Full text of Commercial and Financial Chronicle : December 23, 1948, Vol. 168, No. 4762

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ADM.

DOS.

1948

DEC 2 3

Uft«ARY

Investment Bankers

Association Convention Issue

Reg. U. B. Pat.

New

Number 4762

Volume 168

Office

York, N. Y., Thursday, December

Price 30 Cents a

23, 1948

Copy

Association of America
Holds 37th Annual Convention

Investroent Bankers
By MELCHIOR PALYI

■

holding indications are overwhelming that global inflation
has not run its course, and even most carefully managed boom is
bound to come to an end, points out hedging policies of past inflations are futile. Sees possession of "substance" logical way of
Dr.* Palyi,

hedging, if conditions

able, contends

satisfactory, but because gold is unavail¬
stocks are a limited hedging haven, along

common

business.

The 37th Annual

question,
from the

uncertainties of our times raise the
forcefully than ever before, of hedging against them

The extraordinary

held at the

point of view.
They create
more

Association of America was
Beach Hotel, Hollywood, Fla., from Dec. 5 to 10, inclusive. The

Hollywood

before.

ever

At the risk of

being

ing

plati¬

tudinous,

[ As We See
Confusion Still More

some

Confounded

"first

hedging—

Pilyi

Melchior

Dr.

Rob¬

tonio,

Collins, Dewar
contained in this
"Chronicle."
i The new Board of Governors
named by the respective regional

issue of the

Julien H. Col¬
lins

Julien

California

The

were

elected

Hal H. Dewar

Albert T.

Armitage

agreement that the first step was to reelect President Tru¬
Coffin & Burr Incorporated, Bos¬
we
are
discussing, disregarding man. Whether this line of argument had anything in par¬
ton; Hazen ST Arnold of Braun,
short-run hedging maneuvers on ticular to do with it or not, President Truman now finds
Bosworth • & Company, Toledo;
Commodity and security markets, himself in the White House to stay for another four years.
John F. Fennelly of Glore, Forgan
and generally speaking in current
<Ss,Co./ Chicago; Joseph T, Johnson
He has four years ahead of him, but he has his
transactions—can be only of the
of The Milwaukee Company, Mil¬
long-term character. It is senseless
utterances and those of his supporters during the past
waukee; and Laurence M. Marks
to think in terms of hedging and to
four months or so immediately in front of his eyes.: First
of Laurence M. Marks & Co., New
expect to sell the hedge the next
York City.
of all, he can hardly forget the undertaking that he will
morning at a profit. But that is
The principal speakers at the
keep business going strongly and smoothly, giving em¬
exactly what many people do, or
Convention, in addition to Julien
think of doing, especially in con¬
ployment and high real wages. He has in effect given
H. Collins, the retiring President;
nection with common stocks. No
assurance that for the length of his service at all events
which is what

can

one

But he who

Run is.
tion

tell how long the

Long-

and

(Continued on page 62)

seeks protec¬

;

Hal H. Dewar, the

ter,
Los

States

Kirkpatrick, Kirkpatrick-

S. R.

Pettis

Central

& Hurry,

Walter

Angeles.1

Omaha;

Co.,

Richard

Simmons, Blunt Ellis &

Simmons,

Chicago.

incoming

(Continued on page 59)
PICTURES taken at IBA Con¬
vention and of the hew

Officers

ation

appear

and

Associ¬

Governors

in the PICTORIAL Sec¬

Addresses and committee

tion.

reports start on page 17.

quick capital gains.
not just a virtue

"Patience"

Benjamin A. WaL

Bingham,

against the abnormal risks
in this kind of world,
distinguish that need from

the desire for

George W. Davis,

San Francisco;

inherent
must

;

Davis, Skaggs
& Co., San Francisco; Edward C.
Henshaw, Brush, Slocumb & Co.,
:

Vice- Presi¬
dents

groups are:

Collins & Co.,

Chicago.

Eichelberger

and Nadler are

Texas,
succeeds

who

Inland Steel Co.;

the

dresses of Messrs.

:oast, San An¬

; principies"
should
be
.

General
of the
United States Army, and Dr. Mar¬
cus Nadler, Professor of Finance
at New York University. The ad¬
of

Robert

ertson & Pan-

President

the

Assistant

dall,

Hal

Dewar

Dewar,

—?

President, were Clarence B. Ran¬

for

year

During the past national campaign one of the most fre¬
quently heard arguments of those promoting the candidacy
of President Truman was to jthe effect that a "boom" was
under way which would, if not controlled or checked, in¬
apropos.To begin
evitably sooner or later end in a catastrophic "bust." Par¬
with,- invest¬ ticular remedies proposed for: dealing with the situation
un e n t
for
varied from doctor to doctor, hut there was of course general

reminder

forthcom¬

the

•

as.

President

EDITORIAL

■

Association

elected

confu¬

sion, too, than

i
><

Convention of the Investment Bankers

-investor's^

Dec. 5-10. Hears addresses

Hollywood Beach Hotel,^ Hollywood, Fla.,

by Julien H. Collins, retiring President, Clarence B. Randall, General Robert
L. Eichelberger, Dr. Marcus Nadler and the newly elected President of the Association for the ensuing year, Hal. H. Dewar. Receives Committee reports.

are

with real estate and one's own

Meets at

■

£ (JHrrrij

(Continued on page 60)

State and

Michigan Bell

Municipal

Telephone Company
Forty Year 3%
Due

% Debentures

R. H. Johnson & Co.

1988

Established 1927

October

15,

Prospectus available

INVESTMENT SECURITIES

request

Bonds

64 Wall

PHILADELPHIA

BOSTON

Members New

York Stock Exchange

Troy
_

Wall Street, New

Boston

Chicago

Philadelphia Providence

Amsterdam

London

York 5

Albany

Buffalo

Scranton

Harrisburg
Wilkes-Barre
Woonsocket

Syracuse

Washington, D.C.

Office: 26, Bishopsgate,
London, E. C.

Branches in India, Burma, Ceylon, Kenya
Colony, Kerlcho, Kenya, and Aden
and Zanzibar

Paid-Up

Reserve
The

Bank

Capital—-£4,000,000

Capital——£2,000,000
Fund—-

£2,500,000

conducts

description oi

every

banking and exchange
1

N. Y. 5

52 WILLIAM ST.,

OF NEW YORK

Bell

Bond Dept.

Teletype: NY 1-708

New York

THE CHASE

HAnover 2-0980

Teletype NY 1-395
Wires Connect

Private

j,For Banks, Brokers

business

Trusteeships and Executorships
also undertaken

and Dealers

BRITISH

LIMITED

the Government in
Kenya Colony and Uganda

Subscribed

HAKT SMITH & CO.

Montreal

NATIONAL BANK
OF

THE

CITY OF NEW YORK

Toronto

Buenos Aires

Bankers to

Head

THE NATIONAL CITY BANK

Springfield

NATIONAL BANK
of INDIA.

Bond Department

Street, New York 5

Underwriters and
Distributors of Municipal
and

SECURITIES

& Electric Co.

BONDS & STOCKS
COMMON

Bought—Sold—Quoted

OTIS & CO.
1899

(Incorporated)

CLEVELAND
New York

Michigan Gas

Bearer—Regis ter e d

Corporate Securities

Established

CANADIAN

Chicago
yDenver
Cincinnati Columbus Toledo Buffalo

Dominion Securities
SUTRO BROS. & CO.
Est.

1896

Members New York Stock

120 Broadway, New

Exchange

Grporatiqn
40 Exchange

Place, New York 5, N.Y.

York 5

Telephone KEctor 2-7340

IRA HAUPT & CO.
Members

York Stock Exchange
Principal Exchanges

New

and other

111 Broadway, N.
WOrth 4-6000

Bell System

Teletype NY 1-702-3

Boston

Y, 6

Teletype NY 1-2708

Telephone: Enterprise 1820 1

COMMERCIAL

THE

(2598)

Polaroid Corp.

Thursday, December 23, 1948

FINANCIAL* CHRONICLE

lit

Alabama &

By EDMUND W. TABELL*

Queens Borough
Gas & Electric
6

BOUGHT

Member, New York Stock Exchange

Lighting

Long Island
System)
—

SOLD

—

in 1949

New York 5

Teletype NY 1-583

Lonsdale Company

—t

other,

Members

York

Stock Exchange

York Curb Exchange

New

BROADWAY, NEW YORK 5
REctor 2-7815

Tel.

New York

clearings, j interest
rates,
commodity priced, purchasing

tion.

and

also

Tele. NY U610

TRADING MARKETS IN=

INDUSTRIALS

LOW PRICED

AND OIL STOCKS

MINING

from the

Stocks Removed

Exchanges

York

New

STOCKS

OBSOLETE

STEIN & COMPANY
Members Nat'l Ass'n of Securities
William

27
I

St., N. Y. C. 5, N.

City 2, N. J.

Montgomery St., Jersey

Tel.

Dealers, Inc.

Tele.: NY 1-1055

DIgby 4-2190

intangible

the foreign situa¬

relates to

the

many

Common

Co.

sheets.

and " balance

BANKERS BOND £2i
*

Incorporated
1st Floor,

Kentucky Home Life Bldg.

LOUISVILLE

KENTUCKY

Long Distance 238-0

Established

Bell Tele. LS 1R*

1856

ing

the

in the

price trends of shares. It requires
exhaustive
research
by trained
I

which

fundamental

studies

sug¬

Stock

checking, I

of Technical
reason

use

for

Approach

the

technical

the

increasing

approach is

York

Curb

technicians.

both ap¬
extremely useful.
their strong points and
their weak points. Pos¬

said

before,

are

CANADIAN

Exchange

that

Commodity

Exchange,

Board

Chicago

New Orleans

from

often

CHICAGO

DETROIT

PITTSBURGH

very

SWITZERLAND

1420 Walnut

120 Broadway r

St.

New York 5
BArclay 7-7835
between
1

Philadelphia 2

PEnnypacker 5-5976

Private Wire System

Philadelphia,

York

New

Angeles

and Los

Recent Memos

to discourage
technical work.

mean

'doing

Strawbridge & Clothier

going to base your

only

tern.

lowers

potentially attractive pat¬
believe a great many fol¬
of the fundamental ap¬

NORTHWEST MINING

SECURITIES
For

MINING

Immediate Execution of Orders

Sp-43 on Floor
of Exchange from 10:45 to 11:30
A.M., Pac. Std. Time:
Sp-82 at
or

BANKS

Quotes call TWX

John B. Stetson

Warner Company
—

★

—

Byllesby & Company

PHILADELPHIA

OFFICE

Stock Exchange Bldg.,

Phila. 2
Teletype

Telephone

PH 73

Rlttenhouse 6-3717

lllllllllllllllfllllllllilllllllllllllllllll
Trading Markets

American Furniture Co.

Moore-Handley Hdwe. Co.
Dan River Mills
i

Scott, Horner &
Mason, Inc.
Lynchburg, Va.
Tele. LY

LD 33

Miiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii

BUY

SAVINGS

BONDS

Royal Bank of Scotland
Incorporated by Royal Charter

1727

HEAD OFFICE—Edinbnrgh
Branches

throughout Scotland

LONDON
3

8 JVest

OFFICES:

Bishopsgate, E. C. 2

Smithfield, E. C. 1

Charing Cross, S. W. 1

Burlington Gardens, W. 1

W. 1

SECURITIES AND

BRITISH

SOUTH

AFRICAN
■'

SECURITIES

•'

STANDARD SECURITIES
-

CORPORATION

Members N. Y; Stock Exchange and Other
115 BROADWAY

Stock Exchange
Spokane

Telephone BArclay 7-0100

Brokers

Principal Exchanges

Peyton

NEW YORK 6, N. Y.

Teletype NY 1-672

TOTAL ASSETS

£153,656,759

Members Standard

Goodbody & Co.
-

H. M.

64 New Bond Street,

Dealers

Branches

Associated

Banks:

Underwriters

Building, Spokane
at

GENEVA,

■

CORPORATION
•

happy if we

other hours.

Exchange Bldg.
N. Y.

erages

CANADIAN

Cotton Exchange

YORK 4,

Request

BUCKLEY SECURITIES

buying and selling decisions on
such graphs before you have had
adequate
training, I warn you

INDUSTRIALS

■

NEW

But if you are

Inc.

And other Exchanges

N. Y. Cotton

Memo on

proach would be saved from some
serious errors if their attention
graphs
or,,
almost every stock were drawn to potentially favor¬
listed on the New York Stock Ex¬ able or unfavorable situations by
change and the more r important the occasional use of the technical
speculative bonds and the more approach.
J '■
-1
active issues on the New York
Prospects for Stock Price
Curb.
In addition, we also have
Enhancement
charts on the various market av¬

CANADIAN

Trade

COMMON
•

the fundamental

Cotton Exchange

York

New

not

vou

Use

accuracy in forecasts.
consider that above average.

We Maintain American Markets For:

Exchange

New

ENGINEERING

With all
and
double

checking-

this

Members

York

AETNA STANDARD

conclusion is arrived at.

gested.

One

branch offices

studies, together with net
changes and oscillators. We have
various so-called breadth of the

such as the Dow-Jones, the
So much for that.
Our main
New
York
"Times,"
the
New topic is the stock market and what
sibly the weakest point in the
"Herald
Tribune"
and issues present the favorable op¬
fundamental approach is the fact York
Also, we portunities for price enhancement
that it does not take into con¬ "Standard & Poor's."
on
the more active in 1949.
sideration the psychology of the have-data
commodity futures.
This-data is
investing public.
A year ago this month, I pre¬
in the form of point and figure
Quite often stock will be earn¬
dicted
that
the
stock
market
charts of which I will tell you
ing $3 a share and will sell at $100
would reach the low for.the year
more later.
Taking into consider¬
in the first three months of 1948.
*
Stenographic report of an ad¬ ation the various charts of half This proved correct as the lows
dress by Mr. Tabell made under point, one point and three point were reached in February.
The
the auspices of Draper, Sears & fluctuations, we have over 2,000 rest was not so
good. I expected a
Co., Boston, Mass., at the Boston charts of this type showing fluc¬ high in mid-year close to the 200
Stock
Exchange, Boston, Mass., tuations over the past 10 years or
(Continued on page 73)
more.
In addition, we have availT
Dec. 14, 1948.

H. Hentz & Co.
New

Direct wires to our

average

opportunities get 70%

maximum

wa.y I can illustrate is the type
speculators not only in this' coun-'
of work that we do at my office
try but all over the world. Briefly,
of Walston, Hoffman & Goodwin.
it is a study of supply and de¬
We have, roughly, charts and
mand; a study of the effects which

both have

quite often result in obtain¬

countless number of investors and

Both have

Bought and Sold

range

direct than
against it.
'
approach.1 With¬
Conceding that both approaches
out the compulsion of broad eco¬
We are not so concerned with nomic
training or the constant have their strong and weak points,
causes.
We are more, concerned
it
would
seem
evident that a
study of individual industries it is
with the effects that these causes
combination of both approaches
possible to be aware of the im¬
should bring better results than a
may have on security values. The
portant changes in price trends.
technical approach is based upon
blind
adherence
to
either ap¬
However, its relatiye simplicity is
;he principal that the market is its
In fact, many of the
perhaps its greatest danger.
If proach.
own best barometer and that tfie
larger groups and individual in¬
you believe that by the use of a
supply and demand of stocks will few technical gadgets you are on vestors use both approaches, if
govern the market's future moves.
In
the road to a life of ease, you are only for checking purposes.
The technical approach requires
my own work, which obviously is
in for a cruel disillusionment.
the study of a vast amount of
concentrated on the technical ap¬
To rbally do a good sound* job
technical data in order to evaluate
proach, I find the fundamental ap¬
on- a technical approach requires a
the relative strength of the buy¬
proach is of inestimable value in
great deal of work and a great
ing and selling pressures which
substantiating technical evidence
deal of training to really prop¬
cause the fluctuating willingness
or, in some cases, as a warning,
to buy or willingness to sell of erly evaluate the different tech¬ when
the technical picture has
nical factors.
Possibly the best

proaches

Standard Oil Ky.

Mobile, Ala.

various moving

analyst.

Bought and Sold

psychological -factors,

will

earnings

The fundamental approach is the
field of the economist and security

and competent

Stock

of the effect of fundamental fac-^
tors, plus

individual com¬

fundamental changes cause

Ashland Oil & Refining

monthly

and

investing

the management

revealed

statements

DIgby 4-3122

operation of i

panies

York 6

39 Broadway, New

imore

the

and

facts relating to

Exchange

Chicago Slock

The

fundamental things such as

factors such

Slock Exchange

New York Curb

much

bafnk

power

Members

900

NY 1-1557

New Orleans- La.- Birmingham, Ala.

have

over

charts.

Now York 4, N. Y.

HAnevar 2-0700

...

other,

are

many

Joseph McManus & Co.

able

York ptock Exchange

Members New

25 Broad $t.r

approach;
—

speculating lows, short ihterest, issues traded,
odd lot purchases and sales.
We
better than
public can often go to wild ex¬
also use .various buying and sell¬
tremes of optimism or pessimism.
the.use of
ing pressure gauges.
■
,
either one by
Quite often these changes in mood
The physical labor of keeping
are
not
timed
to
fundamental
itself.
this data up to date requires a full
The fundachanges. In many" instances,* the
eight-hour day of one person. The
market will anticipate a funda¬
mental ap¬
and interpretation of the
mental change and discount it. In study
proach
is
a
other cases, the market will refuse graphs requires a lot more addi¬
s t u d y of the
Edmund W. Tabell
tional time. The forecasts are not
to recognize a fundamental
causes of why
based upon one single indicator.
security prices fluctuate. Its main change until long after it has oc¬
Each graph or chart is checked
concern
is the broad,, economic curred. The additional use of the
against, many
others before a
trend. It takes into consideration technical method, which is a study
and

frfc PONNELL & CO.

Steiner,Rouse&Co!

psychology of the investing or
which
include
speculating public was extremely (market. . graphs
optimistic in the first instance and studies on volume; number of ad¬
vances
and declines, highs and
the.reverse in the last case.

with

each

the

con¬

junction

Request

share and be selling at $10 a
share. Now, that was true because

and

used

share; .and quite often, as is
today, a stock will be earning

true

approach.
They are both
extremely
valuable

Bought—Sold—Quoted

market: One, the fundamental

approach. There are two approaches to the

the technical

New

Bought—Sold—Quoted

going into our main topic, which is the outlook for the market and the outlook
for individual stocks, perhaps it might be advisable to examine the background of the tech¬
and the

120

stock prices

Before

nical

Prospectus on

has already discounted this. Predicts low point in

of 1949, but looks for no serious business slump. Points out importance of selectivity
market both as to groups and individual stocks, and places rails as having best possibilities of
appreciation, followed by building and machinery industries.
*

in first quarter

Hanseatic
Corporation

BArclay 7-5660

Louisiana Securities

methods, approaches and limitations in stock market analysis, Mr. Tabell traces prob¬
able effects of recent developments on stock price trends. Looks for corporate earnings to decline from
10% to 33% in 1949, but holds market

QUOTED

New York

120 Broadway,

Goodwin

After describing

Preferred

(Part of the

Partner, Walston, Hoffman &

Kellogg. Idaho and Yakima. Wn.

Glyn
Williams

Mills

Co.

Deacon's Bank, Ltd.

•

Volume

COMMERCIAL

THE

Number 4762

168

INDEX

New

Articles and News

';Uints

What Stocks

Own in 1949—Edmund W. Tabell.

Construction—Roy Wenzlick.,.,
Labor-Management Responsibility—David McCord Wright.........
Reasons for Higher Rail Rates—Jules Backman
Importance of the Interest Rate—Dr. Per Jacobsson
Marital

Are

Deduction

and

Stresses

10
-

10
12
13

Outlook for Real Estate and

John

deflation, and thus importance of

Indonesians Recovery—Herman J. Friedericy
....................
Are Profits Under Competition Ever Too High?—Clarence Francis..

There

Split Gift Under Revenue Act of 1948
14

Against International

Winning

can

which

and

Capital Market— Marcus Nadler..
18
Investment Banking and the Future—Julien H. Collins....
19
Railroad Committee Discusses Present and Prospective Rail Outlook "20

Governmental

Securities

the

Bond

Sees

Municipal Committee Cites High

Record

of Local

Tho^e in Attendance at Convention;
State Legislation Committee Favors<New Uniform
if

Investment

Bankers

37th

Profits

Means

Government

Counteract

Democrats
about the

-A

Tate

Says

Set-Up

•

L. L. Moorman Commehts

Securities

Now

Exchange

Cleared

„

Golf and Tennis Winners

See

claim

particularly

par-t

any

charged

IBA Convention

Cover
9

The

Recommendations.......;....

tremendous

;

shortage

occa¬

and

improvement

machinery for efficient production
arid' reduction of labor cost. Since

Einzig—"The New Bilateral System".,....... v-4-•

1929

From

by 12 million and the population
by 20 million.
v

Washington Ahead of the News—Carlisle Bargeron Uv
.

.......

Observations—A.
Our

.V.........

?.<

s.v:

Public Utility

plants

Governments

'•!'

Offerings

;■

Security

Prospective

79 :

Reporter's Report

Our Reporter

Securities

Railroad Securities

Salesman's

Securities

Now

Comer.

The State of Trade arid

economically the current demand
for their product.''
Our vast business
to

continue

activity

v.....-

Industry

...

Washington and You.

.v.......
1

Twice Weekly

Drapers'

and,

COMMERCIAL

and

Gardens,

Edwards

c/o

•

Park

DANA

Place,

REctor

-s

ary

COMPANY, Publishers

New York 8, N. Y.

2-9570 to

WILLIAM

DANA

President

Offices:

111.

135

(Telephone:

Salle

State

C.,

Prince

econ-l

Eng-

ancj

for 20 years head of the Stock

9 million

were

\Second
wdiere

firm

which

lion

was

the

World
-

War.

-would

unemployed.
between

DIgby

year

the-outbreak

bore

1.90

Yet

expect

holdings

were

times

holdings ..of

today,
with

money.

INVESTMENT SECURITIES
509

$67^ bil¬

such

are'$102.8

Stix & Co.
...

St.,
0613);

and
per

Monthly
per

Note—On
the

rate

under

the

matter

office

post

Act

are

Febru¬
at

these

Today

billion

ning
a

the

rate

$175

billion

Members St. Louis Stock Exchange

1.70 times such personal

year or

holdings.

Slichter

Professor

states,

"This

happened between the first quar¬

his

the

and

ter

1948.

second

quarter

During, that time the
Tate

nual

of
an-,

of business; spending
dropped from $38.5 billion to $37.2
billion, but this was more than
offset by a
ri^e in the annual rate
of spending for consumer goods
from $172.0 billion to $175.1 bil¬
lion."
The

has increased

war

capital goods and

have

not been

shqrtages

labor.'which

when

Industrial Bond

Paper
over

manufacturer
Million.

Net quick
60%.
Interest

States,.

and

$35.00

some

made

Members
year:

New

amount

„

3
over

times.
Data

request

George Birkins Company
40

Exchange Place, New York

WHitehall 4-8957

5-1

Tele. NY 1-1404

(Continued'on page 57)

The

Public National
Trust

Record

York

Bank

^Company

New

York

'.'J'i

per

PREFERRED STOCKS

the

Analyses

—

fluctuations

funds.

Winters

Crampton

Corp. ;

year.

assets

covered

matje up and can¬

consumer

interested in offerings of

S.
of

Monthly,
^Foreign 'postage extra.)

account

with

alone

assets

charges

March

Record—Monthly,
(Foreign postage extra.)

Earnings

Approximate Price 64%

time.

Accordingly,
^spending eases
local governments will make up
the difference; overall the great
Federal expenditures is competnot; for

4% First Mortgage

Spencer Trask & Go.

Quotation

year.

Rates

United

Union

year.

street

ST.LOUISI.MOS

and

New

exchange, remittances for for-eign subscriptions and advertisements must
be

ouvel

personal

Dana

of
Canada,
$38.00
per
Countries, S42.D0 per year.

Bank

4-2727

the

consumers' expenditures are run¬

name.—Editor.

Other Publications

23, 1948

Dominion

Other

$25.00

Other

the

Territories

Pan-American

$25.00

Chicago

Exports—Imports—Futures

the

Possessions,

Thursday <general news and.'adissue) and every Monday (com¬

Every

Y.,

Subscriptions

plete statistical Issue — market quotation
records, corporation news, bank clearings,
state and city news, etc.).,
'
"

vertising

second-class

Subscription

9576

SEIBERT,

which

Smith.

by William

from

8, 1879.

RIGGS, Business Manager

Thursday, December

York.

1942,

HERBERT D. SEIBERT, Editor & Publisher

WILLIAM

25,

30's

Munich and

in fuli

cial circle figure for 30 years, and

Exchange

Company
Reentered

WILLIAM B.

v....,

London,

1948

CHRONICLE
Patent Office

U. S.

Reg.

catching

never

attempt

lawyer specializing in corporate
practices and taxes and a finan-j
was

FINANCIAL

will

its comprehensive

omist, investment counsellor
i

•76

Tomorrow's Markets (WalPer Whyte Says)

The

too small to meet

far

are

"Theodore

in Registration......

Published

"therq

Securities

SUGAR
Raw—Refined—Liquid

that

is
now
even
less
capital
peit
worker in American industry thap
20 years ago. In -addition,, many

Wilfred May

labor force has increased

Professor Slichter states

our

..........

News About Banks and Bankers.

"72-

......

;....

NSTA Notes

STREET

with

sioned by a great war has monop¬
olized the flow of steel to expan¬
sion

Coming Events in the Investment Field

...

year

long past the depres-1

professor of Harvard University, goods of all kinds

...

Indications of Business Activity....,.........

greater
consumers
prosperity,
impact of bear markets.
t
they would be spending more
During the last 19 years (since money
for
household
durable
1929) expenditures on plant and
goods,
automobiles
and
other
equipment have been abnormally items than in 1939,
they are really
low and in some years, not large
relatively spending less. For these
enough to offset depreciation, on
personal holdings of bank deposits
the
authority
of
Surrmer
H. arid cash were
then $35V2 billion,
Slichter, eminent economist and and
expenditures for consumer

Bookshelf

Mutual Funds

1939 was

Further, £t
■

ticular credit for the bull markets

Stock

Dealer-Broker—Investment

there

that it will appear!
the

WALL

NEW YORK 5, N. Y. >

country had not yet emerged and

cyclical succession Of bear and
or

9 9

the

Through

Securities

Canadian

The year

pattern

Republicans

Bank and Insurance Stocks
Business Man's

consistent

LAMB0RN & CO., Inc.

demand against cash and deposits
would appear from the following.

*.........

(Editorial)

substan-^

the

Teletype NY 1 -2846

bust from the door

to a large
outlay. An indication of

can

HAnover 2-8244

would 'lead

consumer

not

INC.

Street, New York 5, N. Y.

the inconsistencies of the flow of

sion

bull markets

Regular Features
As We

possible

years

was-

extraordinary

(Boxed I

during that period the stock

Subsidy and Freedom

office

that neither the Democrats

Systems!........
SEC Amends Rules Governing Filing of Corporate Reports—%......
Over-the-Counter

to say that the four periods had

the Technical Market

been

number

same

20 Pine

fortunately the boom in the

going into the details
of the compilation it is sufficient

-..... •-.............

Without

Companies Threaten Wall Street

Secretary John W. Snyder Says Bond Support Program Helps > -,
Municipals
t.......

will keep the

u s-?

tially under both administrations;

•:...,

have

market has not deviated

;:*-

Chicago Sees Soft Spots in Midwest Business "15
29

Insurance

generated and disbursed for
goods than are available

WM. E. POLLOCK & CO.,

house for the present.

......

Key-

and

Reports Philadelphia-Baltimore Exchange Merger Plan.,i>.
Bertram

duction will need the army of 61
million employed; the large in¬
come

The

Higher Reserve Requirements

Federal Reserve Bank of

slack

.> ;.

Nadler Assert Pegged Bonds

Collins and Marcus

Rowland

7/15/72

take

has made

Annuala,:

>......

Floyd B. Odium...
,i
Curtis ter Kuile Urges Revision of: SEC Laws
<G.

due

study of the 50-year record of thd
Hence,
a
drop
in
business
Dow-Jones
Industrial • Average spending
which would make a
since 1897 during which period it large output of automobiles, dur¬
appears that the Republicans and able household and other items

.Cover
Revenue} Loss, Says

i.........,.

Business

7/15/57

continue

todian Fund

Theodore Prince

Holds

America

Hartley

stone

25-.

....

■

Convention

Reduced

Act,

f.
- 26
State Securities Act,k 27

Association

Taft

List of

due

will

o Ti¬

a ma^

2'A %

the veto of the

Tax-Exempt

Tax......

and Development

of here and there left by some inwhich
(in -dustries and awaiting preference
both
houses) in others as in steel. But all in all,
•voted
against for some time to come, vast pro¬

......j.>

Taxation Committee Recommends 30% Ceiling on Income
Stock Exchange Committee Opposes Cut in Memberships.

consumers

Europe, Government, City, Coun¬
try,- State, business and individual

Industrial Committee Predicts Reduced Financing in 1949
Public Service Committee Reports Heavy Utility Debt Financing

.classes'.of

For Reconstruction

j o r i t y

Pegging Source of

;

Financing..,...........

various

Committee

Inflation

a
—

The International Bank

all, but remaining behind,
particularly in the capital goods
for some time. Nevertheless, the

party^

gress

The Outlook for the
'

36maal

with

Wall Street—Hal H. Dewar

main-

present
1BA President Scores Attacks

equity financing is indicated.
stocks in terms of commodities,

t i

tained

ADDRESSES AND COMMITTEE REPORTS

IBA

you

common

with

...-

day simply to wishing
very

interfered^

III—Roger W. Babson...

So
to¬

space

Safe Havens in Case ol World War

Street!

generally.

Communism

-t-Eric Johnston

Wall

devoting this

question that the election did give a shock to
Bat business, big
business of the Government,
State, cities, local governments and of the important corporation sup¬
plying the major part of our capital goods is too big to be stopped
business

Not

we're

were

book values, and other factors and lays this to absence of
high optimistic note in general business.

wages,

14
14

Waldron

cheapness t of

—even

war,

applied to war pur¬
poses. and therefore shortages of capital goods and labor cannot
be made up for some time. Holds continued plant expansion and
.reduction of costs can mean difference between prosperity and

6
-J"
7

Centralizing'Stock Exchange Organizations—Francis Adams Truslow

isn't everything

business capital expenditures since end of

money

L. M.*

Mr. Prince points out much of the funds

Kilowatt Crisis—Frank McLaughlin
Television Boom Is On!—Jerome J. Gunther

The

Commenting

The Job Before the 81st Congress—Hon. Albert W. Barkley.

(2599)

Investment Counsellor

•

Equities Market—Theodore Prince
Dangers of Government Bond Unpegging Exaggerated
—Julian G. Buckley

By THEODORE PRINCE,

.Cover

New Capital and

CHRONICLE

Capital and Equities

Page

Investment Hedging—Melchior Palyi

FINANCIAL

Members

New

25 Broad
;

York

Stock

Exchange

Members New

Tel.: HAnover 2-4300

V .'!/••'

Tel.:

•

Teletype—NY 1-5
Boston

Glens

York Curb Exchange

135 S. La Salle St., Chicago 3

Street, New York 4

Fsills

FINancial 2330

' "

Schenectady

available

■h

request

C. E.

■■

Unterberg & Co.

Members N. Y. Security Dealers Ass'n

' '

Broadway, New York 6, N.Y.!
Telephone BOwling Green 9-3565

---

Worcester

"Teletype

1-1666

(2600)

COMMERCIAL

THE

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

The New
s

By PAUL EINZIG

Dr.

•

By JULIAN G. BUCKLEY

ivV
'

■

On basH of

analysis of1 classes of U. S. Government obligations,

together with their distribution J

Mr. Buckley contends, if present price pegs were removed, Federal Reserve problem of supporting market for bonds would not be serious and no market panic or ill-advised selling
'''."would ensue.
among various groups,

LONDON, ENGLAND.—In theory the bilateral method of trad¬
ing has been outlawed in a number of international agreements dur¬
ing recent years, such as the • Lend-Lease master agreement, the

■

Ever since the Election many

economists and financial writers have been stating that
government bonds is now a certainty. They point to the
pronouncements of the Treasury and the Federal Reserve authorities as well

the continuation of the pegs on
numerous

the

ad-

ministrations'

trust accounts

I form of
i trolled

investment

con-

/main
ment

their
to

be that with a
debt

and

Securities

and

lowed

free
al¬

Julian

Buckley

op-

Recently
two
leading
-money market experts (within 24
hours of each other)
at public
meetings
quoted
Shakespeare's
Hamlet; as follows:
perate.

"And makes

those ills

■;!

us rather bear
have than fly

to others that

of"

;

This

seems

know not

simplification

cowardly atti¬

man;

the hurt

^nalyze the total debt of the

least liable to influence the bond

market and running down to issues which might have a greater
effect.:
'
TABLE I
"■■■'
'
'

•

9/29/48

(In Millions)

Special

Issues

Marketable

$ 37,423

Issues

held—

By Trust Accounts>
By the Federal Reserve
System

Savings Bonds—___
B i 11 s,
Certificates and
Notes

3,739

23,280
54,776

IL S.

32,067

rU. iS. Government Bonds—
;/

Under 5 years to call—
5 to 10 years to call-—_

45,026
9,608
44,838

Over 10 years to call___

System

with the Series G Bonds and

comparison here, while

and bonds had in¬
creased to
$11,156,000,000, illus¬
trating the effect of the support
program of the Federal Reserve
System.
It is equally clear that

able.

773,000,000

securities held by

eral Reserve

System

th£ Fed¬
threat

are no

the market unless the Federal

Reserve authorities

should

de¬

sire.
U. S. Savings Bonds

governmental au¬
have

thorities and money experts

there would be

sale

redemption would result.

to $94.70

and the

ap¬

preciation of the Series E Bonds
is very slow until the years rela¬
tively near to the maturity date.
In
other
words,
by redeeming
these bonds, the individuals would
give up a maturity yield' almost
impossible to replace with any¬
thing like the same security.
The following tabulation shows
the

amounts

Series

Bonds

held (as of Sept., 1948) by maturi¬
ties with the approximate yields
on the redemption prices Jfor the
unexpired term of the bonds from
redemption to maturity.

Maturity

(000,000)

4.26%

1953
1954

Trust Fund, the Federal Old-Age
Survivors
Insurance
Trust

and

the

Railroad

i'ttient Account.

1952

1957

■and

Fund,

1958-

;

the

3,107
2,655

4.36
4.18

3.37
3.66
3.52

3.25
.

3.05

Retire-

It is obvious that

Total

$31,932

7 these bonds
'

some¬

have

the

over¬

sancitity

the

that
of

Government

par

Bonds.

Some months ago the Treasury of¬
ficials
were
reluctant
to
allow
even

cates

the

Treasury certifi¬
below par for fear

government credit. However,
after some discussion, the U. S.
Treasury
Certificates
were
al¬
are

below

par

still

and

selling there without unfavor¬

Bills,

total

The

and

Notes

are not any threat to
market.
In fact the various

Weighted

*3.70

and much

Under

the

available

comparison

with

the

practical

Dr.

Paul

it has been

and

debt

suggested that

substantial part of this short-term
debt
should
be
refunded
into

longer maturities preferably after
1972.
However, purely from the
standpoint of the Federal Reserve
System supporting the pegs on
it

bonds,

little

seems

clear

if' any

woiild" be

of this short
thrown on the

long bonds

withdrawn.

were

developing in
The

policy

remarkable

matter
not

Britain

uries

considered

was

there

Du
was

countries; it
difference.

the

sought to be balanced; it
of

the

export

Since

the
War

efforts

achieve

the

been

between

that

above

the

Government Bonds held by the
banks, the savings banks and the
insurance
company
can
be di¬
vided into three
with

call

date

catagories; those
under

five

years

totaling $450,026,000,000 which are
mostly held by the commercial
banks; those with maturities to
nearest

average.

ten

call

date

of from

five

the

result

can,

course,

broad rule that

as a

their

which

trade

and in necessities there

arise

But if

London

marked

want

luxuries

are

bound

discrepancies.

government suggested to
in

that

elec¬

for

return

trical equipment it would sell per¬
fumes such an offer woud be re¬

export

should import jected out of hand. Before the war
it would have been accepted, since
admitting the import of luxuries the net result of the arrangement
from
a
particular country that would have been the balancing of
country should admit correspond¬ the accounts between the two
ing quantities of British luxuries. countries.
At present, however,
necessities and

that in return for

Needless

to say, the principle is
sought to be applied,in rela¬
tion to every country.
But, then,'
nor was there ever any attempt to

and

so long as the
shortage in the
supplies of; essential goods con¬
tinues, the* British Government

not

bilateralism

enforce
of

the

countries.

tion
S.

for

exact balancing of
and exports in luxuries
necessities.
The principle

balance

the

return

realized.

neqessities Britain

sense

Government Bonds

indicated

tween' countries

necessities.

the

importing luxuries and are "not in
a
position-to export luxuries on
any substantial scale.
Even be¬

equilibrium between the im¬
port and export of luxuries in
relation
to
particular countries
and

that

allows for many exceptions. Some
countries have no objections to

port

retaliated

concerned

only operates

second

have

countries

imports

certain degree

done

was

bilateral

question of

/
of

countries

This

regulating the situation

There

was

achieved through
import of luxuries

end

virtually at

most

essential goods on a basis of reci¬

was

necessities.

lux¬

procity.

whether

indifference

countries

individual

trade in

negotiations, many
agreements have been concluded
for the import of luxuries on a
basis of reciprocity.
At the same
time, the bilateral pacts contain
clauses providing for the sale of

conception gave way to the biconception under which

matter

for

came

lateralist

with

other

countries

particular country show a
deficit or surplus.
During
'thirties
this
multilateralist

trade

few

need

any

large

the

governments during the
years and, it was only

many

the

within

by banning luxury imports from

matter of in¬

was

ban

when

all

come

them.

last

relation

whether

would

for

grand totals the figures in relation
to

return

measure

foreign

would

the
growing

some

standstill,

accounts

international

exports

coal

necessities.

agreement

the

tendency to aim at maintaining a
balance between the grand totals
of visible and invisible imports
and

offered

every

absence

indifference whether

balanced.

'twenties

mainly

port

foreign
shows

Before

trend.

the

basic

first World War it
a

direction.

a new

evolution

trade

situation

which

necessity it is

all
U.

indus¬

to sell her

has developed in
country is anxious to
export mainly luxuries and to im¬

Einzig

cor¬

total

other

were

for timber.

pressure

import and ex¬
It < is Y no
longer considered sufficient if Brit¬
rectly pointed out that this figure ain's /trade
with
a
particular
of short-term debt is too large in
country is balanced. The aim now

"••:Tt has been frequently,' and

and. most

If Britain

wines there would

or.

rigid

form.

Reserve

System, as of
1948 amounted to
$46,145,000,000. These are broken
down into $12,628,000,000 of bills
due within 90 days or less, $22,294,000,000 of certificates due in
a year or less and $11,223,000,000
of notes due in two years or less.

these

limited exportable coal surplus in
return for the import of cosmetics

has

equilibrium

certificates and

bills,

notes, including those held by the

the de¬

easily be satisfied.
Today, there is a scarcity of labor

system

was

Certificates

producing

that

tries.

Maturity)

1951

buy a

trust

authorities

market if the pegs on

Term to

2,849

principal

for

believed

emphasized

paper

Yields (or

Remaining

Held

1956

The

ground

industries

goods,

could

Gradually the

were

Also^ it
financfal

that

Saving Bonds Series E>

i counts include the Unemployment

sues.

similar compari¬

striking, is still applic¬

long-term

Amount

certain amount of marketable is-

mand

World

year

issued

pos¬

British

essential

gaining in¬
stead of losing

made

addition these
and

what less

is also

the

were

each

1955

can

make

Federal

ac-

trust accounts

practice,

bilater alism

However, the redemption price
September 29,
of the Series G Bonds declines'

$ 1,121
4,105
5,935
6,775
5,427

sible to

able results.

below

loss of con¬
fidence on the part of the holders
of these savings bonds and whole¬

the various government

trust accounts.

of 3.70%.

ment bonds allowed to sell
par,

issues, totaling $37,423,000,000 are, as their name implies,

j over to

to approximately 81 at
price they would afford a

lowed

These

by the U. S. Treasury and turned

8/32

expressed the fear that if the pegs
were
reduced and U. S. govern¬

TABLE

Bonds

100

which

in the

Government

there would be loss of confidence

■'

$250,757

Plan

Agreements,
in

long

as imports and ex¬
fairly evenly
bal¬
anced. « But at that time there
was large-scale
unemployment in

Marr

assumed

son

Special Issues

ports

the

new

the

•

;

turn,

and

yield 2.48%, ,j To make it advan¬
Savings Bonds to switch to these
long-term Treasury Bonds from!a

.Sept.

A number of

country of about $250 billion. The
following is a summary of this
debt, broken down into principal
items starting with those issues

;

period involved. Bills, certificates
and notes had decreased to $11,-

can¬

not be much"

;

present time,' the U.

Treasury 2y2% bonds due Dec. 15,
1972 are selling tit ,100 8/32 and

However, by Nov. 17, 1948 the
composition of these holdings had
changed fairly drastically for the

It is the purpose of this article

;

the

•

return

over¬

the

problem.
Rather it might be better to quote
from Shakespeare:

would be 3.70%.

yield standpoint alone, the Treas¬
ury
Bonds would have to drpp
from
their
present
price
of

these

tude at worst and at best

"Courage

by the Federal

amounted -to

were
'withdrawn
market

29,
1948,
these
23,280,000,000, com¬
prising
bills,
certificates
and
notes of $14,078,000,000 and U. S.
Treasury Bonds of $9,202,000,000.

the

■j p e g s

•

Held

Reserve

disaster would
if

Government

seen from the
above
yield to be replaced;
would range from 3.05 % to 4.36 %j
and the weighted average yield

t can be
that
the

Pact, the Loan Agreement of 1945, the Geneva and

A greements

tageous for the holders of the U. S.

$250
panic

economic

result

(not all of which were spe¬
cial issues) of an average of about
$3,363,000,000 a year. Thus? the
trust funds are an important fac¬
tor contributing to the support of
government bond prices.

argu-

billion,

bonds

econ-

seems

during three fiscal I

ended June, 1948 made an

years

omy. But

Bretton Woods

Havana

shall

^election, plat-

;

Einzig, in noting that despite its disparagement in international
the practice of bilateralism is gaining, sees'Britain
requiring imports of essential goods instead of luxuries, thus neces¬
sitating reciprocal agreements restricting and regulating imports.
agreements,

•

attempt

rigidly.
The

And

the

relation

even

countries

system

term

would

old
to

in rela¬

which

the

sought to be applied, no
made to apply it too
.

reason

for

There is

essen¬

even

discriminate

equipment.

slight tendency

within

the

broad

category

and

the clear evidence
that there
turn

men

are

George
Wall

lump
to

board

the

and

years,

economic

Swiss

and

have

lived

political

order,

and in relative prosper¬
are communists in

peace

•"

tors of the

Trust company of the

payment of

able

Jan.

stock dividend,

the

stockholders

22.

pay¬

his

business

letter

the

But there

Mr.
Gibson
also
the
change
in
the
of; the annual meeting from
the
second
Wednesday in Jan¬
uary to the third Wednesday as
well as a change of future quar¬
announces

date

dividend payment dates to
of the month following
the close of each quarterly period.

terly
the

15th

Switzerland.

The letter

Why should a Swede—a citizen
of the great "middle-way" nation
—turn communist? But there are
Swedish

heretofore

communists.

And above all else, why should
an

American—living in the most
favored, prosperous country in the
we

communist? But

have American

The

just
the

unite

nothing

longer
they
their

but

the

will

It has

outgrown such swaddling
siren songs. It still uses all its old
appeals, but today it bids boldly
for the intellectual, the disgrun¬
tled, the credulous and the cul¬

and

the hungry, the

the miserable.
of

per

the

be maintained

can

outstanding
of the stock

payment

after
divi¬

In his advices to the stock¬

dend.

incident

says

the

coming

in part:

the

subdivisions.

usual

elec¬

proposal

increasing

the

vember, 1944, formed Morris &
McVeigh in 1915.
Mr. McVeigh
became associated

from $41,250,000,
represented by 2,062,500 shares, to
$45,000,000, represented by 2,250,000 shares; the additional 187,500
shares, par value $20 per share,
so

authorized
rate

board

stock

one

shares held.

the

issued

dividend

share for each

On Dec. 15, 1948,
declared

directors

such stock dividend

proval

subject to ap¬
stockholders and the

trinaires,

fore stockholders for action at the

the

doc¬

the revolutionists, the
They are willing to take
risk—any chance—to gain

any

their ends.
rule

are

Such

are

the

men

Russia—the members

Politburo, their commissars and
party leaders — their camp

lesser

(Continued

page 67)

necessary

to the certificate of

annual meeting Jan. 19."

who
the

with the Trust

through this connection,
than 30 years ago. The new

company,
more

Chairman

board

the

attended

University of Virginia, graduating
in

with

1907

A.B.

and

de¬

LL.B.

He started law practice in

grees.

with the firm of Win-

New York

throp & Stimson. He is a trustee
o! New York University — Bellevue Medical Center, a director
Globe

Co.

ance

Loeser

Insur¬

Fire

Rutgers

and

board

the

member

directors

Frederick

Co.

DeCoursey

Fales,

President

The Bank for Savings in the City

New York,

the

announces

ap¬

pointment of two new officers at
December

the

meeting

the

board, effective Jan. 1. William J.
Clark to be Assistant Secretary of
the board and Felix S. Wassmann
as

Assistant

Mr.

ment and

Secretary of the
has

Clark

been

the

of New York,

election

Robert

announces

U«

Bowery Savings Bank, and Harris

Dunn,

President

Goelet

the
to

River Savings Bank
York

announced

the

North

both of New
Dec.

the

forthcoming merger of their two
institutions.
The Superintendent
of Banks has given his consent as
required b.y law, and the boards of
the

two banks will meet shortly
ratify and fix ah effective date
merger. The Bowery Sav¬
ings Bank was founded in 1834
and has deposits of $670,000,000
owned by 388,500 depositors. The
to

of the

North River was founded
and

1866

has

$106,000,000 of deposits
owned by 101,500 depositors. The
combined

U«

N. Baxter Jackson, Chairman of
the Chemical Bank & Trust Com¬
pany

joined the bank in 1932.

Henry Bruere, President of The

ized capital stock

fanatics.

These

No¬

author¬

amendment
incorporation,
increasing the authorized capital
stock. This proposal will come be¬

communist.

March,

1924

Wassmann is in the Bond Depart¬

approve an amendment to the
certificate of incorporation of the

filing of the

First, there is the Lenin type of

from

McVeigh

sented to the meeting
to

Broadly speaking, there are at
five
types of communists,
and perhaps each type could have

the

tion of directors there will be pre¬

at the

least

Trust

employ of the bank since 1941 as
secretary to the President. Mr.

stockholders

Communists

Board

Company
Charles

bank.

addition

"In

company

paid

$2.40

greater number of shares

which

tells

because

lose

rate

that

states

stockholders' meeting, Mr. Gibson
com¬

appeal to the workers of

world

have

dividend

holders

communists.

existence
of
in; these countries

very

Morris,

cer

opinion of the management, from
present indications the existing

also

late

Spen¬

Chairman of

■

stockholders,

Why,-for instance, should any
be
a
communist,
when
Switzerland's democracy has been
a
vigorous, going force for 300

the

Lewis

Executive

Dec. 15 by the board of direc¬

recprd

Swiss

McVeigh

and

Fulton

Dec.

these:

York.

Mr.

York

Harvey D. Gibson, President of

Trust

Company of

Manufacturers Trust Company of
New York announced the approval

answers

Directors"

elected

fact before

the

Board

Vice-President.

people with widely varying ap¬
peals.
We must recognize that
as

was

been

man

City,
meeting of
directors Henry C.

Alexander

McVeigh,

elected Chair-

New

why

questions such

has

hand

get

Fulton

every

strategist knows

can

McVeigh,
senior
partner of the law firm of Morris

President

New

that,

banks.

reasons

this
well, * and trades upon the
susceptibilities of different kinds

Street,

Assistant

Whitney,

announced
the

communist.

The communist

Charles

Edmund

men

ourselves

many

and

how

and

all-embracing

one

blind

Assistant

both

•'

of the

States.

United

elected

were

past President of

Henry

how

know

planted

and

Textile Export Association

time,

same

Carpenter

of Trade

of
J. P. Morgan & Co. Incorporated,

turn to communism.

men

various

Meili

com¬

know

We have been inclined to

Types

lajmg & co

President of the New York Board
H.

Ernest

about

need

it takes root in the minds of

jooor

little

and

chains.
■■

Fitzgerald Mills Corp.
being identified with the
management of various other cotton
organizations." He
is
also

Vice-President

obscure them.

an¬

Mr.

Board

alism

They are dangerous an¬ munists
they settle nothing; they us that communism is

aganda mill.

candor.

according to an
by Mr. Jackson.

besides

Vice-Presidents,
and
Bartlett,
formerly
Treasurer, was elected

tured—as well

world—become
more

is.

problem, you
facts, line them
up,
strain them
a

Jefferson is also Chairman of the

pet
prejudices.
And you don't let blind emotion¬

international

communism.

better

You don't let facts truckle to pre¬

ity?

know

all

be¬

how true that

you

for

know

add -them
through the colander

rubble, and that wouldn't destroy

war

education

up,

should

than most of

munism.

mean

Mr.

little

moment

better—in

could

are

*An

before

have

are

emphatically true as
conflicting ideologies.

elected

nouncement

between

undisciplined

as
a

are,

Communist

missionaries

disaster.

certain

have them right here.

.a n

cracfkpots?

the

ef¬

a more

still

chasing that fairy
tale?
Are
we
still thipjdng of
communism as a lunatic vfringe?
As a fly-by-night doctrine of un¬

ritorial gains.
fectual way.

utilizes

individuals; it is true as
nations, and it is even

Sr., Presi¬
Co., Inc.,
the Advisory

of Iselin-Jefferson

Company

communism.

petitor, his strong points and his
points.
That is true as be¬

tween

♦

Board of the 320 Broadway office
of the Chemical
Bank
& Trust

weak

communism

of Russia will rise up
against their communist masters?

She

and blow away?.

still pitching pennies in

wishing well and trusting that

believe that she puts her main
reliance on the Red army for ter¬
She has

the people

munist

about

Floyd W. Jefferson,

first

conceptions

fully understood

munism
Are

our¬

ment" which will somehow—some

heard,

methods

report.
It would be
fatal self-deception not to recog¬
nize facts, unpleasant though they

other

any

to do

some

Johnston

world

City Investing Company.
Us

first thing we need
is to acquire all the knowl¬
can

director of the bank for

very

■.

total

light
A.

Eric

could

home better

intelligent way the bold
challenge of com¬

for

struggle

wish

the

Communism
The

46th

many years. He is a Trustee of his
father's estate and is a director of

dent
■1

the

of the late Robert Walton

son

Goelet,

has been

edge

than

does.

audacious

tion?

not

against inter¬
national com¬
munism.
|

est

with

Should Acquire Knowledge of

fail to do

important

munism

winning
the

and

mo¬

ment

vastly

sane

world

the

been

step is - basic - to all
Do We Meet the Challenge?
others.
In any kind of contest,
That leads me to ask this large,
there is great advantage in know¬
and vital question:
ing all one can about one's com¬
Have we been
meeting in a

home

with this
viction:
*

this—that

just

what

edu¬

came

cratic

what Russia

cation.
J

has

who

Board

of the bank. Mr. Goelet is the old¬

New

trip through western Europe, behind the

That

the

Meili,

Dec. 14.

Advisory

Street and Madison Avenu# office

I talked to heads of states, to men in busi¬

democratic world?

for

means

what

n u ru¬

bers

Corp.

announced

the

Henry

<S>-

op¬

Banking

was

in the professions, labor leaders, journalists and—I'm happy to
report to you be-

ness, men

were

for

Mr.

the

director

tions under which communism takes root,

institutions

deposits in
and

will

have

of $777,000,000
than 400,000 depositors.
excess

The Boards of Trustees of the two
.

(Continued

on page

71)

•

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

CHRONICLE

IB A President Scores Attacks

(2613)

Wall Street

By HAL H. DEWAR*

President, Investment Bankers Association of America
Partner, Dewar, Robertson & Pancoast, San Antonio, Texas

-r

Hal H. Dewar, in inaugural
time President of the

Wall Street is

address,

it is high

says

United States should know

symbolic of investment industry,

not

and it is Main Street where securities go.

Urges an
objective analysis of place of investment banking in
nation's economy and stresses importance of venture
capital. Points to loss of profits due to competitive
The honor of being chosen for this office is one that I can share
only in part. I feel that it is primarily a recognition of the growing
importance of our Southwest Empire. < So, as a member of that com¬
munity, and not just an individual, I am very grateful.
I

have

Texan

first and last^~ I
do want to j°b

made my

plug,

point out

but

evidence of the

non-

putting sound statutes on

the books.

But

Hal

weren't think¬

political character of this Group
that

this

Dewar,

Incoming

ing constructively. Our efforts in

Texan

fit

saw

for

nominate

this

office

time

When

everything pointed to a
sweeping Republican victory in
the pending national elections.
May

Texans

add

that

here

well

many

the

many

dealers

throughout the nation who

are

the investment firing line

field

consisted of

Sky legis¬
matter of
fact, weren't thinking of these
problems one way or the other.
Either position is a symptom of
the negative approach.
lation.

Most of us, as a

If Federal
is

right,

securities

then

achievement
for

business

Street."

high time that the President
the

United

that
of

Wall

States

should

Street

know

not

symbolic
industry. It is Main Street

our

where securities must go if we are
to continue a free economy.
Before

have

state

the

discussing the topics I
mind, I should like to
personal feelings about

Anti-Trust

suit.

Last

Julien Collins said in
7th

year

had

the

never

seen

domination

year,

entering his

great

seen

distributing machinery

that has been set up by the invest¬
ment dealers of this country, I

impressed by the spirit of in¬
dependence and competition that
everywhere.
am

exists

As advisors to

our

customers,

in investments, that the only
certainty is change.
And yet, in
say,

phases

many

there

activities,

our

resistance

great

this

only certainty. You can call this
being reactionary, conservative or
old-fashioned.
But, whatever it

is, the financial world is studded
with

apathy in regard
to this vital question is
perhaps
cultivated by the comforting feel¬
ing that we are saving a substan¬

the

fi¬

nancial community.
Still, I have
seen us battle many times for an
accustomed position rather than
search out
not

but

new

one

comfortable

which

made

the

was

first,

overall

sense.

This

sounds

erality,
ample:

I'll cite

vague

specific

gen¬
ex¬

The Federal Securities Statutes
considerable

need

revision

and

emphasis should be placed

the rule of law rather than

men

in their administration. There is

thin border between regulation and

control, and

many

our

admin¬

istrative agencies need to be re¬
examined in that light. Still, the
basic principles behind the Fed¬
eral Statutes

free
of

consistent with

society, and I think that most

the

now

are

investment

bankers

agree with this.

will

I don't have

to tell you, however, what our at¬
titude was before their enactment.
For

there was a
glorious opportunity for the busi¬
ness

many

itself

years,

connection, I want to say
profits.
If we look
profits from the standpoint of
immediate and long range, I think
it might be said that we fight

r-:m

like mad for the former and for¬

get the latter. Such

the

situation is
tremendous

amount

whereas
the
great,
useful
and
eventually profitable field of risk

capital is

the back shelf.

This

brings up my third topic,
but before discussing it, one more
about profits.

word

know what

Most of

you

Texas

eighth is, but
for those who don't,
it is I2V2
points. While this like some other
a

stories on Texas might slightly
exaggerate true conditions, we do
believe that good profits make the
wheels spin.
Partly as a result
of

its

defense

psychology, our
today is working for
ridiculously low profits.
John
Clarke
calls
it
"cheap Chinese
business

labor."
has

This

meant

that

Dealers in

many

constructive

the ablest in the business

their

war

tion

at the

the

Association

address of Mr.

De¬

the

STATE AND MUNICIPAL BONDS

capital prob¬

lem.
The whole question of venture
capital is another example of our
negative approach.
In this man¬

Specialized service

we are aiding and abetting
"riskless
economy"
which

ner,
the

corporate,

Cliff

Folger spoke about so elo¬
quently in his terms as President.
Three

institutional,

and individual investors;

years ago, I wrote an ar¬
ticle concerning the capital strike

quotations furnished and consultation

which, in
crippling

invited

subtle ways, is as
as labor strikes.
This
strike is still in existence. Here is

ideal

ground

for

thinking and work

regarding investment portfolios.

constructive
on

the part of

the investment banker—each and
one of us.
Some are actively

every

Guaranty Trust Company

engaged in
work.
One of
the major
phases of the problem is the tax
angle, and I don't need to tell you
about the self-sacrificing work of
the Courts brothers in this field.
such

of new york

But there

are other phases of the
problem which need the full en¬

ergies of

our

To put

ery.

it bluntly, we need
ringers, and fewer

door-bell

Bankers

our

This

lies

the

heart

profit problem. In the larger

scheme

risks

the

lies-at

Capital Funds, $365,000,000

investment machin¬

order takers and competitive bid¬

Investment

risk

ders.

Holly¬

too,

UNITED STATES GOVERNMENT SECURITIES

for the lack of at¬

Conven¬

America,
wood, Fla., Dec, 10, 1948.

Here,

reason

tention

37th Annual
of

abilities.

en¬

are

another

^Inaugural

In this

word about

for

path¬
ological desire for security which

brought into our economy by
great depression and, unfor¬

tunately, nurtured by the New
Deal philosophy. This craze for
security, if not tempered, can
eventually destroy the free en¬
terprise system. All of you know
(Continued on page 54)

gaging in outside activities in order
to. get more proper compensation

others

This

the

problems basically and
constructively.

sive

some

We have gone overboard in in¬

stitutionalizing them.

natural result of the almost

was

our

resistance-to-change atti¬
tude.
Our
investment
banking
business is perhaps more progres¬
a

than

dangerous thinking because it
is what we do with these savings
that really counts.

its

risk capital.
The national

This

this
jobs

do. It is

can

springs of

tial portion of our income.

of energy that is today
going into the near profitless comp e t i t i v e
bidding
operations,

ac¬

be my 7th year on the Board, too,
and I share his feelings precisely.
the

that'

There is no more effec¬
tive stimulus to collectivism than
the drying up of the

President, Addressing Convention

exemplified

tivities of the Association by any
firm or group of firms. This will

As I have traveled about and

this

jobs like

see us

society.

IBA

been

evidence

any

control- of the

have

that

Board

It is

that I want to

what

would

Association

our

attack

legislation

think

protagonist.

"Wall

re¬

sistance to Federal Blue

have regretted Mr. Truman's ref¬
erences
in his campaign to this
as

active

taking

the heart

business
of

free

140

Broadway

New York 15

Fifth Ave.

44th St.

New York 18

Madison Ave.

60th St.

New York 21

Member Federal Deposit Insurance

Corporation

Rockefeller Plaza

New York 20

50th St.

COMMERCIAL

THE

(2614)

Aa active

capital market and

By DR. MARCUS NADLER*

Professor of Finance New York

steady flow of capital to industry
for modernization and
enlarge¬
of productive

ment
■

V..{■

requisites for
a
dyn.amic
economy
and
a high level' of
u

and

the

Marcus

Dr.

Nadler

hence

1945,

and

productive facilities.

the game time.

industrial

and

create

ventions

but

"values

new

ones.

oftep destroy old ones. Every new
machine that increases the pro¬
its

ductivity

free,

to
•

•

has

production

mo¬

nopoly

goods.

countries where the cartel system

During

the

depression

was

the

modernization

and

tured, and that the need for cap¬
ital expenditures was therefore

older

last

/few

-V;;';,,

At the present time the

capital

demand

particularly

large
amounts of

the utilities to meet the increased

the
consuming
public. But even in a competitive
society the process of replacement

already ma¬

the

assure a

example, large
capital will have to be spent by

expense

For

protects the high-cost producer at

the

'30's too much reliance wa§ placed
on the theory that the economy of
the United States

over

continu¬
capital, sup¬

created by re¬
expansion needs.

alone should

come.

for

construction, and that of consumer

new

strong
demand for capital for some time

competitive

where the government

and

inventions

The
years

economic
society this process is continuous.
This is not the case in countries
In

that

placement

machines.

older

This gives rise to a

demand for

plementing

the

quality of the product hastens
obsolescence,

ous

the

operator or

demand for power. The construc¬
tion of plants to liquefy coal and
shale

ma¬

could

billions

chinery
is ' often
retarded
by
featherbedding rules of unions or

formerly. Primary
emphasis was placed on the ne¬
cessity for increasing consumption.
The result was that, in spite of
the
large expenditures
by the
as

great

plowing back of earn¬

the

It is evident that any meas¬

sion.

taken

ures

undoubtedly

of dollars.

absorb

recent

sur¬

securities

new

future.

re¬

sometime

the

of the

obligations of the
Bank are of high quality for they
rest to* a large extent on the good
faith

government as well.

The

and

credit

the

Sources

External
External

United

sources

States,, which is- the largest stock¬

the

form

holder.

ferred-

stock

The

fluctuation

due.

these

during the past year
primarily to their being

and

the

fact

that

some

not familiar with the

were

One

tive and

few

secur¬

years,

be seen from

may

corporations relied;

II,

Appendix

inventions

new

sources.

made

are

The

percentage of common stock
in relationship to total new capi¬
expand' rather tal raised
by
corporations has

improvements are per¬
fected, the demand for capital will

tended to decrease in recent years
is

and

one

bank indebtedness of corporations, 7

the proportion becomes even much
smaller.
In some cases, particu-'1

larly

regards term loans, bank

borrowing must certainly be con¬

sidered long-term capital indebt¬
edness.

to be any

There does not seem

shortage of capital seeking an out¬
in

let

bonds

mortgages or notes.

—

The

of capital

sources

undergone

ever,

have, how-

considerable

change, in that the importance of
investors

institutional

in¬

has

creased whereas that of individual

has

investors
Whereas

declined

during

business done

1939, $6,800 million in 1946, and
$10,600 million in 1947, while the
figure for 1948 in all probability
be

rather small.

now

includes in the total the increased

1948,

form

the

new

will

pre¬

common

to a considerable extent on bonded;
therefore " conclude
indebtedness to meet their capi¬
long as the American
tal
requirements from external,
remains freely competi¬

may
so

economy

and

be either '

long-term

was

ity underlying the bonds.
that,;,

Capital

may

and short-term bonds
and notes, as well as loans from
new
investors commercial banks. During the last

bonds

vey

Congress that

duce

■

recourse

ings today constitutes, the princi¬
pal source of capital for expan¬

large * country
capable
pf
exporting , capital
and
cap¬
ital > goods
on
a
large
scale.
With the return of more normal

by the American Gas Associa¬ in all likelihood
tion indicated that new capital re¬
.than decline..;
>';; ■,; ; ■/
by government regulations.
quirements of the gas utility in¬
The high standard of living of
dustry alone may amount to over
The Supply of Capital
the people of the United States is
$3 billion during the five-year pe¬
The supply of capital used by
based
on
high
productivity of riod 1948-52, or about 55% of the
industry is derived from two main
Federal
Government for recov¬ equipment and
labor, which ' in present investment in the indus¬
sources, which may be classified
ery and relief, unemployment still turn has made possible the output
try.
The demand for capital by as internal and
external. The in¬
remained high and the standard of of commodities at a relatively low
public bodies for roads, hospitals, ternal
supply of capital represents
living did not go up. The standard price in spite of high wages.
So schools and other public works the
plowing back of earnings by
ofj living of a nation is determined long as productivity is increasing, staggers the imagination.
The
not
by the amount of dispos¬ the standard of living is bound to same can be said with even great¬ corporations. -'It also represents
the utilization of depreciation and
able income expressed in terms of
increase, since not only will more er emphasis as regards the need
mfrney but rather by the supply commodities be produced but the for new housing, as well as the depletion funds. External sources
consist primarily of the sale of se¬
of; goods and services produced market for them will broaden.
modernization of existing dwell¬
curities
bonds or equities — and
and made available for consump¬
Modernization, replacement and ings.
bank loans.
During the last few,
tion.
The
production
of goods plant expansion can take place
> Assuming
morestable ' inter¬ years reinvested earnings consti¬
national
political conditions, the tuted the principal source of new
only if there is an adequate supf*Talk by Dr. Marcus Nadler, j 0£ capital at the disposal of demand for American capital and capital for corporations. Undis¬
before
the
Investment
Bankers f
and capital goods from abroad is tributed
profits of non-financial
Association, Dec. 9, 1948, Holly-1 industry. If this supply dries up, bound to be very large* indeed. corporations amount to $2,500 mil¬
wpod, Florida.
for one reason or another, the The United States today is the lion in 1929, $1,300 million in
not

without

needs

$12,040

commercial

their

borowing or the sale of securities.

profits, such as the imposi¬
therefore, direct in¬ tion of an excess
profits tax or
vestments by American concerns
The Demand for Capital
the raising of the ordinary tax and* capital flotations by foreign
rates on corporations, will reduce,
The American economy is in a
countries
in • this
country ' are the
constant state of flux created by
supply of money available for
.bound to increase.
the inventive genius of the people
capital expenditures. This, in turn,.J
It. is fairly certain that the In¬ is bound to have an adverse effect
and by the willingness of consum-*
ternational Bank for Reconstruc¬ not
only on business activity but,
ers
to
accept .new commodities
tion and
Development will offer in the long run, on the revenues
and services and to discard old

of capital formation
productive and destructive
New basic in¬

is both

and

earn¬

in 1946, 50%; and in 1929,
65%.' The retention , of earnings
by corporations has enabled them
to finance a considerable part of

ings;

Conditions,

The process

activity,, employment

the standard of living.

by the availability of labor, raw

which
*

nomic

eapital goods,; and'
capital, is limited only

for

materials and

$6,630 million
million in 1946,
$16,180 million in 1947, and are
estimated at $18,500 million for
1948.
In fact, a high level of busi¬
ness activity, employment and na¬
tional income is to a large extent
dependent on a satisfactory bal¬
ance
between the production of
capital goods, including housing
V

dividends 40% of their total

with' only"

end,

In 1947 nonpaid out in

linancial corporations

new

definitely adverse effects oh eco¬

which

power

the demand for

the

indus¬

amounted

spending

the population to absorb

goods and services produced.
Looked at from this point of view,

capital
enditures

try,

the

comes

proeess

the

post¬

been

large
e x

ate

enables

period

has

and other purposes.

Since

prosperity

''<• W

v..

solution in tax changes and removal of stock margin requirements.

sees

rendering of services cre¬

and the

for

reasons

war

University,:^

ness ac¬

tivity. One of
the
major
the

Thursday, December 23, 1948

capital and predicts, as long
as economy remains competitive and new inventions jare made and new im¬
provements perfected, demand will expand.
Stresses lack of equity capital
large current demand for

Dr. Nadler refers to*

facilities are
paramount

FINANCIAL ..CHRONICLE

the

most

by investment and:

brokerage houses

viduals,

sharply.

'20's

was

with indi-i
time the

present

larger.
The June, volume of securities sold to in¬
Reserve* Bulletin dividuals is only a small percent¬
By
table giving estimated! age of the total amount sold.

still

Federal

contained

principal

uses

and

sources

cor-

far

the

greater

is absorbed

part

porate funds during 1946-47. (See

Appendix I.)

Underwriters and Distributors
-

'•

•'*

v-'VVo

•

r'~v

;y0;:;

•

•..

life insurance companies. The sup¬

According
1947

funds

tions

.' \

j'Cr*

by institutional investors, notably 1

tures,

■

Investment Securities '

thesej figures,

retained

constituted

funds

plant

1"
to

used
-

and

from

54%

ply

funds

the

institutions

disposal

bound to

for

equipment
expendi¬
inventory
accumulation,
-

while the adoption of

(Continued

page

30)

E. HUTTON & CO.
ESTABLISHED

1186

MEMBERS
N<TU)

York

Stock

Exchange

New

Cincinnati

Baltimore

Chicago

Union Securities
65

Telephone: HAriover 2-4800
:

•

' '

BUFFALO

BOSTON

HARTFORD

•

Exchange-■

York

Curb

Philadelphia
■

Stock

Board

Chicago

Exchange

Exchange
oj

Trade

Corporation

Broadway, New York 6

Stock

Exchange

Stock

' ^

UNDERWRITERS

DEALERS

BROKERS

/
'

YORK
NEW

CLEVELAND

Baltimore; Md..-

Philadelphia, Pa.

•v'

PHILADELPHIA

}

•

SYRACUSE

Dayton,

Ohio

'*•*

•

Lexington,

Ky.

of
in-r

crease, chiefly because the volume
of life insurance will continue to

total

corporations

these

opera¬

> '

Easton, Fa.

Boston, Mass.

■
"

•

Portland, Me.

pen-

Volume 168

Number 4762

THE

■j-

COMMERCIAL

has

custom

been

"State

the

Association

Union"

message

activities.

practice'
today, howr,
ever,
because
you will have

full

reports

\ from our com¬

mittees

servative

COV-

fully

which

cern

well

served

the

been

it than

the

had

It has

aspects

Board

Co.,

been

has provided

and

train

mentals

them

Under

the

McClure

the

Association

Dealers

held

was

annual

Investment
of

Canada

Accompanied by Murray Han¬
I attended the meeting of the

National

Association

ties ' Administrators

Securi¬

Portland

.Oregon, the Conference of Nation¬
al Organizations in Chicago, the
Board

"the

Governors

World

Bank

meeting

and

Fund

and

■

funda¬

perman¬

affecting

of securities in the vari¬

states.
retire

has

He
from

been

has

decided

now

active

tration

full-time

persuaded

Association in

continue

national

our

the

that'
or~-

Sometimes

are

Not

Heartened

conventions

Our

tional
held

election

year

every

have

vance

without

whether

one

knowing

our

have

na¬

been

servative

liberal.

delibera¬

This

strength,
which

both.

nor

not

will

selection

•

our

lay the eggs itself.
one

observation,

"Socialism is competition without

prizes, boredom without hope, war

but

always

we
.

without

should remember

all

are

weakness,
become

and

above all
If

and

"T-

statistics

takes
,

the

to face

difficulties

ahead,

(Continued

new

the

they

hardships
years

may

page

Nathan
T

■

personnel;
valuable

^■"

■ ■t

„

• w

A New Committee

the

growing impor¬

aviation

committee-

new

industry,

aviation

Established 1850

has

been appointed under the chair¬
manship-of former Assistant Sec¬
retary of Commerce, William A.

Burden of Smith, Barney &
Co., who will report for the first

time at this convention.
I

recommend> your
our

<" study, and

committee

re¬

London

Chicago

ports, and I acknowledge here
my
great appreciation for the
work done by the chairmen and

■

...

members of the
tees

and

for

various

the

commit¬

cooperation

staff, both in Chicago and in
Washington.
our

What
for

State

has

been> accomolished

members

Legislation

our

the

field

Investment
of

Bankers

America,

Holly

largely

wood, F\a., Dec. 6, 1948.

the

TJnderwr iters

STATE and

and

When Murray Hanson and I at¬
tended

—

the

State

annual

Securities

convention

Commission¬

Distributors

MUNICIPAL

Mitnicipal Bond Department
i

BONDS

THE NATIONAL CITY BANK OF NEW YORK

Head

MORTON & CO

55 Wall

Office:

branches

in Greater New York

Street, New York

INCORPORATED

15 BROAD

STREET, NEW YORK 5, N. Y.
HAnover 2-5620

MEMBER

FEDERAL

DEPOSIT

INSURANCE

CORPORATION

he'art

and it is

morally destructive."

are

mediately

one

and

out of young men

Democrats

factor

.victory
end.

membership.
'•*

;v ''

distinguished

quoted from the London "Times."

that all Republicans are not con¬

were

in ad¬

state

na¬

problems..

Then, too,

meeting would

of celebration

both,

the

international,

sometimes

Election

shortly after the ballots

counted

that

the

socialist state, the distinc¬

And

about the future.

problems

our

poses to

advice and counsel.

tional,

sideration is given to the goose
that lays the golden eggs, whereas
a socialist state is one that
pro¬

entirely free from

worry or concern

reminded

tion being that the social welfare
state is one in which special con¬

affairs, I

period during which

have been

the
of efforts made by Arthur
.Committee in New York; and I
G. Davis, who is now in his 22nd
*An address by Mr. Collins at year of loyal and devoted service
Thirty-Seventh Annual Conven¬ to the Association.
tion

people
under¬

expressed

result

Association

continue the trend toward a'social

iiv"my- adult life has

never

there been

advis¬

the vote

impressed with the realization

that

look forward to his continued

tion,
of

this, too, will be
■*

Washington, and a special meet¬
ing of our newly formed Mexican

laws

few

Harriman, Ripley
can now report the

consideration of

son,

its

•

contribution to
k

Murray Bay,

Quebec.

direction

Because of the

consider

Co., Inc., we
completion-of our. project for the

tance

including

continued,

ently.

only have we visited almost
every Group in the Association,
but, in addition, it has been my
privilege to attend meetings of
other representative national as¬

from

discussions

this

Fennelly of Glore, Forgan &

people

community have

Having lived through both Re¬
publican and Democratic adminis¬

are

attract young men to this business

well.

Not

which

obstacles to

new

States

welfare

chairmanship of

most useful
service to our membership; and
I would urge that our efforts to

discuss

entertained

Committee

Education

under the

John

fulness.

sociations,

that

only really
prosperous and healthy large na¬
tion in the world today.
As stated by a newspaper friend
of mine in Tuscon, Ariz., recently:
"Over a long period, we may

brief observations

year,

in the best IBA tra-r
dition, and I thank yOu again for
your hospitality and your thought-

has

financial

the

patience to

wherever

capacity. We wish him many
more happy and fruitful years as

The

Al-

stop

convention

which

able

been

should

Nov. 2.

respected

ory

scientific

have

has

United

there

with the

trips to Canada

Governors

meetings during the past
the first of which was held

Rye, New York, early in Janu¬
and the second' at White Sul¬
phur Springs, late last May.

business.

our

and'Exchange

results.

participation in this work,'but he

members this

our

been heartened by the unexpected
I hope you will have the

of visting our mem¬

assembled

Securities

Our travels included almost every
of the country and two

every

most

it is one of deliberation, for

opin¬

work

ary

section

best

there will be

He is well known and his

the

his

year,

the years.

ion

year,

making as
many
appearances before Group
other
meetings and
gatherings
various

also

endorsement

confidence
are

Fear

these

ous

The

point of view

Murray Hanson

over

had two

bers in 32 cities and of

were

fortunate

We may expect labor to remain
politically persuasive.
We trust
they will adhere to the accepted
responsibilities of American citi¬
zenship.
'
<

with

men

the sale

Commission.

occu-.

With

of Securities Dealers,

result

"traveling companions, I have had

which

first

sioners have for Arthur Davis

tee, I have met with the members

even more

California.

the pleasure

For

last

again,

learned

and, with the Executive Commit¬

anticipated, but

con¬

of Stock

the Association

Association

spent..
Following another custom es¬
tablished by my predecessors, our
"travels began early in -February,
with a trip to the Pacific North¬
den Little and

Oregon,

Exchange Firms, the American
Association, the National

it has been time well

and to

Portland,

it cannot be said that most

Bankers

forward

Association

time,

certainly from

west

ers

hand, of the universal respect and

fer with

hope that I

carry

predecessors.

pied much of

in¬

affection which the state commis¬

interest and in the tradition

have

stand.

August

I have had occasion also to

con¬

great privilege, as

able

work

your

.of

things which

past year; and I

have

abroad

pros¬

Urges

college, civic, and other groups in
an endeavor to bring about a bet¬
ter understanding of our business.

great pleasure, to have
your President during

81st

of higher taxes, and notes current socialistic tendencies.

believe I have accepted every

citizens.

.■.It has been

now

vote

and effects

progress

vitation I have received to address
Julien H. Collins

of the

some

the

derly and profitable business. Yet,

elsewhere.
Following this, I will discuss some
of the problems of our business
and

during

foreign policy which has been
bi-partisan, and it is the kind of

aggressive advertising and merchandizing by investment banking business.

not be
reported

-may

the

Says outlook for business has been dimmed by

bidding.

our

sociation

matters

by the Association, and reviews

pect

apparent

party.
we

of anti-trust suit

of competitive

fields,
and
I
will, therefore, comment
on only a few

progress

which is being contested

separate

all Democrats liberal.? Describes

are

nor

ering .,their

It is fortunate that the President
and the Congress are of the same

In presidential address to Investment Bankers Association, Mr. Collins reviews
developments in the /Association and in investment banking. .Though stating
financial community has not been heartened by results of November election,
Mr. Collins notes as a factor of strength that "all Republicans are not con¬

this

Congress.

President, Julien Collins & Company

to
.

Retiring President, Investment Bankers Association of America

plan

(2615)

By JULIEN II. COLLINS*

"depart from

CHRONICLE

Banking and the Future

long established

present at this time

FINANCIAL

Investment
.

34)

im¬
pre-

COMMERCIAL

THE

(2616)

Sound, but Outlook Dubious

Holds Status of Rails
The

^rnittee of the Investment Bankers

Association of America, under the

Chairmanship

Percy

Stewart,

"p artner of
'Kuhn, Loeb &
'Co., New York
City,
in reporting developments of
'

offset the decline in pas¬

nues

Securities Committee, calls attention to
delays in granting rate increases to offset higher wage payments.. Holds this
puts carriers in adverse situation, and most railroads will find increasing dif¬
ficulty in financing except at higher interest rates. Notes trend toward reduced
traffic, which if continued, may cause net income deficits. However, with
working capital positions built up and absence of heavy capital needs, rails
as a whole have few pressing financial problems. Reports rail statistical data.
Percy M. Stewart, of IBA Railroad

Com-

Securities

Railroad

Thursday, December 23, 1948

CHRONICLE

FINANCIAL

traffic.

senger

for

revenues

Total

the

year

operating
1948 are

estimated at $9.6 billion compared
with $8.7 billion for 1947.

and; Expenses—While

Earnings
increased

date

this

revenues

year

partly translated into
increased earnings so that aggre¬
were

gate net income of Class I roads
for the first

nine months of

1948

amount to $502 million compared

current year

hour increase is applied to all
it will increase
railroad
operating cost by $360
million annually.

37th

the

per

Con-

Annual

railroad workers,

vention

Hjfolly wood,
Fla.,
stressed
the

squeeze

rail¬

the

from

-retroactive
w

g e

■creases

Despite the successive increases
freight rates granted in Decem¬

ber, 1947 and again in April, 1948,
the roads felt compelled on Oct. 1
last to ask for a further 8% in¬

result-

roads
'i

Percy M. Stewart

side, and delays of

one

which request immediately
following the new wage advance
was
increased to a total of 13%.

crease,

Commis- - This second request was aug¬
sion
in
granting
compensating mented by a further plea that
'rate 'increases.
The
Committee the 8% rate increase be put into
•pointed out, however, because of effect on short notice. Unfortu¬
improved working capital posi¬ nately, the Interstate Commerce
the Interstate Commerce

•

tions and absence of pressing cap¬

Commission

needs, the condition of the
'rails, generally, is sound. Follow¬
ital

ing is the full text of the Commit¬
tee's report:
"

the

Since
of

two

reports

interim

Committee submitted in
and May of this year
on
the hopeful side, it is

your

request

the

refused

quick rise of 8% and opened
hearing on Nov. 30.

for

the extent
not put

It is obvious that to

that

increases

rate

after

months

until

effect

into

are

is
must
be
by the roads. In the
pleasing to be able at this time current
instance, this will amount
to report that the railroads have
to $30 million monthly. We all
had favorable
earnings to date
know how
badly the railroads'
and the year's complete results
earnings
position
was
handi¬
should bear out the optimism pre¬
capped in 1946 by the long delay
viously expressed.
in
granting rate
increases. In
The best estimate seems to in¬ view of
the promptness
with

January
were

dicate that the

Class

for

1948 net earnings

roads

will

approxi¬

million as compared
with $480 million for 1947 and
$287 million for 1946.
'

mate

$650

retroactive

increase

wage

loss

the

granted,

RAILROADS

financing and refinancing except

higher interest rates. An illus¬

tration

noted

this

the

could

trend

offering

recent

the

comparatively short life of
25 years, for which two bids, both
for 3%% bonds, were submitted.
The
attractive
offering
price
brought a most favorable response
all

this

kinds

encouraging

was

from

secure

above

show

one

10%

difficult, if
impossible, to
obtain new
capital funds or refinance ma¬
turities by the issuance of nonfixed interest bearing securities
such as income bonds, or by pre¬
This

their poor

issues.

which the raises sought

earlier in

the year were

granted, your Com¬

mittee

have

hopes

are

not now to

repetition of the JL946 de¬

volume

maximum

;

roads reached
the

settlement

25%
of

Brotherhood

Conductors

agreement with
of /Railroad

and

Trainmen

of their demand

for

boost in wages on the basis
10-cent

hour increase.
representatives
of
the
three
other' operating
unions was finally reached on the
Same
basis early in November.
Negotiations with representatives
of 16 non-operating unions have
collapsed, however, and the con¬
a

per

A settlement with

troversy

has

referred

been

down about 3.4% in the

period. The rainy day must

sarrie

inevitably

and

come,

not

difficult; under different business

conditions,
in

decline
which

visualize

volume

and

sharp

revenues

might result in substantial
until

deficits

time

such

ating expenses

oper¬

be brought in

can

line.

indeed

fortunate

was

that

Class

our

their

railroads,

enabled

were

financial

and build up strong

•

pressing

im¬

structures

working capi¬

positions; hence there

few

all

investor

the

will find

fact-finding board. If the 10 cents

above.

well

aware

railroads

Most

increasing difficulty in

are now

financial problems.

pression would bring about seri¬
ous

the

difficulties for

the

amount

the

beginning

in the face of the large num¬

steam

replacement

locomotives

Diesel

with

being added. The

cars

new

continued

railroads.

months of the year,
roads

which

locomotives

1,062 were

with

compared

Diesel,

when Class I

service 1,159 new

put into

676, en¬

gines in similar 1947 period

Diesel).

that

this

our

first

industry,

great

which has proven

itself to be one

lines

defense,

phasized that the better earnings
picture is largely attributable to

(606

requirements on Nov. 1, 1948

ment

continues

(109,647

locomotives

order

cars

ago)

and

year

finance

tificates

operating ratio,
at
the same rate (78%) as last year.
As already stated net income of
Class I roads for 1948 will prob¬
ably reach $650 million as com¬
pared with $480 million in
and $287 million in 1946.

show

purchases

all

covering

issues have

certificates

million

covering

Loomis;

for the full year

re¬

revenues

the

first

trust certificates has accounted for

million of this total. Mort¬
and collateral trust bond
issues make up the balance. The
$380

gage

institutional interest in the latter
issues has been unenthusiastic for
the most part.

1947.

W.
H.

Dick; H. C.

Fisher;

Morton;

Payne; H. G. Smyth; H. S. Stur-

gis; J. W. Valentine.

■

months

above

the

1948

were

period

ing

15%

revenues

last year.
were

and

gain

passenger

running about even with

Rate increases, however,

largely responsible for the

higher freight revenues this year
and

also enabled

passenger reve¬

Street, New York 5, N. Y.

tal Expenditures

—

Notwithstand¬

are
expected to reach a record
high of $1,260 million, far in ex¬
cess of the previous 1923 peak of

million,
and
comparing
million for the year
1947, there has been no impair¬
ment in the net working capital

with

$847

position which amounted to $1,619
million on Aug. 31, 1948 as against
million at beginning , of

$1,624
year.

Legislation—Since

submitted

report
Bill

dential

provided

agreements

such

San Francisco,

DICK & MERLE-SMITH

IRVING LUNDBORG & CO.

Milwaukee, Wis.

Cal.

minimize

large

against the railroads, now being
tried.

has

there

BLUNT

already

E. MASTEN & CO.

that

hoped

Congress takes no such
A few railroads

Philadelphia, Pa.
NEWHARD, COOK & CO.

Cleveland, Ohio

St.

Investment Securities

permits

nancial
the

voluntary

the

of railroads

capitalization

WHITING,

WEEKS

Boston, Mass.

STUBBS

the
re¬

fi¬

difficulties provided that

plans

approved

are

the

of. the

I.C.C. and-by at least 75%

outstanding of each class

certifi¬

trust

equipment
As

iners

have

its

tral

debt

voluntary

recommended
approval

the

of the Le¬

New

Jersey be

the

30 Pine

Street, New York 5, N. Y.

•

The

holders.

proceeding- with

recapitalization

their

plans,

Missouri-Kansas-Texas
a

structure

Act.

per¬

voluntary plan

security

considering,
tal

& Maine and Maine Cen¬

are

stock

SWENEY, CARTWRIGHT & CO.
Columbus, Ohio

Boston, Mass.

which

Act,

interim report early in

our

year,

Boston

Richmond, Va.
,

en¬

important legislation, referred to

mitted to submit

Louis, Mo.

SCOTT & STRINGFELLOW

new

already

are

Reed-Mahaffie

the

action.

avail themselves of

deavoring to

Railroad

NEWBOLD'S SON & CO.

Chicago, Illinois

•

been

agitation to repeal the Act.

Pittsburgh, Pa.

CURTISS, HOUSE & CO.
HARRISON & COMPANY

recent

the

since

However,

election

high Valley plan and that Central

Washington, D. c.

BIDDLE, WHELEN & CO.
Philadelphia, Pa.

Cincinnati, Ohio

the

degree

importance of the anti-trust suits

Commission

MACKALL & COE

Detroit, Mich.

HUTCHINS <fc PARKINSON

are

readjustment plans, I.C.C. exam¬

ROBERT W. BAIRD & CO.

this

approved by the I.C.C., tends to

cluding

CORRESPONDENTS

SIMMONS

interim
board

The passage of

veto.

cates).

the

of securities affected thereby'(ex¬

•

ELLIS

our

May 25, the Bulwinkle
became
law over
a
presi¬

meeting

amount

LONDON

BENNETT, SMITH & CO.

Capi¬

ing that gross capital expenditures
for road and equipment for 1948

1947, with freight revenues show¬

(Chairman);

■"

Net Working Capital and

of Class I roads for the

nine

13%

submitted,

like
1947
equipment

in
the
sale of

$183,390,000
period. The

is¬

Operating Revenues—Operating

industry for the current year.

this

the first 10 months total
being
$461,117,000
as
against
year,

some

statistical

increase

to
make
agreements with
im¬
munity, under the anti-trust .laws

pared with the sale of $210

sues

substantial

issues

capital

all in funded debt,

railroads,

1947

bill, which would enable railroads

been sold in 1948 to date, as com¬

trust

the

1,630

ago);-

danger through no fault of its own

Appended

has continued this year

which

(960 a year

order

with

substantial

freight

102,220

should not be placed in financial

view of the various phases of

increases and not to any

the rate

reduction

backlog of equip¬

The

$380 million equipment trust cer¬

end

like
em¬

$1,059

equipment including freight cars,

Evans;

NEWARK

ap¬

parent in results for the first 10

permanently corrected to the

and

O. P. Decker; F. R.

61 Wall

the

The situation should be currently

Percy M. Stewart

ESTABLISHED 1845

being

apparently

Respectfully

Clark, Dodge & Co.

total

the

by Class I roads on Sept.

ber of

war

generally,

tal

one-third
are

owned

the

prove

which ac¬

of age,

years

for

count

year

making.

The

during and immediately following

year

are

monthly delivery being about 8,600 cars. Old freight cars, those

1, 1948 are only 10,000 above

Effective Oct, 16 last, the rail-* ings

goal of 10,000 cars was
not attained during the first 10
months
of
1948,"
the
average
monthly

over

$317 million for the
period, it should be

1947

Financing—New

ago.

year

scrapped in large numbers, inas¬
as the 1,752,000 freight cars

the railroads will lay. It would seem that a sound Your Committee's concern is for
forward
looking
national the future. We again point out
estimated $1,260 million, and
on road and
equipment, or some policy would permit the railroads'
that
the
railroad
industry has
$400 million above the 1947 total, under
present peak business con¬ never been allowed to earn the
with equipment expenditures ac¬
ditions to recoup without delay
6% return contemplated under the
counting
for
$940
million
as
against $560 million in 1947. The the higher costs of operation.
Transportation Act of 1920. Fail¬
maintenance of this high level of
It
should
be
noted
that
al¬
ing a more constructive attitude
capital
expenditures
can
only
though revenues for the year are on the part of regulatory author¬
continue with present satisfactory
considerably above 1947, carload¬ ities, any sustained business de¬
earnings.
This

spend

from

down around

were

much

traffic.
It

miles

owned,

sad
commentary on
credit position despite

shouldered

present

Although freight car deliveries
continue
at
a
high
level, the

not

stock

In terms of revenue

slightly smaller, with the
Region the only one to
fractional gain. Passenger

revenue

will find it extremely

common

3.9%

were

Southern

broad interest. It is evi¬

and

1946.

ago was

dent, therefore, that our railroads

ferred

but

1947

similar

the

from

ton miles the decrease from a year

viewpoint, but is clearly indica¬
tive of the high yields required
to'

ended

3.4%

period

and

investors

period

decreased

from

roads for
Nov. 13, 1948

Carloadings of Class I

$40 million of C & O bonds. This
was
a
double A rated security
with

Equipment—

ami

Carloadings

with

Date

1948 to

Data for

Statistical

and
is.

revision of its capi¬
under

the

Mahaffie

Volume

THE

Number 4762

1G8

Sees Bond
j

The

Securities

Governmental

the

Treasury's long-term interest rate at 2V2 % and its effect on inflation. Sees no

vention of the

of interest rates which would help
to
check
credit
expansion, the

authorities

nailed

Hollywood,
Ma., took oc¬
casion to again
call
attention
to

inflationary
the

Federal
serve's

reserve

increase of
city bank reserve
requirements, effective in June.
This was followed in July by a
special offering of Series F and G
bonds to absorb any funds accu¬
mulated
by savings institutions,
which offering in itself attracted
some switching out of marketable

effects of

central

America

Re¬

second

bonds.

"de¬

field of credit control.
our

monetary authorities have thrown
$10 billion into the defense of Par.
The

inauguration

and

has

its

become

liscal

this

policy,

stubborn

perseverance,
most
important

the

influence

encouraging

flation of credit.
As reviewed in

in¬

report

came

Federal

passed

budget
from

had

definitely

the

previous year's
substantial surplus to a position of
approximate balance, permitting
little

debt

retirement at best and

raising the longer term possibility

financing. The $2 billion

boost of all member bank

reserve

1947, until July of that year the
requirements in September under
Treasury held its 90-day bill and
emergency powers granted by the
certificate rates at

one-year

war¬

time lows, thus
encouraging banks
to expand loans and extend in¬
vestment maturities.

Beginning in

July, 1947,

controlled rise of bill

and certificate rates
current

credit

record

and

the

con¬

demands for bank

exerted

toward

pressures

special session of Congress inten¬
sified

the

supports.

bond price
the Reserve

pressure

By Nov.

Banks' holdings of

long bonds ex¬
ceeded $9 billion, nearly all pur¬
chased since November, 1947. Sup¬
port
buying ' in
October
alone
totaled $1% billion as skepticism
grew and sales of Government's

in
on

basic

present

reason

for

Federal

the

never-

whether

argument,

ending

the

Treasury

and

Reserve

should hold to,

modify or abandon
fixed price supports for Treasury
securities.
To enable the orderly financing
the

war,

the Federal Reserve

Banks multiplied their investment
in
Treasury
securities
tenfold,
from

$2V4

1941, to a
$24 billion
That

was

cause

billion in December,
peak of more than
in December,
1945.
inflationary, but few

in
principle be¬
vastly greater money sup¬

questioned

generally appreciated, that the ply

of deficit
our

the

policies,

focus' understanding

and

past

order

in July the flood of bond
fense of par,"
Delmont K. Pfeffer
selling was again undammed. The
but
warns
perils of inflation were further
against
any
drastic
change
in
emphasized by the calling of a
present fiscal policy. The full re¬
special
session of
Congress
in
port of the Committee follows:
August, whose discussions and ac¬
tions were almost entirely in the
The "Defense of Par"
So,

During the past 12 months

was

required

the

to finance

war.

bought, shorts

were

the.

sold out

were

Banks

Reserve

re¬

deemed.

(With little change in
total holdings, the Reserve Banks'
portfolio of Treasury
securities
has swung in the last year from
3% to nearly 40% in bonds due
beyond five years.) But the fact
remains that because of this pol¬
icy investors in Government bonds
have been able to sell readily and
generally
without
loss,
which
supplies them with funds and en¬
courages them to make business
loans or other forms of private in¬
vestment augmenting the supply
of credit and expanding the de¬
mands
for
goods
and
services
which add up to higher prices and
higher living costs.

That result is the principal ar¬
of an uncer¬
gument against the present policy
the grave danger of
of the Federal Reserve and Treas¬
any further credit inflation stood
Support of Treasury bonds
out as public enemy number one. ury.
at fixed prices is properly criti¬
The first move was to take the
cized as being inconsistent with
kerosene away from the fire by
and subversive
of the obviously
using the Treasury's war loan
sincere concern of the authorities
bank deposits for the redemption
and
especially the Federal Re¬
of some of the Government secu¬
serve
Board, about the growing
rities owned by the commercial
banks and the Federal Reserve danger of an ultimate crash if in¬
flation is not checked. Specifically,
System. That was done in an or¬
the support policy is opposed first,
derly fashion during 1946. Then in
because by supplying Federal Re¬
the first half of 1947 unexpectedly

With

tain

the

coming

peace,

large revenue surpluses were ap¬
plied to the same purpose. By the

serve

credit

Government

whatever

volume

bondholders

choose

to advocate
keep the cost oi
living down by various price con¬
direct

Investment
sociation

production
"pie." Further¬
having prevented the rise

more,

permitting bonds to recede slightly under par, but warns
against major change in policy.

adverse effect in

Con¬

Bankers As¬

warrantedly low levels, it tends
to cheat capital and
especially the
thrifty whose savings have built
our nation,
of their fair share of

headed by Delmont K. Pfeffer, reviews

Treasury and Federal Reserve efforts to hold government securities at par.
Calls attention to heavy Federal Reserve government bond purchases to keep

37th

the

Annual

(2617)

Pegging Source of Inflation

Governmental Securities Committee,

Committee, of which Delmont K.
Pfeffer,
Vice-President of
The
National City Bank of New York
is
Chairman,
in
its
report

CHRONICLE

FINANCIAL

COMMERCIAL

demand, it prevents the play of
corrective forces which in the past

are

action

prone

trols and subsidies

foreign to oui
private enterprise ir

traditions of

peacetime.

Space does not permit full de¬
tails

the

efforts

thi

which

authorities have made
to offset the inflationary effects
of bond price support by tighten¬
ing bank reserve requirements
raising the Federal Reserve's re¬
discount rate, and offering higher
interest
rates
on
Treasury bills
monetary

and certificates.
moves

Admittedly, these

have succeeded moderately

cautionary restraints on bank
lending policies; and better yields
as

short

Governments have

term

the
maintenance of
liquid investment positions, on the
part of banks especially. But like
the farmer who cut a big hole in
encouraged

his

barn

door

for his

cats

and

little

hole

for

bonds

even

to astronomical totals.

the

kittens, the
monetary authorities are charged
with
nullifying
their own re¬
straints on bank loans by continu¬
ing unlimited purchases of long
In

effect, by these purchases Re¬
serve
credit is extended directly

capital expansion.

