Full text of Commercial and Financial Chronicle : December 19, 1946, Vol. 164, No. 4552, Section 1

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US. ADM.
BRARY

ESTABLISHED 1839

Final Edition

2 Sections-Section

Reg. U. S. Pat. Office

New York, N.

Number 4552

Volume 164

Y., Thursday, December 19,

Price 60 Cents a

1946

Copy

■

'
■

■

For Pictures of

New York
ner see

Aerovox Corp.*

request

R. H. Johnson & Co.
INVESTMENT

HIRSCH, LttlENTHAL & CO.
Stock Exchange
and other Exchanges
*

Members Hew York

HAnover 2-0600
Chica go

Geneva

York 4, N. Y.

Teletype NT 1-210

(Representative)

64 Wall Street, New York 5
BOSTON
C
PHILADELPHIA
Troy
Albany
Buffalo
Syracuse
Baltimore
Dallas
Harrisburg

New Haven

CORPORATE
FINANCE

of INDIA, LIMITED
Bankers to the Government In
Kenya Colony and Uganda •

Paid-Up Capital—^..
P Reserve Fund
„i

£2,200,000

undertaken

NY 1*708

Inc.

Acme Aluminum Alloys,
"

Conv. Preferred

New York

NATIONAL BANK

1-305

Montreal

Toronto

OF THE CITY

OF NEW YORK

Preferred

Analysis upon request

*Twin Coach Company
Conv,'Preferred. <viv-V
*Prospectus

Members N.

Security Dealers Asfn.

New York 5

45 Nassau Street
Tel.

REctor

2-3600

Teletype N. Y. 1-676

} Reynolds.
Members New York

Broadway,

120
,

Telephone:

for Banks, Brokers'
"

and Dealers

Telephone:

Enterprise 6016

& Co.

York 5, N. Y.

REctor 2-8600

BeU Teletype:

NY l-§35 -

ira haupt &
>

Stock Exchange

New

Philadelphia

request

Utilities

Service

Solar Aircraft Company
90c Conv.

Northwest

Bond Brokerage

Com.

^Detroit Harvester Co.

Company

INCORPORATED

j»i''also

Teletype NY

/vV.

trearhart &

£4.000,000
£2,000,000
of

HAnover £-MM

ST., N. T..

Bond Dept.Teletype:

MARKETS

Bank conducts - every description
banking and exchange business

62 WILLIAM

Bell

Ceylon, Kenya
Zanzibar -

Trusteeships and Executorships

The

THE CHASE
.Members
Security Dealers Asm,

.New York

OF NEW YORK

SECONDARY

Head Office: 26, Bishopsgate,
r.;*
v 'London, E. C.

Subscribed Capital

THE NATIONAL CITY BANK

•

NATIONAL BANK

■

SECURITIES

Pittsburgh
Scrant.on
Wilkes-Barre
Williamsport Woonsocket Springfield

London

Cleveland

Branches In India, Burma,
Colony and Aden ana

Bond Department

Established 1927

Successors to

25Broad St., New

SECURITIES

Prospectus on request

Hirsch &Co.

Bonds

CANADIAN

Common Stock

Pictorial Insert.

Municipal

Liberty Fabrics of
New York, Inc.

Havana Utho. Co.*
* Prospectus on

Annual Din¬

State and

Vacuum Concrete

;

Security

Association

Traders

Hardy & Co.
Members New

York Stock Exchange

Members New York

30 Broad St..
Tel. DIgby

4-7800

Curb Exchange

New York 4
Tele. NY 1-733

co.

Members New York Stock Exchange
and other Principal Exchanges ?

Ill

10 Post Office Sq.

Broadway
York 6

Boston 9 W

New

2-3100
Tele. NY 1-2708

REctor

Direct

Private

;

HancodkySIJSfcv
' v?

Wire toBoetan

3202

THE COMMERCIAL & FINANCIAL CHRONICLE

TettJing Markets

-•

Thursday, December 19,

The World Bank-Its

Standard G & E Com.

Mid-Continent Air
Taca Airways*
With

Retiring: President of International Bank for
Reconstruction

Prospectus

:»i-■■■*'

1920

1-423

Wheel

Elk Horn Coal

t.,X

„■
tl

,«

political considerations and that

Common &. Preferred

When the Life Insurance Association of America invited

Common & Preferred

address your annual
for me to ac¬

Mayflower Hotel, Com.

meeting, it

privilege

was a
I-

May, McEwen & Kaiser,

(

Scripps Howard Investing

Since

cept.

Resources International

then

President

120

insistsjdan is ,essential.to maintain leadership
admits its

of timerhe jhas *\ -;
looked
ahead JX

e c o n

1-1227

did

New, When Issued

be¬

Plaza
4950

:;X;XXXXX::

Plaza
"A"

Vanderhoef & Robinson
Members New

York Curb

Exchange

Bell System Teletype NY 1-1548

consideration

must

But you also have A social

responsibility to promote the pub*

lie interest whenever you can do
so
without jeopardizing the se¬

organization of

the Bank has been

developed and
curity of your investments. Surely,
it is now passing into the stage
pf the promotion of better world
operating activities.
Its
work
conditions is a matter of real im¬
henceforth mast be viewed in
portance to those you represent.
terms of long-time continous
A year and a half ago, we and
op,>our

world

opportunity

Bought—Sold—-Quoted

Allies
war

concluded

second

and turned to the

con¬

struction Of the peace, We apparticipate ih the further (leter;proached that difficult task So¬
berly, determined to pursue it un¬
*An address by Mr.
Meyer be¬
fore Annual Meeting of the'Life tiringly and pktfSntry^ Certalnl^v
we dicL nbt expect the achieve¬
Insurance Association of
America, ment or peace to be an
easy task.
New York City, Dec. 13, 1946.
Our generation has had broad
experience in searching for con¬
ditions which will permit peace to

Analysis

never

long
is

Common Stock

A.
1^'.''

Campbell iX

Common & Preferred

Central

Public

XXX'XX Income 5

Utilities

;

Struthers

exist.

American Overseas

1952

H. G. BRUMS & CO.

society

Bell

WHitehall 3-1223

Teletype

Bought—Sold—Quoted

Member4
V*

•

/V.

I'..

.«LK

'•

Our

X, 120

of
which

brightness of

"Special

;

placement

road

ahead is

obstacles, but

large

blocks

pare

for the establishment of
on

page

3228)

We Maintain Active Markets in U*S» FUNDS
for

some were the Noi-

mandy beaches

Over-the-Counter Stocks and Bonds.
.x.'XX

••

X;*1

'-''Xyx'.v

others—Salerno,

CANADIAN MINES

^Teme^iCoTupan^
Members N.

37 Wail

Bell

CANADIAN UTILITIES

Y. Security Dealers Assn.

St., N. Y. 5

Teletypes—NY

hardly stack

John
as

prosperity of
1

our
~

country.
'; v

fi. Things

,jt:i

get ^

Mdf and,

a
J?

some

Members New York Stock Exchange

tM<em^%Ntop0gf)ciCr^

may get a lot worse be¬

fore * they

Edward A. Pureed & Go.

"
-v'

insurT

Happy New Year

-Tarawa,

mountable obstacles to the future

\ \ 50 Broadway WHileWll 4-8120
Bell System Teletype NY 1-1919

people

may be tempted to throW
dp their hands and say to bell

New York 4, N. Y.

with it, what's the use. We, as a
nation, cannot afford to sit idly by

and let

national morale disin¬

our

tegrate in any such
of

all

allow

manner.

businessmen

can

themselves

Central States Bee. (Va.)
CotbAion

Least

afford

.Stock

infected

Citizens Utilities Common

with an attitude of hopeless
resig¬
nation, because the.y are the ones
who must provide the
leadership

and the

not

Avon Allied Products

ingenuity to speed our
through these trouble;-

;

Fred F. French Investing
Common & Preferred

' *

Frank C. Maslerson & Co.
Members New

...

64 WALL ST.

The wrong answers come
up all
too often when the ballot box and
a

York Curb Exchange

.X.™,'.

,/. NEW YORK »

Teletype NY 1-1140

HAnover 2-9470

return trio to

Washington count
more than economic
integrity In
deciding national issues. As :busi-)
nessmen, it is imperative that we

Our Lady of

of the prob¬
lems confronting us. The produc¬
tive Capacity of American
industry
is the only force on this earth that

Victory Church
A

(Continued

on page

War

the

build^ prosperous tomoi*

can

Canadian Securities Dept.

Hanover 2-4850
1-1126

Anzio,

Saipan—characters

ness-like solutions

CANADIAN BANKS

^X'VT

and

D-Day. To the
who hit that beach, and the

Lewis

Merry Christmas

with

eschew the way of politicians, and
bend pw full efforts to the busi¬

CANADIAN INDUSTRIALS

studded

cians—party lines notwithstand¬
ing.
x'-x4.xxx;

Situations"'{
of

Best Wishes f or

that

international Bank

(Continued

maintained lor the accumulation

the

out

nation's tomor¬

it is not hard to understand
the pessimism of some Americans.
rows,

Conference in 1944, members of
the United Nations began to pre¬

•'

Department
Is

black

our

some

JX||XX/:X; X'./

Idea of

BROADWAY, NEW YORK
TeL REctor 2-7815

upon

branct office#

our

days

strikes,

Long before the Bretton Woods

X' i

■

New fork stock Exchange
New York Curb Exchange-,

know

Mosber

days. By this time, I hope
businessmen * have learned
put the solution of their
problems in the hands of politi¬

McDonnell &ro.

1-1843

rash

Wtl-i!SSJs ^
Orleans, La,-Birmingham, Al®.

Direct wires

these

dark

New*01*^^4^

HAnover 2-0700

New

tomor¬

wake must necessarily be a pains-;
taking; -continous and ilexible passage
process.

Telephone:

the weakened foun¬
dations which a! war leaves in its

20 Pine Street, New York 5
4

would

the complete answer. But we db
know that the building of a stable

Airlines

one

enough to believe that

Wells X

Common & Preferred

■■/V

Members New York Stock
Exchange,

25 Broad St,

row.

men

Steiner, Rouse & Co.

will, as
as there

/In

The

Request

famine

flood evferX

Byrndun Corporation

■

pesti¬

stopped him
dead. They'

the safety of your capital and in*
Come;

Meyer

Eugene

permanent
head. They basic

have

nor

first

your

should

Telephone COrtlandt 7-4070

lence,

you

erations and its permanent head

31 Nassau Street, New York 5

are

duty is tb your policyholders and

reached

should have

Preferred

has

progress

invest the funds for
which you are trustees. Your first

when the Bank

Rogers Beet

war nor

ities,

point had

been

■

Sometimes his

important factor ih
its
social
security." Under
the
supervision of the state author¬

because, 1 leit
strongly that
the

Manufacturing Co.

step-

b y

Rockwell

,x.c-

gone

ahead,

'.J

;!;X

of management, hut*

been slow, but

nation

cause, and only

Hafcliaway Bakeries

The insurance companies of. this

and

•'«

during its initial period and
I shall leave it with regret.
•,

Development.

Teletype

Bell

and

isfaction to be associated with thb

WOrth 2-4230

\l'

?•

•

practical difficulties. '

Even iii his days of blackest de- "
spafo*, man - has always managed
to
keep his chin up high enpughto
look ahead.
Since the beginning

pleasure

as a

security,

Urges employers and manufacturers to go*X
operate, and points out advantages of regularized
employment.',

Bank

o r

struction

Broadway, N. Y. 5

as
o

well

worker and: employer.

policies and proce¬
dures and the expansion of staff.
It has been a privilege and a sat¬

Interna¬

tional
f

Members Baltimore Stock Exchange

mination

have

i g n e d

res

t h

j MilcltelUCompftiuj

'V.''

has becomeanopen issue. Holds employment
regu¬
larity, and stabilization i$ better form of workers
security and that
NAM is working out program which will benefit
public as well as

Kingan & Co.

annual wage

XX/'

i
,

Differential

replace private foreign investment. Points nut security
back of proposed debentures of the Bank and maintains
operation
<of Bank will be along strictly conservative lines.
Says as creditor
nation we should 'engage In
foreign investments and that one of
principal functions of Batik is to promote- private foreignf invest- X
meat Holds Bank will be instrument for developing more pros¬
perous world.
,v >
*■
" * ' "* -** *
' 1
»

TELETYPE

Development
\

it will not

Exchange PL, N. Y. 5 HA 2-2772
BELL

and
^

tires and describes its progress
be guided by economic and not

Members N. Y. Security Dealers Assn.
Nat'l Ass'n of Securities Dealers, Inc.
40

organization -and objec-;
up to present. Stresses Bank is to

SECURITIES CORP.
Established

■

MOSHER*

for strained industrial relations« Trav-'
NAM spokesman says guaranteed

reason

of workers for

ing

First President of World Bank outlines its

KING & KING
.

XX-W•'/*}'XX.V'

IRA

Chairman, National Association of Manufacturers

Asserting principal

Higgins, Inc*
•

Aims; and Importance*

Jack & Heintz*

1946

Memorial

Financial

In.

District

3236)

1127

Goodbody & Co.
Members N. Y, Stock

Exchange and Other Principal Exchanges

115 BROADWAY

NEW YORK 6, N.Y.

Telephone BArday 7-0100

Your Contribution is

*An address by Mr. Mosher .at
51st A n n u a 1 Congress of

Teletype NY

1-672

Earnestly

Solicited for the
Building Fund

the

American Industry^ conducted
by
the National Association of Manu¬

JOSEPH McMANUS & CO.

facturers, New York City, Dec. 5,
1946,

We have prepared
:

drpTthtijs

Nathan
X

Memorandum

NATIONAL GAS

Straus-Duparquet, Inc.

Which is available

;

X-

Common

7f>ftN£
-

ST., N. Y. 5

WHitehall 4-4070 I

BOUGHT

Teletype NY 1-609

Private Wires

SOLD

'>•

QUOTED

.•

:^r''

Prospectus

•';

jtf'V

request

Reynolds & Co.

INCORPORATED

37 WALL STREET

Teletype 1-376-377-378

Buffalo—Cleveland—Detroit—Pittsburgh—St.

Vv,-vX /

74 Trinity Place, New York
6, N. Y.

-„

—

J*G*White6 Company

Member New York Security Dealers
Association

Telephone HAnover 2-2400

^Universal Winding Co. Com.
X' *-•

ilif

Troster, Currie & Summers
I
I

$2.40 Conv. Preferred

request to

G. h. Saxton & Co., Inc.

Products, Inc. Com. & "A*

Raytheon Manufacturing Co.

CORPORATION

Banks. Brokers and Dealers

*Ak

& ELECTRIC

Members

NEW YORK 5

120

ESTABLISHED 1S90

New; York; Stock Exchange
Broadway, New York 5, N. Y.
Telephone:

Louis

Tel. HAnover 2-9300

Tele. NY 1-1815

■

Bell

REctor.2-8600

Telety|>e:

^635 ■:/.; K.

[Volume 164

THE COMMERCIAL

Number 4552

FINANCIAL CHRONICLE
&

Industrial Share Prices in 1947
;:

' • * By FRANK; P. BRECKINRIDGE ;
Investment adviser cites bearish business factor of unbalanced

1
'
—Hoy L. Garis
_—^-_.._.Cover £
i Forecasiability of the Stock Market—Washington Dodge Cover *
Economic Outlook for 1947—Lewis H. Haney
Cover
The World Bank—Its Alms and Importance—Eugene Meyer 3202
The Guaranteed Annual Wage—Ira Mosher

Breckinridge —3203
(Editorial) mi
J.
.li.AiwV-M .3203
fPrke Distortions and the Business Outlooks
i
-~Q. Forrest - Walker'fWall SL Bankers and Business Analysts Changing Views on v'
| Inevitability of Market Bust—Edmoiir Germain
.3204
Export-Import Bank and Repayment Problem
\v
«r*t.

—William McC. Martin, jr.

———*
(The Institutional Investor in the Dynamic Century

I
■

v.-:;

•

170, Will like-

lyi slid

real; re¬
sumption of

;

Plan^ohii vCi Borton

.3207
;The Enslavementiof Labor—Matthew' WoIl_——--—^.3207^
'

(The Threat to Independent Business—Wendell Berge M—3207;
sTheAmericanPlanforGennanBankEeform^^^^^;0
j
Herbert
1 Essentials of British- Export Follcy^-^ifStafford Cripps ^3209 •
A Wage Policy for 1947 Prepared for CIO—R. N. Nathan 3209 *

m o

P. Breckinridge

interven¬

ing, rally might be sharp and
strong, but will not last longer
than a brief period because the
weight of economic forces are such

3214

the

vement.)

4-r-Rufus ;S.Tucker
^Capital Goods for Consumers—Reavis Cox-

run.

optimism

which

3214

Distribution to Sustain Expanded Production

old Cat's and Dog's.

Obsolete Securities Dept.

any

may

99 WALL

force prices up temporarily. Be¬
hind this/conclusion is the gen¬
eral premise that stock prices de¬
pend upon profit expectations of.

tions

are

•

poor.

YyY %

business

is determined

•;

- ^

main¬

in 1937—
Will determine whether or not we
i»?

f-;

Mortgage Certificates

ly by the expectation of high or
low profits six or twelve months
or
more in the future. Business
men—not

.pessimism among

men

All'

}' -

Title Company

WHitehall 4-6551

Offerings Wanted

^ofits the <^rux

'Optimism

;

STREET, NEW YORK

Telephones

high and rigid and inventories re¬
main unbalanced, profit expecta¬

amounts of
figures exact¬
ly—theses indicate; ;only
the
general
t ion

!f.

We'll
your'<$$$$ in time for Xmas.

deliver

corporations; and. that because
manufacturers' prime costs are

$ize and direc-

■

they will over-balance

re die t

can p

Industry^Boger Babson
Consumer-Spendable Income, Spending, Savings/ Credit,

that

short;

an
upward
'trehd. (No one

| ; ^fEdwiti'G*1 Nourse Jj*-»~,h,*-3206^

"to

any

{Full Employment A^t and the Economic Future

Decentralization

around 140 be¬
fore there is

—Donald B. Woodward
——
—_3205
Surveying the Post-Election Scene—Emil Schram __—_„_3206

.The British Token Import

big bundle of cash

great

for your

v-j

3205

-Lwith

I" > It isbest judgment that industrial stock market prices over
the hext six months will go lower; the Dow-Jones industrial
average,

■

TO TOWN

||l^^^fof^e;^sumption;cl;rear:upWard;trend.^''l::-

•»«.,»

SANTA'S COMING

| Jokes industrial share price will decline about 20% from current

3202 ;

AND COMPANY

inventory situation, and resultant injury to corporate cash position
and profits; and stresses rigid costs.
Hence fie concludes Dow-

■

Industrial Share Prices in 1947—Frank P.

Regulation Rapprochement

licHnnsTtm

and News '

Articles

jShould Obsolete Equipment Be ReplacedNow?

politicians

GOLDWATER, FRANK & OGDEN
39

Broadway, New York, N. Y;

HAnover 2-8970

Teletype NY 1-1203

Member ot

;>■:

(Continued' on page 3231)

New York "Security Dealers Assn.
National Assn. of Security Dealers, Inc.

^^Alfred -Schindleji!
Questions of Foreign Economic Policy—R. F. Mikesell ____3215
Competitive Pattern in Consumer Credit—F. R. Wills—-3216
Banks in Consumer. Credit Field—John Lucas

Regulation Rapprochement

3221

Problems in Business Recovery—Carl D. Smith

—3224

—Scoville

Hamlin

—*■

—

Rule of Men Displacing Rule

3224

—

3206

Harold D. Smith Resigns as V.-P. of World Bank ——3207

Monetary Fund Announces Initial Par Values of Member
J

Currencies—Cammile Gutt

ABA Calls for Abolition of Regulation W_

Listed, Securities

3211

•

3210
.3252

.Recommendations .
Municipal News arid Notes

.3220
NSTA Notes
.-.........3211
Observations—A. Wilfred May...3205
Our.Reporter on Governments.. .3228
Our Reporter's Report.......;.... 3263

Mutual

-L

Funds

Pase

•

JEinzig—Why Cheap Money?.... .3213
Prospective Security Offerings. .3261
Public Utility Securities.
3208
Railroad Securities

Real

Estate

Securities

Now

•

■■

that

Corner... .3226

directing "a Teturii to

policy.

!; Recognizing this picture,
Cpmtiiute^

Thiokol Corp.

National Company
!

Billings & Spencer

National Shirt

our

Registration. .3256
Tomorrow's Markets (Walter
1
*
Whyte Says)
..3255
Wiujxi-ugton and You
......3205

Chicago

TRADING MARKETS

Amer¬
ican way of life, our democratic form of government, and
to the removal of regulatory restraints inconsistent with

.....3218

Salesman's

: -1

as one

also goes the Securities and Ex-

^ The/ mandate of thc rpeople last November has been

definitely appraised

Securities.......... .3214

Securities

go, so

chainge Commission;

—

."*•••*'j'.'.' f;,;.

it, these antics

see

(i ^ As the elections

Expanding at Lower Rates ——3223
Cleveland Trust Co. 1947 Predictions
—L-I-—J*l3223

•'

are embraced in the adage
fas the elections go, so goes the Supreme Court."

Merle Thorpe Sees Better Oil Outlook Under Free Market 3222

Regular Features

Wh^tJs behihidit all? '

N. Y. State Mtge. Loans

Investment

Request

i New York

field br particular,
that^lenceforthy n *ul^ of reason will be appiied by this
teguIatOryfbbdy. C;^ ? I
!

Henry H. Heimann Sees Labor Reaction Against Strikes_13219
New Congress Must Abolish Industrial Class Warfare
3219
Clolmer Committee Sees No Need for Depression
3221

Dealer-Broker

: '

/^nc^thepiiblic'atlargeiah^lhej^
,

1. ^Sifaori

:Page
Bank and Insurance Stocks.... 3216
Canadian Securities............3222

J. F. Reilly & Co., im

.,..v-y,

— — — — — —-W .

r——— —

High Court Bars Tax on Interstate Securities Sales -—3215
Prewar U. S. Per Capita Income Was at Record High

Prospectus
f/Y;

—3211

Unchanged Basic Interest Rate Predicted by First Boston 3213

"A"

Spokesmen for the Securities, and Exchange Commisiipn ;hav^ ibeen; indicatingfelastic*anterpretation of the
inSbrder^ as me believe; to influx

-.——3210

Association of Stock Exchange Firm Protest Credit.

Prohibition

Laboratories

3208

Sen. Bridges Attacks FR Credit and Margin Controls

to insistence of the

a response

of Law—Nathan L. Miller.-3224

Herzfeld and Stern Vote in Favor of CIO Union

Allen B. Du Mont

public. Clamor for
1 erasure of other than government by law now well recognized.
I Maloney Act a blot upon national escutcheon. NAS0 dn invasion
;
'of; our American way of life,, an imposed institufion in the nature
j of JOPA; whichi piaces:ieninge4Upo«o$pfead« when
liftnig other ceilings; Shouldbe abolished.
^
:
!,
1 41 v
,
SEC elasticity

Profits Without Responsibility: An Answer to Mr. Nathan

litbiod

Shops

foM

Memberi New York Security Dealers Assn.

government' as, presently' i 170
gtm"4 and removed price ceil¬

our

Broadway

WOrth 2-0300

Bell System

Tetetype NY X-84 V

ings generally besides erasing other restrictions.,
°

Published Twice

York,

Weekly

The COMMERCIAL and
Reg. U. S. Patent

25 Park Place,

REctor

Office

New York 8, N. Y.

2-S570 to 9576

Bank

„

Every Thursday (general news and ad¬
vertising Issue) and every Monday (com¬

plete statistical issue —market quotation
records, corporation news, bank clearings.
State and city news, etc.) ;; ;;;

C/o Edwards & Bmlth. •
•
Copyright 1946 by William
t
Company
-■

Quotation

recognition of the will of the people, this conduct
good although belated,

•

(Continued

•

on page

3248)

Haytian Corporation
Punta Alegre Sugar

•,

Eastern Sugar Assoc.

;

Record

are

interested in

offerings of

\Z::l-TE'X

Monthly,

PREFERRED STOCKS

Class A Common Stock1

exchange, remittances for for¬
eign subscriptions and advertisements must
York

funds..:

;

•

Jlfewtber# New < York -Stock Exchange

Graham-Paige 4s

B. Dana

Susquehanna Mills

Spencer Trask & Co.

0613);' 1
England,

Sugar

I? ^Fidelity Electric Co.

(Foreign postage extra.)

the rate of

made in New

U. S.

;

Commodore Hotel

High Grade Public Utility and Industrial

.Note—On account of the fluctuatioirs in

Lea Fabrics

;

■

Record—Monthly,

(Foreign postage extra.)

Earnings

$25.00 .per year.

25* Broad

*Streef£ KcW York "4 "

Members New, York Curb. Exchange

i35 3."Lit Salle ~SfCBicagO'

L \ Tel.: HAnoYer 2-4300

TeT.V Andbver 46^0

3
1

Mohawk Rubber

Reentered as second-class matter Febru¬

25,

is to the

- ■.

135 S. La Salle St., Chi¬

3, HI.- (Telephone: State
Drapers' Gardens, London, E. C.,

cago

ary

Rates.

Other Publications

and

Monthly

"Other Offices:

March

Union, $26.00 per year; in
Dominion
of. Canada,
$29.00
per
year.
Other Countries, $33.00 per year.

$25.00 per year.

Manager

t;j|, Thursday, December 19, 1946

Pan-American

Editor St Publisher
SElBE&T, president

WILLIAM D. BIGGS, Business

Act

Subscriptions in United States, U.
Possessions, Territories and Members

COMPANY, Publishers

DANA

the

under

lit.

■EBBEBT D. SEIBEET,

WILLIAM

Y.,

Subscription

FINANCIAL CHRONICLE
WILLIAM B. DANA

•Prospectus on request

'Albany

•

Boston'

Glens Falls

Schenectady:

DUNNE & CO.
25 Broad St., New York 4, N. Y.

Worcester

Members New York Security Dealers Assn.

WHitehall

1942, at the post office at New

3-0272—Teletype NY 1-956

.private

Wire to

Boston

Mromberg-Larison
•

TITLE COMPANY

r;;Common,& PrcfeirydAv

Coca-Gola Bottling

Oxford Paper

CERTIFICATES

Coca-Cola
^

STRAUSS BROS.

Panama
Members N. Y. Security Dealers Assnl.

NEW YORK 4
tolgby 1-8640*"*

N, Y. Title & Mtge. Ce.

3HSS-

B«U

Stock Exchange

WHitehaU 44330
Teletype NV l-203ar^
*

;

•

Teletype MM 89

Direct Wire Service

New York—-Chicago—St Looii
J
Kanui City—Lot Angeles

...

& Trust Co.

W.'

Members

74 Trinity Place, New York 6, N. Y.
Telephone?
Teletype*; ■'
NTI-375

Analysis

Radiator Co.

upon

—

Nil- 2751

■

Request y

C. E. Unterberg &

;:v established huv
Specialists in Soft Drink Stocks

BOwllnc Green 9-71#a

Public National Bank

National

HoixResEgiKesiHt

Teletype CQ 129

Bottling Co.

■

lewburger, Loeb & Co.
Memberi Vew -Yotk

Coca-Cola

■c;v'y;yv

Harrfooa 26TO^
f

Bpttling Co. -of Chicago

Macfaddeit

Publications, Inc.
\,p.^kf'r^y
6s» loos

Red Rock Bottlers, Inc. (Atlanta)

Pan American Bank Bldg., Miami 32

Telephone: 3-2137

15 Broad St, N.Y. 5

CHICAGO 4

Teletype NY I-$32, $34 /

PrWen^Cu,;S "gtf

;

lrwdwqr s' ' Board iofTrade Bldg.

;■

Coca-Cola Bottling Co. of Los Angeles

Lawyeri Mortgagc Co.

Lawyers Title & Guar. Co.

Co. of New York

Gota-Cola; BottKhg- Co.^ of; St Louis

Co?

Security Dealers Ass'n

Broadway, New York 6, N. Y.

Telephone BOwlingr Green 9-356S
Teletype NY 1-1666

MMERCIAL & FINANCIAL CHRONICLE

Thursday, December; 1 % 1946

BUSINESS" BUZZ

Price Distortions and ®
eaasss

f Tlie Business Outlook
J

ACIUAL MARKtIS
-

' ;'<*w-

•

By Q. FORREST WALKER*

ftW#

jfo«n©mtof»

IN 250

•

Economist'maintains "boom-and-busf* prediction*-are not*war¬

ACTIVE ISSUES®

economically sound background; Hails cautious public
psychology as reducing price distortions which may occur. ; Hold- f ing that nation is now in third phase of postwar adjustment^ he%
' predicts upward trend will end during first quarter of 1947, and
thereafter dispersion will tend to narrow on down side. ; *
ranted by

Abitibi Power

Buckeye Steel Castings
Cinecolor

astrological lore, the number "seven" has had a certain mys¬
significance. from the earliest times.
It has enjoyed great
popularity*
over the
cenany theory of seven year cycles
t u r i e s. The or the mystical significance of the

;

tical

Chicago R. 1. & Pac.
Old

Pfd.

....
mr-y.

Diebold Inc.*

seven

District Theatresf

General Machinery
GL Amer. Industries

Hartford-Empire Co.*

Higginslnc.
Hydraulic Press

the
deadly
sins, and the
Seven Keys to
B a 1 dp ate.
man,

seven

fluctuations;

ness

shows that the check to manufac¬

aind construction has al¬
occurred when prices were
abnormally high, prosperity great¬
est, and stocks of materials ab¬
While astrology and sound fore¬
normally low."f He believed that
casting are poles apart, it is a prices dropped near the end of a
curious fact that the seventh year boom
when
demand
appeared
Q. Forrest Walker

Lanova*

Majestic Radio & Tel.
Michigan Chemical
Minn. & Ontario Paper

decade

each

of our

nomic history seems to

eco¬

own

have been

year of more or less serious
economic disturbance.
The econ¬
a

Missouri Pac.
Old

number "seven."

thoughtful book on busi¬
published
in
1911, George C. Hull remarked:
"People will buy or construct if
calendar week
you sell at prices low enough to
from the Book
satisfy them that they will gain
of Genesis, the
by so doing. They will stop buy¬
seven wonders
ing or constructing when prices
of the world,
are so high that they are satisfied
the seven ages
they will lose by so doing. History

Douglas Shoe*
Expreso Aereo

group¬

includes
such widely
separated subj e c t s as the
ing

omic historian will

Pfd.

readily recall

turing
ways

ever because
the
complete old, lowpriced contracts forced prices up,
and they could not be maintained

greater

than
to

pressure

when future contracts melted

1837, 1857, 1907 and 1937 away.$ While the present price up¬
as years of economic and financial
heaval is mostly a normal postupheaval,
and
less
serious control development; some-part
troubles occurred in the seventh of
the increase has been caused
1807,

Mohawk Rubber*
Moxie
'•

Old Pfd#

-vy'z

:t>.

-ril® y

other d^cadefiu Tprtun^ by the pressure to complete old
for 1947 contracts..But we are here chiefly

year® of

N.Y. New Hav. & Hart

the? prospects

ately,
*

can

fGeo.

Richardson Co.

Wail Sfreei Bankers and Business Analysts

Changing Views
1

pleased to

are

announce

Mr. D.

that

Raymond Kenney

now

associated with

Some feel confident another month may

reveal more clearly actual
shape of things to come. Many agree business picture has bright¬
ened considerably and, given wise direction, can continue to
improve

Alabama Mills*

FIRST COLONY CORPORATION

Aspinook Corp.*

82 Wall Street

Worsted, New

Teletype NY 1-2425

Birmingham Elec.
Cent. States Elec., Com.
Derby Gas & Elec.
New England P. S. Com.
Puget S'nd P. & L. Com.

Bought

Bulletin

Upon Request

Circular

The
is

unduly

influ¬

upon
now

their thinking
strong convic¬

certain basic condi¬

tions for the maintenance of both

QUEENS BOROUGH GAS & ELECTRIC CO.

22 East 40th

Corporation
:

ESTABLISHED 1927

Street, New York 16, N. Y.

Telephone: LExington 2-7300

difficulties

face of all kinds of governmental
and
priorities.
The

latter,

much

for

was

the

thought,

to bear
little. Pro¬

faltering just a
duction, they said, was what

was

needed

sys¬

lift

the

economic

tem to full stature but evidences

Teletype: NY 1-2948

faulty

legislation

and

(Continued

page

CTIVE MARKETS

EST

OSGOOD COMPANY
Earnings past three

1926

years

♦Hoving

Corp.

about $2.40 annually.

i>er

"Capital Records

Stock selling about $9 per share.
U. S. Finishing Com. & Pfd.

120 BROADWAY, N. V. 5
i J®. REctor 2-8700

Circular

upon

3264)

===

Great American

Aeronca Aircraft

Net current asset value (Dec. 31, 1945) $12.60

share/

Members N.Y. Security Dealers Ass*.

too

were

economy

without

production and employment at were all around that irresponsible
men
both
in
the very
highest
high levels exist which per¬
places and in the low stations as
haps were not present before,
well and the following they were
Last fall the world was dis¬
able to muster were tampering too
turbed by the open talk of war
much through strikes and impos¬
and the political
situation: the
sible demands with the productive
prospect of another international
mechanism. The great flood 1 of
of arms on top of a veritable
goods which people heeded - to
wave of labor unrest stimu-

Ward & Co.

the

very

request

upon

been

change

based

tion that

EASTERN CORPORATION

restrictions

have

enced by fears of the inevitability
of an economic collapse.

NATIONAL COMPANY

Southwest Natural Gas
Standard Gas Elec.
t Prospectus

Quoted

Sold

Central National

3;-

————

reconversion

selves,

6% Cumulative Preferred

Southeastern Corp.

through dark glasses believe to-3>
day that business men generally,
perhaps
even
including
them¬

Scranton Elec.
Spec. Part.

Some at least of the bankers and stock market analysts on Wall
who three months ago were inclined to look at the future

New York 5, N. Y-

Tel. HAnover 2-8080

Street

Textron Wrnts. & Pfd.

conditions for maintenance of both

production and employment at very high levels if absent a few
months ago are present today. The encouraging signs, they say,
include stiffening of public resistance to unreasonable demands by
'labor and h general; improvement in domestic and international
political situation; 'It is probably too early yet, they say, to be
really positive :abofct what certain straws in the wind may meal.

Conditioning

Vacuum Concrete

By EDMOUR GERMAIN

Conviction growing certain basic

United Drill &Tool"B"

Inevitability of Market Bast

Upson Corp.*

N. J.

'Wishing You a Merry Christmas,' then add
'How about the five bucks you owe me?'"

say,

Industrial*De¬

An address

Taylor-Wharton*
Tenn. ProductsU. S. Air

Hull:

by Dr. Walker be-J pressions, pp. 27-28. Frederick A.
Stokes Co., New York, 1911.
fore New York Chapter of Amer¬
ican Statistical Association, Dec.
% Ibid. p.117.
(Continued on page 3231)
12, 1946.
:
*

postscript and

appraised without resort to

Philip Carey
Purolator Prod.*

"And close it with
a

request

*Prospectus on request

Industries

Virginia Dare Stores
Kingan Co.

1-1286-1287-1288
Direct Wires To

10 Y
qtuf

Phlla. & Log Angles

Seligman, Lubetkin & Co.
Incorporated

ENTERPRISE PHONES

nitttrdfim

Buff. 6024

Broad Street, New York 4

J.K.Riee,Jr.&Co.

v..

■

Members New York Security Dealers Association

Bps

HAnover 2-2100

Members

Established 1908
N.

Security

REctor 2-4500—120
Bell System

Dealers Assn.
Broadway

Teletype N. Y. 1-714

SIEGEL& CO.
G^DIgby 4-9879

89 Broadway.

Teletype

NY*

1-1048

Volume

1641 Number 4552

THE COMMERCIAL & FINANCIAL CHRONICLE

Jenks Kirkland Partner^

Export-Import Bank and
||Repaymerit Problem!

PHILADELPHIA, PA: — Jenks,
Kirkland
&Cor?1421 Chestnut
Street members of ihe'hffew York
arid

Philadelphia Stock Exchanges,

will

^admit Lawrance A."Brown! to
partnership "_asof^amjgry;!... its

AMERICAN .MADE

MARKETS

CANADIAN

SECURITIES

Bank of Montreal

Bank of Nova Scotia
Bank of Toronto
Can. Bank of Commerce
•!'.•••/3 v'«>

;

A'-

■

/ •* >• -

■ ■.

~■:

•

Dominion Bank

Imperial Bank of Canada
Royal Bank of Canada

62 WILLIAM
,

HAnover 2-0980

ST., N. Y. S

Bell Teletype NY 1-395

Toronto

Montreal

New York

Galveston Houston

Jefferson

Lake

Com.

Sulphur

Pfd.

.':y

•'

r Jonas & Naumburg
Lane Cotton Mills Corp.

Standard Fruit &

S/S

& Pfd.

Com.

T. J. FEIBtEMAN & CO.
Members New Orleans Stock Exchange
New York 4,
41 Broad St.

New Orleans 12, La.

N. Y.

Richards Bldf. Arcade

■> .*?:

Bo. 9-448X

BeU Tel.—NY-1-493

American Insulator
.

San- Carlos Milling

'.-v

/ Albert Pick
Carbon Monoxide Eliminator
American

Beverage'

-M Preferred

:j-N-JMD

:V T

PETER BARKEN
New York 4, N. Y.
*•"/!' Tele. NV1-2501

32 Broadway,
Tel. WHHbeViali

Closed shop probably will not
he outlawed completely. Better
guess

4-6430

is that Congress will erect

safeguards about the right of the

Specialists in

individual to work.

►

Domestic, Canadian
and

Philippine

Mining Issues
coming Congress both

In the

Republicans and Democrats will
jockeying for advantageous

positions in the 1948 elections.
harmony
will mark
tax,

Brokers

budget-balancing, tariff and
bor legislation.

(Continued

la/

Political oppo-'

page

3255)

62 WilFam St
•••■••>

Dealers

Securities

Investment

Telephone

New York 5, N. Y.
Teletype
?v%NY-1-2613

/
j

•

. -

WHitehall 4-2422

Branch Office
.

?;■

113 Hudson St., Jersey

American Maize Prod. Co

City, N. J.

Tybor Stores

Common
;

'•*

<V%

j }-

Bought —' Sold

Quoted

'\'y*t y

•

Punta

fllegre Sugar

Quotations Upon Request

F AR It
Members

New

& CO.

York

Stock Exchan

York Curb Exch. Assoc. Mem\
New York Coffee & Sugar Exchan

New

63 WaU

MEMBERS N. Y. SECURITY DEALERS ASSOCIATION '

/ *

Street, New York B, N. Y/, T Bell Teletype NY 1-897

120

WALL SL.

TEL

NEW YOI

HANOVER"2-0f J2

THE COMMERCIAL & FINANCIAL CHRONICLE

3206

Thursday, December 19,1946

BALTIMORE

Dominick & Dominick
Baltimore Transit
All

Co.

Dominick & Dominick, 14 Wall

Iitttti

Bayway Terminal

National Sash Weight

Preferred

STEIN BROS. & BOYCE
Members New York St Baltimore Stock

Exchanges and ether leading exchanges
S.

CALVERT

BALTIMORE 2

ST.,

Bell Teletype JBA 393
Near York Telephone BEctor 2-3327-

Manufacturing Co. •

American Air Filter

Berkshire Fine Spinning Assoc.

American

Dwight Manufacturing .Co.

Parker

Consider H. Willed

Appliance Co.'

Purolator

Ass'n

Naumkeag Steam Cotton
.

Turf

Girdier

Corporation

Saco Lowell

Murphy Chair Company

Shops'

brokers, of 30 ; Broad
Street, 39-14, and negotiations are
scheduled to

BOSTON 9, MA3S.
HANcock 8200

Teletype BS 424

Long Distance 238-9

foreign, markets for

ing toward a 40% increase in pay.
•The. union committee negotiat¬

mentation
ism is put
No

Hopkins,

added

the

staff

Co.,

South Grand Avenue.

one can

form and war,
the people of

the United

in
walk of
i life, are in re¬ War I and just as it
swung too
volt against far to the left after
1929. The
;> regulation and
ideal process now would be fto
regimentation.
V

think

the

LYNCHBURG
:

has

occasion

even

returns.

had

Utah-Idaho

•

American Furniture Co.
Bassett Furniture IncL

Sugar

•'

Amalgamated Sugar

24 Federal

Nov.

The

On the other

Tele. LY 83

whole

Not

only

elected

ESTABLISHED 1899

WHEELOCK & CUMMINS

salt Lake City I,

torious

LD 11

officials,

Service
well

Republicans

—

"Part

BROKERS and DEALERS

;

1946.

Mentis

Members

Request '

STOCKS

■

;

1420 Walnut Street, Philadelphia 2

Yorkfcs

Now

"•? J.

1898

v
'

•

CHILD,iNCj.
take

Members Salt

Stock

Los Angeles

...v

Head of

Stock Exchange:

Exchange Building

Salt Lake City,

Teletype SU57

not

♦

;:''.:..;Phohe 5-6173

and Los Angeles,

Foremost Dairies, Inc. f
Common & Preferred

■>

■

Federal

new

•

Agency

simple

propose

Over
■

jWinit & Lovett Grocery Co.

Available

;

v...:

■!,

1946
Low

Textile Securities

discount

approximately
from net current

:1>J' ;V'.'{. I:".

Common A Preferred

a century of
leadership in
Complete lire protectioa: ~

date

Properties

Municipal & Corporate Securities

Barnetfc Nat'l Bank Bldg.

Jacksonville 1, Florida
"Long Distance

47
Teletype JK 181
Branch-HSt. Petersburg,. Fli.

♦

».

BOENNING & CO.
5-8200

Private Phone to N. Y. C.
COrtlandt-7-1202

I.D.U
>

Empire Steel

Pittsburgh Railways Co.

Cons. Rock Products
/

Sterling Motor

Tel.

WEST

6th

STREET

2529

Tele.

Exchange

from

Pac. vStd.

10:45

Timet

1946

H. M. Byiiesby &

ll:30i

Sp-82

675

Stock Exchange
Bldg. Phila. 2
Telephone •
*;••• Teletypes
Rlttenhouse 6-3717
PH 73

it for the fu¬

Sense,

industry. tion's

Not Monetary

Manipulation

The first point X warit to make
about this act is that it does pot

DealersUnderwriters

Peyton Building. Spokane
.:rBranchee^
;

at;i:Vv;^-^^':vV.-V

operation.

clearly that the na¬

business

tremendously
complicated process, in whose di¬
rection many agencies, public and
private, have essential parts. 3t

recognized, too, that each of these
agencies must have

great deal of

independence to adapt
An' address by Dr. Nourse be¬
operations flexibly to chang¬
fore 51stCongress pf Industry ing' conditions^ and Bpariiculi^
needs. At the same time the Con¬
conducted by the National Asso
ciation
of 'Manufacturers,^" New gress recognized that, if this loose*:
\
York Gityj Dec; 6,; 1946.
(Continued nnk.psagfil3232)
;
•

Kellogg, Idaho and Yakima, Wn.

peacetime

individual

Members Standard Stock. Exchange
of;Spokane..
■: ■;.
Brokers

sustained basis of efficient and

prosperous

It recognized

ture benefit of American

STANDARD SECURITIES

upon nroney, magic as a means of
getting out of the artificial condi¬
tions of wartime business on to

OL Dr. Edwin G. Nours®

Managerial

•

its

)'^!M
^' -0'

<
U*- "3s:

thejse

legislative consideration and re¬
draftings the Congress definitely
turned its back upon any single
type^
■.$ remedysjiecificaljy

full

take

"<■;

CORPORATION

Company

are

advantage

Floor (

Act
and

■■

in the hands of the Chief Execu¬
tive for bis
ndministrativeapplication;
During the process

meaning
of
the Employ¬

other hours.

PHILADELPHIA OFFICE

ANGELES, 14, CALIF.

Trinity

to have

Warner Company

OSCAR F. KRAFT & CO.
LOS

Quotes call TWX Sp-43

AJlL.

Truck

Wawaset Sec. Co.

530

business,

ment

any simple panacea for
business ills,. Jt jbXfers; nu
tri^k
remedy which the Council of Eco¬
nomic ; Advisers is supposed; to
wqrk but, by a formula and put

es-j

correct under-

For Immediate Execution of Orders

Common & Preferred

Common

are

NORTHWEST MINING |
SECURITIES

Botany Worsted Mills

with corpora-

propose

nature. and

Empire Southern Gas

Disney

standing of the

American Box Board

Common & Preferred

Walt

ican

SPOKANE. WASH.

Seaboard Fin.

sential if you,

LOS ANCELES

trick

Compares work of Council

as, representa¬
tive of Amer¬

Teletype SPBG 11

point'y'',

solutely

SPARTANBURG, S. C.
.

•

Employment Act of 1946 does

asserts

panacea

judgment ab-

;;fr% I

(Established 1892)

PH 30

fl. M. LAW & COMPANY

1606 Walnut St., Fhiladelpbla
$
PEnnypacker

ijriek,

three
are

Clyde C. Pierce Corporation
Florida

•

v - vThe time at my disposal is (wife
*
what
to say can be boiled down to three rather
simple; points.
But

assets.

high—,r— 19
to

•

';rAND

and responsibility to maintain high prododioii.
Says law siipplements and aids private business and assures it a more favorable
environment
Warns business against its own testrictive controls."

Southern

American-La France-Foamite
i.

■

top' management. planning, and coordination, sfnd points out
jy Acttbat'it is government's continuing
policy
•

Chairman, Council of Economic Advisers
i.

the nation's business.

SPARTANBURG

/i;y>.

3245)

page

remedy for business ills.
Holds money manipulation to maintaiii
employment i$ not intended
and that statute is merely a broad
enabling act for iystematic study

Utah

Private Wire System between

Philadelphia, New York

JACKSONVILLE, FLA.
V\;y

By EDWIN G. NOURSE*

■

v:i p BROKERS

Pittsburgh, Pa.
Hagerstown, Md.1,
N. Y. Telephone-—WHitehall 3-7253
i

Bell Tele. DM 154

Established

W. H.

EQUITABLE BUILDING
DES MOINES 9. IOWA

;
-

New

York, Philadelphia end]
;lot Angeles Stock Exchanges
I
Also Meimber of
• r
•
\
New York KJurh1 Exchange

Bo~ught-~Sold——Quoted

♦

(Continued

;

Full Employment Act and
The Economic Future

UTAH MINING

BUCKLEY BROTHERS

3*30% Preferred Stock

:♦.;.v4"1.»

mission is prepared to initiate re¬
finements in the/, law now. that
we have had time to
recognize" a
few imperfections.
This is not

ton Chamber of Commerce, Hous¬

Philip Carey Mfg. Co.

Light Co.

at the arinual dinner of the Hous¬

JL_

mission and Securities Exchange
Act of 1934. The Chairman of the
SEC has indicated that the Com¬

pro¬

pf address of Mr. Schram

ton, Texas, Dec. 17,

apparent in

represent "already has
learned to live happily with the
Securities and Exchange
Com¬

vic¬

are

were

industty

which

de¬

—

hostility and supercilious¬

which

ness

certain quarters in the past. The
section of the securities

Utah

TRADING MARKETS

Gruen Watch Co.,

Iowa Power &

'»

some change
already discernible. Coopera¬
legitimate, honest enter¬

tion with

climate

ceeding to heed the mandate

BELL, SYSTEM TELETYPE SU 464

No. Indiana Public Service Co.

hand, there should
change in the attitude of

for

INCORPORATED

Phono 4-7159

160 S. MAIN STREET

tl: PHILADELPHIA

those in the Civil

IfiiiiiAiiiiiiiiiiiiiiiiiiiiiiifiiiiiiiiiiiitjii

DES MOINES

some

administrators. And

Washington already is "differ¬

feated Democrats

COMPANY

Lynchburg, Va;

Tele. BS 128

progress

studied

EDWARD L. BURTON

Scott, Horner &
Mason, Inc.

Street. Boston 10

cannot be

prise should replace the kind of

ent."

Request

Tel. Hubbard 3790

reenacted.

clock

Washington on business in recent
weeks has found that many people
there have changed their attitude

Dan River Mills

Walter J. Connolly & Co., Inc.

sense

eventually

inevitably will be

The

but also appointed ones and even*
on

the

since

Trading Markets

Boston & Maine BE.

Circular

dis¬

Many of the
1930s were long

turned back.

Cer¬

reforms and

ones.

repeal laws which

and

anyone

bad

overdue; it does not make

election

tainly
who

good

the

reforms

;

who

follows

the

miiiiiiiuiiiiiiiiiiifiiiiiiiBiiiuxiiiiiiir

card

Supreme

Court
Emii Schram

keep the

as
o o

said that

SALT LAKE CITY

Prior Preferred'

every

.:< •

609

&
Light

the polls. That shows that Amer¬
ica is still American!
^; The danger, of
course, is that
the pendulum will
swing too far
to the right as it did after World

-States,

Bell Tele. LS 186

Utah Power

without knowing that there
economic thinking. After

scene

;

the national

survey

destroy

may

our

sharp turn to the right in political and
:
dpprpggfniiJrP.A " -v

*;•

Harbach * &

parity guarantees

pnce

prodacts* Contends system of price regi¬
puts farmer on defensive just as labor union favorit¬
on defensive/ Warns rising priceV threatea our
prosperity.

to The Financial Chronicle) * \y

have been

Floor, Kentucky Homo Life Bldg.
LOUISVILLE 2, KENTUCKY •

and points out agricultural

look¬

LOS .ANGELES,? CALIF.-vApt
thur J. Burns and John W. Mears

Incorporated
1st

commence soon

and that securities

among

Hopkins, Harbach Adds

IS! BANKERS BOND

31 MILK STREET

conducted

[

retained.

Lab^r

election

(Special

Pont, Homsey Co.

CIO,

Says government regalation of bnsiness is hers to stay
regnlation will continue, but criticizes Federal
the employees of all < classifica¬
Reserve Board for destroying loan value of listed securities*
Urges
tions at Herzfeld & Stern,, stock
;/ more self regulation in botb security and commodity
marketing,
and bond
Board

inquiries Invite#

sees danger in sliarp turn to
right going too far as
after World Waif L and cautions desirable reforms should be

Winn & Lovett Grocery

Mr. Schram

The -United Office and Profes¬
sion^ Workers of America,
last Friday won a * State

ing salary.

Products

Warren Brothers Class'"C"

President. The New York Stock Exchange

In Favor of GIO Union

ing a contract with the East
Brooklyn Savings Bank said that
yesterday the bank had agreed,
among other things, to .a- $10: a
week raise for employees earn¬
ing up to $50 a week, a 20% raise
fort those earning more than $50
a week, and a $35 minimum hir¬

LOUISVILLE

BOSTON
Bates

Surveying the Post-Election Scene

Employes Vote 39*14

and other

Monumental Radio
,

Street, New York City, members
Exchange,
leading Exchanges, will
on
January 1 admit Graham D.
Mattison, Walter E. Conway, and
Walter C. Winter to general part¬
nership, and Richard B. Dominick
to limited partnership in the firm.
On the same date, Gayer G. Dom¬
inick, William C. Beach, and Ed¬
ward K. Davis, general partners,
will become limited partners.
of the Ne"to York Stodk

Davis Coal & Colit

Herzfeld & Stern

Partnership Changes

:i .5*?

iVolume 16,4

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 45,52

The BritisK Token Import

Harold SmHk

Plan

Director, Commodities Branch
;*"?/.
;.^Office of Intemational Tradej Pepartment of Commerce

Resign

(Special to the "Chronicle")

World Bank

Executive

to.day announced
of

Harold

■

D.
1

dent".

;

Office

wanted to

give

monopoly gains during

war

the next pres¬
ident
of
the

government restrictions

institution

unless removed,

to restore free

com-

„

traders

Trade,

termination of

tails of the agreement, they will
increasingly seek to take advan¬
tage of this opportunity to make
their products available to British
consumers. One trader whoquick^
ly realized the value of this re¬
opened trade commented: -"The
British Token Import Plan means

the

De¬
partment of

Commerce,
with the Brit¬
Board

Trade.

of-

Short¬

after

the
the

war

OIT, recogniz¬

basis which will

on a

traders

selection

existence of my com¬
He estimated that poten¬
tial profits to his business would
eventually exceed $500,000.
-

20%

export

permit

i The British Token Import Plan

reopening of

permits the

estab¬
in

connections

trade

lished

the

United

Kingdom.
The Plan has
been extended, so far, to cover 117
products which range from gar-

continued

their

on page

3238)

t h

This, he characterizes

"false economy." Attacks mergers

Smith,

President,

enterprise

remain

make

known.

out

directness
and
clarity
have often been confuse
with politics and with emotion, ,

ficient

the all-

fight
quired to

They

re¬
save

took his present

it?

Bank, he

;

Now is the. time to present" tcl
American people a graphic
and effective picture of two facts;
First, that the concentration of
economic power in this country ik
increasing; above Vv any previous
crest of monopoly in our
history;;
second, that the decrease of inde^
pendent business will • continue

the talk about

post at the World
quoted in the press

stating in effect that the salary
too good to pass up.

Sources in
to

know

Mr.

mind

will

and

however,1 that
things in

other

has

not

remain

the World Bank, after .a new

dent takes
the

-Smith

over.

Vice-Presidency-

request

with

linked

and

his

with

presi¬

assumed

Meyer's

resignation

Meyer's resignation.

understood that Mr. Smith

intended

lip

the

just

service

;

paid

tors to

ora¬

sym¬

bol which has
no

our

reality

unless the causes of

economic

life;

talk

which

removed

are

and

concentration
power of

the

monopoly is broken. As it stands
at the present moment, the Amer¬

Wendell Bers«

they

indulge to
j '
whip up public feeling for

ican people do not have control
some

selfish purpose?

their economic destiny and as time
goes on

I do not think it is

offer his resignation

earlier, but that Mr. Meyers urged

all

economic

freedom

ah^ exc^Wf position

indicate,

Smith

icari
Do the Americ

people really want the antitrust laws enforced? Do they care enoug
about
free
v
■ \<$>competitive
have not been presented with suf

would

recalled that when he

influenced by profit incentives of investment

I begin tonight by asking the blunt question:

e r

is not

was

bankers and other financial interests.

IW h

if
requested
by
the incoming

was

Cites

competition. Says Dept. of Justice aims

assist¬

Mr.

It will be

history, and

competition but is handicapped by small appropria¬

and consolidations

;

Harold P. Smith

our

the. reduction of small businesses, and

imme¬

ants.

The Enslavement of Labor

tions.

is greatest in

diate

fully understand the de¬

very

dangers threatening freedom

independent business will decrease.

his

pany."

ing the impor¬
John C. Borton
tance of quick¬
ly restablish—
ing trade channels with the United
Kingdom, especially of branded
trade goods, worked out the plan
in cooperation with British offi¬
cials

hand

Trade anticipates that when U. S.

ternational

ish

free

annual prewar exports
for certain base years; ~" V < ; ^
i The
Office
of
International

In¬

not aroused to

are

opportunity, antitrust enforcement official contends

explained
that Mr.Smith

average

ranged by the

economic

concentration of economic power

An offi-

cial

the

ar¬

Smith, Vice-Presi-

Millions of dollars in trade opportunities have been opened for
international traders with the establishment of the British Token

Import Plan
through
an

Assistant Attorney General of the United States

Asserting people

Directors

the1 resignation

agreement

products in the three years prior to war. Says number of
commodities have been expanding andplanisonly part of oyer-all
areas.

Independent Business
By WENDELL BERGE*

WASHINGTON, Dec.? 18.—The

such

mercial relations in all

Threat ' to

4s V.-P. of World Bank

Commerce Department official describes, arrangement wherebjf BriU
ish Government permits American manufacturers to export to
Britian' certain commodities up to 20% of the average amount of

"effort of Office of International Trade to re-establish normal

3207:

possible to¬

night to give the final

to.

answers

these questions. The answers will
unfold with the development of
events in the next few years. But

they may lose their free¬

opportunity, if the trend-

dom
to

concentration

checked.!

is not

The

people's ; reaction to these]
facts; will determine the path wei
By MATTHEW WOLL*
acceptance until now.
are to, take-.-whether we shall gd
Vice-President, American Federation of Labor
there are signs that the people are the way, of
monopoly; towards!
not aroused to the danger that scarcity, poverty,' and the loss of'
Prominent labor leader attacks Russian communism as enslavement
threatens the freedom of econpmic democratic
political institutions,
Henry Oltman Dead
of
opportunity in t^is country. It is or whether we shall secure for
£w|at$ratfg^jSpj' C>
Henry Herbert Oltman, mem¬
my personal belifef that once alert ourselves and for futhre genera?
cites examples of building "war centers" by forced labor. ^Points
ber of the New York Stock Ex¬ to the
crisis, the American people tiohs genuine economic freedom^
out totalitarian state is complete antithesis of Christian democracy
elective
govern¬ The time has come when decision;
change, died at the age of 74 after Will" demand
mental action against those mo¬ must be rhade.
I
a
brief .illness. Mr.- Oltman had
and accuses commuB;sts of instigating a state of terror here "under
nopolistic forces that threaten the
been a member of the Exchange
Monopoly Problem More Serious?
destruction of independent busi¬
guise 0 abolishing-tyranny-o£ private capitalist property/' Pledges
since. April 12, 1900, succeeding to ness opportunity.
The monopoly problem is today*
But, in my
[ AFL to support of democracy and lays distressing failure of world
the seat held by his father John opinion, the issues and the facts more serious than at any time]
since the passage of the
peace to absence of International Bill of Rights.
Sherman]
B.-Oltman, who died on Feb. 15,
Act.
If monopoly power
follows]
t *An
address by Ml Berge be?
It is now approximately 50 years since .the great Papel Encyclical 1900. In 1934 he became a partner
its traditional course, we can ex-;
fbre Chicago Chapter, New Coun¬
in the firm of Chisholm and Chap¬
was presented to the world by Pope Leo XIII on the subject of capital
cil of American
Business, Chi- pect higher prices, limitations on]
him to postpone insistence on its

■

labor.

This

..•i- ;,

nouncement

made

the

fronts

labor

people

that con¬

the

world

clear

that "

—-

This is the great danger

Pro¬

today.

regarded

(Continued

heyday of the

on page

3230)

this

firm •'

was

C&kQ, 111.,

article

Co., he became
latter.

human

3250)

Pont company in
seat

Rliodesian Selection Trust

1942 but kept his

the Exchange.

Gaumont-British
i

laborer

himself

CORPORATE

must

always

interest

are

ot current problems.
have problems

1X5 BROADWAY

World

T.letyp. AT 288

Teletype NY 1-672

GEORGIA
Xsong Distnnce 108
1,

Suliivan-Waldron Products Company

that

followed

Getcliell Mine, Inc.

COMMON STOCK

Yuba Consolidated Gold

Manufacturers of the NationallyKnowh

"WHIPSTER"

•

/if

PROSPECTUS ON REQUEST

Fields, Inc.

........

,•>.

<.
BOUGHT—SOLD—QUOTED

peoples of the world,
be

Other Principal Exchange*
NEW YORK 6, N. Y.

Anchorage Homes, Inc. A & R

confronting

War, and now the
Second World " War, with their
ever-present sense of insecurity,
have
initiative of altogether too many

greater disaster
th any; nationfjth5n,-for Ihe people
ixk lose

ATLANTA

BLDG.

the first World

can

Dept.

Telephone BArclay 7-0100

Established-1894
RHODES-HAVERTY

perplexing and the ways strewn
with njore. hidden pitfalls than at
present. The long years of struggle

.There

'* ^

•,''

discussion
-

both Church and Labor been

of the

!//;■'.•r »;>; '*'}*'

Members N. Y. Stock Exchange and

not overlooked.

nificant frame for the

Old

•; *■

Goodbody & Co.

Despite the time which has in¬
tervened, the profound wisdom of
the
observations
of
the
Holy
Father continue to provide a sig¬

the

British Securities

guarded. At the same time, the
rights of property and of individ¬

of lis

Matthew Woll

vital

initiative

LOCAL STOCKS

safe-

Scopliony, Ltd.

BONDS

borne in mind
his

STATE AND MUNICIPAL BONDS

dignity of

on page

member of the

worth

and

the

ual

(Continued

;

resigned from the du

commerce,
but
that
the

and

Dec. 11, 1946,

merged with Francis I. du Pont &

chattel

mere
or

arise and the

ets

must never be

It is then that false proph¬

when

and

man

coi^ijJchCC^^iheinse|ye$;
hr.
V;-uAv?;

F. H. KOLLER & CO., Inc.
,

■

Members N. Y. Security Dealeri Ass'n,.
Ill

Knights
of
Columbus
Forum,
Brooklyn, N. Y., Dec. 3, "1946.

BROADWAY, NEW YORK 6. N. Y.

>.'i

New York H anseatic Corporation
|

120 BROADWAY, NEW YORK 5,

Telephone! BArclay 7-5660

BArctay 7-0570

NY 1-1026

N. Y.

Teletype: NY 1-583

THE COMMERCIAL ft FINANCIAL CHRONICLE

-T>

,1'V

Thursday, December 19,

1946

wtmrnm^

trend

ent" downward

rates

Monetary Fund Announces Initial

of 5^-6^ % seems logical.
Assuming that the pipe-line en¬
terprise is financed 50% by 3%
bonds,
25%
by
4%
preferred

range

Par Values of Member Currencies

stock, and' 25 % by equity money,
the

American Light

return

the

latter

might

M. Gutt, in press conference, issues detailed explanatory statement,
■j citing unprecedented features of Fund'* operations beginning ■>y
March 1. Denying that Fund Has disagreed with proposals of any
member; he states that initial par values are in all cases those <

work out at 12-16%; to allow for
contingencies these figures might

and Traction

to 10-15%. How much
sub-holding company in the
can
American Light & Traction
about 40% of system
earn
(per share on its own com¬
gas business, with a
mon stock) from the new Invest¬
relatively small proportion of electric and miscellaneous sales. Nat¬
ment?
On the basis of our as¬
ural gas is obtained from southern fields by purchase from Panhandle
Eastern Pipe Line, and manufactured gas is distributed in Milwaukee. sumptions as above, the figure
be reduced

Light & Traction is a

American

United Light &: Railways system, controlling
assets.
Its subsidiaries are principally in the

•

proposed by them, and based

existing exchange rates.

(Special to the "Chronicle")

WASHINGTON, Dec. 18*—In a long-awaited announcement the
would appear to lie within the International Monetary Fund today published the list of initial par
is Mich-<3>
to
provide the required equity range of 65£-$1.40. The latest in¬ values of
igan Consolidated Gas Co. servic-'
terim earnings were $1.60; de¬ members' cur¬
mination of their par values for
ing the Detroit area; others are money. At the end of 1945 the
a period, which is not defined in
Milwaukee Gas
Light, Madison top company had over $9,000,000 ducting dividend income from rencies, as re¬
Detroit Edison and crediting the
the Articles of Agreement.
The
(the consoli¬
quired by the
Gas & Electric, Milwaukee Solvay net current assets
Arti¬
nine countries mentioned above
Coke and a new company, Michi¬ dated balance sheet showed over preferred dividend (since the pre¬ Fund's
ferred is being retired) would ad¬ cles of
as
having postponed decision on
$22,000,000). Current assets were,
Agree¬
gan-Wisconsin Pipe Line Co.
of course, largely in cash and gov¬ just the figure to $1.33. Addition ment. :;N i n e
this question include six war vic¬
Michigan Consolidated Gas re¬
ernment
bonds.
The
tims: China, Greece, Poland, Yu¬
company of the estimated pipe-line earn¬ countries have
cently announced in full page ad¬
owns
a block of 1,289,200 shares
ings would raise the figure to requested fur¬
goslavia French Indo-China and
vertisements
that
the
Federal
This estimate ther, time to
of
the
Netherland
Indies.
Other
Detroit Edison (about one- around $2-$2.75.
Pbwer Commission has granted
once - enemy - occupied
fifth of that company's stock) does not adjust for possible sav^ fix their pari¬
Countries
authority to Michigan-Wisconsin
which at the recent price levels ings in parent company overhead, ties, but in all
like Denmark, Holland, Belgium,
Pipe Line to construct a natural
would be worth
an
estimated possible increases in subsidiary other cases
Luxemburg and Norway are not
gas pipe line from Texas to Mich¬
on this list of exceptions.
$30,000,000 after allowance for taxes when reported on an indi¬ the Fund has
;' ,
igan and Wisconsin. Customers in
vidual company basis, or similar
sales "shrinkage." Hence, the par¬
accepted the
the? Detroit district, according to
refinements.
;

The principal subsidiary

the:

advertisement,
will have
available, on completion of the
pipe line by 1949, some three
times the amount of gas that was
available in 1945. In the interim,

ent

might have about
available cash after

would

have

stockholders

are

entitled

time, and it seems premium must be settled by the
SEC and the courts. Allied Chem¬
probable that the recent coal
strike (which resulted in leasing ical, a large holder of the pre¬
of the Big Inch and Little Inch ferred, some time ago suggested
that stockholders were entitled to
lines to Tennessee Gas) may have
had something to do with expe¬ $40 a share instead of $25, on the
diting the FPC decision by a ground that in a free investment
SEC for

some

three-to-two

Whether

vote.

the

SEC will also prove amenable re¬
mains uncertain. American Light

market

about

the
a

stock

3%%

would

basis.

staff recommended

sell

The

SEC

compromise
8* Traction has been slated for figure of 33, but this has not been
dissolution for some
time past, ratified by the commission itself,
is
still
and* the commission has appeared which
pondering
the
rather reluctant to approve the question.
To retire the preferred at par
pipe-line financing because of the
approaching dissolution of the top would require $13,400,000, at 33
company. However, formation of $17,700,000 and at 40 $21,400,000.
the* new pipe-line company pro¬ This would leave about
$18 to
vides
new

vehicle for

financing the

line.
the

company

bonds and preferred stock.

It ap¬

likely, however, that

com¬

stock will be held within the

system and that American Light
& Traction may use its cash assets

nected

subsequently was

with

con¬

financial

several

there, most recently with

prove

joy
in

the new company should
successful, since it will en¬

assured market.

The FTC

the past has usually

allowed

about 6-6^% to be earned

in¬

vestment although with the pres-

Hartman, Smith & Mann, Inc.,
being formed with offices at 19
Rector Street, New York City, to
engage in a securities business.

are, Herbert D. Smith,
President ' and
Treasurer,
and

jThomas W. Mann, Vice-President

many

Secretary.
Mr. Smith was
previously associated with GamCo.

Mr.

Mann

was

'
_

From

'and

y;/

tral Nazi gov¬

some

of age.

bil¬

ReichsAll

marks.

and formerly, a general
partner in Jenks, Kirkland & Co.,

400

lion

Stock Ex¬

was

institutions

•

change,

failing health. He

but

minor

fraction
this

years

debt

held by

banks

financial

and

institutions.

Raymond A. Kupfer Opens

The
used

DETROIT, MICH.—Raymond A.
Kupfer is engaging in a securities
business

offices

from
He

was

Herbert

formerly

with

Nazis

financing
'

war.

There

campaigns

"si-

the

ent" system of

M. Bratter

13750

Straus & Blosser and Crouse & Co.

■

were

war

the
bond

national effort to

The financial

sell to individuals.

now

naturally
in
complete de¬
fault,
totals

George Estabrook Brown, mem¬
York

— •

ernment,

Hageman Corporation.

of the New

standpoint, military government in Ger¬
receivership for a bankrupt nation. The direct debt of the
a-vd ef unct cen-^financial

the

with

George E. Brown Dead

BRATTER

excess

bank official.

Officers

Dexter.

list

of currency and deposits, which are
backed merely by defaulted debt of defunct Nazi Government, cor¬
respondent presents outline of bank reform plans proposed by U. S.
Military Government. He includes critical comments of Reichs-

Panhandle Eastern and Tennessee

Gas,

among

the

parities announced today. These
are Brazil, Uruguay and the Do(Continued oil page 3262)

By HERBERT M.

Pointing out present

are

from

German Bank Reform

Hartman, Smith & Mann
Forming in New York City

ber

missing

|fhe American Plan for

A. M. Kidder & Co.

well

three Latin-'

countries

In 1902 he moved to Mon¬

and

houses

those

Agreement on the
Fund, members which suffered
enemy occupation during the war
are
entitled to postpone deter-

died at his home after six months

Judging from the history of
finance the other pipe-line ventures such as

new

will, in due course,
estimated $84,000,000 cost of the
project by raising a substantial
amount of funds by the sale of

mon

$26 million to invest in the pipe¬
line company.

Doubtless

pears

treal

On the other hand,

American

Bretton Woods

broker, died after a long illness,
at the age of 73. Mr. Colwell was
graduated from Syracuse Univer¬
sity and later was a financial re¬
porter for The Syracuse Evening
Herald.

Gutt

Camille

the

Under

Latin-American

Countries

members.

Louis S. Colwell, Montreal stock¬

pre¬

Delay

parities
pro¬
by the

Louis S. Colwell Dead

provide for re¬

non-callable

tiring its own
ferred stock.

•

posed

sale of the Edison stock. However,

Michigan Consolidated Gas will
This step has also posed a prob¬
spend $2,000,000 to enlarge its
stand-by manufacturing plant and lem over the last year or so, and
has been debated at considerable
to- build a new liquid petroleum
plbnt. Construction of the pipe length in SEC hearings and staff
line will be rushed to completion findings. While the stock is noncallable it is theoretically redeem¬
a# fast as materials
can be se¬
cured, after financing plans have able at par in liquidation; but
been approved by regulatory au¬ since dissolution will be involun¬
tary (due to the SEC "death sen¬
thorities, including the SEC.
The question of building a pipe¬ tence") the issue as to whether
line has been before the FPC and

company

$39,000,000

the

buyers. The
inflationary effects of the war
may be seen by a comparison with
the Reich debt in 1935, 15 billion
Reichsmarks,
During the same
were

of years the currency in cir¬
culation mounted from 5 billions

span

1935 to about 60 billions this

while net bank deposits in¬

year,

from

creased

billions

150?

billions.

mir~:y

The problem

today is not merely

of an increased supply of in¬

one

struments

purchasing power,
but also of substantially reduced
supply

and

production

services to

and

of goods
bought there¬

with.

From 1936 to date the

tional

income

the

na¬

four-zonal

declined

from

area

some

70 billion RM to perhaps 25
billions.
In view of the

four-power level-of-industry plan

Trading Markets in Common Stocks

for

;

'Bates Manufacturing Co.
Bausch & Lomb Optical Co.

*Crowel!-Collier

"Foremost Dairies

■i.V

*/V

h-V

Liberty Aircraft Products
Rockwell

•••"''

Germany, the national income
not exceed 50 billion RM by
The disparity between ac¬

may

1950.

and

tual

PRIMARY TRADING MARKETS

the

Birmingham Elec.

one

potential production on
and debt, deposits

hand

and currency on the other, is ex¬
treme. Germany has all the warinflation elements apparent in the
U. S., without the production ca¬
pacity to put real values back of

Indiana Gas & Chem.

Carolina P.&L

U. S. Potash

'"*y~ i 3*7

PUBLIC UTILITIES

Manufacturing Co.

"Tennessee Gas & Transmission
•

Germany

Mass. UtO. Assoc. Pfd.

Central Arizona L. & P.

Prospectuson Request

Paine. wtititht, Jawn & Curtis
ESTABLISHED 1879

Northern Ind. P. S.

Central Illinois E. & G.

Public Serv. of Ind.

'Central States Elec;

Puget Sound P. dc Li

Its inflated debt.

Citizens Utilities

Scranton Elec.

Cons. Elec. & Gas Pfd.

Southwest Gas Prod.

ki Germany's national wealth, that
Is the legal market value of real
assets in the country, has declined
from about 400 billion RM in

Consumers Power.

Southwest P. S.

1938

Federal Water & Gas

Consolidated Elec. & Gas Pfd.

Southwest. Nat Gas

Delaware P. & L.

Standard Gas & Elec.

War damage to

^Tennessee Gas &Trans.

*Gulf Public Serv.
All others traded

Central Public Utilities 5Ks, 1952
Portland Electric Power
6s, 1950

■■■"

Our

New

oicti

direct

private telephones connect

Col
f

BROADWAY, NEW YORK 6. N. Y.

i
..

;jy

...

Direct Wire to Chicago

aggregate

•

■ -

•

;..

Broadway
Telephone

•.

COrtlandt

New York 5
7-9400

TWX-NY 1-1950-2 and NY 1-2837-8

89 Devonshire

St., Boston 9

TWX-BS 208-9

'i
:

•*

175

at least

is very

sub¬

In Berlin alone, it is esti¬

mated repair of war damage

120

now*

property is esti¬

reparations, which

J. Arthur Warner & Co.

LAfayette 3300
,

stantial.

Los Angeles and Atlanta, Ga.

Incorporated

billions

about 225

billions, not counting the cost of

York, Philadelphia, Boston and Hartford.

Members of Nat'l Ass'n of Securities Dealers, Inc.

Gilbert J. Postley

mated

* Prospectus upon request

Direct private wires to

(Continued

page

will

3254)

Jl'

1 News dispatches from Germany
month
have., reported the

this

adoption of American
banking
proposals in the three Laender of
the'U. S. zone.,p^Ms article was
prepared by Mr. Bratter during a
recent visit to Germany—Editor.

5 Volume 164!

Number 4552 " •'

THE COMMERCIAL 4 FINANCIAL CHRONICLE

•

Essentials of British Export

Policy) J"ie', offic,a,5 Jead
For

By SIR STAFFORD CRIPPS*

President of Board of Trade of Great Britain

Support of New
Trade Agreements

......

32og

Wage Policy for 1947 Prepared

i//|/FoiCI0

High ranking British trade official acknowledges increase in British
An analysis prepared for the Congress of Industrial
Organizations
ITO
charter not expected to
exports will not ^olve .balance of payments problems -unless fully
by-Robert R. Nathan Associates, Inc., stresses the need of wage'
cause
Congressional trouble, but
manufactured goods aire exported and unless Great" Britain can
increases for the benefit of workers and the whole
economy and
duty reduction plans are exciting ?
obtain the kind of exchange required to. meet foreign commitments.^
■0 contends that an increase of 23% in wage rates is required to bring :
|opposition, y// /////^:// }•
Says only 14% of British exports go toU. S.and Canada, from
real weekly earnings back to
January 1945 level.
•
' * " •'
(Special to the "Chronicle") \
which 50% of import* come, and loans from these countries are
The following is-the text of "National
Wage Policy for 1947,"
; WASHINGTON, Dec. 17.—Un¬
4,;:rapidly bring exhausted. Defends exports at expense of home con*
prepared for the Congress of Industrial Organizations under the
der. State; ^Department/ auspices
sumption on ground Britain is now,debtor nation, and urges export
authorship of Robert R. Nathan and Oscar Gass by the Robert R.
Tuesday, representatives of vari¬ Nathan
Associates, Inc., Washington, D.-.C.;• *,•/ /\/. "V.'./":
• of
luxury items directed to nations whose exchange is required. | ous trade associations and pres¬
1. Recent economic tendencies^"
11 Sees need of greater home production.
sure
' ^w/
f
groups
we had
:

today

iS;'b ^ is perhaps hardly

necessary for me in speaking to an audience
intelligent industrialists to recapitulate the very obvious argu-

ments in favor

•;

coun- '•

enable
the

em-

phasize/ t h e/

par-

ticularly want
to bring out if
you will al¬

•

work

done

that

raw

terial.

what

ning his business at a reasonable
profit and expanding wherever he
the

opportunity

profit.

with

government, on the other
are
concerned
primarily
the

national

balance

sheet

and not with the profitability of

^individual

manufacturing ^con¬
that is why it, may

and

cerns,

sometimes

seem

to the individual

that action by the government is

not consistent with his particular
interest in the matter of exports.
the
compulsions placed
upon
the
government
by
the

Indeed

wider considerations must of

/the

desires

individual

producers.
That is why I welcome this op¬

portunity to put before you the
overall picture as we in the government

importing

were

before

see

With our existing level

war.

exports round about 110% by
of pre-war. exports, we
still well down

are

of payments.

today.

Exports have no national purpose or virtue except in so far as
they make possible the acquisition
of the foreign exchange which is

sumer

our

that

Wilcox

tative restrictions.

Officials expect no difficulty in
Congress over the charter for an
ITO which won't

come

before the

National Legislature before 1948.
But

opposition to proposed

circumstances

war

the

equivalent

tained

This

assumption that
of

creases

out

home-re¬

our

imports.

pre-war

the

uijder post¬

tot maintain

in¬

any

price roughly balance

overall between imports

exports.

This

and

give 4

would

roughly the
of

living

underlying uncertainty.
.

job,

persist

the

volume

goods and

this

hards

ser¬

being
produced, re¬
tail

sales

and

even

circles

division

tween

pre-war,

that

Tuesday's meeting with private
grbijbs follows the pattern; set. by
the State Department during the

"profitless

profits" in the face of the current

True, profits
considerably from industry
among firms in
a
single industry—but there are
few exceptions to the generalizavary

and

Seldom have

(Continued

page

different

population

will

sections

(Continued

least

therefore

was

when

earnest

ad¬

EVER WISHED
'1 \?«

Ij1 ■" yv,fc"

•

An ANALYSIS

/; ?

for

'k'

•' •

on page

3239)

Samuel M. Pearson will become
partner in Jerome Melniker &

T TAVE

Co., 61 Broadway, New York City,
members of the New York Stock

Exchange,

Gooods
more

export the greater will be the
need for imports of raw materials
we

security for

January 1,

one

interpret it?
1

RAILROADS

offer is

•

•'*'

highly speculative stocks. Consequently, investors
well advised to

use

extreme

most

useful services

thorough analyses

clear, down-to-earth style.
S

•

analyses

you—and

them

''i»f "r

of the

clients only to

Philadelphia lawyer

concise and

These
knRailroad securities range from high-grade bonds

one

our

—written in

your

We believe

. .v.

^ { e\

we are

,/ 1

of genuine importance

are

certain that you will find

helpful—as have others.

caution in order to

inost

nearly meet their objectives.
Our new study "Railroads"
gives a fair, factual assessment of
problems facing the indus¬
try. It examines
the

♦An address by Sir Stafford at
-the Federation of British Indus¬
tries'
Exportj Conference, West¬
minster, Eng., Nov. 27, 1946./
.

•

R. W.

Traffic trends, new equipment

requirements, competition, wages
and other aspects of this Impor¬
tant industry and provides

Revokes Suspension
15 on M. S. Wien & Co.,

effective

'Dec. 16, has been revoked
•

Securities and

Exchange Commis-

after

being

Joseph J. Lann is

assured

; the'^brokerage firm.
-

•

by the

sion. The Commission said it had

I acted
:

Nov;

tration

was

"without

The regis-

revoked for 30 days
com-

f pany was allowed, to reapply after
it complied with the

SEC order.

An individual

of 30
nent

Telephone HAnover 2-1700

NEW YORK 5

Teletype NY 1-993

analysis of each
201 Devonshire

leading carriers with perti¬
information

15 others*

"...•

>...

Street, BOSTON 10
.

\r.

••

.....

Members New York Stock

of "Railroads" will be mailed promptly,,
request There*s no obligation. Address Department
copy

GOVERNMENT,

that

longer with

prejudice" and the

•

Pressprich 8C Co.

68 William Street

suspension imposed

^'05 ^ ■; 'fd:

often procured'an analysis of a

you

find that it would take

choose those securities which

Export Fully Manufactured

The

■

»:fs\

ofANALYSIS?
an

Jerome Melniker Admits

the

Merrill Lynch, Pierce, Fenner & Beane
Underwriters and Distributors'of Investment Securities
Brokers in Securities and Commodities
70 PINE STREET

;

if'

vanced its trade proposals at Lon*
don this Fall.
:

be¬

not be the same

and

pre-war,

are

3246)

•>**»#

campaign for the Bretton Woods
program and the UK loan.
It is
a sign that the Administration at

though the

standard

are

to industry—and

uncertamty

of insecurity.

returns of business.

growing under¬

sense

base

present
prosperity."
It is sheer nonsense to speak of
"profitless prosperity" or "spotty

imports,

Yet there is

the

in their references to the

peacetime prosperity.

lying

and reflect this uneasiness

so-called

consumption,
and other
measures of economic activity, we
are in the midst 'of
unparalleled

exports

the. dieultra-conservatives in

and

uneasy

and

the p level

business and financial

vices

Robert R. Nathan

which

pessimism.,:.Even

overall standard

same

New

Exchange by about
$19 billion, or nearly one-fourth,
is only one manifestation of the

pre-

of workers

the

home

It will be obvious that the

value

the

Stock

controls is expected in 1947.

materials and con¬
goods that we require for

own

duty

calculation, reductions
and criticism of excep¬
tions to abolition of quantitative
exports in vol¬ trade restrictions and exchange

York

the

listed

/Despite the record level of cur¬
sly in, rent profits, the; more far-sighted
peacetime members of the business commun¬
seems " to
-be
ity "sense something unsound in
prevalent .to¬ the situation.
Probably it. is the
day. In terms very high level of profits and the
of the number
realization that they cannot long

international
Clair

reduced

securities

viou

the

raw

other countries.

achieved

has

the

break in the stock market

which

em¬

Prosperity far
beyond/any¬
thing ;ever

ITO,

explains
work

severe

during

;^1947.-^--;7:

Prepara¬

tee for

that necessary

ume as

achieving, /

consumption; the
raw materials we require for our
exports; and the capital goods we
need to equip our industries at
home and to export for use in

balance

Without going into

175% of pre-war

Those imports can be placed in
three broad categories. The food¬

stuffs,

on our

long explanation

necessary to enable us to main¬
tain the flow of imports essential
for the standard of life that we

aim

sometime

I may repeat the target figure of

ployment

pros¬

sharp decline in

tory Commit¬

ma[

the

such a combination of good
business and bad psychology; The

and

fear

nec¬

essity be contrary at times to the

hand,

losses, and

the

Delegation

low

volume

The

pect of

the

uncertainty

short¬

sees A

brought

V business

American

In other words,r. the .more
brains and craftsmanship we can

of the individual manufacture. He
is primarily concerned with run¬

;

headed

ly to lay before you the

London,

have

V/ instability, widespread

:where/he

gathering and
export the better for our balancb
V
*/
plead for supf
of payment position and thus the
port. At the same meeting Winr
higher our standard of living.
throp G. Brown, told about the
whole story.
Sir Stafford Cripps
The firSt major question is how
preparations being made for trade
: The attitudemuch do we need to export? At
agreement negotiations in coming
of the government and the nation
the present moment we are im¬
months, looking toward lowering
in this matter is, of course, bound
porting rather more than 70% of of tariffs and removal of
quanti¬
to be somewhat different to that
low

are

from

possible compared to the value

;

values

material

raw

points
•

^Washington

port fully manufactured goods in
preference to partly manufactured
goods, and we should prefer as
exports those goods in which the

easily to

second

policy,^ In^ general^we ^should exf

heard
Wilcox,
had just
/

returned;

category./That
points to the first principle that
we
should adopt in our export

try today, but
I' believeit/
will

the

under

for this

who

: <S>-

•

vigorous
export policy f

Clair

MUNICIPAL; RAILROAD,

UTILITY, INDUSTRIAL BONDS'

\ /"AND INVESTMENT
i

STOCKS

NEW YORK & N, Y*

Uptown Office: 730 fifth avenue

PUBLIC

Exchange

"<v;

•

»•

•

.•••

FINANCIAL CHRONICLE

THE COMMERCIAL &

Central Hanover Bank & Trust

bulletin—Laird, Bissell & Meeds, 120 Broadway, New
York 5, N. Y.
Company

Dealer-Broker Investment

—

ice

lar

Co.—study—Doyle, O'Connor
Co., 135 South La Salle Street,
Chicago 3, I1L v:;

Ralston Steel Car Co.

Circu¬

—

Lerner & Co., 10 Post Office

—

Square, Boston 9, Mass.

Northwest Utilities—AnalysisIra- Haupt & Com ;111; Broadw:ay> i£.TtdckweJl. Manufacturing Co.—
New York 0, N# Y. £, ; ■>- 7,.: ,e. 1 Analysis—Steiner^ Rouse & C04
2$: Brpad $■ Streets - New 7 York 4.
/

Recommendations and Literature
His understood that the firms inentioned will be pleased
to send interested parties the following literature:

Pfd.

Gas

and

Consolidated

and

'52

TJthlty -

Public

Central
of

study -and. analysis
W.

form—Fred

Electric

Comprehensive

—

Co.,
208 South La Salle Street, Chi*
Analysis—Service to dealers— Values for 50 securities, and the
cago 4, 111.
s "*.£<• 1
R. W. Pressprich & Co., 68 Wil¬ fortnightly investment letter con¬
taining a memorandum on Rail¬
liam Street, New York 5, N. Y.
Chicago North Shore & Mil¬
road
Obligations and some at¬
tractive -.Convertible
Preferred waukee Railway Co.—Brief mem¬
Automotive Industry—Summary
orandum on outlook—Brailsford
Stocks.
V.
r'

Fortnightly

evaluation

and

Survey
61 Broadway,

Business

and

Market

E. F. Hutton & Co.,

N. Y.

New York 6,

Guide to the

Perplexed—a chal¬

of pessimis¬

lenge to the barrage

with

statements—bulletin

tic

suggested stocks for income
and capital appreciation—Strauss
Bros., 32 Broadway, New York 4,
N. Y. ^; zi £ £.77

major projects

Bonds—Covers 33

nearly $500 .billions in
outstanding—in loose-leaf

having
bonds

the

i,77:7

v.:\i

Silver

Picture—Memorandum
current situation—Bache

Co., 36 Wall Street, New York

6, N. Y.'Aitf.

for

Investment Opportunities in the
Gas Industry

Fairman

Salle Street,

Fred W.
South La

Study
208

—

Co.,

Chicago 4, 111.

Industry's Outlook
Study — Delafield &
14 Wall Street, New

Petroleum
1947

for

—

Delafield,
York 5. N* Y.

Transactions in Marketable Se¬

Abbott Laboratories

Public Utility Holding Compa¬
nies—Current
developments—H.

Co., 60 Beaver Street,
New York 4, N. Y.
Also available is a table of Book
&

Hentz

CARTER H. CORBREY & COJ
national Association
of Securities Dealers

Member,

First

sion

—

and

Corp.;
pany.

Chemical

Sun

§p?£e:£7£7,..

DISTRIBUTION

Moreland &

Michigan 4181

run

/ s uq>

Wells-Gardner & Co.,

Coma

York

Gruen

circulars on

are

dum

bottleand

necks

ma¬

these odds

insur-

nearly

discussion of

mountable

Watch

"Business

ex¬

and

Co.—Memoran¬

Buckley

—

available

are

memoranda

Public

Service

Co. and Philip Carey Manufactur¬

memoranda

Hart¬

Empire; Lanova Corp.; Mo¬

Gulf, Mobile & Ohio Railroad—
Analysis—R. H. Johnson & Co.,
64 Wall

memorandum

International Cellucotton Prod¬

Lomb-i—Current

would

probably

Established

de¬

Co.

•—

Hanseatic

Analysis ^ New

Corporation \

York

—

velopments in the current issue of Broadway, New York 5, N. Y.
The Adams
Journal—^-Adams ;&

120

Co., J231 South La Salle Street,
Maryland Casualty CompanyChicago 4, 111.
/
Analysis of situation—Edward D.

Members Principal Stock Exchanges

Circular

Maine

Railroad

—

Chicago 3

Indianapolis, Ind.

Mass.

Rockford, 111.

Cleveland, Ohio

-.v

Fourth

sites, low taxes,

Co.

Memorandum

—

Indiana Public

Serv¬

Company—Detailed

—

Northern

Indiana Public

208

SALLE ST.

SOUTH LA

CHICAGO
Telephone
Direct Private

Bonds.:

4, ILLINOIS
Randolph
Wire

Beh System

Federal Reserve
1941

war

measure,

called

58?

York

Telephone
New York

8711

added inducement.

Philadelphia

••

;

located

dressing

poultry

/Teletype CG
Pittsburgh

He pointed
imposed by this
regulation on the use of consumer
credit compel monthly payments
out that the terms

on the part of buyers of such a
size that many people, particularly
veterans and familes in the lower

the

As¬

Bankers

0Qxr.

and

middle

income

groups,

are

prevented from buying necessary
things, such as automobiles, re¬
frigerators* washing machines, and
othef appliances.

inter¬
view held by
Carl M. Flora,
of

Iii"

Dec. 13.

Flora
-

First

? Carl M. Flora

273

Minneapolis

Milwaukee,

The committee held

meeting last
Drake,Chicago.
VThe

Consumer
has

week

September, the American Bankers
Association called attention to the

sin National Bank in

two-

The

'unwise, unnecessary, and expen¬
sive wartime controls that add to
the'consumer

Credit

Com¬

been

of war and after the war, we now

cost

the

whole

recommended that
Congress give 'immediate con¬
sideration to the propei
timing
nation,'

studying this
regulation ever since it was in¬
augurated," Mr. Flora said,- "and
while we supported it during time
mittee

statement announcing the
the Consumer fCredit

Committee, Mr. Flora said, "At its
annual convention in Chicago last

Wiscon-

the

action

Presi¬

dent

6% & 7% Preferred,

Incorporated

State

think it is outmoded."

Consumer

Vice

Byllesby and Company
-*"7^:C?

;y:L

been

■

was

for

mittee

Mr.

135 So. La Salle Street, Chicago S

4068

to New

.7.

have

Easy access to taw materials can
be inviting factors. Some of the
biggest packers in the country

which the Board of Governors of the
System imposed on the use of consumer credit in

day

have

which

these towns have fopnd
cases not only a new
labor supply but new plant facil¬
ities
for
rent—something more
than scarce in big cities today.
Lower costs of upkeep and repairs
gone into
in many

DEEP ROCK OIL CORP. Common

H. M.

Firms

commute.

Abolition of Regulation W,

Wis.
analyzing these

willing to work. But

are

are often unwilling ta move
from their home towns or even

Holds banks, by sound principles of financing

the "Commit¬

Brochure

our

women

credits, could avoid its inflationary aspect.

consumer

Chairman

We Maintain Active Markets in

NORTHERN STATES POWER CO.

5H's of '52

traditionally employ women
for expert needlework. There are
countless
small
towns
who?e
tries

of ABA Consumer Credit Committee* says
hardship on low

press

Serv-

INTERSTATE BAKERIES CORP. Common & Preferred

Write for

Siujh

the clothing indus¬

of order restricting consumer credit work

income groups.

tee

Utility

be rewards# by lower costs.

businesses

llOf Regulation iW
Carl M. Flora, Chairman

sociation

SINCE 1908

Central Public

large
or
small industiy
which locates some of its; plants
Ih small places is almost sure to

ABA Calls for Abolition

Wall Street, New York 5, N. Y.

Co., Inc., ' 40 Ex¬
change Place, New York 5, N. Y.

The

population of causing savings in time and trans(Continued on page 3212) *

American

Fred. W. Fairman Co.

study of
situation—Bear, Stearns & Co., 1

Buda

sufficient size and ability to sup-

Credit ? Com¬
Northern
ice

Luckhurst

plants in the broiler areas, thus,

the

—

Teletype CG 405

Tel. Franklin 8622

Coo 300 North
Street, St. Louis 2, Mo.

Walter J. Connolly &
Co., 24 Federal Street, Boston 10,

Chicago Board of Trade

10 So. La Salle SU

Jones
Boston

1916

•

Lower Costs tor Business

have

Paul H.Davis &Co.

locations.

homeowners. Good shipping facil¬

terms

Standard Screw.

pre¬

residents

matcrials

mak^ * thdiiSandfii pf
bibfaii'; cpmriltthiti^t Ideal factory

Street, New York 5, N.Y.

Iron & Steel; Barcalo; Haloid;

available is

have

which

good source of in¬
dustrial power, low living costs
and healthier living conditions for
the worker. The majority of the

requisites

access ta raw

ities, suitable factory buildings or

ing Co.

W. L. Douglas Shoe Co.;

ford

are

Indiana

cities

small

reasonable

cbnibihe ^d

I? when endeav¬ they

Roger W. Babson

Also available

ucts

^Prospectus Available on Request.

work-

skilled

Froedtert Grain & Malting Co.—

Memorandum—in

4, N. Y.

Bausch

*Seismograph Service Corp.,Com.

terials, f i n ds

Brothers, 1420
Walnut Street, Philadelphia 2, Pa.

*Jessop Steel Pfd.

ply diffi-

oring

Co., Penobscot Build¬

Also available

Also

Snap-On Tools Corp., Com.

into labor

larger industry, ;already
beset by a
shortage of

7erg,

.7———;————r-

.•

probably ply 7; labori demuncts $ along - with

£cultle$.

—

expanded,^———■*'

will

—

Hydraulic Press Manufacturing
Purolator Products; Upson Corp.;
Co.—Detailed Analysis—Comstock
Alabama Mills; Diebold, Inc.
& Co., 231 South La Salle Street,
Chicago 4, 111.:
Automatic Fire Alarm
memoAlso available are analyses of
randum
Mitchell & Company,
Long
Bell
Lumber
Co.,
and
120 Broadway, New York 5, N. Y.
Miller Manufacturing Co,

CG 99

-if

pand. The trend b turning toward
a very workable and perhaps the
Financial Digest"—Loewi & Co.,
only solution—decentral'zationl
Argo Oil Corporation—Descrip¬ 225 East Mason Street, Milwaukee
When we think of decentraliza¬
tive circular—Seligman, Lubetkin
2, Wis.
tion ■-of
industry
we
visualize
& Co., Inc., 41 Broad Street, New

650 S. Spring St.

135 S. La Salle Si
State 6502

Hickey,

New Haven Possibilities.

hawk Rubber; and Taylor Whart¬

LOS ANGELES 14

Street, New York 5, N. Y,

Also available is

ing, Detroit 26f Mich.

Also

>■

detailed

Service

solution of labor and materials.

Engineers
Public
Memorandum—Vilas

Holds
plants ih tmal! placer are rewarded by lower cosU and that envhonment*fivmgconditionsjandmoraleofworkers arebetter.Sayfi
11 rmaff cities aUo oifer aRractioh for management and fth^r families
/'/' Wer find ourselves todi^y at7 a point where the -more we expand
an industry the greater become our difficulties.
A jmaaU industry,

lack

49 Wall

■

Allied Paper Mills—Card memorandum—for dealers
only—

CHICAGO 3

Showers Brothers. Co.—-Analy¬

and other difficulties of. industry*

bottlenecks

shortages,

National* Cash

Corporation,

New York 1,

sis—Caswell & Co., 120 South La
Salle Street* Ghicagot: 3, J1L /7 i

ByROGERW.BABSON !

New York 5. N. Y.

MARKET

available

Also

•

Distillers

Fifth Avenue,

Decentralization of Industry

Northern

UNDERWRITERS

Schenley

Study—Hayden, Stone & Co.,- 25
Broad Street, New York 4, N. Y.
memorandum

Aspinook Corporation—Circular
—Ward
&
Co., 120 Broadway,

;£?£££

SECONDARY

Com¬

they have
running in the ChronicleMark Merit, In care of

write to
350

V ' 7/.7'-

Co.—Detailed

Products

Ekco

Engineering,

Pacific Coast

For

Unterberg

been

Herrick, Waddell & Co., Inc., 55
Liberty Street, New York 5, N. Y.

Tennessee Products and Wellman

Wholesale Distributors
Middle West

Memo¬

—

randum—Penington, Colket & Co.,
70 Pine Street, New York 5, N. Y.
Also available is an analysis of
Burdine's Inc.; Heyden Chemical

Wholesalers—Report
Broad Chicago 3, III.
Street; New York 4, N. Y.
Pipe Line

Co.—Analysis—C;

Trusi

/Mr. Babsotuee# dccentraKzatiou
Lackawanna RR NJ Divi¬

—

Mortgage "A"-4s~£
memorandum indtcatibg attrhcl
ernment—Circular containing in¬
tive yield—In the current issue of
formation and instructions rela¬
ffKailroad and Other Quotations"
tive to transactions with the Fed¬
curities of the United States Gov¬

Admiral /Corporation — Brief
memorandum—Dempsey & Com¬
pany, 135 South La Salle Street,

—Hayden, Stone & Co., 25

7/jScbenie^ distillersCorporation

&Co£61 JBroadway,New Ycrkb

Aircraft

Delaware Lackawanna & West¬
ern

Vultee

Consolidated

with supplements planned
principal new projects and
—-B. W. Pizzihi & Co., IhC.,25
major refunding operations. — eral Reserve Bank—Federal Re¬ Broad Street, New York 4, N. Y. f
serve Bank of New York, 33 Lib¬
Tripp & Co., Inc., 40 Wall Street,
New York 5, N. Y*
erty (Street, :New York City»
A. DePinna Co.—memorandum
form,

N.Y.

—Brochure of articles

Public National Bank

Corp.—Study—Penington, Colket
& Co., 70 Pine Street, New York
5, N. Y.

Revenue

Public

& Co., 208 South La Salle Street,
Public Service Company of In¬
£
assessment Chicago 4, 111.
diana, Inc. — analysis—First Bos¬
of the problems facing the indus¬
ton
Corporation, 100 Broadway,
Collins Radio Company—circu¬
try—A d d r e s s Department F-2,
lar—Adams & Co., 231 South La New York 5,- N. Yf . . ,:
^
Merrill Lynch, Pierce, Fenner &
Salle Street, Chicago 4, 111.
Beane, 70 Pine Street, New York
5, N.Y

■

••'*•

circular—

—

Seligman, Lubetkin & Co., Inc., 41
Broad Street, New York 4,- N« : Y.

Railroads—Factual

list of

Handbook

•

Osgood Company

in- brochure

Fairman

and

for the elimination of all war con¬
trols

and

activities

that

hamper

the functioning of the private en?

(Continued on page 3245)

.Volume 164

Number 4552

THE COMMERCIAL & FINANCIAL CHRONICLE

ifUtacks Federal Reserve Credit
Margin Controls -1111

First Boston Offers
Eastern N. Y. Pwr. Bds.

NSTANotes
.'

At the.

•

underwriting group led by
First Boston Corp. and ineluding Smith, Barney & Co. and
Merrill Lynch, Pierce, Fenner &
Beane, won the award of Eastern
The

New York Power Corp.
$9,861,000F

(jommittee r 7/" -.77
Philadet

'first mortgage sinking fund,
bonds;
'due 196.1. The winning bid named

request ol R. ^Victor Mqsl^;

!Phiar President elect of the National Security. Traders.
Association, a a "price of" 101.24 for a 3^4%
Special Legislative Committee was appointed by the-NSTA to deal
coupon. The group is publicly re'Specifically- with the proposed new legislation of the SEC
regarding offering the bonds today at 102.
i information on ^Unlisted Companies'.'
having $3 millions in securities At this price the yield to the pur¬
.outstanding, or 300 stockholders.
•••
chaser-would be approximately
The* list of the Committee, as
announced by Thomas Graham, 3.09%.
•/
i President
of the NSTA, with representatives from
each affiliate fol¬
The
"

lows:'-

7 7

proceeds

4 u r

•

&
;

|
|

.Vtee-jbJ^nn^^-CIafr "S.

/ y

•

—

ConipanjkJl

'7/'

bonds,

Lc'

1*•
;

Equitable Security Corp.;1 Ches¬
Phillips* Pacific Northwest

bonds

Representatives

{ Atlanta, Ga.f- Malon C. Courts, Courts

-t

- *

& Company.

|Rjepe,^Alex^Brown

Sc Bons.
Boston, Mass.—Ralph F. Carr, Ralph F..Carr & Co;
Chicago, 111.—Ralph S. Longstaff, Rogers, Tracy, Inc.

I-

r;■; Cincinnati; Ohio—Harry C.

assumed

Corp.,

companies % to
Eastern

New

Hudson,

one
of the
merged
intd

York Power.

...

Paul Porter to Head "

& Co.

Dallas,*' TexasL^W. C. Jackson First" Southwest Col
'Detrbit,Mich—
Mc0ohaid-Mobre&Co.

•

Power

• •

Com;mission

Connccticiii^-Apdrew Tackus, ,Futnam & Company,
/Cleveland, Ohio—R.L •.Cunningham, Cunningham &?■ Co.

Vonderhaar, Westhelmer

: V;

were

River

•

from'

5% bonds. The International Paper-

' new

$3,000,000 in preferred
stockr will be used to pay off at
maturity on Jan. 1, 1947, the
$12,861,000 of International Paper

ter A. .LuCas,. Stem Bros. &
Boyce; Josef C.

Company.^

the

those

sale f of

;

Hall, Jr., Clair S/HalK&; Co.'

Members—& Frank Burkholder,

from

together with

Greece

j"Paul; A. Porter,

recently re¬
signed Price. Administrator who
had stated his intention for

per^

sonal reasons to sever all connec-/
with the Government, or*

tions

;

" Los ~AngdIe's,;£^

Efec; 11

Flp$da—George M; McCIeary, 5 Florida Securities Company.
Hofuston, Tetfas—Claude* T. Cfockett, Moroney, Beissner CO.
Kansas 0% Mp.—Arthur L
E. W. Pidce & Company,

B. jScottV MaxweU^ Marshall^

Greece, which is expected to leave
Washington by air about Jan. 20;
according to advices from Wash¬
ington from the Associated Press.
The State Department announce¬
ment |stated
that the
mission,

;

Louisville* Ky.-r-Burgess Rcimfer; BeifWyn: T. Moore- Co;
;Memphis, •Teim.^Robert R. Jdrdaw,.Mid-South Securities;'
i
'

Nashville, Tetfm—Ch£s< -WV Warte'rfield,. Cumberland Securities
New^Orleans, La.—H. Wilson Arnold, WeiL& Arnold.

which has been asked to complete
its job

by the end of next April;

■

Pittsburgh, Pa.—S. Lee Bear, Kay,,Richards

Co,f"^ 7

Portland, Ore.—Donald C. Sloan, Sloan & Wilcox.
: J-.
St. Louis, Mp.—JosCpii Cr. Feterson;; Eckhardt-Peterson; '

"will examine economic conditions

BhiMeiphia/ Fa.^-'EdnTund J, iDavis, Rambo, Clo'sd & Kerner;:

;

X^Wty.^itus; Jr.; F,: J* Young •.&, Co.

in Greece," and will further "con¬
sider the extent
to
which the

Greek Government^ can carry out
reconstruction
and
development

:. .,v~

through effective

Sah Francisco, Calif.—Walter F. Schag,- First California Co.

Seattle, Wash^-Harry Grande; Grande & Col, inc.
Allison-Wiliidms Co..

was appointed ^ chief of
American Economic Mission to

;

sources,

use of

■foreign

assistance

quired."

Twin Cities—Kermit: Sorum,

Greek re-;

and^ tlie extent to whicl*

may

•.

re¬
•

Active Trading Markets in

Collins Radio
'

Company
Common Stock

leading

field

concern

commercial

the

radio

equipment.. Sound financial
an'd
Paul

H. Frank Burkholder

Moreland

competitive

position

after reconversion.

Circular

Request

ADAMS 6- CO
231

;

SOUTH

LA SALLE

STREET

CHICAGO 4, ILLINOIS

TELETYPE CO 361

PHONE STATE OlOt

Aeronca Aircraft

Corp.

Baltimore Transit Co. Pfd.

Chgo. Auro. & Elgin Ry. Units

^Howard Industries, Inc.
Chester A. Lucas

Josef C. Phillips

Hydraulic Press Mfg. Co.

Old

Ben

Coal

Corporation

"Long-Bell Lumber Ccmpany
•
1

Nunn-Bush Shoe Company
COMMON STOCK

UTILITIES

MIDLAND

INDUSTRIAL

Mastic

BROWNHOIST

Asphalt Co.

"Miller Manufacturing Co.

REALIZATION

MIDLAND

COMMON

Seven-Up Texas Corp.

St. Louis Public Service Co.

A Memorandum Sent

Request

♦CARSON PIRIE SCOTT 4'A %

;

Ar '

PREFERRED

1(W

^Prospectus available upon request

*Detailed analysis available on request.

DOYLE, O'CONNOR & CO.
r t

Members Chicago Stock

INCORPORATED

Exchange

225 EAST MASON ST.

PHONES—Paly 5392,

Chicago: State 0933

•

Trailmobile Company

COMSTOOK & CO.

MILWAUKEE (2)

Teletype MI 488

chicago 4

135 SOUTH LA SALLE STREET
231

CHICAGO 3, ILLINOIS
Telephone: Dearborn 6161

Teletype:

CG 1200

So. La Salle St.

Dearborn 1S01

Teletype CG 95S

■

3212
%

'ii-y

»-

•>•!» i $

.fix.

have

A'-%• ii*

it' >* *&■

declared, t|i£ annual dividend

recommended

233,054 shares,

Trading on the Detroit Stock Exchange dropped to
last month, as against 391,912, valued at $4,679,747 in the comparable period in 1945.
For the first 11 months sales
valued at $2,995,298,

4,689,125, or $58,152,265, as against 5,203,177,
the like 1945 months.
AAA
A;V
'

A/AA'AT■

»i:£

«,

'^A A, V'r

/the Plastic Wire & Cable Company of Jewett City reported ,net
shares
in the
common
capital income of $35,254 or 860 per share for the fiscal year ended Sept.- 30,
stock to be distributed to share¬ 1946. Net sales for the year were $2^05,248?; earned, surplus# $165,--

dividend on
six
shares held, payable Feb. 15 to
.-AvA;.'W
holders of record Jan. 14.

$50,461,598 in
AAA

vf. A

increase of 25,000

holders

stock

Engineering Co. of Detroit has requested SEC
withdraw 150,0003"
V/g cents, payable Dec. 28 to
common stock

par

first

the

ife*

ditions."

Decentralization of

record Dec. 21. It is
payment by the con¬
since the stock was offered

holders of

unsettled market Con¬

"because of

■

cern

Industry: Babson

publicly
last month.
Smith,
Michigan Corp. and
Hague & Co. underwrote the
associates, including Braun, Bosoffering of 100,000 shares of $1
worth & Co.; McDonald-Moore &
par value common stock at $3.50.
Co.; Paine, Webber, Jackson &
*
*
*
Curtis; H. V. Sattley & Co., Inc.;
Michigan Consolidated Gas Co.
Miller, Kenower & Co.; Cray, Mcwas given permission by the SEC
Fawn & Co.; E. H. Schneider &
to acquire the assets of West Mich¬
Co.; Croiise & Co.; Donovan, Gil¬
bert & Co., have purchased an igan Consumers Co., consisting of
issue of $2,000,000 Western Mich¬ 4,182 shares of no par common
for an aggregate value of $1,500,igan College of Education, Kala¬
000. West Michigan will liquidate
mazoo, 1%%, 2%, 2V8%, and 214%
and transfer its assets to Michigan
.

serial and Consolidated,
*

at prices from 1.00%

Crampton
w;:;
z :■ v A Grandville, Mich., has asked' SEC
authority to withdraw its regis¬
Smith, Hague & Co., Detroit
tration statement of Aug. 27 for
investment firm, announced that
119,337 shares of $1 par common
Randall
Graphite
Products
stock. No explanation was given
I Corp. has declared a dividend of
for the request to withdraw the
&

Winters

to 2.34%.

consolidated
net

showed

securities.

