...t,

*«o

80:

V
—

3

•

/
ii "• :

3
■

;

20

>

20

•

..

j-

6.6%. ■

ri*

9.3

10.5

15

3>/2'

:t.

M
M

13.0

11.8

'

3V2

,

m

,...,;

■&&

'

XJ

:

'

1

.5

wi

,.'

■

15
'..

Common

:> r

,

i t,

''V-

30
10

.70

c....':

'

v-4
,

\V-;>V

.

25.

70
70

■

,...

'

Return on

v-^: a

25

•

■

•

•

2%

40

:

2% %

)

Pfd. Ratio

2%

r

50

•

/60;?:
Utilities

70-

•

i 50

.»

Returif

Assumed

/Assumed
r
Int. Rate

Common

Pfd.

;\"';

j

•

-0% Over-tfll Rate of

15 X

-

*

•;

;

-

Assumed Capitalization Ratios,
Debt

V"
'

i

.

Company
Old Line:

.

—

of Convertible Debentures.

14%

•cal

message

balanced

32%

12

62

Natural

Slec

*

23%

49

will I'-'t]"'

'' } J'U.
The president's Program

K-.

—

jNorthern Natural

make An: important contribution,
it cannot increase fast enough to
meet

*

51

that

possible

—

*

-

22

45%

—;

.

klahoma Natural

de¬

conclusion is
increased production

only

18
21

.30

____________

lolumbia' Gas & Electric

pends on the continuation of fa¬
vorable weather

,■

'anhandle Eastern

even

outlook

<13?

__

)

78

year

Really

increases

:

12

Old Enterprises

but could encourage producers to
hold animals back from the mar-

significant

2%
10

an

important factor, crop prospects
are favorable. Improved feed sup¬

foods

Common

7

(14)*

79

such increases cannot be large. In

ket for heavier feeding.

pro—

12

production de¬

efficiency.

have already occurred
hfite undoubtedly made such a successful
readjustment difficult,
|f prices
continue to rise, the
possibility of

800,1

32%
•

ments which

future

Pfd.

78

At 12/31/48 Est.

pends largely upon improvements
in

date, there is reason
that the price readjust¬ plies will produce a modest ex¬
are inevitable in the
pansion in the production of some

hope

Debt.

66%

a

working at full blast.
conditions, expansion

Under such

agriculture, where weather is

take effective

we

The
whole

■

Committee, Aug, 2, 1948.

1

g u

over

bf

production

This expectation was disappointed.
Industrial production did increase

'

South- /
era Natural Gas Company, Colum¬
bia Gas System, Inc., United Gas ;
Corp., the subsidiaries of Pacific ]
Lighting Company, and Lone Star
Gas Company, have recently re¬
sorted to debt financing, thereby

yet

consumers

k

Eastern Pipeline Company,

possible other¬
wise, under a strict 6% limitation
worked their way up through the
of earnings on depreciated origi¬
price structure. Tax reduction has
nal cost, if capital structures were
meant that the restraining influ¬
maintained on a more conserva¬
ence
of the government surplus
tive basis.
will
be largely 'Jipr wholly
lost
Defense expenditures
are
being
The Capitalization Pattern
stepped up. Export demand re¬
A comparison of the capitaliza¬
mains high.
There is no indica¬
tion that the backlog demands of tion ratios of new enterprises as
in

J'/

V

r

•

,

————

over

rat e: of

holders

before.

was

.-.■■■

■

'

£

„

>

to the rigid

control

re¬

confidence in
predictions now than

any

optimistic

Representatives,-' Washington, reached, that
salutary downward

D. C.,

'by

Committee

If

Be-

j tween June, 1946 and June, 1948.
consumers'

always been accom¬
panied by unemployment, and de¬

have be¬

hardened to this

so

we

are

i

.' %•

<•••.

Carl C. Brown
Holding Company
Act.
ple into believing that the end had
been reached.
It is always haz¬ Managements are resorting to this
ardous to attempt to predict the expediency of top-heavy financing
future, but there is no reason for to create sufficient earning power

chart shows wholesale

pression.

they

•

-

/•'

the average, and

on

■"

■

:'r

beer,

quarter of 1947 prices

|
.

,

declines have

v

'

'

pipe line

j heir
money require¬
June, 1946 to 192 in ments. additional find that the most industry old pipe line transmis¬
Thus we
June, 1948, an increase of 13%' conservative -member of the in¬ sion projects are being seriously
perity and bring still greater hard¬ As a matter. of fact that
13%' in¬
dustry, Consolidated Natural Gas handicapped through the present,
ships? ~ The weight of evidence crease had been achieved
low allowable rate of return. It
by No¬
Company,
which
hitherto
was
indicates that this is, what wiP
vember of 1947 and the volume of
is small wonder, therefore, that capitalized with 1Q0%
common
happen unless effective action is production has remained
virtually
the managements of new pipe line
f.tock recently sold $30 million of
undertaken quickly.
stable for the past nine months.
debentures. Similarly, Panhandle
(Continued on page 23) If we look at the present situa¬ But increased
production did not
tion in historical perspective, the solve the price problem, arid it
NATURAL GAS PIPE LINE SYSTEMS
country's precarious economic po¬ cannot be relied upon now any
New Enterprises
sition
becomes
apparent.
This more than it could two years ago

still

;

under

the

to

increases, which will undermine
the foundations of economic pros¬

Prices have been
rising rapidly
for over two years and

■

government,

responsibility

to

followed by a sharp decline.

higher prices.

rising.
danger that

'

Such

occasion

\j

rates

over

gas

New, natural gas pipe line projects seem to be raising their
capital requirements substantially through the issuance of senior.
securities.
In this way they are creating security structures with a
small proportion of common stock. This trend is due in a large meas-

early this, year they actually de¬
These pauses in the infla¬
tionary process misled many peo¬

.

-

midst of

■'

■

,

natural

new

;

clined.

there

than

now

as

inflation.

each

on

mained stable

national history.

our

two years ago. Consumer
prices had also risen
the President emphasized about 3%. Price rises on a broad
in his
message thl§ week, the pas¬ scale are taking place
right now.
sage of time aggravates the criti¬ The
situation in retail food prices,
cal nature of these
highly complex which have risen 6% between
conditions. It is, therefore, to be March and
June, is part cularly
hoped that this Committee and acute.. It
might be noted that, in
the Congress as a whole
will con¬ the last few weeks
alone, whole¬
sider immediate
action
to
deal sale food prices have risen around
With
the
mounting inflationary 6%. How far are we prepared tc

•Add,

hopes have

the

.

investors in electric utilities.

,

-

\

up

drastic

had

two-year interlude.

here,

of all

of

end

second

This

as to
particular
problems coming within their
spe¬
cific sphere of interest. In a
sense,
A am completing a return
engage¬
ment with your Committee
after

was

average

is

the

highest in
Paul Porter

this

Committee to
testify in detail

I

prices

in¬

double their prewar level and the

avail¬

to

My testimony

J

•

•

creating topheavy capital structures. Urges rate of
stockholders be raised-to level enjoyed by

are

47%, the false hopes. These particular sta¬
wholesale price of food is up 61%,
bilizing forces :have served at bes'
farm products are up 40%, and
to
halt the upward movement
all products other than farm prod¬
temporarily and have soon beer
ucts and foods are up 42%. Whole¬
outweighed fcyi other factors^ You
sale prices are now more than
may
recall that throughout the

of the Execut i v e
Branch

will

substantial

more

Thus, the

wholesale

of

the President's

a

even

creases.

tion.

other

last Tuesday.

' ""

return to gas company

to

risen 29%, the retail price supply, which might tend to sup¬
the retail price port that view.
25% and rents
However, from time to time
are up 8%.
Consumer prices are during the postwar
inflationary
now at the highest point in our
spiral, individual factors have ap¬
history. Wholesale prices, have peared which seemed tp herald

and

projects

•

erage,

dealing with

Cabinet

on

"

Co.

&

points out that, because of strict control

j

of food is up 47%,
of apparel is
up

ommendations

Members

joint session

a

<$>-

to the support
of those
rec¬

h i g h

Congress at

Marks

and absence of financing regulation,

»

to thd

Brown

'

C. BROWN

M.

,

bill which will put into effect the recommendations sub¬

a

Laurence

Mr.

President does not have sufficient inflation controls.

Special Assistant to the President of the United States

as a

d 1 directed

a n

Contends

H

Taft-Ellender-Wagner Housing Bill before Senate Committee. Wants "easy money" to continue.

am

the speedy enactment of

urge

.

well

as

;Thursday, August >5, ;1948

10 -

10

10

■

,c

:.K" svz

3%.

■

•

■

i-5.2.:
16.0
t
:!•

jr

•;
'

5

:■■■

■'

25.5

Volume

168

Number 4722

THE. COMMERCIAL

FINANCIAL CHRONICLE

&

Produc tion ps Answer

From

Washington
Ahead of the News

By MORRIS
•

-

.

-

-

toflnf laftioxt

SAYRE'*t|'if

President, Corn Products Refining
Company
President, National Association of Manufacturers

•

7

(503)

f
1

Leading industrialist,^ asserting Jng^ headache today is
inflation, .contends it cannot, be charmed df by
song chants of political medicine-men
Accompanied by1 strait-Jacket conlrols. Says prices are
high because production has not keptpace with amount oi
naunist..iageiitsand 'sympathizers or "spies' in our government will'
money people ale Wilting and able to spend.
rmeasiire up to the fajnous Canadian -case.
Att^tks Firesident Truman's proposals. Denies prof its are cause of
The reason for this 4$-fhai
highprices and calls for elimination
it'will not likely be proven or can be proven that they, gave Soviet
of:unnecessary "gdvernmetat spending and lower income faxes, and, above
all, more output per worker.
(Russia:;a n y$>
; .>.
j.v-v 'yv ■
,
essential
in¬
^
" Wfrat this country needs is a good five-cent cigar." Old Tom Marshall was
impress upon-the. economy' Of :this
right when
formation that icuntry
expressing .amazement he; made that Sage observation. And he would be
just as right today in his appeal for qualthe New Deal and
R -is the first time; h!e
Ty} at. lower cost; Quality at lower cost would solve a lot of our
Administra¬ has ever heard of such accusations
problems-—including the
inflation V' w e
<$,,

By CARLISLE BARGERON

sing

It is doubtful if the current disclosures of the activities ©f

.

um-

-

.

'

.

tion

not

as
the
informer, Miss Bentley,!
tp. made. He knows-that he has been
give. She was three times a witness vbefore the
an
ally. This, New York grand jury.
it
is reliably
Still another one is pained and
and
understood,} grieved
many
newspapers,
has been the have said that it is an outrage thati

re. a

?v

was

r,T

g e

explanation of
those
among

irresponsible * Congressional
Committee
has I been> smearing!

the

him.

an

persons

His

wife

•.called

was

as

a

near

much

so

and

processes, the expansion of cause, of high
prices is the fact
existing industry, and the build-' that demand has outdistanced
pro¬
ing of new plants.
duction,
^T,
's.
TV
V
That progress
stopped dead in

.about;.
Americ a's

big

headache

,

today is "in-^
f J at Ion"

the. '30s.

—

"high

:

prices"

"the

—

cost

more

for

.

.

~

-

iChahmaah
widely known
-priations
Commitf.ee, "arid
of
Ttohihgton. nffjbial^nnd -;semi*t jChairman > John
>officia l-.5ir.cles, extended for some House
Appropriations Committee;
^^^oiithS. ;. ^0$"-y y;
against the -export of needed ma¬
.^yjljaiiy
T ;fhe shames "nowyap** terials to Russia. The fact is that
it

has

been

-

pearing.v.ltaVe-i long

been

widely

knownJ^-vWashingtonos suspects; 'ions, : by Slaw im
inasmuch aslhe^NevV Jfta^gj-and bills, sought to stop
hpulS

jury

ja 1 case

their

not

did-not mak^

or

v:)When

so-called

•

.In other words

i

.

*-

ihev

they

materials

were

'■

they

the tail end

shipments;

told

wore

the

-exports,

were

UNRRA; then they

bi-partisan foreign pol¬

icy.

they
lend-lease

into

ran

these

told

were

of

first

then

part of

were

were told

that

they
already

had

been oh order.

the

Morris

"big

,

■

Sayre
■;

-

j

business" that

-

debt

After-

better

jobs,

was:

best,

reached

record

deficit

our

the

that

came

na#

then

either.

bidding

trebled

finance

in

downright amazing to
torials

in

Eastern

certain

it

our

war

money supply
production, from

We

1945.

used

the

mon^

war

read

edi¬

would

respectable
that
this

newspapers

the

parading of a grand jury's pro¬
ceedings which did not indict, is
blot

a

and

on

democracy's

blow to

a

our

be

liberties.

Activities

ever since it
Martin Dies.

Commit¬

screams

innocent

men were

I

have

a

valid

indeed, of

or,

would

It

of "Liberals" that

one

openly

of

single

claim

one

who

ago,

enough,

fellow

issued
merce

several

a

spite

We

had

goods,. shot away

debt,

of

now

the

>

Coihmerce

control

com¬

we

December

study
Com¬

Department at the height

and

'46

to

the

direct

mechanical

men—as

ratio

strike

effect

of

that

energy

imthe;^tpductidri of

ers

processes and
worked

common

And
•of

the

for

credit io

the

sion

You
of

average, we plowed
one-fifth of that value into

back

friendlier

machines

into

Sayre

at

Conven¬

July

28,

Let's

an

econ¬

American

horse-

strip"emotions, pol¬

of

rela-

against

2,600,000 in 1940; 4,190,washing machines as against
1,550,000 in 1940; 1,200,000 elecIric ranges as against
only 450,000
000

iri

1940; and

the

so

whole

on

down

line—from

cleaners,

radios
automobiles;
:

and

through
vacuum

stoves

But good as that record
not enough!

is, it is

Today's higher wages and that
unprecedented '61 million people
at work have lifted
many

of families to
For

the

new

first

millions

scales of

living.
they"are in

time

the

market with money — real
money—to buy better cars, better
clothing and better food. That's
all to the good, too.
Take meat for instance.
From
to
1929
our
average
con¬

1920

sumption of meat
337 lbs.

As

prices are no more the
of
Inflation,
than
wet
are

the

cause

the

Department

said

a

of

rain!

of

Com¬

to

per

person

Gas

Much

130

of

lbs.

In

this

1947, it

increased

sumption is by people who
never

able to afford

before.

few days ago, a basic

In

other

(Continued

was

as

con¬

were

much meat

words,

we

32)

on page

Black Hills Power & Light
Company
Central Arizona Light & Power

Company

Company

Common Stock

as, a, heinous thing to ,be. happen¬
ing. in
this Country, when the
worker's employer should have
any

fire him
of

for\ inefficiency.

the. stories

got

The

one

of

those dubious journalistic awards

.enterprise

have to go

when

he

didn't

out of his office, and

the series has

been

printed in

is not selling..

these

-

by

her,

revelations

one

we

that

weren't
we

were

to

•

■'7

favoring

so

information

rapidly

growing

natural

Indiana Gas & Water Company

Company
Michigan Gas & Electric Company
Michigan Public Service Company

gas

producing and distributing system is
available to
cial

We

dealers

and other

finan¬

Minneapolis Gas Light Company
"Minnesota Power & Light Company

institutions.

hkve

stock

a

which

position
is

in

this

currently

Missouri

common

on

a

them, should be

at their

own

Central Illinois Electric & Gas Company
Gulf Public Service Company
>
Iowa Public Service Company
Lake Superior District Power

concerning

Utilities Company

Public Service Company of Indiana, Inc.
Sioux City Gas & Electric Company

$0.20

quarterly dividend basis.

defend

to do

made

Southwestern Public Service Company

risk.

-

Approximate Price—14^4

Tucson Gas Electric Light and Power
Company
Wisconsin Power & Light Company

Wm. S. Beeken Adds
WEST

Harry

R.

to

The

Financial,

PALM

Feger

*Prospectus Available

Chronicle)

BEACH, FLA.—
is

former, high govern¬ Beeken
Company,
ments official who fhas left his Building.




doing right

Britain. The "Liberals" who want

fSnprnn]

.

present

the Soviet Government be¬

lieve that

this

a

book, which, hearteningly enough,

there is

columnists, and always seeking to

decent/ set-up, been able make

in

to

writer

stir up strife with the
Washington

Pull detailed

with

Wm.

Comstock & Co.

ACAIXYN^COMPANY

CHICAGO 4, ILL.

S.

Guaranty

231

$o. LaSalle Sty

Dearborn 1501

Teletype,CG 955

-

*;

was.

From 1930 to 1939 it went

PUBLIC UTILITY COMMON STOCKS

Arkansas Western

to

155 lbs.

High

;cause
•streets

•j

year.

productivity
per
worker, when judged by the 1940
prewar figures, today's industrial
production is truly remarkable.
In 1947, for
example, we pro¬
duced
3,400,000 refrigerators as

ture and face the facts,
i

per

face

low

down

•

In

be

lively

the

in

even

itics, and prejudice out of the pic¬

merce

,

^

3%

But

related

what he had been
As I say, it is doubtful if it will
subjected to by- the government's ; be Tound: that
jtbe^peoplg:j-gKY-fe
^loyalty board" authorized by Soviet
Russian,
anything
that
Congress to ; get ..the
doubtful Roosevelt \ wasn't, eager^ i to^ vjgive
workers out of the .government.
them. But their intent was
plain'
This paper,
formerly known; as
and their mischief making
the leading Republican
ability
organ of
was unmistakable.
.the country, ran a
They were al¬
series. on this
andnymous worker's experiences ways planting, stuff calculated to

for

to

figure out the why o4
high prices! Let's use some good

.

and

have

to

isense.

the

on

expan¬

modernization.

don't

omist

ever-in-

an

pay

inventory, of

customers, and of

and

creasing production of goods, we
iold-fashioned
always:-saved something.
Every
year

was

credit. Veterans terminal

on

the increased cost of

products—

new

of

$12

billion

gbods—as in¬ spend accumulated savings to

together

value

loans

increased

$5

spent to the tune of $1V2 billion.
Business
has
been
forced
to

progressed because, out

total

bank

to

slightly. Consum¬
have bought $8 billion worth

good.

we

'47,
banks
which

'45

leave bonds have been cashed and

re¬

genuity and inventiveness brought
men

in the
steadily

has

declined

more

placed animal and human energy

.

Motors

in

of

supply

public

estate, (largely housing,)
$9 billion for business. Other

and

we
put power and tools and
better methods into the hands of

as

prepared the
by Henry Wallace's
General

progressed

the

for real

loans

We

when

From December

"member"

plateau

one

war

money

the

of

up¬

prosperity to another.

new

the

hands

billion

We progressed from

•

since the

set-backs .increased.

the development of new
term, wages could be increased by 25%
the' Washington without
any cost increase... It was
'-"An address by Mr.
bureau of the New York "Herald- i the
statement which, .after the
,Tribune," just as misguided, frus¬ strike settlement,, Henry said was the Lions' International
trated and psycopatbic
tion,:: New York City,
people are written
by
a
young
economic
1948.
always "running to the papers" student just
trying his hand out.

the

use

walked

Even

cycles.- But,

of

production is nearly
But Productivity
per worker—has gone

up ^ss than 10% in the past 10
years> when the historic
increase
the goods
has been about

government stopped increasing its
bonds and started to reduce its

as

man

who

the

of

"Left¬ "45

unnamed

an

downs.

output

equivalent

inflation.

ward.

were

prominently
mentioned, and who is. he, what
did he accomplish?
Why he is the

.

ist,"-to

of

mittee all that time.
Another
fellow

he had

hundred times that
they cite one
injustice. Not one has ever been
produced.*
' '
months

that

out

injustice, Department's export

that

unjustly hurt. I have asked
these -"Liberal" screamers a

..0-Amazingly,

turns

zal: member;

been
of

agency

mentioned. in
the
"soy" disclosures was an influen¬

being smeared,
one single

case

but

up,

prominently

yet to hear of

with

one

an

and

in

temporary
the ship¬ and even
major depressions,
fascinated moved
steadily onward and

became more indignant but
apparently powerless.

Notwithstanding the

"repeated

how

ana

would

:

72 % above 1939,

And,.. right there, is the basic
cause of today's
high prices, and

;

launched by

was

law

of the govern¬
ment
could
continue to get by
with this defiance of the
legisla¬
tive branch. Taber and Bridges

This writer has followed the
bombastic activities of the House

un-American

tightened

the

ments continued. I was
at

escutcheon

"

tee

indignantly sound off

provisions in

for

All industrial

but kept the money in circulation.

irrespective of the ica was a
synonym throughout the
merits, the shipments to Russia
world* for production, prosperity
continued.
Bridges
and
Taber
and-progress. True, we had ups

is

other

available.

Sure, we've got more than 61
people at: work toda^y.
And manufacturing production is
running 78% above the 1939 level.

-

circumstances

each

are

"brmtiniTDtess" money to ©av for
printing press
to pay for

.

the

pur¬

million

$40 billion in 1939 ,to $278 billion

exactly what we're
going- through today. We'vb got
a- hangover—a hangover from the
Federal spending spree we went
on.i'i the '30s, lured on by prom¬
ises of "something: for aabthing"

against

the goods that

$33 billion to $108 billion. We in¬
creased our national
debt from

that's

more

power than there is goods.
result is that consumers are

,

We

to

high, there is

chasing
The

disastrous

a

were
creating purchasing power
by government deficits, there was
little that consumers could spend

their money for. Even
now, with
civilian production at an all-time

or

war.

flushing out, : Regardless of how Congress and
"a
more
abundant
life"
being done by the Republicans, is might write the
law, at the in¬ without havirig^tp work for It.
being 1 applauded: iby:: thef
decent; stance of its appropriation com¬
For 60 years until
non-New Deal Democrats.
1929, Amer¬
mittees, and
Under

high .today because

are

'amount of money people have and

and

rich", taxes at their

tional

another binge.

on

Prices

na¬

gone;

staggering figure of $40 billion.

-We ought to know by now that
can't cure a hangover b,y go¬
.Arid

«i

for

financing until, in; 1939;

we

-

v

the production of goods and serv¬
ices has not kept pace with th.e

merrily into

•

hear from politThe favorite

we

prescription
of
the
economic
quacks-and the! leftists .witch doctorfrr-the! strait-j acket of controls

ing

gross

at their worst didn't foot the bill.
So we went

ical) medicine-men.

—won't help

*-

in the hands of men,

power

more

the

"prof¬

its',and

-^th^^vimr:appropriatibhs-

against them, of treason; cpaamit'ees
flushing out by Congress amount of

(sional committees —Senate and
House — is
undoubtedly political
but it, is just as
bi-partisan as the
so-called bi-partisanship of our

appropriation
these exports.

about.

our

ading; as "do-gooders," But "soak

ng£, chants

so

of

speqd, fax and spend" programs:
of New Deal collectivists
masquer¬

•

;investiga&bj^^

L

are willing to spend.
Production
grabbed by the tax collector. It.: isn't matching purchasing power.
wept to; finance the "tax and .During the war years, while we

four
being witness
times
before
And that;
the
mentioned^ •New. York grand jury.,
headache |
^
■
Carlisle Bargerom
who have had
It so happens : that. this - writer 2 a n 't
b e
■d',r 'S-Ah^y ;r.the:4iQnor<of:
charmed' xy.Lt
appearing before the grand ( jury;
by; dhe,..singnow

one-fifth

—

liv--

-

The

tional production that had
each year for new tools

high

of

ing.'.'

)

<■

•

Cause of High Prices

:

Incorporated

;

Chicago

NewYork

Boston'

Milwaukee

'

-Minneapolis'

Omaha

ate

&

COMMERCIAL

THE

(504)

8

FINANCIAL CHRONICLE

Secretary Snyder Upholds Credit Curbs;

I Sproul Gives Views on Credit Curbs

curbs

pressures.

all know, the trols, I am in favor of their res¬
production of toration.
"The most effective types of
goods during the war
As

expansion,
though main¬
taining that

curtailment

"our chief re¬

deferred

it

for
of

inary

control
f 1 at i

lies

judg¬

good

most

The

are

There

con¬

important single
extension

time

is

in

form

at

the

consumer

credit

consumer

out¬

important
shortages
of standing at the end of September
bankers in the
goods. But with production near reached an all-time peak of $11,capacity levels, purchasing power 400 000,000. At the end of 1945,
15,000 banks."
made available by consumer loans it amounted to only $6,600,000,000.
The text of
Prior
to
December
can be used only to bid up prices
1946,
total
S e C t e ta r y
John W.Snvder
of consumers' goods. It cannot call consumer loans outstanding at any
S n y d e r's
statement to the Committee fol¬ additional goods into-existence. It one time had never reached the
is imperative, therefore, that ef¬ $10,000,000,000 level.
lows:
indiv i dual

many

control

The

inflation

of

is

not

only one of the most important
domestic issues before the country

of vital

it is also

today,

icance to

signif¬

_

foreign policy for it

our

is well-known that influences of
certain groups are
an

depending

upon

economic collapse in this coun¬

try to further -their own aims.

President, ' in his message,
an
eight-point program

The

outlined

for

concerted

a

attack

the

0:1

problem of high prices. The Treas¬
urer Department is directly con¬
with

cerned

Titles

which

2910,

I and II

of

S.

deal,

respectively,
with the second and third points

President's
program —
the regulation of con¬

the
namely,

of

credit and

sumer

inflationary

the

control

of

credit..- -While
these two items are important in
bank

the anti-inflationary program,

We

must keep- in mind that they are
hut segments of the oyerrall prob¬
lem and must

be treated in their

relation to other dominant factors

bearing

of-living.
Title

_

would

point

implement
the

of

recommend

the

President's
as

that

follows:

consumer

credit controls be restored in
der

hold

to

credit."

down

v

,

During

the

and

war

the

im¬

mediate postwar: period, ^ the
tension of consumer credit
controlled

ex¬
was

by the Board of Gov¬

of

ernors

or¬

inflationary

the

Federal

Reserve

System, acting in accordance With
an

Executive Order of the Presi¬

ing gold

reserve

requirements of Reserve banks.

prepared

demand for our products from all
parts of the world. /
(2) The resultant of these forces
has been a wage-price or a pricewage spiral, whichever way yon

therefore
could

only

furnish
bare

"a

outline"

want to look at it.

of his personal

views

on

time of moderate controls

ent

on

restrain

demand, for

the

the extension of instalment credit,

goods until supply

which

the

has

total

At

accounted

increase

for

in

85%

of

consumer

point, Mr. Chairman, I
to quote from testi¬
mony which I gave to two com¬
mittees here last fall, only to in¬
would

like

"Money market interest rates
a small part of the total cost

of

Dealer-Broker Investment

credit, and changes

consumer

in such rates are almost powerless
to

limit its

extension.

It is

Recommendations and Literature

nec¬

to cover specifically by
dicate that I have from the be¬
regulation such matters as mini¬
ginning urged this type of legis¬ mum down payments and the
lation.
I am now quoting from maximum
periods
over
which
testimony given before the House payments may be spread on in¬
Committee

last

fall,

and

before

essary

stalment purchases

It is understood that the

goods in order tp restrain this
"An t i - inflationary
measures type of inflationary credit."
which may b«etaken in the^mone¬
Title II of S. 2910 would im¬
tary field «re of course but a
plement the third point in the
segment of the^ wltole ^prbgraini, President's
message.
This point

send interested

to

of consumers'

the Joint Economic Committee:

and

firms mentioned will be pleased
parties the following literature:

Balancing the Investment Port¬

Dillon

folio—Analysis—Eastman,

1 ti

authority

control
consumer
Senate passed a bill

powers

17, to extend the author¬
ity of the Board of Governors to

"The

credit.

The

Dec.

March 15, 1949, but the House of

Representatives has not yet taken
action.

1 believe that it is urgent

in the national welfare that
sumer

con¬

credit control legislation be

enacted

as

soon

possible.

as

Total consumer Credit outstand¬
ing at the end of May reached an

ail-time
This is

peak

of

$13,800,000,000.

increase of $1,750,000,i090 since the expiration of Con¬
trol

an

legislation

on

Nov.

1

of

last

year.
i

The increased use of
credit in a period of

consumer

inflationary

pressures

can

only

add

to




those

to

n

t

a

t y

are

necessary,

Certain

however,

fortify the voluntary efforts.
President

has

suggested
that consideration be given to the
following
monetary
measures:

the

good

preferred and common
stocks for capital gain, Common
Stocks for Investment, a leaflet of

Quarterly comparison of 19 stock*
—Laird, Bissell & Meeds, j 12®

teresting

High-Risers— List of
stocks
j udgment- of the indi- ! which have advanced percentage¬
15,000 banks; wise more thanrtwice as fast as the

vidual bankers in the
in

the United States.

of

Governors of the

The Board;

the

Federal

Re¬

the

Federal

De¬
and

that Consumer Credit Con¬ the Executive Committee of the
trols should be restored and some National
Association
of
Super-,
restraint should be placed on in¬ visors of State Banks, represehtflationary bankCredit; two, Legis-1 ing the Federal and State super¬
lation should be provided to pre¬ visory
authorities,
have urged
vent excessive speculation on the bankers to confine the extension
Commodity Exchanges; three, in¬ of bank credit under existing
tensified activity in the sale of conditions, as far as possible, to
loans that would help production,
savings bonds.
...

'Restoration of
Controls'

and

rather than increase consumer de¬
mands.

should

discussed by

to

ficials. As to

consumer

credit

con¬

The

been

have

'Restraint
on
Inflationary bank
Credit,' these matters have been

Federal Reserve of¬

Wall

System, the Comptroller of.

Currency,

posit Insurance Corporation,

one,

"As to item one;
Consumer
Credit

averages^-Cohu & Co., 1
Street, New York 5, N. Y.
,

serve

banks, in general,
most
cooperative.
I

like to

commend

take

their

(Continued

this

occasion

public

on page

spirit,

34)

of Philip Morris and Sharp 8s
and a list of 39 Growth

Dohme;

Co., 15 Broad Street, New York
5, N. Y.
Also- available are lists of in¬

c^iief reliance for the" control of;
Intensified inflationary bank credit lies
in;

restraint.

yses

Stocks.

&

consumers

to hold prices down.
efforts^ will be, continued to obtain
v o

on

to

are

scarce

form

this

Federal agency has had statutory

to

we

Approaches de¬

not, by any means, solve reads as follows: "I recommend
dent, issued pursuant to.the Trad¬
the problem alone. - But /such steps
that the Federal Reserve Board
ing with the Enemy Act. Ifi June
as can be taken when related to
Rail hews,' and analyses; of Beth¬
1947,
President
Truman
be .given greater authority; to reg-?*
quite
those in other fields will of course
ulate' inflationary * bank : credit?' lehem Steel Corporation and Mor¬
properly stated that he did not be
helpful in the overall solution. The
ris- Plan Corporation of America.
consider that he would be justi¬
expansion of bank credit,
"The President is greatly dis¬
fied in continuing the control of
except in the fields of consumer
turbed in regard to price infla¬
City of Philadelphia Bonds—
consumer credit longer under the
and real estate financing, has not,
tion. which threatens our -whole
Valuation and appraisal—-Stroud
in my opinion, been, a major con¬
authority of legislation applicable
& Company, Inc., 123 South'Broad
aconbrhic structure, and he is con¬
primarily to a wartime
emer¬
tributing force to present infla¬
vinced that the Congress is equally
Street, Philadelphia 9, Pa. *. , ,/
tionary pressures. We nftust, how¬
gency, and recommended that concerned.
Also- available* are a valuation
Congress pass specific legislation
ever* attack the problem of infla¬
and appraisal* of^Railroad Equip¬
"The President has laid special tion on all fronts.
authorizing such control. Congress
ment Certificates and price-earn¬
acted on this recommendation last emphasis on voluntary actions on
As this
Committee- knows, -1 ■
ings ratios and yields on 123 Pub¬
summer, but the legislation then the part of businessmen, labor have always believed that
our| lic Utility /Common stocks.
enacted extended the
leaders, farmers,
-

If

about

mand.

and could

authority of
the Board of Governors only to
Nov. 1,. 1947. Since that date, no

serious

be

the

>

,

which reads

message,

the cost-

on

i

stopping this
dangerous trend, instead of mak¬
banking and
ing gestures, which will merely
credit sections
give the appearance of having
of the bill be¬
done
something about inflation,
fore the Com¬
we
should
be concentrating
on
"This increased use of consumer
forts be made to restrain the de¬
mittee. These
business and labor policies which;
mand for scarce goods until sup¬ credit in the present period of
views were
determine price-cost relationships
inflationary pressures can
only
ply approaches demand.
expressed
b.y
—that is, on industrial pricing and
It has been urged that the vol¬ add to those pressures. As we all
Allan Sproul
Mr. Sproul as
wage settlements—and on govern¬
ume
of consumer credit, despite know, the curtailment of the pro¬
follows:
ment policies with respect to th~
its unprecederitedly high level, is duction of consumer goods during
(1) First, I want to emphasize prices of farm products and the
lower in proportion to incomes the war period gave rise to a tre¬
the view I hold that the expansion Federal budget.
Throughout the
deferred
demand
for
than was the case immediately mendous
of bank credit since the end of the postwar period there has been a
before the war. This is true, but such goods. As we all know, de¬
not
unreasonable
war has not been a major element
presumption
I do not consider that it is rele¬ spite the fact that industrial pro¬
in the inflationary pressures which that, if we could have restraint
vant to the immediate problem. duction during 1947 has reached
have been generated in our' econ¬ in these areas, and no undue ex¬
The relevant question now is not the highest level
ever attained
omy.
Some of that expansion of pansion of credit* we. might work
how much consumer credit the during peacetime, we have
not
credit was necessary and the rest out of our difficult situation with
country can bear, but how little yet been able to produce enough
played a minor part in creating modest strains, without a major
it can do with, since at the pres¬ goods to satisfy this deferred de¬
existing
inflationary
pressures. check to productive processes, andf
ent time, any addition to con¬ mand. There still exist many im¬
The
present inflationary move¬ without inflation getting out of
sumer credit adds
to the already portant shortages of goods.
But
ment received its main impetus hand.
production
nearv
capacity
strong
pressure
of inflationary with
from sharply rising food prices,
(3) This, of course, is a matter
forces.
I submit, therefore, that levels,
purchasing power made
from a first, second and third of judgment.
If you believe, as
an
expansion of consumer credit available by consumer loans can
round of wage increases, and from some do, however, that we cannot
of the magnitude which has oc¬ be used only to bdii up prices of
a high level of capital expendi¬ risk
waiting for this relatively
curred since Nov. 1 is not in the consumers' goods£
wtq purchase
tures, all operating against the happy outcome; that something
oational interest, and that it jus¬ more
goods.
It vis imperative,
background of wartime deferred must be done now to prevent a
tifies the reimposition at the pres¬ therefore, that efforts be made to
demands and accumulated liquid
(Continued on page 38) ;

credit since Nov. 1.

r

I

second
"I

directly

more

-:,5:

Allan Sproul, President of the Federal Reserve Bank of New
York, appeared on Aug. 3 before the Senate Banking and Currency
Committee to give his views on
proposed anti-inflation credit curbs.
Mr. Sproul, who had
just returned from a vacation, stated he was
unable to give ;
<£
:
—
a
carefully
funds of our people, and the heavy

statement, and

"Total

still

are

are

pressures.

credit

during

deferred demand.

the

of

ment

goods.

those which
strike at the individual forms of
control

credit

peacetime, of such
we have not yet been able to pro¬
present
duce enough goods to satisfy this credit.
attained

ever

the

in

such

for

has reached the highest level

war

credit

bank

demand

tremendous

a

''n?'v''•*• *'

•••'♦!:

to be lowered and support of government bond
prices abandoned, all of which result in lower production and em¬
ployment. Says increased^ reserves, if required, should be applieable to non-member as well as member banks. Sees no need of rais-v

we

And, despite the fact that indus¬ credit extension which
trial production since the end of tributing to inflationary

the

o n

liance

consumer

%' X'4'.

.

public would, have

of the

period gave rise to

\

than those proposed should be used if a break in vicious circle
of wages and prices is
required. Holds money income of consuming

~

1

cred¬

on

>•..*

.■'>

"'w

year.

Secretary of the Treasury John W. Snyder appeared before the Senate Banking and
Currency Committee on July 30 and gave his full support to President Truman's proposals
for further

h■

President of New York Federal Reserve Bank denies present credit r
expansion; is serious inflationary force, and says more drastic meas-rI

Banking and Currency Committee, Treasury Secretary, though extolling volun¬
tary action in curbing credit inflation by bankers, urges measures proposed by President giving Federal
Reserve further pow2rs.
Denies rift with Federal Reserve Board and points to unlikelihood of Treasury

surplus in coming

\'t\' v\-..•'A' -1'":'

.f,);;:1,;...

In statement to Senate

y

Thursday, August 5, 1948

,

"

New

York

City

Bank

Stocks-

Broadway; New York 5, N. Y;

-

Public

Utility 'Operating Com¬
panies—Analysis of outlook for
listed

common

stocks—Ira

Haupt

&

Co., Ill Broadway, New York
City 6, N. Y.
Railroad Developments—Leaf-*

let—Vilas

&
Hickey,
49
Street, New-York 5, N. Y.

Wall

Railroad Equipment Industry

—«

Analysis—Hirsch & Co., 25 Broacl
Street, New York 4, N. Y.
Railroad Industry—Analysis

of
Working capital position
in "Fortnightly Investment Let-ter"—H. Hentz & Co., 60 Beaver
Debt and

Street, New York 4, N. Y.
Insurance Stocks: Present Posi¬

tion

and

Prospects — Analytical

In

the

same

issue

are

data ant.

Water Company Bonds, Contineu- '

discussion—Geyer & Co., Inc., 67

tal Baking Co., Jamestown, Frank¬

New York 5, N. Y.

lin & Clearfield, and new Louis¬

Wall Street,

ville & Nashville 1st reg. 3 %s.
Insurance Stock

Prices—Discus¬

sion—Dempsey-Tegeler & Co., 210
West Seventh Street, Los Angeles

14, Calif.

Railroad Outlook — Analysis ~
Smith, Barney & Co., 14 Wall St.,
New York

5, N. Y.

Also available is

Market—Discussion
and European

of

outlook

situation in "Forth-

nightly Market and Business Sur¬
vey"—E. F. Hutton ■ & Co., 61
Broadway, New York 6, N. Y.
In the same issue is a compari¬
son of 8 leading Rails; brief anal¬

a

special study

of Atchison, Topeka &

Santa Fe

Railway Company.

Television—Analysis of outlook
-William R. Staats Co., 640 South
;

:

(Continued

on

page 42)

.

Volume 168

Number 4722

,

THE

COMMERCIAL

&

FINANCIAL CHRONICLE

ing the

In "Special Event" radio broadcast Federal Reserve
System Governor gives data on prices, production,
credit and foreign loans. Says efforts should be made to check a
boom that will bring about a dis-'

S, Szymczak,
with

the

Govern¬

tary

ment for Ger¬
many, discuss¬
ed "Our Pres¬
ent

Economic

Situation"

i

rises

to

be

the

More; money in
the
bank, more cash in their pockets,
and more Government bonds. The

bought.

total

amount

of

these

and corporations at the end of the

that people saved out of their in¬

war

Ra¬

over

Detroit,

Mich.,

on

July

31.

comes

increased very greatly dur¬

ing the

war

as

before the

as

war.

was borrowed from the
The Government paid the
out for war equipment, and

i.i

as a

Question:

result of this

these

And

liquid assets

where

received

curtailment

There

diately

after. the

reached

in

a

the

a

war

In June

did

come from?

all

as

I

m

•

during

the

able to pay high
sary

for

what

prices if

they

mar¬

were

haye

neces¬

wanted

At

—

This

risen

marked

ques¬

hourly

less

than

resistance
on

tions

put
to
Governor

Szymczak and his replies follow:
i
question: Governor, I think the
economic
the

problem

minds

of

uppermost

us

why prices

what

the

might

come

are

chances

Answer:

in

of us is the
Can you tell
so high?
And

many

high cost of living.

that

are

down after

That

is

they

while?

a

long story.

a

Even

so, I think we might first
take a look at how
high the cost
of living is now.

According to the

Bureau

of

(which

is

Labor Statistics index
to be used to adjust

rates

wage

under

the

Gen¬

new

eral

Motors-United
Automobile
Workers contract), consumer
prices

in May were 70% higher
than in 1939 and 9%
higher than

a

year ago.
it

&

Question: Wasn't there a sharp
drop in grain prices early this
year?

<

Answer: Yes, but it did not
help
cost of living much.
Food

the

prices

they

dipped
are

temporarily,

now

but

somewhat

above
clothing

their

January peak and
prices have risen further. So have
rents, but in comparison with 1939
levels rents
while

are

food

up

less than 20%

and

double what they

clothing

are

before the

were

war.
*

Question:

*

Governor

Szymczak,

what about meat prices?

Answer: They have risen con¬
siderably in the past few months
and

are

than
two

a

about

now

year

and

a

ago

half

20%

and

higher
than

more

times the prewar

level.
:|:

tjt

Question: You said that since a
ago the total cost of living
has risen 9%.
Have any items
year

down?

come

Answer:

Reductions

in

retail

prices have been few and far be¬
Radios and vacuum clean¬

tween.
ers

cheaper than they were a
Some textiles and mis¬

are

year ago.

cellaneous

products
been reduced.
*

*

Question: That
facts

have
*

.

can

the

own

rience.

Answer:

Chiefly the

TINENTAL BUS SYSTEM, INC. directs the

operations of

network,

routes throughout

far-flung carrier
as

the

a

comprising

result

vast intercity transportation
more

than

the West and

came

of

a

into

merger

22,000

being early
of

miles

Southwest.

this

Continental

of

This

over a

TINENTAL
southwest

supply

of the

Trailways

SYSTEM

extends

totaled
gross

Bus

System.

fourteen-state area, TRANSCON¬

BUS
from

National

Scheduled

operations

revenues

3,500 people

tinental'S
passenger

cars

over

over

through

Kansas

fleet
and

$21,000,000.

us

war.

in

1947

Combined
More

than

of approximately

1,000 buses,

maintenance vehicles.

Evidencing its faith in the continued growth and
of

its

territory/

and

City,

routes

miles.,

required to operate TRANSCON-

NENTAL is carrying out

Chicago

these

70,000,000

were

are

development
west

than

more

year

System, Dixie Trailways and Santa Fe Trailway$,
all members

Amarillo and Denver; and from Dallas to
Shreve-,

port, Hot Springs, Oklahoma City and Tulsa.

program

which

will

an

TRANSCONTI¬

equipment replacement

place

the

expe¬

Denver, Albuquerque, Flagstaff, Los Angeles and

what

into San Francisco; from Corpus Christi and Hous¬

of

ton

Now, can you tell
these high prices?

caused

FROM headquarters in Dallas, TRANSCON¬

Operating

.

living;

plenty of housewives
details from their

also

the main

covers

the present cost of

on

Linking Texas with Chicago and the West Coast

*

company

in

the

continental carrier in the nation.

on

Dur¬

the Texas Gulf Coast to Dallas, Fort Worth,

enviable position of having the largest percentage
new

bus equipment in operation

of any trans¬

ing that period

a great deal of the
productive resources was

world's

This Is another advertisement in the series published
for more than 10

diverted to

war purposes.
In this
at the peak of the war
two^-fifths of all production

table Securities

country,
over
was

for

war

uses.

Abroad,

years

by Equi¬

Corporation featuring outstanding industrial and commercial

concerns

tn the Southern states.

economic

fac¬

Equitable will welcome opportunities to contribute to the further

development of the South by

supplying

capital funds

to

sound

enterprises.

tories were destroyed and trade
was
disrupted to an extent not
readily appreciated by those of us
living at a distance from the
of actual warfare.

scenes

'.a
•

"

*

'

>

DALLAS
KNOXVILLE

p

.r

NASHVILLE

BIRM INGHAM

Question: So that for

period
of five or six years
production for
civilians was low and
supplies of

"consumer

a

ORLEANS

MEMPHIS

goods were reduced?

-

Answer: Yes, and at'the
r
6.7
•• *
v

'-i

■>

time incomes the world

expanded

people

•

.

*

being paid for

«

AND

Corporation

JACKSON. MISS.

:

same

over were




CHATTANOOGA

w.

tremendously because

were

YORK

HARTFORD

G REENSBORO

Securities

BROWNLEE O. CURREY, President. '

'

'is

jVJ

•

NEW
v

NEW

Juiallil JLAlP I

pro-

322 UNION STREET,

NASHVILLE 3, TENN.

TWO WALL STREET,

•

Xv>

'

'

have

NEW YORK 5, N. Y.

earnings

double

spring

(Continued

ur¬

-<'v

much

manufacturing

average
more
than

levels.

they

war

How

plants
are

•

* /'* v.;

\

Answer

when

war,

even

risen?

wages

ge.t it, is that people accumulated
money

and

employment

:.7-

:

Question:

point,

program.

new

•

j
main

spite of the

war

record and wage
rates have advanced further.
V-',

record

supply of purchasing power.

Question: The

in¬

continued

plenty of jobs imme¬

rnpre now.

resulted

current

war in

of

were

ment

bonds

of

out

which generally

high after the

sion in these funds and increased

ket. Then after the

sj:

lars

comes

expan¬

many goods were not on the

period.

Question: And

The

great

than three times

more

up

so-called

"liquid assets" held by individuals

was

Answer: Yes, people could back
their wishes with more dollars

was

holdings of redeemable Govern¬

Answer:

limited by con¬

were

in

more money
bank after the war?

trols. In this country the amount

WJR,

Szymczak

Price

goods

had^

Se-

dio Station

S.

were

people

broad¬

Events

ries,"
cast

there

n

"Special

a

or

ducing munitions and waging war.
The increased incomes were
part¬
ly taken away by government
taxes but people still had much
more
money to buy goods than

amount

money was deposited in banks
held as currency. The

A- <$>-

Mili-

remaining

borrowed. Some of this amount than
ever before—dollars accumu¬
was borrowed from
savings and lated
during the war and also dol¬
the rest

a

merican

financed by taxes

war was

the

banks.
Governor of the Federal Reserve Board for 15
years, with experi¬
money
abroad in 1944 for the Foreign Economic Administration
and again in 1946 and 1947 the

ence

M.

and

bust.

astrous

M.

9

Answer; Less than half of the gently: in the
way of food, auto¬
Government's expenditures dur¬
mobiles, and houses. Is that right?

The Economic! Situation *

•

(505)

prewar

wage

rates

before

as

developed
page 34)

in

&

COMMERCIAL

THE

(506)

10

i

Maryland Drydock,
l'*&•': *•'5;* 'A

•

..'-/V'

PITTSBURGH—Philadelphia Company, subsidiary of Standard
Electric Co., and in turn a holding company of gas, electric
and traction properties in the Pittsburgh area, has filed a petition
new business is in active1 pros*
asking the Circuit Court of Appeals in Washington to set aside a
pect for public works, utilities
Securities & Exchange Commis--^
—
;—~~
and many types of private works,
pion order of June 1 to liquidate
Railways underliers, Citizens
"The. lime' products - operations
Tractions Company
and Alle¬
and dissolve. The company's peti
ofccmpnhy; whiclr presently
gheny Traction Company, may
Gas &

Available)

(Prospectus

buckley securities

WHitehall 3-7253

FEnnypacker S-5976
Private

New York 5

"v

Wire System .between

and .Los- Angeles

Philadelphia, New York

did

tion

44 Wall Street

r

Philadelphia 2

for

ask

not

a

hearing,

which, according to a clerk of the
court, could have been ordered
by
the
Federal judges
"right
away" if it had been requested.

The company's petition avers
the
petitioners "are in-

J

f Philadelphia
Bank & Insurance

h

f to

i

2

Street, Philadelphia

Locust 7-1477

New- Bridge

Proposed

jM< purchase-. 500,000 shares of'
President Baldwin Locomotive Works' au¬
of Knappen Engineering Co., re¬ thorized - but
unissued common1
tained; by the Delaware River stock at a price of $15.11 a share.
Proceeds of the sale, about $7,- ;
Joint Commission and- the States
P. T; C. Cuts Lossesbf. Pennsylvania? and New- Jersey 555,000, will probably be used by.
PHILADELPHIA — Reflecting
Theodcre-T. Knappen,

-

_

•

!

higher

of

effect

denying

March 21,

Teletype PH 257.C'

•

'

.

.

,

York Phone
WHitehall 4-2400
New

Phone

Baldwin-Westinghouse

■

H.

Chestnut

serve

| to public holders.

oppressed and deprived
the terms of
order." The petition also
/ the court to review an

J SEC order of June 30

! 3*6s 2039, Pfd. & Common
N. NASH & CO.
1421

per

to make an over-all survey of port paldwin- to reduce or pay off its'
fares authorized
approximately $6 million of* bank
Philadelphia Transpor¬ requirements, will recommend the
construction of a new $43 million loans, the balance being avail- the company the right to intro¬
tation Company reports a profit
able for "additional working cap¬
duce^ additional evidence.. .The
of $313,944 in the second' quarter bridge across the Delaware from
South Philadelphia to Gloucester, ital.
company furthermore wants the
compared with a loss of $533,082
Charles G. Brinley, Chairman
commission to consider further
in the first three months.
T*he six New Jersey.
This was announced last week of Baldwin, and Gwilym A. Price,'
the company's voluntary plan of
months period shows a net loss
at a meeting of' the Tfaffic and President of Westinghouse, in a
of $219,138.
reorganization.
Transportation
Council of
the joint statement, said:
A spokesman for the SEC stated
The company statement breads:
Philadelphia Chamber of Com¬
"For
many
years,
Westing"The new rates of fare are pro¬
that a
number .of steps in the
merce.
I
house and Baldwin have collabducing close to the anticipated
company plan
had already re¬
"Traffic studies,'' Mr. Knap¬
orated closely in the-develop¬
ceived
SEC approvaland
had
10% increase in revenue; but
ment
and
design
of various
pen said, ."have
shown that a
been or. were being put into effect.
they are providing only for the
long*proposed Minnel under the
types of railroad
locomotives.
minimum
costs
of
carefully
Steps which have not been acted
river between Hog Island and
The
acquisition
by Westingscheduled and
efficiently op¬
upon by the commission are the
hoiuse of a substantial but miPdulsboro, N. J.1 would not be
erated service, leaving little or
recapitalization of Pittsburgh &
commercially feasible—at least
j nority common stock interest in
West Virginia Gas Co. and Ken¬
no
margin for return to stock¬
net' at this time.
On the other
Baldwin is a natural step which
holders
and. future
improve¬
tucky-West Virginia Gas Co. and
should materially benefit both
hand, a new bridge would han¬
the reorganization of Pittsburgh
ments."
dle about 1 million automobiles
companies
through
the
Expenses, the company says, ,
Railways Co. which is in progress
and 144,000 buses a year. With
strengthening of the coopera¬

f asks

Philadelphia Transportation Co.

IPhila.

$2.68

.

PHILADELPHIA — It Whs an¬
nounced last week that Westinghouse- Electric Corp. has arranged

operating at capacity.'

^iales, are

extending responsibility in mat¬
ters which might be prejudicial:

of legal rights by

j the

Stocks

1

share.

common

Constitute about one-third of total

two

disinterested trustees
withr Mr. George; thus

additional

jured,

j

to' appoint

court

the

ask

that
'

•

to

equivalent

was

Net

increase of 16

an

year,

•

corporation
1420 Walnut St.

*

I

>".

'•

Organization, Inc.

Kent Moore

i

Corporate News ana Notes

;;

\ (Reports on Request) '

'

.

'•'V* vv•'V-s

/.

•,

■

its history

Wilming¬ and that further gains in all di¬
visions^ are A in"1' prospect for the
ton markets, is in a strong posi¬
remainder of the year.
tion. Undelivered contracts for
this commodity as of" July 1/
Sales
of. $65,956,000n in thq
1948;
are
over
double* the"
second quarter brought the six
amount of sucht contracts at any
months
total
to
$124,617,000,
preceding midyear," and- much
compared with- $107i941,BOO last
ton, Philadelphia and

Pennsylvania Brevities

& Light Co*

in

months

six

active

concrete, in the Tren¬

tral-mix

Puget Sound Power.

Thursday,: Augiistf 5* 1948

FINANCIAL CHRONICLE

.

i

_

f.

Phenolics

American

Pfds.

Botany Mills Com. &
Camden Forge

in

Dayton Malleable Iron

the

Gisholt Machine

The Stumbling

Trecker

Kearney &

Analysts

Stromberg-Carlson
Vinco

are

/

Block

timate

agreed that the

week
are being felt in the form of a
marked drop in Saturday riding.

Telephone

PH 73

RIttenhouse 6-3717

ers
"

Pittsburgh Hotels 5-1967

Issues

4V2

Common

South Jersey Gas

'

Samuel K, Phillips & Co.
Philadelphia 2

Packard BIdg.,

N. Y. Phone
COrtlandt 7-6814

Teletype
PH

Exchange

Stock

Philadelphia

members

375

of

Atlantic City

Phila. Elec.

stockholders,

to

Company, * producers and
distributors of sand, gravel, cen¬
Warner

misfeasance

and

on

and joins

;•
Subsidiaries Take Action

'

It is reported that

of

the boards

two

Pittsburgh

directors

of

ceeded

only

are now
larger volume

York

Available Publications

•

y

,

;

Valuation^ and Appraisal

.

RAILROAD EQUIPMENT
■*""

;

'

*

'

*4'

•'

•

*

'•

f

,

'il

:

.4

t. •.

y-;

,

CERTIFICATES
t

^

v';

.

_

y':'

Philadelphia 2

Valuation and

Chicago

Boston

Appraisal

Francisco

San

Drexel & Co.,
- &
Co., Blyth i
and First Boston Corp.,

Co.

Ingen

offer
$134
million
Pennsylvania
Turnpike
Commission obliga¬

as

joint

will

managers,

will

i

be

outstanding
2^>s, and balance, term bonds to
presently

finance

the

construction of the

100-mile extension of the

pike from Carlisle to

Turn¬

Philadel¬

phia.

Water, Water,

Everywhere

Price-Earnings Ratios and Yields
123 Public

Western Pennsylvania

on

?

#

CHAPLIN

and

Utility Common Stocks.
'■

■

...

' \,

i

Copies

.

on

COMPANY

A

New York Curb Exch. (Assoc.)

PITTSBURGH 22, PA.
Grant 3900
Bell

t

;

61 Broadway
NEW YORK, N. T.

PHILADELPHIA 9, PA.

.

Bowling Green 9-3987

System Teletype—PG 473




Request

■

as

Assistant

He

Manager.

formerly
with
B.
V.
was

Christie &

the

in

Co.

<*nrn

orate

tr a d i ng de¬

A.

Gordon

Crockett

y

PEnnypacker-5-7330

Allentown

Pittsburgh

—

After

cents.

>

declaration of 25
Accumulations on
the

preferred stock were cleared up
a year ago and the company has
been' engaged ih a program of

WOrth 4-8400 - y
Lancaster "
Scranton
;

outstanding senior

Joins

Gordon Graves & Go.
Gordon- Graves & Co., 30

Broad

Street, New York City, announce
that Howard W. Knepple is

now

associated with' them as manager

Philco First
William

has

Half

Balderston,

President

reports that com*
completed the
most

of Philco Corp:,
nanv

Democratic National

Howard Knepple

of

p, ,;} 120 BROADWAY
NEW YORK 5, N. Y.

the

a

by

reducing the

of

Committee.

issue.

Incorporated

J23 SO. BROAD STREET

PHILADELPHIA

idends

t

ff

STROUD & COMPANY

Members

10th Floor, Peoples Bk. BIdg.

•

CityJ

Pitts. Stock Exch.

e w

Exchange,

man

•>'

lapse of 17 years, Lit Brothers
has resumed common stock div¬

'

Issues

N. Y. Stock Exch.

N

Stock

Pa;,' Commonwealth Providence, Rhode Island. Col,
Commonwealth Water Proffitt following his service inv
& Light Co., East St. Louis & In4
the
Treasury ..Department
at
terurbaii Water 'Co., . Greenwich
Washington has specialized for the
Water,
System,
Joplin
Water
past ten years in the arbitraging
Works Co.y Kokomo Water Works of U. S. Government bonds for
Co., Marion Water Co., Mononga- banks in New York City and
hela': Valley
Water Co., Pennai State.
State Water Corp., Peoria Water
Honorary degrees were awarded
Works
Co.,
Richmond Water at the same time to Hon. Wi
Works Corp.,
St. Joseph Water Stuart
Symington, Secretary of
Co., South Pittsburgh Water Co: the Air Force, and U. S. Senator
and Terre Haute
Water Works
J. Howard McGrath, now Chair¬
V

Trading Department Active in

Wire to New York

the

Col. E. J. W. PtoffiH

The

Lit Brothers Resumes

Direct

Build¬

partment.

Corp.

CITY OF PHILADELPHIA BONDS

:

n y,

members

York

$47 million
serials to refund $45,-

086,000

p*a

Gulf

of

total,

the

Of

&

Shields
Com

ing,

tions, the largest revenue bond
financing ever to come to mar¬
ket.

asso¬

with

ciated

11,

Aug.
Van

Gordon

uas

Receives Hot. D.Sc.

-

*

New

become

Ji

TEX.—A.

HOUSTON,

Washington,

PEnnypacker 5-0100
1528 Walnut St.,

Shields&Co., Houston

to

Water Co.,

E. H. Rollins & Sons
Incorporated

approach

bridge.

Turnpike Financing

resulting

Com.

by prospectus

Bought—Sold—Quoted

A.Gordon CrockettWith

at

pro¬

FidelityrPhiladelphia Trust
from the
of busi¬ Co., Philadelphia, has been ap¬
ness
being
handled.
Further pointed principal transfer agent
benefits from these improvements and dividend disbursing agent for
Colonel Edward J. W. Proffitt
should be in evidence in the re* common stock of American Water has been awarded the honorary
Works Co. and for all the pre*
suits for the latter half of this
degree*^ of Doctor of Science in
ferred
stocks
of the
following Business Administration from his
yejar and thereafter.
companies: Citizens Water Co. of Alma Mater, Bryant College, of
"Our principal product, cen¬
earnings

ing

Roberts & Mander Common
*Offered

terminal

Crockett

expansion
have pro¬
satisfactorily and increas¬

Co. Common

Richmond Cedar Wks.

Philadelphia

new

in the

recom¬

$33 mil¬

a

existed

past."

and

tion

part of Philadelphia Company
in the petition filed by
the SEC in June in asking for the
removal
of
W.
D.
George ,as
trustee
of
Pittsburgh Railways

the

Merchants
Nor.

semi¬

that Phil¬
tral-mix concrete and lime prod¬
adelphia Company has continu- '
ucts, reports gross sales of $6,749,ously opetatedU Pittsburgh Rail¬
305 compared with $5,422,914 for
ways system
as a department
the similar period last year. Earn¬
for the profit of Philadelphia
ings per share were $1.62 com¬
Company and to the loss and
pared with $1.37.,
injury of the public holders.
Charles Warner,
Chairman of
The 25-page petition, filed on
the board, states, "Our large cap¬
July 14; sets forth alleged acts of ital outlays for plant moderniza¬
malfeasance

the

&

Earnings Up

report

annual

posed

On

a

also

Greenwich Point, below the

B.

In

marine

super

>

he

construtcioo of

has

which

tion

profit."

to

#

—

said

Knappen
mends
lion

30 icents, the

could operate at a

span

demanded by

as

.H

Warner

bankruptcy

lares

lower

the toll set at 25 to

of civic groups.

PHILADELPHIA

system securities aver

Elec. Com.

Distilling Com.
Ind. Pub. Serv. Com.

number

*

public hold¬
Pittsburgh Railways Co.

Co.
*

children,

school
a

grant

to

pany

court in Pittsburgh,

1500 Walnut St. 6-1950

Lehigh Valley RR. Annuity

,

In proceed¬

ings now before the

Cambridge BIdg. 3s 1953

Phila. Transportation

Spokesmen for the P. T. C. say
that it is impozsibte for the com¬

plan of refinancing, re¬

present contention.

effect of the five-day

the

Philadelphia Company's
remaining debt and preferred
stock issues. The reorganization
of Pittsburgh Railways Co., a
wholly-owned
subsidiary, and
its 41 underliers, .is a matter of

BIdg. Phila. 2
" Teletype

Stock Exchange

supplies
It notes that

repair parts.

and

funding

PHILADELPHIA OFFICE

rates and ris¬

wage

ing costs of materials,

problem presenting no impor¬
tant difficulties; nor is the ul¬

Byllesby & Come any

higher

of

„

H. M.

continuing to climb because

are

recapitalization of the gas prop¬
erty subsidiaries is a technical

Corp.

Warner Co.

brankruptcy court.

the

municipal

bond

depart¬

ment. Mr. Knepple was. formerly
manager

s

of the trading

ment and Cashier for J. A.
Co.

depar^
Ritchiq

168 4 Number 4722

Volume

k

-S^E

y:::;

:

..V'-c-W-'MW'."■'%[''

?COMMERCIAL & FINANCIAL CHRONICLE
modities,

Basic Terms and

(507)

Objectives of EGA

By PAUL G. HOFFMAN*

!

.

Administrator, Economic Cooperation Administration

but would

programs

for action in such fields

take

j

also

include

as" monetary and fiscal policies
and trade policies where govern*
ments

j

European Economic Co-

Mr. Hoffman outlines to Organization for

and

governments

-action." In

programs

for

only

of

the

ments

ices

coun¬

in the

direction of making

the movement of goods, serv¬

can

addition "to

each

tries, the OEEC should have a
four-year plan of action of its own
calling for specific accomplish¬

and

tions.

peoples- among

I would

operation factors in essential pbKcies of European Recovety Pro*, -j
gram. ^Says cooperation pledge of participating.ipuropean nations
j
must be fulfilled 'and programs niiist be developed to conform io ;
fundamental readjustments required in national economies.

the

na¬

year program

of action

supplemented
programs

so

by

would be

four

that

one-year
the end of

at

each year progress could be meas¬

ured.

the

hope that the four-

The

steps in

measures

the

which

(Continued

on

are

page

program,

planned

14) 're¬

I am happy to have this opportunity to meet you today. The Or¬
ganization for European Economic Cooperation has been in existence
now
for approximately three months, and our American Economic
Cooperation Administration for a little over three and a half months.We

em¬

are

barked

gether

duction

to¬

enterprise
magnifi¬

an
—a

cent

t

e n

prise

e r

of

—

-

cision

embark

to

not bard to

is

on.

of
the
peoples of
Europe
a it d

•

growing
deep--

a

est

interests of the United

States

that Europe should again become
a
living, workable and indepen¬

for
re¬

dent

economic

and

*

•

political

ganization, there has at the

rope

in Eu¬
and for

time

t h

creation

and

Paul

mainte¬

G.

that

Hoffman

,*

ties

the
free
peoples
have undergone and

Europe
still

undergoing

many

of

or¬

w

be

WAfi&reAfi

same

conviction

cannot

on

A

I

o-

"£■■ ■■

in

set

an

old

an

concepts of how

staggering. In the three
which have elapsed since

war,

goal

frame

traced

are

the

growing

a

old picture or
design, nit" can¬
not be brought about by old ways
of doing business or through old

......

conditions to freedom and peace.
Our objectives are inspiring be¬
yond measure.
Our responsibili¬
years

been

this

the

the

of

nance

taxbs

conviction that'it-is in the

covery

e

It

trie task.

explain;why.

W hile there has been

part
free

economic

the teiv.

e-'feC? 7 •'

determining factor in their de-"

a

the

America

and

I

:

To the American people each
qfelements was and remains

co¬

on

trade;

these

operative J ef¬
fort

and

minal date.

upon

ests

best

nation's inter¬

a

served.

* New
pat¬
intra-European trade andexchange must be-found and new

are

terns of

of
.are

directions

in the

hardships

resources.

These are made,

of

-use

stockholders

Europe's,
neces¬

and

privations. They have worked sary and not alone
by the drastic
hard and they have accomplished
consequences of two wars, but also
much mere than could have been
by the tides of change, that run
expected in View of the desperate longer and
deeper..
conditions with which they were
Each participating nation, look¬
confronted in 1945. Their achieve¬
ing at the operations of its own
ments and their potentialities un¬ national
life, must face up to re¬
derscore our joint responsibilities
adjustments to satisfy the require¬
for carrying through- to our ob¬ ments of a new
world. Tnese -re¬
jectives.
/v.
adjustments cannot be made in
It is time to take stock in broad

basic terms of

and

and of our

our

the

objectives

lation 4o. those, objectives-

you—I

perhaps make a
reporting as ac¬
upon, the. present

can

by

curately'as I

can

attitude

of

toward

the

the

American

economic

that

people

substantial

majority,

man,

of..the'

of

of.,

the

Committee

-

-of

■

strength

of

America

there

Europe

-

as

understands

readjustments

ex¬

are

-

war.
^

.

Programs Must Be Developed.

the

Republican party,
all our great labor organizations,
business organizations and farm
organizations enthusiastically sup¬
port the European Recovery Pro¬
gram.
Rut this should be noted:
The support of the Americah peo¬
ple stems from their belief in your"
pledge as set forth in the Report
of

terms

catch their, breath after the ordeal

people, President Truand Thomas E, Dewey, can¬

didate

goal in

difficult and that they
require immense efforts by people
who .have scarcely had -time to

American
-

new

ceedingly

Program.
A

its

whole.

a

Recovery

European

na¬

seeks

of the economic capacity and the

.

contribution

can

tion

of that stock taking must be done

by

Tliev

only be accomplished if each

Most

'-^i^lodmeht

.nationalAction' along

of

course,

the old seoaratist lines.

present position in re¬

-

America

it

will

aim

.understands

*

■

that

be

not

easy-for. the par¬
ticipating nations'to develop pfot-

conform .to the

to

grams

funda¬

mental

readjustments, of. which. I
have been
speaking, but if. the
recovery we hope for is to be

achieved,

must
be. so
It is the responsibility
of each government to develop its
programs

.

developed.

European

Economic

Cooperation and later own program, and it is the respon¬
in the Conven¬ sibility of each government, to
Economic Co¬ work out the mutual adjustments
operation
In the Convention for which will, be the basis for a mas¬
European Economic Cooperation, ter' plan.
'.
participating
countries
pledged
What seems to me to be called
reaffirmed by you
tion for European

HIGHlights of the 20th

year...

.

.

themselves "to combine their eco¬
nomic

strength

join

to

together

to make the-fullest collective use

for

and quickly is such a master
plan of action based upon' the full

"recovery

of

the

European

individual

of their

r

General Mills'sales

econ¬

high, $458,473,576

capacities and* omy by June 30, 1952 when Amer¬
potentialities" and to "undertake ican aid" terminates. This master
the

elaboration

and

execution of

prpgram would, of course, be a
joint recovery program" in or*-, composite of
programs developed
^achieve as soon as possible fry the
participating nations,
and maintain a satisfactory level Western
Germany' and Trieste.": I
of economic activity without ex¬ want to
make clear as crystal, the
traordinary outside assistance."
fact that ivhat I have in

for the

a

previous

.

yean

;

during the last year
.

rose to a new

compared with $370,932,427

Earnings also reached

a new

high,

der to.

mind

Elements

of

a

Cooperation Pledge.

