Full text of Commercial and Financial Chronicle : December 27, 1951, Vol. 174, No. 5076

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

.•

•

& $app|> Jleto
UBHM1

Reg. U. S

New

Number 5076

Volume 174

EDITORIAL

happenings serve to remind
thoughtful among us—if indeed they needed
any reminder—that the position of "leadership"

By L.

Boston banker

have assumed in world affairs is any¬

These facts

are

phases of industry, labor, commodity prices, domestic
foreign trade, and stock market prospects. Favors
stocks of good chain variety stores, moving picture and

money sup¬

and

air

bonds should be

Blames Con¬

purchased.

Excluding defense orders, the total business

(1)
ume

take the place

of peace production.

(2)
The outstanding, feature of
1952—barring all-out war—will be
the Presidential Election on Nov. 4,
1952.
I comment further upon this

interest rates.

tion

on our

daily living.

may

all feel poor in terms

of the

purchasing power of our dollars,
scious that there has been a marked
increase in the money

but

we are con¬

supply of the
Had this

country in the past decade.
increase

been

advertised

due

unrestrained

printing of dollar
bills by our government, it would be
easily understandable. The increase,
however, took place largely in the
field of bank deposits, and since this
method of inflating the supply of
money is more roundabout and less
noticeable, but the means by which it
comes to pass are far less generally
understood. To the extent that this
the

face, but they

facts, and as such must be taken into account
at all times.
In some part, doubtless, they are
the natural, perhaps the inevitable consequences
of the role which we have assumed. Nationalism,
are

(4)

Farm

income

will

Continued

on page

PICTURES

Continued

THIS

Security Traders Association appear on page 19, while
IBA Group

DEALERS

•

wH~

WV:

Roger W. Babson

of
controls, increased taxes, and high
prices will cause a decline in legitimate business. H
civilian production declines too much, the public may
then cry, "This is a government-made slump; let's change
the Administration."
'
v
.
(6) If in 1952 it becomes evident that business is de¬
clining too much as a result of government curbs, the
planners at Washington will rush their patient into an
oxygen

tent.
Labor Outlook

Many labor groups will be successful in getting
another round of wage increases in 1952. Although there
(7)

page

Continued

page

Christmas Party of Seattle
state of new officers of Texas

at Annual

taken

ISSUE—Pictures

to an understanding

continue

(3)

high in 1952. .
<
•"
(5) As 1952 wears on, the effect

of
what lies behind the ballooning of
our money supply in the past 10 or
l.s.Pruyne
12 years, it will accomplish its pur¬
pose.
Inflation has been rather in¬
elegantly described as "too many dollars chasing too few
goods." This phrase immediately indicates that there
study adds

national jealousies, international suspicion and
intrigue, and the like, have always been dominant
in what is known as world politics. Historically,
these forces have been really important chiefly
>

paragraph 48.
The Administration and its
economic advisors appear firmly con¬
vinced that radical inflation is about
to
break out next year.
But the
"brain trusters" are overlooking the
fact that the boom is already old and
that it was creaking badly when the
Korean War broke out.
The date of
the slide has only moved ahead.

under

knows, in a general way what inflation is
and each of us is all too conscious of the impact of infla¬

Each of

vol¬

1951. However,
high, as war orders

in 1952 will be less than that for

National Income in 1952 will be very

independence of Federal Reserve and return of higher

Says only convertible

companies.

transportation

opportunity" to reduce money-supply in

and Administration for not providing a budgetary
surplus and points out "jokers" in Treasury's statements.
Expresses pessimism regarding reduction in government
spending, but is optimistic regarding effects of restored

perhaps, even more.

not pleasant to

increased

postwar period and thereby curb inflation.

doing and the way we are doing it.
There is no good reason to doubt the reports
which come almost daily ,from many parts of
Europe and from non-Communist dominated parts
of Asia to the effect that the United States of
America is distrusted about as much as the Krem¬
one case,

Mr. Babson discusses outlook for 1952 relating to various

gress

are

than

explains factors

tration "missed

creasingly evident fact that our associates in this
Korean enterprise are often as Laodicean in their
support of our policies in that troubled peninsula
as
they are in helping to implement any decision
that is made, are but simple reminders of our
dilemma.
For the most part, we have been able
to summon majority support for our stands in
the meetings of the United Nations, but no one
who has cut his eye-teeth needs to be told that
there are many who support us who are often
more than doubtful about the wisdom of what

By ROGER W. BABSON

SUMNER PRUYNE

ply and postwar inflationary trend. Reviews history of
wartime and postwar period financial developments, and
attacks Treasury's "easy money" policy. Says Adminis¬

thing but a simple and easy one. The course of
apparently almost never-ending "negotiations"
with the Communist forces in Korea, and the in¬

lin—in

Copy

Outlook lor 1952

Vice-President, First National Bank of Boston

the

Increased

We See It

Numerous current

Price 40 Cents

York, N. Y., Thursday, December 27, 1951

Business and Financial

the

which

Pat. Office

Why Our Money Supply

flear to &U

"The. Commercial and

MNMH1S1RMMMI

HIS1RE.SS

■

appears on page

20.

State and

U. S. Government,
Stale and

Municipal

Securities
telephone:

of INDIA, LIMITED

R. H. Johnson & Co.

Kenya Colony and

26, Bishopsgate,
London, E. C.

INVESTMENT

SECURITIES

Branches in India, Burma,

Chemical

bond department

30 BROAD

ST., N. Y.

Colony, Kericho, Kenya,

64 Wall

Street, New York S

Albany

Troy

Scranton

Harrisburg

Williamsport

Wilkes-Barre

Allentown

Pacific Coast &

VANCE, SANDERS & CO.
111 Devonshire Street

I
■»

New York

Angeles

OF NEW YORK
Bond Dept.

Memd Department

£2,000,000

CHASE

THE

£2,500,000

Trusteeships and Executorships
also undertaken

NATIONAL BANK
or mi an of new

CANADIAN

New

york

England

Internal Issues

BONDS & STOCKS

Corporation Bonds

Public Service Co.
Analyst* upon request

Private Wireb

Dean Witter & Co.
14

Wall Street, New York,

Members of

N. T.

Principal Commodity

and Security

DEPARTMENT

Goodbody

Co.

ESTABLISHED 1891
MEMBER8 NEW YORK STOCK

EXCH.

Exchanges
115 BROADWAY

^Chicago

Capital
Fund

The Bank conducts every description
banking and exchange business

Teletype: NY 1-708

CANADIAN

BOSTON
Loa

Paid-up

£4,000,000

and Stocks
Direct

BOSTON

Tmptctui from authorized dealers or

Hawaiian Securities

Subscribed Capital-

Reserve

Gov't of Canada

AUoe

f*.

THE NATIONAL CITY BANK

PHILADELPHIA

BOSTON

Ceylon, Kenya
and Aden

and Zanzibar

Washington, D. C.

Bond Fund

Uganda

Head Office:

HAnover 2-3700

COMPANY

Bonds

Bankers to the Government in

Established 1927

BANK & TRUST

Municipal f

NATIONAL BANK

San Francisco •
■

Boston

Los Angeles •
•

Honolulu

Chicago

105 W. ADAMS

CHICAGO

NEW YORK

Domehon Securities
Grporatiots
40Exchange Place, New York 3,N.Y*

IRA HAUPT & CO.
and

111

other

Broadway, N. y. 6

WOrth 4-6000

ST.
Teletype NY 1-702-3

WHitehall 4-8181

Stock Exchange
Principal Exchanges

Members New York

Boston

Teletype NY 1-2708

Telephone:

Enterprise 1820

The Commercial and Financial Chronicle

(2506)

w-Umber

MARKETS

TRADING

The

Dow Chemical
Common & Rights

Rights

participate and give their

Paget Sound Power & Light

they to he regarded,

are

GEORGE

New York Hanseatic

Corporation

as an

for favoring

offer

BARONE

Teletype NY 1-583

Union Carbide & Carbon Corp.
its

Here too, research is em¬
phasized and this often leads to a
superior product at a lower price.
The expansion program. under¬
taken by the company since the

Specialists in

Rights & Scrip
Since 1917

frfc PONNELL & To.
Members

New

York

New

120

Stock

Exchange

Curb

BROADWAY,

Exchange

NEW

Tel. REctor

Pabco

corpora¬

JIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

ac-

longest loan agreement ever
made by a corporation. But it is

and
divi-

not

George L.

formed

Barone

in order to in¬

ily and now

use.

The

loan

before-maturity if it
so.
Moreover, the loan

company

(1) Chemicals.
(2) Plastics.
(3)

Moore Handley Hardware Co.

be converted

Alloys and metals.

into

can

Pabco

sents

long-term
investors

The

deflated

Tele. LY 83

advances

LD 33

possible 100%
appreciation
period of

148
Tel.

the

one

Teletype

259

Telephone WOrth 4-5000

the

Komanoif

building

ma¬

Dow Chemical

field

of prod¬

and

sells

ucts

3%% note at

wide variety

ranging from floor covering?

Of these, the floor covering di¬

almost

has

Pabco

marily

with

the

new

and

General Aniline & Film "A"

pri¬

known

been

rights

Foote Mineral

vision, which makes a variety of
linoleum and cork products, is by
far the most important.
Up till
now

and

Dewey & A!my

paints, insulation material, etc.

issued

when

expan¬

attests

7-0425

oldest

the Pacific Coast—but
completion of its
modern
New
Jersey

Grrste\ & Frekkel

final

Members

to this fact.
leading position in
Sales in
1950
reached a' new plants, Pabco-will unquestionably
this rapidly growing field.
The
become an important factor in the
recently developed wool-like syn¬ high of more than $758 million.
East,
rivaling Armstrong CorK
thetic fibre Dynel has outstanding But records made by Union Car¬
bide rarely last for any length of and Congoleum Nairn.
possibilities.
It is warmer than
time. This year, sales are
However, this writer is not se¬
running
wool, as soft as cashmere, shrinkwell ahead of 1950 and for the lecting Pabco as the stock he likes
proof, dyeproof and allergy-proof.
first nine months totaled $691 mil¬ best merely on Pabco's prospects
This
new
fabric
could
revolumaintained

lllllllllllllllllllllllllllllllllllllllllll

State St., Boston 9,- Mass.
CA.

finest

terial

assured. The
by practically every major
confidence exhibited by both the
industry.
Being the founder of
petrochemistry, Union Carbide has management and lending agencies
are

request

and

materially
increased
the
com¬
pany's earning power, and further

used

Information
a

promise

names

can

The company is producing about
300 different chemicals which are

Lynchburg, Va.

THERMO KINS RY.

holding out

sion which has been followed has

gases

U. S. THERMO CONTROL

•

issue

Pabco is

the
elects

and carbide.

(5) Industrial

Scott, Horner &
Mason, Inc.

time.

repay

policy of continuous

oughly

branch offices

our

acquire
t ho

the New York:
16.M>, repre¬
opportunity for

unusual

Birmingham, Ala.

Mobile, Ala.
Direct wires to

Exchange

Exchange
Exchange

Curb

Pabco

stock

Products, selling
Stock

York

New Orleans, La.-

Products

The .common

(4) Electrodes, carbon and bat¬ any time before Nov. 1, 1959.
teries.

New York Stock

25 Broad St., New York 4, N. Y. ;
HAnover 2-0700
NY 1-1557

KOMANOFF

able

rigidly fixed contract. There
ample provisions which pro¬
vide flexibility.
To begin with,
a

The activities of Carbide will get the
money as it
stead¬ is needed, thus
avoiding the pay¬
embrace five major ment of interest on funds not in

fields:

Dan River Mills

Members

Iforzfcld & Stern, New York City

are

Union Carbide have grown

American Furniture Co.

Steiner,Rouse&Co!

over a reason¬

capacity.

crease

Trading Markets

Bought—Sold—Quoted

Members New

the

sions

Komanoff,

City. (Page 2)

dential'companies. It is probably

seven

Corp.—

of the

one

were

2-7815

quired

Carbon

tions

Products—I.

very

teen

YORK

Carbide

of Herzfeld & Stern, New York

inception, Union most daring in the history of
Corporation American industry. In the last
was
a
success.
Incorporated in five years UCC has invested $423
New York in 1917, the new con¬
million in new plant facilities. Of;
cern fused to1950 expenditures,
which ag¬
gether a group
gregated $70 million, 60% was di¬
of f o u r com¬
rected toward increasing the out¬
panies
whose
put of chemicals and plastics, 29%
activities
ap¬
for alloys and metals, ancl 11%
peared to hold
was divided between the remain¬
exceptional
ing two divisions. This expansion
promise.
Ex¬
program is now being accelerated.
pansion was
The company recently announced
rapid and in
that a $300 inillfon loan, running"
the years that
for 100 years, had been arranged
followed, thir¬
with the Metropolitan and Pru¬
Carbide

Alabama &

and

Selections

George L. Barone, Security An¬
alyst, Van Alstyne, Noel & Co.,
New York City. (Page 2)

nor

of the company's

end of World War II is

From

he,

sales.

Members, New York Stock Exchange

York 5

intended

not

are

Louisiana Securities
Union

sell the securities discussed.)

27, 1951
■

Week's

Participants

Their

particular security.

account for 30%

Security Analyst,
Alstync, Noel & Co.

Van

Established 1920

BArelay 7-5660

reasons

(The articles contained in this forum

Central Public Utility 5x/2/52

120 Broadway, New

This

Forum

A continuous forum in which, each week, a different
group of experts
in the investment and advisory field from all sections of the
country

Pacific Tel. & Tel.
Common &

Security I Like Best

ISO

Security

Dealers

Broadway

Assn.

New York T

Tel. Dfghy 9-1550

Tel. NY 1-1932

Luscombe
Texas

Airplane Corp.

Engin. & Mfg.
on

velopments which have proved
commercially feasible.
A broad

Request

lion

year.

field

Information

tionalize the textile industry. Dy¬
nel is but one of the many de¬

the full year.

has

fruits

BUTLER,CANDEE & MOSER
44 Wall
Teletype
NY

most

Carbide

9-0040

the

plastics division has its ro¬
too, and here again Union

mance

BOwling Green

1-1862

the

uncovered,
remain, for
part, untouched'.