Call Us On

Any

1946.

This

dehydrators.

last year. On a per share

•

for chemicals and June
1, 1948 through 1957.
synthetic products.
Towns ;f'A' A " - ' *
*
*■
such sources of hydroelectric
material

raw

other
near

power,

Valley Project, the Boulder Dam
in Colorado, and Bonneville and
Grand Coulee dams in Oregon,
offer

Trust
open

Company is planning to
new branch at 866 Farm-

MICHIGAN

UNLISTEDS

ington Avenue, West Hartford.

the

experimental stage, of com¬
paratively strike-free power in
rural districts is the production of
gas
by burning unmined
coal.

United

Wm.C.Roney&Co.

now

holders of Extruded

512 BUHL BUILDING

MICH.

Established 1919

Members Detroit Stock Exchange

Building

DETROIT 26, MICH,

Telephone

Teletype

Randolph 5625

DE 206

tirement

Jan. 6 of the remain¬

payment of a 20% stock dividend
on Feb. 1 to stockholders of rec¬
ord Jan.

Fred B. Prophet

Company
Common Stock

Circular

" A'''

that

arrangements

eYoimg, Larson & Tornga
GRAND RAPH)S, MICH.
GR 84

loan.

for 16 years,

3%
it will provide addi¬

tional capital and to finance fur¬

ther expansion.
*

Phone 98261

workers.

today

Added

Directors of The Detroit Bank

ALLIED PAPER MILLS

16.8%

Although

advan¬

a i 1 way Company
Equipment
Trust l%s due June and Dec. 15,

: ""v:'*

big-city

among

cities

also

offer

attrac¬

Their

women

and chil¬

dren

like the friendly conditions.
The unit manager has an oppor¬

tunity to develop independence of
thought and action, solving indus¬
trial problems with a minimum of
red tape and 'cost. Decentraliza¬
tion of industry is the trend of
the times while at the same time
large cities will continue to grow
and prosper.

dividends

Bristol

the following:

are

paid

dividend

plus

compa¬

extra year-end

Brass

quarterly

extra

initial

30c

of
of

40c

a
on

Dee* 14; Stanley Works declared

payable

extra

stockholders

Dec. 20 to
of record Dec.'t>.

Arrow-Hart & Hegeman Elec¬
tric

Company

$2.50

declared

payable Jan. 2 to stockholders
Of'record Dec. 10.

basis.0

1.65%

nies declaring

prices ranging from a .75%

lic at

Among the industrial

pub¬

bonds were reoffered to the

Fafnir Bear¬

-;* j

/'•'*

/::

New Haven

ing declared $1.50 payable Dec.

jj.

recently sold $200,-

,,17
•

General Public Improvement

000

bonds dated Dec. 1, 1946, due

$23,.

1948 through 1949, and

000 Dec. 1,

outstanding in his small $22,000
payable
Dec.
1,
1950
community, rather than lost in an through 1956. The First Boston
enormous one, ,The lack of a feeling
Corporation
was
awarded, the
of
personal
importance
often bonds with a bid of 101.10 for a
causes
slip-shod, don't-care atti¬ 1V4% coupon.
tudes

Co.

are

the financial

RR.

1947-56; and Western Maryland
Railway Company Equipment
Trust l%s due Nov. 15,1947-56.

last

November

over

Western

R
7

may be

families.

Borrowed at

New

the

year.

tions for management and fheir

dential Insurance Co. for a $20,-

000,000

8.6%.

division, sales of 25,018,hours
increased

kilowatt

environment
can
tremendous effect on the

Small

have been made with the Pru¬

/ A-& A* A

6, and the declaration of
dividend of 65

compares

The Town of East Hartford re¬
being ( pretty
much
standardized
everywhere, cently t£old .$1,210,000
School
some
bonds dated Dec. 1, 1946 due $64,employees are willing to
work for less where
they can 000 each year commencing Dec. 1,
1948 and $63,000 maturing each
work in the same small town in
which they live. Thus, they cut year
commencing Dec. 1, 1961
commuting costs, cost of lunches through Dec. 1, 1966 inclusive.
and are able to shop where prices The issue was purchased by The
are cheaper. They surely do more
First Boston Corporation and R. L.
and
better work for the same Day and Company with a bid of
100.65 for a 1.60% coupon. The
wages.

semi-annual

announced

Request

Haven

workers.
This increase in morale may be
cents, payable Feb. 1 to holders cne of the reasons for greater pro¬
of record Jan. 3. Ah ,
A
ductivity in the small community
*
♦
♦
for the same money paid in the
A: George W. Mason, President
city. AAA:
'
of Nash-Kelvinator Corp;, has
Think of Management
the

crease

Sattley & Co., Inc., and

which

hours

31,900,181 for November
This
represents an in¬

1945.

coal

healthy
a

wages

ing $8,500,000 worth of preferred
stock held by the RFC and the

latent

great

watt
with

stra¬

088

morale

a,. merger

lie

tages of the rural worker are the
1%% interest. The average yield
advkhtages of extra leisure.'' Hei
is 1.82%.
ffi. c
•
:-i A
may walk to and from his job,
*
*
*
work ;in a healthy environment,
Directors
of
Detroit's billion
for, and with, men who are his
dollar bank—The National Bank
neighbors and church friends. He
of Detroit—have approved the re¬
knows that with honest effort he

Michigan Markets
639 Penobscot

have

Campbell, McCarty & Co., of De¬
troit, have been awarded $125,000
of Birmingham Mich., water sup¬
ply system revenue bonds; by the
Birmingham
City
Commission.
Bonds maturing from 1948 thru
1958 bear interest at 2% while
borids due 1959 thru 1967 bear

Charles A. Parcells & Co.
,

stock¬
Metals, Inc.,

the basis of two new shares

cording to terms
agreement. %j*#.:

near

towns

Illuminating

reported sales of 34,715,832 kilo¬

Living Conditions

for each share outstanding, ac-

Phone
Cherry 6700

share for each share
held. The remaining 95,668

new

shares will be issuable to

Humbert New York Stock Exchange

DE 167

tegically
supplies.

basis of

of common on the

one

small

Numerous

Equip¬
194756 and l%s due Dec. 1, 1947-56;
Chicago & North Western Rail¬
way Company
Equipment Trust
2s due';
^047-B6;>':ifclawar&

Equipment Trust 2s due May 1,
and
Nov. - 1,
1947-56; Northern
Pacific Railway Company Equip¬
ment Trust 13/4s due Dec. 10, 194756; Pere Marquette Railway Com¬
pany Equipment Trust l^s due
July 15, 1947-56; Union Railroad
Company Equipment Trust 1^4s
due
Sept. 1, 1947-56; Southern

division
of
Company

Bridgeport

Company

Railway

ment Trust l^s due Aug. 1,

Lackawanna

the month of November,

For

the

♦

of.. •

and

possibility for the future, now in

ers

DETROIT 26,

low-cost

nearly unlimited power supply. A

has

Teletype

industry

.'A

The Hartford National Bank &

that of the Tennessee

Ohio

Stock Exchange

Detroit

with $33,-

compares

373 for the corresponding period

approved for listing 309,918
additional shares of $1 par com¬
mon stock of the Detroit Gasket
&
Manufacturing Co.
Of this
amount 214,250 shares will be
issuable Jan. 2 to present hold¬

The

Becent additions to the .list of

legal investments for Connecticut
Savings Banks ate as follows: - A
Province of Saskatchewan 3^sf
3%s and 4s due June 15, 1947-49;
Pacific Gas & Electric Company
3^s due June V, 1966; Philadel¬
phia Electric Company 23/4s due
Dec. 1, 1981; American Telephone

$409,855

factories, freezing plants and now

■

«!

profit

for the three months to Oct. 31,

of canning

building

account

income

(including domestic subsidiary)

basis,
Accessibility
to ! sources
of
earnings were 320 against a
deficit of 30 a share ' respec¬
cheap power and food make rural
sections especially inviting to in¬
tively.
& Telegraph Company 2%sT due
dustry. Small cities in Kansas, A A?-.-'
*
*
*
Missouri, Texas, Louisiana, Okla¬
The City of New Britain re¬ July 1, 1986 and 2%s due Dec. 15,
homa, Kentucky, Montana
and cently awarded to Bacon, Steven¬ 1961; Pacific Telephone & Tele¬
West
Virginia are hear large son & Co. at 100.297 for 1.20s, $110,- graph Company 2%s due Oct, 1,
sources
of natural gas. This can 000
Street bonds, dated Dec. i, 1986; Rochester! Telephone
Corp., be used for cheap, fuel and- as the 1946, payable $11,000 each year, due April 1, 1981; Chesapeake fie

The

bonds.

revenue
bonds were offered

term bonds

the

Connecticut Light & Power Com¬
pany reported sales of 91,562,000^ > i
^
' A, v;."''■■■
kwh. compared with 77,019,000 period of last year which brought
kwh. for the same month of 1945. the total to, $2,407,725.
The corporation's most serious
This; represents a^ gain of
problem at the present time is the*
scarcity of raw materials.
Royal Typewriter Co., in their

of the wise use of small towns is
seen

;

'•

For the month of November,

portation costs. Another example

■

(Continued from page 3210)

The First of

dormitory

447, and net Working capital $370,206.

the basis of one share for each

Copco Steel &

permission

shares Of ^ $1

Connecticut brevities

of $1.20 on the common, payable
Dec. 23.
In addition, the board

Brevities
were

Thursday, December 19, -1946

FINANCIAL CHRONICLE

THE COMMERCIAL &

* /

•
.

Veeder-Root, Inc, in
ment

......

state¬

of Nov. 3, 1946 showed

total current assets of $4,550,504

$3,891,031

against
Total

.current

year

liabilities

ago.

to stock

of record D06^j5,

making $5 for the year agkihkt
$4 paid in 1945. Hart & Cooley
declared $2, paid Dec* 18, bring¬

ing the total payments for the
year

year.

to $6 against $5 for last

Singer

Company

Manufacturing

declared

special

dividend of $4 a share payable
Dec. 27 to stock of record Dee*

12, bringing total payments for

the

year

to $16 against $12 paid

last year.

;■

were

$649,679 against $584,035. Total
assets were $7,435,572 against

$6,193,094.

CHAL-Yon
(Special

of January 1 of this year,
earned
surplus account totalled
As

$2,513,341 compared with $2,282,895 as of the preceding January.
The net increase in earned sur¬

to The

Corp. Formed
Chronicle)

Financial

BOSTON, MASS.---The CHALYon Corporation has been formed

with offices at 89 State Street to
engage in the securities business.

plus in the period Jan. 1, 1946 to Officers are Joel Willoughby East¬
Nov. 3, 1946 was $611,318, bring¬
man, President; Richard S. Whiting the total to $3,124,659. This
comb, Treasurer; and George W*
compares

$124,830

with an increase of
corresponding Sears, Jr., Secretary.
the

INDUSTRIAL BROWNHOIST

Tifft Brothers

L. A. DARLING CO.

Fifty-fifth Year of Dealing in

Members New York arid Boston Stock

RESISTANCE WELDER

Exchanges
;

Associate Members New York Curb

THE C. H. DUTTON CO.

;

Exchange

■'

Connecticut Securities

:W,h

;

Markets

—

Primary Markets—Statistical Information

Primary Markets in

Information

Hartford and

Connecticut Securities

Moreland & Co.
:

member

CHAS.W. Scranton & Co?U

Hartford 7-3191

••••?:

detroit stock exchange

im;3,!^1051

PENOBSCOT BUILDING

■<

en .a»vtr\-k

Bay

City

—-

•'

■''.. /j.'

Lansing

.v-r

DETROIT 26

BOwling Green 9-2211

a" 'i."'

—

Muskegon

Bell System Teletype: HF

New Haven 6-0171
-

New

v""*'-'*

;

365

London

2-4301

Hartford 7-2669

•

-J>lb-> i)
i h\.

Members New York Stock Exchange

New York:

New York Canal 6-3662

Teletype NH 194

■

si 3

'.
r
rfoiriw
Waterbury 3-3166
Danbury 5600
!^'
-

Volume 164* Number 4552

THE COMMERCIAL & FINANCIAL CHRONICLE

Charles Clark lo Admit

Missouri Brevities

Field and Schlater
.Charles

Clark

Co,

Wall

Street, New York City, members
of the New York Stock Exchange,
will

Edward

admit

and

Field

Myron F. Schlater to partnership
on

Jan. 1. Mr. Field

previous¬

was

partner in Edward P. Field

Co. Mr. Schlater was

the

manager

municipal department for

Charles Clark & Co. for
of years.

number

■

*'V"

Robert H. Rich will retire from

in the. firm on

partnership

Dec.

Markets '

Primary

Insurance Stocks

Bank &

*Stromberg-Carlson Co.
^Mid-Continent Airlines

^Pickering Lumber Corp.

Trailmobile;
Common

Preferred

Gruen Watch Co.

*Clyde Porcelain Steel Corp,
*

$80,000 of St. Jo¬
Mo., 2% refunding school
bonds, due in 20 years, was pub¬
seph,

Members St.

Stock Exchange

Louis

ST. LOUIS 1, MO.

licly offered on Dec. 9 through
Direct

Barret, Fitch & Co., Inc., and Lu¬

Request

While & Company

issue of

Statistical Information on

and

connecting

private wires—

Chicago, New York, Kansas

City,

Farrell & Satterlee, Inc., both

cas,

City, arid sold within

of Kansas

; Teletype SL 477

Telephone CE 0282

48 hours and the account closed.

Spencer T. Olin, Vice-President
of Olin

Industries, Inc., on Dec. 13

elected

was

member of the board

of directors of

'Laclede Steel Co.

to fill a.vacancy.

Kansas

declared

•.

•

COMPANY

City Title Co. on Dec. 11

dividend of $8 per share

its

holders of record Dec. 20.

Total

718 Lopust

Saint

Street.

Loiu^ i;;Mo;

payments for the calendar

year

capital stock, payable Dec:

'Central

'8250

1946 will amount to $13 per

share, compared with $6 per share
in, 1945,
The net income; of the Kansas

City

Southern Ry. for the ten

months

Oct.

ended

31,

1946,

amounted to $2,874,933, equal to

$4.26

with $3,957,793, or
mon

MICHIGAN

common share, compared

$6.39 a com¬

CHEMICAL

share in the corresponding

period ended Oct, 31, 1945.

Peltason Jenenbaum Co

POSITION MARKETS IN
Barker Dome Oil Sc Gas

BUILDING;

LANDRETH

Spinning Assoc. Com. & Pfd.
Chicago & SouthernJlir Lines
Chicago, Wilmington & Franklin Coal

Berkshire Fine

f ST. LOUIS 2, MO.
Teletype-SL 486

^ ° / V ' L D-240

Hearst Consolidated Publications "A"
Kansas

City Public Service Com. & Pfd.

Old Ben Coal Corp. Com.
Hilton Hotels
_

Southern Union Gas
Velvet Freeze •

National Oats

Collins Radio
Delhi Oil
Taca

Steel Products, Eng.

♦

Universal Match

Airways

SCHEPCK, HICHTEH COMPANY

INVESTMENT
509

SECURITIES

OLIVE

STREET

ST.LQUISI.MO

Landreth Building
Members 8t. Loul* Stock

C'J

Bell Teletype 4•-;-.•••
:

SL 456

gf,
'

Louis

.Garfield 0225 4•

Mo.
'

L. D. 123

Excnenge

THE COMMERCIAL & FINANCIAL CHRONICLE

opinion is held by some that
prices will tend to gravitate more
less around
present levels—
which, by the way, holders of this

Thursday, December 19, 1946

opinion consider

healthier

levels than those from which
■

th$

prices have fallen—for some time;
During this period when the stock market, according to some perhaps Until the new construc-f
observers, is trying to decide which way to turn, the investor who tion can get under way. Very few
contemplates placing funds in real estate securities steers a wise real > estate men; believethat < th^
course, say some of the analysts, who shows a proper regard for the new
construction/ even / .when
cost factor in the operation of any properties in which he may be or started/ will be attempted dn
anyj
1

•

y1 '

By DE. RUFUS S, TUCKER*

Consumer-Spendable Income,
Spending, Savings/ Credit
•

I>ecome interested. In appraising the cost clement; too,,these analysts thing; approaching
point out; it might

prove

could

in the amounts

differences

some indication of the extent
to which costs with some adjust-

give

'ments,

*
,

could

course,

necessary.

drop

•

The cost factor can be partlcu-

larly important in the case of
hotels, the analysts argue. Some
really good names in hotels,' for
instance, because of the presence
/of high costs, often can not offer
/ the investor returns or the pros.

pect of returns as large as or as
promising as those which many
other

i
>

■(

less

establish-

well-known

their lower
costs, are sometimes able to pro¬
vide, they report.
Some of the
generally-considered best hotels
because

ments,

today

requiring 85% of

are

some

so,

these analysts declare.

is running around 95%

dertaken in

occur

- to
keep their financial
can Hand the
pbpishment in. the way' of
business shrinkage before really
getting hurt, .they insist.
•
' j

pancy

heads above/water
most

remain

fairly high level for

should

surround

can

securities

halo

attrac¬

tiveness despite the apparent force
of the bearish mood of the day!

Probably

least

Treasury
BillOffering

SOLD

QUOTED
*5
*

•:?*v v.V; 1

.'■it *■'dr

.The

estate

for the

•

various

tlenecks

the

troublesome

tenders

bills

the

40 EXCHANGE

Fl.,N.Y* JMgby

Tohtype NY 1-95$

<M95Q

that

dated.

mates

figures

con-

&Tri-;;most/cases/!-tte
spending and saving is determined
not by the total of money income,
or statutory' net income, or the
"total" income as defined by gov-?

The published .ernment economists to include in¬
come

margin

ihcome/which
payments

is what is left of income
after payment

of direct taxes, but
depends greatly on the manner in
which that income is distributed,

forecast of

future income
But

they are not
They furnish a
frame of reference against which

wholly

It is linked

received in kind.

more( to disposable

of error, and
any

hazardous.

place his own esti¬
if they fit., If they

he must make up his mind
it is his picture or the
frame/that is the wrong size, ;

can

wide

see

whether

/(figures are
(/subject to a
Rufus S. Tucker

can.

particular

some

do not,

and pat-

forecast sales.

■f

student/ of

product

spendbe re¬
lied upon to

ing

the

i.e.

useless.

number

families

and the extent
which consumers are already

* An-address by Dr. Tucker be¬
fore Northern New Jersey chap¬
v

ter of American

some

extent it is

helpful, in

judging the potential demand for
goods not of the first order of
necessity, to deduct from disposa(Continued on page 3243) ; -

Marketing Asso¬

Dec.

alj

each income level,

supplied with durable goods.

10,

Capitol Goods for Consiimeis
•

the

were

Reserve

and

opened at
Banks, 'on

of durable
has

goods than does size of the accumulated stock, Frof; Cox
buying modelled on Regulation W

•

/eqUiva-j

little

effect

restrictions

have ,pnly

approxi-' of ;durable goods,

discount

re¬

begun to understand how big an accumulation

^eed tq ihaintaini^he Americari

v" r

The National Resources Committee^

rfer-$qmd
time.yet'0^:- *(////r. .."4 *.
!

living.

puMl^^Mh "1939 ^ "first^Cougtv, estimates' jddwri/fe'/d&^v/^l^;haye
pompetitivei
guess
for the year 1935. Even no reason to doubt; however, that

^ahgq-sdfaccepted
bids:

on inflarioaajy
forces/( Siies a abetter control in
production and contends (tdeferred demands" often
are
dissipaied and disappear. Points out increasing life span qf
durable goods....
V

$1,784,03-3,000.'

rate

Pennsylvania University

contends regulation of instalment

■

Average price,'99.9054lent

of Finance,

Holding inadequate attention has been given to accumulation of
consumer capital as a factor determining level of real income aqd
/that instalment credit has lest influence upon consumer purchases

fixed price basis at 99.905 and

School

Wharton

;

V"',..

By REAVIS cox*

Treasury-

Dec.

accepted in full)>

main-- relatively* - strong

Should

the

/;sumer

accepted,
$1,308,874,000'
(includes $26,576,000 entered :
on;

due consideration to the cost fac¬
reason

91-day

Total applied for,

probably, with all

tor, should-with good

Federal

Total

than six months ahead,
they
the entire market in real es-t

tate securities

corpe

% terns of

•

$1,300,000,000

Dec. 16.

in-!

say,

which
'•

mature March. 20,. which were of-,

dustry to open up. Since the stock
rarely discounts the fu¬
ture with any degree of assurance

Memberi New York Stock Exchange
Members New York Curb Exchange

Dec.

fqr

£ereqldnfDec. 13,

market

SHASKAN & CO.

thereabout,

bot¬

construction

tent

;/ of national in-

Secretary of the Treasury

announced

undoubtedly take all of two yeah

...
'

'•

the

e x

the

Result of

market,- apartment
houses, is that the present struc¬
tures won't be getting any com¬
petition from new buildings for
this length ot time .at least for the
very simple reason that it will

BOUGHT/

yij

section. of

tations
■

1946.

the

another

limi-

obvious

ciation, Newark, N. J.,

primary consid4
thinking, as in the
thinking of .those concerned with
real

■'""»/

y*}

eration in their

mainly interested in statistics of income and savings

arc

many' real- estate

with

of two years more.

SECURITIES

;We

;

remain

heavy in¬
deed for some time, they think!
Selectivity, they say, based upoii
considerations of
the
operating
costs of particular properties in
an
uncertain market should and
space

sutfered

eyer

because of their bearing on future demand for .products we hope to

period many new tenants as
present leaseholders find they are
able to get along on less floor
space,»they point out./ In and
arond New York, demand for ex¬
isting commercial and apartment

minimum

able

Among the commercial build¬
ings, the cost factor is likewise
becoming y very
important,
the
analysts say, because there are
some
signs of shrinkage hi the
amount of space which tenants are
requiring.
However, they admit
these signs are at present at least
very spotty indeed.
Despite even
the ; expected / wholesale .with¬
drawal of the government war¬
time agencies from the millions
of square feet of space they ard
now occupying in these
buildings,
the
analysts
think,
occupancy

from excessive private saving; and Russia is only country injured
by governmental over-saving.

consider*

(Keynesian:economists,■ becontendsnonation has
-

the future will very

be able to receive for

•

un¬

in which disposable income is distributed.

manner

likely be: confined to those areas
where
severe
congestion exists
because of. wartime shifts iri the
population, the market .experts
believe, too. Many of the present
commercial buildings and apart/
ment houses consequently should

the present time, it must be obvi¬
that the establishments which

ous

require the least amount of

;ma^

reasonably be expected to be

Since hotel occupancy on the av¬
erage

a very# grana

Such- new construction

spending - and, saving gruauy

( Cities importance of ^uj^raumri^
is
residinm
of disposable income jifter provision for necessitiej. Oppbsiiig

than the market is .inclined today
to give ft; the.analysts, point outi

possible future 'date in' a

should -nevertheless

REAL ESTATE

costs
at

declining market would need, only
65%

/depends, hn

strength

occu¬

pancy
to meet operating
whereas others need now,

volume >of?

scale, however.
The potential of
in real estate securities
consequently is probably greatej

helpful

to compare present figures with
those of the last decade .as the

S Dr, Tncter inaintaiiis

;•;/

{

Highs $9,907; ^quwaleht^tdajf morb^ciii&t^
Univers ityof jPennsylvania ,Pro
in/ the /production" of Cmsi^csr
discount approximately
0.368%l fessbr Ralph F.
Breyer; and I have,' durables we shall also Teach new
estate bonds, for
per annum.
instance* is.(equal!
•;//,;!-/-j worked out1 a hiore refined /esti-; highs in consumer £ holding "of
to. the, return .on, some -corporate: /
499.905; equivalent .rate,ofi mate;, using the greatly improved these v goods, /even/ if they are
stocks, the real estate bonds would
discouhtr/approximatelyi i?4376% i basic I/statisticg now; at^iilablb /for! valued/at/prewarvl^ides*r>^ken
nevertheless have
as

really

weaken, they point-out,;
even where the yield orisome real1

Firm

Trading Markets:

California & New York

to face the com-]

petition; which
has

Koal Estate Issnes

shown

them.

these

past

jpt,axipuxhrr

(experience I

stocks

can

J. So Strauss & Co.
Montgomery St., San Francisco 4

Tele. SF

6l& 62

EXbrook 8515

thinks
have

—

idept oLLord;

estate

securities

with

definitely

tedly

Dec. 19

the

Wall

Al^if

firm's

Street,

where

home

New

office,

York /

SECUR

Hotel Sherman 5/5

Broadway/New St,

3s 1961

Hotels

Transportation Bldg. (Cgo.)
..y
Land Trust Units
o

So. La Salle

•

„

As yet no one has brought these

*An address by Prof. Cox be¬
fore

1946.

are

consumer

durables

which

Common

Savoy Plaza Class ^A"- ? •
■ASavoyvPlaza "3-66 1956fft&
v

■

Westinghouse Bldg. Part* £tfs. CBI
East 42nd

Hotel Waldorf Astoria Common

Realty 5s

Mayflower Hotel Stock

80 Broad

870 7th Ave.

St.

St. 3s

1956

1949 WS V/l

Bldg. 4s 1956 WS

4J/as WS

Amott, Baker & Co.
;
/
/V
Broadway
.

150
Tel.

BArclay 7-4880

Incorporated
.

SEE. INSIDE BACK COVER

New York

„

7, N.Y.

Teletype NY 1-588

the

instalment

National Hotel Cuba 6s 1959 WS

St., Chicago 3, 111.
Tele. CG 660

)

capital goods
purchase cjf
plays a
major part. These goods, for which
Instalment / buying is particularly
important, fall into four large
groups. The largest consumer in-r
vestment,! to: our surprise^ wp
found pat in automobiles but iq
; ; /(Continucd pn page-3252)
;.
holdings of

New York Athletic Club 2s ,1955

Pittsburgh,' .Hotels

Lexington Units

Voting Trust Ctfs,

FIRST LA SALLE CO.

Grant Bldg, 2^8 1957 WS
Hilton Hotels Pfd.
Hotel

Tel. Central 4424

Eastern Ambassador Hotels Units

Fuller Bid jr. 2</2s 1949 WS
Gov, Clinton 2s 1952 WS
'

100 North La Salle St.

current values it had risen to 50.5

biliiori dollars.

OFFERINGS WANTED

Knickerbocker

Lott

values, the aggregates

consumers

the Northerp ; New. Jersey
Chapiter, American Marketing As¬
the sociation, Newark, N. J., Dec. 11,

executive
Goodwin will be

strong in the real es¬ meetings. Mr.
tate field, as in
many other sec¬
here-^ntif/December. 21
tions of "the/securities
ihaikefe/yef JHotelT^erre/

current

wilihestill^^higher ;hie<»use^Dif the

City,

attending

very

con-i at

central

^t/billiodfdjMlars. (Iri^unadjusted;

headquarters in Los Angeles,!

Our

senti-duCabJes |Jieldi jfaC/'rise/stiyj,
1 shaU riot/i^
to
; totalled 135.1H billion! discuss our! fin&iftgs In
in the
more,de[-»
dollars. Three years later,-/after, tail,/
pur report has' been"* pub>
/ - ,1
adju&tment^to refmove/t^
lished. / For : present purposes T
of a 25% price increase during the want
| only
liseq /to! approximately two-thirds Of these

GeraliM/ Goodman, fece-S rfiS1

passed their peak
in prices in the current market.
While bearish,
feeling is admit¬

SPECIALISTS

REAL

real

$1,304,827^00^

Gerald CU^man

that

purpose. /

elusions iijOtii J^n;

pr^eiated^/yaiue '4of^durables; arid; ;rises/in;;pr^s-slrice(^

was^a^maturit^df i^siin-'

ilar issue of bills

It would not be difficultto find
on
Wall
Street
who

someone

There!

amount

estates-securitiesoatn^n^S^iheiri

holdings,- the analysts • reason,

Awl/for Mi'

ih^jow/Prtce^

the other handf some'
marketrwise investors who * don't
like to put all. their eggs-in one!

basket will certainly want to con-!
tinue to include, a few
good real

155

the

71%. of fhe amouiit

give;

eredit

(i'h'v.
V

f•;;

.*. ? v^rr.-^V;

■*>' -' V :■*>'. \jp&

Volume 164-Number

M *;v*>' '■. ^ ^

4552

' ;v"

>'.

*•''"' ,'',:'t' *"'•' ' ■""ai~v"' *

THE COMMERCIAL

'■'"^ <

•

''''1'

<■ •*■

';y <

'>'

'''

FINANCIAL CHRONICLE

•~,'V'

3215

YY
;:i;Y

YYpfe

to Sustain

*»»

Supreme Court Outlaws State Tax

Expanded Production

By alfred schindler*
Former Under Secretary of Commerce

in convinced

that full and effective distribution

Y..

his

total

her

can

income.

1-..v'..

only have the money or credit
productively and gain¬

when he is

follow that the total national out¬
put and employment will be in¬

fully employed. 'Y . : T \^<
•"
Now, the second conviction'/1
of money have with regard to distribution
which people is
that you
do not necessarily

creased.

will

remains the

Now

total

the

amount

achieve

spend in

in total

increase

em¬

depends,

ployment when a. particular firm
succeeds in increasing the sale of

and

large,

|tst -product 'Or brand, ■ if this in¬

the

size

crease

aggregate

their

sales

income.

is accomplished by shifting
from its competitors.'
>V.:"

All the charts

which

have

Alfred 3chindler

example, jaggressive mer¬
which .results in an
expansion of the sales volume of
X brand automobiles may have
been achieved by diverting sales

chandising

.sales - income
relationships clearly demonstrate
.

this fact. For this

all the

reason

from its competitors in the

effective distribution- techniques toy.
as

advertising

promotional activities, - are
apt to fail of their mark if the
dollars which

they seek

are

tomers.
that

Let

man

not in

'
° P
'i'^sHcb "Frankfurter,

.^iana sales tax, totaling $652

protest
.

from state

G. Freeman of Rich-

under

who read the decision, said that the inter-

u-°u' the Constitution prohibited a state from
may fairly be deemed to have the effect
flow,of trade between states" and that the pur-

jrni nJ actl?n wi?lcb
free

of this clause was
to prevent states from
exacting
those engaged in national
commerce."

pose

toll from

furnish¬

that their total spending
In other words,

same.

the'consumer

may

merely

shift

the pattern of his purchases with¬
out spending more, in the aggre¬

gate,

s^a^e commerce and therefore barred

out

income.

of his given level
i. v:iY^YKYYelYYY

|loore, Leonard

& Lynch
Admits Two New Partners
Charles

Laidlaw Admits Partners
Laidlaw

and

New

William A. H. Leonard will be ad¬

New

Co., 26 Broadway,
City, members of the

York
York

Leonard,

Jr.

Stock Exchange, will
partnership in the New admit to partnership on Jan. 2,
Stock
Exchange firm of William W. Kouwenhoven, Wil¬
Moore, Leonard & Lynch, on Jan. liam E. -Dugan, Paul E. Burdett
i. They will make their head¬ and Henry B. Laidlaw, general
quarters at the firm's New York partners,
and Theresa!,, N. Mcoffice, 14 Wall Street.
Sweeney, limited partner.

mitted to

York

a
♦

Challenge to Distribution

Thus distribution is faced with

dual challenge:

(Continued

first to advance

on page

3243)

■i

indus-

relationship to in¬

same

autos leads the

of X brand

com¬

to make a greater net in¬
plant, equipment and
inventory, then aggregate national
employment would be increased.
£ However, even if the entire au¬
tomobile industry succeeds in sell¬
ing more cars, and in this manner
obtains a larger share of the con¬
sumer's dollar, it still does not
pany

vestment in

and he

f ^Address by Mr. Schindler be¬
fore Northern New
Jersey Chap¬
ter of American

Marketing Asso¬
Newark, N. J., Dec. 11.

ciation,

ings,

and

n° m ln

? ^ase Srew; out of an appeal by Almira

sarily been increased....* V"7*
Of course, if the increased sales

cus¬

only buy when he

has the money or
credit,

taxatkm

come as before. then, obviously,
total employment has not neces¬

always remember

can

If the total sales of -autos

bear the

campaigns,

sales

the pockets of their potential

household furniture

For

ever

prepared

The public may buy more
automobiles and less, let us say,

A Dual

The Diversion of Sales

our

economists

such

a
decision, with two justices dis¬
senting on Dec. 16 holding the State of Indiana was
without power
to jevy a gross income tax to a sale
by a resident of stocks to/An
out-of-state purchaser.
"; :
: \
r " v,
This reverses the Indiana Supreme Court which held that the

goods and services: is, determined by the
amount of money or, credit in the. hands of the
people. The primary force which determines the annual
volume of business done, in; this
country depends on the total amount jof money each consumer decides
to spend out*
::
.

').*

Securities Sales

under-privileged consumers-—comprising one-third of the nation—is indispensable for \
expanding economy. Costs must he lowered for benefit of lower income groups. Maintains trade
barriers plug the lines of distribution and must be abolished.
ail

Interstate

The Supreme Court rendered

Former Commerce Department official asserts our distribution
policies are faced with dual challenge:
(1) to advance interests of particular companies; and (2) to promote all business. Holds increase of
incomes

1946.

'mi'

Questions ol Foreign Economic
Policy
f

By RAYMOND F. MIKESELL*

Associate Professor of Economics, University of Virginia

Prof. MikeseH points out

ewentially

between national interests

'r
t

successful foreign economic policy is

external;

caV* attention to conflict in the foreign trade objeclaid down in the proposed I. T. 0. Charter. Sees difficulties
carrying out proposals under.conflicting ideas of private trading

fiyei
in

a compromise

and slate

trade

;

monopoly and contends

organization does not operate

a single
state trading
principle of free flow of commerce

based on relative competitive
advantage. Holds I. T. O. loopholes
regarding commodity agreements a practical compromise.

•

There are two basic questions to be considered
by every country
in the formulation of its
foreign economic policy. The first question
has to do with
'
r
<$>-

• • .

the

interna¬

tional

taining

and

political inter¬
of

capacity.

World

the

in d ivi dual

the
Raymond F. Mikesell

;

trade should

countries

and

In a world of widely dif¬
fering economic and political sys¬

tems and philosophies

v.f"

••

speed and safety of the far-famed
Hiawathas. No extra fare
fine trains —and

discriminano

any

discrim-

U.
;

interests and
t

-'fi v:Vj

•>

•••' .V*,-

•••■

••

J '1

private

enterprise

University of Toronto, Tor¬

onto, Canada, Dec; 13, 1946.

highway
you

CHICAGO

worries about

weather conditions when

ride The Milwaukee Road.

WINONA

ST.PAUL

Jl) MINOCQUA

without

MINNEAPOLIS

neit/iwoodt

A fast, Specdliner schedule.

ttiamuta

CHICAGO

con¬

employment jtor alt

The

cbuh^
Y^Y:-vY;YY^:7.Y/,YYYY-:

specific

objectives
United

measures

are

which

well known.

States has

sought to

(Continued

page

3244)

•

MOINES

SIOUX

CEDAR RAPIDS
•

FALLS

F. N. Hicks, Passenger
;

SIOUX CITY
•

OMAHA

Traffic Manager

Chicago 6, Illinois

The
re¬

duce barriers to the free flow of
-

WING

MINNEAPOLIS
m/dwest

DES

■

RED

bility .at high levels of income
tries.

LA CROSSE

•

DUBUQUE

and

way

trade

Y Y?. Y.'

day—each

have, been taken to further these
•"

ducive to; \yprld economic sta-

ex¬

these

MILWAUKEE

Jnternatibnal environment

a successful

*An£sddreSs by Prof. Mikesell

at the

be'multi¬

exceptions,, be carried

collusion;

foreign economic policy must be
something of a compromise be¬
national

political environ¬ f5* .There should, be .established

ment.

realities,

enjoy the club-like comfort*

International trade should, with
few

ternal

against
particular. ■ r..

••speed and comfort

the

productive

•

ination

other

tween

tion against the trade of

the structure of the international

and

its

peaceful nation and

objectives in the light of the in¬

economic

which

with

There should be

feasibility
of
realizing these
of

trade

You will

lateral in character.

country.
The
other question
to

world

consistent

reliability

twin ernes

large volume

United States will have

national

economic

•

for all-weatlier

follows:

There should be

the

standpoint

terests

summarize the basic
economic
objectives of

the United States

at¬

them

from

relates

may

foreign

and

means

ests

Objectives

•

objee-

tives

eco¬

nomic

the

Milwaukee Road

COM^^TA!.;^

-THE

3216

1 $i

reasons. For examples Continent¬
al, Fidelity-Phenix, Hartford, In¬
surance Co. of North America and

Bank and Insurance Stocks

shown

1936,

DEUSENS^^^==

VAN

Paul' Fire

St.

far

Marine

undistributed

greater

the group.

jfrarisnn it is of interest to note
that
the
Dow-Jones Industrial
Average has to appreciate 10.4%

By F. R. WILLS*

than the average of
On the other hand the

President, General Phoenix Corporation

How individual fire

in¬

surance stocks compare with the
reach
index and
with each other is
its 1936 high of 194.4.
In other
Words, industrials have declined shown iri the following table.

from

12/11/46

♦Aetna

,——

High

mszmi

72
*

''A^icultural^fcii.-^™
/ Amer. Equitable
/Bankers & Shippers...

81.5

ernment as its executive director

11.5

of the World Bank to replace Mr.
Robert H. (now Lord) Brand, its

49%

—6.6
—11.7

temporary

36.4

executive

76.7

501/2

—-

48%
35%

26.5

assumed

43%

60.2

new

96%

.27%

+Han6ver/&*-^-^«r
*Hartford

4.4

♦Ins. Co. of N.'A.——

971/2

^National

New Brunswick

53.8

New

51%

74.5

Hampshire

♦North River

;

44%

observed that

will be

First

ktocks

higher
of 1936, having
moved against the index.
These
are

those of the other 18?

We think

rather the

reverse,
for: the market has moved their

3,250,

companies to finance their busi¬

present

com¬

35.1

Born in Ex-

28.7

mouth, Devon
in

and

47.5%

for

the

stocks, 31.5%. The reason for the
disparity between these averages
and the index lies in the weight*

Firemen's of Newark and Nation¬

Liberty. Firemen's Fund is now
21 % 'above -its, 1936/high; after

Equitable.

American

investor would refrain from plac¬

ing his funds in Fidelity-Phenix
or Insurance of North America,
and instead would place them in

119.2%

for

stocks

such
able

Christiana

The

American

Equit¬
Shippers.

Bankers &

main

point to consider is

that one must distinguish between
the relatively speculative issues
of fire insurance stocks and those

Securities Company
Revised Circular

Request

of investment caliber./-The form¬
This Stock Presents

Interesting

bilities Against

New

York

Stock

volatile

market

action and may well afford trad¬

E..I. da Pont

1890

Sir

James

educated

and

.
;
Cam-

out¬
standing
record,
James
Grigg
passed the civil service examinaions with distinction and imme¬
an

diately entered the British Treas¬
ury in October 1913.
Since then
lis has been a career of public
service, culminating in Secretary

this notable Briton, whom the

London Economist describes

BArctey 7-8500

T^etype—NY

sort of a guide; But
long 4errh investor -this

serve as some

for

experience, is the fact that, to ac¬
cept the Secretaryship of War re¬
quired surrendering all civil ser¬
vice retirement benefits

lated

Grigg

accumu¬

the years.

over

was

in the British Treas¬

only two years when World

ury

War I called him to accept a com¬

mission
After

the

Artillery.

Royal

serving in Salonika, Grigg

He became

retary to

Principal Private Sec¬

Chancellor of the Ex¬

chequer / Sir

April,

Robert

1921,

and

post under his

the

Home

held

the

Sold

—

REVIEWED

again.

Mr.

Grigg

then / became

Quoted

sentative Earl

—

COMPARED

a. m. to 5 p. m.

tP.

C. T.)

Sir

was

ih/1932; he
'

James'

this

was ere-

repeal

post

was

Fi¬

India's Executive

39). He
In

was

1939

(1934-

made K.C.S.I. in 1936.

Sir
as

Council

James

returned

Permanent Under Sec¬

wartime

clared

Lewis of

Ohio,

was

that

now

to declare the

emergency ended. In a letter
House Speaker-designate Jo¬

war

seph W. Martin, Jr., of Massachu¬
setts, he said that repeal of the
President's
would

powers

this

based

the

occupation forces

to say:

blanket
the

end

reason

War

declaration
would

war

of its

Act,

the

force

Department to abandon its

tices."

Army would be compelled
rely entirely on recruiting'

to fill manpower

requirements.

3. The modernized staff structure

the Army would

be elimi¬

nated.
4. Statutes

providing

secrecy

patents essential to national de¬
fense would be wiped out.
Demands

for

repeal of
had
been made earlier by many GOP
leaders, including Martin.-

the

quick

President's

war

powers

E, F. Hutton Co. to Admit

War

E. F. Hutton &

pres¬

ent modernized

is based

the

organization which
that act and revert to

Co., 61 Broad¬

New York City, members of

way,

powers.

the

also,

effect upon the first

Powers

emergency

2. The

Europe

Japan. The United Press ac¬
count, as given in the Washington,
D.C. "Post" also had the following

Repeal would force the Army
to fall back on "extremely lim¬
ited procurement authority and
unwieldy
procurement
prac¬

time

and

Draft

End

present procurement pro¬
gram of the armed forces is

have

"far-reaching conse¬
quences" which would injure ihe
United States Army, particularly

Would

Repeal
1. The

"neither wise

desirable"

nor

New

Stock Exchange

York

outdated

tee

lacked

//////+//+;//';/; private
New York

Chicago
-i—
San Francisco
TELETYPE.L, A. 279 — h. A. 880
.

adequate staff for

thorough study, he told Martin

that

than

war

powers

granted

—

the

500

emergency

many

late

Australia and New Zealand

them

baniTof

President

NEW SOUTH WALES

immediately after Pearl

(ESTABLISHED 1817)

Harbor—were contained in vari¬
ous

Paid>Up Capital

statutes.
■

He said his

only

-£8,780,000

—

6,150,000

'Reserve.' Fund

ited

North

Seattlo0''''/-

East,
and

Italy,

Africa,

powers

could

the

organization

£23,710,000

> i

the

Middle

Holland

Head Office:

new,

Congress convenes. The

Committee

will

be' Republican-

• 1 1 1 •

,.:

OFFICES:

29 Threadneedle Street,

overall study of the problem

George Street, SYDNEY

LONDON

E. C, 2

-47 Berkeley Square,

as soon as

£~*h '■> 'j

THOMAS BAKER HEFFER,

and

government."

Judiciary Committee undertake

'/ ty

Aggregate Assets 30th
'
Sept., 1945
£223,163,622

"without

harm to the economy of the coun¬
or

Liability .of Prop.- 8,780,000

He recommended that the House

Normandy,

Germany,

Reserve
"■'!

immediately

conduct of

During the war, Sir James vis¬
—:

investigation showed

46 minor

repealed

remaining in that post until he

210 West 7th St., Los Angeles

United Press dispatch from Wash¬
ington
stated on Dec.
11, de¬

try

became secretary.

—

3242)

page

He made these points in oppo¬

the Chief Executive's
grants.
Mr. Lewis,
a

Roosevelt

Member of the Viceroy of

Britain

BUTLER-HUFF & GO.

.rntg{•

sition to a blanket repeal:

Chairman of a special GOP Com¬
mittee which is studying possible

retary of State in the War Office,

y•

(Continued

Inquiries invited. Orders solicited.

did not know

much about down payments as

time ;powers be given a major
place in the ^party's platform for
the 80th Congress, brought) em¬
phatic disagreement from Repre¬

Revenue, a post he held during

nance

Special Bulletin and Booklet Service to Dealers & Brokers
Trading daily 7

same

Stanley

successors:

the years 1930-34.

indicate

ated K.C.B,

—

chaiipaanipf iholBpkr&ojf

table will

Insurance & Bank Stocks
ANAYLZED

Newark,

unsatisfactory.*

A proposal by the Republican<£News, official publication of the controlled ' in
line
with
last
Republican National Committee, month's GOP congressional elec¬
that repeal of the President's war¬ tion victory.

the

period that,

—

American

flan to End War Powers Oppose

in 1919 returned to the Treasury.

those stocks
which the market has particular¬

1-1248-49

Bought

as an

administrator of long and varied

ly favored for good and ^sufficient

Telephone:
Bell'

truck paper was

At that time

Grigg
>

ing

CxchangS;

126 BROADWAY, NEW YORK 5, N.

Chapter,

ad¬

surprise,

organization pre¬ and other national Exchanges, will
opportunities for short and Baldwin,. Neville Chamberlain,
scribed by earlier statutes."
admit Joseph J. Edgerton to part¬
medium term gains, in which con¬ Philip Snowden, Winston Church¬
nection^ the tabulation above may
Complaining that' his commit¬ nership on January 1.
ill, and in 1929-30 Philip Snowden

Laird, Bissell & Meeds
Members

are

Tax Loss and Arbitrage Possi¬

80%

our

of business, while our experience

+A paper read before the North¬
N.

and, much to

this proved to be a desirable class

basis of

the

posed.

The average for the 18

The dealers had very few,

ness.

or
the

Dridge, where he made

stocks

cars

vance

Marketing Association,
N. J., Dec. 11, 1946.

high

fi-

pressing the existing

were

tion

prices /up, in triost cases because adjustment for capital changes.
of superior earning and growth
Such a table as this is some¬
factors.
thing to study with a speculative
Among the remaining 18 stocks; eye, but it cannot be used as a
"potential"/ appreciation ranges serious guide to future .market
from a low of 11.5% for Boston to performance; if this were so, an
a

automobile

dealers

are:
Continental, +7.1%; ing method used in computing the
Fidelity-Phenix, +13.2%; Glens index and in the stocks which
Falls,
+4.1%;
Hartford
Fire, comprise it, several of which are of State for War in the Churchill
f+4.6%; Insurance Company of stocks which are priced higher Cabinet.
His
long
service as
Stocks which are
North
America,
+15.4%; New than in 1936.
Principal
Private Secretary
to
included in the Standard & Poor's
Hampshire, +1.0% and St. Paul
every chancellor of the Exchequer
Fire & Marine,
+35.4%.
Does ihdexare marked with ah asterisk from 1921 to 1930 gave Sir James
this mean that their prospects of and in addition there are: Ameri¬ an
exceptional insight into British
future appreciation are inferior to can Insurance,} Fireman's Fund,
financial policies.
Characteristic

■

—

if any, outlets for their wholesale

or retail paper.
At that time our
Gfedit policies, were largely /de--/
haiici^g;/whicl^f
exceeds/alt pendent* ondur//ability to/ re¬
others.
/ ■'*■■■
finance automobile paper.
It was
In order to give a better
pic¬ the consensus of opinion among
ture of present-day competitive the banks at - that; time that it;
conditions, it might be well to would be risky for .finance, com¬
go back some 30 years and follow panies to handle retail passenger
the developments from 1917 to car instalment paper,
but they
the present time. As
were
willing that: /we handle*
my experi¬
ence covers this
wholesale trucks
and
passenger
30-year period, I
We did,
can recall
competitive conditions car and retail trucks.
in 1917, 1918 and later.
however, reluctantly accept some
retail paper covering passenger
;
In those days there were few

of the institu-

Stocks

not, in fact

of<$>

therefore

ern

** Adjus ted for stock dviidends.

Sevenofthe^ 25;
than the hjghs

lines

all

will

finance companies and automobile

85,270 votes

♦Stock used in Standard & Poor's Index.
.

ington
Ban k-

4.98%

42.4

60%

-26.2

154

114

♦Springfield F. & M—

29.2

31%

board he casts

38.9

46%

X—

*U. S. Fire

pattern

23.2

Washington
♦St. Paul Fire & Marine
Prov.

h i

June.

the

—1.0

109

881/2

——

-13.3

31%

221/2

—

/ Securtty

di¬

duties in

Wash

57.5

41%
84%

♦Phoenix

W..

rector,. Sir
James
Grigg

•—4.0

26%

♦Great American

petitive

211/2

Franklin Fire X

;

Bank'4^-

Appointed by the British Gov¬

73
46

large field that it would
cover the entire com-'

impossible in the limited time allotted to

developments

55%

—

■

GRIGG

118

♦Fire Association**

Glens Falls

World

119.2

confine my remarks principally to

65y2
49%

♦Fidelity-Phenix

The subject assigned to me covers such

merchandising.

UK Executive Director of the

Boston-

-Continental

SIR JAMES

Series)

95%;

18%

(Twenty-fifth of

Holds bank competition

makeautomobile financing profitable.

necessary to
-

And World fund

credit field.

consumer

affect dealers' operations seriously, since banks will take only most
desirable portionof retail' paper. + Predicts higher rates will be

Officials oi Bank

Appreciation or
Depreciation
to Reach 1936 High
vX
35.2% //
24.0
rt • '

1936

Asked Price

banks in the

level

Dec.

its

Finance company;executive traces history of automobile purchase
financing, and indicates aid that was given dealers by finance com¬
panies in promoting sales. Shows declining profits in automobile
financing, but asserts finance companies welcome competition of

fire

stocks.

•

Consumer Credit

earnings,:

By way of com-<S>
further since 1936 than have

An interesting and harmless "indoor sport'; is that of occasion- ^wth; of: /such stocks/as: Ameri¬
can Equitable,
Bankers & Ship¬
i^llycombttting^the^pot&Uiail market Jappreciationofstocks on the
pers,
Franklin, Hanover, Home,
assumption that the market will eventually move up from its present
North River; etc., * has been * well
level to a previous high point.
For example, Standard Sc Poors
below average.
/ ;
-Weekly index of fire insurance stocks was 116.8 on Dec. 11, 1946; its
previous high was 124.3 in February 1936, and the potential appre¬
ciation is 6.4%.

J*#

have

growth in equity since
measured by the plough-

•

back

Stocks

This Week—Insurance

«-l

1946/J

i ;

Agency arrangements with
throughout
■

■

■-

'■

—

Bsb1hU|^

■»'—■

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

Volume 164

26%,-Dr.

Pre-Wai U.S. Pei

Capita Income
Record High

Was at

much

of the

highest

the

world

;

one

the

retained

of the
than
one-third of the incomes of the
upper 5%.
For the lower 95%

they

returns for personal effort and on

of the National Bu¬

National

Income:

by the National Bureau

of Economic

somewhat

less

senting returns

and
on

that

components

—

its

from

property and

total income payments

duction of federal

the

upper

the

total

flow

Michigan City, Indiana. • Caps
made in its Chicago plant at
320 West Ohio St.
: v I
>
are

The company is
capacity levels and

orders

its

filled.

operating

than

national product."

offer to sell nor

Co.

and

1914,

year

months

sales

6. H. Walker & Go. Will

bankf

AdaiHMcKaigkl.Newloa
G. H. Walker & Co., members of
the New Yprk, St. Louis, and Chi¬

cago Stock
David

Exchanges, will admit
McKnight and George

A. Newton to partnership on Jan,
Mr. McKnight will muke his

headquarters at the

firm's

Newton

and is owned by four

will

located

R, Portis, Lyon Portis and Theo¬

for

Mr. McKnight

formerly

was

ing

ration of New York.

27,500

solicitation of

representing

offer to buy

$25,000,000{

any

of these Bonds«

•* I'

Commonwealth of Australia
TWENTY-YEAR 3'M BONDS

one-

over

■-*

••

(

-'a* I

fifth.

"These

contrasts

indicate

Dated December

big

among industries in
member of the work¬
population." In agriculture,

differences

1,1916

•

...

V*jt%

Due December 1,1966

'j*

«, «

VXV

income per

ing

income

produced

Interest

per person em¬

ployed was half that of the coun¬
try-wide average; in secondary
commodity
production
and
in
commodity
transportation
and
distribution, it was equal to the
average, and in the service indus¬
tries, well above the average.
A relatively large share of na¬
tional income, well over one-half,
was
accounted for by industries
dominated
b y
unincorporated
firms, land
a
moderate
share,
somewhat
over
one-third,
by
those dominated by corporations.

payable June 1 and December I

Price 98*/2% and Accrued Interest

Copies of the Prospectus may be obtained from only such of the undersigned as may
legally offer these Bonds in compliance with the securities laws of the respective States.
1
,t'
^

}

*'<

v—

V..r>

12%

of the total was ac¬
counted for by government. "To¬
Only

tal

and

service

income

per

MORGAN STANLEY & CO.

em¬

ployed rise steadily," Dr. Kuznets
says, "as we pass from the group
[of industries] with a large pro¬
portion of unincorporated firms
to

the

industries

dominated

THE FIRST BOSTON CORPORATION

BARRIMAN RIPLEY & CO.
Incorporated

BLYTB & CO., INC.

private corporations, to those in
corporations are subject to
more government regulation, and
finally to the public sector."

GOLDMAN, SACHS &

which

LAZARD FRERES&CO.

SALOMON BROS. &
UNION SECURITIES CORPORATION

WHITE, WELD & CO.

DREXEL &

Distribution

National

Income

"The estimates show that of

tional

income

than

100%,

na¬

.•."

[1919-38],

the average,

more
was

distributed in the form of income

payments.

LEE BIGGINSON CORPORATION

produced - during

the two decades

The

excess over

y P

*\."J

J{K

SWISS AMERICAN CORPORATION

R. W.PRESSPRICH&CO.
v

-3

«r

•

SiSS
i'

>■

•

*■

December 16,1946.
S

officer of Argus Research Corpo¬

rM::

slightly

St.

dore Portis, each of whom is sell¬

period almost half was engaged
in commodity producing
indus¬

counted

Mr,

Louis, 503 Locust Street.

"The Industrial structure of the

tries, and less than a third in the
service industries. Agriculture ac¬

New

York office at 1 Wall Street.

■m

working force is quite different,"
Dr. Kuznets finds.
During this

this

estimated at $2,175,000, and net
earnings of $323,000 for the period.

Shilling-

The offer is made only by the Prospectus,

ed for less than 10%.
;

basis.

sales
with

six

Differences Among Industries
an

dis¬

first

brothers, Arnold E. Portis, Henry

ables disappear quickly and con¬
sumption of services coincides

This announcement is neither

can

allocation

During 1919-38, the commodity
producing industries accounted for
38% of national income; the serv¬
ice industries (governmental, pro¬
fessional, personal, etc.) for 42%;
commodity transporting and dis¬
tributing
industries,
for
20%.
Agriculture, one of the commod¬
ity producing industries, account¬

being

income flow and

of both

has

now

books

Production

tributed

ing group which on Dec. 16 niade
a public offering of 100,000 shares
of $1 par common stock of Portis
Style Industries, Inc. at $6.50 per
share. The company is one of the
three or four largest hat manufac¬
turers in the country and the fi¬
nancing being done today, will
mark the first opportunity the
public has had to participate in
its ownership.
It was organized

70% of national income as meas¬
ured in 1929 prices. Since perish¬

received

than 5,000 custom¬

ers

its

law, Bolger & Co. headed

products, etc. An almost
equally large share was accounted
for by services. These two cate¬
gories accounted for more than

before de¬

Distribution is effected

in this country and Hawaii. Its
fur felt hats are made in its plant

primarily from the
groups!

Brailsford &

decades

paper

income taxes;

group

two

hats.

mer

through

these

Shares of Portis Style
Industries

goods
to
ultimate
consumers,
about 40% was made up of per¬
ishable
commodities, i.e., com¬
modities Jasting
less than six
months, such as food, drugs, fuel,

repre¬

The report shows that when the
To show how this high per cap¬
ita
income
was
produced and population is grouped according
to size of income per capita the
used,
Dr.
Kuznets traces the
"economic process of circulation upper 1% group received, on the
as
reflected in national income average, during 1919-38, 14% of

origin in the various industries,
through its distribution by type
and size, to the various categories

cloth caps and leather and
wood gloves and mittens for men
and boys, and all types of sum¬

Group Offers 100,000

orie-

Into Capital Formation

mation."

hats,

even

that

;•

The company manufactures and
distributes fur felt and wool-felt

Last year the company had a
volume of around $3,675,000,

90% of national income, leaving
only 6 to 7 % for net capital for¬

enterprise somewhat higher.

Research.

less, than

the

payable Dec. 27

of record Dec. 20.

1919-38 the flow of goods to con¬
sumers accounted for well over

capital than present data permit,

Summary of Findings, announced

constituted

"During

the share representing compensa¬
tion for personal effort might be

monograph,

and* for

Flow of Goods to Consumers and

income

Economic Research in a

staff

incomes of the upper 1%

population

employees of the company. Di¬
rectors have declared a 50c divi¬
dend on the stock,

components, Dr.
Kuznets concludes, "are the char¬
acteristics of a highly developed
industrial, largely urban economy,
with a relatively democratic or¬
ganization of society and freedom
of enterprise.".

Dividends, interest,
accounted,

suggest

come

and

come

property than those

and rents combined

data

of their present hold¬
An additional 10,000 shares
registered and are being sold

All these aspects of national in¬

upper

heavily

the average, for almost half of the

finer line could be drawn between

use

mation, and for almost 70%

tenth.

sity of Penn¬

the
more

were

in the prosperous decade 1919-28.

weighted by dividends and other

fraction of national income.

sylvania and a member of the re¬

the

much

income from

net

undistributed

incomes
were

of the lower.

1929 the share of national income

Univer-

Professor
Simon Kuznets

that

upper income

The

about 25%

ings.

net

than 95% of net capital for¬

most 78%.

Roughly four-fifths of national
was distributed largely for
personal effort, one-fifth as re¬
turns on invested capital, he says.
It is possible, however, that if a

its

Sample
savings

groups

Kuz¬

large

very

current

without

their share in total dividends al¬

high-

findings pre¬
sented by Si¬
mon
Kuznets,

and

finds

the

leaving a trace in
the stock of goods.
Savings embodied in net capital
formation, he finds, are accumu¬
lated mainly by individuals. Dur¬
ing 1919-38 they accounted for

their average share in total wages
salaries was less than 7%,

profits by corporations and ;say«f
est in the his¬ ings by governments wasonly
Ordinarily,
Dr.
Kuznets
tory
of this 4%."
country
b e - says, the amount not distributed
in the form of income payments
fore
World
War II.
This is less than 4%, merely a minor

but the
'

this week

ishes

and

Kuznets

product of economic activity van¬

one-tenth the sharesde¬

Dr.

production, Dr.

proportion

14% of total income pay¬

ments,

their

nets points out that

by ;:these-upperr: Income

average,

During the two decades 1919-38, average national income per
capita, pec gainfully occupied person, per person employed, or per
j
''
\
family unit in^
—
the United 100% reflects the capital deple-jStates, was tion in the depression. "Even in
not only one the; cyclically
prosperous
year

with

Be¬

groups.,
,.
While the upper 1 % group of
the population received, on the

income.

reau

reports.

•

underreporting

returns,

ceived

finds ?ver one-half of total income was
accounted for by unincorporated firms; that upper 14% of income
group received 70% of total dividends; and that income flow of
goods to consumers accounted for more than 90% of national

Kuznets
possible

however, these
percentages, the report notes, may
underestimate ;*■ by;
perhaps : as

national income, also

tax

National Bureau analysis of 1919*1938

Simon Kuznets, in

Dr.

cause

3217

*■

n^V-

FINA^i^ CH^NICIiE

THE <JOMMERCIAL

share or twice

;the present- divi¬

The traffic outlook for

dend rate.
*«

Thursdays December 19,* 1946

Pflugfelder & Rust and McGinnis, Hampton &

highly favorable and with
the new rates recently -authorized
even better ppr share results are
^#^1' Ywric "Stbcat13fi[xchaiige: ■ f-Bamptoxt^dfe
looked for next year than in 1946]
The -stock sells -only--about six- Rust, ^! Broadway,-New Yprk City, -will be dissolved
times potential 1946 earnings.
-1 two new 'Stock Exchange firms, both of which will be located at 61
1947 is

Sellger to Be Formed on January I $1

Railroad Securities
recommending!he securt

Many rail analysts have recently been
Western Pacific, and particularly

the preferred and com¬

ities of

stocks, as representing outstanding values in the rail field. The
common has recovered some 10 points from the low of a few months
mon

organization.

Broadway, will be formed by members of the dissolving

Raymond Kenney

but is still available almost 20 points below the 1946. high, and
preferred has retraced only about a third of the break of 30 points
it • sustained
during the selling*
■ ■
First
Colony "Corp.,
521 Wall
'wave.
With the common bh a $3 r vertible into common stock at the
Street, New York City; announced
rate of $50 a share. Through
•dividend basis the current return
of retirements and
is better than 8% while the pre¬ 'combination
=the Income "bond?
ferred affords a return of around conversions
6.4% on its $5'dividend at recent; outstanding had been reduced to
ago

With First

the

Colony Corp.

market levels., : •;■■■:/
;

a* $11,807:700 as of the beginning
last May.
**

After the coimnbn -has received;

of
;

comparison with non-equipr
ment debt aggregating only $21,r
807,700 the company as of the end
of September had net working
S tanably^ mauate ^gdinst lany
(SpiM b£ $2l/S07#0b.1 Moreover
crease in the common dividend,
at least for the time being, but the the net working capital does" not
$3 in any one year the preferred
shares equally in any further distribution. This provision willpre-

current rate appears

well secured

together with the road's
strong - tteances
2rnd favorable

and,

^earnings ipraspects;^ould- war'rant considerably higher prices./;

against
tax- liability, deferred

posisble

Pflugfelder

Wm.

certain jreserves

indtufle

Patrick <8. MeGfami#

Sylvester P. Larkin

maintenance, etc., invested jn gov¬
ernment bonds.
As of the end of

year.these holdings amounted
$12,000,000.
D. Raymond Kenney
preferred Stock ($100 par)
structure Western Pacific is fi¬
is outstanding in the amount of that D. Raymond Kenney ht^ henancially * one of the strongest
$318,502 shares and there are come associated with their firm.
roads in the country.
It emerged
408,283 shares of common, in¬ Mr. Kenney was formerly with
from reorganization only a few
creased by. bond •conversions from C. E. de Willers & Co. •
I years ago with fixedinterest debt
the
wfeinal issue of 319;033
confined to equipments and $10,-!
■Shares.; In xview "of r the Strong
€00,000 of 1st 4s. There were also
treasury position and reserves set
-con
,
hp it Is generally expected that
last

to close to

iahd

In relation to

The

•

William H. Taylor on
WorUFaad Staff

capital obligations'

further
: William H. Taylor, UB. Treas¬
next year. It
would; not appear unlikely that ury monetary official well known
the entire balance of the Income in the United States and other
bonds
might be retired..: This countries, on Dec. 16 joined the
would be particularly favorable to International Monetary * Fund as
will. be

stock

common

sharply' reduced

Chicago Railways
Cons^^is; IS27

Hugo E. Sellg;er
f

•

John G. Preller

O'Donnell

James

Henry Oetjen
'

•

Stock in eliminating Assistant -Director of the Opera¬
through conver¬ tions Department. Since return¬
sion.
ing to Washington from London in
From a traffic standpoint West¬ June, 1946 Mr. Taylor had been
ern Pacific over a long period of Assistant Director of the Treasury
years has had one of the most im¬ Department's Division of Mone¬
pressive records among the coun¬ tary Research, a post held by him
try's
railroads.
The road has before he went abroad.
benefited materially from indus¬
With his headquarters in the
trialization of the Pacific Coast
American Embassy in London, Mr.
area
and other sections of the
Taylor for two and one half years
west.
In the early 1930s an ex¬
until June was the Senior Treas¬

the common

Arden Farms
Common & Preferred

Consolidated

Dearhbrn

dilution

future

Cotp.

Universal Match

California
ury
Representative in
Europe.
connection with Great North¬
During the war he worked on fi¬
was
completed.
This has nancial and
monetary problems

ern

Republic Pictures

been of considerable

Debenture 4s, 1965,

Ernst&Co.

the

At
Stock

Exchange

leading Security and Commodity

So. LaSalle St.,

time,

same

property

new

Chicago 4, 111.

well for a continuation of
the favorable traffic trends in the
augur

For 18 months in 1941-42 Taylor
in China

can

been showing considerable progresss in bringing operating costs

Optical Co.

control.

under

the

last

two

for
which figures < are
available, September and October,
transportation ratio averaged just
below

H. H. Robertson Co.

31%.

For the first weight
the year it had been

months

72 WALL STREET

around

Van Tuyl& Abbe

38%.

Telephone

Teletype

HA 2-6622

NY 1-1499

■:•/■ .%■

■ ■

Allowing for the

participating feature of the 'prer

of the Stabilization
China.
Previously he

ington and in academic work at
West Coast universities.
der Mr. John

Bank

the

Fisher, formerly of

England

and

now

Director of the Fund's Operations

Department.
-

II——Dfcto*

become
«

•

owned

(Special to The

Financial

CHICAGO, ; ILL,—.William- J.

stock,

vlor

States

Offers Rail Issue
&
Co., • Inc.,
of investment
that made public offering

Halsey,headed

Stuart

bankers

group

2%% bonds, Series A;
1, 1996 at 100%. Princi¬
pal, interest and sinking fund on
these bonds are unconditionally
guaranteed
by
agreement and
endorsement, secured by the first

mojrtgage

Erie RR.

Bessemer

The bonds

were

Lake

Conneaut, Ohio dm
Pittsburgh, of

from

pally

1st

Lake Erie to East
which

171

miles

•

paid regularly

are

the stock of Pittsburg -(at-6%

on the preferred and 3% on the
common) in the total amount of

$419,976 per year by Bessemer as
part of the rental for the lease of
the properties of Pittsburg..
^
Bessemer is

award¬

one

of the princi¬

carriers of iron ore in th'e
United
States,
transporting
it
bidding Dec.
17 on
from Conneaut, Ohio principally
98.8099.
to its connection with the Union
The Series A bonds are redeem¬
RR. at North Bessemer, Pa., for
able at prices ranging from 105%
to par. For the sinking fund, the delivery to the Pittsburgh dis¬
trict.
It
also
transports
large
redemption prices are scaled from

the

bankers at

102% to par. Annual

pal

competitive
a
bid of

quantities of coal, coke and lime¬
Dividends have been paid
on the capital stock of Bessemer

sinking fund

stone.

$120,000 plus

are

a sum

Approximately 80% of Pitts¬
burg, Bessemer & Lake Erie RR.
common stock and 80% of ifs pre¬
ferred stock is owned by United
Steel

all its
properties are leased to Bessemer
& Lake Erie RR. for a term of 939

States

years

Corp.

and

beginning April 1, 1901. All

the

stock

in -Bach year

all bonds

the

Bessemer

•beginning with

1904, through the year 1945,.
except in the years 1905, 1907,

year

1908 and 1932.
•

■'

Priced to yield better than

Hlrrnj Cltrtatmas

;

LOS

ANGELES,
has joined

nest Aeh
Sutro &

Analysis on Request

Happtj New fear

f
v»m

the staff of

Co., Van Nuys Building.

A War Memorial mlhe FinancIal District

-L,|
'•

i,:

■;

■■■■

Your Contribution is Earnestly

-cV^

Solicited

for the tiuildiftg FtfRd
CDARAMTEED RAILROAD

Broad Street

STOCKS-BONDS

New York 4, N. Y.

Telephone BOwllng Green'9-6400

Teletype NY 1-1063

f)-/

L h. rothchild &

co.

J Meniber of Natianal'jLS&ocialion
of Securities Dealers, Inc.

&2 vrall street
HAnover 2-9072

n. y. c. 5
Tele. NY 1-1293

CALIF.—Er-

Our Lady of Victory Church

ja^rtU it

*614'%'

■

With Sutro & Co.
(Special to Th. Financial chkonicle)

■

Line

operated

RR. Dividends
on

are

Bessemer and B
under sub-lease by Union
lease

Mtg "A" 4s 1993

Properties of Strategic Nature

Bessemer

DL&W—Lack a wan na RR N J

First Mortgage Bond on Main

Steel

& Lake
Erie
owns
approximately
179
miles of road extending princi¬
Pittsburg,

equal
previously
acquired for the sinking fund.

Chronicle)

United

Corp:

ings

L. F. Rothschild Staff

;

....

Halsey, Stuart & Co.

to interest

William J. Becker Joins

Bamptoa &

partners in McGinnis,

payments, contingent upon earn¬

earnings on the Becker lias become-associated with
the
10
months L, V. Rotchschili & Co., 231 South
through October were indicated La Salle Street. Mr. Becker was
around $4.15 a share. For the full
formerly with-Glore, Forgan &
year the earnings *on the ?samre
basis should run close to ~$6 'a Co. for a number of years.

lerred

common,

NEW YORK 5

with the Treasury in Wash¬

was

months

5%s

Alternate Ameri¬

Member

Board

At the Fund, Taylor works un¬

In recent months the road has

Talon, Inc.

,;-=

currency.

was

earnings.

Missouri Pacific RR.

will

due Dec.

Armstrong Rubber Co.

Preller,

mortgage

re¬

postwar years, and a high rate of

American

Sellger. '

Taylor went ashore with the first
troops to direct the handling of

status with respect to
transcontinental traffic. invasion

equipment has brought the
property to a much higher state of
efficiency.
All of these factors

Exchs.

120 Broadway, New York 5, N. Y.
S31

John

the invasion of North Africa Mr.

habilitation and the installation of

other

and

virtually rebuilt. Thus

were

Hugo B.

Sellger, <Chas! Warren Caswell, Henry Oetjen, Jariies O'Donhell, and

traffic bent-

road has improved its com¬

petitive
through

MEMBERS
York

McGinnis, Benjamin E. Bampton, member of the Exchange,

associated with the governments- Dec. 18, subject to I. C. C; ap¬
properties. During the in-exile, with the UK, and with proval, of $12,000,000 Pittsburg] under
miles
of trusteeship the main the Allied armies. At the time of Bessemer & Lake Erie RR first

period
the

Patrick B.

will form Pflugfelder & Rust.

member of the Exchange,

fit to both
lines

New

Northern

into

tension

Sylvester f\ LarMn,

WilliamH. Pflugfelder, Adolph H. Rust, and

Mclaughlin, reuss & co.

Volume 164

Number 4552

THE COMMERCIAL & FINANCIAL CHRONICLE

tual cost per hour of

Sees

Labor Reaction

Against Strikes
1

Manager

need

Men,
in-; his

says

Monthly Bus¬
iness

for

Review

December

that 1947 por¬
tends a much

better; overall
labor

man¬

Henry H. Heimann

labor

While

recognizes the benefits of unioni¬
zation, the head of the credit and
financial executives says that the
average

that full work at

desirable

convinced
fair pay is much

worker seems

than- long

weeks

pay-days during strikes
leaders.
opinions expressed by more

■Without

New

need

capita to

credit

production

for

per

not

The effect of this

fail.

removing regulations are helpful
in building a free atmosphere in
which business may breathe.
"The needs of the people all

quite?

the world

called by ambitious labor

over

These

should

use

are

such that

supply

every means to

great productive capacity will

be*a itremtendous assets;It will
supply needed wants here as well

Town

Dec.

industrial

o r

the rest of- the world.

This, is a

distinct

asset if

turn it to full

production. T

;vj J

...

"This

for

address

cumstances

MeTryle

Stanley

com¬

"We have

things through the decades in exchange for a week's work, and

Service
well-

such economic miracles

known lectur¬

one

series

tures

livered if labor

cooperate

lec¬

confidence born of

participation in the war. It
is an optimism that has always
been a part of our nation; but the
confirmed it.

We have

management
elimination of eco¬

the continu¬

improvement of techniques of
production.
,\

ous

bor and Man¬

agements—in the Atomic Age."
"It

be de¬

can

and

nomic waste and in

Merryle S. Rukeyser

"Lar

;

; "On the other hand, feather
restrictions on output,
declared, "to expect and slowdowns are anti-social.
than negative results from Those bad habits cheat
working-

would

-mistake," Mt. bedding,

Rukeyser
mbre
new

legislative.enactments in thte

men

field of labor relations. Harmoni¬

human

ous

relations

within

but. must

from

result

their second

role

cus¬

tomers of the goods and seryices

inL

produced

dustry cannot spring from statutes,

our

war has

permanent except change. Work¬
ers should be encouraged to con¬
tinue-to expect more and better

for

International

will preserve the

a dynamic field of
human relations, where nothing is

Ruk-

counsellors"

static formula for in¬

status. quo in

eco¬

mentator

relations
a

dustrial peace. No fixed set of cir¬

eyser,

its

stabilize the world.

who offer

and

ffWe have labor skill en masse
that is vastly superior to that of

"Management should be leery of

Hall, in

e w

News

in the rest of the world.

nomic

theless, larger than it has been ih.
If this demand is supplied,'

years.

,.,

was

overstated in. many lines, is never¬

our

expressed

The--de*! City,

goods; ' thoqgh

Congressional majority, will have an opportunity next
the legislative causes of class warfare in American
\ \
€ ^ ' :r
.•
•
•
: ■
-

remove

This view

insure unit* values that
merchandise.

new

industry..

expan¬

consumerbuying;

heavy

Will

mahd

The

month to

sales

goods. We

our

Congress Must Abolish

Industrial Class Warfare: Rukeyser

.«v[

•

nation has ample credit
postwar production.
At
the present time we are the
only
upon the morale of the nation is
nation that can really afford to
bound to assert itself.
export capital, goods and food. If
"There
is
a
recognition that we
use credit in this respect with
governmental war powers must discretion we will do much to
end and steps in the direction of

must

agement relationship.

efficient

well-planned

sion ; to' develop

agriculture now; is in a^posFbuy, andpr riper irivesttnentsby agriculturewill ensure
it&holding its
io£6h coihpCtitidn :ah6^t V
<
'JThis nation has taken' seriously
the leadership it
earned ; ;ot
hasiiad4hrust uptoh itv 'It^'Earn¬
estly trying to discharge this re¬
sponsibility. There is a grim de¬
termination throughout industry
and by many individuals that we

Credit

and

forces to distribute

tion "to

Association of

-i

follows:

trained

need

that

National

production,

^y.- ■ i'/ .:T; id

"First, our great productive ca¬
pacity -could be a real asset. We

Pointing to a noticeable reaction by the rank and file against
strikes, and, to the fact that labor leaders are being called to account
for work stop- '
\
®———
———
^——r—,
'
fourth and a fifth of our popula¬
pages,
Henry
H.
tion and its-buying power is tre¬
Heimann,
mendous.
It is a distinct asset
Executive
the

warns.

Some^of•' the' favorable factors
maim as

Henry H. Heimann, Executive Manager of National Association of
Credit Men, holds change of attitude of rank-and-file of labor is
good omen and augurs hetter busuiess <tnd credit outlook. Sees,
return to qualities of statesmanship in public affairs.

Heimann

3219

their

fellow

workers."

initia¬

the

Mr. Rukeyser advised managetive among the various groups in
merit to show sympathetic interest
industry. The need is to eliminate in the current
problem of balanc¬
the bias in the Wagner Act which
,

ing tile worker^ family; budget lit
discouragedforwardlookingmanthe,face of inflationary pressures.
from initiating humah He said that it behooved
manage¬

agement

that our ac¬ group of young men and women
will be helpful who intend to do things and to benefits. The effect of this was to ment to clarify the causes of in-*
ficial effect in the months ahead, and not harmful. This * situation, make progress. Most of our young freeze conditions until changes flation; and advised management
people are anxious to .get started.
a tremendous liability abroad, can
he declares. were demanded by the unions,
i to induce cooperation by workers
If they receive recognition and
"There is a genuine recognition be both a spiritual and a ,businesis
"Yet the long record of industry arid other groups to present1 a
asset for this nation. Leaving out their efforts are appreciated and
iby industrialists of their past la¬
if opportunities are made avail¬ through the decades has shown a united front in demand at the seat
bor mistakes and they are plan¬ the business value of our meeting
able to themj they will pull this
broad ' opportunity for enterprise of
ning to avoid these in the future," this responsibility, the spiritual
government for fiscal
and
nation through. They'have dem¬
Mr. Heimann says. "At no time satisfaction that will come through
onstrated their ability in the war by managementin volunteering to monetary changes needed to elim¬
in the history of business has so helping our fellow men will make
inate the causes of inflation.
improve
conStioni
in a convincing manner."
much
sound thinking
and pro¬ our very best efforts exceedingly
worthwhile."
gramming been scheduled, all di¬
rected
toward
a
better
laborThe recent portal to portal pay
management
relationship
and, decision will have a sweeping ef¬
This announcement is not an offer to sell or a solicitation of an offer to buy these securities.
consequently-, toward better pro¬ fect in many
large
industrial
The offering is made only by the Offering Circular.
Wduction. This is a real asset."
plants, Mr. Heimann warns. Al¬
Another improvement named by though this point of contention
the credit executive is a return to was first brought up in the mining
the qualities of statesmanship in industry,
it already has
been
public ' affairs with a decline in seized upon by some labor leaders
•.
th^ potency -of mob psychology. as applicable to any large plant
This recent trend he points out is where the entry gate is a long
a -possible asset
for our nation's distance away from the actual
work bench. Should this applica¬
economy.
....
and

the

men

who

pay

the union dues may have a bene¬

them in such a way

tion in this respect

The

-"We

will have

tion

the

portal to portal pay
tural
market for at
least two
decision become general, it will
year's," Mri Heimann says. "Agri¬ add heavy extras on industry's
culture accounts for between a payroll and thus increase the ac¬
a

good agricul¬

v$i2^00}000|;

Pittsbu^, Bessemer and Lake Erie
v

First
'

Raikoad:Company!||g|||i^
Mortgage
■

,sdnSeries A
oB%H2

•

"/tp-f

'■

;;

-.t. $:y, 0-

Principal, Interest and Sinking Fund Unconditionally Guaranteed
by Agreement and Endorsement, Secured by First Mortgage*

Give This Practical Christmas

Bessemer and Lake Erie Railroad

Gift to Your Business Friends

Dated December i,

M>>.;

Company
Due December

1946

1,1^5

and Associates
The issuance, guaranty

and sale oj these Bonds

are

subject to authorization by the

Interstate Commerce Commission

i!°

★
opinion oj Counsel for the Purchasers, the Bonds will be legal investmentsfor savings banks
organized under the laws cf the States of California, Minnesota, New York, Ohio and Vermont,

In the

The COMMERCIAL and

FINANCIAL CHRONICLE

and accrued interest
100%

Price

4 '

The

J i

A limited number of Gift

Chronicle
for 104
names

are

Subscriptions to The

being accepted.

twice-weekly issues.

and addresses of

Offering Circular may be obtained in any State in which this announcement is circulatedfrom
only such of the-undersigned and other dealers as may lawfully offer these securities in such State.

$26.00

per annum
HALSEY, STUART & CO. INC,

Send orders with

recipients to Circulation

••"

GLORE, FORGAN & CO.

',S.\

;■
■

Dept. today.

A suitable letter, mentioning the
♦

donor's

name,

•

R. W. PRESSPRICH & CO.

'■

-v.;

OTIS & CO.

fKCORPORATEO

GREEN, ELLIS & ANDERSON
^ t

•'

■..

■

The Bonds

to withdrawal,

v*l

New York 8,

N. Y.

are

-J.

...; '

■■■■

;

-•*

THE COMMERCIAL & FINANCIAL CHRONICLE

offered t^ien,

cancellation

**.

•>

WEEDEN & CO., INC.

THE ILLINOIS COMPANY

GREGORY i, SON

ROTHSCHILD & CO.

gift subscriptions.

25 Park Place

PHELPS, FENN & CO.

will be sent to those receiving
AUCHINCLOSS, PARKER & REDPATH

these

{fill *
4

(INCORPORATED)

■■

;

•

■

•

'
,

and if issued and subject Co acceptance by the Purchasers, to approval of counsel, to prior sale,
modification of the offer without notice,.and to authorization by the Interstate Commerce

Cotomi&sion of their issuance, guaranty afkl sale. It is expected that Bonds in temporary form will be available for delivery on
*
' or about January 6, 1947, at the office of Halsey, Stuart & Co. Inc., 35 Wall Street, New York 5, N. Y.
4

December 18,1946.

«»*.?

'i/.i.t.ys.jS.W-v.

•

discHmihatioh most controls removed

requiring' greater

in the selection of investments.

"Do

know whether "the
companies whose * securities you
own are gaining or losing in the
for
business
or
competition
whether they will probably earn
more or less next year than this

economic

natural

and"

demand

law

and
of

the main high. 1947 should be

supply

reasserting itself,
production should cure shortages.
Consequently the price of such
items as food and clothing should
decline; there probably will be
a
small percentage advance in
year compared, with their com¬ rent, with but minor adjustments
petitors? Maybe you do not have upward in electricity, gas, and
the time or don't want to bother fuel.
It seems to us, therefore,

By BRUCE WILLIAMS

What's Below the Surface?

you

diving Into a pond of water without
knowing what's below the surface—and yet that is just what some with such details. If so, don't you that this Index in the near future
people do when they buy securities without knowing what's behind think you should obtain com¬ will reach its peak, and thereafter
their investments. Do you know the resources, the management, the petent
investment
advice
and the trend may be expected to be
current earnings and earnings trend of the companies whose secur¬ supervision?" — From Walter L. downward."
ities you own compared with competing companies in the same in¬ Morgan's
current
memorandum
dustries?
London Stock Prices at Peak
on Wellington Fund.
"Many people buy securities
A recent letter from the man¬
"No one would think of

profitable

traordinarily

an ex¬

for

year ;

railfoad dqiiipmeht companies'"and
for

buyers of their shares at pres¬

ent levels."

Investment Company Reports

Fund—After

Affiliated

reduc¬

tion of bank loans from $9,500,000
to

$5,000,000 during the fiscal year,
Affiliated reported total assets of

$25,098,013 as of Oct. 31, 1946. Net
asset value of the common stock
was

$20,098,013. At the close of the
invest ments were
common stocks^ of which

fiscal year,

92.0% in

industrials accounted for 76.2% of

with

they

less

care

vestment

Cost of Living

thought than

in buying an
National Securities & Research
or a car.
Yet, their in¬ Corp, analyzes the Government's
purchases usually in¬ Consumer Price Index in the cur¬
take

would

overcoat

and

volve

considerably more money rent issue of "Investment Timing."
and require more careful investi¬ The Index is charted from 1939 to
date and shows a gradual rise of
gation to avoid mistakes.
"Successful
investing requires about 30% in prices up to the be¬

(1)

careful,

investigation

and ginning of this

year

and

much

interpretation of economic sharper rise during the first 10
and political factors in selecting months of 1946. Average "cost of
investments
and
(2)
continual living" prices are now about 50%
supervision of the investments by above prewar as measured by this
experienced investment special¬ index. The analysis concludes:

proper

Group Securities, inc
h CLASS OF,

ists.

"Because

the

magnitude of
the work involved in constructing

"As companies adopt new ma¬
Government's
Consumer's
terials and methods of production the
to reduce costs and improve their Price Index it no doubt will con¬
A PROSPECTUS ON REQUEST

from your Investment

dealer or

Distributors Group, Incorporated
63 Wall

Street; New York 5,N. Y.

competitive position, some com¬
panies gain and others lose in the
contest for the buyer's dollar. This

tinue

cost of

competition will increase in many
as consumer needs are filled,

the

measure

the

living in this country, and

hence is

lines

likely to reflect the rate

change

the

future.

With

the total.

agement of Incorporated Invest¬
ors

reviews the

general business

outlook and calls attention to the
recent action of

security prices in

;

London.

net assets at the end of the fiscal

stocks has

industrial
ceeded

decline

its

all

ered

slightly

now

and

recov¬

has

ex¬

high record
This does
any
close

the

level reached last July.
not

necessarily

have

with the level of

connection

marizes

se¬

Series

trie

SECURITIES

position of the Rail

INCORPORATED

CORPORATION

RESEARCH

126 BROADWAY, NEW YORK 5, N. Y.

New York

Chicago

—

Fund—Net

Trust

Earnings,

fell;

and

market

the

Fund—Net
1946

30.

divided

918,709

as¬

$5,-

were

cash

follows:

bonds,

9.9%;

1.6%;

pre-

74.5%.

commons,

Bond Investment Trust—Net as¬

sets

Nov. 16,

1946 totaled $6,-

836,896, equal to $105.78 per out¬
standing trust unit.

prices of their common stocks de¬
Dividends

clined correspondingly.
Los Angeles

were

31, 1946 were $4,equivalent to $5.66 per

and ferreds, 14.0%;

for most railroad equip¬

dividends,

Lord, Abbett & Co.

Series

Oct.

Nov.

items,

companies.

ment

Axe-Houghton

materials has made 1946 a

other

bad year

investment dealer, or from J"

Mutual

First
assets

News," sum¬ sets

"Shortages of steel, lumber

your

Income

and

largest with net assets of $9,128,399 and $8,861,752 respectively.

share.

Stocks

Equips as follows:

NATIONAL

$23,-

were

831,937,
curity prices in this country ex¬
share.- ;
cept that it suggests that at the
Dividend Shares—Report for the
present time British investors re¬
gard a serious international crisis fiscal year ended Oct. 31, 1946
showed total net assets of $52,as highly improbable."
304,498, equivalent to $1.42 per

"Railroad Equipment

OF INVESTING COMPANIES

1946

Oct. 31,

year

342,758, equal to $7.94 per share.
The report shows investments in
bonds of 44 different corporations

Distributors Group in a current

Prospectus upon request from

Fund—Total

"Common stock prices in Lon¬
don, it will be recalled, declined with the largest individual hold¬
rather sharply during the month ing
representing 5.24%
of net
of September. A recovery set in assets.
early in October which has con¬
National Securities Series—Ag¬
tinued with only minor interrup¬
gregate net assets of the nine Se¬
tions up to the present time. The
ries as of Oct. 31, 1946 amounted
London 'Financial Times' index of
to
$37,671,169. Preferred Stock

Railroad Equipment

Prospectus upon request

|||f

/
Bond

Manhattan

Incorporated Investors—A divi¬

"Since the total railroad equip¬
ment

produced in 1946 was less

than

the

scrapped,

amount

the

backlogs of equipment orders re-

dend

from

net

cents

of which

$1.50

from

stock

in¬

Dec.

record

investment'

net

payable

come,

$1.25

gains' and

capital

Dec.

1946

24,
11.

Fundamental Investors—A divi¬

dend

*%ck

of 80

Dec.

12.

American

Selected
of

dividend

FUND, INC.

share from

24, 1946 to holders of record

Dec.

INVESTORS STOCK

cents per

security profits payable

realized

which

$1.41

$1.25

Shares—A

share,/of

per

is from

capital

net

gains and 16 cents from ordinary
Prospectus

request from Principal Underwriter

INVESTORS
R. E.

income, payable Dec. 28, 1946 to
Prospectus

SYNDICATE

may be

holders of record Dec. 14.

obtained

Macgregor, President

SELECTED INVESTMENTS COMPANY

Minneapolis, Minnesota

expressed in this
necessarily at any
time coincide with those of the
Chronicle.
They are presented as
those of the author only.]

REPRESENTATIVES IN THE PRINCIPAL CITIES OF THE UNITED STATES

views

[The

article

135 South La Salle Street

Prospectus from your Investment Dealer or
*

CHICAGO 3, ILLINOIS

HUGH W. LONG & CO

not

INCO#COPAt£0

48 WAIL

STREET. NEW YORK S, N.Y.

LOS ANGClH

CHICAOO

SHARES OF CAPITAL STOCK OF

^Massachusetts
Investors

evstone

Trust
Write for prospectus

relating

the shares

of either of these investment funds, each
of which is managed independently of the
other

different management

group.

VANCE, SANDERS & COMPANY
Prospectus

from

your

The

may

be obtained

local investment dealer or

Keystone Company
of Boston

Prospectus
your

may

be obtained from

loca^investment dealer,

Congress Street, Boston 9, Man,

DEVONSHIRE STREET

111

BOSTON

or
NEW'YORK

THE^PARKER

CORPORATION

61
''P*

front authorized dealers, or

ONE COURT STREET. BOSTON 8, MASS.

Broadway
-st

izo

LOSf ANGELES

CHICAGO

«•

410 Wert Seventh Street

Soutb LaSalie Street

„

«"r,V-"S

*f">

'*""t

if''1

"i>

* v

"*"/

'*'Mw nftW^' '"t£

Number 455:2

Volume! 64
W-:

••

•

_.».

ri»v-.

...

/?..;.-.-:.%,x-;-,nw.;.x

7r3>-'■

■■■

which I helped to organize three

Banks in Consumer Credit Field

years 'i
mittee

early

Credit Committee

24-month

lenders

and

longer

even

Frequently, the
of

the

loans or
made avail¬

short-term

to expand and

lines

of credit were

reached

able

over

customers

were

and

banks

began

the

them, in turn to be rethe

bank's

and

Consumer
later

was

Institute

American

the

our

with

Credit

banks

creased
sumer

field

along

are

playing

importance in
Credit field

the

and

prevent

in¬

the small borrower or
purchaser of an automobile, re¬ proper competitive practices. Un¬
or some other desired less the bank is willing to install

tomers,

0,000

Nat¬

refrain

and

im¬

from

urally, follow¬
ing Regulation

frigerator

W the volume

Through necessity of putting either hire or develop competent
funds to work, the bank studied management and conduct its Con¬
its customer, his borrowing habits sumer Credit affairs along sound
and his possibilities as an instal¬ and ethical lines, it had better
ment
loan
customer, and con¬ keep out of this extremely com¬
cluded to go into the instalment petitive field and leave it to those
credit loan field directly, rather who have been engaged in the
than indirectly through the na¬ business for years and have the

declined

article.

low

$311,000,000 in No¬
vember, 1943.
Tod a y
the
is

volume

the $800,000,000
1933 to Regulation

over

From

mark.

John H. Lucas

W, Aug. 9, 1941, other companies,
including credit unions, industrial

companies,
experienced an increase

hanks and small loan

likewise

in volume.

Consumer credit

compara¬

tively new subject in American
banking
although many banks
have been engaged in the business
for

several

years—some,

in fact,

1924.
The real par¬
ticipation began within the past
decade and most banks generally
have
indicated
interest in
the
business in some form or another.
The
early participants demon¬
strated that the lending of money,
or the buying of installment con¬
as

early

tracts,
payable on a monthly
basis, could be profitable if the
business
were
handled
wisely.
Some
of the early participants
went into the field of installment
finance companies, personal fi¬
nance
comparlies or Morris Plan
bankers for men to head up their

departments.

their

Some

few

bought the entire control of some
of the smaller automobile finance

companies in order
trained
personnel.

obtain

This
was
neither desirable nor permissible
ill most instances, because of cer¬
tain
legal technicalities.
Other
banks decided to build up their
departments slowly with a head
of -! the
department qualified to
employees as
needed.
Following the stock mar¬
ket crash of 1929, banks found it
difficult
to ' obtain
sufficiently
train

their

sound

commercial

own

loans, compe¬

tition from other lending
arose

as an

the

had

Banks

buying

the

low-rate

tional

/ -J

lenders

proper

financial

whose

alternative

government se¬

curities and commercial paper or

"know

systems

how'-

and

procedures

proper

back¬

justified such ridicu¬ ground and training to handle the
lously low rates on their short- business on a sound basis.
term paper.
Morever, the bank
recognized the possibilities for a
higher return on the funds em¬
ployed and a smaller risk with a
diversified lending policy.
The
survey
showed that these new

Milwaukee Company
Re-elects Officers
.

outlets for the
could

both

lending

use

of bank funds

developed

the

borrower and

institution.

Com-

i 11 e e

tion's

for

the

h airmanship

of William M.
Wm. M. Colmer

Colmer (Dj^/jr

yy ^ 0 ^
clared that strikes have
progress

bank

The

of "sleeper loans" by bank exam¬
iners. Many institutions had made

waukee

Company, 207 East Mich¬

economic

and recommended
take prompt action

balanced gov¬
policy With respect to

labor relations."

"Corrective" but not "punitive''

States

labor, legislation, the group added,
is mandatory to assist the nation

employment

in maintaining high

"active

pointed out that the
has the greatest
buying power and the largest dev
mand for goods in its history."
"There is nothing wrong with the
country that hard work and re¬
sultant production will not cure."
The Committee's; Eleventh Re¬
port covered a wide' field of
recommendations concerning the
nation's economy, including emmoyment, surplus property, pub¬
lic works, construction, finance,

Chairman Colmer in presenting

budget, taxation,;agriculture, war

the report amplified on the Com¬
mittee's statements with reference

and

controls

u n

derwriters

economic

foreign

;
V ^
1944, Jhe bi?par-i

tisan group has conducted exten¬

the recent coal strike

and. made exhauson page 3251)

sive hearings

(Continued

tors of invest-

This is under

circumstances to be construed aS

offef to buy,

directors

the

•

NEW ISSUE

■

December 13,1946

.V,

;

•

•.

•

Mill

100,000 Shares;
v

v- i,.V/

V-i.W#

Kansas City Power

& Light

x;.;';:^Company|

3.80% Cumulative Preferred Stock
(Par Value $100 Per Share)

Price $102.70 per

Company, payable Jan. 2, 1947.
The

offer

anpffe/jng of thesesecuritiesforsale, or as
-V

solicitation of an offer to. buy,; any of such Securities',
'
; <x's •••xxx'
is made only by means (J the Prospectus.

or as a

The

were

viduals for the purpose of remod¬

and distribu¬

policy loans to corporate 'officers
in e n t securiand employees and hesitated to
ask for definite payments for feat ties, a n nounced
that
of criticism by, corporation offi¬
at the annual
cials responsible for sizable com¬
meeting of the
pany bank accounts.
company,
the
Requests for payment often
officers
and
caused the borrower, and the com¬
directors were
pany officer to take an unsympa¬
re-elected,
thetic view of the bank's problem.
Bankers realized the examiners' and, in addi¬
William
criticism was justified, but usu¬ tion,
G.
Marti n,
ally, wound up by giving some
Addison Hauweak excuse for not insisting on
Joseph T. Johnson
gan, and Carl
payment or even Reduction. This
G. Hausmann,
new type of lending with definite
formerly officers of Morris F. Fox
prearranged monthly reductions
& Co., were elected vice-presi¬
appealed to them.
The "sleeper"
dents of the company.
The Mil¬
was eliminated, his paying habits
waukee Company in October em¬
were
regulated, he paid and did
ployed the personnel of Morris F.
so promptly at the proper time.
Fox & Co., which withdrew from
To speed recovery in the early
the investment business.
thirties the National Housing Act
At the directors' meeting a div¬
of June, 1934, created the Federal
idend of $2.50 a share was de¬
Housing Administration in order
clared on stock of the Milwaukee
Banks

instances

should not be. permitted, since no
economic plans of Congress or the

igan Street,

The report

to achieve a "better

ernmental

the

are

greatly United

hampered the country's reconver¬
that Congress

state

recession."

j g g

sion

•

problems, called
cooperation between
management. and labor to eliminate immediately the current dif¬
ficulties so that we can avoid a

Policy
Planning,

under

the

pri¬

and

phasizing that productivity is the
real solution for many of the na¬

Eco¬

nomic
and

economy,

system,

%
The Committee, repeatedly em¬

MILWAUKEE, WIS.—Joseph T. to industrial strife. He said; "The policy.
profit
Created
president of the Mil¬ repetition
of. 'such unfortunate
to the Johnson,

officials had encountered criticism

to stimulate business.

Special

enterprise

stake."

House

Postwar

statements

agencies encouraged to make loans to indi¬

situation became
operating as well
income standpoint.
and

serious from

;

vate

by such par¬
the recent coal

whole

Our

sovereignty,

The

reckoned with in the, years to
come. The banks must handle the
business with
intelligence
and
Soundness

strike.

0 0

cus¬

alyzing blows

slump.

must

seri-

con¬

tinue to be stymied

business

o u s

Con¬

anything if the country is to

man-

g e m e n t

teamwork

commercial credits.

our

The

labor

bank activities in

own

Consumer

loaned

own

Depression

Special Committee on Postwar Economic Policy sees no need
for business stump and predicts a better balanced, constructive and
not punitive, governmental policy with respect to labor relations.
Says there is nothing wrong with economic situation that bard
work and resultant production cannot cure.

American
v

Foi

House

peak of $784,1941.

was

Asserting that high industrial production is the key to national
1 had conducted several years prosperity, a special:* House committee in its finalf report today
strongly urged
of research in the subject; for my
full - fledged
business of the country are worth
own
institution in 1935 and di¬
rected

period of time.

their

volume

business

obligations, payable

V.'ly V'VVXV-.:

Banking.

Place of Banks in the Con¬

ment

1931, 1932 and
1933, but beginning in
1934

for

<e>-

requested by Dr. William Irwin to
write the. text on Consumer Credit

Banks had comparatively little of this

Credit Field."

the

Association

Bankers

but warns they must
and soundness and refrain from improper

I have been asked to discuss "The
sumer

to oper¬
direction
of

men,

was
appointed.
member
of the first

and must be reckoned with in years to come,

competitive practices.

Colmer Committee Sees No Need

national \ com¬

tion,

banks became interested in consumer financ¬
ing only during last decade and describes part taken by American
Bankers Association in promoting this field of credit operations.
Concludes banks are playing increasing part in consumer credit,
Mr. Lucas points out

nine

the Consumer Credit Department
of the American Bankers Associa¬

Pittsburgh Trust Co.

Vice-President, Peoples

prior.

under

ate

By JOHN LUCAS*

handle it with intelligence

3221

THE COMMERCIAL & FINANCIAL CHRONICLE

plus accrued dividends from and Including'
December 1, 1946 to date of delivery

company

renovating and repairing who were re-elected are Joseph
T. Johnson, Alexander M. Railing,
homes
and
places of business.
Feeling; it necessary to induce J. A. Keogh, Earl Pryor, Clifford
banks to do so, the Federal Hous¬ A. Randall, Thomas H. Spence,
ing Administration even went so Herbert C. Wuesthoff and Paul S.
eling,

Grant,
cultivating some of the sources of far as to set up a 20% reserve for
income neglected
in the 1920's, bank losses—later reduced to 10%
but later available in the 1930's. ^hd permitted Instalment pay¬
Government finance agencies were ments to run for five years and 32
A charge of $5 for each
making
their
appearance
and days.
finance companies had encoun¬ $100 original face amount of the
not was permissible.
The Federal
tered the unfortunate 1929-1933

-7;x

Copies qf the Prospectus may be obtained from any of the severalunder¬
writers only in States in which such underwriters are, qualified to act as
dealers in securities and in which such Prospectus may legally be distributed.

Campbell, McCarthy &
The First Boston Corporation

Co. New Firm Name

v. recognized
that a
On Jan. L Thomas G. Campbell
higher rate should be obtained on & Co., 67 Wall Street, New York
a small or modernization loan re¬
cases
City, members of the New York
savings accounts from the public. payable on an instalment basis Stock Exchange, will admit Al¬
than on a strictly commercial obli¬
He made loans when the collateral
bert
G.
McCarthy,
Milton
A.
gation. Backed up by their Fed¬ Prinde, and Philip J. Byrne to
or financial statement justified it.
He
also
noticed
hundreds of eral Housing Administration ex¬ partnership, and the firm name
checks
pass
through his hands perience and a higher income rate, will be
changed to Campbell,
banks became interested in in¬
payable
to
instalment
finance
and
today McCarthy & Co. Mr. Byrne was
companies, personal finance com¬ stalment , financing
panies, employee loan companies, approximately ,12,000 have , plans previously with Shoellkopf, HutMorris Plan banks, credit unions— for or are already engaged in the ton & Pomeroy. Mr. Prince was

along

period

with

banks.

The

Government

recognized he had in most
solicited the checking and

Ilarriman Ripley & Co.
K>\7 iIncorporated...'•

Drexel & Co.

Blyth & Co., Inc.

•

banker

Federal

and

State—and

even

pawnbrokers and unlicensed lend¬
ers.
In many cases these checks
represented payments on instal¬
ls *Paper read by Mr. Lucas be¬
fore

N. JV
Chapter,
Marketing Association,

Northern

American

Newark, N. J., Dec. 11, 1946.

Consumer Credit

field.

with Frank C. Masterson

Recognizing the growing need
and to keep ahead of the times,
the American Bankers Association
created a special; department vfor
consumer

credit and took

over

and in the past

limited

1940 the activities of the Bankers

Association for Consumer Credit;
to organize three years priors <

did business as an

E. Campbell

Mary

Thomas

will retire

partnership

Campbell

Co. on

Incorporated

Stern Brothers & Co.

Baker, Weeks & Harden

Blair & Co., Inc.

Dean Witter & Co.

Spencer Trask & Co.
""

William Blair & Company
,

'VX"7..

...

:;-.7X.:'7:>7;7;77X77:7

'7:'

-'v.'/ '

Putriam & Co.

Fahey, Clark & Co.

J.J. B. Hilliard & Son,

Corporation

||g Kirkpatrick-Pettis Company

Maynard H* Murch & Co.

Bosworth, Sullivan & Company

The First Cleveland

7,;0^3H0-

" '

Hawley, Shepard & Co.

Reynolds & Co.

'7-./X 'X

First of Michigan Corporation

Estabrook & Co.

& Co.,

individual curb floor broker.

from

Hallgarten & Co.

Coffin & Burr

Kidder, Peabody & Co.

McDonald & Company

The Ohio Company

x;; :''

3222

;

•

THE COMMERCIAL & FINANCIAL. CHRONICLE

Chicago Stock Exch.

Sees Better Oil Outlook

Elects New Officers
;
By

WILLIAM J. McKAY

CHICAGO,

ILL.—At the An¬

nual Meeting of the

Chicago As¬

sociation of Stock Exchange Firms
and the meeting of the Board of

With

this

exception

the

;

off¬

has been temporarily

uation

of the official market.

In spite of its actual minor role,

only

has

cial

rate

the

barometer

economy

the

rather

weakly

currencies

practical matter, Cannow look forward to the
a

ada can

exchange into II. S. dollars of at
portion of her blocked, foreign as¬
sets. ' Also in entering the Fund.
With its currency at an enhanced,
valuation, the policy of the Do¬

the neighbor¬ |

of the other members,,
who have certainly not erred on stricter relationship with its offi¬
cial valuation. In projecting the
the side of undervaluation*
picture a further stage it would
The recent shuffle in the Cana- be both practical and
logical to
dian " Cabinet, whereby Finance- foresee
ultimately not two mar¬
Minister Ilsley has become the- kets at
varying levels but a single
majority

Justice

and

the De¬ market

the

official

rate

with

fense Minister Douglas Abbott has: fluctuations
within, the
limits
taken over the Finance portfolio,
fixed in accordance with the pro¬
does not suggest any change of
of. the Ii^ematioi^l
financial policy. On the contrary,,

it might lead to stronger action in

consolidating the currency posi¬
The, free exchange market
in New York has always present¬

tion.

anomalous situation.

turnover
tutes

only

The

market consti¬

mere

this

fraction of the

Dominion's volume of foreign ex-

vision^
During the Week
,

the predonoi-i

nant "feature of the securities

mar¬

ket

was
year-end selling on. a
larger than usual scale. Its impact

fell
and

principallystocks.

internal bonds

result

arbi-

traging operations in stocks
whereby stocks were exchanged
in Canada for

double

bonds, there,

pressure

minions and the

was a

internal Dor

longest term 3s

weakened to 98. The external sec¬
tion was little affected and there

.only- slight activity .with
prices mostly .unchanged.
There
was.further discussion concerning
was

CANADIAN BONDS
eV,%';*<• yZ-r'f

'p:V;:;-'. 7 *

another effort io market,

GOVERNMENT
PROVINCIAL

•

nominating

serve

one

Poiiras

Cai^dianln^rketr'

With

the

t he

,•;!.*

?."■

guishers. Acids,, alcohols, solvents^
medicines, acetones, insecticides,
plastics and detergents, asphalts!

and

ness
m

Compa

com¬

told

the

other

are
i

useful

led into complacency by the rosy-

picture of what industry

can pro-^^

duce*and by consumer polls Whichs
point to a demand Tor products^'
Our planners stress the produc¬
tive potentialities of the nation,
but neglect the most important
factor, which is simply that pro¬

Cities Service

oils

ciation

busi-X
develop-

e n

road

There is great danger, the asscK
was warned, of being mis¬

ofv

year:

n y,

In^

Appoints

industrial laboratories,

j ' "An expanding economy, and we
President
must have it to maintain full em¬
of Colonial Trust
Company,, has
ployment and keep the nation
announced- the
appointment of
Warren A. Poitras as Assistant solvent; will be achieved only if
the public is offered new com¬
Secretary and Assistant Treasurer.
forts and conveniences, and is in¬
Mr.
Poitras, -who recently re¬
duced to buy them," Mr. Thorpe
turned after four years', service as
continued. He pointed to the fact
a
Special Agent in the Counter
that the greatest industries in the
Intelligence Corps of the United
nation
today were founded .to
States Army, is in; the Corres¬
market products unknown a few
pondent Blink Division of the in¬
decades :ago, and they had no easy
stitution. He is a member of the
road tcrfollow. Often they strug¬
Young Men's Board* of Trade of
gled toXthe point of bankruptcy
New York, and Chairman of the
before
a
sales-resistant
public
National
Opinion Forum Com¬
pould be induced to accept what
1

Arthur

Kleeman,

mittee,
Mr.

Kleeman

also

they had to offer,

announced

j .The -petroleum

industry was
pictured as in a fortunate posi-r
tion, in the face of this predicted
competition, if it will only see the
challenge and grasp the .oppor¬

the appointment of John Dowling
;as an
Assistant Manager in the
Foreign Division. Mr. Dowling

|Wasxfori:^ahy7^ear&'ih the For¬

eign Department: of rthe;N^ohaI
tunities
City Bank,- and 'during'the^ war

general interest.

In view of

the " widening

the United

States

Navy.

limit

appeared

have

fixed

by, the needs of the
which were dictated by

public

hunger alone. Then the food in¬

dustry turned to packaging, and
new products. The public pal-,
ate was
delighted by prepared.
foods in great variety. Develop¬
ments in transportation and refrig¬
to

eration

were

and fill

utilized

create

demand for exotic

out-of-season

foods.

