The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
V*
e**J8
^
ESTABLISHED 1839
Res. U. S. Pet. Office
Price 30 Cents
York, N. Y., Thursday; December 16, 1948
New
Number 4760
Volume 168
O ur Economy
Outlook Not So Bad
Chairman, Executive Committee
National City Bank of New York
/
»
r
Mr. Burgess
from
$2 to
■
\
.•
■
predicts a surplus of
$3 billion in fiscal
surplus in succeeding
and
restraint
if
year,
This country is waging war on
three separate fronts
at the same
time. That is the greatest problem
of
•
If
statesmanship for banking and
whole
for the
By HON/JOHN W. SNYDER*
President, New York Stock Exchange
Secretary of the Treasury
the
a
foreign policy
the
shooting
polled might
.
is ; over,;
result
but there is no
communism!
to
a
and the assets
On the eco¬
some
fire, casu¬
alty and allied
companies
recent
swell the total
changes, the
against
world -wide
$60 b isl 1 i
'
*
front,
postwar inflation is far from won.
Here
countries^a
and
political
steadily pushing back
is
change
other
social
of
surge
in
and
of
to*
battle
W. R. Burgee*
(Continued on page 29)
This
the
Emil
Scfaram
$70
billion
ap-
proximate
York
the New
on
Stock
Exchange, but I am
that if we were to project
Mr.
extent into the
the
which
Bankers ^ Association,
would
meeting
before
American
of
Chicago, 111., Dec. 15, 1948.
23rd
at
taken
pictures
for
INSERT
PICTORIAL
See
o n.
under
is
some
value of stocks listed
sure
by
speech
of
^Abstract
than
more
the present trend of growth
Burgess
future, the assets
gentlemen administer
you
soon
exceed the value of
stocks
listed
on
And
hasten
to
I
(Continued
Annual
to any
the
all
Exchange.
admit that
you
on page 30)
*An address by Mr. Schram
Dealers Association.
at
luncheon given by
Insurance
the New York
Industry in honor of
the National Association of Insur¬
exempt from all present
Federal Income Taxes
Interest
Grower
——
the
Commissioners,
City, Dec. 14, 1948.
New
ance
but
of
is
nation
direct and im¬
the
ft
We
See
As
•
a
you
demon¬
strated
many
times
your
ability
few weeks one of the President's many
advisory organizations must hand him a general analysis of
the current state of affairs and suggest what government
Within
In
past,
have
They Should Advise—But Will Not
What
very
make
to
these
policies effec¬
tive.
We
pect the
ex¬
pro¬
(or perhaps, more specifically, what the President) can and grams you are
should do to, promote tfye economic ^elfare of the people considering at
h$ large; measure, government has assurned re¬
sponsibility. ' Presumably, the more vital questions con¬
cerned, or believed to be. concerned, are even now under
intensive study.
One phase of the current situation was
some time ago specially assigned to one Presidential adviser
who, so it was said at the time, needed six weeks to come
up with an answer. Doubtless, in due time the Chief Execu¬
for
which,
tive will receive such
he may
us
meeting'
have
and
John W. Snyder
salutary
effect
upon
present' and
futur
1
policies.
In
been
certain
1948
respects,
critical
a
one
has
in the credit
(Continued on page 30)
*An address
by Secretary Sny¬
National Credit
Conference of the American Bank¬
der
ers
before
that the main substance of
the
Association, Chicago, 111., Dec.
State and
(Continued on page 29)
York
at/
wholesome "
14, 1948.
the
advice the President needs is obvious enough. Charts
and tables are unnecessary to ascertain the nature of it.
The fact, the obvious fact, is that the economic welfare
to
seems
this
to
formal documents on these subjects
desire—some of which the public will doubtless
be permitted to see. Meanwhile, preparatory activity is ab¬
sorbing the attention of dozens of men and women poring
over charts
and tables and pondering the imponderables.
as
Yet it
York Security
Dinner of the New
.
am
mediate.
close
$55 billion,
us
"cold war."
despite
I
gregate
against
nomic
.
particularly glad to have the opportunity of speaking to
you on the occasion of this National Credit Conference. Your group
holds a strategic position in shaping policies of credit right at the
borrower's level, where the effect on the welfare of not only the bor;
error.
assets now ag¬
waging
are
.
/•»
EDITORIAL
Life insurance
of
forces
would
in
be
the
peace;
upholds Treasury's action in supporting bond mar- !■
- Points out extended prosperity can
only be achieved by policy of moderation and restraint on overbaying, over-borrowing and over-expansion.
^
the New York Stock Exchange. Like some other
recent
polls, *>
——:
/','■■■: "■—
:—however,
the
say
at:
even
ket, denying it is inflationary.
to 100% of those
Exchange, I can imagine that close
country. In
shows encouraging signs of stability
ment's credit and
poll were taken, as to who represents the world of finance,
Association of Insurance Commissioners or the New
Stock
our economy
present high levels, Secretary Snyder sees no reasons why it cannot
be maintained. Stresses continued need of confidence in govern¬
■
National
York
war
Asserting
Stock Exchange executive, in pointing out
government on business, warns it
prevail.
economy
Is
By EMIL SCHRAM*
dependence of
should not ride roughshod on its
operations and then condemn the inevitable results as evils of our
economic system. Points out dangers of excessive corporate debts
and neglect of stockholder. Scores taxation as instrument of government policy, and attacks restrictions on securities transactions.
Defends speculation and urges limited tax exemption of dividends.
N. Y.
1948-49, with possible simi¬
year
lar
'
Copy
and Business!
By W. RANDOLPH BURGESS*
•
a
■
CHICAGO SANITARY
7
tl
Municipal
DISTRICT
.v
"23/g%
,
R. H. Johnson &Co.
Construction Bonds
\
--
(Accrued
1,
January
Due
Established 1927
•
J
,
100
Price
if
and
INVESTMENT SECURITIES
to be added)
interest
When
1968
*
issued
64 Wall
White,Weld&Co.
Members New York Stock
Exchange
PHILADELPHIA
BOSTON
Troy
Albany
Buffalo
Wall Street, New York 5
Boston
Philadelphia Providence
Amsterdam
Buenos Aires
Chicago
London
Syracuse
Washington, D.C.
OF NEW YORK
Bond Dept.
the Government
in
Office:
26,
London,
Branches
in
Colony,
India,
Burma,
Kericho.
and
Kenya,
Paid-Up
Reserve
Corporate Securities
£4,000,000
OTIS & CO.
Bank
,
.
conducts
every
Montreal
OF
THE CITY OF NEW YORK
Toronto
CANADIAN
Central Maine
Power Co.
v
BONDS & STOCKS
COMMON
upon
request
Established
Dominion Securities
SUTR0 BROS. & CO.
Est.
1699
description
banking and exchange business
Trusteeships and Executorships
also undertaken
,
of
CLEVELAND
New York
120 Broadway, New
Chicago
Denver
Toledo Buffalo
Cincinnati. Columbus
„
r
f
Grporation
1896
Members New York Stock
(Incorporated)
The
NATIONAL BANK
1-395
INDUSTRY
Copy
and Aden
£2,500,000
Fund
/
Ceylon, Kenya
£2,000,000
Capital
Teletype NY
a
on
THE CHASE
HAnover 2-0980
Municipal
and
Zanzibar
Subscribed Capital
New York
The TELEVISION
Distributors of
Bishopsgate,
E. C.
prepared
Review
Underwriters and
Kenya Colony and Uganda
Head
Teletype: NY 1-708
We have
of INDIA, LIMITED
to
Bell
N. Y. 5
Private Wires Connect
NATIONAL BANK
Bankers
SMITH & CO.
52 WILLIAM ST.,
Springfield
Wilkes-Barre
Woonsocket
THE NATIONAL CITY BANK HART
Scranton
Harrisburg
40
BonJ Department
Street, New York 5
iTetephorqs iREetqr
Exchange
40
IRA HAUPT & CO.
Members
New
Exchange Place, New York 5, N.Y.
■i
I
X.
Belt SysieroTeletype NY
1-702-3
,
~rt
«Boston
Exchanges
N. Y. 6
f
NY 1-2708
Telephone: Enterprise 1820.
WOrth 4-6000
York 5
?
York Stock Exchange!
and other Principal
111 Broadway,
Teletype
2
(2490)
THE
Professor
of
Interstate Power
—
New York Hanseatic
<
......
5
'
values" of assets.
.
.
Louisiana Securities
Bought—Sold—Quoted
-
Nature and Significance of Corporate
-
Teletype NY 1-583
-
h
.
-
Corporation
120 Broadway, New York
BArclay 7-5660
Alabama &
,
QUOTED
—
Thursday, December 16, 1948
Asserting accounting methods do not take into acc )unt today's "cheap dollar," Professor Paton points
out business is deducting depreciation
charges anl other costs in terms pf a prewar dollar worth two
or three times what it is now.
Stresses importance of profits as means of providing risk
capital and
sees, as only alternative in affording business devel ipment and expansion, use of government money
raised by borrowing or taxation. Holds present earning rates
exaggerated because of understated "book
Stock
SOLD
CHRONICLF
Accounting and Editor, Accountants Handbook,
University of Michigan
;
•
BOUGHT
FINANCIAL
ByW.A. PATON*
Debenture Escrow Certificates
Common
&
Why Corporate Profits Are Overstated
:
Interstate Power
6%
COMMERCIAL
Steiner, Rouse & Co!
Profits
Memoers
In any
discussion of the level of profits aid proposals dealing with the taxation of prof¬
its a necessary preliminary step is
recognitio 1 01 the nature of corporate profits and their
general significance in the economy. Basical y, corporate profits are the earnings — one
.
might
Lonsdale Company
Request
on
i
s
k ;
*
-
r
,
■
•
'
'
,
'
I
iifeblood
Members
York
Stock
Exchange
New
York
Curb
Exchange
.
of
2-7815
but
enter¬
ness
nothing
more
in¬
stitutional
ar-
angement
Dr. William A. Paton
whereby a
group of investors pool their sav¬
ings for the purpose of carrying
on some business activity. Capital
r
Joseph McManus &Co
is
Members
New York Slock
Exchange
New York Curb
Exchange
Chicago Stock Exchange
furnished
39 Broadway, New York 6
other
Tele. NY 1-1610
the
by
and
York
from
the
Exchanges
obsolete
much
to
price,
the
stocks
stockholder. And since the provi¬
sion of a substantial layer of risk
same
as
capital
buffer
position in the undertaking.
He furnishes the essential layer
of risk capital. He is not assured
of a particular level of earnings,
or of any earnings. He "holds the
bag." The amount of his earnings,
if any, depends upon the relation
of varying revenues and varying
costs arising from the sum total of
Members Nat'l Ass'n of Securities Dealers, Inc.
27
1
William
St., N. Y. C. 5, N. Y.
Montgomery St., Jersey City 2, N. J.
Tel. DIgby 4-2190
Tele.: NY 1-1055
ing
up
is
if -interference
and
sponsible
consumers;
provide
the
Common
Stock
Bought and Sold
Standard Oil Ky.
an
income, and
lose
part
all
his
of
may
investment.
a
If
the
or
risk
m BANKERS BOND co:
Incorporated
1st
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
a
considerable
earnings
found.
of
The
stockholders
-
—
concern
industry,
*Statement
the
Established
by
Prof.
Subcommittee
on
Paton
The
only
the
op¬
alternative
savers
to
directly by
of the
steward
its
person
on
highly
unreasonable
procedure
a
fantastic if
coun¬
government
money
taxation.
'•
' :
""
eration
a
second
™
]
that
deserves,
preliminary to
level
present
;
broad
a
consid¬
attention
discussion of the
of corporate
stock¬
holder earnings. A basic weakness
in our present tax structure—as
re¬
has
often-, been
pointed
out
biy
is
students of economics and public
in ifinance—is found in the
adoption
of
the concept that the business
corporation is an entity properly
to 'subject to income taxation in its
Business
own
right.
This is
a
most unfor¬
tunate development, and
mittee
has
Economic
no
one
that
adequate foundation either
legally
or
from
the
New
New
York
York
Curb
Exchange
Exchange
Cotton
Commodity
Chicago
Exchange
Exchange,
Board
of
New Orleans Cotton
N. Y., Cotton.
NEW
CHICAGO
Exchange Bldg.
YORK 4,
DETROIT
GENEVA.
N. Y.
PITTSBURGH
SWITZERLAND
canadian
.
is
The ertity or
inevitably faL
entity
that
St.
44
Wall
New
Street
York
in
New
WHiteball 3-7253
York
and
Los
Angeles
has
any
Recent
ticularly important that this p^in'
be recognized
clearly in the fielc j
objectionable,
taxes
but
high rates
at
Memos
on
Strawbridge & Clothier
John B. Stetson
Warner
—
differentia'
H. M.
earnings as such are unsound ir
my judgment.
Such taxes can be
'ust.'fied—if at a]l—only when ap¬
the
.
Byllesby & Company
OFFICE
Stock Exchange Bldg., Phila. 2
,r
Telephone
*
Teletype
RIttenhouse 6-3717
PH 73
hands of. their representa¬
This point of view
in
the
was
reflected
early income tax legisla¬
Baltimore Transit Pfd.
tion.
In the statute of Oct.
3, 1913.
the list of-deductions
provided tc
stock
or
dividends
as
tin
,
corporation
able upon its net
.
with. respect
states
.
which is tax¬
.
income,"
the
the
U. S.
tax
normal
imposed
upon indi¬
shall,, be levied:
the entire net income."'
Similarly the act of 1916 provided
a
tax on corporation net in¬
restricted to the rate of, the
normal
tax
treated
personal
as
utes,
a
recognized
but
tax
on
53 State St., Boston 9, Mass.
LAfayette 3-8344
J
BUY
,
u.
s;
as
savings
BONDS
r
purposr
rate a'
the shares of the
individual stockholders in the to¬
tal corporate
earnings.
As time went
idea grew
! :
however, the
on,
politically that the
(Continued
Royal Bank of Scotland
Incorporated by Royal Charter 1727
cor-
on
HEAD
page 33)
NORTHWEST MINING
Quotes call TWX Sp-43
of
Exchange
A.M.,.
OFFICE—Edinburgh
Pac.
from
Std.
10:45
3
Time:
8
West
49
11:30
Sp-82
OFFICES;
Bishopsgate, E. C. 2
Floor
on
to
throughout Scotland
LONDON
Smithfield, E. C. 1
Charing Cross, S. W. 1
Burlington Gardens, W. 1
at
64 New Bond
Street, W. 1
securities
Goodbody & Co.
Teletype NY 1-6*72
-
Tel. BS 189
pur¬
instead
corporation
withholding agent for the
of collecting'the normal
personal
Co,
The
entity,
the
&
Incorporated
'
in the in¬
early stat¬
in other words,-did not se'
tax on a corporation as ar
independent
A. G.Woglom
were
"credit" for the
a
return.
Finishing Common 13Vr14
income,
received
of the, normal tax
pose
dividual
up
on
dividends
and
17V2-18
and
to .corporations
"that
Heywocd Wakefield
Maine Central R. R.Com.
12-12%
likewise
upon
come
<
from the net earnings of
any
act
upon
15-16
Dewey & Almy Chemical 18-18Vz
individuals included "the amount
received
other hours.
Members N. Y. Stock Exchange and Other
Principal Exchanges
115 BROADWAY
NEW YORK 6, N. Y.
Iw
tives.
For Immediate Execution of Orders
banks
securities and
african
—
PHILADELPHIA
plied to the earnings of individual
citizens, either in their hands or
in
Company
★
corpora^
cn
STANRARB SBCmiTIBS
TOTAL ASSETS
CORPORATION
£153,656,759
,
Members Standard Stock
Exchange
of
Brokers
-
Spokane
Dealers
-
Underwriter*
Associated
-
Peyton Building, Spokane
Blanches
Glyn
at
Williams
.
-
5
Private Wire System between
Philadelphia,
"ability to pay'
meaningful sense if
individual citizen. It is par¬
taxes
the
Kellogg. Idaho and Yakima. Wn.
"fa.
CORPORATION
procedure—
is the natural person, and the
only
or
south
Request
BUCKLEY SECURITIES
t
SECURITIES
mining
canadian
british
on
would apnea',
Philadelphia 2
hadn't been doing PEnn/pacKer ;>-o976
it for
many years.
taxes must
7
industrials
canadian
Telephone BArclay. 7-0100
Memo
•'
Trade
And other Exchanges
COMMON
tic
of
Branches
Inc.
Exchange
ENGINEERING
that
which
standpoint
Members
Stock
AETNA STANDARD
les,
account
own
we
viduals
is
We Maintain American Markets For:
York
offices
person
H. Hentz & Co.
New
branch
—
by government borrowing
Profits, Joint Congressional Com¬
on
the
pansion
There's
Report,
Washington, D. C., Dec. 7, 194&
1856
be
Structure
moreover,
Bell Tele. LS 186
of
stockholders. And taxation of the
administrative*. vehicle
cf
the
steward—as if it were a taxable'
for
profits—the
particular
most fields of
of
number
is
agement
hereinbefore
under¬
range
disappears
The Corporation and the Tax•
investment. In most fields of in¬
sults with respect to
considerable
try to supply the funds needed
for business development and'ex-!
or
make
dustry
competi¬
would
capital' provided
raised
taking is highly successful he will
a high rate of return on his
Bought and Sold
the
capital
result
the individual
only if the array of forces
brings this about. If the under¬
taking -is never successful the
realize
with
governmental ownership and
appear
never
risk
final
eration.
body of re¬
instead the
stockholder will
of
abandonment of private corporate
enterprise and the substitution of
earnings for the stockholders will
Refining Co.
essence
other means should be carried
to the point at which incentive to
capital invested is at the mercy of
a
complex of market forces and
Ashland Oil &
of the resources of a more cr
to
or
no
definite
a
very
through
taxation, control of product prices,
cost-plus eontract between the particular busi¬
ness
the
tive forces of the market
the operation of the busi¬
There
ness.
is
private corporate enterprise there
must be an earning prospect—an
earning potential — if such enterorise is to persist. It follows, that
transactions and conditions mak¬
STEIN & COMPANY
that
manner
Birmingham, Ala.
our
inCxic wnjcn lacimaies tne
p-oxxng
computation of corporate
is obvious that there is no induce-1
earnings may be viewed as a forn
ment to the person who is
saving; of franchise tax on the corporate
money
to
become
a
common
institution and not be serioush
stockholder, on the other
hand, occupies the residual or
mining; and oil stocks
Removed
in
this
to
analysis.
As menabove, the corporation v
simply an institutional arrange-
of differential
income
taxation:
prospect of earnings—and the A moderate flat tax rate
applie;
prospect must not be "too dim—it1 to some
mon
low priced industrials
New
return
wires
a
prices of commodities
personal services. The com¬
manner
Stocks
the
contractual
in
priced by the mar¬
ket and the earnings of such capi-^
tal become a requirement of con-;
tinuing business activity. Without;
bondholders
and
investors with a
a
is
It
risk capital is
funds
of
case
position
the investor is
determined
RAPING MARKETS II*
of
groups
preferred
DIgby 4-3122
a prospect of
earnings if this
type of investment is to be pro¬
vided.
Direct
tioned
,
offer
primary ingredients
operation, one of the
indispensable
factors,
and
liKe
other factors
capital commands
a
price that is a resultant of an
array of demand and supply in¬
In
/'v
and
political
conditions
(including the tax structure) must
business
fluences.
.
.
nomic
of the
one
of
,
-
NV 1-1507
Mobile, Ala.
—:
and
.
is
an
.
—
Stock Exchange
HAromt 2-0700
New Orleans-La.
carry on a business undertak¬
"profit system," ing. Tre corporation is a vehich
loss f insti-. of administration, corporate man
as a
"profit
a
.Now, the important point is that
while \ the person
who provides
risk capital—the
stockholder in
corporate
enterprise—is not as¬
sured
of
a
particular level of
earnings or of any earnings in
our economy, the
totality of eco¬
corporation
than
as
tution..
The
itself
BROADWAY, NEW YORK 5
described not
busi¬
private
prise.
New
Tel. REctor
the
:,—:
York
St, New Yam 4, N. Y.
economic
of
earnings and actual Tosses. As
no
■
McpONNELL&fO.
120
is
'■
has sometimes been said, competi¬
tive private enterprise should be
capital
which
—r
a
fluctuating history in this
respect. There may be periods of
very profitable operation, periods
of low earnings, and periods of
rovide the
r
—
has
the
who'
persons
p
Prospectus
^
.
stock¬
the
holders,
Bought——Sold—Quoted
'
"wages"—
say
of
almost
New
25 Broad
Mills
Banks:
A
Deacon's
Co.
Bank, Ltd.
!
Volume
168
COMMERCIAL
THE
Number 4760
"
Cold War Between Government and Business
a
—Emil Schram
.Cover
.....
Budget Outlook Not So Bad—W. Randolph Burgess....... Cover v
Federal
Why Corporate Profits Are Overstated—W. A. Patton...........V.
"Loaned-Up" Condition!—Joseph M. Dodge....
Automobile
~
4
No
Maybe
inflation
Eeonomy—Sen. Joseph C. O'Mahoney.
.
Agencies Tick—Edmond M. Hanrahan... i .V..'
conclusion
i
3
axound7
9'
-
18
the
prices,
among;
confi¬
dence-of busi¬
But these doubts about continu¬
of
and
nessmen
'/ 19
Why Profits Are Soaring to New Highis—Stanley H. Ruttenberg..
The Federal
20
Budget—Its Meaning—Victor B. Gerard........i..*....
-.
♦
«
.
\
*
'
•,
'
.
■
■
r
'(
0
v
21
estimate
market
government planning and policy¬
making—the general international
,.
p
_
_
•
'
' '
•'.**« * ' '
K
reflects
Walter E. Spahr Scores Our "Liability Currency"...,'i............ rl3 h
,
Requirement.;..;.{ \14
Leroy A. Lincoln Condemns Competitive Bidding
If
.
.
< Boxed).
.
.
....
t NYSE and Curb Exchanges Amend Floor Trading Rules........
& Loan League Reports Easing of Labor and Material
U. S. Savings
Shortages in Home Buildings.....
.
.J...............................
18
■i
Salesmanship Key to Future of Securities Market, Says H. L. Bache..
19
21
Department Analyzes 1949 Building Outlook.
Commerce
due 7/1S/57
'A %
due 7/15/72
3%
a
WM. E. POLLOCK & CO., INC.
20 Pine Street, New York 5, N. Y.
implied
strongly
eral
their capital
ficiency
LAMB0RN &
J
CO., Inc.
STREET
WALL
99
NEW YORK 5, N. Y.
up in business ef¬
worker efficiency,
shake down some excessive profit
tightening
SUGAR
and
will be profitable and margins, and put a few cents of
they can be financed.
And lost buying power back into the
there are other signs—as in retail dollar for people living on fixed
Teletype NY 1-2846
HAnover 2-8244
Raw—Refined—Liquid
programs
figures—of
traae
■
22
some
ceea
are
servers
23s1
Condition.......;...
W. E. Atkins Urges Banks to Keep in Flexible
.
2
all
in
factors
.
.
the part of
the general
by Bruce E. Shepherd..
Recent and Current Insurance Trends Cited
:
and
big
1 ow;
' 21
Freedom Being Lost! Says Dr. Orval Watts.....................i ..".
;
For Reconstruction
;
businessmen .planning
equipment programs;
there is questioning whether these
18
■/.
Republic of Cuba Bonds Called lor Redemption
-
17
...
v........18
«CED Recommends Monetary and Fiscal Policy
situation
as
.
<17"
.y....V•.VvvWV
two
iomniitrnenic J by; both major par¬
much ,as any¬
ties to keen prosperity and full
thing
appre¬
employment.
I do not know of
that
hensions
Norris Oliver Johnson
anybody in a position of responsi¬
a combination
^
bility who wants to rock the boat
of < "fourth-round"
wage
boosts, enough to risk getting wet. There
price
controls,
and
an
excess are intelligent and thinking peo¬
profits tax is going to knock busi¬ ple who believe that some kind
ness profits — and the boom — on
of a short-run downturn in busi¬
\he head.
Again there are some ness would not be an unmixed
election-induced hesitancies
on evil.
It might lead to some gen¬
* ■"'
13;
Street Club of San Francisco Issues First Report....... 1............
.de¬
since
election
the
The International Bank
of the boom seem to under¬
ance
investors. The1
cline
Medicine Under the British National Health Act—Morris Fishbein..
——
——
a
thing to; turn on and off. The best
thing is to have a good atmosphere,
and keep it that way.
•
barom^
•
STREET, NEW YORK
frightened, not too much but just
enough.
But it would be a hard
things,
a
eter
-
ready .cash today!
WALL
Telephone: WHitehall 4-65SI
control on a business boom
wouki be to keep businessmen
ing
Stock
are
........
for
misreading of the record, I think, to draw the
stock prices that deflation and depres-
a
<^———1—
corner.
other
11
"Business Profits Excessive"—Nelson H. Cruikshank....
yours, you'll keep waiting till
Doomsday; Better sell it" to us
depressed
lie
n
o
straight
...
the stock
from
7
II
Danger of Severe Price Declines—-Ewan Clague..
TO XMAS
you're waiting for dividends
from
that
obsolete stock of
If
of you are wondering what I am doing, talking abou'
market is so strongly signalling deflation
some
when
Byt .it would be
6
Housing Costs in Gradual Decline—Robert M. Morgan
v
SHOPPING DAYS
99
6
Charles Sawyer.
Analyzing the Business Situation—Leo Wolman
How Administration
ONLY 7
wave
an equalization of inflationary
deflationary forces, if Federal budget is kept in balance.
and
s
Free
a
fresh
| whelming importance," and predicts
;
4 \
;
Securities—Roger fV. Babson
Preservation of
^
York
of doubts about continuance of
some way6 a good thing
and may prevent more spasms of postwar inflation, discusses infla¬
tion controls, such as rationing, allocations, maximum prices, higher
taxes, reduced government expenditures and .credit curbs.
Con¬
cludes "we are in a situation where government policies are of over-
4
,
Consequences of Defense Program—Beardsley Ruml...........
The Automobile and the American Economy—Hon.
2
r.
.
s...3
What To Do About Inflation—Norris O. Johnson............
Banks Should Avoid
llCHTEIlSTflli
B. S.
good business and higher employment is in
'
Fiscal
Mr. Johnson, asserting
Cover
3
AMD COMPANY
Assistant Vice-President, National City Bank of New
Page
Economy Is Basically Sound!—Hont John W. Snyder
Avoid
(2491)
By NORRIS O. JOHNSON*
Articles and News
„
CHRONICLE'
What to Do About Inflation
INDEX
Our
FINANCIAL
&
a
weakening in
incomes
pensions.
or
Exports—Imports—Futures
But no one
DIgby 4-2727
inflationary surge. In- wants to. take many chances in
well
informed
ob¬ the way of starting up a defla¬
saying and have been tion.
In other words, when this
saying that the boom is over.
! boom comes to a breaking point,
On
the question whether the ^ will be because of miscalculaboom is over I remain from Mis- tions on the part of government,
_
.
t
Regular Features
..;
J
,
.Cover
(Editorial)........'.
As We See It
'Bank and Insurance Stocks
Securities
Canadian
iouri.
16
:....
In
Dealer-Broker—Investment
have
pattern of political policy-making
is unwrapped a month hence in
the President's message to Con¬
than
8
From
Washington Ahead of the News—Carlisle liargeron.
17
7
............
Indications of Business Activity.
37
Mutual Funds
15
:
NSTA Notes
Observations—A.
-
Reporter's Report
Our
Reporter
on
Public
5
43
*
Securities Salesman's Corner
13
Now in
40
Securities
Registration
The' Slate of Trade and
industry
•Washington and
31
fresh
Weekly
.
and
COMMERCIAL
Gardens, London,
Edwards & Smith.
c/o
'
J
Reg. U. S. Patent Office
WILLIAM
r
-
■
-25
B.
Park
:
25, 1942,
fork,
N. Y.,
2-9570
to
Eng-
matter
seuj..a-vi-oS
the
under
post
at
the
-
HERBERT D. SEIBERT, Editor & Publisher
WILLIAM
WILLIAM
DANA
D.
Business
Manager
|
Thursday <general news and ad¬
vertising Issue) and every Monday <comEvery
plete statistical issue — market quotation
records, corporation news, bank clearings,
and
Other
Chicago
city
news,
Offices:
3,
Hi.
etc.).
135
S.
(Telephone:
Other
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State
St.,
0613);
and
per
Monthly
$25 00
9,
'
i
{ 4
-
$35.00
per
$38.00
year:
pert
are
per
Quotation
year.
Hote—On
rate
of
in
Direct
regular
day's
issue
the
of
"Chronicle."
4% First Mortgage
Industrial Bond
Approximate Price 64%
Paper
manufacturer
'ever
M Uion.
a
Net
quick
c-o%.
assets
covered
charges
Interest
times,
with
assets
alone amount
over
to
4
...
Data
request
on
a
George Birkins Company
40 Exchange
Place, New York 5
Tele. NY 1-1404
WHitehall 4-8957
The
'
~
~
•
Record—Monthly,
&
Bank
Company
New
of
Analyses
\
Spencer Trask & Co.
^ Meihbers New York Stock Exchange i
25 Broad Street,
in
New York 4
f
Members New York Curb Exchange
135 S. La Salle St., Chicago 3
York
Crampton
'
Teletype—NY 1-5"
I
Aifcor-v ;
-
Bncton
-
Glens Falls
-
\
*
Schenectsdv
„
-■
C. E.
available
Worcester
on
Corp.
request
Unterberg & Co.
Members N. Y. Security
61 Broadway,
Tel.: FINancial 2330
; TeL: HAnover 2-4300
exchange, remittances for for¬
funds.
Trust
Winters
year.
account of the fluctuations
Public National
in
(Foreign postage extra.)
York
a
in every Thurs¬
infla¬
what the British call "sup¬
PREFERRED STOCKS
ol
Earnings Record — Monthly,
year.
(Foreign postage extra.,)
New
Corner,"
feature
High Grade Public Utility and Industrial
•
eign subscriptions and advertisements mu6l
made
man's
(Continued on page 35)
interested in offerings of
S.
.
be
Dec.
barri¬
controls.
Countries, $42.00 per year.
Bank
$25.00
the
La
Union
Canada,
City,
as
Sales¬
"Securities
the
&
Other Publications
Thursday, December 16, 1948
"
state
of
Dominion
President
SEIBERT,
RIGGS,
Pan-American
We
Febru-
office at New
Act of March
'
....V*
Subscription Rates
Subscriptions in
United States, U.
Possessions,
Territories and Members
9576
r
1948.
York
the temporary
We gave them
bad job in 1948. " Most
thinking people; I believe; would
up
securities read
ration
pressed inflation."
New
for selling
j
1879-
4,
Place, New York 8, N. Y.
REctor
as
iry
DANA COMPANY, Publishers
C.f
New
or
helpful hints
For clever,
This way is a
controls give you a pent-up
Johnson be¬
Bank Associates of
19/"t hw William B. Dana
Company
Copyright
CHRONICLE
Reentered
;
E.
Drapers'
.ind,
; FINANCIAL
way
address by Mr.
the
York,
The
called
of keep-
in which it is
One
behind
up
cades of wartime
tion
:;:An
Twice
controls,
wage
practical expedient in an emer¬
gency.
As a long run measure it
means a good deal of government
dictation of what people can do
41
You...,
and
books and coupons.
of doubts about
wave
to work.
upon
fore
Published
price
have
atmosphere
Tomorrow's Markets (Walter Whyle Says)
keep prosperity and full employ¬
from spilling over into in¬
mechanism is to the political
ness
5
•.
high
Soiling
on
to
where they
good - profits, and high employ¬
In another sense it
ment
is
in some ways a
good shall work.
handles inflation by dealing with
hing. It encourages prudence in
rather
than
causes.
business planning for the future symptoms
and strengthens the guard agaipst Many of our troubles since the
war
stem from the amount of
over-optimism. At the same time
it shows, how- sensitive the busi¬ buying power that was dammed
22
..........
interest of everyone is
with their money and
23
Railroad Securities
i
the
circumstances
ment
the continuance of good business,
42
/
Utility Securities
you
that,-
i-"Tne
24
Governments
Prospective Security Offerings.
.
these
no
when
Pointers
handle.*
flation—the
an economy like
profits,, high employ¬
ment, and high production go to¬
gether and always have,
25 *
Wilfred May...
Our
common
on
can
or because wt
bigger balloon
a
.
11
..........
News About Banks and Bankers.
we
up
way it has been do¬
question in my mind but ing, by spasms, since the end of
that you could kill off Lie boom the war.
It requires the gloved
if the wage-earner, the consumer,
hand. ; not
the mailed fist ap¬
and the, Internal Revenue Bureau
proach.
should try to cart off the whole
Direct Controls
of corporation profits.
We still
One way to deal with inflation
have an economy here predomi¬
nantly of private enterprise. And is the way of material allocations
-
is
Einzig—"Battle for European Economic Integration"... *'
blown
Under
the State of the Union,
in his Budget Message and in hi3
Annual Economic Report.
There
8
Recommendations
event, no one can j business and labor,
of himself until.the
gress
Coming Events in the Investment Field
any
feel very sure
10
16
Man's Bookshelf
Business
.
v. ...<
Dealers Ass'n
New York 6, N.Y.
Telephone BOwIing
TeMvne NY
Green 9-3505
1-1066
4
(2492)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Banks Should Avoid "Loaned-Up" Condition!
i
Fiscal
Consequences
Of Defense Program
By JOSEPH M. DODGE*
President, The Detroit Bank, Detroit, Mich.
Past President, American Bankers Association
Immediate
j
Asserting primary function of banks is to have credit for worthy borrowers when it is most needed, for¬
mer
ABA President points to confused credit outlook as requiring flexible condition of commercial,
banks. Calls for voluntary credit controls and budgeting of loans by individual banks, and warns banks
against remaining in a hot-house atmosphere whi;h ha? been forcing growth at expense of vitality.
Looks for return of norma! competitive type of busiiess along with inevitable inflationary readjustment.
By BEAKDSLEY RUML*
Chairman of the Board, R. H. Macy & Co., Inc.
Under assumption lasting peace is improbable, Mr. RumI
under defense needs Federal
expenditures of $59 billion
j
for next two years may be needed.
outlays, and accompanying aggressive sell¬
ing of U. S, Savings Bonds. Calls for state and local cooperation
same
in
y credit and of bank credit extended
norto private borrowers for sound
Lnaer
mal
t i
Condi-
o n
the
that
sure
and constructive purposes.
IJ am
s,
increase in
which has
curred
at
tionary peak is still ahead of
banks,
j rowings,
would
Within
particularly
and
little attention
the
concern,
been
not-,
a
able
of
has
absence
speculative
of the
credit
is
removed
from the spending stream by the
payment of the debt,
j Nevertheless, all
cussion
the
of
to center
the public dis¬
credit
problem
the private use
on
lending.
I n -( 0f bank credit; and all considered
o ror
proposed action seems to be
necessary
be- directed toward
limiting the ac¬
cause of the expansion of produc¬
tion of banks in extending credit
tion and business activity at
and limiting private borrowers in
increasingly higher prices; also,
using credit.
Other institutional
because of a definitely low avail¬
lenders, including in particular
ability of equity capital. This has government credit
agencies, are
been supplemented
by a large permitted to proceed as in the
past
vplume of loans to support, the without restriction or limitation.
ceased
rowing
has
b
been
building activity needed to meet
the housing shortage.
Again this
at high prices.
was
As
state
and
continues
municipal
to
amounts.
matter of fact, if the price
may have
taken into account in 1 a return to
commercial loans, consumer credit
a
in
large
government itself
difficulty in avoiding
borrowing if the ever-
is
factor
borrowing
increase
The
expanding proposals for the
md mortgage loans, the increases
which have
taken
place
are
of government funds are
use
enacted
by the Congress.
neither
It
startling nor extravagant.
is interesting to note that even
Complications Confuse Credit
orice factor, it was not until the
end of 1947 and the
beginning of
1948
/
that
the
commercial
total
loans
banks
total of 1929.
But
equalled
even
all
of
the
im¬
more
portant is the fact that these bank
bans
have
been
and
iave done their
part in assisting
the economy
to function at its
iresent level of
The
activity.
condition
sxpansion
in
necessary
use
a
outright
There
price
increases;
how
additional
and
No
one
and
the
or
to
cost
credit
know
can
these
effect
At
threats
and
wage
of
gories of
are
the
controls; tax in¬
legislation which
many
of
com¬
confuse
allocations; standby
creases;
labor
will
stimulate
controls.
series of
new
which
credit outlook.
brings
bank
are
of material
into
which
the
There
wilT be
what
now
put
degree.
consumer
goods, we now
Credit to public and governmental have evidence of a
supply ade-f
attention and causes the
concern,1 quate to meet current demand; and
irises
from
the
fact - that
any we have an over-flowing supply of
increase
in
^redit
imposed
is
the
tremendously
mental
on
an
expanded
of
use
of
use
been the real
bank'.agricultural
'already
govern¬
credit, which has
cause
tion problem.
of
infla¬
our
Once
created, the
expansion of public debt, whether
Federal, State or local, does not
contract
except
liquidated.
the
as
If it
debt
at
occurs
is
all, it is
long and slow process. Mean¬
while, this credit is an addition to
a
the money
supply and stays in the
spending stream.
The same effect
is created from loans extended
by
nonbahk sources for
longer term
capital
purposes.
There is
effect of
f
*An
a
the
not
ural
of
use
this
type of
pect of the creation of additional
inflationary
If
pressures.
material
appear
scramble
for
sales
volume,
wage
and
diately will
Mr.
Dodge at
the National Credit Conference of
the American
Bankers Associa¬
tion, Chicago, 111., Dec. 14, 1948.
should
may be a
inventories
ventory loans.
and
in¬
Any slowdown in
accompanied
by
increases, imme¬
tax
squeeze
marginal
pro¬
ducers.
Almost any combination
of possibilities will restrict
profit
able
effect
have
may
in
the
a
been
the
ary
conditions
should
change,
abruptly in
be
no
note
further
that
side,
we
there
has
reserves within the
limits authorized by the Congress.
otherwise
is
e
can
to the
some
is
even
their objec¬
years
way
believe that the election changed
freedom everywhere.
something.
but
It
clearly,
did
not.
It
established
that for at least four
the
more
only,
fact
years
Peace
war.
unlikely because the
changed.
As a matter
of fact, nothing much has
changed.
Too many people are inclined to
aggressors have
the
as
their objective
imposition on the world of a
of life that is repugnant to
If
not
are
we
for
peace
'
going
many
have
to
to
years
come,
The
considerable,
and
the
burden
apparent
ent
it
will
will
of
undertaking. I
the
of
productivity
will
what
general
the
allocated
for
be available
not
otherwise
and
might
substantial
standard
be
living during
periods
This is
nically possible and morally
perative.
the economy are just exactly what
tional
in 1947, with perhaos
additional complications, the
they
were
some
form
exact
and
will ' not
we
months.
which
I
extent
know
to
me
today than it
the
neces¬
last
year.
recommen¬
;thi£ meet¬
credit,
.various
in
must
some
related
to
an
investment and
institutional
exchanges. It also means correc¬
of inequities and injustices
home.
It
protection
means
to
less
internally
come
informa¬
tion
at
destroy what they cannot
trol.
con¬
It means the reformation
oi
those whose prejudices cause them
consciously
or unconsciously;, tc
undermine the moral foundations
of our
country, the aspiration for
freedom
the
of
and
recognition
individual
his inalienable rights as a
of
and
all
for
dignity
of the
credit policy.
It is not sufficient
to have a good commercial loan
has,
policy and
and
and economic aspects. In present¬
any
ing the fiscal'consequence of such
poor
loan
mortgage
time credit
policies, or
Each
must
of a
the
become an integrated part
general investment policy for
bank
which
fundamental
which
and
its
is related
economic
becomes
to
the
situation
redefined
in
application to the operations of
individual lending and investment
departments.
Quality and Liquidity of Bank
Investments
a
policy for
bank, the nature of the security
investment
account
is
tant
/
"
and
closely
(Continued
a
related
impor¬
factor.
33)
on page
defense
program
therefore,
moral,
political
give the impression these
con¬
sequences are so unfortunate that
we
should withdraw from
our
fense responsibilities. On the
trary,
the
serious,
as
long
as
not
intolerable, and
have
we
con¬
though
consequences,
are
de¬
no
peace,
a
defense program, an adequate de¬
fense program, is both necessary
and
desirable.
The money requirements do not
precisely the true economic
problem.
It
is
not
themselves that
armament for
the
build
dollars
defense; in
example, it is
par¬
raw
material, in¬
plants and skilled labor.
At the moment,
plants and labor
such
are
materials,
being rather
fully utilized; and a vast increase
in productivity, such as occurred
from 1939 on, is not in the picture.
We do not
now
that
have the idle
were
Accordingly,
fense
A. M. LAW & COMPANY
(Established1892)
program
an
is
then
at
hand.
adequate
likely
de¬
to
put
some
5 allocations a and
some
.
SPARTANBURG, S. C.
L. D. 51
sary.
Teletype SPBG 17
*An
address
by
Mr.
Ruml
at
annual
meeting of Farm Bureau
Federation, Atlantic City, N. J.,
Dec. 15, 1948.
for
very
large
is
both
tech¬
people
im¬
A $50 Billion Budget
which
icy
discussion of fiscal pol¬
our
proceeds.
The
elements
in
the
background
are,
that
true
peace in the world is improbable
for many
to
years
that
and
come
an
adequate defense program is
imperative and that we face total
Federal
expenditures
that
may
well average $50 billion
a
the
1949
calendar• years" of
year
1950, and perhaps somewhat
than "that
in
the
in
and
more
following
years
1950.
are
very
large figures,
they are no more than the
possible requirements for which
but
fiscal
our
pared.
.
policy
If
program
be
must
adequate
an
can
had
be
pre¬
defense
at
a
lower
cost, we certainly want the lower
cost.
We should take all prudent
to make sure that ef¬
measures
ficiency
dominates
all
Federal
expenditures, and that defense ex¬
penditure* is
and
of
properly
conceived
controlled, always in
a
man¬
consistent with the true needs
ner
adequate defense.
best the figures of the
budget will be large—
large by any experience of a
at
Federal
very
time
axhd
when
we
at
not
were
war
subject to restrictive wartime
controls.
To appreciate how large
these figures are it is only neces¬
to
sary
note
that
the
projection
which I have given for 1949 and
191)0
the
will
Federal
12%
of
about
than
portion
about
product
expenditures,
the
national
Even
50%
able for
use
require
national
defense.
re¬
some strain on
some kinds of pro¬
duction. It may well make neces¬
v'
improvement in
This is the background against
u
But
Requirements of Defense Program
state
an
adequate
defense program, I do not want
to
of
of
the United
for
even,
These
human person.
An
numbers
educational
and
this
was
banks
skillful
that
all be tied together and be¬
way
and
activities
in
dations you will hear at
about
services of
extensive
mean!
believe
The discussions and
ing
some
means
against those among us whose
loyalties elsewhere induce their
selective credit is any
sary
which
for
nothing
see
leads
of
It
tion with other
comparable
unfortunate,
a
increase
of
countries; it
means
de¬
"appar¬
say
economic coopera¬
this
the
be
reduce
burden" because the increase
armament
in
growing
effect
that.
of
sources
1, GEORGIA
force.
fense
improved
a
that the prob¬
banking business an
relation to the government and to
me
Textile Securities
Long Distance 421 *
from
methods and
life
AND
ATLANTA
resulting
conditions
Established 1894
Teletype AT 288
on our
an
lems
to
ex¬
to offset in
proper
this demand
States, where
prospects which have
Properties
IMODES-HAVERTY BLDG.
of
adequate
defense
program
means
an
adequate
armament
program; but it means more thar
mental
Southern
Ilv
rate
An
tion of
MUNICIPAL BONDS
Robinson-Humphrey Company.
maximum
may
years
the
going to have a continua¬
the policies and the funda¬
are
LOCAL STOCKS
The
three
or
then we are going to have de¬
fense programs far into the future.
we
dustrial
CORPORATE BONDS
contemplating
are
measure
labor
for
ticular kinds of
STATE AND
and
important favor¬
one
two
its
tivity
gained without resort
more
we
technical
violence of
mass
States
productive capacity by the ordi¬
nary annual increase in produce
Beardsley Ruml
the
be
United
penditure, it is
attack,
prob¬
ably believing
tives
The basic need for
un¬
ui.ixn.eiy to
is
is
require
likely because
over
not
gram
reach
the aggressors
di
the
able aspect. Since the defense pro¬
or¬
dinary * every¬
day Jiving.
War
in
There
tion in the de¬
more
necessary in the interests of
both the economy and the bank¬
both
elsewhere throughout the world.
assump¬
of
of capital goods that
might be available to
raise
the
output
of
consumers
goods and the standard of living
unexpressed
that
it has
controls. It will certainly limit the
production
the
We must all continue to follow
the principle that selective credit
ing business.
<$>-
'
,
again;
cisions
well.
again in recent months that a
future is unlikely, but that the chances of
near
worth
basic
they did so
there will not
of public credit.
use
is
policy
as
over
worth
becomes
as
1947,
re¬
quired bank
it
present
immediate demand for
an
sion in the
notice¬
in
so
in the
war
and
over
saying until it
the
of
In considering a loan
increase
be
is
saying
.
should
government power to control pri¬
vate Credit expansion.' This will
go hand in hand with any expan¬
fulfillment of
encouraging
have to
It
as to assume that if the
trend from the seemingly stabil¬
ized or the apparent disinflation¬
term-loan agreements.
will
y
one
other combination of them.
allocations
imminent, there
;
no
said
remote.
more
us.
be
been
peace are even
infla¬
or
has
shooting
optimistic
are
Deflationary pressures are becom¬
ing apparent and there is a pros¬
.On
by
which
permitted to have their nat¬
price effect on the markets.
margins and
contrast between the
address
products
us.
However,
time, in most cate-
same
the
have been reached
behind
To
plications
that
existed right along.
Outlook
with the multiplication of
the
dollar amount resulting from the
convinced
may
a
use
seems
not
It
relatively short-term,
are
have attracted
There
is
credit bor-
consumer
It
At least at the
moment, this suggests Washington
corn-
reasonably short period,
the supply of funds arising from
or-
jMcph M. Dodge
oc-
January offerings.
mercial and
loans
bank
Public
borrowings are substantially permanent, while private borrowings
programs.
policy
The Treasury has announced that
the
114% rate will hold for its
expected,
government's defense
The question of war and peace underlies all issues of fiscal
just as it underlies all, public policy and much private
,ncreasewasto?
be
Advocates civilian commission
to scrutinize armament
bank loan expansion has been reported as following the pat¬
period of 1947, but to a smaller degree. Of course, the last six months of
is the usual period in which there is a marked seasonal increase in loans, and an
the year
holds
annually
Since June of this year,
tern of the
Thursday, December 16, 1948
so,
more
we
of
total
and
about
product for
we
will
product
non-Federal
of
20%
for
and
have
avail¬
civilian
had in 1939. The pro¬
national product
our
going for defense and other Fed-
jeral purposes will be much higher
'than, im 1939, but the amount re¬
maining for local and civilian use
will be much higher too. The sit¬
uation is unfortunate, but from
an
economic
point of
(Continued
view
on page
42)
it
is
k-akTjswr.
.
Volume 168
THE
Number 4760
COMMERCIAL
A,jr_
CHRONICLE
FINANCIAL
&
^
'K
Electric Output
,;;
To Admit
"*■
Kingsbury
Carloadings
Brown
Retail Trade
State of Trade
Commodity Price Index
and Industry
Business Failures
By A. WILFRED MAY
Food Price Index
Auto Production
The
J
Implications in Mutual Fund
Investment
Broad
Operations and the Public's Attitude to the
.
\
Brothers
of Jan.
:
,The operations of the investment trusts and the behavior of the
holiday-shortened week.
public jn evaluating their shares. give important substantiation to
It was also moderately above the level of the corresponding week
some of the investing principles that have been advocated in this
©f last year.
' \
column..
V;
V..
'.'.'.'J,".' ,'v
Employment continued at a high point, although there was an
Exemplifying the common investing foibles is the market com¬
Increased number of layoffs in some parts of the country.
In the
munity$ continuing attitude toward the discounts
Stamford-Greenwich section in Connecticut, it was reported, that
at which the" closed-end funds sell — the sig¬
concern over the decrease in employment became sufficiently serious
nificance ' lying in their variations as well .as
the past week to summon a meeting of the Manufacturers' Council
in the VeryocCurrenee of market prices1 below
of that area for Monday of the current week." According to reports,
genuine asset valuer .Eyer since the 1929 .stock
similar meetings have been called in some. pther ,manufacturing
market collapse, iti lieu of the previous'premiums"
centers. J
•
•
'Vw/'sji.'"* v
\j the prices of the closed-end trusts have repre-;
In quest for the reason for these layoffs, it developed that they
sented discounts, exemplified by the following
meant
only a scaling-down * from high level operations and an which are noW existing: Capital Administration
.approach to normal prewar schedules^ As the week closed, layoffs —41 %; Adams Express—34%; Tri-Continental—
/during December had amounted to about 526,' moved up from 276 33%; U. S. and.Foreign Securities—33%; and
.by disclosure of 250 more on Friday, last.; Prewar employment in so on down to only 4% on Pacific American and
the area was about 8,000 in 1938, inflated to around 10,000 in 1940.
2% on the traditionally low-discounted Lehman
V, For the country at large continued claims for unemployment
Corporation!
If the trusts' cash holdings be
/insurance rose about 14% and initial claims increased nearly 22%
segregated, the resultant* discounts on the actual
in the week ended Nov. 20.
V,-":
f
-V
market portfolio are even greater; for example,
In Lima, Ohio, the Westinghouse Electric Corporation on Sat¬
in the case of Adams it would be .about 50%.
urday of last week disclosed that it had cut its .working force at'
A. Wilfred May
Suck discounts must be contrasted with the
Lima by 800 employees since the first of the year, attributing the
premiums (the "load") of from 7 to 10% above
layoffs to a "stabilization of orders."
On Jan. 1, last, the.plant's asset value which is part of the sales price of'
'
working staff stood at 3,500 persons.
.
•
■
the open-funds.
The latter, additional shares of which are now being
For the aircraft- industry of Southern California, reports state
sold at an annual rate of a quarter of a billion dollars, assuredly
that employment with but one exception is holding steady,
the Possess management and assets of no higher quality than the former.
exception being the Consolidated Vultee at San Diego, where employ¬ The contrast can also be cited between the services of investment.
ment dropped by 600 workers in the last six weeks, with the possi¬
Dcunsel who deservedly receive compensation of H% annually, and
bility of the total decline reaching 2,500 workers by June 1, according our depreciated closed-end "Packaged Investment Counsel."
to President La Motte T. Cohu.
This would represent 25% of the
The varying discounts constitute an ^element of uncertainty ad¬
pre-layoff payroll, but Mr. Cohu described it as a "temporary dip,"
ditional to the realizable market price which the closed-end trust
since the slump comes as the company ends production of 178 Convair
shareholder may expect, which is already subject to fluctuations
liners and prepares to start work on 37 military versions of the
correlated with the changing value of the portfolio.
is
.
liner.
companies reported enough orders on file to keep
employment at the 55,000 mark at least through 1949.
'
*
*
# ' v
..
'f
-
,
.corporation profits came in for a thorough airing
before Congress with
a
representative of organized labor citing
figures to show what he termed "serious maladjustments between
prices and income levels," while another labor official suggested
that corporation profits.be reduced by higher taxes and wage in¬
creases ;ift order that the high level of speculative profits be taxed
The past wbek
away.
:
<
,
Counteracting the arguments advanced by
Slichter, Harvard University
H.
Sumner
porations have overstated their
last
three
The
profits by $16,400,000,000 during the
years.
Harvard
economic subcom¬
that when 1948 figures are
professor told a House-Senate
investigating
mittee
organized labor, Dr.
economist, said U. S. cor¬
corporate profits
in, "real profits" will be only about $16,000,000,000.
On the other
'hand, reported profits will be between $20,000,000,000 and $21,000,000,0-00—an overstatement of roughly 25%, he added.
e
'
These are the estimates, according to DrJ Slichter, by which
produced more steel per day in November
in any past month and turned out a record total tonnage for
month, according to a current release of the American Iron and
Steelmaking furnaces
'
than
Steel Institute.
Shipments of steel products in the first 10 months
reports, increased 1,879,000 net tons over the
period,\to 54,183,000 tons.
of 1948, the
similar 1947
••
.
months of the year, should shipments be at
the same rate as" prevailed a year ago, or slightly less than the
October rate, they would place the total for the year above 65,000,000
tons, which would be about 2,000,000 tons greater than in 1947, and
a
the
In
,
record
final two
for
any
year.
of
sets
ap¬
proximately
$215,000,000jln
addition to. its
commercial
f.h.Kingsbury,Jr.<
the
banking achy*
conducts an
f
,
ities,
also
firm
extensive investment advisory
business.
on
holds
It
memberships
the New York Stock Exchange;
Exchange and the
New York Curb
in Boston, Phila¬
Chicago^ in all of
offices
are .main¬
stock exchanges
delphia
and
cities
which
tained.
General partners
D.
E.
include Moreau
Brown, Thatcher M. Brown,
S. Bush, Louis Curtis,
Prescott
.
Roland
Stephen Y.
Harriman,
Hprd, Thomas McCance, Ray Mor¬
ris, H. D. Pennington gild Knight
Woolley.
W. Averell Harriman',
Ambassador-at-large for the Eco¬
nomic
Cooperation
Administra¬
tion, is a limited partner. Under
Secretary
of' State
Robert A.
Lovett was a general partner be¬
going
in
Washington
to
'/
'
Mr. Kingsbury, an alumnus of
The discounts to some extent are,justified, for the average invest¬
yield, after management expenses, of the closed-end funds on Princeton University, has been
securities-plus-cash is only 3.9%, as compared with 5.6% simul¬ associated with the firm since 1929
taneously available on the Dow-Jones average, ,of industrial stocks. and in recent 'years has been a
At any rate, far more significant than the absolute existence of Manager.
■
J
the discounts are the variations in their size.
•
;
ment
.
trust to
being quite constant through¬
with the disparities maintained frozen by the inter¬
ested market community in rote fashion.
In other words, some funds
are habitually regarded as "high-discount" and others as "low-dis¬
count" ones, without correlation to respective management ability or
the
In
first place, the
size of the discounts vary from
trust, the difference in these discounts
out
the years,
discernible justification.
any other
Manufacturers Trust Co.'s
Twenty-Five Year Club
the
At
Ninth Annual1 Banquet
Twenty-Five "Year Club of
Manufacturers. Trust
Co., New
of the
In the
second place, and more
tuations in the size of the discounts
officers were elect¬
ed for the coming year:
important, are the habitual fluc¬
of the trusts as a group—and iut
precisely the opposite way from
ih' line with generally illogical
discount-able—when the market is inflated.
less,
consideration—as well
as
common
mere
cluded
by
the forces of speculative
of bear market emotion
Public's
sense—are
But such value
completely ex¬
psychology.
thus entails a
Attitude Reflects Fundamental
most
But
significant
toward the discount.
of
all
on page
Charles Frederick,
'/
dent
President
Colbert, Vice-Presi¬
Edward J.
iv-V
■/
Carl Ftuak,
Secretary-Treasurer.
Harvey D. Gibson,
President of
Manufacturers Trust Co. and
hon¬
member of the Club, ad¬
the gathering and pre¬
sented service plaques to 49 em¬
orary
dressed
ployees who became members
this
bringing the total member¬
ship in the Club to 349.
i
year,
H.*Jones
With T.
(Special
to
The
Financial
& Co.
Chronicle)
CLEVELAND, OHIO —George
D. V. Shelton has been added to
the
staff.of
Union
H. Jones & Co.,
Bldg., members
T.
Commerce
of the Cleveland
Stock Exchange.
Speculative Fallacy
is the trust community's
Far from considering
(Continued
Roosevelt Hotel,
York, held at the
the following
Speculative Foible Reflected
ation
Institute
tptaf as¬
with
their
A double-accentu¬
double-discounting in
Output for the 11 months, at 80,737,800 tons of ingots and steel the case of trust shares on the down-side; that is, there is a growing
for castings, was 5% less than in the full, year 1947 and greater than
discount on the trust shareholder's participation in assets which are
in all of 1945 or 1946.
The indicated total output for the full year
already being depreciated in their own stock market.
1948 is more than 88,000,000 tons.
that
States
United
'
.
,
largest
June, 1947. -
which they logically should.* For.
speculative behavior, the' discount
reported statements of profits exaggerate the'amount of corporate
habitually is greater, rather than smaller, during bear periods; and
income available to pay dividends, expand plant, raise wages or
conversely, it is cutomarily reduced during bull markets. Typically,
reduce prices.
a tabulation of 11 representative trusts shows that between Feb. 28
Dr. Slichter said there are two main reasons for the exaggera¬
tion in profit statements: The fact that most corporations still insist
and Oct. 23, this year, during a rise from 167 to 190 in the Dowon
counting a rise in the cost of replacing inventories as profits Jones
average of industrial stocks, the average discount on 11 rep¬
(and because most corporations count the rise in the cost of replacing
resentative trusts fell from 33 to 26%.
plant and equipment as profits.
This, of course, is the exact converse of what should happen
"It is obviously ridiculous," he added, "to count a rise in costs
as profits and yet most corporations do it and pay stiff taxes on the
according to standards of common sense; for the market's valuation
amounts so reported."
of the underlying assets is more precarious—and hence more, and not
,
Ox
oldest
private bank¬
ing ffcrmriiitfae.
fore
Discount Variations Significant
the
and
.
.
&
riman
,
'
1818, Brown
Brokers Har¬
.
Other major
1,1949.
Established
in
..
&
,
Market Valuation of Their Shares
upturn was noted in overall industrial production
.
Harriman
Co., 59 Wall Street, New York
City, announce that Frederick H.
Kingsbury, Jr., hag been proposed
for general
partnership as
last week above the level of the preceding
_
5
Steel Production
The
fractional
Aei.
m
(2403)
a? f'4
vi
A
in
.
ts
attitude
whether or not the re-
16)
DIVIDENDS
*
GALORE
\
,
Time Inc.
approach of Christmas and attracted by many
promotional sales, shoppers increased their purchases last week. The
dollar volume of consumer buying was approximately even with that
of the comparable week in 1947.
Interest in toys and small gift
items rose appreciably.
" ..."
Stimulated by the
.
The volume of wholesale orders the past week slightly exceeded
week and of the similar week in 1947. Fill-in
orders for seasonal merchandise continue to be numerous.
Many
,
,.,,
Kingan & Co.
McGraw
(F. H.) & Co.
Nothing
American Maize Products Co.
than
that of the preceding
buyers attempted to maintain inventories at a moderate
»lections, however, were less prompt than a year ago.
;
STEEL OUTPUT
Some
on
the
Congressmen, getting
(Continued on page 28)
%-■'j
.
Established 1888
-
INC.
£
.
**"
ready to attack the steel industry
■
the
MEMBERS N; Y.
63 Wall Street,
SECURITY DEALERS
New York 5, N. Y. J
-
Monday
Issue
"Chronicle"
dividends
h.'
-
the
helpful,
for
,
FREDERIC H. HATCH &-CO.,
controversial capacity question," will find their ammunition
of
Bought—Sold—Quoted
Col-
SCHEDULED AT 100% OF CAPACITY
UNCHANGED FROM WEEK AGO -
;
level.
more
ASSOCIATION;-'.
C
Bell Teletype NY 1-897
declared and
when payable
coverage
6
(2494)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
The Automobile and the American Economy
f
Automobile Securities
By HON. CHARLES SAWYER*
Stressing importance of economic growth under in* enterprise, Secretary Sa.vyer hold5 stockholder,<along with labor and management, constitutes pari of ihe business structure. Says we must continue to
Mr. Babson discusses automobile securities and
says it is evident'
insider* have been getting oat of their motor stocks. Gives
v
reasons
4v/by insiders
.•
make'capital investment attractive and contends business is healthy and on sound foundation. Asserts
"there is nothing to be afraid of," though some dis:ipline and restrain and even sacrifice to deal with
mnauonary problems may be required of all.
.
j
p
money
regard history as a chronicle of campaigns and battles—a record of the rise and
dynasties and empires—the success and failure of great warriors. The great events
history, however, are those which mark definite progress in the struggle of men to achieve
stand-^
of living
ards
those
and
mark
which
changes in the
ideas
and
symbols
which
by
men
live. What
this
worked
miracle? What
dualities
of
the
or
mind
ooay of man
contributed to
this
amazing
result?
Charles
Curi¬
osity?
Sawyer
Desire
for
money?
:—;
:—~
;.—:
—r**
basic plans and decisions and
responsible
These
the
the
are
people
and
for
think
that
tratiorr
stockholders
are
This is
Some
and
one
highly inaccurate
a
concept. That may
nave
100 years ago; today,
been true
however, the
the
for
_.'
- -
Men
Men
point
industry
of
works
the
•
■.
.
n^end.
f^entf.
automobile
results.
managers.
managers
same.
final
—
tional
are
as
way
the
a new
shift.
gear
,
Therefore,
7
systeri
our
benefit
of
th$:
great national
major factor in peace!
output
and
employment!,'
ownership of-officers and direc¬
tors in
publics-held corporations
try in time of
skill
the
at
service
Prior to the
7
is less than 4% of the stock hold¬
industry
ings outstanding. The tremendous
of durable goods for civilian
At
present motor, -vehicles
in
New
York
that the
e en:, getting
sign the credit; but one thing is
clear—this great achievement is
the work of
and
men
live and labor in
Men
do
things
want to do them
are
women
free
a
who
society.
marks
they
because they
the
distinction
democratic and
a
tarian
society.
When
ourselves the question
will the next
ever,
be¬
totali¬
a
ask
we
round
one
the
on
*
great
t.
„
.
mi_
^
who make profits possible to
par¬
ticipate in the fruits of their ef¬
forts. We must give consideration
to the two groups who make in¬
mystery. Will Americans want to
should
'
hundred
one
lion automobiles?
;
t
>'
conceive and direct production.
another
mil-
If
they want to
them, will they be able to
make
s-do so?
.
Our aim should be to maintain
Labor
desires
to
share
and
—
share—in the fruits of its
effort.
Management also should
be given adequate reward tor tne
good
judgment,
courage,
skill,
energy
foresight
and
devotion
which)are/required to operate a
type
of
developing
society
wjiere men will want to do the
successfully!
I
spoke
earlier of the importance of the
things
symbols and ideas by which
a.
typified by this magnifi¬
accomplishment in the auto¬
cent
mobile
world.
You
and
I
believe
in free enterprise. This
great pro¬
of
motor
vehicles
was
duction
wrought by free enterprise
as we
understand it. Will free enterprise
continue to function and
grow,
adapting
past to
changes
of
itself
new
has
the
made in the patterns
are
one
thing is
growth. Growth
—
in
conditions? Whatever
capitalism,
sary
it
as
necesr
come
can
only from the creation and profit¬
able investment of
capital. When
our system is
healthy, profits are
earned, and these earnings are
reinvested. The result is more
jobs,
products,
more
satisfaction
in
—
more
human
short, economic
and social progress.
Labor, Management and
Stockholders Comprise Business
Structure
business
live.
frequently refer
capital and labor and assume
that those two elements
comprise
the whole of our business struc¬
ture. The truth is there
elements in the
three
are
present-day busi¬
structure.
There
is
a
very
large
group
known
as
labor,
does
all
of
the
manual
work and an important
part of the
which
mental
work
dustrial
large
of
involved
process.
group
people,
a
made
where
and
is
a
very
comprising millions
majority of them
women, who have
plants
in the-in¬
There
never
their
who
are,
seen
products
for
the
part, unfamiliar with the
the
opportunity,
hind them
most
Sawyer at
a
Automobile
ciation,
by
Secretary
dinner meeting of the
Manufacturers
Detroit,
Mich.,
1948.
Asso¬
Dec.
9,
worth
built
into
t|
The speed with which reconver¬
sion
was
accomplished
by i the
and
the
automobile
the
It
cars.
automobile
from
—
is
too
bad
dealers must
these
extravagant
mistaken policies of the
tor
car
mo¬
manufacturers.
Notwithstanding the above com¬
ments, I had much rather have my
money in a new automobile than
in the stock of the
company which
is
manufacturing it.
Certainly, I
would riot buy a second-hand car
the old standard
gear
shift.
One might as well
buy a
horse and buggy.
Just in
which had
closing,
let me say that there is one man
in the world who could knock
my
forecasts galleywest. His name is
Joe Stalin!
If our troops should
Set mixed up with his soldiers in
or elsewhere,-we all would
China
^
thankful to own any kind of
automobile at almost any
price,
especially if Joe should "acciden¬
an
tally" drop
bomb
a
on
Detroit!
the
and
depression. It was the
important single contribution
the smooth transition from
time to
to
war¬
a
to
work, and offered fresh
tunities
to
those
who
oppor¬
dis¬
were
CLEVELAND, OHIO—Roderick
family owned and
these
companies
Second-hand
civilian economy.
a
Certainly the
it
doubts, ask
has
three-fourths
of
the
auto¬
Including drivf
ing to and from work, mileage for
business
amounts to
use
from
on
Government
manufacturers'
be
ancl
get
*
a
bid
a
a
have
for
of
been
entitled
that
they
It
its
has
Just
before the end of the
century, the
land ran out.
The physical
frontier
vanished; and with it
free
older American pattern
of expansion and
The
our
can
frontier
opprtunity.
was
opportunities.
men
a
symbol
These
of
Ameri¬
and women could
the
see
tangible results of their labor.
They were important as individ¬
uals.
They knew the satisfaction
working with others to build
of
homes
and
industries,
establish
law, and
school systems.
Pushing back the
frontier meant
progress; it also
legislatures,
meant
courts
continued
the frontier
was
freedom.
When
gone, we needed
another
symbol;
peculiarly suited
can
of
found
we
to
our
traits—the automobile.
Automobile
For
are,
a
means
much
way
he
the
freedom
wants
more.
It
in which the
to
to
go.
stands
who
make
buy them.
them
It
for
American
also
other
counts
and
of
with
messed
facts
In
mobile plants built in the
past
10
is planned for
the
black
Why
af¬
cap
is
orders
market
Insiders
space
car
be
transactions.
Are
he
is
not
cars.
not too
his
own
addition
w;age in¬
and
the
cars
are
good anyway. The bodies
In the half century since
Ford, and mudguards are made of tin;
Duryea, Olds and the other early you can't get into some cars with¬
manufacturers
started
putting out knocking your hat off; the
their cars together in their
alley doors are too wide and heavy; the
workshops,
the
automobile
has headlights are for ornaments in¬
changed the face of the nation. stead of usefulness: while cus¬
Since
1900,
15
hundred
different
tomers
are
makes of passenger cars have been
forced
launched
sories."
in
the
United
States.
in
never
actual
came
production.- Each
made
its contribution.
j
live
because
have
of. the
increased
friends and
We
and
have
our
think
differently
automobile.
our
circle
We
of
circle of interests.
increased
our
tempo of
getting tired of being
buy all kinds of
acces¬
Automobile
ing
owners enjoy read¬
illustrated newspaper adver¬
tisements of their
cars.
We
to
ments
printed
are
instructive
teresting,
of
own
These
but the
and
other
advertise¬
and
public
in¬
is tired
listening to thje automobile bal¬
lyhoo that,
comes
over
the radio.
can
best provide
him living. We have built new indus¬
Owners are at last beginning to
steadily increasing abun¬ tries and added to our economic
dance of the
things he wants and potential. Old and new industries realize that they are paying for
needs. Behind a man's car is an
have
been stimulated
and
kept these expensive radio programs,
economy
with a
industry that
has
become
a
na-
(Continued
on page
38)
which
expense
is
added
Jaffe
&
.
Co.,
,
Union
Gillis
Stock
Exchange;
was
formerly
Wood, Gillis & Co,
a
Mr.
partner in
Halsey Sluart Offers
New Bedford Gas Notes
to
Halsey,
Stuart
&
Co.
Inc.
on
JDec. 15 offered $5,000,000 25-year
3%
notes,
son
Light Co.,
series
A*
due
Nov.
1,
1973, of New Bedford Gas & Edi¬
crued
interest.
at
100 V2
and
ac¬
General redemp¬
tion prices for the series A notes
are scaled from 103% to 100, while
Bearish
asking a large manufacturer
why
Cleveland
These
hold-ups
buying
motor stocks, he said, in
three
cars
for
every
four em¬ to
whining about coming
ployees.
One plant has provided1
creases,
frozen
prices
parking to accommodate 20,000 election:
"The 1948-49
parking
new
soon
trade-in
E.
to
several
up.
will
G.
seems
give
brought out at public hearings in
Washington,
together with
ac¬
At most auto¬
off the drawing
board, but most of them have been
Freedom
American,
means
where
to
years,
we
average
automobile
workers
Some
always have
people who keep moving.
the
move
Means
as
and
biles are made. It is the only coun¬
try, however, in which most of the
one
Ameri¬
possible and
United States is not the only coun¬
try in the world where automo¬
ford
placed
ever,
profit on volume.
It
its workers well.
The
paid-
two
So many speculative buyers, how¬
economic
to
base
to
must
Roderick A. Gillis
^
with
Commerce Bldg., members of the
much of it in taxes.
so
ing railroads, building new
munities
new
industries.
as
second¬
your
business.
good
shame
Uncle Sam
industry is symT
cheaply
would
you
They
terrible time during the war
years
i
American
only half what
I do not blame the dealers.
had
the
market
in cash for your old car,
cases you will find this
market
com¬
associated
have
dealer what he will
different dealers that the
of
become
you
hand trucks.
revet
.
any
If
as
conditions
has
are
have had to pay for the same sec¬
ond-hand
car
six
months
ago,
while since Nov. 2, 1948 you can¬
automotive products, in¬
: \
of
many
excise
The automotive
bolic
pay you
In
to
not
derived
billion dollars in
over a
nue
half
In the fiscal year 1948
Federal
well
over
going to smash.
produce
the
Gillis
Market
used-car
employment in the East. It kept
the economy on the move—build¬
with
A.
the Exchange)
on
system at its best. It is efficient
It is competitive. It has aimed to
satisfied
Joins G. E. Jaffe Co.
the big manufacturers themselves
think/
is
willing
were
which
cars
Although the Umt^d States has
only 6% of the world's population,
cluding gas, oil, tires, vehicles and
who
all
are
traded
not
8V4
14
industry confounded
prophets
of
unemDloyfneat
parts.
jobs for those
18%
split-up.
producing and the apparent good
future
outlook,
today's
stock
prices are very significant of what
most
automobile
tunity. If attracted heavy invest¬
created
10%
Roderick A. GiUis
Considering the large output of
•
ments of
foreign capital. It
stocks
17%
*7<;%
to
adjusted
are
taxes
the
address
(Ford
dollars
ones.
Americans. It
been,
unrecog¬
billion
new
the
processes. These are the
stockholders. There is a third, not
nized group who take the
capital,
/ employ the labor, 'and make the
being added to old plants and 1.11
business purposes.
in oppor¬
Trucks
■'Wot
develop,
land
in
the
West.
Throughout the Nineteenth Cen¬
tury' the frontier beckoned
to
rich
Kaiser-Fraser
Mack
worth
our
do today. Be¬
century in which
was
during the'
dollars
and
the
we
a
doubled
million
mobiles and half the trucks.
A
third of the passenger car mileage
in the United States is for
purely
men
West, in
are
facturing
*An
as
was
were
war—800
of the total.
We
frequently
Middle
facilities
economic expansion meant land to
manu¬
too vocal and
the
early years of the * century,
fathers talked about freedom
vestment opportunities for
capital
to
ness
In-
went the
However, the providing of in¬
is not enough. We
i
e
'
millionth motor vehicle be made?
—the
answer
is
wrapped
in
make
of
frozen
wages,
use.
Rofer Babson
prices, and a
holdings which -oc¬
and'
7
'
drying up of
exchanges of parts make up one-third of all
purchasing
this country take place largely consumer durable
power due to the gengoods.
i
without the knowledge, and cerThe value of the industry's warvm?' Ih<;
I
tainly without the control, of the 'time contribution is incalculable. lowing are the prices of stocks on
certain dates:
men
who
run
the
Before
the
enterprises
war, in 1939, the total
•'
1948
themselves.'
value of automotive shipments was
Name of
1940
Before
1948
four billion dollars.
If we are to continue the
By
1944
the
Company
High
Election Recently
great
progress
we
have made indus¬ value of automotive shipments in*- General Motors80%
65%
57V4
*141
«0'/i
52
trially we must continue to make creased to 17 billion dollars, and Chrysler
S tadeba ker^1_
27
38%
21%
capital investment attractive; but half of the products were pro*-, Hudson Motor
17
841/2
13 V4
beyond this we must enable those duced by prewar facilities. These Nash-Kelvinator
25%
18%
151/2
shifts in stock
cur
when, if dustry go — labor, those who pro¬
hundred duce; and management, those who
—
They
fourth
a
the
.„
made to do them. That differ¬
ence
tween
re¬
_
because
or
their
was
fear
*
The irresistible urge of the inven¬
tive genius? It is not easy to as¬
of
elected.
the largest produce!
was
here
man
the.counf
of
that
learn
since
Harry Tru¬
the automotive
price
suffer
I
e.ver
war.
war
very
motor stocks
•
engineering
of
discuss
7—-——
what
out
assets—a
with its facilities and
week
evident from
^ b
managers own only a small frac¬
tion of corporate stock. The total
this
insiders F have
whole economy.
It is orje of our
time
will
It" is
illus
an
I
industry.
/
.
T
th
th?
to
-
If you think you can't afford to give
your wife on Christmas some
good jeweiry, fine furniture, or something else real, it may be O. K.
to give her and yourself a good new motor
car, provided it has no
Some
uigner
in
bearish, and asserts "I had much rather haye my
automobile than in stock of company making it."
are
\
?
fall of
of
By ROGER W. BABSON
*
t
Secretary of Commerce
'
Thursday, December 16, 1948
the
sinking
fund
redemption
prices
range from 100.52 to 100.
The net
proceeds will be applied
of outstanding
promissory notes in the amount of
$2,500,000 and the balance will be
repaid to the Plant Replacement
to
the
payment
Fund of the company.
.The company, operates in Massa¬
chusetts, serving approximately
population of 222,000.
a
Volume
COMMERCIAL & FINANCIAL
THE
Number 4760
168
i Preservation of
From
Washington
Ahead
I
.
of the News
a
| Senator O'Mahoney
...
_
.
•> "•.
<
■
Senator from Wyoming
disturbing world conditions *ird efforts to preserve our free economy
no one in Washington wants a police state, but deplores domi| nance.of big business, and cites knrge; amount of security offerings floated by a few investment houses.
Deplores drift toward centralism which breaks down focal economic independence both in government and
business and asserts security dealers have vital interest in this problem.
comments on
against- attacks by communism.
By CARLISLE BARGERON
This is about the season of the year when the economists, sta¬
tisticians, physicists and the like hold their annual conventions. Un¬
like the Rotarians, the American Legion, the American Association
7
Free Economy
By HON. JOSEPH C. O'MAHONEY*
...
U. S.
.
of
(2495)
CHRONICLE
Says
*
good
members of
felt that
The Executive Secretary of the New York Security Dealers' Association was
there is such £ thing, who hold their annual
enough,
to send me a copy of the memorandum of Dec. 2 which was mailed to
gatherings irr the summer, the economists, sta¬
tisticians, the physicists and the like, hold-theirs this Association ^giving noticeof this meeting. Your Committee on Public Relations
it
wouldbe
•
•
•
•$-—1
1
■ ■ '*'—:
.-during the Christmas holidays.
;■ * ;——-—*—
1' 1".
\
Formerly, there was an understandable rea¬ appropriate to
evening will not add to the con- freedom and real democracy and
that in domestic affairs they are
son* for
this;
This was the time of the year have a repre—
fusion-your committee sees.
committed to working out a pro¬
:
they could get away from work.
If they were sjenta-tive
of
This Is a Time for Statesmanship gram
of social
and economic
working, for the ' government, they .could take
if
Grocerymen,
/.
•
.
.
.
"annual"
or
"sitik"
4ie V govern¬
ment speak
leave; if they; were working
employer this was the best time
•they could steal'away.
.....
•«.. '
•.
Anyway,
since
time* immemorialwe are
.•■for
..
private
a
In
the
|
this
Carlisle
■
Bargeron
period, such as that for every 2,1,person;
are
receiving adequate medical care, 13.5.
-who
persons are
.
fabric.
•
Now they are
which
is
scope.
You
far
-
-
concerned about what is likely to happen to them,
poignant than what is happening on a broader
It is all very well for men to write
more
administrative objectives.
,
appreciate this.
can
mere
,
Well, this year we are likely to have some very interesting in¬
formation, indeed, from these people. Heretofore, they have been
solely concerned with what is happening to our foundations, to the
National
for
time
a
statesmanship in
.
not; that the American race is houn^
to expire in the year 1980 because our "families are having'only 1.7
babies while the Russians and the Chinese are having 8.3.
,
•
ever /was
with emphasis upon the
rather than on the
humanitarian
....
fellows'; Oui
of .information has always been enriched in
before assembled.
read
there
progress
business and in
If this be true—and certainly it
on the part of
government, this is. it.
What we is true, witness our bipartisan
think .and/sayvandndo must' he foreign policy and the declaration
m.an^:
since
viewed against :the background"of of all political leaders in the re¬
the
election"
world events.
NOthing that we cent campaign of their devotion
and /that
the
oh o i c e
chn say or do ■ can have the to social progress—if this be true,
fell
slightest effect except within the I say, then clearly we must meas¬
upon, me
be- :
structure created by
cause
I
the world ure every political and economic
hap¬
piroblem which, reduced to its bare proposal by the effect it has on
pen to be the
bones,
is the struggle between the power of the people to con¬
Seri. J. C. O'Mahoney
ranking Sen¬
communism and democracy, be-, trol their own political and eco¬
atorial
mem¬
ber
of the
Joint
Senate-House tween the philosophy of those who nomic destiny.
Committee on the Economic Re¬ would have the economic affairs
We have a world problem only
of the people managed for them
befcause the power of the people
port.
This is at once a challenge and the
philosophy of those who to* control their own affairs has
and
a
warning and I sincerely believe that these affairs must be
been undermined in the modern
hope that my contribution this managed by the people them¬ world;
It has been undermined
selves
i
nave
no hesitation
nesuauon
m
selves.
I
have
in
by the concentration .of political
saying
that the people of the, an(^ economic power and we shall
*An address by Senator O'Ma¬ United States have accepted the I
no^. begj,n t0 understand the sighoney'at meeting ; of the New
destiny of this country to play a nificance of the events of our
York
about to appraoch that period when the news¬
papers
seem
to have room for; the "papers'.
the economists, the statisticians' ;and • the
physicists
If
/confused -/
h in king
;
L^which
!
i Certainly- if ever there were a
time for clear thinking, it is now.
!
of
view
Indeed, we can .do that
it unemotionally and
objectively. But if we begin to write about our own individual
Security Dealers Associa¬
death, that is something else again. Notwithstanding that people
tion, New York City, Dec. 10, decisive role in world affairs for. time unless we realize first of
are every day dying who
never died before, we become excited, if
the
1948.
preservation of
individual I
(Continued on page 38X
not hysterical, when we discuss the jsubject.
world.
pontifically about the end of the
,
without the slightest trace of fear; we can do
light the American Statistical Association and the Amer¬
in Cleveland on Dec. 29. In
In this
•
ican Economics Association are meeting
recent years these two associations have exulted at their Yuletide
gatherings, when the rest of us were so stuffed with turkey and trim¬
mings that
didn't have tne resistance to cnantngc
aoout
the government, who
we
those of them who were making their mark in
had nationally
extol
\f,
attained fame; and having pointed to them,>-thev would
rectitude of statistics and economics. The mil¬
scientific
tne
lions who had lived before statistics and
economics
came
along were
and diagnosed as people who had not lived at all.
heat..and electricity you wondered how we had- ever
formally pitied
stehm
Like
gotten along without these sciences.
...
,/■
t
■
J',
j.
is to be different,
But this year it
,
/
President '
all.
at
Head. Office—Toronto
1
R. S. McLAUGHLIN,
CARLISLE,
C. H:
Cleveland will not be one of rejoicing and
ments
CANADA/
.
I am told. The meeting at
recounting of accomplish¬
Rather, it will be a meeting to save the sciences of
statistics and economics, and undoubtedly at another meeting some¬
where, that of the physicist as well, against, the doubting Thomases
that have arisen in the wake of the Presidential campaign polls.
.,
'
■
Established 187 It
;
:
!
'
*'
Vice-President
'
ROBERT RAE
,
Vice-President and General Manager
—
These well known pollsters used to be looked upon in awe, at
limes in absentia, at times in person, by these Christmas holiday
-
CONDENSED STATEMENT as at
meetings. They were the graduates summa cum laude of the statistical
and economic schools.