;

The Case for Continuing the Pegs

Probably the most sensible ar¬
gument

favor

bond

price

supports is the obverse of the in¬

Fall of 1947 commercial banks' in¬
flation charge just discussed. That
rates
generally.
vestments in Treasury securities
is, if the bond price support pol¬
offerings
of
Treasury outran needs for
reinvestment, to were down by $20.8 billion and have tightened up on credit
bonds began to depress the mar¬
icy should be abandoned or subpile up liquid resources in cash, Federal Reserve
ket early in the Fall, and to meet
holdings by $2.2 boom times; .and second, because buinuHuy modified, there is a risk
bills and certificates in prepara¬
this situation the
billion, in comparison witli the
Treasury trust tion for the
(Continued on page 32)
eventuality of a drop end of 1945. This funding out and by holding interest rates at unfunds and
the
Federal
Reserve
of bond price levels.
Banks put bids in the market.
payment of securities held by the
But
the
election
results
on
banking system offset most of the
They chose to hold bond prices at
Nov. 2 were immediately inter¬ increase in money supply which
hastily adopted levels approxi¬
would
have
resulted
mating those of mid-November, preted as lessening the likelihood otherwise
of any major change in monetary from the
but
the
expansion during that
support was somewhat
policy, and the Treasury bond period of credits needed by pri¬
grudging and reluctant.
was
lifted
On Christmas Eve the Federal market
by renewed vate industry.
buying, especially in the issues
Reserve announced lower buying
The Argument Against Bond
exempt from normal taxes. Sell¬
price levels for taxable issues and
Price Pegging
in
fact
entirely withdrew any ing of the long restricted bonds
fixed support from the partially was checked, evidencing greater
Since late November of 1947 the
confidence in the. continuance of
tax exempt bonds.
deflation of money supply which
At the lower
strong support, at least until the
prices
the
Reserve
became
a
might have resulted from the con¬
near-term trend of business ac¬
"willing buyer," and has so re¬
tinued retirement of Government
mained through two avalanches of tivity and capital needs can be re¬ obligations held by the Federal
Reserve
selling. Most of the liquidation appraised.
and
commercial
banks

higher

interest

Heavier

Investment Bonds and Stocks

has been of longer maturities, es¬

This then was the situation at has been nullified
by the heavy
pecially the issues not eligible for the time your Committee's report official purchases of Government
was prepared.
banks.
bonds for the purpose of holding

commercial

The shock of the abrupt price
adjustment of Dec. 24, a Federal
Reserve

rediscount

rate

heavy

capital

Policy—Wartime

and Postwar

Before

effective Jan. 12, higher bank
requirements as of Feb.
the

Bank

re¬

27,
of

needs

attempting

Treasury's long term interest

rate at the maximum of 2 V2 %

increase

serve

and

the

Central

that

true

discuss increase

what

should
be done,
we
may
profitably review the net results

ment
been

far

central

any

United States Government Securities

1947, to March, 1948, dumped on
the authorities $5 billion Treasury
bonds
#

maturing beyond five

in Treasury securities has
avoided; as long maturities

utilities and industry generally, in
the four months from December,

•

great net
invest¬

bank

State, Municipal and Revenue Bonds

years.

By early April the first rush of

liquidation
There

had

were

run

its

course.

reasons—such

some

the

abrupt drop of grain prices, a
large Treasury surplus for pay¬

ment of

debt, and the slowing of
lending—to hope

Industrial

roll

co.

that

inflationary

pressures

Confidence

was

ties

hold

But
that

the

line

prices at

soon
check

re¬

became
to

Govern¬

par or

better.

INCORPORATED

Canadian and

was

only

temporary.
Business went
booming along, bank loans began
ai .seasonal
rise in July, and the
insurance companies were flooded
with capital and
mortgage loan
applications and bond offerings of

utilities, industries and municipal¬
ities.

The

stock market remained

stubbornly discouraging to equity
capital
about

needs.
loan

Official

expansion

3beaiea4.

concern

was

Foreign Bonds

sig-

Bank and Insurance Stocks

United States Government

apparent

inflation

Railroad

had

vived in the ability and determi-;
nation of the monetary authori¬
ment bond

•

Bonds and'Stocks

commercial bank

been checked.

Public Utility

•

Securities

ONE WALL STREET

NEW YORK 5, N. Y.

Underwriter

New York

Philadelphia
WHITEHALL

•birtsiDDealer

•

Boston

San Francisco

Pittsburgh

Cleveland

3-8833
Private Jf'ires to all

offices

Chicago

Washington

COMMERCIAL

THE

(2618)

The report of the Industrial Se¬
Association

Bankers

Frank

composed

1948

America,

Willard,

Committee, headed by Frank A. Willard, points out
record of expenditures on new plant and equipment, amounting to $18.6'

pa r t n e r
of
Reynolds &
Co., New York
City, and
19

percentage
Looks for reduced demand for

new

other

ing

derived from internal

was

mem¬

bers, made to

dustrials

An¬

37th

industrial financing in 1949, and refinanc¬

spending

Says large in¬

tion at

Holly¬

wood, Fla., in
pointing to

large indus¬
trial plant expansion in
current

year,

funds

for

new

money.

Frank

were

obtained

Willard

mainly from
internal

sources

and senior securi¬

ties/warned of reduced demand
for

financing

in 1949, but
likelihood
of
equity

new

predicted
capital replacing
senior

of existing

some

securities.

The

complete
text of the report follows:
The

lack

major trend in
security prices has characterized
the year

just past,

much like
We have had

very

the

preceding year.
a
record-breaking
volume
of
peacetime
business,
and
record
high commodity prices; however,
security prices, including common
stocks, as well as fixed income
securities," have maintained a gen¬
erally sidewise pattern.
There
have been many important devel¬

which have

opments

tation, public utility and commer¬
to

$18.6 billion for new plant
and equipment in the current year.
When this figure is supplemented

certain

other

funds necessary

To¬

the

half

items

construction

residential

for

refunding and new money
purposes
by the capital market
has again been derived from the
sale

senior

ex¬

total.

inventory

securities,
almost

90%

such

rather

startling to
realize, since most of the recent
offerings have been fixed interest-

It has been the case

for

great

bulk

development of the Ber¬

many

funds

the

years

that

necessary

for

accounting

^he

securities.

to
has

just

the

SEC reports show that

proportion of corporate bond
offerings privately placed has in¬

meet

been derived from internal sourc¬

ties dwindled.

depreciation charges years;
and,undistributed profits available- •21% of the total in 1945; 39% in
after dividends. This situation has u 1946 and 44% in 1947.
In the first
nine months of 1948 private place¬
been true again during 1948, and

tips confidence
equity securi¬
More recently the

and

Congressional elecagain caused a great
deal of uncertainty about the in¬
has

business

is estimated that

amounted

outlook.:: One

positive
election, so far as its
implications are con¬

result of the

leaving

investment

raised

has

been

the

for

fixed

income

ties
a

sources

almost

$28 'billion,
billion to ibe

to .$6

from

these

outside

sources.

this amount which outside sources

securi¬

called upon

were

the basis of the belief that

Democratic

means

revival

expenditures

estimated

administration

that

to supply, it is

bank

loans

made

$1.3 billion available, and the capi¬
tal markets supplied $5.1 billion

relatively lower interest

creased

namely,

es,

unexpected outcome of the Presi¬

demand

steadily in the past three
private placements were

ments

had

further

jumped

much

85%

higher, amounting to 80
in

1947

with

and

1948.

the

These

first

figures

about 15 to 20%

First, public utility and

rail bonds

are subject to compet¬
bidding, and by virtue of
keen competition
in these two
fields, the sellers of public offer¬
ings have accounted for the bulk
of this business.
Second, within

and Dealers in the Securities of

CORPORATIONS

UTILITIES

•

RAILROADS

the
age
up

MUNICIPALITIES

industrial group the percent¬
of private olacements stepped
very

sharuiy from

little over

60% in 1945 and 1946 to the 8'!>%

figure of the past two years.
It
may be that a part of this recent
THE CANADIAN

•

GOVERNMENT

step-up

can

arbitrarily high

MUNICIPALITIES

Available

are

BANKS

INDIVIDUALS

•

ascribed

the

prices for U.

;. /

:>/•'/':/"■;/ %
Millions

est.——

1948

BOSTON

$588

increase—.,,——:

8.2',*

675

7.7%

,121

6.3%

11.4'/r,

246

1945

Less

Depreciation charges

once

11.5

3.2

5.7

_1_—

by; ;
-'"/t/'-i/.
money—capital markets./—_

Increase

bank

1.3

balance of U.

Effects

New

the

will

election

tailment
the

view

stated

Capital

cause

equally

widely

sharp

cur¬

recognized

high expendi¬

need for continued

public utilities, natural
gas pipe lines, oil and other im¬
portant industries.
The answer
tures

seems

something like this:

Spending by public utilities, nat¬
ural gas and the oil industry may
very well continue at an extreme¬
ly high rate, even though there
been

have

some

announcements

indicating that high building costs
represent
For

deterrent to spending.

example, one of the Bell Tele¬

phone

subsidiaries

early installations
capital facilities, it
that even before
election this year Johns-Manville
huge

noteworthy

new

announced that "about 90% of the

expansion,
duction

replacement, cost-re¬
improvement
pro¬

and

which was inaugurated in
September, .1945, has now been
gram

completed and production utiliz¬
ing most of the new plants and
additional facilities is under way."
General

that the

capital spending and

recently

Motors

also* in its

Pine Street,

PHILADELPHIA
in

released March, 1948,
said: "The postwar rehabilitation
and

modernization

program

Additional

demand
cut

back

for

products will
sharply, And yet

(Continued

group, are not
page

New York 5

Foreign Exchange

other Cities
208

So. La Salle St.,

Chicago 4

Chestnut St., Philadelphia

314

Federal
North

Street,

have

down-turn in

their

manufacturers,

re¬

which

concerns

already witnessed

Commercial & Travelers Letters of Credit

1416

was

virtual completion
year 1947, about two
and one-half years after work ac¬
tually got under way."
Companies such as these, which
made an early start on their postr
war
spending programs, are ap¬
parently scheduled to cut back
their outlays by or^-third or more
in 1949, as compared with 1948,
brought to
during the

Commercial Paper

CHICAGO

an¬

nual report,

DEALERS

•

1947.

these

discrepancy between

widely

ness

RequirementsThere is

Having in mind the farsighted¬

equipment, but the trend and

Election

in 1948 than in 1946

expenditures and the figures used
in this table for producers' dur¬
able

manufactur¬

companies, U. S. Steel,- did spend

statistical difference
the SEC series on capita,-

There is a.

between

in expand¬

enterprises have been two
years behind in reaching a com¬
parable total.
One of the four

5.1

loans.————

over,

ing

f-'SttppUed
New

war was

fund-

rapidly,

rapidly that their combined total
reached its peak in 1946, while

sources.-———$27.7

Deficiency

the

move

productive facilities to meet
peacetime needs for goods,
Their
expenditures
climbed
so

the
Capital

their

and

record

to
.

ability

ing

13.0

—„

expense—

internal

Total

leading

resources

raising

$13.0

charged

outlay

current

able

7.5

profits

companies have
been so
farsighted and capably
advised that they utilized avail¬

6.4

13.4

Less dividends

Capital

—•

——

$33.9

taxes.-

Undistributed,

—

These

■

profits—

1939

$33.4
Sources:

Corporate

Ripley & Co,

Representatives

7.3ft

615

1947

Street, New York 5, N. Y.

•

of Total U.S.

Manufacturing

Goldman, Sachs & Co.

CORPORATIONS

Incorporated

63 Wall

follows:

Manville, General Electric

Investment Securities

Harriman

expendi¬

U. S. Steel, General Motors, Johns-

GOVERNMENTS

Our Facilities

INSTITUTIONS

Inventory

itive

FOREIGN

Combined Capital Expenditures

contrast.

Capital Issues

PROVINCES

tures in recent years

the

private placements for public util¬
ity and railroad bonds. There are
two points worthy of note in this

Underwriters and Distributors

STATES

capital

combined

their

of total corporate bond of¬

contrast

PUBLIC

the

A skeleton outline of

wide basis.

proportionate changes are similar
Following this brief review of
current year's financing, the
Private studies, computed on a
similar
but
not
identical
basis/ big question, as always, has to do
What is Amer¬
show clearly that the percentage with the future.
ican business planning to spend
of private placements in the field
in 1949? ,■/::/
'.;'
of industrial bonds and debentures
,:/,-/,/.,,

49.5%

months

INDUSTRIAL

some¬

from

trend

capital spending pattern of manu¬
facturing enterprises on a nation¬

ferings.

the

General Mo¬

They -reveal

different

what

20.5

about

and the demand for

cerned,

S. Steel,

Man ville.

$6.5

durable equipm't———

Nonresidential

one-half of the total sales of sucn

been

lin crisis killed orf

vestment

tors, General Electric and Johns-

Total

construction———

Producers'

which
of the

bearing securities/that the private
placement of bonds and notes has

year,

funds

$33.4 billion.

.the reduction in the income tax.

tions

nation¬

Est. 1948

Expenditures:

then the outlay
by business enterprises
mounts to the staggering sum of

strong improvement
investor confidence, based on

dential

overall

examination

1946

Predominant

The bulk of the funds supplied

accounted for

$6.4 billion
during

Securities

the

for inventory

including
in

non¬

and

i/.

Senior

expendi¬

tures of

within this 12-month period.
ward the end of the first

-Then the

referred

have

increase

,.in

cial fields.

pansion,

was

capital budgets of" some of the
country's
business- pace-setters,

(Billions)

the

there

It' is interesting

the

demand for both stocks and bonds

affected

sweeping change,

plans.

from

jlted

(

which

1947 and 1948.
that the elec¬

wide economic data we have just-

The increase in Government securities. In other
bank loans is only about one-third worqs, ii the yield on government
ministration would have meant.
to
one-dialf as great as the in¬
bonds is unattractive to banks ana
1948
has
also- been
a
.rec¬
ord-breaking year with regard to crease "in 1947, while the new -insurance companies, there is nat¬
by. the capital urally a transier 01 tunds from
the volume of business expendi¬ money j. supplied
markets appears to be aboutT0%
government to corporate bonds,
tures for new plant and equip-'
and as we know, this has actually
larger than the 1947 amount.. -/ ment. On the basis of the figures
/
It now appears that total 1948 been the case.
compiled by the "Securities and
However, it must be recognized
Exchange Commission, such ex¬ offering of corporate securities,
that while the increase in private
penditures for 1948 will amount including private placements, will
amount
to
to $18.6 billion, as compared with
$6.1 billion for the placements may have been accel¬
erated by the transfer of funds
$16.2 billion last year, and $5.2 year, as against $6.5 billion last
from government to corporate se¬
billion in the prewar year of 1939.
year.
It has been pointed out that
Included in these totals are ex¬ the new money supplied will be curities, the upward trend in pri¬
vate placements is fundamentally
penditures by manufacturing con¬ about $5.1 billion compared with
due to the increasing amount ol
cerns of
some $8 billion in 1948,
$4.6 billion last year, but new
individual savings in the hands oi
as against $7.5 billion in 1947, and
money
supplied
for .industrial
insurance institutions.
.V* .
concerns
a little less than $2 billion in 1939.:
only will be approxi¬
The remainder of these expendi¬
mately $1.7 billion against $2 bil¬ 1948 Estimated Business
Capital
lion last year, a drop of about
tures is made up of outlays of en¬
Expenditures and Sources
'
> /" ;
terprises in the mining, transpor¬ one-sixth.
policy than a Republican "ad¬

made

nas

these

rate

appear

Conven¬

nual

1946,

It does not
tion

in sound financial condition.

are

outlays by manufacturing

companies, many of which had
strongly indicated, prior to the
election, that 1949 would see- a
decline in the high rate of capital

sources.

certain amount of-senior capital with equity securities.

1949

Somewhat less stable will

the

in their

cut

.20%.

budget.

Notes large
of financing through issue of senior securities placed privately.

billion, of which bulk of funds

the

vealed

IBA Industrial Securities

Committee of Investment

'49

Industrial Financing in

Predicts Reduced
curities

Thursday, December 23, 1948

CHRONICLE

FINANCIAL

Boston

Broadway, St. Louis

36)

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

CHRONICLE

(2619)

Debt
In

reporting

Seventh
the

Annual

Investment

tion

the

Thirty -

Convention

Bankers

America

Hollywood,
Fla., Robert
Mason, Vice-

President of
Central

Republic
Company of
Chicago and
New

York,

Services Se¬
curities

Com¬

called lion, 17 aggregating $93 million few more statistics on this subject.
aSemhon^to were negotiated, five for a total; The average gross spread of the

mittee,
heavy

new

nancins

$4 million were offered to j one billion eight hundred million
ktocknolders and a $1 million issue of debt financing sold competi-

fibv

...4.-U

—j

utilities

1918,
largely
through issue
bonds, debentures and notes.
Of total new financing approxi¬
mating $3 billion, it was pointed
Robert Mason

out, more than 86.3% represented
about

and

preferred stocks. It

and

constituted

of the
term

bidding

predominant, though private
placement with insurance com¬
The

companies
hiah

months

this

first

the

utility

year

privately
have

stockhcMers
gregate
able

and

this

the total for the

ag-

money

will

first

financing "done in the
months, over two billion

hundred fifty million

dollars,
or 86.3%, took the form of bonds,
debentures
or
notes,
in
other
words debt financing.
Approxi¬

•one

mately $175 million, or 7.1% of
the total, was raised through the
sale

preferred stocks and the
remaining $164 million, or only
6.6% of the total, through sale of
common

debt financing was

through sales at competitive bid¬
ding, less than $48 million princi¬
pal amount of debt issues going
on a
negotiated basis. There was
no
negotiated utility debt issue
offered

between

late

the end of November.

March

and

An increas-

System financing has, produced an average gross spread
form of long term debt of on y $1.76 per share and a

System

securities

ac-

the

year.

During

the

same

period 87 issues were sold at coro-

tional

this

and

over

weighted

that

per

cessful

only

share. This result, how-

could

During the past year there have
been
an
increasing number of
utility bond issues placed pri¬
vately with insurance companies,
either directly by the issuing util¬
ities or through investment bank¬
In most

issuances

existing mortgages.

possible
the

the bonds

cases

additional

der

the

public

present procedure many of those
who purchased part of the regis¬
tered issue, particularly the small¬

un¬

insurance

have

not

the

additional bonds, and,
has

than

they would have if the bonds

several

months,

had

been

their

for

offered

and

sold

three of the issues the
group

offered

get

the

28)

suc¬

preferred deals pro¬
gross spread of
share .and a weighted

average

Investing in American Business
ts

☆ American Practice

of action has been due not

only
to
relatively
low
money
rates, but more particularly to the
generally unsatisfactory condition
of
the
preferred
stock
market

stock

deals

showed

spread of 7.63%

gross

average

of the re¬
The lat¬

this

;

ter percentage was

inclusion

the

Committee's

report

between

without

influenced by

deals

two

sampling of
holders'

underwritten,
the

com¬

underwriters

varied substantially and was gen¬
on

of shares taken up

the
of

American

sharing

and risks
make

leading

This

practice—

profits

by those who

business

the number

by the under-

stock¬

The trend

continuing.

the

lists

corporations.

pensation

representative

which

were

17%, according

securities

been

Municipal

Distributors

of this firm.

Our under¬

offices in 34 states, have
been
to

especially designed

help achieve this ob¬

jective.
We

gratified

are

place them at the service

take

pride in

expanding base of

se¬

meeting their capital
needs—at the service of

investors
their

and

vancement
not

and Dealers

long

of American business in

well

nomic

and

has

writing and distributing
facilities, embracing 98

country, for this is eco¬

State

interest
,

primary objective

curity ownership in this

Underwriters,

Improved distribution
of

possible.

Investment bankers

their

and support.

ber of U. S. investors in¬

creased

Gn issues offered to stockholders,

erally dependent

decade

1935 and 1945, the num¬

spective offering prices.

through most of the year and the
relatively low ratio of common issues in tile $7 to $8 class where
stock prices to earnings and divi¬ the
spread percentage-wise ran
dends.
Many utility companies 11 to 12%. Information concern¬
have already reached, and many
ing compensation paid on private¬
others are approaching, the point
where additional debt financing ly-placed deals is not available.

report.

the

have

social
which

been

ad¬

could

achieved

increasing

individual

partici¬

pation in the continued
growth

the

United

States.

(Exempt from Federal Income Taxation)

CHASE

NATIONAL

OF THE CITY OF NEW
BOND

Tel. HAnover 2-6000

BANK

YORK

corner

Bell

Lynch, Pierce, Fenner & Beane

Underwriters and Distributors

70 PINE

of Nassau

System Teletype NY

Merrill

of Investment Securities

Brokers in Securities and Commodities

DEPARTMENT

Pine Street

not
page

do
on

17 negotiated

duced

STREET, NEW YORK 5, N. Y.
Offices in 96 Cities

1-1010

the
last

can

THE

the

stocks

the

not

going

been

(Continued

pub¬

companies,

opportunity to purchase

market

price

the
un¬

mortgages
would
likely to come into
market.
Under the

bonds

net

issuances

available

made

additional

existing

seem

con¬

issuing companies obtained

better

utilities,

It is im¬

whether

tell

of the

nature

business

largely due to the fact

was
on

spread

gross

electric

and gas utilities.

ers.

limited

is such that it
seems
to your Committee that a
simple supplement to the previous
prospectus, setting forth more re¬
cent earnings and balance sheet
figures and data as to property
additions, rate changes, etc., should
suffice:
If such a simplified form

concerning
of

say

The

bonds.

utility

jurisdiction

regulation

time,

ing amount of utility debt financing has been done through private
placement, principally with insur- must be accompanied by addiance companies. Available records
tional equity financing in order to
indicate 62 issues so placed, ac-^
preserve proper ratios in the capi¬
counting for approximately 12% tal structures. We will speak fur¬
of financing in the first 11 months ther of this matter later in the
of

preferred stocks the seven
issues sold at competitive bidding

per
have been given do not include
bank loans or other temporary gross spread of -$4.09 per share
There were included in such deals
borrowings,
including
borrow¬
ings from holding companies.
If several issues of junior conversuch were added, further
empha-;tible preferreds on which a wider
sis would be given to the fact that gross spread prevailed than has
•the utilities in their financing acj recently been average for utility
tivities
this
year
have
again' preferreds.
leaned heavily on borrowing and
The three common stock issues
have been far from the supposed¬ sold
competitively
showed
an
ly ideal financing ratios of 50% average gross spread of 6.87% of
aebt,
25%
preferred 'and
25% the - respective
offering
prices
common.
For the most part this while the 10 negotiated common
course

stocks.

Most of the

Bel1

All

System.

whole,

$4.57

(

the

per-

debt securities, 10% preferreds and
9% commons. The figures which

full year

financing.

the

information

Commission

three years,
the SEC work out a simplified
form for registration of the addi¬

Utility
of

registered is¬

sold by the utilities in the first 11; below prices they had contemmonths were 81% in the form of plated, for market reasons.
The

Foresee-

month

debentures

Excluding Bell System financing, the balance of the securities

close to the $3 billion mark. With
major
exceptions, all of this is
new

counted for 37%% of all debt fi-( $1.55
ever,
nancmS sold competitively,

their

for

der

will approximate this figure.

com-

raised

billion

$2%

financing

bring

and

spread was generally wider on the
all! Telephone deals than on the aver-

book

stituted

and

Copies

issued under an inden¬

has been sold within

period

Commission, Washington
It is a handy reference

in the Bell

centage for the year

panies through sales of securities

publicly,

Power

sue

additional

where

cases

are

ture under which

booklet may be obtained at a cost
of $1.00 each from the
Federal

sold competitively by companies

rprnrrk

27%%

the public

public
utility°fth? Bell
1948 has set new been m the

Financing

the
American
Telegraph System

Committee follows:

over

Railroad

Commissioners.

sale this week of the $150 million

the increase.
of the Report of the

text

$4,676 per bond. It is inter¬
esting
to
note
that - the
gross

utility financing in' age of.all of the deals, such averthe first 11 months and with the age being $5,191 for the 10 issues

was

panies is still

the weighted average gross spread
was

for

sociation

bonds

cooperation with the National As¬

State

debentures, where a
was paid to the issuer for the
privilege of underwriting, then

all

the Federal Power Commission in

convertible

that

25, D. C.

fee

aggregating $121 million
to stockholders, in
with
underwriting

accounted

in form of longCompetitive
placing
new
issues

was

securities.

debt

costly registration process.
suggestion is made, therefore,

The

in public utilities
recently published by

booklet

the computation of the Consolidated Edison and Peoples Gas
irom

cases

Companies
Telephone &

than one-quarter

total,

which

financing,

System

constituted

the U months ended
Nov. 30 was $5,067 per bond and
the weighted average gross spread
$4,484 per bond.
If we exclude

offered

standby.

tiveiy

<?,e

most

all American Telephone and Tele¬

graph

were

noted that

was

attention

—

with
an
insurance
company.
In the common stock
field, only three issues totaling
$14% million at offering prices
were sold competitively, while 10
with an offering value aggregatplaced

was

■of

debt

offerings. Many of these
probably would have been
made publicly if the issuing utili¬
ties could have avoided the long

interested

you
a

the

latter

public

Your Committee has been asked
to

the

sales

and

call

companies to pay less for bonds
purchased
privately
than
for
equivalent bonds purchased on

writers.
An
average
of
such
spreads would be meaningless.
to

certainly

months of the year there has been
a
trend on the part of insurance

new

petitive bidding and four through the Spring meeting we said that
negotiation.
'
I we thought it would be of interest
Ui the preferred
stock financ- '< to submit figures on spreads since
ing. seven issues went competi-' this is a subject of much discuscively aggregating some $67 mil- sion in our industry. Therefore, a

Public

n e

high record in

Chairman of
t

licly, but

utilities issues, bulk of which took form of bonds,
debentures and notes sold under competitive bidding. A. T. & T. System
financing comprised 37% % of total debt issues sold competitively, while
an increasing number of bond
offerings have been placed privately with insutJ
ance companies.
new

the

Financing

Robert Mason, Chairman of IB A Public Service Securities Committee, reports

Associa¬

(2620)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

Reports High Record of Municipal Issues
In its report to the 37th
Annual

Convention
of
the
Bankers Association
at

IBA

Municipal Securities Committee headed by Emil C.
Williams, notes,
despite increased output, market for municipals has been
relatively steady but
with rising yield
tendency. Calls attention to work of

Investment
America

Hollywood, Fla., the Municipal

® ecuritie

Committee,

special Committee

Revenue Bonds in

which Emil C.

Vice-Presi-

water

dent of the

pollution and tidelands ownership.

amount of such new issues reached

Bank & Trust
of

York

the

figure
638,000,000
maining to
tively, the

New

City is

Chairman,
stated that for

1948

be added.

Conserva¬

total for the
will

the second

year

consecutive

figure by $500,000,000.

year

new

sues

term
p

There

is¬

long-

munici-

Emil C. Williams

bonds

have

set

record

high,

with

indi¬

several

vidual state issues
reaching above
$100 million, and with authoriza¬
tions in the recent election total¬

ling

about

$838

million.

These

current and prospective authori¬
zations have been accompanied
by
up
and
down
swings
municipal market, with
yield tendency.

The

text

the

in
a

the

rising

Committee's

report follows:
For the second consecutive
year,
the volume of new,, issues of

longmunicipal securities has set
all time
high. In 1947 the

term
an

amount

That
the

was

about

$2,354,000,000.

then the all time
high—

high

being

§1,500,000,000 in 1940.
first

months

about

During the

this

year

exceed

three

were

the

1947

single issues

during 1948 of over $100,000,000.
They were the $300,000,000 New
York State soldiers' bonus
issue,
the
$200,000,000 State of Ohio
soldiers' compensation
issues, both
sold last March, and

$134,000,000
Pennsylvania Turnpike bonds is¬
sued in August.
At the general election

courts, Hotard, etal
Orleans.

year issues totalling
proximately $838,000,000 were

about

This

compares

ap¬
au¬

with

$1,100,000,000 approved

was

2.35%

basis.

2.45% basis

of bank officials and

banking
a

pal

November

1945

1.35

August & September
May

though

1946

1.29

March & April

1947

1.78

1948

2.23

With

market

had

the downs during the

its

year.

ups

Based

and
on

the

volume

constantly

the

purpose

dealers,

sonably

brief

sible, in order that they
complied with by
cials

and

the

its.

securities, through a
understanding of their mer¬

With this in mind

our

tee

The

Obviously,

!Philips T.
York

each

stand

Chair¬

own

(Chairman),
Corporation, New

City; O. Paul Decker, Amer¬

Chicago, Chicago; Hal H. DeWar,
Dewar, Robertson & Pancoast, San

appeal

decision of the

has

merits.

above

Court

re¬

from

Louisiana

Su¬

preme Court in favor of the
of New Orleans.

City

Texas

At the general election

Section

1-a

amended

"Section

1, 1951,
shall

From

•

Progress Report of this Spe¬

after

and

State ad valorem

levied

was

follows:

1-a.

Jan.

VIII

Constitution

to read

tax

Nov.

of Article

State

upon

any

State for gen¬
eral revenue purposes.
From and
after
Jan.
1,. 1951, the several

counties of
ized

the

State

levy

are

author¬

valorem

taxes

all property within their re¬
spective
boundaries for
county
upon

the

purposes,

except

Thousand

Dollars

residential

first

Three

($3,000)

value

homestead, not to

exceed

from
tion

will

recalled

that

shall

used

Roads

was

for

construc¬

maintenance of Farm to

and

Market

for

Flood

Con¬

litigation that occasioned cancella¬ trol, except as herein otherwise
V
tion on July 2 of the sale which provided..
the City of New Orleans made on
"Provided that in those coun¬
April 28
of
$15,000,000 of its ties or political subdivisions or

Co., Incorporated, New
City; Aaron W. Pleasants,
Trust

issue

New Orleans

Morton &

International

ade¬

Committee.

Antonio; Robert S.Mikesell, Stranahan, Harris & Company, Inc.,
Toledo; William H. Morton, W. H.

The

its

that

thirty cents (30c) on each
in mimeograph
form, along with One Hundred Dollars
($100) val¬
copies of this Report. Your Mu¬
uation, in addition to all other
nicipal Securities Committee, ad valorem
taxes authorized by
greatly appreciates the extensive the
Constitution of this State, pro¬
thought and work of the Special vided the revenue
derived there¬

Barbour

ican National Bank & Trust Co. of

York

time

cial Committee has been
prepared
and copies of it will be available

Commit¬

consists of:

The First Boston

would reflect their intrinsic value.

man, Emil Williams, appointed a
Special Committee at our Spring

Meeting last May.

the

rea¬

tion
requested to permit of an
analysis
of
the
securities
that

these

apply
to
the
Supreme Court for

Certiorari.

however,
cently dismissed

the

pos¬

may

bonds.

quate in the character of informa¬

which should further broaden the
investment field and the markets

municipal offi¬ property within this
same

better

practically

the

should

States

Writ

investors

endeavoring to have them

increasing

issue

and

noted,

A great deal

throughout of

eye

United

case, in which
had upheld the

court

plaintiff

re¬

arrangement of such
an

lower

United

that

bond

the
of

This suit is terminated unless the

its

thought has been de¬

to the

forms with

municipal
revenue
bonds financing and its growing
importance, it has become appar¬
ent
that
steps could be taken

for

felt

revenue

for

use

of time and

aggregate vol¬

feview, the municipal

forms,

broad

Revenue Bonds

brief

situation

and bank examiners.
voted

Market
In

bond

the

pattern for

port

June

ume.

Court

city's right to construct the Union

Committee

Oct.

Appeals,
Circuit, affirmed the earlier

Terminal

bonds.

Special

Circuit

trict Court in this
the

revenue

Johness Invest¬
City of New Or¬
brought in the Feder¬
v.

decision of the United States Dis¬

development

January

ing year, as
will be smaller in

as- a

among the first steps to be under¬
taken should be the

1.69

figure
during the com¬
big bonus bond issues

Fifth

appreciation of the
true investment value of munici¬

■*

1.59

volume

States

banks, and

everywhere

study

1943

1948

recognition

was

courts.

(2) To do what it can to create
in the minds of
prudent investors

Yield

1944

the

leans,

secur¬

banking
especially

commercial

The

will be exceeded

Inc.

ments,

investment for
institutions of all kinds,

follows:

Month

The other suit,

and

merits

bonds" which would

them

and

appeal from the decision of the
Supreme Court of Louisiana.

"munic¬

suitable

(lowest yield level) for each year
during the past six years was as

of investment

revenue

entitle

high

backlog of authorized, but unsold
new
municipal issues. However,
writing it does not look as

at this

understanding of the

the class

ipal

4. As of Nov. 18, The Bond
Buyer's
Index showed a 2.35% basis.

Year

City of New

The lower court and the

supervisory
particularly,

ities generally known

the general election last
year. All
in all, there is a
very substantial

authorities

realistic appreciation

fuller

of Nov.

For comparison the market

city

(1) To bring about in the minds

through¬
out most of January of this
year.
It then ran off rapidly to a
2.48%
basis in February.
Following the
successful $300,000,000 New York
State deal in early
March, the
market gradually improved reach¬
ing a 2.23%'basis the forepart of
June, after which it again de¬
clined to

the

Supreme Court upheld the
in October the United
States Supreme Court dismissed

Two general objective? nre be¬

ing pursued:

held at about that level

Nov.

2, of this
thorized.

Bond Buyer's Market Index
20-year municipal bonds of 20
large units, the market at the
of

1947

calendar

State

The

approximately $2,with two months re¬

mention

Two suits were filed against the
city to prevent it from proceed¬
ing with the construction of its
Union Passenger Terminal.
One
suit
was
brought in the state

Chemical
Co.

without

litigation.

bringing about appreciation merits of these issues and in
patterns. Explains status of bills in
Congress regarding

developing uniform

Williams,

opinion

„

Com¬

pany,
Denver,
and
Robert
O.
Shepard, Prescott, Hawley, Shepard & Co., Inc., Cleveland.

Union

Passenger
Bonds.

enue

Terminal

Bond

counsel

Rev¬
was

unable to give an approving
legal

areas

of the State from which tax

donations

have

heretofore

been

granted, the State Automatic Tax
shall

Board

full

continue

amount

the

levy the

State

va¬

lorem tax for the duration of such

donation, or until all legal obli¬
gations theretofore authorized by
SPECIALISTS

the law

—

granting such donation

donations

shall

have

been

fully

discharged,

United States Government

whichever shall first
provided that if such do¬
any such county or po¬

occur;

nation to

litical subdivision
the

full

lorem taxes

Securities

of such taxes
above

such

tained

is for less than

amount

State

va¬

levied, the portion

remaining

donation
said

county
*

and

over

shall

re-

sub-

division."

State and

Municipal Bonds

It will

be noted

amendment

that

while the

eliminates, beginning

Jan. 1, 1951, the state ad valorem

☆

tax

•

property

any

revenue

for general

provision

purposes,

made for the State Automatic Tax

iBoard

C.J. DEVINE

CO.

INC.

continue to levy the full
of

the

Street, New York 5
•

Boston

Cleveland

•

HAnover 2-2727

Philadelphia

Cincinnati

•

state

tax—in those counties

subdivisions

48 Wall
Chicago

amount

•

Washington

St. Louis

•

Direct Wires to all Offices

•

Pittsburgh

San Francisco

viously
tions

been

areas

valorem

political

having

granted

tax

pre¬

dona¬

(so-called tax remissions)—

for the duration of such donations
or

until all

tofore

legal obligations here¬

authorized

the

law

granting such donations have been
(Continued

page

38)

Volume

168

THE

Number 4762

COMMERCIAL

Advocates 50%
Mglon
Courts

Courts,

partner

Co., Atlanta, Ga., in
presenting the report of the Fed¬
37 th

Committee

the

Association of
H

reiter¬

ated

the

cle

de¬

the

cision

maximum
rate

duced
and

50%

made

dend

re¬

Malon C. Courts

gains

The

divi¬

and

the

text

re¬

port follows:

officials,

and many

labor

officials

otjiers. Your Chairman

the

Revenue

particular meetings to the Board

Florida

the

willing to take

all

previously reported at the
Spring Conference at White Sul¬
phur Springs, West Virginia, your
Federal Taxation Committee de¬
cided to pursue the recommenda¬

tions proposed by the 1947 Com¬
mittee but agreed to concentrate
its e'forts on the following' im¬

objectives:

eliminated

but

risk

same

capital;

has

and

largely killed any incentive
accepting
investment
risks

for

with such funds

ceiling

50%

available.

are

feels

Committee

When

floor

Senator

bracket

made
this

for

cerpts

long-term capi¬

gains to 12%%, if enacted into

the

top

rates

and

in the Congressional Rec¬

appears

issue

March

which

1948, ex¬
attached to

22,

are

this report designated as
D."
Unfortunately this
ment

was

"Exhibit

amend¬
not adopted but mem¬

law, would actually increase the bers' particular attention is di¬
to the government in the rected
to the clear presentation
aggregate as it would give the of this proposal by Senator Pep¬
taxpayer some real incentive to per.

revenue

invest

his

money.

that

dividends
is not

the

justice

Committee

the

1949

this

point

in¬
your

effort should

some

get

made

provision in the "Tech¬

nical Bill" which would grant an

option

the

and

port

owners

unincorporated

businesses

Federal

pay

either the individual rates

porate
on

rates.
of

one

Washington
a

reliable

In
our

this

certain
to

re¬

taxes
or

cor¬

connection,

recent

trips to
ascertained from

source

that members of

the

Ways

and

the Senate Finance Commit¬

and Means

for

bears.

This

taxpayers but it
difficult for cor¬

expansion
them

programs

such

to meet

going into debt in

un¬

degree. Your Commit¬
tee agrees that this problem is
one that should be given relief at
the proper time but it is the opin¬
ion of your committee that this

desirable-objective must be

sidered,

thinks it well to mention the fact

that

now

double

desirable

Committee

your

all
more

forces

needs

recommends

Committee

certainly

matter of gross in¬

kind

the

that-it

capital

and

act

new

the return

porate enterprises to raise equity

which

1948

may

subject

only

makes

closely the progress of this bill.

Pepper

50%

strong speach supporting
measure.
His entire speech

rates

reduction in the

Senate

amendment to

make

individual

Act

ord

the

Claude

offered

Bill

Revenue

Act

adopted

present
1948

the

introduced

was

the

maximum tax

of Governors.

that

surtax

individuals and

tal

not

taxation

by the Eighty-first Congress and
some of the proposed revisions of
were

Your

mediate

Congress, gov¬

cluded

also

capital

taxes.

ernment

experts to give a report of these

source

revision

members

have available for investment and

incomes

individuals

from

been furnished by people able

and

the

surtax

equity

with

has

its

efforts

cy¬

risk if the
opportunity
for
gain
appeared
promising. The present schedule
of high taxation has reduced the
annual savings these people wOuld

continue

the past,

raised

capital

vicious

we see a

work.

las

Committee

have

would

and

Right here

investments

making

its objec¬

says

llywood,

headed by Malon C. Courts,

50% and repeal or modification of present capital gains tax.
together with repeal of double taxation of dividends,
will stimulate risk investment. Urges IB A members take active part in forward¬
ing Committee's aims.

Bankers

Income Tax

Contends these reforms,

Invest¬

America

(2621)

maximum of

Annual

Convention of

ment

CHRONICLE

tives will continue to be the reduction of individual surtax Tate schedule to

the

FINANCIAL

Ceiling

IBA Federal Taxation Committee,

eral* Taxation

Committee

tee were most sympathetic to this

con¬

present circum¬
stances, as more in the nature of
a longer term objective
than the
two immediate objectives statedr
at the start of this report.
The
basis of argument being that for
the fiscal
year
ended in June
1948, the total receipts from cor¬
porate taxes amounted to approx¬
imately $10 billion. This fact is
substantiated
by a letter dated
Oct. 26, 1948, from Mr. Stam to
Mr. Murray Hanson, your counsel,
and is designated as "Exhibit C."
Although we do not have at hand
the

under

must

received

amount

exact

the tax

from

dividends, obviously if
very substantial.
Since
probable that the elimi¬

of the Rev¬ problem and were very anxious it seems
1948, the Revision to correct the present discrimi¬ nation of double taxation of divi¬
Revenue Act of
1948, generally nation provided a bill could be dends
(2) Outright repeal or modifi¬
might therefore result in a
known
as
the "Technical
Bill," properly drawn which would not considerable loss of revenue to
cation of the present capital gains
was
only meet the problem but also our
prepared by the Ways and
tax.
government, at a time when
A" and "Exhibit B."
This
Means
Committee
and
actually be feasible to administer.
The plan and program for. ac¬
such revenues are needed, it may
"Exhibit A" represents a copy of
passed. by the House although proposal would afford justified not be possible to obtain this re¬
tion by your Committee was sub¬
a letter dated Oct. 29,
1948, writ¬ never
formally considered in the relief to certain members of the lief at this time.
mitted to the Board of Governors
ten
to
your
Chairman by Mr. Senate before
banking
fraternity
Congress adjourned. investment
at the meeting held at Westches¬
Now we come down to the ques¬
Colin F.
Stam, Chief of Staff, The Committees of Congress and who are required to conduct their
ter County Club, Rye, New York,
tion what can be done?
Our an¬
Joint Committee on Internal Rev¬
as
business
the
partnerships.
This
Treasury have published
on
Jan. 30.
and same was ap¬
swer can well be taken from the
enue Taxation.
This letter states
number
of
recommended
tech¬ matter is being further discussed
proved at that time.
article published by Standard &
that in the event no taxpayer had
nical changes to be included in at the Convention with the hope
Your Committee employed the paid a tax rate of more than 50%
Poor's entitled "For the Good of
this bill.
Your Committee com¬ that action may be taken when
law
firm
of
the Nation," which reads in part:
Spalding,
Sibley, of any dollar of his taxable income
mented in its Spring meeting re¬
Troutman & Kelley of Atlanta to for the fiscal year ending in June
Congress convenes in January of
"What can you do?
A great
port, on the various aspects of this
assist in the preparation of this 1948 the revenue loss under the
next year.
deal. You can be an active citi¬
:

(1)

The

surtax

should not go

schedule

rate

higher than 50%.

To support

After

the position that

bill

program.

the

feels

are

that

two above mentioned reforms

through

means

could

which

would

Congress

promptly seek to stimulate
investment

risk

from this limitation
would have been $655 million and

law

present

Committee

Your

and

general

affect

excess

mated

but

true

picture

ductive

tion

that

equity capital in pro¬
enterprise in particular,
-without any real gamble on the
aspect

and

col¬

without

thereon with the budget
problem. So long as the Federal
budget remains at anything like
$40 billion a year it will be ex¬
tremely difficult, perhaps impos¬
sible, to carry revenue cutting tax
liding

reduction

than

further

provided
which

this

law,

been

law
Yet

enacted this year.

was

constructive

the

leaves

has

revenue

the

income tax

50%

rather

present

take the posi¬

maximum

bring

rate

about
which

business

crease

in turn,

esti¬
only

not

as we

the

would

loss

does

income

This

$22,000.

revenue

nominal

taxable

all

the flow of

revenue

our

passage

in¬

would,

which

were

concern

Gains,

Corporate

have

zen,

heard much about the injustice of

this

Distributions,

double taxation of corporate div¬

You

idends.

Section 102, Inter-corporate Divi¬
dends
and
Consolidated Return,
Loss
and

Carry-over and

Carry-back
Contemplation of Death.
It

likely that

"Technical

some

Bill"

form

will

the

passed

start

Were

from

Federal

you

Congress

scratch

tax

interfere

year

and

system
little

able

plan

designed

possible with

the flow of risk capital into job-

working for

can

tell

your

Congress what

can

discuss,

helping

(Continued

Chair¬

by Mr. Stam in which he out¬
lines the revenue derived annually
man

from the

capital gains tax for the
1947

1946 and

for

ures

inclusive,

1935-1945

period

not

fig¬
being

that

Underwriters

—

Distributors

—

Dealers

examine the figures
in this exhibit you will agree with
you

normal suppliers of
equity
capital too great for the long run

them that this tax has been nom¬

health

inal

our

economy.

President

Truman, in his mes¬
sage to Congress on the State of
the Nation early in January, in¬
that

dicated
of

short

then

were

far

for

capacity
growing future.

He stated that at least $50 billion
should be invested by industry to

improve and expand
tive

over

our

produc¬

the next few

years.

Discussing

the

problem

same

In March of this year arrange¬
ments

were

witness

appear

Committee.

Richard

Co., Atlanta, testified
committee

this

advocating

the

the total need for new
plant equipment could be put as
high as about $75 billion which
is equivalent to five/years of in¬
account,

vestment

question

the

1947

where

rate.

The

this

needed money to come

much
from. The

portion of last year's in¬
vestment outlay was financed out
major

internal funds

business

rates

and

maximum

members

were

the

Ways

copy was

the

Tax
of

Committee

timony

obtained by sale of common stock

Finance

ciation.

were

W. C.

Langley & Co.

also furnished members

mainly insurance companies. Only
a small fraction of the funds was

—#■

and

Means Committee at that time.

and

copies available which
supplied upon request.

stockholders.

long-term
capital gains to 12%'%-. In this tes¬
timony he emphasized the short¬
age of risk capital and its effect
on the industrial economy of the
nation.
A copy of his testimony
was sent to the Congressmen who

profits. The next largest was me
with sale of bonds to institutions

or new

Board

existing

March

reduction

tax

ceiling

50%

consisting of accumulated depre¬
ciated reserves and undistributed

SECURITIES

Courts

of Courts &

that if all factors

taken into

and INDUSTRIAL

the Association to
before the Senate Finance

surtax

of the

for

made

representing

Standard & Poor's have indicated
were

UTILITY, RAILROAD

revenue.

before

capacity

PUBLIC

large when compared to the total

industrial

the

needed

during this period with* the
exception of 1944 and 1945 and
in those years the revenue is not

the

Members New York Stock Exchange

Governors of the Asso¬

There

are

addition to

given

the

before

now

will

formal

the

few

tes¬

Senate

Committee, several trips

made to Washington jtq

,falk

115

Broadway

New York 6, N. Y.

fatalist.

think. You

and
do

educate

"Exhibit B" represents copy of an¬
other letter written to your

you

wherever it might

representative

argue

it.

than decrease

the welfare of

nation, rather than

increase the total revenue

available. Your Committee thinks

the

During the past

Capital

with

concerned

to.

members and included provi¬

sions

is,

burden

the

Act

enue

involved in
these measures we are attaching
two
letters
designated "Exhibit
is

gamble

revenue

persuade

some

and
page

good,

arouse

29)

THE

(2622)

In Attendance at IBA Convention

Committee

Stock Exchange

ABRAMS, Jr., JAMES S.

Allen & Co., New

;

brief

report

Laurence

Committee on

Rela¬
tions, reported
change

that

there

were

Stock

Exchange

violate
fundamental¬
would

Laurence

M. Marks

mately three times as many. In
addition, in the last 10 years a
number of firms have joined the
Stock

ly the principle of policy of af¬
fording free and open markets

Exchange, a great many

Bankers

Association.

supply and demand deter¬ thought of the
the value of seats could be en¬
mining prices, and contended a
hanced naturally by obtaining ad¬
better way to enhance value of
ditional listings of shares on the
Exchange seats is to obtain addi¬
tional listings. The text
of the Exchange and by acquiring new
members all over the country. In
Committee's report follows:
,
In the past year comparatively reporting the findings of the Com¬
few
problems
have
presented mittee, Robert P. Boylan, Chair¬
themselves
to
your
Stock Ex¬ man of the Board, commented as
with

change Relations

margin rules. Thus far no definite
has been made.
Taxation—The officers of the

progress
Stock

Exchange are also lending

every effort to income tax reform,
particularly as pertaining to a re¬
duction of the Capital Gains Tax
and also to the waiting period. Of

times

course,

for

tax

agement

"Any

—

propitious

not

are

but the

reductions

man¬

steadily

working

could

not

retirement program

and,

selective
a

un¬

retired
estates
inactive members. Thus, one of
which

seats

would

primary objectives of a
plan would
be

the

retirement

fundamental principle of
policy. The Exchange
always staunchly advocated

has

fre^ and open markets with sup-y
and
demand
determining,
The Strike—As you know, and. ply
as
was
reported in the interim price. The Board of Governors is
report of this Committee to the strongly of the opinion that any
seat retirement plan would be a
Spring Meeting of the Board of
contradiction of this policy and
Governors in May, in the course
of the winter the union employees therefore it would be a most un¬
The Board
of
the
Exchange went out on sound. step to take.
strike. They were out five weeks feels that the efforts of the Ex¬
the problem.

termi¬

change should be toward expand¬

by union vote.

The union

ing the value of the services ren¬
dered
by the Exchange to the

employees at the end of the strike
received the exact raises they had

promised prior to the strike.
addition, it was found possible
operate the Exchange with 100

been

In
to

fewer

employees.

BARROW, WM. RUSSELL

Another problem the

Exchange Memberships

the

year

New

Exchange

during the winter was
the question of retirement of seats.
As also was reported at the Spring

January

Association

ers

resolved

early

Stock

During

number

the

have

joined

the

York Stock Exchange.

know, seats are selling
neighborhood of $50,000 so
membership
in
the
Exchange
would
seem
during these slow
times a sound way to add another
As

you

the

Assn.,

•

Washington

Shreveport
BRAYSHAW, DONALD B.

♦BARRY, EUGENE P.

Distributors

Group, Atlanta

Shields & Co., New York

♦BREWER,

BARTOW, CLARENCE W.
Drexel & Co., New

BROOKS,

W. E. Hutton & Co., New

York

New York

Bateman, Eichler & Co.,

Journal of Commerce, Chicago

ANDERSEN, JONAS C.

Los

;;

Anderson & Strudwick,

BROWN, AUSTIN A.
Dean Witter &

Cleveland

Baker, Simonds & Co., Detroit

Spencer Trask & Co.,
New York

BRYANT,

Distributors Group, New York

♦BECKETT, Jr., THOMAS
Dallas

Equitable Securities Corp.,
Nashville

BRYCE, T. JERROLD

Clark, Dodge &

BELL, RUSSELL D.
Greenshields & Co., Montreal

♦ARMITAGE, ALBERT T.
Coffin & Burr, Boston

BENDER, ROBERT

Wachob-Bender
•

EMMONS

Reynolds & Co., New York

First Southwest Company,

ANDERSON, Jr., WILLIAM J.

ARNOLD, HAZEN S.

Co., New York

BROWN, WILLIAM P.

♦BECKERS, W. K.

ANDERSON, HERBERT R.

;

Guaranty Trust Co., New York

Hayden, Miller & Co.,

ANDERSON, EDWARD C.

Hopwood,

Paul

♦BROOME, ROBERT E.

Angeles

BAXTER. DANA

Co., New York

SPRINGER H.

Jeffray

Piper,
St.

♦BATEMAN, HENRY M.

AMES, JOHN D.

ORLANDO

Phelps, Fenn & Co., New York

York

BASSETT, EARL K.

Kidder, Peabody & Co.,

BUCKNER,

Co.^

New York

ERROL E.

Nat. Bank of Commerce,

Corp., Omaha

New Orleans

4
BIGGER

Braun, Bosworth & Co., Toledo

RICHARD A.

Dickson &

♦BULLOCK, HUGH

Co., Charlotte

;

Calvin Bullock, New

York

♦ARONLD, H. WILSON
Weil &

BISCOE, Jr

Arnold, New Orleans

HOWARD M.

BURDEN,, WILLIAM A. M.

Whiting, Weeks & Stubbs,
*

Arthurs, Lestrange & Klima,
Pittsburgh
•
:

Chase National

Minneapolis

F. B.

Bank,

New

International Bank Washington

revenue

which

would
BLAKE,

Committee

Marks (Chairman);
Blaine; John D. Burge;
Ralph W. Davis; Allen C. DuBois;
Benjamin H.
Griswold,
3rd; Richard A. Kebbon; Joseph
H. King; Samuel D. Lunt; Chas.
B. McDonald; Louis Meyer, Jr.;
William H. Mitchell; Gethryn C.

Boston

Tribune," New York ;

Albert W. Tweedy.

*BUTTENWIESER,

BENJ.

Kuhn, Loeb & Co., New York

WILLIAM D.

♦BUZBY, Jr.,

Butcher & Sherrerd,

Philadelphia

BLUNT, JOHN E., 3rd

Walter F.

Stevenson;

SIDNEY

H. M. Byllesby & Co.,
Philadelphia

Respectfully submitted,
Relations

BUTLER, WILLIAM R.
"Herald

helpful.

Exch.

York

BLAKE, JOHN L.
Eaton & Howard,

be most

Harris, Upham & Co.,

BLACK, EUGENE R.

Ashplant & Co.; New York
of

source

York

BURNS, Jr., JAMES F.

New York

ASHPLANT, FREDERICK, B.
-

New

BIVINS, ROBERT A.

♦ASHMUN, CLIFFORD S.
C. S. Ashmun Co.,

Smith, Barney & Co.,

Boston

ARTHURS, ADDISON W.

Laurence

Boston

Bankers

Investment

Barrow, Leary & Co.,

Coffin & Burr, Boston

Stock

members of the Investment Bank¬

on. Retirement
Memberships

Committee

Meeting,

public, which should tend to in¬
crease volume of transactions."

Eaton & Howard,

Co., New York
BRANSON, ELLEN M.

and the strike was finally
nated

Barr Brothers &

AMES, AMYAS

Blair &

Co., Chicago

♦AMAZEEN, EDWARD S.

very

Exchange

•

York

Paul H. Davis &

BRADLEY, S. WHITNEY

versely affected at the outset.
"In addition, there is the ques¬
tion of a radical departure from

;

BRADLEY, MAHLON O.

BARR, W. MANNING

Co., New York

seat
ad¬

New

Ranson-Davidson Co., Miami

Allyn & Co., Chicago

New York

;

Chase National Bank,

Philadelphia

Harris Trust & Savings Bank;-.

would be those held by the

BOWMAN, FRANCIS B.

York

BARNES, DAVID

♦ALTGELT, Jr., E. J.

great-number of

Rollins & Sons,

E. H.

♦BARCLAY, Jr., WILLIAM K.

Richmond

seat

questionably,

Co.,

ALLYN, ARTHUR C.

follows:

Committee.-

The management of
the Stock Exchange is continuing
to work on a liberalization of the
Margins

members of the

them

;

Stein Bros. & Boyce,

A. E. Ames &

Investment
was the
Committee that

Harris

ALLEY, WILLIAM M.

A. C.

Detroit

BOOTHBY, WILLARD S.

...

First Boston Corp., New

San-Francisco

approximately

750,000,000 shares listed and there
are
now
1,900,000,000,
approxi¬

New

the

any

1929

membership
York

particular purpose.

plish

J.-

FREDERICK

H. V. Sattley & Co.,

Philadelphia

ALLEN, SIDNEY P.
San Francisco "Chronicle,"

feel that

The Committee did not

re-

any

Denver

Chicago

retirement of seats would accom¬

tee's view that

duction

of the Exchange.

bers

Commit¬

the

Co., Columbus

BARBOUR, PHILLIPS T.

Stranahan,

before it
members and two allied mem¬

Ohio

BOLTON,

Bosworth, Sullivan & Co.,

ALLEN, E. RAY

lem and there appeared

Ex¬

Stock

Orlando

worked
for
about three months on this prob¬

♦BOLES, EWING T.

BAKER, DUDLEY F.

Leedy,' Wheeler & Alleman,

Committee

The

the

man

Washington

ALLEMAN, F. MONROE

ing a
membership.

Chair¬

International Bank,

"•

St. Louis

adopt¬
plan for the retirement of

Co., New York

City,

Louis Co., ;

St.

York

Bache & Co;, New

AYERS, WILLIAM L.

ability and practicability of

Marks

■

WALTER

Metropolitan

the 37th $
Board of Governors of the ExAnnual Convention of the Invest¬
exchange, on petition of about 20
ment Bankers Association at Hol¬
members,, appointed
a
special
lywood, Fla., Laurence M. Marks
committee to explore the advis¬
In

AINSWORTH,

for securities.

free and open market

Co.,

AVERELL, ALFRED B.
:

Birmingham

Charlotte

S. Dickson & Co.,

New York

Sterne, Agee & Leach,\

BOGERT, Jr., H. J.
Eastman, Dillon &

♦ATKINS, J. MURREY

York ' " '

*AGEE, RUCKER

Upholds view of special N. Y. Stock Exchange Committee that ,
reduction in memberships would be departure of fundamental policy of affording

Thursday, December 23, 1948

FINANCIAL CHRONICLE

COMMERCIAL

Blunt, Ellis & Simmons,
Chicago

♦BYRNE, WILLIAM D.

Byrne & Phelps, New York

BLYTH, ROBERT B.
National City Bank,

Cleveland

♦CAHN, Jr.,

WILLIAM M.

Henry Herrman & Co.
BOEIIMLER, ERWIN W.

New York

Investment Bankers Assn.,

CALDWELL, DONALD

Chicago

J. Barth &

Co., New York

CALDWELL, G. JAMES
Caldwell Phillips Co.,

St. Paul

CALLAGHAN, JOHN W.

Goldman,

DISTRIBUTORS

UNDERWRITERS

New

Sachs & Co.,

York

♦CALLOWAY, Jr., DAVID H.

BROKERS

DEALERS

Investment

First of Michigan

Corp.,

New York

Corporate and Municipal Securities

Securities

Special and Secondary Offerings
Research and

CALVERT, GORDON L.
Investment Bankers Assn.,

Washington
CAPEK, CHARLES A.

Advisory Service

Commodities

Lee

Higginson Corp., Chicago

CARBERRY, PATRICK,
"Wall

Street

Journal,"

New York

Shields &

VAN ALSTYNE, NOEL, 8c CO.
44

Members

Company
NEW YORK 5, N. Y.

WALL STREET

CARDWELL, MARION H.
J. J. B. Hillard &

CARPENTER,
New York Stock

Exchange

New York Curb Exchange

BOSTON

52 Wall

Street, New York (5)

•

CHICAGO

•

HOUSTON

•

LOS ANGELES

Son,

Louisville

FREDERICK B.

John Nuveen & Co.,
♦Denotes Mr.

Chicago '

and Mrs.

(Continued on page 42)

Volume

COMMERCIAL

THE

Number 4762

168

FINANCIAL

CHRONICLE

(2623)

Recommends New
pression of the securities business
is influenced by the type of is¬

George

Noyes, Vice-Presi¬
of .The Illinois

IBA State

dent. and Secretary

Legislation Com¬

of the State

mittee
I

trie

Bankers Asso-

cia tio

America,
his

report
37th

called
to

progress

being made
by special
committees of

American

the

Bar

Associa¬

tion

and

the

state

Uniform

drafting

securities

done

can

structive

made

conforming

con¬

the

Uniform Act.

three

through which/ they believe
a
large amount of our blue sky
troubles can be eliminated.

only

(1) To facilitate the normal ad¬
vance
discussion of forthcoming

past year has been
legislation, • with

issues with customers:

believes

which

report

important and of interest to the
membership.
•
^

First

order of

curities. "

This

work

the

Association

Bar

tional

curities

sioners

sociation

and

Laws.

suggestions

the

submitted

such material

committees of the two

the

first

and

above

new

time

this

year

be finished

will
able

for

the

and

discussion

first
made

draft

Stock

ties

and

the

cerned.

by interested

of
At

The

new

draft

Association

need

obstacles

far

investor
when

time

for

elimination

members

are

minimized,

and

effect,
and

ance

prob¬

California

provide

was

this

first time

these

attend

larly.
with

years

conventions

administrator

the

valuable" in
matters

apparent to everyone present

regu¬

acquaintance

personal

just as
blue sky

handling

it is between the

mem¬

Charles

out that time.

A This
was

;

ministrators

various

the

.through

committee,

its

lems

able to be of material assist¬
to

ance

those

attendance..■
with

the

so.

have
This

the

officers of the
While

the

who

been

resulted

extension

Illinois

part

well

these
the

tors in
to the

the
of

relationship between
and

important, it

ours,

and

unified

The

we were

favorable
the

our

business.

There

Act.

convention, as to the
of
becoming
ac¬
with representatives of

quainted

with

nection

visions

opportunity

his

tives of

Too often tneir im¬

that

such

adoption

ments of the several

curb

Underwriters—Distributors

■

Members

states, would
New York Curb Exchange

Chicago Stock Exchange
Chicago Board

Trade

Commodity Exchange, Inc.

Go.

exchanges

120 BROADWAY'

trade

•

NEW YORK 5, N..

Branch Offices

:,.

Empire State Building

•

New York 1,

N. Y.

philadetphia, Pa.

BONDS

Lancaster, Pa.

Allentown, Pa.

Scranton, Pa.

York, Pa.
120 BROADWAY, NEW YORK 5, N.

providence

WOrth 4-4300

Teletype NY 1-750

toronto

East Orange, N.

Pottsville, Pa.
Morristown. N.

Syracuse, N. Y.

Bridgeton, N. J.

CORRESPONDENTS

chicago

montreal
rochester

Direct Private Wrires
cleveland
pittsburgh
toledo

youngstown

Chicago

•

the ground

Detroit

new

still

are

the

con¬

Uniform

some

pro¬

representa¬

industry believe that

(Continued

Reynolds & Co.
/

the

which

our

con¬

com¬

covers

referred to in this report in

some

Commissioners

newer

basis.

draft

and in the main

interested in

comments

Asso-.

the

bill, in its present
fdrm, represents a great improve¬
ment over-the old Illinois Act,

administra¬
With respect

states.

some

latter,

new

Dealers, the

Dealers

Chicago Stock
Exchange, to the end that our in¬
dustry could present its views of

the Portland

is well to

necessarily function

Securities

ciation

election may result- in the

appointment of

remember that each Commissioner
must

sociation of Securities

instru¬

bringing about joint
with
representatives
of

District No. 8 of the National As¬

;/;

ip 1949 and because the outcome

also

were

action

iri the

,V-

maintenance

of the

un¬

Association.

Association

attend

otherwise

goodwill

such,

!"• The

getting. • in

■

by
people

the

mental

prob¬
talking

proper

Commissioners

their

with

and has

number of meetings with the

committee

his

the

some

S.^Vrtis, has been closely

drafting committee. Mr. Vrtis and

that .it

us.

state offi¬ of this acquaintance is especially
our
committee
members important/ at this time, both be¬
it possible for several State cause of the legislative sessions

might
able

told

business

our

business;

Portland convention'in connection
with

directly

of- the

charge

have

had

frequently much easier for them

tov understand

groups,

detroit

"when, as
not "install¬

that
are

in touch with this work,

the free

Brokers in

boston

the

general assembly beginning
January, 1949. Our Central States
Group
State
Legislation
Com¬
mittee, under the chairmanship of

our

herein,
together ;; with
greater uniformity in the require¬

the

friendly relationship with bers of the Investment Bankers
the Commissioners rests on the Association in doing business with
foundation of his work through¬ (each other. And many of the ad¬
that

provisions in the state securities
to accomplish the objectives

board

WIRES

for introduction in the session of

members

PRIVATE

Section

—

ment

outlined

Persuing

STOCKS

understanding

problems.

Corporate Securities Act, which
sets up certain requirements for
"installment purchase contracts,"
was amended effective April 27,

New York Cotton Exchange

chicago

better

Developments in Various States

Philadelphia Stock Exchange

stock

both in number
closer acquaint¬

1948,

Association.

New York Stock Exchange

york

and if contracts"

their

acts

not expected

action in any of the 1949 sessions
in the various states. However it

of each other's

committee

and

opinion and dis¬
blue sky matters
bound to occur, but they can

the pro¬

This

obvious.

believes

mittee

ready in time for legislative

new

Arthur
unable to attend, but it

Commissioners
that

private capital into legiti¬
enterprise is as important
economic factor as at present,

the

Commission

Secuirties Administrators.

to be

impression.

agreements

mate

Exchanges, the Securi¬
National

It is up to

know it.

flow of

of Securities Dealers,

Exchange

the

present

tection

parties, including the Investment
National
the

believes

committee

which is wasted

avail¬

Bankers Association, the

Association

integration with the Federal Act,
are responsible for a great deal of
unnecessary expense and effort in
the issuance ,of securities, all of

are now

draft

Federal

diversity and confu¬
sion between the requirements of
the several states/ and the lack of

working on
proposed
Act. It is expected that some

organizations

was

cials,

This

representatives of the State
Legislation Committee prepared
and

Davis

and

Federal Act. y

staff

IBA

and

the

entirely
business

tendance at the annual conventior

Admin¬

and of

staff

the
For

consecutive

made

the

working
basis for the drafting of the new
Members

the

under

regis-'

are

(b) A short-form procedure for
registration by qualification
of : other
securities which
are
registered under the

which they could use as a

Act.

procedure

which

members

touch

As¬

our

assistance

for

of material

form

asked

can

developed throughout the year by

National

the

Securities

committee.

Act and meet certain, tests;

Commis¬

State

Uniform

committees

These

tered

the Na¬

and

Conference

situations

the securities

cases

purchase contracts" within
able that this convention will be
at Portland, Ore., July
the meaning of that Section.
•
held in "Richmond, Va.. in 1949.
the guest speakers were
•'Illinois—A special committee of
predominantly representatives of i We especially urge the larger
the Chicago Bar Association has
our industry,
including President underwriting houses to send rep¬
working since early this
Collins. In addition to his attend¬ resentatives,* in addition to con¬ been
year on a draft of a new Securi¬
ance, the Investment' Bankers As¬ sidering that they are represented
ties Act for Illinois, to be ready
sociation
was
represented
by by their blue sky counsel, who

members

for state registration, of se¬

special committees of the Ameri¬
can

Federal

the.

notification

(a) A

Act.

hands

the

with.

Acts

Securities Act by providing—

new

Securities

State

integrate the State Se¬

(3) To
curities

importance is

report of progress

Uniform:

' "

„

New Uniform State Securities Act
-'

(2) To provide a workable ex¬
emption
for
regular * over-thecounter/' and
secondary / market
transactions
in outstanding', se¬

are

State Commissioners. This

istrators

few legislatures in session,
your committee has several items
to

improvements

specific

take

19-22,

embodied

the

emphasize, to the members oi
the Group Legislation Committee:
and to the membership at large
the importance of a personal ac¬
quaintance with the individua

opinion of this com¬

convention

Association

mittee and the staff have stressed

in such legislation to
large amount of trouble
experienced under present Blue
Sky Laws. The. text of the Com¬
mittee's report follows:

Our

making recommendations for
the new Uniform Act, this com¬

work

eliminate

While

Therefore

mittee, these have never been on
■members in the respective states
a
more
friendly and cooperative
oasis than at present. At the an¬ and on a nationwide basis by at¬
nual

the

ers.

general pattern which develops in
the work
on
the proposed new

Noyes stressed three specific
improvements which should be

ing the plue sKy laws or ins suttw
this committee wishes

especially
sessions for of investors.
anything in the nature of amend¬
Relationship With State
ments to
the present blue sky
Securities Commissioners
laws, and discuss any such amend¬
ments with this committee* either
The -item second in importance
through the Chairman of .the IBA is that of our relationship with
staff, In this way any work that the State Securities Commission¬

Mr.

inactive

most

correct this

responsibility in administer¬

own

Committees

tion

State

this

act.

far to eliminate such obstacles
without impairing the protection

important that Group Legisla¬

watchful during these

uniform

new

•

and

Differences of
is

National Coliference

Laws

attention

Commissioners

outside of

integration of States' securities acts

trouble

their

most of their time and attention—

An¬

Conven¬

tion

Noyes

most

the

well

with Federal laws.

•

nual

George

secondary market transactions

and transactions which make

sues

in 1949,

tment

nve s

says,

though draft of proposed law is not expected to be ready for legislative action
local groups should be watchful o£ amendments to present blue sky
laws. Stresses need for workable exemption for regular over-the-counter and

"Company of Chicago, and Chair¬
man

Legislation Committee, whcse Chairman is George E» Noyes,

page

41)

COMMERCIAL

THE

(2624)

Safe Havens in Case

Reveals

Of World War III
By ROGER W. BABSON

know nothing
about farming.
Nor is it written for those who live in small selfsustaining cities or rural communities. Rather, I am writing for my
business friends in New York, Chicago, Philadelphia, Detroit, Los
Angeles/)
C 1 e v e land, solutely safe we must be about
11 i

mo r

miles

(Continued from

Hence,

away.

for

our

cost

their

1935.

III

does

addition

one

protect,

these

suffer

our

ice.

ter¬

rible

loss

life.
Babson

Roger

v e

the

famous

"Magic Circle" are espe¬
cially fortunate and have nothing
to

fear.

You

time

time
U.

"the

part

any

Probably

richest

safest in
of the

and

peace

war"

are

has

state

every

similar safe, productive and

some

attractive sections.
live

such

places
With

thankful.

very

Readers who

should
the

above

introduction I will sail ahead.
What I Have
,

For

time

some

Done

Statistical

our

Organization has been building

emergency

another

such

step

emergency,

loyal employees of-long

serv¬

illustration, we last
bought for only $6,800 a

week
farm

183

farmhouse

Readers who
1 i

taking

are

will

cities

the

offices and homes for executives,

some

ten

electric

barn,
phone.

with

acres

rooms,

lights

good
tele¬

and

It consists of 73

woodland,

old

acres

pasture,
tillage.
The place borders a river; a small
waterpower is nearby. It is not an
and

investment

in¬

investment.

farm would

give a family
wholly dependent thereon only a
a

existence.

meager

and

The

spent

time

same

city

job
would pay four times as much as
if expended on this farm—but for
employees who work in a large
energy

city, it is an excellent insurance
policy.
j...
• •.

reported for the first
ters.

the

For

two

whole

quar¬

year,. net

income should equal and may ex¬
ceed the all-time record high of

seen

there

While

have

large

of Detroit Edison
formerly
owned
by

the

distribution

the

capacity between

power

end

sarily

com¬

threat to the privately
utilities, assuming recog¬

owned

into

nition
of

much

80%

new

completed.

talk

additional

projects.

tinuance

Federal

idential

campaign

been

granted

substantial

electric

light

that,

where necessary, utilities will ob¬
tain

reasonable

permit

them

turn

their

ing

the

rate

increases

earn

fair

re¬

investments, includ¬

substantially

higher

in¬

vestment per kilowatt of
capacity
struction

con¬

costs.

However,

your committee be¬
lieves that the utilities face a se¬

high

rious problem.

new

probably

A substantial, and
major, part of the fi¬

nancing of the balance of the

con¬

struction

done

1949.

Installation

must

program

through the sale of equity

secu¬

rities.
an

the year and through the medium

having caught up with their back¬
log. It is not expected that tele¬
phone company financing in 1949

2.1 V2 % to

expected

hit

6,700,000

increase

have previously noted
in common stock fi¬

nancing by the utility companies,
particularly in the second half of

5,800,000
kw. and for 1951
6,060,000 kw. The telephone com¬ of offerings of stock to stockhold¬
panies
particularly the ones in ers. Such offerings have met with
the Bell System, are still far from varied
degrees of success, sub¬

that government financed projects

millions of

have

country and

promises for the most part
The nature

many

there

number

kw,
1949, part of the cost of which
has been covered by financing al¬
ready done. The schedule for 1950

the developments will vary in
different parts of
the country,
but of one thing we can be sure
add

wide-spread
industry and

pres¬

will

been

and power, and gas companies. It
is reasonable to anticipate

another

financing

perhaps

have

telephone

Power

likely to be kept.

are

record

the

generating capacity in 1948
will approximate 4,750,000 kw. It

Truman
voters

Mr.

and

record

projects to

in many parts of the

set

new

much

During the recent

promised such
these

been

recently

has

financing by the util¬
may
look for a con¬

level

pattern has been worked out.
has

1948

required under present day

money

ities

other cases, such as Common¬
& Southern Corporation,

There

respect for the rights
utility companies and in¬

While

now

wealth

the

and

the

vestors in their securities.

contem¬

plated by the 1935 Act may
as

and

now

Commit¬

Federal Power projects as neces¬

account sales and distributions al¬

Your

1954.

often

ready made, it would appear that
the dissolution or integration of
the holding companies

prorata

holding
Taking

stockholders.

pany

which contemplates creation
additional 4,400 000 kw. of

the

pro¬

tee, therefore, does not look upon
this
expectation
of
additional

course

increases

governmental

present

gram
of

American Light & Traction, dis¬
tribution
of
stocks
in
holding

portfolios has

creased labor and fuel costs. Such

the

amount

Common

to be followed in connection with

been

of stocks held

sales

by holding companies, notably the

bottom

any more than

policy

surance

Such

acres

has

public

some

followed

come,

the

It is

the belief of your Committee that
the method of disposing of power

generated at government projects
further (again excepting TVA) has proved 1947.
so
satisfactory to the government,
Regulatory
commissions
progress in the breaking up
of
have
the holding companies as called the private utilities and the pub¬ recognized the necessity of grant¬
for by the Holding Company Act lic that this pattern is most likely ing rate increases
to offset in¬

company

War

rado and Columbia Rivers.

•

year

when

(

investment

Thursday, December 23, 1948

Heavy Utility Debt Financing

23)

page

This

St.
Louis, Emergency Plant, we went north
Boston, Pitts- to New Boston, N, H., where there
burgh,
and is a bountiful supply of food and
Washington, fuel which makes it independent
D. C. Because of railroad transportation.

World

CHRONICLE

opportunity to average down the
bonds.

This week's column is not written for farmers, as I

FINANCIAL

kilo¬

scriptions ranging from as low
amount

high

98^% of the

offered.

stock

Where the additional stock has
generating capacity over will reach the levels of 1948 but
the next decade.
These develop¬ there will still be perhaps as much been offered at a Jiberal discount
Farms as Insurance
the
existing market and
ments are likely to affect prin¬ as a billion dollars of such fi¬ from
bought
an
old
brick
This is not a recommendation
building
where the dilution has been mod¬
cipally
the
far
West
and
the nancing.
which we could use for offices that educated
young or old people Southwest, although the East will
The utility industry enters this erate, such offerings have been
and
several
nearby
homes
in try to get a living on such a farm. also share
through the proposed period of large additional financ¬ generally successful. As a whole,
which we could house a limited The experiment would
probably ^t. Lawrence Waterway develop¬ ing in excellent position. Reve¬ however,
these
offerings
have
.

watts in

branch at New Boston. N. H., for
use in case of World War III.
We

number of executives. We believe

end

that

farms

many

cerns

cities

should

They

owe

Most

business

one

these
the

it to

places

thing.

same

customers.

have

which

vulnerable

their

employers

con¬

summer

they' personally

for

disappointment.
useful

are

employers

within

and

commuting

modest

nestegg.

appeal

homes

executives

distance,

those who have saved
a

Such

as summer

inherited

This, however,

that

medium-sized

could flee, but sdch places do not

corpotations provide not only for

provide

their owners and the

emergency

We,

have

old

have

only

been

farm

families
4

not

this.

picking

houses

offices.

however,

content

plant

emergency

our

I believe that more

Hence,
some

should

the

within

plant.

These

which

employees

rpove^ ^These ...are

been

business, but
also for their key employees and
families.

from.,

could

buy

few

corporations

such

miles

farms

their

should

to ^fairly close together; they should
Emergency" be expected to pay only enough
Plant at New Boston, a distance to compensate for maintenance
Which
could
easily be covered and taxes. They should be fur¬

three miles

with

from

horse

and

are

wagon

gasoline is available.
houses

one

our

well-built

Such farm
with

all

Jnodern conveniences and would
ijsost $30,000 to build today.

nished

What Old Farms Cost
"Old" Boston

chen).

will be

$00,000, and with its close
contains

about

Authorities

told

suburbs

2,550,000.
us

will

city of about

The

that to be ab¬

emergency—take
care
of
four
families
(with one central kit¬

comes

each house could—in

who
and

repeat:

There

someday

World War III; when it
of the above cities
some
a

bombed.

have

not

maintain

Old

the

such

employees
to buy
of re¬

money

places

fuge, should be protected in this
way.

Time to buy such farms is

now.

and

ment

southern

the

watershed.

presently

that

appear

does

any

proved

billion

but have securities

of these

electric

industry

power

not

the

nues

so-called

are

developments will follow the pat¬

over

a year, an increase of 53%
1941
and
110%
over
the

tern

boom

year

TV A,

that they

but

are

likely to be along the lines

of the

part

Hoover, Grand Coulee and

the

Bonneville projects.
It
the

evident

of 1929.

A substantial

the increase has been

profitable residential class of

increase

that

since

1941

the increase since 1929.

projects heretofore completed

increase

have largely benefited rather than

harmed the utilities in the respec¬
tive districts where such projects

sumption

has

since

war

the

37%

and

The rate

residential

con¬

accelerated

been

and

particularly

vestors—do

smaller

the

not

buy

in¬

securities,

sold

them

investment dealer in whom

they have confidence.

In the report of this Committee

service, accounting for 36% of the

all

again that most people—

light and
currently run¬
ning at the rate of more than $4

Southeast through

the

development

the

Spring Meeting,

reference

made

suggestion for fa¬

cilitating equity financing of un¬
This

ities.

utility

suggestion

that

was

might

companies

find

the filling of advantageous to raise equity funds
are
located, with the exception pent-up. demands for ^household, through the sale of stocks without
of -TVA.
For
example, consider applianqes* and 'such other, factors underwriting or commitment, but
as
what

Southern

would

have

California Edison Com¬

in the way of
investment had

pany

plant

.tbe/adyent; of,television.,,

meant

not

been available from the Colorado

River development.
back

now

utility

and

industry

been able to

the

war

years

power

reduced

operating costs resulting

handled

this

namely,

manner,

from new, more efficient generat¬

the Sale by Columbia Gas & Elec¬

ing equipment. Net income in the

tric System

not

immediate

had

and, .supervi¬

management

the load it did

carry

and

look

can

with

have

would

available

velopments

clearly that the

see

« %

The electric power and light in¬

sion by investment bankers. Since
dustry is carrying an increasing
proportion of the additional rev¬ the
suggestion was
made
last
enues
through the gross income Spring, there has been one siz¬
one of the major reason being the
able
piece of equity financing

additional
power

not

from

those

third

post¬

quarter

1948

exceeded

been

for

that of the third quarter

such

de¬

by 71/2%. This increase practically
offset

the Colo¬

the

year-to-year

of 1947

declines

of 1,223,000 shares of
One

stock.

common

the

tional investment banking

for

flat fee which

relation

the

was

na¬

houses,
modest
of the

amount

financing, managed the deal and

through its efforts

than 700

dealers in all parts o.f the country
worked

INDUSTRIAL, RAILROAD, PUBLIC

UTILITY

stock.

INDUSTRIAL, PUBLIC UTILITY, RAILROAD
AND

FOREIGN SECURITIES

dealers

purchased

stockholders.
of

placement of this

stock taken by stock¬

holders

and MUNICIPAL SECURITIES

the

The company paid a fee to

the

The

stock

entire

new

amount

successfully

was

placed without disturbance to the

unlisted trading department

market and

UNLISTED TRADING DEPARTMENT

to the

utility

reasonable

cost

company.

Your committee feels that

through

industry

Wertheim & Co.
New Yorb Curb Exchange

N. Y. Coffee & Sugar

York Stock

120 broadway

New York

Telephone: Rector 2-2300

Commodity Exch., Inc.

Chicago Mercantile Exchange

1-484

1-485

Chicago Board of Trade

N. Y. Cocoa Exch., Inc.

New York Produce
Exchange

Teletype: NY 1-483

Exchange

N. Y. Cotton Exchange

Exch., Inc.

can

equity

MEMBERS
New

the

Laurence M. Marks & Co.
£ '

Members

New York Curb

49 Wall
cables: Wertma New York

New 'York

Stock

►

•

Exchange

Exchange (Associate)

Street, New York 5, New York

nancing.

Telephone: HAnover 2-9500

Teletype N.Y. 1-344

must

compensation
do

cannot,

the

scale

the

lines.

which

utilities

come

paid adequate
work

too

the

expect payment

generous

when

for

these

along

much

they

do additional debt fi¬

But the time has

our

they must have and

which

most cases,

only

the utilities raise the

money

without

when

cooperation

prevailed

were

raising

Volume

Number 4762

168

their billions for
1920s.

THE

expansion in the

The

expected to live and perform ef¬
ficiently on starvation wages.

basis of compensation

The

COMMERCIAL

loss

FINANCIAL

reduction

the

CHRONICLE

(2625)

Exhibit "C"

revenue

$1,025 million to $655
Congress of the United States
to underwriters and participating
million is due principally to two Joint
Respectfully submitted, '
Comipittee on Internal Rev¬
dealers
factors. First, the rate reduction
must,
however, exceed
enue Taxation, Washington
Public Service Securities
that of 1948 and recent years, if
provided in the Revenue Act of
Committee
'
Colin F. Stam, Chief of Staff
we as an industry are to maintain
increased
1948
from
$18,000 to
G. D. Chesteen, Asst. Chief
the machinery necessary to raise Robert Mason (Chairman); Rob¬ $22,000 the point where the 50%
November 10, 1948
ert W. Baird; Joseph H. Briggs;
the hundreds of millions of equity
limitation would become effective;
Carl H. Doerge; Leslie J. Fahey;
dollars the utilities will need in
and second, the split income pro¬ Mr. Murray Hanson
Gene
B.
Heywood;
Edgar J. vision of the Act provided in ef¬ Investment Bankers Association
1949 and following years.
The
Loftus; Franklin T. McClintock; fect a much lower
marginal rate 1625 K Street, N. W. "
utilities and the regulatory bodies
Wallace M. McCurdy; George L. for
those
taxpayers filing joint Washington, D. C.
must recognize that the invest¬
Perin; William M. Rex; Donald
returns, thereby reducing their Dear Mr. Hanson:
ment bankers
cannot longer be
Royce.
benefit from the 50% limitation.
With reference
to your tele¬
there

any further ques¬
concerning these estimates,

tions

please let

Reports

are

Merger Plan

Chief of Staff

effected, it is said, as soon as formalities
are
'completed, possibly next month or early February.
The merger plan, in the meantime, will be submitted to ihe
membership of the two exchanges. J. Dorse,y Brown, Presi¬
dent of the Baltimore Exchange, reports the merged organi¬
zations will be known as the Philadelphia-Baltimore Stock
Exchange.

194320678

Exhibit "B"

Joint Committee
enue

Internal Rev-r

Taxation, Washington

millions

are

F. Stam, Chief of

Chesteen, Asst. Chief

Staff

November 10, 1948

Mr. Malon Courts

"namely, that the 50%

ceiling

and

rates

Joint Committee

into

written

law at this time and

whole-hearted

Colin

Staff
Chesteen, Asst. Chief

G. D.

October 29,

the

ask your

support of the at¬

Mr. Malon

Courts

everything

possible

objective of remov¬
present unfair and eco-

the

ing

nomically dangerous double taxation of corporate earnings.

Your Chairman wishes to thank
»

the

officials

its

counsel,

Federal

other

•

;

Taxation

individual

Association

support to

Committee
members

for

their,

and

generous

year.

[

Federal Taxation Committee

from

50%

Malon
••

Courts

(Chanman);

Amyas Ames; M. J. M. Cox; John
H.

Crago; Richard M. Delafield;

worth?

Hawes;

James <M.

Jr.;

Newell

S. * Knight; - James

Robert

have.

may

offer

shall

subsequently an
effect of' which

the

amendment

the

1948

loss

revenue

amended

cess

law

provide that

would pay

were

rate

ex¬

This would have af¬

fected all taxpayers with

tax¬

dollar of

on any

income

of 50%.

million if

$1*025

present

estimated

©f

then

payer

the Reve¬

enactment of

Act

excess

——

of Dollars
$8,864.2

tax
of

Acts

1940,

taxes

figure

$10,174.4

—

Sincerely

Excerpts
sional

taken
of

Record

Capital Gains

and Losses of Individuals

1935-1945

(In thousands of dollars)

Congres¬

from
March

taxable

$18,000. The

combined

rate

50.35%

1943__

1948,

22,

he advocated a maximum rate of

50%

surtax

rates

vision

170,884

want

the

should

the

their utmost to

call their

can

in business said to
me,

—85,677

67,542
265,996

1944__—_—

354,391

1945_—._

720,693

prevail in the bill is that

tive

carry

private-enterprise

the load of
system

abundant

tion and the expansion of

produc¬

the

na¬

tional economy.
"I

shall

in substance offer two

amendments,

own.

'If I make

the first of which,

get $5,000, for the next

make

another

get

$5,000, and for the third $100,000
another
should

$5,000.'
risk

when

ment

have

hope

appreciable
me

char¬

from my

believe

terprise system.
payer

invest¬

coming back to

'"I

'Why

said,

losing

any

enterprise?'

so ity,

provide the greatest incen¬
for

make

$100,000

acter

which

taxpayers who

—7,301

Bill:

principle

12,472

the

econ¬

the Nation, we must let
them have a little something left
of

reward

reduction should be made to those

4,408

and

men

greatest ability to produce to con¬

pro¬

other

must

of America who have the

41,173

the 1948 Revenue

"The

71,967

indi¬

for

viduals, same to be made
Total

run

$100,000 I get $35,000 residue for
myself, but for the next $100,000

Claude Pepper made in which

ator

.the

"A few days &go a man engaged

Chief of Staff

containing part of the speech Sen¬

.—

mule to

Colin F. Stam

Exhibit "D"

Chief of Staff

income -of

(sgd.) Colin F. Stam

1939_!

motor to

which they

yours,

(sgn.)

make

the

gasoline; if We want a
plow we must feed him;

omy

yours,

want

women

corporation

can

and

President, 1 know that if

"Mr.

tribute

Total

tax¬

the greatest con¬

Nation.

the

and

17.7

Act

productivity

give

305.3

individual

the

to make

tribution

taxes:
value
of

Vinson

incentive

987.2

—-

profits

is not to give large
immunity
from
tax
obligations which I think they
should bear. It is merely to give
That

50%.

taxpayers

the

private-en¬

I want the tax¬

to pay according to his abil¬

but

there

point

of, di¬

minishing returns, and if we do
not

recognize

principal

it,

incentive

have, the

incentive which carries
in

our

the

thwart

all on

private-enterprise

econ¬

omy."

I
.

the taxable income be¬

tween

that

time

was

$18,000 and $20,000.

The estimated

revenue

loss

un¬

Emerson; der present law from this limita¬

Hutton,

•

Sumner

Hardin

tax¬

tax rate of more than

of any dollar of his taxable

Before
nue

Richard P. Dunn; Sherman Ells•

recent

income.

income
;

providing that

his taxable

Respectfully submitted,
.

the

plans and program

our

throughout the

Association,
members of the

loss

your

the

our

discussion concerning the revenue

payer pay a

•

1935—

Reference is made to

should be done to accomplish the
longer term

Current
Back

preliminary and all
prepared by the Treasury

Liability

11 Marietta

Dear Mr. Courts:

that

payer

1941, 1942)
profits

Year of

Courts and Company

believe

1948

Street, N. W.
Atlanta, Georgia

accomplish

Corporation:

your

The

Bureau of
figure is

The

follows:

Declared

inclusive.

Estimated Taxes

F. Stam, Chief of

these two
changes in the tax law. We also

family

Revenue

Enc.

Internal Rev¬

down

(Rev.

with

the

Revenue.

Sincerely

Taxation, Washington

enue

cap¬

1945

Internal

issued

1947,"

Internal

N. W.

Department.

Exhibit "A"

constructive reforms
be

Simonds;

Congress of the United States

12y2%

long-term

Ralph

Statement

Miscell.

accordance

were

Darnall Wallace.

ital gains represents the two most

married
is the head of the

dependent the

taxpayer who

inquiry of Oct. 25, 1948, will be to strike out the 77 %
corporation receipts for which is the maximum rate which
1948 amount to $10,- under the bill may be applied
to
million.
This figure was the individual taxpayer and in¬
from
the
"Comparative sert in lieu thereof the figure

tele¬
phone
request I
am
enclosing
herewith figures showing the net
tax on capital gains for the period
for

Roddy;

/4.4

taken

Dear Mr. Courts:

25)

page

capable of speaking up
getting a respectful hearing."
Summing up our efforts for the
year,
your Committee
is of the
same
opinion as at the outset,
you,

tempt

each

for

year

Excess

Courts & Company
11 Marietta Street,

Lemon; Herman L. Lind; James

and

could

himself, $40 for his wife, and $40

Millions

Colin

1935^1945

(Continued from
public opinion. There

that

de¬

of a single
would be $40; in the
married man, $40 for

that

case

his

case

total

broken

G. D.

Advocates S0% Ceiling
On Income Tax

feasible and

and

In the

man

•

Atlanta, Georgia

individual

taxpayer

pendents.

Receipts for June 1948 and 1947
and for the Fiscal Years 1948 and

Congress of the United States

The merger will be

maximum tax

vidual

Sincerely yours,
(sgn.) Colin F, Stam

According to an Associated Press dispatch from Balti¬
more on Dec. 19, the governing boards of the Baltimore and
Philadelphia Stock Exchanges have agreed on a merger plan.

phonic
the

fiscal

know.

I have said, is the President's
proposal to the Congress, which
will adopt the $40 per taxpayer
cost-ofrliving credit to the indi¬

from

John;
H.

tion

affect
cess

$655

all

million- and

taxable

$22,000.

incomes

would
in

ex¬

and

Underwriters and Distributors'

State, General Market, and Public Revenue

MUNICIPAL

bonds

BONDS

Direct Wire to Chicago and Miami

J. Van

Ingen

Municipal
du

Pont building

57 William

Miami 32, Fla.

Co.

inc.

Bonds
Street

New York 5

Phelps, Fenn & Co.

135 So. La Salle St.

Chicago 3. III.

COMMERCIAL

THE

(2626)

FINANCIAL

ness.

While the ratio Of indebted¬

ness

The Outlook for

total

industry
evident

The

Capital Market

to
that

utilities
which

owners of these savings prefer to
capital varies,from hold mainly cash or bank deposits.
industry, yet : it is In '-past/this situation probably

even

there

the

case

point .beyond
corporation .is not will¬

ing to go. Hence, the ability, and
willingness of an individual cor¬
government bond market has pro¬
sion funds is spreading rapidly. It
poration to expand does not de-,
vided 'institutional investors, no¬
is becoming evident that the de¬
pend only on its being able to
tably life
insurance - companies, .obtain
long-term capital repre¬
preciation of the dollar is per¬
with a ready outlet for their longsented by bonds and mortgages
manent in character and that a re¬
term government securities. Dur¬
but also on its ability to obtain
turn to the price level of the '30's
ing the past year the Reserve
or the '20's is virtually out bf the
equity capital. When equity capi¬
Banks
have
acquired - a Targe tal is
scarce, enterprises are less,
question. - Under
these circum¬ amount of
long-term government
willing and able to increase their
stances, to protect their families,
bonds, thus placing funos at the total capital and expand their op-;
many
people will be forced to
disposal of insurance companies erations. The lack of equity capi¬
carry more insurance than they
with which to absorb new. securi¬
tal has been an outstanding de¬
did when the purchasing power of
ties.
velopment of the past few years.
the dollar was higher.
Further¬
Commercial
banks
are
also It is a
problem of the utmost im¬
more, because of the high prices
large
buyers
of 'shortand portance not only to investment
and taxes and the inability of in-,
medium-term government obliga¬
bankers apd to industry but to the
dividuals to accumulate an inde¬
tions, as well as of corporate se¬ economy
of the country as a
pendent income for their old age, curities and
state and

(Continued from page 18)

many

municipal

corporations have realized
establishing pen¬

The

funds

ability to buy new
depends on their re¬

securities

sion funds.

wholes

Their

bonds.

for

Reasons

the

by in¬

companies and by admin¬
istrators of
pension funds seek
outlets
primarily in bonds and
other fixed-income-bearing obli¬

surance

of the Reserve

duction

the

The large amount of gov¬
acquired by in¬
stitutional
investors
also
gives

gations.

re¬

requirements
Banks
would
increase
the
de¬

Reserve

for

mand
term

reserve

automatically

ernment securities

authorities.

short-

obligations

medium-

and
on,

the

part

the commercial banks. Whether

Lack

stant

corporations, the
supply
of
equity capital from inter¬
nal sources has increased during
the last few years.
There has,
by

the

however,

been

decided decline)

not

opportunity of convert¬

The policy of the Federal Reserve

which

authorities to maintain

willing to

corporation -is

able

orderly

increase

its

indebted-

premiums,

not

pension

able

principal

equity-

and hence
formerly to

This is probably the
for the lack of

buy equities.
'

;

reason

capital

from

external
:

sources;

The
the

savings indicated in
table are to a large

large

attached

extent owned by those
or

GROUP SECURITIES, INC.

general rule, are not buyers of
shares.
They include, primarily,
farmers, highly skilled workers
individual

and

manufacturers.

A: Mutual investment Company
srtwls%•:. VI

Railroad

•

Equipment

merchants

ternal
An

sources.

Steel

savings is also of considerable in¬
The figures show

•Were•"•it
sources

ing

the

volume

of
;

internal

fo/ the

of equity

for. the

banks..

not

capital, the dry?

of external

banks.

the

sharp ipcrease. in

from

pronounced effect on the
capital market.
It has accentu¬

their
the

sources

would

for

demand

the

ated

bonds

Is There

and

mortgages and contributed to the
prevailing low money rates, al¬
though the principal factor mak¬
ing for cheap money is the openmarket
policy
of
the 4 reserve
banks and the liquidation of gov¬
ernment securities by institutional
investors.
The change in saving
has" also " accentuated

habits

the

lack

equity capital and forced
industry to rely increasingly on
internal sources, hence preventing
distribution of dividends commen¬
surate

the

with

porations.'

The

earnings of

cor¬

consequences

the change in savings may briefly
be analyzed as

follows:

considerable extent it
for the failure of
equity market to respond to
earnings of corporations and

i(l) To
is

responsible

the
the

reflect

the

permanent depre¬
purchasing power
of the dollar. As a general rule,
when a decline in the purchasing
ciation

the

of the currency is con¬
permanent, this
has a
favorable effect on the prices of

This is partly because
many
individuals
look
upon
equities as a hedge against infla¬
tion, partly because it is realized
that the capital assets of corpora¬
tions are undervalued, and partly
because over the long run higher
equities.

prices

to a larger volume
expressed in dollars

lead

business

profit-.
Because
many -individuals
who
formerly were buyers of equities
do not have the necessary funds,
however, the market has failed tc
and

hence

reflect these

larger

net

The lack of equity capital
also contributed materially to the
(2)

abnormal spread
turn

bonds

between the re¬
stocks, which

and

that the

■

shortage of venture
capital has led to a considerable
increace in the indebtedness
of
The

(3)

the

Equity Capital?
Since the lack of equity capital
external
sources
is
due

from

primarily
have

saving

the

habits

public,, the

either in
of

save

changes that
in the type of

place

and

savers

the

taken

the

solution

lies

increasing the ability-to
individuals

who

were

formerly the traditional buyers of
equities, in tapping the resources
of the new savers, or in inducing
the

institutional

investors

ac¬

quire equities. An increase in the
ability of the traditional buyers
of equities to save could be ac¬
complished
by
the • following
measures:

•

The

elimination of double
taxation on corporation earnings.
Such a measure would make equi¬
(1)

ties

more
attractive, particularly
wealthy individuals who are at
present primarily buyers of taxexempt securities.
>,••'„•■

(2) A change in the present in¬
tax

come

the

laws

that

individual

would

retain

enable

his

earnings. It
is
not
likely,
however; that
either
of
these
measures

will be taken in the im¬

mediate future.

Therefore, an in¬
supply of equity
capital resulting from tax reforms
is not to be expected.
in

crease

the

(3) It is possible, however, that
the

Board

Governors

the

Federal Reserve System may pass
a

rule

stockholders

enabling

borrow from the banks

present limit of
in

order

margin
to

beyond the

require¬

take

new

stocks offered by corporations.
is not uncommon for directors

It
of

companies to vote against the of¬
fering of new shares by a corpo¬
ration, primarily because of their

inability to
portion.
If,

their own
they were
able to borrow from banks beyond
the limit of the present margin
requirements
their
objections
might be removed, because they
could acquire their allotment of
shares

the
their

Securities Series

level.

Solution

Problem of the Lack

ments

developments.

indebtedness further

present

.NATIONAL.

Low Priced

•

had

today is higher than before.

analysis of the type of liquid

Railroad Stock

•

and

long as these
groups refrain from buying equi¬
ties, or buy only
infinitesimal
amounts, there is bound to be a
lack of equity capital from ex¬

terest.