The

and,

amount,

spent
for
food .doubled
and.
trebled, even though the Ameri¬
can

stomach

grew

bigger.

o.The

petroleum
industry can..
duplicate that record, the speaker,
asserted, if it will put its mind,
:

revitalize its promotion and sales.

Admit Rudford Wilson I

CLEVELAND;" OHrG^urtiss,
jpodndsY
(House: Y& YCb^xUaiph^^ ^
Building, -members-ofr;theYNew velvets,

•

^e^jlizefs; vitamins and
.

brushes, 7 plastics

and

products and at stimpublic interest in them

new

ulating

which will result in sales.

pluming

(York fandY Cleveland* Stock.7 Ex¬

coyer

■

/ *£

\y-

■

}

;vHYyV-:'

•.

Y In doing this* the . industry will,
not only be serving its owii

inte^-»

OstsYxbut it;wiU7 be
MiU cThorpe^ pointed^ OutY to social;
Values, for; while « our • material,

his

will

hearers, there are those of us well-being erie&>. out/ for* this j
^ho pi^y fd^ another "automobile course of action, there is a deeper
industry "to pull us, out.Butwe significance in the spiritual qual-,
forget'YwqXtjnngs. One- is that an itiesx.tO be. preserved in' our Re?* '

B. W^Boas Heads Dept.

^fc^iiinon

Henry/Jr.j and Denis /M.

Stanley Heller Go.

nutorabhUnY^^iiuiustny; xdoesx mot
spring^ nprQvernjght.. tt:: tob&years

public.
;

become; partners in
Stanley Heller & Co., 30 Pine foyxleaderq of The industry-tp g;et
McKinnon, members Sti^etY N^^YorKlG
Ithmr;products: nt^pte^The'Sepf
of the New York Stock
New York' Stock; Exchange,-an- pnd thing we forget is that we can.
Exchange
on Jan. 1. Both will be located in
inounce that rBen. Wj Boas; form-" get .the same, or better results^by
the: IndianapolisY^nd.'
office^ Y 5 erly with Ernst & ,CP-, has-be¬ developing a hundred small new
East,; Market Street. Mr. x Hogan come
associated
with. them as industries which will fit more
has -been with the firm forTrnany manager: :of their
ipvestnient "d6- Teadily andYfapidly into the: oar
yearsSx/YISM
' jpartment;' Y
:
vi
-v;
x tional economy^,
Thomson

cereals.

JiasYPlbdncedY an. amaz? departments, for in wartime there >
ing. vauiety.^oi:^
vira&no:need •fof-xselling and. these
ucts, ranging from dynamite to forces fwere; aRowed ta atrophy*;
beaptyx aids* Fr9m. it ctre obtained There must be -a .unit of. effort,
rayon •dresses,,: -freeziiag; ;comf aimed. both
i^seardhYtq; disr t

Holt & Hogan Partners

Hogan

when this in-,

ready

Curtiss, House &Co. to

fat Thomson^ &

time

discount and ;-the changes; will admit Rudford K. glass, and humfreds of other items,
exchange possibilities the Wilson to partnership in the' firm each of which provides the basis
internal Dominions are
Toy apotheiY prq^tabie enterprise:
beginning bn;3^ ^
JiasYbeeft1
to appear: in the
category of at¬ •with'.
tfcriex-dhe YnatlotixTaces.'*
Cuftiss;; House *&; Go^for
tractive investments.
depression, Mr. Thorpe reminded
(many, years. •
•

was

dustry thought only in terms of.
such staples as meat and bulk

it
has .to
offer,. Once heart.and muscle into the job, and '
looked' do .only.jts the source. of raake the; creation: of a demand
fuel,grease and Wox* there,is now fqr, new things .its Number: One..
nib limit iwbfchx can/bq ,setvoa the assignments for- today...It * must..

jhe"served~as- a-ChiedF Yeoman. id

regard't<> future prospects I
sec¬

petroleum industry give heed to
story of the food industry.*

the

There

inherent

A.E.AMES&™

-p J, V/?,"';r v1/

items.

tor

Officer

Mont¬

refunding issue in this country, but it would appear that the
city -would, be better served in
placing the entire operation on

it -is likely that the internal
tion will continue to;

CORPORATION

shortages > is
filled,
Merle
Thorpe, direc-

real

the.

MUNICIPAL

Members
mittee—to

wartime

: three

serve

Goionial Trust

minion is in line with that of- the

Minister

to.

>-•' •'

Harry
dependent Oil
This state of affairs must be A. Baum, Wayne Hummer &
Co.;
Men's
Assosomewhat
embarrassing to the Ralph Chapman, Farwell, Chap¬
ciation of
*
5 :
Canadian authorities affording as man
ductive capacity is useless unless
& Co.;
Stephen Y. Hord,
New England
Merle Thorpe
it does a practical although super¬ Brown
there is a demand "for products^
Bros., Harriman & ' Co.;
in Boston on
ficial contradiction of their recent Leonard J.
As for the consumer polls,
they"
Paidar, Goodbody &
Dec. 4. This new and intense com¬ are concerned
step.
Consequently, it would be Co.; Fred W. Fairman, Jr., Fred
only with products
not only in an effort to remove
petition, the former editor of "Na¬ already accepted as necessaries or
W. Fairman & Co.
'
/
tion's Business" declared, will be conveniences
an irritating anomaly but also in
of
American life,'
line with operational policy in
waged among industries seeking and these products will not alone;
connection with the International
(to develop consumer acceptance provide the increased national in¬
of
thousands
of
new
Fund if the Canadian dollar in
products come we are seeking.
/'
the free market were brought in
freing prepared for market in our
Mr.
Thorpe
urged
that
the

of the International
Fund is approached and multiof

H. Davis & Co.:.

hood of 5% discount.

operation

conversion

Governors,.

created

years: Howard E. Buhse, Hornblower & Weeks; William A. Ful¬
ler, William A. Fuller & Co.; Wil¬
liam D. Kerr, Bacon, Whipple &
Co.;. Thomas. E. Murchison, Paul

re¬

point. With the official
rate at par the free rate hovers
case

[ -''•<

.overcome- -1.

and
v

urer:

Canadian

and at times it has

lateral

flected badly on Canadian credit.
The level of free funds now is a

Moreover, as the initial stage of

becomes

considered

been

are

Karlson, LaraV i

Secretary, and Assistant Treas¬
Whitney: M. .Sewart 7": •

the free rate rather than the offi¬

by the extension of
foreign credits.
For immediate
purposes therefore and in view of
transcendent importance of cur¬
rency relations with this country,
the Dominion can point to the
current advantage of cheaper es¬
sential imports from its principal
supplier.
•
set

Buckley, Harris, Upham & Co.,
Treasurer; W. C.
son Bros. & Co. ;

The petroleum industry should get ready now for a new era of
competition which is in the offing once the hazards of reconversion

Patrick F.

;

pomting out a new era of competition, holds
petroleum industry is iit fortunate position because of expanding
use of its products.
Urges producers to work for farther increase;
in use of
petroleum products through revitalized promotion ani
sales departments.

country, Canada is in a generally
strong creditor position vis-a-vis
the rest of the world and this sit¬

Merle Thorpe,

■

change transactions but, its day to
day importance in foreign eyes
has equaled if not surpassed that

Under Free Market

viewpoint the Canadian dollar figures in
the category of scarce currencies. Short range considerations there¬
povernori of: the Association
fore, can provide sufficient justification for the raising of the Cana¬ the,
following officers and Gov¬
dian monetary unit to parity with the U. S. dollar. Although Canadian
ernors were elected;
r.fY, *
policy has hitherto been based on long range fundamentals,tfae recent i Chairman:
Reuben
Thorson,
departure from a characteristic course of action can well be vindi¬
Paine, Webber, Jackson & Curtis.
cated as a measure of expediency.^
Vice-Chairraan:
From the multilateral

Thursday, December 19, 1946

The

petroleum

industry^

pppp\ ' 7; 7 ;'2|}|,r

■

Thorpe^^ j^de a

strongxa^r

peal for .the maintenance of free^ 7
dohtof choice:in free-marketsi(T»;>
*these days of planning, he said*:
there-is one way in which a citi-t
zen-can: put any plan to ihe aci4/
test;< Does it

social

arbitrarily create a

and Y economic •:order. 7

which
molded

the

individual-

into

will

ih.;'
/ beY
Or

subordination?

through • research and- marketing, does it provide for the making of ha& gone- a long. ways - toward baen: and women X who are thexri-Y
building: these': many: small - and selves competent and well-dis-;
j basic producersr but it can go a. posed to exercise x freedom* oi 1
^
great/ deal: further.r It has con¬ choice in politics and economics?:

Non-Callable

TAYLOR, DEALE
&
64 Wall

COMPANY

llffii;

($72,900)

;

Grand. Trunk Pacific Railway. Company

Street, New York 5

WHitehall

3-1874

Pp:

£15,poo |gx

;

':
'

•

-Dominion, ol Canada Guaranteed'

Price
-

CANADIAN

SECURITIES
Government

Corporate

yield 2.45%

° .Y"

X"Vi„v—,

•

Incorporated

stitutes,

\ X

Montreal

into cooking

gases

ink

and

paints,, antir

WinnipegJ'irj Vancouver

London,England

"On

this

decision,** the

speaker-

concluded,. .Vwill depend whether
the dignity ..of the individual

freeze,^ glycerine* ether and ex¬

tiadition: of The American* Repub-;

the

.limitless

preserved,*: twhether a

great

capacities of oilYit has used/the lie is to be upheld. The times
same

source

counter

destruc¬

tion caused by explosives
a;

is; to» -

plosives. :" Proving

14 Wall Street, New York 5
Toronto,

verted waste

fats, ammonia,resins, rubber ^sub¬

1|||| Wood, Gundy & Co.

Municipal

Provincial

.-Y/. -xY

3% Bonds, due January 1,1962
Principal"payable irt,Neva, YQrkJ Canaia"oiLiQqdOK

and'in¬

this tradition is lost to

will: he Tosf to

the ".ingredients:,

be:a^^tradition

fire

extin¬

are

heavy .with apprehension, for if

flammables, by using oil to obtain

^or

America, itx

the;'world. It Will/

,Volume

164

Number 4532-

-THE; COMMERCIAL 3t FINANCIAL CHRONICLE

Gilmour & Passmore

New York Slate

Mortgage Loans
Expanding at Lowei bteiest RaN

Elliott V- Bell, Banking Superintendent, ascribes lowest interest to f j
limit of 4% on GI Loans and to increasing competition of lenders.
!
Net expansion .of realestate loans bystate savings andloan. assoj

Cleveland Trust

M. Lowensfein Dirs.
>:

LloycJt

Gilmoiir,'. Senior

Company 1947 Predictions

In its "Business Bulletin'' for
December, Bank fore¬
casts: nine

Part-!

Eastman, Dillons. &. Co., .and:
Roy K. passmore, .Vice-President;
of Guaranty Trust .Co., of New;
ner of

■3223

developments in coming

trencfe^

cuirent

basis of

year on

Tim December issue of the "Business Bulletin," published by the
York,; have been;elected: directors! Cleveland/ Trust -t Company of Cleveland, Ohio, after reviewing
of M. Lowehstein & Sons,
Inc. economic conditions in current $
ciations in 1946 amounted to $46 8 millions.
struction industry and all capi¬
,(textRes)77,7; years, states "the following pre¬
The cost of.mm^
continued (to decline in New! 7 Mr. Gilmour is a Director of : dictions seem at the moment to be
tal
goods industries will be
York State this
year, thus providing a strong contrast to the rising ; Minneapolis-Moline Power Imple-! justified by the"evidence currently
enormously affected by the
ment.Co.; Farnsworth Radio and! at. hand": :" ; j \ 7.
manner in which current labor
!
*
.

—

nearly
other

tion

ev¬

0hahcedy by

was

sec¬

the'

the/ associations,; Television Corp.!; Pacific: Westernj
totaling $5,238,000., Oil

amount

addition, savings Und! iqari a?sociations
supplied !, the mortgage'

El¬

economy,
liott

Dec.

;;

16 in address-

ing

mid-...

the

/winter

con- 7

•ference of

the/

gage lending' is required to hold
institutional mortgage portfolios:

.'New ; York-,

.State League
of Savings and

keel.

even

Loan Associa- T

huiion

of ienuritiesi of this, cotton

goods

though!

house

which

had

Mr. Bell said ~

In the face of the largest volume
of mortgage

loan /associations

$46:800^000

lending in this state
decade, the average rate at
which new mortgage loans were
made by the state-chartered sav
iags and loan associations declined!
to: 4.35% this year from 4.98% iri
a

In 1942 the average rate on

accounted!

of the

extent

cl'ine

1946,

the market

de-

duration

the

and

the

tion.
tor

easy and

keeping long term gdvern-

ments^t^^an/wilLbe' the demi-

high grade bond prices

to the; average prices of 1946.
The interest of the government

-Guaranty Trust Co., and: is i

this expansion" in* a Director of the' Kennedy Valve
real estate loans outstendiag,
7/ Manufacturing Co.
"The year in mortgage lending;
7/7..,, ""
—
i
1
!
»-y''
has been distinguished also by the*

7 hating /factoid iir < the :
money
""market fon most of the year.

Agricultural

Commercial

4% rate, not only

pulledi

account

but also

tended

to force

"The decline in the average rate

primarily

Exchanges.

belaidj

oixnfiwdoanscthis yearoan

past

the

with

be almost

price

floors

quote lower rates in the hope of to force the rate down .on conyemH
attracting mortgage investments.'* tional loans as well. Second, thp
i
After, pointing out that the total competition
for available loans
holdings of mortgage investments was keen and lenders were M4
of hanking organizations of this
"state would show an increase this hope of attracting mortgage in-;
vestments to* themselves. It is a)
year for the first time in ten years,
the Superintendent said:
striking fact that the cost of mort-!
"The rate at which new mort¬ gage money has. been declining!
gage loans have been made, how¬ steadily in a period whose dis¬
ever, provides still more striking
tinguishing economic characteris-j
evidence
of the
resumption of tic. has been a > general rise in;

mortgage

lending.

The

banking

ST..

was,

Farm

arid

;

land; prices will decline

'Ed
,

ban

property.

The

under

the

Department's supervision have recently
supplied information in a special
report on their mortgage loan ac¬
tivity in the year ended last Sep¬

tember 30,

! "These
mortgage

BWw""

■

ments in real estate prices

/./

With;CoristrycHon costs

Louis

Stock

dustry' is uhfayorahlc.

prices "arid ■» dosts*
siderably ,r

can

Foreign

7 tained
-

our

markets, abroad in

the decade

following the first

World War is not in

prospect. \

arid forecasts afew; simple

nomic

fortunes

year

institutions

made

new

investments in 1945 of

the

first

the nation in

/qon7

ctmtinri® ^

of the housing 's^rt^g&
almost
end

Lynch, Pierce, Fenner &

its

remote

wilL bei

the

beginning.

year

sion

without greatly

that

con-|

Chapter

Brooklyn

National
countants

held

-rate of nearly $600,000,000.

series

productivity .and. lower
unit .costs it is not reasonable/ to
look forward

full

production

and. restoration of the

living.

conditions

standard

rising

' v '71

technical

v~>.

construed as an offering of these securitiesfor sale, or as an offer to buy, or as
^Mimtdtkn^aikeffm^bs^ any of such securities* Tha offer is made* only by means of the- Prospectus^;
.

Cost Ac¬

Association of

of 'the;
in

its

sessions

another

Thus
the making of new mortgage in- Wednesday evening, Dec. 18, 1946,
vestments; has nearly doubled in at the Park-Vanderbilt Restau¬
rant in Brooklyn, N. Y.
.1946.
{■
Mr. Leslie Mills was the prin¬
"A breakdown of the figures
speaker, Und hitskddresi
-shows that in the year ended Sep- cipal
dealt with "Current Problems in,
- tember 30, all classes of
mortgage
lending institutions under the De¬ Corporation Taxation." Mr. Mills
is a Certified Public Accountant
partment's supervision made $569,and a partner/ih|the firnr of ;0., F.;
• 000,000
of new - mortgage- loans.
* This total was made
up of $36,- Taylor & Company of New yprk;

December 19,1946

NEW ISSUE

•

>800,000 of FHA loans, $128,000,000
*

-of
.

The

large

total of GI home loans which these

institutions are making is testis
-monyto their public spiritedness.

Iiy helping - veterans to/nhtairt
housing the savings and loan asso-i
ciations made $37,000,000 of GI
-home loans, or 29% of the total:

First Mortgage

A member of the American In¬

veterans* loans and' $404,000,000 stitute
conventional loans.

$9,861,000
Eastern New York Power

Accountants,

Chairman

the

Committee

1946

Due December 1,1961

1961
V

Federal Taxation of the New York

$tate Society qf

Corporation

Bonds, 3M% Sinking Fund Series due

Dated December 1,

telsOTce-i

Price 102% and accrued interest

C^i^e^b^bihcl

rl:;7?;

Accountants and Director of Pro¬

•

Jlqans^ or 17%;; of theitotaLf >(,%

Formerly
Income

: -•;

lecturer

Taxes

7 7 7|7 ;

•?

7-r f
-

7 *

"•

' >• tr■ 2'

partment show that loans on one
-{and two-family dwelling constituted the major share of mortgage
lending volume in the year. Loans
.

Uni¬

turing

New York
war,

Federal. Taxation

the smaller residential proper-:

ties, of course, represented almost
the entire, volume of savings and
7 loan" associations.

almost 1,000 new

The purchase of

■

\ ■/v

University.

Mr. Mills

was

rank of Captain, USNR:

The First Boston

He also

member of the Price

:,*S

i:t

:'■»}

m,i *:r* < *.

:■>'■■■»

Corporation

Merrill Lynch, Pierce, Fenner & Beane

Smith, Barney & Co.

Adjustment - Boards for both the

:■<?*■ r~'<&

During, the

held the:

hj 3

it.;1

in the United

States Naval Service and

served

7 ■V| 7

,,,

small^nes^ences ^ War" and Navy^ Depaftmeids;/^ ; //

■

7'7^:'7i'7'7r;^.-7-

Cbpies bf tlie Prospcctus may be obtainedfrom any of the underwriters
only in States in which such underwriter is qualified to act as dealer
in securities and in which such Prospectus may legally be distributed*-

Federal

Columbia

■

+>'■

■

I versity, Mr. Mills is currently lec¬

the De4

Chapter;
r

NACA.

The associations made $70,000,000

j;of: /Conventional 7 new/ mortgage

New/ York

for

gram

«■'

in¬

creased

It goes. which make for

that^ theC

Deane'ip03/Wuut Street,

relations and trade union policy,
7 A second and related/conclu¬

This is undef no circumstances to be

(Brooklyn Chapter) 7
The

months of this year, however, the
new mortgage loans made amount¬
ed to $470,000,000, or at an annual

eco¬

ahead, mid "probably for

Meeting of

nine

conn

drawn.

a
considerably longer period, will
Unless; turn primarily on matters of labor

d u^

vine

Merrill

Discussed ai Deeembeil

McWhorter has joined the staff of

Corporate Taxation

(Special to The Financial Chronicle)

CITY, MO.--Dean F.;

ex-

will % From the foregoing comments

elimination of delays the buUd-

With MerrUJ Ly neb Finn
KANSAS

their!

rehabilitate

the outlook for the building inl"

7 7.17/C'

their foreign markets,

^0%: above prewar ":level4 tlie

than

•-

4O0!Npr(hi

St.

and

ada,

port industries and reestablish

elusions may be

York

Exchanges.

our

except

<■'"

$330,000,000.
.

Fred

—

be able,

not

7 The first of them is that the

fconnecledr with!

wa^/D^* Jonek*^'

New

•institutions

MO.

foreign nations with which

wiest will

readjust¬

fourth / Sfa?eet,A members of thej

prices."

Finanqjal Chronicle)

^now*-

foreign

disappointing) The

7. possibly the Dominion of Can-

alsch will residential utv

entail mild distress by compari-i

LOUIS,

Kinsley .is

the

.lending of the kind that suS-

(Special to The

deposits are.

trade heretofore has been heav^

last

the

$iKE$«anU£ Johe^CoJ

are

Public debt re¬

commercial

trade will be

-^.^n^^s,^yas)r! vhth/ prtee'i:eei]N

with; ^ankametica! Cqm .and Don-!
7
v:7 "l! 7. '

two factous.> First,!
nellan & Co.
the rate down
on* conventional
the large admixture of GI raort-j
-loans as well. Second, the com-i gage loans, bearing a 4% rate, not:
r petition
for available loans was only pulled the average rate down]
.keen and lenders, were inclined to; on its/own account but also tended'
to

bank

remain close

9. Normal

^/if n6Lquite dehuich'cQncerned

ciited^MWjsthf

factors,

duction will b,e small, while the
7 trend of loans; will move largely
with
commodity
prices. and
general business. A moderated
7, upward trend: of savings de7
posits is likely to. continue.
7

...

bearing

result of it, the

levels of 194ft.

de-

income /will

will probably

gress

the average rate down on its owru

mortgage, loans of these as-: -made.; The average rate of iriter-j
(Special to The Financial Chronicle)
.sociations was exactly 1% higher est charged! on. all types of loans!
at 5.35 %..
■■•
SAN
this period was 4.35%
FRANCISCO,
CALIF.—•
j during
7; "The decline in the average; compared with 4.98% in the same;
rate on new loans this, year," saidl period: last year.
The 1946 rate!
"Mr. Belli "can be laid primarily;
• the/ Sanj
rate
at - which
the
associations Ruildlngi: memhei^
to two factors. First, the large;
.admixture of GI mortggae loans,* made loans; four years ago.. 7
Francisco - and New- York Stock}
.new

Here again the labor fac¬

and,

likely to- be dominant.

Robert J. Foley Now With
7/elin^irQm7l0
15%^ from^»
rent levels, and the next"Con¬
Kaiser & Co., San Francisco

further decline in the average rate;
of interest borne by the new loans.!

in 19.47 than it did ii\

materials and parts

'Money ifates ivill cbntiriue tol be
7 .generally will hold, fairly close

;

industry will do

can

likely to
-

car

much as 25% better if
bring/costs under control
and, once again avail itself of
.the economies of massproduc¬
it

been-a;

for

De-

mortgage^portfolios amounted!
only $175,000:000. Savings and!

to,

levels.

bear market will be determined
-7 largely by the-degree to which
7 adverse factors can - be
eon; structively and satisfactorily re-

mortgage loans of these in-! family concern, since the business;
stitutixms totaled $470,000,000 in was-established in 1889.
the first nine months, the net rise!

Elliott VT. Bell

'tions.

1945.

Even

2. The
r-;

new

growing proportion of new mort-; This "was the initial public distrir

current

7- ieal and- industrial leaders.—

'stated

better

from

••':

settled.

are

The motor

flation,. rather than inflation,
will be the worry both of polit-

money

ent of Banks,. *7

troubles

10%

Suburban Propane Gas Corp. and1

totaling $92,400,000
for &liert<^;:^
21,839 of existing one and two-j
Cp^lheaded:
family.residences;- v
the underwriting, group which sold j
"The principle of amortization;
M. Lowenstein 8c- Sons; preferred
payments "is now so widely in-!
eluded in mortgage contracts that and Common stocks last March.

Bell, " :
Superintend¬

The commodity price level willdecline in 1947 possibly about

S. Plywood Corp.;*

Corp.; U.

ery

CIAI)

H. Gassel & Go. Will |

Problems in
By CAEL D, SMITH*

H. Cassel &

Association of Credit Men

Director of Education, National

Profits Without Respon
An Answer to Mr. Nathan

Admit New Partners.;
Company, members

of the New York Stock

Dr. Smith lists

Exchange,
New York City,
1, admit Frederick
Maier-Jung and Helmut Schalla
to general partnership and- Vera
Cassel to limited partnership in

problems: (1) labor-management relationships;
(2) industrial stagnation; (3) technological readjustments; (4)
curbing of inflationary trends; (5) streamlining sales organiza¬
tions; and (6) reformed fiscal policies. Foresees improved labor
situation through remedial legislation and predicts there wilL be
no substantial business recession or industrial stagnation.
Points
as

Mr.

with

(Special to The Financial Chronicle)

CHICAGO,

revolu-^—
of

guns,

"CIO-Natban Report," Ml Hamlin con¬
(1) "ability to pay" varies from industry to indus¬
try; (2) current postwar profits and sellers' market are tempor¬
ary; and (3) present boom is based on impermanent inflationary
factors. Asserts increased volume of
production is key to greater
consumption at adequate prices. States industry lacks adequate
measure of capital-labor
efficiency, and free enterprise cannot cany
on if income is
apportioned either to labor or capital before its

Walters

years.

has

ILL.

—

Edward

ideals.

and

learned worthwhile lessons from

the

Hitler, Mussolini and Tojo.
Mr. Lewis lost the, strike be¬
cause he challenged the power of

Here

States

United

realization.
Acting on the findings of Robert T. Nathan Associates, Inc., the
Congress of Industrial Organizations has opened its publicity cam¬
paign

this revolution

less

forceful

and

United

the

This is

States

berkorn

wage

and in its pos¬

t do not need to remind

any

man

individuals backing his
challenge, that assumption can be
extremely dangerous, both for the
one man

basis

Mr. Truman for

listened to

once

Government and the Nation
Labor and Management Rela¬

whole.

tionships

Congress

will

Currently, the most critical and
pressing of all these prob¬

ness/*^-;/ *

Jan.

Exchange membership of the late
Charles W. Hill to Louis H. Gold¬
man, will be considered on Dec.
26. It is understood that Mr. Gold¬

individual floor

broker.

With fchas. A. Day & Co.
(Special to The Financial

& Co.,

Street,

We have Mr. Lewis to thank for

Stock

starting the action that is now
ment relationships. For the past forcing the trend.
The Nov. 5
election pointed out clearly the
ilor 13 years we have been build¬

ert M.

of the

clarification

While
been

which
can

increased

be paid.

reconversion

has ; not

attended

by the immediate
deflation with 8 million persons
thrown out of work as forecast in
the Nathan OWMR Report in 1946,

have

exceptions, in such

Displacing

Inc., Washington at Court
members

the

Boston
By NATHAN L. MILLER*

Exchange, have added Rob¬
General

Malpezzi to their staff.

Counsel,

U. S.

Steel Corporation

Former New York
.r

■

",t-!vj j;

$ -V //. ,j

-H

ft*'■v,

(Special to The Financial

labor-

;

Chronicle)

Carthy has become associated with
J. Arthur Warner &

The coal strike has been called

onshire Street.

will

Co., 89 Dev¬

was

Governor, in addressing lawyers' association, ;
departed very far from tbe rule of law and are sub- ;
stituting rules of conduct prescribed by administrative agencies Ift
Federal matters.
Says rule of law requiring equality bas been
violated by statutes intentionally discriminatory, such as agricul¬
tural and labor statutes.
Claims labor monopolies exist and are
restricting and preventing production an£ sales of necessities, and
contends labor anti-injunction statute puts labor organizations
above the law.
i'.'r.'

asserts we bave

BOSTON, MASS.—John L. Mc¬

management relationships.

■J Wholesalers Association, Atlantic off, not in deference to the
City, N. J., Dec. 6, 1946.
(Continued on page 3249)

i t h-

Rule of Men

Chronicle)

I A. Warner Adds

objectives of the trend to¬

wards the

*An address by4 Dr. Smith be¬
fore the Motor and Equipment

profits

important sectors as the railroads, we have done nothing to date to
automobiles, and electrical equip¬ overcome the disparity in produc¬
ment.
"Ability to pay"
varies tion as between war and civilian
from
industry to industry and industries.
plant to plant.
We have further
Increased Production the
to
keep in mind that postwar
Prerequisite
J
profits in a sellers' market is tem¬
It is widely
agreed that in¬
porary; that cheap credit, deficit
spending and subsidy aid do not creases in real wages depend upon
provide a sound basis for lasting increasing productivity; that as
(Continued on page 3253)
prosperity.

direction of that trend and what

the setting, for this prob- Mr. Lewis has done since Nov. 5
We are now reaping what is
rapidly speeding the realization

these

out

wages and

BOSTON, MASS.—Chas. A.Day

lems is that of labor and manage¬

We have been sowing during

there

industries,

notable

been

To Be NYSE Member

income

standing a substantial increase in
profits in some of the mass pro¬
duction

Exchanges,

Transfer of the New York Stock

partner

Prices and

production to be lasting must ad¬
vance together and establish the

ing prices.

Scoville Hamlin

prices reduced. A sound iriin prices does not precede

ah increase in volume.

in wages,
without
rais¬

man will act as an

and

crease

increase

25%

today for bring¬

operation so that wasteful over¬
head can be eliminated and costs

earn¬

ings for 1947,
can support a

S. Moseley & Co., 50 Con¬
Street, members of the New

York and Boston Stock

will act with force and decisive¬

most

gress

and

act

MASS.—Richard

sound basis

ing efficient plans into full-time

esti¬

mated

Moseley Partner

BOSTON,

significance of the problems good advice and his resolution has
ift* business recoveryto be met by been of deep comfort to the coun¬
the business rhen of this country, try. After months of vacillating
ibv you have these problems on and appeasement he has demon¬
both your front and your back strated that his past record has
doorsteps. They are realistic prob¬ been due not to weakness but to
lems and you cannot Solve them misinformation and misplacing of
by wishful thinking; they must be faith. Even the New Deal Sena¬
met with a full recognition of all tors who were opposed to the Case
the facts surrounding them.
Bill a few months ago are now
I shall confine myself to a few showing signs of impatience to re¬
Of the. more pertinent problems commence ;sdch legislation.
They
Which face us in the readjustment envisioh the djanger to ~pu$ na-;
Of our economy from a war to ?a
tionalecqnom^^wvihg.out of the
peacetime basis.
challenge of one individual to the

;

connected

Thorndike will become

and his followers.

cor¬

porate busi¬
ness," on the

previously serving in the
Navy.

F. S.

the

16m.

that "total

was

U. S.

400,000

you

one

the payment of high wages in ad¬
vance of a supporting demand for

While he may assume that he has

far

sible effects than in other parts of
the world. We are seeking to re¬
establish economic order out of
the dislocations of the war period.

ing

become

These

findings pur¬ goods, was not a sound" basis1 for
port to show recovery in 1930 anymore than it

Sills, Minton & Co., Inc., 209
South La Salle Street, members
of the Chicago Stock Exchange.

dangerous procedure for

reaching in its
importance

has

The payment of high wages in
and inefficient
plants;,

efficient

increas-

s.'

with

to pursue, for in
challenging the Nation he is chal¬
lenging
140.000,000
individuals.

less

Carl D. Smith

■

a^-

wide round of

CHICAGO, ILL.—John M. Ha-

nation.

(Special to The Financial Chronicle)

for

second nation¬

With Sills, Minton & Co.
.

been

<■*>

tends that:

date Karl

same

added to the
Today ONE MAN is defy¬
staff of Kebbon, McCormick
&
fire and bat¬ ing the Government and our Na¬
tles, but one tion. Not only is he defying the Co., 231 South La Salle Street,
members of the New York and
i n v o 1 v i n g Nation but he is endeavoring to
changes in tear down the structure of our Chicago Stock Exchanges. He was
The funda¬ formerly serving in the armed
social, eco¬ democratic system.
nomic and po¬ mental question which wei8ce is forces.
litical policies whether we have or have not
tion

Economist-Author

In critical comment

With Kebbon, McCormick

meeting here today at the most critical period In our
We are^in the midst of aworldrevolution. Thlsis

nation's history.

the

come
a
limited
partner.
Maier-Jung was formerly
Arthur Wiesenberger & Co.

technological improvements will mean new products, new
and new ideas, and with more production and balanced
Federal budget prosperity lies ahead.

not

Jan.

the firm. On

processes

are

Nathan, general partner will be¬

out

By SCOVILLE HAMLIN

Broadway,

will

„

formerly

with Hunnewell & Co.
4

Judicial work is the search for truth and the application of the
It is impersonal.
Justice is indeed blind to all but

law to the facts.
This announcement
appears for purposes

of record only. These securities were placed privately
through the undersigned, and have not been and are not being offered to the
public,

the
the

merits

cisions

$8,000,000

■'

r,"v-.....

V."

:Vv

:y.

yy y :y

....

.. ■

■

yi--;

from the rule of law*
and
by law I > mean the law
enacted by the legislative brand*
of government or founded on cus¬
tom, not rules of conduct pro¬
scribed by administrative agen¬

influ¬

his

ence

de¬
com¬

mands respect
.

•

-;y.

y..-.

,.S. V '■ -<

.V-Wfi'-rV.-T

General American Transportation

Corporation

and

cies.

confi¬

dence and his

read

the

advanced

allays any
temporary re¬
sentment

latest

fairness

the

soon

defeated

can

peal

who

make, interpret and enforce

their
Gov.

resort

the

rules, interpretations and de¬

cisions of administrative agencies,

either ap¬

verbial

16, 1946

religiously, but we have,
today considerably more than a
score of daily services to acquaint
businessmen and lawyers with the

Dated December

used

sheets

advocate, who

Equipment Trust Certificates, Series 41

———

far indeed,

judge who al¬
lows
nothing
else

NEW ISSUE

<S>

The

cause.

Miller

own

rules

with

without

legislative warrant.
;
•
So much of their work is de¬
.

pro¬

method

serially to December 16, 1966

relieving

his

partmental, that young lawyers do

feelings.

not have the

•It is trite to say that free insti¬
tutions can only survive under the

Due

day
as
formerly ..to
become
thoroughly grounded in the prac¬
tice of the law, and it has become
more important to know the ropes
than to understand administrative

rule

of law. No one challenges
statement; yet in actual prac¬
tice we have departed far, very
that

♦Part of
ernor

address of Ex-Gov¬

Miller before the Bar Din¬

the
New
York
County
Lawyers' Association in honor of
the Justices of the Appellate Divi¬
sion i of
the Supreme Court of
ner

December 18, 1946.

New

York, New York City, Dec.

10, 1946.

same

opportunity to-"

rules, which change from day to
day and, whether so intended or
not, are usually susceptible of
quite different interpretations and
applications.
In short, th6 rule of men is dis¬
placing the rule of law in Federal
matters, and is gradually extend-

(Continued on page 3248)

Volume 164

;

Number 4552

THE COMMERCIAL

FINANCIAL CHRONICLE
&

and

Export-Import Bank and Repayment
(Continued from
repay

page

3205)

for shot and shell

even

which had been expended on the

V (,

field of battle.«' Simultaneously,1

billions.

This

Import Bank

includes

credits of

Exportabout

billion; the British loan of $3%
billion; surplus property and postV-J

Secondly, imports of

raw

terials should be

higher levels

ma¬

result of

as a

substantially
higher

Bank credits of up to
$7*£ billion;
along with private loans and di¬

thought, for example, that copper,
lead, and zinc would ever have

rect investments abroad.

wished to do
end of this

tive

Even before the

so.

war

construc¬

the

borrowing
that

means

countries,

this

they will have to de¬

was being formugovernment, and 1
find little ground for fair criticism

velop an export surplus of ap¬
proximately the same amount to
meet the service charges unless

of the initiative and energy

this

have

!'l

the

approach

lated

the

which
displayed> in the last

been

/several years. We have subscribed

wholeheartedly to the United Na¬
tions concept; we have seen to it
that

Allies

our

return

not

are

kind

things consumed

required

money

destroyed in

pur common- defense. . We have
engaged in a comprehensive relief
program and we have intelligently
in

moved

direction

will

which

make It

possible for foreign

tries

there

was

help

coun¬

themselves.

First,
UNRRA, a straight
gift; then emergency reconstruc¬
tion lending through the medium
of the Export-Import Bank and,
finally, the International Mone¬
tary Fund and the International
to be

Bank for Reconstruction and De¬

velopment.
of UNRRA,

With
none

the

exception

of these phases

! of United

States participation in
world affairs was intended to be

nonrepayment

basis.

Ac¬

country

provides them with
dollars

necessary

continued private
rect
investments

corresponding
standpoint

lending and di¬
abroad

scale.

through
on

From

the

this

unless

been in short supply

in the United
ZZ//Z ;///////;§// /;•'; ;"!■

States?,

Thirdly, imports of luxury and

way

the

world

the

The

this

for

/////••;•.//*.•'/

As against these considerations
-although they clearly presage a
larger total volume of imports in
the

postwar period than in the
past—we must bear in mind the
fact

that the

same

circumstances

high United States national in¬
come/and demand for foreign

There has

been

never

The

now.

reductions
more

ports they
result

are

goods

sooner

the

unless

The

fashion provide dollars on a scale
sufficient to avoid a net repay?
ment problem and thus postpone

pressure

greater than

do this

ever

until

will

the

rav¬

ages of war have been repaired.
Because of the above

channels

and to

this

end

the

ized than it is at present to further
our activities.
The period of ab¬

promoting im¬
likely to be. As a

normality is gradually drawing to
a
close.
I suggested recently in

many

the

it would

ap¬

eign Trade Convention in New
York, the possible desirability of
private Export
Import Banks,
trade associations, or finance cor¬
porations which will aid the Ex¬
port-Import Bank of Washington

war,

which

lines

address

the

National

For¬

its endeavors.

confident

American business

ingenuity will

over

equal to taking

government
dens
It
can

the

from the

additional

has created.

war

bur¬

is my earnest hope that we
reach and maintain agreement^

the

essentials

economic policy

our

the

foreign

bi¬
partisan basis free from the realm
on

same

of party conflict as on our overall
policy. I fully agree with the edi¬

torial statement in the New York
"Times" of Nov.

output.
If,
however, tariff reductions are de¬
layed too long, internal prices,
costs and production will gradu¬
ally have adjusted themselves to
the existing tariffs, and any tariff
new

Bank

pliers participate. But our whole
objective will be defeated if pri¬
vate capital is not better
organ¬

ap¬

propriate to lower tariffs are not
yet back in production. Further¬
more,
there, is a much greater

wards

The policy of the

its in favor of so-called exporter
credits in which
domestic sup¬

country, this
products will set in motion as
borrowing
great or even greater demands in
countries can develop such an ex¬
flexibility in the price structure
foreign countries for U» S, prod¬
during the immediate
postwar
port surplus they will either have
ucts.
Experience Zhas f already period. Under these
to default on their obligations to
circumstances,
demonstrated that foreign
cus¬
an increase in imports would not
us or
drastically curtail their fu¬
tomers will buy American goods
be
at
the expense of
ture imports from this country.
domestic
up to the full limit of their dol¬
production., The effect of tariff
lar resources.
It has been the
U. S. Foreign Trade Patterns
reduction ;would be, not to con¬
relative shortage of dollars abroad
tract current domestic production
There are, basically, two pat¬
and not lack of demand for Amer¬
terns of national behavior on the
but rather to minimize expansion
ican goods which has operated
of capacity in our less efficient
part of the United States, the
since the late 20's to restrict the
industries.
Our protected indus¬
choice of which will largely de¬
vigor and growth of our natural tries
termine whether or not and to
would, in my opinion, bene¬
export industries. Indeed, foreign fit from a move which caused
what extent our loans will be paid
countries
have
tended
to
buy them at this opportune time to
back. They are:
di?
* 1
U. S. goods beyond the limit of
versify their production and di¬
First—We can continue indefi¬
prudent
financial
management. rect their plans for expansion to¬
nitely to lend abroad and in this
that

means

has

avoiding wherever possible the
government-to-government cred¬

such tariff

undertaken,

are

effective

directed

vate

propriate time for tariff reduction
than

Bank

semi-luxury items, non-competi¬
riers within the framework of the
or only
partially competitive
with United States products, may authority granted by Congress in
the Trade Agreements legislation.
rise substantially with high post¬
national income.

this.

squarely to returning
trade, wherever possible, to pri¬

tive

war

Export-Import
faithfully

capital.

tariff bar¬

our

wholehearted

Congress that we
should supplement and
encourage
and
not
compete with private

American

direction

the

group such

the mandate of

; I
share the opinion that the
principal single step that can be

promptly to reduce

endeavored

true

ij;//;;/ Reduction of Tariffs/ •/

has

Policy of Export-Import Bank

of hfe./

taken

support of

opportunity lies to demon¬

achievements

many

began

depletion of domestic supplies of
such items. Who would have

Day lend lease credits of
perhaps $3 billion; International

by raising our tariffs in the
Inidst of a world depression and
"Long-term dollar lending of this
//severe dollar shortage, thus mak- magnitude will mean average an¬
''*/ ing it virtually impossible for for¬ nual service charges of around $1
eign countries to repay us. regard¬ billion throughout the 1950's and
less of how much they may have 1960's.
From the standpoint of

strate

ters

nature, lends itself

tion of private enterprise.
It is in
this field, perhaps more than in
our domestic
production, that the

national income and the wartime

process of withdrawing more and
more into our own shell during
the 20's and later, aggravated mat¬

.with this insistence,

romantic

to the best in the American tradi¬

eral
Hull
may

13, that "the lib¬
trade policy of which
the
reciprocal trade agreements
be said to be the embodiment

considera¬
cordingly, I welcome this oppor¬ the day pf reckoning.
represents neither Democratic nor
tions, it is my conviction that we
tunity to come to Buffalo and dis¬
Second—We can encourage the cannot afford to
Republican doctrine. It represents,
sit back and rely
cuss with you briefly the problems
development of an increased flow upon a fortuitous combination of modification thereafter will be in¬ rather, the doctrine of free enter¬
incident to' repayment.
of imports into this country suffi¬ circumstances to
bring about an jurious to Specific domestic inter¬ prise in its international applica¬
cient to /enable
the borrowing increase in imports sufficient to ests and
Export-Import Bank Loans
unlikely to be feasible. tion as
developed over the years
countries both to meet the service
achieve equilibrium in our inter¬ While
Both the Export-Import Bank
tdOlay Zappear to be in¬
and reinforced by the world's ex¬
charges on their long-term obliga¬ national balance sheet. I
feel, in¬ consistent with ipnfy earlier asser¬
and you, as American business
tions to us and also to/continue
stead, /that we should take ; posfc tion that it is private industry and perience between the two great
jmeri, have a direct and vital in¬ to
buy the products of this coun¬ tive and vigorous measures to en¬
Times and condi¬
npt government which must take world wars."
terest in this problem.
The Bank
try on a scale essential to their sure an import surplus sufficient
is required by statute to have
the lead in expanding imports and tions have fundamentally changed.
and to our welfare.
to
enable foreign countries to
reasonable
assurance
of
repay¬
now I am advocating a change in
It would be the height of folly to
I find it hard to believe that service / their
dollar obligations
ment before making any loan.
It
many Americans would conscious¬ and still continue to buy our ex? tariffs which must, of necessity, allow the old battle cry of "pro¬
is the expressed policy
of the
However, be achieved through government tectionism" versus "free trade" to
Congress that, so far as possible ly favor sacrificing our export in¬ ports in large volume.
terests or encouraging an indefi¬
consistent with the purposes of
I am quite certain in ray own action, I do not think there is any serve as the basis for disrupting
nite continuance of foreign lend¬
the Bank, all loans shall in the
mind that it is private industry real inconsistency because I am along purely party lines the welling with little prospect of even¬
judgment of the Board of Direc¬
tual repayment merely to curtail and not government which must certain all of you agree with me conceived foreign economic policy
tors off&r reasonable assurance of
an increased flow of imports into
undertake the leadership iff the that neither Congress nor any through which this country is ac¬
repayment.
In accord with the
this country;
The only real hbfce expansion of imports, foreign
brdaftf concept of accepting our
agehey of governtfient is likely to tively participating in the affairs
I see for a revivaldf real World
responsibility in world affairs on
trade, because of its pioneering work actively along these lines of the world.
trade, the re-establishment of an
the basis of enlightened self-ineffective multilateral trading sys¬
terest, the Bank has accepted as a
basic criterion of making any loan tem, and the solution of the dollar
repayment problem lies in the
during the initial stages of this
This announcement is not an offer to sell or a solicitation of an offer to My these securities*
expansion of this country's foreign
program, need first, and has ap¬
The offering is made only by the Prospectus*
trade, both on the import and the
praised reasonable assurance of
export side, and the eventual de¬
repayment as far as possible on
the assumption of A revival of velopment/ of a normal import
Our foreign trade per¬
world trade on a sound multilat¬ surplus.
be small.
It
eral basis.
If our efforts are suc¬ centagewise may
may be only 5, 7, 9% but it is my
cessful, it is the opinion of the
conviction that it represents the
Bank that when such a trade re-J
vival occurs, none of the countries marginal difference between cre¬
| ating a climate in which we can
; to
whom we4> have made
emer-1 have full employment, and a ris¬
Rency reconstruction loans should i
ing standard of living, or going
have any 3?riOUS difficulty repaybackwards to a period of a lower
First
ing these loans. It-Is W.r further standard Of
living with less pro¬
view that a satisfactory Solution •
duction of goods;
Dated December !, 1946 "
Due December 1,1976
-of/the import problem must be
.

■

2/22/

$36,000,000

Kansas

:f||J

City Power & Light Company

Mortgage Bonds, 2M% Series due 1976

•

;

•

achieved if the Work of the Bank
is to prove

successful. This basic
problem for the United

import
States

is^ obviously

the

same

2^S"7!:$if t:\''

the

The

verse

re¬

long habits of thought and

that

recognize

under

new

our

status as

great creditor nation,

import surplus is normal and

desirable.?

other

reason

than the fact that

national

income has risen so

substantially
els. '

Some argue that

alone will solve

lem; in

any

V The long-term dollar financing likely that

•:

involved in the rehabilitation en-

reach a total, during
IStiM beriOdi }ol/$15 to* $20

' v'l.'

'»/'

'w„

' sU"

«•

and accrued interest

Prospectiis may be obtained in any State in which this announcement ts circulatedfrom only
undersigned arid other dealers as may lawfully offer these securities in such State* )

OTIS & CO.

above pre-war lev¬

our

;

deavor may

%Z '

HALSEY, STUART & CO* INC.

(INCORPORATED)

the

source

our

this factor

import prob¬

event, it seems

(INCORPORATED)

'''

„

•'

•

foreign

iMM-iIk''"

December 13, 1946.

1:■ r-Xw

(

L. F. ROTHSCHILD &. CO.
J

A. C. ALLYN AND COMPANY

GREEN, ELLIS & ANDERSON
..Kit

important ' single

of extra dollars for

countries/

BURR &. COMPANY,

INCORPORATED

very

this will turn out to

most

INCORPORATED

HAYDEN, STONE & CO.

FENNER & BEANE

MERRILL LYNCH, PIERCE,

GREGORY & SON

HARRIS, HALL & COMPANY

such of the

automatic in¬

First,
tr ave 1
expenditures
which have
abroad should increase substan¬
will be essential
tially in the postwar world if for

American people

sure

dollar foreign credits

for

•

sary

ating/towards; an
exports both past and present. If crease in
imports:
we are ever to be repaid for the
been advanced, it

Price IOL.4.3%

to take positive steps to in¬
an appropriate expansion of
gaged in foreign trade, namely,
imports or will such an expansion
over the long run it must accept
take place more or less automati¬
imports of goods and services on
cally during the postwar period?
a scale sufficient to provide the
There are several factors oper¬
exchange necessary to pay for its
that which faces any country en¬

Expansion of Imports

The question that immediately
comes to mind is: Will it be neces¬

HIRSCH & CO.

INC.

Thursday, December 19, J946

FINANCIAL CHHONIClyE

THE COMMERCIAL 8c

322(5

The Institutional Investor in the
device analogous tp a

(Continued from page 3205)
Security Analysis

Has Anyone

BUTTON

Lately?

Seen An Investor

high tax rates which now apply to those to jhe
Income groups ranging from $10,000 upward are levied by a p
cally, class conscious government, investment in this nation s produ tive enterprise will be seriously retarded. We are not a nation of
As long as the

primarily gamblers for "price

investors today—we are

appreciation.

people who buy securities don't know enough about speculation.
The majority still insist upon buying stocks when everybody else
is buying them.
They invest when stock prices are reaching peak
levels. They too often sell out when prices are low.
But the bbu
Most

prates about protecting the investor. The NASD
over its thousands of member securities

also conducts a J*0#

dealers throughout
the country, so that they won't increase their mark-ups a fraction
of a percent above some arbitrary amount that its officers think

watch

Is proper,

in Holly-

phony corporation and produces one picture. If it
is a success he liquidates his shares of stock, takes his profit and
calls it a caoital gain which is subject to a 25% tax instead of the
60% he should pay under the law.
Everybody |s nuts—including
the United States Federal Revenue Collector!
organizes

wood

'■

overrated.and overpaid movie actor

Meanwhile spme

What do you think has happened to the- individual investor who
used to buy from two to fiye bonds a month? What has happened to
the bond salesmen who used to carry a rate book and who called
upon

private investors and sold them bonds which would yield 5%
The bond salesmen you see today are those who

BEFORE TAXES.

call

the banks, institutions and

States Government and its

insurance companies.

punitive tax rates have put

The United

genuine Amer¬

of business. Who can save enough out of his earned
income to buy three to five thousand dollars worth of bonds a month
today?
If you are in the higher income brackets why buy a taxable
bond that wilt yield 3% before taxes?
You wnt haye^enough
income left after paying yo.ur tax to buy tobacco, for your pipe.
So
ican investors out

managed money, low interest rates, New Peal financial magic, and
the abortive, punitive taxation levied against those who work the
hardest, think the straightest and create the most, has finally laid
the American investor low. He's a stock gambler now AND EVEN
THEN A HOG HUNGRY TREASURY TAXES HIM TWICE.
BE¬
FORE

HE RECEIVES.

GETS HiS DIVIDENDS, ANDAFTER

ment.

THEM.;'§|;2fg§^

Clearly

there

dissim¬

are

but I cannot help / but
wonder whether the men who
were
groping with the problems
reality, or even irrelevancy to op¬
erations
involving so
much of of life insurance long ago found
in the then undeveloped state of
time with its dominant character¬
istic of erosion. The preponder¬ knowledge any more essurance of
ant investment procedure is se¬ regularity, of measurability and
Much of investment procedure
seems to me to have a curious un¬

ilarities,

curity analysis or its equivalent in

of limitation of variables than in¬

mortgages. Security analysis deals
with relatively short-term con¬
siderations — r e ce n t
balance

vestment

What

men

find today.

what would have been indentified

»;

said positively

can

of the time span that the results in investment have most famous speech with the clas¬
preponderant part of been vastly inferior to those-ob¬ sic passage, "You sbalj not press
investment
covers.
Indeed, the tained in life underwriting.
down upon the brow of labor this
authors of the best book on se¬
You shall nbt
Fortunately, from this point of crown of thorn.
curity analysis say in their pref¬ view, studies are now underway crucify mankind upon a cross of
ace candidly that "the determina¬
to try to fill this investment defi¬ gold."
But this meeting
then
tion of the future prospects of an ciency.- The National Bureau of would probably have felt reas¬
enterprise" has "received little Economic Research, with .the sup¬ sured that all such heretical ideas
space, because
little of definite port of banking, life insurance and had been finally and forever
fraction

small

the

which

value

said

can

the

sub¬

ject."3
premise that the invest¬
ment technique is basically not
compatible with the investment
function suggests that a reconcili¬
This

ation is

needed.

But the techno¬

logical and other requirements of
our
society provide no basis to
believe that the time span of in¬
be

can

shortened.

The

buried

liam

Carson

from

own

your

University
of
Pennsylvania, is
systematically and scientifically
compiling and analyzing invest¬
ment experience in both securities
and mortgages.
In my opinion,
the undertaking of these studies is
the most significant development!
ever to occur in investment, and
they will prove over time to be.
of
quite
extraordinary
signifi¬
cance, marking the first major ad-;

moral

Isn't it about time that

("HOW

ABOUT

someone

got up and asked

PROTECTING

Doesn't he have some

& pew

AMERICAN

THE

Gongre$s,

INVESTOR?"

need for a

and checks the

nique in

qualities of the applicant
past record, usual¬
ly giving attention to a longer
past record than does security
analysis.; But: this is only the
beginning instead of, as in secur¬
ity analysis, the complete job.
,

rights too?

Life value underwriting applies
this information to carefully tabu-,

election

Grand Old Party.

•

jusf flushedanother w

with the

other interested groups, under the
Executive Directorship of Dr. Wil¬

Tbep if the stock market starts to advance and ibe ppoy cbpmp only possibility, as I see it, is the
begins to see some capital gains for a change, another character called development of techniques con¬
Eccles runs in all out of breath and tells him that it ain't proper for sistent with the time span of in¬
him to make money.
vance
in the investment sector
This Eccles fixes it so that he can't borrow vestment.
money on his stocks from anybody to buy more stocks.
In the entire
Any exploration' in this direc¬ against "the Tyranny of the Un¬
country there is no other kind of property which the great all-time tion quickly raises the question of known."*
sucker called the American stock buyer .may own that he pan'tjuse
O
what
other long-term
commitLack of Suitable Investment
as collateral.
Only his stocks which he bought an$ paid fpjr with bis
M^htsr ayelhiade In this ^pnomy
Technique
own dough are not good collateral.
Eccles hits hi&'frbm one .side apd and how they are handled. The
the U. S. Treasury from apother.
But whatever the outcome of
outstanding one, and indeed the
Meanwhile, this courageous irvdiyidual who buys stocks is asked only one I know with a time span these studies, I submit that the
to invest in American industry in order to create jobs and wealth at all
comparable, is the under¬ greatest investment problem is
the lack of a technique suitable to
and prosperity, .The politicians tell him it's good for the country
writing of life values by life in¬
the nature of the operation.
and the labor leaders make pious speeches about their faith In tjbe
So
surance
companies.
And
the
free enterprise system.
But wherever he looks he sees nothing but technique of handling these com¬ long as investment attempts to
cover
time distances of airplane
organized piracy, aided and abetted "by a horde of spineless politi¬ mitments of long time span is
cians, whose main concern is to see that they get elected just once vastly different than those used dimensions with a technique of;
more before the whole country blows up in one general free for all,
in investment. Of course, life un¬ only a bicycle range, it is not un¬
with Phil Murrayin the White Efouse, John Lewis-ruiming the Su¬
derwriting uses an analogous pro¬ likely that results will be some¬
preme Court and Henry Wallace singing "hallelujah brother we
cedure to security analysis: it con¬ thing less than ideal.
jplowed ft under at fast."
Let me try to make the point of
siders the present physical and
The IB A has

•

as
the
significant
investment
is
'r■ *
1- • Ml;>.
that a- careful and systematic problem?
sheets, income accounts, present study of human life has produced
First, money would have been
position of product in present usefyi
and
reliable
mortality of much concern. A period had
and recent markets, apparent ca¬
tables on life, bpt lhat investment just ended in which the Treasury
pacity of existing management in and mortgage men have not even intermittently ran short of gold
present environment, the present tried to develop a comparable necessary for its position and in
value of property.
Clearly such technique. They seem to share the Which |t had had tq appeal, yes,
analysis |s important and neces¬ view of the fiction writer, Arnold even peg, for help repeatedly. A
sary, jand J would not for a, mo- Bennett, who says in the preface political campaign had just ended
ment suggest that it be reduced. to "The Old Wives Tale": "I hated, in which gold was repeatedly de¬
But at its best it is a short-term and I still
hate, the awful business nounced and in which one Presi¬
technique, and relevant only to a of research." And it can be added dential candidate had closed his

vestment

.National Association of Securities pealers, the National Security
Traders Association, the Customer's Brokers and their Association,
the New York Stock Exchange, and other financial organisations.

then outstanding have since
this life—often by a
The
long and agonizing death.
West Shores, incidentally, at that
time were yielding 3.74%; the
East
Tennessee,;;
Georgia,
4.67%;
the
Southern
Railway Consols., 5.44%; the Tex¬
as
and Pacific, 5.85%; and the
Edison
Electrics,
4.70%.
Now;
had we been meeting at that time,
span

is possible" in' invest¬ departed

ity liable

By JOHN

Dynamic Centnry

mortal¬

step

with

tion

Mc-

the

In fact, celebra¬

still

would

probably

victory

the

and

Kinley

have

been in progress on Dec. 10, 1896,
of the great triumph of yirtue.
po ope would even have
suggested that the idea of mone¬

Probably

mapaf&mepl was ^tUl jiObse

tary
in

the

country,

held

still firmly

by millions of persons and that it
was by no nieans dead and buried.
And probably no one would have
suggested that there were com¬
ing money panics that would rock
the country to its foundation, that
there wqs coming a central bank
which would alter most concepts

of banking then held, that there
were men alive presently to win
dominant influence and to casti¬
gate gold as a useless token and
and di¬

do all manner of sundry

verse
things with it beyopd the
imagination of the then feared
William Jennings Bryan. Yes, pn

10, 1896 money probably
would haye been identified as one

Dec.

the

significant

investment

problems, even though the wildest
imagination would not havp ap¬
proached what was to come, well
witb^ J^e period of the EaslTT^pmore appropriate tech¬
different way. Will you nessee, Virginia and Georgia issue
—to
say
nothing of the West

into

Mr.

Shores.
>j
machine?
Let's go
Secondly,
this
discussion < 50
hack for balf a century, and see
What lijyestment prpblenas might years ago probably would have
have lopkedTike to us then. After referred to Mr. J. P. Morgan's
Wells'

tfrne

all, half a century isn't so long in
the time span of investment, and

the

President

and the Treasury over

the recent

with

conferences-

perhaps I somA2hseful, perspective years and his tremendous efforts
can be gained
by sitting a little to aid the Treasury. But the rel¬
of
time,
showing, . for
while at a different point in time. ative importance and power of
groups of persons with such char¬
the Treasury
and Wall Street
acteristics, what the risk is. Hav-.
Fifty years ;sgo in 1395 there!
lated experience, covering a long

period

**A. DePinna Co.—Class A
*Denman

Tire & Rubber Co.^-Common

*Hytron JRatdio

^ Electronics^ Cbrp^l^mmoB ^

*Mary Lee Candies, lnc.r-Common nvt
*Prospecty,s available

on request

**Memorandum available

Herrick,Waddell
55 LIBERTY

request

Co., Inc.

STREET, NEW YORK & J?. Y.

risk from

also

were

securities

outstanding

experience, & charge appropriate for investment people to consider'
For
to that risk is made, and reserve which stretched far ahead.
systematically
established and example, 50 years ago tonight, our!
maintained to cover the risk. Un¬ predecessors would have looked
der this prqicB^ape ■■ the nature of at a market .which ^ ^ontained;
the technique and the nature of
among other issues, the West
the operation are consistent. The Shore^l^flrdhd-<^mp£hiy 1st 4s
results of this handling of com¬ to mature in the year 2361 and
mitments with a long time span which already had been outstand¬
have, beyond question, been vast¬

ing

ly! superior ;tb those obtained i$

have

toy

seen

..,

would have observed the Southern

Fruit

Arden Farms
Fullerton

Growers Inc.,

€26 SO. SPRING ST.

Exchange

TRINITY S7*%

„

LOS ANGELES 14
■\"T •:

Teletypei LA 68

pMfefioM and Information

claring unconstitutional that de¬
vice for the redistribution of in¬
come
and wealth called the in¬
come
tax. And something might
have been said about Mr.

land's use, only

probably would have been identi¬
fied as a significant element in
investment. No one, however, in

but

systematic way to de-?

measurably suitable to risk. Some
contend that there is no such reg¬

ularity in. investment

that: f^FM9FO ^variables
investment

pipbably!4wouM have been,

given to the action pf -the Supreme
Court just a year earlier in de¬

termjine. charges

'•

tion

1995.
All those issues, you, will fropx that radical college proffsappropriate to ppte, had more than 50 years to sor Woodrow ^Vijson's Square
rjsks, ho¥ to-' establish reserves run, just as many of the ,issues Deal, to say " nothing of the in¬

there is

WagensellerSDurstJnc.
Members Los Angeles Stock

very

Information Lacking

Co., J8$ Com,
Oil Co., Com.

viewed

been

Railway 1st Consol. 5s brought
A^coupleoLyears earlier/due any likelihood would have had
in 1994.
They would have seen any vision as to how tremendously
In the present state of knowl¬ the Texas and pacific 1st 5s due important government was to be¬
edge, long-term information on in 2i)00 and the Edison: Electric come, of the agonies to come from
the trust-busting campaign of that
investments analogous to the mOFr Illuminating :
tympany xof New
tality ;v table js, lacking.
Hence York 1st Consolidated 3s due in young Theodore Roosevelt, or
Investment Long-Term r

American

have

Cleve¬
b couple of years
earlier/ of the Army to break a
railroad strike. Yes, government
Railroad

years.. .They would
the
East
Tennessee,

investment with its iiicompatibU- Virginia
and Georgia
ity between techniques and op¬ Consolidated 5s due in 1956. They
eration.

would

differently than hoW* Some atten¬

all California leunWn

than in life,

in life,

exist in

.outstanding have 50 years
to go, and you will real¬
ize that all the issues are still ex¬
now

and more

tant—though

"Security Analysis,"

Graham tc Docid,

House,'. 193*.

It '

•
*

~^J **,

tax and labor

long ^ay pothing of the

Thirdly,
from

Harlow ;.Shapley,

Dr.

ex
"Status Quo or Pioneer," Harpers, October,

l&*o.
:

■■■•..,

and that
4 Phrase

Whittlesey

others

come

i
.

i .{:
■> 1

Hff,: </' -4;:

•

'•»■■ ,**e-: r ■*/;J

I-

West Shores;

someone

might

have

raised a question about the revolt
was going on in Cuba, or the

Cib that

■?v-;..v.■-';1

■

and the New

Deal—long before the maturity of
the Texas and Pacific 1st 5's—to

-i-;

X ?

.r,

Volume 464

Number455 2

Italian invasion k>f
the

THE

Ethiopia/-and

ern

utter route

of the Italians at
Adowa earlier in the year. Some¬
one

COMMERCIAL & FINANCIAL CHRONICLE

Railway Consolidated 5's—

say' nothing of the West Shores.
;

might, though probably would
*have made : a sarcastic; re¬

Finally; Meeting ;58 ^earg/ago^

tonight, /s

pobrtmeiffci>y/CongEess of

a-com¬

mission to study the very vision¬

possibiJhtyVofaRanamaOanal.

ary

But

the chances

that

are

world

the

history of jto them is the problem alike of

most

dynamic institutional

management and of
stability and in the whole 6000 years of record¬ that
servant of institutional man¬
thus of buying
things to jput ed bistory! /Perhaps, more .condi¬
agement, investment management,
away. "' " *
* /
tions have changed more in the
-1
'
3. irive'stmerif
m&nagernerrt needs 50 years since 1896 than in the j ; That these powerful, surging, •
turgid forces, sweeping through
Vast "enlargementiof
.its scope whole period from the time of
pur society, will affect every form
1" .of analysis, an. expansion of. Hammurabi to the time of
Henry pf
investment
can
hardly /be
j' ^perspective "far beyond atten-; Ford. And in the view 1 have, we doubted.
-tion just
Mortgages, ♦ obligations
are but in the midst
.to balance

o m e o,n e

conceivably
might have mii tA€ ^« d • <abouti
mark about ilhe final
bankruptcy strange items
sporadically appearr;
-erf
French' effoti to build a
ing in the news. There might have:
canal in Panama- and of
1the?&pL been a little iaIkv.of. .the first

/ iiot,

3227

2.j Investment .management '" must dynamic period in
; be chary 4jf .<any .corioepf of society—one of the

•

normalty

showing "of: a motion picture- M
Richmond, / Indiana, two years
earlier. Rerbaps' sdmebiie
might

sheets! and

income accounts.

have

observed the frealrish. fact
affairs would have attracted
4./Investment; management, must
little, that a fellow b'atned'
Ldiigley bad
if any, attention in discussion
develop new standards, of val-.
$is just/
made; the Jir£t;;.auccessfuL
an -investment
uation for balance sheet
problem.: And al- flight for
pur¬
3,000 feet of.a heavier
most certainly, not even the most
poses" in a- wprld to fluctuate'
than air steam 3 powered
model
and -change so
,/visionary would: /have^ contem¬ plane. Or that a
violently.nut, /called Oc¬ 5.
plated the possibility of two world tave
Investment management'should
/Chanute,: had
/Wars which would shatter the en¬
question the validity or the de¬
decker glider. There
might have
tire established world order, or been
sirability of extensive! fixed,'
-note' of /a news ' item that
thd -emeigence
of the, United Andrew Carnegie- had
rigid -indebtedness in an econ¬
just in¬ j
States as one of thq two
omy subject to so much fluctugreat stalled in his mansion in New
< world
j r eftiDfi (though if we had beCn
powers with a fleet In /the York a stove
operated wholly with
I ^ lawyers, We •/ would - not- have
Mediterranean, with troops in electncity^ Maybe
someone would
China and the Philippines, with have observed
made that point because such a
that a strange
guy, 'membership in a world confedera¬ named
question, if sufficiently purMarconi, had Obtained his
tion—all long before the maturity first
patent in the United States j / ^uedr>!Wbiild / deprivd; us of a

of, nay per¬ and
equities alike will be rocked *
haps only in the earlier phases of,
by them in the years to come,
this period of tremendous and in¬
And useful as it is, even the most
credible change, This is the View
astute security analysis can
hardlyof
so
i

experienced ! a person as
Mr//William* M. Rand, the Presi¬
Monsanto

dent .of

Chemical, ,who

recently wrote/ contemplating "a
living standard for our children
advanced and

our

own

different from

our

own

from

the

the Edison Electric Illuminat¬

ing /5's, to say
!West Shores.

and

had in England sent
signals
without wires for a distance .of a
few feet. Maybe -the
automobile
there; would have been noted, though it

nothing

the

Fourth, meeting in 1896
might have been some talk about

was,

of course, a freak and there

the

were

less than 00-cars in existence

•

western

frontier,

but

only

accidental student of popu¬
lation would have noted that the
some

the

time,

though there were
four million bicycles.
George
northern states in the aggregate Whitney's patent of a
light steam
just then were becoming prepon¬ engined motor car and George
derantly urban.. The census : of Seldon's patent the .preceding year
1890 showed the North with more of the idea of using an
explosion
than 50%
of its population
engine in a road vehicle, could
as
rural,

but

showed

the

a nee

.1900

census

have

have
the

given to any
decline in the rate of population
in
the
United
States,

the

would

Probably
have

been

growth

though
been

tainly

know it to have

now

underway. But almost cer¬
the fact would not have

been noted

or even

comprehended
that 'ere long the great majority
of

the

entire

population

the

observed.

might have

attention

shifted.

been

first automobile

And

there

comment

race

run

outside,

snow

Chicago two
before. Perhaps technolog¬
change would have been listed

years

ical
as

investment problem. But is

there any remotest likelihood that
the meeting could have envisioned
the development of these freaks
to

age. In

prominence, or
dominance, in the life of the

continued,
decade, American

investments
of

the

tremendous amount of
* izatiofi business j . '•

♦

—difficult

probably not have been in

the terminology of a meeting on

Dec. 10, 1896. Booms and slumps

for

enough; itself—to the
of institutions
really investment i£

only: the servant. Because
changes
would
certainly

jtist- toy br/ serve/ or

opened

material

greater than the combined mater¬
ial achievements since the
begin¬

disserve

cent of the nature and function of

was,

and

was

fluctuations

be,

from

subject to

peaks

val¬

vestment

with

its

sit tiof Infrequent intervals

ways

^gravat^ % warvlbte^

own

not

constructed

'-.

/. ;

•:

f Ult

r :

what mjght have been

as a

Tlut

cmploj^eribt-rshdws

the-ne¬

examination

called the busi¬

ness

least

•;
■'

success

•
•

'
,

cope

some

with

itself

serve

conceived.

Indeed,

20* years were yet to pass

ley Mitchell, was
at*

nearly

life

Investment

before j v/r-f.m'■

security issues of

non-governmen¬

tal
obligors will/average much
higher in the next decade than
during the last 15 years. One can

have little doubt that the volume
of
municipal flotations will be
larger.; In short, one can say in

♦the

narrower view of investment
prospects that the volume of obli¬
gations which investors will ex¬

amine

and from

which

these

"developments, .of

Changing with them and adjusting
5

"Industry," November, 1945. '
6 Radio Corporation of
America, 1945.
7 "New York Times," Nov.
3, 1945. /

One can
predict that amortization will be
far

prevalent

turnover of

.,/u'

changes

interest

change but little, at most, for at
least

considerable time to

really significant ■" in¬
vestment problem is not volume.
And the really significant invest¬

vestment

suocess

mined by

ability to fill this need

^cpinmit

funds

'74,

„./

/v-i

i- s,

for

decades

frothing

offering of these

-V

if:/ 1 '

Price $6,50 Per Share

under

eight

Fnvei^enf management

cycles were to come to hold

•contemplate rapid change and

before the maturity of the South¬

continuance of change.

// /!

•■♦j:;

Brailsford & Co.

political Significance■/b.u si ne s s

Pwspectus tmyhe obtained from such of ihe wi&ersigned k$
registered dealers insecurities in this State,

must
December 16, 1946

into

of the

time span of the West Shores.

$e comtrutA m,

X",1/.

deter¬

live—in which!

industries^ Inc.

ffURorY«lue)
,

of this dynamic century of
change

Sn which

the future—to say
.

will

!/:'|, '//I.J
vi

come.

•; But the

Common Stoch
"

•" .;•;•// >

that the long-term mar¬
rate
is
likely
to

assurance

ket

of trusteeship.

detail the oonclusicms that

probably would have dreamed of might have fallen
thie economic, the social and the headings:

Management

the

money rates of the last 15 years.
And one can predict with some

that

rapid than in past experience,
other than in the great
refunding
associated
with
the

holdings will be

-100,000 Shares

•••/•

Insurance, of

Essentials

they will

choose, will be larger.

the

fahidh would, hi due course, rev¬ might, had the group been very
olutionize -our thinking.
None wise, have been drawn. These

w4th

Portis

Perhaps. the sweeting, in 1896
to write a booki might have spelled out^in a littie

theUni^^

The hard,
continuing, changing
job of na/ndeistandihg and coping

ptberi provisionof

one

only a few—give a
hint, if only an inadequate one, ment prospects do not have to do
of. .the
tremeridpua significance \yith types of issues and refundof fastrmoving technology, likely ings and interest rates. The
major
to be fed, according to the Presi-. problem
is, I believe, to find a
dent of Harvard
new
University, by "a
technique compatible with
flowering of scientific work in operations, and
th$ major pros¬
thiis eouatry the. like of which the' pect is
change, change, change,
world has never seen before" ? change. The extent of
future in¬

major purpose of the institution

banking services
been

mention

problems, but must al¬

orient

and

predict with safety that obli¬
gations of the United States Gov¬

Xfjoh pfekiopuy otvy of such securities*

t^eydopments, monetary! ip which jt -operates, be lt the
management $Qd: a host

wmmtnctmmfteis 'Mdiir m itiimiMtmce*

In¬

has

answers

can

have

only

the

reliability.

any

these

vices and of responsibilities.

leys, from prosperity to depression
be

show

crys¬

been expected to bring great shifts
would have been a familiar phe-:
nomena in the Ws, of course. But, in the nature of liabilities of ser¬
that business in the United States

;

-these tremendous changes un¬
mohey. lt/must' develop a new
derway or in prospect. ;
concept of the -role #nd,function
p Ihitegtment / management muSt of government and .about Inter¬
i
makei much more; careful and national
.relations,. - It nuist find
adequate allowance for risk of a
concept to' cover the organiza¬
i i lOSS. V
/ ;'
.-_/V
tion of a society consisting
argely
8. And, finally, investment manof an '/essentially landless
proler
1 agement must, 1 think we would
tariat /living in cities.
The . em¬
;
have said, place much-more
phasis on. full, employments—with
;. importance,
upon! the quality the British
Government formally
and ability and competence -of
committed,
and
the
American
i
the management of the con- Government V
morally -committed,
| cerns in which investments to the realization of
/perpetual
were made.
■

operations

which

And

one.

economist's

ment problem'in its broadest sense
was how to
integrate investment

-Fifth, the term, business cycle, other
Would

can

ity of the Edison Electrics—to say

tal -.ball

yvith

short

that

reorgan-

de¬

nothing of the West Shores.

even

;

ing,"only

hindsight, in

certain

/'.
Position of II. S. Bonds
industry /has // Of course/ in the shorter
vistas
for
us
simpler view of our problems,

—

real estate

the:

ning of civilization."^ And Mr. ernment will be a
large part of
David Sarnoff/ President; of the institutional assets.
One can pre¬
Radio /Corporation /of / America, dict with virtual
6. Investment ' -management
certainty that
and
says; "I believe that the realities the next several
years will see a
[ institutional management' need
of the years to come wili
outstrip significant increase in the volume
to reexamine their
responsibil- the
promises pf the presant yday;''6 oi real estate mortgages. One can
/ ity—how would they operate to
This .society„has to( hammer out predict with great confidence that
encourage 6r/discourage, or ad* a
revised and perhaps a new con¬ the volume of
public and private
;

technique i©r brgaii-;
short,-we can see
ijsation^of this paper,/a techniquej
that a meeting 50 years
ago to¬
clining rate of population growth night might have made a list of •by which I hoped to keep at least
and -the great regional -shifts of six major investment
problems— jsphie of yop awake al lea^i sonxe
of the time.
Actually, you will by
population, the fact that these; money,government,
udw have' realized that the^conwould mean that, as time passed,'
population, the business cycle and ;elusions
suggested for 1896 are the
population growth could no longer technology—likely to prove highly
be trusted to validate, to bail out significant well within the time conclusions that I suggest for 1946.
They c^tainly would /have been
in time, any real estate invest¬ span of investments then
being; valid
50. years ago, ,and 1 submit
ment except the most extremely acquired.
that
they
certainly
are
valid
imprudent,
could
hardly
have
The meeting in 1896 might have
tonight.'
; V/
been grasped.
The simple fact summarized the -discussion
./
,
!
by say¬
could hardly have been realized
ing that the outstanding invest¬
Changes in Last 50 Years >
that the economy which had al-,
ment problem would be how to
They were valid then and they
ways been preponderantly agri¬
operate in an / environment to are valid now because the entire
cultural would be gone and re-;
change so rapidly as the six items 50 years is a most
extraordinarily
placed by a strange society highly listed would cause.
And it might
urbanized long before the matur¬ have been said that the invest¬
The .effect

copewith

;

based

generation,"; he
"indeed in a
single

cycle. And the tremendous
United States would live in cities nation and the world? Or the pos¬ 4
Mdiscussion /SO -years! competition now clearly in
prosand towns -instead of on the farm, sibility of so vast an array of tech¬ agp; to .coyer' only: n .part- of the
beet / between fpfms- nf '/energy,
With all the economic, social and nological development as we now time, span>;of; fhe Southern Failamong/the * Warious /fabric^/ be¬
1st
Consolidated 5's—and tween all forms of materials both
p'o 111 i c al developments that a know has happened, all far in ad¬ way
landless urban proletariat would vance of the maturity of the Tfexas only a tiny fraction fOf the West natural and
^ynthetic, ; between ■
Shores. Fdt you. will/, of
and Pacific 1st 5's—to
bring and with which 50 years
jcourse, the many forms ^of transporta¬
say nothing
be aware by
later the nation would still be of the West Shores.
thi% time that I am tion, among the many forms oi
groping with remarkably little
By the limitless wisdom of using #- hypothetical 189.8 meet¬ amusement and entertainment
success.

expected

one

Now,/benefiting .from the illim¬ cessity for a new
should I itable wisdom of hindsight, I have that phenomenon

such

say

stone

meaning to investments of these
forces over a long time span—

Shillinglaw, Bolger & Co.

THE COMMERCIAL & FINANCIAL CHRONICLE

3228

terns.,,

Life Ins. Institute
"Our

By JOHN

insurance

In¬

ship in the Institute of Life

approved by the
Board of Directors at a meeting on
were

surance

bringing

10,

.Dec.

the

seven

number of companies elected to
membership this year. The mem¬

bership now/comprises 132 U. S.
;Jife insurance companies, repre¬
senting approximately 87% of the
assets of all United States legal
reserve life insurance companies.
Ten Canadian companies also are
members.
The
companies
ad¬
mitted to membership on Dec. 10
are
the Atlantic Life Insurance
Company of Richmond, Va., the
American Reserve Insur¬

Great

Company of Dallas, Texas,
and the/Hoosier Farm Bureau Life
ance

Company of Indianap¬

Insurance

The four companies ad¬
mitted to membership earlier this
olis, Ind.

year
are:
The Life Insurance
Company of Virginia, Richmond,
the Mutual Benefit Life Insurance

Newark,

Company,

the

J.,

Federal has to buy at fixed prices all of these issues that are offered
by the commercial banks..-.. On the other hand, Chairman Eccles of

T/CHIPPENDALE, JB.

of the way, the money markets the Federal Reserve Board seems to look upon the entire govern¬
assuming more normal proportions. /, . The mid-month fi¬ ment debt pretty much as demand obligations. ...
nancial operation was taken very much in stride by the government
Therefore, in order to prevent the cashing in of certain ot
market, with larger volume and rising prices being-very much in
these securities, he appears to believe that the market for all gey-•
evidence during several trading sessions, prior to the redemption of
eminent issues must be kept stable and protected, which means a
the l1/2% notes.
Although the technical position of the market
.continuation of low interest rates and the war rate/pattern rang¬
has been on the mend for some time, the real test of its strength came
ing from %% to
•
•
.
It will be interesting to see what "
early last Thursday.. . .
comes out of these divergent views on rates. '>/•
Dealers had marked prices down, with the idea of picking
With the December financing out

are now

securities by commercial banks, which
.Much to their surprise the market
went dull, and no offerings appeared; , , . This was followed ?!
shortly thereafter by a reversal in trend which carried prices up,
this time also on light volume
However, since then improved
prices with larger volume have been the course of the market.. ..
up

last minute offerings of

had to meet war loan calls...

The World Bank-Its

Aims and Importance

New York City of $13,900,000 of the June 2VzS
due 1967/72, has been instrumental in bringing home to some in¬
vestors the fkct that it would not take "much buying to push up the
prices of the restricted bonds, when the market is right. ... Al¬
though offerings were substantially in excess of the amount pur¬
chased by the City, prices in most instances were also above those
accepted by the municipal authorities. . . . When it was evident that
a sizable amount of bonds would not come
into the picture unless
prices were higher than those paid by New York City, then the tone
of the market improved considerably. . . .
The purchase by

(Continued from page 3202)
international

development.

1932, has re¬

sociated

ad vices, from

Press

Washingtoti on Dec. 2, which said
that he will open offices in Wash¬
ington and Houston for the J. A.
Zurn Manufacturing Co., Erie, Pa.

prices.

deal- with

They

recognized in

EQUIPMENT
TRUST

CERTIFICATES

Offerings Wanted
-';

-.y:

French economist, who
war was a vice presi¬
dent of Morgan and Cie. in Paris
and, during the war, played an
active part in the liberation move¬
a

before the

conceived'

helping

still

for

these human

takings which would help men to

smaller commercial banks continue to be the most

contribute

the

The Bank is novel in its organ¬
That is inevitably so, be¬

was

instrument

achieve

Bank

world's wealth

ization.
cause

such

existed

before.

institution

Its

ever

members

are

governments, each of which is

entitled

Appoint

Governor.

The Governors meet at least

once

and are entitled to vote the
of the Bank's capital to
which
their
governments have
year
shares

important buyers of this issue. . . . The partially-exempt obligations
and, through the exchange of
responded to the better action of the taxables... . This betterment,
goods with their fellowmen, to subscribed.
according to reports, was because considerable amounts of these
raise their own standards of liv¬
There are twelve Executive Di¬
bonds were taken on by the metropolitan as well as the out-of-town
ing. Only an international bank rectors and each Director has an
institutions.
«
can
do this job on the scale on Alternate.
Five of the Directors
Insurance companies and savings hanks, according to indica¬
which it now has to be done.
are
appointed by the members
tions,;
sellers of these bonds, although
The Articles of Agreement of having the largest subscriptions to
government trust funds were reported to have let out some of
the International Bank and the the Bank's capital, and seven are
these issues.
■'
.

economic studies.

International

in evidence for the 2y4S of 1956/59,
It was designed to
aspirations.
1956/58, so that the two
finance constructive undertakings
issues now give about the same return, with the purchase of either
in devastated or industrially un¬
obligation largely a matter of the amount of preniium involved.
derdeveloped countries — under¬
The 2%s due Septals, 1967/72 are likewise^ J>eirig taken out of the
the

had

abroad

the

suits.

PURCHASES AND SALES

McLain

ment.
The Secretary, Morton M.
preservation of peace Mendels, is a lawyer from Mont¬
would be impossible unless men real, who was only recently re¬
everywhere had the opportunity leased from the Canadian Army.
to earn a living and return as soon In his work he was responsible
as
possible to their normal pur¬ for military estimates, finance and

that

The

market

Mr.

experience

Rist, is

recognized the world dependence
on
economic as well as political
unity. They were keenly aware

the not distant future will most likely

York.

Research Department, Leonard

the

which has also carried along the 2%s due
WM

Cravath, Swaine & Moore

New

extensive

all nations—those had escaped

direct ravages of war as well as
those that had endured them. They

enough to take these present-day purchases of nonbank investors off their hands, at prices as good if not better than
those at which they were obtained. . . .,

good demand is

firm of

problems affected the welfare of

be substantial

to the Bank from the law

came

magnitude that they could not be well as at home in matters related
met
international
finance.
The
through
the
conventional to
channels of private investment, or Treasurer is D. Crena de Iongh,
through the unintegrated efforts who was formerly the president
of governments acting separately. of one of the
largest banks in the
They recognized, too, that these Netherlands. The Director of the

The demand from the deposit institutions for the inter¬

mediate taxable securities in

that these problems were of such

signed from the Reconstruction
Finance Corporation to enter pri¬
vate business, it was stated in As¬

bank

the problems of reconstruction and

Life In¬
LONG 2S FAVORITE
surance I Company,
Milwaukee,
The leadership in the government securities markets again seems
Wis., and the Standard Life In¬
to be with the intermediate-term taxable issues, with the longest
surance Company of Indiana, In¬
maturities of the 2s still the most favored obligations.
.
.
Insurance
dianapolis.
companies, savings banks, as well as commercial banks are in. the
Costello Resigns from RFC mar.ket competing for these securities.. ... The savings.banks and in-:
surance companies are moving from shorter securities into the later
William C. Costello, who went maturities of the
2s, believing that the greater marketability of the
to Washington from Houston, Tex.,
bank-eligible issues, makes these securities attractive at present

with Jesse Jones in

though the President of the New York Federal
rigid pattern of rates used during the war

which cannot take place as long as short-term rates are pegged and

Mutual

Northwestern

seems as

changed and made flexible, particularly: short-term rates. , ■.
The
Central Bank wants to regain control over the initiation of'credit;,

Reporter on Governments"

applications of three life
companies for member¬

The

Reserve Bank wants the

Admits Three Ins. Cos. g
.

;■

Thursday, December 19, 1946

Immediate

bids

firm

practically all issues.
-

■■'i-i C

;

_■

■

•

...

seems

the banks and insurance
■*M;

...

short maturities of; bonds.

•

...

though there is a deftntte quest oanourfor tongeri
maturities among the commercial banks,although up to .the/,presenttime this has not resulted in the Central BahkiSitakingion any of the:
It

So far the operation has been among

companies and vice

versa.

of' governments had accepted
the agreements and joined in the

taxable bonds that have been sold

Weekly List

by the smaller commercial banks
companies or savings banks have been bought prin¬
cipally by the larger metropolitan institutions.
Insurance com¬
panies and savings banks in some instances have also been buyers of
.

the

remaining

memr

the

President

of ;.the

their

Chairman, they
regularly twice a week; *
as

meet

The
to

the

Governors

have

Executive

delegated

Fund.

Directors

their

Last

With

establishment of the Bank and the

insurance

upon

bers.
Bank

authority with respect to the dayspring organizational to-day operations of the Bank.
meetings were held, and the two There is, therefore, a Board of Di¬
institutions came into being.
rectors
continually available in.
the shorts and sellers of the intermediate-term issues.
Due to the
That is the brief chronology of
Washington to act upon the busi¬
mixed demand the market has been able so far to work out these the efforts to
organize the nations ness of the Bank and give gen¬
changes without having to go to Federal with securities.
It is of the world for common action in
eral policy directions.
believed in some quarters that these adjustments can and will con¬
the financial field. It is only one
tinue to be made almost exclusively in the market itself with prac¬
part of our new extensive inter¬ Manner of Conducting Operations
tically no resort to the Central Banks.
If this should be the case, national mechanism. International
I know you are interested not
it is likely that the agitation for change in the short-term rate will
cooperation must grow and de¬ only in the way the Bank is or¬
disappear. V.
' •/
4
%
velop; it cannot spring into full ganized but also in the manner in
If the trend into longer-term obligations by the banks, which
grown activity through a sudden which the Bank conducts its op¬

and

Gladly furnished
request.

elected

ber

The shorter

...

International Monetary Fund were
^fted at the Bretton Woods Con-----f^T.^nc^ ' in 1,1944. ;j jA^oth^r year
pa^dJ^efpre. thp heepss^ry num¬

...

Semi-Annual

...

Valuation and

Appraisal

Complete dollar appraisal
issued each June 30 and

December 31.

cannot be too substantial because there

bonds for them to
or

toward

Central Banks.

•/ "

■'

v.'vrii

Our

experience andi facil¬
ities at your disposal.

not enough

act'of creation.

of these

the rate

patterns

the

part

some

the

Although there has been some buying of the longest ineligible
obligations, it is not believed that there will be much of a following
developed in these bonds, until after the early Januaryv conferences
between Treasury officials and the heads of the insurance companies
and savings banks.
Purchases of earlier maturities of the re¬
stricted issues will no doubt continue, but important acquisitions of
the 2V2S due June and December 1967/72 are not likely to be
undertaken until,after these meetings. ...
...

that future flotations of long-term obligations will depend upon

;

^INCORPORATED

PHILADELPHIA

After

its

formal

establishment

business conditions, trend of commodity prices and the volume of
loans...»

erations immediately. A staff had to
be recruited from among

the

com¬

petent people in many countries.
That was not a simple matter. In
my opinion we have done well. I
have confidence in the ability and
character of
the personnel we
have secured.

But they were not

secured easily or

quickly.

The shortage of trained person¬
nel iii every country jand in every
field of endeavor

was

obstacle to rapid

in itself

♦

You possess as a group a very

the Bank could not begin its op¬

It is not believed that there will be much definite coming;
out of these gatherings, since it seems to be the prevailing opinion

STROUD (COMPANY

erations.

Establishment of the Bank

short bonds to Federal, there may be possibilities of a changed

attitude

Monthly or Special
Appraisal

are

buy, is not accompanied by sales of certificates

progress. /It is

large

aggregation

investment

funds and the Bank desires your
active interest and support. The
Bank

needs

long-term funds

order

to carry out the purposes
for which it was created and you,
of course, want long-term invest¬
ments.

While you are not author¬

ized under existing state laws to
invest in the Bank's obligations,
the Bank hopes that the necessary

legislation will be adopted. It has
felt, however, that the matter was
one that should he dealt with by
the regularly constituted author¬
ities in this country.

only within the last few weeks
The Bank must use its resources
inflationary forces, then there that the Director of the. Loan De¬
and facilities solely for the bene¬
will most likely be an issue of long 2% % bonds for ultimate investors
partment was appointed—rCharles
fit of its members. It is authorized
A deflationary course of economic conditions, most certainly
C. Pineo, a Canadian of compe¬
to make or participate in direct
would not bring about any new bond issues by the Treasury.
tence and experience, who was
loans, or to guarantee in whole or
until
If there should be need to combat

PEnnypacker 5-7330

•

NEW YORK CITY

g REctor 2-6528-29
Two private wires—
Philadelphia, New York

Teletype—PHLA 290 & 297

recently

DIVERGENT RATE OPINIONS

officer

the

Royal Bank of Canada in charge

in part loans

made by private in¬

The recent speech

(full text in Dec. 12 "Chronicle," page 3012) of their foreign business. The Vice vestors through the usual invest¬
by. President Sproul of the Federal Reserve Bank of New York, at President of the Bank, Harold D. ment channels. If in any case a
the New Jersey Bankers Mid-Year Trust and BankirigcConference, Smith, was formerly Director of
member is not itself the borrower,
at Asbury Park, seems to have brought into the open,; the* conflict of the Budget of the United States.
views between the heads of

some

of the Central

Eccles of the .Federal, Reserve Board

over

Bank^ apijl Chairman

money rates and pat¬
,

The

General

McLain,

Counsel, Chester A.
an

American,

who

the
or

member

some

its

central

bank

other comparable agency;

Y-Y

V';77

'Y-

.'■'4',:

7 Y

7 ??

Y. Y;Y" 7>

;

7,,

A.V. f

.7,

'■<

164
l

!Mi Y';'1 \

JimiDer

r; (;
Numbe74S52-lg|j^Klii#if

THE COMMERCIAL & FINANCIAL CHRONICLE

bined with the resources

over-all

which

was 7

sufficiently

mented to be studied

was

a
•

loan

forts

docu¬

not

will

re-

effect

of- its

loan,

com¬

and

ef¬

the

borrowing country,
improve the economic

ceived until October, j Since that position of the country sufficient¬
time, four additional application? ly to give reasonable assurance
Tjiaye; been; received Vin 1 form fpr that the foreign exchange needed
,

consideration..,? Of these five ap- for repayments will be available.
plications, four request assistance
which suffered seriously from the
war.
The fifth seeks funds for

development projects.

;

Bank Guided by Economic. 7 folio, its reserves; its paid-in cap¬
ital on hand and its ability to call
yfv 7 * • y Considerations7 7/77(7. f
-

The Bank,7 to succeed, must be
as a business institution,

operated

—Upon tfie receipt of these appli¬ guided by economic rather than
a
committee of officers political considerations.:; In fact,
-from the( various departments of the framers of the Bank's Articles
cations,

the Bank was appointed to
study
and report on each. These studies

have been going forward and con¬
siderable progress has been made.

Agreement provided that only

economic considerations should be

Questions Considered in
1

Here

of the questions
be considered in the

each' application*
Are
funds available from private
sources on

the

country's economy and how sound
the

investment?

prospects

decisions.

*; [r

What

are

the

that the borrower will

be able to meet the

obligations in¬

curred? If the loan is to be grant¬

ed^ what would be

upon its members for

part
80%. of

the, remaining

all

count

making

loans.

Now

would like to tell you something
elements in the

Bank's

structure

and: operations

governments
which
are
members of the Bank have sub¬
scribed

its

capital

stock

over

in the

currency necessary

isfy its

^ L

Let

to sat¬

examine

for

moment

the. nature of this security.

advance

the

need

for

them

-((7(7;.777 7

the

lask

American

food.

management and American labor
have it within their power to meet
a

great part of the world's

very

tories

and

plants

and

of ing conflicts

those

serves

and

surplus.

hands the power to decide
we will regenerate the

our

the Bank.;
I

ligations

pacity by leaving it idle

loans

This

commission

must

or.

Conservative Operation*
I 'think you will agree with me

Funds Through

■cannot be limited to* projects or
tprograms

rectly

which
the

will

result/ di¬

receipt-of

exchange.- But in each
t

>"»

foreign,
case

and not

Sale

of Debentures..

requirements.

developed

for

serve as

revolving fund. Most of

the the

amounts

lending

used

for

•

and

loans

may

will

the

neer,

engi¬

and the investors in the pro¬

ducing and creditor countries must

live in

are

7, :

borrowing

our

■

Furthermore, the creditor

Corp. Div. Payments
In Sept. Surveyed

coun-

tries will have to invest their cap¬
ital

re s 0 u r c e s

productively in

other parts of the world where

is needed. All the funds of the in¬

7 Publicly reported cash dividend

surancecompanies in the State of payments by corporations in the
New York

are

not invested within

United States

the boundaries of the State; they
find their way

14% higher in

were

September
September

into channels which

this

than in
the Depart¬

year

a year ago,

carryTthem throughout our coun¬ ment of Commerce said on Nov. 27,
try to strengthen the economies of in its report of the corporations
other states and other

areas.

Now

countries are a logical
field for carefully planned invest¬
foreign

ment. It is evident that most of the

funds required by the Bank in ad¬
dition to its capital must, for the

dividends, which also said:
"September 1946 payments were
$451,800,000 " as
compared
with

$396,200,000 in September 1945.

("For the third
present, be obtained in the United year 7 dividend
States.

of this
disbursements
amounted to $1,007,400,000. an in¬
quarter
.

crease of 14.5% over the $878,700,Let me also point out that the
000 total in the same quarter of
participation in the Bank's suc-v
I945.:;7 Coiporattbns en
- in
cess is ^ertaihly^; hot limited to the
trade 7 experienced
the
greatest
direct purchase of its securities.
rise, 48%....
:i
Y
'
One of the principle functions of
"A 47% gain was scored by the
the Bank is to promote private
foreign investment. The Bank can miscellaneous group of the third
help to fill the gap which now quarter of this year as compared
,

and with the same period a year ago.
pri¬ The payment of extra dividends
vate resources on r e a son a b l e by several motion picture com¬
terms.'Its operations, however, arc panies was primarily resoonsible

and: the

Whether

,1 7,i

Need for Foreign Investment

period of boOm, followed the globe.

manufacturer

economies

plan their the new foundations iipon which
reconstruction and enduring peace must rest. Y

development.

The Bank's working capital is Y Bui^ the laborer and the trader*

available

bearable

are

countries
of

programs

bust.'"'

backward

unless

peace

lending country we can all play
part in improving interna¬
We shall also have to share our tional relations and in strengthen¬
technicians — the engineers and ing the forces which benefit men
chemists and agronomists — to in their daily lives. We
can, each
help the devastated and under¬ and every one of us, , help to lay
own

our

think you

Obviously, the Bank's assistance

have

not

conditions

helped to go forward.

producing only enough to satisfy

will have the Bank's
the first line of security.
I certainly shall not hazard the
flat assertion that all the Bank's
loans and interest thereon will be
as

makes.

shall

and

economy or whether we
will squander our productive ca¬

with currencies other than its own.

economic

not a substitute for healthy pri¬
that, in framing the Articles of
will agree that it Agreement of the Bank, they in¬ vate, investment. The loans' it
them in order to strengthen their
makes will, I hope, contribute to
is
unreasonable
to
expect .the tended to make every effort to aseconomies and i n c teas e their
the strength and stability of the
Bank how to make official rulings Sure a conservative operations
standards: of living, in these couih
I look upon the Bank as a great borrowing countries and improve
tries it is hot possible to think bf defining the exact procedure
which it will follow in the re¬ opportunity for the people of the the climate for private lending.
projects only in terms of. a par¬
mote contingency that it should world—not merely for the people They should also help to bring
ticular power plant or other facil¬
need to call all or part of such of the borrowing countries, but for about conditions under which pri¬
ity. Often the best way to pro¬
80% of its capital in order to meet those in the lending countries as vate trade may be restored and
mote reconstruction will be to
expanded.
its obligations. I think, however, well.
undertake a general program for
If we want to enjoy the kind of
that I can clear up any doubt as
The workers and the managers,
the repair and modernization of
to the answer to the particular the
scientists and ^ the engineers economic society in which indi¬
large segments of their economies;
question? which seems to have in the borrowing countries, with vidual men can thrive and live
been bothering the writer of the technical
;
Foreign Exchange Resources
help from the outside comfortably, we cannot7 retreat
into our own rich land and cease
In making loans, the Bank will story to. which I refer. I am as¬ in many cases, must plan projects
sured by the General Counsel - of of sound reconstruction and de* to care how the rest of the world
foe interested in the foreign exlives. We cannot do that because
the Bank that in his opinion the
velopment. If the Bank assists in
'change resources "of the borrow*
obligation of each member on its financing those projects, the peo¬ there is no way. of shutting our¬
ing country. The fact that the fi¬
selves up and keeping the rest of
nancial assistance provided by the subscription to the capital of the ple in the
borrowing countries
the world out. The spread of eco¬
Bank is independent of the obli¬ must labor to construct and
'Bank results in profitable under¬
oper¬
gations of other members, and that ate them for: the benefit of their nomic disease beyond our shores
takings within a country does not
in case some members fail to re¬
fellow citizens..; They must .act will eventually infect us. The de¬
-necessarily mean that the borrow¬
spond to a call on their subscrip¬ wisely in handling their domestic
terioration of the economic condi¬
er will have the resources required
tions, the Bank may continue to economies so that the anticipated
tions under which men live in¬
to repay the Bank. The Bank: will make
pro rata calls, up to the full benefits " will.4 be realized.
They
♦foe lending foreign exchange with amount of its capital subscribed must act carefully so that - their evitably leads to political illness;
and unpaid, until the amount re¬
which will surely involve us un¬
which borrowers can
buy goods ceived
budgetary and fiscal affairs, as
by the Bank is sufficient to
less it is cured. In other words, we
'abroad. Therefore, it is necessary
meet its obligations for funds bor¬ well as the social measures they
to consider the ability of the bor¬ rowed by it pr on; guarantees niade undertake, will 7 bring a rising cannot be the only happy and
standard of living to their people prosperous country on the face of
rowing country to repay the Bank by it.

to expand

or even

efforts to expand

the nations will be futile.
equally: convinced of this:

world's

Those who hold the Bank's ob¬

whether

Security for Debentures

•

facilities,

among

hope of the world. We have

needs tor meet its /obligations;: The
scriptions,^ the Bank could make
portfolio,, together With reserves)
ferent, however, in the case of additional
pro rata calls on cap¬
surplus and subscribed capital
countries whose economies were
ital until the amounts paid in by cannot
be less than 200% of the
destroyed and disrupted by the
exists between widespread
non-defaulting
members
up
to Bank's obligations. •>
Y
war.
In many instances,
those the full amounts of their
urgent needs and available
respect¬

their

our

re¬

The

ive subscriptions should be suffi¬
cient to meet the obligations of

world

the

capital,

situation is somewhat dif¬

Were:(highly industrial-!

convinced that in

of mutual suspicion and smoulder¬

impaired subscribed

•

lied prior to the war. Their need
now? is to rebuild^ arid modernize

essential material needs. Our fac¬

trade and raise standards of living

any

countries

liminary steps to establish an In¬
ternational
Trade
Organization.
In other fields as well, men of
goodwill are working together to
forge the economic conditions of
peace through mutual assistance.

materials

raw

goods can be
real and just as desperate

Canada and other countries, which
did not suffer direct attack, are

though

The

bringing stability into the chaotic
area
of
international
exchange.
The Food and Agriculture Organ¬

the Bank's loans and guaran¬
tees exceed the amount of its un¬
can

further stated
that certain
in¬
security, there is the paid-in cap¬
underdeveloped area, alvestors hadasserted that there was ital
of the Bank, which can be ex¬
it takes- a; considerable
•amount of time to prepare such a,serfous question/whether, if one changed by it, without restriction;
or more members defaulted in the
plans. 7771 ";7:* -7 7-7 • Y*
j payment of calls on their sub¬ into any currency which the Bank

;

will not
for

peace

manufactured

just
as

It is unlikely that the Bank will
borrow funds on a large scale in

secure

ened. The famine of

and
a

remaining 80% of the mem¬ be held in liquid form as a special
bers^, subscriptionsthe: Bahk'is reserve to
meet, th'e Bank's liabili¬
papital Is not subjec^lo icall ek^ ties; After the first
years of op¬
pand and modernize the produc¬
cept for the purpose'lof meeting era ti 0
n,' this reserve should
tive facilities of a country. A
the Bank's obligations.
amount to a substantial sum.
power plant or a steel mill can be
I recently noticed a newspaper
Apart from' the portfolio, the
built; a railroad can be run into
story in which it was stated that special- reserve and the
a .previously inaccessible area if
subscrip¬
there/had foeen no official 'ruling tions which can be
the necessary manpower and local
called, there
as to; the iexact procedure under
resources are available. There are
may be other reserves as well as
which calls could be made against
a surplus arising -from the Bank's
many such projects which can be
this 80%' of subscriptions. It was
operations/ And as a final item of
carefully planned and engineered

•

resumed,

the

I had occasion

obligations.^;; 7

Naturally, new development is
.planned and undertaken ; oh;; a
project basis; in an ieffort to ex¬

which..we fought.

their

reasonable $71/2 billions. Four additional
rate of interest and what other
countries, recently declared eligi¬
charges should be made? Is the ble for
membership, will bring the repaid in full and on the dot.
schedule of repayments appropri¬ total
to approximately $8 billions.
There may be some defaults, and
ate to the loan? What methods of
Of this amount, the Bank is en¬
adjustments may have to be made
supervision can be undertaken to titled to
require the payment of Where
difficulties arise. But even
'see that the credit is properly used
20% as working capital. Ten per¬
If; there are some defaults, the
and repaid?
cent, or the equivalent of about 80% Of
subscriptions to the Bank's
Under the Articles of Agree¬ $750
millions, became payable by
capital can be called in any
ment of the Bank, loans are re¬
Nov.
25.
The full 20%,, which
amounts and in any currency re¬
quired to be for the purpose of amounts to approximately $1 Vz
quired to meet the Bank's obli¬
specific projects of reconstruction billions, will have been received
gations.
v
and development, except in special
by next May. One half of this
Furthermore, under the Articles
circumstances. I mentioned that sum, or about $750
millions, will of
Agreement, the Bank is re¬
one of the applications now before
be in gold or United States dol¬
the Bank seeks; the financing of lars, the rest in other currencies quired to charge a commission of
from 1 to 1 Vz % on all the loans
specific development project si of the members.
a

life

achieve

recently to com¬ ization is concerned with improv¬
ment publicly on the famine of ing
agricultural conditions
call is made, the Bank is entitled
materials and manufactured goods throughout the world/The United
to require that payment* be /made
with which the world is threat¬ Nations have already taken pre¬

which bear upon the character of
its securities as investments.

The

nomic

subscriptions.; If and when .such

the Bank's operations and the con¬ since^ it will hot want to pay in¬
terest on idle money. In no event
siderations to be taken into ac¬

reasonable terms? What aboutkother

is. the effect of the loan
is

Bank's

I have discussed the nature of

are some

which must
case

the

words, the Bank has been
mandate to operate on a

business basis.

Loan Applications

•

relevant
In other

given

•

3229

to be replaced through bor¬ also shoulder a share of the re¬ in all countries to work
together
rowings. In fact, most of the funds sponsibility. 7
toward a more prosperous world.
"'i'*-/
required by the Bank in all its
The Bank's
Many countries today have been
efforts alone will
lending operations must be ob¬ laid waste
by war. Their econ¬ not:,, bring «• about, the conditions
tained
through the sale of de¬ omies have been
disrupted and which we wish to see restored
bentures in the public markets
their administrative and distribu¬ throughout the world. There is
from time to time.
•
j tion machinery shattered. Unless need for action on
many fronts.
••7 The
security behind the Bank's the (destruction can be repaired The International Monetary Fund
obligations will be its loan port¬ and the normal functions of eco¬ has the highly important task of

in the reconstruction of economies

■'

r*'.-

Bank;'must be'( satisfied that the have

:.;;The first application for

/7\7?-',,vY i 7;

acceptable to the Bank must fully
guarantee the loan.
v

;

'Y''

w M':

The

Prosperous

International

conceived

the group gain.
Other nonmanufacturing industries experi¬
encing gains were heat, light and
power up 26%; mining uo 20%
and finance
up
12%.Y Dividend
payments by the communications
group were about the same dur¬

ing the third quarter of this year
during the same period a year

ago.

Y "Dividend

quarter of this year as compared
the third quarter 1945, but

with

among

the subdivisions wide vari¬

ations occurred.;,

World

"Transportation

equipment

disbursements

its

boosted
above

1945.

This

payments

and

ments

tobacco,

4%.

decline in dividend pay*

was

automobile

manu¬

facturing, down 21%, due to the

opportunity for decreased dividend rate of

business and labor and technicians

78%

mainly

was

change in the date of
by
several
large
aircraft
manufacturers.
Third quarter dividend payments
by paper and printing were up
46% over the same period of 1945;
textiles- and
leather,
up
29%;
other
manufacturing, up
28%;
chemicals up 22%; oil refining, up
9%; iron and steel, up 8%; nonferrous metals, up 6%: and food,
owing to

dividend

The only

Bank ^was

nayments

by manu¬
facturing companies as a whole
advanced 10%
during the third

beverages

Work Together Toward
More

for

the largest

one

manufacturers."
!*)*itv *

of
* *

t■'

3230

THE COMMERCIAL & FINANCIAL CHRONICLE

will; point to- their- achievementswith pride and
satisfaction^

The Enslavement toft Labor
i

(Continued from page 3207)

stituted the terror of state prop- ushering- in

demagogue and self-seeker dawn.. erty-owner
In such

times

these, the para¬
duty of every person is to
keep his feet firmly set upon the

ing majority, of the

mount

ground and to scrutinize each

proposal with the utmost

new

be¬

care

fore undertaking its

common peo¬

ple under their yoke,.

Com¬
up

withering

•

- >.

Citizens

this

Utopia state property rights
priority over the
rights of individuals than private

away.

government which
denies
freedom to, its; own citizens cannot

dared'exercise

be earnestly devoted to peace arid

liberty? for the^ citizen^ df? other

attempts made to divert it from
its original moorings or to sway

it"

from

its

and against the forces
•of suppression and of dictatorship.
/
Ih recent years, democracy has
-

racy as over

been

tried.
It is being
in many lands. In
some
it has been uprooted and
highly
centralized
governments

sorely

frowned upon

•

:
*

with dictatorial powers have come
into existence; Wherever central¬

ized

government and dictatorial
powers
have
been
established
there also has been established- a

•

■

-hostility to freedom of religion
and of the practices of the Church,
as: well. as to the rights of free
labor and practices of free trade
unions- and labor organizations,

•

Democracy,

as
we ; know
it!
only for the right of
the individual to be free, but for
the right of every individual" soul
of1 its- importance in the sight cf
God. It is a part of our Christian

stands

God

not

belief that

less state bureaucrats

vicious

life

and

sapping than the human
tongue can tell' or describe,-

therefore

are

spiritual
!'

the totalitarian

Under banner of

nomic

freedom,

they haver im¬

posed a system of'industrial slav¬
ery unparalleled in* the annals of
human history for its magnitude,

ruthlessness, and planfulness of
exploitation. No other country in
the world—with

all the evils at¬

tendant to its
vast

economy—have so
proportion of its national

industrial life based

slave labor

does Communist Russia.

cannot be .the

anism

guardian

angel

bearer and

of - international

security and peace. Already,

have

police

means

the

economy—just

Communist

else

but

State, is

and

savage

nothing
heartless

police state. At this very moment,
billions

have

lost -their

dollars

lend-lease

machinery and tools provided by
the American people to help the
Russian people beat back the Nazi

aggressors, are being used- by mil¬
lions
of
enslaved
laborers ; in

building, new vast arsenals of ag¬
gression for Soviet imperialism.

gained their freedom after
War I.
Thus, YTito's acts

World
are

not the acts of some individ?

ual

adventurer, but an integral
part of a whole pattern being

woven,

powerful

whose tool he is.
and

imprisoned Cardinal Stepinac

timony to this.

point to the regions of the
densely-wooded Urals and to the
bleak shores of the Sea: of Ok¬

laborers-^ayar-workers;;

very-

lives

chained

of- millions of forcedthe

workers

chariot

•

Communism Is Materialistic

The

basis

Communism

materialistic;

purely

the- religion
would
our

the

philosophy

its .devoters.