The

St., New York 5, N. Y.

been

which

the

vanguard.

increasing number of products
being constructed from these
made materials.

An
are

man-

One of the most

recent

products to be developed is
polyethylene, which is actually a

solidified

gas.
While it has been
existence for only a relatively
short time, the demand for it is

GERMAN

sqrieezeable bottles, flexible tum¬
blers and in food packaging,

OPPENHEIMER & CO.

useS

YorTt Stock Exchange

25 Broad Street, New York 4,

ACTIVE

TRADING

Direct

Private
to

New

likely to
supply

able.

million

the

comparable period last
It is not unreasonable to ex¬

pect close to

billion in sales for

Quite naturally, profits

are on

1951

should

last year.

approximate

Dividends, paid in

yea* ^since
servative.
new

1917,
The

per

somewhat' below
every

have .been

con-*

heavy demand for

capital has necessitated the

investment of

profits.

major portion of

However, the patient in¬

CAnal 6-1613

theless

appear

stock.
ise

avail-!

'"'.v'

...

why I favor this

It is the tremendous prom¬
the future holds that
me.

that

Products of this

com¬

unheard of just a,
quickly becom¬
ing necessities of life. Today, UCC
can almost be considered an in¬
pany

plastics ac-' few

approximately 46%rof

reason

which

when aj attracts

becomes
and

other|

only

were

element of

J. B. Maguire & Co., Inc.
31 Milk St, Boston 9, Mass.
Tele. BS

•

142

Portland, Me. . Enterprise 2904
Hartford, Conn. -Enterprise 6800 ■*
Open End Phone to New York Canal 6-1613
;

rare

minerals

Pabco

and

romance

Recently an economical maturity. Perhaps the day Q not
capturing vanadium far distant, when .it will be iull
discovered.
Such
develop¬

was

ments

this

are

grown.

continually wid¬

Until

then,

until

the

Pabco's

interest

cases, cartons and
ilar items.

its

The last two divisions
together

will

best.

remain

the*

security

investment

Fibre1" Board

author's
most

Products,'

opinion,

valuable

Pabco.

-•

Tefetvpe

SEATTLE
SLlot

105

3040

other sim¬

^SENEGA OIL COMPANY^
CLASS "A":
A

opportunity

paying growtfc
in Crude Oil

.Information

;

•-

For many years

the earnings of

Fibre Board have

request

SECURITIES CO.

for

asset

GENESEE VALLEY

the

represents

earnings

dividend

Fibre

equity in net asset value of $21,160,693.

Powers

Bldg.. Rochester 14, N. Y.

Telephone LO 3190

Teletype BO

been ploughed

back

into

plants

new

and

new

Over-the-Counter

equipment; and today Fibre Board
is

one

erties
dous

of the 'most valuable prop--

in" its
current

power;

field, with
and

included
of

"For

its

Quotation Services

tremen¬

potential

earn¬

■

for 38 Years

1951,* had Pabco

proportionate

Fibre Board

earnings with

its

own, Pabco's earnings would have

like Thus, instead
:

Board at $7,241,083 compared with,

requee*

'1006 SECOND AVENUE

the,

ping

carrying

John R. Lewis, Inc.

Fibre
large
Pacific
Coast
manufacturer
of,
corrugated and solid fibre ship¬
.

available

ap¬

been nearly $4.50 per share, as
ening the scope of the company's brilliant future that awaits is fully
activities and new markets are the discounted by the market
price, it. against reported earnings of $2.07.

usual result.

Analysis

rather accounted for by

are

Board Products Company,

ing
intensively quickly, it has not yet reached full

pursued.
method

TUNGSTEN. OIL-GOLD

preciation possibilities inherent in

years ago are

Alloy and metal products com-:
dustry in itself.- From 200 plants,
prise about 24% of total volume.
factories, mines, mills and labora¬
Through nine alloy-making plants,
tories, and 1,100 warehouses its
strategically located throughout products are
?
flowing into the rn-rf
the country, 50 different,
alloys dustrial and consumer-channels of
and metals are
produced, one of the United States.
'Yet, with this
the' most important of which' is
extensive productive capacity, the
!' magnesium. This division., also demand for almost
every
item
operates what
is
probably, the produced is far ahead of
supply!
world's largest tungsten mine at
While Uniqn Carbide Jias grown
Pine Creek-, California.

LEAD-ZINC

never¬

seem

vestor

the

Development*
Limited

reasonably- priced.

Research

Members Nat'l Assn. of Securities Dealers
Inc.

Tel. HUbbard 2-5500

coverings industries.

I6V2 would

about

The

share, which is

Placer

building

connection,
witn
earnings
running at the rate of about $2
per share after heavy tax accru¬
als, the common stock of Pabco

temporarily.

for

the

tnis

ture

...

and floor

Earnings

outlook

the

and

sharp
upward
trend, .although
higher taxes may change the pic¬

Telephone
York

for

sales.

4-0418

Chemicals

count

N.Y.

MARKETS

are

sufficient

UTILITY STOCKS

;

$537

may not have to wait .too
I Pabco owns 50% -of-the class B,
much longer before he
begins to 56% of the class A, and 60% of
Currently, over 90% of the
reap some
of the benefits that the $7
preferred of Fibre Board
output of this product is going to
have been accruing.
Products. The rest of Fibre Board
the Armed Forces.
However, a'
Certainly, Union Carbide has an stock is owned by the Crown
huge • civilian market is awaiting
excellent record.
But this is not Zellerbach
Company.
Pabco is
polyethylene.
Used
in
making

Securities

WHitehall

for

with

great.

Internal

Members New

compared

selling

Continued

for

ap-'

page

National Quotation Bureau
Incorporated
Established 1913

46 Front Street
CHICAGO

New York 4r N. Y.
SAN

FRANCISCO

liliWIJWWlHfc

■HI,.Ill

Volume 174

Number 5076

The Commercial and Financial Chronicle

Basic Conflicts in Our

Economy

INDEX

LicHTcnsTtm

B. S.

By RAYMOND RQDGERS*
Professor of Banking, Graduate School of
-

i",

• .1

■

•*_ ;

New

r_'

(1) internationalism

are:

■

Business Administration
1

•*

opposed to private-electric facilities; (3) public

goods; (7) competition

"consumers

becoming more difficult
maintain perspective

every day to

form

and

sound

real facts.

Disraeli

said,

•

-,.

propaganda, and

says

three

kinds

lies,

Our

RESOLUTION

;,;••• /.

\ v

Economy—Raymond Rodgers

Sell

•

•••

Obsolete
99

there

normal

with

Business in Government—Our Greatest Danger
Everett

Investment

many

are

Dirksen

tion

are

before

today?

•*••'•••

some,

The

'' ' '-v

Investor, the Treasury

survival
sick

—Aubrey G.

and the Federal

Lanston

Reserve

__1

Transmission
Mild Inflation May Be Expected in

•

these

1952—George W. Cloos__ 10

Texas Eastern

basic

Transmission

An Appraisal of the American (Economy by the End of 1952

and

was

before

made

there

were

Raymond Rodger*

pressure

and in
sub-de¬

hand
and
partment of government.
groups

every

department

every

Investment Banker's Role in

1—Winthrop S. Curvin

facts

wider

the

two

between

issue

this

Revenue

Bond

can

man

Is Inflation?—Harold G.

Bad

Philadelphia

See It

Angeles

type

.Cover

amply

■

Artkraf t

(

Manufacturing Co.
18

enough to

in the wars with

use

Sitting Bull and his Indian braves!

for another example, take
the
complaints that business is
bad.
While it is true that some
Or,

lines, and some enterprises -in all
lines, are not doing well, the over¬

held back by - credit con¬
trols,
materials limitations and
other
restrictions:
but
public

Indications

Hydrocarbon Chemical

general activity. So, these wide¬
spread 'complaints
may
simply
become spoiled. War
have

distorted

so.

their

and

sales

curve

have

businessmen

that

mean

and inflation
figures

their

judgment that if the
doesn't point straight

of them think business

up, many

Wyoming Gulf Sulphur

housing is going ahead at an ever¬

growing pace. English voters may
false
teeth,
but
American

News

and

Banks

About

Bankers

Singer, Bean

;

get

voters

get real housing!

Observations—A. Wilfred May

Well, then, as Bruce Barton

put

it, "What can a man believe?"
Or, putting it a little more
broadly, and in the vernacular:
What chance does an

honest man

Answering this
whatever " his
chances

have?

address

♦An

Dinner

Credit

the

Men,

Tax-Eaters

Our

Reporter's

Probably the most fundamental
conflict
in
America
is that
of

Our

Reporter

government waste as opposed to
decent respect for the tax dollars

Prospective

from the sweat of Ameriproducers.
Unfortunately,
those who live on the earnings of

Cincinnati, O., Dec. £,

others

soon

acquire

Railroad Securities

tempt for those who produce the
very earnings on which they live!

22
17 *

Securities Salesman's

and

n e s s

the

break-down

morality evidenced
freezes,

mink

bureau

tax

tions

Corner—

Collins Radio

income

and

scandals

are

The

vital

contempt.

Continued

Best

us.

page

Tomorrow's Markets

(Walter Whyte Says)

Washington and You—

Hoving Corp.
Twire

Weekly

COMMERCIAL

Drapers'. Gardens,

land,

and

CHRONICLE

FINANCIAL
U.

Edwards

c/o

'Thursday, December 27,

corporation

Chicago

HAnover

50 Congress Street,

Teletype—NY 1-5
-

*•

Chicago* '*-

Boston 8

111.
15.

Glens Falls

etc.).

135

(TelcDhone:

Schenectady

Worcester

;

Salle

St.,

STate 2-0613):

WILLIAM

DANA

Editor & Publisher

SL1BERT, President

RIGGS,

Business

Manager

Eng¬

Stromberg-Carison

Dana

Subscription
Subscriptions

office

Act

Possessions,

Territories
Union,

Dominion

Canada,

Other

Other
Bank

and

$30.00 per year.

Note—On
the

rate

Members

and

year;

per

$48.00
per

per

account

—

Monthly,

made

New

York

THEODORE YOUNG & CO.
40

Exchange Place, New York

fluctuations In

remittances for for¬

eign subscriptions and advertisements must
be

year.

Record
the

Bought—Sold—Quoted

year.

(Foreign postage extra.)

exchange,

Works

Publications

Quotation

Whitin Machine

New

States,

$45.00

$52.00

Countries,

March

Rates.

United

Febru¬

matter

post

the

;

PAN'A COMPANY, Publishers

Park Place. New York 7. N. Y.
REcloj 2-S570 to S57G

C, WILLIAM

the

under

Pan-American

South

HERBERT P. SEIBEKT.

■

Y.,

1879.

—

Hubbard 2-8200

2-4300

city news,
Offices:

WILLIAM

Members Hew York Curb Exchange

York A

and

Other

by William

second-class

1942,

every

statistical Issue

records,

Spencer Trask & Co.

and

issue)

news and ad¬
Monday (com¬
market quotation
news, bank clearings,

(general

Thursday

Every

vertising

state

York Stock txchange

25,

York,

plete

C.,

Smith.

Company

ary

1951

London,

1951

Patent Office

PREFERRED STOCKS

Broad Street, New

Di-Noc
.

Members -New

Dictograph

Reentered

—

The State of Trade and Industry

importance to all of

1951.

I Like

Security

reflec¬

High Grade Public Utility and Industrial

Albany

Baker-Raulang

*25

.r,

Securities Now in Registration

Reg.

•

Air Products

by the deep¬

coats

this

The

PL, N. Y. 5

Offerings

40 Exchange

Teletype NY 1-1825 & NY 1-1826

Public Utility Securities

strange con¬

interested in offerings of

are

Governments

Security

Published

Report.

wrung
c a n

The question as to whether taxquestion,
may
be," eaters, or producers, will control
the future of this country is of
I

by
Dr.
Rodgers at a
Cincinnati. Association or

MACKIE, Inc.

HA-2-0270

Producers

vs.

The bureaucratic attacks on busi-

collapsed!

___

all

picture could hardly be more
rosy.
As you will know, some
organizations will fall by the way¬
side no matter high the level of

Corp.

Canadian Superior Oil

Mutual Funds

and Research

Activity.,

Business

*■:

Associated Development

being

Los

Regular Features
As We

„

-is

and

This

•

y&rt:

Teletype NY 1-3370

Moulton

Direct Wires

has

Broadway, New York 6

BO 9-5133

IIow

(Editorial)—
of dissemination Washington bias in favor of gov¬
demonstrate the dif¬ ernmental development of power
Bank and Insurance Stocks._J
ficulty of keeping one's feet on resources will have even more
\
*«■■■
:
■
,
the ground and head in the air- ejfect in the future unless it is
instead of the opposite!
.
For ex¬ countered by public opinion.
Canadian Securities
4Public housing is still another
ample, "after
months of- much
vaunted air supremacy in Korea, issue which grows in importance, ^Dealer-Broker Investment Recommendations.
war or rearmament notwithstand¬
we are now urged to believe that
As was so greatly empna-,
despite the billions and billions ing.
Einzig—"No Upward Revaluation of Sterling"
spent for the Air Force, all we sized at the convention of the real
have
is
a
few
planes
which estate fraternity here in Cincin¬ r From Washington Ahead of the News—Carlisle Bargeron
wouldn't even
have been
good nati last month, private housing is
believe?"

will

J. F. Reilly & Co.
Incorporated

the economic evolution of

parts of this country.

many

Pipe Line

Your Business—Beardsley Ruml

Defense, Taxes and

but
still
very
much
alive, is that of so-called "public

ence

——

long

eco¬

illustration

"What

'-.V

T ranscontinental

Financing

What Is It, and Why?—Robert Van Cleave—--13

Devaluation;

trends.

basic

life and the pleas

halls.

legislative

Witherspoon

Rights and Duties of Stockholders—Lewis D. Gilbert

power" as opposed to private de¬
velopment of electric facilities.
and wails which rend the ether, The resulting public policy has
clutter the newspapers and fog already had a controlling influ¬

discrepancies
nomic

Price Trend—William

Factors in Bond

consequently, international devel¬
opments should be followed very
carefully for clues to domestic
Another

;:7 '

—

Time, Inc.

isolation¬

versus

•

have

standing,

been

there

have

Never

political sphere,

WHitehall 4-6551

Tennessee Gas

well

As these change in relative
strength,
the economy is both
directly and indirectly affected.
In the months ahead, internation¬
alism will be in the ascendancy;

world;

Dept.