Through their rise in national prominence,
statisticians and economists everywhere had advanced themselves;
they .had
have
to
come
Cash
high places in government, to formulate
right hand of our
pensable to them.
on
Hand and in Banks, including
-V
i
___1
Call Loans
——
-
-
statistics and eco¬
the profession, of
pollsters made
thefce
But
Whereas, the statisticians and economists
easy.
had for¬
before concluding that 3.1 fami¬
merly considered a wealth of data
living
pollsters boiled it down
to a sampling process.
If you had'100 million people the thing to
do was to sample only 3,000 people and perhaps 22 babies.
Never
in all the history of men has the business of statistics and economics
lies gave
birth to only 2.6 babies and that 85.4 people were not
Bank Premises
and
■
-
Then, kerflunk—and the pollsters go terribly wrong on
dential
election.
Cleveland
the
As
statisticians
and
economists gathering in
industrialists and bankers sending thqm back to
high stools, away from the throne.
their wage scale
They see their importance and
jeopardized. It is no time for the reading of ordinary
preserving the profession.
The meeting at
year.
Cleveland is to be
of
no
we
—
LIABILITIES
Deposits
i
Deposits by other Banks__
statisticians
economists
and
this
what went wrong
regain our standing.
Letters of
Credit,
*
—_______—______—604,484
Acceptances and Sundry other Liabilities
10,261,850
$37^423,277
Capital Paid Up
Reserve Fund
—
(Special
Leydecker
The
Financial
SAN
Chronicle)
.OAKLAND, CAL.—Jay C. Rut-
ledge
has
Stephenson,
joined
the
Leydecker
1404 Franklin Street.
st3ff
&
$ 7,000,000
_____________
*
____,
Undivided Profits
Total Liabilities
—
—-—
___—
___—_———
A COPY OF OUR
10,000,000
1,054,510,
—-__————
ANNUAL REPORT BOOKLET WILL
*
18,054,510
|£9^n=£I
of
Co.,
to* The
Financial
FRANCISCO,
Charles E. Cagle
Swift & Co.,
members
*
of
Chronicle)
CAL.
Branches and
Correspondents throughout Canada "
Saii
WALL STREET
-
A. W.
RICE, Agent
—
is with Henry F.
'the'
3 King William Street, E. C. 4
NEW YORK AGENCY: 49
490 California Street,
Stock Exchange.
BE SENT ON REQUEST
<£-
-London, England, Branch:
to
6,055,390
L___~
—
'
Henry F. Swift Adds
With Stephenson,
(Special
$358,501,553
-—
-
Notes in Circulation
leisurely thing revolving
It is going to be devoted to the question of
and how can
10,356,295
$£93477^787
__._L.__.—^
.
accomplishments
the
around
first,
136,034,805
5,803,570
Acceptances/Letters of Credit
Sundry other Assets
Total Assets ___—i.
with the polls, and secondly,, the ways and means
what went wrong
—-
.—
their eye shades and
The agenda, as I understand it, is to be devoted to,
papers.
of
They visualize our
it, this is no time for foolishness.
see
the Presi¬
______
—
Liabilities of Customers under
properly under the capitalistic system, the
been made so easy.
,
t
Commercial Loans and Discounts—
35,363
162,335,441
10,858,457
$241,283,117
••
nomics too
68,053,856
Bank of Canada_w-^~- $
Deposit with Minister of Finance..
______
Government and other Securities-—;.—______————-
had come to sit at
leading industrialists and bankers, to be indis¬
policy over the lives of millions of people; they
the
30th OCTOBER, 1948.
ASSETS
Francisco
R. G. HOGG,
Assistant Agent
E.
,H
Assistant
SUBNEKCA
Agent
UQA
all
Thursday, December 16, 1948
Analyzing the Business Situation
Dealer-Broker Investment
By LEO WOLMAN*
Professor of Economics, Columbia University
Referring
to election result
as
Recommendations and Literature
"the late unpleasantness," Dr. Wolman urges caution in tinkering with
It is understood that the
economic structure.
Says we must understand fundamental issues and objectives to be attained in
order to have cooperation, and
points out present situation is unstable, because prices are high and
are on verge of
buyers' strike. Calls attention to high break-even costs, which necessitates
large output to insure profits, and says backlogs in orders are disappearing. Sees no gains made by
labor in high prices and argues fourth round of
wage increases will make things worse. Urges more
work, more saving and more economy. '
firms mentioned will he pleased
send interested parties the following literature:
to
consumers
^
I don't suppose
•
that anybody here expects
Deflation Insurance—Discussion
—El worthy Co., Ill Sutter
14 Wall
Street, New York 5, N. Y.
(address request attention of Mr.
Plunkett).
Street
San Francisco 4, Calif.
B.
Muter
Paper Manufacturer—Data on
to make any forecasts; certainly not
interesting 1st mortgage industrial Price,
,
me
Co.—Circular—Hicks
&
231 South La Salle Street,
£fter what many of you hold to be the late unpleasantness of just a month ago today. That's bond—George Birkins Co., 40 Ex¬ Chicago
4, 111.
made everybody
/body more cautious, including economists. So I will have to content myself change Place, New York 5, N. Y.
today
National
with
is
what
do
we
cooperate with the same
idea in mind as to what the pur¬
a
safer
much
be anyhow.
of the cooperation was? Be¬
if we were not cooperating
Now,
enterprise,
pose
trying to ana¬
lyze this situ¬
cause
difference
with comprehension, with under¬
And
ation.
if we were not
the goals, we might
very well while we are cooperat¬
ing lead ourselves into a lot of
standing,
want
I
begin
with;
what it is we
are
really af¬
ter.
I suppose
all
we
And
agree
that the most
desirable hu¬
man
which
Prof. Leo Wolman
perative
relationships
emst among people; that is, the
tendency is among people to co¬
operate with one another, be rea¬
that
with
I
aim
don't for
another.
one
certainly
foremost
ought
to
labor
of
And
be
the
relations.
moment doubt that
a
that is the foremost aim in labor
relations
of
great
a
of
number
well-meaning people in the United
states.
Our education ought to be di¬
rected toward furthering that co¬
operation. But the education is
a -difficult
undertaking, because
there are so many kinds of things
have
we
to
use
the
as
material
for education,
In labor
or
issues
situation
goal is.
relations, for example,
in all matters of economic pol¬
icy in this
country, there is a
*reat range of issues about which
tfap people of the United States
need to be educated. Some of the
issues you heard discussed this
this
about
United
got to know what
And
understand how
whole
the
in
we
have got to
approach that
we
that's
going to talk about this
question in general terms. I in¬
stable
for
is
the
state
present
nomic
in
situation
the
it
because they have
had
we
a
of
this kind
of
was
to perpetuate
economic situation,
aftermath
thing
of
it
this
to
be
Figures
and
Utility
on
Stock
Guide-
public utility preferred
I
don't
think
it
Tax
Replacements—List—Stan¬
ley Heller & Co., 30 Pine Street,
N. Y.
New York 5,
Television
Industry—Review—
Sutro Bros. & Co., 120
New York 5, N. Y.
Broadway,
Data—Charles
I
King & Co.,
Broadway, New York 6, N. Y.
White
1, Mo.
Dividends
List
—
—
&
Republic Natural Gas Co.—Upto-date
Aetna
*
analysis—First
Co., Mercantile Bank
Building, Dallas 1, Tex.
Strawbridge & Clothier—Mem¬
M. Byllesby & Co.,
Exchange Building, Phila¬
delphia 2, Pa.
Stock
Standard
Engineering
—
hears them he will know they are
I think all these techni¬
Black, Si vails & Bryson, Inc.—
got
nothing
with the situation. These
are
do
Summary and analysis—Eastman,
siirw
Dillon & Co., 15 Broad Street, New
York 5, N. Y.
to
are
available
John
B.
pie/things; they are-matters of
simple, evervdav observation. \
attention of R. H. Burton—
Edward
L.
South Main
Victor Chemical Works—Survey
—Goodbody & Co., 115 Broadway,
New York 6, N. Y.
Also available are analyses of
the bond issues of the reorganized
St. Louis-San Francisco, and of
Phillips Petroleum Co., a report
on Post-Election
Conditions, and
leaflets
switch from Parke, Davis &
A. - Fuller;
stop to think of them. You think
features that characterize business
to Sharpe &
system works.
Because
if
w£' don't know how it works, we
may tinker with it so much as to
really injure it.
JUow, that ought not
to
be
try, whether
you are talking about
labor force or you are talking
about ordinary citizens who go
and vote—or who ought to go and
a
this
economic
The
a
difficult subject to study now and
to ^understand and to transmit to
thp general populace of this coun¬
vote—how
thing is moral
immoral.
a
think it is. jn the United States1 today/ and
they are sources of weakness, and
not of strength.
today differ
economists
lines—that's
ference
where
lies—that's
the
not
dif¬
an
aca¬
demic
difference, that's not
theoretical
difference,
that's
It
makes
lot
a
of
One
these
features
is
that
high. Now, everybody
knows that. Prices are high. I'd
like to put it in another way that
sounds
a
way,
difference
of
prices
a
practical difference.
system
formidable—or any¬
more
I think it gives you a more
vivid picture of what one means
when
one
that
says
prices
% say that ought to be an easier
question today than it used to be
stand—where every¬
body stands—on that question. I'll
high—this has become an expen¬
sive country to live in. It is an
tell you
stable
expensive country for more and
more people to live in. And that
it
is
we
now
live
are
in
so
world
a
dif¬
ferent kinds of economic systems
we
don't
about
have
our
whether
we are
we
to
own
sit
many
and
worry
and
see
alone
understand that, but
in that
wonderfully
liar
desirable scientific
where we can compare
pecu¬
position
our
eco¬
nomic system with others.' And
not only make that comparison,
but tell people about it when we
think we have made
.careful comparison.
So that when
we
a
valid and
talk of coop¬
erating with one another, which
I fhink we ought to be
trying to
dp all the time, there is a prior
question, and the prior question is
piis: When we carry on coopera¬
tion, we do it with understanding;
♦Stenographic record of
an
ad¬
dress by Dr. Wolman at the 53rd
Annual Congress of American In¬
you
why. If
you
think it is
a
situation, you want to let
alone; you want to do more of
the same thing that
produced this
situation,
whatever
that
same
thing
was
stable,
and
—
what that
you
all
know
If you think it is
was.
think it is permanent.
I don't know what
"permanence"
means in this insecure
world, but
you think it is more or less per¬
you
manent, and
you
think it ought to
be perpetuated.
Now, if
you
think it is unstable,
your practical
policies
the
You
opposite.
unstable
a
are
think
entirely
it
is
situation; therefore,
think it is
That's
Therefore,
an
you
risky to perpetuate it.
very
you
practical decision.
think it is undesir¬
able to continue policies that tend
to perpetuate it because if
you
think it is unstable then you also
believe that
continuing
cies that tend to
the poli¬
perpetuate this
business will make it
worse
rather
dustry, sponsored by the National ithan better and make the probAsaociation of Manufacturers, New
j iems you have got to deal with
York
City, Dec. 2, 1948.
i extraordinarily
analysis of
list of Ex¬
Dohme,/
Establish
.
>>£•
Co.
more
difficult
of
one
its
unstable
elements
that has introduced into the situa¬
tion a very great measure of un¬
—Analysis—Vilas
relatively expensive (as
they have, and are continuing to,
in all probability) then there
gets
under way a changing relation¬
ship between income and prices.
Incomes of
some
people fall be¬
hind, and we^do not know who
they are; we do not know how
there are; we do not know
what their aggregate income is.
That is always true. We have a
lot of information, but we never
many
have the needed
formation that
we
But
we
letin—Laird, Bissell & Meeds, 120
Broadway, New York 5, N. Y. /
get along without
that information. We can almost
guess it
a
nak^d
Denver
&
Rio Grande Western
Railroad
ney
Co.—Study—Smith, Bar¬
14 Wall Street, New
5, N. Y.
,
& Co.,
York
eve.
And
we
can
on page
26)
guess
...
Westeel Products Limited—Re¬
367 Main
Dunningcolor
Corp.
—
& Sons,
Street, Winnipeg, Man.,
Canada.
&
Crampton
Corp.—
Analysis—C. E. Unterberg & Co.,
61 Broadway, New York 6, N. Y.
Also available is an analysis of
Miles Shoes, Inc.
Card
memorandum—Bennett, Spanier &
Co., 105 S. La Salle Street, Chi¬
cago, 111.
COMING
EVENTS
Globe & Republic Insurance Co.
In
Field
Investment
—Analysis—Allen & Co., 30 Broad
Street, New York 4, N. Y.
R. Hoe &
Dec. 16, 1948
Co., Inc.—Card
orandum—Adams
Adams
mem¬
&
Co., 105
Street, Chicago, 111.
Income Leasehold
—Edward
D.
North Fourth
W.
Co.—Analysis
Jones & Co., 300
Street, St. Louis 2,
International Telephone & Tele¬
graph—Memorandum—A. M. Kid¬
&
York 5,
Co., 1
N. Y.
Wall
Street,
New
Savoyard
the
Party* at
.
Feb. 12, 1949 (New York City)
Friday Night Bond Club Annual
Dinner Dance at the Hotel Penn¬
Lanova
Corp.—Review and
Oct. 5-9, 1949
(Colorado
Springs,
Colo.)
National
sociation
Security
Annual
Traders As¬
Convention
at
The Broadmoor Hotel.
re¬
appraisal—Kalb, Voorhis & Co.,
25
Broad
Street, New York 4,
N.
Cocktail
sylvania.
Mo.
der
(Detroit, Mich.)
Bond Club of Detroit Christmas
Club.
Y.
by observing things with
(Continued
•
Winters
1
piece of in¬
need at a given
can
Oil.
view—James Richardson
Continental Casualty Co.—Bul¬
new
time.
Glens Falls Insurance;-
&
Hickey, 49
Street, New York 5, N. Y.
Wall
before.
become
Fruehof Trailer; George
Northern Pacific; and Sbell Union
certainty that did not exist in it
Another way of putting that is
that when you get a price move¬
ment of this kind, or when
things
on
Gulf, Mobile & Ohio; Magnavox;
■
Chicago Rock Island & Pacific
are
where
because
a
to
are
works.
in which there
Suggested
changes
or you
about this. And if you really read
into what they say—read behind
the
an
Burton
&
Co., 160
Street, Salt Lake City
1, Utah.
Tax Losses, and a discussion of a
business
-Also available is
Phillip Morris & Co.,
the
present economic
situation in the United
Warner
111.
States is unstable because it's got
these few features. These are the
think
and
Time, Incorporated—Analysis—
A.
Fuller
&
Co., 209
South La Salle Street, Chicago 4,
afternoon. Others are more gen¬
tion; and the other thinks it is a
eral but nevertheless equally im¬
nonstable
situation.
Now,
you
portant issues, and I'd like to com¬
couldn't
have
anything simpler
prehend them under a single term;
than that. And all differences of
naipely, the issue of how an eco¬
opinion are like that when you
nomic
I
memoranda
are
Stetson
Company.
data
terms that everybody in this room
familiar with,
and when he
have
statistical
Utah Power & Light—Write for
♦
♦
Memorandum—Buckley Securities
Corp.* 1420 Walnut Street, Phila¬
delphia 2, Pa.
calities
Inc.—Analysis—Shields
61
Company,
Mississippi
Valley Trust Building, St. Louis
simple
correct.
Now,
what
are
these
two
groups? What do they think? One
group thinks this is a stable situa¬
End
Year
going
forecasts;
analysis.
with
Plough,
& Co., 44 Wall Street, New York
5, N. Y.
William
the policies connected with it.
But first I want to tell you why
is
do
Northrop Aircraft, Inc.—Special
review—John H. Lewis & Co., 63
Wall Street, New York 5, N. Y.
Also
Western Canada Oil Industry—
it, I have got feelings about the
things connected with it; namely,
I think it is unstable. I am
to try to tell it to you in
,
orandum—H.
of
stable.
;
Southwest
Stable
is
Com¬
stocks—G. A. Saxton
common
Co., Inc., 70 Pine Street, New
York 5, N. Y.
contemplate.
Not
Power
\ -'i
Illinois.
on
Conditions
States
Minn.—Special, write-up—
A. C. Allyn and Company, Inc.,
100 W. Monroe Street, .Chicago 3#
&
some¬
present economic situation is like.
And that has nothing to do with
to
Northern
;
certainly the
would
horrible
kind
Corp.—
'
Public
situa¬
a
terms, because I think these
got
Mich.
war,
ii/ferent views about what this
it's
is
question about
no
think it is a highly unstable situ¬
ation. And feeling that way about
That is what my professional
colleagues are arguing about all
the time and, like all professions,
they are in two camps. They are
two" camps
I
because if we did have a
war, and one of the results of -it
United
Economists
Camps of
think
Plastic
process used by the Midwest
Foundry Co., a division of L. A.
Darling & Co.—Reprinted from
the "Iron Age"—Moreland & Co.,
Penobscot Building,. Detroit 26,
obviously go on for a
longer period. But nobody could
possibly think that war was a
eco¬
States?
Two
I
where
with
What
the
of
to
Casting
D.
going to leave
as
period. If
a
tion,
simple in answering:
Precision
Patterns—Discussion of the A. R.
would
solution
very
am
Radio
pany,
that. It could go on. I don't think
forever, but I do think it could go
cific terms; namely, the economic
issues which confront the United
today, right at this moment.
that.
unstable. It could go on
or
longer; there is
tend to talk about it in very spe¬
They
reduce
themselves
to
this
simple
question — anyhow,
simple in stating, although not
than
Union
Analysis—Augenblick & Kohn, 31
Clinton Street, Newark 2, N. J.
,~r
Study of the industry — Calvin
Bullock, 1 Wall Street, New York
5, N. Y.
prettier
a
Reappraisal
my
stand
it
I am not
States
opinion
not
in any doubt
on
whether
you
on
goal.
in
Labor Relations
}
mental
funda¬
of the
one
of
I don't think I
lot of disaster.
a
is
present
our
eoo
sonable
that
States. .We have
society is
in
one
and
trouble, into
couldn't get
you
invention,
either. I did not make it
up for
the purpose of this speech. It's in
the air. It's in peoples' minds. And
that's what they differ about.
agreed upon
to
Petroleum —A
problems than they are likely to
Lawrence Portland Cement Co.
-Analysis—Orvis Brothers & Co.,
Dean Witter Adds
(Special
to
The
Financial
Chronicle)
LOS ANGELES, CAL.—Thomas
H. Wells III has been added to the
staff
South
of
Dean
Witter
Spring Street.
&
Co., 632
Volume 168
COMMERCIAL & FINANCIAL CHRONICLE
THE
Number 4760
(2497) »*
i11 i-i
—
;
i
By HON. EDMOND M. HANRAHAN *
:
•
Securities and
Chairman,
*
Commissioner Hanrahan stresses importance of
administrative
Commission
process
While it. is tme that in these
adversary proceedings the Com¬
ing order pending a formal hear¬
ing, for. a permanent injunction.
mission does combine in itself the
in
functions of
investigation, prose¬
cution and quasi-judicial deter¬
mination of facts and law, the
fundamental
precepts of due
process and fahrplpy are its guideposts.;1 Such [ a combination of
(
our
system of government.
control it by checks, balances and review, good administration lies in
process itself.
Describes SEC operations,
and asserts it has always separated functions of prosecutor from- jury or judge; while making '?air play,!'
its ghidepost. Upholds legal doctrine of -stare deusis^ and contends SEC does not constitute danger-our interference of government in business^
Contends, however completely
.
Exchange
ization to proceed than is the ulti¬
mate judgment of a court
by the
issuance of a temporary restrain¬
of Fair Play
>. Precepts
we
conscience of administrator and in nature of administrative
functions has' been exercised
.
decades
not
approaches the administrative process to praise or condemn it, one musl
approach it as a living fact. Many threads a e woven* into the fabric of regulation which
covers so
many aspects of our activities. Th 2 staple of $11 of them is that set of principles
one
which civil¬
ized
men
cept
Ition still lie in the conscience of
ac-
is
entirely
inde¬
Its decisions
we
have
followed this prin¬
Once
while it
m a
hamstringing business on the one
hand, or of harming the' interests
,
an
con¬
is necessary for us*to reverse our¬
selves.
We have no intention of
proceedings have been re¬
viewed
by the
United - States
Courts of Appeal* and: the Su¬
preme Court: times without num¬
ber, but I know of* no case where
it has been held that
decisions are
of investors
the
on
other, by in¬
flexible adherence to precedents,
iwftesn- bur experience shows m
adminis¬ that the principle
formerly estab¬
prefers charges is dis¬ lished is no longer applicable.
'■
qualified from hearing and decid¬
;ture of the administrative process sponsible only to the Commission.
Effects' of Growth of Adminis¬
ing
a
case.
To
my
mind
when
the
[itself. And that is what I should Its members are isolated not only
trative Agencies ;
V
Commission or any other agency
(like to touch on briefly in this
from investigation and prosecu¬
institutes
However,,
I did not want to
proceedings
its
action
\ talk.
tion of matters in which they aid
limit my remarks to the proce¬
the Commission as opinion draft¬ is comparable to what a court
does in the first stage of a show dural aspects of the administra¬
[ SEC Administrative Processes
ers, but from investigation and
tive t process./ I think
that the
cause proceeding or in the issu¬
I do not profess expertness in
prosecution generally.
Our at¬
No growth of administrative agencies
any fields but my own.
To the tempt is td' preserve a professional ance of a contempt citation.
is
having important effects on our
decision on the merits is made at
j extent that what we do at the
impartiality among these opinion
that time., The Commission/ like living Law—our laws-in-action.
; Securities and Exchange Commis¬
writers, to prevent them from the court, merely concludes that
Here, too, although what I have
sion
has any relevance to
the
the matter warrants further ex¬ to say may have broader implica¬
broader aspects of administrative achieving a psychological stake
tions,
I limit myself excusively to
process, I think it is interesting in the outcome of particular cases, amination in formal proceedings
some aspects of the Commission's
and important for me to tell you and to
and
the
ultimate
develop in them a spirit of
judgment of the
the
foundations of
as
morals
This: Division
of course,
ciple blindly;
for
and
Whether
.
as our
trine of stare decisis. But
the Interstate Com¬
by
Commission.
merce
So far
cerned, we endeavor to apply as
consistently as possible the doc¬
I
and
the administrator and in the na- pendent of the other divisions
re¬
trator who
/
1
'
.
-t,
v
justice..
The
courts
have
for
genera¬
tions
been
spinning this
staple into our
rules
of
law,
and adminis¬
trative
agen¬
cies have been
weaving
into
the
it
fine
of
compli¬
our
cated
and
work.
E. M. Hanrahan
designs
about them.
regulatory
pervasive
pattern.
Few of
activities
our
are
outside
the scope of concern of some ad¬
ministrative
body.
electric
The
,
ob¬
public utility whose
rates, capital structure or opera¬
and
power
gas
tained from
tions
use
we
are
a
scrutiny by
the state commission, the Federal
subject
are
to
Commission
Power
and
perhaps
the Securities and Exchange Com¬
mission.
The
radio
we
listen to
operates under license by and in
accordance with the Federal Com-
aloofness
from
pri¬
litigation before
marily interested in knowing, as
I was, the extent to which the
As
attorneys you will be
elements
fundamental
subway
we
around town is
use
a
of transportation regulated
means
by either the state utility commis¬
sion
the
or
authority.
municipal regulatory
The bank with which
do business is probably under
we
the
state
the
Board
banking authority
of
Governors
Federal Reserve
actions
of
all
and
the
of
System. The daily
of
in
are
us
force.
Our stake in the administrative
is therefore great, and
grows greater with the years. And
it becomes increasingly important
process
for
us
citizens
as
understand
to
that process. *
Its efficiency has, I
been clearly demonstrated
think,
and
its necessity in our complex
economic
is obvious.
No
doubts the good
sense
in committing a body of
technical
problems
to
experts
who
can
spend all their, time
learning what such problems are
one
set-up
seriously
and how to meet them. The fear
has been for the
ficiency.
willing
We
price of that ef¬
have
never
power,
so
sacrifice
been
fundaihental traditions of fair play on
the altar of efficiency.
We have
always
distrusted
irresponsible
to
and it is no accident that
our thinking about the
much of
administrative
process
its place in the
of
the
concerns
tripartite scheme
American government. In
system
does
it
of
fit
checks
best
and
in
our
balances,
the
judicial,
executive branch?
legislative or
That, in itself, is a difficult and
fascinating problem whose facets
are
revealed
in the
subsidiary
problems of delegation of power,
definiteness of legislative stand¬
ards, scope of judicial review, and
so
on.
However completely we
control this administrative process
with checks, balances, and review,
the soundest and most fundamen¬
tal guarantees of good administra*An
address
Hanrahan
by
before
Commissioner
the
New
York
County Lawyers Association, New
York City, Dec. 8,1948.
of
Commission
enced by
us.
is
no
influ¬
more
The statutes administered
by the Commission have
the preliminary author-
(Continued
a
fairly
36);
on page
due
of
and fairness are present
and put into play in administra¬
tive hearings involving adjudica¬
tions. At our Commission, for ex¬
$15,740,000
ample, these hearings are usually
public and are held before a trial
*
.
examiner, or hearing officer, des¬
ignated by the Commission. Def¬
'
*
Southern Pacific
•
-
which provide the basic
adopted
conditions
for
Equipment Trust, Series Z
an
derly and fair hearing,
these rules
rights
•
Company
inite Rules of Practice have been
V
Equipment Trust Certificates
To
mature
(Philadelphia Plan)
*
annually $1,574,000
on
.
..
each January 1, 1950 to. 1959, inclusive
that the substantive
so
procedural remedies
safeguarded.
and
2Vs% Serial
i:
To be
of the parties will be
unconditionally guaranteed
as to payment of principal
Southern Pacific Company
and dividends by endorsement by
With the exception of rather broad
rules
admissibility
the
to
as
of
evidence, the hearings are to a
great extent similar to those be¬
fore a Judge.
When the hearing is concluded,
some
affected by some regulatory
way
conflicts
process
impartial, or¬
such as,
adequate notice to all parties, op¬
road we take to work is subject
portunity to appear and present
either to the jurisdiction of the.
evidence under oath, cross-exam¬
State Railway Commission or the
ination, objections and exceptions
Interstate Commerce Commission
to
rulings on evidence, and the
or
both.
The bus, street car or
like. Careful provision is made in
munciation Commission. The rail¬
the
the
These
Certificates are to be issued under an Agreement to be dated as of January 1,1949,
which, will provide for the issuance of $15,740,000" principal amount of Certificates
to be secured by new standard-gauge railroad equipment estimated to cost not less
than $23,610,000.
.
,
file requests for
specific findings together with
supporting briefs. Thereafter the
parties
may
MATURITIES AND YIELDS
(Accrued dividends
to
be added)
hearing officer prepares and sub¬
recom¬
1950
Copies of this
to the parties
1951
1952
mits to the Commission
decision.
mended
decision
sent
are
and they may
and
briefs.
a
then file exceptions
Thereafter, if the
parties so request, the case is
argued orally before the Commis¬
sion.
An independent review of
the record is then made and the
is
The
and is there¬
review in the
United States Court of Appeals.
You will recall that public re¬
action
against
combining the
after
published
subject
the Administrative Procedure Act
standards
cedure.
2.35%
2.10
1958
2.40
1.85
1955
2.20
1959
2.45
1956
2.30
-
subject to authorization by the Interstate Commerce Commission,
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. ■■
Offering Circular
_
may
HALSEY, STUART A CO. INC.
of
-—designed
1957
1954
to
judge,
jury : and
prosecutor was one of the major
factors leading to the adoption of
functions
2.00%
1.70
Issuance and sale of these Certificates are
ultimate decision of the Commis¬
sion
1.45%
1953
to prescribe certain
of administrative pro¬
One of its provisions re¬
R. W. PRESSPRICH
A. G. BECKER A CO.
A CO.
INCORPORATED
HARRIS, HALL A COMPANY
EQUITABLE SECURITIES CORPORATION
(INCORPORATED)
v
L. F. ROTHSCHILD A CO.
OTIS A CO.
HORNBLOWER A WEEKS
(INCORPORATED)
WM. E. POLLOCK A
FIRST OF MICHIGAN CORPORATION
CO., INC.
quires, in certain cases, the segre¬
gation
of
the investigative and
functions of an ad¬
GRAHAM, PARSONS A CO.
FREEMAN A COMPANY
THE ILLINOIS COMPANY
prosecutory
ministrative
of
decision
tribunal
or
from
determination.
.the Securities and Exchange
mission
we
the
Act,
a.
to
the
Administrative
functions.
of
the
staff and
our
McMASTER
MULLANEY, WELLS A COMPANY
HUTCHINSON A CO.
our
passage
WILLIAM
CLAYTON SECURITIES CORPORATION
BLAIR A COMPANY
Procedure
system of rigid segregation
Working divisions
of
HAYDEN, MILLER A CO.
EDW. LOWBER STOKES CO.
At
Com¬
instituted, within
staff, years prior
of
those
F. S. YANTIS A CO.
THOMAS A COMPANY
ALFRED O'GARA A CO.
INCORPORATED
THE
regional of¬
MILWAUKEE COMPANY
fices
investigate and participate
building of an enforcement
record before the Commission but
do (not participate i<n the decisional
process. The Commission uses the
facilities of its Division of Opin¬
in the
ion
Writing to help it in the draft¬
ing of its quasi-judicial opinions.
To be dated
January 1, 1949. Principal and semi-annual dividends (July 1
and January 1) payable in New York City.
attached, in the denomination of $1,000, registerable as to principal..
maturity. These Certificates are offered when, as and if received by us. Certificates in temporary
or definitive form will be delivered at the office of Halsey, Stuart & Co. Inc., 35 Wall Street, New York, N. Y. The infor¬
mation contained herein has been carefully compiled from sources considered reliable and, while not guaranteed as to
Definitive Certificates, with dividend warrants
Not redeemable prior to
completeness or accuracy, we believe it to be correct as
December 16, 1948.
'
\
.
,
of this date.
-
~.--i,
'*".V
,f
.
BS
•
Thursday, December 16, 1948
CHRONICLE
COMMERCIAL & FINANCIAL
THE
(2498)
10
analyst and Vice-President of Chase National Bank, in testimony before Congresof oil companies, contends reported "profits" are overstated and rate of
return on capital employed is erroneous yardstick in inflation periods.
Petroleum industry
sional Committee citng case
-
By n. E» JOHNSON
Stocks
This Week—Insurance
.
'
Joseph E. Pogue, Vice-President of the Ciase National Bank of. Niew York in charge of
Department, appeared before tie Subcommittee on Business Profits of the
ment on earnings for the nine months ended Sept. 30; 1948. This is Joint Congressional Committee on the Econo nic Report in Washington, D. C., on Dec/ 9,
one of the first companies to give any specific indications of current
and supported
—-——-—r——-—1
1 -■■■' - ■'
;
Last
Company issued a state¬
Glens Falls Insurance
the
week
operating results.
The report submitted to the directors at the quarterly
showed the following figures compared with the similar ones
its Petroleum
Nine Months to Sept.
Prof.
ments
are
ratio between two sets of dollars
5f different values.
W.
A.
matical
that
Paton
ration
:
profits
tal employed
to
tne
of
a
else the "profits"
ratio per¬
results
financial;
these funds.
'
-
.
•,
'
;
.
'
V
,
Aetna
'
.
T
v
'
(Fire)
Agricultural
12--14
High
47
49
$1.80 $1.80 $1.80
______
Insurance
%
0.70
0,70
0,70
_____
3.00
3.50
3.50
17%
•
58
'
—-
—
v •;
::_
.
2.20
2.55,
61%
.72
2.00
2.00
61%
64%- 48%
Fidelity-Phenix Insurance
2.70
2.20
2.20
65%
69%-- 53%
Fire Association
2.50
2.50
2.50
57
61
____________
—
—
44%
•
65%
Fireman's Fund
2.60
3.00.
3:00
78
78
0.50
0.50
0.50)
141/s
15%- 11%
1.60
1..60
1.85
45
47
1.20
1.20-
1,20
31%
32%— 26
(Newark)
Falls
Glens
________________
Great American
—
—
40%
1.20
1.20
1.20
31
31
2.50
2.50
2.50
118
122
1.30
1.20
1.20
Insur. Co. of North America-
3.00
3.00
•3.00
National Fire
2.00
2.00
2.00
46%
49%— 41
45
25%— 21
Hanover, Fir,e
Hartford
T__ -
Fire
Home Insurance
y
_______
29%
106
233/4.
—100
293/4— 23
108-
—
92
'
New
Hampshire
River
North
Phoenix Insurance
_______
2.00
2;1J5'
2.05
42
1.00
1.00
1.00
2.4%.
3.00
3.00
3.00
.82
90,
1.40
1.40
1.40
32%
35%— 30%
2*25^
2.00
2.00
75
81*
—
65%
v, 1,4(1
1.40
1.40
30%
31:
—
23
Providence-Washington
St. Paul Fire
Marine_l___
&
Security Insurance
_ _
Marine.
Springfield Fire &
mis.
a,_.—_—
__
Fire—
•
40:
—
73%
1.90
1.90
1.90
44%
46%— 39%
2.00
2.00
2.00
58
58
—
Fundamental Principles Affecting
45%
"Profits"
It is evident that few changes have been made in the last three
in dividend payments, A number of companies, such as Boston
Insurance, Fireman's Fund, Fireman's. (Newark), Glens Falls, and
Springfield Fire & Marine because of capital requirements sold addir
tianal common shares and in some cases adjusted dividend rates.
/!
There
years
I
With underwriting operations once again indicated to be on a
profitable basis and with... investment income generally trending
Upward, additional increases in dividend payments may be expected.
Among the more interesting companies which will be meeting
for dividend action- during the next 'two weeks are the following:
Aiptna (Fire), Continental Insurance, Fidelity-Phenix, Boston In¬
surance/ and Hartford- Fire»f.
// /■
J // 1- J
In the meantime insurance
stocks continue to. act well market-
After declining- in the post election market most issues have
recovered their losses and a number of the. leading shares are now
udse.
selling only slightly below their highs of the current
year.
•
•
CONTINENTAL
J[ CASUALTY CO.
I;
Bulletin
i-U "l-<
on
''
•;
Request
; .1
The
Financial
Chronicle)'"
MeabenNeir York Stock
Bxehange
BROADWAY, NEW YORE. 5, N, Y,
Telephone;
BArelay 7-3500
Bett Trtetvpe—NY lriU9?&
A. GJbbs,
Manager Trading Dept.)
large. But the charges foi
capital extinguishments (depreci¬
pears
ation, depletion, etc.), designed to
recover the capital
funds extinr
are
■
.
foiir basic conditions
held j in
1947.
in
149%.
It,
thus
becomes
apparent that the changing value
of the dollar distorts the income
that the reported net
account
income ceases to be. synonymous
by anyone seeking to ana¬
lyze the size and significancej of
profits. I shall try to define these
four principles and then briefly
illustrate each point by data taken
with
so
profit.'•■ .;/ '';.'
The
/1
•
absorption of
/.
part of the
Wholesale Prices of All
reported net, income by the higher
Commodities. If this is done, the
adjusted net income, expressed
in. dollars of
purchasing;
prewar
becomes* $509 million in
1946 and $648 million in 1947, the
latter figure showing an increase
of
$139 million, or 27%, from
1946. Thus it is found that 33%
power,
"profits" for 1946
of the reported
of the reported "profits"
and 47%
1947
for
absorbed
were
the
by
shrinkage in the value of the dollar.
■/'/'
".
•
correction
this
If
■''
■
.
is
not
■
-
,
made
in the reported figures, one find£
himself comparing two different
aggregate and falling
type of error as if
of
kinds
into
the
same
he concluded that two bushels are
twice
as
Rate
much
Return
of
ton.
as one
1
Erroneous
An
Yardstick Under Inflation
The
of
rate
return
on
y
capital
useful
of
profits. It provides a true picture
so long as the value of the dollar
remains reasonably constant. It. is
computed by establishing the ratio
ordinarily
is
widely
employed
and
used
a
measure
of current net income to accumu/.
lated borrowed and invested capi¬
tal,
capital
invested
or
investments
Since
are
alone.
made
ih
the past
and income is derived in
the present, this ratio is obviously
the relation of present- dollars to
past dollars. If the two sets of
dollars
are
approximately, the
same in value, all well and good*
But if the two sets of-
dollars dif¬
substantially, as they do when
inflation intervenes, then the ratio
fer
but one commits
/mathematical error even
in
computing it. It is not permissive
is not only false
a
strike
to
a
ratio
between
unlike
things; for example, no one would
undertake to say that profits of
$1 million made by j an enterprise
net
investment? of
I0i million pounds
sterling repre¬
which
had
a
is indicated sented: a. rate of return of 10%.
from our study of 30 oil compa- by. a 194.7 rise im capital expendi-' He would first convert the dollars
nies.;
'
'. ;
\ ■ //.'' tures. of $699; million» and by a to pounds or. else the pounds to
and
then - compute the
(1) In times of inflation, jQr decline in. the. percentage of net dollars
' ./ -■ ' •'
rapid* change • in the purchasing income paid to stockholders, from ratio,
.
.
costs. of, replacements
.
v
power of the dollar, "prof its", as-j 43.4% in
reported- on the basis of estab¬
ip
the .'amount,
the rise in replacement cost?!
lished accounting practice are
effect
overstated
the sum
by
aside • to
set
1946. to
34.9%
in 1947.
By way of comparison, this ratio
/
For
;
./
cover
oil
30
companies
indicated by the reported
Properly Be Comnared; With
in
1947, the rate of return
borrowed and invested capital
figures
this
from 9.3% to 13.2%. But
rose
Reported "Proftis" Cannot
capital extinguishments—depreci-:
ation, depletion,-and the like.
the
1946 and
on
66.3% in 1938...
was
is erroneous. The
however, can be eliminated
if the numerator and denominator
of the ratio are expressed in liker
computation
error,
Previous Years
.
-All financial transactions
are
(2) In times of inflation, re¬
richouser and C. S. Denbdw are ported "profits" cannot properly s ordinarily, expressed, in monetary
engaging, im a securities business, be compared with- previous years units* The dollar, of course, is our
from
offices at
521
Cleveland because of the shrinkage in the standard of value
just as the yard
Avenue*
»■
r-:
purchasing power of the dollar is one of our standards of- length.
ASHLAND, OHIO—Wade Hunv-
dollars.
this
When
is, done,
the
adjusted rate of return becomes
6.5% for 1946 and 7.7% for 1947*
■
Only Ipy correcting for the changy
ing length of the yardstick car
WithM. B>. Cohle Co.
liN, Bissell & Meeds
$1,219 million in 1947; arincrease of $458 million, or 60%
On the face of it, this increase ap¬
1946 and
mind
over
Humrichouser & Denbow
to
million ir-
oil companies was $763
which should be clearly
of
{Special
net income of 3'
guished during the year were in
popular adequate to replace the physica1
counterpart of this capital at pre¬
expression? the technical counter¬
higher costs.
"Profits^
part of which is "net income." Net vailing
income, or-profit, however, at best were therefore called upon tc
make up the discrepancy and par'
is an accounting interpretation oi
abstraction, not a reality or tan¬ of the reported total was diverted
to this purpose.,
Thus /'profits';
gible quantity such as "cash in th€
till/'i^: According to accounting computed by accounting proce¬
dure were larger than.Jdc facto
practice, it is determined by tak¬
ing the total income received by profits. In other words, the in¬
an
enterprise and. deducting the creased cost of; replacement, ap¬
operating expenses and taxes, and peared on the books as a profit
The extent to which reported
then; subtracting an ; estimate of
the' extent to which" the capita,
"profits" were thus ip effect ovsrassets employed have been extin¬ stated
can
be
approximately
guished; that-is, worn, out and determined by adjusting the capi¬
used up.
The sum thus set aside tal extinguishment charges, which
out of the total cash- produced, is are expressed in historical dol¬
supposed to be sufficient to re¬ lars, so that they reflect current
place the facilities of;the business dollars, or the cost of the physical
so that it can continue as a going
capital to be replaced:. If this is
concern.
It is obvious that the done/ We find that the adjusted
adequacy of the sum thus set net -income 2 becomes $418 million
aside for replacement determines in 1946 and-$513 million in 1947,
the • reality of the reported net an; increase of 23%. These figures
income.
It is equally clear that are, respectively, $382 million less
"profits," depending for their com¬ and $763 million less.than the re¬
putation on an estimate, are them¬ ported, figures which are accordr
selves not an "absolute quantity*
ingly magnified, by inflation to
the; extent of 91,%, Inf 1946- and
52
Fireman's
The reported
"The term "profits" is a
51
2.50
en¬
Reported "Profits" Are Overstated
1
in Periods of Inflation *
inflatiqn
tirely false in times of
41
2,40
_
and
times
ordinary
in
true
18%— 14%
67
This is rarely
form of dividends.
Low
Continental Insurance
Boston Insurance
removal from the business
Price Range
Price
1947- 1946
1948
American Insurance
Bid
■
Dividends Paid.
V
providing for all expenses
their entirety for
in the
and available in
-1948
from year to year; their
same
purchasing power " or value has
changed. Thus it is not proper to
say that the "profits" of 3Q oil
companies have- increased from
$763 million in 1946"to $1,219 mil/
lion in 1947. One Can say, with
Index of
:
'
after
dollars
propriety, however,
that; these
"profits"
increased
from
$763
million 1946, dollars in 1946 to
normal, the most effective crite¬
$1,219
million /1947* . dollars in
rion to apply in the judgment of
1947. This consideration suggests
"profits" is their adequacy of in¬
that a more correct view of the
adequacy in the process of capital
Change in "profits" can be gained
formation. Our entire economy is
if the dollars are adjusted to re-'
dependent upon the formation ol
fleet the same purchasing power,
sufficient capital funds to main¬
!
This adjustment can be made
tain
and
expand
the country's
with a fair approach to, accuracy
productive, capacity. .As capital
by dividing the reported dollars
costs rise, "profits" are called upor.
to supply increasing amounts of by the Bureau of Labor Statistics
.
j
For purposes of comparison a tabulation of some of the leading
companies in the insurance industry has been prepared to show div¬
idend payments for the past three years. Also, shown is the current
price of the shares and the range so far in 1948.
the
expressed, in dollars.
are
no
longer
are
these
(4) In all times, inflationary o:
,
%
or
'Profits"
But
missive.
his testi¬
mony
largely
ing
time as the directors of
same
a
to like dollars is such a
ated. Restrict¬
released.
J At the
to strike
mathe*
ratio be¬
a
things of a different kind,
Only by adjusting either the capi¬
exagger¬
are
error
It is
tween
present corpo¬
Glens Falls reviewed the
analysis made
operating results, they also approved the payment Jan. 3, 1949 of an
of
30
petro¬
extra dividend of 40 cents a share and the regular quarterly dividend
leum
compa¬
of 40 cents a share. This in effect increases the payment expected
Joseph E. Pogue
nies, Mr. Pogue
for next year to $2 from the $1.60 a share paid for the last several
outlined what
\ \
»
years.
y,./
'
• "y
•. -v
1 *
he considered to be'the.
A number of other companies have also been active concerning
mental principles affecting profits
dividend payments during rue past vwo. weens.
.A/ritiua.. '•*./
surance announced that it would pay on Jan.
14, 1949 a year-end and gave his opinion, on the basis
of his survey,.. Profits are over¬
dividend of 10 cents a share in addition to the regular quarterly
stated in periods of inflation.
payment. Hanover Fire announced an increase in the quarterly rate
According to Mr, Pogue;', -to 35 cents from 30 cents effective next month. Also on Tuesday of
this week the Insurance Company of North America raised the
What Are "Profits"?
semi-annual dividend, from $1.25 a share to $1.50 and declared the
Few business terms are less un¬
.usual extra of 50 cents a share payable Jan. 15, 1949.. •
derstood than "profits." The. ex¬
These changes together with others recently made
and the
ones that are likely to
follow, should increase dividend payments pression is often thought of as
representing the funds left ovei
of fire insurance companies considerably next year.
■
the
because
Prof.
1947
1948
$1,107,068
$858,204 (loss)
Net from all Sources after Taxes..
1,621,119
58,675 (loss)
The improvement in underwriting results is clearly evident and
hardly needs to be pointed out While these figures are for only one
company in the fire insurance industry, it is expected that other
companies will show comparable results when the year-end state¬
magnitude of profits
rate of return is a
terion of the
of
Sumner
H.Slichter and
30
Earnings.
Net Underwriting
views
the
meeting
for 1947.
(Special
to
The
Financial
Chronicle)
CINCINNATI, OHIO—Peter Q,
Wilshire
has
been
added to
staff of H. B. Coble &
the
Co,, Union,
this be done with any
of accuracy.
(3)
;;
In. times
-
•
of
semblance;
inflation,
the
rate of return on the capital em¬
Trust Bldg.,. members, of the .Cin¬
ployed, ordinarily
cinnati Stock Exchange.
standard, cannot be used
Q
J
^
a
very
useful
as a
cri¬
Relation ofi "Profits" to Capital!
Formation
adjustments presented
in, this
statement, ar«^ computed
hy. means q
wellrknown
economic indices expressec"
.■«•
lAil;
in
terms,
base.
oi; 1935-1939—100
The, indices
as a prewai
and} comnutatinns arc
shown in, detail, in, "Financial Analysis, of
Thirty Oil Companies
ously, referred to.
.
for
1547,"' previ¬
.!•
;
the
deductinr
2 These computations were, made on.
basis
of
net,
income-
before
minority interests', share.'
•
y
* "
word with two
meanings. It represents monetary
funds which, are held or expended;
and it reoresents plant" and facili¬
Capital
ties
are
v. /
for
is
a
which
the. expenditures
made; We shall refer, to; finanr
_
(C.ontinuedi on page»42)
Volume-168
THE
Number 4760
COMMERCIAL
FINANCIAL
&
CHRONICLE
(2499)
11
—T-
Housing Costs in Ciaiual Decline No Danger of Severe Price Declines
''
By ROBERT M; MORGAN*
Assistant. Treasurer;
and
Jn appraising economic
ng
period of uncertainties, particularly in field of housing. Says
a
*
demand for mortgage money is
.1
slackenings because o£ d ecline in new
construction,,less need for veterans' housing, and drop in total vol¬
of real'estate transactions.
ume
and!
Looks for lower, costs because of
upholds pri /ate housing! construction;
in mortgage field.
m .consumer
says
in
product ion
is
levels
which
their
j
The Bureau of. Labor Statistics collects, compiles and publishes current information
for
funds
the
cement,
how-
h
signs
ever,
na
s
weakness
short
A
,
pressing as it has been in the past
three years because of i
(1) the slackening of
struction; .
v-
of
and
round
j
need
for
7/
the
veterans'
has
housing
been met;
in
indicate
ards
term,
(3)
in¬
construction
in
higher wage rates and re
duced productivity. Although the
hourly rates have continued: upward in 1948, and may well go
higher in 1949, there is some real
hope that the^ labor cost factor
the possibility that we have
reached,
or
nearing the peak
are
of real estate
prices;
(4) the drop in the totaL volume
cV real
transactions.
estate
j Under these conditions, it would
the postwar years rose because 01
both
be
have, been helpful in cutting total
logical
market
election,
In certain of the natural sci¬
These
such
ences
neither
builders'
and
lie
the^ most
in
ductions
profits
basis- for
djegree of precision, although
current
m
pletion time is
at; three
overhead
that
there
cost
re¬
Com¬
almost normal
months, having
period of four
now
four
to
cut from
been
a.
to
that
assume
outside factor will not'
some
Clague before the 29th Annual
Meeting of the Eastern Association
of College and Uhiversity Busi¬
ness
Officers, Washington, D. C.,
Nov. 29, 1948.
is
firm trends
is
look
to
productive
labor
are
con¬
competitive
til three to six months ago,
tendency to trim.
no
there
But
as
there "began to appear on the mar¬
ket
structures
new
completed,
and
for occupancy
ready
which
■—houses
failed
quickly—-there began
in the
a
unsold
to
move
softening
profit margin. As a result,
selling prices in the
anticipfated
$9,500 to $14 000 range have with¬
in the past three months been cut
$500! to: $1,000. It is entirely rea¬
to expect that this trend
sonable
may^continue in 1949, with some
the
of
less
.
efficient
ooerative
builders dropoing out. of the mar¬
before doing so, they
have left an impression on the
over-all
selling price level by
their willingness to take a shorts
er* profit.
ket;
.It
but
would
while
vances
there
in
seem,
may-
therefore, that
be
material
further
prices
ad*
and
In the business world
This is what
declining steadily all
Whereas- during 1947 they
year.
by
about
27,000
000'.
45,000
they
August
J
To
a\month,
but
and in September but 23.-
averaged
call in the Bureau
do
bureau,
of
Labor
Statistics
.
(Continued
on page
35)~
mature
#648,000
To be
These
ber
be
to
secured
:
#13,338,000.
but
a
15,000.000
be eligible
represents
might
in
it
was
other article. In the
,
from
the
issued under an Agreement to be dated as of January 1,1949,
the issuance of^9,720,0P0 aggregate par value of Certificates
by new'standard-gauge railroad, equipment estimated to cost
....
j
#
'
1950
1.55%
1951
1.80
to
,
A.
,
.
J
1955
2.40%
1960
2.75%
1956
2.50
1961:
2.80
2.55
1962'
2.85
1963
2.875
1964;
2.90
.
1957
1952
2.00;
1953
2.15
1.958
1954
2.30
1959
'
The
I
'
the return, of
service
and dividends by endorsement by
2.60
*
";
2.65
Certificates are subject to authorization by the Interstate Commerce Commission.
Offering Circular may be obtained in any State in- which this announcement is
circulated from only such of the undersigned and-other dealers as may
lawfully offer these securities in.suck State.
Issuance and sale of these
'
the tremendous growth
demand, due to
men
payment of par value
'
period immediately following the
war
as to
(Accrued dividends to be added)
applications following the
first: big readjustment period.
:
Housing, is subject to the same
general laws of: supply and de¬
as .any
each January 1, 1950 to 1964, inclusive.
MATURITIES AND YIELDS
of
mand
.
Certificates are to be
which will provide for
-
small proportion of the
who
*
The New York Central Railroad Company
talk to the effect that they nave
just abput dried up, but the above
figures do not confirm any such
veterans
on
unconditionally guaranteed
There has been considerable
This
Trust Certificates
(Philadelphia Plan)
.
civilian
life and the shifting of war plant
workersto>
other
occuoations,
HALSEY, STUART A CO. INC.
which
was chiefly responsible for
bousing shortage —: rather,
than the lack of supply.
the
An
would, show that:,
R. W. PRESSPRICH
,
HARRIS, HALL A COMPANY
of
to. about
700 000
a
year
GREGORY
EQUITABLE SECURITIES CORPORATION
:
(.1), The
index
BLAIR
CO.
as
1
HORNBLOWER A WEEKS
PHELPS, FENN A CO:
FREEMAN
A
The price of
A SON
OTIS A CO.
(INCORPORATED!
,
L. F. ROTHSCHILD A CO.
COMPANY
FIRST OF MICHIGAN CORPORATION
GRAHAM, PARSONS A CO.
;
HAYDEN, MILLER A CO.
mar¬
HIRSCH
A CO*
WM. E. POLLOCK A CO., INC.
WILLIAM. BLAIR A COMPANY
.
McMASTER HUTCHINSON A CO.
SWISS AMERICAN CORPORATION
JU LI EN COLLINS A COMPANY
F. S< YANTIS A CO.
.
(2)
CO., INC.
INCORPORATED
(INCORPORATED),
riages deferred by the war, have
been completed. In April; 1947, it
was % estimated
by
the Census
-
A
INCORPORATED
marriage rate—ras. the
family formation—rose
steadily following the war to about
1:000,900 a yeaiy but sincev early
Spring 1948, has been subsiding
;
A. G. BECKER A
A CO.
of: the demand
examination
rent,.as.a.com¬
INCORPORATED
I, 1949. Par value and semi-annual dividends (January l and July 1) payable in New York.
City Definitive Certificates, with dividend warrants attached, in the denomination o£ $1,000, registerable as to par
value. Not redeemable prior to maturity. These Certificates are offered when, as and if received by us. Certificates n
To be dated January
-
-
definitive-form will be deiivered at the office of Halsey, Stuart & Co. Inc., 35 Wall Street, New York,
Theinformation contained herein has been carefully compiled from sources considered reliable and, while not
guaranteed as to^ompleteness of accuracy,-we believe it to be correct a& of this date.
6
temporary or
N, Y.
December 10r 1948.
also
publishes an index of these? retail
present
numbered
National Credit: Conference modity, is dirt cheap—-cheaper by
rc,nniation, comparison than any ,o+ber
in
(Continued on page 39) """"
Chicago, 111., Dec. 15, 1948.
'
at the
we
$9,720,000
2%%> Equipment
7
of the
of, Labor Statistics our index of
wholesale
prices.
Such
prices
should
be
distinguished
from
prices in the retail markets. The
►merit
♦
of American Banker* A
one
significant factors is prices;,
especially the primary
market
prices of commodities which are*
ordinarily sold in wholesale lots.
com¬
can
pre¬
most
JL
M
been
algainst 2^)00,000 in 1940; but indir
where in. 1949„ although the cash, cations are- that the number is
steadily declining as more accom¬
outrol-pocket costs are up, the
modations become availably.
Part of address by Mr. Morgan
we
and
events*
is
New Yoi'k Central Railroad
gips and may produce a situation
*
past
today
for
your
consideration
what has already happened, and
indicating, on the basis of that,
what may happen next.
r
data, evaluate them in the light
J
rates, the normalizing of the
industry may bring some. lower Bureautthat
3;000,000 families had
overhead, and reduced profit mar-,
been
forced
to
double
uo.
as
wage
at
future
by virtue
tributing to a reduction in over¬ to
apply, but it probably covers
head. The margin of profit on a
large proportion of those whose
construction was naturally inordi¬
housing needs were, most press¬
nately high; in the: early stages
ing.
It would be natural to as¬
of: the housing shortage; and un¬
sume a levelling out of the num¬
was
So all that
of
doing
anr
senting
apparently
an
forecast
I
mort*-
ernments.
anteed.
tion of delays, better delivery, and
dislocate
pletely.
firm
What
,
five, months earlier this year,,
conclusion.
Something like 1.300 and from one of nine to twelve
000 G.I. loans have been guar¬
months two years ago. * Elimina¬
to
more
a:
even
these so-called exact, scifences,
nomic
situa¬ the best thinking of the scientists
tion and ana¬ has' viewed' these developments as
lyzing certain representing nothing more than a
b a s
j c- trends very high degree of statistical
in, our
econEwan* Clague
probability. At any rate, we econ¬
omists know that in
our
omy:
field;
Before: attempting
to present where we- must deal with the un¬
of human
will1 and
m.y appraisal and analysis, how¬ certainties
emotion, we can never be sure
ever: I should like to make clear
how long most trends will con¬
*An address by Commissioner tinue; nor can we be sure that
eco¬
Applications for G.I. home loans
possibilities for
over-all
astronomy, physics
as
seen
materials
labor but rather in
nor
an
and
probabilities
more,
and. chemistry, it- is, possible to
discern future events with a high
of funds available for investment.
have
"in
is
cent
this:
knowledge,
of the
some
developments. Further¬
these probabilities- are not
nearly as high from a statistical
point of view as they would be in
the* natural sciences,
Therefore,
in no sense of the term, can any¬
thing that I say be construed as
can
The
f
present
of future
exactly
experi¬
in the re¬
example of
one
our
gage rates might; resume tneir
normal relationship.to government
rates wherever the mortgage
construction labor costs.
is
sense
appraising the
Obviously, mortgage rates have
the bottom; certainly, they
slowly cut
are having a try for higher levels;
ductivity,
but there is a real question as to
mechanical, equipment, and thehow much of a lift there is in
buildling, techniques
of larger
sioi e ror them in the months im¬
scale, operations.
Already
the
abandonment of overtime and the mediately ahead unless there is
an increase in the yields on gov¬
delivery on schedule of materials
gradually and
through higher pro¬
increasing
use
of
it
no
future.
one
a
will continue to be
But
the
In
of .the poll takers
ence
furnish
data-.
the
0
the
foretell
in¬
er
others.
of
pro¬
haz¬
and
umb
n
possible to "db this.
con¬
———-—
1
wage
rial prices.
costs
/
degree to which
(2) the
„
of
creases, on the other hand, would
in all probability raise all mate¬
Labor
new con-
.
ihj
supply,
new
j
public
ductivity,
:.
still
are
Robert M. Morgan
o w
of
dustrial
mort-
country have been exindication
of hausted, or nearly so, there would
1 e ssened de-I appear to.be some grounds for
mand. S t e e 1- concluding that the demand for
products^ and ' mortgage money may not be as
any.
relations,^—•—:
——7————
—
housing
and the limitations within which it is
struction,
investment in certain parts
gage
of
available
demands, large military expendiures and heavier exports as, sustaining price level;
cone dawm Looks for mixed consumers' price index
in next year, with1 little change in general level. <
many;
are
cline
.
wartime prices must necessarily
some
indications of still further rises in construc¬
tion costs to come in 1949, there may be some offsets in builders' over¬
head and builders' profit margins-. As to prices, certain materials-rnotably lumber—have started downward; and a number of other
building rna-"^
t e r i a l s may
net
selling prices are up only
follow suit if
slightly, if any, over 1948.
the recent de¬
Fully recognizing the degree to
Although there
</;v
vital economic conditions for the United States, Our statistical reports cover a:
wide-variety of economic-factors. Among; these are employment, wages, prices, industrial*
on.
key to inflation, curb
as
log
but
I
production and on-site prefabricaiion methods in building,
mars
■
factors in oun postwar prosperity, Commissioner Glagpe contends present conditions, differ from those, following World, War I, when prices declined" abruptly. Points to larger back?
•
into
'7'.''./
By EW-AN,GLAGGE*
U. S,. Commissioner of Labor Statistics
,
.:
real estate, industry head
seer
V
..
*
-
•
Gente> Savings, Bank,. Boston?
Boston* Five
Savings bank mortgage specialist
■
..
>
Vice-President
' 7'
-
12
COMMERCIAL
THE
(2500)
FINANCIAL
CHRONICLE
•
t:
+
Incorporated, inMissouri
Sept 29, 1947, the company is
in the development stage
still
including Stifel, NicoJaus & Co., Inc., Reinholdt & Gardner, Metro¬
and is not engaged in commer¬
politan St. Louis Co., G. H. Walker & Co., Stix & Co., Newhard, Cook
cial production. It plans to en¬
& Co., Taussig, Day & Cof,
I M. Simon & Co. and A. G. Edwards
gage in the manufacture, sale
& Sons, on Dec. 1 publicly offered^
and distribution of "Dynacycle
50,000 shares of Griesedieck West¬ preference stock. On Nov. 23, the
units," parts and motors.
of
American
in¬
ern Brewery Co.
(Belleville, 111.) stockholders
*
*
4
5% cumulative convertible 'pre¬ creased the authorized preference
300,000 to
500,0,00
The directors of Rice-Stix Dry
ferred
stock
at
par
($30 per stock from
share), the net proceeds to be shares, and the authorized com¬ Goods Co., St. Louis, on Nov. 26
used in connection with the recent mon stock from 1,800,000 to 2,- declared an extra dividend of $1
The increase in per share on the common stock,
merger with the Griesedieck firm 500,000 shares.
of Hyde Park Breweries, Inc., St. the common stock was made in payable Jan. 3 to holders of rec¬
order
to
provide for shares issu¬ ord Dec. 15, 1948.
Louis. The plan of consolidation
*
*
*
between the two firms, which was able to executives and employees,
Interstate
Bakeries
Cor p.,
approved by their, stockholders, as well as conversion of.preferred
but unissued.
of
investment
houses
publicly, offering on
Dec. 7
$150,000,000 of 25-year 3%%
debentures due Dec. 1, 1973, of
American Telephone & Tele¬
group
offering of
$60,000,000 Northwestern Bell
yy
Telephone Co* 31-year. VA%
debentures due Nov. 15, 1979 at
,
101.375%
&
Co. The of¬
oversubscribed.
Co., Inc., George K. Baum &
Mutual Mining Co. of Fredericktown
Npv. 29 filed a letter of
on
notification with the SEC cover¬
ing 22,000 shares of common stock
to be offered, at $10 per share, the
used for work¬
American Investment Co. of Illi¬
ing capital. There will be no un¬
nois, St. Louis, on Dec. 7 an¬
derwriting.
nounced that the registration of
*
*
*
the offer of exchange of its shares
fering
was
*
4
4
net proceeds to be
for the
shares
The
of
Fi¬
Ohio
Co. had been made effec¬
nance
tive by the Securities and Ex¬
change Commission.
The plan
provides for exchange of securi¬
ties on the following basis: For
each share of 5% prior preference
stock of Ohio, four shares of se¬
ries A $1.25 convertible prefer¬
ence stock of America;
for each
share of 4*4% preferred stock of
Ohio, four shares of 4y2% prefer¬
ence stock of American; and for
each
share
of
common
stock
of
.Stifel, Nicolaus & Co., Inc.,
Newhard, Cook & Co. and Rein¬
holdt & Gardner
cluded
offered at
interest
ner,
and
Pipe
Eastern
tures due Aug. 1,
tp
*
ton
There vvrill be no underwriting.
stock of American.
National
Bank
,
The offer,
of, Columbus,
Ohio, which is acting as deposi¬
tary for the exchange,
or
to
'McDonald
&
Co.
of
Cleveland,
Ohio, the dealer-manager, or to
any of the participating dealers.
The exchange-offer expires at 3
p.m., Jan.
10, 1949, unless ex¬
tended.
*
In addition, Stern Brothers &
Co. participated on Dec. 9 in the
public
offering
$12,000,000
of
Alabama Power Co. first mort¬
bonds, 3%% series due
1978, at 102.75 and interest.
gage
:
1
'■
statement
with
SEC
the
covering 168,5251/2 shares of $25
par value $1.25 convertible pref¬
erence stock, series A, and 68,175.6
shares of $25 par value 4*/2%
i
*
'' '
■' r
4
Louis, has acquired the T. S. Mar¬
Co.,1 Sioux City, la., subject to
Brothers & Co. and Stifel, Nico¬
laus & Co., Inc., also were in¬
the approval of the latter's stock¬
holders on Dec. 30. Common stock
of
May Department Stores will be
issued in exchange for the*assets
the
Martin
now
firm.
Details
are
available.
*
White
*
#
&
Co., St. Louis, re¬
cently offered an issue of 100,-
cluded in
writers
$10,25
group
per
share
the
common
tral and
South West
at
335,657
subscribed for by holders of
subscription warrants which ex¬
pired on Dec. 3, 1948. The util¬
ity firm's
common
stockholders
had subscribed for 323,949 shares
facturing
of the 659,606 common shares
originally offered to them. Dur-
Co.;
stock
St.
Louis,
com¬
(80 cents par value)
Pettasoi Jttertian Co.
(Continued
Berkshire Fine
BUILDING
on page
39)
Spinning
Black, Si vails & Bryson
ST. LOUIS 2, MO.
Commonwealth Gas
L.D. 246
1.60%, according to maturity.
the over-the-counter
No
underwriting
sos olive
street-
"
^St. Loms |, Mo.
yield
was
in¬
stockholders
The
—
Sold
Detroit
of
Edison
Co.
at
Philco authorized but unissued
stock,
common
or
one
share of
Phiico stock for 8.796 shares of
Electromaster
master will
Electro-
stock.
be
operated by
present management
sion of Philco Corp.
as
a
its
divi¬
amounted to
share
on
$566,947,
the
providing for
class
stock
SL 456
St.
class A stock.
class B
Fred¬
erick M. Hammond, President and
General Manager, stated that "The
demand, for our product based on
$563,938,
$4.88
or
per
share, in the previous year.
unfilled orders indicates, sales will
continue at
next
high level well into
At their next meet¬
a
year."
ing, Dec. 21; stockholders will be
plan to double
the
100,000 shares of class B
stock now outstanding. It is also
proposed to change the par value
asked to approve a
of the class B
stock from
no
par
to
$1 per share, and of the class
A stock from no par to $37.50 per
*
vember
a
262,976 shares having
dollar value of $-1,129,087. These
was
The
name
-
*
Brewing
Tivoli
of
Co., Detroit, has been changed
to Altes Brewing Co.
■
*
figures represent ah increase over
4
*
t
Kaiser-Frazer
Corp.,
Willow
Run, on Nov. 24 announced the
a dollar value of $3,372,256 were
conclusion
of
negotiations with
traded; and over September when Wilbur E. Howett Co., Chicago,
188,620 shares with a dollar value 111., for the lease of a parts and
accessories
warehouse
depot., in
of $2,666,754 changed hands. Post-*
Franklin Park, IU.
It will serve
election trading and activity in
as
a
centralized
distribution
Detroit Edison Co, "rights" com¬ center to the auto firm,'s distrib¬
October when 240,597 shares with
utors and dealers. The warehouse,
which is scheduled for
L
.
approximately
completion
nine
months,
.
will be constructed by the Howett
A. DARLING
Common Stock
and will provide 218,feet of storage and
shipping facilities. It will be con¬
company,
v
000
square
structed on more than 10 acres of
Producing
DISPLAY FIXTURES
land at
a
PRECISION CASTING
*
Nineteen
*
*
.
Hundred
Member Detroit Stock
Budding
Garfield 0225
L.D. 123
Exchange^
1051 Penobscot Building
DETROIT *6, MICH.
Bay City
<7-
Lansing
—
Joseph;
plans
a
split
of its
$5
up
stock
by
later
date
share of
share
close
$1,100,000.
cost of about
.
Quoted
Louis 2r Mo.
after
$3 dividend on the
This compares with
a
share.
Exchange re¬
ports that trading volume in No¬
SCHERCK, RICHTER COMPANY
Teletype
$4.90 per
or
B
two-for-one
par
common
the distribution at
of
one
common
.
a
additional
stock for each
held
of
!'»
Corp.,: St.
,
Bell
Gemmer
of
The Detroit Stock
Supply
-—
,
4
4
Manufacturing Co., Detroit,, have '
been advised * that sales of $12,-
and
Bought
Landretk
Member# St Louis stock
Exchance
to
15, 1948, at
from 1% t»
Nov.
4
in
Rockwell Mfg.
Southwest Gas
prices
mar¬
bined to make November the most
Southern Union Gas
INVESTMENT SECURITIES
school
the New York
Stock Exchange
dated
1%%
bonds
Hugoton Production
Stix & Co;
(Mich.)
portion will he sold to investors
from time to time, either on
.
.Consolidated Dearborn:
Mountain Fuel
the offering to the public of $1,-
500,000 City of Midland School
The unsubscribed
proving, the transfer of. all thenet assets of the company to
Philco Corp., Philadelphia,
in
exchange for 68,212^4 shares of
stock of Cen¬
Corp. not
Co.,
of Detroit, participated in
Blyth & Co., Inc., New York,
acting alone and for its own ac¬ 381,171 for the year ended Sept.
count, on Nov. 16 purchased; at 30, 1948 established a new high
competitive bidding frofri Ameri¬ record in both dollar volume and
can Light & Traction Co. 192,734
unit output in the 42-year history
Shares (par $20 each) of capital of
the
company.
Earnings
of under¬
purchased
shares of
at $5 per share, the net proceeds
T«l«Mpt—St 488
the
which
000 shares of Dynacycle Manu¬
mon
LANDRETH
*
Edward D. Jones & Co., Stern
not
LOUIS
*
both
District
stock
ating additional schedules.
•
tin
to
of
May Department Stores CoM St.
of
ST.
•*' *•
according
$548. Operating
$623,158 in October, $19,546 per share. Reoffering was
1948, were $39,519, or 11% above made at $20,125 per share and the
the same month last year. How¬ issue was immediately oversub¬
scribed.
ever, operating expenses of $593,4
4
847 in October, 1948, were 15%
In January, 1949i the stock¬
above October, 1947, reflecting the
holders of Electromaster, Inc.,
increased cost of labor, materials
Mt. Clemens, .will vote on ap¬
and services and the cost of oper¬
revenues
.
.
American Investment Co, of Il¬
linois on Nov. 18 had filed a regis¬
tration
The loss for the first ten months
of this year was
*
*
10,
volved.
Airlines,
Inc.,
Kansas City, reports a net profit
of $17,484 in October, 1948, after
provision for adjustment of in¬
come »tax, as compared to a net
profit of $27,687 in October, 1947.
par
Nov.
Corp and H. V. Sattley &
the company.
ket.
41
*
of
held
Prentiss M. Brown, President of
or on
Mid-Continent
Co. of Bugler on Nov. 30 filed a
letter of notification with the SEC
may be accepted by delivery of
the Ohio shares to the Hunting¬
ence
Light Co. common stock (no
par value) at $30 per share.
*
shares of capital stock
as
Taussig, Day & Co., Inc.
Friedman, Brokaw & Les¬
&
The Cherokee Basin Oil & Gas
covering 25,000 shares of its no
value, capital stock*, which is
to be offered at $10 per share, the
net proceeds to be used to pay for
development of oil production.
Ohio, four-fifths of a share of se¬
ries A $1.25 convertible prefer¬
15
participated, together with
others, in the public offering of
350,000 shares of Carolina Power
Line,
of debentures for each
amount
ser
1973.
*
uranci
I. M, Simon & Co., Newhard,
investment
sinking fund deben¬
314%
shares
Cook & Co., Reinholdt & Gard¬
issue of $30,000,000
an
Livingstone & Co. and First Michigan Corpora¬
tion, both of Detroit, publicly offered a new issue of 67,500 shares df
$20 par value 5%% cumulative convertible preferred stock and 67,00ft
.
*
also in¬
100.845% and accrued
Panhandle
Co.
on
Michigan
On Dec. 9, S. R.
of $1 par value common stock of
Michigan Bakeres, Inc.,
Kapids, the preferred beings
priced at $20 per share and the active month of the year on the
common at $5.25 per share.
Other Detroit Stock Exchange.
Michigan bankers associated in
The
10
most
active
stocks
the offering are: White, Noble &
during November were: Detroit
Co. and Dudley H. Waters & Co.,
Edison Co., Electromaster, Inc.,
both of Grand Rapids; and Ben¬
Avco
"Manufacturing
Corp.,
nett, Smith & Co., Smith, Hague
Parke, Davis & Co., Common¬
& Co., Campbell, McCarty & Co.,
wealth & Southern Corp., McInc. and Wfn. C. Roney & Co.
Cianahan
Oil
Co.,
General
The net proceeds will be used to
Motors Corp., Armour & Co.,
redeem 5,968 shares of outstand¬
Gerity-Michigan
Corp. andKansas City, declared a quar¬
ing $1 non-cumulative prior pref¬
Hudson Motor Car Co.
erence
stock
at
terly dividend of 30 cents per
$20 per share; to
*
4
*4
share 011 the outstanding com¬
redeem 4,425 shares of outstand¬
The Detroit Steel Corp., which
mon stock, payable Dec. 27,1948
ing $7 cumulative preferred stock
is constructing a new cold rolled
to holders of record Dec. 16,
at $100 per share; and the balance
strip mill in Hamden, Conn., has
1948. R, L. Nafziger, President,
will provide a major portion of
declared an extra dividend of .$1
stated that this action was re¬
the funds required for completion
per share in addition to the usual
*>f
the
garded by the board as initiat¬
company's ■ new < Grand
quarterly dividend of 50 cents per
ing a regular quarterly dividend
Rapids plant. The new 5%% pre¬
share, both payable Dec. 15 to
ferred
policy for the common stock,
stock may be converted
stockholders
of
record
Dec. 6.
which it was hoped to maintain.
into common stock at any time at
This makes a total of $1 per s£are
initial
conversion
price of
Interstate Bakeries Corp. also the
for the year 1948, as compared
$7.2727
per
share of common,
announces that net sales for the
with $2.25 per share in the pre¬
46 weeks ended Oct. 2, 1948 were subject to adjustment from time
ceding year. Actual manufactur¬
to- time
upon
certain
contin¬
$44,657,514, against $39,594,011 for
ing at the Hamden plant, which
the 40 weeks ended Oct. 4, 1947. gencies.
will cost in the neighborhood of
4
4,4
Net
profit after Federal taxes
$2 million, may begin late in Feb¬
The stockholders of the De¬
amounted to $1,537,718, equal to
ruary,
according to present in¬
troit Edison Co. subscribed on
$4.08 per common share, for the
dications, It was stated that the
or before Dec. 1, 1948 for $44,1948 period, as compared with
plant will have a capacity of 60,671,000 of $46,641,400 new 3%
$1,044,672, or $2.46 per common
000 tons per annum.
~
convertible
debentures,
due
share, for the corresponding pe¬
1980, offered to them last month
riod last year.
On Nov. 17, First of Michigan
in the ratio of $100 principal
*
*
*
Dec. 2 publicly
the
among
bankers who
were
■
,
Co. and Stix & Co.
Stifel, Nicolaus & Co., Inc.,
Newhard, Cook & Co., Barret,
Fitch & Co., Inc., George K.
& Co., and Stix &
interest: Stern
Stifel, Nicolaus
and
Brothers & Co.,
«
.
Nov. 17 In the public
graph Co. at 101.61 and interest,
were:
Stern Brothers
& Co.,
Baum & Co., Inc., Smith, Moore
in¬
vestment houses participated on
nationwide
the
Missouri
following
The
in
Included
stocks, authorized
and preference
Nov. 20, 1948,
will continue as a
separate division of Griesedieck.
effective
became
■M
etc..
A-
b! underwriters headed by Edward D. Jones & Co., and
and Hyde Park
Thursday, December 16, 1948
to be added to general funds to
be used. for working capital,
Missouri Brevities
A group
&
of. record* at the
business on Dec. 22,
Muskegon
(Continued
on page
42)
Volume 168
Number 4760
THE
COMMERCIAL & FINANCIAL CHRONICLE
(2501)
13
"r
Manley Hagberg to
Securities Salesman's Corner Form
VJ
Executhre Vice-President of Economists' National
Committee oiB
Monetary Policy points ont Federal Reserve Banks on Dec. 8 had
less than $228 million of asset cash to
Own lav. Firm
DALLAS, TEX.—About Jan. 1,
Manley
By JOHN BUTTON
A.
Hagberg
will
"You Can't Make Sales Today—or Can You?"
Victor
Fla., sends
the following:
us
.
.
-
liability
pay
,
j
A.!
M,
Hagberg 8c Co:; Inc. to en¬
gaged in the securities; business.
Mr, Hagberg has -been a VicePresident of: R.- A. " Underwood &
sentatives
trusted
of
savings toi pre-empt their position with the
It is the Victor Moores who are still keeping
small, flickering flame of security salesmanship alive in this
country. It is the smaller retail organizations that are plugging away
day after day and sending their men out to make the calls that are
still doing the business. It is not altogether the fault of the larger
underwriting firms that the securities business is in the doldrums
But if there ever is going to be a rebirth of investor interest among
the masses of the people it appears that the major portion of the
Dr
re-
a
banks
award
Dec.
9
of
Federal
Reserve
against their deposits
The group reoffered the certifi¬
at
prices to yield, from
1.55% for those due Jan/ 1, 1950,
cates
fop those
due Jan.
1,
'
units;
double
14
bedroom
1,000 steel box
pacity.
cars
of 55-ton
ca¬
/;
8c
liabilities1—
V2
Co.,
Inc., Equitable Se¬
curities Corp., Gregory & Son Inc.,
job will have to be done other than by them.
Harris, Hall & Co. (Inc.), HornSeveral of Mr. Moore's nuggets, it seems to me, can be used blower &
Weeks, Otis &
Co., Inc.,
8,
ratio
a
of
less
that
1%—and the. smallness
of
item
is
not
even
0:
discussec
today.
This shows the extent tc.
which
we
tomed
to
have
become
"If this
gold-coin
banks
country had been
standard
on7 that
had about
times
the
date
on
much
asset
in
the Reserve
lot in
a
.
(Special
to
The
Chronicle)
Financial
ELGIN, ILL.—Clifton J, Peter¬
sen
is with Heath &
Co., Tower
Organized to promote cooperation among local investment firms in
February, 1948, it baa progressed into a permanent organization.;
Several meetings held during year.
The Street Club of San Francisco, of
-
\
The
of
organ¬
was
in 1948 in line with the
ized early
idea
Club"
Investment
Boston
the
Club,!the first group of the kind
nine
Tlie membership of The Street
of San Francisco now ex-
eeds 61,
representing a
an
offer to sell
or a
liabilities do-
(Special
in
a
downtown
institution by one of
financial
to
The
&
Co.
■
With
(Special
LOS
'
•
-
■!
.satisfac-l of the curriculum.
————mmmm:
Yith' Herrick,
(Special- to
The
BEVERLY
*.
!c
.
T
'
Waddeli1
Financial
HILLS,
Chronicle)
;
CAL.—Earl
With Harris,
MILWAUKEE,
WIS.—Paul
F
Bieg is with Herrick, Waddeli McComasis with Harris; Upham &
Reed, Inc., 8943 Wilshire Blvd.
Co., 710 North Water Street.
The
Financial
Chronicle)
W. L Henderson Opens
WALLACE,
IDAHO — William
opened offices
Gyde-Taylor Bldg., tb en¬
gage in a securities business.
L.
Henderson "has
in the
solicitation of an offer to buy these securities.
'
Light
Due
1
November 1, 1973
Prospectus may be obtained sn any State in which this announcement is circulatedfrom only the
undersigned and such other dealers as may lawfully offer these Securities in such State.
HALSEY, STUART & CO. INC
December 15j 4948.
Chronicle)
/,v.
Price 100)4% and accrued interest
Upham
.
CAL.—Sieg¬
fried A. Schmidt has become af¬
filiated with Dempsey-Tegeler &
Co., 210 West Seventh Street. .Mr.
Schmidt was p r e v i o u sly with
Maxwell, Marshall & Co,
25 Year 3% Notes Series A, Due 1973
The
.
ANGELES,
The concert
by business asso¬
by Mr. Townsend
and by-employees of the bank.
,
?
'
the toprank-
in this country where music and
choir singing are essential parts
.
Deanpsey-Tegeler,
to
growth
from an original was attended
ciates invited
jroup of only 16 members.
ory
Financial
.
Company
Dated November 1,1948
.
ANGELES, CAL.—Morris
R. Geggie has become associated
with Bourbeau & Douglass, 510
South Spring Street.
Mr. Geggie
was formerly with John: M. Bar¬
bour & Co. and Nelson Douglass
Barnard Townsend, President of
concert
m
LOS
Bedford Gas and Edison
Title Guarantee
ing boys' choirs in the country, the
boys sang a number of old French
and English carols under the di¬
the highlight of the year with a rection of Dr; T. F. H. Candlyn.
week-end party at Sonoma which Organist and Master of the Choir
it i'^ hoped will be an annual St. Thomas Church maintains one
affaffJ *
of the two full-time choir schools
Tub
its
—MB——i
With Bourbeau & Douglass
$5,000,000
is to promote Title Guarantee & Trust Com¬
a Spirit of cooperation and mutual pany,
Dec. 14. presented a group
understanding among representa¬ of boys from the St. Thomas
tives of the various San Francisco Church Choir in a program of
inVfestment firms and to aid in Christmas carols at the bank's
their further education. Since its main office, In perhaps the first
regular monthly meetings, all at¬
tended by a capacity number of
members and their guests. The En¬
tertainment Committee provided
meet
1
Christmas Carols at
formed. The purpose
organization there have been
there
ho requirement that our gov¬
1
-—
annual re¬
in the securities business.
"Street
on Jan. 1. Mr. Spitzer has
been with the firm for some time.
The offering is made only by the Prospectus. *
port, in which it is stated excellent progress was made and the organ¬
ization can now be counted to occupy a place among the organized
groups
"Under the present system
is
This announcement is not
which Eugene A. Shurtleff,
Blyth & Co., Inc., is President, has just issued its first
bility currency.
ernment
Bldg.
of
changes,
With Heath & Co.
few words.
to
New York and Boston Stock Ex¬
tc
banks
con¬
BOSTON, MASS. -r Lester S.
Spitzer will be admitted to part¬
nership in Draper; Sears & Co.,
53 State Street, members of the
oV
effectively in overcoming buyer resistance at this time. "Remember Phelps,
Fenn
8c
Co.,
R.
W. by returning to a gold-coin sys¬
you haven't done your client any favor if you sell him at the, top Pressprich 8c Co. and L. F. Roths¬ tem the complaint goes up that
of a bull market," and "every share of stock sold has to be bought child & Co.
there is not enough of such asset
by someone and the smart money buys when they are cheap." Both
cash to go around and, therefore,
of these observations can be included in your sales kit—they say a
we should continue with our lia¬
with which* to
Draper, Sears
Admit Spitzer
£
against their liabilities a?
they have under our irredeemable
paper money system.