It seeks to

make this materialistic

not

only ignore but vilify
Creator and hold in contempt
Church

which

sacred

those

and

doctrines

have all' learned to hold

countless

through

centu¬

rejects the, Christian

idea

that

U
we

look

can

across

see

now

the

many

should

;
'

Atlantic
things that
In Russia;

open our eyes.
behold
a
wearied

and

ex-*

hausted people with their heads
bowed to the tyranny of an orga-i
nized
minority., We see labor
sweated at the bidding - of the

;

dictatorship of

small

operating ! through
'

•

oligarchy

privileged

bureaucracy.

Labor organizations
have been transformed into labor

battalions,

;

acting

under

orders.1

Farmers

have beeh herded into
collective farms where home Jifd
and

independence have", beeh de*
stroyed. - Worse than all else, H

determined

;

and persistent effort
Is carried dm
day inv and? day out
by those in authority to tear the
cross of Christ from
the hearts of
the whole people; \ • ■
■
^
;

criticize mildly,

hesitatingly this barbarous
dictatorship over the proletariat.

l^issia's Giani War
If. Molotov and

" With the aid of false

loose

•

thinking,

tion of ethical

definitions!

and the degenera¬

standards, the

;

progressive. By
weapons of distortion and destruc-*
tion they would have us
under¬

stand; that

Russian

dictatorship

presents

the rule of reason
freedom—a government of

peace

and

harmony.

stant

holders

and

privileged

other'

political; office
army officers;-- All
and

persons

mere

and

pawns

citizens are
slaves at the

beck and call of these privileged

>■'

groups...

person*

wHb/gazes bpf

art

thd

well-meaning

per¬

consciously or subconsciously
accepting all of Russia's acts and

projects as the very touchstone
of
human advancement.

deeds

by
alone

State

deeds
that

Terrors

movements and

judges the valid¬
ity and soundness of government

■

Under guise of

anny

erty

abolishing the tyr.

of private
over

capitalist

the masses, the

prop

commu

ujsts, whenever and wherever
they have seized power, have in-

■

appreciate

of the American

battle;.

;a,
^

What is at the bottbrrt. of this

distressingparalysis

failure?

manship?

Why

international

this

states+

•

the-cause

of: human" freedom

and. peaee./:Nd^hation;?^iete«;or

vanquished,. can.. be truly free if
it

disregards—in; fpractice^-these

iumartc^^standar^ in its^dbmestic
and

foreign relations. And let me
^rritdrisi, boundaries may mo4 emphasize that no movement-^mentarily
be
very
important anywhere in the world—can be
'hey are seldom permanent and
genuinely progressive * unless it
scarcely a guarantee for peace:
sincerely and vigorously adheres
Man-made
arbitrary and fixed :o this humanitarian and practi¬
boundaries
set
by
the strong cal guide to a peaceful and bounagainst

the

meek

often

are

soure'e of war rather than a force
for peace. Even less
may be said
for
reparations as
a

pillar

Not

peace.

ered;

syllable

defense

be ut-

can

the

brutal
transfer of populations from their
native soil and traditional abode
as

building good will
among men and fostering peace
among nations.
means

The

Catholic

Bishops

their

fore

when they proclaimed, "Be¬
can
hope, for-a good!

peace, there-must come an agreenent among the peacemakers on

iful world.

this viewpoint that
uncompromisingly
op¬
posed to the philosophy and pradIt

from

are

tice of totalitarian Communism; *

Imperialism today, under,
of

Communism

is far

cover

dan.-

than ever it was under the
'lag of Czarism.- Lest we forget:
! Russia, alone of all the victorious
powers,
has not been satisfied
with merely defeating the Axis
enemy.
The Soviets are the only
power having
extended its do¬
mains at the expense of its Ab¬
gerous

friends

ies—its

well

as?

its

It is not the security cf
Russian people that worries

enemies.
the

;he basic question of man as'man;
he Kremlin—despite: all declamaRespect for - the' rights' and duties
ions regarding danger of capital^
of man- as an individual and as;
aj ist encirclement. Rather, it is the
member of, civic and domestic so*
security of several great democ¬
ciety,:as we hold to be the first
racies and of weaker nations that
obligation of any government to
ts

citizens/'

;•'

now

■■

disturbs

welcome

Communist

The

sors.

Here

light

the»

Moscow

aggres¬
Commissatfs

well for the first time
present distrust, suspicion and bit¬
in their history that the Russian,
terness which divide not
only the people now have complete secur¬
victors from the vanquished but
ity on all sides, the south,, west,
he comrades-in-arms of yester
east and north.
/ "
day's triumph over the Axis men
Not

ace.

the

until

statesmen

snow

very

Choice Not Between Bilbo and

bureaucrats arid-

supreme

mana¬

American' radio commentators
not allowed evert

are

tobroadcast/fo#

have

Standai^l4;bf /living/ $y;^etebting

comrpluad.

the arts arid?

Scienter the dissetnii
knowledge and informa

there

capital, in private enterprise. X'" 1 ^Americahs/ of

States;

likewise

vicious

en^

•

Uhder

pretense

some- measure" of

dom,

the

religious; free-t

Kremlin rulers

ac4

are

tually seeking to turn the Greek
Orthodox. Hierarchy into

arm

of. the Soviet State and an
instru¬
ment of Russian: Government

pol¬

icies at home and"
abroad. Books
and movies and'
press and theatre
and' music' are

ily

agree

that Leningrad Commu-;

nist Party boss,
duct rather

Zhdanov, can. con¬
efficiently the-Party
Lme, .But, it is difficult to under-,
stand'nxwhat ;rtil3rtn"er--;or''by;:.wh&t

means'

this- key Communist
"party!
position qualifies him as- a
judge

literature,

art and rnusic

arbiter of ^eUgious issues*;
'
Because. Zhdanov. can conduct

Stalin

mean

the

harsh party
line, does not
is'more qualified than

great composer .himself to
the Shostakovich Ninth

conduct

Symphony..'Indeed,

material

paradise.^

Under

The

guise

;

the briric: approach of peacertovhtg

all faiths.v>

•

every other ^ecie autdl
stripe of totelitariam. bigpt^

prejudicei: tritolerance^, racialiisirt/^
arid' persecution.
;

jga

challengetol/

is directed; not alone

at'

pblitica

lationship/between human: dignity
and

.organizations,- in¬
cluding the trade unions and* labor
organizatibrls "of - every^ type^ arte f
character... The form of absolutismj

and

.freedom"

world

peace,;

the^ indivisiMit^of

and- democratic

tice | withite

fective peacemaking, for the high-

but^|in|erriationali^m^

diplomacy approach the- problems

est/fpvffiIolv statesmanship^ Only
when; the. leadertsV.pf'internationa
of

Our

between Bilbo and Browder.

choice: is'neiUter

dei^irtan^jshabe/inartrtef/

nations arid" jus- guise"
nations/; is/the vfirsl!

befwOen

peace

that is developing is an aggressive
political doctrine that challenges
not alone democratic nationalism

disguise.. ! Our. choice

dipniri/rtr?d--

itbel/hfe as iagaih^Hboth^ reactten *
fionf the left and right;
'
! " j
>

/■/Tl^/^^iertS^b^

peafee- abroad

•

andjustice/ a t home"< are^/ inter- /
twined and inseparable. ; They
are two sides of one medal;
Let

peace; in this spirit, will they
The Catholic
Bishops of the
be really ' getting; down:;to dwf us build an America free from
United: .States;
ire: their " recent
;tasks of firm/peace^building; •
the errors and terror of every
statement,-* under' the: title
!type of totalitarianism and- .we...
and* Peaces'/were sound' ih their
A n Inter national Bill of Rights
will -/bxiilci/aii America^; able^ and
conclusion i that ;at the,bbttdmi;Ot
Z In; full r-ealizatibn/of thia sounc
eager to. lead? the world, on "tbe
all problems of the world:
today .moral basis so essential to peace
paths of justice and- peace*/ ,'J%-}'
isi^tl^' trt^blem:/ofc
the American Federation of Labor
Let us" build " an America
profound; question ; of. -today " is
^ in
presented,; last August^ to- the which the dignity of human lifO,
^'whether : national;
.

governments United

are disposed to protect or hinder
the. individual;in ?the exercise of

right^
prior, to. any,
For

Social
Bill

Nations

Council,

Economic

an?

and

Internationa
incorporation

the- spiritual

izenry,

and

elevation: of its: cit¬
the enhancement of

rights for
into r tee general peace- treaty,

the people's welfare are our guid- v
dng; motives and we shall, then be
proper tih hiirt am happy .and proud to say that able'to insure1 the building of a
action- by the State,
in spirit—and to no small extent world flee fr°m ail racial and

the: discharge: oi

duties ^vhich

_more j

are:

than; La yejar^ ;.tlie

statesmen of the world.have been

en¬

slavement and- moral
degradation!
gO' hand in hand' in the
Communist

tion and the* investment of private

restoring democracies;; but against pll free

nation of

slavenient of the'huma^mind^ tliri
arts; arid r culture: of the people; ;

of;Com-

developing

few- minutee sir Week e few
cen-t
sored lines to. the United

evils and vile institutions

g^^^/With^dite^^^a^issue^/of
dutebl^eaoo.-i^ThostsujH and'fm^unlessf we * spurr^;rcpbl> V
neW'/ideas;; by: giving: thepy ides:
dard pi^posj^vd^
freedom/for Kthe; d^etopinent:foi

gers;/of stat# -property; -Behind new' commodities;
the irom curtain^- the. land-where;

and

evaluates

objectives; can be just and endur¬
new world
ing." ' ",/j. ;;;
/
tomorrow, for the achievement
Not nation, whethef vtotor
of which
so- many
millions of
many : lands; have; made the/sqi vanquished,: can -reject this/ap¬
preme sacrifice on
the field of proach and be dedicated in deed

♦

however,
one

fail

cap

and

Communist

ectivism,

the, superiority

human -rights

motion of the

welfare of all peoples are primary-

Of. course, ours is a constantly
he world begin to seek under
Browder ;
V
changing and progressing system.
i
standings and agreements oveii
Let me make one/ other plea.
It is: not perfect It is not' bommoral rather tham material
issues,; We who believe in the democratic
Magdan> pletev % If fras/hot teafehe^dts'
over,
the: questions of principle!
Petrovak,. and Yakutia. These are i natev/Biif
4'
progress-' is' not. rti^d^ rather than
the demands of power in our sound and
not; mistery, .cities.
They are cen¬ by
unrelenting; offattacking; arid: uridermtoihg the politics, will- there be" any encour
ters: for Communist
mastery of the veiy/rstateta
position to Communist; tyranny
whole woridv.
r
:inibv'-v.ib3$Oundv'
teaWari^nted
j upon whibhv we depend.r Progress agii /prdspecL /Cor/an/
More than -that. • X speak not can only come by improving the'
support of irt^body; ixierely /
cause
he or they oppose;■■Corrir
only of the physical enslavement device^ of production arid* distri4
of millions of individuals
by thd bution, by constantly raising: the irtsure:;and/irtcr^se^ the right^bl munisri£./Our struggleragairisi the-

Indeed, by con¬
being constantly!
communist! coordinated and' purged
by top
falsehoods, a large party bureaucrats. One may read¬

sons

many
being

ground beneath the heads of col

Gromyko would

persistent

opinion in our
country has been corroded to the
point of many

countries whose people are

which

/*•••$•

It is difficult to understand how

any

prosperity are; to
assured/
a world peace settlement ih
the preservation and- pro¬

Only*

peace

two

namely,

and

better/ fbr/ihe> brave,,

it has1 established

way*

and

propaganda of
section of liberal,
.

Centers 1

plans. Still they
have been unable to piece-to¬
gether the world of yesterday, let
alone-building a foundation for the

Nations would; do well to: inspect
such; giant war centers as

com¬

munists here and elsewhere
hope
to stampede
people into the- belief that they are

/represewtativo-

■r.vLet

not exercise their veto, the United

to ques¬

even

tion

recent statement reached the very
heart of the problem of world

of Soviet
loyalty of the citi-r
ortured world today, upon the
zen to the state;
It asserts r that. tyranny merely because they have
spiritually broken and materially
/ man; was • made for the state: ctered/ occasionally/ tar oppose,, to bound human
beings of so
it

to remake the
There has been no- dearth

of formula

In theory it would level all
classes of society, but in practice

ries.

groups;

aggressor

The persecuted

has borne eloquent and tragic tes4

hotsk where giant cities have been
built by the sweat and blood and

the; state exists for the- individuaJi

state-

Conference

their command

world.

inde¬

In Russia, Communist economy

and all-powerful state; it demands
the complete

Russia's pathological distrust and

bringing eco¬ pendence iti 'World Was It/than

state is the complete antithesis' of
the concept of Christian democ¬
racy.
It stands for the supreme

Herein lie the roots cf

countries

■

and

countries.

suspicion of democracy. The home
system of exploitation by soul¬ and. epitome of ruthless totalitari¬

all children of

we are

persons.
The theory

constructive

path.
Throughout, it has remained the
champion of the cause of democ-

had

owners ever

grounded in American traditions,
has thus far withstood any and all

inspiring

policy recently ennunci"ated by the Conference of Bishops.
of

ment

paragraph of. our statement.- "Hiimanity has. reached a stage of
of :• the; summer^ of
^1945, ' the /top development in which the effort's,
iree of the
Big Three and the
actions, and struggles of all pedr
^reign;Mirtisters o£:the Big Four
pies against poverty and tyranny
and-Five haye" exerted alt energy
must, be/coordinated^*-!# progress
Since the; Potsdam

pleased to say that the. in the worst days of - capitalism.
American Federation of Labor, Under
guise of eliminating exploi¬
with its roots planted deep in
tation, Communist dictators have
American soil and its philosophy foisted
upon regimented masses

Peace

and

historic

the

com¬

selves are

munism, socialized property spells
mass collectivization of misery. In
have far greater

AFL Champions Democracy

■

Distressing Failure of ? World/

societyn where the

state will wither away, the
munist dictators have" set

regime in which the people them¬

In the fatherland of world

adoption- and

promotion*.

the overwhelm-

over

Thursday, December 19,1946

substance:--^ the

approach

to religious: persecution and' poverty

world peace and- human freedom

working feverishly at the task of ittiadeby the American Federation

.making;; peaqe/J;: ^ewv. wilL; deny ;bf
their arduous

efforts./'

Not

many

Labor/hiriter.^terrtatidaalV;^

—4-ofa? society-offree- nationegov^
erned^ by

that set of lofty moral

yalues/wl^fe aidne cart lead* 1S> /

of/RightSu i§; ini fiillv accordt with ; equitable: arid; enduring

peace;

:n:T

'i/Tii

yolume 164

?HE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

;

textile,

Price Distortions and the Business Outlook
Prices

(Continued from page 3204)
with the serious price

concerned

distortions

that

exist

now

their probable effect on the
of business in 1947.» •

■

mediate

and

The price

"wars

patterns after great

seern

have

acteristics. En

reaction

less

rapidly are farm products; the semi-man-!
serious

similar char¬

many cases and of ten operated to
the Na¬ create or accentuate shortages.
Under such conditions, the close of
poleonic wars. After 1815, prices
dropped considerably; but this de¬ active warfare did not cause any
cline Was sdbh larrested and an¬ drastic decline in average prices.
other price advance began that
t We are now deep in the, third
vanced

g'i i s li prices ad¬

sharply^ during

continued

into

1818.

fol¬

was

ments. The

1812 was

war of

ing prices, then a recovery for three

then declined until June 1865 and
was

brief

recovery

until

October, 1865; and after that, fall¬
ing prices until 1879. In World
War

I, prices reached their peak
1918, declined until
March, 1919. rose to a new high in
May; 1920; and then began the
long decline which lasted, with

in September,

some

interruptions,

These time

into

intervals

1932.

not

are

too

pattern/,

(

rough,

very

•

Four main phases

conditions.

or¬

The-

exceptions
in¬
clude war periods with high busi¬
ness activity and wide deviations.
Under peace

conditions, a narrow¬
of deviation from the

ing range
average

seems

balance.

boom

serious

creates

economic

coincide

with

distortions

% v/;;;

Study of these

the

1916-20

I '

group

deviations

period

and

the

fuel

lighting

and

that

In the World War II

building materials

lighting and housing
submerged groups.

the

Aside from

period, the

and

Smaller Price Distortions Now

/:v;

merged position.

fuel
were

hide

and

leather groups soon soared abnor¬

the fact

previously

mentioned that the price inflation
of World War I began on a higher

mally and in 1943 the farm prod¬

level than it did in World War

uct

study of the group dispersions in¬

began

group

its

great

Fuel

and lighting was the
depressed groups
-

rise.
most

dicates that

II,

thus far at least the

price distortions are of smaller
magnitude
than in
the earlier
/Thus far in this second postwar period. The techniques from which
period, the farm products foods, this broad conclusion is deduced
and hide and leather groups have
are far from perfect; but, with all
climbed
seriously out of line their defects, they seem to sup¬
while the fuel and lighting and
port this position. Critical tests
the
chemical groups have been
will come in the next few months.
mostdepressed. With decontrol, There is some reason to hope that
,

there has been

a rather rapid up¬
we can achieve a new price equi¬
readjustment of all groups; librium without too severe a strain
stringently
controlled on the economy.
items
are - moving
into
better
For
the
past several months,
alignment with the general av¬
there has been wide-spread dis¬
erage of all Commodities.
cussion in the press and at trade
i
1 ti
Still another broad view of rel¬ gatherings of the dangers of ex¬

ward

and

the

•

ative

prices can be obtained by
plotting the BLS consumer price
index and the component parts of
that index. In World War I, food
and clothing components soared
rapidly and fuel and lighting and

tended inventory

and commitment
positions. The economic havoc of
the 1919-20 price debacle has been
effectively dramatized. It is prob¬
the

that

able
the

acute

awareness

in price distortions
to make the pending
miscellaneous - items were * lowest
iii relation to the average. In the readjustments far less serious than
;19fl9r20 inflation; ? the clothing they otherwise would have been.
group moved most seriously out of There is too much fundamental
line on the upside with food and, soundness in the broader business
later, furniture.. In the second outlook to warrant a "boom and
period, food, clothing and furni¬ bust" attitude toward our current
ture were the highest groups and problems.
dangers

will operate

pjeriod from 1942 toe date reveals
striking...difference. In the
first period, it was the semi-man¬
ufactured group of commodities
that caused trouble. During that
war, .this, group maintained a po¬

number

be dis¬

may

begin again until the early part
Competent ©bservork believe that
of 1940. The war period,; of coutse,
10% more
before a reversal gets under way. a|gain ^threwr the: groups Out : of

ment

>*./■

falling,

this index may rise 5 to

; Such a reversal is indicated by
Historical precedent. It is usually
experienced' because a replace¬
common

rapidly rising

dinarily have fairly good business

tpat the rising tferid will Persist the deviations of the groups were
well- into the fist quarter of 1947. small; they then widened consid¬
1 Between March, 1919 and May. erably and not until 1934 did they
begin to narrow again; the devia¬
192a, the BLS index advanced
about 27%; and between Septem¬ tions continued to grow smaller
lintil hear^ ehd^pfihej first half
ber, 1945 and December, 1946, the
of 1937; then the range widened
increase has beeft about the same;
Or perhaps slightly more. Some rapidly, and contraction did net

precise, particularly for the earlier
periods; but they will serve to
sketch

general .average fall-within a nar¬
row
range and the index is not

improving business and a widen¬
removal of almost all price con¬ ing range is ordinarily the prelude
trols has stimulated the advance to business troubles. Thus,: from
temporarily. It seems probable 1925 to the early part of 1930, the

riearly - fifteen
years of falling prices. The peak
of the Civil War rise in prices was
reached in January, 1865; prices
there

vegetable oils, yarns,

did after World War I. The recent

then

and

postwar ' price adjust¬
upward trend of prices

during this replacement boor© has
now
lasted about as long as it

followed by six months of declin¬

months

phase

lowed by a long period of declin¬

ing prices. Gulf

ufactured group covers 99 quota¬
tions of such commodities, as raw
sugar,

and

groups staged the great adyances
while foods held the most sub¬

fer-.
pretty stringent control of non- rous and non-ferrous metals; and
agricultural prices; but this con¬ the manufactured group is repre¬
trol or system of "administered sented by 67JF separate quotations
prices" did not make proper al¬ of:various finished, products.
lowance for increasing costs in
When the deviations from the

Historical Postwar Price Patterns
•

During the recenf War^ we had

course

do not advance

during the war period and the im¬

3231

one.

Industrial: Share Prices in 1947

impair the general balance of the
economy and undermine the con¬
which continues until stopped by
fidence of the people who hold the
(Continued from page 3203)
government controls- or the im¬
purse strings whether they be mil¬
minence of peace; (2) the immedi¬
sition much above, the average; have employment at high levels or tive. The fact that inventories of
lions of' plain! people of the man¬
ate post-hostilities decline which
ii came into the zone of tolerance falling prices in 1947. The return manufacturers (as distinct from
agements of great corporations.
for a brief period in the first half to: office of the Republican party retailers and wholesalers) in Sep¬
may sometimes begin before the
These distortions find expression
ertd of the conflict and which us¬
of 1919 and then quickly soared to signals an increase in the relative tember, 1946, were two and onein the relative levels of prices.
ually, lasts for a short time there¬
fantastic heights in the Spring of power of business v managers and half billion dollars higher than at
The continuation of serious distheir
financial
partners.
Other ,the beginning of the year, is less
after; (3) the replacement boom
tortioris ultimately; forces read-* lp2p. Tbo relative positiohv of the
rise in which wartime distortions
group.was finally corrected in the groups, farmers,- labor > executives important for the future, than the
justments.
in the relative prices are contin¬
precipitous general decline of the and1 the like, still wield great in¬ i fact that two-thirds of this in¬

tinguished:

(1) The wartime rise

ued and

usually accentuated;? and

Prices reflect the inter-action of

months. i In; this

subsequent

war

(4)* the period of readjustment in highly complex economic, .mone¬ apd postwar- period/ the semi¬
which a new equilibrium is found tary, political and psychological manufactured group has held a
and the

stage set for

long de¬

cline in prices. The time intervals
of the pattern vary considerably,
the magnitudes of the changes are
never
the same/ but,
still,
general outlines seem to be
sonably well defined.

the
rea¬

sons

those .outlined below

beside

took

crease

place

the third
increase

quarter alone. The rate of

indicatesotne, nar¬

The size of profits in the future,
six to 12 months ahead, is the 64

billion dollar question which the

in unfinished goods. The *
this situation may be
in such cases as the follow¬

tied

effect
seen

made
partly to - bolster • their working
men inust Answer/This is the efligthe/differences in the price be- nia of the
and
department, store head capital position: Ligget
up to this time? In the first phase,
h Wot of these®bups in the two
Who worries in December about Myers Tobacco Co. $75,000,000;
the BLS index of wholesale prices ships have been;,]Ubset y by. a long
periods, iFarni/ products have a
Gar-Wood
Industries
$5,000,000;
advanced from 75 in August, 1939 war during which we fOuiid/tt
heavy weighting in tiie raw ma¬ purchases of:women's clothing to
Hpw well does this general pat¬

tern fit the present

postwar period

somewhat

analagous situation
now
exists in the present, price
structure. Normal price relation-!-

not

rdiffibuli

to account ifay

poor

25- thousand

dollar-a-year

ing examples of borrowings

■

to 106 in

May, 4945, or about 40%.
August, 1914 and No¬
vember, 1918, the same index ad¬
vanced about 95%. If one selects
the 4 months
of our entry into
Between

World

War

the

base,

vances were

and

the

World

War

percentage

ad¬

about 19 and 13%

re¬

spectively.

Still another set ©i
percentage changes can be derived
by taking, the months when a more
or.

less continuous advance

For

our

purposes, the
fact is that in the first

contracted

with

the

began.
significant

period,

recent

war

period; & ri*uck larger part of the
ptice' AfrSanfe --tocckixted''' befofe'
our.

formal entry into the conflict.

The second phase of the general

pattern,

namely

the

immediate

ptwtwar decline;

clearly

fn^kedthistime^asit was in pfiot
periods. In the four months fol¬
lowing V-E Day; there was

a: very

slight decline ih the BLS index

be sold in the

price

ket of next May and June.

terial group and Congress did not
That period was
grant - OPA the right to control
followed by continued and quite
unrealistic price controls, by them; but the semi-manufactured
and
manufactured
groups
were
months of bitter wage controver¬
sies and by Widespread interfup- subject tor Hgorbust/control. We
cannot now tell just when the ex¬
tions ih productiomand in tM flow
tremes of the, current dispersion:
of badly • lieedOd goods. Such con¬
WiHrber ironed out- Pegging of ag*
ditions have aggravated the war*
fiCUltural prices at: 90% of parity
time price distortions. With de¬
for two years after the formal end
control, the difficult / process of
of :the war will probably not pre¬
restoring economic balance has
terit a substantial downward: ad¬
begun.
1;., /'*, / \{/:
/ justment of these prices. Perhaps,
; To
attain this end, some busi¬ it is a good guess that the broad
ness
disturbance seems more or
upward trend will terminate some
less inevitable. Apparently*; w© time® tl^iirst^quatter and ithm:
cannot avoid these correction per¬
the dispersions will tend to nar¬
iods—at least. nof until; there : is row on: the down side
during the
b r o a d e r understanding of the
balance Of theryedrv
forces that create them and vastly
Behavior of Relative Prices
more team work to keep th© ecob-

controls.

omy on an even, keeL We hepd, the
corrections-to. reestablish a price

dex and each

equilibrium in which there, is a

groups are

large:

measure,

permit

and

additional

similar: and

greater decline In the

immediate

.months] f allowing the

;a:

this

problem is to survey the

armistice/ This time,- the continu¬

respective •; deviations^ from

ation

BLS wholesale price index of the

the Pacific

* war

was

sustaining influence.- If is

conclusion;
]menf
the

that

fair

govern^

ci&olsie®^
immediate

down

trends

raw

material,

191#jo date>

we can
more * detailed picture of

relative

chemical'and drug

and the

cannot

decide

not to order a million

dollar addition to his plant back
home,
r

jThe
moves
ness

should

„

question

timing

the

is at the root of most busi¬
calculations
and
errors;

the.

new

equipment

bought

cide business planning (1) invent

tory ratios

arid] (2) prime costsg.-

and

me rnetal products group Was

the relatively:
trol

consideration; it is the relation--

product# groups maintained ship; of the size- of the inventory

was

incoming

orders,; to . invested

also- capital,; to cash, to all kinds of.

high /until price cbn-

invoked.- Housefurnisb-

recall that the

period/ You submerged
raw

material

gropps

and remained

in this position until

Spring 1919.

In the period from May, 1919 to
prices after; i^ace^ far less drastic group includes about 111 quota¬
than in prior postwar periods. tions, more thajft one half of which May, 1920, the hide and leather,

but

prices:

fin'ishedcomporients of thatiridex fuelandlfghtihggroupswereth
may

laftdscape,
whether

facts, including deliveries. If—as
was; the case during July' and Au¬

semi-finished and ings, building "materials and the gust of 1946—retail sales are enor¬

ofer a considerable
in

plotted monthly for the

' the: highest, r$a^^

the

farrft-.

tortions- may fee of interest..

is what is oft the mind of the cap¬
italist who may star© at a Florida

now,.] the inventory de¬
creased, or increased,, the new
sales
program
started now or
later, or should the new product
be put on the; market today or
next year? Since the results of de¬
cisions today do not appear until
six or eight months have passed,
the problem of estimating subse¬
all-commodities; in-* quent' profits is/extremely- com-of the 10 component plicated. Two factors usually de¬

piice again
safe the behavior. of

stimulate

This

:(1) Inventory ratios are con¬
cerned with finished and unfin¬
ished goods on hand. Numbers of
Between 1945 And November, 1918,
dollars are not the all-important
Obtain

pfiee equhibrii®
will

If the BLS

confidence/ a period:Irom

prevailing price dis¬

somewhat

fashion-fickle mar¬

necessary to imposes weep i n g

which wai mostly confined to the forward
planning. Some
raw materials group. After World
cohament on
War I, there was

the stock mar¬ is the important thing in relation¬
of Submerged
;p©stk>rt;arid; it is the ket; but the rate of expected ship to the timing of the increase.
freight rates, were sudd e h I y
r&yv material; group-that has 'risen profit is one, if not the bas c con¬
/ Inventories Harm Positions
scrambled ' so ' that relative' rates
sharply above the all-commodities sideration.
were turned topsy-turvy, it would
:
Unduly large inventories crip¬
index. Since decontrol, all groups
not be long before industry after
/Profits "the; 64 Billion Dollar
ple company operation because a
■havehadvaaoedj/buFi the weekly
/
Question"
disproportionate share of cash is
industry, and! / commtinity after BLS indexes
which may affect

forces. If the existing structure

community would be gravely af¬ rowing of the dispersion zone.
fected; Our whole economic' life Raw
materials, however, remain
Would be profoundly disturbed.
relatively.high.
^

.Our Present Postwar Pattern

fluence,: and there are other rea¬

mous,

but the inventory on hand

is just as

large at the end as at

the beginning

of the month, then

the situation requires

the imme

diate attention of the chief execu-

$1,516,000; West Vir¬
ginia Coal and Coke Co. $3,000,000; Cornell Wood Products Co.
$1,250,000; Fruehauf Trailer Co.
$9,000,000; H. S. Heinz Co. $4,850,^
000; Hunt Foods, Inc. $4,000,000;
International
Business
Machine
Simmons Co.

Standard Cap
$1,500,000—nnd
iriany others. This financing is
usually expensive. Moreover large
inventories are risky because of
$30,000,000;

Corp.
and

Corp.

Seal

possible price declines—thereby
endangering expected profits. * ;
Cost Relationships

costs are a second
of economic troublemakers.

(2)

Prime

group

Prime

costs

material

are

labor

costs, raw

outlay and other direct

out-of-pocket

The

expenditures.

important point about prime costs
is not whether they are high or

their relationships,

but

low,

pecially to selling prices.

main,
tween

prime

prices; which

the

es¬

In the

difference be¬
and selling

costs

determine

future
and

profits. Labor costs are rising
the

effort

unions

to maintain

high wage levels results in

rigidity

of manufacturers' costs—a

rigidity

future

which

dangerous

of
vol¬

profits, especially in the event

price declines or low business
at

umes

crease

leads
as

in
to

higher

prices.

in¬

prime costs, therefore,
anxiety

and

skepticism

profits in the ensuing six to

twelve or more months.

323?

Thursday, December 19, 1945

THE COMMERCIAL & FINANCIAL CHRONICLE

v4iv«*

men nave

Employment Act and The Economic future

Full
Af

•

'-'"'i' i&r'l

//'''-'//.v

..aa/iv

(Continued from

page 3206)
knit system is to work efficiently,
these multifarious plans and ac¬

„

pv"/:;

ii. j

1•«

*«•.

pointed witn great priae

to the fact

the

years, and I trust that the part of the responsibility that top
ahead may see, under the I management of any corporate en^mpioyment Act of 1946, a com¬ terprise assumes, Such business
years

that, in the war emer¬
gency, private industry performea
miracles of production and
be¬
came

the savior of the nation and

tnat, if there was at that time!
sweeping indictment brought
against the management of pri¬

«ay
a

business

vate
has

now

tnis country, it

been tried out at the bar

public opinion ? and no death \
sentence
has
been passed;; It; >
parable development of friendly leaders undertake to utilize the demonstrated the superiority of
would, however, be too much to
lationship to each other in a com¬ understanding and organizational financial resources entrusted to private enterprise over any other
system on earth. In the judgment say that the charge has been com¬
prehensive and coordinated effectiveness between private and their care, the body of workers
It might be
scheme of national business life.
public agencies actively concerned who have become more or less of some at least of these spokes¬ pletely dismissed.
tivities must bear

consistent

Thus the statute became

enabling act for systematic study
of the nation's business.

Under

it,
working

there are set up two
agencies—the Council of Economic

Advisers to the President and the
-

Joint Congressional Committee on
the President's Economic Report.
As to the

former, the act provides
that the President shall, through
a
group of professionally-trained

economists, make continuing study
of

the

entire

economic

of the country.

situation

This includes

re¬

view of the activities of all agen¬
cies in the Federal establishment
as

they deal with economic mat¬

ters and of all

cies land

Government poli¬
in order to

conducting

the nation's

definitely attached to the com¬
pany's organization, and all the
technical and managerial know
how which they or their prede¬
cessors in office have built up over

busi¬

Of course, the analogy is not

ness.

perfect

because you business

one

bureaucrats

have

much

tight control over your subsidiary
agencies than government bureau¬
crats

have

the years, so as to promote the
greatest practicable
volume I of
production with those resources

the

policies and
operations of the component parts
of the economic system.
over

order

that

the

company

may

high wages as possible,
charge as low prices as possible,
and thus maximize the purchasing
pay

The Employment Act states with
great clarity that its purposes are
^

to be

sought "with the assistance
co-operation of industry, ag¬ power of that part of the public
who look to them either as em¬
riculture, labor and state and local
governments" and "in a manner ployees or as consumers.
and

The central administration of

calculated* to promote and foster
free competitive enterprise." Fur¬

great corporation exists only by
recognition of the fact that cer¬

thermore, the council is instructed

tain

to utilize' to the fullest extent pos¬
sible the services, facilities and

powers and responsibilities
most effectively and econom¬
ically be discharged if delegated
ment agencies but also of private to officials and agencies conceived
I of the nation's economic resources research agencies and to "con¬ and organized to deal with the
or whether some of them; are institute such advisory committees business as an integrated whole
of industry, agriculture, labor, and to supply an outlook, access
consistent, directly conflicting, or
fending to retard over-all national consumers, state and local govern¬ to finances, and technical services
prosperity. On the legislative side, ments and other groups, as it which cannot be supplied so well
the act sets up in the Congress a deems advisable."
or at all by the small and more
local constituent units.
Special Joint Committee of four¬ V. Ih

programs

ascertain whether

they

doing

are

the utmost to facilitate and pro¬
mote full and efficient utilization

can

information not merely of govern¬

...

teen members, chosen for their ihterest in economic affairsu and

Conformitywiththese provi¬

sions

the

act—and

a
,

constructive
/v;

Naturally, I shall limit

my re¬

ident^ Wason and Dr. Robey of

NAM "J* r e s i d e n tJackson and
Mr. Schmidt of the Chamber of

marks to the work of the Council
of Economic Advisers.
The task

Commerce, Mr. Murray and

assigned to

the CIO, a group of officials from

us as an arm of

Chief

bers

his

research

staff

mem¬

from

Executive's' office is, as I see it,
jth^Railway Labor Executives As¬
comparable to the ad¬ sociation,
a;
special
committee
ministrative policy- and program- from the Business Advisory Coun¬

-broadly

making that is carried

by the

top executives of a great corpo¬
rate business, in consultation with
each other and with whatever ref earch

staffs are maintained, with¬
the company or drawn upon
from outside sources.
This is what I mean by
in

the

economic

The Congress in this act clearly
recognized that in this day of
large business units, both of capi¬

con¬

formity also with

my own deepest
'Iheir capacity for economic states¬ inclination and desires—we have
manship. They are to make paral¬ established contacts with numer¬
lel study of the nation's economic ous
business, labor and agricul¬
life, to the end that the legisla¬ tural
organizations, and have had
tive program in the economic field around our conference table Pres¬

may square with
national program.

the democratic

world.

It thus

re¬

broad

cil (consultative to the Commerce
Department) and other similar
groups. Consultative arrangements
thus begun will,' We hope, enrich
and guide our work increasingly

in future years and assure for it
a

quality of practical realism.

tal and of labor, it is not to be
expected that the actions of sep¬

and the actions of the council are

that the

content

economic future

accurate to look at the pres*!

ent situation as one of

in which it is

probation,

up' to private busi¬

ness
management by its future
'Pct^; to; justify itself in the more;
their- complete adequacy in the favorable surroundings now pro¬
war period. (On examination, how¬
vided*,
I would suggest that the key to
ever, it becomes clear that they
do hot want that "entirely" to be this changed and on the whole
taken too literally.)
promising outlook is to be found
in the phrase which is common to
I I believe that both these views
the Employment Act of 1946 and
require a little re-examination.
NAM
declarations
of -prin¬
Without in any sense attempting to
to justify all the mistakes that ciples and other documents of this
body
which
have
been
made
were made in the 30's, I do not
believe it could be said in any again fahd > again.' That phrase is
broad why that government hated ?"firee competitive enterprise" / In!
business or, intended to destroy the declaration of policy of the
act. You frequently use it in the
the private enterprise system.
I
believe that the fair verdict of form "competitive private enter¬
The ^ essential; word ; is
history will be that there were prise"
.<
serious defects and shortcomings "competitive."

of the country is safe in

the hands

those who demonstrated

the

anew

...

private enterprise system
it was practiced in/the 2(Ks. J

believe

that

verdict

too

will

that, in spite of some extremists,
the great body of sane and intel¬
ligent people sought reform and
supplementation of private enter¬
prise system, hot its destruction!
It appears to me also that

even

the

glorious achievements of
American business in winning the
war
did
not quite
demonstrate

have just called attention to
the fact that industry > did not

operate in a competitive market
during the war, but in a controlled
in

market

deficit

economy.

operated in a
normal competitive market dur¬
ing the last year. It was still es¬
sentially a seller's market char¬
acterized by inflation, the absorp¬
tion of a substantial amount/of
Neither

have

you

wartime savings,; and a noticeable
resort lately to credit extensions
and instalment buying. It is pretT
economic ty generally agreed that next year

private business en¬ that private management had mas¬
terprise, with their individual de¬ tered the last lessons of economic
arate units of

cisions

taken

under

the

circum¬

science

well that

our

business will move into a truly,
they must be life should henceforth be turned
and at many spots no doubt a
made, can completely and con¬ completely over to them and no
p ^
tinuously add up to full and effi¬ questions asked. The war record of sharply, competitiyo market,.;
That will be the testing time
cient utilization of the nation's industry was a stupendous tech¬
It is up to you to
total productive resources. Busi¬ nological and engineering achieve¬ of business.
ment.
But no one, I think, ever show your capacity to do business
ness has always looked to its gov¬
ernment for the performance of doubted or needed fresh proof of in a buyer's market. Unless you
such special services.
It has al¬ the tremendous capacity of Amer¬ pan allow the/futivolume;pf prod¬
ican industry in this technological uctivity
of <: our capable labor*
ways expected it to do a consider¬
able variety of things from the field.
force, our ample plant and our
marvelous technology to continue
Coast Guard and Light House Ser¬
To have carried through the
vice to the Bureau of Standards bookkeeping and disbursing oper¬ unabated and absorb within your
and the county agricultural
agent, ations necessary even to this gi¬ long-time accounting, financing
"to create and maintain conditions gantic operation can hardly be and managerial system such price
under, which there will be af¬ considered a solution of the eco¬ declines as result, you will not
forded useful emplyoment oppor¬ nomic problems of ^self-sustaining have shown a capacity of the com¬

stances

which

saying
This, then, concludes my first
philosophy ; ;of the point—that the act of Congress tunities,

Employment Act of |1946 relies on

men, government should now get
entirely out of the business field,

for

ment

including
self-employ¬
those able, willing and

managerial sense and not on any
not. pointed toward monetary ma¬ seeking to work." There is thus
trick, remedy. The purpose of the
nipulation or any other specific nothing revolutionary in the dec¬
pet is
to a c h i e v e prosperity
formula of economic stabilization laration;! qf^ : present; act;
It
through / promoting efficiency of and
national- prosperity, but to¬ simply reaffirms in clearer terms
the nation's business, just as the ward
ahdzgi^slhew^blementatidhto
application of,the soundest
purpose of a great corporation is
and broadest managerial princi¬ a responsibility which is part of
to • achieve
company
prosperity ples and practices in dealing com¬ bbriiraditipnal Ani^cah? system
through efficiency of over-all and
It now devolved upon each: of
prehensively and vigorously with
fpot manage men t, skillfully the
nation's business. My other us, whether in the■; executive or
joined. As business executives, two points deal
directly with the legislative; branch of the govern¬
you must at once recognize, the nature of the
government's part ment, to see that, In carrying put
essential similarity between this in
this process and the part which the purposes of this
law, we study
approach and that of the most dis¬ is left to or devolves
upon busi¬ wisely and with due counsel as
tinguished corporate; administra¬ ness. For both
these topics, the well
as
acting decisively and
tions among your own ranks; The
key word, is "responsibility."
promptly when occasion demands.
Bell Telephone system," General
To this end, we of the4 council
Motors, and the Standard Oil Com¬ Government's Responsibility For
sincerely hope that you of the
pany (N. J.) occur to one as out¬
High Production
House of Business no less than
standing examples.
By a vote of 320 to 84 in the those of the House of Labor and
The division of function—local House and a unanimous voice vote
the House of Agriculture will j oin
autonomy but overhead coordina- in; the Senate, and after long study actively /and
/sincerely! in our
t-on—contemplated under the Em- and extensive hearings, the Con¬ studies of causes that'
j ioyment Act is in many ways gress, in Seetion 2 of/the Employ¬ attainment of maximum
prdttujeanalogous to the relations be¬ ment Act declares that it is the tion, employment and

system^
petitive free enterprise
adequately to serve the nation's

prosperity in a peacetime- econ¬
Business was not, during, the
War;/relying /upon voluntary ar¬

needs.-';

rangements made in an open com¬
petitive market—for goods, for

easy.

omy.

labor

for

capital. It did not
have to sell its war product, sim¬
ply deliver it. It received material
through allocation and got labor
or

r1/;/!

not

'/.'!■ z ..;!!■

suggesting that this is

But, over all and in the

last |

analysis; prodtictiozfprovide^ijto
own purchasing power and the
level of prices is not important if
the whole wage and price struc¬

under conditions of draft exemp¬ ture is properly adjusted part to
tion, the|patrioti<r urge, end wa^
Part; It isthe;attempt to;prevent
control and strike rqoratoria which or slow down such adjustment by
are quite, foreign to the bargaining
protective actions that restrict the
relations. of a peacetime market; volume of production that creates
This wot economy was not bal¬ the mischief. Competition works
ancing its books quarterly, yearly, itself out in a market of small
or Within the war period.
Much units because ho/ohe cah arrest or
of the money.that"made the marfe interfere / with; the
competitive^
go"/ in^ the industrial field /was process. But our world of large
pumped in by a process that left organized units gives plenty of
us with a war debt of $275 billion.
chances to put sand in the bear¬
It seems to me that the country ings if the respective parties want
has probably given fair evaluation to try it. Turning one's back on
to all these factors of free enter¬ such evasion of the law of supply
prise in the 20's which ended in and demand" and finding ways to*
purchasing a grand smash; of government con? go on / Witlv full/use ,ef; available ^
tween the operating staffs of Gen¬ continuing policy and responsibil¬
power and in the making 5f rec¬ trol of business in the 30's, which resources—that is the meaning of»
eral Motors I plants
located
at ity of the Federal Government to ommendations which, would
oper¬ failed to get us out of a depres¬ competitive private enterprise and;
FUnt, Michigan; Indianapolis, In- Use all / practicable means con¬ ate effectively toward the removal sion; and of; the wartime business the challenge of the years ahead.
sistent with its needs and
'djana;Cleveland, Ohio; Newark,.
obliga¬ of these impediments.
of the 40's, in which government It is your responsibility to the sys- i
New
Jersey, / and many - other tions and other essential conside¬
and private business in partner¬ tern in which you profess undying
This
brings me to

places

rations of national policy, with
over the country and
and the broad policy¬ the assistance and cooperation of
making organizational co-ordina¬ industry, / agriculture^ labor and
all

overseas,

tion and overhead financing Which
center
in
Detroit and at- 1775

state

and local governments, to
coordinate and utilize all its plans,

to Amer¬ functions and resources for the
York, purpose of creating and maintain¬
laboratories,' Western ing, in a manner calculated to fos¬
Electric/Company, and the high¬ ter and promote free competitive
ly - autonomous operating com¬ enterprise and the general wel¬
panies—state, regional, or local. fare, conditions under which there
Standard Oil (N. J.) exemplifies will be afforded useful employ¬

Froadway." Similarly,
ican Tel.

the

and Tel

New

Bell

same

co-ordination and flex-

ibflity between producting. mar-;
keting, administrative and re¬
search units, domestic and inter¬
national.;
I-;".//;/ | /;/!!;/"//:/!;//.
v/
These: relationships in private
-

business
in

have

friendly;

been

worked

understanding

ment

opportunities, including selfemployment, for those able, will¬
ing and seeking to work, and to

promote

maximum

employment,

production and purchasing power.
This declaration, of "continuing

out

policy

over

seems

and responsibility" is, it
to me, an essential counter-

third

ship muddled through/the strains
of
war emergency but by no
accomplishing
means; arrived at final answer; to
the stated over-all,purpose of the
apt, IfOr v|!aissume without /ques¬ the *problem!of stabilized-peace¬
tion that you do accept promotion time activity; In the light of this

point^namely 4he< responsibility
of business itself in

faith.

At this point, you may say

but to the labor leaders. It is
quite true that this applied also

you

evaluation, they have, through the
courageous : but tolerant philos¬
ophy of the Employment Act of
The Responsibility of Private
1946, given the system of private
v
Business Under the
;
enterprise a new lease on life,
.'
Employment Act.
V / 1 making it the foundation and cor¬
There was a widespread feeling nerstone of the system on which
among business men in the 30's we propose to maintain our posi¬
that government was -antagonistic tion as the leading nation in the
to business—even that a
death postwar economy of the world, *■

to them.

sentence was

adjustment,

the

the prime purpose^ of business!,

nation's

economic welfare

being pronounced on
priyate I enterprise, >f)urmg and
since the war^ therg> has been a

considerable
state

rebound! from that
,gl0^inj Business-'

mental

t. This,

act

assures /

private busi¬
environ¬

that

saying all this to

I should not be

I hope some day

I'll have

the chance to say it to„ a labor!
audience./ But you can't pass the
buck to labor any more than labor

the buck to you. | They
regard themselves as part of
of competitive free en¬
terprise, and you must both of
you find a way of getting together
to hammer out a mutually sound;
can

pass

also

the system

happen today, however, to be /
ment in which to work than they talking to management, and so
there is one general' point I want to ;
thought in the 1930's they could
again count upon. Some might leave with you concerning the issue.;;
ness

favorable

^Volume 164

;

of stimulative

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

competition

strictive control.

lean and sick among

re¬

vs.

and

It is part of your

ruined plant

meager resources,

and

we are

actual

fat

and

that

and

use

their

regret

users

seem

is
practically without exception
bullish, except possibly in the last

report

per

decline from here

sistent than pecunious.'' Althoug
many will disagree, I feel
that
such systems, while perhaps be
ing useful tools in the kits of some

moments

production, em¬
purchasing power
to see that, in coming to govern¬
ment for economic legislation, you

richly supplied.'
Are we going to spend so much of
our
time in quarreling over the
division of the product or the pre¬
rogatives of management and the
rights of workers that the prod

forecasters, seem in themselves on
a
parity with systems to break

uct itself is curtailed and

the bank at roulette.

the

responsibility in building
petitive system
about maximum

that

will

com¬

bring

ployment and

not

restrictive

seek

measures

but rather those that prevent

strong

stand only partly used?
; It does not seem to me to re

resources

re¬

striction, price: maintenance and
§• monopolistic control—just as much quire
oft

ric

our

abnormal

any

degree

great deal about labor monopoly.

nobility amongst us to hope tha
may come together! for collec
tive bargaining in good faith be
tween the two basic partners in

As an

business

your side of the fence as

labor's.

.on

ps
Management is talking today

most

But

felt

them

saying,

have

did

why ain't

than for the rest of us—the dele¬

to do

would

terious

veal

an :

that it exists.
and

quite aware
economist, I

deplore—for labor
effect

has,
places where it exists,
tainment

at
on

"maximum

go on so

less

those
the at¬

stupidity
business

produc¬

seem

re¬

strain

unbelievable

sense

flair

for

casting
mium

lack of the practica

cast of values.

effi¬

tion, employment and purchasing

ciency that we like to call Amer¬
power.''* But let me caution you ican. The major gains of "maxi¬
that
irt^our efforts to purge labor mum production,; employment anc
of restrictionism there be no hid¬ purchasing power" would go to
den desire to make a

buyer's mar- our sleek selves, not the hungry
Jket for labor or that'your ovim and weary of other lands.
Bu
structures and practices do not sustained prosperity here woulc
harbor monopolistic restrictionism help them much by furnishing an
of your own. J hear a good deal active market in which they coulc
about plans for fighting price re¬ sell and a productive market from
which
adjustment in 1947.
they could buy
sorely
;
;My final word is as to the tre¬ needed goods. I would not be so
mendous importance of the re¬ quixotic! as to suggest that Amer¬
sponsibility that, at this moment ica divide its coat with the poor
devolves upon us all.
Whether man overseas. But we presuma¬
operating through the private or¬ bly would not grudge it if, by
ganizations of business or the spreading as bountiful a table for

And then the fore¬

the

discount
value

between
to

seems

and

that the

cies between value
variable that

scientific

price

discrepan¬

By scientific methods
methods
sufficiently

moan

standard
of

highly im¬

the

that two statisticians

few

a ;

There are
in the Street who have

men

achieved it.

-Unfortunately, most

of them have labored

statistically possible to
given point "prices look

"Errors

see

prolonged

reason

or severe

on.

and

Omissions
»

Ex-'

Danger to Liberties
Of Mankind Seen

In Present Conflict
The conflict between power and

liberty has "never been
never so

the

so' hard not

as now,

publican
Mr.

Bricker, Re¬

Senator-elect

remarks

Bricker

Ohio,

credited

were

asserted

was

Dec. 5 by John V/.

acute,"

dangerous to the liberties

of mankind

These

for

thought very difficult.
a

anticipate

cepted."

the

New

York

"Herald Tribune" of Dec. 6, which,
it noted, he made in addressing
the

annual

banquet

Manufacturers
States

be found.
r.1: \ ■ P *
' J
All
this
makes
independent

conclusion.

same

may

equal statistical ability starting

at the same time would arrive

reading matter, all
of it except what an analyst pre¬
pares for private consumption, is
just
about ^universally
bullish.
Once in a long while a study will
come to the
gentle conclusion that
perhaps "better;- situated issues"

and price are

methods

Wall Street

Yachts?"- summed

And

curate forecast of stock

probable.

holidays."
on

after lunch."

pre¬

reasonably ac¬
prices by

after

observing that practically no bro¬
ker leaves to get a bite to eat
without looking at the ticker and
sagely remarking to all within
earshot, "It looks like a rally

that

the

That book

ers'

you

largely.

observer, I

after

Later,

was, "Wait until
Now it's, "Wait un¬

entitled, "Where Are the Custom¬

-.he

production can rich?"
A second approach to forecast¬
that all may share more
On the contrary, failure ing is by statistics and the fore¬

see

rustic to the would-be city slicker
"If you're so smart

Day."

decline,

til

those conditions

expect much of a rally

Labor

the election."

persistent! advocates
the men who

them.

often

can't

until

Or to break

of these systems are
sell

great declines. *"
Last summer, when something
obviously had begun to ail the
market, all I heard was, "Well,

the totalizer at Jamaica.

The

3233

the

Toy

United

America,- Inc.,

the

Hotel McAlpin in New York. The
address was extemporaneous, and
in

its further account

Mr.;

Bricker

had

to what

•

the,

say,

"Herald Tribune" stated:

The fight to preserve and spread
the ideals of human liberty "is

that they
resting on the shoulders of the
congenital
bears,
people of this country," he said,
the practical stock never
relaxing;, for those great
trader will say, "OK, Mr. Analyst
adding that the Anglican system
speculative
markets
when: the
of law and the English-speaking
but how much higher can they go
wise man follows the fools, and
and how long can they stay up?"
people of the world represented
only the fool tries to be wise.
"the greatest power for freedom
Without .those two answers, the
in the world today."
' •<.
■
Clients Demand Bullishness
"Wider public organization of gov¬ ourselves as we are capable .©:! fact that prices "look high" is of
The greatest danger, he said,
Another difficulty the
ernment, we face a solemn hour providing, more and bigger crumbs interest only to capital of vas
broker
of testing. At the end of a strug¬ fall to the mouths of the less for¬ patience and small avarice.
faces as a forecaster is that his comes from "within, not without,"1
I do not know of any way o:; clients want bullishness and his the country.
He said the "quickgle that leaves most of the world tunate.
„

say at a

high."

duration of

-'(Continued from first page)!
simple to discover.
First of all
question, instead of receiving the
tonlike most forms of solitaire, i
standard request for a 300-worc
Js

which the chance o:: statement on what business would
iiever winning is mathematically do in 1947 had received a reques
remote. And the elusive Jack Pot for a 3-word statement.
is always just around the
Before attempting to forecas
corner,
Plaitingv to bq; tapped by a fool, a the stock market, it might be wel
to inquire into the forecastibility
Scholar, or a man of destiny.
game at

There is a forecaster in this city of the beast~a word I
- <
Who has not had a good word for visedly.
^
t
.

use

ad¬

friend of mine pointed him out to
me last summer.

"I feel sorry tor

that chap," he said, "but when, my
customers and your customers are

deserting

like rats he will have
emerged as the Roger Babson of
the postwar* boom.'*
For, ladies
and!; gentlemen, as the salesman
said of the watch he was selling,
4<Even if it stops it will always be
right twice a day."

•

Charms of Statistical Solitaire

Stock Prices

that he erred

Bourse.

tiny wee bit in his
Or

the

attitude

one" can

take

war.

entered

Warsaw < .than -vhe t issued

"' what
turned out to be his last letter. "I
have been proved to be

wrong,"
he admitted, "but whereas others

times, I have
about war only once."
many

i Thus it comes aboutthat I have
Succumbed to the temptation to
And this is the correct

French

say

that's

that

stocks

were

made

why

they

have

In the Street, it is said
were
made to sell,

stocks

why they give

charts

other

and

dium of forecasts for 1947, to be
included in the Annual Review
Which

ail

Russian

Czarist

will save for

sev¬

bonds

they buy
arid

questions asked.
Such
systems
can be fairly! convincing^ espe¬
of

one

that

have a salesman for
them sitting by your desk.
you

pun

waive all

credit

The

man

pendium
other

ceived

day
a

distressed the

very

when

message

nent ! industrialist

the

paper

from
s

4<GO TO HELL." Cautious

revealed

that

the

re¬

promi¬
saying
only,
a

inquiry

industrialist

statistical

determination

value

stock

"habits."

that

stocks and groups have

the
most

individual

For many years Radio

his conscious if he is to remain

est

ment

immediate

with

make

the

sticks

indicate

would

whereas

South

Porto

should,

Rico

Sugar

has sold for less.

over-simplify, the price of

stock

for it.
see

a
is what somebody will pay
It isn't even the price you

the paper.

remarked,

you

As one cynic
can't «ell them to

the New York "Times."

believe

that

market

place

skill develops an ability to guess
the price movements may
?e

over;

short-term

Should

If I

Business Not
correct

Pastime

in nly assump-

ion that profitable stocl£ market
forecasting can be accomplished
by neither mechanistic or purely
statistical means, it would seem
ogical that the most proficient
ranks of those

would

arise

men

from

the

to whom ob¬

pastime, and who
obtain the neces¬
sary statistical data. •
But there
are several reasons which, while
ness

and not

possess

I do not profess to be familiar
with these systems because I am

sufficiently greedy to be will¬
exchange what brainpower
a calculating machine.

ing to

I have for

of them in

nations

harboring

everyone

philosophies.

will not only get few new ac¬
counts but is apt to lose many old
accounts unless its bearishness is

rewarded

way

of '

the world again respect America"
was to
purge from the Govern¬

unaffected by the knowledge that
a firm without buying suggestions

busi¬

can

He looked at

customer;

alien

: V!;V;

Christmas Greeting Cards

and

can

air of great innocence.
I. possibly; tell until

with

"How

tomory

row?" he asked.

Corp. of America has persistently
sold for more than statistical yard¬

forecasters

it, I

Systems

many

must

for

putting; the chart before the

seen

it.

that the end figure
surprised. But of course if I am
given with decimals attached. right, I shall take full credit for
But few, very few, warned the
great wisdom.
In this respect I
reader that this value was subj ect am
perhaps like a customer for
to revision without notice if gen¬ whom I executed
a very difficult
eral market conditions changed.
order right at the close.
"I hope
Another drawback to the pure you are satisfied," I said to the

servation of the market is

But I have

needs

master of his subconscious as well

confident

think followers of these systems

not

business

Printed

greeting

cards

mailed

ing the attractiveness of a stock startingly visible results.
domestically under cover of un¬
price in relationship-^ the market
By what has been said thus far sealed envelopes are chargeable
as a whole.
^
I hope I have, pointed-out the with postage.; at the
third-class
Over the last few years there hazards of successful
market fore¬ rate
of
IV2
cents
for
each
2
have been $ many studies of the
casting; siifficientlyso that if I am ounces or fraction of 2 ounces,
break-up values of utility holding totally wrong in what I am about Postmaster Albert Goldman an¬
companies.
I recall one that was to say,
nobody will be the least nounced on Dec. 5, his advices

are

intentions. ?%; horse.
working on this com¬

was

stocks statistical study is essential
its greatest value is in determin¬

atrocious

eral weeks with good
V:

And while in individua

mechanistic

look right on the chart,

But to borrow

compen¬

market will do is to raise caution

signals.

piece what

If Russian Czarjst bonds

means.

even

you a

approach to the stock

;

cially if

preparing

statistical

fluctuations,
and thaia correct forecast of busi¬
a year later its value
by whatever
ness and monetary conditions can
system you use is 140, you do not
give important clues to probable
feel any better if meanwhile the
on-term .trends, but that mar¬
stock is down to 85.
ket forecasting can never be an
There is a considerable body of exact science
except within nar¬
then who;!leay£ all considerations
row limits.'
This is regrettable
Of value but Of their 'calculations
jecause the big profits! are made
and try to forecast stoclr prices by
by utilizing the extreme limits.

seasonal time for forecasting. One
©f this city's great
newspapers is
now

I know every¬

of paper.. If you buy a stock at
100 because its value is 120, and

Hardly had the Germans

forecast.

through

would; be

wrong

So far

All

appeasement,! Burton-Baldry
With
Catonian
persistency said

fceen

who buys stocks does so with
idea of ultimate profit.
The

that's,

was

were wrong

its bonds.
one

Burton-

the troubled 1930s, when one day
it-was war and the next day it

there

You can't look at stocks the way
life insurance company looks at

late

Baldry of London.

that

the

stocks,

move

also stating:

„

was

when we speak of
forecasting the stock market we
obviously mean stock prices and
not stock values. I suppose all of
you can recall that day long ago
when teacher explained that sound
can
never catch up with light—
it's the unfairest race in history.
And it is the satiie! with price and
value. ' As soon as price hits the
spot where
the slide-rule said
value would be, value is up in the
hills or down in the valleys.

sell,

Values

First of all,

'Another
charm
of
statistical
solitaire is' that no prediction, ho
matter
how
grossly
erroneous,
how grotesque in the light of subSequent fact, can be alibied
away.
The chart reader will tell
you that his chart was right but

interpretation.

vs.

know many of you will disagree
but I. think that the best that a

stocks
since Herbert
Hoover left the White House.
A

common

crowd

become

But

forecasting the extremity

Foxecastaliility of the Stock Market

have

think

that

Christmas

other

and

.greeting cards in unsealed envei0peg may bear a simple written
inscription not in the nature of
personal

correspondence, such as
"Sincerely yours,": "Merry Christ¬
mas," "Happy New Year," ^Wlth
best wishes,", etc., together' with
the

name

!' and

address

sender and of the

of;

the

subjecting them to
the third-class rate..

than

more
*

ready at safe levels.; I don't see
why so many people who failed to
catch the top of the bull market
so

they can catch the

sure

jottom of the bear market.

My prediction is based
belief

the

demand for goods

exists to permit
of
business
while the misfits in our economy
.rate

reasonable

a,f

are

also based

commodity

the belief that there

But perhaps
too hopeful.
t

prices.

hese beliefs are

they

would be

It is

general weakness in

the

are,

alternative

sharp decline in busi¬

general deflation, and large
unemployment, Perhaps the new
Congress would sit by and take
ness,

it.

doubt

economists
with

cry

it.

would

Once

again

the

summoned

of "Quick, boys,

the

needle."

My letters have often referred
;o

sent

"The Great Inflationary Market

sealed

fraction

of an

vises

that

Goldman

class rate

of
as
waste each < year because
they are undeliverable as ad¬
dressed, due to removal of the ad¬

dressee

; other

cause.

Such

greetings are not entitled to the
free
forwarding
privilege
ac¬
corded those mailed in sealed en¬
velopes at the first-class rate and
consequently, the senders in many
never know that the greet¬

cases

ings

were

dressees.

the

not received by the

In view of

foregoing, patrons

to send their
the

and

greetings were mailed sealed

at the first-class rate.

the

ad¬

This would not occur if

are

urged

holiday greetings at

otherwise permitted.

it the hard way, and under

greetings, mailed in
envelopes at the. .thirdof postage, are disposed

ker is that alfhe reads and hears

pay

ad¬

also

Christmas

unsealed

sent the

ounce

numbers

large

••

ounce."

disqualifying brokers as fore¬ of the Forties." Perhaps the word
seem at 'least to "great"- will have to be dropped.
prejudice the ettse against them.-;
But the debt is still with us, we
The first treble with the bro- still lack the national willingness
not

casters,* would

envelopes,

first-class rate of 3 cents
or

;

chargeable with postage at the

being straightened out.

will

cards
are

Postmaster

sufficient, immediate

that

the

selling since
"Christmas greeting cards for
midsummer has brought the stock
U. S. soldiers overseas mut be sent
market to levels below those jus¬
in sealed envelopes and prepaid.
tified; by conditions likely to pre-at the first-class rate of postage
vail towards the end of 1947. For
3 cents for each ounce or fraction
that reason I believe that some
of an ounce,
time next year we !wilT see prices
! ; "Greeting cards, sealed or un¬
considerably higher than at pres¬
ent During the interim there may sealed; ! bearing written messages
be weakness here and there but other than the simple inscriptions
think numerous stocks are al¬ above mentioned, as well; as all

are

addressee, with-

out

Higher Prices Expected
I

"Printed

first-class

rate,

greetings

may

when

be sealed

contain written messages not

prosperity in its history." He de¬
cried ."talking us into a, short pe¬
riod of hard times.
> We need
to guard against the developing
be the case with existing equip¬ consultants and economists con¬
psychology
in
this
nected with business corporations, depression
ment
Again it should be pointed out financial institutions;universities, country, which might; if unre¬
that even when financially able and economic research organiza¬ strained, see us literally talk our¬
selves into at least a temporary
to do so; industries just don't buy tions. The author was one of the
72 persons included in the survey. period of hard times."
new equipment during depression
.The Secretary supported
his
because of the lower marginal ef¬
The majority of these 72' non¬
theme that no fair appraisal of
ficiency of the capital. In periods government
economists believe "America
Today" can justify any
of depression the government is that
general commodity prices
feeling that a material recession
the only agency or organization will reach a peak in 1947 and
in "America Tomorrow" is in¬
in a position to make capital im¬ then furii down. As a result; they
evitable by lisfingy the many evi¬
provements in the form of high¬ expect a mild business recession
dences of prosperity in the United
ways, parks, postoffices, etc. Pri¬ with employment
not seriously States
today, including the high¬
vate business cannot do so.
If it affected.
Fifty-three economists est level of
employment ever ex¬
could, there wouldn't be a depres¬ forsee the peak and A mild reces¬
sion.
The government can make sion to start before the end of perienced in the peacetime his¬
tory of the country, the sound
such investments out of borrowed 1947; one expected it within 18
condition of our banks in con¬
money, regardless of the mar¬ months, while 12 expected it after
trast with conditions in 1929, and
ginal efficiency of the capital in¬ the end of 1947. Only one of the
the tremendous consumer demand
vestment.
Industry finds it ex¬ 53 economists who forsee a re¬
that exists for housing, and many
pedient to make such installation cession before the end of 1947 ex¬
other commodities. He could have
during periods of prosperity when pects such business recession to
the marginal efficiency of capital assume serious proportions. Twen¬ pointed out the excellent financial
condition of our farmers in con¬
is high.
ty-three of them characterized the trast with the virtual
bankruptcy
Again quoting Professor Slich- coming recession as "mild"; 24 of of
American
agriculture
after
as
"moderately serious" World War
ter, "Nothing can^prevent'M from them,
I, add the need for
realizing the possibilities of mod¬ Twenty-eight of the 53 (the ma¬ capital investments in new and
ern technology, except unwilling¬
jority) do not expect serious un¬
modern machinery that will con¬
ness
to place a high valuation employment; nine expect unem¬
tinue almost unabated for at least
ployment of moderate seriousness several
upon
certain common interests,
years to come.
and 12 expect serious unemploy¬
particularly our interest iri enter¬
Even
the
present
disastrous
\
prise,
experimentation,
innova¬ ment.
maladjustments resulting from the
With regard to the duration of
tion.
Never has the folly of nar¬
unfortunate strike in the coal' in¬
rowly
pressing
special
claims the recession, two-thirds expect
dustry— serious as they are—
it to last less than 12 months in
been greater."
should not precipitate the major
consumer goods prices; 60%
ex¬
Not only can we assume thai a
depression in 1947 that pessimistic
depression is not a desirable time pect less than 12 months of down¬ and
over-conservative
persons
to buy because of the low mar¬ swing in building material prices, seem- to .anticipate4—unless if lasts
and
55%
expect less than 12
ginal efficiency of capital, which
unduly long. Instead it may prove
months
of
declining prices in
would more than counter-balance
to be inflationary to a marked de¬
durable goods, other than building
any possible reduction of 5 to XjD%

Should Obsolete Equipment Be Replaced
(Continued from first page)
factors
involved lead
conclusion that "the

complex
him

the

readiness with which an Economy

results

the

translates

techno¬

logical progress into new

invest¬

the resistance which it
shows to depression, and the ease
with which it recovers, depend in

ment,

large measure upon the willing¬
of industrial enterprises .to

ness

their^expenditures for

increase

equipment and for the develop¬
ment of new products more or
less
regardless of
the general
business situation—to step out in
advance of other concerns
and
make
commitments.
In
other
words, it depends upon the rela¬
tive attractiveness of venturesome

daring: production plans in
comparison with cautions produc¬
tion plans. The dynamic influence
and*

of venturesome

production plans

been under-rated in
economic developments/'
has

recent

■

Some overly conservative or¬
ganizations may deem it advisably
to postpone capital improvements
until the depression phase of the
next cycle in the hope of getting
equipment
and
installation
at

lower

costs.

Professor

this

"These things may

Slichter says:

appen,
but they cannot be
counted upon to happen.
In fact
i

■

unemployment may provoke
of -attempts/to-- protect

flood

markets by restrictions which nar«
row the area- of innovation, cut
the

marginal

return

invest¬

in cost of the machinery and

its

Now?

install

equipment

new

ponement, However, even then,
during the prosperous - phase of increased cost of
maintenance,
the ;cycle while the marginal ef¬
Operation,
etc.,
with
obsolete
ficiency of capital is highest..
equipment, would probably make
Especially is. fhisf true when such; it
impossible to accumulate the
new equipment lis to alalgeex*
necessary funds
with which to
tent only a replacement of inef^
make such purchases and install
fident, obsolete, worn-out ma¬ lation
or to continue operation on
chinery that is a constant main¬ a
profitable basis.
tenance liability,

■

than; do- those of the majority
group/This minority of ^2 expect

in its effects on

gree

materials.

ments, and > produce unfavorable
An average increase of about 5
shifts in the schedule of liquidity installation, but we must reckon
with the; period: of delay until the points in the Bureau of Labor Sta¬
preference.
Numerous examples
tistics' index of wholesale prices
phase of the cycle
of this kind of response can be depression
overtakes us.
If the overwhelm¬ of all commodities is the expecta¬
gathered from 'the recent depres¬
tion of the 53, whereas they ex¬
ing opinion of economists is cor¬
sion, both inlthe United States
increase of a
rect that we have from five to pect an average
and abroad."
*
little under 10 points before the
eight years of prosperity ahead of
In this statement we have an
anticipated 1947 peak is reached.
us following a moderate recession
The index stood at 128.4 on Aug.
explanation for the failure of the in 1947 that will
largely be con¬
railroads and many other indus¬
.Vjs
fined;
adverse effOcts to 24, 1946. & ' V*'' ; v;,
tries to make the capital invest¬
With regard to building mate¬
agriculture—then it will be neces¬
ments during the last depression
rials prices, 32 of the 42 answers
sary to put off the purchase of the
that in theory they should have
indicate a smaller percentage drop
new machinery for at least five
made. The marginal efficiency of
from the pesk than would occur
years.
If the present obsolete
capital is highest duririgthe pros-*
in general commodity prices.
machinerycan b#/made to serve
perous phase of the cycle^-as iioWt
for at least five more years-^perThe minority of 12, who expect
Under the circumstance, if seems
haps eight years — then a case the price peak after toe ettd of
expedient and advisable to pur¬ could
possibly be made for post¬ 1947, expect larger, price rises
chase and

Thursday, December 19, 194£T

CHRONICLE

.THE COMMERCIAL & FINANCIAL

3234

our

econ¬

Today in this country we
have all the ingredients to pro¬
longed prosperity and a higher
standard of living except one—
the will to work. However, labor
omy.

unrest does not seem to be a seri¬
ous

factor

those

the

reasoning

persoris who predict a major

depression in 1947.

far

purchase and installation for a;
period of five to eight years; it
should be able to buy and install,
if at a lower cost.
However, the;
author does hot believe that the;
concern can afford to gamble on.
any

"savings" from such a delay
On the
hand, if the investment is

in the foreseeable future.
other

made now, it

will be in a position ;
with confidence

to face the future

regardless of the particular timing of a recession or even of a
major depression. For, iathe au¬
thor's opinion, the' marginal ef-.
fi'ciericy of capital during the next
,

five years
any

will be greater than at

time since the early 1920s.

Every business todaysmust view ;
its expenditures in relation to tax'
laws.
Obsolete machinery : and ;

•

equipment that can.no longer be
depreciated is a tax liability. New ;
equipment that »i$ subject to
normal 10%, animal depreeiatkwi I
can be a major factor in reducing ,
and

taxes

reduce the cost mate-

rially of such new equipment. Un- ;
der present tax laws that call for .
38% or higher taxes, this is a ;
major factor to be considered.
;
.Furthermore, the trend in the
be ;

future

should

taxes.

;

This means that an early

toward

lower

■

purchase of new equipment will effect
a
greater
tax
savings .
through a 10% annual deprecia- ,
tion, than if its purchase is de- /
layed to a later date.
In dollars ,
and cents this is a strong argu-/

purchases now of new
equipment.
The
present tax laws hold out a major

incentive

for

ment
and

necessary

buy

now

any

new

equipment that is needed or can
be useful in a rriodernization. pro¬

^ki'j

gram.

The longer

major tax reductions
are postponed, the greater will be
•
the benefit to a company which '

purchases its new equipment now "
basis of an annual depre-

ciation of 10%. Furthermore/even

the

if taxes shouldbe;■•study ^concerned; the out¬
ZQ%< MAext yearor
of -the existing industrial
sooner such purchases are made*
conflicts does not indicate lower
the greater will be the credit on :
costs in the foreseeable near fu¬
taxes from such depreciation.
To
ture/
*
•
postpone such purchases until a *
] In reply to certain of the ques¬ possible depression? phase of the >
tions that were asked, the author
business
cycto develops tyorild ;
stated that he anticipates a mild
cancel this itoto bf ireduceel cost :
recession in 1947, but not a seri¬
through an annual 10% deprecia¬
ous one.
He does riot believe it
tion on a higher tax level.
]-<;
;

this

come

Will" Catise

serious^nemplbymeri^

lithography' plants that 1
an average increase of aboht 4(1
a; prolonged; period of readjust-i purchased new equipment in the »
points before prices reach a peak. merit. Agricultural prices will be boom' period are the ones' that stir*- >
economists

sin:

The

who

re¬

frained fron* specific answers to
the questions asked Cited tmcer*

tainties in
domestic

the foreign, situation,

lower wages; tior will it cause

the ones

most

seriously affected,

but ygdyerririieritsupport
reckoned with here.

imus&he

He can see

;

Photo

This is a cOn-»?
of the practicability-:
of capital investments when btisi- :
ness
is good.
.Invariably, those
business firms that delay such ;

vived

the

crisis..

crete example

important reductions in prices
politics, government of machinery and its installation
It is necessary, therefore, that controls, and union labor attitudes of the type needed by this concern purchases in anticipation of buy-. •
the increased efficiency of the as reasons, why no answers could within the next several years.
It ing new equipment and modern¬
be hazarded,^,.
new
is his opinion that a serious de¬ izing in the depression phase of
• . .
machinery, lower costs of
Under the date of Dec. 2, 1946, pression that will affect prices the business cycle, are unable to •
operation,
etc.,
be
considered
from the above viewpoint. Gam¬ there is a statement in the press and wages materially is five to weather this phase of the cycle ;
bling on possible small savings to the effect that *'13 of 14 lead* eight years away.
He can see iri cbriipetitibn; With those fifriSSb^
from a depression: in 1947 seems irig?ec<moniistsagreed-today that little or no gain from any delay that weto bold ? arid progressive toe large .a risk to run in view of the United State's is heading'into iri the purchase and installation of when business was good.
the actual cost factor's involved, v
a minor depression,, but only one
the equipment needed to replace
Industrial Investment Decisions
economist
believed
the
nation the
; From the information available
no

That the marginal efficiency- of
capital investment will be higher
..

tow

and

sults

the near duture

re¬

part from the fact that

there is

no assurance

of new

machinery and its instal-

1 atiori Will' be
feW

less

that the cost

over:

the next

Instead, the trend
probably be higher instead
of lower.
Furthermore, the qual¬
ity of the new machinery will be
years,

will

/obsoleteandworn-out - ma-»

the

author; the marginal ef¬
ficiency of the present obsolete
better than that now in use. * The
equipment under consideration is
resulting savings should tend to
low, virtually zero. With, a con¬
balance higher costs today, com¬
stant; if not rising demand, dur¬
pared to prewar years, and there¬
ing the next five years, the mar¬
by further increase the marginal
ginal efficiency of new Machinery
efficiency of the new capital in¬ Will run
high.
vestment.
•

40%,

the

are

now

maximum

re¬

duction in cost of hew- equipment
end its installation would not be
less from
than

have

existing levels by more
to

10%

should

serious depression in 1947.

This

is, however, quite unlikely
improbable.; Since a serious
price break in 1947 is a remote
possibility according to a large
majority of economists in the
country, it may not be advantage¬
and

ous

postpone

Economic expansion takes place ;
In .
Instead, the concern will miss during periods of prosperity.
The United Press polled 14 of the
opportunity to use the new an article, "Anticipations and hi* ;
the nation's ranking economists
machinery when the marginal ef¬ dustrial Investment Decisions" iri
on the question: "Do you believe
ficiency of the capital investment ther"American Economic Review/* ;
we are heading into a- major de¬
Supplement Part -2, March, 1942,
will be high/ ?
•
'
Professor Norman S. Buchanan
pression and if so when will it
It will fail to realize on the
strike and how long will it last?"
states
that
"the
marginal
ef- .
maximum depreciation under our
Four replied "yes"; nine said
ficiency of capital to the firifii, :
tax laws while taxes are high.
A Long period of Prosperity Ahead
tends to be a function of the, de*
"no"; one was undecided*
It Will fail
to; market its" product
Nine believed the nation was
Thus, during the next five to
of
competition and toe .
while" demand is reflecting- the In- gree
eight years- of proseprity; the heading for a minor depression.
creased purchasing power of con¬ presence or absence of techno^ ;
technical efficiency of the new One saw neither a minor nor a
logical improvements in prodttc-* ;
sumers.
machinery and the greater money major depression in the offing.
five equipment. . . . The demand .
The concern will be producing
return on the marginal efficiency Several
for capital goods' by imperfectljr •
predicted varying periods
at higher costs, whereas* with, new
of the
capital' invested, should of prosperity after a pimor de¬
competitive firms i mrust: ? be ? ex-J.,
Work' together to justify the pur^ pression.
machinery, it can produce mbre tremely inelastic with respect to •
Chase and installation now,
efficiently at lower costs and; in
re¬
The most optimistic economist
price. In depression it must apN :
gardless of what may take place iri the
proximate
zero^. . . The ' more :
group stated that he did hot greater volume.
in the way of a temporary reces¬
Tt can pay out its investment in nearly industries approach the
see "even a minor depression in
sion in 1947.
It would seem in¬
a shorter period of time.
competitive pattern, the more do 1
the offing, but the confusion cre¬
evitable
that these two factors
ated by inflationray forces may
It is producing a luxury prod¬ expense elements come to assume •

such

purchases.

should

any

there

assuming they could be
new
machinery bought

^yrong,
and installed
the

efficiency

enable it
a

now

would increase

the

better to

depression than

than counter-balance

machinery.

is that

is no real depression ahead of us
for at least five to- eight years.

Even

now

early 30s."

Indeed, the overwhelming opinion
economists,

chinery.

Even though Costs

3(1%

faced hard times like those of the

plant

weather

and

Dodge

today

of
,,

are bound

Oct.

18, 1946, the F; W.
Corporation, New York

the

and its

setbacks

to be overcome

which

quickly

rising volume of money
rising velocity of circula¬

tion.'',-

In an address to the Economic
Club

at 4

the? Hotel« Astor, New
York, Nov. 20, 1946, Secretary cf

government ' economists

partici¬
pating in a survey conducted ty
President, T. S. Holden.
The
group polled included
economic

short-term

cause

new

City, released the results of the
replies it received from 72 non¬

such : its

could possibly

"high'* costs

the Treasury; John W. .Snyder as:

serted

joying

that

"the

this

country

greatest

is
period

en¬

uct, the demand fo* Which Will be the dominant: role iri entrepves-> J
less in a depression/
Experience neurial /calculations of the mar¬
shows conclusively, that a plant ginal efficiency of capital.
:>
not built or modernized in a pe¬ Any^ Actual b^ iririri^
rise in
riod of prosperity is certainly riot product prices (for firms in pure
:

going to be built in a period of
depression even: if equipmenUand
labor costs
cases,

are

even

lower and in many

though

funds

are

available.
If the

concern

could delay the

competition) is likely' to be
1
followed
by the installation of
*
more
productive: equipment in :
Order to increase output/ r • • The *
more
research and chance dis-* X
covery

render existing plant and

.Volume 164

Number 4552

machinery obsolete,
Will

■

the?" annual

investment
count..

goods

Furthermore;

iTHE COMMERCIAL & FINANCIAL CHRONICLE

the

greater
outlays for
private ac¬
the ittort

of the

capacity

years

from 10 to

was

and

age

from 15 to 25
another 28%

15 years old.

to Say; more

period

of good times to follow,
lasting perhaps several years."

investment goods
than diminution in the
prospective cost* of any one pur¬

-buying
chased'

ready has, the

marginal-efficiency pacity

; This
•

why

the

most

obvious

reason

firms do not
;
maintain, -let-alone- expand,
:ductivep capacity in- deep

even

was

estimated

In*

another

study
by the Brookings Institution (The
Recovery Problem in the XI. S.,
1937) at' somewhere" between 22
and 26 billion dollars.
.... It'does

•

Argus

monly regarded
1 ten

years.

45%

the

enormous*

re¬

approximately quirements
outlined
above
it
Moreover, deprecia¬ would appear to be evident that

tion is commonly charged at the

6$ 10% 'annually
a rate
which is allowed; by-the income
tax huthdrities as a- basis
foi^ com¬

ai very great growth could occur
in the* years that lie? ahead* even

new;

industries.

Financial

10;

Dorsey,

1946;

pression
years

that may not come for
to equip themselves with1 ef¬

ficient, up-to-date
as

rule

waited too long.

issue, depression

President

find

does

new

that

machinery
they have

If and when the
come;* they

are

that even- if the current sharp up¬
rising in prices is later replaced
by a1 period of deflation and de¬
clining costs, it will not be pos¬
sible for a long time to come, if

the more acute."

Status of Railroad Equipment
A

case study of railroad capital
expenditures throws much light
on the problem.
/
The "story behind the story" of
the present and growing railway
freight crisis' is revealed' by a

study made by the American Rail¬
way
Car Institute, released in
October, 1946;This study points
out

that

puting
taxable
income.
A
Since this study wd^made most
.survey: mad^^ by the "American
Machinist" as of the middle of -of .this machinery and other in-*
dustrial equipment is six, years
193-7 indicated, that- 61 %;' of the
.machines in; place were over ten older, little or no replacement be¬
yearSfof age, ,a figure that may ing possible during the war years
.
;
be* compared with 48% in 1930 since 1940.
This study by the staff of the
atuf 44-% in 1525.; (^ee article by
John
Haydock, Oct. 20,
1937, Brookings Institution is vital to
"Plant ' Rehabilitation : Ohly an understanding of the problems
Started." lit a', more recent sur^ involved in this survey.
...

■

substantial inroads
the overwhelming backlog of
any

prewar

ders.

It is

continue

situation

harass

that

or¬

will

indus

many

tries. Indeed, there is slight pros
Every. issue, of this excellent peckthaf supply can: or will oveik

contains
opinions
and take demand ft the foreseeable
articles that indicate; that any re- future.. Shortage of steel, in' 1947
'cession- in. 1947 should be only may. be even worse.
Natural
teinporai^ - Rafeiiy^.is thiere a disf growth- is:, a major, facto# to be
agreement with this conclusion reckoned as basic to a continued
among authorities, who have stud¬ scarcity of steel in the indefinite
ied: the problems involved,
future.
Under the circumstances
..

Babscfts Business Service, Nov.
4', 1946, "Business Depression?"

states:
rtients
both

ean^

owned

by?

Class I Railroads in the U. S.

Research

above

number

the; total

carrying' cars

freight

not prepared to1 weather it.

paper

if there were? no development of

significant

and

prices.
Mr.
Dorsey argues that the present
inflation potential is even more
powerful.

rate

themselves

view

will find

these

Finally, in the Dec. 2,1946, issue
of this Service, it is pointed out

Corporation,
Authorities are generally agreed
that we are, facing a per¬ that for two
770,852 in number
years or more there
,:v.
manently higher .price level^ due will be an almost universal lack 1946): 22.28%, or 394,626
Xo^iinuch^highei^ :wage" i co$ts and of steel.
Today's record peace-f
farm commodity legislation., After
years old.
,
time' output of steel will fail td
:
jWorld War I prices leveled off
13.76%, or 243,654
make

1936.

experiencing; the

Service, discuss
problems in detail.

argues

•"the effective life of most types
of industrial,
machinery is com¬

the? Oct,

Harold

Harold G. Moulton2 et
al, of the
'Btookings Institution, point out in
theft:. hook;,
^apitalfeExpansion,
•Employment, and Economic Sta¬ not: appear that any. gf eaf
jchange
bility" (19401),, pp; 171-182, that in the situation has occurred* since
■

"Commercial

Chronicle," John E. Rowe points
out that "discord in
political, in¬
dustrial and social spheres is
only
6ft the1 surface;^

good" the;Mpaxrhienta and to pro¬
vide1 for: the increased/population

pro-

depres-

the

collapsed

now

Business

eventually. .
The aggregate in¬
crease of capital required to make
.

many

shay

are

our
economy
indicate ness whether it comes in 1947- or?
prices will continue to rise. Buyer later.
It is essential? now to* set
resistance.'and. increased' pPbduc-f up the most efficient organization
tion
may
force a'; recession of possible with the latest new ma¬
prices to "1944 levels." This was chinery.
Such industries: survive
certainly not a year of depression! depression when it comes. Those
In the Oct. 3,
1946, issue of industries which waif for a de¬

is to be maintained. It will

one-horse

great disadvantage when recession
does come,
;

period of high demand, such

underlie

be recalled that even the wonder¬

ful

ducers

of the uneconomic producers.

In this analysis we seer a major? ever, to replace plant and equip¬
cultural Economics, Purdue Uni¬ reason why many progressive: in¬ ment at original cost.
It is em¬
versity, in the issue of Nov. 7, dustries are insulating themselves phasized that "where obsolescence
1946;. aS^ert& lhhf Ihe forces* that now against any reaction in busi¬ is also a factor, the problem is all

been scrapped by 1939.
The? fact
cannotr however, be escaped: that
the-averager age has greatly incrfased and> that extensive' re-?
placements' will in due course be
indispensable if productive ca¬

e.g., materials or
•wages.-. Unless
anticipated
-sales are large
enough- tft tax the
production facilities- the firm, al¬

are facing a
recession, but of
smaller magnitude than 1920-21.
Earl L. Butz, Professor of
Agri¬

£Xisfenc$&^^

input*

toft capital-will- not be
positive re¬
gardless of how lovfr is the
pur¬
chase cost of capital instruments.

31, 1946: ; inefficiency of producers becomes
Unless emphasis is put
Stacy May, former Director, obvious.
Planning and Statistics Division, now on efficiency, inefficient pro¬

nearly the structural organization ent steam-electric
plant should be
r.of industry approaches a competi- replaced or rebuilt within the
-tive
pattern, the greater the stim¬ next few
years.-. . .
ulus to investment, from anyspeData with respect to: capital ex-?
•cific' technological
improvement. penditures indicate
that replace¬
We can be quite certain that
ment since 1929' has. been sub¬
'any improvement in gross income
normal.
Only a small propor¬
anticipations-.*-will be: a -more-potion of the plant and equipment in
•tfent. stimulufr ft*
.

War Production
Board, holds that

pres-<

out

In the "Commercial and Finan¬
cial Chronicle" for Oct.

That is

than 60% of the

3235

foresee

readj ustr?

ih:specifiC lines of^JbusiiiesS;

(!,-

of Jan. 1,
^
r
were 21 to 25 "

;
were

•

26 to 30

old.
~v
•■
-.r
?
;: 18.67 %, or 330,536 were over' 30
years old.
■ "
Nine*
hundred
and
seventy
thousand freight cars, or nearly
years

55%

now

are

than 20 years

Nearly one-third of a million
35 years old. This decline
took place in the lean years of the
depression and again during war
years.
A marked rise in the cost
of keeping these over-age, ob¬
solete cars running, exceeds $200*there is- little* reason: to hope- for
000,000 a year, as compared with
lower prices in steel,
machinery^ 1939. (Twenty years is maximum
;etc^:for seyeral year^ to- come;
Babson's Business Service; for Oct. estimated, usefulness of a car.) (j.
Of the 39,460 passenger train
28;. 1946, and also Oct. 7, 1946,
cars owned by Class I Railroads
discussed this in detail.
as of Jan. 1, 1946:
v
; ' J,
;
In the opihftn of various* conf-f
old.

are over

inevitable and desirable.
We dn not, however, believe that
vey the Warner and Swasey Com¬
It is quoted at such length to
(1947) will witness a
18.02%, or 7,110 were 21 to. 25
pany of Cleveland polled 251 cor¬ .show the enormous demand that decline; fiiii business ?rof!;vatfty;-:^cti mentators^ r prosperity will con¬
years old.
r,
porate users of machine tools as does and will exist for new equip- proportions as we experienced in tinue for an indefinite period. Re
8.87%v or 3;502 were 26 to 30
to the age of their equipment and' ment; ia^^the
* Ali.; in
cent and: present ; uneasiness; is
several yeajrs ahead. either 1921 or 1929.t.
years old.
;
*
the extent to which replacements If the' facts
1^'
aref:correei ras^^sct all, we: are inclined to be opti¬ viewed as; a# temporary postwar
mistic on 1947.
were
made * in* the three;
Some corrections attack of nerves. There is a5 s'tafe y; 38.17%, or 15,058 were over 3D
years; forth, it seems difficult to underyears old. j;;,;.
1936' tft 1938;4n<taive;>This/een-; stand how
ldwer prices can ^ be here and; there will occur,.: but we iof general economic good health
Thus we find a similar trend for
jrns* shpwed' ih^
ma-i ^anticipated ior new re^uipment^ predict the biggest volume Of pro- idue.? primarily ftr tlie^ existettcerof
chine tools in place; 67.3-% had! everilifa:recession should'
As a
exceptional
consumer
demand. the age of passenger cars.
become duction for any peace year.
been bought
"Deflationary
tendencies
(in •This economic good health should result of this situation, a rise has
r?
^>rior to 1926; and; a reality in 1947.
taken place' in "bad order" cars,
1947) are not expected - to. be ^continue
enly 9.6% in the three years,. 1936 1. The
strong
because
it- is
survey proves clearly what
harsh enough ;tia. upset general jbacked by :unprecedenti^: buying a car shortage exists in all parts
,;tb? 193$. ;;^iiit^iiij^^ct;l^dugttt has beeb set' forth,
eftewhefev^ift business."
power.
More people are engaged of the country' and rising costs,
;oufr by these:fignres: is that even
as

;

next year

in the

this analysis, via, that new in¬
dustrial
equipment is not pur¬
1938; the average rate of? chased and installed in
periods of

higher reah wages thart ever together with- declining revenues,
Today's have diminished the net income
^piacemenitlind! beeft bniy^^%^ depression when the marginal ef-* 'wages* highervpriees: of'raw ^ma¬ demands will sustain employment of the railroads1 toward the van¬
XX& is; evident ppiu; these figures
ishing point.
•
J"
ficieiicyi of capital is Idw pr tzeroi terials, etc.f it is necessary to "cut ,and thus create more- demands t<k
Fhtterson, a';ftefnbe#: 6t
Tt is°only;ift periods- ofprosperhyi as far. an^ as quickly as/possible." morrow.—Babson's Business Serv¬
ing industry very extensive • te-!
the Interstate Commerce Commit,
^thd?^ expahdin^busihess that the EHftien^ must J>e;th^byWOrd;6i ice, Oct. 7; 1946.
pltomehts^ wilt
'those-v organftatoihs: Which OOhwi
.Bemadb marginal
■
3ft spite of: current pessimism^ sion, stated in a recent address:
efficiency of capital ex¬
within the nextvfew^yearsiif thei
penditures is high, making inex¬ through the next year': or so in it was the opinion, of the business-? I: "It is time: now to commence
^foj^feproduvtiye capacity js to pedient and uneconomical any de-? good health. Without the highest men who attended the: annual to restore the efficiency of the
days .ItHsucft Ihvestm^tts becatiSei possible^pitch^^6f?efficiencyifaltef* Babson Business Conference (re¬ plant. Perhaps 25%. of the freight
ing companies will go down. New, ported in Babson's Business Serv¬ cars now in service should be re¬
f.ot New York has recently made<a
'pointed' but elsewhere in this study :Up?-rtOi--the - minute; labor-saving ice for Sept.* 30* 1946)/ that-the tired without delay." S-That would
—and; the above data proves it +machinery;and'devices are the key total volume: of business will sJioiy be 450,000'cars*.
.-*■}
age^t^iftkmachh^
tnthe.~solutionof this-probleirf.^,.i further, expansions ir^ 1947 over ;i
In theory,- the railroads' should
;veys':i shows* ;iJam i 1, May^ riever be ^ilt/V- '
d?rom,< Babson's Business* SerV- ;1946 and that' it will, probably
buy; new equipment > and. rolling
i-'V"'i
•1939;:nearlyr 87%/ of ;the* spindles
ice,.«Nov. 4, 1946*- we note-the hold its high levels throughout
stock*• improve their road beds,
|Forecasts:^of Business,- Conditions foHbwih^:stateinenfc;j^ aBusih6ss-i 1947. In fact;, they felt that 1947 right of way, terminals, and ter¬
men are receptive to
making pur- should show a 5%* increase* over minal facilities
>It .was; found; that of a total, of
during periods of
.chases of' necessary
equipment ,1946.
There is> "the*, incontro¬ depression when costs are lower
■193*3991 box looms in place1 aS of dittons:- in thev Hear future' have
been: given considerable publicity. and supplies when the current sit- vertible truth that America is still
•JianVand labor- is available. -- Actually
1937tf80%>* weirei: ten-Cyearsi
:An
analysis made by "United ■uation' shows a considerable in- s vigorous and? growing; natiotWl in practice few railroads are in a
-Q£ £ge?ei?;
"crease over the corresponding? pe¬ A national income of $185 billions
ot1 railroad locomotives- tftegen^ States News7 for Nov.. 1) 1946;
financial position, during the de¬
riod of a year back.
Railroads 'ig' predicted for 1947—a purchas¬
dicatee .thaf :"the six months
pression' phase of the cycle to
are f showing
a
100% gain as ing power that should be spread make
•sents tMe maximunr of efficient mediately aheatf- giVe^ everjcCin-improvements.
Retrench¬
dication of a continuing boom,, against the*: extremes* of despon¬ 'ovey alT classes: of buyers;
Thg ment is the order of the day.
:iife.'^.; Thi^rheari^ that the'-(rail¬
Factory emw only important group that may be Road -beds deteriorate' rapidly,
road) company could save money with- high prices and a- high vol- dency last* spring.
A- general' price ployment; is- 16% better than' a vulnerable to a limited decline in rolling/stock rusts as ,it standfe
by replacing the locomotive (more ■ume of sales,
•thaft 3ft-year^ ol^^ eveft if the ;breakx at retail levels isin- prospect year'ago;- Payrolls are 22%i better 1947—in the latter months of the idle, for shop-employees are re¬
for
the, April-June- period7 of -than* a- year ago;
year—is the farmers.
However, duced of necessity to a minimunf,
new engine were not; of superior
1947.";
However, "the extent- of : "We are still so far from- any 'even if subjected to the antici¬ etc.
Those railroads that bought
-model; that is-, the cost of keeping
the old engine in repair exceeds the; recession^very probably 'will ^cyclical'
downtrend ■ that; most pated decline,, farm: income should: new equipment and made major
be moderate compared with 1920- .fields of activity can continue1 tb still be massive.
•thef depreciation and maintenance
improvements during the prosper¬
;^1 or with 1937-38.
Even at plan for a large volume of busk
iChargea on a new one.
At the
Originatftg from. Washington, a ous phase of the cycle found them¬
:the bottom of the recessidn ahead, ness provided imagination is used
,ehd of 1938 lesgr than 5 %,
sampling survey of the nation, selves in a far superior position.
1936 to

comparatively good years,-

It is pointed out in this

same; is-'

sue^^ that-tb ineet thev increas

,before inr times of- peace;

•

...

(of/rail-,

to keep costs below those of com¬
foadi locomotives)/^were strictly ;indtist!idai::k^
be'neajr ihe level of 1941* which petitors."
The major—if not the
modern;, that is* under ten years
Only—way to accomplish this, to¬
;of,age, as compared'-with 20% at ;by all prewar standards^ was
the end of 192ft. JA& of Dec.. 31, peacetime- boom year. No repeti¬ day is through the : use of the
tion ;of the 1929 collapse appears latest, most modern labor-saving
1938* 28.C*3%t ; Were..: 29- or more
machinery.
Obsolete,
worn-out
'years old, and another 23.8 % were likely in the near future."
equipment will constitute an unfrom 24 to 26years old4 .
Rail¬
In the issue of Nov. 8; * th0
surmounthbleobstacle.
road machine shop equipment
has;
'likewise aged.- In. 1939, 70% of "United States News" states, tliat / "Those businessmen who fear
the machines, in the average rail- "the general outlook in- business a great depression in 1947 will; we
; ■road;
shop were over * 29'yeafs of ujonmninities ik-pne; of;restfained think, later be proved to- have
been unduly alarmed."—Babson's
'.age.,. $ The ^.useftif ?0ife ^of : a? optimism.
Businessmenap¬
Business Service, Oct. 28, 1946.
steam electric-generator — apart
pear t0\ feel that aJ recession (Irx
'from obsolescence-^is. regarded;«
In, a, free economy, the proper
1947) will not be- unduly severe working of the law of supply and
being 20 years at the most.
By the end of i939 at least 35% or prolonged, and they look fop a demand' insures a gradual shifting

supports the prediction that good
times will be long sustained.
The
basis for this will be the buying
power that will flow from current
income and expansion of credit,
rather than from war: savings.

The

railroads have paid

for their failure

solete

cars

dearly

to eliminate

and' for

not

being

ob¬

capi¬
tal
improvements in periods of
good business.*
On the basis of
I Furthermore, both management this costly experience with ob*
solete
equipment
and
rolling
and organized labor are agreed
stock many, if not most, railroads
now that increased production* is
essential
group.

the

welfare

financial position to make

each

Here is a real incentive

*The

railroads

have

not

been

blame for this since
their rates have been subject to
efficiently and economically. "Ta
control
of
the
Interstate' Com¬
procrastinate
is; to
1o s e
the
merce Commissioni
chance."
The
Sept. 9, 194-3, and
(Continued on page 3236)
Sept. 2; : 1946, issue of Babson's
to modernize in order to produce

entirely

Thursday, December 19, 194$

THE COMMERCIAL & FINANCIAL CHRONICLE

3236

sell.more to meet the present
enlarged demand. With the high
marginal efficiency of such capi¬
tal investment, it should be pos¬

and

Should Obsolete Equipment
Be

The Guaranteed Annual Wage f,
(Continued from page 3202)

sible-to. pay. out' .the costs? in ap*

proximately five

Replaced Now?

row

fought' for." campaign since its inception last
of that great August. /■'•
' -1 #
'
purchase and
force, ! our obligation is corre¬
Some people, particularly our
(Continued from page 3235)
layed until the depression phase
spondingly great. It is not only critics, find it hard to believe, that
are
today spending millions of marginal efficiency of such capi¬ pf the business cycle, it would' be
our privilege, but our duty to look
NAM is really behind this pro¬
tal
dollairs.
expenditures will be large impossible to pay out in so
shorf
Evidences of expansion during regardless of any temporary re¬ ,a time. ; Meanwhile, maintenance ahead, to try and see the needs gressive program. It is still harder
and the wants of our people; then to make them believe that the
the present period of prosperity cession in 1947;costs will likely prove prohibitive
do our utmost to fulfill .them. It
are numerous. It is pointed out in
program is not something cooked
Most manufacturers' costs are
years.„ ..If this
installation is de¬

that this nation

the

managers

•■■■i

"Business

that

Nov. 16, 1946,
January-September

Week,"

the

going
the

if efforts are made, to continue to
will be a pretty poor tomorrow
This is notably true in operatewith the preseritJobsoletO
for all Americans if the politicians
working industries.
equipment.
take over. by defaulLbecause' the

up.

metal

period of 1946, 42% of the almost
Steel will cost more. Non-fer$4,800,000,000 of corporate capital rou$k"prices already are up; de¬

flotations were ''new capital" se¬

1946.

have

temporary re¬

More than twice

much pro¬

duction machinery has been going
into existing plants in the U.S.
as into new ones.
"American Ma¬
chinist" reports new business for

August and
in

excess

business
make

September,

1946, as
Standard

$49,000,000.

indicators

continue

good showing with steel
and auto operations at* a postwar
a

out that

"industrial prices are up

little, relatively, the big
gains being in farm products.
Farm prices have the government
very

yet

built"

tell

you—six, eight or ten months
these projects is one
from now—how easily we should
$20,000,000 by General Elec¬
have beep able to read the road
tric, which is "convinced that the
Business
demand for electric power gen¬ signs along the way.
Among

for

equipment ' is

erating

continue for

call

for

years."

some

General Motors

overall

$590,000,000

expansion plans

expenditures of
provide

for

them

point to

ing to the competitive concerns
producing this equipment, the
prices will go up even more in
1947, No reduction of prices can
be
anticipated
within
several
years. Under these circumstances
further delay will but add to the
costs when the new equipment is
installed. Meanwhile, prohibitive
costs of maintenance of obsolete

equipment, less

pro¬
are

would

quite

possible

that

the installation of new equipment
at that time would be inadvisable,

continuation

Policy

the

increased costs of copper. Accord¬

National Labor

Sure,

we must

develojpiiritd ruinous

strikes, civil insurrection or what
have,you, but legislation is only a
part of the answer even with a
two-way stretch of the imagina¬
tion.

There

are

basic

causes

underlying the unrest of our em¬
ployees, and it is up to manage¬
ment to
dig into those causes,
recognize them, and resolve them
in the public interest.
In

opinion,

for

reason

the

of excellent business.

reflected

mand

the

strained

thorough study

made and the

have a national prehensive booklet, "Employment
Regularization," in 1940. Nothing

labor policy that will restore the
equality of labor and management
so that collective bargaining will
have a chance to resolve disputes

before they

of the subject was

findings were published in a com¬

principal
relation¬

to Statistics^are; vastly more plentiful
and more refined than
they were
in 1919 and 1920. Just about; all

going

1946,

that after Nov. 25,

and

now

ment in the 30's so disturbed your

Association that

Must have

ship between labor and manage¬
that this is inevitable if opera¬ ment today is the worker's unsat¬
tions
are
to
continue—then
it isfied craving for security. We
should be done without delay to know through opinion polls that
attain the high marginal efficiency he wants security above every¬
of the new equipment during the thing else. He not only wants a*
next five to eight years of "pros¬ job, but he wants it to be a steady
job. And, we know that he regards
perity."
this kind of security
far more
It should also be borne in mind,
that the product must be' classed highly than any synthetic security
that the Government can offer
as a luxury, the demand for which
him.
' ■
"
can be expected to fall in greater
This wholly understandable de¬
proportion during the depression
phase Of the business cycle. Hence, sire of the American working man

Students of the business cycle will

(p. 10).

captains of industry regard
responsibility so lightly;

keeping the efficiency of
the plant down. If the present ma¬
chinery must be replaced v/ithin
the next two or three years—and
it seems to be generally conceded

experienced a
outlays," although support program under them.
the rate of gain has lessened a Don't look for prices to fall nearly
Tittle in recent weeks. "Business as far as they did in 1920-21, even
Week" points out the important if it develops that we are follow*
fact "that a plant delayed may ing a similar postwar pattern..
be

purchased

factors

decline in such

never

been

duction at higher* costs, etc.

In the September 28,1946, issue
of "Business Week," it is
pointed

spi'e of tnese tremendous
outlays of capital investment "we

than

and worn-out

high.

proposed new equipment

have

costs will be an addi¬
tional 8% to 10% higher due to

cession sometime in 1947.

plant and equipment is a
major factor in this development.
On page 22 of "Business Week"
for November 9, 1946, there is a
list of 88 > industrial projects in
excess
of $500,000 approved by
CPA s'nce March £3, 1946. These
projects are located in all parts
of the U. S. and a number of
them vary between $25,000,000 to
$50,000,000.r "Most reports from
business leaders emphasize that
they are going ahead with their
expansion plans just as fast as
they can."

not

could

March, 1946, at 10% to 15% less

even

rate of expenditures

new

have

there

It is the author's understanding
that the

Labor costs, which are "sticky,"
cannot be expected to come down

generally have soared to new allhighs week after week in

time

that

certa^tty that they will not go still

commercial bank loans to business

The high

such

Furthermore,

offerings.

curity

mand

to counteract the pressure for
guaranteed annual wage. But
the proof is available for all to
this see. The irregularity of employ¬
up

the

growing

de¬

fqr the guaranteed annual

wage,

v.:!;

needed

pletely such
as

refute

com¬

when
from

made by Philip Murray
said (and I am quoting

his

speech):

"Industrial
a

irresponsible charges

magnates

prefer

millions of

status wherein

large corporate enterprises."
That is the picture of you

being

painted for the benefit of your
employees. That is the basis for
demands of the guaranteed annual
and again I say you might
well get used to that term . . ,

wage,
as

it's

old

the

case

the

wheel

squeaking the loudest getting the

As careful as I have been
distinguish between the stabili¬
zation
of
employment and the
guaranteed annual wage, I have
been misquoted numerous times,
I know your concern from the
grease.

tone

of the let¬

received.

They have

number and the
ters

have

been considerate and understand-,

ing, but they have truly mirrored
the

the fear and uncertainty about

annual

guaranteed
lent

minds

the

wage prevaof American

businessmen today.

■

un¬

employed would be available at
ever-decreasing wage levels to be
exploited for the benefit of these

ex¬

inexpedient, and unlikely, .The
I arii warned that the* use of the
Stabilization Not a Guaranteed
panded production. ^ $290,000,000
marginal efficiency of the. invest¬ guaranteed annual wage in an
to being • On a\"pfermanently higher
of this has been spent already.
ment would be low—perhaps zero
2v*
7 7:''
NAM meeting hail! causes a few
level" than they did in 1919 and
-rand the possibility of paying out
Westinghouse is carrying out a
people to turn purple with apo¬ 7; So, I want to re-emphasize the
1920. TKev strength of organized in
a
reasonable time would be
$132,000,000
postwar
expansion labor
plexy, but all of you are going to fact that when I am talking about
and the rigidity of wage
more difficult, if not impossible.
plan,;
•
.
■
hear more and more about it in the stabilization of employment in
scales take care of that.
Wages
It
seems
difficult
to
The ceramic or tile industry is won't
justify the coming months, so you might industry, I am not talking about
go down much, short of a
Waiting five years -or more for a as well hear a few things about it the guaranteed annual wage, and
expecting new peaks this year and major depression."
'
v- -7
Prices

now

much

come

closer

•

each year

in the immediate future.

Their volume of sales is
the

highest

and

fou^ times ,the

.nual

;sMe^for.The^

■

This

sales

ever

workers

new

''The entire

labors
new

to. have
the instai-i

the industry alonei

lation end of

30 to 50%

an-t

927-37.!

industry ■ expects

51,000

portance' in view of the fact that

recorded

.average

industry is on ii& toes

potential saving that it may not
be possible to realize. An approval
of this project eight months ago

This statement is of
major imr

twice

now

of the proposed cost is

(installation)

cost

would have saved perhaps $19,000,
Even assuming that prices .will

the

equipment.

not

capita

eagerly preparing for volume

investments.