To the American
am

lias

a

people, and I

also-to yours, this

sure

very

'meahihg.
attention

real,

a

I should
on

pledge

very simple
like to focus

three elements of the

program

and

of' action,

ponderous

not

a

five-year

is

plan

which tries' to
orocesses of

formulae
tical

a

compress the life
nation into a set of

and

sheaf

a

of

statis¬

tables.

Surely for freedom
loving peoples, no plan must ever

potentialities; the responsibility of free
elusive
sound

to

program

develop 'an
in

government

the

fields of

finance,

'. .^Remarks

men fenews itself from nmiknown*and .unsuspected sources of

pro-

by -Mr. Hoffman made
recently - in-Paris, France, before
the
Organization for European
Economic Cooperation.
.




.

iny strength in the minds
of its
y

men

and

and spirits

women.

-

$13,068,057,

-

Those

four-year programs; of
action which I envisage would in
part be stated in terms of produc¬
tion in agriculture and in key in*

dustries, in. part in terms of exf
ports -or imports of key com-

as

against $9,236,214 for the preceding

•

year.

rigid

pledge
which
was
made:
The- lose sight Of the creative
force of
promise of joint -action and coir individual human
beings and of
lective use of your capacities and the extent to which a nation of
each' nation

11

"•**,0

Dividends totalled $5,934,006, including

dividend
you

on

the

common

stock. We will be

an extra

glad

to

send

the complete annual report. Address General Mills,

Minneapolis 1, Minnesota.

~

^

12

Britain's Economic Defenses

Congresr Stands Against One Man Government

By PAUL EINZIG

By HON. CHARLES A. HALLECK*

•

U. S. Congressman from Indiana

Dr.

Einzig, commenting on Britain's present war potential, points
out, from economic viewpoint, the nation is in a better position than
in 1914 or in 1939, but, because of loss of overseas investment
and lack of materials stock-pile, Britain is less prepared to light a
prolonged war than in 1939.

Republican leader in House of Representatives answers President Truman's attacks on Congress and
denies existence of an emergency that requires special session of Congress. Defends record of Eightieth
Congress and accuses President of working against and not with Congress. Says Republican victory in
November will mean complete accomplishment of program.
After this

Republican Congress

soughtc

the

people

through

their

duly elected
representa¬
tives.

meas-

after

measure,

to

toes

only

his

see

ve¬

overrid¬

den

by over¬
whelming ma¬
Charles A. Halleck

jorities in the
Congress. And
that, bear in mind, took Demo¬
crats as well as Republicans, and
they spoke for the people.
he began a vicompletely unjustified
attack on the Congress, an attack
so obviously political and so petty
as to reduce even further his al¬
•

More

cious

recently,

and

rapidly disappearing

ready

the

tax¬

spite

hostile

of

the attitude
bent

President

of

a

bol¬

on

responsibility. We cooperated
his crumbling political
with
him
in
everything
we stering
fortunes the Republican Congress
deemed to be in the best interests
will, in this special session as al¬
of the country. But what a con¬
trast
is seen in liis subsequent ways in the past, do whatever may
be found necessary in the public
warring on the Congress and in
interest as an emergency matter.
his constant refusal to cooperate
with Congress on matters primar¬
Not Going to Bankrupt Country
ily of its concern.
But we are not going to bank¬
You
remember, the President
rupt the country, socialize the
called this special session of Con¬
country, or regiment the country
gress in the course of a partisan
by police-state methods. We are
political speech at a political con¬ not
going to destroy production
vention in which he almost failed
instead
of
increase
production
of renomination by his quarreling,
and otherwise jeopardize our solid
divided, bolt-ridden party. He did and sound
progress by sacrificing
not consult with Republican lead¬
tial

>Mr. Truman

ure

In

ini¬

eign affairs where he had an

;

vetoed

that, less than three

war

the

work out

to

sup¬

on

the

altar of political expediency.
What

program.

a

interest

national

the true

in Congress about the call for
session.- He did not attempt

ers

the record

is

in that

re¬

gard?

port among the people.

American

The

fighting
ices,

a

<$

•:

•

tion to

be worked out in

of harmony

this

••

v

,

t

time.

re¬

as

stock-piling in anticipation of a
Owing to exchange difficul¬

war,

completed.
But

ties

,

E'n***

*>r-

the

with

clouds

of the nation as a whole.

stated
over

pany

National

and

by

Rep.

Halleck

Broadcasting

any

message

all,

be needed, that the

opened

the

New

as

American

of

preservation

local

home

rule, efficiency and pay-as-you-go

final

is

in

belief

just laws fairly administered for

economy

affair in the Capitol yesterday of¬

ficially

Company, July 28, 1948.

Ail

proof, if

Broadcasting Com¬

Mutual

his

in

our

freedom for the individual under

and

fice, he called Republican leaders
address

against

politics,

machine

and

ing,

volume, number, magnitude, scope
importance of the dozens of
legislative demands Mr. Truman

When Mr. Truman first took of¬

*An

spirit

a

and co-operation for

in government, and the

protection

Deal-

of the

(Continued

American way

on page

35)

stocks

her

1947

erably
the horizon there

occasion.

present

the

on

have

consid¬

The

country has been living from
Generally speak¬
growing concern in Britain
that a third World War would ing the
only supplies, that are
find the country economically un¬ actually available are those which
are
in
the "pipelines."
prepared.
This is
These fears are to some degree true not only concerning govern¬
is

war

on

hand to mouth.

a

exaggerated.

in

For

many

re¬

spects Britain's economic defenses
are now in a better position than

in 1914

were

in 1939. Ag¬

or

ment-owned

stocks

pri¬

also

but

vately-owned
supplies,
as
the
London commodity markets are
much
less
well-supplied
with
stocks than before the war.

There

has also been recent fairly heavy
Russian

rubber and
Scrap metal

of

buying

other

commodities.

stocks

are

Even

at

low ebb.

a

though progress has been
the
renewal
of

towards

made

industrial

worn-out

since

1945,

the

much

leaves

is true also

equipment
position

present
be

to

desired.

This

concerning the rolling

stock of the British railroads. Not¬

withstanding the progress made
by British shipbuilding since the
war, the tonnage of the merchant
fleet is very inadequate even for
peacetime requirements.

would present no
During World War II, Britain's
Those who remember
delays that oc¬ own timber resources have de¬
curred after 1939, before exchange clined to a very low level.
Coal
control, rationing and other indis¬ output is deplorably inadequate.
pensable measures came to be All this could not be remedied at
adopted and applied efficiently, short notice, and would handicap
will appreciate the advantage of the initial economic war effort.
not having to start from scratch
In
one
respect, at any rate,
quirements

problem.

interminable

the

in this respect.

Britain's

economic

effort

war

picture is would be at an advantage com¬
represented by the exhaustion of pared with the situation at the
Britain's
external
reserves;
the beginning of World War II. Then
inadequacy of food and raw ma¬ everything had to be learned from
terial
supplies actually in the the very beginning. Now the gov¬
The other side of the

of these securities having been sold this announcement appears
to

sell

nor a

solicitation

of

an

as a matter

offer to buy

any

of record only and is neither

of these securities.

an

offei

country; the inadequate degree to
which wartime wear and tear of

NEW ISST TE

industrial

McCall

the

and

*Of the 87,167 shares offered to holders of Common Stock of the

gold re¬
£700,000,000, and
investments valued
at

of

the

and

Even so, it

Company, 81,941 shares

the exercise of Subscription Warrants issued

to

were

such holders of Common

£3,500,000,000.
Now the
is under £500,000,000, much of which is claimed by
other Sterling Area countries, or
is

offset

debts

chased by Underwriters.

subscribed for by the Under¬

through the exercise of Subscription Warrants purchased by them,
by the several Underwriters.

external short-term

by

such

tained

subscribed for through the exercise

than it

an

fight

to

was

economic point of
a prolonged war

in 1939.

some

reserve

Stock, including 800 shares subscribed for through the exercise of Subscription Warrants pur¬

have been sold

war

learned between 1939 and

coal pared, from

the

about

were

fundamentally,

changed
lessons

view,

overseas

gold

writers

of

inadequacy

1939 Britain had a

In

(No Par Value)

were not

about

all

knows

The last war was so
that the situation has not

economy.

1945 still hold good.

output.

Common Stock

Subscription Warrants and the 800 shares which

made

ernment

recent

1939; the reduction of the
country's resources of timber and may be said that, on balance the
other home produced materials: country is today less well-pre¬

Corporation

The 5,226 shares which

been

has

with

serve

subscribed for upon

plant

good; the decline of the tonnage
of the merchant fleet compared

87,167 Shares*

of

since

been allowed to run down

reappearance

of

•

In 1938-39 Britain embarked on

may

be

diffi¬

no

or
some
other form.^ Even
delays through the need to
obtain the approval of any such
arrangements by Congress might
create an awkward position for a

o

garded

be

would

so,

quirements,
now

on

States

United

lease

re¬

that task

there

outset

adjustment of
civilian

the

culty in securing American aid in
the form of a resumption of lend-

the

industries

since

that

however,

occasion

would be in the war from the very

^•ffiSr

ricultural

the good of the country. The very

the state of the

on

.-V/;

sumed,

ta®ft,

production, in spite of
Back, before the 1946 elections,
Mr. Truman's attack on the Con¬ acquainted with the cry, "emer¬
the
Republicans
in
Congress its decline from its wartime peak,
gress, and his insistence on having gency." They heard it throughout
is still well above prewar level,
joined in a statement of principles
his way without regard to what the New Deal, again, and again,
and policies.
On that we were and a larger proportion of food
the people's representatives be¬ and again. The American people
can
now
be
grown
within the
elected. On those pledges we have
lieve, must remind many of a and this Congress are willing to delivered. For that the
people country than in 1939. In spite of
similar attack once made on the work and sacrifice for any real
commend and applaud us and for the "demobilization" of the mu¬
Supreme Court r of the
Uniied emergency. * But, a pplitical emer¬
nition industries, the production
that they will re-elfe'ct us and elect
States.
Then the Supreme Court gency
is an
entirely different our
of war materials could come into
candidates, Dewey and War¬
stood against a one-man govern¬
thing
its stride #within a much briefer
ren.
ment. Today, the Congress Stands
space of time than it did at the
It cannot be denied that Mr.
We then said:
against a one-man government.
beginning of the last war. Most
Truman, in calling the session
"Today's major domestic issue wartime
economic * controls
are
Today, the Congress s.ands as an
sought
political
advantage
at
is between radicalism, regimenta¬ still in force, so that the regula¬
independent branch of the gov¬
whatever expense to the country
tion,
all-powerful
bureaucracy, tion of consumption and produc¬
ernment, rightfully rejecting ex¬ rather
than sane, sensible legisla¬
class exploitation, deficit spend¬ tion in accordance with war re¬
ecutive
domination, recognizing

only its obligation to all the peo¬
ple to legislate in the best interest

sad reflection

after the end of World War II, it has

serv¬

and

they

people are well

years

to

economy

casions, laying legislative requests payers' expense and with the Con¬ peace econ¬
the back-drop. omy. With the
before us and asking for our co¬ gress furnishing
This is a continuation of his war almost c o moperation. He did this with re¬
on Congress. I believe the people
plete demobi¬
spect to domestic matters and
resent such tactics.
lization of the
many times with respect to for¬

expressed

a s

campaign at

Democrat

to the White House on many oc¬

to

block the will
of

LONDON, ENGLAND.—It is
world

become necessary to think in terms of economic war potential in case
of another war. Until recently the problem was Britain's conversion

from

o n-

stantly

publicly stated
would cooperate
contrary, he has

elected in 1946 President Truman

was

people had spoken, that he accepted their verdict, and that he
the Republican Congress. That pledge he has not kept.
On the

that the
with

Thursday, August 5, 1948

COMMERCIAL & FINANCIAL CHRONICLE

THE

(508)

as

from

International

There is also an

Monetary Fund.

of

indebtedness

external

ob¬

advances

the

the

some

£3,000,000,000. What is left of the
investments is not easily
realizable. Even in the absence of

Robert A. Dahn Joins

^

G. H. Walker & Go.

Wall
Street, New York City, members
G.

Walker

H.

&

Co.,

of the New York Stock
announce
now

Mr.

with

the firm in

bond department in

its municipal
New

Exchange^

that Robert A. Dahn is

associated

overseas

1

York.
Dahn

was

formerly in the

municipal trading department of
requirements Britain would
Union.
Securities £ Corp.
Prior'
be unable to balance her inter¬
thereto he was with R, W. Press-;
national
accounts
without
the
prich & Co.
'
«
-rU
Marshall aid. The outbreak of a
war

Copies of the Prospectus pursuant to which the offering
was

made may be obtained from the undersigned.

.

would inevitably increase

war

port requirements,

&

Co.

to such extent

that it would tend

White, Weed

to exhaust the

gold

reserve

months.




an

even

World

a

matter

of

Britain would depend on

American

August 5, 1948

in

financial
higher

assistance

degree

Wars I and " II.

.

im¬

to

Joins Stewart, Scanlon Co.
(Special

SAN

to

The

Financial

Chronicle)

FRANCISCO,'. CALIF.

—

Arthur L. Winn is with Stewart*;

Scanlon & -CO.,; 216 Montgomery

than iq Street,^members] of the San FranIt Ts as- cisco Stock Exchange.

Volume

168

Number 4722

THE COMMERCIAL &

The Stock! Market I

FINANCIAL CHRONICLE

President's Housing JProgiam—A Paradox

By ROGER W. BABSON

By HON. EVERETT M. DIRKSEN*

Mr. Babson holds, because Republican party election has already

U. S. Congressman from Illinois

been discounted, present probability is stocks will continue to go
down within

a

Accusing the President of "trying to

put a fire out by pouring gasoline on it," in
recommending housing
legislation leading to government outlays and mortgage credit expansion while at same tim*
urging antimfiation curbs, Congressman Dirksen reviews failures of
Housing Expediter and praises "private Industry in affording more homes. Says President's program will not increase
housing but will intensify
competition in building industry for materials and manpower.

165^185 Dow Jones

range. Sees investors demanding
higher income yields and predicts eventually there will be another
war.

Wall

Street

has

again turned bearish.

have sold their stocks and

are

Apparently the insiders
again waiting for the market to drop.

This especially applies to the oils which Wall Street has been selling
while advising everyone else to hold! Last January in my Forecast
for
1 9 4 8^which

; t

his

this is not

now

possible.

I repeat
yield, after pay¬

newspaper

that to have

published,
I
clearly

ing income taxes, of from 4%
5%

stated

stocks,

in

'

paragraph No.
34

on

afford

the

Jones

range

under

that

safe

(based

upon

the

D

<' Jones

o w-

Indus-

a

net

list of' common
the average investor can
to buy only when the DowIndustrial
Averages
are
185. As indicated' above* I

would .change this range if the
laws or the margin require¬

tax

ments should be

changed; but so
as they are to¬

Aver¬

long

as

ages)

to

hold

day,

readers had better
my 165-185 Range.

stocks

during

to

safe

any

trial

,

upon

they

are

depend

low

a

and

of

What

165

high of
18 5.
(This
was
assuming
no further
change in the tax laws
or
the
margin
requirements.)
Hence, those readers who fol¬
Babson

About

There will be

a

sia this year.

no

with Rus¬

However,

everyone

realizes that there will be
War III
comes

sometime

some

of

a

World

when this

and

lowed my advice sold stocks when
the Averages crossed 185 and are

largest cities
will be destroyed.
Hence, wise
investors are now selling the se¬
curities of companies with most

thankful.

of

Although

porarily
made

sold

a

cash

stocks

above

they

185,

good profit and

for

tem¬

have

now

later

repurchasing.
The present probability is that

Republican election has already

^

been

discounted

will

continue

proaching

that

and

to

stocks

down,

go

ap¬

low of 165, after
which they will move up again.
Wise
investors
are
those
who
my

await these

usually

might well be

our

about

once

a

ture

dealing

gram,

with

higti

prices
The

be

called

civil

more

for
pro¬

M.

Dirksen

profits taxes,

The

consumer

ex¬
con¬

other items.

third

might be called the
"Spare Time Program." The Presi¬
large
cities.
As there are few buyers, dent indicated that if Congress
had time, it could devote attention
the prices of these stocks
drop
to such things as anti-trust laws,
badly. This same reasoning ap¬
plies to certain oil companies with universal military training, repeal
of the Taft-Hartley
Act, national
big refineries in vulnerable loca¬
their

tions.

assets

The

these

in

above

and

the

disap¬

pointment of the "Dow-Theorists"
are

the main

causes

of the recent

stock market slumps.

health insurance and other items.
*An

address

Dirksen
over
the Columbia Broadcasting
System network, July 28, 1948.

bullish,

time

are

the

so

to buy is when these

same

Housing Adminis¬
1944, Congress passed

socalled

GI

Serviceman's

or

Act

which

a

the

will

by

all

be

a

these

deserves

to fully
things. But to¬

Mr.

a

little

January

chance

of

1946,

after

the

dent

called

former

war

discussion.
a

few

ended,

Wilson ;

neither

brok¬

Well, I've been a member of Con¬ home construction under way. Mr.
for 16 years and remember Wyatt had a grandiose plan fo$
most of the legislation that was building houses faster. It was en¬
passed. It began with the Federal

acted into law in May of 1946. The

Home Loan Bank Act in 1933 and

goal

the

houses

Home

Owners Loan Act to
the distress conditions that
existed in those days. In 1933 and
meet

to be about 23A million

was

in

two

250,000 of those

All

years.
were

to

^ x

offer to sell, nor a solicitation of

••

~

.

.

H

y

•

r

an

offer to buy, any of this Stock,

There
made

The first
of

two

are

that

last

184,809 Shares

is that the value

reason

is

why I
Januery.

reasons

forecast

stocks

Yields

and

their

income

yield.

Food,

clothing and shelter have
value; furniture has
a use value; an auto has a trans¬
portation value; even jewelry has
a show value.
Unless
pay

United Air Lines, Inc.

necessity

a

Common Stock

dividends, or Hope to some day,
they have very little value. "Book
value"

is

$10

factor only for scrap

a

par

value

liquidation.
Over a normal period of time
the dividends paid by the DowJones Stocks yield about 5% when
purchased at 165, but yield only
4% when purchased at 185 to 190.

Fights, evidenced by Subscription Warrants, to subscribe for these shares at $10.75 per share, in the ratio of one
share for each ten shares held, have been issued
by the Company to its Common stockholders, which rights expire
at 2:00 o'clock P.M., Eastern Standard
Time, on August 17, 1948, as more fully set forth in the Prospectus.
Approximately 175,000 of the 184,809 shares of Common Stock are also being offered, subject to subscription by
holders of Subscription Warrants, for subscription
by certain employees of the Corporation at $10.75 a share. The
period within which these subscriptions may be made also will expire at 2:00 o'clock P.M., Eastern Standard Time,
on August 17, 1948.

Or

to figure it another way: a
good 8% stock should sell at about

165

to

yield 5%; but at 185 it
yield only about 4%. Let¬

would

ters

from

show

4%

thousands

they want

to

of

investors

yield of from

a

The several Underwriters named

in the Prospectus, including those named below,
may offer shares of Com¬
acquired by them pursuant to the Underwriting Agreement or through the exercise of Subscription
Warrants at prices not less than the subscription price set forth above and not above a
price equal to the current
offering price on the New York Stock Exchange, plus an amount equal to stock exchange commissions.
*

5%.

mon

Income Taxes and Stock Prices
When readers show this 165-185

Forecast of
brokers

mine

to

back

Stock

brokers, the
with the

tort: -'But the stocks which I

*

re¬

am

come

recommending to
than

6%

price.

at

even

yield

you

185

a

offer this Stock in

may be obtained from only such of the undersigned as may legally
compliance with the securities laws of the respective States.

average

Hence, it is reasonable to

believe

that

the

Dow-Jones

dustrial
or

Copies of the Offering Prospectus

more

Averages will
1225."
Then they

In¬

Harriman Ripley & Co.

to 200
also talk

go

Incorporated

about ,the "book value" to which
I; refer

in

the

beginning of

the

column.

Well,
means

as

I have said, book value

almost

nothing unless

companied by
of income.

a

reasonable

But the real

the brokers'

ac¬

vestors

reduce

grant that if

ing

the

from

prewar

yield

to

to

80%.

20%
we

were

income

to

in¬

an

average

price

Drexel & Co.

taxes,
of




250;

Hornblower & Weeks

Lehman Brothers

Smith, Barney & Co.

Merrill Lynch, Pierce, Fenner & Beane

Paine, Webber, Jackson & Curtis

.Dominick & Dominick

Dean Witter & Co.

Lee Higginson Corporation

I

Carl M. Loeb, Rhoades & Co.

today hav¬
the

Dow-Jones Industrials would sell
at

Glore, Forgan & Co.

,

165-

185 range is that
personal income

taxes

Blyth & Co., Inc.

hope

answer

criticism of my

,

but

August 4,1948

a

but
per¬

mil¬

1934, Congress created a public lion and a quarter were to be
housing program and also set up completed in 1946. Congress gave
the Federal Housing Administra¬ Mr. Wyatt broad powers,. armed
tion. In
1937, Vie created the
(Continued on page 32)

New Issue
Dividends

be

manent construction. About

The offering is made only by the Prospectus.

bearish.

the

gress

^
an

Presi-:

Wyatt,

of

Louisville, to
Washington. Mr. Wyatt was to be
made
a
Housing Czar and get!:

has government been doing about
houses for people over the years?

mayor

V
is

In

months

the

'

This announcement

con><?

housing title. In 1946, we
created the Office of
Housing Ex¬
pediter. Since 1932, we have com-?

night, I want to talk about hous¬
ing.
Now folks, what, if anything

^

most

brokers

In

the

.

Displaced Persons Act,

trols and

to

discuss
Everett

modification
cess

States

tration.

tained

there

jects, price
controls, a
of the

United

of

dangers of inflation mitted or expended or incurred
next, he recommended liabilities in the field of housing
more
expenditures
and
more activities of more than $20 billion.
credit, which is like trying to put
The Housing Expediter
out the fire by throwing gasoline
The Act vyhich was passed by
on it.
Congress in 1946 to create a Hous¬
From
now
until
November, ing Expediter or Housing Czar

pro¬

power

millions

and in the

which

included

of

Readjustment

tion

his

"Urgent"
gram

hundreds

Frankly, the President's mes¬
sage is something of a paradox.
In one breath, he directed atten¬

second

might

of

public funds.

and

housing.

year.

to sell is when

are

If you put them all
together,
they would involve the expendi¬

pro¬

buying periods which

come

As the time

ers

^

called : h i s

"Must"

money

Russia?
war

Yesterday at noon, President Truman came up to Capitol Hill and delivered his mes¬
the special Turnip Day session of Congress.
It had a little of everything in it.
In
fact, the President presented Congress with three programs'rather than one.
The first
sage to

rights,

1948 would be

Roger

13

(509)

a

Weld &Uo.

Thursday, August 5,.

CHRONICLE

COMMERCIAL & FINANCIAL

THE

(510)

H

1948

moderately higher than at ' the beginning of the year. Basic Terms and
Witli regard to investments,' holdings of governpient'bpnds are
down in New York City and the 94 cities. Treasury bills and notes
are also down, but Treasury certificates are higher by about 40% for
New York City and 33% for the 94 cities.
(Continued from page 11)
By and large the banks are doihg an excellent job and demon¬
and
the
individual
accomplish¬
strating earning ability adequate to hover present dividend disburse¬
ments which are scheduled should
ments by moderate to substantial margins. But they have been labor¬
be stated clearly and concretely.
ing under difficult conditions imposed by the "easy money" policy
Such a statement would furnish
of the government. It is now a little more than a year since the
understandable
gauges
against
government unpegged the 90-day bill rate, permitting it to rise frqm which
every
citizen in Europe,
its fixed rate of %% to its present rate of ,997%. Meanwhile there
and in America too, could meas¬
have been small rate increases in many other categories of loans and
ure the degree of progress.
notes, but the trend on the whole has been quite restricted and mod¬
Above all, I would hope that
est, Nevertheless, these increases have helped the banks. There are
now
further indications that the Treasury's opposition to higher the plans would not be little plans,
for
as
a
great American
city
interest rates is beginning to soften; as a means of curtailing credit
architect
said, "Make no small
expansion. It also seems likely that higher reserves may be set for
the banks which obviously will have the effect of reducing funds plans—they have no magic to stir
But
available for lending and thus tend to lower income unless offset by the imagination Of man."
plans alone are not enough. They
further increases in interest rates.
The theory that all credit extension by the banks is inflationary, must be supported by faith, and
We
which appears to be the prevailing view in Washington, is of course the will to carry through.
believe in you, .believe that your
wrong. Many loans to industry and bus'ness are for the purpose of
increasing production and facilitating the distribution of goods, and to greatness lies in the future and
this extent are on the side of supply vs. demand. Other loans, which nq't in the past. We are backing
create funds for the purpose of bidding up. goods, that are in short up that belief by 'iibt' only send¬
supply, obviously increase demand pressure and are hence inflation¬ ing you the products of our work¬
men and farmers but also some of
ary. Expert banking knows how to differentiate without being told
our
ablest citizens.
The United
or forced.
or
It appears to this observer that a moderate hardening of interest States Special Representative
Europe is a former- member of our
rates in various categories would be salutary all around.

estate loans are
'

Bank and Insurance Stocks

Objectives of EGA

By E. A. VAN DEUSEN

This Week

Bank Stocks

—>

issue of the "Chronicle" this column presented
earnings of 17 New York City banks for the first six months of 1948
vs.
the comparable period in 1947.
This week we present similar
the

In

July

8

York,
Cali¬

comparisons for a selection of 16 banks in cities other than New
Boston, Philadelphia, Pittsburgh, Cleveland, Chicago and
fornia.
,
BANK STOCKS
viz:

Indie. Net Earns, per Sh.
6 Mos. End. June 30

;

1947

-

1948

Book Value
1948
March 31
June 30

Boston—

National

First

$48.17
1.44

2.05

1.87

72.26

72.57

1.94

1.70

45.16

45.58

2.10

2.29

43.35

44.88

1.05

0.98

49.14

49.32

13.94

15.86

317.97

323.75

9.45

7.27

277.91

279.97

3.92

3.75

90.48

91.97

National*...:.

Girard

61.54

1.40

-

Philadelphia—
Fidelity-Philadelphia
First

$43.51

-31.10

_—

National Rockland

Trust

:7 Pittsburgh—

Peoples-First National
Cleveland—

,

Trust

Cleveland

Chicago-

City National Bank & TrustContinental Illinois Nat'l Bk. & Tr.

Cabinet.
is

of exceptional

We

12.47

13.11

222.46

231.71

Harris Trust

10.57

10.85

325.08

331.18

19.22

17.81

681.89

698.05

2.36

3.19

68.03

68.69

2.90

*3.23

30.67

32.65

2.21

2.76

66.17

67.93

In open

2.28

2.37

f57.27

56.49

Economists'

sending

our

you

products

Northern

mission
qualifica¬

head of

Every

-

man

a

tions.

National

First

.'

Trust

California—

American Trust
of America

Bank

California; Bank

Trust

Citizens National
-,

¥ As in the

banks,
in the
which are reported), and'hence are not
strictly comparable. Despite this, never¬

would

lower.

America

of Bank .-of

necessarily conclusive nor
theless, the comparisons are favorable on

the whole^

-Earning assets of all banks, both in New York City and in other
leading-cities, are down since the first of the year, as the following
ligures published by the Federal Reserve Board show:
j

MEMBER

BANKS,

NEW

Total

Short-Term

U. S.

Total'

Total

Loans &

Loans

Loans

Govts.

Bonds

U. S. G.

Invests.

31,

1947

5,336

7,076

2,128

9,574

11,702

12,926

23,

1948

5,190

7,397

2,292

7,910

10,202

11,343

-146

+321

+164

—1,664

—1,500

-1,583

Change

Dr. Walter E.

Spahr, Executive

Vice-President of the Economists'

Aug

^"1
777
'
7
1 monetary unit is expressed? (gold) 'in whlch 0Ur st?ndard

1948.

2,

Dewew
uewey.

Governor
uovernor

Dear
Utar

,
/

Republican Platform advo-

The

currency."

sound

"a

to

question is pressing today as

MEMBER

BANKS

IN

LEADING

they

Total

—

Total

Short-Term

U.S.

Total

Govts..

Bonds

U. S. G.

Invests.

Loans

31.

1947

14,645

23,229

7,722

29,505

37,227

41,487

64,816'

21.

1948

14,562

24,318

8,928

25,951

34,879

39,197

63,515

—83
—83

+1,089

+ 1,206

—3,554

—2,348

—2,290

—1,301

,

stand fractionally
below their year-end volume both for New York City and the coun¬
try. The low point of the year was June 2, and a moderate rise has
taken place since then. Loans to brokers and dealers and also real
observed

that

7vouia
with

lower rates for

preseribec
gold dol¬
Would you support the Buf¬
proposal on the ground that
would provide the people of
present

the

lar.

fett
this
£.

Thomas

with

country

this

Walter E. Spahr

Dewey

a

sound cur¬

larger quantities.

Joins

Robert F. Sprang

■

—

Economic Educa¬

lor

Inc.,
Irvington-on-Hudson,
York—Paper—-10 copies, $1;

New

provide the United States
gold-coin standard based

upon

on

by Sherman Rogers

title

tion,

weight of the standard

loans

commercial

a

the Goose r — Book¬
- parts
of book of

Kill

based

Foundation

(5) There has been introduced
in
Congress
the
Buffett gold
standard bill (H. R. 5031) which

Loans &

-

Invests.

July

be

Why
let

rame

sponsibility?

Dec.

will

are

.

Total

It

that

redeem, would you

18,740

Loans

Change

believe

should have the

promises to pay
not required to
believe this is
a
case
of granting special privi¬
lege without requiring .the as-,
sumption
of
corresponding re¬
to

which

($000,000)
Ccmmerc'l

you

issue

power

CITIES

94

should

(4)

these institutions

—1,2621

-

lies with

But the initiative

help.you.

'

Policy and Professor of Economics
at New York University, has addressed the following open letter to
Governor Thomas E. Dewey, the Republican candidate for President:

20.002

July

done

vigorously, and to be donea soon.
We stand ready, as a partner, to

is "sounds and asks whether candidate
support Buffett Bill to restore a gold redeemable monetary

Invests

•Dec.

make it.

must

we

Much remains to be

succeed.

National Committee on Monetary

cates
Total

peoples,

free

.

The

YORK CITY

($000,000)
Ccmmerc'l

.

:t question*

system.

higher earnings this year than in 1947, and seven
However, the earnings shown are "indicated" (except

banks show

case

results are mixed. Nine

of New York City banks,

case

/#

candidate, executive of

letter to Republican Presidential
National Commkte#*^

:

and. our men because,
like you, we have a vital stake
in
the
success
of tlie7 Marshall
Plan. It must succeed. In justice
to
the hopes and efforts of all

whether present currency

1948.

tApril 12,

net earnings.

^Reported

On "Sounds Money

are

Staff of First California;.
(Special

The

to

Financial

C'I'ONicle)

CALIF.—Rob¬
Sprang has become asso¬
with First California Com¬

LOS ANGELES,
ert

F.

ciated

rency?

pany,
510 South Spring Street,
currency" means members of the Los Angeles Stock
something to you that is not re¬ Exchange. Mr. Sprang was for¬
vealed in your answer to these merly with Revel Miller & Co.
Republican Party.
With the dollar depreciated and five questions, would
you state and Butler-Huff & Co.
depreciating sharply .in terms of orecisely the additional provisions
its purchasing power, with wider
for a sound currency which you
Ryron C. Foster with
spread
concern
regarding this would recommend to the people
Westheimer & Co; Staff
state of affairs, and with Congress
and to Congress?

what

BANK

NEW JERSEY

and

SECURITIES

INSURANCE
STOCKS

New York Stock

J. S. Rippel

120 BROADWAY,

Telephone:

Established

Exchange

NEW YORK 5, N. Y.

BArclay

Bell

& Co.
2, N. J.

MArket 3-343®

Teletype—NY 1-1248-49

N. X. Phone—REctor

(L. A. Glbbs, Manager Trading Dept.)

2-4383

;>

HUbbaro

(1) Do you believe that our
present domestic system of irre¬
deemable paper money, silver cer¬
tificates excepted, provides
the

whitehall

SUPERIOR

;

*

CG-105
SAN FRANCISCO

i' LOS ANGELESftA

7644

M ICHIGAM.28,37

V

LA-1086

YUkon

+
,

,

4

Riiss Building

210 W. Seventh Street

CV'394>

-

\

6-2332

SF-573

.

NEW YORk, BOSTON, CHICAGO,
CONNECTING
:
LOS ANGELES,
SAN FRANCISCO
PHILADELPHIA,
ST. LOUIS,
Portland, Enterprise 7008
: Hartford, Enterprise 6011
Detroit, Enterprise 6066
Providence, Enterprise 7008
T

PRIVATE WIRE SYSTEM

CLEVELAND,

TELEPHONES TO
t-

Franklin *7535

.

sound currnecy?




with

7

(2). Do you believe that an.

ir¬

redeemable paper money is sound
currency?
™"~ "* v *
" *
(3)

15

Schofield Building
.

231 S. LaSalle Street

NY 1-2875

BS-297
CLEVELAND

CHICAGO 4

3-0782

your

Do

United

you

States

believe„ that
and

Treasury

Federal Reserve banks

,

tu ijssyec

they
do

'

•

Capitol-

Albany,' New

LOS

ip

p.

West

and

under

our

Foster in. the past was

Mr.

H. Zieverink &

W.
son,

with

Co, and Nel¬

'

Browning & Co.

Niland with Browning
(Special

to

The

Financial

CINCINNATI, OHIO

Co.

Chronicle)

—William

previously with J. A. White &

With John B. Joyce &

''
*
York.

;

(Special

j

Dempsey-Tegeler Co.

(Special ♦ to

the

associated with:
325 Walnut

Co.,

&

Street, members of the New York
and Cincinnati Stock Exchanges.

The

Financial

ANGELES,

Chronicle)

CALIF.—Phij-

Walter is now associated
Ppmpsey-Tegeler & Co., 210
Seventh Street. He was foi>

Bingham, Walter

&

merly

with

Hurry,

zz&zd&stt77^:77: :.7 ; J

to

The Financial

W. Johnson has

Co.

Chronicle)

been added tp the

of -John B. Joyce &.
Huntington Bank Building.

staff

With Chas. A. Day
s

(Special

Co.

OHIO-- Richard

COLUMBUS,

j

With

should be

pay.

E. DEWEY

—

required to redeem,

redeem,

*

Chronicle)

H. Niland, Jr., has become asso¬
dent,; Economists' N^- ciated with Browning & Co., Union
tional .Committee
op
Trust Building. Miv Niland was
Monetary Policy.

HON. THOMAS

with

.

Westheimer

York

The

wh\ch

promises to

are not

not

s-

The'Financial

Foster has become

Economic?,
University,
Executive Vice - Presi-V

New

to

CINCINNATI, OHIO—Byron C.

Professor of

the

authorized^ as is the case today,

(Special

I

WALTER E. SPAHR,,

(Signed)

The

ppople of the United States

...

67 Wall Street

Square

2-O650

Since

would constitute a

sound cur¬

a

doubtless you would agree
would: be helpful if you
would state your position on them.

a

10 Post Office

"sound

a

that" it

STOCKS

NEW YORK 5

9

with

States

rency,

6EYEk& SO.
BOSTON

If

#

WHOLESALE MARKETS IN

INCORPORATED

Administration

present

,

of the

beliefs as to what
sound currency
for the United States is a matter
able to suppose that you would
of general coricern, these queries
believe it helpful to interpret the
are submitted to you in the form
sound currency plank of the Re¬ of an
open letter on the assump¬
publican Platform.
~ ,
.
tion that ypui will wish to make
Since there has been much dis¬
your reply to the public in gen¬
cussion of the * following major
eral.
issues in respect to providing the
Sincerely
i
United

BANK and INSURANCE

nominee

devoting special attention to high
and rising prices, it seems reason¬

1891

18 Clinton St., Newark

7-3500

'

to

sound currency means

the

and

Laird, Bissell & Meeds
Members

a

Presidential

the

to The Financial-

Co.,
.

i

&Co.

Chronicle)

BARRE; VT.—Charles E. Sulli¬
is with Chas. A. Day & Co,

van

of Boston.-

•

Volume

(THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4722

168

^ Vv'• ,i"

...

<,! -v

V,■i.'-T-fl'.f.fry-'-1

-

:;cr :t,«vi,',.-^*;:.*v•- .'/>• • .•v-Nc;'.v,- V

V.'v

ri-

- '

v\

■r

No Valid Reason for Special Session
wlI£RRY*~

By HON. KENNETH S.

Chairman

-

U. S. Senator from Nebraska

•

Republican fParty -leader denounces ^President ITruman's call oof
'•Congress in special session as political move, iDenies^grounds for <
emergency legislation and chides President5for mot, bringing yap ;
foreign u.uation and Communism as issues. Says Congress has

Rep. Wolcolt Offers Credit Control Bill;!
of House

^Reserve to raise

/

.

^

,

.

-

■

-

•

•

a\

;

the

lems that

people

"have

can

posi-

a

nas

1

•

-

i 1

pre v a

Fellow

operate a

three

.

more

the

tonight. They'
Livings costs, foreign commit-;
*ments, and Communism.
are:

gov¬

of

ernment

"

other

any

tion

tution

provi¬

sat home

The

sion that Congress

r

Sen.

into

called

special session
deal
with

to

K. S. Wherry

extraordinary

an

Throughout our his¬

emergency.

other Presidents have not
played fast and loose with the
office they have held; they have

tory,

nation

the

acquainted

large

at

with the nature of the emergency

when
sary.

special session was neces¬

a

It

not in this spirit that

was

President

acted.

Truman

in

rather

But

of

the. atmosphere

,a

political convention at 2 o'clock in
the
morning without consulting

leadership of Congress, with¬
even
considering the provi¬
sions in the Constitution, .without
advising the people of America of
any emergency, he issued a call
on
Congress to reconvene at a

the

out

the

moment when the nation is in

heat

and

of

hysteria

a

political

campaign.

quick¬
sands of a ruined political fortune
and -he
has
imposed .upon the
American -people a Special Ses¬
sion of Congress at a time when
he should be thinking of the unity
of the people and of the seriousHe is floundering in the

hess of the situation at home and
abroad.
In

the

.

hours of the
the
Minority

closing

session,

regular

,

Leader, ,Mr. Truman's

to

up

in

notes

Reserve

when

actual

in

provided,
the

however,
Reserve

Federal

reserve

der

Federal;

Jesse P. Wolcott

expansion,

by

Communism;

President

tained

j

abroad.

or

before the

came

.

.

deposits

.

against demand

or time
(l) by member
cities, or

both;

or

banks in central reserve

NSTA Notes

(2) by member banks in reserve;
ap-j
peal and staked his case upon the cities, or (3) by member banks
now in reserve or central reserve
living
costs, -appealing
to * thd
housewives in the hope that he cities, or (4) by all member banks;
but no such change shall have the
can
fool them and distract their

own

run¬

attention from

the failures of the

effect of

requiring any such

NSTA CONVENTION

mem¬

The Dallas Bond Club desires that

•

Administration
vital

in handling

these
j

issues.

That is exactly what

people

the Ameri¬

expect of a politi¬
cal candidate who in desperation
apparently
will
consider
any
can

can

to win.

means

ber

balance
an

7%

maintain

to

bank

to

equal

thereof,

or

reserve

time deposits

against

amount

a

in

the

tion:

than

more

reserve

a

for

NSTA

Carrol

DsIIhs X

balance

all requests for registrations

convention be directed to the Chairman of Registra¬

Bennett, Dallas Rupe

M.

Texas.

The Registration

Kirby Building,

& Son, 903

v

*

;i.

Fee is: $50 for Non-members; $35 for'Members;

against its demand deposits in an .$25 for Wives of Members.

'

.

,

!

,

i

Why did not President Truman
in his message-to the special sest

•—

Now Issue

sion discuss these issues? Because
he

chooses

to

the

serve

lessei
•

Party at the expense of the greater
of the American people
At home, the .President chose t<r
stress the cost of living. He stated
that living costs were the results
of the lifting of price controls and
blamed it squarely upon the Re¬
publican Party. He absolves himr
self from all responsibility, even
though in 1946 a Democratic Conr

,*■

&■%

selfish fortunes of the Democratic

•

$10,000,000

rifcfif*»

fortunes

passed the decontrol

gress
ure,

which he

and

.measr

President s'gnecf.
provisions of which he

the

as

2,10% State Highway Certificates of Indebtedness
(General Obligations)
Dated

August 15, 1948. Due each August 15, as shown below. Principal and s^mi-annual interest
(February 15 and August 15) payable at The National City Bank pf New York or at the State

Treasury, Columbia, South Carolina. Coupon certificates in denomination of $1,000,
registerable as to principal only or as to both principal and interest.

exercised,

telling the American
people at that time that he did
not believe in police state
emethp
ods, and we should once: again
return to a peacetime economy
under American ; free enterprise.
Now he advocates return to

Interest Exempt from

New

pro¬

a

our

gram

the convening of
Special Session:

now.

Federal Income Taxes Under Existing Statutes and Decisions

opinion, as Legal Investments for Savings Banks and Trust Funds in
York, Connecticut, Massachusetts, South Carolina and certain other States

Eligible, in

which he himself denounced.
If 'he was right then, he's wrong

ning mate, Senator Barkley of
Kentucky rhad this to say about
.

,

that

joint session in an emotional

be

may

Federal

or

certificates
against its

against Its Federal Reserve notes
may be', placed upon commercial
Sys-I banks,
every
Federal Reserve; in actual circulation.
tem, "in order! bank under the proposed bill is
The present gold reserve re¬
to prevent in¬ to be
required to maintain a re¬ quirement of the Federal Reserve
jurious credit; serve in gold certificates of not banks is 25% of notes and deposits.

is

mention the threat of

wisely

makes

Reserve

a

40%

policy,

Our Consti¬

■

It

in

gold

than

appalling that on foreign
the President was abso-i regulation to change the require¬
ments as to reserves to be main¬
iutely silent, and not once did he

na¬

earth.

on

circulation;

Reserve

in

reserves

not' less

Reserve

the American people

.successfully
than

issues

if

Central

the

there are;
confronting;

Americans,

crucial

thereof

of

city. No change
requirements made un¬ agent holds gold certificates as
for
Federal
Reserve
authority of this paragraph collateral
The bill
would} shall continue in effect after notes issued to the bank > such
also
permit; March 31, 1949."
gold certificates shall be counted
the
Board of
In addition to the above new as part of the reserve which such
Governors
of cash reserve
is
required
to
maintain
j
requirements which bank

d

e

and

credit

Crucial Issues

longer and has

and

not

f)_ ■,
deposits

_

less than 35%.against its

a bank is in a
Central Reserve city; 23$ thereof
if
in
a
reserve
city; or 17%

March 15,1949.

"

tive voice

;

_—.

than 29%

more

instalment

confront the Ameri¬

now

people.

——,

over

.

consumer

ment in which

*

Re-*

anew

controls

l

■.

*.•:

.

an

exercise

^

with you-the Special Message which;
delivered to the Congress is one -that 1!
deeply appreciate.
We Americans should face our common problems;
"together into a calm, cool, and reasoned way.
Our form of govern-i
Ji_
•*.
£
.M
i_

Banks.

.

Associated Press dispatch, Chairman Jesse P. Wolcott, (Rep.-Mich.),
of the House Banking and Currency Committee on
Aug. 4 presented to his Committee for
approval a bill to curb credit expansion. This bill would give the Board of Governors of the

The opportunity to discuss

■

j

"

•;

According to

President Truman yesterday

•

restore consumer .credit controls and permit Federal
requirements within specified limits for both commercial and Federal Reserve

¥ serve System amount equal to
authority
to thereof, if such

.

x

Banking Committee would

reserve

'.Federal

already given President power to stabilize currency and. reduce
living cost which , he has not used, to. fullyad vantage. Accuses
President of losing faith in. free enterprise.

"If

sit

we

Convention
tween

here
or

if

Congress.in

a

after

the

sit here

be¬

until
we

the

conventions, or after
conventions, the entire
time of the Congress will be taken
up with political ;bickering, polit¬
ical legislationland political ora¬
the

two«

tory,
be

I

and

do not

want .that ito

brought about."

AMOUNTS, MATURITIES, YIELDS ANDrPRICE

-

(Accrued interest t<» be added)

Why, Fellow Americans, every¬
one is concerned with living cost?.
This Congress has been warring
against increasing prices and their
each

cause

and

"

This

Congress r has
of

friend

'

the

j

housewife

:in

authorized, Congress returned
Washington this week.
-

The Members of the Senate and

House of Representatives listened

President, that .is to

"Candidate" Truman.
him

submit

say,

warmed-over

a

to

They hoard

sion of what he presented

ver¬

to .the

Congress .eight months ago. There
wasn't anything new in the Presi¬

dent's message.
He offered

fered
sized

no
-

no

new

that

devoid, of

the

clothes

service

lip

to

1,250,000

400,000

1953,

1.45

1,250,000

1958

2.00

1954

1.60

.1,250,000

1959

100 (price)

I960

2.15

,

1^200,000

,

todav

is

more

than

the

pay,

at even today's prices?

fact, it demonstrates the confusion

The

people

of

increase

our

an¬

Americans
>

j

America 'know

cannot burn
priceless resources
you

we

up

in

national

all
a

of

war

debt

and
from

istration

to

? An
over

tem

the

prob-

address by Senator ^Wherry

the fires of inflation.

J
The Amlrlcari; people, know the

billions

we

The Nzticral City Park

Glerc, Forgan & Co.

The Northern Trust Company

OF NEW YORK

Trust Company of Georgia
OF

(Incorporated)

PORTLAND, OREGON

A. G. Becker & Co.

Roosevelt

W. E. Hutton & Co.

Incorporated

Cross

'Incorporated

'*

Robert Winthrop & Co.

City National Bank & Trust Co.

Stroud & Company
Incorporated

,

The Milwaukee Company

The Citizens and Southern National Bank

The Citizens and Southern National Bank
's

ATLANTA !

.

-

•

'

-

;

*

OF SOUTH CAROLINA

.

.

Stern Brothers & Co. Donald MacKinnon&Co. Newman Brown & Co. J.M.Dain& Company
inc.

INC.
•y

have .appropriated'for

Columbia Broadcasting Sys¬ foreign aid takes out of (the coun■i
network, July 28, 1948.
(Continued on,page;39) V k




are offered subject to prior sale, for delivery when, as and
if issued and received by us and subject to the approval of legality by
Messrs. Reed, Hoyt and Washburn, ^Attorneys, Neio York City.

KANSAS CITY

inability of this Admin¬ $40 to-$258 billion without feeding
with

The above Bonds

our

and total

cope

,

...

It empha¬
is

;

.,

Why. doesn't the President tell
American- people the
truth
about living costs? .
.>
One of the principal causes; is
huge .government spending.
Do
you know that the cost of govern¬
food bill that

In

;

for

the

nual

thinking.

1.90

1,250^000

1.30

member .of

a

He-of¬

Administration
new

1.80

1.15

1952

point ;out (that .Can¬

Truman's

of

1956
1957

1951

the family;, or reduce, the cost of
these necessary items by one red
cent,
i

ment

solutions.

program.

any

suit

me

1.70%

1.00%

low prices* w®Fan#fc&diim$ poiuiid;;
of beef to the family table; one

to

let

Pri':e

1955

$1,250,000

1950

1,250,000

didate

But

or

so

that she could obtain: food, cloth¬
'

'Maturities

Amounts

ing and 'the necessities of life.

.

to the

Yield

100,000

at¬

tempting to lower living costs

to

600,000

the

been

Maturities

•

200,000

$

it has

day

every

Yields

Prices
Amounts

in session.

been

Well, Fellow Americans, in obe¬
dience to the call which- the law

-

15

(511)

'

1.:>• ■J

August 4, 1948

:

-

t/AA' :

i

(512)

1C

THE

COMMERCIAL

&

FINANCIAL-CHRONICLE

Mutual Trust Funds—A New Medium oi Investment

Canadian Securities

By EDWARD M. HEFFERNAN
Trust

By WILLIAM J. McKAY
Canada

more

problem of rapidly dwindling U. S. dollar reserves no hesitation was
shown in putting into operation heroic measures
fqr its solution
Now when there is no
longer any3>doabt concerning the success of minion will be all the more accel¬
the resultant austerity program,
(Steps have promptly been taken to

erated.

mitigate the burden placed

U.

Canadian

consumer.

the

on

Following the

recent government announcement

of

the

elimination

of

the

drastic

excise taxes imposed last Novem¬

ber, the retail prices of a long list
Of important consumer items have
been

substantially lowered.

recent

S.

flow

resumption

of

not been greater
acceptance of the mutual or common trust
by small owners of capital, points out their advantages. Stresses value
of handling funds by
specialists trained in specific fields of investment.

medium of investment

as

"No, I believe that

we have enough of the stock in the account for
now," is the reply so
suggestion by financial counsellors that an individual consider the advi¬
sability of additional investment in some mutual investment fund. The same situation has

often made to the

,

The

c o

the

of

and

mental
as

Canadian

nf ronted<$>

trust

industrial

capital
north of the border is partly a re¬
sult
of
the
Canadian
austerity
measures

of

use

govern¬

com-

trust

mon

fund

this

country of Canada's
increasing importance in the in¬

by banks and trust
panies in those states.

as

a

medium of in¬

It

only natural that bank!*
companies throughout
the country
should realize the
advantages to be gained from the
trust

dustrial field.

The United King¬
recently been ob¬
liged to acknowledge the wisdom
of greater British participation in

vestment. And

use

in

ment

pany we have
e(n

simultaneously

an¬

has

also

sheep had been removed and that

Canadian

the

subsidies

wheat

Hitherto

had

been reinstated.

result

has tended to concentrate

domestic

on

As

a

of the latter measure,

although the
Canadian farmer will benefit from
the

higher prices which

effective

in

accordance

are

now

with

the

economic

British

enormous

industrial po¬

United Kingdom wheat con¬
tract, the .cost of bread to the

has brought about
luctant change of heart.

Canadian public will remain un¬
The opening of
the
U. -S.-Canadian border to the ship¬

ing

new

changed.

ment

of

lambs

and

tential,

There is also

in

Isles

that

the

British

indefinitely support

sheep now
for consideration of

its present population.
In view of
Canada's obvious advantages in

cattle

comparison with the other British

addition to the

consideration is given to its prox¬

clears the way
the removal of the ban

on

exports to this country.
(In this way in

Dominions,

beneficial effects of the Dominion

imity

austerity

and

especially

when

thd

program

with

ance

this

country, by

more

"than half in comparison with last

Canadian meat exports will
further to improve the
'Dominion's U. S. dollar position.
year,
soon

In

serve

this connection

also

the

latest

figures relating to EC A offshore
purchases demonstrate that Can¬
ada

with

total of $136
far the largest

current

a

million will be by

recipient of the U. S. dollars dis¬
bursed
'■<

this account.

on

Although

capable

Canadian

management plays an invaluable
part in the successful operation of
the

Dominion

the vast
country
and the character of its
people are
even more
important factors to be

natural

economy,
of the

resources

»considered
Canadian

in

the

appraisal of
economic
prospects.

Even with indifferent administra¬

tion, & Canada, at
dwindling world

this

stage

reserves

of

of

the

to

tion

to

Canada

the

U.

K.

eco¬

of .proven

capable

management

the economic progress of the Do-

is the

come

re¬

is

now

willing to facilitate investment in
can

be shown to be

advantageous to the British U. S.

terest

in

establishing

in

olants

British

the

Dominion

movement

Canada

will

branch

be

of

and

the

industry to

further

encour¬

aged by the Dominion Govern¬
ment's offer of Canadian dollars

against

the

collateral

of

Investments in Canada.
was

first made in

but until

British

This offer

December, 1946,

it had received

now

no

official recognition from Britain.

During the week all sections of
bond market

Free

were

funds

dull

and

remained

steady and offerings in connection
with

the
November
Dominion
bond redemptions were
easily ab¬
sorbed by the demand on tourist
account.
Stocks also moved with¬
a

narrow

any

(Special

to

The

Livingstone Co.
Financial

Chronicle)

DETROIT, MICH. —Philip N.
Smith has joined the staff of S.
R. Livingstone &
Co., Penobscot
Building, members of the Detroit
Stock Exchange.

PROVINCIAL

M.

MUNICIPAL

(Special to

Herrick, Waddeli

with

Reed,

CANADIAN STOCKS

Inc.,

Financial

Chronicle)

CITY, MO.—Jack B.

Brunner and
are

William

H.

Culver

Herrick,
1012

Waddeli
&
Baltimore Ave¬

<

nue.

the

in

average

known

those people
who have
surplus funds for investment. Too
often do individuals insist upon
,

the purchase of, or investment in.
only one or a few selected secu¬

common

trust

the

belief

latter

investment

represents

single

investment

the

am

most

Trust

tice

has

been

in

in

or

objective

f

o

the

payments
plan that has
been de¬

now

veloped

type

the

a

by

O.E.E.C.
to

trade
the

invest¬

remove

The basic prac¬
use
for over a

funds, have been followed in

and

Supreme Court handed down the
"Prudent Man Rule" and this

of

investment

has

fuller
ef¬

of

use

European

re¬

sources.

M.

Bissell,

The

Jr.

three

can

main

lows;

■.

essence

the plan,

of

think—it

con¬

been

a

more

fective

R.

I

described under

be

headings—is

fol¬

as

'■

•

The first is the establishment of

much

a

broader

and

thor¬

more

adopted by many other states, in¬
ough-going clearance arrangement
cluding my own State of Mich¬
within Europe.
It is to be pre¬
igan.
Furthermore,
this
same

theory

well-known
and

sumed that clearance will be han¬

guides

now

of our
investment

many

mutual

-common

trust funds.

dled by the Bank for International
Settlements

agent, or
European
ation

through the First World
War, the development during the
prosperity and inflation of the
"Fabulous Twenties" was overlyaccelerated. This medium of in¬
vestment then became a victim of
the collapse of our international

financial structure in

ing

1929.

Dur¬

they

were

the early thirties

at

in

Basel

Switzer¬

land, which has been the clearing

The mutual type of investment
fund
developed and grew over
the years. While this growth was

limited

more

clearing
months past.

some

and

a

there
it

is

is
in

of

a

intra-

house,
for
The oper¬
familiar sort,

effect

the

oper¬

ating of a clearing house that, in
theory, ejach central bank or each
government comes in at the end
of

an

accounting period with

cer¬

tain debits against other countries
and
certain
credits, and these
debits

and

credits

are

(Special

LOS

The

Financial

INCORPORATED

investment
resumed

N. Y.
v"

NY-l-1045




'

ANGELES, CALIF.—Karl

(Special to

The

the

and

natural

latter

growth.

At

dom¬

a

in both our na¬
tional and international
economy.

the

late

Common

impetus

the

Trust

found

thirties

Fund,
another
form of investment
management,
its

among

banks

and

trust institutions. In 1937 the
Federal Reserve Board

promul¬

gated regulations set forth by the
Revenue Act of 1936 which ex¬

With Capital Securities
OAKLAND,

fund

its

position

During

Spring Street.

TWO WALL STREET

oper¬

Describes method of

for

means

tries

cleared

certain

have

European

been

debtors

current trade with other

countries;
had

run

and

after

had

used

to

them

creditors,

then,

could

function

and

not

their

European

the

debtors

substantial indebted¬

up

extended

ness

coun¬

in

a

the credits

up

by European
clearing house
to

permit the

continuation of trade.

Example of France

France, for instance, is one of
the principal debtor countries of
the

European

Continent.

France

has been

running a deficit in its
trade with Italy, with
Belgium,
with U. K., and with the Bi-zone.
The French have used

up credits
extended to them in Italy and in

Belgium.
dollars

had

They

to

are having to use
make current settle¬

with

ments

used

credits

the

Bi-zone.

their

up

extended

to

full
them

They
sterling
by the

U. K. until the

new extension of
£ 10 million credit by the U. K.
two or three weeks ago. That is
a

an

illustration of the fact that the

persistence of deficits
in

trade

debtor
tence

on

the

countries
of

in Europe
of certain

part
and

the

persis¬

surpluses in their trade

certain creditor countries, of
Belgium and Bi-zone have
two very prominent exam¬
ples in recent months—the per¬
by

which
been

sistence

of those, the

surpluses

ning

of

running of
creditors, the run¬
deficits by debtors, has
by

threatened to halt European trade
and make the function of

a

clear¬

of the more common finan¬ through a clearing house mechan¬
scapegoats—although unjust¬ ism so that what emerges from the ing system unworkable.
Therefore, the other two ele¬
ly so. When people regained their process of clearing is a series of
ments of this proposal in Paris, in
"investment
Certain
equilibrium,"
they net * balances.
govern¬
addition to the first, which is the
again appreciated the inherent ments turn out to be net debtors
extension of the clearing mechanadvantages of the mutual-type to certain others within Europe;

Chronicl*1)

A. Didricksen and Robert L. Janssen have joined the staff of E.
F.
Hutton &
Company, 623 South

A. E. AMES & CO.

.

to

because

thereby

permit

our

country since its infancy. As
early as 1830 the Massachusetts

among
countries

and

the investment management of

cept

page 38)

on

countries. The

foreign countries. Trus¬
principles of investment,

teeship

Company, realized the need
(Continued

At

century—both in the United States
and

Financial

jPhrontcle)

r

I

Arbor

the present time, the
principal barrier to trade within Europe,
and, therefore, the principal difficulty in the path of one European
country in making use of the resources of another country, is the bar¬
rier presented by the shortages of the
foreign exchange among those

or

only

collective
in

which

Ann

Sees in plan
lessening demand for U. S. dollars.

is

ment is not new.

with

the

operation and role in scheme by ECA.

History of Investment
of

principles.

same

institution

associated,

potentiali¬

that barrier to

idea

The

presumably to be

company.

The

bases of the

ated by Bank for International Settlements.

fund#' There is still

that

problems
no
different and fundamen¬
tally they must be solved on the

ECA official explains proposed international clearance
system to be
established in Western Europe by ECA and

the sacrifice of a welldiversified list of securities
mutual

their

are

most

are

as

several generations

person

Historically

ago.

insurance

problem

European Payments Plan

at

a

a

Assistant Dep. Administrator, Economic
Cooperation Administration

invest¬

among

through

did

an

same

By RICHARD M. BISSELL, JR.*

a
common
trust
fund. My experience substantiates
this
all
too
prevalent
feeling

rities

Today

trustmen

The ECA

or

present these funds hold

Two With E. F. Hutton

vWORTH 4-2400

better

funds

ment

and

enthusiastic about the

even

the

of

one

as
the improved
they could render

customers.

bankers

today, has little
understanding of the mutual-type
investment fund—whether it be

inant

.;}%'■?-r

that

which

opera¬

or

cial

The

KANSAS

b:-

similar

respects to the mutual in¬
vestment or common trust funds.
It is obvious, especially to the

well-initiated,

well

as

their

invest¬

own

fund

which

most

individual,

their

trust

a

policy, has the

Trust "A"

Fund,
is

with

tions,
service
to

mutual-type
in

one

Two with

CORPORATION

NEW YORK 5,

Heffernan

ex¬

the

fund

modest

range

investor interest.

Joins S. R.

same

of

own

despite the
boost in base-metal prices
and
newsprint which failed to create

GOVERNMENT

Ed.

position. A large number
of leading British industrial firms
have already indicated their in¬

in

CANADIAN BONDS

our

dollar

inactive.

world

ultimately

Government

Canada which

must

affairs; with the advantage

in

cent British official statement that

sential

ingly important role in

will

shape of things to

the

nomic

market

attain unprecedented proportions.
An interesting indication of the

es¬

industrial
requirements,
inevitably play an increas¬

greatest

world, there is every reason
to anticipate that British emigra¬

which have so
■fart reduced the adverse trade bal¬

;

not

can

re¬

widespread feel¬

a

Britain

a

Com¬

perience

Afri¬

expansion, but the results of
;he recent South African elections,
and
a
growing appreciation of

can

Canada's

own

countered

the

policy

on

our

Trust

development.

economic

Actually the person with funds
today, either as a result
or as a beneficiary of

of idle cash

was

and

dom

was

ties of the Common Trust Fund.
to invest

that the governmental
embargo on the shipment to this
country of Canadian lambs and

It

nounced

com¬

Present-Day Investment Funds

but

similar,

encouragement, but mostly
of the recogni¬

Fund

the

newer,

in

tion

in

men

suggesting the

consequence

a

Officer, Ann Arbor Trust Company, Ann Arbor, Mich.

Writer, holding it is unfortunate there has
fund

has demonstrated marked ability in the direc¬
tion and regulation of the Dominion
economy.
When faced with the
once

Thursday, August 5, 1948

empted the

CALIF. —Jacques
L. Vale has joined the staff of
Capital Securities Co., 2038 Broad¬

There

way.

the

as

such,
are

passed
use

common

from
30

trust

income
states

enabling
of
the

acts

have

permitting
Trust

Common

net creditors.

That

is

what

itself

iom

ments

—

of

be" accomplished by the clearing
house mechanism. Such a mech¬
anism can make it unnecessary,

if it works effectively, to use dol¬

signed to
of

cope

persistent

countries

by

the

the

can

and

others.

other

two

ele¬

proposal are de¬
with the problem
deficits by some
persisitent credits

The

other

two

ele¬

ments are: first, the funding or
lars, for instance, with some com¬
stabilization of existing debts that
monly acceptable non-European
have been run up between Euro¬
currency for individual transac¬
tions.
But the clearing mechan¬ pean countries by the process I
have just described, and the ex¬
ism that has existed for the past
tension of European creditors of
year or two years in Europe has
additional
credit
to
European
been unable to function simply

debtors.

funds,

taxation.

which

other governments turn out to be

^Statement

by Mr.

the Press Conference

Bissell

at

of the Eco¬

nomic Cooperation Administration,

Washington, D. C., July 30, 1948.

Indirect ECA Assistance

.

The second element of the pro¬

posal

is the furnishing of
(Continued on page 39)

some

Volume

168

Number 4722

THE

COMMERCIAL
not be

&

FINANCIAL

changed materially in

sequence,'

CHRONICLE

con¬

Interest

conditions
of
tightness in the building field, it
probable

seems

that

of

passage

17

World Bank Bonds Paid to
Foreign
Corporations Trading in U. S. Ruled Tax-Exempt

,T

these

"Given

(513)

on

The International Bank for
Reconstruction and Development an¬
Taft-Ellender-Wagner bill, or
similar legislation, would
result, nounced oh Aug. 5 that the United States Treasury Department has
ruled
the

The Interstate Commerce Commission
finally came out late
last week with a decision on permanent
freight rate increases in Ex

Parte 166.
In general the increases followed
fairly closely along the
lines set up in the three
temporary emergency increases granted in
these proceedings since last Octo-S>-

ber. There were, however, a num¬
ber of adjustments
(some up and

tion

most

failure

June

at

even

months

cur¬

rent levels of traffic the new rates
will not provide the carriers with
a
return of 6% on their invest¬

For

amounted

and

June

of

alone

a

earlier
and over

year

1948,

it

to

about the

same

as

it had been in

the

preceding month.
The net
resulting from the cut in
unemployment insurance taxes
credit

petition for still another rate

rise.

amounted

Apparently in reflection
expressed disappointment
industry over the outcome

of the

to $3,476,000 in
June,
1948, the balance of the increase

of

in net

the

being attributable to a re¬
duction in operating costs.
Despite
the sharp improvement in June

of Ex

Parte 166 the immediate
response
marketwise was lower prices for

results

railroad shares and the more
spec¬
ulative railroad bonds.

half

Granting

will

getting an
property in¬

on

vestment, and that with
terial

decline

costs would
most

ually,

of

it

in

the

of

railroad

for

some

is

highly

prospects

months to

at least

come

favorable.

Dividend

promising and prices
are
extremely low in relation to
current
and
anticipated
share
earnings.
The

are

recent

decline

in

railroad

security prices has taken place in
the face of a sharply
improving
current earnings picture. June re¬
almost without excep¬

were

down

to $653,921
$3,790,986 in the

with

before

Eccles

"what the

says

controls and

more

'excessively

one

last

the

recent

in

lows:

proposals, Mr. Eccles vig¬

whole

a

copy

States.

"With respect to foreign insur¬
companies engaged in trade
or
business
within
the
United

Washington

ance

July 21, 1948
Garner, Vice-President
,

"Mr. R. L.

States you further state that under

International Bank for Recon¬

a

your above

interpretation ho par¬
ticular problem seems to be pre¬
sented in the case of foreign mu¬

struction and Development

up-

in

Washington 25, D<. C.

industry from the present 40 cents

"My Dear Mr. Garner:

ping

the

minimum

wage

hour to 'at least'

law

tual insurance companies taxable
under
section 207(a)(5)
of the

cents, in¬
security old age

"Reference is made to your let¬
ter dated April 13, 1948, request¬

by 'at least' 50% and
lowering the retirement age for

ing a ruling with respect to the
question of whether interest on

that net income of

the

the

an

creasing

social

75

benefits

women

from

65

to

60, amending

bonds

the

of

Code, since such section provides
tual

International

insurance
net

Bank for Reconstruction

ifying
the
international
wheat
agreement, authorizing a govern¬
ment loan of $65 million for con¬

velopment is

income taxes when paid to foreign
corporations engaged in trade or

under

struction

business

Code

since

for

tax

of

United

a

Nations

headquarters, increased appropri¬
ations

for

public power

projects

including the $4 million TVA
steam plant, and 'equitable and
realistic' federal pay adjustments.
"Then, 'if the Congressf finds
time,' "the following should be
taken

up:

a

^'comprehensive'

(Continued

on

in the

to

United

from

and De¬

Federal

life

States.

"You refer to a ruling by the
Treasury Department dated Nov.
19,1947, in which it was held that
interest on bonds of the Bank paid
to

non-resident

alien

nor

taxable

201(a)(2)

of the
provides

that

on

the

section

income of

of

individuals

such

income.

You

na-

■

page 33);

territory have recently
To these reve¬
benefits will be added the in¬
fluence of the gradual
improve¬

$4,

been upped again.

Missouri Railroad
Pacific

in
operating performance
has been evidence since the

All in all,

year.

Equipment Trust, Series KK

while the road's earnings are still

nothing to inspire

any

thusiasm

evidence

there

is

the tide is turning
the better.

great

en¬

that

2%%

appreciably for

hand, and trying to hold the lid

taxes with the

other."