Neverthe¬
less, when it is suggested that we
increase by 100 times the usuable
cash
further depreciation'of
on
currency;
duct their business."
have
cash
Spahr concluded, "shouidf put /
sound money
pay out
asset
cur- ;
use; their ingenuity, and bjf al¬
lowing them to gain possession oi
Reserve
would
$23 billion in gold,
as
redeemable
encourage
longcommitment, investment,
production, and employment; anc
open up foreign trade by allowing
millions of private individuals tc
accus¬
liability currency anc
our indifference regarding the ex¬
treme smallness of the supply oi
asset currency which the Reserve
banks normally have to pay out
100
Others associated in the offering
were
A. G. Becker & Co., Inc.,
Dec.
1948, the Federal
Reserve banks had only $227,781,000 of asset cash to pay out againsl
$4-3,490,541,000 of npte and deposi'
light¬
weight sleeping cars, 40 single and
double bedroorp sleeping cars, and
Blair
ized in
payment of these liabili¬
ties, foreign claimants excepted
this
Diesel road passenger locomotive
anc
to golc
certificates which cannot be util¬
"On
until .a,
time
Walter C. Spahr
Halsey, Stuart & Co. Inc. and notes have been
confined
won
r
brake
our
the
of
serves-
Write this column again if
the
re¬
illiquid government securities. Re¬
The company will use proceeds
he wants to. What
he said goes double in spades and you can make it if you try it. Today to finance not more than 75% oi
I read some remarks made by Hal Dewar, of Dewar, Robertson & the purchase price of new equip¬
Pancoast, San Antonio, the new President of the IBA, at the Asso¬ ment to be built at an estimated
ciation's convention in Hollywood." Mr. Dewar asserted that a noted cost of $13,338,000.
The equip¬
economist told
him
a
few
days earlier, that the
investment ment will include 12 2,000-h.p.
individual investor."
»
liability
is put in their hands.
?
"A return to a gold standard bn
the basis of $35 per ounce fine,"
deem in. their
lawful
a
:
as
gold. Collateral held against
Federal Reserve notes can all be
Halsey, Stuart Group
$2.90%
1964.
bankers have allowed "the life insurance salesman and other repre¬
required to
had
renqy
not
isset currency
to
difference."
insti¬
are
and
,
it
over
ierves, much
less in such an
'
Co., Inc.
tutions
system
Currency thrust upon them they
lost, control over the public
purse.
and they cannot regain contra*»
Federal
issuing
$9,720,000 New York Central RR.
2%% equipment trust certificates,
due $648,000 each Jan. 1, 1950 to
1964, inclusive.
at these levels won't make any
and
,
Reserve banks
which- these!
Manley^ 'A. Hagberg
.
States lost the gold-coin standard
Treasury
and
■
good hard
.
issued by
the
a
yyhicti has universalac- -4
ceptability* /;...
;;v
.i
"When the people of the liiritec:
money
,
promises; to
"Get away from your old line of selling for a rise in the market.
Just tell 'em they may still go lower, but at today's prices, they are
still cheap and show a marvelous yield, If they go lower, sell 'em
more!
mestically in terms of
yv".
he
pointed
o u t,
'consists /of
associates
"Remember—every, share of stock sold has to be bought by
someone, and the smart money buys when they are cheap. We can't
be a Houdini and buy at the bottom eighth, but a few points lower
cur-
r e n c
bull market.
can
National
Committee on Monetary
Policy, said at
dmner meeting of the Minnesota Economic Club in
Minneapolis
today.
"This
<8>——————-—
:
-
a
,
down—the averages are going lower—no¬
body will buy today, because they will all wait till they hit bottom
"That is the attitude of the average salesman in times like these.
So, .what happens? • They decide to sit and wait, and !that tends to
"mudee; a bad situation worse,: and it sure - doesn't bring -it any
commissions.
'
»:.
j '
."Having discussed conditions with several dealers, I .find thjey
are all singing the blues.
They; tell you they just can't make a sale!
•Finally they admit they haven't called anybody. So that's it! We
aU decided the panicky public was rightr-but you sure can't make
sales if. you don't call on people.
7V;':;v
"'I
"Now I ask you. Does that make^ sense? 'In 1928,* stocks soldi at
40 times earnings, , and the, public: was • fighting to buy them. *
N<j>w
they: are selling at from two to eight times earnings, and we don't
do a thing about it. So we don't get business, hey?
w
i„; "Personally, I had these same ideas, but; when I realized.there
were no checks coming in and the "rent was due, I figured it was
time to get a new angle or go into another business. So—you can
take this for what it is worth—it paid off for me.
/
"First—don't cut down on advertising, but double it.
Then
when the inquiries start coming in, get off the seat of your pants
and call on them. You will find that the average investor can be
shown, and if you give him the facts, about stocks, as you should
know them, you'll find-that sales will start coming. Remember you
haven't done your client any favor if you sell him at the top of a
Victor Moore
$46%
deposit habdities.
7h^Vnited States'
gradual steps, has gone from an asset
°* ?uliaBllity m/??yC ^ Wter E. Spahr, Executive Vice-Presitol
of the Economists
"So prices are going
some
billion of note and
.
Moore, Manager, Blair F. Claybaugh & Company, Miami
out against
pay
form
.
14
r
-
..
,
j
r,.
bond
•
issue
bearing
interest
National
*
$
has-become President.
Three
Of
Connecticut's
largest
a
life Insurance companies have re¬
Connecticut
cently raised their dividend rates.
Aetna
Life
Insurance
has declared
of .50
a
cents
cents for
Of *$2.30
*$2.10.
and
extra
an
of
insurance Company
General
Life
declared
a
50
of
$2.30 against $2
Travelers
continued
pany
its
$4
American
Corporation
on
a
a.
quarterly
Company has announced that the
$2 to $6
second
of
uflte
for an'annual
dividend
turbo
'$22 against the previous
into
$18.
•
-
*
<±
*
a
.
1
of
two
31,250
has
generators
been
tion
filed -with the
New
York,
Hartford
New
would'be
Haven
acquired
&
>Jt
*
Directors of New Haven "Clock
&
Watch
^Company
announced
on
«Army
and no change in percontemplated/ Mr. R. R.
New Britain Vice-Presi¬
onnel is
"lowe,
dent, Stated that the acquisition is
i
logical step in that It adds an
outstanding
and
universally
known
and
accepted
precision
Ord¬
»
oof, and broadens New Britain's
defense orders in an amount
somewhat under $1 million tor
M3 rapid-fire machine
gun mparts.
It was also stated that there was
a
substantial backlog of hrders
nance
for small
arms.
!ine for generaLdistribution to the
metal
working trades.
the
.Small
been
Stock Exchange
has announced the
Armory and
the company is
approaching maxi¬
mum
gun output based on single-
following firm
changes:
Ben JafTe will retire from part¬
shift operation.
nership in Felder & Jaffe
on
Dec.
31.
./
"
*
.
The Navy
ahew.
*
*
has
the
XF7U-1
built by the Chance
Division
of
will
designed Hor
plants
carriers.
will
engines
.
burners"
be
to
with
increase
*
for
*
Nov.
Present
plans
of
24,332.8
stock
shares
one
shares
outstanding.
der
the
new
for
Frank
partner,
Dec.
Will
3J, the
of Mor¬
of
the
late
Russell
E.
in Bache & Co. ceased Nov.
*
D.
be
*
would
future dis¬
determined
" ,
-
Layton
be¬
the
late
Staff of Julien Collins Co.
,
The- Fin*ncial
CHICAGO,
Kennedy
with
,
has
Julien
ILL.
Joseph
—
&
A.
associated
Co.,
105
South La Salle Street, members of
the Chicago Stock Exchange.' Mr,
Kennedy
formerly
was
Dayton
&
Halsey
awarde,
Commissipr
"
Other members of the offer in;
group were R. W. Presspric i >7
Co.; A. G. Becker & Co. Ire
Equitable Securities Corp.; Harrif
Hall & Co. (Inc.); dlornblower >7
Otis &
Co. (Inc.); L. F
Co."; Shields & Co
V/m. E. Pollock'TSt Co.. Inc.; Firs
of Michigan
Corp.; Freeman
Co.; Graham, Parsons & Co.; The
Illinois Co.; Hayden, Miller & Co.
Edw. Lowber Stokes &.Co.;*McMaster
Hutchinson & Co,; Mullaney, Wells & Co.; William Blai
& Co.; Clayton Securities Corp.
Alfred
O'Gara
&
Co.; Thomas &
Co.; and F. S. Yantis & Co. Inc.
The certificates
to
provide
66%%
for
the
of
mated
are
lowing,
not
thar
more
actual
.tme w:
;
to be issued
cost, esti¬
of the fol¬
at >$23',610,000,
fstandard%gauge
railrqad- ^equipment:- 10 i6,000-h,p
Diesehelectric (freight locomotives•
12 Diesel electric road switching
Gernon
Cruttenden & Co.
with
and
The
Financial
FRANCISCO,.
CAL.
—
Wavne R. Anderson has joined
t^r
staff
Co.,
60f
of
the
of
Schwabacher
&
Street/ members
York
New
Stock
and_San
Exchanges. *
Francisco
|
frrf;
CH^ONTOT
v *
has
become
associated
tivity
Facn
constantly
changing.
development requires
rities
bidding
has
been
period of
eral
Adams
Street, Chicago.
Members
York
New
and
Exchanges
Associate
Members
PRIMARY MARKETS
New
York
Cu!rb /
Exchange
.
Primary Markets in
Statistical Information
Hartford
I
t
,
CO.
Hartford
Hartford
2-4301
7-2669
New
York
Canal 6-3662
Teletype NH
194
■
Danbury 5600
Boll
7-3191
System
1
1
7-3542
take
may.
place, and must
pattern of lending
their
accordingly.. While it is possible
that governmental bodies would
Leroy A. Lincoln
On
,
"Let
consider
us
stress the fact that
just* what
petitive bidding,
take«; pla^e in the creation of a se¬
curity-which is tendered for com¬
petitive bidding. The issuing cor¬
poration
having
what form
of
undertake"
since, in
com¬
investor
no
nor
investment: banker knows whether
not 'he
or
will
the
be
successful
decided bidder, he is not justified in put¬
itself
ting in
financing it desires
"counsel,
great
a
of 'time
measure
and expense in adequate investidraw
the
indenture
and
other Ration of the issuer in advance
ece^sary paoer$. "No one repre- r°f the sale.
Under such circumsenting the ultimate investor takes j stances, a 'deterioration in the
parkin such discussions. It is ob-i character of the investment bankvious, therefore, that where con-! i"g business is to be feared. Sponflicts might arise between the in--sorship responsibility on the part
terests
qf the issuer and w->iat °f
^he investment banker to
might be the interests of the in- either investors or issuers would
ro
engages
to j
'
vestor
conflicts
such
to 'be
in
resolved
issuer.
is
It
bound
are
favor
that
true
the
of
time?
at
corporations do employ in-
some
vestments-'bankers'as advisers
be greatly lessened. His function
would tend to become restricted
merely to problems
and "distribution.in¬
in
"For
of 'pricing
which
reasons
them
to
setting up their indenture provi-j have seemed satisfactory, the-SEC
sions. but it slrould be emphasized j and the ICC have required cornthat in any such case the invest- i petitive bidding in the two fields
ment banker is erroloyed for the| mentioned.
Corporate officers in
specific purpose of advising the
issuer.
j other fields are aware of the op-
His firm may or may
bid -for the
issue
time
the
at
not
of
the competitive bidding but, even
if it /oes. it has no assurance that
on
portunity to resort to competitive
sales
their'
of
method
of
significant
instance where
poration
has
tive bids for
as'
called
a
seems
of
industrial
an
its
have been
may
securities
-financing.
It
that we know
no
cor¬
for competi¬
securities.
some
case
There
which
specific issue would be
as dili¬
has not been brought to our at¬
ultimate tention but, if so, it would merely
investor or in investigating the tend
to
be
the
exception that
detailed operations of his cUent as proved
the
rule
that
industry
in
be
protectihg
would
the
be
tbe
he
were
acting
role
of
underwriter
tributor
of
the
securities
firm's customers. It is
imder
be
tbe
and
likely
concerned
parficu-1
lar
security rather
with
than
vestment.
as
an
its
"Having
next
step
issue
or
a
be
with
the
the
Public Util¬
Interstate
the
Commission in the
railroad issue.
pointed
operations
a
under
Act
are
of
assuring
the
further
method 'Of
one
departs
from
municipal bond and
equipment trust, the
more impossible it becomes adeqUately and appropriately to proas
railroad
the investor's interests under
of
these
considerations,
it seems
Congress
should
pass legislation requiring all secu¬
rities to be sold by competitive
bidding.
No
greater
disservice
unlikely
that
could
done
be
SEC'SjOur country
Securities
the
primarily for the
full
ca«=e
Here it should
that
out
this
competitive bidding. In the light
set up the issue,
is to clear it with
in the.case of
"The
in-
'
,
favor
the standardized type of security,
withUhe
marketability of the
soundness
not
hel guch
the
fundarrental
does
disposing of its securities.
his
to
more
circumstances
more
in
dis¬
to
the
than to
savers
enact
in
such
legislation."
purpose
disclosure
t
<
uninformed
Chicasro Exch. Members
to
investors,
CHICAGO, ILL.
—
The Execu¬
although it is true that under the
tive
i
Public Utilities Holding Company
Stock/Exchange today* elected the
j'
Act, the SEC
following to membership:
!•
ments in the nature of indenture
Committee
of
the
i
York:
BArclay
Waterbury 3-3166
j
'
New
con¬
changes
•
'
:
New Haven 6-0171
those
.
otherwise
i
MEMBERS NEW YORK
S.TOCK EXCHANGE
j
i
and
Connecticut Securities
London
that
be
must
of
ooseivation thereof and on reflec¬ be effective in such matters, it
tion, »we have r.o reason t to. change is much more reasonable 'to ex¬
our original view that competitive
pect them not to <be as 'alert to
bidding is not in the best interest the changes as would those ac¬
of the
investor.
Just why our tively on the firing line of invest^
regulatory authorities -have seen ment operations. The performance
this
fit thus to restrict the discretion of
duty is peculiarly the
of
duly
(constituted
corporate function of management in our
management by the .strait-jacket system of private enterprise.
"While I have mentioned the
of
competitive
bidding
is„ not
clear.
point, I. should like
again
to
of
Stock
Boston
of corporate ac¬
investors
aware
adjust
a
sev¬
Commerce
Tifft Brothers
New
"And
stantly
re¬
years.
.is
new
uniform basis.
on a
change.
gener¬
tive
ity
&
secu^
ally,, competi¬
Stifel, Nicolaus & Co.,/Inc..
West
can
prop¬
railroad
utility J
,
^
with
nor
be
issues and for
^
McDowell
uniform,
interests
field
would
MILWAUKEE, WIS.—Donald C
not
are
investor's
the
,
However,
not uniform. Their
erly protected
FEC
CHAS. W. SCR ANTON
needs
investor.
are
Tbe whole
that
With StifeL Nicolaus & Co.
105
Connecticut Securities
,
the
'ompanies
tnis,
public
gent
Chronicle)
a
/I "For certain
a
to
one
might argue
regulatory body would
position, adequately to
e
protecf
banker in this role of adviser
Schwabacber & Co. Adds
form,
th
in
be
se¬
locomotives;
20
Diesel
electric
it will be the successful bidder.
switching locomotives; 1,300 ' 50•UnHpr these ^circumstances it is
ton box-cars; and 52 lightweight
unlikely
that, the
investment
passenger train cars.
•
;
Market
Chronicle)
become
Collins
Commerce
authorization.
SAN
.to
;r
were
George P.
Joseph A. Kennedv Joms
Holley,
has
of
Interstate
30.
new
remain¬
stock
such
position as might
by the directors.
Mr.
The
unissued
'
of
dividend at the
share for each 20
rate of
*
On
the
Inc.
»
issued
under
the
Philadelphia
plan, were immediately reofferet
by the group, at prices to yielc
from 1.45% to 2.45%, according tc
maturity.
Sales
is subject
t
(Special
($25 par value).
call for the issu¬
available
& 'Hutzler
limited
1.
Co.
*
m
-
Smith in Smith & Gallatin ceased
to 686,656 shares
of
Jan.
under
Interest
&
Towne
Manufacturing
Company
stockholders
held
a
meeting Dec. 13, 1948 to vote on
increasing the capital from 486.656
a
effective
Trustees
Interest
Yale
as
Bros.
a
&
m
by
(Wednesday) $15,740,r
000 Southern Pacific
equipmen
trust, series Z, 2 Vg % serial equip¬
ment trust certificates, due $1,574,000 annually Jan. 1, 1950 tc
1959, inclusive.
The certificates
;
,
30.
*
stock
Salomon
become
Sard
short periods.
ance
partnership, in Jerome
Hutzler, (limited -partrier),
will retire rfrom the tfirm. ^
"after¬
speed
with¬
ton D.
The .power
Westinghbuse Jet
equipped
in
will
The new plane was
in "the-more than *600
:mile-anhour class and Was
aboard
will
Percy F. Salomon, general part¬
ner
Aircraft
Corporation,
use
Pearson
Melniker & Co, on Dec. 31.
be
Vought Air¬
United
M.
draw from
flying wing-type jet fighter
designated
craft
Samuel
announced that
headed
group
Rothschild &
Chkri^es
The New York
relo¬
:
A
Weeks;
New York Stock Exch.
The manufactur¬ Weelslv Firm
^
ing departments of
Arms -Division/have
cated in the North
be
Stephan, present
Manager,
report tor '40 weeks ended Oct., 10,
1948 estates that the
company has
received
Company of Cleveland, Ohio,
will operate under the di¬
rection of H. N.
Manufacturing Company's
recently
cer-
Lucas Vice-President and General
The last
payment, a quarterly dividend of
22y> cents, was made Oct. 1, '1948.
Colt's
purchased the plant and
that
Con¬
quired /for
.\'W
yesterday
"jucas
the preferred
stock had been deferred.
i
—.
Halsey, Sluart Wins !
Stuart
it
if-
ain other assets of Lucas Machine
Tool
r
-electric
New Britain Machine Company
ms
Sit
'
that the dividend
increased
meet
demands.
power
by
outright purchase or eminent do¬
main -by
proposed new
Old
Colony transportation authority.
fii
to
State ^Street.
—i—MBBW——
originally ordered
1946 as part of 'the
the
been
& Co 4
Mr. 'Saunders
recently been with A. G. Woglom & Co., Inc.
' * \
was
in October,
company's postwar expansion pro¬
gram and was rushed
to comple¬
has
148
of .Raymond
has
put
The
'legislature
under
which the Old 'Gdlony division of
bill
A
Massachusetts
department
kilowatt
operation at Montville.
equipment
*
? 5
rate -but increased the extra from
ardized
topic, Mr. Lin¬
Power
&
$;>-
coln stated:
Malcolm L. Saunders
it
Light
of
cerning
Com¬
Connecticut
course
new
curities.
1,
June
of
issues
for
stock¬
Colonial
after
or
sale
1943 will continue to -be of value.
paid in
Insurance
certificates
shares issued to
of
holders
quarterly and an extra of 30
-cents, which indicates a current
1947.
Scrip
4949.
fractional
the
petitive
bidding
in
the
June
29, 1931 to
merging corpora¬
tions would become void on Jtn
*cent
basis
of an address before the 42nd Annual
Meeting of
the Life Insurance Association of America, in New York
City on
Dec. 9, Leroy A. Lincoln, President of the Metropolitan Life Insurance
Comoany of New York, took occasion to criticize the method of com¬
Man¬
Stockholders of
1,
in
In
}
Investment
issued
stock
50
against the 1947 total of
Connecticut
a
J,
.
agement has announced that scrip
certificates for fractional shares'of
Company
quarterly dividend
indicated annual rate
an
a
whers used
no
by ragulative bodies. Says method results
inadequate investigation of offerings.
except where required
>; !
-
-
attractive to corporate borrowers and is
proven
fend Mr. H. ©awn Gollamore
pany
#
Leroy A. Lincoln, Present of the Mslropolitan Life Insurance
Company, tells Life Insurance Association of America ii has not
Insurance*■ Com¬
-Fire
16, 1948
Competitive Bidding Requirement
MASS.—Malcolm !L
Saunders has rejoined the tra.dihg
BOSTON,
of the Tfoard <of
Chairman
come
of
Sy8% sold in March, 1948.
Thursday, December
CHRONICLE
lejoins Raymond Go.
Telephone 'Company
A million dollars of Southern New ©ngrland
*
• *
5%, 50-year gold bonds, sold during the jperiod 1898-1909, was paid
off Dec. 1 through the company's agent, the ?First National Bank and
Trust Company in New Haven. Proceeds were obtained from the
company's
recent
financing,
a^
'
•
f
'
r
FINANCIAL
&
Maicolm L. Saunders
Connecticut Brevities
h
7*
-
COMMERCIAL
THE
(2502)
J
Teletype: HF 136$
may
provisions for the
tecting
the
impose require¬
purpose
investor.
security involved
is
of
Where
of
a
pro¬
Walter
&
Co.,
E.
stand-\
mons,
Kistne?-, A. C. Allyn
Chicago,
the :H. Dsgood,
Chicago
111., and Gilbert
Blunt, Ellis &
Chicago, 111.
Sim-
Volume
COMMERCIAL
THE
Number 4760 "
168
&
(2503) :
FINANCIAL' CHRONICIE
.11
but Investors Stock Fund's portfolio has been carefully
selected to contain a high percentage of stocks that, in varying' de¬
amounts,
meet all four requirements^ The last two factors,
and
substantial plow-back of earnings, can
crees,
dividends
verified.
,
Y \
examination of the portfolio will show
,
c
By henry hunt
"Worry Killing"
fund with assets in excess of $120,000,000.
divided into two classes,: first, worries which
one can 'do something about'; and, second, worries where the worrier
•is completely helpless to change the course of events.
The first
flClass mentioned serves a useful ;purpose; indeed, nothing was rever
-
,
,
that all companies
represented had average earnings per share of $7.84 during the year.
Total dividends paid averaged $2.06.
The average difference, Or
plowback, was $5.76 per share, Whidh was 73.6% of total earnings."
The accompanying map graphically depicts the Wide distribution
Of shares in investors Mutual Inc., the world's largest balanced
"An
v
I
reasonable
be easily
"Worries may be
Prospectus
upon
'
built by man which did not involve a liberal expenditure of 'fruitful
worry,' The second class is wasted effort.
^
"If one could only fit one's emotions into the logical reasoning
' llQUIDATl'ON'VAlUI
Y'
CORPORATION
RESEARCH
120 BROADWAY, NEW
Of SHAHtS »OWNK> "AS OF
j
SECURITIES Ai
NATIONAL
Invest6rs mutual, inc., Shareholders in 4« states
!
alaska and nine foreign countries
' ♦
request iipm
investment dealer, oriwm
your
V
-
YORK 5/N. Y.
mind, then The second class of worries would cease to be
emotion, particularly the emotion of
of the
bothersome.* But unfortunately
Most of us have to accept the fact
can't help will continue; to,disturb* us.
fear, knows few logical restraints.
thdt Teveh the difficulties
*
worries
"Investors'
we
rank
in
high
the
first .group
where one
something about it/ After all, one has only to reach for a
telephone and dispose of the-irritation for i^ood and all/ Constantly
through the 'security worrier's' mind runs the alternative: 'Shall; I
sell wit and end the pain now or wait just a little longer?'
\
•.
"Investment companies, if they fulfill their purpose, should serve
to lessen greatly, if not eliminate, this 'security worry/ In the first
place the direct element of concern is eliminated. One's investments
are conceived as a whole and not as a number of individual situa¬
'do
can
'"Stoiiio-
tions, each one having its own particular 'worry potential.' in the
second place, there is The delegation of worry that has taken place;
someone else (your management) is fighting that battle for you.
1 ;
"Once a person who has experienced the rigors of,'holding secur¬
ities directly becomes used to the indirect method afforded by an
wild horses would not pull him back "to the
at least so various persons who have been through the
investment
old way;
game
or
tell
us.
■**714.935.4
$6,897,543
Dividend No. 33
The
•174,576
Board
Mutual,
J—ST"
-*IAS*A AND fOntlCN.
AUSKA';;
'•
;
Directors
of
quarterly
share pay¬
Sharehold¬
ers
on
on
January 21,
record
as
1949, to
Of December 31,
EE
canada
canal
a
dividend 6f twelve tents per
1
•
Investors
of
has declared
Inc.,
able
"r
.
'mam«
1948.
ftdbb/PwMwf
£ont,
"
.
cuba
,
.
_
.
Principal Underwriterand
finland
HONDURAS
japan
'•<
*
'
*
.
Investment Manager
hawaii
company,
They say that what used to seem to them a desperate
becomes an unemotional business transaction.
It
does seem to us that 'worry killing' constitutes an important part of
the service rendered by an investment company."—Written
by
Edward C. Johnson 2nd, President of "Fidelity Fund.
process
j
'(tasK1""""""
*405,410
f T.
*
.
v
.
INVESTORS SYNDICATE
.
.
switzruand
"vfnezuba
Jn which fharei or# not
total
Minneapolis, Minnesoto
Win® oflnrad.
of chance
A Job
: ^
Well Done
\[
WHtian F.'LaH,
:
Putnam Fund repur¬
chased a single lot of 100 shares. As most readers will remember,
that day saw a decline of seven points in the Dow-Jones Industrial
Tucker, Anthony •& Co., 120
Average and a volume of over 3 million shares on. the New York Broadway, New York City, mem¬
Stock
Exchange.
It is also an interesting fact that for the full bers of the New York Stock Ex¬
month of November the repurchases of shares of the Fund were change,
will admit
Ernest W.
below the average for the first 10 months.
,
■ •
Borkland, Jr. and William Claflin,
"We
call this to your
attention not in any boasting sense III to partnership on Dec. 31. Mr.
(although we are proud of it) but because it reflects the kind of a Borkland is manager of the bond
job investment dealers and salesmen have done in selling the Put¬ and. investment departments in
nam Fund to their customers on an investment basis.
The credit goes New York. Mr. Claflin will make
to the retail salesman, and to these men, and women, too, we say his ,headquarters - in, the: firm's
"On
Wednesday,
Nov.
3,
The
George
is
With Tiffl
t**nnri-i)
THE
»o
CHRONICLE)
FfMlNCIAL
HARTFORD, CONN. — William
F. Lally has become associated
with
Tifft
Brothers,
49
Pearl
Street, members of the New York
and Boston Stock Exchanges.
Mr.
Lally
was
formerly local manager
for Luckhurst & Co. and was
with
J. Arthur Warner & Co.
.
:J'. '
YYY-. ,"<it has always, been our conviction that the proper selling of ,a
.fund was very important from the standpoint or t-.e man^men.:
and the dealer as well as the investor.
It is so necessary. that-tht
men
ard women who place their money 'in a fund should under¬
'thank
Y
you.'
'YY-'i
•
Boston office.
D. K/Porieous V.-P,
-
.
V
V
\
■
-V.
'
r
Firm Name to Be
expected
Andrews &
from it, j
v"'.'
■■
"v
Y'
'"V'#
Effective Jan. 1 the firm name
"In our opinion there has been too much comnarative 'price
selling' for the general good of the mutual fund industry.'Sellin® [of Donald MacTCinnon & Cb./ The.,
swings in the Dow-Jones Averages is not selling an investment. ; It 'General Motors Building, will be
is selling a highly uncertain speculation and it is bound. to bring Changed to Andrews & Wells, Inc.
unpleasant repercussions on the dealer and the management from
time to-time.
' Y" Y-.
•
'
stand* the kind of a fund
it is and what can reasonably be
Wells, Inc.
;
-
-
.
The
outstanding job in the proper selling of
"Dealers
as
well
as
Cor Rotation.
York
any
Putnam bulletin.
stock
market
a
Good Month
doesn't always rise in
But historically it has done so a
Nov. 30
Dec. 31
Rise
149.82
154.76
4.94
145.69
150.24
4.55
1940
131.00
131.13
0.13
1941
114.23
110.96
-3.27
Year
1938
1939
___________
,
4ti
WAU
S1KEET
'
Prospectus
THE
upon request
LORD-ABBETT
Custodian
INVESTMENT COMPANIES
Lord. Abbett & Co.
INCORPORATED
Near York
—
Chicago
—»
New Orleans
—
Los
Angeles
-Funds
Certificates of Participation in
INVESTMENT FUNDS
SHARES OF CAPITAL
STOCK OF
investing their capital
119.40
4.90
IN
135.89
6.32
BONDS
1944
147.33
152.32
4.99
1945
191.46
192.91
1.45
169.80
177.20
7.40
PREFERRED STOCKS
179.40
181.16
1.76
(Serie. K1-K2)
x,
____
1946
1947
■
____
■
(Serie. B1-B2-B3-B4)
won't. But historical prece¬
dent, for whatever it is worth, favors the month—Quoted from a
bulletin issued by Selected Investments Company of Chicago.
Maybe it will rise this time; maybe it
73.6% of Earnings Plowed Back
i
"Any
forces
advance in security
sooner
or
liter
prices that results from
reverses
itself.
An
COMMON STOCKS
(Serie. S1-S2-S3-S4)
Prospectus from
<
fessr local
increasing worth is the
combination of factors for an increasing worth is
(a) potentials for profitable grov/th, (b) capable management, (c)
the ability to pay reasonable dividends, and (d) still plbw back a
substantial- portion of earnings to finance expansion.
In such a
comoany, the earnings plowed back can comoound the company's
ability 1o earn and, in reasonable time, materially increase the value
"The perfect
of its common
"Possibly
stock.
no
company
'
„
has
all
of the
investment dealer er
speculative
only reliable source of long-term capital gains.
.
«.■
Shares9 Inc.
114.50
________
I
r
■
*
5
129.57'
1942
1943
•
NEW YORK
*
December, of course
surprisingly high percentage of the
time.
In nine of the last 10 Decembers, for example, the DowJones Industrials have managed to turn in a plus figure for the month
—despite depression, war, taxes, price control and general turmoil.
The
HUGH W. LONG & C(
;
beneficiaries will also be interested to know
investors placed more money in the Putnam
previous
month in its history."—From a George
*
* '
1 / /
December Is Often
.
Street, /New
Investment Funds.
that during November
Fund than in
1" Wall
City, distributors of Mutual
American Business
this Fund and we are most
f
appreciative of this fact.
Vice-President of Cohu
a
•
encouraged dealers to present it and sell it on such
record seems to indicate that dealers have done an
have
we
basis.
a
elected
savings-investment medium
"We think of the Putnam Fund as a
and
K. Porteous has been
Douglas
;
above factors in
equal
obtained from
local investment dealer, or
Prospectus may be
your
Tk. Keystone Company
of Boston
50
Congress Street
Beaton 9,
THE
PARKER
CORPORATION
ONE COURT STREET.
60ST0N 8, HI ASS.
Massachuaetta
'I
16
(2504)
THE
COMMERCIAL
&
FINANCIAL
Thursday, December 16, 1948
CHRONICLE
nadian
prospects as a whole and
Canadian Pacific's participa¬
the
tion
Canadian Securities
in
the
virtually
there is little doubt that this
dervalued
By WILLIAM J. McKAY
Observations
phase of
activity
every
»
Dominion's economic
stock
must
particular fund's capitalization is high or low,
concerned only with forecasting the future
behavior of the discount per se on the basis of past performance.
Consideration of whether participation in a fund of representative
marketable common stocks does or does not represent good value at
spective discount
eventually
the
higher.
move
On March 31 next, Britain's oldest colony will become Canada's
When the act of union of Canada and Newfound¬
tenth province.
land is consummated
by the British Parliament the 3,842,000
by the
foundlanders
to
make
approximately 13 %
total
a
of
million Can¬
adians.
historic
This
union
Dominion
Commonwealth
im¬
with
of
of
the
of
Newfound¬
Labrador
and
senior
the
the
British
Nations
was
brought to a happy conclusion
after protracted negotiations which
were not alawys free of acrimoni¬
argument.
ous
Finally, however,
the democratic will of the people
decided the issue by popular ref¬
erendum.
Moreover
the
terms of confederation
more
there
proper
portant
also
are
although
many
hitherto
ultimate
were
generous than those
offered
by
Canada
initially
the
as
even
basis
sets that will
role
in
play
enlarged
now
the
economic scheme.
of Manufacturing in
South—James W. Martin and
pulp and paper industry was
responsible last year for a total
Public
Administration, University
of
of
the
that
surpassed
hitherto
leading
Canada
can
in
ex¬
to
the
possession of the
largest papermill in the world—
Co. mills at Grand
opment
Falls
also produce newsprint on a large
and are a main source, of
Alabama—Paper.
der
claim
the Bowater mill at Cornerbrook.
The Anglo-Newfoundland Devel¬
Bureau
—
Collective Bargaining
—
Na¬
the
Co.
International
Workers Union,
.-Corporation
value
prices
stock
of
by
guess¬
going to do, in lieu of - considering
and trusting that it will work out in
capital-appreciation yields, or both.
It is in
functioning as a barometer of psycho¬
or
stock market's
logical reactions instead of
thermometer
a
of values.
Important general investment conclusions are likewise deductible
from the trusts' short- and long-term operating performance, as ade¬
quately revealed in statistical compilations. A good basis of refer*ence is the Dow-Jones Composite Average of 65 stocks.
This com¬
Chemical
parison is valid
their
Washington, D. C
—Paper—$1.00.
scale
line with the
Un¬
Planning Association,
Dewey and Almy Chemical
the
concrete
future
the
are
The Investing Performance
Peace
tional
and
people
satisfactory income
of
discount
to
other
?
Causes of Industrial
lay
now
Morrow
preclusion of visible
makes
trying
appraisable
Taxation
the
D.
"exports
in
what
ing
Glenn
value
gain
trust
the
culated,
land
port of fish.
that similar situations are generally avail¬
implication in both cases being
value judgments irrelevant.
Such an attitude
sphere, where the values can be arithmetically cal¬
epitomises the market place's characteristic fundamental
capital
in
error
as¬
Tne Newfound¬
or
that continuation of past performance with the
valuable
Canadian
a
always existed,
able with other trusts—the controlling
im¬
little
known mineral and industrial
portant territories of
land
it has
Within
into the Dominion nadian confederation.
of
320,000
New¬ the
borders
of
Newfoundland
entry
on a
comment is
market
the available price (as now at a 40% discount) is almost completely
sublimated to comment that even if such a discrepancy is attractive
square
mile area of the Dominion of Canada will surpass that of the whole
of Europe by some 60,000 squared
miles.
The Canadian population will gain as a result of the inclu¬
will
be automatically increased sion of Newfoundland in the Ca¬
confederation
'
(Continued from page 5)
un¬
,
.
though the trusts have
even
in
assets
cash,
they
as
average of 10% of
committed to equity
an
presumably
are
investment and in any event the expense of trust management is not
required for investment in cash
Finance—Floyd F
short-term governments.
or
In the ll%-year period from 1937 through September 30, 1948,
supply for leading newspapers in Burtchett and Clifford M. Hicks
Despite the inevitable protest of the United Kingdom. As a result —Harper & Bros., New York, according to compilations made by Arthur Wiesenberger and Co., (on
the basis of annual restoration of dividends to the trusts as well as
N. Y.—Cloth.
;
'
minority interests which favored of
Anglo-Newfoundland's
pros¬
to the Dow-Jones issues); the closed-end companies showed a gain
complete independence and closer pecting for sulphur for is news¬
1949 Credit Manual of Commer¬
of
71%, and the open-end companies a gain of 56%; against a gain
collaboration
with
the
United print
production, the
Buchans cial Laws
National Association
of 88% for the Dow-Jones Index.
For the period of the first nine
States, the general reaction of the Mining Co.'s extensive lead and of Credit
Men, 1 Park Avenue, months of this
year the trust performance js demonstrated as even
majority of the people of the new zinc
deposits
were
discovered. New
York - 16,
N.
Y.—Cloth—
Canadian province h&s been en¬ The Dominion Iron and Steel Co.'s
worse, with both the closed- and open-end funds gaining 2%—against
$10.00.
7% for the blindly-buyable index.
tirely favorable and
there are iron-ore mines on Conception Bay
Facts
and
Figures
of
Govern¬
Such negative results seem to be caused by the following:
high hopes of enhanced prosperity not only provide ore for the Do¬
and
security for Newfoundland minion Iron and Steel blast fur¬ ment Finance—The Tax Founda¬
(1) Specifically, the trusts avoided the rails, which did better
within the borders of a unified naces at
tion,
Inc.,
30
Rockefeller
Plaza,
Sydney, Nova Scotia but
than other stock groups since the early war years—which simply
and greater Canada.
also for exports to Europe. There New York 20, N. Y.—Paper.
means that the trusts made an error in group selection.
There is little doubt that this are extensive coal-fields on the
Government
Activity
in
the
new
and appropriate union will west coast which so far have not
Lending Field—News Bureau of
(2) The holding of considerable proportions of their assets in
bring mutual benefits to'both par¬ been actively exploited and oil is the American Bankers
Associa¬ cash served as a brake during bull markets—but the counterbalanc¬
ties. As a province of Canada the also known to exist but
similarly tion, 12 East 36th Street, New
ing benefit from thus being partly out of the market during bear
constitution
o f
Newfoundland, little effort has been devoted to York 16, N. Y.—Paper.
which
was
suspended in
1934 its development. As on the main¬
periods, was not reflected in results.
Housing
and
when the London Commission of land Newfoundland is also well
Employment—In¬
(3) The open-end funds have been penalized by their customers'
government took control, will be supplied with an abundance of ternational Labor Office, 1825 Jef¬
ferson
Place,
resurrected.
With a greater de¬ potential hydro-electric
Washington 6, D. C. irrationality in handling the greater amounts of funds to invest in
power.
Paper—75c.
times of boom instead of bust (reflecting the same investment foible
gree
of independence, together
of the referendum.
—
Thus
with
the
influence
of
Canadian
progressiveness'in the field of de¬
velopment of natural resources, it
is inevitable that Newfoundland's
known
and
unknown
economic
assets will
plored.
be
now
The
vigorously
ex¬
hitherto
neglected
mineral wealth, virgin forests and
hydro-electric power reserves of
the vast territory of Labrador will
receive closer attention from
now
Federal agencies and Canadian in¬
dustrial interests. The program of
development of the fabulous Lab¬
rador
iron-ore deposits will be
accelerated and the delay before
actual production will be short¬
ened
It
by several
is
not
moreover
years.
generally
realized
that Labrador is not the
only economic
that
asset
Canada
the
,
economic
benefit
Canada of this valuable
dition
to
new
her
existing vast terri¬
tories is already
considerable, but
the future is likely to show that
current
appraisals will fall far
short
of
the
actual
economic
po¬
tentialities of the Dominion's 10th
province.
and
Present Day Banking 1948-1949
—American Bankers
12 East 36th
internal
sections
of
the
bond market but activity was still
restricted by the absence of avail¬
able supply. Free funds strength¬
N. Y.—Cloth.
Sugar
following continued demand
in connection with oil investment
and a slackening of the recent
early
unsettlement
fol¬
lowing news from Calgary that re¬
finery capacity in Alberta had
been
reached there
was
a
subse¬
north
of
the
Red water
The industrial* issues
were
In
(successful despite
DETROIT,r MICH,
Stock
on
counter.
The
t—
Bond
Club of Detroit has set Dec. 16 for
annual Christmas
Cocktail
buffet
of
the
ration,
In
view
was
as
lit¬
CPR
of
Ca¬
Industry
Information Available
.
Michigan
Chairman
of
the
Corpo¬
Enter¬
Committee, is in charge
\
a
*
funds'
contrast to the open-end
7-10% load) through direct house-
a
the closed-enders' participation sales
Exchange listing
Analogy
with the
be made
may
impossibility of their
sively located
on an
or
left
to
the
quite
are
neglected
depen¬
situation
occurrence
over-the-
in regard
when the issues
the
to
are
pas¬
exchange.
TWO WALL STREET
Admit D. K.
E.
F.
Hutton
Phillips
N. Y.
Charles King & Co.
Members Toronto Stock Exchange
Broadway, N. Y,
out
Jan.
1
York
Stock
will
admit
Exchange,
Donald
been
with
the
firm
for
the
It
erected
New
is
the
Norway
in
York
25th
WHitehall 4-8980
Direct wire to Toronto
general
by
whip-sawing
results
comparing
which
the
has
generally
crowned
This conclusion is borne
during
periods
of
narrow
relaiive
results
of
trusts
markets,
as
follow'
which
of
6%, the trusts registered
Spruce
Broad
Stock
tree
dividends
has
to
put
back).
(both cal¬
Similarly, during the irregular
year,
the funds appreciated only 2%
Fur¬
thermore,
turnover
the
among
habits
while the
Index
gained 7%.
the different trusts, those funds which have low
have
generally registered better results than have
higher turnover funds.
1
over-activity and the speculative approach, which result in
tioning in
Street by
Exchange.
Christmas
with
advance"
an
depreciation averaging 1%
a
short-swing markets existing in the first nine months of this
the whip-sawing, like
Exchange Erects
50-foot
the
1947, while the Dow-Jones Composite Index showed
The
25th Christmas Tree
A
is
of
years.
Stock
the
as
K.
Phillips to partnership. Mr. Phil¬
lips has
by
well
culated
&
Co., 61 Broad¬
New York City, members of
New
results,
Thus, in the unchanged market between the beginning and end
a
so
other abortive doings by those func¬
many
trustee capacity, is to
guided
clients.
activity
gives
In
them
this
case
their
it
a
is
money's
great extent forced by the mis¬
the
shareholders
worth,
and
who
who
feel
prefer
that
timing
operations in the Blue Chips to workmanlike but unglamorous longterm business-like commitments in Special Situations.
Consequentially,
bring holiday cheer to the finan¬
trust managers prefer the prospect of losing money "legitimately" in
cial
an
district.
The
tree
will
be
lighted beginning Friday, Dec. 17,
61
factory
efforts to capture short-term capital profits.
digging-in policy with those pursuing rapid turnover aims.
E. F. Hilton & Go. to
been
Oil
A. E. AMES & CO.
of
of arrangements.
on
concerned.
Frank P. Meyer
supper.
First
tainment
ing & Smelting Co., there
Western Canada
Absence of promotion.
to-house peddling,
their
the
The
1-1045
(5)
advantage.
an
ready sale of special distributions via off-the-ExchangO. in contrast
way,
canadian stocks
NY
disadvantage instead of
Christmas Party
many
WORTH 4-2400
This, entailing difficulty in
dent
nouncement of Consolidated Min¬
was,
NEW YORK 5,
existing since the mid-1930's.
Bond Club of Detroit
irregular and mostly lower.
De¬
spite the favorable dividend an¬
tle market response as far
INCORPORATED
markets
was
reported to
have promising results from its
joint drilling test with Gulf Ca¬
field.
CORPORATION
•
•
flexibility in portfolio operations, has made the size of the funds
distribution
start at 4:30 p.m. to be followed
by
in renewed demand.
nadian
'
,
... *
.
quent minor rally led by British
MUNICIPAL
Figures—t
*'
*
Party to be held at the Savoyard
The Broad Implications
:
Club on the top floor of the Buhl
But far more important in its general implications for the in¬
sues
exceptionally the main center .Building. The invitations to mem¬
only call for festivities to vestor than any of these five reasons for the comparatively unsatis¬
of attraction. The base metals also bers
Dominion which
PROVINCIAL*
and
.
.
\
*
•
(4) Unwieldiness—resulting in general from the de-liquid stock
cil, 136 Front Street, New York 5,
a
-
Facts
is exhibited in the aboverdescribed discount fluctuations).
as
persistent selling pressure. Stocks
were irregular with the
gold is¬
After
GOVERNMENT
n
United States Cuban Sugar Coun¬
ened
were
CANADIAN BONDS
Association,
Street, New York 16,
N. Y.—Cloth.
During the week there was
steady demand in both the extern
nal
,
to
ad¬
American Telephone than in
Thus
the
empirical
record
an
unknown enterprise.
showing that
attempts
at
market-
and, commencing Monday, Dec. 20,
swing-catching
recorded Christmas carols will be
expert investment management below those attainable from the blind
were
fruitless enough to lower the results of the most
played from the outside gallery of
placement of funds in
the Exchange at Noon and in
the general conclusion that true perseverance with long-term invest¬
late afternoon.
the
ment
policy
pays
a
representative index, importantly confirms
off in relative material results.
Volume
168
Number 4760
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
If
(2505)
made
if
Battle for
European
"The first danger [to freedom] arises from those
sincerely love freedom, but believe the way
preserve it is to give more and more power to
'do good' to centralized government.
to
second
look backwards.
•
/
;
"The
the
;
,
had
adverse
the
ture.
fast
is
*
demonstrate the alert, dynamic and in¬
approach to the new problems that the
to
our
.
.
even
en¬
that
by
struggle
Aid
period
the
ern
ideological struggle against
destroy the freedom of men."—
•
V
*
>,
.
.
There
is,
of
.
t
#
.
"
much
truth
in
I
what
us
a
hold fast to fundamental principles
cepts traditional in this land of ours if we
or
worked?
Nor is France alone in this
Most
prematurely,
ferent
are
line.
establish
or con¬
the
not
are
and how they
the
-
In duplicate actions taken by both Exchanges, restrictions on
pur¬
chases by members for own account are liberalized.
The Boards of Governors of both the New York Stock
Exchange
and the New York Curb Exchange at special
meetings on Dec. 11 and
The
.
the
amended
own
rule
governing purchases by floor traders
account.
first
,
,
paragraph
of the
(a).
No member, while
i. e.,
purchases of stock at
'plus tick'."
or
has been amended to read
as
110
on
the Floor of the Exchange,
a
follows:
a
pur¬
price higher than the last sale,
:
.
now
reads in its
entirety
as
follows:
.
'
which such stock last closed
(II) at the price at which such
stock last closed if the price of the closing transaction was above
the price of the transaction preceding the closing transaction
(i. e. a 'plus' tick).:
■
y.,
\
.
-
/;
'/(b).
or
The provisions of this rule shall not apply to
chases made:
ch
pur¬
(1)
-
a
specialist—odd lot dealer in
a
stock in which
I
(2) to effect or facilitate a distribution of securities, if
such transaction is made pursuant to Regulation X-9A6-1 or if
such transaction and such distribution are made pursuant to the
approval of the Exchange;
i
Fl*
I,
•
by
he is registered as a specialist and odd lot dealer to maintain a
fair and orderly market in accordance with Rule 174;
;fi:
*
;
i:! I-' '
; j
■
f':;;
■'
to cover
a
'short' position;
(4)
to offset
a
transaction made in
(5)
for bona fide arbitrage;
(3)
for
assistance,
a
nature
cut
as
from
to
her
down
other
enable Britain
essential
parts
of
This would necessitate
to
the
more
long-term pros¬
The British
In
as
of
austerity for its own sake;
her impoverished
state
she
really cannot afford to indulge in
excessive luxury imports. It would
be a much more realistic solution
if
the
her
continental
took
countries
impoverishment into account
and adapted their .production
export
but
policy
to
the
and
deplorable
inevitable changes of British
import requirements.
imports
the
world.
important
country, and it would
naturally
her
sac'rfe
of. immediate
policy should not be regarded
one
Brewster Joins Allen Co.
In
changes in the production system
of
sake
pects of equilibrium.
to
France, any French export sur¬
plus to Britain must be of such
the
convenient
Municipal Bond Dept.
be
Halsey C; Brewster has joined
the municial bond department of '
tc
Allen &
France if all the adjustments were
Co., 30 Broad Street, New
York City, it is announced
The
aim
is
trade
to
SPEAKING OF GIRLS
.We'd like
to
with
why
reasons
afford
status
out
totally dif¬
a
restore
is that in
quo
deteriorated to
consider¬
a
tional
accounts.
On
the
other
hand, France and other continen¬
tal
countries
it
find
difficult
to
achieve
equilibrium unless and
they have recovered their
until
markets
Here is
their
for
luxury
dilemma that deserves
a
be quoted
ple
in
as
classical
a
textbooks
Marshall
nomic
Plan
of
exam¬
logic.
on
demands
integration
interest
The
the
eco¬
of Europe.
that
In
integration
imports
on
a
large scale.
Should
she refuse it would jeopardize the
of
integration; should she
she would sacrifice the
chances of balancing her inter¬
success
comply
national
other
which
accounts,
major
Marshall
requirement
Plan.
In
plain
is
an¬
of
the
English,
Britain and
equi¬
librium in France and other
coun¬
tries in
error;
with the prior approval of a floor official to permit
the member to contribute under unusual circumstances to the
(6)
.
maintenance, of a fair and orderly market."
a
coming independent of American
support at the end of ERP period?
If
not, how could European inte¬
gration be achieved?
In reality dilemmas
so
are
seldom
completely incapable of solu¬
it
at first sight,
dilemma is no ex¬
ception in this respect. The solu¬
tion lies in a compromise under
as
appears
and the present
which
Britain, would
be
enabled
to absorb a larger volume of con¬
tinental luxuries, even though not
nearly
latter
some
of
large
as
countries
the
1
in
similar position. Is Brit¬
ain to sacrifice her chance of be¬
tion
:
1
"
.)
mistake to force Britain to
degree..
equilibrium
No member, while on the Floor of the Exchange,
shall initiate for any account in which he has an interest a purchase or purchases of stock at a price higher than the last sale
(i. e. a 'plus' tick) if the purchase price is (I) above the price at
,
exports
^
the choice appears to be between
"Rule 110. (a).
r
her
is
to
Britain is urged to resume luxury
"
a
that Rule 110
takes
balanced
a
prewar
the
'plus' tick) if the purchase price is (I) above the price at
which such stock last closed or (II) at the price at which such
stock last closed if the price of the closing transaction was above
the price of the transaction preceding the closing transaction
(i. e, a 'plus' tick)."
so
a
beyond which. it
worth Britain's while
hardly
sibility of balancing her interna¬
to
No member, while on the Floor of the Exchange,
shall initiate for any account in which he has an interest a pur¬
chase or purchases of stock at a price higher than the last sale
(i.e.
united
for
pay
limits
are
make sacrifices,; dependent as she
is on Marshall Aid; It would be a
If Britain were to
admit large continental luxury im¬
ports, that would rule out the pos¬
which, like
"Rule 110. (a).
•
goods
importing at
more
While she would be in
to
neither party could afford a dead¬
On the other hand, there
lock.
exports.
Curb Rule
present
shall initiate for any account in which he has an interest
chase
almost
Britain's
.
cannot
British
-
Rule 374 of the New York Stock Exchange, reads as follows: V
"Rule 110.
is
Plan depends. Since both Britair
France
need Marshall Aid
and
fice,
produce
Britain
*which
Marshall
the meantime her balance of pay¬
NYSE and Curb Amend Floor Trading Rules
13
West¬
in a somewhat
Britain is con¬
an
continent.
able
Dec.
with
of
details of which have leaked
ments
on
countries
Europe are
position.
Britain
they
v
on
the
of
The British Four-Year Plan, the
little.
many)
"early leader¬
to look back and learn what
face
position to buy luxuries and semi-
re¬
an increasing import
surplus from the continent, con¬
sisting mostly of luxuries.^ v
Mr.
We know it has become rather shameful (to
to look backwards, but how harken to
for their
be
admission of
course,
looking backwards disturbs
.
should
the form of
a demand
that during the course
of the next four years her eco¬
nomic policy should aim at the
Stassen has to say—but somehow the reference to
ship"
Einzig
continental front, in
Harold E. Stassen.
to
luxuries
situation
fronted
"We will also win the
Paul
Dr.
similar
men.
•
luxuries.
Marshall
respect.
in
more wheat, steel, and other ne¬
cessities, Britain could save correisponding amounts of hard cur¬
rencies.
Therefore she would pe
in a better position to spend on
more,
stored.
against those who would destroy the freedom of
those who would
fu¬
anxious to
and
present from hard currency coun¬
tries.
If France should produce
she
But
prewar
.
will win the economic
we
which
the end of the
country displayed, holding
the fundamental concepts
then I am
confident that
tinent
near
a buyers'
of growing
increasingly
The alternative is for the Con¬
-
bal¬
which
she is anxious
destroy free¬
by the use of aggressive
military
force.
J
which k
world
a
competition.
to maintain in
dom
early leadership of
large
a
ance
we
genious
market
Britain.; Now ;
she has
achieved in
becoming
with]
trade
sure
"If
be
her
on
those who would
*
whether the desired result could
large
-
,
third
*
a
ance
y
"The final threat is found in
„
r
France
favorable bal¬
quo—to
originates With
ThoSe'who seek to destroy freedoKi by using freedom's open¬
ness as the avenue for
sabotage.
Harold E. Stassen
war
integration,
continuance
the
it is to stand still—
maintain the status
to
European
By PAUL EINZIG
those who sincerely love free-,
dom, but believe that the way
to preserve
before very long, and that this
conflict will not hold up unduly
LONDON, ENGLAND.—It is now quite Clear that the main con¬
troversy in the difficult attempt at European economic integration
is between Britain and France, and that the subject of this contro¬
versy is the future trade balance between the two countries. Before
from
comes
able Compromise will be reached
Economic Integration
who
"The
by Britain alone.' That is,
however, out of the question.
It is to be hoped that a reason¬
as
the
exporting
would like her to, and
would switch over to
degree from the production*
luxuries
necessities.
to
the
production
of
As things are at pres¬
..
recommend this
to
ent the
only way in which Britain
would be able to afford to import
more
The New York Stock Exchange has also taken the above action
one.
She's calm.
luxuries from Europe would
be through an increase of her ex¬
market in stocks by modifying its rules to permit
ports to other continents. The ex¬
members on the floor to purchase for their own accounts, under cer¬
port drive to the countries of
tain conditions, "long" stock at a price higher than the last sale. Pre¬
the Commonwealth, the Western
viously, members of both the New York Stock and Curb Exchanges
Hemisphere, the Far East, would
could not buy on the floor for their own accounts any stock at a price
get your
She's
courteous.
She's competent. Her job is to
call through, quickly and accurately, wherever
you
to facilitate better
higher than the last cale, unless they acted as specialists or odd lot
have to be intensified at all costs.
dealers.
And
even
then
it
is
doubtful
it to go.
She's
one
of 2 50,000 girls who help to give
*■
good service, day and night,
your
telephone operator.
seven
days
'
a
•
you
•
week. She's
Bell Telephone System
'
-
want
;
18
THE
(2506)
COMMERCIAL
&
FINANCIAL
CHRONICLE
CEO Recommends
"Business Profits Excessive"
j
Social
Director, American
taining greater economic stability. Sayi Federal Reserve's support
of long-term government bonds permits expansion of bank credit,
}'■•"'
J *"""
and money supply. -
|
Federation of Labor
Though stating profit motive is vital to free enteiprise economy, AFL representative contends present
high profits
created by high prices paid by workers and others. Holds business firms
are
following
are
J !
'free
could
wages
■
'
1
*"1,'
'.r
and
stable
Committee
United
As
Representative of the American Federation of Labor I am very glad to have the
opportunity to present our views on the very important subject with which your Commit¬
tee is dealing. Labor is vitally concerned with the subject of business profits as it relates
/;■
a
distri-*
the
to
'
bution
of
our
national
in¬
tem which
have
income
is
|
to raise wages.
representatives of
sit
gaining
devel¬
oped in Amer-
collective
the
at
our
bar¬
with employers it
policy to demand
table
their
not
proc-
the increased
create
necessary
the
unions
we
ica and all the
techniques and
These
When
economic sys¬
rrr-'~-
.
esses.,
The
come.
*
productive
increases that will destroy
wage
~
1
~
:—~
rate varied
between
8
ibility,
for
States
world
a
the
Economic
work
economy.
'
free
a
Research
and
stability
tor
the
desire
This
system
no
which
is
that
now
being
which
at¬
establish
to
will
all
of
profited.
system by
America have
in
us
programs
the
destroy
the same token
By
1948 thus far these amazing prof¬
are shown for individual
the
result
industries:,
While pointing out that
i
Automobiles,
.26.1%;
from
sides
all
can-
i(of productive effort among work¬
ers and investors is developed and
'
tary
!
-
and
maintenance
tne
purchasing
of
stone,
20.8%.
Thus
is essen¬ leading corporations in
power
continuance
the
to
we
of
tne
system by which they profit. We
Next only to the immediate re-
dustries
show
the
of
rate
more
return
profits
of
many
in¬
and
fiscal
policy
"than
of
job
good
a
at
a
i
•
retirement
1
vate and
in
'
and
\
these
of
all
both pri- since the end of World War II.
The values
During the entire postwar pe¬
programs,
government.
dollar
are
values
riod, unions have been struggling
to
working people stand to lose
than
any
other' group if
tic
more
price
increases
whittle away
■continuing
'-permitted
purchasing
when
prices temporarily
little, then rose again,
wages have fallen steadily benind
in the rate with prices ever since
the
declined
of these dollars.
power
It is «ot
months
are
to
keep wages abreast of the dras¬
price rise. Except fop/a few
only the worker's fu¬
ture
V-J
security but his present welfare
that is
dependent upon a
a
Day.
war's
Two
end
after
years
living
costs
the
were
up
'
stable economy. As I shall demon¬
strate, the last few years' experi¬
shows
ence
that the
lag in wage
increases in relation to price rises
(
undermines
the living
working people!
of
For
of
the
labor
the
halls
that
last
have
of
were
so
middle 30's
standards
costs
years
we
hearing in
Congress the voices
insistent during the
34%,
:1'-; ;
were
31%.
'
wages
up
1
■
only
-/
'
Prices
than
several
missed
24%, wages only 18%; by Oc¬
tober, 1948 (latest figure) living
cost
the
haVe
been, raised
enough to
due
to
have
more
added
any
increases, and
wage
result has
profits
cover
been that
reached
business
peaks.
new
With each postwar year, a smaller
and
smaller portion of the in¬
balancing the bud»get and
reducing the national come created by American indus¬
debt.
We recall just ten
years try has gone to workers and a
,
ago when three out of nine mil- larger and larger part to profits.
r, lion unemployed men and women
For example, wage and salaried
were
.
•
on
the
on
how
WPA
we
were
told that to borrow the necessary
funds to provide them with relief
employment would ruin the coun¬
try. We were told that a national
debt
our
of
$40
billion would
economy.
Now
with
wreck
a
debt
workers in
1939
received
65%
of
income
created
j
corporation profits. It is labor that
pleads for retirement of the natitiohal debt and the establishment
of a stable economy.
dropped
furtner
60.8%
to
to
in
63%,
61.3%
the
and
in
first
declined
1947
half
and
of
to
1948.
steadily
The
29%
in
share
in
each
postwar
1939
to profits was
and
37% -in 1948
(first half). (The figures aaefrom
the U. S. Department of Com¬
merce.)
\
~
\
The
*
Labor
the
Motive
American
has
long
of
Vital
Federation
recognized
profit motive
''continuance
Is
a
is
vital
free
to
of
that
the
It
is
common"
knowledge that
profits which reached an all time
peak in 1947 are exceeding that
peak in 1948. The proper meas¬
urement
of
earnings
on net worth after
profits is the rate of
taxes,
enterprise which represents the income on
It is the mainspring of
•; business incentive and in a really
free and really enterprising econ¬
omy where there is competition
economy.
stockholders' equity or investment
—the National City Bank figures
are
generally
used
for
current
to
will rise
as
the
tional income rises and the
Use' the
gov¬
government surplus to
held
by the commer¬
cial banking system,
including the
Federal Reserve banks.
i
Refund
idebt in
.
a
temporary reduction,
may be desirable to
Expand the money supply and
bank reserves by openmarket purchase of government
increase
securities; further ease the reserve
position of the banks by reduction
of rediscount rates and/or by re¬
requirements.
deficit, if there is
reserve
Finance
the
by borrowing in
one,
a
that
way
.
tional
bank
"
reserves
in
debt
the
may
be
by borrowing from
banking system,
the
Federal
Reserve
part
commercial
„
banks.
•
'
•
Expand the volume of Federal
loans
and
within
loan
of
guarantees
the
scope
the
of
accepted
program
priate in the long
loans,
Federal
as
appro¬
run.
.
The statement calls the Federal
*
Reserve System's support of
term government
maturing
government
way that will reduce the
as
necessary for this purpose.
Refinance maturing Federal
na¬
ernment surplus will increase.
retire; debt
rates
or
extreme
stimulate private expenditure*.
including
that
so
rently
most
long-
bonds "the
important
cur¬
problem'*
of Federal monetary policy. Pur¬
• point
about holdings of the banking
system.
\ chase of
government securities by
that/ they are
Tighten the reserve position of the Federal Reserve in support of
created by the high' prices
paid Ithe banks,
by Federal Reserve the long-term government bond
by workers and other consumers. 'sale of
government securities in market adds to bank reserves and,
During the postwar period, the the
open market, by increaee of
unless offset, permits an expan¬
American
businesses have
been rediscount rates
and/or
by in¬ sion of bank credit and the money
depending on profits retained in crease of reserve
requirements.
supply, CED points out.
;
'
*
the business to furnish about 70%
The
these
of
the
new
significant
profits
new
is
capital
equipment,
and
other
marked
period
needs.
contrast
when
furnished
to
necessary for
working capital
new
much
a
This *
to
the
is
Reports Easing of Men and Material Shortages
Building ■'■; '*:[■£&■ ■
in
prewar
capital ?was
greater ex¬
tent
by the sale of securities to
investors.
This change in, busi¬
ness
practice affects our. entire
Si
i
Sayings and Luan Lzague
survey says cement shortage is only
bottleneck in materials.
,
economy. It means in actual fact
that by keeping prices high, com¬
panies actually take their new
capital from consumers "who pay
out
needed
cash
involuntarily to
meet
high prices, instead of bor¬
rowing
it
from
investors .who
low
/ Men and materials that go; into home construction are more
easily -obtainable today than at any time since before the war,* al¬
though shortages still are hampering building production in some
localities
This
vey
across
is the
just
the,country.
of
consensus
,
a
lay the united
States Savings and Loan League.
Results of the study were released
by the national trade organization
for 3,700 savings associations and
cooperative banks;
! V
income groups who have to
The "survey found that 77% of
high prices by cutting dawn
savings institution executives
their purchases of living neces¬
think the flow of building mate¬
sities. Qualified persons have re¬
rials has improved in their com¬
cently pointed out that there is
munities
during
the
past
six
>no, reason
to
believe, .adequate months
and
73% believe that a
capital
could
not
be
obtained lack of
manpower is no longer a
through new security issues. Ac¬
problem in home building.
tually the
yuiume of new capital
JBut while there was consider¬
jraised by,,issuing new securities
able agreement that the materials
has increased steadily, * as a. com¬
situation generally- had improved
parison of, nine month periods in
to a marked
extent, the survey
.the three postwar
years wfll shQw.
indicated that cement still is a
It increased from
$2.0 brlion: in
bad .bottleneck in the
undertaking
1946 to $2.8 billion in 1947 and
and finishing of housing projects.
$4.2 billion in 1948.
(Commerce
In midwestern towns and cities*
Department figures,) /, However
it was found, the cement shortage
this $4.2
billion compares
with is
having the most depressing.ef¬
$13 billion spent for new plant
fect, with three out of every five
and equipment by American cor¬
executives questioned
stating that
porations in the first nine months
it was postponing many housing
of 1948, and the
actual volume Of
meet
•
.
capital obtained from
starts.
new
|
.
secu¬
/"
<
sur-3>————' V
completed
-
year.
going
■
Profit
High Prices Paid by Workers
can
(1) In periods of inflation:
revenues
tax
a
ing system to acquire government
securities, with such Federal Re¬
serve
action in providing addi¬
"
Hold tax rates stable,
tax
significant.
,
these same voices Meanwhile the share
going to
strangely silent on the ques¬ profits. of both corporate and un¬
tion of retiring the national debt incorporated
business increased
and devote their strident pleas to
further reduction in income
taxes,
inheritance taxes and taxes on
is
by
are
v
which
jwillingly invest their savings., A
industry;
in the first postwar year„.1946, large proportion of the consumers
the share paid to workers had who pay for .this neW capital are
the
of $259 billion
i
vestment
'."
,
.
*
in
deficit. \fn
a
CED
it /is
Following are the elements of
ithe program recommended: /
< "
that
that
so
will induce the commercial bank¬
greater stability.
double
loans.
insta¬
recommending in this field
a
major contribution
stockhold¬
on
of
cannot
jmake
ers'
expect that they should recognize;
equity, whjch has been usual
this purchasing power must in
prosperous;
peacetime years
wage sufficient to maintain his
not be destroyed either by wage over the last two decades.*
family in self-respecting decency
cutting
or by charging unreason¬
Those who would show profits
the first interest of the working
able prices.
as
a
man is an economy of continuing
percent return on sales ig¬
A
policy of fairness
to
all nore the fact that sales volume
stability. This is because the sav¬
ings of working people are in groups is the only possible basis may double with little, if. any. in¬
in
Such a crease
stockholders'
such
invest¬
things
as
life
insurance, for a sound economy.
government savings bonds, and in policy has not been in operation ment, and it is the income on in¬
quirements
•i
workers
tial
followed.
'
'
the
govern¬
ox
Will decline
surplus
into
turn
duction of
representatives
expect
cheir
ernment
conditions
mone¬
textiles and apparel, 22.5%;! pe¬
litself offer the solution to
of troleum products, 21.3% office
bility in a free economy,
j't not endure unless fair and equit¬ business to accept the principle equipment, 25.4%; pulp and paper jbelieves that the program
able distribution of the rewards that a decent living standard for products,
23.0%; cement, glass,
tacked
N. H. Cruikshank
to
:
ta*" revenues will fall; as the na¬
tional income falls and the gov¬
of
jNorthWest Bancorporation.
it rates
guarantee
I£old tax rates stafid^,
The^CED study was released oh
10 by W. Walter Williams
,of Seattle, Wash., CED Chairman
is
on
relates
of
a
the
(2) In periods of depression:
'
•Dec.
first The- statement
voluihe
the
ment loans and
jand President of Continental, Inc.,
11.6%, 1929 at 12.8%, 1941 and
Philip D. Reed, Chairman of
12.4%, and 1946 at 12.1%. Dur¬ the CED
Research
and
Policy
ing the war excess profits taxes ■Committee and
Chairman of the
reduced
the
earnings
rate/ to hoard of the General
Electric Co.
reports
of
——-——
:
was
Yet
•
■
Committee
this policy
:——
at
9-10%.
'
current statement
a
as
Reduce
for
chance
any
"
'
progressive
profit. Working three quarters of
1948,
for
a
many months of study by a sub¬
cultural by¬ people have no desire to kill tne smaller number of corporations,
committee. of CED businessmen
goose
that
lays
the
golden
egg
of
products ' of
| show an increase of more than members under the Chairmanship
that sy s tern wages. Likewise when we think |2% on/net worth above the corre¬
Jof J. Cameron Thomson of Min¬
are
at
stake. of national fiscal policies we have sponding period of last year.
In neapolis, Minn.,'President of the
social
'
Policy
Development, in
fiscal policy
:
and in only four peacetime years
did it exceed 11%; 1928 when it
and
economic sta-<£
and
'
•"
"
''
'
'
,
stable America is essential to
monetary .and
emphasizes, that
of
1
more
imust be attained within the frame¬
11%
and
>
premise that
the nation's overall
f
*
Says sound monetary policy by government is basic in checking inflation and
be raised further without rise in prices.
economy.
'
With the
policy of "charging what traffic will bear" and this is having dangerous consequences for American
*
Monetary and Fiscal Policy
Outlines programs for periods of inflation and deflation for main-
By NELSON H. CRUIKSHANK*
Insurance
Thursday, December 16, 1948
"
,—^—1~——-
,1
From the
point of overall avail¬
ability of manpower and building
material
the
in
supplies, states and cities
south
presented the best
There the belief was
expressed
by
90%
of
savings
picture,
association
and
82%
officials
that materials
supplies have improved and
noted that
a
more
favorable
>
labor situation had arrived.
:
In
the
far
west, 75% of those
queried thought there has been a
change for the better in both men
and
on
of
materials.
Their
sentiments
echoed by 66%
eastern institution spokesmen,
materials
were
.
but in that section of the country,
only 60% thought tbe manpower
situation
was
better.
•.v!
Redemption of Bonds of
Republic of Cuba
-
The
Republic of Cuba is noti¬
fying holders of its External Loan
Thirty-Year
Gold
Bonds
Sinking
Issued
Fund 5^'%
under
Contract dated Jan. 26,
Loan
1923, that
manufacturing cor¬ rities this
year
is
only
about | In other sections of the country, all outstanding bonds of this issue
porations, dhese figures show an
three-fourths
Of that af 1929 al¬ particularly the east and south, will be
benefits
redeemed, out of moneys
workers > by
cement, was
bringing average, earnings rate of 17% on though the amount
tight-* by
normal
spent for plant
in the sinking fund, on Jan. 15,
net
worth
after taxes
in
about
1947,
constant improvement in
standards, but still far better than
which exceeds by a considerable and equipment is almost double that
found in the midwest. Aside 1949 a^ the rate of 100% of their
amount
all
previous records in that of 1929. Through prices paid from
""Statement by Ivlr. Cruikshank
cement,
the
majority
of par value, together with accrued
the 22 years covered
by these fig¬ for consumers goods buyers, are midwestern answers revealed that interest to the redemption date.
before; tyie Joint Committee on
the Economic Report of the Pres¬ ures.
During the period from providing capital for industries the material situation there is
Payment of the bonds will be
better than last June 30, and the
ident, Washington, D. C., Dec. 8. 1925 to 1946, in: most
peacetime over which they have no control
made at the office of J. P. Morgan
1948.;
j
?ame
is
true
of
construction
prosperous
years
the. earnings.
(Continued on page 24)
i workers.
& Co^/Inc., New York City.
"
...;/•
among
records.
For
business units the system
-
.
Volume 168
Number 4760.
COMMERCIAL & FINANCIAL CHRONICLE
THE
Salesmanship Key to Fature of Securities
Market, H. L Bache Says
says
By STANLEY H. RUTTENBERG*
Director of Department of Education and Research,
Congress of Industrial Organizations
CIO representative, asserting Amercian industries
in warning of Russia.
Salesmanship equal to that practiced in other American indus¬
tries was advocated for the securities business by Harold L, Bache,
head of the brokerage firm of Bache & Co. in a talk before nearly
200 executives and other personnel of the firm Dec. 12 at 36 Wall
Street, New York. The meeting^
was
the second held
in recent C. Walzer, financial editor of the
weeks for the purpose of exchang- United Press, who discussed the
ing ideas and methods for improv¬ need for education of the Ameri¬
ing the outlook for the securities can public in the nation's invest¬
ment
business.
problems
under
today's
Mr. Bache emphasized his con¬ economy,
and
Dale
Carnegie,
fidence in the future of the busi- noted author and lecturer, who
pointed out the need for "person¬
alized" selling.
.
without regard to costs,
high-level production.
are in. process of gouging public and are raising prices
lays situation to policy of corporations to seek profits under low-level as well as
Says this leads to distortions in national income and sows seeds of next depres¬
Holds incentive to increase production and
expand capacity is curtailed by present high level of
Denies there is scarcity of venture capital and lays low stock prices to lack of
investors' faith in America's future.
sion.
corporate profits.
The CIO hopes that this investigation and hearing will throw some
light upon the
level^f profits which has been the subject of considerable discussion. Some groups say that
profits are low and others that profits are high. We are hopeful that this series of com¬
,
mittee
ings
has been held in District No. 3 of
rities
'
are:
L.
Robert
District No. 3,
the States of
New Mexico,
Those elected
District No. 3
Robert L, Mitton,
Mitton
an
t i
1
a
imparinves¬
industry
will
justify
the position
taken by the
Dealers, Inc.,
being composed of
Arizona, Colorado,
Utah and Wyoming.
to membership on
Committee
that
ican
the National Association of Secu¬
CIO
over
the
period
Investments, mony
of
7
In this testi¬
years.
S. H. Ruttenberg
should like first, to re¬
Denver, Colo.; W. H. Hutchinson, view the level of corporate profits
ness but declared
it was impor¬ Hutchinson & Co., Inc., Pueblo, of American industries, informa¬
tant that the public should be en¬ Colo.; Joseph E. Refsnes,. Refsnes, tion which we are sure is quite
couraged to invest in securities Ely, Beck & Co., Phoenix, Ariz.; familiar to the members of this
listed *on the principal exchanges. Robert H. Burton, Edward L. Bur¬ committee.
Secondly, we should
These
like to discuss the reasons why
securities, he said, were ton & Co., Salt Lake City, Utah,
These four members have been we think profits are soaring to
the best in the world, but to pro¬
Frank T. Ryan
Harold L. Bache
interest in them it
"salesmanship
equal to that practiced by other
American industries" be employed.
Frank
T.
Ryan, President of
World Commerce Corporation and
a partner in the firm, proposed as
ja step
in improving the interna¬
mote
proper
essential that
was
tional economic outlook that Jap¬
anese
industry be rehabilitated by
materials
raw
supplied from the
Hemisphere,
extracted
Western
by labor brought from over-popu¬
lated
European
countries.
He
warned that Communist gains in
China were driving Japan closer
to the Russian sphere of influence
United
that the
and
move
Japanese
thinking.
New
political
end
(
of mineral wealth,
to effectively compete with Com¬
munist-controlled Northern China,
Co.,
Denver,
Colo.; * David > F.
Lawrence, Boettcher & Co.* Den¬
ver, Colo.-f Harry W. Middaugh,
Central Republic Company, Den¬
ver,
Colo.; Malcolm F. Roberts,
Sidlo,
Simons, Roberts & Co.,
Denver; Harold D. Writer, Peters,
Writer & Christensen, Inc., Denver.
<1. Nick Thomas Forms
Memphis Sees. Co.
MEMPHIS, TENN. —J; Nick
Canada, New¬
Thomas, Jr., has formed the Memfoundland, and Labrador, and the
use of European labor would rep¬
resent "the greatest of all eco¬
exist
in
Alaska,
nomic aids" to countries with pop¬
ulation problems, he
declared.
strategic necessity of ap¬
plying the surplus manpower of
overpopulated
European
coun¬
tries, such as Italy, to extracting
needed raw materials for Japan
not as exorbitant
just briefly like to
general
profit
picture as seen by organized la¬
bor.
Reports for the third quar¬
ter of 1948 by the "Wall Street
Journal" which'surveyed 155 ma¬
jor companies in 15 industries
showed third quarter earnings to
be "A sweeping 41.7%
above the
third quarter earnings of 1947.
Such a showing clearly pointed to
record high earnings for all of
pity Bank's
on
net worth based
on
was con¬
reported
unusually
high
of
profits
after
taxes.
Bethlehem
Steel
Corporation
showed an increase in the third
than
aid
re¬
Individual corporations of 1948
levels
'giving'
Bank
City
worth for previous years
siderably lower.
the EC A into
of
National
ported third quarter, 1948 earn¬
ings of 400 leading corporations to
be 38% above the similar® period
have
principle
the
1948."
The
to
J.
Thomas,
Nick
Jr.
/Eutope," he asserted. "Our great'
est
: assistance
fcountlies is,
4
to
the
European phis Securities Co. with offices in
the Three Sisters Building to act
paradoxically, not in
in 'taking,' and the
but
as dealers in municipal bonds. Mr.
'greatest of "all economic aids to Thomas was formerly with J. C.
Italy, for example, would be to Bradford & Co. and Equitable
take from her her excess popula¬ Securities Co. In the past he was
giving
tion.". j
i"''
•
a
1'
from
partner in Winston & Thomas.
woiiid do well to
in collaboration with the
increased
$213
over
'
their
million for
the
General
profits
the
first
nine months of 1947 to $327 mil¬
lion in the similar
for
an
are
The' ECA
study,
quarter, 1948 of 40%
same
period ,in 1947.
Motors
increase
of
period of 1948
53%.
These
just two specific examples but
are representative
of two
they
governments concerned, a mass Dammes & Koerner
migration of European families to Form
vinto selected regions for the purOn, Jan. 2 the New York Stock
pose of exploiting the natural re¬
sources needed, Mr. Ryan said.
Exchange firm of Dammes &
basic
industries which have con¬
tinued
.
to increase their prices
1948 because
in
they say it is neces¬
1
"The passing of Manchuria into
Koerner will
be formed with of¬
Russian Icontrol will, in time, cause
fices at 36 Wall Street, New York
Japan to turn from her coopera¬
Partners will be Herbert P.
tive undertakings with the U. S. City.
and seek more vital relations with Dammes, exchange member, and
the Soviet
tended.
Union," Mr. Ryan
"We
should
con¬
be'-alert; to
Emanuel
has
been
develop a pplicy that will effec¬
tively combat this long-range in¬
as
fluence."
Koerher
Other speakers included
.
\
Koerner.
an
active
Mr.
for
Elmer & Stern.
to meet increased costs. As
shall
we
companies
point
out
increased
these
later,
prices
not
just to cover increased costs but
far in excess of what was neces¬
sary
to cover costs with the re-
Dammes
some
^Testimony of Mr.
years
individual floor broker. Mr.
was a
sary
partner in Herzfeld
•
-
before
the
the Economic
D.
Ruttenberg
Subcommittee
Joint Congressional
of
Committee
the
on
Reoort, Washington,
C., Dec. 8, 1948.
the
as
level
—
of
indicated.
erations
at
are
at the present
profits before taxes
almost
were
——
than
lower rate
a
time."
/
way:
"We must
$30 billion and $18 billion after
taxes.
now
the
In
pre-war
which, by the
years,
way, were
1936-39,
the base
we
as
charge
as
high
pirice
a
while business is
can
good and production levels are at
all-time peaks so that we can
make sufficient profit to set aside
for
the wartime
excess
for the rainy day when orders
profits tax, the average corporate
will fall off and production will
profits, after taxes, was $3.9 bil¬
'
lion.
In other words, corporate decline."
This is an extremely dangerous
profits, after taxes, in 1948 will
be more than five times what attitude for American industry to
take.
Granted
industry
must
they
were
during
the
excess
protect: itself
against
periods
profit tax base period, 1936-39.
when production will not be at
Profits Soaring to New Highs— capacity levels, the question which
we raise specifically in this con¬
Why?
years
,
•
nection is whether industry, in
soaring to new
fu¬
alLtime dangerous highs because protecting itself against the
ture,
is not adopting policies
(1) American industries are in¬ which will hasten
"the day »
volved in the
Profits are
now
of gouging
process
the
,
when .operations
public, that is, in self-interest, rate.
they
making
are
make
can
while
much as they
the making is
as
,
at
a
.
lower
."
„
.
are
By following the policy of rais¬
ing prices and profits, in other
words, industry is doing more
good.
(2) Corporations are engaged
_
_
toward bringing on the depresprotecting themselves against sion and bringing closer the day
toe futoe.'depression which they when
they will need the reserves
.
,
m
feel
inevitable.
is
(3) Corporations
should
We
summarize
Europe through the mechanism of
the '
they, actually
Corporate Profits
reports for the first nine months
of this year of 18.7% as compared
with 16% for 1947.
Return on net
greatly if we do
not convert the principle of aid to
more
of
nual return
"We shall fail
something
as
are.
Level
of
1948
some
November, 1948 letter showed that
these 400 corporations had an an¬
would, &t the same time, aid in
solving a major European prob¬
lem, Mr. Ryan said.
•
our
of 1947. The National
The
;
finger at
of the prob¬
been
installed.
The
hold-over lems which have been raised by
members of this Committee are: industry groups in an attempt to
Walter H. Coughlin, Coughlin & indicate
Jhat present profits are
shift in
economic
:
sources
a term of three years
new all-time highs; and, thirdly,
we should like to discuss the ef¬
beginning Jan. 15, 1949.
At the meeting to be held in fect upon our economy of the
January, 1949, officers for the en¬ present level of corporate profits.
suing year will be elected after Fourthly, we should like to point
States must
offset any
to
now
we
elected for
the new committee members have
effect
It is clear from this quote that
Looking at industry as a whole,
profits, before taxes, of all U. S. Steel Corporation, at least, is
corporations will be at least $34 safeguarding itself against the de¬
billion and over $20 billion after pression which it considers Will
taxes.
This compares with the inevitably come.
Mr. Olds' re¬
previous best year, 1947, when marks could be paraphrased this
We are
vinced
o n
ture of Amer¬
election
——
sultant
profits
contro¬
tigation into
the profit pic¬
Elects to Committee
COLO.—An
get
the
c
NASD District No. 3
hear-3>
will
at the facts of
versy.
DENVER,
19
Why Profits Are Soaring to New Highs
■
Listed securities "best in' world/1 broker tells meeting. We should
bolster Japan with raw materials produced by surplus European
labor, Frank T. Ryan
(2507)
must
show
better
the
| about whiqh they speak. That is
they, to say that the practice of indus-
think
stockholders
try to raise prices and thus its
a;
profit
picture each sue- profits will do more to bring on a
ceeding year regardless of the depression and reduce production
implications for the stability of than any other single decision of
our economy which this practice
industry.
If, on the other hand,
carries.