Corp.

The Victor Chemical

Gains
the

at least .100 % in 36 of
States.
For
individual

were

present building an
States, California was third with
plant in Florida. Costs
a per capita
are
average of $1,480 com¬
high now but the marginal
pared with the national average
efficiency of capital is also high
of $1,150 for 1945.
now,. Delay would be uneconomic.
An
analysis of these figures
Carter Oil Co. is building a
give us an insight into the eco¬
complete new refinery ($17,000,000)

Billings, Mont. This is
subsidiary. In the
Souther -v California
area, South-

Standard Oil

ern
ern

California Gas Co. and South¬
Cour ties Gas Cd. are building

natural gas pipe line into Los

nomic present and future of our
nation. Workers have become used
to the highest standard

that

living

country has ever en¬
joyed. Any deflection from that
height will be: fought "with revo¬
any

The

Richfield

program

The

under way

amount

dena,

Cities

Co.

has

$15,000,000,
of

Burbank, Pasa¬

Glendale are making
additions
to
their
steam
and

new

plants.

;-v!':

Southern

California

Edison

Beach, The Bureau of
Power & Light of Los Angeles at
Wilmington, and the Imperial Ir¬
rigation District at Brawley are

Union

Oil

Co.

refinery at Wilmington.
All

are

building
?

of the

utilities in this area
overtaxed and are striving to

meet the
i

•

;

present
V

reduction
in wages in the foreseeable
future.
Since costs of installation amount
to from 30% to 50% of total costs
of the new machinery under con¬

demand.

S'l 1 U I M £

how
the

.The

* f V C

difficult

postponement

any

chase

can

see

pur¬

be justified if based

hope' of

lower

costs

within

the iiext five to eight years.1
yf's.■ V.'vrV.y

/>•*

installing steam plants.

The

we cannot

important

any

sideration,

Redondo

all

Obviously, therefore,
expect

/'v":

■

•'':-•'! $

Conclusion
; It is the author's understanding
that the proposed new
machinery
is more efficient and will

operate

at less cost.

enable. the
f V 3^ U

■' 1

Furthermore, it will
.

company

produce

know that

security cannot be guaranteed*—at

to stimu¬

so-called guaranteed annual wage
contracts.
In one of

thie

CIO Steelworkers*

have guaranteed annual wage contracts,
the -Utopian I find this condition (and I quote),
schemes that have, tried it, and "nothing herein shall impair the
flopped. The idea that the Gov¬ right of the employer to terminate
ernment can guarantee security is employment of any employee beHoward R. Mears, Jr., Assistant
just as fallacious, because any cause of change of business condi¬
Manager of the 34th Street Branch such Government
program is no tions or for cause."
of the Chase National Bank, of
better than the productive capac¬
In the contract of a large com¬
the
class
of
1941, was elected
ity of the economic system which pany which has gotten a lion's
President of The Graduate School
supports it, and that economic share of the guaranteed annual
of Banking, New York Metropoli¬
system is business—your business wage publicity, there is a clause
tan Group, at the buffet supper
and my business, all buiness.
which reads (I'm quoting now)„
meeting* in New York Dec, 3.
But merely shrugging off the "it is the intent of the company to
Charles C. Joyce, Treasurer of
maintain it, but the
the East River Savings Bank, class guaranteed annual wage as an im¬
company must
possibility is no answer to the and does reserve the^unqualified
of 1943, was elected
SecretaryTreasurer
Three
members
of problem. The worker needs some¬ right, to be exercised tat its sole
the alumni group were elected to thing more than the, unreyeajed discretion, to withdraw this guar*antee at any time;"
the board of directors for terms nobleness of, management upon

N. Y. Group of Graduate

least for very long.
to
do is to count

Ail

you

Banking School Elects

which to build his security.
They are: Clinton
Your Association recognizes this
Axford, Editor of the "Ameri¬
can Banker," class of
1943; Briant basic truth and is tackling the
S. Cookman, Assistant Trust Of¬ problem, riot from the impractical
ficer of the City Bank Farmers basis
of
a
guaranteed7. annual
Trust

Company, class of 1944; and

Robert F, Marchant, .Treasurer of
the Bank for. Savings, class of
1940.

One hundred fifty members

the

New

York

wage, but from! the practical and
realistic
planning
of
stabilized
and

Group assembled for the meeting
was addressed by Dr. Har¬
old
Stonier,. Director of the

WV Randolph Burgess* Vice-Chairof Board of the National City

consequences.

A Program of Employment

which

man

that steady pay
the worker's goal of security

employment

Metropolitan will be the natural

School, Other guests included Dr.
f

that is said

because

of three years.

granted.

Oil

that the NAM's program

Angelas. Ine Pacific Lighting Co. lutionary zeal." Workers today
are
taking financial security for
is making new additions.
.

security,

for

entire new

higher—which is doubtful
reasonably certain that

years.

1945, which show the sharpest,
most
! sales."
staggering lift in living
standards on record. Per
■"
capita
The Monsanto Chemical Corp;
income payments. for the U. S.
and the. Victor Chemical Corp.—
as a whole
during 1945 averaged
both
large producers of phos-i
113% higher than those of 1939v
phates—are making large capital
and

seems

me now.

late management to stabilize em¬
The annual wage "is
thP ;!ai£
and in the minds of workers. It ployment is not a iriove to promote
the guaranteed annual wage: And*
has! been promoted extensively by
I also want to take this opportu¬
the unions and the Government.
All of us wUI, admit
is a4bad nity to warn you against being
riiisled by the guarantee- in the
"

term, and hardly the answer to
they, will, not be lower for several the Worker's known
craving for

has recently issued a
study
income payments per

merce

—it

The U. S. Department of Com¬

from

Regularization

details
gram

NAM's

you

about the

national

pro¬

to stimulate management to

Bank, of New York; Dr. William

get

A. Irwin, Associate Director 0f the

effort. As members of the.Associ¬

behind

School; and .William Powers, the ation,

you;

informed

Registrar,
|. VaepjV:.

y;.» ii.; ?»»■:

this forward-looking

have been kept, fully

the progress
;tO.

of this

circumstances beyond

other

control of the

company."

Even in the Hormel
comes

the

plan, which

closest to the unconditional

guarantee, you will find that the
guarantee is not necessarily for
40 hours a week; and that the bal¬
ancing of long and short weeks ub
to the 2,080-hour annual limit of
the

Now.I do not need to spend a
lot of time telling

Here is another where the con¬

tract may be suspended "in event
of fire, floods, wars, strikes or

Fair

Labor Standards Act

basic to the operation
And

even

plans
1931

and at

single

well-established

such

this

of the plan.

one,

first

which began in
covered

department,

can

only a

run

into

trouble because of unforeseen dif¬

ficulties such

ceiling prices

OPA's Unrealistic

meat which pre*

•:■'&ir:'r.,.VrI • ,-yi-h$f'Vj

jVolume 164

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

vented', cattle

shipments to the
slaughter houses last Summer..
So you see the guarantee is not

companies
because

or your own

that

boils

industries,

down

the

yet all that it is feared to be, and

solution of your individual prob¬
lems, But, I do presume to tell you

that

-f.

some cases means no more

than

of those prob¬
impossible
ones.

great

many

wholly .; impossible, \ doing " the
things that no men ever did before..

That is

/;/

:;,;v

why I

'"f'-

deeply

am so

con¬

your

The

cities

own
same

3237
and

industries.

sort of failure

man¬

agement to tell its employees the
full story of profits, what.,
they
result

from, why they are neces¬
the one in the Dickens tale about lems
are
mot
sary, and the untold blessings that
the "person who can't pay, gets Some companies have found the
;hey have brought to humanity,
problem with the same will and
^another person who can't pay, to answers. Others are ■ making determination that you demon-- seep industry continually sizzling
guarantee that he can pay."
/ progress.
'' ;.///
on
the
strated
in /accomplishing
"unconscionable
profit"
the
v But
irrespective of the limita¬
Whole industries are beginning "miracle" of war
production, we griddle, The only story that most
tions of the "guarantee" in these to
of our employees get is from the
cooperate toward the end of can some
fident that if the management of
American industry tackles this

contracts, the companies which
signed them at least publicly ex¬

pressed their good intentions. In
addition to improving relations
Iwith their. own employees; these
companies have also won the solid

day level off the

providing

steady employment.

duction

Much of the groundwork has been
done for you. Successful methods

argely

well

studied, analyzed and classified by
your own Association and other

backing of the American people,
a majority of whom believe that

such organizations
can

Management Association and

management has failed to consider

the

National

the problem seriously enough, and
/that steady work and steady pay

attainable.

are

fact,

the Ameri¬

Industrial

Confer¬

ence Board. NAM has compiled a
complete bibliography on the sub¬
ject, which is yours for the ask¬
ing. J assure you that a. study of

the

eliminate■

union boss

papers,

curse

irregular,
..

/I ask each and every
you,

how/better

strate

can you

your

for their welfare than to

concern

et them know that you are

doing
everything in your power to give
them the thing that they .want
most—the
security of a yeararound job? *,,
:
; • / .
.
/

there ■? is
growing pilblic sentiment in favor
And here,, let me warn you,
of legislation requiring such ac¬ the material available
today will
everything you do in organizing
tion, according, to one recent save you
many a trip to the ihediand promoting a program of em¬
opinion poll.
cine chest for an aspirin tablet in
ployment
stabilization
in
This jibes with what I've beep the
your
days ahead of us.
own companies must be explained
^riyirig since I started talking em*
Denounces Indifference of
step-by-step to your employees.
ployment stabilization to busi¬
Employers
It may seem strange to you that
nessmen eight months ago. While
You know that t arn one to try it is necessary to sell your em¬
many companies lost sight of the
problem due to its fadeaway dur¬ and pick up a cheap headline by ployees first, but there have been
ing the war, its resurrection seems tossing brickbats, but I will have numerous instances where plans
certain enough for all of us to do to admit that I've been somewhat were
inaugurated without pre¬
our utmost now. to prepare for the
dissapointed by the indifference vious consultation with employees
.

lime

when

We'll

never

does

arise

again.

businessmen

some

NAM's

Employment ; Stabilization Pro¬
gram. I've made two trips back
and forth across the country since
the national welfare than we have June talking employment stabili¬
aright how when consuinertlemahd zation, andeverybody agreed, with
ond purchasing power promise us me that it would be a good thing
the long steady runs we need to except one old fellow who ac¬
Iron out the ups and downs of the cused me of being a communist
But at the same time that they
production curve.
r w
were agreeing in principle, I en¬
Sees Some Opposition
have

better chance

.to prove ourselves and establish
once and for all our concern for

airi

countered such reluctant cases as

still somewhat amazed at

these:

the large segment of management
fwhich

does

not

recognize

NAM
Employment Stabilization
.Program as anything mqre than a
philanthropic gesture ot manage¬
ment to tide employees over slack
periods. That is its most important
social aspect, it is true, but if any
of you here are similarly mis¬

2. The

shoulder

was

chip

because

present or past strike difficul¬
ties and the attitude that it

•;

was

em¬

futile

try

promote
steady employment; when the
union was promoting organized

•

employment v?/:*' • -

ployment is equally beneficial to
the employees, the company itself

3. The management which was so

,of union opposition to job
community in which it
transfer and long and short
operates. ;You do not have to take
work-weeks without overtime,
word >f<mjtbis; it is 4h§< con?-i
■v;4 thatit>wa^hotfeltworthwhile
sensus of the clinics which NAM
i > tO' tryriueh a^i'ogram^ *
basj! been holding through the1
-country in an effort to aid compa¬ 4. The management of seasonal
nies actively engaged in employ¬
businesses which was almost
ment stabilization programs.
totally unaware of the progress
in • employment
stabilization
You
all, know that it takes
and still considers as inevitable
^steady runs—long steady runs—to
.and

the

realize

real

efficient

costs

sure

•

the

and

profits. Broken runs, changes in

traditional

seasons.

;

layoffs in slack

I don't doubt that

runs—up or down—reduce effi¬
ciency and raise costs accordingly.

The

when

that

labor

costs

end

plant is shut down or
slows dowri is a fallacy that man¬
agement must recognize. The loss
a

of trained

workers, the lost effi¬
ciency in production, the cost of
training new workers, the wastage
and spoilage of material caused by
untrained employees—all must be
figured into the real costs of slow¬
ing down a plant./Actual dollar
savings in taxes where states have
merit rating clauses in their un¬
employment compensation laws
ore only one of the many factors
to be considered. This all adds up
to lower cost per unit of

tion—the

produc¬

keystone of
cessful manufacturing.
very

suc¬

Even if you could discount all

the benefits to the individual

em¬

ployee,

the jcommunity, the na¬
tional economy and the better"
relations between employer and
■employee, mere selfish interest

should

make

redouble

its

every

efforts

management
to

stabilize

employment. You should be;the
ones

force

steady employment
on
your: employees
instead
of
waiting for them to make you
do it.'

//'

I do not presume to stand
up
•here and try to tell you from a
speaker's rostrum how to stabilize
the work schedules in your own

lot more

some

have thought of

they had better
convincing than any

of these I've encountered. If

man¬

agement is going to preserve .its
right to economic leadership in
this country, it has got to become

positive in the solution of such
basic problems / as helping; the
American people build; the secur¬
ity that they crave so deeply. We
cannot afford to be procrastina

tors, we cannot afford to carry a
chip on our shoulders, we cannot
afford to permit union interfer¬
with the welfare of all

ence

our

employees, and we cannot be
bound by ; the chains of blinc
tradition if we hope to provide
the industrial leadership neces¬
to the rebirth of American

sary

ascendancy in the world of to
morrow.

No
I

one

the

knows any

difficulties

face

achieving year-round employment
throughout industry, and we may
never overcome all of them, bu
that is no excuse for: not trying
That is the challenge to manage¬
ment. With this industrial machine created by the ingenuity o::

free

men

tion and
the

and driven by competi¬

incentive,

reputation

for

have

...

the

benefit for granted after
of it has

newness

off,

worn

continuous selling campaign must
be maintained by

management to
the maximum effectiveness

assure

and cooperation on a job stabili¬
zation program until its benefits
become firmly established in the

just

all

the

other

workers.

true

this

And

that

affects

employer-employee

re¬

lations/ It isriot 'enough^ td fol¬
low out all the good industrial
relations practices.
Management
must make its employees ? aware
them

and

what

makes

them

possible. Time after time I've had
employers ? come to
h o aide r
about

troubles

when

cry

their

labor

employee

policies,

wage scales, and working
conditions had always been far

liberal

than

those

of their

competitors who never seemed to
have any trouble.
*

And

the

almost without exception

fault

could

traced

the

failure to sell its
employees on their progressive
policies. It allowed them to be¬
management's

come

actual detriment instead

asset to

good labor relations.
Because they were not informec
otherwise, the employees had not
only taken,for granted their extra
privileges and superior treatment
but they soon came to regard the
boss
as
a
"pushover," to be
knocked off first. / .
an

won

doing/: the

management

but that wasn't good enough for

individuals to

our

employees.

own

employees when
them
our

fail

the facts and

editorial

much stronger competitor to con¬
tinue operation. In other words,

they thought this publisher had
become a "pushover," simply be¬
cause
he had never thought it
necessary to sell his people on
their preferred status - in • the in¬
dustry.
,h:>f
Get Co-Operatidn 'of Employees
=

Undoubtedly ^ou'haye

seen

this

tragedy of misunderstood motives
re-enacted

again

and

again

of all Americans who yearn for a
and prosperous tomorrow.
Like

businesses; when

make

them

when

part

fail

give

fail

of the

team;
them the

give

sense

security that they need to
feel in the business?
Management,
to my mind, has been
guilty of a

all

other
worthy. gcals,
employment for our
people requires the cooperation of

continuous

all

these groups—business,

•

labor,

government and the public. Only
with that cooperation can man¬

agement successfully provide jobs
that the

and women of Amer¬

men

depend

can

upon

month,- and next

figures about

meriting the solid backing

secure

•

Is it any wonder that the voices
from the left get the ears of our

tions

know
of

the

difficult

task

week,

year.

propor¬

ahead, and

know that it will take weeks and
months and years to
achieve, but
I feel sure that I can count on
you
as

mere

chosen few- to go beyond the
call
of duty to
give this

worthy;. NAM

program of
Em¬
ployment Stabilization the steam
it

needs

build

for

morrow

all

better

to¬

Americans.

most serious dereliction in allow¬

ing the mistaken belief to become
prevalent that business > as" al¬
against the

ways

good

things of

!; Laws

drastically

life; against security; against high
wages; and against full/employ¬
ment.

the

Top management cannot shrug
this off, noj? can the men who are

reorganizing
banking system to
banking and curtail

limit branch
been

responsible

for

good

industrial

and public relations in

industry.

The; responsibility for Improving'
the

welfare

our

employees,
bettering their working conditions
and
living standards; making
them

understand arid appreciate
that they are the beneficiaries of
this competitive enterprise sys¬

tem, is

joint one.iTop

manage-

ment has got to motivate it,; but
the industrial and: public rela¬
tions men of American

industry

have got to carry it out.

It has become

dent to

the' German

States

Zone

cording

merce,"

stabilization'.

Until

the

boss is firmly behind such

the lesser

gram,

big

executives

can

ness.

and

the

imagination

successful manager. It requires a
sense of social
responsibility and
the

willingness to5 accept neces¬
sary changes in 6ld'riiethods arid;
old standards.

Industrial progress in.this coun¬

try has been built by men with
foresight and the willingness to
take

chance.

They

are

minority,

it is true, but that
should not discourage us. Leaders
are always in a
minority..

.........

...,,.

I urge you, the leaders of Amer¬
ican industry, to assume your full
responsibility
in
this
forward

crusader and the provider of the

good

things

lifef^ecurityTa

better standard of living.
Second—It is the most impor¬
tant

single thing

can

do to

combat the subversive influences
which today are

undermining the

freedoms of America.
Third—It

the

only

•

reliable

build lasting prosperity for

all Americans.

ac¬

had

Com¬

the

fol¬

say;

"This action to 'break up undue
concentrations of economic power'
taken while the United States
is

conferring with the other occu¬
pying powers on banking reorgan¬
ization for Germany as a whole.
/ "The

laws, effective Jan. 1,

new

for

Central

Bank

each of the laenders to take

over

previously performed by

the German Central Reichsbank.

"Stocks of the

banks

new

will

initially be held by the State gov¬
ernments, but later will be sold on
prorated/ basis

banks

the

various

operating within each State.

"Under
banks

the

new

laws,

may operate

branch,

qnly^ tyi|;hin

the State Where the head office is

located arid the

new

Central Banks

will not have branches outside the

particular State in which they

are

located.
.

"This

will

branches

that

mean

the

large German
which; in practice have

chains,

been separated from their head officesin other parts of / Germany
since the occupation, now will be

completely set
head offices.
"While the

from

apart

these

Central Banks

new

do not become the legal successors
the *

Reichsbank,
they
will,
prejudice to future set¬
tlement,' take over assets of the

.'without

Reichsbank branches within their
territories and assume the liabil¬
ities of the Reichbank to
tent

•

the

ex¬

possible, the AMG said."

Redeem Bonds of Cuba

| Republic of Cuba, through Reinaldo Fernandez Rebull, Counsul
General

holders
Year

of "Cuba,

its

Sinking

External

Fund

notifying
Loan

5V2%

30-

Gold

Bonds issued under Loan Contract
dated

Jan. 26, 1923, that $1,200,principal amount of the bonds
have been drawn by lot for re¬
demption on Jan. 15, 1947, out of
moneys in the sinking fund,
at
100% of their par value and ac¬
crued interest to the redemption
000

The

date.

bonds

drawn

for

re¬

demption will be paid at the of¬
J. P. Mor¬

fice of the fiscal agents,
gan

& Co., Inc., on or after Jan.

15, 1947, after which date interest
the drawn bonds will cease. On

Dec.

way to

Press

city appearing in

was

a pro¬

go only so far. The success of
such a program demands the bold¬

Dec. 9, ac¬

which also

lowing to

the

government

the New York "Journal of

functions

ment

have

Germany,

Associated

counts from that

sparkplug

of employ¬

American / military
announced at Berlin

increasingly evi¬

program

banks

adopted by the three laender
(State) governments in the United

provide

of central

power

that only top manage¬
ment in individual businesses can
me

looking effort to provide steadier
Because the union's power tac¬ employment because:
tics called for hitting at the weak¬
First—It is the surest way to
est opponent, they called a strike convince our
employees and the
on the man who set the pattern
public
that
business " is
the
of

public

interest

men

their organizations and our
elected representatives in
govern¬
ment. It is a program in the

ing

these fellows.

unionization

working

and

ica

competitor, which was stronger in
resources, circulation and income,

worthy of the
support of all businessmen and
business groups, all

ourselves to blame for not
speak¬

There is rio freedom we enjoy
it
today—be
economic, social,
political or religious—that we do
not owe to the boldness, imagina¬
There is a case here in the East
which illustrates my/point per¬ tion and sacrifice of a minority
fectly. It is the case of a news¬ somewhere in the pages of history.
The' minority of management
paper publisher. First to sign a
contract
with
the
Guild, anc can write a new page in history
credited with raising the news¬ by taking the leadership today in
paperman's, lot in his city, from an all-out nationwide ..effort - to
one
of the worst to one of the help the working men and women
of America attain their goal of
best, he finally had to say "no
to a demand-and two of his papers job security with a sound, work¬
were
struck. He offered to sign able
employment ' stabilization
a contract paralleling that of his
program.

workers, meanwhile allowing his

better than

Because it is human nature to
take any

for
Difficulties of Plan

■

of you

other reasons, but

idea

this audience

they met with; so much sus¬
picion and fear that they had to

minds

which

management with
its

guided, get the Idea out of your
once and for all, that this is
pure charity.
/; /;., ■,;, // ", , jl.; J:.;

/ The achievement of steady

actually in the midst of a labor
shortage, and could not see em¬
ployment stabilization
as
a
problem to worry about today.

bead

1. The. management

this

and

be abandoned.'

drivers.

one of.
misunderstood, if its profits are
demon-?
misunderstood, then we have only

employees

your

news¬

they, portray all in¬
managers as profit-mad

slave

in the labor

and

dustrial

seasonal Unemployment.

the pitfalls have been

curves

pro¬

'of this prbgram are

1946,

$569,700

principal

previously
redemption had not

amount of these bonds
drawn

for

Gentlemen, the high objectives been presented for payment.

jjS >J;; ^ Fjji,'#'&:■>r~
*/$/;?». '•

3238

SHE COMMERCIAL & tFmANClAi; tH^0NK
Unless

The British Token
(Continued from page 3207)
den rakes, to hoes, to ladies' hats
and liquor.
The original list con¬
tained 47 items; 34 new items
added

were

lish

Import Plan
from the

quickly As possible .normal
commercial trade in all areas.
as

they

;are

manufacturer

authorized toy

who,

-can,

lessen the flow of paper .between

and 'the
Of0ce^ $t fntenmtidnaK'Tradev

under the Plan.

manufacturer, .addressed

Plan

Oct 24.

the

Office

Such authoriza¬
tion must be made by letter to tbe

^Since numera^^
usually toide toy dndivaduai ^

; r

porters, scrip -is issued in
ient

1938.

For the year

that

1946 this

is limited to two-thirds of 20% of
the exporter's prewar trade with
the

United

Kingdom during

the

"base years."

The

20%

sight

seem

quota may at first
small, particularly to

However, the

ment

pres¬

the

Trade

Office

International

the

The Plan is

the approved

However,
who

list to

the Plan. If
es,

must

quota.

not

ble

Such

authorization

be in the form of

agents

letter

not

can

forwarding agents

certified

under

BUDGET BUREAU NO,
IT

NO.

Office

this

the

New

International
can

York

firm

illustration

had

plan

the

market

under

the

Token

Plan. Likewise, forwarding agents
are

41-X84I

neither

principals.

(Scrip number when certified)

manufacturers

Neither

agents,

consideration

can

only

(FOR .CMH'OPJT\&

document nor scrip issned by the
International Trade within the token

scrip issued
cant to the

MANUFACTURER

NAME

(OR

Kingdom established
export license.
The

be forwarded

are

agent

upon

AUTHOR,l.?EJU AGENT)

£. -0ATE OF APPLICATION

commission agent to act
the agent of the manufacturer.
or

into consideration an¬
theoretical
illustration, a

other

U. S. resident

buyer representing
English merchants buys

several

3. APPLICANT'* REFERENCE

dresses

NO.

man¬

Taking

t>jr 'the appli¬

United

Kingdom importer ior attackmen^ to the latter's import license application.

*r—

)UN AmOY;Ej>

re¬

ufacturers which specifically give
authorization to the forwarding

this

export quota for the United
herein may be used as

nor

Forwarding agents,

commission

presentation of letters from

REQUEST FOR CERTIFICATION OF PREWAR EXPORTS
Office of

the

acted

belongs to the manufacturer and
only the manufacturer is entitled

can¬

ceive

TO THE UNITED KINGDOM

only as a commission agent, he
could not apply for certification,
because the established
market

TRAOE

SUPPLY BRANCH

the

given.

demonstrated

FORM APPROVED

DEPARTMENT OF COMMERCE
ANO

clearly that such markets were
developed by such individuals or

united STAT.ES tor .AMERICA
INTERNATIONAL

Individuals acting as commission

his

"REQUIREMENTS

authorized

Kingdom, but who are Trade before
consideration
manufacturers, may be eligi¬

other individual to apply for

firms

firms and not by a manufacturer.

any

OFFICE

markets

the United

manufacturer wish¬

authorize his agent

may

established

of the over-all effort of the Office

International Trade to reestab¬

basically for U. S.

individuals

had

indiscriminately from

any

manufacturer who will sell to him.
The account is carried with the

ADDRESS

manufacturer in the

U. S, buyer.

name

of the

In addition the U. S.

buyer, >when facing Orders, re«4
quests

the

■

OESCR IPT-IQN

JV■

;to

COMMODITY

GROUP

fonw.arding

responds

with

number

case

upper

right hand

the

Form

IT-558'

assigned by GIT. The

fitst

part of the number
sponds to the commodity

number

the

corre¬

group

assigned to the item at'

time

added

the ap¬

proved list of items subject to the
British Token Import Plan. The"
second

part

numerical

Of the

case

number

number.

For

ex¬

ample, the number 17-601 in the

right hand corner of the
would
indicate
that
the
issued to cover the im¬
portation into the United King¬
upper

scrip
scrip

was

dom of lawnmowers for the Brit¬

ish Token Import Plan. The last
part of the number, 601, is merely
a numerical
case number.

The
and

scrip is non-transferable
non-negotiable. Scrip issued
given manufacturer' cannot

transfered

to a manufacturer
product, nor can it toe
used by the holder for ;a product
other than the one
specifically
listed on the ""Request for Cer¬
tification", Form lf-558.
of another

When

certified U.

manu¬
,

United Kingdom importer he #m>
wards to the importer sufficient
scrip to cover the order,. The Brit¬

the dresses from the manufacturer

the

which is inserted when the
Form IT-558 is certified and cor-'

facturer receives an order from .a

agen-

•cy»^ The fprsvarding agency, upon
orders^

NO.

-'>*r

•

number in
corner

manufacturer to ship

thedresses lo
COMMOOUT

in value to $2,550. However, if the*
order was for $2,569, then scrip

manufacturers,

turer's

manufacturers who sold to British

Kingdom during the
base period, 1936, 1937 and 1938,
may apply for certification under

Import Plan with

<7-8-46)

equal to $2,575 would be required.'
a manufac¬ The
applicant should indicate in
agent or ex¬ section 7 Form IT-558 the
denom¬
porters who operate as described
ination of scrip desired. Sample
above.
Any other individual or
scrip Is. shown below.
firm must present a letter of au¬
Scrip issued is identified by a
thorization from a manufacturer

ify

accounts in the United Kingdom.

United

the United Kingdom is only part

IT-558

pation under the plan.;

Any manufacturer who export¬

ty coverage under the plan.

FORM

It is impossibletoindividuals
1937 and 1938 to the United King¬
dom and should explain in detail or firms to be certified under the
his reasons for requesting partici-- Token Plan unless they can qual¬

Commerce, three copies
IT-558, "Request for Cer¬

ed items

pressing for additional

Token

scrip can. he.
forwarded to the British importer
:at the convemehcei Pf the :&I.
exporter.
Scrip
is ; issued
&n>
twejnty-five, fifty, qne hundred,;
five, hundred, one thousand and
twenty thousand dollar denom&na-.

stated

Who Can Apply for Certification

relaxations and greater commodi¬

This

ap¬

Government must

below.

deed, only token shipments. How¬
the

tification of Prewar Exports to the
United Kingdom," which is shown

United

Kingdom prevent
the'British Government from al¬
lowing larger imports at this time.
The shipments allowed are, In¬
ever

of Form

ent .austerity conditions and the
limited foreign exchange balance

has

Government

the

International ;Tradei Pepart-j

ipanufaetprets who operate oh £

limited scale.

conven¬

that the

which sold dresses to his select! tions. Each
denomination is erf a
manufacturer, but who, neverthe-,
clientele in London, the NewYqrk." different
color, jFpr <exampte, f5he>
less, believes that he is eligible;
firm is enUtted To n quoth Tiased twenty ^ivje^to:
certify .eachlhahufaeturer's state-1 for participation under ^
S(^p IsyelloWr
ment
as
ton such sales, as the British cus¬ the
to «his
prewar
export through other means, should
fifty dollar jdeeP; pink,.,etc.
re-j' tomers belong to the New York
trade with the United Kingdom quest a determination of eligibil¬
! Yalue. of the acrip forwarded
In this instance the manu¬
and also calculate the quota to' ity from the Office of Interna¬ firm.
to the British importer need toe
facturer did not make an export
which each manufacturer is en¬ tional Trade. Such
requests should
only to^^ thev^ near^ twenty-fiw
sale.
The export sale was made
titled. Each manufacturer desiring
fully identify applicant's export
dollars. To illustrate, an order for;
to qualify submits* to the Office activities during the years
1936, toy the New York firm.
$2,561 would require scrip oqual

British

United States to the United King¬
dom during the years 1936, 1937
and

dominations

propriate value

To qualify under theBritish To¬
The United Kingdom imjports ken Import Plan, manufacturers
lishment of a quota under the
from the U. S. ton tgiven item' must establish the fact that they
(were
are limited to 26% of the value of
exporters to the Unite#' Status of Individuals Other Than Token Import Plan. However, if
Manufacturers
the U. S. exporter's average an¬ Kingdom during the three-year (
v. J
*' the U. S. manufacturer made do-!
mestic sales: to%a Kew York firm
nual value of expprts from the period 1936, 1937 and 1938. The
Any Individual
Is -not a
on

1946

^qualify the :U#S.V^mantifacturers

International' Office of International Trade.
;
To illustrate, ifa U. 3. dress
Trade, stating that the manufac-.
turer lias given permission to .a manufacturer sold 4resses fo a
particular individual to apply for customer in Lodon, only the U. S.
quota to which the manufacturer, manufacturer1 is entitled to the
is entitled.
exports as a basis for the estab¬
\
to

Operation of the Token Import

'Sept. 19, and 36

!Ebuisday, j&gx^nber4-9j

and ships the dresses to the ^mr-; ish importer presents the scrip ,to
chaser in the United Kingdom. In the British Board of Trade, to¬
this case the U. SL touyer is <eli$- gether with his request for m
ble,for the quota and not the import license.
manufacturer

or
the forwarding
the accounts ha, the
United Kingdom belong to the
U. S. buyer and not the manu¬

agent,

mmmmm

to AHNUAt PRE-WAR
EXPORT? OF DESCRIBED .COMMODITY 70 "Tt(t VNITED KINGJDDM

facturer
YEAR

(No.

QUANTITY

of pnite)

Form IT-558,

'). n;<"

AVIRAGE

wwee*»

"iwrWH .k.wi-.1

«aae

VALUE,.....

nwmm

INDICATE THE DEN

f TOKEN

mm warn m

■

EXPORT

em *

OUANTJJY.

VALUE

•

v?li:i'4

20,00.0

wpve^meem

"u.

QUANTITY

SCRIF

(OFFI^IAH
ISSUED

filltT

THE

:
\vpij, &*>-:,

'''7

•«"'

«•

-J

(

AV'/

jo,ooo

'•

■

•«

"..w- ; • .'v. ■;
■'
,

5,^OD

5°

■

....

■•I

j
...

•

.T.y.i v.--\'t'

Lf??JJFy ™AT TH? ! FORMAT lONCPNTA I NED

'y.

How io Request Additions to

Upon rec^pt pf ^omi
©igfhie i4st
the applicant; fasr yeri$e&
; Manufacturers
nho exported
tto eligibility and .fibie average
yalue of exports to the three; •products to the United Kingdom
years, 1936,-1937^:ahd;1938 Is cal^ ; duringthe base period,other than
cinlated. Two-thirds of the result¬ those on the approved Mst, may
ant figurels thew^dne of the com«^ request; the indusion pf} their
mpdity which can be imported products in the Briti^i Token
Into the. JJnited iQngdpmiPi .1^5. Import Plan toy writing to the
Commodities Branch, Office of In¬
; If the applicant's request is ap*
ternational Trade, Department <xf
proved, GIT will certify; the apr
Commerce., Washington 25, D. C.
plicant as toeing eligible for
!

■

j-ff';

Scrip issued for 1946 under the
Token Import Plan will he valid
and accepted by the British Board

form.

AMOUNT OF

OIT

fOR
(TOKEN .EXPORT

VALUE

■'

NOT

■

VALiV WITHOUT OFFICIAL

;

CERTIFICATION

HEJIE3JI 1$ CORRECT" AND COMPLETE fO "TaE $EST OF AfY

'-C
1*019

import Jiccaiaq,

submitting the formr, j
must he taken to include;
qnly one eligible commodity on, Scrip to 1947 will be issued'ha
each form. Administrative ppera-j January and will foe" valid torn
tiohal details prohibit the handling: Jam ;1, JW47 for
of' more * than one
commodity jper' the year.^;:"-" ^
■

wwHr

mrrm

SCRIP

OEStRED

<«.

^request; for

scare

e*ep

dOi.Of AVJERAGE............

;

wwp

Thus, .when scrip, together .with

is presented In |jon3pn» the
^Request forCerti- • formation contained ton the topoit

1936, 1937 and .1938 of the desired;
^MpmOdity to the United King-!

m1'.!

...

applicant's name, commodity to; Form IT-558. v-r
which certification is requested,
Validity Period of Scrip
.and annual prewar exports for'

193®

dom.

Trade is airmailed to the
British Board of Trade in London.

fication of Prewar Exports to the license request must
correspond
United Kingdom," requests the Witi the Information reporikd wk

■J, "

forwarding agent.

Certification Form

(So deJJere)

1937

of each Form "IT-558

tional

VALUE

1936

One copy

certified by the Office of Interna¬

par¬

$N OtftEDGE A N 0

Such requests should be prepared
ticipation in the Token Plan and;
around the following nutline:'
will return
JT-558 to the applicant Together X* CVmrnabdity for w4)^ebnrid«5rwith scrip equal To the amount ef
the 1946 quota.
„
.
...

'"C.fir;-'

ation is requested.

% fJatee oftousiness findicate)
a.

DATE

SIGNATURE

w.t)
•GJfO—Com

Manufacturer

to; Export mpartment^
p. i

Scrip is issued under the British
Token Import Plan merely
to

c.,Forwardmg Agent
d. Export Merchant

Volume

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

164

Trade Association

f.k Commission

OtherJ

Importance of the British

Merchant
*'V'

market

your

total

MV'--■ Port trade: ^

the

of prewar estab¬
channels, products
which have been placed on the
market subsequent to the base
period, 1936, through 1938, .cannot

■' • ■

^ - ■ >y.

A form incorporating the above
exports of de-"
scribed commodity to the U. K. points is being prepared to facilir
a.: Applicant's exports to the late the filing of requests for ad¬

3. Annual

prewar

knowm
U.K.
a*

(indicate)
Private customers

d. U.K.

warded

of
Trade with U.K.

and through the

Applicant's

when

further

it
re¬

sum

exceeds

export trade has now become
matter of real importance,
This : raises"
a
third
point.
Hitherto we have been accustomed,
in

One

states

united

their controls further. The Office

tinue its efforts to press for

ponf

tional' relaxations

;

addi¬

^apitUy^a^

debtor and not

really sound
I

ports

the

commodity

scrip

entitled tb request

for token

the United

Kingdom

which this

scrip is

from

port permit

this

nature different to those

afford

can

primarily -for
with

for

arvd tvo/iqq

shipments

for

export market

the

.during

year,

1946#

Director

■'f'.

IT*55?

unjte0

STATES

IT Serif Jtite

america

office

international

and

supply

eigh

trade
branch

Value?- <500.00
The

the

holder

commodity

scrip is entitled to request

this

the

from

United

for yhlch this,

markets

most

an| im¬

shipments of

ifingdoro for [token

#jF

scrip is issued£h$

manufacture

pre¬

Borton,

little left for the free ex¬
port market.
'
-L
lV, [
*
j
-

Director

sell

pa^..320|)).

foedstuffs in *the
of the difficulties
regards these is to persuade
the growers to part with them'.
world

home

market.

The

shops, the timber in

this

Unfortunately, as I
of availability

have said, the Jack

our
requirements in
American markets is such

the
Sas>r«0W^te|iy. upset thje

are

used to

that

let a certain
exports satisfy the

obliged to

volume of

ge| from; let me say, Europe are

non-

at; the * very Jatest,; as: o*ir
dollar loans are exhausted, .and
.

general prefte^ly vuiueh • sooner than that.

our

into different markets by

an ex¬

Glasses ot Goods Exported

■

•

large extent upon the loans
from the U. S. A. and Canada, be¬
cause 50%
of our imports come
from North and South America,
whereas only 14%

tion pf both exports and importer
We must try and get nearer to a
balance not.only of our total trade

hut our hard currency trade as

of our exports well, and unless
that

in the

succeed in

go there. We are therefore using
the rest of our exports for one of

two we shall find ourselves in

three things. Either piling up an
excess of immediately unusuable

drastic action jnPF&F to

foreign currencies ~ soft curren¬
cies—which we cannot use be¬

doing

year

the

position of having to take some

parry

come

great

importance. It may mean a
work on your part to
expand those exports, but I can
little

assure
a

:r-i

you

that it wili saye you

big headache later on. I need

not

say

that

always at
ally

wi-

curious contradic¬

consequence

have to of¬
in order to

try and extract the food needed
either by ourselves or by those
areas for whom we are responsi¬

example of that is the
Siam and Burma. This
again means a direction of ex¬
ports—particularly of scarce con-*

ble.

rice crop of

Many industries urge upon
need for them to export

information

they see golden opportunities /of
which they cannot take advantage
because the goods are not there—
having been directed to some
more esesntial market.

time
better supplies
goods for their own

workers,

order

encourage

tual type of

There is

goods we export.
constant tpgrof-war

ability

trickle

tried

the

maintain

of exports

best of-

at least

to our cus¬

goodwill, but that,
a yery satisfac¬
tory public for those who are
anxious to build up and expand
pur

preserve

of course,

their

is not

overseas

at from
there

trade.

But looked

national point of view

escape

from it.

Raw Materials Shortages

they press us for
of consumer

have

tomary markets in particular, |to

yet at. the :same

and

».

We
our

the

Department is production. This emphasizes the
service—individu¬ need to pay attention to the ac¬

collectively—where it can

tion.

across

your

j do not wish to be misunder? help with advice
.itf'y:

fer inducement goods

We should make people understand that exports are not some-1 sumer

and have first two alternatives; neither of
which bring us in the immediate
to he got instead from America,
imports that we need. These forr
ih addition to this is another type
eign exchanges which we are ac¬
of disturbance due to the war,
cumulating are not at present ex¬ that they should not cultivate new only emphasizes once again the
that oMhe exchanges. Many for¬
changeable for hard currencies— friends, wherever they may be, importance of the direction of our ]
eign currencies are not now ex¬
who show promise of becoming exports
1
changeable, for dollars at all, so they are soft currencies,
j But nevertheless there must, of'
that their receipt does not help [ ^ We are» therefore, owing to #ie pld friends, f; [do ask: ^he Federa^
tion (and others represented here) course, be some relationship be¬
us with dollar and hard currency i oroed
devastation,
rapidly |o set on foot enquiries .and to tween the volume of exports and
purchases. This means that we by i; war
of goods fpr the home mjarket,
must try to get for our exports spending our dollars from the Stimulate analysis which wilj lead
exporters to exercise the wisest particularly in those consumer
the type of foreign exchange that loans, and when those are spent
selection between possible^ mar¬ commodities of which there is an
we 'need tp obtain immediatein|- there will be no more available
kets in the light of our great need acute shortage. This means that
ppyts.
/.
f. except what we can *eam,
for certain currencies. I think you we not only have to regard the
It, Js therefore pf great impprr
& fe gud /Canadian Loans And tance now that we- should pay will reach the conclusion that to volume and direction of exports
also
the actual
classes of
Imports
attention not only to the volume increase our exports to the West¬ but
And here we
At the moment we are living pf exports but also to the direct ern Hemisphere is an objective of goods exported.

not «ow obtainable there

the moiiey

J^y get.for them, however, high
Price may be*
J
a

should be, and indeed must be as
soon,

nothing

little

with

goods like cotton cloth;,
tension of export licensing or
other controls. ButT helteye thOte thing taken away from the home which have to be devoted to parte rponi for a conscious .and consumer but rather a means Qf-iticular markets again decreasing
deliberate effort on the part of obtaining for him some of his | the amount available fpr free exmanufacturers and exporters to mPst essential meeds. That is, of]Port.
^
,
t
All these pomfhetmg ponsuqier
take stock of the possibilities course, prpvided WS pan bbtaih J
imports in exchange for them. If claims, each one of them urgent,
open to voluntary action. I do
not ask them to neglect the ob? we fail for the reasons I have have to take precedence „ to the
vious needs imposed by the type stated to get a quick return inj normal building up of our exof business they do; nor do I sug¬ the form of imports, then it means i P°rt trade even in ojir old tradigest that they should forget old that though in the future the tional markets, and that explains
friends—least Of all those in the home consumer may do better, at I why it is that our exporters often
Commonwealth and Empire — or the present he will suffer. That j feel themselves frustrated when

mediately.

what we shall get
exports at any

particular time. Unfortunately

one

else using the foreign
to buy articles from
other sources which we need im¬
or

exchange

in return for those

world markets. Things we

giying

and

guidance.. It is not the intention of
the government to force exports

war,

only half the story.

When we stipulate an overall in¬
crease
of 75% in exports, that
does n<?t define

buy with them! stood

shortages

things we need, or paying off
some
portion
of
the
sterling
credits
accumulated during the
the

either.

But that is

cannot

cause

things we need to im¬

port will not necessarily be the
same

the

also; plays a considerable part.
are all aware of the
apute

the houses or the petrol for pur
cars are purchased by exports, or

Essentials of British Export Policy
of

aspect] of
experts which

further

You

the

fruit in

•nr?

(Cphfiniicd

direction

kinds

There

this

purchasing medium for
are
just as much part
when there is
of our home standard of living as
are: the
goods we produce and ^ they can buy

Requirements and Supply Branch

19013

minimum of supplies, and this
that there is sometimes

very

imports,

John C.

must

needs of our

means

exr

bu^it to regard them, that is

there are certain of
our customary markets—particu¬
larly Colonial and Dominion —
which look to us as the suppliers
of classes of goods they do not
themselves manufacture. Ijn these
cases we are bound to give them

clusively for export without at¬
tempting to flbat them or sup¬
port them on a home market. And
this applies especially, X think,
to those markets where we can
get dollars for our goods.
Exports in the sense in which
we

Swe Uthe year . 1046 f

lines

is the
certain of

that

and

exports. Just. ns

people

own

carefully. to

new

Exports

look after the vital

merely whether they
can
take the overspill from our
home market but whether we can¬
not

port pernifc

here

direction

these

ascertain not

:.J

;J DEPARTMENT OF COMMERCE ,'

iihmm

forced

We must therefore examine for-

FORM

Direction

But there is another factor that
comes

that

export market, if others are
pared to buy such luxuries.

gppds most useful.
Forced

any reason why w£
deprive ourselves of the
possibility of creating a useful

.tRequirements and Sypnly Branch

19015

should

crucial

most

people such, for in¬

our

commodity but overall, each party
getting the increase in the cIqss

quantity in the home market,

but

Borton,

•

luxury goods,
profitable to
us from the
export point of view,
it may well be that we
cannot
and do hot want to afford them
in

John C#

■

which pre the t most

issued for the value of
.

Instance,
as
decorated
pottery
ware, which is pleasant but not
essential, the bias has been in
favor of exports. This has given
us a
balance not commodity by

the

If those goods are

the

.as clothing, the bias must
strongly in favor of the home
consumer. In other cases such, for

overspill into the home

round.

Ijn-

? jap

stance,

likely to endure and is

market rather than the other
way

holder

but

goods

'HI I1J-HJ

The

;

some

ex¬

not

markets

types

overall.

hpme market, may it not be sound
policy for us to make such good£

yalu^:^ 425>0O

the

increase

home

and

individual

double

tried

goods and share the re¬

sults of the increase between

There is today,

explained,

needs of

require

branch

and 5uppu

have

demands

way.

have

folw

creditor nation—

one.

this

balance of payments problem, and
if we can find in any suitable mar?
ket abroad a demand for
of

international trade

requirements

two

materials.

and

goods,

IT Scrip No.

america

whether that proposition is still

from

which

;

vCWWC

I)CFA8TM£iir
office

constantly hears the pro¬
that exports require a
home market upon which
be founded.

these

capacity to produce,
the point of view of

fore, as the only body capable of
taking a broad overall view, to
try and hold a wise balance be¬
tween these two opposing pulls.
Neither side can be allowed to get
away with it! We have therefore
sought to deal with the matter

position

can

our

It is for the government there¬

;We must ask ourselves in the

;

from the home market.

willingness of the British to relax

Sipce the BritishTokep Import

both

light of pre-war expert
ience and particularly of our ex¬
perience before the first war, to
consider exports as the overspill

basic

total

labor

the

light of the altered circumstances
of today— the fact that we are
a

Plan has as its primary objectives possible.

4T-559
<7-8-^6)

balance of payments
the equally urgent
supplies for our
people in the home market.
One thing is quite clear, that the
a

and

need to improve

v So the second point I want to
emphasize is that the direction pf

FOR*

attaining

overseas

they

Status of >Tew Products

Supply.

between the national necessity of

•

indication of the

117 items

Office of Inter¬

pf Internatipnal Trade wjlf

of U.K. on U, &

.Direction of Exports Important

may

originally acpyered pnly. 47 ftem?

national Trade's Current Export

product in U.K.

Tx Reliance

indicated

has

nor

be expected. Howpyer, the fact that the Tokep Plan

Bulletins.

surrounding
^original' efforts- to.' infrpDescribe facts
duce

been

the press

announced through

possible to predict the

restrictions,

laxations

Importance

'"T.

control

national
Trade
to
the
British
Board of Trade, AH iadditfons will
be

Britain Import Controls

ations will be made by the British
Government in the U.K. import

Office of Inter¬

the

today.

you

Future Relaxation in Great

It is not

joint

extent to which additional relax¬

approved list will be for¬

the

;

Subsidiary Company

Other

iionw Office in U.K.

c.
o

make

plan.

in the task I have ventured to set

our

•

request through their trade asso¬
ciations. All requests for additions

import Merchants

b. U.K.

articles

similar

organization

trade

be considered bnder the

|J.JKv#uruig -the base years ditions to the list of commodities
subject to the British Token Im1936, 1937 and. 1936. ;
'i h. TotaliJ; S. jExpprts tp the jpprt
U.K. jdurihg the base years
The effecfeenessi of presenta¬
1936, 1937 .and 1933, if tion will be increased if producers
Distributative

reopening

lished

ex-,

3239

now

come

major

pur

that is the
It

|
;

to what i? one of

headaches today and
material shortage.

raw

affecting both our

capacity

produce for the home market,
and for export. The latter is the
to

(Continued on page 3240)

Thursday, December .19, 1945

FINANCIAL CHRONICLE

THE COMMERCIAL &

3240

Policy §gg Economic Ontlook for 1947

Essentials! of British Export

The other point J want to stress
just must maintain and If
is the need to prepare at once
possible—if we can get the raw
more affected, however, since we
materials—increase our exports or for a sharp competition in the
must retain sufficient* raw ma¬
export field. The easy seller's
we shall become a real cropper in
terials to satisfy our own urgent
market will not last long—not
a year or two.
heeds before we can allow it to
It isn't necessary for me to add, nearly as long as we and others
would like—and we shall then
go into exports. It is more likely I am
sure, that the only way to
that the expansion of our exports
have to retain our place in our
get more both for exports and the
tvill suffer seriously from this
markets and win new
home market is to increase our present
markets by the price, quality and
shortage
over
the next few
production wherever the raw ma¬
,v':fhonths;./Z^
terial position allows it~-as, for design of Our goods.
The steel, timber and vegetables
That means economy and pro¬
instance, in the case of cotton and
bils
duction efficiency will be all im¬
position are probably the woolen
goods.
three most difficult Timbers/not
portant as, too, will be Design—
I have tried to explain to you
so much for direct exports as for
the importance of which has been
the basis of our national plan for
/packing
and
similar ancillary
thoroughly demonstrated by the
Services. All three of these ex¬ exports. For its implementation remarkable success of the Britain
we must depend upon the co-op¬
port demands conflict with most eration of industry. We are in the Can Make It Exhibition.
We have before us a very tough
Urgent home requirements, and it
is probable that we may have to light of the now more stable labor job which we cannot achieve by
situation working out targets for
cut still further the allowances
any slipshod or take it or leave
for export in these goods. Steel each industry which we want it methods. We have to? /go put to
has already been cut severely so your co-operation in f olio wing sell our goods and to make our
'/as not to hold up the house and out.
goods attractive to the overseas
We must always remember that
factory building programme and
buyers, and that wants a lot of
our
export market is not static hard thought, imagination and
to allow sufficient for our home
! demands
for machinery of all but ever-changing and as a re¬ hard work, too.
7
sult of the war it has changed
For many months and perhaps
hinds,
including that for the
very greatly.
mines, for agriculture and trans¬
even years to come we shall be
Quite new lines of production beset
port. There is no immediate pros¬
by all sorts of difficulties in
like penicillin, radar, gasturbine
the field of raw materials and in
pect of our being able to make
engines, to take 3 instances, have the
good the deficits from imports,
shortage of labor in particular
come to the fore as really valu¬
though we would gladly do so if
industries—as, for instance, - the
It were possible, nor is there any able export commodities, and we textile industries. There is no easy
must encourage these as much as
4 j&ort term prospect of anygreatly
cure for these
difficulties, they
our
traditional exports.
Others
increased home supply. We have
are
unpleasant facts which we
like coal, for instance, have al¬
therefore to accept the position
must try to put round by our in¬
most
entirely disappeared and
that we .cannot produce: enough
genuity and hard work—there is
their place must be taken by
steel to satisfy our very heavy re¬
no other way.
others if we are to attain our
We in the Board of Trade want
quirements without some imports
175% target.
which we cannot at present get.
to help in every way that we can
Wherever these new sources of
We have examined with the utbut we must keep always before
jnost care the allocation of steel exports show -themselves we want us the needs of the consumer and
to give them ail the encourage¬
fOr each end use, and done our
the overall national policy of the
test, to cut out inessentials and ment we pan, and if we can have balance of payments which is the
to preserve the supplies for the early advice of them, we can, I cardinal necessity of any future
jtiost essential of our manufac- think, help in building up an ex¬ prosperity for our people. I am
tttrers, including some export of port trade in them.
sure that by co-operation between
There is one point that I would the
machinery, cars and so on.
government and the two
As regards timber, we are, of like to mention particularly with sides of industry we shall be able
cOurse, almost wholly dependent regard to imports. I have dealt to succeed provided that through¬
upon supplies from overseas—our with the raw material position out we study each other's point
k own woods and forests have been but there are other manufactured of view ahd co-operate with a

(Continued from first page)

/ Wer

(Continued from page 3239)

Back - of all, lie:
satisfied

(1J large un¬
shortages,

demands and

heavily cut during the last

6 years, and there is comparatively
little left unless we are to destroy

woodlands altogether. But all
the
world wants extraordinary
our

^ods in short/supply which form
part of exported products which
it is possible in certain cases to
import into this country. If in
any
such
cases
any
exporter

Dominion Bank Warns

quantities of timber for repairing thinks that he can obtain such
the results of the' last 6 years goods from abroad he should let
1 devastation. We are getting what us know and We will do our best
we can, but some of our main to help him in the matter of for¬
The entire Anglo-Saxon world
sources for softwood like Russia
eign exchanged—however scarce it must hurl back the industrial war¬
and Finland are using, nearly all may be, for we do not wish for¬ fare how threatening both gov¬
their supplies for rehabilitating eign exchange or other difficul¬ ernment and law or "civilization
:their own
t Pi £'# 6^ their ties to stand ib the Way of such is lost," C. H. Carlisle, President
desirable imports.
neighbor^
of the Dominion Bank, warned on
I don't think manufacturers are Dec. 11 at the bank's annual meet¬
of hardwood, of which we ob¬
tained
large
quantities
from slow in coming forward with such ing at Toronto. Pointing out that
.America before the war, but today requests, but I want to assure in the six-month period ended
it is almost impossible to get any. them that we shall welcome any Oct.
31, Canada lost $29,000,000 in
We
are
applications
for
import wages during strikes that involved
getting actually about such
one-tenth of our pre-war supplies licenses and do our utmost to
119,000 workers, Mr. Carlisle as¬
from that source.
facilitate the importation, wher¬ serted
that
industrial disputes
You are probably all aware of ever it is going to expedite or
should
be
brought before the
the linseed oil position and its assist our export program.
courts to avoid such unnecessary
/repercussions on many manufac¬ : There are two general points losses in wages* production and
turers such as paint, linoleum and which I would like to stress in re¬
conveniences to the people. In his
so forth.
lation to our policy.
remarks he said:
■

Against Labor Strife

■

■■

These
own

that

are

our

control, and it is fair to say
are getting a good share

the

matters outside

available

but that

world

surplus,

unfortunately, is far too
satisfy our needs.

small too
I

hope that all of

have been
able to study the series of articles
you

material

supplies which
are
appearing in the Board of
Trade "Journal," as we are most
on

raw

that

only
attain the / volume of export of
manufactured goods that we must
first

The

have if there is

can

general

expan¬

sion of world trade compared to
pre-war. Pre-war we had 20% of
the world trade in manufactured

increase that by 75%

goods,

without

world

in the-total

increase

trade

would

mean

our

having 35% of the world trade in

that industrialists should manufactured goods, and that is a
fully informed as possible figure obviously impossible of at¬
only of the present facts of tainment. If, therefore, our 20%
the situation but of the prospects is to be increased so greatly it can
as
well so that they may plan only be by an increase in the
their output accordingly.
total of world trade. If that goes
anxious

not

'/////[:// 7/7 Markets^;.'7S7777S
Hardly

day

Board of Trade without

resentation to
of

this

that

the

some

rep¬

passes

that the export

product

urgently

needed at home should be stopped
or

severely restricted, and in each
there

case

noCtdoubt

are

for

strong

arguments

maintaining

the

by 75% then if

retain
20% of it we can get our 75%
increase, and that is why we are

Conflict of Home and Export

anxious

should

good

result

countries

expansionist

policy, and > why
cussions.

all

that

we can

hope for a
the ITQ dis¬

from

;i/I/;: may

say

series- of

talks

that

the

have

;

"Today fwe have over the Anglo-

present

proceeded

most

both government and law. Such a

threat must be hurled back and

kept back or civilization is lost.

Nothing

plainer than
strike weapon is
being overworked."

"This has been made

will rise,

while perhaps fats and

of which
nation

ume

exports and a more

^anore unbalanced trade. > i :y

for

there

real

hope

resulting international policy
which
will
encourage
a
large
and world expansion of trade to our
/ t > and iother countries' great benefit.
a

than

to give to a foreign
secret and vital informa¬
was

The Commissioners made it

tion.

clear that Communism is the seed

bed

stealthy,
Canadian

the

conspiracy.
The
poisonous
plague
of
has

fallen

many

localities,"

said, "and
spread
to
be

shown

deny that
;

♦,

that

have reduced the demand

for currency.

Thus we have cre¬
ated a strong tendency toward a
Finished goods prices are
low compared with raw materials. reduced purchasing power of the.
dollar.
This
is
the
inflation
(Flour may raise, while wheat
declines;/and cloth rise, while cot¬ potential* It is, primary inflation*
^The. essential point is that it is
ton and wool do not.)
v
(3) Building activity will not something done to money.

decline.)

and oils and grains may

(2)

This potential inflation has been
to become effective, in

recede, though prices of building

allowed

materials and labor may.

several ways, so that effective in¬
(4) Interest and rent are low
comparedwithwages,, and the in¬ flation, or price inflation, is well
along. First, it came in govern¬
comes of savers and investors will

rise, while money wages will soon
There

will

ment bonds—where there has been
a

be "stabilized."

also be

tendency

vertiable

Then it

came

commodities

for the quality

speculation
spreein farm prices, both
and land,
and in

of goods and the
(The price of labor
productivity of labor to improve, money wages.
while prices and money wages are has been pne of the characteristic!
inflation peaks in this inflationary
not raised in proportion. Thus the
so-called
wage-price
spiral
is period.)
Thus the vast potential inflation
likely to keep on spiralling.
is likely to have its way irt 19477
with prices higher at the end than
Significance of Coal Strike
in the early part of the year.
The
significance of the coal
Certainly there will never be a
strike is, I think, not that it will
return to the price levels or the
intensify a business recession in
1947, but that it will turn the cur¬ purchasing power of the dollar as
/
rent period of irregularity (which it was in the 1933-39 period- <
A point which 1 would stress is
I had expected to continue into
that under our present monetary
early 1947) to a sharp but short
setup,
to
is

reserves

constitute

limit

Issues.
There
nothing definite or objective to
our

currency

prevent what is popularly known
as

the wage-price

these

spiral.

circumstances

justment

low

the

which

the

Under
malad¬

is
high can be
corrected readily by raising the
(The main uncertainty is the pos¬
low price.
That, I think, will be
sibility of large strikes in the
the general tendency.
Spring.)
\
In 1919, the inflated condition
Probably the coal strike will
and

one

price

other

somewhat increase unsatisfied de¬

was

largely

mere

"credit infla¬

tion"—bank
deposits based bii5
sires, and shortages, which tend
commercial loans.
Such inflation
to expansion.
Probably it will
is easily and quickly liquidatedincrease business confidence, by
The credit is elastic, and the; infla¬
causing a general recognition of
tion is; temporary andP cyclicalthe need for more equal collec¬
Now, however, we haVd a cur—
tive bargaining and a.limitation
rency based on a monetizatiOij Of
on the monopoly power of orgaiithe public debt, the like of which
ized labor.
has not been seen since the days
of John Law and Mirabeau.

The Basis for Conclusion

The

deposit currency is inelastic and
My conclusion rests upon the
enduring. The only way out seems
following rather extended chain
to be to use it!
of reasoning,. some of the links
being positive and others nega¬
Inflation Phases
tive.
Isn't the basis for a correct
There are two phases of the
forecast always found in laying
current inflation:
First we went
aside prejudices and eliminating
off gold, and inflated our note and
erroneous premises?
deposit liabilities.

Then

in-

(1) My first point is that a most Creased loans, partly guaranteed
today is to believe
by the government, the loans be¬
that it makes no difference what
ing based on inflated prices, or
you use for money.
This is the depreciated dollars.
John Law, or Keynesian approach.
7 The devaluation and depreciaIt comes out first iff thb AVertioiT ef the standard, dpljar will
worked analogy between the pres¬
probably never be corrected. The
ent and 1919-20. I Some similari¬
expansion of loans, however, will
ties exist, but sO great is the "dif¬ in due course
be corrected.
This;
common error

ference in the condition of money

Mr. Carlisle
attributed its
educational
institu*-

many

Suggesting that there must

limit to

that the the value of a
dollar in terms of gold is at

currency
more

apparent in/ the recent exposure
of an espionage plot, the purpose

tions."

to these
demands we should rapidly find
ourselves with a diminishing vol¬
way

rise in prices, but some
it has any meaning.

that Can¬

added:

been

give

will, be at some such time as;19497/
and credit, that ;! think it far out¬
50, or whenever the usual exces¬
weighs any likeness! We have not sive ratios of loans to reserves and
ada cannot escape the influence of
only abandoned the gold standard to deposits
develop.
world conditions of a confused,
since: 1919, but have issued such
But no serious credit strain ex¬
unstable and dangerous nature. He a
vast excess of credit and deposit

products in the home market. But
wCre to

was

Mf. Carlisle warned

hopefully, and if they con¬
tinue in the spirit that has so far

ever

that today the

warfare

which threatens the supremacy of

Communism

industrial

world

Saxon

forecast, concerns the true nature
of Inflation.
Not only do many
economists define inflation as; a

The truth, it seems to the, is that
prices. For example:
we have so increased the quantity
(1) Prices
of semi - finished
of the currency, and decreased
manufactures are low compared
with agricultural products. (Metals the security for the currency unit,

dip in the November-December
figures, seen in the indexes of in¬
dustrial production, freight traffic,
and employment.
Probably well
within three months thereafter,
there will, begin a sustained up¬
swing in business, and a resump¬
national tion of thb bull market In
equities.

determination that the
interest shall prevail.

(2) The second error,/the cor*/
rection of which leads to a truer

and

far too

into the

(2) great currency inflation, and
(3) beginning expansion in plant,

equipment, and residential build¬
ing.
These
will be effective
throughout 1947.
Therefore, the predominant re¬
adjustment will be through expan
sion in the low items, both output

potential inflation of 1934-45
effective price inflation

the

paper

least
was

thre^ times as little' as it

in the earlier

bound to make

period.

This is

difference.

ists

now.

Probably it will/hot
prices of vari¬

until the backward
ous

sorts have been inflated to the

level of the others.

Farm prices
badly inflated; semi-manufac¬
now catch up.
Govern¬
ment bonds are badly inflated
7
private equities will catch up ir*
due course.
The price of labor ;
is
badly inflated; interest and
rents will rise to z equalize the
sharing of the national income. -'■■■■.//
are

•

tures will

End of New Deal Not Deflationary

Again, the idea exists that the
end of the New Deal is deflation¬
ary.

This notion completely fails
inelastic mass of

to allow for the

deposit cjurrency and so-called
liquid
savings which are now
available for use as "money." The
ending of the,New. Deal admin¬

In general a period lies ahead
which government loans will
decline and private loans expand..

This is already seen in the declin¬
causing a ing trend of bank investments and
impunity the propagation of doc¬ more rapid turnover of bank de¬ offset by rising commercial, in¬
trines which sap the rvery founda¬ posits and a greater investment dustrial, and agricultural loans.
tions- of-its'existence." rsl g £i * W u demand; ' These things' will turn f (3)- The third bksrc efrof W bft
a

said

"no

academic freedom, he
caq> suffer with

nation

istration creates confidence in the

future of business, thus

(IIMMWIWI'MU

[Volume

164

Number 4552

V'M;

•'».

iTHE COMMERCIAL & FINANCIAL CHRONICLE

cleared

away is the notion that
the national income is not
directly

boom

production,

the

most
significant
namely, the end

trends,

but

all

the

down.

goes

another

up,

This

leads

must

go
fourth

the

is
''created" by government borrow¬
ing. This leads to the closed-sys¬
tem economic
theory, upon which
is based most of the erroneous

ness.

Beginning

New

Additional Forecasting Errors

Deal,

and

war,

forecasting of

(4)

government

control

social

planning, which will mark
beginning of a boom in busi¬

the

recent years.

One

with the
increased by the

entered

casting. ;

forecasts

government

debt,: and sustained
manifestation is the view
that deposits (and
government
spending.
The
notes) based on by
government bonds are as good as credit of the sovereign was used
for money, and social
or better than
planning
deposits based on
business loans.
Some "feel" that largely took the place of enter¬
the expansion of bank loans is a prise.
This period is now passing.
menace.
the
They say it will cause / One great trouble with
credit strain oh account of excess thinking of the past decade has

inventories, that it means over§ production because of alleged ex-

that

been

regarded

>cess

national income.

capacity, and that,

now

that

John

government

the

mysterious
so-called

(a)

productivity of labor, there will
a lack of consumer
purchasing

power.

ernment

None of these pessimistic obser\rations appears to

to be well

fqiinded.? The expansion of
mercial

com¬

loans, accompanying the

return to

banking,

System of commercial

means that the use of the

nation's credit will be directed to

productive purposes.

Character¬
istic of the boom in government
between 1933 and 1943, was the
"creation" of credit currency by

bookkeeping

methods,

without

much regard as to the productive
use
thereof.
Now, however, the

borrower has to
that

will

assure

repay the loan.

lender

have the

means

Bank demand de¬

row

loans,

;

increase,

•

therefore,

the^ investments of the
which

banks,

largely

consisted of gov¬
will decline, thus
total earning assets

ernment paper,

leaving the
sustained, if not actually in¬
At the same time, de¬
posits will hold up, and the turn¬
well

creased.

of deposits will actually in¬

over

crease-probably

a great deal.
It should be noted that the "in¬

vestments" of the Member Banks

see no reason

to expect

any: early

credit strain, from the
standpoint of either the cash po¬
sition of the^banks Of-their re¬

goods

that

find

linens,

are

those

among

goods

aluminum and radios, both

are

two.

They
together,

vented complete liquidation.
The
New Deal was then followed by
the

war.
The result was the big¬
gest, if not the best, public debt

capital-goods

up,

remains

true

.There is not the slightest indica¬

tion of t^edit strain in the money
rate structure.

ment

for
are

and

savings

productive

investment

Banks

purposes.

advocating that the govern¬
debt held by commercial

ment

banks

should

refunded

into

long-term bonds bearing a 2^4%
At the same time, indi¬

'coupon.

vidual savers and investors would
be able

to expect

something like
14 % on their money, because? the
money would be so used as to
earn

Money rates do not seem likely
to go high enough to indicate a
-

major recession for

a long; while.
With commercial loans expanding

and

credit

rising, indi¬
cating that the period of war sav¬
ing is over, business is replacing
consumer

the great borrower.
This, however, does not suggest to
'my mind anything in the nature
government

deflation.

are

merely

liquidating the government
enterpriser.

End of

Planning Boom

What is the significance of this
movement in the use of

positive

understanding
"T;

industry,

ure

and

herring drawn

across

The 1947 Revival of Private
;r

goods,

year.

re¬

Again, note that it is produc¬

vived private enterprise. In 1947,
instead of Federal public works,

tion that furnishes the basis both

there will

for demand and for consumption.

large volume of
private plant expansion.
Instead
a

The

dividual spending will rise as gov¬
ernment spending falls.'^The new

since 1933.

It has been govern¬

and politics that have been
booming. Now it is my judgment
that, aside from a brief period of
readjustment, it will be business
ment

will boom.

The

depression
likely to be a depres¬

of 1947 is

sion in government,

and it is the

employees of OPA who will be
out of jobs.
The
the

foregoing

creation

rests

upon

regarding
income

misconception

"production."
both

error

national

When

desired,

and

of
object is

held

worthwhile, by, free individuals,

approaching de-

control^ of the building industries,
the mere abundant supplies of the

basic building materials, and the
development of better bases for
bank credit for building purposes,

(5) The fifth error, is the notion
up inventories is a
dangerous, perhaps a fatal process.
that building

The

that

demand

increase as
inventories increase. After all, in¬
ventories are capital and are re¬
quired for production.
And pro¬
duction is the basis of demand. It

part of the true understanding

of business to recognize that in¬
ventories

lation
Times

significant with re¬
and shipments.
change,
but
such

are

orders

may

truths remain.

Since when did it

become bearish to build up ade¬

quate inventories?
How can a
pipeline flow at a maximum capa¬

city until it is full?

way.

found

were

the

hands of the government,

includ¬
cotton. Now we

ing such goods as
find that the condition of demand

there can be.
The greater the real
production, the larger the real in¬
come, and therefore the purchas¬

has cared for

ing power.

that stands in the way of a true

Broadly speaking,

product constitutes

one

demand for

another.

flation

arising from

de¬
allegedly

fixed "national income."

any

The

na¬

tional income in dollars may rise
or fall.
The real production and

wealth
count.

the

nation

are

what

\
%i

error

income

concerning
is

closely

the
asso¬

ciated with the notion that it
ists

total of

bank credit? I think that it points

absolute—as

ex¬

fixed

even

such apparent¬

ly dangerous accumulation.

deavors to absorb individual and
are

doomed to fail¬

true index of industrial

than

18%

above normal.

As al¬

the

building cycle to be

than half way up

in its expanding

phase.
/

•

■

forecast

Federal

the

index

duction.
of

ucts

This is
the

Reserve

industrial

one

inflation

into

tion to another in order to absorb

mass

the

means

price rise at

containing

the

bearable level, and

adds

that the danger of attempt¬
ing to increase non-bank holdings
of Treasury securities in such cir¬

estimated
in

struction would

billion
other

$10

period, and

"produc¬
capacity" is excessive.
The
our

that

duction

the

so-called

war

largely not pro¬
all. r Certainly,
the

was

purchasing power—a sort /'activities" that contributed to it
"wages fund," so that if one were not motivated in the normal

encourage the
of funds from

lines

pro¬

from $7

average

annually;

and

nually; business inventories would
increase further by $2y2 billion
to $3 Vz billion annually^: and net
exports should be sustained
about $3 billion per annum.

maximum shifting
line of produc¬

resulting

over-production

creating

one

•

from
field by-

production in others.

new

It is also

one

unemployment

essential condition Of

continued

prosperity under ottt
enterprise system that new
products and new and improved
techniques of production be con¬
free

tinually developed in order to ab¬
sorb in productive enterprise the
high savings that result
from
prosperity. New products and new
and improved techniques are en¬
couraged
by
the
prospect' for
profits. The proponents of a larger
degree

of government control in.

economic life

neglect this fac¬
tor, which is responsible for our
high standard of living and which
our

from $14 billion to $17 billion an¬

could have occurred only under a

free

enterprise system. This sys¬
will continue to provide a
rising standard of living as long
as
capital formation is necessary
and profitable -- in other worcte^
as long as we retain our inventive
genius and as long as it receives
adequate compensation."
tem

Tax Structure Must Be Reformed

Annual Corporate Financing
Needs Only $2 Billion >

§ The report emphasizes that the

It is estimated that corporations
would be able to finance their

;

tax structure and burden must be

conducive

the

of M7

maintenance

large capital requirements prin¬ a healthy economic climate. It
cipally from their own savings, or further states that it is necessary
retained

earnings, and that their

needs for outside

average
num,
year

financing would

only $2 billion:

$10 billion for the fiveperiod. The report also esti¬

mates

that

will

consumers

both

for

labor

strive

and

management

increase

production

per-an?

spend

and

consumption,

labor

continuously

within

ployed

particularly

the

em¬

capacity

higher percentage of their dis¬
business. It is also essential that
posable income than they did be¬
a

investors

war,

On the basis of these estimates
of

capital formation and of

con¬

spending
together
with
probable
government
expendi¬
sumer

vide the

encouraged

funds necessary

pro*

for in¬

creasing the plant and equipment
of

old

enterprises

establishment

and

new

for

the

ones.

tures, it is also pointed out that

personal

n Co m e

rates

throughout the coming five-year

the

Government

Federal

of 20%. Expenditures of

average

range

set

are

Marache, Sims & Co.

Opens in Los Angeles
LOS ANGELES,

of $28 V2 billion to $30

billion. Under prosperous
envisioned
a

tax

condi¬

that

even

reduction,

the

CALIF. —Ma¬

rache, Sims & Co. is being formed
with offices

at 210 West Seventh

Street to engage in the
Partners

securities
Paul

Treasury would have a budgetary

business.

surplus of $3V2 billion and a cash

Marache and W. J. R. Sims.

surplus
would

$51/2

be used

production

business

producers
durable equipment would average

war

for

billion

construction

such

that

which

unemploy¬
ment ranged between 7J/2 million
and 2V2 million, residential con¬

with

notions

different

duction. / The $ environment

which this flow takes place should

tions

truth

nature and the mis judgments
individuals, labor and business,
savings and capital are able to

man

flow

past

production in the
led

through
which, despite the vagaries of hu¬

inflation of

' j,
the first place, this index of

industrial production exaggerated

tive

mechanism

ogy which would exist. For

pro¬

of the prod¬

few years.
Iri

the

vides

psychol¬
price
less virulent degree,
it urges increases in actual and
potential production as a more ef¬

because of the

period need to be reduced by

(6) The sixth pnd final error

Board's

^Thus-we-:heed^:hpt fear

proportions

fore the

inventories

pays

Since the cortt-

(Continued from page 3213)

contingency
which is not envisioned) such en¬

may

its

real

lent

conditions

the

that ,it

end

product.
It is
of real production

•

Conditions that will contribute to

characteristic

s '

this

In this connection, the viewers*
with-alarm may well be reminded
that a few years ago the excessive

then

•

price inflation should attain viru-

producers-goods
industries
cumstances is that of interfering
greatest source of em¬
with the necessary flow of savings
ployment and income. The pros¬
to productive uses.
pects foi^; the producer-goods iriThe larger part of the analysis
dustrles are good. In this connec¬
tion, perhaps I should present my deals with the requirements of
opinion that the reaction in build¬ varying levels of future business
ing activity .that has-occurred .;re* possibilities oyer the five-year
cently but minor and temporary period. For prosperous business
the ^ gross
and that a resumption of the long conditions
national
upward swing in the building cy¬ product is set at $213 billion with
cle is to be expected during 1947. a national income of $178 billion.

plying issues of corporate securi¬
ties, to an increasing extent rep¬
resenting equities in plant and
equipment, or venture capital. In¬

In this connection, as the
government retires its debt, the
General Motors Corporation ex¬
pands its equities,
;

based

production,

ready indicated, I would suppose

J r*;y

of industrial

production would probably be less

the

are

of ever-growing issues of govern¬
ment bonds, there will be multi¬

tion.

business

correctly

fective

it does what hap¬
pens to capital goods. It is most
significant that practically all
large companies are planning to
expand plant and equipment next

government bond market.

current

Unchanged Basic Interest Rate
Predicted by First Boston Corp.

business funds

period of

'•*» v?

results

condition,

this

•

soft

twofold

the

ference what happens to hard or

was probably
in the last
analysis the result of strain in the

This
■

market

obsolete,

Business Hit Bottom in Early 1946

the trail of investment; and* capi¬
tal. It doesn't make so much dif¬

begin

putations of long time trend are

average and by distortions
averaging relatives.

Even the 1946 break in the stock

source

due to

very Red, red

Another
characteristic is that: if is not a
fixed quantity: the more the real
that rate—in production. It
strain for private money to production, the more consumption

carn*4%r

ing the

ing not business.

but

expanding

suggest possibly about 18% above

This index is seriously af¬

it is the government that Is fail¬

that

Again, one sees the- renewed
emphasis of production. Both the
need and the importance of higher
interest rates, are the encourage¬

living.

including
All the talk about

Thus,

somewhere

we are up

the

long time trend.

fected by a bad system of weight¬

non-durables

Enterprise

the

measures

remarkable rise in the standard of

the building.:

^een; Now

It is the gov¬
ernment's credit that is strained,

cycle.

by the growth
also by the
rapid multiplicationof families
and babies, to say nothing of the

durables

ever

way

phase

important matter. This trend

is affected not only
of population,
but

inventory "pipeline" is not
As a matter of fact, we have a rigid tube. Within limits, it can
ri&m&k been in a business depression, ex¬ and will
expand to carry an ex¬
Moreover, while interest rates
cept
possibly during the war, panding output of goods. The fact
are
firming

soft goods.
No allowance
for long term trend, a

little

Thus

of ^

end

made

very

and will expand

can

serves.

that they are low, both absolutely
and relatively to security yields.

able
is

bottom

early in 1946.

of the so-called non-dur¬

case

and

the

around

water-tight bulkhead between the

debts that had been built up prior
to 1929.
Jn various ways, it pre¬

that the world has

1943,

with

the

One

(b)#,The logic is that the pro¬
ducers of hard goods are the con¬
sumers of soft goods.
There is no

shows too high

use

in comparison

now,

somewhere

periods, and especially in

most abundant in sup¬

hard goods.

period will be based lipton the
production of real goods, which
means that to an increasing extent
This tends to keep the total of
incomes will be earned by pro¬
loans and investments in line with
duction, and will increase as pro¬
the total of deposits, thus main¬
duction increases.
Just to illus¬ 1
taining the cash position.
Incitrate, Detroit ■ will - cease to be
dentally, too, net reserves of the the center of
military tank build¬ |
1
Member Banks have increased—
ing activities, and again become
their reserve deposits minus their
the center of automobile product
Thus I

hand,

ply

under¬

have decreased, roughly in pro¬
portion to the increase in loans.

-borrowings.

hard

household

wear,

other

the vast private

over

abused

level

-t'

that
the
forecaster may better
realize, first, that we have had a
business cycle with the peak bade

place, the index
production almost

pre-war

its fiat to bor¬

use

government

took to take

requirements.

the

fact

which

the individual out of debt. In

1929-33

posits will be increasingly "deriv¬
ative," thus being more elastic
and more closely related to busi¬
ness

was

between
so-called

much

sugar, linseed oil, edible oils and
shoes—to mention a few.
On the

Eccles) thought of income as the
credit of the sovereign.
The gov¬

and

the

between

The

men's

(and,
at
least
thought, M. S.

earlier

difference

—

some

many cases of greatest shortage in
such
so-called
non-durables
as

Like John Law,

Keynes

his

and soft goods.

government has
the source of

there

durables

distinction

spending will be re¬
duced and wages be limited to the

that

on-durables

been

productive

second

industrial

universally in

affecting

error

the

The fourth

Our

way.

capacity is not excessive.

based

economy

peacetime

and fifth concrete errors in fore¬

32<1

billion,

which

principally to

re¬

tire commercial bank holdings

Treasury securities.
The

■

analysis. states

"private

enterprise

that

system

of
r

the
pro-

Marache

are

previously

was

J.
Mr.

with.

Harbison & Gregory; prior there¬
to

was

executive

dent of Fewel,
headed

Vice-Presi¬

Marache & Co. and

his

own

investment

firm, Paul J. Marache & Co.

THE COMMERCIAL & FINANCIAL

3242

rates to the dealers and

do today, with the

financed

as a

result that
dealer

one

About that time a

$4,000 to $7,000 each,
payments as low as

from

model

Our

first

automobile

field

companies gave recognition to late

down

$500.

this

was

that

repossessions

made

truck

that

80%

sustained
This loss

fact

the

that

needed trucks and bought
been

sell

trucks retail and

much

en¬

50%

and

the

had

established

the passenger

began

car

encourage

ments

panies in 1929 and this has pro¬
gressively declined until it repre¬
sented about 38% in 1941. At the

present time new car retail de¬
veloping from-new car wholesale
has
been
running: below 10%.
There are many factors that must
be considered in determining why
.

ably be increased.

agency plan.
ers

„

The National Automobile Deal¬

The first turn our company

Association likewise feels that

improvement was dur¬

had in any

this may be a threat to the exist¬

has

ing the month of October, when
the number of retail transactions

ing
relations
between
finance
companies and dealers. Their post¬
war planning committee, in its re¬
We also direct to the dealer
cent report, stated that the prob¬
repair work in the event ot'^a
lem -of bankv cc^petition - sur¬
collision accident; to be given to
mounted
> in
importance / any
his service department.
In some
matter yet presented, that it mer¬

amounted to 2l1A% of the whole¬

his prospect.

sale transactions* which/was a big
improvement over preyiqits
months;
; .
1

years

194308—J-

to the interest of the dealers of the

irtbe finance /companies
the
same unit volume in 1947 or 1948
they did in 1941, their

that
ume
as

vol¬

will be increased over 100%,

unpaid balance has
due to
prices. This

the average

increased by that amount,
the increase in retail

1. Remind the dealer that many Iwouldfmeanrthat theSmQitof;dfc
period from Jan.
of them have contributed to the outstanding receivables would he
31, 1935 to Dec. 31, 1941. These
probable loss of this business to increased from the 1941 figure of
meant.
Terms at that time were
premiums, depending upon the figures have been compiled by
the bank
by exacting reserves .$1,800,006,000 a to
were limited to 12 months on new
$3,600,000,000.
I0S3 ratio.
Over the last few the First National Bank of Chi¬
which sometimes reach usurious With net worth of approximately
cars and 8 to 10 months on used
years
the insurance companies cago and cover principally their
proportions b/ a padding process.. j $500,000,GOO? thefedebl; of. the; f|cars.
On new ears we endeavored have been
showing no profit, as own customers whose combined
This practice is not countenanced 'mmce companies? ?will; vreaelii a
to secure one-third down and on loss ratios on automobile insur¬
capital, including debentures, was
by all finance companies; but has maximum
of
$4,000,000,000
or
used cars we required 40% down. ance are
running as high as 135% in excess of $500,000,000 and who
been
sufficiently widespread to 8. times, present net worth. The
Rates during the early 20's were of
premium income. In some in¬ did a volume of business of $2,have created a completely unset¬ banks have liberalized their credit
mainly whatever the finance com¬ stances,. finance companies are 700,000,000 in 1935, which steadily
panies wanted to charge.
The paying,the insurance' company increased, except for 1938, to $4,- tled situation.
policy regardingibi^owing xaiiqs
construction of retail rates during
2; Educate dealers in the eco¬ to* 4 to 5 times net. worth. - This
premiums above what they re¬ 500,000,000 in 1941, with outstand¬
this early period was based upon ceive from their finance
business, ing receivables at the end of 1935 nomic value of the retail function would mean that the total borrow¬
a percentage rate up to 10 or 15%
in order to keep their insurance of
approxi mately
$900,006,000 they perform by selling financing, ing capacity on? aStolbasis

financing and we started to learn
what down payments and terms

: :V

such

transactions;

profits

the seven-year

ran

of the insurance

36 to 50%

from

During the early years
not

consider

from

insurance

which

means

protection

derive

counts.

the late

recourse

basis

and the

feeling

of finance

began

among

companies

basis—that

unsound

and

on,a

was

number

com-

;

re-

During the later 20's the whole-

sale rates

were three-quarters of
1% flat charge plus three-quarters

of 1% per month on the outstand*

irig.

Non-recourse

several

straight

rates

cent

per

were

higher
rates.

recourse

than
Dur-

and
'

30's

with money rates going down

on,

with

the finance companies
able to acquire money in
the capital market,, there was a
steady reduction in rates. Whole¬

-.being
1

sale rates
of

down to

came

one-half

fiat

charge, plus ¥2% per
*
month,-and/it was not until 1936
j 1 Jiat retail rates on new cars were
stated

•'

standard

multiplier,

when General Motors Acceptance
Corporation announced their 6%

plan.

I recall the discussion at

finance convention
this

plan

.number

out

nance

rates

the

business.
to

fi¬

However,

bank

companies

finance

con¬

tinued to deeline and the 6%
plan
became more or less standard and
a

fair rate for

new

Out of this 6%
ary

give

car

paper.

was

custom¬

for the finance companies to
anywhere

to the

dealer

from
a

reserve,

either

cars

new

1941.

the

These

profits,

bank

than

comparison

they

are

when

he had

hand before

model arrived.

Then, to
further help the dealer, we made
advances

used

cars

that he

could handle his

trade-ins, and at
inventory became
high and in final liquidation some

times

used-car

losses
some

business,
than

would

the

sustained.

to keep

cases,

have advanced

cars

have

dealer in

been

worth..

In addition, when a dealer's work¬

ing

capital

operate
what

his

are

sufficient

not

business,
called ;

capital

which sometimes

make

loans,

^secured
fc'Si '
■■■

seven

years

clear

seems

the

will

have

that

ture

will

bound

the present rate struc¬

last, that there is

not

improvement in

rates, both wholesale
and

even

extent, we believe
over? the next few years-the

cut in, to,some
that

companies

finance
have

are

going to

opportunity to finance

of today will soon be

automobile

corrected; as

production

The real, problem

increases.

of finance com¬

panies is to raise the necessary
capital and obtain the necessary
credit

facilities

to ' finance

this

large volume of business.

Standard SlockExcb.

increases

Now

Spokane Stock Ex.

SPOKANE, WASH.~-The Stand¬

affect the dealers' operations se¬ ard Stock' Exchange; largest mill¬
riously, because if there is any ing exchange, int the United States,
This condition has already been large amount of retail paper taken has changed its "name ' to '-the
direct by the banks, the greater
recognized by the finance com¬
Spokane Stock Exchange, accord¬
part of it would be the most de¬
panies.
-V
•
,
.
* ?
sirable portion of the retail paper, ing to an announcement by Paul
and as the volume of retail de¬ Sandberg, President of .the Ex¬
V It is the only industry I know
of that has had increased wages, clines in proportion to wholesale change.
Mr; Sandberg stated tlrit
financing, the finance companies the name was
rents and all operating expenses,
changed since most
would have to adjust their rates
plus a slight increase in the cost either in the direction of larger exchanges are named after the

both

Wholesale and retail rates.

of money,

which has reduced its

wholesale

rates

larger

retail cities in whieh they

*.h"-""."'

*>!'Mvib¬

and retail,

though the banks may

finance trol when repairs are needed.

companies are going to do the job
Considering this type of com¬
of postwar financing, comparable
petition we feel that if it is de¬
to what they did prior to the war,
veloped to any great extent, it will
there

sion

getting less* service such a large volume of business
use
the long that these competitive conditions

prior to the war. ■% JX sold likewise pass out of his con¬
that

the conci¬

finance, we^cometo

they

stock

automobile

factory

At certain pe¬
have not moved

freely enough to keep the factory
wheels turning,
the dealer has

new

end

with other financial institutions, established dealer, finance com¬
manufacturing
companies
and pany arrangement.
small loan companies are not ex¬
7. Remind the dealer that it is
been forced to overstock, and the cessive.? A study of these figures the usual practice of the insurance
finance company is called upon will indicate that finance com¬ company
who carries the risk
to finance the excess, even though panies cannot materially reduce through his; regular channel of
the dealer's normal credit facili¬ their rates below the 1941 rate financing, to bring to that dealer
schedules.
ties have been exhausted., it
Operations 'of finance for repair, any car damaged by
At times we have looked at our companies for the year ending collision. If the placing of insur¬
Dec. 31, 1946 will not compare fa¬ ance passes from the dealer's con¬
wholesale outstandings and won¬
dered if a dealer would ever sell vorably with the averages for the trol^ themthe -automobileshe has

riods

the

companies felt that
they just could not operate on the
6% plan and would probably have

the

from

showroom.

the

increased

1941—. 11.03

freight
local

and

with

—^

1936 when

announced

was

5.* Make clear to consumers that
through to the consuming about 9/10ths of 1% for the seven- when they finance
through a bank
public. The part the finance com¬ year period, losses for 1941 being
they are taking - away business
panies have played, in this pro-; 68/100ths of 1%. Converting these from their favored dealer, just as
duction and the assistance which; profits on volume to capital em¬
much as when they buy parts and
they rendered to dealers is evi¬ ployed, the earnings for the seven even cars from some other dealer.
denced by the results of the past. years are as follows:
It will be well to remind the buyer
To
carry
out
this
assistance,
1935
16.22
that should he borrow from the
finance
companies have always
1936.
15.54
bank;'- he creates r an obligation?
paid the automobile factories cash
1937
.15.02
with that bank that will affect his
as the cars are shipped.
In some
9.51
further borrowing power capacity.
cases the finance companies have
9.44
6.
Show the
customers
that,
advanced the full 100% of whole¬
10.54
when they finance through a local
sale cost and sometimes the

ing the period from the late

which

at the

tion

such

procedure

the
a

number
that it

panies preferred to stay on
course basis.
'
-

non-

appear

was

impossible to operate

was
a

20's the method

financing automobiles
;

ac¬

required only fire and

theft insurance.

the

for

They hope the loss

ratios will improve.

source
•,

profits, but considered it only
1

connections.

did

could

•

necessary insurance to the would be about 2^ billion dollars,
$1,780,000,000
so the present capital and bank
During the buyer.
of
the finance
industry
3. Educate dealers in the impor¬ credit
It is well to consider the kind of seven-year period: the gross in?
come
on
volume of receivables tance to them of retaining the .would be short IV2 billion dollars,
job that has been done for the
American public by the relation¬ purchased was approximately 6%. profit they realize, through the and" to meet this' condition capital
The profit ratio to volume aver¬ dealers' reserve, from the retail¬
'accounts would have to be* *-inship that exists between automo¬
Profit ing of financing service.
bile factories, automobile dealers aged approximately \lk%.
; creased: substantially.
ratio to volume for 1941, the larg¬
and automobile finance companies,
4. Edueate the
consumer,
.When we consider the present
with each of
the three groups est yearin the automobile finance through the dealer, in the desir¬
business
was
1.11%.
Operating
competing for each other's busi¬
ability of 'securing: hisitoancihg competitive terms and the present
ness; or
with each group ae a expenses during the period were service from the same dealer who lack of profits, with the possible
of, volume, sells him a car, accessories, parts,
whole competing with the other approximately 4.6 %
two groups to force an increase in with operating expenses in ,1941 repairs and maintenance service. ; volume of business the ftoapqe
companies and banks will hav^ to
the volume of automobile produc¬ 4.2%. Losses to volume averaged

handling charge, plus in¬
surance, all of this added to the
unpaid balance.

plus

■'

60% of the new
handled by the finance com¬

was

to those banks who intend to

serve

profitable.
The reductions were has been pointed out to show the
nation and that ; its importance
made largely to offset some of vital part they play in, a dealer's
could not be measured in words.
the prospective competition from operations.
This committee recommended a
banks.
In examining the competitive
seven point program tn the Asso¬
Formerly it was customary to pattern in the finance business it ciation, designed to keep control
derive a substantial profit from is well to look at the operations
Of financing needs, as fallows: >.
the insurance written
on
retail of the- finance companies; during

this type of business and develop¬
during the next few years
tended to stabilize this kind of

can

We alsQ have a unique problem
in our business. Capital of all fi¬
the profits from- this de¬
ited the dealer's closest attention
nance companies is inadequate to
ers
of
large wholesale credits partment made it possible for the
and gravest consideration.
Fur- finance automobile production of
without the proper retail volume dealer to break even. The service
theri they stated that it was vital five or six million cars, because
by finance companies
makes the. wholesale rates
un¬ rendered

business

reserves

The extension to deal¬

structure.

same

namely,
-

dealers'

which

paid in about the same pro¬
portions as they had been on the
6 % plan; with the result that: we
now
find
an
inadequate rate

retail as on wholesale,
one-thirtieth of 1% per
day on the total receivables, with
an advance of 80%, or a net yield
of 15%. With the experience we

rates
-

companies,

by some

plan

were

at. that time v; with the
company I was with followed the
pattern of the receivable finance
business

out

vr;> Hates
*

nor

which

bad, as well as border-line credits.
Sometimes we must extend these
credits in a matter of minutes, as
the sale is very important to the
dealer and delay might cost him

was

3% per annum.
Also, in 1945, the
standard 6% plan was reduced to

of the money employed.

;

This rate

floor.

ascertain,
automobile paper
I

for the num¬
remained on

reduced, in 1945, to $1 plus

later

these

and

insurance

of days the car

the dealer's

loss probably

our

would have been

ber

would

Otherwise
forced

stock.

tire

have

cost

the rate per annum

army

the

cover

handling charge and the 4% being

$125,000.

over

would have been greater
the

for

but

loss of

rates,

this percentage is so low. One rea¬
depositors'
credit
needs son is that a number of cars were
through a personal loan depart¬ sold for cash and wound up in the
ment. Finance companies welcome black market or in the lots of used
such banks to the consumer credit car dealers. Also, a large number
The competition ..the of the new cars have been going
tion to purchase all the paper of¬ fraternity.
finance
companies regard .seri¬ to fleet buyers, who do not finance
fered by a dealer, namely minethem.
With the elimination of
run paper,
which means that we ously is the direct to-the-automo'OPA this percentage will prob¬
have to take the good with the bile-buyer or the bank insurance

last trade-to on- a new car,

the
standard may be the second, third or fourth
rates on new car wholesale, prior trade-in, has to be financed if the
dealer is going to make a profit.
to the Second World War* came
We therefore have to be in a posi¬
down to $1 plus 4%, the $1 to

final
>

realize that the

assistance.

reductions

continued

wholesale

the

service

It is well to consider the

up to two years old rendered by a finance company to
higher rates retained on a dealer other than financial

With

had only advanced
retail'% and
80%
of
price,, in I the
liquidation of the account we

fact

were

olderda^::-^

In spite of the

close to 70%.

ran

reductions

rate

bank interest

tomarily made at
rates.

nearly

a recent survey that
nearly 95% of the banks in the
country plan to engage in some
form of consumer financing after
the war. How this bank competi¬
tion is going to effect finance com¬
panies remains to be seen.
None
of these remarks apply to those
banks who plan to render a full
and complete service to dealers,,

All such loans are cus¬

cessories.

business

would not be attractive.

tion found in

improve the dealer's service
department we have made ad¬
vances on his equipment and ac¬

dealers'

the

rates, u or

The American Bankers Associa¬

on cars

and the

retail

the

with the result that

cars,

substantial1

the

casualty in

-dealer, with whom we had ap¬
proximately $150,000 in wholesale
and $500,000 in retail.
I recall

plan also was
whereby the finance

formulated

with

bonus for obtaining the paper.

high-priced trucks sell¬

number of

ing

from

repurchase agreement

for his

(Continued from page 3216)
we

consuming

public;?;;::,;^

Competitive Pattern in Consumer Credit
^

Thursday* December 19, 19-46

CHRONICLE

0/ *1.

y> / ;•$

'h. I

«'l i

t /1 j -' 1 *

-i I;

j iuf

■

\v i*, f'

?i J i 1M e- • >v >.i y/ii

are

located.

Volume

164

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

Consumer-Spendable Income,
Spending, Saving, Credit
(Continued from page 3214)
to

cover

sities.

the cost of absolute neces¬

How much this

shall be is

more or

deduction

less arbitrary,

hut something like $230 per cap¬

ita,

©r

and

household

calculated^ able; goods-^lothihg^

We income ahl amount

possibly $1,000 per family
for each independent

$500

equipment and automobiles, and
skimp on repairs—paint, hard¬
ware,
Which

furniture, carpets, etc.
that

large national
income derived from production
means

increases: the demand for' middle-

person, .in dollars of 1935-39 pur¬
chasing power, appears to be about
right to cover food, clothing, fuel

class comforts, whereas a large in¬
come
derived from inflation in¬

and shelter at the minimum level.

luxuries.

This

amount, increased or ? de¬
creased year by year to correspond
with changes, in the index of the
cost of living, represents the vol¬
ume
of
purchases; concerning
which consumers have practically
no choice. What is left of dispos¬
able income is what the sellers of

creases

the demand for expensive
Therefore

•

the

amount

of national income is no. more im¬

portant than its nature
because

the

nature

determines

or source,

source

kinds ; of

what

buyers get. it to spend, and, the
atmosphere in which they da their
spending*

equity. At the present time the
proportion of autos sold on time
is

considerably smaller than nor¬
mal—perhaps only one in five, as
against a normal proportion of
than

doubtless
we

one-half.

have

have been

sold

all

able

the

credit whatever.

off

use

rapidly
scale.

come

consumer

Also

made of

some use

lated

during the
versal shortages.
time when

come a

there

falls

the in¬

has

been

savings acumuperiod of uni¬
But

Keynesian

there

consumer

will
cred¬

it will again be necessary to en¬
able persons in the lower income
brackets to purchase cars* When

word

on sav¬

economists

fear

that

nation

may suffer from ex¬
saving. I take the oppo¬

•

None of the statistical studies of

better

in¬
than

and. have
persons

usually, assumed

moving to

that

ments are

income; pay¬

cessive

private saving,

and Rus¬

sia is the only one that has suf¬
fered from excessive governmental

considerably increased*

We have avoided a serious infla¬

tion in /the war^ and supernum¬

income increased faster than
From 1941 to

erary

the cost of living.

1946 disposable, income increased
the cost of living increased

37%, and supernumerary income
increased 81 %.. Hence the un¬
precedented savings that are re¬
ported. Hence also the unprece¬
dented volume of retail sales and

the willingness

of the public to

buy any kind of trash*
iBut although supernumerary in¬
come rose from
1941 to 1946 it
may

year

decline fairly sharply next
even if income payments and

that makes it necessary to con¬
sider each

category of goods sep¬

Taxes

consumer.

may

which

con¬

impede

the flaw of funds into risk enter¬

prises and which stifle proper in¬
I

reconstruction, for it must
be financed somehow, and the only
alternative
to
saving is infla¬
tion.

But

adequate discussion
of this point would take a week,
an

I conclude with this bald state-

centive must be removed.

repeat, that anything

extend

raise

Again
do to

level of

the

real

income of the people will be done
for our greater prosperity
and
full

employment., This is the gov¬
responsibility toward
employment for its

ernment's

continuing

people.

Distribution to Sustain

Expanded Production f

ness

of Distribution

The Cost

that the total volume of

Now I have also heard business¬

Moreover, it is by these methods
of aggressively merchandising in¬

tion while only 41

dividual products and brands that
distribution has succeeded/ over

men^ for the most part manufac¬

the long run,

in selling a higher
standard of living to the Amer¬

production;These same
therefore

turers,

that

say

consequent de¬

about distribution is that the trade
barriers

which

plug the lines of

distribution must

disposed of

energetically be
for all.

once and

Today there "are innumerable
State, city and industry-imposed
are insidiously tak¬
ing their toll of the consumer's
dollar, making it difficult for the

barriers that

ordinary businessman to survive,*increasing distribution costs, and
placing unnecessary obstacles in
the way of veterans and others
who want, to establish
of their

own.

businesses
"

•;/ Behind almost every trade-bar¬
rier law, or regulation, is a mix- 1
business¬

if the
efficiency of distribution could be

improved, with

Trade Barriers Must Be Abolished
:; Now, one final conviction I have

cents goes for

ican people, and thereby influ¬ cline in distribution costs, they
And in the analysis one
encing the level pf employment; could lower their
prices and the
must consider price elasticity as
However, there remains an area flow of consumer goods would in¬
well as income elasticity. Finally
in, which the most progressive crease and the result would be
the tastes of consumers change;
for reasons other than^changes in promotional activities will prove more production and more em¬
of questionable purpose unless the
ployment.
.
income/' '
//|!/:
more basic problem is first faced
They are right! There can be
This is illustrated by the two
and resolved. This area is that of no question but that technological
great
governmental
studies
of
consumers
who
are
and other advances in distribu¬
1935-38; and 1941-42* • Confining potential
arately.

ture

motives. /But

businessman
must

pay

barrier*

and

the

small

consumer

heavy price for each

When

you add to the
price a purchaser normally would
pay for a~ product* without com¬

pensating him in extra value for
the increase, you automatically
shrink

and

size

the

your

possibilities

your.

market

for

con¬

tinued growth and expansion.

;

our

attention to families with in¬

comes

between

$1,000 and $10,000,

since the samples were unreliable
below and above tha trange, we

forced to remain, potential

con¬

because of the meagerness
of their income.
A third of a
nation is something more than a

sumers

but rather of increas¬

justment for the higher price of

sume more

automobiles.

ing their productivity

But

still

find

comes

fewer

their in¬

will; expand and they can

buyers in 1941 than the
study^would have buy more.
J National income, measured in
led iis ito expe^. The chief reason i In short, whatever increases the
ihoney,isderived eitherfrom pro¬
,

tion/resulting

they should and

must in increased efficiency and
lowered distribution costs, are to

be: desired from every standpoint.
Progress lies in this direction.
However, the cost of distribu¬
tion

cannot

and

should

not

looked upon as an end in itself.
It is a necessary means to an end,

Trade

fundamen¬

are

They

the

injuri¬
adversely

are

to business and they

affect

wholesomeness

the

national economy*
,

The

time

has

for

come

Con¬

to examine the whole ques¬
tion of trade barriers, and to take
gress

remedial

action.

representatives

body

our

they

elected

are

the

to
and, in most cases, make such determinations as are
does vitally affect all costs.
Fre¬ necessary for the national welquently more money wisely spent farei ^But the time has also come
on distribution and its component
for businessmen - to take a hand

and

sueh

factors is in the end: money very
well spent
to lower
a

proper

and contributes directly
prices to the consumer—

distribution,

in destroying

those industry-im¬
posed barriers that are blocking
the road to reduced costs.

desired result. Greater efficiency

government

can

anywhere else
in our economy, would make it
duction orfronr inflation. If de-. for smaller sales of new cam efficiency
and! productivity of possible for most of our people
rivi^frotoi htRatiott if inay notf
achieve
a
seems to be that before" 1935 there thi s one th i r d olthenation, what¬ to
generally higher
stilt in higher supernumerary in- had been five years of low sales ever iqcreasesthemoney income standard of living. Anything that
cOm^ ahd-if it does'^o,'-that result ^ihd/thcre was ..a,/vacuum to'be they earn, whatever stretches the lowers cost to the ultimate con¬
Will probably j^^emppfary^ut filled. 1935 followed three years buying power of the money they sumer, or that makes his money
for:the market: analysthf more se- hi which average sales/had been earn/; whetherit ia through lower go farther, raises his real income.
rious objection to the inflationary only 1,510,000; 1941 followed three taxes or lower prices, will .tend Conversely/ inefficiency in dis¬
tit/'mot inn I
tl
itoethod of increasing 4he nationl years in which average sales had to increase .their total consuiftp-. tribution; as; in other factors in
income is theeffect it has in alter- been 2,700,000.
tioh/ and thus - will enlarge the our economy, is costly to society
flow of real national income and in terms of a loss of potential
ing the normal/pattern of ineome| Since consumer jcreit:
:ljfeted
-

barriers

tally restrictive.
ous

Trade, barriers

1935-36 income

wherewithal

finance

that time comes I have no doubt

disposable inebtoie Meclm^^ehly find considerable differences in £bhtica}: cliche. It is an economic
moderately. For example if "dis¬ the proportion buying automor reality, and a distressing one. Un¬
posable income fell 10%,- from biles, whether new or used, * and til* we, the leaders .of American
$145 billion to $130.5 billion, super¬ the > proportions,^ ownfeg/autdtoio^ industry find, an effective means
numerary income might fall 16%, biles that were new when bought of increasing the income of these
if the: prices,,of* necessities re¬ Adjustment for the rising eost of J>e<^le; they have no effective
mained unchanged; < Or to' put/It living makes little difference, since choice but that of spending their
differently, if dispo^ble - income there was only about a 5% rise. limited:., incomes, on the basic ne«?
tell 10%, supernumerary. income Adjustment for higher direct taxes cessities: of life;;; Here' the task is
not jpnerof. inducing them to con¬
would "fall more than 1Q% unless helps
considerably, and also ad¬
the prices of necessities fell more
than 10% which I doubt will hap¬
pen*-■
/ "

be cut for busi¬

businessmen

saving* After a great war, involv¬
ing immeasurable loss of capital,
a high rate of saving is needed to

changes in the purchasing power
of the dollar as measured by the
cost of living. But not all prices
change by the same amount, and

that

the

ex¬

and

Taxes must also

stantly improve their products,
their plants and equipment so that
unit prices can be reduced to the

from

income

group that our greatest op¬
portunity for expanded produc¬
tion, sales and distribution lies.

have

suffered

ever

tional

this

site view. In my opinion no nation

different in¬ goods and services purchased will
men say that the high cost of dis¬
total income*
"*
r come class would conform to the be increased*
Selling, advertising tribution is what makes their
habits of that class* Sbmh analysts and sales
promotion are neces¬
"Supernumerary Income"
prices high* Much publicity, for
have recognized thai ton ^
sarily directed towards increasing
example, has been given to the
Supernumerary income may toot ment of this sort takes tirtoe. Most
the sales, volume of a specific
statement that 59 cents of the con¬
be increased' by inflatmi^ bveto if analysts have recognized that an
brand or of a particular product.
sumer's dollar goes for distribu¬
disposable income: and; net na¬ allowance must
be
made
for
both are

and

accord¬

has

the interests of all busi¬

come,

cut

comforts, luxuries, - and durable
goods have, to compete for. Sav¬
ings also come out of this residu¬
um, which, some economists call nary sampling methods,* They have
'Supernumerary income." In cor¬ classified individuals according to
(Continued from page 3215)
relating sales of autpmobiles. with their incomes in a, given year* the interest of particular compa- of the free
enterprise system; and
national income over a series of Users of this material have made nies as it must in
the competitive every alert and progressive busi
years, we have found that super¬ their own calculations of the dis¬ struggle for
survival; second, to. nessman never loses sight of it*
numerary
income usually gives tribution of income in later years, advance
better results than disposable

can

ness,

spending; and saving, habits; has
made this distinction* and it is one
that: could/not be made by ordi¬

that taxes

ingly, especially taxes in the lower*

income^ brackets, for it is within

finally, just

Some government and other

the

num¬

credit

as one goes up

ings.

/■//

■

And

cessive

ber of well-to-do buyers has ex¬
ceeded the production of cars, and

the

ished.
;

this

any con¬

The

that Regulation W will be relaxed,
if it has not previously been abol¬

cars

make

ijrear without extending
sumer

could

3243

evil.

They have

are an

economic

cumulative ef- '
feet on our entire economy.! Coramoto !sense: should fell us. that we /
a

r*m

»•

L*.

jL:

■■

•

""L*

—

distPibuttonv/.l'awd.;'1 changing '.the-' amongj the subjects to be discussed Employment.;
I have known
buying habits of large classes of at this meeting I must point out
<

real income;

hammering home • the- idea
that we must do everything pos¬

usually in proportions -that
do not differ much from year to

failed

income for the masses of our peo¬

year..

ment, or to increasing consumer
consumption by. passing along the
cost reductions in the form of

taxes.

{'price" reductions;

restricts production

The government is the peo¬
Thus, the burden of the war
has fallen directly upon the shoul¬
ders of the people.;; This is as it
must be. | This is the cost of pre¬

ment* and with it sales and dis¬

serving

tribution.

not

consumers.

Income froraproduc-

fion goes to

producers~and inves¬

that

consumer

tant ' addition

credit is
to

impor¬

supernumerary

tors

income, but that its use at inap¬
propriate times or in! excessive
Income from inflation goes amounts involves danger. We have
to
government employees and found that if the terms of credit
contractors, to holders of inven¬ are
arranged so that the buyer al¬
tories and speculators, in amouiits
ways has an equity, i.e. the resale
that are almost whoHy unpredict¬ value of
the automobile is always
,

able.