Equipment Trust Certificates
(Philadelphia Plan)

To

To be

Sets forth

mature

annually $470,000 on each August 1, 1949

to

1958, inclusive

unconditionally guaranteed as to payment of par value and dividends by endorsement by
Guy A. Thompson, as Trustee of the property of Missouri Pacific Railroad Company,
but not individually

These

on

Certificates are to be issued under an Agreement to be dated as of August 1,1948,
provide for the issuance of $4,700,000 par value of Certificates to be
secured by new
standard-gauge railroad .equipment estimated to cost approxi¬
mately $6,279,730.
which will

own

anti-inflation program.
In the

August "Monthly Bank Letter," published by the National
City Bank of New York, President Truman's anti-inflation
proposals

MATURITIES AND YIELDS

set forth in his recent
message to the special session of Congress
in for considerable criticism on the
ground that it is inconsist¬
ent and contradictory.
Comment-^-

as

come

ing

the

on

President's

message,

the

"Monthly Bank Letter" states:
"Having set forth in the first

part of his message the program as
'necessary to check high prices
and

safeguard
our
economy
against the danger of depression,'
the

President

devote

most

then

of

proceeded

the

to

remainder of

tion

to the need for

as

to

the

already

huge

spending-

lending-guaranteeing activities
the Government, and
inflationary pressures.

"First

need

the

on

Declaring

that

more

list

of

accentuate

editorially
"

are

housing.
"desperately

housing

at

lower

prices,'

the President requested
prompt passage of the Taft-Ellender-Wagner bill, with its broad
provisions for liberalizing mort¬
gage
for

•

credit

and
guaranteeing
housing investment, and
public
housing
and
slum

yields

on

clearance.

£

"There

.

is,

.

of course,

rapidly

as

.,

..

'"It is estimated that

a

dwelling units will

new

The

a

It is

:

no




ques¬

thirties and the

a

war

expanded

"

'Nothing

It

is

2.40

1958

2.70

2.50

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

•

HALSEY, STUART A CO. INC.

be started

R. W. PRESSPRICH A CO.

remarkable

years,

possible

private

construction.
of

legislation

Chicago, Illinois. The information contained^ herein
while not guaranteed as to completeness
e

The-

in

total

dwelling units would

McMASTER HUTCHINSON A CO.

To be dated August 1, 1948. Par value and semi-annual dividends (February 1 and August 1)
payable in St. Louis, Mo.
Definitive Certificates, with dividend warrants attached, in the denomination of $1,000, registerable as to
par value. Not

to expand public
housing, but this
would
only contract

number

JULIEN COLLINS A COMPANY

redeemable prior to maturity. These Certificates are offered when, as and if received by us. It is
in temporary or definitive form will be delivered at the office of Halsey, Stuart & Co.

materially.

activity

FIRST OF MICHIGAN CORPORATION

MULLANEY, WELLS &. COMPANY

only gradually.
Government

through

OTIS 4. CO.
(incorporated)

FREEMAN A COMPANY

and it

the

construction

A. G. BECKER A CO.
incorporated

HORNBLOWER A WEEKS

could do would step up the rate
home

1954

million

capacity of the buildin<*
industry hqd been so
severely
contracted in the depression of the

of

2.65

2.05

This would constitute

record.

be

2.60%

1957

Issuance and sale

as

achievement, considering the fact

can

1956

2.30

1955

being erected in

country about

this year.

2.20%

1953

1951

is possible with
existing supplies
of building > materials
and avail¬
able labor.
.■
■<"
i
•

new

1952

1.85

July 28—

on

'Homes

this

1.55%

1950

and

that the

was

we

1949

cheaper housing. But as the New
York 'Journal of Commerce' said

.

tils discourse to urging a series of
costly proposals that would add

more

:

stiff;

conclude,

therefore, that the ruling dated
Nov. 19,1947 would apply to mu¬
United States would not be sub¬ tual insurance companies taxable
s
ject to taxation under sections
(Continued on page 33)
-foreign corporations not en¬
gaged in trade or ^business in the

or

eastern

beginning of the

such

companies attributable to domes¬
insurance business regardless
of the domestic or foreign source

tic

nue

ment

United

companies

section

vidual commodity increases in the
Commission's
decision
of
last
week.
Also, passenger fares in

that

therein

the

in the case of foreign;

insurance

a

foreign mu¬
shall be

defined

within

sources

States,

a

company

income

the displaced persons act and rat¬

subject

United

effect that gross income of
foreign
corporations includes only income
from sources within the United

fol¬

as

{v.;

■

se¬

action, including $300 million

of which is

"TREASURY DEPARTMENT

ries of other 'musts' for immediate

education,

a

the

States in view of the provisions of
section 231(c) of the Code to the

ruling is contained in
letter dated July 21, 1948, to the

a

Bank,

orously opposed as 'inflationary'
the long-range housing
program.
"Following housing, the Presi¬

year federal aid to

119(a)(1) of the
"You state that the above-men¬
tioned ruling would seem neces¬
sarily to apply equally to foreign

ruled

The latest

the President's

dent continued with

previously

bonds of the Bank

income tax.

"Again, testifying before Con¬
on

on

be considered from sources within
United States under section

the

in trade

the present situation.'

gress last month

Revenue Code, due in part to the
fact that such interest could not

paid to non-resident aliens, or to
foreign corporations not engaged corporations
(other than insurance
or business in the United
companies) which are engaged in
States, is not subject to Federal trade or business

Fall,

expan¬

mortgage

easy

had

that interest

housing' as 'perhaps the
inflationary single factor in

York, in August "Monthly Bank Letter,"
is blowing up the economy with

more

Congress

described

program amounts to

inflation steam with

more

with

Treasury

System

credit for
most

Scores Truman's Anti-Inflation
Proposals
National City Bank of New

Reserve

211(a) and 231(a) of the Internal

Revenue Code, to its life insurance
business in the United States) is
not subject to taxation under the
Internal
Revenue
Code.
The

formerly its chairman. Testi¬

fying

wide as those of June.
Apparently
the company will benefit to some
extent from the
change in indi¬

most

security analysts that a
bearish attitude at this time is not
warranted. Earnings will be high
this year and the traffic outlook

full

improvement in the
earnings is expected in
coming months, although future
gains will presumably not be so

present

opinion

the

Further

be quite burdensome
the railroads individ¬

is

was

for

road's

any ma¬

traffic

year

income

opening half of 1947.

be

not

equitable return

net

compared

with the new rates the

even

industry

sults

deficit

of

$5,277,000. This in¬
crease
was
recorded despite the
fact that gross revenue was
just

making plans to

to

month

amounted to $4,437,000
the
month
of
May,

the industry is faced with an al¬
most certain third round of
wage
increases. With this
background,
it has been stated in the
press that
the railroads are

that

net

a

_

the

the like month

over

mount in the months since the
pe¬
tition was originally

a

with

the company reported net income
of over $8,000,000.
The increase

Certainly a return of 6%
could hardly be termed excessive.
Moreover, costs have continued to

file

income.

$7,398,000.

ment.

filed,

net

the road had been plagued
by severe weather followed by
the bituminous coal strike. As a
result it finished the first five

of

Federal

sion in

year

the Commission to
grant the full
increase that had been requested.

It is pointed out that

the

of

Mr.

the large
Earlier in the

surance company and
attributable,
under Section 201 of the Internal

ing for most people, with infla¬
tionary effects spreading through¬
out the entire economy.
On the
latter point, no One has been more
emphatic than Mr. Marriner
Eccles, of the Board of Governors

this year, was in the black for the

As was to be
expected, industry
spokesmen voiced disappointment
and

but only in more expensive hous¬

and

to

that interest on the bonds of the Bank
paid to foreign corpora¬
tions engaged in trade or business in
the United States (other than
interest paid to a foreign lite m
———
——■

a

not in more housing

ago,

first six months due

total increase over rates in
effect last September is estimated
at about 22.6%.

decision

suggested in these columns

Even Pennsylvania, which
has been having a hard time of it

year.

The

the

instances by

credits to un¬
employment insurance taxes rep¬
resenting the cut in such taxes re¬
troactive to the beginning of the

some
down) in individual com¬
modities, the net result of which,
it is estimated, will add another
$67.4 million tq industry revenues.

over

highly favorable, bolstered in

as

month

expected that Certificates
Inc., 123 South La Salle Street,

has been carefully compiled from
or accuracy, we

believe it to be

sources

correct as

considered reliable and,
of this date.

July 29, 1948
,1';.

-

-

-

-

■

■■■

THE COMMERCIAL &

18

-J:

:

organization of
million, Doug is
the kind of sales manager who is not too proud to pound the pave¬
ments himself occasionally and ring up retail sales on his own.
We
think you will enjoy reading his '• down to earth article on mutual

•Waddell

Adds
Benjamin Grody Company, 40
Exchange Place,) New1
announces

fective

Manager Of .the

The

If I Were

"Manager of

Syracuse, N. Y? as

issues

York

*'

the past.
C'-.f

office?

Due to the

Douglas K.
York sales for Herrick,

ranks

The

retail salesman.

phenomenal sales of Affiliated Fund during the past

as

the largest of the "Big 4" among New York sponsors

By DOUGLAS K.

His

"f v*; •

:;;3

nanur

and has for 12

V'"-'.\

tering

'

a

on

300 names at any one

pect. Too much time can frequently be spent with the ex¬
tremely wealthy, with institutions, with pension funds, etc.
Sure, it's gratifying to bring in a big sale—but the little sales

He doesn't have

a

during

be try prospect; the hardware store owner, the business ex¬
ecutive, the shoe repair man, the 'retired school teacher; the
trained nurse, the business woman—and the man behind the

office building
his name in gold let¬

importantly engraved on a letterhead.
Dressed each day nor dees he wear
spiced
foreign accent.
But, he's
citizen, proud of his cit¬

door nor

plow. They all have one common problem: Fear of insecurity
To help them not only puts "business on the
books" but gives a salesman an inside glow of doing some¬

with

CAIi. —Paul
R'.
Rogers has been added to" the staff
of
Capital .Securities Co., 2038
Broadway.-V ''
V.
.

heavy

a

American

an

in their old age.

His English is

clean white shirt.

quickly mount up and several little sales may be closed
time spent trying for a big one. Everybody would

can

,*v

He works in our

is George.
years.

PORTEOUS

Waddell & Reed, Inc.

His suits are not freshly

E'inancial Chronicle)

OAKLAND^.

thing for others.

dollar by
dollar, living frugally on his weekly
wage for performing the many menial
izenship; has saved his money,

This slogan would be a good one for me: "Time not spent

.

the

good

...

.

of a prospective client is time wasted." I
a "putterer" nor waste good working
daytime hours with routine office work, looking up addresses
or sorting prospect cards.
Those activities are for non-sell¬

retiring

.-

ing hours. I'd make as many calls a day as possible, realiz¬
ing that the salesman who makes a sufficient number of calls
each day will be taken care of by the law of averages. I'd be
convinced I can't sell such a vitally important matter as the

of

chores

a

in

George has been a

porter.

when

infirmities

the

of

presence

would

listener during his years in Wall
Street, has heard the usual "street" talk
in
the
washrooms
and has dreamed
dreams of security, of income and of

age*

try not to 'be

of

man's

slow down his activity.

investment

Many a high powered salesman has
rubbed shoulders with George (and with

I'd realize I must

frotp6ciu$'< upon request frotn
I your fav&tqent dealer, or from

research

■

&
corporation
securities

120 broadway,

mew-york $. h.y.

•

•

and ignored the

the time to

Dividend

Shares, Inc.

Nation-Wide Securities Co.

Prospectuses
available

Investment

Dealers

or

.

were

a

retail salesman of Mutual

investor for

to my
many

.

■r

.

A

.

.

.

a year.

'

George cannot break his habit of frugal living and reg¬
ular saving.
He'll want to increase his own little • holdings
from time to time.
The dependable conductor of the 8:15
has
an

he

a

the 7:45—and I'd set my trusty "Big Ben" for
rising to get acquanited with him to point out that
can
create a fund for himself that would mean

pal

on

earlier

too

"Security of the Purchasing Power of his Dollars" and his
eventual active business retirement without the fatal de¬
pendence

upon

relatives

or

dependence

the meagre

upon

government Social Security payments.
And—I'd be

the President of

sold

so

on

salesmanship that, like

my own

leading Mutual Investment Fund corpora¬
tion, I'd set aside a fixed sum out of my earnings each
month to invest in Shares for -myself.
I'd want a Living
a

totaling $105,458,000, excluding bank loans of

position is Calvin Bullock, whose five mutual
have combined assets of $97,290,000.
Close behind, in third position is "D. G.'s" Group Securities with!
asets of $90,349,000.
'
'
•
;
u
v :
Hugh W. Long's sponsored funds, Manhattan Bord Fund and*
New York Stocks, now have combined assets of $66,411>,000.
How¬ C\
ever. /including
Fundaniental Investors and Investors Management
Fund (distributed but not managed by Hugh W. Long), total assets of f

CO

.

B1-B2-B5-B4)

:

.

T

inc.

tributors.

■

*

1

at

.

the

top among
/
?'

'

-

New York dis-<
\,j

,/

.

It is

interesting to note that the growth of Lord, Abbett's Affil-i
fated Fund has been-more than four times as fast as that of the!
business
'

local investment dealer or

*

?

as

a

whole during the past three years.

Net Assets

June 30,
June

Tke Keystone Company
of Boston

this group

$110,689*000 places
!$■;$rt f

S1-S2-S3-S4)

'45
30, *48

f

Affilitated Fund

.,

.

*

",

?

^ ,

$1,065,000,000
$1,597,000,000

$18,450,000*
$57,343,000*

>;»:'•

81 Mutual Funds '

*i

15
-w

Prospectus from your InvejJmont Dealer or

%

"V.'.ifu"»•

%

Increase

1

:;!
•
%\-

50%

210%

"Excluding bank loans.

Congress Street

Boston 9,

If I owned

business for myself.

grocery

perhaps

Prospectus from

i

he

There's
satisfied customer.

In the runner-up

COMMON STOCKS

!

whom

funds headed by Dividend Shares

capital

(Series K1-K.2)

50

friends

"Affiliated."

| PREFERRED STOCKS

four

or

buying Shares too.

selling assistance than a

net assets as of June 30

BONDS

'

in

Annuity, too!

IN

(Series

relatives

his

merely the transition; from pospect to customer ... A cus¬
tomer for additional business in a few weeks, or months—or

dollar the

INVESTMENT FUNDS

(Series

of

interested

be

.

prospect would receive as income," etc. I would take an
interest in the Georges, the conductors, the many people
with whom I'd come in contact daily.
I would study their
individual investment needs and would handle, my visits
with them on the subject closest to them—their own financial

Funds.

<

names

store—I'd expect my customer of yesterday to be
my customer of today—and tomorrow
..and the closing of
a mutual fund sale would be recorded in my own records as
a

for continuous dividend income

Certificates of Participation in

investing tlieir

campaign, in the 1920's, used the
who owns one." I'd ask—each sale

man

consider myself in

I'd

chaser.

\\

but

.

advertising

vvould

better

no

my own

Custodian

.

"Ask the

make—for

I

problems—with the serious purpose of protecting them with
better knowledge of investments, i would illustrate
investment priciples with practical stories, involving either
local people or well-known events. I would learn .enough
about the subject to talk in realistic terms—not theoretically,
for too often that confuses and frightens a prospective pur¬

Keystone

no,

65.

big

thinks

Investment Funds,

of "the purchasing power of the

for continuity

.

first-call sale—oh,

.prospect that he too can create a trust fund, by joining
others with similar finances and desires..

slogan:

diversification,.for marketability, for continuous

investment management".

a

Many banking institutions do not solicit ihe "average
a trust fund.
Consequently, I would point out

my

Established 1894

down

American" for

first step would be to educate myself in the broad prin¬
ciples of our business such as the protection we offer the

CALVIN BULLOCK

of

age

small suburban town. He

other

Mutual Invstment Funds.
If I

They deserve to have
that's being in¬

"ready" look in my prospect's
eye and the relaxed lines of his mouth.
He will have real¬
ized that in buying Shares, he can create for himself grad¬
ually and slowly over the years, a "Living Annuity" in which
he participates
that through this plan he will not be like
the millions of Americans who are financially dependent at

1

from

be a

think it over—it's their money

wouldn't turn

I

vested.

can

I'd close only when 1 saw the

commutes
people's lives,. Bill^ad made
friends with the conductor.
Oh, he's ridden hig,.vtrain for
years, the 8:15 to the city. Last week he sold that conductor
some shares of a Mutual Investment Fund.
I asked Bill how
he felt about that sale and he replied, "I've done a favor for
a man who has performed many for me!"
I asked him why
he hadn't sold him sooner and lie told me he just hadn't
applied himself before.
There are many Bill Smiths, John Jones, Harry Browns
who are having similar selling experiences. They are begin¬
ning to realize that there is no segment of the ^investment
business, the insurance field or the banking field which is
accomplishing so much for the "average American" as
in

Interested

daily.

Bullock Fund, Ltd.

punch in the first interview

The "Trust Fund Plan" idea should be developed

gradually in the minds of prospects.

the

Bill Smith lives in a

..

by mail, nor by telephone.
people—that I've got to get out of

money

the

see

sales

much

Too

deterrent.

Living Annuity.

^

a

the office.

possibil¬
ity that he was a prospect.
One day
Douglas K. Porteous
recently a friendly guy in a clean shirt
and a freshly pressed suit
passed the
time of day with George. One word led to another and sud¬
denly the guy realized that George was a prospect.
A
prospect not for a $50,000 sale—but, for a surprising amount
anyway.
We'll call the friendly guy Bill Smith—rand if J
were Bill Smith I would feel humble about the opportunity
I had to
do something for George—helping him realize
his lifetime ambition to build for himself a Trust Fund, a

other Georges)

National

with

My prospect list would be kept "alive"—not more than
time—each of them a "quaUfied" pros¬

Retail Salesman

Vice-President, Herrick,

in

as

Capital Securities Adds
(Special to

any

months, the Lord, Abbett Group of mutual funds which also in¬
cludes American Business Shares and Union Trusteed Funds now

(Sixth of a Series)

;

.

...

a

Mr<

specialize in

Pelz will continue to

New

helpful to

trading depart¬

their New York. City,

upstate

retail

12

written by

was

Porteous, Vice-President in charge: of New

sociated wi1& -^'Johnson f & ' Co.
of

•

Retail^ Salesman

this ^series

in

article

sixth

a

Mr. Pelz formerly was as¬

ment.

a

Lord, Abbett Heads "Big 4" Among New York Sponsors

HEN&Y HUNT

By

the associa¬

and

through

distributors

Reed,

funds which should be

"

,

If I Were

tion with the firm of Stanley Pelz
as

V.*

-

York' City?

Company ef¬

&

2,

Aug.

^

>

in the firm

change

a

Grody

of

name

and

United Income Fund with net assets of nearly $16

Grody & Company;

Now

Thursday, August 5, 1948

FINANCIAL CHRONICLE,

3'lassachusekti •

HUGH W. LONG & CO.
•




Needless to state. "Affiliated's" growth was

accomDlished largely

inco**o«au;>

-46 WALL

i.u«>*■ >■■«*»

2500 Russ

'A-*?

STREET. NEW ^iCRK

5. N Y

'{PCSi i-.A'j

•

...v..

..• •

'

Volume

168

Number 4722

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(515)

19

go some to catch up

with M. I. T., and Keystone although you're not
too. far behind Investor's Mutual.:, j

Proposed Pennsylvania Turnpike Extension

"Incorporated" Optimistic

$134,000)000 Bond Issue

In its

mid-year report to shareholders, Incorporated Investors of
Boston notes that assets rose from
$67,046,000 to $75,274,000 during
the

first

half

for business

'48.

of

President

follows:

as

i

•

Parker

comments

f

v

'

v

the

on

to Reach Market

on

August 11

outlook

\/:

•

:
"The management continues to maintain the fund in a
fully in¬
vested position because it believes that conditions are
favorable for
common
stock investment.
Retail sales continue at record levels.
Construction work is at an all-time
high; the expansion plans of in¬
dustry run to figures of tremendous magnitude; profits and dividends

are

excellent; employment, is high. And yet, stock prices in relation
earnings ^and dividends are unusually low* Your1 management can

to

find

basis in business conditions

no

swing in

business

activity

or

or

conditions for a down¬
stock prices, in the near
0

money

common

future.V

|
|
"Your management feels that the last few years Imve offered
special opportunity to investment • companies to demonstrate the
value of professional investment management. These
years were try-'
ang years for the average unaided investor. From many quarters he
lieard forecasts of a business recession. Various theories: indicated
that equities should be
sold, which added to his perplexity. Yet no
2>u$iness recession developed and stbck
prices are again above the
levels at which the so-called sell
signals were given. In nearly all
cases those responsible for the
management of diversified investment
companies relied on careful analysis of
fundamental conditions and
.•

resisted the

vesting. As

implications of the various mechanical theories of in¬
a consequence

they, not only produced creditable iiivest-

ament results for their stockholders but also a
peace of mind that
ether investors left to themselves
may not have enjoyed."

Wellington Skeptical
-

m

Walter L Morgan, President of Wellington Fund,

mid-year report that net assets have reached a
$57 million. The report continues as follows:

states in the

high in

new

of

excess

■

."Although there was some evidence of a decline in business
activity in the first quarter of the year, this trend was reversed
under the stimulus of our
European recovery and rearmament pro¬
grams and income tax reduction.

change in public psychology.
price

level

revived.

did

The

not

These

stimulating factors caused

The expected

materialize

and

decline

fears

some

in the

of

a

general

shortages

were

demand

for automobiles and other durable
goods
Increased and building construction rose to a postwar
peak. Bonus
payments of many States, higher wages and prices for farm
products
also helped to increase national incorhe and
improve the outlook for
imsiness for the remainder of the
year.
...
:■^.>'v
"It should be realized that some of
these^
diminished or absent next year. European aid and bonus
payments
sire scheduled for smaller amounts.
Many authorities doubt whether
larm products will remain at present peak
prices. The non-recurring
'

etimulants cannot be considered as permanent
props to prosperity.
If the fear of war should abate, there is
apt to be a more severe
adjustment in business than would otherwise have occurred. If the
defense program is expanded further, it
may lead to controls, profit
restrictions and higher taxes.
It should also be realized that the

production of

goods is catching up with demand
adjustment to more normal levels."

many consumer

that business may have some

so

A

topographical

Turnpike and

of

panorama

Commonwealths of

the

th^Philadelphia extension

at 25 Broad Street, open for

it will

as

appear

Pennsylvania
upon

showing

completion, is

inspection by investment dealers and the general

on

Pennsylvania

the

display

public.

A

this week
nationwide

investment banking group

jointly headed by Drexei & Co.; B. J. Van Ingen & Co., Inc.; Blyth & Co.,

Inc.

Corporation, plan to offer $134,000,000 Pennsylvania Turnpike Commission

and

The

First

bonds about Aug.

Boston

11.

This is

the largest

revenue

bond

issue

ever

to

be

marketed.

The

is

panorama

shown above with the Turnpike appearing in the foreground.

World Bank Reports Its Finances
Net

income

for

ended June 30

year

of

than

more

eliminates deficit of previous year and provides

Shown viewing the penorama are, left to
and James Couffer of B. J. Van Ingen &

$4 million

surplus of

over

right, front—Walter H. Steel of Drexel

&

Co.

(pointing)

Co.

Left to right, rear—B. J. Van Ingen of B. J. Van Ingen & Co.; Eugene Cowell of The First Boston

$3 million.

Corporation; and Reginald Schmidt of Blyth & Co., Inc.

The International Bank for Reconstruction and
Development has
financial statements for the fiscal year ended June
30,

released its

1948, audited by Price, Waterhouse & Company.
this period amounted $18,703,978.

The Bank's total income for
After deducting expenses amount-

ing to $11,557,848 and amounts for
the Special Reserve aggregating
$3,051,478, the net income for the

$4,094,652. This

year was

suf¬

was

been

made

million.

approximating

The

$470

equivalent

was

disbursed

This announcement is not an

of

$2
Belgian
Francs and the equivalent of ap¬
million

ojjer ojsecurities for sate

or a

solicitation oj an ojjer to buy securities.

in

ficient to eliminate the deficit of

proximately $4

$1,063,805

New Issues

August 3, 1948

.

bursed in Swiss Francs. Disburse¬

existing

June 30,
net income

on

1947 and to provide a
at June

should

30,
be

1948 of $3,030,847. It

noted

that during the
$1,276,003
of
bond
registration and issuance cost was
charged directly to expenses for

fiscal

year

the year.

creased

$261.5 million

sult

the

as

the

subscription to

re¬

2,000

shares by Australia and 380 shares

by Finland,
to six

and

133

additional

Para¬

shares

by

Egypt, and 96 additional shares
by Iran* The total subscribed
capital stock at June 30, 1948
amounted to

$8,286,000,000.

The total loans of the Bank in¬
creased from $250 million to $497
million during the fiscal year. In

addition,

to France

to the Netherlands has been

and

com¬

pleted. Denmark has available

an

on

March 25,

1948, the

Bank approved loans to two cor-?

porations owned

$23,551,741
and Luxembourg, $3,392,508.
In July,
Year

On June

by

the

Chilean

2%%

Swiss

Franc

April

1,

1953

amount of

in

the

aggregate

and

francs
to

1954,

in

amount

Bank

Serial

an

and

Swiss

accrued

Francs

17,000;000

to

$3,955,788)

the Kingdom of

share)

per

share)

(Dividends subject to

a

2% Hawaiian Withholding Tax)

Transferable subscription warrants, expiring at 12:00 o'clock Noon August 16, 1948,

evidencing rights to subscribe for Series D Preferred Stock
Common Stock

International

interest.

were

(Par Value $20

aggregate

of

for

per

100,000 Shares Common Stock

in

Settlements, Basle, Switzerland
par

(Par Value $20

Bonds

1948 maturing

(equivalent

the

50,000 Shares Series D, 5% (Cumulative) Preferred Stock

1, 1948, the Bank sold

dated

principal

Company, Limited

(a Hawaiian Corporation)

1947, the Bank sold to

2Vi%

Bonds due July 15,
1957,
and
$150
million
of
its
Twenty-Five Year 3% bonds due
July 15, 1972, both issues being
payable in United States dollars.

as

Government

The Hawaiian Electric

unused loan balance of

the subscription

additional shares by

guay;

the loans

dis¬

was

the public $100 million of its Ten-

During the year, the subscribed
capital • stock of the Bank in¬
of

of

ment

million

at

$20

per

share

outstanding Common Stock,

at $20 per

share and

being issued by the Company to holders of its

are

as more

fully set forth in the prospectus.

at

These

disbursed

to

the Netherlands

Copies oj the prospectus

may be obtained from whichever oj the undersigned
(the underwriters named in the prospectus) may I gaily offer
these securities under applicable securities laws.

part of the loan of $195 million

to it.

$16 million, to become

effective when ratified and guar¬
anteed

Chile*

by

the

Including

Government

this,

loan

commitments

1948

amounted

to

at

the
June

$513

of

total
30,

million,

Herrick, Waddell Adds
(Special

against which disbursements have Avenue.




to

The

Financial

Dean Witter & Co.

Dillon, Read & Co. Inc.

Chronicle)

KANSAS CITY, MO.—John W.
MacMahon is with Herrick, Waddell & Heed, Inc., 1012 Baltimore

til

Lit

C?%..

-

-

i,

tent' that

arguments against working diligently dur¬
ing the hot days of July and August. They run the gamut of excuses
all the way from such old standbys as, "What's the use of calling
on people now because most of them are on vacation", or, "It is too
.hot to work, who wants to call on a customer or a prospect looking
like a wet rag?" Then there are such gems as these, "Markets are
slow, nobody is doing anything anyway." You have heard them all,
so

why go

on.

pressures.
"With

if you like the other
side of the story for a change. True, many people are away, -but to
say that the majority of people are not in and there is no use to put
in a full day's work for this reason is just the bunk. All the people
are not away, many of them are at home this summer the same as
every summer, and if you want to see them, all you have to do is to
make the calls. Telephone calls will sometimes obviate wasted effort
if you wish to simplify and organize your day, which is only common
either in the winter or the summer.

sense

L If ft

is hot

you

.

will feel a lot better working

• .y

.

<

:
•

has

■

are

turers.

Inc. is

Robert
iett

G

&

v

has

It is

Sons,

to

ernor

In vestment

securities

cers are

As¬

Bankers

formed with

Preside nt;

Am erica

to

Thomas

th

r e

term.

F.

President

He will

Secretary; and
Charles

John

succeed

was
for¬
merly Secreretary.
Gen¬

annual

conven¬

eral
and

tion next December.

Thos. J.

Meaney

Manager
trader

for

W. L.

Morgan &

Co., with which Mr. Loxley was

Florida Securities Adds
(Special

ST.

to

The

Financial

Co.,

Florida

Bank Bldg.

in

the

Malcolm

F.

gold

stock

source

domestic monetary

i t

Continuing
Bank

Minor,

partner in

Kendall & Hollister, New
York City, died on July 28.

National Pyne,

30 at $778 million,
slowing up of gold

the

s

cause

grams of our

of

their pos twar

Six-Month
of Dollars;

;J

——£—
"

.

Import

Res. Bank*

257

June, 1946

Amount Held
With Federal

—

.

J

412

467

531

i

965

1,496

Dec.; 1947—_-.r_-.4--

1,335
f1,058

i

June, 1948

55

-

92 ;
—262

1,427 :
79-3;

,

...

;

?
,

161
—45

—13

...

"Excludes

46 Front Street, New York 4, N. Y.




358
—3

213

44

1946June, 1947——
Dec.,

! NATIONAL QUOTATION BUREAU, Inc.

Res. System

Total

lateral

San Francisco

for

held for international account and
leans.
tPreliminary.
- j
gold

Source:. Board of Governors of
Commerce

release

"United States Gold

,

N

System arid Department of
arid Silver Movements in June, 1948."

the Federal Re'sefve

"

gold pledged as col¬

important factor in the 1946
earmarked gold, how-

'

the repatriation of Ar¬
gentine holdings. Gold exports to

,

"An

was

ever,

-

Reduction in

With Federal

Ended

-

country largely offset, imports, »
from other countries in the latter
half of 1946 and account in part
for the low rate of net imports in
that period. Sales of gold in the
United States by other countries
were
nearly as great as in the
first half, including South African
gold which began to reach this *
country in fairly sizable volume.
.
"Gold was imported from South.
Africa and Canada at a greatly
accelerated rate in the first half
!
of 1947; as in the previous period, ■"

that

MEMBER

Earmarkings

t

Net

large
sold by

1947

large part of
from gold held
at this bank for

reduction in

(—) in Member Bank Reserves)
.
Gold:—
Dollar Balances

Six Months

were

earmark

of

were

A

$2.8 billion.

va¬

imports. To the ex-

Reduction in

half

gold

gold for foreign accounts amounted
to nearly $4.2 billion, but at the
end of 1946 the amount had been
reduced to about $3,8 billion, and
at the end of- 1947 to less than

1946-June, 1948

Periods January,
Increase or Decrease

of

*

foreign countries. At the end of
1945
total unpledged earmarked

dollar securities

EXPENDITURES AFFECTING
BANK RESERVES BY SOURCES

first

sales

under

notably France,

States, but in 1946

countries.

other
the

Sales

heaviest sellers of gold

United

the

and

Gold

of

Europe,

amounts

requisitioned from their nationals,
foreign countries have drawn or
their gold
reserves in order to
help finance the large volume of

ACCOUNT

(In Millions

to the

Treasury,

the

and oc¬

further reduction
payments by the

early

the

were

government—or in¬

from the sale of

wake

Some

a

postwar period
of the liberated countries of
the

Western

(in some cases) dollars which they
had accumulated before or during
the war or which they derived

almost every¬
these shortages
the direct result of whole¬

in. its

where.

S.

U.

gold sales to
the period re¬

this development

despite

Sources

directly through the Internationa1
Bank and the Monetary Fund, and

shortages of goods which the war
left

the

from

directly—through

of

Treasury.

using the dollar

either

of the postwar

For 35 Years

-

curred

rious credits and foreign aid pro¬

developments."
analysis, the

the

slackening

flected

peacetime needs.

tained

gold to the United
been the widespread

has

States

Over-the-Counter Quotation Services-

' L

in

this country during

proceeds of their own exports, the
substantial amounts of dollars ob¬

of

FOREIGN

Established 1913

preceding

in international

"In addition to

have

of gains in

states:

"The main

F. Malcolm Minor Dies

of

period. A further
quantity and
value of United States net exports
occurred in the first half of 1948.
the

both

turned

their

foreign
somewhat,

gold to this country re¬
mained close to the high rate of

sales

After the end of the hos¬
groups of countries
to the United States fo3

tilities

"
"

to

payments
decreased

countries

some

supply.

was

-

of

Treasury

cutting off during the war of cer¬
tain countries outside the battle
area from their normal sources of

respect, not only to the in¬
ternational situation, but also to

were

Chicago

up

"In

with

movement

FLA.—F

Raymond Maxson is with Florida
Securities

also connected.

Chronicle)

PETERSBURG,

gold

incoming

foreign

goods
from
the
United States was effected in the
last half of 1947. Since, however,
purchases

which had be¬ sale destruction of production fa¬
cilities and of the shifting of mcr
gun to show signs of tapering off
earlier this year, increased again and machines from peacetime pro¬
in
May and June.
Despite the duction to war production. Other
scarciLes of goods arose from the
slowing down in February, March,

the

in

contraction

"Some

the United States,

of

»

System.

serve

the gold inflow into the Unitec

April, the gold stock of this

-

result foreign countries

a

drew heavily on their
reserves
through gold sales to this country
and through further reductions in
their dollar balances with the Re¬

and its effect on member bank re¬

postwar period, an analysis of the
causes and origins of gold move¬
ments to this country is of interest

ey

-

As

gap.

.

member bank reserves during

tor. Mr. Mean¬

Edward K. Dunn

war

*

exports
In the first six months of

result of price increases. Sub¬
stantially enlarged payments to
foreign countries by our govern¬
ment failed to close the financial

According to the Bank:
"The rate of inflow of gold into^

serves.

been the main

Loxley, direc¬

Baker,
■& Co., whose
term
expires
at the close of
the association's

the

in

as a

Review" of the Federal Re¬

August issue of the "Monthly

Bank of New York analyzes

than

months, while
declined some¬

1947,. however,- net exports of this
country rose sharply in quantity
and even more so in value, partly

The

Reports net imports in half-year eitd^d June
continuing trend of last two years, i Foresees
imports.

dollars more

account

net

what.

ought

lining

are

billion

preceding six

our

;
.

The Treasury spent

a

reduction

creases

E.

Redwood,

Jr.,
Watts

the

the

in

slackened

international

on

gain wide publicity

Bowles

reserves.

1946.

half

about

1

•

placed under earmark for foreign
accounts for later use. Since in¬

and

e-y e a r-

'

r

some

Glancey,Vice-

a

*

eagerly with the President. No one then need
make any mistake about the real nature of the
movement ri&w setting under way.

million in
the six months ended June 30.
Imports were over $1 billion,, but

J. Meaney,

as

of

for

a

country increased $778

Thom¬

sociation

serve

second

of

source

bank

banks)
half of

somej sort of medal.
good thing though that men

like Paul Porter and Chester

and

business. Offi¬

the

of

J.

in

engage

the

Gov¬

a

probably

States since the end of

Walnut Street,

been

elected

PA. —T.

PHILADELPHIA,
Meaney, Inc.. is being
offices at 1420

a r-

1

honestly, even

drivel, the Republican Party

present him with

to

serve

Being Formed in Phila.
Dun n,

"Aggregate foreign spending affecting bank reserves (from gold
and dollars held with the Reserve

which
Truman's pro¬
stop inflation dead in its tracks."—

for this sort <rf

The

J. Meaney,

K.

'

'

'■

"

of the war,

additional

so

yourself to business you just cannot help
accounts. You will keep your
desire to serve them. If they have
some losses go to see them by all means. Bring them the latest infor¬
mation which you can obtain about their holdings. Put in a solid
day's work. You will find that both the heat and any other worries
which you may have concerning your business will be of little con¬
cern
to you. The greatest blessing that God gave to man is work.a
There, is nothing that will clear the mind and reinforce your bank
account except work. It is the doctor's best prescription.

Edward

*

-

.

reserves.

potent.al

a

Chester Bowles.
•

than gold
additional
To the extent that
of

source

they of course did not represent

accept President

If Mr. Bowles continues to

balances

important

a

member

to-the dangerous emergency

posals, they can

these

cial banks at the end

a

confronts us,-and

customers remindful of your

—

bank

Wall Street, that
concern
is

publican leaders. If they will face up

as

about

foreign countries' dollar balances
were already held with commer¬

i

at this late date,

but obtain seme* orders and some new

MD.

sales

to

in

decline

more

was

"Although it is unlikely,; there is. still time
dramatic reversal of the-viewpoint of the Re¬

for

Besides if you expose

BALTIMORE,

'

sizable

the working people of
America but with the profits of the meat packers,
the steel monoply and the gjreat corporations which
dominate the National Association of Manufac¬

will lay the foundation right now.

old

In the first half of 1946 a

welfare of

the

not-with

slow that is a good time to call-upon people. The
time to open new accounts is not when markets are boiling and
security prices are up. People who see their investments down in
price will be more willing to meet a new face who can bring them
some fresh ideas and good cheer. Besides if you offer securities at
a time when they are not in demand the chances are ten to one that,
when the market once again picks up, your new customers will see
a price rise in that which you have sold to them.
i In this business, today's sales are the result of yesterday's efforts.
If you are going to do good business this fall you will recognize that
•the smartest thing you can do right now during these hot dog-days of
July and August is to go out and see three to four brand new quali¬
fied prospects each day for at least five days a week. The only way
anyone can sell securities is first to gain the good will of your
prospect. Next comes a certain amount of friendliness between you
and your potential client. The way you conduct yourselfj your wil¬
lingness to help supply information and service, your sincere convic¬
tion that you want to help your customers and not just make sales,
your complete indifference to any high pressure sales arguments,
these are the things that will pay off in October and November if
you

"

million.

overwhelming

its

ih;the office bemoaning the fact that you are not doing enough busi¬
ness. When you are busy you don't mind the heat nearly as much as
when you are sitting in a pool of your own perspiration.

j If markets

'

$900

by adding substantially to
supply of money and credit.
"The Republican leadership
made it clear that its heart

still clings to

Bowlee

Chester

than sitting around

central

foreign

:by

governments with the

and

amounted

actually moved to increase the
inflationary' dangers still fur¬
our

of

of; 1945

ther
-

"

Federal Reserve banks at the end

Congress, they not only
refused to accept even the lim¬
ited tax and fiscal approach, but

good reasons for working

position

reserve

held

banks

over

V-;

Here are a few

the

on

ances

control

complete

dollar' balances of

the

American commercial banks. Bal¬

responsible in June, 1946r for the destruction of
the original controls which had limited, price rises
to only ;5% over a three-year
period of intense inflationary

There are many good

!

fect

of the National

By JOHN DUTTON
•

jRepublican Party le^dei^ at the diteciion
Association of Manufact;urers> were

f ;JThe

v

foreign countries had been aceumulated at the Federal Reserve
banks, reductions of those bal¬
ances have had an immediate e*f-

Now, Mr. iBowles!
Securities Salesman's Corner

l9^;'

;Thur^day,'fAugust 5j

;

FD^VHCMKCmCH^GIK

THEfOCMMEBCTAE88S

.(5161

20

" '

came

:

~

the

these

two

■

negligible amount in the Lrst half '
of 1947 and were later reversed,
4
as

,

of

from

gold

imports

countries '(al¬
though not necessarily for their
accounts exclusively). Exports of
gold to.Argentina dwindled to* a

most

that country found.it necessary

toi draw
for

the

on gold reserves
payment of its imports

heavily

Western Euro-

.

countries also drew heavily

•

from this country.
pean

A'

"i A*

Volume 168

Number 4722

the

r

commercial; & financial, chronicle

(517)

theft- gold reserves to - meejt country- during the .period Some rector, it was indicated in the ant
Treasurer. According to the
their commitment.
of these shipments were, used tcf Providence "Journal" on
July 30.; "Courier-Journal" of
Louisville,
"To pay for their heavy pur¬ enlarge unpledged earmarked "ac-r That paper states that Mr. Frazier Mr. Atherton
on

Junior Brokers Group
Of New Orleans Elects

4

chases

counts,

cf

goods in the United
States in the second half of 1947,
former

which

increased

$260 jnillion.

entered

about

in

^

"It seems
well as the
likely that the im¬
ex-neutrals, exported gold to, this portance of gold shipments and
sales
of
earmarked
country
in
substantial
volume.
gold as
a
our

allies,

Chief among the exporting coun¬
were
the United Kingdom

again tend to diminish; in part

and

j

of bank

source

Argentina, with amounts of
nearly $490 million and $350 mil¬

result

which

of

import

He

posed recently.

ported
and

$165

million.

goods

these

have

already resulted in

shipments,

however, were made
holdings of earmarked
gold here. (Exports of the respec¬

diminished rate of

tive

in

more, as the European Recovery
Program gets under way and a
greater share of this country's net
are
financed'
exports
through
"unds supplied by the
Treasury; a
further decline, perhaps to the

.n

than

greater

the decline in their gold reserves.)
Other countries continued to draw

their

upon

which

earmarked

declined

accounts,

further.

-

number

a

of

of gold

use

to

level

the largest source of

countries
sizable

of

gold

States,

Treasurer.

Six-Month

(In

production

gold

"Mr.

FROM

January,

Millions

THE

UNITED

Source:

Dec.
1947

11948

357

46

5

9

—39

1

490

810

—

163
28

135

54

289

157

of

Sweden,

Governors

of

to

States

1923.

He

115

297

114

24

-28

17

—23

55

531

1,335

Gold

and

who

Auditor

National

the
of

July 31.

on

of

years

of

Bank

The

with

the

before

Logan

-Philadelphia

their

Silver

System

and

Movements

in

Department

National

Bank

and

Kensington, Pa.,
has become the New
Kensington
office of Mellon National Bank &

June,

1948."

q$ Pittsburgh, according
Pittsburgh "Post Gazette"

the

to

of

of

Aug. 2, which also had the fol¬

lowing to

acquisition of the Logan
by the Mellon National was
approved by the stockholders of

the

CONSOLIDATIONS
NEW BRANCHES
NEW OFFICERS,

Bankers

and

ETC.

REVISED

Logan

National on Friday.
Wilson, formerly President
of the Logan National, has been
appointed Manager of the New
R.

Kensington office.
D. L. Robin¬
Ralph B. Hudson and M. K.
Alter, former officers of the Logan
National

,r

Clifford F. Scherer has been ap¬

Assistant Vice-President
of J. P. Morgan & Co. Inc. it was
announced on Aug. 3. Mr. Scherer
on

the staff of J. P. Mor¬

gan & Co. Inc. since April 1, 1929.

merged with the Chase

National Bank under the

pointed

has been

was

the

two

mated

the

of

The combined assets of

latter.

uie

j

name

institutions

at

esti¬

were

$i;025,000,006,; ranking

Chase at

that

time

been

appointed
Managers.
Frank
R,
Vice-Chairman
of
the

Denton,
Mellon

National, said

committee to the
been

advisory

an

McHugh, former President

Garber, formerly Manager

the

Chase

National

of;

Mr.

Mellon National Bank & Trust Co.

the National City Bank.
McHugh
became the
first

Bank

of

home

at

"He

Chappaqua, N. Y., on Aug. 1. Mr.
McHugh, who had also served as

years,

New

I

York, rdied

Chairman
mittee

of

of

the

the

at

his

executive

com¬

bank, retired from

President of the consolidation.

resigning in 1928 to take
Chairmanship of the execu¬

the

tive committee. After his resigna¬
tion. of this

I

that post in 1934, retaining, how¬

tinued

ever, his position on the hoards
of several other corporations; one
of these was the Chairman of the
board of the Discount Corporation.

I

-

McHugh

at

was

time

one

President of the Iowa

State Na¬

tional Bank at Sioux City.

In its
account of his career, the New
jYork "Times" of Aug. 2 said in

t'partr
V "In the Middle West Mr. Mc¬
Hugh
the

himself

made

leader,

was

Iowa

and also

a

banking

a

elected President of.
Bankers
member

Association,
of

the

exec¬

utive committee and Chairman of
several

sub-committees

American

Bankers

of

the

Association.

lArhong prominent bankers

who

V cjaine to appreciate his caliber

was

'Gates W, McGarrah, then Presi-

;

f

dent of the Mechanics and Metals

National

Bank

of New York.

In

con¬

the

Dis¬

former President of the New

was a

State

York

and

Bankers

'i

*

-

of

the

board

Federal

of

directors

Reserve

announced

on

Bank

of

of the

Boston,

July 27 the appoint¬

ment

as

Ames

Stevens of North Andover,

"Class

C"

director

of

and

Vice-President

cepted,

moved

to

New

He

York

a

of
ac¬

in

1916, and in 1922 he succeeded
Mr. McGarrah as President.
■:

"Four

second

years later occurred the
billion-dollar bank consol¬

idation in the history of American

banking when, in, February, 1926,

the Mechanics and Metals National




men

officials of

were

National

Bank

Without

the

when

cancy caused; by 'the
on
Dec.
31, last, of

va¬

resignation

Donald K.
David, Dean of the Harvard Busi¬

Forbes

it

became

Bank

ance

of

value
a

stock

the

Ky.,
issu¬

July

28

the

of

$100

Stevens

is

a

in

the

bank

share and the issue

oversubscribed

was

at

Palmer,
sistant

at

than

more

hegan,
and

World

and

director3 of

War

I.

director

the

has

Holmes, Jr.

held

were

of

and

New

the

fol¬

lowing officers elected for the ^re¬
mainder of 1948: President, George

Na¬

B. Riviere

Wash.

of

Howard, Labouisse,

institution, became Assistant Vice-

Friedrichs & Co.; Vice-President,
Thomas Holmes of Weil and Co.;

President

Secretary,

Walter J. Brewer,
and

long with that

Trust

July 28.

Counsel

'

Allen M. Steiner oi
Woolfolk, Huggins and Shober;
Treasurer,
Milton
J.
"Mickey'"

on

,

McGovern

Paul J. Cox Opens
Own Investment Firm
KANSAS

Mr.

Cox

1947
o

&

dealer and

offices

at

120

broker in railroad,

securities.
ten

and

Mr.

has

Hall

been

for

the

include

.

co-

■

securities brokerage,

speaker from

banking

securities
erage

guest

and

firms,

in¬

banks,

commodities

brok¬

houses, and industry.

Bartling & Go. Formed
In Los Angeles, Cal.

Financial

Chronicle)

ANGELES,

CALIF.—An¬

nouncement is made of the forma¬

;H. G. Diveley Interests
The

a

vestment

LOS

to

of

understanding

past

with

rities- department.

(Special

and

reorganization

Pflugfelder, Bampton & Rust as Man¬
ager of the reorganization secu¬
years

n

formed in

spirit

Pierre R. Dupont of MLPF and B;
Secretary, George B. Riviere; and
Treasurer, Thomas Holmes.
Meetings are held weekly and

Opens

Broadway, New York City, to act
as

public utility,

io

p er a t

was

a

Outgoing- * officers were : Presi¬
dent, James F. McKillips of Stei¬
ner, Rouse & Co.; Vice-President,

Frank L. Hall has formed Frank
with

promote

banking,

Christopher

Inv. Business in NYG
Co.

to

Snideij banking andj;ommodities.;

C.

Frank L. Hall Go.

Hall

Pro¬

the members and to fur¬
ther the knowledge of the mem¬
bers in the fields of investment

Co.

L.

Co.;

among

was

formerly local Manager for O. H.
Wibbing & Co. Prior thereto he
was with Prescptt, Wright,

Company and B.

&

...

The Association

ment business with offices at 1016

Avenue.

Beer

Shober.

MO.—Paul J.
opened his own invest¬

Baltimore

of

Director, W. E. "Bill" Figueira of Woolfolk, Huggins and

gram

CITY,

tion
»

COLORADO

SPRINGS, COLO.
—H. G: Diveley Interests,-Inc., is
engaging in a securities business

of

the

investment

banking

firm of Bartling & Co. with of¬
fices at ;650 South Spring Street.
Officers are Herbert W. Bartling,

President;
Arthur
W.
Billings
offices
in
the
Colorado- and Daniel T.
Oertel, Vice-Pres¬
Springs National Bank Building., idents; Claude J.
Whitfield, Sec¬
Officers are H. G. Diveley, Presi¬ retary-Treasurer. Cecil J.
Downes
dent; Egbert H. Schif, Vice-Presi¬ is Manager of the trading
depart¬
dent; and Raymond E. Rayford,, ment and Charles W. Flesher is
Secretary-Treasurer.
Sales Manager.
•
from

•

.

.

Newport News

as

Quarterly Statement of Billings, Estimated Unbilled
Balance of Major Contracts and Number of
Employees
Billings during the period:

&

Trust

Thirteen Weeks Ended

will

holders
new.

go

and

to

the

remainder

stockholders.

cates will be issued
and will

make

The
as

new

June 30, 1947

June 28, 1948

$ 3,126,162

$ 4,326,250

$ 7,839,714

15,082,986

9,746,224

28,540,054

1,021,948

767,436

2,293,454

to

32

of Sept.

The plans to
were

our

operations

Earl R.

di-

1,104,994

Estimated

1,147,076

3,327,215

1,891,071

$2),Z21,235

$15,986,986

$42,000,437

$24,710,100
v

balance of

billed

at

of the

At June

un¬

period

the

At June

28, 1948

30, 1947

$67,943,262

major contracts

f

$59,439,571

11,861

10,981

close

Number of employees
at

the

close of the

/

period

issue of

;

,

The
■

•

•'

..

Company reports income from long-term shipbuilding contracts on the percentage^
of-completion basis; such income for any period will therefore vary from the billings

.

Muir," Presidettt; of thfc
Trust

13,840,987i

1,990,139;

1

Totals

1

on
:

Louisville

7,873,048

Other work and

enlarge the bank's

noted in

15, page 239.

:

.

accessories "

certi£i-;

the bank's capital

v '

Company

of

fa

the contracts.-

any

Billings and unbilled balances

on

Government contracts

are

subject

adjustment* which- might result front' statutory repricing and profit limitations,*
By Order of the Board of Directors

b

a

June 30, 1947

$

Hydraulic turbines and

stock-*

present

contracts

repairs

Co. of Providence, R. I.
Lovett C.
;Lguisville,
Ky.,
announced
on
Ray, formerly Vice-President, has July 28 the promotion of Gilliam

been elected President and

Twenty-six Weeks Ended

June 28, 1948

Ship conversions and

Louisville, from which

also quote the following:
"More than
60%
of the

capital

President

of the High Street Bank

:

Shipbuilding and Dry Dock Company

Journal" of

health, Victor H.

retired

Seattle,

Shipbuilding

July
Because of ill

Seattle-First
of

This is learned from the "Courier*

Lawrence

Manufacturing Co. of Lowell.

Frazier

the

Bank

once

40%.

the bank's current 1,500 shares of
stock." >

Treasurer

of

tional

C.

and Bankers Association

Orleans

Seattle attorney, as As¬
Vice-President and Trust

:$250

of

Groton and Harvard
of

of

Thos.

par

Spinning Co. of SkowMe., and Vice-President

of

veteran

a

capital

a

It was stated
in
the
Seattle
"Times" of July 28 that coincident
with
the - election
of
Harvard

Stock

Louisville,

shares

on

500

of

of

position $200,000 capital, $325,000
surplus. Voting at the stockhold¬
ers' meeting represented 1,429 of

graduate
and

Mr.

had

single dissenting vote,

a

stockholders

stock

Stevens fills the

School..'

bank

-

"

Lowell.

ness

been

$175,000.

we

Mr.

having

the Oakland office of Mellon.

Mass., director and Treasurer of
the Ames Worsted Company of

Main

as

J. Fairbanks, for¬
Assistant
Manager,
will
succeed Mr, Garber as Manager,
said the Pittsburgh "Post Gazette"
of July 29, which added that both

authorized

M.-Creighton, Chairman

is

him

Merle

Yards

Albert

the

merly

Bankers Association."-

^

of

Pittsburgh, has been appointed
Vice-President
of
the

the

J

office

Assistant

utive committee of the American

He

to' join

Oakland

bank.

placed in vol¬

was

Association,

for 18 years on the exec¬

was

the

McHugh

the Mechanics and Metals.

,

of

Corporation, which he had
organized in 1920, uhtil 1941. He

July, 1915, Mr: McGarrah; invited
director

v

Chairman

as

Mr.'

i

Chairmanship he

count

Mr.

~

of

retained the post only two

the

Brokers

First Na¬
Savings Bank of

&

branch has

new

only to
John

Trust

V

named.

J. N.

second

as

have

Assistant

Fri¬

semi-annual,

Junior

Effective July 15, the

untary-liquidation,

J.

son,

CAPITALIZATIONS

1948,

the

Bank,
Army.

say:

"The

bank

News About Banks

23,
of

absorbed by the Bank of America
National Trust & Savings Associa¬
tion of $an;. Francisco.' The Ful¬

deaths.

Trust Co. of New

1,058

ORLEANS, LA.—On

July

elections

The

age.

Trust Co.

Reserve

#

tional

Fullerton, Cal.

Cox has

200

257

Federal

Torrey,

Philadelphia
"Inquirer"
reports
that his father, James Windrim
Torrey,
and
grandfather,
John
Washington Torrey, were also'as¬
National

NEW

day,

he

1925

Cashier

Secretary,
being
Secretary in 1938,

was

67

was

when

he was with the Reserve
he served three
years in the

lerton

In

Assistant

Comegys

ago,

Ky.,

Assistant

1941

Reserve

Officer

tPreliminary.

the

-

associated

—71

All Countries

and

elected

in

elected

Assistant

sociated

—43

release "Unitfed

Commerce

—

3

Countries

Board

4

_

—

1—

Netherlands,

was
-

Treasurer in 1946 and Vice-Presi¬
dent in the following
year."

June

1947

—21

290

Imports From

became

Philadelphia, Pa., died

—

Countries

Africa

Total

he

and

bank

advanced

in

left to become Audit
Clerk at the
Louisville. Branch of the Federal

a

Secretary and

became

Philadelphia

1946

7

___

•Belgium,

as

When the

1938

1946/

Ray

was

and

years

Export (—)

June,

—

,

Other

in

the

there

was

director

a

from 1929 until his retirement two

—134

—

United Kingdom

All

Dec.

1946

Other Latin American Countries

South

STATES'

-

Six Months Ended

Country—

European

he

Dollars)

of

Argentina

Canada

the

1946-June, 1948

June

Western

with

well occur, especially

may

.

*Other

in

March

on

continue

elected

Vice-President

the gold holdings of certain

Net Import or Net

France

he

been reduced to minimum levels."

AND

Periods

1920

with

board.

I-n-

President

Cashier

Mer¬

Livermore,

He

Assistant to the Treasurer. While

the

was

Farmers and
in

ago.

the

In

changed

1931 he

years

Hospital Trust Co.,

1916.

and ' will
of

10

the

Bank of St. Louis.
Six
months ago he entered the
service
of the Louisville Trust
Co. as an

in

James

MOVEMENTS TO

associated
National Bank.

its name to the
High Street Bank & Trust Co; in

individual countries have already

this

to

of

since

European
shipped a fairly

amount

GOLD

our

Western

also

in,

became

Island

1928

bank

Western world outside the United

gold im¬
ports; its gold shipments to the
United States jumped to $810 mil¬
Other

Bank

associated

member

Further¬

cases.

"During the first six months of
this year the United
Kingdom yvas

lion.

chants

started

High Street Bank
1,1922. He was elected

settle accounts in the United States

were

said in part:

of the

a

to rebuild

countries

at

forts of various countries to cut leaving there to become Cashier

$115

Some of

career

with United until it
absorbed by Industrial Trust

Rhode

The successful ef¬

began his banking

bank

stayed

Company

.town their purchases of American

between

of

he

the

career

United

became'

im¬

of

It likewise

the

was

restrictions

countries have

several

employ

when

with

as

lion, respectively.
France, Can¬
ada,- and South Africa each ex¬
amounts

1922.

1912

here will

reserves

the

"His'banking

as

tries

of

?l.

.

July 28, 1948

""""

R,

j.

FLETCHER, Vice President and Comptroller

H. Atherton to the post of Assist-

r

THE

(518)

22

Home Loan Bank of
of housing, construc¬

record pace*

tion will continue at

.

More homes will be constructed for American families if the
Taft-Ellender-Wagner Housing Bill is not enacted than will be built
if it should be passed at the special session of Congress, is the opinion
of George L. Bliss, President of the Century Federal Savings
elation of New
—
'
fusion and will divert materials
York City.

Asso-

'

Bliss,

Mr.

who

for

was

years
President
of
many

Federal

the

Home

Loan

Bank

of New

York,

pointed

out in

a

state¬

ment made on

J uly

29,

industry

tion
is

that

construc¬

the

present

at

present rword voldnie of
business, the article concludes, be¬
ing done at constantly higher
price levels, requires an increas¬
ing volume of funds for financing
plant and equipment expenditures,
and large dollar inventories and
receivables.
Internal means of
The

in
the port is transmitted to the
total needs, according to figures gress for that purpose.
compiled by the Department of

private
away

driving private

pro¬

Mr. Bliss cited statistics show¬
in its history, with dwelling
being
erected at a rate ing that the average annual num¬
ber of housing units provided in
which, if continued for the bal¬
this country during the 35 years
ance of the year, will produce ap¬
from 1911 to
1945 was 433,857.
proximately 1,050 000 privatelyThe peak decade was from 1920
built and p r i v a t e 1 y-financed
to 1929, when an average of 703,dwelling units in tne year 1948.
400 housing units were provided
^indications are that, if the gov¬
each year.
ernment will keep out
of the

restrictions

With

on

construction labor.

"On the other hand, enactment
cause con-

shares of series D

The
new

to an article in the August issue of
of The Northern Trust Company,

the
article

states.

"The national

is, almost two and onehalf times 1929 and three times

of

Income

Only the first and second halves
1929 and the first half of 1930

shewed

greater sums,

the article

states, with figures of $4.2 billion,

$3.8 billion, and $3.3 billion, re¬
spectively. In those earlier pe¬
riods,
flotations of
investment
trysts and holding companies con¬
stituted an important fraction of
the total. If such issues are ex¬
cluded, then only the first halves
of

1929 and

1930 exceed the first

half of 1948 in activity in the new
issue market.
;
V
,

The 1929-30

in the security

,

A

period was unusual
markets, the article

points out, because of the great
speculation and high prices in the
stock market.
Taking as more

threats

Aug. 16, 1948.
proceeds from the sale,
$2,300,000 will be applied by the
company to pay a like face amount
of its short-term promissory notes.
The balance of the proceeds will
rants will expire on
Of the

importance of bond
issues as

compared' with the 1925-29 distri¬
bution is marked in all categories,
according to the bank, capital ob¬
tained from stock issues has fallen
40% from the 1925-29 annual av¬
erage,
from

while the amount obtained
new
bond issues is 43%.

greater.

of

growing
Re¬

well-being.

In addi¬

-

The

must

be

comparatively
favorable
of new capital financing

added

be

eral funds

the

plant

000 less than a year

judged relative to other

changes in the nation's economy,




June

earlier.

employment set
record of 61.3 million.
civilian

new

a

Industrial production reached a

postwar peak in February
after the work stoppage in
coal mining, approached it again
in June. Improved industrial re¬

new

and,

lations

and

dence

reinforced

high

business confi¬
by
increased

Government commitments for for¬

to the company's gen¬
and will be available

expenditures

for

expansion
which

pre¬

timated total

period

the

calls for an es¬

bers

emphasize

must

til the

very

eve

of an economic

collapse many people are
about the

true

apt to

and more confident
soundness of the econ¬

more

grow

ance

and the indefinite continu¬
It may not be
that "a boom is always fol¬
of the boom.

lowed

by

dents

of

a

bust,"

business

as

many

equipment.' '

quently

say.

fre¬

affairs

engaged in the

The company is

ritory

1947, of the entire ter¬

served
of

clusive

360,274,

was

United

the

armed forces,

ex¬

States

i-

For the calendar year
company

1947 the

reported total operating
$10,400,862 and net

revenues

of

$1,763,581. For the three

months ended Mar.

ating

revenues

the standpoint of the secu¬

ahd!|r4SO,000

of

production
bushels

of

3.3

over

corn—a

billion

record.
not rem¬

new

While such a crop could

edy the meat shortage during the
rest of this year, it would provide
the

basis

for

ample

more

sup¬

plies of livestock products in 1949
and thereafter.
Gross national
a

new

product reached

high of $246.5

billion per

But

31,1948, oper¬

were

$2,774,228

shares

of

common

£-*///■)(i -7
■
' : v. '
rity buyer also, the effect of high
stock;, Fundedfaebt amounts
income taxes in reducing the at¬
?!
tractiveness
of
risk-taking
in $15,200.000.
.

inflation

.

to

prices.
income

Consumer

annual rate

ran

at

an

of about $208 billion,

compared with $195 billion in
Consumer
income
after
production that it 1947.
would take care of prices.
In¬ taxes increased from a rate of
creasing the supply of goods is, $174 billion to a rate of $186 bil¬
indeed, to be sought through lion;
Consumer
expenditure,
as
a
every practicable means. But, his¬
torically, no important inflation result of some buyer hesitation
has been cured in that manner. in the first quarter, increased less
Nor has this one, despite the fact than disposable income, leaving a
that every factor of high profits, small increase in net consumer
heavy market demand, and large saving.
' - <
'
I
funds available for investment has
The distribution of income; ac*
been, favorable to the expansion of
cording to the most recent data,
production.
0
has changed but little since 1946.
The policy proclaimed in the A survey of families, however,
Employment Act requires us to showed half the' Nation's 'Con¬
devise and adopt positive meas¬ sumer spending units falling sub¬
ures to stop this inflation and se¬
stantially behind in the race of
cure
relative stabilization.
It is incomes with living costs during
not too late for preventive meas¬ 1947.
One-fourth of the family
ures, and we are not yet forced units
spent
more
than
they
by the tragic consequences of de¬ earned. Low-income people were
pression to adopt measures which spending past savings predom-t
would interfere with our free inantly
for
current
expenses,
economy far more than would any.
higher-income people more often
or all of the measures I have pro¬
spending theirs for durable goods
posed. I realize that the anti- or converting them into residen¬
inflationary program I have of¬ tial or business investments.
increase

'

production, purchase, transmis¬
sion, distribution and sale of elec¬
tric energy on the Island of Oahu,

of July 1,

feed

tight

was
being harvested, and
generally favorable crop reports
were highlighted by an indicated

stu¬

127,519. This includes
expenditures
of
approximately
tion to control the boom.
$6,342,000
for
new
generating
For two years, it has been as¬
equipment and additions and $3,992 000 for additions and better¬ serted that if matters were left
alone there would be so great an
ments to transmission and dis¬
tribution

and

crop

that
the
course of inflation does not run
according to any set schedule. Un¬

omy

livestock

midyear, our second largest wheat

them.
I

of

supplies have reduced the output
of most livestock products.
At

it would be year during the first half of 1948,
reflecting some increase in pro¬
proposed reckless to assume that the bust duction but mostly the rise in
Will not happen if we neglect ac¬

expenditure of $11,-

income of

"The bias toward bond issues is

opening of the special session,
again advised the Congress of
the "dangers that
we face,
and
made
recommendations to meet

I

payment

1948-1950

__

attributable, of course, to the high

From

Some

ago.

850,000 workers were added to the
yet unemployment in
June was only 2.2 million—400,-

in

representative the years 1925-29, level of corporation and individ¬ and net income
$285,231.
inclusive, domestic corporate se¬ ual income taxes."
.There is a
Giving effect to this financing
curity issues for new capital av¬ definite advantage in bond financ¬
eraged $5.1 billion. The figure for ing as compared with stock fi¬ the company will have oustand- fered will impede some business
the year ended June 30, 1948, is nancing, the bulletin points out,
ing 300,000 shares'* of preferred plans, will curb some profit op¬
$5.9 billion. In contrast with the because interest on the bonds is
stock par. value $20' (including portunities, and may limit some
deductible
from
income before
five-year period 1936-40, it ap¬
wage 'advances.' It'is of the yery
pears that the present volume is
computing income taxes, whereas 100,000 shares of series B 5% and
five times as large.
dividends
are
not.
deductible. 150,000 shares of- series '€»/ 4^4% essence of a plan to counteract
* \ ./<•'
volume

year

a

labor force,

the

Hawaii.
It
furnishes
electric
Aggregate business spend¬ service in all sections of the isr
ing: on plant and equipment is land, including the City of Hono¬
twice as high as in 1929 and over lulu, sugar and pineapple planta¬
three times prewar. Personal sav¬ tions, Army and Navy establish¬
ings are three to four times higher ments and numerous towns and
than in 1929 and before the war." villages. Estimated population as
The greater

our

in world affairs.

place

prewar.

issues rather than stock

to

peatedly, I have called attention
to
the
developing
inflationary
conditions which endanger both
our
domestic strength and our

is offering the
stock and the series

viously made, or for other cor¬
porate purposes.
The company
has entered into a program of

the

the

continuously above

ran

level

prosperity

present

our

should not blind us to the

of construction
proposed by the Taft-El¬
expenditures during 1948, the re¬
lender-Wagner housing bill."
imbursement of the company for

"Commercial & Financial Chron¬

we are

year

the

The subscription war¬

then held.

for

icle."

that

Employment in the first half of
this

tion, recent events have forced us eign aid and defense give promise
of one share of into a preparedness program add¬ of continuing high-level output
common stock for each
shares ing to the strains upon our home for the rest of the year.
and making it even
of common then held, and one economy,
Agricultural production ran be¬
more imperative that we act with
share of series D preferred for
low the level of the first half of
each 7 shares of tommon stock courage and dispatch. In my re¬
last year because smaller
num¬
cent message to the Congress upon

security issues to obtain new capital totaled
the first half of 1948, fourth highest six-

compilations of

American

1948, at the rate

market.

cited

But

preferred stock d:or subscrip¬
tion, in each case at $20 per share,
pro rata to the holders of its com¬
mon
stock
of record July 20,

published by Northern Trust
Company of Chicago, citing compilations of the "Chronicle," points
out although new issues in first half of 1948 were highest since
1930, in comparison with national income and current capital needs,
Its figure Is relatively lower.
Sees need of a healthier new issue

month period on record, according
"Business Comment," the bulletin

5% cumulative

D

are

as

consumers,

of

to treat too lightly
problems which it still offers.

company

common

resources

prone

value $20.

also par

the

managed so skillfully

preferred stock par value $20 and
100.000 shares of common" stock,

Analyzes Domestic Corporate Issues

which

Con¬

,

writing the offering by The Ha¬
waiian Electric Co., Ltd., to its
common
stockholders
of 50,000

August issue of "Business Comment,"

in

that I
with infla¬
tion are based upon a candid look
at the whole economic situation
as it has developed over the past
recommendations

The

business, furnish the basis for sus¬
tained
markets.
Our financial
condition is strong.
A national
debt of tremendous size has been

Dillon, Read & Co., Inc., and
Dean Witter & Co. are under¬

construction

dollars

and

American

of

income

Hawaiian Elec. Stocks

.

billion

Summary

v

have made for dealing

A Time for Action

construc¬

housing business, even this rate of
tion removed in the middle of
building will be exceeded in 1949
and that housing construction will 1946, there were 681,000 housing
units provided in that year.
In
continue at a record pace so long
1947, the number of privately
as there* is a need for mote hous¬
built and financed housing units
ing units," Mr. Bliss Asserted.
completed
climbed to
879,000.
"The principal objective of the
Based on the rate of increase over
T-E-W
bill
is the erection of
1947 production shown so far this
more public housing.
Its alleged
Mr. Bliss estimated that
'aids for private housing' provide year,
1 050,000
housing units will be
a
false facade, intended to con¬
provided in 1948. He further fore¬
ceal the true purpose of the bill,
cast the possibility of
1,250,000
the construction industry is al¬
dwelling units being provided in
ready absorbing all of the ma¬
1949, "provided the construction
terials and labor now available
and home-financing industries are
for home construction.
There is
nothing in the bill or that Con¬ not confronted with the discour¬
gress can do, to increase the sup¬ agements and competitive threats
ply of either building materials or of additional public housing such

Domestic corporate

Situation in

Economic

The
f

are

gram
units

three

(Continued from first page) &
up-to-date survey of the eco¬
nomic situation, the difficulties it
presents, and the solutions called
for. This Mid-Year Economic Re¬
an

financing these requirements
1947 covered only 71%
of

housing, will result in
investment funds
from the housing field."

engaged in
greatest

bill will

Inflation Controls

Dillon, Read & Co. and
Wilier Underwrite

housing

of the T-E-W

Again Urges

Truman

known.