Aviation

individuals

non-incorporated firms that, as

PeI

/also

term loans by

and the character of invest¬

preferred by individuals has

paying taxes, con-r
sidered
funds and.

tributions

are

'-i.-

responsible

power

little left after

insurance

im part

new

in the external sources of equity
legislation will be passed giv-. capital. This is not
due, as is gen-j
ing part of these obligations into ing the Board of Governors of the erally believed, to the lack of sav¬
cash and investing the proceeds in Federal'
Reserve
System
the ings. On the contrary the liquid
new securities, particularly when
power,to regulate the investments savings of the people aretoda^
the latter yield a higher return. of insurance companies and other much
larger than before the warj
It may be expected that whenever institutional investors, in addition
total savings are indeed impres-)
business activity is high and' the to those of the member banks, is sive.
This may be seen from Ap¬
j
government shows a surplus, the as yet not known.
pendix III.
It is, therefore,- clear that the
agencies of the government, such
What has taken place, however;
as
the Old Age Insurance Fund supply of capital seeking an out¬
is a strinking change in the type
and
the
Unemployment
Trust let in bonds and mortgages is of savers and in the character of
Fund, will buy outstanding gov¬ large and can be increased by the
savings. Before income taxes be¬
ernment obligations, thus furnish¬
policies of the Reserve authorities
came.; burdensome
the principaling sellers of these securities with and the agencies and trust funds
buyers of equities were individ¬
cash with which to make new in¬ operated by the Federal Govern¬
uals in the higher income brack¬
vestments.
Similarly, when busi¬ ment. Corporations seeking capi¬ ets. As a rule, they were in a
tal through the:sale of fixed-in¬
ness activity is downward and the
position to save a portion of theifsupply of bonds declines, these come-bearing obligations should,
earnings, and much of the sav4therefore, be able to find an ade¬
agencies will sell government obli¬
ings." went for the purchase of
gations in order to provide insti¬ quate supply of capital."
equities.
At
present,
however,
tutional investors with securities.
There is, however, la. limit to most
salaried
individuals
have

them

indebtedness

crease

the con¬
retained ' profits

but also short- and medium-term

indicates that savings 'are becom¬

ments

evidenced

growth

Conditions, resulting in a tempo¬
rary
postponement of investing
and spending.
The substantial in¬
crease.' in life insurance policies

savers

Capital

position, which in turn is
greatly influenced by the policies
serve

accumulated

represents an effort to avoid taxes.
On the whole;- however, it reflects
uncertain .economic and political

business concerns, as regards not
only long-term bond indebtedness

undoubtedly have had a marked
effect on the ability of industry
ing more and 'more institutional
to expand and to modernize its
in character.
This tendency will
"equipment in order to meet the
undoubtedly ' continue; '.thereby
increased
post-war demand. So
furnishing adequate amounts" of
far, the lack of external equitycapital to be invested in bonds
capital has not had an adverse
and mortgages.
The figures also
effect
on
business
expansion;
reveal that many individuals are
primarily
because
corporations
using more of their savings to
have retained a large portion of
purchase houses and durable
their earnings and partly because
goods. This is due to the accumu¬
they have been willing to borrow
lated demand for these goods cre¬
heavily, especially since during
ated-during the war, but also to
the war private indebtedness de¬
The
rise
in
considerable
living
creased materially. It is, however,
standards.
highly doubtful whether business
The change in both the type of
Equity
concerns
will be willihg to in¬

•

the necessity for

Thursday, December 23, 1948

CHRONICLE.

take

however,

and

equity

make

interest

sure

would

that

undiminished.
\

Agricultural

Automobile

•

Building

•

(41

Chemical

the

Electrical Equipment • Food

Investing Company
Petroleum

•

Industrial Machinery

•

Merchandising

Tobacco

•

Railroad Bond

Mining

Utilities

•

LOW-PRICED

SPECULATIVE

INSTITUTIONAL SERIES

BALANCED

SERIES

INCOME SERIES

•

PREFERRED

SPECIAL
»v

★

General Bond

•

SERIES

PREFERRED

SERIES

STOCKS

STOCK

SERIES

Institutional Bond
STOCK

Fully Administered

SELECTED

SERIES

GROUPS SERIES

LOW-PRICED STOCK SERIES

SERIES

AVIATION

BUILDING SHARES

CHEMICAL

METAL SHARES
OIL SHARES

RAILROAD EQUIPMENT SHARES

RAILROAD SHARES

Prospectus upon

STEEL SHARES

request

WSION'

'tlllOkGO'1

material

help in the distribu¬
equities among these per¬
of them are primarily
interested
in
a
steady
income.
tion of

Most

hesitation

buy

equities

partly due to the fear of loss,
but also to the fear that the in¬
might not be constant. Cor¬
porations, such as the. American

come

Telephone and Telegraph Com?
which have maintained a
constant dividend policy over a
period of years do not find it dif¬
ficult

substantial

assets could be
tapped for the equity market. The
adoption by corporations of a con¬
sistent dividend policy would be

pany,

NATIONAL SECURITIES & RESEARCH CORPORATION
.

owners

new

RETAIL TRADE SHARES

i i

Distributors Group, Incorporated

the

Their

INDUSTRIES
AUTOMOBILE

for

Associa¬

amounts of liquid

sons.

INDUSTRIAL STOCKS

advisable

Bankers

to give careful study to the
question of how the savings of

STOCKS

COMMON
★

might

tion

BALANCED

BONDS
LOW-PRICED BOND

Investment

120 Broadway, New

York 5, N. Y.

distribute

their

individuals who generally
are not buyers of equities.
It goes
without saying that'the tapping of
among

Volume

163

THE

Number 4762

the
savings of the new savers
might involve considerable en¬
largement of the personnel of in¬
stitutions engaged in the distri¬

(5)
and

the

solved.

insurance

companies

for

the

increase

bound

are

considerably

the

fu¬

bond

and mortgage markets

insurance

may

concerns

portion of the

to alter the

depreciation

the Revenue Law to

Internal

could

tal

sources

by the following

portant

many

activity at

action

(2)

Con¬

APPENDIX I

§ Estimated Principal Uses and Sources of Corporate Funds
In Billions

—of Dollars—

USES—

1947
14.7

accumulation

to' set

ings by corporations.
The impo¬
sition of an excess profits tax or

the

that

evident

would automatically

ma¬

high level. N

would

desirable

capital

and

Whenever

corporations

permit

dividend

capital. A revival of the flow of
equity capital from external
sources could be achieved by the

dividends,

capital gains tax, and by a

earnings

expenditures by the

continue

to be

for

some

general
Since

taxes.

Federal Gov¬
fiscal

the

during

ernment

bound to be very large,
however, none of these measures
is likely to be adopted by Con-

pro¬

year

one

in income

reduction

dynamic economy.
the
supply of equity
a

capital is stagnant, the expansion

reserve

of double taxation on
by modification of the

removal

availability of equity

industry is retarded, and event¬
to establish ually the result is a decline in
a consistent dividend policy. They
business activity and ah increase
would then not be subject to the in unemployment.
The demand
penalties under Section 102 if they for capital, in the United States
paid out only a small fraction of is very large at present and will
up

in the demand

decline

quires
an
adequate supply of
equity capital, Congress should
give
careful
consideration
to
measures
that might lead to an
increase in the supply of such

definite relationship

between the

producers' goods.
Because a dynamic economy re¬

Summary and Conclusion
There

■

undoubtedly

lead

for

current demand.

rates
contract this

of capital and

increase in corporate tax

source

are

year

order to enable them

their

Percentage

1947

11.6

1946

gress.

capital

equity

(Continued

time.

the supply

order to increase

internal

from

32)

page

Inventory

—of Total—

1946

•

Law

nue

to alter consider¬
(1) Modification of the Reve¬
ably the valuation system which nue Act to liberalize depreciation
life insurance
companies have to allowances. As is well known, the
V

modern

modify Section 102 of the Reve¬

States but also

contribute to maintaining business

capi¬
primarily

gress:

acquisition

chinery and equipment and would

of equity

increased

be necessary not only to make im¬

changes

based .more

reserves

Internal Sources

large life insurance companies for
the purchase of
equities, it would
legal

sums

equity capital plays
a very important.role in the eco¬
nomic development of the country,
it is of the utmost importance that
Congress study this problem care¬
fully, with a yiew of stimulating
capital expenditures not only at
present, when the demand for

provision of

reserve

Since

to change the present

gress were

Increasing Equity Capital from

were

formation of

it would be advisable if the Con¬

the

resources

vided the

serve

banking fraternity.

are

vitally interested in this problem.
In order,
however, to make avail¬
able

depreciation reserves are
original cost. However,

permit larger
on replace¬
capital is to tap the resources of ment than on original cost, pro¬
the new savers which, admittedly, vided the", company utilizes
the capital goods is great, but par¬
is not an easy task.
However, it funds so retained for capital in¬ ticularly in the future, when the
most pressing
pent-up demands
can be done and the job certainly
vestments within a given period
for
capital goods have already
rates the closest attention of the of- time.
Such a liberalization of
the Revenue Act would stimulate been met and the country depends
investment

both companies in need of equity
capital as well as the executives
life

any

(2627)

CHRONICLE

not

the near
future. The only thing the invest¬
ment banking profession can do
to broaden the equity market and
to increase the supply of equity

be larger than the supply of bonds
and mortgages, it is evident that

that

ever,

Congress,

FINANCIAL

ings or the sale of equity capital
likely, how¬ to the. public.. Because the need
remedial tax legis¬ for plant modernization is- great,

lation will be passed in

outlet in the

power

laws.

tax

expansion has been met, a situa¬
tion may arise where the supply

capital seeking

primarily

pends

which has the

ture and since, once the pressing
need for housing and industrial

■

capital from external sources de¬

equity financing. Since

companies

therefore state that the
solution of the problem of equity

the assets administered by life in¬
surance

One may

of tapping the resources of

set aside for a re¬ While there is ample supply of
paid out in dividends capital, primarily owned by in¬
to replace obsolete equipment to¬ during a specified period pf time. stitutional investors such as in¬
surance
companies, seeking out¬
day costs from 2V2 to 3 times more
(3) Both individuals and cor¬
than formerly. A corporation that porations would benefit if the cap¬ lets in bonds and mortgages, there
wishes to replace obsolete equip¬ ital gains tax were to be modified is a definite lack of funds seek¬
ment therefore not only has to use to provide a lower rate on profits ing an outlet in equities.
During the past few years the
up
its depreciation reserve but which are incidental to an indi¬
also to add a still larger amount vidual's or a corporation's busi¬
principal source of equity capital
has been the plowing back of darn¬
either out of earnings or borrow¬ ness.
current

based

com¬

knowledge, have so far not been

Finally, considerable study
thought haye been given to

purpose of

addition, the purchase

equities by life insurance

panies raises a great number of
other
problems
which, to my

bution of securities.

means

follow.
of

COMMERCIAL

APPENDIX III

§ Saving by Individuals in the United States

6.7

7.5

5.1

5.4

0.0

2.5

1940-1947*

(Billions
Total

26.5

,
-

27.0

100

—__

retained

Reduction

External,
Bank

total

"Funds

from

liquid

and

Federal

mortgages.

net

and

sources

income

9.0

42
11

3.0

0.5

Total

0.0

2.3

ois'crepancy.

1.2

27.0

26.5

banks

later

and

sections

after income taxes and cash

SOURCE:

§ Business

Financing Through
(In

Millions

External
of

5.
6.

100

tOthcr U. S. Government.

savings bonds.

1948, p. 616.

Funds

:,N?"v Capital

Common
Total

Business Lo

Security I?s'Tc
Bonds &

Banks

1929

6.417

2,302

1,517

2.598

1930—

4,712

973

412

3,322

1936—

1,202

249'

863

1937

420

,.+

205

670

817

Notes

0.8

1.1

6.8

8.2

8.5

6.9

6.6

'3.4

3.2

3.4

3.4
4.6

2.5

2.0

3.2

3.5

1.9

2.5

3.9

4.9

5.1

2.9

+ 10.4

2.8

11.1

2.4

3.1

+ 13.7

—

...

14.9

9.6

1.0

+11.8

6.3

0.9

3.7

4.0

1.3

0.2

—

0.4

0.3

flfOther durable consumers' goods
(7 + 8+9)—

0.7

0.4

Does

unincorporated
not

includes

revisions

have

saving of

business

corporate
been

made

include net purchases by

the

*7.9

'*+

15.1

types speci¬

brokers and dealers or by

29.9

1.2

—

3.8

nonfarm

ttLargely attributable to purchases of automobiles and other
durable consumers' goods,
although including some debt arising
of

consumption

goods.

38.8

0.1

—

0.2

—

0.2

—

.1.1

—

The

-1-1.

9.7

6.8

6.'5

+38.6

46.4

+
■

and securities.

14.4

3.9

8.0

+ 14.9

+ 19.8

+ 43,0

+ 33.2

+ 49.0

378

loan associations, insurance

;

flIIConsumers

the

expenditures

durable goods as estimated by

Department of Commerce.

NOTE:

totals.

and Exchange

Figures

Asterisk

Current

data

Commission, March 31. 1948.

rounded and will not necessarily add. to
indicates less than $50 million.
necessarily estimates and, therefore,
are

are

(")
are

subject

revision. '

417

17'

1,370

2,470

—2,690

500

130

•'J+ 3.650

X + 5,800

889

286

1944—

663

8.1

133

449

1945—

1,264

226

430

608

1946—

3,546

718

712

2,036

"1947—

4,749

616

589

3,544

66
84
75

SFrom a study by Mr. Stanley Miller in "The Harvard Business Review," Novem¬
ber, 1948.
'Excludes investment compary issues. Figures for common stock issues have
been adjusted to exclude all new stock issues of the investment companies since a
breakdown
to

latter

the

tBased

1924.

Bureau

commercial
National

New

loans

Research;

and
to

"Commercial

estimates

Economic

Research

national

rounded

CANADIAN SECURITIES

stocks is not available subsequent

common

banks

nearest

estimated

million

ten

dollars.

the

National

iTerm

loans

$1.4 billion.

issues,

banks,

Bureau

preferred

business

Economic

corporations estimated
SOURCE:

into

the

and

Financial

Federal

Chronicle";
of

Bank

Reserve

estimates

business

New

loans

York

loans
based

national

STOCKS

BONDS

of
on

banks.

Public

Government

Utility

Municipal

Industrial

Corporation

Mining

AMERICAN BUSINESS SHARES, INC.

Traded in American Funds

AFFILIATED

THE

FUND, INC.

LOBD-ABBETT

INVESTMENT

COMPANIES

UNION

BOND

W. C. Pitfield &

FUND

Prospectuses

;

■

•

Teletype:
NY 1-1979

NEW YORK 4

Request

Co., Inc.

30 Broad Street

Phone:
HAnover 2-9251

Affiliated With

•

WVC. PITFIELD & COMPANY, LIMITED

Loud, Abbett & Co.

MONTREAL

INCORPORATED

63 Wall
CHICAGO

Street, New York

NEW

ORLEANS

Halifax
LOS

Moncton

ANGELES

Vancouver

Saint John

5.5

34.2

.^Construction of ^dne-to-four nonfarm dwelling? less net ac¬
quisition of properties .by nonindividuals.
Also includes a small
amount of construction bv nonprofit institutions.

1943__

8.9

1.1

2.9

vis., -saving in savings and

pertain,

—

+ 36.9

,1.0
6.8

3.2

1.8

V+

41.3

'-+

3.3

"Securities

purchases

1.3

0.8

0.3

+; 1.9

one-to-four family

dwellings.

from

+
+

3.3

3.6

+ 23.6

by bank loans.

0.1

—

0.5

—

0.1

—

+ 10.3
,

government saving. Con¬
soni£ of the series,

0.3

0.9

—

0.2

—

1.0

4.1

.3.1'

—

1.2

Total gross saving

§Inclucles

0.9

0.3
0.3

•

ff.Nonfarm dwellings.

—

0.7

0.6

2.1

other segments of
individuals' debt have been allocated to the assets to which they

5.0

—

0.2

1.2

0.3

4.0

3.3

0 4

Pref'd

—1,250
'r—
,

1,062

Bond* &

Common

203

1,225

1941—

Capital Security Issues

of Ccmm'l

Notes

0.4

—

ttLiquidation of debt not elsewhere classified
Total liquid .saving

UMorigage debt to institutions
Per Cent of Total New

Pref'd
Stocks

Stocks

+Includes Armed Forces Leave bonds.

tNet Change

Year

1946
+ 11.9

0.3

1947

1945
+ 1S.0

17.5

—

Corporate and other
ULiouidation of mortgage debt...

tDoes not

Dollars)

in Estimated

0.1

State and local government—

siderable

ID.

Sources

1.8

1.3

—

other individuals financed
'

'—

insurance——

1 Securities

fied.

APPENDIX II

+,
+

insurance

dividends, plus depreciation allowances.

Department of Commerce—Federal Reserve Bulletin, June,

+16.1

100

Private

Government

companies.
Also, in contrast to certain figures
article, excludes unincorporated enterprises.
'Profits,

the

pensions reserves.———.'—

insurance

and

^Excludes

quoted

3.1

+ 10.9

■+

1944

1.943

1942

4.9

2.7

deposits

Insurance

3.3

bank

Savings and loan associations.

1.0

duel"

taxes

statistical

6.4

and

1941

2.9

4.8
_

for

3.0

Government

10.4

Currency

1S40

11.1

—

issues

0.5

16.8

14.4

assets..,

total

Trade credit
Other

operations

loans

Security
;

14.9

___.

Dollars)
•

Type of Savings—

'Internal,

100

SOURCES—

Ottawa

Kingston, Jamaica

Cornwall
London, England

Toronto

THE

(2628)

COMMERCIAL

FINANCIAL

Bond

The Outlook for

Thursday, December 23, 1948

CHRONICLE

Pegging Source of Inflation

lieve'that the pegging has been rates on Treasury bills and certifi¬
too
stubborn, that there was a cates, continuing,, the trend begun
might
time back in June while the pres¬ 18 months ago; because these in¬
be suddenly undermined by the
creases have been a factor in stif¬
shock to confidence, unsettlement sure was off the pegs, when it
(Continued from page 31)
of the bond market, and a conse¬ would have been a good thing to fening bank credit to a very help¬
sources, it is desirable that Con¬ security purchases to permit in¬
ful degree.
back away a little to lower sup¬
gress
consider
modifying
the dividuals to borrow from the quent tightening of credit. But
An almost inescapable
port prices in order to penalize
corollary
jresent
depreciation
allowance banks beyond the present limit since no one seriously proposes
the second wave of switching out of the bond support policy is that
.nd liberalizing it for companies in order to take up their allot¬ such complete withdrawal of sup¬
and
of long Governments into other actual
optional
maturities
which reinvest the added depre- ment of new shares offered by port as to create chaos in the bond
have been and are being refunded
investments.
market, this fear of the effect of a
iation reserves within a stated corporations.
short issues, usually
Underlying this whole problem into very
The investment banking profes¬
change in the support level must
jeriod of years. It might be adof whether a drop in the support one-year certificates.
So long as
/isable to
amend
the Revenue sion itself could broaden the sup¬ be regarded as a "psychological
price is advisable, is the fact that interest yields on Government se¬
Act
to
permit corporations to ply of equity capital by tapping argument" of the sort which builds
in terms of the billions of bonds curities lean heavily upon price
ipread
their
earnings over a some of the large liquid assets itself up by long repetition and which
may be for sale there is no pegs rather than being determined
jeriod of years in order to be able held by individuals who are not assiduous waving of the scare¬
commensurate ready
demand or by the free play of market condi¬
Nevertheless, it deserves
lo follow a consistent dividend as a rule buyers of equities. The crow.
buying power outside the Federal tions, it is .admittedly difficult to
policy without becoming liable adoption of a consistent dividend primary consideration. A collat-j
Reserve, other than in the savings scale in middle-term maturities
policy by corporations would in¬ eral argument frequently heard is,
under Section 102 of the Revenue
and insurance institutions which without creating new problems of
that a sharp drop in support prices
Law. The Board of Governors of duce many individuals who are
themselves have been the heavi¬ market support.
While the pres¬
the
Federal
Reserve
System dependent on income to acquire might lower Government credit in
est sellers.
Therefore, either the ent proportion of very short ma¬
esteem
and
conceivably
should also consider easing the common shares more readily than public
Federal must stand by at some turities is not dangerous in our
cause an unreasoning panic among
present margin requirements on is the case today.
price, or the level must be let opinion, we do believe that as
holders of savings bonds, discour¬

(Continued from

The

Capital Market

that

page

•

21)

national prosperity

our

aging further purchases and pos¬
sibly
precipitating
large
scale

Says Insurance Companies

cashing

Threaten Wall Street

Set-Up

of savings bonds.
The
case for continuing support prices
unchanged becomes very com¬

pelling when it is draped in robes
of State, as has been done re¬
peatedly by stressing the need for
keeping our national credit un¬
disturbed so long as we are closer
The possible ruin of the Wall Street brokerage and stock ex¬ to war than to real
peace. Under¬
change setup of today looms as a possibility unless big insurance lying all these arguments is the
companies are not, in some way, curbed from the practice of taking excuse that other policies, such as
over multi-million dollar securities issues or exclusive participation
farm price supports, liberal mort¬
in other business deals.
gage and other building credits,
This was the warning of Bert- died in many instances by good,
and
high Government spending
am B. Tate, a former Wall Street
going concerns anxious to have generally, are inflating much more
mderwriter,
now
a
prominent money for legitimate expansion directly than the bond pegging
ealtor in Babylon, Long Island,
selling properties to the insurance policy.
vho disclosed the contents of a
organizations and in turn leasing
Our Committee Views
same
back on long-term agree¬
etter he had written to members
Venturing beyond mere review
jf Congress on the question of ments.

members practice by insurance
companies of purchasing large issues of securities threatens to
destroy securities business.
Bertram B. Tate writes Congress

ack of

new

public interest in

urities and bond investments.
"The

cratic
nomic

foundation

the members of the

demo¬

our

of life, from the eco¬
is free enterprise

way

angle,

and that is in turn based

ownership

TOmmercial

public
various

organizations,

large

and small," Tate wrote.

"It has been the trend for

surance

side

some

for the tremendous in¬

years now

companies to have

track

purchasing

"Where is the stock broker and

se-

in¬

new

such

giving
public

public under
Instead of

arrangement?

members of the general
chance to invest savings

fine, safe shares of going busi¬
nesses, it leaves them an oppor¬
tunity frequently to
only buy
lesser 'bets.' Also, unless the stock
'dealers' who make honest livings
out

selling shares to Mr.

Mrs.^ John

Public

wake

and
up,

they will be out of business before

and
we

summation

the

argument,

have asked ourselves what

would

officials

the

Treasury and the Federal Reserve
System

faced

were

responsibility

with

deciding

the

debt

down

enough to stop most of the
selling. There is also the possi¬
bility that a slight lowering of
price, by suggesting a change of
policy, might in itself induce a

bond market price levels adjust to
the pegs, or vice versa, the earliest

possible

start,

should

made

flood of unnecessary

selling aimed

refunding bond options es¬
pecially into longer notes and
short bonds. By such offerings the

solely at escaping

greater

Treasury

ket

loss.

For

should at

this

some

reason,

mar¬

broad

and

upon

terest

which

the necessity of

lowering the pegs,
Committee if clothed with

your

authority would drop at once to
the price at which we think liqui¬
dation

dried

would

pretty
well
although not completely

help

can

stage decide

upon

stable
is

hold

the

investment

goal

one

in¬

of debt

management policy. It should be
possible to do much in this direc¬
tion without

greatly exceeding the
relationship
of
intermediate
to
long term rates on which the war¬
time loans

issued.

were

stopped.
But

price
this

return

stage

tions

split

support

and

reality, the
been held to
view of condi¬

they are now, we
whether to continue

policy

Committee

unchanged.

are

the

probably
would
conclude that nothing should be
done pending a good long look at
business prospects over the yearend.

Treasury Savings Bonds

having

pegs

It does appear, however, that

While
cussed

attention
the

price

has

supports

been

and

pros

for

fo-

cons

marketable

Treasury bonds, the savings bond
issues

have
rocked
along
ap¬
parently unaffected by the con¬
troversy.
Last July's successful
special offering of Series F and G
bonds may have been helped by
doubts

about

the

continuance' of

the recent revival of

buying inter¬ price support of the marketable
est in Government bonds may of¬ issues; but the purchase limits on
interests of the nation.
This is a
fer another opportunity as in June savings- bonds bar any large funds
continuation of our practice in six
to retreat just a little on support from such a refuge, and the inter¬
previous reports to the Governors
prices-, in order to snap the psy¬ est rates available on bills, certif¬
of the Investment Bankers Asso¬
chosis of "rigidity or nothing" in icates and short bonds are far bet¬
ciation since 1946.
which the market has been held ter than on short term holdings of
It appears that if our decisions
since last December.
savings
bond or savings notes,
were governed by a majority vote
With the passage
of time we even after the August adjustment
of the Committee members, even
have lost some of our fears of the of yields on the savings notes. It
in
restrospect we
would
have effect
upon savings bond holders has been feared that the threat of
made
no
great changes in the of
dropping marketable bonds be¬ below-par prices for marketables
main policies of debt management
cause
low 100, and a majority of us now would
cashing of savings
followed since July, 1947. Despite
think we could go down at least bonds; but this has not appeared.
all the criticism against the prin¬
the
to 98 without inducing any great On
contrary, some savings
ciple of supported markets-which amount of
bond investors have been wonder¬
savings bond cashing.
is heard in financial circles, other
As of' the second week of No¬ ing why they should accept the
surveys of
banking and invest¬
vember, we are nearly unanimous lower short term rates on savings
ment opinion have
agreed that in
holding that monetary
and issues wnen the market risk is
when the chips are down, a ma¬
debt management policies should
managed out of Treasury 2V2S by
jority of commercial and invest¬ be
shaped in anticipation of con¬
ment bankers across the country
their support above 100.
tinued inflationary
pressures
in
have favored and hoped for the
Despite the relative handicaps
our
success of the bond price pegging
economy.
To that purpose,
of low short term yields, notice
which has been the central fact higher interest rates are an im¬
periods required for redemption,
of debt management policy.
portant factor in containing infla¬
best

management policies for the

...

large issues of'securities also han-

they know it.""

DEALERS IN

Revenue and General Obligation

our

Committee

views

there

tion, although necessarily supple¬
mented

lost

Municipal Bonds

collateral value, sales

and lack of

is this significant change: we have

unanimously

our

unanimity

pegging. A minority of

favor

us now

be-

further

quantitative

moderate

controls.

favor

increases

still
of

savings bonds thus far this year
exceeded

have

one-third
the

slumping to

and

Distributors

show

$174

million in

first

$400

net

sales

and in the

1947,

months

netted

1947.

billion dollar

redemption in 1946, Series E

recovered

Underwriters

period

comparable

After
net

redemptions by a

greater margin than in

this

million.

has

year

Sales

Series F fell off in 1946, but con¬

Investment Securities
Public Utility

Municipal Department

Industrial

tinued to show

sizable net.

Municipal

almost

unchanged

slipped

Railroad

20%

through

1946,

1947 and has al¬

most recovered

this year.

factor

important

qAllen & Company

Se¬

ries G held its wartime sale level

very

good

this

showing, however, was the special
offering of Series F and G bonds

Established 1922

during July, when the annual sale
limit

30 Broad Street

Bell

New York 4

SCHOELLKOPF, HUTTON & POMEROY, ING.
70

System Teletype NY 1-573

Niagara Street, Buffalo 2

63 Wall Street, New York 5

Teletype BU

available
and

Wire

Between

der this
to

Offices,;

1948

was

temporarily

$100,000 to $1,000,000
insurance

special offering amounted

$226

million

Series

$900 million Series G.
issues

companies

savings institutions. Sales "un¬

Teletype NY 1-2827

122
Private

from

BOwling Green 9-2070

Washington 8060

Telephone HAnover 2-2600

for

lifted

billion

series
over

and

The three

combined

netted

redemptions

in.

Volume

1946, $1.5 billion in 1947 and
$2 billion in 1948 through Oct. 31.

with the acceptance of the

(All

riod.

spread annually
As

over

income
long pe¬

ries

safeguard against de¬
liberate
abuse,
the tax choice
should be extended only to those
who hold to maturity.
This sug¬

reflect

gestion, originating in your Com¬
mittee, has already been rebuffed
by the Treasury; we believe it

figures exclude

cruals

the

and

net

interest

combined

ac¬

totals

after

redemptions of Se¬
A, B, C, and D, which are
earlier issues corresponding to the
present Series E.)
These results
are

the

tional

continued

income

rise

na¬

full

employment
and high earnings.
The fact that
the showing is if anything better
than that of savings institutions in
maintaining deposits, is a testi¬
monial to the untiring efforts of a
small group in the Treasury's sav¬
ings bond division and in various
—

the

event

FINANCIAL

CHRONICLE

debt
maintained,
by administrative budget sinking
fund appropriations ranging up to
2% a year and as a goal averaging
1% a year, of the present
d^J>t.
toward

progress

retirement

should

review,

of your Commit¬
the principal trends
Treasury and Federal Reserve
debt management policies.
They

—

value of bonds.

Certainly,

expense.

in the

no one

financial world wants to profit in
this work, but there is no good
to expect

reason

the acceptance of
our-of-pocket expense losses just
because that

done in wartime.

was

relative

light of the fact that the ac¬
crual rates on savings bonds stand
unchanged
while
other
invest¬
ment
yields including those on
short marketable Treasury issues
have
risen, we further recom¬
that the

first,

mend:

limits

doubled

of giving

sale

without

sec¬

of investment

does

comparable maturity.

subject of Government debt man¬
agement within the usual scope of
comments: namely, whether a

our

the extension

beyond the present

maturities of savings bonds.

set

for the

Con¬

committees of Congress,
tered around

become

the

pressing

the

ma¬

turities of Series E bond issues in¬

especially after 1951.

crease,

cifically,

Spe¬

alternative to

investment

re¬

through the purchase

of another bond of identical terms,

would offer those who hold to

current

series of equal

income

debt

should be
interest
rate of

20 years)

full

the

(perhaps

bond

maturity

the

taken

expected,

into

the

trust funds.
some

but

plague

us,

enced

the

Social

recent argument

any

period held beyond the pres¬

ent

12-year

maturity Up

other 12 years,

issued
issues

now

Secondly,
of

ers

but only

refund at

an¬

bonds

maturity the

accepted

ment" of

believe that hold¬

discount

the

bonds

who

forego current income for 10 to 12
years,

deserve

the

privilege

maturity,

now,

ual

costs

"good"

year
may

for the individ¬
mean

that

very

little "income" remains to reward

his

patriotic

loan,

social

and

pro¬

our

Respectfully submitted, :

pattern

ally.

the

prob¬

involved

lems

the

man-'

"State

•

local

and

governments,"

Snyder said, "are one of the
important
groups
of
in¬

most

eral

debt.

Nearly

owned

amount

total

the

Fed¬

billion
by

Of
State

for State and local gov¬

ernments
Federal

hold

securities.

you

billion

of
the

Before

owned only about $lJ/2

rates,

well

by the usual bond

factors.

market

During the past

two years,

the great supply of

market

price

has

municipal
were

Robert B.

Pfeffer

far above any

year

ceeded

Kneass;

Repp;

has

important factor in this

securities is also used

Kent;

Knight;

Molander;

Robert

"The

George

Francis M.

accounted for

ments
used

which

for

by those invest

will

eventually

capital outlays,

such

Smutny;

George

Spaulding; J. W. Speas.

roads and other

provements.

corporate bond

capital,
any

offered

funds

which

"that

it to our¬

owe

Your Committee holds
matter

debt

that,

competition

for available investment funds.

"Despite

fluences,

these

depressing

prices

stable foundation

part

this

of
a

certainly

long

firm

adopted by the Treasury and the

were

market

Federal

support

Reserve

stability

the

for

reasonably

any

fund

for

counts.
ward

the

market/'

Social

Industrial, Railroad, Municipal Securities
*0

Equipment Trust Certificates.

reserve

Security

ac¬

The tendency will be to¬

smaller annual net accruals

Members

to these accounts, as payments are

passage

and

of time.

increase

For these

New York Stock

through
reasons

New York Curb

ministrative budget appropriations
actual

for

debt

national

and

retirement.
vary

may

the

any

debt

deflationary

conditions,
reduced to

influence

important net retirement. The
may

Exchange (Associate)

Such

with changes

economic

times

Exchange

Philadelphia Stock Exchange'

subscribe to the policy of ad¬

Utility,

far, above

expected

be increased in future

compared periods of depression.4 But in any!

Philadelphia
1500

Walnut St.

New York

policy

maintaining

Treasury

as a

the total

early

reflecting the

Underwriters and Distributors of Public

and

generally

since the

year,

in¬

municipal

Established 1838

management pol¬

issues

likewise

previous record,

strong

Drexel & Go

"retire¬

ex¬

A huge

types of local im¬

These

rec¬

10 months of

total.

bonds have rested

largest amount, however,

Pruyne; Herbert N. schools, public buildings, bridges,

Rudolf

has

A substantial amount

of Federal

Blyth; Russell M. Col- for sinking funds.

well; Russell

•Winston

funds

and
year

they have already

last year's

volume

state

last

ord and in the first

this

depressing

New

flotations

exceeds

The increase

trust

expansion.

(Chairman);

been

influence.

far

and

new

municipal issues coming into the

new

$100 million.

gener¬

policy

our

the past few years

for

been

Committee

Delmont

setting the

rates

deci¬
have
specifically reflected in the
municipal bond market.
"Prices and yields of municipal
bonds, of
course,
are
strongly
affected by income tax rates and
by anticipated changes in such
over

billion—and 15 years ago, no more

pension

large,
policies

been

John W. Snyder

interest

for

Many

sions

agement of the
public debt.
•
Mr.

debt

management

wide effect in

Gove rnment

Governmental Securities

debt

have

than

grams.

Because the debt is

you.

Federal

the

war,

defense

that Treas¬

accident of maturity relatively token payments because

the

holder

As it

haps the final refinement of the

capital gain in

rather than current income.

in¬
with

terest

policies in budgeting for expand¬

Security

sufficient

permission to treat the accrual, if provisions will
held

common

publicly held debt—per¬

liberalized

outstanding.

imp orta

Federal

management on
your" financing
costs is of great importance to

trust fund accruals should be

ury

redemption prior to maturity; that national debt stands

is, the 2i/2% rate would apply for

"The"effect

most

Administration's

This has given rise to

selves."

through

will be greatly influ¬

adequate provision for retirement,

income

"they

ities,
have

sub¬

continuance of the 2V2% rate, but
loss

of the shortage of manpower and

by municipal¬

for any

inflation

about

ownership to the trust funds is not

without

ments had to be deferred because

securities

eral

probably be

can

be content with a

should

large hold¬
ings of Fed¬

shift governments and the remainder
toward firmer repression of credit by city, county and other local
government units.
inflation.
Whether such renewed
"It is a new development in our

icy, the shift of debt from general

larger

the

year,

purchase

limits,

annual

in fact

the past

over

fiscal

1948-49

amount

concept

G bonds, in consideration

the

accumulated, in general, during
war, when expenditures for
public
purposes
and
improve¬

view

administrative surplus for debt re¬

The holder

preceding redemption.

average

three calendar years.

month

the

background

Summer

ure

that

must this

per

2.90%

first of

the

option

compounded)

(not

calculated

annum

of F

bearing-

holder's

the

accrued

interest

2.90%, which would be re¬

deemable
with

exchange at maturity

10-year

far

retirement has exceeded that fig¬

stantial

apprehension

nervous

made for the purpose, but

tirement

bond might

goal under

Buoyant confidence rather

the

3>————

Secretary
pointed
out

ury

Moulton; Aaron W. Pleasants;

That

for

annual

before the American Municipal Association in Wash¬
Dec. 15, Secretary of the Treasury John W. Snyder called
attention to the effect of the Treasury's firm support of government
bond prices in stabilizing the market for municipal issues. The Treas¬

change of vestors in the purchase of Federal
At present you own
all-embracing securities.
national debt manage¬ nearly $8 billion of such securi¬
field

rate and perhaps longer maturity.

is, the holder of a Series E

cen¬

something like 1% of

conditions.

present

have

ap¬

budgetary appropriation has been

maturity the right to exchange for
a

bold

talk

ties—some

ment.

than

Treasury's interest rate control as maintaining stability
as well as keeping up value of $8 billion
of U. S. Bonds owned by municipalities.

major

any

in¬

opinions,

cluding discussions in the finance

sideration of extension offers will
more

in effect

retirement of our

authoritative

Many

policy in

ington

economy

third division of the

proach

than

rather

concern

Regular Debt Retirement
There is

cautious

be $250 billion present national debt

inducements should

offered to encourage

to pay back
purchasing power
the
savings bond of

reproach statutory sinking fund should be

the

anything away; and

that

ond,

annual

savings bonds might well

in¬

promises

than

attractiveness

vestments, still offer unquestioned
security, and that no other gener¬
ally available fixed income in¬
any

Attractive

parent, it must be admitted that
savings bonds, although declining

vestment

Making Savings Issues More

While that is ap¬

municipal bond market,

approve

appreciate that a great
deal of study must precede any
have not been as anti-inflationary
changes in the now well establish¬
as now appears to have been de¬
ed terms of savings bonds, we are
sirable
perhaps
the
monetary
agreed that some strengthening of
their appeal is warranted as an managers would confess as we do
to some second thoughts—but on
inducement to renew maturities
the whole our criticism, as before,
field offices, who have had to of such bonds.
is
work very largely through volun¬
mainly
that
wartime
easyBefore leaving this subject of
teers and on contributed adver¬
money policies were carried too
savings bonds, the caution should far into a
peacetime boom period.
tising.
be expressed that we in the finan¬
So long as inflation runs un¬
Also,
the
bond
support
policy
cial industry must not permit our¬
would have been much more de¬
checked, it is important to stimu¬
selves to be guilty of venting upon
fensible if the first pressure had
late saving and wider ownership
this department of Treasury fi¬
been allowed to carry long bonds
of savings bonds, against the in¬
nance
the impatience which we
a little below 100 before the pegs
evitable
economic
reversals
to
sometimes feel with general fiscal
were driven in.
At that time, with
come.
policy. It is charged that the call
credit expansion proceeding rap¬
Your Committee
believes that
to fight inflation by investing in
the Treasury should adopt a more
idly, the effect of a discount price
Treasury bonds rather than spend¬
might have been to impose some
expansive policy toward the sav¬
ing is completely inconsistent with
desirable restraint.
ings bond campaigns such as the other Administration
actioniswhich
This present moment is another
one begun an Armistice Day.
Ad¬ have
steadily boosted the cost of of those times when the
broad in¬
vertising and publicity programs
living, thus reducing the savings terests of the
should be broadened at Treasury
country indicate a
we

Points to
in

(2629)

Secretary Snyder Says Bond Support Program
Helps Municipals

Review

tee

merits reconsideration.
While

COMMERCIAL

THE

Number 4762

168

14 Wall Street

bond,

Thursday, December 23, 1948

FINANCIAL CHRONICLE

COMMERCIAL

THE

(2630)

charges which to us appear so re¬ cept salesmen's .compensation, are
to; be distributed among the full
reality. <

have

had

now

enough

ex¬

perience, however, with competi¬
tive
bidding to warrant a re¬
Furthermore, the large amount 100 issues,:-whether successful or
of unproductive energy and ex¬ not, the gross profit ox this firm's examination of our -methods—thp
sooner the better.
<■
v:
•
:
pense to which the 17 firms and .experience was $163.50 an issue/
So much for competitive'.bid¬
the Association are subjected im¬ put because this figure comes up
in black
ink on balance the con¬ ding, <
•'
" ' •
';
poses an unnecessary burden on a
What of the Future
f
business which should be direct¬ clusion could be reached.. that a

mote from

Investment Banking

And the Future

(Continued from page 19)
vent

the

decaying

from

midst of

swers

things:

good fortune.

our

other ing all its ability and efforts "to¬

which disclose, among
-

The present administration has
repeatedly expressed itself in fa¬
of reducing the national debt.
Finally, the vote is an expres¬
sion in • a free economy between

vor

and

co-conspirators;

are

groups

and

representatives of two responsible
major political parties which have
espoused many of the same fun¬
damental theories. A third party,

(2)

•

of the Government's
answers
and that further effort
will be made to require the Gov¬
the adequacy

passed
Justice
brought action against 17 of our
than

has

year

Department of

the

member firms and against

The

itself.

sociation

responsive
of and more specific. The Govern¬
ment intends to take additional

passage

time, however, has not diminished
the force of this action, nor has it

ernment

the As¬

depositions in the interest of ef¬
provided a decision. Those of you fecting further pre-trial discovery,
all of which indicates that it will
who are not directly involved as a
member of the firms named, but be many more months before the
case comes to trial.
only as. a member of the IBA,
should

informed

Most of you

suit.

this

know that we and the
served Inter¬

rogatories
on
the
Government,
which accompanied our answers
to their complaint.
The Interro¬
gatories were designed to
Government

the

from

secure
spe¬

cific information about the alleged

conspiracy.
Medina
to

June

the

directed

answer

10,

Judge

Government

days.

ment

laboration

repeat my statement of a year
ago.
The charge against the As¬
sociation seems to me wholly un¬
I

will conduct endless paper work, price meet¬ needs of industry been greater
compromise ings, and statistical study, to say and never' before in our history
nothing
of the
communications have individuals possessed .liquid
with the utmost vigor.
'
costs and preliminary effort and assets", in such abundance.
Why,
the
diligence
necessary
in all then, are we not realizing our full
Competitive Bidding
and

warranted,

And

now

without

defense

and

favorite subject— competitive efforts.
Expressed another

competitive bidding, which I have
discussed at most of our

meetings

traveling around the coun¬

while

issues

the

this firm was

which

the" successful

way,

bidder,

the

gross

profit before expenses was at the
Much has been said about
rate of $3.53 per $1,000 of liability,
competitive bidding on corporaxe
Applying the results to the 100 is¬
securities, and we are constantly
sues in
which the firm had par¬
asked why the Association does
not do something about the prob¬ ticipated, the gross rate of profit
was 710 per $1,000 of liability be¬
lem.
One reason we are already
fore deducting expenses.
involved in an anti-trust suit is

try.

because

Now

expressed our collec¬

comes

the cost accounting.

share of the current prosperity? Industrial
averages
of
stock

prices

are now

surrender

near

level,

whereas
more

they

were

the Japanese
August, 1945,

commodities

most

still

than

are

50%

higher tha-n
at that time.

outlook

The

for

this

business

has been dimmed

by the prospect
high
taxes,
reducing
both
spendable and investable income.
It has been dimmed also by the
of

Sept. 14 filed partial an¬

our

with

defense in col¬
Hugh

Mr.

Cox,

During

case

the

of the Government

Association

has

un¬

folded, it appears even more un¬

likely that the court could

uphold

period,

this

participated

firm cal.

the

100

exactly

ac¬

to bid
Of this num¬
among the success¬

may

counts which were formed
on

As the

opinion on the subject.

tive

is in excellent hands.

case

our

After against

extension of time, the Govern¬

directing

son

about 50 of these Inter¬

rogatories within

money
had been, made in
Now,- an appraisal of the .future.'
competitive bidding. Nothing could Our business is surrounded by op¬
more deceptive, however.
The portunities and obstacles. Wo are
apparent profit of $163.50 an issue told that there is too much money
would scarcely pay the cost of the in the economy today. Never be¬
administrative
efforts, including fore in history have the capital

We By applying the most conserva¬ trend toward profit margins which
do not adequately compensate in¬
still, however, have a free choice tive estimates of administration
as individuals,
and I believe we and office overhead, the cost of vestment firms for the risks they
take nor do they make it possible
may find a solution if we are will¬ registering a profit of $16,350 on
to
compensate
sales
effort
in
ing to look the facts squarely in this firm's books was $20,500, or a
My purpose in giving you this
net loss of $4,150, which is at the small units in a broadened mar¬
the face.
information regarding the status
It has also met discourage¬
In an effort to get specific in¬ rate of 950 of red ink for each ket.
of
the anti-trust suit is not to
formation on the subject, studies $1,000 of liability assumed. Only ment because of the growing dis¬
cause
you any additional loss of
have been made available regard¬ the
anticipation of better days position of individuals to entrust
sleep in these otherwise hectic
their savings to institutional in¬
ing the results of competitive bid¬ could encourage a firm to con¬
days but to make it perfectly clear
tinue to engage in a business re¬ vestors.
ding activities of one firm for the
that all of us are involved. I can
Venture Capital
period from Jan. 1, 1948, through porting these results.
assure you that, with Murray Han¬
Nov. 22, 1948.
,
This example may not be'typi¬
We
have
heard
a

defendant firms

financing of American

industry.

our

That the Constitution and
By-Laws of the Association, its
reports and actions of meetings,
Boards,
and
Committees
are
representing views which were
unfriendly to our basic concepts among the agreements upon which
the Government will place reli¬
of good government, was hope¬
ance to prove the conspiracy.
lessly defeated.
Our counsel advises me that we
Anti-Trust Suit
are still not entirely satisfied with
since

the

wards

That the Government will
claim that all present and former
members of the IBA, its Board of
Governors,
standing committees,
(1)

little

corporate issues.

ber, they were
ful bidders in 19 instances.

Once

times, or, in terms familiar
to followers of baseball, the bat¬

in five

ting
Yet

great deal
I think it lately about the importance of di¬
better than many. ;■;* recting the flow of capital into

think it is, and

be even

What

concerns

most is

securities.

The

difference

We know from experi¬
that the purchase
equities is more favorable to

that equities.

in bidding for corpo¬
rate issues is so different from the
customs which have been estab¬
lished
in bidding for municipal

the pattern

lies

ence,

moreover,

earning
If

are

low

they are today.

to realize our ambition

are

ratios of price to

when

investors

than 200.
principally in our judgment of to expand markets for new capital
swinging risk because those who bid on cor¬ through the sale of equities, it is
the bases, porate securities do not appear to to be hoped that the enthusiasm
dirtying up their uniforms,
have established a convincing rec¬ of the investing public will assert
nothing better than a minor
now
when ratios are low
ord in the measurement of their itself
average

less

was

they were up there

day after day, running
and

with

league average.
It should be mentioned also that
the firm studied had capital as¬
sets

New

York

Stock,

Exchange

New

York

Curb

Exchange

Stock

Exchange

Philadelphia

the

$400,000
and

and

risks ac¬

the' 100

separate bidding accounts ranged,
$200 to $800 thousand.
What is more important is that

from'

the

1342 Walnut

under

liabilities

cepted in joining each of

MEMBERS

slightly

that

NEWBURGER & CO.

Street, Philadelphia 7

gross

profit,

after deducting

losses, on the 19 issues
was

NEW YORK 5

HARRISBURG

LEBANON

ATLANTIC CITY

14 Wall Street

Telegraph Bldg.

Farmers Trust Building

Central Pier

purchased

$16,350, before applying ad¬

ministrative

expense,

salesmen's

compensation, rent, heat, commu¬
nication, and general overhead.
Because most of

and prices for shares appear favor¬
able. Many industries are selling
one
in the
public markets today at
demonstration that competitive
substantially less even than net
bidding on corporate securities as
current assets.
now practiced
needs periodic ex¬
The shortage of venture capital
amination.
I urge you to make
is widely discussed.
An increas¬
studies of your own results, using
ing number of businesses have
accepted cost accounting methods,
had
difficulty in raising equity
and I promise you that you will
eventually
become advocates of funds, being thereby forced either
to stop expansion or to finance
reform. What is that reform? This
expansion through plowed - back
is
a
study in itself. " In these 20
earnings or by going into debt.
minutes it is impossible to discuss
Loading business with debt has
new procedures.
They are too in¬

risks.

these costs, ex¬

You

have; seen

least

disadvantages

tremendous

volved.

espe¬

in those lines of industry
which
experience wide fluctua¬
tions of sales and profits.

cially

While

complete

overhauling
is long
would be

of the whole tax structure

UNDERWRITERS, DEALERS and BROKERS

THOMAS & COMPANY
UNION

TRUST

PITTSBURGH

BUILDING

19,

PA.

investor

the

overdue

by the introduc¬

most encouraged

tion

remedy for the present

duplication of taxes on corporate
earnings when passed on to the
individual.

Pennsylvania Municipal Bonds

urgent need and
statistical com¬

the

Despite

desoite impressive

Public

Utility—Railroad—Industrial

Investment Securities

economy

our

Pennsylvania

Property Tax

Members

Securities

Members of

■

York

Stock Exch.
New

Philadelphia Stock Exch,

Pittsburgh 22, Pa.

The National Debt

public debt, which reached

high of $279 billion, has been

reduced

approximately

$250

billion, but it is still a source of
major concern, and the avoidance
of both debt increase and deficit
are
strategic issues in
resisting the inflationary pattern.

The
must

GRant 3883

financing
1812 First National Bank Bldg.

York Curb Exchange (Assoc.)

1521! WALXUT ST.. PHILADELPHIA 2, PA.

continue

government.

Pittsburgh Stock Exchange

Investment

can

without wise ad¬
of business as well

ministration

fauset, steele & co.

The

New

by long
the mpst

well

function

Yarnall & Co.

and

powerful nation in the world to¬
day. Fifty per cent of the world's
productive wealth lies within our
borders. This does not mean, how¬
ever,
that our wealth is, inex¬
haustible.
Nor does it mean that

Specializing in

Personal

richest

the

odds

States

United

The

BONDS and STOCKS

Issues Free of the

parisons equity capital remains
timid,
awaiting more incentive
and more encouragement.
;
; >
\

(

1 Teletype PG 381

enormous

reduced

discharged
the
sinrl

for

the protection of

credit, our money,
omnnmip>urf»lI_L#>incf
'

national
Anr

burden of debt
and eventually

Volume

168

Number 4762

considering

the

COMMERCIAL

THE

federal

FINANCIAL

CHRONICLE

product in the nation today there
is ample evidence that it has not

system should be made known to
greater numbers of our citizens.

there is general agreement on the

been sold under that label. »

There must be constant reminders mourish

necessity of large military outlays
and substantial expenditures 'Tor
foreign aid. These factors, together

democratic

with the

persits in

(2631)

l\udget for the next year

tional

service

debt

veterans,

our

the

and

two,

own

that

ward

na¬

benefits

through accepted
methods, the drift to¬

Meanwhile,

socialism

nation

must be

this

orderly

continues

way

and the

taxation

ernments.

level

which

al¬

'•

•

■

»
.

In addition to

has

An Education Program

this, the adminis¬

been

There

opportunities

freedoms

peculiar

can't go wrong. It's just a dumb
mechanical
weathervane
which
shows which way the
wind Is

blowing. When the wind changes,
it has to change—but some of the
priests, having anticipated

the hope of the world.

high
LETTER TO THE EDITOR:

their

The Technical Market
L. L.

Moorman, commenting

■

are

a try for glory,
.change with the wind.
result, their stubbornness

-losses

causes

Systems

Anyway <

instead

this

has

can't, invest

you

with the

profits.,,

with
speculation and not investing, and

endless'opportunities
program of expanded social bene¬ to acquaint our citizens, especially
fits which will require additional those of high school and college,
expenditures.
Admitting the de¬ with the plain facts about business Editor, The Commercial and Financial Chronicle:
sirability of a sound social pro¬ and government, and, if business¬
In spite of the fact that you (Mr. May)
seem to enjoy an argu¬
gram, we must pause to consider men are really in earnest, they
ment, you occasionally use considerable tact. Take your "Observa¬
carefully whether our economy will take upon themselves the task tions" of Nov. 4. It's a
honey.
will be able to stand additional of providing sound economic edu¬
First, I want to assure you that I agree to a great part of your
strains at this time. If these ex¬ cation that everyone can under¬
argument, but I believe careful^
penditures are increased substan¬ stand.
price trend studies to be part and your are supposed to buy stocks to
is
tially they must come through the 'i There
nothing
mysterious
parcel of good tactual analysis. improve your spendable income
the
investment
sacrifice of other less vital gov¬ about
banking
This I believe to be an important through market profits, because
ernmental services. Otherwise one business, though some apparently
prerequisite for sound investment present
tax
laws limit tax on
of two things will happen. There believe that it is done with the
procedure.
It
is
important
to long-term profits to a maximum
will be huge deficits that will dis¬ use of mirrors or by
sleight of
speculative programs as well, but of 25% of any such gains. If the
rupt our economy and finally af¬ hand. Both the underwriting and a simon
pure investment program
operation produces a loss, it can
fect our credit and the value of distributing
functions are com¬ should be
confined to safety of be used to reduce actual earned
our
currency.
Or, if taxes are paratively simple operations
principal and the assurance of income. Formula plans based upon
raised substantially, they will en¬ through which savings and other
reasonably dependable income. I secular or market growth chan¬
danger the continuance of our capital accumulations are trans¬
believe the minimum income re¬
nels, give the implication that
lated into investments and through
business prosperity.
quirement
of
the
individual you can't lose money by buying
It will be no easy task to bal¬ which
the
ownership
of
these should
common stocks. The trend of the
determine
the
objective
ance
the budget.
Even today in intangible evidences of the na¬ and the character of the invest¬ channel is
always up at the rate
an
atmosphere of high industrial tion's wealth are transferred from ment
program.
The risk assumed of 3 or 3V2%. If you are wrong,
production and profit, the corpo¬ one owner to another, day after should
be only that necessary to
just wait. You can't lose.
ration taxes will be $13,000,000,- day.
the bare fulfillment of the income
Furthermore, investment analy¬
Yet,
because our industry is
000, or 30% of the federal buug-r.
based
upon
business
peed. Ample diversification and sis
smaller
than ■ many
and this amount is sorely needed somewhat
balance are important safeguards fundamentals, national
income,
to balance our present expendi¬ others and because:our functions
which cannot be ignored.
building,
production,
earnings,
are not a part of the
tures.
daily lives
I
do
not
consider
balance
a
dividends, etc., used to be good
There is no reason to believe of most of our citizens, the essen¬
method to beat price movements, yardsticks of value.. Lately the
that we can increase our debt and tial
machinery sjipplied by our
fear of the
reelected

systems in

refuse

A. Wilfred May's "Observations"
in the "Chronicle" of November 4, says battle should be
against the
high priests rather than against technical systems of investment
"policy and market trend analysis.

ready high.
tration

individual

and

prosperous

essentially free, despite the grow¬
ing dependence of our citizens
upon the State and Federal gov¬

the

nation, where the incentive
and
the
profit
motive
a
virile and highly pro¬
ductive economy which today is
our

system

country

prepared for large federal expen¬
ditures
and
the
continuance
of

means

and

speculate

dollar at the

same

time. This brings us back to bal-.
ance.
Use part of your money to

invest with, i.e. buy safety and
dependable income. Shoot craps

with the balance if you can afford
to. By

following this simple prin¬

ciple,

investments

contentment

would be

try

beat

the

battle

bring
there

and

market

without systems.
In
conclusion,

•

could

need for investors to

is against

with

think

the high

your

priests,

rather than the systems. Of
course,
this

broadens

it
I

the

sympathize

field

and

puts

personal basis. Therefore,

with

because

you

can't get all the high priestsJ

you

of anyone system on the same side
of

the

market

Therefore,
mortal.

the

time.

same

systems

im¬

are

Personally, I'd rather have

Hercules

task

Stables,
your

the

which

the

delicate

very

Aegean

reminds

conclusion

your "Observations" of the Nov. 4

issue of the "Chronicle." You said

increase

taxes

indefinitely
without inviting disaster.
our

members

little

understood

and

but

rather

greater'

method

income

with

unknown is

obtain

less

risk.

portant

than

fundamentals.

"The

im¬

little appreciated.
And then only when greater inthreats, labor troubles, etc. on the
Since the .profit results from our
prospective
icome is needed. If- the income is domestic scene —and war scares
business have been somewhat dis¬
customers attracted by the highly
sufficient for the needs from good on the international front—stimu¬
in recent
years
and
developed
sales
efforts
of
the couraging
tax free
municipals, then late the emotional factor of fear.
since
many
changes have taken
large
life
insurance
companies
|100% investment-, in such tax Today fear psychology is used as
with the result that there is today place which have made the con¬ ifree
municipals would be perfect a club to scare people into doing
duct of our business more diffi¬
a greater concentration of wealth
balance for the account. The as- foolish
things, and tire United
under
institutional
control than cult, concern has been expressed
jsumptidn of greater riskfto try for States Government 'is one of the
about our future prospects. I feel
ever before in history.
worst offenders.
market profits or greater income
>
reasonably safe in predicting that
would.be a silly unnecessary risk.
Fortunately, this problem can the
Therefore,
is it any wonder
firms, large or small, who rec¬ ' I
believe this'is* entirely in line
be met. It can be met by expand¬
people listen to the high •priests
ognize the many changes in this
ing our sales efforts to reach to¬ business and who are resourceful iwith your own philosophy, .and Of any. technical market system,
way back B.C. (before confusion)
day's broader market. It can be and
if they
claim to offers financial
aggressive in their advertis¬ it
was the normal accepted
met
by
introducing
prac¬
improved
redemption?
And
speaking
of
ing and merchandising methods
tice. * Today:
methods
of
business solicitation
new.
ide^s
foster mechanical systems,:it is the high
will report good results notwith¬
which are designed to reach the
speculation.
For
example,
you
priest who goes wrong, not the
standing these discouragements.
thousands of individuals who hold
system. And isn't .that because
Let us remember that the facili¬ must buy commodities or equities
these unprecedented amounts of
ties
offered
by the
investment to hedge against ' inflation—the they are human? At times every
liquid assets. Many of them may
banking business are indispensa¬ future purchasing power of the system hits-dead center and can
be found in agricultural commu¬
be interpreted two ways. Result:
ble in a free economy. And let us
dollar must be guessed at. If you two
nities or somewhere off the main
interpretations.
The
high
Remember that the demands which
road of our cities and towns, un¬
are in a high income tax
bracket, priests, are divided. The system
will be
made
upon
us
to
raise
have

seen

accustomed to investment respon¬
These markets

reached

and

can

unit
profit

greater

generous

onlv

cost
mar¬

gins.
!

•

picture

men

have

the free
among

than 20 years business¬

this

course

misprint

and

have

may

perhaps

-'read -"between

have

schools," but if it
rectly

was

-greatly

delicacy

gratulate

you

'Hhem fall
on

one

friend

tells

look

now,

on one

Dec.

.5,' 1948

tions.

meet

changing

must

make

admire

the

than

Declaration

enterprise

one

believe

that

system

is;

the

free

another

but you've been step-

of the stools.
L, L. MOORMAN

must

told
of

and

the

retold.

Rutherfordton, N. C.

plans

Underwriters and Distributors

The

American

Railroad, Public Utility, Industrial
and

Municipal Issues

WELLINGTON
FUND

eeueeee
INCORPORATED

STROUD & COMPANY

Incorporated

1928

•

123 SOUTH BROAD STREET

National Distributors

NEW YORK

1420 WALNUT STREET
'

PHILADELPHIA 2
-

PEnnypacker 5-0851

PHILADELPHIA 9

W, L. Morgan & Co.

Teletype PH 743

•

PITTSBURGH

•

ALLENTOWN

•

♦

P. O. Box 329

of the essential wheels

best fundamentals

don't

—

industry.

ica

and

And,

Meanwhile, the story of Amer¬

of Independence.
I

ing is
of

con¬

stools

things.

knowledge that investment bank¬

treatment

your

condi¬

our

two
cor¬

heartily for letting

darn

jping

the

printed

expression.

between

the

not

SCRANTON

should

we prepare for the oppor¬
tunities ahead and keep alert and

enterprise.system, mostly
themselves./ It has had
except

will

been

with confidence and with the full

anything
While

value-scrutiny

unless

preached the merits of

oratorical

and

capital from private sources may
well exceed our ability to perform

flexible

For

only 'fall between the two stools.'"

attempting

our

sibilities.

individual

bridge the gulf between market-

Tax

LANCASTER

(2632)

COMMERCIAL

THE

Thursday,' December 23, 1948

CHRONICLE

FINANCIAL

Reduced Industrial Financing in
expected to cut back by more than

internal

|20%, and other enterprises in the

funds

mining,

railroad,

Jiold

their budgets at

well

high level,

ko that total business expenditures

pay

mean

decline in

to make a few

the

necessary

1947,

and

assumptions about

1948.

for

building

then

funds from earning power next
year.
If a decline of 8 to 10%
In net profits, before taxes, is
a

pectedly low earning

would

course

business

might

able

tax

would

—

'The question arises whether, the

the

cause

confronting

earnings than has been assumed.

mean

about 15 to 20%, or

unemployment.

$3 to $4 bil-

know

higher
and

that

Democratic

the

price

wages,

increased

our

economy

such

reduced

payrolls and

Efforts to

mass

offset

decline in business spend¬

ing by increasing government out¬

restrictions

lays

taxes.

corporate

production which would inevitably

has included promises of

program

J On the assumption that business
earnings" next year can hold up to

effect

adverse

expendi¬

slowdown in durable goods

tax structure, then
business earnings would decline

even

/unjustifiable

business

tures,

|ax rate is assumed in the already
burdensome

election

profits

with

will have

results

excess

other punitive tax burdens

shrinkage

•

es¬

vicious circle ih which

promptly followed by curtailed

supply most of its own capital

moderately higher

capital outlay.

needs.

—

power

have its effect in further

decline in available funds would

inventory,

1949

is needed

no new money

of Federal

would face

losing battle,

spending.
of

'(SEC

■

•

Financing in 1949

—

Proposed Uses of Net Proceeds:

(000's omitted)

too

early to lay. down

eral

ture

Bank

Reserve

Philadel¬

in the

Philadelphia district
expected 16% decline,

further

and

the

points out that

expect to rely upon banks for only

—

their

against 13%

9-30-48

1947

1946

$6,466,053

$6,756,582

3,798,966

4,590,540

83.62

70.99

Plant and equipment

2,689,300

Working capital

1945

1944

1943

1942

$5,901,744

$3,141,847

$1 ,146,914

3,278,828

1,079,844

656,967

307,958

473,652

48.53

18.30

20.91

26.85

45.43

3,408,523

2,114,682

637,803

251,757

140,889

287,039

1,109,666

1,182,017

1,164,146

442,042

405,210

167,069

186,613

609,986

1,707,931

3,246,302

4,688,823

2,438,063

811,685

533,703

requirements,

This sur¬

a year ago;

made prior to the elec¬

was

vey

$1,042,556

tion.

New money

(4) If the net demand for new

capital does indeed dwindle, the

% of total

Retirements

stage might be set for refinancing
a

certain amount of senior capital

with equity securities.
The

actual.

development

13.43

26.42

48.05

79.45

77.60

70.77

51.19

these possibilities would be gen¬

Funded debt,.

191,48§

1,155,191

2,391,919

4,116,897
'

2,037,505

666,657

365,819

erally constructive. The period of

Other

376,257

356,304

378,786

134,009

49,071

.72,538

.137,543

196,436

475,597

437,917

351,486

72,490

30,341

\ 67,582

231,452

46,818

27,271

35,201

1.49

2.38

3.38

% of total..

debt__

maximum

42,243//

133,916^

Other purposes.

133,076

% of total
Industrial

1,673,993

—

% of total
New

2.59

2.95

2,685,903

36.85

Retirements

1,973,818

355J33

—

Other purposes-—.

3,600,777

41.54

1,275,833

money-.

3.42

1,969,294

53.29

1,230,693
;

169,216

1,033,392

497,439

of capital

viate

33.37

32.89

43.37

227,587

292,651

1,107,002

551,617

252,659

:/51^775:

28,lit

17,193

strains.

not

definite "no."

sound, but it has not pro¬
enough to weaken the

ceeded far

financial strength built up in ear¬
lier years. A few brief facts bear
this out. Today business sales vol¬
ume

is running two and

times

of these strains, result¬

o&e-half

high as it * was in 1929,
yet corporate debt is only
about one-fifth greater than it was
in that prewar peak year.
SfC
data show that corporate working
capital, excluding banks apd in¬
surance companies, has increased
from a prewar figure of $24.5 bil¬
lion in 1939 to about $64 billion
the middle of 1948.
Comparable
figures are not available for 1929,
as

and

but other data indicate that work¬

ing capital today is at least twice
1929 levels, while corporate debt
has increased only moderately.
The record seems clearly to point
to a strong position with regard
We

alle¬

can

downs and ultimately a

nearly adequate flow of divT

idends

those

who

have

nished the risk capital "to

that

structure.

conclusion
period of rounding out

are

the

led

the

the peak in

capital requirements
larger American busi¬
enterprises in sound shape to
meet the manifold problems con,fronting us.
Ingenuity and re¬
sourcefulness have prevented thje
development of corporate (deteri¬
oration.
' |
finds

the

;•••,

dom-

In previous remarks this

mittee

has

problems

fur¬

Amer¬

;

ican "business, /'<
.

called

attention

connected

with

eapital, problems which rendered
it

necessary

substitute

Respectfully

submitte^,

A.
Willard
(Chairman);
Ainsworth; Wilbur G.
Bingham; William B. Chappell;

Walter W.

financing for equity financing in
instances in which the latter was

♦

W. T. K. Collier; Milton C.
Cross; Harry S. Grande; Henry
Herrman; Matthew J. Hickey,
Jr.; E. Jansen Hunt; B. P. Les¬
ter; Stanley N« Minor; Paul L.
Mullaney; Chapin S. Newhard;
E. Cummings Parker; John J.
Quail; Wickliffe Shreve; Wil¬
liam H. Sills; Joseph A. Thorrias;
Murray Ward.
.

r
FIFTY-SEVENTH YEAR OF DEALING IN

CONNECTICUT

SECURITIES

A Managed Investment Company

Primary

Prospectus
your

may

be obtained from

local investment, dealer

Statistical Information
8

Chas. W. Scranton & Co.;
THE

PARKER CORPORATION

ONE COURT

STREET, BOSTON 8, MASS.

Frank
•

senior

clearly desirable. From the begin¬
ning of 1945 to date, about 20%
of the new money has been raised
through the medium of commpn
stock, 15% preferred stock? 'and

Industrial Securities Committee

the

shortage and timidity of venture

SHARES OF CAPITAL STOCK OF

was

Relaxation

requirements

some

loan pay

207,741

26,793

answer

The direction of the postwar trend

ness

50.57

453,664

under

needs

ing in balance sheet improvement,

527,185

810,516

2,200,869.

649,565 \

' 42^348^^/02,520'

2.25

to debt in 4he business

time of many

capital

conditions of inflation has been a

Preferred stock

structure.

The

$4,542,868

the 1949

for financ¬

9 Mos. End.

AH corporate

It had earlier been hoped that
sounder tax structure might be

Including Private Placements and Unregistered Issues But Excluding Commercial Bank Term Loans firms involved in these programs
5,:

unsatisfactory
frorh
the
standpoint of a balanced capital
structure.

hard and fast pattern

indicates

■'

Data)

direction

'49
notes.
Clearly,
this trertd has

calendar, a tax strucp
furnishing relief from crip¬
pling double taxation. This would
ing next year, but it does appear have tended to improve the out¬
that;
look for improving the ratio .of
(1) The need by business for equity capital to debt, in new
financing. Now this tax prospect
new money will be considerably
does not appear bright for the
reduced.
near future, although this type of
(2) Strength in the fiked in¬ relief is still a requisite to sound
future financing.
\
come securities market may per¬
The picture we have sketchedi
mit working out delayed refund¬
in for the coming year does in¬
ing operations.
clude the projection of a material
(3) Bank loan formation may slowing down of the rate at* which
slow down; there could be sub¬ business has been going into debt.
With the tendency to finance with
stantial payoffs on loans if inven¬
debt
so
widespread
in
recent
tory requirements are not mush¬ years,'we necessarily come to the
roomed by further price rises. A question
whether
business has
recent survey made by the Fed¬ piled up a dangerously high debt
is

tures

and

been

■

Pattern

bonds

the

phia of projected capital expendi¬
CORPORATE SECURITIES OFFERINGS

65%

in contrast to the sterility

power

needs,

externally,

inventory reducing capital expenditures,
billion

$6.4

about

Unex¬

requirements were $7.3 billion in tablishing

ability of business to generate

projected and

internally

from the capital markets.

in¬

generate

capital re¬

Increased

quirements.

business capital spending of $2 to

^3 billion. Now' it is

then hinge

ventory and working

be down only 10%.

This would

either

the 1948 level. Demand for new

capital would

sufficient funds for capital

spending
dividends

and continue

program

business

for

expenditures

plant have a definite reproductive

objectives would make it very dif¬
ficult

approximately

meet this

adequate

public utilities

fand commercial fields may

capital

generation

would

business

since

Sweeping accomplishment of these

1948, the

within about 15% below

(Continued from page 22)

MEMBERS

209 CHURCH

NEW

YORK

STOCK

EXCHANGE

STREET, NEW HAVEN 7, CONN.

Bell

Teletype—NH 194

Telephones: New Haven 6-0171
iKfwTork.CAnal 6-3662

-Hartford 7-2669

■

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

>W(X-

CHRONICLE

•"

31 Milk Street

/■<,' f'nH'

Iff

95 State Street

■

BOSTON 9, MASS.
Telephone

■«

(2633)

SPRINGFIELD 3, MASS.

6-8200
HAncoc

Telephone 2-7485
Teletypewriter

Private wire to New York—CAnal 6-8100

New York
■

Clearing Ageni: GRACE NATIONAL BANK OF NEW YORK

■"

.•

;

•

COMMERCIAL

THE

(2634)

FINANCIAL

Thursdayi December 23, 1948

CHRONICLE
aries., Public Law 845 is the result

Issues
fplly discharged. This would ap¬
pear to give full consideration to
the

state's

remission

tax

tb the date of maturity of

suance

(Continued from page 24)

agree¬

ments.

the

original purchaser
holds such bond to the final

who

maturity date is therefore entitled
to treat as exempt interest the en¬
tire amount of the discount re¬

by him when the. bond is

ceived

Tax Exempt Discount—

bond.

paid by the City at par at matur¬
Where an original pruchas-

Municipal Bonds

ity,

make

loans

of
ctn

various

but

1954,

would
of

close of business June

the

30,

termination

such

affect

not

the

half

completion

agreements entered into up to

that time.

effective, coordinated national

in the California

1947,

case.

Last January1 there was intro-f
procedures for ob¬ duced in the Senate S. 1988 copy
taining financial assistance tor Of which was appended to our
planning ana constructing treat¬ Interim Report of January 30 of
ment works are now being draft¬ this year.
The measure was spon-ied.
•
According to the law, sored by twenty Senators' from
different parts
of the country.
States, municipalities, or interstate
agencies must obtain approval- of Among the many bills on the sam^
proposed projects from the ap¬ subject introduced in the House
propriate State watfer pollution was H.R. 5992 which was passed
agency, or agencies, .and from the by the House on April 30 by a
Public Healtn Service.
vote of 257 to 29.
That bill was
"The

exact

order to
aid in financing
May of this year the City of N sells the bond before maturity,
Chicago sold a block of $66,500,000 he is entitled to treat as exempt projects authorized under federal,
bonds for various purposes. The interest the portion of the discount state or municipal law, the Act
rate On $36,500,000 of these bonds wnich is 'earned' for the number authorizes the RFC to purchase
"The Federal Works Adminis¬
was
specified as iy2%. Some of of days he held the bond, his pro¬ the securities and obligations of, trator is authorized to make grants
the bonds are
serial and some portion of the total discount being and to make loans to, states,- mu¬ to States, municipalities, and in¬

cision of the U. S> Supreme Court

century eftort to create in>. June,

business water pollution control-program.

enterprises, financial institutions
and municipal bodies, etc., as pro¬
vided by Sec. 4 of the Act, termin¬
ate

substantially the

Senate

same

The term bonds are

bonds.

term

redeemable at par

equal to the proportion that the
number of days he held the bond

prior to matur¬
The bid for these $36,500,000 bears to the entire number of
of bonds was at a discount, speci¬ days from issuance to maturity of
fying a separate price for each the bond.
''Similarly each successive pur¬
maturity and where the bonds are
optional a separate price for each chaser is entitled to the portion

ity.

optional date. The Department of

of the discount at which the City

Internal Revenue issued

originally sells the bond, allocable
to the number of days he holds

ruling

these bonds, holding that sucli
discount is additional interest: and
on

exempt from Federal income taxes.
The

principle of this ruling is
the

referred to in

the

same as

our

Annual Report of last Decem¬

one

ber, issued in conection with the
$20,000,000 Fulton County,
Georgia 1%%' serial bonds sold
by the County in March, 1947 at
a specified separate price for each
maturity. A substantial majority
of such separate prices were at
sale of

discounts.

Both

reaffirm

simply

these

the

rulings

long-estab¬

lished holdings of the Department
as to the
status, for Federal in¬
tax purposes,

come

bonds
a

sold

discount.

We mention the Chi¬

ruling in this Report merely

cago

because
of

of interest
municipality

discount

the

bonds

also

where

treatment

covers
on

the

optional

redeemed

prior to
maturity.
The Optional feature
was
not involved hi the Fulton

County issue.
5

For the purpose of general ref¬
erence, we quote below
ion of Chapman and

the opin¬
Cutler of
effect of the

Chicago as to the
Treasury Department's rulings of
April 30, 1948 and May 4, 1948,
relative to $36,500,000 1 Vz % bonds
cf the City of Chicago sold
by the

City

above mentioned.

"The discount at which

bond

by the City is regarded
0s constituting additional exempt
interest accruing daily over the
entire period from the date of is¬

pur¬

figures his
share of the discount with respect
to the number of days he held the
out

bond

of the

total

number

days from issuance by the City to
the fixed, maturity date. <
"The
ment

only difference

occurs

the

who

purchaser

in treat¬

case

holds

the

bond
par on the
the

when it is redeemed at

earlier call date: he is entitled to
treat

as exempt interest all of the
remaining discount, that is the
proportion of the discount, which
the number of days from his date
of purchase to the date of fixed
maturity bears to the total num¬
ber of days from date of issuance
:o date of fixed maturity."

These

the

bonds

and

the

price of
position if above the cost.

dis¬

terstate agencies for studies,

sur¬

one

veys,

Finance

Health

Service

the

and

Works

Federal

eral Works Administrator to other

obligations issued or to be issued
project and to other obli¬
gations then outstanding."
for the

Great

several
other

"The passage of Public Law 845
has provided for the first time a
national program for the elimina¬

"Water

mediate results will not be
,

tional.

But over

sensa¬

period of years
the improvements in health, in
recreational facilities, and in the
general public welfare will be

Municipal Bonds and Notes

that the California

tication and financial

The

"FIRST

operations.
Bonds

1784

★

The

BOSTON

Specializing in New" England names.

MILK

•

STREET

A. T. & T. TELETYPE

Neighborhood Bank That Serves The World

BS1

BALANCED

Government,

proposed

legisation, litigation, U. S. Su¬
Court decisions, its decree,
etc., and further proposed legis¬
lation this year, intended to estab¬

preme

case was

government could properly
in any suit against the Great

urge

States

Lakes

Federal

STOCK FUND

merged

under

areas

within
States.

the

boundaries

the
.

"The
title
the

of every State bordering qn
the Great Lakes, and

sea or on

committee

the

how

unable to

BOSTON'

-333

many

years

FRANCISCO

to other coastal and to the Great
Lakes States. We are certain that

until

the
the

and

for

with

what

the

States

Supreme Court belie veld
than a century was the

confusion

law,

law

Congress enacts a

consonant

uncertainty

and

continue to exist, titles will

and
years
of
vexatious and complicated litiga¬
tion will result."
,
clouded,

State Court Decisions and
,

Legislation

Appended
brief

references

this
to

report

certain

are
state

and state
during
the

court decision, rendered

legislation

enacted

Only decisions and legisla¬
tive enactments, considered to be

vear.

and

powers

LYONS & SHAFTO
Incorporated

Bonds

Montgomery St.

SAN

estfc

would
take to adjudicate the question of
Whether the decision is applicable
mate

BOSTON
Established 1924

Cali¬

implications in the

fornia, decision have clouded the

State and Municipal

INVESTMENT MANAGERS

such

That Committee also said:

HOWARD

INCORPORATED

Lakes

24 Federal St.

the

sub¬

the

of general interest to the munici¬
of the pal trade or of special significance
locally are included. Attentiori is
states and* those holding under
directed to these decisions and
state authority may be preserved
enactments—court decisions, Apas
they existed prior to the de¬

rights

PROSPECTUSES OF THESE TWO MANAGED INVESTMENT FUNDS
MAY
BE OBTAINED BY REQUEST TO YOUR INVESTMENT
DEALER OR TO

EATON

for

recover

government

EATON & HOWARD

FUND

like¬

precedent which the Fed¬

lish the law for the future so that
the

EATON & HOWARD

Situation

velopments in the so-called tidelands matter—the claim of the
Federal

★

Tidelands

.For the past two years we have
reported regularly in our Interim
nd Annual Reports respecting de¬

NATIONAL BANK

and Notes.

and

will

immeasurable."

authen¬

★ Purchasers and wholesalers of Municipal

States

wise

remain

★ Complete facilities for municipalities

Lakes

qualified witnesses testified

eral

wastes.

Corporation

Judi¬

"The approach to pollution con¬
pollution abatement is trol is complex, Each river basin
primarily a State responsibility. presents its own problems. In
unless sooner dissolved by Con¬ However, as numerous rivers are each
case
the
best
interest of
gress. The powers of the Corpora¬ interstate, the problems of pol¬ the greatest number of people will
tion to purchase obligations of and lution extend
beyond State'bound- be considered in carrying out the
objectives of the programs
I "It is a long range plan ahd im¬
r

Senate

(which would have expired June
30, 1948) through June 30, 1956,

the

ana

nary

Agency, Bureau of Com¬
munity Facilities, it is pointed out: tion of water pollution, 1 The pro¬
Reconstruction Finance
That the national program is gram is* a challenge
to States,
Corporation
to assist States, municipalities, in¬ municipalities, communities and
Iri May, the Congress passed terstate agencies and industries in industries and general cooperation
control
of
water
S. 2287, effective June 30, 1948, the
pollution is essential in order to achieve
extending the life of the Recon¬ caused by sewage and industrial success.
'

•

June

ciary Committee amended S. 1988

other action prelimi¬ making it conform to H. R. 5992
recommended
its
the
construction
of and
passage.
states, municipalities, and political projects, and to make loans at 2% However, no action was taken by
subdivisions of states; public cor¬ interest for the planning and con¬ the Senate, due
apparently tb the
porations,
boards and commis¬ struction of sewage treatment fa¬ close approach of the June adr
sions.
No such financial assist¬ cilities:
journment. It will be recalled that
ance shall be extended, unless the
"Grants for plan preparation for President Truman vetoed a simirfinancial assistance applied for is
lar measure in 1946, during the
any
one project cannot
exceed
not otherwise available on reason¬
$20,000, or one-third of the cost of closing days of the 79th Congress.
able terms. For brief summary of
such
It is important that the tideiwork,
whichever
is
the
various features of the new Act;
smaller.
The Act authorizes an lands
situation be
clarified by
see
our
Interim Report of last
appropriation not to exceed $1,- Congressional action. In its Re,May.
000,000 annually for five years for port of June 10 last, the Judiciary
the
making of grants for plan Committee of the Senate stated,
Water Pollution Control
concerning the applicability of the
preparation.
In our previous reports w.e cov¬
"Loans for any one project can¬ California decision to other coastal
ered developments in the Water
and Great Lakes States, that:
not exceed $250,000, or one-third
Pollution Control Bills in the 80th
"The Attorney General of the
of the cost of planning and con¬
Congress. During the closing days
United States testified that he in¬
of the session last June, Congress structing the project, whichever is
the smaller.
The Act authorizes tended to bring in the near future
passed S. 418 in the form recom¬
similar suits against other Coastal
mended in conference.
It is now an appropriation not to exceed
States and that, although each
Public Law 845, 80th Congress, ef¬ -$22,500,000 a year for five years
State would probably urge 'spe¬
for the making of loans for plan¬
fective June 30, 1948.
The states
cial, defenses' based upon the la\)v
have for some time past done a ning and construction.
and facts under which it joined
"It is specifically provided in
great deal of constructive work
the Union, the California decision
and extensive planinhg toward the the Act that the security of the
was a precedented for the suits he
abatement of water pollution. The loans, including the payment of
intended to bring against other
enactment of the Water Pollution principal
and
interest
thereof, States.
Control Law, combining federal may be subordinated by the Fed¬
"The
attorneys
general
of
instrumentalities

rulings, of course, have
and
state activities and federal
no
bearing on bonds sold by a
municipality at par or better and assistance, should grealty stimu¬
late these important health under¬
later acquired in the market at
discounts. Such cases require the takings.
In a joint statement of the Fed¬
declaration as a capital gain of
eral
Security Agency,
Public
the difference between the cost of

struction

is issued

successive

Each

bond.

the

chaser selling the bond

nicipalities and political subdivi¬
sions of states; public agencies and

Bill G. 1988.

BOSTON

HARTFORD

NEW YORE

Volume 168

pendix 1, and legislation, Appen¬
dix 2.

7
Respectfully'submitted1,'

COMMERCIAL

THE

Number 4762

'r'

FINANCIAL CHRONICLE

(2635)

those in-1 Ms been especially designed for ing revenue bonds will find it; to
consider the specific purpose for which it their interest more and more," to
'suitable
for
commercial * bathe I isl to be used. They are designated urge issuers of these bonds to
portfolios. Therefore, one of our IB A Revenue Bond Report Form comply with these requests and
1
arid IBA Revenue Bond to cooperate in this respect with
chief aims* is to create: a better, No.
feeling,
if
possible,
regarding Rjeport Form No, 2 Water, Form the banking officials, if they ex¬
pect to sell more of these bonds
these bonds in the minds of the l\o. 2 Electric Light,, etc.
State and Federal authorities hav¬
| Form No. 1 may be filled in to the banks and others who
^
ing supervision over the commer- by the issuer r underwriter or at¬ would buy them,
Recognizing that it would be
cial banking system.
torney from information in the
: The
program Which has been ptospectus and may change little most helpful to the success of this
proposed1 and Which is being de¬ or none during tne life of tne program to have some central
veloped, although not yet formally bonds. It is to be in. effect a agency Which Would find it to its
adopted; by tne
Committee, is prospectus in condensed; form, interest to collect. and distribute
bonds

revenue

among

which

Vestments

-•

they

Municipal Securities Committee
Emil

Williams

(Chairman);

Rucker Agee;

bour;

Phillips T. Bar¬
M. Bergman; Or¬

Oscar

lando
S.', Brewer; : Alan
K.
Browne; George N. Bullard;
George S. Channer, Jr.; Walter
I. Coie; JR. Crunkleton; Her¬
bert Y. B. Gallager; E. Kenneth
Hagemann; - William • H. Ham¬
mond; John G. Heimerdinger;
B. F. Houston; Wilbur E. John¬
son;
S. D. Lamon; McDaniel
•Lewis; W.
L.
Marshall, Jr.;
George L. Martin; Richard H.
Martin;. J. W. Means; Andrew
S. Mills; William H. Morton;
Laurence M. Rieckhoff; Jones
B. Shannon; Robert O. Shepard;

based

Committee

about

the

White

their

past record and

po¬

tential" Worth rather than1 to any
inherent weaknesses in the prim

Springs

Surplus

are

directing

our

'■

•»

each revenue

ef¬

.bid

chasers

•.

bond must be

it;

ultimate

the

that

those

cial

information must

Committee

Revenue

udged

its

it has been issued for some

be had regard¬

tribution of whose bonds

design, and
dence

that

we have every confi¬
the request will be

made

responded" to.
go

even

Some
further

magazine of general circulation
municipal dealers.
The
cumulative value of such adver¬
among

tising would
ports

were

be great

good

fashioned

if the re¬
and would give

after the
issuers
an : opportunity
to
familiar explain the reason if
they were
agencies are well poor.
The cost of the audit and
to "do the work and" other expense
and

are

all

now

Such

necessary to pre¬
the information requested
they would be well paid for their together with that of the attendant
efforts because, undoubtedly such
advertising, if any, should be in¬
manuals would be in wide de¬
cluded in operating expenses arid
mand.
The idea interested them so
provided "for in the indenture.
and we have reason -to believe Many of the
large revenue bond
that at least one is seriously con¬
issuers now make a practice of
sidering devoting more space to
mailing to those who request it
revenue bond projects if not in¬
regular reports regarding their
deed the publication of a separate
operations and we believe that

accepted

cause

moves

equipped
through the sale of the manuals

the operation of the;project they
have financed..
We don't think

rities Committee appointed a: Spe¬

;

Emil Williams,
'Secu¬

Chairman of the Municipal

bonds

enue

with.

pur¬

kept informed

are

quest all municipal attorneys to
include a covenant to this effect
In all revenue bonds Which they

issuers to agree to
starting on ' this job was to publish a report of operations at
propose to some of the reporting regular intervals in some paper

having

once

ably evolve which will be fol¬
lowed by all.
The Committee intends to re¬

when

at more frefor the manage¬
or1

merits; and cannot
blindly simply beV that this objection * is well taken
ekcepfr maybe: in cases' of un¬
popular purpose, certain i pertinent usually. small projects; the dis¬

Meeting in May,

first

In any event as time goes
standard pattern will prob¬

attorneys; may
and encourage

the

distribute

favorably

one

pre¬

it; will not feel called upon
see

tion.

amply, compensated for its efforts,

Who

forts.

the

reports which

this end

Revenue

from

auditor

:
'
agencies who .are receiving and
Objection will be made by some publishing at regular intervals fi¬
that; as many issuers of revenue nancial reports on municipalities
bonds intend to make but one arid industries, the publication of
isjsue they and the 1 underwriters a manual solely devoted to rev¬

ment.

The program as we see- it should
be essentially educational; and to

Bonds
At

the

pares annually"
qiierit intervals

properly designed are good
bonds,
and
that the prejudice
in
some
places" against
tiem is due to lack- bf knowledge

■

...

elaborate

direction and the Committee hopes
that these IBA reppit forms may
be followed in detail or as a pat¬
tern in supplying such informa¬

these reports and which would be

Fjarm No. 2 may best- be filled in

found

Progress Report of ike Special
•

well1 conceived

arid

curies uDbri which they are based;
-He

the conviction that rev¬

enue bonds When

Paul E. Youmans.
"*'

are con¬

Bonds, which is made up; of the
following members:

pare

ing it in order to determine its fined - to ' the area in which it
true
investment
value.
Among operates. ' Municipal officials are
Phillips Barbour (Chairman),, tne questions which at once came accustomed to make reports from
The' First
Boston
Corp.,. New; to .mind when we approached the tijme to time' to certain State offi¬
York; O. Paul Decker, American problem were these':
cials and to other recognized manual for this purpose.
;
this
custom
will
grow.
Even
National Bank & Trust Co., Chi¬
Obviously it will be to .the in¬ though in
aiid
the
information
(1) Exactly What information agencies
many
of the older
cago; H. H. Dewar, Dewar, Rob¬ is needed regarding each project? which they furnish today is in terest of issuers as well as under¬ issues
there
was
no
covenant
ertson & Pancoast, San Antonio;
(2) How do we get that iri- gieater detail and more elaborate writers of J revenue bonds, for requiring the issuer to report
Robert
S.
Mikesell, Stran^han, formation?
than they gave" us a generation Which wide distribution is desired
publicly the result of its opera¬
Harris & Co., Inc., Toledo; Wil¬
(3) How do we make it avail¬ ago. la those days the only sta¬ to cooperate with this publication tions,.. many of them do so.
It
liam H. Morton, W. H. Morton & able to those who want it?
becomes a .reality,
tistical information we had: about when it
in must be obvious to all that it is a
Co., Inc., New York; Aaron W.
(4) How should investors use a
municipality
was
the
debt making available the information good
thing to do.
Pleasants, The International Trust the information when they have statement and population; Today desired and ,we believe it will
The Committee expects to seek
Co., Denver, and Robert O. Shep¬ it to determine the investment we have that and a great deal naturally follow that once this the
cooperation of such organiza¬
ard, Prescott, Howley, Shepard & value Of the bond under con- thore; and unless such informa¬ manual is issued and circulated tions as the
Municipal Finance
I sideration?
tion is available bonds do not it; will be only a matter of time Officers
Co., Inc., Cleveland.
AaAAssn., American Public
The general objectives of the
the
same
The best way we knew to an- receive
consideration until all will recognize the ad¬ Power
Assn., American Bankers
1
Committee are:
swer
the first question Was to and maintain their position on vantage such a volume may have
Assn. and other of similar char¬
(1) To bring about in the minds prepare a form of report or ques¬ legal lists/ etc,,' to which they for
all
interested
in
revenue
acter and hopes that through the
of bank officials and supervisory tionnaire for each of the
bonds. We bepeve it should be a
purposes may be otherwise entitled,
publications issued by these bodies
i, From time to time insurance long step forward in our effort
banking authority's particularly, lor Which revenue bonds are gen¬
sufficient attention will be at¬
a more realistic appreciation and
to interest the banking authorities
erally issued, make them as brief companies, trust companies and
tracted to our program to increase
fuller understanding of the merits arid simple as possible and yet n|any
and others in these bonds.
sophisticated
individuals
and broaden the interest in rev¬
of the class of investment secu¬ in sufficient detail for the pur¬ Who buy revenue bonds demand
It is the custom of the leading
enue bonds a'n$ that it will prove
rities generally known as "munic¬ pose we have in
attorneys who are most to
regarding bond
mihd, then put certain : / information
have been well conceived and
ipal revenue bonds" which would them to the test and see if they those" they* own just as they do active in drawing up trust agree¬
sound.
The
publishers of the
entitle them to recognition as a will do the job we intend them about
other
securities
in
their ments and indentures for revenue
"Bond
Buyer" are already
cosuitable investment for banking to do.
Members of the Commit¬ possession. - State
and
Federal bonds to include a covenant re¬
operating in a most effective and
institutions of all kinds especially tee were asked to suggest ques¬ banking authorities are urging quiring the issuer to make avail¬
impressive manner by devoting a
commercial banks, and
tions for1these forms and based
the banks to keep more complete able annually or in some cases large portion of the Annual Con¬
(2) To do what it can to create on their»replies and*on' sugges¬
information * regarding vention Number to this subject
in the: minds of prudent investors tions from others, report forms files regarding all securities
in often er,
everywhere an appreciation of have been prepared for use by their portfolios. Therefore, those the financial condition and prog¬ and I am sure other publications
,

the

investment

true

municipal
Despite

value

bonds.
enviable

revenue

the

tbe

issuers

Electric

Light

Who make

practice of distribut-

ress

the

under their

project

(Continued

page

PoWer, Water, Sewer, Toll Bridge

record

and

Highway bonds. Those for
these bonds have made, other purposes may be prepared
particularly during the, years of when there is a demand for them
the
A sample of these- forms ap¬
depression, there are still
'those who look upon them with pears in the Annual Convention
disfavor because they are not sup¬ ; Edition
of
The
Bond
Buyer
ported by the taxing power. Al¬ thanks to the thougtfulness and
though many of our insurance kindness of Sanders Shanks, the
which

Dealers in

INVESTMENT SECURITIES
Members of

companies, banks, trust companies
and*

individual' investors'

been

buying them for

have

years

New York,

the

Boston and Chicago Stock Exchanges
New York Curb Exchange

supervisory banking officials," as
a

rule,

still

hesitate

include

issued,

whereas

Form

No.

F. S. MOSELEY & CO.
New York

Boston

Chicago

Indianapolis

Underivriters, Distributors and Dealers >-

State and

Municipal Bonds

Purchasing and Distributing

Corporale Bonds and Stocks

Stats, Municipal, Corporation
..

INCORPORATED

and Public Service

Company

Founded 1803

Securit.'e*

EC.CTGN

Chace; Whiteside, Warren & Sears
INCORPORATED

24 Fcdera

Street

PORTLAND'

HARTFORD
)

Eoston 10

CHICAGO

NEW YOPFZ

Ceneral

BANGOR

MEMBERS —EOSTON
-

NEW YORK CURB

STOCK EXCHANGE

EXCHANGE (ASSOCIATE)

i:tributors

mm ENGLAND FUND

Lreanizzd 1931
.

lEospita; Trust Bidg., Providence 3

40)

4«

THE

(2636)

COMMERCIAL

that these

outlined doubtless will not satisfy

Reports High Record
Of Municipal Issues
(Continued from page 39)
also will cooperate with the Com¬

tomers,

mittee in any

and

others in

the

gospel

ity

which

campaign of public¬
may
be determined

widely

upon.

are

effort

officials

banking
endorse
reason

going to make a sincere
hgve the supervisory

our

program

have
will be

to believe that we

effort to spread

about these bonds as
practicable, we believe

it would do much to aid our pro¬

It is hoped

interest

may

that the Committee
the Governors of

Association

our

the

successful.

authorities

banking

gram.

Washington
and

the

point

that thpy

plans

our

may

in¬

If addresses such as those made

duced to finance the cost of pre¬

recently by Robie Mitchell before
the American Toll Bridge Assn.

paring reprints of such addresses

and

McDonnell before

the American Public Power Assn.

regarding certain constructive teatimes of revenue financing both
of which

appeared

in the "Bond

to be distributed by

Buyer,"

were

dealers

among

their

bank

cus¬

those mentioned and articles on

the subject and that the

tion
the

Associa¬

may be reimbursed later by
dealers who use them.
We

hope to handle the cost of pre¬
paring the report forms in the
same

way.

Now

this

program

above

sell a

which I

Committee's

kind

the

tomers

termine

investment value

the

Insurance companies

these bonds.
want

Others

great deal more.

be satisfied with less.
We
tried to hit a happy medium.

may
have

having this or similar infor¬
compiled in a separate

mation

attention should be more

manual

effectively

attracted

bonds

class

easily to

informed

about

importance,

the

ers

the

yes,

informing the
banking officials about their

necessity
wares

fully

will have taken

which

long

have set out.

business and

familiarize themselves with these
IBA

and

forms

report

induce
well

bank

their

try

customers

others to form the habit of

keeping posted

maintain

and to

who

dealers

municipal

become

live file of such

-It should pay hand¬

dividends

some

the

means

end

and

broadening

the market for these bonds which
*

believe

are

municipal financing and to

future

issued

destined to play

than ever before in

greater part

numbers

greater volume ^nd

the country grows.

PHILLIPS

Committee earnestly urges

The
all

goal for

step toward reaching the

the results

them

the sheep

to separate

goats it will have spent
its time well.
If, in addition, we
can arouse underwriters and deal¬
the

operation of various projects
this means one can become

better

their volume of
profits to thoroughly

information.

from

revenue
enable one

compare

their field of

expand
and

on the progress of
the facilities who bonds they hold

better able

and

operations

erly judging the investment value
of revenue bonds and make them

should have to de¬

average buyer

anxious

should be had to aid one in prop¬

the

information

fraternity and its cus¬
to what
information

vestment

essentially educational and these
report forms are designed to point
■

fully informed as
merits.

are

help to educate the in¬

than

wop't help you except in¬
directly, (o sell your bonds." As
stated
above,
the
program
is

out

can

If this Committee does nothing

to that query

answer

officials who

to help or hinder its

to* its character and

"it

same

much

distribution

issue
The

new revenue

offering today?"

asks "how will it

the dealer who

help

Thursday, December 23, 1948

FINANCIAL CHRONICLE

BARBOUR,

Chairman, Special Committee.

are

SEG Announces Amendments to Rules

anc

therefore better able to determine

their value and desirability as in¬

The Securities and Exchange

vestments

Commission announced on Dec. 17

amendments to its

his

for

particular

pur¬

pose.

rities

compile engineers' esti¬

can

have

mates

galore, but unless they are
presented to someone who is fa¬

miliar

with

record

mates,

they

merely

reputation

and

those

making the esti¬
will continue to be

little

than guesses
speculative in the

of the banking officials. And,
speculative issues are

eyes

the

therefore

and

course,

suitable for bank

not

investment.

Finally, and this comment is
kept to the last to better empha¬
size

which
is

sent

Committee

this
to

with

urge

can

securities in

believe

class, not less than $2,000,000.

well-directed
see

they

the

Federal

Reserve

districts,
in which bonds have
been bought, as well as' to the
members of their syndicates and
those

whom

they

have

the

holders

interest

mation

sold

reading

information regarding
it in advance, just as they cover

cize

important

insurance

compa¬

other large buyers now.

these

are

quick to criti¬

officials for failure to

look favorably on* some pet issue.

However,

who know all about

it seldom have made any
least

any

order

the

that

effort, at

organized effort, to see

follows:

securities, other than
by the registrant, of
whose financial
statements are filed with the reg¬
istration statement on either a
consolidated or individual basis."
Under the so-called "disclosure"
as

the

similar

and

those owned

subsidiaries

(Items 25 and 26);
provides that
information regarding remunera¬
tion
of
directors
and
officers

requirements

the Commission now

exceeded

payments,

$25,000.
(2) Each person who was one of
the three highest-paid officers of

registrant during such fiscal
and whose aggregate re¬
muneration, exclusive of pension,
retirement and similar payments,
the

year

exceeded

$25,000.

(3) All persons as a group who
directors or officers of the

were

registrant

time

any

during

such fiscal year.

Item

Under

remuneration

relating to the
of
certain
other

aside from officers and
the 4 prospectus is to
state in tabular form the name of
persons

directors,

the

each

"5. Information is to be included

all

during such fiscal year and
aggregate
remuneration,
exclusive of pension, retirement
whose

all

using Form S-l may be
of
this
interpretation,
Item 8 is amended by adding to
the instructions a new instruction

given full

Oftentimes

advised

even

in which they expect to dis¬
are called on and

and

securities

subsidiaries.

tribute the issue

nies

to that of
of the

item has been
as
requiring, in the
of full disclosure, infor¬

it that the bank examiners in the

the

prior

securities

year:

(1) East person who was a di¬
rector of the
registrant at any

This

registrant.
interpreted

persons

they should.
area

subsidiaries

the

farther, and
They should- see to

can

the

constitute

these bonds.

They

Item 8 now

information

for

curities, such securities ordinarily
a claim on the assets of

super¬

banking authorities, in¬
cluding the chief bank examiner
each

(Form S-l),

capital securities of the registrant.
Where the registrant has subsid¬
iaries which have outstanding se¬

visory
in

requirements

the ommission under

calls

that this information is

placed in the hands of the

the following persons
capacities while

of,

time

As to amendments in the prosoectus

regarding the projects
have underwritten.
they would find the

should

amount, including

outstanding securities of the same

available annually, if not oftener,

effort

benefit

(2) quarterly reports of

bonds, set an
example by. using these forms at
least
as
a
pattern,
in " making

they

developments, and

for services in all

and sponsor revenue

information

significant

sales and
acting as directors or officers of
operating revenues by those com¬ the
registrant during its last fis¬
in¬
panies which have registered new cal

fluence and energy we have, that
the
underwriters who originate

which

received regarding the proposals.

pertaining to the Securities Exchange
Act of 1933 the Commission has changed its policy of granting exten¬
sions of time for filing annual and other periodical reports.
These
reports must now be filed within the time designated, unless an
extension
of time is
based on^
1
—
"substantial grounds."
In addi- should show the aggregate remuneration directly or indirectly
tion, the SEC stated that it now
requires the filing of the follow¬ paid or set aside by the registrant
and its subsidiaries to, or for the
ing: (1) current monthly reports
connection with rules

pre¬

what

and suggestions were

comments

it, the most constructive idea

genera! rules and regulations under the Secu¬
Acts of 1933 and 1934. These amendments, it is pointed out,
been under consideration since last Summer, during which time

following

persons

aggregate
remuneration
from the registrant and its sub¬
sidiaries for services during the
whose

year of the registrant
$25,000, the amount of
remuneration and the ca¬

fiscal

last

exceeded
such

pacities

which

was

re¬

ceived.