Spending

Habits

Producers

And Investors

higher than the' unpaid balance;
both the seller and the buyer are
protected. This

means a

down pay¬

The spending^ habits;Vof s pro¬ ment of a third or
more, because
ducers and investors do hot change new automobiles lose value fapidr
rapidly. The-spending, habits of ly in the first year, but it does hot
contractors and speculators > vary necessarily mean, a strict; limita¬
greatly between prosperous times tion of the period of payment. At
and badtimessandr are bard ^to present the term of the loan is
predict. In general income, derived limited to fifteen months byReg-

^'frcmCii^atibnU is§qpilclriy?sperit#

ulation

and to a large extent on expensive

age

luxuries.; Those! who do not share

often

in it cannot reduce their consump¬
tion

they

ofabsolute; necessities but
purchase fewer comforts,

can

and extend the lives of their dur-

Our

own

loans

aver¬

less than that, and have not

gone' beyond—not because
any-policy concerning a. fixed
maximum time, but only because
of the controlling principle that
the buyer must always have an

translate

into improved

those

savings

the level

buying and consequently
and employ¬

Every businessman should con¬

stantly and energetically strive to
his cost

factors and

war

say a

of real

word about

has put a terrific fi¬

nancial burden upon the govern¬
ment.

I want to again warn such busi¬
nessmen
that this practice dis¬

reduce

sible to! raise

plants and equip¬ ple, I want to

courages

The

then

ple.

the

our

freedom.

cost

that

But this is
must

feel

obligated to pay through the nose
for the rest of our lives and those

posterity. There are all
kinds of present expenses which
of

our

and when
to

permit

prices

.low enough
people as pos¬

are

as many

sible to purchase as much as pos-

sible.
tion
men

Trade barriers are distribu-

barriers, and you business¬
who are primarily distribu¬

tors should

of such

good many
businessmen who worked hard at
reducing their costs, but then
a

only prosper when trade is
permitted to flourish to its fullest
can

concern.
i

make the destruction:

barriers

your

immediate

„

As X have said

! many times

the

past, progress, aboye. all
else, is the American way of life*
We are always concerning our¬
selves with those problems which
seem to impede our way toward

higher
standard
of
living*
prosperity and continuous
employment for our people. It is
this enterprise on our own behalf
that has made us a great nation.
Thus the work and effort we put

toward

forth

tribution

the problems facing dis¬
is energy

good of all of us.

spent for the

The difficulties and

struggles of

today are but the price we pay
reductions to the
consumer in lower prices or im¬
government can cut, and must cut; for the accomplishments and vic¬
tories of tomorrow. The distribu¬
proved products, or in the im¬ there are all kinds of expenditures
tors of this country have given u%
provements he can make toward where savings can be effectively
an
exciting and satisfying past.
greater efficiency in his plant or made, and must be made; there
It is to their great and everlastequipment. Lower the cost of the are all kinds of costs that can and
product or improve it, or prefer¬ should be reduced, and must be ig credit that they will continue #
to give us an exciting and satis^ff
=
ably both, and you increase its reduced.
These reductions must be made fying future.
distribution! This is the dynamo

pass

these

THE

COMMERCIAL & FINANCIAL CHRONICLE
Such

trade

ments under the

of tariff agree¬
Reciprocal Trade

Agreements Act

and through its

means

The international objectives of
maintaining world economic sta¬
bility and of promoting the max¬
imum
freedom
in I international
.

In addition to the

sponsorship of
international agreements and the
making of direct loans to foreign
governments for the promotion of

balance

multilateral

trade

United

the

has,oh occasion made

States

rep¬

resentations to

governments en¬
tering into long-term bilateral
ftoangements involving a large
The II, S. Gov¬

volume of trade.?
ernment

activities of foreign

to; limit their purchases to com¬
modities

required for relief and
rehabilitation, to make purchases
in1 accordance

commercial

with

considerations' and through

nor¬

mal trade

channels, and to liqui¬
date their operations as soon as
possible.3

^ In certain
tional

stated interna¬

cases

objectives

conflict

may come into
special national in¬

with

terests and

policies, or the inter-*
national objectives may be found
to be In certain respects inconsfst-'
ent within themselves. For

ple,

certain

aspects of

exam¬

America's

agricultural program are in con¬
flict
with
our
general interna¬
tional objective of eliminating im¬
port quotas and export subsidies.
The United States has from time to
time imposed import quotas oncertain agricultural commodities.
In
1938

inaugurated a program of
subsidizing exports of wheat, and
wheat flour followed by the sub¬
sidizing of cotton exports in 1939.4
It

significant

connection

that

the

gested Charter for
al

note

U., S.

this

"Sugr

Internation¬

Trade

Organization" provides
for loopholes to the
general rules
fagainst import quotas and export
subsidies.5
These exceptions to
general rules would enable
the United States to
employ im¬

the

port quotas and export
whenever

subsidies

to support
agricultural price

necessary

our,,

domestic

and

production

difficult to

the

see

programs.
how we can

secure

maximum

advantages to be
gained from interregional special¬
ization

nations

exceptions to
Of

course,

resort

these

substantial degree.
nations

pursue

uneconomic/ domestic

policy Vof

maintaining

prices above their
normal competitive levels and dis¬

courage
and

the transfer of

labor

uses,

from

less

resources

productive

aooropriate foreign trade

program will have to be

employed

in order

effective¬

ness

■l Sec

Charter for an Inter¬
Trade Organization of the United

Department

State,

Septem¬

1244.

V 2 See
tions.

"Swedish-Soviet
Exchange

3 See
S

Claire

Trade

Notes

Swedish

Dept. Bulletin, Sept.
U.

the

"Suggested

Nations"

,TJ.

insure

of the domestic
program.

national
ber.

Negotia¬

between

Governments"

Policy,"

There would also have to be

Dept.

Washington. D. C., Oct. 6. 1946.
4 Under

J944
jnay

the

Surplus

Commodity

Property* Act of
Credit
Corporation

sell surplus farm commodities for

port

Cbough
M.

the

competitive
world
domestic prices are

Gordon,

Agricultural

Economic

Review,

5 See

for

Aspects

Policy,''

September,

discussion

this

ex¬

even

higher.

'International

America's

596-512.

prices,

See

1946,

pp.

turn

to the

now

question

foreign economic objectives may
conflict with those of other na¬
tions.

In considering the five ob¬

0i^0ctiy#x>fprpmc^hlw
in international

prise

commerce.

with; respect;, to

multilateralism and non-discrim¬

ination

are

based

the fear that

domestic, economies will suffer if

they

not protected from rapid

are

shifts

conflict

external

over

the

The

demand.

objective .of leav¬

ing foreign trade to private enter¬
prise stems from basic differences
in economic and political organi¬
zations and Philosophies.

The

and trade in uneconomical chan¬

of the relative

basis

direct

costs

they ; vrilLcon^

broad

trade

Charter.

objectives

the

national

procurement
Since these requirements

to conflict with the
price and
production
policies of state trading countries,

likely

are

Nevertheless the inter¬

commodity agreements
contemplated under the Charter

will

the

likely to get in the absence of
international supervision. Like all

ideal

lateral
not

conditions for

state

trading

multi¬

system

are

likely to be realized.

matter of

istence

state

far

I.T.O.

the

practice the
trading

monop¬

is likely to. do violence to
principles of nuiltilateral trade

and non-discrimination in several

In the first place national
trading enterprises, whether
they be buying or selling organ¬
izations, are generally controlled
by a single governmental depart¬
ways.

than

better

international

other

which have

olies

the

are

agreements

chance of success,
Charter represents a
a

compromise between the various
conflicting national interests and
international

objectives which
society as we

must be resolved if

know it is to survive.

state

ment

11 See Articles 34,. 35,
Suggested Charter.

12 See

Articles

36 and 37 of theof

41-49

the

SuggestedI

Charter.

their activities otherwise

Inevitably they will

make

bilateral

deals

trading with other state trading
nations or even in trading with
countries where trade is in private
hands.
Many nations will inevi¬
tably be pressed into bilateral
trading nations in

order to protect their trade. More¬
over
political considerations can
scarcely be eliminated from their

decisions

regardless

tional commitments

New York Stock Exch.

Appoints Gray & Klem
Emil Schram, President of
New

York

thd

Stock

Exchange, an¬
appointments, with
the approval of the Board of Gov¬
ernors,
of Edward C. Gray as
nounced

the

interna¬
the

con¬

Finally, the existence of

trary.

the power to determine what and
how much to

import

the hands of

commerce

the basis of relative

or export in
single trading or¬
ganization may be in conflict with
the principle of the free flow of
cm

competitive advantage.
It

Government

taken

however, and
permitted to freeze production

domestic

are

never

not without danger,

abroad.

involves greater risks for the
than a handicraft so¬

resolve.

producing

home production and

cept at a tremendous loss in real
income,
Just as a modern econ¬

has

supervision of the Organ¬
; Such arrangements are

nels

the

substitute

ductivity

der the

import would have to be made on

jectives stated/above no nation
would quarrel with the objectives sibility to their own people of
maintaining reasonably high levels
of achieving a large volume of
of employment and income cannot
world trade and. high levels of
be very far off if democratic cap¬
income and employment, although
italism is to survive.
there may be substantial differ¬
ences of opinion, as to how these
Private vs. State Trading
objectives should be attained. The
The conflict between the objec¬
objectives- which
present "the
tive of keeping international trade
greatest difficulty,are .those which
in private hands and the objec¬
relate to multilateralism and non¬
tives of the state trading countries
discrimination' in trade, and the
is in, some ways mdre*difficult to
The doubts raised

stabilizing
considered, to be desir¬

are

regarding what and how much to

deals with state

reflected

addition, the decisions

large in both cases.
Moreover the day when all gov¬
ernments must assume the respon¬

Let

prices

purpose

employed

them.

ciety in which production is for a
local market, so a multilateral
world economy is inherently less
stable than one in which trade
is conducted on a barter basis.
But the rewards in terms of pro¬

would, of

attempt

stand

among

against state trading per se, but it
has frowned on many practices

No
its

which may be inevitable under a

be futile to

course,

outlaw

state

trading
the nations of the world.

country can be asked to give
foreign traders more freedom

than is accorded to .those dealing
in similar commodities produced

Edward C. GrayCharles Klem
system of state trading. The I.T.O.
Charter seeks to bring the prac¬
and sold in its domestic markets.
of' state trading- enterprises
If, for example, a* government First Vice President and Charles
into .conformity with the general maintains a
monopoly over the Klem^ as
Vicei PfesidOnt and
principles of non-discrimination sale and distribution of domes¬
Treasurer.
? ■;
and; trade on the basis of purely
tically produced tobacco products,
Mr. Gray lias been Vice Presi¬
commercial considerations such as it; is; not to be expected that im? dent,/He is in
charge of the De*
price and quality.9 In other wprds,- porters and
exporters will be per*
partment of Member Firms.
Mr..
state trading, monopolies, whether mitted to
buy and sell these com¬ Klem has been Assistant Vice
they deal in a limited number of modities without restriction. The
President and Treasurer.
commodities or, as in the case of
course taken by the I.T.O. Charter
Mr. Gray was first employed
Russia, have; a complete monopoly is
probably the best compromise
of all foreign trade, aresupposed that
by the Exchange in 1918 after
can be achieved between the
to behave like any private trader,
interests of nations moving in the having been graduated from New
buying wherever he can obtain direction of economic nationalism York University. He is 44 years
what he wants at the lowest pos¬
old. Prior to the reorganization of
and those which adhere
to the
sible
the Exchange, in 1938, he was for
price and selling to the
principles of unregimented private
highest bidder regardless of any enterprise in international com¬ three years secretary to the form¬

tices

■

Although the volume of world

trade

is partly

function of the
policies of trading

commercial

countries; the most important sin¬
gle determinant is undoubtedly
the level-of income and employ?
ment in the major industrial na¬
tions. In a multilateral world, coun¬
tries which

are

successful in main¬

taining

high levels of domestic
income and employment will in¬
evitably experience balance-of- political or, economic considera¬
payments difficulties when there tions beyond the purely pecuniary
are
sharp decreases in incomes ones involved in each purchase or
and
business
activity in other
sale. Admittedly this is expecting
countries.
It
is
not
surprising
therefore that a major issue of
the World Trade and Employment
Conference

London

has

been

the

responsibility of nations,
ticularly important creditor
tions
and
ous

such

the

United

par¬
na¬

States

Canada, for preventing seri¬
depressions within their

borders.

think

that this

deal

great

for

consultation
regarding the
practices Of state trading nations
and

forced
into
nationalizing
their
foreign trade against their, will.10

it is possible

course

to have

multilateral trading

tem in-rwhich

each

sys¬

States

guarantee that
we
will live up to this interna¬
tional obligation.
The best that
can

done

relieve

nations

their

other

and

exchange

practices when they

are

experi¬

sale

balance-of-payments

that

sions
with

dif¬

included

ization.}
deficit

discussion

countries

August,

payments difficulties
for

both

the

balance

,aref|£rovided

Fund

International

Agreement

and

see

the

8 See
Full

1946,
M.

and

vate

Charter

quantita¬

Articles

26,27

Suggested Charter.

the

principles of multi¬

trade

controlled

international

cartels.

to fix prices, establish marketing
quotas,

otherwise "restrict

production

and
.,-./•

and

sale in international

zation

the trade

believed
tions
.

the

any

Suggested

member

Charter

the Organi¬

with

member

respect

practices, including state trading

practices, of any other member

of
August,
'

provides for representation to

/ ,.//■■•'.,

From

Con¬

Business

that

position he ad¬
vanced, in >1940, to the position
Director of the

Member
tant

Department of

Firms, becoming

Assis¬

1943 arid

Vice President in

Vice President in 1945.
Mr. Klem came to the

Exchange
advancing
to the position of Assistant Direc¬
tor of the Department of Public

floor page in 1922,

Relations in 1932 and to

the As¬

sistant

Secretaryship of the Ex¬
change in 1938. Early in 1941 Mr.
Schram

detached

him

from

his

duties in the Secretary's office to
work as a member of the Presi¬

dent's staff

financial and bud¬

getary problems. He became As¬
sistant Vice President in 1943 and
Treasurer the following year.

Tucker Anthony Admits '
Tucker,

Anthony

Co.,

120

Broadway, New York City; mem*
10 Article

Journal

Science,

Committee

duct.

governmental enterprises

"Multilateralism

Political

1946, pp. 322-327.

controlled

safeguards for

Employment" -Canadian

Economics

the violence which is

International agreements by pri¬

"United States
Policy" Canadian

313-321.

Kalecki,

Compromise

vvV <?

Financial

pp.

«r'-v

state enterprises or by privately

Journal of Economics and Political Science,

9 See

Monetary

discriminatory

*., J

'/{■:'?{

whether

provi¬

I. T. O.

the

cerned, it makes little difference

Sec¬

;

International

experiencing

in international commerce is con¬

Inter¬

abroad.
nations

VII,
The

Parallel

lateralism and non-discrimination

may

purchase

(Article

Agreement,
Fund..

,J, /

done

tive trade restrictions. (Article 22, Suggested
Charter for an International Trade Organ¬

ficulties arising from depressions

Adequate safeguards for

Monetary

respect

the

currency

Articles

are

the members

scarce

restrictions

tion

7 For

encing

to be

currency

impose

national

obligations with

trade

'V,..

accord¬

inter¬

can

So far

tive competitive advantage in a
responsibility has been
world of state trading monoplies.
definitely established.
However,
there is no way by which the
6 The International Monetary Fund pro¬
present
Administration
in
the vides that in the event the Fund declares
United

I. T. O. Provisions

with the principles of rela¬

ance

i>;X

transaction

would be determined

be instrumental in pre¬

may

venting soihe^hationsfrdih being

trolled enterprise.

Ideally of

minimum the I.T.O.

Charter will provide a mechanism

state-con-

from* a

merce.

national

question.

Articles 20 and 25 of the Charter.

factors

tend

of how certain of the broader U. S.

some

the

scarcities of the ization^3

the; relative

coordinated.

American

relation to their costs

individual

Bulletin,

nomic

omy

whether under the control
private cartel or an inter¬
governmental committee, tends to
stifle economic progress and re¬
duce the gains from trade.
,

agreements

able in the interest of world eco¬

tem,

commodity

for

respect

"Fundamentals

State

a sys¬

the

State

J5, 1946.

Wilcox.

Such

ties would be frozen.

also

has

sought to curb
purchas¬
ing missions by requesting them

the

held during an

earlier period and
of production and

national

may

for example, cannot provide
for Britain's trade
with the Western Hemisphere ex¬
a

pattern

rigid

rightly outlawed by

the I.T.O. Charter.11 Where inter¬

stability, provision is made
deficits in their current
assurance
that the prices of ex¬ in the I.T.O. Charter for the de¬
obtain credits from
ported commodities bore a close velopment of such agreements un¬
International Monetary Fund.?

temporary

area,

trade in the controlled commodi¬

commerce are

purely commercial considerations.

ternational Trade Organization.6
In addition nations experiencing

the relative shares of the market
the

and

adherence to the principle of pur¬
chase and sale on the basis of

proposals
for
an
International
the
Trade Organization.1
It seeks to commerce in order to secure the
It is recognized, of course, that
promote multilateral trade, and to greatest possible advantages from
remove trade discrimination and interregional
specialization may permitting countries which avoid
A good economic depressions to impose
restrictive * business
practices also come into conflict.
exchange and trade discrimina¬
through the International Mone¬ example of this conflict may be
tions against a country which is
tary Fund, and the proposed In¬ seen in the recent discussions re¬
having a depression does not pro¬
ternational
Trade
Organization. garding the Orr plan for a: wortd
vide complete protection.3 Coun¬
The United States has also argued pool of farm commodities for the
tries whose economies are geared
of stabilizing world
for the inclusion of non-discrim¬ purpose
to a particular level of imports
ination clauses in the peace trea¬ prices. Critics of this proposal put
and exports are bound to suffer
ties with the defeated nations.
In forward by the United Nations
from a sharp decrease in their
order to restore world trade and Food and Agricultural Organiza¬
It takes time to develop
tion have rightly pointed out that trade.
production as rapidly as possible
new sources of imports and new
and to raise the income of less under such a plan prices .would
markets in exports.
Nevertheless
developed areas the United States always be high enough to cover
the
alternatives of bilateralism
has
made
large
governmental the costs of the least efficient
and
of
confining trade within
loans to foreign countries and has producer, thereby preventing the
more
efficient
producers
from small groups of nations have
sponsored the international agree¬
never been shown to be adequate
ments which led to the establish¬ capturing a larger share of the
Marketing quotas, to meet the needs of modern in¬
ment of the World Bank and the world market.
dustrial economies.
The sterling
if established, would be based on
World Fund.

bilateral deals

discrimination

trade

Suggested Charter for an In¬

the

Conflicts of Objectives

system would require the

avoidance

Questions of Foreign EconomicPoIicy
(Continued from page 3215)

•

Thursday, December 19, 1946

conflict

fails

with

the Charter.

abide

the

which
the

are

obliga¬

offending

recommen¬

New York

Stock Ex¬

change, will admit Cecil F, Gor¬
don

partnership

-Dec.fr 31.

George S.. West, limited partner,
will retire from the firm on Dec.

dations
may

of the Organization, that member
be suspended.
■
/
;
Z

bers of the

31.

•

" ' '" "V

'•

[Volume 164

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552

3245

diately after the election, "Thank

Surveying ihe Post-Election Scene

haps too bluntly, is that to

God for the American farmer." I

extent

repeat, that

tonight, die- Will al¬
or
strength in

higher and higher prices for every
staple crop the American farmer

(Continued from page 3206)

only encouraging, but surprising
has
considering past attitudes on the
part of other agencies. I am happy

ito

the change so far as the

say

SEC

concerned,

came

before

to sell. We have succeeded

getting prices

but

should

forget how favorable the
political and economic climate has

never

Government

of our
business is here to stay and those
who think differently are a very
small fringe. I am convinced that
.' in time the securities industry it¬
self will be given credit for the
good job it has done in selfregulation and that, as it continues
to do a good job, the regulatory
agencies will relinguish

Parity Law

The

price support laws, in most
cases, guarantee for two full years
after J an. 1 following the official
declaration of the end of the

war

that the objective of government

policy shall be to maintain farm
products at not less than 90% of
parity. Now, parity is determined

another

by what the farmer has to pay
things he buys. The things
the
farmer
buys,, in turn are
priced to a considerable extent by

government attitudes.

the cost of the labor that goes into

There is one government agency
that has yet to see the light,, and
I speak of the Federal Reserve

making them. If, therefore, wages
increase, paritfe#/^
them. There is always the possi¬

Board which, by fiat, has de¬
stroyed the loan value jof listed
securities, among which are to be

bility that higher industrial wages
may result in such high
farm
parities as to price American farm
products, including American cot¬
ton, out of the world * markets.
Don't forget that, in spite of regi¬
mentation abroad, the law of sup¬
ply and demand still governs the
world markets,

trols

more con¬

they find them no longer

necessary.,

refrain from

cannot

comment

found

some

the

soundest

in¬

vestments in the world and held

by millions of people. The Board,
in my opinion, ignored the intent
of Congress by its action.

undoubtedly was ac¬
celerated, if it was not precipitat¬
ed, by the fact that prices had been
advanced too fast and too high un¬
der artificial conditions
by the

ways

tower

the economic and social life of

nation.

Don't

ever

our

sell him short.

its

capital

and

confusing capital
recurring income. We

returns with
have

York

in capital gains,
the Treasury

similar

problem

Necessity of Markets
One

New

although I

believe

and

Wall

Street make the mistake of underv

other

thought and I am
through. You have taken from the

estimating the other forms of capi¬
tal gains outside of profits
in se*

bowels of the earth the most valu¬

curities. It is unfortunate that, the

ing in the artificial operations of
pools and other manipulative ac¬

able precious natural resource in

capital gains tax is entrenched in

the world

the intricacies of the tax structure.

tivities.

increasing

—

use

The Price

regulation

mar¬

ket collapse

some

has/been living off

either winking at or actually aid¬

been.

election.

free markets. The 1929 stock

Texas

for the

too

much

credit

and

shipped
Prices Threaten Our Prosperity

petroleum

—

its

—

ever-

quantities. You have
by-products into the

other 47 states of the Union. You

incipient danger have piped natural gas to Atlanta,
prosperity in our present na¬ to California, Colorado .and Illin¬
tional economy it is, as you know, ois and now you propose to trans¬
If there is any

in the

field

of prices.

There al¬

danger that people will
come to think of prices as an end
in
themselves
rather
than /. as
ways

port it to the New York metro¬
politan area. .'•
The

cannot

sized,

too

however,

;

often

empha¬
there is ia

that

distinction between

basic
and

income

capital

gains, and that our
method of taxing the latter ris
extremely crude, for one thing,
since in a period of rising prices
such

have

significance of my observa¬
tions lies not necessarily in the
vast productivity of your State,

through for

Too many in late years have been

but

must

going
gains are

his residence

regarding, price

been

merely

function in the economy.

as ah obj ective.
price in any com¬
modity is only to regulate its sup¬
ply and to regulate the demand

The function of

for it.

going up in price very
rapidly. Price control kept prices
for

products and commodi¬

some

ties far too

low; not enough

produced and too few

were

was

dis¬

have

the

fact

"markets"

that
to

you

exploit

Production,
consumption

distribution

are

that the wealth

pro¬

What

both the
our

that

very

form

minor
in

extent

this

State.

the

Other

parts of the country — and indeed
of the world — buy your oil and
cotton and sulphur and have sent
untold sums into your State or
made it possible for Texans to buy
the goods and services,.of every

are all aiming at, east
north and south, is the
our

resources,

in the soil and
This

resources.

means

must not put impediments

the

resources

human

these

seeking

now

utilization

full

■

and west,

duced in Texas is consumed only
same

and who is
place.

years ago,

the cornerstones

economic existence. I need

not tell you

only paper profits to a very great
degree. Ask anyone who has sold
or ranch, bought 10
another

your enormous resources.

Just recently some things have
been

rather

some years,

way of their use. One of
impediments is the capital

gains tax which should be modi¬
couraged frorii wanting to buy.
fied in the interest of putting all
government's Someone had to
go without, or to
of our resources to
work, par¬
efforts to support farm prices thus have
too little. Now prices are
ticularly? since
in
the present
the laws affecting that industry. far have been successful, it is
being allowed to rise. The ad¬
period of readjustment it will be
Significantly, almost no investors, dangerous to conclude that these vance in prices has a double ef¬
variety which are required for an necessary to stimulate risk capital
jot
even
speculators,, in public devices always will operate, so fect; it makes for a smaller de¬
ever-improving standard of living. in every form. Texans are not
utility securities,,would like to see effectively in favor of the farmer. mand ;«and; a larger,, supply.
This - interdependence ; of the afraid ofirisk; historically you
Thus far, everything'in the world
these laws repealed.
Eventually, when the supply is economic
life of one section of the took great risks to gain indepen¬
environment has been favorable
The
larger and
fewer people
reforms, represented by
buy,
country on the nation and the rest dence and developed your re¬
to success. In other words, the law
our securities laws, although hard
prices will have to come down so
of the world is one of the central sources without asking for guar¬
of supply fand demand has been as to
entice people to make pur¬
fought, are here to stay. So are
points which we must fully recog¬ antees. You and I are one in de¬
operating
in
favor
of higher chases.
many other good things which the
nize in formulating our future manding only that the cards be
prices, and working along hand in
"left
of
center"
government
The danger here, of course, is
not
stacked against
us
in the
political and economic policies.
hand
with
the
statute
laws
brought us during its 14 years of
that too many things will go up
'
What I have already said, per- future.
enacted by the Congress.
too fast
There are only a few, I am sure,
in the power and light utility in¬
dustry who would Bke to repeal

Just because the

and price themselves out

power

Yes, much ol the legislation was
good, andmeed I mention my. old
*
v
love, the RFC, in which your own
Jesse Jones, did such a magnifir
cent job. I was most pleased recently to; see that agency stand its
ground "when/efforts;were * beihg
'

•

■

and

demand;

in the South
recently seriously effected
by a break in the cotton market.
Being close • to that picture be¬
cause of the large volume of cotbsuiness

'ton

that

member

our

firms handle, I can see the need
of further self-regulation in our

commodity exchanges. I refer to
self-regulation that will strengthen
the stability of the markets, not
weaken them, and this I am de¬
lighted to see, is apparently being
undertaken
by
the
exchanges
themselves,
voluntarily.
They
should be permitted to do so. We
learned long ago that self-regula¬
tion is best,
but it must be
thorough and effective. Our own
failure some years ago to intro¬
duce
stringent
self -regulation
brought us a trip to the woodshed
that will not be forgotten and

which, incidentally,
quite rapidly.
I

want

matured

preach a bit about
economic morality as it centers
around the law of supply and de¬
mand.

When you

push any com¬
modity, or any security, or any
manufactured
product,
to
an
artificially high price by trying
to repeal or ignore the natural
law of supply and demand, you

such
or a

for

wiil

Fortuitous
as

subsequent

invite

unwittingly

grief.

circumstances,

unexpectedly poor crops

may not like this, or you
like it, according to where
you sit and according to your in¬
dividual opinions, but, the,precept
sharp "turn to the right", in Amer¬
ican political and economic think¬
ing puts the whole system of
regimenting prices for the pur¬
poses of the farmer on the defen¬
sive, just as it has put labor union

may

favoritism

off if

fortuitous

circum¬

For nearly a score of years^
one way or

another, we have been

trying- to make the law of supply
and demand operate at

'over 100%

something

efficiency in creating

better

market in

free

manufacturers

people think they
have a monopoly in cotton, or in
wheat, or in copper. They for¬
merly did have the control of the
many

markets for all of these commodi¬

ties. But now, cotton also is pro¬
duced
in
Russia, in Egypt, in

Brazil, .in Turkestan, and in India,
as
well as in other places; the
wheat belt has moved steadily to
Northwest

States

until

the

United

longer is as important
as a wheat exporting country; and
more copper now is produced in
South America,
Canada and in
no

Africa than in the United States.

big mistakes the bulls
made

last

Summer, when
they bought cotton futures on the
poor crop

here in the South,

was

they forgot to look at the

whole

buying

mass

dispose of small
for, $1,600 and medium-sized
cars for
$2,000 — but there are
many potential small car owners
who can't pay more than
$1,000
and many potential medium car
can

owners

who

can't afford

pay

than
$1,300.
Until
the
"premium" market is exhausted,
the automobile maker can
get
along all right and sell his pro¬
duction, but a time will come
when he will have to
tap the

world

supply

situation.

Other countries had a good crop.
We have found out

York

Stock

safest

markets

Exchange
in

the
.

the New

that

the

world
*

*»' J>

J'-!

are
,

ABA Calls lor Abolition

01|Regiilation W

abnormal
the

and

normal

the

and

unusual

the

usual.

These present obvious maladjust¬
ments are the product of more

hidden

maladjustments which
preceded them. Many of them, to
be sure, were the necessary prod¬
uct of a long and hard-fought
war.

during the period in which our
nation was in danger, but every
economic literate

long-range

knew

that

its

consequences
would
to demand painful ad¬

consumer

credit

known

"On November 16 the Board of

Governors of the Federal Reserve

"Now

that

governing

the

all

other

controls

purchase of con¬
have been

durable- goods

removed, the time has come for
the
complete
Regulation W-.

abandonment

figure in

testi¬
fies to his good sense. He is mak¬
ing strides in the better utilization
of his land. More and

years

recognize that some con¬
durable goods, including
automobiles, refrigerators, wash¬
ing machines, etc., are still in
scarce supply.
However, we also
realize that if the distribution of

of his

being used by industry
through the progress of chemurgy.
Great new vistas in agriculture
are being opened to us constantly.
To me as a farmer, the future
never
looked brighter. I heard
many
times last month imme¬
crops are

ments of Such size that

control

they would

financial burden that he can¬

not afford to assume.'

"The * Consumer

most

consumer

needed
income

to buy
out of

people
goods

they will be forced to 'cash war
bonds ; to purchase such ' goods.
The Committee further1 believes

that? bankers ;/and
could

businessmen
credit

put in effect sound

Such terms would make it

terms.

possible for people in the middle
and lower income groups to buy

goods.
These
terms
be
inflationary/1 noi*

necessary

would

not

they

prices

affect

re¬

quire policing by the government.
Whab these' terms should beis a.
matter-of education on the part
of each lender.
This Committee
would be pleased to advise banks,
for instance/what in its judgment

sound, standard terms in this
particular period. The losses that
would inevitably result from loose
that

natural

the

Com¬

its

re-

our

sys¬

enterprise.

bankers and businessmen are free
to

use

based

their

own

edge of the
conditions. ■;
"With
trols

The

elimination

the

any

existence

con¬

there
justification for

prices and

Board

local

borrower and

nollonger

the

best judgment,
knowl¬

intimate

their

wages

Regulation

Governors

the

Federal Reserve System suggested
in

this

recent report to Congress thai

regulation be made
credit

W was
was

and

control.

a war

permanent

check

free yet sound flow of consumer
credit can be maintained only if

Association' is

aware

unsound loans

create

individual

tem

nent

Credit

terms

tion:

consumer

because if

the terms imposed are too severe

for

mittee of the American Bankers

sponSifclliiy to

inflationary

are

"We

sumer

to the lowest

credit

would

credit.

sumer,

anything that would contribute to
inflationary pressures. However,
the Committee believes that the

arbitrary

Regulation W.

these goods is to be on a fair and
equitable basis, the arbitrary re¬
strictions imposed under Regula¬
Now we are in the midst of the
tion W on the consumer financing
great adjustment. Unquestionably
of these goods must be eliminated.
the farmer will be the first to
The only way these goods can be
feel the blow of falling prices.
made available to all groups of
But he is best equipped to with¬
our
citizens is to permit sound
stand the shock. He seems to have
credit terms which are within the
more notches in his belt. But
why reach of the vast
majority of the
is, he so well equipped? Because
people. The terms now required
he is willing to work hard. He has
under Regulation W mean that
always worked hard and the fact the little fellow muist
obligate
that he has paid his debts down
himself
to
make monthly pay¬
be such

justments.

'kt u-

(Continued from page 3210)

terprise system.'
Among these
controls, it included the control

System announced the streamlin¬
ing of Regulation W. This was
mass < market. This can be done
widely publicized as an important
only ivheh cars are obtainable at
step, in the;-Board's program of
lower prices. i
*
modifying Regulation W. whereas
The same thing can be said for in fact
the
principal relief it
almost
^eyery - scarce/ and high granted to consumers was in the
priced item about which people matter of charge accounts.. The
now complain. As
prices resume limitation on the use of charge
their functions in a free price accounts
was
lifted;. however,
economy, strange things are hap¬ rigid cpntrols were continued on
pening.
We should not confuse the use of consumer instalment

Price control was not all wrong

demand.

the

cars

with

Too

reach

power., So long as there are only
few automobiles made; of course*

the

products and farm staples. In
of cotton, now that we
have a short crop and the whole
world is in need of everything
from which cotton is made, this
may be a very good time to begin
to switch back from a regimented
market
to
a
market
governed
solely by the law of supply and

that

will fall to of its own weight.

have

case

The

the

cotton

stances and a house made of cards

defensive.

farm

awhile; but eventually there
be

the

I think all of us will be

to the rescue

war, may come

and

deeper

You

I know that you

were

■

]ust about the way govern¬
ments always do when they try
to improve on the law of supply

have gotten in
deeper,
regulated
more and more, regimented more
made "to force it to make what it
and more, built more and more
considered unsound housing loans.;
I could see signs of the early complicated bureaucratic institu¬
tions. In short, one thing has led
graining of theoldrriaster/iri that
to another until the public has
controversy.
";
j become fed
up. It has had enough.

Break in Cotton

*n
prices for, the
'beneht of the farmer, we have
done
,

emergency measure.

never

should

a perma¬

Regulation

intended

government
be

control

abolished /noW.

help combat infla¬
recognizes It is hoped that the new Congress
J
be a mistake-to ;do will agree with this view." /

"Committee

th^^'^Md

Wage Policy for 1947 Preparednondurables. The gain in
for CIO

decency—are being seriously un(Continued from page 3209)
dermined. Second, the long-term
tion that profits are extremely
stability of our economy is being
high in comparison with all pre¬
endangered by a shift of income
vious experience.
<,
away from the consumption of the
The growing concern over eco¬
masses and toward the savings of
nomic developments is not lim¬
the relatively few. Third, the so¬
ited to businessmen. Concern is cial and
political health of our
greatest among the millions upon democracy is being threatened by
millions of workers who have
the concentration of income and
been caught In the vise of the In¬
wealth and the resultant concen¬
flationary rise in prices and whose tration ©f power and influence.
incomes have shrunk substantially
These are great dangers.
in terms of the food and clothing
It Is obviously
and other necessities of life which
present time, to anticipate correc¬
can be bought with the contents
tion of these dangerous trends
envelopes.; :
through reductions in prices and
Seldom, if ever, in Our history profits.
The regulatory mechan¬
have we experienced within a few
isms by means of which reduc¬
brief months, such a major shift
tions in prices and profits might
in economic well-being witti dras¬ have been
achieved, through gov¬
tic consequences to such a large
ernment action, have been shat¬
proportion of our people and to tered irretrievably.
Moreover,

of the weekly pay

whole economic

our

/jtesctey;December$0^1946

THE COMMERCIAL & FINANCIAL CHRONICLE

3246

stability as

has occurred in 1946. From a suc¬

cessful period

businessmen show no signs

gain in

durables for the whole two years

into-

state of

un¬

healthy- and harmful inflation, all
within

has

weekly earnings to their January

been

19.2% and

durables

about 9.1%. However, due to the

the

restore

power 'of

buying

1945 status.

changes in labor costs; able, to increase the -number of
directly measure their employees, eliminate over¬
changes in the money that : the time, and effect a corresponding
worker has available to maintain reduction in their hourly labor
his standard of living. These most costs. From January 1945 to Oc¬
tober 1946, total civilian employ¬
vital issues are discussed below,

dollars

increase
,

sizable

to 57.4 million

cents

and

hourly earnings,
the increase in cost to employ¬
of

ers

hour

worked

product

has

beph

smaller.

in ;j

real

manufacturing

all

(Chart and

YY!

Of the de¬

'f;

;;;

;

hourly

able and nondurable

goods

crease

hourly
1945.

manu¬

wage

facturing industries is revealed in

8% to equal the real
of y January,

earnings

With present price and
trends, the real increase

be about

in-

required at the end of 1946 will

the following data:

trary# the business community has
INCREASES IN HOURLY LABOR COST AND STRAIGHT-TIME
tailed facts demonstrate, this situ¬
first pushed aside price controls
HOURLY EARNINGS, JANUARY 1945 TO OCTOBER 1946
ation may be traced to the sucand then raised prices rapidly in
cessful pressure against price con¬
All
; Durable Goods Nondurable Goods
the face of already huge profits.
trol in the face of continued short¬ In the five months
Manufacturing Manufacturing
Manufacturing
ending October
ages arising out of the war and
1946, living costs consequently Straight-Time Hourly
the insatiable quest for ever high¬
11.3 cents
18.3 cents
Earnings
12.7 cents
rose
nearly as much as in the
er profits. The results may be
16.4 cents
6.1 cents
8.6 cents
fifty months following Pearl Har¬ Hourly Labor Cost...
clearly seen in the growing bur¬ bor/ Wholesale prices rose even
While the average dollars and manufacturing even' of 8.6 cents;
den upon workers, paralleled by
more.
cents cost per hour of work in from
January 1945 to October
the lushest profits in history.
It seems equally futile to an¬ manufacturing rose by 8.6 cents, 1946 is an increase of only 8.2%.
The demand for some types of
ticipate a correction of these dan¬ the average dollars and cents la¬ This compares with an increase
goods and services has already
gerous trends through!a change in bor cost per unit of output pre¬ of 25.3% in all wholesale prices
softened. Millions of low income
tax policy. On the contrary, cur¬ sumably
rose
even
less.
Since between the same dates (Chart
families find themselves priced
rent
congressional
tax-thinking Janary 1945 the quality of the ci¬ and Table 16) and an increase of
out of the market. The demand
vilian labor force has improved 27.9% in the wholesale prices of
runs, at best, in terms of an equal
for most goods is still very high
percentage reduction in total in¬ notably.
Men
with experience manufactured articles alone.
because of the backlog of wants
dividual tax liabilities for all indi¬

manufacturing in

all

earnings

October, 1946, required

even
.

real

The

C labor

cline in overtime work in the dur¬

As indicated above, the average
increase in straight-time hourly

weekly^ earnings. Y" /

average

Table 8).

been much 4nor$ modest.- The
Increase fit labor cost per unit

of ex¬

(Chart and Table
of hours

the

fell from 45.4 to 40.5

has

work

while

straight-time

increase in wel¬
fare even if secured through a
moderate reduction in real pur¬
may mean some

chasing power. For this reason, It
is of value to examine the trend
51.7 million' of real
hotfrisr earnings hs .well ha

ment increased from

4. While there has been

hours; wotked

A reduction' In

measure

neither do they

As the de¬

few months.

the;

increases which would be needed

Changes in real weekly earhentirely after the steel reduction in overtime work and
dispute settlement of February the consequent reduction in over¬ ings are the best general measure
time premiums, the average cost of the ability to sustain or im¬
1946.
to employers of an hour of work
prove "the standard of living.* It !
Changes in straight-time hourly
has risen only about two-thirds
may, however, be argued, with
earnings are not directly signifi¬
as
much
as
the
increase
in considerable
force, that workers
cant in measuring the economic
straight- time earnings. - £
put in longer hours during the
changes in which we are most in¬
Because bt theprogress of de-^ war than they .would .like to work
terested. Changes in straight-time
hourly earnings do not. directly mobilization, employers have been

ercising such self-restraint in their

except in the face of a sharp re¬
duction in demand. On the con¬

dustries

took place

of stability in prices natural search for profits as would
prevailing throughout the war, we bring about a decline in prices
have moved

varies in relation to

earnings
in
all
manufacturing
January 1945 has been about
13.1%; in nondurables alone it

since

10%.

In durable

manufacturing alone,

the increase required in October
reach the Jan. 1945 real earn¬

■

—

■

have been

arid the

high incomes and accum¬
ulated liquid savings of those in
the middle and higher income

viduals

demobilized

and

have

5. The average weekly earnings of

paying income taxes.
jobs formerly held by wom¬
This would mean an enormously en and by very young and very
greater percentage increase in in¬ old persons who are not normally
brackets. These demands cannot
come
after taxes for large in¬ members of the labor force. High¬
form the basis of continuing pros¬
comes than for small ones. There¬
er
level operations in the massperity. Long-term prosperity must
fore, if current congressional ideas production industries are being
be based on expanding mass buy¬
prevail, changes in taxes will still achieved and bottlenecks are be¬
ing power. It cannot be achieved
further accentuate the dangerous¬ ing eliJhiriated; both of
these
by shrinking the buying power of
ly diverging trends in incomes trendsc meaii higher
the workers in order that profits
from wages and salaries as com¬ productivity. While it is too early
may rise far beyond reasonable
for conclusive statistical evidence
pared to incomes from profits.
and
stable levels.

2. Never in

quired

clearly re¬
major general Increase

in real
yage

rates.*

The purchasing power

*;
of by far

the greater number of American
families has been falling recently,
month by month. Of all the gain¬

fully

employed people in the
States, about three-quar¬
ters are wage and salary earners.
These—the great bulk of our peo¬
ple—-have suffered a major de¬
united

cline

the

earnings

real

during

value of

their

the

past
two
years; in recent months this de¬
cline has been proceeding
alarming rate^
:,
i
<

at an

Meanwhile incomes other than
wages and salaries have not de¬
clined but

the contrary have

increased
sharply. Since 1944,
while the total of wages and sal¬
aries

derived from

all

sources^-

public and private—has fallen,
corporate profits after taxes have
risen about 50 %, end the incomes
of: famv operators (after all ex¬

3. Public opinion lias been lured
v into
a false sense of security
with

respect to national wage
trends by exaggeration of the
i extent and the significance of
increases in straight-time hour¬

ly earnings.
-tTherevis

widespread belief,

particularly among businessmen,
that "Everybody got an 18 Vz-cent
hour increase this year." This

belief is mistaken.

prosperous

among

our

the

and

salary

earners and an

increase

period front

of the increase
hourly labor costs. Y
: v
'

Change Jan. 1945 to Aug. 1946

for labor in the

•

;

■

trated,' there; was a' hot lossChf
$4.48 in weekly earnings. In nondurables there was a rise of $3.82.
Most production workers in im¬
portant relatively high-paid mass
suf¬

earn*^
Workers

two

creases would

most all classes of workers has

been very great.

durables

peak and the sus¬
expansion in nondurables )
(Chart and Table 3).
The rise in

ous

continu¬

life."

•

tivity in their most concrete and
practical
form—namely
as
re.

fleeted

profitability—are con¬
below.
*
+ /.

sidered
8.

There

been

has

outstand-*

one

ing development in the earn¬
ings of labor during the past

development
pronounced s
tendency for the lowest-paid v
groups of workers to receive

two-years.
has

the

been

This

very

relatively larger

creases.

wage
Y

in¬

There is great—though not com¬

plete—consistency

the

trend

toward

greater percentage wage
increases in lower-paying than in
the

10312

114.9

+9.6

'-:-.:.

present trend of

crease

about

From January 1945 to October
• living
costs - (Charts - -and
Tables 16 and 17) have risen

16.8%.
From January
1945 to
May 1946, the rise was only 8.6%.

■

manufacturing were only $39.24: gp<uIs>^'Workex94,+whuY3ax^'. as a
in October 1946 compared to $47.50 group, the lower paid) have re¬
in January 1945 (Chart and Table. ceived greater increases than the
18); a rise of 21.0% would be re-, durable workers. Many especially
quired to erase the loss.
in

Workers, low-paid nonmanufactaring
groups have also moved up sharp¬
ly. The convergence since Jan.,

manufacturing can now buy
only about four-fifths of the goods!
and services with their weekly
pay that they could buy in Jan¬
uary 1945. In durable goods alone
a.rise of 27.5% in Weekly earn-J
ings would have been required in

prices, an in23% will be October

1946,

in the broad durable and nondur-

able;manufacturing groups^-Jt Is
the
lower
paid industries that
.This development means that, have had the larger pay increases
In terms of January 1945; prices,1 relative to. their previous earnings.
the
whole the nondurable
average weekly earnings in all On

ings to

But

■

earnings

back to the January, 1945, level.
By the end of 1946, with the

;

any

higher-paying industries

(Charts and Tables 3 to 1-2). With¬

1946 to restore real earn¬

1945 has been greater in weekly
than in

hourly earnings because
loss, of overtime.has., been
more pronounced in "the higher**
wage industries,
;
t
the

'There has been it convergence

the January- 1945 levels ;

It must be emphasized that

of earnings not only in compari¬
the; son with 1945 but Y also—quite

percentage rise in dollar earnings
required to bring Teal weekly
earnings back to the January 1945

strikingly—in

comparison

1939. It is one

structive

with

the most ton-.Y

developments of
the
considerably from in¬ 1940's that the earnings of lower
since the abandonment of dustry to industry (Chart and Ta¬ paid workers now more nearly
Manufacturnig
Industries >
price controls, the cost of living ble 19). For automobiles ; it was approximate the earnings of the
'
84.0 cents
has increased very rapidly. ; The 28.4%, for steel 25.7%, and for higher paid workers than was true
*91# ';:? *
index /will probably - stand 20 % electrical machinery 17.6%. There in the prewar years. The strong
100>J('-h4 (,
above/the January 1945 level by is no presumption that the profit demand for labor and the eHorts
Y + Y position of companies in these in¬ of the better-organized workers
+16.1v+v;/;r:,,.; the end of 1946. /V

Nondurable Goods

•

earnings—withont

to bring real weekly

and

substantially greater in
nondurable goods
category

aver¬

in^crease in prices—would have
been required in October, 1946,

straight-time hourly

earnings has been

On the

age, in all manufacturing, an
Increase of about 21% in week¬

•

war

Industries r
105.3 cents

■■

In durable manufactures, where
the
decline
has
been
concen¬

Even if there had been no in¬ production industries have
crease in productivity iJurmgtthbi fered a
sharp loss In weekly

reflects the contraction in the de¬
mand

Manufacturing

August 1946

Jan., 1945 level, we do not mean
to suggest that there is ground
for
national
complacency
coneerning even the highest stand¬
ard of real earnings yet attained
by ' American workers; On the
contrary, even the highest stand-*
ard
of- living
yet- reached by

variations, which have been sub¬ 6. Taking into account the in¬
crease In living costsv durink
stantial, there has been a broad
difference in the pattern of in¬
the past two years, the. decline
in real weekly earnings of al¬
crease in
straight-time earnings

Durable Goods
*

•

manufacturing, there has

decline

Table 4).

and

the increases in
weekly and hourly earnings that
are required at the present time
to
restore real earnings to
the
indicating

consider "the American way of

earn¬

STRAIGHT-TIME HOURLY EARNINGS

;

specially

part

that the standard of living is the
weekly earn¬ only proper subject of considera¬
ings of $1.67 or 3.5% from Jan¬ tion in the formulation of national
uary 1945 to October 1946 (Chart
wage policy. Costs and produc¬
been

in/productivity^ has?bHset;A^ub^

past

entire

the
income going to profits.
First, the than is durable goods manufac¬
living standards of the masses of
turing (Chart and Table 14). From
our people—never better than a
January 1945 to August 1946, the
tenuous compromise with minigain in the durables group was
mum requirements of health
and only three-fifths as much as the

Jlanuary 1945
February 1946

In all

presumption in favor of such
higher productivity. It is not at
all improbable that the increase
stantial

1946).

years.

creases in their weekly
ings during this period.

man-

cents—during

hourly rate in October was
1.3%
above - the Jan.,
1945 level
(though 6.0% below
the real earnings peak of May,

—

in the share of the total
national

•

(except

and

two

leal

In general, American workers falls far below
only workers in the lower-pay-, the level that we are accustomed
ing industries have had in¬ to

good data), there is a reasonable

tained

inherent in

productivity

manu¬

add
the

already

—

fallen.

Three dangers are

the past

January

after the

the present trends 'toward a re¬
duction in the real income of
wage

post VJ-Day increase in

few industries that have

workers

have declined—even

dollars

years, labor cost in¬ ings since January 1945.
hardly begin to ex¬ in low-paid industries have gen¬
1945 to October 1946, plain the rise in prices. An in¬ erally had increases
(Charts and
average straight-time hourly earn¬ crease in hourly labor costs in Tables
5, 6 and 7).
ings in all manufacturing rose by
IpJEKLVjEARNINGS OF PRODUCTION WORKERS
only 1-2.7 cents, from 97,0 cents per
Selected Industries
Jan. 1945
Oct. 1946
hour
to 109,7 cents per hour
Change
$59.42
: $58.12 —$6.30
(Chart and Table 13). This meas¬ Automobile
Steel
55.04
50.28
4.76
ure of hourly earnings, which dis¬
Petroleum and Coal Products Mfg.
56.20 f :
• 55.20
/
1.00
regards overtime premiums,
Lumber and Timber Products—.-L33.72
38.79
<
+ 5.07
therefore; rose 13.1% during the
31.69
41.54
Canning and Preserving-——.lL
+ 9.85"
past two years.
General Retail Merchandise Stores
22.31
t 28.57
Y *
+ 6.26
Apart from individual Industry

Over

people have risen sharply, while
the earnings of the workers
have
-

hour

penses) have risen about 40%. between durable and nondurable
Earnings that go, on the whole, to manufacturing.
This difference
the

production

facturing

recent years has the

national interest

taken

now

ings rate was 10.9% (Chart
20). In nondurables,

Table

level varies

64 ^ Ntiimbet^4552
-

THE COMMERCIAL & FINANCIAL CHRONICLE

"have therefore not benefited only,! aries

."the

and

striking

then

that the - return,; after
taxes, of all corporations on their

net worth rose from 219% in 1936x
39 to 9.1% in the fourth
quarter

Tins convergence of labor

-ings

decreased

1939. Corporate profits also dipped
but have subsequently recovered

of workers

.groups

first

relatively well-paid J moved up to a level 169% above

already

earn-

means

•

level ^about 290% above 1939.

an"

turing

the average, in manmfac-

corporations, without

any

dividual industry. Obviouoly, the
profit and wage picture must be

expansion in volume. Such an increase

is independent also of

considered separately in each
wage
i

the" negotiation.

1946

(Chart and Table 26). It possibility of adding to the profits
similarly striking that the net ©f manutadturing corporations by
manufacturing corpora¬ raising manufacturers', prices and

after;

corporate taxes
difference? and a great variety of basis, corporate income rose 133'%
from 1939 to 1944 while private
individual industry problems, it is
more
meaningful
to - think
in wages and j "salaries rose 138%,
'terms of an overall national wage Since then private wages arid sal¬

.-still

sible

3247

return of

tions

6.9%

their net wdrth

1936-39

rose

11,6%

f rom

in-the

retaining

present

levels

distribution, thus

fourth

The facts

prices at later
rnovt

quarter of 1946 (Chart and ing in the direction ©f restoring!
Table 27).
By other measures, former profit relationships as be¬
than at arpy other time, aries have risen by a further 12%
which
attempt to: correct
for tween manufacturing corporations
;/in-©«r recent history. Such gen-' while corporate .profits have risen
the excess amount of cash and and others. Should such a restora-s
©ral thinking will still need
to by a further: 50%,
Government securities included iii tion of traditional
-be adjusted to the individual facts
relationships i
1L In spite of the Increase in cor- net worth* the rise is 1 even .more take
•in E^h industry oij firth
place, a substantially largerporate taxation since the late Spectacular (Chart and Table 28)1 increase than 21 % in the
earnings
JL^ct eonsi(teratix>n, but/it ican/af-'
fx 1930's, total corporate profits
of production workers in manu¬
Even
^ord some broad policy guidance J
£ the
conventional;. net
after ; taxes
are
now
greatly worth " measures
facturing woyld be possible with¬
reveal
some
higher in relation to sales than
.9. At full employment, the pres¬
striking implications for price and out any increase in final prices.
r they
ent price and wage structure of
On the other hand, this makes no
: were
in :the ;: prewar wage policy. If all
-corporations

.policy

adduced in this

sur¬

vey provide the general economic

now

background for

particular

wage

discussions and settlements. They
have
been
assembled to throw

light on the general wage-priceprofit situation. Major decisions in
national

policy

wage

are

clearly

immiment. It is hoped that the as-

;

serably of these facts may be
helpful in bringing about equitable
decisions, made in full awareness
of

current economic

conditions.

•

;

American

industry

yields

period.

content

were

v'*

their

provision for increases in

wages

and salaries of the nonproduction
/ level of corporate profits before
xlntheyears 1936-39, hllcorpora-.; 1-636-29 rate of return ©n net
taxes as high as at the lushest tions
■
x earned
ah average return worih, they could afford -at the workers. .;:x '.A-x;
period of war prosperity.
It; < after taxes) equal to 3.2 % of the to¬ present time to grant wage in¬ %
(Tttorhihately,^^^due t© the ab^
yields a level of corporate prof-! tal value of their sales (SChart and creases -of an annual ' value of sence of
•V.Vappropriate payroll data
its after taxes about 50% higher T'aMe
26). In the last half of 1946, about $17 billion. Manufacturing for all corporations, it is impos¬
'I •
than the wkr peak and utterly; they had a net Teturn of "about corporations
alone, without re¬ sible to make the same type of
without
earlier
precedent in 511% on total .sales. This is an in¬ ducing their rate of return on net analysis of the wage increases that
our
national experience.
crease of
four-fifths in the net worth below the high level of could be made out of the excess
6.9% v -earned in 1936-39,
in ©ec. 1946 the' economy Jhas! rate of return on sales.
could profits of all corporations -as is

x ;

already at approximately a $25 billion level of
r total
r corporate
profits
before
-•;A-taies (Chart and Table 22). This
'Iveiameroi
'
•^4^
war y ear; it as mote te
.goods. Yet

we are

an an-

bM^e--$8%
billion
This

rather

would

than;

$15} billion;

still be ^double the

oanred at the war/peak.

The calculations cast

tripled
rate

since

for

1936-39

while

manufacturing

management.

terially
of

our

would

also

ma-/

detract

from the ability
economy .to contribute to

world reconstruction.

tions would still earn about twice basis would be much the
larger.
the average $2 % billion of profits As indicated ; in point 11
above,
thatt
the rate of return on net worth for
^they earned in the years
1936-39 and nearly as much; as all corporations has more than

t:936-39t)rG)£it level.Agross profit /they

that comes from high-;
operations,
a
stalemate
impoverish both labor and

would

15. The facts aH lead to the
'

If all corporations had only the

ings would be running at

wage

duction

level

f; worker's point -of
also
v.

con-

elusion that not only from the

same; average

>%al£h^:; in

national

be tragic.
By de¬
priving the economy of the pro¬

grant wage increases of an annual possible, for manufacturing cor-i
rate of return ton valute,6f abdiit $5T bUhon. Altef porations alone.- We can tee confi¬
xseveral iields,;parric-i sales fat the end of 1946 as the av¬ granting this $5.1 billion of wage dent, however, that the increase
increases, manufacturing corpora- possible on an all corporations
: -consumers': rdurable; erage ;of 11936-39, their rvet Earn¬

reached the high level of

policy would

i®G0t yet

stalemate

for

the

view

benefit

but
the

f whole

economy a further substantial wage increase With¬
out a general price increase is

possible,

justifiable

and

es-

//; sential.

the

As has -been shown in the
pre¬

ceding analysis and as can be seen
in the following tables and
charts,

about $13% billion (instead bf
light
vohime : bf the present annual rate of about on the irresponsible assertions tions alone has less than doubled. the facts combine to
indicate the,
$25
billion)
would
suffice
to that the price increases that have It may therefore be conjectured need for
wage increases without
average
1936^39 profit. .vMume! yield a net of about $8 % ■ billion. occurred during 1946 were made conservatively -that if the excess
corresponding
price
increases.
^aibss htatibiml ARrdduct Therefore, hyr Jicceptviig the pre necessary by wage increases. On profits of manufacturing corpora- The inflation in which we are en•is how cmly 32-%-times ;as Agreat as war rate of net return on sales the contrary/there is every reason
necessary
»it was in 1939 (Chart and Table all corporations would be Mple to to conclude that—with exceptions in wages in. manufacturing the ex
to
maintain a healthy level
of
,1);.the;share;hf corporate profits <gmnV wage whereases tit tin an¬ in some few industries and firms cess profits of all corporations will profits. The wage increases of the
nual rate totalling .roughly $11(4 —these wage increases could have support a general wage increase
dbas increased greatly,

<2%- times

the. .-1929

some

corpora¬

greater increase^
in wages would be possible if cor-f
porations were to accept the same1
rate of profits before ;/taxes
sales as in 1936-39; this would
merely meanthat they wouldchot
shift the^ increase in corporate
billion. An

-alone, -the profit situation is only
slightly less brilliant-rKm a be-j

fore;xt9xe^':basis.

;3>ue-jl6ithe/ex^

ttptippal vMuine and profitability
.of wartime manufacturing busi/

even

--rtrrt
akn
earned.
fact, oh
and also in mninr irrterriin-!
to major interrup
the !ayerage, substari^ly larger
tions of production in 1946, profits. taxes onto prices.
increases could have been ab•before taxes in manufacturing are;
Manufacturing corpora tions
still below the war peak.
But afohebad 4>s0mewtat .'higher rate soibed;ySbme necessary increase^
in; prices could; have been -coun¬
6f Pet return on sales In 1936-39
they are now passing the $13 bilter-balanced by price decreases;
lion mark—a leVel more than 2%
than all
corporations—4.3% in¬
Such a healthy wage, price and
times that of 1929 and more than stead of 3.2%
(Chart and Table
'nflcc

ixess

lour times the average of 1936-39;
fc'

after taxes

basis—which

27). In the last half pf 1946, man¬
ufacturers' rate of net returns

-on

"is most relevant to the earnings Of -sales was about 5.7% ^or 33%
"stockholders
corporate profits j higher than in 1936^39. This more
SI5 billion, fullvi moderate rise in the rate of manu^re opproaching $15 biilion, "fully1.

Tm times
war

year

the level of the best facturers: returns compared to
(Table and Chart 23). tbbse!bf all "corporations reflects
■

Hue however to the lower prewar

parti(:iilarlythe presentlushmar-

are

referring to economic realities

attainable with industrial peace at
the close of 1946. No doubt, over

consideration

-of

such

the * dangerous

consequences

exoessive

profits and such loose pricing.
time, further increases in produc¬ Business
policy clearly has been
tive volume, in labor efficiency,
shortsightedly
set
on
raising
and in profits are attainable. It is
prices again and again and taking
perfectly possible for business, all that the market can bear.
profit development would have under such a healthy ^develop¬
"The Office of Price Administra¬
beep particularly assured had rea¬ ment, to grant wage increases of
tion has demonstrated (Eighteenth
sonable
wage
increases
been this order of magnitude, stabilize
granted without, long-drawn-out prices, and achieve substantially Quarterly Report,~Time-SO, 1946,
interruptions of production.Reace- larger profits than we "have in¬ pages 6-11) that the price ad¬
vances made by leading industries
fuT settlements between labor and dicated.
were not necessitated by wage in¬
management in 1946 would have
14. The salient facts of the wagecreases. The OP A points out that
meant oven larger
output and
price-profit situation in Amer¬ actual: price increases made by
"Therefore greater profitability aftd
ican business today indicate fifteen industries before June 30,
"greater
capacity
to
pay
the

corporate tax^istrucl^; tcnpbteitE gins at all levels of diriribiitioii.
If" manufacturing corporations!
profits after taxes are now about
higher
wages
without
raising
the volume of 1929; ahd 3^4j ha#/Ihersaftfe rate hf retidn on
sales as in
1936-T9, their pet prices.1
timbs lis
profits would now be running at 13, Even
the years 1936-39.
; 1 manufacturing corpora
hh honual rate df about $6 bBlion
tions, whose profit position has
Tor ihanioftacturing cprppratipfi^
testead of $8.hilJion. Their gross
not improved nearly so much
alone; on an after taxes basis,
profits would be about $10 billion
as that o( ail *>ther corpora¬
the picture is very similar. At the
instead
of about
$13% billion.
end of 1946, profits are approachtions, can afford to grant their
'

;

past year could- have been ab¬
been absorbed -and a satisfactory! of at least. 25%.
sorbed without- any general rise
level ©f profits nevertheless main-!
In suggesting the possibility, !or in the
price level. The >price line
taihed. 'The 8.2 % increase in av4 industry in general, of absorbing .could
have been held and still
erage manufacturing hourly labor! wage increases of approximately
yielded excellent profits.
:
costs' could easily have been ab¬ these- magnitudes-,- we are not re¬
//Business / on the whole
has a
sorbed out of the lavish profits ferring to distant prospects.
We
given no evidence of restraint or
that have been
In

that

//crease

production

national interest

major

in wage

general

rates.

re¬

1946

in-;

offset the wage
increases granted/Since June 30

It. is

were

3.6

times

large

necessary to

manufacturers''

most important that this gen¬

the

eral wage advance be achieved

They would have about $3% bil¬

the

quires

prices has been even greater and
the relationship to wage increases

without crippling work stop¬

even

pages.

The

increase

basic

facts

clear.

are

remote. In the second

quarter of 1946 profits after taxes

for all corporations were already
increase of about 10% in hourly
well above the war peak. Yet since
earnings in manufactures is re¬
at the present time without
June wholesale prices have risen
quired at the end of 1946 to bring
reducing the corporate rate of real
12. Corporate profits are now es¬
hourly earnings back to the 21% to bring a further sharp rise
return on net worih to a level
in profits. Part of this increase in
4he 1936-39 average.
pecially high in relationship
lam; 1945 level; an increase of
below the 1936-1939 average
to net teorth or to any other
.The economic and social conse¬
perhaps 23% is required to bring prices reflects the rise in prices
of farm products whic hare proc¬
of "62%;
real weekly earnings back to the
Significant
measure xof
the
quences of such an uriprecedentin
manufacturing indus¬
As indicated in point 11 above, Jan., 1-945 level. An increase of essed
stake of ownership in business
-cdly high volume of profits are of
the 1936-39 rate of return on net about 17% is required to meet the1 tries. However, prices of indus¬
the highest import. They require
operations.
trial products have also spurted
worth for manufacturing corpo¬
increase in the cost of living since
the earnest consideration of the
Sales volume is an equivocal
far ahead since June. '
>
rations
(after taxes) was 6.9%. the enunciation of the Feb., 1946
yardstick for mensurin^ pro£it&?4
Maintenance of this rate of return Government wage policy. In man¬ N There are those who urge labor
especially in the perspective pf
ID. Total torpor ate income has
industries alone, the. to abstain from requesting wage
wage policy-—because The/volume would^ permit, at the present vol-* ufacturing
risen much more rapidly since
©f sales is a joint prbduct ifi^ capi^ iiihe of business and with present End ©f 1946 level bf corporate increases on the grounds that such
/1939 ^and
Especially
since
tail
and
labor.
The /ownership productivity and prices, the grants profits after taxes will support a a policy would avoid further eco¬
1945--4han income fromwages
nomic / and
social / difficulties.
stake in business- enterprise and ing of about $5.1 billion of annual 21% increase in the earnings, of,

tng an annual rate of $8 billion;
They are about 45% above the
best war year, 1% times as high as
■Ik 1929, and 3 Vs- times as high as

lion

creases.

contribute

wage

in¬

crease

workers

21% in total earnings

■

and salaries.

the level of profits are more ade¬

before taxes basis,

cor¬

porate -income -rose by approxi¬
mately 275% between 1939 and
the year 1944, while wages and
salaries derived from private em¬

by only 138%.
Since then, as demobilization has
progressed, private wages and salployment* .rose

'■

*We' -have,, excluded civil

and

military Government wages and
salaries throughout this compari¬
son

from
Includ¬

because ho profits accrue

r Government employment.

appraised in relation to
worth orjsome other index of

quately
net

wages

time; ;

would

also

production workers, without any: These people must assume either
further increase in productivity, that the present economic rituawithout any further expansion in tion is already sound or else that'

Total
Net worth would be
volume, and without reducing the;
manufacturing produc
unexceptionable measure of tion workers' payrolls in the last return after taxes -on net worth to
In
ownership participation but for quarter of 1946 will be at an an¬ a rate below that of 1936-39.
the great increase in cash and nual rate of about $27 billion. But total
corporate
enterprise,
the
Government Securities
held by in 1939 about 10.6% of total man¬ profit position is less precise sta¬
business enterprises in recent years.
ufacturing
payrolls
were
ac¬ tistically but clearly much more
In a realistic sense, a very large counted
for
by unincorporated favorable than in manufacturing
part of this cash and Government business. Even if we allow only alone, in comparison with prewar;
securities is not invested in the about 9% for unincorporated bus¬ it may reasonably be conjectured
the present time,
business and has no claim to earn iness at
the that total corporate business can
a normal business
return tm in¬ share of total payrolls properly support a 25% increase in wages'
vestment. In the very substantial attributable to corporations would on the same basis that manufac¬
measure that net worth is inflated be only about $24% billion.
A turing alone; can support a 21%
increase on $24 %
billion increase.
by such assets, the. ratio of profits 21%
investment.

It
.

increases.

Government payrolls, to¬
and Salaries rose by
155% through 1944 but have fallen to investment in -recent
to 150% above 1939 at the present Unduly minimized.
ing such

tal

wage

leave corporate profits after taxes
about twice as high as 1936r39.

therefore

all

years

the

would be about $5.1 billion.

It must be emphasizedj that this
21% increase in earnings is pos-

These

facts

descriptive of
They
apply exactly to any in¬
are

the basic ^general situation.
do

not

it contains within itself

ance

tli is

elements

early healthy bal¬
and stabilization. We reject

leading to

point of

imbalance

view. The present
wages
and

between.

profits is unsound; it is not auto¬
matically self-terminating in a

compatible with general
stability. Rather, it Is
self-terminating through a reces¬
sion. Unless there is an immediate-^
increase in wages or a sharp drop

manner

economic

prices, we are flirting with
collapse. There is no evidence to
date to indicate that business will

cut

prices -prior to
(Continued on

depression in|?;
page 3248)
S

FINANCIAL CHRONICLE

THE COMMERCIAL &

3248

of the securities field

Wage Policy for 1947 Prepared for CIO

doms

avoidable. This is too high a
for

bringing

into sounder

wages

alignment.

kind

avoid
ness

sufficient

increases is in itsel
assure a
continued

expansion o
economic activity. On the con¬
trary, complementary policies are
required in a great many fields.
Fiscal and particularly tax poli¬
cies need to be altered drastically

activity. Such a policy would

ter

are

also

How

affairs

categories of goods those millions
K of wofking families who
have of wealth need to be re-designed
been removed from the market and administered with a new de¬
^. because, of rising prices. Such ' a termination. At the same time, we
provide,
especially
policy should appeal to business need; : to
through the long-overdue expan¬
as well as to labor as a sound way
sion of our social security sys¬
to
restore
the
basic
economic
tem, for the maintenance of ef¬
a strength which will in turn bring
optimism and a sense of security fective demand where the needs

;;

greatest. : Minimum

are

pessimism

established

must

For

served

would

appear

levels.

statesmanlike

efficiency and produc¬
tivity; and finally we can have
stable prosperity. We, have the
productive capacity and we have
the needs for continuous full em¬
creasing

■

threaten

need

pfogram

wages

higher

growth and
the

benefits

among all our

our

are

bodies.

-_v;
ing its influence

y;1::

•

The system is well entrenched.
The process has gone far. We can

only hope gradually to ameliorate
:

ts atrocities and effect procedural

improvemehts.

The " Administra¬

tive Procedure
he

right

Act,

direction,

but

truths

have

■

Rule of Equality Violated

law

free

country

truism that

now

law

speak of

and

inherent in the nature of

judicial

that.

statutes

which

avowedly and intentionally

dis¬

social creatures be personable indi¬ criminatory.
Bowles, Henry WalThe tendency to discriminate is
nherent in all forms of govern-',
lace, and Wallace Fulton. •
one

of the

ernment and has been

Chairman of its Board of

Wev understand it to be the
a

custom of every

newly elect¬

the NASD to go on
transcontinental junket under the
supervision of the Exec¬

utive Director with the aid of the Public Relations
representative.

■

reasons

adopted

to assert his

Ih our opinion Wallace Fulton has

.intended

wise

leaders

beneficiaries

are

That is not

to condemn

a reason

democratic government, but it is
a reason for unremitting vigilance

been

the' primary

of the

balance.
One

is; intolerable! thai anyiman
whether repre4

group of men,

senting capital

or.

shoulcf

labor,

have, the power to wreck the na¬

certainly

come

to the
of
equality, but the effort to do that
has gone too far and resulted in
legislation injurious to the public
and'in, thejtorig, run! irio&l
$11
should

favored

extent of putting all on a plane

■

for

careful revision of pur laws to
safeguard the public interest, to
make.,all.equal before the lawf
and to enable this country to re¬
sume -its forward march under 0
government of just and equal

NYSE Asks Member Firms

Report Margin Accounts

^TheYfollcmiiigdressed

on Oct. 10 by Edward C.
Gray, Director of the Department

Member

exempted farm and
labor organizations from our anti¬
trust laws,
To put them on a4 plane of
equality with their suppliers and
customers, the farmers must be
permitted to buy and sell collec¬
tively and to engage in other col¬

put employees on a plane
equality with their employers,
they too must be permitted to
bargain
collectively,
with
all
reasonable safeguards. Indeed, the
Courts many times said that the
workers had that right before it
was secured to them by legisla¬
of

tion which, however, was so one¬
as in practice to result in
coercion rather than bargaining.
sided

time the workers had

one

take

leave

what was

offered.

Now, the shoe is on the other foot
and the

The

public foots the bill.
for

lust

the

Those

who

direct

should be selected
processes,

and

such

action

by democratic

carefully
be held

should

grows

safeguarded,
to

strict

That is the basis of the laws
now

have to

sponsibility

re¬

accountability.

and

time to

time

in the past

Exchange has requested
firms

mem¬
it with in¬

furnish

formation- pertaining to the num*
ber of margin accounts carried by
member firms. It will be helpful
to

the Federal authorities and to

the^.Exchange to have this, infor¬
mation at this time.
:

"Accordingly, the Exchange

1«

«,

r>4

.« +*

,TT
'

to?

;.i:

re¬

that each member. firm
carrying margin accounts in se¬
curities for customers furnish it,
on
the attached stub, with the
total of such accounts open on its
quests

books as of the close of business
on

Tuesday, Dec. 31,

1946.

; *

"The Exchange would appreci¬
ate the cooperation of the member

firms

filing

the

reports

Friday,/ Jan. 17, 1947, with the
Central Receiving Dept.,
Stock
Clearing Corporation.
"For the purpose of this report:
Please include only margin

(1)

accounts

with

by
what it feeds on. The power of
collective action may endanger
the very life of the community
and destroy individual freedoms.
power

New

the

Exchange to member
firms-carrying margin. accounts:

ber

have

Firms

York Stock
From

rixairiplesmust

two

that equality before dealings.

preserve

They

vtlxe

beginning

now

to understand.
or

virlYM

sponsibility

workers who have the most votes.

•

their

with

credit

balances

debit

balances

other

than

free predit balances; (2) -Please
count all the margin accounts of
one person

or organization as one
account; (3) Please do not in¬
clude:
(a), cash accounts, even
though the customer has signed a
loan, hypothecation; or so-called

customer's

agreement, (b) omni¬
of
correspondents

bus

accounts

who

are

members of the NYSE."

corporate re¬
just and fair
responsibility

secure

and
Union

Merrill Lynch Firm Change

Effective Dec. 31, 1946, Russell
Clark, New Orleans, general part¬
ner in Merrill Lynch, Pierce, FenLabor Monopolies
-V ner &
Beane, 70 Pine Street, New
Monopolies are repugnant to York City, members of the New
free enterprise and free institu¬ York Stock
Exchange will become
tions. Natural monopolies have to, both a limited and
general part¬
be regulated in the public inter¬
ner; Earl W. Huntley, Los Angeles,
est. Limited monopolies only are limited
partner, will become a
permitted to encourage authorship general partner; Arthur S. Launand invention.
don and Herman Belth, general
We often, hear arid, all agree partners will become limited part¬
A.i,.
,1
that labor is mot ar commodity/ ners/
.*
* ** *
M *'"*» *
Jr.*
sS
can

be secured in the

same

way.

{

indoctrinator and too little the sefvant of the! securities
industry.
'"'"V • Phrase coinage to .effect oppt'Cssioh: i$; Sa$.

which all forms of gov¬
have floundered in the

laws

to make it

independence,,
been

gov¬
of the

Quite naturally, discriminatory
are passed to favor the larg¬
est groups, the farmers and the

hands off policy with respect to

the Chairman of the Board of Governors

simpler for such Chairman

the law which is the very essence
of democracy.•
/■' Y" y

We believe it to be high time that the Executive Direc¬

one

pro¬

past.

tor of the NASD

rocks

ernment

ed Chairman of the Board of Governors of

are

This may be said of Chester

ment. That is

intended to

predicament in which
we • now find ourselves and the
danger is that we may go too far
the other way, when our effort
should be to restore a proper

However, when they are engaged in activities, pursuant
why the founding fathers
ideologies, which adversely affect the welfare of vided checks and balances.
the people, then it is time to call a halt.
inevitable under autocratic

man.

change

can

;

refer

review

to their

often

too

;

lective activities.

The rule of law requires equal¬
ity. That all must be equal before

decidedly interesting and enlightening reading.

Shortly the NASD will elect

on
the public,
eventually react upoq

laws

•

whom it

'
That / has

step.

Governors.

those

serve."

step in
only a

was a

practice
which, under the best of condiions, are bound to be more or
ess discriminatory, because that

may as

page 3224) '

cause

administrative

another NRA, only distinctly

such

public services and> essential in*

Displacing

;

forgotten. I do not

injuries inflicted

The time has

eral power.-; •

another

vicious in, form.
f \
We believe that the history of the transformation from
the one set-up to the other, and the
persons involved, would

ment of free institutions and the

dustries.

have es¬
caped the capacious maw of Fed¬
any

process.

Securities Association, we believe to be violative of the
United States Constitution, class legislation and contrary to

misleading slogans, anti*
injunction
laws
have ; been?
enacted, which as a practical mat¬
ter have put some groups above
the law. Apart from the impair?

tional economy or to paralyze the

of these.

one

purely in-

over

trastate matters, if

The

adequate remedy;
5 \yi~Vr.-? i ~
: Yet impelled by popular agita- ;
tion and

departures that

defined

(Continued from

challenge to disclose the extent of in camera activity between SEC and NASD has never been met. \
;
The monopoly features of the Maloney Act giving spe¬
cial financial advantages to the members of a National

commission. of wrongful and un¬
lawful acts when there is no otheri

Eternal

recent

gov^

which restrains all alike from the

therein, abolished.
in sympathy with voluntary
self-regulatory

disgraceful ways in which NASP has acted as earned by sad experience over
co-policeman with SEC, one of the most odious is its self- and 5 over again. Error moves
imposed OPA inherent in "the 5% spread philosophy" which rapidly, often under the guise of
reform, but real reform is a slow
attempts to place a ceiling upon spreads.
and tedious

Regulators

welfare.

Of the

viduals.

Rule of Law
.

presently expressed good will of the SEC is in no
sense voluntary.
The Maloney Act, the medium of creation of the Na¬
tional Securities Dealers Association, has so stigmatized the
SEC as to constitute it a blot upon our National escutcheon.

make

functions

by injunction. It is the
impartial administration of justice

constitutional institutions have
bulwark protecting our freedom.

Rule of Men

The

;

essential

ernment

first

Now is the time to be rid of it.

people.

our

were a

The NASD is not

economic
wider diffusion of
of
such
growth

promised SEC elasticity is also a jumping of the
gun, for it must be clear that the new Congress will restore
many of the liberties infringed upon by the Securities and
Exchange Commission, which impair free, open and liquid

the NASD

and

courts of equity. That is not

be erased and government by

men must

National Securities Association

The

mpre

over-all scale let

tary

Maloney Act was definitely such a departure, sad¬
dling us with the NASD.
To discourage monopoly, prevent secret
interactivity
between the SEC and the NASD, to
encourage free, bpen
and- liquid markets; for all these
purposes, among many
others, the Maloney Act should be repealed and the existing

for sustained

(Continued from page 3203)

proper practice.
We regard

The

Regulation Rapprochement

permitted to set itself above
law and the public interest.
The prevention of irreparable
injury threatened by wrongful or
criminal acts has long been rec¬
ognized as one of the most salu¬

domestic

our

Unfortunately, there have been

unequivocal
restatement of public responsi¬
Y for both labor and management to
bility for the maintenance of full
look the facts in the face and to
arrive at peaceful conclusions with employment and a renewed de¬
termination
to
cooperate f with
respect to sizable wage increases
other nations in the achievement
immediately. Through such a pol¬
of this objective. Major wage in¬
icy we can have industrial peace;
creases at this time are but one
we can have gradually increasing
production accompanied by in- element in such a well-rounded
" It

long time

well and

move¬

:■

nec¬

may

amenable to the law. None should

scale.

the leader in that

law:#esfor

replace the present
insecurity,
/

regarded

nation.

our own

Government by

They

the

seek to

achieve in

monopoly and to concentration

and

we are

clean house.

What

life.

rights as any other
kind of monopoly. All Should be

important it is, therefore, that in

harmful to the common good and

special shortage situations. Curbs

figment, of the imagination.

nation,

essities

ment.

direct charac¬
necessary
to meet

Other controls of

fringe dealer while picturesque, is entirely
a

prevented

production or sale of the

to individual

Such persons or entities do not exist.
Freedom is now being sought on a world
As

control and restraint

to exercise

the

not.

are

misnomer and

stable and equitable

relationship which will
serious decline in busi¬

they

occasions restricted

course a

The term

suggest that a policy

;

step up buying power and bring
back into the market for many

We do not

of major wage

It would not do labor or the
public or business any. good for
labor to forego the needed wage
increases. Rather, raising wages
without increasing prices appears
•: to offer the only currently pos¬
sible means of bringing about the
,

laws

profits capacity,

and

harmony with
right of others. Labor
monopolies have on innumerable
the

fringe dealer is always the other fellow. ;
Dealers .are either entitled to he such under existing

f )v

direction to make the most of our

price

have the right to work

men

not to work in

commonplace nowadays to hear the term

"fringe dealer."
V

Free

it is of other activities'where free¬

interfered with.

are

Hence it is

(Continued from page 3247)
which unemployment,
declining ployment and an ever increasing
incomes and shrinking demands standard of living. Now is the op¬
will
make
price declines un¬ portunity to move in the proper

Thursday, December 19, 1944

i..

». * ,»

-J

™

?»•*!% .*

■*

.»

-»

•* •* Jf

•M

•

•*

,£

f- .*;.•*

y:-:-

■r,.'
■■

.''

■

'■:<

*****

WtM-UfcViWWtto«*#rWW|HW

f.ty

fK-:'.?;-:W^HE^CPMi^RciAIi'sft'
tece*-br^*i^bfvi^mh^T:

inBusiness
{Continued from

page

Industrial Stagnation;

v'5

3224).

of the

people but so as hot to ex-,
pose the Supreme Court to the
hysteria and frenzy of an economic crisis during its delibera¬
tions; the assumption apparently
1 being that the Supreme
Court is
n not capable of "truthfully and imf partially - administering •••> justice"
i during- crises. Mr. Lewis' retreat,
however, will not affect the determination of Congress to obviate
such crises in the future/ -; 1 - - :
•

point you to what is "happening
oh' <the campuses of the colleges
maintained

in ^ this" country
by
stagnation presents business enterprises, This number
did, not include those laboratories
another major - problem iri busi¬
ness
recovery.
This stagnation maintained by the government or
should be temporary and will be by colleges and. universities.
In
governed quite largely by the 1945, the end. of World War II,
Industrial

duration
strikes.

mobiles
tries

present

and

future these research development lab¬

and

Production in

steelj auto¬ oratories under private enterprise

other major

will snap

indus¬

back quickly

un¬

totaled 2,250, and the annual pay¬
roll going to those engaged in re¬
search

development work for in¬
dustry fit totaled
approximately
strikes will add greatly to the $700,000,000. Do not underestimate
your own imagination when
you
? Some of the probable "results of shortage of consumer goods, both

less /i strikes ; are
; not ; settled^
Lowered
output as a result of

and

durable

their efforts will be:

non-durable.

This

try to comprehend the

new prod¬
processes and the
ideas that have been
created out of the test tube and

shortage will tend to prolong the ucts, the

1. The monopoly power of unions
period of prosperity which inev¬
v
will be' limited. :
itably must follow a return to and
2. The closed shop in theory and
stability of peacetime4 economy.
ft/ri practice, as we have known it, Business
in general will be helped
;;l, will be subject to restriction.
by this temporary' stagnation to
\ '43,/The, * violations, Vrof ^ contract complete its task of reconversion.
% '■&' agreements;
on
the; part of While production enterprises have
-: unions, will be subject to punfully reconverted, some of our
**
ishment *
major industries still have much

many

the

experimental

{

will probably be

itely

The

management

defin¬

if father than to labor.

•

■

particularly in
such-industries as" transporta¬

utilities; and the
extractive industries of natural
which the gen¬
eral public depends for eco^ ^ honric and living necessities.^In
this connection steps will un4 <
doubtedly •; be set up through
^/fwhich controversies^ between
upon

management;must

prdceed in brder to arrive at a
satisfactory basis of settlement
t - before a strike need be called.
6.- The "financial responsibility of
;;

co-existent basis with

true

also

tured

for

union funds in
that

ble
r

the

their

stockholders

■

and

the

j ? clarification; of the employers'

same way

general publics fortthe
disposition of available funds.
T.,'The Wagner Bill will be re¬
vised in order tq bring about d
to

corporations are responsi¬

.right to dispense with the services, of those whose loyalty to
the organization is uhder serious question and whose produc¬
tive usefulness to the organiza¬
tion is nil.

ready

ago

they

was

and primarily

can

now

pass

the manufac¬

products occasioned by
increases without waiting
approval of OP A and

regulatory; government

3. Workers in general are less in¬
terested in work stoppages and

evident that

disposition

bodies.

unions will be held accountable,

bership for

the past.

the

other

| * under the law, to their mem¬
J*

year

the added costs
wage

responsibility to thcfee which
corimratiohs today are required
It

because

man-

our various States
similar statements of financial

file.

case

to settle controversies than

In other words, the
day is not far distant when
unions wilt be required to file
With the commissioners^! coi-

the

Employers will be

porations in

general

has been

tv,.: agement.

tr *

business, the small business

;
f

the

those Who

end

the

have

gone on strike
Supreme Court. In general, Su¬
have made as a result of "their
preme Courts have rendered their
work stoppage, amounts to only
decisions in accord with public
opinion, but this cannot be taken three to five cents per hour or ap¬
as a generalization in the present proximately $100,000,000 over that
crisis; While labor has been crit¬ which their employers would have
ical of the courts and leaders like given them on the basis of offers

jHr. Lewis^have tended: to flout
openly by action and in expressed
terms the authority of the court,
it is certain that labor will look,
in the future,/ to the courts for
protection of its assumed or con¬
stituted rights. By and large, la¬
bor, management and the public
will, all three alike, benefit by the
decisions made by the supreme
/
judicial; authority of ourinatioii.
The immediate decisions may not

always be satisfactory but I be¬
lieve the general interests of the
nation as a whole will be best

airing of

a proper

as we are now

neSStJf^ so that the public

con¬

wit-

as a

whole may see and understand the
issues-at point.
.

for

country
this great

that

you

production and distribution of all
types of goods and commodities

do about it?
^

,.y;.

}

Fiscal Policies

knowledge, skill and

The business recovery of fife
The peak
of it will be reached in, three or. Country will be quite largely co^
four years hence.
Engineering ditioned by the manner- and fig
and business are the two predom¬ extent to which we address oialrinating interests of study, of the selves to handling our fiscal poli¬
ex-servicemen who. make up so cies and problems. The balancing
large a proportion of this student of the Federal budget is a neces¬
influx to higher, education.
The sity in our governmental economyimplications for business and in¬ It must be done by cutting; ex¬
dustry are clear and any business penses, by eliminating unnec&K
executive who loses sight of the sary government functions
a¥fcl
potential
personnel,
tried
and services and by scrutinizing Wftfc
trained for a definite vocational greater businesslike care the fi¬
objective, as a source for recruit¬ nancial 1 commitments of loeiL

truth has only begun.

ing competent personnel for his
organization in the days ahead

State

Federal

and

governmental
gotod
business and of good governmeafl
In the interests of

bodies.

need to address ourselves ttf ht

fibt

realistic reorganization of our
•

;

Inflationary Trends

;

sideration

with

for

threatens

long

and

continue.
Just so
demands are made by seg¬

ments

time

some

our

population for in¬
and increased

creased- wages

prices of transferable commodities

result of these

segments' of
will be

our

labor population

increased production

that

structure.^

cannot

complete the con¬
of these problems in
business recovery without recog¬
nizing the influence of inflation¬
ary trends.
Inflation has been
v.

the

We^- need. tO/^gfgd.
thought to new techniques of leHislative action which will

prevent

wholesale

appropriations of funds?
which have not yet been coHectddt
created and made available M

the Treasury

before the appropiftOf course, there
are emergencies to be met whgrt
such action cannot be anticipated^,
but we should call a halt, once'
and
for. all,
in the constantly,
recurring; emergency of defieii
spending.

ations

are

made.

shortages may be rapidly reduced
and that there may be drained off

lations and the perplexities grow¬

ing out of world affairs, all tehd ;
setting for a-period
demand for skilled labor far be¬
of uncertainty and of hesitancy of
yond the ability of our labor mar¬
acticn on the part of the business¬
ket to meet the demand. Labor aside for the purchase of desirable man.
Too long a continuation of
consumer goods.
Business exec
these disturbing forces may wfelt
leaders, however, like Mr. Lewis
utives need to watch the inflation¬
and others, should not lose
sight
precipitate a brief but rOther dras¬
of the fact that when, the costs o:! ary trends with great care and tic recession, similar to what we
labor become prohibitive in the particularly to guard against the experienced in 1921; we hope We
production » of
commodities
or building up of heavy inventories
may avoid it, but if it must come,
goods we invariably find one of lest we experience a repetition of the sooner the better.. Such a
end

adversely affected, but the

result

will

increased

to create the

sizable portion of the cash re¬
serves which consumers have laid

two things happen

either

new

1921.

recession

may

much

tow^M

processes or new

this

lack

action Will

re¬

The picture, at present,
is most encouraging. Retail sales
The closing days of the war
during the month of December,
their leaders are not all-wise
dropped us into a new age of
1946, will probably exceed ten
and omnipotent in labor man¬
power f— the Atomic Age. Scien¬
billion dollars as against four and
agement.
tists and

Since

upon

represent small

business will do well to keep your
interest; and attention { centered
upon
the > kaleidoscopic changes
that are destined to take place in

tional, but our home economy.
.Many of these workers are
realizing for the first time that

no stopping this reme¬
war,
legislation. , The temper of slightly over a year ago, workers
in this country have lost a stag¬
public opinion is such that the
next Congress has no choice open gering total of 143,800,000 days of
to it but to provide remedies to work. As a result of this loss in
prevent a repetition of the chaotic working time they have also been
conditions
which we now face. deprived of the even more stag¬
The big: question to be answered gering total of $1,350,000,000 in
The actual gain which
in the future is the attitude of the wages.

troversies such

who

gretted.

Power of Atomic Age

engineers

There is

% served by

developments will have
You

remind

nationalresources"
to suffer."
The

indignation isgreatrwhaf shallWfe

Sales Problems
shaking down the spongy fiber V
labor-saving ma¬
are
less
strike-minded.
The
chines are developed so that the
There does not seem at present of our economy and to expedite*;
wage losses which they have
need for the high cost of labor in
the reconversion from an inflated
an immediate need for
concern
sustained have seriously affec¬
large numbers is diminished, and over the
ted the pocketbook nerves; of
problem of sales as a wartime economy to a peacetime
at the same time production is in¬ factor in business
stabilized economy. Once such a
recovery. / Busi¬
millions of workers throughout
organizations
which
have recession has been experienced,
the nation.; Many of them are* creased; or industry, and the con¬ ness
publie
revolts
against failed, however, to put their sales the stage will be set for a restora¬
at last waking to the fact that suming
paying the excessive costs reflec¬ organization in streamlined order tion of confidence in .business ahet
^
they .have been led astray by ted in
the product and reconvert and who have neglected to make a we may well expect a« period of
the pied pipers of Moscow or
to the use of other products or
unexcelled prosperity to last for
searching analysis of their mar¬
of other deranging influences
processes less expensive and per¬
kets and their present and future several years, at • least for fife*
which would throttle and com¬
haps! far more satisfactory and conditions may see: the day when probably for six or more years.
pletely upset not only our na¬
modern.

dial
;

these, enter¬

interest must not overlook the ef¬
fect which these new processes

them.

this

be losing the chance of his
large
business lifetime.
;: ;
pri¬

prises and thev technolpgjcai. ben¬
efits will therefore accrue to large
scale

and

destined

and services, price rises in the
immediate future are inevitable;
developments
and improvements. It is true that prices will * undoubtedly continue W, In
closing, may I give you, in a'
there will be a certain amount of to rise until such time as the con¬ word, the general outlook
for
sumer does what he did in
and full economic recovery.
labor displacement
1921, business as I see it.
The cOat
resulting from
At last the Government is be¬ the introduction of labor-saving gpes on a buyer's strike.
There strike, the continued demand Of
is already ample evidence of the
labor for
a
ginning to discourage strikes devices, but the total effect of this
higher and higfior
and work stoppages instead of displacement upon American la¬ consumer's intention to do just wage
increase, the inflationary
that thing.
The only solution for spiralling of prices, constant dis¬
' Setting the stage for an encour¬ bor will tend to be favorable
Small preventing a runaway inflation is turbance of labor-management ffcagement of these disorders as /rathe* : than unfavorable.

;

tion; public

the

tional .'economy,

the union will be established

for

public is com¬
pletely fed up with work stop
pages and -is' beginning to have
little or no patience with mi
nority "groups; who insistt on
throwing monkey wrenches into
the
machinery of production

•!; -labor and

primarily

reasons:

1. The

resources

duration

been

universities

and

portant

will

While

have

promoters of

mary

and

big strikes of 1947 will be

short

three

•

5. The right to strike will be limited in- many areas of our na-

full produc¬

tion /tempo can be realized.

will be restricted and: foremen

■

work to do before

foremen

processes

laboratories.

corporations

C The : unionization

new

these

%•;•*-*.

•s(^fM ih"t\

have

not yet

coordinated their efforts of linking
this new found power to? our in¬
dustrial profits, but the day when
that will be done is not far distant.
In

keeping

your

and

billion

dollars

1939.

Transposing the
ten billion

current month's
dollar sales into 1939

cen¬

industry, remember

that the economic history of this

the

case

ever

month of six and one-half billion
dollars

contrast

one-half billion

sales for 1946 will
one

for

four

run

and

Retail

1939.

well

hundred billion dollars.

over

You

in the

inventions, as was what
happens tin the price struct
19,40's, and when¬ ture rift: the retail field likewise

there has been

simultane¬

development or discovery of
submitted before the strike was a new power, something interest¬
called;
The indirect results; of ing happens.
Out of this combi¬
work stoppages are hard to Pleas¬ nation of the ingenious expression
of man's mind through invention,
ure. We have no Adequate stand¬
ards by which; we ean evaluate and the discovery of new sources,
there has invariably been engen¬
these indirect losses.
dered a great industrial expan¬
Technological Readjustment
sion.
Make no mistake of it; we
In effecting business recovery, are on the threshold of such an
we must not lose sight of the im¬
expansion the like of which
portance of the problem of tech¬ neither this country nor the world
nological readjustment. The mag¬ has ever seen.
nitude of this problem can best
Linked with these two interest¬
be stated bv comparing the re¬
ing developments is a third phe¬
ous

happens in your field.

nomenon

War II with similar development

during World War I. In 1918 there

the

were

two

hundred

are

no mean

also in

age

proportions.
of learning,

proportions of which

Time does not permit me to say
what I would like to say regard¬

ing the problem of housing devel¬
opment. This is one of the most
critical issues with which
tion

has

been

faced.

our na¬

Housing

for

knowledge.

represents an appalling govern¬
mental bungling of an acute prob¬

world economy.

We have a won¬

derful chance to help the devis-

tated

nations

evi-

political resources. Doing so frOfci
a helpful and instructive attitude
divorced absolutely from an im¬
perialistic and domineering atfr*
tude, cannot help but result Irt
creating a favorable world opinion
toward

us.

Your own group

ciation you

and the asso¬

represent cannot;

prosperity that lies ahead.
have

Iie|p

in the

great future before

Yott
yon.

Make the maximum use of it,
be

always sure that this is

upon

but

basedi

the principle of service first

above self.

lem, for which there is no excuse.

national Two

There is

economy

at which we are playing

point in

our

fast and loose with the moral, so¬
cial
our

LOS

Coast

Chronicxe)

ANGELES, CALIF.—Wil- >

spiritual welfare of liam C. Pike and James Harding
population to a greater degree Walraven have become associated

than in the housing development.

are

With Buckley

(Special to The Financiai

and *the

dwarf JWhen two, three

independent all previous records of mankind's

research development laboratories

whereby she may help materially
in directing the destinies of sound

but share Jin large measure

search development during World

the threshold of

Europe and of
prices and dollar yalue, gives us Asia recondition : and rehabili¬
a
comparative figure for this tate their social, economic aha

country and v Great ; Britain : in¬
well know that whatever happens
variably reveals that whenever in
retail sales also happens
there has been an upward surge
in
wholesale
transactions
and
in the curve/of

attention

tered upon technological develop¬
ment and its possible effect upon
business

one-half

America is

great national and international
development.
She holds in her
hands the leadership potentialities-. ;•>
a

with Buckley

four families Sixth Street.

Brothers, 530 West

MrdlP4ke

-was^pre-^:

compelled to live where only viously with Walston, Hoffman &

one was

intended to live these im¬

Goodwin,

3250
Court,

Independent Business

The Threat to

during the war in the petroleum,
production and a lowering in the synthetic rubber and other fields
found such favor with elements in
level of employment.
Monopoly
industry fearful of vigorous com¬
power prevents the full utilization
(Continued from page 3207)

of our

productive and human re¬
It retards technological

sources..

progress.

It stifles the develop¬

ment of new. enterprise.

•

Let us briefly review the gains
made by monopoly during the war
These gains

years,

were

mostly

Jnade at the expense of competi¬
tive

enterprise.

More than 500,000

small
business
concerns
were
eliminated from the market dur¬

ing the

war

The further

years.

concentration of control of

manu¬

facturing facilities, industrial
know-how and financial strength
was accentuated by the necessary

research

that

Other industries seek to

devices.

non-competitive
habits which were fostered by the
the

war

•

emergency.

need to

of monopoly?

march

need

coordinated,

unified,

governmental policy running
throughout every agency of the
government
which deals with
business, designed at once to curb

;

contracts

large

concerns.

is in a position to control facilities
equivalent to those of all manu¬

facturing corporations in 1939.
Sixty-three large manufacturing
corporations have sufficient liquid
to
buy all government-

Those

who

portion

the

funds

enforce

failure

leaf

and

anti¬

for

markets

farmers

the evils of

available.
the

the

million

trust enforcement is in direct pro¬

The

eco¬

objectives of this case were
outlaw the evils of price-fixing

the effectiveness of anti¬

and

over

condemn

dictatorship of prices

selling

methods

over

If given

under the antitrust

laws.

What Businessmen

million wholesalers and retailers.

trust(laws

Can Do

adequately is much
I now come to the question,
However, I want to talk to you
costly to taxpayers than the
briefly about the legal principle what can businessmen 1 do about
cost of an adequate program.
For
monopoly?
We in the Antitrust
involved in this case..
v
the fiscal years 1940 through 1946
As a yesult of the decision
is division are helpless without your,
antitrust
appropriations
totaled
support.
That is as it should be.
now clear that possession of power
$12,030,600, Fines assessed during
in a democratic society.
No gov¬
the same period in suits brought plus the intent to exclude com¬
ernment can or should adopt any
under the antitrust laws totaled petitors is illegal under the mo¬
long-term policy that does . not
$5,902,979.03. Thus, antitrust fines nopoly section even though the
.have the support of the, majority
alone amounted to almost half the power to exclude is not actually
of the yoters.-/ ; L 1'1,1..
/
Some
previous
Su¬
funds appropriated.
It is not pos¬ exercised.
But if you, the people, are td
sible to estimate in all cases the preme Court decisions had thrown
doubt on this principle, which is sUcceediih^uttfight against mo¬
enormous savings to the consumer
resulting from the fact that com¬ now settled by unanimous deei* nopoly you must Insist upon mak¬
petition was restored and main¬ sion. j As a result/the Department ing your voice heard. >

monopoly and to lend the full
support of the vast resources of
our government to aid free, in¬
There has been some resurgence
Of small business in the first post¬ dependent, competitive business¬
tained in :inany ^ importaiit Indus^
men.
war
year, but there were still
'
Antitrust policies should, guide tries.
some
160,000 fewer businesses
But "in some:, instances we do
Operating at the beginning of 1946 every government agency admin¬
istering policies that affect busi¬ have direct, positive evidence of
than in
For example, government savings
derived from
antitrust
The 250 largest corporations in ness.
For example, the
this country now hold approxi¬ procurement officials should prosecutions.
wherever possible award govern¬ direct saving on a single contract
mately two-thirds of the nation's
ment purchase contracts so as to in Pittsburgh, because of an anti¬
usable
manufacturing facilities.
competitive business. trust investigation, amounted to
This group alone either owns or encourage
distribution of prime government

war

Section 2 of that Act.
nomic

these companies has. re¬
development. ; ;
adequate funds, we pro¬
pose to examine every corporate <
merger
of significance.
Where
these mergers appear to eliminate'
competition, we propose to warn
<
the corporations involved that if • V ;
they take further steps to effec¬
tuate the merger we shall file suit:;
among

tarded technological

stop the
There are
two basic requirements:
one of
policy and one of practice. First,
What

tions of the leading tobacco com¬

As Attorney General Clark has

stated,

The decision of the Su¬
Court sustained the convic¬

panies and their principal officers
for monopolizing in violation of

they are accomplished at the cost
of losing free enterprise and the
American
way
of
life?
Such
economy would be false economy.

great

pressure was brought to bear for
the prolongation of these pooling
continue

;

petition

preme

control

government

lending policies should always be
certain that government funds are
not used to further or assist the

85% of our annual appropriation.
As a result of one other major
antitrust
duced in

suit, royalties were re¬
industry by 50% and

one

the saving to the • Consumers 9each

growth of monopoly.

Justice

need

not

now

>:biotbixxg:--:partisah' about»'

de¬

from

terred

instituting
actions an: anti-monopoly policy/ ~i Eyer^.
against- monopolies -mereiyr ;be* since the passage of the Sherman
cause
monopoly power over the Act In 1890 /both political parfiea
market
has
not
been - actually have professed adherence to its,
exercised. ; A defense commonly basic principles. Practically every
heard ih antitrust cases isthatthfc political platform?.* of : both the
monopoly position
was
"thrust major parties since 1890 has con¬
upon" an industry but that the tained a declaration for strict en¬
power of the monopoly had never forcement of the antitrust
actually been exercised against This has been true -ofthe? Hepqbr
competitors.: The tobacco case lican party as well as the Demo¬
should eliminate that defense in cratic party.
For example, way
back
in
all future antitrust cases.
1900,
the
Republican
These are examples of major platform declared: "We' condemn
all conspiracies and combinations
antitrust suits
each
costing the
,

The second -great, requirement is year as a result of that action ex¬
ceeds
$4,000,000, or more than
owned manufacturing facilities or to apply our policy against mo¬
intended to restrict business, -to
twice the annual appropriation government
many
hundreds of
to purchase the assets of some nopoly by the regular appropria¬
Icreate monopolies^ to; Um|t pro4
for the Antitrust piyision,' ;/ thousands of dollars to prosecute
70,000 smaller manufacturing cor¬ tion of sufficient money to enforce
to a successful conclusion,
I con¬ duetioii/kjr to eontrol/prices and
the antitrust laws. The Antitrust
porations.
favor such legislation as will ef¬
Antitrust Accomplishments
tend that the results were well
i How did this come
about?
To Division receives over 650 written
fectively restrain and prevent all
The
But antitrust
accomplishments
of
the worth the money.
meet
the
requirements of the complaints each year; over three
such abuses, protect and promotes
Antitrust Division on a budget of enforcement is not always costly.
Army and Navy for goods of new complaints each working day.
less than, $2,000,000 per, year pro¬ We have within the past year been competition, and secure the rights
every description the government It institutes about 50 cases a year.
vide an effective sample of what successful in preventing corporate Ofvprpducers,[^jabpms\an&
turned to the most powerful busi¬ What becomes of the other 600
are engaged
could
injh$p$ti^and^
be accomplished
if more mergers without the necessity of
ness organizations.
Are they all un¬
This develop¬ complaints?
merce."
adequate funds were made avail¬ resorting to litigation.
Had the
ment was unavoidable, not only founded?
Ho.
We do our best,
The1
assets

■?.

;

•

because these

organizations pos¬
sessed advantages in capital,
pat¬
ents and experience, but also be¬
cause
the Administration quite

ofter drew its personnel for war¬
time procurement and economic
direction from the staffs of the

leading business

but the fact remains that we have

the great industrial systems with
with they were familiar and in
which

they had confidence. Ac¬
cordingly^ as j the
government
poured billions! of dollars into
additional

pr6duction

despite

earnest

Many
have

businessmen, of
feeling

that

the

course,

United

through

sub-contracting arrangements and
Otherwise, tended to lose ground.
A

Moreover, the

government

con¬

sciously

substituted a policy of
controlled economy for the peace¬
time policy of competition.
This
was

essential,.,

temporary
measure, because of the huge de¬
mands

the

war

machine

and

the scarcities in consumer
goods
which
those
demands
created.

nopoly and the
dollars

the

millions of
defendants expended
many

States Government should protect
them from monopolies.
We are

in vain efiorts io prevent the gov¬
ernment from obtaining an effec¬
tive decree.
I am happy to report
that they were not successful.
As

must be frank. ;; The resources of

government
available
for
antitrust enforcement in any one
year ' since
the passage of; the
Sherman Act in 1890 have been

your

less than the tsum of money ex¬

efforts

Department of Justice not

Hartford

Empire case there
eight major defendant cor¬

were

porations.

One

these

corpo¬

rations

expended approximately
$900,000 in the trial of the case in
the district court and an estimated

$500,000 or more in prosecuting its
appeal to the Supreme Court and
in the settlement of the final de¬
The

cree.

other

expenditures: of

seven

tions in that

the

defendant
case

are

corpora¬
not known

result

the judgment,

house¬
wives do not longer have to de¬
pend upon Cbiming Gia^
heat-resistant
oven ware.
More¬

ordered to license those pat¬
ents to any applicant. As a result,
were

won

country, until the government
this case, not one of you

had

given

their
permission. And for 25 years the
permission was never granted to a
newcomer,
Today the industry is
open to all.
As a matter of fact,
here, in, Chicago at the present

that

mitted to enter into relations and

understandings which would
been

have

illegal but for the special
exemptions from anti¬

wartime

trust prosecution.

the

entire

light of f the fact
appropriation of

the Antitrust Division for each of
the years since its establishment,

glass plant which

the Court has ordered the Owens-

except for the year 1942, has been gressive industrialists.
less than $2,000,000...
:
f^
Another ' example is
•

Both

of stifling competition and

increasing

concentration

nomic power.

ing

which evoked

Rooseyelt's trust-bust¬

campaign

formed

were

through mergers.

eco¬

T^e great trusts of

40 and 50 years ago

Theodore

Influence of Financlal Groups
and Investment Bankers - "£.

considering- the - monopoly
problems^: raised by Ibte increas¬
-

;

President
message

Congress had said: "It is uni¬

versally

conceded

that

combina¬

tions which engross or control the
market

particular kind of
by suppressing
natural and ordinary competition,
whereby: prices are unduly en¬
any

merchandise

hanced? to the'; general
are

consume

obnoxious not -only/to; the.

common

law but also to the

public

welfare*'*;" ^jWhateyer-powefc '
'the. * Congress: possesses oyer thiar,.
most important subject should be

promptly-'-;'A s c
asserted."

...;

Notwithstanding Presideiit

bankers

competition in Amer*
These bankers are

enterprise,

the t ease

primarily

interested

principal source

the

sale

to seek every, opportunity to stim¬

ulate new Security issues;

Since

these bankers also act as financial

companies which
issue the securities they sell, they
are

three

the

period

when

the

strategic

powerful

and

antitrust

McKinley

their [Presidents-one...against,
livestock association and
cf income.'^ Con*

sequentlyp it is natural for them

advisers

only

prosecutfpi^:.wer^':Started^durihgr'

of securities: cThese sales are

defendants

kets.

means

the

Illinois Glass Company to sell to
any applicant at its fair appraised
value.
Such opportunities should
be especially £ appealing, to pro¬

were per¬

have

ican industry.

viewed

industries

would

greatly accelerated. • The
corporate merger is the classic

could have entered the glass bot¬
tle manufacturing industry unless

exactly^ but they exceeded $1,000,000.." These sums should be

Whole

involved

industries
been

year

McKinley in his annual

Kinley's warning, the concern:of
today anyone is free to make ing number of mergers, we must
overlook
the
influence -of both.the;Republican- and Demo¬
glassware; " Think *>f It! Jri this not
financial groups and investment cratic platforms of 1900 for- free
free

allocations and price
replaced the competitive
struggle for materials and mar¬

control

preceding

ques¬

the

legality
of
these
mergers, the concentration in the

over, the defendants who owned
patents dominating the industry

time there is

Priorities,

tioned

facilities,
the big companies tended to get pended by one corporation to de¬
bigger while small companies, fend one antitrust suit.
In the

;

I have already mentioned the
insufficient funds to investigate
adequately the majority of these Hartford-Empire case involving
the glass container, or bottle, mo¬
complaints.

enterprises.
It
was natural to find
a
tendency doing what we can. We shall con¬
among them to rely heavily upon tinue to do what we can.
But I
.

able.-

was

-a
local
the other,

two

against coal associations of
"great importance, vYei itshaa,

been estimated that between Jan.