Commerce.
The remainder came
6 months, and upon a careful an¬
In the years since the end of
alysis of where this situation may
already in from mortgage loans, 14%, and
hostilities in World War II, the lead us if we do not act in time.
"It is
short supply to a greatly expanded new security issues, 15%.
American economy has offered an Below I summarize what seem to
public housing construction pro¬ obvious that corporations cannot
gram.
Government officials in continue to finance their present impressive display of inherent be the points of greatest signifi¬
their zeal to expand their social¬ scale of activities unless a healthy strength and elasticity. More than cance in this situation and this
10,000,000
veterans
have
been analysis. A more detailed exami¬
ized public housing plans are mis¬ new issue market and the avail¬
smoothly absorbed into the ac¬ nation of the facts, and a more
leading the public as to the true ability of bank and other credit is
tivities
of
the
business world. extended analysis, is contained in
;
housing situation.
The greatest maintained." ;
Month
after month,
the labor a report on The Economic Situ¬
danger in their effort is that the
force has been employed at a level ation at Mid-Year 1948, prepared
adoption of a program to provide
which
but few were willing to for me by the Council of Eco¬
hundreds
of thousands
of 'low
forecast. In spite of high living nomic Advisers, which I am trans¬
rent' housing units, with the def¬
costs, our people continue to en¬ mitting to the Congress along with
icits on their operation paid by
Dean
joy high standards of living. The this Mid-Year Economic; Report.
taxes assessed against owners of

labor, which

and

the

Ceorge' L. Bliss

Thursday, August 5, 1948

CHRONICLE

stock investments is well

common

Tafi-Ellender-Wagner Bill Will Obstruct
Rather Than Facilitate New Housing Output

Warns

George L. Biiss, former President of Federal
New York, asserts if government will keep out

& FINANCIAL

COMMERCIAL

groups

that

this

be done.

will" ultimately

when it is done;

Consumer

credit

continued to

expand during the first half of
1948.

Business

investment

larger share of the

took

a

national out¬

All put in the first half of 1948 than
during 1947.
Equipment outlays

benefit
1

have

been

exceptionally

high

.L_

COMMERCIAL

THE

Number 4722

.Volume 168

and
plant construction speculative overexpansion,
less many leaders in both industry

Regulation and Gas
Company Investment

expenditures have increased

Present

strikingly.

that such outlays

are

indications

will continue

high throughout the rest of the

in¬

inventories

year.
Nonfarmj
creased markedly

applauded for
the conscious restraint they have
and

and wage

Profits exceeded last year's av¬

reflecting high prices for
a
high volume of output. First
quarter data, however, indicated
a drop in profits of small manu¬
facturing firms.

basic

effects on cost struc¬
tures and prices in many related
lines of production, on the cost
of living, and on further wage de¬
mands.
Third, credit expansion,
ramifying

last

the

quarter of 1947, in part reflected

in

^decreases
in

creases

4\vith all

in¬

and

exports
in

imports

trade

our

The foreign

continents.

Of the year.
The

Federal cash surplus dur-

ing the first half of 1948 amounted
$7.6 billion. Receipts ran 7%
higher than last year, payments
9% lower. The reduction in income
taxes and the increase in

of

tained.
The hard facts of today leave no

in

Many farm prices re¬

February.

gained or surpassed their earlier
levels and industrial prices re¬
sumed their climb.
By midyear,

price increases appeared to be ac¬
celerating. The index of consumers'
prices has now reached an alltime high.
continued
the
third
round of increases that began last
fall though interrupted
by the
break in commodity prices. Most
©f the third round increases have

»

■

Wages

roughly corresponded to the rise
in cost of living since the previous
contract.

defense

and

aid

-Foreign

ex¬

penditures during the present fis¬
cal year will increase pressure on
the domestic economy. New de¬

expenditures will not be
great during the next few months,
but- will rise thereafter.
Both
fense

have a special impact
upon such short-supply items as
steel, other metals, and farm ma¬
chinery, and will draw increas¬
ingly upon our already fully em¬

programs

quate

labor force. More ade¬
allocation
authority
is

needed

if

ployed

to avoid pro¬

are

we

gressively more serious disruptive
effects

these

of

programs

upon

prices, and the organ¬

supplies,

ization of production.
The reduction

in

income taxes

Will reduce Federal revenues by

$5 billion at the same time
that expenditures will be sub¬
stantially increasing under the

about

new

programs.

influence
cash

The deflationary

recent

of

surpluses

will

government
thus be re¬

placed; by the inflationary influ¬
ence of additional expenditures on
the i part of consumers
burdens are reduced.
The general

outlook

whose tax
as

one

uation in

is

a

to infla¬

side, the supply sit¬
number* of industries

improved

over

a

year

ago.

Bountiful

crops are in prospect
expansion programs are
siearing completion in many lines
of production, and we should ex¬
perience a gradual increase in
output from an enlarged and mod¬

Postwar

ernized

industrial

plant.

Com¬

mendable caution continues to be

$hown

by

.

business

in

avoiding




:

t

1

•»

'V.i v.-

'

-1

•

•

«-S.A -h*?

showed

irregularities

There have been many

drop of over 10%.

a

four
May-

in the recent reports of individual

have been

follows:

as

,
■
—Period—

Mos.

Company—

5

*

.

;

Percent

Decline

014%

$2.26

$2.64

2.33

2.86

0 18

Apr

1.64

1.73

D

Jun

1.81

2.09

014

May
May

12

12

& E

Philadelphia Electric
Commonwealth Edison--

-

5

12

Jun

1.41

1.69

D 10

Public Service of N. J—

6

Jun

.53

1.21*

D 56

Consolidated Edison

3

Jun

.34

.47

D 28

Edison

Detroit

advan¬

sales

the

Ended

12

Consolidated Gas of Bait.
Kansas G.

•

-EarningsCurrent Previous

On the other

v

hand, compare some of the increases of the southern

companies:
Earnings

Percent

Current Previous

Increase

—Period—
Mos.

Ended

12

May

$2.56

12

Company—

May

3.45

2.50

38

Southwestern Pub. Ser._„
Houston

Lighting

23%

$2.08

!

12

Apr

5.25

3.86

36

12

Mar

1.38

1.18

17

to pay

12

May

2.82

2,46

15

12

l,
May

1.65

1.54

7

in

contained

sion

con¬

*Electric P. & L. System

purchaser Central & South West
for their contracted quan¬ El Paso Electric
tities of
gas
at the prescribed Gulf States Utilities
minimum level, whether they use
it

There are certain per¬

not.

or

adjustments in

due to the

„

f

^Includes United Gas and four electric

companies.

event

the

serious business decline

a

_

There

but,

price advantages of tak¬

north

ing gas at 100% load factor opera¬
tion, it is likely that even under
highly unfavorable economic con¬

are

of

course

exceptions in both sections. Thus in the
System earned $4.32 vs. $3.79

American Gas & Electric

the

recently despite the fact that its subsidiaries burn coal—improved
efficiency appears to be the answer. In the south we find TampaElectric earning only $2.19 vs. $2.58—but this company burns oil

ditions customers
of these new instead of gas—and oil now costs about $2.83 per barrel vs. $1.48
savings has declined, and lines will continue their long- in 1946. Georgia Power in-the Commonwealth & Southern System,
that many of his neighbors living term purchases at a high level. in the 12 months ended May 31 earned $1.32 vs. $1.68—but muck
on pensions or fixed salaries are
This in effect constitutes a guar¬ of its power is hydro-generated, and it has had .to buy power
-' -H
L
actually worse off than they were, antee of minin^m earnings from recently.
sees

that the value of his accumu¬

lated

a

ago.

year

many

Looking abroad, we
great

despite

that,

see

progress,

countries are still far below

living standards needed for
production and are de¬

the

sustained

pendent on outside help for any
hope of further advance. We must
be on our guard lest our national

prosperity and security be under¬
mined by inflation at home or by
misery abroad.
Our American prosperity de¬
pends in part on world events, but
far

action

own

our

on

more

or

to year for substantially the
capacity of the new lines.
factor operation is

year

entire

This high load

the underground
storage facilities and interruptible

augmented

disregard of the dangers
our path.
Despite my

warnings

and

the old

ible

to

of the
Their salvation is
dilute the equity too great¬
the ups and downs

business cycle.
not to

ly.

It

able

that

unfortunate

is

sort

beset

pur¬

lines, with few exceptions, are de¬
void
of
these
highly important
features and are therefore suscept¬

domestic purposes.
But thus far we have shown a
blind

the

of

chasers. Generally speaking

counter

that

by

characteristics

load

right here at home. More
than 90% of all the goods and
services that we produce are for

inaction

to

measure

a

low

a
allow¬
as

rate of return the older en¬

terprises

are

more

being forced to re¬

and

more

to

debt

fi¬

While there is still room
for senior securities in the capital
nancing.

structure of

a

Some of the

figures for the northern companies can be explained

special factors, but unfortunately explanatory comments
not always forthcoming with the published statements.
Thus

due to

as
are

be due to

Virginia Electric's yecent decrease in earnings is said to

heavy stock-piling of coal in anticipation of a strike. Public Service
of New Jersey had a variety of reasons for its bad showing—a heavy
winter storm, a temporary rate cut, bad transit earnings (prior to
the

fare

recent

increase),

special

eharge-offs,

Edison in the second quarter included

etc.

Consolidated

six months' retroactive wage

increase, and the company is still awaiting rate relief for the gas
business which is heavily in the red.
How

in

the

further

gains

Pacific coast

the

about

Edison

12

months

companies?

ended May

Southern

showed

gain

California!

of

12%, and
likely, since the company is now relieved of a
heavy expense burden for shifting operations to 60 cycle phase.
Pacific Gas earnings in the 12 months ended March were $2.23 vs*.
a

seem

$2.57—due to a new issue of common shares, combined with drought
effects.
Mountain States Power, which wasn't touched by the
drought, reported $5.05 vs. $3.54 in the 12 months ended May.
^
In studying

number of the older

these cross-currents in electric utility earnings, it's

,

companies it is not a desirable de¬ necessary to know how the company's pow.er is generated—by hydromendations, we have not adopted velopment
If
to
countenance.
A or fuel. If hydro, rainfall and water supply are vital factors.
adequate legislation for control¬ growing amount of the common fuel is used, it's necessary to know what kind—coal, oil or natural
ling inflation. The failure to con¬ stocks of these' companies have gas (the cost of the latter is virtually stationary compared with the
trol inflation effectively in the found their way into conservative others).
If the company burns coal or oil, it may still be able to
past makes it increasingly urgent investment portfolios and there¬ offset part or all of the increased cost through fuel adjustment
that we adopt and apply vigorous fore should not be allowed to de¬ clauses—hence it's important to know this feature of the rate struc¬
measures to guide us safely from
teriorate in quality.
ture (Consolidated Edison and Boston Edison have clauses covering1
the uneven postwar boom to an
The real need of the industry almost all operations; most other companies have clauses applying
era of sustained and stable pros¬
is a higher allowable rate of re¬ only to industrial and commercial business).
perity.
turn so that conservatively capi¬
A third important question, particularly for the coal -burning
We are now challenged to carry
talized companies will be able to companies, is whether they have lagged in their construction program,
out the pledge to the American
earn more than a nominal rate of
and hence have had >to run a lot of inefficient generating facilities*
people contained in the Employ¬ return for their common stock¬ or
buy expensive power from other companies. And a fourth question
ment Act of 1946 that it shall be holders in an
industry limited by is whether, in financing their expansion, they have already diluted
the policy of our Government to a
substantially shorter life span their earnings by issuing additional common stock, or whether suck
to "utilize all its plans, functions, than electric utilities.
dilution will appear in the future. And a possible fifth query might
and resources V
;
to promote
be—how tough is the commission in the state in question, with re¬
maximum
The Recommendation'
employment, produc¬
spect to a possible rate increase?
'
tion; and purchasing power," in
The actual picture at present is
an
economy of free competitive
not as glum as it is pictured. Al¬
enterprise.
•
*
-*
thereby permitting a soundly cap¬
Approve Sisto for NASD
though the 6% over-all earnings
It is no less important to take
italized company to earn at least
level has been established form¬
The admission of J. A. Sisto &
action to forestall a business col¬
as much for its common stock as
ally by FPC action and court de¬
Co., New York City, into the Na¬
a
standard
lapse than it is to use Government
capitalized
electric
repeated

recom¬

,

:

-

.

to

overcome

a

sion once it has arrived.

world.

1

f

ductions the Federal Power Com¬

'

■■

•

mission condones

a

higher level of

return due to its cognizance of the

Rand & Co. Admit

factors cited

r

herein, the mounting

of

gas, material, labor and
Co., 37 Wall Street,
New York City,
have admitted money, is not known. This in it¬
self is not of
sufficient conse¬
Charles J. Rodarmor and John J.
quence, however, to impart con¬
Lees to limited partnership.
fidence in investors so long as the

Rand

cost

&

6% limitation threat is overhang¬

D. Allan Burt Dead

ing;-What

D. Allan Burt, limited partner

in Hazlett, Burt & Watson,

ing, ;Wf Va«, died on

Wheel¬

July 28.

'g

is

needed

of

a

new

thp ,Gopimls*
over-all allowable
return to a 7&%-8%,

pronouncement jpf
sion raising the
rate

is

New

Chicago Exch. Member

CHICAGO, ILL.—The Board of
Governors of the Chicago Stock
Exchange today elected to mem¬
bership Edward H. Keller, Secre¬

of Texas Na¬
Corporation, San Antonio,

tary and Treasurer,
tional
Texas.

.

the sixth

and the

.i

Corporation is

sion

in

1938 from the New York

of
Joseph A.
controlling partner of the
firm, for "conduct inconsistent
with just
principles of trade.*'

Stock

Exchange

Sisto,

.

firm

.

NASD
has

.

that

the

been

contended

"sufficiently

pe¬

and

the

T,exaS firm to become a
the Exchange which has veto

&st

in, San Antonio*

Securities

Commission because of the expul¬

nalized,"

firmof

of

Dealers, Inc., has been approved
by the Securities and Exchange
Commission. Membership in the
NASD had been barred by the

The

.

National

Texas

member

•

Association

tional

depres¬ cree, all pipe line. companies are utility company.
earning substantially greater than
Our suc¬
the prescribed limit. Whether by
cess in this effort is essential for
its inaction of mandatory rate re¬
the reconstruction of a peaceful

measures

tion shows conflicting influences.
On the

•->'

tracts which require the

lasting prosperity is not assured.
Even in the midst of the present

,

decline

a

certain

have

these features
is the large "take or pay" provi¬

of

penditures have overtaken rev¬
and deficits are likely to

ma¬

Most important of

mitted

enues,

after

Southern Utilities

vs.

;.

older

the

most

State and local government ex¬

rose

•

of all electric utility companies in the first
months of 1948 showed only slight declines, but the month of

substantial element of strength.

prosperity, the average American

ing it down to $252 billion.

Prices

for complacency.
Though
people are optimistic about
immediate business outlook,

in

room

the

the

characteristics not found
lines, that impart a

tageous

remark¬

the

of

lines

new

ably high level of postwar pros¬
perity that we have thus far main¬

»

■

foundations

the

it may seem,

as

enterprises
with
heavier
equity are apt to be more adver¬
sely affected by the deteriorating
capitalization trend than the new
ventures. As now constituted the

favorable factors, we are

some

investors.

to

concern

ture

midst of gathering in¬
flationary forces, which day by
day are imposing additional hard¬
ships
upon
countless families,
and day by day are undermining

I expenditures
for
defense
and
V foreign aid will virtually elimi¬
nate the surplus for the second
half year. The Federal debt was
reduced about $5 billion during
the first half of the year, bring¬

^ increase.

Ironical

in the very

to

ft

siderable

partly a cause and partly a result
of inflation, still persists.
The facts add up to a clear and
disconcerting conclusion. In spite

| aid program will increase our
| surplus of exports during the rest

pipe line com¬

new

panies and the declining cushion
of equity
capital for the older
companies give a basis for con¬

continuing and

ments foreshadow

foreign investment, at less

ratios for the

and price increases in major
industries. These develop¬

wage

Jtor the housing they need.
of

Northern
Net Income

companies. It may be interesting?
to compare the reports for different areas to see how much the
to 25%.
geographical factor accounts for these changes. The principal reason
for gains in the south is of course the use of natural gas as fuelpress strongly upon
production.
The Consequences
plus the rapid increase in sales for a good part of that area.
Second, we are currently in the
The comparatively thin equity
Some recent reports of share earnings for northern companies?
midst of a round of substantial

running consumers' ability to pay

rate

type of capital structure
capitalizations varying from
70% to 80% in debt, and from 10%
to 20% in common stock. Under
such circumstances they are able
to earn a more respectable return
on their equity ranging from 12%

with

goods, and demands arising
from expanding government de¬
fense and foreign aid programs

construction is ex¬

the

mided

ment

output has been accompanied by
an
increase in costs that is out¬

half

(Continued from page 6)

projects are resorting to a pyra¬

situation ' is

ices, business demand for invest¬

pected to increase the total supply
of dwelling units by more than a
million during 1948.
This high

Net

pricing policies

demands.

dominated, however, by three in¬
teracting processes
making for
continued
inflation.
First, con¬
sumer demand for goods and serv¬

erage,

than

be

can

immediate

The

during the first

jpiid quarter as sales picked up.

Residential

labor

exhibited in their

quarter of the year, when sales
lagged, but leveled off in the sec-

,

22

_

Since the" war;

x

(519)

CHRONICLE

FINANCIAL

&

Commission
power over the

1 association's membership agreed*

24

(520)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE
reasonable

I.C.C. Rate-Making Policy»Its Evils and Remedies
(Continued from first page)
at

need has

This

once.

for

dent

1946, retroactive to Jan.

„

to which the

carriers

The

sharp decline in
earnings precipitated a
sensational shrinkage in market
values, greater in railroad securi¬

good reason why the
final report should not be issued
now, in fact should have been is¬
sued

some

and

the

no

months ago.

carriers

immediate

an

this

final

ties than in any other group. In
five months the total
value of
railroad stocks and bonds listed

The public
entitled

are

to

decision

the New York Stock Exchange
shrank from $13.5 billion to
$11.4,
on

by

Commission."

What

Is

In 1946 and

nessed

Procedure?

rates

gave

too

procedure

Again

later.

little

the

and

too

of

American

order by the ICC.

by

the
to

as

Commission

the

reasonableness

individual rates in

a

of

the

involv¬

case

ing the general level of rates. The
Commission is under no statutory
requirement
needed

that

increase

an

urgently
the
general

in

level of rates be deferred
th

conclusion

of

pending
investigation

an

prolonged as to defeat the pur¬
pose of the national transporta¬
so

the

Class

I roads

were

in

bank¬

ruptcy or receivership. No other
regulated industry was in this
plight; neither telephone, electric,
gas,, trucking or waterways com¬
panies. Obviously, there is some¬
thing wrong with the manner of

regulating rates
The

railroads

may

listed.

shrank

to

24%

far

by

other group

any

The regu¬

only

16%

the

rail¬

for

major

the
by

greatest shrinkage of any

were

granted

on

they

You

could have bought practi¬

cally the entire railroad system in
the

United

States

for

about

$11

billion, which is about half of the
original cost less depreciation, or
10% above the par value of the
bonds.

Annual Rate of Return

and of

in

striking

contrast

to

new

financing by industrial

stock

com¬

panies.

But

pered

by

ment

.

these

not

are

unintelligent

ham¬

govern¬

regulation.

The

highest

In

New

traffic

in

earn¬

great systems like
Central and Pennsyl¬

had

deficits, the latter for
the first time in its 100-year his¬
tory.
On the old freight rates
prevailing at the time that
increased

were

ings

on

1948

were

rate

in

increase

the

earnings

net

all

three

in¬

24%,

This

condition

For

is

not

20

new

or

the
ICC policy has been to make in¬
creases

over

too little

years

and too

late, so
that railroad earnings shrank and
stock prices fell far worse than
industrials.

other

railroads than
and

far

less

A

groups

listed

on

the

New

of

than

for

bottom.

Class

I

roads'

peak

earned

in

utilities'

of

for

all

12.1%, but for
about

was

2%.

City
Bank
Monthly
April;? 1947.) The rail¬

Letter of

return

1942

of

6.30%

fell, short of the
rate

average

of

return

of

6.44% for the period 1926-1946
granted by Commissions and State
and

Federal Courts.

For

the

period

15

CENT
1

1

1

1

1

I

I

l

1

1

1

1

earned

an

average

re¬

of 3.54% under ICC
regula¬
tion, but public utility transpor¬
tation
companies, regulated
by

40

over

mistakes, but the expropriated in¬
vestors pay the
penalty for offi¬

of

■?6dzoo

CORPO
)0

state

commissions, were
6.83%; and all public
utilities, including electricity, gas,
telephone, and telegraph, were

z Co
1

>

granted 6.43%, In the prosperous
half decades 1926-30 and
1941-45,

/-—

geniuses in engineering as
tunneling mountains and bridg¬
ing chasms, but not in their atti¬
tude

to

the

They

do

not

are

reasonable

a

extended

an

profitable;

V

than

the rate

less

ALL AC TIVE
CORPORA TIONS

U.

S.

In the de

2.22%,

40-odd

of interest

public

i

l

I

l

I

1

1

1

sense

compete

But the ICC is

nopoly.
the

risk-

on

from

relief

But

in

for

In this ratio, freight rates
lagged by 40% and, therefore,

should

have

been

raised

corre-

;pondingly to restore the
relationship.

prewar

The

,

very

hand,"

isting

the

do not challenge the con¬
clusions of the ICC in the courts.
in

1932, they

successful in
compelling the
Commission
to
grant
rate
in¬
creases which it had
just

previ¬

ously

refused

most

to

the

carry

give.

case

million

a

They

dc

their

for

al¬

stockholders

to

the stockholders'
Congressmen to
get legislative relief. Instead of

tackling fundamental fallacies
mission

and

rate

a

of

the

increase,

and

be

based

on-forecasts of volume of traffic.
Government forecasts have
proven

notably

and

erroneous

torted

by

dis¬

are

political

Hoch-Smith

in

reso¬

agriculture,

changes in

.

.

...

1938:

"The
is

Secretary of Agricul¬

authorized

pressure

to

make

com¬

plaint to the ICC with regard to
rates
relating to. the transpor¬
.

.

tation

.

of

farm

prosecute

products

the

and

before

same

to

tfye

Commission." However, the farm¬
ers' erstwhile

plight has been

con¬

verted into current unprecedented

prosperity.
The farmers have been
to

the

expense

Government
at

the

favors

ac¬

stockholders.

the

farmers

the

of

expense

bankrupt

long

special privileges at
of the railroads. The

a

legal
and
Constitutional
right to a reasonable return.
cannot

when

structure
as promote
the movement of products of

customed

present

lying

rates

the

rate

ture

of

vast array of statistics and
figures
which obscure the
strong, under¬

Freight

passed

depression. For

agriculture, affected by that de¬
pression, at the lowest possible ;
lawful rates."
Again, under the
Agricultural Adjustment Act of

Com¬

opponents

they

was in

depression

were

not

legislation

agriculture

.

They

as

in¬

crease.

the Commission is directed to ef¬
fect
such lawful

Excessive regulation has crushed
initiative
of
the
managers.

did,

the

Farmers now enjoy the
greatest prosperity in history. Yet
the procedure before the ICC
is
dominated by an ancient "dead-

example,

the

they

bear

can

lution, passed in 1925 and still in
effect, states: "In view of the ex-*

What Are the Causes and
Fallacies Involved?

When

traffic

6%

railroads

courts

The

of

railroad

R oads

which

were

paying no dividends
carrying farm products helow cost.
A pauperized industry
was paying subsidies to
prosper¬
ous agriculture.
It is easy to be
or

were

a

government

rate

a

increase

on

crease on

is

earned

unemployed within six
and 13 million withir

months,

months.

Net Investment

Instead,

Utilities

still in

boom.

a

government post.

1936-40.

2.50

6.58

6.05

1941-45-

4.95

6.36

6.09

forecasting

3.54

6.83

6.43

ness

of

and

MANUFACTURE sIG

PUBLIC

/

/

X

so

figures

UTILITIE's

a

call

duty.

meager,

new

came

new

i

was

—

capital

was

not

Since World War I

money
put into
railroads
1% from stock and 99% from

bonds

or

earnings.

Risk

capita

not attracted to the railroads

because of the totally inadequate
In 1947 the railroads' re

return.
.

^^TRAN SPORTATION

turn

of

3.4%

was

short of the 6%

$600

million

return, exceeded

by statel-regulatdd 'utilities.,;

§

Thp. prospect for railroad

Source: National City Bank
Monthly Letter, April, 1948.

'43-47

depression is ominous.
roads
in

as

his

a

for

basis

is

fallible,
.

has

years

the

been

of

busi¬

volume
for

fixing freight
Fairman B. Dick, in

But

statements

Committee

before

on

the

Railroad

opposition

"no

wartime

under

lion

per

thermore,

earn¬

are

earning

oi

If the rail

having such difficulty
less

than

half

of

ICC

It

was

on both occasions.
Commissioner Carroll B. Miller

dissenting opinions in 1938 and

1939 in railroad bankruptcy cases
stated

repeatedly,

business

of

the

forecast earnings.
for

God."

Most
of

"It

is

not the
Commission to

That is

forecasts
a

wish.

a
are

It

task
ra¬

is

i

fundamental fallacy to fix freighl
rates

on

the basis of such fanciful

forecasts.
Not

difference

burden of $5

a

billion

taxpayer. * Fur¬
the shipper bene¬

even

In World War I under
gov¬

ernment

control,,
by 78%
but

in

in

some

at the

World

rates either had
or

railroad

economic forecasts, but

ac¬

counting facts should be the basis

the

end

of

cases

the

were

war

rates

end,-of
War

risen

not

wrong

in

$3 bil¬

over

The

annum.

constitutes

Bank¬

the

"desperate."

Gov¬

railroads'

per annum on the

the

was

the

Government taxes of

war,

in

outlook

rin

deficit of $2 billion per
annum,
but in World War II the railroads
under
private control paid the

Hobbs

"hopeful" for prosperity and
spring of 1932 it said the

was

control, the

assumed

the

1931

was

inefficiency"

Federal

ernment

risen

of

There

by the
spokesman for the State Utilities
Commissions.
In World
War*.I,

had

autumn

in¬

rate

a

World War II, as charged

fited.

the

to

the basis of inefficiency

utterly unfounded.

ruptcy in 1943, showed how ter¬
ribly wrong these forecasts were

tionalization

ings ^during the next recession

'38-'42

ICC

Man

The

In

exhibit, reminder and

easily raised.

10

The

rates.

these

Because railroad earnings were

1

in

evert

the desk of every
the ICC as a perma

great

a

the

a

7.08

on

In

spring of
1946, government economists
again
forecast
a
depression.
Twenty-eight months later we are

6.47

chart

opulent Paul?

statisticians, after
the" collapse of Germany in 1945
forecast that there would be

6.82

This

oppo¬

present

;

ported.
had

ob¬

over

the

the

in

to

rarely.

6.95

to

TRADE




cases

succeeded

1926-46.

sought

other.

eight

bonds

utilities

Railroads Transp'n

member

"SZ-tt

and

taining returns averaging

1.95

nent

'28-32

each

rate-making mo¬
utility
companies

hundreds of rate

courts

4.76

'

DEFICIT

with

for, and in a

a

The

carried

1931-35-

1

20

L

world.

affords

sound, and practical
long-term rate-making

In 1941 the ICC studied
the relation of freight
charges to
the value of commodities trans¬

Utility Com¬

and thus set precedents

nine

ought to be

5

State

missions decide rates
independently

Average

Manufacturing, Trade, Transportation, and Public Utilities.

Jjv

the

policy.

million

less

or

Government

Rate of Return

PER CENT

15

risen.

boom, followed.

Net Worth Of Leading
Corporations in

i

logical,
basis

in

bold fact which

a

_

The

1926-30.

i

apolo¬

farmers

highest

wages

pay. an

earned

Period—•

i

of

the

(2) industry i:
costs of transpor

(3)

have

the

Here is

But government

6%.

over

1930's,, the risky railroad

-5

1

7
American railroad freight rates
the lowest in the world and

are

overoptimistic forecasts of traffic

pressed
business

Earned by
-Granted toClass I
Pub. Util. All Public

1

transgression, and a vio¬
lation of the "due process" clause
of the Constitution.

nies earned

(xricrr'SSg

1

(1)

delay raising freight rates
accounting crime, an eco¬

an

nomic

philanthropist with other peo¬
ple's money.
Why should the
Government rob a poor Peter -to

while

1

earn¬

To make wages retroactive and

is

appease

prosperous;

groups.

6.26%.

25

bodies

return, but

series

namely:

tation

in

nents

compa¬

V //^
on

regulatory
fight, but

and

on

declines

;hen to

legal

been

getics,

sharp

the railroads earned less than 5%
but the utility transport

/-A

Annual Rate of Return

clear

in

granted

LE/

their

rights, resort
complicated apologetics.
As I
stated in my briefs in 1938 ana
1939, the railroad managers have

earn

offsetting rise in freight
They showed how this lag

created

instead

managers,

on

Constitutional

i;o

to.

the

ings.

railroad

insisting

and

at

supplies,
fuel'1; arid
and the lag in the neces¬

rates.

sins.

misconceptions, both of the

1926-1945, the

turn

PER

makes

sarily

groups

ratio

or

average

was

railroads

(National

ICC

spokesmen

and

wages,

.

1946,
practically at

were

The

manufacturing

The

terial

the

an

net worth in

railroads

future.

This

business.

every

Hearings did an excellent job in
presenting the rise in costs; ma¬

As

result, a new wave of railroad
bankruptcy faces the investor in
the

railroad

When^cos^s

.

must rise.

elementary in

The

a

and

In

industrial

net income to

the

trade

companies.

70

the

for

public utilities

showing the percent

railroads

Leading Corporations

for

manufacturing
array

less

was

is

that

so

simple argument of the clear right

After

return

poverty

decisions. ■;

rise, selling prices

poor years,

net

the 3948
investment

the 1948
earnings on the net investment
should be about 4.25%. The re¬
turn on the investment is
insig¬

The

plead

In

apologize.
The whole case
before the ICC is based not on the

After the first

totaling

creases,

for

greatest for ICQ

10%,

of

the

1.8%.

were

shippers

earn¬

investment

0.16%.

on

wages

1947, the

the

rates should not be increased.

peace¬

1946

York

vania

business declines?

The

ings for all roads and deficits for
some.

what,

cial

time history has caused low

Net Worth of All Active Corporations

on

stock issues since 1930.

new

is

by
This

in

boom in American history,
are
their prospects when

peace

Because

of this plight,
practically no rail¬
road has been able to finance

the

unique.

was

May

Exchange.

Lacking a rise in
rallied least of any nificant in boom
years.
Corpora¬
group. This shrinkage from lyiay,
tion
profits for the years 1946
1946, to January, 1947, was 22% and
1947
were
the greatest
on
for the railroad stocks, 17% for
all stocks, 14% for the steels alnd record, but the railroads earned
only 3.10% on the net investment
chemicals, 12% for the regulated after
depreciation.
In the pros¬
utilities, while the oil stocks rose
perous 1920's, the earnings were
by - 7%.
These cold figures are
less than 5%, and in the
depressed
more damning of our
rate-setting
1930's, less than 2%. What will
policy than any legal brief or the be the
earnings in the next de¬
most
meticulously
descriptive
pression?
words in the dictionary.
group.

rates,

study needs to be
bankrupt.
I
made
correlating ICC decisions
The market value of railroad se- 1 and
shrinkage in market values of
curities declined drastically.
Wage I shares of railroads compared with
increases

Stock

.

far the

have been fi¬

government policy which

exceeded

stock prices by Jan. 31, 1947,
railroad stocks
still showed

nancially bankrupt due to govern¬
ment policy. But
fundamentally it
was

r a i 1 r o a d
shrinkage in

Similarly, after the rebound in

the railroads.

on

utilities

roads.

tion

policy."
During the 1930's about 40% of

total

compared

Railroads,

No finding
is
required

relative

stocks

the

lated

before

no

in

or

late.

a
House Committee April
15, 1948, "A general increase in
rates, demanded by rapidly chang¬
ing economic conditions, calls for

regulating

the shrinkage in

Yet, as was pointed out by J.
Carter Fort, General Counsel; As¬
sociation

of

The

railroad

and

$2 billion. This
of a cockeyed

over

consequence

rates.

of

first

wages

a

policy

1947 investors wit¬

railroad

railroad

total of

a

tS

the historic

raising
ICC

or

Present

York

threatened

railroad

entitled.

are

with¬

out any compensating increase in
freight rates. Obviously, railroad
earnings would have to decline.

been evi¬

months, and yet
this
Commission
has failed
to
bring in a report, finally deter¬
mining the amount of the increase
some

I know of

1

Thursday, August 5, 1948

return

at!

II

all,

lower'at

than

at (the

beginning.
Railroad
win

the

efficiency

war.

helped

War II with World War
I,

traffic

was

74%

freight

greater, but

carried in 25% fewer
freight

by

33%

with

fewer

25%

to

Comparing World

was

csirs,

locomotives, and

fewer

workers.

The

superior performance of the rail¬
roads

in

the

two

postwar

years

■■

Volume

168

Number 4722

THEgCOMNdSRC^

-

(521)

& Fl^NC^

-

25

lic and run a certain minimum j The law does not require this proinequities later, but the railroads
number of trains; regardless of the cedure,
House;1 J u di al a r y Committee; should- be allowed automatically
In utility rate regulation, some
and immediately to raise rates volume of traffic. They must also |
In that 26-year interval, there, "Rate-making, and wage-setting
maintain adequately right-of-way, state commissions often follow a
was* att increase in tons, per train or power and responsibility,should when- wagek
of 76%, in freight-car-miles per be unified. Unification of govern¬ other costs rise. As J. Carter Fort structures and equipment. These prudent and practical course. They
at
a
House
Committee are fixed costs. When volume de- promptly grant the increase re¬
day of 88%, and in freight-loco- ment regulation is- essential for stated
clines
slightly,
profits decline quested by the utility and immotive-miles'per day of 54%. all transport agencies in stand¬ hearing on National Transporta¬
greatly.
'
pound' the
resulting proceeds,
Meanwhile, the average hourly ards of safety, wage scales, labor tion Policy: "Under the governing
Over a period of years the rail- subject to final determination of
wages rose 78% and cost of ma¬ standards, rate-making, account¬ statute, railroads are permitted to
roads must average a fair return, the rate. Customers receive a re¬
initiate rates by filing them with
terials by 75%.
But the revenue ing, depreciation and taxes."
but the ICC concentrates on try- fund if the final rates are less
Moreover, in a brief on March the • Interstate Commerce Com¬
per ton-mile declined 16%.
ing to fix a return at each hearing, than requested rates. The InterEvery measure shows increased 24, 1939, to the House Committee mission and such rates become
That is impossible. The railroad state Commerce Act in Section 15
efficiency of the railroads. It was on Interstate and Foreign Com¬ effective, unless suspended by the should
average 6%, as the utilities
(7) specifically authorizes the ICC
such increases of efficiency that merce, I pleaded,
as
a
public, Commission, upon 30 days' notice, have been allowed over a
long to follow the same policy, of permade it possible to keep freight service,.
"Equalize
wages
and or less with the permission of the
period of years. It is shocking to mitting a proposed rate increase
aours on railroads and their com¬
Commission."
\
rates low in World War II.
think that in the greatest boom
to go into effect, impounding the
The railroad income accounts petitors. Relate selling prices and
The Transportation Act of 1940
period in peace, the net return resultant increased revenue, subThe Government assumes does not require the Commission
and'balance sheets are meaning¬ costs.
was only 1.99% in 1946 and 3.40%
ject to a refund to shippers deless unless the figures are ex¬ the power with respect to freight to hold hearings before rate in¬ in 1947. The Commission should
pending upon the final decision
pressed in dollars of the same rates and wages but refuses to creases, requested by the rail¬ lean to the side of
liberality be- of the ICC as to rates. The ICC
purchasing power. The opponents assume responsibility for its ac¬ roads, become effective. The pro¬ cause of the
difficulty of fore- has not seen fit to use this authorUnite power and responsi¬ vision of the statute is merely
of a freight rise do not seem to tion.
casting. Rates can always be re- ization in any general rate in¬
realize that in comparing net op¬
bility." Again in July, 1946, I permissive but the Commission duced if
they are too high. But crease.
erating incomes in 1925, 1935, and pointed out the absurdity of di¬ has interpreted it as mandatory. if they are too low, bankruptcy i
Congressional action may be
1947, they are comparing current viding hearings on wages and on This interpretation produced in of the roads could result.
necessary. The 1940; amendments
dollars of low purchasing power freight rates and the grave risk 1946, a record year of peace-time
Commissioner Eastman in his to the ICC Act provided for a

$921'and
in

the increase ruptcy?

efficiency.

with

better

dollar

of

prewar

The long-term

trend in cost is

meat for the radicals. When prices

■

falling in 1893, the radicals
argued that rates be based on the

were

of

production, insignificant earnings,

after wage

the

times.

matched

that

1930's.

delaying rate increases long
increases, and pleaded
"the present policy cannot
continue. There must be integra-'
tion of selling prices and costs, of
freight rates and wages."
" ' : ■
Investigate

prevailing low reproduction cost.
World

After

War

I

when

prices

rose, the radicals shifted to the
ancient low original cost; As one

methods

other

of

The ICC might well

rate-making.

study the experience of other sys¬
of

tems

rate-making,

"agreed rates," which

such as
in ef¬

are

witty lawyer said, "All that hap¬
pened was that the radicals took

fect in Great Britain and in Can¬

their'opponents'

briefs."

ada.

Justice Brandeis

stated

But

Professor G. Lloyd Wilson's

only

depressed

the

in

of January

to

powerless

has

ICC

"The

ago,

years

stated 34

been
operating

reduce

Greater reductions in rates

costs.

only with reductions in
all-potent, price fix¬

come

costs.

Even

ing Commissions cannot take the
place of invention as a stimulant
and a guide."

elusion and
of

even

ownership

public

costs

modernization,

by the exercise of practical judg¬

"Freight rate-making is a pric¬
procedure and as such it is
highly volatile. There is danger
that the patterns of rate-making

ment based

may

in

dis¬

a

values is

problem to be

a

facts and

on

solved
busi¬

on

investor

The

and.

the

own

should

rates
low

the

is

forgotten

Stockholders put up savings

man.

level

a

vestor

to

as

be

Freight
set

at

so

despoil the in¬

capital from the

repel

or

industry.
rate

railroads.
never

The proceedings in the

hearings

partake of tragicomedy. After the series of catas¬
trophic years when almost 40%

>

of the nation's mileage was bank¬

rupt or in receivership and close
to

billion

$3

wiped

in

securities

tion, the ICC is still today trying
to

that

see

railroads

much

too

earn

the

do

not

What

money.

a

witless policy!

The investor is ignored
Eskimo at the U.N.

like

meetings. Pro¬

fessor Leo Sharfman wrote

—"The ICC—A Study in
istrative

five

Law

volumes

deals

with

and

of

a

book

Admin¬

Procedure," in
2,980 pages.
conceivable

every

an

It
as¬

pect of the ICC, but there is not
word

a

them

keeps

stockholders

the

about

whose money

built the railroads,

going,

and

A.A.R.'s

The

lets,
way

of

of

about

book¬

Railroad

"Review

and

Operations,"

figures

ICC.

statistical

"Yearbook

formation"

the

pays

taxes to help support the

In¬

of Rail¬

give all sorts
miles of tracks,

of

amount

equipment, materials
and
supplies, taxes, number of
workmen, wage rates and annual
earnings, but there is no mention
of how many stockholders there
what the distribution is, the
holdings per shareholder;
what percentage owns less than
are;

average

10, -25,
many

50,

and

stock

own

sfive, 10

or

more

than

they

attention

more

the

that

with

rates

the

carriers

in

are

aim

be

flexibility

in
in de¬

helpful

effective
rolicy of rate regulation by the
veloping

sound

a

historical

?n

ICC's

This

commission.

well

as

new

these

as

errors

would

old.
a

State Utilities

The fact that

quip

so

long

about

an

Commissions in

setting rates for electricity and
transportation. A recital of this
history of errors could be a valu¬
able guide for future ICC policy
—how not to do things.
Let

the

sion is

but

not

a

A commis¬
suitable form of organi¬

regulating and judging,
suited

is not

it

regulate

ICC

the railroads.

zation for
but

are

not

for adminis¬

tering and executing. Let the rail¬
road

decisions

railroad

sponsible
railroads

be

managers

for
do

the

made

who

by

the

are

results.

re¬

The

not wish, or benefit

by, excessive, rates. But they, and
not
the ICC,
should have the

that goes with responsibil¬
Often they do not even util¬
ize the full
latitude in raising
rates to levels allowed
by the

ity.

heeded
retired,
ICC.
elderly stockholders were brought
Railroads should be allowed to
into
the
hearings to show the
raise selling prices automatically
cruel impact of ICC niggardly
to meet rising costs just as indus¬
rate-making
policy
upon
the
backbone of the American com¬ try and agriculture do. Some util¬
munity, the hearings would as¬ ity commissions, domestic and for¬
or

even

heard.

are

If

a

not

few

,

sume

an

atmosphere- of life and

V

reality.

'

eign, use an automatic sliding
scale,
whereunder
rates
move
with the prjee of fuel and tabor.

'

What

Is

the

Remedy?

rights to pensions on retire¬

and

ment.
"Allow

said

Certainly

generous

Brandeis

Mr.

returns."
to

the ICC

should

road

"The

the

ICC

cannot

as

have

So
in
an

surplus not only to provide
the lean years but in order

need
for

a

that

there

be

may

such stability
him

to the investor as will induce
to

buy

rate."

securities at a low
in 1907 he wrote,
proper conditions, a rea¬

their
Again

"Under
sonable

assurance

of

undis¬

the

enjoyment of high divi¬
dends might be the best method
of
attaining
cheap
gas." High

turbed

dividends
rail

create

also

will

low

rates.

The

public utility industry has
stable volume of business
and
relatively
stable
earnings.
Therefore, the rate of return on
fairly

the

net investment fluctuates but

little

the

around

level.

6%

the railroad industry suffers

fluctuations

great
of

volume

the

in

But

traffic, earnings, and the rate of
return. In years of declining busi¬
ness,

for

it is impossible to raise rates,
volume

the

pressed

years

I

roads

Class
even

to

a

shrinks.

de¬

for

earnings

the

might

deficit.

In

go

to

0

or

Therefore, in

"prince and pauper" in¬
dustry, to average even only 5%,
such

a

the rate of return

might have

to be

in

a

8%

good year
or

better.

But the ICC does not allow a 5%

return in good years and the

in¬

dustry can earn but little in poor
years. Under the present ICC pol¬
icy of allowing 4.20% in boom

^ears, bankruptcy is inevitable in
the

depression.

next

V The principle
a

boom

ous

that earnings in
period should be gener¬

because railroad rates cannot

be increased during a depression,

enunciated in
by the ICC itself (General
Rates Increases, pp. 729-730). The
reason is obvious.
The railroad

was

also

clearly

1937

policy. ably as the management, relate
urging cost and selling price, operating
% .changes in government: policy joh expenses and freight rates. The industry is highly pyramided in
railroads,
la May
of
1938
I very idea of having the ICC ac¬ its operations. Unregulated indus¬
pleaded, ptirely as a public serv* tually fix rates should be re¬ try can curtail operations.^ But
ice; before the Railroad Bank¬ jected. Let it merely correct clear the railroads must serve the pub¬
Develop.'

Sinbe

an

integrate#

l938 'I/have

been




provide adequate earnings. ..The

earnings

new

money

expansion,

Comrate in¬

cycle. It should require the

re-

authorize

to

mission
crease

a

immediately upon the ap-

plication of the railroad and not
suspend or reduce it until after
the hearings are held,
(
The law would have to be resmall, as about half the earnings vised so that increases or? deare required for capital improvecreases of wages and freight rates
ment. For this reason the earnings
should he handled by the same
available for dividends should be
liberal enough to

attract

hody

the same time. The rate
jncreaSe should be automatic af-

Besides, with the rise of
prices of materials and supplies
and of wages, the cost of expan-

ter

Surely congress
Certainly
the statute should prevent recurrence
of the historic procedure
of the ICC in refusing to allow
rates to be raised even when the
return was miserably inadequate.
lQwed

because of the low buying power of current dollars.
Ample earnings would make
possible
financing
by
stocks
necessary

of bonds to total capital

centage

EES

possSe risfng 'stock

|

recur>

duty here.

.

prices. Then if the railroads would

t0

clear

hag

Thus the per

bonds.

rather than

use

rnake

convertible bonds

as a

The col-

raised.

were

wages

lapse of earnings, as in 1946, due
to ICC delay should never be al¬

improvement increases
and therefore higher earnings are
and

sion

if by two bodies then at

or

ieast'at

new cap-

ital.

.

.

.

physician, "He keeps on
making the same mistakes for 50
years and calls it experience." Ba¬
sically, the ICC ignored its re¬
sponsibility to set such rates as
would give a "fair return," as did

manage

commissioners

opportunity to earn. The managers
should
have
ample reward for
The railroads
give their efforts.

elderly

40

$

of

survey

continue for

recalls

time

The

tenure.

should, like Federal judges, enjoy
freedom from political influences

of omission and

errors

long-term perspective on the
problem of rate-making. It should
be
valuable
to
Commissioners,

a

political pressure on orig¬
appointments or on security

no

1914.

Make

the

be

the members

Commission. There should

of the

and

ICC.

required
by law to grant such rates as will

are needed
law should specify some definite
available a( return on the investment averaged
low rates. There is also need for throughout a complete economic

to make

such rights denied to

of

and

would

in

method

on

specify

to

as

so

clearly that the ICC is

industry constantly in need of
improvement • and greater efficiency, the amount paid out in
dividends
must
be
relatively

should be provided for
commissioners, to cover old age
and
disability. Even the staff,
down to the clerks, now enjoys

inal

Vi¬

burden

amended

be

taxation."

ment pay

the

consumers."

distributors and

Commissioners' s&laries

men.

all

cover

a

the need for revenue sufficient to
enable the carriers to provide
such service." This Section should

lieving the car shortage and to increase safety and efficiency. In an

and

of producers,

of

pay

should be raised. Generous retire¬

of

needs

the

traffic requirements
sion

conformity

able

industrial

revenue

and

power

stockholders

organized,

i

for

20 years.

Because

'

100 shares; how

fixed and
be paid to

following familiar practices
in
making rates than to making sure

were

decapitaliza-

through

out

unduly

become

that

experience."

ness

ing

Raise

turn.
Section
15-A
calls for
"adequate and efficient railway
service at the lowest cost . . . and

requires

to

sufficient
and prevent

except a fair re-

purposes

many

sound system

a

earnings

general
Adequate

senting
opinion in- the United
Railways v. Best 1930, whether
to use charges "based on original
-cost or upon fluctuating present

National
Transportation Policy,
In that statute Congress specified

private enterprise for transportation, the carriers must have
revenues
which
will
not
only
cover all costs but provide profits
large enough to attract capital,
There is no escape from this con-

ICC
members
book,
"Freight
Rate
Making" and
provide for retirement and
compares our class and commod¬
disability. The terms of the service
ity rates with "agreed rates."
on the Commission should attract

as

1936, made

1,

on

As Louis D. Brandeis

can

report

this clear: "So long as we depend

financ- i

ICC =d too high

™tes' oforSence a^d dLcretion

—

ing medium, the bonds would be
converted and disappear in per¬

prosperity. Good earnings
because the rail¬

maxfmum

if it

tors.

iods of
are

necessary

have

roads

followed

a

and

generally have paid out less than
half the earnings, except during
the depressed 1930's, when earn¬
ings were scant. Besides, Amer¬
ican railroads paid out a smaller
percentage than industrial com¬
panies did. Again, American rail-*
roads paid little in dividends and
improved the property, but Brit¬
ish railroads paid liberal dividends
and neglected the property.
The utilities

return

quate
and

were

on

low

the

returns

inadequate

languished.

ICC

The

precedent

Commissions

investment

But the railroads

flourished.

received

granted ade¬

the

should

the

of

the

and

Government

twice

should

in¬

tegrate the approach.
Publicly
regulated enterprise should fol¬
low the practice of private com¬
petitive enterprise and examine
wages and rates at the same time.
Let both hearings be held at the
same

time.

Eliminate the lag in raising rates.

Immediately
creased,

give

to raise rates

after wages are in¬

railroads the right
on

short notice and

let the JCC hearings, be used to

adjust

relative

differences

But do not hold up
increases

until

later.

the broad rate

all the

been too legalistic—too
precedents and
of present actualities.
the law was made for man
not man for the law.
The
can
and should be changed.
has

much
too
But

and
law

of 'historic

little

Only then will there be a

realistic

approach to the problem of rail¬
road rates, earnings, and bank¬
ruptcy.

present rate-

Continuance of the

making policy forebodes dire ills
for one million railroad investors,
for

and

private enterprise in general,
even for the ICC itself.
Its
by statute, already

and
in
foK mooted
State committees,

ICC.

policy

ings

abolition

Courts

which have granted returns
that allowed by the

approach to the rate hear¬

The

con¬

policy

dividend

servative

very

prevented traffic from mov¬
ing or shifted traffic to competi¬

details of

relative rates have been adjusted.*

Congressional

some

policy. It

present rate-making

its

must ultimately

victim of its

under

inevitable

is

be the legislative

adminstrative errors.

Betts, Borland Admits
ILL.

CHICAGO,

Borland &

on

Aug.

h^

York

Betts,

member

firm,

Mr. MacCorkle will

6.

make

in

Co., Ill South La Salle

Exchange

Street,

will be ad¬

partnership

to

C.

of the New

York Stock Exchange,

mitted

Robert

—

member

MacCorkle,

City.

headquarters

Interest

Quintan

July 21.

of

in

the

the

late

firm

in New
John

H.

ceased

on

THE

(522)

26

Reporter
i

Governments

on

By JOHN T. CHIPPENDALE, JK. i

Presidential

.

,

.

.

.

.

.

.

.

'

••

problem of inflation has stood at
the center of the picture.
The
upsurge
of various elements in
the price
and income structure
has introduced unsettling factors
which
are
clearly incompatible
with
stable
prosperity and in¬
creasing national security. At the
very heart of sound economic pol¬
icies must be the desire to help
achieve greater stability and more
permanently workable relation¬
ships as rapidly as possible.

maintain

"From

riods

.

unleashed

*:»

T">

^

•*;

-

•

INCREASED

1

-

\ :'T

•'

*

*

-

■

,

'

-

•••

.

forces

1

'

•

RESERVES LIKELY

.President Truman's recommendation that the "Federal Reserve
should

Board

increased

have

restrain inflationary bank
credit,"-took more concrete form, when Secretary of the Treasury
Snyder and Chairman McCabe, of the Fedreal Reserve Board, urged
that the Board be given authority to regulate instalment credit and
"to increase reserve requirements of all banks by 10% on demand
deposits and 4% on time deposits.
.'. These new powers would ex¬
pire Jjune 30, 1950,
It is up to Congress now to decide whether
the Federal Reserve Board should be given the restrictive measures
that have been asked for.
Polities'will be very important in what
takes place in the way of additional powers for the regulatory
authorities and predicting political actions is at least a very hazardous
business. X
to

power

.

...

.

.

.

....

Opinions

still

to

seem

divided

he

(despite

apparent

ap¬

proval by Senators Taft and Tobey and Representative Walcott)
to

as

whether

not

or

additional restrictive

credit will be given to the Board.
followers

of the

markets

money

will

that the Congress

see

.

.

.

powers

bank

over

However, the shrewdest

fit to grant this authority.

have

restraining influence upon the lending policies
-of member institutions for a time, at least, although it cannot be
completely effective as long as support levels are being maintained
by the authorities on Treasury obligations.
However, the knowl¬
edge that the Federal Reserve Board could step up required reserves
■of member institutions from time to time will no doubt serve as a
a

.

fcraker

.

the credit

creating policies of the commercial banks.

the

hand,

on

On

.

other

if

desirable

loans

should

.

continue

.

.

to

along there is nothing to prevent the banks from selling
Government obligations and using the proceeds to meet in¬
creased reserve requirements.
come

.

.

Sharply restric¬
slow up loaning so that business
On the other hand, it could be that

however, might
adversely effected.

measures

...

.

.

more to their liking to swap Gov¬
ernments for loans, and the brunt of the effect of the
proposed credit

.limiting program of the
ment bond market.

authorities would be borne by the govern¬

action

in

the

istrong inflationary trends.

money
.

.

.

markets

is

cure-all

110

for

However, the inflationary forces

from
our
already
overloaded
plants, fully employed labor force,
and still overstrained supply lines.
"The presence of these infla¬
tionary factors does not mean that
we

are

kind.

threshold

the

on

inflationary

of

an

of4he 'run-away'

orgy

While alarmists refer to

money,' sober students do not see
situation
any real analogy with Continental
and Confederate currency episodes
or the more recent collapse of the
in the present monetary

Europe

countries

numerous

elsewhere after both

or

"Of

the

course,

United

States

dollar has had its real value low¬
ered in the course of the economic

prices

pass over

mildly restrictive measures now
enough to tip the scales in the opposite direction.

would

be

likelihood

of

a

And

there

is

World

near-time restoration of that

former value.
sacred

1939

tary

The

Government securities markets have had some wild
price
gyrations since the end of the v/ar, and these can be attributed
largely to the short-range stop-gap policies of the
monetary author¬
ities in their management of the
huge public debt.
There seems
.

War

But there is nothing
the price marks of

about

or

times.

INVESTOR CONFIDENCE LACKING

.

by

lar, although at
essarily higher

case,

that

readjustments induced
II.

But

price level nec¬
than in prewar

a

the

process

adjustment

is

of

mone¬

the

compromising through which
parties at interest work out

their rival claims in

subject

but

omy,

influences

of

free

a

to

the
..

this

process

it

as

what

balance

forces work

amining
reduce

out,

competing
begin by ex¬

we

of the factors that
pressure of inflation.

some

the

Outstanding among these is the
that, in many fields of pro¬
duction, the supply situation is
greatly improved.
"One
such
development
was
dramatized by the Department of
Agriculture crop report of July 9.
It opened with these profoundly
significant sentences:
'Crop production in 1948 prom¬
fact

the

in¬

price-income
The

Nation's

.

to

that

surpass

standing

year

set

record

in

of

of

the

1942,

1946

..

the

record

a

...

[corn] production of 3,329 million
bushels

is

indicated.

now

The

wheat

prospect,
1,242
million
bushels, is an improvement of 4%

.

.

rent estimates

indicate

an

.

aggre¬

"Despite

high degree of in¬
dustrialization,
the
tremendous
importance of agriculture cannot
be

our

overlooked.

of foods

age

The

world

short¬

of
up

and other products

agricultural origin, continuing
to this year, has had an im¬

inflationary impact upon
price structure through

mense

the whole

the relations that farm prices have
to the cost of living and to in¬
dustrial wages, prices, and profits.
Although the full effects will not
be felt
for
some
time, greater
abundance in basic agricultural
crops should be of signal aid in
the checking of inflation and the
progressive working out of rea¬
sonably stable relationships.
"That

end

would

not

be

pro¬

moted if the enlargement in sup¬
ply of farm products were to coin¬
with

cide

some

of

demand

ment

serious
to

curtail¬

produce

goods,

and

markets.

such

to

But

other commodity
repetition of

the

by

a

a

Economic

out

tested

and

over

the

Budget

Half, Annual Rates
Excess of

pendi¬

Expendi¬

tures

tures (—)

Receipts

(+ ) or

Ex-

( +) or

Re-

pendi-

Expendi¬

ceipts

tures

tures (—)

186.0

173.6

and

+ 11.6

re¬

19.4

,

.

.

reinforced

are

by

indications of improved

understanding

economic

and

<

objectives on the part of
those who operate our business '
system.
It cannot'fairly be said
that
they have rushed blindly
anead in the boom spirit of past
expansionary periods. A sense %of
broader

has

caution

attained by in¬

been

initiated

have

of

reductions,

as

a

-

doing something positive

"If international tension

lessens,
lightening of both the physi¬
cal and psychological impact on
our economy, with its great pro¬
ductive potential, would sharply
reduce
inflationary pressure at
important points. We might then
rather promptly be put to the test
to show whether our producers
and distributors could make price
and cost adjustments fast enough
to continue employment and pro¬
the

duction without serious cutbacks.
"In

spite

of

the

counterinfla-

tionary factors enumerated, it
mains

true

inflation

much with

very

this

of

that

re¬

still

The nature

us.

continued

is

inflation

has

been treated in detail in the pre¬

ceding sections of this report.
It
be
summarized
briefly as
three interrelated phases of one
complex process.
can

"First, there is the fact that de¬
categories has been
expanding and may expand fur¬

mand in most

Consumer

ther.

demand

is

run¬

ning high, particcularly under the
impact of tax reduction and wage
increases.
Rising residential con¬
struction and heavy investment,
fed by high profits, add to busi¬
ness

demand.

ditures
total

are

of

Government expen¬

rising.

effective

Thus the
demand

sum

of

all

types
still
continues
to
press
against a supply that increases
only slowly. This excess of de¬
mand may not be as general as it
was when postwar shortages were
at their peak.
The inflationary
pressure

is perhaps

more selective
is still a major
price situation.

than it was, but it
factor in the

price-wage

30.0

37.2
-10.6

.

-15.8

8.9

foreign investment
of receipts
(+) or

Exess

3.9

in¬
—8.9

vestment

(—)
Govt. (Federal, State and local):
Cash receipts from

the public

-3.9

53.2

+ 6.7

Total gross national product

♦Estimates based
NOTE—Detail

on

will

—21.3

-25.2

structure.

The

recent

goods has evaporated. Substantial
increases, which often have
made

in order to

previous;

price

catch

231.6

231.6

not necessarily

+ 3.9

+ 12.0

—24.9

—21.1

—3.8

up;

increases^
or

promptly followed by substantial
in the prices in industrial
goods. Production costs are still
rising, and while many businesses
can
pass them along in higher
prices, there are others that are
rises

incomplete data.

Source: See appendix

had;

have been accompanied in turn

(—
:

very

wage

with

52.0

have

great im-u
base of our

of

attempt to hold industrial wages
and
reduce prices of
industrial',

been

64.0

59.9

Cash payments to the public.
Excess
of
receipts
(+)
or

Adjustments

Developments

effect

portance at the
industrial

(—)

spiral.

few months

cumulative

21.4

private domestic invest.
receipts ( +) or in¬

payments

side

numerous

a

.

.

"These favorable factors on the

physical

of the last
profits

Excess of

weeks period.
by investors as a whole, along with
Treasury weekly retirement of bills is responsible for the
smaller
government holdings by Federal., - •
'
'
;
,•

Switching from longs into shorts
the

permit the great demands upon the productive sys¬
tem to be. met more easily and
will ease the pressure on prices.; 7

have been multiplied through the,

174.4
+ 8.8

(+)

serves

.

v

will

ucts

"Second, the inflationary effects
■_

International:

.

a

collapse of farmers' incomes. Such
a
collapse shortly after World
War I spread to rural merchants
and bankers, to manufacturers of
farm
equipment and consumer

164.8

Undistributed

Net

increased flow of final prod-

the

to stem inflation.

compared with
123% in 1942 and 126% in 1946.'
average,

Business:

Institutional investors,
principally insurance companies, continue
long governments to the Federal Reserve Banks with these
eliminations in the last three weeks
exceeding $354,000,000.
Savings and commercial banks also
disposed of the more distant
maturities in the past week.
However, these sales, by non-bank
investors, so far have not had inflationary
implications since total
government security holdings of the Central
Banks have decreased
by more than $325,000,000 during this same three

of

orders will be worked down, and,

1923-32

Ex¬

Expenditures

sell

As

backlogs

domestic

efficiency,

means

Seasonally Adjusted*

Gross

vast • scale.

a

dustrial

gate production about 128% of the

Excess of

Saving

upon

enlarged and modernized in¬
plant gets shaken down
and its crews trained to maximum
an

.

Calendar Year 1948, First

vestment

.

vestment

.

.

—Calendar Year 1947—

.

.

We appear to be:
nearing the end of the strong im¬
pact of war-created shortages of
plant and inventory.
While in¬
dustrial output has increased less
rapidly than extremely favorable
production conditions had led us
to expect it, it should progres¬
sively show the effect of nearly
three years of added capital in¬

dustrialists, merchants, and bank¬
over
earlier
forecasts and
will ers with regard to inventories,
be the second largest crop in our credit
expansion, and construction
history.
Cotton acreage is plans. Some unions have applied
10%
larger than in 1947.
moderation to their wage demands,
All-crop prospects are reported and some manufacturers and dis¬
above the average of the past 10 tributors
have
sought to hold /
years and as good as in 1946. Cur¬ prices against further advances or

ceipts

NON-BANK SELLING




out¬

and

(Billions of Dollars)

Disposable income—

.

which should

trial expansion.

Consumers:

.

second factor

"A

significantly work against further

"

ises

Re¬

confi¬
dence is restored in the Government
market the authorities will
continue to be the only sizable buyer of
Treasury obligations.
.

now

these

Receipts

.

is

In attempting to judge

pressures.

...

.

public

appropriate

policies.
"In

econ¬

guiding

worked

within

one

Account—

to

inflation is the increase in indus¬

and

ships

easy way of doing the job of keeping interest rates low and
Government bond prices within limits other than
by the method of
supporting
Treasuries when they approach
levels
set
bv
the

:r

ments may be wrought, primarily
in the context of the bargaining

debacle today is precluded
policy of farm income sup¬
ports, implemented by procedures

only

past 20 years, though not yet per¬
fected.

gredient, and in a sense only a
byproduct, of adjusting relation¬

.

However, this has not created confidence in the minds of
large holders of Government securities, because
they are not
convinced that support prices can be held
indefinitely.
This
feeling still persists despite statements by the money
managers
that the 2%% rate on long
Governments will be maintained in
the foreseeable future.
However, until such time as

and

production
and employment.
The practical
question now is how these adjust¬

no

managers.

facilitate

to

as

maximum

our

present currency as 'printing press

"To be sure, we want to achieve
reasonable steadiness of the dol¬

the hump, as some believe they will
soon, there will not be the
same bally-hoo for credit
controls.... If this should be the

*to be

market, but it is

alleviate.

which have been brought into the political arena
may lose some
of their momentum in the near future and when

be

the

1926, and the attempt to
restore them would probably cre¬
ate more hardship than it would

...

might

in

business

and

consumer

.

Hie commercial banks will find it

St

ad¬

World Wars.

ing credit still remains with the member banks.

Limited

to

currencies of

Supporting prices of Treasury obligations give the banks an out,
to speak, in their lending operations and the initiative for creat¬

-would be

Effective

.

in

tive

unsettling

.

.MARKET EFFECT

so

be

incapable of stimulating a propor¬
tionately larger flow of goods

...

Larger reserve requirements for member banks of the System,
along with higher short-term rates and an increase in the rediscount
should

the

inflation.

of

demand

.PSYCHOLOGICAL IMPEDIMENT

jrate

to

justment policies have been hard
to devise and harder to get ac¬
cepted and applied.
'
"We
appear now
to be once
more
at a stage of renewed in¬
stability, with many prices reach¬
ing for the easy dollars that a
still
undersupplied
market
is
ready to yield; with recent and
prospective wage settlements con¬
tributing to the upward process;
with market demand again being
stimulated
by
the
accelerating
procurement programs of foreign
aid and national defense; and with
continuing scarcities of numerous
key materials. Tax reduction has
added

going along with the idea

are

appeared

we

again

.

I...

have

when

so

unfolding,
there
are
complex
time since the forces, some working to lessen arid
others
to
intensify inflationary
been brief pe¬

to

time

there

war,

Thursday, August 5, 1948

Analyze Nation's Situation

structure

moving toward such stabilizing
relationships. But each time this
prospect was soon upset by some
new factor of curtailed supply or
expanded market demand which

Volume increased on the doWnside but was not excessive,
although itwas large enough to-exercise a definitely depressing
influence on prices of Treasury obligations.
All maturities
and groups have been affected, shbrts, longs, taxables, partially
exempts and ineligibles, so that the market at times was not too
dissimilar to what it was just prior to last Christmas Eve. .
.
.

■

CHRONICLE

(Continued from page 2)

request ior greater control over bank credit,
ralong with testimony of Treasury Secretary Snyder and Federal Re¬
serve
officials before Congressional committees, played havoc with
•the Government securities markets.
Prices of bank eligibles in
many instances went plummeting down to "pegged" levels as bids
•faded because what few buyers that, were left in the market, with¬
drew to the sidelines.
Some minor support on the way down
was supplied by those that were covering short positions.
.
.
Un¬
certainty and confusion are; again-rampant in the money markets,
which means that confidence is at abput as low an ebb as it has been
in a long time.
y, Investors and traders are not going to do any¬
thing until the atmosphere clears, and no one is attempting to pre¬
dict when that will take place, y
.
j
•'*
V

FINANCIAL

&

Economic Advisers

Our

The

COMMERCIAL

246.5

246.5

>

add to totals because of rounding.