(a) Each affiliate of the regis¬
(other than its majorityowned subsidiaries);

trant

voting

((b) Each
in

answer

trustee named

Item 29;

(d) Each person
(other than
registrant or its majorityowned
subsidiaries) with whom
the

ROBERT GARRETT & SONS

BAKER, WATTS & CO.

person

any

ESTABLISHED 1900

Item

terial
ESTABLISHED 1840
Members

New

York

Stock

Exchange

Members

Baltimore

Stock

Exchange

Associate Members

New

York Curb

•

in answer to

named

25(a), 29 or'30(a) had a ma¬
relationship.

and offi¬

Previously, directors'
cers'

had

remunerations

disclosed if in excess of $20,000 or

Exchange

1% of the registrant's total assets,
whichever

MEMBERS

New York Stock
New York

Government and Federal Land Bank

Baltimore Stock

Maryland County and Municipal Bonds

Exchange

Curb Exchange

Bonds

Active Market in Local Securities

amount

was

smaller.

new

pension and retirements payments

Listed and Unlisted Stocks and Bonds

(Associate)

the

rules, informa¬
tion is also to be furnished as to
Under

for

the

benefit

directors

and

•

Exchange

officers.
Other changes made

CALVERT &

REDWOOD STREETS

BALTIMORE 3,

MD.

in the SEC
"significant
subsidiary," so as to accord with
higher tests employed elsewhere
in
the
rules, and
regulations.
Another change also eliminates a
provision of permitting a regis¬
trant to disclaim responsibility for
the accuracy of completeness of
required information which is un¬
rules define the term,

GARRETT BUILDING

BALTIMORE 3

West Virginia Representative,

MARYLAND

Clarksburg,

Union National Bank Bldg.
W. Va.

Baltimore—Mulberry 2600

Telephones: New York—CAnal 6-7162
Teletype

395

known

and not available without

unreasonable effort

expense,

Volume

168

COMMERCIAL

THE

Number 4762

FINANCIAL

CHRONICLE

(2637)

Recommends New Uniform State Securities Act
because

(Continued from page 27)

further

they had not been made

form approved by the Com¬
in
compliance
with

improvement is needed.
These are the subject of current

missioner

discussions with the Bar Associa¬

Section 8.

record

Dec.

28, and the stock is<^
currently
quoted,
"when
dis¬ additional shares to Middle West.
tributed" at 9%-9%.
(Based on the current number of
Kentucky
Utilities
now
has shares, earnings are $1.48.) Earn¬
of

revenues

million
shown un¬

$20

nearly

per annum, and has
usually rapid, recent growth, 1948
gross being about one-third high¬

than

The

1946.

company

supplies

electricity to a popula¬
tion of about 458,000 in 73 coun¬
ties in Kentucky and one county
in Tennessee.

Large .cities served
Lexington
and
Paducah.

are

Miscellaneous
ice

and

the

from

revenues

for

account

about

properties

water

revenues;

sold at the end of

were

gas

1947 and

the last of the ice properties are
being currently disposed of. Some
gas interests were also sold this

the remaining properties
located in Paducah and

year,

being

Shelbyville.

territory
served
by the
company includes a large part of
the blue grass region in central

Kentucky, and

parts

tuminous

areas

coal

and

state.

western

While

the

industrial one,

south-

of the

area

bi¬

the

parts

not

number of manu¬

facturing units have been

estab¬

lished in recent years.
Middle

West

chasing

currently

additional

pur¬

125,000

shares of Kentucky common stock
at

$10

share.

Following this
capital
structure will approximate 49%
debt, 21% preferred stock, and
30% common stock equity. How¬
a

transaction

pany

bonds in the

future, of which

near

$1,500,000 will reduce bank loans
and

the balance be used for

forma

pro

would

ferred

and

capital

units, one to be completed about
year from now and the other

54%

debt,

27%

19%

pre¬

stock

common

equity, it is estimated.
The

company's

charges

opinion

dealer

When the lower court
the

contention
case

dividend

preferred

require¬

Livingstone & Co.) the ef¬
(1) to make the seller
liable to return the deposit on the
was

"when,

if issued" contracts
and (2) to make the seller absorb
the loss incurred by the subse¬
quent drop in price of the securi¬
as and

ties covered

by the contracts. The
possible repercussions of this de¬
cision

were

enormous

reduced

been

recent

common

by Middle West in the

stock have improved the

financial structure.
is

engaged

now

construction
new

through

years

several cash in¬

refundings, and
vestments

substantially

The company

its

and

program,

plants

power

substantial

are

possibility that other purchas¬
ers under "when, as and if issued"
contracts covering securities which
dropped in value might, if such

corpora¬

the past
Copies of the California and contracts
had not been made in
only about New York amendments and a
compliance with Section 8, sue to
requirements more detailed discussion of the rescind their contracts with the
compared with 50% in 1947 and former, are given in Appendix A
consequences indicated above. Sec¬
year

purchased

has

27%

its

power

and

in 1946.

74%

during the three years
inclusive,
amounts
to
about $34 million.
However, the
current and contemplated financ¬

1949 Legislative

The

1.948-51

1951, it is estimated.
pany
could probably

The com¬
issue this

and

two

operation

should

in earnings.

were

that

estimated

the

tially.

the

months

ended

Oct. 31 the kwh. cost of purchased
power

average

—cost

about

generated

pany

around

while

.79c

power

was

$2.25

earnings would not, it is thought,

produce
net

For

the

months

ended

Oct.

below the $2 level, it
The
80c

likely

the

Sale

the

But

the
cash

anticipated

increase in the

rate appears

over

conservative

and

any

rate

rather

next two

un¬

years,

requirements for

the construction program. Several

stock which will be out¬

seems

current

earnings.
dividend

to $1.37 on

standing "after

in¬

is estimated.

dividend

present

therefore

based

return

20%

earnings to slightly

these

reduce

years

common

value.

in Federal tax rates would

crease

31, 1948 earnings were equivalent
the 1,065,000 shares of

unreasonable

plant

because

.61c.

share, and such

per

from

now

$1.20 would

dividend rate

appear

earnings projections

out.

reasonable
are

borne

section, but the amendment of this,
section in 1948 shall not affect any
transaction or other matter which

is being contested or inquired into
in any legal proceeding pending
and undetermined at the time such
takes effect.1'

amendment

Section

curities Act

the Corporate Se¬

was

amended, effec¬

tive April 27, 1948, to read as fol¬
lows

all

(all matter in italic is

language in brackets

"Sec.

purchase
sale
used

Every installment
involving the
security proposed to be
(a)

contract

business

mitted

and

Building

which

the

"(i) The time within which the

not

(Continued

in Ap¬

Simmons

CHARLOTTESVILLE

Dealers in

Municipal Bonds

Specializing in
Virginia, North Carolina, and West Virginia Municipals

Section
curities

-■•'North Carolina

Act

instalment

the

Corporate Se¬
provided- that every

purchase

contract

.v7.j

in¬

Municipal Bonds and Corporation Securities

volving the sale of a security pro¬
posed to be used by any broker
in the regular course of business
should be upon a form which shall
have

been

submitted

Active Markets in Unlisted Securities

to, and ap¬

proved by, the Commissioner and
which shall contain clauses giving

information.

specified

Difficulty
when the

under this section

arose

purchasers

"when,

issued"

scind.

under

contracts

their

as and
sought to re¬

after

contracts

SCOn, HORNER &' MASON, Inc.
LYNCHBURG, VIRGINIA

the

price of the securities to be ac¬
quired under the contracts' de¬
clined
on
the
ground that the

"when,

as and

if issued" contracts

Corporate

Dept.

Teletype

R.
*

Fitzgerald

Eldridge Longest

Attending Convention

Dept.

"installment purchase" con¬

were

tracts

within the meaning of Sec¬
Securities

tion 8 of the Corporate
Act

Municipal

were,

and

that such

therefore,

Richmond, Va.

Roanoke, Va.

Norfolk, Va.

Bluefield, W. Va.

contracts

absolutely

void

NORTH and SOUTH CAROLINA
MUNICIPAL BONDS
F.

CRAIGIE & CO.
DEALERS

Thomas D. Neal

(Vice-

Exchange (Associate)

Walter S. Robertson"*

42)

CHARLOTTESVILLE, VA.

(Chairman);

Noyes
W.

Richmond Stock Exchange

Marion

page

ses¬

Exchange

Buford Scott5*

by the
contain

shall

The Peoples National Bank

Members

New York Curb

upon

and

sessions

Richmond, Virginia

New York Stock

approved

commissioner, and
clauses specifying;

Established May 20, 1893

115 Mutual

shall

form which shall have been sub¬

•

Stringfellow

de¬

by any broker in the regular

course
a

VIRGINIA-WEST VIRGINIA

Scott &

new;

was

leted):

contracts"

com¬

might be expected to earn

have

meaning provided for in this

Appendix A

It has been

1951

purchase
does

H. Warren Wilson.

and result in further

power

purchase

Legisla¬

Chairman); George K. Bhum;
Waller C. Brinker; Todd Cartwright; E. W. Darmstatter; El¬
mer A. Dittmar; Edwin B. Hor¬
ner; Eldon H. Keller; Stanley R.
Manske; Norbert W. Markus;
George W. Marshall; William
Moore; Frederic P. Mullins; Al¬
bert
C.
Purkiss;
Howard P.
Richardson; Charles S. Vrtis;

plants and the purchase of high-

increase

Richard

high-cost

"when,

and

had

State Legislation Committee

the Tyrone and

Green River power plants

eliminate

these

dates

George

years.

"installment

average

now

is expected to add

Completion

that

attempt

has

Respectfully submitted,

about 800 customers monthly over

the

clear

if issued" contracts

pendix C of this report.

compared

and this

'installment

term

the theory of
the section

case,

urged to keep

sions will start, are given

with 4.06c
in 1943. Usage approximates 1.300
kwh.
The companv is extending
its rural service lines into new
areas

with

are

make

and

amended in

commencement

upon

the lookout for any

the

equity,
because
of
reinvested
earnings during the 3-year period.
3.47c

was

amend¬
ments to blue sky laws or other
legislation that would affect our
business. A list of the state legis¬
latures which are meeting in 1949,

ing the 25 % ratio of common stock

rates

of Group State

touch

amount of bonds without disturb¬

Residential

Sessions

legislatures of 44 states will
regular session next year.

tion Committees

capital
requirements,
and only
about $5 million of additional se¬
curities will be needed by the end
of

Members

ing mentioned above should take
care
of a substantial part of the

about

this report.

tion 8

construction

company's

The

currently

reducing operating costs substan¬

view

the

tion.

have

ments

the

fect

California
and

(Gruenin-

the

suits

the,

ger

the

not

within

off

contract'

purchaser in this

The company in"

1950.

cost

fixed

also amended to provide that

"the

process.

officers

was

appointed the Secretary of
as
agent for services of

for

in¬

the

were

contracts

deemed

have

doing

Wisconsin—An

contracts

such

business

dealers

State

Grueninger

sustained

York

shall

the

assumption

the

cut

fornia Act.

non-resi¬

New

con¬

structure

that

ings resulting from new generat¬ Attorney General, dated July 1,
states
in
effect
that an
ing units. A 25,000 kw. unit went 1948,
into operation at the Tyrone plant "agent's" license is required for
in October last year and another partners
who sell securities in
25 000 units in May this year.
A Wisconsin on behalf of a partner¬
ship which is licensed as a dealer.
new plant on the Green River is
being designed for two 30,000 kw. This is similar to the requirement

struction. After these transactions
the

provide

upon

meaning of Section 8 of the Cali¬

25,

dent

which reflects the improved earn¬

latter's

the

it is reported that the com¬
plans to sell $10 million

ever,

for

1948,

Feb.

In an attempt to make the new
provision effective retroactively
further

stallment

Act"

"Martin

effective

amended,

was

program

The

estern

the October period are
about 10c higher than those for
the 12 months ended Sept. 30,
ings

York—The

New

27 to holders of

wiH be made Jan.

sec¬

that

tion Committee, and both groups
the final stages of dissolution, hope to work these out and pre¬
sent a united front in support of
is distributing its holdings of Kentucky Utilities Company common
the bill when it is introduced.
stock on the basis of one share for each two shares of its own stock

distribution

meaning of that

contracts

Kentucky Utilities Company

The

the

tion.

business had been doing busi¬
ness in
"when, as and if issued"
our

Middle West Corporation, now in

outstanding.

Naturally, the people in

within

James H. Scott

STATE

L. Thornton Fleming

and

MUNICIPAL

BONDS

Joseph J. Muldowney

616

EAST

Telephone 3-9137

MAIN
i

STREET

RICHMOND

15,

VIRGINIA
Teletype RH

& 84

THE

(2638)

COMMERCIAL

pursuant to section three hundred

Recommends New Uniform
State Securities Act

"(ii) The time within which de¬

livery of such security shall
made,

[after such deposit.]

"(iii)
under

conditions,

The

calls

which

[margin] payment

for

any,

be made.

"(iv) Any other provision which
the commissioner may deem nec¬
essary for the protection of the
parties to the purchase of such
,

'installment

contract'

tion

purchase

referred to in this

shall

deemed

purchaser

the

securities

agrees

dressee

the

state

for

pay

designated peri¬
installments on specified

article, shall be deemed to
irrevocably appointed the

secretary

state

his

its

agent upon whom may be served

subpoena, subpoena
other process di¬
such person, partner¬

duces tecum

rected

ship, corporation, company, trust
or
association, or any partner,

principal, managing agent, officer
director

issued' contract

ewhen

distrib¬

uted' contract, as
generally known
in brokerage practice or securities

business, or 'any contract' involv¬
ing the purchase or sale of securi¬
ties used by a broker, shall not be

deemed to be
chase

contract'

'installment pur¬

within the

mean¬

ing of this section merely because
such

contract

involves

in connection with

action, matter
the practices,
or

trust

the

sold

security purchased for
the

customer

becomes

ready for delivery, or when the
deposit or down payment of the
customer, in the judgment of the
broker, becomes impaired or in¬

sufficient.
Any contract referred to
subdivision (c) of this section
need not be submitted to or ap¬
proved

trust or association may

file with the secretary

designation,

of state

complying

terms

herewith, duly acknowledged, ir¬
the

appointing

revocably

tary of state
upon

his

whom

such

process;

that

"(d)

company,

corporation,

partnership,

company,

affairs, management

association. Any such per¬

son,

when

trans¬

thing relating to

corporation,

nership,

down payment and an implied

of the balance or any part
thereof upon demand by the broker

may

secre¬

served

any

provided, however,

designation filed with the

secretary of state pursuant to sec¬
tion three hundred fifty-two-a

section two hundred

this article

ferred to in subdivision (c) of this

tion. Service of such process upon

section and in which event

the

use

thereof shall be made unless and
said

use

thereof.

"(e) The term 'installment pur¬
chase contract' has had and does

also

serve

secretary

made

other

matter
or

time

such

amendment

takes

service
such

following section

the

Fraudulent

the

department

city of Albany,
shall

provided

service

and

notice

that
a

and

sufficient

copy

of such

forthwith sent by the

attorney general

partnership,

such person,

corporation,

com¬

trust or asociation, by regis¬

tered mail with return

New York

receipt

re¬

quested, at his or its office as set
was

add¬

Practices

National City Bank, New York
C. F. Cassell &

Charlottesville

forth

the

'dealer's

statement'

filed

the

department

law

Spencer Trask & Co.,
New York

Farwell, Chapman & Co.,
Chicago

COOK, Robert H.

■

B. J. Van Ingen

Maynard H.

Murch & Co.,

First Boston

Session

Corp., New York

FRANCIS B.
&

Co., Jacksonville

♦COUFFER, JAMES G.

Colorado

Jan. 10
___Jan. 3

COUIG, J. DALTON
Hirsch & Co., New York

W. Pressprich

& Co.,

♦COURTS, MALON C.
Courts &

New York

Adamex

______Jan. 5

Curtiss, House & Co., Cleveland

Securities Corp.,,

COXON, THOMAS T.

Apr. 5

Florida

•

♦CLARK, ROBERT E.

Jan. 10

Georgia

Calvin

♦CRAFT, ROBERT H.

Jan. 6

Merrill, Turben & Co.,
Cleveland

:_______Jan. 10

Iowa
Kansas

♦CRAIGIE, WALTER W.
F. W.

Jan. 4

Maine

Guaranty Trust Co., New York

CLARK, WILLIAM H.

_Jan. 5

Illinois

Hallgarten & Co., New York

Bujlock, New York

Jan. 3

Idaho

Indiana

Jan. 5

__Jan. 3

Montaha

Nevada

New Jersey

Jan. 5
Jan. 11

New Mexico

Chronicle,"

Jan. 11

Hampshire

New York

Paul H. Davis & Co.,

York

New

North Dakota

Crouse & Co.,

Clayton Securities Corp.,

Ohio

Jan. 3

Kidder, Peabody & Co.,

Jan. 10
__Jan. 4

Utah

Jan. 5

Jan. 10
__Jan. 12

■____

West Virginia

Wisconsin

Wyoming

Jan. 11

CURREY,

Cohu &

legislatures

Louisiana,

Mississippi

ginia

not

will

session
called

meet

1949,

but

Kentucky,
and

could

Minneapolis

J. M. Dain & Co.,
DALENZ.

JOHN McG.

Calvin Bullock, New York

Montreal

DAVIDS, MARK

Vir¬

regular

Nashville

Collier, Norris & Quinlan,
The

BROWNLEE

DAIN, JAMES M.

Co., New York

COLLIER, W. T.

Equitable Securities Corp.,

♦COHU, HENRY W.

___Jan. 12

JOHN

Mercantile Trust Co., Baltimore

Sterne, Agee & Leach,
Montgomery

Jan. 10

Vermont

Angeles

♦CRUNKLETON,

♦COHEN, MORTIMER A.

_Jan. 3

Washington

Crowell, Weedon & Co.,

New York

__Jan. 11

Texas

Bodine, Philadelphia

Los

♦COGGESHALL, GEORGE K.

Schoellkopf, Hutton & Pomeroy,

_____Jan, 4

Tennessee

♦CROWELL, WARREN II.

New York

_Jan. 4

Oklahoma

DeHaven

CLIFFORD, HARRY C.

Detroit

GORDON,
& Townsend, Crouter

CROUTER,

Boston

Jan. 4

Chicago

CROUSE, CHARLES B.

Jan. 5

Carolina

Rupe & Son, Dallas

CROSS, LOUIS J.

CLAYTON, C. COMSTOCK

Jan. 5

North

Dallas

Clarke, Inc., Chicago

"Commercial & Financial

__Jan. 17

___,

CLAY, Jr., HARRY

Jan. 4

Nebraska

New

John

_____Jan. 5

Missouri

REX

CROMWELL, W.

CLARKE, JOHN W.

Jan. 4

Minnesota

Louis

Goldman Sachs & Co., St.

Atlanta

Jan. 5

Michigan

CREELY, WALTER J.

Johnson, Lane, Space & Co.,

Jan. 5

___

Craigie & Co., Richmond

HAGOOD

♦CLARK,

,_________Jan. 5

Maryland

New York

_____Jan. 5

Co., Atlanta:

COX, M. J. M.

♦CLARK, GEORGE E.

Jan. 5

____l

♦CLAPP, Jr., JOHN J.

May 3

Connecticut

Pressprich & Co.,

New York

________Jan. 10

California

: /

Co.,

New York

Meeting

____

Co.,

B. J. Van Ingen &
R.

Alabama

♦CORRINGTO.N, JOHN W.
Paine, Webber, Jackson &
Curtis, Chicago

CHRISTOPHER, WILLIAM

1949

Arkansas

Smithers

New York

■

CHAPPELL, WILLIAM B.

Date of

Arizona

& Co., Miami

COOPER, WALTER W.

CHAPMAN, R. C.

Childress

State

CHAPMAN, RALPH

Calendar For 44 State Legislatures

♦COOK, HAROLD H.

Co.,

CHILDRESS,

Which Meet in Regular

COOK, A. HALSEY

Allyn & Co., Chicago

♦CASSELL, CLAIR F.

refused."

Appendix C

South Dakota

the

process are

pany,

Appendix B

Cleveland

postal authorities

notation by the

that receipt thereof was

RAYMOND V.
Co., Chicago

CASEY, DOUGLAS

Jan. 11

office

effect

The

in¬

quired into in any legal proceed¬
ing pending and undetermined at
the

shall

state

♦CONDON,

Co., Atlanta

South Carolina J

the

service

bearing

envelope

Bank,

B. J. Van Ingen &

Jan. 4

being contested

designa¬

Courts &

general of

attorney

original

Rhode Island

such

the

turn

the

days after the re¬

ten

and leaving with him or a deputy

state

transaction

agent,

National

Central

Cleveland

acceptance was re¬

or,

Oregon
Pennsylvania

this section, biit the amendment of
this section in 1948 shall not affect
which

such

by personally delivering to

have the iheaning provided for in

any

its

COLYER, CHARLES M.

Co., Chicago

♦CARTER, Jr., HUGH D.

by the addressee or his or

secretary of state a copy thereof at

until the commissioner shall have

approved

shall

general corporation law

ten of the

mail,

post office depart¬

Massachusetts

its agent

by the commissioner, un¬
less, in the discretion' of the com¬
missioner, he shall require the
filing of any form of contract're¬
no

its registered

Delaware

express agreement

ment

any

business of such person, part¬

pay¬

provi¬

sions of this article arising out of

for the

action

any

under the

general

torney

deposit

qualified to

person

proceedings brought by the at¬

"(c) A 'margin' contract, 'when

thereof, in

John Nuveen &

signed by the ad¬

customs of the

ment,

of this

(Continued from page 26)
CARK, FRANK C.

in accordance with the rules and

fused

defined

dates.

receive his

dealer,

any summons,
any

for the purchase of a se¬
curity used by a broker in which
the

section three hundred fifty-nine-e

return receipt pur¬

without

business

In Attendance at ISA Convention

receipt by the attorney

the

general of

organized under and by virtue of
the laws of a foreign state, who
or which shall do business in this
state

Service of such

shall be complete ten days

process

its principal place

to the

known

address

porting

company,

resident

association

sec¬

contract

odical

trust

last

the

corporation,

nership,

two,

in default of the

filing of such 'dealer's statement,'

after

Any person, part¬

"Sec. 352-b.

have

security.

"(b)

25, 1948:

having his

additional

may

(Martin Act), effective Feb.

Act

article,

attorney general.

(Continued from page 41)
purchase of such security is to be
made by such broker.

subdivision

fifty-nine-e,
this

Thursday, December 23, 1948

FINANCIAL CHRONICLE

♦COLLINS,

into special session.

JULIEN H.

Julien Collins &
♦Denotes

Co., Chicago

Lester & Co., Los

♦DAVIS,

Mr. and Mrs.

ARTHUR

Ar.geles
G.
Chicago

Invest. Bankers Assoc.,

DAVIS, DeWITT

Welsh, Davis & Co., Chicago

TRADING

CENTER

DECKER, O. PAUL
American National

for Southwestern Securities

Bank,

Chicago

RETAILERS

DELAFIELD, RICHARD M.
First Boston Corp.,

Chicago

O F
de

VERGNE, J. H.

Weil & Arnold, New Orleans

Underwriters, Dealers and Distributors

TEXAS SECURITIES

of Southwestern

il:

•

♦DEMPSEY, DUMONT G.

Newhard, Cook & Co:, St. Louis

Corporate and Municipal Is'sues

♦DeSTAEBLER, EUGENE
F. S. Moseley & Co., New York
v? y

.■

TELEPHONES
L. D.
Local

694

Central 9127

Western Union DLS 93

TELETYPES
BELL

DLS

DeSWARTE, BRUCE II.

SYSTEM

Continental Illinois Bank,

395-396

WESTERN UNION

Mb
43)t

Dewar, Robertson & Pancoast
SAN ANTONIO 5
L. D. 15

TELETYPE SA 3

Chicago

<•—.

-v

....,

♦DETMER, HOWARD F.
Detmer & Co.,

Chicago

♦DEWAR, HAL H.

Dewar, Robertson & Pancoast,
San Antonio
V.
\
.

♦Denotes

Mr. and Mrs.

Volume 168

Number 4762

THE

;

FARRELL, F. D.

dillman, david
."Journal; of Commerce,"
.

Dittmar & Co.,

(2639)

♦HAGEMAN, E. KENNETH

Harris Trust & Savings

Bank;

Chicago

GARDNER,. FRED W.
Reinholdt & Gardner, St. Louis

HAWES, HARDIN H.

G. H. Walker & Co., St. Louis

New York

Geyer & Co., New York

San Antonio

CHRONICLE

DominickDominick,

FELDMANN^ HERMAN A.

dittmar, elmer a,.

FINANCIAL

GANDER, MacLEAN

City National Bank & Tr. Co.,
Kansas City
v

Chicago

COMMERCIAL

♦HAGEMAN, Jr., H. FREDERICK
Rockland-Atlas National Bank,

HAZELWOOD, CHARLES F.
E. H. Rollins & Sons,

Boston

New York

♦GARNER, J. FRANKLIN

FENNELLY, JOHN F.

♦doerge, carl h.
Wm. J. Mericka & Co.,

Glore, Forgan & Co., Chicago

HALL,( HERBERT S..

Welsh, Davis & Co., Chicago

♦FINNEY, Jr., HOWARD

New

GATCHELL, EARLE

Bear, Stearns, & Co.,.New York

dominick, bayard' ii
Dominick 8c Dominick,

Hayden, Stone & Co.,

♦donnally, j. p.

Peoples-National Bank,

Charlottesville

Clark, Dodge & Co., New York

FISHER, CHARLES N.

;

GEIS, LEONARD B:

Singer, Deane & Scribner,
Pittsburgh

♦dqolittle, roy w.
Doolittle & Co., Buffalo

Newburger & CO., Philadelphia

♦FLEMING, CHARLES J.
Hanrahan & Co.,

DORBRITZ, ERNEST O.

Carl M.

Worcester

New York

•

♦FLINT, JOHN G.

downey, norman s.

Folger, Nolan, Inc.,
•

;

Washington-

Geo. B.

Gibbons

& Co.,

New York

Baltimore

FORDON, RALPH
Watkins & Fordon, Detroit

Indianapolis

69 W.

Washington Street,
Chicago

Foster &

York

Reinholdt & Gardner, St. Louis

-Robert Garrett & Sons,
Baltimore

■

New York

dunn; stewart a.

C. J. Devine & Co., New

;

York

"Journal of

Chicago
dunne, newman l.
Robert W. Baird & Co.,

dunstan, e; f.
International Bank, New York
*

■

Guaranty Trust Co., New York

♦HILL, CAREY S.

HARDER, LEWIS B;

Harris,

Upham

Hill Richards &

Co.,

Los

New York

Commerce,"

HARPER, W. PAUL

Bank,

New York

HIPKINS, C. A,
A. G. Becker &

Haupt & Co., New York

Braun, Bosworth & Co.,
NeW York

Co., Chicago

HOLT, ROBERT L.

HASTINGS, BYRON
Parker

Blair & Co., Chicago

Corp., Chicago

Minneapolis

Chase National

♦GRIMM, WILLARD T.

FURLONG, THOMAS R.

Kidder, Peabody

"Chicago Tribune," Chicago

Chicago

Co., of Georgia, Atlanta

HATCHER, ROBERT L.

White, Weld & Co., New York
& Co.,

C. Edgar^Honnold,
Oklahoma City

;

Trust

PHILIP

♦HONNOLD,

♦HATCHER; LLOYD B.

Allison-Williams Co.,
-

Stranhan, Harris & Co.,

National

Angeles

GRAHAM, JAMES S.

Co.,

Angeles

HILL, MALVERN

HOPKINSON, Jr., EDWARD
Drexel &

Bank,

Co., Philadelphia

(Continued

New York

page

44)

Gairdner &

GRINNELL, GEORGE M.

Co., Toronto

Dick &
Yarnall & Co.,

john h.

Merle-Smith, New York

Dealers in

GALLAGER, HERBERT V. B;

EATON, Jr., CHARLES f.
Eaton & Howard, Boston

R. J. Edwards,
Oklahoma City

Charlottesville

•

GAIRDNER; JAMES A,

♦duval, gordon b.

edward

Peoples National'Bank,

;

•

♦FUGLESTAD, ARNE

Milwaukee

St. Louis

Goodbody & Co, New York

FRYE, CHARLES S.

HILDRETH, WILLIAM S.

St. Louis

GOODBODY, HAROLD P.

Fridley & Hess, Houston

HASSMAN, ELMER G.

Corp.,

HESS, WILBUR E.

Globe-Democrat"

"St. Louis

♦GOLDSMITH, BERTRAM M.

Securities

Equitable Securities Corp.,
Nashville

Assn.,

Washington

Boatmen's

Ira

"World-Telegram,"

HENDRIX, WILLARD R.

EDWARD

Jr.,

GLOVER, W. WAYNE
California Bank, Los

Folger, Nolan, Inc., Washington!

American

Investment Bankers
.

SYDNOR

Blyth & Co., New York

Marshall, Seattle

♦FRITZ, EMDON

dunn, edward k.

GLASSMEYER,

♦FRIEND, ARTHUR S.

duhme, herman

GBLLES, GEORGE J.
A. C. Allyn & Co., New York

♦FOSTER, ALBERT O,

Wertheim & Co., New

Corp., Indianapolis

♦Dubois, allen c.

■

Bond

Jr.,

York

New York

HANSON, MURRAY

First of Michigan Corp., Detroit

FORREVV Jr., GEORGE C.

drobnis, george j;

♦

GILBREATH,

New

Co., Worcester

HAPP, WILLIAM A.

downing, james b«

Baumgartner, Downing & Co.,

♦HENDERSHOT, RALPH

Wertheim & Co., New York

GIBBONS, Jr., GEORGE B.
-

HANSEL, DOUGLAS Ri

Geyer & Co., New York

FOLGER, JOHN CLIFFORD

Union Securities Corp.,
New York

Hanrahan &

GEYER, GEORGE

Kidder, Peabody & Co., Boston?

Cincinnati

HELLER, JAMES M.
J. C. Bradford & Co., New York

♦HAMMOND, WILLIAM BL
Braun, Bosworth & Co.;
Chicago

Loeb, Rhoades & Co.,

Moore, Leonard & Lynch,
Pittsburgh

Walter, Woody & Heimerdinger,

♦HANRAHAN, PAUL B.

GERNON, FRANK E.
i

HEIMERDINGER, JOHN G.

Hallowell, Sulzberger & Co.,
Philadelphia

GEDDES, EUGENE M.

New York

New York "Times," New York

York

♦HALLOWELL, HENRY R.

New York

FISH, IRVING D.
Smith, Barney & Co.,

New York

♦HEFFERNAN, PAUL

Morgan Stanley & Co.,

-Cleveland

GRUNER, GEORGE

Philadelphia

Lee

GALLAGHER, FRANCIS P.

Inc.,
\

Higginson Corp., New York

S.Government Securities

V..

♦HAGAN, Jr., JOHN C.

Kidder, Peabody & Co.,
New York

Mason-Hagan,

and

Inc., Richmond

♦edwards, william n.

Municipal Bonds

William N. Edwards & Co.,
Fort Worth

Complete Investment Service

♦eichelberger, robert l.
War

Department, Washington

FLORIDA MUNICIPAL BONDS

♦elcook, sam l.

Bond Department

Gables Letter Service,
Coral Gables
.

Corporate Securities

;

rr-

Investment Funds

Teletype Connections to Leading Brokers

♦ELKINS, Jr., GEORGE W.

■f

Elkins, Morris & Co.,
Philadelphia

Throughout the Country
'

' '

■

■1

•:

•'

■"

•

NAT 10

ellsworth; sherman

Wm. P. Harper & Son & Co.,
Seattle

BANK,
S

T. Nelson O'Rourke. Inc.

'
■

emerson, everett s.

Emerson, Roche & Co.,

■

Investment Securities

;

356 South Beach Street?

Jacksonville, Florida
Daytona Beach, Fla.

•

Bell Teletype 80?

San Antonio

Phone 5-7400

Teletype JK 182

Telephone 5571

emerson, sumner b.

Morgan Stanley & Co.,
New

l^ork

DISTRIBUTORS

UNDERWRITERS

DEALERS

♦emerson, willard i.

Hemphill, Noyes & Co.,

BUSINESS ESTABLISHED

1924

New York

empey, lester h.
American Trust Company
San Francisco

Florida Bonds
.

municipal bonds

•

♦emrich, milton s.
Julien Collins & Co., Chicago

MUNICIPAL

COUNTY

DISTRICTS

corporate securities
estes, wayne j.
Estes &
•

Firm Bids— Firm Offerings

—

Quotations

Co., Topeka

evans, clement a.
Clement A. Evans & Co.,

UNLISTED

Atlanta

CORPORATE

ISSUES

ALL LOCAL SECURITIES

evans, thomas w.
Continental

Illinoi§ Bank,

Chicago

fAath;

harry w.

Tripp & Co., New York
♦fahey, leslie j.

Fahey, Clark 8c Co., Cleveland
^Denotes Mr. and Mrs.

LEEDY,WHEELER &>ALLEMAN
Incorporated"
FLORIDA BANK BUILDING

Clyde C. Pierce Corporation
Bell Teletype JK 181

Long Distance 47; 5-3680

ORLANDO, FllORfDA

JACKSONVILLE 1, FLORIDA
BELL TELETYPE OR 10

LONG DISTANCE 27

Branch- Office

ST" PETERSBURG

THE

(2640)

COMMERCIAL

FINANCIAL

CHRONICLE

LINCOLN, MARY R.

♦KING, JOSEPH H.

In Attendance at IB A Convention

Union

Buffalo "Evening
Buffalo

Los

Angeles

Rockland-Atlas National Bank,

Camp & C6., Portland

^.'Lynchburg

^" • V

Natl. Assn.

♦HOUSTON, Jr., JOSEPH C.
-•■

HOWE; PAUL D.

KNEASS, GEORGE B.

JOHANIGMAN, S. E.

A. Webster.

Dougherty •& Co.,
Philadelphia
•

/"-;|
;

...

Chas. W. Scranton &

Co.,

Milwaukee

Savannah

»JOHNSON,

WILLIAM A.

Wagenseller & Durst,
Los Angeles"
•
*

Glover

Pittsburgh

MacGregor,
•

National

Harriman

Finance

Washington ;

Illinois Company, Chicago

♦McCORMICK, D. DEAN

New

Laidlaw

Shields
;

York

Co., New York j

Thayer, Baker & Co.,

Philadelphia
Distributors,

Mcdonald,

Mcdonald, harry x,
Securities & Exchange

Dillion, Read & Co., New York
LYKLEMA, W. C.
A. C.

Co., New York

Allyn & Co., Chicago

McDonnell, donald n.
Blyth.de Co., New York

♦LYNCH, Jr., C. McK.

Mcelroy, david b.

Moore, Leonard & Lynch,
Pittsburgh

LEATHER, B. H.
,

;

J, P. Morgan & Co., New York

♦KAUFMAN, C. G.

Co., Cincinnati

Shields & Co., Chicago
KEBBON, RICHARD

W. E. Hutton & Co., New York

JACKSON, CARL W.

Harris, Hall & Co., Chicago
'Denotes Mr, and Mrs.

Chicago

Lee

McFARLAND, DONALD E.

♦LYONS, Jr., W. L.

Lehman

W. L. Lyons & Co., Louisville

Haupt & Co., New York

lehman, orin

Bacon, Whipple & Co., Chicago

Co.,

Chicago

♦LEES, LEON
Ira

McEWAN, GEORGE S.
Paul H. Davis & Co., Chicago

Finance Publishing

Higginson -Corp.,

New York

■

KERR, WILLIAM D.
1.

'»

LYONS, SAM B.

LEE, JAMES J.

Kebbon, McCormick •& Co.,
.

Dominick

&. Dominick,

Kuhn, Loeb & Co., New York

MA LICK, JOHN

New York

SOUTHERN
TEXTILE

♦LEMON,rJAMES H.

Underwriters—Distributors—Dealers

LEWIS, DAVID, J.

SPARTANBURG, S. C.

St.'Louis..,

MARKS, LAURENCE M,
Laurence M. Marks & Co.,

Courts

New York,

Co/, Atlanta,

Lee Higginson

MARKUS, NORBERT W.
Smith, Barney & Co.,
Philadelphia

Co., Jackson

LEWIS, MEAD A.
Dick & Merle-Smith, New York

First Trust Company,

Bear, Stearns & Co., New York

Corp., Chicago

MERRITT, WILBUR M.
First Boston

;

MARTIN, BENNETT S.

LEWIS, SALIM L.

MERRELL, Jr., ROLAND

♦LEWIS, Jr., ED. S.
Lewis &

j",-'

MEANS, J. W.

(Established 1892)

Long Distance 51

♦McMillan; John s.
:: j
Dempsey-Tegeler & Co.,
*

Paine, Webber,
Jackson
Curtis, Mewl;York';" "

•

A. M. LAW & COMPANY

Heller, Bruce & Co., New York

♦MALLORY,,WALDO W.
Clement A. Evans & Co.,
Atlanta

PROPERTIES

♦McMAHON, EUGENE G.

Johnston, Lemon & Co.,
Washington
^

SECURITIES

Fidelity-Philadelphia Trust Co.,
Philadelphia

New, York

McGUIRK, WILLIAM

New York

Morgan Stanley & Co.,

Co., Minneapolis

Northern Trust Co.,

MACDONALD, RANALD H.

Brothers, New York j

Kalman &

McGREW, EDWARD D.

LEMKAU, HUDSON. B.

Comm.,

Washington

& Co., New York

New York ' Times," New York

IGLEHART, J. A. W.

and

ciiarle^

McDonald & Co., Cleveland

LUDIN, JOSEPH

LEACH, ORIN T.

Wood, Gundy & Co., New York

Co., New York

.Boston

LAWSHE, EMMETT

"•

Putnam Fund

Bankers Trust

♦McCURDY, WALLACE M.

LUDCKE, G. L.

•

LAUD-BROWN, WELLS

Co., Cleveland

Kebbon, McCormick & Co«
Chicago

Bear; Stearns & Co., New York

SIDNEY

Estabrook &

Baker, Simonds & Co., Detroit

♦LOW, V. THEODORE

Bank,

Publishing Corp.,

New York

Ripley & Co.,

♦McCONNAUGHEY, ROBERT K.
Securities & Exchange
Comm.,

Bank, St. Paul

LUCRE, FRANK L.

KALES, DAVIS

♦HUTTON, Jr., JAMES

McCLURE, NATHAN D.V

♦LOOMIS, JOHN S.

Co., Chicago

Durham

Baker, Weeks & Harden,

White, Weld & Co., New York

First National

New York

KAELIN, WILLIAM R.

HURLEY, WILLIAM L.

W. E. Hutton &

HERMAN

T. H. Jones &

•
-

HUNT, E.1 JANSEN

Chase

E» R. Jones & .Co., Baltimore,

"JOSEPH,

1
H'"
Corporation, Boston

♦LOOMIS, CHARLES H.

LANE, ARTHUR D.

JONES, CHARLES F.

MILTON

Parker

Co., Milwaukee

First Securities Corp.,

Chicago

MAY,.J; DENNY'

Chicago

Co., New Orleans

John Nuveen &

EDWARD S.

JONES, ELISHA RIGGS
•

Northern Trust Co.,

•

LOFTUS, EDGAR J.
c
R, S,. Dickson
Co.> New York

Howard, Labouisse, Friedrichs

LATHAM,

♦HUGHES, WILLIAM S.

♦HULME,

Loewi &

Chicago

[

Raffensperger; Hughes & Co., j
Indianapolis
;
•
I

Co;, St. Loui^

maxwell, john m.

H, C. Speer & Sons Co.,

Wood, Gundy & "Co.," New York
HUGHES, W. SHANNON

G. H. Walker &

LLOYD, H. GATES
Drexel & Co., Philadelphia

LAING, C. W.
,

matthews, robert H.

♦LABOUISSE, JOHN P.

"JOHNSTON^

Lord, Abbett & Co., Chicago

Chicago

Milwaukee

♦HUGHES, ALBERT R.

Chicago

...

Mason, Moran & Co.,

Co., New York

Bank,

:1s

♦mason, walter G.
Scott, Horner & Mason/
Lynchburg
>

;

LOEWI, J. VICTOR

Cleveland

HUFF, ROBERT H.

Federal Land Banks, New;York.

-Johnson, Lane, Space &,Co.,

Ball, Burge & Kraus,

Republic Company/."

New York

York.

LITTLE, ALDEN H.
Investment Bankers Assn.,;

JOHNSON, THOMAS M.

♦HUDSON, FRED W.

New

First Boston Corp., New York

KOIILER, B. M.
*

Illinois

Continental
;

Central

Bank,

„

KNOX, JOHN T.

Co.,! Milwaukee

New Haven

Blair

Nat.

♦LINSLEY, DUNCAN R.

knight, francis m.

JOHNSON, JOSEPH T.

HO YE, WILBUR G.

Philadelphia

Company,. Chicago

Milwaukee

Chase

Phiadelphia National Bank,

NationsBank, Chicago

First

LINEN, JOHN S.

KLEIN, 'GUST A V

Mead, Miller & Co., Baltimore

JENNETT, EDWARD. J;;,..,

Mason, Lynchburg

♦MASON, ROBERT
;

Calvin Bullock, Chicago

Walter G.

Inc7

Jenks, Kirkland & Co.,
Philadelphia

Stifel, Nicolaus & Co., St. Louis

MASON, CAROLYN G.

Securities Dealers,

Washington

Kirkpatrick-Pettis Co., Omaha

♦JENKS, MORTON

HORNING, BERT H.

Milhous, Martin & Co1:, Atlanta

LINDSEY, JOHN

McLeod, Young, Weir,
.New- York.

MARTIN, WAYNE

Boston

♦KIRKPATRICK, S. R.

Scott, Horner & Mason,

Security-First National Bank,
Los Angeles

♦LIND, HERMAN L.

JAR VIS, W. H. R.

♦HORNER, EDWIN B.

Assn.,

Chicago

♦KING, WILLIAM T.

♦JARDINE, Jr., J. EARLE
William R. Staats, Co.,

News"

♦MARTIN, GEORGE R.

Investment Bankers

Corp.,

New York

(Continued from page 43)
HORNADAY, HILTON

Securities

Thursday, December 23, 1948

Corp., New York

meyer, Jr., louis

Stern, Frank & Meyer,
Los Angeles

Lincoln

♦MARTIN, GEORGE L.

Bell Teletype SPBG 17

LIEBENFROST, CONRAD H.

MEYERS, EDWARD J.

Martin, Burns & Corbett,

Stern, Lauer & Co., New York

Laidlaw & Co., New York

Chicago

♦middlemist, john h.
Northwestern

National Bank,

Minneapolis
Underwriter*

CALL

FOR

BIDS

■

Distributor*

miller, james K.

Firm Bid*

/mimvhii

auk

b
#■

Dominion

■

tcnn.

Corp.,
4

L.: 1

Firm

Offering*

minor, stanley n.
Pacific

Dealers

Securities

New York

•

Northwest Co.,

Seattle
v

•

Quotation*

Society for Savings, Cleveland

North Carolina

8 o i. j

pal

'Jl

MITCHELL, EARLY F.

State and

r'"''

Municipals

United

State*

•

First National

•

■

GovernmMF^Secoritie* • General Market Municipal*
-Jhi-

Bank, Memphis

MONTGOMERY, HARRY, T

Associated Press, New York

MOORE, JAMES A.
,

Branch

Banking & Trust Co.

M IFobstt Mmm

WILSON, N. C.

Bell Teletype—WILSON NC 100

TELEPHONES 5-3637
•

• S-1&38 *

■

-"j.

■

•

il2

j\l

•

Richmond

♦moreland, j. marvin

^TELETYPES

-Tfrv.

Branch, Cabell & Co.,

MEMPHIS

LD'.3l!

.■

Welsh, Davis & Co., Chicago

MOORE, RODERICK D.

MEMPHIS 1, TENNESSEE

Telephone——3020

•

MITCHELL, BYRON R.

;

ME-283
-.

-—

•

ME.284

Rotan, Mosle

^
.

Galveston

„

& Moreland,
,

}

Volume

Number 4762

168

MOREY, Jr., RICHARD
A. G. Edwards &

THE

COMMERCIAL

♦PIERCE, Jr., DANIEL T.
Hirsch &

Sons,

PIETROWICZ,

MORGAN, 2nd, WILLIAM B.
Stroud & Co., Philadelphia

STEPHEN

Maynard

Chicago

San

MORRISON, A. B.

Co., Miami

Francisco

San Francisco

Lehman Brothers, New York

Reinholdt &

Co., New York

Denver

POHLHAUS, WALTER C.

Mackubin, Legg & Co.,

International Bank, New York

MULLANEY, PAUL L.
Mullaney, Wells & Co., Chicago

MULLINS, FREDERIC P.
A. E. Masten &
Co., Pittsburgh
MURPHY, JOSEPH D.
Stifel, Nicolaus & Co., Chicago

F. Eberstadt &

Co., St. Louis

Wright,
Kansas City

NEUHAUS, PHILIP R.
Underwood, Neuhaus & Co.,

Snider

Co.,

Dillon, Read & Co., New York
♦NEWHARD,

CHAPIN

Newhard, Cook & Co., St. Louis

SLEZAK, G. EDWARD
Loewi &

& Sherrerd,
Philadelphia

Weeden &

♦SMUTNY, RUDOLF
Salomon Bros. &

New York

Johnson, Lane, Space & Co.,

New York

Savannah

Schwabacher & Co., New York

SPENCE, W. FREDERICK

Bacon, Whipple & Co.,

Robert Hawkins & Co., Boston

New York

♦STABLER, C. NORMAN

♦SHIELDS, CORNELIUS

"Herald

Shields & Co., New York
Scharff

Jones, New Orleans

Investment

STARRING, Jr., MASON B.

♦SHREVE, WICKLIFFE

Graham, Parsons & Co., "

Hayden, Stone & Co.,

New York

Bankers

Assn.,

Chicago

♦SILLS,

STEARNS, GEORGE
WILLIAM

"The

Bank,

SIMMONS, RICHARD W.

ROVENSKY, WILLIAM R.
Hornblower

Chicago

STEARNS, PHILIP M.
Estabrook &

New York

RALPH, HENRY A. J.
Bank of

Reserve

Economist,"

Sills, Minton & Co., Chicago

ROUSE, ROBERT G.
Federal

Tribune," New York

* .V

ROSEN, JUDITH S.

Alystyne, Noel & Co.,

Hutzler,

♦SPACE, JULIAN A.

Vance, Sanders & Co.,

RODDY, JAMES E.

Paine, Webber, Jackson &
Curtis, Chicago

New York

San-Times, Chicago

Buyer," New York

SHARPE, WILLIAM P.

SHERBOURNE, HAROLD H.

Emerson, Roche & Co., Austin

QUAIL, JOHN J.
Quail & Co., Davenport

Co., New York

SMUCKER, OTTO M.

♦SHANKS, Jr., SANDERS
Bond

Assn.,

Chicago
SMITH, J. RAYMOND

Butcher

QLIGG, JAMES F.

Co., New York

Investment Bankers

Eberstadt & Co., New York

SHAW, HERBERT I.

ROCHE, DAVID T.

Distributors,

Co., Milwaukee

St. Louis

Seattle-First National Bank,
Seattle

Co., Providence

Mercantile-Commerce Bank,"

Fund

G. H, Walker

Baltimore

♦NOEL, RICHARD C.
Van

SKINNER, OSCAR

Magazine," New York

Co., New York

ROBINSON, EDWARD H.

Alex. Brown & Sons, Baltimore

NIELSEN, EINER

♦NIX, ALLEN J.

Rippel, Inc., Newark

Newark

PRICE, 3rd, WILLIAM J.

Putnam

Ripley & Co.,

York

PRETTYMAN, CHARLES B.

Boston

J. C. Bradford & Co., Nashville

Sons, Baltimore

Fidelity Union Trust Co.,

PUTNAM, GEORGE

Paul

ROBINSON, ARTHUR R.

PROSSER, MALCOLM S.

Riter &

Julius A.

Riter &

Houston

NEWELL, RICHARD M.

New

Mackubin, Legg & Co.,

RIPPEL, JULIUS A.

Welsh, Davis & Co., Chicago

Houston

Harriman

City Bank, New York

SEVING, FREREDICK T.

& Co., St.

♦RITER, HENRY G. 3rd

NEUHAUS, JOSEPH R.

Underwood, Neuhaus & Co.,

SCUDDER, DANA B.

"The

♦PRANKARD, 2nd, HARRY I.
Lord, Abbett & Co., New York

Prescott,

Bankers Trust Co., New York

SEVERANCE, CRAIG

RICE, IRVING J.

Alex. Brown &

■

SIMPSON, CRAIG

♦SMITH, DUDLEY C.

RIEPE, J. CREIGHTON

Dominick,

PRESCOTT, JOHN A.

New York

Denver

Singer, Deane & Scribner,
Pittsburgh

"Fortune

Clark, Dodge & Co., New York

Irving J. Rice

NELSON, EDWARD H.

Kidder, Peabody & Co.,

SCRIBNER, JOSEPH M.

SCULL, PENROSE

Bank,

REX, WILLIAM M.

New York

NAUMBURG, CARL T.
Stern, Lauer & Co., New York

Sidlo, Simons, Roberts & Co.,

Stringfellow, Richmond

National

C. J. Devlne & Co., New York

San Francisco

SCOTT, BUFORD

SKINNER, DAVID L.
Share

REVITS, SAMUEL,

POSTLETHWAITE, J. RUSSELL
Irving Lundborg & Co.,

Dominick

NYU, New York

Baker, Simonds & Co., Detroit

SENER, JOSEPH W.

Co., New York

POWERS, LESTER

NADLER, MARCUS

SIMONDS, RALPH W.

Pittsburgh

POPPER, ELVIN K.
M. Simon &

H. Walker & Co.,
Providence

SCHWABACHER, Jr., A. E.

Scott &

Gardner, St. Louis

Mellon National

PONTIUS, MILLER H.

Financial

♦REUTER, F. BRIAN

Baltimore

MUDGE, LOUIS G.

REISSNER, FRANK L.
Indianapolis
Bond
&
Corp., Indianapolis

SIMONS, BURDICK

REINHOLDT, Jr., JULIUS W.

International Trust Company,

t
SIMONDS, CLARK

Schmidt, Poole & Co.
Philadelphia

Schwabacher & Co.,
San Francisco

Chronicle," New York

"News,"

♦PLEASANTS, AARON W.

♦MORSE, FRANK H.

•

Co.,

REILLY, F. VINCENT

PIPER, JOHN S.

W. H. Morton &

•

"Commercial

Philadelphia

♦MORTON, WILLIAM

H. Murch

Cleveland

(2641)

SCHMIDT, WALTER A.

REID, FRANK B.

"Chicago Tribune," Chicago

Central Republic Co.,

Weeks,

A. B. Morrison &

CHRONICLE

♦PIGOTT, JAMES M.

♦MORRIS, GEORGE L.
Hornblower &

FINANCIAL

REDWOOD, Jr., JOHN
Baker, Watts & Co., Baltimore

Co., New York

St. Louis
f

Blunt, Ellis & Simmons,
Chicago *
•

(Continued

Co., Boston
on

page

46)

Weeks,

New York

America, New York

NORTH, LUDLOW F.
Robert W.

♦ROWE, ROBERT G.

♦RANDALL, CLARENCE B.

Baird & Co.,

Inland Steel Co., Chicago

Milwaukee

RANKIN,

NOURSE, CLIFTON F.
Illinois Company,

Chicago

HARLEY L.

■

Vance, Sanders & Co., Boston

■■

A. E. Weltner &

RATCLIFFE, MYRON
Lehman

Seventy-six Years of

H:Vi /

SANDBERG, MAURICE

Louisville

♦OSGOOD, ROBERT L.

Rowles, Winston & Co.,
Houston

J. J. B. Hilliard & Son,
C? A.;

Illinois Company, Chicago

In Louisville Since 1872

Co., Philadelphia

ROWLES, RUSSELL R.

Girard Trust Co., Philadelphia

RASH, DILLMAN A.

NOYES, GEORGE F.

Stroud &

Co., New York

Investment Service

♦SCHAUST, GEORGE J.

Brothers, New York

♦OTIS, C. BARRON

First National Bank,

The "Bond Buyer," New York

RAUCH, ALFRED,

Minneapolis

Kidder, Peabody & Co.,
Philadelphia

OWEN, RALPH

SCHINDHELM,

Equitable Securities Corp.,
Nashville

Members New York and

SCHLUTER, HAROLD J.

Rauscher, Pierce & Co.,

"Business Week," New York

Dallas

First

Goodbody & Co., Chicago
*

1872

Nat.

Bank

Chicago Slock Exchanges
Exchange

Associate Members New York Curb

Chicago,

Investment Securities

New York

♦REDMAN,

♦PAIDAR, LEONARD J.

ESTABLISHED

California Bank, Los Angeles

RAUSCHER, JOHN II.

♦PACE, CLARK R.

J. J. B. HILLIARD & SON
GEORGE

St.

GUY

Edwards

JAckson 0181
SCHMIDT, REGINALD M.

Sons,

Louis

Blyth &

Co.,

New

York

419 W. Jefferson St,

Hilliard Bldg.

Owensboro, Ky., Office, Masonic Temple

PARISH, 2nd, HENRY
Carl

M. Loeb,

Rhoades & Co.,

New York
IKE

PARKER, E. CUMMINGS

SCHARFF

^AMES

RODDY

DANIEL

SCHARFF

Glore, Forgan & Co., Chicago
PARKER, NATHAN K.
+

•

Kay, Richards & Co., Pittsburgh
V.

Mr)>'

•'

PARKER, WILLIAM A.
Parker

Corporation, Boston

™
PARRY,

SIDNEY L.

BANKERS BOND

Assn. of Stock Exchange Firms

INCORPORATED

New York

1st FLOOR, KENTUCKY HOME LIFE BLDG.

PEtfRIGO,

CHARLES

R. '

LOUISVILLE 2, KENTUCKY

Hornblower & Weeks, Chicago

PETERS, GERALD P.

Peters, Writer & Christensen,
Denver

PETERSON E. NORMAN

Equitable

Securities

INVESTMENT

New York

National
New

City Bank,

York

♦Denotes Mr. and Mrs.

NO.

180 &

THOMAS GRAHAM,

WHITNEY BUILDING

TELETYPE

♦PFEFFER, D. K.

DEPT.

INVESTMENT DEPT.

INCORPORATED

Corp.,

NEW

181

ORLEANS

235

MAGNOLIA

1271

SHREVEPORT, LA.
.

■

r.tttfi

JACKSON, MISS.

Manager

WOOD

BOHNERT

WILLARD

LEWIS

FETTER

HANNAH,

Asst.

Mgr.

CHARLES C. KING

McNAIR

HOWARD

CONWAY
D.

LOLDEN

JOHNSTON,

JR.

(2642)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

WEED, Jr., W. H.

In Attendance at IB A Convention
Goldman, Sachs & Co.,'

j
j

Philadelphia National Bank;
Philadelphia

Salomon Bros. & Hutzler,

-VAN SLYCK, MILTON L.

WILSON, H. WARREN

Bacon, Stevenson & Co.,

"Journal

New York

Commerce,"
r

Investment Bankers
i

First

Straus & Blosser,

Pacific Northwest

" ;

National

•

VINSON, EGERTON B.

Fund

W. H. Newbold's Son &

Co., Chicago

WALDMANN, GEORGE

Mercantile-Commerce

Lehman "Brothers,

New York

WINTER, 2nd, EDWIN W.

♦THORS, J. EMERSON
Kuhn, Loeb & Co., New York

Orlanda

WITTER, JEAN C.
Dean

WHITE, ALEXANDER M.

♦TOMPKINS, HENRY B.

Co.,

Bingham, Walter
Los

WHITE, HARRY H.

& Hurry,

Atlanta

WALTERS, HARRY L.
1

Girard Trust Co.,

Philadelphia

WHITE, KELTON E.
G.

WARD, JAMES C.

New York

Third National

Walker &

Co.,

Merrill

Bank, Nashville

*WARD, NORMAN B.
Norman

Ward &

Pittsburgh

Chace, Whiteside,
Sears, Boston

Co.,

Warren

either

Lynch, Pierce, Fenner

the

New York

A. M. Kidder &

Arthur

Co., New York

Wiesenberger & Co.,

S. Yantis &

New York

FRANK

less

Co., Chicago

WARREN, ROBERT H.

Baker, Weeks & Harden,

WILBUR, LEROY A.

Geyer & Co., Boston

Stein Bros. &

YORK, Jr., EDWARD

Fact

Drexel

Boyce, Baltimore

Co., Philadelphia

cents

Earl F. Waterman &

Chicago

Distributors

middle

Group, New York
*

WATTS',

Jr., SEWELL

October.

credits

Up to the time of this writing neither railroad management nor
the representatives of the nonoperating unions have definitely com¬

Detroit

been

accruing

flect

mitted themselves

crued

between the

to whether

Presumably,

the

for

10 cents

from

.,a

the
the

reports will

December

then,

Watling, Lerchen & Co.,

VALENTA, FRANK L.

retro¬

jsimilar hourly, increase for
non-operating unions from

WATLING, PALMER

■

had

railroads

Co.,

Seattle

Chicago "Herald-American,"

found

would

1, 1948. Earlier, the
operating unions had ac¬
cepted an hourly wage increase, of
10 cents. Gene»ally speaking, the

""WATERMAN, EARL F.

♦VANDERPOEL, ROBERT P.

was

hour

This

active to Oct.

Harris, Hall & Co., Chicago

Atlanta

Bullock,

had

various

WASHBURNE, HEMPSTEAD
Calvin

concerned

generally
-expected. A wage increase of

sufficient.

New York

UFFORD, HENRY M.

than

onerous

been

;

■■;//.

the immediate impact
Finding Board's rec-

iommendations

♦YANTIS,

seven

TSOLAINOS, K. P.

desirable to any
radical elements in

country.

of the

Bache & Co., New York

WARREN, JAMES C.

.non-operating
the only possible

appears

So far

♦WOOLNER, ADOLPH

WIESENBERGER, ARTHUR

Exchange,

the
was

the most,

but

Beane, New York

TRUSLOW, FRANCIS ADAMS

hours.

Ifinding unless

York

WOODS, RICHARD A.

St. Louis

WHITESIDE, THOMAS

Louisville

unions. This

Wood, King, & Dawson,
New

New Orleans

'TRIGGER, RAYMOND
Investment Dealer's Digest,

the

it was desired to
ibring to a head the alternatives of
WOOD, HAROLD E.
widespread insolvencies or gov¬
Harold E. Wood & Co., St. Paul ernment ownership. Under pres¬
ent conditions
it is doubtful
if

White, Hattier & Sanford,

Angeles

even

within

came

mands

♦WOOD, DAVID M.

Robinson-Humphrey Co.,

New York Curb

Witter &

San Francisco

WALTER, BENJAMIN A.
.

Stein Bros. & Boyce,

Assn.,

Chicago

Co., New York

holidays

Railroading is a seven day a week
job. Overtime pay for "any work
performed on Saturdays and Sun¬
days would indeed have imposed
an insuperable burden on the car¬
riers.
The
Fact
Finding Board
iturned down this part of the der-

White, Weld & Co., New York

♦TROST, MILSON S.

Bankers

Investment

♦WALKER, Jr., G. H.
G. H. Walker &

and

work

WHIPPLE, JAY N.
Bacon, Whipple & Co., Chicago

THOMAS, JOSEPH A.

Monday
overtime
on work
Sundays
though such

period
from
Friday, with
penalty ~ rates to apply
.performed
Saturdays,

WINSOR, 3rd, JAMES D.

Bank,

New York

the

through

Leedy, Wheeler & Alleman,

St. Louis

Co., New York

WHEELER, HOWARD

the demand of the unions

was

that the 40-hour week should fall

Biddle, Whelen & Co., Phila.

♦TEGELER, JEROME F.

Dempsey-Tegeler & Co.,

That

Blyth & Co., Chicago

*WAKELEY, THOMPSON M.

possibility had been par-;
ticularly ieared by railroad man¬
agement ; and
railroad analysts.

CHARLES C.

Wertheim &

One

WINGADER, LAWRENCE A.

WERNER,

schedules.

neve

Co.,

John Nuveen & Co., Chicago

Co.,
A. C. Allyn &

Distributors,

Boston

Townsend, Crouter
& Bodine, New York

Philadelphia

Stanley

New York

DeHaven &

TAYLOR, C. NEWBOLD

Co., Seattle

Bank, Chicago

WERLY, CHARLES M.
Putnam

Chicago

Sept. 1, 1949, giving the
eight and a half months
in which to adjust themselves to"
on

railroad

WILTBERGER, ALFRED S.

STRAUS, FREDERICK W.

Fact Finding

jfect

WILSON, WALTER W.

WENDT, GEORGE B.

Savannah
*

ADOLPH

Varnedoe, Chisholm & Co.,

Kuhn, Loeb & Co., New York

recommendation

Board was that.
the 40-hour week be put into ef-

E. Weltner & Co.,

Morgan

"YARNEDOE, SAMUEL L.

♦STEWART, PERCY M.

the

Kansas City

•

ex¬

nonTpp-

the railroads

applicable to the op¬

Tne

off.

held

WILSON, LYLE F.

Paine, Webber, Jackson &
Curtis, Chicago
•

Chicago

Corporation,

New York

VAN WINKLE, PAUL K.

Assn.,;

not

the

erating unions upeter ;their work¬
ing rules and conditions. The only,
question was how long it could ba

New York

,y;

WELTNER,
"

STEVENSON, ROBERT

Union Securities

Central 'Hanover Bank,

have

would

to- embrace

—it is

Chemical Bank & Trust Co.,

WELLES, RUSSELL

tended

erating personnel of

New York

♦STEVENSON, GETHRYN C.

iually

Reynolds & Co., New York
♦WILLIAMS, EMIL C.

WEHRHEIM, ROBERT V.

VAN HART, T. GEORGE

New York

Corporation,

New York

(Continued from page 45)

STEPHENSON, F. KENNETH

WILLARD, FRANK A.

Union Securities
*

Thursday, December 23, 1948

re¬

differential
hour

mid-October

ac¬

and

the

Baker,'Watts & Co., Baltimore

Mr. and Mrs.

Oct. 1. Also, earnings for the first

labor

♦Denotes

they will accept or reject the recom¬
mendations of the Fact Finding Board. There has been some grumb¬
ling on the part of some of the<^

eight

ment

Pre 5 ca tt ,Wri qht, B ruder C a.

leaders

BANKEH5

some

also

expressed dissatisfaction with the

part

proposals.

that

This
a

very

was

ex¬

publicly

out

applauds

mendations.

however,

such

recom¬

that

of the recommendation is
dealing * with the 40-hour

Institution of the 40-hour week

Sept. 1 is expected to add some
i$150 million.to 1949 expenses The,

industry in recent years that

'total increase in costs for next year

full

the

for

year

;the estimated cost for.1949 would
have,.been $260 million. When the
40-hour week goes into effect it
was recommended that the hourly

PREFERRED STOCKS

EDWARDS & SONS
1887

increase

hour

$340 million. Had

employees / been
straight 10 cents -an

inon-operating

unprejudiced observer that event-

Established

is estimated

any

granted

A. G

been

;on

MUNICIPAL and CORPORATION BONDS

Specializing in Unlisted Securities

had

accepted through¬

universally

it. had long been obvious to

probable,
eventually
both
seems

will

1949
than

better

anticipated.

week. The 40-hour week has been

occasion

rare

months

somewhat

from

recommended

cents

seven

parties will accept the findings.
Obviously the most important

manage¬

have

when either management or labor

Established 1885

■

and

representatives

pected. It is

INVESTMENT

rate, be
increased suffi¬
ciently to bring weekly wages to
wage

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ibased
323 Bankers

mean

aggre¬

estimates, of course, are
the
assumption
that

there will be

TEXAS

increase in effi¬

40-^hour week.
Admittedly the
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greater problems in adjusting to
ciency

Tel. BEacon 3-8831

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level

excluding

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Carl M.

same

vailing,

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Corporation and Municipal

the

under

work

shorter

than

week

did

generally. Where a job
must be performed 24 hours a day
seven days a week there is no "way
to compress 48 hours' work into
40
hours.
There
are,
however,

industry

Securities

I. M. SIMON & CO.

places where greater effi¬
or further mechanization,
far toward offsetting the
shorter work week just as was

many

Business Established 1874

ciency,
can

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early

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estimates of the increased

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tions, therefore, are apt to prove
somewhat high. The market took

MID-WESTERN and SOUTHERN
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little notice of the Board's recojn-

mendation

Long Distance 93

this

and

absence

most

selling

analysts

was

fully

It now remains to. be
how quickly, and how gen¬

justified.
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Volume

COMMERCIAL

THE

.Number 4762

168

(2643)

CHRONICLE

FINANCIAL

PAST PRESIDENTS

IBA

Labor-Management Responsibility
(Continued from page 13)

be kept at

ways
tire

any

not. really
though
that is what they think they want
—they want to be able to buy
want

•official

price

•would

tag

have

lower
everything

given

any

•houses
'the

restrictive; .practices which
hamper production? Does he

believe

that

achieved what

the

left-wing pro¬

In order to have more
goods we must have more produc¬
tion.
This brings us to the real

(

could

list

better
ties.

present scarci¬

our

words

other

hardly have
it

not

merely production that is needed,
but production of a special kind—
the production of capital goods—
and
under
present conditions I
sure

Lord

the first to

be
that this produc¬

say

tion

Keynes would

cannot

without

increased

constantly "plugged" by the left-

wing.
It is the idea that "capi¬
talism, or planlessness, brings de¬

pression."
occur

And should a recession

in the

future the cry

near

be raised that
had it not been for inflation "due
to

repeal of the OP A" there would
been no depression.
Con¬

have

"were priced
out of the market by avaricious
business
men"
and that is the
cause
of
depression.
Plausible

sumers,

stabilizing

minute.

But

measures

what

many

long as our system is to grow
production and in living stand¬
ards, it cannot give absolute se¬
curity.
Furthermore, and even
more important, neither socialism,
or comprehensive planning could
do

said,

either.

other words

any

sumer

extent

some

what

wants when he wants it must have
some

insecurity.
fundamental

The

clue

the

misunderstandings which are now
in danger of
lies in the

wrecking our society
recognition of one basic

Growth

fact:

willing

their

restrict

claims

sions

and

insecurity.

Few

change, and itself entails change.
It is not by the endless repetition
of existing techniques that output
can
be increased.
It is not by

get the higher living standards
they want tomorrow.
This re¬
mains true as a long run proposi¬
if there should now be
check to activity.
responsibility not only to
the public but to itself is not to
demand a fourth round of wage

Collins

Charles

Jr.

Hopkinson,

would

matter

salary.

Garland

After
first
painting a Utopian picture of a
socialism in which everyone gets
equal money income, they pro¬

met.

have

ever

reduction

This is absurd.

the

power and fame,
simple love of one's

(Continued

page

48)

MARKETS

Trading Department Is Active In All

Our

Local Listed And Unlisted Securities

And Invites Your
"If there is

Market

Inquiries

can

find it"

Specialize In Orders For Banks And Dealers

be
a

judged by the extent to which
society makes a tidy housekeep¬

EDWARD D.

ing job of its present techniques.
The question is, how open will it
be to further changes?

of
we

the basic

lies

expansion of output can be
entail constant changes
in wants and in methods of pro¬
duction.
There is no way of mak¬

mere

shown to

any

system,

cannot

1871

MEMBERS
New

St.

conflict
modern society.
For even if
had no new inventions, the

Yet here

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tion even

temporary

Labor's

increases.
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vilification and mis¬

representation which I read and
hear today presses upon me

almost

physical weight.
But we
must stick to the high spots and
ruthlessly curtail explanation.
The lesson of our Ipresent scarci¬
ties has not failed to be brought
with

STATE and MUNICIPAL

REAL ESTATE,

My time is limited. There is so
much I would like to say to you.
The mass of

UNDERWRITERS

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INCO R PO RATE O

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•
Direct

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between

State and Municipal

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United States Government Securities

Offices

Bonds of Fedeial

responsible leftwing economists, and they have
joined in the cry for saving—but
with
a
difference.
For
while

Agencies

home to the more

rightrwing economists talk of in¬
creased inducements to save and

the more responsible
left-wing .economists merely talk
of taxing consumption.
In other
words all intelligent economists
today,
of whatever persuasion,
know that a fourth round of wage
increases at the present time will
to

.invest,

that

good.

Taussi£,D<iu£> Compaq,Iss
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attempted
dis¬

consumption is likely to be

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this

any

is either

dishonest.

But

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increase in mass

purchasing power and
astrous.

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ESTABLISHED 1924

All of them know

further

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unintelligent or
many

left-wing

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CORRESPONDENT

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What of

for

desire

the

what

LOUIS

ST.

Only

that in that case no

would be insecure—for no one

one

money.

constant, re¬
peated, and energetic use of new
inventions will living standards
rise.
Social efficiency is not to
be

ceed to argue

through without some insecurity.
Many people write as if the only
insecurity to be afraid of were a

simple expansion of things "as is"
that the wants of the poor are to

today, they will never

somewhat

through

comes

Mr.
Phillip
ing all industries equally prosper¬
Murray in his article in the July though this argument can be made ous at the same time, without
"Atlantic" still speaks as if con¬ to
sound, 1 believe is to be almost stopping change and expansion.
Could we have kept the horse and
sumption and more consumption entirely mistaken.
were
the chief thing needed to
buggy industry, and the new auto¬
If we were to draw up a table
solve our problems. For Mr.
mobile industry equally prosper¬
listing the advantages and the dis¬
Can we keep the electric
ous?
Murray has been conditioned to
advantages
of
capitalism,
the
attack profits, and, once we recog¬
score
would look something like light industry and the kerosene
nize the need for saving, then the
lamp industry equally prosperous?
this:
On the credit side for cap¬
case
for
profits becomes much
Socialism, or general planning,
italism
one
would list its tre¬
does not avoid this job of shifting
stronger.
Yet come what may the mendous
long-run productive ef¬
outlook for economic stability at
output around. It only changes the
ficiency, the relative freedom of
the present time will never be
way we handle it.
choice which it gives compared to
bright until the following idea is
But here lies the problem. For
other systems, and the freedom,
somehow grasped: Without sav¬
constant
reorganization and
also not absolute but relative to the
ing
we
cannot create
capital. other
of
industry,
which
systems, which it gives to redirection
Without capital we cannot sup¬
growth and the satisfaction of the
the independent new idea. On the
ply the wants of the workers. If
consumer
alike
require
under
bad side one would •list depres¬
the lower income groups are not
Yet

saving.

Julien

system which grows and any sys¬
tem which tries to give the con¬

immediately

will

of these

bootlegging could be forced to
observe regulations which did not point.
have
popular
support?
With
Barring those mistaken, misin¬
money in their pockets and a tre¬ formed, or dishonest individuals
mendous new demand, the people who maintain that mere price con¬
would soon create a black market trol will do the job, the argument
of unprecedented proportions^
of the left-wing economists today
It sounds trite to say so, but it must be that the government will
cannot be stressed too much. Our be a better producer than private
problem is one of production. But enterprise.
In other words they
we should
not simply stop there. intend to tax consumption, trans¬
•' If
we
want
to
understand our fer the funds to government, and
needs we must go farther. Bar¬ embark on a huge series of gov¬
ring the temporary checks to ac- ernment outlays in housing, steel,
tivity
already
referred
to our etc., to meet the shortage. The
problem is not merely one of pro- point we have got to ask ourselves
duction but also one of saving. is—would this really be the better
Again let me quote from Lord way?
Keynes: "The object of saving is
In the debate between socialism
to release labor for employment in and
capitalism there is one theme

like."

society

make

gram.

producing goods such as houses,
factories, roads, machines, and the

reconcile these

We shall talk about

people today either do not realize,
or do not want to realize, is that

ought to have more goods
as possible that l am not

soon

follower

capitalist order if

and

groups
as

done

some

income

'lower

funda¬

stable.

did in the way

conflicts,

that

which

nation

could

by re¬

purchasing

mass

think

larger, or eliminated

any

consumption,

1946-47

1947-48

did not feel that a great deal

will relieve the pressure on
prices — so far as direct money
outlay is concerned, But it won't
give people more goods and there¬
fore it is not likely to halt social
unrest.
It is precisely because I

•materials, made the supply' of new

"now

excess

the

believers in

mentals of the

that

denieu

cannot

could

the

power,

Does Senator Morse

goods.

taxation

moving

prices—even

•really think that keeping

Now

people

lower

handle

matter solelv by state actio^.

desired fig-

by control schemes., But the

American

v/i«h

economists

THE

(2644)

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

lows: growth involves

Labor-Management Responsibility
mistakes, one cannot al¬
ways expect the spontaneous pat¬
tern of consumer wants always to

make

(Continued from page 47)
work?

By the time a man gets to
is usually committed,
not
merely occupationally, but
emotionally, to a given line of
work—often to a given commu¬
nity.
And it follows that when
be

men

committed

thus

are

gions

and

up to full employment. Full
employment, under any system,
Will come spontaneously only if
the number and the importance Of
the industries which are expand¬
ing just about offset the number
and the importance of the indus¬

add

re¬

they

occupations,

are

also committed to a given pattern
of

resource

tries

ment

benefits, old age insurance,
ordinary tact and con¬
sideration by management in in¬
troducing change, a great deal can

the use of

be done

conflict.

reduce

there will always be an

But

unavoid¬

able minimum of strife and inse¬

curity,
Many a

under
socialism.
will be left stranded

even
man

back number and no, money
salve is ever likely entirely to

relieve his hurt.
'■

Yet

trade unionists, and
left-wingers write as if
interests"
were
only a
capitalist phenomenon. They seem
many

many

that

"vested

feel

either

the

that

mere

in¬

o'f socialism, eft gen¬
planning,
will ; make
everybody unselfish; or else that

eralized

will abolish

instinct

the

workmanship.

One change or the
other would be necessary to give
a conflict-free world. As
long as
people like to take pride in their

with

conflict

growth

and

giving

chance

every

for

"personal
development" have

failed to realize that

even on

failure

may

con¬

which

since

have

the

been

war:

con¬

large,

yield to the
general welfare. Those UNESCO
social "scientists" who wished to
a

decline.

the

ment. For first of all, even under

planning there may be mistakes;
secondly even if the planners

and

Underwriters

drops to the old level of 10,000,
and

about four-fifths

whom

of the men

have induced to go into

the

housing business are out of
jobs. Yet there has been no "over¬
production." Not one house "too
many" has been built. It is sim¬
ply that (from the point of view
of. stability) we have built them
"too fast." The planners face an
insoluble conflict between giving
people what they want when they
want it, and stabilizing the indus¬
try.
,

There are two general lines of ness cannot, in itself, be relied
approach. The first is the policy of upon always to avoid depression,
centralized advance planning of the only other way in which busi¬
groups could take direct ac¬
against depression would be
by "consultation" in N.I.R.A. style
—or to call things by their right
If one sticks to mathematical name
by forming cartels. In
logic the conclusion is inescapable other words private planning.
There is, to .be sure, a good deal
that the only way to be (more or
less) sure that we will never be which the individual firm can do
in any danger of a recession is to to
mitigate booms and slumps
getting involved in
set up a sort of traffic cop for new without
investment. An investment plan¬ N.I.R.A. agreements. It' can post¬
ning
board . must
be i created pone unnecessary- durable goods
through which all new projects expenditure and try to stagger its
must
be
cleared.
Any business capital outlay. It can use good
wishing to make a sizable addition sense and moderation in inventory'
to plant, or to introduce a new accumulation, and, as I have al-i
invention, or new product, would ready said, in price increases. But
have to stand in line, or "queue these policies, though helpful, are
up" until it got the green light not enough entirely to handle the
from the Board. And the Board problem. Inevitably we will find
would not/only permit—it would ourselves coming back to Lord
also direct—the location of indus¬ Beveridge's traffic cop idea. Only
try and the allocation of materials this time the planning board will,
and'labor. This is the essence of be a business group. And what,
:
Lord Beveridge's so-called "Full pray, is wrong with that?

investment. The second is the

new

policy
of
"filling
in,"
during
slump, by special projects. We
will begin with advance planning.

ness

tion

„

Employment in

Free Society."

Now

such

MEMBER CLEVELAND STOCK EXCHANGE

NATIONAL CITY BANK BUILDING
CLEVELAND

price theory in this
can

paper.

But it

be shown that there would be

reply would be that if it quite good reasons, even under
ought not to be called waste under the "purest" of "pure" competi¬
socialism neither ought it to be
tion, why wage increases, or out¬
called waste under capitalism. You
put increases, might have a more
cannot eat your cake and have it than
proportional effect on profits.
too.
Leaving that aside, however, the
ra
point
which
concerns
me
is
business
So far, what I have said will whether
really
could
avoid depression by cutting prices
not, I believe rouse much opposi¬
tion among the more conservative "in time." One practical question
members of my audience. Unfor¬ immediately leaps to mind: Who is
tunately, however, it is riot enough to have the requisite clairvoyance
to decide just when the right time
to stop at this point. The problem
But my

THE FIRST CLEVELAND CORPORATION
Telephone

would not be "waste" in any eco¬
sense. I would quite agree.

nomic

SECURITIES

14
Teletype

Bell System CV 443 & 444

1 have outlined

Well, unfortunately, there is a
great deal wrong with it. The
point of view which I have tried1
to put forward in my books is
always liable to be misunderstood
as lining up government, planning,
and stagnation on one side against
business, progress and develop¬
ment on the other. No such simple
classification is possible. I cannot
in the long run see any reason
why centralized, cartelized, busi¬

far

runs as

fol¬

has come?

But

le,t that pass. The

ful

little

Wm. J. Mericka
Jones

IWESTMEM

SECURITIES

1212 Union Commerce

Co.

Members Cleveland Stock Exchange

Building
Union Commerce Building

Cleveland, Ohio

INCORPORATED

Company

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Broadway
YORK

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7-3550

though it

Pfivate Wire to New York

Economic

sound to say it, the
is infinitely
simpler than that of peace. Any;
may

time

war

problem

economist- could

solve

the

em-t

ployment problem, if allowed to.
inaugurate general rationing. But
to solve the problem of employ¬
ment does not necessarily mean
solving the problem of welfare.
We could solve the employment
problem—if, jobs alone were all
we
wanted—by erecting statues
of

Adolf

road.

Hitler

every

cross
j

make

myself
clear.!
Everything that I have just said
applies with equal force tp the
socialist state or to governmental
planning. The clue to continued;
growth lies in such decentraliza¬
tion of power—whether the power
be labor, government, or business
—as to give the new man a chance ;
and the new firm a break. What-1
ever the system we employ, social
development can only continue if!
means
are found for persuading
those groups, who are inconven¬
me

ienced by change to yield to the

public
Direct

"The

book

Problem in Peace and in War" by
Professor Lionel Robbins. Strange

Let

T. H.

—

it is not surprising that
proposal should have the
enthusiastic support of left-wing
groups. What is surprising is to
find some right-wing groups ad¬
vocating substantially the same
thing.
The
motives
underlying
cancel out and conflict. For exam¬ such
paradoxical behavior are not
It can be shown that even in
ple if the steel industry, for the always of the highest. But fre¬
such an ideal state it will be im¬
sake of future stability, acts like
quently it is precisely those busi¬
possible to increase the output of a socialist state trust and does
ness
groups and spokesmen for
consumers' goods rapidly without
not expand its output rapidly, then business who are
usually regarded ness planning would be much, if
distorting the structure of indus- the
cry is raised of "monopolist." as the most "liberal" and "for¬ any, better than the same thing'
try, "overbuilding" the durable But if on the other hand there is a
ward looking" who will be found done by government.
goods industries, and eventually
rapid expansion (assuming ex¬ advocating schemes of this sort.
Once more the clue to under¬
entailing "waste" or unemploy¬
pansion to be possible), and later And it is to this group that I will standing lies in remembering the'
ment. Take housing as an exam¬
on demand falls (as could also be
basic
address my discussion.
principle: Growth comes
ple. Suppose that the population
the case under planning) then the
Lately there has grown up a sort through change. The trouble with
is increasing fairly evenly. The
very
people
who
now
most of
chances would be that about the
mysticaL belief, both among setting up a centralized licensing
violently attack the industry for
same number of additional housed
right and left, wing critics, that and planning board for the allo¬
a
failure to expand will be the
business management as such has cation of resources and planning
would be needed every year. If
first to blame it for unemploy¬
both the power and the obligation, of investment, under any system,we wanted a really stable housing
ment. They will maintain that if
acting by itself, to prevent depres¬ is that it creates a field-day for
industry, we should have to gear
only there had been comprehen¬ sion. This
it to this steady demand, and fluc¬
view; in ipy opinion, is vested interests, Men and indus¬
sive planning all would have been
both mistaken and dangerous. In tries with independent and valu¬
tuations in either direction would
well.
What they should
say
is one version it is
able new ideas will be discrimi¬
be most undesirable, Say that the
implied that if
rather that if only we had kept
nated against. The tendency of
business
will
normal output for a given general
only
hold down
consumers waiting even longer all
such a set-up will be to log-roll
prices or put them down "in time"
situation,
and
distribution
of Would
have been well.
(whenever that is) it can avoid itself into industrial stagnation.
wealth, would be 10,000 units per
I have lately been able to force
The central planning board will
depression. I would be the first to
year. But now suppose that for
one of the outstanding theorists of
four or five years—-during, say, a
admit, and indeed insist, upon the become a circumlocution office, a1
board of obfuscation, or in less
socialism to admit that socialism wisdom of self-restraint
by busi¬
or comprehensive planning could
academic
language,
a
general
ness in raising prices. But if we
not in itself avoid excess capacity want to increase or maintain Out¬ stumbling block. Let us not be
in the durable industries under put under present circumstances misled by the short-run success of
and Dealers
the
circumstances just outlined.
price increases are frequently in¬ war-time planning. I would like to
However*
he
argues
that this evitable. I. am obliged to bypass refer you to an extremely thought¬

MUNICIPAL and CORPORATION

Prospect 1571

form of

highest
plane
of
motives
one
man's development (for instance
introducing new methods) may
involve another's insecurity.
.Growth
then
comes
through
change, and change involves an
inevitable minimum of insecurity.
But worse yet: If we are to try
to anticipate the wants of con¬
sumers so as to give them what
they want when they want it, we
are inevitably involved in the
pos¬
sibility of recession or unemploy¬

are

newly released labor force, con¬
siderable deferred demand, a huge
potential rise in the output of con¬
The full realization of this di¬
sumers' goods. Does not the way
lemma is tremendously important.
seem open, then, for peaceful and
For if we really follow through
Uninterrupted expansion? Unfor¬
the left-wing criticisms of capital¬
tunately, One further question re¬
ism and of management, it will be
mains: How fast shall1 consumers'
found
that
they nearly always
demand be satisfied?

will be persuaded to

avoid

there

fronted

work, they will tend to resent
change.
Veblen's
"capitalistic
sabotage" should be called secur¬
ity sabotage. For in any growing
system some people will suffer
from- change* and those people are
likely to try to prevent it.
The
best we' can do, is so to educate
the public that minority groups
acting in an anti-social fashion

man

sumption to keep pace with con¬
sumers' goods output, that there
are
no
monopolies, no pressure
groups, no price lags, no hoarding,
no need of foreign trade or foreign
investment. But suppose further
that
such
an
economy
is con¬
fronted with the same problem

troduction

the

built, and a
"backlog" of accumulated demand
piles up. In our example, this
comes to about 50,000 houses. Can
the planning board, using careful
advance
planning alone, satisfy
this backlog promptly—and still
stabilize the private industry? Un¬
fortunately it cannot. The task is
impossible—no matter what the
houses

war—no

government.
Suppose we decide to satisfy this
supplement this private pattern of
right away.
wants, but we cannot force it to housing demand
conform, of itself, to
a
stable Thousands of young architects,
foremen,' and skilled workers are
pattern.
There is, however, one further trained. A huge increase in plant
is undertaken. The industry sud¬
and tremendously important point
which underlies the problem of denly raises its capacity from 10,000 units a year to 50,000 thousand
social stability.* This is the back¬
units, The "backlog" is satisfied.
log problem. Let us take a very
But then will Come the tragedy:
favorable case. Suppose the United
We
shall not want
50,000 new
States is governed by a politically
houses every year, We only want
omnipotent and economically om¬
houses
now.
Once
the
niscient planning boards possessed; 50,000
"backlog"
is
satisfied,
demand
of
every
moral virtue. Assume

unemploy¬

use.

change and underlying fallacy of the whole
change involves personal insecu¬ scheme is the assumption that
rity. Furthermore rapid expansion public response to price reduction
to satisfy consumers' wants, where would always be such as to main¬
a backlog exists, will probably en¬
tain full employment. While we
tail
eventual
"excess"
capacity cannot explore the matter in de-V
under any system. But on the other tail here, it can, I believe, quite:
hand "planned" expansion is likely easily be shown that no such ideal
to be more stable only because in¬ response could be relied upon, or
volving
more, sabotage
and
a indeed would be at all likely.
greater denial of consumers. The
If, then, anticipatory price re¬
duction or price restraint by busi¬
question is what to do?

with

matter
can

welfare.

centralized

who

And

the trouble

planning

does

easily become

it—is
a

—

that

n6!
it;

convenient'

Volume 168

social

ritual

Number 4762

THE

for

burying change,
rather than advancing it.

what

are

do?"

gander. If busi¬
complains about union sabot¬

ness

The

out,

well. The outstanding
business sabotage is the

ever

are

erect

peaceful and

business must increasingly partici¬

must

foreign nations. But if

all

conservative

fore¬

are

frustration

So much for
What
of

ing as an impartial observer with
virtually no personal politics, it
that the

efforts

our

and

crisis.

Senator Taft has remarked, and

to me

the

then

quite correctly, that what people
are really afraid of today is not
inflation but deflation. Yet, speak¬

which

have

living up to our side
bargain, if we intend to
put up tariff barriers whenever
the foreigner has a better idea,
of

doomed

thing

I be¬

American

intention of

finance.

seems

and

pate in the capital development of

deficit

use

free world,

lieve that America

concerned, we should
take steps to give the smaller men
a chance.
Second, so far as stabili¬
zation is our aim, major depend¬
ence must be on a policy of "fill¬
ing in" rather than a policy of
advance
planning.
This
means

not

the
a

right-wing policies.

left?

have

new

man

spoken
and the

chance. I purposely did

speak either of redistribution

"pure
to

seems

in this country have so far been
unwilling to do, is to give an ade- J
quate assurance concerning what
policy they would follow in a
slump. Unwillingness to accept the

the

idea

groups

giving

new

outstanding1

competition,"
that

for it
left-wing

the

hopelessly

aims

confused as to its
this point. Instead of giv¬

ing little
it

has

chance to get big,

ones a

its

concentrated

fire

the big ones little. A
j making
principle of compensa-, jealous resentment of any expan¬
lory finance seems to me to doom' sion takes the place of a demo¬
residual

the

extreme

right

wing

species of intellectual castration.
I

not

finance

and

believe

public works

discriminate

cure-alls

consistent

with

internal funds and the

"ploughing
creating mo¬
nopoly. Nothing could be more
misleading. I do not doubt that it
is convenient for our large wellestablished corporations to expand
back

democracy

there

slump in

severe

will

later

your

demand

take

over
with government
projects." We cannot, it
guarantee the market for
every
industry; that would be
merely another way of sabotaging
change.
But
there
are
certain
basic industries, for instance, steel,
for whose products
we
can
be
quite sure there will be recurrent
demand, and whose basic market

welfare

is true,

should

therefore

underwrite.

could

banks

and

to be
1

profits"

internal

them

and

comes

from

which

with welfare is to say to the heavy
industries: "Go ahead and expand,
and

But most of

funds.

easily

float

borrow
more

(and

hence

ices.

have

done

serv¬

myself

\times. I greatly doubt whether, in
the light of home and world needs,
the backlog problem for steel is
as

great

cannot

ask

it is thought. But we
so

unstable

could

living

done.

the

once

in¬

time

realize

that

for
I

future

for

our

civilization.

BEVERLY

in the

left technical

achievement hitherto undreamed.

Stock Exchange, will
Raymond E. Stephens to
partnership on Jan. 1. Mr. Ste¬

Herzfeld & Stern to Admit

some

have

stop.

and

Daniel

entirely to
side, but I have done this ad¬
visedly. Psychological techniques

social progress is to be
the extent to which a

Herzfeld

through persuasion. And

think

management

"We botn of

Jenks, Kirkland Partner

ought

help. We live in

Kirkland

renewed

scarcity. If

continued

money

you press

for

increased

your

—for

instance

onslaughts
the

those

still

increased

admit

nership

Exchanges,

Beebe

Simon

part¬

IBA

PAST

Jan.

London

partnership

PRESIDENTS

1942-43

1943-44-45

1941-42

in¬

production

M. Loeb, Rhoades & Co.,
Broadway, New York City,

Carl
61

Jan. 1.

money

further

Henry L. Lowerre to
on Dec. 31.

members of the New York Stock

other prices
of food. By

saving and

you

admit

Loeb, Rhoades to Admit

Chestnut

1421

Co., 63 Wall

Exchange, will admit Hubert R. A.

will

will only add to the inflation.
Even if prices in your own indus¬
try do not rise as a result of in¬
creases,

Co.,

Street, members of the New York

you

spending will push

Lewis

and Philadelphia Stock

increases

wage

wants

time of

partnership

any more government control than
can

will

of Max Reichenbach.

higher liv¬

ing standards. Neither of
we

•John

PHILADELPHIA, PA. —Jenks,
want

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

nership on Jan. 1. Mr. Cohen will
acquire the Exchange membership

can

John H. Lewis Admitting

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

society

time.

Broad

will admit Paul A. Cohen to part¬

to labor:

say

Stern,

that

sociologists, agree that persuasion
is impossible without a
community
of values.
Let me
outline then
to

judged by

says

York

admit

phens has been with the firm for

cannot do much if the whole
sys¬
tem
is regarded as a
gyp. Mr.

Toynbee, the historian,

Reeves

Beverly
New

one

what

HILLS,
CALIF.—
& Co., 271 South
Drive, members of the

people is to be
justified, labor and management
can join together on this basis to
bring about a rate of progress and
racy

labor problems almost

function

delay
which

want. Those readjustments of
techniques and methods which you
you

dislike

will

trying

occur

expand.

system

any

Neither

wholly avoid the dangers of
some
depression which inhere in
can

any

free

society.

and

But

rapidly

one

growing

comes

promise to join with you in
ures

to stabilize

If labor is
can no

ment

meas¬

demand."

prejudiced that it
longer accept such an argu¬

then

not

really

see

John Clifford

Folger

Ja>

PI. Whipple

John

business

whom

expansion from private

funds is vital. It is they who will
suffer
most
from
Mr.
Murray's

HAYDEN, MILLER & CO.
Established 1903

proposal. In other words labor
jealousy of profit helps monopoly
for it makes it harder for the new

back-fire

the

of
'

shown

direction

Union Commerce

increasing monopoly. For the in¬
come
tax, as I have elsewhere
shown in detail, falls with dis¬
proportionate weight against the
new

man

Thus, to
that if
the
it

near

and the
sum

new

up,

do have

future

signal

INVESTMENT SECURITIES

firm to get started.

policy

CLE VE

Building

LAND,

OHIO

Members Cleveland Stock Exchange

enterprize.

seems to me

depression in

should not take

for

violent attacks

renewed

and

saving, for
increased planning, whether from
step
toward
relative
industrial
right or left, for further money
stability will be taken when the
wage
increases, or for higher
right wing accepts the principle tariffs. If
the depression
shows
of placing a floor under demand.
signs
of
becoming
severe
we
There is another principle which should bolster
demand by public
turn.

Thus

feel

that

the

first

the

right wing also ought to ac¬
cept. What is sauce for the goose,

outlays deficit financed, but I be¬
lieve that if this is done thfe crisis

Underwriters and Distributors
of

McDonald & Company
1250 Union Commerce

Building

State, Municipal and Corporate

Cleveland 14, Ohio
Member of New York and Cleveland Stock
Associate Member

Securities

Exchanges

of New York Curb Exchange

OTIS

Investment, Underwriting, Brokerage,
Municipal, Trading, and

ESTABLISHED

■

CINCINNATI

AKRON

COLUMBUS

SPRINGFIELD*

1899

CLEVELAND

CLEVELAND
CANTON

CO.

Statistical Departments

LIMA
NEW YORK

•

MANSFIELD

TOLEDO

Daniel Reeves Partner

But if Jefferson's faith in democ¬

middle-

not-so-well-known

sized

indus¬

try to take such great risks, at
artificially low prices, and with
tremendous
construction
costs,
without offering something in re¬

much

(2645)

standards)
and
cut
down
the
profits on which Mr. Murray has
his eye, but for the most part it

their

expen-

retard

the

for

This

sive. It would both reduce expan¬
sion

Again the left-wing
high income taxes can

desire

from

issues.

new

would be

sure

Business and labor alike, seem to
me far too prone to underestimate
future

Professor

Murray speaks of expansion from

I cannot escape the conclusion that
the solution of the back-log prob¬

relatively short-lived,
outlook quite

vestment

with

Slichter in the July "Atlantic" Mr.

the
But

recovery nearly to
extent that some people think.

outlined,

debate

for

earlier

opportunity. Let

examples.

some

his

in¬

are

which

upon]

lem,

give

should grab from, the shelf at the
first sign of trouble. Also I doubt
if we
shall have- to rely
them

cratic stress upon

deficit

that

CHRONICLE

business

if anything,

case

got

tariff.

answer

FINANCIAL

flationary.

has

in order

cen¬

of output are

the

prove

and
soon,

change
put its own house

I believe lies in two things. First,
so far as welfare and the
growth

that at times

will

will say, "if
planning is ruled
you

tralized

the

age and union resistance to

"But,"

for

sauce

COMMERCIAL

CINCINNATI

TOLEDO

CHICAGO
~

DENVER
COLUMBUS

BUFFALO

Fleek

THE

(2646)

COMMERCIAL & FINANCIAL

CHRONICLE

Thursday, December 23, 1948

and then let's contrast Jhat with
give you a little perspective on this ings that "were built during that
period were built with black mar¬ the present period.
'particular building.
k.
'
The building that I have charted ket lumber and many other black
.Material Costs in War Periods,
liere and that Twant to talk about market
materials, and so this
broken dotted line here repre¬
is an eight-room frame residence
I have here. a chart showing
built on a particular lot, but in sents the probable black market what has happened to "building
of
this particular series of figures I cost
building
this building material prices in two war pe¬
(Continued from page 12)
am giving the figures only on the during the same period.
riods. I would like to direct your
fIation this time and again fore¬ have many other supporting rea¬
first
replacement cost of the building.
to
The OPA went off at this point, attention
this, broken
closures went up.. unustially high. sons which to .me seem more or
In 1914, when the first World and
prices
were
decontrolled. black lipe which shows lumber
less conclusive.
Many of you, J am sure, have
War started, to build this building Here is the way the cost of build¬ prices from 1913, year by year, to
read the book published. last year
cbst $3,836.
Long-Term Factors
In 1920, to build the ing this building, with the ground, 1923. You will notice a vertical
by Dewey and Dakin, on cycles,
has varied up to the present time, line here on my chart, and this
I
should like to
talk for a same building to the same specifi¬
and you remember in that book
cations cost $7,678, In 1932, at the and at the present time the actual vertical line represents the end
minute about the long-term fac¬
that Dewey and Dakin point out
bottom of the biggest depression cost of building that building to of the First World War, the Ar¬
tors that are' operating and how
that these various cycles which
the same specifications which in mistice in November. 1918.
we ever had in the United States,
You
those long-term factors affect the
are operating in different types of
to build the same building cost 1938 and 1939 cost about $6,700 will notice about six months after
safety of real estate mortgages.
business in the United States, are
to $6,800, today would be about
the end of the war, lumber prices
The first of these long-term fac¬ $4,480; and I should like to point
sometimes going up at a particular
started going up in this fashion.
tors
I would
call construction out that at the bottom of the de¬ $16,300.
time, one cycle will be going up
pression in 1932 it still cost 17%
Now, you will notice that from They went up, and they reached
while another cycle is going down, costs; that is, replacement costs.
more to build this building than here
this point in the spring of 1920,
on, I am guessing.
I am
Regardless of whether we have in¬
but, after a study of the various flation or
it cost in a fairly normal year of
trying to guess what may happen and that had been quite a rise.
deflation, in the last
types of cycles that are operating
1914, before the first World War to construction costs in this period Relatively few people at that time
in different business, they point analysis this inflation or deflation
started; in other words; a part of ahead. I am not guessing because expected any prices to drop, and
out the fact that in their opinion,
the inflation that accompanied the I want to
jiveL
guess; it; is always very
particularly
building. prices.
I
all rvf thAca pitaIaq win "ho ir, fi-idir.
all of these cycles will be in their changes in replacement cost. Over
first World War became perman¬
the
difficult, it is always very hazard¬ could show you many articles
long
period
as
we
have
downswing in the period around
I am guessing what is going written at that.time in scientific
charted it, and we have charted it ently imbedded in our economy ous.
1952; they therefore assume that
and even that tremendous depres¬ to
happen to construction costs. and government publications giv-r
from 1850 to the present time, we
we are
going to head into major
sion couldn't carry construction You
know, I think they are about ing reasons why prices would ad¬
economic
trouble
in
tbe
find th3t the &ctu3.1 selling prices costs back to the
economic
trouwe
in
tne TTniterl
United
point that they at' the peak.
of typical p]eceS 0f real estate will
However, T don't vance still further, and yet in the
States about that time.
left.
show very much trend one way or next 16 months the price of
vary more nearly as a line show¬
lum-,
Now, I don't follow that exactly. ing the percentage fluctuations of
When the second World War the other until about the middle
ber dropped, by 59%. It bounced

Outlook for Real Estate

)

•

And Construction

seems

that there is still

enough resiliency in the picture to
carry us much beyond that date.
It seems to me 'that ,we couldn't
expect the bottom of

our

next big

depression before 1955, and, in my
own thinking, I wouldn't be at all
surprised to see it as late as 1957,
but because all of the cycles in the

their

the present

assuming that in the various

forecasts that I

making today.