NEW YORK

American Marietta

ism.

necessity to

fast!'

—S. H. Nerlove

internationalism

propa¬

Securities

Telephone:

Wainwright

'•

-"v

In the

ganda became

but

for good cash!

Principles in Municipal Financing

.„—Townsend

conflicts which condition our lives

made

was

—

'•

pressures.

Basic Conflicts
What

observa¬

'em

WALL STREET,

that

obsoletes

•

Securities and Security—Max Winkler

powerful,

And

your

V.J.V—Sen.

that

derstands

sta¬

tistics!"

YEAR'S

they will be far better if he un¬

damned
and

v-.; \*-v v."■

•

1952—Anticipation and Vaticination—Ira U. Cobleigh

of -lies:

lies

'■•••

time

of fortuitous circumstance, as

"There

are

•

••

once

Cover

We'll exchange

basic conflicts in our
English' economy today, and that the rela¬
tive positions of these contending
•
forces vary widely with the winds

judgments based

The famous

statesme ri~

Conflicts
..

for action and decision is here.
is

•

Warns, in these opposing forces,

facts must be distinguished from

unfair trade and other

vs.

Basic

encroachments; and, finally, the conflict between the Federal,
Reserve and the Treasury.

AND COMPANY

NEW
\* .'• *

against

Why Our Money Supply Increased—L. Sumner Pruyne

private housing;. X4) "tax-eaters" vs. income producers; (5)
inflation vs. deflation; (6) rearmament;goods production vs.

;

••

isolationism; (2) "public power"
y

"•

page

Business and Financial Outlook in 1952—Roger W. Babson„Cover

discussed by Dr. Rodgers

economy

vs.

Articles and News

University

York

Among basic conflicts in the

(2507)

fund*.

WHitehall 4-2250

Teletype NY

R. Y.

The Commercial and Financial Chronicle

(2508)

Thursday, December 27, 1951

...

lective bargaining has

already be¬
largely mythical, with all
the big disputes chronically wind¬
ing up on the President's grand

1952—Anticipation
And Vaticination

piano—and every settlement ap¬
parently dictated more by political

almost
You

of the

season

yon are

traditionally prolific with prophecy,

year

imaginative capsuled conjecture about
everything from general conditions to Gen. Eisenhower
offered today
it

know

would

moment

start off today's fantasy

easy

with

such

titles

standard

Look Ahead"

you

but

—

in helicopter size and pro¬

surge

Piesecki

'52,"

Sikorsky and
leading producers.

are

Throughout

Economist describes collapse of
monetary systems in

Europe
concluding that the dollar, because of our large
favorable trade balance, vast resources and
self-sufficiency,
and absence of
foreign debt, faces no similar prospects.
Regarding stock price outlook, maintains although market is
high by historical criteria, it is still lagging behind last decade's

decade,

last

the

rise in the economy.

probably the most unreal prices
in this whole

baffling world, have
Shortly before World War I, two
been those of money and gold.
investors, subjects of and residing
Well, 1951 started what you will in Imperial
Germany, purchased
see
carried
on
importantly
in each 1,000 marks worth of se¬
1952
a
boost in the price of curities.
—

Taft

havetoget

hearing
all
those, ChristCarols

mas

in Latin

sung

nothing will do
but

entitle

this

forward

look,

us¬

ing two words

Eisenhower

vs.

About

must con¬
template frankly the abuses that
stem from one political party re¬
politics,

in power for

maining

score

years. Surely my province does
not lie in excoriating the Caudles,
the

camaraderie

Internal

the

deep freezes,

the

minks,

callous

few

and

collectors

Revenue

of their

quarries. If the sear¬
snatched al¬
ing
blowtorch of publicity
is
most
bodily played on this political scene,
from the pages
however, it
may
well be that
Ira U. Cobleigh
of Virgil; and
trustworthy Taft, will by Novem¬
instead of say¬
ber, emerge as the champion of
ing "Look" at my predictions of government
with
honor
and
things to come, I classically urge honesty. Perhaps then, integrity
and
you to "ecce," a word somebody
intelligence will be more
told me means "behold."
highly esteemed by the electorate,
Well then, behold 1952; a final than politically induced in action.
departure
from
all
that mid- In that event, Robert Taft, who,
hullaballoo stuff; and a
rude dousing into the icy waters

century

of peace and preparedness
and

politics

plums, petroleum and Petro-

grad, prices and Peron, production
and profit, pelf and pelts (mink
that is) through which we may

some

for

than

hower

reputed

assured

than

military

allies

defensive

Europe. The
waging a brutal
and ominous aggression in Korea,
even
though thousands of miles
Russians, while

their

nearer
we

supply sources than
have failed to penetrate

are,

basic

our

eager for

seem

defenses.

They

truce that will

not disgrace them in the

eyes

their Chinese pink allies, who no
doubt expected stouter support,
and

the

Muscovite

shown.

strategic

There

success,

malefactors
will

World

War III in 1952. There may, how¬

ever,

period

mourning
within Russia over the passing
(presumably from natural causes)
a

of the most famous bank robber of

all time, and the propagator
Commie Rot; Stalin.
-!

Assuming the termination of
Korean fighting, our total arma¬
ment

production will not be

duced.

rapidly with standardized
bly-line
production
of
planes
event

or
we

greater

re¬

not go ahead

may

artillery;

assem¬

tanks,
in that

but
would surely continue
pace

our

all. the musicians
the Taft band¬
may be left to blow
on

research

develop the most effective fightprototypes
of
every
sort.

1951 by roughly 6%
will lead butter as the
major goal of our economy. But
the line may not actually be so
sharplydrawn as in 1951. Remem¬
and

guns

ber last

January. Rubber with al¬
leged inelastic supply, and steel

getting
picnic.

plentiful

pickles at

year

in production; but new taxes

and

the

missies

can

ready

made

be bettered in

vital

changes in
cjnd warfare by use of helicopters.
These whirling transports perform
a
.

jjsacred

wift

mission

return

providing

wounded

from

battlefield; as against agonizing
jilting journeys formerly requir¬
ing

hours

ambulance

over

bpmb torn roads. On the offense,
hjelicopters provide new tactical
mobility. Effective troop elements
can be moved
rapidly into fighting
areas in low
flying 'copters, with¬

out being sitting duck targets like
paratroopers; and they become in¬

New York

3%.

this past week

rose

The

his

money

be more, generous.

era

vestment

For instance; New York State
savings banks will emerge with a
2*4 % rate on deposits, nudged
perhaps up to 2 V2 % by the year
end; and incidentally they, too,
will be buyers of top-flight com¬
mon stocks by Labor Day.

Higher Gold Price Forecast
I mentioned gold. It's Jbeen hogtied to $35 an ounce officially

since 1934. Well,.this year some¬

body is
You'll

goirtgT to slip. the knot.

ing,

were

for

won't have
labor

bite

real short

are

sure

trust
con

and

legal

funds,
Dr.

Max Winkler

maybe

were

likely

you

year

and

Superior

make

highs

new

Superior at
a

Oil.

even

Both

should

with

1952,

money

to cross

conservative

less

entrenched

electric

These

also

were

grand.

income

and

company.

available

counted

was

lions, it was

par

year

1923,

mind,

discount

net

1951

after

taxes by
your

7%, and you're gearing
1952 estimates not far from

reality.

half

when

the

had

mark

declared

dividend

one

About

"laboristic"
own,

and

still

have

rest

economy—out for its

devil

take

the

future,

and everyone else. So here add

$1
day to the base price of labor
steel, rubber, manufacturing,
railroads, buses, and you can
a

calculate

the

new

inflationary

attempt to foretell

doings of next

Also, is it

year.

shall return to those ideals of

integrity, industry, and belief and
trust in

religious guidance of

lives, that have made
try great? Once there

our
was

our

coun¬
a

man

pluses which will be added to the

in the White House called Honest

price of everything

Abe. Happy New Year!

you

buy. Col¬

I
-l

the

trend

•

does
as

about

power

decade

to have been arrested

the

and
not

seem

yet. How¬

ever; it is safe to state that the
fate of the dollar is definitely^iiot
like that of the

cies to

which

made.

The

eign debt,

European

reference

absence

curren¬

has

vastness

the

sources,

been

our

re¬

for¬
large favorable trade
well as relative selfany

balance, as
sufficiency justify this view.
Excessive

Spending

What is it that makes for infla¬

tionary

processes

existence

these

spite of the

factors, which

are
admittedly strong enough ef¬
fectively to combat inflation?

You will recall the advice given
by Mr. Micawber to David Copperfield, in Charles Dickens' novel
of the

same

name:

"Annual income, twenty pounds;
annual
expenditure; 'nineteen

nineteen six; result happiness.
"Annual income twenty pounds;

Continued

page

Since 1932 Specialists in

VIRGINIA—WEST VIRGINIA
NORTH and SOUTH

hundred

CAROLINA
MUNICIPAL BONDS

■F.W.-

CRAIGIE&CO.
RICHMOND, VIRGINIA
Bell System Teletype: RH 83 & 84

Telephone 3-9137

the

world

for

foodstuffs

Established

Members
New

been

Exchange

Curb

Exchange

York

Chicago
New

succession states. Rumania, Bul¬
garia, Greece, Yugoslavia, Italy,
France, and, to a lesser degree,
England. Why the monetary sys-

Dinner

Meetinsr

Cotton

other

N. Y. Cotton

Inc.
Trade

Exchange

Exchanges

Exchange Bldg.

NEW YORK 4, N.
CHICAGO

Board

Orleans

And

Exchange

Exchange,

war.

Russia, Austria-Hungary and the

♦Address

Cotton

Commodity

What

had

Stock

York

New
..

which

York

New

Wars and Inflation

tries

1856

H. Hentz & Co.

happened
in
Germany
too much to hope, for 1952, that happened in most European coun¬
we

lost

has

last

if I call it."

the

labor

for

purchasing

the

downward

its

monetary reserve, her oversea?
investments, her merchant marine
edged dean of baseball umpires, her colonies, her markets, and
immortalized the phrase, "It ain't portions of her continental terri¬
nothin' till I call it."
Well
to tory. She was dependent upon the

protect
income

reasons

dollar
its

within

convertible preferred at 74.
The late Bill Klem, acknowl¬

trends, in

and

reached its lowest point, the com¬
common

"It ain't nothin'

the

sure,

Frankly, however, it's and raw materials for which she
been a lot of fun to apply a few could pay only with the aid of
wisps of logic and perception of the printing press.

your

one

mil¬

paraphrase that,

can

investments

uation of the situation will afford

now

companies

come

the

against further depreciation?
>
In order intelligently to answer
these questions, it is necessary to

running in the
trillions and quadrillions. For the

pany

For others that

mark,

abundant proof that there is
willing to assume a slight
risk, selected the shares of a well justification for such fear. To

rate

cost

the

going -to

the

hence

hence. Don't forget TXL, however,

appre¬

available

notebook

your

at prevailing fear over the fate of the
American dollar. A careful eval¬
to yield 3J/2%. The other,

and

$45 an ounce; ■. prrd~
;pafd about 5% annual divi¬
if actual produc- <
dends.;';^ '
.
tion costs are taken into accounts
less than nine .years, the
"There's gold in them thar hills'1"
Gernian mark, the monetary unit
and more of it will be brought out
of the country, had deteriorated to
if the price is right! So jot down
one-thousand-billionth of its 1913
and

what

understand

col¬

at least

see

are

future

part

drastic, how much in pur¬
power is it going to lose

one's

and

about par
somewhat

the

crown, the franc or the
the decline will not be

chasing

stituted

lateral,

the

fate

quite

rat¬

excellent

those who

over

the

degree

dollar. -Is

lira?

louse up profits. Take the top 20

that

can

ruble, the

savings

banks

are

them

is. ment, which
over, so look for higher interest
had,
within
(and lower bond prices) in 1952, the country,
and expect savings institutions to
.the highest in¬
easy

resultant

American

govern¬

might stage ad¬
billion per cent! Even though in
so
scarce
that
the
government vances, quitq unrelated
tp the gen¬
real
threatened to essay production, eral market
money
the distribution
trend, gather ye the
Well
what
happened?
Rubber, latest information about Molyb¬ amounted to only 25 cents (U. S.).
it was almost 30 thousand million
synthetic and natural, came denum
Corp.; International Min¬
bounding into supply. Ditto steel! erals, now 39, Chicago and North¬ times as large as was received by
his more conservative fellow in¬
Why right now, we have steel western now
16, Zenith at 69, Soo
vestor.
production 20% above peak out¬ common at
18, Alexander Smith
The above is not fiction. It has
put of 1945 and there is tech¬ at 1514 and for plump cash yields
nically no more of a shortage ponder over income rail bonds actually occurred in Germany af¬
here than of jokes about Sinatra. like
ter the First World War, in which
Soo, Northwestern and Cen¬
Copper is scarce, but aluminum tral of Georgia, plus Denver $5 Germany was defeated, lost her

.<jorean air warfare showed the
nped to improve our jets; our
a

There

guided

hensive

the

and

I ng

r.ceuracy and range, and we have

resources

others,

by the nature of the
of the countries in ques¬

of the rest of the world.