A for sources and explanatory material.

it

Volume 168

COMMERCIAL

THE

Number 4722

obviously squeezed. Capacity to booms to collapse while business
for high-priced material is sentiment is still confident,
"It is not enough to be satisfied
not necessarily distributing them
in the way most consonant with with quick and crude adjustments
economic efficiency. Railroad by which our economy can 'get
freight and passenger rates have by' from month to month or year
been
materially increased, and to year, still under the momentum
utilities in many instances have of forces engendered during the
been granted advances by public four-year war period. No one can
utility commissions while others foretell precisely when some event
have requests for such advances or series of events might touch
pending. This upward movement off a change in the economic situ¬
of prices is linked on the one side ation more rapidly than we'were
to the third round of wage in¬ prepared to deal with it.
It is of
creases and linked on the other ever-increasing
importance that
the policies and actions of private
to active talk of a fourth round.
"The rising cost of living is im¬ business, labor, agriculture, and
posing intense hardship upon mil¬ government should move toward
lions of individuals who are not economically sound relationships
so that the postwar boom may be
strategically located to participate
succeeded by a sustained prosper¬
in the upward movement.
Meat
prices continue to rise, while the ity based on the maximum rea¬
sonable use of our productive reprospectively large supply of grain

pay

will

have little power

to enlarge

the supply of meat throughout the
remainder of this year and indeed

operate somewhat to reduce
While improved grain stocks

may

it.

next year will have

important ef¬
of livestock
products, they cannot in the im¬
fects

the

'on

mediate

prices

counteract

future

which

inflationary forces

strong
control

our

the

markets.

"Third, credit expansion, partly
a, cause and partly a result of in¬
flation, still persists. The spiraling
increase in prices and wages can
continue only so long as business
can
replenish its working capital
from bank credit or through the
•

conversion of liquid assets.
'; "Almost as

significant in its dis¬
turbing effect as the statistically
demonstrable
tion

is

which

the

infla¬

of

evidences

uneasiness
uneasiness

persistent

it

The workers have

world.
cost of

seen

the

living continue to mount,

1

special

were

circum¬

isolated its

significance and which

could not be counted upon to pro¬
tect

under other circumstances.

us

Besides

the

farm

price-support

which gave assurance to
the business community at large,
the break was shortly followed by
other events in the economy which
program,

fortified

optimistic business sen¬

timent.
"But

Employment Act of 1946
Congress declared the contin¬
uing policy of the government to
'coordinate and utilize all its plans,
functions, and resources' to bring
about

maximum

maintain

and

employment and
to
preserve
and strengthen our
economy of free competitive en¬
terprise. This plan of action re¬
quires that we shall always look
to the independent factors in our
business world to adjust their pol¬
icies so intelligently that the im¬
production and

which

balances

in

inevitable

are

highly dynamic economy shall
and shall not ac¬
cumulate until they destroy busi¬
ness
stability.
"The
role
of the government
as
contemplated in the Employ¬
ment Act ordinarily is to develop
its own activities and organize the

our

be

temporary

market.

out

powers

that

seems

afty

corresponding benefits to the
public. The business firms which
have held down their prices can
only feel that they have permitted
others to increase their profits,
and they have not halted the in¬
flation.
"A
real
difficulty
with
the
wholly voluntary solution is that

cannot ignore

the

pros¬

the

as

it

that

break

in

other sector of the economy

some

where the consequences
thus be isolated.

would not

If attendant de¬

velopments which cannot be fore¬
did not

substantially to
counteract
it,
this break well
might" carry our highly sensitive
economy into a general recession
of serious proportions.
seen

'"In

short,

serve

have

we

this

very

s had
a significant warning
while there has still been oppor¬

year

of

effort

less

of

thousands

con¬

the prices of building materials

up

In

1947, we exported $11 billion
goods than we imported. If
we
let foreigners come in here
and buy huge amounts of Amer¬
ican
goods without their being

more

to

able
to

produce goods to furnish
of course that foreign de¬

us,

mand forces up

prices. This year
the excess of exports will be be¬
tween $7 and $8 billion.
The President insists

on

expend¬

itures of nearly $40 billion a year,

nearly all of this money finds
its way into the markets to help
force up prices.
and

burden is
more than $40 billion a year, and
many
businesses and individuals
today are able to pass on those
taxes into the price of the goods
that the housewife buys.
When
The

government tax

of

most important

which

a

of

few

our

business corpora¬
held down or

have

actually reduced prices in a boom
the

of

furnishing
halt

to

effort

"The

same

purpose

express

leadership
the

in

an

inflationary

attitude has been ex¬

hibited by a large

number of the
important leaders of organ¬
ized labor, who have earnestly'and
with some success postponed or
moderated-the urgent demands of
members of their labor unions for
most

wage

cost

increases to meet the rising
of
living.
Farmers have

frankly expressed their uneasiness
about the situation which was be¬

ing created by rising prices even

three

serve

the

its

vetoed

times

The

our

Federal

Board has power by

re-discount rate

taxRe¬

raising

and limiting

purchases of government bonds

to force a reduction in bank loans.
In

fact, its power is so
the danger is, if it were
used, it might not only
prices, but precipitate

great thai
carelessly,
reduce all
a depres¬

sion.

President

The

does

lack

not

to reduce prices. The fact
is he doesn't want to reduce prices,
certainly not before the election.
He wants votes from the farmers

high farm

prices.

He

wants
high

votes from the workmen for

wages.
We will look over the field and
see

inflotion,

should profit by

we

this warning and

the

circum'stahces haye accorded tp us.
The hiost! dsingejrous error that
,

overtake

Consumers

have

reserved

amounts of their savings
despite the pressure of
high prices, have made large an¬
nual additions to current savings.

vigorously seize large

additional grant of time that

could

ures.

us

as

a

bonds and,

"While

nation

this

spreading

sense

of

wbuld.!b.e to assume that the prob¬ responsibility
and
of
caution
lem has'disappeared, or that, our promises much for the success of

whether

any

other reasonable

powers can be given him by which
he can restrain the expansion Of

efforts
we

should be abated because

have thus far avoided

reverses, or because the
ditions for continued
appear

for

to be sound,

inflationary and
-

serious

basicc con¬
prosperity

It is typicql

speculative




credit, but I feel quite confident
he will never use them before

Fortunately bountiful
crops have
already reduced the
price of corn, wheat and other
grains, which is bound to be re¬
lower price for food.
Otherwise the only hope for lower

flected in

a

prices lies in getting
ministration inspired
Deal

President

said

controls

such

that

By

police state methods. He was
right they would mean the end oi
economic freedom in this country
The President wants to re-estab¬
lish

OPA, WPB and all the war¬
agencies. He represents that
he only wants these powers for
standby purposes, and that they
will be sparingly used only with

time

relation
short

in

This Congress has

supply.

when

that

learned

commodities

vital

to

powers

are

to a left-wing Ad¬
the.y are freely used
thing we learned
from OPA in the war, it is that you

once

granted

ministrator
If

is

there

can't

do

one

price

partially

control

Every important commodity is in¬
terrelated. You can't fix the price
of

unless you fix the price
wheat and chickens

meat

of

corn

removal

in

the

complete

re¬

of control for

j

were

and

dairy products. Once you start
to fix prices, you have to regulate
every detail of every sale trans¬
action. This Congress certainly is
and

not

going to grant powers on the
theory that they Won't be used.

a period of 30 days.
time the Congress could

the

enact another bill—and remember

this
it

was

Democratic Congress-

a

almost

was

impossible

impose controls
aural

The

De-control

own

controls

moved

to rebasic agricul- '

on

products.

President's

Board

then

re¬

dairy products
and grain. The attempt to control
meat

on

such

was

President

fiasco

a

himself

that

off

took

the

these

controls just before the 1946 elec¬
tion, because he was told that no
Democratic Congressman could be
elected if they remained in effect.
Then after the election, it was the
President himself who took off al¬
most all other controls before the
first

Republican

Congress

in

14

could even meet. He could
reimposed controls at any
time up to July 1, 1947, He did

years
have

not

do

and did not ask for

so,

renewal

his

of

Can

powers.

sincerely believe that the
trols

he

is

vast army
or

con¬

asking for without a
of enforcement agents;

with such

even

a

he

govern¬

ment could now enforce the

knows

Objections to Price Controls

that

army?

an

He

reasonable

no

man

would

Apart from the destruction ol
liberty, there are three practical
objections to adopting police state
methods:

They choke production in¬
stead of increasing it.
What we
want is more production to give
(1)

the

housewife

The

war.

couldn't buy any butter, any meat,

canned goods. No man

any soap or

could find

a

white shirt

or a new

leather

suit.

There

cause

of the black market

was

no

be¬

slaught¬

ering of beef, and no shoes. There
wasn't

lumber or building
except in the black
market, and none of them came
back until we got rid of OPA.
The English have complete price
control
and
rationing, but they
haven't
got enough to live on.
They have no incentive to get
production,
and
they
rely
on
any

materials,

American

power

for

modities.

bill,

sulting

fix prices,
allocate and ration com¬
In
October
1947, the

after

opportunity to take positive meas¬ November.

of

off

The President vetoed the

him power to

to

cut

dorsed. He wants to increase taxes,

reaped the ultimate consequences

being satisfied because the lack of

not

memory

took

production and the provision that
they should be gradually relaxed.

has

any

reduction bills.

for

He

kind. I have
the project for spend¬
which he has not en¬

economy

yet to see
ing money

expenses.

ognized along .with the better pub¬
of

He

rememoer

people what they need at reason¬
able prices.
Surely, the memory
of the American people is not sr
short they can't remember OPA

The President has power to

in

store

fix wages,

and

actions

must
price con¬
the Republicans. Let's

short.

modifications designed to increase

and homes.

action thus far taken has not yet

Far from

ly, the President's

(Continued from page 4)

spicuous firms deserve to be rec¬
licized

market.

Price control won't work. Sure¬

and Prices

though they have been benefici¬
aries thereof, but the nature of
this
industry
gives them little

tunity to aqt in time.

j

what really happened.
July 1, 1946, Republicans renewed
price control powers with various

shown the slighest interest

The attitude and

price, most of it goes into -

the .black

Special Session

never

every

movement.

a

natural
,

trols,

The

business

stabilization.

to

flation,

to

the effectiveness of vol-

can

be

public

for

need

market

lead

wise and vigorous government ac-

untary actions be assured."

con¬

many

adjust its oWn policies so
may contribute its share

pect that unworkable relationship
iri the price structure, necessarily
the outgrowth of unconquered in¬
may

government should have and use feet on
in the interest of economic American people don't like to be
a bility,
to supplement the j regimented and they don't like to
strength of individual actions, to j be ordered around by Federal of¬
give them common direction, and ficials. Morals are broken down,
to
prevent
their dissipation ■ because it pays to be a criminal.
through mutual conflict of pur- i The moment the government fixes
the price of corn at less than its
pose.
Only with the support of i

workers,

and

no

was

st

tion

businessmen,

There

yards, but millions of
black market trucks. The

that the

necessary

it requires simultaneous action by

desirability as well

given to the
firm to

lumber in

the lumber

show that wide attention has been

tions
we

80% of the meat was in the black

It is therefore

it

"In the

the

here?

existed

which

markets

or

assurance

that the inflation will be stopped.

them

,

there

firm

they have shown has
only brought them sacrifice with¬

to

and

policies which affect business in
a pro¬
such a way as to facilitate these
disruptive force if it is needed
voluntary
adjustments. you buy a pair of shoes, you pay
not removed by dealing with the But if economic maladjustments some of the taxes of the farmer,
specific factors
which
are
its become so serious that the volun¬ the feeder of the cattle, of the
causes.
The deep significance and tary action is clearly inadequate packer, of the hide processor, of
reality of this uneasiness in the to halt threatening trends in the the shoe manufacturer and the
shoe retailer.
The. consumer fin¬
presence of inflation was clearly economy, the
power of govern¬
ally pays. Probably^ 25 %< of the
illustrated by the conditions sur¬ ment must be
used where
the
rounding the break in commodity President and the Congress deem price you pay for manufactured
prices early in 1948. A tremor of necessary to forestall serious dam¬ goods represents taxes.
These are the causes of infla¬
uncertainty,
even
of fear, ran age to the public interest.
tion-and while we go on creating
through the whole economy, and
"The
comprehensive
wartime
for a short time there were many
controls over business were rap¬ money and increased buying, we
who thought that we were close
cannot
be
surprised
at higher
idly removed after the close of
to a serious and general downturn
hostilities.
Voluntary action has prices. Each of the programs has
merit.
None
in employment production.
perhaps
can
be
been increasingly relied upon to
"Fortunately,
that
particular maintain business activity at a wholly eliminated. But if we don't
want high prices we will have to
break turned out to be corrective high
level
without
permitting
rather than disastrous.
But this serious maladjustments to arise. cut all of these programs in a
should not blind us to the fact The files of our business journals reasonable proportion.
that

individual

no

have

can

restraint

foundly

stances, already referred to, which

group

sources.

breeds, an
could expand into

which

But

sumers.

27

(523)

FINANCIAL: CHRONICLE

&

aid

for

a

standard

oi

living far below our own. Many
countries in the world have con¬
In all of them incentive to

trols.

produce has vanished.
enongh

to

do

the job of

is done by
natural economic law. There are
control

as

well

as

it

probably a billion transactions a
day in this country, and no one
knows enough to fix the prices
and conditions to
govern those
sales.

I

saw

the

little

men

no

or

the South and there was

relief from bungling

and in¬

rid of ad¬ justice.

by the New
philosophy of spending and

represents

program
surrender

to

left-wing which is
stray

away

complete

a

politics, and to the
tempted to

so

to the support of Hen¬

Wallace.

ry

The policies of the Administra¬
tion

have

caused

inflation'.

An

Administration which has been in

for 16

power

cannot escape

years

the results of its

action.

own

It

has the powers to check inflation

today—we

of the

course

additional

grant

may

powers—but

the

only

real

re¬

people against infla¬

tion is at the election

on

John W. Ayres

Willi

Nov. 4.

Scott, Honor, Mason
VA.

LYNCHBURG,
Horner

&

associated

now

them

in the

their

Richmond office,

Eighth

Scott,
Krise

that John W.

announce

is

Ayres

—

Inc.,

Mason,

with

sales department

Street.

Mr.

of

12 North

Ayres

was

formerly with C. F. Cassell & Co.
of Charlottesville.

who

struggled with the problem in the
OPA bureaus. They created books
and books of regulations and had
to amend them daily. If their rules
fitted the East, they didn't fit the
West

will not be granted.
The Presi¬
dent's adoption of this police state

Building,

(2) In the second place, nobody
knows

give him such power, and
personally I believe he is only
asking for it because he knows it

Bonds of City

Holders of 30-year sinking fund
5%

gold bonds due Mar. 1, 1957,

of the

City of Brisbane are being

notified

(3) Price control and rationing

of Brisbane

Drawn for Redemption

that

amount of

$50,000

principal

these bonds have been

drawn by lot for redemption on
in meeting problems spending, and taxing and taxing. won't work in America in time of
peace.
In time of war a morale Sept. 1, 1948, at par. The bonds
adjustment in the future, the

our economy

of

forces

with

which

we

now

con¬

to be too strong
for the countervailing efforts of
individual factors in the business
tend have proved

Price

The

Controls

President

Won't Work

tries

to

blame

prices on the • Republicans
because they have. refused 4b

high

develops, wfiith1 nialses- |t
to

possjble

fice

njaiiiita^

peace tcame,

will be redeemed at

remember the blacls

the, bead of¬

of The National City Bank

of New

Y0rfc."U*

28

(524)

THE

COMMERCIAL

now

may

ibe

«r

to suppose

her dinner—a diet

never

Let

us

therefore

with rather

more care

suggest they

examine

the

obviously

notions of

"ceilings" (on prices if not in full degree on wages),
"roll-backs," of rationing, of "allocations," of more rigor¬
ous rent controls, and the rest are
paraded with such oldtime

Truman

deserve special

a

one

—

rent estimates

required.

space

excess

profits tax

a

on

political.

.

!

McCabe's Views

—

many

The rapid expansion of the money

supply which resulted from their
contributions rilust not be per¬
mitted to rise and plague them as
if they had cunningly contrived it
for their

which is not at this moment

'to

available, but certain 'elemen¬
be safely drawn and they will suffice
condemn the proposal in toto. The satisfaction of future
may

^demands in the modern

complex economic system depends
preparations today for production tomorrow.
That is to say if the production of the
good things of life
Is to keep pace with
population growth, to say nothing of
•satisfying new or expanded per capita demands, a sub¬
stantial part of current
output must at all times be devoted
to the enlargement of
plant and facilities. This is partic¬
ularly true in a day and generation when the workman

peculiarly

•demands

upon

more

and

more

for less and less effort

In these circumstances, it becomes

his part.

absolutely essential that

industry be more and more mechanized
expensive of all items, human effort.
Now,

on

to

save

that most

there

I1
1

1

final

are

a very

several reasons—most of which

This
an

results

of

supporting the market

for government

securities.

It has

Policies

Adopted

to

Restrain

Inflationary Credit Expansion

come

of

effect

market

ment

bank

on

purchases

has

the

of

war

ment

Reserve

expanded

gram

The debt retirement pro¬
made possible first by

was

and later by a sub¬
surplus of cash receipts
expenditures. In paying out
large part of the excess cash

collected from the public to the
Federal Reserve for retirement of

debt, that amount
eliminated from

of money

the

As

second

a

straint, about
eral

a

Reserve

embarked

their

holdings
Com¬

bank holdings of govern¬
of all types in¬

securities

deposits
and
currency
from less than $40 billion in 1940
to $110 billion at present; of time

creased from about $16 billion
1940 to a peak of $90 billion

deposits frOm less than $30 billion

reduced during 1946 to $70 billion,

to

largely by Treasury use of its ex¬
cess bank deposits to retire debt.
To meet the demands of rapidly

nearly

$60

billion;

United
States
Government
securities,
which are readily convertible into
money, from a few billion to over
$90 billion. The total supply of
of

these forms of money and poten¬
tial money is now more than three
times the prewar total.

The

productive capacity of the
was largely devoted to war
purposes for almost five years. At
nation

the

peak

record

more

than 50%

production

of

for

was

our

the

end

of

1945

then

and

ir
a1

were

in th(
postwar period banks have further
reduced their holdings of govern¬
ment securities but they still hold
$65,000,000,000 of them. Other in¬
vestors

have

deemed

some

economy

also
of

sold

or

the holdings

re¬

of

government securities in order to

obtain funds for other
Sales

war

of

U.

S.

uses.
se¬

140

coming

million

into

re¬

the

upon a program of per¬

banks

encourage

invest

available

short-term

on

in

Reserve

holdings

of short-term

thus

of its

serves

term

offset

to

the

to
to

short-

This enabled

Federal
and

was

others

and

funds

term securities.

the

reduce

its

securities

effect

on

re¬

purchases of longer

bonds.

The

rate

on

90-day

Treasury bills rose from % of 1%
1%, and that on one-year
Treasury certificates from % to

to about

l1/8%. Late in 1947, market yields
government

i.e.,

prices of

the market.

bonds

bonds

also

rose,

declined

This adjustment

in

was

in

large part inaugurated by sales
by financial institutions to obtain
funds

to

invest

in

corporate

se¬

curities and mortgages, but it was

accelerated by sales made in fear
of further declines in prices
of

bonds, which had been selling at
substantial premiums. In order to
check this decline,
the System

adopted

chasing

Government

people curities in the market by banks
possession of and others have not been absorbed
more money than any people had
by purchases on the part of other
ever had to
In order to keep the
spend and save, there investors.
was a scarcity of things to spend
prices of government securities
it for.
Consequently two great from declining, the Federal Re¬
backlogs rapidly accumulated—a serve System has continued to
While

use.

were

of

the Fed¬
Treasury

year ago

government securities to rise from
the very low levels at which
they
had been pegged during the war.

on

expanding private

sup¬

reserves.

measure

and

was

money

ply and also from bank

Banks

securities.

use

those held by the Federal Reserve

banks.

a

the com¬
the country anc

Federal

of

the

stantial

economy,

government

mercial

been

Treasury surplus to retire
maturing securities, particularly

The purpose of this action

mercial banks of

also

effective

more

measures

the

of

over

and to provide the money supply
demanded by the expanding and
abnormal

govern¬

by the Federal
System.
The first and

Reserve

large cash balance built up by
the Treasury in the Victory Loan

3)

page

reserves

of

securities

drive in 1945

demand

were

turned

loose

characterized

down in

shortages.

analysis to the simple fact that the required funds

largely out of the picture for the simple reason
that,
when he is through
paying his taxes, he has little or
i
nothing left. Due to the fact that the reformers in
'f • Washington have so shackled the securities
markets that
they can no longer function as once
they did, and in part
to the uncertainties involved in all the
quackery clearly
in evidence even when
slightly below the surface in
1 :
Washington, it has for years been difficult if not impost
| sible tor corporations to gb' tothe' general

pansive

a

Credit Curbs

on

greatly

spending power plus an unprece¬
dented volume of current income

....

by

Prices

in

a

market

scarcities

and

rapidly.
quickly en¬

rose

Pressure on wages
sued and the spiral of price-wage
inflation was on its way. At pres¬

could not be readily obtained from
any other source.
The wealthy individual (often termed the
capitalist) is

series of

a policy of freely pur¬
bonds at an established
prices, which maintained

yields in accordance with

a

pat¬

tern

ranging from lVs% for

one-

year

issues to 2%% for the long¬

est-term bonds.
It may be of interest to review
credit developments and the ef¬
fects of

ent

total

physical production

of

all goods and services is probably
not over two-thirds greater than
at

the

maximum, while
prices have risen by about threefourths.

securities Offered for sale and not

showed

small

a

increase

for

an

increase in bank credit that

may

be

new

reserves

prewar

many

obtained.

In the postwar

served

ernment

times the amount of $7

period these
supplied the basis for

securities

billion.

Most

by

of

re¬
an

and

was

accompanied by

increase in bank credit in response

serves.

1948, however, deposits

Basis for Postwar
•

rf

Expansion

Credit

-

active demand for loans to

finance the operations and expan¬
sion of the business system in

In .helping to finance the gov¬ bra of high |deirtahdj
ernment's large war expenditures activity, rising costs,

total of
growth
an

pansion in bank deposits and

to

an

a

this

occurred in the latter half of 1947

?

Pnblic Debt Holdings Provide

in their

purchased by others. The result deposits and their total loans
and
of these purchases by the Federal
investments, although there were
Reserve banks is to supply addi¬ some wide
fluctuations during the
tional reserve funds to banks. Be¬
period. In the 12 months, com¬
cause of the fractional system of
mercial banks increased their
tot^l
reserve requirements, these new
loans and their holdings of ;■ cor¬
reserves in turn provide the basis
porate and state and local gov¬

'




1945.

of

these policies
during the
backlog of unfilled wants and a carry out its wartime responsibil¬ past 12 months. In the year end¬
backlog of money savings. With ity of supporting the market by ing June 30, 1948, as shown on
removal of controls this pent-up buying at relatively stable prices the
charts,
commercial banks

important part of the growth of plant
has historically,
particularly in this country, been made
possible by retaining profits and investing them for this
purpose. In the years since the end of World War
II,
this proportion has been
exceptionally great. For this
;•

selfish ends.

own

Nevertheless, as a net result of
war
financing, there were in¬
creases in the public's
holdings of

return to the wartime

tary conclusions

One of these is the

on consumer

(Continued from

But, politics aside, what could reasonably be expected
excess
profits tax arrangement, or
something approaching it? Of course, any complete answer
■to such a question would
depend upon much information
a

end

$15 billion in bank
loans.
The Board of Governors
has kept the
Congress and the
public informed concerning these

mitting yield rates

cur¬

What of EPT?

•of

attention, perhaps.

Corporate

less regularly overstated in

have long been a source of complaint
politically powerful groups which have not
hesitated "again and again and again" to associate them
with the high cost of living, despite the fact that
high
and constantly rising wages (never connected with the
high cost of living by these observers) are much more
directly related. Anyhow, the "corporations" are gen©rally regarded as profitable political targets.

by

since the

quantitatively
Paul these

as

borrowing,
for further power for the Federal
Reserve over its member banks. As for the
former, it
appears scarcely consonant with the constantly reiter¬
ated complaint that the consumer
buying power is too
low, and as for the latter it is obvious enough that the
Federal Reserve authorities have all the
power they
need to force retrenchment
by merely selling Treasury
obligations.
This program of the President's is a
strange con¬
glomeration of nonsense.

little difficult, at this time, to regard

now more or

antagonists

say

and the other asks

proposals

exception takes the form of

this proposal as other than purely

profits

we

demand for the wartime control

than their inherent content would

demand for reinstatement of the

corporations. It is

protagionists (or should

Porter)

Of the eight "points" of the anti-inflation program, seven
of them are demands for controls or for
authority to

impose controls. The

lion

the money supply.

formulating proposals and defnding them before
Congress—where, as is well known, they are not partic¬
well acquainted with economic ularly popular.
Two requested
addressing an audience rendered
controls, or authority to control,

worth the time and

are

as

of

Mstory. He is, moreover,
all too receptive to quack suggestions by the increasing bur¬
den of the cost of living and the "education" inflicted upon
*them under the leadership of President Roosevelt over a
"•period of a dozen or more years.
t

by the
public have increased by $15 bil¬

—which, according to him, must be given effect if the world
The
Federal
Reserve
System
is to be saved—consist of familiar (and we had
supposed for and the Treasury have adopted
the most part
thoroughly discredited) controls. All the old policies designed to offset the ex¬

The Chief Executive is

not

point

reduction of $25 billion

a

in the volume

The remainder of the President's anti-inflation
program

many if not
■most of them unaccustomed to broad economic
analysis of

and

of

known to human beings and

addressing himself to the great rank and file,
effect

largely the result of

increase

As for the Rest!

"ibe the part of wisdom to dismiss the President's recent pleas
with such a generalization, however evident its
validity may

and

has been

consumer

result,1

despite

to what he would do with the funds — or, for
repeatedly pointed out that the
that matter, to give evidence of any
understanding of the effect has been to increase signifi¬
real consequences of such a proposal would be.
cantly, and it may be dangerously,

Must Be Exposed

cause

for purposes
ordinarily served by
the capital market.
As a

of government securities held by commercial
banks,
deposits and currency held

this

■0. But in the existing circumstances it would probably not
Ibe to the matriculate.

There is ample evidence
that bank credit is also
being used

goods (as may well
be); for public works either "self-liquidating" or not; or
merely taken out of existence by retirement of Federal debt
held by the Reserve banks. Perhaps it could not
reasonably
be expected that the President give any clear indication at

still wholly unavailable to them.

[

prices.

war¬

enhance effective demand for

well differ—and about which no opinion
be fully accurate—but it would

that any of the strange admix¬
quackery and contradiction has ban¬
ished the business ups and downs long familiar, or that
any program or programs likely to be formulated by the
amateurs, or, for that matter, the professionals, may
reasonably be expected to do so. The notion that the
next depression must bring the horrible consequences
now described
by the President is, fortunately, however,
quite without foundation in fact. One might as well
solemnly assert that mankind will shortly and certainly
go to the damnation bow-wows unless each human being
from this day onwards has a slice of the moon for his

'■'■%,.

Conditions generally have scarcely
enlargement of fixed charges.

circumstances, the taxing away of corporate
profits on the scale apparently now proposed could scarcely
be other than severely
damaging to the economy. Such a
conclusion, so it seems to us, is fully warranted quite re¬
gardless of whether the funds so taken in taxes are em¬
ployed by the Federal Government in such a way as to

tures of economic

#■'

Thursday, August 5, 1948

In these

held may prove to

nonsense

CHRONICLE

ranted substantial

(Continued from first page)

*

FINANCIAL

equity funds.

:|||i||RAs We See It ■
[: opinions

&

drawn

In
to

the

early

months
were

ex¬

re-;
of

with->

make

seasonal heavy:
payments, which were not;
by Treasury expenditures.
Bahks met the drain
by reducing ;

tax

an

accelerated
and rising

offset

their holdings of Treasury bonds.

$■

Volume

& FINANCIAL CHRONICLE

COMMERCIAL

THE

Number 4722

168

(525)

1948, by about $1.7 billion, al¬
though at a somewhat slower rate
of growth than in 1947.
Most of

ber bank reserves.
Bank credit
requirements at central serve-held securities and (2) re¬
cannot expand unless banks ac¬
city banks in New York duction in, Federal Reserve hold¬
and Chicago, as well as increased ings of Treasury bills through a quire or have reserves on which
to expand. One way in which the
requirements resulting from de¬ rise in short-term rates—the first
has been greatly reduced in its System has supplied reserves has
posit growth.
potency.
Whereas the Treasury been through purchases of longgovernment
securities.
A
Prospective Demands for Credit
showed an excess of cash income term
Economic prospects indicate a over cash outgo of $9 billion in means of restraint would be foi
the System to limit its purchases
continuation of strong inflationary the fiscal year 1947-48, the pros¬
of such securities either by refusal
pressures during the next several pects for the current year on the
months and perhaps for a much basis of very tentative and unof¬ to buy or by reducing its prices
longer period. Individual incomes ficial estimates are for a cash sur¬ sufficiently to attract other pur¬
have continued at a high level, plus Of only about $3 billion. This chasers. As you know, the System
reduces
considerably has made a public commitment to
with a tendency to increase as difference

loans

also

Some

maturing bonds

were

ex¬

certificates orv notes
part of these issues were

changed for
and

a

sold.

the

At

time

same

banks in

general purchased added amounts
of Treasury bills, an indication of
the

effect

term

of

the

in

rates

higher

short-

attracting available

funds.

Banks also continued to increase
their

loans

in

the

first

half

of

in

the most important anti-inflation¬
the dollar increase in bank loans prices and wages have risen and
ary influence in the situation dur¬
during 1947, particularly in the employment has grown with the
Consumer spending, ing the past year.
last half, was in commercial and labor force.
The Treasury cash surplus was
industrial loans, but the increases based on current incomes, the use
a particularly effective device be¬
In consumer loans and real estate of past savings, and borrowing
in

Showed

1947

larger
have

and

percentages

continued

to

expand in 1948.

Savings institutions, particularly
insurance companies, also consid¬

erably expanded their holdings of
mortgages and investments other
than

United

States

Government

securities during the past year.

In

the

aggregate, these assets of se¬
lected groups of financial institu¬
tions increased by $8.6 billion in

cause it exercised a drain on bank
likely reserves. As a result the banks
to remain for a while at capacity losing reserves had to sell securi¬
levels, with possible further rises ties in order to maintain their re¬
in prices.
Business expenditures serve positions. While under these
are
also expected to continue in pressures they are less likely to
large volume.
Government ex¬ be seeking new loans and in some
penditures are increasing, while cases less willing to meet loan

continued

has

to

Construction volumes

the

income

recent

expand.

seem

reduction

tax

Continuation of these tendencies
call forth further credit

will

ex¬

period, of which $6.4 billion pansion. Borrowing by consumers
met by receipts of new sav¬ and homeowners will no doubt
continue to expand and thereby
ings from the public and $2.2 bil¬
lion by a reduction in their hold¬ add to consumer spending and to
demands for housing; which are
ings
of
government
securities.

the

brings

exercised

to the various
restraint may be

us

The

first

on

voluntary

the part of bor¬

lenders.

and

rowers

is

means

self restraint

expansion.

credit

over

I

am

con¬

vinced that the voluntary program

originated and actively developed
excessive.
Prospective by the American Bankers Asso¬
Non-bank investors, as a group, already
sold and redeemed bonds, but pur¬ large outlays by business for ex¬ ciation has had a significant effect
chased certificates and bills, re¬ pansion of inventories and plants in developing a more cautious and
will
probably
exceed
internal critical attitude on the part of
flecting increased popularity of
also amounts

funds available and

obtained

toward

bankers

so-called

unpro¬

If
curities.
Overall
demands
for inflationary pressures were mild,
surance
companies substantially
funds may continue in excess of voluntary restraint might be ade¬
Increased their holdings of gov¬
current volume of
savings quate to hold them in check. Con¬
ernment securities during the war the
and then in the postwar period readily available for lending for tinued and intensified voluntary
reduced these holdings while in¬ such purposes. To help meet the restraint will make our joint task

Another chart shows how life in¬

by flotation of

for

creasing their mortgages and other

demands

Investments.

credit

corporations,

>

Treasury bonds by nonbank investors and by banks in
the past year have been largely
purchased by the Federal Reserve
System. < The System purchased
$5.7 billion of Treasury bonds in
the

market
the

also

and

market

net

a

purchased
amount

of

about $2.6 billion of notes and cer¬

tificates,

but

sold

balance

on

nearly $4 billion of bills to banks
and other investors.. In the same

period the Treasury redeemed for
cash about $5 billion of maturing
Issues

various

of

held

kinds

the Federal Reserve banks.

by

With

all of these wide shifts in
of

holdings
securities,

different

types of
only a small net decline
In the System's aggregate holdings

there

was

of government securities, although
the total fluctuated considerably

£rom time to time.
•V

The

of

purpose

this

detailed

survey of figures is to illustrate
bow shifts in holdings of the pub¬

lic debt

being used to finance
spending, and how
and
Treasury

are

inflationary
ITederal

Reserve

policies endeavored to offset these
tendencies. Treasury use of surplus
Tunds to retire securities held by
the Federal Reserve drains re¬
from

serves

banks

and

makes

it

necessary for them to sell securi¬
ties if they wish to maintain their

loans,

and

even

more

want to expand credit.

if

they
The higher
so

fate

on Treasury bills
encourages
banks and other holders of
liquid

funds to buy bills rather than in¬
vest in other assets.
Since most
of the bills have been held

by the
Reserve, a reduction in
System holdings is made possible

federal

»nd bank reserves are

thereby ab¬
Nevertheless,
sales
of

sorbed*
bonds

the

to

Federal

Reserve,

primarily by non-bank investors,
bave

been

so

large that

strictive effect of

the

re¬

the other poli¬

cies? has been fully offset.
It

*

bank,

should

be

reserves

mentioned

that

have also been sup¬

of

their

individuals,

holdings

securities

and

borrowings
If

these

of

also

from

se¬

capital,

and

and

nancial institutions will sell

Sales of

In

new

fi¬

somf

government

increase their

banks.

the

is

bonds

Thus

continued.

reserve

made

available

funds
to

addi¬
would
be

banks

which,

unless otherwise offset, could susa

very

keep the reserve position of banks

used

sufficient

job alone when inflationary
are as strong
as they

are

at the

present time.

Perhaps

point of view of both
But
will the loan increase the supply
of the

parts

total output? If all

reserves?

further

for

As*

lending and investing.

you know, the Board of Governors

presented various ways of
dealing with the problem of resserves
or
immobilizing certain,
las

bank assets.

The method proposed in the bill
before
and

you

is

involves

no

banks in their competitive re¬

lations with non-member banks to

credit

require that they be singled out

expansion

than

to

now

problem is to absorb

Increases

reserves.

in

< reserves

be anticipated from three
principal sources: (1) imports of
gold, (2) return of currency from
circulation, and (3) purchases ol
government securities~by the Fed¬
eral Reserve banks to support the
long-term yield level. The prin¬
cipal problem before the System is
to absorb or offset reserves arising
from these sources. The only way
it could do this effectively under
present authority is to liquidate
part of its holdings of government

may

securities.

It would be necessary,

of

to

course,

sell

large portfolio of bills,
and other short ma¬

a

certificates,
turities

that

it

the

carry

additional

reserves

hat may be necessary to combat
;his
inflationary situation.
The

Congress might well find it desir¬
during this interval to recon¬

able

sider

the

serve

requirements, possibly along
developed recently be¬

the

whole

structure

of

re¬

lines

fore the

Joint

Committee

on

the

Economic Report.
I should like to indicate

what

can' and

cannot

be

briefly
accom¬

plished through increase reserve
requirements. Changes in require¬
ments

of course, be con¬
They must

cannot,
in

sidered

isolation.

be related to other instruments of

policy. In practice they are close¬
them at prices
ly related to open market opera¬
The Sys¬

the market would pay.

tem has

aer

to

abandon that commitment.

could

use.

If

the

tions.
to

One method that banks use

adjust

positions

their

to

the

exerted by an increase
in requirements is to sell Govern¬
ment securities. To the extent that

pressure

demand
for
bank
of these hold¬
these are purchased by the Fed¬
ings to absorb reserves would re¬
eral Reserve,
new
reserves
are
sult
in
a
further
stiffening of
created which meet the higher re¬
short-term interest rates.
quirements. This is not the whole
The Open Market Committee of
the Federal Reserve System fee1 story, nor does it happen invaria¬
bly, but it does ^illustrate the
that a rise in short-term rates is
complexity of our problem.
An
a necessary and
desirable} step. An increase
in
requirements,
of
increase in the short rajte would
course, reduces the multiple credit

inflationary

credit is strong, use

tend

to

attract funds

uses

to

investment

from

other

in

short-term

government securities.

The policy

of

allowing

rise

was

and

has

At

individual

the borrower and the lender.

immobilizes

makes them unavailable

short-term

begun about
had

this

some

a

rates
year

to
ago

success.

point the necessity for

teamwork

between

the

Treasury

and the Federal Reserve becomes

apparent.

I

am

keenly sensitive

expansion ratio as well as the li¬
quidity of banks. Even when the
Federal
serves,

Reserve

it has

a

creates

new

re¬

greater volume of

securities available for sale.
extent to which it could

use

The

them,

however, involves similar consid¬
erations to those arising in con¬
nection with disposals from the

resources

or

are

being used to capac¬

to the necessities

of the Treasury

in its task of managing the public

price

,

in part these factors. The
total growth in reserves was
$1.4
of about a

whole

and

a

present
portfolio,
namely,
the
at which they could be
ity, the loan may merely enable
liquidated.
Additional
reserves
supplied the borrower to secure parts that debt. I thoroughly understand the
In other words, the purpose of
through the gold inflow may be otherwise would have been bought Treasury's responsibility to keep increasing authority over reserve
the interest cost of the debt as
approximately offset by the drain by another firm. From the point
requirements is not to obviate the
resulting from seasonal currency of view of the economy as a whole, low as possible consistent with all possible need for increasing shortrelevant factors. I know that the
demands.
the loan has increased the demand
term rates.
That problem would
To avoid an abundance of re¬ for
Treasury Department is equally still be with us.
goods but it may not have in¬
sensitive to the responsibilities of
serves, an easy short-term money creased total supply at all.
The basic purpose of increasing
Ba¬
market,, and continued inflation¬ sically, that is why I believe that the Federal Reserve in the field the authority over reserve re¬
ary
credit
expansion,
positive self-restraint, though important, of monetary and credit policy. The quirements would be to enable the
measures to absorb reserves will
is inadequate to check a strong problems of mutual concern to the System to acquire more—if neces¬
be needed.
Treasury and the Reserve System
In view of the pres¬
sary many more—long-term Gov¬
inflationary development.
in their respective field are being
sure of current demands, the con¬
ernment securities to maintain the
Another reason is the force of
approached in a continued spirit
tinued shortages of many goods,
long-term yield level. New re¬
competition not only among banks of cooperation.
the limited capacity for increased
serves
created by
such System,
but among all lenders. We have
The rediscount rate is another
output, and the available accumu¬ in the United States not only
purchases—or in other waysinstrument of policy in the shortlations of liquid assets, further
could
be
absorbed through in¬
14,000 commercial banks but also term market. Although its effec¬
credit expansion will add to the
creases
in reserve requirements
many thousands of other lending tiveness is diminished in times
pressure for rising prices.
Con¬
and thus be made unavailable for
agencies. Because of concern for like these when the volume of
tinued credit expansion will store
multiple credit expansion.
the general interest a bank may
member bank borrowings is small,
up
trouble for the future and refuse to lend even to a
good it should not be writen off. If, for
Summary of Reserve Board's
make the inevitable adjustment
customer. This does not mean that
example, the yield on short-term
Views
more dangerous for the stability
the customer will not secure the Governments
rises, it might be¬
of the economy.
Subsequent to making the fore¬
funds. It may merely result in a come
appropriate under these cir¬
This course of economic and
permanent loss of the customer to cumstances to increase the dis¬ going remarks, Chairman McCabe
monetary developments has been the bank. And
unfortunately the count rate. This action would dis¬ appeared on August 2, before the
the source of increasing concern
House
Banking ' and
Currency
new lender may secure the funds
courage
the market from
re¬
to the Federal Reserve authorities.
Committee, and after repeating
from sale of government securi¬
acquiring through the discount
We are convinced that, so long as
ties, with the result that the loan window the funds that had been many of the above statements
the present situation lasts, it is
summarized the Federal Reserve
may be just as inflationary as if withdrawn
through the disposal
important to restrict further credit
Board's views as follows:
the bank had made it in the first
by the Reserve System of shortexpansion and to promote a psy¬
In conclusion, I should like to
instance.
„.:
term Governments. An increase in
chology of restraint on the part of
state
emphatically
the Board's
I want to emphasize that I sup¬ the discount rate has great psy¬
both borrowers and lenders.
To
further

large infla¬
tionary expansion of bank credit.

stain

Of

billion,

number of reasons,

a

investors .may

tional

Reserve

creases

are

reserves.

that

given volume*
An increase in rer
on

port

strongly the self-restraint chological effect. Each increase
developed by the Ameri¬ repeats the warning that credit is

program
can

Bankers

would like to

Association
see

arid

it pursued

ag¬

in

need

of

restraint.

in the rate and open
operations
supplement
as necessary parts of
over-all credit policy.

Changes

gressively, not only by banks but

market

by all lenders. It is an important
step in the right direction. Pri¬

each
an

continued

other

view
over

that

the

use

of its

powers

the supply of reserves

under

present conditions should be
directed toward restraining fur¬

expansion and not
liquidation of the
outstanding volume of credit. The

ther

credit

toward forcing

Federal Reserve System was es¬
These twb related instruments
tablished to provide for flexibility
restrain the growth of tioned, however, I dp not think influence the volume of reserves in
our monetary system. It was
it can do the job alone.
of member barik$. The third gen¬
bank reserves during the past year
not designed to make available
Another approach to the prob¬ eral in$trinnent~reserve require¬
to
cover
in¬ —namely (1) use of the Treasury
(Continued on page 30)
billion dollars cash surplus to retire Federal Re¬ lem is through control over mem¬ ments—is designed to influence

Federal

offset

There

however, why voluntary restraint
cannot
be
expected
to do the

securities by the most important reason is that
exceed a loan which
may appear produc¬
$1.5 billion in the last half of 1948 tive when viewed by itself may
and perhaps be much greater early
not add to the total output of the
in 1949. These sales will keep the
economy as a whole. For example,
government bond market under a customer may increase his pro¬
pressure and require support pur¬
duction by borrowing
funds to
chases by the Federal Reserve, it
purchase needed parts that are in
the policy of maintaining the
% short supply. Such a loan would
yield level on long-term Treasury appear to be productive from the
non-bank

plied in the past year by an in¬ under pressure and discourage
of gold amounting to $2.2 further inflationary credit expan¬
billion and also by a decline of sion will
require carefully coor¬
about half a billion in currency dinated
operating measures on
In circulation.
A temporary in¬ the part of both the Treasury and
crease of $1.3 billion in
Treasury the Federal Reserve System.
at

loans.

easier.

sales of government

flow

deposits

speculative

or

pressures

continue,

tendencies

ductive

of

quirements

credit

bank

of

,

based

freedom of action, I believe there
is a better way to operate against

Our basic

in which

ways

amount
be

can

simple and direct,
departures from
support the 2%% yield level on existing principles. The bill woulct
increase by 10 and 4 percentage
long-term government bonds for
the foreseeable future. I gave my points the reserves that member
reasons
for
subscribing to that 3anks may be required to main¬
commitment when my confirma¬ tain against
their demand and
tion was under consideration by time deposits,
respectively.
The
would
be
the Senate Committee on Banking authorization
granted
and Currency. Although that com¬ for a period of two years. We feel
mitment substantially limits our deeply that it is not fair to mem-

applications.
This

will lower receipts.

was

these issues with the rise in rates.

he

reserve

reserve

20




the

to

two

sets

of

measures

marily for the reasons I have men¬

A

30

(526)

THE

COMMERCIAL

FINANCIAL' CHRONICLE

&

Thursday* August 5, 1948

wholesale

fS

commodity

level

index

price

slightly under ;

preceding weeks

of

'

daily wholesale commodity price index
showed little change duriqg the past week with the general level
holding slightly below that' of preceding weeks. On July 27 theindex closed at 281.45, as compared with 281.71 a week ago and
268.77 a year ago.
:
/
The

&

Dun

Bradstreet

.

(Continued from page 5)

.

west.

-

.

;

'

Detroit

buyers are finding they can pick up steel by truck
.n Chicago for
just about $2 more,than they pay a Detroit producer.
(Continued from page 29)
At they can take water shipments from the windy city the price is
any amount of money .that bor¬
about the same as that from a local mill.
Or they can reach over
rowers might demand without re¬
;o Cleveland and truck cold-rolled
sheets into the auto city for no
gard to the productive capacity of
more
than the Detroit f.o.b. mill price plus switching charge, the
the economy and the speculative
magazine states.
nature of the commitments. The
Using trucks to dodge high rail rates sounds good but has

System would - be derelict in its'
duty if it did not exercise a proper
measure of restraint.

Expansion, of
because of

of maintaining

the necessity

of restraint over credit
expansion. The proper .handling
of this problem requires the most
exercise

management.

It

be

can

facilitated by the extension of the

proposed in
the bill before you, which exten\ sion is thoroughly consistent with
existing powers and traditional
powers,, as

s

this

aw

possibilities

for

prospects

and

continuation of inflationary preswhich will call forth addi¬

sures

for

that

credit.

the

demands

confident

Federal

authorities

serve

will

feel

I

use

Re¬

tendencies without
economy

depriving the
of the credit needed to

maintain

the

at

highest

.'he

infla¬

arising

The

additional

of

restraint

For that

needed,
and

powers

sought

the now un¬
expansion of
credit.
upon

even

should

they are urgently
though they are not
be

not

regarded

Congress or by the
generally as a cure-all.

United Air Lines Offers

184,809 Shares Gem.

company's

stock¬

common

holders for subscription, announce

they may offer shares of the stock
acquired by them pursuant to the

scription
common

above

of $10.75 set for
stockholders
and
not

subscribe to

the

shares, in

the

184,809 com¬
ratio of one

share for each 10 shares held, will

expire at 2 p.m., (EST), oh Aug.
17, 1948. Shares not subscribed by
stockholders

are

to' be offered

to

employees on a formula involving
seniority and compensation. Em¬
ployee rights also expire at 2
p.m. (EST), on Aug. 17, 1948.
The present offering is one-half

the size of

a

previously planned

offering of 369,618 shares which
was

and

filed
the

with

sale

of

the

SEC

which

porarily postponed.




June

was

9

tem¬

bales last week as compared with
72,500 a year ago. Cotton con¬

preceding week and

the

according to the New York Cotton Exchange Service Bureau.
There was a moderate increase in the demand for cotton gray

goods with a noticeable rise in the number of requests for class.A
print cloths. A considerable order volume for delivery during the
first quarter of 1949 was booked.
There was also a marked gab*
in the spot demand for print cloths.
While buyer interest in sheet¬

rise in order volume.

flecting

is

a

companies having 94% of
industry will be 94.2% of ca¬

of the

1.2%, from last week.

or

changed at

A month ago the indicated rate

1,672,600 tons
capacity

castings-as

and

ingots

one year ago

1940, highest

i,678,-I0& tons last week,

against

electric output expands further in latest week

distributed by the electric light

power industry for the week ended July 31, was 5,352,439,000
kwh., according to the Edison Electric Institute. This was an increase
of 10,312,000 kwh. above the output in the preceding week and 546,599,000 kwh., or 11.4% higher than the figure reported for the week
ended Aug. 2, 1947.
It was also 1,001,428,000 kwh. in Excess of the
output reported for the corresponding period two years ago. y •

CAR LOADINGS DECLINE BELOW PREVIOUS WEEK AND

corresponding periods in 1947 and 1946

Loadings for the week ended July 24, 1948, totaled 882,566 cars,
according to the Association of American Railroads. This was a
decrease of 9,961 cars, or 1,1% below the preceding week, and a de¬
crease of 37,362 cars, or 4.1% below the corresponding week in 1947
and 27,947 cars, or 3.1% below the same week in, 1946.
;
.

cars

and trucks

States and Canada

in the United

of

volume

past

-

continued to increase during

week|febut at

buying

consumer

a slightly slower rate than during
volume somewhat exceeded that of

previous

the^ cor¬
year ago, Dun & Bradstreet, Inc. reports in its
trade.
Shopping in basement departments and

Total 'dollar

weeks.

prewar year.

Production of

high level.

a

The
the

ago,

The amount of electrical energy

,

the Boston

,

1,660,700 tons, of 94.9% of the old
and 1,281,210 tons for the average week in

month

a

in

to reflect
moderate improvement for the week and year

1,697,900 tons of

This week's operating rate is equivalent to
steel

j

and wholesale trade continues

retail

90.3%.

was

declined

sheep

foreign wools remained limited and prices generally were un¬

most

pacity for the week beginning Aug. 2, 1948, an increase of 1.1
points,

and

wool market increased last week from
"the low levels of previous weeks:
Interest was directed mainly
toward scoured medium wools and carpet wools.
The demand -for

The American Iron and Steel Institute announced on Monday

steel-making capacity

cattle

moderate increase in price.

a

Activity

of this week the operating rate of steel
the

of

Receipts

responding week a
current survey "of
interest in lower priced merchandise increased substantially as many
consumers continued to seek
bargains.
Unit volume in some lines
decreased somewhat.

Requests for credit

rose

slightly last week but collections

generally were fair.
Interest in Summer apparel

centered

beachwear with interest maintained

and

on

clearance sales of sport

men's

in cotton dresses and

Some items of lingerie and costume jewelry
sold well at reduced prices.
There was a spurt in consumer interest
in Fall apparel last week as many retailers reported an increased
demand for Fall coats and suits.
The response to early promotions
of furs was reported to be fair in many sections of the country, v
suits.

lightweight

-

resistance to the high

Consumer

prices of some food items

increased during the week.

Retail volume of some

fresh meats and dairy products dropped

housewives sought reasonably priced substitutes. Large
quantities of fresh fruits and vegetables were purchased at moderate
prices and a large demand for beer and picnic items was sustained
in the week.
Produce suitable for home canning was sought \by
moderately

as

r

dropped to 113,706 units from 118,797

units the previous

(revised)

week, according to "Ward's Automotive Reports."
Output in the similar period a year ago was 97,712
the like week of 1941, it was 61,146 units.
This week's output-consisted of 86,529 cars and
made

in the United States and
,

2,360

cars

units and, in

took

a

pessimistic view of the production prospect

immediately ahead.
.Total output, for

July

was

placed at 495,796

cars

week

a

,and trucks in

ago.

year

There

23,707 trucks
and 1,110 trucks made in

Canada.
Ward's

Total grocery volume, for the period ended -on
Wednesday of last week was slightly above that of the corresponding
consumers.

many

was

a

,

substantial

•

.

demand

for used

cars

...

and automobile

affected furniture sales in
demand for sihall electrical appliances
also declined somewhat the past week. : Sporting goods, however,
continued to be in high favor with vacationists.
/ ^
Retail volume for the country in the period ended on Wednes¬
accessories.

A

seasonal

lull

adversely

parts of the country and

come

day of last week was estimated to be from 5 to

9% above that of a

year ago.

the United States and Canada.

folr

Regional estimates exceeded those of a year ago by the
business

failures

turn upward

Commercial and industrial failures

rose

lowing percentages: New England and Pacific Coast 5 to 9, East 2
South 4 to '8, Middle Westu8.,to 12, -Southwest 6 to 10 auijl
Northwest 9 to 13.
■■
to 6,

to 98 in the week end¬

ing July 29, Dun & Bradstreet, Inc., reports, exceeding ' 91 in the
preceding week and 69 in the comparable week of 1947.
Although
concerns failing were seven times as numerous as in the same week

the

of

Rights of Common stockholders
mon

in

be 55,700

reported to

were

sumption during the first 11 months of the current season was about
18% below that of a year ago largely as,a result of decreased exports,

together on top of an already tight supply
commercial steel buyer has to scratch just a little harder each

a

sions.

to

Buying interests generally were centered on Tor ward shipments
rose moderately.
Total sales in the ten spot mar¬

kets

price

price equal to the current
offering price- on the New York
Stock Exchange, plus an amount
equal to stock exchange commis¬

with the

continued

and cotton futures

separately, not one of the voluntary allocation pro¬
drop in the bucket if it be measured against total steel

nonth, this trade authority concludes.

underwriting .agreement
or
through the exercise of subscrip¬
tion warrants purchased by
them,
at prices not less than the sub¬

liquidation

crop.

ings increased appreciably, there was no sharp

steel.

auto production lower in latest week

associates, underwriters of an of¬
fering of 184,809 shares of United
Air Lines, Inc. common stock to

new

he

Harriman Ripley & Co., Inc. and

'

program

large

a

jroduction, but added

by

public

prospect of

and

offerings

niumerous

were

54,100

reason

the

the

railroads stand 'to

me

and

would enable the Reserve System
to exert a very necessary degree
restrained

trucxs and

thing that is certain—and as the months roll by it is be¬
fact than fiction—that is more voluntary allocation of
and military steel, "The Iron Age" notes.
On top of the

more

grams

from

causes.

generally awaited further price developments.
Many of the small
were buying to fill immediate needs while the larger bakers
previously placed orders covering much of their future needs.
Prices were virtually unchanged for the week.
Cotton prices in spot markets declined slightly last week
and reached the lowest level in the past four months.
There

had

last week as heavy
rains and falling prices discouraged current shipments. The num¬
ber of hogs received in leading markets remained steady, re¬

s

non-monetary

as

bakers

Considered

use

further

by using

save

can

more

car

for

n

structure which have already been
created
by
inflationary
forces,

check

that Pittsburgh could hold

and doubted

and thai for hot air heating, those for atomic
mergy and prefabricated houses, there has been added about 105,)00 tons monthly of armament steel.
An inland barge construction
urogram will put the bite on another 20,000 tons a month begin¬
ning in the fourth quarter.
Other programs are certain to come

readjust the unbalanced rela¬
tionships
within
the
economic

pressures

he

cases

reight

not

cannot

ago

years

business at present rates.
One

Finally, it should be emphasized
as strongly as possible that action
in the monetary field alone can¬

tionary

mills there

it. This week he disclosed that two
Carnegie-Illinois and American Bridge, had
roads to slash rates to New York and Detroit by 40%.
is now paying this freight but he is learning that in

customer

ome

ose

the additional powers proposed in
the same way.

and

receipts continued to increase.
Yields of corn and oats
previous expectations and a record high corn crop was
anticipated.
Tne demand for domestic flour was limited last week as bakers

levied against

isked Eastern

sustainable

levels. We would endeavor to

vol-,

recent

above

were

lig Steel subsidiaries,

production and employ¬

ment

some

being

reases

their

existing powers to the fullest ex¬
tent
possible to
restrain
these

week ago.

shipments of-wheat have been going into storage for
There was some increase in the mill demand
for wheat the past week.
Both corn and oats futures declined mod¬
of

ume

position in normal times in the face of the rail freight rate in-

.s

ivilian

As I have pointed out, there are

tional

some

a

coming

»methods.

/

At

/uilding them, the trade paper adds.
The President of United States Steel, Benjamin Fairless, fore-

.'the

confronted

System's

too big to be trucked.

are

has

individuals

and

formidable

careful

products

System
with
difficulties
in
the

stitutions

advances

July 23 slight

.

Some

tendency to accept truck shipments only for areas that are
•therwise virtually closed by prohibitive rail freight rates.
But
tew
mills have better truck loading facilities and older, plants are

ings of that debt by financial in¬

on

futures continued to vary with a narrow range during
While receipts have been very heavy, a considerable

Wheat
the week.

erately

"'"f:

haul it.

degree of stabil¬

a

ity in the value of the vast hold¬

*

20%
half
their tonnage .onto trucks there wouldn't be trucks enough to
■.

trading in July grains ended

government loans.

its .bad; points.
Many steel mills can't move more than
of their .output by truck.
If all mills had facilities to load

debt

public

the
and

war

As

occurred but prices generally were below the level of a

the

1946

when

numerous as

14

occurred, casualties

were

only about one-third as

the 277 recorded in prewar 1939.

* '

.

v~

v

Failures involving liabilities of $5,000 or more
all of the week's increase,

accounted for
rising considerably above last year's

total of 58.

*

Increases occurred in the number of retail and commercial serv¬
ice

casualties, while failures were slightly less in all other industry
and trade groups.
In all lines, the 1947 level was equalled or ex¬
ceeded, but the only sharp rise appeared in retail business.
!!'
Over one-half the total failures were concentrated In the Pacific
States, being

over

twice

meats

There

j:-

was an

:'v
appreciable drop in the wholesale food price index

last week from, the record high levels of recent weeks, according to
Dun Jc iBradstrefct, Inc.
Influenced largely, by declines in grains and

meats, the index fell 12 cents to $7.18 on July 27.
This was 10.3%
reached in the corresponding 1947 week.

above the $6.51

%

moderately during

past week with total dollar volume slightly exceeding that- of
corresponding week a year ago.
There was a slight decrease
for some seasonal merchandise, but this was more

the-demand

in

chan balanced

by

an

increased demand for Fall apparel and by In¬
lines.
i

creased wholesale volume in some food

-

Department store sales on a country-wide basis, as takenr fr;bm
the Federal Reserve Board's index for the week ended July 24, 1948,
increased by

with

»nded

9% from the like period of last year.
This compared
For the four weeks

similar increase in the preceding week.

a
.

Julv

date by

24,

1948, sales increased

:

by 10%, and for the year, to

7%.

•

.-Retail trade here

as many as a year ago.

food price index adversely affected by grains and
...v

Wholesale order volume in many regions rose

/

\'X

in New York the past week was marked

by .seasonal activity. cHowever, in terms of dollar volume*
over the like period of a year ago were not as great.

gains

.

r ;5

-

According to the Federal ? Reserve Board's index, department
store sales in New York City for the weekly period to July 24, 1948,

period last year. This compared
(revised) in the preceding week. For the
weeks ended July 24, 1948, sales increased by 9% and for the
to date by 6%. 1
*
.
. ..
increased 3% above the same

an

increase of

8%

with
ftiur
year

a

*

Volume

168

THE

Number 4722

mm m wmmmtm mmmmm mm

(527)

COMMERCIAL & FINANCIAL CHRONICLE

"Austerity" is bad economics
wrong arithmetic.
It is also

liberties to work and to consume,

AUSTERITY: International Crnsade Against Luxuries
defended

as

a

means

for

econo¬

.(Continued from.first page)
.them and that it must see to: it
mizing its reserves o£ foreign cap*
most curious game which is going that wheat will be imported inchangesT This argument seems to
on
in international trade today stead of oranges or paper (largely
do
impregnable to most people,
and of which I had been a very to be used by bureaucracy itself)
it rests, however, also on incom¬
insignificant
victim
at
Copen¬ irisiead, of -automobiles; -Th^gpy--:
plete and oversimplified reason¬
hagen. Every country is proud to ernment, in other words, has the
astounding insolence to ask us to. ing. A child can understand that
produce tilings of good quality
if the imports of refrigerators are
and workmanship, which to have accept its arbitrary scale of pref¬
erences for our own.
It counts restricted, more foreign exchanges
is

and

it will not *each its goal.

Bui the

rehabilitation

capital plant of

a

consumption. It

also

depends on

total: amount of the national

philosophy.

dreary

of, the

nation does not
how much of a

only depend on
given amount of national produc¬
tion will be absorbed by current
the

31

dear

to

all

planners,

But it is
collectivists

"commissars." It gives them

and

power and importance; it lends a tone of unworldly
saintliness and patriotic concern

employment,

to

their

public

speeches,

it

and

/

.

production, Little would be gained gives them the opportunity of
by a policy which prevents the making the consumer the scape¬
people from buying what they goat of their destructive economic
not a strict matter of life and
like if it kills at the same time policies. They seem to have be¬
on
the people to overlook or to will be available for the imports
death; everybody-likes these sotheir zest to produce as much as come accustomed to look upon
of wheat or less exports will be
called "luxuries" and is prepared forget that no starving man will
he consumer as a highly ob¬
needed to restore the balance of possible. That is exactly what all
to make an extra effort to earn prefer coffee to porridge and that,
these European regimes of "aus¬ noxious and disturbing element
if people want new houses above payments. It takes, however more
the neces-ary money; but. more
It is more and more which, unfortunately, it. has not
nhan a cnild's understanding to see terity" do.
and
more
countries- are- most anything else, they will demand
being recognized today that those yet been possible to suppress al¬
houses instead of automobiles, To that mere cuts of imports are a
anxious to sell them all abroad
together. In their eyes, it is sheer
inadequate
means
for countries have been acting unwise
ask whether a country can "af¬ wholly
and to- keep out the "luxuries" of
which have believed in this all insolence on his part to wish to
ford"watches or not is only an- overcoming a "crisis of the bal¬
other countries. The final outcome
too simple arithmetic of import buy what he likes with his money
ance of payments,"
of this practice is that only a few ojjier way. of asking whetner tue
le
has earned.
It is nasty for
cuts and export drives. What is
sum
total of the/consumers of
First of all, this "crisis of the
countries are left where the "lux¬
He
the use of working hard if you ifiri to ask for "luxuries."
the
country,- by demanding balance of payments" is not an
uries" of the world can be bought
cannot buy something beyond the must be firmly put in his place
watches, expresses its preference act of God but' the result of a
merest necessities?
The country and be intimidated by all sorts of
freely and in reasonable amounts,
for
this
commodity as against maladjustment of
the
national
not necessarily only rich countries
simply gains on the balance-sheet economic sophisms. It is hardly
others of which they have already economy as a whole. It is a symp¬
like the United States or Switzer¬
of foreign trade what it loses on an exaggeration to say that this
enough or which they deern less tom of an economic overstrain of
land, but also a country - like
that of production, and we have is a. mentality which is distress¬
the: country which leads to an in¬
Belgium which has been impover¬ indispensable. The fact that, by
good reason to believe that what ingly widespread the world over.
tending
to it
But now the governments are
ished by the war but whose eco¬ private trad© obeying the com¬ flationarypressure
loses on the latter account is
mands of the consumer, oranges drive up prices and foreign ex¬
nomic policy is determined by a
greater than what it gains on the beginning to discover with dis¬
are being imported into a country
changes. There will be a strain
good deal of common sense.
former, especially as time goes on. may that there are limits for the
indicates
that a large class
of on the balance of payments, in
The reasons usually given for
Except in war times, all efforts to restriction of consumption. They
these
people, who really 4 must ether words, there will be a short¬
increase production by moral per- nave to take account of the revolt
thife international crusade against
know
whether
oranges - are
a age of hard currencies as long as
luxuries
seem
quite
plausible.
suation, posters, medals or theat¬ of the consumer. If he cannot buy
good thing or not, has made up either the internal inflationary
The couiliry, we are told, it too
ricals will end in disappointment. the "luxuries" he wants lie is in¬
their mind that they can afford pressure1 has not been diminished
The soundest and most efficient clined to buy the luxury of leis¬
poor to afford things which are
them.. These people are the con¬ or the rate of foreign exchanges
stimulus consists in offering peo¬ ure, that is, to work less, but this
riot, strictly essential. Houses or sumers.
It
is
they for whom not been allowed to find its nat¬
wheat are more, necessary than
ple the chance of buying a watch, is precisely the kind of luxury
Providence- let
these
delicious ural level. The way to cure the
watches "that is the simple phi¬
an
automobile or oranges or of which iS really harmful to the
fruits grow.
"crisis of the balance of pay¬
.-.-....v.
going abroad for the holiday if nation today. He is also begin¬
losophy.:: People are all the more
All this sounds almost indecerii ments," therefore, is not to cut
ning to look through the flimsithey work hard.
eager to swallow it as the good
to some people who specializeiAik .imports but to cut the govern
It has been one of the great ness of the arguments for his own
things of this earth can be bought
what may be called social prudery: mental expenses responsible for
regimentation.
merits of the Report of the Harrionly
by
a
minority
anyway
In this he might be inspired and
They will ask us indignantly how the. inflationary pressure—or to man Committee of Foreign Aid
-against which envy, suspicion or
let the exchange rates go.
But
we can assume the interest of the
(delivered on November 8, 1947) encouraged by the wisdom of an
puritanical self-righteousness can
rich to be identical with that of
bureaucracy does not like this
He had
be easily aroused. So nations can
to have seen all this very clearly Italian friend of mine.
cure because it means less instead
be all too easily persuaded to fol¬ the country as a whole which is
and to have warned the European been invited to give lectures in
of more employment and power
Now it is
but he declined,
nations against killing production Great Britain,
low governments in their policy to supposed to be poor.
sheer
social hypocrisy to think for it.
incentives by undue restriction of his main reason, as he confided
export all, or most of the lux¬
of the rich as potential
Secondly, a cut in imports has consumption. They would indeed to me, being that he did not like
uries made in the country itself, only
their more be wise to follow the Belgian ex¬ "austerity" even for a few weeks
and to keep out those made in buyers of "luxuries" in the more repercussions which
advanced countries. We have all simple-minded
advocates
over¬ ample and to give more attention of this short life, least of all if it
other countries.
of
us
seen
more
than once
look.
Its most
direct and most to
meant to live according to the
the satisfaction of consumers
golden watch on a simple work¬ important, one, i,s
A^Some Fundamental Fallacies
tl^ on exports. demand as a prerequisite of in¬ whims of a man whose only force¬
man's wrist. It much be conceded, Trade is reciprocal, and a restric¬
^
ful argument is that he is in of¬
All this seems quite plausible,
creased production.
That means
on
the other hand, that a very tion of imports is bound sooner or
fice. My friend has to work very
arid yet it is all wrong. It is based
on the other hand, that the gov¬
unequal
distribution of income later to diminish exports as well. ernments have to scale down their hard to earn his. living, and there
on
a
reasoning which can easily
might make it possible that one- That vis true for any kind of com¬
are
few luxuries which lie can
be shown to be faulty, and it leads
over-ambitious
investment
pro
consumer
is starving while an¬ modities, essential or not.
If the grams which they had believed afford, but he likes to be sure
to' policies which are pernicious
other buys imported oranges. But British- Government prevents its
and self-defeating.
to be. able to carry through re¬ that he may have what he can
The crusade
it is precisely to common fallacy subjects
from
buying a
Swiss gardless of human reactions. They
against luxuries, is one of the most
afford and to work for it.
I am
to believe that, by farbidding the watch or going to the Alps it is
have to rediscover the consumer,
powerful agents for depriving our
inclined to agree wholeheartedly
civilization of its best fruits, for imports of oranges or refrigera¬ at the same time preventing so and they have to lift the ban on
tors, we are feeding the hungry many Swiss from buying a Brit¬ "luxuries."
with him.
destroying life of its springs and
or housing the homeless.
As long ish suit. This repercussion on ex¬
for dragging the nations down to
as the government does not change
ports may set in immediately as
the level of grey drudgery and
the
distribution
of income
and in the case of strictly bilateral
/'controlled misery." But it is un- take away the purchasing power: trade v^greements between softfortunately one of most efficient
ready to buy those "luxuries ."/the currency countries, or it may take
| -devices of a bureaucracy which
(Continued from page 4)
imports is' a: some: time and come about in
wants to prove its indispensability prohibition of its
mere
curing of a symptom,
in¬ more indirect way as in the case approximately
8,400
kilowatt- j- terms of safety of
and to expand its reach further
stead of buying foreign "luxuries"
of a hard-currency country like hours per home.
This gain of; inc0me and appreciation in marf and further.
people now
will
buy national Switzerland, but come it will. some 600% in kilowatt-hours in
ket value, we have prepared the
,

..