Now, if the only reason that. I
have for being pessimistic on v the

long

pull

cycles,

afraid

course,

for

inflation of real estate

prices is the tremendous increase
have had in the cost of replac¬

ing existing buildings.
In
we

organization in St. Louis

our

have

now

which

seven

refigure

We try to -fake ever

and

let

buildings

every

month.

item of cost,

give you

some

ex¬

these

would

recurring

amples of what has happened, and

were

any

If that is the case,

of the reasons,

one

past have averaged out at 1955, I
am

replacement cost than

other factor.

little

you

my' pessimism,

bit

but

will remember I always like

back quite

distance and

1923

1948

Twenty-Five Years

Specializing Exclusively in
State and Municipal

Bonds

started in

1939, to build this build¬

ing cost $5,894.
To build that
building one year ago cost $10,532,
and to build that building this
month cost

$14,632.

Now, that is an increase of 39%
against a year ago, an increase of
149% above pre-war 1939, an in¬
crease of 227% above 1932; 100%
above
and

the

1920,

preceding high,

above the first World
War pre-war period.
282%

In my

to the

chart

"Value

called

Value

our

that

have

Market

and

Standard Six-Room

Frame'House in St. Louis."
The

starts

chart

bottom

The

1938.

chart

bottom

the

The

the

line

year

our

is
This line running along
zero.

$25,000.

Municipal Bonds

suming that we are going to be
in another big real estate depres¬
sion in the middle

'50's, I show an
accelerated decline in this period.

Now, should the actual drop in
the cost of building this building
follow my line exactly during the
next eight or nine years, I can
tell you quite frankly I am going
to be more surprised than you

Our

struction

line

top

chart

New York

•"

Detroit

Chicago

Cincinnati

sents the

selling price of

50-foot lot suitable for the
of building we have here.
The black line we have here, the
solid black line, starting in 1938,
shows the
replacement cost of
building that building new, and
you will notice in 1938 the re¬
placement costs,including the
value of the ground, ran about
$6,700 to $6,800 — very little
change over to the middle of 1939,
Then the war started at this point
and from there on out you will
notice that we have had slight
age

type

OHIO

SECURITIES

Corporate and Municipal
.

■.

,1
.

■1

.'''I'--

1.-

increases

field, Rickards
CINCINNATI

Go.
CLEVELAND

point
we

construction

to this point.

over

our

have

costs

Then, at this

line separated, and here

our

solid black line which

represents the legal price_ of
building this building, assuming

now

that

you could buy your
rials, at, the OP A prices.

Now,

mate¬

back

prewar

repre¬

an aver¬

only

were

17%

Let's

to" anything

your

in-this fashion, went Up like that,
and then went over sidewise dur¬

ing the period of the '20's.

Now, in contrast with that First
War period, let's'look at

World

the

look

period

through,

another angle. I am assuming that
that is going to be the bottom of

just

come

fed

dark

with

1940 to the present.

These charts

drawn in such a way that this
vertical line that represented the
are

end of the

First World War also

represents the end of the Second,
and

again you will notice about

six

months

after

World

Second

the

War

end

the

price of
lumber
started skyrocketing
in
that fashion.
It reached a point
here, had a false drop, went up
again, another false drop, and at
the present time it is right here.
If it goes any higher, I am going
to have to

thick

draw

chart.1

new

quite

significant,
however, that at the present time
the
prices on lower grades of
lumber are
cracking/ Whether
this will prove to be another false
drop, only the future can tell but
certainly we at least are rela¬
tively close to the top, and in my
opinion when the top is reached,
we
are
not going to stay there
long,

very

this figure from

have

shown

lines here on our chart These red
dark lines take the period from

price level.

don't think

are

going to;

repeat this experience of 1920 and

'21, that lis, we are pot going to
have

drop of 59% in lumber
in
16
months,
but
it
wouldn't surprise me at all to see
a drop of 33V3%.
In other words,
I think that it is entirely possible
that lumber may drop by onethird from
its present heights,
and as lumber drops, if it does,
and when it does, I. think
the
37% higher than it was at the top
drop Will also be noticed in many
of the last real estate boom in other lines of building materials.
It is largely by taking charts
1925. That doesn't seem to me as
of " this sort and trying to work
an
unsually pessimistic forecast.
Out what seemed probable in the
In fact, I think I could find rea¬
behavior of individual buildings
sons why I could make my fore¬
materials and labor that we fi¬

big depression period, and I am
still assuming
that construction
costs are going to be 129% higher
than they were at the bottom of
the last depression in 1932. I am
also assuming that at the bottom
of another big depression of this
sort our construction cost will be

pessimistic

cast

far

that.

Let's look for

see

what did happen

similar

know that most build¬

costs

higher than they were in that pre¬
war period. Now, I am assuming
they are going to be 73% higher
In other words, I very definitely
believe that you are not going to

Toledo

and then I start a
this decline goes

in this fashion, and then as¬

over

opinion, if we go into a
will be, but to me, this looks like
depression in the mid¬
dle fifties, construction costs will the general trend.
not drop back to the pre-second
Let's look at this drop that I
World War figure, the figure of have here, and let's see whether
1939, and in all of our thinking that looks reasonable, in view of
the experience of the past. I am
we are assuming that a large part
—and I moan a large part of the assuming that at the low point of
infation we have had in our econ¬ the next depression the cost of
omy, is a permanent change in our building this house is still going to
base.
We think it entirely im¬ be 73% higher than it was in 1939.
probable that we are going to in fairly prosperous times.
have too large, a drop in construc¬
Now, let's contrast that with
tion costs, but in order to show
what happened in 1932, and you
you just what we
think might will remember in 1932 at the bot¬
happen there, let's turn for a tom of that
big depression, con¬
here

Incorporated

next year,

slow decline, and

very severe

minute

Braun, Bosworth & Co.

followed

period,
the

the

First

than

minute and

in this last

period
World

prices

arrived

nally
we

this

drop

that

show here.

There

are

number

other

long-range factors in addition to

that replacement costs. Another longWar,

factor, of course, would be

range

interest rates, because the interest
rate affects the value of all exist¬

ing buildings. If interest rates are
low, we capitalize with a- low
rate when we try to figure the
value of existing properties. When

MUNICIPAL BONDS

interest rates
is

EXCLUSIVELY

Walter, Woody & Heimerdinger
MUNICIPAL BONDS
403

Stranahan.Harris & (ompany

DIXIE TERMINAL
CINCINNATI 2

just

are

turned

does have

high, the story

around,

and

that

tremendous effect on

the values

of investment proper¬

ties.

have gone through
period of very low interest rates
enabled
a
tremendous
Also,

which

amount of business to go

which

otherwise clearly

have been done.

forward,
couldn't

!, '•

INCORPORATED

Lew in Interest Rates Passed
NEW

YORK

TOLEDO

CHICAGO

I think I would be in agreement

with

practically

all

economists

i when I say that the low in interest"

Volume

168

Number

rates has been

4762

THE

I think the

passed.

found

rate on small loans is gone,
it is gone for GI's, and unless tne
government makes direct loans, I

think .that
tial

those

absolutely

loans

ourselves

housing,

with

surplus

times

your

iwenties.
boom

made

been
at

made

5%;
at

■51/2%ir' but

going

slowly.

interest

creep

You

rates- at any

hble

rates

are

very,

very

some

are

that

years

that

Way

there

real

Those

go.

reports

only

was

estate

who

you

remember

"Save the City," and you remem¬
ber our forecasts that we were
in

for

real

estate

started.
Estate

taxes

All

governments

Their

that

and

have

costs

need
gone

above

money.

Lave to pay their school

The

value

what they
estate

real

has

needing money
naturally turn to increasing

assessments

with

values.

in New York City, I
in

many

with assess¬
ments, and, of course, that is true
in
many
cities of
the
United
'States

the

downtown

ties, but it is not true

proper¬

The

going
*.

only
up

that

when

now

won't

values

taxes

drop,

and

have

down

come

going to go through the same situ¬
ation in the '50's. in the late '50's,
probably,
that
you
have
gone
through in the late '30's.

get

all

but

melt

can

of their time trying
place to live, and who

offered

miums,

are

you

that

most

find

increase

values

they

spent

difficulty with

that

by 1950. That may be quite a sur¬
prise to a lot of people who have

the small

.residential properties.

indicated

premium- has
been
shrinking. It is our guess that it
is going to disappear entirely by
1950, and, by the way, I think
that
the
housing shortage as a
real shortage is going to be over
scarcity

just

are

experience.

that

this

have

made

realize that

values

cases

/starting to catch

$3,000.

course,

time

scarcity pre¬
building ran about
Various studies we have

one

mium

line

nearly

present

a com¬

sorts

housing

pre¬

shortage

hurry if we
change in economic condi¬

away

tions.

We Are Building at a Rapid Rate

this:

Remember

Short-Range Factors

let's

Now,
„

■

•

take

building

some

but

for ' it.

the' demand

evident,

thoroughtly

understand

realize

must

that

hands

the

recent

scarcity premium

—

big

stand

words,

continues.

suppose

safe
the

going

be.

think they are unwise. I
they would certainly be un¬
as mortgage investments, and
I

only

build

reason

them

that

are

going to

the

Federal

government, through the FHA, is
going to make credit ridiculously
easy on

under¬

that type of development.

I have

the

been

FHA

great admirer of

the

early period. I
am
starting to become a definite
opponent of the FHA. I believe
that the policies that the FHA is

pre¬

othej-

that overnight

drop

think

inescapable part

this, that the scarcity

scarcity

built this

in fact, at the present time
already running consider¬
below « the
corresponding

that

1949.

past, is a
the amount

mium will only be paid so long as
the

1948.

fewer

dwelling units, as great as 10%,
although I rather doubt whether
it will be quite that great. We are
going to build a lot of "co-op"
apartments in the United States in

that we
of the

that, let's also

build

of the price, but if we thoroughly
understand

built

months of 1947. I don't kno\y how

willing
to
pay
for shelter because he
couldn't get shelter in any other
way—that is a very real part of
the nrice. It is

are

ably

that the average nerson is

1949

are

year;
we

price for which at least residential
nropertv
has
been
exchanging
.

rapid rate,
not going to build as
pretty

going
to
dwelling units than

part

are

been

think it may be, on the number of

But

course.

have

self-

fast

our

short-range factors. In the short
period," let's put it this way: at
any particular time 'the price for
which any type of real estate will
change hands will depend almost
entirely on the relationship of the
supply of that particular type of
property in that community to

starting to follow

v/e

are

con¬

seems

that to generate
of building

E. F.

two

today and if

Gonnely

Edward

Frothingham

Hall

with build¬

now,

ings built at a cost, possibly onethird less. If we build a building

went

too from your own

governments

-would

have done it and I know you can,

in relationship to the old
.assessments,- and
these
clearly
.gone up

and

committees—

government

five years from

could buy this

the peak of
up to $18,000
in selling price, and if you doubt
that, I can give you plenty of ex¬
amples of actual buildings that
inflation

our

buy.
..

building

parable

firemen, the policemen, every¬
body has to be paid more, they

line

building for $6,000 in 1938;

teachers,

the

have to pay more for

black

our

distress basis you

they

up;

Some

were

building costs at their pres¬
height in the United States, is
running the risk of putting these
buildings in competition, four or

you
will notice as we
into our war activity, our
housing shortage developed, and in
this
period our red line goes

has

1936-37

part of that
financed with irrational

ent

Then

city governments and

PRESIDENTS
1937-38

last

with

went

period of sharply rising

PAST

1939-40-41

were

time, and because we had more
housing than the market was able
to absorb, we had not a scarcity
premium at that Fime, but what
we call a surplus discount.

our

IBA

late

tremendous volume

States vacant and for rent at that

charts,

•

the

cealing the default.

United

the

terest out of other funds and

that

black line.

census of
of all the urban

units

houses

continuing to sell bonds
par after the buildings were
already in default, paying the in¬

Federal

showed 7%

1940

one

take

our

The

dwelling

could

taxes

our

(2647)

words, at that time we
negative scarcity premium.
that
time
we
had
a
high

vacancy.

range
factors.
Another
one
of
them would be taxes, and we have
been forecasting for a number of

'39

and

1938

below

they

long-

our

before

other

had

here

line

red

time in the foresee^

lat-gely because
the government • policies.
Those

back

increase

future,

have

red line

not going to get
in interest

are

tremendous

that

CHRONICLE

of your big bond
continuing to sell
bonds at par,
and this has all
come out, of
course, in testimony

notice
a
red line, and that
attempts to show the sell¬
ing prices of existing comparable
housing in comparison with the
cost of new buildings. You notice

4%% will

.that have
5% will be made
ones

FINANCIAL

The

was

money/
houses

continue to be made, that the rate appearing at other times.
be/increased to 4%%. Many loans,
On this chart you will
that have been made at

bond

gage

and dis¬

economy

as a great deal of the
very unwise
financing -of- the guaranteed mort¬

let's say,scarcity pre-,
mium will disappear. It is a very
volatile thing, present at certain
vacancy,

of 5%. Overnight the

essen¬

going

are

COMMERCIAL

hand,

On the one first time since 1933, in their opin¬
much afraid of ion, the deflationary factors bal¬
inflation.
On the other ance the inflationary factors.
cate of that building four or five further
hand, we see many indications
In the past, regardless of what
years from now for one-third less
than our present building is built, that deflation is actually setting happened, we always had that in¬
One reason that I gave the flationary
and if the thing is financed with in.
balance to
carry
us
a
in my introductory re¬ through, and it did, but now if
very, very slim equity, many person
of the owners of these buildings marks a bigger percentage at the they are right—and I am rather
are going to find that
they could present time is bebause it is al¬ inclined to think they are—if we
build a new building for less than most impossible now to tell which are sailing on pretty much of an
way
the .balance will swing in even keel, any change in economic
they owe on the old one.
It is my opinion that you
I have often said if you want to 1949.
conditions, something that in the
can't
know when foreclosures are
postpone
deflation
very past might not have affected us
going
to rise rapidly, you don't have to much longer, but I think that we at all, might start one of these
subscribe to my reports. When¬ might be able to use the hypoder¬ downward spirals. That organiza¬
ever the
average individual finds mic once again and for a while I tion is quite worried about the
that he can buy a new building think we might get some infla¬ outlook.
for less than he owes on the old tionary effects and stave off some
Now, I make this statement that
of
the
deflationary effects that I think the
one, you are going to have a very
deflationary factors
rapid rise in the foreclosure rate. many of us have been dreading.
are starting to get into the ascend¬
Foreclosures at the present time
My contacts with large organi¬ ency in full realization of the fact
are dragging
along the bottom of zations in the United
States, how¬ that practically every policy that
chart.

our

we can

build

dupli¬

general

ideas.

we are very

In the last three years

President

Truman

announced

ever, in addition to our own figaveraged lower than
his election speeches would be in¬
have ever averaged in any urges, are swinging me toward the
flationary in character, and that
other period in the history of the
deflationary side. Just the other every one of the inflation

they
they

have

United

States

figures

go.

far

back

our

controls

that he

with possibly
exception, were attempts to
long distance telephone with the
solve
foreclosure
problems;
it
treat symptoms rather than causes.
merely means that in an inflation¬ economist of one of the three On the other
hand, the one excep¬
ary period, when values are going largest corporations in the United
tion, I think, is higher taxes. I
up,
when construction costs are States. This man told me that the think we are
going to go into
going up, even 100% loans may
various
studies
that
they have higher federal budgets, but I think
become safe, and I have seen some
110% loans that have become safe been making — and they have a .that you are going to see the in¬
in

That doesn't

mean

day I talked for

long time over

announced,

one

the

recent
past,; but, on the very large .economic departmenthand, reverse these factors have convinced them that
jfor^he
—scarcity
premium,
which
has
been going up, may turn around,

other

crease

the

federal

budget

fi-

(Contipuec^on page 52)

and you notice in my guess on

the
here, I am guessing that
scarcity premium is going to
become a surplus discount on this
type of unit by the middle fifties.
future

that

George A. McDowell U Co.

So you are not only going to
have the drop frpm your construc¬
tion cost at this point to the con¬

Corporate Bonds and Stocks

struction cost at that point in its
value, but in my opinion you are
going to have the drop from the
selling price here, which still in¬

Specializing in Michigan
Listed and Unlisted Securities

cludes

a
little scarcity premium,
selling price here which will
include a surplus discount.

Mortgage Testing

Now,
gage

my way

of testing a mort¬

what

see

would be to chart

amount still owed

might happen
against this the
on

MEMBERS DETROIT

STOCK EXCHANGE

the principal

in any year Jn the past, and if my
line gets gets very far below the
amount

still

pal, it is

owed

ing to have

opinion

some

the
you

princi¬
are

go¬

difficulty with

that general type of
mortgage.
I know most
ent

time

are

BUHL

BUILDING

DETROIT

26, MICHIGAN

Phone WOodward 2-9630

Teletype DE 195-6

at the pres¬

hesitating between

unwise

Markets In Michigan Securities

UNDERWRITERS and DISTRIBUTORS
Dealers

and

WATLING, LERCHEN & CO.

Brokers

Listed

Investment Securities

and

Unlisted Issues

Members:

New York

WHITE, NOBLE & COMPANY
Members

GRAND RAPIDS 2
Mich;gan

Phone

94336

Trust
-

Detroit

(

Stock

DETROIT 26,

DETROIT 26
Buhl

184

Detroit Stock Exchange

New York Curb Exchange

Chicago Stock Exchange

Exchange

Building

Teletype GR

Stock Exchange

WOodward

MICH..

Building

2-8992

Teletype DE 7

Ann Arbor

Pontiac

Jackson

New

York
»•

(2648)

THE

COMMERCIAL

Outlook for Real Estate
si

■

■1 v

(Continued from page 51)
nanced at least to

a very

large

tent by higher taxes on corpora¬
tions f and individuals.
I rather
.

1949 is

going to see an
excess profits tax, but I do think
that it will see a very much; well,
doubt if

let's

a 10% increase in the
bracket incomes, and an
regular corpora¬

say

higher

increase in your
tion

That will be deflation¬

tax.

ary.

think

ex-

balance these vari¬

factors have a

let's say after the

the vacancies in office
buildings, and vacancy, as you
know, in the last two quarters has
increased by a very, very small
.amount, but the increase. in va¬
cancy is far less than the decrease
in federal
occupancy,
In other
words,' some of the war bureaus
have been going but of business,
and as they have^ they haye made
space available, and private in¬
dustry has been absorbing that
space almost as fast—not quite,
plotting

of, these things that I

some

have been

timistic
owned

saying.

still

office building,

op¬

shape,

are

one

now

going

right

now—

to be

faced with the

lot of very un¬

"co-ops" and of

other

government-insured

ment units.

things would have to

apart¬

I think in the lower

groups

they

are

going to be

faced with the competition of sub¬

have to drop by a bigger

fpercentage than I think they are sidized housing. Just as I left St.
fgoing to drop, or else the square Louis, I noticed a headline in the
[foot rentals dn existing space will

St. Louis paper

fhaVe ot increase.
I We have been plotting the

the

fage

rentals of all office

St.

that the tenants of

Louis subsidized

dwelling

and had formed an

buildings

water

excellent

The
of

On the other hand, under

ect schedules

for

Now

"matter

way

long-

President all with

fact

the

the private utilities

PoHey of Cooperation

belief that if the policy

Federal

had

Government

of cooperation with the

one

cal

Affiliated with

projects

social reform.
the

EXCHANGE

NEW YORK CURB EXCHANGE

instruments

private utilities should not be

(ASSOCIATE)

seems

the

government

field" in this'regions with¬

power

out

knowing just where

going

was

the extent of the respon¬

tive processes

of government are

"ring around the rosie" affair to

handle

satisfactorily the govern*

tions

the

STATE

GOVERNMENT
AND

MUNICIPAL

field.

power

legislative

lined

handling

have

blessings of abundance.

Today they are called upon to en¬

hardships

assuring the region of
power supply.

How to Alleviate Present

alleviate the present power

scarcity.

make the

•

Firstr

avoid

YORK
15

HANOVER

2*157 2

During

•

SYSTEM

TELETYPE

368

restricting

such hours,

rapidly

BROAD

TELETYPE-NY

l«853

the

proceed

possible with the

above Grand Coulee

few years.

over-all

projects

will firm

Coulee

work

such authorized

will

projects,

most quickly reduce the

shortage menace:
An

acceleration

immediate

the

;

important contributing fac¬

tor to

the

increasing power de¬

is that the one* million kilowatts

multi-billion dollar plants
far

con*

There should also be

additional capacity

range

the additional; capacity .to. be

installed

use

imperative that the

struction of such storage

help

meas¬

Government
as

can

minimum during

know, there has

installed

between

now.

scheduled

at Grand

and: 1952

Coulee
for. the

most part represents peaking ca¬

pacity only and1, any substantial
integrates amount of increased firm power,
There exists that is, power whicb will be avail¬

developed a, truly
and

program.

much conflict of interest between

—

Established

10 South La Salle

STREET

SYSTEM

this Winter

curtailment

electricity to

Federal

hours

peak

Members principal

REPRESENTATIVE

BELL

the

of customers

drastic

ures

ade¬

following observations:

all classes

able

—

on a

year-round basis, cannot

Municipal Bonds

Fidelity Fund, Inc.

COMPANY

BELL

short¬

supply,

power

from 4:30 to 6:30 p.m.

Chicago
2- 70 70

NEW

future

quate

assure

National Underwriters

'FRANKLIN

to help

and

age

NORTHERN

TRIIST

Now, as to what can be done to

Underwriters and Distributors

BONDS

Power Shortage

as¬

adequate

prepared all sorts of long-

comprehensive

the

were

agencies

Federal

various

yet been

the

affected,

the obligations of the Fed¬

ficiency: in the years 1949 to 1952

No Over*AH Program
The

assuming.

administra¬

multi-purpose

projects.

but

was

states

ous

for the business¬

procedure

and

Listed and Unlisted Stocks and Bonds

THE

There

policy nor a proper stream¬

power

not

dure
-

business opera¬

ment-'s extensive

ised

■r*-

are

too cumbersome and too much of

The

the

money

Second: It is

people of this region were prom4

sibility

STATES

you

these: The
usual administrative and legisla¬

jumped head over heels into the

UNITED

plain facts

the

The customers of

discriminated against.

purposes^ and

would be encountered if the vari¬

saw.

tive

STOCK EXCHANGE
STOCK

*to

Govern¬

involved for
future development are tremend¬
ous,
running into the billions;
problems
of
great
magnitude

the
finger in the

"merry-go-round"

greatest

people without using these Fed¬

PARTNERSHIP

CHICAGO

developments

available

other

amounts

and

does not exist a clear-cut Federal

eral

THE

purpose

made

can

criti¬

it is today. The benefits of

multipe

-A. G-. Bceler & Co*

Federal

private. utilities,'; the; powef sup¬

YORK

to what is basic in the

of course, numerous agencies
bureaus
and
Congress and

The

the

ply situation "would "not be

NEW

government's failure to provide an
adequate power supply, you have,

any

the

cific Northwest, which it has tied
in with irrigation, flood control

sume

deck of cards.

ever

r, t PINE STBEET

■Ml

the

eral Government in the matter of

might add here that the pri¬

been

THE

shuffled'around

are

try that is presumed to provide
equality of opportunity.

NEW YORK

Members

has been sub¬

much confusion, con¬
troversy and delay, and the proj¬
to

pie and you have lots of hocuspocus,
and
politics
involving
among
other things party, sec*
tional and ideological differences,
budget battles, changing policies
as
to
"pump priming," "defla¬
tionary pressures" and, of course,
"log rolling" and "yards and yards
of red tape."
In short, electric
power, instead of being handled
as a business proposition, has be¬
come a political football. Frankly,
this whole power situation is the

Calls for

A-

new

jected

term contracts entered into by the
Bonneville
Administration
with

punitive

CHICAGO

ment has gone so far in the matter
of power development in the Pa¬

and

planning and installation
generating capacity in the

have been treated by government
is an absolute disgrace in a coun¬

Established 1893

Department
the

tion of multiple purpose projects.
Because

Pacific Northwest

years.

basis.

of Investment Securities

the

interior and

Army Corps of
Engineers, have the responsibility
no initiate river development
pro¬
grams, but the 'final decision as to

future of this area is at stake.

prime power
from Bonneville on a long-term

Underwriters and Distributors

such

expected 'from government as it
functions today, but it is not very
comforting when the economic

erating capacity.
Some of the
contributing causes to the short¬
age could probably not have been
remoyed by anyorfe.
These in¬
clude such factors as the big in¬
crease in population in the region,
the tremendous load growth in
this area, since the war's end, the
inability to obtain generating
equipment during the war, and
the difficulty of obtaining new
equipment during the post war

contract

INCORPORATED

procedure1

present

over the long-term
period required for the construc¬

shortage is due to a lack of gen¬

year.

large industrial users, principally
together aluminum, about 50% of the total
organization to presently available Federal power
generation is going to~a handful of

A. G. Becker & Co.

the

Under

various departments of the execu¬
tive branch of the government,

Perhaps this sort of thing is to be

STREET

gen¬

The

vate utilities have been unable to

120 SOUTH LA SALLE

sales

con¬
servation and other purposes,

(Continued from page 7)

customers.

retail

and

control,

irrigation, fish and wild life

erally in 1948 hit an all-time peak. authorizations and
appropriations
They are running below that is the responsibility of the Con*
now. They
are running below a
gress and of the President.* Con¬
year ago. I think in
1949 they gressional appropriations are made
will run below 1948, and since all for a
single year or at the most
values on retail properties in the
two years ahead.
Even if a co¬
last analysis depend almost en¬
ordinated long-term program is
tirely on the volume of business
developed
and
authorized
its
that can be done in a location, if
continuity over the years is de¬
the
dollar
volume
of
business
pendent upon continuing year to
drops in the various retail loca¬
year or biennial approval by the
tions, their dollar values will also
Congress. Thus, there is no real
drop.
assurance under the present set¬
up that any given program will

Unit projects had gotten

aver-

sales

store

production, flood

power

be carried out

good

values

are

on today's market,
provided I was trying to get the
largest price I could get. If, on
the
other
hand,
the
principal
thing I wanted, was a steady in-,
come,
possibly a little smaller
than my present income but a
steady, safe income over a period
of years, I would continue to hold
it.
In
my
opinion, department

Kilo wait Crisis

situation to

wise building of

'^happen: either construction costs price

|would

higher, but some higher.

competition of

foot they

getting:. In other words,

of two

I think big apartment buildings

are

ing in competition with buildings
at the fates per square

it, and
small
i 1 di n g

I would sell it

prevent evictions, or to do their
best-to prevent evictions of 'per¬
whose
income had gotten
above the limits allowed by law,
I think you are going to see a
great deal of attempted political
pressure to raise that limit to get
subsidized housing, if you give the
tenants sort of a right to what they
have got. I think that is more or
less of a tendency. We know we
are going to have a continuation,
and, a very exaggerated continua¬
tion, during the next four years
now
of our ; subsidized building
projects.
If I owned a farm today,
I
wouldn't sell it if I were a good
farmer and operating that farm
myself. If I weren't a good farmer,
if I held that farm purely as an
investment, I would sell it. If I
owned a good downtown business
location, let's say a 100% location,

very

looks

with

and

not much

office build¬

new

still

higher than they

going to make it imposs¬
a

office

though,

us,

lieve that the great increase that
we
have gotten in construction
costs is

The office building

If I
almost

any place in the United States, I
would continue to own it.
I be¬

ible to build

releasing

been

Thursday,* December 23, 1948

CHRONICLE

sons

vacancy.

office buildings.

fast—as the govern¬

been

has

there

Now, let's see,if I can summar¬ increase
ize,

We have always been

since 1925.

bigger chance,
first six months
of 1949, of showing a downward
but almost
drift than they have had any time
ment has
in the past few years.
ous

quarterly

States

United

the

FINANCIAL

1916

Stock Exchanges

Street, Chicago

CG 405
ROCKFORD, ILL.

Volume

Number 4762

168

THE

be obtained at Coulee until addi¬

tional upstream storage dams are
built.
.

t,Third: There should be created
framework

Federal

Home

Rule,
the

assure
an

which will

Pacific

adequate

seek, ■to

Northwest

supply. There
must be prepared at the earliest
possible moment a long range re¬

gional

power

blueprint
which all interested parties will
agree to and which will provide
for

program

the

ment

most

region's

develop¬

water

re¬

sources. Some changes will be re¬
quired in procedures and methods

legislation, administration
financing in order to put

and

development

power

schedule.

firm

Some

machinery must
whereby the people
region have a definite say

be established
of the

ing

the

out

be
on

preparation and carry¬
such a program. The

Federal

Government

left with

life

should

not

death

grip

the economy of this region.

These

are
basic requirements
only because of the crucial
importance of adequate electric
power to the life of the people in

not

the Pacific

Northwest, but also in
major role that this
region plays in our national eco¬
view

the

nomic

life.

part

Adequate
electric
be provided as a

should

power

of the

nation's

mobilization

surance

getting

their

money

gional

power
shortage
but
to
make matters worse a very men¬

acing situation currently exists in
the

electric

distribution

field

Seattle.

Briefly, the facts are these: In
the City Council passed a
resolution declaring the company
1943

of business

out

franchise expires.
not

when

1952

If Seattle

its

were

obtained

eries.

long-term

take

However,
ments of
are

the
our

require¬

electrical

customers in Seattle

increasing

substantially

year

capital is, there¬

New

year.

crisis.

fore, needed annually for increas¬
ing the capacity of existing sub¬

stations, underground transformer

the

system,
in

to
re¬

let

how

tion

City

lowest

the

City cannot take

present

demands

tomers from its existing

Any

"have

systemj

for

That

jor supplier of

that

the City or the Company
acquiring the/ facilities of the
other. Naturally, Puget does not
want to go out of business.
It
would
like
to
take
over
City
Light, but it appears that this
even

putting

element of choice

has

been
the

only

crisis

field

can

way

the

that

Seattle

tribution facilities is for the

This

people

and

say

pretty

the

take

but

that

you

the

because

load

everywhere and

play Santa Claus in these times is

you,

Uncle Sam.

Thanks

privilege of being with

lot for the
you.

ma¬

in this

Utility

Railroad

our

time.

just

the

Municipal
msicmms

re¬

said

there is

since

that
■

as¬

Bond
Stocks

facilities

gentlemen,

this

something

This

]

all

H. M.

that

Byllesby and Company
(Incorporated)

be apathetic

com¬

135 So. La Salle

community

St., Chicago 3, 111.

region needs to be thor¬

Telephone

the crucial

vigorous laction.

273

and; to

that

so:
•'«.

Teletype

Financial 6-4600

the t situation

'o v-"Ml

*'t

out

New York

Philadelphia

Pittsburgh

Minneapolis

,•>-

in¬

are

straus & blosser

work

service

are

interruptions

ing

bound to

substantial

occur

economic

involv¬

Because

imposed

upon

the

CHICAGO

EXCHANGE

NEW YORK CURB EXCHANGE

135

sentence

death

STOCK

STOCK EXCHANGE

(ASSOCIATE)

Investment

loss to

thousands of customers.
•

YORK

it by the City,

SOUTH

CHICAGO

SALLE

STREET

Securities

ILLINOIS

neyy

capital is not available to Puget
for the

tion

Telephone ANDOVER 3-5700

expansion of its distribu¬

facilities

Seattle.

With

money as

tight and risk capital

scarce

it is

reason

that investors,

are

Public

Utility

Direct Private Wires Coast to Coast

today, it stands to

DETROIT

KANSAS CITY

MILWAUKEE

Industrial

GRAND RAPIDS

not go¬

'
■

■,

Railroad

Municipal

UNDERWRITERS AND DISTRIBUTORS
OF

INVESTMENT SECURITIES

Central Republic Company
(Incorporated)

AjCAU.YN«"COMEANY

CHICAGO
NEW YORK

MILWAUKEE

CLEVELAND
MINNEAPOLIS
Member of

Incorporated

DENVER
OMAHA

DES

MOINES

ST.

LOUIS

CHICAGO
NEW YORK

BOSTON

PHILADELPHIA

OMAHA

Chicago Stock Exchange

■- *

,-%<t

MEMBERS

is
NEW

serious

•

about

facilities

this

Unless

done,

ex¬

carrying heavy loads at the pres¬
ent

Rotarians

know the only one who can really

present that ade¬

about.

this

role here has

assurance

distribution

oughly aroused

settlement mot

much

people

our

tremendously grave

regret that

has

action

NOT

nature, of

■

requires

Seattle, and because

can

placent

fair price,.0This JSuB :matter

which

solution is to be obtained.

supply

power

economy,

that this is

adds up to a real "kilowatt crisis."

acquire the Company's property

our

adequate

regimenting

of unity,

if the right and

necessary

"Scrooge,"

and

will be provided in the City.

City

been

that

assumed

needs

City

Certainly,

dis¬

the

quate

serious

adequate

assured

the

surance

the

oeople

the greatest degree

els

task

re¬

and

both at the national and local lev¬

supply adequate

power

this

any

and

biggest

problem,

Industrial

ness

distribution

averted

and

Puget is through doing busi¬

follows

the

-Wl

the Company's selling
eliminated.

Pope

highest order of statesmanship

its

gion will be provided;

to the City's

That

difficult than

Practically speaking,

has

power

means

to meet

Republican in the White

House.

complex

•

the

proper

see

Public

either

would be

without

de¬

but there presently

ists

case

achieve'

cannot

and

concerned;

responsibility

areas,

boils down then to

future

are

government

the

systems.
It

far

velopments

gion of

production field in this

region

than would otherwise be the case;
and it would put the City at a

Pacific

the

today is that of assuring this

customers

power

that

destiny with the red lights
power shortage holding up

government
has
forced
private enterprise out of the

it would mean that the
paid through the nose
because of higher electric rates

some¬

"bright future."

Allan

confronting the Pacific Northwest

That

supply;

George W. Bovenizer

its progress.

in the United

power

States;

short

shortage

power

greatest potential hydro-

electric

come

obvious

Northwest

region which has

Wood

proper

critical
in

painful

and

of this "dark hour of crisis"

have to tell you:

the

increasing money costs,
the height of folly. It
would cause an appalling waste of
now

its

and

how will

really tragic
to

exists

materials

is
me

That

with

critical

trimmed"

been

Orrin

"lights dimmed."

way you

would

cus¬

look at it, a con¬
tinuance of the building of dupli¬
cate facilities at present day soar¬
ing prices for labor and materials,
and

things for them, and
private power has been victimized
by
this
trend.
Its
operations

cost.

Puget's

not
was

by the people, who over
period of years, have been de¬

and

of the

care

did

This

manding that government do

and

service

The

that I

atmosphere.

done
a

Light can intelli¬
economically plan a
future program which will assure
the people of adequate distribu¬
me

emphasize

create the

the City. In the present state
uncertainty, it is not clear to

gently

company's distri¬

throughout the
bution

electrical

of my

Vaults, feeder lines and the like

crease

their

blown fuses and short circuits but

that

immediate

grossly inadequate

are

care

existing situation is

would

our

intolerable and impossible one

buying

and

We do not want

quirements.

deliv¬

death sentence.

not

were

1931-32

1934

ing and find that distribution fa¬
cilities

from Puget's standpoint, it should
also be an extremely difficult one
of

PAST PRESIDENTS
1935-36

sorry that the atmosphere
discussion today, electrical¬
ly speaking, has been full of static,

under

While

for

53,

customers to wake up some morn¬

This cannot be done when

you are

if our electric
increasing, no new
capital would be needed annually
for enlarged facilities and there
growing

load

not in ,1952, but right

demands it:

growing electric utility, must

plans
and
commitments
years ahead especially under ex¬
isting
conditions
when
needed
equipment and material can only

(2649)

it, but because the public interest

disadvantage from the standpoint
program and in the interests of' of future industrial
development.
national security.
Substantial savings could be ef¬
fected by a merger of the two
Seattle Situation
Now not only do we have a re¬

CHRONICLE

This is not because Puget wants

make

FINANCIAL

year,

now.

back.

economic

the

to put millions of dollars into
situation where there is no as¬

ng
a

govern¬

ment policy, procedure and ad¬
ministration with a maximum of

COMMERCIAL

KANSAS

MILWAUKEE
CITY

MINNEAPOLIS

FLINT

PEORIA

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•

Volume 168

,In the real estate business for

ous,
,

standard
margins
usually established

example,
profit
the

THE

Number 4762

are

commission

The.

trade.

of
in

issues

and

great

deal

selling group business is done for
2/sth. Why should an investment
dealer be expected to make only
$1.25 before tax for raising $1,000
for

corporation?,.
; v; •
In this connection it may be in¬

;

teresting to

discuss the time of
day at which bids are scheduled

opened. It has been

gen¬

eral custom to open bids at 12:00
noon.

Many persons in the se¬
curity business do not realize how

this

all

about

came

and

perhaps
it would be well to state
just how
this practice originated.
When public bidding on munic¬

ipal bonds first started the fol¬
lowing procedure was adopted.
The

first

step

electorate

the

regularly

proposal

vote on the
the bonds for

issue

specific

some

have

was

bonds

After that

purpose.

engraved
immediate

were

made

and

that

day

ready for
de¬
livery. Next the issue was adver¬
tised for public bidding on a cer¬
tain

date.

the

bankers

the

steps

noon

would

outside

assemble

the

City

Hall
with their certified checks ready
to cover the

full

bid.

proposed

and his close

the

bundle

he would
of

the

est

bonds

out

came

Each

under

that

his

was

sale

take

then

now

banker

state

the

would

announce

publicly
was

mayor

descending the steps

bonds

place.

The

associates

Before

arm.

the

building on their way to
that official would carry

lunch,
the

of their

amount

When

what

amount

prepared to bid for the bonds.
mayor would take the high¬
check, after which he would

hand the whole bond issue to the

method

and

has

trust

accounts..

Years

ago

banks Used to buy "most of their
securities

from men' whom they
recognized as experts, - men of
long experience and wide knowl¬
edge
of
mortgage
indentures,
traffic
If

density and earnings ratios.

salesman had

block of bonds

all

at
new

placing orders for se¬
- gradually
become
adopted by a number of banks
and trust companies. This inno¬
vation is generally referred to as
"directed business." The practice
has developed in connection with
the struggle to get deposits, loans

and

does

•

the

ment

will

that

his

orders.

run,

broad

about

procedure

antiquated

automobile

and

a
a

impart

anyhow. Regardless of their de¬
sire to get in new accounts, banks
may eventually find that the old
fashioned policy of cooperating
with

investment

salesmen

the

and personal

ability not only are
of some highly de¬

apt to know
in

investment

many

situations

but

salesman

institution
mation

call

with

bank

are able to point
objections to an in¬

which

vestment

buyer from

out

would

making
have

the

save

what

might

been

serious

these

certain

days when

writing firm
issue

under¬

to put out

prepares

securities, natu¬
bond, al¬
though he actually had none of rally every effort is made to
them on hand for sale. Being con¬
frame the prospectus so as to give
vinced of the desirability of the
as much favorable information as
purchase, the buyer would suggest
that the salesman's firm quietly possible.
At the same time the
accumulate, for example, a half law requires that any unfavor¬
million
the

block

the
was

bonds

when

and

assembled to offer

new

writers

indications

Lawyers

order

were

rarely abrogated. Nowdays, how¬
ever,
another factor enters the
picture. The salesman is apt to
discover, after furnishing all the
necessary
on

ing

knowledge and figures

investment that the result¬

order

some

has

been

directed

other broker who has

deposit

has

his

dossier

the

trust

loan,

papers

must

assist

clearly

underwriter

and

mistakes.

any

the

furnish

the

"Office

trade

try to protect against
law

suits

the

that

investment should result in

that

has

information

relations, competition,

ance

pro

forma figures

is to

furnish

cus¬

information what¬

soever

com¬

except that which is to be
in

the

Conse¬

prospectus.

quently it is tacitly admitted that
data in the office

any

bal¬

one

found

parisons with other similar invest¬
ments,

tomer with any

sheets, income accounts and

memoran-

(

dum, but not in the prospectus,
must not be passed

estimates of future operations. The

(Continued

along to

on page

cus-

56)

Sills, Minton

the

Company

INCORPORATED

loss
Members Chicago Stock Exchange

customer. Consequently many

facts

the prospectus unless they would

ployees. Now it says very clear¬
ly, at the start of each prospectus

issuing

This paper is apt to

valuable

future

any

event

for

entitled

Memorandum"

developed.
contain

device

Also they

the

particular piece of business.

the

favorable

information not to be found in the

from

issuer

undoubtedly receives

actually

mailed

the

account

name

pleasant surprise but it is doubt¬
if

order

it to

shown to anyone outside
underwriters immediate em¬

even

stated.

preparing

making

and

figures

are

prospects and pro

that

circumstances

and attempt to protect the

withstand

ful

Hayes

office

for

Office Memorandum

is clearly marked that it is
use only and under no

paper

The

Henry

able factors known to the under¬

them to the customer. Such verbal
of

Trowbridge Callaway

be mentioned.

prospectus

infor¬

complete

Ferries

eluded.
Only
the
unfavorable
competitive conditions are apt to

quite usual for

cases

serious

mistake.

order.

Henry

best. These men, through contacts
with their customers, experience

tions of

now-

leather dash board would be

experience

their
situation
these is
reason to believe that they prob¬
ably would not receive the order

would be rewarded with

Bidding Antiquated

above

Actually it

turn

was

1927-28

work

hesitant

knowledge, experience and ability
Moreover it

1929-30

that way
because invest¬

always

long

out

chance

accounts

knowledge of a choice
to
some
buyer where

sions, advantages and disadvan¬
tages of the security, there was
excellent

trust

PAST PRESIDENTS

and

men

sirable

them

future

not

actually understood and could
explain all of the figures, provi¬

1949

recently

curities

send

That broker

Public

days

less

IBA

rely on the re¬
cipient to give them first chance

Office Memos, Remedies
or

(2651)

1930-31

it believes that salesmen

customers

Directed Business, Prospectus,

CHRONICLE

policy of directing business
beneficial to the bank

will

III

FINANCIAL

may seem

because
PART

This

which the investment is intended.

successful bidder.

The

special advantage over others
placing orders for the new

securities.

for

placing a mortgage loan is regu¬
larly stated in many States and
averages about 1%. Most public
bidding underwritings are done
today for an average gross profit
of about 0.5% ($5 per $1,000) on
bond

any

COMMERCIAL

earnings

favorable data

competitors

suit.

law

209 SOUTH LA SALLE STREET

CHICAGO 4

Future

forma calcula¬

DEarborn

2-1421

Tele. CG 864

shunned and

are

left out of

the

position of
not

usually

in-

the expense

of doing the business at noon is
often about double what it should
bev Business

Middle West
luncheon
12

in the East and

are

apt to be out at

most any time

not

catch

difficult

between

This

o'clock.

and

makes

men

only

buyer in his office between these
hours

also

but

makes

Investment Dealers and

the

hard

committees to¬
Duplication of telephone
calls, undelivered messages, over¬
burdening of long distance lines
and other exasperating delays are
frequent.- Sometimes as many as
three issues are up for bidding at
approximately the same time, all

Cljamtrr ^rruritira (Lmntpamj

Underwriters

MUNICIPAL COUNTY

investment

get'

AND

SCHOOL BONDS

gether.

which

adds

Some institutions
with

the

are

calls

telephone

confusion.

CHICAGO

Indianapolis Bond and
Share

:«

Corporation

Telephone

RAndolph 6-3900

Tenth Floor

Teletype CG 540

129 EAST MARKET ST.

39 South La Salle Street

INDIANAPOLIS 6, IND.

swamped

that

every

available trunk line and member

the

listed

buying department is
to

rush.

the

handle

en¬

Some¬

times the deluge of sales effort is

that

severe

all

temporarily

•the

interim

calls

have

refused and in
entirely
unex¬

KETCHAM & NONGARD

pected and choice offering of out¬
standing securities is apt to be

Investment Securities

missed.

It would seem

that if bids were
opened at 10:00 a.m. or'2:00 p.m.
it would help to remove some of
•the

105 West Adams St., Chicago

objections
to
the
present
practice. The really ideal time
seem to be at 8:30 p.m. At

MUNICIPAL

•that time all stock exchanges and

3, Illinois

BONDS

would

business firms
out

the

bankers

are

United

and

tives could

States.

corporation

Underwriters and Dealers

closed through¬
Most
execu¬

Davenport, Iowa

—

Chicago, 111.

BONDS

conveniently at¬

STOCKS

•

tend auctions of securities at that
time

could leave their
business, have dinner
and then be ready for the meet¬
ing at which the bids would be
opened. Moreover there would be
plenty of time to consider bids,
terms and
offering prices, send
as

places

they

out wires and have

Distributors

■

MUNICIPAL BONDS

REVENUE BONDS

•

and

IOWA-ILLINOIS MUNICIPALS and GENERAL MARKETS

We invite your

offerings
Teletype:

Telephone:
DEarborn

CG 385

2-6363

everything in

shape for the sale the next

ing;

Underwriters

buyers

morn¬

would have

M ili'fli r-i.-Li

*.*

*•*.#*

ft.

*%>».*

j*r.

*•

.mt

<%r>

COMMERCIAL

THE

(2652)

A Revision of the SEC Laws Needed
page 55)

the

creation

actually

apt

are

widely

at this point

Now

it should be

made clear that there could be no

valid

reason

preparation

for

objecting to the
of. an office memo¬
trouble

The

randum.

that

actually is unlawful under present

regulations.
Such
papers
are
very
.useful and often contain
valuable
information, but they
really are forbidden. An under¬
writing firm may have been ac¬
tively conducting a high-grade
business for many years and have
an
excellent reputation for hon¬
esty and fair business dealing, but
the law does not take any of that
into account.
It does not give the
underwriter the same leeway as is
commonly taken by manufacture
ers, department stores, insurance
concerns or almost any other type
of enterprise that has been the
backbone of building up American
business to its supreme status in
the world of today. Consequently,
it

for

apparent that there is need

change in this regard.

quently its usefulness as a means
preventing losses to investors

from these causes has never been
tested.
Certainly it has not been
particularly successful in prevent¬
ing the issue of securities which
later declined drastically in price
on the open market.
All restric¬
tions on the raising of capital for
corporations
of
unquestionable
standing should be so modified as
to present a minimum of interfer¬
ence
with their right to solicit

funds

Review of
is

their

has

developed entirely too
control

bureaucratic

much

There

needs.

over

zens
a

the

order

make

start

provide a basis for discussion of
changes in the Securities Acts the
following procedure is suggested
for consideration by members of
the investment profession, bank¬
ers, members of Congress and all
is

suggested that a commis¬
would be appointed by the

for

sion should preclude the

and

the

Securities

1934

also

Exchange Act of

should be

real
or

drastic

truly

decline

severe

been

never

frame

depression since

for changes in
Qualifications

proposals

the Securities Acts.

securities

used

ities.

large in¬

It is not regarded as neces¬

sary

home of every citizen so that

The duties of the

concerns.

mission should
and

include

recommendation

the

com¬

series

qualifications for new issues of
securities
which, if met, would
exempt

corporation

obligation

from

prepared

order

cover some

with

they

Neither

sometimes

dis¬

possible irregularity in

the

conduct

our

ing subjected to the expense and
delays now required under pres¬

economy.

vital

CURTIS

TER

part of

KUILE.

appointment to this commis¬

any

men

inclusion

but the most experienced

in the investment field.

would

prevent

This

appointment

the

Supervision of security Dec. 22, ly4«,
trading should be returned to the New York City, N. Y.

York

Dealers,

the-counter
York

dealers

ences

between

Stock

Clearing

business

resulted

area

the

from

the

are

New

ties

Corporation,

procedure

The

York

New

the

window

committee

and New Jersey)

National

tive

District

No.

Association

the National

delivery

Nov.

velopes

Associa¬

and

the

has

over-

proven

the

average

400

over

en¬

day delivered through
delivery system and

central

there is every

likelihood that the
present system will expand.

with

started

participation

been

Se¬

12:30

delivers

Clearing

Briefly deliveries of over-the-

nine over-the-counter dealers and

counter securities are made about

clearing agents for over-the-coun¬

Corporation

packages
consigned to his

which have been

firm by other dealers.
Fees

for

system

are

the
delivery
service charge
of
$25 per month, plus 5c for
each
envelope
assessed
against
use

flat

sender

and

against

dealers

60 dealers.

over

agents

139

possible

receiver.

combination of receipts or
the
dealer
may
find
Deliveries

are

keeping

with the

their

for

over

who

and

the

number

dealers

who

have

participated in the central
delivery system declare it has re¬

sulted

considerable

for them and greater
as

messenger

saving
convenience,

service

connec¬

tion with the conventional method
of
delivery of
securities
is
a

troublesome problem to dealers in
the New York area.

Wood, Walker & Co.
To Admit Two fo Firm
Wood, Walker & Co., 63 Walker
City, members

Street, New York

firms

which

the

striction

the

dealer

whom

consigned.

which

placed

the

sender is-that deliveries shall not

already

were

are

GOVERNMENT,

Exchange member, and John T.
McClintock, Jr., to partnership on
Mr. McAlpin has been ac- {
tive

individual floor broker;

as an

McClintock

Mr.

formerly

was

H. L.

Froy Joins

Abraham & Co. Staff
H. L. Froy joined Abraham 8c,
Co.,
120 Broadway, New
York
City, members of the New York

Stock

Exchange, and will be in
charge of the firm's foreign de¬
partment. Mr. Froy has been con¬
nected with P. N. Kemp-Gee &
Co., members of the London Stock
many years.

Appointed to

George

Kneass, Vice-Presi¬
Philadelphia National
Bank, has been appointed Chair¬

dent of the

SHAUGHNESSY 8c COMPANY, INC.

man

of the Governmental Securi¬

ties Committee of the

Investment Securities

Investment

Bankers Association.

Investment Department

Drexel

Admit

PHILADELPHIA, PA.—William

NATIONAL BANK

Machold

F.
FIRST

NATIONAL

ST.

PAUL,

BANK

will

admitted

MINNESOTA

New York and

J. & W.
J.

Philadelphia Stock
Jan. 1.

Seligman

to Admit

Seligman

& Co., 65
Broadway, New York City, mem¬

Charles C. Cook

bers of the New York

change,

Greenman & Cook, inc.

will

Stetson

Ex¬

partnership

Jan. 1.

New
New

York

admit

Investment Securities

Stock

James

partnership
149

Exchange, will
Riley, Jr., to

Jan. 1.

FIRST NATIONAL BANK BUILDING
SAINT

PAUL

Buckley in New Location

1, MINNESOTA

Buckley
New

Members of Minneapolis-St, Paul Stock

Stock

Charles

Vilas & Hickey, 49 Wall Street,
York City, members of the

Harold E. Wood & Company

admit

Vilas & Hickey to Admit

INVESTMENT SECURITIES

Teletype—ST

partnership in Drexel & Co., 1500
Walnut Street,
members of the

BUILDING

Exchanges

ST. PAUL 1, MINNESOTA

Jan. 1.

IBACommiHee

of Saint Paul, Minnesota

of the New York Stock Exchange,
will admit Allan H. McAlpin, Jr.,

pre¬

Envelopes
may contain more than one de¬
livery providing they are going to
the same consignee. The only re¬
they

counter

participate

are

seller,
who places them in a sealed en¬
velope bearing the clearing house

Other

participate

clients

Deliveries of securities

STATE AND MUNICIPAL BONDS

scale

fees.

Kneass

Telephone—Cedar 7441

excess

charged for additional¬

Exchange, for

Almon A. Greenman

charge of $50 a month
that, for such a mini¬
500 envelopes may be re¬

made

partner in John H. Lewis & Co. '"•* \

follows:

pared at the office of the

plan to make Central Delivery to

FIRST

envelope

per

the

houses

behalf

THE

p.m.

securi¬

receives

over-

successful. Even during the dull
periods which Wall Street has ex¬
perienced since Nov. 1 there has

Dealers.

clearance

U. S.

and

a.m.

of 500

the-counter dealers became effec¬

the

182

9:00

messenger

New York banks.

confer¬

Cashiers

clears for
Teletype ST P

convenient.

now

participating, but ac¬
tually the number of firms bene¬
fiting from this plan is much
greater. One of the clearing agents

1, MINN.

deliveries

making deliveries of over-thecounter securities through the central
delivery system. of the New
York Stock Clearing Corporation, connected with the New Yorl
Stock Exchange, it is announced^
by George E. Rieber, Secretary of members of the New York ClearDistrict No. 13 of the National ing
Corporation, and to receive
Association of Securities Dealers, deliveries from them
through the
Inc.
The making of the central same channels.
They may also
delivery system available to over- make deliveries to 13 participating

ter

BUILDING

between

mum

Nov. 1 by New York Stock

securities dealers, members of

Securities

Central

BANK

Repeated
deliveries
may
be
through the central system

made

Over-the-counter

New

not

Clearing

ceived and delivered each month

the-counter dealers considerable expense, in addition to convenience

to the

Corporation.

in any

Clearing Corporation, reported successful, saving participating

tion

and

concern

minimum

Through N. Y. Stock Exchange

curities

SAINT PAUL

immediate

assessed

Over-the-Coiinfer Securities Now Cleared
Centra! delivery system, established

precaution

ance

(New York

Caldwell Phillips Co.

more than $50,000 per
envelope.
This dollar limitation
was imposed
mainly as an insur¬

the

laws.

ent

aggregate

the

apprehend

occasional criminal.

ness

the

registering

police

operations of the investment busi¬

government agency and be¬

some

the

is it necessary to examine, inter¬
fere with and delay the orderly

study

that

may

the

System

prevent
abuses to the orderly conduct of
the business of trading in secur¬

concerns and three large
companies, also three senior
officers
of
leading
investment

Committee

Bell

could

care

Section, Association
of Stock Exchange Firms, and the
Secretary of the Uniform Practice

NATIONAL

stock

surance

the

FIRST

various

trust

and

curities. The whole Securities Act

reviewed. There has

the

exchanges where experience and

to include the invest¬

seem

ment officers from three

ex¬

President of the United States to

1933

would

Thursday, December 23, 1948

executives

fied by years of active investment

panding powers of government
agencies in this regard.

sion

college professors
thoroughly quali¬

not

others

and the time is at hand when

halt should be called

complete
revision of the law relating to the
issue, purchase and sale of se¬

for

need

politicians,

and

CHRONICLE

the business of United States citi¬

those interested.

Needed

Laws

for

gradually

There

SEC. Conse¬

the

circulated.

FINANCIAL

training. An excellent commission

{(Continued from
tomers. Nevertheless these papers

Stock Exchange, andl
Securities Corporation,

Buckley

Exchange

Brothers, members

York

the

announce

New
'

way.
*

•

York
1

-i

removal

offices
i*'

i>.„

to
v

120
r

»"•

their

Broad¬
•*

Volume 168

COMMERCIAL

THE

Number 4762

and

New

Capital and Equities Market
(Continued from page 3)

ing with all spending business
improvement and extension which
will

during

the fiscal

year

1948 and 1949 four billion dollars
last year. After election, ex¬
penditures of the country's de¬
over

fenses

must

expected to rise
President
Truman

substantialy.
recently
tures
in

sugegsted that
defense

the

fiscal

and

expendi¬

stockpiling
be

1949-1950

year

held to $15 billion.
The

inflationary features of

present
sented

our

spending is best repre¬
by the peak years—1921-

the

national
economy
of continued expendi¬
tures for plant expansion and re¬
duction of cost

differences

Expenditures (in millions)—

Year

Nat. Defense

Other

1921

1,800

1922—-

900

1923—

700

We will

war

The

$12,700
18,500
5,100

sult

This

because

facilities

increased

plant which must

and employ

use

spent

$400
unproductive

for

put.

Accordingly, a billion dollars
thus spent is multiplied by 2, 3
andv4 times in amount of produc¬

same

sum

plant maintenance. The gov¬

ernment for such purposes

labor and profit; while the
money
obtained
through
taxes is only spent once here or
abroad which, so to speak, does
not

bring in its train of doubling
or tripling of productivity of the
original amount invested.
Mystery Market

gargantuan

spends

amount

abroad,
which is likely to become rather
larger " than smaller in the near
future.

will

while
in

ties

thus

have

other

had

President
Union

Equity

Truman

address

Financing

his

State

observed

far

not

from

prewar

averages,

conflicting

and

were

from

confusing
the

over

May,

1945

pacity

the

need

for

growing

and

prove

tive

expand

facilities

produc¬

our

the

over

few

but this is only the begin¬

years,

Federal

down
the

stock

President

Truman

recognized

extreme

in the
production.

corporations secured $4.5 billion
capital in 1947 (the highest since
1927/28/29) $3.5 billion in 1946
and

economists,

bull

and

$1.2 billion in 1945; in 1947
corporations obtained $3.3
by bonds and notes and
secured $1.2 billion in equity capi¬
tal. (This is not expected to be

where
and

since

sued
was

chartists and
and

then,

bear

still

This

1929

1925-26

1924-25

unexpected

and

new

curious

seems

tion

including

after

three

President Truman
of

that

of Democratic Administra¬
years

and

two

years

Republican Congress that we
have
suddenly felt that

should

"evil

days are upon us."

Mr. A. Wilfred

the

May, writing in

"Commercial

Financial

and

Chronicle", speaks of the "desper¬
PIfny Jewell

ate situation in which the present

day investor

well

himself"

forth

set

publications and systems for
achieving market success which

many

are

in vogue. This is because
as well as

now

the multifarious events

psychology

15 to 2(F million
speculators
can

Dysarl

the

pursuing

methods

doubtful

Thomas

Ray Morrit

speculator

Stock

Exchange of which approxi¬
mately three-quarters of 1% were

Jones Industrial Average
1948

was

traded in and

1948

slightly than 99J/4%
did not change hands in, the nine
sessions following the election.
A
widely published estimate

at 57.45.
a

Sept. 27,
March,
175.99, the rails similarly
From there they reached
at

low

since

high of 190.19 in the Dow-Jones
average and the rails

Industrial

"polled"

Market

The

guaged.

nor

for

Equities

been

underrated

Reserve

sarily

by the Federal
in its unneces¬
imposed restrictions

System

severe

the stock market.

The

raise

of margins to 75%
formerly 50% has im¬
paired the availability of equity
purchases and this raise to 75%
which

did

was

not;

mean

increase of 50%

similarly of 62.24.

tion Day, Nov. 2 (about one point
lower in the Industrial average

most

equity fi¬
nancing that has been increasing
in importance since the war has
importance

claimed that the market appraisal
of American industry
dropped $6
billion in these nine sessions,

investors
neither

$20 for

stock traded

dicate

every

al¬

worth

in. This does not in¬

wholesale repudiation

the

amount

loaned

and 2i/2

This
up

was

fairly

to the Elec¬

points lower in the Rail¬
These Dow-Jones

road average).

Averages are now (Nov. 22) about
where they were at the low of

disturbance

Sept. 27 except that the Industrial
average is one point above, and
the
Rail
average
is about 1%

greatly exaggerated
by reason of thin markets and a
great reduction of open buyers
and sellers

the N. Y. Stock Ex¬

change; this should be deducible
from

what

has

been

above

set

forth.

Mr. Dewey was nominated June
one of 300%. Cash required is
three-quarters of the amount pur¬ 24; Mr. Truman July 5. The Dowand

maintained

stability of the present demo¬
cratic incumbency but rather a

but

chased

well

points
below
the
former low
point. These movements including
the crash of 15.44 points from Nov.
3 to Nov. 18 as above discussed
could lend itself to the theory that
the advance from Sept. 27 to elec-

(Continued on page 58)

one-

quarter or three to one. Formerly,
50% mean one-half cash and onehalf loaned

one

one.

This has

thinned the market
the crash of 15.44
points in the Dow-Jones average

market

evidenced by

from the opening of Nov. 3 to
close

con¬

lows

were

time

C. S. Ashmun Company

15,15(0,000
in

traded

the

November,

INVESTMENT SECURITIES

the

N. Y. Stock

Exchange (the sharp¬

est

since

break

1946 of 22

purchasers

18th

which

together

new

the

during

had

are

were seen.

and

Labor

points). At

price of $20

per

Day

average

share this

repre¬
1026

static
a

investment

dither

over

optimism

over

have

the last two

recurrent

and

been

waves

pessimism,

peak

sented

turnover of

This would

of stock

mean

were

that

(100

listed

LINE

BUILDING

one

point

Bell

Teletype MP

I'll

2,004,000,-

are
on

NATIONAL-SOO

MINNEAPOLIS 2, MINN.

$20,000,000

traded at

depreciation. There

FIRST

$303,000,000.

the

was

securities

when

Index

have

markets

peaks

Investors

kept in

1948.)

down

210-168)

equity securities who do not rely

years

amount

went

simultaneously

new

these

highest

year

Average

were

Since

billion

went

urgency

additional

Some 412,000 large and important

equaled

Index

(159 to 185): No wonder

analysts

while

while the Federal Reserve

fused!

the

PAST PRESIDENTS

1926-27

undoubtedly

the need for increased investment

goal

the

market

(Dow-Jones

in equities for the capital require¬
ments of our business corporations
and

(Dow-

second

Reserve

225-159):

went up

ning."

two

May,
1947 where it can be fairly stated
that during the first of these years

years

the stock market went up
Jones Averages
165-210)

posed

years

notwithstanding the in¬

termediate gyrations. Not least of

these

is¬

billion

issued in bonds and notes and

$6 billion through equity capital.
Thus,

the

growing

capital funds is indicated by the
figures

submitted

"below

for

need

of-the

GOVERNMENT,
MUNICIPAL BONDS

STATE AND

Allison-Williams Company

Gross National Product (total out¬

put at market price of everything

made,

and

rendered)

capital

plus

grown,

with

of dollars—1948

NORTHWESTERN

(in

BANK

BUILDING

MINNEAPOLIS 2

services

accompanying

expenditures

Bell

System Teletype MP

Investment
163

THE FIRST NATIONAL BANK

estimated):

(In billions of dollars)

Capital

1945—

9.2

204

14.7

228

17.8

,:!248

above

*19.0

Piper, Jaffray & Hopwood
Established

table

indicates

the

Kalman &

lion

expenditures
have

prove

im¬

almost
in

seven

wonder

the

predicted
at

which

was

COMMERCIAL PAPER

end

Members

was
New

preceding.

8,000,000

Truman

the

much

years

ployed,

and

Investment Securities

production in the last three

years;

spent

STOCKS—BONDS—GRAIN

bil¬

expended to

been

$50

over

1895

Company, Inc.

significance of capital funds and
that

•

'Estimated.

The

5.2

213

1948

4.5"

211

1947

•

16.1

193

1946

8.2

160

1944—

6.5

125

1943.

•

5.2

100

1942

Minneapolis, Minnesota

Expenditures

1941

■

Product

Years—

1939

1940

Department

billions

Gross Nat'l

take

Endicott
unem¬

President
the

war

place

problems.

Congress on
Jan. 7, 1948, stated: "We are to¬
day far short of the industry ca¬
future. At least $50 billion should
be invested by industry to im¬

that

terrific rise

important factors, equi¬

are

movements

Importance

has

finds

tion,

year-of 1919!

IBA

inflation

deflation, depression and pros¬
perity, "boom or bust", peace or
war and now the unexpected and
hardly
to
be
anticipated
new

and

additional labor and produces ad¬

3,300

indus¬

different

and

the

capital through equity
financing does not increase the
burden of debt. Also/because such
expenditures by corporations re¬

processes has left a great vacuum
in our great industrial machine

mean

prosperity

securing

3,400

spent for the

tremendous

billion

thus be spending over

three times what

peak

Total

$1,900
4,100
3,300
2,500
2,600

1918_— $10,800
1919—__
14,400

thus

can

between

deflation.

and

concurrently, viz.:

(2653)

Democratic Administration which

The importance on our

ditional goods, all of which in turn
add to national income and out¬

1923.
Fiscal

and

Spring of 1946 failed to ma¬

terialize.

bottoms

tries

CHRONICLE

FINANCIAL

Building

SAINT PAUL 1

York

Stock

Exchange

and

other

principal Exchanges

McKnight Building
MINNEAPOLIS 1
ST. PAUL

MINNEAPOLIS

GREAT

FALLS

(2654)

THE

COMMERCIAL

New Capital and Equities Market
tion discounted the expected elec¬
tion
of Mr.
Dewey which was

itself—are

similar comparisons at the bottom

current 46%, in prewar 1939

of the bear markets which

were

1942

stocks

common

really

substatially cancelled with his de¬

cheap in terms of commodities,
production, income, value of en¬

feat.

far

1938.

and

ended

Again stocks in Dow-Jones In¬

other

dustrial averages reached a
163.12,

been violated. The stock list

the N.
in

tion

how

founded

serious

the basic

investors

allow

spread of return over bonds is
exceedingly wide as evidenced.

disturbance

Stocks

while

For

the

forth of national

CENT

production have

RISE

SINCE

100% to

500%!

% Incr.

Nov. '48

Since '47

535

___

280

circulation___n_^_l__,
income

400

300

175

Bank

deposits

130

147

100

fl76

f 170

130

125

Wholesale

Weekly

building

commodity

prices

of factory workers

wages

$Railroad stocks (Dow Jones)
Utility stocks
416

(Dow

composite

Poor's)

stocks
_

^'Indicates

%
Ya

1939

due

the

'
—

■mm

—

'mm-

and

7 times

cific

and

terms

purchases by actual labor. In fact,
the essence of America's superior¬
ity is its dominant position in pro¬
duction

value

per

notwithstanding

.hour of .labor,
high priced

our

labor and low evalued dollar.

Consider the comparative work

sian

farmer.

worker

given time. An

than

Rus¬

American

steel

much

steel

produces

peace or war.

other

trol

countries, which makes liv¬
ing costs high and wages low in
terms

worker
than

actual

value

product, not
United

States

adds

much

factory

average

the

since

only receive back less

can

the

labor

the

The

or more.

worker

buy

the

Any. party in

con¬

must
seriously
consider
changing these basic factors and
thus threatening the high return
of the labors our prosperity and
our

the

much
world

again to

senior

needed
over

save

—-

needed

now

the world from the

advancing hordes of communism.
We may consider further whether
they are attractive in terms of

lish worker has to labor 9 hours,
and
in Italy 24 hours.
In the

power

United States it takes
hour to

make

one

cotton

Germany.
into an aver¬

United States

prewar

Sixty work-hours
age radio made in

factory; 171 in Great Britain; 262
in Sweden.

miner,

A United States coal

using

American

terms

In Terms of

methods

tor

are

earning

Tabulation

parisons

Dividends

below

shows

com¬

of just after V-J Day,

at the

cal)

subsequent (almost identi¬
three bottoms of 1946-1947,

at the

last

1948 low and at the low of

week.

$20.56
18.64
19.44

8.4

173.48
165.39
163.21
163.55
163.12
163.11
92.92
98.95

—

31, 1938

—

;

Also

appended

Buckley Brothers
MEMBERS

New

York

Stock

Curb

Los

Exchange

530 W. 6th

Stock

Exchange

however,
bil¬

1931,

November,

debit balances were $1%

lion

great

still represented a

and

securities with
still owing.

8.4

loans
greater

sarily

16.3

indebtedness

15.3

houses would not be prone

10.50

11.9

*9.4

9.2

row

No estimate of the soundness

comment

without

values

the

low

era

surpluses

570 dollar.

$400,000
investment in plant in 1939, re¬
quires about $1,000,000 today and
this must earn a legitimate re¬
turn in competition with plants
that have depreciation based on
of

cost
omy;

former

deflated

money,

for

needed

these

are

econ¬

auestion

the

over¬

the

question of whether the plant can
duplicated at the capitalized
price.

increase in Dowprice averages of
30% since August, 1939 does

However,

not appear
ket

market

consistent with
of

valuation

the

end

Stock

a mar¬

stocks listed

all

Exchange

1939 of $42
about $66 billion at
present prices, except that the
Dow-Jones average is a selected
list of only 30 stocks. Neverthe¬
less,
a
rough
approximation
would indicate that the duplica¬
August,

billion against

large
Trust

Cleveland
their

15th

Nov.

inventories
the
Co.,
states in
bulletin

this

year:

"Throughout the present infla¬
tionary boom most manufacturers
have sought to avoid the buildingup of top heavy inventories. As
compared with prewar, the cur¬
level

rent

ventories

manufacturers'

of
as

with

line

whole

their

choice

high

of the

investor'

common

by government edict.
The third
(common stocks) are not high and
some 30% above 1939 and
much more than in that

period

is the

and

has

not

only

followed

medium

the

infla¬

tionary trend.
Cash can buy less
than 40% today than in 1939 and,

therefore, it has followed the de¬
flationary trend. The only form of

property,

may

fairly

said

magnificent and over¬ that can be bought at 1939 prices
whelming
array
of established is common stocks.
production that won the war for
It is not believed that the fa¬
Russia,
England
and
ourselves
could not be duplicated for less vorable factors of earnings, divi¬

doqble the present approxi¬

mated

market

value

$66

bil¬

dends, comparative attractiveness
of

yield,

quality

price

and

depleted margins,'
overspeculation.
This includes \our surprising election
j

selling through
or

outside of

of China and \

the imminent danger

which

remain

periences
all

our

With

indicated.

have

turbulent

the

herent

instructure,

processes

present

bust" and fear of
ment

that

cated

every

that

becomes

day, it is small won¬

the

general feeling of
pessimism has oervaded the stock
der

market

for

last

the

,2%

years

during whicl\ period stdeks have
looked

still

and

look

Per¬

dear.

brought about a
speculative neurosis which late
events have heightened.

haps

this

This is

has

not intended

posium for
*in

sym¬

It does mean,

stocks.

common

rampant bull market

however, that the bearish events
over

the last 2% years

have been

overemphasized.
The

following conclusions

justified.

national

lightly

ap¬

•

deeply inset in

being

cannot

and

speedily be eliminated

without disastrous consequence.
That President Truman must be

fully

aware

thereof

will Congress carry
them the
That

Investment Securities

Underwriters—Distributors—Dealers

seem

voted

Private

Wire

System from Coast

to Coast

well

implications involved.

the

present

majority

to be of the "leftist" clan and

against upholding President

Truman's veto of the Taft-Hartley
111

SUTTER

STREET, SAN
Garfield

530 W. 6th

and

closely before

the Senate and the House do not

Primary Trading Markets
FRANCISCO 4

1-4460

Sacramento

Oakland

Act.
That

Street, Los Angeles 14
San

Jose

politics,
"boom and
foreign involve¬
more compli¬

economics,

our

Buckley Securities Corporation

;

but stocks look cheap
when they are dear and they are
dear when they look cheap as ex¬

That inflation is

ELWORTHY & CO.

».

sophisticated

seem

maw

permanent

cosmic position. "

our

may

Russian

the

into

could

paradox,

pear

Street, Los Angeles 14

emerge

(rather from

rosy-hued prospects and glowing
market appreciation), particularly^
since there is an absence of forced

low artificial rate of interest fixed

that

not

from such conditions

following

Investor

the

present situation. /

markets

Bear

paucity

even

our

out

not

volume

grade

ferred stocks,

only

not

has

structure of

inflated

ultimately Asia of a billion people

bonds, pre¬
stocks and
cash.. The first
is on a high
plateau, highest in decades. The
second
(high grade preferreds)
must similarly follow bonds in the

among

worth

1929

existence in

threat to

The Choice

The

and

The

debits.

their

and

in¬

sales."

therefore, is
primary

capitalization which turns

(It was $72 billion October,
1948.)

same

objectives. This test of book value
bears

30,

of plant cer¬

appraisal

tainly in this

book

companies.

sound

our

Most of them have large
and

stocks would be complete

to bor¬

greater sum of money than
difference
between
their

the

lion.

Exchange

Stock

credits

Value

Book

should be neces¬
than
customers'

standing

13.80
10.02
10.66
10.08

Philadelphia Stock Exchange

Angeles

the

It would be interesting to com¬

Nelson.

Terms

common

than

Exchange

credits

customers

the

pute the debits of the brokers rn
1929 on the basis that the out¬

8.9

tion of this

New

available as to What

are

the debit balances or

were

large sums

Times

28, 1942

some

important fac¬
investments.

long-term

figures

Earnings Ratio

1945—:—

Mar.

and in terms of book value.

Dividends

1929, the brokers' loans were
maximum of $8% billion and no
In

deal of outstanding

Annual

9, 1946

"Barron's

Jones

takes 4 hours in Great Britain and
took

dividends,

work-

shirt.

17, 1947
22, 1946

power

pair of
work shoes with the wages of 3 %
hours of work, whereas the Eng¬
can

Earning Power

It must be noted that a

These facts make America's pro¬
duction
the
dominant
note* in

required in other products and in

the

the * 'New
York Stock Exchange houses.

Earnings Rate

16, 1948

Aug. 20,

the

three Russians.

riod

9, 1948

Oct.

coal

basis

imagined with some

$66 billion worth of stocks on
New York Stock Exchange. -

following tabulation tells its own story:

May

million.

cash

near

colossal

earnings for the latest available six months ended
the comparison would be even more favorable were com¬

Mar.

farmer, using American
power nrdriven
equipment,
pro¬
duces 41/2 times

bonds was 2.47% while the yield on the
was 3.23%
with the price average

Dow-Jones

produces

Russian miner in

1929, the Dow Jones industrial

average

for

$230

.approximately

$539%
stocks

are

loans

Their

American

production

This

Indust. Average
mm

of July, 1948.
period which wit¬

much

4.97

tAs

machinery,

than

3.10

9, 1946.

1935-39

However, taking up more spe¬
corriparisons let us make a
comparison in terms of actual spe¬
cific

are

8.07

million and

approximately and the credit
plete third quarter results available; the Industrial average is selling
balances $280 million while the
at as small a ratio to earnings as at any time during the past three
brokers' loans were $730 million.
years and substantially lower than at the 1938 and 1942 market bot¬
This, of course, represented close
toms. The current 8.4 ratio is roughly half of the 163.12 bottom figure
to the end of the deflationary pe¬

reorganization.

5.23

In Terms of

The

showing of the

2.74

On the basis of

of Oct.
mm

expended—1935-39=100

poor

bankruptcy

million.

7 97

•

317; the yield on its list of 40 bonds was 4.85% while

Apr.

money

railroads

Exchange are $579 %
the
credit
balances

1.35

Nov.

1.58

2.63

98.95

industrial

Jones

(Dow Jones)

relationship in

SThis increase since
almost

Industrial stocks

nessed

(Standard

100

Jones)

1.76

2.72

4.08

Barron's TO highest grade

Dow

Nov.

2.68

4.30

its 30 industrial stocks was 2.88%; the yield on United
States Government bonds was then 3.47%.
In May, 1946, the y-ield

157

building-

*New non-residential

4.44

June 30th
—

Today the debit balances of the
of the New York Stock

;

92.92

members

It must be noted that in January,

190

commodity prices

*New residential

2.49

that could be

Deer.

toM

Farm

2.78

163.12

31, 1938-____.

yield

including

years

163.55

Since '47

—

last

New Deal President.

2.92

at 212%.

PRE-WAR

2.81

5.09

163.11

Apr.

such as to
considerable apprecia¬
tion notwithstanding the impact of
certain unfavorable factors with
which we have been faced during
the

Stocks

any

devalued

2 60

5.70

163.21

■

for

years.

present

•2.98

165.39

Mar.

appreciated from

National

set

1946

Spread

bonds

5.79

Barron's

H.ghest-Grade

173.48

20, 1945
28, 1942

its

April '47

Money in

Aug.

stock

other factors therein

1948

1939

Attractive?

Federal debt

16,

17, 1947___
22, 1946—__

average was

all

Yield

May

whole

our

Dow-Jones

Mar.

index is 30% above the prewar of

The important question presents
PER

against the

9, 1948

Oct..

event, their
price for the

the

Yield

Nov.

foreseeable future are

Ind. Average

Nov.

de*.
last

two

our

about the least in¬

elements

economy.

should be.

are or

Common

Are

at present are

flated

well

production? The
present lack of balance in our
economy would be indicated by
the following table which indi¬
cates that $1 can buy more in
stock equities than it can in any¬
thing else and that common stocks

Stock Exchange has
trading range since
Sept., 1946, between these lows
and 194 high. These observations
are intended to
clarify the ques¬
on

been

make

that

87%
.

national plan of

163.21, 165.39 in 1946 and 1947 and
1948
respectively
which
have
never

factors

1938,

will

ly safer than in any former years
relative to margin of earnings and

consuming 80% of earnings,
in

stocks

lows of the

common
below the

dends at the moment are relative¬

terprises, wages and salaries and

and

goods,
cline

two

those

higher, but in 1942, dividends

were

they

In other words, divi¬

67%.

spread were

the yield and

years

(Continued from page 57)

Thursday, December 23, 1948

CHRONICLE

FINANCIAL

the

efforts

deflationary
viewed

with

difficulties

program

set

will

apprehension
a

depression

be
and
can

Volume 168

Number 4762"

easily be brought about by wellmeaning but radical measures.
That
Congress arid president
Truman do not want a. depression
before the Congressional election
,

of 1950
>of
,

the Presidential election

1952,

That the great need for produc¬
tion as an- antiddte to inflation is

equity

capital that-cam expand
imp -re as e production at

.plant,
lower costs and thus reduce prices.
;. That

stocks

common

the

are

'logical vehicle of carrying out, a
^program of supplying equity cap¬
ital which has been denied to-that

part of our economy
peeded it most.
-That

that

stocks,

common

are

has
more

attractive in price, yield, earn¬
ings and underlying value in re¬
lation

any

pur national
cash.

other

production, including
••

That inventories

sales

are

elements

in relation to

COMMERCIAL

THE

course of
the. past three
particularly give

tally effect the national

dinary

affairs

which

years do
not
confirmation of
harmful

deflationary

policies.

that prosperity wins elec¬

aware

tions

is "good politics."

and

'However, there remains ^an im¬
portant factor

■difficult to;

about which* it is

reach.a;depnite con¬

clusion before vthe

new CohgrCsS
"gets into action," namely, what
will the economic policy of /the

new

strongly enforced democratic

administration

involve?

Specifi¬
cally, will: it cautiously analyze
corporate profits in terms of the
labor element it seeks to propit¬
iate by reason of the So-called
.

late

political

"mandate?''

Ac¬

cordingly, further, will it scruti-'
nize prices, profits and wages in

analysis of their

instead of

own

■which does riot spell trouble in the
•event of a temporary slowdown.

This is due to conservative evalu¬
ation of the continuance of our

present prosperity,
That the tremendous demand-

blowing
tion,

•.

from expansion, construc¬

depreciation,

huge

un¬

precedentednational output,

the

adolescent

method

ac¬

continuance

present high

our

degree of prosperity;

prosperity

which is the result of almost two

insufficient

decades-

capital

construction caused

farmers element, increase of our

sion and the most destructive wars

armament

possibly

should maintain

profitable

help

and

program

and

our

China—

vigorous and
for

economy

a * con¬

siderable period of time to come.
That
could

the

Administration

new

through

poor

judgment vi¬

such as anti-trust
($9,522) and furni¬
fixtures ($5,549). If it

and

had

not

been

for

the

history.

end

competition

should

depres¬

All these factors in the

determined

are

open

remain

by free and

which

the

basic

and

'concept

of "our United States" and forms

the

backbone

our

supreme

Education

Sur¬

Committee

Report

Education

The

Committee,
headed by John F. Fennelly of
Glore, Fbrgan & Co., Chicago, re¬
ported a continuation of the pro¬
gram
inaugurated
under
the
Chairmanship of Julien H. Collins,
which

established So

was

success¬

the immediate postwar
years.
The most important ac¬
complishment
during
the
past
year w;as the publication of two
booklets designed to assist mem¬
bers in reducing the rate of turn¬
over
among the young trainees
employed Since the end of the
war. A study of this problem last
year by the Education Committee
fully

revealed

wide variation in the

experience of investment firms.
Thus, it became apparent that the
loss of empoyees was serious only
in the
had

of those firms which

case

failed

adopt methods for

struction classes.
To asist members in the

tion of

new

personnel,

selec¬

booklet

published by the Education
Committee on ,Nov. 1, 1948, en¬
titled
"Selecting
Investment

was

Bankers—A Manual for Scientifc

Selection."

Personnel

ual, with
sheets, is
ber

This

man¬

complete set of work
available to mem¬

now
firms at

price

to non-members at a

of $4 and
price of $5.

1948-1949

Committee Chairmen,

Chairmen of
Committees for

The following are

ensuing

Aviation

year:

Securities:

■

William

Smith, Barney

A*rM. Burden,

.
*

Eastern

As of Aug.

Pennsylvania

•.

Class

& Co., Philadelphia.

ney

Class B

277

237

Class C.__

251

702

Caldwell

Harriman

Ripley
porated, Chicago.

Co.,

Incor¬

Drexel

Francis

Finance:

Co.,

Phila¬

Knight,

and Trust

ton,

Company, Chicago.

State

Stock

Hugh
New

Corbett,

Municipal

Forgan

New

Council:

William H. Morton, W. H. Morton
& Co., Incorporated,. New York.

York

Rauscher,

City, members of the
Stock Exchange, an¬
that J. Vincent Hurley has

nounce

become

associated

their %New

with

them

was

trading depart¬
formerly in the
department of
Lazard

trading

Freres & Co.

Pierce & Co., Inc., Dallas.
Public

Johnson,

Education:

The

Joseph T.
Milwaukee Com¬

Milwaukee

Public

Robert

r v

Mason,

Wertheim & Co. to Admit
Herbert

Securities:

Central Republic

Company, New York.

Goldstone will be¬

partner in Wertheim &
Co., 120 Broadway, New York
City, members of the New York
Stock Exchange, on Jan. 3.
come

Registered

branch

Howard M. Biscoe, Jr., Whiting,
& Stubbs, Boston; Philip
Stearns, Estabrook & Co., Bos¬

ton.
New York

S. Linen, The Chase Na¬

tional Bank of the City of New
York; Reginald W. Pressprich, Jr.,
W.

Pressprich

Co., New
York; Wickliffe Shreve, Hayden,
Stone & Co., New York.
Northern

Nine

Ohio

The

V'"'

GENERAL

THE

OBLIGATIONS

of Gover¬
THE

SC;;:

STATE

CALIFORNIA

;
AND

ITS

POLITICAL

SUBDIVISIONS

Committee, under
Chairmanship of Francis M.
Knight of the Continental Illi¬

the

National

Bank

and

Trust

Chicago,
reported
that
during the fiscal year which closed
Aug. 31, 1948, the Association's
income

amounted

$187,-

expenditures

Total

were

leaving

$193,508,

operating
$5,880, against a budg¬
eted deficit of $17,529 authorized
by the Board of Governors. For
the previous fiscal year, total in¬
an

deficit of

Southeastern

K. Dunn, Robert Gar¬

Sons, Baltimore.

come

Harry H. White, White, Hattier
& Sainford, New

Orleans.

Estes

ing in

crease

in income resulted in part

plus
tions

Co.,

net loss of 15 in the ac¬
during the year.
The membership of the Associa¬
tion at the end of the past two
fiscal years was reported as fol¬
a

the

whereas

ing the
Membership

$2,098

for

the

1946

convention,

1947

loss of

opera¬

convention

re¬

INVESTMENT

DEPARTMENT

Hattk of America
NATIONAL

£^SINOS

ASSOCIATION

$343. Exclud¬

convention

1947-48

item, income
slightly larger,

was

than for 1946-47.

The increase of

$40,006 in expenses

was due to in¬
operation (ap¬

tive membership

creased

lows:

proximately $12,370); to increased
activity in certain fields of As¬
sociation
work
(approximately
$12,565); and to certain extraor-

BOND

was a sur¬

from

the

sulted in

The Membership Committee re¬

ex¬

$153,502, result¬
$35,551 surplus. The de¬
were

from the fact that there

Southwestern

Wayne J. Estes,
Inc., Topeka.

$189,054, and total

was

penditures

Southern

ported

con¬

Finance

628.

Columbus.

were

Board

SPECIALIZING

703.

total

Ewing T. Boles, The Ohio Co.,

by the

nors
during this convention. If
they are approved, the member¬
ship of the Association will total

Valley

applicants

new

Co.

Co., Ceveland.

rett &

819

beginning of the new
fiscal year on Sept. 1, member¬
ship losses have totaled eight.

nois

Ohio

Charles B. McDonald, McDonald

Edward

Offices

Since the

sidered

John

853

costs

York

ment.

Oil and Natural Gas Securities:

the

York

New

Incorporated, New York.
Division

Day & Co., 14 Wall Street,

R. L.

W. H: Morton & Co.,

Municipal

issue

Hurley Now With
R. L Day & Go.

Co.,

William

Securities:

this

Inc.,

Mexican Investment: Charles F.

Glore,
Glore,
Chicago.

"Chronicle."

717

Registered

Ir¬

Barney

1948, submitted at the recent con¬
vention, are given in full else¬
where

Martin, Burns
Chicago.

■

Relations:

Smith,

Membership: George L. Martin,

John

Exchange

Company,"

&
Co., New York.
The
reports
of
the
leading
standing committees, for 1947-

York.

Bullock,

Co.,

George

Illinois

ving D. Fish,

P.
Barry, Shields & Company, New
Companies:

Legislation:

Noyes,
The
Chicago.

Industrial Securities: Eugene

Calvin

Ful¬

pointed.

Group Chairmen's: Thomas
Whiteside, Chace, Whiteside, War¬
ren & Sears, Incorporated, Boston.

Murch

The Ohio Company, Columbus.
Small Business:
Not yet ap¬

Governmental
Securities:
George B. Kneass, The Philadel¬
phia National Bank, Philadelphia.

York

Savings Bonds: Ewing T. Boles,

Buttenwieser, Kuhn, Loeb & Co.,
New York.

Investment

Company,

Illinois

Cleveland.

Foreign Securities: Benjamin J.

Bullock,

Maynard

John

Securities:

Research Special: W. Yost

Continental Illinois National Bank

pany,

Federal Legislation: Edward H.

York, Jr.,
delphia.

Railroad

Loomis, The
Chicago.

England

.Weeks

Class A___

276

Offices
New

Class II___

Class B___

Minnesota

James

Caldwell,
..Phillips Co., St. Paul.

Jr., Drexel & Co., Philadelphia.

yet ap¬

Not

Class

Class C_^_

Si-

Nixony
Dominion
Securities
Corpn. Limited, Montreal.

Education: Nathan D. McClure,

Class A-__

Ralph W. Simonds, Baker,
monds & Co., Detroit.

of Aug. 31,
1947

Class il___

Michigan

31,

1948

Norbert W. Markus. Smith, Bar¬

Federal Taxation:

Roy C. Osgood

pointed.

Co., New York.

Conference: Edward Hopkinson,

(Continued from first page)

John A. Prescott

H. Morton,

Canadian Securities: Stanley E.

Holds 37 th Annual Convention

1920-21

plus of $3,642.

the

Investment Bankers Association

PAST PRESIDENTS

1922-23

anti-trust

48 would have resulted in

the IBA Standing

power.

IBA

operations for 1947-

counting,
involving inventories, the Careful screening of job ap¬
depreciation, dividends, return on plicants and also to establish ade¬
investment and a devalued dollar quate
on-the-job training pro¬
which in turn seems based on a grams to supplement formal in¬

large national income to labor and

Europe

ture

(2655)

items,

suit expenses,

That the present Administration
including Congress must be fully

not excessive. That there

absence

CHRONICLE

suit expenses

the analysis that competitive and
'high optimistic free markets make and determine?
note in business generally as well
This
discussion,
investigation
as an absence of speculative com¬
and analysis of corporate profits;
mitments on' thin margins, in busi-:
is "already on" and appears based
ness
and
in the
stock
market
is

FINANCIAL

SAN

FRANCISCO, CALIFORNIA

COMMERCIAL

THE

(2656).

CHRONICLE

FINANCIAL

Learning From History?

Hints

Investment Hedging

the

(Continued from first page)
under

these

the

circumstances;
absolute necessity.

about

Moreover—just what is to be
hedged against? Almost anything
might happen, and no exact tim¬
with

future

knows the
degree of assur¬

any

one

should surmise
that dangers, and prepare to face
but

ance,

everyone

them.

much

That

period

inflationary

United States and

nothing
tions

the

Given

yet

has not

run

prospect of

rates, of

printing

press),

one' hazard.

number

The liberal welfare state that

en¬

tertains

by
the

same

the

and
the

carries

burden

World's

Western

deficits

groups

pressure

subsidies

time

economic

or
a

actual

war

run-away

Briefly,

vir¬

term

stretched

the

national credit

exhausted—-when

ever-fur¬

reaches

currency

States have behind

these
us

inflation

prospect,
is

greatly compli¬

relations.

went

for

Economic

reason

presupposes

that not only individuals and cor¬

porations, but also the policy¬
making public authorities act ra¬
tionally—according to the rules
of the economic game.
When the

carry

rules

15 years on

can

haywire, the door was open

others.

investment

Taxes

comparatively
moderate
If French insur¬

were

in Europe.
stocks

ance

depreciation,

insurance

French

because

was

franc

led the Paris
stabilization,- it

and
the

after

bourse

the

with

rose

companies were free to hedge
through investing in gold assets.
Common stocks often lagged be¬
hind

but they sky¬

commodities,

rocketed with

inflation that was

not driven underground temporar¬

manipulations.

ily by governmental

Foreign exchanges were permitted
to seek their own levels. Profit-

making
In

frowned upon.
inflation,
stocks, as an ex¬

not

was

Germany's

runaway

utility

public

ample, held their own because
the system was one of compara¬
tively free enterprise, much freer
than any

of this age.

serve

may

the

guide-posts

case

suming
literal

be. Short of

may

as¬

catastrophe in the most
of the word—that this

sense

country may be pulverized physi¬
cally by A-bombs, or morally by
the

—

basic

laws

economic

logic remain valid in the
pull, even under advanced
Dealish conditions, or in a

long
New

Garrison Economy.

the

of orthodox

latter's

financing is to ignore

the

realities

But

even

such

situation.

The

problem

upon

hedging

is to

the capital itself against

preserve

forces

extraneous

ists that would

with the tempo of inflation. There¬

Gold

fore,

superimposed

the regular course of busi¬

Whether the threat is to stymie
the
a

earning

permanent fashion, or the

chasing

—

Industrial

pur¬

(of paper claims)

power

Brokers

the capital into

to convert

form

these

which

risks

are

offset, in part at least.
may consist of nothing
than proper financing.
In¬

Hedging
more
MEMBERS
New

York

Stock

New

York

Curb

Exchange

Exchange
'J
>v'..

(Associate)

flation

San Francisco Stock Exchange
,

Los

Stock

Angeles

■'

perversion of
financial procedure. The
the

means

hedging

with

One is the

borrowed

slow

current inflation.
not

accelerate

money.

character

the

Suppose it does

much

during the
it might turn out
has over-hedged—unless

depression,

are

one

has

taken

against

this

through

maintaining

Even

postponed until the inflation ends

financial setup,

sec¬

private

corporate, which is caught with
short

(as already,

li¬

proper

consideration. What about the

status of

all sound

tant

prices,

which

*•->

■

"1 "IT

100

markets

everybody's

buying

lots)

ounce

(usually

unrefined

vir¬

been fortunate enough to liquidate
at or near the peak of the infla¬

gin gold, at prices some 15% to
20% above the official $35 per

tion and enters the deflation

Needless to say that the
ownership of unrefined gold may
be outlawed, too, so as to lengthen
a tottering paper money's hold on
life.
Even so, the risk may1-be
worth taking.
Apparently, it is not illegal to

strong liquid position, or unless
his portfolio of depression hedges
is a strong one, he might find him¬
self under

crushing debt burden.

This

maneuvering between too
much'and too little liquidity is
one

the difficult

volved

simple

answer

problems in¬

hedging. A
would be to avoid

long-term

debts altogether;
to

take

ounce.

hold gold abroad

caug*ht in foreign exchange re¬
strictions, the question is: where

realistic

substantial

re¬

to hold it?

countries

repayment at the debtor's choice

Mexico did not

math—which

possession

now,

but

other

sources

the

may

ago.

Pres¬

while it stays un¬

are

substitute for

received instead of storage

last several more yearg, and

that

gold shares may not have
reached the market botton as yet

(caught

as
they are between a
gold price and rising gold
production costs) they constitute
a
highly important hedge which

fixed

stance;
;

future, as

long

paid — provided
dividends
are
forthcoming. In spite of the like¬
lihood that the managed inflation

what

the

exports,

gold with the advantage of divi¬
dends

substitute for, but as an

to,

Gold shares

additior
is the sensible way of
investing in each individual in¬

in
so

Cuba,

notk yet

gold

der international rule.

hold

through;
(b) That it is not undertaken

will remain

control
is

income from

may

have

ently, the international zone of
Tangier is the safest haven and

it always has

enough current
same

Venezuela,

Uruguay
clamped down

"substance"

Some Latin American

and

imply the destruc¬

tion of paper liquidity—the

(but the legality

may be revoked on short notice).
Since almost the entire world is

to outside funds, but to do
preferably on a long-term ba¬
sis, at the prevailing low interest
rates,
and
on
an
amortization
schedule with the option of early

"Ttfz

■■

case

There still remains the legal

loophole

Unless the investor has

black

not

are

taste.

"
'

again, is the

in France). In the meantime, gold
is available, but often at exorbi¬

leverage when the infla¬

tion ends?

controlled economy, deval¬
of the
currency may' be

uation

—until the bonds of control break

significant is

inde¬

speak,

quidity.
ond

Being the
and

insurance

out

risk,

losing side.

ubiquitous,

structible liquidity, it emerges un¬
scathed from every inflation.'

next five years:

that

the

ultimate,

Exchange

' ' V

to being the

if not before, when not
only paper
claims but even most commodities

—keeps sufficiently liquid and has

Underwriters

ex¬

all prayers.

answer

nearest

comes

short-term basis.

been, the
logical way of hedging, provided:
(a) That the owner can "wait"

means

of Primary and Secondary Offerings

single investment outlet

However, two considerations
should dampen the propensity of

borrowing

rectly and indirectly, or physically
damaged: the hedging operation

Investment Bankers and Brokers

fashion.

you can have it
—because it is bound to appreci¬
ate in the subsequent

present rates

by depreciation; whether the as¬
sets
might be expropriated di¬

SUTRO er CO.
Distributors

(of assets)

power

well-

and

perfect hedge—if

long-term financing at the
is far preferable to

Against inflation and its after¬

1858

well-diversified

assorted

course

Hedging

away,

(d) That the cost of the hedging

Problem of

taxed

operation is not prohibitive; and
(e) That it has been undertaken

ness.