will exceed

heads; plus the important military
our

sure

moves

explained

confidence

than

some

because of our own ex¬
panded output of military hard¬
ware, our bigger supply of lethal
atom bombs, and our development
of guided missiles and atomic war¬
of

than

greater

was

tion

now

have

for

years,

coordination

nomination. And unless he

collapsed and why the extent
collapse in some countries

4%, we've hit the 2%% marker lected the
ourselves, and bank loan money 3V2% bonds of

are

Homestake, value. Interest on the 3V2% bonds
wagon, no one
Dome Mines, Frobisher. These will
continued to be paid promptly at
his horn. Coyness and club-house
be rewarding equities if the offi¬
the stipulated rate.' The conserva¬
politics have seldom merged, so cial gold rate
glides upward, as I tive owner of a
1,000-mark bond
unless the five star general puts
expect in 1952.
was receiving 35 marks a year, the
his show on the road, his star
same amount he had received nine
»Stock Market Outlook
may never ascend. Thus, for 1952,
years earlier. The rate of interest
I predict that all Taft has tOjdo
About the market, there being
was fixed and the virtually com¬
is to select a popular and effec¬
no great shortages anywhere' (ex¬
plete collapse of the currency
tive running mate, and he has a
cept
perhaps
of
ability)
and
simply destroyed the value of the
good chance to enjoy the $5 mil¬
profits being of a lower order,
money due on the bond—and, of
lion improvements in the White
1952 should
not
be a year for
course, all other fixed-income
House. Taft and Warren, Taft and
roaring
bulls.
Prospects
more
bearing securities.
Stassen or—don't gasp—Taft and
favor hitting 225 than 300 on the
The less conservative investor
Senator Lodge could return Tru¬
Dow-Jones
scorecard.
Oils
and
in the shares of a well established
man to the foulard department. So
chemicals
may
again
supply
it's Taft and who in '52.
corporation fared much better.
leadership. Of the American oils,
Since the enterprise was manu¬
Pure, S k e 11 y
Socony-Vaeuum
High Industrial Production in
facturing and selling its products,
seem most
favorably priced; and
1952
the price of the latter rose in re¬
of the Canadians, Imperial, Brit¬
lation to the fall in the value of
Some
augury
was
suggested ish American, Calgary and Ed¬
the money realized from the sale.
about production and profit—so
monton, Canadian Superior, and
While before the war, the corpo¬
here goes. Gross national product National
Petroleum
seem
most

Clearly the possibility of peace
more

pa¬

winner, he can't win without the

now

Peace Assured for Many Years

decade, has

tiently waited in the wings of the
Republican theater, may go front
and center. So, although Eisen¬

quickly, with
climbing

swim in the next 12 months.

One,

terns

of the

Canadian long-term rates the more con¬
well above 3%, London
servative of
long-term bonds have sold to yield the two, •se¬
money.

fancy. After

Security

WINKLER*

after war,

Era Ended

Money

Easy

the
big

duction in 1952. Bell,

"What Cooks for

ready
for
battle,
they land. Look for

stantly

been

have

DR. MAX

Partner, Bernard, Winkler & Co., Members, N. Y. Stock
Exchange

Frankly, short of depression or
at least, a rugged recession, the
price of labor in 1952—or any
other year—is indefinitely up.

Your Income"

"Expanding

considerations.

economic

than

By IRA U. COBLEIGH
Author of

Securities and

come

DETROIT

PITTSBURGH

Uni¬

versity Club, before Syracuse Dental So¬
on Dec. 11, Syracuse, N. Y».....

GENEVA,

SWITZERLAND

ciety

•

'i;

•

..v

Volume 174

Number 5076

The Commercial and Financial Chronicle

jf"

(2509)

Breyer to Manage

r
Steel

The

Production

Dept. at Cohu & Go.

Electric Output

Carloadings
Retail

State of Trade

Commodity Price. Index
Food

Price

Auto

and

Arthur

Trade

Industry

Index

York

New

Production

New

part¬

By A. WILFRED MAY

City, members of the
Stock

York

taking

1 Wall Street,

Exchange,

management

is
of

Department

Business Failures

the

Jr.,

Breyer,

of Cohu & Co.,

ner

the

over

Mutual

Fund

The Investment

for

of Jan. 1.

Company

Solution

Committee-Investing Difficulties

The

industrial

Total

for

output

the country

large

showed

D. 0. Walker Partner

slight increase the past week as many plants stepped up their pace
to meet the challenge of defense requirements.
In the aggregate,
output held moderately above the level of 1950.
On the employ¬
ment front layoffs continued to affect some parts of New England
the past week.
New record highs were set in both steel and
electric power production a week ago.
®®®c;

The steel mills added

over

ited

Even

short

shutdown would

steel

havoc

cause

all

the

programming of the government.
Loss of even a
week's production would total more than 2,000,000 tons of steel
ingots, and all chance of early stability in the Controlled Mate- ®
rials Plan would be lost.; Market emphasis would shift to worth¬
production

less CMP tickets which would create

this trade paper states.
The

multitude of hardship cases,

(Special to The Financial ChbOnxcle)

The main hope for steel peace was

that

Dec. 31

win

could

based

there

although

"satisfactory"

Rollins -&

Co.,

H. L.

shuffle.

;

Incorporated,,-in
„

urgent national

hardly a
before the

deadline, it was expected the workers would respond to a
plea from the White House.
None of the parties

could afford the responsibility for a long

months.

and

tieup of steel production,

points out.
bSrs

These

ing industries

are

bound

t--

.-.-J ■

♦

V-

...

(Special to The Financial Chronicle)

LOS

ANGELES, Calif.—Harold

L. Logsdon has become associated
Hutton & Company,
Spring Street. In the
past he was in the trading de¬
partment of Bingham, Walter &
Hurry.

with
623

South

taking the biggest bites.

No letup in demand for

these best sellers is anticipated in the foreseeable future,

this trade

authority observes.
Need for scrap is desperate.

exhausted

their

stocks

Early this week

own

and

were

of 1952.

ice which have gripped major steelmaking

Cold, snow and
50%.

Mills

past two weeks reduced

some

collections

working blast furnaces to the limit in

than

effort to
replace as much scrap as possible with hot metal charge in their
open hearths, concludes "The Iron Age."
are

Bad weather conditions caused
to

Charles Clark, Jr. Is

about 7%

drop

Winslow,
120

according
year ago,

"Ward's

production

Automotive

was

off

with

the

previous week,
Compared with a

Reports."

Several

completing 1951 model

the current week, the
cause

cars

programs

last week by

the

agency

October,

"Ward's."

added.

Reduced Ford

output

was

of declined truck production.

Lincoln, which had
late

York

Stock

resumed

been

formerly

with

Scott & Co. of Philadelphia.

ery,

the

model

past

changeover

week,

since

according

Continued

page

Difficulties4

■

Doherty Roadhouse
Reynolds & Co., 120 Broadway,
York

New

York

nounce

Co.,

City, members of the
Stock Exchange, an¬
that Doherty Roadhouse
become the
and a mem¬
Reynolds' expanding

Toronto,

has

firm's correspondent
ber

wire

the

In making the an¬

system.

nouncement, Reynolds & Co. said
establishment

"the

this

connection reflects the grow¬

new

ing American interest in Canadian
markets and securities."

;
'

•:

•

HAS BEEN ADMITTED AS A

once-and-for-all
a

vast

investigation,

amount

discussion

investment

and

commitment to

coverage

constructive

Being

over

affiliated

become

these

zations,

228

libraries and

use

attributes

of investment company

joint

homes and hospitals, 147 schools and colleges, 60 ,
154 other charities. National Investors Corporations

(another open-end fund) is presently held by 23 religious organiza-®

tions,

12 schools and colleges, 13 homes, foundations and other,
organizations, and five sanitarium and hospital funds.
Street Investing Corporation is held
by 6 schools and :

charitable
Broad

colleges, 25 religious organizations, 11 societies and
8 charitable organizations and homes.

associations,

and

Opportunities in the Closed-Ends ;
In

with

contrast

widespread

such

7-T"

Members Netv York Stock

Exchange

FOURTH AND OLIVE
CEntral 5585

•

Effective November 1, 1951

pleased to

announce

that

:'YY
JOHN

firm name
of Benton & Nicholas,
11 Wall
Street, New York City, members

be changed

COMAN

will be admitted

of this firm

to Benton & Co.

Partner

of January

2, 1952

Herbert

Fransioli,

-•

To Be Wilson & Creem

®.

member

of the New York Stock Exchange,

will

retire

from -partnership

C. J. DEVINE& CO

Fransioli & Wilson, 50 Broadway,
New

SAINT LOUIS

are

York

Dec. 31, and
effective Jan. 1, the firm will be
known

City,

Wilson & Creem.

Robert Wilson and John J. Creem,
Jr.

are

exchange members.

48 Wall

Both

is-

«.4

adoption of the open-end
Continued on page 39

formerly with Minot, Kendall

will

very

management to .
responsibility which obstruct,
ordered portfolio management, is already becoming recognized/
as
evidenced
by ownership of open-end funds.
While exact/,
detailing of institutional ownership of fund shares is unavail-4
able, it is apparent that it is growing.
For example, the ;;
Massachusetts .Investors Trust is held by 367 religious organ!-,
The

of the New York Stock Exchange,

Newhard, Cook

the

Used

Effective Jan. 1, the

LIMITED PARTNER OF THE FIRM

coming these difficulties. It has the basic procedural advantage ■/'
toward simplification of all trustee problems by requiring only

To Be Benton & Co.
;

•

B's

(Special to The Financial Chronicle)

was

precisely the same investing ability, A will do
capital than with his own, because of greater
freedom from subjective emotional obstacles.
The investment company can go a long way toward overB

with

With du Pont, Homsey

& Co.

MR. 0. D. WALKER

•

have

vidual

better

Reynolds Wire to

has

;

Additionally, as with all investors, with institutional managers
also, there is the psychological disadvantage of emotional inter- ;
ference
with objective judgment arising from
involvement r
in one's own decisions.
Even though individual A and indi- -

Open-End Funds Already

Pont, Homsey & Company, 31 Milk
Street, members of the New York
and Boston Stock Exchanges.
He

ANNOUNCING

difficulties of joint management more

BOSTON, Mass.—John S. Nesbit

WE TAKE PLEASURE IN

weather,"

long term.

Mercury, however, down for changeover since Dec. 12,

is not expected to return to volume production until Jan. 2 or later.

day last week, was postponed

one

interfering with the optimum in investing decisions here is the
desire to be an agreeable fellow and opinion log-rolling.
In addition to Blue Chip-itis and window-dressing in the
selection of issues, there also results general following of the lines
of least resistance including unwillingness to "buck" the prevalent
market climate of the moment.
The individual is more prone to.v,
"Stick his neck out" if left on his own and responsible only to, ,

provide

that

down for

production

was

the New York office of Montgom¬

New
new

General Motors

weather and "other factors" and have postponed the wind up until

the

McEvoy,
City,

York

New

largely have psy-: >
chological roots. The strong tendency toward Blue Chip-itis and ?
window-dressing which affects all handlers of other people's
money,
is even greater in the case of committee members®.,
subject to continued checking on each other's results and to re- k
ciprocal recrimination—or even to mere guilty conscience.
Also,,,

meet

out-of-state Buick-Oldsmobile-Pontiac assembly plants were pre¬
from

Clark

than 33%.

jammed factory storage facilities.

vented

New

Clark, Jr. has become associ¬
Mr.

heavy snows bogged down dealer "drive-aways" of

and

of the

ated with that firm.

"Ward's" said Chrysler had slight output losses the past week
as

Douglas

Broadway,

members

output in the United States

car

last week compared

because

himself®

With Winslow, Douglas

Exchange, announced that Charles

centers for the

***

mills had

some

operating with borrowed
They had promised to repay the loan in the first quarter

scrap.

tight supply for many
the products from which defense and support¬
are

partly

YYYY®

;

The Psychologically-Rooted

Regardless of what results from wage mediation efforts, plates,
structural

Logsdon With

E. F. Hutton & Go.

seemed

contract

and /pursuant

policies."

institution scheduled to be held

The

the

procedural
difficulties; such as infrequency of meetings,
unwieldiness in caucusing for majority decia. Wilfred May
sions between meetings, and tendency toward
® '
brevity of meetings when they do take place. A meeting of the
investment committee of an important New York City educational ;

was

Boston. office.

and/ balance,

investment

This

"Corporation, 75

Mr. Norwood

system

scientific

for 10 days because of "inclement

back-to-work

"The Iron Age"

Securities

charge of their

Union strategy had committed it to a mandatory policy of

chance

formerly Vice-President of Blair

■

And,

Federal Street.

rescheduling job would be terrific—for mills and govern¬
And many customers who thought they were safely

"no-contract-no-work."

•

^®Yi' •;' a'%Y®:®^/ Y;''^

® ...,..®

mill schedules would find themselves caught in the

need.

BOS.TON, Mass;—John K.; Nor¬
wood has become associated with

ment alike.
on

with

Union

the

Union Securities

wholly outside
inflation and

including fofmal trusteeship.
Anyone hav¬
ing serv e d on an investment committee
charged with ® managing an educational or
philanthropic institution's. fund must realize
that it is- well-nigh impossible for the members,
no matter how expert and conscientious they
may. be as individuals, to "manage the portfolio

partnership in their firm.

They are both psy¬
chological and administrative, and apply to
the committee set-up in its various forms,

the

announced

lie

exigencies

decline in interest rates.

John Norwood With

turmoil,

„

have

difficulties

well-known

admission of D. D. Walker to lim¬

weekly.

si®

These

Newhard,
and Olive,

—

Co.,

Exchange,

j- JJariy this week strike fear had turned the steel market into

a
according to "The Iron Age," national nietalworking f
Near-hysterical efforts of consumers to get "quick" steel i
reflected their uncertainty- Of future supply.
The rush for steel
was.made more urgent by.the prospects of a steel strike scheduled
to take place on Jan. I.
Another strike hedge was seen in renewal *
of interest- in premium-priced metal.
•

Mo.

Fourth
members of the New York Stock

Output for the year is
new all-time record.