_

Utilities—For Income and Profit

'

capital invested,

| -y,

What is the main fallacy of the

ones.
Since a British consumer Many countries believe that they dicates—yes dramatizes—the im¬
following tabulation. All are rated
must be cannot buy a good Swiss watch can
indefinitely earn Swiss francs portance of the goal, not only to
,kept out of a country because it lasting a life-time he will spend or
"above average" by "Standard &
gold by selling their export electric utilities and home owners,
is. too poor to afford them? The
his money on whiskey, tobacco,
Poor's" Advisory Service, and in
goods freely to Switzerland while but also to investors.
most obvious objection is that it
The
leaders
of
the
industry addition to liberal yield on the
racing, or spectacles. In fact, un¬ keeping out Swiss export goods
is,impossible to define objectively der the present regine of "auster¬
"have only one objective: to re¬
on the pretext that they are "lux¬
basis of indicated dividend rate,
what a "luxury" is. For instance,
ity" in Great Britain, more money uries."
It
is obvious, however, duce to a minimum the period
Swiss
watches are
one
of the
than ever has been spent on alco¬ that such a country must, in sheer which so frequently elapses be¬ hold additional appeal for those
notorious victims of the present hol, tobacco and entertainment.;
self-defense,: restrict its own im¬ tween inception of a new devel¬ who cannot afford to overlook
international crusade because
If the restriction of imports of ports too if the other countries opment and the day when the idea safety and income in the search
watches are not deemed indisis translated into sales."
"luxuries" is to force a nation to persist in their practice.
for market profits.
§ pensable. Now it would be dif¬
The gas business has been posi¬
be more economical it is bound to
Thirdly, there are other im¬
ficult to find a better symbol of
fail entirely, because this meas-.
portant repercussions to be con¬ tively embarrassed by the new
our civilization than a watch.
It
ure
will not destroy the
pur¬ sidered which make the economy demands for service made upon it.
is. so significant and indispensable
This situation has been brought
that it would be quite proper to chasing power available for buy¬ in foreign exchanges by import
ing things which are not, strictly cuts largely illusionary. Most Eu¬ about by sizable price rises in
speak of a "watch civilization,"
essential but only divert it into ropean countries which have been competing fuels, particularly coal
apd at .is simply ridiculous to class
(Special to The Financial Chronicle)
other and mostly less desirable devastated by the war have based, and oil, the cost of which makes
tl}is instrument of measurement
CHICAGO, ILL.—Peter L. Maes
channels. If a man wants to offer as we know, their entire policy of electricity and gas attractive on a
of time
among
"luxuries," but
has become associated with S. R.
a watch to his wife as
a Christ¬
reconstruction on the simple idea price basis as well as on the basis
the very fact that this has been
Miller & Co., 231 South La Salle
of convenience and cleanliness.
mas present but is prevented from
that, by a formidable machinery
J possible : in "so many., countries
Street.
Mr. Maes was formerly
shows how dangerous it is to base doing so by the import restric¬ of over-all economic control, im¬
Selected Growth Stocks
trader for the Republic Invest¬
tions he will not present to her
ports have to be cut to the bone
commercial policies on such an
To aid the investor in selecting ment Company.
a
saving certificate instead.
He while everything beyond the bar¬
^arbitrary concept.
will only hunt for something else est necessities should be exported. equities which should do well in<^
Approximate
But
the
real fallacy is
even
which will make both of them In this way, it is thought, the capi¬
Price Range
...much more fundamental.
It is
1947 Current
1946-1948
dess happy.
The total result for tal reserves of the country can
ILow
Price
immaterial if the government calls
Div.
1944
High
1945
1946
1947
; Common Stocks—
a nation will be at least the same
be built up again in the quickest
6%
13%
8'/a
0.60
1.06
0.95
0.75
0.77
California Electric Power
v a
thing a "luxury" or not, as long amount
14
12
of luxuries but. less hap¬ possible way. That is the philos¬
0.60
8%
0.73
0.95
1.00
0.72
Central Arizona Light & Pwr.
as it leaves it to us to decide whethr
10%
9 V*
6%
0.60
0.42
0.46
1.06
1.00
piness, and less economical use of. ophy which we encounter again Central Electric & Gas_,„-_
er we can afford it orinot.
It is
17%
29%
1.30
22%
1.77
2.05
2.23
2.67
the productive resources of the and again, and we have shown al¬ Central Illinois Elec. & Gas__
11%
14 %
14%
0.27
1.00
0.70
1.30
1.63
exactly the impertinence of bu¬
Central Illinois Public Service
28
15%
country.
"
1.20
18%
1.34
1.41
1.50
ready two reasons why it is likely Central Maine Power——
1.35
reaucracy that it deprives us of
14
9
7'A
"0.50
0.48
0.72
1.53
1.61
to fail. Restriction of imports and
25 y8
42
this choice when, on the ground
30
2.52
2.00
2.54
3.47
The "Crisis of ithe Balance of
3.34
53
72
expansion of exports does not Community Public Service
3.50
60 v2
2.69
2.98
3.81
i that
3.32
the "country" cannot afford
Payments."
Connecticut Light & Power—
21%
27%
27JA
1.60
1.59
1.57
2.70
2.25
necessarily imply a corresponding
this or that, it prohibits or re¬
17 y2
17%
10%
0.82
0.50
1.04
1.68
1.41
Everybody is bound to admit net saving of the national econ¬ Kansas-Nebraska Natural Gas
ts stricts its importation, The whole
24%
16 y2
13%
1.20
0.91
1.07
1.89
2.04
this. But if restrictions of the im¬
12 y2
omy as a \yhole.
Unless the sys¬ Northern Indiana Public Serv.
16%
ioya
0.80
2.05
1.50
1.88
2.03
■Aargument against the free imporPuget
23%
24%
13%
0.95
ports of ''luxuries" do not help a tem of control will be extended Texas Sound Power & Light1.11
1.14
2.26
,1.33
■1 tetion of "luxuries" implies that
Public Service-.,.,-,,
22
23 y2
33%
1.27
1.99
2.00;
2.98
2.77
nation to economize its produc¬ to
a
real
collectivist tyranny, Western Light & Tel,,,,.
n
bureaucracy knows better than
Plus, 3% in stock,
1 To July, 1948.
destroys
completely the
n the
tive resources, can they r.ot be which
consumers
what is

ijbelief

that

"luxuries"

Peter L Maes Joins

S. R. Miller & Co.
,

'

-

•

--

.

*

good




for

32

(528)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE
tion, as our history
dantly shown.

Production Is Answer to Inflation
(Continued from page 7)

Bumper

of

crops

wheat

idea

in pros¬

1946

corn,

meat per person last
year than in the prosperous '20s.
And we will eat stilt more this

and other

in spite of feed shortage. So
with food in general; with
clothing, and with many more

sia, too, is* experiencing its biggest
crop year.
Australia, the Argen¬
tine and other cereal producing
countries
are
anticipating
the
greatest yields in their histories.

13 % 1 more

pect.

are now

We shall be growing more

pork and beef for ourselves.

year

it

grains

is

durable items.
But

getting back to the demand
goods. Every real American
is willing arid anxious that the

the

To

extent

that

Rus¬

these

hopes
and anticipations are realized —
and they're going to be—the pres¬

for

United States shall do its utmost
to relieve and help rebuild war-

sure

on

for

us

tremendous

ship¬
going to

ments of foods abroad is

shattered

Europe.
That means be
relieved.
priority for $6 billion of foreign
abroad and

Lessened

demand

produtcion at
aid. Add to that commitments for
home give real promise of lower
^rearmament and it is easy to see
prices.
what is exerting "too great a de¬
mand on available supplies;"
The Presidents Proposals
There's

good

a

deal

of

mis¬

understanding
and
still
more
plain,
unadulterated
demagogic
hunk about today's prices.
In our free economy; prices are
the balancing factor between sup¬
ply and demand. Prices are made
by consumers as well as by pro¬

And

hours

yet,

more

within

we've

the

heard

the

last

24

President

of the United States appeal again
to
the
Congress to
reestablish

price controls—to set
meat-rationing system.
the

people

earth,

up

a

new

Of all of

of

1939

even

level.

phoney if there ever was one.
a phoney
because those who

a

It's

talk such
of

nonsense

back to

aries rolled
Yet

those

1939.

and

wages

would certainly

their sal¬

or

have to be cut for

they represent 85% of the cost of
all

goods.

consumer

What

would

such

rollback

a

Official

government

statistics

increased

ers

105%

and

117%.
Between June,
May, 1948, alone, hourly

earnings

of

factory

workers

20%
and their weekly
earnings went up in the same pro¬
portion. For three years now we
have had general wage increases

justify increased

that, even
buying More

markets of just a few years ago?
Did price
control actually con¬

demands.

Proponents

trol—did

be

But the figures show
at these prices, we are
per

person

than

in

the prosperous '20s. New automo¬
biles sell like hot-cakes in used

lots

car

at

large premiums over
the manufacturer's price.
Sure!
Some prices have sky¬
rocketed.

Some

.moderately.
clined—as

have

in

the

gone

up

some

And

have

de¬

of

case

still

in

under

actually

OPA?

Can

stand
have

we

why

ration

books

distribution
about

of

that

result

in

a

necessities?

fair

What

neighbor who

always
seemed to be able to get thick
juicy steaks? Did you always get
goods when you presented a ra¬

we

had price increases in the

Profits
Profits

and

are

high prices.

controls
to break

High

assailed

of

in

one.

profits

use

this

But the greatest of all respon¬
is that of folks like us
fellow Lions, charged with local

country.

Ours is
service

would

fourth of

a

to

before

have

to

with
and

subsidies

and

regulations
discovered

most
are

of

think

us

keeping

that

all

prices
with food prices.

pace

"That just isn't true!

study of the wholesale price,

index from the end of 1939 to the.
available figure
in 1948
-shows increases from highest to
Jatest

-

least in this order: Farm

products,
materials, Foods, all commod¬

raw

ities

'

-and

Last

semi-manufactured

Smallest

products!
the

on* the

List

Increase,
!

!

goods,

with-

the

manufactured

And

hew and

cry

directed, against

yet, much of
about prices is

manufacturers.

Or take the consumers'

price in-

-dex.

Here, again, we find that
iood prices have out-run all other
items in the cost
of
living

workers'

of

families.

And

just as many of us think of
prices in the terms of food

all

prices,

so,
we, too,
frequently
the cost of living in terms
the price
of
a
porterhouse

gauge

of

steak.

We've

heard

predictions
within the last few days of new
high meat prices and growing
shortages for the balance of this
year.

"How come?", you ask.

Remember last winter's demand

by President Truman for the
imposition of price controls
"various food items?
student

a

didn't

of

know

the

re-

on

There wasn't
situation

who

right then that that

would

upset the market. Under
the pressure of the poor 1947 corn

crop and high wheat feed prices,
jfarmers had marketed more cat¬

tle

and

before.

calves
It

in

1947

than

ever

obvious that, if the
1948 demand for meat continues at
was

the

1947 rate, prices must
go up.
And then the farmers heard the

President's demand for
trols.

Who

would

new

be

con¬

foolish

enough to buy feeder cattle or far¬
row: hogs
with the prospect of
controls

that

break-even

might not allow a
price for these ani¬

mals. ' Farmers

are

good business

men, too. Add to that, the effect
of the packing house strikes dur¬

ing last February and March' and
the

prediction

this fall makes
But there is

of

cans

to

higher

prices

sense.

certainly

a

side.




brighter

churned,

housewives

buy "tie-in" items—two

of this

or

two pounds of that

year

industry

and

«

is

great

a

country,

this

America of ours!
Ours is
life

of

truly

with

wonderful way

a

its

freedoms

today
promise of even better
for everybody.
There's our job, Lions. If enough
Americans have the facts, we'll
keep America Safe, Strong, and
its

and

tomorrows

.

Free!

insur-,the Expediter vast powers to im-»
to pose price ceilings on new houses,

galore.
some

But

he

elementary

What

out

Mr.

Wyatt

for

that

to

have

It

Takes

quickly

build

materials

the

Department of Commerce
says
part of these earnings were
fictitious in that they represent the
same physical inventories at
higher
prices. So they take off $5.7 bil¬
that

He

you

such

as

soon

build

manpower

to

done

be

President
Now

must

lumber,

found

bottlenecks

was a rank failure. They
that it took materials and,

could'nt

discovered

houses,

it

over,
found

houses.

with

It

directives,
V

rules, regulations and red tape,

produc¬ soilpipe, lath, plaster, flooring and
But

This

that

in getting

for

Versus

Congress

the President to ask

comes

additional

housing legislation.

What he refers to is
has been

bill which

a

pending in Congress for

long time. It would commit the

a

brick, soilpipe, flooring and other country to an ultimate expendi¬
You see, there were price ture of about $9 billion.
Roughly,
ceilings on those items. The pro¬ two-thirds of that would be in the
items.

ducers

of

these

form of public contributions on
public housing for a period of 40
lion. Part of the remaining $11.7 come back to work
because they years. One House of Congress has
billion is not real profit either, were under a
goods?
price ceiling. OPA refused to go along with this pro¬
because it is conceded that current would
Can artificial controls be put
not
change the ceilings, gram and for a reason. That
on
a
are
not therefore better
few selected items without depreciation allowances
wages could not reason is that it believes that pri¬
enough to keep up with the neces¬ be paid and therefore production vate
creating
distortions
in
others?
enerprise, private builders
Would it be possible for hundreds sary
replacement of worn out lagged. It was a case of one
lick
this
housing problem
gov¬ can
But even if all the ernment
of thousands of retailers to roll equipment.
agency refusing to co¬ better, faster and cheaper than ~
back the prices of the goods now $11.7 billion were added to wages
operate
witji another with the re¬ any government agency if it has a
in their stocks and still remain in the workers would get about 10% sult
that
the
program, bogged chance. This is a free enterprise
business?
Would return of con¬ more at the expense of those who down.
country. In the seven year period
have
trols again require the; employ¬
provided the money that
The program also bogged down from 1922 to 1929, the builders of
ment of untold thousands of gov¬ makes jobs possible.
because of the multitude of rules the
country
built a lot more
If all the $11.7 billion were ap¬ and
ernment bureaucrats who could be
regulations. Houses and de¬ houses than they did in any simi¬
more
usefully employed in pro¬ plied to price reduction, the result signs had to conform to certain lar period before or after. Nor did !
would be less than 6% on the $211
ductive enterprise? Have we
(standards.
any
New
designs
and they have mortgage insurance or
billion of ultimate consumer goods.
reason on earth to think that con¬
methods had to be approved in Federal aid of any kind in those
trols would increase production?
Washington. Detailed plans had days.
More Production Will Stop Spiral

in

order

Were

Food Prices
A

forced

wasn't

Were

this report I hold
Get the facts. Pass

copy of

get to work

things about building houses and
dwelling units.

could

that

a

expedite the building of houses. issue directives, impose priorities
Wyatt forthwith issued rules and what not and when it was all

Food, of course, looms largest
the family budget, and when
we protest the high
price of foods,

you?

leave this hall.

Mr.

were

record

him

let

there

a

avail¬

(Continued from page 13)
him
ance

$17.4 billion after taxes.

was

are

Presidents Housing

your

1947

manufacturing

great opportunity for

country, to pro¬
mote sound
thinking and the ap¬
plication of common sense ano

get

its income

other fashion any¬

some

.

your

products.

way.

high cost of living

Get

not.

us

you

pro¬

because

purpose

a

facts.

able to you today—at the doors as

sibilities

soon

cannot

for

a

business

even.

government
about

wage

' of

allow

has

us

on our

Program—A Paradox

price
that rollbacks can

still

and

of

none

The facts about inflation, prices
and

own

as

Well let's look at that

You

but

Management has a major re¬
them
on
to
your friends,
your
sponsibility in working to strive
your
workers,
your
for greater cooperation between families,
preachers, your children's school
tool owners, and tool users.

Prices

causing
Labor leaders point

argue

made

taxes

opinions

right to be wrong

ir.

in my hands.

what

butter

savings

efficiency and low-cost

tion and for profits which reached

on

v

duction.

tion coupon?

in

those

interest, can
contribute by encouraging the ut¬

radios,
shoes and luggage.
But the big¬
gest boosts, according to the fig¬
ures, have come in foods and farm

You couldn't butter
bread with the price ceiling

of

Labor, in its

fall.

price controls without wage con¬
trols,
subsidies,
and
rationing?
Did

the spring and then wondered

one

prices

in¬

creased

to them to

ket; prices cannot go higher than
consumers are willing to pay.

the

cans are

re¬

productive enterprise.

weekly

1946 and

earnings

ings, the price tags and the black

mar¬

a

American
principles to today's
problems.
Sound thinking must be based
on facts.
We have a right to our

encour¬

show that the cost of living in
May, 1948, was 71.5% over 1939.
leadership—grass-roots leadership
But
during
the
same
period, —in thousands
of communities all
hourly earnings of factory work¬ over this

tastic prices.

sellers'

help by

can

teachers.

mean?

Look at the meat situation again.
We recoil at what seem to be fan¬

a

we

investment

most

salaries

abun¬

saving and that encourage the

age

wouldn't think

having their wages

has

turn to fiscal policies that

There's

Ameri¬
people who ought
to know by recent and bitter ex¬
perience that price controls and
rationing are no answer to high
prices. Has anyone in this great
hall forgotten the OPA price ceil¬

ducers for, even in

on

Government

rolling back prices to the

or

Thursday, August 5, 1948

to

get

there

Producers

interfere

know

controls

production.

controls

supplies,

They

hamper

impede

raw

distri¬

and discour¬

both initiative and incentive.

Producers know too that without
the patriotic, urge of war to in¬

spire compliance,

raise

items

could

induce

to

wages

not
to

men

counter

bution, increase costs
age

goods?

the

that

know

with

that

material

rationed

under

Production

to

satisfy

demand

is the only way to stop the spiral.
And increased productivity—out¬

put per worker—is the only way
to
increase
real
wages,
lower

prices and provide the better to¬
all so ardently desire.
key to this log-jam is to
eliminate
unnecessary
govern¬

morrows we

The

to be submitted. Half of all houses
must be under $7,500 and half of

those had to be rental houses.

If

OPA

in

permitted

price

on

came

difficult

certain

an

increase

materials, it be¬

to

produce houses
in many areas under the
ceiling
set by the Expediter.

Despite the fact that Congress
supplied Mr. Wyatt with $400,spending and reduce our
J)00,000
to
build
more
houses
highly progressive income tax so
one
seem lily-white
by contrast. that
faster, the program was a con¬
people can again save and
siderable flop. One of the top
Getting back to meat again— invest. Management
today labors
men dealing with home loan
because that is the yardstick
guar¬
by under a double handicap in its
antees in the Veterans Adminis¬
which many of us measure
living efforts to get production up and
tration
costs—we have a prime
resigned
in
protest.
example to lower costs. On the one hand,
of the futility of
Another government official said
price controls and management faces an
inability to
that "Private builders could do
rationing.
find people with the money and
better at less cost."
Right there — in meats
the incentive to risk their savings
was
Now then, what happened
where price controls
to
finally broke in plant modernization and new
this Wyatt program? It just died,
down completely. It was that col¬ ventures.
On the other hand, it
It just folded up from sheer in¬
lapse that forced the President faces
short-sighted
trols

now

would

a

return of

create

market that would make

a

con¬

black

our

ment

last

—

himself

to

abandon

controls

al¬

together in November, 1946, after

committees

use.

thing work.

—the

•

Farmers

just flatly refused to
sell hogs and beef at
ceiling prices
which did not allow them some¬

thing,

however

little, above the
raising the animals.
Can you blame them for that?

cost of

And don't you think they'll do it

again?

shop labor
ertia. The President made
frequently at¬

tempt to regulate the introduction
of new equipment or restrict its

series of substitute and make¬
shift experiments to make some¬
a

that

Industrial management needs

ately,
sound
at

country needs—and desper¬
economic

thinking

on

the grass-roots

The

answer

education

and
these problems

to inflation is
wages.

rounds have demonstrated
It is not in reduced profits.
are

no

ef¬

to revive

it after its expira¬
tion date. And there was a reason.

It

was

While
were
_

a

the

pretty
number

sorry

of

record.

starts

that

reported seemed rather im¬

secured estimates of

houses from

cer¬

Three
that.

They

already too low to attract the
savings necessary to finance lower
cost production.
It is not in con¬

at

one

house.

can

The

live

lag

in

and

a

"started"

stretch-out

between the time a house was
started and the date of completion
became longer and longer. And,

need for,

our

least

different

15

sources
including the CIO, the
AFL, the Census Bureau, the De¬
partment of Labor, the Producers

Council, building economists and
others.
2

The highest estimate was
000,000 units per' year. The low¬
was
300,000. Several of the

est

refined

estimates

900,000 units

around

were

per year.

Very well, that is the estimated
need.

Now

what

has

been

doner
'
L.

to meet that need?
In

1947,

started

.

849,000

and

units

completed.

were

There *

plenty of problems in secur-»
ing material and manpower. After
all, air castles in Spain can be
were

built

from

brick,

dreams

lumber,

hardware

and

pressive, the number of comple¬
things to build
was pitifully small. After
all,

no

Record

up a Joint Cmmittee of Senators
and Congressmen to survey the
housing problem. That Committee

tions

levels.

tainly not in higher

fort

The

Now folks, let's look at the rec-*,
ord. Early this year, Congress set;

Now

other
a

house.

For the first five

by

private builders

units.

flooring/*
substantial?

then, what's the

this year?

it "takes

but

nails,

«r-

score

' " '

fof*

•

months, starts
were

356,000;

/

And
ot
if you think prices are
That's 28% above 1947.
course, it added materially to
the expense.
high now, how high do you think
If that rate is
maintained, it*
they'll go if we move into another trols,
Now folks, one thing more. That will mean that for this
They have been tried and
year - of£
price-controlled black market and found
Act which created the Office of 1948, we will build more houses
wanting.
"under-the-counter" economy?
!Ojbyiously;. the answer is in Hbusing Expediter declared hous¬ than in any year in our history, t
And then there's that
crack-pot more and more efficient produc¬ ing to be
emergency, It gave The peak year was 1925, when we

168

Volume
\

,

•

...

;

.

'

•

y ./•«

\

•

.

FINANCIAL

COMMERCIAL &

THE

Number 4722
v

/

-r

V-. ;.'V .4,. ■■

'.

J:';. -.'1

.f'U.-:

.!• V

beat that was set up 25 years ago to problem. With private builders
supervise banking, and keep our moving toward the construction of
Now
there's
the
answer
to credit and monetary system on an nearly a million units in 1948,
shall we now project government
even keel.
bousing.
Mr.
Eccles
was
The Dept. of Labor says that for
sounding
a into this field to compete for ma¬
May of this year, 2,064,000 persons warning on inflation and suggest¬ terials and manpower, so that we
were employed in the construction
ing that the Reserve Board be merely aggravate demand and
provided with additional powers wind up with not "'more houses
industry.
That's an increase of more than to increase reserves against de¬ but more expensive houses and a
posits and thereby Keep credit heavy additional burden upon the
200,000 over last year.
public Treasury.
In proportion as more material expansion under control.
built' 937,000

more10

available,

gradually go

shall

we

over

the million mark each year

and

that's

far

so

When all is said

becomes

manpower

and done, the
to inflation will be found

answer

in

the

field. It

monetary

means

I

action
is needed in
too. We must shut off the
spigot on the free and unlimited

creation of credit through the sim¬

not insensible to the need

am

for

houses.

145,-

are

000,000 people in this country who
are going
to get hurt, including

the whittling Federal expenditures to
the very bone. It means living those

beyond

there

But

dreams of any government agency

who

.

money

w.-

'

and

;

inflation,

We'll

houses.

that in 1948.

(529)

CHRONICLE

'."iV

':r.

ple

of selling government

process

securities to the Reserve Banks at

guaranteed minimum prices.
interest

less

rates

flexibility,

some

Banks have

the

Reserve

latitude for

no

Un¬

permitted

are

exer¬

•

.....

ernment

can do, success in fight¬
ing inflation will depend to a
large extent on the spirit and good
sense of
the people.
Along with,
some of. the inflationary excesses
of today there are many other in¬
stances of sound, conservative ac¬

tion.

At

its

which

under

their

facilities

made available to the market.

are

"Fifth. In addition to what gov-

time when

a

examples of

many

have so

we

and

inflation

results, it is not too much to

cising their proper discretion in
hope that
determining the terms and condi¬
tions

3.1

v,V..'\Y»v..

•.

the

people

our

dangers

and

recognize

can

in

act

time

to<

avoid the ills which present trends

presage."

acquire new
within our income. It means keep¬ houses,
that it's not even funny.
unless Congress moves
ing the budget balanced. It means cautiously to make sure that the
on
The President's Idea ;
keeping easy credit under control. economic house of the entire na¬
These houses I
refer to are
does
not
come
Now then, here
tumbling
is what Mr. tion
:.
going up now in all parts of the Eccles said to the committee. down.
land. They're not paper houses.
(Continued from page 17)
Once
"Congress is currently considering
more,
let me say that
They're not houses made of Fed¬ the continuance of easy mortgage more manpower is employed in under section 207(a)(5)
of the] or security of the Bank by whom¬
eral
red
tape. These are real credit for housing. Easy mortgage the
construction
industry
and Code for the same reasons given soever held if the sole jurisdic¬
may

World Bank Bonds Paid to Foreign

Interest

Corporations Trading in U. S. Ruled Tax-Exempt

Rouses. People live in them.
Now comes the President with
a
request to supply additional

credit

is

the

of

one

infla¬

most

V

tionary factors in the domestic
credit picture.
The housing
housing legislation. Now, the Bill shortage cannot be overcome by
to
which
the
President
refers increasing the competitive pres¬
contains a lot of
provisions. It sures on scarce supplies' of ma¬
would authorize the use of pub¬ terials and
manpower. They are
lic funds to build and equip plants the limiting factors on the vol¬
to

produce pre-fabricated houses.
a
provision for insurance
of blanket or multiple loans for
It

.

There's

in

provision

a

It

brackets.

low-income

the

contains

bousing. It contains

a

for

rural

number of

provisions
for
expanding
and
liberalizing home mortgage credit,

t]

What This Can and Probably
Will

yt

Do

need

we

there has been any

the

health

mark

year

to

million-perit. And the

the

toward

mdving

repeal of

program,

Taft-Hartley

substitution of

labor

and

law

'fair and

a

sound'

labor-management relations act, a
'real'
long-r&nge farm program,
stronger reciprocal trade agree¬
ments act, universal military
training, a national science foun¬
dation,
strengthening anti-trust
laws, and, finally, approval of the
a

St.

much-debated

and

Lawrence waterway project.

whether
period in the

history of the nation when we did
jnot need morejiouses. But we're

meet

production of houses will grow as
become
supply.

Economics
•

"Quite

as

for

economic

an

considering

gram,

and manpower

stances

in greater

most

an

of

the

the

pro¬

circum¬

message,

is

that

of these

projects would in¬
pouring out more money, or
increase costs directly as
in the case of the proposed mini¬
mum wage increase.
That some of
volve

are

now

available and instead of reducing
the

of

cost

crease

house,

a

it

will

in¬

it.

| As a- matter of fact, to super¬
impose the kind of a program the
President wants on top of what
we're now doing in this field, will
not mean more

housing but
expensive housing.
But it will

If

more

something else.

mean

expand home mortgage
credit on such slender terms that
,

we

scarcely

no

owner-equity

is

can

do—the very

inflationary fire which he seeks
to curb!

.v

/

■

be

my

personal

"In

effect,

what the program
blowing up the
economy
with
more
inflation
steam with one hand, and trying

amounts

to

is

to hold the lid

trols

and

on

more

with

more

taxes

con¬

with

the

other.
"As for price controls and ra¬
tioning of goods deemed in short
supply, such proposals evoke
memories of the artificial prices
and

black

markets

perated the public
controls

were

that

so

exas¬

until wartime

abandoned

in

1946

©pinion. About three months ago,
nomic Report consisting of seven

S5enat,ors and
of

which

seven

Senator

ment
agencies,
regulations and

swarm

of

district
offices,
accounting and

systems^—all adding to
Federal employees and

Congressmen,
is

the

about

150

Taft

men

in

"As

new

miles of red tape.

regards the

corporate ex¬
cess profits tax: — probably
the
strongest weapon in the Presi¬

vote.
A

Anti-inflation

Program

"What, then, would be a sound
for curbing inflation?

program

cut

government.

With

huge $40 billion budget, the
today is the biggest
spender of all. The President rec

Government

more

gq\f^ipnenj;.spejid

ing, whereas what

we

need is less.

to

sion

in

next




even

anti-inflationary

purposes,

taxes

and

cor¬

able
'the

while

credits,

be

sources

States'

United

the

shall

from

income

net

within

section

such

under

minus

the

pro¬

urban

above

stated
dated

pay¬

the bonds of

on

terest

on

national

trade

taxation

section

the

204 of

determined

be

in

mortgage

within

by government guaran¬
excessively easy terms.
We ought to be tightening up on

other

is

the

the

within

not

to

subject

relative

the

under

of

tions

foreign

than

companies, engaged
business

or

States

Internal

sec¬

Revenue

Code.

"Very truly yours,

the

credit,

the Inter¬

for Reconstruction

life insurance

surance

or

are

bonds of

the

corporations,

United

201

1948

Development paid to foreign

and

state that the gross

Code 'shall not

13,

Bank

visions of section 206 of the Code

section

letter

your

correct
with respect to the fact that in¬

in

income of in¬
companies taxed under

in

and

April

government

/s/ THOMAS J. LYNCH

Acting Secretary of the Treasury"

States.

fostered
tees

without

or

the

United

on

subsidies

and

guarantees for

housing construction, now strain¬
ing at the practical limit of avail¬
able supplies and labor.
"Third, modify price support for
agricultural products and let the
cost of food

tastic

that

come

It is fan¬

down.

high government offi¬

cials should be talking about im¬

posing

mentation

while

taxes and

more

the American people
Government
puts
a

on

the

'floor' under wheat at
on

the

of

dollars

regi¬

more

$2

a

bushel

farm, and spends millions
to

keep

up

the prices

of potatoes,

eggs, and other foods
might otherwise decline and
the pressure on the cost of
living.
Also, lower agricultural
prices would reduce the cost of
our foreign aid program.

"It is your

tion

income

is

within

controls

should

be

have—the

bank
credit,
using those which

over

traditional

instruments

the

of

and

new

we
we

tested

Federal

Re¬

discount rate and open mar¬

serve

be

not

is not from

the

rather

sec¬

read

as

or

United

sources

States,

but

providing merely that
is
inapplicable
in
determining what types of in¬
come (irrespective of geographical
source)
should
be included - in
gross income from sources within
as

section

119

the United States,

and under this

contention it is your
interest

on

companies

ance

section 204
be

opinion that

the bonds of the above-

paid to insur¬

named Bank when

taxable
under
Code, will not

of the

subject to tax under that sec¬

tion.
"Section 204(a)(2) of the Code,
as

stated

that

the

in

letter, provides

your

normal

tax

net

income

Missouri Pac. Equips.
A

headed

by > Halsey,
July 28 was
Missouri Pa¬
cific RR. 2%% serial equipment
trust certificates, series KK, ma¬
turing $470,000 annually Aug.* 1,
group

Stuart & Co. Inc.

awarded

1949

to

on

$4,700,000

1958, inclusive.

The

cer¬

tificates, issued under the Phila¬
delphia plan, were immediately
reofferecl by the group, subject to
ICC

authorization, at prices to
yield from 1.55% to 2.70%, ac¬
cording to maturity.
Other members of the offering
include R. W. Pressprich &

group

Co.;

A.

G.

Becker

&

Co.,

Inc.;

Hornblower & Weeks; Otis & Co.;
First of Michigan Corp.; Freeman
& Co.; Julien Collins & Co.; Mullaney, Wells & Co. and McMastcr

Hutchinson &

Co.

and the

corporation surtax net in¬
shall be the net income from

come

sources

"Fourth, before asking for

contention that

should

206

providing that section 119 is in¬
applicable in determining whether

that

within the United States.
such

income from

Groks

sources,

however, is not limited to the six
items specifically
mentioned in
section

119

of

broad enough
from United

the

Code

but

is

to cover any income
States

al¬

sources

Proceeds

of

the

issue

will

be

used to finance not

of the actual

$6,279,730

exceeding 75%
cost, estimated to be

of

the following new
railroad
equip¬
freight locomotives
diesel road switching

standard-gauge
ment: 14 diesel
and

four

locomotives.

ket operations.

As in the case of
though not specifically mentioned
agricultural price support pol¬ in that section
(Helvering v. Suf¬
icy, it is an anomalous situation
folk Co., Ltd., CCA-4, 104 F. [2d]
to be asking for more powers over
505), and it has been held, in the

the

credit

when

we

have

a

discount

case

income

of

from

the

sale

of

and when money
property, to depend on all the
generally are set by the factors of the transaction such as
banking and fiscal authorities at
negotiations, the execution of the
levels that are an open invitation
agreement, the location of the

r^te

of l1/4%,

rates

to inflation.

"It

is said that we cannot per¬

than

—

income

net

tax

manner
provided in section
119,' which latter section sets forth
spending, the greatest inflationary the rules for determining whether
factor has been the rapid expan¬ income
is derived from sources

"Second,

serve, as you know, is the system

arsenal

normal

our

would decline. The answer to this

proposed

interest

ment of

the

of

above in«r

the Bank to insurance

certain

"First,

two-way influence. While
such a tax, if it results in a budg*
serve System. Mr. Marriner Ecetary surplus that is used to re¬
eles, who has been a member of tire public debt held by the
banks,
the Federal Reserve Board since tends to exert a
deflationary in¬
1934, and who until recently was fluence
Ujpon* credit, it also enters
the Chairman of the Board, testi¬
into
business costs and, like a
fied in behalf of the Board. *
wage
boost, tends to increase
^Incidentally, the Federal Re¬ prices. To be most effective' for
a

factors

transactions mentioned

companies applicable with respect to the

to tax.

poration surtax net income of
foreign insurance companies tax¬

Sound

ing

received

the

render

ter,

such section to the effect that the

upon the great mass
spending by individuals. But
corporations, of course, do not

this may be conceived of as hav¬

Chairman

pages of testimony from the Board
of Governors of the Federal Re¬

the provisions
of the Code, also

and

stated in the previous ruling let¬

of

mit interest rates to advance, for
then prices of government bonds

dent's

by the Bank,

of section 116(c)

should bear

ease

unsupported involving businessmen and trades¬

the Joint Committee on the Eco¬

subject

be

paid or the location of any office
or
place of business maintained,

companies
question is raised, according
taxable under section 204 of the
letter, with respect to for¬
Code.
eign insurance companies taxable
"It is the opinion of this Depart¬
under section 204(a)(2)
of the
ment
that
your
conclusions as
Code, because of the provisions of

these

allocation

Now folks, that does not happen
to

latter

such

to

is

taxation

Such

to your

eral

at the people's insistence.
Fur¬
the demand for houses but feed thermore, price controls and ra¬
tioning would pose great problems
this dangerous inflationary fire
of setting up peacetime enforce¬

other force

should not. paid

we

this, instead of pumping out more
credit into an already seriously
inflated field through more fed¬

needed it will not only aggravate

as no

time,

would

projects, of and by them¬
now, it will stepup and increase selves, have merit is not ques¬
tioned. But tossing them all into
the demand. As you increase the
demand, you add to the very in¬ the hopper at a time when, by the
flationary
pressure
which
the President's own testimony, the
President says he wants to cire. economy is already dangerously
Certain it is that this Federal inflated, and, in a message pur¬
program which the President pro¬ porting to present an anti-infla¬
poses will not increase the sup¬ tionary program, seems explain¬
able only in terms: of political con¬
ply. What it will actually do is to
intensify the competition for whgt siderations.
material and manpower

that at this

ommends

Politics

schedule

a

understand

available

•<

vs.

'emergency' session of the Con¬
gress! What makes it difficult to

materials

Now, what will happen if the
government is put into the hous¬
ing business up to its ears?
On
top
of the
demand for
bouses which is so readily evident

or
business
within
the
again trade
States,
but would
not
project the government so far into United
life insurance
this field as to jeopardize the very apply to foreign
companies taxable under section
program which is actually pro¬
201(a)(2) of the Code and that
ducing houses?
I am persuaded income on the bonds of the Bank

the President's request and

(Continued from page 17)
tional

doubt

I

houses.

more

that

denies

one

the place in which it is issued or

nation.

A

long-standing
No

this

of

essence

basis for

tional

at

Scores Truman's Anti-Inflation Proposals

volving fund

public housing where the govern¬
ment helps pay the rent of those

the

houses are being built than for .your conclusion with respect
anytime in the history of the to foreign corporations other than
Shall we now accede to insurance companies engaged in

more

would

the ori-the-site pre-fabrication of
bouses. It has a billion dollar re¬

for slum clearance.
It has a revolving fund and an¬
nual contributions
for so-called

of construction."

ume

has

.

.

is

that, while some control over

interest rates and the government

property
ment.
p.

and the

place

of

pay¬

(G.C.M. 25131, C.B. 1947-2,

point

market

Of

without making it

and

briefly stated herein

to the

credit; cdntrol to work. While it
effect that nd taxation of any kind
i$"true that action ih'fields Other
money

Inc.,

to

The

Financial

ANGELES,

L.

Reed

has

Chronicle)

CALIF.—Gil¬
become

con¬

with Pledger "& Company,

West

210

Seventh

Street,

members of the Los Angeles Stock

Exchange.

He

was

formerly with

Marache, Sims & Co. and Merrill
Lynch, Pierce, Fenner & Beane.

G. Brashears Co, Adds

Bretton Woods

inflexibility Department, dated. Nov; 19, 1947,

impossible ;.for

bert

nected

provisions of section 9 of

Article VII of the

is

absolute

LOS

85.)
"The

desirable, this Agreements Act, quoted in the
control cannot be carried^ to; the •previous ruling, letter; from. this

bbnd

With Pledger & Co.
(Special

is essential to stem shall be levied

on

any

(Special
,

LOS

to

The

Financial

Chronicle)

ANGELES, CALIF.—Mor¬

ris F. Sullivan has been added to

the staff of G;'Brashears & Com¬
pany,

510

South

Spring

Street,

members of the Los Angeles Stock

obligation Exchange.

34

COMMERCIAL

THE

(530)

FINANCIAL

&

CHRONICLE

Thursday, August 5, 194*

market of

Tomorrow's

now

And if the rate of

thousand.

Markets
Walter

a million buyers a
for product X, it has
dwindled to perhaps 500

Whyte

half that.

bile is

example. List prices
almost daily and behind
an

go up
them

=By WALTER WHYTE=

The automo¬

come

the under-the-table

are

The

deals.

thing holds
other
War talk dominates mar
field.
Both political parties
ket. Nervous public selling
are
leveling charges at each
meeting with but little inside
other and making big noises
buying, causing present un
but neither is doing anything.
certainty. Market itself says
nothing.
same

almost

in

true

every

weeks

Some

surprising how first advised caution, a condi¬
gripped New tion I foolishly abandoned too
York.
I've just completed a soon, I saw what I believed
7,000-mile trip covering vari¬ were certain signals. Later I
saw what to me seemed good
ous
parts of the Southwest
Unfortunately the
including Mexico and no¬ buying.
where was the talk of war so latter disappeared and nerv¬
rife as it is right here in New ous
selling took its place.
It's

little

a

talk has

war

York.

The

that

fact

don't

I

condi¬

market

such

tions

selling what it

or

what
When

has.
-T

>,I

*

find

the

general
feeling among industrialists
(those I've spoken to) who see
the threat of

same

war

a

unset¬

as

tling to their businesses,

ket isn't

fusion rests
it is
or

scarce

advise

to

*

do-

a

e. g.,

doing nothing one way

another.

in

thi.

necessarily at ani
those of th*
They are presented at
of the author only.J

time

not

coincide

with

hose

*

*

general feeling
shooting will begin

I feel that the

tion where

industry raises

an

and then increases
prices of its products so that
fewer people can afford them
is
too
fantastic
to
picture.
Yet, that is what is happening
every day.
wages

*

i\i

$

stock
today based on past earnings
is almost without meaning.
Where there was a potential

Pacific Coast

Ailg. 27,

1948

Bond

Club

the

Reserve

responsi¬

bility for overall bank credit

con¬

Mr. Eccles has discussed this

trol.

with

matter

detail.

in

you

on

we are

ment that the

mental

to

number

a

of

occa¬

entirely in

agree¬

objective is funda¬
inflation

the

order

again

to

clarify

a

statement by the Chairman of the
Reserve

Board

conclusion of

at the

ings that were

Dec.

on

the hear¬

conducted at that

time:
view of

fact

the

that

some

viewpoint
between
Snyder and myself in
the Board's so-called

special

io

the

£§cord.

the

I

dis-

have

with

niatter

the

Sec¬

The fact is that the area

retary.
jf

this

take

clarify
ussed

proposal, I would
opportunity to

reserve

to

agreement be.ween

us is much
than
has
been
Such' difference as

complete

more

represented.
exists is in

evaluating the degree

restraint

of

inflationary

on

ex¬

pansion of bank credit that would
be exerted by the special reserve

I

effectiveness.
the
all

at

am

more

whether

some

of

Denver-Rock>

Group of IBA joint Annua)
Party at Park Hill Country Club

Security Traders Association oi
York
Summer
Outing at

New

Travers Island.
Nov. 13, 1948

Bond

(Chicago, III.)

Traders

Club

of

in

advance with

Chicago

Luncheon for members of NSTA

"(1)

the

That

most

fiscal program to insure

the
largest possible budgetary surplus
consistent with the government's
obligations at home and abroad. :
orous

"(2)

That coupled with an in¬
savings bond campaign,

tensified

io

The

has

to

Financial

Chronicle)

OHIO—Carl

formed

engage

in

the

-

C.

F.

the

F.

Mead

&

securities
138

Put¬

Both

measures reverse

the process

by which the money supply , was
increased during the war and«are
effective

anti-inflationary

influ¬

OOrtlandt 7-4150

Private Wires to Principal Offices
San Francisco

Monterey

—

—

Santa Barbara

Oakland

—

Mr.

Mead

was

for¬

"(3)

That

the

program

which

the

Sacramento

(Special

to

The

Financial

Chronicle)

YOUNGSTCtf®^

That

under

maintain

to

2%%

rate

and

present

prospective conditions it is
tial

essen¬

established

the

long-term market¬
able government securities.
"(9)

on

That restraints

"The

of

area

therefore,

be

permissible increases would be in;
to the existing statutory);

addition

maxima, .and could be applied'
to demand deposits in
general, or to tho • e in banks « in
central reserve cities, in reservej
cities,
or
in other
places, sep-|
arately; or to time deposits, *>asj
required. The bill provides that
1hese changes in reserve require¬
ments shall not continue in effect
beyond June 30, 1950.
flexibly

|

The

down

special

to

reserve

would

appropriate if additional

be

meas¬

ures

prove

to limit the

necessary

unrestricted

r ow

of

access

banking system to*
which
a
multiple

reserves

the
upon

expansion

brief

of

back to

my

"I

would

like

that

to

has
my

testimony—is the
longer have the'

no

of

Reserve

surplus

a

for

against

requirements,

the

infla¬

the

at

at their statu-!
tory maxima for time deposits-in
all

time,

are

banks, and for demand deposits;;

in .all banks except those in central

The

cities.

reserve

serve

cities

with

a

is 24%,

compare.!;

as

maximum

statutory

of

20%.

remain'ng

oMy

the

of

Board

the medium of

to

serve

soundess

of

;

present

requirement for demand;
in banks in central re-f

reserve

deposits

maintain

fiscal

n—which

o

authority

Governors

of

to

tighten credit conditions through

a

the

we

prospects

point out that
positive feeling that the
major objective at this time is to
I have

t i

Treasury
to use
tionary pressures.

The

testimony be¬

fore the other committees:

u a

Mr. Chairman, since

previous

fact

oank credit can be built."
I. go

i t

s

present

disagreement,

narrows

whether the

should

instalment credit.

on

percentage

requirements,
banks

shown

confidence

in

located

cities.

the government and

\

increasing reserve
applies, therefore,
central

re¬

But these banks have

|

in

the continued
public in gov¬
ernment obligations.
I feel that
the attack
on
the problem can
best be handled by the applica¬
tion of a substantial budget sur¬
plus to the reduction of the public
in

debt

of the

the

which

will

the

least credit

expansion

the recent past of any class of
bank.
It is clear, consequently,!
the

that

Board

power of the
Governors to increase

I

requirements is not well

j

remaining

of

reserve

suited to

the nature of the prdb-

[

lem which now confronts us** The

f
equivalent amount proposed legislation would remedy J
of bank-held
government secu¬ this by providing the Board -of
rities.
."
Governors with authority to cope I
extinguish

.

I

an

.

back

go

manner

now

to

prepared

my

testimony.

To repeat ohe sen¬
tence: "In the present situation, I
think that it is clear that prudence

that

requires
to11

ments

additional instru¬
supplement the volun¬

with

the

bank

this

the

method—in

bank

re-

•

of

class

control

such

where

most needed.

j

may

best be done by the required
serve

of

excessive1 expansion

credit—whenever

seems ;

-

-

1

(Continued from page 9)

industries.

eading

in -automobile

creases

trical

general range of
hour, which has

15 cents.an

this.

characteristic

been

where

any

elec¬

and

industries have

equipment

been within the

5 to

in¬

.Recent

y e a r

increases at all

have

spiral." Such a spiral once under
is difficult to- stop. In a pe¬
riod of heavy demand and rising
prices, increases* in prices and
wages reinforce each other.
Only
way

who

those

Basically prices, wages, and prof¬
are all high because of heavy
It needs to be

its

demands for goods.
remembered

that

wages

are

not

and

will

been

continue

to

next
few months, when the Treasurywill continue to have a substantial
cash balance that. can; t>e used to
restraint

during

the

business cost; that, par¬
ticularly in 'times like these, many
;>rices are not very closely related
costs;

;o

care

rtP.

and

consequently

be taken in attribut-

should
price

that

increases

to

wage

in¬

creases.

fixed

receive
that

claim

can

tribute to the
t'fi.

incomes

they do not con¬

spiral.
*

*

>

Question:
Governor, there is
another question I would like -to
ask you in this connection—has
the banking system contributed to f
the rise in prices by expanding
loans?

>

I

Earlier

Answer:

k*''<

mentioned

during the war the banks
a
great deal.of monev-to
the Government, which the Gov¬
that

loaned

ernment

spent for war purposes,
increase-in

and this resulted in an

purchasing power people held.
the Govern¬

the

In the last two years

raised

ment' has
than

it

has

spent

more

and

in' taxes

with

the

surplus has paid back some of
these loans, which has tended .to

supply of money. But
private business and

reduce the

bank loans to
if*

*1*

to

•

consumers

have

expanded

increases ^sharply since the war, tending ,to
~ *
add to costs and theyt add to In¬ increase spending.
comes so they must haVe soih© 4n~.
si.
V
* v
luence on price increases, V
Question: Have bank loans con¬
Answer: They most certainly do*
tinued to rise this year?
b""
Actually these things are all inter-,
Answer: Loans for commercial
Question:

-

But

wage

'

as

W. Stroh has become associated

with

Beadling & Co., Union Na¬
tional Bank Building, members of
the Cleveland Stock Exchange. In
the

Fresno




during the year has

effective

-

Teletype NY 1-028

"(8)

time deposits;
points.
These

against

and

4

by

changed

policy alone.

i:he only

ences.

suing

Street.

Stroh Joins Beadling Co.

New York 5, N.Y.

points

program

National Bank of Marietta.

(Associate)

Chicdgo Board of Trade

cannot

but

requirements against;

effective

Treasury and the Open Mar¬
ket
Committee have been pur¬

San Francisco Stock Exchange

14 Wall Street

generated

are

bank reserve

demand deposits by 10 percentage;

be corrected by monetary and fis¬
cal

Re¬

~

ment:

exert

York Stock Exchange

forces

the Federal

System to increase member

serve

certainty,

merly President of the New First

New

"(7) That the Board's proposal
is not in any sense a substitute for
but a supplement to the fiscal
program
and
direct
action on
other, fronts where
inflationary

It authorizes the Board

Governors of

vital purposes.

business from offices at
nam

New York Curb Exchange

and

been negotiated.
accomplishes
two
*!•
'I*
*!*
To the extent that
savings of the public are invested
Question: Now that you are dis-.
Nov. 15-18, 1948 (Dallas, Tex.)
in savings bonds, spendable funds cussing wages, Governor, I want
National Security Traders Asso¬
to ask you whether they are high
are taken out of the market place
ciation Convention.
jecause
at this time of excessive demand
prices are high or are
Dec. 5-10, 1948 (Hollywood, Fla.)
orices
and
insufficient supply and can
high because wages are
Investment Bankers Association
be used to pay off maturing debt
1948 convention at the Hollywood
held by the banking system. Like¬
Answer: I am glad you asked
3each Hotel.
wise a budgetary surplus can be that because there seems to be so
used to reduce bank-held debt. much misunderstanding about it.
way

on

to the Convention.

Co.

Members

result of

a

objective.
of

We are in full agree-*

at this time

anti-inflationary measure has been
and should continue to be a vig¬

Sept. 10, 1948 (New York City)

Mead

Schwabacher & Co.

before

the press.

in

san

We both feel that
special reserve is
or

broader understand¬

a

as

in

Secretary

like

gained

Congress

the

tory, I would like to inject here

regard

self-imposed restraint by
banking community; which

reinstated

background of the legislative his¬

"In

may

ing of the problem

contro

program."
In

upon

the

has

considerable

He and I have discussed it

together

mined

(Denver, Colo.)

Mt.

(Special

Coast Exchanges

has

stronger measure of restraint may
needed next year depends on
which
cannot ' be
deter

MARIETTA,

Pacific

Federal

which

System

needed

C. F. Mead & Co. Formed

on

the

of

ernors

possibly some stronger
be necessary.
"(6) That this will depend on
the course of events and in part
or

measure

tary action of the bankers be
placed in the hands of the Federal;
Reserve System."
The
legislation
before
your
Committee would accomplish this?

factors

Securities
Orders Executed

bank

be

massing through Chicago

An evaluation of any

inflationary

cn

credit,' this is a matter under the
jurisdiction of the Board of Gov¬

whether

than

foreign difficulties. The ques¬
tion of prices, their control,
the halting of the inflationary
spiral, are all basic. A situa¬

'Some-restriction should

placed

guine about it.

EVENTS

comes

rather

domestic

be

its

COMING

present unset¬

tled market condition

the

requirement. He has expressed to
this Committee some doubt as to

if the

is that the

from

article do

expressed,

Chronicle.

*

But

[The views

of

Congress last November:
of item 1

ments

require¬

reserve

discussions

two ^committees

of the press has emphasized a dif¬

and

tiresome

material,

the fact that

on

point I would like to
refer to some previous testimony

10

nothing policy. But until the
market itself gives a clue it
quotas, etc. "It's all quite con¬ Is the only policy to follow.
fusing. 'The only thing that
More next Thursday.
isn't confusing is the stock
—Walter Whyte
market, and its lack of con¬
allocations of

this

before

debt-payment operations are

needed, increased

that additional in¬
supplement
the
voluntary action of the bankersbe placed in the hands of the Fed¬
eral Reserve System.
At

rent

longer available. If it appears
that other restrictive steps are

to

—

and

"(5) That the problem will pre¬
sent a different phase when cur¬
no

requires

ence

struments

ference

repetitious

in
'

But, in the present situation-,
think that it is clear :that. pru<

Federal

be

*

*

becomes

curtailment

of hatrk' credit..

extension

the

the maxi

secure

voluntary

decline.

the mar¬
saying anything.
*

It

to

program

mum

will

you saw — a
the situation

corrected I can't say;

❖

*

■

its

infla¬

tionary lending.

sions and

usual

Under

selling frequently
I have to recognize that the is absorbed by shrewd buyers.
In this instance the past buy¬
buying public does believe
ers didn't sell their stock but
shooting will start and not
knowing how to evaluate this simply stepped back and let
in terms of market action, is the market go. The result is
subscribe to it doesn't matter.

laying off,

against

particularly to commend the

and

"In reference to the second part

when

ago

overextension

(Continued from page 8)

increase continues it will be¬ American Bankers Association for

Says—

the

Secretary Snyder Upholds Credit Curbs

year ago

and

past he was with Otis & Co.
Butler, Wick & Co.

reduce bank-held public

"(4)

That

some

debt.

additional re¬

expected as a re¬
statement of Fed¬
eral and State bank supervisory
authorities cautioning banks
straint may be

sult of the joint

.

related, which is one reason why
we
talk about the "inflationary

and industrial purposes

have not

j

tlWHf lUfflUMBi mmt ■»»»«.«!

since

risen

THE

Number 4722

168

Volume

number of lines for a

a

new

wave-of

and. price rises

occurred

but

time;

short

partly, because of seasonal
partly because of
fi¬

year,

in

tion

of the

the beginning

influences and

buying

substitution of other means of

in the summer

ulated

Also, banks have shown

nancing.

crops

making loans.
Loans on real estate ha^e con¬
tinued
to X rise
rapidly, despite
some
restrictive policies; and so
also have consumer loans.
in

restrain

some

Question:

;

Do

in loans

creases

Europe; \

Answer:

of

Extension

possible

more*

pressure

degree

production,

funds

on-

Higher

prices.

prices X in
turn have
required
larger, loans to finance a given
physical volume of business.

countries?

-

it be expected
and profits, and
the volume of bank credit will go
on expanding indefinitely?
Can

Question:

that prices, wages

situa¬

Early this year there

of

supplies

and

important

some

| Answer:
question.

That is a* very basic
The
answer
which

economists read from the pages

severe

reaction.

abroad.

ments

biil

a1

the

for

to* increase; pay¬
needy,

page

(Continued

either Fascist or

against

life

of

that genuine social;

"We believe

economic progress can be
achieved only on these American

and

Even with¬

out United States assistance, how-

our

bor's right
collectively

it is

constitutional principles and

fever, foreign demands would have

ity

of

American people ap¬

the

taxpayers

on

a

political expedi¬

tion.
But that is water over

the dam.

the work of the Con¬

is never done. Always there
which someone
believes should be enacted and

gress

will be something

to organize, bargain
and strike is fully

protected.
Rights of employers
and the general public are also

probably
Possibly
to

do

so.

Beyond that, and looking at
things about me, I am not as pes¬
simistic as some about the future,

I see homes being
utilizing X every
available
and man. In my
own
State of Indiana and else¬
where I see the most bounteous

Everywhere

built,
nail

and board

crops ever

pie.

a

ought
we

to

enacted.

be

might have been able
more things before

few

to favor a grateful peo-<

As they are being

harvested,

prices are dropping way belowthe peaks of the past. Inevitably
that means decreasing consumer
for

prices

all of
help
but the-big job

foodstufls.

In

these things. Washington can
and

is

helping,
production must be done

of actual

in the'country.

the Repub¬
such, must nec¬
essarily be enacted when we haver
a Republican President to cooper¬
ate with a Republican Congress
when we meet next January. We
shall
elect
Dewey and Warren,
and
a
Republican Congress, in*
November,
and
then we shall
move to the complete accomplish¬
thing finally,

One

prove.

Of course,

for peaceful settlement of
labor-management disputes. La¬

of

Today, it is undoubtedly true that v
We
provided a cost-of-living some prices are too high, and we
increase for postal and other Fed¬ do not have all the housing we
need.
The Republican Congress
eral employees.
We*
extended
the
reciprocal has been considering the wholei
trade' agreements - act with fair •situation and will continue to do

12)

dures

Communist trends.

instead

playing hookey and going across
the country at the expense of the

aged 'and

has made a great record of
accomplishment. It has made a
record off which we who have

One Man Government

loans and

Congress,

the

with

35

blind.

gress

push up

grants to foreign countries have
been large and they have contrib¬
uted to increases in prices of do¬
mestic commodities, but it is a
cost that we have
willingly as¬
sumed in order to assist in relief
ahd recovery

and

helped in its achievement take
justifiable pride; It is a record of
which the overwhelming major¬

•

Answer: Yes, Federal

.

passing

»:« •"

to
Haven't they

and helped

sizable

prices?

$

*

How about loans

'Question;
been

prices and

expansion

to

protection of our national econ¬
omy,../
/;
- v y /;
We
expanded social security,

"

❖

*

foreign

presures. on

have been strong.

essential

all

of amendments designed only to give
hesitation in buy¬ history is that booms come to an proper consideration to American
ing,
as
grain
prices declined end, with serious consequences agriculture, labor and industry.
for production, employment, fi¬
sharply on prospects of excellent
I These and many other * things
nancial assets, and economic well
we have* done:
The measures • we
crops in this country and abroad,
but demand has4 since increased being generally. The bigger the enacted are benefiting every seg¬
boom the more likely it is that
again owing in part to the actual
ment of our population and creat¬
the bust will be disastrous. That
and anticipated effects of a reduc¬
ing
wholesome- conditions
for
tion in taxes, increased foreign is why efforts should be m ade to
prosperity and happiness.
check a boom and prevent the
aid, and the expanded, armament
distortions in prices, production,
A Record of Accomplishment
program.
Generally, production
has been close to capacity levels ;profits, and the like which lead to
So this 80th Republican1 Con¬

been used to compete

the

wages

then?

Answer:

have also
for; a limited
supply of goods, thereby adding to
borrowed

but

products, such as steel, have con¬
tinued to fall short of demands.
Upward

(531)

FINANCIAL CHRONICLE

again was some

credit

'

*

Question: How about the

as a cause or a re¬

since the war has in some

levels.

%

*

sult of rising prices?

made

later

production

and

reached new peak

in¬

regard

you

and autumn, stim¬

partly by short feed grain
and new plans for aid to

tion since
>

a

&

COMMERCIAL

lican program, as

safeguarded. Peaceful settlement we adjourned a few weeks ago
to give our citizens
of disputes is going forward. La¬ had the President stayed here in
been very large relative to prewar
this clean-cut choice."
ment of our program.
bor is obtaining good contracts, Washington on the job, working
because of wartime shortages of
That was the issue in 1946. Tru¬
and above all, production is pro¬
sweeping
proposals
are
goods and accumulations of gold man's
ceeding without interruption.
and dollar balances.
clear proof that that is still the
That is the production so badly
fundamental issue for 1948. That
needed to keep prices down, and
Question: You have been dis- is his basic conflict with the Con¬
meet our commitments at home
cussing so far the influence on gress—a conflict between two dif¬
and abroad.
'prices of various
demands- for ferent philosophies of govern¬
We
have
exposed the Com¬
goods./ Now, would you tell us ment.
munists and battled for the elimi¬
The Republican Congress, with
something about supplies? .How
(Continued from page 6)
nation
of
Communists, Fascists
understanding, courage and fore¬
large has production been?
port control powers to June 30,
and other subversives from the structive program of eight meas-O' Answer: Total physical produc- sight, hailed the challenge for the
1950.
Federal
Government and other ures to stop inflation. This proTitle V authorizes the Housing
tion of goods and
services has preservation of the Republic and,
places where they can carry on gram has been incorporated ipto
J1 been
two-thirds higher this year reversing the ruinous New Deal
the
Antiflnflation
and
Excess Expediter
to
establish or re¬
their nefarious schemes to wreck
nihan in the 1935-39 period; output policies, established solid founda¬
maximum
rents
and
Profits
Tax
Bills which,
it is establish
our country.
tions upon which our country is
hof manufactured goods has been
strengthen enforcement.
We have aided foreign nations. hoped, Congress will consider and
now going
forward again.
double the prewar average.
Of
Title VI gives the Secretary of
adopt.
These bills are designed
We have appropriated billions to
course, that period
was quite a
to halt further increases in the
Agriculture authority to regulate
relieve impoverished humanity in
What Republican Congress Did
? while
ago and since then the popforeign countries, to re-establish general level of prices by a com¬ margins in connection with trad¬
Here is what we did.
liulation
has
increased
by
11%.
their
economies,
and
restrain prehensive program that attacks ing on the commodity exchanges,
We liberated the people from
Also,
there were
many unem¬
communist aggression.
This has the problem at all the strategic a power which he does not now
ployed in the 1935-39 period. Even seventy-six thousand rules, direc¬ been done with the full knowl¬ points. This is necessary to deal have.
tives and orders, releasing thdir
both with the basic cause of the
so, the present production level is
Title VII establishes an Antiedge that the great export of
;
inflation and with the factors that
energies and capacities to produce
very high — practically at peaceInflation Coordinator in the Ex¬
goods involved would necessarily
time capacity with present equip- goods urgently needed to main¬
cause
it to spread through the
ecutive Office of the President to
raise prices in this country as well
tain ourselves at home and our
whole price system.
| ment.
as
add to inflationary pressures
coordinate the anti-inflation ac¬
friends abroad. True, many things
The proposed bill deals with all
A •
*
*
*
tivities of the executive agencies
because of the great spending in¬
; ^ A Question: You are emphasizing
are
yet in short supply.
Why volved. But the Congress with the of these points except taxation, and an Anti-Inflation Advisory
i then that in spite of a very large
wouldn't they be with so many
which will be covered in another
Board to advise the Coordinator;
people, and at the President's re¬
3f volume of output since the end of
demands
from
abroad
and at
bill.
requires the President to submit
quest, believed this aid program
the war the pressure for price in¬ home? But this much can be said:
Title I of the present bill aua report to Congress at least once
to
be in the national
interest.
creases has been very great,
except for the Republican Con¬
thorizes the reimposition of con¬
every
quarter on the progress
High prices resulting from such
Answer: Yes, and this pressure
gress prices would be higher and
foreign aid programs should not trol for two years over consumer made in controlling inflation and
houses scarcer today.
was
particularly evident in the
be charged to the Republican Con¬ credit by the Board of Governors on desirable legislative action; and
latter part of 1946 when practical¬
certain
miscellaneous
We cut the cost of government gress in an effort to get votes as of the Federal Reserve System, j contains
but only with respect to install¬
ly all price controls except those and balanced the Federal budget. Mr. Truman seeks to do.
provisions.
over rents were removed. This acment credit.
We did away with unnecessary
The tense international situation
The process of inflation is char¬
*
tion was taken partly with the
Title II authorizes the Federal
government functions and pay- has required tremendous sums for
acterized
by three inter-related
hope that production could there- rollers,
pruned
Mr.
Truman's national defense. We have pro¬ Reserve System for two years to phases. First, there is the excess
by be increased.
Since then, in spendthrift budgets, and cut the vided for the national defense, increase the reserves that member of total demand—by consumers,
[i the past year and a half, producnational
debt with
the biggest with increased appropriations for banks are required to hold against business, government and foreign
tion has increased, but by only a
surplus in the history of the na¬ all branches of the service, par¬ demand and time deposits.
countries—over available supplies
A moderate amount because of capa¬ tion. Excessive
government spend¬ ticularly the air corps, and with
Title III authorizes the establish¬ at existing prices.
city limitations, and prices have
ing is one of the causes of high temporary selective service.
ment of control over key prices
The effects of this initial phase
advanced further.
prices. To cut the cost of govern¬
are then intensified by the priceWe have cared for the veteran and wages and then only under
•
•
*
*
*
ment and pay on the national debt
specified conditions. I do not pro¬ wage spiral. Finally, an increas¬
purpose

Present'Inflation and|
President's IProgram

.

'

;

■

.

,

v

♦

.

.

%i. Question: Has the high level of
0 production'
since the war eased
* the shortages of goods prevailing
u

then?'

i;

^ Answer: Yes, quite a little. Mer¬
chants
and manufacturers have

1 been able to

substantially increase

$ their stocks of
goods. More—
A though not enough—housing ac.commodations have become available.- Consumers
have satisfied
r> some
of their more urgent deAferred
demands for goods not
available " in - wartime. In some

/.

exceed

lines, as in the shoe industry, sup-*
plies have exceeded demand and
% output has been curtailed.
$ '

'WC

'

1

f

dollars; to

-

Such

Answer:

the

case

appeared

for a time in the

to

be

second

Quarter of 1947 when hesitation
was
npticeable in a number of
markets,
:

./ •»'

even
»

red

reducing produc-

call

billions
put

and

for

cut

with 71%
to

housing,

inflation"

make

building boom
through the removal of red-tape
and unnecessary restrictions and
by legislation directly aiding in
We generated a

ana

personal

income

taxes

of the tax relief going

persons

with incomes

than five thousand

of less

dollars.

More

million in the lowest

bracket now pay no taxes
That

reduces the price of

at all.
every¬

thing we buy, from a haircut to
an automobile, and also puts more
money

in the hands Of consumers.

much-needed

production.

passed the Taft-Hartley Act

providing

fair

and

just

proce-

We
flood

-V-.

forwarded reclamation,

control,

river

harbor

and

improvement, rural electrification
and rural road building. For these
meritorious

projects

we,

priated record sums since

r




pose

at this time to treat

standards in the pricing

with the

and wage

provisions.
The Committee has
just received the-bill and I will
be glad to appear in support of
the criteria used at the pleasure
of the Committee and when the
members have had the opportun¬
to: study
greater detail.
ity

Title

IV

its

gives

provisions

in

President

A,

■

appro¬

they are

power

under

this' Title

would be

that

rationing

established for key cost-

of-living commodities

essential to support the
of the economy

mand.
An

effective

anti-inflation pol¬

at the same time limit
increase in total demand and,

icy must

by selective action, bring
the inflationary spiral.

to a halt
Without,

support of other measures a re¬
strictive credit policy would have
to be so drastic to combat inflation
that it would run the risk of causwV

depressfon"

Excessive

Basic

Demand,

Inflation Cause
No anti-inflationary

policy can

effective that does not deal
with the basic cause of inflation,
be

in the event the excessive demand.