Since

expropriated,

in the process;

during a sharp inflation,
unorthodOxy pays only as long as
money rates remain low compared

answer

and

ous.

position
during the inflation. (The credi¬
tors will hold the bag.)
To rely
on
customary standards or ratios

sort, to be followed or discarded,
as

stronger

In short, it would be futile to
try
to
copy
mechanically the
hedging policies used in inflations
of'the past.
Nevertheless, they

bolshevism

constantly are
changed while the game is on, bet¬
United ting becomes extremely hazard¬

fever.

may

double

deflation,

tractual

and

regimentation, but it must live up
to its own goal of full employ¬
ment. And the price of full em¬
ployment is inflation. War prepa¬
it into

discrimina¬
interferences. They include
taxes
against business and the
saver,
political
interventions
which reduce profits one way or
another, be it by controls, regu¬
lations and restrictions, confisca¬
tory measures of the type of capi¬
tal levies, the withholding of la¬
bor or raw materials, nationaliza¬
tions, and arbitrary methods to
stymie enterprise, to violate prop¬
erty rights, and to pervert con¬

rearmaments, may
tax capitalism into semi-socialistic

rations

latest

at which the

ther

owe

tory

recurrent
rises con¬

of wage and price

generous

The

forever.

date

cated and confused by

later (to be financed by

the

"sup¬

uninterrupted
prosperity
of nine years, cannot last

This

colossal national

sooner or

stitute

spell

and

cheap

Federal deficit to arise

the

medicine to which

tually

of in¬

new

waves

cease¬

well

monetization

draw, plus the practical certainty
a

carefully managed

the end of the confidence rope.

debt, given also the vast accumu¬
lation of liquid funds on which to
of

the

even

...

gold influx,

money

and

the

cessant

most

hand,

pressed" boom is bound to come
to an end.
An "intermediary" re¬
cession, if any, should be over¬
come quickly, by paper shots-inthe-arm.
But
this
inflationary

Canada, to say

rest,

inflation

its course.

less

for the

even

France

1920's, the investor had easy
escapes at hand. One could own
gold and reliable gold-convertible
foreign assets.
If one country

even

other

the

indica¬
overwhelmingly that the

are

global

This is

clear;

took

History has its
round¬
ways of repeating itself.

1926).

Hedging—Against What?

ing is possible.

which

road

only 12 years to travel (referring
to
the collapse of ' the franc
in

debt and the less equity, the

past, even as late as in

the

Thursday, December 23, 1948

;

prudent investor should over¬

look.
SAN

407

FRANCISCO

MONTGOMERY
NEW

YORK

LOS ANGELES

STREET

210

SAN

BROADWAY

246

BEVERLY
240

NORTH

Diamonds

WEST SEVENTH STREET

SOUTH

JOSE

FIRST

rise

They

ditions, and

material

price

under' un¬
political con¬
run well ahead

INVESTMENT

well

grade
wide

MEMBER

LOS

ANGELES

623

Security

SYcamore

3-4106

Bldg;.

— enjoy
marketability under

Inflation

any

drives .up

simultaneously, their market is
by
overspilling luxury
buying and by hedging demand.
Market
control
by the .famous
Syndicate is a factor of stabilizing

STOCK EXCHANGE

world¬
cir¬

diamonds

sharply their costs of production
boosted

SPRING—LOS ANGELES"TRINITY 1011
TELETYPE

Pasadena:

from industrial and low-

cumstances;

Bingham,Walter £ Hurry
SOUTH

Highest

grade, pure (cut) stones, in par¬
ticular—distinguished from jewels

SECURITIES

621

may

commodities.

other

DRIVE

Mi tell 11111. T nil

good

settled monetary and

STREET

HILLS

CANON

are as

substitute for gold as can be found.

DISTRIBUTORS

221

Westwood: 10010 Kinross Ave.
ARizona 3-1181

influence.

Another

is—

feature

the tax: 20%

presently in the U. S.
(payable once only, on the retail
level). It is likely to rise undqr

& Co.

fiscal

iiji

strains; 66% is the rate

Britain.
•

INVESTMENT

HANNAFORD & TALBOT

SECURITIES

Lacking the "perfect" liquidity
of gold is the shortcoming of diaf
monds—and a boon in disguise;, it
the

spares

headaches

owners

which

kind

the

beset

gold,

due

to the

tary

Investment Securities

public interest in its mone¬
function. And when worse

comes

did in Europe
again
.!
hope it never will happen

to worst, as it

and elsewhere time and
let

here.

;

Common

405 Montgomery Street
SAN FRANCISCO 4

650 South Spring Street
LOS ANGELES

519 California Street
SAN FRANCISCO 4

System Teletype SF 113
GArfield 1-8000

10%
Bell System Teletype SF 234

that

investor
more

Bell

Stocks

it may,
should
not
as

the average
sink

much

(nor much less!) than, say,
of his fortune into gold—

gold

They

are

diamonds.
last-ditch hedges, so to

shares —plus

Volume

speak.

168

Number 4762

Earning assets must con¬
the bulk of investments,

stitute

hedge

hedge.

That brings

common stocks to the fore.

But

why

priced

they

are

under-

any

standards, in view of the inflation
threat, and contrary (allegedly)
to

all

experience

rable

under

conditions?

judgment

The

compa¬

collective

the

market-place
does,-not indicate any inflation
fear. If that judgment is wrong,
at proved to be for
what reliance is there

ture behavior?

2Vz

years,

its fu¬

Will stocks not be

disappointing just when
should

provide

needed?

the

If they act

biggest

expected

boom,

from

as they do in
what can be

cyclical

reversals, to say nothing
"ultimate" reckoning?
*"•

The

stock

should

they

protection

them

market's

the

Its

interest rate and of corporate

earnings—are determined by spec¬
ulators, professional or otherwise.
They appraise and underscore the

COMMERCIAL

"money bonds," but in many
even against the deflation¬

cases,

aftermath.

ary

higher

Notwithstanding

taxa¬

tion and other techniques of per¬

corporations,
domestic
remain, as they
always were,-a comparative haven
for ..inflation-*threatened
capital.
stocks

common

(The

same-

holds

preferred

for

stocks and "credit" bonds only So

long

they have not reached par

—for

which

they

heading.)

are

That much should be evident. The

difficulty is in choosing between
industries, and the individual
units within each. That is a chap¬
ter in itself, to be analyzed under

the

the points of view of the post-,
inflation earning potentials« their
greater or. lesser vulnerability to

avoid

loss at the nearest turn

—first

things first—and to cross
subsequent bridges when he
reaches* them.

Long-term hedging in common
means
to take advantage
the market, rather than to be
guided by it. The question is not:
v

of their
managerial ability to adjust them¬
violent

changes

the

economic climate.

Hedging in commodities pre¬
problems of its own. Prop¬
erly selected, standardized com¬
sents

modities

changes)

market

that

experience

coun¬

booms

not last longer (under the defunct

gold

standard,

mind you) than
Or when it fears that

eight years?

hands

It is

can

is, however, out of, the
question)?
What matters, in reality, is not
of

hesitancy

and

•we

inconsistency

unsettled market at

when the decision

time

to which way
go still seems in the balance.
as

iWhat matters is the question: How
will it behave if and when new

deficits

budget

shortages.,
storm

and

breaks

little

appear,

the

doubt

new

inflationary

loose?

There

about

Thomson
bers

that.

saway

partnership

Jan.

York

Stock

Ex-

firm

the

Mr.

Gassaway has been
with the firm in the Jacksonville,
Fla., office. Mr. Teichgraeber has
been with the firm for

also

time.

some

Joseph Hammel With
First Securities Co.
•

(Special

The

Financial

CHICAGO, ILL.
Hammel is
ties

can

first-class

which

single

through

channel

hedging efforts should be

directed

the

first

now

—

Joseph

Baker,

Lewis

Jr.

Franklin

"We would do well to
try to steer a course that
will preserve as much freedom as
possible for our
farm business and for the
general economy.

with First Securi¬

"Specifically

Urban

real,

estate

the
con¬

and

are the most durable goods
(other than gold and diamonds),
which consideration is important
in itsef.
Accordingly, they used
to offer in the past full protection
during inflations, and fair protec¬

tion

after,

crises.

disregarding

Under

ipul'ations

and

passing

bureaucratic

ma-

wealth-redistribu¬

tions, they lost much of this at¬
tractiveness (think of the fate of

ought to keep Government out

of the markets.

"Let
ables
the

the

(Government) support

take the

form of

loans.

make simple compensatory pay¬
producers, somewhat as it did on milk
during the war; •
"In that way we can have income
support, yet
prices will find their own level in the markets.
to

"We

our

of free
labor

are headed toward a
degree of State control
productive energies that spells a weakening
enterprise, free markets, free farms, and, as

will

ultimately find out, free workers."—
Genung, Economist of the Northeast Farm

Albert B.

Hammel,

who

Federation.

has

recently
been with Straus & Blosser, in the
past was with Kneeland & Co. and

Mason, Moran & Co.

can

-I'-

W. L. Taylor Partner
In H. C. Wainwright
CLEVELAND, OHIO.—The New
York

Stock
Exchange firm
of
Wainwright & Co. will ad¬

mit Warner L.

ship

Jan.

Taylor to partner¬
1.
Mr. Taylor has

been with the Cleveland

office in

the Union Commerce Building for
some
time.
Prior thereto he was
an

officer of Ball,

Coons & Co.

the fears of Mr.

We share

doubtful (as he does not

indefinitely

seem

have both

J. B. Hanauer & Co.
Will Admit

ership
rables

of
is

truster's

the
a

fundamental

thorn

side.

But

the

du¬

brain-

the home
'independent
%

and

the

Harry i. Betden With
Charles A. Futter Co.
Rice

cel

with

one's, protection

(together

properly adjusted insurance

mining, in¬
policies, etc.) against the- unpre¬
dustrial, and merchandising firms
to
hedge not. only against the dictable as well as the "normal"
prospective depreciation of money hazards of economic life. They

subsidy

R. L.

are

and

full

his

Woody

Co., 50 Commerce Street,

Day i Co. lo

mem¬

Karl

partner

Herzer

will

become

Belden

has

Day & Co., 14
New
York
City,

vidual

floor broker.

Charles

Townsend

will

retire

V, On Dec. 31, Adrian R. Kristeller,
member of the Stock Exchange,

from

will withdraw from

charge of R. L. Day's New York

J. B.

partnership in

the

firm;

has

been

office since October.

Hanauer & Co.

Join Loew
become

associated

with Charles A. Fuller Co., North¬
western Bank Building. Mr. Bel¬
den

was

Frank

been
It

formerly President of
Belden, Inc., which has

dissolved.
is

understood that Harry C.
formerly Vice-President of
Frank & Belden, Inc., will repre¬

Schwabacher & Co

Rice,

INVESTMENT SECURITIES

sent Loewi & Co. of Milwaukee in

Minneapolis.
600

MARKET

STREET

AT MONTGOMERY
t

SAN DIEGO
>

■

''""

;; '

•

SAN FRANCISCO 4

OAKLAND

MEMBERS

SAN JOSE

SAN

HILL RICHARDS 6- CO.

r,7.?

CHICAGO

NEW

NEW YORK

FRANCISCO

YORK CURB

EXCHANGE

STOCK

BOARD

EXCHANGE

TRADE

EXCHANGE

(ASSOCIATE)

LONG BEACH

LOS ANGELES
621

South Spring St.

SAN FRANCISCO
1

Montgomery St.

PASADENA
Private Los

Angeles-San Francisco

vftire

Member
Los Angeles Stock

Exchange

of the New York Stock Ex¬
Street,
change, will admit
Charles L. members of -the New York and
Woody, Jr., an Exchange member, Boston Stock Exchanges. Mr. Her¬
to
partnership on Jan.
1.
Mr. zer in the past was a partner In
Woody has been active as an indi¬ F. S. Moseley & Co. On Dec. 31
bers

Wall

MINNEAPOLIS, MINN.—Harry
I.

Admit Karl P. Herzer

NEWARK, N. J.—J! B. Hanauer
&

Genung, but

to be) that the farmer

freedom.

rental

properties!) unless for ex¬
ceptional reasons.- Absentee-own¬

on non-perish¬
perishables, let-

Government

ments

instance:

one's
own
business,
be it
home, the farm, or a going

buy

Subsidy and Freedom

Chronicle)

Co., 134 South La Salle Street.

Mr.

Hedging

That brings us to the most im¬

portant

owner

advantage of Wall Street's shortof

New

mem¬

Joseph F. Hammel

farmer are just about the last ones
fact, the far-sighted in¬
to be victimized.
vestor—who does not indulge in
The business or farm one knows
day-dreams of buying at the low¬
and
runs—preferably several of
est and selling at the highest—is
at present in the very fortunate them, and the house one occupies
position of being able to take full —they are not only part and par¬

McKinnon,

and BernardE.Teichgraeber

business.

Internal

can

1915-17

charlge, will admit Owen H. Gas-

matter of

term-mindedness.

of the

use

farms

the

To Admit Two Partners

different story

"insider": he who

work of his own

shortly by incisive regimentation
(that could not last very long in

•(which

PRESIDENTS

Thomson & McKinnon

market trend

off.

cern.

America), or by a sudden and
substantial rise of the interest rate

the prudent investor.

instrumentality in the frame¬

corporate earnings may be crushed
•

PAST

1918-19

"natural" in the light of this

try's

IBA

essence; otherwise,
might boomerang. Un¬
is assured,
the layman had better keep his

the

this

that

offer all sorts of

the process
less

for the

now, when it expects a "natural"
down-turn of
business activity,

(2657)

managerial

ing is of the

does

CHRONICLE

possibilities
adjustment. Risk
distribution, to repeat, is as vital
for the cautious hedger as it is for
of

barometer

stocks

What

FINANCIAL

controls, and above all,

(marketable on the ex¬
are the
most sensitive
of
monetary change,
next turn only. What
may happen
provided
governmental - controls
years hence is no more their busi¬
do not upset the calculation.
In
ness
today than is the grain mar¬ any case, forward buying and
ket's job to evaluate the price of
selling and the carrying of futures
December, 1948 wheat in terms of involve loss of earnings, actual
the supply-demand situation that
charges, and additional risks.
may be forthcoming in December,
As a general proposition, this
1949.}, In other words, the stock
type of self-insurance can be used
operator expects to take a profit in a
temporary fashion only. Tim¬
•or

also

secuting

selves

function

properly understood.
fluctuations—given the level

and

•

measured

now,

THE

NEW

YORK

OAKLAND

MONTEREY

FRESNO

SACRAMENTO

SANTA

BARBARA

ROSA

-j

* COMMERCIAL

THE

(2658)

months he must make it

next few

As We See It
(Continued from first page)

he intends to abolish the business cycle.

He has, more¬

in his files copies of his campaign promises which
offered varied and often quite inconsistent suggestions

over,

to how this should be done.

High prices

of his important "talking

one

were

points" during his tours through the country. He was
definitely going to do something about them. Low prices
threatened the farmer — and he was going to do some¬

There

thing about them.
could

who

not

should be able to live

great many poor people
as they thought they
and he was going to do some¬

were a

live

manage
—

Must Now

were

and

determine whether it is

what

are

For

are

known

recession not at all to his liking.

whole matter in
a

Yet if

high profits to take them

of the

good

wages.

They constituted

the Administration for

one

of the hopes, doubtless, of
of "painless" taxes.

source

ful

much

going to "capital,"

little to the

from

income

the

—

are

current

caused by mal¬
production, too

and need is

bonds

capital.

run

'
.

' '

•

■

•'

its

committed and its

the

Administration

would

very considerable
"stalling." Business is at this moment hesitating, so
far as it is hesitating, largely because it feels a
deep uncer¬
tainty as to what the new Truman Administration will do.
It is beginning to feel that the President and his advisers
are
showing some indication of. wincing and relenting and
refraining in the face of adverse business news. This appar¬
ent prospect has tended to take off some of the
edge of
run

If only

nervousness

about the situation, but it has

finitive effect.
as

cause

If the President is to

of any

yet had

himself

de¬

entirely
substantial setback In business during theremove

President

Yet

precisely

his.
It

solution, but it would help,./,,.

home

age

partner
in
Co., died at his

Cooper,

George

Jacques

Coe

attack

heart

of 48.

the

Paul

Andersen,

partner

;

es-i

the

pic-J

other

side

has

been

the

sold

the

banks

and

to support the

proceeds used

Jong-term bond market. The Fed-;
era! Reserve held
of

the

gold certificate
$22,260,000,000. Under

law, 'which

present

25% "

reserve

notes

and

Reserve
-

Cyrus J. Lawrence & Sons, New
Yorlr, died at his home at the
age of 44.

against

the Federdl
could buy $42,-

deposits,

additional

.of

„

S. *

Government Bonds without reduc-

frig this gold reserve ratio below
to

seem

This

minimum.

required

would
<

requires »

held

System

431,000,000

the

PduK Andersen Dead

the

could

Vv.;

real

and.

corporate

reserves

there wijl

convert

frequently 1
pointed out. that the Federal Re- jserve System has. ample power at
the present time to support the
bond market. For example, as o'f( f
Dec: V1948* the Federal Reserve r
System ..held .$11,995,000,000 eff
bills, certificates and notes which

do not require action

estate

somewhat smaller rate

companies to

this that the

part heretofore contemplated at least at this time!

George Cooper Dead

It is believed

capital require- ;

business and real

ture

post-election developments were to lead the
make a clear and unequivocal statement

the

1949

tate paper.

well

that conditions at present
would be

corporate securi¬

insur¬
their
government securities into higher

thinking is too involved with foolish no¬

economics.

corporate

mortgages!:

be less opportunity for the

this

give

country most needs at this time.

risk in

estate

than in 1948. Therefore,

It is too deeply

admittedly unlikely.

Must Not "Stall"

Yet

real

will be at

about

holdings

and

in-.'rj.

other

Governments to

government. Such an attitude on the part of the pres¬

ent Administration is

tions

premiums; into

words, there has been
panic dumping of U. S. Gov¬
securities but a* gradual
shift of investments from U. S.'/.

—

ernment

What it does

the business of the country as

call.

the situation. Business needs

Administration which would

the idea that it must

were

creased

higher wages could not fail yielding

ever

adverse effect upon

pro-

with

Government*
placed along with

these

accumulating

develop in the early future

back seat driver from the national

want

largest

bonds

Bonds

tips from government and it certainly is not in want of

no
a

the

ments of

Washington Government based

philosophy of higher and
to have

hold

of ten years

ance

fire-insurance

$2,373,000,000 or about 11.8%;J
proceeds resulting from the

sale

it has other causes, and any

now,

•

and

;

The

that

find

invest¬

substantial!
Government
\

securities from $20,015,000,000 in
January, 1948 to $17,642,000,000 in,
September of that year, a decline

were

can

for
a

ties and real estate.

threatening

steps taken by

medium

and over. This '
figure equals $16,401,000,000. Since !
the beginning of 1947 the life
inCjl
surance
companies have reduced
their total holdings of government

goods and services.

real recession

one

savings banks

life

portion

No Back Seat Drivers!
a

With

ontheir,1
-expanded0

new

they sold
their U. S.

companies

possibly better off for short periods of time during the
war
and immediately after, but all this was more ap¬

dates

This, naturally,
makes an excellent political analysis, but it has little else
to recommend it. Any hesitancy at this time definitely
originates from no such cause. In real ability to buy
consumer goods and services the wage earner never was
so well off.
On paper he may have been as well off or
consumer

The

the over-privileged, and too

interest"

holdings.

which constitute the market for most

masses

for

the

part

Most of the New Deal school

thinking insists that depressions

distribution

be called

can

ments

would certainly not be greatly im¬

if such indeed it

—

suitable

sound growth of industry and

the current ills of business.

parent than real.

If
presently these profits disappear or threaten to vanish,
an
excess profits
tax would have little meaning, and
steeply raised corporate income Jax rates could hardly,
'be defended by any of the stock arguments now brought
to bear. Prices, meanwhile, have been hesitating for a
good while past — even during the campaign for that
matter
and though they continue to furnish a good
means of stirring up the emotions of the
people, it could
be that increasing unemployment will presently be po¬
litically more dangerous.
a

remembered

capital on the
part of business, it. seems doubt-;

It could hardly be otherwise in view of the

proved.

political

many

Even

demands

high rate of business activity which has been ob¬

taining the outlook for

rate

deposits.

presently to reach the

were

serious recession threatened, and that

trade in this country

break-even points.

over a

To leave the

accordingly the Administration must proceed at once
and with vigor to induce a return to or a continuance

faulty diagnosis

hurdles and to furnish the basis for demands for higher

must

savings banks not only have '
relatively. high
operating !■'. ex- Lpenses but continuing pressure for

great uncertainty would be only

President

the

conclusion that

of the labor leaders supporting it have been counting
on

state of

good while past, the Administration and most

that

little less troublesome.

require relatively small reductions in volume in most in¬
stances under existing conditions to turn the profits about
which the President and his advisers are so fond of talking
into losses, so low is productivity, so high are wages and

high

banks.

number of other things

•

prevention of a substantial recession that he
has to combat. He has his "experts" at work on the question,
but one need scarcely be a prophet to guess that they at
this moment at least are having their troubles, too. It would

any

•

ever, that large selling will de¬
velop in the future from. savings

constantly talking about during the campaign would

was

be to invite

continuation of the

for him to do

;

(Continued from page 4)

the standby power to ration or to control

the

the Taft-Hartley Act

necessity of really getting down to
earth on some of these question's, and his task is immensely
complicated at the very outset by the fact that he finds it
difficult to

Dangers of Bond
Unpegging Termed
Exaggerated

Wagner Act; for him

prices;

Now he is under the

boom

substitution therefor of the old

to insist upon even

Earth

reasonably clear in the

to work in earnest for a repeal of

to go

any

Get Down

Thursday, December 23, 1948

relatively near future that he has no intention of "imple¬
menting" a number of his campaign promises at least for
the present. For him to proceed with excess profits taxes
or
a substantially increased corporate income tax;'for him

number of things
which should be done with public funds, which doubt¬
less would tend to keep business going (so he thought,
at least). He would see to that, too, and at the same time
in some unexplained way public finances would be man¬
aged so that no inflation would be generated from that
quarter. And so on more or less indefinitely.
There

thing about that.

CHRONICLE

FINANCIAL

ample to sup¬

port the U. S. Government Bonds
which

be offered in the
and, of course,' avoid any

might

market

panic.

■

It is not meant to imply by

the
problem of supporting the market is not serious.
On the other hand, it is believed
that

above

the

*
.

that the seriousness has been over¬

UNDERWRITERS AND DISTRIBUTORS OF

rated

tinued

First California Company
Corporation and Municipal Securities

UNDERWRITERS

•

DISTRIBUTORS

•

effort

and

present

rigid

to justify con¬
support of the

addition,

pegs.

it is

pot believed that the Federal Re¬

shpuld

serve

TRADING FACILITIES

entirely

withdraw

•

Unlisted Trading

•

all activities

Department

market

that

Offices Serving Investors

the

stand

Comprehensive investor

coverage

in
SOUTHERN CALIFORNIA

California and Nevada

far

concerned.

Federal

the money-

Reserve

felt

should

by in order to insure that

panic does develop by ill-ad¬

vised selling and

that the liquida¬

tion is orderly.

Conning & Co., Ballard

Pacific Company
OF

SAN FRANCISCO

CALIFORNIA

Members Los Angeles Stock

Glendale
Pomona

Mi. 66J1

Bell System Teletype:

Hollywood
Riverside

Santa

Long Beach
Monica

>XL.VV"i^h'

" '

'' ■' '

Exchange

Redlands

•

-To Admit Partners

CONN.—Conning
& Company, and. Ballard, 50 Lewis
Street, members of the New York
Stock Exchange, will admit Basil
F. Austin and John H. Beardsley
to partnership
on Jan.
1. Both
HARTFORD,

623 South Hope Street, Los Angeles 14
Telephone:

..v.rrLO-S;'AN GELES ^,

J."--*

Member Los Angeles Stock

Exchange

LA 17
Pasadena
La Jolla

Private Wires

Between San

Francisco, Lot

Angeles and New York

)v»ve been with the firm for some

•.time.,

v!-..<.•; •

\/i> ;•

Volume 163

Number 4762

THE

COMMERCIAL

The lob Before 81st
surrounded.

(Continued from page 6)
tinue

ment

follow,

the

finances

our

duction of

our

manage¬
the

and

re¬

thinkable

would

that

the

un¬

incoming
recom¬

This will benefit not only the aged
and the unemployed, but it will

]only to the extent of

a reduction
in taxes whenever it is possible to

without

unbalancing the
by giving a full

nation's budget,
of

measure

lions

relief

low

income

mil¬

those

families

whom the wartime burden of tax¬

ation fell most heavily.

The plat¬

form did not commit itself to any
increase in taxes, and I think it

is, fair to say that, unless the im¬
perative needs of the Treasury in
international

our

domestic

and

situation require it, there will be
no, increase in the tax burden im¬

posed upon the American people.
There
ment

was
one
positive commit¬
against the enactment of a

national sales tax.

"There

has

discussion of the possibility of the
re-enactment of the

excess

are

profits

Congress to carry out
pledges
to
the
people.
the repeal of this Act
will
automatically re-enact the
Wagner Act, is a matter of legis¬
lative and parliamentary concern.
The repeal of this law does not

ing with the question

Ij have

inflation.

information

as
to
whether that recommendation will
will

income

creased
sary,

But unless in¬

repeated.

should

be convinced that
of

excess

neces¬

should

Congress

unless

re-enactment

profits tax would be

essential part of an anti-infla¬

tion program, I am not in a

posi¬

tion to predict that such a tax will

be re-enacted^

It is

extremely

controversial

subject, and there
who
honestly doubt

those

are

whether

the

wartime

excess

re-enactment

the

profits tax would

reduce the cost of

living, or mere¬
reduce the net profit upon
which existing
taxes would be
collected. We repealed the excess
profits tax at the end of the war

wise men, and it may be that
there ought to be modifications in

are

administrative

the

had

been

wartime

taxatipn measure, and because it
anticipated that in, the re¬
conversion period there might be
great unemployment and a slack
in business activity, and that the
repeal of this tax would stimulate
both employment and business ac¬
tivities. The expected unemploywas

raent

did

not

Instead

occur.

there being a

lag in the business
activity, there was an acceleration,
and

have reached

all-time

peak in our production of goods
services

and
made

and

the

profits
Undoubtedly

therefrom.

this situation must take its share
of responsibility for the inflation¬
ary conditions which we seek to
curb,

and

have

doubt

Congress will'have the
deal

with

that

courage

realistically in the
light of conditions which now pre¬
vail, or will prevail in the im¬
mediate future.
is

And whatever it

essential

found

this

respect, I have no doubt that the
American people will accept the
result with that same degree of

procedure

the

original Wagner Law, growr
ing out of the experience of the
last decade during which it has
administered.

been

modifications
that

tion

the

such

But.

are

necessary

with the convic¬

should be made

fundamental

rights
bargaining, guaran¬
teed
in that law,
shall* not, be
decreased or weakened by any
Act the Congress
may
pass.
I
collective

doubt

that

whatever

will be just to

in this field

employees
and
employers and
that they will be able mqre har¬
moniously to work under it, if
they desire to work under it.
When

the

LaboT

created,

was

facilitate

Department

was designed to
welfare
of
the

the

our

President

Aet when it

the

original minimum
maximum hours' law

and

something of
an experiment;
40 cents per hour
as
a
minimum wage is pitifully
inadequate and you will be sur¬
passed, it

was

prised

was

the

know

workers in the U.
more

than

have

the

President

and

again,
mum

pledged
doubt

the

wage

hour.

has

number

S. who receive
cents

per

hour.

ourselves, and
recommended,

will

recommend

increase of the mini¬
to at least 75 cents per
commitment

This

our

platform and of our party will be
promptly carried out.

now

exists

This de¬
ficiency
was
tragically empha¬
sized during the recent war in the

Thomas E. Morris
Bu'th rfr Co.,

Social

Harold M. Martin

Inc.,

Murphey-Favre, Inc.,
Spokane

San Francisco

examination of draftees callqd up
their country.
We

for service to
have

pledged ourselves to enact
legislation granting Federal aid
to the states in the improvement
of their educational facilities.

Whatever

lowers
in

standards

the

educational

state, lowers
their standards for the country as
a

whole.

ican

one

We feel that the Amer¬

people

have

endorsed

the

program to which we are com¬
mitted;
that
Congress shall
promptly enact legislation grant¬
ing aid in the sum of $300 million
at least for the improvement of
our
educational system, and for
the guarantee of equal opportuni¬
ties to the children of the nation,
regardless o£ geography, in the
,

this

with

deal

sit¬

uation

by the enactment of farm
legislation.
We are all familiar
with the results.
Congress has,
by the enactment of the Agricul¬
tural Adjustment
Act, the Soil

tive flood

control, whose cost, in
comparison to the losses suffered

gation and practical opportunity,
approach the subject in the
spirit of a true America, that will
recognize the rights of all Amer¬
Civil Rights
ican citizens to enjoy the benefits
In his message to the 80th Con¬ and participate in the processes of
gress, the President recommended their government.
There are many other matters
the enactment of legislation
pre¬
venting
discrimination
in
the of domestic concern with which
be compelled to
enjoyment of
the
fundamental Congress will
They will be brought for¬
rights by people of America by deal.

reclamation
create

which

programs,

prosperous

has reflected

reason

ward

ality.

sity

of race, color and nation¬
We have become the lead¬
democracy
in
the
world.

ing

owe

circumstances and

require.

may

neces¬

But, I wish to

reiterate my own unalterable con¬
viction
that
no
political party,

While our democracy is not per¬
fect, it is the best that men have
yet been able to devise, but we

and

especially the one which has
recently succeeded, can afford to
repudiate its solemn commitments

it to ourselves and to future

generations to perfect it wherever

to the American

possible.

inaction

subject

people, either by
by inadequate action.
It is through this process that we
justify democracy and justify the

that

intense controversy, as we
know; but the controversial
aspects of it cannot minimize our
obligation to deal with it.
No

arouses

well

democracy
perfection
ment

long

any politi¬
lays before them a
action, the consum¬
mation of which they have a right

its govern¬
citizen to

to expect.

every

Congress

program

democracy, but deny to him parti¬
cipation in its processes when it
has been preSbYved. I have faith to
that

people in

cal group that

offer up his life in defense of that

believe

faith of the

claim to approach

can
so

require

can

elected

International

Relations

In the field of international

lations

tunately

foreign policy, for¬
there was little differ¬

between

the

two

upoh a platform that commits it¬

ence

contending political parties in the

honest

effort to

bridge
this gap between theoretical oblian

(Continued

page

Active Markets Maintained

the

Colorado, Wyoming, Montana

prosperity of every other clas^ of
people.
Farmers buy about

25%

American
as

purchasing

manufactured

This

whole.

New Mexico

25%

Municipal Bonds

employ¬
ment for labor and profits for in¬
dustry.
In turn, a prosperous and
power means

Security

SECURITY

and

COMPANY

BUILDING

DENVER 2, COLORADO
Bell

Teletype DN 296

Telephone Tabor 4154

sion, including soil conservation,
through

COUGHLIN

the

obligation

In view

society to¬
ward those who have spent their
lives in its service, but have not
been

able

accumulate

com¬

far-sighted
which agricul¬

long-term,

legislation,

upon

ture
no

may depend.
There can be
question that this subject will

receive

prompt

favorable

and

action by the incoming Congress.

Congress

may

be expected also

to continue and make

vetoed

BELL, DN 290
Private

wire

effec-

DENVER 2,

harmony and spirit by which
bargaining ought to be

—

DN 369

Gregory

COLO.

Dealers in

bosworth

sullivan

Corporation Securities

was

tor Quotations and Information

& company

TaUtyp* DN 284

and

undertook and succeeded in with¬

collective

Loveland, Colo.

his

drawing essential rights to labor
organizations and their members,
as American citizens, and affected

Bonner

PETERS, WRITER & CHRISTENSEN, INC.

this

platform

feel, that the law

Municipal Bonds of

T*l«phon* Kty»ton« 4241

•

ARIZONA

COLORADO

NEW MEXICO

MONTANA
UTAH

NEVADA

.WYOMING

I7TH

CALIFORNIA

STRUT,

DINVIR, COLORADO

INVESTMENT
BANKERS

great

64)

our

products

re¬

and

self to

helped to
agriculture,

itself

will

by floods, is inconsequential.

Conservation Act, the Price Sup¬
port Act, and the increase in the

and unemployment features of the

harsh; and unnecessary, and that it

the

life

educational system.

our

social security program.

veto. ; The
pledged it¬
self to its repeal, because we felt,
an# I

deficiencies in

cultural

well-employed labor offers a wide
market for agricultural products,
a
mutual
partnership
We have pledged ourselves to creating
the extension of social security profitable to both and indispens¬
able to
the country.
and to the increase of its benefits.
We have
Experience has shown the need proposed, and shall carry out our
in regard to farm
for its extension to cover millions commitment,
of others who are not now cov¬ support prices, the continuation of
ered by the old age subsistence the farm program and its exten¬
Extension

was

support

Democratic

for the support

One of the great

deavored

When
wage

passed by Con¬
gress.;; As a member of the Sen¬
ate, I had -voted against it, and

voted

oppor¬

employment

own

families.

own

American

MAIN 6281

campaign and the past two years,
and
probably in the next few
months, is the Taft-Hartley Labor
The

relatives,

at adequate wages

instances,
families and

history.

Taft-Hartley Act

Act.

burden

people
of the nation. attempt to prepare themselves for
it has been muti¬ the battles of life.
lated and almost stripped of all
its essential powers.
Farm Legislation
We propose,
and it was one plank of our plat¬
On the subject of farm legisla¬
form, to re-establish the Labor
tion, we are equally positive in
Department
as
originally con¬
our
attitude.
We recognize that
templated and make it a real force
there can be no general prosperity
in the progressive development of
in the nation if agriculture lan¬
the
welfare
of
the
American
guishes.
Over a period of years,
worker and the whole American
without regard to politics, under
industrial system, which will
Democratic
and
Republican
automatically benefit the welfare
Administrations, Congress has en¬
of the whole people.

Of course, one of the most con¬
troversial subjects during the past

many

In recent years

petence for their declining years,
acquiesence and support for which and to those who
may be un¬
they have been noted in every employed through" no fault of
crisis

the

tunities for their
of their

who

laboring

because

Wagner Act is undesirable.
Experience makes us wiser, if we

to Congress deal¬

message

modification

some

kinsmen, and create wider

the

done

iri his

that

mean

them

their

those

employed and
because it will re¬

employable,

and

maintenance

industrial profits which American

recommended
the
reenactment of an excess profits tax

beneficial

younger

lieve

have

Truman

of the first efforts

one

Whether

tax because of the unprecedented
business has enjoyed before, dur¬
ing, and since the war., President

be
new

its

considerable

been

also

of the

PACIFIC N'WEST

security

Taft-Hartley Act, and I look for

Question of Taxation

'Oh the question of taxation, the
^commitment of our party went

IBA GROUP CHAIRMEN

their own, we feel that the social

that to

;
v

(2659)

CALIFORNIA

Congress would
Act repealing the

pass

CHRONICLE

program should be ex¬
tended and its benefits increased.

Administration would not
not

FINANCIAL

Congress

mend and that the

public debt.

which this aid is being re¬
While, there will be dif¬

upon

ficulties, and no doubt some dis¬
appointments, I have no reason to
believe that the nations which yve

(Continued from page 63)

committed to the

are

extension

and

con¬

the

have been able to reaffirm more

tinuance

emphatically than ever bur theory
that politics should end at the
Water's edge. Our foreign policy
has been non-partisan,
because
we
recognized, even before! the
termination of the war, that its

Reciprocal Trade program, under
which many of the harsher bar«
riers between nations in regard to
commerce
and trade have been
modified. We have come to know

conclusion

and

would

aftermath

agreements. Our commerce
with trade agreement" nations has
increased during the last 14 years
by nearly twice the percentage of
incteases>"witKnori-tradeagree'

tenance and the strengthening of

the United Nations. If

this great

shall not succeed, man
lose his hope of the future

agency

may

of civilization. Its difficulties are

made more
intransigence of
totalitarian
nations seeking
an
aggression* and seeking to destroy
our conception of democracy. We
shall, to the utmost of our ability,
preserve, strengthen, and perpet¬
apparent, and
by, the

are

acute

uate

the ' United

Nations

settling international
controversies, in the hope that
ultimately all nations and all

means

peoples

will

its surplus

exchange for
we must
afford

ment nations. We know that men

-'■!

committed to the main¬

are

kets in the world for

and

find mar¬

must

had

ihacy. We shall continue this pro¬
'•

nation

those markets,
reasonable opportunity■ for other
nations^, to sell their products to
us. The Reciprocal Trade program
benefited
us
and has benefited
the nations .with which we havC

unity and cooperation among all
political groups, which has pre¬
sented to the world a picture Of
accord and understanding among
the American people, eVen of some
of the more intricate problems
that dwell in the field of diplogram.

our

products,

present to us problems that could
not be solved by any single politi¬
cal party.„We have been happy in
the attainment of that form of

that

the

tribunal of world peace.

must work in order to live. They
sell

must

order that

shall

what

they

they produce, in

be, employed.

may

undertake

continue

this

great program, because its
only alternative is a return to the

log-rolling, back-scratching,
horse-trading days when partisan
politics was the chief motive be¬
hind

the

enactment

tariffs,
upon special privileges to
special interests.
'

based

are

committed

to the

con¬

tinuance of the Marshall Plan for
the

recovery

of Europe, and we

shall honor the commitment: We

shall, of course* expect the bene¬

ficiary nations
their

agreements

carry
as

out

all

Condition

shall

foster

continueto

the

agencies of

peace

and the prin¬

ciples

which

peace

upon

secured.

may

continue

shall

be
to

press for self-government without
outside interference or agression
among the peoples of the world
who desire to be free and among

the

which

nations

attempt

guarantee that freedom.
We shall
peace

fare

continue to press for
treaties affecting the wel¬
of the defeated nations in

World

War

No.

2, and

shall

continue to insist that all the

na¬

tions affected by the aftermath of
war and the collapse of economic

the

dynamic,

ever

long

picture field to pro¬
vide it with a great part of the
entertainment
which
we
need.

without

the

destruc¬

foreign policy, we shall
Neighbor, not only
to all our American colleagues in
the family of nations, but to those
nations

Good

which

seek

preserve

the

<►

::
<►
<►

ATKINSON, JONES & CO.

::
*
«►

J
*

INVESTMENT SECURITIES

<►

J
<►

If, in the period of four years,
we shall be able, through the co¬
operation of the American people
and of the free peoples of the
world, to bring about the realiza¬
tion of these ideals, there will be
glory enough for every man, re¬
gardless of his politics; his re¬
ligion, or his national origin.
In behalf of all these

<►

507

4*
4*

BANK BUILDING

>
«►

PORTLAND 4, OREGON
.

■

promises, I
the

sure

Government

hopes and

I speak for
the

United

States, not only in welcoming, but
in

soliciting, the sympathetic

operation

all

the

co¬

American

„

need not

theatre.

survives the

television,

flourish; there

to. do so."

published

If the motion

are

following is quoted:
"Progressive radio men—scien¬

tists,

plan

and

broad¬

sound

sight;

they

sight.

and

Tele¬

radio of tomorrow.

There has never been

"Opportunities
into

extend

for
television
fields aside

many

It has tremend¬

from the home.

"In March of 1947, there were
only 25,000 video receivers in the

educational

possibilities for
schools, as well as for home ex¬
Today, there are tension courses. It
brings the ra¬
600,000 television receivers
dio teacher into view; permits the,
they
are
going
into
the use of demonstrations and illus¬
ous

States.

American

homes

the

rate

trations and

"Television

fullest

use

the

rest of the

vision

known

flourish

fasci¬

It will not affect the

the radio.

motion picture adversely.
.
Television has something the ra¬
.

never

had—visual imagery. It

appeals both to the ear and the
eye. The talking pictures by ac¬
quiring the extra dimension of
sound

displaced the silent films.

peoples and all people of good
will, wherever they abide.
As we approach the Holy Season
of Christmas, may we be inspired
by the hope that we may ulti¬
mately have peace on earth and
good will to men.
: '
.

major

The

ironed

were

ago."
Wayne Coy,

out

of: it

Chairman of the

Federal Communication Commis¬

sion, states:

"Television, after crawling at a
snails pace for many years, is
now shooting ahead at supersonic
speed.
"In fostering the growth
of Television, the Commission be¬
lieves it is helping to bring to the
American people the most power¬
ful medium of mass communica-*

nating medium of communication.
It will vitally hurt and restrict

Association,

years

technical

surprises.

wrinkles

a challenge to the mo¬
tion picture industry. If it arises
to the occasion, and I think it will

Broadcasters

J. R. Roppele. "It is a mistake to
think of television, as full of un¬

threat, but

will

programing, like the

industry is booming,"
President of the Tele¬

states the

advantages, offers televsion not

gives the blackboard

dimension."

a new

opportunity in televsion
special films to be
shown oyer the air.
It has been
estimated that by 1953 the tele¬
vision broadcasting industries will
require three or four times as
many motion pictures as Holly¬
wood is now turning out
."
"These new movies, with many
new
stars especially suited for
television, and produced to make

dio

sound

vision charts their future—it will
be the dominant factor in the

anything in the industrial history
of our Country to equal it."

the

both

early days of the automobile, the
picture, and yes, even ra¬

over

industrialists

casters alike—now think in terms

motion

and

of RCA, in a
interview, from which

the

18 months has surpassed even the

dio itself.

Chairman

Board

On this same broadcast, James
Carmine, Vice-President of Philco
Corp., stated: "Television is the
fastest
growing industry in
America.
Its progress in the last

vision

international conflicts.

not

"Television
dominates
radio's
future," states Brigadier General
David
Sarnoff,
President
and

those who

will

picture com¬
unwilling to enter this
new industry *.
then my com¬
pany is most certainly prepared
,

panies

flickering light of democratic television and motion
pictures can
as a bulwark against
provide our country with enterthe advance of godless and faith¬
ment and education on a scale
less ideologies, which are utterly
never dreamed of before."
antagonistic
to
the
democratic"
Rouben Mamoulian, who direct¬
ideals.
ed "Oklahoma," "Carouse 1,"
We shall continue to welcome
"Porgy and Bess" on Broadway,
the sincere cooperation of all na¬
and
many
outstanding
screen
tions, regardless of their present
plays, on this same "Town Meet¬
attitude, in the effort to bring
ing of the Air" program stated:
peace of the world, lift the burden
'We're living in an age of miracles
of fear and of taxation, and of the
and television is one of the most
physical and moral destruction
exciting.
My opinion is, tele¬
from
have, from time
immemorial, borne the burdens of

the

and

civilization

it will expand and
is room for both."

institutions

<►

It's not for nothing that
the Roman people was

theatre will live. As for

—making

possible date,

motion pictures

the cry of
for bread

motion

the

television

films, but rather depend

them for its material.

the

worry.

known.

Today the industry looks to

world has

ond great

be the

PORTLAND 5, OREGON

"Television is the most
that

think

upon

constantly growing vital industry

destruction. We shall con¬

mass

In our

tinue to urge disarmament among
the nations of the world at the

tion of civilization itself.

Air" broadcast stated:
-

several thousand per day..,. The
motion picture industry has a sec¬

picture is worth 5,000 words.

harm the

We shall continue to urge in¬
ternational control of the agencies

obliterated

acquires a much
stronger new element — that, of
sight.
And. as the Chinese say,:
one

United

but until
attained,
we shall continue to. keep our¬
selves strong to defend our insti¬
tutions, and to defend the demo¬
cratic
ideals, which cannot be

AMERICAN BANK BUILDING

Television

Woods, President of the
American Broadcasting
Co., on
the Oct. 12 "Town Meeting of the

and political and social institu¬
tions, shall, in good faith, seek to
strengthen
themselves in their
democratic processes, and in the
utilization of every possibility for
economic and political stability.

earliest

M. Adams & Co.

television

Mark

with all the nations of the world.

any

Opinions of Experts

justify

the dignity and the rights of the
American nation in its dealings

program.

that

that great boon has been

(Continued from page 9)
that

seeking to aid will repudiate
their part of the program, but
will undertake in good faith to
are

oui:
assistance, in order
they
may
stabilize their
political and economic institu¬
tions,
resist
encroachments
of
totalitarianism, and build a firm
foundation for future peace and
prosperity.
.We shall continue to maintain

Thursday, December 23, 1948

Television Boom Is On!

ceived.

The Job Before 81st Congress
recent campaign and election.

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(2660)

tion

ever

conceived by the mind

of man."
"In

the past

12 months, tele¬
vision has grown faster than any
other major

industry ever to ap¬

the American horizon.
growth has been sound
and stable and has taken place in

pear

And this

every
phase of the business,'*
stated R. C. Cosgrove, Executive
Vice-President,
Avco Manufac¬
turing Co., in an address at the
20th Annual (Boston, Mass.) Con¬
ference on Distribution, Oct. 25,
1948.

Avco Telecasting

"Our

Station

Cincinnati is growing rapidly.

At the

time, we are build¬

same

ing additional stations in Dayton
and Columbus and have applied
for

permit in Indianapolis. It
surprising then, to arrive

not

at the conclusion that by
less than five

1953—
from now—,

years

television* in all its ramifications,
will be giving employment to one
million persons, and will have in-,
jected an investment of at least $8
billion

into

the

economic

blood¬

stream of America."
*

"As

tain to

Pacific Northwest Securities

Frank Butchart & Co,

the industrial elite.

On whatever

judged. Television is
here." — New
York

"Times."
!js

"Television will one day exceed
sound broadcasting in its scope
and

••

its

influence

our

Na¬

tional Life," states

PORTLAND 4, OREGON
AMERICAN BANK BUILDING

decidely

BU1LPING

Bell System Teletype PD 230

billion-dollar pro¬

Investment Securities

INCORPORATED

WILCOX

assume

portions in another 12 months—
the first 'post-war baby' to joint
basis

BLANKENSHIP, GOULD & BLAKELY

business, it bids fairly cer¬

Edgar Kobac,
President of the Mutual Broad¬

casting System.

PORTLAND 5, OREGON

Conclusion
The

executives

quoted in this

bulletin, are, not visionaries,, Con-

Volume 168

Number 4762

versely they

outstanding lead¬

ers

are

their

respective

Their opinions
respect

and

THE

Sees

fields.

confidence

high

places.
It

oft

times

to describe the eco¬
potentialities of a scien¬

development

accused

without

over

Such

early
the

ing government obligations from
investors
banks.

being

emphasis

"painting the lily"

—

posits

criticism

scientific

accompanied
development of

"telephone," "wireless," teleg-

emerged the mammoth motor in¬

dustry
and
"mass
production"
methods of production; radio and
the airplane, which have convert¬
ed the cosmic sphere into "one

world"; the "atom bomb" with its
frightful implications, and now,
television

straining

the

leash

of perfectionism.

has

socially.
life itself,

revolutionized

produced

countless

organizations

that provide income and
pleasure
for the masses

and—many

mil¬

lionaires.
Under

leadership

such

outstanding executives as quoted
herein
and
many
others — the

that

the

case

transac¬

increase in de¬

the

commercial

exceed

banks,

(2661)

1BA
NEW

GROUP CHAIRMEN

YORK

E. PENNSYLVANIA

either

balances.

As far

Banks

concerned it leads

either

are

case

member-bank

"Purchases

curities

by
others

banks

thus

as¬

sured; and with this broad growth,
opportunities for profitable par¬

ticipation
tion

through

the

careful

securities

selec¬

capably
managed television organizations.
Again we quote Mark Woods,
President of the American Broad¬

casting Co. on the Oct. 12 "Town
Meeting of the Air Broadcast":
"In the

future, I think that films
are
going to play a tremendous
part in the development of tele¬
vision, and I am hopeful that
through the cooperation of the
motion picture industry, they can
really enter a new and profitable
enterprise.
To the motion pieture business, I say don't miss this
challenge. Get in this industry."

for

ments

Reserve

than

the

they

ket

se¬

Banks

needed
time

and

the

pressure

effects

and

the

other

segments

mar¬

affect

the

guided

the

Duncan R.

Since

international

member

condition of the Treasury for even
a
few months ahead, it
may be
assumed that no change will be

tial

banks, the latter's poten¬
of

source

undiminished.
few

remains

reserves

Since

months

during

the

other

made

than commercial banks have been

serve

the largest

port of the government bond

investors

sellers of government

the present

policy

securities, the higher
quirements absorbed
created

excess

Hence,

Federal Re¬

regarding

the

Golf & Tennis Winners at IBA Convention
The
in

following

the

golf

the winners

are

and

tennis

tourna¬

ments at the Investment Bankers
Association Convention held
in

Hollywood, Fla.:
GOLF

mar¬

ask

and probably obtain new powers
not alone over the member banks

essary

alo and Mrs. Thompson W. Wakeley (A. C. Allyn & Co.) of Chicago,

and

but

over

tied.

maintain

stable

govern¬

and

possibly

conditions

ment

securities

reserve

Governors

balances.

the Federal Re¬

authorities consider it

serve

nec¬

orderly

the

market,

requirements

does

tive

except

not

in that

may

exer¬

psychological influence on
the lending and investing activi¬
ties

the

higher

banks

interest

greater amount

will

earning-

reserves.

re¬

sion.
of

other

banks

institutional

the

even

readjustment

into

While

the

moderate

from

serious

the

present

Reserve

and
re¬

reces¬

policies

authorities

government bonds and at the
time raising the

the

same

require¬
ments have been severely criti¬
cized
as
conflicting and conse¬
quently
ineffective, * a
carefm.

corporations

analysis

leads

the

utilization

loans

Plans

Critique
and

and

Summary
Latimer

Report

Documents—William

Berridge and Cedric Wolfe —
American Enterprise Association,
Inc., 4 East 41st Street, New York
17, N. Y. —Paper—50c.
Overseas Information Service of

Charles

States

Government
Thomson

—

The

Brookings Institution, Washington
S, D. C.—Cloth—$4.
Survey
National

Customs

Association

Unions

—

14 West 49th Street, New
York 20, N. Y.—Paper.

vacuum.

terer

—

Capital?—Oscar
Federal

They

Reserve

analyses,

the

conditions,
volume

Lit-

Bank

bank

loans and
investments, by com¬
modity prices, and by the needs
of the
Treasury.
The economic
visibility in the United States
during the last few months of

has

been

low.

monetary
the

prices

and

wiil

continue its upward movement or
whether the forces of readjust¬
ment, which have become evident
in

number

spread

economy.

States
will

industries,

throughout
To

the

depend

immediate

upon

total

risks

that

are

the

taking

discharging

John H.

Garrett Opening
Own Offices in Zanesville
ZANESVILLE, OHIO—John H.
Garrett has opened offices in the
Masonic Temple Building to en¬
gage

future
govern¬

securities

formerly

was

business.

officer

Gar-

retLTalley, Inc.

cago,

runner-up.

Women's

(Special

The

Financial

DURHAM, N.

Chronicle)

Harry M

—

Boyd is with First Securities Cor¬

poration,

111

Corcoran

Street.

MICH.

—

Detroit Stock
mit

Clara

(Special

The

Financial

PORTLAND, OREG.
G.

Daniel

ship

will

Jan. 3.

retire

Louis

Gulf

staff
can

Hess

Bank

Bogey

C, Dubois of N. Y. tied;

draw

Mrs.

Hughes

Alden

Walker & Co.

delphia;

Mrs.

(Mellon

National

Trost

Brian

Men's

Trophy:

Walters, Girard

Christie,

Winner:

the

firm

Green,

Stryker

Malon

and G. H. Walker, Jr.
(G. H. Walker & Co.), New York,

Mixed Doubles:
H.
&

Mr.

director of the Atlantic

Indies

Steamship

Dines.

Bros.
&
Boyce),
Runner-up: James B.
Winsor, 3rd (Biddle, Whelen &
Co.), Philadelphia.

R. T. Reed Director

of Canada Trophy:

Clark Simonds,

The
to

election

the

Stone

dent.

Mr.

press

tied. Mr. Varnedoe winner

Board

the

Reed, is

Director

the

Co.

and

Wells

is
Medal

Gross:

Play Tournament,

Winner:

Walter

also

A.
can

Phiadelphia. Runner-up:
A.
R.
Hughes
(Lord, Abbett & Co.),
Chicago.
Play Tournament,

Low Net: Winner: Allen C. Dubois

Woolen

and

Ex¬

Fargo

the*

Co. He

and of the Ameri¬

Co.

Robert T.

Knight Opens

PITTSBURGH,
Knight

President
American

PA.—Robert T.

is engaging

securi¬

ties business from offices in the
(Wertheim & Co.,), New York.
Runners-up: Dana F. Baxter, JLJnion Trust Building.

the

STATE

Investment Securities

328

director of the Amerex

Holding Corp

(Schmidt, Poole & Co.),

Men's Medal

Directors

Chairmaji

draw.
Men's

Ralph T. Reed

Webster, Inc., is an¬
nounced by Whitney Stone, Presi¬

(G. H. Walker & Co.), Providence,
and Samuel E. Varnedoe (Varnedoe, Chisholm & Co.), Savannah,
on

Board

ihd

INCORPORATED

System Teletype PD

MUNICIPAL BONDS

Bell

Mrs. G.

Walker, Jr. Runners-up:
Mrs. Hugh Bullock.

Hemphill, Fenton & Campbell

Portland 4, Oregon

Courts

(Stein

Building.

The United States National Bank
Bldg.

Pitts¬

New York

Jr.,

Milton

Doubles:

Edward
to

Reuter

Bank),

(Courts & Co.), Atlanta; and Ben¬
jamin Buttenweiser (Kuhn, Loeb
& Co.), New York). Runners-up;
Hugh Bullock (Calvin Bullock),

Louisvile.

Low

TENNIS

Co., Philadelphia. Runnerup: Joseph C. Houston, Jr. (Cal¬
vin Bullock), Chicago.
Memorial.

(G.

(Providence); Mrs.

Runners-up: Frederick T. Seving (Butcher & Sherrerd), Phila¬

Trust

Robert

Tournament:

Simonds

G. H. Walker of New York.

1st prize.

won

Little

Winner: Harry L.

The

Clark

Tourna¬

Allen

McFaul, Ameri¬

Green, Director

West

Winners:

ment: Mrs. Wm. S. Hughes (Wagenseller & Durst) of La. and Mrs.

The

Popper, winner.

Twosomes

Laurence P. Smith

from

Brown, New York City,, has been
elected

On draw Mr.

Mixed

partner¬

Dec. 31.

Louis A.

Co.), Baltimore; Elvin K. Popper
(I. M. Simon & Co.), St. Louis;
H.
Sanderberg (A. G.
Weltner
&
Co.),
New
York;
Adolph E. Weltner (A. E. Weltner
& Co.), Kansas^ City.
Maurice

Chronicle)
—

has been'added

Bennett,

Exchanges, will ad¬

Troyanek

Elisha Riggs Jones (E. R. Jones &

With Hess & McFaul
.

Bennett, Smith Co.
DETROIT,

(Hayden, Miller & Co.), Cleve¬
land; Newman L. Dunne, (Robert
W.
Baird
&
Co.), Milwaukee;

burgh.

Blind

Minneapolis, Minneapolis, Minn.—
Paper.

Smith & Co., Penobscot Building,
members of the New York and

the

draw.

Schmidt

With First Securities

eco¬

developments in the United

Wakeley winner

Investment Bankers Association

will

entire

large extent

involved

conclusion

authorities

lesser

impos¬

wages

factors

their duties in the best way pos¬
sible under rather difficult con¬
ditions."

sible to state with any degree of
accuracy whether the inflationary

spiral

all

reserve

the

determined

are

economic

changes

nomic
Where Does Small Business Ob¬
Its

their

of Manufac¬

turers,

tain

potential losses.''

1948
United

obliga¬

"The policies of the
monetary
authorities are not formulated in

the

mak¬

writers state:

the

acquiring

means

Concluding

Employment

—

and

for

in varying
degrees, some banks
will have to increase their
capital
funds in order to be able to ab¬

Bookshelf
Guaranteed

proceeds

exchange
of riskless
assets, if held to ma¬
turity, for assets involving risks

sorb

Wage

Mrs.

other

maintaining the support prices

non-

Because the sale
and

prevent

generating

securities

commercial

desirable

tied

government

lead

since

the banks'

sources

and

rates

all

will

hand,
Women's Medal Play Tourna¬
should the forces of readjustment
ment, Low Gross: Mrs. Sewell S.
prevail, the Board of Governors Watts,
Jr., (Baker, Watts & Co.)
probably will take measures to of Baltimore;
Mrs.
Leonard
J.
ease the money market in
order Paidar
(Goodbody & Co.)} Chi¬

the availability of bank
and the policy is ineffec¬

cise

undoubtedly

investors.

raising

decrease
credit

inflationary forces
aggrevated, the Board of

become

Jr.

Whiting, Weeks
& Stabbs, Boston

sup¬

ket. Should the

re¬

newly

Howard M. Biscoe,

Philadelphia

Women's Medal Play Tourna¬
ment, Low Net: Mrs. Roy W. Doolittle
(Doolittle & Co.), of Buf-

the

reserve

long

reserve

Lloyd

Drexe. & Co.,

the

political

situation renders it almost impos¬
sible
to
estimate correctly the

the

Gates

Corp.,

New York City

do not reduce the amount of
gov¬
ernment
securities held

Linsley

First Boston

above-men¬

developments.

unsettled

purchases

the

will

extent

tioned

buyers'

broadened

and

authorities

large

de¬

new

these

with

inflationary
will gradually disappear.
policies of the Reserve

"The

require¬

reserves

current

operate

economy

create

posits. -Because

taxes.

will

supply the banks

the

tions of political subdivisions and

Man's

ENGLAND

hand,
should
expenditures
for
military and foreign aid purposes
be
limited, then the transition

commercial

reserve

same

the

ing

Business

NEW

Congress will have to

from the sellers' to
government

nullifies

raising

forced

increase

and

deficit

government se¬

the

from

increase

reserves

their holdings of
curities.

the Re¬

considerably

—

future growth of Television is

estimates, then the Treasury will

re¬

serve

last
the

CHRONICLE

ment expenditures in general and
military and foreign aid expendi¬
tures in particular. Should these

commercial

serve

with

The transition from
mystery to
established fact has enriched the
world economically and

than

accompanied by an increase in

t^phy,

"moving
pictures,"
the
"horseless" carriage;"out of which

other

tion results

to speak.

FINANCIAL

(Continued from page 12)

difficult, if not

imposible,
nomic

tific

Pegged Bonds Counteracting
Higher Reserve Requirements

accepted with

are

COMMERCIAL

Bond

FIRST
OF

Department

NATIONAL

PORTLAND,

BANK

OREGON

(2662)

COMMERCIAL

THE

lower than

Reasons lor Higher
(Continued from
the

while

come

railroad

rates

re¬

unchanged.
The
sharp
decline
in
total operating rev¬
enues
in 1946 as compared with
the immediately preceding years
substantial

with

has been using up their
working capital.
This has been
true not only because of the low

in¬

the

gin for the entire period shown
one exception
(1920).

12.4%

low ratio.

very

result
and

for the

assured.

in¬

ship

re¬

ties."

<., v

other
not

but in

some

dustries

able

t i

a n

which

other in¬

undistributed

will provide a

less than- half

this

1936-39
the

about the

was

allowance

the

become

even

clearer.

It is

all

tal

investment

and

phasize

for

This is true

capi¬

replacement

few industries in which the neces¬

sity for continued replacements is

profits

cushion for

pronouncd

for

railroads.

be noted

emphasis has been placed upon
desirability of a return of
5V2% to 6% as the legitimate ob¬

the

for -the railroads of this
With prices more than
higher than in the prewar
years, it is important to keep-in
mind that a 6% return today has
the real purchasing power of about
3.5% before the war.
As has been
jective

FEDERAL

INCOME

TAXES

the

leave
AND

NET

RAILWAY OPERATING
RAILWAYS OF

INCOME TO

CLASS I IN

TOTAL

REVENUES

net

100

$10

has

position should any decline
operating, revenues occur. The
directed

this

excessively

Bottari
R.

1— —T—T"

In,

Co. and Blair & Co.

past he was trading manager

for Sutro & Co.

•

Weekly Firm Changes

in poorer years. The

return

changes:
S..

would

substantially

below

. —1

Kutch

member

•

■

/v;

CO.;will

dissolve

Dec. 31.'.. y

: >;•;

Louis F. Branch will;withdraw,y

partnership in A.?, E. Masten.

& Co.

Jan. 3.

* '

Lehane, member of
the Stock Exchange, will with-,
draw from partnership in McDon¬
nell & Co. Dec. 31.
• /
' 4,
ii
/

INDUE •

i—r T

I!" I 1

m,;

DeCoppet & Doremus, died'..,

12.

Dec.
r

Fletcher retired as

Exchange

Dec.. 15.

;

Co. /will

firm. .On
V.:
Rowland Stebbins, limited part-';.
r

" '

original cost.

v. -

Dunham
an

5y2% to 6% of a property account
based

'■
\
»,
w
Blumenthal &

dissolve Dec. 31.'.'vy".?;*.*.?<w-

that the average
period of years

assures
over

The/New York Stock Exchange:
following firm,

<ner

fact,

;

has announced the

granting of the present demand
would yield the average return,
not one above average. By that

MIlW 0FWATHIO INCOC, USD 0* fflSKD » MI LIKUD CONSTRUCTION

Mr.|

high

obtain

objective is to

CHART II

San

previously with WmJ

was

Staats

the

from
■

Bottari

Tony

Building,. members of the
Francisco Stock Exchange.

New York Stock Exchange ;

the

that average

net

net worth based
upon book costs. These book costs
involve
original cost, which is
usually
substantially «• below
present values. To the extent that
this is true, it follows: that the
return on the actual net worth is

associCo., Russ'

this

the return should be above
provide an offset to
the " inevitable
declines
below

dollars applied to

Kaiser

with

ated

that target to

worth reflects earnings in current

SDJOMtD NET

—.

Tony Bottari has become

years

during the

return

the

Basically,

CALIF.

FRANCISCO,

railway operating
necessitate a rise

average return of 5V2% to 6%,
then it follows that in prosperous

past half century,
(SCALE 2)

(SCALE 1)

SAN

would
of

This is true.for another reason.
If

railway operating income than
yielded
years

With Kaiser & Co.

railway

goal.

the

over

the attainment of
6% return, would

the

Tony Bottari Is Now

deprecia¬

attainment'

net

represents

the industry with less real

re¬

upon

objective, therefore, is that it is
too modest, rather than that it

general price level in the
substantially above

most

railway

this/' total

the

criticism

such a return would have

THE UNITED STATES

Traders Association;

Security

of New York.

em¬

able

future

below
the
ratio
prevailed in past pe¬
riods bf prosperity.
It would still
leave the industry in a vulner¬

stated, even a major
prices is expected to

5 V2 %

the

Co. Both

man

total

which

75%

Thus,

department for Hettleare members of-

arbitrage

substantially

country.

near

and

operating revenues to
billion, the ratio' of
net railway operating income to
tal revenues would be just about
13%. ' This is a lower ratio than
in 27 out of the past 38 years and

next few years,
TOTAL OPERATING REVENUES AND PER CENT OF

return1

Since

above

leave the

business..

Young

yield $1,374 million.

The investment in

decline

property after depreciation at the
end of 1947 was $22.9 billion. A
6%

the historic level.

CHART I

'•

investment

property after accrued
tion.

fect

previously

order

represented by

book

the

prevail¬

I have

conservative
6%

how

turn

them

mentioned

would

made

will

alternatives

these

income

However, there are

important.

adopted at this time.

prices and costs and their ef¬
upon the purchasing power
business dollars. For years the

current

upon

recognized, of course, that
little
possibility "that

re¬

could

based

securities

Heriry B.^Gersteri. Mr. Young was:
a partner in Young, Aal & Golkiri.
be Mr. Gersten was manager of the'

may

either

present situation.

point

make

amount

which

industries in

for

there

ing in that depressed period is a
sufficient commentary upon the

other

would

turn

$555 mil¬
lion, or 28% below the 1922-39
average
of $772 million.)
This
evidence could be multiplied in
other ways (e.g. price levels, in¬
dustrial profits, business failures,
etc.), The fact that real net rail¬
way operating income in 1947 and

A Return of

Heriry B. Gersten

R. Young

engage in
a
Partners
are

values.

was

1948 fell below the level

of these alterna¬
possible a re¬

Either

tives

For railroads,
average net railway

1936-39

higher than

ported.

period 1922-39.

the

return

applied to the book values as re¬

for

same as

rate

example, for all
the profit in years

(For

corporations

that

means

situation,

be applied to the replace¬
ment value of these properties, or

ing the late 20's and only moder¬
1934.

railroad

the

could

dur¬

ately higher than in the years 1931
to

terms

connection with these changes

When

even

large

the

values, or alternatively a higher
of return can be applied to
values as reported.
In

receivership.
The average level
of net railway operating income
was

one

the book

was

earnings,

rate

the higher cost of replacement at¬
tending current price levels, the
dangers inherent in this situation

adjust their
costs more rapidly to meet pe¬
riods of adversity. In
addition,
their large
earnings under to¬
day's boom conditions have made
it
possible to accumulate subare

that

mileage

lower

upon

equivalent of current replacement

railroad

Ex-7

change Place, New York City, to

the

use

revalued

can

margin

values

10
million
Approximately one-third

the

being
40

two alternatives is available. Book

be used.
On a
basis, unemployment

based

costs and current

may

from

values

restored

that

margin of profit is an over¬
of actual profits be¬

cause

During periods of de¬
many

that

ard

One

railroads.

book

1935-1939 represented

national

created

discrepancy

depressed period by any stand¬

italics

statement

been maintained
cases they have been

activity,

The years

offices

with

attempt is

to be made to compensate for

which

margins

industries,

twenties.

20,

imperative

the

for

only

increased.

clining

satisfactory

low
In

have

1948,

(May
added.)

membered
-.

late

the

above the level of the late Twen¬

a normal margin
period, contains the

the future.

contrast, for all industries com¬
bined both dividend payments and
retained
income
are
running

could wipe

difficulties

substantially

running

than

lower

dustry to obtain

serious

been

present inadequate profits.
The inability of the railroad in¬

this

dividend payments by

the amount of retained net income
has

company.
It follows that if

current earnings.

(lersten

Young
formed

today's prices, the cost of the
plant would be $200 not the book
cost of $100
shown by the old

financed to some extent out of

operating income

for the years 1925-29 and

average

out the

for

out of receiver¬

companies have been less
than three-fifths as large as the

operating income before
has been true in the past.
This means that relatively small

seeds

come

roads

the

trusteeship have begun to
dividends,
but
the
total

"Recent

during

some

the

railroad

railway

would

since

tionally lower."

are bound to be reflected
in much sharper decreases in net

regular dividend
stockholders. The

increased

amount paid out has moved frac¬

place,

volume

than half of

replacements

and

plant—expenditures

people.

pay

Declines in total operat¬
revenue,
when
they take

has

which have

dustry.

substantially

additions

Young ft Gersten
Forming in New York 7

of the

larly important to the railroads,
must
continuously make

fewer

reduction

power

If the

worth at

the net

today's prices was $20,0, then $10
of earnings would represent a re¬
turn in today's markets of only
5%.
If any orte built a concern

This is particu¬

dollar.

business

ranged

Class I railways are cur¬

making

purchasing

Current

meant

has

also

the

Department

Survey

since

war,

in terms of the future of this in¬

duce

are

Commerce, that:

rently

But, it is evident that

decreases

the

payments

point has great significance

taxes,

number

margin is still very low as
compared with prosperous periods
of the past.
This low margin' or high break

ing

which

difficulties

"Somewhat

the

even

It has recently been pointed

the 131

allowance is made
cost increases already

new

the

before

ment,

are

reserves

Business of the U. S.

granted late in 1947, the
showed some improve¬

creases

margin

rise

are

out

increases

realization

full

the

prices has resulted in
a
reduction of purchasing power
for the wage-earner. Of equal im¬
portance is the fact that this price

value

actual

which

margin and they will have
accumulated

worth of 10% is indicated.

frequently emphasized that

rise in

the

their

tries.

rate

further

railroads

the

meet

find a
For 1948, as a

of prosperity,

engendered by that vulnerability
than is the case in other indus¬

period,

despite the rate increases granted
during that year. In other words,
instead of the high ratio which
would
be
anticipated during a
period

increases

between

increasing costs.

less

one

was

It is

in the

prior to 1943, the margin of
railway operating income plus
at

because

but

Railroad

Power

For-example, If
an
industry with a book value
net worth
of
$100 has current
earnings of $10, a return on net

Profits

vulnerable because of the decline

year

taxes

and

Thus,

1947, although railroad gross
were greater than in any

of the lowest for the entire

delays

rates

revenues

income

obtained

returns

with

net

sur¬

pluses at the same rate while
their expansion and rehabilitation

in wages and other costs
reflected in the lowest mar¬

accumulate

program

creases
was

able

been

mained

combined

Purchasing

suggested by the fig¬

published;

ures

Rail Rates

periods of adversity. In contrast,
the railroads, which are subject
to violent fluctuations, have not

14)

page

increasing total operating in¬

Thursday, December 23, 1948

CHRONICLE

FINANCIAL

Daniel

Simon
will withdra\y.
from partnership in Ungerleidbr
& Co. Dec. 31,
f
.;
Harry

• ■

<■

■

Frederic

Winthrop, Jr.v limited

will retire from
Wainwright & Co. Jan. 1.
oartner,

C»

Endicott J.

King will retire from;
partnership in Walston, Hoffman
-

& Goodwin Dec. 31.
1

At,rag

M35-W3*
a

William D. Winchell of Buffalo,

general partner in Goodbody &
will become a general arid
partner >Jan. 1.

Co.,

limited

'■

■■

Richard L. Morris, general

part-

will become a limited partner
Hayden, Stone & Co., effective

ner,

Jan. 1.
i

1911

'IS

*20

'25

'50

*35

S*c4*4

areas

art

psrlodi of taalnaaa contraction.

W
fM

«rs
M

ev
*4

,1,

—i

I.I

J—

UN
N
W\
- —

so
O

«-

«o

—

Jij

1—1—

__i—j—i—

<u««WN«r~«o».Q

—

-H

—T

tSU

£li

Robert

ftuwi

Vol nation,

~t ■

■

•**

Intorotato Cowroo Coaoloolon.

- —»-

Struthers, general part¬

Wood, Struthers & Co., will
become a limited partner effective
ner

„

Dec. 31.

•

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

CHRONICLE

(2663)

IBA

We Are Not

(Continued from page 16)
followers. They are cold, cynical
realists, unswayed by emotion.
Second,..thero 'is th£vintell6ctual
V^communist. He may ; be utterly

ideology, but look at the different sidiary to it.
If all the world
tactical approaches on this prob¬
really- .believed in it and gave
lem in Italy and France.
reality to .it, all the things which
In Italy where farm land is held communism rails
against would
in huge estates, the communists'
gradually disappear.
promise to break up and distribute
;
How could there be war if all
the holdings among the people.
people set a precious value on
In France, where there is wide life itself?" ;
;
* :
diffusion of land ownership, the
How could
there be injustice
communists have submerged prop¬ and discrimination if the indK

believe completely that

com-

-munism'is-the sheltering arm for
despairing.

||Hewith the th'ej^eti{5al :trtdpia he calls commun¬

;/>the-world communist.
He may
/ have a personal grievance against
th;e .old
tion

childhood

memory

injustice to himself or to his fam¬
ily may prompt his conversion.
Or, again, he may be merely frus¬
trated

inability* to

own-

anead-

world.

in '

a^'

democratic

He may believe that com¬
will give him the miracle

munism

his

move

rebirth.

Fourth, there is the emotionally

immature communist.

•

.snared

,for;„

He may be

the communist appeal
brotherhood of man.
He
by

land

concentrated

:possible .-he

rrevels

■

the

nique.

On the

for,. themselves

row 't

children.

and

Communism

the

gulped
story that communism will in-

j 'the

j.evitably rule the world, and he

l-.wants to be on the winning side.
Caught young, this type of com¬
munist often

faith-

think

for,

falls away

matures,
himself

stands that he

from the
learns to

under¬

and

•

duped by false

was

slogans and false promises.

Fifth,. there
communist.
ism

'fine

stomach

He turns to

sheer

commun¬

desperation.

The

him.

Saving the world

lit¬

means

nothing to him either.

wants to

himself.

save

of a materialistic Utopia. It
going to end war, it says; and
depressions, all want, all in¬
justice, all inequalities.
It will

He is hun-

The democracy he has known

<gry.

and

ises

communisihr-ringUoud in

which

ears

belong

starving

Communism dangles-before the
•man
who has nothing at all, the

promise of
in

a plot of land—a share
factory—any material in¬

ducement

want.
It was
with
such
glittering -and gaudy
*'pledges for the future that com¬
munism

than

sia

are

million

•

card-carrying
today—more than in

communists
any

headway

In Italy there

two

marked

made

Italy.

may

dandruff and the

But

her

Russia

sons,
one
out
Italian
voters,

of every three
; cast
communist
.

'*
-

The great rank and

munists

and

thizers

world

today

type

—

worker Jevel

where the main

cold.

common

propaganda

the

salesmen

Can

and

years

countries

the

and

call

them

laugh at them.
Let's

ability of communism to

grievances of the

power

masses

lad-;

then

entrenches

communism

once

it has

because the se¬
out when the

power,

ballot

goes

police

but call it what

meet it head-on.
with

will,

must

must
meet

positive ideology of

Communism

weaknesses:
some

the

sooner

our

strengths.

weaknesses

selling

our
our

should be able to

the

overcome

She

World

bat

Communism

world

the

democratic

ide-<

ology?
What are we selling and'
ought we be selling? What;
think

we thought.
it to its feet

than

improve

living

standards

around the world begins to unfold.
We are finding more
economic

political
we

precious thing
<

the

cardinal

democratic

Everything else is sub¬

-does'.

decay

and

moral

taken.

industrialzation.

program

America, true
China, true anywhere you look

around the world.

The next dec¬

ade will

inevitably see industrial¬
ization surging vigorously ahead
at a sharply accelerated pace. We
can

give

and

should

many, areas,

terest

upward

push

self-in¬

our
so.

To undertake and underwrite

program of world-wide industrial¬

ization

part

our

business-like basis is

dustrialization
way

A Global Program

The

I suggest means
organizing on a global scale to
utilize fully all the world's natu¬
ral

trialization

manhour and this is the
that

living

only

standards

per

intelligent

see

set

item accepted as a necessity,
just as we accept the permanent
budget item for our armed serv¬
ices.
Both are security measures.
an

One is

prevention; the other

pro¬

tection.

way

can

for

recovery,

things, I should like
up
a
permanent
World
Economic
Development
This would mean a
Corporation.
fusion of government funds and
the capital of private enterprise.
Such a program would involve
a permanent budget item for us—

Because indus¬

output

reclamation,

resources.

for

To do these

always the key

increases

human

organizing

land use, and for the proper flow
of capital.

to lift living standards.

Why is this so?

and

means

for

responsibility. In¬
is

program

Hand
ment

raised.

in hand with

corporation,

(Continued

develop¬

propose

68)

on page

PACIFIC NORTHWEST COMPANY

decay*

exists,

out.

must

• UNDERWRITERS

rooted

billions

voted

aid. for

two

for

purposes:

Telief—to

fulfill

man's

ate

urgent

need

and

life—and

would

Pacific Northwest

mutual

first,

• DEALERS

for

since 1913

immedi¬

for

Offices in 8

the

Markets Maintained in

second,;

strategically located
Pacific Northwest

PACIFIC NORTHWEST

cheating

the

SECURITIES

taxpayer if the money
only for relief and not for

traying the

Serving the

• DISTRIBUTORS

We would be

be-1,

cities.

ATT SEAT 187-188

of democracy if

cause

this money were used to perpetu¬
ate

injustice

EXCHANGE

inequality—to

and

Our

gram

one

communism.

recovery

answer

pro¬

PORTLAND

TACOMA

YAKIMA

EUGENE

ABERDEEN

stomach

Necessary as it

BUILDING

SEATTLE
SPOKANE

economic

BELLINGHAM.

is,

arena

event of Democ¬

being
PORTLAND

Brokers

•

EUGENE

SPOKANE

Communism?

Create

communism

takes

Underwriters

•

Dealers

can

.utmost; through
her ideological
warfare with democracy. Every¬
where you

must

measures

That's true in South
in

expected. Wherever this

poorer.

is the most

Cleveland

alone.

vidual

earth.

ECA

I'd like to suggest some.
The world needs a monumental

make the rich richer and the poor

Hayden, Miller & Co.

enormity and magnitude of

ought to be sell-'
ing is. simply this: that the indi¬
we

Louisville

the task is just coming to light as
our
vast program of mutual aid

aggravate them and
advantage
of
them.
She
She exploits them to the

take

democratic

formidable

reconstruction.

what
I

than

the

com¬

build

the

of helping

The

and

But

sicker

The task

are

employ to

can

democracy.

went

Other

depend

American

Selling Democratic Ideology
What

Democratic

Performance and works

SEATTLE

.tions, in which

can't

for reconstruction.

our

powerful

story we'll have to tell.

against the
salesmanship
of

Task of Building up

necessities

And

Galen Miller

J. J. B. Hillarcl & Sons,

Co.,

inc., Chicago

and

in.

come

Ideological warfare is a highfalutin' phrase in American ears,

own.

way

pressure

than

secret

make

struggle of ideologies
today, this is a buyers' market.

that

irreversibly by police state
No country thus far has

Russia

that

and

communism which peddles its bag
of promises from door to door.

methods.

cret

converts

high

deadly serious
converts its ^ ideology thought.,

power,

concept.

the

use

ders to power is a

customers

best tools

laughing, and start
thinking and acting wisely. The

get

They accept them

quit

thing.

folded and complacent hands. We

absurd

preposterous, but there are"
millions
of
people
who " don't

sell

for

In the world

and

communist.

Russia cannot create the condiroot.

We may laugh at the communist

promises

That's

last

the' satellite

fifth

this

Communism

vs.

fought.

come

stomach

the

sympa¬

non-communist

The

racy

file of com¬

communist
the

the
the

places of the world
today, it is no longer enough to

last few years.

other country outside of Rus¬
itself—and eight million per¬

ballots in the last election.

buy

In the market

whitewash
the
hard¬
ships, sufferings and injustices in

ill of the world—down spread out the wares of democracy
including
rheumatism,: and sit behind the counter with

him, and the thrown off
resounding' prom¬ come into

world

democracy when
does
the
thinking

every

;seems to have failed
new

the

the mind. * The bargain
counter
days for democracy are at an end.

all

stomach

prom¬

and

Marion H. Cardwell

Andrew M. Baird
A. G. Becker &

But

concept

political,

sovereign being;?
we can't expect the
hungry

masses

cure

and

bouquet of blandishments
beguilements.
It has some¬

anywhere be
choose freely

man

and

thing for everybody in its

men

social

and believe them.

points" Of communist ideol¬
mean
little or - nothing
to

ogy

tle

the

type

mixed

con¬

simply have

may

could

economic order he desires if

their

offers

How

denied the right to

positive side,

Russia is trying to buy people with
the promise •- of a better tomor¬

spiratorial aspect of communism, skillfully
l Or

OHIO

■

-may see it as the only way for
'him to help reform the world.. It is

NORTHERN

division

ises

VALLEY

and; vidual is more important than all
injus¬ other things?
*
tices and hardships of industrial
How could there be class
strug¬
workers. ' 1 .'
>
"
gle in a society wherein each man
Capitalizing on'thd injustices Of respected the inherent rights and
established systems is the
nega^; dignity of the other?
about

aganda

have

order;• racial -discrimina¬ live side of the. communist tech-i
the

OHIO

vfhe*. MpelesS :ahd; the

ism.
_i,j*'
'
V'"
'
r.*. "Third,' there is the man-againsf-

GROUP CHAIRMEN

STATES

;|'*xsincere in a faith that communism
^V^lStaJl it claims to be. He may, in
jfaet".

CENTRAL

TRADING .MARKETS
PACIFIC

look, communist tech¬

State and

U. S. Government Bonds

MAINTAINED

NORTHWEST

Municipal Bonds

SECURITIES

niques twist and turn and back
anu^fill in the hunt for the best
chances to stab at
the existing
order
ures

It's
-

and

needle

lor

its

fail¬

and inequities.

important to keep in mind
communist dogma re¬

that -basic

mains

fixed,

and

its

Seattle

ob¬

jectives. But its' methods and ap¬
proaches- are as shifty as the foot¬
work of
JLust

skiHedbiojtex:./ A;o'■!r>;
communism

plays oil
'the varying susceptibilities of dif¬
as

ferent kinds of

proach

individuals, its

may vary

.country.

;

Collectivization of the land is
,

fundamental dogma of communist

Municipal and Corporation Bonds
MEMBERS
New

York

820

First

National Bank

FOSTER & MARSHALL

ap¬

from country to

Stock

Exchange and New

SECOND AVENUE,

Teletype SE 482-483

York

Curb

BOND

(Associate)

SEATTLE 4
Telephone SEneca 0680

MAin

3131

DEPARTMENT

Seattle 4, Washington'

Teletype SE. 489

(2664)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

We Are Not

Winning
Securities Salesman's Corner Against Communism

Our

Reporter

(Continued from page 67)
vast
extension
of
"partnership

By JOHN BUTTON

capitalism."

Governments

By JOHN T. CHIPPENDALE, JR.

Partnership

capi¬
private
genius in

Firm

prices, with increased volume give a con¬
How to expose
structive tone to the government bond market.
.
Operations
qualified investors? How to meet capital and business
appear to be largely monopolized by commercial and savings banks;
new prospects op an
advantageous basis? ^fow to gain attention?. How partnership with the capital, the,
with dealers eoming into their own as activity expands, . . . The
to get before the right people to tell our.
story? Here is a new ap¬ manpower and the resources of
movement from shorts into longs seems to be making more headway
Its purpose is a
proach—CAN YOU TALK ON YOUR FEET ABOUT YOUR BUSI¬ other countries.
with savings banks now letting out the near-term maturities to take
mutual and cooperative develop¬
NESS? Can you stand up and tell, others about it in an
interesting
on
higher yielding tap issues.
There appears to be more con¬
way for half an hour?
If you think you can, then how about this ment of industry and commerce
fidence in the market that prices of eligible Treasuries will tend
•—here is what happened to one investment dealer that tried it.
among
nations.
In
this
way,
to gradually improve, because of the better demand from deposit
America makes available to the
He belonged to a club composed of about 400 members. He was
'
world one of its greatest assets— institutions.
active in its affairs. One evening at a meeting of the board of direc¬
the American capitalist with his
The Zl4s due 1956/59 have been well taken with the demand
tors, before they got down to business, one of his fellow members
dollars
and
techniques.
While
asked him what he thought about the stock market. He
widespread.
The longest taxable bank issue is also under
spoke: for a
government aid and partnership
moment and the things he said seemed to
register. He noticed that
accumulation, with the better prices due in part to the easing
capitalism are entirely different
the others had stopped talking and were
listening to his remarks.
of the pressure of selling by savings banks, which seem to be
in
approach,
they
complement
He cut it short and the
meeting went on. But as a result of these
each other in their ultimate ob¬
about through with their switches out of this bond.
tew remarks he was asked to make an address before an
In the >
open meet¬
jectives.
'
;
ing of the club on "Investment Policy."
tap issues there has been interest in all of the bonds, with the
Does this sound staggering in
This club is composed of. professional and business men.
They
2Vis coming in for buying from some of the savings banks. . . ►
are interested in knowing more about "sound
Yes, it does.-, But so are
investment"; they are scope?
The problem

ourselves to

talism

of prospecting is always with us.

people who

American

means

are

advancing

...

that

men

have

manner

subject

all

: men

Here is

about

has

development

the,

for

prospecting wide

ities.

functions

how

have

—the

better

job

•endless.

ITIES

KNOW

MOST

Orders,

when

THE

HOW

you—make

clients.

If you

SHOW, OTHERS

YOU

vast

AND

WORKING
IN

THE

town—help

you

Why not offer

that

you

out

are

TWELVE

direct

know

The trouble is

INVESTMENT

the public and

done

so?

HAVE

What

this

among

the

make

Circumstances

some

club?

possibility

have

are

the

What could

freedom

want

nation

for

was

world

our

busi¬
we

ask

yourself,

owned
owned

U. S. Government Bonds

own

house

farm

nental

determined

built

Have

this

your

great

got

market?

people,
all

all

Why not be the first

friends and neighbors about

how

they too

better investment?

can

live better

Is there anything, any¬

What do you think?

divine

tion

Over-the-Counter Quotation Services

For 35 Years

America.

is
to

the

NATIONAL QUOTATION BUREAU, Inc.
Established 1913

who
of

New York 4, N. Y.

end

tary

our

the

that

need

•

who

the

great

and

cannot

chosen road.

parts

men

and

the

many

rates would seen

not

increased

tighten the

because

then

markets in order t

money

pressure

sell

securitie

government

virtually

for

loans

and

only

cease

demand

not

the end of liquida¬

mean

investors.

non-bank

Commercial

fear

higher

banks
reserve

sellers of Treasuries but

...

demands being made by the mone-

that

operate

however,

who

support

for and obtained

the money

over,

it.

belief

that

The

about evenly

are

the

markets and :

opinion

divided

controls will

new

;

are

asked

that the powers that be will be in

to meet whatever conditions that

future

since there

position

might arise in the future^

Legislation to bring non-bank investors under regulation of the
authorities

tained.

believed

among

the

most

likely to

ob-

■
>

REVERSAL

TREND

With "the

—

movement

on,

which

believe will take

many

allocation economy to a competitive economy,

changed attitude in the

government

bond

quotations

floors

about

should

how

of the

many

Under

the

make

matter of

way

of bank
and

now

for larger commit¬
i-

...

competitive economic conditions and with the infla-

softness, which would

markets might

money

portant seller would be

even

display

that present positions in the

mean

eligible issues would be very solid.

the

question in the minds

shorts be sold to

tionary pressure relieved, the
some

The fear

of the longs should be bought

in the distant maturities?

ments

from support levels, the talk is not

away

Then there

maintained but how far will Federal Jet pripes

being
.

move

there is developing

market.

pegged prices not holding is disappearing. '.

from

This time the only

Federal, which would

im¬

reversal of

position that the Central Banks have been in recently.

morning

the

ey^rywhere

the righteousness

believe

1949,

money

The 1*4% certificate rate should hole

should

The

would

legislation,

advance?

trumpets to resound

believe in

decline

forces, which would be passing with the lessenec
.

b,y

institutions

investors

group

time,

rally

authorities for greater power

than

discouragement

uttermost
to

ters, would also result in
v

women

time for reveille. This

funds

question.

lessened

income.

fact,
we

faith, this should be for

freedom

man,

Francisco

and

other,

exalting

the

earth:

enough

ourselves

let

from

time for

markets, which should

Easier money market conditions, it is believed in some
quar¬

cannot long

have

nor

hour and

San

for

funds.

requirements

things

principle
—

men

You

each

such
an

channelled, there

can

money

might turn out to be sizable buyers because of the need to main¬

one

single

faith

distract

the

substantial,

very

demand for government securities.

requirements

securities

capacity to inspire faith in others.

still

funds that would be used to finance industrial expansion would

with

courage¬

perhaps

other

any

know fear

were

these

and

our

education

funds

further rise in short-term

any

for

conti¬

triumph and prevail.

With

46 Front Street,

better

demand

not

to get

concept of democ*

sovereignty

look to

can

tone

easier

investable

outlets into which it

many
an

reserve

tain

simple and essential

the

challenged,

faith

Chicago

together

the

that

racy—the

your

and

the

would

our¬

In this rededication to faith

becoming investors in American Industry.
where, that is

today.

man's

in the not dis¬
•:

supply

out of the

to be

coastal

our

But

faith

ONLY

What do you think?

have

1948.

town to start telling

business

all

people—and

must

one

Faith in

are

■

bonds, exclusively of U. S. governments,*

Management," November

were

nation; it kepi

civilization,

without

78% owned life insurance

•"Sales

thin -little

faith

countrjy:

them

savings accounts

48%

richly

leadership.

ourselves

still

were

STATES:

46%

9% owned stocks

that

say

powerfully equipped.

Faith

owned

BUT

simple fact that

never

This would mean

Commercial loans appear to be slowing down,

also be eliminated and this should

immodest

other

except

ourselves?

not

endowed

things

Why haven't

Look at this and

45%

;

possibly lack in

without

in
is

which absorbed the lion's share

MONEY RATES

daring people, a reckless people,

UNITED

their

and

opportunity there is it together and molded it when

country to sell

checking accounts

reflected

....

this year.

case

money,

the

many

back?

believe, then

THE

landed

it shouldn't.

for business. It's

GOOD JOB?

owned

not

should

biggest human

Should this task frighten us?

faith

while working

year,

reversal of the up-trend is looked for

definite

the

was

mortgage

savings in 1948.

and

com¬

the whistle.

RAKE.

likely to decline next

reached peak

expenditures for

capital

jam in history.

ous

39%

demand

restrict inflationary

YOUR

that

out

Housing, according to indications, will require

for

even

these

less

With

doubt

1949 than

tant future.

pointed

are

less funds in

indus¬

nations—all

whole

demand

grab

meanwhile sell themselves.

being

capital requirements will probably decrease with stable or receding

but

selves founded this

masses

in the middle of it and handed

say

industry

power

shortage

and

capacity to lead the world along

Out of the 48,400,000 spending units in

fears

skills—the mutual

woeful
tools

levels.

commodity prices.

science—

hungry

could possibly lack.

DEALERS

holding

DONE

mistake about it—people

haven't told them.

for the
ness

Make

and

inyestment—ABOUT MAKING MONEY.

about

has

the side of those

who believe that the postwar rise in interest rates has

the way to peace without war and

FOOT

cessfully?—What Is Behind the Stock Market?—These

want

living

than it
-

turbulence

friendly

obtain

Investment Policy—The New Wall Street—How to Invest More Suc¬

people want to know about today.

SEEN

ours

services to

your

for

DEMAND

More money market followers are going over to

INDIRECTLY

MEANWHILE

with

life

better life

pressures

trial

business has much to recommend it.

GOOD

world

newly conscious of political

SECUR¬

WHAT .YOU SAY-THAT YOU KNOW

PROSPECTING

man

bine to

could build good

civilized

swirling revolutions in hu¬

traffic

ARE

feet about this business of

and

The

list

whole

moment

known.

ever

sources

facts—the

HARD

ENGAGED

your

MANNER,

about it?

thinking

TODAY—SO FEW

interesting-subject—where there will be

program—

clients

our

the

get

can

ARE

known

talk

can

ARE

How to go

anyone

they

WHO

JOB, this method of building
HERE

help

short talk along these lines

you

OBJECTIVE

the

are

This is

between

markets— —the

investment

services—our

EFFICIENT

PEOPLE

the

death

feet,

your

capital—creating

try

facts »and

guess

BUSINESS.

for

Pick

Lions, Men's

have available today—why we don't have

trails of time.

the

WE HAVE A WONDERFUL BUSINESS

PEOPLE

new

Clubs,

Street—the * Corporation—what

Among history's many
hours, this one will tran¬
scend for generations.
This is no
petty crossroads in the winding
when

situation—why tips and hunches seldom work

supplying

clients

our

new

The subject is teeming with possibil¬

Street—how

information which

to investment

open

Can you talk

successfully—how to plan

Wall

new

the stakes.

wavers

Rotary

are

business—supplying

our

invest

Wall

how to pick a growth

will

this

What to talk about—how about this?

Why

ask

creation

churches, Chambers of Commerce, Fraternal

make it interesting?

you

The

There

.Women's organizations by the hundreds.
can

the

town?

your

customers.

the way be builds

possibilities

field of

new

into

fateful

his ideas,

presents

the country.

over

How

Clubs

investment

accounts.

possibilities

which

nobility
man's

des¬

SMALL BANKS
decline

The
rather

ACTIVE
in

demand

mortgage

money,

which! has-been

pronounced in some sections of the country, according to re¬

ports, is bringing buying into the eligible 2]/2S due 1967/72,
mand

have

^
for

been

indicate

tiny to live freely and fully, with

of late.

appearing has not been

that

smaller

the fruits of the earth to be his.

*•

De-»

steady, although the size of individual buying orders that

the

accumulating

large.

institutions

for

This would
the

most

seem

part

to
are

deposit banks, which have not been too active in this bond
•

Volume 168

Number 4762

THE

COMMERCIAL

mutual

that'
the

interest.

central

the

host

the

—

Senior

Margin

Clerks' Division. Up to recently
.membership, in your hard-work¬
ing and useful organization has
;

been

limited

Senior

Margin

^Clerks in the New York Stock
'

.Exchange firms. Now that membership is open to those who han¬
dle

the

same

responsibilities

firms

member

the

York

New

Curb.

Exchange and other ex¬
changes, I believe', that you have
made

wides

amendment
not

only

the

area

and

constructive

which

will

enlarge

your membership,
within which you

Stock

ready

60%
Scattered

most

each

are

know

tains

remarkable

part

business.

business which

high

con¬

percentage of hon¬

est,

able and individual human
; beings. The individual, indepen¬
dent, self-dependent character of
the

people in

business

our

j'not be overlooked.
damental condition

must

It is a fun¬
of our busi¬

tered

our

country

lands.

foreign

Without the
independence of
judgment and the conflict of opin¬
ucts

ness

the

are

thousands

natural
of

prod¬

small

busi¬

organizations, I don't believe

properly organized, or rather decentralized,.so as to perform its

(function

,free

service

capital

that

agent

markets.

firm

part¬

are

Stock

are

about 45% of the issues

the

Stock

transferred
and

the

by the

last

Yet

Stock

years

the

tax

from

came

Curb

has

tells

interest
both

and

of individuals

the

know

small group
firms can exert

make

ways,

for

between

business.

Your

commended

for

action

providing

ditional link.

All

three

great central organizations in

tal

;any collective opinion which will

.'substantially

affect the trend
values in the open market.

areas

other
ness

organizations in
to

which

though

our

three

loosely,

reason¬

will

City, Mo.

risk capi¬

make

about

add

and

it,

The

Financial

Chronicle)

LOS

Chronicle)

Street. Mr. Torg¬
previously with DempseyTegeler & Co. and First California
Company.

ler

was

the Los Angeles Stock
He was formerly with
bett &

Exchange.
C. E. Ab-

Co.

With H. H. Butterfield Co.
J. Parmelee Petrone

(Special

Opens

ORANGE, N. J. — J. Parmelee
Petrone is engaging in a securi¬
ties

business

from

offices

367

The

Financial

JACKSON,

Whitman

Chronicle)

MICH. —Paul
with

Trust

Co., Jackson City Bank &
Building.

Alden Street.

With
S. Korner in NYC
Korner

curities
320

^engaging in

business

East

57th

from

se¬

offices

Street, New York

City.'

Johnson, Lane, Space

(Special

The

Financial

SAVANNAH,
McNair

has

Chronicle)

GA. —James

joined

the

staff

and Drayton Street.

•

present.

expansion and

tivity ahead.

McLeod,Young,Weir & Company
LIMITED

ac¬

ACTIVE DEALERS

ket will remain free.
But

•

these

industry

make

Towef
if

would

the

Babel

securities

our

CANADIAN SECURITIES

chaotic

business,

our

over-all

some

organizations
voluntarily accepted by

not

were

in all

individualistic, small

business virtues

thousands of

otherwise

•C

'■ "

Dit

inde¬

ect

■

■>

Private

The First Boston

pendent parts.

There are several
centralizing
organizations.
There are, for instance, the New
York t Stock
Exchange and the

■

ire

Corporation, Netv York

such

New
one

ship

York

Curb

Greenshields & Co Inc

Montreal Curb Market

merely a very large partner¬
in which hundreds of indi¬

507 Place d'Armes, Montreal

impose uniform standards

conduct

and

business methods

Elgin 0161
TORONTO

•

viduals have joined to obtain com¬
mon facilities which
they all need
and

King Street, W.

Members Montreal Stock Exchange

of Canadian Security Issues

Greensliields & Co

Underwriters and Distributors

Exchange—each

QUEBEC

SHERBROOKE

Hamilton

Ottawa

Montreal

OTTAWA

London

TORONTO

which all respect.
There

the

are

various Regional

Stock Exchanges, your Association
of Stock Exchange Firms, the In¬
vestment Bankers

Association, the

National Association of Securities

Dealers and many other centraliz¬

ing agencies.

Each

its

serves in
together the
independent
firms and individual enterprises
which
carry
the real responsi¬
bility and which actually do the

field

ovm

thousands

job nthat

;

one

tie

small

known

the

Canadian Securities
Government,

Se¬

curities Industry.
Need
'We

Public

Centralized

all

know

that

All issues

We know

today it

over-all

and

keep this bal¬

•

seems,

great importance
health ..of
our

our

country,

•'!

MEMBERS

MONTREAL

STOCK

MONTREAL

Municipal

•

EXCHANGE

CURB

MARKET

Aldred Building, Montreal

Utility, Industrial

quoted and dealt in.

Wire connections: Montreal

Toronto

New York

of business.

•

But

kind

must

.r.v.

Dominion-wide service.

tralized authority to impose order
on the
other, is the right kind of

ance.

this balance

widely dispersed judg¬
ment and authority to decide and
act, on the one hand, and cen¬

our

Authority

between

balance for

Collier, Norris & Quinlan

-/'■■■

that

the

Collier, Norris & Quinlan

Royal Securities Corporation
Limited
St. James Street

business,

that

closer

association be developed between
those central agencies which
give

]

'
The

244

West

Montreal

Hamilton

Halifax

Calgary

Saint John

Vancouver

•

Quebec

MEMBERS
Dealers

Association

Canada

Toronto

Montreal
Ottawa

Charlottetown

Investment

1, Canada

Telephone HArbour 3121
Toronto

LIMITED

St.

Winnipeg
John's, Nfld.