LOUIS,

Cook

2,090,000 tons to their 1951 output,

expected to top 105,145,000 net tons for

investment

In Newhard, Cook
,ST.

eclipsing the previous weekly high output rate of 2,089,000 tons
established in the week ended Nov. 4;

currently growing ramifications and complexities of the
community highlight the advantages of using the
company as an instrument for overcoming the con¬
tinuing difficulties obstructing "committee administration" of in¬
vestment portfolios.
investment

Street, New York 5, N. Y.

;

The Commercial and Financial Chronicle

(2510)

...

Thursdays December 27, 1951

matic, and

Bigness in Government—
«
y
Our Greatest Danger

I think

tning

when

the

spending and concentration of

govern¬

and functions in

powers

budgetary system and calls present
Advocates crusade to make
citizens realize bigness in government spells higher taxes,
and recommends adoption of a single-package budget. Wants
Congress given adequate machinery to work with.

have

always

out

gotten

great

Thoreau, the Americari philosopher who carried on
so

many

along the edge of

years

count noses on
Banking Committee

prove

dislocation

''being

read about his

problem.

every

while

once

and

about

his

canny

instinct

for

un¬

dipping his

hand

iV'-K

observations

he made in the

Everett

M. Dirksen

over

industry, the ,.ucuu\», w
....JHJ .
other industry of which I can

think

and

at least.

answers,

years,

served

the

Banking

other

tween

think

the

available

increase

think

this

inflation

significance

the

business

spending. We say, of course, so
long as government and individ¬
uals

are

going to

spending dollars
_4_.3

„

pour

many

into the economic
..

blood streamv of the
country, you
are

going to have this inflationary

*From
before

the

address

Life

Senator Dirksen

Insurance

Association

America, New York City, Dec. 11,

1951.

House

lawmakers,

imposing too>

many,

great

who

burden

...

the
;

"Mr. 'Wilson,

make

t^ltnd out, and/so,
the boss an
and do not

are

that

fact

over

before

5,000

your

there

cases pendStabilization

Board at the present

time,"

"Well," he said, "if

you

may

set in.

upon,

That's

so,

said, "Now, is it

fair assump-

tion that most if not all of tnose
cases will be approved?"
He said, "I presume so."
I
said, "When they are ap¬
proved, what happens?
It means,
of course, that the farmer who
has to buy things under/a parity

other

thing,

of course,' is
always has in mind

Congress is mindful of it.
hand, if taxes

are

Hpfipif

HPliof

hoTe

and

T™

can covei it with

{

nrec

sefe

hote

von

?ert

u'n

cally set

nrW

fffitTSlSr
tive

they

be"in

and*

economy,
that prices
An
i;u

th.

are

that

kirk
simnlv

kirkpH

ira

the'

means

.5/

iu I
cour®e>ls a S°od deal
* ±ar™er down m Georgia
if ?
a moto.rist out of
ho1®- Tke ^otorist handed
*

nim

and

I said, "And that, in turn, will

1 said, "Then, what you have
really done is to have created an
automatic
inflation engirib arid
you

have lost control."

His

final
AXIS llildi

The best

answer
ctlXSiWCI

exPect

was,
Wcifij

control
can

"We
YV C

canUctU"

inflation.
is to slow

So' there we arc today in this
inflation picture, as all eyes are
fastened upon the real culprit,
namely, spending in government,
But. I wonder if it has ever occurred to y°u. as we think of
sPending as a cause, that possibly
spending can also be an effect?
It is one thing that isn't ventilated very much, and so I want to
take a few minutes just to discuss
spending as an effect rather than
as a cause.

;..

conversation, he sa'd,
do this day and night?"

"Do
;

The farmer said,
"No, we don't,

One

the

that

factors,

"Well, what do
He

said, "At night
filling up that mud

do at night?"
we

are

busy

hole again."
So it is one of those
roundabout
spiral affairs that become auto-

cause,

the

Southern

Old

occurs

snobbishness

that there has been a

the

Congressional

in¬

would

request off, is, I am convinced,

Carlisle

Bargeron

something they can't understand.

this befall me, they keep asking themselves, and I
think I can understand their feeling. '•••:•
They wonder, and I do, too, why Mr. Truman is looking down
his nose at their associates, the fellows they went this and that
Why would

place with, the fellows from whom

they received relatively little

presents.1 Why, their type constitutes the backbone
In fact, Messrs. Caudle and Oliphant must have
been impressed by the relative genteelness of the group they
associated with because, although they talk out of.the side of their
mouth and murder the King's English, they do carry their liquor
picayunish

of the Fair Deal.

is an unusual attribute for the adherents here in
of the "great liberal" movement.
Oldtime Wash¬
ington hostesses were fairly showered .with canape from the
sputtering mouths of the early batch of Liberals to arrive here,
but they have long since become immune, or rather, a new group
of hostesses, to fit the times, has sprung up. I recall an earlier
high official of the Justice Department who invariably became
embarrassingly partly dressed after he had had a few cocktails,
and unrestrainedly bold in his approach-to women. That fellow
which

well,

to even higher places, and his hostesses are still putting
With "him because he has "influence" in Washington.

has gone on
up

the

mannered

Federal power.
Federal power
£rows> and especially so in times
of moral confusion, such as obtain
at the Present timeContinued

Let's look
on

page

mis¬

became too companionable with to be mild
of letters, values and appearances having shifted

men

around here in recent years.
We have been told repeatedly, and indeed we now know, that

have

government of and for the common man. Are the under¬

lings in the great Common Man movement to be common by day
and at night sneak off. and seek the companionship oL,the Union

Are they expected to- be Dr. Jekyl and Mr. Hyde's,
their commonness only a sham, or are they to be the

League Club?
to speak,

genuine common thing, day and night?
What sort of
helpmates, now, would

•-'•

"•

and

Caudle

Messrs.

Oliphant have been to Mr. Truman had they shunned the associa¬
tion of such Truman admirers, such "Liberals," as Nathan and
Naster and Henry the Dutchman?
It strikes me that had they

they did they would have been guilty of
chief, just as does the tony wife who won't
accept her ambitious husband's rough associates.
Much to do is made by Democratic Congressman King, head
of the tax investigating committee, that Charlie Oliphant, who
never had a job in his life except with the government and who
otherwise

done

undermining

than

their

had become

general counsel for the Internal Revenue Department,
up prosecution of a tax fraud case too long, because
Congressman Morrison of Louisana insisted he wanted to talk
that he held

with him about it first.

Now, what nonsense, Congressman King!
a
"supporter" of the Administration.

Your colleague has

been

He has voted for
wanted, wars, controls, more money,
whatnot. Don't you suppose he has something coming to him for
this great statesmanship? In the name of heavens, don't you think
this duly elected public stamp has something coming to him? He
has played bail With the Administration; the least he can expect
is that he will be played ball with in the matter of helping one
of his constituents in tax trouble. So help me goodness, a Con¬
everything

the

President

is supposed to have some influence in these days, of
overwhelming Bureaucracy! Just what purpose is he to serve?

gressman

Is he what you would call a bad associate of Mr. Oliphant's?
Frankly, when they come to talking about the associations of
men like Oliphant and Caudle, I think that is perfectly splendid
for the Republicans, but crocodile indignation on the part of Mr.
Truman and his propagandists. They have made, for a long time,
mockery of those who take daily baths and wear clean shirts and
undergarments, the stuffed shirts of Wall Street, the exploiters
of the poor, the "economic royalists," the men who are ignorantly
comfortable in their well upholstered clubs.,
,
,

These

people are enemies of progress, we are told, and
tainly they are enemies of the present ruling caste. Well,
can't
the

judgment
growth

understand that Messrs. Caudle and Oliphant even

ean

took the felloWs they

expect

warmth

them
of

their

issue

invitations to

well

stocked

dinner

clubs,

the

Caudles

cer¬
you

wrap

and

I?
;

in
the

Regardless of any predilection these latter might have,
seek companionship elsewhere. They have got
get it with the Nathans and the Nasters.
;
>
.

But it is my belief

S 3 and 1 only do this during SakeS spending an1 ®flect rather
ine aaythan
a

first

they have got to

Growth of Federal Power
course,

fellow

Oliphants.

being inclined toward

some

you

parity formula,
agricultural gauge of

not

covefhwi£

vou can

sev^^n?hu|'tfefis
h

the price level for commodities."
He said, "I suppose that is
right."

4iiof

ic?

anotherhLnvword S
the

so-called

kick up the living cost?"
It, therefore, has a;
He said, "That is an obvious
political implication, assumption."

taxes.

pcil]

this

which is

Caudle

with such

say

it must be so."
I

voice, at all.

prohibit his underlings running
people.
•
/
3 I accept the professed dismay of Caudle
and Oliphant over the experience they have
had.
That they find themselves out of jobs,,
Caudle by request, and Oliphant, to head such
which

the

this,

positions they should not have run with. Mr.
Truman, faced with a political problem here,
is understood to be coming up with a plan

„—

something
ing

Obviously, itimplications.
Cer—

are

said,

.since „
you are
— -

little reticent and

inadequate to the current spend¬
ing of government, there is a gap.

problem,

but I wonder whether we
go back
far enough.
We attach so much

the

this

affirmation

are

•

know, perhaps' I ought to refresh

inflationary

about

On the other

I hear it beat

■*■»

cases

before

pending

and

pro-

day after day

ears

too

many

youwith

tax burden upon the peo-

tremendous

^UJ-

the last 10 years.

economics, and

;

"How

that

made by Emerlong time ago, that of all
debts, people are least willing to

cor¬

I believe that it stands
up in the
face of orthodox
law, nearly everything I have learned in courses

into

said,

"That's - substantially

that

thing.

son

ductivity that matches the increase

write

Washington

in prices over,

wage

formula will have to pay a higher
price, and that in turn will kick

that

goods has probably
not^ increased over a 100%. So
that, roughly at least, there is a
rat)o
between
an
increase
in

and

Ih'.v<

theory

discovered

the

are a

that Congress

Our

years.

thpnhv

policy, and they do not want

The

be¬

consumer

figures

*vlww

He said,
correct."

preliminary

taxes,

years

there

put

one

consumer

money

new

industry where the law of dimin-

productivity, however, in the field
of

the

ishing returns

variety and the long green variety,
probably increased by 170-odd

percent in the last

have

political

solid

than

this

.about

the

kind of

that

tainly

has

"Under

be agreed upon?"

two that is

with

large,

has

I suppose our spending
both of the check-book

money

to
order to

necessary

interested in sound and stable and

with

course

remember the

rectly,

said,

have
%

you

order."

He said,'T couldn't tell you."

\xnfh

pay

Jf I

Wilson,

new wage

order, it is proposed that where

pie of the country.

goods and the spending power in
the hands of the consumers.
'

way in

requires

But

heavy

pro¬

disproportion

J-

Senate,

Banking

things

nothing

come

reluctant

which almost everybody is famil¬
iar .today.
So, in the jargon of

inflation

pniYirt

spending

and

problem of

disparity

cal1 it now, unless there is somethinS in the way that would argue
back that1 tha* it be denied, it probably will

situation,. first oi all, vye

Rep¬

duction* price controls, rent con¬
trols, wage controls, credit con¬
trols, curbs on consumer spending,

it, is
a

quite

^^urrency, which has dealt
with this whole

these

•
j-

over

unknown to me, I was assigned to

day,

Now,

the Senate Committee

the

not

concerned

reasons

resentatives, and for

all

the;

Representatives, and the begin¬
ning of a term in the United States

Over the

Committee of the House

and

problem today.

gap.

terms of hacking at the branches
instead of the root. I know all the

simple

into

"Mr.

Wage Board?"

there is

back

1950,.

'had

"Ox-tail."

premise

are

•

;

•

whither it is the life
batiks

think.

January,

said, "That is right."

presently

inflationary problem which

insurance
any

who

confronts every custodian of peo-

pie's money,

about

said,

gotten out

been

worthy of the thinking of people

but that in part,
at least, that is true with respect
to the

I think often
went

who

think

establish

not sure,

admonished

back quite

hundred hack¬

ing at the branches.
I

have

said, "Oh, why go

It was that philosopher far?"
observed that for every,
But
hacking at the root of a tree,
were

occasions.

waiter said,

once

there

and

have?"

you

behavior.

man

set

common

the danger

course,

man ;

The

field of human

who

and

many

the

restaurant, got the napkin around there, are voluntarily * negotiated
his neck, and when the waiter wage agreements, looking toward
came, he said, "What kind of soup an increase, or escalation, as they

those solid

took

base pius 10%, if the 10%
been allowed before""

that I

spirit

vestigations of them. As I understand it, they
have
been
guilty of no particular malfea¬
sance
but they : have " run with some of the
darndest people, people who in their exalted

W:-,

t'l'"

Christmas

the

Lamar

But

lot

•

substantially correct."

back,

said, "Now, it runs in my mind
that your first wage order under¬

know,

ing out a fish.
Then I go back

this

•

going

scolded

the

I simpiy

water and tak¬

with

wrestle

know

whether or no, and so the spiral that is effective in America
at
the present time must neces¬
ought to be placed at the
spending root. I am of the opinion, sarily be reflected in prices?". :
He said, "That is obvious."
frankly, that we do not go back,
'•">

enough, and

family, and

force,

bean rows, and
his $24 house,

Massachu-

So I

string,

that rising costs out of this

agree

I want to ex¬
amine
with
you
this afternoon
just a few general considerations
that I think you, as identified with :
one
of the great industries of
America, should have in mind

the

axe

far

setts. I go back

junior member.

may

economy.

end

magnaminity toward my fellow men. And in that light I want to
say something in behalf of Fellow Men, T. Lamar Caudle, Charlie
Oliphant and their likes who have been' on the political frying
pan.
I have casually met Oliphant.
I don't

said this to Mr. Wilson: "Will you

Pond

our

tail

the

■

Walden

cross-examine

and

costly in disruption and

By CARLISLE BARGERON
It

get five minutes

so you

discuss

was

Washington

Ahead of the Neivs

great

this tremendous problem that

method, "budgetary guesswork."

thrill

It is

decide you have about
to
spread among 12

hour

members,
to

of nation's

quateness

you

one

Scores lack of efficiency and inade-

the Federal Government.