■industry would moderate its avar¬
icious appetite for profits by mod¬
(4) Corporations are raising
it
prices with little regard whatso¬ erating its pricing policies,
ever
to existing costs but with would go a'long way toward sta¬
bilizing our economy and thus
concern almost solely for what the
postponing,
maybe
indefinitely,
market will bear.
These
four factors
combined the "inevitable depression" which
represent the self-interest, short¬ they seem desirous of protecting
themselves against.
sighted, depression producing
"
thinking
American
of
serious
avoid
economic
are
to
disloca¬
tions.
This statement will
briefly re¬
points.
connection with the
fer to each of these four
First,
desire
sible
in
to
make
while
as
much
as
pos¬
the
making is good.
It seems clear upon an examina¬
tion of any series of facts
or
figures that American industry
shows little regard for the general
public while it shows major con¬
cern
for itself.
One price in¬
after
crease
made
by
another
the
has
major
been
industries
since the elimination of OPA. Few
attempts have been made to ab¬
sorb
increased
costs
or
evert
to
to the American consumer
a better product for a lower price.
The only sight which industry en¬
visions is its avidity to increase
prices and reap more and more
profit.
In
addition
corporations
are
engaged in protecting themselves
against the depression which they
feel is inevitable.
This point of
view is vividly set forth by Mr.
Irving S. Olds, Chairman of the
pass on
Board of the United
States
Stteel
Corporation in his Annual Report
of 1946.
He said:
"Operations are at an alb-time
high. Profits should be sufficient
to enable a fair return to be paid
to the owners of business in the
form of dividends and also to
,
permit
set
an
adequate amount to be
aside for future
the day
needs
since
will come when steel op-
would
We
industry
that must be altered if we
comment
also
like
to
briefly
the general
attitude
indus¬
trialists that year-in and year-out
regardless of the effect it has upon
our economy profits must be ever
increasing. It seems that the heads
of our major corporations feel it
incumbent
upon
themselves to
maintain an enlarging profit pic¬
ture for their organization.
It is
this attitude on the part of indus¬
trialists which is creating and
adding to the serious economic
distortions, which are occurring.
The attitude of having to do bet¬
ter than the last guy weighs heavy
upon the minds of American in¬
on
of business managers and
dustrialists.
tude
the
on
ments of
our
It is this selfish atti¬
part of major seg¬
American life which
portends serious consequences for
the future.
It would be
for the
good of industry and for the good
of
our
as
economy
whole
a
if
this attitude could be moderated.
We
further
maintain
that
in¬
dustry has raised prices with no
regard to increases in costs but
only with regard to what the
market will bear,
In other words,
industry sets prices on the basis
making a profit at a low level
of production, it wants to make a
profit even though its
opera¬
tions' are curtailed from present
levels.
This means that prices
must be considerably out of line
with costs of production when op¬
erations are* at ..present day high
of
levels.
.
1
•'
'
Again this self-interested think-
(Continued
on page
27)
'
2fl
(2508)
THE
The Federal
COMMERCIAL &
FINANCIAL
CHRONICLE
Perhaps
Budget—Its Meaning
ell
In many ways this is an ideal time to dis .uss the Federal
budget.
the election is ever; and the President will n 1 submit his
budget to
ther month and
an
a
half.
we
partially
the
situation
result
cure
job protection and the continuance of the weekly pay check,
This
coun¬
past
part of
our
vi
con linued
schemes
larg
ale
oi
benefit
age
social security
j
a
agricultural
why farmers should be discrimi¬
not
let the funda¬
nated against in this race to secure
shelter from the natural effects of
mental
economic
same
need
we
issues
become
scured
ob¬
by
a
deluge of data
antf statistics
would
if
the
before
were
as
pause
a
it
When
might
gotten
recall
where
nation
our
be
and
moment
have
we
our
was
are.
founded
a
century and
a
half
ago
most
people were rugged individualists.
They were geii-employed. Tney
operated small farms or had small
businesses with maybe one or two
employees,
were
and
the
employees
apprentices hoping
mostly
planning to set
their
Of
and
such
It
own,
up
is
people would
businesses
natural
want
that
few
a
They
common
other;
felt
defense" and
essential
way
was
the
years
growth
industry into large-scale
en-
terprises, and the resulting
gesticn
believe
wage
more
do
in
even
as
not
we
the
argue
con-
of
people in cities, has
this nation from one in
cost-of-living for the rest of
mg"
of the "socializ-
many
aspects
of
present govI ernment were eliminated and the
our
should
lower
prices
at
! least by the
reduction of the tax
burden and provide an incentive
to production that might accompiish miracles. • But I do not argue
us, we
ment, again excluding defense and
foreign aid costs, are still $13.3
billion, or 47% higher than in the
No allowance has
year.
been made'in this calculation for
rigid
expenditures,
bilHon
of
rational
annual
debt.
like
the
interest
And
we
ment
the
largest
spending of
The
of the really
VY"V\.''''
tremendous
Federal
place
year
govern¬
any
prewar years.
'
re¬
expansion
in
spending that has taken
cannot
be
fully
accounted
for by the continued march of so¬
cial reform.
The answer seems
time
a
mated
that
today three out of
four people who are gain¬
fully employed are on someone
else's payroll. They are interested
im the
of
success
private
prise only indirectly.
This
makes
Employees
*
vast
a
enter¬
difference.
going to have an
point-of-view. Today
are
employee's
the majority of our citizens
work
for dollar wages and are defi¬
nitely dependent
on
whether
the
company for
which
they work
continues to employ them. If the
company were to discharge them
and they could not find other em¬
,
ployment, they could not
to
farm
a
or move
tier
and
the
weekly
regular
start
paycheck
makes
of
will
their
v
sobering
thoughts
which
are
Trend
*
turn
of
I
as
-
thoughts that reflect themselves in
elections.
Anybody who thinks
our
attention
fiscal
A
Let
Workers'
us
face
workers
desire
and
has
ers', point
This
of
view!
a
ou
insist
year
means
°
ends
the
officially estimated
,
significance of this
are
remember, of
for
the
current
for national
necessity
of
defense; and most of
that
he
l0
All of
our
the
ade¬
national
Government
is
It is hard to pick
magazine without
running across some unbelievable
project that is being financed by
YOU—by all of us taxpayers.
Let
us
not
for examples.
pause
In any
enterprise as large as the
government, it is possible to pick
out many
samples of waste and
inefficiency. Even if the govern¬
ment
of
were
run
with
the
efficiency, it would still
sible
to
stances
find
of
to
affect
and
now
going
imagination.
on
merits the attention
deficit
of
us—in
peace
my
is
bad
too
that
the
idea
The
happen
if
earned.
we
spent
we
Hoover
also,
what
its
would
resources
period
-
happen
which"'spent
company
over
time.
of
While the
a
thing
same
happens to governments, only the
process is much slower and its ef¬
fects ahe at first largely concealed
by the ability of governments to
manipulate their finances. How¬
ever, we do well to remember that
have had
we
Federal surplus in
a
only two of the last 19
time marches
Let
us
deficit
Let
the merits of
argue
financing
That is
And
years.
on.
not
this
at
associated
merely point out that the
me
debt
exceeds
now
talked
talked
millions; then
billions; now we
in
start with
trillions.
We have
:
.
and
stamina of
; "
It needs
indeed,
our
and
the
Pync,
country is bleak
outlook
for
At
the
tures,
current
the
load
level
of
of
Wall
our
Exchange,
ward
firm
aggregate they
about
are
substantial
&
ish
was
Co.
Mr.
Pyne,
Tellier &
York
in
so
many
are
City,
trend
in
happening
this
aftermath of
country.
a
is
-
What has
the
great war.
We
are
in my judgment entering a
primary postwar deflationary ad¬
habitually
even
in time
savings.
our
box
of
been
Hollister
of the
Company Adds
Co., 42 Broadway, New
that Anthony
Doherty
announce
retail sales
with
the
firm
department.
;
Mr. Costanza was formerly .with
Co., while Mr. Doherty
previously with Rutberg Be
Inc., and C. E. deWillers .&
*
'
..
~Y
William R. Staats tie.
Opens Chicago BraissSi
CHICAGO, ILL.
—
William R.
Co., members of the Los
Angeles
Stock
Exchange,
has
Staats
opened
South
branch
a
La
Salle
ated with the
Robert
E.
office
Street.
new
2091
at
As.soci-;
offices will be;
O'Keeffee, formerly of
Cruttenden
&
Co.
control, that
money and our way
Fur-; of life will be lost;
even
&
of peace we
cannot
balance the Federal budget, con¬
likely to bring fidence' in
thermoret the effort might
out of
formerly
has
normal
now,
are
Kendall
associated
now
in the
countries today.
been
Mathews
Costanza and William M.
and
To date I have not been
unduly
concerned about the inflationary
E.
Two to Retail Staff
other
property
Mr. Grafmueller
Tellier &
"isms" as soon as there is no sub¬
stantial middle class which has an
private
Ed¬
Robert
trading department.
tionary process. And it is the mid¬
dle class that is the
great bulwark
of our nation.
Any nation is an
in
C.
for many years as manager
wipe out the middle
through the historic infla¬
interest
Stock
York
that
and
general partners effective
as
with
For it will
or
52
City,
York
associated with Lazard Freres
was
lars, will ultimately result in even
more unpleasant alternative.
to Communism
Hollister,
New
announce
Grafmuelle'r
Dec. 27.
is I all
a
*oSy p^ey
&
New
Mathews will be admitted to the
but
class
Kendall
Street,
members of the
expendi¬
taxation
York
Pyne, Kendall to Admit
Grafnwelter, Mathews
society has proved
no apology. - But
our
New
insurance stock department.
we
a
the future of
the
can
wonderful country—
the best in the whole world.
The
itself.
Nielsen
New York City/ in its bank
way,
Once
in
D.
with
Hanseatic Corporation, 120 Broad¬
one-
quarter of a trillion dollars.
we
Soren
point.
subject for another time.
a
Co.
may
of
than
be pos¬
savings that
everyone
way.
extended
any
The
to
more
Co.,
be made in any one direction
may
seem small in themselves, in
the
literally
lives—the
individuals
As
constructive
ONE.
will
our
of
feel sorry for people who live
beyond their means.
We know,
highest munism. That is why "isms" flour¬
Commission
of
lives
we
suggest that justment.
It may seem a paradox
bi-partisan job is to say that under such condi lions
being done by this -group, It is to the
inflationary danger, may in¬
be hoped that such recommenda¬
crease in magnitude.
But in my
tions as are made which seem
opinion it will. If, through deficit
likely to result in economy and
financing during the next few
increased efficiency will receive
years, the people of our nation be¬
enthusiastic support by EVERY¬ come convinced that
our finances
a
handled
rest
Soren D. Nielsen,
formerly with
Newburger, Loeb & Co., is* now
more
Brady &
preliminary reports of the
it
it to
cause
of
was
interested in sound government.
us
Soren D. Nielsen With
That is why Rus¬
early victim of Com¬
people
by
important
an
order.
staggers
Let
loading
voyage.
for
Keynesian
contrary notwith¬
the
is
the
an
situation
of all
Ship
heavy mort¬
a
an
the
law and
tomfoolery.
The
a
chance
a
in
of
sia
ridiculous in¬
some
waste
Our
do
and Pandora's
inflationary
ills
will
be
Richard W. Clarke
-
Richard
W.
Clarke
to
&
Admit
Co.,
East 42nd Street, New York
17
City,
members of the New York Stock
us, probably,' instill a new point ,pf view; a
really opened and the flight from
some sort of financial aid fresh attitude in our officialdom the dollar will
begin.
It
is
a grue- Exchange, will admit E. Bates Mcoyr former Allies is an unfor-'on
economy and efficiency, """"i some thought that no nation
yet— Kee to partnership on Jan. 1.
Yeel that
<
fiscal
on
creating
quate armaments for
ex¬
defense and
international financial aid.
I'm sure, are agreed
vital
course,
billion of the total
us,
„
v
Ay., Dec. 1, 1948.
are
must
penditures
work¬
t
which
$3.3 billion; in 1939
expenditures were $9 billion.
The expenditures for the
current
We
*An address by Mr. Gerard be-
fnr*
year,
up a paper or a
the
that $18.8
unions '* with
all the rules and
regulations that, endeavor to se-
TmiiRvnfo
svuie,
on
to you—to all of us?
squarely.
of our people
100 cents of
dollar
our
engaged in.
the
issue
on a government that
the
that
But what is
What is
the
projects
fiscal year.
at $42.2 billion.
Government
The vast majority
being
think
be held back.
gets
every
Where does the fault lie?
June 30, 1949, with the
budget for
the 1939 fiscal year and the 1929
fiscal year
who
to
us
effect
In the 1929 fiscal
year the gov¬
King Ca¬
others
let
pastt
Federal
nute
can
recent
developments have had
ernment spent
that tides
be-
you
continuation of the
a
this point of view is
likely to be'
changed should prepare to take
his rightful place with
the
-
do, that the future is
the
of
current
ways in the minds of the majority
of
our
people.
These
are
the
and
Federal Budget
budget.
Let us start
by comparing the budget for the
al¬
for
spends.
now
the
are
Uncle Sam
value
those who fail to take an interest
in
all
the
Alice-in-Wonderland
'
Assuming that you agree with
my analysis of what has been hap¬
pening politically and econom¬
ically in this country during the
these
dispos¬
These
to
'
trend
its
and
more
the part of the'<
the position of the
workingman,
likely to be
cannot
be
soon
homes.
toward
on
a
debt
we
Federal
it
way
crushing. Unfortunately, how¬
enlarge
its
re-;
It lies at the door of
every voter ever, failure to balance our budget
sponsibilily for the welfare of the
jn the country. Not only at the from this
individual. I believe we are
point on in time of peace,
likely
doors of those who lobby for
to see more and more
spe¬ now that we have a national debt
attempts to
cial projects; but at the doors of of
stabilize employment and shelter
one-quarter of a trillion dol¬
government
'eve.
back
Unless
anew.
trend
activity
past generation and that
out to the fron¬
appearance,; they
even eat and
sessed
life
go
that
present
more
carries
many
take
rest
clearly to be that both the Execu¬ way of life is dismal to contem¬
changed
; this
point.
I merely advance my
tive and the Legislative branches
plate, if we fail to place our Gov•Which most people were self-emJ belief that it is visionary tq hope of our Government are
not as con¬
inment
unarces
on
a
ployed to one in which the vast that we are any time soon
pay-aslikely cerned as
they
should
be
to
see
you-go basis from this point on.
.majority are employees. It is esti- '• to see an abandonment of the
every
good for
The
war.
justification
financing,
the Federal
must
member' that the 1939 fiscal
represented
$5.3
on
in
little
deficit
than
some
find that in terms of 1939 dollars
the expenditures of the govern¬
but
is
would
a
the 1939 fiscal year.
Recognizing
that the
cost-of-living for govern¬
ment has gone up as well as the
point that
the greatest good of the
greatest
and
to
up
national
provided,
years,
now
lounder
it
by current taxes.
friends
It
of $23,4 billion for the current fis¬
cal year, or 160% higher than in
society, such
have, it might be for
now
Army
grow
of
gage, but it is still seaworthy and
pro-
a
deficit financing is so appealing.
You and I individually know wnat
would have to
we
some
can
increase it further.
not
of State
now
standing.
pos¬
km
.
trillion
the
over
what
further with debt and
find
on
fights
justification for
financing;
sums
even
covereu
is
there
Navy—we still have expenditures
laboristic
a
and
—
also
cooperate
the-nation-
there
the money could
After all, evexi in
considerable
to
be
i,urcs
When
more
spending, it is
waste
1939 fiscal
liberal candidate.
I
to
maintain
only have resulted in turning out
the large body of
eligible voters
tion; and would have caused them
defense
peaceful world
such program would
! to vote, by and large, for the
vital
sible
expenaitures
of recent
who for one reason or another
failed to vote it in the recent elec¬
i
should
We
quarter
off
almost inevitable catas¬
an
inflationary sea.
budget has a real
of insisting that all expendi- meaning to YOU—to all of us; The
_
foreign
being intel¬
are
citizens
possible
■■cram,
but let that point pass.
Excluding all national defense
and
international
financial
aid
successful
a
expensive
of money;
I seriously doubt it. I
any
program
„
Through the
our
[ resulting savings - were reflected
avail- in a lower tax burden.
Such a
able to him.
of
campaign.
cqnfident1 number" if
"the general welfare" would
be best promoted if
every individual worked out his own des-
tiny in whatever
publicans,. to
functions.
thoroughly
that
trends
of
use
be developed.
would have enabled the Re¬
years
govern¬
ment activity confined to "provid¬
ing for the
boristic political
how
we
more
stave
may
trophe.
not
All
European countries
possibly China,. Let us post¬
exiective
anything, it proved that the Re
publican Party has also adopted
most of the essentia] features of
\ I Mr.
Roosevelt's
"New
Deal."
present There are, those that hold that a
well to clear-cut departure from the la-
us.
bring
can
sacrifice
ligently made and whether
they inevitably
budget figures
Before considering
situation,
to make of
or
financial
aid expenditures
government a national grab-bag.
If the recent election
proved
Victor B. Gerard
new
laws;
this
pone any consideration of wnetner
the national defense and
prices
ax
the
in buying her
The Budget and Taxes
Western
and
valorization
means
for
the
ior
ahu
time
spending,
nouse-
in government, thereprogram that all cit¬
one
An
energetic effort by all citizens to
keep our Federal finances in bal¬
and
seems
lore, is
bankruptcythe inflation¬
on
primrose path.
ance
average
complete
Yet the die is not yet cast.
spenaing that tne
wife exnibits daily
and more horrible consequences
eventually should Russia over-run
permanent
urn,
make
now
j
arid other types of benefits. On the
side of equity, there is no reason
e~.se
to
of
sensible thriftne-s toward Federal
tunate necessity and that failure
j
relief,
be
way
the farmeis it
t of
<> r o s p e c
foims
j will continue to
spend¬
and
the
ing
old
unemployment
ouici
uiiu.
lavish
that
means
payments,'
as a
of
ary
com¬
on.
im
try faces
has turned back
a
izens, no matter what their party
consider affiliations may
be, can cooperate
can
calmly and
that the
Congress
a
short
with
of
intelligent frugality
same
The excitement of ir.efficiency
Thus
instincts
most
groceries at Aioger and tue A & P.
The elimination of waste and
Congress for the 1950
fiscal year, which begins July 1, 1949, for
trauitional
tne
the
Scotchman."
a
President
a
posed ox peopie who will exercise
Scores deficit financing as
disasterous, but foresees
primary postwar deflationary adjustment, if budget is balanced.
a
is
ccotchman; and
Company, Louisville, Ky.
Mr, Gerard lays rapidly expanding federal budget t) labor.stic control of
government. Sees more spend¬
ing arising from waste and extravagance than fro n social reforms, and advocates election of a Presi¬
beginning of
what the nation
soiely needs
By VICTOR B. GERARD*
Manager, Bond Department, Commonwealth Life Insurance
dent "with all traditional instincts of
Thursday, December 16, 1948
Volume
168
Number 4760
tm
commercial
&
financial chronicle
(2509)
21
Medicine Under the British National Health Atl •4.
f:
Dr. Orval Watti of Iko Foundation for Economic Education
ascribes
V trend
inflationary boom, government controls and various forms
social SECurity spending. Sees failure to understand
and apply
Golden Rule. -'*'•
of
Addressing a meeting of the Rotary Club of Tarrytown, N, Y„*£>r. Orval Watts of the Foundation for Economic Education
talked oh
the illusory nature of our so-called
prosperity in the United
•are
marked up
terms * of
•in
inflationary boom wher£ prices
an
*■;
.
—?——--—r1
others
■
; paper
money
dp junto
the rule
.capita
think
per:
de-
is
do If
-ciming."
.
living
•experscs what
should go into
maintenance. *.
and repairs of
the
horn e
Dr. V. Orval
today are
^merely United
States
?«ij '-*?■
Watts,
these
not
who
profits
advocated
really profits.
Dr.
or
quahty of medical services. flott*
a- deterioration
suffering and
of medical profession.
WU
Vrwi
""tv** *
yuiV
W
r
l1
■
,
.
a
.
.
-,
_
■
-
_
It:
:
-
--
'■
'''
I
■
■■
■
■
'
•
1
-
■
.v€w$r ; inhabitants tftan has Great^titaihu jThd British / program is;
1
U
^embracing..
A
careful study;
af tte Britisn act indicates tnat id
■is another attempt to make •
or-|
and: administration,
ganikation
serve; purposes
medical
in
carei
which are quite foreign -to tne!
philsophyc of : medicine itself,
j
which
By giV- ;
funds
ant
!
In.-control'of regional;
are
boards. These boards include
rep-1
resentatives of all of the
interests;
mainly; concerned in the conduct!
of hospitals." The ultimate finan¬
the specialist, insti¬ cial j Control rests, with the. Min-j
ister
;'
'•
ri r;; 15
Qf Health. ;,He delegates to;
-
deceive the people while
they build
up
.
tutions.
Watts
the
governments
power to
should
the .regional
boards the responsi¬
"Eventually," a crisis will, occur;
perhaps in 5, .10 or 20 years Jrorri bility ,of planning: hospital serv-l
ices in their own areas.
now and
:They are j
when it gomes we -can
r
revolutionizing American way
life, to abandoning tne gold
of
I
a,
a runaway inflation an
"It is inflation that .Wakes
crisis.
income," .ing
laid these present
problems, which
ate
4"'
i
Treasury revolution, not deflation.
.
taxable
go into
'depreciation and maintenance and
are
I
they ought to want syou) t-; ^dspnaiiza.ion have been tried in^
they knew, their business.'' countries of lesser. Stature and
there is
Watts
a
Calculations ? of
that
heaJh of people
on
mean more
...Great Britain has been divided1
endorsed by both political
parties;
and
is likely to 'continue unti' into some fourteen or more areas,
>
Business prof- '
Dr.
would
When the
-
"its
said
—~
... He
said: that most oftheso*
called reforms consist of (a) tsA
reformer; and (to) the politician
deciding what they will 'make
(e) do for (d) so as to get'td's):
vote to keep them in power, That'
is why the' revolution1 has be
eh;
,a fa
ily .t.iat /
spends on cur-
valid judgment of effects
system in this counCry
-i"People Deceived
'"We are in
"the position of
.
-■
any
"
values
appointed dayj struck in England on_the fifth of July in 1948, the world's
then!
you.' Today in- politics' greatest experiment in socialized medicine was under way.
Other nations have experi¬
is 'Do.unto others as you. mented with state medicine and a
variety of weird programs of socialized medicine and
'
'
.rent
and
.
as y°u w°nld not have
while the real
.wealth
.
MORRIS FISHBEIN, M. D.*
Editor, "Journal of American Medical Association"
„
Leading American medical editor describes British socialized medicine and reports on its practical difficutties and problems,. Scores large amount of red
tape and disruption of services of medical profession.
Says new regulations and regimentation is discouraging
medical profession, though it is too early
£ - to- pronounce
States;
in
are
:By
.."J]
...
-asserting "we
*•••"''
:
:
to
only hope that there will be lead-! charged, not so: much, with the!
management of individual' hospi-;
ers
ready who will remember that,
tals as with arranging the
it was freedom that built
pattern
America
*as
tne
income Tax Amendment
of hospital service and determin¬
Dr. Fishbein pictured while delivering address
and that freedom is not
nearly
as
in
1913, alohg with government
ing whether or not services are
bad as it has been painted,
during
contiuis ana various forms of so¬
decision rests with the regional tion that has given to voluntary
the last 15 or 20 years," Dr. Watts adequate; Hospitals are managed
cial
Doard.
The
authorities - believe hospitals - and
individual physiy
security
spending, • adding: concluded.
by management: committees. In
By freedom ne ex¬
that by this technic they Will be cians in
i"What we have in America touay
the United States the
addition, each hospital has a local
plained,
he
meant
freedom
ffoh
is less American in the sense of
able,to distribute specialists prop- leadership and progress in rtiedicommittee. The chain of control is
physical coercion ani intimida
erly and maintain a proper stand- cal science that is distinctive in;
being free, than what existed in
from the Minister of Health to
tion whether from government a;
of specialization
in various our country..
,Europe
before
1914' and
from
the national health boards to the ard
!r.
private
source.
c'
which millions fled when fcney
lospitals.' >
| I visited England early in Aiimanagement committees and from
Several leaders suggested that
emigrated to the United States."
them to the house committees.
gust 0f this year and took opporiregional. board would, want a tunity, such as was available, .to
"This revolution has 'come.'beThe
Struthers to Admit
grouping , of hospitals is
physician, a public health officer, view at first hand the methods of
cause people have
supposed to remove competition
failed to under*Cornelius N. Bliss,
Jr:, will"be¬
a lawyer, a financial man and an
practice.
At
a" dinner
in
the
stand and apply the Cold en Rule. come a
among
hospitals.
At
the
same
partner in Wood, Struth-;
architect.
;"
'
]' Aethenaeum Club I met with
This rule has a positive and
time the health authority recog¬
neg¬ ers & Co., 20 Pins Street," New:
Under
the new act, the Ministry representatives
Of
the
medical
ative," Dr. Watts said, and added: York City, members of the New! nizes the danger that people will
lose ^interest in the hospital once of Health provides hospital and profession and the party included
"The negative is 'Do not do unto York Stock
Exchange, on Jan. "1*1
Sir
Wilsbn
Jameson, chief medical
it is included in
without
cost
theadrr) inistr a - specialist 1 service
other than the tax paid by the 1 officer of the Ministry of Health,
tive .groupmg.
.The Minister of
-.
4
people
of
England,
and
the
people11
visited
some
general practi: Health ^ has said that people .Will
feel jjlist as much sentiment for a are provided also with appliances tioners and spent several hours in
that are nol more expensive than viewing,
by their courtesy, the
Department of Commerce expects $18% billions to be expended j group /of, hospitals as they have the
type prescribed by the Min-4 conduct of practice under the Na-,
felt in the past for their own hos
'j(in new construction, or more than 5% above 1948.
istry. Hospitals may make charges tional Health Act. I spoke with
pital.^ 4- *■'
" '
*
"
stanaaxd in "1938 and
by changes
rin the American Constitution
such
,
,
Wood,
;
_
Analyzed
-
"
'
*
-
•
„
;
New
;
construction
in
1949
is
expected
to
reach
a-
.
value- of U The representatives of the'Min¬
$18.75 billion, setting
a new dollar-volume record for building activ-4
ity, tne Department of Commerce has
announced; >, •: v : V ; L .y
j ■
the expected total of $18.75 billion,, a Joint estimate
;
istry of ; Health have expressed
hope that the regional boards Will
pftfiej include experts
and
representa¬
Departments of Commerce and^—— / J,.■
>'. ;.j|;
■'—
tives' of ; the public, i, The chief
.Labor, represents an increase of nonresidential building. The lat-^ medical officer Of! each regional
more than 5% over the
$17.8 bil-t ter classification includes private! board is charged With selecting
•
.lion figure
\ 1948.
in
now
for
prospect
educational
:
hospitals
buildings,
social
and
-
churches.
and
recrea-j that
; Physical volume of construction
.in 1949,
however, apparently Will
tional buildings.
Tnese expected
gains are only partially offset by!
;be about the
an
-thus
Will
same as
in
remain
appreciably
previous physical volume
;below
records
•'
,
set
in
the
1920's
the
private
new
1949
rvalue
outlook
total
of
which
it
is
for
..
ap-
same as the total
now
.public construction in 1949 is estimated at $5 billion, an increase of
-almost
$1
billion—or
24%—over
the total of 1948.
struction
con¬
will continue to be
construction and, at $6.5
the
new
billion, is
expected to constitute about 35%
total.
This
estimate, how¬
ever, represents a decline of more
j-than 8%, in comparison with the
figure of $7.1 billion for 1948.
Aside from residential
most
of
of the
building,
principal components
private
new
construction
-expected to increase. Private
residential
whole
-
is
$4 billion,
building
in
1949
increase
building
results
construction
"all
nonresidential
is
due
to
of
building, to
a
large1 y to substantial advances in
hospital
and
institutional
build¬
ings and in educational construc¬
tion.
]
and
other"
a
.
dwelling units.
with
Practically all of
the
owned units to be started in
estimated
at
only
about
nicipal
programs
1943
It
mu¬
and in military
now appears
volume
1949
30,000.
largely in purely State and
will
be
that
about
925,000 units, of which not more
than" 15,000
will
be
publiclyof course, no
made for any
private
con¬
privately-owned,
number
of
publicly-
owned.
35%
residential
this total will be
This
com¬
of
case
non¬
from
staffs.
the
is
It
authorities
have
understood
do
wish
not
physician:
Especially
interesting
private patients: However;
hospital facilities are
limited that, hs far as "I have
so
able
been
to
learn, it is exceeds
to get a private
difficult
ingly
patient into a hospital.
The medical and dental schools
it
thought that a doctor
is over a Jay man Or vice versa.
On the appointed day the peo¬
ple Of Great Britain began to ap¬
ply on a special form to the doctor
"n
whose panel they wished to
be included.
By this time some
95% of the population of Great
Britain has been duly accepted by
some
stood that physicians might charge
fees to
the available
Great Britain were not
of
turned
Ministry of Health nor
their hospitals. On the other
to the
over
were
hand; all voluntary hospitals and
local authority hospitals were
turned
over, to
the Ministry of
all
quirement by
the Ministry of
the Health.
However, the Ministry of
Health may at sometime purchase
either by agreement or by com¬
discussec
pulsion hospitals which have thus
was
serv¬
ice and hours of service with their
authorities
The
employers.
In the estimate for
1949.
allowance could be
further residential
construction
that- might
result
from possible future housing leg¬
islation.
in
-
mind
standardization
of
far
been
exempted.
Minister
The
have
the
lem of proper
of
;
Health
vised
by
is ad¬
a
Chairman
the
ciation
and
mental
health
of the
distribution of spe
the hospitals has public health office. The" remain¬
also been 'difficult.
The regional ing 35; appointed by the Minister
Health,
include
15
medical
board has the responsibility of of
making certain that specialists are practitioners, 2 of whom are ex¬
in
mental
disease;
5
in the
perts
properly distributed. They adver¬
field of hospital > management; 5
tise vacancies that exist in hospi
tals and receive applications from in local government, 3 dentists, 2
cialists
among
consultants.
The
local
manage
ment committee then sits with lie
regional board to recommend suit
•able
Candidates; and the' ultimate
'
-
*An
before
address
by
American
Manufacturers'
Fishbein
Dr.
Pharmaceutical
Association,
j York City, Dec. 6, 1948.
♦
,
Act.
•
Here
few actual citations
a
are
except
question of maintenance of the
staffs of hospitals. Up to now em¬
ployees
of
hospitals
their remuneration, terms of
patients
from
every
class
of
society. Mrs. Fishbein was/dis¬
tributing CARE packages to the
poor
and needy and I accom¬
panied her and spoke to.these
people myself. I met members of
the middle class, which in Great
Britain is exceedingly small com¬
pared with ours, and I had op¬
portunity to talk with persons;of
considerable wealth. May I saythat practically all of those with
whom I talked, regardless of their
wealth, had registered under the
that Catholic and from letters of British physicians
denominational
hospitals
were published in the "British Medical
freed from the necessity of re¬ Journal" or available in the orig¬
Health
central council which
includes 41 people of whom 6 are
struction, the figures for value of; various
professional
classes
in
officers of the Royal College of
work to be put in place next year
hospital work and each group of
are based on an estimate that con¬
workers will have contact with Surgeons, Physicians and Obstet¬
struction will be started in 1949
the
General:
Medical
the Ministry of Health by means ricians,
on
about 875,000 new permanent of a
special committee. The prob¬ Council, the British Medical Asso¬
the
the
a
in
an
total
$1,375 million—an increase due
as
over
in
of the increase
to
anticipated 42% increase in public
installations.
over
at just
increase of 12%
estimated 15% increase in
mercial
are
an
the prcbable total for 1948.
increase
in
total
private
an
half
construction
non¬
estimated
residential
Almost
public
In
largest single component of
of the
Privately-1
public utility construction
is expected to reach $2.75 billion,
a
rise of 8% over the total for!
1948.
'
y ;
' "j
.
Private nonfarm residential
x
construction.-
in-:
owned
dollar
a
billion,
appears
will be
reached in the present year. New
.
dustrial
decrease in
6%
.
construction,
$13%
proximately the
.
in
and
.
For
expected
,
1942.
:
1948, and
medical
for part-paying patients in single
rooms
or
wards.1 It "was under¬
2
midwives
experts,
and
2
nurses,
2 pharmacists.
The British have Organized one
of the most complicated
machines
dealing with health that the world
has
ever
known.
Certainly this
monster
New from
care
"
bureaucracy
r
removes
and medical
all of the personal inspirahospital
care
in
inal
own
my
office. Dr. H. G.:
Harvey of Dorchester wrote in the
"British
Sept.
Medical
Journal"
11:
of
•
.
"Since
already
written in my surgery alone 970
prescriptions, 1 per 4 patients on
my list, excluding all prescriptions
on
my
rounds, and this in the
less busy summer months. One is
amazed
by the extras, such7 as
douches and nozzles, eye • baths,
pessaries, etc., one is invited-to
supply.
More strange and
more
alarming still is the un¬
doubted
fact
that
the
patients
think they get all these extras
free because the government sup¬
plies them. I am firmly convinced
that the huge cost of prescribing
July
.
now
run
.
have
.
by
increased
other methods
no
taxation
or
less distasteful.
working classes will pay, the
largest
the
I
piling up will in the shortreturn to the public for pay¬
ment
The
5
share,
greater
as they, represent
proportion
of, the
population, and doctors may quite
probably be compelled to pay by
(Continued on page 32)
COMMERCIAL
THE
(2510)
22
of
Recent and Cnnent Insurance
while
Manager of the Association, analyzed the recent and
investment trends as indicated by changes in the composition
or
the aggre-t
gate assets of bonds (foreign and domestic comtne
United
bined) of $1,566,000,000 in 1947
of investment portfolios.
the
end
58.3%
United
corporate
insurance
companies
present
postwar
Shepherd
with
period.
The
shows
that
of
snarp
the
war
accompanying
the
amounts
a
pic¬
in
ture
contrast
table
and
per¬
centages
of assets held in the
various investment classifications
the
1948 year-end.1
data
dominant
funds
reveals
flow
since
the
end
been into private
corporate
investments, i.e.,
mortgages
This trend, great-
accentuated in 1948, has oc¬
curred in response to the
capital
of
viduals
tures
corporations
the
as
and
nation's
indi¬
expendi¬
investments
$18,925,000,000,
of
all
life
against corresponding in¬
creases
of
$4,761,000,000 in
$2,346,000,000 in 1946. In
increase in
assets.
Thus
funds
end
holdings of
government
available
in
the
of
1947
but
the
at
about
from
an
bulk
of
000
of
S.
bonds
State,'county &
•
munic. bonds,.
"Canadian Government
"Other foreign governments—.
Total government
bonds.—
Railroad
Public
...
utility
.
Other
—
Total
up
their
in
The
end
of
with
Public
latter
1945
States
Total
Mortgages—Palm •_!
Other
and
Total
Policy loans and premium notesCash
Other admitted
at the
"Includes
ica,
all
assets
political
thus
from
about
company records,
1948 data are
of
the
total
of
assets
will
at
have
end
of
real
1948
of
loans
of assets
as
,
Estate—Although life in¬
companies have increased
000,000.
Until recently ownership
of
estate
real
life
by
insurance
restricted to prop¬
the conduct of the
was
erties
acquired
debt.
Within the past
in
prop¬
satisfaction
few
of
years,
number of States have
a
revised their laws to permit these
Canadian
securities
at
be
held
in
end
of
the
Estimated
Dec, 31, 1948
Amount
% of
Outstanding
Amount
Total
of
Total
Outstanding
615,702,000
$16,750,000,000
30.2
1.3
1.2
2.6
850,000,000
1.5
1,259,391,000
2.6
609,169,000
1,310,661,000
2.5
.0
1,430,000,000
2.6
10,994,000
.0
18,693,000
.0
20,000.000
.0
48.8
$21,959,105,000
42.4
$19,050,000,000
34.3
2:887,024,000
6,941,009,000
4,969,290,000
5.6
2,975,000,000
5.4
13.4
8,650,000,000
7,300,000,000
13.2
6.7
2,925,669,000
6.1
5,582,781,000
3,316,474,000
11.6
$32,605,874,000
72.3
$35,350,062,000
73.4
,
6.9
9.6
15.6
$36,756,428,000
71.0
$37,975,000,000
68.5
115,795,000
.2
99,778,000
.2
93,652,000
.2
254,329,000
628,485,000
.6
100,000,000
.2
340,244,000
.7
.7
1.4
400,000.000
.7
807,207,000
1.7
375,143,000
921,688,000
1.8
950,000,000
1.7
$998,609,000
2.2
$1,247,229,000
2.6
$1,390,483,000
2.7
$1,450,000,000
2.6
775,547,000
5,860,435,000
1.7
794,534,000
1.6
894,600,000
1.7
13.1
1.9
6,360,211,000
1,025,000,000
13.2
7,779,977,000
15.1
9,800,000,000
17.7
$6,635,982,000
14.8
$7,154,745,000
14.8
$8,674,577,000
16.8
$10,825,000,000
19.6
734,937,000
1,890,766,000
1.5
860,199,000
1,937,003,000
1.7
1,050,000.000
1.9
3.9
3.7
2,075,000,000
3.8
856,703,000
1.9
1,961,876,000
4.4
,
780,247,000
957,750,000
1.8
756,112,000
1.6
1,020,442.000
2.0
2.1
850,000,000
1.5
1,056,945,000
2.2
1,103,850,000
2.1
1,175,000,000
2.1
$44,797,041,000
100.0
$48,190,796,000
100.0
$51,742,987,000
100.0
$55,400,000,000
100.0
Insurance
all
of
on
Year
government
actual
United
Oct.
States
of
Life
Books—Life
Insurance
and
the
Life
Editions—published
by
Insurance
The
Association
Spectator
bonds estimated.
31
records
of
about
of
Amer¬
Company,
and
-
175
legal reserve companies.
ftn
investment
Government
bonds
Dominion
are
and
estimated
about $119,000,000 in
year-end total of $1,430,000,000.
This increase, which is
the largest since 1945, will restore
the
a
percentage of assets invested
in these securities to its 1946
yearend level after a dip to 2.5% at
the end of last year. Investments
of life insurance
companies in ob¬
1945
a
com¬
increase
1948 to
portfolios, slightly
as
ligations of other foreign
ments are negligible.
nearly
govern¬
Considering the state of the security markets in general, and
the pessimism
surrounding railroad securities in particular, it is hard
even one railroad
common stock that is still
1946 market boom.
One of
the few in this enviable
position is Union Pacific. Adjusting for the
two-for-one split in mid-1948 and the 1946
high was 84%. Even after
the post-election decline in all
sections of the market this stock the
latter part of last week was
selling at 86. At this
level most analysts consider the stock
and defensive
companies,
which
at
the
end
of
1947
held
purposes.
relatively high
still attractive
for investment
?.
1
Therf have been many changes in this situation in recent years
which have tended to
improve the already strong position of the
junior equity. Taking a look at the distant
past, the background is
rpost impressive.- The company has shown
earnings, and paid divi¬
dends, on its common stock in every year since the
beginning of the
present century. For the period 1906-1932,
inclusive, the distribution
on the old stock never
dropped below $8.00 a share—the equivalent
of $4.00 a share on the
present stock. From 1933 through 1947 a rate
of $6.00 a share on the old stock was
maintained.
The new, split
stock has been placed on a
regular $5.00 basis, with a $1.00 extra
declared recently. Very few
corporations "can point to such an envi¬
able long term record.
>•'/?
;
,</
One of the important
improvements. in the cortipany's; already
strong position in recent years has been the sharp reduction in out¬
standing debt. In the years 1941-1947 the non-equipment obligations
outstanding were reduced by close to $160 million. The balance as
:
,
of the end of last year was down to
roundly
$179 million.
In
com¬
parison, net working capital
was close to $97 million and the com¬
has investments in other than affiliated companies carried at
$88 million. The debt retirement has been augmented
by exception¬
ally favorable refunding. The company now has no
boqds bearing
pany
interest above 3%
and its largest issue carries
only 2y2%.
The
com¬
bined result of retirements and
to
an
they
refunding has reduced fixed charges
between $5^ and $6 million. As
recently as 1944
annual level
were
from oil
Companies
38.7
1.6
from
to
above $15 million.
Another
$20,020,582,000
4.3
of
interest
bonds)
'
44.9
11.6
assets
of
subdivision
will
them.
life
standpoint.
and about
An estimated increase of
and
$21,639,051,000
1,903,134,000
the
ma¬
While
compared with
peak ratio of 46.0%.
also
estate
non-farm
represent 17.7%
however,
risen
3,009,138,000
5,212,369,000
from
which
both
assets
gained
from
in
portfolios, however, suggests
the possibility that their yields
may
be readjusting to a point
where they are again becoming
(including
1948
$10,825,-
erty used in
companies' business and to
the
Total
increase
four
mortgages
Dec. 31, 1947
Amount
1948
of their 1946 record volume—after
decreases of $1,618,000,000 in 1947
of
which
advantage
pany
security holdings
total, only about 75%
then
Federal
Total mortgage hold¬
non-farm
companies
up¬
$23,525,138,000
with
admitted
about
make up only about 1.9% of their
assets and will total about $1,050,-^
rep¬
50.2
sub-classifications
preliminary estimates based
97(k>
and
farm
subdivisions.
compiled
Their
$3,271,000,000 in 1948—
they will still be a very large item
1948 have been
ly 50% in the last two years, such
properties at the end of 1948 will
nearly
utility
public
Outstanding
are:
data'are
of
companies
tax
increases in all three
but
surance
15.6% at the end
Source^ of. the above
data, compiled jointly by the Institute
1945-1947
t
thus made them unattractive
life
to
United
year.
these
level out of line with others
a
little
Federal
in life
company
mod¬
their real estate holdings by near¬
ex¬
end
$22,481,233,000
asseis
Total admitted
one
for
$2,150,000,000, which is
larger than last
of the
Real
Dec. 31, 1946
of
Total
7,685,000
Real estate
within
demand
as
1945.
Legal Reserve Life Insurance
1,168,447,000
'
will
The 1948 increase
increase
on
will
assets,
have
securities
of
estimated
an
46.0
utility
Other
these
the
against 13.1% at the end of 1945;
and farm mortgages 1.9%
com¬
pared with 1.7% at the end of
cor¬
slower-rising
11.6%
$20,582,788,000
722,313,000
Stocks—Railroad
$16,750,000,000,
turing
about
the
$7,300,-
to
will
year,
catching
Outstanding
Government
the
about 2% will be insecurities
in¬
$1,025,000,000 on farms.
Both classes of mortgages have
risen in proportion to assets dur¬
ing the postwar period, but farm
mortgages only moderately.
At
estimated 13.2% at the
Dec. 31, 1945
Bonds-MLJ.
to
and
At the end of
1948 such securities will
approxi¬
mate
000,000 or 19.6% of assets—will
include loans of about $9,800,000,-
in¬
1948 increases of
4.3%
this
Amount
Investment Class—
obligations of
market
bonds, due to their tax-exempt
status, had depressed their yields
States Government.
estate
further
great
one-third
years
utility
railroad
bonds
bonds
to
United
in
and
years.
Investments, by Classes, 1945-1948
AH
will
large as the 1946 increase.
Non-farm mortgages made up the
public
indus¬
or
In proportion
resented
Spring of 1949.
in
times
corporations
railroads
—
of
trend.
estimates based on actual
yearend data of about 350
companies will be¬
resent
important factor in the active
year's
have
annual
of the year to about
end
1 Final
come
bonds
industrial
hands but. also sizable
amounts of additional funds.
De¬
creases in
in
000,000.
into their
represent
properties
30.2%
and
over
000,000, $8,650,000,000 and $2,975,-
coming
Such
mortgage holdings of life
insurance companies is estimated
porate bond classifications at the
1945 to
new
will
1946
ing these
changed relatively little in
private-enterprise investments
all
progressive
period
panded
only
1945
i.e., principally
corporations. Public
two
years
life
insurance
companies have been able to place
not
1948
exceeding the combined total in¬
vested in public
utility and indus¬
trial bonds at that time.
About
funds
erate increases in
com¬
respective totals of the three
in
Real
of
postwar
Sharp increases in expen¬
ditures for private construction in
an
$2,330,000,000 in industrial bonds,
$1,700,000,000 in public util¬
ity bonds and nearly $100,000,000
in railroad bonds will
bring the
these
in
insurance
over
substantially larger than the
total
of
end
The estimated
and
both
.1947 and 1948 such increases have
been
—
of assets
Government Bonds—Nearly 90%
all government bond
holdings
of life insurance
companies rep¬
period.
amount.
1947
Loans
had been in
This 1948
years.
from 1.2 to 1.5.
of
mortgages have been the second
largest investment channel for life
holdings also have risen by
increasing annual amounts during
this
year, as
the
than
trial
insurance
for
at
the
have
estimated
Mortgage
though level¬
1945,
seven
percentage
slightly during the year
Probably the chief
factor
influencing the trend of
these securities is their yields. The
real
include a somewhat larger
volume of commercial than resi¬
dential real estate.
1945
represent
the
holding above the high reached in the
this
is
will
of
by such companies at
ings of the life companies at the
Continuing
his
Shepherd stated:
of
This
half
over
then
bring to¬
holdings at the end of
to approximately $1,450,-
stock
end
purposes.
in¬
$60,000,000—which is less
about one-fourth of the
Well
properties acquired for investment
dustrial stocks primarily, began to
level off last year after record
of
after
increase will raise the
end of 1948—estimated at
bond
companies
chief
representing only 22.6%
utilities
mortgage-loan and real estate in¬
in
off
progress
level
1946 and 1948 and since have been
maintained at that level."
vestments
the
at
uptrend,
increases
down-trend which,
ing
to realize that there is
creases
$6,527,000,000
outstanding corporate security,
Their
1948, bringing the total to
about $850,000,000 at the
year-end,
is notable because it reverses a
contributed.
been
A net increase of
nies.
estate held
stocks.
about
or
The
assets.
1948.
ing
the
-
end
the
at
for
account
ponents of the expansion of cor¬
porate bond investments from a
other
in
in
throughout
total
private domestic invest¬
ment—largely for producers' dur¬
able equipment and new
private
construction—increased by about
'80% between the first quarters of
Mr.
1942.
than
more
1948
40% in obligations of domestic
State and local governments dur¬
of both
and commercial prop¬
purposes
1947
demand for mortgage credit dur¬
34.2%
assets
on
report,
held
the
postwar period. Such bonds held
in life company portfolios at the
end of this year are estimated to
uy
meeds
be
securities,
high of 50.2%.
vate
has
1945
will
assets
enterprises Jiave been
the largest, artery carrying
the
savings of policyholders into pri¬
pre¬
since
such
and 1948 increases—of
$125,000,000 and $190,000,000 respec¬
tively—in the total real estate
holdings of life insurance compa¬
$950,000,000 in
industrial stocks, about $400,000,000 in public utility stocks and
about
$100,000,000
in
railroad
Corporate Securities—Bonds of
insurance
of
securities,
and real estate.
the
life
assets
reflected
000,000.
contrasted with their post¬
as
year,
vestments of about
At
approximately
1948
of
the year
composi¬
corporate
A review of
that
of
of
the
which
tal
it was at the beginning of the war.
Obligations of governments (Fed¬
eral, State and local and foreign),
on the other hand, will represent
only about 34.3% at the end of
1948
of
this
to
and 1946 increases—will
changes have had
on
end
and
mortgages
and real estate.
This ratio, which
has risen from a postwar low of
41.5%, is now slightly higher than
war
at the ends of the years 1945-1947
and forecasts of such
holdings at
these
of
holdings of all
reserve
new
These postwar
marked effect
erties
assets
company
up
for
residential
investments
than one-half of the 1947 increase
funds.
tion
life
Bruce E.
total
of
"the
legal
t k
increasing
1.7%
crease
$2,909,000,000 in 1948
account
for
the
availability
of
funds for private investment in
excess
States
o
increases in stock holdings in 1945
1946. The estimated 1948 in¬
and of about
com pa n i e s.
According
to
Mr. Shepherd,
ite investment
t
tions
and
"
compos¬
from
but will have declined to 2.6%
the
Shepherd,
a
declined
Thursday, December 16,
companies to acquire real estate
for investment purposes.
Acquisi¬
that year, these holdings pro¬
gressed to 2.7% at the end of 1947
his report to the 42nd Annual Meeting of the Life
Insurance Association of America in New York City on Dec. 9, Bruce
insurance
mean¬
of
In presenting
life
s
which,
been
From
change in trends.
reserve
have
insurance
one
had
proportionate increase in holdings of public utility and
Investment in rails and in mortgages shows little
States legal
life
of
but
industrial bonds.
current
will
bonds
CHRONICLE
represent only a small proportion
Shepherd, Manager of the Life Insurance Association of
America, reveals a sharp decline in holdings of government securi¬
E
Railroad
Corporate
Investment Trends
and
FINANCIAL
6.7% to about 5.4% of assets.
Bruce E.
ties
1948.
&
and
development
has
been
the
sharp expansion in profits
operations.
This has probably been a particularly
potent market influence as it mollifies many investors who take a
dim view of railroad securities as such. As
recently as 1937 net in¬
come
For
gas
from the oil and gas operations amounted to less than
the five
years
$500,000.
through 1946 it averaged close to $7,500,000 and
$16,957,218. This compares with combined pres¬
last year it soared to
ent fixed
charges and .preferred dividend requirements of less than
$10 million and would alone leave some balance for the $4,445,820
shares of common stock.
For the 10 months through October 1948
income from oil and gas
operations amounted
against $12,669,139 for the like 1947 interval.
net
Union
to
$21,986,833
Pacific
is; by itself, a sound and consistently profitable
operating property. On the average for the past 10 years net operating
income, which is reported after Federal income taxes, fell just short
of $33 million.
The low was slightly under $20 million in the severe
recession year 1938 and the
it was close to $37 million.
high
As
was
$61 million in 1942.
Last year
final
earnings consideration, the
company gets considerable income from its holdings of miscellaneous
securities, mostly those of other carriers. Nonoperating income, ex¬
clusive
of
oil
and
gas
a
operations,
was
above
$9
million
last
year.
Adjusted to the present outstanding stock, but not adjusting for
the reduction in debt and
charges, earnings available for the com¬
mon stock have
averaged $7.03 over the past 10 years. The lowPwas
$3.31 in 1938. Last year the company reported $11.35 a share on the
split slock. For the 10 months through October 1948, there was a rise
to
$11.98 a share from $8.21 realized a year earlier. There should be
further gains in the last two months of the
year, with final, 1948
results likely to reach, and perhaps top, $16.00 a share.
Considering
the long term record a price-earnings ratio of less than 5^2 times
appears
ridiculously low.'
'
;
•
Volume 168
Number 4760
■fHE
COMMERCIAL
selves
Urges Banks to Keep in
recent
to
University,
price trends, inflationary boom
Uni¬
versity,
New
York
City,
told
struction
National
Credit
Con¬
ference of the
Ameri
c
n
a
Bankers Asso¬
increases;
ciation a! Chi¬
what's the
use,
cago
shall have
inflation
Dec.
on
13.
Dr.
said,
to
W. E. Atkins
Prof.
enough
steel
go
Shall it go to the state for
of
arma¬
through the mechanism
the' state
for
foreign uses?
controls
making it
sumers
done,
established
difficult for con¬
cies,
as
whole
meas¬
they
against inflation, but as a
decision on the part of political
to
give the
fewer
automobiles
houses."
matter
meet
any .economic
used
more
"On
the
basis
of
recent
record
position
to
cause
eventuality.
of
store sales, which for five weeks
were
below the
1947
levels,
would
that
appear
inflationary
checked.
the
boom
Under
postwar
has
been
circum¬
such
stances, any decisive
it
and
impor¬
tant action aimed at
restricting
trade at this time would
hardly
seem to be in order.
In any case,
the banks should be in a
position
of flexibility, with bankers able
and
willing tp adjust their tactics
to the
situation
as
it develops.
If
this
trend toward a
softening of
prices during the last few months
should gain headway; if it should
happen that the postwar recession,
which has been predicted so many
times, does make its appearance
in 1949, it is obvious that our
re¬
cent
attitudes towards credit re¬
striction will be outmoded
by the
course of events,
"I hope that I shall not be mis¬
understood.
a
I
substantial
Bather, I
not
am
predicting
recession
for
1949.
trying simply to say
that present facts
argue against
laying down rigid rules either by
am
governmental
agreement
fiat
among
restrict
may
and
necessary
ments
arise.
and
the
to
or
by
common
bankers which
hamper
the
sensible
situations
adjust¬
as
they
That is not
produce
fact
were
nothing
but
that
bank
credit
is
of, the kind of inflation
we
to the
us
very sensitive
institution, that it
widespread havoc^if
used.
The
credit
have
land
did
not
produce
carefully
potentialities of bank
not
widespread
and
can
not
broken
speculation.
security
That
this
in
occur
proportions
into
out
commodity,
overwhelming
during the past four
tribute to the good sense
American people and the
years is a
of
the
wisdom that has been displayed
by our loaning institutions.
"But
that
it
should, also, be clear
policy of restricting credit
a
less
no
credit
than
is
Even in
that
of
to
many
open
a
increasing
dangers.
period when credit
re¬
striction in general
may be recog¬
nized
desirable,
as
government
nor
neither
the
individual
any
banker^ should cut off loans on a
rule-of-thumb basis without good
reason.
If the government or the
individual
banker
should
now
adopt the policy of saying: 'We
have such and * such amount of
credit
outstanding and hence
we
will
not consider or permit addi¬
tional loans,' the result could eas¬
ily be disastrous.
a
' It might tip off
drive to sacrifice inventories and
start
an
ever-widening circle of
liquidation.
In any case,
it would
hurt productive effort
by restrict¬
ing the productive loan. The net
effect
might be that not
only
would
certain
commodities
be¬
,
come
is
"Although the present situation
.somewhat
deflationary,
the
American
economy,
namic, is today
even
always
more
dy¬
so.
In
the
past three years, there have
been other1 periods when the in¬
flationary boom appeared to be
flattening out, only to be followed
by a new upsurge of activity, ex¬
pansion and price increase. It can
happen again.
If the army and
navy require $20 billion instead
of
$15
billion;
assumes
if relief to
substantial
China
proportions;
if political commitments to Greece
and
Turkey
states
ings
require
and
steel,,
scarce
the European
increased borrow¬
and
increased
lead,
copper
shipments
and.
products; if the public
of
other
con¬
unavailable, but in due time,
bottlenecks would begin to show
up
throughout
the
productive
.
process
and
we
might get
real
a
undesired setback.
"When
we
talk
about
cause
if
and
launches
projects
and
ments
will
it
adopt
that we
may
controls
that are crude;
become fascinated with dol¬
with the
of
credit
rather
no
we
more';
consider
than
quality of credit; that
may say, 'We have made
loans,
steel,
lumber,
power
a
shall,
and
so
therefore,
may
that
'we
for
creased
and
launches
will
the
claim
are
the
man¬
per¬
If the
in¬
an
it
prevent banks from
by
the
lending
banke/s
or
to
a
them¬
natural
gas, and cattle and sheep-raising.
There are, also
diversified industrial enterprises in the area.
;
social
transfer
from
.
The
of
the
for what
trols,
industry:
new
they are—not credit
but
method
a
for
"I
want
that
I
it
clearly
disavow
attempting
Electric
KWH
understood
intention of
to evaluate the worthany
Operating Income—..
Income
decisions, I would make
cisions
similar
to
those
that
de¬
are
being made now. Even though I
might not like them, I might re¬
gard them as politically inevi¬
table.
What I protest against are
evasive
measures
and
the
evasive talk by which the realities
the
hidden from public
are
and
knowledge
Thereby, I pro¬
recognition.
test
against the consequences of
evasions; first, because the
public is not told why it is
being
such
denied the many
things it wants
and feels it should
have; and sec¬
ond,
because
in
its
ignorance, it
frustration into. anger
its
against the innocent."
24%
""Operating
fuel
general taxes and Federal income taxes
of 18.5% of gross revenue for
industry and
(12 months ended Oct. 31, 1948).
fuel
cost
Reasons for the company's remarkable
gain in earnings in recent
are
(1) the low operating ratio—21/2% of gross revenues
being carried down to the balance for common
stock, against an
industry average of less than 14%; (2) extremely low fuel
costs;
(3) a timely expansion program, giving the
company surplus power;
years
(4)
the unusual rate
of growth in this
territory in recent years, re¬
sulting largely from a huge irrigation program, as well as the de¬
velopment of oil and gas.
Low fuel costs result from the use of natural
gas as boiler fuel.
The company is protected by non-escalator
contracts for natural gas
(at all base load plants) with an average life of about five
years
(Weighed
by
output
of
respective
plants).
Average
cost
over
14%, reflecting the efficient operation of
new
units.
Elects New Officers
of Blyth
elected FreSMent
Investment Association, of
Co., Inc.,
of
the
was
New York to succeed
of
Philip Moore
Schroder,
Rockefeller
&
Co.,
at
Inc.,
the
Association.
a
Russell is
graduateJ of
company's construction program for the next four years is
estimated at $75 million, or about
$18 million a year. It will obtain
about $15 million a year from the
public in order to finance this,
$9 million in bonds and the rest in common stock.
After completion of the program, the
company will have four new
50,000 KWvstdam plants.
normal
and
of
the
surtax
or
rate,
ment
Association
Business
For
been
the
program
vestment
Administra¬
past year he has
director of the In¬
Association, which
originally organized
Investment
as
Bankers
officers
ensuing
and
elected
include
year
were
of
the
stock
George
Dillon &
Robert
C,
Curb Exchange,
Verne Horton of Gold¬
Chairman
Based
twice
27Vz
it
is
selling
rate
FRANCISCO,
CALIF.—
The Street Club of San Francisco
its
Marine
Christmas
Memorial
nesday,
Dec.
Club
on
at the
Wed¬
8,
Officers
year.
Party
celebrating the
completion of its first
successful
for
the
coming
year were announced and installed
by
officers
The
new
President, Thomas M.
Mitchum, Tully & Co.;
Vice-President, Harold D. Bar¬
are:
nard
Jr.
of
Dean
Clark, Dodge & Co., 61 Wall
Street, New York City, members
Treasurer,
El worthy
&
of the New Yoik Stock
Kenneth
C.
will admit
Hoffman
Exchange,
Francis W. LaFarge to
rather
out¬
the
current
over-counter
about
of
$2
Co.; and Eugene A. Shurtleff of
Blyth
&
Co.
New
committee
chairmen
Howard
named
were:
by
President
Membership, Rob¬
ert D. Gibson of William R. Staats
Co.; Program and Publicity, David
Bullen of El worthy & Co.;- and
Entertainment, G. Wiilard
Miller
Jr. of Dean Witter & Co.
outgoing President Eugene A.
Shurtleff of Blyth & Co.
Howard of
Clark, Dodge to Admit
been
are: Warren H.
Berl of
Edwin D. Berl & Son; Clarence O.
Amonette of Brush Slocumb &
Installs New Officers
held
At
at
has
41/2,. and currently it
adjustment for the
as
before
directors
Street Club of S. F.
SAN
44
10V2 times earnings.
(the quarterly rate was
1948) the yield is 7.3%.
dividend
current
increased .during
annual meeting was
by a cocktail party.
fol¬
the
on
Nominating Committee.
partnership Jan. 1.
low
as
be
around
stock
common
sold
of
nell & Co.
of the
the
stock
McDonnell of McDon¬
was
record
1942
price
the
Donal
Sachs & Co.
In
for
Baldridge of Morgan, Stanley &
Co.; Paul Hallingby, Jr., of E. F.
Hutton & Co.; H/ Vernon Lee,
Jr.,
man,
market
selling at the equivalent of
dividend of 60% paid in 1947.
Mr.
Board
The
standing.
would
Washburn'; and Dud¬
ley F. Cates of Kidder, Peabody &
Co., Treasurer. Elected to the Ex¬
ecutive
offerings proved quite successful, the first being 86% sub¬
scribed, the second 95% and the third 131% (including over-sub¬
scription). It appears likely that the company'will make another
offering next year, possibly in February or March.
Brokers
Washburn of Eastman,
Co., Vice-President; Roger T. Gilmartin of Merrill Lynch,
Pierce,
Fenner
&
Beane, Secretary, to
succeed
•'
The
cases.
was
the Junior
Association.
Other
law,/£
stock offerings were made to
stockholders in August
(l-for-4); in February 1947 (l-for-10); also in January 1948 on
1-for-ll basis.
Over-subscriptions were allowed in the last two
a
Stanley A. Russell, Jr.
Graduate
tion.
profits tax
excess
1945
University
of
new
Common
of
York
School
a
except to anticipate mortgage bond financing; the present bank debt;
is about $3.6 millions.
Invest¬
Bankers
New
by
or
present
management to shape its program for future
financing so as to
maintain these approximate ratios. It does not
borrow from the bank®
Program
of the
.
capital structure is approximately 60%
|de$t, 15%
preferred stock, and 25% common stock. It is the intention" of the
1940
Joint Train¬
ing
r,.
the fiscal year
The
•
of
^
^
' ,/ . \
ended Aug. 31, 1948 shaire earnings on the
common stock were $2.63 a share
compared with $2.31 in the pre¬
vious year, a gain of about 14%,
Budgeted figures for the current
fiscal year (to end next
August) indicate that the company hopes
to earn $3.14 a share or an increase of
19%. Because of its
For
Cornell in the
Class
generating
The
heavy
building program, the management feels that under
any new tax
legislation it could take, advantage of probable provisions for "ac¬
celerated depreciation" on new
plant, and hence that the company
would not be very
adversely affected either by an increase, in the
annual
meeting of the
Mr.
the
program—some
'^Stanley A. Russell, Jr.,
&
for
fiscal year ended Aug.
31, 1948 was 6.48 cents per mcf. of gas, equiva¬
lent to $1.57 a ton for coal.
Fuel cost per KWH. was reduced over
3% for the fiscal year 1948, and in the month of October
the decrease
was
N. Y. Investment Ass'n
55.5%
.
maintenance,
Includes
for Southwestern
cost
i
,
I'
expenses,
depreciation.
(0.5%)
80.45%*
'
46.1%
FPC/
from
12.9%
0.7%
71.6%
cent of gross.—
♦Figures
and
10.4%
,
24%
-
9.7%
32%
-
Operating Ratio**-.
Operating Expenses and Maintenance—
*
Industry*
24%
Net
per
Company
u_
Net
whileness of these measures. Per¬
haps if I were in a position to
make
Sales
Gross Revenue
con¬
keeping
people out of the market.
numerous
,
,
has enjoyed
company
very rapid growth in recent years*;
percentage gains and ratios for the 12 months ended
Aug. 31, 1948
being as follows compared with those for the electric power
would have
'have' to those who
to
beneficiaries
services.
If credit controls are
necessary to effect these purposes,
then they should be understood
lowed
reserves
a
those who otherwise
many
pot
Oklahoma, in the south plains region of Texas*
Valley of New Mexico. The electric properties form
fully inter-connected system, the Texas and Oklahoma
portion
extending about 300 miles north and south, and 120 miles east and
west.
The territory has an estimated
population of 600,000 and is
devoted largely to agricultural
production, processing of oil and
and in the Pecos
cement,
making
program—call
security—it
sections of Texas and
improve¬
less
copper
available
Administration
The
may
Southwestern Public Service
Southwestern Public Service derives about 90% of its revenue®
from the sale of
electricity, 6%. from natural gas sales, and the re¬
mainder from water and ice business; It
operates in the Panhandle
pro¬
make
new
policy of raising
decision
stop
you
sonal and producers'
goods.
we
situations, for if ac¬
commodated, they will ra^se the
total credit
outstanding.'/ After
all,
may
Administra¬
harbor
and
totals
very
increased
leave
of the New York
lar
the
an
is what I fear: that
may
You
car, but
smash.
a
fighting
inflation by restricting credit, this
we
2$
very
result of, rather than the
a
•
•
been
whether
have had must not blind
fact that credit is a
price
department
have
or
careening
turns
say
largely
culture and various industries and
the
might
the
inflation.
to
current
whether
or
inevitable.
could
bankers
data," he said, "reports from agri¬
poli¬
they
not
or
differently,
were
"To
Dr.
Atkins urged
maintain a flexible
whether
relevant to the issue.
The
remains that such policies as
consumer
and
govern¬
At the moment, I
with the sound¬
desirable,
handled
ures
authorities
with
were
liberalized by more generous
Federal
guaranties,
the
actions
not taken
what
of these Administration
ness
buy automobiles, and
time, mortgage terms
are
largely
am not concerned
are
obviously
but
ment has done.
are
more
to
at the same
our
"Indeed, the inflation that has
occurred on the whole has been
the result not of loose
lending by
the banks, not what bankers have
or
When
we
on
governmental policy.
around;
ana
the
question
has
been, 'Who shall have the steel?'
ment
back
tionary drive again gains momen¬
tum, it will be a consequence of
"there has not
been
is
answer
hands without the bankers
having
any iota of responsibility for it.
What is clear is .that if the infla¬
"Explicitly
stated,"
Atkins
the
and if—
(2511)
produce
constructing public "build¬
ings, highways, bridges, irrigation
of
round of wage
can
gram of
roads, harbors, irri¬
gation projects and public build¬
ing and increased shipments of
launch a broad program of
public
health rehabilitation; and
if, in
addition, the Administration gives
the 'go' signal to
organized labor
to press its demands for
a fourth
the
automobiles.
"When
Atkins,
Chairman of the Department of Economics,
Washington Square ColYork
ing
tion
a
smash-up caused by stopping speeding auto with road block.
New
that
the
also
The real issue in the current situation is not
primarily inflation,
but "who should
get the limited amounts of goods and services which
are available for distribution and how
much," Dr. Wiilard E.
lege,
tactics
CHRONICLE
great harm;
They are akin to
erecting road blocks to stop speed¬
be checked, and
appears to
attempt to fight inflation by restricting credit, may be like
stop lending is
but these are also
simple;
basis of
says on
FINANCIAL
to
crude
Flexible Condition
Dr. Wiilard E. Atkins, of New York
&
Witter
Robert
Co.;
B.
and
Koch
_of
&
Co.;
Horner
of
Secretary,
Walston,
Burnhajm & Co.
Leonard J.
Greenthal,
manager
of the statistical
admit
to
department, will
partnership in Burn-
ham & Co.,
Goodwin/
York
City,
Other members of the board of
York
Stock
&
to
Admit L. J. Greenthal
15 Broad Street, New
members of the New
Exchange
on
Jan.
1.
24
(2512)
Our
FINANCIAL
&
COMMERCIAL
THE
CHRONICLE
Thursday, December 16, 1948
//
"Business
Reporter
on
Governments
(Continued from page 18)
and
which
from
they receive no
dividends.
By JOHN X. C HIPPENDALE, JK.
The government bond market continues on the constructive side
with investors adding to their holdings of
Treasury obligations.
.
.
Although tightness in the money markets has tended to limit com¬
mitments, it is believed that activity will expand with the passing
Altnough the major part of the
capital obtained by business
from
retainer profits has been
new
used for the constructive purpose
employment" means a steady in-, fourths of all savings drawn were
crease
in employment year by for such
purposes.
year as population increases and
In 1949 consumer buying must
more workers come into the labor
increase substantially if we are
force seeking jobs. This means a
to
maintain
steady increase
goods
in
production
of
of
our.
employment ,and
To achieve this*" a
and
services, for produc¬
production.
both by the larger
stable
dollar
is
essential. ''The
of this condition, which should be soon, *•'
The bank-eligible obli¬ equipment or supplying needed number of workers and by their
postwar price rise in living costs
gations are the market leaders and are expected to hold this position working ^capital, nevertheless rising productivity. And how we
must be stopped.' • /1
because the deposit institutions are showing more interest in these there nas been a
marked ten¬ tome to the vital point In the
securities.
Dealers also are inclined to look with favor on thei dency on the part of large cor¬ whole problem of maintaining an
Sound Monetary Policy Basic in
bank issues, which accounts for modest
inventory building hi some; porations to use their high profits economy of maximum employ¬
Curbing Inflation /A1
'}j
*>£ these securities.
Positions have been enlarged in face of higher for
the
purpose
of buying up ment; namely, the purchase of
Basic in checking inflation is a
loaning rates by a few of the banks.
the
smaller concerns.
products and services of Th- sound
A study Just
moniary policy 6T the hart
issued by the Federal Trade Com¬ oustry. For unless these products
Federal last week reported a decrease in bond holdings of
lit'- the Fetteral
Government.
Eiare
mission shows that in the period
bought and taken off- the forts to
more than $58,000,000 showing that the authorities will sell secur¬
/ iiiaitRaih-:rt3iey'^V.ic€s bf
from
1940
to
1947,
2,450
formerly!
ities to keep the market orderly and prices within limits.
market, production" will be .cut government bonds* sh'Ould
It
no^ be
independent manufacturing- and back, workers laid off and "full
/ is reported that a sizable amount of the securities sold were
permitted to inter forewith tuca
mining companies with an asset employment" will be replaced by a
bonds in the middle maturities with indications that the 2s due
policy: for Our entire' economy
value of $5.2 billion have disap¬ rising
unemployment with im¬
Dec. 15, 1052/54 were among the largest eliminations by the
..epends on government fiscal and
peared as a result of mergers and mense loss to everyone.
Central Banks.
This would be in line with the better tone
monetary policies to check those
and demand which has been appearing in the longest taxable 2s.
acquisitions.
These acquisitions
On whom
does the American excesses wnicn
may be disastrous
nave been particularly marked in
This bond on Dec. 15 becomes a four-year obligation (With a
economy depend to buy its prod¬ in a boom period..
the textile industry where com¬ uct?
yield of 1.67%) which makes it attractive to deposit institutions
Before
the
war
m
1939,
Government tax, policy is. also
that do not want to be too short or too long.
panies have been making 'profits consumers bought about 75% ; of
vital.
The Executive Council of
of 20 to 36% on net worth in 4948
it
government
14%,
business the
American Federation of Laand 1947, in chemicals and drugs
OTHER FAVORITES
bought about 10% for mainten¬
oor has pointed out that the bulk
where profits were from 15 to
The 21/£s due 1956/53 are also
ance, improvement and expansion
attracting attention as are the
of tax savings, approved by,
2*4s due 1956/59, with out-of-town commercial banks reportedly 24%. and in foods and beverages of is plants^ and about 1% repre¬
i.Oth
Congress
accrued
to
tax
where
profits were from 10 to sented .net
the main buyers.
exports
to
The 2V2S due Sept. 15, 1967/72 likewise have
foreign
payers
in income groups: over
42%:
We do not have enough countries.
their followers but have been under some
With rising
postwar
pressure because of sell¬
$3,000. The low incomes still bear
information to show the actual
ing by savings banks.
The proceeds from these eliminations have
prices, consumers were able to
heavy tax ; burden, and this
effect of this merger movement
been going largely into the restricted obligations.
buy only 71% in 1947, but the
>
Switches are
should be kept in mind in any
still being made from certificates into the distant eligible taxables on competition, but these figures slack was taken up by business
new measures for taxation. Their
cause
for
much
concern.
which
by institutions that are in need for earnings because of declines in give
bought unusual amounts
buying power is vital to the na¬
What could be more destructive for
loans or the lack of suitable mortgages.
plant and equipment, and by
tion and must be increased. "
to our economy than the use of
foreign countries which in early
Bank loans in New York City declined again last week for
In looking to 1949, the Amer¬
high profits to eliminate or se¬ 1947 still had enough capital to
the fourth time in a row, and this has many
money market fol¬
ican
Federation of Labor recog¬
riously lessen competition in
buy for reconstruction purposes.:
lowers paying more attention to the government securities mar¬
nizes
that in
a
free market?
free
A free enterprise As we look ahead to 1949 a
enterprise
very
kets.
The opinion is that if loans continue this trend there
the
system depends on competition to different picture presents itself. economy
organizations ,o'f
.
expanding plant and improvirig
of
tion
is
,
economy at levels
maximum
raised
.
...
...
...
t
»
.
.
..
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
...
.
.
.
will be
more
a
active interest in
securities.
government
.
.
productive
adjust prices and Consumers are no longer able to basic
groups — em¬
consumer
needs, buy even 70% of the total product ployers, .labor and farmers—can¬
and stimulate efficiency and the
expect the government
to
in the first three quarters of not
lift from them the burden of their
invention of new techniques.
1948
they " bought only f>9.8%;i
check
.
There has been selling of tap bonds by savings
banks, trust
aocounts, and the smaller insurance companies in order to take
up commitments made in the recently offered telephone bonds.
..
The
are
partially-exempt
'
continue to be in demand, with
the last four maturities getting most of the
play.
,
.
These bonds are
not easy to pick up and there have been instances
recently when
been
made
that
above the quoted offering side
important amount of securities were bought.
were
high
price
so
many
by
the
postwar, period
seriously felt in
sectors
the
of
economy
Workers' average real wages have
been declining during the post¬
period.
war
.
bids have
in
being
now
various
issues
the
of
followed
businesses
...
PARTIAL EXEMPTS ACTIVE
The
results
policies
...
$150,000,000 issue of American Telephone and Telegraph Com¬
pany's 3%s Would bring in more liquidation of Treasuries than
has appeared so far.
to
.
These eliminations have not been sizable, however, and were
much less than had been expected.
It was believed that the
.
excesses,
production
From
to
May
(V-E Month)
(V-J Month) the
buying power of the
1945
August 1945
of
business
purchases for plant and
equipment which have taken up
the exceptionally high proportion
15% in 1948, are expected to
•of
own
responsibility for construc¬
policies in regard to priced.
Federation of La¬
tive
The American
bor clearly stated its
the end of the war of
policy, at
asking wage
1949; foreign net
increases which could be granted
purchases
fori private
account
without
raising prices and wn
have dropped to an insignificant
seek today a situation in which it
amount as their funds were ox
drop
away
in
The
hausted.
result
that
is
the
whole economy turns to the' gov
ernment to support the. market
will be
possible to
carry out thdt
But M view of the dras¬
policy.
tic
price rises and the
policy of
'decline in
no
Tor its products. This Is a serious many companies to charge all the
though there is very little inclination to dispose of these weekly pay envelope of the aver¬
traffic will bear, labor cannot re¬
and
age
factory
worker J was
dangerous situation, and the
bonds until yields decrease from current levels.
10%.
This is due prin¬
frain from asking maximum wage
cipally to the better tax-free return that is available in these obliga¬ From August 1945 to October root - cause of the maladjustment
increases unless we^have assur¬
is
1948
(latest figure)1 the ayerirge
high prices which cut off con-r
tions compared with the yield obtainable in taxable Treasuries.
ance
from employers
that theV
factory worker's buying power sumerfouying power.
the market and
It seems
as
.
.
.
.
.
.
has
HIGHER PRICES EXPECTED
•
;
Although
adjustments will continue to be made in portfolios
in order to meet particular needs and for
year-end purposes which
may cause
temporary maladjustments in individual issues, investors
and traders appear to feel that
prices Of government securities will
tfend to improve gradually.
Better quotations are looked for in
the bank obligations but no wild rush
up in prices is expected be¬
.
Federal
cause
has too
many
securities that
.
If
and
.
is relieved.
pressure
can
be
sold to
prevent
.
,
...
spending is held within reasonable limits
budget shows a surplus, there is quite likely to be a
much better
.
.
.
decline for 1948, the first in about 11
that the drop in demand deposits and
a
years.
.
currency
.
.
It is
will be
$3,000,000,000.
While support purchases of government
bonds hampered credit controls, this was offset in a
large measure
by the retirement of short-term Treasury securities held
by the
banks, which reduced deposits.
Also increases in reserve require¬
.
.
.
...
and
in
interest rates
monetary contraction, since
on
short-term
governments resulted in
pressure on reserves cut down the expan¬
sion of loans and investments by the commercial banks.
...
ple in the first half of 1948
10%
below
1945
and
This decline
1946.
entirely
has
price
the
to
7%
was
below
been
rise,
due
since
SACRAMENTO,
CAL. — Lle¬
wellyn J. Reese has opened offices
at 1812 J Street to engage in the
securities business.
He was pre¬
viously with Capital Securities Co.
Fitzgerald
died
of
sequences
1938
was
a
partner
Munds, Winslow & Potter.
econ¬
First of all, it means a
omy.
se¬
war
bonds in wartime.,
ing
power
been
their
of
reduced
fourth
and
bonds
were
by
The buy¬
savings
least
at
has
one-
by one-third if the
bought early, in the
war.
Similarly, those who depend
on social
security find that their
payments
are
so
government
pur¬
Recovery
military pro¬
the
we
cannot go
in¬
on
definitely
told
by
business
competent
ob¬
in
large
very
increases
demand."
..
The
serious
shortage
buying
power
sized
even
to
<
con¬
is empha¬
when We realize
more
forced
are
larger extent
and on the use
a
rowing
savings to meet current
buying
the
from
We
in
must
understanding
sary to reach
of
maintaining
levels
and
of
cutting the sup¬
under
products of
try.
a
power is
of
the
for
market
year
since the
to
de¬
our
neces
common
our
war
and
are
at
production
new
problems.
is
now
still being
re¬
$3.8 billion per year; Postal Sav¬
banks,
in
the
first
nine
months
of
1948,
withdrawals. have
by
$425
million while
serve
Board
new
risen
sav¬
The Federal Re¬
study, of
consumer
finances in 1948 showed that half
of all
.
"spending units" had drawn
savings for the purchase
goods, which is
indication of the extent to
"non-durable"
an
-
When
individual units act separately
hp
one of them can have
determining
effect,'no matter how great. the
unit
one
offset and
another.
the
be
may
negated
It is for this
Executive
which, families have had to draw
the act of
reason
Council
American
Federation
has
for
called
completely
by
a
of
of
that
the
Labor
joint conference
of
business, labor and farmers to
examine facts and propose a joint
voluntary program in cooperation
with
the government't6 stop, in¬
ings have declined by $67 million flation.
or
2% in the year ending Sep¬
tember 1948;
in mutual savings
.
goa
economy
unless
of
'i'.f
.
;
A. G. Becker & Co. to
Admit Seven Partners
CHICAGO, ILL.—A J < a1 Becker
& Co.,
120 South La
members
of
the
Sallp Street,
New
York land
Chicago Stock Exchanges,ion Jan.
1 will admit William 0.f
Mabie,
Herbert T.
Schaffner. Alvhn L.
Pearson, Maurice J. Cann, David
Dattelbaum, Russell H. Boyd,
N.
and Charles W. Ritter to partner¬
on
ship.
ing
Boyd will make their headquar¬
savings to meet ordinary liv¬
expenses. In the very low in¬
So-called "full come groups (under
$2,000) three-
maximum
employment.
is
scale
past
deemed at the high rate of almost
of
what
national
of
expenses.
.
savings bonds
op their
of
a
desire may be to act for the gen¬
eral good.
The constructive act
above the previous all time
peak
in
1939.
War bonds and
have
realistic
on
bor¬
80%
American indus¬
a
way
policies
effective
on
Consumer short-term credit has
increased at the rate of $3 billion
income groups.
reduction
high. The great voluntary organi¬
zations
which.determine wage,
consider
of
.
this
policies
which, will
avoid
prlbe' increases and peririit prices
to decline where they are unduly
they meet together to discuss .the
current
- situations
ayid ; decide
upon " policies, meeting
again at
defense
intervals to review programs and
in
*
^
sumer
reduced
w
follow¬
ing
that "very small declines
civilian demands * will offset
servers
a
will meet our sacrifice by
expanding these pro¬
price
and 1 production
to take up the slack in con¬
'cannot function in an
purchasing power. We are
that consumers
rious injustice to the millions who
saved
their money
and bought
Secondly,
ailment at the age of 71.
Mr. Fitzgerald prior to his retire¬
in
for the American
and
But
gram.
pend
,
heart
ment
Program
the
of
cutting away of the peo¬
ple's buying power by the high
prices which created today's high
profits is having dangerous con¬
sistence.
Harold Fitzgerald Dead
Harold
income
money
is being supported
by
chases for the European
show that the per capita diSpos-*
grams
able income of the American peo¬ sumer
port
Opens
present
in
.
L. J. Reese
The market
at
ings rose by only $369 million.
buying power that they no All
these are signs of the pressure
longer provide even a bare sub¬ of
high prices, particularly on low
Bankers Association's voluntary
campaign to
restrict credit expansion has also been important in this
matter.
Unless there is a marked increase in government
spending
the contraction in the money supply should
continue and this
will eliminate the monetary factor as an
inflationary force.
»
Figures from the Presi¬
dent's Midyear Economic Report
benefit
The American
.
his pay.
Economy
Despite all the criticism that has been put forward about the
price support policy of government bonds, along with its inflation¬
ary implications, it is indicated that money
supply of the nation
ments
consumer,
advancec
This
SUPPLY AND "PEGS"
about
the average
unions
have
High Prices Dangerous to the
.
estimated
than
ter
because
American people have advanced
steadily In the postwar period.
enough price fluctuations and volume to make it interesting for
both investors and dealers.