Since gov-

j ernment expenditures and foreign
This Title also extends ex- '
(Continued on page 36)

such rationing: should
essary.

credit and money supply is
operations
at the higher in¬
come and price levels; and the in¬
creased
money
supply in turn
tends to reinforce the excess de¬

ing

the

the

to establish allocations and
inventory control over scarce ma¬
the construction of homes, par¬
terials or facilities that basically
ticularly for veterans.
affect production or the cost of
We adopted a long-range farm
living and where they are neces¬
program
designed to give the sary to fulfill defense * requirefarmer reasonable assurance for
ments, carry out U. S. foreign
the future and at the same time policy or curb inflation, and also
stimulate the- maximum produc¬ to establish priorities where nec¬
tion of much needed goods.
essary for these purposes.
It is

Also, tax reduction has stimulated
We

188

programs

and billions of
us completely in

nent?
We

passing

needs of veterans,
including increased compensation
for the disabled, survivors of war

high prices inevitable and perma¬

than seven

Question: Have there been any
periods -when supplies of goods
generally seemed to be catching
pp with or exceeding demand?
;

Truman

costing
the

dependents,

dead, subsistence payments for
student veterans, for on-the-job
government expenditures
training, the cashing of terminal
receipts. Why, then, does
leave bonds, and aids for veterans'

having
Mr.

his

bills meeting

prices.
Secretary
of the
Treasury Snyder just this month
said as much, and then predicted
that we are close on the edge of
cuts

,

a

and

inflationary pressure and

reduces

become nee-

36

(532)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

low-cost

Present Inflation and President's
aid

national

of

priority,

policy

must

in

be

line

high
business

and

consumer

demand

brought

of

limited

with

urged by those who would appar¬
ently prefer to condemn this coun¬
try to the miseries of inflation
rather than take the unpleasant
steps that this program calls for.

is
the

as

threat of future collapse.
I

and

have

attempted to give you
only a brief outline of the serious¬

available

ness
of the present inflationary
expansion is fi-« situation, of the need for effective
nanced by undistributed profits,
action
by our government, and
some by bank credit and some
by a summary of the comprehensive
new
capital issues. Adoption of program submitted by the Presi¬
-an excess profits tax and legisla¬
dent to supply this action. I have
tion that authorizes some tighten¬ not attempted to present a de¬
ing of bank credit controls are tailed statistical picture of the

Most

the

business

most suitable

iting

business

means

expansion

for

lim¬

many facets of our economic sit¬
uation which support the need for
this program. We stand ready to

without

interfering with desirable invest¬
in bottleneck industries.

ment

method

One

of

limiting

ment of

maturities for instalment credit

er

consumer

billions

to

consumer

curtailment

of

if the basic

even

of

have

de¬

also

attempted

to

ap¬

proach this problem without the
hysteria which too often accompa¬
nies

discussion of matters touch¬

a

closely the interests of vari¬
in the economy. Amer¬
ican industry, labor and agricul¬
ture are producing at a record

ing

so

ous

cause,

groups

excess

demand, is effectively re¬

rate.

duced.

-

hyper-inflation
or
the intense
general shortages that are present
in most other parts of the world.

There

will in¬

of past develop¬
Meat supplies will be low

because

crease

ments.
and

prices that

are

meat

related

to

price

come

increases of

die is

A continued price-wage
spiral may multiply even a small
of

demand

that

to

in

productivity

and

sup¬

plies.
With respect to such
a
price-wage spiral, it is true that
the best way to stop inflation is
to

price rise in items
essential in the cost of living, like
meat, or in industrial production,
like steel, can be prevented, the
stop it.

If

a

basis is laid for

a

stabilization of

and wages. Labor leaders
have stated repeatedly that wages
can
be stabilized if the cost of

prices

living

is

profits

are

held and if excessive
taxed. Gradual increas-

^age^and11gradual 'Pre°ductiond of '
would

prices
•the

and

method

15JIJ.

then again become
by which producers

consumers

share in the fruits

-of technological progress and in¬
creased productivity.
It has been
wage

said that price and

controls try to cure the

toms ratner than the

cause,

symp¬

of in¬

This argument overlooks

flation.

the fact that the

ais not

price-wage spiral
only the result of inflation

hut also

further

causes

A reasonable

minimum of

provide for

inflation.

policy involving

a

risk, therefore, should

a

combination of vari-

some designed to
demand, others to
halt
the
inflationary spiral. In
-such
combination,
no
measure
.meeds to be applied drastically be¬
-ours

measures,

curtail

total

each

cause

gives

support

to

the

other.
.

What

we

want, therefore, is

a

program which will hold inflation

without

causing

a

incurring the
risk
of
depression. All of these

requirements; we believe, are met
by the balanced program pro¬
posed by the President. This pro¬
gram is embodied in the two bills

before the Congress.
These bills

should

be

regarded

:as a means of reducing excess de¬
mand ; of restraining increases in
prices and wages at key points

which,

directly

and

indirectly,
.Influence
the
entire price
and
wage structure;' and finally of se¬
curing the most desirable distri¬
bution of the chief scarce com¬
modities.

We do not expect these

measures

to

price

level

reduce
now.

the

We

do




general

expect

not

with

faced

the

worthless.

Disaster

not

may

no excuse

for

subjecting him

great suffering and misery.

There is also no point in at¬
tempting to
assess
the blame,
among the various groups in the
community, for what has hap¬
pened or is happening to prices.
I, for one, do not believe that such
an
assessment is possible.
There
is loose talk about profiteering by
business or greediness on the part
of labor and farmers. But despite
some
unfortunate
monopolistic
elements which exist, prices are
still established throughout most
of our economy in greater or less
degrees in the market place, by
the inter-action of supply and de¬
mand.
We
cannot
expect
the

otherwise

could be absorbed by an early in¬
crease

are

be just around the corner. But the
prospect that the patient will not

the past.
excess

We

The American dollar will not be¬

prices high because of

last year's short corn crop and
high feeding costs. Wage demands
are

The

measures.

sustain

not

this

as¬

The reservoir of presi¬
dential
powers
in the type of
emergency that we now experi¬
sumption.

is not unlimited.

ence

There pres¬

ently exists no authority to con¬
trol prices by direct regulation or
to require the allocation of scarce

impact

I

mand, unless pursued drastically
.at the danger of causing a depres¬
sion, will not in itself do the
-whole job. There is a momentum
in the inflationary spiral that will
continue

does

record

commodities and materials for

The
individual

program.

by the over-all picture:
inflationary
pressures
are
still
with us, prices are still rising and
the living standards of large num¬
bers of our people are being pro¬
gressively
impaired.
Thus
the
basis for national prosperity be¬
comes increasingly precarious.

pur¬

total

authorize additional

sential purposes.

this

dicated

chasing power and has made more
difficult the task of limiting it.
The

infla¬

of

you

studies, however, can only em¬
phasize the general conclusion in¬

expend¬
itures at a time when supplies are
still scarce. It should be frankly
recognized that the
tax relief
given by the Congress to many
people who are not among those
hardest hit by the price rise has
sadded

deal with

collective

-Higher down payments and short¬
"will limit other

to

power

tion and that Congress should not

sideration

con¬

credit control.

consumer

ample

with whatever facts
or analysis on specific or general
points you may desire in the con¬
supply

demand is the reestablish-

sumer

being

now

The first of these is the repeated
assertion that the President has

supplies of goods.

:

es¬

Such powers are
asked for in the pending bill and
are basic and indispensable to
any
attack on the problems of high
prices and inflation.
It

has

the
to

been

also

President

proclaim

asserted
has

now

that

authority

kind of
emergency and thus, invoke
Economic
and

some

credit controls.

sumer

Committee

Senate and the Senate

reenacted

tinue

The

new

con¬

Joint

Committee, the Banking

Currency
the

as

opinion

as

is grave

doubt

President

a

tut

whole

a

to

con¬

They

credits.

were

repealed in the House.

It

is

my

lawyer that there
as to whether the

has

to invoke

ot

authority

consumer

real

the

consumer

existing law. But as¬
suming that that authority existed,
that

action

one

insufficient

to

alone

would

maintain

seal off the increases

or

that

growing

are

in

prices

It has been said before the

mittees

of

be

stability

day.

every

months

the

are

com¬

Congress

that present
conditions
are
the

of this

450,000 permanent non-farm
dwelling units were started, as
compared with 355,000 in the first

year,

six

months

of

1947.

Units

com¬

pleted probably amounted to at
least 500,000 in the first half
year,
compared to 360,000 in the cor¬

responding period last year and
832,000 during all of 1947. If pres¬
trends

ent

units

continue

may

well

should

million

one

be

be

completed in

President's

proposals appear
refuge in the assumption
that some manipulation of red'stake

to

count

rates, abandonment of the
government support of the bond
market

other credit and

or

tary

policies

basic

cause

mittee

has

would

mone¬

the

remove

of inflation. This

com¬

explored exhaustively

these policies and the mechanisms
now

in

have

reached the conclusion that

I

effect.

trust

that

you

as the inflationary risks of
ticularly recognized in the revival

strong national defense program
have had to be accepted.

a

Such
and

VI

calculated risk

a

extension

In

program.

approximately
non-farm

the

of

was

par-

Title

FHA

months,

recent

of the total
starts
have

40%

housing

been made under the FHA insur¬

system—an indication of the
importance of this" program.
It
be clearly recognized that

ance

must

in the

volume

It

the

sible

as the result of a hold-over
Every
practicable
anti-infla¬
housing, starts from last year; tionary safeguard should of course
It is likely that new
starts—espe¬ be incorporated in the housing
cially starts of rental housing— program. This has been recog¬

of

from
the

now

will

on

legislation

fall

off

embodied

unless

nized

consistently.

fall

Last

President

Taft-Ellender-Wagner Bill is

en¬

trator of the newly-created Hous¬

Without

that

legislation,

the

the

the

acted.

directed

Adminis¬

in

be well under the. one
million completions expected this

ing and Home Finance Agency to
the problem and recom¬
mend
appropriate proposals for
legislative and administrative ac¬

year.

tion.

Even the supply of new housing
so
far constructed has fallen far

legislation left little

short of

ther

next

year's

housing

will

record

probably

of

meeting the heavy volume
housing demand. Housing prices

and costs of construction have

tinued
than

to

in

rise,

1947,

current

loans

existing

on

new

review

It

houses
annual rate of

the

first

half

of

that

found

was

practicable

action

the

existing
for fur¬
administrative
room

would

which

decrease

its

inflationary effects. Therefore, a
number of legislative recommen¬
dations

submitted

were

to

the

Congress by the President in Feb¬
ruary, which are incorporated in
the Taft-Ellender-Wagner Bill as
it passed the Senate.
That Bill

family

an

for

billion

made

1-4

running at

$11

consum¬

for it.

Mortgage
are

of

much

ability of most

to pay

and

slowly

more

too

production is priced well

above the
ers

but
Far

con¬

to

includes

amendments

place appraisal standards

more

conservative

larly

on

1-4

on

a

basis, particu¬

family housing in¬
VI, and to begin

1948, compared to less than $3.8
billion in the last prewar year of

sured under Title

1941.

the

The

outstanding volume of

such loans has risen since Decem¬

ber, 1945 from $20 billion to about
billion.
About one-third of

$33

the outstanding volume of home
inflationary
mortgage debt is insured or guar¬
result
of "easy*: money"
policies. anteed
by the Federal Govern¬
Many of those* Svho would reject

the

—just

long run, a sustained, high
of housing production is
only sure way of correcting
recognized, how¬
ever, that the completion of one the present inflation- in the hous¬
million units this year will be pos¬ ing market.
1948.

authority

credit control

the

under

What

first six

the

In

at least three fallacies

prices and to reduce, so far
possible at
this
late
date,

determined by considera¬

are

housing.

facts?

them to end the upward march of

(Continued from page 35)
tions

Program

Thursday, August 5, 1948

ment, through the G.I. and

FHA

from

Title

assistance. It also includes
ber

of

VI

forms of

permanent

to

credit

a num¬

provisions

designed
to
lower housing costs, such as pro¬
visions for research, and financial
aids for large-scale
methods of

construction, both on-site and in

units are mudThe only figures avail¬

Furthermore, the Taft-EllenderWagner Bill is consistently de¬
signed
to
make
financial
aids

those for

available principally for the types

Mortgage loans made

on

multi-

dwelling

smaller.
able

more

factories.

programs.

family

transition

are

surance

FHA

such units,

on

in¬

loan

which

was

of

housing most urgently needed,

such as low-rent housing and lowannual rate of $720
million in the first six months of priced sales housing. Thus the Bill
1948.
Unless new legislation is is designed both to stimulate cost

runn'ng at

adopted,

an

substantial drop
housing is to be

a

rental

such

in
ex¬

The FHA Title VI insur¬

reduction

and

to

divert

more

of

productive

capacity to the
low-priced field where housing is
our

no

pected.

has established that the abandon¬

responsible for
large proportion of new rental
construction, and new commit¬

that

farmer to sel1 his wheat for less

ment

of

ments under that program

Bill

has been made
Taft-Ellender-Wagner
is unnecessarily inflationary

you

place

in

at

time

than the market price because
or

I

may

feel that it would be in
interest for him to do

the public

expect other groups
individually to substitute your or
my idea of the public interest for
normal
competitive practices in
determining their returns.
Our
present price structure is the na¬

so; nor can we

tural

result

of

the

operation of
our
economic system of private
enterprise under the abnormal
conditions of this post-war period.

History indicates that nothing so
weakens a system of free private
enterprise as extreme instability
of the type we are now experi¬
encing.
The blame can be laid
only at the door of a government
which

miscalculates its responsi¬

bilities

and

negelects to provide
protect the system
from the temporary and abnormal
measures

pressures

We

war.

late

to

carried

over

propose,

from

even

at

date, that this neglect be

the

this
rem¬

edied.

real restraint can be put upon
prices by credit restrictions alone.
I further hope that the evidence

existing policies would
jeopardy the savings of

small

many

investors

holders and strike

blow

the

to

essential

full

if

a

fundamental

we

are

to

which

is

maintain

employment, relatively stable

Power

Appearing before the Senate
Banking and Currency Committee
August 2, four days after mak¬
ing the foregoing remarks, Mr.
Porter
refuted
statements
that
on

ceased

April 30, 1948.
the

for

Except

of

period

the

Wyatt program, when allocations,
priorities, and construction con¬
trols

the

used,

were

available

powers

to

principal

the

Federal

major depression.

Government to encourage the con¬
struction of sales and rental hous¬

It is my personal

ing

prices
a

and

avoid

the prospect of

belief that the
government
should
strenuously
resist any proposal that the price
of long-term 2Vz% bonds be per¬
mitted

par."
the

to

drop

Par is

people

abandoned,
bondholders
any
ance

a

"a

little

;

below

fixed point which

understand; if it is
small investors and
would

never

have

confidence in official assur¬
that some other price would

There

has

been

the

repeated

suggestion that exports are re¬
sponsible for the high price level
and

existing

inflationary condi¬
tions. I have attempted to avoid
hyperbole in my presentation to

How¬
ever, I cannot refrain from char¬
acterizing the claim that the net
export of 2Vz% of our gross na¬
tional product is the cause of in¬
flation as sheer nonsense.

Rising Prices and Housing

most needed.

The

argument

the

a

rials

are

Such

an

the

when

labor

and

mate¬

being used to capacity.
argument fails to realize

following significant points: ^

(1)

Without the credit aids to
private enterprise, it is doubtful
that present rate of construction
will be

maintained

next year.

I

been

credit aids. The
(2) There is every reason to ex-?
G.I. loan program, adopted in 1944 pect that the materials
supply will
have

as one

the

of the

measures to

readjustment

of

promote

veterans

to

civilian life, was amended in 1945

by the liberalization of appraisal
standards, by doubling the maxi¬
amount

mum

and

anty,

the

of

loan

The

to

FHA

been

housing

until

extended

cessful
in

isting

recognizes in its
provisions that it

now

insur¬

revived

30,

1948,

clearance

work

are

for

two

compete

limited to planning

the

clearance work

The

to

for limited materials
Expenditures for slum

and labor.

clearance

unwise

next

year;
actual
could be defered

in areas of shortage;
importance of these provi¬

years

sions is the need to begin the nec¬

and time-consuming plan¬
ning work in connection with this

essary

have been

suc¬

bringing about an in¬ program.
Furthermore, if the President's
housing construction,
getting both new and ex¬ anti-inflation program is enacted,
in
in

houses

veterans.

It

Bill

The
be

permitted

was

April

These programs

and

(3)
slum

when it expired.

crease

improve during offand that supply
be significantly im¬
proved by next spring.

would

substantially liberalized in
1946.
It was successively

May,

season

will

other

(Title- VI), which

deliberately

expire late in 1945,

and

to

builditig

guar¬

numerous

war

program

had

continue

factors

heavily

by

amendments.

ance

really be protected.

the Congress of this issue.
Says President Does Not Have

program was

a

bond¬

and

confidence

ance

was

-

-

into
;

the

hands

of

.

recognized by the Con¬

certain other actions
sible to lesson the

pects of

a

will be pos¬

inflationary

full-scale housing

as¬

pro¬

The authority to allocate
gress and the Administration that gram.
Finally, it has been asserted
has suffi¬
these credit aids, while increasing scarce materials could be used to
that
the
President's
program,
power
to control inflation
volume
of
housing, would limit less urgently needed con¬
and defended the "easy money" taken as a whole, does not make the
policy of the Administration. He "economic sense." This attack is necessarily add somewhat to the struction in favor of low-cost and
also urged the enactment of the
based principally upon the claim inflationary pressures in the econ¬ rental housing, and the authority
Taft - Ellender - Wagner Housing
that a plan to check rising prices omy. In view of the urgent na* to establish price ceilings could be],
Bill. The portion of his testimony
tional need for housing,; these in¬ used to hold down the cost o£
relating to these matters follows: is in contradiction with a program
In the past week, I have noted to stimulate the construction of flationary risks had to be accepted some building materials.
the

President

cient

already

Volume 168

THE

Number 4722

COMMERCIAL

&

FINANCIAL CHRONICLE

37

(533)

Indications of Current Business Activity
The following statistical tabulations coyer production and other figures - for the latest week or month
shown in first column are either for the week or month ended on that date, or, in cases of quotations, are
Latest

American iron

Month

Week

Week

Ago

of that date)

Aug

8

94.2

Aug

8

1,697,900

93.1

94.9

ALUMINUM

1,678,100

1,672,600

1,660,700

■XX

(in

short

55,450

5,083,650

5,447,800
5.591,000

5,444,450
5,633,000

5,493,900
5,674,000

5,202,000

17,879,000
2,166,000
6,625,000

17,524,000

17,938,000

2,207,000
7,382,000

2,350,000
7,200,000

5,777,000

8,825,000

9,008,000

8,858,000

8,737,000

output

(bbls.)

Gas oil and distillate fuel oil
output (bbls.)
Residual fuel oil output (bbls.)
Btocks at refineries, at bulk terminals, in transit and in pipe lines—

Finished

unfinished

and

gasoline

(bbls.)

1

Kerosine

I

Gas oil and distillate fuel oil (bbls.)
Residual fuel oil (bbls.) at

V

(bbls.)

July 24
July 24

at

at

20,382,000

19,773,000

54,756,000

53,385,000

104,178,000
18,436,000
45,166,000

64,556,000

63,170,000

58,812,000

100,641,000

July 24
July 24
July 24
July 24

at

100,701,000

AMERICAN

ASSOCIATION

OF

AMERICAN

GAS

Total gas

1,903,000

,

sales

Mixed gas sales

85,955,000

CIVIL

52,414,000

AMERICAN
of

ENGINEERING

Total

July 24

882,566

892,527

888,582

919,928

July 24

ENGINEERING

CONSTRUCTION,

U.

S.

685,161

654,015

708,067

694,509

X-'

p

July 29

$143,213,000

$160,923,000

OUTPUT

Bituminous

(U.

coal

S.

and

BUREAU

lignite

Pennsylvania anthracite
Beehive coke

69,784,000

62,050,000

73,429,000

48,377,000

63,277,000

13,673,000

10,152,000

21,803,000

12,130.000

12,220,000

12,800,000

11,798,000

output

(tons)

—July 24

;

1,191,000

1,070,000

1,116,000

1,117,000

*79,200

144,300

SALES

INDEX—FEDERAL

RESERVE

oil output

137,000

BRON

139,800

stock

July 24

231

236

263

and

industrial)—dun

5,352,439

5,342,127

5,165,825

4,805,740

Cruds

103

91

69

of

July 27

3.77117c

3.24473c

3.24473c

$43.72

$42.96

$40.51

York)

(New

Lead

(St.

Louis)

(East St.

$43.16

$41.33

$40.66

$40.83

—

For Month

at

87,432

U. S.

BOND

A.

IRON

Govt.

21.200c

21.200c

21.200c

113,389

116,678

73,065

72,791

82,542

21.600c

21.425c

21.550c

21.425c

103.000c

103.000c

80.000c

103.000c

19.50fc».

17.500c

LL5Q0C

19.300c

17.300c

17.300c

COM¬

OF

DEPT.

CASTINGS

,

992,692

tons)—.:—

(short

1,051,083

1,097,307

555,728

—-—

.584,969

633,013

436,964

466,114

15.000c

12.000c

12.006c

producers' own use (short tons)——

Unfilled

for

orders

sale

at

end

464,294

month

of

I—

(short tons)

1

2,601,626

2,690,893

2,782,706

'

14.800c

July 28

10.500c

f
„

For

15.000c

July 28

July 28

j.

'-J'-V.

.,

stocks at end of period (tons-

21.225c

.July 28
July 28

...

OUTPUT

MINES)—

OF

(BUREAU

-

Month of May:

AVERAGES:

Bonds

100.71

Aug. 3

100.78

100.88

Mine

103.70

U.

recoverable

of

px-oduction

the

;

Aaa

111.81

112.37

112.75

117.20

116.41

116.61

117.00

121.88

Gold

(in

Lead

(in short tons)

Aug. 3

:

A

114.46

115.24

115.43

120.22

111.25

111.62

112.19

Aug. 3

105.86

106.21

106.74

110.15

Aug. 3

Group

74,891

*74,045

75,072

153,638

*154,856

161,353

116.80

'

Baa

in

Copper (in short tons)

Aug. 3

Aa.

metals

S.

Aug. 3
Aug. 3

Average corporate

Railroad

103,474

111,927

(tons of 2,000 lbs.)__

(short tons)

sale

For

July 28

DAILY

82,334

104,524

customers—

to

Shipments

at^c

PRICES

*91,819

105,221

(tons of 2,000 lbs.)

S.

METAL

MOODY'S

668,461.

of June:

2,000 lbs.)

GRAY

QUOTATIONS)* '

at

Louis)

471,100

*801,900

$36.38

July 27

Electrolytic copper— ,*..7""'
Domestic refinery at
Export refinery at
Straits tin (New York) at
Lead

5,352,900

*577,319

3.16613c

July 27

-

v.-

Zinc

5,824,000

*5,721,600

855,635

(net tons)

(tons of 2,000 lbs.)

In U.

PRICES:

M, j.

*3,238,919

540,980

(net tons)

MERCE—Month of May:

A

7,800,000

5,592,763

stocks at end of month

Deliveries

98

July 29

<E.

172,944,000

8,068,000

6,133,743

(bbls.).

(net tons)

Beehive coke

brad-

&

inc.

PRICES

182,950,000

13,452,000

50,000

Copper production in U. S. A.—

Finished steel (per th )
2-,,:..-—-^.
Pig iron (per gross ton).—
Bcrap steel (per gross ton)

HETAL

5,625,000

213

July 31

(in 000 kwh.)—

COMPOSITE

5,048,000

and export

(net tons)——:

Oven coke

Refined copper

AGE

8,703,000^

4,519,000

(bbls.)

9,757,000

SYS-

AVERAGE==LOO

(commercial

street,

;

1

10,342,000

28,000

28,000

(BUREAU OF MINES)—Month of June:

Refined

•

156,024,000

11,676,000

10,293,000

imports

COPPER INSTITUTE

failures

(bbls.)_

(bbls.)

imports

Production

EDISON ELECTRIC INSTITUTE:
Electric output

(bbls.)

(bbls.)

products

Increase—all

COKE

(tons)

July 24

STORE

TEM—1935-39

p

i

166,416,000

164,509,000

gal¬

42

8,778,000

July 24

of

34,618,000

MINES):

OF

(bbls.

Indicated consumption—domestic

66,216,000

July 29

crude

Oven coke

{

176,213,000

INSTITUTE—Month

184,006,000

25,840,000

74,643,000
86,280,000
64,477,000

(tons)

DEPARTMENT

v-

98,115

xX XXXXxX-xX^Xx X-yX'&Xf

-

production

gasoline output

oil

Refined

$100,834,000

52,226,000

i.

.

Federal

COAL

$114,276,000

-July 29

—

State and municipal

-

j

165,179

84,176

12,044,000

therms)-

(M

each)

Natural

Crude

-July 29
July 29

.

i

'

domestic

Domestic

NEWS-

construction

Private construction
Public construction—

'

182,003

170,574,000

—

(M therms)

PETROLEUM

May:

RECORDS:

"

1,847,537

167,263

(M therms)—'

16,962,000
45,047,000

Benzol

>

2,110,831

2,204,179

For Month

—

therms)

(M

Manufactured gas sales

lons

freight loaded (number of cars)
t,
Revenue freight rec'd from connections (number of cars)

<

2,470,358

70,271

ASSOCIATION

Natural gas sales

RAILROADS:

Revenue

;

Not avaU.

2,007,558

May

of June:

Total

;

51,118

9,258

2,245,092

of

16,166,000

Kerosine

July 24
July 24

oil

output—daily average (bbls. of 42 gallons each)
stills—dally average (bbls.)
Gasoline output (bbls.)

•,

53,277

13,868

182,646,000

tons)—Month

:0,
July 24
July 24

Crude

;

Ago

Production of primary aluminum in the U. S.

Crude runs to

,

Yea*

Month

(BUREAU OF MINES—

Stocks of aluminum—short tons (end of May)

AMERICAN PETROLEUM INSTITUTE:

Previous

Month

Ago

90.3

:

Latest

Year

7

and steel institute:

Indicated steel operations (percent of capacity)—
Equivalent to— XXX:'X
jXx-rX ■ ':\XV
Steel ingots and castings produced (net tons)

v

r«

Previous

available (dates
as

107.98

108.16

108.70

112.56

Silver
Zinc

|

Public Utilities Group

Aug. 3

112.19

112.56

113.31

118.60

j

Industrials

Aug. 3

115.63

116.22

116.41

fine

ounces)

fine

(in

33,652

*35,512

32,772

3,269,401

*3,403,464

3,037,920

51,422

*53,042

57,902

431,033

338,531

312,406

225,461

117,572

111,789

91,620

1,055

1,281

1,628

8,550

8,246

8,922

33,868

ounces)

38,269

37,400

89,035

90,054-

120.63

Group

U. S. Govt. Bonds

Aug. 3

2.45

2.45

2.44

—Aug. 3

3.04

3.02

w

2.7S

Aug. 3

2:83

2.82

2.80

2.5i

—

2.93

Public

Utilities

.

NATIONAL
ity

-

Number of passenger cars—
Number of motor trucks

■■3

Fats

by

index

—

3.38

,3.35

3. If

3.28

3.27

3.24

3.0:

3.05

3.03

2.99

r

—

2.84

2.83

Aug. 3

431.9

432.1

434.7

419.1

244.3

245.8

242.2

223.9

235.0

286.5

195.1

Aluminum

Copper (thousands of pounds)-

Number

July 31
July 31

225.1

—July 31
July 31

276.1

;

—

u~

:
.

.

—.

.

Livestock---!----—--

i

Textiles—

commodities.

_

—j
———-—_

Fertilizer

and

drugs

materials:

a—

:

—

———

Fertilizers--———W-:

—

—

machinery——
—
All-groups combined—*——

275.5

INC.—Month of June—

307,12*

349.6

344.4

254.0

250.£

276.7

180.3

Lead die

285.9

31
31

233.8

232.9

172.7

172.5

176.9*

199.7

200.3

214.3

-

81;286

1,260

(thousands of pounds).

181.8

167.4

166.0

158.4

228.3

228.4

216.)

156.6

156.6

157.1

149 .f

138.6

136.5

136.6

127.9

Production

Shipments from mills (bbls.)

144.0

144.0

143.8

36,772

1,219

966

July. 31

140.2

140;2

127.)

228.0

226.0

226.8,

Month of May:

135.(

143.1

206.7

Stocks

(at end of month)

(bbls.)

159,210

138,409

160,314

163,539

157,641

187,408

176,856

91

84

97

99

360,981

372,739

336,183

458,672

.

13,389,000
15,328,060

17,880,000

19,388,000

'

175,182

July 24

ffi'tProduction:^*tons)*• * ••
■24,■
I i Percentage of activity——————July 24

161041,000
19,047,000

16,077,000

—

1

17,740,000
19,544,000

(bbls.)

—

j. •.
—

628

-39,070

PORTLAND CEMENT (BUREAU OF MINES)—

National paperboard association:
(tons)—.

673
•

220.7

231.4

231.9

—

622

35,469

31

—-—,

1

(thousands of pounds)

167.7

31>

COM¬

(thousands of pounds)

Zinc

292.4

OF

(DEPT.

Magnesium (thousands of pounds)

250.7

31

July 31

1

CASTINGS

MERCE)— Shipments, Month of May:,

Capacity used—.

Orders received

400,372

*

INCORPORATIONS—DUN

BRADSTREET,

258.5

317.8

233.9

—___July 3i

—.—i———

—

273.3

313.0

—July 31

———

Farm
i

BUSINESS

—

July 31
.July 31

—

—

'Building materials..™—4—;
Chemicals

July
—.July
.July
July
—July

:—

Fuels————

Metals-.

coaches

motor

of

NON-FERROUS

/

230.0

products——
Cotton

Miscellaneous

4

2.62

—

—

—

Farm

!

if'

.

ASSOCMTIONr-WHOLESALE < COMMOD-.

oils...

'

4.'

2.72

2.87

—.—

groups—1935-39=100:

—

and

—

3.40

Group,—

FERTILIZER

index

Foods—

'—

Aug. 3

—

Group.

commodity

June:

2.81

NEW

moody's

of

Total number of vehicles

2.64

3.05

FROM

MANU¬

ASSOC.)—Month

Aug. 3
Aug. 3

*

Group

Industrials

2.88

3.08

SALES

(AUTOMOBILE

S.

U.

IN

FACTURERS'

.Aug. 3

Baa——....

-

1—

2.89

3.10

Aug. 3

Railroad

PLANTS

2.25

3.07

—

corporate

FACTORY

VEHICLE

MOTOR

moody's bond yield daily averages:

Average

(in short tons)

...

86%

66%

80%

.

.7

TRUCK TRAILERS (DEPT. OF COMMERCE)—
Month of

r- ' 1

May:

Unfilled orders (tons) at

WHOLESALE
All

PRICES—U.

REPORTER

PRICE

4,580

X

S.

DEPT.

OF

commodities—-——.

146.9

Rides and leather products——.;
Textile products.
L.

—-

U.

16812

168.9

166.7

150.9

_JUly24

194.6

198.1

198.4

*4,736

4,568

$11,657,505

$13,313,997

$11,270,344;

S.

(value in dollars)-

STATUTORY

GOVT.

183.0

167.3

189.5

189.1

188.6

173.9

148.1

148.0

149.1

138.9

190.4

_July 24
'

..July 24
.July 24

191.2

TION

As

—

at any

one

and allied products
Housefurnishkigs goods
■!-7 Miscellaneous commodities—

135.8

134.0

108.9

Total

160.9

160.9

158.8

143.9

$275,000,000

197.9

.197.4

174.8

132.9

134.5

135.5

Raw

145.9

145.0

131.3

119.2

119.4

121.2

116.4

■*■■■.

groups—

Total

'Revised, figure.

186.4

185.2

154.7

153.9

145.3

.163.1
162.3

163.4

••.160.5

162.4

143.7

150.6

150.4

133.7

.

v'.y

...

-

7^y:




^

7.

July 24
July 24

and foods

XX'

'

.

166.0

154.5

July 24

All commodities other than farm
products
All commodities other than farm
products

—

252,236,480

258,286,383

73,460

74,596

89,530

$252,365,707

obligations not

owned by

$252,311,077

$258,375,903

the

T

gross

anteed

.

,184.6

July 24 /. j

—July 24
;

$275,000,000

252,292,246

public debt

gross

Treasury

public

debt

and

guar¬

obligations

debt obli¬

gations not subject to debt limitation—

materials

Semi-manufactured articles
Manufactured products

$275,000,000

117.9

145.9

v-r ■:

Deduct—Other outstanding public

Special

*

be outstanding

that may

time

Guaranteed

198.0

.July 24

.

136.5

.July 24

Chemicals

■X

LIMITA¬

(000's omitted):

May 31

Outstanding—

.July 24
.July 24

-

.

of

amount

Total face

.July 24

-

DEBT

182.9

.July 24
—

*4,116

4,052

Shipments

141.S

-July 24.
i_—

—

;

145.6

LABOR—1926=100:

j

;;i Fuel and lighting materials
•■X, Metal and metal products—-—:
&X Building: materials
i

145.3

3,753

Production

INDEX—1926-36

July 30

£i;-vFarnt products————————
, 'YPOodS
Vfi

—July 24

—

.

oil, paint and DRUG
ij.r.f
average=100

(number of units)

Shipments (number of untis)

it

:r

<»S

no

b&u

Grand

•

;'•••> 5

,..i

total

824,135

828,043

884,487

$251,541,571

$251,483,033

$257,491,416

$23,458,428

$23,516,966

•

outstanding—

145.0

•a-!:'; Balance face amount.of obligations issu»
able under above authority..
^Revised figure.

•:

■

•'

'

$17,508,583

38

(534)

THE

COMMERCIAL

&

FINANCIALr CHRONICLE

not

Sproul Gives Views
?./

(Continued from page 8)

it has been

* ■

on

Credit Curbs

applied haltingly and

worse

situation later, and that that
something is monetary and credi.

with time lags which to

action to break the vicious circle

of

me

distressing.^ Perhaps

have

.

banks

which

I Federal

members of the

are

Reserve

System, if it is to

one set be capable of having its maximum

figures will illustrate its effec¬
tiveness, taken together with thd
voluntary efforts of the commer?

of wages and prices, you will have
to contemplate action far more
drastic than I apprehend is con¬

i

cial bankers of the country.

exitcc

banks

be fair to the

it is to

11

ana

which are members of the

bystem. I also believe this whole

Pre-

power to deal with reserve
re¬
templated by -the proposed;, legis¬ .l'iminary .-figures for June 30, 19481 quirements should be lodged in
of total demand deposits adjusted
lation which is before you.
tne
Feaeral Open Market Com-'
The
and currency outside banks, which
purpose of that legislation, as I
miitee, which already has re¬
understand it, is to help restrict is the current money supply, show sponsibility ior open market op¬
a total of $108,560
million, which erations in government securities,
further credit expansion.
If you
is a reduction of approximately
want to work through credit meas¬
rather than in the Board of Gov¬
$5 billion since Dec. 81, 1947 and ernors. I realize that
ures to meet existing problems in
this would
an
increase of only $127 million
the old-fashioned way, however,
make passage of the legislation a
or
a
fraction of one per cent
you will really want to aim at
little more complicated, but so does
In
other
credit contraction. The steps in since June 30, 1947.
tne
proposal Lo extend; the au¬
words,
the
rise
in
the
gen-i
the process are restriction of the
thority of ihe System to non^
era! price level has oecurreu in
money
member
banks.
supply,- rise
in
interest

the face of a substantial decrease

rates, contraction of employment
and production, contraction of in¬
And

come.

h

cultiej
true"

.we

method

$250

of

have

of

to

the

the

added

government

a

diffi-

compu¬
of

debt

billion, which is

uous

of

process

'

which

includes

the

supply during the
past six months and practically
no increase during the past
.year.
I should like to step up our ex¬
isting policy in terms of timing
and aggressiveness, out f do not
think that granting the
System
authority further to increase re¬
serve requirements will add much

this "tried arid
ending a boom,

of. using

now

tation

add

to

in

in contin¬
refunding, and

money

Probably,^ 'this

reflects my lack of any enthusiasm
the proposed legislation in tne
terms and circumstances in which

ror

,

is

brought before you, and my
concern whether the public
will
it

understand

that

this

standby

thority would be merely
tion to

our

an

present modest

au¬

addic¬

policy,!

and would not represent a cnange

into

rushing to get out of currency
things, as people do when

there is

real run-away

a

inflation;

and those who risk creating such
fears about

our currency, no mat¬
ter how devious the
approach, are

performing

a

real disservice.

J I might add to this general
gument
l

a

specific

more

eduction in

reserve

one.

made late in the

ar¬

The

requirements

of the Federal Reserve banks
war

as

a

was

neces¬

adjustment to fundamental
changes which had taken place
were
taking place in our
banking system. The reserve re¬
sary

and still

quirement

1948

Thursday, August'

lowered in

was

flationary conditions, and to some
extent we have had the means of
doing so.
has

So long as the Treasury

surplus in its cash revenues,
and so long as it uses these sur¬
a

pluses to retire government secu¬
rities held by the Federal Reserve
banks, it is effectively offsetting

the

iri

commer-

tj

the effect of gold' imports on

position

reserve

of the

That is what we have

cial banks.

j.|

ports and, while the inflow Of gold
is not lixely to be so large this
year as last, we should continue to
keep our #scuLhbbse; in order^so

j|

provide the monetary authori¬
ties with sufficient excess reserves

j i|

if

order

to

!

"sterilize" gold im-

been doing to

to,prevent gold imparts - ,
from adding to inflationary pres-' j j
to
meet
any
!^'
f ' !.V«V
emergency which surest \\:
i|
might develop. : I can see no .in:finally, there -is 'the,, general M
ptitutional or conventional reason argument about tightening up the 1
ior restoring the reserve
require¬ brakes on pur monetary machine. - !
ment to what it was before, the
It has a reassuring sound but it
•
war, so long as we cannot happily*
•may be a dangerous adjustment.
^
make a similar adjustment in the
Historically, the chief reason-'for ; • ;|
public debt and in the assets and the suspension of the Bank Act m
liabilities of the banking system.
England was the high fixed gold
j|
The action taken in 1945 was not
reserve requirement of the British
solely an emergency action, but if
currency system, and in our own
it
it had been the
emergency it was country we established the Fed¬
designed to meet is still with us. eral Reserve System, because we
enable

us

toward a much mof^'dfhfetic policy"Little time need be spent on
So long as
found that when the brakes were' ?''
in terms of rising
inte|;|st'Htes and the. second argument
give our support
that, increas-. jammed on by a rigid gold-re- '
abandonment of dU^^present sup¬
; |
to the government security mar-,
ing the reserve requirements of
quirement
we
usually
had j; a
port of the government ' secbority'
the. Reserve Banks would steriket, the initiative will remain with
money panic.
market.
'
J
the
commercial
banks
and
the
#
{Should have to use• our powers,
llzf*j-.the; ■ current.. -gold. n inflow. < :v Theoretically reserve require- ; |
market through the banks, as to
i yhl&rfls really just another way, of
.'With or without
this
ments* for federal Reserve Banks
proposed
[
Federal Reserve Gold Reserves
whether they will make use of
saying that, .the federal Reserve
added authority to increase re¬
are
unnecessary,; but^'■ I am not
more
reserve
credit or not.
To
Regarding the proposal to in¬ bunks, nQw.: have too much excess
serve
requirements of member,
arguing that >they are not re-4;«
be sure, to the extent that the crease the gold reserves required .reserve,- and it follows by defini¬
ami
;
banks, without regard to interest
tion that .any increase in the rerates and the-government security authority is used, the ratio of ex* against notes and deposits; lathe,
as a broad guide to policy and to
j
pansion of member bank credit Federal Reserve bank^JVIf. ISproul :«erv.e requirement will reduce the
market.
*
necessary changes^ifr odr banftdn^7 C;| 1
amount of those excess reserves.
based on a given volume of re¬ remarked:
Our action would have to be dras¬
system which may require review - j I
serve bank credit will be reduced
: Such a
proposal might, of course,: .This is not sterilization, however,
tic enough to lower the money
by the Congress. Granting that • {|
somewhat, and the possibility of arise out of the fundamentalist Since nothing is done about mem¬ Reserve Banks should be
subjeqt
income of a large section of the its use will introduce another fac¬
!|
thinking of those who believe that ber bank reserves, and it is at that to reserve
requirements, however,
[
consuming public. To accomplish tor of uncertainty and doubt into
level, that the problem currently
any
-"strengthening of the- gold!
this
they should always be permitted
by
over-all monetary or the situation. But these gains may base" is a desirable
|
check, pn, in¬ arises. When gold is imported into to have a
wide margin of excess v]!
credit action would probably mean
well be at the expense of an ex¬ flationary developments. I am
not this country (and is not placed
reserves. To be of real-service iri ^:!
a
serious decline in production
tended period of further unset-, going to enter into that area of under earmark for some foreign
lime of-need Reserve Banks
and employment. In view of our
mupt
tlement in the government secur¬ religious belief and
||
religious dis¬ owner), it is sold to the United
be prepared to face the situation
domestic needs and our interna*
. \
ity market, involving our support putation. In the'area of economics States Treasury at $35 per fine
tional commitments, 1 still cannotas/they find it,, to-maintain broad
and a consequent increase of the
and public ipolrqy I can discern,: ounce, and the dollar proceeds are
contacts*
with
the
commercial
believe'!that is the right policy;
|-credit base,. and at the.^expense.. rather
dimly,iithree arguments paid over to the seller from the
(4) What we are left with then
of public confidence in* the Fed- which might be made for this pro¬ Treasury's account in the Federal banking system, ;and to extend ac¬
is the question as to whether our eral Reserve System Or in the
The spending of commodation on any sound asset.
posal, none of- which, however,- Reserve bank.
It is essential that the public have
present modest policy of credit sincere desire of the government has anything to do with the im¬ the proceeds puts new reserves, as
well as deposits, into the commer¬ confidence in its ability to obtain
restraint needs to be supplemented
to do something about inflation, mediate inflationary problem.
now
cial banks, and enables the banks money when needed. While the
by enactment of legislation Giving the Federal Reserve SysFirst, there is the argument that,
should be in a
to expand their loans and invest¬ Reserve Banks
authorizing a reimposition of con- tern additional power to increase the reserve
requirements of the
ments by several times the amount position to impose restrictions and
sumer
credit
controls; and the reserve requirements isn't going Federal Reserve banks were low¬
restraints on monetary and credit
grant of additional authority to to bring down the price of meat ered
of the reserves created for them
during the war to meet an
the .Federal Reserve
expansion, they
should not be
System to or the cost of housing.
emergency situation, and should
by the gold inflow.
This is the
compelled to refuse demands, by
increase reserve requirements of
(7) My only basis for supporting be returned to their former level level at which
gold imports need automatic and inflexible mechan¬
member banks.
this proposal to grant additional now that the war is over. Second,
to be sterilized under present in¬ ical brakes on their powers.
(5) With respect to the first authority to increase reserve re- there is the
argument that some¬
proposal, I repeat my advocacy quirements would be a long range
how, some way, increasing the re¬
of restoration of consumer credit
serve requirements of the Federal
desire to reduce the leverage fac,contr<4s on apstalment credit, al- tor in our
present system of pro- Reserve banks would sterilize the
though it must be realized that portionate reserves. There may current gold inflow. Third, there
,;after a period of no control, dur- weR be reasons, taking the long is the sort of catch-all argument

a,

large

demand

.

its

to

liability, and we have a govern¬
security market sensitive to
every wind that blows.
In order
to be sure of getting results, we

we

ment

effectiveness.

continue

j|

to

,

j

-

V-ifiS

'M

<

Mutual Trust Funds—Mew

:

,mg; which

our control^organizafl^S(necessarily disintegrated,

tlie

be

vieWj for

problem of enforcement will
difficult

a

one.

country, and
Qf the limits within which those

Nevertheless,

requirements

0i

can
Reserve

Federal

S<J c?e? y ® in"*
so gen-

i

jeated and the restraints

be varied by the
System.

i

am

inclined to believe that this could
h

'

vte?

quirements of the Federal Reserve
banks, would put desirable re¬
straints on the central bankers,
give earlier public warning of

an increase in the rerequirements of the com-

meciai banks of the

!-eVe this is the kind of a
selective credit control the terms

m

that

serve

m-offressivp
progressive

a

sten
step

in

our

erally applied as to make its ad- ! be a Pr°Sresslve steP
monetary-banking
organization,
possible, and I be¬
especially if there should con¬
lieve that, in terms of restraining
tinue to be a persistent and sub-'
further inflationary developments,
stantial inflow of gold. With a
ats application is desirable.
modern
central
banking system
(6) With respect to the second
operating in a highly developed
proposal, I am not so clear. My
deposit banking system, and with
personal preference would be to
i
decreasing reliance upon gold,
continue with the policy we have
much'tfThe need"for low reserve
been ti'ymg to follow under our
requirements
and
consequent!
.present powers, andv in coopera¬
economizing in the provision of!
tion with the; Treasury. - That polmoney by commercial banks has*
; icy has involved a continuous
ef-:; disaDoeared
In
theqp
rirpTim-fort not only to absorb reserve

.

ministration

funds ^ that
the

become

!

available

to

banks; but

also to keep the
banks
under
some
pressure
in
maintaining their existing reserves
by reducing, whenever possible,
i the System's holdings of govern¬
ment securities.

That process has

involved the

bility

and, at times, destructive?
contractability of a money supply!
based

on

low

reserve

ratios

of;

?

great an element of leverage

funds to redeem maturing se- J
Icurities held by the Federal Re-?°"r
rury

serve '

term

banks,

permitting short- '
This
interest rates to rise, increas¬

ing : Federal ^fteservi Bank^idi^
I count rate" and, "in general", Vmain;

*

taining a degree ofxloubt and:uncertainty in the money market,
which places restraint on the desire of banks to extend commit¬
ments

Into

and

them.;

measure

of

borrowers

That., policy

to

enter

P^ent system to be left
disposal of 14,000 banks.
is
really

provement,

emergency

a
long-term
however,
not

im¬

an

device, and something

appropriate to the studies of
monetary commission than to

more
a

this brief session of the Congress.

(8) If you do decide to adopt
this proposal, I think that, by all

it should be made applicpf success, ^even: thbngh%,able to all ;bapnk<£arid imt" just; to
.




has, had

critical conditions in

means,

/Medium of Investment

reserve re*;

banking
system, and bring the whole sub¬
ject before Congress for review.
our

(Continued from page 16)
for

the
first
argument, aside
pointing out the. futility of a
different reserve requirement for
notes and deposits, in a country
with a highly developed-, deposit
banking system in which notes
and deposits are completely inter¬
changeable, I can do no better than
to quote from a speech made by

Senator Taft at the time the pres¬
ent; reduced reserve requirement
for

Federal

Reserve

banks

sufficient

one

our

country.

gold

reserve

such

25%. If there
rush

tremendous

40%

swamp

would

just

as

swampy ,25% 4

de¬

the

were any
it would

much

it

as

I do not

see

the

necessity for a 40% reserve.
But I do see great danger involved
in constantly agitating as to what
the

reserve

good
gave

Our

should be."

advice

when

That

Senator

was

Taft

it, and it is good advice now.
people are not afraid of the

dollar; they are gravely concerned
about rising prices, but they are
r

.

•

*4* .-..rtJV.&f;

!

advantages

of

this

investment management,

and

established

"A"

Trust

its

Fund as early as

1932.

My experience with our Trust "A"

which

Fund,

operated on the

is

basic investment principles

same

fication and research. The
involves not only the original in.-

vestigation. iutp

.a

particular in¬

dustry i and.company, but also the
subsequent continuous examina¬
tion of all pertinent data.
And
equally important is the so-called

"timing" factor, which, in effect,
as the mutual investment or com¬
means the proper time to buy1;—
mon trust funds, is that customers
and to sell.
Relatively few per¬
find
an
additional
attraction
sons ..are. in a position to provide
through'participation" in
that
similar services to themselves, as
Fund. It provides them with a
it all adds up to a full-time .job.
personal contact with the man¬
agement of their funds and, of
Diversification of Investments
,

course,

each account participates

in

Fund

the

trust

Most investors undoubtedly feel
usually through • a that the word "diversification"
The latter -ar¬ has been
over-emphasized in con¬
is attractive to many nection with all kivestment

agreement.

rangement
as

it

excludes that portion of their

estate

from

probate and the

re-^

lated costs.

for the currency of

I think 25% as a
is adequate. I cannot

the

of

was

conceive that gold would be
manded
in
anything; like
amount of

and

type

On

from

adopted by the Congress in 1945.
stances there may well be a bal-- He said when the bill was before
the Senate in April of that year
ance
of advantage m higher re-i
"I cannot understand why a. 25%
serve requirements, as a means off
reducing the dangerous expansi-! gold reserve requirement is not a

of surplus Treasj

use

increase in the

an

prob¬

lems.

Perhaps it has, but it should
remembered
by
everyone,

be

especially those with modest 'injfunds, that it is an im¬
portant factor whenever any in¬
vestment is contemplated. Seldorh
vesthient

Investment
The

Objectives

objectives of all investment
are as follows:

management

(1)

Conservation

of

(2)

Provision

an

for

principal.
adequate

income.

(3)

Preservation of purchasing

power.

can

an

can

there

is

some

variation

accom¬

be done through a mutual
trust

or

fund.

Intelligent
and proper diversification will re¬

common

duce the risk of loss of both prin¬

cipal

While

individual investor

plish by personal investment what

must

and income and, therefore,
be given consideration; ' by
person with an investment

in policy among investment com¬

every

panies banks and trust companies
as
to the best way to accomplish

problem.

these

investment

managers
seem

to

of
be

objectives,

investment

all

/I-jiX
No

funds

pretty well agreed
upon two things—namely, diversiZHI?) W
' •' '''

to

Management Costs
mention has been

this

volved

point
in

a

about

made

up

cost

in¬

the

mutual-type

IB

invest-

m

THE COMMERCIAL

;

ment fund.

Naturally there must

stitutions, accomplish a dual- pur>
pose through establishment of a
as there is bona fide trust arrangement. They
considerable expense in the con¬
acquire hot only a sounds invest¬
stant supervision which is
pro¬ ment
program j
but further,in
vided the funds under their man¬
part, theirest&te plahs. ;-::
/
v-soime

compensation

to

the

"Snanagers of capital,

agement.

panies

The

,

have

entrance

investment

what

and

tees

are

sometimes,
with

the

most

In

the

Reaction

other

hand, it is en¬
couraging to those of'us who ate
engaged in the investment field
to see the large number of

people
realize that

either case,

the who1 are 'coming to
moderate, and they,
as
individuals,
are
illnominal, - compared equipped to cope with investment

services

the

rendered.

cost

"tools"

same

to

com-"

On

acquiring

are

as

professional

In

of

available

would

managers

be prohibitive to the individual
investor—and usually, impractical.

problems under our present com¬
plex economy. Day by day more
investors
are
beginning to ap¬
preciate the benefits to be gained

through

the

the

of

use

mutual

be attributed to the outstand¬

can

ing/ Mucational ^cairnpaigns which
investment companies, banks and
trust companies have been pro¬
moting to apprise the general
public on this very subject. It is
hoped that these same groups will
continue
their
splendid
work
along this line.
|
^

'Acknowledging this heartening
trend and in reply to the opening
statement made in the first para¬

graph, I should
a

like to

person never can

that

say

have too much

vestment,-is continuing to gain
"greater acceptance by the owners
^oi capital,
Investment funds are

{Continued from page 15)
try scarce materials, food, cloth¬ there
ing, steel, lumber, farm machinery tion

plant construc¬
more plant expansion —
jobs and more production,
more

—

more

production lower

In response to the will of the
people, aroused by the blackest
year in work stoppages and loss
of production—the year

of 1946—

your

Republican Congress passed

over

President Truman's indefen¬

sible

.

cilities.

comparable

There is still

a

fa¬

tendency

the part of the average owner
or those who recently

on

of capital,
"

have.acquired
to

that

feel

they,

surplus funds,
they alone and only
some

capable of handling the

are

investment of these, funds.

^especially true of
been

very

field

men

This is

who

have

successful in their

own

of

endeavor.
It might be
point to quote an
excerpt from Mr. Arthur Stone
Dewing in his well-known book,
"The Financial Policy of Corpora¬

;

£ well
«

this

at

tions." published

by The Ronald
Press Company, New York
City.

'

J?

.

.

The school teacher,

.

Cler¬

ment

39.

of

of

out

cents

earned dollar for open and

taxes.

every

hidden

succeed .without

cialized training.
men
one

stanch
of

tne

long

that it is doing the job demanded

by the people and intended by the
Congress. Official reports of the
Bureau of Labor

has

the

needs, to stabilize the currency and

to

the cost of living.

reduce

The

Congress has given the
authority to control
exports.
He has not used that
weapon
to full advantage.
This
has resulted
in a higher living
President full

cost

Department ibf, Labor show that
since the Act went into effect on

mo.st

controls—controls—and

is

of the people.

production
when

.

b .Furthermore,

cialist in

more

.Another
among
seems

—

re¬

this

person

than

one

.common

is

a

and
rare

spe¬

field.

tendency

investors, which, however,
to
be
decreasing, -is the

concentration of funds in one; type
of security or one industry1 It is
not unusual to find a person who
insists _upon placing all, of his or
her funds in first mortgages on
real

in land contracts,
or
in public utility or, railroad
stocks and; bonds,
people come
irito the Trust Company daily in¬
estate,

attitude.

He has

omy

Attitude

has

defeatist

a

lost faith

free enterprise sy stern

in the

and in the

produce and distribute-their goods.
It was only after the 80th Con¬
gress boldly broke the shackles

in

a

Defeatist

President

same

day
\; age of. specialization, it is a
instance where

A
The

ability of the American people to

quiring perhaps the most exten¬
sive and far-reaching specialized
'-knowledge of any profession or
business."

or

.

fastened
New
we

the

upon

Dealers

the people by the
Washington that

than

76,000 government, orders,
rules, regulations and directives,
that were choking industry, and
stifling initiative. The nation had
directive
indigestion. Thousands
of

these

have

orders

been

directives

and

repealed.

Across

the

nation the

.

that

is

unrestricted,
of

segments

cooperate,

pointed

econ¬

should

at

this

try? have

be
very

coun¬

the
if not the largest, wheat
oats crops in the history of
produced

of

one

largest,
and

this nation. We also have
the

finest

prospects

one

for

of

corn..

These big crops are what furnish
us

meat and other food.
And

will

the falling

prices of grain

be reflected ein the

ing markets in meat,
dairy products.
Fellow

Americans I

enumerated

a

few

of

consum¬

bread

and

have
the

only
major

bills passed by the 80th Congress
that have

as

States.

Europe it¬
self, so that, France, for instance,
will receive some part of its aid
from the ECA directly, as it is
receiving in the first two quar-

the

will

receive

indirectly. The

aid

indirectly, I

illustrate

can

a

continues

to

notorious fact that he has vetoed

the American ,133 bills since he has been Presi¬
people did the greatest dollar vol¬ dent of the United States.
year,,

of business, and produced
highest national income in all

ume

the

the nation's history.

,

United

or U.K.
steel, if there were
for export, would- have to be
paid for.

any

Therefore, the European coun¬
tries are' buying their -steel here
instead of buying it in Europe.

a

supplementary al¬ We would not want that said. The
grant-in-aid to Bel¬ very reason for being willing to
gium. That would be conditional furnish aid
indirectly
in
this
upon Belgium granting equivalent fashion is to make sure that it is
aid to France.
Therefore, ECA not easier for the French, for in¬
will make a grant-in-aid to Bel¬
stance, to buy. their steel here in-'
gium, as that grant-in-aid is used stead of Belgium, or that it is
by Belgium, the Belgium Gov¬ not easier to procure any com¬
or

ernment will

establish a drawing modities in the Western Hemi¬
equivalent value in sphere if they aire available or
currency,
and that ac¬ could be produced inEurope.

of

account

Belgian

will

count

French

be

Government
abled

available

Government.
to

use

French

will thereby
this

the

to

The

be

indirect

t

j

en¬

assistance to finance its deficit in

with

trade

other

Belgium

with any
creditor
who

European

Those three points, I think, are
essence of the whole
opera¬

the

It

is

similar

very

these Europeans, at

superior

to

the

Take

or

enters into this proposal.

tion.

Stockholders of McCall

ECA

what

to

least, believe

shore

so-called

off¬

94% of Stock-

Issue Oversubscribed
McCall
common

Corp.'s

offering

stockholders

additional shares of

of

common

to

its-

87,167
stock

at

$26 per share was subscribed
for to the extent of 81,941 shares

Europe. It

procurement in
for

means,

using

indirect

*

assistance

of
to

by

instead
of
giving
the
for instance, dollars for
off-shore procurement, is that it

drastically put an end to dol¬
trading within Europe, be¬
it means that the way in
which
a
European
debtor
fi¬
nances, at least a part of its debit
balance with a European creditor
—the way in which, say, France
finances part of its debit balance
with Belgium—is not by a settle¬
ment in dollars, and it is not by
paying dollars for Belgium's es¬

the several

With

France,
French,

underwriters.

Brush, Slocumb Co.

(Special

to

The

Financial

Chronicle)

SAN

FRANCISCO, CALIF. —
T. Wallace, formerly with
Witter & Co., is now asso¬

John

lar

Dean

cause

ciated with Brush, Slocumb & Co.,

sential exports to France. Instead,
it

that it will be financed

means

indirect

assistance, and.
therefore, no direct dollar trade is
going to be necessary.
our

There

are

many

details

more

of this that I could elaborate. One

trade

within

in

described

Europe,

the

that

way

it, will of

quired to make

a

is,

that

I

course

a

as¬

have

be

re¬

1

Montgomery Street.

Morton Seidel Adds
(Snecial

to

The

Financial

Chronicle)

LOS ANGELES, CALIF.—Mor¬
ton Seidel &

Company, 458 South
Spring Street, have added Hiram

H. Stolurow to their staff.

With C. E. Abbett & Co.
tSnecial

to

The

Financial

Chronicle)

LOS

othy

ANGELES, CALIF.—Dor¬
A. Stubblebine has joined

the staff of C. E. Abbett &
pany,

its

character will have
favorable consideration and

emergency
our

-

direct assistance,

that this

so

is, I think, correctly described
simply

an

indirect

way

of

as

fur¬

nishing assistance to the countries
that

debtors

are

in

current

ac¬

counting, v
One last remark I would like to
make

in

purpose

explanation of this. The
of it

can

be described, as

of' unity rests With the

people.

It

will

election

of

Thomas E.

come

American
with

the

Dewey to

the/Presidency and the return of
a

Republican Congress in Novem¬

ber.
This will clear the way for the
solution

of pressing problems —
foreign and domestic—and
redound to. the well'being 6f all

both

America.

Com¬

3277 Wilshire Boulevard.

Coburn, Middlebrook Adds
(Special

to

T,he

Financial

Chronicle)

HARTFORD, CONN.-—James A.
Lennon is with Coburn and Mid¬

dlebrook, 37 Lewis Street,

local currency

In conclusion, as Acting Ma¬
jority Leader of the United States counterpart deposit against its
Senate, I want to assure you — direct aid, just as it does against

■billion; from- Federal income ta^es; Any legislation found to be of An

year;.

it could

give steel free,
a grant-in-aid from the
States, whereas Belgian
we

Y

—

71% of that reduction is going to
persons receiving under $5,000 a

that

for

sistance

last

said

steel

as

run

ments of Our economy.

And

state of affairs where

be

follows:

France

;

a

commodity that is in short
supply, we did not want to have

me¬

country which needs indirect

7,400,000 low wage earners will be sent to the White House
'Wrbyj the Smaller cuKmer? of Capital?
who in most'cases, is"the average haVe been
where I hope the legislation will
dropped from the' tax
investor in the United States. The rolls; married couples are per¬ be shown like consideration.
'
advantages of this medium of ih- mitted/to divide their inepmesfbf
May I make this final appeal.
vqBtment^ as^pointed out aboye, tax purposes and thereby obtain¬ This is no time for strife or for
are withoupequal in the
history of ing lower rates; special relief is political bickering. This is a time
:
investment either in this country going to persons over 65 years of when we need
unity of purpose.
or. abroad.
And those individuals age and to the blind. This means It is a time when
we must have
who obtain these benefits,
take-home
through more
pay
for
the full cooperation v of all. branches
^common trust ftmds; Operated by workers. It means a
replenishing of the governments
many of our bands and trust in¬ of the wells of investment so that
The means to remedy this lack




such

chanism by which it will receive

ground-sw,ell of relief
We could have done more, a lot
was
reflected in industry—agri¬
more, if we had had the coopera¬
culture— mining, and all seg-, tion, of
President Truman. It is a
/

it is to buy steel in the United
In the case, notably, of

ters, and^some part' of its aid: it through

»

been., -a. .greater < acceptance of
mutual or common trtast fund

sure

of the creditors within

helped to increase our
production,* and production is the point that I will mention is that
only sure cure for high prices.
a debtor
country, a debtor in its

that even though
cut
President Truman's one and all
spendthrift budget by more than President Truman has called the
$6 billion and we rejecliedv
extraordinary session of Congress
entirely in only one type of secur¬ posals by him that would have as a political maneuver, this Con¬
added $20 billion more. This cer¬
gress is ready and willing to pass
ity or7 industry. Even after the
disadvantages of this method OX tainly would have fed the fires of costructive legislation at any time,
inflation.
for the welfare and benefit of the
investment is explained to them,
The Republican
some
of
the potential investors
Congress has American people.
I want you all to know that
are adamant in their stand.
reduced taxes. We have cut $4.8
a
not

Europe; the

furnishing of that assistance in¬
directly by way of the currency

by

services -and .make the statement
that their funds must be invested

has

of

can

it

that

out

our

moment the farmers of this

in

began to get production. When
war ended there ' were more

all

quiring-^ boot investment Or trust' ^,We

It is unfortunate-that there

countries

One of the great advantages

As evidence of the accomplish¬
ment of what can be done with

controls, and regimentation

spe¬

| nesses — that of investment

that it is just as easy for the
French to buy steel in Belgium

Prospects for Deflation

only solution the President

offers
more

beginning, but again

debtor

or
approximately 94%. The subinstance, in terms of scription warrants, which expired
Aug. 3, entitled the stockholders
the example I have just quoted,
that instead of giving the French to purchase one additional share
effective,
wages
have
reached
Government dollars to spend in for each six shares held of record
their highest peak under this Act
Belgium, the dollars go directly July 20, The offering was under ~
and there has been more constant
to the Belgian Government upon written by an investment banking
production of gdods~-we so urcondition of the Belgian's provi¬ group headed by White, Weld &
gently need in order to
bring
Co. The 5,226 shares which were
sion
of
Belgian
currency
te
(down Drices
not subscribed/for have been sold
France.
P

at home.

The

and

to embark cn
intricate busi-

Statistics in the

Aug. 22^ 1947, there has been a
Congress substantial
reduction
in
work
done about it?
The Congress has
stoppages.
Compared
with
the
given the President the power he number before the Act became
what

Yet these

-

ready

Labor-

•

Now,

lawyer, dry goods mer¬
chant,
and
shoe
manufacturer
know enough about their respect¬
ive businesses to feel assured that
the ordinary uninitiated could not

so-called

Management Relations Act. Ex¬
perience under that act proves

gyman,

.

the

veto

-

did at the

.

be

can

-

| this wealth with

I

in these terms. We want to make

conditional

type common trust funds likewise
The American housewife knows
h a v e: ^.experienced
substantial' that her dollar today js not worth
growth in those states where per¬ as much as it was in
1939, and it
mitted. The latter is a
.significant doesn't-go nearly so far.
.
r
development.
For
many
It is the history of every coun¬
years
corporate trustees
have] managed try. that has imposed' price con¬
ffa large proportion of the wealth trols that production dropped,
of the country and
.it is a welf- prices increased, black markets
i recognized
social > • development took
over, and the value of money
that the wealth of capital of our went down.
'
country is becoming less and less
The American housewife knows
/concentrated; hence the need to that she can no longer support a
^provide the present owners of government that
requires the pay¬
•

that the

ECA is to-render to each of the

lotment

grawjng, not only In v dollars vol-; and thousands of other items. more
upaer fout ateo;;in' Jhe humhdr of These huge
exports cause high and with
participants while the newer- prices at home.
prices..

r

(Continued from page 16)

assistance

of/ the

part

If

in¬

common

ECAEoropean Payments Plan

deficit in its trade with Belgium,
the ECA will grant a so-called

Current Trends in Investment

or

The

of the best.

Today there is evidence that the
theory of mutual

39

(535)

and ^arc

fund

trust

orv common

CHRONICLE

turning to theite investmeht ihanj*
ager$
tcr/< handle
their surplus
funds; Part of. this recognition

very

-

pases

the

trust

regular trustees'
funds under their

the

on

management.

■

i and

Public

as

fees,

charge

charges
*

known

management

fiWJule fthe -banks
panies

is

com¬

FINANCIAL

&

SURE

-

SAFE

PROFITABLE

-

40

(536)

THE

COMMERCIAL

&

FINANCIAL

SecuritiesaNow «in
•

Air

Commuting,

Inc., White Plains, N. Y.
(letter of notification) 1,060 shares of capital
(no par value), of which 600 shares will be sold
publicly at $100 per share.
Underwriter
Burnham &
Co;
Proceeds—To be used to engage in limited helicop¬
ter operation over routes which the
company is presently
June

INDICATES

Proceeds

17

to selling stockholders.
$25 per share.

17 at

stock

Borderminster

—

Registration

SINCE

ADDITIONS

PREVIOUS

ISSUE

Expected about Aug.

Exploration

Co.

•

Ottawa,

Ltd.,

certificated to fly or in limited
helicopter commercial

dian funds.'

Columbia

Proceeds—For exploration of properties.

No underwriter.

of.

Air Power

o

Brentlawn

Publishing Co., Inc., Tenafly, N. J.
(letter of notification) 66,004 shares of common
stock (par $1).
Price—$1 per share. No underwriting.
TO provide
working capital and general corporate ipur*

Association, Inc.,
Shelbyville, Ky.
July 28 (letter of notification) 9,600 shares of

common

stock. To be offered to stockholders in the old

St. Mat¬

poses.;".:-

thews

Aug. 2

American Fidelity Fire Insurance Co., New York
(letter of notification) 20,000 shares 80c non-

preferred stock (par $5).
Price—$14 per
Stockholders of record July 15 wfll be given the
right to .subscribe to the stock. Rights expire Sept. 9,
1948/
•

Anco Electric Corp.
(Del.), Wilmington, Del.
July 29 (letter of notification) 150,000 shares of Common
stock (par $1) ana 150,000 shares of
preferred stock
(par $10). Price of preferred, par. The common shares

Corp. of New Jersey in
No underwriting.
General corpo¬

ital and general

Maine

Power

1947

and

corporate funds.

Arkansas Power & Light Co. (8/24)
July 23 filed $7,500,000 first mortgage bonds, due 1978.
Underwriters—Names will be determined by competitive
bididng.
Probable bidders include: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; The First Boston Corp.; White,
Weld & Co.; Glore, Forgan & Co. and Harriman
Ripley
& Co. (jointly).
Proceeds
To reimburse treasury for

new common

for each

common

expenditures, to

defray the

instruction and for other corporate
.

cost

of

30

(letter of

cumulative

notification)

convertible

2,000 shares of class A
and

preferred
common

shares

stock,

stock.

of

Under¬
Dec.

Continental

8,

Central

4%%

and

•

To be sold at $44

share held.

Refining Co.

Chieftain

and

chase

common

one

of Allied into

Proceeds—Proceeds from sale of company's
are to be added to
general funds and made avail¬
able for further expansion of its interests.

•

Badger Exploration Co.,

share of

stock.

common

Citizens

class B

stock.
Price—$50 per share.
No underwriter.
For working capital and to acquire
properties.
common

General corpo¬

Del.

common

stock.

unit.
eral

share of class B at $13.25 per

Underwriter—Emory S. Warren & Co.