From

you

Senate

and

ment

indulged in in my life was

ever

with Charlie Wilson.

Senior Senator from Illinois stresses dangers of Heavy

;

of the most engag¬

one

ing bits of cross-examination that

By HON. EVERETT McKINLEY DIRKSEN*
U. S. Senator from Illinois

kind of self-gener-

^ating engine of inflation.

tion

that

common

such
of

made
and

they would be disloyal to an Administra¬
fetish of the common man if they did not act

associate

with

common

men.

There

can't

any

the crime of bad associations on the part of those
Administration which is devoted to exploiting such common

thing

When T. Lamar Caudle says he can't under¬
for his gregariousness with common men,
him. What else would Mr. Truman want?
You just can't please some people.

people
stand

it does.

why he was fired
I think you can believe

Volume 174

Number 5076

...

(2511)

The Commercial and Financial Chronicle

NATIONAL STEEL PRODUCTS COMPANY,

Houston,

Texas.

built by

Recently erected
the Stran-Steel Division,

warehouse,

208,425

covers

square

feet. Provides facilities for distribution of steel

products throughout Southwest.

Steel Distributed

by National Steel Products Company

aids the industrial progress

CORPORATION,

STEEL

LAKES

GREAT

of the great Southwest

Detroit,

Michigan, The only integrated steel mill in the
Detroit area. Produces a wide range of carbon
steel

National Steel Products

growth has kept

pace

Company is another National Steel division whose rapid

with the industrial

area

products

types

of steel for the automotive industry.

huge

cated

roof

new

Houston, Texas, plant and warehouse—a Quonset structure

fabri¬

by the Stran-Steel Division—provides five acres of floor space under one
makes National Steel Products one of the foremost steel distributors in
.,.

the Southwest. Almost three
steel from this distribution

thousand

And National Steel Products is

customers

ten states are

its

most

organized

to serve

the Southwest swiftly and well.

barges deliver a great variety of steel to
distant customers.

Producer of

steel

of the

representative
corporation, one of America's

expansion of National Steel Products'Company is

foresight and progressiveness of its parent

producers.;

wide range of other

Unit

DIVISION.

world-famed

turer

Weirton,

plate.
important

Great

Lakes

• >

HANNA

fTl CORPORATION

GRANT BUILDING

PITTSBURGH; PA.

IRON ORE COMPANY,
ore

the
Quebec iron

and

HANNA

and

Cleveland, Ohio.

from extensive holdings

development
ore fields.

ing

NATIONAL

••

buildings

in Great

region. National Steel is also participat¬

THE

•,

Quonset

Stran-Steel Mailable framing.

FURNACE

MINES

properties

new

Labrador-

CORPORATION.

furnace division located in

NATIONAL STEEL

Mills at

Corporation. Plants at Ecorse, Michigan,
and Terre Haute, Indiana. Exclusive manufac¬

Produces

largest and fastest growing steel

COMPANY.

products.

I.akes

The continued

STEEL

largest independent manufacturer of tin

Steel

its very door on the Houston
Ship Canal. National's large fleet of modern trailer trucks assures prompt delivery
Boats and

major supplier of all

served with

•

Virginia, and Steubenville, Ohio. World's

West

STRAN-STEEL

point.

serves.
WEIRTON

Its

...

Blast

Buffalo, New York.

CORPORATION.

Pennsylvania,

Coal

West

mines

Vir¬

ginia and Kentucky. Supplies high grade metal¬
lurgical coal

SERVING

AMERICA

SERVING

AMERICAN

INDUSTRY

for National's tremendous needs.

Chronicle... Thursday, December 27, 1951

The Commercial and Financial

(2512)

In 1936,

the State of Tennessee.

the State of Tennessee had about

Principles in

Investment

bad

The

conceive.

could

total amount of its obligations was

then about $130

tain

WAINWRIGHT*
Partner, Wainwright, Ramsey & Lancaster
Consultants on Municipal Finance, New York City
TOWNSEND

Dealer-Broker Investment

debt structure as the hu¬

mind

man

million with cer¬
State's

the

revenues

Recommendations and Literature
It iti understood that the firms mentioned

pledged irrevocably to certain
bond issues, and other revenues to
other bond issues.
Some issues

send interested parties the

will be pleased

following literature:

had

sinking funds accumulated for
payment, others did not.
Some of the sinking funds could
not even be invested, and moneys
held for the payment of certain
bonds simply were lying idle in

\yafa\yrigfalj in explaining nature of municipal finance
consultant services, particularly in matter of financing im¬

their

provements by means of revenue bonds, lists as information
which both investor and consultant wish to know:
(1)
nature and economy of the debtor community; (2) its form of

municipal finan¬
problems

they undertake to

solve are many

In a few months my
firm will have

and varied.

behind

put
20

years

this field.

efforts

simply

here

extended

paid off. Each

refunding

was

floating

accumulated

debts, and the refunding

current

the

years

try

might at the least be called new
legal thinking, both derived from
the necessity of solving difficult

field of work.

in the future of the same difficul¬

should preface any ties.
The best approach to this prob¬
further remarks by saying that
While many jobs we have under¬ lem in those days was expressed
in the well-known
"cash-basis"
taken have been similar in nature
to those undertaken on other oc¬ law of New Jersey, Chapter 60 of
casions, we have yet to find one the Pamphlet Laws of 1934. This
that does not have some. angle act authorized the funding: of
that is new and unique and which floating indebtedness via the issu¬
Perhaps

type of treatment that ance of l-to-15-year serial bonds,
but the communities that availed
can be applied only to the par¬
themselves of the financing pro¬
ticular case in question.
requires

The modern concept of

munici¬

pal finance started soon after the
unfortunate

visions of this act had to covenant
to balance their
on

"cash

strict

operating budgets
for

basis"

the

real

bubble

estate

burst

into the general bond and budget

laws of the State when they were

1926.
The

defaults

not

were

debt

serious

and

difficulties that

arose

something

revised

that

the

ing

two out of thirteen Greek munici¬

belonging

the

similar

the

ing cities.

Attic

You might also be in¬

terested to know that in

Association which had
contracted loans with the Delos
Maritime

handling
refinancing of the debt of the

the

City of Tampa, a covenant as to
the operating budget was incor¬

were guilty of complete
default while eight defaulted par¬
tially. In this country more than

Temple

porated into the contract between

the fact that its

permanent debt structure had been
recreated upon a sound basis, and
the maturities of its new money

borrowings

were

the

pattern

new

"dovetailed" into
of payments

which the State had demonstrated
it could

readily meet.
Raising new money for any mu¬
nicipal body on favorable terms
involves

the ability to

primarily

demonstrate
and will be

the

that

repaid.

money

can

Economic cir¬

cumstances, of course, are not im¬
proved by high debts, and poor
debt structures
to

good credit.

fail

not conducive

are

Some communities

the

tell

investing public
how good their credit is. One of
our

present clients, the Washing¬

ton

Suburban

which
the

District

River,
credit

District,
bordering

the

Potomac

ago

found its

years

deteriorating

simply be¬
it had failed to put out suf¬

ficient

factual

about

data

its

fi¬

The District had to under¬

nances.

take

area

Columbia,

side

few

Sanitary
the

serves

Maryland

cause

into

provisions

laws of other states, as well as the
charters of a number of our lead¬

the end of the fourth century B.C.,

palities

the

and also has contributed in writ¬

Toward

borrowers.

hand in the
laws mentioned,

firm had

creation

history of municipal finance. They
were
a
repetition of an ancient
-tradition

1935.

You may be interested to know

at that time
new

was

of the
depression of the early 1930s upon long as such bonds remained out¬
This
fundamentally
the finances of all types of gov¬ standing.
sound approach to municipal fi¬
ernmental units in all areas of the
nancing was soon generally rec¬
country. In Florida, of course, mu¬
ognized and the provisions of the
nicipal difficulties started ahead
1934 Act were later incorporated
of the rest of the country when
consequences

improvement in the

State's credit

borrowing

large-scale

some

to finance the

demands for water

sanitary sewer services oc¬
casioned by rapid growth in popu¬
lation following the end Of World

„

War.II, and

though its finan¬
cial condition was entirely sound,
even

years

defaulter ion record in this
try.

Others

arose

out of the

100

each succeeding
depression brought new defaults,
gome because of the issuance of
years

railroad aid bonds, others because
of the collapse

of real estate booms

and

Chattanooga,

Tenn.

de¬

pression of 1837, and during the

Knoxville

coun¬

Let

ing.

Many

that

needed

new money

their

have

debt

structures rearranged also needed

improvements.

new

Until

financial

their

structures

in various sections of the country,
others from difficulties incurred

permanent

by irrigation, drainage, and recla¬
mation projects, some because of
the after effects of the War be¬

the markets for any new improve¬

the

tween

States,

and

purely local reasons.
faults occurred

and

pression

very

result of absolute

others for

Not all de¬

periods of de¬
few were the
bad faith.

established

were

ment
to

sound

on a

issues, of course,

them.

Once

were

it could

basis,
closed

dem¬

onstrated, however, that their fi¬
nancial
out
any

affairs
a

had

sound

reasonable

improvements

been

basis,

could

worked

for

money

amount
be

new

obtained

•An

address

Club

November

the

New

29,

by Mr. Wainwright at a
Municipal Bondwomen's
York,
New
York
City,

1951.

Perhaps the most interesting
ample of this kind that I can
call

is the

work

District,

potential

In the case of

made available to

buyers of its bonds,

credit rebounded in
its

and

cost

creased
within

adequate

soon as

was

80/100

re¬

firm did for

yield and market performance over■ a 12 J/2 -year period-NationalQuotation- Bureau, Inc., 46 Front Street, New
York 4, New York.
*

clear

and

•

111.

Davis

1952—Brochure—Paul

for

Salle Street, Chicago 3,

10 South La

1•~

made

available

potential

creditors

its
at

about their finances.

design

financial
see

the

issue

same

comments

are

Also in [ ^
j }
& Williams, 11 j

Reaction Motors.'*

„

Broadway, New York 4, N. Y.

& Co., 225 East Mason
Also available in the current

Ampco Metal, Inc.—Analysis—Loewi

Street,

Milwaukee

and Financial

"Business

issue

Wis.

Digest" is a discussion of ;
on capital gains and

1951 and its effect

the Revenue Act of
losses.

Annheuser-Busch
407 North

—

Memorandum

Co.,

Eighth Street, St. Louis 1, Mo.
Co.—Memorandum—F.

Investment

Associated

Dempsey-Tegeler

—

Coseley

Bulolo Gold Dredging
25 Broad

Electric

California

Limited—Analysis—Oppenheimer & Co.,

Street, New York 4, N. Y.
Power

Company—Analysis—Hill Richards

Co., 621 South Spring Street, Los Angeles 14, Calif.

Canadian Pacific—Review—Dean Witter &
York

New

Utility—Review—Ira Haupt & Co., Ill Broad¬

Central Public

New York 6, N. Y.

way,

Co., 14 Wall Street,

5, N. Y.

Champion Paper & Fibre—Memorandum—Shearson, Hammill
&

Co., 14 Wall Street, New York 5, N. Y. Also available are
on
Ex-Cello
Corp., Joy Manufacturing, and

memoranda

Sharp & Dohme.
Continental Oil Co.—Brief survey—Abraham &

Co., 120 Broad¬

New York 5, N. Y.

way,

Cuneo Press,

Inc.—Analysis—Freehling, Meyerhoff & Co., 120
Chicago 3, 111.

South La Salle Street,
Delaware Power &

Light—Memorandum—Josepthal & Co., 120

Broadway, New York 5, N. Y. Also available are memoranda
on Gulf States Utilities, Iowa Power &
Light, Ohio Edison
St. Joseph
Denver

Dillon &

and West Penn Electric.

Western

Grande

Railroad—Analysis—Eastman,
Co., 15 Broad Street, New York 5, N. Y.

Machinery

Food
&

Light & Power

Rio

and

Chemical Corporation—Analysis—Bache

Co., 36 Wall Street, New York 5, N. Y.

Fresnillo
La

Company—Analysis—Dayton

Salle

randum

Street, Chicago 3, 111.

Trane Co.

105

Gernon,

Also available is
,

South
memo¬

V.'

Grinding Machine—Write-up—Lerner & Co., 10 Post
Office Square, Boston 9, Mass.
Also, available are write-

Gear

ups on

National Company, Riverside Cement "B," and Seneca

Falls Machine.
Howard

Industries,

— Memorandum — Ames;
Emerich
Salle Street, Chicago 3, 111.
-

Inc.

Co., 105 South La

plans

that

that all informa¬

properly

Continued

appraise
page

>■'*

Inc., Kentucky Home Life Building, Louisville 2, Ky.
New England

111

Public Service Co.—Analysis—Ira Haupt

Broadway, New York 6, N. Y.

& Co.,

Continued

page

Lion Match

Universal Match

are

Kentucky Stone Company—Analysis—The Bankers Bond Co.,

times.

The consult¬

Co., 4 Wall Street, New York 5, N. Y.

are

is not only to

•

{

•

Alliance Manufacturing Co.—Circular—Kearns

Trading Markets

Troster, Singer & Co.
Members:

Security

Telephone:

2-2400.

Cleveland-Denver-Detroit-Los

Dealers

Association

New York 6, N. Y.

Trinity Place,

Teletype NY

Private

buyer

Co.,

Singer & Co., 74 Trinity Place, New York 6, N. Y.
the

state¬

actual

all

•

Aircraft Radio—Data in current issue of ^Highlight'!---Trc)ster, L

This is just good business.
Mu¬
nicipalities cannot kid people
ant's job, of course,

Ohio Match

up-to-date

•

120 i

sure

ments of its financial condition

Electric Bond & Share Co.

Stocks

Selected

Co.,

Also available is a memo-

Broadway, New (York 5, N. Y.
randum

Bros.

year's time.