1, 1898, ,and Jan. 1,: 1904^ 236 ;in-?
dustrial comb in a tio.ns- werq

;
,

launchedviyith; am aggregate capi¬
talization of $6,000,000,000.

IJ'.u'-.

create

the

business

government and the brought in 1942 against Standard
the; free enterprise" '
small or too closely held to. be a
public
willingly
expend ; many Oil Company of New Jersey; The
'systeim^^si^^
Restoring Free Competition
millions of dollars to conserve the complaint charged that the Stand¬ source of security-selling business, ; I thinfeihis reference
to'history^
;
One of the major obstacles now
when combined can become the
fertility of the soil. No one ques¬ ard Oil group had conspired with
hafe its importance today.; Toz
confronting the Antitrust Division tions the
base for the flotation of a sub*
necessity of protecting I. G. Farben, the great German
more than 40 years each political ;
:
of the Department of Justice in
stantial stock or bond issue;; In a
our
fundamental
natural chemical trust, to restrain trade
party rendered continuous homage
its effort to restore and maintain
great many instances investment to
resources.
Is it not equally ob¬ throughout the world in oil and
the prnciples; of the;. Shermani
free, competitive enterprise is the vious that the
fundamental social chemical products. The defendant bankers have been most instru¬ Act/and yet in practical economicpersistence of patterns of thinking resource in
entered into a consent decree re¬ mental in combining, two or more effect
the American econ¬
during that period the law
fostered by these wartime emer
competitors in an industry into
omy—freedom of
was. a dead letter.
I think, that
opportunity- quiring it to issue unrestricted
gency measures.
We are con
licenses royalty free during the a single company. ■
•
merits as much consideration?
today we are paying the price of;
fronted with the task of recon
we
The financial advantage which our failure to make effective the ;
treasure the American free war, and thereafter at reasonable
verting a managed economy to u enterprise
system from the same royalties, under several thousand accrues to the investment banker principles of the Sherman Act.
free economy.
A transportation
Someone has said that the only
standpoint that we treasure the patents covering such important from
frequent mergers is not ac¬
industry which enjoyed during the nation's soil
as
those used in the
resources, it js at once processes
thing that history has proved is
war a license under War Produc¬
apparent that neglect in either manufacture of synthetic rubber. companied by the advantage of that we don't learn anything from
tion Board Certificate No. 44 to case can
have Irreparable conse¬
We have recently won a very lower prices or better products for history. I surely hope in this case;
fix rates and agree on services
quences.' ; vf.:';
f ;.f • f'.-fv
important
legal
victory
which the consumer. In many instances at least, that .is Wrongs.
^through rate conferences and bu¬
We are told that we must bal¬ will considerably
The real source of the Ihreat td
strengthen the there is no technological gain as
reaus
resisted, the; termination of ance the budget. We must reduce government's hand in future anti¬
free enterprise, about
!whicb^the
a result of the combination of the
this license and fought to make it
the. Federal debt,
I agree.
But trust actions against monopolies
_Republican leaders are so* con-f
permanent by legislation.
Patent of what use is a balanced
budget I refer to the tobacco case decided various companies. In some cases cerned, lies in monopolistic conpooling arrangements authorized and a reduced Federal debt if last
spring by the U. S. Supreme the S elimination of
competition trol over our great industries. If

the

■

Forty. years later, in their. 194$
campaign platforms, we find the' •
*
; 1' •
Republican ; party | still ^ pledging;V
Mergers and consolidations are antitrust enforcement on
the,
among the" most prolific sources
grounds that "monopolies and mo¬
of' new security; issues.
Two or nopolistic prices threaten the very
three companies, each of them too
existence of

position io
they seek.

...

Volume 164

Number 4552

THE COMMERCIAL & FINANCIAL
CHRONICLE

-we

really believe what we con¬
stantly say about the necessity of

preserving, free
tions

»■

continue will result in the aban¬

partisan

political

The

now.

considera7

Now Is the lime

;

Government

continue to f act deT
cisively -and effectively to prevent
the further spread of concentra-

-You

enterprise

The future of enterprise is In
respects the major economic

the disappearance of free enter?
prise in the aftermath of war and

must demand that the channels of
•

competitive

economic
crisis.
Because
this
open for small business.
•
- j
country is the industrial leader of
•/•••'IP these times of strife betweeq: the
world, because its institutions
labor-and * capital we ■> hear &ih4
are stiR free, and because its nat¬
sistent demands for. curbs upon
ural and human resources are vig+
the power artd activities of labor

•

orous, we still have the luxury of
choice between economic freedom

unions; I recognize, as many must,
certain^ labor union abuses

that
;

have

created

serious

expanded

private building pro¬

grams slacken.

and

problem.

system

control.

It >is

sheer delusion to believe that

3251

duration. The

and

amount

Com¬

further substantial reduction

of the
Colmer
Committeee, but a sup¬
plement relating to European eco¬

States take similar action and that

the coverage be extended, espec¬
ially to employees of small firms."

year."

This is the final report

nomic

reconstruction will be re¬
leased before the end of the
year.
As was the case with the
previous
ten reports, this is a
unanimous
report of the bi-partisan com¬

still

freedom Will forsake jus. ; There" is
ho question as to which way free¬

off

business*'

and

"curb

;

labor" have; long been '* the

•

of / the

anti-democratic

dom

/hear^

the

program

lies.

The .danger is

affairs

men

of those who favor the corporate later -than' we think.

•

that in

is
-

always
'

Colmer Committee Sees No Need
y[[[;

(Continued from page 3221)

; ■

tive /studies ;jhto

the

industrial;, greater emphasis

on remodeling
reconversion
of
existing

depression or reces¬
Loose talk of depressions

industry improve its methods* so
sion
rent Jiigh costs. can be
thet
7
and'S^oesaSccessipr^ unjuSi reduced and greater home con¬
[tifieftj/ahd serves no good* pur- struction volume result,
'*
J
pose."
.• ' /
■
'h • % * * *
,

President be broadened
all phases of economic

prime

purpose

cover

policy. The

the permanent

fore

recommends that the balance

Trade Barriers

Hamper
Peace

basically sound/economic status,'
[the. Committee Warned that the'
of low production in many
.industries ; must be erased and

.causes

'"another wage*-price spiral

aVoid-i

;ed* - if prosperous conditions I
to continue..

are

/
!/!.:: i
[ "A start has been made toward
[ the-, goal, of sustained/bigh' em-:
;ploytobt,*
-

[conditions ^whicfecwilbCn^

one hundred fifty million
originally recommended be
appropriated for this purpose.
[

stability * of productive. employ-;
ment /at a high-level."
.

nitteekfedtioned; bd^-

;«y^|iha£//ihe7^^
[not,and should, not take fullresponsibility /for- maintaining eqor;
_

[nomic: ^stability* or full employ;ment,";
..
...,,.v .^ /;;^I

•

way

previous report with respect
developing the maximum de¬
gree of freedom in international
exchange of goods and services
and of improving public service to
agriculture... Wide publicity re¬
garding the present situation in
its

(D-Tenn.),' Francis
E.
Walter
(D-Pa.), Orville Zimmerman (DMo,), Jerry Voorhis
(D-Cal.),
John R. Murdock
(D-Ariz.), Wal¬
ter A. Lynch (D-N.
Y.), Thomas
J. O'Brien (D-IU.), John E. Fogarty (DTR. I.), Eugene Worley
(D-Tex.), Charles L. Gifford (RMass.), Richard J. Welch (R-Cal.),

expenditures

and

other

factors have pre¬

prpb-

fems / which!

faces

can

the

economy

be
production

;

ever

solved

only

per

man-

reduce

neither

•ism—which/we fought to prevent
Irnying imposed upon us."
Budget Surplus Stressed

The. Committee^ vigorously ad¬
vocating a balanced Federal bud"get/; i^qminended that e^pendi^
lures for the fiscal year ending
,

dollars,

This, the group
added, should /makepossible' the
.

jof

"substantial

sur¬

plus," and Would/ also allow for
reduction"

taxes.

Housing

Federal

Discussing

in-

Recommendations

housing

difficulties,

The Committee recommended

-4

/ '••»

}'. '

un¬

#■>-y'

;>.r*

»?

*■ '

v. ;

V/Two Groups Offer Bonds and Stock
of Kansas City Power & Light
Two underwriting syndicates, one headed; by Halsey, Stuart &
Co., Inc., and the other by The First Boston Corp. placed on the
market Dec. 13 senior securities of the company amounting to $46,par value.
Consisting of $36,000,000 of 30-year first mort¬
bonds and 100,000 shares ($100 par) 3.80% cumulative preferred

000,000 in
gage

stock, the offerings will accomplish a refinancing operation, intended
to reduce bond interest from 3% % ^
to 2%% and to retire 40,000 shares income was $4,106,007. / For the
of $6 dividend; series B first pre^ twelve;? months ended Aug. 31,
1946 total

ferred stock.

The

bonds

were

offered by

operating revenues were

$23,846,592 and gross income was

$5,615,087.^

/•/•-■-'7

art

Kuhn Loeb & Co Places

$.70%.

The bonds

awarded to the

were

bid of 100.889 and
preferred stock on a bid of

bankers on a
the

Equip. Issue Privalely
American

General

Transporta¬

tion Corp. announced Dec. 18 the
sale lot $8,000,000 of equipment

J. J. Gronin Now With

:»P0dfied.

The

Committeee/ declaring that

War

Mobilization

and

Other leading committee recom¬
mendations / included : j proposals

stock.

A Missouri eorporationi Kansas

City

Power

Light

Co.

was

formed in

1922

solidation-

anced

With
This

•> ■.

-v.

;

'•'•••

•

••

•

,r-\

Shearson, Hammill Co.

Hammill

Shearson,

Co.,

Wall Street, New York City, New
York Stock Exchange members,
that John J. Cronin, Jr.,
resigned j from Tucker,
Anthony & Co., has become asso¬
ciated with the firm: Mr. Cronin,
prior to his war service as a Navy
Commander, was associated with
announce

recently

ates and sells electric energy, and

"The

governmental

respect

Reconver-

of no par common

Congress passed legislation
calculated to provide a better bal¬

bill

"a sort of over-ail;
general staff to coordinate the
formulation arid execution of poli cy ."
v

sion-r-tb act

After completion olihe; new fi¬
nancing, capitalization of the com¬
pany will consist of $36,000,000 of
first mortgage bonds, ^ $4,000,000
notes, 100,000 shares of cumulative
preferred stock and 525,000 shares

Seventy-

Employment:
ninth

"some

j'f

•

-'creation

costs and

initheihmg itup/tohahy

be reduced

themselves

extend

wisely."

"We should not.. be. misled by, istrative controls."
[those who:* urge./ that we > can[
The Committee suggested "the
equally Weil 'mobilize' for full
continuation
of
a
Presidential
[employment in peacetime. Todo; agency"—such as the Office of
[jsd would be.to acc^fiotalitarianr

1948,

not

interfering with national

defense and the normal functions

of trade; barriers j lb

ac-

preserve."

30,

should be used to induce farmers

100.91.
increase supplies."
trust certificates, Series -41, to a
Proceeds from the sale of the small
Contract Termination: "The ob¬
group of institutions through
"assist "greatly - in the establish¬ jectives set by Congress ;.
have new bonds and from the sale of Kuhn, Loeb & Co. The certificates
ment- of a peaceful world order" been reached. One
year; after V-J 100,000 shares of-. 3.80% cumula¬ ••wiU;--;'-maitore:-Vjeerially^;hi-//eqt»l
by substituting "economic; co¬ Day the contract settlement and tive preferred stock will be used quarter# installments to and in¬
operation; for economic > warfare " plant clearance jobs /have been' to redeem $38,000,000 of outstand¬ cluding Dec. 16,. 1966. Maturities
At the • same
ing first mortgage, bonds, 3%% to and including Dec.; 16, 1955,
toe/Tneyreport /practical#completed."
Series due 1966 and 40,000 shares bear dividends at the rate of 194%,
pointed out that "high levels of
Surplus Property: "Progress in
of the company's outstanding first and the other maturities 294%.
the disposal of war surpluses has
output ibbd; employn^t at 1^
i
!■> are an essential for an ex-! been disappointing . ,',
preferred stock, -Series JB,
The //equipment covered by the
Congress
panded world trade."
j
must -accept the full responsibil¬ ; Concurrently with the sale of trust consists of 1,445 freight cars,
The Committee /proposed / that ity tor /the unsound provisions em- the new bonds and new preferred estimated to cost C$8,900,000,
■>,
1 bodied in surplus
thej^^erai//pow^; Of70PA^/bej^oaiea/jn^surpius property dis- stock, the company proposes to
property aisended/ttext iam/^I^toi/thej^^
f
legislation^ and in/great part borrow an aggregate of $4,000,000
ond> .War Powers Act ;be allowed^fdr the delays^ caused^zby^^the pri-i against its serial notes from a
^orittes' ^and preferences; jgranted group: of commercial banking in¬
/• '•.•/.
I.\ ' <
to the/necessity for new
stitutions.
^
legisla-'] under it."

reduction

[

•billion

without

previous similar developments

ending June 30, 1948, can be re¬
to
thirty billion dollars

..^hi^w^weret^Jbitihg''

'June

land values and the consequences

year

•

fiscal

the

for

syndicate headed by Halsey; Stu¬
& Co. Inc. at 101.43 to yield
vented the output per ! worker 2.68% and the preferred stock by
from off-setting/the -effects of the First Boston Corp. and asso¬
ciates at $102.70 a share to yield
those wage increases. The
over

powerxlo* b^ determine by CohV the need is for
speed in disposing
gress,
to protect certain short! of the
surpluses, advocated that
JCOmpHsJi dts/ puipose ;nbr:remam' commodities and
export ,and im¬ the > program
administrator 7 be
a
^democracy/r. We„ were able -to port;;^ccmtolsv r Continuation of
given "very broad discretionary
/mobilize our economyfor war:
general fiscal i!and monetary con¬ latitude" and
"sympathetic help";
'only; by. surrending /'temporarily! trols was advocated ;as dhe /best
so that the
job, now less than one[the/.-', basic ; democratic I freedoms' safeguardr against
inflationary third done, can be
accomplished
pressures: and as 7'more/effectiyel more swiftly.
'

•

can

duced

Wolverton

(R-N. J.),
Clifford R. Hope (R-Kan.), Jesse
P. Wolcott (R-Mich.), Jay LeFevre
(R-N. Y.), and Sid Simpson
<R-I11.).

be bal¬
The Committee feels that

that the budget

anced.

Committee

"The

Agriculture:

ment cannot be handled in such a

Brides Chairman Colmer, the
Committee included Jere .Cooper

hour, wbich would both

polfey^:ihe^Committoe«^^eupp^rted

:PP^t/Sdded, ^cotild

reiterates the recommendations of

country,

increased

Inthefield of foreign economic

and

•

;

World 7

will

ously promoted" to counteract in¬
flationary forces.
;

the

dollars

committee

■

;/aA^^iiglt^3^^fhS cwntry®'a

revenue

necessary

distribute the tax burden in

■

which

^addK^ure'Of the United States:

for either

to de¬

necessary

system

agricultural and commercial and
Additional conclusions or recom¬
It structures which "has; proved to
; alsp visited Europe to study eco¬ be the most rapid and cheapest mendations of the Committee in¬
nomic conditions and international method of getting needed housing cluded the following:
'trade,
:v" 7 "v7/77:/7t in terms of money and materials!"
Product'on: "The upward pres¬
The group further proposed that sure on prices has been increased
DepressionHeld Unnecessary j
'a far larger quota" of low cost by eharp increases in wage rates/
;
Considering -everything,"' the rental units should be, pushed. It Bow production in many indus¬
; report emphasized; "the-Commit- is
tries caused by work stoppages,
also
highly
important,
the
; tee feels that there is no necessity committee
said, that the building delays in deliveries, high turn¬
.

private a manner that will provide ade¬
industry. Good progress has been quate incentives for venture capi¬
mittee.
•
,;
made in the preparation of draw¬ tal, creative effort and business
/.The Committee does not recom¬ ings and specifications. The plans growth and also permit expansion
mend tot; it be continued in the are completed for projects amount¬ in consumer demand.
The per¬
next Congress but strongly
urges ing to slightly less than two bilr sonal income tax should be re¬
that a permanent committee on lion dollars. Should there be a re¬
garded as the main reliance for
economic policy be established to cession in the next year or two, Federal
tax
revenues
and
1
continue the type of work of the however, the volume of planning, should be continued on a broad
special committee,
base."
•
: •''
/ ;'
or
that the now/ready, or assured of-com¬
[
funcions of the Joint Committee pletion will be far short of what
Finance: Bond saving and buy¬
on
the Economic Report of the is needed. The Committee, there¬
ing campaigns should be "vigor¬

Charles A.

•'

"It

and local governments and

•

s/exp^tto. Impose :7hew'"restraints
upon labor.
The. twin demandsj

•

tax

the

can

following
.•/ ;.,

the

during
"

velop
raise

made

Taxes:

Public Works: Machinery should
be set up to coordinate the con¬
struction policies of Federal, state

-"hands

that

and

Government,

mittee recommence that the other

;

would be to assist in
new
p legislation- mayv be can
tolerate / regimentation;
by
Federal Budget: "It forebodes
fnecessary to assist in solving th^ monopoly without in time necessi¬ planning action designed to reduce
the wide cyclical swings of busi¬
problem. But unless we decide to
danger for the future if under the
tating /regimentation > by govern-/ ness
which
the
Committeee present very favorable conditions
appropriate sufficient funds to en- ihent.; If we
forsake/the principles
termed one of the most important of high income and high tax rates,
force the antitrust laws against
upon
Which, economic freedom economic
problems now facing the the fiscal affairs of the Govern¬
business monopoly, we should not tests
by/failing /to, apply .them,

»Some

the

free,
kept

v;-f../:

issue of bur age,
Jin most of the
world today we are witnessing

•

-of' ^economic- power.

sur¬

many

tlori

political freedom cannot

when/yoq vive..

must demand and require that our
•

unions

fight donment of industrial democracy.
to maintain free,-competitive en- If industrial
democracy is permit¬
terprise should transcend purely ted to perish our proud heritage
tions.

;

labor

shall
be
restrained!/while
the
march of monopoly is allowed to

those affirma¬

belief is

that

say

then

enterprise,

the time to act

state. .;; To

was

This

labor

vetoed

policy

relations.

by the President.

Committee

did

not

analyze
the wisdom of this specific legis¬
lation on this subject but feels
with the President that corrective

companies.

through the con¬
predecessor L. F. Rothschild & Co,/:/;!

two

The

company

gener¬

lesser extent distributes gas,

heat

and

water.

is distributed in

Electric
an

area

energy

in Mis¬

souri and Kansas, including Kan¬
sas
ern

City, Missouri, and in north¬
Iowa.
Gas is distributed only

Two With Marxer & Co.
7:.V (Special

The

DETROIT,

Financial

Chronicle)

MICH. —Lome

Clemens and Calvin R. Vogt have
become affiliated

with Marxer &

the

company's Iowa service
Company, Penobscot Building,
mends that prompt action be taken territory.
members of the Detroit Stock Ex¬
that the Surplus Property Act of I by the appropriate congressional
For the eight
months ended
change. '
1944 be simplified to speed dis-1 committeees so that sound, conAug.
31,
1946,
approximately
posal of war goods; that unem- structive—not punitive — legisla91.85%
of the
gross
operating
ploymeint compensation coverage 1 tion may result..
Walter F. Norris Is With
be broadened; That old-age
insur--j'fOne of the important measures revenues of the company were
.

legislation is needed and

recom-

—

about

12 million persong now excluded;

) is

ance

extended

cover

minimize

economic

decline

derived from its electric business,

unemployment compensation. approximately 6.09% from its gas
that public construction be lim- j There is now available in State business and the balance from its
\ unemployment compensation
ited to new projects of immediate
J funds 3^^ seven billion dollars. heating and water business. Total
necessity, and that plans be

pre-|>#.

Many states have recently lib-

pared .for work which could federalized

their

beneto^/'both

operating
months

revenues

were

for the eight

$15,959,735 and gross

Harris, Upham & Co.
'

(Special

to The Financial

LOS ANGELES,
ter

ated

Norris has

with

Chronicle)

CALIF.—Wal¬
become

associ¬

Harris;flUpham & Co.,

523 West Sixth Street.-

.THE.COMMERCIAL & FINANCIAL CHRONICLE

3252

Capital Goods ^lor' Consumers

MunicipalNews
/The performance of the municipal bond market iri the past fortnight, particularly in the retailing
of the singularly large emissions
offered in that period, was.of such
an
impressive nature as to con¬
vince even the most pessimistic

;
■.
.

//that the .market/for tax/exempts
''has far

disappeared. In prac-f
tically every instance,
under¬
writers
were
able
to achieve
from

„

marked

success

in the distribution

of their offerings, with the results
in some cases, notably the $46,-

Turnpike

Pennsylvania

000,000

/; Commission • issue/ being nothing

Zf.less than spectacular.
The

Tuesday/ to an investment
banking
group
headed by
Drexel & Co., B. J. Van Ingen
& Co., Inc., and Blyth & Co.,
Inc., proved to be one of the
fastest movers in a long time.
Re-offered at a price of 102.50,

-on

affording
to

yield of about 2.38%

maturity,

bonds

the

were

sought;/ after

by in¬
vestors, with the result that the

eagerly

underwriters announced late
the day
a)

Issue

district issue, of
r

comparable maturity and optional

dateswas!^p^eredjlast MarcH^i-- ^
A feature of the current

...

furniture,
floor-1 i coverings,- ^ refrigerators,
washing. " machines, - sewingu ma?
chineSj cooking equipment, port¬
able heating equipment and mis¬
cellaneous
electrical appliance?
other" than; radios; Transportation
equipment ranked second, al¬
though it included both automo¬
biles - and parts> accessories" and
tires bought separately from the

finan^7

ing,! and, one, that has been in in¬
creasing evidence lately, was the
.

closeness o£ bidding for thq loanThus the successful bid of 100.155

tent these- fluctuations are a cause

the successive phases-of their long-

cycle of production, distribution
business cycle;T;jntosf*leave and consumption a few, months
the
determination; of cycle ahead of the goods:*sold]for .cash,

and to what extent a consequence
of the
to

;
:
/
Third, during the period when

theorists./
/

...

the stock of durables is being

built

jWe do ;not have, time here to
through the intricate analysis
necessary to determine the prob¬

economic
other dif¬
ferences between cash and instal¬
ment buying. I must content my¬
self with saying somewhat dogmatically that in my opinion the
effects of instalment buying as
such are by no means so * simple

influence
upon •
up, the rate of production is a able
combination of the rate of expan¬ fluctuations of this and
sion in the stock and the rate, of

replacement of the existent stock.
A rapid rate of accumulation and
for 2s, or" a net cost of 1.9918%, cars themselves. Almost equal in a sudden transition to replacement
provided a cover of only 7.1 cents size were the other two groups- demand,
necessarily
entail
a
per bond -over the second high jewelry and watches and pianos, shock to the producing industries
^
tender of 100.1479 for 2s. radios and other musical instru¬ and to the economy as a whole. and direct; as issometimes * as¬
No
less
successful
than the ments. In the aggregate these four Should this conincide with a shift sumed; that differences in the ef¬
Chicago District undertaking was groups amounted to 22.8 billion by consumers
from increasing fects of instalment buying and
the $13,500,000 Los Angeles School
dollars in 1940 and to 25.4 billion their stock to drawing upon it as cash buying; of durables are. less
District
financing,
which
was deflated dollars or 32.4 billion cur¬ an offset to reductions of income, than is sometimes assumed; that
handled by an account headed by rent dollars in 1943. •/ ;
the shock may be very severe in¬ analysts of this problem are not
Harriman Ripley & Co., Inc., and
'/.. ,'v"
Now one can well say many deed.
Z'tZZ'- always as careful as they should
In mathematical theory, given be to differentiate between periods
Halsey, Stuart & Co. Inc.
things about these huge pools of
Here again the underwriters es¬ consumer
capital. I shall not try the amount of stock of any dur¬ when the instalment system is be¬
tablished
a
price scale which to cover them all. I shall merely able the economy wants to main¬ ing built up or expanded" to* new
proved
irresitible to portfolio pull together a few thoughts they tain and the life span of the goods, areas and those in which it has
managers arid the results ..more bring to mind that seem to me industry could readily establish become mature; and that in a ma¬
than justified their decision. True
appropriate in a series of meetings a rate of production equivalent to ture instalment system fluctua¬
enough, the yields were consider¬ concerned with the influence of the eventual rate of replacement tions in; instalment purchases are
ably more generous than those consumer credit, and more partic¬ in a saturated and stable market. more likely to reflect than to
available on both comparable and
*
:
ularly of instalment credit, upon By operating at that rate from the cause the business cycle.
even
less favorable credits.
the economy. Because our allotted outset, it could achieve a smooth
Sixth, it is necessary to avoid
time is short, I shall have to risk transition from the growing to the confusing the effects of the factors
However, the account man¬
In return it we have considered, i. e., durabil¬
sounding a bit dogmatic in order saturated market.
agers obviously and wisely deto offer a maximum of conclusion would have to pay the price of ity, the accumulation of a large
jplded to acknowledge the un¬
and a minimum of supporting evi¬ taking whatever number of years stock and instalment buying, with
willingness of buyers to pay no
dence.
For the supporting argu¬ the formula required to acnieve the effects of monetary policies
more than
passing interest, to
ment I shall have to refer you to the desired stock.
that result in additions to or de¬
list quotations.^ In short, they
In practice, of course, all this is ductions from the flow of pur¬
the longer study I hope to have
wore more interested in dis¬
,

of the award that the
all sold and the syn¬

was

•(Continued from page 3214). ;!
household goods such as

loan, awarded

turnpike

scale at which

Thursday,-December 19,1946

dicate books closed.

A feature of the operation, the
largest revenue undertaking in
tributing
their
wares,
rather
jabout a year, was the appearance
than to acquire a gilt-edged in¬
of three .bidding groups in the
ventory.
^competition at the sale. This: was
noteworthy considering the size of
Eight in step • with the; tempo
the project alone, and in light of established by its larger counter¬
jthe fact that, with the exception parts were the results obtained by
already noted, the municipal mar- the underwriters of the $1,850,000
iketv has -been 'considerably less Euclid City School District, Ohio,
than dynamic for many months.
2%% bonds, due. Dec. 1, 1948The winning Drexel account bid 1970. This issue literally went out
of 100.9399 for 2V2S, incidentally, the window, a result the more
; materially
bettered terms speci¬ spectacular in view of the fact
fied by
the also rans, both of that only one bid was received
Which specified a 2.60% coupon. by the district*/'
V
;
®A group headed by Shields & Co.,
The offer/ a price of 100.25,
and Alex. Brown & Sons, was
was made by a syndicate man¬
Second in the running, nejning a
aged by McDonald & Co., of
price of 100.70, while - the final
o

Cleveland, which re-offered the

offer of 100.15 was entered in be¬

bonds to yield from, 1 % to

half of

Kuhn, Loeb & Co., Glore,
Forgan & Co., and Lazard Freres
.:■& Co,, and associates.I'

by the Commission

Revenue Bond Data

While the out-,

are not redeem/
able until Aug. 1/ 1947, holders

standing bonds

/A: valuable %nd greatly needed
to
the altogether too
scarce centralized reference ma¬
terial on the subject of - public

addition

immed-1
late payment at the full redemp- i

may

.£■:

present them

for

tion price plus accrued interest

revenue

new issue of $46,000,000
2V2S has a maturity date of 1976,

Part

/and

are subject to optional re¬
demption, in whole or in part, not
pearlier than Dec. 1, 1951. ~
J
f' The highly successful turnpike
financing was preceded by a num¬
ber of equally impressive opera-

^tionsj all of which served to
erate

considerable

among

the

ample,
"which

publication presents
history, including
statistical, data, of 33 major rev¬
enue
bona
projects with out¬
standing indebtedness of close to
$500,000,000.
a

gen¬

enthusiasm

sey,
,

derive from

the. economy

each

Our

year.

statistics of

production income,
expenditures,
and
the
like,

nearly could he have come to esti¬ cash buying
of durables may
mating the life span of the cars to merely reflect an inflation bf 'iri5*
be manufactured years later? For comes
'by^^the injection/pf/new
matter, even now when we
so much about the automo¬

that

purchasing power at some other
point in the system. Direct control
over instalment buying, even if it
who
can ; confidently be more Effective than" anything
etary transactions in the markets. wrought,
Although in theory we know bet¬ make such predictions for 1950? modelled on Regulation W is ever
ter, in practice we have tended to Who caii make similar prophecies likely to be, will not control the
be
satisfied
with
records 'of for the multitude of durables other real Infla^onary and deflationary*
come

records

from

mon¬

know

bile and the social changes

it has

amounts

manufactured

and

dis¬

than automobiles?

forces involved. It is more likely
Fourth, regulation of instalment to be simply a system of rationing
in the salelof ^durables, is some part of the purchasing power
a very weak instrument for the the
monetary authorities choose
eontrol of these fluctuations. Ef¬ to feed into or keep in the sys¬
fact, however, the amount of, say,
transportation,
refrigeration
or fective elimination of these fluc¬ tem. Really effective control over
radio
entertainment
consumers
tuations imeans making "some con¬ fhe inflationary and deflationary
derive from any one year's dutput sumers wait, possibly for years, to effects of credit must be imposed
of the necessary equipment repre¬ get' the durables1 they waht and at/other levels and in other! areas
sents a small percentage of the rationing what is available among of the economy.
/
r
,
J
service they obtain, from the en¬ insistent claimants.; It mearis tut^ ■Perhaps I should.add that if, detire. stock! available .to them. This ting the top off booms in produc¬ spite all the objections that have
is true even in years of. large pro¬ tion and allocating restricted out¬ ,heeu expressed against it, some
duction. .The size and. distribution put among individual producers. sor of control is to be put speci¬
of the* entire stock,; not the addi¬ It entails finding, effective ways fically upon the; credit flowing to
tion made, to it during any one to stimulate; producers: and. con¬ consumers under, the instalment
year, .determine the level of liv¬ sumers when they fear the future. system; it would be well to: impose
ing consumers attain in these Whether the people of this coun¬ it somewhat earlier in the pro¬
areas.
try/will id fact accept such con¬ ceedings than at the point of final
Second, there is some reason to trols, I venture to doubt in the sale to consumers/ Most of the
believe that such factors as income light • of
their recent .rebellion value embodied: in durables has
and instalment credit have less in- against wartime controls. Whether, been accumulated before the con¬
fluerice ppon output and consumer even if the people prove r amen¬ sumer sees them. If he buys on
purchases-of durables in any year able, the government has effective instalments, the credit he receives
than does the size of the accumu¬ instruments
for the purpose, I may. be not a net addition to the
lated
stock, v The
relationships venture to doubt in the light of credit structure but a mere offset
among these various factors re¬ some years of experience in Wash¬ to credit granted producers and
main almost entirely unexplored. ington/Certainly, control over in¬ distributors earlier in the; chain.

tributed

measures

of the ben¬

efits accruing to consumers from
the production of durables.
In

terms

In the absence of adequate statis¬

stalment terms aione cannot even

Imposing

should be made, for ex¬

value dealers and investors, not
as

tical research, one must therefore
fall back: upon informed guesses

begin to do the j ob.
Fifth, care must be

form of fi¬

that make due allowances for the

differentiate the effects of instal¬

existent stock.

only after goods have been manu¬
factured and brought to market is

ment credit itself from those due

the

excellent
such

results

issue,

as
more

indicated
than 85%

the

of the

The
bonds, due in 1966 and
callable serially from 1949 to 1963,
were scaled to
yield from 1% to
2% for the 1949-1962 optional ma¬
,a

dollar price of 99.75

1963-1964, and 99.50 for both

the.1965.and the non-optional 1966

increasing

order

mater

awarded

issue had been placed by; the
syndicate within three hours of
the formal offering. •

turities; at

officials,

as¬

importance.

seems

rea¬

sonable to suppose that the stand¬
ard of living to which consumers

to the nature of durable

taken

check

that operates

clumsy and of uncertain effect at
best. If it also fails to stop infla¬
goods and tionary injections of credit at the

keep

the

subject

current,

CHARLOTTE, N.
Bruckner

and

C.—Jack

Johnston

King

have become affiliated with Mer¬

maturity,*This; level, incidentally, rill

Lynch,

Pierce,

Fenner

contrasts with the 0.55% to 1.25%, Beane,rX,iberty. Life Building.

Thus is

to the fact that consumers must points where they are made,/it
aspire, in so far as durable goods accumulate a stock of such goods must become intolerable.
supplements de¬ are concerned, is reflected in the in order to enjoy the satisfactions
Seventh,; an unsolved problem
voted to large scale new projects stock they accumulate and main¬ they provide. It seems to me that
concerning durables is the extent
The size of that stock in instalment buying as such has one to which they have introduced a
and refunding operations" are ex¬ tain.
turn reflects judgments concerning principal effect. As compared with more or less permanent element
pected to.be issued.
amounts and uses of income ex¬ so-called cash sales it advances in of instability because of the soNecessarily, publication of the tending over periods of several time the sequence of steps through called
cycle of replacement de¬
booklet entailed considerable ex¬ years.
Within any one year, a which the stock of durables is pro¬ mand. It is sometimes said that
high level of income permits ad¬ duced, distributed and accumu¬ great fluctuations/ from year/ to
pense and it is being offered by
ditions to the stock without pro¬ lated. The cash buyer withholds year in the output of these goods
Tripp & Co., at a price of $7.50
portionate increases in the imme¬ expenditures until he has accumu¬ will be reflected in the future as
per single
copy
and additional
diate/flow
the lated the price, which he * then goods wear out and are replaced.
copies may be obtained at $5 each. stock affords. Similarly,, in a year spends in a lump; whereas the in¬ The conclusion holds in any pre¬
of low income the stock makes stalment buyer borrows his lump cise form
only if durables have a
possible a retrenchment of expen¬ price, spends it immediately, then definite and unvarying life in use.
With Merrill Lynch
z; diture: without 'aproportionate re¬ withholds expenditures while he Exeprience during the war, when
(Spwial to The Financial Chronicle)
duction/in" the flow of satisfac¬ pays the debt. Both plans involve so many durables were cut out of

syndicate headed by HalStuart
&
Co., Inc.,
and

investors,

public

nancing which bids fair to
sume

success.

Chicago

mention

it treats in detail

Harriman Ripley & Co., Inc.,
proved exceedingly popular with

for

the flow of satis^

—

consumers

tion should prove of inestimable

fact that
'

case

Needless to say, the publica¬

followed in the.wake of the Balti¬

/?:> to

the

detailed

—

could have computed

municipal fraternity.

attended

The

just been pub¬
& Co., 40 Wall St.,

l~Highway and Toll Bridge

Bonds,"

previous
.ventures as those of the Chicago
Sanitary District and Los Angeles
School
Districts, both of which
more

bonds has

New York City. Labeled a "Hand¬
book of Public Revenue Bonds—

;' The

Mention

lished by Tripp

to the call date.

real income

factions

dream. Who in 1900 or 1910 chasing power in the economic
the number, system.
Instalment buying can
variety and distribution of autor take place on a large scale without
mobiles
American
consumers the creation of large new amounts
would want in 1920 or 1930? How of money. Correspondingly, large

just

Tripp & Co. Compare

other purposes.

that

exception¬

•

in the redemption of $42,300,000 Z
of -/outstanding X 3%s
and
for

-V

ally- fast--moving piece* of Jbusi- /
ness. Z.:/,/,. /;■•
..-/ Z

Proceeds of the financing, will;
be employed

2.75%

and immediately discovered

they had acquired

ready for publication shortly.
First, then, I feel that we have
given grossly inadequate attention
to this accumulation of/cdnsumex'
capital as a factor determining the

&
*

tions.

The great violence of fluc¬

tuations/ in
durables;:*
traced

the

can-

production

Undoubtedly

considerable

of
be

part* to

these, circumstances. :. To what

ex¬

alternation

tures

with

of lump

periods

expendi-

of; saving

Withholding^The: essential differonce

between them

is that goods

production entirely but the stock
in use dropped surprisingly little,
precludes acceptance of any such /
rigid premise. The period Of /pise
can
be stretched substantially^ if

.gold/ on instalments move through necessary; ^Similarly, it jcmb^ci^

.Volume 164

short at :any time,

•

THE COMMERCIAL & FINANCIAL
CHRONICLE

Number 4552

It seems

consumers

and weight

of the sacrifices they
must make if they postpone con¬

its demand for

sumption while they save to pay
cash or if they simply do without
durables, need further analysis.
Only if we understand these can
we understand the social signif¬
icance of instalment buying, the
degree of rationaility shown by

pick

good, it does

where it left off.

simply not consumed some¬
thing over a period of months or
years,

and

would

have

tion

the

production

that

permitted consump¬

And

always made

the great consumer market of
America.
They do today. - Yet

ulation

they

Board 'actually circumvents the
law under "which it was issued.

are

the

very

people the Fed¬

eral

Reserve Board authority to change

Reserve

give the
''well-to-do" with their charge
accounts the opportunity to buy
whatever they need on their own
terms, while denying the worker

discrimination

which

economy of the country and the
comfort of the average wage earn-,
must

be made

the

subject of

definite action by the new Con¬

ruptcy.

measure

"Mill and Factory"

Magazine and the study issued by
the United States Bureau of Labor
Statistics
♦

marked

all

to show a
in general pro¬

serve

decline

ductivity. Even labor union ex¬
ecutives acknowledge the need for
revising the trend toward lower
productivity, i
v

American Federation of Labor

•

President William Green, writing
in Labor's Monthly Survey, re¬

cently states: "Wage-earners can
best stabilize their wage dollars

the

absence

advance

by surges; is powerless
to make any clear cut distinction
between efficient and inefficient

plants,

events and

mkde

dustries rose less than 2 %. Even

out in recent months.

Pegging Wages

Falling

Production

This attempt to peg wages on a

sub¬

that protest and have
it clear that Eccles' refusal

un¬

The

Federal

law

itself

Reserve

Board.

gives the Federal

excessive

use

credit

boom and bust. The CIO in seek¬

enterprise cannot hope to carry on
ing to force this new increase in by continuing to pay out profits
wages in the mass production in¬ to capital or labor before they are
dustries is exaggerating the pos¬
realized; through continuing to
sibilities of all industry; is dis¬
employ a yardstick of capitalcouraging the application of the labor efficiency suited to an agri¬
remedy to the eviL
/
cultural society.
We have further to take into
We can only hope to make in¬
account the use by CIO in its creased
production a point, a part¬
findings of an outworn yardstick nership undertaking as capital
of efficiency, one that accounts and labor
accept joint responsi¬
alone for output per man-hour.
bility for upkeep through accept¬
Such a yardstick makes -it im¬
ing a bare wage return in place
possible fairly to cIMinguish be¬
of maximum wages and profits;
tween what con^^utes^upkeep

unavailable for the benefit of the
American

people

needed

markets

can

Copies

when

stabilize

constructive

not

was

disorderly
regarded

public policy."

this

communication

also being sent to each mem¬
ber of the Board of Governors of
are

the Federal Reserve.

The Board of Governors of the
Association

your

urges

Damaging Control
Those

who

are

for

the

sponsible

Stock

Exchange
serious consid¬

Respectfully,

primarily
health

re¬

/ s/ James F. Burns, Jr.,

our

margin. regulation

President.

national economy see in this 100%

control j ust
as damaging to the
country's econ¬
omy as those OPA controls which
a

Why Cheap Money?

had the country bound down.

It
is'not desirable to allow complete
credit

other

stock

purchases

encourage

words

string transactions.
not asked.

And

But the

in
shoe¬

that

100% margin

should be reduced substantially to
allow for the wise free flpw of

investment funds which

(Continued from

vital

are a

part of the life blood of the Amer¬
ican economic system.

ponents would like to

Market

Debacle

keep the interest
present level. Both
schools imagine that it would be
possible to keep interest rates
stable nt a certain level. What they
rates at their

overlook ' is

will

effect

serious

disorder

even

the

market

than was experienced a few weeks

Logic should

ago.
such

control

require

the

100%

that
mar¬

that

the, moment

it
cheap
to an end
matter what level—spec¬

becomes
—at

If this 100% margin regulation
is allowed to stand indefinitely
the

3213)

check the

decline, and to

that; the

evident

drive has

money

Fears

page

stocks

was

which

ill-advised.

known

are

gin

regulation

ulators

come

Government

stock:

would hasten to take their profit.

There would be

a sharp fall. This
again would induce holders bf
floating debts not to renew -their
holdings, in the hope of being able

later

favorable

should

„

tinues to refuse to recognize the

Protest Credit Prohibition

This would give labor a

falling standard of production is
no cure for the evil, nor will it
is entitled to share in the results
provide the sustained purchasing of increased production, in the
power required to prevent a fatal profits of
industry, but the free

finance, at a time when credit
not being used to excess for
purchasing or carrying listed se¬
curities, and rendering this tool

eration of this resolution.

ne¬

sort of
partnership in business and in¬
dustry, with labor sharing through
a maximum wage in the profits of
industry before the goods are
sold or the cost of production is
met. CIO is, in so many words,
demanding the right to share
profits
without
assuming
any
responsibility for the balancing of
supply and demand.
You and I may agree that labor

over

Credit

was

Firms

the

stock market.

actually-

control

markets.

there

other

regula¬

margins only at such time
is

markets

loss

sprees are not desired by this As-1
sociation. But prohibition of the
use of credit as an essential tool

tion of this kind should be issued

the

'
definitely terms.
M.
The Board continues to claim that be included in that list of bum¬
The result would be a sharp rise
this regulation is designed to avoid pering controls which are being in interest
rates, or a spectacular
speculation. The fact of the mat¬ eliminated or revised to give the expansion of credit to meet ma¬
ter is that while the regulation bars country a* chance for expansion, turities, or both.
The Treasury
the purchase of listed stocks on production^ and prosperity. If the would have to raise the funds
re¬
margin, it condones the purchase Federal Reserve Board itself con* quired for. the repayment of mar

to act at that time

the latter small gain has un¬
doubtedly been more than wiped

conditions have

stantiated

legislative action

CIO claims that in its

cby helping to increase volume of
production."
The
survey
also mulated,'; and like information,
before there cart be a determina¬
Stated that productivity, in war
>' 51
plants increased 61% in less than tion of wages.
during the war, but
that productivity in; civilian in¬

Congress did not intend that

throughout the country to be al-J damaging effect of the 100% marmost wholly speculative. The truth1 gin regulation then this too is one
gotiations, the unions are entitled of that assertion is found in the of those vital subjects which must
to have the fact of a business, its
fact that the regulation does not be given early attention by the
profits, its dividends, its price bar buying on margin over-the-1 new Congress.
schedules and how they, are for¬
The

ffour years

Reserve

economy.
The Federal
Board regulations, which

inates/ or which for the* good of the

r
of an adequate
capital-labor
effi¬
ciency, industry is powerless to
get rid of wasteful overhead and
bring efficient plants into fulltime operation; is powerless to
substitute advance by stages for

Board findings, those by Charles
B. Walker in "Fortune" Magazine,

Federal

is produced more is avail¬

the Report in

the

der its

for

Reserve Board
regulations
damaging, and in damaging
that group/ vital injuries are in¬
are

■

general agreement that this reg-

for
the
adjustment of wages, gress.
Margin Ban III-Advised
values,
consumption.
In the mortgage-interest-rates,
absence of any general increase in taxes, insurance, dividends to ac¬
Another regulation of the Fed¬
production, a second round of tual earning power. The means eral Reserve Board which con¬
wage increases promises to price for readjustment was lacking after tinuously
hampers reconversion
us
out of the market, domestic the 1929 depression. In the ab¬ is that which bars the purchase
sence of any
and foreign.
definite tie-up be¬ of listed stocks on margin.
As
tween the amount of wage in¬
early as November, 1945 I made
Labor Productivity Unfavorable
crease and the percentage of in¬
a
protest to Chairman Marriner
The reports from industry con¬ crease in efficiency, it is lacking Eccles of the
Federal
Reserve
cerning labor productivity are for today. By placing a premium on Board against the 100% margin
the most part unfavorable. The inefficiency and waste the CIO regulation.
The protest was jus¬
National
Industrial
Conference program is an invitation to bank¬ tified at the time.
Subsequent
more

able

3211)

page

average citizens have

either the Federal Reserve Board
itself Should take action to elim¬

(Continued from page 3224)

securities

credit

average worker just cannot afford. counter securities through banks,
a
charge account. If he is to obtain Such provisions represent a gross
these goods at all he must obtain discrimination
as
between listed
them on the instalment plan. The and unlisted
securities.
There is

of the country the oppor¬
tunity to buy at all, is contrary
to American principles of fairness.

Profits Wxthoul Responsibility:
An Answer to Mr. Nathan
j

Margin Controls

(Continued from

This

listed

resulted

during that period is gone for families

good.

which customarily irk
credit, abolition of credit in

volve

flicted upon the entire American

has

some

structure

Attacks Federal Reserve Credit

not

3253

using the instalment
sonable to believe that variations system, and the weight of the burr
in the choices made by individuals den imposed upon them when they
as
to replacement dates will in are deprived of the instalment
time eliminate any < replacement privilege.
One may assume that
cycle originally: present.
v,:/.- the need for many (perhaps most)
durables
becomes
acute
as
the
Eighth and last, I should like to
comment on the relations between consumer and his family reach
what has been well called the life particular
points' in their
life
cycle of the family ^and its need cycles. Waiting to get the goods
for taking possession of durables later may entail a severe sacrifice.
at particular times. These matters Conceivably it can mean sacrific¬
need much more detailed, study ing the satisfaction for all time;
than they have thus fhr received. It can mean sacrificing output for
The nature and strength* of> the all time, too. We hear, much of
pressures that make so many con¬ deferred demand nowadays. Much
sumers
willing to pay carrying of it is not deferred but disap¬
charges or price differentials for peared. A family; can't go back to
immediate delivery and the nature where it was. Even if it can defer
rea¬

securities has caused
postponement or abandonment of

productive enterprises.

Continue

policy,

If the trend of interest rates Is
.

will have to

large
extent
free
credit balances at present in the

give

taxpayers

hope for
Indeed, it
may be even doubtful whether.it
a

British

then

reversed

lowing specific considerations:
To

creased

an<j. in order that the bpnks should
belablC Jb:.'absorb;'t^e 'addition the
whole''y^blume ofif, would be
expanded.
he
lotion •£. thus
brought about would be a multiple

money

mendation is supported by the fol¬
"A.

degree the money
through an in¬
issue of Treasury bills,
raised

of any conceivable inflation cre¬
ated through continuing the cheap

(Continued from page 3211) ;

listed

large

would be

Listed Securities
ing,

turing debts, and would only be
able to do so at much higher rates.
To

up any

reduction of taxation.

ance of the policy is not only un¬
will be possible to maintain taxa¬
just to the individual investor, but hands of brokers are owned by tion at the level to which it was
assumes the existing distortion in large investors, who usually pur¬ reduced in the last Budget. Any

the economy will be followed by
recession or a depression. This

in turn

would increase the bur¬

of our enormous public debt
might result in that very in¬
flation
which is
the purported
reason for prohibiting the use of
credit for purchasing listed secur¬
ities..
"Increased production' of goods,
together with a Federal budget

chase for cash. Investors with

av¬

drastic

further-

reduction

could

and small accounts fre¬ only be possible through the con¬
quently utilize credit as a legiti¬ version of high interest - bearing

erage

den

mate and valuable instrumentality

and

for improving their financial po¬
reason
alone, the cheap money
sitions, and under existing restric¬ drive is a tTreaswv policy, not a
tions they are deprived of this as¬
Socialist Party policy.

balanced at

level within

our rea¬

sonable capacity to pay, are the

only

reliable

inflation.

safeguards, against

Both

these

safe¬

sistance

their

efforts

get

ahead.

Moreover, their inability
to participate in the market, be¬

loans

drive could not continue

of lack of free credit bal¬

forever.

ances

and current restrictions

bound

credit, has greatly reduced funds
available for absorbing securities,
with unfortunate results for large
and small investors alike, and for

For this

Evidently, however, the cheap
money

cause

lower level.

Its

extreme

be: reached

limit

sooner

later, and when it is reached the
reaction described above is certain

to set in, unless in the meantime
guards are impaired by current
restrictions imposed by the Fed¬ the general public as well.
the floating debt has been reduced
eral Reserve Board. Hence, in the ; "B. Markets for listed securities to normal
proportions. It is im¬
interest of high employment and a constitute an invaluable reservoir
and profits. The inadequacy • of through their agreeing to share
portant, therefore/to drag. out the
dynamic economy, and as an aid of liquid, funds. Recent events in
this yardstick was discussed at Income on a
pre-determined basis; in the
It
fight against inflation and other markets, where liquidity is process as ..long as possible.
the recent Washington Confer¬
through their agreeing to delay deflation, the Governors of - the relatively
smaller
in
ordinary would be short-sighted to press
ence sponsored by the. Bureau of
times and virtually disappears in
the division of income until it is Association
of Stock
the cheap money drive too hard,
Exchange
Labor Statistics and the Bureau
times of crisis, threw additional
of the Budget. It was pointed out realized.
Firms unanimously and urgently
because in
that
case
it might
burdens on listed securities mar¬
that output per man-hour fails
recommend that the Federal Re¬
kets, with disturbing effects, since reach its extreme limit too soon.
to account for such important va¬
securities markets were already And it may take time before the
serve Board recognize that events
Two With Walters Firm
riables as capital investment and
,

•

horsepower.
J

In otlifer words, industry as a

wil^jfecks an adequate measure
-pitefficiency; lacks
•a>
a

(Special to The Financial Chronicle)

proved the unwisdom of ex¬ thin, partly because of restrictions unwieldy
the

of credit.

•"

mass

of floating debts

could be reduced to* Manageable

have become associated with Wil¬ ities, and that such restrictions be

credit must be distinguished from

achieved, the tefmMWtion of the

abolition

cheap money

representative measure of cost, liam Walters Securities Co., 3923
price-floor or point of reference West Sixth Street.

have

ANGELES, CALIF.-^Paul isting restrictions on the use of
C.: Buetow and Frank S/ Fuhr credit for purchasing listed secur¬
LOS

immediately removed.
"The

validity

this

recom¬

use

- -

"C. Control and orderly use of

credit.4 In

view

proportions.

Or.cdi 'that ; end

drlVeOcould be

en¬

patterns throughout the business visaged without undue concern.

THE COMMERCIAL & FINANCIAL CHRONICLE

3254

the

The American! Plan lor German Bank Reform
(Continued from page 3208)
require 37 billion ium, rnoie or
less.

Its

;

■'

■ •

present

condition,

destruc¬

tion, reparations, deindustrialization, lack of raw materials, pros¬
trate internal and external trade
Germany practically a na¬
tion on relief.
Often overlooked

make

in addition to its

is the fact that

present inflated debt, deposits and
currency there are tremendous fu¬
ture,

non-productive costs which
internally financed with¬

must be

out

Welfare costs,

outside help.

occupation costs, cleanup
costs all mean

struction

of de¬
budget

deficits and hence more inflation

—maybe

hundreds of billions of

Keichsmarks.

With the division, of Germany

into four zones there is—contrary

program—at this

the Potsdam

writing

monetary

common

fiscal policy, al¬
though a detailed plan for finan¬
cial reform has been prepared by
banking

and

of American financial ex¬
and is now under quadri¬

group

perts

the

large-scale issuance of these
military notes by the Rus¬
sians, especially during the early
months of the occupation, must
have
swelled
considerably - the
Allied

cordingly,.; bank, deposits have
greatly increased because of the
redepositing • of currency by the
Of the cash holdings of
the banking system in this area,
about
nine-tenths is ultimately
lodged in the local Reichsbank.
About 80% ,of the assets, of ithe
public.

default, sirice there is

American

zone

;

bank"

"central

supply of currency in the hands
of the population of the Russian
zone, and the writer has heard,
although there is no statistical commercial banks here are in the
of
measure
German
Government
thereof, that the black form
market is worse in the Russian
than in the West of Germany.

Thursday, December 19,1946
separate

for

each

the

three Laender. each such institu¬
tion establishing clearing arrange¬
ments with the two other "Laen¬
der" central

Each central

banks.

bank is to be known as the- ^Ccntral
Banking
Institution,"
for
which

the three regional

purpose

used,

namely*

those

•

Baden

(Wiesbaden).'

Hesse

this is a

Whether

fact

cannot

longer

The

"Reich" Is to disappear

word

German central Treasury.2 "Ac¬

There is such

banking functions.

bills

the

hands

the

banks,

American

zone are

issue

not to be banks

commercial

banks.

agents of their respective Laender.

example, the Munich branch of
so operated. Its

of course in the same
as old Reichsmark notes

by the Reichsbank t before
Day; that is, they are non/While the paper currency in
German director is Mr. Heinrich interesttoaring obligations : of a
circulation in the four zones is
The
uniform, consisting of Reichsmark W Hartob, who for many years presently extinct authority.
notes issued before V-E Day by was connected with the Reichs¬ chief present difference
is that
the Reichsbank and Allied miltary bank and has considerable famil¬ with Reichsmark notes you can
with' occupation banking buy something.
notes placed in circulation by the iarity
"It
is
a
mistake
to
regard
occupying armies, the treatment problems, having worked on the
of bank deposits in the four, zones other side of the table in Paris, Reichsmarks as completely worth¬
has not been uniform. The Reichs¬ when that country was subject to less, even though they represent
bank, of course, no longer exists direction from Berlin after the in large part the financing of the
1940 collapse.
as a central-banking system. The
Director Hartlieb* production of war goods now de¬
head office in ' Berlin has been incidentally, in prewar years as stroyed. Certainly a fair fraction
a
Reichsbank
official,
worked is represented by tangible prop¬
closed, so have the Berlin head
offices of the big branch banks, with such American bankers as erty which still has value, real es¬
central
mortgage
and
savings Rovensky and Gibson on standstill tate, for example, so the Reichs¬
banks.
Instead there is only the questions, and on Reichsbank for-? mark is not completely devoid of
clearing - agree¬ de jacto 'backing.'
Berlin Stadtkontor, a quadripar¬ eign - exchange,
"An interesting phenomenon in
tite-controlled bank. It does busi¬ ment and similar matters.
The writer a^ked Mr. Hartlieb this part of Germany followed the
ness with : the public to
has no contact with the former whether he felt, as do some of the replacement
last
year
of
the
Reichsbank branches and agencies Americans- in Bdrlin. with whom Reichsmark by the Shilling in
the matter was discussed, that it nearby Austria.
The effect in
throughout the country. In the
,

the

edge of what became of the assets
of the Russian-zone branches and

agencies. The same is true of the
other big German - banks. /• The
Russians 1 closed all commercial
banks in the territories they con¬

had been

mistake for

to leave

ever,

In the other zones, how¬

the Americans, British and

French allowed the local banks to
resume

business.

'<{ From the standpoint of infla¬
tion, therefore, the Russian zone
has eliminated the inflation po¬
tential in the form of old bank
step which incidentally
has forced many people to go to
work who otherwise, as in the

deposits,

Western zones, would be tempted
to live on their savings and patron¬

ize

the

black

market

erally than they now can.
other hand, the Russians

gen¬

On the
are

be¬

lieved to have added to the infla¬

tion

occupation* of this zone, of Ger¬
many.' Mr.; Hartlieb admitted that
the pressure on the people to work

is stronger in the East as a re¬
sult of the U. S. S. R.'s policy of

"correct"

left his money

and

deposit with his bank was penal¬
ized, whereas the person who took
his deposits out in the form of
currency
was
rewarded for his
unsocial act, this Reichsbank of¬
ficial commented.
People who
patronized the black market dur¬
ing the war, Nazis and tax evaders
had kept away from the banks.
In Mr. Har tlieb's opinion, the
supply of notes now believed to
be outstanding in the four zones
of Germany is about ten times
-

than what would

mally required

the

nor¬

Goulet has

belief

widespread

that

what

would

done here as

of what

be
anti-inflationary

would

measure

Bavaria

ultimately

the

opposite

the Russians did in their

zone

after

the

Germany
immediately
occupation.,
/ •

centralization."

The

/; American

bank decentralization

policy is

re*

act as

dealer

utility and industrial stocks and

previously ' President

was

Goulet & Co.,*>Inc. and was with

Realty Liquidators, Inc. of Yon-

the banking regulations for its

jurisdiction, the American Plan
provides. Bank inspection will be
carried out, however, by indepen¬
dent

supervisory agencies to

established

Land

each

what similar to the

some¬

Supervisors of

State Banks in the U. S. A.
work

The

bank

coordinated

such

institution

need.

Logically, reorganization
banking in the American zone,
makes sense, in the light of the,
Berlin decision I just quoted, only,
or

if there exists
the other
"To

Federal

United

similar system iir

zones

make

Reserve

Germany.
comparison, the
System: in. the

States does, not leave the

banks entirely inde¬
pendent, but insures the carrying out of national credit policies,. W;
Randolph Burgess, in? his book
reserve

'The

Banks.

Reserve

and & the;

Money Market,' describes the oi£-;
gin of the Federal Reserve System
and says that when the decision
had

been taken

12 re-;

create

gional banks, an impossible situa^
tion would have ensued, had there
been no provision for coordinating
them.
The same holds, for the
.

„

The

Flan

banking is based

for

German

the quadri¬

partite policy, laid/down in the
Berlin
man

economy

shall he decentral¬

considered by OMGUS fo be

.cases

businesses.1

ruled
The Banks and Inflation

were

left open, Mr.

Hartlieb

stated, resulted in the" public re¬

gaining confidence in them.

out,

bank supervision

In the U. S;

Banking

zone

operations*

clearings, supervision and control

The fact that the banks in this

Elsewhere

the

writer

that while blocked accounts

ized

part

are

all

"Land*"

being

-organized

State basis in the three

Laender of: the American

Ac-

was
are

substan¬

deposits most of them
not totally blocked, but may be util¬
for

"normal

business

transactions."

Branches

where

the

ficial bank supervisory
of the Land concerned.
of

with

bank

authority

;Where in

Land there exist branches

any one

outskfo

;

its

head

office

the

cases

large banks,
of

claims

the head offices
of

investment

former

branches

large part of assets consist
other

banks,

in Berlin,

were

principally

that bank's head office

made

will be completely independent of
any

extra-Land control, direct

indirect, by any other banking in¬
stitution." r
- :.y
c< .*
number

The

in the

duced

conform

service

needs

as¬

sets of

the Reichsbank and com¬
mercial
bank r branchesr repre-*k
sented

on
the nowoffices in Berlin? * i

head

claims

"Under

t h

.occupation

the

have

been

branches

Reichsbank

forced to. contract liabilities with¬

.always: being - given corre¬
sponding assets. An example was
government at
Frankfurt
reportedly.
deposited
2,500,000,000 RM of previously un-.
issued, notes: it had captured ill a
cave in Thuringia fox credit to its
account, at the FrankjPurf branch
of the Reichbank.
This was the

out

when the military

•

equivalenf of the;;causing, the h&r
of

suance

that

much

currency

without corresponding assets.:.

The

2,500,000,000 RM deposit is "thus
a

charge

the

three

Laender

governments of the American zone
or
.

all four

"In my

zones.

opinion, too," continued

zone

and

should be

as,

separate -from the

g9yertoent as possible, and not
made
the means
of: financing

g'oyerhmeht deficits. It/ rh'ust to
remembered

that

in /Germany

will be. re¬
the limited

ditional.

available

per¬

Where

In Bavaria, for

example*

Bavarian State Bank has been

in existence

for

than 165

necessary, under

years..Such institutions, therefore,

American .Plan, local or. re¬

pught to be used, to finamie state

eliminations

are

„

gional banks will be favored

Later
be

the

State-owned banks have been tra¬

sonnel of the community.

such

done with

Then,;

reform.

currency

banks:." and

branches

further

over

former. large banks

the "Big

where functions

exercised.

is to

the/Land /con* Mr, Hartlieb,. "the central hank

cerned, one of the branches" will

the

zone.

The U. S. Plan recommends for

informed

total

Land

permitted,

branches

tial

the

for the Land, and such head office

the

*
^. *, » '
;
■ t
; j
Not only the central banks, but
all classes of banks are M be de¬
centralized- to the Land jeVel, un-?

eliminated.

board.:

tions

power

what

closed

ized and that excessive, concentra¬
of

onus

Conference, that this Ger¬ located

Germany

capital

withdrawal

and any new
branches created within each Land
first.must be approved by the of¬

whole.

not
.

and

it to regulate reserves*
and
settlements,
but
subject to, the regulations of any
central
banking authority later
established
for
Germany as a

empower
transfers

bank's head office is located will

American Banking Plan
Described

are

kers, N. Y.

sue

will be

'which the Laender/.'central
banks' can turn for credit in case

The Land central bank will is¬

outside

banking

jbonds, whole mortgages and mort¬
Mr. Goulet

fix in each Land.

der the American Plan.

zone

gage certificates.

keep in the Land central bank a
certain
minimum percentage of
their deposits, as a reserve for
settling balances. The exact per¬
centage the supervisory board will

American Laender of this zone."

Therefore* national centralization

working

in public

to acting
as fiscal

Commercial and savings banks in
each Land will be required to

eral Reserve System in the, three

for

offices at 32 Broadway, New York

City, to

are to be confined
bankers' banks and

general, the American cen¬
"After currency refoim,: which tral bank plan for the Laender
however is: not ah isolated issue, was designed to be easily amal¬
but can be successfully solved gamated with any form of central
only} along with other economic financial administration later es¬
and political problems, the main tablished under Potsdam for Ger¬
problem facing us here," con¬ many as a whole, whether a cen¬
bank
or
central
tinued Mr, Hartlieb,/'is bank de¬ tral
banking
-

divduals

opened

They

there

marks a month in the cases of in-

William

■

inspectors will be
through a Banking
Council, made up of the super¬
visory
officials
of
the
three Reich today.
c.
,
i
Bavaria was that large numbers Laenc^pr. , /
./."Another
r ,
" /
;
point is timing.
I
of people brought Reichsmarks to ; The American,Plan envisages a
pointed out to the Military Gov¬
banking law for each Land, as ernment last year that to reorga¬
their banks for .dopbsit bri tha.the*
ory that here* loo/to^ final rec¬ similar as possible to those of the nize banking in one zone before:
koning might, favor those/ with! other Laender, but taking, into ac¬ the German ijuirency is ireorgabank accounts as against currency count local .circumstances. It/also nized and before a: new central
boarders. The people, did not, pre¬ calls for. ajn independent super¬ currency-issuing authority is set
agency,
as
completely up would be premature, as it;
sumably, bring to. the banks all visory
their currency, but perhaps only divorced from politics as possible. would
burden the new,
U./S.half, "as a hedge. This evidenced The • central bank's charter would sponsored banking system with the

German ported to call for kmMatto

economy.
This suggests the elim¬
ination of nine-tenths of the notes

potential in their zone by the
Referring
printing of large amounts of Al¬ in the public's hands.
lied military marks from dupli¬ only to Bavaria, but presumably
cates of the plates used by the the same applies more or less in
U. S. A. to print military marks the other parts of the American
for the Western powers.
These zone, Mr. Hartlieb pointed out
duplicate plates were supplied by that bank deposits as they ex¬
the United States. These Russian- isted on V-E Day are by no means
printed notes have a tendency to all "live," for under Law No. 52
overflow into the Western zones, of the Control Council, certain
as
evidenced by the 1,000-mark bank accounts are almost com¬
notes, which the Western powers pletely
blocked, being subject
have not printed, but presumably
only to withdrawals of 200 to 30d

William F. Goulet Opens
Offices in New York City

MrijHartlieb^ said::; Tt Is: k&rdAa

the bank deposits Intact upon our

wiping out existing, bank balances
and breaking the banks, but that
the Russian system was unfair
quered as of May 8, 1945 and re¬ and for many individuals quite
placed them with a new system of brutal. The person who had been
banks.

Hartlieb Decries Headless

(

V-E

and

names.

issued

the other zones have no knowl¬

•

the units concerned might ^e toe
smdll: M make,dtpracticable^* :

the Reichsbank is

Germany
all
were
closed
Reichsbank branches in

under the Amerieaa Plan.
But'
this feature, It was realized, might
never
be implemented
because

from/their

for

banking

offices

similarly be reduced in area*

branch

and

a:few: minutes to give .all my re4
actions to the U: S. Plan,'but I
•////.
Each of the three new central would, like to make a. few
cordingly,"
continued
Director
say.
points.
It is "reliably reported" that the Hartlieb, "the banks have no as¬ banks is to have a "supervisory While
decentralization ~of -eco¬
Russians ^agreed in 1945 to give sets suitable for rediscount at this board," representing ^the various nomic power is one of the qtiadrithe amounts of Allied
Military Reichsbank." But it is our policy economic interests, including partite aims, the Berlin/resolution
Marks issues outstanding as of to
maintain
confidence
in
the union labor, of the Laender. Each of August 2,1945, specifically pro-Dec. 31, 1945 and quarterly there¬ banking system.
that
We d6 not want Land central bank is to act as vided
Germany: shall * be
after, but so far have not done so. any bank to get into trouble, for clearing and settietont' /institu¬ treated/a$ an/economic whol<?
tions for all banks in its area as
U. S., U. K. and French have. •
that
-to tnis end common policies shall
might become
contagious.
Therefore, if a bank is faced with well as the: two other Land cen¬ be; established
regard to cur-*
Reichsbank Official Interviewed
tral banks, the central banks of
trouble, it can borrow from this
rehcy and: banking^/ dmjgilicit -it*
The former branches of the Reichsbank office in Munich, but the British and French zones, a such a
policy would seem to be
Reichsbank in the American zone only Lombard loans at iVe % In? bank or banks in Berlin, and pre¬ the ultimate establishment
of. a
are still operating under the Of¬
terest, 1% more than the official sumably the State banks in the oank or issue tor- the whole of
fice
of
Military
Government discount rate for commercial paper. Russian zone.
;
/', t4
Germany and I suppose—if is only
The Land central banks of the a
"With regard to the Treasury
(OMGUS) with limited centralsupposition —t that ultimately
zone

Russian Zone Differently Treated

zone

may

they are
category

Russian

basis,
ownership

control

(Mutoh)^i / Wtoenbbrg* ;/,/ //• /s/>JEtaiildng)Syst«n; /.
*
(Stuttgart), and Greater ^Commenting: oil; the U/S./iPIan,'

; branch Jn each of the three
Laender of this zone. In Bavaria,

Reichsbank

:Standtkreis

and

branches of /th^vfteichsbabfc-^

being

with emphasis oh- local

Bavaria'

partite consideration in Berlin.

Landkreis

decentralized

"In.

the

past

S;*.
the/ Reichsbank:

branches have dealt not

Six."

banking systems

exchequer heeds.

may

only with

other banks but with the general;

public. They are not to be pro-

Volume.; 164
:r.

bibited

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4552
;//!//

:■

ful to the currency. I feel that we
should be building a sounder post¬

from

doing that sort of
business, but I think all accounts
clearing agreements-should be
:kept with the central bank. The
public should be obliged to bring
its foreign exchange to the 'cen¬
for

the

trusted to

scribed,~asa central; bank.

the

will

the

plan

for.. decentralization
for

the

law to fit

obstacles,

provided
laws

.laid

••v'>/'j*
t: Federal

was

principles,
were

week '

not

gov¬

'as

American

one

were

relates

(Continued from page 3205)

"Ing * 1947

American consumers by the Fedf
erai phrase makers.

^d/that (1) supplies of/certain
goods will."'remain

■consumer,

.•■:
#

tioit.

,,...

.'/**

..."

".VV

]

"anced

number of mergers, we must iiot
the lnfiuence of fi¬

overlook

nancial groups and; investment
bankers
o n
competition
in
American industry. These bank¬
ers

production. This .year we
are getting 5,400,000 tons, or about
'20%- Of production. For 1947 the
■Food Industry Council Committee
.is demanding 6,950,000 tons, or

ural for them to seek every op-

So Congress must de-

portunity
to
stimulate - new
security issues.
Since
these
hankers also act
visors to the
Issue

of
don't

hanker

upset
*

the

sugar

ness

budget balancing

tete-a-tetes.

ad-

'■

mmarnm**

vessels

Lincoln Re-elected

Chairman

the

Board

Institute of Life Insurance

shortly

the

Dec.

11; at the Institute's Eighth An¬
nual
Meeting at the WaldorfAstoria "Hotel, New York, Elected

be nudged into a lumber transpor¬

has offered; services of tation Cue.
One of the narrow
Treasury tax specialists to Senate bottlOiiecks In
theAbusing stop-

last week's

will

who

age

IS the box

usual since i932.

\'-f

•

sjs

ic:!i

trade

Foreign

will

ers

shortly boil over. Under Secretary of State Clayton hopes to
highlight coming international

with

conference

world

agree-

ments cutting tariffs for the

•

three

are

ready to counter with demands
..

that

all

ification.

well

kicks the

Trade

entire

Agreements

hot kettle of econom¬
political ingredients

—and the resultant

niess won't

palatable to the
tariff advocates.

Congress for rat¬

This

Reciprocal

•Act; into

commitments

such

submitted

Chairman of the Board,
tial Insurance Co. of

very

Department trust bust¬
are tmhappy, fear air economy

low-

Republicans themselves are split
on
the trade pacts issue.
New
York's Republican Representative
Reed is penning a resolution kill¬
ing the entire trade agreements
statute.
That won't pass.
Better

is that Congress will vote
itself a chance to OK or veto
tariff changes before they be¬
come operative,.
\
~

guess

F. W. Hubbell, Des

Pruden¬

America;

Moines, Iowa,

whittle President of the Equitable Life
down their appropriations.
So Insurance Co. of Iowai Ji H; LithVice-Presi¬
they're excavating the old monop¬ gow, Torimto^ O
oly witch and will shortly send dent and General Manager, Manu¬
her aloft astride their own propa¬ facturers Life Insurance Co. and
conscious

Republicans

years.

Justice

turmoil

Congress

Their special mis¬
sion, they will remind the public,
is to protect taxpayers from mo¬
nopolistic evils. Ergo, taxpayers
surely wouldn't want the trust
busting fund curtailed./ Congress
will hear lots of such special ex¬
emption pleas, likely will ignore
~

♦

Charles

Ohio,

to take

loss.

landslide.

instrument

will

for

months

hoping stops

end,

posed of all his stocks at reg¬
ular intervals. He would then
over each issue.
reasons that led to his

care

coordinating

from, the

elected

Directors,

health

that

ment

stocks

the

origi

nally recommended here are
still in

fact

position to advance.
the

It has just

Life

Accident

Co.

Nashville,

Insurance

Co.

Re-elected
committee

were

the

Mutual Life Insurance Co.

the

in at

Southern Pacific

43, the stop is

More next

came

44.;

now

Thursday.
—Walter Whyte

[The views expressed in this
article do riot necessarily at any
time

coincide

with

those

the

Chronicle.

They are presented
those of the author only.]

-:.'r •

';,jx

may

you

UJ\ '*'■ *t,
'

"•[■>• .<•*

•'./

Members
York

New

Stock

York

New
New

York

Chicago
New
-

read

Exchange

Curb

Cotton

Commodity

Exchange
-

Exchange

Inc.

Exchange,
Board

Trade

Orleans Cotton Exchange
And other Exchanges L

Bldg.

NEW YORK 4, N. Y*
V -7k

Pacific Coast

CHICAGO

DETROIT

ri'

\ ,'

GENEVA," SWITZERLAND,

"•>J

Orders Executed on

LAMBORN & CO.

Pacific Coast Exchanges
^'

'•

r.'r"'W»'.

•'

:v;; \

Schwatacher & Co.

ft ft W ALL S TR E E T

NEW YORK 5, N. Y.

Members

Nets York stock Exchange
New

York

Curb

(Associate)

Exchange

SUGAR

Chicago Board of Trade
New York 5, N. Y.

14 Wall Street

COrtlandl

Private Wires to
San

Francisco

ft Monterey

—

exports—Imports—Futures

Teletype NY 1-928

7-4150

Principal Offices

—

Santa

Oakland
Fresno

—

Barbara

Sacramento

H'i?0'i•■•/

PITTSBURGH

Securities
.

H. Hentz & Co.

You saw
Now I say

happened.

■

preferred,
by sur¬

N. Y. Cotton Exchange

Ten¬

Adams,
tions of the Federal Govern¬
Columbus, Ohio, President of the
ment In a single agency.
protecting
Ohio State Life Insurance Co.;
*
*
industry from excessive recovery
suits by labor will be debated,
Federal Trade Commission is Col. D'Olier; James A; Ful tort,
likely enacted by the Republican about to resume collecting indus¬ New York, President of the Home
Congress* This actipi* will stem try-wide statistical reports. This Life Insurance Co. of New York
-from the court order ^permitting operation was suspended during
and John;A; Stevenson, Philadel¬
unions to sue for portal-to-portal the war because of duplicating
pay Under
Federal Wages and OPA effort. With OPA discarded, phia, Pa., President of the Penn

prise.

(last

this

column)

by the time

and

executive

Claris

with

read

you

week's

Tenn.,
of

selling

Established 1856

time

nessee.

func¬

FTC has obtained the Presidential

i den d

cussing the rally that "by the

President of the National Life &

Hours Act for a period retroactive

Assurance

Insurance

across

which took the Street

Last week I wrote in .dis¬

that

bought

been post¬

Craig,

Just hold

poned.

what

Dresser

immediate

the

highs last week, despite the

same

at 37,

17, should be sold

Incidentally com¬
pany just declared a $2.50 di-

market—

entire

which failed to penetrate

in¬

West

disre¬

stop at 13.

All this leads to the state¬

Statute of limitations

do price.

Managing Director of

Great

not

If the 24. Stop still is 18. Gulf, Mo¬
buying bile and Ohio
bought at 12,

Harry W. Manning, Winni¬

-Mutual

state system of
for the poor and
the

mains

still remained, he would buy
has
them again.
If not he Would

:•

proposing

should

Co.; Arthur M. Collens, Hartford,

Ohio's Republican Senator Taft,
medical

words,

everything would work out garded. What looks wonderful
an&tfre'lc^
one day
has; a habit of turn¬
be transformed
into^a profrt. ing nasty the next. If there
I have nothing against long is
anything consistent about
pull holding. But when such the market; it is its inconsist-;
long pulls tie up cash: which ancy.
~
❖
❖
could be used advantageous
4s
Iy, it is neither investing or
Anaconda bought at 37, is
trading. Years ago I knew a
to be sold across
42; stop re¬
successful trader who dis¬

Conn., President of the Phoenix

National

authored

immedi¬

higher iiltk
prices;However,; the

mate

longer be current."

the

Substituted for this

measure

other

I have known all of these show

people to sit with their stocks

Cincinnati,

peg, Man.,

health insurance was
by
the
Republican

Health

all

Board

present
clude

stops.

Williams,

New members of the CXOctitive

committee,

aborning. The Wagner*MurrayDingell hiU for universal com¬
interred

President of the Western

8c Southern Life Insurance Co.

Socialized medicine has died

pulsory

com¬

signal for a bull market they but should not be held if
they
waiting ior, it turned break last week's lows.
down again, in characteristic
*
V'*
manner, adding to the confu¬
Readers are still
long of
sion that
already existed. \
four stocks, some
bought re❖
#
cently, and some bought some
The hardest thing to do is time
ago.
Up to this writing

may

ganda broom.

most of them.

which

were

car

sje

lows

ate

as members of the Board of Diwide publicity and reams of
shortage. To rectofs td ; serve "until 1950 wefe
write the next revenue bill. Many
help ihkrket increasing ' timber Paul F. Clark, Boston, Mass., explanations—hasn't changed
Republicans and Democrats like supplies, the Maritime Commis¬ President of the John Hancock
its bullish picture.
.and; trust Snyder, will, welcome sion will
The out¬
conscript merchant ma¬ Mutual Life Insurance Co.; Franksuch
friendly cooperation — un¬ rine aid.
lin D. D'Olier, Newark, N. J., look for an advance is still the

members

quite

are

stocks

should do better in the

resumption of rally.

Insurance Insf. Head

Snyder

and, House

paratively near future.
To
choose /them,
however,
is
Last week's failure to ad¬
A rule of
something else.
vance gives signs of turning
thumb I think you
might se^
into gt h i s
week's success.
Technical indications point to riously consider is to regard

small, Co. of New York, was re-elected

will

re¬

=By WALTER WHYTEs

buy something else,
nothing.

industry financed
by government loans. Federal aid
Leroy A. Lincoln, President of
for pre-fab projects will be made
the Metropolitan Life- Insurance

Coastwise

Actually there

pow¬

they seek." [See page 3207

'ji

fabricated home

tion to sit down with his experts

strategic and

;dress.—Editor.]

accept—with

•

sell,

Congressmen will available but limited
pleasures-Treasury non-related ventures.
Secretary John Snyder's invita¬
Republican

they

for full text of Mr. Berge's

the old Roosevelt philosophy of

plowing under, ,?
^
25% of the estimated 30
million ton production.
Govern¬
Definitely dead victim of the
ment budgeteers warn we must Wyatt
housing collapse is the
tremain oh the old 1ft or 20% level, dream of a new and fabulous pre¬

financial ad¬

erful position to create the busi¬

Republicans
to embrace

years,

just

companies which

securities

they are in

continuation of subsidies for a

couple

the

about

bowl.

These sales

thelf principal source of in¬
come.
Consequently, it is nat¬
are

production Is

shortly ring up

primarily Interested in

are

the sale of securities.

let: product;
parity
subsidies or (2 > curb production
and
avoid
parity
payments.
From this position it looks like

sugar,

we'll

purchase

tion run rampant and pay

achieved. Before the war, we con¬
sumed about 19% of the world's

.otherwise

cash

;on

rid# whether

if a baleconomy is to be

equitably

world

crop

may

surpluses.

food which must be

scarce

distributed

Now

booming^

Sugar is cited by the controllers

;

based ;solely

Congress, The New Deal
Congress yoted to maintain farm
prices at 90 % of parity for two
v yearg/after
the war's feijniiia-

(4)' ultimate; over¬

car

Previously, credit value had been

fore

production will result and Amer¬
ican producers will lose their mar¬

bull "

new

used

Economy of scarcity or Fed¬
eral guhsidles7 That's the .wor¬
risome
dilemma
dangling be¬

"table share, production in other
.nations will be stimulated to un¬

kets abroad.

.be prorated to, all nations, (3) if
we demand more than an: eQu!^

sound volume;

the

*
*
*
Estimates place the re¬
liability of employers at
Here's an official word of
$ff *O}$l0 Wmon; Nfew Xieal Con¬
warning to investment bankers
gressmen refused to limit the Ii-^ •that
the Justice Department is
ability. NoW, .however, legislators
looking you over. Said Assistant
are ready to step in with, restrain¬
Attorney 0 e.n6.raf^ Wendell
ing action if necessary, compress¬
JBerge; in ■ k/ receni, speech::"In,
ing thn/retrqacrive/recoye
considering the monopoly prob¬
riod into one, two, Or three years.
lems raised by the increasing

:;scarcs»t2)^^

again

.The market having come stocks would be
a
buy at cur¬
close to giving everybody the rent levels
guides designated by the Board.
(Tuesday's close),
of

one

We are to be

will

number

(2) the average retail value as

sultant

"Reasonable self-denial" > din*
1$ 'to be^ urge^ upon

the lower of

to 1938.

sites just can't get too chummy
over ^suchissues,
'
h
,

-r

credit val¬

car

either (1) the cash purchase price

Washington and You
-

inflation balloon

car

must be based

stated- in

used

that hereafter used

this
load/of; huckshot

stories

vived.

;■

by invoking again the utilitarian
Regulation W.
The board ruled

submitted,
it,
"The
politicians took over everything, appointed
everyone, approved everything/ They out¬
did Hitler. ;; They were told they had
to
modify their ideas,'*

but,

Whyte
Says— §§§;§!

this

Reserve / Board

^imed

at the

principles were

Draft

effectuated.

are

the

and

markets

Walter

White House ad¬

already viewing
tough One a little forlornly,

central

Land

the

Minor differences

approval;
be

and

Leander. 1 Ea^h

asked to submit
for

were

visors

the

evolution

principles

banks

This- mayprove;harm-

ernments.

down

strongly

influence

the

Markets

column, the mar¬
probably be up again,

ket will

Tomorrow's

renewed and energetic drive
to have the four-cent copper tariff

criticism

Vwth

the;;/Rank ^Control'; Supervisory
'Bbard^,: and Bank Committees the
banks'

nal

shaved in half.

the

fiable. it is really not a
American authorities.
In

"the creation by the Laender gov-*
ernments in whole or: in part of

under

•

this week's

Convening of Congress will sig¬

government

*tJhder:theiAinericah

paper

3 While Mr. Hartlieb's objection is justi¬

hardly be correctly de¬

power can

"'central

German

again be circu¬
its questionnaires.
More
work! ' v/V/V

lating

trained bankers and not

officiels.3

"In the last analysis, of course,
bank vwhich hashb/hois-^ssuC

much

nod and will soon

banking system if more of
banking/ decisions were en¬

war

tral bank.'

3255

-v;■.■

•

.eo!r>3■.:''

DIgby 4-2727

0-B^ V: m&!
'is

Securities
•
tjj

Acme Electric Corp., Cuba,

JN. Y.

>nants for common stock to underwriters at an

aggregate

Of the net proceeds ($292,940)
current bank loans; about
will be used for machinery and equipment, and
mainder for working capital.
'
•
*
•
price of $200.

.will be used to pay

Acme-Hamilton Mfg. Corp., Trenton, N.

$50,000
$20,000
the re¬
"

Aug. 29 filed 50,000 shares 5%| cumulative preferred
irtock ($20 par) and 82,TOOshares ($1 par) common
^

Livingstone & Co.v Offering—Company is offering the
50,000 shares' of preferred, while the 82,000 shares of
common are being sold for the account of certain stock¬
holders.
Prices—$20 a share for the preferred;2 and^
$11.50 a share for the common. Proceeds—Company will

proceeds; to fully discharge secured demand
notes,' mortgage notes and partial discharge Of de¬
benture indebtedness. Offering temporarily postponed.
apply

•

Adams Oil Co., Los Angeles,

Calif.

(letter of notification) 30,000. shares each ($10
par) 6% cumulative convertible preferred and ($1 par)
common.
Price—$10 a Unit consisting of one share of
preferred and one share of common.
UnderwritersPacific Co. of California, Los Angeles.
Proceeds^-For
working capital and construction of an asphalt plant,
Dec. 9

'<c

\'',i;

Aero vox

yJ,\ >rv'V;

)

Air

a common share.
If offerings are made
Maine, they will be made by Frederick

C. Adams & Co., Boston.
ment and to

•

*'%,'• v

Inc.,

i^v*

'•'

Oakland,

y"'- *

'V<'V

Calif.

(letter of notification)

750 shares ($100 par)
Class A stock. Price—$100 a share, No underwriting. For
purchase of machinery and equipment ancj payment of
-organizing costs and operating expenses. "
American

**■'

' *•

*■'

Airways Training,

Dec.

To complete plant and equip-

provide working capital.

0""IV'

-I

•

June

Broadcasting Co., lnc., N. Y.

filed

950,000 shares ($1 par) common stock.
Underwriter—Dillon, Read & Co. Inc., New York. Offer¬
ing—A maximum of 100,000 shares may be sold by com¬
pany to persons, firms, or corporation^ with whom the

N 7V

Atlantic Refining Co., Philadelphia

general funds, however, the company antici¬

Oct. 29 filed 29 3,000 shares/ ($100 par).^cumulative preference stock.
Underwriter—Smith,- Barney A Co., New
York.
Offering-rStoCk will be offered for; subscription
to common stockholders on the basis of one share of

funds for its building and expansion
Offering date Indefinite.
Co., Montpelier

scribed shares will be sold to the underwriters who will

corporation had network affiliation agreements on March
31. % The remainder will be offered publicly. Price by
amendment. Proceeds—To prepay notes payable to ac¬

capital.
American
Nov. 5

Building Corp., Dover, Del.
(letter of notification) 20,000 shares each

($10
preferred and no par common. Price,

par) 5% cumulatiye
$10 a unit consisting of
j&are of

delphia.

common.

share of preferred and one
Underwriter—E. M. Fitch & Co., Phila¬

Proceeds—For

one

additional

machinery, working

capital and other corporate purposes."

arily postponed.

stock
sto

Basic Food Materials,

Inc., Cleveland, Ohio

(letter of notification) 5,000 shares; (no par>
to be offered to stockholders; 295 shares of
($100 par) preferred, 4,750 shares (no par) common and
$50,000 10-year 5% debenture notes, all to be offered to
the public. Prices—$5 per common share to stockholders;
$10 per common share to public, $100 per preferred share
arid debentures at face. No underwriting.
To increase
working capital,
v
'
:

common,

March 30 filed 2^43,105 shares of common (par $5) plus
an additional number determinable only after the re¬
sults of competitive bidding are known. Underwriters—
To be filed by amendment.
Probable bidders include

Dillon, Read & Co. Inc., White Weld & Co., and Shields
(jointly), and w, C. Langley & Co. and The
First Boston Corp. (Jointly). Offering—Price to public
& Co.

by amendment.

Beaunit Mills, Inc.,

New York

Sept. 6 filed 336,550 shares common stock (par $1).
Un¬
derwriting—No underwriting.
Offering—Stock will be
offered for subscription to common stockholders in

Sept. 27 filed 180,000 shares ($2.50 par) common. Under¬
writer
White, Weld & Co., New York. Price — By
amendment. Proceeds—Of the total, 140,000 shares are
being sold by St. Regis Paper Co., New York, and the
remaining 40,000 shares are being sold by I. Rogosin,

the ratio of

President of Beaunit

—

one additional share for each two shares
Unsubscribed shares will be offered for subscrip¬

held.

tion to officers and directors of the company
amendment.

Proceeds—Working capital.
definitely postponed.

Price—By

filed 33,639 Shares of

Kans. To pay

outstanding indebtedness and expenses and
in Kansas City, Mo. Offer¬
ing postponed indefinitely. *
"
r
p
to open five additional stores

stock

(par $5).
Underwriters—Rauscher, Pierce & Co. Inc., and E. H.

Rollins & Sons Inc.

common

Offering—Stock will be offered to

the public.

Price by amendment.
by six stockholders.
'

Sept. 12 (letter of notification) 41,000 shares of 5%!
cumulative convertible $6 par preferred. Offering
pricey
$6 a share. Underwriter—Estes, Snyder & Co., .Topeka*

Offering in¬

Arkansas Western Gas Co.
June 5

Mills, -Inc.

Berbiglia, Inc., Kansas City, Mo.

Shares are^being sold

Oct. 31

(letter of notification) 75,000 shares (10c par>
common.
Price—$4 a share. Underwriter—E. F. Gilles¬
pie & Co., Inc. Proceeds—For acquisition of machinery*
tools and raw materials, and for working capital.

Berg Plastics & Die Casting Co., Inc.

Armour and Co., Chicago
July 12 filed 359,000 shares (no par) cumulative first

Birmingham Electric^ Co., Birmingham, Ala.

preference stock, Series A; 300,000 shares of convertible
second preference stock, Series A, and
1,355,240 shares
common stock (par $5).
Underwriter—Kuhn, Loeb &
Co., New York.
Offering—The 350,000 shares of first
preference stock will be offered in exchange to holders

Offering—Company isrifferlng the jstbek on a share for
share exchange basis to holders of its $7 preferred stock;
and $6 preferred stock, plus a cash adjustment.
Ex¬
change offer expires 3 p.m. (EST) Dec. 23. Shares not
required for the exchange will be sold at competitive?
bidding at a price not less than $100 per share net to the
company. - Underwriting—To be determined by competi-^

of its 532,996 shares of $6 cumulative convertible
prior
preferred stock at the rate of 1.4 shares of first prefer¬

stock for each share of $6 prior preferred.
Shares
of first preference not issued in exchange will be sold
to underwriters. The 300,000 shares of second
preference
stock will be offered publicly. The 1,355,240 shares of
ence

live

bidding. Probable bidders include The First Boston.
Corp.; Dillon, Head & Co., Inc.; Blyth & Co;, Inc.; Leh¬
Brothers; Kidder, Peabody & Co.

man

will be offered for subscription to common
stockholders of the company in the ratio of one-third
a new share for each common share held.
Unsub¬
scribed shares of common will be purchased by the
common

Blumenthal

Price—Public offering prices by amend¬
Proceeds—Net proceeds will. be used to retire all

unexchanged shares of $6 prior stock and to redeem its
outstanding 7% preferred stock. Temporarily postponed.
Art craft

demption of 3,907 shares of 7% cumidative pre¬
ferred on April 1, and for funds deposited in trust foe
redemption on Oct. 1 of remaining preferred shares. Although it was proposed to offer the stock for subscrip¬

Hosiery Co., Philadelphia

mon.

It also

upon conversion of preferred. Underwriter—New-

covers

shares of

reserved for issu¬

common

burger & Hano, Philadelphia. Price—$25.50 a preferred
share and $12 a common share.
Proceeds—Company will
receive proceeds from the sale: of all of the preferred
and 100,00 shares of common. The remaining'
50,000
being sold by three stockholders.
Estimated net proceeds of $2,300,000 will be used by
the company to pay off bank notes of about
$1,100,000
and to purchase additional machinery and equipment
common

are

in the amount of $1,200,000.

Oct.

Book-of-the-month Club, Inc., New York
28 filed 300,000 shares- ($1.25
par) capital

•

ing—Of the total, the company is selling 100,000 shares;
and six

stockholders, including Harry Scherman, Presi¬
Meredith Wood, Vice-President, are selling:
remaining 200,000 shares.
Price- by* amendment.
Proceeds—Company will use its net proceeds'for work¬
ing capital to be used for expansion of inventories of:

dent,

and

the

and

other

materials

and

book

inventories.

Underwriters and "Distributors

of
| ^

Corforate and Municipal

Municipal Bonds

•
:

raw

—

United Stales Government Securities

•'

stocks

Underwriter—Eastman, Dillon & Co., New York; Offer¬

paper

Offering date indefinite.

SPECIALISTS IN

•

•'
-

•

C. J. DEVINE

Securities

•' :

•'

ti,"f

)

•

Pittsburgh

and other cities

•/

Chicago

1 j' v

' v

48 WALL ST., NEW YORK 5, N. Y.

*i2c.

New York

CO.

&
'

ffK.^

*«

Founded 1865

HAnover 2-2727
.

Chicago

•

Boston

•

Cincinnati

Philadelphia
*

St. Louis

•

Pittsburgh

San Prancisco

Cleveland
-

Members of the

New York

☆
'S

[•ill

Kidder, Peabody^ Co.
((.i.

INC.
Y

tion to stockholders at $10 per share, company on
Sept.
20 decided td withhold action at this time.

Sept. 27 filed 53,648 shares ($25 par) 4^% cumulative
convertible preferred and 150,000 shares ($1 par) com¬
ance

& Co. inc., New York

common and sub¬
scription warrants relating to 30,000 shares thereof.
Underwriting — None, Proceeds—For reimbursement
of company's
treasury for funds expended in re¬

underwriters.
ment.

(Sidney)

Aug. 30 filed 119,706 shares (no par)

•

;

Nov. 26

S1 FIRST BOSTON

Boston

—

J-M/m
(par
$100) and 200,000 shares of common stock (par $1);
Underwriters—Kidder, Peabody & Co. and Bear, Stearns
& Co. Proceeds---WiU go';to selling stockholders. Pric^

American Water Works Co., Inc., N. Y.

CORPORATION

...

by amendment.

§
1

Other funds, will be used to redeem $20,000,000 of 7% ;
cumulative preferred stock at $115 a share plus accrued
dividends, Indefinitely postponed.
* -

State and
"■

"•

Uxbrfdge Worstod Corp.

% The

additional

Nov, 27 filed 45,000 shares of 4% preferred

—

Corporate and Public Financing

-share;

including repayment of obligations, acquisition
production, and expansion of refining,
transportation and marketing facilities. Offering tempor-

18 filed 100.MO stores each of $100 par prior preferred stock and $10Ofpar convertible second preferred
stock. Underwriting—Union Securities Corp., New York.
Price by! amendment;
Proceeds—Net proceeds, / with

shares of

American Colortype Co., Clifton, N. J.
Aug. 12 filed 30,000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriter—White, Weld & Co. Price

The balance will be added to general funds for corporate

being sold
for account of Harry Bloomberg, President. Price—By
amendment. Offerlng date indefinite.
-

quire radio station WXYZ, to construct broadcast transmitter for station KGO at San Francisco and for
working

stock, convertible 4^ Scries A*ati$105

purposes

Co. Proceeds—Stock

NewYork

applied to redemption of the company's cumulative pre?
ferred

Sept. 25 filed 75,000 shares of common stock (par $1).

American locomotive Co.>

)

reoffer it to the public. Price by amendment.
Proceeds11
—A maximum of $15,540,000 of the net proceeds will be

American Limoges China Corp., New .York
Underwriter—Riter &

|
f
Unsub-' j

preference stock for "each nine shares held.

(letter of notification) 10,000 shares (no par)
capital stock, to be offered to present stockholders.
Price—$59 a share.
No underwriting. For additional
capital funds for expansion purposes.

Lanes, Inc., Portland, Me.

Oct. 9 (letter of notification) 15,000 shares each of preferred and common.
Offering price, $10 a preferred

•'

•/

American Zinc, Lead & Smelting Co., St. Loiila

share and 1 cent

Proceeds—Net proceeds initially will

Dec. 2

Corp., Bedford, Mass.

in the State of

Aug. 22 filed $1,500,000 of 5% sinking fund debentures,
due 1961, and 50,000 shares ($1 par) common stock.
Underwriter—Ames, Emerich & Co.,4 Inc., and Dempsey
& Co., Chicago. Offering—The debentures will be of¬
fered publicly. The common shares will be issuable upon
the exercise of stock purchase warrants for purchase of
common stock at $2 a share above the bid price of such -;
common on the effective date of the registration. Com¬
pany will sell warrants for 25,000 common shares to the
underwriters at 10 cents a warrant. The remaining war¬
rants will be sold to officers and employees of the com¬
pany. Price—Debentures at 98. Proceeds—Company will
use $1,025,000 of proceeds of debs, for payment of an
indebtedness to Bankers Trust Co., New York. Balance;
will be added to working capital. Offering postponed,

vv- '

ltji

American Fidelity

the proceeds from the sale of 63,860 shares.
Company
also will receive proceeds from the sale of 20,000 war-

Thursday^ December 19, 1946!

Registration

pates it will use the

;

-j;

program.

Colony Corp.
Offering—To be offered publicly at $5
share.
Proceeds—Company will receive proceeds from
the sale of 68,880 shares and four selling stockholders

INDICATES ADDITIONS SINCE PREVIOUS ISSUE
V.,, I -j/ji

be added to

filed

Now

by amendment.

132,740 shares ($1 par) common stock.
Underwriters—Herrick, Waddell & Co., Inc., and First

June

THE COMMERCIAL & FINANCIAL CHRONICLE

■

3256

New York and Boston Stock

Boston

Philadelphia

Exchanges
.

;

„.

Chicago

etwftjianwMj

■«

[Volume.! 64

■•$•«"<X/

'-",.

i"r■' 'ff~

Number ?4S52. '■>■-J

THE

COMMERCIAL'S FINANCIAL CHRONICLE

:>:'v "..California Oregon Power77 7777
May.,24 filed 312,000 shares of common stock' (no par).

NEW ISSUE CALENDAR

(Shouting probable date of offering)
December
1

Stock will be sold

writers—Names

by amendment.

Probable

in¬

Inc.; The First Boston Corp.; Harri¬
man
Ripley & Co,
Offering—Stock is being sold by
Standard Gas and Electric
Co., parent, of California.
Bids Rejected—Standard Gas & Electric
Co. rejected
7June/25 two bids for the purchase of the stock as un¬
satisfactory. Blyth & Co., Inc., and First Boston Corp.

...Capital Stock

Ohrbach's Inc..——-.———-.-—Preferred

Union Pacific RR.-.--.——--Cond. Sales Agreements

Eastern Broadcasting, Inc—-,-Pfd. and Com.
Pacific Western Oil Corp;™———Capital Stock
December 23,

Camfield Mfg. Co., Grand
Haven,

1946

December 24,

Kingsport Press Inc.

i,Ji

December
Red Owl

registered, 100,000

1946

............Common

$4.50

for

are

^.Ing date indefinite.
July
.

Common

filed

Common

January 3, 1947

and

7fi January

.Common

Western Air

available

for

corporate

Porcupine Gold Mines, Ltd., of Toronto,

400,00,0 shares of

common stock.
Under¬
Offering—To the public at
$1 a share in Canadian funds. Proceeds—For a variety
of purposes in connection with
exploration, sinking of
shafts, diamond drilling and working capital.

writer—No

—Capital Stock

January 15, 1947
White's Auto Stores, Inc.—!

will

Ontario
June 24 filed

Lines, Inc.

77 Boston Store

balance

Indefinitely delayed.

Carscor

Common

January 13, 1947

($1 par) common stock.
Offering—Stock initially

common stockholders of Admiral
Corp.
Proceeds—$75,000 is earmarked for pur¬
machinery and equipment, and tools, jigs, dies

fixtures;

.Pfd. and Com.

Columbia

Aircraft

Products

Inc.

u
•i

</•

150,000 shares ($4 par) * 30c cumulative^
convertible preferred stock, convertible into common ,
stock in the ratio initially of 1V2 shares of common for
each share of preferred. Underwriter—Floyd D. Cerf ;
Co., Inc., Chicago. Offering—Company offered 59,585% .
shares for subscription to present common stockholders
of record Aug. 6 at $4.50 a share in the ratio of one share v
of preferred for each > share of common held. Rights
expired Aug. 20. Stockholders subscribed for *35 shares.
The offering to common stockholders excluded the two
principal stockholders who waived their rights to sub¬
scribe.
The
remaining 90,414% shares and 58,850%
shares not subscribed to by common stockholders will
be offered to the public through underwriters. Price—$5
a share. Proceeds—Approximately $50,000 for payment

share.

purposes.

6, 1947

Manning, Maxwell & Moore, Inc

underwriters.

of Federal taxes; $250,000 for payment of Lincoln-RFC
loan; $50,000 as a loan to Palmer Brothers Engines, Inc., 7
a subsidiary;
balance for purchase of machinery and
equipment and working capital.

Central & South West Utilities Co.

Aug. 30 filed its ($5 par) capital stock. Company's name
is to be changed by post effective amendment to Central 4

•

7 4,,.^

1 {

'i(

J< ' ?

«:

' *; |' *

„

{

fiept. 10 filed 30,000 shares ($50 par) 5% cumulative
preferred and 500,080 shares ($1 par) common. Under¬

Commonwealth Telephone Co., Madison, Wis. )
Corp. (Del.)
Prospectus will be issued
in connection with the public invitation for sealed bids 7 Sept. 23 filed 16,071 shares ($100 par) $4 cumulative
preferred. Underwriters — Paine, Webber, Jackson & «,
for the purchase of a sufficient number of such shares 5

writers—Paul H. Davis

o* Chicago,Iric.

& South West

& Co. and Stroud & Co., Inc.
Offering—Preferred will have non-detachable stock
purchase warrants fpr purchase of 30,000 shares of com*
mon stock of the total
common, 375,000 shares will be
offered for sale for cash. 30,000 shares are reserved for

Issuance upon exercise of warrants attached to preferred
end 05,000 shares are reserved for. issuance upon exer¬
cise of outstanding warrants. Price-^-By amendment.

Proceeds—Net proceeds, together with other funds, will
be used to pay the company's 2% subordinated note in
the principal amount of $5,268,750 apd accrued interest.

same

constituted

Curtis and Stone & Webster Securities Corp. Offering—

upon

not

exchanged for shares of
Underwriters by amendment.

Sept. 27 filed 268,875 shares ($1 par) common. Under¬
writer—Van Alstyne,' Noel & Co., New York. Price—By
Proceeds—Stock

being sold by share¬
«
1

holders who Will receive proceeds.
1

of a
Public

consummation

$5 cumulative,
basis, plus cash adjust¬
be sold to underwriters.
Price by amendment. Proceeds—To redeem at $110 a ^
share, plus divs., all unexchanged old shares.

Shares will be offered for exchange for

preferred, on a share for share
ment. Shares not exchanged will

the

merged corporation.
Possible bidders: Glore,
Focgah. & Co.; Lehman Brothers-L^ard Freres* & Co.
(jointly); Smith, Barney & Co.-Harriman, Ripley, & Co,
(jointly); Blyth & Co., Inc., Stone d? Webster Securities
Corp. and First Boston Corp. (jointly). Price by Amend¬

;

one

Wayne, Ind.

Aug. 21 filed 90,000 shares (no par) common. Under¬
writer—None.
Offering^Common shares initially will
be offered for subscription to common stockholders at

(Harry), Inc., Wilmington, Del.

Co.,

$1 per share. Proceeds-^Working capital, etc.

(letter of notification)

270,000 common shares

(par $1). Underwriters—Newkirk & Banks, Inc. Price—

Dec. 3 (letter of notification) 5,000 shares of $1.25 prior

jvV<

--7,.

i ",y

«■

i><V

>'v7"i

Crawford Clothes, Inc., L.

I. City, N. Y.

ment Corp., New

selling stockholders. Offering date indefinite.

York,

may

be considered underwriters.

•

Collett-Week-Nibecker Inc., San Francisco,

Curtis

Publishing Co.,

Philadelphia

(letter of notification) 1,000 shares of common on
behalf of Gary W. Bok, Vice-President and Director.
Price—At market.
Stock will be offered through the

Dec. 10

notification) 3,000 shares of 6% cumu¬
Price—$100 a share. No underwriting.
additional working capital.
v

Dec. 9 (letter of
lative preferred.

For

brokerage firm of Hecker & Co.,
to selling stockholder.

Philadelphia. Proceeds

Brooklyn

(N. Y.)

Union Gas Co.

May 3 filed 70,000 shares of cumulative preferred stock
($100 par). Underwriters—To be filed by amendment.
Bids Rejected—Company July 23 rejected two bids re¬
ceived for the stock.
Blyth & Co., Inc., and F. S. Moseley & Co. and associates submitted a bid of 100.06 for a
4.30% dividend. Harriman Ripley & Co. and Mellon
Securities Corp. bid 100.779 for a 4.40% dividend.
In^n/inUAlt.

r\np+r\Ano^

Aug. 9 filed 300,000 shares ($5 par) common stock. :
Underwriters—First Boston Corp., New York. Price by ,
amendment.
Proceeds—Go to Joseph Levy, President,

•

Aug. 9 filed 76,000 shares (no par) capital stock. Under¬
writers—A. G. Becker & Co., Inc., Chicago." Price by
amendment.
Proceeds—Shares are being sold by stock¬
holders. Temporarily postponed.
cr
77

preferred being offered to stockholders at $25 a share.
The right to subscribe will be in the ratio of one share
for each 5 shares held. Underwriter—Salvage Adjust¬
For general corporate purposes.

Briggs & Stratton Corp. (12/19)

;;

(Originally company filed for 80,000 preferred shares
par $25 and 350,000 common shares.)

Citizens Casualty Co. of New York

are

capital stock of Texon Oil & Land
basis of one share Continental for 4 shares Texon*

Aug. 2 filed 150,000 shares ($1 par) common. Underwriters—Aronson, Hall & Co. Price $8.25 per share.
Proceeds—To repay .demand loans and for general funds.

share for

common. Proceeds—7,000 preferred shares
being sold by company, the remaining 5,500 pre¬
common are being sold by
present stockholders. Net proceeds to the company, es¬
timated at $147,500, will be used to prepay to the ex¬
tent possible outstanding $149,300 mortgage liabilities.
Offering date indefinite.

Continental-United Industries Co., Inc.
Dec.

ferred shares and all of the

to holders of $2 par

7 Christina Mines, Inc., New York
9

;

stock. Underwriter V- C. K. Pistell & Co., Inc.,
New York. Price — $25 a share for preferred and $11

common

mtemmmmmmmmmmum.

after present public offering. Price—$2 a comshare, one cent a warrant.
Underwriter—L. D.
For working capital.

year

Continental Oil Co., New York

Proceeds-*~Working capital, etc. Offering indefin¬

itely postponed.

Nov. 25 filed an unspecified number ($5 par) capital ;
stock shares. Underwriters—None. Offering—The shares
will be offered for exchange on, or before Feb. 1, 1947,

rate of one share for each 7% shares held.
Unsubscribed
shares wiir be sold to underwriters.
Price by amend¬

ment;

Sherman & Co., New York.

'T/

C^r-na-var Corp., Brazil, Ind.;

N"ov. 4;(letter of notification) 132,500 shares ($1 par) 7
common and, 35,000 warrants for: purchase of: commoii
mon

Sept 25 filed 12,500 shares ($25 par) 4%% cumulative
convertible preferred stock and 50,000 shares (200 par)

Continental

ment.

Central Soya Co., Inc., Fort

Bowman Gum, Inc., Philadelphia

Braunstein

proposed merger into the issuer of American
Service Co., to provide funds for retiring the preference
shares of the issuer and American Public Service Co.,

Offering date indefinite.

amendment.

will

Colonial

Airlines, Inc., New York

•

Oct 25 filed 150,000 shares ($1 par) capital stock. Under¬
writer—Auchincloss, Parker & Redpath, Washington,
D. C. and Hornblower and Weeks, New York. Price by
amendment. Proceeds—Net proceeds will be used to pay
off

$550,000 loan to the Continental Bank & Trust Co.

purchase equipment and development ex¬
penses of Bermuda route, The balance will be used to in-

Curtis Publishing Co.,

7>'7.-; :-77'

Philadelphia

1,000 shares of common ;
Price—At market. To
be offered through brokerage firm of Granbery, Marache
& Lord, New York.; Proceeds to go the selling stock- ■
10 (letter of notification)

Dec.
on

behalf of William Curtis Bok.

holder, i,

•

7;- ;':

„

of New York;

•

Curtis Publishing Co.,

Philadelphia

(letter of notification) 3,000 shares of common on
Zimbalist, a Director! and Vice¬
-President. Price—At market.
To be offered through
the brokerage firm of Granbery, Marache & Lord, New
Dec. 10

behalf of Mary Curtis

York.

Cyprus Mines, Ltd., Montreal,

Canada

May 31 filed 500,000 shares of common stock (par $1).
Underwriters—Sabiston-Hughes, Ltd., Toronto. • Offer-

Pi ing—Shares will be offered to the public at 75 cents a
share.
Proceeds—Net proceeds, estimated at $300,00ty
will be used for mining operations.
Dallas
Nov.