For gen¬

business.

Clinten

April 15

.

one

To be offered in units of one

Works, Philadelphia, Pa. (8/17)

July 23 filed 36,210 shares ($5 par) common stock. Un¬
derwriters—Stroud & Co. and Coffin, Betz & Sullivan.




'

Corp.

Limited,

:

•

Toronto,

Ontario,

Can*

July 7 filed 675,000 shares ($1 par) common ,stock and

writer—None is planned.

Price—135,000 units

to be

are

offered, consisting of five common shares and a stock
purchase warrant for three shares, for $7.50 per unit.
Proceeds—To de-water mine, cross-cut to the ore zone,
and for
•

repayment of temporary loans.

Family

Finance,

Inc.,

'

Long Beach/ Calif.

<

I

July 29 (letter of notification) 13,409 shares 6% cumula¬
tive preferred stock (par $10). Price—Par. No under¬
writer. For general expansion of business.
»
Fireman's

Fund

Insurance

Co.,

San

Francisco*

July 23 filed 458,544 shares of common stock ($7.50 par).
Offering—Shareholders of record Aug. 23, will be offered
433,164 shares at $30 per share at rate of four new shares
shares held.
Underwriters—Blyth & Co.,

for each five

Inc., The First Boston Corp., and Dean Witter & Co. will
underwrite 25,380 shares and will purchase all unsub¬
Proceeds—To provide the companies of

scribed shares.

the Fireman's Fund Group with additional capital funds.

(Mich.)

Machine Co.

First Guardian Securities Corp., New York

(letter of notification)

10,000 shares of stock
to be sold at $5% each (market price), for selling stockholder. Underwriter—Charles E. Bailey, & Co., Detroit.

June 4 filed 36,000

preferred stock
common

Corp., Newark, N. J.

for

July 26 (letter of notification) 290,000 shares of common
stock.
Price—$1 per share. Underwriter—Charles W.
Warshoff & Co., Newark, N. J.

To meet obligations.

Colonial Western

Underwriters Co., Inc.,
Shreveport, La.
}
r
July 12 (letter of notification) 24,170 shares of Class A
common stock
($1 par). Price—$10. Underwriter—MidSouth Securities Co., Nashville, Tenn.
To purchase the
:-

Belmont Iron

pur¬

unit consisting of

Credit Corp., Wilmington,

Cobalt Mines

July 26 (letter of notification) 2,000 shares of ($100
par)

per

and iy2 warrants.

Inc., Santa Fe

405,000 common stock purchase warrants to be offered
shareholders at the rate of one for each 25 held.
Under¬

Underwriter—Dunne & Co., New York.

share of class A and

(8/317)

Inc., Denver, Colo.

Price—$2.75

Eagle Oil & Refining Co.,
Springs, Calif.

Eureka

;

July 23 (letter of notification) 4,000 shares ($12.50 par)
class A common stock and 4,000 shares (25 cents par)

stock

- ■

30,000 warrants entitling the holder to

rate purposes.

Ashland.

.

Corp., Highland Park, Mich.

derwriter,

Under¬

Shares will be sold at par by directors.

Products^ lnc;r Brooklyn, N*w/Y^

stock

for the account of two individuals. The
latter are stock¬
holders of Allied Oil Co., Inc., and-the stock to be
offered
for their account is a
part of the shares they are to

loans.

o

Co., Inc., Cayuga, N. Y.

July 30 (letter of notification) 20,000 shares of common
stock. Price—At over-the-counter market price. No un¬

July 2 (letter of notification) 50,000 shares Of common

100,000 shares

Associated Telephone Co., Ltd.

•

_

14 filed 400,000 shares of $1.20 cumulative con¬
vertible preferred stock.
Underwriter—A. G. Becker &
Co. Inc.
Proceeds—Of the total, 300,000 shares are to
l>e sold for the account of the
company and

July 27 filed 85,000 shares 5% preferred stock (par $20),
of which 75,000 shares will be offered
publicly at $21.25
per share and 10,000 will be offered for
subscription by
employees under a purchase plan at $20.25 per share.
Underwriters—Mitchum, Tully & Co.; Paine, Webber]
Jackson & Curtis, and the Stone & Webster
Securities
Corp.
Proceeds—Plant expansion and to retire bank

Power

rolling mill, equipment and for
working capital.
:
Challenger Airlines Co., Salt Lake City, Utah
March 1 filed 600,000 shares ($1 par) common stock, of
which 400,000 are being sold for the company and 200,000 for the account of Claude Neon, Inc. Underwriting
—None.
Price—$2 a share. Proceeds—For equipment
purchase and general funds.

July

merger

•<

(letter of notification) 300,000 ;shares ($1 par)
common
stock.
Price, par.
Underwriter—Charles E.
Bailey & Co., Detroit.
To establish shops, pay debts
and increase working capital.
;)

Proceeds—To purchase

lative convertible preferred stock
($50 par). To be sold
at $44 each for Frederick Machlin, Executive^ Vice-President and Secretary of the
company.
Underwriter-^
2V Eberstadt & Co., Inc., New York.

with the

Cowles

Dunk Donut

filed

writing—None.

Armstrong Rubber Co., West Haven, Conn.
July 8 (letter of notification) 1,000 shares of 4%% cumu¬

connection

21

Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common.

,

in

(8/10-13)

Aug. 2 (letter of notification) 500 snares oi capital stock'
(par $5).
Price—$35 per share.
Underwriter—Blair F.
Claybaugh Co., Syracuse, N. Y.
Additional working
capital.

stock issue is not necessary.

respectively. This stock is being sold by
James A. Walsh, President of the
Companyr Underwriter
—F. Eberstadt &
Co., Inc., New York.

receive

Corp.

19 filed

applied toward the payment of $3,500,000 bank notes,

& Light Co.
40,000 shares ($100 par) cumulative preferred. Underwriters—Lehmatn Brothers; Glore, Forgan
& Co.; Dewar, Robertson & Pancoast negotiated a pur¬
chase contract in April, 1948, but the SEC on July 27,
1948, concluded that financing by the proposed preferred
Nov.

$11.75,

Ashland Oil &

Motors

300,000 shares ($1 par) common scock.
Underwriter—Van Alstyne Noel Corp.
Proceeds—To be

July

July 8

new

($50 par)

facilities.

by amendment.
Proceeds—For construction and
repyament of bank loans.

purposes. Expected

1,000

Proceeds—For

and plant

Price

Armstrong Rubber Co., West Haven, Conn.

June

.

patrons and members. Price—At face
acquisition of additional office

stockholders and

—

construction

(|

non-dividend common stock ($25
par); $6,000,000 of 3y2% five-year and 4V2% 10-year
cumulative certificates of indebtedness; and $2,000,000 of
1%% demand and 21/2% 6 months cumulative loan cer¬
tificates.
No underwriting.
Offering—Offered only to

only one bid, that of Blyth & Co., Inc. and

tenth share of

i

Assoc., Kansas City,

•

Kidder, Peabody & Co. was submitted and was rejected
by the company.
They bid $13.75, less $1.75 under¬
writing commission. Now expected on negotiated basis
through Blyth & Co., Inc. and Kidder, Peabody & Co.
Offering—To be offered to 6% preferred and common
stockholders for subscription on the basis of one-half
share of new common for each preferred share and one-

,

Corp., Chicago,

Oct. 16 filed $3,000,000

Co.

Nov. 10 filed 160,000 shares ($10 par) common.
writing—Company called for competitive bids

Arizona Airways, Inc., Phoenix, Ariz.
July 30 (letter of notification) 48,000 shares ($2.50 par)
common.
Price—$5 per share. No underwrtier. For

perfect certain tool inventories.

Consumers Cooperative
Missouri■
/i. *; i ' /-v'V

(8/17)

amount.

•

v

Co.

15 filed

Central

rate purposes.

,

Service

Lehman Brothers and Lazard Freres & Co. (jointly); A.
G. Becker & Co.
Expected about Aug. 17.

"toill be issued to Anco Electric

property and equipment.

Public

owned

^Expand fire insurance business. No underwriting.

exchange for assets.

Illinois

574,087 shares ($10 par) common stock,
by Halsey, Stuart & Co. Inc.
Underwriters—
Names to be determined by competitive biddihg.
Prob¬
able bidders: Glore, Forgan & Co.; Blyth & Co., Inc.; The
First Boston Corp., and Central Republic Co. (jointly);
July

To

Discount

(letter of notification)

July 16

Trotting

Central

J

III.
5,970 shares $3.50 prior
preferred stock, ($50 par) and 11,940 shares of Class A
common stock.
To be sold in units of one share of pre¬
ferred and two shares of Class A common for $50.25 per
unit.
Underwriter—Julien Collins & Co.
Working cap¬
Commercial

convertible
share.

Seattle, Wash.

Inc.,

Racing

Horse Association at $2.50 per share.
Harry N. Faxstein, Secretary-Treasurer, will purchase
the unsubscribed shares.
No underwriting.
To increase
working capital.

July 2

Industries,

i

stock

500,000 common shares ($1 par). Under¬
writer—Mark Daniels & Co. Price—40c per share Cana¬

work.'Vj?/>,'W^
•

particularly;

July 27 (letter of notification) 300 shares of preferred
(par $100) and 120,000 shares of common stock
(par 10). To be offered in units of 1 share of preferred
stock and 400 shares of common stock at par value there¬

filed

2

interest in other corporations,
companies.

controlling

life insurance

Canada

June

Thursday, August 5, 1948

CHRONICLE

t

t

stock.

conversion

Price—$25

a

City,

shares of 5% cumulative convertible

($25 par) and 172,000 shares

($1 par)

(72,000 shares of common to be reserved
of

the

preferred.)

Underwriter—None.

share for the preferred and $10 for the

com¬

mon.

Fission

Mines Ltd., Toronto, Canada

April 16 filed 200,000 shares of treasury stock.
writer—Mark Daniels & Co., Toronto.

Price—$1

Proceeds—For mining and business costs.

>

.

1

Under¬
a

share.
•

•

Volume 168

$10,000,000 borrowed by Indiana Service Corp. and as¬
sumed by the company under a me^^^^
for treasury
funds.f Expected about Sept/14; /

NEW ISSUE CALENDAR
August 10,
Ry

Chesapeake
11:30

Equip. Trust Ctfs.
Common

(CDT)_____

States Power

10:30 a.m.

__

Co.

(Minn.)

Preferred

(CDT)

St. Louis-San Francisco Ry.
Neon (EDT)

1

.Equip. Trust Ctfs.

August 11, 1948
Pennsylvania, Commonwealth of
August

16,

Official Films, Inc

August

Bonds

1948
Pref. and Common

17, 1948
Ltd

Pacific Associates, Inc., San Francisco,

/

Calif.

June 29

(leter of notification) 8,000 shares 6% cumula¬
tive prior preferred stk. ($25
par); 16,000 shares ($1 par)
common

Asbestos

Quebec

Continental Motors Corp.
Northern

International

1948

& Ohio

a.m.

41

(537)

Number 4722

-

Ltd.,

Co.,

Sherbrooke,

stock, and 16,000 shares of common to. be issued
exercise of warrants held by owners of the prior
preference stock. All stock to be sold at par valuer
upon

v'•

-

Jan, 30 filed 1,500,000 shares ($1 par) common stock.
Underwriter—Paul E. Frechette, Hartford, Conn., is the '
U. S. authorized agent and principal underwriter. Price
—$1 each.
Proceeds—To construct milling plant and

purchase equipment.

Proceeds to pay off a bank loan, make advances to a
wholly-owned susbidiary, Klamath Machine & Locomo¬
tive Works, Inc., and for additional working capital.
Hannaford & Talbot, San Francisco, will be selling

agents.

Keller &

Co., Inc., Boston, Mass.
May 28 (letter of notification) 9,300 shares of cumula¬
tive participating preferred stock and $200,000 of 20year 5V2% debentures, due 1968.
Underwriter—General
Stock & Bond Corp. Proceeds—For working capital and
other corporate purposes.

,/

Powder River Oil

Co., Denver, Colo.

May 11 (letter of notification)
common

stock.

400,000 shares (100 par}

Price—25 cents.

Hughes and Co., Denver.
Powers Oil &

Underwriter

*

R. I*

—

For working capital.

Drilling, Inc., Casper, Wyo.

Belmont

;

Preferred
Common

Works

Iron

Central Illinois Public Service Co.

Common

Detroit

Common

Edison

Wisconsin

Co

Public Service

August
Seaboard Air Line
Noon

Bonds

Co

18,

—Equip. Trust Ctfs.
Bonds

August 24, 1948
Arkansas Power & Light Co.—
Bonds
Chesapeake & Ohio Ry
—Equip. Trust Ctfs.
August 25, 1948,
Chicago Rock Island & Pacific RR.
11:30 a.m. (CDT)
Equip. Trust Ctfs.

September 14, 1948
Michigan Electric Co

Bonds

September 21, 1948
Pacific Telephone & Telegraph Co

Debentures

Flotill Products,

June 11 filed 200,000 shares ($100 par) cumulative
pre¬
ferred stock. : Underwriters
Names to be determined

Kingsburg (Calif.) Cotton Oil Co., Kingsburg
July 14 (letter of notification) 20,000 shares ($1 par)
capital stock.
Price—$4.25 per share.
Underwriter—
Fewell & Co., Los Angeles.
Froceeds to selling stock¬

through competitive bidding.
Probable bidders: Morgan
Stanley & Co.; Union Securities Corp. and White, Weld
& Co. (jointly).
Proceeds—For property additions and

holders.

bids

Public Service Electric & Gas Co.

V

—

Southern California. Edison Co

Indiana &

July 14 (letter of notification) 800,000 shares (250 par)
common stock.
Price—25 cents per share.
Underwriter
—John G. Perry & Co.
For drilling operations. //;<;

•

1948

RR.

(EDT)

Kentucky Oil & Distributing Corp., Monticello,
Kentucky
July 30 (letter of notification) 299,900 shares (100) capi¬
tal
stock.
Price—$1
per
share.
Underwriter—Peter
Morgan & Co.
For development work and working
capital.

Associated Telephone Co.,

Manufacturing

Rochester,

Co.,

Mich.

and

June 15

(letter of notification) 7,000 shares of common
stock (par $1).
Price—$5.50 per share.
Underwriter—

C.

G.

McDonald

&

Bids—Company, Aug, 4, received two

on the proposed issue of
200,000 shares of preferred
stock, but rejected both. On July 7, last, the same issue
was put up for
sale, but when the hour came for under*
writers to. submit their bids the management declined
to accept them. A group headed by the Union Securities
Corp. and White, Weld & Co. on Aug. 4 bid 100.90 for*
stock with a $4.50 dividend, which compared with the
bid of 101.65 for $4.40 dividend stock which this group
was prepared to submit July 7.
Morgan Stanley & Co.

Lincoln (Neb.) Telephone & Telegraph Co.
July 12 (letter of notification) 15,000 shares ($16% par)
common stock.
Offering—Offered stockholders of record
June 30 at the rate of one share for each eight now held.
Rights expire Aug. 4.
Price—$20.
To extend plant
facilities.
No underwriting.
McAleer

Inc., Stockton, Calif.

improvements.

associates

These

bid

100.55 for $4.50 dividend stock, thethe.y were prepared to bid on July 7.
the only bidders at each of the sales.

terms

same

as

were

Co.
#

March 6 filed 385,000 shares of 60 cent convertible pre¬

•

McVicar

ferred stock (par $5) and 325,000 shares of common stock

<par $1).
Underwriter — Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6.
Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
common
shares and company 125,000 preferred shares
and 75*000 common shares.
Company's proceeds will be
used for general corporate purposes. Effective May 5.
«

Football

Club

of

Chicago,

Inc.

(letter of notification) 2,130 shares ($100 par)
common stock.
Price—$100 per share. No underwriter.
For working capital.
July 29

v

Fraser Products
Oct.

Under¬
Campbell, McCarty & Co., and Keane & Co.,

21 filed

writers

—

Co., Detroit, Mich.

100,000 shares ($1 par) common.

Price—$5.25 per share.
Proceeds—The
being sold by 14 stockholders who will re¬
ceive proceeds.
Registration statement effective Jan. 16.
Detroit.

both

shares

Brush Co.,

Hartford, Conn.

as

•

Melrose

Inc., Allentown, Pa.
Aug. 3 (letter of notification) 1,042 shares of -common
stock.
Price—$30 per
share. i.r; Underwriting—None.
-Working capital, plant improvement, etc.

Heidelberg Sports Enterprises, Inc.,
Pittsburgh, Pa.
June 25 filed 2,041 shares of class A common stock and
•5,000 shares of class B common stock (par $100). Price
—Par ($100 per share).
Underwriter—None. Proceeds
—$600,000 to be used for spectator grandstand and bal¬
ance

for related

purposes.

Heyden Chemical Corp., New York, N. Y.
June 29 filed 59,579 shares of cumulative convertible
preferred stock (no par) to be offered common stockSolders in the ratio of one share of preferred for each 20
shares of common stock held.
Price—By amendment.
Underwriter—A. G. Becker & Co. will acquire the un¬
subscribed shares. Proceeds—To'be used in part for im¬
provement and expansion of manufacturing facilities.
'Offering postponed.
Idaho-Montana Pulp & Paper Co., Poison, Mont,
Blay 17 filed 100,000 shares of 4% cumulative preferred
43tock ($100 par) and 500,000 shares ($10 par) common
stock.
Underwriter
Tom G. Taylor & Co., Missoula,
Mont.
Price-^$300 per unit, consisting pi two shares of
inferred and 10 shares of common stock. Proceeds-<-To
♦erect and operate a bleached sulphate pulp mill with a
—

'200-ton per day

Illinois

Decatur, III.
•June 30 filed 690,098 shares of common stock (no par
Value). To provide for conversion of 345,049 shares of
•Outstanding 5% cumulative convertible preferred stock
<par $50) which the company intends to call for redemp¬
tion at $52.50 per share and accrued dividends. Each

preferred share is convertible into two common shares.
"Public offering is contemplated of the common stock not
Issued in conversion. Underwriting and offering price
to be filed by amendment. Probable underwriter: The
First Boston Corp.
Proceeds—To redeem the preferred
stock and for

construction.

Indiana &

,

Michigan Electric Co. (9/14)
July 14 filed $25,000,000 first mortgage bonds, due 1978.
Underwriters—To be? determined t>y competitive bid¬
ding. Probable bidders: Halsey, Stuart & Co. Inc.; The
First Boston Corp.; Lehman Brothers; Dillon, Read & Co.
Inc.; Harriman Ripley & Co. Proceeds—To prepay $6,000,000 of bank notes borrowed for construction and




.X.

,

>

Corp., San Francisco, Calif.

Mills

1

\

.,■■■•

'

■■

Riley Stoker Corp., Worcester, Mass.
June 3 (letter of notification) 7,000 shares ($3 par) com¬
stock.

mon

rahan

June 25

(letter of notification) 3,500 shares of common
stock (par $5). Price—At market.
Proceeds—To selling

•

Underwriter—Edward D. Jones & Co.

Nanscran

(N. J.)

machinery.

Midwest Packaging Materials Co., St. Louis, Mo.

Price—$11% per share.
Co., Worcester, Mass.

&

Royalties

Associates,

Inc.,

Underwriter—Han-

New

Orleans,

La.

July 30 (letter of notification) 18,000 shares ($1 par)
capital stock. Price—$10 per share. No underwriter. To
purchase or acquire lands.

Mining Co., Seattle, Wash.

July 30 (letter of notification) 31,000 shares of preferred
stock and

310,000 shares of non-assessable common stock,
in units of one share of preferred and 10
for $1. No underwriting. For explor¬
ation and development work, as well as purchase of
equipment.
to

be

■

^

•

-

sold

shares of

June

29

Battery Co.

($50 par) convertible pre¬
dividend, by amendment. Un¬
derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis. Proceeds—To retire
$3,000,000 of bank loans and general corporate purposes.
Temporarily deferred.

ferred

stock.

National

Price and

Electric

Products

Corp.,

Pittsburgh,

}

,

TV W4

(letter of notification) 8,500 shares
stock, (stated value $8 a share).

common

$33,625.

July 14 filed 65,000 shares

->Vi

•

n

Sangamo Electric Co., Springfield, III.

common

National

Underwriter

—

Paul

H.

Davis

&

■""•v.-

-

■

j

5

*

(no parV
Price

Co., Chicago.

Proceeds will be used to partially reimburse the treas¬
ury for expenditures in connection with a new $1,00Q,000 plant at Marion, 111.
V*

'.A.:-,/

Sanger Bros., Inc., Dallas, Tex.
June 25

(letter of notification) 2,000 shares of common
stock (par $2.50).
Price—At market (about $11.25 per
share). Underwriters—Walker, Austin & Wagener and
Stifel, Nicolaus & Co. Proceeds—To selling stockholder.

Pennsylvania

2,000 shares of -common
$50). Price—$37.50 per share. UnderwriterSinger, Deane & Scribner. Proceeds—To executors of an

June 23

(letter of notification)

stock (par

estate.

Northern States Power Co.
June 3 filed 200,000 shares of

(8/10)

(of Minn.)

cumulative preferred stock

(no par).
Underwriting—Names to be determined by
competitive bidding. Probable bidders: Lehman Brothers.

Bids—Bids for the purchase of the
stock will be received up to 10:30 a.m. (CDT) Aug. 10, at
company's office, 231 So. La Salle Street, Chicago, III.
Smith, Barney & Co.

•

Sears,

Official

Films,

Inc., New York

Roebuck & Co.,

Chicago

July 11 the Savings and Profit Sharing Pension Fund
of Sears, Roebuck and Co. Employes,
Chicago, 111., filed
25,000 memberships to participate in the purchase of
650,000 shares of capital stock.
Total amount of contri¬
butions of all members will not exceed $11,500,000.
■

.

•

•

'

-

i

•

„/

Shoe

•

,

.

V

.

t

'3

■ r ■

Corp. of America, Columbus, O,

June 28 filed 25,000 shares of cumulative preferred stock
(no par), with class A common share purchase warrants

attached and 25,000 shares of

warrants.

capacity.

Power Co.,

.

Raritan

agents, trustees for certificates issued against mortgage
and accompanying bond.
Trustees will issue 5% par¬
ticipation certificates.
Price—$1,000 per unit. To meet
operational losses and payment of bills incurred for new

Proceeds—General funds and to

(letter of notification) 10,000 shares of capital
stock (par $10).
Price—Par. No underwriter. Mainly
for well drilling.

•

& Sons,

•

July 16 (letter of notification) $150,000 mortgage to
Leroy Jones and Albert C. Van Tine as depositaries and

July 30

stockholder.

(L. F.)

as

develop mining property. "

preferred stock.
Price—par. To raise working capital
and retire existing indebtedness.
No underwriting.
Grammes

and

well

each for the warrants.

July 12 (letter of notification) 3,000 shares of ($100 par)

•

July'27 (letter of notification) 12,500 shares of 7% cumu¬
lative preferred stock.
Price—$10 per share. No under¬
writer.
For working capital.

(par 500 Canadian funds)

1,100,000 common share purchase
1,100,000 common shares to be
reserved for issuance upon exercise of warrants. Under¬
writer—Carstairs & Co., Philadelphia.
Price—60 cents
(U. S. funds) and 60 cents (Canadian funds) for not
more than 100,000 shares to be sold in Canada; one cent
warrants,

are

Fuller

stock

common

Quality Seal Oil Co., Saginaw, Mich.

Mining Co., Ltd., Vancouver, B. C.

July 14 filed 400,000 shares

common

stock reserved for

Underwriter—Lee Higginson Corp.

Proceeds

—For general corporate purposes.

(8/16-20)

July 16 (letter of notification) 49,000 shares 350 cumula¬
tive preferred stock (par $5) and 49,000 shares of com¬
mon stock
(par 100). Price—$6 per unit, consisting of
one

share of each.

Working capital and other general

corporate v purposes.
Corp., New York.

Underwriter

—

Aetna

Securities

•

:

Southern California

Edison

Co.

(8/18)

July 28 filed $25,000,000 first mortgage bonds.
writers—Names to

bidding.

be

determined

Under¬

through competitive

Probable bidders: Halsey, Stuart & Co. Inc.;

•

Blyth & Co., Inc.; The First Boston Corp. and Harris,
Old
June 24

North

State

Co.

Insurance

Hall & Co.

filed

100,000 shares of capital stock (par $5).
Price—$15 per share.
Underwriter—First Securities
Corp., Durham, N./C.
Offering—26,667 shares will be

initially offered

on a "when, as and - if issued" basis;
13,333 shares will be purchased by underwriter for pub¬
lic or private offerings;/and the remaining 40,000 shares
will be publicly offered on a "best: efforts basis" on
completion of. the subscription of the first-40,000 shares
and the company's receipt of a license to do business in
North Carolina. Z. Prdceedb^Fcrc i general business pur¬

poses.

'

'

'/

^

.

;

(Inc.), jointly.

tion program.

Proceeds—Finance construc¬

Expected Aug. 18.

Squankum Feed & Supply Co.,
Farmingdale, N. J.

Inc.

May 24 (letter of notification) 1,000 shares $5.50 cumula¬
tive preferred stock (par $100).

Price,

par.

Underwrites;»

(—FidelitySecurities & Investment Co., Inc., Asbuiy;
iPark, N. J.
i-T':

I

Working capital. *
i

:

r

(Continued on page W, timW.iniM*

42

(538)
(Continued from page 41)
;

•

."j-.""*."-'

-A^,''it-

-»

'''■' •*<!.*.

Gold

Sudore

{ V':v'-

' ^

Mines

■

*-K"V

•

Price—*•$!

share

par

Proceeds—For

♦\

*

?1'-

•

■■)■■

Underwriter—

Price—60

cents

shares
Daniels

share.

a

(par $1)
&

April 30 filed 10.000 shares of

Toronto,

Co.,

V

-

'.'

Underwriting—None.

(letter of notification)

Zonolite Co., Chicago,

develop¬

Power

Price by amendment.

•.

■

June 2

(letter

stock.

Utilities &

& Co.

To be offered for

Reed,

Inc.,

and Theodore N. Law.

$3,600,000

Cooley

R.

&

Bell

for

to retire

;

sale

of

Aug. 24.

on

equipment

cessful

debts created by plant improvements.

will

in

bidder.

be

certificate

•

bidders:

Pacific Telephone & Telegraph

28

$75,000,000 35-year debentures

the

of

on or

before Sept. 21.'

finance '

Pennsylvania,

Aug. 10 ;

to

Probable bidders: Mor¬

Commonwealth

of

Certifi¬

Inc., Blyth & Co., Inc. and The First
Boston'Corp."

majority

of

the

outstanding voting

21,297 shares will be offered publicly.
record July 6 are given the right to
of

Aug.

10.

Price—$7.50

Proceeds—To increase working

"

West

Virginia

Coa!

Paul, Minn.

by stockholders later this

To

be

of $3,420,000

dated

July 30

&

Common

stock.

rights to subscribe for
100 per share.

&

capital.
St.

Co.

shareholders

one

(100 par)

will

be

Detroit

share.

per

No underwriter.

Trask

Co.

Service

Corp.

(8/17)

Probable

Co.

Edison capital stock.

&

Co.

(jointly);

Blyth

bidders:

and

Salomon

prove an

will be

Halsey, Stuart

Bros.

&

Griesedieck

Western

issue of

new

Harriman

Ripley

&

Co.,

Central

Dealer-Broker

and

Public

Recommendations

208

South

Utility

La

to

the

the

Corp.—

Los

*

Salle

Street,

Angeles

Arkansas

Western

Detailed information
dealers and

Co.—

other financial insti¬

tutions— Comstock
South

Gas

La" Salle

&

Co.,

Street,

4,111.

231

Chicago

the

available

Joy

Manufacturing

Clary

recent

Marshall &

William

—

Hourwich

Street,

authorized

Line

New

and

and

Davison

Co.,

North

capital

from

Corp.—Sum¬

500,000

Inc., 25 Broad Street, New York 4,
N. Y.

Co., 647 South Spring

Probable bid¬

Halsey, Stuart & Co. Inc.;
Harris, Hall & Co (Inc )*
Hutzler; Harriman Riplev & Co. and

Lehman Brothers

(jointly).

Niagara Hudson Power—Discus¬

situation—Kalb, Voorhis &
Co., 25 Broad Street, New York 4,
N. Y. '
"

Bank

on

Company-

Corporation

-

—

31 Milk

du

Company —

231

analysis—Comstock
South

cago 4,

La

Salle

Pont, Homsey Co.

Co..

Philip Carey Manufacturing Co.

Chi¬

—Analysis—William A. Fuller &

&

Street,

Barlow & Seelig Manufacturing
— Circular — McMaster
Hut¬

Co.

chison & Co.,

...

105 South La Salle

Street, Chicago 3, 111.

Co., Inc.—Analysis—

Adams & Co.,

Associates,

Galveston-

Co., Consolidated
Gas
Corp., and Purex Cor¬

poration,

Also

in

the

issue

is

Municipal Bonds

terest

exempt from
Federal income

a

in¬

air present

taxes.

Terminal Tower Co.
Data
Wm. J. Mericka &
Co.,- Union
Commerce Building,
Cleveland 14,
Ohio.
'

—

,

Co.,

209

South

La

Salle

Street,

Chicago 4, II.

Metal

Forming
bulletin

Corporation —
First

—

York 5, N. Y.

Silver Creek Precision Corpora¬
tion

—

Analysis—Heimerdinger &

Tool

Street, Milwaukee 2, Wis.
available

tional Pressure

ysis-—A.

•

Company—Spe¬

53

cial report—Loewi & Co., 225 East

Also

105 West Adam?

Verney Corp.-—Descriptive anal¬
Gt, Woglorm & Coi,

Straus, 50 Broad Street, New York
4, N. Y.

National

Time, Inc.
—Analysis—Amott,
Baker & Co.,
Inc., 150 Broadway;
New York 7, N. Y.
\
*

data

are

Cooker

Na¬

on

Southwest Gas Producing Com¬
pany

Analytical

brochure

—

Scherck, Richter Company, Landreth

Co.

—

Inc.,
Street, Boston 9, Mass:

State

Also

available

analyses

ing and Maine Central

Building, St Louis 2, Mo.
Winters

New

England Electric System—

-

Southwestern

Public

Service

Company-rr-Brief report in current

Co.. 1

issue of

N. Y.

Wall Street^New York. 5,

r ' ^

7

"

'

-

.

Street, Chicago 3, 111.

er,

are
descriptive
United States Finish¬

oil

monthly bulletin—Rausch-

Pierce & Co., Mercantile- Bank

Building, Dallas l,_Texv

•

&

Analysis—C.

Railroa^* p

Crampton
E.

6LBroadway, New
Also available is
Miles Shoes, Inc.

Corp.

Unter'berg

U Co*

York 8,< N. Y
an

"

:

analysis ol
'

;;

.,.

New
Bird & Son, Inc.—Memorandum

—New York

•

.

111.

*

&

Utilities

'

Street, Boston 9, Mass.

Memorandum—A.l ~M.» Kidder. &
R. Hoe

Spinning
Houston

list of Texas

Appliance

-

•

—

New

-

'

,

Salomon Bros.. &

Co., 1 Wall Street, New York 5,

N. Y.

Inc

'.

certificates,

sion of

Parker

Lumber

ders:

,

shares, of

Co.—Circular—

conclusions—Maxwell,

Chemical

amend-

an

which would

Colony
Corporation, 52 Wall Street, New

—Analytical study—G. H. Walker
S:

Bell

Co

on

Street, Los Angeles 14, Calif.

Associated Transport, Inc.—Cir¬
&

approving

on

incorporation

circular

Mason

O'Connell

of

Material

Long
■

of

York 5, N. Y.

cular—Homer

certificate

Current

Multiplier

mary

27

analyses

are

American Co.

-

developments

115

Chicago Corporation and In¬

graph Company—Brief analysis of

Co.,

Co.,

ternational Nickel and leaflets

Associated Telephone and Tele¬

&

&

Broadway, New York 6, N. Y.
Also

■&

B, to be dated Aug.
15, 1948, and due $370,000
Aug. 15,1949-1963, due in one to 15
years.

Chicago, Burlington & Quincy—

available to

Halsey, Stuart

•
St. Louis-San
Francisco Ry. ( 8/10)
Company has, issued invitation for bids
to be operied
Aug., 16 (Noon),, at office, 120
Broadway, N. Y. City, for
the purchase of
$5,550,000 equipment trust

Co., St. Louis.

Also available is data

Analysis—Goodbody

Probable, bidders:

.».■

Stock Earnings.

14,

ments.

Salomon Bros! &
Hutzler.

.

Avenue, Milwaukee 2, Wis.

Chicago 4, 111.

*

*

Expected

.

Milwaukee Co., 207 East Michigan

(Continued from page 8)

.

Certificates will be
dated Sept. 1 and will
mature in 15 equal annual instal¬

Holly Sugar Corp.

3ard memorandum—Brailsford &

Co.,

-

series
•

Hutzler

Inc.

Inc.

»

(8/18)

$4,200,000 equipment trust cer¬
tificates, series D, will be received
up to noon (EDT)i
Aug. 18 at office of Willkie Owen
Farr
Gallagher &
Walton, 15 Broad St., New York.

of investment houses,

group

headed by Edward D. Jones &

change

Street,

Co.,

\

Seaboard Air Line RR.

Bids for the purchase of

convertible preferred stock, which

underwritten by a

Hall

Spring

Fjrobable bidders, if sold competitively, will
include Halsey, Stuart & Co. Inc.
•

Brewery Xe.-

ment

Calif.

&
,

Sept. 1 stockholders will vote

(Inc.);

expansion.

Kidder,

Probable bidders include:

(jointly); Shields & Co.; Kidder, Peabody & Co.; Harris
Co.

Hutzler;

Funds will be used to

for expenditures

already made on
plant and equipment and for
necessary future

account of

Harris, Hall

Corp.; Coffin & Burr, Inc., and Spencer

(jointly); Glore, Forgan & Co. and Central Republic Co.
&

reimburse company

Stockholders will be asked in the nea^Tuture to ap¬

Inc.;: The First Boston Corp.; Blyth & Co., Inc.;
&

&

in ratio of $1C0 of deben¬

year

tures for each four shares held.

equal semi¬

Sept. 15, 1968.

to.' (8/17)

_

Underwriters—Names to be determined by

Goldman, Sachs

Salomon Bros.

Aug. 17.

July 19 filed $5,250,000 first mortgage bonds, series due

6

(jointly);

The First Boston

•

bidding.

20

subscription

B.

July 28 American Light & Traction Co. asked SEC per¬
mission to sell at competitive
bidding 190,000 shares of

given

share for each share held at

less than $3

Wisconsin Public

in

series

•

Expansion and replacement of coal mining facilities at

competitive

mature

ctfs.

(Inc.); Harriman Ripley & Co., Inc. and Lehman

Detroit Edisoii

West Columbia, W. Va.

Aug. 1, 1978.

and to

trust

Peabody & Co. and Dick & Merle-Smith.

Unsubscribed shares will be offered by

company at not

equipment

Probable bidders: Halsey, Stuart & Co. Inc.;

Underwriter—None.

(letter of notification) 36,261 shares

common

1

(CDT) Aug. 25 at

a.m.

annual instalments from March 15, 1949 to

Rights expire

Transportation Co.,

Sept.

11.30

pany

(8/25)

*.

~

:

Light & Coke Co.

July 26 directors authorized

Chicago Rock Island & Pacific RR.

Brothers
•

Peoples Gas

purchase

subscribe in the ratio

share.

per

•

Harris, Hall & Co. (Inc.).

Bids will be received up to

and

stock

Stockholders of

share lor each 10 shares held.

new

one

Probable bidders: Halsey, Stuart

company's office at 1136 La Salle St., Chicago, for the

stock, of which 21,503 shares will be sold to single holder
the

(8/11)

an application
by the com¬
to the Illinois Commerce Commission for
authority
to issue
$16,4QO,000 convertible debentures. If authority
is
obtained, debentures will be offered for

•

June 28 (letter of notification) 42,800 shares of common

of

by

Offering of $47,000,000 2y4% serial bonds, due 1952-1^68
and $87,000,000
3%% term bonds due June 1, 1988, ex¬
pected Aug. 11 by Drexel &
Co., B. J, Van Ingen & Co.,

Md.

Hagerstown,

to

approved

Stanley & Co.; Halsey, Stuart & Co. Inc.

•
on

certificates

equal annual instalments from Sept. 1, 1949 to Sept.

Co. Inc.;

&

Corp.,

j

(9/21)

authority

was

•

Products

Co.
for

company

the

1948, and mature serially

1,

application

California P. U. Commission.
Company, it is ex¬
pected, will call for competitive bids on Sept. 10 to be

Aug. 10.

locomotives costing $3,690,692.

1, 1958, both inclusive.

Stanleyj &

Morgan

(8/10)

trust

Sept.

Probable

issue

offering

on

is inviting bids to be received

dated

Deben¬

Sealed bids wjll be

July

This is in ad¬

submitted

the purchase of

com¬

$60,000,000 45-year debentures

Co., Halsey, Stuart & Co. Inc.

Halsey, Stuart & Co. Inc.; Harris, Hall

equipment

Co.

President, announced

asked with the coupon rate to be determined by the sue*

(Inc.)

$3,600,000

cates

Inc.

Co.,

plans the

Telephone

Hopley,

Ry.' (8/24)

Chesapeake & Ohio Ry.

Proceeds—For general corporate purposes.

Victor

,

(

Northwestern

pany

,

is putting up for award

company

The company

Underwriters—Herrick, Wad-

George

and

Probable underwriter: Central Repub¬

July 30 Russell J.

common

gan

July 29 filed 41,000 shares of 5% cumulative convertible

&

the

to

that the

Specialty Corp., Boston

preferred stock ($10 par).
dell

shares

;

Probable bidders:

Underwriter—R. H. Johnson & Co., New York.

United

22,000

Underwriter—Wm. C. Roney & Co. Price

'Chesapeake■ & Ohio

dition

($1 par)

171,000 shares

Price—56 cents each.

Frances B.:Law, Robert B. Law,

5

III.

notification)

of

equipment trust certificates

Proceeds—For construction.

(letter of notification)

common

pres¬

Co., Chicago.

•

Aug. 3 reported company has plans for sale of $5,500,000

Corp. and W. C. Langley &

U. S. Airlines, Inc., St. Petersburg, Fla.

•

working capital.

No underwriting.

Cik, Wilmington, N. C.

derwriters—Union Securities

It is

and the proceeds from such sale will be used to increase

(par $10).
Proceeds—

Prospective Offerings

Water

stock.

common

tures will be dated Nov. 15, 1948.

July 30 filed 80,000 shares (no par) common stock. Un¬

Co.

share.

per

by amendment.

Working capital.
Tide

stock

common

Price—$10

1,000 shares of class A

preferred stock (par $100). Price, par.

•

•

V

Thermo Electric Fuse Corp., New York

July 28

contemplated the preferred stock will havq, some

ently intended that only the preferred stock will be sold

Mainly for development.

stock (par $1).
•

is

lic

May 24

' .'

It

Expected

stock"

stock ($10 pair).

common

Canada.

Proceeds—For mine

ments.

to 185,000 shares of preferred

($30 par) and 850,000 shares of

privilege of conversion into

Yeakley Oil Co., Alamosa, Colo.

preferred stock.

($10 par)

common

Aug. 17.

Canada

Thursday, August .5; .1948

,$4,600400k

of short-term bank loans and ior construction."

stock ($1 par).

funds.-

mining operations.

April 2 filed 300,000

CHRONICLE

Proceeds^For the- payraeht of

her & Beane.

Canada

Tabor Lake Gold Mines, Ltd., Toronto,
Underwriter—Mark

*

common

American

FINANCIAL

&

White, Weld & Co. (jointly) \ Merrill Lynch, Pierce* Fen-.

V;'

-.

Limited, Toronto,

July 21 filed 500,000 shares of
None.

COMMERCIAL

THE

Hanseatic Corp.,

Broadway, New York 5, N. Y.




120
,

England

Public

Leonard Refineries, Inc.—Circu¬

Co.

lar—George Birkins Company, 40

Ira

Exchange Place, New York 5, N. Y.

New: York 6, N.'YV

J

V».„.

plain

Service

preferreds—Analysis-

Haupt &

111 Broadway
'

,

.

\

in the

same

issUe

are

reports

ore

Mading -Drug stores Co., Federal
Water
Union

&,

'Gas

Corp.,

Southern

Gas ' Cb7 Berkshire; Fide

Wisconsin

Central

Railway

M^mqrai^um^ric^ /McNfeal

&

Cov 165; Broadway, New York 6,
N. Y.

¥dlurne

168

v"ftvrf:+'

Nuttiber '4722 f:

■

lis

view

before

ximmitteea this

Our

Bank

down

orter's

eligibles

an average

have

is

backed

of about % of

short-term Treasuries

off

are

Report

This

v

behavior
market

ment

disturbing

| Ipvristmerit bankers and poten¬

are

to

the

of

govern¬

is

naturally

quite

underwriters

•

who

given to discussing the pos¬

tial corporate. Issuers of ;'new se¬

sibility of decisions Joy corpora-

curities

':ions*

to

;heir

projected

are

have. ..their

among
•

the

attention

groups

who

focused

on

Washington these days.
:

sudden ;

The

of

political anxiety-

=;' and
do

-

demand
something

over

tionr ioi

■

inflation

additional selling, by

to stop1 the for-

money

i

ing.

could

The government securities mar¬

most- sensitive "to-such; pos*
been

imhapihess 'in-:;a

corporations

ment, market yield: is the key to

-

turally k carriedi thri (threat * im *
1 some stiffening; in interest; rates.

has

more

restored.

through! -ac-vj sary funds,; and since the govern¬

tightenhp; pii^redii^ na-^

sitoilities,

until
are

and other holders to obtain neces¬

;

ket,

financing

Meanwhile there is the threat of

r

thai; Congress 3

ward5 rush;r largely

i

-

and

expansion

propitious conditions

*

reflecting

of

the

firm-

are

experiencing

decidedly quiet spell at the mo¬
in

vacations

ment

and

with

sway

are

probably

August
•

17

looms

now

just

as

meantime to dictate

change in

a

plans.
of offerings it seems strange that
all three issuers should

But
that

will

bankers

be

bidding

shares of
Central Illinois Public Service
being

common

Stuart

sold

Co.

&

sales, according to a current study by the National Industrial Con¬
Board, have been maintaining the same ratio to disposable
heretofore.-

The other $7 billion non-instalment half of the consumer credit out-

(Special

Chronicle) f

The

Financial

Chronicle)

;

Vanderbilt

Co.,

DIVIDEND

The

looks

new

an

as

is working

company

plans for

distance

some

-

now

Corporation

Cumulative Preference

$3

of

Board

Stock

of

Directors

The

quarterly dividend of 75tf
per share upon the outstanding $3
Cumulative Preference Stock, pay¬
able October 1, 1948 to the holders
regular

COMPANY

CAN

three-quarters

cent was declared on the

per

Preferred Stock of this
ber
of

record

business

STACY*

the

at

close

September 22, 1948.

1948 ai quarterly dividend of one

July 27,

of

V THOMAS H.

STOCK

Secretary.

July 29.1948
Wilmington, Delaware

Company, payable Octo¬

1, 1948 to Stockholders of record at the close
business

September

will" remain open.

1948. Transfer Books

16,

Checks will be mailed.

.

Secretary.

EDMUND HOFFMAN,

Woo PALL I NPl/sf RlEs| | NC.

on

issue of $60,000,000

debentures which

money

has

It

NOTICES

Hotel

AMERICAN

and

still

borrowed

the

parent

directly

American
&

Radiator
¥}tu>y0rl,

company,

<

Telephone

con¬

struction.

on

PiLUlurfk

CORPORATION
COMMON

A

Standard

Sanitary

PREFERRED

Tele¬

&

graph Co., to finance its

DIVIDEND

DIVIDEND

quarterly dividend of $1.75 per share
the Preferred Stock has been declared
September 1, 1948, to stock¬

payable

time People's Gas

same

15 years.
This operation
scheduled for late fall.
"r<S

•

al$o is

holders

of

record

close

at

business

August 20i. 1948,
A dividend of

twenty-five cents (2S<)

special dividend of ten
share on the Common
Septem¬
ber 24, 194-8, to stockholders of record
at the close of business on September 1,

per

share and

cents

(10c)

a

quarterly dividend of
Con¬

declared

payable September 1,
1948, to stockholders of record
August 13,1948.
A regular

25c?

quarterly dividend of
share on' the Common

per

has

declared

been

payable

August 31,1948, to stockholders of
record August 13, 1948.

.

per

Stock have been declared payable

1948.

the 5%

on

vertible Preferred Stock has been

Stock

^

m. E.

GRIFFIN,

S ecretary'Treasurer,

fi

t-z-rjp&e*

i

of

A regular

31V4^ per share

JOHN E. KING

Cutting the Cloth.

Treasurer

United Air Lines has taken the
bull by the horns so to speak and
trinimed its common stock offer¬

ing to fit

the prevailing

THE FUNTKOTE

market

stages.

the

The

its

the

halve

filed

COMPANY

American gas
AND ELECTRIC COMPANY

the

and

at

^

to be

are

to stockholders

Preferred Stock
Cumulative Preferred Stock of this

of such stock of record

opened first
of

1, 1948. Checks will be mailed.

A

share

the books of the

on

Company at the close of business Septem¬
ber 3, 1948.

Aug. 3 in the ratio of one'new
share for each 10 held.
Any
portion

,i

Dollar Eighteen and ThreeCents ($1.18%) per share for the
ending September 30,1948, on the
4%% cumulative Preferred capital stock of
the Company, issued and outstanding in
the hands of the public, has been declared
out of the surplus net earnings of the Com¬
pany, payable October 1,1948, to holders *

a

as

I One

quarter

fixing

of record

THE regular quarterly dividend of

quarter

share.
Books

Rockefeller Plaza

New York 20. N. Y.

n

August 4, 1948

to

$10.75

30

Preferred Stock Dividend

originally

SEC

price

offering

—,

company

registration

amount

with

be offered

affirmatively undermined in the

to

United Corporation has declared the

Common Stock Dividend

then will

THE quarter quarterlySeptember 30,
dividend for
the, regular ending

to empolyees.

Twenty-five Cents (25c) and
2/100ths of a share of the Common Stock
of Atlantic City Electric Cpmpany on each share of the Common capital stock of this
Company, issued and outstanding in the
hands of the public, has been declared out
of the surplus net earnings of the Company,
to be payable and distributable September
15, 1948, to holders of such stock of
record on the books of the Company at the
close of business August 12, 1948.
1948

South Carolina Issue

or

Financial

The

clearly epitomizing the ignorance and demagoguery
In the event of any remaining
of the current proposals is the hauling forth of the attack on cor¬
porate profits—under the epith.et of "excess"!?). Let us look at the unsold balance the latter will be
reasons
advanced for the proposal.
In his last week's message to underwritten by a banking group.
the Congress, President Truman s^id: "(sic) First, I recommend that
aiLexcess profits tax be re-established in order to provide a Treasury
surplus and provide a brake on inflation!

position* which he disregarded

C.

John

George E. Frazier

Hie United

Likewise

Actually (as his Council of Economic Advisers could have in¬
him) there are many better ways to help the budgetary

and

with

— Patrick
E.
Hughes and Dudley W, Lang, Jr.,
are with
Steiner, Rouse & Co.

DIVIDEND NOTICES

On

in
though
Northwestern Bell Telephone Co.
will shape up as one of the big¬
gest borrowers this falf.3

of

Chronicle)

—

With Steiner, Rouse

of

unsubscribed

formed

The

Carley &
Building.

with

along

Looking Ahead

-v.

amended

"Excess'' Profits Again

to

PREFERRED;

fering

At its very best, Reserve Board restriction of consumer credit
can be as illogical, unjustified,
irrelevant, and harmful as has been
Mr. Eccles' clinging to anachronistic margin requirements which disfcriminatorialJy cut securities off from usability for credit. Mr. Eccles
how is opposing all cf his Chief's current proposals, excepting only
those for bank and consumer credit control, as "piecemeal" measures
of control.
Should he not agree that those two measures which
he favors will work out as "piecemeal" political strategy?

■"3 -

Traction Co.
,

Financial

COLO.

Haven,, has joined the staff of Mc¬

This undertaking is being car¬
ried through three potential of¬

|

|i:

Haven with McCarley Co.

pattern.

should realize, that taking a
1 swipe at instalment credit makes no sense whatever. It can be
effective only in aggravating economic imbalance and generating
depression in key sectors of industry, oi- in promoting inflation,
i
or both.
;
In summary, as all non-politicos

New

(Special

nia Edison first mortgage bonds
and .190,000 shares
of Detroit
Edison Co. common being of¬
fered
by
American
Light
&

At the

starfdirig in charge accounts ahd other forms with their supposed
economic (if not political) importance are to run on untouched.
If
it is sincerely felt that consumer credit is a major cause of trouble
warranting primary legislative attention, then surely it is utterly
absurd to cover only half the field.
Not cnly would the automobile
buyer be discriminated against, but distortions and imbalances would
be vastly increased by such inconsistent coverage.

Avenue,

Halsey,

by

Inc.

r
The
complete inadequacy of the current proposals must be Light & Coke Co., is expected to
recognized in the light of the suggested legislation which touches seek $16,400,000 through sale of an
oply one-half of the consumer credit outstanding, namely, $7.2 billion issue of convertible debentures, to
ofinstalment buying out of $14.1 billion of the consumer credit total. .carry a 3% coupon and mature in

|

University

The

Bosworth, Sullivan
Co., 660 Seventeenth Street.

$25,000,000 of Southern Califor¬

from;

::

1212

Jork City.

chose the

574,087

for

American

ference

&

ASHEVILLE,. N. C.-~Girard E.

day

now

»"

Alfred Valzone Opens

now

Alfred Valzone is engaging In a
securities business from offices at

date.

same

to

^MOBILE,* ALA.

offering Of debt securities. Until

(Continued from page 5)

(Special

DENVER,
Crawford

In view of the veritable dearth

full

well

With Bos worth, Sullivan

lina and certain other States.

the

as

big day of the month with three
issuers slated to go up for bids

43

'

are

Would constitute its first public

as

York, Connec¬
ticut, Massachusetts, South Caro¬

•*

movers,

the future it

Mid-Summer Slack

hew

income

(539)

trust funds in New

development

,

Reserve Board Chairman outlined

;

slow

Though

/

Underwriters
a

a

marked general

mean

;

its

disftnctlyf ^ofter

ton^^fiatticuldrly^

rates such

,

balance

month, thus permitting dealers to
work on. unsold portions, of recent

of

considerable

delay

necessary

outcropping

the

over

unless something happens in the

;

-

thin

a

li point and ineligibles are vir¬
tually; all
at
their
"'pegged"

;prices.

CHRONICLE

FINANCIAL

&

Congressional pleased-i Tfie new issue calendar investments for savings banks and

;

week.J,,:!\;;

point within the week, while

a

n

COMMERCIAL

THE

of

Of $10,000,000 Cifs,

H. D.

quarterly

dividend

of

$1.00

per

has been declared on the $4

Corporation, payable on September
15,

1948

at

stockholders of

to

record

the close of business September

Common Stock
A

quarterly

share

has

dividend
been

of $.50

declared

per

on

the

Common Stock of this corporation,

payable

on

September

10,

1948

to

stockholders of record at the close
of business August 27, 1948. Checks

will be mailed.
CLIFTON W. QREGG,

b

Vice Pres. and Treas.

ANDERSON, Secretary

August 4,1948.

Message; and far fror.\ being deflationary, the excess profits
on
tax .Is grossly inflationary. This is so in the first place because the
resultant draining-off- of capital funds would prevent their invest¬
A syndicate headed by the Na¬
ment-in plant, which, as even-Mr. Tr.uman recently said he realized,
tional City Bank of New York
is necessary to* create
badly-needed anti-inflationary production.
made public offering on Aug. 4 of
Such* a'tax is likewise, inflationary because; as was qleai-ly demon¬
strated during the recent Wartime years, net earnings of 10-40-cent $10,000,000 State of South Caro¬
same

dollars,incite the grossest kind of extravagance in corporate manage¬

lina 2.10% highway certificates of

ment ^extending from - advertising outlay to executives' hotel and

indebtedness

night-club luxuries.

from

And;

as

has been proved time and again in the

practical business world, higher taxes are invariably translated into

prices.

2 2. C-F3

I3::

kthfti;-inflatibp'- quality;

the

introduction

"through

lit' large7 corporations? wouldelo^e

j$4,3M$O0,O0G Jof

completely misleading;

statement about theireal usevof^ corporate capital. V Surely the Truman

at

prices

2.15%,

The

Aug.

of serially

by stating as the measure's primary

to

maturity.
dated

,-;i;;:iikewise, Representative Dingell justified
his enabling bill today (Aug. 4)

1%

on

15,

to

yield

according

certificates

are

They

are

general

credit

or

as

legal

SITUATION WANTED

through expanded bank

(which it also professes to eschew).

profits, in the whole purchasing power field
inconsistent.

Fortcorporate profits

are

is' ridiculously.
running

at

narrqw]

9nly

billion annually, against the nation's $210 billion of personal income,
arid agajtnsi;

$f33" billibn of

wages

;and

salaries^ Bup^rem

$32 bilhohrepresents^the^politicalimpotents!




terly dividends

on

regular quar¬
the Company's
Preference

follows:

as

Company, held today, the following
.dividends
A

were

regular

declared:

quarterly

dividend of

$1.00 per share on the $4 Cumulative
Convertible Prior Preference Stock

payable September 15, 1948 to stock¬
August 26, 1948.
A
regular quarterly dividend: of
$1.75 per share on the 7 % Cumula¬
holders of record

Preference Stock-12^2 cents
per share payable September 1,
1948 to stockholders of record

August 16, 1948.

tive Preferred Stock

payable October

15. 1948 to stockholders
October 1, 1948.

of record

A

HY<Again, dike
pot-shot against consume, Credit which^eonfcentrates on the instalment segment, the. singling * out. q£ corporate
arid

have declared the

Stocks

eligible

GREATEST NAME

IN WOOLENS"

A T the meeting of the Board of
TT Directors of
American Weolen

The> Directors of Hunt Foods

Carolina and, in the opinion of the;
are

'THE

DIVIDEND NOTICE

Common and 5%

;

capital funds,

Foobs, INC*

Obligations of the State of South
underwriters,

..

1948, and mature

fcraih^Trusf knows that anti?inflationar3rvproduction facilities cap]
be provided only out of

HUNT

'

to

Aug. 15 from 1950 to

1960, inclusive.

;

3

Investment Adviser
With

over

stock

and

20

years' experience as senior
analyst with prominent
investment
firm
(jesires
contact
with
Estate, Individual or Investment Trust.
Splendid baqkgroqndbpf accomplishments.
Mature judgment. Excellent personal and.
business references. Cl&Vently affiliated.
Box
F
85,
Commercial
&
Financial
Chronicle, 25 Park Place, New York 8.
bond

•**

Common Stock-25 cents per

share

payable August 31,1948 to
stockholders of record August 16,
1948.
Edward Mittelman

quarterly dividend of $1.50 per
share together with anextra dividend of
$2.00 per share on the Common Stock
payable September 15, 1948 to stock¬
holders of record August 26, 1948.
Transfer books will not

-

-

'

'

Secretary

be closed.

Dividend checks will be mailed by
the

'

Guaranty

Trust

Company

of

New York.

F. S. CONNETT,

Los

Treasurer.

Angeles,California, ,"
August 4, 1948

<

(540)

44

THE

-

FINANCIAL: CHRONICLE

&

COMMERCIAL

'

Thursday, August 5, 1943
far

so

BUSINESS BUZZ

as

historic

Washington...
v:^;A':■£\D
A

Behind-the-Scene Interpretations
from the Nation's Capital

-mm

can

tactics

infiltration.

of

[ months, perhaps, if the Marshall
i Plan works

well

as

as

is hoped

for it, western Europe will have !

'gJ Vi|||

reached

JLM.lt/ll/JLfJlts

;■•*.

learned, the Reds
win by their

they

Some time within the next 12

y^'y^yy,..

yy

be

can

still think

that

stage

the;

where

[ Russians will have to make
I their

minds they

up

cannot dom¬

inate it without fighting. When)
that lime

■

WASHINGTON, D. C.—Long after the smoke of President Tru
private but furious battle with the opposition Congress has
tolown away, the Democratic political generals will hold a critique,
and here is what the informed are betting that they will say: The
calling of the special session was <&
The public has come to think of
the greatest tactical blunder made
the
former
Chairman
of the
by a President who was not noted
Federal Reserve Board as a New
ior consistently brilliant political
Dealer. Mr. Eccles utilized the
generalship.
[' :.
■

crisis.

man's

when

| President

Trurnan's

truly

rostrum

ex¬

of

inflation.

The

is

second

V

-

of

Cpngressional

apart

well.

so

that

admit

He

while

have

7.1. ttntBOMKC

wouldn't

STOCKS .-BONDS

them

figure,

patent

back. Filially, the. Senate
House committees: invest!
space

and

better

po-

in¬

-

-

"

Only

believed

was

part.

those

of

one

be justified in

to

like
for the other

does not

The public

the prices it pays

fellow's
;

dise.

►

Dr.

service

communists
accused of

to

try

Reds,

the

than
the

of

*

mise)

.

public wants.

anti-infla¬

Congress, on the other hand,
^annpt.^It is a commonplace fhat
around election time the gentle¬
men
of Capitol Hill are jittery.
Often
10
un-organized letters
other

an¬

way or

them

cause

can

one

the

to

The south¬

fear

that

conclusion

It

came

decline.

They

would

special

don't

have

the

■the

words

the

of

man

who

was

spurned, member M. S. Eccles of
the

Federal

Reserve

Board,

Truman program was about as

flationary

There
cal

to

are

a

blame

As

deal

y
-

As

-

is-

*

They blame Tru¬

lot of astute politi¬

among the south¬
If their normal impulse to

"regular" were present, they
might help Mr. Truman immeas¬
urably, and embarrass the Repub¬
licans. So the critique will list as
a third factor the joining of politi¬
cal battle when part of the Demo¬
cratic

withdrawn from the battle, or had
gone

(4) While the

battle

of

the

The

battle

is

tacitly

not

been

generally
played in the
news

been. making hay for
the Thurmond-Wright Dixiecrat
/ticket; -Some of;, the* more re-

the

ballots, and it will
It may be that

strained

national

unity on foreign policy almost to
the breaking point. Such men as
Senator
Vandenberg
and
Gov.
Dewey held the rank and file
from going out on a binge of re¬
crimination against the RooseveltTruman Administration "for get¬
ting us into this mess," only by
heroic pleading. The behind-thescenes

battle

has

been

won

in

favor of "bi-partisan foreign pol¬
icy," but this unity might break

in!

a

further crisis.

(2)

the

tactical

in favor of the Administration.




♦

increase in
though per¬
missive, might be just the psy¬
chological .factor
which would
swing a broad turn in the busi¬
ness
cycle. * It is • believed that
one

national

consolidate

a,

such

a

fear has hitherto restrained

Chairman McCabe of the Federal
Reserve

Board

Treasury

or

Sec¬

retary Snyder from advocating in¬
creased
reserves,
until
finally

'/

'

the

other

western

or

Such

i

[1

'

other hand,

'

the GOP

the

to

compro¬

S.

U.

will

things,. For

German

Govern¬

some

ing about

a

is

of

war

too

in

subject of negotiation.

of

for

the

a

time

the

crisis.

U. S.

Corp.

Finishing

worry

Lonsdale Co.

future.

near

Seatex Oil

a

M. S. WlEN & Co.

The U. S. has not backed
its opposition thereto.
However, from every side the
word is reported that the Rus¬
sians show no disposition to fight
now.
The strongest jbelief is that
Europe.

on

ESTABLISHED

1919

Members N. Y, Security Dealers Ast/%
40

Exchange PI., N. Y. S

HA. 2-8780

Teletype N. X, 1-1397

*

Trading Markets: ;;
' Firm Trading Markets *- >

;

a

postpone

Belle Isle

will, of course,
possibility at almost
The Reds have not
back-tracked
on
their objective
of dominating
the continent of
down

to be

\

Reiter Foster Oil

War with Russia

always be
any
time.

ar¬

out: more:

Dorset Fabrics

much

the

<

Texas Gas Transmission

*

❖

not

currency

worked

man¬

decline in business.

*

There

..

agreement is believed

imminence

prevent
without bring¬

increases

price

an

may

somehow

to

enough

here

monetary

It

HAnover 2-0050

> ;

>

Ralston Steel Car

,

/1 Oregon: Portland Cement

FOREIGN SECURITIES ■■

'

Riverside Cement A & B

"

"

AH Issues

Spokane Portland Cement
HARL MARKS & PA INC. K
FOREIGN SECURITIES
.

<

/

»'

LERNER & CO.

:

Investment Securities

SPEOAIISTS.

50 Broad Street

New York 4, N. Y.

.

<

■ >

10 Pert Office Square, Boston 9, Mass.

Telephone Hubbard 1990

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO-

and do not
futile assault.

M. LOWENSTEIN &
Pyyiy-

,

Teletype BS 69

i

tagged

put.
as

■

Susquehanna Mills
;

;

•

They * have
been
"bare-faced election

r !n T- W. -» -ThS ■%

Empire Steel Corp.

divide/ them

programs
to
save
humanity
from its-ills and worries have

been

SONS, INC.

Cumulative Preferred Series
BOUGHT—SOLD-QUOTED

Kobbe & Company

(5) Finally, the "liberals," all

.T

an

your

that is left to Truman, will not
like the light in which all their

F,.f

the

satisfactory to the- Russians.

to try to hold down credit

even

,

conven¬

say, is enough to
special session as a
political blunder.
The

forces,

i

hand,

reserves,

it

if

-

the

defensive

the

V

preponderant)

On the

legal

•

political generals will say as did
Hitler's generals of the "Battle of
the Bulge," that when forced to

in

of

one

as

acceptable com¬

critique will

condemn

Designed to give public-1

has been far from

everything. They are de¬
ciding which of two dangers is
greatest.

tion, is making a split within the
party which will take longer to
heal, if ever it does. This in itself,

.

ity to the Democratic sales line
for "action against high prices i
uow," the weight of publicity j

Democratic

an

leave

increased bank

On

despite the gloomy predictions of
ida, Mississippi, and Alabama,
the Democratic political generals,
with Georgia maybe coming up.
their troops are not heading into
Louisiana is beginning to crack,
certain disaster, in which
case
and, v progress 4s
being made
(their critique will be different;
Zt^sewhere;:Z*:'tOtherwise, here are some of the
So the special session, on* top
things, which will be noted; '
of the northern wing
victory at
(1) Mr. Truman's call of the
session

near

increased
legal reserves
are
authorized,
then they will have a political
argument. They will be able to
point to this provision as "some¬
thing
they
have
done," and
perhaps

reasons,

agers

enact

sponsible
claim
that
Truman
will lose South Carolina, Flor¬

the

draws

duck

sition.

the land of cotton the southerners.. have:•

toe decided Nov. 2.

special

session

the

$

*

committed himself for this propo¬

party, has been growing and
feeding on the special session
"fight" on civil rights.:; Out in *
:

meas¬

forced to because Mr. Truman had

the southern revolt
against the national Democratic

the*;custom of* military

over.

either

inflationary

and

newspapers,

generals, the political generals of
the
Democratic
party will not
hold their critique until after the
battle is

had

to the enemy.

over

has

*

*

they, have a
Be-Boop'!"

Be-Bop,

reserves,

to

with

in¬

it was deflationary.
So the Congress thought. It fig¬
ured that even the large spending
programs would be comprehended
toy the voters as anything but de¬
flationary.

'Be-Boop,

goes

end, the Congressional leadership
faces a final decision on whether

gentlemen

forces

bids,"

*

the

as

of the stock I want, but

name

jingle that

ures.

be

contents
finally revealed,
also
relieved
diem of much of their worry. In

radio

ses¬

and the left-wingers.

man

erners.

Mr. Truman's message,

"I can't recall the

or

"civil rights."

of

business

a

sion

the

lowered prices for
their
own
goods and services,
black markets, and perhaps even

prospect

the

of

got

to the fact that the special ses¬

saw

economy

stick.

sion

have

circumstances inevitably pointed

to the

constituents

controlled

the

they

end

got;
The

condition to holding

as a

some

down,

the southern Demo¬

the Republicans for the fact that

.

down Mr>Truman,

feel

dirtiest

they did not do right.

The
Congress: was not or ha s hot been
unduly
worried
over
turning

in

course

viewed
an

(a short-run

rangement

now

Of

crats

is

Berlin.

on

ment might have to be slowed

sweetest sham battle you ever saw.

viewpoint around election
.season, or cry in their beer for

with

instance, the speed of organizing

-

change

to

on

have all but reversed their

positions. They think the Senate
Republicans are pretty nice guys,
and vice versa. The alleged fili¬
buster, around the anti-poll tax
bill
has
been
just
the
nicest,

their

the

out

to staying in Berlin, or give up

Berlin

-

constituents

S.

lose something as a condition to

(3)

erners

that

They will not
U.

the Reds Have

whereby

of the Administration.

by
arden advisers,
the 1 President.
can spin a theory as to what the

minds

the

limb

a

promise

the

Normally southern Demo¬
crats go into opposition at a time
of threatened victory for Repub¬
licans, or of Republican control

Surroundedand j?insulated

from

on

problem

tion program.
•;

force

working out

coun¬

did

their

up

to

Likewise

out

federal payrolls

on

betraying their

stories

news

Of that

the: inferential • proof is said to:
Say iii the attitude of Congress.

;
•

more

headlines and

more

not want

did

Truman's remedy.

got

'* sltions with the story of alleged

merchan-

and

public

The

premises

months,

Red troops, eventually the block¬
ade will work.

and;

commies

Truman's

Dr.

flation remedy.

he

roll

make

U. S. must jjet out.

prices

expected

this year.

question. The U; S. cannot
stay tOrevef in Berlin if the; Reds
meer

change the

is

Berlin

dent wanted power to roll back

that

crisis

figijt will not be over Ber-»
lin, it is said.; The U. S. hasf
climbed - out on a limb on the

Presi¬

the public lops up, to

t

The

forced

the

that

it is not expected

cQmr

was

i

a

come

decides

time in the next 12

some

special: session; program
- Then - Paul-Porter,
the;?
bright
hoy,

didn't do

Politbureau

the

While

Administration's

to

will

to fight.

or

mittee hearings to tear the Truman

crisis

whether to give up its objective

..

traordinary attempt to win populatity at the expense of Congress
Was bound to succeed, they note,
only if two premises were found
to be justified.
The first is that
the public is fretting at the march

there will be

comes

The

,

■» * JT-.tF

?*.!?■

-ySyyyj:- "y
!

K->"ii

i

Members

-v/z incorporated..y
Rational Association of Securities Dealers, t$c.\ \y"

55 Liberty Street, New York 5, N. Y.

Telephone

"

BArclay/7r2663

■

Hill, Thompson & Co., Inc.

■

h/r:'
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-

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