Common' Stocks—Review—Sutro

Railroad

de¬

tion is available which will allow
ex¬

;

its

Every borrower should be
that

com-

short period

borrowing

about

sound, but to

at reasonable rates of interest.
meeting

this

re¬

financ¬

communities

the

condition is sound.

information

turn from debt

now

organization to

and

elapsed between the Tampa and. its, bondholders that nobody in the investment world
is virtually identical in effect with
time the first colony was founded
could be sure of it without the
the "cash-basis" law of New Jer¬
^nd the date of our first municipal
facts.- People won't just take the
default. The City of Mobile, Ala., sey. The- same may be said for borrower's word for it that his
other cities we have served, such
in 1839 was the earliest major
200

up-to-date

parison between the listed industrial stocks used in the DowJones Averages and the 35 over-the-counter industrial stocki
used in the National Quotation Bureau Averages, both as to

financial

for the great

ten leading integrated companies

attraction for long-term investment
Co., 15 Broad Street, New York 5, N. Y.

Ristine &

—F. P.

average

Over-the-Counter Index—Booklet showing an

problems, the structure
in amounts that could be
of Tennessee's $130 million debt
highlights de¬ met from revenues without strain¬
was
completely rebuilt into an
veloped dur¬ ing the capacity of the commu¬
orderly payment program that
ing those nity to pay taxes. ; ,
could easily be met from normal
years of expe¬
; in solving problems ,of large
revenues. The necessity of refund¬
rience and to current debt accumulations and
ing was thus eliminated. A& a re¬
try to outline poorly spaced payments of out¬
sult, the State by 1939 was getting
to you some of
standing permanent d eb t, one new
money at *2%%, by 1941 at
the more in¬ principle had to be observed if
\Vt%t and by 1946 some of its
teresting
un¬ new money was-to be obtained, or
T. Wainwright
permanent borrowing cost 1%,
dertakings ac¬ if it was necessary to have the
with some as low as %ths of 1%.
complished. Brief mention will be cooperation of the holders of long
While a general decline in interest
made of activities which, while term bonds. This cardinal prin¬
rates during that period accounted
limited in /their nature, indicate ciple was that something had to
for some of the enormous savings
the wide scope existing in this be done to prevent the recurrence
in interest costs, the main reason
some

offering above

interest rates.

Meeds, 120

Bissell &

Outlook—Bulletin—Laird,

Stock

Oil Companies—Bulletin

Our eye teeth were

ing

I. du Pont & Co.,

Street, New York 5, N. Y.

Broadway, New York 5, N. Y.

any¬

cut a few thing but good; the lowest rate of
interest on any of its outstanding
after the troubles in Flor¬
long-term bonds at that time was
ida, largely in New York and in
4% and most of it carried higher
New Jersey in the early 1930s. In

N. Y.

Stock Prices—Discussion—Francis

Wall

was

years

you

been

ever

The State's credit

issue.

give

Bank

none

successive issue that matured

of long-term debts with maturi¬
ties spread/ out over a period of

will

York 6,

Average

Virtually

those years much of the work of
Through the application of new
it my firm involved reorganizing
principles of finance and with
in existing debt structures, the fund¬
legislation resulting from what

Air

War had

that of over-lapping agencies; (3) condition
of community's general finance; (4) description of physical
properties; (5) financial history and financial condition; and
(6) nature of the obligation.
The services of

Industry—Bulletin, with special reference to
Inc., United Air Lines, Inc. and Eastern
Lines, Inc.—E. F. Hutton & Co., 61 Broadway, New

Transport

American Airlines,

of the debt
issued by the State since the Civil
cash.

government and

cial consultants and the

Air

wires

1-376;

377; 378

Angeles-Philadelphia-Pittsburgh-St. Louis

Volume 174

Number 5076

The Commercial and Financial Chronicle

(2513)
structural

The

Investor, the Treasury,

The

By AUBREY G. LANSTON*

Aubrey G. Lanston and Co., Inc.

necessary

view,

within

methods

banking and credit regulation

Just

SI.,-™

runs

com¬

preserved from domination by the
Executive branch of the Govern¬

ment,.

attractive to

private

credit

dealing by the Federal Reserve.

The Specific Queries and
questions submitted to us
Congressman Patman's sub¬

committee

largely the

concern

re¬

actions of investors to the methods

(2) Transfer the
Board

of the v/-/'/

powers

Governors

over

con¬

sumer, real 'estate and stock mar¬
ket credit, reserve requirements

eral

Fed¬

Reserve,

and with

cer¬

Treasury

full

member

Federal Open Market
and

fundamental

doctrine,

Aubrey G. Lanston

(a)

offer

terms

and

its securities * under
provisions that seem

best suited

objectives

set

the national

Treasury

dispute

intolerable.

stitutions.

Phase Nine. Sept. 20—Oct. 10,1951

Federal Re¬

becoming

were

This

This brief period is
noteworthy
(1) the Federal. Reserve

was

because

recognized

by practically, every
investor, and it inspired sales of

action, of

actual needs.

Moreover

was

the

credit

Federal

System acquired

excess

Reserve System since the out¬
break of the war in Korea?

Distinguish, if

was

bination

quite clear from the
of

Market

mit,

Integral part of

wish to sub¬

reason

our

to each question, our con¬
viction that each of the issues to
before

come

the

Committee

the

subject of banking, debt, and

credit

should

that

resolved

will

conform,
in
practice and in theory, to the fol¬
lowing three principles:
manner

One, the normal functioning of
nation's banking and credit
machinery must be administered
by private hands.
the

the

Two,
of

private

activities
State

regulation

necessary

banking
by

and credit
Federal
and

the

governments

must

achieved through instruments and
methods that are impersonal in
their application.

the

Three,

between the
the

essential difference

printing of

Federal

money

announcements

issuance

banks

central banks is the cost

interest.

mitted-

This

with

must

increase

consistent
of

bonds

private
be

per¬

decrease

the

expansion

desirability
contraction of

the currency.

Specifically, therefore,

Committee, would require

Federal

Reserve

System

use
its powers in contradiction
to its credit objectives.
The
directive to the Federal

Reserve should state that it is the
will and intent of

Congress that

the

powers

Market
Reserve
shall

(a)

you

Open

exercised solely

conformance

national

determined

Federal

with

de¬

objectives
the Federal

Open Market Committee with full
consideration of the problems that
may

arise from undesirable major

shifts in debt

(b) in

ownership,
that will per¬

a manner

mit the normal

nation's

functioning of the
banking and credit ac¬

tivities to be administered
by our
private banking and lending in¬

the

decisions

their

the

investment

belief

that

the

average

the

This question has been largely

the

promptly

end

Treasury the winner.

seemed

with

vestments

doubt whatsoever that the
longerrun consequences of
pegged mar¬

became

respect

the

credit

management

various

Phase Three. Aug. 17—Oct. 11,1950

Reserve's

tricate

We wish to suggest the follow¬

interest

themselves
rate

from

policy

was

fixed

wholly

the

serve

tion

customary summer lull
more permanent situation.

incongruous.

the

Holders

Government
1

proper

the

Phase Four. Oct. 12—Dec. 13, 1950

committed for in increasing
In
some
instances it
seemed desirable to management
were

volume.

under

the

Treasury

or the Federal Reserve,
whichever seems the more logical.
^Extracts

Lanston

froni
and

the

Co.,

replies by Aubrey
Inc. to questions

from .-The Subcommittee

Control' and

General Cred¬

Debt

Joint Committee

Management of the
the Economic Report.

|Soy. 16, 1951.

ties.

methods and policies employed
by
the Treasury and the Federal Re¬
serve

relate

jjJL

commercial

the

banks

maturity

?fii?

Continued

•

page

not

Offer

July 1, 1923, Due July 1, 1948;

Dated July 1, 1923, Due

Phase Five. Dec. 14, 1950—

Feb. 28, 1951
largely to the quality
of personal decisions made
The commitments of non-bank
during
an
unusually difficult period. Dif¬ lending institutions were
growing
ferences in the quality of such
in size.
Increased difficulty was
judgments have no bearing on the being encountered as investors
fundamental question, namely, the tried to sell
Treasury bonds. Sup¬
allocation of authority, from a port was
being confined increas¬

July 1, 1957; and

Certificates of Deferred Interest
issued with respect to
■'

;•

(Scrip Certificates)
Bonds of Series C,

and

Convertible Certificates for
Fund Dollar Bonds, Due

External Sinking
January 1,1976.

NOTICE OF EXTENSION
The time within which the Offer, dated April 26, 1946, to exchange
Bonds and the appurtenant coupons for Republic of

the above

El Salvador 4%, 3%% and 3% External Sinking Fund Dollar Bonds,
due January 1, 1976, and to pay Certificates of Deferred Interest

(Scrip Certificates) in cash at 15% of their face amount, may be
accepted, is hereby extended from January 1,1952 to January 1,1953.
The period for exchange of Convertible Certificates for
3% Ex¬
ternal Sinking Fund Dollar Bonds of the Republic, due January 1,
1976, in multiples of $100 principal amount, has also been extended
from July 1, 1953 to July 1, 1954.
Copies of the Offer may be obtained upon application to The
National City Bank of New York, Corporate Agency Department,
20 Exchange Place,
NeVf York 15, New York* the New York Agent
of the Fiscal Agent, Banco Central de Reserva de El Salvador, San
Salvador, El Salvador, C.A.
,

;

REPUBLIC OF EL SALVADOR
By Enrique A. Porras

December 27,1931

their

vestments still would not

Dated

banker

ing approach to the fundamental consistent with their responsibili¬
to sell long-term Treasury bonds
and the need for greater ties for
regulating the availability,
as commitments were made and to
amount, and cost of credit.
reinvest
in
short-term
securi¬
(1) Place the respective lending
A retrospective judgment of the
activities

Many

7% Sinking Fund Gold Bonds, Series C,

issue

credit

ence.

shortened

Republic of El Salvador

...

nutshell the reaction of in¬
vestors is well expressed in the
of a commercial
several weeks later....

)??n

Cii9tomsFirstLien8%SinkingFundGoldBonds,Series A,

words

our

™e announcement of Aug 18

was

This is
To

in-

and

came especially strong after
involvement in Korea.

during the second week
May. A prospective slackening
the demand for capital and

discount rates of the Re¬
Banks made the entire situa¬

coordination.

and

The bottom of the market

general preference for

an¬

Non-bank
lending institutions
during periods of depression. For
lending agencies of the Govern¬ these
became
substantial
sellers
as
reasons, the desire of the
ment, the Treasury and the Fed¬ Federal
Reserve officials to ex¬ mortgages and other investments
eral Reserve.

continue to be buyers of
Treasury
and Federal Reserve ing institutions. No one could tell,
holdings of restricted bonds were however, whether this was to be
on the verge of exhaustion.
the

for

about a greater co¬ boom and
complicate the problems
ordination of objectives arid poli¬
of debt and
with

available

return.

for bringing
cies

securities

"I sold the whole
blooming port¬
Treasury securities un¬ folio, including short-term notes
The Committee also seeks to
and bonds, and put the
necessarily
inflate
the
money in
money
develop the need, and methods,
supply during periods of business Treasury bills."
kets

to investors
that non-bank institutions would

Federal

vate loans and investments would
jjot be available in volume and
^at °^y fractional changes ever
J"'®*? bkely in short-term rates,

reached

likely

(c) through instruments and by nouncement of Aug. 18 came as a
surprise to
investors.
that are impersonal In complete
They were stunned by receiving,
their application.
coincidentally, a Treasury financ¬
Reserve Has Accelerated
ing announcement calling for no
Money
and Credit Expansion
change in rate or term, for a re¬
In our view, the methods em¬ funding of unprecedented amount.
The Board's approval of increases
ployed by the Federal Reserve

utmost

mmotenance of the 2 /2% rate,
combined with the belief that pri-

hold

"westors generally felt that

Treasury would be victorious
dispute. Confidence in the

long-term bonds
offered in on the part of bank and non-bank
other in- institutions.
This preference be-

were

volume

Treasury-Federal higher rates of

feud over the level of
short- and long-term rates would

desire

weakened. V.

reply to Question

during 1950 up to Aug.

April 5—July 3, 1951 termediate

Treasury bonds
substantial

Reserve

come

was

Distinguish between

answered in our

led to

Phase Seven.

Phase Two. June 22—Aug. 16,1950

that

investor's

his securities

methods

that it remain responsible and be
responsive to the Congress.

between

classes of customers.

...

Treasury ultimately would prevail.

The

be¬ increased the expansion in
money
and credit
more, in this particular
importance to the country that period, than would have been the
the Federal Reserve System be case
had
the Treasury's
views
strengthened, if necessary, in its prevailed.
independence of the Executive
At the same time, there is no
branch of the Government and
lieve

investors. based

Treasury

short-term, intermediate, and '
long-term United States se¬
curities?

been unsuited to

conditions.

Period

of your customers
:

presumably
prevailing highly liquid investment, Treasury securities, no market existed,
Undeu the circumstances, most Under
the
circumstances,
the

have

market

clude

credit

security

since the outbreak of the warin Korea upon the preferences

.,.

Committee, the Federal
Our acceptance of the Korean
Board, and the Banks
challenge caused investors to con¬

sirable

of the

Treasury

(2) What has been the effect of
the changes in credit policies-

that

desire, be¬ the market would be
deluged with
tween successive phases,
sell orders.
Prices were stable
because recognized dealers were
Phase One. The First Six Months
forced by the Federal to quote
of 1950
nominal prices higher than those
In January,
1950, the Federal at which investors would gladly
Reserve initiated two
policies for sell if they could make an actual
its handling of the
Treasury se¬ sale. The Federal frequently re¬
curity market. It started to sell quired that the investor leave
his
Treasury restricted bonds in vol¬ bonds on order with a dealer

by stitutions, and

Government and the
its

the

approximately their May lows...

com¬

ume
and at declining prices.
namely,
It Even then, and when the amounts
Open Market Committee, and
J*
also caused the prices of
pri¬
Treasury were .of moderate size, the invest(b) expressly avoid setting any short-term securities to
vate banking and credit shall be¬
ease, by or might sell only a part, some- the
terms and conditions that, in the minute
come
subject to the control or
fractions,
so
that
the times none, of his bonds.
Thus, m
domination of the Executive judgment of the Federal Open Treasury's financing appeared to to some
holders of a

For this

large amount

whether

branch of the Government.