*
.
will show
But
bet¬
capital
tone in the government bond market.
Despite
the many uncertainties that confront the
money markets the feel¬
ing seems to be that the immediate future will find develop¬
ments in the government market on the favorable side
with
MONEY
2%%.
average money wages and the per
government
the
another
.
.
anything like that happening.
Recent trading limits are quite
likely to hold for the time being, but a somewhat higher range might
be anticipated, if business continues the
"rolling readjustment" and
the inflation
declined
the factory worker has fared
Mr.
Dattelbaum
and
Mr.
ters in the firm's New York office.
-
Volume 168
Number 4760
THE
COMMERCIAL,
&
FINANCIAL
from surplus.
News About Banks
at
stand
vided
were
York
with
the
Stock
Ex¬
to
and
In
1943
Assistant
an
he
was
stituted
and
elected
Vice-President
a
Mr.
and
Marshall
.Treasurer,
is
in
charge
Mr. Blaine served in World War
I
he
the
same
to
his
B.
A.
9
President
Colt
from
President
at the
to
five
office of Assistant
and
Mr.
and
Schlumpf,
%
Elected
and
Schubert..: I. E. White
were:
v"
*
■
*
Following;
of
of
the:
a
also
has
been
Manhattan
of
and
will
*
*
aggressive
act
as a
di¬
Chairman
as
*
•*
Bank
and
following
pointments have been approved
by the Board of Trustees: William
Jones and
George R. Macalis-
Assistant
on
of
stockholders
be held
Jan.
on
*
*
wbicn
19
joining
1944,
becomes
the
directors.
Robert Rae, formerly Vice-Presi¬
dent and General
Manager, has
been
elected President.
Mr. Rae
New York Agent for the bank
from 1926 to 1929. A. C. Ashforth
was
has
been, made
and
Thomas
General
Manager
Wilding has become
tj the
President.
*
S?
an-
Ri
Secretaries
R.
in
Morris, Assistant Secre¬
in
the
Personal
'
*
•
44
*
an
record
at
■<
.
to the Bank of the Manhat¬
tan Company two years ago from
the United States Trust Company
the
Walter
Philadelphia
stock
dividend of
close
»;«
of
Trust
Di¬
*
Chesebrough
has
business
William
Harold
W.
bank's
board of trus¬
appointed
board
of
directors
Dec.
on
11
as
P.
an¬
by John
C.
Arthur B. Richardson
Duhring Development Com¬
•
*
tt
'
banking
30 years
Edward S. Frese, who has been
associated with the Grace National
officer of The National City
Bank of New York for the
past 17
New
in
1946
entered
in
Manager
as
1947
of
Mr.
the La Salle Na¬
as
Manager of its
credit department and will con¬
tinue in that capacity. He former¬
had
been
Louis
for
during
as
associated
National
years
served
*
than
more
before
bookkeeping department.
ly
*
17
with
Bank
of
the
St.
except for 3
the war when he
Lieutenant in the U. S.
years,
Navy.
:'!
A special
it
if
meeting of the stock¬
holders of the First National Bank
Birmingham, Vice-President, will
years, during which period he was
Assistant
Cashier
from
1944
to
retire
1946
to vote
at
York,
the .end
of
60th
announced
directors
on
of
on
James
this
B.
month
birthday,>the
Dec.
The
13.
.
,
National
Dec. 14 to in¬
the surplus of the
bank to
bined
action
increases
capital
and
the
surplus
which
pointed
has
time
he
was
ap¬
Chicago will be held
on
on
been
now
was
formerly Presi¬
rectors
on
Dec. TO authorized the
transfer
of New
vided profits to surplus, effective
Dec. 31. The proposed additional
York.
'
<
Sterling
%
4!
National
*
•
Bank
Trust Company of New York
from
nounces
and
an¬
that Lester H. Sharaf, in
The Bensonhurst National Bank
$77,500,000 to $124,of
was
director
Co.
of
Chairman of the
of
Miami,
dent of the Genesee
director
of
Jackson
RR.
the
the
First
Vice-Presi¬
Corp., and
a
Fort
Wayne and
Reynolds was
born in Jackson, Mich., son of the
President of the People's Bank
there. The Reynolds Spring
Co.,
which he
founded, was sold to
the steel interests for 'quite a bit
of money,' he
reported"
Mr.
*
*
*
,
At
f,
a
meeting of the board of
directors of Barclays Bank
(Do¬
minion, Colonial and Overseas)
Nov. 22 it was decided to
on
rec¬
ommend
the following dividends
for the year ended
Sept. 30, 1948:
A final
dividend of 4% actual
the A stock and B
oft
shares, making
for the year, less income tax
the standard rate of 9/- in
at
the
£.
Net
profits for the year
£649,873. 18s. 4d.;
£572,412.
peroted
are
last year
as
Boston Isv, Club
Elects Now Officers
BOSTON,
MASS.—The
Boston
Investment
Club held its annual
dinner meeting and election of of¬
ficers at the Boston Yacht Club
Tuesday,. Dec.' 7.
officers
ing
were
The
following
elected for the
com¬
year:
President: Clair C.
Pontius, R. t,.
Day & Co.
Vice-President: John J. D'Arcy,
F. L. Putnam & Co., Inc.
Treasurer:
William
H.
Jr., Tucker, Anthony &
Secretary:
John
Higginson Corp.
Qlaflin,
Co/
Ahearn,
Lee
Publicity Chairman: > Edwin J.
Pingree, F. S. Moseley & Co.
A
luncheon
held
was
for
the
at
members
from
of
New
York
City, Montreal and Toronto,
Canada, who attended the meeting
for
the purpose
aims of
of discussing the
organizations
mutual
our
and to coordinate efforts to
ulate
aggressive
stim¬
merchandising
methods
by
investment
firms,
aiding
the
individual
,
thereby
salesman.
The
New
Investment
York
Philip
was
Moore,
Association
of
represented
Schroder,
by
Rocke¬
feller & Co., President,- and Stan¬
ley Russell, Blyth & Co., Inc.
The
Montreal branch of the Junior In*
vestment
Canada's
las
Dealers
representative
of
Doug¬
Secretary.
The
Rodomar,
Toronto branch
sociation
Association
of
the
was
latter
As¬
represented by Rob¬
ert Wadds, President; John Greey,
Secretary, and William Wilder,
was
Past President.
Dec. 21
the question of increas¬
dent of the Bank Credit Associates
com¬
000,000, by transfer of $46,500,000
of
Vice-President, ing the capital stock by a $15,appointed Vice- 000,000 stock dividend. The di¬
$240,000,000 to $250,000,000. The the customer relations department
Board
has
at its 39th Street Office, has been
previously
recom¬
mended to shareholders, for ap-< elected an Assistant
Cashier of
proval at the annual meeting Jan. the bank.
it
if
if
11, an increase iii the capital of
the bank from
Palm
Greenhal!, Heck & Co.
Assistant
President. He
$172,500,000 by transfer oi/$10,000,000 from unallocated reserves.
This
at
also
and
organizations
Boatmen's
-
"He
board
similar
cals, Inc., and
•
from
House
director of Clifton Oil & Gas Co.
and
advices
tivities:
Dodge
assuming his
present position. Mr. Kennelly has
been employed in
Chicago banks
since 1928, joining the La Salle
been elected
pany.
Press
Parker
director of
B a y b a n k
Pharmaceuti¬
board
& Trust Co.
Beach
in
the
Florida
"TimesUnion" of Jacksonville also indi¬
cated as follows his further ac¬
Assistant
nounced
the
Chairman of the
*
Reschke,
and
been
President and
to
and
Cashiers of the La Salle National
Bank of Chicago by action of the
bank's
chardson,
J.
Kennelly
have
•
B.
Co.,
died on
of age.
,
int. the
of
crease
elected
_
years
City Bank voted
Mr. Marshall
of
Comptroller of the Currency.
The stock
dividend, if approved,
will be payable to stockholders of
Dodge
retirement
and
the
tional
shall had been elected President,
F.
Abbot
Goodhue,
a
Bank
Jan. 11, and to the approval of
on
President and
succeeding
*
National
declared
director of
announced that Lawrence C. Mar¬
in
6%, .subject to the approval of
stockholders at the annual
meeting
rick, Assistant Secretary in 'the
Banking Division; H. Clay Den¬
nett, Russell R. Roetger and Wil¬
was
*
Company
National
of
Provident
The board of directors of
*
that
Arthur
the
Jan. 7.
Charles Diehl, President of Em¬
City Savings Bank of New
York,
credit
War II.
.*
pire
nounces
A.
department since the
has been named an Assistant
Officer. He, too, served in
World
years
Miami, and the First National
Gables, Fort Laud¬
erdale and Lake Worth.
Associ¬
8%
vet¬
are
John
consumer
*
of
Co.,
Trust
h<
board
the
trust
war,
H.
bank's
of
Manager of the
consumer credit
department, while
William Weir Donaldson, of Glenside, who has been connected with
its
Lawrence C. Marshall
came
held
All
War II.
with
since
ardson also is
The
r m a n.
be
Wednesday in January
instead of the second
Wednesday,
commencing with the forthcoming
Assistant
Jackson
Wayne, who has been
identified
Out-of-Town Division; D. C. Mer¬
bank
i
will
third
C.
O.
World
of
the
following his
a
stockholders
of
Sears,
Bank
Bank
Vice-C h
William
erans
H<
York has voted to amend the
ByLaws of the trust
company so that
in the future the annual
meeting
will
and
department
as
was
H<
The Board of Directors of Man¬
ufacturers Trust Company of New
the
partment;
Thomas
H.
Sweeny,
Manager of the credit department;
Manufactur¬
After
the
*
of
G. Moeller of the new
banking department.
area.
as
Horace
business de¬
ing
business and
Graham B. Blaine
information
Named
were
has
;•
age.
that
on
trade
and
1.
ap¬
ment.
reached
economic
of
Jan.
on
Assistant Treasurers
Trust Company of New York
Hanover
vision; Gerhard Dreyer, Assistant
Manager in the Foreign Depart¬
had
maintaining up-to-date files
the appointments become ef¬
fective
announced that the
liam
who
of
All
Wright, President.
Mr.. Reschke
has been with the bank since 1936
and served as head of the discount
Central
taries
14, it
placed in charge of the "desk" for
each unit, with the
responsibility
Mitchell announced the
promotions of five others to junior
executive positions in the bank.
tees. Mr. Rich¬
Company
New York, held on Dec.
been
announcement by William R. K.
Mitchell, President. At the same
the
of
The
an
increasing its business."
"
F.
meeting
has
by the
directors, according to an
has
of
*
directors
staff
Inter¬
Treasurer,
has been promoted to the
post of
Assistant Vice-President
time Mr.
Fla.,
69
was
*
Heyer, who joined the
the
ter,
board
the
*
Provident Trust Company of Phil¬
adelphia in 1923 and since 1942
has served as Assistant
board of
Beach,
He
of Little River Bank
Trust
C. Dixon
Bank
-
named
of
❖
Trust
rector
Assistant Trust Officer.
'
member
7.
Secretary is Bertrand H.
Mallison.
Tradesmens
of the board's Trust Committee.
W. C.
an¬
Klee¬
system the map
Division
meeting
been
new
Kalb, and Assistant Trust
Assistant
Palm
Mr. Reynolds at his death was also
President of the W. R. Reynolds
ated
ert
Officer, G. Nelson Turner. Named
ada, has been elected Chairman of
Mr. Goodhue will remain
Secre¬
was
had
the
by Mr.
Higgins, Cyril G.
Joseph
L. Hockenos.
Elected Assistant Secretary is Rob¬
H.
and
Dec.
of
Vice-Presidents
and
desk"
of the world has been devided in¬
to a number of
geographical areas,
each of which is considered as a
trade and economic unit. An ex¬
national
Co.
Kress
in¬
man:
perienced
Trust
'Times-Union"
to
Clarence E.
are
1
*
Bank of Coral
Advanced
Carlisle, formerly Presi¬
dent of The Dominion Bank, Can¬
leader in
Norman
Assistant
P. A. Brock and
*
interna¬
here
made
Under the
Rochester
Rochester
hattan Company for 17 years, and
for 10 years before that was Pres¬
ident of a bank acquired- by the
but
Behlers; R. W. Billman; E. H.
Brummer; R. L. Dann; L. J. Fla¬
herty; C. G Miller;-G. J. Ruska;
were
who
*
Baker, Chairman, in his-annual
report to the stockholders on Dec.
7 (referred to in our Dec. 9
issue,
page
2386) - the company "has
grown and prospered." Mr. Baker
added that he (Mr. Goodhue) not
only "directed its operation wiseiy
F. J.
Wiebe.
Goodhue,
/Blaine's
:
and hence was not eligible
for
re-election.' During his ad¬
ministration,
said
J.v ; Stewart
Treasurer; W. F. Finley, formerly
Assistant Secretary; M. E. Gevers,
formerly Assistant Treasurer; W.
N.^Hartman, formerly Assistant
Treasurer, and J. C. Kennedy,
formerly Assistant Secretary. D.
jr. Giles, formerly Assistant Trust
Officer, was named Trust Officer.
taries
under., Mr.
year,
ficer.: Promoted to the rank of
Assistant Vice-President were: P.
T. )Arzee* formerly Assistant
A.
of
Manhattan ' Company,
reached retirement age during the
Assistant Treasurer, Assistant Sec¬
retary, and Assistant Trust Of¬
R.
Vice-President
in
company has
part
nouncement
President of the Bank of the Man¬
to .the
Elected Assistant Treasurers
placed
was
post of Trust Officer,
others to the offices of
12
a
general supervision.
Vice-President^
the
to
one
as. a. Vice-President
became
Company
May, 1947
Vice-
others
the
ail the out-of-town business of the
bank's main office at 40 Wall St.
also
Vice-President,
of
Bank
ance
time made public the
same
promotion
Assistant
was
the Bank of Manhattan
in January,
1932.
In
announced the promotion of F. A.
Cochrane
Co.,
Kidder,
Peabody Acceptance Corp., Bos¬
ton. In September, 1927 Mr.
Blaine
joined with International Accept¬
President.
Dec.
Chemical
Vice-President :;of
a
Tompkins,
Vice-President
since
1920, was designated Senior ViceOn
Agricultural
and
meeting,
the
associated with the Amer¬
was
Boston; from 1922 to 1927 he
partment in 1945 and continues in
in addition
responsibilities.
Seebhd Lieutenant in
a
ican
of
banking de¬
capacity,
as
Infantry from ""August,
1917 to
February, 1919. From 1919 to 1922
company's business on the West
Coast and in the Southwest. He
made head of the
—^
--
order
the in¬
"geographical
in
repeating
a
University of Beirut,
Beirut, Lebanon, a Trustee of
the Northfield Schools, Northfield,
Mass.
in
of
form in
the
American
that
engaged
the
the
*
Wiley R. Reynolds, President of
the First National Bank of Miami
*
which said:
system in its international Divi¬
sion, appeared in rather garbled
our issue of Dec.
9, page
2396, owing to an unavoidable
mix-up of type.. We are hence
of
of
others
*
Rochester, N. Y., announced on
Dec. 10 the promotion of six mem¬
bers of the bank's
staff, according
St
importers, exporters
tional trade the
Vice-Presi¬
in
Vice-President.
Mr. Ardrey entered the
employ
of Bankers Trust
Company in 1930
*
effect
to"
Lincoln
effective Nov. 30, by a Stock div¬
idend of $7,600.
Comptroller of the
.
improve the service
Trust
business.
utive
Avenue.
stitution
Trustee
Vice-President
to
change firm of C. D. Halsey & Co.
In 1934 he joined the United States
Company.
the
of
associated
.Bank of the Manhattan Com¬
pany and was assigned to the di¬
vision handling New York City
election of Alex H.
Ardrey, VicePresident in charge of the bank¬
ing department of the company,,
to a newly created office of Exec¬
G.
Arthur
the
H. Ardrey
Charles
York, to the
was
At
the
Raymond N. Ball, President of
a Vice-President of the
*
placed in charge of its
banking department. In .1946 he
Alex
that
Irving Trust Company, he became
dent
new
of
Currency.
i)s
An announcement
by President
S. Kleeman, of the Co¬
lonial Trust
Company
of New
elected
.;
Office
company, has taken charge of its
branch office in the New York
Central Building, 46th Street and
Park
merger of that institution with the
Tompkins
announces
Gambrell,
Colt,
President
of ot New York. He started his bank¬
Banker^ Trust Company of New ing career in 1925 with the Ameri¬
York, announced on Dec. 9 the can
Exchange National Bank in
New York City.
Following the
this
1948,
*
Bankers
and
Sloan
was
H<
Undi¬
30,
25
<2513)
capital Nov. 30 from, $400,000 to
$500,000 through a stock dividend
of $100,000, it is reported
by the
Inving Trust Company of New
CAPITALIZATIONS
as
$126,000,000.
profits on Sept.
$36,329,781.73.
4*
REVISED
A.
is
the surplus thereafter
will
BRANCHES
NEW OFFICERS, ETC.
B.
this increase
approved,
CONSOLIDATIONS
NEW
If
CHRONICLE
Brooklyn, N. Y., increased its
of
$5,000,000 from undi¬
To Bo Formed in NY
As
of
Stock
Jan.
with
tributed to stockholders of record
New York
15
so
that
as
of Dec. 31 the
capital stock would be $75,000,000
surplus, $65,000,000.
the
New
of
York
Green-
hall, Heck & Co., will be formed
stock, it is stated, would be dis¬
Dec.
1
Exchange firm
offices
Harry
A.
at 30 Broad Street,
City. Partners will be
Greenhall, John Heck,
and Edward Schafer.
Jr., the Ex¬
and the
change member.
Mr.
It is announced that the capital
of the National Bank of Commerce
in
Superior,
creased from
Wis.,
has
been
in¬
$275,000 to $282,600,
Greenhall
Mr.
were
Heck
and
partners
in
Townsend, Graf* & Co. Mr. Schafer
has
been
active
floor broker.
as
an
individual
26
(2514)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
prices
Analyzing the Business Situation
(Continued from page 8)
lhat
we
are
United
at
now
States
a
where
have
a
point in the
ness
situation.
the
forceful
moving
of
life oh the capacity of
people to
fouy has become a pretty risky
*thihg—and it is tending to get
Tmore risky all the time.
«in
of
a
more
expensive
There
is
second
sistently
become
business in
It
has
the
costly
United
costly to
Stanford
which
It
University, and
has
is
a
-from
since
point
of
said
of
-of
a
before
model
new
That is
.
the
reasonable
anything,
or
measures
the
over
what has got
pretty long period of time,
rnuch
longer than most people
imagine — that affects business¬
men's
And
calculations
it should.
all
the
time.
It would not be
a
well-conducted
business system if
phenomenon of that kind did
.a
not
'
directly and constantly affect
their judgments in the
future,
You heard Mr.
Dodge's speech
that
true
you
in
are
that
they
that
some
business
reason
turn,
then these
backlogs disappear, and
nobody knows where they go. It
like
is
It
money.
like
this
plethora of money which we talk
about which is a plethora when it
is doing the
today
a
—
when
the
pens to
things it is doing
disappears somehow
and
business situation
hap¬
change.
I looked back at the 1920
period,
and I don't
it.
to
We
policy, and
it
know
not
kinds
risk
of
of
risks,
doing
nothing,
and
yourself which kind
we
people
give
you
and
we
We
took
faced
the
Let
in
1927,
doing
of
nothing; and because
doing nothing,
we
took the
we
got
into
risk of
an
infinitely
what happened
And
that
doing
in
1929.
having made
tion
up
mind
your
character of
this
situa¬
is,
-
many decisions that might have
been7 made in one
direction will
Hot
be
made
in
that
direction
again.
There is
a
correlary to that, and
correlary is this: It takes a
phenomenal volume of business—
-the
when
and
"phenomenal" I
it—in the United
States to¬
mean
day
I
to
say
make
being
the
made,
money that is
haven't got any
I
"time
to talk about
is too much or too
whether
ever
volume of business to
do
You know when
'
that
little, but what¬
it is, it takes a
phenomenal
it.
within
multiply
reasonable period of
time,
a
the
backlogs disappeared.
They must have been substan¬
tial, and I will tell you how know
they
there
were
break in 1920,
—
1921,
because, the
was succeeded
by
a perfectly enormous increase
in production of commodities like
automobiles
They
out
were
of
the
existing
clear
back¬
What
people
want
to
bear
then there is
■five times, six
times,
(and if you look at
log—and that is that part of the
backlog that at any given time
Will
are
tion
on
what
see
times,
times
seven
figures
they look like)
you
you
doing
something. The ques¬
how long can you count
continuing to do that thing?
is:
(and that
people
future—the dependence
moment.
in
come
business
a
orf
an
whose
in¬
an element of great un¬
certainty and weakness in the fu¬
ture business
situation.
So,
those
two
edge,
and
error
for
^
American
them.'.;
-
a
Let
me
it
would
,■
be
a
observer
any
scene
add
features
.!t)
to
grave
of
the
,
goes
on
today
are
three
an
factors
is
perfectly
sound. talk and perfertjv obvious
and it
turn3 on this original
issue of mine as to
whether we
talk,
in
number
of
things,
more new
than, i.t did 20 years ago,
might speak about "it or
that relates to
the
ways.
a
question I
way
am
talking about, to this issue.
to
labor
I
think
said what I have said I
dispose of that very quickly.
can
I said I wasn't
going to make
any
predictions—and I don't have to.
The fourth round is already under
That is, there have been
fourth round increases and
way.
some
If
have
we
going
to
some
talked about.
fourth
a
be
round, it is
reluctant
that's
reluctant
a
might almost
it is going to be
say
both
on
I
round.
advance;
sides.
Well,
that's
progress.
Both sides will be reluctant about
it. The business side will be reluc¬
tant
because
wise.
be
they
And
reluctant
think
the
don't
labor
think
side
because
they
wise, either.
it is
it
will
don't
Now, when both sides agree like
that—I don't say they are
agree¬
ing in public, I am reading into
they think about
certainly isn't up to me
this—it
whether
say
It
pens.
because
is
to
still
more,
no
an
it
fuel
nobody
fourth round is
not. It certainly is
Or
is
a
matter what hap¬
undesirable thing
going to add more
fire; it will feed it
this
and
any
it
I want to make
ment
about
is
going to
good.
the
do
'
,
general state¬
welfare—
about
welfare of what we call
labor, this big slice of the
popula¬
tion that is in the labor force, the
60
million,
that portion of the
60 million that
comprise it.
or
Historically
—
and this is
com-
The more government
does, the "mon sense, and this is
logic —
eostly government becomes. historically,
they make their great
And when you already have a
gains when prices are
more
highly costly situation,
falling; and
an
expen¬
they
retain
for
them
later;
and
I
when
going
are
bal¬
to
salt
it
be
can
second
my
that
as
1929 with the
to
spend less. I don't know, but
think
done.
time—and that is
a
proposition—to
begin,
cutting costs, hard
do. Not to thinjk
to think about
about
is
to
about it, but I mean to do it. This
is the time to think about
cutting:
have
we
you
This is also
everybody
which
on
away, to be
saving, be¬
need it,
and because
economically it is a
sound thing to do—to save more
peak
figures
much
very
stage. That's
And
if
these
you
until
this
United
later
rect.
tremendous figure.
knew the history of
a
kinds
to
of
70%
a
increase
in
take
me
have
we
ferent
a
of
the
of
the
1948,
1939
real
and
September,
'of, wages in¬
rate
there is a difference for
you—increased 19%. That shows
September, 1948. And the
and
is
if you go for a fourth
and its
aftermath, you can
well take it for granted it
it
going to be eaten up. And you
needn't blame anybody for it. You
can't blame it on profits, and
you
not
are
going to deal with it on
control, and you are not
price
going to
stituting
the old
deal
with
it
by
sub¬
Taft-Hartley Act for
a
Wagner Act. It will, in my
judgment, make things
That is my diagnosis of
humble
worse.
this.
the
is
unstable
an
unstable
situation,
situations
not
are
good to perpetuate. It is not wise
to
follow policies that tend to
make them continued because
you
onlv
add
to your future diffi¬
culties.
So
as
labor
is
concerned,
on,
the
be
cut
I
the
to
that
say
being
we
to
—
possible,,
as
to
way
of
make them
and
to
cut
excessive-r-or,
to
it
put
afford
things
in
inflation
not
really, but you think you do—and
can't afford it in
you
correction.
a
period of
.
So my third piece of advice is-,
that if we, by some stroke of
fate,,
into one of these situations;
fall
•which
I
have
various
been
names
giving
to,
the
theseeffort
should be not to ask
somebody to*
bail you out—because it will makeit
that's
worse,
foregone
a
con¬
clusion.
if
and
the
American-
people
again
reach
the
point
where they are going to ask
gov¬
ernment to save them from them¬
selves, that's going to be bad. It
is to the interest of
everybody in
the United States in
to
business, in
among labor, and in
public, to learn'what
difficult thing. I have
propositions
you,
arid they
you
propositions
are
what
are.
some
gen¬
to
lay before
perfectly ob¬
these
They
general
given
a
not
are
njles of conduct, because
who
I to come * here
and
coridute!; < in
questions
like
are
and'
to
them
by their own efforts.
And if they don't solve them
by
their
own
efforts, they
into something much
mi
are
going
worse.;
m
•
————?
Two With Kinnard
do—and
very simple, but to tell
how to behave, and I am not
that kmd of a person
anyway, is a
eral
the general
diagnosis
my
ousht
voU
of
others
brief
cooperate
carry
always the hardest Dart of
speech; to tell you what is the
rules
than
as
only
is
out
solve
matter is
vious to
see-
are:
this way—cut out the
things your
can't afford any more. You can
these
which is what you
hope to
with you in the future.
Well,
we.-
the dead wood, which means;
a little
harder, to cut out
carelessness, to cut out waste, to
they
large measure (if not
illusory gains, and they
eating up
past
gains,
very
totally)
what
coopera¬
order—what
to work
will be
as
years,
will
cooperatidp,,
need
industry, and
far
their gains from now
have been in recent
in
need
you
first
them
When
This
and
that
as
away
a
And
pretty
costs
some
hard
my
pleasant
brief
picture
you want to carry away with
you,
as
to how a long historical
gain
can be eaten
up by an inflationary
period. And it is being eaten uo
round
save
am
make
ing
employees
in
the
United
States, 17 million of them, in¬
now.
to
business,
where
of
more
real
rate of manufactur¬
There
always
inflations, and it
or correction—you
giving you the option
choosing if some of-the words
I
September/ 1945
2%.
in¬
adjustment
>
wage
of
try to do is to make the
depression or the recession or the-
Then I take another
period still
closer to home,
to
margin
have to
what this eating up process is
hourly
and
really
you
tion
Now,
you
with
then
here's
19%.
like.
that
third propositions
is a perfectly terrible
one/ but it.
it my last
one, and it is this: If
we
get into trouble, then what,
we ought to do—and here's where:
eradicated in part. Between
creased
cor¬
to
doing
And
things that happened, and
in cost of living have
end
is
may seem.
falls
past
it
a
begin to think that itis time to get rid of these ineffi¬
batch of dif¬
new
time
ciencies
another
figure
home, 1939, the
with September, 1948.
end of 1939
think
great margin of
And if you just got
on
associated
is
which is closer to
•Now,
work
I
is
money. Inefficiencies were
real
70%.
was
heard
efficiency—I mean cooperatively
—you probably could save a lot of
hourly—real rates of wages, and
Let
and I
here
by
States.
There
inefficiency.
things, you'd say
something you couldn't
duplicate. It takes a long time to
make
tell,
other
today
and
by
your
speaker at lunch, there is a great,
margin
of
inefficiency in the-
depression, be¬
prices fell and then didn't
cause
to
cited
speakers
know when most of that increase
took place, in the
rise
able
are
you
that's
a
labor
something
1929
ber, 1948 increased 70%. And
their minds what
Of course, government does
.vou
me
round.
having
•desirable
likely to do, or intends
enormous
and
brings
fourth
undesirable,
to describe it in
third which is of
different kind. Much of the
talk
that
there
discontinue describe it in
many different
j
'?
Rut I want
a
given
a
the situation which tend to char¬
acterize it, and I want to add a
fourth. The fourth' is what gov¬
to do.
that
the
and
to
ernment is
are, I
of common knowl¬
think, matters
more
Ccstly Government
So,
Labor Problem
Well,
is
it may not look like it at
costs
inesses
part of that back¬
a
expensive, backlogs are
constantly changing their charac¬
ter though to outward
appearances
are
constantly rising on an abso¬
lutely phenomenal volume of bus¬
limitless); and
You have got to bear that situ¬
ation in mind. With
rising prices,
life becoming more costly all the
time,
a
is
afford to buy.
can
business point of view—
and from a
business point of view
I mean from
the point of view of
the outlook for
business in the
From
with.
deal
month
creased
in
say ten years, the business
volume
•of a succession of firms
four
to
are
always two kinds
backlogs, the one backlog which
a
backlog of things that people
want
ficult
there have been
mind is there
is
things
Now, they
that.
just didn't arise
sky.
logs.
the
all
and
with
connected
of
you
and
reason,
ance.
seven
books
a
call real wages—in the United
States between 1929 and
Septem¬
been
and what it is likely to
to, you can't stop at that
point. You better go to the next
point and say: "Well, that means
lead
recall—thdugh I was
today. There is a build- around
in those days and was in¬
ing-up of debt. There is a plow¬
that sound practical policy as of
terested in the business situation
ing back of money into the busi¬
this nature." And what it means
—anybody
ever
saying anything in the
ness, and that is
present situation is that it
becoming a co.n- about
backlogs at that time.
I
'stantly more expensive thing. And
is unwise to add
inflationary* in¬
don't know if
they did or not. fluences
when things become
more costly
to this present already
Maybe they had another word for
•like that, and appear to be
con¬
highly
inflated
situation.
Because
it.
But
there
must
have
been
tinuing to do so, that makes de¬
if you do, you are
going to make
enormous
backlogs
in
1920.
And
cisions for the future more un¬
it still more
unstable, and make
yet the business broke in 1920 for
certain, and makes it likely that
the aftermath infinitely more dif¬
some mysterious
•at lunch
wrote
this:
costs. I don't think,
if you got
cooperation, that that's an infi¬
nitely difficult matter, an in¬
superable matter. So far as we-
that
You have got
to make up your minds as to what
the character of this situation is.
And
which
simple
is
This is
save.
these things matter
This
is the time
cause
cause
a
first
to
,
you.
save
their money even
though
that might reduce retail
sales, be¬
know,
of
The
time
a
are
figures in 1948, the real hourly
earnings—I will tell you what I
by that,
the
purchasing
power of hourly earnings, what
is
back and look at it.
what the
was
last
is
before
They
time to be parsimonious. If I
were
a leader of
labor, I'd tell them to
you
that that's
our¬
greater
always true in a
society.
You can't sit
complex
it
City—but
ideas, general
them
put
few.
are
propositions.
This
good the
so
York
Saving and Economy
me
They
mean
me
of
selves
More
from
you,
the
was
and
us
latest
for
nothing. We took the risk
risk of
thing
New
are
Let
we
it
risk
but
—
If you compare
us.
the
like this one, though not
identical with this one, in 1927
1929.
if
in
general
propositions.
to the United States and ad¬
came
spedts
and
this
year,
during
mired
situation in many re-
a
after
years
illustration
concrete
a
We faced
in
good
a
year
you
see
going to take.
are
they
no
year—1929
risk most
of
how
you
though it didn't look
from
face
you
going
on,
was
moment, and it is
a
show
yourself very much good.
If you start in 1929—and
know
we
holiday
matter what the pro¬
vocation, you are not going to do
academic discussion,
discussion.
It
relation
face the risk of acting.
You
can
pretty well
a
or
keep
now
situation of this kind if worth
a
two
dis¬
curve
point—to
When you confront a situa¬
tion of this kind you
always face
are
should, for
this
this.
today—enormous backlogs,
big inventories, both of
other,
is
an
practical
is
a
recalling for
very
But
a
is
necessary for the con¬
tinuance of that business.
iness.
it has increased
because
conditions
which
-increases in the cost of
doing bus¬
to be
it
closed
and
these
as
percentages
you
same
num¬
This isn't
of
business situation, then that
business situation not only now
but all time in the
past, arid you
can
make
a
pretty good
guess
about the future, will disclose the
was
(1As that cost increases—and
perfectly
in
we
good
$75,000,000.
,not think
any of these index
bers,
If
big increase, and I do
a
are
risks
today alone, but
know it from past history. And
what we know from past
history
something else at
thing of that amount—or, anyhow,
by a large amount—and you will
have a perfectly good
percentage.
He
an
by the
risks.
grave
this
what
multiplied your busi¬
ness five-fold, you will have mul¬
tiplied your inventories by some¬
introduction
was
of
added
unstable
has
take percentage that in¬
are
direct and
a
be
situation.
And un¬
stable situations do
not
last.
I
said that has a relation to
policy.
big, or else you
big volume of busi¬
a
poten¬
So, my conclusion is that this is
an
same
situation, they
when
the
1948)
big.
know
ness
away
$15,0011,000. And he said
retooling now (which
situation, and
that particular phase of the busi¬
very
cost of
..in
the
ventories
paper
One of
this figure:
was
is
kind to
it
to
have got added
you
al¬
are
business is
If you
cost
of
retooling for
Chrysler before the war when
4hey were introducing new models
was
*
mind
my
proposition
ness.
paper
interesting and got tucked
•in
a
couldn't do
circulated.
was
make
costs of
new
detriment,
own
up for a time,
how prices go up.
gets into a situation
on
labor
©f this
kind
where
prices are
steadily mounting almost without
interruption, those rising prices
eat up their gains, and
they eat
them up pretty
swiftly.
We tend to forget the
past, and
I want to give you a
couple of
figures—the only figures I have
got today, which illustrates this
government, or in the act of being
added by the government, then
thing is true
inventories. Inventories are big
of
Keller,
view.
to
And
when
more
one
interesting
very
this
been
-the figures he gave that
:
ity.
to
States.
the speakers was Mr. K. T.
of
Chrysler. He i read a
Backlogs?
backlogs. Backlogs
big when business
ways
United
States.
I
listened
to
a
speech out in Palo Alto last sum¬
mer at a
business conference at
,
Great
its
to
have added
you
tially
Otherwise, there would not be big
business, or great business activ¬
business in the
carry on
expensive
and
have got great
we
We
want
about
feature
consistently become
*
*
more
advanced to
situation is stable
indirect
Have
closely related to this, but it afiects different people. It has con¬
-do
sive situation, which, in my opin¬
ion, is going to become excessively
arguments
backlogs.
Doing Business
a
unstable busi¬
of the most
an
One
is the fact that
I
High Cost of
or
that the
prove
way
stable
going
are -
depending
When
Thursday, December. 16, 1948
MINNEAPOLIS, MINN;—Richard W. Wigley of
Mankato, Minn.,
and George Fleissner of New. Ulm
have joined
Kinnard
&
the- staff of John
Mr.
Wigley
the
Hamilton
Co.,
Baker
was
formerly
Trust
G.
Arcade.
with
Co.
■
—
•B. C.
(Special
:—
11
*——-—~
•
'
Ziegler Co. Adds
to
The
Financial
Chronicle)
am
WEST BEND, WIS.—Luther G,
you
Medley is with B. C. Ziegler and
Co., 215 North Main Street.
week
of
Volume
Number*4760
THE COMMERCIAL & FINANCIAL CHRONICLE
-Mr'•
;
(Continued from page 19)
ing
the part of American in¬
on
dustry is the kind of
thinking
which inevitably will lead to the
lower levels of production—lower
levels which spell
unemployment,
reduced income— in brief,
depres¬
-
sion
with its misery and chaos.
If is the old false notion of
mak¬
ing
profits
levels
of
prices
through
instead
of
and
high
making
level of profits
same
moderate
production
the
at least
or
a
The claim is
a
absorbed
by
incomes
and
are
exorbitant
wit¬
are
claims
present
ness
dynamic
economy could be perpetuated in
ing to buy the products of these
industries.
The Textile and Shoe
America
industries
profits
If
<
'
•-"•••-
could
industry
realize
that
a
be
made
stable,
the basis of maximum
on
production and low prices it would
be a major
accomplishment. But
instead,
industry
figures
some aay production win
be
curtailed
still
wants
and
to
that
on
make
accomolish this,
a
that
have,
co
day. it
profit.
To
therefore, indus-
tjry sets its prices to make
at
the
low
level
Consequently,
and
creases
this
tween
creates
demand
inevitably
that
'
bring
distortions
and
lead
supply which
to
imbalances
on economic
Economic
be¬
reversals,.
Consequences of
As
,
result of these practices by
a
soar: to
all-time
new
serious distortions in
highs,
(1)
national
our
income occur;
(2) serious malad¬
justments develop between prices
and income levels; (3) the seed
of the next depression are
germs
being laid; and
increase
and
expand
to
soar
highs,
new
do
so
at the expense of
segments of our national
income.
Profits increase because
other
and
present
inflationary period but
which spells
serious foreboding
for the future.
It would be for the
good of all
stered and
The
Shoe
and
industries
third
point.
bined
with
which
will
This
the
practice
the
discussed
kind
of
the
temporary
taking almost 15%
half
of
1948.
the
.other hand, compensation of
ployees took 67 %%
tional
61%
income
in
1939 the
a'
of
em¬
our na¬
and only
compared
situation
share
to
is true—
national
our
going to corporate profits
lesser
a
1945
Even
same
greater
income
and
in
1948.
of
in
On
share
compensation
of
going to the
employees.
In¬
stead of this
of a
Program,
fense
and
etc.
Do
armament
not
misunderstand
feel
we
that
the
..
"In
future
a
omy*)
consumer
penditures
will
require
in order to
share
for
expanding econ¬
V- income and ex¬
(everything
duced."
that
larger
a
assure
markets
can
be
pro¬
i,
r. oa
expanding
armament
and
defense
that
We
must
ments that
a
are
full
production
keel
...
have increased much
than
have
cost
the
incomes
American
of
mass
of
living,
more
for
in
with
we
the
thinking
fallacious
of
big
and
expand
capacity is
curtailed
by
the
any
enter the
float
a
duction has
no
increasing
drive
to meet the
increasing demand for
American
pro¬
products.
This
many
is
an
extremely dangerous development
if
we
dynamic
be
are
to
maintain
production
economy
increased
a
and
capacity
tion does not have to be
factors
to keep
given to
the' business
.
.
maladjustments
between
prices
in
scene
curing
small
and
..
.
however,
with the claim that it
cannot
se¬
market.
ment,
is
fallacious.
Industry has
not made the kind of effort which
they should make in order to. de¬
velop sources of venture capital.
Of
course
to look at the
the amount of
through
would
flotations
figures of
money secured
securities issues,
new
conclude
capital
new
new
is
of
that
not
one
much
secured through
Considerable
stock.
secured
through
However, we
must look further and deeper into
this problem. Just an examina¬
bonds
tion
of
are
and .notes.
the
statistics
of
new
se¬
measured by the Consumers' Price
Index of the Bureau of Labor Sta¬
and income as well as
distortions
in
our
national income/
These
curity issues does not answer the
problem or permit us to draw
tistics
distortions
satisfactory conclusions.
has
risen
over
37%
since
early ? 1945 while Mbome in term?
of average
facturing
a
little
weekly wages of manu¬
workers has increased
over
that average
13%.,
This
means
weekly earnings
as a
are
creating economic
For
situations: which result in the de¬
struction of production incentives
ample, the present stock
and
ability
many
other factors
lead to-economic chaos.
This Committee has
a
which
.
.
major
-
V
re-
ket
does
From
not
of
all
.
view, based
reflect
the
American
reasonable
on
ex¬
mar¬
profit¬
industry.
..
points
production,
the
•
stock
the
market
might be altered, hut it is the lack
of faith
in
the future of America
which is being discounted by the
American investor.
:
,
,
If the American
economy could,
be made to operate on a fair and
equitable basis whereby the mass
of American people could
buy the
mass
production goods of Ameri¬
we
would have a
can
industry,
and
prosperous
profitable nation
in which there would be no
scareity of equity capital and no prob¬
lem of the stock market discount-!
ing the future of
nation.
our
One reason
why industry is not
floating new security issues and
receiving equity capital has to do
with
the
dividend
American
prewar
corporations.
of
In
the
corporations were
large share of their
years
distributing
profits
policy
a
after taxes.
However, in
1929 70%
of the corporate profits
after
taxes
were
distributed to
stockholders in the form of divi¬
dends.
A little
larger proportion
distributed'
was
in
the
prewar
in
1936-39.
However, in
approximately 40% of the
corporate profits after taxes were
years
1946
distributed
in
dividends
and
in
1947 less than
40%, and currently,
about 35% of the corporate profits
after taxes is being distributed in
dividends.
Maybe the stock mar¬
ket
would
ability
the
reflect current profit¬
American industry if
of
shareholders
the
distribution
the
same
in
the
Of
it
participated
of
extent
prewar
dividends
which
of
the current profit
derived.
;
are
•...
*
*
It is further
claimed by
sentatives
of
business
well
as
,
*
industry
repre¬
and
big
they did-
years.
industry
course
in
argues
that
qannot distribute dividends be¬
cause
it
must
retain its earnings
in order to
meet its
for capital.
On the other hand if
are
greater need
or the egg. However,
firmly convinced that the
porations
as
faith
America's
in
well
as
the
lack
future
St
It
has
*
been
of
sentatives
and
of
has
repre¬
industry and
also
as
the
busi¬
claimed
dollar
them to be.
because
a
figures
indicate
This they say is true
large
costs.
This has reference
problem of deprecia¬
tion allowances.
It is claimed
by
these
representatives that indus¬
try should be permitted to depre¬
ciate old property and old equip¬
ment at what it would cost to re¬
place, such equipment today: The
regulations of the Bureau of. In¬
ternal Revenue permit
industry to
depreciate the original cost of
plant and equipment. It must be
understood that there is nothing
in
the
Bureau
of
Internal
Rev¬
enue's
regulations or in the tax
that prohibits corporations
laws
from
depreciating
plant
and
equipment at current costs if they
build such plants at current costs.
However, if they build such plants
at
the
cost
of 5 to 10 years
ago,
it would be unfair and
extremely
fallacious to permit them to de¬
preciate these plants at costs other
than actual costs.
Would
make this point about
ing
industry
depreciat¬
equipment
at
current
day
costs if current day costs were
less than they were 10 years ago?
We
and
do
think that industry
not
their
representatives would
before this Committee and
come
make such
costs
claim if construction
a
less
were
today than they
They are mak--
10 years ago.
were
ing the claim solely in
effort
an
to
explain to the public the high
to
which
profits
have
soared/ Put,another way, what if
prices start to decline tomorrow?
levels
How would business adjust a de¬
preciation policy to a fluctuating
price base?
Industry can depre¬
ciate its equipment and plant at
current day costs as long as it
constructs them at current day
costs.
There seems to be
disagreement
cqnsiderable
industry
between
and its
accounting representatives..
Many
accountants
mended
have
against the
recom¬
of
use
a
fluc¬
tuating depreciation base.
Again
with
repeat in ^connection
we
both
the
inventory profits
depreciation policy that
industry has devised these two
arguments currently only to ex¬
plain away the currently high
and
the
levels of profits,, If
prqfits today
low and not being attacked
were
for
being
too
*
high,
industry
would not be engaged in a propa¬
ganda
campaign
to up
deprecia¬
tion allowances and to deduct in¬
ventory profits.
There
by
again the
other day by Dr. Sumner Slichter
that profits are not as high today
ness
actual
*
claimed
as
that profits are not
to
amount
of
cor¬
.
counters
venture capital on the open
This claim, in our'judg¬
cure
full
of
employ¬
market.
se-
r.
and
situation
full
something to do with the equity
business¬
new
promising in
being the oppor¬
maintain
dividend policy of American cor¬
easier
much
,
Industry,
of
more
there
to
ment
we
producer
the problem
capital
new
men.
t
tunity
attempt to
an
were
terms of
series of stocks to the
make
to
extremely profit¬ •portions
It is fairly obvious that
high
profit levels have created greater
an
able level.
large
future
the chicken
public.
If, on the other hand,
large companies did secure equity
capital from the public, it would
for the
or
the
new
out
of
as
interest
equitv capit*1
stock
transactions,
it
extremely difficult
new
businessman
to
for
tend
must
best
receive
through
Industry realizing
that
it
can
make high levels of profits with¬
expanding
if
not
becomes
in
operating at
example,
does
economic
business
we think will lead
into an inevitable collapse.
The incentive to increase pro¬
and
the
earnings has a tend¬
to eliminate new competition
because
America which
ever
in
not
a
ency
this
call¬
are
prices
rapidly
the
is
the stock marke
discounting the future. If the
course
industry did distribute dividends,
the equity capital market might
be considerably different than it
is today.
It seems as if we have
the problem of which came first,
of retained
Therefore,
it
is
thought in mind that
Cost
people. ..The
modernize its facilities and
dynamic * economy., This
practice of expanding by the use
props
the
case
a
which
ing to the attention of this Com¬
us
industry, however,
new venture capi¬
profits ar«£
profits regardless of how they
to the Whole
profitability of American in¬
is
own¬
capacity, if is engaging
serious monopolistic practice
of
Advisers
clining: as has been the
the/past decade.
Since the war period
in
even
temporary
enlarged. number of
As long as
tal to
subside.
mittee
the
employment and full
the
a larger
larger share of
operations.
If, on
business'
economy
when
of
expand
necessary to main¬
an
number
or va
does not secure
develop¬
on
limited
a
larger number of people become
a
consider., the
economic'
This
shareholders and the managers of
the business become responsible
as
therefore
larger
business.
the other hand, new venture cap-,
is secured from stock issues,
temporary expendi¬
they will not last forever.
tures
a
ital
and
and
that
of
owners
expanded
proportion
peace
When industry is pushed to re¬
Council of Economic
clearly recognizes the duce costs to make reasonable
need in an expanding economy for profits!, it is more inclined to mod¬
the compensation of employees to ernize,; improve
efficiency and
be ever, increasing rather than de¬ expand than it is when considera¬
Here
When
people continue to control
programs
essential for American
*
means
Recovery Program and the
pean
are
and
our
exoanded.
:
retained earnings in
own
continue to be
Euro¬
present level of corporate profits.
:
re¬
used, to modernize
production facilities
listic tendencies involved.
program,
taking
.'
be
be
must
operation.
It
is
dangerous because of the monopo¬
de¬
considerably
'
profits
extremely serious situation is
When industry rein¬
an
Euro¬
a
duction
specifically, said:
net
to
vests its
earlier
of pur national income should be
a larger proportion of an
increasing national income.
F6r example, the Council of Eco¬
nomic Advisers, in discussing the
long
range
economic
program
to
aggravated
situation
occurring, the com¬
pensation. of employees component
ever
like
a
expand
An
my
com¬
props
Recovery
pean
tain
while
should
We
depression will be in¬
evitable if the economy were not ample,
to expand capacity, the
receiving shots in the arm through present owners of the business
1945
first
depreciation
economic situation
must consider that
dustry. Of
to
retained earnings are used, for ex¬
concomitant
.
of
tained
and
a
the first half of 1948, we find that
corporate profits before taxes took
11% of our national income in
the
is
tions
general practices
have
we
create
wherein
to
me
aside
scarcity of venture
capital and that as a result por¬
tify the present price structure
leads
set
"inadequate"
there
demand and supply in
a point which will
jus¬
situation
be
First of all, the contention that
doing just the opposite. They
are
attempting to bolster their
present price structure by reduc¬
ing
production
and
eventually
"This
must
allowances.
are
,
; In comparing the year 1945 with
of to¬
discuss with the Committee these
claims by American business.
production maintained.
Textile
such
as
tion
concerned if prices were reduced
so
that demand would be bol¬
ers.
.
...
parts
are
guard against inventory price de¬
Industry also claims that
profits do not take into considera¬
ment
prices
large
clines.
occur.
when
facilities.
expand
purely
book
profits resulting from increased
evaluation of inventories. Indus¬
try claims that inventory profits
to
and
and
Further, that
day's
profits
increase faster than wages, serious
distortions in our national income
increase
and
modernize
are
security: Yet we simultane¬
ously realize and sincerely hope
that
these
are
only temporary
expenditures of our Federal Gov-
prices
of
ing of American industry which is
cannot be considered actual
so
profits
dangerous not only in this
position,
lessened.
are
profits
they
incentives to
production
capacity
As
(4)
levels
ciently large quantities to replace,
balance at
American industry in the estab¬
lishment of its price
structures,
higher and higher profits, quarter
after quarter, are made. As
profits
un¬
because venture capital
not available for use in suffi¬
is
example of the self-interest think¬
bringing
Soaring Profits
that
as
Industry
are
essential because, of
the increased costs of
doing busi¬
attempting
to
remedy this situation by curtail¬
ing production instead of curtail¬
ing
prices.
Again
we
see
an
in¬
decline, profits
resultant profits de¬
prices established on
from
basis
production
as
costs
The
soar.
rived
a prpfit
production.
of
not
are
levels.
to
of
and
conscionable
profits
production.
.
industry generally that profits
are not high and are not
today
because
insufficient to pur¬
consumers
chase these products. We
made, by business
of the current
we
the stock market does
not reflect
the
why
is in the process of
leading
situation where the products
of American
industry will not be
come
to
27
by Dr. Slichter
as high as they
are indicated to be
because indus¬
try does not charge off "all of its
.
try where prices are already so
high that many people are refus¬
level
through low prices and maximum
f
picture of American industry, the
level of stock" prices should 4 be
vmuch higher than they now are.
result of rising prices and: in
spite, sponsibility in its investigations of Stock.prices have pot risen in re¬
of three rounds of
wage increases the profit picture.
It must get to lation to rising prices.
This has
purchase approximately 17% less the roots of the
present situation resulted in the hesitation of people
today than it purchased in Janu¬ which gives rise to
the exorbitant to invest in the stock market. With
ary, 1945, when
weekly earnings unconscionable level of profits of this hesitation goes the scarcity of
were at their wartime
peak. This American Business.
equity capital.
,t
distortion between prices and in¬
But we must ask ourselves
nessing this situation in the Tex¬
tile industry and the Shoe indus¬
reasonable
(2515)
*
porate profits are really fictitious
profits secured through inventory
adjustments.
This is just an ar¬
gument devi$ed by management
apd business representatives in
are many other problems
connection
with
the
whole
in
scope
gation
in
of the Committee's investi¬
which could be taken up
greater detail in the course of
testimony.
However,
We
this
have
touched
phases
that
and
this
the
majpr
sincerely hope
investiga¬
upon
I
do
Committee's
tion will really uncover the true
facts in the light of the situation
as
it relates to profit figures in
American industry.
.
-
t
In conclusion
might we say that
attempt
to
explain
away
the the CIO feels: (1) an all-out at¬
present high level of corporate tack must be made upon the monr
profits.
In the judgment of the opolistic and self-interest prac¬
CIO, profits are profits regard¬ tices of American industry; and
less of the source from which they
(2) an excess profits tax and un¬
are derived. Inventory profits are
distributed profits tax must be
enacted in order that the present
money and the money can be used
by the corporation for whatever high levels of speculative profits
can be taxed away. We
purpose they see fit.
sincerely
an
Many corporations have shifted
practices so that
they no longer reflect inventory
profits.
This
has
been
done
their accounting
through the adoption of the UFO
method of accounting.
On the
other hand, corporations that have
not
adopted LIFO have a tendency
hope that the results of this Com¬
investigation will lead
other things to such recom¬
mendations to the incoming 81st
Congress.
;
: Y
mittee's
among
——
inventories
count
the values of
and
inventory
in
this
their
dis¬
way
profits.
If
in¬
ventory profits are not to be con¬
sidered real profits what are they
to
be
considered?
In
the
light
—'—
To Be Lewiiwon & Sacken
1
to understate
i
On
Jan.
2
the
firm
of
name
Sydney Lewinson & Co.* 25 Broad
Street, New York City, members
of the New York Stock Exchange,
will be changed to Lewinsom 8t Sacken.
v
28
THE
(2516)
The
Financial
CHICAGO,* ILL.
Hammel
has
Joseph
—
CHRONICLE
(Continued from page 5)
CHRoncit)
become
with Straus &
FINANCIAL
The State oi Trade and Indnsby
Straus ft Blosser
to
&
week.
Jos F. Hammel Joins
(Special
COMMERCIAL
ineffective,
j
F.
"The Iron Age," national metalworking weekly, in
says
The steel
But there is no sign- of a falling off in steel production.
Nor is
there any chance that supply will outrun demand for at least the
first half of next year.
After that it is anyone's guess, but before
in. order such things
guesses are
European
to be
gaged.
labor impasse, defense demand,
as
the effects of
arms and
a
fourth round of wages will have
,
Demand from the oil
.
industry, from
gas pipeline firms and from
heavy most of next year.
A dark horse in
the present steel picture is governmental and state sponsored con¬
struction. This may mushroom if reports of unemployment become
widespread. Layoffs have occurred in the metal industry, but they
the
are
Salle
Street, members of the
New York and Chicago Stock Ex¬
changes. 'Mr. Hammel was for¬
merly with Kneeland & Co., MaMoran
son,
&
.
Co.
Doyle,
and
O'Connor & Co,
working force that they
only
are
a
sign
this
a
country
No
end next year.
well
can
take
It also means that by the end of 1949
of
care
any,
preparedness
'
war.'-
user
in their of¬
Street, the second
of a series of exhibits being that
of the Radio Corporation of Amer¬
death
ica.
Age," will
Program
\.
■
program
\
or
:
of conversion
This
latest
exhibit
and
the
out
will
show
modern
most
manufactured
ries
.The extreme
Walnut
on
by
the
products
and car¬
RCA,
philosophy of these
to
there
three
Management
and
cooperate to produce the
»goods,
the
wages
and
the
profits.
financial
history
of
the
in
Know
•.
Know its record.
Know its products
These
the
are
real
This,
will
values
be¬
concludes
prewar
On
Saturday evening, Feb. 12,
next, the Friday Night Bond Club
will
hold
its
Thirteenth
Annual
Dinner Dance at the Hotel Penn¬
sylvania, New York City.
nection with the
In
con¬
dance this year,
the club is sponsoring a Souvenir
Domestic cotton markets continued to show improvement
last
Reported
last
WEEK ENDED DEC.
NEW
HISTORICAL
organization
to create
are
of
purposes
a
better
among and contact
between
personnel
the
"Street."
The
more
more
and
of
capac¬
pre¬
PEAK
by expectations of greatly enlarged exports in the near
export volume though not large, showed some
Also tending to strengthen
prices was the reported
spot supplies due to the continued heavy movement
into
similar period
,
in
194*3, when loadings
were
affected
by
The
J. F.
Broadway,
nounce
&
Co.,
New
the
-
Inc.,
City,
York
association
with
changeover
Chevrolet
of
cut
about
1,000
units
bu| higher schedules by Cadillac and
;.i
This week's
output consisted of 93,090
and'3,884
cars
BUSINESS FAILURES DOWN
Commercial
and
ago
was
Casualties
to
122
week
preceding week, Dun & Bradstreet, Inc.,
numerous
than in the comparable
weeks of 1947 and 1946 when 87 and 33
occurred, respectively; they
an¬
were
the
of
less
than
the
270
1939.
firm of James F.
in
the
corresponding
week
;
Woolley, Jr., as FOOD
PRICE INDEX DROPS TO NEW LOW FOR YEAR.
Manager of the Municipal Bond
The Dun & Bradstreet wholesale food
Brokerage Department. Mr. Woolprice index declined
ley was formerly a partner in the another three cents last week to stand at $6.33 on Dec. 7.
Marking
a
new low for the
municipal bond firm of Woolley
year, the current figure represents the lowest
level for the index in more than 17
& Petroski, prior to which
he was
months, or since June 24, 1947,
with
Braun, Bosworth
& Co., Incorporated.
With Bond & Goodwin, Inc.
■
(Spwtal
to
BOSTON,
Tl«
Financial
MASS.
—
Cheonicll)
Ralph
r
E.
Emerson is with Bond & Goodwin,
Inc., 30 Federal Street.
were
rather quiet although prices generally
:
when it
stood at $6.24.
At $6.33, the latest index shows a drop of
14.0% from the all-time peak of $7.36 recorded on
July 13 of this
year and
compares with $7.12 on the corresponding date a year
ago, or a decrease or 11.1%.
COMMODITY PRICE INDEX MAINTAINS FAIRLY STEADY
LEVEL FOR WEEK
The daily wholesale
commodity price index, compiled by Dun &
Bradstreet, Inc., held at
a
were
;
.
As Christmas
shopping got well under way in most sections of
week, moderate to sharp increases over the previous
volume were reported.
Retail dollar volume was
th'e nation last
in
week
retail
about equal to
Dun
to
&
that in
the corresponding week last year,
Bradstreet, Inc., in its current
promotions and sales continued
Christipas shoppers generally
years.''
\; '
^
'
apparel
volume
according
of trade.
Holiday
in many areas.
selective than in previous
survey
to attract shoppers
were
more
increased
slightly
during
the
week,
fractional rise in the demand for dresses.
a
accessories
suitable as gifts were purchased in an
Shoppers bought rainwear in a substantial quan¬
While the demand for men's apparel was generally low, many
tity.
increased
consumers
their
purchases of haberdashery..
Sportswear
requested frequently.
was
Housewives
increased their demand for food during the week.
purchased than in the previous week with low and
moderately priced cuts still among those most frequently requested.
More
meat
was
Consumer interest in dairy foods and canned
goods rose fractionally.
The demand for fresh fruit and
vegetables, and bakers' goods gener¬
Shoppers' interest in furniture and housewares declined moder¬
ately in-the week, while retail hardware volume was slightly higher;
demand
for
heating equipment dropped fractionally.
Consumer
interest in low and medium-priced toys was very large and exceeded
that of the similar week last year.
Moderately priced general mer¬
chandise
suitable
gifts was purchased in an increased volume
major appliances a trifle below the moderately
high levels of previous weeks.
demand
as
for
Retail volume for the country in the period ended on
Wednesday
last week was estimated to be from 2% below to 2% -above a
year ago.
Regional estimates varied from the corresponding 1947 levels
New England and South down 2
to up 2, East down 1 to up 3, Midwest 0 to
up 4, Northwest up 2
by the following percentages:
to
up
6, Southwest
up
2 to
5 and Pacific
up
Coast
down
5
.
to
fairly steady level throughout the past
total
dollar
volume
wholesale
of
orders
last
week
was
slightly above that of the previous week and exceeded by a small
margin the volume of orders in the corresponding week a year ago.
Holiday gift and novelty items were ordered in a large volume.
in* recent
number
in the
115
considerably
about y2 cent below
RETAIL AND WHOLESALE TRADE STIMULATED BY
CHRISTMAS BUYING IN LATEST WEEK
As
^LIGHTLY
.
associated
Cotton textiles
The
and 26,112 trucks built
and 2,096 trucks in Canada.
more
v/ere
or
117,902 units and
cars
industrial failures dipped
ended Dec. 9 from 126 in the
reports.'
to
down 1.
Output in the similar period a year
1941, 95,990 units.
in the United States
Woolley, Jr.,
Mackenzie
model
date
of Nov. 15 declined for the third
steady to firm.
in the like week of
:
With Mackenzie Go.
~
trucks in the United States and Canada
from
125,170 (revised) units the previous
others made up the loss.
com¬
.
units
to
season
,
and
from that producer's total,
has grown
popular and that
,
125,182
cars
as
successive month to 30.63 cents per pound,
the Aug. 15 peak of 31.12 cents.
with
week, according to "Ward's Automotive Reports."
group
.
to
staple
368,065 in the
previous week and brought total entries for the
bales.
LATEST WEEK
Production of
rose,
the
in the week
2,929,553
Women!s
SETS ANOTHER NEW POSTWAR HIGH IN
"
of
increased volume.
work stoppages in the coal fields.
AUTO OUTPUT
Cur¬
tightening in
government loan, which totalled 267,264 bales
ended Nov. 11.
This compared with a record volume
11
of
the
future.
improvement.
the
the
today
institutions of the financial
munity. V
..
■
spot
the
IN
week this year, which includes Thanksgiving Day.
It
represented a decrease, however, of 74,405 cars, or 8.5% under the
corresponding week in 1947, but an increase of 75,099 cars, or 10.3%
the
the membership
contains
members from many houses and
markets totalled 214,900 bales
previous week and 293,500 in the
Demand was stimulated to a large extent
preceding
the
understanding
ago.
ten
rent
of
and
year
the
187,600
ally remained unchanged.
■
aims
a
Loadings of revenue freight for the, week enclbd Dec. 4, 1948,
totaled 804,183 cars, according to the Association of American Rail¬
roads.
This was an increase of 81,093 cars, or 11.2% above the
above
Ac¬
cen¬
"Iron
59,137,000 kwh. above output in the preceding week and
377,353,000 kwh., or 7.1% higher than the figure reported for the
week ended Dec. 13, 1947. It was also
926,880,000 kwh.. in excess of
the output reported for the
corresponding period two years ago.
Journal.
The
week
with
A
in
sales
week, against
same
year.
ATTAINS
spot and futures prices again moved upward.
as mill buying increased in
tivity in spot markets expanded
Retail
OUTPUT
-
liquidation and hedge selling. The raw sugar markets was
steady at
a slightly higher level.
Demand for coffee was good at or close to
the high levels of the previous week.
Hog receipts at principal
marketing centers continued in heavy volume resulting in moderate
price declines during the week.
Steers and lambs also trended
mildly downward, v ,,\ *\ •
*
.4
quiet
CARLOADINGS RISE 10.3% IN POST-HOLIDAY WEEK
AnnualDinner Dance
new
The parity price of cotton
a
and 1,281,210 tons for the average week in 1940, highest
ELECTRIC
crease
hind your certificates."
the
for
.
continue
energy distributed by the electric light
and power industry for the week ended Dec.
11, was 5,704,823,000
kwh., according to the Edison Electric Institute. This was an in¬
Company
your
capacities.
and
The amount of electrical
—
outlook
Domestic demand for flour continued at a slow
pace with pur¬
chases limited to small lots for
nearby needs.
Demand for cocoa
was
slow and prices again moved sharply
lowqr;, under continued
.
year ago
company tells this success story
its most succinct terms
increased
97.8% of the old capacity one'
must
The
steelmaking
have
This week's operating rate is equivalent to 1,802,500 tons of
steel ingots and castings the same as a week ago,
1,784,500 tons a r
month ago and 1,711,400 tons, or
who
men
their
firms
ity for the week beginning Dec. 13, 1948, unchanged from the
ceding week. A month ago the indicated rate was 99.0%.
latest efficient facilities.
;
shortage boogy man is bound to die
100.0% of
.
/
increase,
steel
since steel
The American Iron and Steel Institute announced on
Monday
of this week the operating rate of steel
companies having 94% of
the steel-making capacity of-the industry will be
things —
An attractive product, priced
competitively in its field.
A
modern
plant, with the
are
1949,
be done by building more electric furnaces, rebuilding
increasing output of older furrfaces, building more openhearths,
increasing use of blown metal from bessemer converters and highe
capacity on existing units because of better performance.
Certificate
Stock
a
in
and
exhibits.
"Behind
The
tral and eastern sections of the belt.
steel, outside of some appliance makers,
is doing away with this high-priced method of getting what he
PHILADELPHIA, PA. — New- »wants. Next
year may be a different story.
The bigger ones still
burger & Company, 1342 Walnut need much
tonnage that they cannot get through their regular mill
Street, are continuing their "Vis¬ sources.
fices
previous week, on a daily "average basis.
wheat crop appears
promising with
ample surface moisture reported in the greater part of the winter
wheat belt.
Trading in corn was more active with future prices
showing a tendency to sag., The cash corn market, however, showed
progressive strength, influenced by relative light receipts and
per¬
sistent government buying.
be wary of
an
on
corre¬
buying by mills and sizable purchases by the Government.
steel
to
the
on
The general trend of prices was
slightly upward in the latter
part of the week.
Strength in wheat was attributed to active
will
come
index closed at 271.12
Grain markets showed no marked
changes during the week.
Volume of trading on the Chicago Board of Trade fell
slightly below
are
getting too low on inventories.
Nor will they tell
companies to cut their quotas, the magazine adds.
Yet the chance that 1949 will bring out a new record in finished
steel output—because of new finished steel capacities and full output
of openhearths—means the highly pressurized steel shortage phase
the
Nov, 30 and 301.89
on
week and both
Series of Exhibits
ualization"
and
narrow
definite signs this week that the gray market in steel
has weakened—both in tonnages being offered and in price, but as
long as there is a chance of higher steel prices those using steel
will
Newburger Continuing
be
a part of total
at this time.
There
La
will
small
so
watch
to
Joseph F. Hammel
field
auto
were
sponding 1947 date.
industry's artillery is impressive.
So much has output
been boosted that capacity figures are a secondary problem.
More
steel is being made than ever before in history and, states the trade
paper, this rate will keep up during the first six months of 1949.
Should there be no serious* labor troubles it will keep right on
pouring into the pipelines.'
r -
Blosser, 135 South
Movements
7, compared with 272.31
that of the
its current summary of the steel trade.
associated
Dec.
Thursday, December 16, 1948
of
weeks
buyers
most
goods
delivered
were
promptly.
The
attending
many wholesale markets moderately
surpassed the number in the preceding week and in the comparable
week; last'
year:
r.
-
Department store sales
on
"
*.
country-wide basis,
a
as
taken from
the Federal Reserve Board's index for the week ended Dec.
4, 1948,
decreased by 4% from the like period of last year.
This compared
with a decrease of 5% recorded in the
four
preceding week.
For the
weel^s ended Dec. 4, 1948, sales decreased by 6% and for the
year
to date increased by 5%.
While
Christmas
purchases
showed
some
stepping-up here
in New York the past week, dollar volume for retail trade
again
dropped below the 1947 level for this period, being reflected in a
decrease of about
According
to
5% in department store sales.
the
Federal
Reserve
Board's indek, department
weekly period to Dec. 4, 1948,;
period last year. '- In the preceding
store sales in New-York City for the
declined 6y 6%, from the
same
week
a
like drop was registered over the similar week of 1947.
For the four weeks ended Dec. 4, 1948, a decline of 8% was recorded
over that qf last
year and for the year to date volume increased
by 4%.
-
'
•
•
Volume 168
Number 4760
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
«hfr'
B9
corporate income taxes.
As We See It
people of the United States will be best served
President and a government which will take them¬
a
selves out of the way and leave the millions of Amer¬
icans who know full well how to look after their own
interests to do
so
in their
own
way,
subject only to such
in business.
Congress to adopt such a view of the
begin acting upon it promptly, they need have
the
the
thereafter
year
or
the year thereafter.
rendered aboutas
der it.
In
minimized.
unlikely
as
It
would
indeed
human ingenuity could
brief, the best that the President
or
-
likelihood that any
aware
that there is little
this
policy, and to formulate some
judgment about the possibility of some feeble steps in
this direction, particularly if the outlook continues to
give the powers that be some concern. If hesitancy in
business
now
should
presently
prove
to
have caused
the reformers and
time-serving politicians in Washing¬
modify, to soften or perchance to abandon some of
ton to
the restrictive actions heretofore said to be scheduled
for the coming months it will have served an excellent
purpose.
President and his advisers
trend
„
fire
the goods and
half
and
if
it
Underlying
to
such
done at all the cost would be prohibitive.
prices, and we had best leave them
directing our attention to causes and not
How
to
Harass
powers
over
Anyone
life,
as
and
the
vast
the individual.
these
of
three
.
movements taken
test
by itself would
capacity; coming all at
they confuse our thinking
our
weaken
resistance.
our
The
trouble
is
for
disease makes the others
one
that
can
to pre¬
vent business from
continuing to produce as it has been
producing and giving jobs to as many as it has, he could
not go about it more
effectively than to eliminate a
number of the provisions of the
Taft-Hartley Act about
which he had so much to say during the
campaign, and
about which his tone appears to have changed somewhat
in more recent weeks. A complete reinstatement of the
:Wagner Act as it stood prior to the enactment of the
present law would eliminate such restrictions
as
have
been
imposed upon jurisdictional strikes, secondary
boycotts, and the financial irresponsibility of the unions
generally. This much alone would deal a severe blow
which is
only just beginning to feel some
provisions of the earlier New
labor legislation.
relief from the fantastic
Deal
man
a
budget.
the
prescription
human
meaning,
Federal budget is as hu¬
document
as
a
family
The family budget shows
Tom
Surely, neither the President nor his advisers can be¬
lieve, if they think about the matter realistically and care¬
fully, that business will be sustained or stimulated in its
work of providing for us all
by action on their part which
reimposes the excess profits taxes or which greatly increases
was
married.
budget is
Just
the Federal
so
realistic bookkeeping
a
of the activities of the Nation and
records
in
its
figures every
in National policy.
step
who asks for
and
extrava¬
of
his
R.F.C. guarantee
an
loans
is
just as surely
pushing this country a little fur¬
ther
from
away
American
planning
who
support,
There
asks
the
or
who
eran
the
of
way
for
for,
the
as.
more
price
unwounded
asks
are
traditional
life
a
vet¬
pension.
arguments
in theory
pegging the prices
securities, but the
for and against
of government
asks
protect the
for it
bonds
in
in
order
his
own
is
prise and toward statism.
Taking a broad look
of
past
-
and
spending in terms
There
wars.
to
seems
me
ground for the position of
insisting that the
military budget for next year be
held withjn the $15 billion limit,
the President in
which is after all
lot of.money.
a
Within that limit this country can
maintain a strong and impressive
military
preparedness.
Military
spending
beyond
$15
billion
would, as Dr. Nourse has stated,
threaten America's position on the
inflation front and on the front
of
social and political changes.
Our
struggle abroad is economic
as well as
military. We could lofee
the battle; just as easily by eco¬
nomic weakness as by military
weakness.
In terms of the current
let
me
not
if
as
we
budget,
suggest that the outlook is
bad
commonly feared,
the people apply to it our
as
wisdom and energy.
First, as to foreign policy, mili¬
requirements are the great
question mark. It takes a cour¬
ageous
layman
to
dispute
the'
arguments of the military experts,
but this is not solely a military
problem. It is a political problem,
an economic problem, and above
all a problem in common sense.
tary
the
reason
we
military
unification
of
don't
experts
the
quite trust
is that the
Armed
is
stronger.
The
the
at
three
threats to our American
civilization the banker may have
an influence on where
this coun¬
try
do:
moves. Three things we
may
(1) Understand the issues and;
take
a
critical look at day-to-day
policies in the light of the longer
term trends. (2) In our own busi¬
ness exercise restraint in
any ac¬
tion
which
be inflationary,
may
restraint in any action which
may
draw
government more largely
into interference with individual
freedom.
(3) Work together on
public*
problems.
What
our
bankers do through
ized
tant
^fforts
their organ¬
mor$ impor¬
may; be
the next few years in the
in
wellbeing of each one 'of his than,
what we do individually. ,/;
;
Forces
less
be
by
say
than
the
and
must
first—I
$1< billion.
reduction
will
strengthen
increases
the
the
A
not
should
reasonable
weaken
for
program,
for
pressure
but
it
self-
help. Taking together the military
foreign aid, the overall .ex¬
for
foreign
policy
penditures
should require only a modest in¬
over the present budget of
crease
$19 billion.
.
full review of the Federal budget.
Our
review, like every
other
tees for 1948-1949:
Education:
N.
Leonard
Hayden, Stone & Co.
National
Chapters:
Jarvis,
Jack
Bett.
Huhn, Bache & Co.
Entertainment: Walter
McKeag,
Jr., Merrill Lynch, Pierce, Fenner
& Beane.
Grievances: Alfred M. Elsesser,
Kidder, Peabody & Co.; Standish
M. Perrin, Goodbody & Co.
Insurance:
Robert
J. Davidson,
Legal
and
Research:
Lester
Robins, Francis I. du Pont & Co.
Professional ethics:
N.
Leonard
Jarvis, Hayden, Stone & Co.; Don-'
aid C. Blanke, Eastman, Dillon &
Co.; Richard M. Ross, Dean Witter
thoughtful review, showed many
places where
substantial & Co.
Membership:'
Lewis
savings could be made, or spend-"
Harris. Upham & Co,
ing could wisely be deferred.
other
Public
Predicts
a
Budget
Surplus
Relations:
Harder,1
Thomas
B.
Meek, Francis I. du Pont & Co.
The current budget for 1948-49
is likely to
to
show a surplus of $2
billion without any new
$3
With restraint
real
effort
adoption
commit the Maginot Line error of
Customers
Fahnestock & Co.
,
The Committee on Public Debt
Policy has just completed a 2Vz
year study which has included a
the
we
of
But, as recommended
by the Harriman Committee, the
second year's expenditures should
Military policy today,
scrutiny lest
Association
ing chairmen of standing commit¬
value
continued.
taxes.
moreover,
The
Brokers has appointed the follow-
yet given this country a
unification
of
military policies.
has not
needs the closest
has
program
be
demonstrated
and
Outlook Not As Bad As Feared
One
Shun Tax Increases
sweeping
but the
was
>
a
The first thing for us to do as
individuals is not to ask for Fed¬
eral aid
ourselves. The banker
for
sound
great
born, when Jim
broke his arm, when we moved to
the larger house, and when Mary
Business
If the President wished to do what he
to business
waste
the
enlargement
Federal functions.
;
(Continued from first page)
the democratic way of
state
assumes
new
when
to outward manifestation.
.
:
us
causes govern
causes,
:
guilty of aiding the
political trend against free enter¬
with
were
not
government
to start
chipping at the
budget, to build a back¬
and
portfolio
nomic
slave
prom¬
practical way to dd
definite
about
this
against
gance
not be true
terms, can perhaps pre¬
is far less vigorous and far less
With respect to other foreign
serve his sanity best if he tries to
all with what we want than one pin his thinking down to terms of expenditures, E.C.A. has been
which is free of restraint. The
hope of preventing or halting our own Federal budget. This may successful. Communism is weaker
in Europe today than it was- a
seem like a narrow and .material¬
what officialdom is pleased to term inflation in this
way
year ago.
Production is higher.
istic
interpretation
of
policies
is illusory. - It can not be done for
any great length of time,
The unity of the western countries
even
is
Federal
to
v
which is
short-
parties
and
more,
centralized
The most
we
really want to keep worse.
Foreign policy, for exam¬
business going at full tilt, the first
thing they better do is ple, requires huge spending. That
to drop the idea of price controls and
rationing. They had increases inflation pressures,
which in turn stimulate proposals
better drop the idea in toto, whether
applied to all com¬
for heavier taxes and more con¬
modities in all markets or
merely to certain selected com¬ trols,. moving us one
step nearer
modities in certain selected markets. We are not
to
state socialism.
likely to
* \
find it feasible to operate an
economy which is half free
Looking at t h i s kaleidoscope
and half slave, and we are certain to find that an
the banker, who thinks in eco¬
economy
capable of supplying
the
campaign
people
banker who
and
Maintain Free Markets
If the
in
seem
election
something
needs is not to be found in statistical tables but is not hard
once
♦
heaven knows how American business
course. People like
voting for unsound
power and service.
in
turn
an
have
emotional
the
less
to understand.
a
on
we
to benefit them. Both
the
farmer
so
as
the
no
ised
impediment placed in its path.
And
is
country
binge,
policies that
tion. It is nonetheless instructive to
survey the situation
with such a thought in mind, to
speculate about the re¬
or,
a
inflationary
run
might continue at length, but the facts are
plain without further argument. The advice the President
of such
m
buildings and old
in
for that matter, that the Presi¬
dent would accept any such idea no matter who
pro¬
posed it to him. That is the tragedy of the present situa¬
sults
war
shall have to be
runs its
it and keep on
expenditures for capital goods on the part of private
enterprise have passed or soon will pass their peak, but
it is certain enough that large sums will continue to be
needed for the purpose through the years if
industry is
to maintain its vigor. Excessive taxation of such
profits
is precisely what is not needed to
help ^business over
President any such advice
stay in office long,
fight this
we
flation
that
in official position will give the
or that such an adviser would
one
years
may
'
people it serves is to quit trying to do anything
for business, but get out of its way.
fully
to
fronts,
content with old
minds of men become
Prudent housekeeping
appeal.
The
usual lesson of
history is that in¬
without
sources
would have prepared itself to produce
services the public wants. It may or
ren¬
the Federal
obtaining funds from outside
postwar
a
be
Government could do to help business to do its
very level
Of course, we are
going
three
distorted.
only source of funds with which to equip American
corporations with the capital they needed was, therefore,!
their earnings.
Had they not been liberal during the
best for the
to, or
or even for exten¬
sion of government
services. If we
are
has
The
If
danger of the type of boom that is likely to end in
disastrous bust would be
is
public works,
tries,
that American business
burdensome increases in debt very difficult. It is still
difficult, if not almost impossible. Large individual in¬
comes (after taxes, that is)
simply do not exist any more.
were
time the Government put its own house in order
same
The
great "If*
the word "re¬
straint." This is ho time for
large
this
been along with most other coun¬
war in
urgent need of large capital invest¬
Conditions imposed by government rendered the
task of
further moment of uneasiness about the state of business
next year or
V
ended the
How to Galvanize Business
at the
slowing down
a
Thank God for the Profits
ment.
no
cause
,
The fact of the matter is
socialistic analyses.
situation and
surplus.
all
When
from the markets and thus tended to
infinitude of statistical reports and semi-
At any rate we are certain in our own mind that
the President and the
similar
about
kept out of the income stream roads, and a slower
modernizing
during past years. Only if they think some such thing as of America than we should like.
To say this can be done is
this could they defend an
net
argument to the effect that the
to say that it is
size of corporate
easy or will be
profits has taken purchasing power away done.
history of many other countries, is eloquent of this
simple fact. No research is necessary to discover it or
to prove it. Yet a plain
forthright statement of it might
an
of
unaware
have been hidden away or
"rules of the game" as will assure a fair field and no
favor. The whole of American history, and much of the
be worth
scarcely be
can
tially overstated by the very nature of the accepted account¬
ing system and by the necessity of conforming to the
requirements of the Bureau of Internal Revenue, but even
more important it can
scarcely believe that corporate profits
(Continued from first page)
of the
by
They
the fact that corporate profits in recent
years are substan¬
for
and
economy,
of
Mr.
with
such
G. Stewart Smith Dead
G. Stewart Smith died at Eliza¬
as
beth, N. J., General Hospital. Prior
Hoover's
to his retirement in
recommendations, the budget for
head
1949-50
of Newark.
can
be
made
to
show
r
a
a
of
G.
Stewart
1942 he
was
Smith &
Co.
'
,
extended1 try, -business and government. It
(Continued from first page)
picture. But, I am glad to say that period can be attributed to the would encourage the capital expansion so necessary for maxi¬
bank loans during this year have fact that, until the stock market
mum production in peacetime.
got out of hand in 1928, there was
Total loans of the
weekly reporting member banks
expanded only $1.8 billion through
Dec. 1, 1948, as compared with a
"rise of $3.8 billion in the same
-than last year.
period of 1947.
This satisfactory showing is at¬
tributable in very large measure
to the Credit control program of
the American Bankers Association.
Through this voluntary program,
the bankers of the country have
tendered an important service by
adhering to a more than usually
cautious loan policy in this criti¬
cal
inflationary period.
Your
willingness to Jorego im¬
mediate banking profits in the in¬
terest of
is
stable national economy
a
arid farsighted
sound
banking
practice.
I
tive
no
nor
firmly
today
convinced
overdone
broadening financial field.
recent
Your
action
through the A.B.A.
shown
a bold and aggressive inclination
and ability to step out as leaders
anti-inflation program has
and to take
ing
active part in shap¬
an
future econ¬
our present and
omy.
This has not been an easy
task.
high degree of
But in the interest of
It has required
flexibility.
tbe
national
a
this
ready to meet inflationary
pressures
with self-imposed re¬
straint, or to step in with a sound
loan
in
policy
times
the
when
demand for bank credit is whole¬
some.
What
At
this
Lie
May
it
time
Ahead
would
be
well
to take stock of the nation's pres¬
ent economic
position, and to cal¬
culate
what
may
lie ahead. I
Should like particularly to discuss
the cooperative role of the bank¬
ing system and the Treasury De¬
partment in dealing with our most
important national economic
problerri —r that of strengthening
economy at the present
level of prosperity.
high
our
v
.
The achievements of this
coun¬
try in the three years since V-J
Day have been, to say the least,
remarkable.
The
reconversion
from
war to peacetime production
accomplished with amazing
speed and efficiency. During these
years, while substantially meeting
our own current needs, we have
also provided relief, rehabilita¬
tion, and reconstruction to a large
Was
part of the war-torn
world.
We
;
now
wartime
reached
a
stage
accumulation
of.
demand for many products is be¬
coming
let
me
more
nearly satisfied. But
remind
that severe
Shortages still exist in lines such
as
steel
their
you
and other metals,
products.
and in
Labor
shortages
a
problem. Many
new
products and new demands for
service await only a more ade¬
quate supply of basic materials
remain
and labor.