M.
of

Johnson, Lane, Space & 'Co., Bay

should be able to

Butter-

field &

consequence, we

continued

Financial

I think

realistic

see

The

and the problem

raising it is important.
are

econ¬

Commerce Depart¬

our

530 West Sixth

rather than to 3

al¬

joined

And

people, including the

is necessary

can

busi¬

also,

are

(Special

if there is

there

organizations lies the work of still

long as our business is or¬
ganized, or perhaps I should say
'disorganized, as it is the free mar¬

our

Kansas

(Special

than

saying in

ad¬

Russell E. Siefert
Stern Brothers & Co.,

With Lester & Co.

Buckley Brothers

ment, admit that

•

Beyond the

less.

say,

gain

percent of

greater

applied to individual

omists of

our

Ernest B. Torgler With

which

nothing risked.

bonds,

these

lesser

that is to

reverse,

mutual

strong

tried

stockholders of the old

nothing
indicia

growing

have

arithmetic

percent

ableness

exchanges during those

these

the

unmindful of the

not

squawk.

actually

oftentimes

larger

main¬

15 years.

get the most

least

improved

that

the

and, in fact, increased the
average percentage of its volume

All

remember

Exchange in

the

have

feathers.

new

was

with

think

Cardinal

tained

of the two

measure

feathers

Curb

of all

Moroney

Moroney, Beissner
& Co., Houston

for

were

the

Robert E.

Co., St. Louis

ANGELES,. CALIF.—
It was Cardinal Richelieu, I be¬
LOS
ANGELES,
CALIF.— Harry F. Wagner, Jr., has become
lieve, who told King Louis of
Ernest R. Torgler has become as¬ affiliated with Lester & Co.,- 621,
France that the purpose of any
sociated with Buckley Brothers, South Spring Street, members oT

dealt

from

J, Creely

Goldman, Sachs
&

„

it is
that

Exchange

about 56%

now

Walter

bility when obtained.

In the matter

Exchange listings,
interesting
to
remember

with greater assurance of its sta¬

Exchange Mem¬

well.

employees some further
participation in national income

Exchange^firms;
Regular Member Firms

Stock

(the securities business would be
1

Curb

(Continued from page 6)

tain

of transactions to the total volume

which

mu¬

regular and associate
the

association in

cumstances, a further tax directly
op corporate earnings ,might be
avoided, thus making more cer¬

and 93% of our Associate Member

Curb.

and

these

increased.
aim at

Loss: Odium

Stock

our

Firms

scat¬

through all the Main Streets

SOUTHWESTERN

Government Revenue

easily presented:

are

ber Firms

listed

hundreds, perhaps
relatively small businesses

ion

80% of

into
thousands, of

that it remain broken

ness

ners

active

extent

of the

members

Among Many
We

the

CHAIRMEN

TEXAS

MISSISSIPPI VAL'Y

Reduced Profits Means

A few indica¬

great.

very

tions

Business

the industry.

al¬

were

them

objective

each .part and each

Association

interests

IBA GROUP

ave¬

between all of

organizations of our
be broadened and

traffic

mutual

hope

along v^ith the equally important

apd the New York Curb Exchange
Our

(2665)

objective of .retaining the inde¬
pendence and the individuality of

;

together.

tual interests

Securities

1 V

the

Exchange,

business.

•;;

By opening your membership to
Senior Margin Clerks in all
firms of all recognized stock ex¬
changes, you have taken a good,
long stride toward bringing the
similar but scattered parts of oilr
business together., You have also
added
one
more
bridge to the
many that now join the New York

assist and influence the securities
1

•

all

but
can

business.

CHRONICLE

may

That, is

direction to the different parts, of;
our

Association

business

(Continued from page !■)'

FINANCIAL

the years go by, the

nues

,(2666)

THE

lack is

reflection of its

man¬

❖

Markets

CHRONICLE

❖

isn't

unseasoned

secret.

has

paring with 302.36

been

couldn't

mixed with

higher
and
lower
tax
proponents
getting their versions into
print.
*

any

I'd

More next

year.

IThe

Whyte

now

not

tone

with

customers

that

(Continued from

of this week the operating rate of steel companies

about

rooms

having 94% of

88.6% of capac¬

ity for the week beginning Dec. 20, 1948, as against 100.0% in
the preceding week, representing a decrease of 11.4 points, or

coming events and what the

11.4%. A month

the indicated rate

ago

was

99.2%.

The decline is due to the fact that most steel mills will not
This week's operating rate

During the past week, the
leaders remain leaders

the

can see

such

that in the action

stocks

Big Steel,

General Motors and others of

calibre.

equal
other

Conversely,
the
so-called

stocks,

"gambles" continued to hold
their

1,597,000 tons of

castings compared to 1,802,500 tons

1,788,100 tons

month

old

only in
actual

leadership is gradually being
taken over by the secondaries,
is gradually
proving -itself.
of

capacity
in

week

one

ago

1,515,490 tons,

ago

year

1940, highest

and
and

1,281,210

for

prewar

tons

week

86.6%

the

ago,,;

of the

❖

The

subject of good and bad
always been a con¬
troversial
one.
Basically a
stock which has paid divi¬
dends for a long time, has ac¬
quired respectability and with
it widely accepted intrinsic
and

"safe

The amount of electrical energy

;

distributed by the electric light

and

power industry for the week ended Dec. 16 was 5,790,191,000
kwh., according to the Edison Electric Institute. This was an in¬

85,368,000 *kwh. above output in the preceding week and
422,567,000 kwh., or 7.9% higher than the figure reported for the
week ended Dec 20, 1947. It'was also
849,738,000 kwh. in excess of

corresponding period two

CARLOADINGS FALL 8.3%

BELOW

1947

years ago.

WEEK

roads.

This

considered

Conversely,
stocks
of companies
which
have recently come to life,
pay minor dividends and have
no
record of longevity, are
considered
questionable, to
put it mildly.
t

But it

is because the first

class has attained

respectabil¬
ity that it usually has lost its
incentive.

And this incentive

was

ceding week this
or

decrease of 20*907

AUTO

Production of
rose

HIGH

pre¬

cars,

:
SET A NEW

LATEST WEEK

The

fire

Mercury
about

at Ford's

assembly

Rouge

lines

1,000 units from

reached its best volume
at its peak postwar

plant, which

since

rate, the

the

the Ford and

added.

year

Packard

and

war,

agency

Output in the similar period
in the like week of

idled

Wednesday of last week,
week's total, Ward's said.

the

knocked

Hudson

ended Dec. 2

DROP

ago

below the forecast

Coast

continued

Dec.

120,667 units and

LATEST

from

122

1946.

with

week

same

liabilities of $5,000

under

$5,000

rose

from

and

exceeded

the 1947 total of 14.

The Middle Atlantic and East South Central States failures

higher

the

preceding

week,

while

FOOD

PRICE

With

Members

York Stock

Exchange

New

York Curb Exchange (Associate)
San Francisco Stock Exchange

Chicago Board of Trade
14 Wall

Street

COrtlandt 7-4160
Private
San

Wires to

Francfsc

New

INDEX

LOW LEVEL

sale

was

OFF

FOR

SHARPLY TO

the

East

North

were

Central,

RECORD

NEW

Teletype NY 1-928

further general recession in food prices last week.
31 items included in the Dun & Bradstreet whole¬

price index moving lower against only 3 advances, the
index dropped sharply to $6.21 on Dec.
14, and from $6.33 a week
earlier. This represented a decrease of 1.9% in
the week, and brought
the current index to a new low level for 18
months, or since June
10,., 1947, when it stood at $6.12.
The latest index showed a drop
of 11.5% from $7.02 recorded a year
ago at this time.

Santa

Barbara

Monterey—Oakland—Sacramento
Fresno

and

NEW

INDEX
YEAR

INFLUENCED
LOW

LATEST

-•quality

WHOLESALE
BY

TRADE

CONTINUES

GAIN

HOLIDAY PURCHASES

shoppers responded favorably to many clearance ;
promotions.
Moderately priced goods of good ]
very popular.
•
/

were

Retail

apparel volume rose fractionally the past week.
While
women's and men's suits and coats sold in a slightly smaller volume

previous," accessories and haberdashery were purchased
in a very large volume.
The demand for blouses, sweaters,
lingerie,
gloves and hosiery increased seasonally.
Shoppers purchased mqre
ties, pajamas and shirts than in preceding weeks. Consumer interest
in sportcoats and slacks rose.
Men's heavy overcoats continued to
decline

sales volume.

•

'■ '

Consumers bought slightly less food than in the previous
with meat purchases in fractionally decreased volume.

weejc

rose slightly and bakers' goods were sold in a substantial
Holiday packages of candy, cookies and fruit were popular;

volume.

While the demand for large furniture pieces declined last
week,
shoppers' interest in occasional furniture rose moderately. The sales
volume of chinaware, cutlery and

general household goods increased
sharply.
Clearance sales of small appliances and radios were re¬
ported in many localities and shoppers' interest in major appliances
dipped.
'
;
of

last

week

estimated

was

period ended on Wednesday
unchanged to 4% ahove p

from

Regional estimates varied from the corresponding 1347 levels
by the following percentages:
New .England down. 3 to up 1,
East and Southwest unchanged to up 4, South
up 1 to up 5, Midwest up 2 to up 6. Northwest unchanged to up 3, and Pacific Coast
With moderate declines in wholesale order volume in

tions and
tinued

increases

.novelty goods
wholesale

others, total dollar vloume in the week
high level of recent weeks. It was about
a

were numerous.

markets

some

year/

sec¬

the

declined

con¬

even

year ago.
Re-orders of small gift and
The number of buyers attending jnany

seasonally

number in the previous week, but
in the comparable week last year.

about

two-thirds

' the

moderately exceeded the number
-

;

■

Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended Dec.
11, 1948,
decreased

by 1% from the like period of last

decrease of

For the four

(revised figures)

weeks

ended

Dec.

11,

This compared

year.

in the preceding

recorded

1948, sales decreased by

4% and for the year to date increased by 5%.
Retail trade in New

;

Fork the past week advanced with sales

•

volume reflecting a gain over last year for the first time during
the present Christmas period.
-

The increase

mated for department stores at

According

the

Federal

was

small, being esti-

Reserve

Board's

index,

by 6%

from the

same

the four weeks ended Dec.
over

that

3%.

period last

year.

department

to Dec. 11, 1948,

In the preceding

like drop was registered over the similar week of 1947.

„

of
.

•;

last

year
,

and

11, 1,948,

decline of 6%

for the year
.

3%.

store sales in New York City for the weekly period

week

daily wholesale .commodity price index regis¬

■».

down 2 to up 2.

FOODS
WEEK

Led mostly by foods, the general level of prices moved steadily
downward during the past week to reach a new low for the
The Dun & Bradstreet

spotty.

good demand for scoured wools but supplies were scarce.
was
shown in staple woolen wools.
Foreign wool
strong and active.
*
;
:
•*

AND

declined
PRICE

STRIKES

slow

was

remained

Selective

food

COMMODITY

market

sales and holiday

week.

MONTHS

York 5, N. Y.

Principal Offices

v
wool

raw

the

prices \

mom
parts of the
country, moderate to large increases were reported last'week. Total
dollar volume slightly surpassed that- of the comparable week a
year ago, states Dun & Bradstreet,
Inc., in its current survey of trade.

with

Exchanges

Total entries for the week

ago.

Boston

with that of the similar week

1939.

declined

same as a year ago, from 112 last week, while casualties

liabilities

sold

As holiday gift shopping gainfed

;•

the

The.y compared with 249 in the

interest

markets

WEEK

preceding week, Dun & Bradstreet,
Inc., reports. Casualties slightly exceeded the 91 in the correspond¬
ing 1947 week and were considerably more numerous than- the 27

There

New

was

Little

month

the

Retail volume for the country in the

was

Schwabacher & Co.

year ago.

FURTHER

can

were

There

Commercial and industrial failures decreased to 96 in the week
ended

government

253,553 bales, against 267,264 the previous week*
and 368,064 two weeks ago.
The Dec. 1 estimate of the Crop Re¬
porting Board placed the 1948 crop at 14,937,000 bales, or slightly

1941, 65,875 units.

FAILURES

the

declined for the second successive week.

This week's output consisted of 93,793 cars and 25,389 trucks built
in the United States and 4,046 cars and
2,224 trucks in Canada.
BUSINESS

vegetables

Pacific and New England States
they showed a decline.

Pacific

controlled

Housewives
request the moderately priced cuts.
Meat and butter
substitutes were in large demand;
The interest in fresh fruit and

(revised) units the previous week,
according to "Ward's Automotive Reports."

77| the

Orders Executed

■•■{

continued to

trucks' in the United States and Canada

and

cars

and 45,475

to 125,452 units from 124,041

Failures involving

Securities

1947

AGAIN BREAKS THROUGH

OUTPUT

POSTWAR

below the

decrease of 70,883 cars,

8.3%

5.5%

Pacific Coast

narrow

than the week

2.6%

cars,

It also represented
under the corresponding week in
below the similar period irC1946.
year.

Reported sales in the ten spot markets increased moderately;
during the week but entries of the staple into the government loan

the output reported for the

for

below parity after Jan. 1.

crease

prices

the week on an easier tone following the anthe Department of Agriculture that farm com-

STIMULATED

stock."

did

and closed

RETAIL

ELECTRIC OUTPUT ESTABLISHES FRESH ALL-TIME RECORD
IN WEEK ENDED DEC. 16

Loadings of revenue freight for the week -ended Dec. 11, 1948,
totaled 783,276 cars, according to'the Association of American Rail¬

❖

stocks has

values

Steers were-also
as

average

year.

own.
$

lower

Business

is equivalent to

steel ingots and

statement made here that the

You

and

beef.

modifies

operate Saturday, which is Christmas Day.
•

and- that

further decline of 1.% cents in the actual cocqa
were still hesitant in
making

further drop to the lowest levels of the season.
liberal supply and prices worked downward

dressed

Industry

page

the steel-making capacity of the industry will be

market will do about them. *

name,

commitments,
disappointing demand for their products. Coffeb
early in i the week but displayed a firmer
at the close.
Hog marketings continued in large volume, and
further weakness in wholesale pork prices, live
hogs showed

inactive

was

were sharply lower
Liberal offerings and lagging:

Manufacturers

nouncement

The State of Trade and

Gashj

and*unsettled; prices

week under heavier receipts.

range

open at 10 and close at 3. In
between there is a lot of talk

times. >

Spot cotton markets fluctuated irregularly within

affairs

of those

rallies- at

extremely_ cautious, with

market for eggs was weak

taking its cue
from the news, continues to
one

small

prices easier.

winter wheat crop was reported
gen.-}

confined mostly to small. lots for nearby shipment.
*
•,
Spot1 butter prices pt New York were off IV* cents a
pound,
reflecting increased offerings and moderately heavy receipts. The

reportedly due to

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

caused

and

new

demand

market.

views

article

check

erally satisfactory with adequate pioisture in most parts of the main
belt. Although government buying of flour continued in good
volume;
trading in the domestic flour market was

The market,

in poor demand with

were

The condition of the

stay

Thursday.
—Walter

facing a new
Most everybody expects
are

the-decline

oats

demand resulted in

both ways.
*

Corn lacked support and, is selling well below the-government
price. Continued buying of both wheat and corn helped to

hold

loan

booms. If I

that

particularly

for the

By the same taken where
ten to make much of a story large profit potential exists,
here or in any other stock loss possibilities are equally
great. The pendulum swings
market
column.
The
news
continues

through

gone

com¬

The cash wheat market was quiet with prices sharply lower,
reflecting heavy country and warehouse offerings.
:t

having achieved respec¬ But I do know that with what
tability, wouldn't engage in I think I see I wouldn't want
By WALTER WHYTE:
any longer.
To that extent to be long on a list of blue
Blue chips continue to lose such stocks are theoretically chips. I'd rather buy stocks
favor while secondaries gain gambles. But because they're in industries which are al¬
it.
Consider
second
group gambles
they
frequently ready depressed, e. g. movies,
better situated for immediate bring the buyer considerably or in industries which haven't
future.
larger profits.

happened since
the previous column was writ¬

a year ago.
whole developed a weaker tone,

Trading volume in futures on
Chicago Board of Trade declined rather sharply despite persistent
liquidation by holders of December grain contracts.
<

enterprises, or companies with these point to changes. - What
developments that the older these will be I don't know.

has

previous, and

the like date
a

the

ones,

Little

towards the latter part ,oi the week.

long year since stores
sales Christmas week. All

ran

Grain markets

many a

comparatively
issues, reflect new

Thursday, December 23,1948

tered 268.20 on Dec. 14, -down from 271.12 a week

higher taxes. That there is
buyer
resistance

The new, or

Whyte

FINANCIAL

increased

agement.

Tomorrow's

Walter

COMMERCIAL

date

was

volume

Foi*

recorded

increased
•

••*

Volume 168

THE

Number 4762

COMMERCIAL

FINANCIAL

Ohio, will act

(Continued from
banks
will

will

consolidated

consist

of 30 members.
In
keep the board with the

order to

maximum

three

limit

ti ustees

members,
from

retired,;

one :

the

16)

page

the Worcester

County Trust Company of Worces¬
ter;

Mass.,

assets and
deposit and certain .other

assume

Bowery and two from
North River.
The" expressed

the

liabilities of the Southbridge Na¬

in=-

tional Bank of Southbridge, Mass.,

tention

the

in accordance with an agreement

President of the Bowery will con¬
tinue as President and Chairman

Dec. 15 by. the
directors Of the bank. The trans¬

the

Board

the

that

consolidated

also approved

action is subject to the approval

of the stockholders of the South -

The Bowery Sayings Bank. Harris
Dunn will occupy the office of

bridge National Bank and of the
State and Federal banking author¬

Vice-Chairman.

ities.

banks, which will be, known

from

Cleveland

President George

state

GROUP

CHAIRMEN

SOUTHERN

W.PENNSYLVANIA

that

Gund indicates

additional

stock

available for payment of a

stock

pose

having

'dividend.

If the increase is auth¬

orized,

that

expected

the

stock dividend will be made pay¬

able

Feb.

Feb. >1.

stock

record

It will be in the ratio of

lone share

stock for each

new

ill% shares of old.
Harmen

Flinkers,

statis¬

The sale price,
it is an¬
nounced, will be based upon the

tician in the Federal Reserve Bank

Bowery Savings Bank, will retain

valuation of the assets

that position until Mr. Bruere re¬

posed

Executive

Earl B.

Schwulst,

Vice-President

The

linquishes the office of President
which

next,
the

expects

remaining

Board

Officer.

July
Chairman of

Chief

and

Executive

Mr.

Schwulst, it is ex¬
pected, will then become Presi¬
dent and Chief Administrative Of¬
ficer.

Mr.-

Dunn

continue

will

under this
of

the

will

P.
i

IBA
MICHIGAN

that the action by the stockhold¬
ers is in furtherance of the pur¬

special .meeting

Dec; 15 voted to buy

vices

(2667)

the question of

increasing the capital stock of the
institution
from
$13,800,000
to
$15,000,000. Associated Press ad¬

The directors of

and

CHRONICLE

plan as Vice-Chairman
Board, Robert W. Sparks

First

Raymond

Vice-President, and
Haulenbeek will

Bank

Bowery—and

niergdr

the

fourth

the

just west of 7th Avenue.
*

the

Ninth

•
„

Annual

Banquet

of the Twenty-Five Year Club of

Manufacturers

Trust.

Company,

New York, held at the Roosevelt

Hotel, the following officers were
elected
for
the
coming
year:
Charles Frederick, President; EdWard J. Colbert, Vice-President;
Carl Funk, Secretary-Treasurer.
Harvey D. Gibson, President of
Manufacturers Trust Company
ana honorary member of the Club,
addressed the gathering and pre¬
sented service plaques to 49 em¬
ployees who became members this
year, bringing the total member¬
ship in the club to 349.
*■»'

•

«■

iff

Instead

desk

pad

sis

usual

the

Christmas

calendar,

Colonial

Trust Company of New York has

Yuletide remembrance
to its correspondent banks abroad,
bi-lingual dictionaries in English
sent, as

Jan.

aries

English-Spanish
also

have

been

diction¬

sent

corre¬

spondent banks in the Southwest,
where such banks conduct

con¬

siderable volume of business with
clients in Mexico and other Latin
The diction¬

American countries.
aries

sent to 350 correspond¬

were

act

the

Dealer" of Dec. 9,

Southbridge office of the Trust
He also stated that the
present' directors
of
the
bank

ents in 24 countries.

The

Southbridge National
organized in 1836 and
has total deposits of approximate¬
ly $8,300,000. As of Dec. 1, 1948,
Worcester County Trust Co. de¬
posits totaled over $76,000,000, and
after the assumption of the de¬
posits of the bank deposits, it is
stated, will total over $84,000,000
was

with total resources over $91,000,-

000, exclusive of assets held in the
department which exceed

trust

$74,000,000.

The Trust company
operates offices in Fitchourg,
Barre,
North
Brookfiejd
and

now

which also said:

and four offices in the
City of Worcester. It is the oldest
trust company in Massachusetts,
dating from 1804.

;

• ••

fund now totaling $87,President Ray M. Gidney

000.000.

is the other trustee from the bank

here.
two

The board has 26 members,

Assistant

National

Officer

Trust

Newark

Essex

Bank¬

ing Co. of Newark, N. J., has been
announced

President,

by Robert- G. Cowan,
it was stated in the

ernors

the

Federal

Harris joined the staff of the bank

1932

with

and

the

has

trust

been

identified

since

department

The

Union

Trust

Company

Maryland in Baltimore announced
on

Dec. 14 that Howard M.

former

Michel,

Assistant

Secretary and
Treasurer, was elected

Assistant

Vice-President, and
Frederick M. Knieriem, Assistant
Trust Officer, was made a Trust

Officer.

that

The

Baltimore

"Sun"

in reporting this, also said

Bernard

Bond

was

Allan
been

Arscott,

elected

C.B.E.,

Chairman

has
the

board of directors of the Canadian
Bank

regular

meeting

Committee

Executive

of
of

the
the

Board of City Bank Farmers Trust
Company of New York held on

the

stock

dividend

Detroit

"Free

Press"

made

the

each

Detroit

17,

will

the

bank's

:j:

sj:

election

Schaefer

respect if
Allan E. Arscott

on.

Stanley M. Wedd

si:

•

Gregory

17 by

of which

Vice-President

Dec.

of active

utive

was

Presi¬

officer

bank.

the

remain

Logan will
the

service, 23
spent

were

bank.

Mr.

director

Arscott

Mr;

years
exec¬

has been

ciated with the institution for 43

"Journal,"

who

has

cember, 1944, and has been

been

associated

with

the

bank

years.

since

1935,

advanced

from

tive Vice-President

was

Assistant Vice-President.
*

ber,

asso¬

Savings

Bank

Manitowoc, Wis., will acquire,
Dec.-31, all the assets of

1947,

all liabilities of the latter

bank, it is reported in special ad¬
"Journal"

was

Dec.

that

bank for 43 years.

bank

the

Schuette
and

the

combination

the

President

National

savings

Guido

Bank.

Rahr

is fur¬

ther stated:

(Special

The

Financial

LOS ANGELES, CAL.—Jared C.
Aiken
have

Howard

and

become

T.' Snedicor

associated
Aiken

was

of-the

two

banks

Dec.

21, Alfred H. Howell was ap¬
pointed Assistant Trust Officer.
*

.combined under the

merger of

the Liberty Trust
Company and the Peoples Bank
of Cumberland, Md., which is ex¬
pected to become effective at the

Announcement

1,000

the

sale

stock

shares of the

the

First National Bank of New York
was

made

Boston

price

Dec. 21 by the First

Corporation.

$1,170

was

per

the

than $21,000,000, according to J. S.
Armstrong, Financial Editor of
the

Baltimore

"Sun"

Dec.

directors

have

voted

bear

the

Liberty Trust
Company, will approximate $1,Charles A. Piper, Presi¬

$250,000 to surplus ac¬
count by charging a like amount

400,000.
dent

against undivided profits, thereby
increasing the surplus account to

tinue

$1,500,000.

the

name

transfer

„

Herman

Ringe,

founder and
President of the Ridgewood Sav¬
a

of the Borough of
Queens, New York, died on Dee.

ings
13,
of

Bank

Mr. Ringe had been President
bank since 1944.
He also

the

Liberty Trust, will

con¬

President and active head
combined

Under

bank.

plan of merger, shareholders
each

bank
of

the

will

receive

stock

2.1428

$10

par

the

real

estate

firm

Herman Ringe & Son and was its
President at the time of his death.

Manitowoc

There will be
personnel.
The savings bank was founded in
1884 by the late John Schuette,
no

changes

grandfather

bank

President

Schuette."

Henry

Herbert T. McHenry With
Shields & Company
(Special

been

Bank

Atlanta, Ga., has
Vice-President and

of directors.

The Atlanta "Consti¬

Seventh

Henry

was formerly
& Hutzler in

Mr.

Mc¬

with Salomon
Chicago.
In
with Banks, Hunt¬

semblance of

some

Most

little

a
-

have

they

the

one

perhaps have

slow

inevitable
of

are

accept the inter-

that

another.

upon

Americans

now to

the

fact:

that

American

the
con¬

sumer, investor, worker, and
American Government itself
all

interrelated with
world

the
are

the problem

peace.

We believe that

as we are

long

required by the

troubled international situation to

maintain

huge military budget,

long

money

spend

and

goods

for

eco¬

nomic recovery in other areas of
the
world,
inflated
price
and

profit
with

levels
in

are

apt

remain

few fields.

This is
very

that

an attempt to answer a
thorny question. We think

the

nation

can

gratified

at President Truman's evident in¬
tention

restrain

government
expenditure within the limits of

With L. J. Vetter & Co.
(Special

SANTA

The

Financial

Chronicle)

BARBARA,

Philip H. Augerson is

CALIF.—

now

quote, states that Mr. Alston, who
joined the bank in April, 1947,
was
a
member of the legal de¬

associ¬

national safety.
at this

the

can

are

gratified

policy because the welfare
average

American

best be served by

citizen

careful

re¬

with Sutro & Co.

partment
Finance

the

Chief

State

Street.

the

Co., 1028

past he was

Reconstruction

Corporation,

where

Examiner

Simons

With Merrill

the

(Special

The

BEVERLY
❖

was

Dec.

Lynch Co.

Financial

HILLS,

Chronicle)

CALIF.—

treat from current high levels of
government

Henderson
LOS ANGELES,
firm

210

Hogle & Co., is

19, the stockholders of the Cleve¬

department of the American Trust

Fenner &

land Trust Compahy of Cleveland,

Company of San Francisco, James

den Drive.

ated

with

Merrill

now

affili¬

Lynch, Pierce,

Beane, 454 North Cam¬

expenditure.

Now Harbison &

Thomas S. V. Waitt formerly with

promoted to Vice-President in
charge of the banks and bankers

Street.

ley & Co. of Los Angeles.

Jan.

meeting

become asso¬
& Co., 210

Shields

tution" of Dec. 17, from which we

Charles C.
.

Chronicle)

ated with L. J. Vetter &

Bank."
#

with

West

loan administration.

Si!

has

McHenry

ciated

Trust Officer, Mills B. Lane, Jr.,
President, announced on Dec. 16
following a meeting of the board

share owned

At their annual

Financial

elected

became

merged institution for each
by them in the Lib¬
erty Trust Company and Peoples

The

the past he was

Robert A. Alston, Trust Officer
of the Citizens & Southern Na¬
tional

LOS ANGELES, CAL.—Herbert
T.

Bros.

••{i

until,

and stability descends upon

earth.

been

will be maintained.

of the

the

founded

name

18.

His advices state that both banks

by Harvey L.
President of the Na¬

tional Bronx Bank of New York,

that

"The combined capital accounts
of the merged bank, which will

announced

Schwamm,

resources

—

J
fg

selling

institution with

will result in

have formally approved the plans,
and he further says in part;

6.84%.

The

share to yield

end of the year,

management
Savings
bank, although separate facilities
and

they

dependency

total

$23,500,000 and deposits exceed
$22,300,000. All operations will be

Remedy

prices
exist, and 'inflated
profits where they exist, are di¬
rectly related to, and will not be
where

interest

Mr.

Dempsey-Tegeler & Co., 210 West
Street.

our

We believe that inflated

equally

formerly with Morgan & Co. Mr
Snedicor was with Fairman & Co.

with

Stability of World Conditions

with

Seventh

force

and

prepared

Chronicle)

than your

answer

First, something is al¬

work.

the

Dempsey-Tegeler & Co.

did not

than

peace

and H. R. Baker & Co.

"Assets

Who

to ask it and

courage

candor

solved

Aiken, Snedicor Join

19,
an¬

made on Dec. 18 by President

Henry
of

of
say

nouncement

question:

high-priced supply has
caught up with de¬
mand, the laws of competition are

since Decem¬

also has been associated with the

vices from Manitowoc to the Mil¬

goes

the

where

was

effective

which

ready being done about the prof¬
its of 1948. The consumers have,
for some time, been doing some¬
thing about it. In those industries

Stanley M. Wedd, Execu¬

elected President,
succeeding Mr. Arscott. Mr. Wedd

Manitowoc

all

Milwaukee

waukee

the

command.

S. H. Logan, who retired after 52

President of the bank since De-;

Soft

era.

would deserve less

F, A. Ross, following a board
meeting.
Mr. Schaefer, says the

The

it?

having the

added,

the State Bank of Milwaukee

been

instead

goods

We regard this as a fact-of-life
question.
We
respect
you
for

years

The

;

imply

should

common

share.

for

emerging from that

you

one

250,000 and establish
capital stock at $5,000,000 at par
$20

since

done about the profits of 1948 and

value of

time

The issuance, it is

carry

the

You ask if anything should

which

made Feb. 15 to holders of record
Jan. 11.

most

spots are now occurring and more
will come.

held, the
Payments
will
be

said.

bank

(Continued from page 10)

are

Detroit,

the

Dec.

basis

nine

Competition Ever
Too High?
competing

states that the distribution will be

for

Are Profits Under

Pearl Harbor.. Dollars have

by directors

Pittsburgh

goods competing for dollars.

Bank

Mich.,- according

ap¬

pointed Assistant Manager of the
foreign department.
A

George G. Applegate,

market

George G. Applegate

Co.,

succeeding

Commerce,

Recommendation has been made

assume

Francisco'

the Manitowoc National Bank and

1940.

San

System in Washington."

Mr.

19.

Dec.

Cjochead, President, announced,

Reserve

"News"

Newark

being from the Board of Gov¬

dent

Appointment of Richard E. Har¬
ris

Means

Atlanta

"The Board of Trustees admin¬

isters

announced
■

Detroit

Spencer,

Dec. 15,

sf€

Advisory

and that all the officers and per¬
sonnel of the bank would be re¬

...

Courts &

"Chronicle."

company.

Bank

Miller

Miller, Kendwer & Co.,

accordffipg^fO"~the

said that it is planned to conduct
the business of the bank as the

tained.

Gerald

mem¬

Retirement

learned from the Cleveland "Plain

Ireland, President of
the Worcester County Trust Co.,

the

examining

elected

D..

continue

ber

bank

was

transaction.

meeting will be held

William

and in the language of each reci¬

pient.

Committee of the Trust company

present sole office of the North
River at ' 34th and 33rd Streets

holders'

Cleveland's

department,

System's
Board of Trustees by the District's
1,792
employees
at
Cleveland,
Pittsburgh and Cincinnati, it is

the

after

the pro¬

Jan.
15,
1949, Edward E. Williams, Presi¬
dent of the Southbridge National
Bank, stated that a special stock¬

Vice-President.

will
have four/ offices,
three
being
those of the present Bowery Sav¬
ings Bank—110 East 42nd Street,
34th Street and 5th Avenue, and
130

on.

date,

would

Administrative
The

take-over

bers

name

West

Seventh

the

Exchange,
Harbison

CALIF. —The

of Harbison & Gregory,

Los

has
&

Street,

mem¬

Angeles

Stock

been

changed

Henderson.

THE

(2668)

COMMERCIAL & FINANCIAL CHRONICLE

Thursday, December 23, 1943

Indications of Business Current Activity
The following statistical tabulations
shown in first column

production and other figures for the latest week

cover

either for the week

are

month ended

Latest

AMERICAN

IRON

Indicated

steel

Week

Ago

100.0

88.6

Dec. 26

(percent of capacity)

operations

Month

Week

INSTITUTE:

STEEL

AND

that date,

Month

86.6

99.2

Dec. 26

1,597,000

1,802,500

1,788,100

1,515,400

Dec.
Dec.
Dec.
Dec.

oil output—daily

Crude

runs

(bbls.)——
Kerosene
output
(bbls.)_.
Gas oil and distillate fuel oil output (bbls.)

5,620,150

5,615,150

5,626,400

5,252,739

115,650,000

5,698,000

5,712,000

5,104,000

18,395,000

18,216,000

17,811,000

15,705,000

oil

2,506,000

fuel

output

(bbls.)

Kerosene

fuel oil

Residual

2,485,G0l,

7,669,000

6,337,000

8,897,000

8,964,000

8,580,000

Volume

freight

91,795,000

26,537,000

26,528,000

THE
of

FEDERAL

BUSINESS

Manufacturing

83,993,000

83,979,000

86,381,000

83,659,000

Retail

"Revenue

87,603.000

RAILROADS:

AMERICAN

loaded

freight

Total

—

Retail

construction

871,677

854,159

Construction

642,663

702,860

729,219

Commercial

Dec. 16, $146,187,000'
Dec. 16
44,038,000

;

$83,693,000

$123,240,000
59,946,000

69,218,000

63,294.000

60.921.000

Bituminous

S. BUREAU

(U.

70,255,000

Dec. 16

46.968,000

49.093,000

6,225,000

14,201,000

coke

DEPARTMENT

11,900,000

—Dec. ll

(tons)

INDEX—FEDERAL

SALES

STORE

946,000

153,500

RESERVE

♦11,485,000

12,065,000

13,408,000

1,137,000

(COMMERCIAL

1,151,000

♦151,400

144,900

146,90(

(BUREAU

564

485

5,790,191

INDUSTRIAL)- -DUN

5,367,624

BRAD-

.Dec. 16

STREET, INC.

126

122

steel

and

Africa

Central

(net

America

3.75628c

Dec. 14

$46.82

$37.0(

;—Dec. 14

—

$43.00

$43.00.

$39.75

York)

(New

Lead

(New York)

Lead

(St.

and

23.200c

3.19541c

COMMERCIAL

SEED —DEPT.

Stocks

(tons)

Aug.
Nov.

103.000c

80.000c

21.500c

15.000c

21.500c

Dec.15

21.300c

17.500c

17.500c-

Stocks

10.500c

Group

101.8f

132,055,009

385,415,000

(tens)

Aug.

Bonds

—

111-07

116.22
114.4(

Produced

110.15

109.97

110.15

HO.lf

Shipped (tons) Aug. 1 to Nov. 30

103.64

103.47

103.80

103.9r.

106.74

106.39

106.56

105.3<

112.00

111.62

113.11

Produced

116.02

115.82

115.63

115.24

Shipped Aug.

Stocks

(tons)

Dec. 21

Stocks

Hull

Aug.

Fiber

A&—III~I~—I-I

Dec. 21

—

3.11

Shipped

Aug.

Railroad

Industrials

—:

Group

3.10

2.82

2.84

2.89

2.90

2.93

Stocks

3.16

3.17

3.16

Produced

3.52

3.51

3.54

;

—

Group

3.35

3.37

3.06

3.08

2.85

2.86

2.87

393.5

392.0

400.4

3.36

3.43
3.00
'

2.89

INDEX

ITY

Nov.

Textiles

and

drugs
—

Fertilizers
All

groups

231.9

236.f

205.7

210.9

266.(

243.3

244.3

249.1

275.i

304.3

294.9

299.9

336/

207.7

210.2

210.0

312/

247.1

250.0

256.7

263.(

242.3

198.2

Food

172.7

172.1

179.2

Feed

18
13
18

combined

195.4

194.4

194.1

TURE

Orders

received

Production

ASSOCIATION:

14,465

17.463:

13,875

12,313

17,287

(DEPT.

month

13,500

15,163 /

35,542
91,311

35,877

40,532 ;)
92,119

745

616

36.720

38,612

1,420

1,393

271

—

277

237

INDEX

AGRICUL¬

1914=106—As of

Crops

226.2

224

grain

hay_.

151.4

156.4

142.9

142.5

135.6

Truck

150.8

150.1

141.8

153.7

,153.7

151.3

129.3

Livestock

216.9

217.6

219.3

220.0

Meat

Oil-bearing

162,012

201.641

218,071

167,198

198,237

190,868

190,406

11
11

10C

363,813

362,854

394,769

444,685

183,345

■'

crops
crops

and

——

DRUG

REPORTER

PRICE

INDEX

—

192G-3G
-Dec. 17

AVERAGE=100

143,5

144.3

144.4

150.1

MERCE)

Month

PRICES

WHOLESALE

NEW

SERIES—U.

DEPT.

Shipments

LABOR—

1926=100:

All commodities

)

Building materials
All

other

—

182

167

229

307

276

273

236

214;

184,860

181,567

170,769

174,857

162,059

COM¬

equivalent)

Dec. 14

163.0

163.7

164.3

f62.6

Stocks

174.0

175.5

175.2

196.4

172.6

173.7

177.5

178.2

Consumption of logs (M ft., log scale)

153.1

153.4

153.2

145.1

Stocks

145.7

146.1

147.0

147.5

14
14
14

136.9

136.8

122.9

173.8

173.1

151.0

RECT

AND

203.2

202.4

190.8

133.7

134.5

138.1

___Dec. 14

—

sq.

ft.

%-in.

equivalent)

end
84,937

78,008

43,973
74,289

353,443

308,522

222,569

57,700

—

(M ft,, log scale)

at end of month—

TREASURY MARKET TRANSACTIONS

Net

month

GUARANTEED

A.—Month

sales

Special indexes—

DI¬

SECURITIES

$220,961,000

$800,000

—

$i2o"o6o
■

Meats
"

Hides and skins

170.1

173.3

172.7

255.7

219 3

227.6

225.4-

235.8

Dec. 14

—Dec. 14

Dec. 14

Grains

Livestock

230.9

235.4

239.1

227.9

'-———Dec.' 14

199.3

206.3

206-2

258.0

TRUCK TRAILERS

Month

Ilncludes 404.000 barrels of foreign crude runs.

(DEPT. OF COMMERCE)—

of October:

Production

(number of units)

Shipments-(number-of

*Revised

figure.

3,725

;

units)———

■'.Shipments (value in dollars)—
figure.

54.082

November:

,Net purchases

♦Revised

242

179,673

(DEPT.

Dec.
Dec.
Dec.
Dec.

±.

materials
Metals & metal products

260

of October:

ft.

Dec. 14

other than farm and foods

products

Fuel & lighting

2^3

172

%-in. equivalent) —
consumption
(M sq. feet,

sq.

Dec. 14

Foods

333

289

243

—Dec. 14

products

Textile

and

3/a-in.

All commodities
Farm

304

323

373

265

———

PLYWOOD
—

349

204

—

Production

272

270

25T

272

—

Dairy products

SOFTWOOD

151

176

354'

284

Truck crops

174

351

—

Dairy products
u—
Poultry and eggs———j„—.
Seasonally adjusted—
Fruit
1
i
,»

251

313

products————

animals

418

283

—

204

186

—

Fruit

142.8

11
11

324

189

157

149.7

Tobacco

236.7

283.

246

149.7

229.0

312

192

412

—1

grain

190.6
225.9

263

226

181

—

and

grain

227

234

Feed

159.3

190.5

FARMERS

DEPT.

15:

Nov.

190.6

.Dec.
Dec.
Dec.
Dec.

(tons)

AND

86,973

708

38,407
1,366

—

Poultry and eggs—

PAINT

•

pounds).

August, 1969-July,

225.9

Percentage of activity
Unfilled orders (tons) at-

OIL,

COM¬

of Oct.:

Unadjusted—
•.
All farm products

NATIONAL PAPERBOARD

6,770
5,215

17,215

Nov. 30—

NUMBER —U.

Dec. 18
Dec. 18

machinery

Farm

CASTINGS

Dec. 18
Dec. 18

materials
materials

1,836

9,139

7,412

20,412

—

to Nov. 30—:

1
1

(thousands

Dec. 18
Dec. 18

Metals

Fertilizer

30——

RECEIVED

227.5

192.6

}ec.
Dec.
Dec.
Dec.

Chemicals

1,938

13.138

:
:

(thousands of pounds)
Lead die (thousands of pounds)—

Dec. 18

Livestock

Building

169,757

170,842

11,694

1,655
30

Zinc

)ec. 18

commodities

436,975

(thousands of pounds)——'—

Dec. 18
Dec. 18

Grains

Miscellaneous

526,983

372,625

Magnesium (thousands of pounds)

PRICES

Cotton

Fuels

444,187

583,616

——

b^les)—

MERCE)—Shipments,
Aluminum

Dec. 18

oils

products

Farm

663,667

179,331

to Nov.

Aug.

NON-FERROUS

225.6

and

Fats

30———-

COMMOD¬

ASSOCIATION—WHOLESALE
GROUPS—1935-39=100:

FERTILIZER

NATIONAL

456.9

382,379^
348,147

grabbots, etc. (500-lb. bales)—

Motes,

Copper

INDEX——^

COMMODITY

MOODY'S

322,680

293,351

to Nov. 30——

Shipped Aug.

—Dec. 21

Group

Utilities

Public

3.10

3.53

70.040

70,796

484,534

451,895

2.80

Jec. 21

—

74,606

.„

to Nov. 30

Aug.

3.09

Dec. 21
—Dec. 21
Dec. 21

Baa

756,579

—-—

to Nov. 30

to Nov.

(500-lb.

Nov.

Produced

2.38

3ec. 21

Aug.

30—

Nov.

2.37
-

779,8211

643,927

Linters—running bales—•

Stocks

—_—

3.0—

Nov.

(tons)

2.78

corporate

Average

-—

Hulls-

111.25

116.61

2.44

80,246
640,767

968,318

to Nov. 30——

115.04

•

70.183:

78,427
963,339

Nov.

(tons)

111.25

463,708,000

83,053,000

115.24

110.229,000

514,707.000

322,667,000

117.00

2.44

97,778,000

438,531,000
401,421,000

622,973,000
120,774,000

117.40

2.43

141,085,000

Shipped (tons) Aug. 1 to Nov. 30

MOODY'S BOND YIELD DAILY AVERAGES:
Govt.

1,509,160

500,491,000

111.44

•

1,414,364

1,688,575

666,487,000

—

30——

Nov.

Meal—

Dec. 21
Dec. 21
.Dec. 21

—a

3,098,207

1,871,377

«,4—

(pounds)

and

Stocks

100.87

100.84

to Nov. 30—

-Dec. 21
Group
Group

3,196,661
•

(pounds) Aug. 1 to Nov. 30—

Produced

100.95

Aug.

Dec. 21

Industrials

$287,000
i

4,171,898
2,124,956
2,129,379

30—

1 to Nov.

Aug.

115.43

Dec. 21

Utilities

$285,000

—

COM¬

30——

Nov,

Dec. 21

Public

'
*

Nov. 30

Dec. 21

Railroad

559,600

Oil—

Refined

14.800c

17.500c

Produced

Dec. 21

Aa
Baa

*618,300

/'•

(pounds 1

21.300c

••/
'*

Cake

$287,000

30--

Shipped (pounds)

23,425c

DAILY AVERAGES:

corporate

Average

4,629,000

4,961,000
„

YORK—

to Nov.

Aug. 1

NEW

PRODUCTS—DEPT.

SEED

4,681,000
624,600

COMMERCE

(tons)

Produced (pounds)

103.000c

Dec. 15

Aaa

at mills

Received

Crushed

52,689,000

*51,350,000

48,485,000

millions)

(in

21.450c

23.425c

——Dec. 15

Bonds

Govt.

OUTSTANDING—FED¬

Slocks

103.000c

z,\

—

BANK

RESERVE

November

10,044
—

MINES)—Month

lignite (net tons)—
(net tons)

PAPER

21.200c

Dec. 15

PRICES

BOND

MOODY'S

23.200c

Dec. 15

—

;

(East St. Louis)

23.200c

23.425c

Zinc

370,172

•

MERCE—

150,283

10,162

1——

tons)

Crude Oil—
Dec. 15

at——

Louis)

448,283, (j
1.219 v

139,308

—

anthracite

(E. & M. J. QUOTATIONS):

Electrolytic copper—
Domestic refinery at
;—
Export refinery at—..—:—
Straits tin

829,725

541,886

——

tons)—

(net

COTTON

•METAL PRICES

692,169

492,659

tons)

——'

...

coal

■

642,129

(net

tons)

(net

Pennsylvania
coke

"
r

November:

ERAL

Dec. 14

Pig iron (per gross ton)
Scrap steel (per gross ton).

$47,837'
1
'

America

COTTON

(per lb.)—

$53,491

—

—————-——

North
South

IRON AGE COMPOSITE PRICES:

Finished

7,342
13.099

/•>

5,626,900

5,704,823

8,245
14.595

anthracite

-Dec. 18

$27,397

$30,651

8,400

—

MINES)

Pennsylvania

(net tons)

57(

346

October.

exports

AND

$16,345,000

$54,400

Bituminous

•

$101,060,000

$30,800
——-

Beehive
FAILURES

$24,416,000

—

EXPORTS

1,202,00(

•

To Europe (net tons)
To Asia (net tons)-

Dec. 11

kwh.)

(in 000

537,000
505,000

DEPT.
OF COM¬
Oct. (millions of $):

COAL OUTPUT (BUREAU OF

output

1,135,000

77,709,000

Total

•v'

Electric

1,531,000

955,000

1,382,000

„■

32.424.001
28,437.000'

INSTITUTE:

ELECTRIC

EDISON

5,917,000

3,456,000
1

15,200

SYS¬

AVERAGE=100_

TEM— 1935-89

313

1,198,000

INVENTORIES,

Beehive

■

$12,574,000

—

_—

liabilities

liabilities /—

Month

_Dec. 11

(tons)
(tons)—;

lignite

anthracite

Pennsylvania

461

$14,160,000
2,139,000

liabilities
service

Wholesale

OF MINES):

—Dec. 11

and

coal

2,690,000

Manufacturing

COAL

COAL OUTPUT

460

MERCE—Month

$130,139,000

30,500.000
53,193,000

102,149,000

Dec. 16
->

;

—

municipal

26,
115

number

liabilities

804,183

673,346

31,894,000

and

State

124

188

NEWS-

construction

Public

112

208

$15,933,000

BUSINESS

construction

Private

129

——:
——

liabilities

783,276

RECORD:
Total

$92,910,000

—

service

Dec. li

ENGINEERING

number

"'V Total

CONSTRUCTION

ENGINEERING

CIVIL

$107,141,000

number

Commercial

Dec. 11

cars)

(number of

53,318,000

freight rec'd from connections (number of cars)

Revenue

$102,887,000

SYSTEM—

BRADSTKEET

number

Wholesale

ASSOCIATION

3,031,937

Wholesale

55,032,000

86,406,000

300

♦3,021,131

GOVERNORS

November:

♦300

—

thousands)

FAILURES—DUN

INC.—Month

Ago

300

—

(tons)

RESERVE

(in

Year

Month

3,086,513

reporting

transported

November

Month

18,127,000

82,406,000

-Dec. 11

—

95,235,000

25,512.000

carriers

DEBITS —BOARD

Month

Construction

97,110,000

—.Dec. 11

oil (bbls.) at

fuel

(bbls.)

2,665,000

.7,269,000

—.-Dec. 11

1————

oil and distillate

Gas

——

2,490,000

7,553,000'
8,946,0c0

11
Dec. 11

(bbls.)
—Dec. 11
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at
.Dec. 11
Residual

October:
motor

average

output

Gasoline

of
of

BANK

(bbls. of 42 gallons each)
stills—daily average (bbls.)
.——

Crude

of that date)

AMERICAN TRUCKING ASSOCIATION—

Ago

INSTITUTE:

PETROLEUM

AMERICAN

are as

Latest

Number

ingots and castings (net tons)

month available (dates

of quotations,

cases

Year

Equivalent to—
Steel

or,

3,853

3,746

$11,982,830

$11,306,032

——

3.962

3,594
...

4,605

$11,952,284

.Volume 168

Number 4762

THE

than

What Stocks to Own in 1949
(Continued frorti page 2)

level

trials.

the

The

Dow-Jones

high

supposedly
a

195.

was

reaction

to be followed by
consolidation.
The

high of the year—close to or above
the 1946 high of 213—was to be
reached in the later part of 1948.
The reaction came

along accord¬

ing

schedule,

market

has

unless

the

sharpest upward
recorded, the averages

move ever
are

but,

the

going

to "fall

far

„

short

reaching the 1946 high of 213 by
the end of the year.

This failure of prediction

part,

was

on my

at least

partially due to
turn of the tide
in the Presidential election. How¬
the

unexpected

ever, the way
tern has been

the technical pat¬
working out since

mid-Summer, I doubt if Mr. Tru¬
man's

election

made

of the

market

other than

the

timing of the relatively minor
trend of the next few months.
If
the

inflationary

factor

in¬

creased government

spending con¬
tinues, there will be higher taxes
and some partial government con¬
trols.
This probably would have
been

true

had Mr. Dewey
If, as is more prob¬
able, the deflationary factors be¬
even

been elected.

come

would
for

predominant,

there

little

sense

Either

taxes

controls.

the other will hap¬
seems rather illogical to

one

pen.

seem

increased

fear both at the same time.

level.

There

will, of
interruption

be periods
adjustment.
But I think the supply and de¬
mand
potential
today is much
greater than it was, let us say, in
1920

It is

course,

and

1921.

possible that there will be

piecemeal

adjustments
industry, one

each

sector of
by one,
readjusts and returns to a normal
pattern.
This has already hap¬
pened in many industries.
Cer¬

tainly, the shortages and demands
built up by four years of war and
by ten years of depression are not
going to be satisfied by the last
three years of peak production,
large as that production may be.
This becomes

unlikely
consider the growth in
population over the last 20 years,
and
the
greatly
increased
in¬
when

even

vast

segment. of our
people, thus greatly enlarging the
buying power.

comes

mass

Whether

inflationary

defla¬

tionary factors will become
nant

domi¬

question.
In
either event, the effect on earn¬
ings should be about the same. It
open

would appear that earnings, after

taxes, will be 20% to 33V3% low¬
er in 1949 than in 1948.
If, in the
present market, prices were sell¬
ing at anywhere
near
normal

price

earnings

ratios, this
would result in a sharply lower
price level* For example, if a
company were
earning $15 for
1948 and paying out 60% in divi¬
dends or $9, and selling at 150
to yield 6%, it would seem logical
to expect a sharp drop in price
in the event that the earnings de¬
clined to $10 and the dividend
-

cut

were

$5.

However, under
present market conditions, while
the stock is earning $15 it is only
paying $5 in dividends and selling
at 75. A'drop of 33V3% in earn¬
ings to $10 would not necessarily
have any effect on either the divi¬
dend or the price.
In fact, from
a psychological viewpoint, the re¬
verse may be true.
The market
has failed

move

ahead

in¬

creased

earnings because, for the
last two years, the investing pub¬
lic has been fearing a recession in
business
and
felt
that
present

earnings

only

were

temporary.

When business does drop off mod¬

erately

(competent

look

for

175

the

authorities

than

index

FRB

which

around 195) the fear

now

dip to

sis will be removed and the
ket

psycho¬
mar¬

then look ahead to the
next upswing in the business pic¬
ture.
In that event, the price-toearnings ratio will be much high¬
er than is prevalent today.
may

Low Prices to Come in Early 1949
To

the

sum

I again predict that

up,

will

market

low

its

reach

point for 1949 in the first three
months of the year.
I do not be¬
lieve the low will be much, if any,
lower than the Nov., 1948, low of
171, and that it will certainly
be

above

160.

the

situation is quite different than it
was
20 or 30 years ago, or even
after the Civil War.

had in 1921

The debt that

practically the

proportionately,

same,

had

was

after

the debt

Civil

the

War.

To¬

day, I do not think that is quite
the situation; and so I think that
prices not only of commodities but
of many other things are on
a

higher plateau.

The scale is dif¬
if a five-year-old
boy should walk in here this mo¬

ferent.

I mean,

and

ment

decided to

measure

his height, and through using a
yardstick that had been changed
to

where

scale

longer
inches,

foot

inches but
the boy would
12

feet tall.

was

six

was

eight

It would appear that the

height of the child was all out of
proportion. That isn't the picture.
The height of the boy is normal
in relation to the
the

changed scale of

yardstick.

I think that is true in

that that

our

I don't

today.

economy

are

the

stock

entire

new

era

with
bil¬

against eight billion in
1929. It is quite different from the
as

situation

New

when

1929

the

over

York

listed

the

stocks

Stock

turn¬

the

Exchange

was

130% of the national income, and

the

today
of

the

turnover is about 4%
income. This last

national

figure

shows

PTowth,

the

possibilities

think, in the

financial

field.

prices
low
today?
Stock market prices in relation to
are

earnings and
tremely low.
number

dividends are
I think there

our

ex¬
are

the

and

reasons

obvious

most

GROUP

CHAIRMEN'S

fault

and

1930

that there has
been a tremendous change in this
country in the last 10 or 15 years.
A great many people don't realize
it. We are still trying to approach
the same people in the same way
for risk capital. Strangely enough,
those same people haven't got the
same money that they
had 10 or
15 years ago..-There is an entirely
new
segment of our population
who have investing funds and we
don't do. anything about interest¬
ing, them in the investment and
speculative possibilities in today's
low prices.

think,

Today there are 15 million to 20
potential customers for

million

securities

that

lion

are

here

not

were

the 1930s. There

20 mil¬

potential customers for tele¬

vision

and

automobiles

and

sets

houses that

were

19304s.
Now, whether

not here

in the

realize

that

you are an

has.

the

mean

should be out try¬
ing to sell today are the farmers
people that
and

laborers
of

men

and

small

North

the

business¬
West

the

and

the South,
and everywhere
else; and they are the people who,
in my opinion, are the potential
and

customers of tomorrow.
a

tremendous

have

market

mass

here

that is going to mean a great deal
to us in the future.
And that is another

reason

why

not going to have a seri¬

you

are

ous

slump

fall off in business.

Thomas Whiteside

James H. Lemon

Chace, Whiteside,

Johnston, Lemon
& Co., Wash., D. C.

Warren &

tive, interrupted by intermediate
corrections, will be around 250 in
Dow-Jones
industrials, with
5% leeway on either side.

the

nel.

October, 1946, I have
buying
selected
issues
the averages enter the

lot more than two

years

to satisfy.

While

170-160

so.

the

price

appreciation
a

low of

250;

shown a,

55%

individual

than

160 to the indicated

erate

should

fourth

declining

culminate

the

The fifth, or final

doing

also

dis¬

the funds had increased 800%.

they are selling to
investors, and I think
many of us in our own businesses
will have to change our operations
a
bit and pay some heed to this
important new element. ".

ward

not

include

all

diverse

phase
early

patterns.

has

also

but

advanc¬

this

even

been

This, of

course,

in the past,
selectivity is
evidence today.
true

extreme

an
example,
I
advised
switching Anaconda Copper into
Phelps Dodge, at the same price
two years ago. These
are
both

the
copper group.
Of
the background is differ¬
but they are still copper

stocks

course,

ent,

stocks. Today Anaconda is selling

1929

at 34,

approximately two

points
other

away

two

three"

hand, Phelps Dodge which

1946

from its low. On the

actually sold,

believe,

points lower than Anaconda,

(Continued

page

74)

Mail your Annual Report

to the Investment

Houses

Investors

them

the

Country.

information

for

your

look to

company.

Addressograph Service
We

have

graph

metal stencil

Department

for

our

Addresso-

investment

every

banking and brokerage firm in the country,

alphabetically

arranged

States

and

Cities, and within the Cities by firm names.
This list is revised daily and offers you the

Market Phases

believe that the

tax laws in 1949.

will

and

After selecting the best
groups, the issue is further com¬
plicated by the fact that many is¬
sues
in
the
group
show quite

Dow-Jones industrials should sell

words,

the smaller

Stock

most

covered that in the last few years

say,

3,000%.

some

will

in 1949?

own

groups.

ing phase will be an upsurge
carrying into the middle 1950s.
This will be the dynamic upswing
with over-speculation and heavy
public participation. The pattern
is not complete as regards the
ultimate price objective for this
final
advancing phase, but the
above the

individual

The 1949 advance will be selec¬

tive

while

raise.

The

1950s.

discuss

stocks

profitable to

advance

sometimes
there are gasps of astonishment
at an upside objective of 240 and
250, it really is a relatively mod¬
or

Stocks

Individual

now

stocks, which is the topic of our
meeting. What groups or what

have had

has

years

approximately

from
240

last

Let

„

Every bull market
in

Prospects

buying range, and I shall

continue to do

three

in the brok¬
erage
investment field, I might
draw your attention to open-end
investment
trusts.
In
glancing
through the financial statement of
one of your local investment com¬
panies, I discovered that, from its
inception somewhere in the early
1930s, the investment fund had in¬
creased

My prediction may eventually
quite conservative.

turn out to be

Whenever

haven't been

good job, let

stock market

1942, started a long up¬
war
price cycle, similar to

most

service

up-to-the-minute

available.

May,

that of 1914-1929.

Such long-term

price
cycles usually have
five
phases—three of advance and two
of decline. The first phase was the
advance from 93 in the Dow-Jones

Our

charge for addressing envelopes for the

complete list

$5.00

per

(United States

Canada) is

thousand.

All

addressing completed within 24 hours.

change in the tax laws, I don't be¬

industrials in May, 1942, to 213 in

can

the

lieve that is quite true.

May, 1946.
ing phase,

labels at

range

industrial

accumulation

istration

average,

and will

even¬

price level

some¬

some

area

tually result in

of the last

think
of

where around 240-250.

This fun¬

the

damental-

not;

question

pattern

has

changed

the

results

election.

has,

however,

delayed.
latter

been

the

been

The market during the

part

1940

should

apr

there

SEC

will

you

the

might

recent

relative

and

never

quite

look

into

statements of
the
a

taxation

number

other things pertaining to our fi¬
nancial

business.

You

would

amazed to know that the SEC has
a

lot

faith

in-our

business

The second, or declin¬
was the drop from 213
to 160 in May, 1947. This area was
again tested in February of this
year.

are

now

the

also supply the
a

list

gummed roll

small additional charge.

third

phase—a period of advance. This
third, or advancing phase, .will be
comparatively moderate and se¬

Herbert D. Seibert & Co., Inc.

lective

25 Park Place

Publishers

of "Security Dealers of North America"

•

with

well-managed
the advance.

the

better-grade,
companies leading
The ultimate objec-

long-term upward growth chan¬

high of 386.
One day last week I went through
The objectives of 250 for the
one
of the poorer sections of a
present phase, and above
1929
nearby city and I noticed that four
highs for the ultimate advance,
out of every 10 homes had a tele¬
seem fantastic now, but only be¬
vision aerial.
Those people were
cause
of the
present depressed
living in the houses that they
mental state. Percentagewise, the
were living in—why? Not because
advances are quite in line with
they wanted to, but because they
couldn't get new homes. So when
you say that residential housing
may slow up temporarily this year
on account of high prices, it may
possibly be true, but there still is
behind it all a potential demand,
which, in my opinion, is going to
take

of the market over the

moves

past 60 years. It must be remem¬
bered that this country is still in

Ever since

advised

Sears,

Boston

the

advo¬
cate of New Deal policies or not,
something has happened in the
last 15 years, and you have to

I think that is a

We have for¬

1931.

and

gotten,

jority opinion is that there is go¬
ing to be very little change in the
statement, but when
you go beyond that and say that
in our present Democratic admin¬

busi¬

investment

the

the broker's, and the whole
financial field. I would say rough¬
ly that most of us are about 20
years behind the times in our pub¬
lic relations. We are operating on
the same basis as we were in 1929

reason,

safe

stock

why

reason

ness,

of course,
present tax laws. The ma¬

pretty

SOUTHEASTERN

low, I think, is partially

are

other

Why

Another

prices

Certainly

market

brokers' loans less than half
lion

mean

that envisioned in 1929.
not

CHAIRMEN

months, between 160 and 195

opinion that the
28

still

Another thing, I think our debt

IBA GROUP

COMMITTEE

the

think, furthermore, that sub¬

are

(2669)

Securities Industry

ject to interruptions such as you
may get in 1949, we are going to
have a high level of business for
the next eight to ten years. There
is a historical precedent for this.
Certainly it has happened after
every major war. It happened af¬
ter the Civil War.
It happened
after the first World War, and it
undoubtedly, in my opinion, will
happen after World War II.

great

any

difference in the ultimate destina¬
tion

aforementioned

have who

Low Prices Partially Fault of

indus-»proach or pass the 1946 highs of
This 213 and be on the way to the

was

some

CHRONICLE

FINANCIAL

it.

COMMERCIAL

REctor 2-9570

New York 7.

THE

(2670)

the

steels,
equipments,

What Stocks to Own in 1949

ties

high

59, and even

today is selling at 53.

So, there is going to be a great
deal of selectivity, not only in
groups
but
also
in
individual
stocks
within each
group.
The

that have bearish patterns
of them—
indicate that they have not much
chance of any great rise in 1949,
but I don't believe they are going
to have too much of a„ decline. If
groups

—there aren't too many

there

decline indicated, it

any

fairly moderate.

Rail Stocks Price Appreciaition

opinion,

best

the

the group that
possibilities for

appreciation,

price
what

and

interested

that

the

in, is

I don't think you
will find many people who agree
With me on this.
My opinion is
railroad group.

think,

about,

railroad field.

the

covers

Building Industry Group

most

second

The

favorable

is the building industry. As
i have stated before, I think there
is a demand for building that will
last for a considerable j period of
time. There are very many people
in this country with an .increased
standard of living who are not go¬
group

I think over

mand for low-cost

building

the

itself,

group

types of stock,

various

there

are

some

speculative, some more or
a semi-investment nature,

less of

purely on technical factors, and very few, with the possible
I have some backing exception of Johns-Manville, that
from the fundamental angle too. would be classed as investment is¬
I doubt very much at any time in sues. I will not attempt to differ¬
based

think

but

the next two or three months that

much below 50

the rails will sell

rail

the

month

last

low

think the

average.

around

was

51.

The downside indications built up
in

the

riod

May-July distribution pe¬

by the rail average and by
individual

the

in most
the

rail

have

stocks

been reached. Now,

cases

ICC may

show
refusing

me up

rather

badly by
to grant a
freight rate increase, but from the
technical pattern of the railroad

believe, that

stocks,

about

reached

may,

lows.

test

these

however,

rail

rails

their

have

They
lows

the

again.
have

doesn't

of stock that

can

purchase at
It is the type

be recommended

'for

yield and potential apprecia¬
It is earning over $20 a
share and with a very good possi¬
bility of an increase in the Rresent
$6 dividend, it has an attractive
tion.

technical pattern. Potentially, the
stock could sell at 150; and on the

in a sharp break
in the market, it should meet sup¬
port around 95.
downside,

Other

even

less standard rail

more or

that

very

very,

Portland
speculative issue,
but with greater chances of price
appreciation, is Penn-Dixie
Alpha

and

Cement

Cement. A more

every
attractive

interesting

around 100 to 102.

stocks

attractive tech¬
nical patterns. My favorites in the
cement group are Lehigh Portland

Machinery Group

think

have

third

The

pattern.

and I think there you have

some

stocks,

One of the
better railway standard stocks is
Atchinson, ' Topeka & Santa Fe.
It

course, there is the
allied field of cement company is¬

able field, I

broad

the

group in the favor¬
would say, would be
classification
of the

machinery group. That would in¬
farm equipment issues, oil
supply issues, and every¬

clude

well

thing relative to the general ma¬
chinery group. The picture in the
group
is rather spotty,
and I
think you will have to be careful
with

Stocks

selection.

favorable

technical

very

pattern

Cooper-Bessemer,
Elliott
Com¬
Joy Manufacturing, Foster
Wheeler, A. O. Smith, Chain Belt,
Standard
Steel, Spring,
Dresser
Manufacturing,
Warren

Pipe:

S.
4

and

Pipe
?

very

Actually, they should not be
i included in the machinery
group,
sas City Southern, Illinois
Central,
! but I think some of the electrical
Delaware
&
Hudson,
Atlantic
Coast Line, Southern Railway and | equipment issues look attractive.
Southern
Pacific.
Reading Cor¬ Square D, to my way of thinking
sound technical patterns are Kan¬

poration is also

ing

rather interest¬

situation.

Reading, as you
know, owns a considerable block
of Central Railroad of New Jersey,
which is an extremely speculative
issue. It has moved up from 8,
about

year

ago,

around 34 today.

is selling
Instead of buy¬
and

ing Jersey Central, you can buy
through Reading, which is selling
today at around 22, about the
same price
it was selling a year
ago.
In
the
more
speculative

one

sues

the

attractive

is¬

of the group.
the

favorable

classification

fourth

issues

would

include

mail order and store stocks. Now

that
for

curious

long

time,

Light,

patterns

nessee

Corporation,

is " recom¬

rather interesting profit

Classifications.

of the above
would include

of the household

equipment
issues, such as floor covering com¬
panies like Firth Carpet, Alex¬
some

The

liquor stores
are
fairly
liquidated
and
present
some
possibili¬
ties. Schenley is an outstanding
issue,
and
for
second
place,
Distillers Corporation-Seagram.
I think there are some special

group.
The outstanding
California Packing.

Land

could

mentioned

the

bhe

then, there is another,
of issues that has been de¬
pressed but may be near a turn.
They may take quite a while in j
turning. I think, for example, the
air line stocks could be included,
Now,

group

classification;

that

American

Airlines

Northwest
American

Parj[
specula^

and

interesting

are

Lines.'

Air

Eastern

Airlines,

tions. I think they are pretty well

liquidated.

The Marital Deduction and

v'l

r.v

Split Gift Under

Revenue Act of 1948

■■

-i

but will be one that,

barring con¬
it during the sur~f
spouse,
not
exceeding
an sumption, of
thi<j in income taxation by means ing
amount equal to one-half the ad¬ vivior's life, will be present for
of
the
compulsory joint return
tax in the survivor's estate.
Tax-?
failed repeatedly, such a change justed gross estate, that is, the
gross
estate less Section 812(b) ability in the survivor's estate is
was made in estate and gift taxes
(Continued from page 14)

by the Revenue Act of 1942. Under
a decedent in a community

that act

property

state

was

chargeable

with all the

the community property law.

der

also

was

chargeable

estate passing to the surviv¬

gross

;

with

deductions for funeral and admin¬

will

deduction; but

characteristic

most

interests which pass the test.

claims and support
an example, if the
husband's adjusted gross estate is
$200,000, any amount which he!
bequeaths to his wife, up to $100,-j
000, will be fully deductible in;
computing his estate tax. The de- j
is

what

given—as is true of the

not

half

duction

the

value

£.!
a

terminable interest, without more;

is disqualified; that is where the
decedent directs the purchase by

his executor or trustee of a teii^
minable interest, for example, am

annuity, for the surviving spousef
has

the phrase "passed

uses

passed" and defines it so,

broadly

of testamentary dis¬
it. Similar notions

however,

instance,

one

The Act

property economcially attributable interspousal gift deduction.
to the other spouse to the extent
Terminable Interests
of his power

not the test of the

istration costs,

allowances. As

to include all types of

Unfortunately, this general rule property transition, either inter
It covers wills,
were
injected into the gift tax is beset by a number of qualifica¬ vivos or at death.
tions. The first of these deals with inheritance, forced interests of a
law.
y.'>
surviving spouse, deeds, joint ten¬
This not only evened the score; the nature of the interest which
must pass to the surviving spouse. ancies, appointed property and in¬
in some respects it transposed the
Interests passing to the
If the interest is one that by its surance.
inequality. Where, for example,
spouse, however, inus
terms will fail upon the lapse of surviving
the family estate had been ac¬
time or the occurrence or failure be included in the decedent's gross
cumulated through the husband's
to occur of an event or contin¬ estate in order to be deductible
efforts and the spousal desire was
Hence, inter vivos transfers to t. <
to have the whole estate pass on gency, and if there passes by gift
from
the decedent^ spouse
to a other spouse, unless revocable, ir
the death of the first spouse to
third person an interest in the contemplation of death or the like
the survivor, if the wife died first,
will not be includible in the de¬
same property
by reason of which
the result in < a community pro¬
the third person may enjoy any duction- But the gratuitous suc¬
perty state, under the 1942 Act,
part of the property after the ter- cessive interest which will barge¬
was a tax on half the assets at her
mination of the surviving spouse's duction of the surviving spouse':
death and a tax on the whole of
them at the husband's subsequent interest, then the interest passing preceding estate may be created
Recall the illustra¬
to
such spouse will not
be de¬ inter vivos.
position

over

death. In
the

common

law state, on

facts, there would be an
tax only at the husband's

same

estate

death.

y. *. v

■.

v'.y'y -.'.'v-

The drive for equalization of

income tax

nue

was

resumed after the

culminated

and

war

Act of

the

in the Reve¬

1948. In the

new

tion where the

ductible. In short, where the sur¬

spouse's

viving

husband, by a deed
contemplation of death,

not

is
a
and is

conveyed real estate- to his son
one,
successive interest subject to a leasehold estate, iii
himself and then bequeathed the
another created by the decedent

limited

followed
in

interest

for

terminable

than

less

there will be

full
no

leasehold to his wife.

consideration,

law,

Trust

The
A

devise

deduction.

the

wife

for

Exception

life,

whole approach to
There are three exceptions to
remainder to the
children, is a
parity is reversed,
the so-called terminable interest
clear example of a nonqualifying
the design being to put all states
terminable interest.
Here
are
a rule, the first in favor of trusts.
upon the same footing as that en¬
Assume
a
testamentary
trust
few others taken from the Senate
joyed by the community property
which gives the income, payable
however,

the

the problem of

states before

the

This is

war.

ac¬

Committee Report:

quarterly to the decedent's widow
for life, and gives corpus as the
widow by will shall appoint, to
her estate or elsewhere, and in;

Smith
devises
real
estate
in
complished for community pro¬
perty by repealing the 1942 estate joint tenancy to his wife and
and gift tax amendments, and for daughter. The wife's interest may
non-community property by in¬ terminate by her death before the
come-splitting, gift-splitting and daughter, whereupon the latter
the marital deduction. Property will succeed to the property by
-

rights

are

not affected.

Taxation

;

■

The

general theory of the new
that, to the extent "to which
decedent's non-community prop¬

half

interest

the

devise

common,

not

^axed

of it.

tenancy

interest

fjrS£

even

,
if iha
the

exercised.

them

his
ld

then
tu

(

be deductible.

whole

the

casg^the propert^Twould
jn ^e decedent's

and

estate

law is
a

lined, there would be no deduction

in
interest would

were

the wife

deductible.

appointment

On the test above out¬

children.

giv^her bv her father^Th^wife^s
given ner by ner lather, ine wire s

The Marital Deduction in Estate

default

By deed not in contemplation
of death, Smith gratuitously con-'
erty passes on death to his sur¬
viving spouse, but not • in excess of veys real estate to his son, sub¬
group, I think that Denver & Rio
one-half, it shall be disregarded ject to a 20-year leasehold estate
advances.
in Smithy
Smith dies bequeath¬
Grande;
Chicago, Rock Island;
in computing the estate tax. In the
Some of the retail issues that
Seaboard Air Line; Western Pa¬
ing the leasehold to his wife. The;
have attractive technical patterns typical case to which :L have re¬
wife's interest is a terminable one!
cific; St. Louis & San Francisco;
ferred, where
assets
are: Federated Department Stores,
and when it expires the gratuitous
Gulf, Mobile & Ohio, are all at¬
have been born
Marshall
^th^hdSband's successive interest in the son will
Field,
Allied
Stores,
tractive.
I also think that for the
earnings, we hayevLhesej results
J. C.
Penney, McCrory Stores,
semi-investor who wants income,
take effect.
The bequest to the
under the new
com¬
Montgomery Ward,
Sears Roe¬
some of the recorganized rail pre¬
wife is not
deductible.
If the
munity property
virtue
buck and Gimbel.
ferred stocks offer some very in¬
son
paid for his successive in¬
Next in order, I would place of the repeal of the;1942 amend¬
teresting opportunities, not only
terest, the bequest to the wife
possibly the oil stocks. They were ments, only the decedent's half of
from a yield viewpoint, but from
the family holdings wiUbe sub¬ would be deductible.
one
of
the
few
groups
that
a profit viewpoint.
For example,
An interest passing to the sur¬
reached the upside objectives of ject to the estatetax; apd in a
Chicago, Milwaukee, St. Paul &
not;
the 1946-1948 base, but now since common law state, by virtue of the viving spouse is, therefore,
Pacific, preferred,, sells at 34, and
their decline from the 1948 highs, new marital deduction, that por¬ disqualified merely because it is
I think will pay $5 next year. And
It falls from grace
I think they are attractive. Again tion of the family holdings, up to terminable.
it is also possible that the $3.50
selection
is
important:
Cities one-half, passing to the wife will only when it is a terminable in¬
arrears may be
cleaned up also.
terest followed
by a gratuitous
Service, in the more speculative pass free of tax. Observe here that
And even, without present pes¬
under the new Act you can split successive
interest created
in a
field, along with Plymouth Oil,
simism, in such an eventuality it
third
tax
purposes
person
by the
decedent.'
appears
undervalued.
Standard your t income for
could advance a few points.
without actually giving your wife Patents, copyrights, leaseholds and
Oil of New Jersey and Gulf Oil
Chicago & North Western pre¬ are attractive in the better grade any of it. Your estate will have annunities, for example, though
ferred is very interesting as are issues. Shell Union is also attrac¬ no
marital
deduction,' however, terminable interests, will be de¬
the preferred stocks of the specu¬
unless your wife actually gets part ductible if the decedent passes his
tive; New Mexico and Arizona
lative issues mentioned above.

products

food

the

situations

-A \

but

the past six or seven

Another lesser known stock, Ten¬

that do not fit in any

thing, because
ever since the

recently,
months,
they have built up quite a sizable
base pattern, and I believe they
could have fairly substantial price
over

The fertilizer group

mended.

1946, the merchandising
have
had
unfavorable

technical

patterns.

Steel,
Wheeling
Steel
and
Youngstown Sheet & Tube. There
are
a' number of special groups

break in

issues

sound

erals & Chemical is in that group.

I mention Electric Power
Kelsey Hayes Wheel,
Mueller
Brass,
Sharon
Steel,
Standard Steel Spring, Superior

are:

pany,

Bigelow-Santechnical

and

They have

Cement.

individual rail

technical

Ma-

Smith,

ford.

groups,

his spouse for other purposes un¬

Furnace, Celotex, Flintkote,
sonite and Otis Elevator.

sues,

these

Holland

attractive

Radiator,

American

Then,

ander

is extreme¬
ly interesting. International Min¬

issues

building field

the

technically in
are:

look

that

stocks

chemicals, in that order.

family property eco¬
nomically attributable to him, ir¬
respective
of
the
division
of
ownership between himself and

entiate between the various issues,
but

and
motor
metals, utili¬

halted by high costs,
a period of time there

going to be a tremendous de¬
housing.

motors
paper,

individual

for

ing to be satisfied in their present
nomes. While temporarily that de¬
sire may be

Possibilities

shows

develop¬
ments in the recapitalization plan.
out mere could be some

That

and

(Continued from page 73)
has been

.Thursday, December 23, 1948

CO^ERCIAL .& FINANCIAL CHRONICLE

- „
power

This

widow's
t
e
„„f

„

u„

should not be

because

the

widow's interest will fail upon the

of the power.
The
exception in the new Act,
however, allows a deduction in
such a case.
It permits a deduc¬
tion for a trust meeting all the
nonexercise
trust

following requirements:

(1) The surviving spouse must
entitled

to all

the income for

;>uch income must "be
payable at least annually.
life

and

must have an
alone — to
appoint the entire corpus free of
the trust (by will only, or deed
only, or by either) to such spouse
(2) Such spouse
unrestricted power

the

estate

whether

—-

such

spouse,,

not to others.

(3) There must be no power in
other than the spouse to
appoint or distribute any of the
income or of the corpus elsewhere
anyone

than
If

to
a

ments
does

his

such

trust

spouse.

meets these require¬

(I shall call a trust which
"deductible - trust")
the

As a special situation, Western
Maryland common is an interest¬
ing stock, extremely speculative,

speculative^ development field.
Next
in
order,
and
without
mentioning individual issues, are

tion
of

all

precisely,

marital deduc¬

granted for the full value
property in the

spouse.

ever,

the

most instances, howinterest which gains

whole interest in /the trust property is treated as passing to the

decedent's' deduction will not be terminable, bu*vrvmg spouse and no sucees-

Volume

Number 4762

168

THE

sive interest is considered to exist

in any other
person.
The excep¬
tion is confined to
trusts; a legal
life estate in the-surviving spouse

coupled with a general power of
appointment would not be de¬

vor.
Heretofore, where the clause
applied,
the
survivor's
interest

to his
at

and the > property,, al¬
taxed in the prior estate,
escape a second tax.
Now, prop¬
erty given to the wife, up to one-

Ome

net

in-

trust

ac-

means

understood

ounting under the local law
fcet.. income
Sense.

the

Whatever

income

however, there is

mean,
that if

tax

the trustee

can

discretion,

doubt

longer be given

he has in the past,
to allocate receipts and expenses
between

corpus

have

can

hold

income

and

discretion

estate

with¬

accumulate income.

planner,

the

trust

vanishes, it is true, and
property will not be taxed in
estate, but it then reappears

the husband's

giving

lite income to the widow and

re¬

estate to bear

heavier tax burden.

Tax

Net

controls.

spouse

interest

widow,

interest

the

The value of that

estate is re¬

gross

with

power

the

to this

It is not

"conventional, trust."

deductible.

will

still

used, of course, to cover propierty passing for the benefit of the

by any death
ing upon the recipient

of the bequest;
by the amount
of
any
encumbrance or charge
upon .the property or any obliga¬

again

mercy

estate

estate, it does not
/shift the tax," as the deductible
trust does, to the estate of the
survivor.

tax

Life

Insurance

Exception

the

and
tax

amount of

until
the

Mr.

what

marital

fix

the

deduction
the

cannot
we

Once

Greeley's

cannot

marital

know

taxes
The

its receipt.

for

is,

This

until

are

—

the

survivor's

reason

tion incurred

amount

spouse

the

is also reduced

in excess of the
marital
deductions; but though
currently it avoids a second tax in

surviving

fall¬

taxes

or upon

estate

fix

the

know

the

deduction.

avoided, of course,
provision throwing /all death
can

the

nondeductible

por¬

tion of the estate.

A second exception exists under

the

same

the

provi¬

sion dealing with so-called uniden¬

proceeds settled

tified

upon

deductible
exception

the surviving

terms similar to the

trustv^ Orginally this
was narrower than the

trust

exception, but an amend¬
ment last July equated -the two
and, in addition, extended -the ex¬
ception to endowment and an-

assets.

Smith

conveys

real

estate, his only asset, as a
gift to his son, reserving a 20-year
leasehold

estate

himself, and
later dies bequeathing the lease¬
hold to his wife, the bequest, as
we
have seen, will not be de¬
ductible.

Have

deduction

contains

estate

you

thought

of
cash

will.

requires
Other Provisions

only

all

The estate tax "marital deduction
thus emerges as a tax-shifting de¬
vice. In general, property relieved
of taxation in the estate of the

eliminated
and

during

the

both
cover

be made

calendar

year

question; and such consent re¬
sults in joint and several
liability
each

upon

spouse

this elimination for the year.
another
One effect
argument for

wife;

husband

between

consent

gifts made

either

has brought with it other changes.
The
deduction
for
previously
taxed property has been wholly

the

The consent must

spouses.

The estate tax marital deduction

The Deduction in Estate Planning

for all gift taxes

and

furnishes

gift-splitting is
family holdings
in the estate
by means of a are concentrated in one spouse, he
and will be subject to the un¬ conventional trust rather than by* now has the benefits of two
$30,fettered disposition of the survivor outright
gift. There is another 000 exemptions and two $3,000 an¬
in the meantime. For many people change.
In the past where this nual
exclusions.
This,
coupled
this power of disposition will be deduction was available, the value with the lower bracket benefits
first

spouse

die will be taxed
of the survivor—

passing
the

ton

high a price to pay for tax
shifting, especially since, without

nondeductible

wife's

*-•«i4>ul

the

for

assets

that

.■

■£

rpu

*-»

j-%.

-a.,

•

;

m w

4-Vi

A A A

previously taxed property
by its share of de¬

that

one

the

irt the husband's estate—

means

the

such

trust.

But

made

conventional

aware

people

should be

of what they forfeit
by placing their future estate in a
conventional
"trust
instead
of

dividing
and

between

such

deductible trust.

trust

By such

the

inter

division of the estate there would
be two $60,000 exemptions instead
of one; the tax bracket would be

mitted

lower

whole;

halves than

two

and

tax would

payment

one

half

the

be postponed until the

permitting
credited,

wife the interim

gift

that
to

funds

otherwise have

would

pay

gone

taxes

the

husband's

full

use

mind,

the

however,

marital

that

deduction

does not "always produce the larg¬
est

saving,

spouse

One

has

even
no

reason

ing

property of her

own.

is that

property pass¬
deductible trust rather

than : in : "a

while

where the other

conventional

escaping

estate

trust,
tax

the

ever

in¬

the

death, since the gift

was

wife,

may

deduction

produce
the

estate

equal to its value in the gross es¬
tate, in which event none of the
estate

tax

will

be purged of its

Chase

National

Bank

has

Vice-President

is the officer in charge

the

of the bank's Produce Exchange
Branch on lower Broadway.
Harry S. Craver

was

appointed

an Assistant Cashier in the Public
Utilities Department, and Richard
J. Donovan an Assistant Cashier
in the Commercial
Banking Dept.

attributable to

its inclusion in the gross estate. In
such
a
case,
the
Act provides,

there will be

equal¬

ident

donor's
the

full

bank.

con¬

the

estate

or on

announced the promotion of James
J. GaNun from Second Vice-Pres¬

gross

not the Revenue Act

short

Chase Bank Promotes

tL
the

not

deduc¬

marks the

The

templation of death to the donor's
in

marital

in the trust business.

extent

re¬

gift in

A A

complexities,
beginning of a new
era in taxation—one
thing is cer*
tain: it will cause no depression
or

estate, by

gift tax
this extent,

its present approach
to the problem of equalization can

inclusion

the

1948 falls

ization,

of the estate
.

gross

tax. Assume

marital

Keep" in

portion

the gift in the

estate

earnings

that

attributable

Whether

donor's gross estate

death, the law has always

tax

only reduc¬
ing the cash demands upon the
husband's estate, but giving the

death of the wife—not

later

gift, brings about tax.
the

of the

transfer

vivos

cluded in the

tion.

gift tax
credit section, we have complexity
run wild; but some of the changes
may be brought into focus here.
Where a gift tax has been paid on

revisions

equalization

estate.
In

achieved

ductions taken

marital

the

of the split

reduced

was

where

benefit

in the previous es¬
deduction,
they can still pass the family es¬ tate. It must now be reduced also
tate through the wife to the chil¬ by its ratable share of any marital
taken
in
the
dren with only one estate tax — deduction
prior
of

death.

vein

the Act in favor of life insurmce

spouse

his

(2671)

chased during the decedent's life,
j spouses to treat such gifts as made
with a conventional trust in the one-half by each of them.
This

community property.

benefit

Value.Controls

duced

but

shifting

In computing
the marital de¬
duction, the net, value of the in¬
terest
passing to the. surviving

mainder to the children, with no
power
of
appointment
in
the
trustee to invade principal to meet
the widow's needs?
I will refer

is thus defeated.

and

What of the familiar tool of the

•

interest

her

used and events call it into oper¬
If that happens, the wife's

the

trust is to be deductible

disaster clause is

a common

ation.

held
no

unless

passing

property

wife, but with

all

CHRONICLE

deduction for any

non-community

vanished,

ductible.
1
' "
'
The exception speaks of income; only- once—in the wife's estate,
While this means net income, as. where,, presumably, the tax will
This will be so
pposed to gross income, it is not be less onerous.
whether

decedent with

ready

half the gross estate, will be taxed

lear

&' FINANCIAL

COMMERCIAL

Shillinglaw, Bolger Adds
(Special

remission of the

estate tax; in determining the por¬
tion of the estate tax which is due
to the inclusion in the gross estate
of inter vivos gifts, we are re¬

The

CHICAGO,
Stoeterau

has

Financial

ILL.
been

—

Chronicle)

Albert

added

P.
the

staff of Shillinglaw, Bolger & Co.,
120 South La Salle
Street, mem¬

bers of
the Chicago Stock Ex*
estate, will be twice
quired to take into account any
change.
laws, once in
estate
tax
marital
deduction
the husband's estate and again in
payable to the surviving spouse in the theory that, being absolute, it
the wife's "estate. This duplication gained through such inclusion.
a lump sum or- in installments all
will be deductible even though it
Wm. H. Rybeck Admits
of -state death taxes, not present
The, Marital Deduction and Split
of which go to such spouse or the
can be paid only
by a sale of the when a corfventional trust is used,
MERIDEN, CONN. — Esther A.
Return in Gift Taxation
estate of such spouse, the proceeds
nondeductible
leasehold?
Con¬
becomes ^ more
Schulz has been admitted to part¬
costly
as
the
are
deductible without resort to gress thought of that, too, and
Equalization has also been at¬
amount 6'f the property in the de¬
nership in Wm. H. Bybeck & Co.,
the insurance exception; ■ If any of scotched the stratagem by a pro¬
in
taxation
of
inter- 16
ductible trust* increases. Another tempted
West Main Street. Miss Schulz
the;-installments
may^gof else¬ vision-that if: an otherwise-de
spousal gifts by repealing the 1942 has been
associated with the firm
reasbn; iri^states where the Fed¬
where, however, there will be no ductible bequest to the surviving
community property amendments, in the
eral tax can "be deducted in com¬
trading department.
deduction
unless
the" settlement spouse" may (note the word) be
effective April 2, 1948, and by pro¬
puting the inheritance tax, is that
plan meets all these requirements: satisfied out of a nondeductible as
viding for common law states a
the estate tax becomes smaller,
marital
deduction
(•(1) The surviving spouse must asset or its proceeds, the value the
With CrowellVtWeedon
equal to half
inheritance
tax
becomes
be entitled to all payments during of the bequest will be reduced
(Special to The Financial Chronicle)
by larger. Of course, where the wife the value of the gift. The quali¬
his or her life and such payments the value of such nondeductible
fications here are much the same
LOS
has substantial holdings of her
ANGELES,
CALIF.—
must
occur
at
least
as in the estate tax deduction. No
annually, asset; and such reduction is re¬
Robert
N.
Gregory
is
with
own, the use of the full deduction
deduction can be claimed if the
starting not later than thirteen quired even where, the bequest is or
Crowell, Weedon & Co., 650 South
any part of it on the husband's
months after the decedent's death, not in fact ^satisfied out of the
interest given tp the other spouse
Spring Street, members of the
earlier
death may
actually in¬
u
is a terminable interest followed
A will set¬
(2) Such spouse must have an nondeductible asset;
Los Angeles Stock Exchange.
crease
the overall taxes on the
unrestricted power—alone—to ap¬ ting up a deductible trust should,
by a gratuitous successive interest
two estates.
either retained in the doner or
point, during life or at death, all therefore, prohibit the inclusion
Each estate must, therefore, be
Joins Hannaford Talbot :
created in a third person.
payments under the contract h> in the trust corpus of any nonde¬
The
carefully analyzed to determine trust
(Special to The Financial Chronicle)
such spouse or his or her estate,
ductible asset or its proceeds.
exception to the terminable
the
amount
of
property
which interest
SAN
whether or not to others.
FRANCISCO.
CALIF.—
rule appears again, - but
shoqld go into the deductible trust the insurance
(3.) No other person can have
f
Disclaimers
exception is omit¬ Philip B. Taylor has joined the
and the amount which should pass
staff of Hannaford & Talbot, 519
the -power to appoint any pay¬
ted
and
another
exception in¬
A further unpleasantness is the
in a conventional trust, in order
ments away from such spouse,
serted, this one in favor of inter- California Street. Mr. Taylor was
disclaimer clause. If the wife re¬
that maximum saving in the over¬
i You are aware, I know, that
spousal gifts in joint tenancy or previously with Sutro & Co.
jects an interest which in her all taxes on the two estates be
the insurance man's kit in the past
tenancy by entireties.
There is
hands would be deductible and
realized. This determination
has
contained
few
the same provision as to uniden¬
settlement the interest
passes to others, the should receive
With Brainard, Judd
special attention in tified
assets and,
plans that would meet this test. deduction is lost; on the other
of course, the
(Special to The Financial Chronicle)
cases
where the
adjusted gross same
exclusion
of
community
hand no deduction is permitted
estate is less than $120,000, so that
The "Common Disaster"
HARTFORD,
CONN. — Joseph
property in computing the deduc¬
where a third party rejects an in¬
none
of the precious $60,000 ex¬
P. McCluskey has been added to
Exception
tion as in the estate tax sections.
terest which in the wife's hands
emption be wasted, as well as in
the staff of Brainard-Judd & Co.,
The third and last exception is
would be, deductible and the re¬
At an
earlier
point, I have 75 Pearl Street.
cases where there will be deduct¬
one in favor of common
d saster
jected interest passes to the wife.
ible interests in favor of the other drawn your attention to the fact
clauses, under which otherwise
that in estate taxation there is a
spouse included in the gross es¬
absolute interests will abort and
deduction for the full value of
Community Property Exclusion
tate but not passing
under the
pass
elsewhere if the recipient
The marital
deduction
cannot will. Such outside interests—joint qualifying interests passing to the
.should not survive the decedent
other spouse, not exceeding, how¬
exceed half the adjusted gross es¬ tenancies and insurance
proceeds,
-for a specified period or if the
tate, that is, the gross estate less for example—should be taken into ever, half the adjusted gross es¬
.recipient should die in a common Section
Here the deduction is only
812(b) deductions for ex¬ account in fixing the portion of tate.
disaster.
The exception permits
half the value of the gift.
The i
penses, claims and the like. If that the probate estate going into the
/the use of either type of clause formula were
result is that although in a com- I
applied to an estate deductible trust.
'in a bequest "to the surviving
munity property state the family
containing the decedent's half in¬
And while the slide rule is in
spouse, but. the required period of
assets may be divided so as to give
terest in community property, the
use
for this purpose,
the estate
survival
cannot
exceed
six
Act
would
miss
its
target
of planner might consider another each spouse one-half as his sepa- :
months; and such spouse must in
rate
property without entailing
equalization. Three-fourths of the problem: the amount of
property
fact survive the prescribed period,
any gift 'ax, the same division of J
family assets could then be passed to be
put into a corpus-consuming
where the first type of clause is
to
the
wife
tax-free,
the half deductible trust so that it will be such assets in a common law state
used: or, where the other type of
will require the payment of a gift1
which she takes outside the pro¬
completely exhausted at, but not
clause is used, it must be shown
tax upon one-fourth of the hold¬
bate estate as community property
before, the wife's death. Since the
that such spouse either did not
and half of the other half con¬
ings.
While we may guess the
property so passing would escape
die; or could not have diecly as a tained in the husband's
philosophical and
the practical
gross es¬ taxation
altogether, a combination
result of the same accident which
which
brought
tate; while in a common law state of such a trust with a conventional considerations
took the decedent's life.
about this result, we can hardly
only half the assets can reach the trust
;
covering the rest of the fam¬
The new Act, although it per¬
wife free of tax. The law solves
be expected to accept it as equal¬
ily assets, would mean real tax
mits the common disaster clause, this by eliminating, in the
ization.
compu¬
economy.
Much the same thing
makes its use dangerous in con¬
tation of the adjusted gross estate,
Equalization is attained in the
nection with a deductible provi¬
the decedent's
interest in com¬ may be accomplished, of course,, taxation of third party gifts by ,

uity contracts..
Where

J.-

insurance

suggesting that Smith make

proceeds

are

the husband's

taxed

under" state

bequest of $50,000 to his wife, on

(

•

sion in the

surviving spouse's fa¬

munity property, thus leaving the

combining

annuity,

pur-' married

persons

allowing 1

Thursday, December 23, 1948

CHRONICLE

FINANCIAL

COMMERCIAL

THE

(2672)

in
•

Gas

Affiliated

Cleveland,

Inc.,

Equipment,

filed

40,000

land; Day & Night Manufacturing Co., Monrovia, Calif,
and Payne Furnace Co., Beverly Hills, Calif. [Affiliated
obtain an additional $4,000,000 the private sale of

fwill

early in January.
«

Expected

companies.]

.15-year 3%% notes to insurance

of notification) 1,767 shares of capital
stock
of which 1,000 shares will be offered
publicly at $100 per share and the underwriter will
receive one share for each 10 shares sold and an option

„

•for five years at $100 per share on two, shares for each
three shares-sold.
Underwriter—Burnham & Co., New
•York.
9

scription at
.share of

Corporate purposes.

eomihoii

Price—$6.50

share.

per

States

Underwriter—William C. Roney

Un¬

derwriter—Coffin & Burr,

initially

existing

Proceeds

—

Inc.
Offering—To be offered
stockholders both preferred and
To reduce outstanding short-term

Central

Pfewer &

National Bank of Boston.

Nov. 21,

1947, filed 40,000 shares ($100 par) cumulative
preferred. Underwriters—Lehman Brothers; Glore, Forgan & Co.; Dewar, Robertson & Pancoast negotiated a
purchase contract in April, 1948, but the SEC on July 27,
1948, concluded that financing by the proposed preferred
issue is not necessary.

■

Mines

Christina

Dec.

;Nov. 24 filed 30,000 shares of capital stock. No. under¬
writing. Offering—To be offered to stockholders at $10

share. Proceeds—To complete company's purchase
,of Eureka-Maryland Assurance Corp. of Baltimore, and
to keep surplus intact.

Inc., New York

American

Co.

Petroleum

Colorado

•';*

-r

Colo.,

Delta,

Inc.,

YY/..

Price—$8 per

Cantor, Fitzgerald & Co., Inc., New York.
Working capital, etc.

of notification) 250,000 shares of common
Price, par. - No underwriter.-. For drill¬
ing and development program.
,
V. ■'
,

Steel

Pump Corp.
Sept. 21 filed 200,000 shares-($2 par) convertible class A
litock. Underwriters—Herrick, Waddell & Reed, Inc. and
Sills, Minton & Co., Inc. Price—$8 per share. Proceeds
■—To retire indebtedness and for working capital.
In¬
definite.

Y-\

Y.'

•.

Corp., Newark, N. J.
July 26 (letter of notification) 290,000 shares of common
stock.

Price—$1

■

Areata (Calif.) Timber Products Co.
15 filed 100,000 shares 6% cumulative preferred
stock (par $10) and 300 shares of common stock (par
$5,000). Offering—To be offered in exchange for out¬
standing common (par $10), or as an outright sale.
Underwriter
None.
Proceeds
To retire outstanding
common and pay notes; balance to erect plywood mill.
v

Coleraine Asbestos Co. Ltd.,

—

Argus, Inc., Ann Arbor, Mich, y
Nov. 1 filed 115,315 shares ($10 par) 5y2% cumulative
convertible preferred stock.
Offering — To be offered
Initially for sale to stockholders at the rate of one pre¬
of

stock and

common

purchased

purchase

stock held.

warrant for each

With

will issue

company

each share
a

of preferred
purchase warrant en¬

titling the holder to buy 80/100 of

share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriters—Leason & Co., Inc., and First Securities
Co., Chicago. Proceeds—For working capital. 1 ■>
' ••

Atkinson

Co.

(Guy F.)

•,

South

San

'Calif.
Dec.

(letter of notification) 7,000
capital stock.
Price—$30 per share.
For

additional

shares
No

(no

Duro-Test

Dec.

underwriter.

ployees of the corporation, the prices not to exceed $4.90
per share plus commissions.
•

Dec.

stock

sold

(par $10).

through

Price—About $32.50

Baker,

Weeks

president.

for account

Harden,

share.

Bradshaw
Oct.

Mining Co., Tonopah, Nev.
(letter of notification) 1,500,000 shares (5c par)

common

stock.

Price;—2d cents per share-

Underwriter

—Batkin & Co., New York.
To repair and renovate mine
of company and to exercise option to purchase
processing
mill and move and erect such mill on the

company's

property and for working capital.
•

(Calif.) Water Co.
Dec. 17 (letter of notification) 2,000 shares of 6% cumu¬
lative preferred (par $25).
Price, par. No underwriter.
'For operation expenses.
•

Cauble's

capital.

Dec.

Dec. 17
'

lative preferred (par $100).
For operating capital.

Price,

par.

.•

Rock

Eastern

$295,000 15-year sinking

(letter of notification)

mortgage bonds. Price, par. Underwriter—
Mohawk Valley Investing Co., Inc., Utica, N.
Y. Pur¬
pose—Refund of $295,000 first and refunding mtge. bonds.
•

Empire States Petroleum Co., Denver, Colo.