(Texas)

27 filed

Railway & Terminal Co.

40,000 shares

($25 par) 5% participating

preferred stock. * Underwriters—Names to be supplied,
by amendment.*- Probable Underwriters—Kidder, Peabody & Co., Merrill Lynch, Pierce. Fenner & Beane;
,

h.-A.A-

•

.1.

.1;

June 26 filed

Ltd., Toronto (1/3-10)

will be offered to

——.Capital Stock

Corp., Ltd..

150,000

Underwriter—Dempsey & Co.

chase of

-7

Canadian Admiral Corp.

January 2, 1947

■fc:

preferred, together with other funds, will be used
repay the bank loan. Indefinitely postponed.

Bonds

Frontier Power Co.—
Harman (William) Corp
Orange-rCrush de Cuba S.A

issued and outstanding and will
by three stockholders at

are

underwriters

their- own account. The remaining
being offered by the company. Price
$4.50 a share. Proceeds—Company's share to pay rene¬
gotiation refund in amount of $180,000 to the U. S.
Government, and for additional working capital. Offer-

30, 1946

Sydney County Council N. S. Wales

Canadian Admiral

the

120,000 shares

27, 1946

Stores, Inc.———————JPfd.and Com.
December

sold

■'■

7 ! Colorado Milling & Elevator
Co., Denver, Colo.

Aug. 20 filed 70,000 shares ($50 par) cumulative con¬
vertible preferred stock.
Underwriter—Union Securi¬
ties Corp., New York.
Price by amendment.
Proceed*
—Prior to the proposed issue of preferred stock, the
7
company plans to call its $3 cumulative convertible pre- *
ferred stock for redemption at $55 a share plus accrued
dividends. " Funds for the redemption will be supplied
by a short term bank loan.
Proceeds from the sale of

Miciw

July 29 filed 220,006 shares ($1 par) common stock. Un¬
derwriters—Gearhart & Co., Inc. Offering—Of the shares

Walker Vitamin Products Co.—CI. A & CI. B Stocks

■

company will use its proceeds for payment of mortgage
notes, open account indebtedness and for purchase of
additional equipment. Any balance will be added to
working capital. Indefinitely postponed.
7
-

share, and Harriman Ripley & Co. bid
$24,031 a share. Stock will again be put up for sale
when market conditions improve.
7;

20, 1946

•

» '..i

ceeds from the sale of 150,000 shares and Generoso
Pope,.
President of company, who is selling the remaining 150,000 shares will receive proceeds from these shares. The

bid Of $28.33 a

December

■

A:.;W Onf-V,

" Colonial Sand & Stone Co., Inc., N. Y. 7
August 15 fijed 300,000 shares ($1 par) common stockUnderwriters—Emanuel, Deetjen & Co., New York. Price
by amendment. Proceeds—Company will receive pro¬

Under¬

bidders

iisV

clude Blyth & Co.,

19, 1946

Briggs & Stratton Corp.—

through competitive bidding.

>:3
JWi ssjsf't

jV.ty,,~vas' •,»«

w»

(Continued

on page

3258)

iii

THE COMMERCIAL & FINANCIAL CHRONICLE

3258

(Continued from page 3257)
Rauscher, Pierce & Co. Price by amendment. Proceeds
will be applied to the redemption of 3,843 >
.shares of 7% preferred stock and for purchase of new
equipment and for construction as part of its modern¬
ization and expansion program. Business—Railway, trol¬
ley and bus transportation.
3

dell

Co., Inc., New York.

—Proceeds

Inc., Cicero,

Ill.ff|

($25 par) 5% cumulative
preferred stock and 71,950 shares (par $2)
common stock 40,000 by company and
31,950 by certain ?
stockholders. Underwriters—Paul H. Davis & Co., and
Sbillinglaw, Bolger & Co., Chicago. Price by amend¬
ment. Proceeds—Company will use proceeds, together $
with a $1,000,000 bank loan, to purchase machinery,?
buildings and to retire bank indebtedness. Offering date
convertible

Indefinite.
I

•.

3-/'/.-.V'

•

Delta Chenille Co.,
Oct.

2 filed

'•

(200 par)

writer

capital.

Foreman Fabrics Corp., New York

Offering date indefinite.

Fresh

holders who

will receive proceeds.
For working capital.

Dispensers Inc.,/Brooklyn, N. Y.

Frontieir

Dec.

common.

Trinidad, Colo*

Johnston, Lemon & Co., Washington, D. C.
To be offered to the public at $8 a share.

securities

to be

are

;;

whom

offered to

(1/245)

1
•

*' '

;

""J'-*

J'' '*

"•?/•v.,

' '

Helene Curtis Industries,

!ncv Cblcago
Dec* 5 filed 60,000 shares ($5 par), 50-cent cumulative
convertible: preferred. Series A, and 120,0.00 shares ($J
par) common, reserved for conversion of preferred.
Underwriter—Simons, Linbunv. & Co. Offering—Com-;
pany will offer 40,000 shares of preferred to employees "
at $9.50 a shrire and 20,000 shares tq the public at $1.0. a
share. v Proceeds—To be added to general corporate
funds.
Business—Beauty supplies.
.

...

Corp.; Clearwater, Fla.
Oct, 11 (letter of notification) 99,000 shares of
and
mon.
a

To selling
;

common

Glencalr

purchase warrants covering 50,000 shares of com¬
Offering—Price $3 a common share and five cents
Underwriter—Amos Treat & Co., New York.

Hollywood^

machinery/ plant renovation and working capital.
Jk.;

•'<•

•'

•«♦.,■

•/;

.}r ' J

!i'

-•»*.x

»'j, 11 ; V*"'

*4
L

' s

Mining: Co. Ltd.* Toronto, Catv

one

Slf
com¬

Holt <Henry)

June

•;

stock, (par $25) and 150,000 shares of 3
(par $1). Underwriters—Van Alstyne,!
Noel & Co. Proceeds—Corporation will receive the
pro¬
stock

ceeds from the issuance of

50,000 shares of the

common

stock which will be used to increase
productive capacity,
add new lines of products and
expand the business. The

remaining 100,000 shares of common stock and the pre¬
ferred shares will be sold
by present stockholders. Of¬

Ero

company

and for working capital and funds

Illinois Power Co., Decatur, lll.
June 17, filed 200,000 shares ($50 par) cumulative, pre*
ferred stock arid 966,870 shares (rib par) common stock.

Griggs, Cooper & Co., St. Paul, Minn.
Sept 3 (letter of .notification) 12,000 shares ($1 par)
common.
Underwriters—Kalman & Co., Inc., St. Paul.

Price—$100 a share. Underwriter—
Dunlevy Childs, Boise, Idaho. Proceeds

Farquhar (A. B.) Co., York, Pa.
Sept. 26 filed 30,000 shares
vertible
an

unspecified number of

version

the

> ■

p-.y /

Inc., Philadelphia. Price—By amendment. Proceeds

—

Proceeds will be used to redeem
$355,350 4%% sinking r
fund mortgage bonds, due
Aug. 1, 1957, to pay off
certain contracts and chattel
mortgages of $72,000 and
$800,000 to reduce principal on outstanding bank loans.
.

pany's treasury for construction expenditures. Net pro- *
Society, Inc., New York
29 filed 18,500 shares at $4.25 cumulative preferred | ceeds from the sale of common will be applied for re- C
demption of 5% cumulative convertible preferred stock
stock ($100 par); with non-detachable common stock
;
not converted into common prior to the redemption
purchase warrants entitling registered holders of shares
date; /:Thelbalance will - be^^ added
of the $4.25 preferred to purchase at any time
treasury t funds, "r
64,750 $
shares of common stock at $16 a share at the ratio of
3% • Company has asked the SEC to defer action on its financing program because of present market conditions.1, ;
common shares for each preferred share
held; and 120,- •
000 shares of $1 par common stock.

con-

common; and

shares to permit con¬
Underwriter—Stroud & Co.,

common

preferred.

June 25, filed 100,000 shares ($5 par) class A stock and
shares (10 cent par) common
stock, of which
200,000 shares reserved for conversion of class A. Each
share

class

common

stock
stock.

initially convertible into 2
Underwriters—Herrick Wad-

Underwriters—H.

•

]; International Dress Co., Inc^ New York; - ; • -11
Atig.. 28 filed 140,000 shares of common stock (par $1).B

Byllesby and Co., Inc.
Offering—Underwriters to?
purchase from the company 18,500 shares of preferred •
and 20,000 shares of common; and from Fred P. Murphy •

Underwriter—Otis & Co.

Offering—Price $10 per share./!

Graham, Jr., 100,000 shares of issued and out- B Proceeds—Selling -:stbckliblders will
standing common. Prices, preferred $100 a share; com- • Offering date indefinite. ■": *
and J. C.

$14

share. .Proceeds—To. retire $6 cumulative";
preferred, pay notes, discharge a loan. Offering tem-!
porarily postponed.
v >
mon

receive,, proceeds.Yf
/

•j Johnson Power-On Transmission. Corp.?of III.*U

Dec.

Films Inc., Now York

shares of

competitive bidding. Probable bid¬
& Co., Inc. arid Mellon Securities
Corp. (jointly) and Morgan Stanley & Co. and W- E./;'
Hutton & Co. (jointly). Proceeds—Net proceeds from the sale of preferred will be used to reimburse the cojxh ?
Underwriters—By

ders include Blyth

S July

($25 par), cumulative

preferred; 45,000 shares ($5 par)

Grolier

Boise, Ida. ;

Oct. 21 (letter of
notification) 3,000 shares of 4%% preferred ($100 par).
to retire debentures and for
expansion purposes.

54,350 shares of cum. cony.
City, Nev.
preferred arid 50»000 coriimon stock purchase warrants/
Sept. 3 filed 500,000 shares ($5 par) capital stock. Under¬
Price—$5.50 a preferred sharri arid, 2i cents a warran^/^
writing—There will be ho. underwriting but Everett ;N. 4 Underwriter-—Amos Treat & Co.; New'York. To exer¬
cise options for purchase of .five,variety sto^esr to retire:
Crosby, President and James Manoil, Treasurer, will act
notes and for working capital.
as selling agents.- Price—$5 a share.
V
'
B;?5*
Proceeds—For te-^

—

Richard Meade

Dec. 3 (leter of notification:)

Sept. 5 filed 105,000 shares common stock
(par $1).
Underwriter—Straus & Blosser, Chicago.
Price—$11.50 '
a share.
Proceeds
Shares are being sold by stock-. ? Price—$25 a share.
Proceeds — For improvement and
holders. Offering date indefinite.
modernization program. Offering indefinitely postponed. '
Falk Mercantile
Co., Ltd.,

general funds.. Offering date indefinite.

for development and construction
program.

Manufacturing Co., Chicago

33,884

Hy-Grade Supply Co., Oklahoma City
Crand Canyon-Boulder Dam Tours, Inc.. Bouldsr

financing of

fering temporarily postponed.

($25 par) cumu.

preferred' stock .and

ftice^r$23 a share of preferred/ Price for-the common,
by amendment. Proceeds—Net proceeds will be added'.
to

preferred

common

convertible

($1 par) common stock. Underwriters—Otis & Co.,-Cleve^
land, Ohio. Offering—Company is selling the preferred
shares and stockholders are selling the common shares.

Alstyne, Noel & Co. Offering—The, 300,000 shares are
issued and outstanding and being sold for the account
of certain stockholders. Company has also issued 55,000

& Co., Inc., New York

28,1946 filed 20,000 shared of

lative

par common. Price, $100 a unit. No I"
underwriting. For /construction vol * radio broadcasting ?
stock purchase warrants to the selling stockholders at
station, purchase of land arid other expenses.
*
10 cerits a share entitling them to purchase up to Aug. 1*
-i-Vi..//•>;.://:v-.'.;v-yvi ■■
;
Empire Millwork Corp., New York|l|l
1949, common stock of the company at $11 a share. Price
by amendment.' Offering temporarily postponed.
Aug. 28 filed 50,000 shares of $1.25 cumulative converti¬

ble

? J

Aug. 28 filed 355,000 shares ($1 par)- common, of which
55,000 shares are reserved for issuance upon the exer¬
cise of stock purchase warrants.
Underwriter — Van

Inc., West Hemp-

share of $100 par 6% cumulative preferred

share of

Dlensdep Textile Corp., Nqw York

(letter of notification) 530 share units, each

prising of
and

y'ty

Broadcasting Co.,
stead, N. Y. ■ (12/20)

•

BuAank> Calif.

*,[ Eastern
Dec. 13

Colorfili^

(letter of itotiRcatiqn);^ll9,i>()(£^isHarea of ($lparj *
capital. Price, $3 a shhre. No underwriting contract, how- j
ever, 55,000 shares to be issued to or through H. R. O'Neil
■
of Buckley Bros., Los Angeles, \yilL be sold by on^ or <
more of the following firms: Buckley Bros.; Durand
Cd., Tucson, Ariz,; J. Earle May & Co^, Palo Alto; CaUL
Oct. 16

Oct. 2 filed 300,000 Shares ($1 par) stock. UnderwriterMark Daniels & Co., Toronto. Price—40 cents a share
(Canadian Funds). Proceeds—For mine; development.

warrant.

For

stockholders. Offering temporarily postponed.
'":0Mv.;'■ ■;£? v y
■;
1"

Offering date indefinite.

„

'•

•

group

Durasite

Institute, Inc., Hot Springs, N. Mex.

Dec. 16, filed 50,000 shares ($10 par) 5^% cumulative
prior preferred and 50,00(). shares <$10 par) cpmmcpj. r
Undeiwritlng—None. Offering—All of the preferred and '
40,000 shares of the common will be offered publicly. Of
the remaining common, 9,998 shares will be issued to
Charles J. Van Ruska in payment for promotional serv- •
ides and a 99-year lease on real estate assigned to the
company, and one share each will be issued to Tom A.
Corbett and Emil M. Van Sant for services. All three ?
men are officers of the company. Trice—:$10.15 a pre- ?
furred shar^ sosd $1Q a commoni 3har&' Proceeds—?
ceeds will be used to build and equip hotel and health >
facilities and to acquire a mineral water supply. Business *
—Operation of health resort.,, .^

Under¬

represented

are

Proceeds-

pand merchandise iA its existing stores* Offering tern- j
porarily postponed.
a
*
.
t

for investment,
Dion Industries Inc., Milwaukee, Wis*
by /Carl M. Loeb, &
Rhoades & Co. and certain of whom are represented
by '% July 31 filed 50,000 shares of $1.25 cumulative converti¬
Roberts & Co. For payment of outstanding liabilities, for W ble preferred stock series A ($20 par) and 150,000 shares
purchase of equipment and supplies and for working, (10c par) common, all issued and outstanding and being
sold by eight selling stockholders.
Underwriters—Van
capital,/^//;/*'
Alstyne Noel & Co* Price by amendment. Proeeeds--of

Offering—

Company is selling 60,000 shares and stockholders are
selling 40,000 shares.
The company will use its proceeds
to pay the costs of opening; additional/stores and to ex- |

13 (letter of notification) $100,000 of
5-year 4%
Oct. 25 filed 119,431 shares ($5 par) common. Under¬
sinking fund debentures, due 1951; $100,000 of 7% year I
writer—Sills/ Mintori & co. Price by amendment; Pro¬
4% sinking fund debentures, due 1954; 10,000 shares
ceeds—Shares are being sold by three stockholders, in¬
($9.50 par) 5% cumulative preferred; 30,000 shares (150
cluding J. G. White & Co., Inc., New York, which is sell¬
par) common, and options for purchase of 25,000 shares 3
ing all of its holdings of such stock. Following the sale
of common, exercisable one year after present
offering. §1 of its
holdings J. G. White will no longer be parent of
Prices, $1,000 per debenture, $9.50 a preferred shares,
Frontier. Company will receive none of the proceeds.
15 cents a common share and one cent an option. The

certain

27 filed 100,000 shares ($1 par) common stock,
Underwriters—Van Alstyne, Noel & Co., New York, and

Power Co.,

;

Inc., Los Angeles

June

Banks, Inc. Offering—Of the total
company is selling 350,000 shares and two stockholders,
Roland E. Fulmer and Louis H. Newkirk, Jr., are selling
the remaining 100,000 shares. Price—$6 a share. Proceeds
—For purchase of sweet potatoes, plarit expansion, addi¬
tional storage facilities, research and development work
and working capital. Offering date indefinite.

Under¬

common.

Hartfield Stores,

DryFoods, Inc., Columbia, B* C.

writer—Newkirk

Typesetting Co., Detroit* Mich.
($1 par)

ment with the Chase National Bank.

v.:

300,000

1$ expected to be made available under a credit agree¬

July 29 filed 110,000 shares ($1 par) common stock, all
outstanding.
Underwriters—Cohu & Torrey.
Price by

Aug. 30 filed 450,000 shares (100 par)

C. G. McDonald & Co., Detroit. Price — $5.50
share. Proceeds — Stock is
being sold by six share¬

•

Balance will be added
Temporarily postponed.

preferred at $53 a share.

to working

(1/2-15) v

Corp., Phila.

(William H.)

filed

Health

—

Boston,

3Vz% sinking fund debentures, due 1959; and $2.50 cum¬
ulative

Harman

shares of capital stock. Under- :
writer—Smith, JBarney & Co/Price by amendment. Pro- ]
ceeds—Will be applied to the purchase and installation :
of machinery and equipment and to the carrying of in- «
ventories and receivables. Additional working capital

July 29 filed 100,000 shares of $1.25 cumulative con¬
vertible preferred stock (par $25). Underwriter—Blyth
& Co., Inc. Offering—Underwriters are making exchange
offer to holders of Class A preferred on share for share
basis plus a cash adjustment. Proceeds—Approximately
$1,060,950 for redemption of class A preferred; balance
for expansion, working capital, etc. Dividend rate and
price by amendment. Offering temporarily postponed.

added to working capital,

Sept. 25 filed 70,920 shares

Nov.

Foster & Kleiser Co., San Francisco

remaining 150,000 shares are being sold by Apponaug
Manufacturing Co., Inc. Principal stockholder estimated
net proceeds to company of $1,007,913 will be added
to general funds to be applied for corporate
purpose.
Company anticipates expenditures of $300,000 in 1946
and $300,000 in 1947 for equipping and absorbing costs
of starting operations of four plants, two of which al¬
ready have been contracted for. The balance will be

Aug. 5 filed 60,000 shares ($15 par> cumulative preferred
Underwriters—Eastman, Dillon & Cd. Price by
amendment.
Proceeds—To be used to redeem 15-year

Under¬

common.

writers—Names by amendment. Price, $8 a share. Pro¬
ceeds—Of total, company is selling 150,000 shares and

Detroit

use approximately $402,000 tqward-.
manufacturing plant in Chicago; bal- ;
anceior working capital. Offering date indefinite. :/
;

stock.:

amendment.

Inc., Jackson, Miss.

300,000 shares

It also will

dends.

the purchase of a

Food Fair Stores, Inc., Philadelphia

July 26 filed 62,000 shares

Hammond Instrument Co., Chicago

publicly at $8.10 a unit consisting of one share of class A
Aug. 8 filed 80,000 shares ($1 par) common.
Under- i
one share of common stock.
Proceeds—$201,- /; writer: Paul H. Da vies & Co., Chicago. - Price by amend-1
000 for retirement of 2,010 shares ($100 par) preferred
ment.
Proceeds—Net proceeds will be used to redeem *
stock at $100 a share; remaining proceeds, together with
its outstanding 6% cumulative preferred stock at an ■(
other funds, will be used for production of educational
estimated cost of $213,258, exclusive of accrued divi¬
stock and

Danly Machine Specialties,

Offering—To be offered

Thursday, December 19, 1946

Gulf Atlantic Transports Co., Jacksonville, Fla.

Jan. 17 filed 270,000 shares of

common

stock

(par $1),

Underwriters—Blair & Co. Offering—Stock is being offered to present shareholders at $3 per share.
Holders

;

■

pijoyement/and. development expen^S^

•
.

12 (letter of notification) 5,252 shares of common/
($10 par). Pricer~$10 a share. No underwriting. For im- u

«•;

3 B;kingsportrPresSj Inc.,

Nov. 14 filed $1,200,000 4% sinking
1966

(to

,- -

New:Y^i^|^24) Bv3// B?!

of approximately 200,000 shares have agreed to waive!
their preemptive rights.

Offering date indefinite.

hKr / ;. v

be placed privately with

fund
an

debentures, due/*
insurance com-

Volume 164

Number 4552}

THE COMMERCIAL & FINANCIAL CHRONICLE

pany) and_55,00Q shares ($2.50 par) common. Under/
writer—Alex. Brown & Sons,
Baltimore, Md. Price—By
amendment.
Proceeds—Company will receive proceeds
from sale of
debentures, and common stockholders will

redeem

receive proceeds from shares.
Company will use $577,500
to redeem 5,500 shares of
5% prior cumulative preferred
and $281,017 to
prepay note to Equitable Life Assurance

3ociety;pf the United

States.
.

Under-

Proceeds—For exploration and development of
property and tor-administrative expenses.

57,000 shares ($5 par) 6% cumulative
convertible preferred, Series A. Price—10 cents a
com¬
mon
share and $5 a preferred share.
Underwriter—
Gearhart & Co., Inc., New York. Proceeds—To
replace
working capital used to promote new publication called
additional

will receive

racing

;

ticmal

;

postponed/i,v

registered, company is selling 40,00tt shares,

Middle West is selling 57,226 shares and
Halsey, Stuart
& Co. Inc., New York, is selling 22,774 shares.

Proceeds

proceeds from bonds to redeem

Proceeds—Net pro¬
shares, estimated at
$350,200, will be applied as follows: About $111,300 for
retirement of outstanding preferred stock; $41,649 to
purchase 100% of the stock of two affiliates, and bal¬
ance $197,000 for other corporate purposes.
The pro¬
ceeds from the other 3,000 shares will go to selling
stockholders. Offering temporarily postponed..
/
Ohio Associated Telephone Co.

Sept. 11 filed 35,000 shares (no par) $2 cumulative pre¬
ferred. Underwriters—Paine, Webber, Jackson & Curtis
and Stone & Webster Securities, New York.
Offering—
Of the shares registered, 21,000 are being sold by the
company and the remaining 14,000 are being sold by
General Telephone Corp.
Price—By amendment Of¬

Ohrbach's Inc., New York

(12/19/2G-23)
Co.,

proceeds from sale of
.•

Sept. 19

filed

Carboii Co. Inc.

Old Town Ribbon &

140,900 shares; ($5 par)

common. Bie

' shares are

by amendment.
Inc.,

shares. The company will

apply its proceeds to general funds.

com¬

tnent.

Orange-Crush de Cuba, 5. A.

Detroit

cumulative

convirtibld

(1/2-15)

July 22 filed 125,000 shares ($1 par) common and 40,000
warrants.
Underwriter—Floyd D. Cerf Co., Inc., Chicago.
Offering—Price $4.75

and: outstanding

issued

share.

Proceeds—Of the total

is selling 37,500 shares and stockholders are
selling 87,500 shares. - The company will use its proceeds
company

for
,

equipment and working capital.
Pacific Power & Light Co., Portland, Ore.

July 10 filed 100,000 shares ($100 par) preferred stock.
Underwriters—By amendment. Probable bidders include
/

July 11 filed $22,500,000 20-year collateral trust sinking
fund Series A bopds, and a maximum of 1,568,960 com¬ ;
mon
shares ($5 par).
Underwriters—By amendment.

Blyth & Co., Inc.,. White, Weld & Co. and Smith, Barney &
(jointly); The First Boston Corp., W. C. Langley & Co.;
Harriman Ripley & Co.. Offering—Company proposes to
issue the 100,000 shares of new preferred for the pur¬

Co.

Bidders may include.

HalSey, Stuart & Q). InC/ (bonds
only), Bear, Stearns & Co. (stock only), First Boston
Corp., White, Weld&Co.-Kidder, Peabody & Co. (jointly).
Offering—Bonds and common stock are being offered in
connection with a compromise recapitalization {dan
approved by the SEC, on June 24, 1946, which among
other things provides for the elimination of all out¬

pose of refinancing at a lower dividend rate the 67,009
§ outstanding preferred shares of Pacific and the 47,808
I preferred shares of Northern Electric Co., in connection
with the proposed merger of Northwestern into Pacific.
I In connection with the merger, the outstanding preferred
stocks of Pacific and Northwestern will be exchanged
I share for share, with cash adjustments, for the new pre¬
ferred stock of Pacific, the surviving corporation. Offerstanding debentures and preferred and common stocks,
«tig price—To be supplied by amendment.
' r
and for the issuance of $22,500,000 of bonds and 2,300,000
new

common

bonds and the

shares. Bids for the purchase of the

common

the company

An alternate

„

;

stock which

were

to be received

Pacific Telephone &
Francisco

Telegraph Co., San

Underoffered for
subscription at $100 a share to common and preferred
for the issue of 77,625 convertible preferred shares (par
/ stockholders of record on Jan. 8, 1947, in ratio of 1 share
for each 10 shares
(common and/or preferred) then
$100).. and 1,246,011 common shares (par $8). Under the
proposed plan consolidated funded debt would be prac¬ I held. Subscription rights will expire Feb. 10, 1947. Priee
/ $100 a share.
Proceeds—Net proceeds of $32,728,000 jf
tically Unchanged from that provided in original plan,
all rights to subscribe are exercised will be used to reim¬
the Association to issue $22,425,000 coll. trust bonds.
burse in part the company's treasury funds used for
These bonds and preferred stock inay be sold, subject
additions and improvements to its telephone plant and f
to an exchange offer, to the holders of present deben¬ £ plants of its subsidiaries. The balance of proceeds will
be used to repay outstanding advances from American,
tures on a par for par basis. Present preferred would
/ Telephone
and Telegraph Co., parent.
The compafgp
by

share. The

coin:■

Inc., New York. Price by amendment. Proceeds—Com¬
pany will receive proceeds from the sale of 5,000 shares
and five stockholders will receive proceeds from the

shares. Underwriters—First Boston Corp., New York,

Aug.

were

withdrawn

Aug.

Dec. 12 filed

12.

plan filed Nov. 25 with the SEC provides

rights, to subscribe to 5 hew

& Co., Inc.
Price, $6.75 a share.
ceeds to the company from 62,000

receive for each share held 8 shares of new common; with

$3,500,000 3%% series A first mortgage bonds,; due 1972,

Co.

.Nugent's National Stores, Inc., New York

sale of the remaining 35,000

unspecified number ($2.50 pair)

Aug/ 2 filed 30,000 shares^ 6t

sEhre exchange basis to holders ;of its
.outstanding 7% prior lien^ $6 nonpar prior lien, 6%
preferred and $6 (no par) preferred. Of the common

,-v-^d

Service

fering indefinitely postponed..

NewJEitgland Gaa and Electric Association

Un-

share for

ahd^meresi^ Net

Public

21 filed 85,000 shares ($1 par) common stock.
Underwriters—Newburger & Hano, and Kobbe, Gearhart

common.

;

body & Co.; The First Boston Corp.; Harris, Hall & Co.
(Inc.); Merrill Lynch, Pierce, Fenner & Beane, and Ira*
Haupt & Co. Offering—New preferred will be offered

^ >

Indiana

Northern

■

and are being sold by
IKaurice
Cohen
and
Samuel
Friedman,
President
and Secretary-Treasurer, respectively, each selling 15,000
shares of preferred and 15,000 shares of common. Price
*-r$l0 a share for i the preferred .and $6 a share fbr Gw

derwriters—To be determined by competitive
bidding,
jPrqbable bidders include Blyth & Co., Inc.; Kidder, Pea«

holders.
Price—$16 a share.
Proceeds—To
selling stockholders. Offering temporarily delayed.

June

and Lee Higginson Corp., Chicago. Price—By amend¬
ment. Proceeds—The stock is issued and outstanding and

are

due 1976; 14,000 shares ($1Q0 par) cumulative
preferred

at 106.75

of present

land Utilities Co., and 146,923 by. Middle West Corp.

preferred (par $10), and 30,000 common shares ($1 par).
Underwriters—Names by amendment. Offering—Shares

common.

stock and 120,000 shares ($10 par) common stock.

Newburgh Steel Co.,

net

issued and outstanding and being sold for the account

are

ferred stock series A. Underwriter—A. G. Becker &

will be supplied

Michigan Gas & Elec. Co., Ashland, Wis.

use

stock.

Probable bidders in¬
First Boston Corp.; Stone
and* Harriman Ripley &
Co., Inc. (jointly). Of the shares registered, 182,667 are
being sold by Midland Realization Co.; 54,426 by Mid¬

being sold by shareholders/ Names of the selling
stockholders and the number c£ shares to be sold by each

Jime 24 filed $3,500,000 of series A first
mortgage bonds,

—Michigan will

common

Offering—All shares

clude Blyth & Co., Inc.; The
& Webster Securities Corp.,

stock being

par)

($2
Co.

Nov.! 27 filed 40,000 shares ($50 par) cumulative pre¬

mon
/

Meyer-Blaqke Co., St. Louis, Mo.
29 (letter of
notification) i,200 shares,

on a

offered under competitive bidding.

;

National Aluminate Corp., Chicago

(no par)
common^ 50 % on behalf of George A; Meyer Finance Cb./
*.St/Lbuis; .and 50% on behalf ;of: Robert' L. Blanke, Jr.
'i and Marian Blanke, both of University City,; Mo. Price—
$31 a share. Underwriter—Smith-Moore & Co., St. Louis.

Proceeds

(letter of notification)

Sept. 27 filed

—$5.75 a-share. Proceeds—Working capital.

Underwriter—Cruttenden

share.

Mfg. Co., La Crosse, Wis.

70,000

ment.

Underwriters-^-Loewi & Co., Milwaukee; Park-Shaughnessy & Co., St. Paul, Minn.; Bell, Farrell &
Stebbins,
Inc:, Madison; Heronymus & Co., Sheboygan, Wis. Price

Price by amend¬
Proceeds—Redemption of outstanding 4%% preferred stock at $109 a share plus dividends. Indefinitely
The /postponed.

Bee. 12 (letter of notification)
50,000 shares of

Price—$4

filed

Aug. 28 filed maximum of 384,016 shares of common
stock. Underwriters by amendment as shares will be

<**-Murphy (G. C.> Co., McKeesport, Pa.

McQuay, Inc., Minneapolis

Northern Engraving &

Aug.

Sale Postponed—Standard Gas & Electric Co. asked for
bids for the purchase of the stock on Sept, 4, but the
sale has been temporarily postponed.

proceeds of $28,000,000, together
a $6,000,000 contribution from NY PA NJ Utilities
Co., parent, will be used for redemption of $13,000,000
of 3%% bonds, due 1964, and 120,000 shares ($100 par)
5-10% cumulative serial preferred and to finance new

Underwriter-^Smith, Barney & Co.

May McEwen Kaiser Co., Burlington, N. C.
f
Aug. 22 filed 175,418, shares' ($1 'par) common stock*
Underwriters-Goldman, Sachs & Co., and Hemphill,
; Noyes & Co. Price—By amendment. Proceeds—Net
pro¬
ceeds go to* 11 'shareholders who; are: selling the ; stock

offer present -

stockholders the right to purchase 387,500 addishares at $4 each in the ratio of 1 V\

Probable bidders include Blyth & Co., Inc.; Kiihn, Loeb
& Co. and Smith Barney & Co. (jointly);
Harriman,
Ripley & Co.; The First Boston Corp. Offering—Shares,
are owned by Standard Gas & Electric Co. and. conatitute 56.39% of the company's, outstanding common.

indebtedness, purchase, equipment and improve plant

Mountain States Power Co.

ti9?i^at-&;^p^.'I!le^yYorki r For, payment of certain current

constructions.

June 6 filed 140,614 shares of common stock (no
par).
Underwriters—To be determined by competitive bidding.

•

development

250 shares ($100 par)
(500 par)
common.
Price—$100 a preferred share and 50 cents a
common share. No underwriting.
To carry on business
of the corporation as factory representative and dealer.

"receive warrants for purchase of 70 shares of common.
Other warrants for purchase of
8,500 shares of common
f
will be $old: at five cents a warrant.
Underwriter—Amos

ItefhgCegistered/Offer^

1,000,000 shares of 15 cents

6% cumulative preferred and 100,000 shares

$500) and 22,500 warrants for purchase of common.
notes; will be sold at face amount and
purchasers of each
$1,000 note also will receive warrants for purchase of
^ J40r shareebf common
each;$50ft note will

/;■

with

Monroe Sales Corp., Philadelphia

convertible

common

Nov. 27

:''v

Probable bidders include Blyth & Co. and Smith, Barney
& Co. (jointly); First Boston Corp. and Glore, Forgan &

June 13 filed 250,000 shares of common stock (par $1).

note#$l,0OQ)/i$25,OOO/5%;/con^

•■■'

Corp., Ithaca

Co. (jointly) and Halsey, Stuart & Co. Inc. (bonds only).

Monmouth Corp,
A" balance due on construction
by distribution of 14,636 shares of the
hew preferred to F. H. McGraw & Co. and subcontract
tors.
Business—Operation of race track.

Price

facilities/

Gas

Proceeds—Estimated

work will be paid

■

the

K/.":-.,

•by amendment.
Proceeds-^Proceeds will be used to
repay $1,000,000 in bank loans with the balance going
into general funds.
t J*
f
^

Markley Corp., Merlden, Conn.
Dec. S fletter of notification) $75,000 5%

shares for each share held.

Nov.

Underwriter—Hornblower & Weeks, New York.

discount

Electric

—Part of the funds will be used to redeem 25,200. shares
of $50 par 4% non-cumulative convertible preferred held

Manning, Maxwell & Moore, Inc. *(f/$»47) 1
27 filed-" 160,000' shares* of
$12.50,vpar common.

being sold for the account of

plant.Offering—Company will

common

State

Underwriters—To be determined by competitive bidding.
*:•
/

Underwriter—Unsubscribed shares and additional shares
to a total of 315,000 will be purchased by the Monmouth
Corp., fornied last May to finance construction of the

ManagedFund$lnc.,5t. Louis,Mb.
'2,300,000 shares (1c par)' capital stock.
Underwriter-tsiaytoh and Co., Ihe/ St. Louis. Price—
share. Proceeds—For investment.

York

Oct 30 filed $13,000,000 first mortgage bonds, due
1976,
and 150,000 shares of ($100 par) cumulative preferred.

Dec. 5 filed 16,000 shares ($50 par) 5% cumulative con-W
vertible preferred and 633,500 shares (lc par) common.

Bee.' 3' filed

Ltd., Toronto,

Corp.; Kidder, Peabody & Co., and Blyth & Co., Inc.
(jointly>; Harriman Ripley & Co; Coffin ■& BuTr and
MerriU
Lynch, Pierce, Fenner & Beane. Proceeds—The
shares are being sold by Consolidated Electric and
Gas
Co., parent of Maine Public Service, in compliance with
geographic integration provisions of the Public Utility
Holdtog Company Act. ^
"

New

;

Monmouth Park Jockey Club, Oceanport, N.
•

Maine Public Service Co.*
Preque Isle* Me.
June 25 filed 150,000 shares
($10 par) capital stock.
Uudemriters^Tb be determined through
competitive
bidding.
Probable bidders include The First Boston

■

::#WOrk.;'v(/:^

working

MadaYellowknlfe Gold Mines* Ltd., Toronto

Oct. 21,filed 1,250,000 shares ($1 par) common. Under¬
writer—R. J. Hale, East Aurora, N. Y.
Offering—Of the
total company is selling $1,000,000 shares and the reare

■«,.

dividends-all unexchanged

each. Proceeds—For exploration and mine

Jtme 7 filed 250,000 shares of capital stock
(par 40c).
Underwriters — Names to be supplied by amendment.
Offering—Stock will be offered publicly in the U. S. at
40e a shaire (Canadian money).
Proceeds—Proceeds,
estimated at $75,000, will be used in
operation of the
company/

alternate plan are scheduled by the SEC for Dec. 19.

maining 250,000 shares

;

105 and accrued

as to which will be used
will be left to the SEC and the court.
Hearings on the

the principal underwriter, brokers and
dealers, which
shares they will receive as additional compensation on
the basis of 250 shares for every 1,000 shares sold for
the company. Price—60 cents a share. The underwriters

common and

^FasMon ^Trades- /and/ to provide
capital.-Offering date indefinite.

/Midas Yellowknife Gold Mines
Canada

Leader Enterprises, Inc., New York
Sept* 26 (letter of notification) 150,000 shares of
(10*

par)

original plan, but determination

ex¬

■'

writer-/Jack Kahn;
New/York//'Pricety^O cents a share,
the- underwriting
discount will amount, to 21. cents a

mining

preferred not issued in

shares of prior Hen and preferred
stocks.;,

Kiwago Gold MinesLtdL, Toronto, Canada

share.

new

Dec. 3 filed 1,000,000 shares
(no par) common.

and from shares of

mon

change will be used to redeem $375,000 3%% serial debentures, due 1951, at 101.2 and interest. It also will

i 3259

common

shares at; $9 per

present plan does not affect the status of

328,125 shares (55100 par) common.

writing—None. Offering—The shares will be

said advances from AT&T are expected to

approximate:/

$45,000,000 at the time the proceeds are received.
^

(

(Continued on page 3260)

/"•

THE COMMERCIAL & FINANCIAL

3260

St. Louis

stix, Baer & Fuller Co.,

Republic Aviation Corp., Farmingdale, N. Y.43259)/4 .; 4**
V
Pacific!Western' Oil Corp.,; Jersey City7(12/20) :r Oct".'9. filedv100,000,shaxeg,.($50 .Pes) convertible "pre¬
ferred stock.
Underwriters—Hayden, Stone & Co., and
Dec. 11 (letter of notification) 4,477 shares ($10 par) j
( Kidder, Peabody & Co.% Price—By amendment. ( Pro¬
(Continued from page

Thursday, December 19, 1946!

CHRONICLE

;

^ j

shares common stock (par $5);?
Underwriter—Goldman, Sachs & Co.
Offering—Eight
selling stockholders are disposing of 62,000 shares, and
capital stock. To be offered for sale to certain employees \
ceeds—Proceeds, together with bank loans, will be used 4; the company will offer 40,759 shares initially to its preat a price to be based on the market price but no event
to increase working capital.
Such funds are deemed i ferred and common stockholders. Price by amendment.
higher than $20 a share. No underwriting. For general
Proceeds—Net proceeds from the sale of the company's
necessary in view of the additional facilities that com¬
;
corporate purposes.
"
"
;
shares will be added to its "building construction and
pany intends to acquire and its large backlog of peace¬
time
business. Dec. 17, it was. announced
company
improvement fund/' Offering date indefinite.- - ^ ~
:
Pal Blade Co., Inc., New York
negotiated bank loans in lieu of public financing.:
June 28, 1946 filed 227,500 shares ($1 par).capital stock.
Stone Container Corp., Chicago
Underwriters
F. Eberstadt & Co., Inc.
Offering—; •
Republiclndemnity Co.(Of America;Tucson, >«*" ', <Oct, 124 filed 300,000 shares of ($1 par) common. Under*
225,000 shares are outstanding and are being sold by 10
Afiza
»•;•••■* •. v ((
'- ''"."'v -J'
<■?'')' <'" -"/(
/ writer—Hornblower &
Weeks, Chicago. Offering —Of
stockholders, and 2,500 shares are being sold by A. L.
Dec. 12 filed 20,000* shares ($10 par) common and 50,000
the total, company is selling 200,000 shares and stock¬
Marlman: to all salaried employees, indefinitely ^pdst-J
shares ($2 par) 50c cumulative preferred. Underwriter—
holders are selling the remaining 100,000 shares. Price
■'
poned.
(44r4:(■ 4114:
If company finds it necessary to enter an underwriting
by amendment. Proceeds—Of net proceeds, company will
agreement, the name of the underwriter will be filed by
use $1,225,000, plus a premium of $12,250, together with
Palmetto Fibre Corp.,Washlngton, D. C.
■;amendment.
Offering—The shares will be offered for
accrued interest, for payment of a bank loan, and $493,August 16 filed 4,000,000 shares (100 parpreference
subscription to common stockholders of record on Jan.
500, together with accrued interest, for discharge of its
stock. Underwriting—Tellier & Co., New York. Price
10, 1947, in the ratio of % of a share of new common
10-year 6% debentures.
Any balance will be added to
50 cents a share. Proceeds—The company will use esti¬
for each share owned and 1% shares of new preferred (
working capital.
,
t>
mated net proceeds of $1,473,000 for purchase of a new
•

Aug. " 28 filed 102,759

—

•f

'■

drilling

Airways, Lima, Peru

50-cent convertible
preferred and 238,561 shares ($1 par) common. UnderwrUer-r-None stated.
Offering—Shares will be offered
publicly in units of two shares of convertible preferred
share of

offered for

5 to the extent of one share for

unit. The company
also may offer the shares other than by unit at a price
of $7 a preferred share and $1 a common share. Proceeds
—To increase capital for expansion of proposed air
route connecting Peru and Montreal, Can.
Pharis Tire & Rubber

not

Price—$10.50 a share.
Proceeds—From 45,000
sold by company will be applied to working
initially. Offering date indefinite.
Swift International Co. Ltd.,

Rowe Corp.,

New York

Co., Newark, O.

vertible

Underwriter—Van Alstyne, Noel &

own

account.

value 15 Argentine

»•

(Dec. 6

scription to stockholders at the rate of one share for
The subscription price will be

,r: V

Of the total 31,000 shares

($1 par)

will be offered pub-

Sydney County Council, New South
Australia (12/30)' 4; ' - ' " ' ' 4

Class A common

Oct 28 filed 71,141 shares. (45c par)

bank loans," and other corporate purposes.

(45c par) .Class B common. Under¬
writing—The underwriters who are also the selling
stockholders sre Dempsey-Tegeler Co., St. Louis, Mo.;
j July, 5 filed 75,000 shares 5% cumulative convertible
;preferred stock ($10 par).
Underwriter—Van Alstyne,
Dittmar & Co.,,San Antonio, Tex.; Stifel, Nicolaus &
Noel & Co. and associates.
Price by amendment.
Pro- , Co., Inc., St, Louis,-Mo.; and Rauscher, Pierce & Co.,
ceeds—Of the net proceeds, $250,000 will be used to pay P Inc., Dallas, Tex.
Pri<?C; by amendment.
- V
and 35,44T shares

Parts Co.

of Ann Arbor,

Mich.

;

3% notes held by National Bank of Detroit, $75,000 to

4
theft

reimburse treasury for sums spent in acquisition of
electrical, division plant of the company, $30,000 for con-r/
etruction of space for executive offices in the economy
baler plant, and the balance will be deposited with gen-

Shatterproof Glass Corp., Detroit, Mich. ;

Oct 28 filed 280,000 shares ($1 par) common. ;, Under¬
writing—None.
To be sold through brokers on Over-

Quebec Gold Recks Exploration Ltd., Montreal
Nov.

100,000 shares (500;/par) capital stock. (
Underwriter—Robert B. Soden, Montreal, director of

Price—500 a share. Proceeds—For explora¬
development of mining property.

29 filed

Inc., Minneapolis

The options for purchase of the 175,813 shares
are to be offered to original subscribers of

Under¬

Price by amendment.
proceeds will be applied for the redemp¬

(purchase 18,000 shares of the issued* and outstanding
common owned by them.
They are also selling tq Hall-

and

use

Proceeds—Net

warehouse

being

constructed

Hopkins,

future,

•

expansion program.

are

ceeds

Minn.;

also

will be used

for

common

Offering
Bond

Price—$10

Co.,

share.

Cruttenden & Co., Chicago.

seven

use

;tiqn.

■'

4 4

common.

pany's 75,000 shares will be used for increasing

capital, with a view to entering the Frequency

Detroit, Mich.

working
Modula¬

time. Of-

Coring date postponed.

are

$500,000 bank loan,

now under construc-

: " :

the ratio of

preferred share for each five shares of common held

unsubscribed shares will be sold to underwriters at same

price.

Price

—

Public offering

price

of unsubscribed

(O.)

Edison Co.

Oct. 25 filed $32,000,000 first

Inc., Chicago. Offering—To be offered to common stock¬

one
'

Toledo

Emerich & Co.,

holders for subscription at $25 a share in

and

Proceeds—Company

its Proceeds, together with

^.finance paints and varnish plant

stockholders

issued and outstanding
Proceeds—Net proceeds for the sale of com¬

additional 18,000 shares of, the

tory amounting tq $400,000, and for additional; working
capital. Offering temporarily postponed.

vertible preferred. Underwriter—Ames,
•

Of the total of 60,000 shares,

the company is selling 40,000 and

contribution

options to purchase

Sept. 3 filed 40,000 shares ($25 par) 5% cumulative con¬

Underwriter—Bankers

jjtsposing of the remaining 20,000.

toward the expenses of issuance,

tion and Television fields at an advantageous

stock ($2.50 par).

and Almstedt Bros., both of Louisville,

garten & Co., for $1,500, plus $360 as a

Such pro¬

Reliance Varnish Co., Louisville, Ky.
common

stock.

additional manufacturing

Soss Manufacturing Co.,

Nov. 20 filed 60,000 shares of

facilities in the amount of $600,000; for additional inven¬
;

Any balance will be used in its moderniza¬

tion and the

Noel & Co;

hot converted into

which

$300,000 for equipment of warehouses at Green Bay,
Wis., and Fargo, N. D., which it expects to construct in

cumulative con¬

A (par $20)*

tion of outstanding series A convertible preferred stock

Of the remaining proceeds,

$500,000 for equipment of its general office

Underwriters—Hirsch & Co.

writers—Van Alstyne,

$800,000 of 'the proceeds for

reduction of its bank loans.'
;

cents).

Solar Manufacturing Corp.

Price by amendment. iProceeds—

York

Aug.* 1 filed 210,000 shares of common

vertible preferred stock,(series

.it will

Tele-Tone Radio Corp., New

stock (par 50
Offerlng-r-Company is offering 75,000 of the shares registered.
Eleven
stockholders are selling 135,000 Issued and outstanding
shares, for their own. account. Offering—Price $6.75 •
share.
Options—Selling stockholders are also selling to
the underwriters at 7 cents per option warrant options to

June 14 filed 80,000 shares of $1.12%

use

temporarily postponed.

It also will issue, options to em¬
ployees for purchase of 69,875 shares of common. Price—
$10 a share.
Proceeds—For purchase of equipment and
for working capital.

(12/27)

Offering

mortgages and for general corporate purposes.

the company's stock.

15,000 shares ($100 par) cumulative con¬
shares ($3 par) common.

Company expects to

and options

common

Underwriters—Piper, Jaffray & Hopwood and J. M. Dain

•,

-Wl

preferred and 75 cents at share for common. Underwriter
--Amos Treat & Co.
Proceeds—For payment of noted,

Antonio, Texas

vertible preferred and 50,000

Co., Minneapolis.

-v*1'-

are

purchase 175,813 shares of common.
Underwriting—
Offering—The common shares are to be offered

publicly.

stock

($1 par).
Offering Price—$0.60 a share to public.
Company has
not entered into any
underwriting contract. Proceeds—
Development of mining properties and exploration work.
Red Owl Stores,

None.

Canada '/

Nov

Offering—The

Dec. 9 filed 500,000 shares ($10 par) common

Reaimont Red Lake Gold Mines, Ltd., Toronto,
common

Slick Airways, Inc., San

company. (

Nov. 20 filed 800,000 shares of

filed

tion and

;

Wales,
*>
»
Dec. 9 filed an unspecified amount of 10-year sinking
fund bonds, due Jan. 1, 1957.
Underwriting—Kidder,
Peabody & Co., New York.
Offering—Terms of the of¬
fering by amendment. Price by amendment. Proceeds—
For redemption at 102% % on Feb.-1,-1947, of City of
Sydney 25-year $8,170,000 5^2% sinking fund gold bonds,
due Dec. 1, 1955
The bonds originally were issued by
The Municipal Council of Sydney to provide funds forthe extension of its facilities supplying electricity to the
City of Sydney.; The, electric properties of the ^Municipal
Council were assumed by the Sydney County - Council
in January, 1936. r
^ '
V*
k
J

Taylor-Graves,
Conn.
:(
issued r-4:
July 12 (letter of notification) 44,300 shares of ($5 par)
and outstanding and are being sold by William B. Chase,
cumulative convertible preferred stock and 44,300 share®
President, and members of his family or trusts created
(common stock (par 50c).
Offering—Price $6 a share for
by Chase or his wife. Price—At market.
market.

the-counter

eral funds. Offering temporarily postpqned. -.0"

;

net price, after

not less than the offering

7-Up Texas Corp., Houston,9 Texas

Proceeds from sale of preferred will be used to purchase

be
at

customary, brokerage commissions, of
price to stockholders. Price
by amendment. Proceeds—Proceeds will be used to re¬
duce outstanding bank loans, to finance additional in¬
vestments in plant facilities and to provide additional
working capital.
Business—Holding company of sub¬
sidiaries engaged in meat packing and allied food lines.

(Calif.) Sky Park Airport, Inc.

(letter of notification) 53,000 shares

certificates for 500,000 shares, par
gold pesos a share. Underwriters—
shares will be offered for sub¬

supplied by amendment.
Unsubscribed shares will
sold publicly or privately through brokers or dealers

Plastic Molded Arts, Inc., New York
JiCly at $1 a share, 16,000 shares will be transferred to
Aug. 27 filed 60,000 shares of preferred stock ($10 par) } Alex. Wilson and "Wayne Voigts for. their interest in
Santa Cruz Flying Service, which is a flying field and
and 75,000 shares of common (par 50c).
Underwriter—
airport, and 6,000 shares .would be issued in cancellation
Herrick, Waddell & ; Co., Inc.
Offering—Company is
of partnership indebtedness.
No underwriting.
For
offering the preferred stock to the, public, while the
common is being sold by certain stockholders.
operation of airport "business.
Prices—
t Preferred. $10 a share; common, $4 a share.
Proceeds-

Precision

Buenos Aires,

each three shares held.

Santa Cruz

common.

shares
capital

Offering—The

None.

Offering

Pricey by amendment

date indefinite

Co., New York. Price—$20 a
share, Proceeds—For payment of loans and to replace
(working capital expended in purchase of building from
RFC and to complete construction of a building.

6 filed deposit

Dec.

July 29 filed 100,000 shares common stock. Underwriters
—Hayden, Stone & Co. Offering—The selling stockhold¬

Co. and G. L! Ohrstrom &

stock¬
shares.

Argentine

ers, who include Robert Z. Greene, President, are offer¬
ing the shares to the public through the/underwriters,

pay

Offering—Com¬

each five held. Issue will

for their

equipment,

(4 »
stock (par $1).

Co., Trenton, N. J.

is selling 45,000 shares, and eight selling
holders are disposing of the remaining 150,000

underwritten.

Sept. 27 filed 100,000 shares ($20 par) cumulative con¬

preferred.

Swern &

pany

underwriters.

Inc.

Aug. 28 filed 195,000 shares common
Underwriter—C. K. Pistell & Co., Inc.

issue 454,465 shares of common

at $15 a

common

Company has decided to
stock only, which will be
subscription to stockholders of record Sept.

Grace & Co.

Street & Smith Publications,

July 17 filed 197,500 shares of common stock. Under¬
writers—Glore, Forgan & Co.
Offering—The offering
represents a part of the holdings of the present stock¬
holders. Indefinitely postponed.

which commenced operations last April, is engaged
general casualty insurance and bonding business./

one

Price—

Republic Pictures Cprp«r New York
Registration originally filed July 31 covered 184,821
shares of $1 cumulative convertible preferred ($10 par)
and 277,231 shares (50c par) common stock, with Sterling,

Dec. 5 filed 477,122 shares ($7 par)

and

Unsubscribed shares

the company to the public.

pany,

and ; other equipment

machinery

of common held.

$30 a common share and $10 a preferred share. Proceeds
—The proceeds will be used to augment capital by an
additional $300,000 and surplus by an additional $800,000
for business expansion purposes.
Business—The com¬

Peruvian International

will be offered by

yZ. Peninsular Oil Corp., Ltd., Montreal, Canada
Sept. 3 filed 600,000 shares of common (par $1).- Under¬
writer—Sabiston Hughes, Ltd., Toronto, Canada. Price—
60 cents a share.
Proceeds—Net proceeds will be used to

purchase

each

for

factory near Punta Gorda, Florida, at a cost of about
$951,928. It will set aside $150,000 for research and de¬
velopment purposes and the balance will be used as
operating capital.
^ K ,

and 160,000 shares

mortgage bonds, due

1976,

of ($100 par) cumulative preferred.
competitive bidding.

Underwriters—To be determined by

f Probable bidders include The First Boston Corp.; Halsey,
Stuart & Co. Inc. (bonds only); Blyth & Co., Inc.; and

determined by competi¬
proc^S1 together with $4,-

shares by amendment. Proceeds—For expansion of plant

Smith, Barney & Co. Price to be

facilities

tive

and

postponed.

for

additional

working capital.
v

(

Offering

:- ,\.J.

bidding. Proceeds—Net

500,000 bank loan and if

necessary,ASiP $5,000,000 to Nj

■

.7-'
■

iVolume: 164

>
•'.

the commercial & financial^ chronicle

" Number 4552

3261

contributed by its

parent, Cities Service Co., will be used
Walker. Vitamin Products, Co., Inc., Mt. Vernon',
outstanding debt and prefe^fr irtock,^
(12/23)
• •>,:
..
payment of $53,906,590, exclusive of interest and/Dec. 13 (letter of notihcation )t7iobO shares (500 par)

White's Auto Stores, Inc. (1/15/47)"
Aug. 29 filed 75,000 shares $1 cumulative convertible
preferred stock ($20 par) and 50,000 shares common
stock (par $1).
Underwriters—First Colony Corp. and

Jtojredeem
ing

UUnitedStatesGypsum Co.

.j, r..,

Childs, Jeffries & Thorndike, Inc.

/:;MyrOh W^
-*»,.«•; andGlady? S.'Hetherington. Price, $10.15

;

Dec. 11, filed 399,477 common shares ($20 par).. Under- i: writer-Billings, Olcott & Co.,-New York,

writing—None. Offerins-^-To be offered to stockholders-

^61'record 4an,

proceeds go to semng stockholders.

4:,at^60 :i>er; share 4ns 3*atip> of one^new

Isharefor/each ihreec &wne<L/Rights ;wiR;^
io; the; contemplated $42,060,-1

U. S. Television

writer

Manufacturing Corp., New York

Under¬

common..

ment

vertible preferred and 150,000 shares of common (par

various

expenses,

amendment. Price $5

share for preferred.

per

expansion of> busi-

Proceeds—For working capital and

Western Air Lines, Inc.

;

(1/13-17)
4

/UnderwHter-^illon, Read.& Co* Inc4 price- by ^amend¬
:

Universal Corp., Dallas, Texas

Dec.

(letter of notification)

common

Proceeds

Under-

capital.

ber of shares.

and

with

ceeds—For

developing

mining

Acquiring and developing mining properties,

Un¬

Company will

'•

•'

•

competitive

•.

stock to

common

bidding,

Underwriters—By

Part of the shares

top holding
•

to be

are

(jointly);

Proceeds—

sold by Middle .West ,Corpn

of the System, and part by pref-

company

stockholders of North West Utilities Co.,: parent

erence

of Wisconsin, who elect to sell such shares of Wisconsin

stated

smaller

Forgan & Co., and Harriman Kipley & Co.

| The Wisconsin Co., and Dillon, Read 3c Co.

amounts.

shares presently

which

common

num--,

dissolution

its proceeds, together

use

Probable bidders include Merrill Lynch,
Pierce, Fenner & Beane; White, Weld & Co.; Glore,

will

North

distributed to them

West Utilities

upon

the

Co.

$1,000,000 bank loan, toward payment of its prom¬

Wyatt Fruit Stores, Dallas, Texas

Nov. 12 filed 5,000 shares

has obligations amounting to $1,667,000 which will

pany
*

*" ^

total number

.-i.:,

Business—

property.;

the

•

filed 550,000 shares ($10 par)

sold

issory notes, aggregating $3,926,946. In additioii the com¬

derwriter—Noneasyei. i: Pfice--?25 bents V sjb8re.<4
♦

Presideniand Director, The

will be reduced if the offering consists of. a

Victory Gold Mines Ltd.; Montreal, Canada filed 400,000 shares ($1 par) capital stdck.

unspecified

being offered by each will be stated definitely by amend¬
ment

1 Nov. 13

Offering consists of

William A. Coulter,

writer^Federal Underwriters, Inc., Dallas; and Trinity
Bond Investment Corp., Fort Worth.
For additional

—

number of shares being, sold by the company and .by

share in the

held.

ratio of one share for each three shares

(no par)

30,000 shares

to be offered to stockholders at $5 a

ment.

amendment.

Nov.' 27 fileji 1,200,000" shares ($1 par) capital, stock.

ness.

'■

be
(

A..

May 21

■$1) to be offered for special purposes. Underwriters—
Names by

Em-

vWisconsin Power & Light
Coy Madison; Wis.

repayment of bank loans,

purchase of equipment and for working capital.

sidiary, retire loans from banks and from White's

:--,v

Price by amendment.

ployees Profit Sharing Trust, and for additional working
;capital. Offering date indefinite.
' - ./..

•

Auchincldss, Parker & Redpath, Washington,

—

account.

own

Proceeds—Proceeds from the sale of the. preferred stock
will be. used to provide funds for a wholly^owned sub4

D, C. Price—$7 a share/ Proceeds—Will be used for pay¬

Nov. 4 filed 300,000 shares (no par) 25c cumulative con¬

dividuals for their

} West Coast Airlines, Inc., Seattle,* Wash.

Offering—Company

offering 75,000 shares of preferred; the 50,000 shares

.of common,are outstanding and being sold by four in-

broker. '

*i':
1

Sept. 2 filed 245,000 shares ($1 par)

1 '.

program; •

-•*

/ Proceeds—Wilfbenpplied

share. Under-

paid following the Sale ot the stock; Tt: anticipates the

(par $100) preferred stock.

Underwriter-^-Rauscher* Pierce & Co/ Proceeds—Will be

completion of Its equipment and! facilities program/nexti E used in part to equip three

%ear J with unrequired, expenditure bl about $8,600,000.

new

cafeterias, to remodel its

markets and to increase working capital.

super

-»V,:

Prospebtive Security Offerings
-(NOT YET IN REGISTRATION)
INDICATES ADDITIONS SINCE PREVIOUS ISSUE
-

(;•

(Only "prospective8,, reported during the past week are
given herewith. Items previously noted are not repeated)

<5t

■

-_s,v

•

Alabama Great Southern RR.

^t)ec; 18 reported company has plans imder consideration
Tfor sale in January "of equipment trust certificates for
vless^ than!$2,000,000, iprobable^^jbidderst include; Halseyv
'Stuart & Co. Inc.; Salomon Bros. & Hutzler.
v

'"4

!
v'i

v/r'-'-V

Aluminum Co. of America
Dec.

18 reported company

•

1 1/10 shares of
with

the

plans to offer in January a

existing share

is; contingent uppn approval of

4,000,000 new shares by stockholders at a: meeting Dec._
20. If the proposed exchange is approved, the company

oiitstanding; shares ,

ferred by exchange and by redemption at

First

plus accrued dividends. Probable underwriter: The
Boston Corp.

•

Dec.

19 reported new

Inc.

; /

financing for expansion of com¬

Electric

Co.,

Oklahoma

stock (in accordance with SEC

common

retire bank loan

ing interests had agreed that plans for

new common

City;

-,C

•

mortgage bonds and $10,000,000 through serial bank

year

•5

(jointly1): ^

Smith, Blimey & Cd.
tu,

;

t'S-

•

r;:--*■-/

Owens-Illinois Glass Co.

Dec. 12 stockholders voted to increase authorized com¬

I^obable underwriters include; White Weld & Co.

The First Boston Corp.; Halsey, Stuart Sc Co* Inc.

The First Boston

?&Vofciri& (jointly);^ Harrimarri^Ripiey &, Cbj;; Kiihn,
LoCb & Co. and

feasible.;

Company planned to raise $20,000,000;by Issuehcelbf 20f !
Joans.

pro¬

Corp.-; White, Weld & Co;j Lehman Brothers and - Blyth

$30,000,000 fi¬
were

stock,

treasury and

;usedJn redeeming-the 7!%" preferred

Istoc^ Probable biddersVwill include

nancing of a-proposed additibnaT405i ihile 26^nch: line 4
tram^rant County, Kan. to Kansas

City

preparing to sell

and company at same time intends to sell

^approximately! 140;00$ shares of

Cities Service Gas Co.

stock from 3,000,000 shares to 4,000,000 shares (par

mon

$12.50). Additional shares may be issued later to finance
Mountain States

Power Co.

expansion or ^acquisition of additional assets. Probable

Dec. 16 Standard Gas & Electric Co.

wjll offer at com¬

underwriters, Kidder, Peabody & Co. and Collin, Nor-

petitive bidding its 140,614'common shares of Mountain
States Power Co. Date of the

/ California Eastern Airways,

ceeds of which will be used to reimburse

•

$110 a share

its holdings

regulations)

Dec, 10 company official testified before FPC that bank¬

dividend rate lower than 6%, is being considered.

^retire the^^ 910,756

include; Halsey/ Stuart &

Co. Inc.; Salomon Bros. & Hutzler.
•

...■

new issue for each

.^eCoxcli^ge^offer-

January of about $2,000,000 equipment trust

certificates. Probable bidders

Gas

Dec. 4 Standard Gas & Electric Co. is

shqres:in;exciianger fer^butstanjl^
cuWlative preferred stocky/^|<mtatiye j)&i^ Of

ing

issuance in

Oklahoma

•

Cincinnati, New Orleans & Texas Pacific Ry.

Dec. 16 reported company has under consideration the

offering will be set later. A

previous sale, set for Sept. 4, was postponed because of
unsettled market conditions. The Securities and Ex¬

•

Southwestern Public Service Co.

Dec. 16

reported

financing to provide

new

change Commission has shortened the customary 10-day

000 for construction

expenditures for the

$7,000,-

some

year

1947 is in¬

pany's air cargo business possible, with Andre de

Saint

period for receiving bids to six days to meet the com¬

dicated. Some portion of the funds required is expected

Phalle & Co. as underwriters.

pany's request to take advantage of the most opportune

to be raised

time under existing market conditions to sell the

stock. Probable bidders include Dillon, Read &

•

California Oregon Power Co.

Dec. 4

reported Standard Gas & Electric Co. again pre¬

holdings of 312,000 common stock (no
par) through competitive bidding. On June 25 last com¬
pany rejected bids submitted by Blyth & Co., Inc. and
The First Boston Corp. (jointly) and Harriman, Ripley
paring to offer its

& Co., Inc.

ties. Probable bidders include Blyth & Co., Inc.
First

Boston Corp.

there will be 1,000,000 (no par) shares com¬

which 286,024

are

shares remains unchanged, although it is indicated that
some

Corporate Securities

of these shares may be

mon.

The unissued

common

converted into new com¬

may

be issued later at the

discretion of directors, "without being offered to
holderat

tain

stock*

equipment to cost $6,916,200, to be sold under a

conditional sale agreement.
•

Waitt & Bond,

Nov.

Blair 6- Co.

Northern States

Dec.

reported

Power Co.

company

(Wis.)

gage
BOSTON

:;VT

.ia^l^4LOr.
CHICAGO
: CLEVELAND
u. irrrsBURGH
\ sr. loots

philadplf^a

3%s,

due

first mort¬

1964. Probable bidders include Smith

Barney & Co.; First Boston Corp.; Harriman, Ripley &

Inc.

stockholders

shares,

and

equity capital

approved

recapitalization plan

provide

company

with

additional

for expansion. Plan calls for the con¬

solidation of Waitt & Bond Inc. With the Waitt & Bond

Co., a wholly owned subsidiary.

corporation would

probably will sell a new

lower-cost bond issue to replace $17,325,000

designed to eliminate arrears of dividends on the Class

new

•

(noon) by company

Broadway, New York, for lowest rate at which

120

outstanding. The

number of convertible preferred and class A preferred

State, Municipal and

Co. Inc.

bidders will provide funds for financing purchase of cer¬

capital structure.

authorized in place of the present 513,522 shares of

class B common, of

United States Government,

common

(12/19)

:v-

Roxbury, Mass.

Dec. 17 stockholders voted to revise the

mon;

*
"

Under plan

Union Pacific RR.

Bids will be received until Dec. 19

Moxie Co.,

and The

through the offering, of additional

(jointly); Harriman, Ripley & Co.;

The First Boston Corp.
•

securi¬

consist

Capitalization of the
of

cumulative preferred

shares ($1 par) common and

110,000
($30

authorized

par),

600,000

100,000 stock purchase wat-

/ rants. The plan involves a public offering of new
ferred. The company has been

r& Co., which has

Co., Inc.; Dillon, Read & Co. Inc. and Halsey, Stuart &

shares of

Co. Inc.

$30

new

share.

pre¬

negotiating with Reynolds

indicated it will underwrite 50,480

preferred, subject to market conditions ?at

THE COMMERCIAL & FINANCIAL CHRONICLE

3262

L•

/! Observations IIISSI

(Continued from page 3205);

;

' -

■

Thursday, December 19, 1946 J

following the complaint of India, the Assembly passed a Vote of cen¬ of the Fund—Brazil, China, - the
Dominican Republic, Greece, Po¬
for racial discrimination,
Apart from the real motives for such interfering actions—whether land, Yugoslavia, France in re¬
they be a phase of power-politicking and in what proportion—they spect of French Indo China and

sure

set

precedent that is both very dangerous and

guarantee of con¬

the Netherlands in respect of the

have re¬
avalanche of agreements, that tinuing controversy. Not only is it practical procedure, but it is Netherlands Indies
were technically
completed, but which did not settle -the core or guaranteed by the Charter, that the Security is to. be limited to call¬ quested,; in accordance ^with^Ar¬
XX,., Section' "4
of
the
foundation of basic questions and long-standing rifts*
ing member nations to; account for international aggression, and not ticle

Christmas

conclusion, resulted in an

—

Typical of an agreement which though formally reached, has
the results dependent on the future action—and not pleasant
words—of the interested Powers, is that on disarmament. Despite the
fanfare, and the relief that any joint friendly statement at all could
be issued on the subject, it unfortunately must be realized that this
recurring problem has not been settled; and that effective disarma¬
ment still is closely and inextricably intertwined with the political

left

dynamics and behavior attending
and the "Have-not" (real or

the differences between the

"Have'

Agreement,

Power

values, and the Fund has agreed.
Pending the completion of certain
legislative proceedings: in Uru¬
guay,-the initial par value ;of; its
currency has not yet, been/defi¬
nitely established.
\
v

for

meddling

with

affairs

internal

the

small

the football that has

jockeying for terri¬

torial

position in the Western Mediterranean), And if the South Af¬
rica action is to be a precedent, how can UN in the future be stopped
from taking similar action against the U. S. for our racial discrimina¬

tions, or against; Russia and other members withauthoritarian re¬
gimes for pursuing undemocratic action?«
,
,
;
v
-*
\; >'■

asunder.

Facing with realism the fact that these and lesser issues are still

disarmament,

"This is^flie 'first tiihe that

large number of nations have sub¬

Monetary Fund Announces Initial

organization and thus"new phase
of international
monetary cooper¬
ation has begun. The major signi- ficarice; of the present steji;i$ not
in Hiepbrti&ularrate bf exchange 1
which are announced, but in the fact that the participating nations *

unanimous vote is proof of its inocuousness, in the context of the present state of East-West affairs.
The
implementation of the pious resolution and the "formulation of prac¬
tical measures" is left to that caldron of controversy, the Security
have now fully established a re¬
Council. The full responsibility is now thrown into the Council's lap
gime wherein they are pledged
(Continued from page 3208)
for establishing an international police force; for getting all foreign
to promote
exchange stability, to
Uruguay is not mean, he added, for empha¬ make
troops out of territories in which they don't belong; and for generally minican Republic.
no changes in the
par values
still in the process of determining sis, that the Fund is freezing cur¬
reducing the size of nationally armed forces, and for keeping them so
of their
currencies, except in ac¬
The case of the rencies at their present relation¬
deduced. For the latter, inspection is the Vital-prerequisite; but if in¬ its par value.
cordance with the Fund Agree;
spection, control, and punishment are going to be subject to the Dominican Republic is one of a ships.
ment, and to assist each other in
Veto in the Council, the entire disarmament program is rendered country which at the moment has
Another point Mr. Gutt made
attaining the general objectives
no currency unit: of its own.
H was that countries with multiple of the
abortive.
Fund.
* '
*
'
vfti
is in process of setting up a new
exchange rates merely represent
f
The certainty of future Russian obstruction to continuing ef-;
monetary system, and this is ex¬ the rates which the Fund will use
Proposed Par Values Accepted
fective cooperation along these lines is indicated by Mr. Gromyko's
f"
pected
to
take
several
more
in dealing in these particular cur¬
"The initial par values
llth-hour action after the assembly's close in blocking for at least
are, in
months, Mr. Camille Gutt, Man¬ rencies.
all cases, those which have been
three day's the submission of Mr. Baruch's Atomic Energy Com¬
aging Director of the Fund, stated
Moscow Silent
mission report, because of Russian dislike of the provisionforvetoproposed by members, and .they
today.
Questioned as to the rea¬
less punishment—surely a sine qua non ot effective control in this
Asked about Russia, Mr. Gutt are based on existing rates of ex¬
sons for Brazil's failure to fix a
field and of disarmament in general.
revealed that no word has been change.
The acceptance of these
resolution being passed by

Par Values of Member Currencies

Unprecedented *' Step in Fixing

live, is not cold-water throwing, but constructive in guiding public
mitted their exchange, rates to
opinion to goad our respective diplomats into future behavior that
consideration by an international
will lead to a state of world harmony.
\
;
:;

Unfortunately it seems that the very fact of the

imagined) Powers. It must be remembered

talk about rearmament has never been lacking. Under the
aegis of the old League of Nations an arms conference was initiated
in February, 1932 and lasted for three full years. But practical meas¬
ures guaranteeing effective execution were never agreed on; and so
the well-equipped military aggressions of Hitlerite Germany and

agitation

Powers for the former's own individual aims (as
been made of Spain pursuant to the East-West

that pious

Japan tore the world

more timeyforr the •
determination of their initial par

to. interfere in matters of internal administration. If this principle
should be abandoned, there ^11 be no future limitation dn Big

Disarmament

par value at this time,1 Mr. Gutt's
The controlling East-West rift in disarmament policy, as re¬ answer was Very general and received from Moscow about that
country's entry into the Fund.
the debate, is based on the underlying aim of the ■
unilluminating.
>
*■■' •
Soviet to get at our bomb secrets and at the same time to withhold
Whether any of the nine "post¬
The
Uruguayan
Government,
the all-important information about the number of their troops based
poning" countries will be ready
which is on the

vealed throughout

out, has been

way

at home.

So, we must conclude that Utopian aims for disarmament to take
the place of balanced military might, as the means for keeping the
peace, as in the past, actually^depend on
the important Powers.^if#!^

genuine^good will between
v..

f. Apart from the indicated Russian opposition to continuing inspection, there may well be -objection thereto by our next Congress.

proceeding

with

exceeding

cau¬

tion. Its decision to postpone

ing

the- par

value

of its

fix¬

Peso

reached the Fund only about half
an hour before the deadline. Ap¬

with

the

its

by the time
operations
in
Gutt did not reveal.

March,

value

par

starts

Fund

view

Brazil

Gutt's

statement

satisfied

not

with

its

parently the present government pf0S^ih|^par ;vglu0, If is being as¬
sumed
in
some
quarters
that
considers
it
necessary
for
the
Brazil already has discussed the
Congress to pass upon the par
matter with the Fund. Albeit in¬

rates

if? not,
terpreted as

however, to be in¬
a

guarantee by

Fund

that

main

the

unchanged.

all

the

rates

will

re¬

As the Execu¬
tive Directors of the Fund stdted
in their first annual
report, issued

September: 'We recognize that
cases the initial
par values
that are established may later .be
found
incompatible •, with
the

in some

maintenance of
national

balanced inter¬

payments

position at '&>■
high level of domestic economic
.

atomic energy, but in general armament as value. '•
iX,> :. v". z; 'Cl
activity.
When this occurs, the ?.
formally, suggesting some differ¬
Fund will be faced with new proi>-r
The Fund' won't be ready to be¬ ent
well, there may well be popular as well as legislative objection to
par value to which the Fund
lems of adjustment and will have
burrowing into commercial and industrial "know-how" by agents gin operations: before: March .1,
would * not
agree.
Asked by a
Not only in the case of

of an jnternationalvcommission.

Mr. Gutt "stated. While he did not

The Veto Still With Us
;

discuss the

which has

f
Similarly in the case of' the problem of the Veto,
nettled UN ever since its compromise-adoption in the original

Charter,
definitive action has been postponed. After long debate, and insist¬
ence by Mr. Vishinsky that the would-be abolishers of the Veto are
"war-mongers playing the game Of the small powers," and that the
privilege would not be waived by Moscow, a completely inocuous res¬
olution was adopted. This consisted of a weasel-worded substitution
by Australia,, merely calling- on the Big;Five Powers "to consult, so
that the use of the veto should not impede the work of the Security
Council". Hence it is difficult to infer that the Soviet will in the fu¬
ture make an about-face from its previous walk-taking and other
manifestations of unilateral control over decisions, particularly when
they affect her vital interests.Trusteeship Still

"Warm" Problem

In the realm of
difficult

trusteeship and colonial policy, agreement is as
anywhere. Here; as in other fields^ words do notmean

what

they are obviously saying. For Messrs. Novikov and Vishinsky,
vigorous and incessant championing of the rights of the
world's poor 15,000,000 non-self governing peoples, actually are zeal¬
ously trying to protect Russia's interest in the worldwide powerpolitics struggle; while likewise our Mr. Dulles, m his legalistic dia¬
lectics over disposition of the former Japanese Islands, is looking out
for the United States' "security" in the Pacific, pursuant to the pol¬
icies of our Navy and War Departments.
;
:
in

their

Although the Trusteeship Council will hold its first meeting next

March 15, the likely happenings there are in great doubt, as Russia
has bitterly opposed every one of the eight trustee agreements which

have been thus far! submitted; holding they are both unconstitutional
in terms of the Charter, and generally unfair. These agreements ap¬

ply to the territories of New Guinea, Ruanda-Urundi, French Togoland, the French and British Cameroons, Western Samoa, British
Tanganyika and British Togoland. In fact,, Mr. Gromyko has cast
considerable doubt whether the Soviet will participate at all in
deliberations of the Council.
*,
.
,

the

And in the long-term agenda in this sector there must be included

political, social and religious connotations.

Palestine, with all its

{

Meddling in Internal Affairs

Agitation for action by the World Organization for interference
with the sovereign rights of non-Big
Powers, like other issues, is
growing more turbulent rather than subsiding. In the case of Spain,
not only have the Russian satellites finally gotten UN's Political and
Security Committee to recommend the recall of all heads of diplo¬
matic missions from Spain; but Monday night at New York's Mad¬
ison Square

Garden the delegates from Poland, Czechoslovakia and

Yugoslavia demanded further future action,

even

sanctions—always an inflammable act. In the

case

the extent

of South

Africa,

correspondent whether the Fund
Brazilian proposed

had rejected a

it is known that many of the mem-;
par Value; iMri
ber .countries are not yet equipped the
negative. '

Gutt answered In
-

".v «'

to recognize the unusual circum¬
under which the initial

stances

par values were determined. It is
just at such times that the Fund

can be most useful in
with thei het^ssary ^financial ma-'
seeing that
The Fund iknbt
.necessary, exchange adjustnients
chinery, such as the setting up of
ish currency black markets by • its are
made in an orderly major and
depositaries to do business with
present action, Mr. Gutt explained competitive
the Fund. The Fund

...

cannot very

exchange depreciation

inquirer.

;

is avoided.'

;

>
c
>
a World Body if
His press conference was - held
important blank spots
Price and Wage Disparities
in the comfortable carpeted office
on the global monetary
map. even
f;
Recognized' •'
'
of the Fund on the ninth floor of
though under the Fund's Articles
H Street; an office "building
of Agreement, that institution may
which the State Department took present exchange rates there are commence operations when it has
in hand subscriptions representing over during the-war and from substantial disparities in. price and
65 % of the quotas of the eligible which the twins it helped hatch, wage levels among a number of
the Fund and Bank, are gradu¬ countries. In present circumstances,
membership.
ally squeezing it out.
however, such disparities do not
At any rate, the Fund has de¬
Present with Mr. Gutt were his baye the san^.* ;«ignifieance'
cided to postpone commencement
normal times. For practically all.
of operations until March, pre¬ Belgian assistant, ~M. Rolin Jaccountries, exports are being lim¬
sumably in the thought that -by queins,. and two former. United ited
mainly by difficulties of prothen it, as well as the world, will States Treasury officials, V. Frank
duction or transport, and the wide
be in a somewhat better condition. Coe and Edward Bernstein, .both
gaps which exist in some coun¬
It is generally appreciated that now attached to the Fund. A large
the press * at¬ tries .between the xojsi of-needed;
the Fund is a rather delicate ma¬ contingent - from
chine not designed for the storm tended the unveiling.
imports and the

well operate as
there

are

proceeds: of

and

stress

which

still

tosses

the

financial and economic world.
The
"Chronicle"
is
informed,
thatthere are noplans as yet to

statement

Since the
the

has

Fund

issued

most

been

fully workedoutas^o satisfy
the

different

ex-

by ports would not
-he' appreciably;

care-*

home

requirements
use
the
authority to establish of the 12 Executive; Directors. It
Fund offices outside of Washing¬ should be studied by all interested
ton,
^
and therefore is here presented
v
'
Mr, Gutt was at pains to explain in full (with the. exception of the
K

hairbwed

;%y;';^(&njge^-.&^
parities.

currency
many

to recoveir
war,

addition,

hpuhtrles have just begun
and

;

from^the disruption,pf;
efforts

restore the'

to questioners that the
of

ment

does not

bers

the -table
mean

announce¬

par

values

that the Fund guar¬

the

individual

maintain

selection.

that

clear

the

initial

the

members.

way

Fund-considered

parities suggested by
Since

there

of knowing what

any

date.

currency

The

world

settled.

The

value

par

at
is

some

still

future

too

un¬

"Chronicle").

announcement

does

•

their economies

into

l
I

Yuithermore, for

countries

combating

in¬

may

of.

the

bring theirs -cost structures

official! statement

line with those of other countries.

issue

Official Statement C
The

productivity -of

for

too- late

this

concern¬

now

expected

gradually

many

with

concerned

ing initial par values follows:'%
"The

International

Inflation; there is a danger that
Monetary change in the exchange rate-would I

wilt begin exchange trans¬
actions on March
1, «1947.x The

Fund

transactions of the Fund
at

will be

initial

the

have

been

manner

laid

par values which
determined
in- the

down

Agreement. The
currency

Fund

available

clusion

Fund's

will be suited to the circumstances
of

come

the

The

that it had rio choice but to accept

the

table of par values which has be¬

mem¬

parities of
duty,
he said, is to see that its resources
are
not imperilled. He made it
their

delay,

antees these parities. He said that

the ever-present super-nettlesome problem of

for the

reasons

par

toward;

intemai

tendencies

inflation; **

w"Iri yiew of all these; considera-

■

tions, the Fiiftcf has reached the

Fdnd

conclusion that-the proper course

value of each

of action is to accept as initial par

the

is stated in the schedule

below. Eight

aggravate the

value

the

of the 39 members change."

existing
h

- v,

rates
i

ex¬
.

Volume 164

Number 4552„

THE COMMERCIAL & FINANCIAL
CHRONICLE
of the

holding companies, collab-;
orating with the Securities and1
Exchange
Commission,^- develop
some

program which will result in

orderly

process

issues to market.

bringing the
•

The marked

the

success

offering

Commonwealth of Australia's 20-

3%%

year

Investment bankers are.looking
f forward to the New Year

One

bonds

the

encourage

poui^U
new

ifwhich;Will p
an immense
I'turi Of public Utility equity Offer| ingsi notseranch in the form of

is expected

Sydney

County
smalt

(

next, to become
Division

^of

American

Director <of

Marketing

Petroleum

the

Institute,

Acting Director Ralph K. Davies
the

Oil

Gas

and

the

which

This

Army Building Program
-Immediate action -is to be taken

construction, including building
conversion

Division

an¬

Petroleum
Conservation
Division of the Department of the

Interior.

served

■TD36;:,:;

Dec.

15.

Accepting
one

of his

temporary

tained in dismantling war
camps

would be used for

housing units.
he The, War Department estimated

^"..¥#41^:; When

^dertakW/ '.Ittvidvhdb* special assistants for the past four was
transferred to the OHice of
$8,500,000
of 10-year
sinking
and a half years, Mr. Davies said
Petroleum Coordinator for Nat
fund bonds, has alreadyv been 1
issues, but father largely a
ittpartr
*
'
started through the process and
tional
Defense
as ^ Director
of
j consequence of sales of portfolio
'"You have served in the Fed¬
is at present in registration with
issues under the operation of the
eral Government over a long pe¬ Marketing. In July, 1942, he be¬
: "death
sentence" clause ? of the
riod of years—faithfully and with came
Special Assistant to the
The Commonwealth's
j Holding Comply. Act.
'i
$25,000,- distinction—and I greatly dislike Deputy Petroleum
Coordinator, in
000 offering, which was
?.
Insofar as debt securities for
brought to the prospect of the Oil and Gas
the agency which later became
market at a price of 98%, was not
this industry are concerned, the
pivision^^ losing your 4ble assist*
the Petroleum Administration for
long imi moving?out< to investors ance over the
consensus is that new emissions
period ahead.
and has ruled at a sizable
War. Since theliduidation of. that ^
premi¬
wry likely will fall consider / ''However, X
ifuUy onderstaaid
um -since.:.■ :r-;:
c''
ably short of the high, marks of
•;
your reasons for this action and, wartime
agency, ,l Dr* Frey has
1944 and 1945. The reason here
in the circumstances, cannot well been
Pennsylvania Turnpike 2.*#$
completing ire official hisIs that in~ many cases the refill
offer /Resistance to thenu ; Your
Three bahkiiig ^ groups nought
fory Which, will bepublished eariy
nancing of higher coupon bonds
new; association - pr ov^des ah
the $46,000,000 issue of new bonds
next year.
yhas heen largely completed and
interesting and challenging field
I
demands for new money may be ; brought put by the/ Pennsylvania of work ond One'
iii which you
; *de fo r re d
DIVIDEND NOTICES
by circumstances Turnpike Commission on Tuesday will continue to be able to con¬
new

7,713

Press Washington advices Dec.
7,
which added that material ob¬

Assistant

Director of Refining-and Markets
ing of that Division from April;

Upon liquidation of the N.I.R.A., dwellings, authorized by Army
Dr.
Frqy was transferred
to engineers, according to Associated

With regret the resignation of Dr.

nounced

$60,069,752 worth of military

Department oi> Interior,
administered
the
code.

the: the

Recovery Act in the mar¬
keting section. After assisting in
drawing up the Code. of Fair
Competition for the Petroleum
industry, Dr. Frey was transferred

Frey, \vhp had been

to ^prepare for
issue shortly.
:

Petroleum Institute

31,.

Which char¬

recent

dustrial

Frey Joins

After nearly 19 years of gov¬
■■■; ernment
service, Dr. John W. Frey
has resigned effective Jan.

f Australians a Success
acterized

Dr.

3263

that the dwelling construction will
meet

about

current

15%

needs, at

of
a

the

Army's

cost of about

•

$41,329,500.

Construction

for

re¬

search projects will consume the

•

balance of the authorized amount.

DIVIDEND NOTICES

■

...

which

tend to

construction

discourage

beyond

new

essential

but the competition was not too

keen, judging

'case of equity issues,
compilation contained in a re¬

commission

priceof T00.939

the general

welfare.*'

Dr.TYey, a native of Depue,
111; Was graduated from the Uni¬
versity of Chicago in 1919 and the
University of Wisconsin in 1926,
when

tion being

he received the degree of
Doctor of Philosophy. After en¬
gaging in research work -for the
Bureau of Mines in the summer

loan Within

recep*

sucn as to result in
the complete disposition of the
a few hours.

The next

nearesthid was 10(^70

Commerce

later

the

same

year,

pon

which specified a cou¬ remaining there until 1933, when
he became advisor to the Deputy
rate of 2.60%, while the third

bid

was

that

means

either

through
by offering of
rights to shareholders, these
fix-pis must dispose of a total of

tmderwritlrfg

isroal)

2f»

street.

15,000,000 shares of

xnon

stock with

market

current

levels,

com*

valued

approxi¬

a group

100,15 for the same

cou¬

Administrator of the National In-

pon.

DIVIDEND

Congestion Clearing
The underwriting fraternity is
no
longer seriously concerned
With the matter of unsold .secur¬

ities. which accumulated,^ |n the
r
wake of
the-market's collapse
these stocks must be sold through back in September. Good progress
the niedium^ bf competitive bid* has heenmade ; in wo^
ding,"which meaim that'the bahk* such issues.

ersare-goings ta- mighty busy
Reports had
current that
calculating values and markets such unsold issues were being rap¬
in the months ahea<l
idly whittled away* hut It re¬
*"<* {-jmained' for James J. Caffrey, SEC
'5
- Cause for Concern Chairman, to sotthd the most re¬
>*
.^Always standing ready to take cent note of reassmrance. /
advantage of an opportunity to
Talking to newspapermen at the
J make a dollarr the bankers never¬ Florida convention of IBA he was

AMERICAN

Noble

January
the

Checks

1947,
of

will

inclined

are

fear that

much

confusion, may attend the
marketing of this vast volume of
stocks unless no precautionary
measures

taken.

are

—

Tire IBA group's report suggests that "timing of the sale of
these issues is % matter of con¬
cern to

can

asked about the fiscal condition of
underwriter firms and dealers in
view of
the
survey which the
agency had conducted, and
that the findings had been

of 25c per share on the Com¬
Stock, .-payable
December
31,
1946
to
Stockholders of Record at the close of busi
December 20,
1946.
Transfer books will
remain open.
ROBERT B. BROWN, Treasurer.

mon

ness

may

Dividend

position with

N. Y.

the

member firm. Box M

Trader

•

Veteran—'many

years experience execut¬
listed and over-the-counter orders-—
would prefer small trading inventory—
knowledge of all securities.
Box 0125

Commercial

Financial

Chronicle,
Park Place«New York 8, N. Y.

Company

Commercial

Chronicle,

Park

per

dividend

New York, N. Y.
December 17, 1946

Philip Morris & Co. Ltd., inc.

;

A regular-quarterly dividend of $1.00
Cumulative Preferred
4% 7 Series,
and the regular
quarterly dividend of 90<i per share on
the Cumulative Preferred Stock,
3.60%

UDELL, Treasurer, '

Preferred

capital

this

Corporation

have

per share on the

the

clared

a
dividend of ,62,/2c per share
Common capital stock.
The dividends
and
Preferred
Common
stock
are

January

on
on

det.

at the close of business on January

the

1947.

the Common Stock ($9 Par), payable
January 15,1947 to holders of Common
Stock of record at the close of business
on January 2, 1947.

ICEMP, Treasurer.

Pursuant to a resolution adopted at
the Stockholders' Meeting held on July
10, 1945, no Certificate representing a

The Garlock

share or shares of Common Stock of
the par value of $10 each is
recognized,
for any purpose, until surrendered, and

Packing Company
December 11,1946

the

Certificate

Common

COMMON pIVIDEND No. 282

15,

There has also been declared a quar¬
terly dividend of 37
per share on

both

payable
1947,1 to stockholders of record at
business December; 17, 2946*

-Series have been declared payable Feb¬
ruary 1,
1947 to holders of Preferred
Stock of the respective series of record

de*

37^c per share on
stock.
They have also

each

Stock

shall

Certificates

have

for new
the par value of $5

been

Issued

therefor.

Holders of Certificates for- shares of
Common Stock of the par value of $10
each are therefore urged to exchange

meeting of ;fhe Board of Dircotora,
held this day, a quarterly dividend of j
254 pet share was declared on the com>
a

such

Certificates, for Certificates for
Common Stock of the par value of
share, on the basis of two shares
new
Common Stock $5

new

mon stock «of the
Coihpaoy, payable
December 28, 1946, <to stockholders of
record at the close of business- Decem¬
ber 20, 1946.
R. M. Wapi.es, Secretary

Cumulative

per

pa/

value,

for each share of Common Stock of the
value of $10.
'

par

jlj.
L.

lt.
G.

HANSON, Treasurer.
jtiAJNoUN, Treasurer.-

General Mortgage 4%% Gold Bonds,

Preferred
three

Series E, due
to

Check»'Y^I:;^,':'lna''^ fe' Guar*"

anty Trust Co. of, N.

' ...;

July I, 1977

be called for redemption

■:

July 1,1947

v,-

Y., Dividend

Disbursing Agent

NOTICE OF PREPAYMENT

F. S.

CONNETTV
Treasurer.

Place,

December 18, 1946,

Great Northern Railway Company has heretofore irrevocably
City of New York to

New York 7, N. Y.

directed The First National Bank of the

.publish appropriate notices calling for

tedenption

on July 1,1947

the entire issue of the above mentioned Series E Bonds then out-

Standing at 105% -of principal amotmt plus accrued interest
-said date.

Over The Counter
V*

/""1

Nineteen

'(V!

Salary

c <v» „*

^ C

following.
or

partment of member firm

Financial

Chronicle,Eark Place,

.New^orfe'g^V. ;

185th Consecutive

,
.

Holders of said Series. E Bonds may obtain prepayment of said
at the redemption price thereof, viz., 105% of principal
together with accrued interest to July 1, 1947, by sur-

house. Thoroughly experienced
in

all

phases

listed

and

unlisted securities. Controls
with

business. Ability to work
salesmen

and

originate

•

The Directors have dedared from the

Accumulated Surplus of the Company a

business

December

December 16,1946. Checks

business

cial

New

Chronicle, 25
York

Park

8, N. Y.

Place,

A. C ALLAN,
'
Secretary and Treasurer
Philadelphia 32. December 6. 1946

By F. J. GAVIN,
St.

.'k■'"0

GREAT NORTHERN RAILWAY COMPANY

will be mailed.

Finan¬

as aforesaid in
within five days

after the surrender of such bonds.

the Common

stockholders ot record at the close of

FK19,

1946. Payment

Stock, payable December 31. 1946. to

special situations. Address Box
Commercial

27,

respect of bonds so surrendered win be made

final dividend for the year 1946 of one
dollar ($1.00) per

;

rendering such bonds with all unmatured appurtenant coupons
City -of New York, at its office,
No. 2 Wall Street, New York t5f New York, on or prior to the
to The First National Bank of the

Quarterly Dividend

over-the-counter securities

some

M-1211, Com¬

bonds

company

desires position in Trading de¬
'

experi¬

commission,

Box

mercial

years

Good

ence.

both.

amount

Trader Available
-

The Electric Storage Battery

TRADER

Paul, Minnesota

PreMent^wy
;'

November 7, 1946
:

^':;:.:' '

'..'

...

oils

S
k

Great Northern Railway Company

1946,
payable January 15, 1947 to stock¬
holders of record January 6, 1947..-

1219,

-the

REDEMPTION NOTICE

Stock was declared for the
months ending December 31,

•

been 'de¬

Ave.,NewYork 3,N.Y.

AT a mfedtmg of the Board of Di*
tlLrectors of the American Woolen
Company lield today, a regular
quarterly dividend of $1.75 per share
on

;has

25, 1347 'to stockholders

incorporated

Financial

Directors

regular

ing

?
1

cents

tills

per

American Woolen

•

—

19fr

fifty

quarterly dividend and
share
as
an
extra
dividend
on the no par value stock of
the Corporation
issued and outstanding, payable on and after
December
27,
1946,
to
the
stockholders
of
record on the Corporation's books at the close
Ot; business December 18,
1946.
MARSHALL NORRIS, Secretary.;

S. E.

1946.

United Shoe Machinery Corporation

Notice Ot

THE ARUNDEL CORPORATION
Baltimore, Md.
Pecember 13, 1940

share as
50
cents

In Wall Street* Desires

23,'

GtJlTTHBR, decretory.

WALLACE M.

Fully experienced trader* 20
years

record
a

stock

The Board of Directors of the Arundel Cor¬
poration has this day declared 25
cents
per

tpsiSpd
I JtvAL/Jciv

December

DtVlDENt) Ho.
dividend

capital

the

225 Fourth

not be

Order Clark

stockholders

O. P.

UNITED FRUIT COMPANY
a

The

••

Call for

clared

■*

PHILIP MORRIS*

regular
extra dividend

Company

distribution, through no
^fauirof its own the marketing

SITUATIONS WANTED

West

"good"

derly

]' Tt is*important, 'the IBA: com*
mitfee notes, that the management

Stock,

SITUATIONS WANTED

an or*

machinery of the industry
equal to the task."

and

^martin, Treasurer

dajr/de^
of $1,375

COMPANY
Streets

he said

that the total of undigested secur¬
ities afloat is now well below
normal and still going lower.

some means

be found tb^provide

business on
mailed.

Lionel

New York
Directors
of
the
Atnerican
Company
has
declared
the
dividend
of
25c
per
shfcre and
an

Board

the Investment banking

Industry, and unless

.Ekscmfodc.ix,W4&.

12, 1946

of record December 19, '1946.

NOTICES

Brooklyn,

The

theless

this

has

Joseph l.

?er share on the 5V2% Company, payable P>*eSeries Cumulative -on
erred
Stock <of
the

Manufacturing

■■

Directors

regular quarterly dividend

cember 31, -1946.

1, n.

Twerity-five tsettts ;(25^) pier
share will 'be paid January 15, '1947 on the
Stock of the Corporation, to stock¬
holders of record at the close of business De¬

Common

MANUFACTURING

•

Board
the

clared payable January

mately$3&pM;9G0.
And, it is interesting -to note,

vokk

December
The
elated

some

new

Dividend No. 3

1928, Dr. Frey went to the Bu¬
of Foreign and Domestic

self is hot necessarily complete,
J

CITY INVESTING COMPANY
.

A dividend Jdf

reau

priceptWith the

While this particular list in it*

a
2 V<> % coupon, and pro¬
ceeded to reoffer the bonds at a

of the Investment

( holdings under the law.

range

for

port of the Public Service Secur-

Bankers Asshi, lists a total of 21
i companies
which
must
divest
f themselves of certain of their

the

The successful group paid the

But in the

4 ities Committee
■

bids.

tribute to

Wi€fflTA River Oil
Corporation

HOI

THE COMMERCIAL &

and Business Analysts

Wall Street Bankers

of Market Bust

Changing Views on Inevitability
desperate
by the shortages created by the
war, they declared, was not mov¬
ing as it should to the market
places of the world*
1
Developments

of the last few

al¬

months—of the last few weeks

most^ it could be

said—have al^

tered the business

picture consid-

however, they point out
is probably too early yet,

erably
now.

they

say,

about what

•

wind

Some feel con¬
another month may
clearly and in sharp¬
the actual shape of

mean.

may

■S

reveal more

outline

make

ever.

question often asked,
prices stand in rela-

"Where will

er provision for the amortization
equipped armies from the lands
of the loans to be made, he feels.
upon which they have been living
trade amounts to only
back to the home country. So far Foreign
as
French politics' is concerned, 10% of the total volume of busi¬
ness done by this country but this
he feels, January also is the month
to watch. French politics can be 10% is the margin of profit, he
explosive and developments there points out. Only totalitarian gov¬
will be watched now with more ernments can get along without
than usual interest, he points out. foreign trade, he feels, and this
In his opinion, too, some con¬ only under conditions that would
prove intolerable in this country.
cern is being felt \ over whether
The expanding economy of the
England will be able to complete
United States needs a generous
her reconversion process before
amount of foreign trade, he thinks.
she exhausts the funds provided
Most foreign nations do observe
by the American loan. Germany
the terms oftheir financial obli*
will certainly stage a comeback
gations religiously, notwithstand¬
someday, he is sure. Sharing views
ing the experience which invest¬
known to he held in certain in¬
ors in this country have had with
formed academic circles, he
some
nations, and there is no
thinks that it would be impossible
reason why the
securities of the
to reduce Germany to an agricul¬

tural

influence

this

and

has
having turned
from
its major difficulties already is
readily admitted by them, how¬
the

management
will surely
itself felt upon such labor-

union demands upon

the proverbial corner away

bankers4 and the

the

analysts predict.
Public opinion
is stiffening against unreasonable

things to come. That business

■■-

their rightful place

demands,

/.given some signs of

■

in the econ¬
omy, it is thought. Any news con*
cerning the intentions of Congress
on labor legislation coming out of
Washington is being read avidly
by all of Wall Street* one of thO
bankers points out;
The unions will not be as suc¬
cessful this time in obtaining in¬
creases in wage rates should they
press for another round of wage
to

to be really positive
certain straws in the

fident, that

3204)

(Continued from page
satisfy their wants made

The Morgenthau

economy.

Germany is
generally accepted today, he

plan for disposing, of

management deliberations con¬
cerning pay that may be held dur¬
ing the coming few months, they
say." Unions that push their de¬
mands too far must figure upon

not

out German indus¬
would be necessary

feels. To wipe

trialism

the German

first to exterminate

people, he holds.

going on strike because manage¬
ment woh't give in to their un¬
reasonableness, they point out.
Strikes in some of the major in¬

Wisconsin to prohibit
the sale of the securities of the
International
Bank within
her
of

bank- dustries, of course, could have the borders
presages ill for the future
v er gives
the reply that the gen¬ effect of destroying the possibility of American foreign trade, one
eral level of prices will fall—must for an immediate improvement in Wall Street analyst who follows
fall
under the pressure of the the business outlook, they warn,
the foreign situation rather care¬
mountain of goods which is be- a fact which could have unfavor¬
fully points out. In fact, he says,
'*• ginning to find its way to market able
repercussions upon labor as the resignation of Eugene Meyer
■?>—but that the fall particularly at well as upon industry. >;
as President of that Bank is prob¬
the points where it occurs, will
With the world • demand for ably a clear-cut indication that he
; be healthy.
The greatest declines goods as great as it is because of himself feels that the Bank faces
may be expected, he believes, in
the terrific destruction wrought a hopeless situation. If so, then
agriculture,
textiles — the
soft by the war and with the market as his resignation can only give force
goods in general—and in some restricted in favor of the United
to the justice of the Wisconsin
scattered industrial lines, such as States as it is because the war
action, he believes. Certainly, un¬
small
radios produced by not- left our
productive mechanism in¬ less the Bank lends money to na¬
well-known
manufacturers.
No
tact,»the stage is indeed all set tions for; more constructive pur¬
decline in prices can be expected, for a
high level of both produc¬
! however, in the end products of tion and employment in this coun¬ poses than just providing their
large-scale heavy industry where try, one analyst reasons. The fac¬ armies with new uniforms, the
costs have risen so, he thinks.
"
tories of Germany and Japan espe¬ money will never be repaid and
-

J The retail trade, according to
another banker, is taking advan¬

tage

the

business de¬

omies of these countries may never

goods to dis¬

heavy

mand for Christmas

fully recover. The United States
alone of all the major industrial

of all their high cost mer¬
now while they can.
It
remains
to
be
seen,
he says,
whether in January the merchants
pose

chandise

;

orders with

place

the manufac¬

turers for the more standard type

which in
the past have usually been found
in great abundance and variety
lower-priced

,of
;
:

their shelves.

will

have

items

Retail merchants

realize, too, among

other things, that consumers no
longer want to buy such items as
men's "sport shirts" in place of

the

regular white shirts and that
.

certain substitutes to which the
4 public has become accustomed are
;

now

than

the

generally
preferred
original products, he

points out.
changed
complexion
of
Congress has given rise to the
hope, too, that now much needed
revisions of labor legislation can
be made without delay, The Wag¬
ner Act, it is held, is unwise legis¬
lation. Some apprehension exists,
however, that the Congressmen
may, in haste, pass equally illconsidered revisions tending much
too far in the opposite direction.
Congress should not pass any law
prohibiting the right to strike, for
example,
one
banker
believes.
What is needed, above all, is legis¬
lation that will discourage labor
leaders from approaching the con¬
The

ference

table with

and insolence they

razed to the ground
he says, and the econ¬

cially were
in this war,

the

cockiness

have often dis¬

the bank must surely

Govf
proportionately
greater than the one which the
United States has extended to
Great Britain, he believes. When
sound amortization principles are
followed in the granting of for¬
eign loans,' healthy international
trade results, he thinks.
: •• • ;
eminent

the

greatest need of the mo¬
the polit¬
ical setting in which it is placed-^
is for intelligent leadership, both
the close observers of the indus¬
trial scene and students of busi¬
ness genera 1 iy agree. Recent
The

•

fail, he is

Sunshine Consolidated

M. S.WIEN & Co.
ESTABLISHED 1919

Member* N,
40

HA. 2-8780

Exchange PL, N. Y. 5

Teletype N. t. 1-1397 '

Ass'n

Dealers

Security

extent the better tone

concerning the prospects for
in

ness

situation
factors, but still the an¬
political

the

ments

and other

alysts closest to the

might have acted
greater wisdom, however, if

148 State St* Boston 9, Mass.
CAP.

Tel.
N.

0425

«.

Teletype BS 259

Telephone HAnover 2-7914

•

scene' hesi¬

state positively

tate

busi-f

view of certain improve¬

that the

market

and business trends is as
that. Many of the analysts

averages

in complete agree-?
that the business picture has

anyhow
ment

Dithomat

maintain production

ployment at high

Corp.

Boston Woven Hose & Rub. Co.

and,
continue

ight e n e d considerably

given wise direction, can
to

Diamond Alkali

are

Merrimac Hat Corp.
Linn Mfg.

and em¬

Petrolite

levels,

Co.

International Buttonhole
Monolith. Port. Midwest pfd.

Teletypes-NY 1-971

HAnover 2-0050

Ralph F. Carr & Co., Inc.

Abitibi Power & Paper Co.

31 Milk Street,

Brown Co.

j-Boitoo

Minnesota & Ontario Paper

French

Hubbard

Co.

6442

Boston 9, Mas#.
Teletype
BS )2S

New York

Heoever 2-791)

Bonds and Shares

Communists to seize control of the

government, he points out, can
only tend to strengthen the hope
that some observers have dared
to entertain, that the rebuilding
of the European economy along
traditional
lines might proceed

r.rn mabzs a r.o- Inc.

sians

cpprnBTTctT^

New York 4. N. Y.

50 Broad Street

AFFILIATE: CARL MARKS & CO. Inc.

area

Tito

including

zone,

around

and

Securities with

Specialists in

However desirable it may

P 30 FEDERAL STREET, BOSTON 10 '

Specializing in ^Inlisted Securities

for Russia: to
vacating positions she has held
East Europe; .ktili it is a little

puzzling

Putlic

>Vc '1 SV Ajy<- i

large Volume

business

for

;

UtilityIndustrialReal Estate

car

■

r'7/r\.

Bonds.

i-v
v

'"-V.-.,'

*'.? **
1 •'-*

v x'*•»%

\V«

v v

^Seaboard Fruit Co., Inc.

^General Products Corp.
p ' A> P- *
l,•?. -v * -'1-

-y

; ix\

'"Susquehanna Mills

Preferred and Common Stocks
Empire Steel Corp.

RALSTON STEEL CAR CO.
(freight

Teletype BS 22

Bank*—" Insurance

of ? Freight Car#

long-term

Established in 1922

Tel. HANcock 8715

observers, he

many

Shortage

Mem England Unlisted Securities '

be in Western eyes
be

New Eng. Market!

Frederick G. Adams & Co.

Yugoslavia,

his position, too,

cult to maintain

the

even

himself might find it diffi¬

he feels,

Bond*
TEXTILE SECURITIES

Public Utility Stocks and

CHICAGO

completely from the East Euro¬
pean

Industrial Issues

Investment Trust Issues

decide to withdraw

should

Specialize in all

Insurance and Bank Stock*

FOREIGN SECURITIES

without undue delay. If the Rus¬

indicates

U. S. Radiator Pfd.

FOREIGN SECURITIES

probably reflects to some
of feeling

erages

Lumber & Timker

Gerotor-May

NEW ISSUES

strength in the stock market av¬

correlation between st9ck

V Wisconsin,

played there, it is felt. Employer's points out, why Russia should be
well-f-ed, well
property rights should be restored calling * her

Delhi Oil

Rails

ment in business—as in

he thinks.

failure

3203

improvements in the interna¬

the

page

Commons & Pfds.

loan

tional political

and

see

Old Reorganization

agreed to -give the Spanish

really has the necessary she had used her good offices to
facilities today for supplying all
compel a settlement of some sort
the great markets of the world,
he is convinced. The foreign bus¬ by the various countries now look¬
iness which the industrialists of ing for financial aid of the old ob¬
Germany and Japan used to do,
ligations upon which they have
too, the United States can now
defaulted and to insist upon prop-,

situation also justi¬
fy greater
optimism regarding
possible trends in business,- one
prominent b a rik«T holds. The
large-scale withdrawal of Russian
troops from
German and East
European territories in general

contents

index of

significant that Argentina has

powers

take over,

For detailed

attractive, through safeguards, to
American investors, he feels. It

convinced.

with

Ultl INDEX

International Bank can't be made

weeks, too, the de¬

In recent
cision

lion to former levels?" One

■

Thursday December 19, 1946

FINANCIAL CHRONICLE

BOUGHT-SOLD-QUOTED

manufacturers)

f.--.

'-:Pp■

^Prospectus oii request

Market about IVi
1946

high

Circular

about

208 SOUTH
•

epfcg. $ t

% T. BONN & CO.
120 Broadway

New York 5

Telephone COrtlandt 7-0744
Bell

Teletype NY 1-886

LERNER & CO.
Inactive

REITZEL, INC.

REMER, MITCHELL &

Available
»'

LA SALLE ST., CHICAGO
V- V,

•

V- 't ;•

4
'

WESTERN UNION TEIEPRINTER "WUX'l

PHONE RANDOLPH 3736

•
..

BEll SYSTEM TELETYPE

CG-989

Hill, Thompson & Co., Inc.
Markets «id Situations for

Securities

120

10 Post Office

Square, Boston 9, Mass.

Telephone Bobbsrd 1990.

Teletype Bs 69.

Dealers

Broadway, New York 5

Tel. REctor 2-2020

Tele. NY 1-2680

Full text of Commercial and Financial Chronicle : December 19, 1946, Vol. 164, No. 4552, Section 1

FRASER