The
have
industries
affecting
-
to perpetuate
do all in our power
a
and that we are paying too
price in order to gain the
benefits of bond market stability
whirih I have outlined. Actually,
rests
high
basis than the earlier
for
occurred
without
the
in
various,
appreciably
over-all
business
level.
of 1929.
To this end,
most
a
bankers play
role. One of
you
important
first responsibilities is to
closely examine each loan ap¬
plication from the viewpoint of its
effect
national
the
on
economy.
that period was also one
prosperity.
National
income
had
reached the highest level in his¬
tory up to that time; labor was
practically fully employed; and
business was highly prosperous.
The maintenance of that
high-
plications beyond the domestic
picture alone. The pres¬
international situation
remain
integrity
and
unques¬
tioned.
v
The
Treasury and Federal Re¬
directed their efforts
have
serve
bond market
toward maintaining
stability in both directions —
keeping bond prices from
mortgage future income to
increase present
demand. Such
loans are not only
inflationary
pose
today—they
tions to
distinct contribu¬
are
boom-and-bust cycle.
a
toward
and
going down too sharply. Begin¬
ning in the spring of 1947 we took
action
to
control
an
incipient
boom in the bond market — by
selling
Basically Sound
Our Economy
economy is at present in
basically sound condition, and
signs of stabil¬
Our
shows encouraging
ity in the vicinity of the present
high levels. There is today no
strong evidence of over-buying
by consumers, nor of over-expan¬
sion by industry. And consumer
demand on the whole is still for
times, healthily unsatisfied,
and capacity in many lines is still
inadequate.
The fact that our present eco¬
nomic levels are much higher than
these
the
before
is
war
no
for
reason
doubting that they can be main¬
tained. The
record levels es-
new
tablished
in
exceeding
the
mid-twenties,
the
too high and too fast,
keeping them from
up
made for
a
makes
particularly imperative that
United State's financial strength
it
obviously, loans that are not
going
a sound productive pur¬
For
there has been
Federal Reserve
the
of
some
long-term
bonds
from
the government invest¬
accounts, by offering the
Investment Series of bonds to in¬
ment
in¬
creasing short-term rates. All Of
these operations combined to take
upward pressure off the market. *
stitutional
conditions
When
downward
a
oond. market
by
and
bond
stabilized
changed,
pressure
developed,
prijes
the
and
investors,
on
we
through
pur¬
chases of
long-term bonds. All of
actions have been taken with
our
toward
view
a
promoting
busi¬
These
<
employment
reasons
ones.
of
prospect
should
years
holdings of gov¬
creased
to
On tne
a
con¬
give the
confidence
in
nation* in¬
the
stabil¬
ity of present high business levels.
The
program.
President
made
has
clear in his statements to
program was
and
very
Congress
nation
that a major
administrative
program has always been, and will
continue to be, a well-maintained
high-level - economy, and, within
the
to
objective
his
of
this framework, to provide f Or a
balanced budget and progressive
Furthermore, if the bond mar¬
debt reduction.
.•
^
;
;
ket were allowed to get out of
An
extended
prosperity
can
control, there is a real, possibility
that
only be achieved by a policy of
would have more inflation
we
moderation
by encouraging a
hy business -development
while restraining -the excesses Of
dence in the stability of the bond
over-buying, over-borrowing, 'and
market, and a consequent impair¬
which inevitably
ment of confidence in our fman^ over-expansion
would bring on a business depresr
cialsituation, might well have se¬
sion.
This policy of moderation
rious consequences In this country |
has been and will continue to be
and cause a weakening of confi¬
the Administration's
dence
in
our
financial stability
•program.';
;
The nation has a huge task be¬
throughout the world.
fore it. We must meet the normdl
Despite the continued strength demands of a
growing population
in "Our national economy, there is
with high <living standards. "We
some
feeling of apprehension in { must
provide productive machin¬
business circles.
[ :
ery to replace that worn out dur¬
It might almost seem that this
ing the war. We must build'neW
business apprehension is getting
homes,
new
hospitals, >new
to
with,
contend
inflation.
to be
The
removal
of
cause
In the fall
reconversion
In
e a
—
l t
churches
and
schools,-
and.
new
municipal facilities. We must .re¬
be- build thousands of miles of high¬
the' ways. In addition, to all this, we
unemployment
effort.
h
confi¬
of
general fear of
was a
widespread
war
rather than less
seasonal affair.
a
of 1945 there
the
(
from
fall
of
1946
a
must do our part in the great task
the of world reconstruction, and we
severe stock market break in Sep¬
must build a powerful defense'es¬
tember of
that year.
Last fall tablishment, to the end that nor¬
there was fear of unfavorable ef-1 mal
international ; relationships,
business
scare
from
fects
developed
the
over
restriction
credit
become
of
None
these
realized.
business
But
the
free from
program.
fears
theat
the world.
unwarranted)
of
reestablished
This
is
war,
may
throughout
•
•
It Js a
as they were, they have had the
sobering prospect.
In "the 'years
beneficial
result
of
putting
a ahead, our major task wiil be to
damper
on
various
speculative protect this American economy
projects, which would in any casej from the mistakes of the past—
have been of questionable-: eco¬ not only to insure that a serious
nomic benefit.
I doubt that
anyj business depression shall not hap¬
sound expansion plan, for which a pen, but to be certain that we
real need existed, has been af¬ maintain our present
course
of
were
fected."
ness-confidence and of attaining a
high level of
production.-
the
substantial
more
tinuation of the policies of recent
Since this
initiated in Novem¬
ber, 1947, Federal Reserve hold¬
ings have increased by some $950
million.
Much
more
than
this,
support
any
contrary,
net increase in
no
on
business apprehension
y
.
.
'
r
*
•
large order.
a
;:
J- national economic progress.
and
themselves
in
be enough. But there are
peaks reached in further
important
reasons
for
World
War
I,
unquestionably
maintaining stability in the gov¬
seemed excessive to many
at the ernment bond market.
time.
more
We
Now
have
we
ar.a
be
cannot
in a growing
previous standards
definitely
economy,
used
to
our
measure
present prospects.
The
people
all
of
United
the
demo¬
the
of
wark
States
economic
strength.
and
justify
To
as
a
bul¬
financial
this
confi¬
ognize
our
maintain
for
joint responsibility to
an
ever
constant watch
influence by which our
strength might be under¬
any
own
magnitude
billion is unknown to any
past period of our economy. The
uncompromising
wartime
de¬
mands, however, forced a revision
have
lot
a
values of
to say
more
the assets
of
about the
ployment,
insurance
tion,
*
maintenance
and
of national economic stability de¬
pend upon
in
the
government's
credit.
The Treasury's first objective is
policy in such a
as
to promote full con¬
fidence in the credit of the United
now
hold
enues
$55
''.i:
bonds.
You have heard much about the
1
cold
the
Another
important
consideration
of
factor
is that the
for
budget¬
public
by any
significant decline in bond prices.
cost
ary
servicing the
•
;
m
government
On the other
hand,, co¬
between
war
and
West
East that
the
are
we
four will on the
aiding.
This,
the
East
claim
by
and
the
based
,
now
derived from taxes
and business earn-
jngs> ^ is essential that the wheels
|of indllStry continue to turn.
trying to impose
countries we are
of
are
on wages
the
qualities
is
none
more
Of
of
statesmanship,
important than fair¬
is con¬
course,
ness and temperateness.
It would
illus¬ be unfair and intemperate to cre¬
trate,, the Labor Government in ate a set of conditions handicap¬
The interest cost is -already $5;3
[Britain has proposed the nation¬
ping business and then condemn
billion a year. A further rise iin
alization of the steel industry, a
the inevitable results as evidence
the
budget charge for interest
step with which our people have of the evils of the American
payments would be of nationwide
little sympathy, but no one has Economic
System.
importance, and it would affect
seriously suggested that - in re¬
And to business I would say:
every
taxpayer. A rise in the
prisal, we withdraw our aid to
average interest rate of the public
Remember
that this
is
1948.
Britain.
We concede to Britain
debt by as little as V2 of 1% would
There is a world-wide trend [to¬
i?the privilege of managing
her
cost the American taxpayers ap¬
ward
security.
This trend has
own
affairs and of running the
proximately
one
billion,
two
British economy in a way that reached into the far corners of
hundred fifty mrflion dollars a
the earth where the New Deal has
meets the approval of the major¬
year.
In many
ity of the English people. Cannot scarcely been heard of.
The Treasury was able to fi¬
countries the people are willing
that same distinction be applied to
nance the last war at an average
to
surre nder the heritage rf free¬
our domestic affairs?
Can we not
interest rate of less than one-half
dom "with its incentives for -the
avoid a cold war between
would
debt
manner
who
billion of nontransferable savings
factors, of which
many
of the most elemental is con¬
fidence
1
operative effort», will ^produce a
stable
prosperity, an? unanswer¬
Nevertheless, we are all in the
thinking. One of the important
able argument to the claims of Lie
[same boat, the ship of finance, arid
decisions made early in the war
foes of democratic capitalism.
everybody agrees that you have
was to sell as many securities as
done
a
-Far be it from me to try Ho
magnificent job While
possible to nonbank purchasers.
there are a few unreconstructed prescribe
for
government
ahd
This decision had tremendous im¬
rebels
who
might dissent if I business, but if I had the j b arid
plications for the future of our
made the same claim on behalf of had to do it in two or three sen-1
debt-management
policies. This
the Stock Exchange.
tences, I would say to government:
was
particularly significant with
Because three-quarters or more
respect to the sale of government
;
Let's Avoid a Cold War
of the Federal Government's rev¬
securities to tens of millions.pi
entire financial and fiscal
our
purchasers,
Achievement
;
shrinkage; in produc¬
slump
a
revenues.
companies than I have about the
market
value
of
listed ' shares.
a
Domestically
mined.
one
(Continued from first page)
A public debt of the
of $250
of
cratic countries of the world look
on
should
million
25
people than we had in 1929.
are
be
increased
trary
to
our
To
purpose.
.
stability
is
States Government—and
of the government bond market
essential to this achievement.
I came to the
of
Treasury in June
when
1946,
process
we
were
in
-
the
of transition from war to
The country was faced with
numerous
and varied economic
peace.
problems. Not the least of these
that
time
was
the
and in its relation to the
lower,
of high
~
toward
nomic
were
in our
activity
peacetime history.
it is to be emphasized/however,
that the desirability Of continued
your
dented size of
then
economic
fullest
ent
the present
business picture resembles that of
the mid-1920s. Although the eco¬
levels
and toward attaining the
fidence
effort to heed any signals of
business collapse similar to that
at
In certain respects,
business con¬
promoting
toward
business
every
a
believe that
to
reason
serve,
has directed its efforts
toward
maintaining this Confi¬
however, is directly attributable
dence in the stability of Jhe gov¬
to the $2 billion increase in re¬
ernment bond market. Such ef-i
serve requirements last September
forts have contributed materially
Board,
stable business trend, and make
to conduct fiscal
demand
these
new
items should serve to replace any
significant deflationary reduction
in demand that might follow the
filling up of wartime shortages.
In fact, such a replacement proc¬
ess has already been going on for
some time, and corrective adjust¬
ments
on an even
dence, it is essential that we rec¬
,
have
where
of the
areas
some
are
stability in the government bond
market
and
confidence
in the
future, we must not fail to heed
„ne lesson of the
1920s. We must government's credit has great im¬
bankers
position and
make
there
and
—
Therefore, during my tenure of
office, 'the Treasury, in coopera¬
tion
with the
Federal "Reserve
no
the present
ernment securities attributable
Government Bonds
Support of
—
keel, the vol¬
ume Of industrial production be¬
came established
on a generally
stable but gradually rising trend
for the 5r«year period from 1923
through 1927.
In the interest of our country's
tinuing
economy,
maintain
must
economy
signs Of this today—but the im¬
pact was not of sufficient force
to unsettle the economic levels.
With economic
conditions con¬
that the banking fraternity must
conscientiously work toward ef¬
fective
leadership in an ever-
in the
excesses
over-buying, over-borrowing,
over-expansion. It is true that
speculation in city real estate was
a
am
of specula¬
hazardous volume
see
ment securities to the Federal Re¬
level prosperity over an
no
I
of the large sales of govern¬
cause
been carefully screened, resulting
in a total increase of much less
Thursday, December 16, 1948
FINANCIAL CHRONICLE
COMMERCIAL &
THE
a
public
both
in
unprece¬
public debt —
without parallel
our
debt
terms
of
its
dollar
total
economy^
of the country.
Confidence
in
the
to be assured to maintain the
have
a
had
not been done, the
interest
charge
would
been
year
more
than
$10 billion
Is
instead of $5 billion.
Support Policy Inflationary?
ease
It has been argued that support
problems for indus-
of the market is inflationary, ^be¬
system.
It
would
govern¬
ment
and
the
business,
conse¬
mere
promise of security—some¬
dis¬
thing
which is. abhorrent to us,
of
,
quences
of which would be
astrous?
ment
Business
and
separate
occupy
un¬
derlying strength of the national
reconversion
this
If
present
stability of
the government bond market had
financial
the interest rate of World War I.
govern¬
but which reveals the strength
spheres.
the
Each has
its duties and responsi¬
bilities.
A
them
can
cold
only
war
result
between
in
unem^
human
desire, for
Maybe we can resolve
lem of security and
in
the
process,
security.
the prob¬
freedom and,
level off the ex-
Volume 168
Number 4760
THE
tremes of boom and bust. -While
■the rewards may not be as
great
-as we should; like in
any one year;
'
tne
average/result
satisfactory.
will
be
more
summarize; let government
ride sroughshod Because of its
not
let
and
business, mot 'take
the attitude of the youngster who
<brpke iUb the baseball game and
went 'home with the ball because
'he
-was' not
pitcher,
i
which must rely on external
financing in large degree and as &
ayr
result
:
'
:
/
,
The
Financial
role
from
now
horns
of
the
regulate
you iin that/ event.''
upon
f '*
?
*
di¬
a
Your ^colleague commis-.
wno
gentleman would have thrust
CHRONICLE
public
Taxation
; •,
\
,.
-
a3 an
.
Instrument of
Policy
.
»
not, has ceasea tto *be for revenue
in common stocks insist on
returns
ment of Asocial
that: the companies cannot afford
ing
to pay.
Taxation, whether
only,
lit ;has
we
become
policy.
dike it
instru¬
an
By; not tax¬
'/sumetning ana
oy
\| something else, 'the will
-
or
taxing
of the
While-the debt ratio of cor¬ people us expressed.
We woiila
not think of putting a Tax< on win¬
•' porations is still ;good, tiie
trend,!
Community
down
-the
FINANCIAL
utility industry, insist that tne
companies do not exceed wellestablished *debt ratios—investors
\z)
if
Stepping
on
lemma:
permitted to £be the
•
is
sicners,
••
rTo
power
•
COMMERCIAL &
unchecked,
my
economic
physician, * I
■would like -to
say that, while the
bad.
Our
tax
We
rpanes.
Choose
-otnei
forms !of
excise
taxes, dor exraising oT ownership' ■amitie; on items 'in the luxury
funds.
The yield "to individuals class. > What I am suggesting ; is
on
ownership securities, reduced that- there us no reason why taxa¬
laws
as
is
dow
encourage debt financing as
against 'the
'financial; community is not at the ■by /high surtax rates, is Tar less tion, which fhas already formed
moment ithe most optimistic '
spot a etractive than "gross 'yields would' /an important part of social policy,
►in The country, we can take
pride •indicate., /We have, in: oi^/w^ sOamwtt 'be used to encourage in¬
that it has done
'both
during
■war's
end.
funder
magnificent job
a
the
war -and
it
Arid
has
since
done
so
most
discouraging condi¬
tions.
Tne
brokerage-and invest¬
ment
bankingtbusiness has had no
-
share fn the current, boom: "It
has,
tn vfact,
undergone somewhat of a
-depression
since
mid-1946
and
■>,
itself, but hot to the stock¬
pess
holder, who
rrliilions.
We
have
neglected- the stock-;
Neither.business nor gov-!
holder.
ernment
has
Because
is
-gentlemen,
you
through
and
in
counted
.given
One
him
of
recognized results »of this neglect,
the,loss of revenue by the Fed¬
eral Government. * If we assume
omy and
dend
un¬
trade, I would like to call
your
attention to/some figures
which :I regard as most signifi¬
cant.
According to the latest study of
:
»the
United
creased
ment
net corporate debt in¬
between
1945
and 1947
more.
and
it
is
fair
to
That by the end of 1948 it
have reached
$110
billion.
.All [private debt,
vidual
including indi¬
non-corporate,' in¬
.and
creased /from;$140 billion at'the
<ehd of 3943 to $172 billion at the
end of 1947.
vance
'It will
probably ad¬
dollar's,divi¬
individuals, 'ttvaprf
1948,
have
received
of
revenue
addi¬
the
thirties,
the
for
greater
security, which I men¬
earlier, has stimulated an
astounding growth of life insur¬
tioned
and, in fact, of all forms of
protection.
I
have
no
quarrel
with this desire for security.
II
ance
is
deep-seated,
including Federal, State and local,
declined
the
least
billion this year.
in
about .$30'
that
the
another '$15
.Net public debt,
period
same
by
billion, with the result
at. the close of
1947
the ipri¬
a
people, we must encourage
incentive by doing something tc
make ownership .more attractive
portion represented -.about
42%/of total net public and pri¬
One of the most effective ways
to change our tax structure in
vate
way
vate
indebtedness,
with 34%4 in;v 1945.
make us^ watch
our
compared
This should
step. ■ -*
.■
as
/These 'figures cause ire to /ask
ithis question:-Is business tending
-to-'borrcw 'too
'Creating -too
readily?
severe
•repayment?
We
.Are we
strain lor
a
fortunate ir
are
to
ownership.
to
how
I
am
this
long
as
investment in
not dogmatic as
should
balanced
maintain,
we
as
budget.
that,
under
tions,
with
Pone
be
I
a
feel
do
present
eondi-.
our
commitments
abroad, it should be done in
a
creasing^too rapidly for continued
iprivate debt to be sou^d, we all
has
agree,
to
rest
ownershio.
on
Because of our present high
prices, it Js particularlv necessary
to -keep the ratio of debt to total
business investment low a n 1 ''h a ve
ample cash in the bank.
and
large,
uals 'do
business
not
ship
to
capital,
the
lows:
.
an
owner¬
aggregate
cm-
The situa-
be summed
it entered the postwar
the
ings
up
fol¬
as
(1) T h i
s
cornorations
year
income
$8
will
of
taxes
billion and'$21
They
$34
close to
dividends, leaving
probably
billion
about
billion after taxes.
in
pay
approximately $13 billion of re¬
tained earnings.
If we take the
three-year period 1946-1948 as a
whole
find
we
'reinvested
•t^e
business has
$30 billion of un¬
earnings
which
have
the increase in debt at
:Stockholders40%
the stockholder.
are
getting
only
of
expense
about
that
some
distributed
cushioned
of
reported
earnings
against 7.0% in the past; yet stock¬
like
holders,
business, have
ing costs.
among
Tax
earn¬
(3) the ability to bor¬
policy should be geared'
government
to'meet
There
industries.
are
and
higher liv¬
exceptions
Some do
not
Let's look at the problem for a
moment
the
from
standpoint
era
outlive?
cause/for
into being be¬
came
of
Some people say
other
unfamiliarity
-All of the statutes
to
tions
the
anc
damp down this overI refer to the restric¬
on
security
registration
advertising, tc
the
issuance and sale of securities,. tc
the margin requirements on stock
in
process
exchange collateral, all of whic?
are applied to no other industry
The
Reserve
Federal
Board
has
authority/to regulate margins "for
the purpose of preventing the ex¬
cessive use of credit for the pur¬
chase
is
savers,
among
the
par¬
savers
among
farmer
and
corporate
securities
Government
ments.
the
.in
with
groups,
invest¬
as
data
show
that from
1935 to 1947 there
not
no
only
flow
of
was
individual
savings into corporate securities—
there was actually a
extent
lion.
of
$3
of
$172
the
billion.
tremendous
It
is
Apparent that virtually all of
savings
Do
we
tions
bil¬
During this period, personal
savings" reached
sum
decline to the
approximately
are
our
going to institutions
want our financial institu¬
to
avenue
thus
become
the
one
single
of investment of the funds
have large undistributed earnings
of.the American neoole?
ble at the
I trem¬
responsibility which
you
in
we
financial
the
do, and
can
world
the point oi
doing, a better job in the sale o.
investments. There has been toe
are
on
much tendency to
to
be
Shaken
confidence
-carrying of securities."
of credit currently
or
used is abnormally low as the 75%
margin requirement virtually puts
the roaring twenties, but how car
it be justified today
trading is at
a
when security
rate of about ore-
quarter that of 1926 and when for
many-years
investment by
indi¬
viduals in corporate securities ha*
been almost entirely absent?
7
see
told
the Board
conditions
more
would like tc
normal before
reducing margins, but I am at a
in determining what factors
loss
working against normalcy, lit
cannot be excessive speculation,
it cannot be excessive volume, It
are
certainly is not excessive loans.
personally
their
power
inclined to think
is being used as ?
measure
impression
stocks
create
under the
that .prices
of
inflationary trends.
would have
little -effect pricewise, but would
add much to liquidity so sorely
margins
needed by
telling them that they roust
have $4 of collateral for a loan
by
Regulation should be flex¬
ible and responsive to the changed
$1.
conditions of our economy.
I am
moderation
in
the interest of a
advocating
not
cation
in
long-term
to
ad¬
ownership of the
securities of American enterprise
Instead of emphasizing the possi¬
bilities of catching '"highs" and
"lows," we are about to use
imagination and visualize the
buy
its
by/the
adoption
however,
the
with
,
exempt the
our
taxation
pos¬
t
s
k h
o c
1 d
o
from
e r
that portion of divi¬
on
dends paid by corporations in ^ex¬
cess-of
50%
of their
earnings
available
they have learned to purchase
means
advocate
I intend to
managements of
many companies in different in¬
dustries.
The
proposal
would
regularly as r
producing income, mucl
a
,
Congress,
talk
securities
as
changed since publi¬
pamphlet, we are
of .this
currently exploring an interesting
tax proposal.
Before feeling free
note of greatei
a
the
vantages/of the
after
of pro¬
for
the
Federal
stock
common
taxes.
This {pro¬
posal, if enacted into law, would:
(1) Eliminate any necessity Tor
an undistributed
profits tax;
tection."
By encouraging long-term in¬
vestment, I do not mean to be¬
little the importance of speculatior
(2) Eliminate any need for;Sec¬
tion 102 of the ilriternal Revenue
whidi, carried
Code;
by people whe
on
informed
well
are
who
and
car
surtax rates take the lion's share
To
encourage lon^-term invest¬
ment and ownership of America r
enterprise, I would like to see the
capital gains rate of 25% reduced
substantially.
At the Exchange
we
the
see
tax in
the
effects of the presen'
practical
a
flow' of
It check:
sense.
capital.
is not
It
?
revenue-producing feature of the
tax
structure.
sired
from
If
the
the
is
revenue
de¬
capital gains tax*
substantially more
reducing the rate
be had b?
and shortening
can
folding period. ;
Giving
thought
to" the
double
taxation of dividends which has
been mentioned so often lately, J
do mot
know
authority
of one recognizee
taxation who is satis¬
on
fied with it.
J do not know of
ore
does not believe that it is contrary
to sound tax legislation.
No less
an
authority that Secretary of th*
Snyder
recommended
Treasury
correction in
Texas, iin
speech at Houston
a
December,
Revenue Act
1947.
The
■■
,
(3) .'Recognize
double
injustice
of
dividends
in
the
taxation
of
principle, »but only to
degree;
•
limited
a
.
(4) 'Give
to take
or owners
interest
for stockholders
cause
in
the
decidedly .more
their
of
affairs
companies;
(5) Increase
Federal
The
to
revenues
Tteasqry, although it is
not'proposed as a revenue meas¬
ure.'
(If this provision had been
effective
Jan/1,1948, at least 50%
of earnings might have been
dis¬
tributed instead of less than 40%,
in
resulting
million
an
estimated .$700
additional
Federal
in
Revenue);
of
'
•
(6) Increase
the
*
.
v
attractiveness
ownership securities and hold
down the
increase in the debt of
corporations;
(7) Tend to reduce emphasis on
possible capital appreciation and
place the emphasis of investment
on continuity and sta¬
bility of income;
programs
(8)
Militate
against
concentra¬
tion of power.
I
should
like <to
emphasize in
proposal
that it leaves management and
stockholders,or owners, in,The
position of determining dividend
outlining
this Tentative
1913 clearly rec¬
inconsistency.
Ai
that time corporations paid a 1%
policy without
income tax and dividends received
should be.
by
ing fund repayments contained in
ognized
of
this
individual stockholders were
exempt from the 1 % normal tax.
I
7
am
price control
false
which have
allow ourselves
by passing events
We should strike
amoyht
The
we made an
study of the /genera¬
savings into in¬
vestment.
This study was dis¬
tributed as a pamplet entitled,
"Economic Progress."
In an at¬
tempt to keep pace with conditions
subject of confidence, I fee.
that
consultants,
exhaustive
tion and flow of
or.
afford the risk, .adds stability anc
was
overeager to'buy securities
liquidity to the market.
Taxes
so
eager That the whole credi/ alone discourage short-term spec¬
structure was involved.
A legis¬ ulation.
A profit realized withir
lative^program was adopted which six months is ordinary income an?
was necessary in character if nbl
is taxed as such.
High individual
of
ticularly
labor
There
factors.
are
we
as
I feel that an
nomic
few years the public
a
the equity market.
Confidence cannot be instilled
that the reason why savings do;
in the minds of the prospective
not flow into ownership is due. ir
owners
of American enterprises
a
the stockholder.
—notably the public utility indus-.
ital markets
Decreased
to these considerations.
large degree, to tayes, but there
-
will have net earnings before Fed¬
eral
and
row.
are
.
period. (2)
unprecedented retained
individ¬
have
of debt to
eeals*'the •rxceotions.
'tion -may
Wh^e by
and
appear
excessive ratio
We should
that busi¬
ness
will not
always have the
wealth of liquid assets with which
take
one
Super¬
vision and regulation of the cap¬
am
and government.
into account (1)
ness
economic health?
in
sense
its usefulness in another,
way
relativelv
a
this
life insurance
buying on a cash basis
is
This may have been desirable ir
4'
to maintain or increase the govlow fratio of
<ernment's
revenues.
Given
the
/private debt to national incomeat
will to do so, the problem can be
the moment; but is not debt insolved ^beneficially for both busi¬
-having
makes
While
concerned.
one
means of
security
encourage
credit or equity funds into indus¬
try without ■ doing:harm to every¬
to
our rapidly changing eco¬
conditions, legislation 'thstl
eagerness.
long-term trend
and difficult to
reverse, but I feel
that, in the best interests of al
by • at
With
nomic
well
as
31
large stockhold¬
important part
basic interest that restraints oi. of our work at the Stock
Exchange
the capital markets should not be is thinking and
acting in the best
excessive.
They know, as we interests of the stockholder.
About a year/ago, with the
know, 'that you
cannot badlj
help
handicap -the
flow
of
either of Franklin Cole and Co., eco¬
sibilities in interesting the public
;t is
general
regulations had their origin in the
quest
ers.
companies. Tt is part of tneii
industry
policy.
or
Growing out of the experience
small
ance
as
desire
of
extreme importance to all insur-
our
Security Legislation
in detail.
billion
$2
The Search for Security
billion
will
would
tional
assume
each
of
if companies
could have paid the
percentage
of
dividends
which
they dis¬
tributed in the past, the govern¬
pears
approximately $84 billion to
■&10O
out
paid to
that .in
Department of
States
^Commerce,
from
cents
ibi
encouragement
^ownership -of
economic
little-
the .government -receives about 4C
guarding against
wider
much
the
equity, wish to do your part in
preserving a well-balanced econ¬
in
The,
power.
directly in line with
consideration.
yolir wital^concern with debt
be
must
•presented.an important imbalance
in the domestic economic
picture.
sound
.
another,? given eneoui^emf^ity stead /of -discouraging Ownership
special assistance'to the wage- As a natipn, we are committed to
against
concentration
of
■earner, to the farmer and to busi-i fight
and
and
(2519)
have
explored
proaches
various
ap¬
this
to
knotty problem
and I have become fully conscioug
of present conditions that make
solution
end
retaining
of
difficult.
so
the
of
the
Since
corporations
war,
are
disproportionate share
their earnings to finance ex¬
pansion
a
iota of govern¬
This is as it
.
For example, if sink¬
loan /agreement
a
interfere
with
or
more
indenting
divi¬
liberal
dend
payments, stockholders will
have
the
facts
before
them
and
explained.
Likewise, exceptional
growth, "which creates extraordi¬
nary need for funds, will not <be
retarded by forcing dividend pay¬
ments -in
lieu of a penalty, as
under -the
undistributed
profits
capital.
evitable that
think
provide
one
interference.
additional
I deem it in¬ tax.
government will
Finally. I return to my main
seriously of the appli¬ theme. We must not permit gov¬
and
working
ment
more
our
cation
of
ternal
Revenue
Section
102
Code.
of
the
The
In¬
CIO
at its
recent'meeting in Portland.
Ore.,
has
ernment
and
in
war
to
a
cold
business
which
dissension
and
to
can
engage
lead only
disunity.
For
already advocated an
undistributed profits tax which I
hoped had been buried with the
myself, I firmly believe that by
setting aside nrejudice and pre¬
Revenue Act of 1938.
an
conceived
notions,
of
era
good
we
can
enter
which
feeling
higher stock market, but because
of the importance that security
values have in accurately reflect¬
of the small stockholder in regard
should and will be our response
a world
eagerly awaiting the
lead of our country in the effort
to
attain
political stability and
ing economic conditions.
In the
valuation, for example,
to what was in his best interests.
economic recovery.
I do not refer to the trend of gov¬
in
regulation
matter of
large business es judged by
quotations prevailing on the
every
the
national
stock
exchanges.
ownership interest in a
An
privately
department store cannot be
appraised without reference to the
owned
price of
listed
Since coming to the Stock Ex¬
change in 1941,1 have been some¬
what
amazed
at
the indifference
ernment
policies, but to the inter¬
by the stockholders in
companies that they own.
I
believe a deeper understanding
and keener interest on the part of
the
average
stockholder
is
a
est
taken
department store necessity for
a free economy.
themselves as to
stocks.
of
affairs of their companies
The same would be true
machine tool company and. in
fact, of all hnes of business
out further
elaboration, 1
With¬
can say
that this matter of sound evaT na¬
tion in The
security markets is of
On Hayden, Stone
(Special
the
forming
a
to
the
extent
ment
in
to
its
encroaching
In¬
the
to
Tire
BOSTON,
R.
Birnie
Hayden,
Street.
has
Staff
Chronicle)
Financial
MASS. — Alexander
joined the staff of
Stone
&
Co.,
85 Water
•
i
mam
—■
...
and to
which the govern¬
policies
upon
their
may
.be
owner¬
ship, particularly through taxa¬
tion, is of major importance for
(Special
to
The
Financial
Chronicle)
-
MASS. —Richard S.
Cobb h with Kidder. Peabody &
BOSTON,
Co., 115 Devonshire Street.
•
32
THE
(2520)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, December 16, 1948
make such beds
Health Act
Medicine Under the British
family doctor's note. He is asked
to supply his national registration
identity number. Then when his
well as taxation."
sight has been tested, he signs a
Another letter which
a
phy¬
paper so that the practioner can
sician
wrote
to
the
London
obtain a fee. Next the prescrip¬
'Times" reads:
tion is sent to him by mail and he
"During the last seven days, in then must choose an ophthalmic
addition to my ordinary daily or
dispensing optician to get the
"work as a country doctor, which
glasses. A list of the opticians is
means
long hours of motoring, also available in the post office.
visits, and surgery attendances, I The patient takes the prescrip¬
have
been
called
up
to issue tion form to the optician who
.medical certificates for
(1) makes any;, extra. measurements
-vacuum
flasks, (2) corsets, "(3) that might be required and tells
coal, (4) brassieres, (5) hot water him what kind of glasses he can
bottles, (6) elastic stockings, (7) have without charge. He gives
outside shoes, (8) milk, (9) eggs, his
identity number and then he
(10) clothing for expectant signs a form for the optician. The
mothers,
overseas
(11)
travel, Ministry of Health reports "there
(12) successful vaccination and is a shortage of frames at present"
inoculation, (13) children's family so that in the early stages of the
allowance, (14) glucose, (15) pre¬ scheme, the optician will ask you
pared baby food,
(16)
brandy, if you have a spectacle frame. If
(17): whiskey,
(18) - petrol, and the patient asks ^or certain types
(19) paraffin.. Further* to this,; all of glasses which are more ex¬
my 'panel'
patients, when sick, pensive than those that are neces¬
demand a duplicate certificate for
sary in the opinion of the gov¬
their employer if they are em¬
ernment, he signs another pre¬
ployed in any government: or scription form to confirm this and
municipal work, otherwise they pays the extra cost.
lose some of their Isick benefits.
There is now plenty of evidence
My real work—treating the sick that the government of Great
(Continued from
,
reduction
—is
of
21)
page
capitation
becoming
of
rate
as
secondary im¬
portance."
The
for
Britain
"British
Medical
Aug. 14, 1948 says:
Journal"
»
-
"Members of the profession ccfrnbecause
they cannot get
plain
clothing
coupons which
entitle
them to purchase white coats. The
has
the
meet
been
quite unable to
demand
for
glasses
—
patients requesting two or
pairs at the first visit.
the patient breaks the glasses
than two years after his sight
tested, they can be replaced
he has to pay the cost him¬
unless' he can prove that the
If
was
but
They
and
to
replace¬
a
ment coupon for three gowns or
coats. The application
must, how¬
be made to the Ministry of
.Health
in
Scotland,
and
for
ever,
Northern Ireland to the
Secretary
spf the British Medical Associa¬
tion."
Evidence
already
published in
British periodicals indicates that
for the first three months
service the costs of
of
drugs
appliances
were
three
the
and
times
the
amounts estimated
by the Minis¬
try of Health.
*
} sPent
Sir
an entire morning with
Wilson Jameson, chief medi¬
cal
officer
for
the
Ministry
of
loss
for
Ministry of Health
to
Dr.
Gale
in London and
the Ministry in
of
caused
children
his
own
forms to be
needs of
their
additional
are
used for meeting
the
children.
the
Since the service went into ef¬
fect,
the first of these
ister
points
out
In
notes, the Min¬
that the greater
part of the cost will be paid out of
taxes. It is" estimated that the first
nine months of operation in Eng¬
and Wales will cbst £180,-
land
)00,000.
Certainly it is already
apparent that the costs will be far
beyond this estimate.
The
has
"British
protested
about
the
doctors.
Medical
from
Journal"
time
time
to
payments made to the
At
practitioner
present,
can
„
general
a
Jameson,
was
When
he
I
left
asked
Wilson
if
me
there
further information that
might give to me and I re¬
plied that I would be
any
he
especially
happy to receive a copy of each of
the forms and each of the
regula¬
tions used under the Act.
He
sai<f
—and he is a notable
humorist,
"Doctor, have you chartered the
.'Queen Elizabeth' to take you
*
home?"
Now
the
I
have
mail
forms
and
been
each
receiving in
week
additional
and
I
additional regulations
have
assembled
a
con¬
siderable pile of such material.
If,
instance, one wishes to have
for
glasses,
"note
must
one
that
the
get
doctor's
a
need
eyes
testing.
The family doctor is
supposed to
provide this note. If,
however, one
is
unwilling - on
conscientious
grounds to get a doctor's certifi¬
cate, he
write to his
may
council
tive
ficulty.
explaining
Then
he
execu¬
the
dif¬
have
his
tested by either one of
special
doctors
described
the
may
eyes
ophthalmic
/or
by
This
an
choice
medical
-receive
practitioners
back of the
optician.
explained on the
form which
the family doctor fills out. At
the
post office there is posted a list
vof the ophthalmic medical
proper
prac¬
titioners and the ophthalmic
opti¬
cians
for
the
area
concerned.
These I are also available in the
^office; of
,
the
executive- council.
a
number
year,
of
patients — and the
numbers may run from 40 to 100
a
day .— his income is propor¬
As
far
medicines
as
are
con¬
chemist
who
takes
part
in
scheme. It is said that there is
price limit
or
any
other kind
the
no
of
limit for medicines prescribed for
treatment. Already there has been
difficulty because private patients
of the doctors, regardless of the
promise
give
of
free
'
the
government
medical
service
to
to
concerned, must pay for
the medicines that are prescribed.
This leads inevitably to the dif¬
everyone
ficulties
which
eliminate
cial traveler and theatrical artist
specialist, Mr. Donald B. Fraser,
phrase
The procedure to obtain
Royal College of
gynecologist, says
that the specialist has no alterna¬
months. It
that,
too,
certain
treatment
as. a temporary
resident requires
the signing of a form stating that
there is no intention of staying in
the
district
for
months,
after
number
is
give
their
which
home
then
doctor
were
ish
in
Each executive council has
cial
fund
are
made.
doctor
a
too few dentists to make
are
full
service
delay.
.
service,
.
,
available
Until
a
full
without
The
does
estimated
patients
Wales
delays, can be
made available, a special priority
service for expectant and nursing
mothers and young children" is
being organized. r- ;
<:.
titled
to
free
payments
paid to
depend on
fixed
year
a
the
the
the
sees
It is
about
350,000
in England and
a
that
will
spe¬
fee
not
patient but is
a
sum.
medical
receive
care
temporary residents.
as
One
of
.
the
most
interesting
experiences I had while in Eng¬
land was a dinner at the Athe¬
naeum
Club. at
which
were
present the editor of the "British
Journal"
and
the
of
"British Ab¬
stracts of Medicine and
Surgery,"
presidents of the Royal
of
Physicians
and
of
the
also
College
Obstetricians and the Vice-Presi¬
dent
of
the
Royal College
of
well known spe¬
Surgeons, also
cialist
ficer
the
and
of
a
the
chief
of¬
medical
Ministry
of
Health.
almost
was
everyone is en¬
medical treatment
under the National Health Service
Fellow
tive
but
was
a
discussion
especially
inter¬
the
of
so-
report
was
initia¬
some
general practitioners who
might wish to go on into various
specialities. Most recent available
facts
indicate
that
specialists
could receive $10,000. a year up
to
maximum
of $20,000 a yea^.
qualify, the specialists
must
satisfy a board, which is
not especially a board of physi¬
cians, that they are capable as
specialists and this board then
a
In order to
determines
the
make
which
specialists can
up to
$20,000
$10,000
brackets.
mittee
Most
the
of
leading specialists
—were
exceedingly
to
rewards
the
being
doubtful
the
under
sufficient
to
as
Act
encourage
young men to undertake the long
and rigorous
qualification
of
ment
that
road
as
time
leads
to
sickness
for
came
the
pay¬
the
first quarterly in¬
physicians working
Act, many physicians
disappointed because they
stalment
to
the
under
were
received
much
so
less
for
their
services than
the
Nation's
insurance
States, has issued
attempt
an
remarks
to
in
the
United
statement in
a
discredit
regarding
the
few
National
Health Act that appeared in my
humorous
diary
the
in
the
"Journal
of the American Medical Associa¬
would
take
pared for it.
Press"
hard
some
knocks and the doctors
were
pre¬
However, the "Medi¬
is convinced
Health
now
Act
abolishment
that
means
of
pri¬
practice and will inevitably
lead
to
areas
that
result.
In
certain
throughout the country,
gen¬
not
thai
The authorities
attend
private
health
patients
have
centers
may
which
provide auxiliary aid in diagnosis.
The
control
of
private beds in
hospitals is such that the private
practitioner has virtually
to
the
over,
use
of
these
regulations
no access
beds.
as-
to
More¬
charges
Morrison's,
affairs
over-
Whether
will
be
the
patients, or for
another question."
that
for
good
medicine,
is
Conclusion
As I stated
is
:
previously, the time
too
soon to
pronounce any valid
judgment On the effects of the
British National Health Act on the
health
or
of
more
ity
the
people of England
on the qual¬
particularly
medical
of
service
and
the
quality of the British medical
pro¬
fession.
Some of the authorities
with whom I spoke and who have
been
previously referred to have
estimated
100
anywhere from 20 to
in order to make the
years
system
workable
that
may
it
to
the
the
meet
extent
promises
made
by the government
the system was installed.
In the face of the
before
shortage of
doctors, nurses, hospitals, health
centers, drugs, and young ladies
trained to handle the paper work,
the
British
nevertheless
are
at¬
tempting to make the sys'tem work.
An
American
commentator
cently wrote,
"Since the
re¬
British
Health
everybody in
England has become a patient. Ail¬
and
nurses
referred
to
by the
"Journal" exist and will have to be
made
good. The British Ministry
of Health itself has issued
of
saying, "It
that
the
the
in
the
service
possible
and
would
medical
make
of
existing
use
build
tals
centers."
health
and
but
best
the
sources
permit expand
their scope and
The
not
Utopia
will
conditions
as
inauguration
near
ments
now
Ministry of Health admitted
in¬
was
which
were
before
never
demanding attention at state
Hypochondriacs and per¬
expense.
who
sons
for
have
trifling ailments
they would never
which
trouble
doctor are
a
now besieg¬
ing the offices of doctors and den¬
tists, simply because attention is
at the expense of the state."
Regardless of- the
hospi¬
new
Service
July,
discovered or considered sufficient
to inconvenience the citizen are
state¬
a
always made
was
service
new
evils
the
or
apparent benefits of the opera¬
tions of the British National Health
were
working ex¬
ceedingly hard and stated that the
Act,
real
racy and not of a socialistic state,
could only suffer from the estab¬
that
doctors
test
Winter
would
come
since
the
people wishing to
during this
number
see
in the Winter is always
of
*
physicians
greater.
The editor of the "British Med¬
ical
Journal"
also
admits
in
letter
a
that
the
to
me
services
are
crowded but he questions whether
not
physician sat up at
night to prepare forms for the fol¬
lowing day. Now
I
can
state
solemnly and sincerely that a gen¬
eral
any
practitioner who had invited
to spend a
me
while
he
himself
morning with him
patients
saw
that
it
told
me
the citizens of the United
States, still citizens of a democ¬
lishment of such
system in this
a
country at this time.
there
Inevitably
is deterioration of
medical
service because of the methods of
work. Doctors simply cannot seb,
diagnose and treat patients in the
process in which they are over¬
whelmed by such plans as those of
the British and do a satisfactory
job.
If
tries
doctor
a
patients
day,' he
a
to
see
gives
all
them less than what medicine
quires unless he has
40
of
re¬
vast estab¬
a
necessary to
preparing
the
forms and that the keeping of the
books on his government basis as
contrasted with his
private pa¬
lishment with innumerable assist¬
tients had involved him in such
that
vast
the
tinue
was
time
of
amount
he did not
see
unless
a
work
that
how he could
con¬
paper
the
government
■
might be necessary, because of the
amount of paper work necessary,
to
train
clerks
in
the
keeping of
the necessary records. Moreover,
when I
ally
was
found
busy
the
papers
doctors
who
women
incomes
by helping
and
related
surgeons
to
gov¬
patients.
support of
are
is
a
Mail" by a
my
statement that
overburdened
with
letter to the "Daily
physician who writes:
"Spectacles? Yes
(a
green
form).
Good
buff
afternoon. Next! Milk? (a
form). Next! Good Afternoon!
Sickness
ants.
benefit
certificates?
(A
choice of pink and white forms.)"
If he tries to
see 100 patients
view to developing
his income, he is reverting to the
a
day with
methods
a
of
treatment
prevailed in
of
disease
previous
a
cen¬
tury. Fortunately for modern man,
the technics of preventive medi¬
cine, the great advances in medi¬
cal
science, the development of
new
drugs which are superbly
efficient make it possible for peo¬
ple
to
they
be far
were
more healthy than
in the past and to, have
many more years of existence. By
these
advancements
in
medical
science, insurance companies ben¬
efit and when the insurance
pany
,
com¬
is the government, the govr
ernment benefits.
Denmark, I actu¬
physicians
with
In
in
young
their
earned
forms
50%.
Mr.
in
30
to
of
stituted
ernment
ruled
of
employment.
state
National
Union
himself, says that
the shortages of doctors, hospitals
practitioners in the better
class of practice have suffered re¬
ductions in income ranging from
eral
ful
Workers
they had expected,'
would
provide him
with
some
and, as has already been said,
new
type of medical clerk who
private' practice apparently
would be trained particularly in
promptly
disappeared
for
the
handling papers for government
most part. According to the "Medi¬
physicians.
cal Press" for Nov. 3, it was imI talked this over with Wilson
nlicit
in
the
provisions of the
National Health Act that private Jameson, and he admitted that it
practice
signed
on
tion," yet the General Secretary of
the British Transport and General
spend
specialist.
a
for
Health,
which is devoting its every ef¬
fort
to
promoting
compulsory
or
in Great Britain—and I met many
financial worries
no
employment
have
with
contact
hospital is no long¬
operating itself.
The report,
made Nov.
14, says that "there
are
long queues of free patients
waiting for hospital space, wait¬
ing for specialists' attention, wait¬
ing for glasses, waiting for hear¬
ing aids."
Recently
the
extraordinary
agency that is known as the Com¬
usher
Spens
provide
or
er
the
The
plan
but besides the
called
designed to
the
loses
he
hospital has
the
Spens report about which
physicians had considerable
in
retary
of
London's
Middlesex
Hospital.
He said that now the
clear
I
in
be
the
hospitals and therewith his
practice. His view is confirmed by
Brig. A. P. Hardy-Roberts, Sec¬
Act
and
a
to
otherwise
wholly about the National Health
ested
a
the
of
Surgeons and
ment
dental
without
When .the patient decides which
^ i Especially interesting is Note 6,
erf these practioners he wants to
which says that
test his sight, he calls on him
by
appointment and hands him the
which
from
number of times that he
vate
Ministry of Health has said
own bulletins, "At
present
council.
paid for
are
patients in these special categories
in process of being developed.
virtual
also promised, but the Brit¬
The
and
are
the
everyone
can
address.
sends it to the executive
National
its,
there
Aliens
The fees that doctors
cal
for
identity
an
signs the form
the
services
three
than
more
received.
to
future.
Dental
the commer¬
concerns
private
practice
and
in the not too distant
are
statement,
with the National Health Serv¬
ice.
There
will
be,
to
use
a
When
the patient is told that
he can get free all the medicines
prescribed by his doctor from any
the
from the upper 10% of the popu¬
lation but from only 2 or 3%. One
liv¬
are
ing in England for less, than three
tionately reduced.
cerned,
with
who
about
the equivalent of
$4,800, provided he sees a maxi¬
mum number of patients.
If, how¬
ever,
he is unable to see that
as
ophthalmic
is
£1,200
same
article
doctors
,
Scotland.
at the
his
of great numbers
for the
visitors from abroad who
tive to
public.
Harley, Street
and to handle papers
time and he concludes
full
doubt.
general
of
their private practice
overwhelming ef¬
care
of the sick
be
a series of notes have been
developed to explain these prob¬
the
specialists
that
the
will
lems
to
indicates
tention to
fort to take
"There
includes
It
vacation.
on
The talk after dinner
have
to
are
tested, there
eyes
by
expensive glasses.
more
If
Health,
and with Dr. Kennedy,
his assistant. I have since
spoken
to Dr. Peters of the Office
of the
not
was
the
.
report
have found
cost from $32
now
week.
per
falling off since July and that
they now draw their practice not
Britain
"Lancet" and of the
less
Great
in
are
Medical
carelessness. Patients always have
to pay the extra cost of repairs
gowns or coats
who
$50
Another
interesting
is
This
patients
three
self
entitled to a coupon
equivalent to the purchase of six
times.
all
many
government permits them to get
white gowns but not white coats.
are
at
to
to
The House
of
Delegates of the
American Medical
in
St. Louis
last
Associatiop met
week
and
reaf¬
firmed its fundamental policy.. It
rejected unanimously the invasion
of government into the practice
of
medicine
and
the
attempt
of
government
tonationalize
the
medical profession.
This policy,
and fully established by
body of Ameri¬
medicine, is so clear in stating
our principles
^hat I repeat it here
as a concluding statement:
i
restated
the representative
can
.
"The
American
Medical
Asso¬
I hesitate to quote a writer in a
British newspaper. However, one
ciation reaffirms its belief in the
Candidus, who is well known
medical
a
British
commentator, calls
as
at¬
application
care
untary basis.
of
the
principle
insurance
on
a
The A.M.A. has
of
vol*
en*
Volume 168
Number 4760
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2521)
I,
couraged and assisted the devel¬ reaucratic propaganda, is a variety
medicine
or
state
of voluntary prepayment of socialized
plans. Coverage is now provided medicine and possesses the evils
throughout the country, and pro¬ inherent in any politically con¬
tection is being extended rapidly trolled system.
It is contrary to
opment
to
of
•
ever-increasing proportion
population.
"The American people now en¬
American
health,
socialism.
an
our
joy the highest
the
level
standards
finest
of
scientific
of
medical care, and the best quality
Of medical institutions thus far
achieved by any major country
the world.
"The
American medicine
of
are
the
the result
scheme
as
bution
of
deterioration
gressive
the
of
detriment
ous
of
the
"The American medical
profes¬
the
institution of any system of medi¬
cal care which would result in
ical
carefully considered opinion
is that any scheme of political
medicine would be a catastrophe
for the American people,
Our
"Compulsory sickness insurance,
notwithstanding misleading bu¬
j, *
care";
are
we
certain
voluntary med¬
insurance, with the con¬
of the American
care
support
medical profession, can and will
solve the economic problem of the
the
existing framework of private
enterprise.
"It has been demonstrated that
voluntary method provides
better and less costly service
a
and
avoids the imposition of enormous
taxation.
'
"The
continuing
determination
and
purpose
American
the
of
improve the standards
ical care,
of med¬
to make that care
and
available to all our
(Continued from page 4)
the
of
investment
ac¬
count, its quality and its liquidity,
is the balance wheel around which
the
loan
general
structed.
If
the
policy
is
con¬
investment
ac¬
count
provides sufficient liquidity,
policy can
be
quite
different than if the investment
the
loan
account
provides
only
limited
a
liquidity and the bank must look
to
the
loan
meet any
account
for
funds
to
establish
flexible
a
total for loans and for each cate¬
of loans.
These 'will
be
related to the nature of the prob¬
able loan demands
on
the
business,
the deposit structure and possible
deposit demands, and the quality
and distribution of the security
investment, accounts
loans
in
the total
As
each
category approach
policy maximums, there will
be a need to exercise a restraining
influence over the" loan growth.
Also, as the maximum is ap¬
the
proached, there will be
incentive to provide
added
an
new
loanable
funds
by a more rigid policy of
liquidation of existing loans, in¬
stead of
permitting indiscriminate
rapid payment and turnover
more
tive
It is
inevitably leads to selec¬
lending
and
sounder
assets.
form of self-imposed credit
a
control.
It
as
proposed
be just as
effective
national credit
control, with the outstanding adVantage that the selection is made
in
any
terms
can
of
local
needs
and
quirements by
men who are
pletely familiar with them.
There is
no
re¬
com¬
standpoint of the individual bank
the attempt to apply voluntary
credit controls is a difficult one.
It is difficult to determine whether
making
business loan
a
causes in¬
the circum¬
whether
flation
or
stances
prompting the request for
the loan
tion.
were
If it
bank loan
the result of infla¬
is assumed that
every
is inflationary, then it
would appear
only an¬
swer is to stop making loans en¬
tirely. However, no one will deny
that
it
and
industry
have
•
basic
is
that the
credit
and
we
loans,
will find that the trouble
we
factors
have
been
visible for
and
we were
actually
as^e look back over
history of problem
credit
both
some
present
time before
shocked into being
aware
of them.
The
be
problems
product
a
strains
of
you
convinced,
are
much
done
be
that this can
effectively
more
and with much less
danger by the
cooperative efforts of the individ¬
ual bankers of the country than
it
by any law or series of
regulations, no matter how care¬
be
can
prepared,
fully
meet the
in
effort
an
to
should all realize that if we
exclude a renewal of government
We
We
banking business has
accustomed; also, that if
the
become
increases
deposit
should
occur
from either of these sources,
there
is
effort
possibility that
every
will
made
be
with
controls
forms
new
additions
or
an
sterilize
to
the
of
in¬
credit
to
present
the
present
controls.
We
all
that
know
high cost of living and high prices,
plus the availability of goods, has
tended
to
reduce the rate of sav¬
and in many localities has
brought about a deposit decline.
We can be certain that with rising
ings
government expenditures, govern¬
deposits
ment
banks
in
will
be
drawn down to the lowest neces¬
sary
current Treasury balance in
to
avoid cash budget
effort
deficits
additional
and
govern¬
Any
way
difficult to
you
see
look at it, it is
how banks can de¬
deposit increases to pro¬
vide for substantially larger loari
totals.
Deposits
may
not rise.
pend
on
There may
be deposit declines. If
deposits
rise from
expanding
loans,
there
can. be
legislative
trouble.
It
deposits
rise from"
sources outside the banking busir
ness,
allowed
pansion
of loans
deposit structure.
on
the present
Every
one
of
business within
a
industry,
an
its
competitive, price and quality
position, its profits margin and
,
points, will
similar
industry;
itself
will
trend
and
factor.
stresses
Business is slowing down
areas while still strong
some
in
others.
vary
businesses
and
will be
....
from
within
the
industry
controlling
a
•
.
..
;
,
limited number
A
which
mand
current
This shifts de¬
reduces existing back¬
and
of
orders.
It
high
more
of filling
instead
orders,
present
brings
area
back
of
prices,
con¬
taste
needs
and
are
hew factors to be reckoned with.
but
such
as
had
bad
a
name
among the mass of nonstockholder
voters and hence could safely be
around. And finally the
development has proceeded to the
point at which the corporation h
subject to a distinct system ci
pushed
heavy income taxes, and dividends
received by individual stockhold¬
ers
from what is left are subject
both normal tax and surtax tc
to
individual without regard tc
that the total stream o:'
fact
earnings
corporate
been
treated
This
is
an
as
has
already
taxable
income
inequitable'arrange¬
concerned
replacement' and
uses
of
some
up
about
what
he
spends
it.' This!
can
be added up to
the conclusion that
from
it
also
now
on
to mark up
not
will
prices.
that it will be
mean
to maintain
or
be
It
so
risk capital sorely needed
plant'facilities'
v.»
:">
,
may
for the
ol
expansion
•
''
'
■>
'
•.<}
*
-y•
Present Level of Corporate
Earnings
and
many
it will
What
■<
be much healthier
to
a
Any business which might lose
10% or 20% of a 200% gain in
volume over 10 years will still be
doing much better than its man¬
would
ever
have
dared
ago. Never¬
prophesy some years
theless, if these managers can op¬
only on a basis of each year's
increase
absorbing
last
year's
mistakes, and have planned only
erate
for
increases
with
no
allowance
for set-backs—look out.
The
are
Selective
Credit
Job
political connections
attention
our
it,
selective credit
job is divided into two parts. One
is to help keep
the borrower's
credit in such a sound position
that he can modify his course, if
necessary, without embarrassment
see
our
either to himself
the
on
managements
to
part
of
the
use
foresight they expect of the
same
borrowers themselves.
! So
final
my
connection
is this.
7
.
point
to
you in
selective credit
with
Credit policy has to
be
only with the in¬
goodness
of
individual ;
concerned
trinsic
,
not
loans, but with budgeting the total
credit advances made by the baiik
in every category so that the bank
is
to
sure
flexibility under
able
its
retain
own
less favor-
any
conditions.
less
These
"
credit ■?
;
fa-
vorable conditions may arise
from
:
higher bank reserves or decliri- ?
ing deposits, or a combination - of ;
them, or additional government
credit, controls. Whatever they are,
selective
credit,
it
as
individual cases and
to
the
credit
banking, is
as
applies to
it applies
form of insuring
one
of
]
thje
borrowers,
the
banks, and the
;
function of
service
'
economy.
or
to the bank.
The other is to keep
the loan and
—
from the real
troubles
to
some
to divert
causes
page 2)
country would increase with ' a
great increase in business activity
and dollar volume of sales. Indeed, if the total reported earriings of all stockholders of the
United States
stant
were
-
•
•
to remain con-
in
decline
or
•
a
period
of
large production and sales such a
development would be cause for
alarm as far
as
the future of
business enterprise were
private
We
concerned.
must
be
our
on
,
guard not to form opinions care¬
lessly on the basis of aggregate
figures representing earnings of
stockholders,-earnings of factory
employees, or of any other group.
Only* as the available data are
carefully
sifted,
analyzed, and
compared is it possible to form
reasonable conclusions
is
as
to what
with respect to the
relative positions of the various
economic groups making up the
going
on
nation.
-
^
,t,
This means, of course,- that the
pertinent question regarding the
leveL
of
imaginary
of
reported
cor¬
porate profits—earnings of stock¬
holders—is: Are such profits large
relative to other factors? Do such
represent an increasing
share of the national product? Are
profits
current
developments enhancing
position, of those
furnish
risk
capital
and
economic
the
who
pinching other important groups?
In my
judgment
a
careful study
of the available data discloses that
a
negative answer to any such
question is clearly called for. The
•
fact of the matter is that the for¬
gotten man of the present era is
stockholder, the chap 1
provides risk capital. His
showing is poor whether if is ex¬
pressed in terms of his share of reported corporate earnings or in J
the
common
who
of
has
what he
left from
culprit who can be safely sdolded.
Organized business enterprise has
occupied a whipping post position
in this country for some time. By
terms
of personifying busi¬
activity, using such expres¬
sions as capitalism, Wall Street,
etc.
as
epithets, and forgetting
that the people who provide busi¬
ness with capital and who super¬
vise business operation are ordi¬
important group
in- the com- ;■
munity has been
squeezed » as much as has the investor, and this
includes
the
furnisher of
risk
folks like the rest of us, a
mysticism is developed
that tends to obscure the real is¬
squeezing is seen in the continu¬
ing
difficulty
of
raising new
money
for
business expansion •
through
the
issue
of common •
stock—and the existing layer 'of r
risk capital in many cases has
been
thinned by the; issue
of \
senior
contractual securities to i
a
process
ness
nary
sort
of
that the members of
legislature, in pur¬
suing thejr inquiries,, will discount
heavily; all such loose talk and
sues.
our
As I
borrowing enterprise,
failure
current
question
is:
the merits of the charges
businesses.
hot-house atmosphere
which has been forcing growth at
the expense of vitality.
get out of
credit
weak¬
,,
immediate
The
difficult
increase sales vol¬
and
ment,
There being currently made by politi¬
will be a realignment of prices, cians and others to the effect that
which has already begun.
Then the earnings of American cor¬
high costs will squeeze profits, porations are "excessive," that our
corporations
are
indulging
in
and profit margins will decline.
"gouging,"
"profiteering,"
"ex¬
The
price readjustments, the
ploitation," and that something
cost and
profit difficulties, and
must be done to curb these in¬
perhaps more losses and business
satiable institutions if inflation is
failures will, in fact, be merely a
to be checked and the standards
step in return to a more normal
of living of the people preserved?
competitive type of business. It
The first thing to be noted in
will be an inevitable inflationary
readjustment.
It will not neces¬ commenting on this matter is the
desire always present in any dif¬
sarily lead to a depression or to a
ficult
situation t- particularly in
disaster.
It should be expected,
in
bank
(Continued from
poration constituted a choice tax¬
able entity in its own right—ar
entity which not only had no vote
it also constitutes z
major deterrent to the supplying
of
business enterprise with the
he
of: the
from
of
any
Are Overstated
his past
savings and is able to save less
than he used to, he becomes in
creasingly dollar conscious. He is
As
not from
Why Corporate Profits
the
of
but
refusals
or
arise
stability
quality conscious. The
consumer's right of choice and his
and
changes
banks
which
arid maintaining the strength and
in the banks.
Loaned-up
magnify depressions; they
always have and
always will,
the
price
from
credit
more
rabidly becoming
meet
of
to find out what it
to operate in a market in
demand does not exceed
means
to
changing markets, should not be
further embarrassed by demands'
banks
beginning
agers
borrowing.
ment
will not be adequate for an¬
other similar business.
The trend
ness
themselves
already having evidence
are
in
ume
which
appeared
adequate in a
long-term sellers' market will not
be adequate in a buyers' market.
The ratios adequate for one busi¬
of
Sound businesses, struggling with
internal" readjustments
ness
:
.
For the second, I remind you
as
They will arise again, as I have .many times in
over-confidence; the past, that one of the primary
of this.
rate and amount to
at the
which
the
various segments of the economy.
easy
creases
.
first, I suggest a careful
review and strengthening of the
assets ratios usually " applied
to
borrowing accounts.
The ratios
over-expansion; unsound cost and functions of banks is to have
price relationships; and the un¬ credit available for worthy bor¬
balances
within
businesses, be¬ rowers when it is most needed.
tween
businesses, and* between That requires some reserves of
financing and a continued
rapid expansion of loans, there is
little
likelihood
of
deposit in¬
deficit
:
sources.
the
and where' he spends
problem.
same
1
be placed on him from other
may
which always multiply
sumers are
convinced, and I am sure
am
multiplying the strains which
or
boom progresses.
from
forms
of
a
At
Needed
Efforts
ferred
other
The Boom Ending
orders.
Cooperative
on
break-even
exist.
posed which would limit the ex¬
inflationary conditions,'
for
to be
seem
they
production into the
individuals to
available; but under
when
unexpected
arrive. But
logs
_
business
for
These will
without substantially or
unnecessarily multiplying the in¬
flationary pressures which already
economy,
probably banks will not be
to use them to expand
loans.
Restrictions could be im¬
necessary
country
different direction.
an
doubt that from the
ex¬
nearly ten years creates the ma¬
terial for many business and credit
constructive purposes which con¬
tribute to the functioning of the
crease
of loans
have
we
as
this
stricted. to the essential needs and
renewals.
Any such policy which tends to
limit the total expansion of bank
loans and, in the process, insures
in
supply have become more readily
available, the consumer tends to
spread his spendable funds in a
I
gory
perienced
position of thri bank
flexible "thatv no de¬
the bank .need be trans¬
to the borrower, Causing
mands
For the
supply.
As products heretofore in short
agree that speculative and
long-term loans should be avoided
and the use of bank credit re¬
to
maximum
such
will all
deposit declines.
Under present conditions, ii
would seem particularly desirable
'
boom
are
having difficulties.
For
a
larger number, full capacity.op¬
erations are restoring all the usual
risks of active competition. Many
a business
begun since 1945 is just
"Loaned-Up" Condition!
total
directly af¬
it.
A.
industries and businesses actually
people."
Banks Should Avoid
The
fect
things
forget. These
banking busi¬
the
ness, but nevertheless
Medical Association is to maintain
and
not
outside
distribution of medical care withir
the American public.
to
damage
medical
convinced that
the
sion is unalterably opposed to
such
any
method of the distri¬
a
"On the basis of experience, we
and
sick
needy.
rejects
must
we
exist
the
tinued
standards of that care to the seri¬
tion
investment
sufficiently
of 4
general economic situa¬
our
finality.
trol.
of all countries
about
limit¬
now.
£ "number
are
problems.
are
"The experience
There;
that when the
people understand the facts, they
also will reject it with the same
a free profes¬
working under a free system,
unhampered by government con¬
where government has seized con¬
trol of medical care has been pro¬
and. is
possibilities suggests
ing loan expansion
The American Medical
Association
development by
sion
the
dangerous step in
of complete
state
direction
of equally
great accomplishments of
tradition,
first and most
these
33
I hope
national
abuse.
Next. I would like to call atten¬
tion/to
the fact that it should be
expected that the total stream of
corporate dollar earnings for the
*
dividends he receives after ;
personal, income taxes thereon —
his" "take-home pay." No other ;
any
capital
as
well
as
the investor in :
bonds and other dollar contracts.
One
the
very
point at which new common j
stock money
a
[
clear evidence of this i.
well
is badly needed. It is P
known
fact
(Continued
that new
on page
34)
fi- '
3*
Tomorrow's
Walter
the fact that my
this
changing;
it will have to stand;
glasses need
My charts are all
with
sundry food
smeared
stains and besides I
Markets
slide rule and
lost my
triangle
—
*
price level
*
rt
so
*
that
ones
much
don't
take
ket
signs
think
anything, I
have a better
you'll
Day,
or
Election
by another dip down
about present levels.
I'm
to
that the averages
aware
More next
can't
[The
go to 180 without the leaders
had a Thanksgiving
participating Yet the leaders
for that matter, an
don't look promising. I know
article
too
do
not
those
to
$6,000,000,
change.
In
,
various
the
as
blue
either
at
chips, are
their name. They
as
point to lower, prices, or
recorded
best
maintenance
a
of
status quo.
tion
in
years
which
stocks,
The
show
spirit are those in the rela*tively- low price category.
Among them are Aveo, movie
stocks like Paramount, Twen¬
tieth
Century-Fox and RadioKeith-Orpheum, a couple of
coal stocks, e, g., Philadelphia
Reading Coal and some of the
building issues.
Why/such issues should ad¬
while others, the qual¬
ity stocks like General Mo¬
tors, Chrysler, Big. Steel and
vance,
others
with'
respectable
a
background,, should, not,
leave to others to
fact I'm not
was a
election." '
them
in
seen
Dewey
since
"cinch to get the
■
*
*
This;
mean
right.
of
*
doesn't
that I'm going to be
My. crystal
ball
beem electrified; and
is
my
has
wife
lamp. The stars
don't say a thing to me, ex¬
cept if T don't see them,, I be¬
lieve* iti will: rain.
The only
thing II have is a ticker and
using it
as a
that's been taken, away
even,
front
It has since been
me*
switched
into
translux.
a*
Reading; it only drives home
deliberately intended to
of making the
position of private risk capital
completely untenable. The un¬
this
as a, means
favorable condition
of
stock
denced
curities
markets.
Orders Executed
Pacific
Coast
on
Exchanges
the
earnings
of
the
name
affairs
every
if
about
we<
year or
of
the
shown
those
the
the
Thereafter
those
by
underlying
invoices
is
cost
he
.
absorbs. this
situa¬
involved.
revenues
•
all the limitations of
an
but
as
rule
a
he
of
does
involved,
make
not
recorded
data
Members
of each cost factor through
the stream of business operation,
course
of
allocating each type and item
cost
to
periodic
reasonable
in
revenue
Judgments,
way.
better than the
ment
being
deducted
of. real
New York Curb Exchange (Associate)
Sm,Eranciic? Stock, Exchange
.
than
that
Chicago Eroard of Trade,
OOrtfoiBdt?v4150
New York 5, N. Yi
Teletype NY 1-928.
Private Wires to Principal Offices
*
„
Slur-Francisco—Santa* Barbara>
M<tatarey<—Oakland—Sacramento
.
Freano
■■
of
attempting to, chop the, stream
business activity represented
by the affairs of a large corpora-?
figure when
tion into annual segments and. to
state in black and white, im a
r
t
i
the
►
on
.
unadjusted book figures;,, This is>
imaginary case but. L don't be- ;
lieve it is farfetched.
Moreover,,
an
sus¬
convinced
i; am
material- costs
in
employed
$100,000,000—quita. a change
from the 20% rate computed, on.
course*
a-sharp and:
5% yield on resources
of
materials-
of
charge?
the assumption o5
as
that
must
be
devote*
some
of
our
of 5%-3%
on
that inv the case
important compa--
earning power,
-
book figures the. aa-
.
nies that show
an
of
stitute
a
basis for dividend distrh
butions.
of
and? 1948
1947
have been irsuggesting that a largei -
distributed
tion
in
of
in
dividends.
course,
Onr
the reten¬
for
with
compared
,
tradition
capital, but; i'
a partial ex¬
in planation of the prevailing rela¬
fair
tion
new equity
to say that
between
dividend,
disburse¬
than
they would be
if all. costs
a
of
.
conserva--
•
generations it has been* •
second nature to the accountant*
to minimize recorded assets; Thisis reflected in various practices
tism.
For
and procedures*.
Small* items q£ :
capital expenditures may* be in* >
eluded
in
maintenance* on
the [
couoled with the-difficulty of se¬
is
net
earning
of; employed
curing
re¬
tends to
time the resulting
earnings-
:
accounting; that1 ;
aggravate, the. showing'of'
rates higher than true-1
in1 substantia
amounts in recent, years* is the
great need for funds for. reolacement and expansion of* facilities
of
general feature
conventional
cherished
cor¬
statements
some cases
be
of
yields. I have in mind the long-
Readers
porate
There's another
■
replenishing the same -old, stoel
goods, and will in no sense con¬
income.
that
a
is
particular
or
absorbed
on
current basis,, so-ax
a
less
liabilities- woul:di»
$100,000,000; Evidently* f
earnings of $5,000,000. give* only >
rela¬
Assume, for example, were, measured in the same, kind
particular* company shows ofv dollars as are represented in
definite number of dollars, what; net earnings for-1948: of
$10,000,- receipts from customers.,
000 and that the depreciation in¬
the company, earned each
t
Iti is- to be hoped, that: in revis¬
year.
ground
of
conservatism,1 and> in '
understatement:
resources? may hr? •
considerable.
The
treatment*
of'
doubtful items is resolved in fayoar*
of exclusion from recognized* a***-
•
•
may-have been full**- in the. accounts ar»<h>
still have some economic, signifi-r- sets.
Assets
depreciated
Assets
acquired * by the* .
of accretion, such>as the/r
timber growth^, may- not. be reflected in the accounts. Or>-
cance.
process
case-
of
,
ganization and development costs,, and costs of. raising capital,, ore,,,
,
,
t.
Aside from- the technical
plexity of
tional;
i
of, the
ported depreciation- cost figure is ments and reported earnings i;
not a large- fraction of total ex¬ many, cases is found in, the fac4
penses it may, be
an
imoortant that reported, earnings, are larger
,
14 W*Jl {Street
dollars
to
earnings, in some
significantly. It must' not
that there is no statistical .be
forgotten that although
problem that, the. human being many industrial
companies the
difficult
are
revenues
of
Simi¬
say
more
is
there
put them
obvious that
plant expenditures made
when the construction dollar was
*cases
tackles
short * time
advance
received.
*
ployed
because
tained
revenues
as
costs the
amount to
character but to my mind
serious
basis
other
the same footing,,as similar assets recently acquired*..
the
total
of► the
resources
erm-:
frac¬
reason,
quality of
„
earning
first-in, first-out flow, it is fairly tual? return on risk capital
caleiir;
a portion of -the-re¬
lated consistently in terms of; 194 8i;
ported net earnings period by pe¬
dollars, both with respect to-earn- .
riod will represent funds; needer
ings data and assets involved, does "
to provide the increased number
not exceed 3%-4%.
a serious matter
alyses, valuations, come into play worth two or. three times what it
along the line and. the results, is now-. Tile result is overstate¬
no
a
costs, notably, depreciation, are in
the. jpdgments exercised. It is safe
present-day prices;
rate of. earnings-,
a
a
all
are
as
share of reported? earnings shoulf
cases
of
converted to
to
the
$1,000,000.
where
to
conventional
of
terms of
a
of
and costs
are
many
an¬
of
shown roughly in terms
of 1948 dollars; But certain other
ings,
of
Exchange
to
advancing prices.
not air in year-end dollars.
incurred, tracing the
cost
remains in the business-. Of
ing system that endeavors to deal larly labor costs and other charge?
systematically with the complex, for current services, deducted from
questions concerned with record¬ revenues in determining net earn¬
as
the
batch of merchandise
accounting is not
account¬
of
tively
array
an
portion
less
declining prices, before
disposition of the commodi¬
This limitation
the result of deducting
are
total
similarly 11
depreciation of 1948
as
of for example, total revenues or re¬
applicable costs and other charges,, ceipts from customers are being
and the final result is subject to
shown in 1948 dollars, although
f torn
And
final
reflect
The
up
to reflect
adjustments
>
resulting'netU
would; be only $5,00.0,000.j. And> f
suppose, still further, that if all; i
recorded- asset
costs- stated
in
terms of earlier price levels were -
longer reasonable to describe
tion
porate income statements of 1948.
more
of the
the
dollars.
1948
no
re¬
holder
tion is much
case
be-set
same
factors
terms
and
building deducted from revenue?
at
earnings computed for the stock¬
however,
to
purports
revenue.
Occasionally he
adjusts recorded costs downward
cost
many.:
power, computed in
terms of these respectively, overr- ;
stated and understate i * figures is -
dollars, and that the reader
in term?
cost; of
other
in
Accordingly,
building as $1,000/—
a financial state-
The problem arising in connec¬
tion with inventories
is of; the
or
In
book: values* n£.
very
much less than the total!»
number of dollars involved stated!,
ex¬
corded cost into operating charges
and ultimately into expense or
ties
a new,'
corporate resources* particularly;
in the area of fixed: assets, are
expected to interpret
of
incurred.1
in periods
of reasonably stable
prices, but it is serious, in my
judgment, in a period such as we
are now
experiencing. In the cor¬
stockholder,
is
and
documents
making
in 1948
lars
time
in
fhent that
"the
the
as
and that's th&t. In the
000
is
other
basing;/
book value of stock¬
investment.
the- dollar
cases
same
the cost of the
records
,
New York Stock.
the
changed. Thus;
The accountant, in other
words,
cost; in terms of the dol¬
furnishing funds
furnishing
personal
services. There
are
no
serious
complications in measuring the
earnings of; a corporate employee,
for example, who is paid $4,000 in
.he year 1948. He receives $4,000 of
the relatively cheap 1948 dollars
to
Schwabacher &Co.
our
as
might be
of
likely to be grossly improper and..
regarding this > matter. As I see
misleading. Suppose,* for example,,
it the really important point; int~
that the reported earnings- of a\,
volved is the definition of cost.
particular company for 1948
To me cost is not. just a, nominal
amount to $10,000,000 and the total
term but a measure of economic,
of resources employed less liabili¬
sacrifice or force incurred. Actual,
ties as reported in the statement
significant cost' is an ( economic
of financial position is $50,000,009.
quantum, not just a monetary ex^
Relating these* figures it appears..1
pression.
If this is a reasonable
that the corporation has an. earn->
7,ew it" follows,.for example, that
ing rate of 20%, a very fine show- :
if a building was built ten years
ing indeed. But suppose, further,
ago at a cost of $1,000,600.in >tennf
that if all the costs., deducted: in ;
of
1938
money,, and
the same
arriving, at the earnings ofr $10/-^
building would now cost $2,500,000,000 had been convened:to 19481/
000, in terms of 1948 money, it is
prices, so as to place them on,ttre*»
no
longer reasonable to-describe
changed
so
understated
as
sense-be- r
prices expressed in.
holders'
a great deal of controversy,
in accounting and business circles
might call the 1948. unit the
zollar, and this would encourage
clear
thinking when"" we
were
comparing the present value of
money with,' say, the 1940. dollar.
currently reported
re generally overstated to a sig¬
nificant degree, particularly from
he standpoint of the use of such
figures for the purpose of measur¬
ing the relative economic posi¬
and
did
not
significant
practice
and
pected,
v/e
present situation is that corporate
let
rationally
more
economic content
Earnings
aspect
unit
but that's
the
an
accountant
monetary
a
of
cheaper monetary unit: This;:
is bad enough. But the error, be- :
comes magnified when the over6-stated earnings are applied to.am.
out
far
so
-
earn¬
generally overstated *new/- *
in
cause
ments
There has been,
As every
think
Accounting for Corporate
important
the
economic
extraordinarily stupid,
and
Securities
of
of our best companies are
selling in 1948, in terms of 1948
dollars, for much' less than their
prices in 1946; in terms of- 1946
dollars. If corporate earnings are
at
a
phenomenal and excessive
level by proper tests the people
who buy and sell equities must
An
that
citizen knows, the
only aspect of the dollar that re¬
mains unchanged from year to
year is the name, and I sometimes
get the notion that, we would; all
many
be
The
unit.
fluctuate,
case.
and
The: shares
fact
that the dollar he is using
of
cance
not
prospect
equities is further evi¬
by the state of? the se¬
ing costs
Pacific Coast
a
the
in
his reckonings is = the
same
yesterday, today, and forever.\Unfortunately this assumption? does
not square with the facts. It would
be grand if the economic signifir
does not
is the time to
little more meat
now
less it is
use
tions
course,
is
from the stockholder's bones—un¬
I
The only
thing I'm sure of; is that the
secondaries
show
a*
zip I
This
1948.
on
measuring
assumes
serious situation, and
a-
that the lat¬
sure
and
in
wnole structure is predicated
the
assumptions ol a. stable
the
good
supposedly
1947
as
suggest that;
try to pick
explain; In
ter will1 not go up.
haven't
such
*
*
*
is found
are
As IfVe
indicate, corporate-
adays
current
day earning reports are subject to
serious limitations, and should be
read with due.reeognition of their
shortcomings.
fundamental limitations. The most
serious
data
are
and
to render income state¬
as
<
certain, expenses on recorded dol¬
lar costs that are out of line with*'
based thereon inadequate
misleading. Many accountants
would not agree with this recom¬
mendation, but I believe all ac¬
countants recognize that present-
(Continued from page 33)
nancing through issue of; common
stocks
has only
been a trickle
lor years and there has been little
or no improvement in this situar
ear¬
bring them into line with
present prices in all cases in which
issues.. The first line stocks,
blue
an
ings
costs,to
as
still limited to the secondary
the so-called
tried: to
been
unlikely,
so
be very important.
to
me
change in
has
this*'
csiv
porate accounting methods under •"
present conditions that seems to
ing procedure to meet the situa¬
tion. The remedy, as I see it, is
systematic revision, of recorded
Why Corporate Profits
little life, it is
a
another aspect of
matter of the limitations of
substantial
very
a
marked, and return to
the
while
However,,
Reported Earning? Rates
There's
to warrant changes in account?
as
of line
stocks show
is
my judgment the
value of the dollar
the
any
of
They are presented
of the' author only,]'
•
deduction in the
a
would be reduced from $10,000,000
*
*
as
$8,000,000. With such a de¬
duction the net earnings reported
this
Chronicle,
placement cost of* plant facilities
expired, as of the end' ofr the tax- •
able year, as deductions-in lieu cf
that the expired > plant
shown
lier dollar has become
in
those
urged
so
necessarily, at
with
be
can
fore
Whyte
expressed
coincide
time
Day.
*
views
cost of materials used and4 the* re- '
only half a& high
was
In this situation it.
deductions based on unadjusted*
only, half of book- costs. I understand that de-6what it should be, in terms of the velopments !
along this- line have*'
1948 prices applied to most other occurred in the income tax stat¬
cost factors, and that the signifi¬ utes of some foreign countries.
.V«
cant depreciation, figure is there¬
Thursday.—Walter
Years
New
and
Christmas
than you
present mar¬
mean
followed
in 1948.
income statement
But based on experience in don't buy too much of them.
watching; markets,
making Here is a sample list: Avco,
=By WALTER WHYTE=
and losing on them, I'd say Thatcher, American Radiator,
Leaders
act
despondent that the familiar
Coal,
averages Philadelphia; Reading
while secondary stocks point show a latent
strength that Paramount, Twentieth Fox,
to? higher prices.
Crane.
can carry them to across 180
If recent and
as
cost
to buy, if you
money
Thursday, Decemberj 16J 1948'
company were acquired«when the
paradoxical* but
*
25
*
sounds
The stocks which show up
are the cheapies — the under
there you are.
Whyte
FINANCIAL. CHRONICLE
COMMERCIAL* &
THE
(2522)
,IU
the- process,
accounting, has
is;
fc
.ii'
•
J..
cluded^ in expenses- based on re¬
corded; plant* costs* is $4,000,000.
com¬
ing, the. Internal. Revenue. Code
often
charged off although, theit
contribution
Congress will give serious atten¬
to
the- value- of; the-'
Assume, further; that* on* the av¬ tion- the possibility of authorizing going concern has not lapsed. In¬
.certain; erage the- plant facilities of the the use- of current replacement. tangible: assets of various; types-
conven¬
•
-
•
i
1
,
i
;
i
+,
.•
!