Dec.

(letter of notification) 1,138,000 common shares
(par 100), 298,000 of which are presently unissued and
840,000 of which are treasury stock. Price—250 per share.
No underwriter., For operation expenses.
Erndale

Mines

cumu¬

No underwriter.

Dec. 13

stock

$100,000 5-year 6% first mortgage bonds
(convertible into common shares at rate of four shares
to dollar, or at a price of 25 cents per share).
Under¬
writer—James T. Dewitt Co.
Price—95.
Proceeds—To

in full, outstanding indebtedness and
working capital.
;

off, in part

for general
•

Eureka, Inc., Central City, Colo.

Dec.

stock (par $1).
ing operations.

Price,

par.

Enamel

Corp., Cleveland, Ohio

Offering—

Sept. 17 filed 79,080 common shares ($1 par).
To be offered for
29

ratio

subscription by stockholders of record
of

for each four

additional share

one

shares held.

•

Harman

(William H.)

Rights expire Jan. 12. Underwriter—Mer¬
Lynch, Pierce, Fenner & Beane. Proceeds—Company
use the funds for general corporate

purposes.

Front

stock.

Range Mines, Inc., Denver, Colo.

Price—$2.

Westfield, N. J.

shares of common
Underwriter—John RY Marple & Co.,
For development construction and pay

A\I'

Pittsburgh.

Chicago.

§§p4;

k
'

hih

I'jjm

!i.,i

N i \\

Quoted

—

<&
\l

Ik. iun

' 2-i HI(i >.\! >\\
Teicphoiic \\ Urtti

Sold

—

Reynolds

?flx'Y MSWBFRS N:«' York.

Boston

Corp.,

H.)

Corp., Wilmington, Del.

64,332 shares of class A
capital stock to be sold at auction by Adrian H. Muller
(letter of notification)

•'

•

Harwill, Inc., St. Charles, Mich.
Oct. 27 (letter of notification) 125,000 shares of

common/'

(par $1).

Sports Enterprises, Inc.,
/
Pa.
June 25 filed 5,000 shares of class B common stock (par
Heidelberg

Price—$100 per share.

$100).

;

•

'•?

If \

h N

•

-1

K k.

ISH

1
N

: -i

CHANGE

Underwriter—None, Pro¬

ceeds—$600,000 to be used for spectator grandstand and
balance for related purposes.

Heyden Chemical Corp., New York, N. Y.
29 filed 59,579 shares of cumulative convertible

June

preferred stock

(no par) to be offered common stock¬
20

holders in the ratio of one share of preferred for each
of

stock

common

held.

Price—By

amendment.

Underwriter—A. G. Becker & Co. will acquire the un¬

Proceeds—To be used in part for im¬

subscribed shares.

provement and expansion
Offering postponed.

of manufacturing facilities.

Hotelevi&ion, Inc., L. I. City, N. Y. (1/3-6/49)
160,000 shares ($1 par) class A stock.
Un¬
Cantor, Fitzgerald & Co., Inc., New York,

Nov. 3 filed

derwriter

—

share.

per

Proceeds—To develop, exploit and

television innovation.

Poison, Mont.
Nov. 23 (by amendment) 258,675 shares ($10 par) com¬
mon stock.
Underwriter — Tom G. Taylor & Co., Mis¬
Idaho-Montana Pulp & Paper Co.,

Price—$10 per share. Proceeds—To erect
bleached sulphate pulp mill with a 200day capacity.

soula, Mont,
and operate
ton per

Chemical

Co., Seattle, Wash.
notification) 15,000 shares of pre¬
ferred ($10 par) and 15,00 shares (90c par) common. To
be sold in units of one share preferred and one share
Interstate

Dec.' 13

(letter

unit. Separately/the preferred would
and the, common at $1 per, share.
No
For working capital,

at $11 per

sold

par

underwriter.

Infra-World

Dec.

ferred
nance

Sales,

Inc.,

Fort Smith, Ark.

(letter of notification) 3,750 shares of 7% pre¬
(par $20).
Price, par.
No underwriter. To fi¬

its business.

Kingsburg (Calif.) Cotton Oil Co.
Nov. 17 (letter of notification) 76,302 shares of common
stock. Offering — Warrants will be issued to common
shareholders entitling them to purchase one share of
common

for each five shares held of record on Nov. 30,

per

$2.50

share.

Price, par.
Underwriter — Charles E.
Bailey & Co., Detroit.
To pay current liabilities, pur¬
chase property, building and equipment and for working
capital.
stock

Underwriting, none. To reimburse
spent for capital improvements.

the treasury for amount

Bought

I'Y '

Wilmington, Del.
Dec. 14 (letter of notification) 27,425 shares of class A
capital stock. Price, market. Underwriter—Smith/Bar¬
ney & Co..
•:
' ' • ■/ '
I

and subsidiaries will

Common Stock

(William

bank loans.

Private Wires to Offices in other Principal Cities

(letter of notification) 500 shares of 6% preferred
$100).
Price—Par.
No underwriter.
For

(par

common

Dec.

Harman

11,100 shares of capital
No underwriter.
For min¬

(letter of notification)

Ferro

Metal Products Co.

(Ohio)

working capital.

;

Hamilton

•

distribute

Ltd., Toronto, Canada

Texas Eastern Transmission Corp.

New York

H., L. & L. Development Co., Kansas City, Mo.
16 (letter of notification) 75,000 shares (no par)

Price—$3

filed

preferred.
Price, $1 per share.' No underwriter. For i
the development of oil and gas lands by drilling wells ;

•

(1/3/49)

Inc.

Products,

first

fund

stock);
Corp.

Pittsburgh,

Nov. 29 (letter of notification) 150,000

Hatchery,

Inc., Pekin, Ind.
(letter of notification) 2,000 shares of 5%

Winchester,

shares of 5% cumu¬
Price, par.
Under¬
writer—City Securities Corp., Indianapolis, Ind.
For
further additions to plant and for additional working

Co.,

Dec. 16 (letter of notification) 3,000
lative preferred stock (par $100).

rill

Campbell

Telephone

Indiana

per

Indiana

Eastern

pay

Manufacturing Co., Lewiston, Me.
(letter of notification) 1,000 shares of common

N. J.

North Bergen,

Corp.,

shares of capital stock

Bates

Underwriter

Canadian Currency.

Proceeds—For drilling operations.

(letter of notification) not in excess of 10,000
(par $1), to be acquired for em¬

Securities

Expected about Jan. 11.

costs.

& Son.

•

(jointly

Union

and

debentures). Proceeds—For general corporate
including the payment of present short-term
$6,000,000 and the financing of a portion of its

construction

1949

Lynch, Pierce, Fen¬

notes of

50 cents per share in

—P. E. Frechette.

Dec.

par)

working capital and to reduce indebted¬

ness.

(jointly

Hutzler

Bros.

purposes,

Dec.

Francisco,
!. Vr"'l.n/

Salo'mon

Montreal, Canada
Aug. 16 (filed 200,000 shares of capital stoek.- Price—

ferred

Warshoff & Co., Newark,

,Nov.

—

share. Underwriter—Charles
N. J. To meet obligations.

per

Corp. (both); Lehman Brothers (debentures); Mer-11
rill Lynch, Pierce Fenner & Beane and White, Weld &

ties

•

Cobalt Mines

Dec. 17 (letter
stock (par $1).

American

through competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc. (debentures); Stone & Webster Securi¬

for oil and natural gas.

Mfg. Co., Inc., Brooklyn, N. Y.
Aug. 26 (letter of notification) 37,400 shares of 500
cumulative convertible preferred stock.
Underwriter—

.per

(no par). Underwriters—Names to be determined

stock

Dec.

Complete development program.

share.

(1/11/49)

Co.

competitive bidding of $15,000,000 20-year
debentures and a maximum of 280,000 shares of common

(letter, of notification) , 60,000 shares of capital
Price—$2.50 per share.
Underwriting—None.

stock.

Utilities

States

Co. (jointly on debentures); Merrill
ner & Beane
and Lehman Brothers

Light Co.

Clarostat

Ljfe Insurance Co., Montgomery,

Alabama

stock.

Gulf

DecT 9 filed

•

& Co.

All

Central Maine Power Co.

•

(letter of notification) 15,000 shares ($3 par)
stock, for the benefit of Manhattan Building Co.

"?*

Nov. 1 filed 303,330 shares ($10 par) common

stock

Electric Appliance Corp..

Air-Way

Dec.

;■

in ratio of one-sixth of a share for each
held. No underwriting. Proceeds—For

par

Hartford, Conn.

shares of 4V2% cumulative nonvoting
first preferred stock ($100 par).
Underwriting—None.
Price, par.
Proceeds^To increase working capital.

common

construction costs.

(letter
(no par)

Fuller Brush Co.,
Nov. 8 filed 11,606

filed

bank notes payable to The First

Inc., White Plains, If. Y;

Air Commuting,

Dec.

ISSUE

80,000 shares of common stock (par $15).
Offering—To be offered common stockholders for sub¬
Dec.

common.

SINCE

ADDITIONS

Illinois Electric & Gas Co.

Central

shares of $3 cumulative preferred
stock (par $50) and 1,000,000 shares common stock (par
$1). Underwriter—Reynolds & Co.1, New York. Purpose
-—To purchase all of the assets of three subsidiaries of
Dresser Industries, Inc./ viz: Bryant Heater Co., Cleve¬
Dec.

INDICATES

Volume

168

Number 4762

THE

COMMERCIAL

•

due

December 28, 1948
Chicago Milwaukee St. Paul & Pacific RR.
Noon

(CST)____'
January

•«

Eastern

Equip.

January

-Equip. Trust Ctfs.

1949

Chesapeake & Ohio Ry._

.—Equip. Trust Ctfs.

January 11, 1949
Chicago Burlington & Quincy RR.^Eqp. Trust Ctfs.
Gulf State's Utilities, Co

January
Rohm & Haas

Co^,3:30

January 20,'1949
Chattanooga &

Nashville

St. Louis RR

•

Nov.

Dec.

Flash,

Inc.,

New

(letter of notification) 100 class A shares (no
Price—$250 per share. No underwriting. To es¬
a
laundering business in Lima, Peru; corporate

tablish

purposes.

Ohio

Co.

additional

Proceeds—To

equipment

retire

and

bank

loans,
additional

provide

working capital.

Mississippi Power & Light Co.

•

filed

stockholders.
ard

Oil

Co.

Securities

These-shares

(New

were

Jersey)

of investment houses headed

stock.

Proceeds

—

271,025 shares ($1 par)

purchased from Stand¬
July 1948 by a group

Ltd.

Nov.

Waukesha

(Wis.) Motor Co.
7 filed 200,000 shares of common stock
($5 par).
Offering—To be offered to stockholders of record Jan. 3

at rate of

Monarch

•,.

Machine Tool

Sept. 13 filed 26,000 shares of
Underwriters—F.

Eberstadt

;

for

common

underwriter.

Inc. and Prescott,
Proceeds—Stock being sbld

•

Moore

Enameling & Mfg. Co., West Lafayette,

National

convertible

pre¬

dividend, by amendment. Un¬
Sachs & Co., New York; Piper..

•

cumulative preferred stock, nonassessable and nonconvertible.
Price, par. No underwriting. For general

Kebbon, McCormick & Co., Chicago.

Paul

Proceeds to selling
•_

107,430

Gas

($1

par)

Central

RR.

(1/4/49)

bidders:

Halsey, Stuart & Co. Inc., Harriman Ripley &
Brothers (jointly); Salomon Bros. &
Hutzler; Harris, Hall & Co. (Inc.); The First Boston Corp.
Co.

and

•

Jersey Central Power & Light Co.

Dec.

Lehman

10 company

competitive

stock.

common

RR.

■(
Dec. 9 company asked ICC for
authority to issue $6,400,000 of equipment trust
certificates, series BB. Probable

Co., Dallas, Tex.

basis of

Pacific

be dated Jan. 1, 1949, and will mature
$227,000 semi¬
annually July 1, 1949. to Jan. 1, 1959. Probable bidders:
Halsey, Stuart & Co. Inc., Salomon Bros. & Hutzler,
Harris, Hall & Co. (Inc.), Harriman Ripley & Co. and
Lehman Brothers (jointly).
;
f
;

asked SEC permission to sell

bidding. $3,500,000

30-year first
bonds, proceeds to be used for construction.

6utstanding stock of

through

mortgage
Probable

bidders:

new share for each
10
of subscribing for addi¬

•
Halsey, Stuart & Co. Inc.; Harriman Ripley &
Co.; Glore, Forgan & Co.; Merrill Lynch, Pierce, Fenner
& Beane; The First Boston
Corp.; Salomon Bros. &

Hutzler.

one

Proceeds—For construction and

•
.

•

better¬

•

Un¬

working capital.

1 to: f5 years.
Probable bidders; Halsey, Stuart &
Co. Inc., Harriman Ripley & Co. and Lehman Brothers

(jointly); Salomon Bros. & Hutzler; Harris, Hall & Co.
(Inc.). Expected about Jan. 20.
•

Dec.

• :

Taylor Food Co., Raleigh, N. C.
Dec. 17
(letter of notification) 17,000 shares ($1 par)'
common stock, of which
7,000 shares would be sold at
$1.12% and 10,000 shares at $1 per share. Underwriter—
Griffin & Vaden, Incv
For additional working capital.

•

Hickman; G. H. Walker
Pancoast; Underwood, NeuOffering—Offered for subscription by stock¬

holders at $16.75 per share in ratio of one new share for
each, two shares held. Rights expire Dec. 24. Proceeds—
To increase

(1/20)
reported company plans the sale of $4,320,000
equipment trust certificates, series E, maturing serially
Dec.

derwriters— Schneider, Bernet &
& Co.; Dewar, Robertson &

haus & Co.

Nashville Chattanooga & St. Louis RR.

Inc.

(letter of notification) 2,000 shares of common
stock (par $10).
Price—$16 per share. Underwriter—.
stockholders.

about Jan. 5-6.

of $4,540,000 equipment trust certifi¬
cates, series GG, will be received at "office of J. W.
Severs, Vice-President, Room 744, Union Station Build**
ing, Chicago, up to noon (CST) Dec. 28. Certificates will

stock

Illinois

Southwestern Investment Co.
'
Nov. 12 filed 33,880 shares (no par) common stock.

Oct. 29
;

Boston

Sale expected

(12/28)

Co.,
Philadelphia; C. T. Williams & Co., Inc., Baltimore, and
Woodcock, McLear & Co., Philadelphia. Proceeds—To
; construct a racing plant.

Manufacturing Co.,

Jan.

ments.

Y.)

Halsey,
Corp., Harriman
Brothers (jointly); Salomon

First

writing—None.

be offered in units of $100 of debentures and 10 shares
of stock. Underwriters—Harrison & Co.; Bioren &

(N.

filed

Union

shares held, plus the privilege

Racing Association, Inc.,
Baltimore, Md.
Dec. 16 filed $600,000 6% income debentures due Jan.
1,
1974, and 60,000 shares (50<* par) common. Offering—To

Orangeburg

record

Ocean Downs

The

$8,900,000

bidders:

tional shares not purchased by other
stockholders/Under¬

purposes.v Underwriters—Buckley
Brothers;
Hope & Co., San Diego, Calif.; G: Brashears & Co., and
First California Co., Los Angeles, Calif,;
'
.,

Southern

Offering—To be made to holders of

corporate

Dec.

•

Inc.,

Probable

Chicago Milwaukee St.

which

ital and general corporate purposes.

Clippers, Inc., San Diego, Calif.
(letter of notification) 30,000 shares ($10 par)

stock.

Price,

Bids for purchase

(par lc)
1,350,000 shares will be sold by company and
150,000 shares by W. G. Nelson Exploration Co. Price—
$1 per share. Underwriter—J. J. Le Done Co.; Petroleum
Equities Corp., New York. Proceeds—For working cap¬

Price and

National Tuna
30

Co.

($50 par)

common

phscggo Burlington & Quincy RR. (1/11/49)
Company expected to sell $4,320,000 equipment trust
certificates early in January. Probable bidders:
Halsey,
Stuart & Co. Inc.,
Harris, Hall & Co. (Inc.), Salomon
Bros. & Hutzler, Harriman
Ripley & Co. and Lehman
Brothers (jointly).
Sale expected about Jan. 11.

Southern Oil Corp.,
Jackson, Miss.
i*Oct. 8 filed 1,500,000 shares of common stock

derwriters—Goldman,
Jaffray & Hopwood, Minneapolis. Proceeds—To retire
$3,000,000 of bank loans and general corporate purpose!
Temporarily deferred.,
'
,•./•*
Nov.

Ripley & Co. and Lehman

par)

Proceeds—Will go to selling stockhold¬

Bros. & Hutzler.

its proceeds for property additions and betterments.

use

Battery Co.

July 14 filed 65,000 shares
ferred stock.

Stuart

For additional working capital and to reduce

Offering deferred.

(no

Offering postponed.

equipment trust certificates.

-Smith, Barney & Co. Price, by
Proceeds—Commonwealth will use its pro¬
ceeds to reduce indebtedness and Southern Indiana will

•

Prospective Offerings

amendment.

10,000 shares (no par)
common.
Price—35 cents per share. Proceeds
go to Wil¬
liam B. RodgerS. Underwriter—Cohu & Co.
*

200,000

Co., Pittsburgh

Chesapeake & Ohio Ry.. (1/5-6/49)
Company, it is reported, plans the sale of

Underwriter

pany.

(letter of notification)

Cleveland, O.

increase capital of company.

(Edwin L.)

by amendment.
ers.

owned by the Commonwealth & Southern
Corp, and 75,000 additional shares of stock for the benefit of the com¬

Ohio
Dec.

ex¬

•

Underwriter—Hemphill, Noyes & Co., New York.

Price,

Southern Indiana Gas & Electric Co.
20 filed 600,000 shares
(no par) common

Oct.

Hawley, Shepard & Co., Inc.
by certain stockholders. Offering indefinitely postponed.

Wiegand
Sept. 28 filed

(no par).

Co.,

Rights

shares ($50 par)
preferred and 2,000 shares (no par) common stock. Price
—Preferred, $55 per share; common at $10 per share.. No

Colo.

Western Reserve Finance
Co.,
Dec. 16 (letter of
notification) 6,000

Corp., New York

amount of short-term bank loans.

stock

plant improvement.

•

Underwriter—Peters, Writer & Christensen, Inc., Den¬

for each two shares held.

new

Underwriting—Company will

pay fees to
selected investment dealers for
securing the exercise of
subscription warrants. Robert W. Baird & Co. Inc. will
be dealer-manager. Proceeds—To
carry possible increase
of accounts receivable and
inventories and to provide

(C. D.) Co., Grand Junction, Colo.
(letter of notification) 1,500 shares ($50 par)
5V2% cumulative preferred stock. Price—$51 per share.
ver,

Co.

one

pire Jan. 24.

Nov.

—

Dec.

Smith

area.

—

Co.

Gas Co. and Middle West
Corp. will sell 120,000 shared
and 34,000 shares,
respectively; Copper Range Co., 34,000
shares and several individual owners
11,200 shares.

(letter of notification) 299,000 shares of com¬
mon stock
(par $1). Price, par. Underwriter—Willis E.
Burnside & Co., Inc., New York.
Working capital. Ex¬
pected early next year,,,;/
r.J .-4 --. V:
>n

Of the remaining 508,520 shares
outstanding, all but 3,320 shares are
owned by United Gas Corp., Columbian Carbon Co. and

Toronto.

Proceeds—To

body & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber, Jackson & Curtis (jointly). Proceeds-11Will go to selling stockholders.
Consolidated Electric &

Underwriter—Old Colony Securities
Proceeds for gold mining operations

Silver Diner

stock

United Carbon Co.

Anthony Mines Ltd., Toronto, Can.
1,088,843 common shares (par $1).

40 cents per share.

1928, owns and operates a natural gas pipeline
extending from northern < Louisiana to
the

common

common stock (par
$9).
Names to be determined
through com--'
petitiVe bidding. Probable bidders include
Kidder, Pea-

to 3:30 p.m. (EST) Jan. 17.

Aug. 6 filed

Inc., Dewar, Robertson & Pancoast, and Walker, Austin
& Waggener.
Business—Corporation, which was organ¬

Greater St. Louis

plans

Y., and others to be

by amendment.' Price, market.
bank loans, working capital, etc.

Underwriters

St.

by Union Securities Corp.

Webster Securities Corp., White, Weld &
Co., A. C. Allyn
Co., Inc., Equitable Securities Corp., John W. Clarke,

Funds, Inc., Kansas City, Mo.

filed

Sept. 28 filed 200,000 shares of

—

selling

and

system

Proceeds—For general corporate put-

Upper Peninsula Power

Juan Glove Corp., Hato
Rey, Puerto Rico
(letter of notification) 60,000 shares of Class A
common
stock. Price
$5 per share. Underwriter —
Lawrence Turnure &
Co.; Blyth & Bonner, New York.
For corporate purposes and
working capital.

Co., Stone &

Foods, Inc., Sherman, Texas

common

Rohm & Haas Co.,
Philadelphia, Pa. (1/17/49)
filed 15,816 shares of 4% cumulative

York,

Firms in the group of selling
stockholders, in addition to
Union Securities Corp., are Kuhn. Loeb &

ised

Co., Inc.

repay

Registration statement effective Dec. 13. Bids—Bids
purchase of stocks will be received at Department
of Justice, Office of Alien
Property, 120 Broadway, New

Under¬

gaso¬

;

named

Plywood & Timber Co., Everett,

Dect

common

Corp.

new

United Utilities & Specialty
Corp.
Oct. 15 (by
amendment) 125,000 shares of common stock
(par $1) and 33,000 stock purchase warrants (to be sold

Act.

146,700 shares of

building of

■

San

the

$lz,000 of periodic investment
acquire united accumulative fund shares.

for

Mississippi River Fuel Corp.

writer— Union

Tucker's

United

Dec.

$25)

Trading with the Enemy

part /company's construction pro¬
gram and other corporate purposes.

Dec.

Oil

Underwriter—Rauscher,

Pierce &

included in the registration but they are not
being offered at this time because of a pending suit for
return of these shares under the

petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Glore, Forgan & Co.; Equit¬
able Securities Corp. and Shields & Co.
(jointly). Pro¬

•

To purchase

.*:.•■

Co., Cincinnati, Ohio
*
Dec. 14 (letter of notification)
9,420 shares of class A
capital stock. Price, $7.25. No underwriter. For ail ex¬

Mrs.

Distribution, Inc.,
(par

No underwriter.
;

Nov. 26 filed 200,000 shares of common stock
(par $2.5C>
of which 80,000 will be sold
by the company and 120,000
shares by eertain stockholders.

common are

Nov. 30 filed $7,500,000 first
mortgage bonds, due 1979.
Underwriters—Names to be determined through com¬

ceeds—To finance

Tower

poses.

share.

per

pansion program including
line service "stations. * ' "

preferred
stock, series "A" (par $100) and 197,697 shares of com¬
mon (par $20).
Offering being proposed by U. S. Attor¬
ney General, Office of Alien Property Custodian. Under¬
writers—Names to be determined through
competitive
bidding. Probable bidders include Kuhn, Loeb & Co.;
Lehman Brothers, and
Glore, Forgan & Co. (jointly);
Kidder, Peabody & Co., and Drexel & Co. (jointly); A. G.
Becker & Co., and Union Securities Corp.
(jointly). An
additional 5,410 shares of preferred and
67,627 shares of

Ohio
Dec. 8
(letter of notification) 19,000 shares of 6%
cumulative preferred
stock
(par $12.50)
and
19,000
shares of common (par $1). Offering—To be offered in
units of one share each. Price—$13.50
per unit. Under¬
purchase

filed

Dec.

Merry Mites, Inc., Columbus,

writer—The

except about $275,000 may be advanced to a new sub¬
sidiary to be used by it in making part payment of the
option purchase price of one-half of the stock of Conifer
Timber Co., Fortson, Wash.
Indefinitely postponed.

York

par),

•

stock, of
which 105,000 shares are to be offered
by company, and
166,025 shares by 15 selling stockholders. Underwriter—
Blyth & Co., Inc. Proceeds—To company from the sale
of the 105,000 shares will be added to
working capital,

pand plants and reduce indebtedness.
Americanos

Price—$27.04
building.

notification) 421 shares of capital stock.

Washington

balance of the company's 4% purchase
money mortgage
bond and to pay the balance of the
purchase price on a
blast furnace and coke plant. Part will be used to ex¬

Lavaderos

40,000

Robinson

Dec. 15 filed 400,000 shares ($10 par) common. Under¬
writer—The First Boston Corp. .Proceeds—To retire the

•

filed

Maryland

to underwriter at 10 cents
class B purchased.
Proceeds—To pay balance of current.
each). Underwriters—George
"R. Cooley &
liabilities and working capital.
Co., Inc., Albany, N.

Koppers Co., Inc., Pittsburgh, Pa.

77,

Thirteenth Street Housing Corp., Rockville,

Dec. 13 (letter of

B preferred will be offered at
$25 per share with one
phare of class C given as a bonus with each 4 shares of

Equip. Trust Ctfs.

—

•

5% cumulative
convertible class B preferred stock and
10,000 shares of
C stock (no par).
Underwriting—None. Offering—Class

(2673)

■

determined

Montreal, Que.
Oct.

1949
(EST)I-Stocks

p.m.,

Renaissance Films

.—Bonds

17,

provements. Underwriting—The company rejected bids
submitted Aug. 4. The SEC on Aug. 23
exempted the
proposed sale from the competitive bidding rule. Sale
on agency basis
being discussed.

Names

Public Service Electric & Gas Co.
June 11 filed 200,000 shares
($100 par) cumulative pre¬
ferred stock. Proceeds—For
property additions and im¬

Class A Stock

1949

January 5,

—

For construction costs.

-Bonds,

___•

____________

Illinois Central RR

Indiana, Inc..
$1(2,000,000 first mortgage bohds, series H;

Underwriters

Lynch, Pierce, Fenner & Beane; Kidder, Peabody & Co., and White, Weld & Co. (jointly). Proceeds—

1949

Rocjk,Products, Inc,__

Hotelevision Inc.-

1979.

Merrill

Ctfs.

Trust

CHRONICLE

through competitive; bidding. Probable bidders: Blyth
& Co., Inc.; Halsey, Stuart & Co.
Inc.; .The First Boston
Corp.; Harriman Ripley & Co.; Glore, Forgan-'&.
Co*;

•

FINANCIAL

Public Service Co. of

Dec, 31 filed,

NEW ISSUE CALENDAR

Pacific
22

tional

$100

Telephone & Telegraph Co.
revealed plan to offer 828,920

company

common

share, in ratio of

shares of

common

stock
one

new

its

addi¬

stockholders

for each five

preferred stock owned.

Proceeds

would be used to repay temporary loans and to finance
«■

further

plant construction.

•

COMMERCIAL

THE

(2674)

CHRONICLE

FINANCIAL

Thursday, December 23, 1948

being in gold and dollars).
tremendous drop in
"forced the * Swedish

Importance of the Interest Rate
(Continued from

14)

page

tioning and restrictions which the
public so heartily dislikes.
Diverse Effects of Interest Rates
In

question of
a relatively

considering the

the rate of interest in
free' economy

tially

carried on essen¬
private enterprise, it

large-scale constructions, such as
electric power stations, requiring
much initial capital outlay. The
Of investments al¬
ready mentioned will- often ab¬
sorb 60% or more of all current
two

groups

savings.
concerns

government bonds .and
capital assets. With govern¬
ment debts on their present scale,
such movements give rise to a
-complex of questions which can
cially since 2 to 3% must be re¬ in no way be neglected. Suppose
garded as the upper limit of in¬ a particular venture would give
crease for most countries
in the
a yield of (say) 7% while govern¬
Western World.
ment bonds yield 5%. The differ¬
(1) Whenever there is a large ence between the two rates may
budget deficit financed by the use, not be sufficiently ^important to
of central-bank money and thus outweigh
the risk involved in
should be admitted that there are

causing direct inflation, it is not
to be expected that an increase
in the rate even from 3 to 6% will
make any

material difference. In
such a situation people will be
willing to pay a high rate for
money simply in order to acquire
goods and other real assets (the
things which in German are called
"Sachwerte"), this being the only
way to avoid losses from inflation.

If, moreover, at a time of budget
deficits (or of a plentiful supply
of
liquid
funds
from
other
sources), abrupt and sharp in¬
creases were

wages,
to
an

to be made in money

it would clearly be absurd

expect monetary stability from

3% the profits expected from the
business venture would be more
twice

than
from

derived

income

the

bonds-^a very

government

substantial difference.
In

general,
of

fate

must

account

influence which the

taken of the

exerts

interest

capital

"capitalization
last
two years the Sveriges Riksbank,
by its purchases, supported the
quotations of government bonds
at a yield of 3%, savings banks

values
(i.e. as
factor").
When

and

during the

sold

institutions

other

some

out a great part of their holdings
(2) From time to time machin¬ of government bonds, investing
ery,
etc., is revolutionized by the proceeds largely in mortgages
startling inventions which it pays which would give them % to 1%
to/exploit at almost any rate of more pier annum. Had the Riks¬

bank withdrawn its support from

(3) When stocks of
rials have

down

run

mate-

raw

plant and

equipment
have
been
insuffi-'
ciently maintained (as is the case
after

man

will

long war),

anxious

business- j

every

restock

the bond market,

with the result

that the quotations dropped to
(say) 80 (corresponding to an effeetive yield of 33A%), the sav-

ings banks and the other institu-

tions would have been much less

reequip his enterprise at an'inclined to sell out, since they
early date; and even relatively might have reckoned that in a few
high interest will then not prevent4 years' time, when the business
trend had turned, the bonds would
a heavy demand for credit. Faced
with such a situation the author- again be quoted at 100; it would
and

ities

are likely to rely partly on' have required a very high immequantitative restrictions and will, I diate gain to make up for the loss
therefore, only gradually abolish, of 20% in the capital value. It
their wartime controls.
j; would seem beyond doubt that a

withdrawal

Riksbank's

the

in the period immedi¬
ately following the second World support, causing a rise in interest
War, businessmen in Great Brit¬ rates, would have had a very con¬
ain were asked, in a questionnaire siderable effect on the amount of
prepared by a group of econo- credits granted and consequently
mists, whether, considerations aS'0n the volume of investments in
When,

to the level of interest influenced

them in their decisions

regarding

enlargement

activities,]

their

etc.,

it is not

that

they usually attached little

surprising

to find

importance to the rate of interest.
But that does not rule out the pos¬

sibility that in
cumstances

normal cir¬
moderate

even

changes in interest rates may have

Differences

apt to exert

are

stance,

rates.

generally

is,

admitted

the interest level exerts
ence

the

for

volume

in¬
that

influ¬

building

partly

transactions

because

affecting several countries tend to
financed

with

market

the

the lowest rates.

In the

past three

ions

there

has

not

reports from the Belgian

so,

other

and

markets

give the im¬

pression that changes in interest
have

rates

fluence
one

not

without

been

one

interest

ments is

current

invest¬

by building activity. Even at the
peak of the railway construction
in the United

building

houses

represented

about one-half of the value of all

the rate

lar; only he believed current sav¬

ings before 1939 to be

attached

influence

the

rates,
act

the

strikes

rates

savings

ana

resources

fixed
banks

Factor in Calculating Profitability

The; level of
a

interest rates

determining factor in cal¬

culating the profitability of other

interest

warning with regard
business

reduction
more

were

over

long

would

mostf flexible

the

rate

kept absolutely

periods,

lose

one

means

monetary trends.

central
of

their

of influencing

It is also well

to remember that a
of financial

generally,

hopeful note.

bor¬

abroad.

strengthening

controls, affecting the

the

coun¬

continu¬

the

wish to keep down the burden of

tions

for

have

been

drop

afraid

the

quota¬

be¬

bonds,

government

of the banks and
other financial institutions which
many

cause

during the
subscribe

not

are

brought

extent by

same

about

changes in the

budget.
s

Policy of Government Bond
Purchases
-As

financial

war

heavily

such

into

pressed

were

bonds

balance-sheet

ume

control

takes* th

monetary"

must

power

purchasing

not. be

unduly- in.
is, therefore, of th<
utmost importance that under th<
present boom conditions centra
creased.

banks

should

from

the

rigorously abstain
fresh funds'into

pumping

market

by purchases of,gov¬

ernment bonds.

tices

have

sible

rate

tell

what

the

proper
market. In

of interest in the

Switzerland,
the

and

the

National

Federal

have

nance

prac4

Once such

ceased, it will be "'pos¬

Barik

Ministry

recent

Fi¬

sold
gold and gold coins to the amounl
of

about

thus

Sw.

frcs.

absorbing

home

market.

years

million

1,500

funds
the

from

the
time

same

interest rates have risen, but

onlj

by 1/4 to Vz% this being sufficien
to

On* the

equilibrium.

ensure

London market the acceptance bjr
Sir
Stafford
Cripps of the 3%
level

for

stead

of the 2V2%

government

bonds,

ihf-

be bookedvat their

capital assets and the
decline in the
postwar
savings, even with full

marked

flow

had

Keynes,

employment,

run

his predecessor had aimed,
rapid!/
full„par value. gave a new note of balance-to. the
The Federal Reserve System has whole financial structure. Through
helped to bring about an increase the advent of Marshall aid/ the
in

short-term rates

has from

but

capital markets of eountries with

time

in favor of

higher interest level.

government bonds in the market,

additional

interesting to recall
Keynes who dis¬
central - banks,
by

giving support to an interest level
of 21/2%.
It was recognized that

make

to be restored

such

tively

is perhaps

that

not

was

that

covered

interventions

their

kets,

interest

economists
that

mar¬

influence the

could

level

the

had

point

rates.

insistent

been

before

long

actual

Swedish

Keynes;

Gustav Cassel had. said, it: before
1914 and Knut Wicksell

before

such

had,

even

1900, made, the possibility
influence

cardinal

a.,

point of his monetary theory. Ac-'
cording to Wicksell, the market
rate of interest was subject to a
number of

cluding

diverse

influences, in¬

action

the

central

banks, but he did not think

cenr-

time

bought

long-term

purchases. might
undesirable

tain

have

cer¬

consequences

realization

the

rate

interest

United

the

other

the

But

any

general

of commodity prices never¬

level

theless

fear

States

country.
by

rose

inflation

to be that

seem

the role of credit

inflationary vrise
The

ensue.

so-called

many

mists

modern

not that

latter

playing

central

the

arbitrarily

punity.

cen¬

they at¬

banks

any

the

im¬

(Incidentally, Oscar Wilde

further

that

only

public

Reliance

entail

return

budget s in

developments

than

Kr.

enforce a.rate of 3%

investments,
as

mal

ment

But

"new

built with old

bonds,"

official

has been

undue volume
as

30% of the gross national

figure).

cannot

3,000

securities

gilt-edged

nor¬

houses
govern¬

high Swedish

reported to have

said.

run

con¬
cour¬

of poli¬

the United

have ceased to show

prevail.

itself

bring

provided

States

This need not
inflation,

about

appropriate

credit

policy is followed—witness the ex¬
perience of other countries. In
more

general

whenever

that,

way,

may

be noted

surplus in the

budget is obtained through almost

confiscatory taxation of higher in¬
comes,
a

reduction in the volume of pri¬

savings, especially if at the

vate

time

same

money

is left in

the hands of the bulk of the popu¬

lation

(for

through

instance,

abolition of the turnover tax) and

the

currently

investments

Sweden could not be provided
current
on

the

went

savings,

1948

burden

by
fell

monetary reserves, which
down

3,000 million
Kr.

the

from

about

1945 to

Kr.

spent.

The

anti-infla¬

tionary effect would be more cer¬
tain

the

achieved

budget

through

surplus
a

were

substantial

reduction in government

expendi¬

some

ture; but this has only rarely been

summer

the

case.

(less than S. Kr. 350 million

the

rate

700 million in the

ning of 1947 to about Lit. 600 ii
the

Summer^of

1948.

18th Annual

The

;■

Report of th<
Settle¬

International

for

published

ments,

June,

1*948

finds that its review of monetary

conditions

credit

and

world

"leaves

dition

th(;

Finally, the effects which
of interest

produces on'

physica

direct

those

already Jn existence."'It

further finds that "increases
terest

place

...

rates v. which

present

havq

reaching

•

by*

„

capacity,

of further infla¬

complete¬

no-means

small

ly over; - the falling-off of

savings in

in
full

production

limits

the danger
is

taken

cannot

inappropriate

with

the

in ini
.

and

atmosphere

.employment,

but

"are moderate

considered

be
the

number of countries

is not the least

significant warn¬

ing that private thrift needs to be
encouraged and that
factor

the

hands

always

must

omy

formation of

essential

the econ¬

adequate

genuine savings out

of current income."
Indeed the successful execution

the result may actually be

Since all the capital required for
volume

the free
for-Sh

successful,

very

market rate for the dollar,

although boom condi¬ tion

surplus,

Sweden, the purchase by the Riks¬
of

seem

In the fiscal year 1948-49

ticians.

tions still

Experience

been

controls

rather exaggerated

of the ordinary

age

cannot

realization

the

will already

finance

surpluses would

budget

ing too modern is that

Sweden's

exemplified

replace credit policy.''

the

gets old-fashioned.)

rela¬
in th^

increase

impression 01
but
a
restrictive
credit
policy all-round reaction against an ex
helped to maintain equilibrium. treme ease of money—with Onl;
It is, of course, not claimed that one or two obvious Exceptions
a
deficit
or
a
surplus in the More attention has been paid f"
budget is of no consequence but monetary means of control in ad

said that the great danger of be¬
one so soon

means

8%. This policy has, on the whol,

independent Bank

interest fidence in the wisdom and

with

and

This

influence the level

fix almost

power

econo¬

they think

of interest rates but that

tribute

prices

mistake

level of interest rates.

policy, the

Belgium, where in 1947 the budget
had not yet been wholly balanced

rate, the re¬
sult would be a fall in prices, but
if they maintained too low a rate

possible for the balance

moderate

stance, having been brought-bad
The from about Lit. 900 at the begin

persisted.

conclusion would

try; if the banks quoted
rate than the natural

which should

10% and the

over

part side by side with the former.

higher

receiving

are

principally to the supply of capL
tal goods in each particular coun¬
a

budget

resources

large budget as is the case in Italy, Interef
surplus; and, indeed, for the fiscal rates have to be raised, more ap
year 1947-1948 the Federal budget p r e c i a b 1
y. *1 Thus govemmer:
closed with a surplus of $8,400
bonds; in Italy yield^ about-5*
million—the largest ever known and commercial credits cost 6 i>

over

natural

inflationary
character,
but
Where, dn the other hand, th
had hoped that these con¬ budget has not
yet been balance
sequences would bemeutralized by and the need of
capital is* grea

to act

balanced

many

budget policy cannot wholly take

was

tral banks should be in a position

arbitrarily; for there

whifci

level at

trouble if their holdings could not

lived, would logically have been

psychological product (20% being

increase being likely to

state
a

the

other

prompting

struction of

importance should much

changes

employment both of national

rowed

also

cost

of cheap money has been the

would

equivalent

the

cially if full employment was re¬
stored.,
After the wartime de¬

Rates

than

adequate, necessitating the main¬
tenance of very low rates, espe¬

some

erations
ance

permitting

credit

accompanied by

Finally,

1%).

conditions and
of interest in particu¬

changes

while

capital investments resulting from

Lord

late

Psychological Influence of Interest

States in the latter

half of the nineteenth century the

the

of the balance of payments.

generally accounted for

increase

authorities

million

proportion

living

matter of fact, a

not

would

great importance to the effect of

bank

large

(while

Keynes as one of their supporters. .public debts. Moreover — espe¬
the
contrary,
he
attached cially in the United States—the

equilibrium in the capital account

level

capital involved and the relative¬

always realized what

cite

can

tries, one of the principal consid¬

It is not the case that those who

they have really helped to restore

not

deny the influence of the rate of

in¬

country to another and that

instruments

of^ the

monetary management.

(because of the large amounts of

ly long life of houses), but it is

rise by Vz % in the mortgage rates

controls

greater reliance on interest rates
as

been their desire not to cause the

round to fi¬
including a

creasingly swinging

the flow of funds from

why those in power

being to maintain rents at the 1939

nancial

much

been

financing but,

reason

leading economists, is in¬

rate
years

The

slightest rise in the rents charged
for flats and houses, the policy

well

tral banks can

tal,

even

interest

influence

■

the opin¬

authorities,

movements of capi¬

international

latitude for shifts in

levels

interest
an

substantial effect.

activity sensitive to alerations

con¬

therefore, encouraging to
practice of monetary

is,

would

There are, in fact, certain fields

excnange

especially

tend to intensify the trend fin Sweden fhave been against any
towards
nationalistic insulation. increase in the interest level has

Sweden.

capital values and movements of
funds

place of physical controls, the volj

United States.

trols)
It

increase in interest rates.

interest.

tercourse, while physical controls

find that the

starting the business in question;
but if the yield of government
bonds were only at the rate of

impose tighter and tighter trade

purchasing power, will
in the end
permit the abolition of restrictions,* which
have involved a cutting down of
many existing hindrances to for¬
imports of raw materials and of
eign trade and thus strengthen
from the
the ties of free international in¬ machinery,!■ especially

other

(listed below)
in which a change in the rate will
be of relatively little effect, espe¬

reserves
Government

usually

between

situations

certain

volume of

(and

important question
the shift in investments

Another

This

the

gram

the

Pro¬
.

flexible

rigid

Recovery

European

requires the adoption of a
credit

policy

after

conditions enforced
But, credit

war.

confidence;

and

broader aspect,

the

during
akin

.consider

; a

the re-application

of financial controls characteristic
of

for

peace

its

economy

full

success

of real peace with

* a

presupposes

restoration

settled political

conditions in the individual coun¬

tries
one

their

another.

and

relations -with
<

Volume

168

Number 4762

THE

COMMERCIAL

FINANCIAL

CHRONICLE

(2675)

ding in the closing months of the
will-toe continued."
\

year;

(Continued from

page

to the proposal for pending steel nationalization—all clearly appeal¬
ing to the material self-interest of the majority.
Wigs, Monocles, and Steel Nationalization

the collectivized state," or everi the citation of abortive

spread

^precedents in Germany, Austria, Russia and New Zealand; possibly
outweigh

in, the

voter's

emotions

nothing, the "something" in this

the

bait

something more for

ranging all the

case

way

from three

pairs of free eyeglasses to two wigs per citizen (voter), the initial
provision and cleaning of the latter incurring an annual cost to the
government

must

spreads

private "cartelization" and the self-realized interest of the elec¬

not

the

■

and

live

for

issue

the

been

that

voters

free

are

The Public Service Securities Committee of the Investment Bankers
Association has just issued an official report (contained elsewhere in
issue of the

"Chronicle") in which it is contended that further
variety are justified,."assum¬
ing recognition and respect for the rights of the utility companies and
investors in their securities." The narrow justification offered is that
"the projects heretofore completed have largely benefited rather than
Harmed the utilities in the respective districts where such projects

Federal Power projects of the non-TV A

located."

The

same

well.

For

test of self-interest extends to international activities
example, where exchange controls with overvalued
currencies rule, embracing a concealed tax on exporters to pay a
disguised subsidy to importers and subsidization of consumers—small
wonder is it that it is difficult to remove the exchange penalties on

•!
.

exporters which these other more numerous sectors of the community
feel are benefiting them.
"

Hence

■-

has

must realize that

monopoly

too

were

foy taking

1948.

naturally
have
in the type of

has

the

institutional

been

investors

bit

mise of

class

section of the community

lacking the moral stamina needed to quarrel with

Santa

Claus, to resist our Robin Hood politicians, or-to refuse the
delightful sensation of getting something for nothing whether by
Soaking-the-rich or even by confiscating the real income^ of statepampered labor by concealed taxation!

dicated

plans

for

Dallas

new

Power

The Broadmoor Hotel.

Telephone

Tele¬

Christmas cheer.
Hold

Yields

The pickup

investment

for

of rating
by sav¬

ings banks provides the explana¬
tion of their return as buyers of
corporates in substantial volume.
These
1

speaking the invest¬
business has had
little real cause for complaint so
Broadly

ment

far

banking
this

year's results

are con¬

cerned, although things naturally
have

could

better

much

been

without

approaching the state of
general prosperity.

noted,

institutions,

disposed,

were

was

though

not necessarily willing, to keep
their funds in Treasuries and in

mortgage loans until the return
Double

their

corporates

that

and

choice

Triple

Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association

the

above

pushed

level.

Well

Judging

;
.

those

and file

rank

the

got through with some

profit while

1 measure

| of the

business

the

comments

aggressive

few

houses

just that came to pass as
the year progressed with the yield
on top-grade utility issues rising
25 to 30 basis points in the year
and on good rails as much as 50
basis

points.

j did much better than just that.
until the twilight
months of the year that those who
bring together corporations seek¬
ing funds and investments looking

}

not

was

for

outlets

their

for

capital,

^potted what they viewed

the
j-ea.l "big break" in their favor.
as

That took the form of the re-

turn of the savings banks to the

field of investment incorporate

securities.

little

With

note-

j worthy exception the savings
} institutions, over a period of
years,

absent

have been conspicuously
from the corporate in¬

Offers Diversification

While
had
of

fur¬

explanation than the sparse

They
with

among

brought

year

the

in
,

part

vesting

evi¬

interest

Convention at the Holly¬
wood Beach Hotel.

this important inThe manner

such

banks

New

Boston and Philadelphia

subscribed

for

element

the

last

diversifica¬

bonds, while
Light plans a

Meanwhile

Koppers
registered 400,000

has

shares to

Co.,

that

the

Debt

Dr.
*

Henri

may

return

money

the

rates

reason

abnormal

unless

the

Treasury and the Federal Reserve
their

reverse

which

does

not

current
appear

big

Still

been

their

according

years,

issued Dec.

consideration

320

East

PACIFIC GAS AND ELECTRIC CO.

57th

DIVIDEND NOTICE

by the

After

The

High

and

New

Directors

Board

holders

December

$600,000,000

Record

22, 1948.

Bureau

past fiscal years.

the

1949, to common stockholders of record
the close of business on December

31, 1948. The Transfer Books
be closed.

business

Transfer books will remain

ROBERT

BROWN, Treasurer.
San

than

the

two

Total State debt

BROAD

STREET,

Of gross State debt totaling $3,629,220,000 at the end of fiscal
1948, only $10-3,511,000 representee

NEW YORK 4,

December 16,
The

Board

Directors

this

borrowings.
Against
balance, made up of long-term
debt, the States had $576,073,000
in sinking funds, so
that "net"
long-term debt of the 48 States
totaled $2,946,636,000.
This repre¬
sents an increase of 70% in net
in the past two years,
the Census Bureau.

States

according to

has
day declared the regular quarterly dividend
$1,375 per share on the outstanding SVa'#

Series

Cumulative

pany,

payable

'•ecorrt

ber

27,

Preferred

January
the close

1,
of

Stock

the

com¬

to holders

1949,

business

Decem¬

1948.

The

quarterly dividend of $1.25
per share has been declared by
the

EDWARD

for

profit, noted in competitive bid¬

WeatherheadjCompany

Board

debt of the State govern¬
ments is backed by their full faith
and

credit, but long-term debt of
States at the

end

17,

consolidated textile co., inc.

1949,

record
on

obligations,

from

particular

sources

taxes

December 15, 1948

the Capital Stock of the
Corporation, payable Janu¬

fi¬

Census

Common Dividend No. 156

4.48

closing dates, the 12 months end¬
ing June 30, 1948.

Preference Stock

4.56% Convertible Series
Dividend No. 3

company

Common
28

193rd Consecutive

28%

year

1948 of seventy

($.75) per share on the Com¬
Stock, payable December 31,1948,

cents

stockholders of record

business

Financial

LOS ANGELES, CAL.—Charles

Mickle,

the

uary

are

pay¬

January

31, 1949, to
of record Jan¬

stockholders

5, 1949.
o. v. SHOWERS

ALLAN,

Secretary and Treasurer

Chronicle)

All three dividends

able

the close of

December 20,1948. Checks

H. C.

cents per

Preference Stock, 4.56% Con¬
vertible Series.

Accumulated Surplus of the Company a
five

per share on the
Stock, 4.48% Con¬

vertible Series;

The Directors have declared from the

mon

Stock;

cents

Preference

Quarterly Dividend

final dividend for the

of the

following quarterly dividends:
37V2 cents per share on the

The Electric Storage Battery

Buckley Securities
The

The Board of Directors has

will be mailed.

% Convertible Series

Dividend No. 7

report.

gross debt increased,
States, it was reduced,
the fiscal year 1948—i.e.,
in 7 States with earlier

(Special

COMPANY

Preference Slock

R. W. Gleason,
Secretary

ac¬

States,

With

CALIFORNIA

EDISON

authorized the payment

and for 25

except

Treasurer

1948

SOUTHERN

10, 1949, to stockholders
of record December 27, 1948.
ary

counted for most of the growth of
State debt in the past two years,
For 23

19,

Consolidated Textile Co., Inc.,
at a meeting held on Decem¬
ber 15, 1948, declared 30f
per
share as a quarterly dividend

rev¬

nu¬

December 17, 1948

Philadelphia 32, December 10, 1948.

Jr., is with Buckley
Corp., 530 West Sixth

Street.
THE

CHASE NATIONAL BANK

OF THE CITY

NEW YORK

With Uhlmann & Benjamin
(Special

The

CHICAGO,
Holub

Financial

ILL.

is with

—

The Chase National Bank of the City of New York has declared

Chronicle)

Frank

Uhlmann

Ben¬

jamin, Board of Trade Bldg,

dividend of 401 per share

stock of the Bank,
at

able
out

Street,
for

mercial
Park

private,

New

town

York

firm.

furnished,

suit¬

representative

Box

Financial

1215, Com¬

Chronicle,

Place, New York 8.

the 7,400,000 shares of the capital

payable February 1, 1949

holders of record

the close of business January 3, 1949.
The transfer books will

payment

Space Available

January 3, 1949.

of Dividend No. 13,
•
The Board of Directors of

payable

State

borrowing by
merous
States, especially to
nance veterans'
benefits, has

the

of business

Notice

revenues.

MORRIS H. WRIGHT

and not

Large-scale

according

the

Cleveland. Ohio

representing
contingent charge against other

stockholders

the

November

$394,057,000 of "non-

enue

Directors

outstanding Preferred Stock of
the Company, payable January

fiscal

1948 included

only

FRAHER, Secretary.

Most

the 48

not

California

Francisco,

the

wi/Tl

Treasurer

Beckett,

1948.

company

this

now

debt

CITY INVESTING COMPANY

above the leve
of 1940, its previous high.

long-term

December

cash dividend for

report

each

American

open.

risen

the

Directors

of the year of 50
cents
per
share upon the Company's
Common Capital Stock. This dividen
will be paid by check on January 1,.

Manufacturing Company has declared the quar¬
terly dividend of 25c per share and a yearend dividend of 50c per share on the Common
Stock,
payable December 31,
1948 to Stock¬

has

the

York
of

Board

1948 declared
fourth quartet

15,

COMPANY

Streets

West

Brooklyn 22,

con¬

declining each year from
1946, gross debt Of the 48

1941 to

States

Common Stock Dividend No. 132
The

MANUFACTURING

Noble

the Census.

Wall

money

by doing the actual selling of new
issues are hopeful that the trend
toward

Enthoven

DIVIDEND NOTICES
AMERICAN

to be in¬

Sore Spot
make

increasing rapidly in the past

two

Office

who

Costello,

securities business

offices

policy,

dicated.

Those

Edward J.

Street, New York City.

cor¬

be expected to

since there is

expect

the

confident

are

order

new

Emile

engaging in
from

and

of State governments has

Securities

porate field
continue

been

1948.

com¬

State Debt at New

suitable for their purposes on the

have

27,

Dr. H. E. Enthoven in NYC

Inc.

new

offered if,
when, market conditions are
sidered satisfactory.

the opportunity for ac¬
of the type
basis

similar flotation.

corporates

right yield
exception.

stockholders of record

Treasurer

early

$10,000,000 issue and Kentucky
& West Virginia Power
plans a

during

naturally

segment.

which

York,

mounting

reviving

dence

little cheer¬

underwriters when
the closing two months of the
ing

the

quiring

ease

in direc¬

concerned

are

cent years

was

policies, it is

the change

tion just as any other of the large
institutional investors. But in re¬

by law to acquire.
there

investment
that

tion must be to their liking.

yields afforded by the type of
security which they are permitted
So

savings banks have
say about the shift

Market observers

needed

reticence

Their

ther

their

known

vestment picture.
•

the

little

1949

the close of business December

Annual

in¬

guaranteed"

ratings

short-term

in yields offered by

investments

top-grade
suitable

Answer

the

Convention

dividend of
$1.00 per share on the outstanding
Capital Stock and a dividend like¬
wise of $1.00 per share on the out¬
standing Class A Capital Stock
were declared payable January 10,

Security Traders As¬

Annual

•

American

regular meeting of

December 16, 1948, a

(Colorado Springs,

sociation

months, Public Service Co. of
Indiana having registered $12,000,000

the Board of Directors

Corporation held

5-9, 1949

cor¬

changes,

the

be closed.

not

Chairman of the Board.

of The First Boston

Colo.)

But several utilities have

outstanding is
graph issue added a real touch

Friday Night Bond Club Annua]
Dinner Dance at the Hotel Penn¬

National

financing appears indi¬
by the smattering of plans
coming into sight though

much will depend on tax

will

COLE,

Boston, Mass., Dec. 16,1948

porate
cated

Transfer books

Feb. 12,1949 (New York City)

pro¬

sustained volume of

divi¬

cents per share
Stock, payable January 3rd,
to stockholders of record December 24th,

sylvania.

holds

declared

Baltimore Security Traders As¬
sociation 14th Annual Banquet at

Oct.

year

INC.

has

rate

the Lord Baltimore Hotel.

interest.

new

Directors

the

individual

the

Common

SYLVAN

(Baltimore, MdL)

DELAWAttE,

Board
No.

the

1949,

Jan. 14, 1949

where

That

OF
dend

"licking"

be found showing

may

NATIONAL SHIRT SHOPS
The

Field

that

some

Investment

thin, and the

principal
outlet, but with yields moving up
a bit
presumably it is the hope of

mon

If},

EVENTS

since

etc.

toupees.

Typically, even our investment banking fraternity has evidenced
thfe, forsaking of broad basic political implications for the immediate
specific results foreseeable from public ownership and socialization.

are

selling

operating

investor

now

;

this

set

Building New Backlog

torate.

Monopoly

not

great.

market*

$4,500,000.

Significantly, the potential tough-sledding facing the 'steel
nationalization legislation is no doubt only made possible by the
relatively vague connection between Sir Stafford Cripps' basic aim to

monocles

did

year

the

Underwriters

end

the

Can the

question of whether,
as
charged, the result of the Act is "To make organization and admin¬
istration serve purposes in medical care which are foreign to the
philosophy of medicine, curtail initiative and degrade the profession,
and

most

COMING

throughout

particularly well with those who

were

Take the socialization of medicine.

business

chances

DIVIDEND NOTICES

Such
'

not

be closed in connection with the

of this dividend.
THE

CHASE

OF THE

NATIONAL BANK

CITY

OF NEW YORK

J. Egger

Vice President and Cashier

Thursday, December 23, 1948

FINANCIAL CHRONICLE

COMMERCIAL

THE

(2676) ;

the;

BUSINESS BUZZ

American

Farm

Bureau

Federation.
On the other hand, it is not
anticipated that supports will be

on.

•

s,,*

maintained
i'

?<.

the

'7777
'

Behind-the-Scene Interpretations

A-<A

—

from the Nation's

indefinitely

high

of parity sought by the
chairmen of the Senate and House

•

committees

litis

—

90%

agriculture.

;

have watched the

Those who

Capital

legislative situation closely say
it's a long-run
bet that

-'7->

that

Congress will write

ments of labor and

wove

is no

be reported that there

may

lack of sensitiveness among Mr.

the

Truman's

advisers

enormous

political" difficulties

involved

would

campaign

these

promises.

Hence if the President does

•

"ask

throw

fit.

The
be

surpluses,

when

his private
conversations with his legislative
in

necessary,

leaders

Capitol.

the

from

Often

making
private commitment, for

the President may escape

this

even

the sheer volume of promises ex¬
ceeds the capacity of

the legisla¬
tive mill to grind out in one ses¬
sion's operations.
Watch also to

how much

see

the President stresses

rather
Last

year,

sure

would give him

President

the

objectives

specific

than

programs.

that Congress
nearly nothing,

endorsed

of specific legislative
such

health

host

proposals,

insurance, other

medical

aids, the Taft-WagnerEllender housing bill, and so on.

In the

private opinion of one of
the Senators who has had a great
deal to do with the subject, what
turns out in the way of labor reg¬

ulation

legislation may provide a
fairly typical standard of how far
the Congress will go to the Left
in 1949.
:
It

and Senate

White

House < visitors

special committees on
set

despite the Democratic-spon¬
Legislative Reorganization1946, which condemns spe¬

up,

sored

racket"

ness

forum for

most optimistic
government
viewpoint, oh the business out¬
look. On the other hand, there is

little

ness

tion again in 1949. This seems to
be one of the results of the corn

percentage of "parity" at which
the price support would oper¬

belt jitters over falling prices and
the danger the government would

ate.

strong GOP

constituencies.

Under

ing

the

guessing

politically

other

the

hand,

business

Washington is

legislation,

Commission

stock

81st Congress who

members of the House who voted

override.

the

new

House,

228 members voted to override.

would

that if the

say

and I personally think they

can,

will, they can save a good deal

the drain.
the other hand, if Mr. Tru¬

of it from going down
On

man

'stakes his all' on the com¬

plete wiping
Hartley act,
pretty

near

out of the TaftI think he
can

Public
-are

housers,

whose

fairly drooling at the prospect,

threaten

con¬

is now

wipe

out

"Chronicle's"

the

busi¬

re¬

own

views

iHerrij

COtrtstmas

all

farm
there

meeting

several days ago

§
f

to all

M. S. Wien & Co.

the flex¬

less backing for

supports, as was evidenced

the

pretation from the nation's Capital
and may or may not coincide with

surpluses,

ible

doing in

downturn

is in prospect.

eventually

supports. As a result of the
jitters over falling prices,

surpluses, as

wheat, the lower would be

in
of

Teletype—NY 1-971

HAnover 2-0050

ESTABLISHED

Firm

the

Trading Markets

FOREIGN SECURITIES

1919

Security Dealers Ass'n

Exchange PI., N. Y. 5

HA. 2-8780 5H

Teletype N. Y. 1-1397

All Issues

Trading Markets:

P.ARL MARKS & r.O. INC.
7

Ke-

Ralston Steel Car

FOREIGN SECURITIES
SPECIALISTS

This is the

Oregon Portland Cement

Now York 4, N. Y.

SO Broad Street
AFFILIATE: CARL MARKS &

ac-

CO. Inc.CHICAGO

„

Riverside Cement A & B

of the

one company

well

(as

Members
40

best;

Spokane Portland Cement

prohibited);

now

Season's Greetings

To All

LERNER & CO.

It is not predicted, however,

investment Securities

whether this proposition is like¬

in 1949

pass

10 Post Office

over

until next year.

Besides
of

increasing
Federal

business,
would

the

work

Teletype BS 69

net¬

regulation

Kefauver

WONDERFUL

bill

hardship

upon

creditors

and

owners

business

the

Square, Boston 9, Mass.

Telephone Hubbard 1990

YOU

difficulty.

PEOPLE

They

could not sell to the most likely

buyer,
could
owner

competitor.

not
or

sell

bring in

they would
date were

out

such

new

capital,

forced to

Hill, Thompson & Co., Inc.

they

liqui¬

law in exist¬

IUcvvii dUvtstmas—

jij

itstppg 3tcw Ucav

■

ence.
*

the

field

farm

ject of price supports and farm
control

legislation

Markets and Situations for Dealers

120 Broadway, New York 5

legislation anticipate that Con¬
mouths gress will open up the whole sub¬

Which seems to be almost sure of

farmers

pile

they seem headed for

ly to lessen competition."
j

Experts

would

be¬

of "par¬

and 90%

farm

in the face of

mounting'

indignation

public

too

prohibit the

another

control,

get away with it,"

said this informant. *

The

ity."

continually

be¬

supports

price

tory high supports

farm

the govern¬
considers seri¬

where the effect "is substantial¬

work

"So

Republican leaders make a de¬
termined fight to save as much
of the Taft-Hartley law as they

60%

tinued

voted to override the veto of the

81st' were

revis¬

and

ginning in 1950 would vary
tween

pet project of the Federal Trade

50 members of the

the

supports

observers

that

fauver bill will pass.

quisition by

law

Aiken

the

farm

assets

new

some

that

whole

(This column is intended to

the White House, and Re¬
publican
leaders,
favored
the
flexible
supports on the theory
that if the law required manda¬

normally

candidates

flect the "behind the scene" inter¬

groups,

Republican

defeat

the

most

election

the

Until

which

income,

farm

require Federal incorv
poration (and rigid Federal regu¬
lation) of all corporations., 7. * j
posal

Senators

ously

business" and in favor of his pro¬

Four additional

evidence

ment

propaganda against "big

promised

Taft-Hartley act.

the

profitable to be shut off. Senator
O'Mahoney is reported to be plan¬
ning to turn the Joint Committee
on
the Economic Report into a

Taft-Hartley

Senate in the

The "small busi¬

cial committees.

have

there will be

the

Act of

announced that the President has
a simple repeal Of the
law
(if such is
technically and legally possible),

that both House

are

"Small Business" will again be

pointed out that although

was

the

Committee, if it is recreated.
chances

into

Association, is said to reflect

ers

The

will

conference of the Americart Bank¬

led

ness

written

whip with great force during 1949
upon "monopolistic big business."
Rep. Wright
Patman of Texas,
Who works harder at this anti-

O'Mahoney of Wyoming, probably
wilLhead the House Small Busi¬

hence,

Secretary
Snyder's
qualified
optimism for a high volume of
business continuing perhaps for
years,
expressed
at
the
credit

protect

big business stuff than almost any.
one
except
Senator Joseph C

outcome,

chairmen.

not

demagogy

net

government commitment to

law based upon that law's
concept of parity, but (2) lower
than the present 90%
supports,
continuance indefinitely of which
is
advocated by the
committee

program,

storms

Congress

Aiken

will

The

supports.

fhrm
prosperity
(1)
higher than the 90-60 ratio vary¬
ing inversely with the size of

oppose

make his wishes known,

have to

the

hand,

support

Louisiana, co¬

public housing remain firm
for all," the test of what Mr. Tru¬ in opposition, and were an antiman does want enacted and what
segregation
amendment
added,
he* wants shoved aside, blunted, or Southern
Democratic
"n a y s"
to
their
delayed for the sake both of po¬ added
negative
votes
litical harmony and the stability might
possibly kill the whole
of
the
country's business, will proposition.
*
*
*
come out later. The President will

other

per¬

kiting
price

will provide for av¬
supports somewhat less

erage

would
If Republicans who

the

.than 90% of the new parity.

prospective acting chairman of
Banking Committee, and Sen¬
ator John J.
Sparkman of Ala¬
bama, two ardent advocates of
public
housing.
Even
Senator
of

are

/probably

the

author

boost

also

the

Allen J. Ellender of

other costs.

supports

centage of "parity," any
of
the
official
parity

segregation.
asks Congress to ap¬
House
rules
would
probably
all his campaign program,
preclude the offering of such an
then this request has one definite
amendment from the floor. In the
significance.
Senate the rules will permit it. It
This significance is that the
probably can be done. Several of
White House entourage has not
the most ardent lefties of both
as
yet and will not by Jan. 5
parties could not avoid voting for
be able to make up its mind
it. This would immediately alien¬
how it will work out of the web
ate Senator Burnet R. Maybank,
entanglements

the

Since

seemingly

them

boosting

prove

around itself in the election.

a more lib¬
"parity" prices,
to include ele¬

eral definition of

WASHINGTON/ I). C —President Truman, when he appears in
person before Congress in less than two weeks, "will ask for all."
This is the burden of reports coming from all persons who have
talked recently with the President and his official family. They antic¬
ipate that the "State of the Union"^
message will call upon Congress getting through a public housing
to enact all the legislation per¬ and slum clearance bill early in
the year, have one big fear. That
taining to the President's numer¬
fear is that even if some northern
ous,
expensive, and conflicting
Democratic "civil righters" don't
campaign promises.
do
it, some Republicans will —
Whether these reports of Mr.
that is, introduce on the floor an
Truman's plans are accurate can¬
amendment providing that any of
not be confirmed, of course, until
the
public housing constructed
the President delivers his message
under the program shall be open
on Jan. 5.
On the other hand, if it
freely to persons of all races, and
does pan out that the President
with no

considera-

25 broad st.

/
wm.

new

york 4
.

;

gOUlet
.

;

Telephone
WHitehall
3-6816

Tel. REetor 2-2020

Tele. NY 1-2660

Volume

168

Number 4762

THE

COMMERCIAL

&* FINANCIAL

CHRONICLE

IBA

Pictorial

Section

INVESTMENT BANKERS ASSOCIATION
OF AMERICA

OFFICERS 1948-1949

President

■

Albert T.

Hazen S. Arnold

Armitage

Braun, Bosworth & Company

Coffin & Burr, Incorporated

Toledo

Boston

V ice-Presid ent

John F. Fennelly
Glore, Forgan & Co.

Chicago

Vice-President

Joseph T. Johnson
The

Milwaukee

Company

Milwaukee

V ice-Presid ent

Laurence M. Marks
Laurence M. Marks
New

York

& Co.

S'i

•

IBA Pictorial Section

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

GOVERNORS

Walter W. Ainsworth

Howard M. Biscoe, Jr.

Metro. St. Louis

Whiting, Weeks

Co., St. Louis

& Stubbs, Boston

Ewing Thomas Boles

Wm. McCormickBlair

Chicago

Caldwell Phillips Co.,

Columbus

St. Paul

•

George W. Davis

W. T. K. Collier

Julien H. Collins

Collier, Norris &

Julien Collins & Co.,

Davis, Skaggs & Co.,

Quinlan, Ltd., Mont.

Chicago

Edward K. Dunn

San Francisco

Sherman Ellsworth
Wm. P. Harper
& Co.,

& Son

Seattle

Inc., Pittsburgh

Sumner B. Emerson

Wayne J. Estes
Estes & Co., Inc.,

S. R. Kirkpatrick

Kirkpatrick-Pettis
Co., Omaha

Continental

Sons,

Hagemann

G. H. Walker &

Knight
III.

Nat'l

Bk. & Trust Co.,

Chicago

Co.,

B. P. Lester
Lester &
Los

Richard P. Dunn

Auchincloss, Parker
&

St. Louis

Topeka

Francis M.

Milton G. Hulme
Glover & MacGregor,

Rob. Garrett

Baltimore

Morgan Stanley & Co.,
New York

G. James Caldwell

The Ohio Co.,

Wm. Blair & Co.,

Co.,
Angeles

Redpath, Wash.

Edward C. Henshaw

Brush, Slocumb & Co.,
San Francisco

Herman L. Lind

Camp & Co.,
Portland, ore.

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

GOVERNORS

CHRONICLE

IBA Pictorial Section

(Continued)

John S. Linen
The

Chase

Natl.

Norbert W. Markus

Bk.

of the City of N. Y.,

Smith, Barney

New York

■1

Marvin Moreland

Rotan, Mosle and

Moreland, Galveston

Wickliffe Shreve

•

George L. Martin

Tucker, Anthony

Corbett, Inc., Chicago

The

Aaron W. Pleasants

Robinson-

The Int'l Trust Co.,

R. W. Pressprich

Atlanta

Denver

Co.,

Henry G. Riter, 3rd

& Co., New York

Richard W. Simmons

Ralph W. Simonds

Blunt, Bins &

Simmons, Chicago

Baker, Simonds & Co.,
Detroit

E. K. Van Home

Benjamin A. Walter

Stone & Webster

Bingham, Walter &

Cleveland

R. W. Pressprich, Jr.

Humphrey Co.,

New York

McDonald

Co., N. Y.

Joseph L, Morris

Hayden, Stone & Co.,

Secur. Corp., N.

Charles B. McDonald

John C. Maxwell

Martin, Burns &

& Co.,

Philadelphia

Hurry, Los Angeles

Harry H. White
White, Hattier &
Sanford, New Orleans

„

Riter & Co.,

New York

Philip M. Stearns

Joseph A. Thomas

Estabrook & Co.,
v

Ghace,

Whiteside,

Warren

Sears,'

Inc., Boston

Boston

Lehman Brothers,
New York

Alfred S. Wiltberger

Edward H. York, Jr.

Blyth & Co., Inc.,

Drexel & Co.,
Philadelphia

Chicago

■

diwrij;'.

■.

III

IBA Pictorial Section

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

New President Takes Office

Hal H.

coast,

Mr.

Dewar, Dewar Robertson & Pan-

San Antonio, new IBA President,
addressing Convention

and

Mrs. Hal H. Dewar,
Mrs. Julien H.

Clarence

Dewar, Robertson & Pancoast, San Antonio; Mr. and
Collins, Julien Collins & Co., Chicago

Randall, Inland Steel Comaddressing the Convention

pany, Chicago,

Hal H. Dewar, Dewar, Robertson & Pancoast, San Antonio, new President of the IBA
receiving badge of office from Julien H. Collins, Julien Collins & Co., Chicago,
the retiring President

General Robert L.

Edward

Dr. Marcus

Nadler, addressing Convention

Hopkinson. Jr., Drexel & Co., Philadelphia; Mrs. Clarence B. Randall,
Chicago; Benjamin J. Buttenwieser, Kuhn, Loeb & Co., New York

Eichelfcerger, Addressing the Convention

Presentation of award to Arthur G. Davis
Pf IBA

s^w^wwj^tf y^y^rtW^m«w,

Voiume 168

THE

Number 4762

COMMERCIAL

FINANCIAL

CHRONICLE

^WMttfi.WM.^^w,^

IBA Pictorial Section

At Investment Bankers Association Convention

Presidential receiving line: Mrs. Julien Collins; Julien Collins, Julien Collins & Co.,
Chicago; John F. Fennelly, Glore, Forgan & Co., Chicago; Alden H. Little, Invest¬
ment Bankers Association, Chicago; Roland
Merrell, Jr., Lee Higginson Corp.,*Chicago

Mr. and Mrs. Albert T.

Frederick W.

Straus, Straus & Blosser, Chicago; Mrs. Jerome F. Tegeler, St. Louis;

J. P.

Mrs.

St.

Milton

Trost, Louisville; Jerome F. Tegeler Dempsey-Tegeler & Co.,
Lcuis; Mrs. V. Theodore Low, New York; V. Theodore Low, Bear, Stearns & Co.,
New

Amazeen,

John H.
Clement

Trost, Stein Bros.

Armitage, Coffin & Burr, Inc., Boston; Mr. and Mrs. Edward
Burr, Inc.. Boston; Mr. and Mrs. Howard M. Biscoe, Jr.,
Whiting, Weeks & Stubbs, Boston

W. Wayne

York

& Boyce, Louisville; Le Roy A. Wilbur, Stein Bros.

Coffin

Donnally, Peoples National Bank, Charlottesville, Va.; Mr. and Mrs. Benjamin
Walter, Bingham, Walter & Hurry, Los Angeles; George Schindhelm, California
Bank, Los Angeles; John T. Knox, Federal Land Banks, New York;

Boyce, Baltimore; Mrs. Milton S. Trost; Walter C. Pohlhaus, Mackubin, Legg
& Co., Baltimore; Palmer Watling, Watling, Lerchen & Co., Detroit

Milton
&

Rauscher, Rauscher, Pierce & Co., Dallas; Mr. and Mrs. Waldo W. Mallory,
A. Evans & Co., Atlanta; E. Cummings Parker, Glore, Forgan & Co.,

Shreve, New York City; Clement A. Evans, Clement A.
Atlanta; Edward H. 'Nelson, Kidder, Peabody & Co., New York;
Mrs. J. Emerson Thors, New York

Chicago; Mrs. Wickliffe
Evans

Glover, California Bank, Los Angeles

Co.,

IBA Pictorial Section

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

Hollywood Beach, Florida

Harriman Ripley & Co., New York City; Brownlee O. Currey,
Securities Corp., Nashville; Mrs. Eugene Black, Washington, D. C.;
James K. Miller, Dominion Securities Corp., New York City; Daniel T. Pierce, Jr.,
Hirsch & Co., New York

F. D.

David

Boston;

Equitable

Farrell, City National Bank & Trust Co., Kansas City, Mo.; Mrs. W. T. King,
John S. Linen, Chase National Bank of New York; W. Paul Harper,
Boatmen's National Bank of St. Louis; James C. Ward, Third National Bank,
Nashville

Walter Creely,

Goldman, Sachs & Co., St. Louis; Salim Lewis, Bear, Stearns & Co.,
City; Mrs. F. Brian Reuter, Pittsburgh; James Abrams,
Allen & Co., New York City

New York

Frederick

Hulme,

and Mrs. J. Emerson

Thors, Kuhn, Loeb & Co., New York City; Herbert V. B.

Gallager, Yarnall & Co., Philadelphia; Willard S. Boothby, E. H. Rollins & Sons,
Philadelphia; Herman A. Feldmann, Geyer & Co., Inc., New York; Robert
Stevenson,

3rd, Investment Bankers Association, Chicago

Seving,

Glover

Butcher &

& MacGregor,

Sherrerd, Philadelphia; Mr. and Mrs. Milton G.
Mr. and Mrs. William D. Buzby, Jr.,
& Sherrerd, Philadelphia

Pittsburgh;

Butcher

J.
Mr.

L. Skinner,

W. Means, Courts & Co., Atlanta; Sherman Ellsworth, Wm. P. Harper & Sons
Co., Seattle; Mrs. Edwin B. Horner; Edwin B. Horner, Scott, Horner & Mason,
Lynchburg, Va.; Mr. and Mrs. Sanders Shanks, Jr., Bond Buyer, New York City
&

—

Volume 168

THE

Number 4762

v—.

—

December S to December

Leslie J.

Capek,
Bank,
Chicago; John J. Quail, Quail & Co., Davenport; John G. Heimerdinger, Walter,
■y:K■ Woody & Heimerdinger, Cincinnati; Robert F. Bender,
Lee

Schluter, First National Bank of Chicago, New York; Charles A.
Higgivson Corporation, Chicago; Edward J. Jennett, First National

::v

IBA Pictorial Section

CHRONICLE

COMMERCIAL & FINANCIAL

Harold J.

w»wwti,«flB

„

VII

10, 1948

Fahey, Fahey, Clark & Co., Cleveland; Robert B.

Blyth, National City Bank,

Cleveland; Mrs. Leslie J. Fahey; Frank B. Reid, Maynard H. Murch & Co., Cleveland;
William McGuirk, Kuhn, Loeb & Co., New York; William H. Clark, Merrill, Turben
&

Co., Cleveland; Byron R. Mitchell, Society for Savings,

Cleveland

Wachob-Bender Corporation, Omaha

v:/'

and Mrs. Addison
McG. Dalenz,

Mr. and Mrs. Bertram

W. Arthurs, Arthurs, Lestrange
Calvin Bullock, New York City;
Calvin Bullock, Atlanta

M. Goldsmith, Ira Haupt &

Leon Lees, Ira Haupt

& Klima, Pittsburgh; John
Harry M. Ufford,

Co., New York City; Mr. and Mrs.

& Co., New York City

Carl

Naumburg, Stern, Lauer &

Herrman &

Mr.

and

Co., New York; William M. Cahn, Jr., Henry

Co., New York; Conrad H. Liebenfrost, Stern, Lauer & Co.,
Mrs. Herman B. Joseph, T. H. Jones & Co., Cleveland

Mrs.

Norman

Ward, Norman Ward &

Herman L.

New York;

Co., Pittsburgh; Mr. and Mrs.

Lind, Camp & Co., Portland, Oregon

VIII

THE

IB A Pictorial Section

Thursday, December 23, 1948

COMMERCIAL & FINANCIAL CHRONICLE

Membership Attendance at New Record

William J. Price, 3rd,

Alex. Brown & Sons,

Austin

Brown,

Jr.,
Leonard & Lynch,
New York

Baltimore; Mrs Edward Glassmeyer,

Blyth & Co., Inc., New York; Charles McK. Lynch, Jr., Moore
Pittsburgh; Bayard Dominick II, Dominick & Dominick,

Dean Witter & Co., New York; Percy
& Co.. New York

M. Stewart, Kuhn, Loch

James K. Miller, Dominion

Herbert I. Shaw, Vance,

Robert E.

Ufford,

Orlando

Mahlon O
Mrs

Bradley
Waldo W

Atlanta;

Paul H Davis & Co., Chicago; Mrs. Malon C. Courts,
Mallory Atlanta; Mr. and Mrs. David H. Callaway, Jr.,
First of Michigan Corp., New York

Sanders & Co., Boston; Mr. and Mrs. Walter C.

Detroit;

Pohlhaus,

Mackubin, Legg & Co., Baltimore

Calvin Bullock, Atlanta; Gerald P. Peters. Peters, Writer &
Christensen, Denver; Mrs. Howard S. Wheeler, Orlando, Fla.; Herman A. Feldman,
Geyer & Co., Inc., New York City; Howard S. Wheeler, Leedy, Wheeler & Alleman,

Harry

Securities Corp., New York; Ernest O. Dorbritz, Moore,

Leonard & Lynch, Pittsburgh; Palmer Watling Watling, Lerchen & Co.,
K p Tsoiainos> Baker, V/eeks & Hardin, New York City

Clark, Calvin Bullock, New York;

Richard A. Bigger, R. S. Dickson & Co.,

C.; Mrs. Norman B. Ward, Pittsburgh; Earl F. Waterman, Earl F.
Waterman
&
Co., Seattle; G. L. Ludcke, Putnam. Fund Distributors. Bostrn;
Mrs. Earl F. Waterman, Seattle; Herbert R. Anderson, Distributors Group, New York
Charlotte,

w. Rex Cromwell, Dallas Rupe & Son, Dallas; Mrs. Henry G. Riter, 3rd, New York;
Ewing T. Boles, The Ohio Company, Columbus; Wallace M. McCurdy, Thayer, Baker
& Co., Philadelphia; Mr. and Mrs. Henry R. Hallowell, Hallowell, Sulzberger & Co.,
Philadelphia; Mrs. Ewing T. Boles; Henry G. Riter, 3rd, Riter & Co., New York City;
Mrs.

Wallace M. McCurdy

—

4V,•> w:

w.v^ww«i**
or*.

Volume

168

THE

Number 4762

COMMERCIAL & FINANCiAL

Gala Evenings at

Mr. and Mrs. Kelton E.
G.

Elmer A.

Dittmar,
&
San Dittmar
Antono; George F. Noyes, Illinois Company,
Co,
Chicago; Russell R. Rowles, Bowles, Winston & Co., Houston

B. Averell, Bache & Co., New York City; John H. Edwards,
Oklahoma City, Okla.; Robert E. Clark, Calvin Bullock, New York
City; William N. Edwards, William N. Edwards Co., Ft. Worth, Tex.; Thomas Beckett,
Jr., First Southwest Company, Dallas; Adolph Woolner, Bache & Co., New York City;
John McG. Dalenz, Calvin Bullock, New York; Walter W. Cooper, F. S. Smithers
& Co., New York.
Seated: Mrs. Robert E. Clark; Mrs. Adolph Woolner;
Standing:

)

White, G. H. Walker & Co., St. Louis; Mr. and Mrs. Arthur
Davis, Field Secretary, Investment Bankers Association

Alfred

J. Edwards, Inc.,

Mrs. William N.

Edwards; Mrs. Thomas Beckett

.*.,

""W"

CHRONiCLE

vmnmv**,

,MtoM««MI*<4fe «ft

•wmMUM*

IBA Pictorial Section

Convention

Mr. and Mrs. Cornelius Shields, Shields & Co., New York City; Mr. and Mrs. Eugene
P. Barry, Shields & Co., New York

ElvinK. Popper, I.
Simon &
St. Louis; Myron Ratcliffe, Lehman Brothers,
New York Clty! Walter W' Amsworth, Metropolitan St. Louis Company, St. Louis

Jim

Daisy, Harry H. White, White, Hattier & Sanford, New Orleans; Walter J.
Creely, Goldman, Sachs & Co., St. Louis; Laurence M. Marks, Laurence M. Marks
& Co., New York; Edward J. Jennett, First National Bank, Chicago; Alfred S.
Wiltberger, Blyth & Co., Inc., New York; Thomas Beckett, Jr., First Southwest
Company, Dallas; Wickliffe Shreve, Hayden, Stone & Co., New York City; Robert
K. McConnaughey, Securities & Exchange Commission, Washington, D. C.; John
S. Loomis, Illinois Company, Chicago; Richard A. Kebbon, Kebbon, McCormick
& Co., Chicago; Robert H. Craft, Guaranty Trust Company, New York; Hazen S.
Arnold, Braun, Bosworth & Co., Toledo; Richard W, Simmons,
v*
•
—
Blunt, Ellis & Simmons, Chicago *
"

IBA

THE

Pictorial Section

COMMERCIAL

& FINANCIAL

Heavily Attended

Business Meetings

Davids, Lester & Co., Los Angeles; Paul B. Hanrahan, Hanrahan & Co.,
Worcester, Mass.; George S. McEwan. Paul H. Davis & Co., Chicago; Robert H.
Warren, Geyer & Co., Inc., Boston
Mark

falim Lewis

Bear, Stearns & Co., New York City; Mr. and Mrs.

Sidney L. Parry, Executive Vice-President, Association of Stock Exchange Firms,
New York City; William A. Johnson, Mason, Moran & Co., Milwaukee; Harold P.

Goodbody, Goodbody & Co., New York City,

New York; Mrs. Richard C.
Charlottesville, Va.; Richard C. Noel,

Commercial & Financial Chronicle,

C. F. Cassell & Co.,

Van

Vincent Reilly,

Noel; Clair F. Cassell

Jerome F. Tegeler,
National Bank.
Weed, Jr.,

& Co., .St. Louis; F. Brian Reuter, Mellon
Pittsburgh; Mrs. V. Theodore Low, New York City; W. H.
Union Securities Corp., New York City

Dempsey-Tegeler

Thursday, December 23, 1948

CHRONICLE

Alstyne, Noel & Co., New

York City

Elvin K. Popper, I. M. Simon & Co., St. Louis; Walter J. Creely, Goldman, Sachs
& Co., St. Louis; E. Kenneth Hageman, G. li. Walker & Co., St. Louis; Mr. and Mrs.
Jerome F. Tegeler, Dempsey-Tegeler & Co., St. Louis; F. Kenneth Stephenson,
Goldman, Sachs & Co., New York

Harry A. McDonald, Securities & Exchange
Prescott, Prescott, Wright, Snider Co.,
McDonald &

Commission, Washington D. C.; John A.
Kansas City; Charles B.

McDonald,

Co., Cleveland

President Association of Stock

Exchange Firms

Mr.

and

Mrs.

Thomas Beckett, First Southwest Company, Dallas;
Joseph H. King, Union Securities Corp., New York

Mr. and Mrs.

Mr. and Mrs. Robert L. Osgood, Vance,

Sanders & Co., Boston; Herbert I. Shaw,

Vance, Sanders & Co., Boston

Volume 168

THE

Number 4762

COMMERCIAL

FINANCIAL

IBA Pictorial Section

CHRONICLE

The Rebel Room

Mrs. Mortimer A.

Cohen, Montgomery, Ala; Mrs. Samuel L.'Varnedoe, Savannah;
Orleans; Mrs. Julian:&. Space, Savannah; Mrs. Waldo
Atlanta; Mrs. John P. Labouisse,*New Orleans; Mrs. Rucker Agee,
Birmingham
\

Mrs. H. Wilson Arnold, New
W.

Mallory,

A. Space, Johnson, Lane, Space
& Co., Savannah; Thomas M. Johnson,
Johnson, Lane, Space & Co., Savannah; Waldo W. Mallory, Clement A. Evans & Co.,
Atlanta; Samuel Varnedoe, Varnedoe, Chisholm & Co., Savannah; Hugh Carter,
Courts & Co., Atlanta

Julian

John

Labouisse

Howard,

Labouisse,

Friedrichs

& Co., New Orleans;

Errol E.

Buckner, National Bank of Commerce, New Orleans; James Roddy, Scharff & Jones,
Inc., New Orleans; Reginald M. Schmidt, Blyth
Harry H. White, White, Hattier & Sanford, New

& Co., Inc., New York City;
Orleans; Wm. Russell Barrow,
Barrow, Leary & Co., Shreveport; H. Wilson Arnold, Well & Arnold, New Orleans

Mortimer
First

Cohen,

National

Stern, Agee & Leach, Montgomery, Ala.; Early F. Mitchell,
of Memphis; Mrs. T. M. Johnson, Savannah; Rucker Agee,
Stern, Agee & Leach, Birmingham

Bank

Joseph

W. Sener, Mackubin, Legg & Co., Baltimore; George F. Noyes, Illinois
Company, Chicago, Chairman of the State Legislation Committee, IBA; Ed S.
Lewis, Jr., Lewis & Co., Jackson, Miss.; Samuel L. Varnedoe, Varnedoe, Chisholm
& Co., Savannah, Chairman of the Southern-Group of the State Legislation Com¬
mittee, IBA; John P. Labouisse, Howard, Labouisse, Friedrichs & Co., New Orleans

Mr. and Mrs. Jesse

Donnally, Peoples National Bank, Charlottesville, Va.; Mrs. Clair

Cassell, Charlottesville, Va.; Rockerick D. Moore, Branch, Cabell & Co.,
Richmond. Va.

XII

THE

IBA Pictorial Section

1
■

■

COMMERCIAL

Thursday, December 23, 194$

FINANCiAL CHRONICLE
0

Conventioneers Bask in the Sun

Mrs. W. L.

Lyons, Jr.,

Louisville, Ky.; Mr. and Mrs. Frank S.

Yantis, F. S. Yantis &
Los Angeles;

Co., Chicago; Mr. and Mrs. Warren H. Crowell, Crowell, Weedon & Co.,
Carey S. Hill, Hill Richards & Co., Los Angeles

Harley L. Rankin, Girard Trust Co., Philadelphia; Mrs.
Alfred B. Averell, Bache & Co., New York City; Ralph
&

Mr. and Mrs.

B. Du

Trust Company, New York; Mrs. Gordon
Val, New York; Gen. Robert L. Eichelberger, Washington, D. C.
Robert E. Broome. Guaranty

Mrs. F.

Mrs. William N.

Brian Reuter, Pittsburgh; Mr. and Mrs. Emil
Chemical Bank & Trust Co., New York

Edwards, William N. Edwards &

Co., Ft. Worth, Tex.; Paul K.

Fred

•

Cleveland, Ohio; Mrs. C. McK. Lynch,
Hulme, Pittsburgh; Mrs. V. Theodore Low, New

Hudson.

Mrs. Milton G.

Howard

C. Williams,

Winkle, Paine, Webber, Jackson & Curtis, Chicago; Mr. and Mrs.
Bache & Co., New York City; Mrs. Van Winkle

Mrs.

Morton Jenks, Philadelphia;

W. Simonds, Baker, Simonds
Co., Detroit; Morton Jenks, Jenks, Kirkland & Co., Philadelphia

Finney,

Jr.,

Bear, Stearns

Jr., Pittsburgh;

York City

& Co., New York City; Mrs. Sidney Blake,
Jr., Philadelphia; Mrs. Howard Finney

Philadelphia; Mrs. Geo. W. Elkins

Van

Adolph Woolner,

Bank, Chicago; W. Manning Barr, Barr Brothers
& Co., New York; Robert V. Wehrheim, Philadelphia National Bank, Philadelphia;
Arthur R. Robinson, Fidelity Union Trust Company, Newark; William M. Cahn, Jr.,

Bruce DeSwarte, Continental Illinois

Henry Herrman & Co., New York

Volume 168

Number 4762

THE

Fun

COMMERCIAL

IBA Pictorial Section

CHRONICLE

XIII

the Florida Beach

William N. Edwards, William N. Edwards &
Co., Ft. Worth, Tex.; Paul K. Van
Winkle, Paine, Webber, Jackson & Curtis, Chicago; Adolph Woolner, Bache & Co.,
New York City

Edward

FINANCIAL

Clifton L. Nourse, The Illinois Company,
Chicago; George F. Noyes, The Illinois Co.,
Chicago; Robert F. Bender, Wachob-Bender Corp., Omaha, Neb.; Carl W. Jackson,

Harris, Hall & Co., Chicago; Charles A. Capek, Lee Higginson Corp., Chicago

Meyers, Laidlaw & Co., New York City; Howard Finney, Jr., Bear,
Co., New York City; Frank L. Lucke, Laidlaw & Co., New York City;
City National Bank & Trust Co., Kansas City; James Haller, J. C.
Bradford & Co., New York City; Frederick J. Bolton, H. V. Sattley & Co., Inc.,
Detroit; W. Paul Harper, Boatmen's National Bank, St. Louis; David H. Callaway, Jr.,
First of Michigan Corp., New York City

Johnston, New York City; W. H. R. Jarvis, McLeod, Young, Weir, Inc.,
City; Edward S. Johnston, Wood, Gundy & Co., New York City; Ralph
Chapman, Farwell, Chapman & Co., Chicago; Irving D. Fish, Smith, Barney & Co.,
New York City; Mason B. Starring.
Graham, Parsons & Co., New York City;
Springer Brooks, Piper, Jaffray & Hopwood, Ft. Paul, Minn.; Milton G. Hulme,

Douglas R. Hansel, Wertheim & Co., New York City; Charles C. Werner, Wertheim
Co., New York City; Mr. and Mrs. Sewell S. Watts, Jr., Baker, Watts & Co.,
Baltimore; James B. Downing, Baumgartner, Downing & Co., Baltimore;
John Redwood, Jr., BUker, Watts & Co., Baltimore

Irving D. Fish, Smith, Barney & Co., New York; Mr. and Mrs. John W. Corrington,
Paine, Webber, Jackson & Curtis, Chicago; David J. Lewis, Paine, Webber, Jackson
& Curtis, New York City; Mr. and Mrs. Dumont G. Dempsey, Newhard, Cook & Co.,

Stearns &

Farrell

Parker, Glore, Forgan
Co., Chicago; James S. Abrams, Jr., Allen & Co., New York; F. Monroe Alleman,
Leedy, Wheeler & Alleman, Orlando, Fla.; W. Frederick Spence, Robert Hawkins
&
Co., Boston; Robert H. Warren, Geyer & Co., Inc., Boston
W. Rex

Cromwell, Dallas Rupe & Son, Dallas; E. Cummings

Mrs. E.

New York

Glover &

McGregor, Pittsburgh

St.

James M, Pigott, Central Republic

Louis

Co., Chicago; Franklin Schmick, Straus & Blosser,
Chicago; Mark Davids, Lester & Co., Los Angeles

XIV

IBA Pictorial Section

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

Championship Golf Played Again

Hudson

Lemkau, Morgan Stanley & Co., New York City; Edward K. Dunn,
Sons, Baltimore; Thomas Whiteside, Chace, Whiteside, Warren &
Sears, Boston; J. Earle Jardine, Jr., Wm. R. Staats Co., Los Angeles

Robert Garrett &

Mr. and Mrs. Gordon B.

Duval, Guaranty Trust Co., New York City; Frederick B.
Carpenter, John Nuveen & Co., Chicago; Dana F. Baxter, Hay den, Miller & Co.,
Cleveland

Fred W.

Gardner, Reinholdt & Gardner, St. Louis; C. C. Clayton, Clayton Securities
Corp.} Boston; Charles R. Perrigo, Hornblower & Weeks, Chicago; George L. Morris,

James

Burns,

Jr., Harris, Upham & Co., New York City; C. Newbold Taylor,
Co., Philadelphia; Nathan K. Parker, Kay, Richards & Co.,
Pittsburgh; James D. Winsor, 3rd, Biddle, Whelen & Co., Philadelphia

W. H. Newbold's Son &

Hornblower & Weeks, Philadelphia

George W.

Elkins, Jr., Elkins, Morris & Co., Philadelphia; Samuel L. Varnedoe,
Varnedoe, Chisholm & Co., Savannah; Walter A. Schmidt, Schmidt, Poole & Co.,
Philadelphia; Edwin B. Horner, Scott, Horner & Mason, Lynchburg, Va.

Newman L. Dunne,

Robert W. Baird & Co., Milwaukee; Milton S. Emrich, Julien
Co., Chicago; John M. Maxwell, The Northern Trust Co., Chicago;
William H. Hammond, Braun, Bosworth & Co., Chicago

Collins &

Earl

F. Waterman, Earl F. Waterman & Co., Seattle; Harry I. Prankard, 2nd,
Lord, Abbett & Co., New York City; William S. Hughes, Wagenseller & Durst,
Los Angeles, Calif.; Albert R. Hughes,
Lord, Abbett & Co., Chicago

David B.

McElroy, J. P. Morgan & Co., New York City; George E. Clark, Adamex
Corp., New York City; Rudolf Smutny, Salomon Bros. & Hutzler
New York City; Paul L. Mullaney, Mullaney, Wells &
Co., Chicago; F. Bryan Reuter'
Securities

Mellon National

Bankf Pittsburgh

Volume 168

Number 4762

THE

COMMERCIAL

FINANCIAL

IBA Pictorial Section

CHRONICLE

Gathering Huge Success

Mrs. George J.

Schaust, Minneapolis; Mr. and Mrs. Thompson M. Wakeley,
A. C. Allyn & Co., Chicago

Allen C. Du
&

Bois, Wertkeim & Co., New York; Wm. Russell Barrow, Barrow, Leary
Co., Shreveport; Julian A. Space, Johnsvn, Lane, Space & Co., Savannah;
Robert L.

Mrs.

Earle

Jardine, Jr., Los Angeles; Mrs. William S. Hughes, Wagenseller &
Durst, Los Angeles; Mrs. Carl H. Doerge, Cleveland

Mrs. William H.

Sills, Chicago; Mrs. V. Theodore Low, New York City;

Mrs. William M.

DeHaven & Townsend, Crouter & Bodine Philadelphia; Herbert
Yarnall & Co., Philadelphia; Alfred Rauch, Kidder, Peabody & Co.,
Philadelphia

Gordon Crouter,
V. B. Gallager,

Cahn, Jr., New York City

Mr.

and

Mrs.

Hugh

Holt, Blair & Co., Chicago

City; Dillman A. Rash,
Louisville, Ky.

Bullock, Calvin Bullock, New York
J. J. B. Hilliard & Sons,

Henry R. Hallowell, Hallowell, Sulzberger & Co., Philadelphia; Mrs. Ewing T. Boles,
Columbus, Ohio; Phillips T. Barbour, First Boston Corp., New York

Francis Adams

Truslow, President of the New York Curb Exchange; Mrs. Malon C.
Courts, Atlanta; Mrs. G. H. Walker, Jr., New York City; Clark Simonds,
G. H. Walker & Co., Providence, R. I.

XVI

IBA Pictorial Section

THE

COMMERCIAL

Work and

FINANCIAL

CHRONICLE

Thursday, December 23, 1948

Play Order of Day

Hal H. Dewar, Dewar, Robertson & Pancoast, San Antonio; Ewing T. Boles. The Ohio
Company, Columbus; J. Marvin Moreland, Rotan, Mosle & Moreland, Galveston;
S. R. Kirkpatrick, Kirkpatrick-Pettis Co., Omaha; Henry G. Riter, 3rd,
Riter & Co., New York

Elisha

Riggs Jones, E. R. Jones
Corp., New York City;
Orleans; James Abrams, Allen
Co., Inc., New York City; W.

rities

& Co., Baltimore; Norman S. Downey, Union Secu¬
Harry H. White, White, Hattier & Sanford, New
& Co., New York City; Reginald Schmidt, Blyth &
Paul Harper, Boatmen's National Bank, St. Louis.

Press

The

IBA

Staff:

St.

(standing) Edwin W. Winter, 2nd; Alden H. Little; Gordon L. Calvert;
3rd; Erwin Boehmler; (seated) Mary Lincoln;
Judith Rosen; Ellen M. Branson

Murray Hanson; Robert Stevenson,

conference

Louis Room

John A. Prescott, Prescott, Wright, Snider Co., Kansas City, Mo.; George Schindhelm,
California Bank, Los Angeles; Mrs. Charles J. Fleming; Charles J. Fleming,
Hanrahan & Co., Worcester, Mass.

Newspaper Panel—Patrick Carberry, Wall Street Journal, New York; Thomas R. Furlong, Chicago Tribune, Chicago; William A. Happ, St. Louis
Globe-Democrat, St. Louis; Ralph Hendershot, New York World-Telegram, New York; Robert P. Vanderpoel; David Dillman, Moderator; Paul
Heffernan, New York Times, New York; John S. Piper, San Francisco News, San Francisco; C. Norman Stabler, Herald Tr\X>wne, New York

Full text of Commercial and Financial Chronicle : December 23, 1948, Vol. 168, No. 4762

FRASER