/.
t
.
i
.-j
Volume 168
Number 4760
have been
may
written
off
gesture of" conservatism.
ing
a
Markets
sucfi
incurred
costs
vertising,
as
THE
ad¬
as
when, clearly ap¬
even
ing rates
generally
are very
stated. 7
COMMERCIAL
over¬
emphasize is this:
Under present
in the light of
condition^,
included in acknowledged
certain serious limitations of
Itfow, when this general and
tially
unavoidable
understatement
par¬
tendency
of
to
corporate
re¬
is coupled with the limita¬
sources
tions of accounting
resulting from
the marked change in the level of
prices in recent years,
have
we
situation in which reported
a
earn¬
and
ventional
earnings
ports
accounting,
corporate
shown in current re¬
as
deep
misgivings
a
to another, inflation¬
blow-off like
ary
Other
dangers
controls
were
Edwin
these
of
erally
much
higher
than
true
yield rates.
income
This
by
fiscal
that
return
a
to
such
Just how fast
pay down
on
As
ger.
tree
a
ways
fearful
trols
may
do
some
years
two-pronged dan¬
people, we are al¬
that economic
habit
prove
forming
larger
of
life and weaken the
re¬
liance of the people on free bar¬
gaining. If that danger is avoided,
there
a
the
postwar
year
constitute
is the opposite danger that
in avoiding it, we develop evasion
or defiance of constituted author¬
boom—-
on
labelled
area
that
that
a
third
a
is
to
expenditures.
not think
If
cut
you
the, $40 billion
Federal
budgets
for
the
problem
American people, you will be re¬
minded of the fact when you look
at
income
your
1948
sider that the
.everything
that
tax
when
and
con¬
and develop a spirit of acceptance
of authority over larger and
areas
higher
still
to
us
policy—and
government
if mili¬
their continuance for
we
you
enter
liability for
further
you
con¬
price of just about
buy contains taxes
into
business
costs.
If
you
do not think that there is
waste of manpower and materials
in government I advise you to
take
the
good look at the report of
a
Hoover
out in
Commission
January.
litical
coming
This is not
document.
It
is
a po¬
prepared
side
of
sion.
the debt is
a question
people dif¬
amount.
In Congress
figures of around $2 ¥2
minimum
$3 bil¬
or
year have been favored,
President
has
repeatedly
a
in
Congress,
his last
two annual budget messages, are
billion re¬
spectively.
The importance of an
annual debt retirement figure is
perhaps not so much in what the
figure is, as*in the determination
to see that spending is held down
so that an agreed-upon figure for
debt retirement is actually real¬
ized., The $8 billion surplus for
debt retirement in fiscal 1948,, we
should recognize, was largely the
of
of policy is to put the rein on gov¬
ernment
expenditures.
This
is
$4.8
easier
to
with
budget out of control there
is
Summary*
postwar
our
We
in
are
inflationary
boom.
policies are. of over¬
whelming importance in deter*
mining
what the
1949
pattern
.
where
We
to
and
State
policies,
sive to
situation
and
you, gentlemen, engaged as
evaluating credits and
creditworthiness, it is a matter of
immense
respon¬
made in Wash¬
boom
To my mind there is too
at stake
put
for everyone con¬
balance
and
between
deflationary
forces is
warrant the
nearly equal to
of
inflationary
roughshod
methods
of
importance
is
handled.
how
this
brakes
If
are
and adjusted as conditions
on
dictate
you
may have a higher
percentage of losses and writeoffs*
cerned—government, business, the
employee and. the consumer—and
the
hope for arresting infla¬
pressures.
on
you are in
local govern¬
highly
are
But
To
policies,
inconsiderable
decisions
ington.
a
business
not
a
measure
in
are
private
do.
prices and wages, of the public
debt, and of restraining private'
credit expansion — become man- /
ageable and within, the range of
sound credit policies and volun¬
tary cooperation*
:
^
ernment
shall be.
thah to
say
With a firm
the. budget, other prob¬
lems—of
upward
pressures
on
hand
situation where gov¬
a
a
small
a
tionary
In summary we are today in a
kind of uneasy resting point in
much
child
type regimentation, and hew tax
devices*
The most essential task
expan¬
them into harmony with the gen¬
eral economic situation*
mended
and
credit
other
words, there is a
need-for integration: of govern¬
ment credit policies and putting
ment;
billion
continued
In
urged the importance of debt re¬
duction.
The surpluses, for debt
retirement which he has recom¬
to
(2523)
should try. to
which reasonable
$1.8
within
controls
would present a
make
to put the brakes
way
again
-
the return to controls and
,
takes
necessary
tary
expenditures
should
rise
touch further. I quote Dr. Nourse:
•
to
Cut Government Expenditures
Nourse, Chairman of
the President's Council of" Eco¬
nomic Advisers, when he warned
might become
levels
taxes bearable.
direct
recently stated
G.
Federal
and
^generally* overstated fer. There is general agreement
standpoint of effective; that repayments ought to be ac¬
disposable income, and corporate celerated in. boom times like
these,
earning rates computed by apply¬ but no responsible official, to my
ing reported dollar earnings to re¬ knowledge, has offered a definite
ported dollar book values are gen¬ figure of what would
be, the right
had then.
we
Treasury
the
(Continued from page 3)
up.
down
pay
are
from
What to Do About Inflation
with
try to
policies.
con¬
The
building
to
CHRONICLE
The other is the matter
by
ence
lion
view
FINANCIAL
With respect to corporate ac¬ Of its distribution, which is sub¬
countings the conclusion I wish to ject to "management" or influ-
plicable to the future, are seldom
assets.
of how fast
the debt.
.
&
I
But
think
is
that
.
where
too
you will
than
better
it is
hard
to
that
situation
agree
a
make
a bad
loan and hard to tell a good credit
man from a bad one. *
use
OPA-
accident—underestima¬
tion of revenues,
efforts of Con¬
(Continued from
scale down expenditures
gress to
to permit a measure of tax
relief,
called
prices,
and the deferral of the actual tax
sumers'
cut until this year. We
refer later.
Prices,
should not
overlook that flush Treasury rev¬
enues,
and the existence of a
known surplus, themselves, give
government
administrators
and
ning of the
legislators
of
feeling of affluence,
a
The
of the
jeopardy
The
surplus for debt
any
iirement
re-
in
was
a
of
which I
Con-
rose
autumn.r The grains and some
shall vegetables and fruits, as well as
Index
in 1914 to
summer
of
fallen
so
far
as
to
Federal
legislation,
Livestock
products, in general, are still con¬
siderably above the support level
the begin¬
a peak
war
have
reach the price
support levels pro¬
vided by the parity formula under
in
from about 67%
the
11)
page
and
cotton,
Price
1926 average at
167
This
index
to
Wholesale
World War I
invite the practice of adding items
onto
the
budget,
and
put
in
the
1920.
rise of about two and
and could fall further. Others
(
orie-half times
are
the prewar level.- not covered by support legislation
prices of farm products rose and could also fall further.
somewhat earlier and more rap¬
On the other hand among in¬
by a bipartisan commission, sup'
during the war than the dustrial prices there has been
lowering ported by disinterested
The matter of public debt re¬ idly
experts,
of the moral fiber of our
little
people. authorized
tirement has lately
weakening
been over¬ prices of industrial products, but comparatively
by unanimous vote of
In
any
event,
by giving legal the
There have
shadowed by a rising tendency of the two reached the peak at about right down to date.
Congress.
sanction
the
same
level
to
in the summer of been declines in some of the in~
certain
structures,
private indebtedness and in bond¬
Our Federal
Government has
1920. Then there was a rapid col- dustrial
procedures and property rights
commodities which are
ed indebtedness of State and local
grown like' Topsy, new agencies
for
a
period of years, controls
The rise in non- lapse in the speculative markets made, from farm products, such as
added on top of others without governments.
build up greater or less vested in¬
beginning
in
May, 1920 (no other cotton and hides, and there have
Federal debt has been a strong in¬
too much attention to how they
word so "accurately describes the been
additional
terests on the part of beneficiaries
weaknesses
in
Here policies of
fit together or to just who is sup¬ flationary factor.
of
situation),
so
that within a year other lines. At the same time,
these arrangements
to
have
the
Federal
Government
have
posed ,to do what.
In the tax
farm prices had fallen to less than there has been persistent and conthem
perpetuated,
and
vested bills we are
played a very vital role. The gov¬
paying for a fatalistic
one-half the 1920 peak, and in- .tinued
claims
of those who have been
strengthening in other in¬
ernment itself has been a lender;
altitude that these things are in¬
dustrial prices had fallen almost dustrial
hurt by them to secure some off¬
it has been a guarantor of billions
prices, principally the
evitable, and that this or that
as far.
This was one of the sharp- metals.
In fact, it seems likely
of mortgages; and it has, through
setting benefit.
Either
way
it
high-sounding classification of ex¬
est and deepest price declines in that some industrial
the Federal Reserve Banks, main¬
prices could
complicates the return to smooth
penditures "cannot be touched."
American business history.
continue
to
rise, even though
operation of the economy."
tained
an
easy
money
policy
The time is long passed when we
There was
some
recovery
in prices for farm products and- cerwhich, in today's environment,
ity, black markets
and
a
could
Increase Taxes
Another way to stop inflation is
t
to
jack
taxes.
up
patent
remedy
scribed ten
economists
That
for
was
one
boom
pre¬
15 years ago when
told us that changes
or
in tax rates, rates of government
afford
to keep business on an
keel.
There are some very
way
even
definite accomplishments to chalk
up* since the war in the general
area
of fiscal
policy-—and some
novel
and
effective methods of
debt retirement from surplus rev¬
But when you come to tax
enues.
increases,
you
run
ties.
still
have
We
into
a
difficul¬
tax
messy
structure hastily concocted during
the war.
Tax rates are
indulge the feel«
jrM
because
of
the;
just
sacrosanct
label it carries.
that
ting
our
unfortunate consequence
the
inducing
ernment securities to the Federal
Banks
roceeds elsewhere
a"<?
cutting
.if®
D
1011
III
S
y
Hr
question posed for next
how
many
tacked
other
billions
Then
there
of
purposes
terest
that if
^
will
is
the
expenditures
exclusive of
for
in¬
argument has been used
we
can
afford to spend $7
billion on foreign aid, we can cer¬
tainly afford to spend "X" hun¬
dreds of millions
on
domes¬
some
ThA
The
jja
credit.
year
the public debt. Too of¬
on
the
ten
more
on.
billion
$18
put
on a free
enterprise economy and
still expect it to work.
A
study by the Committee
Public
—
Debt
and
Policy
I
quote
Government
is
—
finds
"the
on
that
Federal
controlling
add
State
and
ments the fraction
fourth.
people
"The
to
local
comes
capacity
carry
a
tax
If
govern¬
to
of
load
one-
as
25%
is
in
the
we
"solution"
should
of*
Credit Policy
accept
way
""Within the limits of the dictum
that
government bonds shall not
sell below par the authorities have
taken
the
succession of moves, over
a
past
high
the
bank
has backed up the
nonbank
restricted
in
one
debt
management
debt—from the interwar bottom of
$16 billion in 1930
lion
up
to $279 bil¬
in February,
1946—has al¬
ready had consequences which it
is
difficult
to
bank
access
an
credit through
2^s
to
which
their lending as
lending slowed
investors
to Federal Reserve
their ability to sell
War
the
investors
nonbank
These
down.
policy
up
authorities with
voluntary program toward this
And Regulation W has been
put back on. This year the focal
point of the problem of credit
expansion has tended to shift to
life
insurance
companies
and
a
have
wrapped
di¬
lending for less essential
The ABA, as you know,
inflation is through credit policy.
In the present environment credit
is
mainly
months,
18
rected at discouraging commercial
commercial
of dealihg with
The rise in the national
inflating price and
fourth
stronger dose of
a
have accelerated
A
has
block has
hlnrk
stand.
other
policy.
danger zone."
not
stable
and
This., is something to think about.
And
a
with
termined by precise formula. But
as
dollar with
a
power.
bundle
free,"
(he report states, "cannot, be de¬
ratio of taxes to income
and
buying
any
still remain prosperous and
a
government
still expect to have a stable econ¬
omy
and
ly expanded national income."
the
marching out with increased ex¬
penditures in all directions and
spending one-fifth of the present¬
we
have
cannot
of
deflation than the economy could
much of
can
use
drop in bond prices
a
would involve
end.
you
This hampers
c+nmhlincy
stumbling
fearful that
purposes.
load
the
been that the authorities have been
The fact is that if
generally tic program.
very high already.
Some may al¬ we have to spend so much on
ready be beyond the point of defense and foreign aid we ought
diminishing return. And there is to be cutting back in other areas
the
fundamental
question
how of government expenditures. We
tax
lend
Federal Reserve in its
.
a
to
and
JS£&&5s^ —i tr
the
be
of
is done of get-^
Reserve
money's worth out of the.
dollars,
is
We need
h&s
investment instituf&ons and others to sell their gov¬
to see
better job
a
spending, alternate deficit financ¬ These two
ing and surplus financing, was ing us $19
y
the
to
Loan
Reserve
21As
and
Banks
at
pegged prices of par or better.
There is abundant room for in¬
fluencing the supply of credit
through changes in the terms on
which
the
Reserve
Banks
will
exaggerate—in turn marketable government se¬
terms
of
high taxes and high curities into cash.. But these pow¬
prices we have to pay* From the ers of the Federal Reserve need
inflation
angle, there are two to be considered in light of the
parts to the question of handling overall credit policy of the gov¬
the public debt* One is the matter ernment which is strongly on the
both groups of prices during the
prosperity in the 1920s but chiefly
that prosperity affected industry,
while agriculture suffered a long
depression.
There was then a
further decline in the great de¬
pression of the early 1930s affect¬
ing all kinds of prices.
As a
matter of fact, the prices of farm ■
products in 1932-1933 were about
30% below what they had been:
in 1914. Industrial prices did not
drop so far. Even during the recovery
in the later 1930s, farm
prices lagged behind, so that in,
1939-1940 during the early days
of the European war, farm prices
were still at 1914 levels, with industrial
prices
considerably
higher.
,:
tain
other
products
continue
to
fall somewhat further.
'
'
No Early
Price Collapse
Does this toean that
we are now
in the early stages of a price col¬
similar
lapse
think the
1920-1921?
to
answer
is,
conceivable
course,
declines
could
I
no. It is,, of
that
recent
snowball
and
spread across the whole economy,
Nevertheless, it is important: to
that
note
nomic
there
factors
are
several
operating
at
ecor
the
present time which did not exist
in
1920.
some
Let
me
present to
you
contrasts between these two
postwar periods.
In. 1920 we abruptly stopped our
lending to Europe and therefore
Then in the early months of sharply curtailed our exports at
World War II farm prices shot a critical time.
Second, in 1920
upward rapidly; the rise was* re¬ we virtually stopped our military
tarded during the period of price appropriations.
Third, there was
control, but price control was ap¬
plied later to farm products than
to such industrial products as cop¬
per and steel. Then after the war
they rose again to nearly three
times prewar levels. In part this
was due to the short corn crop of
1947.
At
the
1949
peak farm
prices, were considerably higher
than they were in 1920.
a
smaller backlog of
accumulated
demand and of
buying power, for
the war was shorter; and finally
we
had no' kind of supports for
farm prices. The result was that
price"declines could spiral through
the whole economy without sig¬
nificant supporting demands com¬
ing into the picture until a floor
was
reached.
hand, industrial ; In 1948, on the other hand, we
prices, which began World War II have through the Marshall Plan
our
at about 80% of their 1926 aver¬ continued
exports. ' Seconds
age, had risen by 1948 to about our military appropriations, while
150.
Stated another way, indus¬ reduced far below war levels, are
On
the
other
prices have risen much less likely to continue at a high level.
prices and are at pres¬ Third, we have enacted legislation
ent considerably lower than farm supporting many farm prices at
trial
than farm
levels
generally not far below
where these prices now are. Fur¬
have begun
to fall. There was a sharp break ther, domestic industrial demand
is still being maintained at a high
in
February
1948 followed by
level. Finally, there is now a high
some recovery.
But on the basis
level of consumer spending based.
of the splendid 1948 crops they
began to fall again last summer
(Continued on page 36)/ / *
prices, relative to prewar.
Now
farm
prices
36
(2524)
THE
COMMERCIAL
bonuses,
No Danger of Severe
Price Declines
on
high employment, high
liquid sayings-
wages
dex
'
is
groups
,
I
other
or
types
of
Foods,
of
six
Rent,
in hours
pay¬
a
in
manufacturing
two
world
wars.
industries
In
actual
represents
one-fourth
of
the
about
major
in
ern
Europe, or even all the other
foreign lending and exports which
counterbalanced
total
creases—or
the
arise, are, taken altogether, a
our
domestic dex.
may
high proportion of
Consequently,
declines, it has
that theseAll that I am saying
rxiuction.
relatively small but
a
as
ence upon the index as a whole.
significant demands for American
Rent, on the other hand, has
products are still continuing in risen
least; it is still less than 120,
1948, and will continue in 1949, in which means a rise of
less
contrast to their
sharp decline in
1920-1921.
I
^
stress
these
prices which
20%
^
primary
rent
free to rise
1921,
as
much
as
business, because they are a free market. Rents have been
so important in
determining the steadily rising in recent years and
continuation of other
important will undoubtedly continue to rise,
economic factors, such
ment,
and
wages,
as
slowly if tight controls are con¬
tinued, or rapidly if controls are
employ¬
incomes.
War
good thing, so long as these de¬
clines are confined to individual
commodities. Disaster comes when
the downward
readjustments are
permitted to spiral into a
general
price decline which creates de¬
pression and unemployment.
Of
declines
course,
might
ment
this
cause
in
is
the
to
a
in
some
prices
downward
move¬
general
price level,
expected.
Such a
be
items
some
are
mixed, with
declining while others
rising. Note, however, that
food has roughly three times
the
importance of rent in the index,
that
so
1 % declihe in food will
a
counterbalance a 3% rise in rent.
Some other items in the
index,
such
as
apparel
nishings,
and
have
house
recently
fur¬
shown
some
moderate decline in general
prices
is not the same
eral
creeping
thing
across-the-board
leading to
as
a
gen¬
price
de¬
depression.
a
Retail Prices
Next
prices
I
want
to
discuss
retail
Index, but the
some
not
years
name
ago
adequately
cost of
was
because
Living
changed
it- does
represent the total
living.
It is really a meas¬
price changes for a fixed
market basket of
goods and serv¬
ices which are priced from
month
of
ure
upward. For example,
the recent rise in street
car fares
from 10c to 13c in
Washington,
D. C., will cause a rise
in the mis¬
cellaneous index in this
city.
as
represented by the Con¬
sumers' Price Index of the
Bureau
of Labor Statistics.
This was for¬
merly called the Cost of
'
may turn out to be
signs of levelling off or de¬
clining slightly, but the fuels and
miscellaneous
items
are
still
cline
-
so
to month, or
quarter to quarter,
During World War
Concerning the general
tion in retail
prices, I would like
to point out that there
is no likely
prospect of a decline as
sharp as
that which occurred after
World
War I. A 20% decline in
the Con¬
sumers' Price Index would
bring
the index back to
140. In the
behavior
level of about
light of the probable
of the wholesale
index, there does
much
I this index
situa¬
likelihood
a
price
not seem to be
of any such de¬
cline in retail prices. At the
same
approximately doubled, reaching time, it is obvious that continued
a peak in the
sharp declines in food prices
summer of
(and
1920.
In
the price
collapse of 1921 it declined by about 25 to 30
points, or
20%. Note that this index is
much
toofe
"sticky" than the wholesale
price index. It rose less
•
they
have
not. yet
expressed
themselves in full in the
index)
bring down the present
Consumers' Price Index from
could
5
to 10 points over
a period of
time.
during
file war, and in the
However, I would not want to
depression it
guarantee that
fell back only 20% as
any such decline
against 50%
will actually take place.
for the other.
/. "
' :J.
H
Consumers prices are more than
During and after World War II,
merely business prices which in¬
this index has. risen
.
,
from
100
<1935-1939 average).to a peak of
in August and
September
174.5
1948.
At this level the
index
nearly
was
25
points higher
at the peak in 1920.
was
than
it
On the
other hand, as
compared to pre¬
war
levels in each
case, it has
llsen less in World War
II—about
75%
.
as
fluence the
prosperity of the re¬
tail trade.
They are of vital eco¬
nomic significance
because
determine
the
worker
envelope;
that
against 100% in the other
pay
It
is
receives
real
wages
envelope
buy in goods
the
in
the
are
will
pay
what
actually
and services.
also
important to dis¬
tinguish between wage rates and
and
weekly
the time
postwar conditions as
they
six years
during and after
World War I,
earnings. The former is
or piece rate
for a job;
the latter is the
amount which the
worker earns as a
result of a
week's work. The
latter is influ¬
enced, of course, by the
number
of hours which
the worker has
been able to
put in during the
week. It may also be
In October 1948 the
Consumers'
Index fell 0.5% to
173.6.
Brice
This was due wholly to declines
in
pie price of foods, which stemmed
primarily
from
falling
farm
measure
purchasing power of wages and
Money wages are what
were in
:
large
salaries.
war.
In one
sense, therefore, re¬
tail prices
today are- not as much
changed after nine years of war
;
in
they
influenced
^
.PYfrtiiaae*
pay/
al^^prpdiictioia
skill
d
invest¬
ments.
that
The statutes* outline
them.
and
effort of workers, im¬
supplies
of
materials,
modernized' industrial
equipment,
and
superior management. Low
productivity
tors,
while
the
<
y
.
in¬
vestments of others
implies con¬
comitant obligations to
treat in¬
be due to de¬
all of these fac¬
vestors
fairly,
high
productivity is
functioning of all
due to effective
of them.
:
The moral premise
behind these
is
that
the possession of
power over the
savings and
laws
may
clines in any or
these earnings fell to less
$22 per week, after which
SEC
No'
/
Dangerous
Interference
in Business
Over long periods of
years pro¬
There
were
who
many
feared
ductivity in manufacturing indus¬ these laws
because they seemed
earnings was tries in
the United States has in¬ to
point the way to a
fact, in only a
dangerous
creased at a cumulative
rate
of
months during the
interference by government in
the
about 3% per year. It
increases
very much less. Tn
scattering of
six-year period from
whole
1914
usually creates unusual demands slackened or taken-off. In World to 1920 did the real earnings rise
more than
for products
20%. That is to say,
which, in turn, cause War I the rent item, which was
when the
"distortion" in the normal
money earnings
had
price not controlled as in World War II,
been deflated
structure. By "distortion" I mean rose steadily
by the rise in the
throughout the de¬
Consumers' Price Index, the pur¬
only that the resulting wartime pression
of
1921
and
finally
prices are different than
reached a peak in 1923-1924 of chasing power of the weekly pay
they
were
envelope never rose more than
before the
war, and also about 150, or 65% above its pre¬
20%. To put it still another
from what
they will be again in war level. There was a shortage
way,
a normal
wages
and prices paced each other
postwar peacetime econ¬ of housing at the end of World
on
the
rise,
with
omy.
wages gaining
Consequently, in the post¬ War I just as there is now. If
war
readjustments of business, rents were wholly uncontrolled, it comparatively little. It was 1923
before
the
real
many of these high wartime
is possible that
value
of
the
they would now
prices
must
weekly pay envelope in manufac¬
necessarily come down.,
In rise quite rapidly.
turing averaged as much as 25%
fact,
such
a
readjustment
is
above 1914.
Mixed Consumers' Price Index
healthy for the economy insofar as
In World War II the
it restores normal
in 1949
use of price
peacetime price
controls
operated to strengthen
So the trends in the Consumers'
relationships.
Therefore, failing
the
purchasing
prices at a period like this can be Price Index in the next year or
power
of
the
a
t
remedial action. In
general, these
abuses relate to the
overreaching
and misuse of power of
those en¬
trusted with the public's
proved
revival of business in 1923.
These were the
money earnings.
The change in real
it would in
est to
in¬
,V:
picture,
was about
they recovered somewhat in
been
be
<
5 '»•*» *
the
productivity in -this abuses
and, within varying
sense means the
limits/
productivity of empower the
Commission
to
take
industry as a whole, including the
action to correct
$27
than
should
'■
(Continued from page 9)
common pattern.
They are ad-*
dressed to evils and abuses
which
the
Congress
thought
needed
if
we
clear
per week—a rise of two
one-half times the
prewar
level. Then in the
depression of
than
week
hours,
'vi-i •'•■
j,,
Agencies Tick
in¬
wage
longer
•
,
the
namely, productivity. It must be
and
prewar.
This' is be¬
has been Under con¬
trol, and therefore has not
market
of special inter¬
are
above
cause
to
in
look in the
longer future,
there is one other
important eco¬
nomic- factor
in
this
bined, and not for each industry.
By 1920 this average had risen
influ¬
work
As
$11 per
week. This means the
average for
all
manufacturing industries com¬
this group
marked
by
by
creased.
average
in
manufacturing
decline
a
purchasing power of the pay en¬
velope, except insofar as this is
weekly earnings of the worker
iest weight in the index—-at
pres¬
ent prices a relative
importance
of more than 40% of the whole in¬
be
fact,
only
labor force in the United
States,
but it happens that we have
much
Apparel,
will
1948
Mow Administration
extent.
increase, then
there
do riot mean to
say that the House Furnishings, Fuel and
Light,
combination of the Marshall Plan, and Miscellaneous.
more information on
those indus¬
Among these,
the
military appropriations for the food group has risen the most tries than we do on other
parts
the
United
of the
States,
prospective as compared to prewar—to a
economy.
At
the
beginning
peak
of
military appropriations for west¬ of about 212. It also has the
World
War
I
the
heav¬
•
Thursday, December 16,
in wage rates did not
or
occur to
any, substantial
If consumers
prices
I should like to
present briefly
review of real
weekly earnings
manufacturing
composed
—
FINANCIAL CHRONICLE
ments.
(Continued from page 35)
and
&
weekly
time
same
the
earnings,
at
the
rose
rapidly. In 1939
weekly earnings for
average
all
which
manufacturing
tries
than
because the cost of
living had
been held
down, the real value of
these
earnings had
50%, exclusive
than
must
be
risen
of
recognized,
that there
in these
more
taxes.
of
It
course,
was
something artificial
rises, because the wage
earner
could
not
buy
all
the
things he might have wished to.
Many foods were rationed; auto¬
mobiles and
many other types of
durable goods were not
available
to the
ordinary
consumer. Never¬
theless, in terms of the basic com¬
modities in the Consumers' Price
Index, the purchasing power of
the
dollar
than
in
weekly
was
World
better
War
earnings
workers
rose
more
maintained
I,
and
the
of. factory
sharply in
terms of command over
present
and future goods and
services.
This
is
the
there
the
was
induction of
millions
of the best workers in
labor- force into armed serv¬
ices, and a further widespread
the
shifting from peacetime
industries. Then
war
of
work
at
the
the
war
there
was
a
mendous reconversion with
to
end
of
The
cate
machine
more
of
Statistics indi¬
postwar improvement
productivity in
in 1947.
in
1948.
that there
are
will be some further
recorded
industries
some
Indications
improvement
However, it is
abundantly clear that
far
below the cumulative
3% rate of
increase which would have
been
tions.
under
As
raw
we
are
peacetime
materials
condi¬
come
into
better
supply, as new machinery
equipment is introduced into
and
the
plants and
gradually
as
the labor force
readjusts
peacetime
itself
employment,
could be and should be
improvement in
hour
output
in
there
a
marked
per
ly
impose
by
law
the
duties
of
honesty and fairness which exist,
So long as these
in the moral code.
laws
remain
and
within
such
bounds
are
administered
reasonably,
public welfare is served and
individual liberties are not en¬
the
dangered.
In
all
this, the task
ministrator isthe
vital
a
of
the ad¬
He is
one.
keystone in the law's enforce¬
Unsound; ill-considered
ment.
-
man
weak
part
law.
administration on his
destroy even the best
stringent or vindictive
can
Too
administrative
policies,
the
on
other
hand, can serve only to
substitute the evils of
unrestrained
government
for
that
of
unre¬
strained
government for that
unrestrained
individualism.
of.
To
mind, in the middle course of
sound, temperate, reasonable reg¬
my
ulation lies the path of the
ideal
It is only on this
level that good laws
administrator.
may achieve
their
ends.
proper
ministrator
Such
an
ad¬
will
recognize
the
rights of individuals but in each
case
will weigh in the balance
their
corresponding
duties
to
others.
in
many
industries.
The
measurements now being made in
the Bureau of Labor
Statistics will
indicate this year and next
year
to
of
type restrict and restrain in¬
dividuals in their business
transac¬
tions and practices but
they mere¬
and
of the
Labor
some
normal
con¬
.
equipment.
productivity studies
this
tre¬
shifting and labor turnover, acpanied by materials
shortages and
lack
Those who would
oppose the
tinuation of these laws at
present
comprise a very small
minority.
productivity,
normal rate; in
many industries it
This was natural be¬
cause
conduct of business. These
fears,1
by now, have generally
subsided.
Certainly, it is true that laws
wars
declined.
;n
But
others.
expressed in terms of
output per
man
hour, did not increase at the
—to
week.
in
During both
was
per
years than in others.
more in some indus¬
turing.
Bureau
$48
some
general average for all manufac¬
about $24
per
week. By
early 1945 these
earnings had just about doubled
about
in
more
It increases
what
extent
this
is
actually
taking place.
These
the standards
are
which
we
have
our
adminstration of the law. We
attempted to follow
iri
have found from
long experience
that
the
true
measure
of
the
Commission's success is not jn the
direct re¬ number of
prosecutions and pen¬
to wages and prices. alties it has
sharp decline in weekly
obtained, but in the
earnings, The effect of productivity is to
not because
degree to which it has educated
wage rates were cut, make it
possible
to
produce
the
business and financial
but because hours of
people into
work were same
output with less labor; it re¬ an
acceptance of the spirit of
shortened; There was
widespread duces labor costs per unit of out¬ these
loss of overtime
laws* as part of their own
pay as well as a put.
This could be given to the
substantial shift in
working code? ,;
'
employment workers in higher
wages, to con¬
from higher-paid to
lower-paid sumers generally in lower
jobs and industries.
prices,
Then
the to business
owners
in increased
G/ F. Rothschild
wage earners attempted to restore
profits, or in some combination of
their high wartime
George F. Rothschild, formerly
weekly earn¬ these way Si At
any rate, over the Executive
ings by increasing
Vice-President of Con¬
wage
rates. long
run
the
real
This effort has
purchasing tinental Factors, has * been ap¬
continued for the
power of the
worker's weekly pay pointed special representative for
past three years. The net
result
envelope will depend upon the in¬ Standard Factors
has been a
slight further decline crease in
Corp., New York.
in real
productivity. This is the Before the war Mr. Rothschild
After
V-J
Day
there
was
a
Productivity
has
a
lationship
.
Appoint;
-
purchasing
tual
power. The ac¬
weekly
earnings of faetory
in money now nearing $55 per week in manufactur¬
workers
are
ing industries. However,
whole
war
over the
period since 1939, the
rate at which
wages can advance
over
pends. In our short run discus¬
purchasing power is sions of
wages and prices from
about 129, which means
29% year to
year, we often lose sight
above prewar, but below
the high of
this
fundamental
fact.
It is
wartime 1945 peak
(exclusive of
taxes). In summarizing this de¬ my conviction that in the years
ahead there will be much
more
velopment, we can see that wages
discussion of
and prices have both
productivity as a
spiraled up¬ factor
than there has been
ward during the
during
last three years
the recent war and
without either
postwar pe¬
making a substan¬ riods.
That is why it is
tial net gain over
important
the other.
to measure
changes in productiv¬
If the Consumers'
Price Index ity as best we
can, and also why
should decline to
any extent dur¬ it is
necessary for both
index of real
now
ing the next
the effect of
earners'
year, this would have
improving, the
purchasing power,
Vided, of course, ;that
wage
pro
was
a
partner in
long period of years with¬ members of
increasing prices.
It is on Exchange.
production and
.productivity that
a
rising standard of living de¬
a
out
ment
manage¬
and
labor
creasing attention
ment
teduct&ri&kA^^
of
higher
to
devote
in¬
to the achieve¬
productivity
in
Duryea & Co./
Stock
the New York
:
:
;
First New Mexico Co.
ROSWELL, NEW MEXICO—
John M.
Holley, Jr., has formed
the First New Mexico Co.
with
offices at 103 W. Fourth
Street, to
engage in the securities business.
Mr. Holley was
previously a part¬
ner in
Holley, Dayton Gernon in
charge of their Roswell office.
With Chace, Whiteside1
(Special
to
The
BOSTON,
Cronin,
Jr.,
Financial
Chronicle)
MASS. —Herbert "J.
is
connected
with
Chace, Whiteside. Warren & Sears,
n
Lie.;
24 Federal Street;
(2525)
31
The following statistical tabulations cover
production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that
date, or, in cases of quotations, are as of that date):
AMERICAN
IRON
AND
STEEL
INSTITUTE:
Indicated steel operations (percent of
Equivalent to—
Bteel ingots and castings (net tons)
capacity).
Latest
Previous
Month
Week
Week
Ago
-Dec. 19
100.0
100.0
Year
Ago
99.0
97.8
ALUMINUM
OF
-Dec. 19
1,802,500
1,802,500
1,784,500
l,71i;40(
WROUGHT
Total
to
runs
Gasoline
output
Kerosene
Gas oil
stills-r-daily
(bbls.)
average
(bbls.)
output
j}e(1
j}ec'
(bbls.)___
and distillate
fuel
oil output (bbls.).
(bbls.).
-Dec.
r
—
Gas
— — -m
rr
r-
—-
-n-T--rnr rr
-
rV
—Pec!
oil and distillate
Residual fuel oil
— — .w
fuel
(bbls.)
oil (bbls.)
—Dec!
at
at
Dec.
5,264,7«f
5,269-;(KK
18,216,000
17,317,000
5,600.000
17,213,000-
2,490,000
2,630,000
2,387,000
8,897,000
7,476,000
9,477,000
7 549,000
8,902,000
95,235,000
93,802,000
91,377,000
26,537,000
83,993,000
26,569,000
85,151,000
26,740,000
33,150,000
86.968.00C
19.273^000
58,241,001
86,361,000
86,192,000
81,947,000
55,556,000
7,269,000
Residual fuel oil output
Trr...£)(!^.
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
.Finished and unfinished gasoline (bbls.) at
..Dec
Kerosene (bbls.) at__
;
5,626,700
IRON
tons)—rMonth
-and stainless
AMERICAN
\
of
Total
domestic
4
4
-
U
804,183
642,663
843,166
878,588
661,165
700,182
700,145
ENGINEERING
CONSTRUCTION
RECORD:
Total
U.
-
construction-!
S.
Private
ENGINEERING
,4—1
—
.Dec.
—
construction
Public
construction—
f
State
>
Federal
and
municipal
—
Bituminous
9
9
.Dec.
9/m
$83,693,000
Dec.
9
30,500,000
53,193,000
46,968,000,
—Dec.
9
6,225,000
$362,329,000
$137,751,000
287,841,000
63,561,000
74,488,000
63,023,000
-
s
74,190,000
51,724,000
$95,623.00C
29,589,000
66,034.0QC
37.226.00C
22,466,000
28,808,000
'
11,465,000
and
lignite (tons)—
Pexmsylvania anthracite (tons)Beehive
coke
■
—Dec.
4
11,350,000
no, 130,000
10,425,000
13,12O>0OC
—Dec.
4
1,137,000
1,039,000
863,000
1,185,001
147,600
Dec.
—
production
TEM—1935-39
SALES
INDEX—FEDERAL
RESERVE
ELECTRIC
4
*151,300
152,900
133,300
and export
——!
j-
stock
ZINC
zinc
output
347
485
t
320
508
Unfilled
000 kwh.)
(COMMERCIAL
'STREET, INC.
AND
-Dec. 11
INDUSTRIAL)—DUN
&
5,704,823
5,645,686
5,570,767
orders
OF
126
122
96
87
14,935,000
3,902,000
178,521,000
2,665,000"
grades
(tonk
end
at
of
(tons)
period
69,682 i>\
70,716
,71,195
—
<!
67,402
2
96,142
19,484
•
43,788
43,130
79,789
69,166
43,250
$14,650
$14,382
$11,708
7,717
*7,533
5,314
3,769
*3,725
1,854
1,915
*1,781
*1,944
1,258
3,948
*3,908
6,933
*6,818
3,241
2,723
*3,130
3,057
6.394H
2,864
*2,724
2,600
964
921
23.323,000
21,269,000
11,857,000
"
44,431
OF
THE
FEDERAL
SYSTEM—Estimated short-term-
in millions
Sale credit
of Sept.
as
'•
2
3Q:
credit——„—;1—
consumer
—
■f
——
'
-2_22_—
——
——
Automobile
—
2
.
1
•.
'
Other,:
—-
credit
.2
*-
1
——
credit
j.i.—
2-—
—:
r-
2-2——_
accounts
Single payment loans.——2
:
credit
969
ACREAGE AND
U.
S.
Dec.
It
PRODUCTION
AGRICULTURE—As
OF
of
OF
■
'23,003,000
14,937,000
bales—„—
gross
(DEPT.
GINNING
:
15,166,000
METAL PRICES
(E. & M. J.
7
3.75628c
Dec.
7
$46.82
Dec.
7
$43.00
—
—
3.75628c
:
refinery
3.75628c
3.19541c
Month
$46.82
$37.06
Adjusted
for
$43.00
$43.00
$40.25
Without
seasonal
QUOTATIONS):
(New York)
Lead
(St.
Zinc
at
23.200c
23.200c
8
23.425c
23.425c
23.425c
21.550c
Dec.
8
103.000c
103.000c
103.000c
80.000c
)ec,
8
21.500c
21.500c
21.500c
15.000c
)ec.
8
21.300c
21.300c
21.300c
14.800c
-Dec.
8
17.500c
17.500c
15.500c
10.500c
.
at
Louis)
8
)ec.
.
tin (New York)
Lead
.Dec.
_
at__
(East St. Louis)
.
at
23.200c
21.200c
U.
S.
AVERAGES:
IRON
average—100)
CASTINGS
For
producers' own
corporate-.
-
.
Baa
.
Group———,
Utilities Group
"Public
Industrials
Group
:
111.25
110.70
110.8t
117.00
117.00
115.82
115.81
Dec. 14
115.24
115.04
114.08
114.4C
*
—.
109.97
109.97
109.60
110.IE
103.47
103.47
103.64
103.8<
.Dec. 14
106.39
106.39
106.21
105.51
.Dec. 14
,
.Dec. 14
r
101,84
.Dec. 14-
-Dec. 14
——
Railroad
100.72
111.25
100.84
-
A*-Z——I———"™—III—IIIIIIIIIIII!
100.86
Dec. 14
Dec. 14
.Dec. 14
111.62
111.62
111.25
115.82
115,82
114.66
112.7J
114.8i
Orders
booked,
cancellation,
less
U. S.
t
Bonds
Govt.
Average
corporate—
-
——.—
Aaa
.
Railroad
Group—
2.45
2.31
2.44
3.10
3 .10
3.J.3
,3,1:
-Dec. 14
2.80
.2.80
2.86
:2.8c
2.89
2.90
2.95
2.9:
-Dec. 14
3.17
3.17
3.19.
3 46,
-Dec. 14
3.54
3.54
3.53
3.5:
-Dec. 14
3.37
3.37
3.38
3.4:
-Dec. 14
Baa
2.44
—Dec. 14
—Dec. 14
>
f
-4
-
;
Public Utilities Group—
-Dec. 14
3.08
3.08
3.10
3.0:
Industrials Group
-Dec. 14
2.86
2.86
2.92
2.91
Dec. 14
392.0
398.4
399.0
4554
tpns)
of
end
NATIONAL
•
FERTILIZER
INDEX
ITY
:
ASSOCIATION—WHOLESALE
COMMOD-
GROUPS—1935-39—100:
BY
200
Railroads
Utilities
Banks
(125)
(15)
130.2
,
81,761
77,824
83,976-
44,305
43,881
37,456
33,943
47,706'
36,270:
40,106f
38,654
31,059
158,351
164,002
210,676
$28,117,874
$28,551,870
$28,175,868
•
OF
Nov.;
-
5.54
5.82
6.72
—
——2
2^——
6.98
5.93
5.48
7.42
6.20
6.34»
j,
6.08
5.80
6.02
1—,2
4.87
4.45
4.66
:—i
3.30
3.16
3.57
(200)——:i'.
—
CAPITAL ISSUES IN GREAT BRITAIN—
Midland
Bank, Ltd.—Month of November—^
£14,372,000
Total of /customers' net debit
Credit
>'%
EXCHANGE—As of Nov. 30
(DOO's paaltted): ,-4
!; Member firms carrying margin accounts—
extended
hand and
Total
customers'
balances—2
customers
to
Cash on
—
in banks in
U. S.___—
credit
balances—
£8,837,000
£104,779,000
•
NEW YORK STOCK
v:
•
-
■■
.
t
$579,53513
$551,101
44,639
49,183
361,412
563,441
,
75,98R
409,00?
539,863
65.466,288
72,185,619
a.
.131,233,680
130,944,936
price index, 12-31-24=100——
Member borrowings on U. S. Govt, issues—
Member borrowings on other collateral———
$118! 085
$50,641
228,614
252,386
of
value
free
listed
of
shares——
—-
bonds——a,
PAPERBOARD
r,.
78.8%
Stock
AND
227.5
231.9
235.2
23 7.f
205-7
206.8
212.0
275.6
244.3
250.8
251.8
274.£
1,943,399
*1,812,343
1.898,10f
—Dec. 11
294.9
304.2
297.1
342.4
Paper output (tons of 2,000 pounds)—
975,614
__Dec. 11
210.2
211.7
208.7
315
Paperboard
828,456
*916,314
*766,159
955,990
814,678
Dec. 11
250.0
258.1
261.9
260.1
Dec. 11
242.3
242.3
244!l
Dec. 11
172.1
172.4
1-71.6
178.1
Dec. 11
194.1
195.5
193.9
226.C
output (tons of 2,000 pounds) —
Wet machine board
output (tons of 2,000
pounds)
Building board output (tens of 2.000 pounds)
Mill
receipts
of
pulpwood
(cords of 128
cu. ft.)
—2
—2
commodities.
materials
Building
.T
Chemicals
and
Fertilizer
materials
drugs
1
Orders
received
of
PAINT
AND
189.5
159.:
229.0
236.4
Softwood
150.3
152.2
156
Hardwood
142.9
142.9
142.5
135.C
150.1
150.1
140.6
Dec. 11
153.7
153.7
151.3
129.3
Dec. 11
217.6
219.7
220.8
219.4
.
REPORTER
PRICE
NEW
SERIES—U.
4
150,890
183,311
244,488
189,639
229,23:
179,58:
4
Dec.
4
93
89
95
9f
Dec.
4
362,851
338,720
419,248
466,62:
—
190,868
INDEX —1926-36
_..Dec. 10
S.
218,071
-.Dec.
!
———
PRICES
190.6
225.9
149.7
DEPT.
OF
144.3
144.6
144.4
.
Fuel &
lighting materials...
Metals
&
products
^ec.
164.2
7
163.7
165.1
162.C
7
175.5
179.4
176.3
196.'
173.7
177.0
176.1
179.1
lec.
7
7
)ec.
7
146.1
147.0
146.8
146-'
3ec.
7
136.9
136.8
136.6
122.'
.
.
.
.
(at
153.4
153.4
153.2
10,867
*10,682
12,641
128,462
*119,188
114,850
2,042,434
1,776.021
2,063,321
1,796,317
266,413
267,004
(BUREAU OF MINES)—
end
of
2
—
(bbls.)—
month)
AND
SLIPPERS
(DEPT.
OF
MERCE)—Month of September:
(number of pairs)
Shipments
(number of
(value of)—
19,938,000
18,300.000
20,562,000
6,086,000
*7,061,000
5,668.000
19,349,000
18,605,000
93%
.
90%
,
COM¬
Production
Shipments
20,324,000
93%
—
r
SHOES
—
41,990,000
43,280,000
$162,660,000
pairs)—
*41,357,000
43,055,000
40,826,000
—
v
*$162,658,000'
144.'
3ec.
7
173.8
173.8
172.6
) 51/
lec.
7
203.2
203.2
203.0
188.8
Dec.
7
134.5
134.5
134.8
137.&
sale
COMMERCE)—
(short tons)——
(short tons)
—
producers' own use (short tons)
^Unfilled orders for sale at end of month
For
(short tons)
STATES
UNITED
BUREAU
OF
„—
153,845
149,222
148,358
114,925
112,551
111.288
38,920
36,671
37,070
424,352
447,972
497,344
$1,020,800
$926,100
$1,305,000
597,200
558,100
$252,562,994
4,385,070
$252,512,609
4,802,239
$258,301,069
3,935,084
$248,177,924
$247,710,370
$254,365,985
EXPORTS AND IMPORTSCENSUS—Month, of October:
(000's omitted):
Exports
Imports
UNITED
—
*
—_—
STATES GROSS DEBT
491,610'
DIRECT AND
GUARANTEED—(000's omitted):
Special indexes—
Hides and skins
——
Dec.
Nov.
!iIncludes 371,600 barrels of foreign crude'runs.
30
173.3
171.8
171.1
255.C
As
227.6
233.1
240.4
234.f
General fund
235.4
237.3
242.4
225.'
206.3
207.3
203.1
262.4
of
Net debt
2
balance———i—
———-
annual interest rate
-"Revised figure,
tPreliminary figure.
Computed
•Revised figure.
•
.
*
October:
Capacity used
Shipments
.Dec.
.
.
of
—
Prodjuction (bbls.) ____—-—
Shipments from mills (bbls.)"
For
Foods
metal
Month
—
—
STEEL CASTINGS (DEPT. OF
Month of October:
LABOR—
products
cords)
(in
'
150.'
1926=100:
Farm
cotds)——
(in
PORTLAND CEMENT
Stocks
at
DRUG
AVERAGE=100
WHOLESALE
190.6
225.9
Dec.
activity
orders (tons)
Unfilled
——
Dec. 11
150.1
(tons)-
(tons of 2,000
types of paper
all
Dec. 11
ASSOCIATION:
(tons).
Production
Percentage
of
pounds)
Dec. 11
Dec. 11
machinery
combined
MERCE)—Month of October:
Output
—
_Dec. 11
groups
NATIONAL PAPERBOARD
198.2
|
OF COM¬
(DEPT.
Dec. 11
—
-sir
$592,890
325,657
,•615,240
67,026,330
137,509,330
;
75.8%
$98,792
214,697
.
~
-
...
V;tV •.'.fi.MYdaf
Dec. 11
—4
OIL,
of
2——.—2
(10)
1127.5
DEPT;
—
yield
t129.1
Dec. 11
Miscellaneous
All
sale
."2
—
-
376
oils
and
Livestock
Farm
for
YIELD
—
(25)
(25)
Insurance
NEW
AVERAGE
STOCKS—Moiith
COMMON
Industrials
PAPER
.—
!
■
_
WEIGHTED
MOODY'S
302
*327
products
Fats
Farm
INDEX-—
sale
MONEY IN CIRCULATION—TREASURY
As of Oct. 31 (000's omitted)—
Market
COMMODITY
for
—
Market value of listed
MOODY'S
month,
*307
357
OF
;
orders,
Average
MOODY'S BOND YIELD DAILY AVERAGES:
•„r—--
(DEPT.
(short tons)——_
use
288
of
COMMERCE)—Month of October:
Shipments (short tons) -——
For sale (short tons)
1(short
Bonds
Govt.
Average
DAILY
1
adjustment
(short .tons)
PRICES
BOND
Average=100)
variation—^
seasonal
(1935-39
MALLEABLE
Unfilled
MOODY'S
'!
November:
November
Export refinery at
Btrails
ol
INTERSTATE
COMMERCE
COMMISSION
Index of Railway Employment at middle
at
n
SALES (FEDERAL RE¬
STORE
$46.82
Electrolytic copper—
Domestic
| J
,
10,040,618
12,762,089
—Dec.
1,004'
COMMERCE):
SERVE SYSTEM)—(1985-39
Finished steel (per lb.)
Pig iron (per gross ton)
Bcrap steel (per gross ton)
f
2,257
...
Running bales (exclusive of linters) prior to
DEPARTMENT
IRON AGE COMPOSITE PRICES:
v."-
GOVERNORS
RESERVE
COTTON
Dec.
185,588,000
INC.—Month
5,327,470
BRAD-
;
—:
—
output," all
Production 500-lb.
FAILURES
4,597,0d0 ;>
175,120,000
15,290,000
CONSUMER CREDIT OUTSTANDING—BOARD
COTTON
INSTITUTE:
(in
(bbls.)_
INSTITUTE,
smelter
Charge
Dec.
28,000
10,883,000
28,000
11,428,000
4,402,000
November:
DEPT.
Electric
168,826,000
157,530,000
11,046,000
50,000
^ 8,658,000
consumption—domestic
Service
EDISON
185,043,000
172,886,000
12,129,000
(bbls.)__
rStocks at end Qf period (tons)
SYS¬
AVERAGE=100
——
—
AMERICAN
Loan
STORE
174,580,000
!
(bbls. of 42 gal¬
—,
products imports
Noninstallment
DEPARTMENT
5,681,597
I
:
,
Instalment credit
(tons)
7,242.427
5,511,474
,
Total
(U. S. BUREAU OF MINES):
coal
*7,987,112
11,515,000
credit
COAL OUTPUT
7,763,216
5,952,006
or *2,000 lbs.)
Shipment (tons of 2,000 lbB.)__i\.—
,oec.
.
i
-
V
NEWS-
•,„v
...
146,860.;
including alloy
163,037,000
Slab
—
^
130,786
(bbls.)——
of
CIVIL
141,144
gasoline output (bbls.)——;
Benzol output (bbls.)
j
Crude oil importB (bbls.)——.
Increase—all
723,090
November—
Natural
(bbls.).
Dec.
Ago
INSTITUTE—Month
PETROLEUM
Indicated
,.Dec.
of
(net tons)—Month of Oct
lons each)
_____x.*,.
Domestic crude oil output
ASSOCIATION OF AMERICAN RAILROADS:
Year
•
INSTITUTE:
September:
Refined,
Revenue freight loaded (number of cars)
Revenue freight rec'd from connections (number of cars)
STEEL
AND
Shipments of steel products,
16,051,001
2,113,0©C
6,525.00C
8,749,000
Month
ingots and steel for castings produced
(net
5,617,050
5,721,000
5.615,150
115,698,000
.^.Uec
Previous
shipments (thousands of pounds)
Steti
Crude oil output—daily average (bbls. of 42 gallons
each)—Dec.
Crude
Latest
Month
(DEPT.
of October:
COMMERCE)—Month
AMERICAN
AMERICAN PETROLEUM INSTITUTE:
PRODUCES
—
2.214 %
2.211%
'2.136%
mmmm
38
COMMERCIAL
THE
(2526)
FINANCIAL
&
CHRONICLE
facts and analyzing them; second
The Automobile mid
The American
by carrying out programs, volun¬
tary anu compulsory, for distribu¬
ting scarce goods at home and
abroad
where they will do the
most good. In constant coopera-
Economy
and consultation with business
(Continued from page 6)
Rubber, snift of population to the West—
gasoline, glass, steel, nickel, lead where cars are even more neces~^all depend upon it.
! sary than in the East—will be a
The domestic tourist business is contributing factor. New models,
of
largest. Without
vacation trips
would still be a luxury of the
wealthy few. Since 1920 we have
increased the mileage of surfaced
rural roads from 350,000 to 1,530,000 miles.
Our big cities have
"exploded" as people have discovered the pleasures of living in
the country. Hundreds of factories
now
one
the
automobile,
our
^
_
...
Healthy
.
,
x
..
stated
earlier
conditions
world
become
~
,
^
..
wanted to do.
the
con-
Will social and
0f
eco-
world-wide network of assembly
changes make this task difpIants and factories. This type of
ficult or impossible.
The answer investment is
continuing, in spite
involves, an
inquiry
into
the of many
dIffjcuitieS; we have esre,^ 7? .anc* vlS®r °f a great and timated that American industries
infinitely complex organism, our placed abroad over 600 million
democratic
capitalist society. Is dollars in direct investments in
nomic
that.organism^healthy. Can it be
£
discipline,
x
what
foresight, what cooperative
•
.
the
yond
fondest
Today
than
more
dreams
of
our
producing
are
we
before, either in
peace; but we are not producing enough to supply the deever
war or
We
^mand.
are
faced with the need
to plan our future.
lessly
would
be
To drift aimthe height of
l0llywhich
examine
the
in
craft
have embarked, and we
we
must
carefully chart
That
craft
our
be
must
course,
staunch
and
seaworthy; it will without doubt
be
called
storms.
to weather many
are all in this boat
upon
We
automobile
to
a
the
dollar
problem
since
the
industry,
significant
solution
the
—
foreign
automobiles
insatiable,
more
demand
be
to
seems
almost
biggest imports
spent abroad by
our
money
million
1947
spent 597
we
dollars,
excluding
the
on
American
ships
and
planes. In 1948 this figure will be
much higher. I have established
a Travel Advisory Committee, on
fares
which the American
Automobile
world
which
that
depends
the
will
hold
its
whole, abroad and others rent American
the
upon
should make
we
it
of
a
hope,
certainty,
and
course
will safely come to land.
Now Being Put to Severe Test
At the moment
nation is be-
our
.
,
.
_
-
to a severe test. Parts of
the world are not too friendly and
lng put
military
spxenuv uast s!im^orl oule
establishment.
the world
are
not
too
Parts
strong and
we
are spending vast sums to
store their strength.
.
Presently
with
we
we
re¬
tions.
inflation. "At
encouraging
foreign
coun-
tries to improve their transportation facilities. You have teamed
the
up
American
rubber industries to
finance
sponsor
International
are
Federation,
oil
an
stimulated
business is sound, and
keep it that way.
a
large unsatisfied demand.
We have
a
rapidly growing
ulation
and
larger
number
With
build
areas.
more
their
in*
full
Road
in
families
one
or
pop¬
s^ndar^
people
of
two
a
will
suburban
will
cars.
criticism.
for
We
that
matter,
your
American
believe
we
want to
It is the duty of the Department
of Commerce to try to keep the
own
economy strong. At a
time when unprecedented stresses
and strains
us,
we
are
must
with
and
all—in¬
of
interests
the
farmers,
.
future
the
should .face
determination
confidence,
being placed
do what
we
upon
can
to
President. None
are
us
can deny that we
well off. The farmer is
very
Preservation el
hope. Let
when
we
us
face the light.
first, by
gathering
forces
whicn
of
on
saying this, I do not wish to
as
meaning tnat4
unaerscood
concentration
has
been
not
ac¬
bankers-have been known to look
the field seeking to discover
over
firms
which, for a' fee or a com-,
mission, V coyld be
brought ; to¬
gether in corporate merger.
Tne
.
result
inevitably
is to narrow
rather than to expand the field, of4
competition, to increase concen¬
tration
Free Economy
a
(Continued from page 7)
economic
of
/
that the concentration of political
lative
the United. States a police state.
The time has come to take off tne
always been preceded by con¬
nas
centration
of
economic
The
rise
been
Hitler
of
utterly
power.
would
impossible
if
have
there
branches,
at
establish
in
partisanship,
mere factionalism, and to look
facts exactly as they are. Wnen
of
blinders
of
to
-
the
of
although, of
in the early days of this
century industrial mergers, out of 1
which
known
appraise our prob¬
precisely where we
over
go.
I feel very strongly
by a wave of the hand. The
concentrated arbitrary power of that it ought to be possible to re¬
Lenin and Stalin was erected only cruit among the members of this
upon the foundations of the old organization a group 01 mnitan
course,
of
some
came
industrial
well-
our
giants,
were
promoted by those who were pri- ;
marily
concerned
in the
phases of the transaction.
•
fiscal
•
*
<
economic
concentrated
the
of evangelists dedicated to the pres
ervation of a free economy with¬
power
nobxes.
Tr.e
of Russia did not direct
regime, so that the change
people
the old
from the
to the communists
czars
merely
was
their
and
czars
exchange of dic¬
an
tators.
the
struggle be¬
was a
should * control
destiny, and toiali-
people
own
tarion
dictators
who
back
..turn
reaction
self
so
long as sue.
individual remains loya'
wanted
clock
the
re-establish
and
and
opportunity
for
the
We shall find the solu¬
people.
World War II
trary
individual
any
group or
dom
War Was Won for Freedom
to
or
to the American tradition of free¬
J
that
out
any
thought or purpose o
hostile action against any grout
As
power.
a
Of
arbi¬
" matter
of
tion
of
our
difficulties, not ir
punitive action, but in construc¬
tive action, not in the punishment
of alleged or indeed of real of¬
fenses, but in the framing of an
economic structure that will pro¬
tect
an
expanding economy of op¬
portunity
and
the restrictive
against
deadening influences of eco¬
preservation, the communist nomic concentration.
dictators
that
alinged
struggle
racies.
We
themselves
in
with the democ¬
thought during the
victory they would
that after
war
see
the
value
we
are
now
quite
ideologies
they
were
made
common
The
democracy, but
war
they are
their ,totali¬
in
steeped
as
tarian
of
learning
when, before
as
they
attacked,
won
was
had
with Hitler.
cause
for democracy
because the habits of freedom had
made
air
our
armies and navies and
fighters
resourceful,
more
competent, more effective as
individuals than were the regi¬
I undertake
to
say
that the * difficulties in
which the security dealers fino1
themselves at.the present moment
are
not due to any
the
upon
part
of
deliberate plar
person
any
01
to create such a situa¬
tion, but solely to the fact that we
any group
have
flow
been
have
forces
the
understood
not
which
drying pp th<
capital alac>
investment
of
hordes
of
the
dictators
know perfectly
well that the
capacities of the fighting men of
America
not
were
measured
by
the fact of whether they were re¬
the ranks of business
fessions,
result
the
their
the pro¬
or
abilities
or
the
were
the fact that they were
of
products
of
institutions
free
and
certainly• we have seen
enough to know that the future
progress of the peoples of the
world
depends
wholly upon the
degree to which the opportunities
of
freedom
are
extended
the
to
peoples of all nations.
than
better
the
comparatively
investment
doing
few
houses have for years been
the bulk of the security
This
business
during the
clear
made
was
study of the Temporary National
Economic Committee. It is equally
clear
During
now.:
period
the
from January, 1934, to June. 1939
six New York City firms handled
than 57%
more
security is¬
of all
This
is
which
and
problem
the
we
in
America.
background
against
must examine the plans
purposes
of business as well
the plans and purposes of gov¬
ernment.
There
the
than
far
were
issues, but
more
six firms managed more
same
51%
the
of
The fact
total.
that the percentage of concentra¬
tion fell off in the more recen*
period
and
that
number
the
o'
slight gain and t^at ah
past 16 years about economic free¬
dom has not been wholly without
avail.
has
At
the
in
time,
same
undoubtedly
increase
the
been
area
campaign,
among
there is
the members
government,
whether
in the executive
or
the
institutions.
these
Police State
are
a
the talk in Washington durmg tV
ance
I undertake to say to this group
that despite all the slogans of the
purpose
has been
tbpm
a steady
of private
placement by financial and insur¬
No One in Washington Wants
110
of
they
legis-
has
appraisal
there
the
of
Little
tween
Business,
in
gov¬
a
clear
been
differences
Business
,
that '
be¬
Big
and
.:
is it understood by
the degree to which
nor
the
public
Big
Business
has "come
domi¬
to
nate the entire economic and "so¬
cial scene.
The government
in
Washington has expanded, not be¬
cause of any plot upon the part
of any member of Congres3 or*of
the executive to increase Federal
but because the progress
powers,
of
economic concentration
field
the
of
attention
of
"businessmen all
to
in
the
Big Business has turned
little
over
and
the
local
country
Washington and to the govern¬
as
a
source
of
protection
ment
and
of necessary capital.
It was
clearly shown during the studies
of the Temporary National Eco¬
nomic Committee that the savings
the people through banks and
insurance companies flow into the
of
centers
where, under
management,
they
are
available, practically exclusively, use of Big Business.
The
president of a great insurance'
company, with its offices here-in
New York, testified at one of the
committee hearings that his com¬
pany was not interested in a loan
of less than $250,000 and, as I re¬
for the
call
be
it
that
would
bothered by
prefer
not "to
loan apolications
for less than one-half million dol¬
lars.
That
is
when
course,
■
economic
in
ernment
is
group
business nor
understandable, of
one
considers the
During" the period from.
annoyances of the detailed work
January, 1938, to April 30. 1947
necessary to serve the small loans
*he percentage fell off slightlv
sues.
issues increased shows that therr
This, then, is the background
against which we must view the
neither
central
knows
this
of
financial
one
j
What I desire to call to the at-
tention
prise.
N6
*.
Growth of Federal Government
making difficult the establishment
of new free, competitive enter¬
members of this organization that
/
concentration
want to
better eyes to
practice also results
however, I believe is
incident to the progress
an
lem and to see
able to take
was
»
All, that,
only
structure that he
much
shall have
we
re-
security
competitive economy.
mere
is done
of.
number
to
which the mergers are carried (mti
the normal development of a free,
this
not
and,
power
extent
some
denying to the far reaches of
country,; to the
extent to
already been erected in
Germany a concentrated economic
had
to
issues.... The
in
the
power in totalitarian governments
your
—
In
be
duce
Department carries out its duty in
ways
the
witnout any planned purpose
the part of any group.
therefore,
political
source of
understand
themselves promote concentration
.
not be afraid of
shadows. Our shadows fall behind
the pressures
and relieve them if possible. The
locate the
The two
of
cluding
man who has been and is now our
as
domestic
employment
of
homes
Many
than
r*
a
tion
for the next four years the same
the ranks of management or from
the ranks
of agriculture, from
matters the Department of Com¬
merce
is willing and
eager
to
help. We are at all times anxious
to have your comments,
sugges¬
curs, the demand for automobiles
will be heavy f*r an irdef'^'t n now
President
their
as
and
In connection with all of these
tions—and
Automobile registrations are
at 33 million and there is still
chose
cruited from the ranks of labor
organization that
cooperative plan-
and that of other friendly
nations. If this sound growth oc-
riod.
ex¬
willing to cont¬
am
and
be faced with lout the world. In giving your
appalling depression. In order that ; support to this organization' you
Americans may make progress we are
combining sound
business
should undertake to avoid each practice with an
enlightened in¬
of these calamities.
terest economic development.
omy
con¬
people
We
may
depend upon the opportunities for
steady growth of our. own econ¬
its
make
to
asked
more
ning among nations for the ima' proving of road facilities through-
One may ask as to the prospects
of
markets
for5 automobiles
at
home and abroad. The answer will
be
distribution of this type of busi¬
tne time has come for us io
ness,
tribution, but will not be asxed ic tively
promoted
in
some
everything. To
deal stances.
I
know, tor example,
with
the
inflationary
problems
thattmany mergers of industrial*
which
confront
us,
to avoid a companies have oeen
promoted by
disastrous
depression,
requires investment houses for the
purpose
delicate handling
of our entire of
issuing new'securities. Indus¬
situation and careful considera¬ trial
engineers and investment
Business
mented
has
election.
any
What is there to be afraid
inent.
late foreign travel in another way
—by
will
of? By a fair and open -vote, the
The Automobile Manufacturers
Association has helped to stimu¬
threatened
are
increasing
later date
of
automobiles for travel once they
arrive at their foreign destina-
business
laborers,
and
businessmen. Your government is
well
aware
of. that
necessity.
their
Americans. In
the
tween tne peoples of the democratic
j
travel. One of
the
since
undertake
nations of the world wno believe
labor, farmers, busi- Association is
formally
reprehousewives,
scientists sented, to stimulate travel abroad,
professors, teachers and tech- An increasing number of Amerinicians,—all groups, classes and can travellers take their cars
future
about
so
and
The
questioned
labor is well paid, and
profits are the highest
in history. Could the fearful ones
by any chance be afraid of four
more years of prosperity?
Some
discipline
and
s o m e
restraint, and even sacrifice, may
oe required of all of us. Business
prosperous,
contribute
for
assisting the government in
attempts to stimulate foreign
lts
off
not
planation, but
the
of
together
nessnien,
races.
been
sold
shall
con-
You of tbte auto trade Can help
by
1
it is economically feas-
tribution
I is
We must
,
by the
ess
| ible, will make
.
Our economy has expanded befathers.
1947 ^n even greater decentralization of the manufacturing proc-
re(lulred *0 keep " wherever
?ay
hk
nealtny/
have
of
Be Afraid
to
,,
...
that
I
have
if
One of the more effective ways
increasing purchasing power
tinued production of automobiles
abroad is to invest capital in forwould depend upon what Amenelgn productive facilities. This the
can workmen and managers would
automobile
industry
has
been
be able to do as well as what they
dojng for several decades in its
_
I
Nothing
4
Stability and Investment Abroad
...
__
Organization
lind ways of
more economical in the use of
the fears of some people with
fuel, possibly more attractive in
reference to the future. I have
design, will increase the rate of
been asked to explain why stocks
obsolescence,
stable, the foreign demand will be
greatly increased. Last year we
exported one billion three million
dollars worth of automotive products.
While this year's total will
have moved away from centers of
undoubtedly be lower, the world
population and new communities still wants these products, al~
have been built up around them,
though many nations are short of
Farmers have increased their pro- £he dollars
required to buy them,
ductivity, and have changed their
The destruction and dislocation
living and spending habits. All causeci
by fog war have increased
business has speeded up. What
:be foreign demand for our prodthese changes mean in terms of
uc(g. but at the same time have
dollar value,, no one will ever
made it harder for foreign coun_
compute. The value is tremendous a.ies to
produce for export-esand the automobile industry is
pecially to the United States,
responsible.
Business
we
to do these jobs well and to
doing them better.
try
alive by the automobile.
Thursday, December 16, 1948'
figures
as
I
any
do
not
cite
evidence of
any direct purpose among invest¬
ment bankers to promote or to
which
is
only
and
to
to
illustrate
bring
cold
the
indicate -that
sirable to
I cite them
it
if
about
a
facts
is
de¬
broader
Business
wants,, but
why the demand
#
from all'
parts of the country to authorize
continually
rising
,
to Little Busi¬
people turn to govern¬
only when the
government loans
ness.
The
ment
for
action
sendee they need is not provided'
for them by the institutions which
exist.
So, Congress is
constantly,
under pressure, not from any radi¬
cal group, not on the part of any
state
planners, not upon t^e part
pohre state,
of anv advocates of a
but
the part of the people
to
provide,
through
upon
themselves
RFC
or
otherwise,
ernment
which
the
retard concentration.
Little
it also illustrates
is
tions
demands,
met bv the
we
The
of gov¬
expanding economy of
country
rot
sources
capital to supply the need
the
but
whrdi
loaning institu¬
have.
dispatches from Hollywood,
Florida, tell us that at the meeting
Volume 163
Number 4760
THE
of
the Investment Bankers' Asso¬
ciation tnere tnts
week, u.e retir¬
initiative
ing
Presiatnt,
Mr.'* Julian
H.
Collins, declared ttiat there is still
mands, and if you permit the free
opportunity for
vate
wmtn a
resourceful and ag¬
gressive iirms- in spue of what lie
say to you
the United States;
that if there be
what
toward socialism it is due
fact
that
industrial
appraised
the
are promoting thp drift to¬
ward centralism. .More
$.an that,
industrial and JinaneiaL leaders
sometimes
cern-
fear
tnis
s
gaive tHe^&ecretary of-Agriculture
more power to regulate the
pack¬
ers and stcckyaras
industry than
was ever granted
by any admin¬
say
a_v
of
at\
application}
loans, has inade it
practice
a
asking local bank participation
but
local
banks
reluc¬
are
tant to participate for two reasonsyyfirst,' pernaps because they
and atten tion 4a things:
they
happen jatheril^an to wppidJlike a better rate of intery
things'which are. taking place est -Shan proposed, but
primarily
under their own, noses.
Only/the because* the banking arm > of the
"day before yesterday^ for;:eacample. government frowns on.
long-term
the Washington correspondent of
loans by commercial banks.
Sc
a
well-known- insurance journal there are
many cases of businesses
came to me
during the hearings throughout the country
who, be¬
on
business profits and showed
cause they cannot get
their.capital
may
the
/me a
telegram from his editor di¬
recting him to interview me and
needs
get
of the
from
Federal
a good story on the legislation
provide Federal regulation of
•insurance which, it had been re¬
to
to
the
RFC
Reserve
because
ol
Comptroller
or
Currency regulations, turn
the
insurance
companies
of
New York or sell out to. Big Busi¬
authority, -I .was. ness, thus affording an oppor¬
busily e n gaged in preparing. tunity for big investment bankers
There was not even the slightest to issue
new securities for a new
ported
on
good
basis for the report and the
mes¬
merger.
sage was the first and only knowl¬
edge I had had about my alleged
I have
no
Weli,
>
you
say,
what
control
the
us.
hesitation in saying to
go¬
in
leaders
would
de¬
and
vote their attention to the things
tv at
are
happening in business,1
better.progress would be made all
along the line both in government
and
in
business
This
would
between
of
building
nomic power and unless
tbe
solemn
fact
that
up
an
learn
we
economic
concentration is but the prelude to
political
be
concentration,
must
we
for that eventuality.
prepared
Preservation of
Capitalism
again during the
over
opinion that the
personal
ership
would
devote
itself
to
gree
has
of
a
nesses
■■
■
,
Big
/
■
.
.
of
fact that out of
business
a
firms
amazing
total of 3,316,000
and
any
earnings in the hands
big corporations seek new
the
they
turn to the
me
and
number
affiliates and
any
number of busi¬
their directors desire.
Ac¬
for.
avenues
f
Business Dominance
Now let
in
up
cumulated
'
-'
set
subsidiaries
engage
system, in which it professes to
believe, from internal dangers.
developed.
preser¬
into
as
lines.
and
so
into non-related lines
go
well
investment,
actual
They
as
subsidiary
expand
out
geo¬
persons
en-1 graphically into a dozen, a score
United j or even more
states, and business
talk about the de¬
which economic power
to
I
been
hands of
concentrated
in
the
few managers, but by
a
idly
jj
t
-
i
ran
j*
-
husiness
in
Ftates in
do
I
Federal
•
thority
not
never
la\*Hthe powers,-the
social
the
and
bilities ;of' the
does
and
mean
business
the
field
in¬
down
managerial
the
they constitute one-tent^ of 1%
the total, employ 40% of all
.
workers./
for
the
figures.
They
New
the
pect
to
power of
them
eral
from
page
25
•of "Small Business:
of the
Its Place and
independence
the
businessmen's
you
ex¬
expanding
the government in Wash¬
The growth of the Fed¬
of
pendence
Com¬
can
the
Government
mining
Problems," written by Dr. A. D.
H. Kaplan of the Brookings Insti¬
sets
*
-
escape
ington?
study
a
managerial
is broken down, how
not my
are
for
which
economy
'.
is built
place
If local economic
figures of any
Deal propagandist.
I have taken
tute
its
pattern
state.-
of
not
in
and
local
under¬
ecomonic
two
are
thing.
merely
the
and
inde¬
aspects of
same
There
by
railing
be
can
the
no cure
I
that it
feel
is
hi'ghly desirable
that there should be
a
conference
authority
problem
of
and
national
£
charter law.
Labor
have
management
and
already made great progress in
developing a better relationship
Universities
have
established
the
seminars in which labor and man¬
mittee for Economic Development
and published by McGraw Hill,
growth of government if we pay
no attention to the
preservation cf
agement leaders confer and study
their
problems
the New York
local
ficial
results.'
publishers who, by
imagination, can be
rcalled propagandists for the police
no
strain
state.
of
••
The
.business
see
siphoned
the
in
the little
savings of the
they live
into
the big city
capital where they
are
available, not for the free,
independent development of the
ings
were
bution to
huge
York
agency.
ternity,
blame
the
^
politi¬
cause
you
have
yourselves,
not
taken
eco¬
of
this
drift
businesses
of
as
are
the
the/country
which
are
is
a
much
I?at
little
terms
Lowering
the
at
and
lowest rates
1
no
one
has
ever
since
War,
no
forget that the gov¬
expanded steadily
the
close
matter
the
of
what
Civil
The
which
have
1948 in the
the
of
result
net
DoliticaJ
government activity.
It de¬
the establishment of the
liam
of
Howard Taft just
ously
as
it
legislation
the
which
it
as
denounced
be¬ the
ma
President
of
the
Wil¬
vigor¬
any
of
Roosevelt
unthinkingly char¬
has
taken
place
been
free
vital
flow
of
an
interest
There
as
and if built in
100 units
done
the
years,
the job
will be
private basis,
(2)
almost
entirely by public authorities, or
(3) by
The
combination of both.
a
private
ventional
basis
is the con¬
capital,
the
that they
in pro¬
could well take the lead
moting
this
basic
prevailing procedure than in
multiple
understanding
or
apartment house con¬
struction.
excuse
for
public housing
in this country only 15 years ago
was
that it would be used bene¬
ficially in
a
make-work program
—that it would help take up
in
the houses be produced
large-scale builder,
slack
used for those needing public
aid,
effects of con¬
otherwise described as the under¬
so that our
There was then no
capitalistic economy can demon¬ privileged.
strate to all the people of the other logical point at which to
tinued concentration,
that
freedom
makes
for
|
draw
the
is
line,
nor
field
does not lie in the reimposition of controls and restrictions,
Missouri Brevities
ing the subscription period, the
underwriters sold 160,975 shares
there remained for public of¬
so
fering 174,682 shares.
*
is there now.
problem of un¬
ing Co.,
of
$150,839
realization
of
its
$63,130, which in¬
representing the
on
No.
These
third
consoli¬
a
nonrecurring net income
a
7
results
the
net
disposition made
mine
in
Oklahoma.
with
compare
net
earnings during the third quarter
of 1947 of $88,855, after
for
-
Federal
company
shares
and
has
of
income
provision
67,955
stock
preferred
shares
The
taxes.
outstanding
prior
673,100
of
common
stock.
Net after taxes for the first
nine
months
equal
to
share,
$1.29
47
per
totaled
cents
against
as
common
$658,420,
per
common
$1,211,349,
share,
or
in the
corresponding period last year.
#
*
,
Net profit of Illinois
RR.
Terminal
Co., St. Louis( after charges,
and Federal taxes, amounted to
$1,238,769,
or
$2.48
per common
'share, for the first ten months
of 1948, compared
379,
public works would aid, and there
for the
nower.
St. Louis, for the
dated net loss of
cludes
employment which a program of
tral
*
quarter of 1948 reports
There
system of arbitrary cen¬
*
American Zinc, Lead & Smelt¬
stability and progress far better
no
the
housing built privately—not publicly. Control of inflation in this
than any
now
by
. The
key_to control of inflation
in the mortgage field is to have
employment—that it would be
of the meaning and
world
production Of
mass
more, by on-site pre-
(Continued from page 12)
many
largely either (1) -on a com¬
pletely
the
or
on a
fabrication^ methods,
for ' about
$8,500 to $9,000.
To obtain low
costs, it is therefore going to be
necessary that a great many bf
during
there can be no single
answer, and the problem will have
to be attacked on many fronts.
The broad approaches, however,
can
be
easily narrowed down
Over
for, expan-
room
definite turn
rather
are
with
but
The
in
subsidy
good lot in
an average residential area, can
be produced and sold singly for
about $11,000. If built by an operative builder, say five to 15 at a
time, for about $9,500 to $10,000;
principal factors bear-
a s
floor
ond
in the real estate market.
problem before us.
so
and
very important,
sion, and located
changes
prospect of this continuing to be
have
cost
in
in
agreements
that
get
into
the
headlines,
thus
cultivating the
fears which hold business leaders
Security dealers have so vital
an interest in this problem of con¬
centrated "economic power, they
of
together could be
years,
In the field
assistance.
more
tions of the country, they illustrate the point. A basic 4Vz-room,
24 ft. x32 ft. house, with tile bath,
automatic heat, stairway to sec-
there is more
of the
he a
partial an¬
direction—given a
time, and more pres¬
Credit, which until early in
available as mortgage
money
in
greater
amounts at
higher ratios to value for longer
approach.
cooperation which
is essential to a sensible solution
wHI
for reduction in costs.
sure
was
of the single house,
back from the
belief
to
reason
tnat
tnere
wl" be
swer
in this
(5)
1948
is disagreement, but it is tbe dis¬
by this problem than there
everv
there
re-
into the business,
coming
is
month.
greater de¬
turning to Washington for aid and
parcel post system under the ad¬
(
Blame
victim
ministration
cians for the growth of Big-Government.
rights in the
nounced
to the investment fra¬
don't
fected
of
•
So I say
abandon states'
party was in power. Business has
clamored against every extension
fiscal institutions of New
or
from some government
bene¬
convinced
of agreement among all af¬
Let
prises which finance their capital
needs neither by loans, from the
most
gree
ernment
earned, but for distri¬
the big business enter¬
am
there
and as are the localities
sav¬
I
that
little
of
with
is idle to talk about states' rights
in
the political
field when we
a
which
communities in which these
It
security dealer of a big
city like New York is just as much
off
reservoirs
independence.
The
little firms,
communities
economic
against
nomic field.
This is the most significant sp.cial and
economic
fact
of
our
time.
cently
The builders have learned mueh
the past ten years; and although the following examples
may not be applicable to all sec-
a
ject,
recommendations for
its
gress
latter
decline in regular
$4 million for the
ings, show
deposits of
law,
to 'study this
present to Con¬
The
techniques that have been
there
against a normal
3.5%, have, been steadily fall¬
ing off and are continuing to do
so
at present. Figures compiled
by the Mutual Savings Banks for
to
experts, of corporate
law
experts,
of
consumers,
of
farmers and of workers, called by
themselves.
isJke{^arder way; but with - the
war,
suggestions
for a solution of the housing prob¬
lem
as
there
are
people who
think seriously on the on the sub¬
business
of
a
the costs
t_
.
Jail-the workers
More than that,
.t^e 4.900 firms, each of which em¬
ploys 5C0 of more workers, though
are
housing: one is to
subsidy in one form or
another; the second is to lower
grant
au¬
that
of
'(L,
.■
but two ways to pro¬
are
vide for the person unable to
pay
of
responsi¬
corporation
in
operation, with
the full cost of
1939
,
These
There
which
October, 1948, while representing
but a segment of the national sav-
and
the government acting in the role
of insurer.
has been a major factor in
have suggested that Big Businesc making effective the demand for
housing.
A certain amount of libshould be broken up, but I dc
eralization of the FHA, most espesay that we shall not be able to
cially the introduction of the G.I.
prevent this continued drift to¬
loans guaranty, and a concomitant
ward centralism in business and
in government unless we make up relaxing of state laws on mortgage lending have made possible
our minds definitely to define by
sales with little or no equity.
that
precedence tor this—private
goo a
at 15% of the national income
during the
■.
in
subsidized
v ' ■
'
approach to the- prob¬
lem would see.ii 10 lie along the
lines Ox- a real combination of pri¬
vate and public effort, each as¬
suming the role lor which it is
best equipped.
There is already
construction
savings,
crieap
A better
and
...
to those
over
of
need
Lousing.
be any
ing on the demand for housing
terstate and foreign commerce, the
in the
therefore
been
that
with
employing 28.707,- j institutions in localities far from regulation of which, by the Con¬ has
500 persons, 26,900 firms, less than
the central office of the mother stitution of the United States was fewer new families needing space
-3 % of the
total, in fact only eight- corporation, and are under* the committed to the Congress of the as a result of fewer marriages
with
individuals
tenths of 1%- of the total, em¬
having
more
supervisory direction of -the cen¬ United States.
ployed
15.955.700
workers,
or tral managers who sit at the top
Though I have introduced a bill urgent calls on their income due
to higher living costs, with the
56.6% of all.
In others words, all of vast industrial
empires which in Congress after Congress to pro¬
rate of savings slowing down and
of the business firms in the United
are
in fact governed not by the vide for Federal charters, I
df
.States employing
holders
of existing savings more
less than 100 real owners, the stockholders, but not pretend to say that any single
cautious in their use, and with
persons
constitute 99.2%
of the by employed experts.
Thus, local person is competent to define all
total and employ only 44*4% of: economic
independence is broken these powers and responsibilities mortgage credit stiffening, there
gag^d
real
offing for 1949.
(4) Individual
attempt to
ineligible for pub¬
be turned
may
Falling incomes could rap¬
effectively reduce de¬
all-powerful state.
The Federal mands for
housing arising out of
power grows merely because we current
higher income. There are
bave been unwilling to face the
signs, such as the decline in de¬
fact that in tbe modern world
partment store sales, that, al¬
with modern technology the mod¬
though personal incomes have not
ern corporation drifts
inevitably been reduced, higher living costs
toward the concentration of eco¬ have been
soaking up any excess,
organized corporate business.
to
does not appear to
in the
half-hearted
a
lic Lou.ing by virtue of their high
incomes in order tnat the space
for
and
erage.
sake
mere
must
particularly true if business lead-! permitted
space;
pand the power of government for
the
We
recognize the fact that
pressure
of
(3) Individual income has been
running at an amazingly high av¬
and
in present circumstances
corpora¬
tions with unlimited charters are
be
constructive, campaign -4or -the
preservation of the free enterprise.
individual business
no
gress, nor, for that matter, any
member of Congress, wants to ex¬
modern corporate system as it has
ence
been
utilization
but
remove tenants
decontrol,
step-by-step
has
there
nition of the characteristics of the
Little
gradual,
there
or any responsible leader Oi
Democratic Party in Con¬
Business
between
living. While salaries
and wages have risen,, rents have
for the most part, except for new
construction,
remained
frozen,
thereby permitting people to stay
spread out, reducing the number
of persons per suite, and increas¬
ing the number of rooms per per¬
son,
With no genuine attempt in
1948 to work out a program of
man
Big Business, but the differ¬
ference
business
government,
financial
and
is
cost-of
proper
past 15 years I have expressed the
are we
(Continued from page 11)
the
that' neither President Tru¬
the
39
Homing Costs in Gradual Decline
you
The
What Is the Remedy?
not
If,instead of planning defenses ' ing to do about it?
First, we vation. *>f :4he capitalistic system
against things that are not hap- i must recognize not
only the ^dif¬ depends- ^wholly upon our recog¬
n-ninv
.
do
we
events* the events will control
:
•
government
any
in the hands of events
are
if
and
to
Over and
activity.•
istration'
(2527)
aber¬
forget mat it w~.s
President Harding who signed his
name
as Chief
Executive to t .c
We
business
fantastic
so^iaxuc
Packers and Stockyards Act which
leaders,
small
a
cne
iox
condition
announcing its willingness to
the
as
of
no
agency.
fer
to. give more con¬
seem
for
to
aion^*
Let
construction Finance Corporation
upon
(which
pretend
leaaers
rations
too, mus
shafe the responsibility.
The Re¬
m
conditions
pri¬
" \
not
Government
statesman snip n as. not yec i.x>tf;ea
at facts as t
ey are and has not
clearly
capital acterized
economy de¬
government
they want.
responsible
business
and
the
free
to
that-business
the
xo
turn
Now, I do
I
drift
a
provide
capital, don't complain if the
people
;called, the persisting driit toward
socialism in
to
growing
economy to starve lor lack of
thriving private
a
business lor
,
COMMERCIAL. & FINANCIAL CHRONICLE
or
with $1,028,-
$2.06 per common share, \
same
period of 1947.
40
THE
(2528)
COMMERCIAL
•
Affiliated
Gas
capital.
Mfg. Co., Inc., Brooklyn, N. Y.
of notification) 37,400 shares of 500
cumulative convertible preferred stock. UnderwriterCantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc.
Ciarostat
Inc., Cleveland, O.
Dec. 6 filed 40,000
cumulative preferred
stock (par $50) and 1,000,000 shares common stock (par
$1). Underwriter—Reynolds & Co., New York. Purpose
—To purchase all of the assets of three subsidiaries of
Dresser Industries, Inc., viz; Bryant Heater Co., Cleveland; Day & Night Manufacturing Co., Monrovia, Calif.
and Payne Furnace Co., Beverly Hills, Calif. [Affiliated
will obtain an additional $4,000,000 the private sale of
15-year 3%% notes to insurance companies.} Expected
early in January.
.
,
.
.
.
,
'
.
Equipment,
shares of $3
All States Life Insurance Co.,
Montgomery,
Copper Canyon Mining Co^ New York
10 (letter of notification). 342,350 shares of capital
(par 100)r of which 42,350 shares covers offer of
recession, 150,000 shares and options for 150,000 shares
are to be offered
at 430 per unit of one share and one
option. No underwriting. Repay RFC loan, meet current
obligations, etc.
*
;
No under¬
stock
." Sept. 21 filed 200,000 shares ($2 par) convertible class A
stock. Underwriters—Herrick, Waddell & Reed, Inc. and
Sills, Minton & Co., Inc. Price—$8 per share. Proceeds
/—To retire indebtedness and for working capital.' In¬
definite.'
•"/ •.
.;; '•
,'•••;
'*
•
(Mass.) Playhouse, Inc
notification) 2,000 shares ($25 par) 6%
npn-cumulative preferred stock. Price, par. No under¬
writing. For expenses of organization and working capi¬
tal as well as purchase of real estate,
■
.
Timber Products Co.
e
filed 100,000 shares 6% cumulative preferred
(par $10) and 300 shares of common stock (par
—
pay
—
115,315 shares ($10 par) <5lk%> cumulative
convertible preferred stock.. Offering — To be offered
Initially for sale to stockholders at the rate of one pre¬
ferred stock and purchase warrant for each
shares
stock held.
purchased
company
With each share
will issue
a
of
•
Co.
.<
of
'
shares
for general corporate purposes.
Front
•
shares
four
held
,.
/ j '•
'»./ V
.
...
Conn.
r
.
v
.
.
first preferred stock ($100 par).
Underwriting—None.
Price, par.
Proceeds—To increase working capital.
\
Central Illinois Electric & Gas Co.
3 filed 80,000 shares of common stock
common
/.
•
stockholders for. sub-
•
scription at par in ratio of one-sixth of a share for each
share of common held. No
underwriting. Proceeds—For
construction costs.
-
Central
Power
&
working capital.
-
Grammes
8
-
of record
Nov. 21, 1947, filed 40,000 shares
($100 par) cumulative"
preferred. Underwriters—Lehman Brothers; Glore, Forgan & Co.; Dewar, Robertson & Pancoast negotiated a
purchase contract in April, 1948, but the SEC on July
27,
1948, concluded that financing by the. proposed preferred
-
r
Century Food Markets Co., Youngstown, Ohio
Dec. 6 (letter of notification)
6,000 shares of common
(par $2.50) and 3,000 shares of 5% sinking fund cumula¬
No underwriting.
share.
per
-
.
in
4
ratio
of
Utilities
new
one
share for each
12
Co.
(1/11/49)
9<vfiled competitive bidding of $15,000,000 20-year
Boston ' ...Pittsburgh'
per
share. Underwriters—
Roth & Co.,
W. Sparks & Co.; Parrish & Co.; B. H.
Proceeds to selling stockholder.
New York.
Idaho-Montana Pulp & Paper Co., Poison,
(by amendment) 258,675 shares ($10 par) com¬
stock. Underwriter
Tom G. Taylor & CO., Mis¬
mon
—
Price—$10 per share. Proceeds—To erect
and operate a bleached sulphate pulp mill with a 200ton per day capacity.
V
soula, Mont.
Intermountain
Fire
Insurance
6
(letter
of
Price—$150
r 1 >1
Sold
—
]
K
\<
H \ .\'
Quoted
—
Co.
8c
i
■
>■-1
'A
N()Kk
(
'
Chicago
120
g1'..
,
TeKrh<w
F K O \ 1) W
\\ Onn
Co.,
Helena,
notification) 1,342 shares of capital
per share. No underwriting.
To op¬
fire insurance company.
a
Intermountain
v
(
Indemnity Insurance Co.,
Helena, Mont.
(letter of'notification)'1,342 shares of-capital
stock. Price—$150 per share. No underwriting. For busi¬
ness operations.
; \
;
Dec.
6
Johnson Bronze Co., New Castle, Pa.
Oct. 27 filed 125,000 shares (500 par) common on behalf
of executors of the estate of P. J, Flaherty. Underwriter
—McDonald
•
Kaslo
&
Co., Cleveland.
Indefinitely postponed.
Silver-Lead. Co., Inc.,
Seattle, Wash.
<,
(letter of notification) 200,000 shares, (par lc).
underwriting.. For explora¬
tion, development and purchase of equipment.
Price—10 cents per share. No
Kendall
Co., Boston, Mass.
(letter of notification) 4,000 shares
2
stock (no par).
Boston
•
tprp.
Kerite
Dec.
h
\ >
\ ! M
Y(
•
HK
s.
n
"t
..
rh
i
VC-.ifANfiJj
.■
' Cc
of common
Price, at market. Underwriter—The First
13
Co., New York;
4,300 shares of common
Price—$23 per share. UnderwriterLee Higginson Corp., New York.
Proceeds to under¬
writer as selling stockholder.
(letter of notification)
(par
$10).
Kingsburg
(Calif.)
Cotton Oil Co.
,
(letter of notification) 76,302 shares of commorf
stock. .Offering — Warrants will be issued to common
per
VoRk
Mont.
Nov. 23
at
through competitive bidding. Probable bidders; Halsey,
Stuart & Co. Inc. (debentures); Stone & Webster Securi-
Reyn olds
Private Wires to Offices in other Principal Cities
Price—$7]/s
Co., N. Y.
4,000 shares of common
for each five shares held
Members Nr,V
:
stock (par $100).
J.
notification)
(letter of
common
COMMON STOCK
c
8
Dec.
shareholders
a maximum of 280,000 shares of common
(no par). Underwriters—Names to be determined
900 CONVERTIBLE PREFERRED STOCK
--:N^ York::
television innovation.
Hudson & Manhattan RR.
debentures and
UNIVERSAL WINDING COMPANY
Ac-
•
a
stock
Bought
(13-6/49)
—
Nov. 17
Dec.
facilities.
'
shares ($1 par) class A stock.
Un¬
derwriter
Cantor, Fitzgerald & Co., Inc., New York.
Price—$3 per share.
Proceeds—To develop, exploit and
Dec.
Rights
States
manufacturing
of
Hotelevision, Inc., L. I. City, N. Y.
•
Gulf
1:
\
Nov. 3 filed 160,000
stock
held.
'
.
preferred stock (no par) to be offered common stock¬
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¬
Work¬
•
,
Insurance
Dec.
.
holders in the ratio of one share of preferred
expire Dec. 20. Price—$27.50 per
share to stcokholders. On rights not exercised stock will
be sold to public at $30 per share. No underwriting. To
increase capital and surplus funds.
shares
•
& Sons, Inc., Allentown, Pa.
notification) 1,200 shares of common
Co., Dallas, Texas
Nov. 15 (letter of notification) 10,000 shares of common
stock (par $10). Offered for subscription by stockholders-
*
•
Nov. 29
.
Gulf
2,000 shares of preferred
No underwriting. For addi¬
(L. F.)
(letter of
stock.
Price—$36
ing capital, etc.
-
Light Co.
stock issue is not necessary,j
tional
par.
cumulative nonvoting
Charlotte, N. C.
(letter of notification)
(par $50). Price,
Dec.
Nov. 1 filed 303,330 shares ($10 par) common stock.
Un¬
derwriter—Coffin & Burr, Inc.
Offering—To be offered
initially to existing stockholders both preferred and
common.
Proceeds —To reduce outstanding short-term
bank notes payable to The First National Bank of Boston.
9
stock
•
..
Central Maine Power Co.
Glasgow Supply Co.,
Dec.
(par $15).
,
Heyden Chemical Corp., New York, N. Y.
June 29 filed 59,579 shares of cumulative convertible
erate
Underwriter—John R. Marple & Co.,
For development construction and pay,
Fuller Brush Co., Hartford,
Additional
chandise.
•
Westfield, N. J.
BiUings,; Mont.
Co.,
W.)
discount purchases of merchandise and to enable the
corporation to keep on hand a larger stock of mer¬
stock.
Price—$2.
(C.
(letter Of notification) 1,500 shares of common
stock and 1,000 shares of preferred. Price—$100 per
share. No underwriting. To provide cash with which to
9
Nov. 29 (letter of notification) 150,000 shares of commpn
Philadelphia
,
Hendricks
Dec.
underwriting,
No
a
Dec.
stock.
Price—$220
share.
balance for related purposes,
Montana
s.
Nov. 8 filed 11.606 shares of ^2%
per
Heidelberg Sports Enterprises, Inc.,
Pittsburgh, Pa.
V'JtvC
; >
June 25 filed 5,000 shares of class B common stock (par
$100). Price—$100 per share.. Underwriter—None. Pro¬
ceeds—$600,000 to be used for spectator grandstand and
•
Offering postponed.
Range Mines, Inc., Denver, Colo.
.
Corp.,
each
for
Lynch, Pierce, Fenner & Beane.
Proceeds—Company and subsidiaries will use the funds
150 shares of capital stock.
Offering—To be offered
;
additional
Dec. 13 (letter of notification)
Dec.
,
one
Corp., Cleveland, Ohio
common shares ($1 par).
Offeringsubscription by stockholders in ratio
bank loans.
working capital.
.
Enamel
Underwriter—Merrill
property and for working capital.
Bryant Air Conditioning
Proceeds—To
Price—95.
Co.
in full, outstanding indebtedness and
capital.
...
or
Sept. 17 filed 79,080
of company and to exercise option to purchase processing
mill and move and erect such mill on the
company's
•
Dewitt
—To be offered for
Mining Co., Tonopah, Nev. '
Oct. 8 (letter of notification) 1,500,000 shares (5c par)
common stock.
Price—20 cents per share; Underwriter
To repair and renovate mine
off, in part
Ferro
.
Bradshaw
—Batkin & Co., New York.
Ltd., Toronto, Canada
Dec. 14 filed $100,000 5-year 6% first mortgage bonds
(convertible into common, shares at rate of four shares
to dollar, or at a price of 25 cents per share).
Under¬
for general working
Beryllium Mining Co*, Inc., Seattle, Wash.
Nov. 29 (letter of notification) }100,000 shares common
stock (par 10c).. Price—15 cents per share. No underwriting, For purchase of equipment and working capital.
-
Mines
T.
Harwiti, Inc., 9L Charles, Mich.
(letter of notification) 125,060 shares of common
stock (par $1).
Price, par.
Underwriter — Charles E*
Bailey & Co., Detroit.
To pay current liabilities, purchase property, building and equipment and for working
capital.
Oct. 27
distribute
,
Erndale
pay
8
•
:
'
■
writer—James
Manufacturing Co., Lewiston, Me.
y
(letter of notification) 1,000 shares of common
stock (par $10). Price—About $32.50 per share.'No un¬
derwriting.
:
'
.
;
;
•
500 shares of com¬
Underwriter—Trustee Securities
stock, (price $10);
mon
en-*
.
(jointly on debentures). Proceeds—For general corporate
including the payment of present short-term
notes of $6,000,000 and the financing of a portion of its
1949 construction costs. Expected about Jan. 11.
purposes,
100 shares of preferred
notification)
(par $100), $50,000 of 9-year enhancement bonds, $35,000
Bates
.
29. .(letter of
Nov.
preferred
purchase warrant
rill
provement and expansion
Offering postponed.
Houston,
of 10-year 8% convertible bonds and
titling the holder, to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriters—Leason & Co.,, Inc., and First Securities
Co., Chicago. Proceeds—For. working capital.
Dec.
Products Securities Corp.,
-Texas
....
*
bonds.
mortgage
Electrical
—
Nov. 1 filed
common
Y.
N.
Utica,
Inc.,
$295,000 15-year sinking
Price, par. Underwriter—
Mohawk Valley Investing Co., Inc., Utica, N.
Y. Purpose-T-Refund of $295,000 first and refunding mtge. bonds.
notes; balance to erect plywood mill.
Argus, Inc., Ann-Arbor, Mich.'
Products,
(letter of notification)
first
fund
*
and
Rock
(12/17)
10
Dec.
$5,000). Offering—To be offered in exchange for out¬
standing common (par $10),; or as an outright sale.TJnderwriter
None;
Proceeds
To retire -outstanding
common
oi
Eastern
15
stock
J
Duxbury.
(letter
Dec. 8
'
of
•;
Dec.
American Steel & Pump Corp.
Nov.
.
Proceeds~~For drilling operations.
—P. E. Frechette.
••
(Calif.)
shares of capital stock.
Price—
share in Canadian Currency.
Underwriter
16 filed 200,000
50 cents per
of Eureka-Maryland Assurance Corp. of Baltimore, and
keep surplus intact.
/
.; ; '•
Areata
Montreal, Canada
Coleralne Asbestos Co. Ltd.,
Aug.
; to
.
(both); Lehman Brothers (debentures); Mer¬
Lynch, Pierce Fenner & Beane and White, Weld &
Co. (jointly on debentures); Merrill Lynch, Pierce, Fen¬
ner & Beane and Lehman Brothers
(jointly on stock);
Salomon Bros. & Hutzler and Union Securities Corp.
ties Corp.
.
writing. Offering—To be offered to stockholders at $10
per share.
Proceeds—To complete company's purchase
.
(letter
Cobalt Mines Corp., Newark, N. J.
J
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.
Alabama
,
26
Aug.
■
Nov. 24' filed 30,000 shares of capital stock.
ISSUE
PREVIOUS
SINCE
ADDITIONS
tive preferred
Idaho
Dec. 3 (letter of notification) 400,000 shares of common
stock. Price—40 cents per share. No underwriting. For
prospecting add development.
• ■
...
INDICATES
Registration
(par $20). Price, par for both. No under¬
writing. To pay off current bank loans and for operating
Aberdeen Idaho Mining Co., Wallace,
•
-
in
Now
Securities
Thursday, December 16, 1948
CHRONICLE
FINANCIAL
&
$2.50
entitling
share.
them
to
one shard of
of record on Nov.; 30,
purchase
Underwriting,
the treasury for amount spent for
,
none.
To reimburse
capital improvements;
Volume 168
Number 4760
THE
COMMERCIAL & FINANCIAL
sidiary to be used by it in making part payment of tEe
option purchase-price of one-half of the stock of Conifer
Timber Co., Fortson, Wash. '
Indefinitely postponed.
NEW ISSUE CALENDAR
Rohm & Haas
December
28,
Dec.
1948
Chicago Milwaukee St. Paul & Pacific
Noon
(CST)
filed
15,816 shares of 4%
writers—Names
1949
Hotelevision Inc.—
2
Co., Philadelphia, Pa. (1/17/49)
cumulative
preferred
stock; series "A" (par $100) and 197,697 shares of com¬
mon (par
$20). Offering being proposed by U. S; Attor¬
ney General,. Office of Alien Property "Custodian. Under¬
>
—Equip. Trust Ctfs.
January 3,
,
CHRONICLE
be
to
determined
through competitive
bidding.
Probable bidders include Kuhn, Loeb &•
Co.;
Brothers,.and Glore,1 Forgan & Co. (jointly);
Kidder, Peabody & Co., and Drexel & Co. (jointly); A. G.
Becker & Co., and Union Securities
Corp. (jointly). An
.—Class A Stock
Lehman
"
January
4,
1949
Illinois Central RR._—
i^Equip. Trust Ctfs.
January
5,
additional 5,410 shares of preferred and
67,627 shares of
included in the registration but
they are not
being offered at this time- because of a pending suit for
return of these shares under the
Trading with the Enemy
Act. Bids—Bids for purchase of
stocks will be received
common are
1949
Chesapeake & Ohio Ry.__..__-___Equip. Trust Ctfs.
January
11,
January
1949
Rohm & Haas
Co., 3:30
.Debentures, Common
17,
1949
(EST)—_L.—^Stocks
p.m.
Kreamer Veneer Co., Louisville, Ky.
Dec. 6 (letter of notification) 400 shares of 6% cumu¬
lative preferred stock (par $100) and 200 shares of com¬
stock
(par
shares of common
writer—The Ohio Co. Proceeds—To retire bank loans,
purchase
additional
equipment
and
provide additional
Mississippi Power & Light Co.
Inc.; The First Boston Corp.; Glore, Forgan & Co.; Equit¬
able Securities Corp. and Shields & Co.
(jointly). Pro¬
finance
in
pected early next year.
Smith
gram and other corporate purposes.
Monarch Machine Tool Co.
stock (no par).
Co., Inc. and Prescott,
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
by certain stockholders.- Offering indefinitely postponed.
Underwriters—F.
Eberstadt
common,
ferred stock.
Price and
($50
dividend,
par) convertible
by amendment.
•
National Tuna Clippers,
Nov.
30
(letter of notification)
pre¬
Un¬
Underwriters—Buckley
purpose#
v
To
8
pur¬
Co.
each two shares held.
Rights expire Dec. 24.
To increase working capital.
Proceeds—
•
shares
(par $25) 5% cumulative
convertible class B preferred stock and 10,000 shares of
C stock (no par).
Underwriting—None., Offering—Class
B preferred will be offered at $25 per share with one
;
Spartan Grocers, Inc., Los Angeles, Calif.
Dec. 8 (letter of notification) 9 shares of
preferred (par
$100) and 29,775 common shares. Price, preferred par,
common, $10 par. No underwriting. For redactions of
long-term obligations.
•
Dec.
bonus with each 4 shares of
Springfield (111.)
Instrument Bearing Co.
8 (letter of notification) 4,000 shares of common
-stock,
class B purchased. Proceeds—To pay balance of current
liabilities and working capital.
For
(no par). Price—$50
plant expansion.
per
share. No underwriting,
Laboratories, Inc., Edmonds, Wash.
(letter of notification) 18,000 shares of common
Price—$5 per share. No underwriting. To pay^
River Valley Finance Co., Davenport, la.
(letter of notification) 1,000 shares of 6% pre¬
ferred stock (par $100). Price, par. Underwriter—Quail
& Co., Danvenport, la. To increase
working capital.
I
Nov. 22
&
Hutzler,
(jointly).
sell
$4,320,000
Sale expected
about
Chicago Milwaukee St. Paul
(12/28)
Bids for purchase of
cates,
series
GG,
&
Jan.
11.
7
Pacific RR.
.r.
•>;/
$4,540,000 equipment trqst certifi¬
will
be
received
at' office, of
J.
W.
Severs, Vice-President, Room 744; Union Station Buildr
ing/Chicago, up to noon (CST) t)ed. 28/ Certijficates will-
dated Jan. 1, 1949, and will mature
$227,000 semi-}
annually July 1, 1949 to Jan. 1, 1959. Probable bidders:
Halsey, Stuart & Co. Inc.,, Salomon Bros.' & Hutzler,
Harris, Hall & Co. (Inc.), Harriman Ripley & Co. and
Lehman Brothers (jointly)."
«
7
,
•
Florida
East
Coast
Ry.
The
company has asked the ICC for permission to sell
$2,060,000 equipment trust certificates, the proceeds to
purchase of 10
new
diesel electric loco¬
motives, costing about 2,761,846. Probable'bidders: Hal¬
sey, Stuart & Co. Inc., Salomon Bros. & Hutzler, Harris,
Hall & Co. (Inc.), Harriman Ripley & Co. and Lehman
Brothers (jointly).
'
v' *
,
•
Illinois
Central
RR.
(1/4/49)
Dec. 9 company asked ICC for authority to issue $6,400,000 of equipment trust certificates, series BB. Probable
bidders: Halsey, Stuart & Co. Inc., Harriman Ripley &
Co.
and
Lehman
Hutzler.
'
Brothers
(jointly); Salomon Bros.: &
•
,
'
.....
•
Long Island RR.
Dec. 6 D. E. Smucker, General Manager, announced com¬
pany plans to refund $40,000,000 refunding mortgage 4%.
bonds due March 1, 1949.
Pennsylvania RR. holds $8,000,000 of the issue.
Probable bidders; Halsey, Stuart
& Co. Inc.; Kuhn, Loeb & Co.
'
/
Taylor Food Co., Raleigh, N. C.
(letter of notification) 23,000 shares of common
(par $1).
Price—$1.75 per share.
UnderwriterGriffin & Vaden, Inc., Raleigh,
N% C. For purchase of
additional machinery, to defray the' costs of sales
promo¬
tion and for working capital.
'/
/'/' j:
(Inc.).
filed
25,000
shares
($2.50
par)
stock
..
-
Bros.
to
Chattanooga & St. Louis RR.
reported company plans the sale of $4,320,000
equipment trust certificates, series E, maturing serially
in 1 to 15 years.
Probable bidders: Halsey, Stuart &
Co. Inc., Harriman Ripley & Co. and Lehman Brothers
(jointly); Salomon Bros. & Hutzler; Harris, Hall & Co.
10
Nov. 5
Robinson
(1/11/49) '>?.■
equipment trust
January. Probable bidders; Halsey,
Harris, Hall & Co. (Inc.), Salomon
Harriman Ripley & Co. and Lehman
Company expected
certificates early in
Stuart & Co. Inc:,
IIL *
capital stock.
Underwriting, none. Offering—Stock being sold by three
stockholders who will grant a discount of $1 per share
to brokers and dealers on original sale. Price—$12.50
per share.
Dec.
debts and provide operating and general overhead funds,
funds.
Sale expected about Jan. 5-6.
7.7;
Sterling Insurance Co., Chicago,
Ridd
& Hutzler.
Chicago BurEngton & Quincy RR.
be used for the
Un¬
haus & Co. Offering—Offered for
subscription by stock¬
holders at $16.75 per share in ratio of one new share for
Distribution, Inc.,
in part, bank loans used for construction
Indefinite.
I
v
Investment
Halsey/
Corp., Harrimaii
(jointly); Salomon
& Co. Inc., The First Boston
Ripley & Co. and Lehman Brothers
be
Associated
derwriters—Schneider, Bernet & Hickman; G. H. Walker
& Co.; Dewar, Robertson &
Pancoast; Underwood, Neu-
Montreal, Que.
.
filed
Southwestern
Rahr's, Inc., Manitowoc, Wis.
Dec. 9 (letter of notification) 500 shares of preferred
stock (par $100). Price, par. No underwriting. For addi¬
tional working capital.
•
Chesapeake & Ohio Ry. (1/5-6/49)
*
Company, it is reported, plans the sale of
$8,900,00Q
equipment trust certificates.* Probable bidders:
®
Nov. 12 filed 33,880 shares (no par) common stock.
•
■
Corp., Jackson, Miss.
pay,
poses.
*
Plywood & Timber Co., Everett,
r a
Washington
v-V-.
•
\ - r
,Nov.:17 filed 271,025 shares ($1 par). common stock, of.
which 105,000 shares are to be offered by
company, and
166,025 shares by 15 selling stockholders. Underwriter—
Blyth & Co., Inc. Proceeds—To company from the sale
of the 105,000 shares will be added to
working capital,
except about $275,000 may be advanced to a new sub¬
Wireway Sales Corp., New York-::
notification) 299,000 shares of common^
Price—$1 per share. Underwriter—(
Mercer Hicks &
Co.; New York. Corporate purposes.1; /
Brothers
—
Underwriting—The company rejected bids
Aug. 4. The SEC on Aug. 23 exempted the
proposed sale from the competitive bidding rule. Sale
on agency basis being discussed,
.
-— Smith,
Barney & Co.
Price, by
Proceeds—Commonwealth will use its-pro-,
Telephone Co.
Aug. 24 filed 22,000 shares of $2.60 cumulative (no par)
preferred stock.
Underwriters
Paine/Webber, Jack¬
son &
Curtis; Stone & Webster Securities Corp.; Rauscher, Pierce & Co.
Price by amendment.
Proceeds—
provements.
Dec. 3
Underwriter
Southwestern
submitted
stockl
com¬
ital and general corporate purposes.
June 11 filed 200,000 shares ($100 par) cumulative
pre¬
Proceeds—For property additions and im¬
•
"'.TV-v //'•
Names to be determined
Nov. 17 (letter of
stock
(par 10c).
•
ferred stock.
a
—
Stuart
1,500,000 shares of common stock (par lc)
of which 1,350,000 shares will be sold
by company and
150,000 shares by W. G, Nelson Exploration Co./Price—
$1 per share. Underwriter—J. J. Le Done Co.; Petroleum
Equities Corp., N£w York. < Proceeds—For working cap¬
Public Service Electric & Gas Co.
share of class C given ask
Underwriters
Bros.
Oct.
stockholders.
40,000
Upper Peninsula Power Co.
^
Sept. 28 filed 200,000 shares of common stock
000 additional shares of stock for the benefit of the
Southern Oil
Orangeburg (N. Y.) Manufacturing Co., Inc.
29 (letter of notification) 2,000 shares of common
stock (par $10).
Price—$16 per share.. Underwriter—
Kebbon, McCormick & Co., Chicago. Proceeds to selling
filed
(par $1) and 33,000 stock purchase warrants
(to be sold.'
each). Underwriters—George
R. Cooley & Co.,
Inc., Albany, N. Y., and others to be
named by amendment..
Price, market.
Proceeds—To
repay bank loans, working capital, etc.
:"■*
to underwriter at-10 cents
filefj 600,000 shares (no par) common stock
owned by the Commonwealth & Southern
Corp. and 75/*
Brothers;
(letter of notification) 6,999 shares of.comraoq
(par $5). Price, par. No underwriting;
>
-
29
United Utilities &
Specialty Corp.
Oct. 15 (by amendment)
125,000 shares of common stock
Bait Co.'
Offering deferred.
Oct.
Oct.
(Ind.)
of
ceeds to reduce indebtedness and Southern Indiana will
use its proceeds for
property additions and betterments
7
Renaissance Films
Bend
(letter
amendment.
($10 par)
:/.O'Brien Dicer, inc., Los Angeles, Calif.
Dec.
...
(C. D.)
20
pany.
4 ,v.;
stock
10
Oct.
Hope & Co., San Diego, Calif.; G. Brashears & Co., and
First California Co., Los Angeles, Calif.. •
Rights
.
.
cumulative preferred stock, nonassessable and nonconvertible.
Price, par. No underwriting. For general
purposes.
.
Southern Indiana Gas & Electric Co.
6%
corporate
..
notification) 7,500 shares ($20 par)
common.
Price—$40 per share. No underwriting. For
additional working capital..
Inc., San Diego, Calif.
30,000 shares
South
Dec.
derwriters—Goldman, Sachs & Co., New York; Pipei,
Jaffray & Hopwood, Minneapolis. Proceeds—To. retire.
$3,000,000 of bank loans and general corporate
Temporarily deferred.
for each five shares held.
Additional working capital.
j
amount of short-term bank,loans.
&
National Battery Co.
July 14 filed 65,000 shares
;
Co., Grand Junction, Colo.
Nov. 22 (letter of
notification) 1,500 shares ($50 par)
51/2% cumulative preferred stock. Price—$51 per share.
Underwriter—Peters, Writer & Christensen, Inc., Den¬
ver, Colo.
For additional working capital and to reduce
part company's construction pro¬
Sept. 13 filed 26,000 shares of
share
new
•
,
Nov. 30 filed $7,500,000 first mortgage
bonds, due 1979.
Underwriters—Names to be determined through com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
ceeds—To
one
,
forking capital.
.
of
expire Dec. 16,
-
of 6%
$12.50)
and
19,000
(par $1). Offering—To be offered in
^jnits of one share each. Price—$13.50 per unit.-Under¬
preferred
capital
of
4
Merry Mites, Inc., Columbus, Ohio
8
(letter of/notification) 19,000 shares
cumulative
York
*
r
Dec.
New
notification) '52,095 shares
(par $5);/. Price, par. Underwriting—None.
Of¬
fered existing stockholders of record Nov.
16 in ratio"
—
stock
(par $100).. Price, par for both. No under¬
writing. For construction of factory building/
;
•
8; (letter of
stock
■
,
•
mon
Unexcelled Chemical Corp.,
,
Nov.
41
(par $9)1
through com-f
petitive bidding. Probable bidders include
Kidder, Peaat Department of
Justice, Office of Alien Property, 120 v body & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber/ Jackson & Curtis (jointly). Proceed*—
Broadway, New York, up to 3;30 p.m", (EST) Jan. 17,
Will go to selling stockholders.
Consolidated Electric &
:•>
Rotary .Drilling Corp., Tulsa, Okla.
Gas Co. and Middle West
Corp. will sell 120,000 shares
Dec. 7 (letter of
notification) 300,000 shares of common
and 34,000 shares,
respectively; Copper Range Co., 34,000
stock (par $1). Price, par. No
shares and several individual owners
underwriting. To purchase
11,200 shares.
; >
drilling equipment and pay expenses,
;.
J...,
• ;■
Washington (D. C.) Cab Co., Inc.
•
> San Juan Glove Corp., Hato
Rey, Puerto Rico
Dec, 10. (letter of notiiicatiqn) 490 shares/of
Dec. 10'(letter of
common/ *
notification) 60,000 shares of i Class A
stock.' Price—$25 per share.) No
underwriter! Fob work'^
common stock.
Price
$5 per share/ Underwriter—// ing capital. •
v
*
i'v/'/'"
Lawrence Turnure & Co.; Blyth &
Bonner, New York.
Waukesha (Wis.) Motor Co.
"v—
For corporate purposes and
working capital, v
n,
: Dec.' 7 filed 200,000
shares of common stock ($5 par).r
St. Anthony Mines
Ltd., Toronto/ Can. i ^ V
Offering—To be offered to stockholders of record
Jan/3, '
Aug. 6 filed 1,088,843 common shares (par
$1)./Price/- -at .rate of .one new for each two shares
held.V Under*v v
.40 cents per share. Underwriter—Old
Colony Securities
writing—Company
will pay fees to selected
Ltd. of Toronto.
investment/
Proceeds for gold mining operations * dealers for
securing the exercise of subscription
war,-/,
Silver Crescent, Inc.,
rants.
Robert W, Baird & Co. Inc. will be
Kellogg, Idaho
dealer-man-:,
Oct., 30 (letter of notification) .550,000 shares of assess¬
ager.
Proceeds—TTo carry possible increase of accounts,' *
able stock.
receivable and inventories and to
Price—18^ per share.- Undcrwriters-^-R. L.
provide for plant im¬
Emacio & Co., Inc., and Hachez &
provement.
:
:
'
Brown, Inc/ Spokane,
Wash.
For mining operations.
Wiegand (Edwin L.) Co., Pittsburgh
i;'
Silver Diner Corp., New York
Sept. 28 filed 200,000 shares (no par) common stock/
Nov. 17 (letter of
notification) 299,000 shares of com¬
Underwriter—Hemphill, Noyes & Co., New York. Price,
mon stock
(par $1). Price, par. Underwriter—Willis E.
by amendment. Proceeds—Will go to selling stockhold¬
Burnside & Co., Inc., New York.
ers.
Offering postponed.
;
Working capital. Ex¬
Chicago Burlington & Quincy RR.__Eqp. Trust Ctfs.
Gull States Utilities Co.--
(2529)
Mrs. Tucker's Foods,
Inc.,
■
Sherman, Texas
Nov. 26 filed 200,000 shares of common stock (par $2.50)
of which 80,000 will be sold by the
company and 120.000
shares by certain stockholders.
Underwriter—Rauscher,
Pierce & Co., Inc.
poses.
*
•
Dec.
•
Dec.
Nashville
13
-
England Electric System
9 Irwin L. Moore, President, stated there is
lihood
sold
/
;
New
that
additional
common
shares
may
a
like¬
have to bes
prior to the. time benefits of the construction pro¬
fully realized.
'< 1
'
|
//
gram are
•
Indiana, Inc. : r
7 I
has asked the Public Service Commission^
for authority to issue and sell $12,000,000 of;
Public Service Co. of
The company
of Indiana
first mortgage
bonds, proceeds to be applied
on
construe—:
Proceeds—For general corporate pur¬
(Continued
on page
42)
.
42
THE
(2530)
Stone &
(Continued irom page 41)
BJ.vth & Co., Inc.; Halsey,
Stuart & Co. Inc.; The First Jboston • Corp.; Harriman
Ripley & Co.; Giore, Forgan & Co.
Probable bidders:
tion costs.
"•
Dec. 9 the FPC authorized the company to increase its
a
cubic feet
day by increasing pipe line and other facilities.
The
delivery capacity by 111,000,000
that a contemplated $50,000,000
issue of first mortgage bonds be sold on a competitive
basis.
Bidding on tne proposed bond issue follow the
intervention ox Halsey, Stuart & Co. Inc. in the Com¬
mission hearings. Comprny contended that continuation
of financing on a negotiation basis would result in a
lower cost ior the financing. Probable bidders include
Commission
o.
& FINANCIAL, CHRONICLE
Webster Securities Corp., and
-
Ttxic Eloctric Sorvise Co.
Dec. 15
^ered
reported company has plans under ccmsideratiorr '
sale, probably in April, of $8^000,000 bonds. Probable
Halsey, Stuart & Co. Inc., The First Boston
Corp., Salomon Brothers & Hutzler, Harriman Rip¬
ley & Co., Inc., Hemphill, Noyes & Co. and Dexel
& Co. (jointly); Glore, Forgan & Co. and W. C. Langley
& Cq. (jointly); Blyto & Co., Inc. and Kidder, Peabody
& Co. (jointly); Union Securities Corp.
-'
Dec.
Texas Gas
15
TransmissionsCpt^:
..
• .<
bonds may be thrown
open
bidding with respect to its debt financing. Halsey, Stuart
connection
with
mission Corp:,
®
debt, financing
'
_
was
licly offer
announced company
a nev/
of Public
Expenditure
,
be forced to meet
severe
work
Of
American
the
Retail
should Federation, the National Associa-
public expenditure
tests of nion of Manufacturers
or
the in-
sonal association
to competitive
numerable trade associations,
These latter organizations have as
their purpose the forwarding of
gram
is much
i
pre-;
tional
working capital.
Sills, Minton & Co.;
Inc./ is'
1
with
clear understanding of our?
a
dangers and
clear acceptance oil
the defenses" of
a
duties,
our
can
the United States-be
brought* to,
their maximum, strength to resist
the wprld wide forces which to¬
day
in
and
threaten
the
days
to
freedom
our
come
and
our
free institutions.
>
A
-
.
-
5 vv•*1
(Continued from
\
10)
page
dollars
-of capital
expenditures
closely the $2,160 million!
of cash internally generated; and
the same is true of the $455 mil¬
lion of payments to stockholders,
and minority/ interests and the*
$476! million of money borrowed.
more
match
tax program
'
Does this mean that the group had,
borrow
the
money
to pay
.
to
dividends? The. accountant would
certainly not admit this, for divi-'
dends can only be paid from sur«*
but capital expenditures can
pius,
be
made
from
funds:
borrowed
But it is certain that without bar-:
rowings there would have been
hardly any funds for dividends,
if capital expenditures had re¬
mained unchanged. And if capitalexpenditures had.-been less^ the
oil "shortage" would have been
prolonged.
,
circumstances,!
In view of these
it
scarcely be claimed that the!
earnings of the oil industry were
"too great." The earnings played!
can
essential role in the process
an
capital
formation. Nor
capital formed in
much
be stated with
can
it
-
the
was
formation
1947.
of
It
that
assurance
magnitude
of!
toi
was.
capital'
in
1947, and again in*
1948, which has converted the!
petroleum situation from-one of:
scarcity into
of abundance.important? :»
one
What could be
more
,
ship of Fred Lazarus, was or¬ of the fact that we made these
ganized to look into the .more distinctions in wartime,-we do not
general question of how; we can seem to have carried a parallel
protect in greatest measure our conception over to the long-term
traditional freedoms while we are problem of managing a $250 bilundertaking extensive and un¬ uon debt, and of meeting the fi¬
precedented
defense
programs. nancial requirements of the years
Since the field,of the ad hoc com¬ immediately ahead.
mittee to
wh i~h I have referred,
Those portions of our'aid to
the study of the possibility of a
Europe and elsewhere that go into
Civilian Commission on Defense
plant apd equipment, into inven¬
Expenditures lies well within the
tory, into the rebuilding of tools
field pi the Sub-Committee under
and facilities
Fred Lazarus'
Chairmanship, the
work of the rd voc committee has
been transferred to the Sub-Com¬
mittee
nomic
Committee for Eco¬
IJevelopirent;
appropriate
and
at
an
It will make such
recommendations
as
seem
to
it
up
ductive
loans
abroad
for
world
reconstruction should be financed,
not
by taxes, but by the sale of
government savings bonds to the
public. The sale of these govern¬
savings bonds should be by
nation-wide intensive campaigns
ment
wise,
ta
-
productive loans
given a fair chance will build
the level of productivity. Pro¬
are
and
4 Agriculture
associated with
iSpeaking o" the Committee for in consumption.
Economic
Development,
I
have
Such
a
care
and restraint
,
program of
We must find in the
tal formed. The remainder of the
democratic processes of our gov¬
ernment
the ^organizational
ar¬
funds was disposed of as follows:
$175 million to working capital;3
$197 million to the retirement and
refunding of debt; and $455 mil¬
others need.
rangements that will make sure
these tools of fiscal policy are
in the public interest lion to stockholders and minority
they will thereby interests.
This analysis of the source and
strengthen, the national defense
and at the same time help pro¬ disposition of funds reveals the
tect the economic freedoms we anatomy of capital formation in
the petroleum industry. And ,the
are committed to preserve.
•
figures are all expressed in dol¬
The defense of the Uxi i t e d
lars of like vintage—1947 dollars
States, particularly the moral, po¬ —with
one exception. The item of
litical and economic aspects of
capital' extinguishments is esti¬
defense, cannot he carried on by mated on the basis of
managed
the
Federal
waging of
Government
war
M
;a
alone.
F_ederal
responsibility to be &ixep-ibut then
have emergency Federal laws,
wartime restrictions and controls
we
and
military priorities in all the
of life.
:
ways
But in
much
as
the waging, of defense,
sav¬
ing to be held
S.I
»
1*1
M.S 1 I i 9 I 1
on
*
The
minum
for
1
meet- ;
\
that date* ~
of
Alu¬
Detroit
& Brass
Corp., manufac-;
bearings and bushings1
of
turers
a
*
*
directors
.at
to
engine using industries, have*
declared
extra
an
dividend
or
12% cents per share and tae usual'
quarterly dividend of 12% cents!
per share, both payable Dec. '24;
1948 -to
stockholders
Dec.
1948.
10,
year,
an
Of
record
On! Dec.
extra
24, last
Cents: was
of 25
paid.
.
:
i
-
An
.
-
.
issue
of
*
•
%
i
S2 5r^.900
Suth-.»
erland Paoer Co. (Kalamazoo) 11
3.19 % serial - notes- due senxian^ually Nov. !, 1954 to Nov*
1983,
was
placed
privately »
through
Harris,
Halt & Co.
(Inc.) of Chicago, UL, - accord- ^
ing
on
to
an
announcement made
Nov. 23.
-
*
The
ital
common
.
'
*
stock of rhe
Cap-!
City Products Co., Columbus,"
Ohio, which is listed on the De¬
troit Stock Exchange,, has been
split-up -on thd ; basis of "two new
this item when it, becomes con¬ shares of $5 par value each in
verted into physical replacement
exchange for each outstanding
of the capital worn out and used share of no
par value.: This twoup-
for-one
Some
are-
additional
relationships
striking. The $2,976 million
3The
additions
to
working ■ capita!
-
aloo
-epres«r»*«d capita! formation, .at least, in
large part.'
f
S|««
nib ject
plan * is
dollars must be allocated to
the Federal Government
do. it must be supported by
the activities of state and:local
can
sales of
past dollars
and .therefore part of the net in¬
come
The
stockholder approval
,
The
^
(Continued from page 12),
1948,
that
and
-
plaps shortly to pub-;
with the'over¬
all program of world reconstruc¬
tion.
Also, a savings bond pro¬
a
j
expected to underwrite the issue.
rial capital as "capital funds" and
flexible- than
to physical capital as "plant and
both ixi timing and
facilities."
in intensity of impact.
In days
such as these when we are uncer¬
Capital - originates out of sav¬
budget, it is reasonable and essen-| the legitimate interests of their
tain as to whether inflation or de¬ ings^—production in excess of contial that they also must meet membership groups.
The Comflation lies ahead, we;:neednwiour gumption.
There
is
no
other
these tests.
mittee for Economic Development
source/ Savings may be made by
fiscal. planning the ki
on
the other hands studies and
This is a new situation that re¬
ibility that a well organized-sav¬ productive units, such as corpora¬
quires new approaches. Both the reports on national problems from
tions, and by individuals; and
ing bond program can provide:
interests of efficiency and of pub¬ the standpoint of the national in¬
In principle I think it can be through the intervention of credit,
lic confidence would be served by terest as seen in the setting of
future savings can be transferred
businessmen's
experience.' For said that we-'shall'be on sounder to the
some new safeguard on such large
present.
this reason, among others, CED ground if our internationalcomexpenditures in a time when we
Capital formation is the process
mitments that are directed'to the
are not at war. Last May I made policy statements are widely read
reconstruction of ■ world produc¬ whereby capital funds are ac¬
the suggestion that a civilian com¬ in official .and private circles and
cumulated
and
converted
into
mission might well be established are cordially received by educa¬ tivity, productive loans as dis¬
physical capital. Economic pro¬
tinguished
from
grants'
for
emer¬
tional
institutions
of
all
kinds.
to be charged with the, responsi¬
gress depends largely upon the
gency relief, are covered-by
bility of scrutinizing and com¬ Public understanding of impor¬
rate
of
capital formation and
of bonds to the publrn rather than
menting upon general matters of tant national problems is helpfully
therefore the process is indispen¬
defense policy and upon the effi¬ advanced; but I think that there by taxation. The tax burden will sable to our
standard of living.
be lower if savings bOiids-are Sold
ciency of the carrying-on of the would be a further gain if agri¬
Measures which interfere with
to meet budgetary expenditures
culture,
and
labor
too.
would
program.
Such a civilian com¬
capital formation are harmful.
of a constructive-nature. *
mission should be in continuous create agencies of research and
Let us examine the bearing of
looking
at
national
session. -IV personnel should be education,
Preserving Freedom Under Fiscal oil company "profits" upon capi¬
highly competent and informed problems from the standpoint of
tal formation in the petroleum in¬
Policy
the national interest.
The con¬
on all phases' of defense strategy
If the tools of fiscal policy are dustry. We shall use the Tecord of
and tactics.
It should be non¬ tinuance and improvement of spe¬
30 oil companies for the illustra¬
organizations working for well managed, whether in a pe¬
partisan and it should be non- cial
tive figures.
riod of expansion or contraction
representative.
Iii other words, special objectives would be en¬
In 1947, this group of oil com¬
it should consist of between five tirely consistent with such an ef¬ tt..ey will contribute, much to the
panies generated cash out of its
and nine patriotic citizens who fort, judt as it has proved to be in prevention of interfere nce in the own
operations to the extent of
specific decisions of businesses
would drop their ordinary busi¬ the field of business.
million.
This
sum
was
and private individuals. For the $2,160
ness, and sacrifice their
private
segregated
by conventional ac¬
Aggressive Program for Sale of
consequences
of action at the
interests to perform a new pub¬
counting
procedure
into
$1,219
U. S. Bonds
level of fiscal policy are general,
lic service, namely to provide in¬
million of net income and $941
Another current problem of fis¬ impersonal and appropriate to the
formed
and
judicial " civilian
million of depreciation, depletion,
cal policy is what to do about sav¬ development of the economy as a
scrutiny, oyer defense programs
etc.
The latter item represents
whole.
The individual's '.specific
and expenditures at a time when ings bonds.
an estimate of the
capital worn
"ecisions may then be taken with¬
the country is not at war.
An aggressive program for the
out and used up during the year,
in a general frame Of reference,
sale
of
United
States
Savings
but was inadequate to replace this
This suggestion was well re¬
a
frame of reference established
ceived in many quarters, and ac¬ Bonds to the public is an essential
capital because costs had gone
in the public interest and not dis¬
part
of
a
program
for
financing
up. In
addition, the group ob¬
cordingly a small committee was
torted by private greed .nor de¬
tained
formed to explore the possibilities defense and economic recovery
$743 million of outside'
stroyed by the blind whirlwinds
and to make a report. This com- programs that contribute to de¬
funds, !as follows: long-term debt
of economic collapse.
'
mitte was od hoc and unspon- fense.
issued, $476 million; sales of com¬
The instruments of fiscal policy mon and,
sored.
preferred stock, $206
Its modest but adequate
During the war we knew that
finances were supplied by the the sale of war bonds to private give us hope that we can preserve million; and sales of assets, etc.,
our economic freedom to buy and
$61 million. Thus the group in
Spelman Fund of New York.! Its individuals, particularly t h o s e
to sell, to borrow and to invest, 1947
generated
and
obtained
membership consisted of Hiland with small and moderate incomes,
G. Batchef ler. Herbert Emmerich, was an alternative to taxation as to move from place to place, to $2,903 million of funds.
What became of these funds?
William Tudor Gardiner, Harry a means of withdrawing purchas¬ employ and to be employed, and
to receive for our own private
By far :the larger part, $2,076
Scherman
and
myself.
In the ing power from the hands of the
use wages, rents and profits as a
million/or 71%, went into capital
meantime a Sub-Committee
of people.
We knew that sales of
the Committee for. Economic De¬ bonds to the commercial banks reward for skill in the application expenditures.- T he r e f o r e, this
amount represented physical capi¬
of
efforts
in'
supplying
what
velopment. under the Chairman¬ bad different effects. But in spite
necessity, urgency- and -efficiency. J
Since defense expenditures
are]
likely to be more than half, the |
7 '
class of cumulative convertible
Of Defense Program
All
Trans-;
■
_
*" ferred stock to provide* approximately $1,500,000 addi¬
ings bonds to the public picks-Tip governments:. Private organizapurchasing
power ; that:: WouM tionsrhave their part to play, bus¬
otherwise have to bewithdrawn inesses and business groups, trade
by taxation. It has the* great ad¬ Unions/churches, educational.in¬
vantage over taxation in that it stitutions, and of-cpurse farm or¬
is selective and that it therefore ganizations, such as your own.
does not impose on those who Even the individual in his own
(Continued from page 4)
cannot afford it, as tqxatieAJnaefrt; life.thas'his partto play on the
by no means desperate in the often thought that an organizathe direct costs of recoasteuction ecoaemicjthe political, and moral
sense that' extraordinary over-all
J tion similar to the CED in the of productive plantar Tfte- saleoi front Only by working together,
sacrifices must be made in the field of agriculture would serve
savings bonds tothe public would
standard of living which we have,a useful national purpose. In the
also afford an occasion for mak¬
field of commerce and industry,
known in recent years
the CED does not duplicate the ing people awawr^of their per¬
Tests
by Texas Gas
,
Wheeler, Osgood Co., Tacoma, Wash.
Dec. 9 it
corporation's propose4-$06^06,000 20-ye3r first
mortgage
The FPC on Dec. 9 directed Tennessee Gas Transmission
v,
Co. (which see) to adopt the principle ox competitive' "*"
& Co. Inc. has asked the FPC to take similar action in!
bidders:
•
Thursday, December 16, 1946
bidding. Corporation's original plan was to place the
bonds privately with a group of institutional investors!
White, Weld &
Co. (jointly); Halsey, Stuart & Conine.
for
Tenmsree Gas Ttaitsmicsion Co.
natural gas
COMMERCIAL
split-up
was
ratified by
30, and
the stockholders on "Nov."
the >
new
stock
will
receive
ia
quarterly dividend of 12%- cents
per
share
on
Dec.
20, whidi te
.
Volume
Number 4760
168'
equivalent
quarterly
the
to
the
on
cents
COMMERCIAL
paid
stock..
no par
Packard Motor Car Co., Detroit, turned out 11,124 units in
November, setting a new post-
-
'•
*
previous
10,547 i units
October.
totaled 86,991
peak ol
1937.
109,518
cars
November
11,193
units
gram."
The
Packard
Rousing
registered
graph Co. offering has provided
a
much needed lift for sentiment
a
surpassing
in the underwriting field, judging
from the more cheerful atmos¬
Company, for the
reported consolidated net income
$9,488,336,
cents
slightly over 63
common
share,^ after
of $5,814,000 for esti¬
per
provision
or
mated income taxes. 'For the
cor¬
responding ttine ; months of 1947,
the company listed a net loss of
$131,478.: Consolidated net sales
of
$164,325,977
est
peacetime
of last week's
success
vast American Telephone & Tele¬
phere which prevails.
nine months ended Sept. 30, 1948,
of
was
the high¬
volume for any
comparable period in the com¬
pany's history. For the 1947 nine-
month
;
of the big un¬
the
issue
the
of
end
last
$150,000,000
offering
remained
in
to
repurchase
brought
only about 200 debentures out
of
the
800
and
dealers
around
lots,
"less
thik week found
¥8,"
themselves
"shut-out." They just
find
any
with
one
the
Cunningham
*
.
Drug
Stores,
Inc., Detroit, for the year ended
Sept.
1948
30,
income
taxes
of
$3.71
81,417,096,
equal
to
share, com¬
With
$1,292,526,
$3.39
or
share, for the preceding year, and $1,197,077,. or
$3.14 per common share, for the
fees,
ended
year
Sept.
30,
1946.
Current assets at Sept. 30, 1948
.
amounted
to
$7,430,329,/
current liabilities
and
$3,349,789.
At-
the close of the last fiscal year,
there
106 Cunningham and
were
stores in
Shapero
operation,
*
Forging
ess
jended
Aug.
1948
31,
reported
a
pet
income
after
charges
and
Federal income taxes of $383,184,
with
compared
$204,830- for
the
year, and $97,776 (after
income tax credit of $285,000)
preceding
an
for the year
ended Aug. 31, 1946.
assets at. Aug. 31, 1948
Current
iampunted
to
$1,617,875, and
k-erit
liabilities
totaled
The
company's
stock
"coast
distributed
among
than
more
holders?
j
from
*
.'
cur-
$578,444.
is widely
to
1,200
stock¬
-
Co.,
f
30,
of flotation.
was
*
ing world
and
it
looked,
f taxes of $82,897, or 21 cents per
cents
vious
share
per
Cash
year.
provided
little to
buyers.
in
the pre-.
But
and
the
of
one
firms,
is
reported
group to enter a bid.
a
be ordered is
action in
financing
via
the
competitive
-
Railroad
Equipment
Notes
of the
many
leading carriers have been
providing
substantial
a
fill-in
during lulls in corporate financ¬
ing, and it
continue
through
fortnight.
/
Time
this trend will
appears
the balance of the year is unlikely
produce
equities,
deals,
those
securities
than
more
secondary
who
handful
a
mostly
market
in
new
feeling better about
are
things.
the
to
usual
was
American Bankers
of
! dividend of 2H cents per share:
1949
stockholders
to
\ Dec.
14,
:
same
1948.
action
of
This
taken
as
x?
A.
«
Detroit,
Corp.,
i
solidatcd
t
come
$2.07
■
per
against
record
share,
or
for
a
con-
61
jv, ,1
$1.31
the
as
.
common
York
put of town firm.
mercial
Park
&
corre-
representative
f
•
,
;.A
of
Chronicle,
Place, New York 8.
25
„-
.V,
•
Company, payable
Machinery Corporation
Directors
clared
Preferred
clared
cf
dividend
a
this
of
capital
Common
capital
Corporation
37l,fec
stcck.-
dividend- of
a
5,
ary
close
1949,
of
stock.
business
have
621,<iC per
The
December
share
of
14,
the
de¬
the
on
on
both
payable Janu¬
are
WALLACE
de-.
on
also
dlvideqdi
stockholders
to
have
share
per
They
Preferred and Common stock
record
at
the,
1948.
M.
KEMP,
Treasurer:
H> B. Pierce,
Secretary
WESTERN
TABLET
A
STATIONERY
*.
CORPORATION
National Shares
Notice
Corporation
rate
14 Wall Street, New York "
special dividend of one dollar and fifty
($1.50) per share has been declared this
the Corporation's capital stock payable
December 24, 1948 to stockholders of record at
the close of business December 17, 1948. It is>
A
cents
on
that
expected
approximately
cents
four-tenths
ninety-nine
and
of
this
(99.4c).. per
share
special dividend will be designated as a "capital
gain dividend", pursuant to the provisions of
the Internal Revenue Code.
The Directors have also declared a dividenc"'
of fifteen cents
(15c) per share payable Jan¬
uary 15, 1949 to stockholders of record at tht
close of business December 31, 1948.
JOSEPH S. STOUT, Secretary.
December 10, 1948
is-hereby
of
$.50
per
.
standing shares
mon
Stock
of
given
share
ber
without par value of the Com¬
Western
Tablet
&
Stationery
22.
•
e.
h.
bach, Treasurer."
YALE
The Yale & Towhe Mfg. Co.
On December
:
13, 1948, a stock dividend
5%, was declared by the Board of.
Directors, payable December 31, 1948,
to stockholders of record at the close
of business December 23,
1948.
r
F. DUNNING
Secretary
Vice President and
The Electric Storage Battery
Corporation
193rd Consecutive
Accumulated Surplus of the Company
Dollars
stockholders of record
ofseventy
the Com-
cents
($.75)
per
share
on
COMPANY, INC.
Slock, payable December 31,1948,
stockholders, of record at the close of
DIVIDENDS No. 24 and No. 25
mon
to
business December 20, 1948.
W. C. KING,
a
final dividend for the year 1948
five
-
the close of
at
HIBBON & CARBON
The Directors have declared from the
Dye Corporation
Special dividend of
($3.00) per share on
the Common Stock of the Company,
payable December 28, 1948, to common
declared "a
Three
OLD TOWN
Quarterly Dividend
business
Secretary
on
The Board of Directors has declared an
December 20,1948. Checks
extra
will be mailed.
dividend of 10 cents and a divi¬
dend of 30 cents per share on
Philadelphia 32, December 10, 1948.
Notice
the Com¬
Stock of the Company, payable
December 31,1948 to stockholders
mon
on
own
close of business on
December 23,1948.
>
JEROME A. EATON, Treasurer
December 9, 1948
t
[ARUNDEL)
/tOWORATION^
achieved
Reserve
Federal support,
through
open
MARYLAND
the
market
THE
level
Federal
commit-
The
Board
of
Directors
of
The
Arundel Corporation has this day
declared 25 cents per share as the
regular quarterly dividend, on the
no par value
stock of the corpora¬
tion issued and outstanding, pay¬
able
and
on
after
December
SITUATION
WANTED
close of business December 20,1948.
f
MARSHALL G. NORRIS,
December 14,
1948.
185th
Common
and
Preferred
Dividend
Board
The
ol
Racing
Eastern
Inc.,
upon the outstanding shares of common stock
the Association (both no par and $2.00 par)
payable
record
3,
January
December
20,
to
1949
stockholders
ol;
1948.
JOHN
a dividend of 7H per
share or three per
value of the shares
of The Texas Company has been declared
this day, payable on January 3, 1949,
to stockholders of record as shown by
the books of the company at the close"
of business on December 10, 1948. The
cent
(3%)
on par
stock transfer books will
PAPPA8,
C.
December 8,
1948
remain open.
L H. Lindeman
President
Beneficial
and its
Notice-
Directors
of
declared a quarterly divi¬
dend of 25c per share on the outstanding shares
of preferred stock of the Association payable
January 3, 1949 to stockholders of record De¬
cember 20,
1948.
The Board of Directors of.
Eastern
Racing
Association, Inc.,
have also
declared a quarterly dividend of 15c per share
Association,
Dividend paid
Consecutive
The Texas Company
predecessor.
Stock
of
Available
by
EASTERN RACING ASSOCIATION, IRC.
28,
1948, to the stockholders of record
on the
corporation's books at the
TEXAS COMPANY
mw
November 19. 1948
SECURITY
Industrial Loan
ANALYST
Corporation
r.
.
Treasurer
DIVIDEND NOTICE
,
Dividends have been declared
the Board of Directors,
Judgment
as
by
follows:
CUMULATIVE PREFERRED STOCK
Diversified
Experience
per
Convincing Personality
55th
The
share
$1
Loyal & Cooperative
per
Financial
Place,
York
8,
Directors
share
a
cents
of Seaboard
regular quarterly
a
share
on
payable Jan. 10, 1949 to
stockholders of record Dec. 23, 1948,
&
Nl Y.
The dividends
per
are
share
at
close of business December
also
declared
on
Convertible Preferred
a
regular
cents a
Philip Kapinas
1948
Treasurer
share
Jan. 10, 1949 to stockholders of record
Dec. 23, 1948.
November 29, 1948
The board of directors has
declared
1 St per
a
dividend of
share payable
December
on
21, 1948", to
stockholders of record
December 15, 1948.
G. H.
Westby, President
Stock, payable
A. E. WEIDMAN
18, 1948.
December 7,
directors
DIVIDEND
Quarterly Payment
quarterly dividend of 65
payable Decern'
ber 29, 1948 to stockholders of rec
ord
STOCK
6th Consecutive
STOCK
DIVIDEND NOTICE
Com-
Stock
PREFERRED
Chronicle, 25 Park
New
of
DIVIDEND
Quarterly Payment
December 31, 1948)
Energetic
Commercial
Board
dividend of 45
: ion
(for quarterly period ending
J1125,
STOCK
Consecutive
Finance Co. declared
$4 Dividend Series of 1948
Effective &
COMMON
$3-25 Dividend Series of 1946
Treasurer
■
that a dividend afc the'
on the issued and out-'
Corporation
ha3
been
declared
payable -on
January 10, 1949, to the holders of reoord of
such shares at the close of business on Decem¬
December 10,1948
intention of let¬
no
He declared
Box
Box ! 1215, Com¬
Financial
'
-
■
ber 17, 1948.
year.
furnished, suit¬
private,
New
stock of the
December 27, 1948, to stockholders of
record at the close of business Decern'
Allied Chemical &
has
per
Space Available
Street,
United Shoe
The
meeting of "the Board of Directors,,
held this day, a quarterly dividend of
25 $ per share and an extra dividend of
25(f per share were declared on the
a
The
for
December 8,1948
•
>
COMMON DIVIDEND No. 290
At
Broadway, New York
•
.
$.37(/2
Wall
'
1948.
the
at
1948.
Secretary.
company
COMMON
able
13,
record
17,
ALEXANDER,
of
Allied Chemical & Dye
in-
equal to
share,
sponding period of last
Office
December
H.
BALTIMORE
ing-house has
Wire
&
after
$84*i,064,
common
"
1948 to stockholders of
business en December
of
Executive
Assn., made it
the
was
reports
profit,
.
the
*
$534,133,
common
;
net
taxes of
"4
:;
NOTICES
Company
of record at the
a year ago.
Spring
Young
Packing Company
DIVIDEND NOTICES
clear that the government count¬
Mature
L.
itself.
Singer Manufacturing
29j
-
Treasury
parley
the
ranges
15 to 20% equity.
D.
Snyder's comments this week, be¬
credit
The
ber
Secretary and Treasurer
the
a
fact that
of
33%
division
OlVUAfeNP
close
when only a hand-
Dividend
fore
from
equity
the
•
H. C. ALLAN,
the
by the
financing only 66% of the
equipment and hold¬
The Board of Directors has declared a
special
dividend cf $4.0u per share payable on Decent-'
Treasury Stands By "Pegs"
of
of
quarterly
j which will be payable Jan. 3,
t
of
DIVIDEN0 NOTICES
.
Secretary
| clared, payable Dec. 27 to stockdition
offering
ensuing
the
six cents per share has been deholders of record Dec. 7, in ad-
is
:
An extra dvidend of
f
interest
increasing number
Yesterday's-
sues.
day
route.
of
*
offerings*
broadening
in SEC's recent
seen
Secretary
j
This
directing Tennessee Gas
Transmission to carry out its debt
though
| 16 cents per share were paid in
both years.
such
manifest in the
pri¬
of institun
underwriting
e r
the
rouse
even
or
dividends
an
Ordinarily
though the in¬
as
Christinas spirit. But
of
placement
group
likelihood that bidding will
The
cheerful
too
none
was
vestment market' outlook in gen¬
eral
ing
attention to
1
completed the underwrit¬
after
income
reports
[ share, compared to $121,020,
32
"short
the
up
in the open market.
Products
Screw
Detroit for the year ended Sept.
\
clear
ting its bonds find their
[
1948
a
coast
f
Wayne
.
under¬
Until this operation came along
and
&
pocket Co., Pontiac, for the year
the
position" incurred in the proc¬
to
American
The
v
*
cost
little of their realized
a
to
indications
were
might
writers
; per common
*
it
of the
the
$15,740,000
slated
been
Equipment trust issues by
In fact there
that
net
a
income
Federal
common
per
pared
reported
after
for
*
issue for sale.
-
a rg
had
Commission
couldn't
*
issue
forming
Offers
cost
issue of 20ryear
mortgage [ bonds
will
be
ordered up for competitive bids.
tive bidding, has raised the ques¬
tion before the Federal Power
in dealers' hands.
appetites of
houses which hitherto paid little
whetted
big- $66,000,000
staunchest advocate of competi¬
disclosed
week
that only about $800,000 of the
have
more
road is
first
1
placed. A check of distributors
even
Feeling in investment banking
tional
solidly
has-been
.
.
*
pro¬
Southern Pacific's
43
one-to-ten year serials was a case
in
point. Interest was spurred
competitive bidding rule more
or
less generally, appears to
quarters seems to be that the
Texas Gas Transmission Corp.'s
vately with
957.
""
support
houses, specializing in
business, sought out such
But application of the
of bids which appear for such is¬
originally
dertaking naturally are among
most elated, confident that
the
who endeavored to pick up small
.
the
;
The
And sponsors
period, sales volume was
$94,494,102. At Sept. 30, 1948 cur¬
rent assets totaled'$65,035,225 and
current liabilities were
$26,139,'
to
Up For Competitive Bids?
;
'*
October's shipments by 641 cars.
<
net
no
(2531)
of
this
increase in Federal Reserve hold¬
tributable
production
reached in
of
peak,
postwar
new
issues.
ings o£ government securities at¬
shipments
also
ful
debt.
with the
compares
all-time
CHRONICLE
tee, is necessary to facilitate the
handling of the government's
"actually there has been
last
11 months of
company's
-
established
For the
FINANCIAL
The head of the Treasury con¬
tended that the support operations
are not
inflationary, stating that
of
this year, output
units, which
*
monthly Tiigh
&
\
production peak, exceeding»
war
the
'
25
THE
SEISMOGRAPH SERVICE
CORPORATION
TULSA, OKLAHOMA, U.S.A.
:
44
CHRONICLE
& FINANCIAL
COMMERCIAL
THE
(2532)
Thursday, December 16, 1948
on
any future monetary
tion would diminish.
BUSINESS BUZZ
,,/
*
*=
*
situa-.
*
v
While it may be that when the
show-down comes, the Board will
on...
be forced to appear
A
Behmt-the-Scene Interpretations
>
Capital
firaoi the Nation's
ask
gl
gym a
quired
'jljLIlit; M' "mAf
■'
consistent and
authority to boost re¬
reserves, the fact is ;|that
for
enthusiasm has diminished mark¬
edly.
This is; surprising, for only
weeks ago the whole FR
Board team was racing for all it
few
a
WASHINGTON, D C.—If you want to get a slant on how Harry
going to work out as an administrator of the biggest gov¬
ernment in the world now that he has a full presidential term irt his
own right, keep an eye out to see what he does with the National
Security Resources Board.
around just short of war.
Already Mr. Truman has al¬
.On
Chairman
NSRB
tain
Hill to resign as
of the NSRB, just as
about to pull the cur¬
Arthur
lowed
was
from
away
a
toward
curbing.
As
the
of
a
goal
fact,
as
a
of
within
whole,
decided hesitancy
to
monkey with hank credit curbs
this 1time.
The
President, •
however, has the final say as to
at
highly-placed officials who are
believed to feel that war could
break out and that its avoid-
he
what
will
Congress.
If
to
recommend
he
recommends;
once again the curbing of bank
eredit, he will do it virtually
planning how to mobilize V ance is far from sure.
:
l
- economy ; for' war.
So the question is whether all
Furthermore,
Mr.
Truman
has
planning for mobilization of the
temporarily
replaced
Mr.
Hill civilian economy having
been
with
his
personal henchman,
junked before the last war and
John R. Steelman, and under cir¬ A-N Munitions Board planning
cumstances which raise the pos-r
having been junked, after ; this
ability that NSRB's work is being war, will NSRB planning, in turn,
repudiated before it has been re¬ also be junked? If this develops
viewed by the White House.
as
the outcome of the shift in
•*
*
♦
NSRB heads, then a war would
National
Security Resources
find the U. S. again in a mess with
Board is the top civilian mobilno planning for war.
*
*
«
iaation planning agency of the
government. It stands between
What NSRB proposed to do was
half of
civilian
^liie
matter
a
the
Administration
there is
hand, there are many
the other
and one-
year
worth
bank credit
was
:
Truman is
without
the private
backing of
his advisers, it is believed.
(This column is intended to
;
re¬
flect the "behind the scene" inter¬
pretation from the nation's Capital
and may or may not coincide with
the "Chronicle's"
own
■■I
views.)
•
•»,
311
"
and
Services
Armed
the
the
I metals,
manufactures,
man-
transportation,
power,
I
and
so
-
? on, must be given up by the
! civilian economy to make posl Bible fighting
the next war,
I should one break out. It also
blue-prints the agencies which
j will
administer
the
controls
the economy..
over
V;
;
was
ignored.
As
of
the
this
plan¬
during the' greater part
in
war
a
constant
stew,
with everybody tugging against
everybody else. In particular the
agencies for administering
the
controls were in constant ferment,
with heads of agencies
all
to
prevent these conflicts
bilization planning was begun in
even
before the expira¬
than
a
time
&
Board
get from NSRB, which is
natural, of course, since NSRB
has to be a restraining force upon
would
II.
former Army-Navy
The
nitions
:
War
World
also
spent
Mu¬
more
NSRB
studying the
the recent
scheme
mistakes of
and proposing a
war
mobilization.
for
Then
of that "unification"
11t junked
:
.
.
;
all
NSRB. ;
the mobilization
planning
was
that
spread
around
Of
Board planning was
"preliminary"
and
"not
are
leave
and
had
ficial
1 So along
came
man
the NSRB, and
man,
it all over, again.
Now
NSRB is ready with .an outline of
Its offerings.
These consist of la
basis and a program of
government war organization: That
Is to say, Congress would pass the
bill granting vast powers to the
government
to J mobilize
men,
money, and machines, this law to
lay pn the shelf Until; the emer¬
gencyor nearr-emergency of war.
said
to
make
war
| mobilizationplanning of some
pertinence is the widespread be-
|
lief throughout government that
| war with Russia is entirely posr
f
even
if it is hot probable
near future.
The general
f appraisal is that Russia does not
fjiwmt war, and will stop her
flying of the western world
anyway,
to for
planning
months."-However, an of¬
seldom
to go
about
Likewise, Mr.
gets
yen
a
Mr.- Steeltemporary NSRB Chair¬
hinted that he was listen¬
•
in naming
ing to aH the bureau boys who
wanted a piece of the war busi¬
standby
| bi the
been
ness,
like
draftees
.
millions
in
the
of potential
war who
last
realized what good officers
bank
35
#
There
has
*
bank
required
few
boost¬
If
around
the
fall
early
went
coun
with
try
preaching the neces¬
holding
down 'bank
credit to fight the inflationary
One
election.
U. S.
Mining Syn.
Finishing
Dorset Fabrics
Lonsdale Co.
same
Soya Corp.
profits tax, to release
the mild inhibitions
and
Act,
business
then
business,
FOREIGN
SECURITIES
ex¬
the
is what
That
orate.
Board
m.s.wkn&co.
probably fears.
The
might try the
you
pansion plans just might evap¬
.......
the
sample
a
threatening
Taft-Hartley
the
at
Now all that is changed.*
is
the
at
was
Congress was generally snarling
A number of factors account for
the change.
at¬
an
South Jersey Gas
to the inflation¬
hit
were
excess
of
for
spiral.
in
labor from
speeches
sity
print, about 3 lk
by 4^4" iriches
Saudi Arabian
an
are
loans are a
business
financing.
in
they
rate
Term
time" Congress
barnstorming
an
the
the
giving
Colonel!
expend¬
capital
prop
boom.
ary
factor
the
Board
seconds
and
activity
record
a
important
commercial
weeks.
During
at
itures
during the past
reserves,
business
business
Yet
off in Federal Reserve
of
ing
credit, if accompanied by
the doghouse of public opinion.
decided
a
model
all
unemployment, would put it in
'
been
of
tractive sepia tone.
reduced
inter-agency jealousies.
elec¬
*
of
ESTABLISHED
left-wing Congress will
long way to guarantee that
a
j
;
-j
election
The
*;/; '
■
is
1
responsible in
another
respect. / One result is
likely to be a demand for more
liberal
home
lending.
a law
curbing the total lending capacity
If
of
Congress
banks
mortgage
to enact
were
and
the
at
is
There
chial
even
an
more
however,
reason,
Board
Reserve
paro¬
why
the
hesitates
now
to
Members
40
N.
Y.
1919
Security Dealers Ass'n
Exchange PI., N. Y. 5
HA. 2-8780
Teletype N. Y. 1-1397
step out with a demand for power
to
raise
required reserves still
further.
As required reserves of
to
more
home mortgage loans, banks
would
a
course
Board
earning
is
acutely
a
double pres¬
serves
conscious
of
on
contraction
a
capacities,
often
The
of
their
are
Board,
are
Trading Markets:
Ralston Steel Car
Oregon Portland Cement
Riverside Cement A & B
much less.
it
is
now
said,
Spokane Portland Cement
feels that if it goes ahead with
its
"sales
season
might
restriction
advan¬
going to
make eyes at the state banking
departments, where required re¬
the Federal Reserve
the danger that
with
faced
to" reduce business loans.
Of
the
rise,
tages of belonging to the Reserve
System diminish. Member banks,
admonish banks to make
;be under
banks
member
time
same
were
sure
proposed - mobilization '; statute to
be
enacted * byv Congress
on
a
Is
of
official
Washington
to be completed.
started
slble,
the
in
and
inches
me
around
,,
home just when his job is
very
What
,
expla¬
that Mr. Hill "wanted
course
nations
to
TRUST
even
LOAN!"
important front ,in the face
an
arise.v
Truman,
•';
a
won't
you
existing govern¬
agencies could get a piece of go a
if the Administration as a whole
the war business, as with the idea
wants bank credit restriction, the
that the agencies to administer the
civilian control job are well, effi¬ Congress will write it. The new
Congress will not be one. to hesi¬
ciently, and exoertly organized,
tate to throw the onus on. to banks
and work smoothly. \
;; / >
for
any further inflation that may
*. V
some
A-N
only
co.—when
For
on
tion
,
duced to a lesser role of being ;
the
planner for
the
Armed j
Services ' only;
Coincidental^ i
word
TRUST
for
concerned
so
.
'
fine
a new
camera
going
pictures
them the finished
"A
■
of the
Army-Navy j
Munitions Board, which was re- j
I the
I
was
not
is
a
his Polaroid; camera
snapping
boys
ment
;
pot project, the "unified" De¬
fense Department. The creature
"
was
how many
with
along came President Truman's
.
demands of the services.
the
and one-half of its
year
Department was re¬
Commerce
earnest
of
95
cooling
ported, for instance, to the disap¬
pointed over its small share of the
proposed production control op¬
eration, Labor Department wanted
to have a top voice in manpower
mobilization policies.
The Serv¬
ices, according to reports, were
dissatisfied with the shake they
scrap¬
and these disorders that war mo¬
tion
with
Board sentiment for the
ping with one another over who
should have authority to do what
was
of
He has become
,
enthusiast, and
the other hand, it is
jealousy
House functionary.
with which.
It
war
just
government
agencies which gives the ap¬
pearance
of being responsible
for the passing of Mr. Hill and
his replacement by the White
On
a
consequence,' mobilization
ning was
.
slogan.
a share of the war business so
they could "keep in the picture,"
as happened during the past war.
past war the pre¬
mobilization planning of the
government
the
scheme
Place/New York City, has
get
_
During the
war
this
Under
Col. Oliver J. Troster, of Tros-
,
ter, Currie & Summers, 74 Trinity
agencies would have definite and
broad powers. It would eliminate
at the outset,the perennial tussle
of the Offices of Hangovers from
the Good Old Spending Days to
'
'
Thirty-Five
to
set
up
four
all-embracing
agencies to manage, respectively,
the production, manpower, trans¬
portation and economic stabiliza¬
tion phases of war mobilization.
people. It determines,
subject
to
White House
apI proval, how much of all food,
American
*
on
as
program"
higher
of the fall
it
reserves,
well face the fact that
membership in the Reserve Sys-.
tern
will
drop.
Then
the
Sys¬
LERNER & CO.
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hubbard 1990
Teletype BS 69
tem's capacity to play any part
they
would make in the forces.
!;!
ill
HAnover 2-0050
Friends
that
of
NSRB
are
their
plans
will
not
be
Perhaps in talking about
integrating' NSRB planning with
other government agencies, Mr.
Truman may have had something
better in mind than merely pro¬
tecting the Interests of existing
agencies. Within three months, or
less, when Mr. Steelman is sup¬
posed to give -way to a "perma¬
nent"
Chairman of NSRB,
this
story may become known. It is
i the story of whether government
•
Teletype—NY 1-971
hopeful
Firm Trading
Markets
junked.
FOREIGN SECURITIES
All Issues
Hill, Thompson & Co., Inc.
Markets and Situations for Dealers
HARL MARKS & CO. tec.
FOREIGN SECURITIES
120 Broadway, New York 5 /
'
Tele. NY 1-2660
Tel. REctor 2-2020
SPECIALISTS
.
Administration must.
breaj^ down
50 Broad Street
New York 4, N. Y.
*
—^—AFFILIATE: CARL MARKS A CO. inc. CHICAGO
mfmm
;
i-.rxn
■
mi
* a
/
j.:
Volume
168
Number 4760
THE
New York
*
COMMERCIAL
&
FINANCIAL
CHRONICLE
Pictorial
Insert I
Security Dealers Association
?■.
George Searight, Aetna Securities Corp.; Frank Dunne, Dunne & Co.; Hon. Joseph C.
O'Mahoney, George Geyer, Geyer & Co., Inc.
_H. E. Kuehner, Joyce, Kuehner & Co.; Edward A. Kole, guest; Edmond M. Hanrahan,
Chairman of the Board of the SEC; Emil Schram, President of the
New
John
Bill
J.
H.
Erwin
O'Kane, Jr., John J. O'Kane, Jr. & Co.; Herman D. Meyer, Stern & Co.;
Doerr, Reynolds & Co., Philadelphia; Harry D. Miller, Nugent & Igoe,
East Orange, N. J.
Stugard,
Bond
&
Goodwin, Inc.; Wm. C. Orton, Gude,
Feeney, Waldorf-Astoria check room
Mrs. Jule
Winmill
&
Co.;
Frank
'
T,
Harrington, H.
D.
&
York
Stock
Exchange
Knox
& Co., Inc., Boston; H. D. Knox, H. D. Knox
Co., Inc., New York City
Mrs. Marguerite I. O'Keefe, Executive Secretary, New
York Security Dealers
Association; Miss Margaret O'Keefe; Joseph Flanagan, John J. O'Kane, Jr. & Co.
Pictorial Insert
THE
II
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, December 16, 1948
Twenty-Third Annual Dinner
P.
C.
J. O'Kane, Jr. & Co.; "Duke" Hunter, Hunter & Co.;
& Co., Inc.; Otto H. Steindecker, New York Hanseatic Corp.
Kullman, Jr.,' John
Charles H. Dowd, Hodson
(
John Cusack, Amott, Baker & Co., Inc.; Melville Wien, M. S. Wien & Co.;
Sam Weinberg, Weinberg, Frank & Co.
Anthony Becker, Securities and Exchange Commission; Lee Sherman, L. D. Sherman
& Co.; Irving A. Greene, Greene & Company
Edwin L. Beck, Commercial & Financial Chronicle; Frank Scheffey, Geo. R. Cooley
& Co., New York; Lou Walker, National Quotation Bureau
C. W. Hotchkiss, Sterling Oil of Oklahoma, Tulsa, Okla.; R. M.
Lax & Co.; Walter Kruge, James D. Cleland &
Maurice Hart and Kurt H. Grunebaum, New York Hanseatic Corp.; Earl H. Newbery
Chilson, Newbery & Co., Kingston, N. Y.
Wright, Greenfield,
Co.
Volume
168
Number 4760
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Pictorial Insert Iir
Held at the Waldorf-Astoria
William D.
Moran, Securities & Exchange Commission; Richard B. McEntire, SecuCommission; Bert Seligman, Townsend, Graff & Co.; Louis Loss,
rities & Exchange
Securities
John
F.
Graham
&
Exchange
Commission
♦
Philip L. Carret, Gammack & Co.; Shelly Pierce, New York Journal of Commerce;
Walter Murphy, Jr., Walter Murphy, Jr. & Co.; Edward T. McCormick, Assistant
'
Director, Securities & Exchange Commission
Vic
O'Mahoney, guest; David Morris, David Morris & Co.; D. J. St. Germain,
D. J. St. Germain & Co., Springfield, Mass.
Walker, National Quotation Bureau; Louis P. Singer,
Summers; Eugene J. Callahan, Jr., guest
Troster, Currie &
Belmont
Reid,
Growney
&
Co.; Mike
Growney,
Growney &
Co.
Towbin, C. E. Unterherg & Co.; Meyer Willett, C. E. Unterberg
Allen MacDuffie, guest; Homer D. Wheaton, guest
& Co.;
THE
Pictorial Insert IV
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, December 16, 1948
Friday, December 10th, 1948
Arnold G. Hyman, Newborg & Co.; Louis C. Lerner, Lerner &
Clermont Cartwright, Hill, Thompson & Co.
Co., Boston;
Harry Kevits, guest; Ed Caughlin, Edward J. Caughlin & Co., Philadelphia;
Joe
Edward
S.
William F.
Goulet; D. Raymond Kenney, Kenney & Powell; Nat Krumholz,
McDonough, Cohu & Co.
Ladin, E. S. Ladin & Co.; Joseph E. Owens; Robert F. C. Benkiser,
Grace National Bank & Trust Co. of N. Y,
Kurt Wechsler. Heimerdinger & Straus; Barney Nieman, Carl Marks & Co.;
Franz Bachman, M. Schloss; Curtiss J. Straus, Heimerdinger & Straus
Siegel & Co.
Dave
Magid, Hill, Thompson^ & Co.; Sam Magid, Hill, Thompson & Co; Ralph Dimpel,
' Edward A. Purcell & Co.
»
@FedFRASER