Treasury securities and. (2) the

markets suggested that the
price
improvement of the summer had
been a secondary or technical ad-

creasing the demand for capital
and credit by businesses and inch-

Additional directives should be
of
the hearings given to the Treasury and to the
seems
likely Federal Reserve as follows:
to
pierce,
The Treasury shall
a

the various types of banking in-

°7ing ,.the

Committee,

The scope

and

the period was
conditions arising

the

(4) Cause the latter, as well as
a
technical the Board of Governors, to be¬
come responsible to the
character.
Congress.
;

the heart of

serve

whole,

which

tain matters of

however,

the
in

general terms, has viduals
who
wished
protection <justment.*
been the response of your cus¬ against higher interest rates or a
*
"
jtomers (in terms of buying, decreased
availability of money.... Phase Ten; Oct. 11—Oct. 31,195$
selling, and holding United
Phase Six. March 1-April
States securities) to the vari¬
4,1951
rp,
f
•
'
bonds continued to drift lower, a
ous
credit
The announcement of a Treaspolicy and debt
trend that, at the time of this
management moves made by ury-Federal Reserve accord was
repIyj has carried prices back to
the Treasury and the Federal received with geneial relief...

judgments and discount rates to the Federal
employed b y Open Market Committee/
the Treasury
(3) Make the Secretary of the
the

Replies

(1) What,

,and

and

Treasury securities

substantial investors.1

The

one

institutions from the

and the market mechanism should
be
protected from personalized

securities and restricted

provemlnt

the Federal Reserve

Sys¬
tem should have its independence sell.

permitted to follow desirability of currency expansion
contraction. Disapproving of non-marketable* government

subseiLinl
rmeasurabr

pletely counter to the second prin¬
ciple enumerated in this reply.

bonds, Mr. Lanston declares current
borrowing should be confined to an E-type savings bond modified and limited to small maximum-purchase; and to short-term-

Feral ren

Reserve

est cost

issues

1t?rr\the

employed by the
h
™5re™sing y reluctant ^or demand, and this revealed to
during this try¬
ing period did turn an important rnmtnVaV increasingly large buy- dealers that a number of sellers
oming an
^vere no longer interested in bids
instrument, namely, Federal open- er for its own accounts and funds.
Some burinrorders
v"
market operations, into one that
Investors believed that if the u ™
to assert
mwas highly personal. The
between
the
two
impor¬ differences
measurable imFederal

tance of this is that it

should be achieved through impersonal application; and inter-•

ingly to only the longer restricted Phase Eight. July
5—Sept. 19,1951

Replying to Patman Questionnaire, well-known authority on
government securities market, maintains normal functioning:
of nation's banking and credit
machinery must be administered ?
private hands;

with respect to
the Federal Reserve System.

And the Federal Reserve

point

the Government

Minuter of Finance and Public Credit

The Commercial and Financial Chronicle

..,

(2514)

Mild Inflation
Be

have

of defense outlays and

ending in
June 1952 the Treasury will prob¬

has enjoyed

nation

1951

gradually

diet

Most

1VJ.DOL

which gcuciai
WHICH
general

that

felt

fiscal

'53

year. Looks lor decline in residential construction, as'
reduction cf $20 billion in private sector of economy, '
including net foreign investments. Sees, hov/ever, heavily

be.

can

pay-as-we-go

well

it should not be assumed the

with greater

o^oods
orhiehe/taxes'
ot nigner taxes

unemployment.

certain types

nnnn

•

increased government spending that will keep business activity
up to present level, with approximately same price level but

ii;hn

tno

noire

Competent

observers

have

Changes in Gross National Product

re-

VV ill
everybody will xiU'V^ wm
have am-

in 2nd and

ct
a

1UW,
low,

price

xxsxiig

volume of debt flotations as

wit-

the $550 million total of new

ness

controllers would be busy

through- fundings - recently announced by
the year
out
controlling prices two large firms. In addition, perrather than in justifying the con- sonal income is likely to increase
tinuance of their office.
It was further, liquid asset holdings are
foreseen
that
military procure- at record levels, and consumer
ment and private capital outlays,. credit
restraints have been rethe
most
inflationary types of. 1 axed. Finally, the present wage
spending, would rise rapidly.
In line will soon come under heavy
view of the attainment of these pressure and will probably retire
goals, what did keep the lid on to a new defensive position.
Prices?
'
'
,

Buyers

currently

are

1 e c.o m 1 n g
l0IL ^ear»

nun

rising

dxiu
and

w
war economy is something
to us. In some sectors, notably the Detroit area,.income has
dropped as layoffs resulting ffom
cutbacks HI. civilian goods h|ave
cuxuaciva
in. tivmau guvvxa nave
not been' balanced by increased
defense work.
Tightness in the
labor market in other areas has
been relieved by new entrants
who are seeking to supplement
family buying power depleted by
high
prices- and
taxes.
Many
buyers, individual and. business,
will be wary of scare stories after
their experiences of the past year,
The proportion of income saved
could conceivably rise from present levels. Finally, as 1952 rolls
on more of the basic industrial facilities started in the past year and
a half will begin to bear fruit by
adding to total capacity.

Let

the

new

grounded

America

i •

•

1951 with the third quarter of
1951, the siia*-p decline of approxi¬
mately $9 billion in"* corporate
gross private investment, at an an¬

.C
the. position
.

the second and third quafas set forth in Table II.'

j •Comparing the second quarter

...6n

l!ave

3rd Quarters 1951

analyze the changes be¬

ters of 1951

1 " e

the gross
national Prad~
ucs the dollar
measure of all
g.oods and
services that

nual rate, was offspt by an equally
sharp increase of $9 billion in gov¬
ernment

spending, almost entirely

due to enlarged defense

Household

spending.

and t unincorporated

spending

approxi¬

mately

will be «produced in the
American
economy, will
- continue
to

and,

remained
at
the same level,

cordingly,

the

dollar

ac¬

measure

all goods and services did not ap¬
S.

preciably change.

Nerlove

The

substantial

decline

new

rise during
1952 substantially above the levels
P'
JWesume tsreriecteaaireached in the third quarter of
on tne part
1951. They indicate that toward 01 P vaie ousiness to reauce tne
the end of 1952" the gross national rate at wnicn inventories were ac.

product may be in the neighbor-

hood of 10% greater than the ap-

fortified

•»

tween

yirougnout

sure.

limited

CVCiJ UUUJ

leaciieu
reached

arjiy
ably

This

flation—but don't be too

? would

the

remark-

Most of

questions estimates of a Gross National
Product in 1952 of $369 billion, which is 10% above that of

once

neutralTze?

depreciation deductions are permitting the retention of increasing
ably stable, amounts of cash. Most banks are
amidstdynam- in a position to increase their
ic
underlying lending and the insurance comp ressures. panies are ready to handle a large
George W. Cloos

income-

University of Chicago

Professor Nerlove

basis,
condition which is not now fore¬

handled
a

pie money to spend, especially in
t e r m' o f relation to the supply of goods,
months during Total business profits have prob-

Even

more.
*

extended

prices

the

however,

current

been mill tne net Utect
aad /lononrt

have

are
during the coming year.

at-

tainment of an.
lUiuluviit

March,

will depend upon who pays them, cently revised their views with
*
All these factors would appear ";g.
™ tbe ,ge™:raJ business slt"
probably in prospect to add up to a resumption of inatl0b that is likely to prevail

clines

to pre-

the

By S. H. NERLOVE*
Professor of Business Economics,

worked down to safe levels and
increases rather than -further de-

would

been

excess

seen,

,.i

year

government will start spending in

...

have

bold

inventories

ob-

few

servers

fiscal

After

penditures. Both of these spending categories create mcome withcut immediately increasing the
supply of civilian goods. Retail

nine
month breathing spell following
the
hectic period of the
postKorea inflation.
At the start of
'The

dangerous.

the

ably achieve a small cash surplus.

1952 rising
continued high level of capital

■.

For

expenditures, with public having ample money to spend, i Says
this portends continuation of inflation trend, but it will not
be drastic

Appraisal of the American
Economy by the End of 1952

materials
to essential;

diverted

been

uses.

Reserve economist foresees in

Midwest Federal
rate

allocations

heavier

of Chicago

Economist, Federal Reserve Bank

to replace goods, ;
durables, now that '

particularly

CLOOS*

By GEORGE W.

of another buying raid, it

case

.will not be easy

May
Expected in 19S2

Thursday, December 27, 1951

$328 billion, at an

with a vigorous tax system, de- proximately

JJJJ ^la
ter
of

This

1950.

accumulation

largely cut of the inability
important segments of private

arose

In retrospect, it would appear
that the foremost factor contribut-

position of the woodsmen who re- vices to hinder extreme credit ex- annual rate, reported for the third business to sell goods at the rate
quarter of 1951,
sponded twice to the cry of wolf, pansion, and best of all a growing
they had expected. With commod¬
In arriving at an estimate of
ing to the end of the price rise They aren't going to get excited productive machine which we may
ity prices spotty since March, 1951,
was
the impressive achievement:
roughly $360 billion gross national in spite of a rise in
quite so easily again. This time, ca^ tritely, but truly "the envy of
personal dis¬
of American industry in turning product, at an annual rate, for the posable income, it is likely that
however, it may be the real thing. the world.":.
,,
y
out goods to meet heavy demand jn the
Midwest, department store
On balance, I believe that infla- end of 1952, these observers take this trend of restricting new: indespite serious handicaps. The pil- inventories in October had de- tionary forces will have the upper account of increases in govern- vestments in
inventories will con¬
ing up of goods faster than well- dined from the year before while hand during the next 12 months, ment spending on defense which
tinue* Indeed there is a real posheeled buyers could take them off sales had risen.
.Even stocks of Nevertheless, fears that an- all- will, according to them, more than
sibility private business will bethe shelves satiated demand of television sets and household
ap- out European style inflation might offset probable decreases in gross gjn
actually to liquidate invensome
buyers
and^ stilled fears^of, pliances. were at moderate levels, develop are probably not well- private investment, including new 1 tories some time in 1952. This
others that shortages or further
residential construction.
The as- means that toward the end of 1952
price increases were imminent.
sociated increase in personal dis- the additions to
.

•

......

Mmi

inventories

After
gan to

May, retail inventories be¬
fall off, reversing the build¬

Admitted to Partnership in

Chas. W, Scranton Co.

are

incomes, according to likely to be either nothing or
their views, will induce higher even less than nothing.'
absolute
consumption
spending
The increase of approximately
than the amount which prevailed $1 billion, at an annual rate, in
.»during the. third quarter of 1951. corporate plant and equipment inAecordingly, they expect aggre- vestments was entirely due, in
gate real output to be larger, the the net, to the indirect effects of
general commodity price level to augmented defense expenditures,
posable

up which had helped keep pro¬
duction, schedules tight. The larger '
than expected first quarter Fed¬
eral surplus coupled with credit

restraint
the

measures

helped to draw

teeth of buyers, business and

individual, who

still hungry

were

for goods.
Kven

their

most Americans

buying

were

spree

pared

well-stocked

liquid assets. Nevertheless,'
buying leveled off somewhat

The

;they

below first quarter rates and per¬
sonal income
continued to rise,
new

savings jumped to

Americans

wouldn't

save

their

money anymore—at least in

liquid

forms—it

soon,

became

apparent
that somebody was doing it. Since
March
individuals
have
"not

spent" almost one-tenth of their
income in spite of a long-run ten¬

dency to put away about 5%. By'
far the greatest proportion of these
funds were used to repay debt or

to.build
bank

liquid assets such

Edward A.

Frank

Burgess

Johnson

reached dur-

Edgar

of
is
shown in

1951

the

•

NEW HAVEN, Conn.—New Partners of Chas. W. Scranton &
The appraisal of the American
Co., 60-year-old New Haven securities firm, on Jan. 2, 1952 .'willy*
Economy by the end of 1952, as
be Edward A. Burgess, Frank M. Johnson and Edgar B. Grier, all
shown in Table I, should be seriof the home office, 209 Church Street, it has been announced. All
ously questioned. Instead, there is
of the new partners have been connected with the Seranton organi¬
a
real chance that during this
zation for many years.
'
^
;
"V
:
~
•coming year the Gross National
.

■

Petersburg, Va., and graduated from
yRandolph-Macon College. He served overseas in World War I and.
.Mr. Burgess was born in

was

one
a

Product

high

time American Vice Consul at Rio de Janeiro, Brazil.

trustee of the Church of Jthe Redeemer, member

Quinnipiack Club and

levels

not

rise

reached

above

the

during

the

quarter of 1951. Indeed, in
spite of the large increase in despending that is now being
projected, the present indications

the

past President of the'New Jlaven. Lions

Vy.;:':

will

third

fense

Following graduation from Wesley an University and service ; are the Gross National Product by
the end of 1952 probably will not
in World War I as a Naval aviator, Mr. Johnson came-to New;
be above the level reached in the
Haven to enter the securities1 business.
He" has been active in
church and charitable affairs, having served as
Thomas Church, a member of the advisory board

quarter

•

corporate

1951

does

not

made by corporate business These
investments were supported largehlgh corP?r?te net

^a™iv Imf

cently some sup^rt^ram^ Jrom
the.indirect effects of heavyde-

fenff spending. The first support
™lU ^
throughout 1952 and without Such
support investments.
and
equipment might .easily, be rq^

4^r°^ e aPProximately $37 billion annual
.

.Pr.0^"

uct _by. the. en^ ,pi 1952. This,-im-

•

the gross

na-

pr0(jWC|; couid drop .back to

Product, at an annual rate, fell by
an
insignificant amount between

member of the Graduate Club.

well for continued large
new investments in plant and
equipment. This kind of investment has been at a high level for
some time, significantly above the
annual capital allowances being

Mr. Grier entered the securities industry in Nbw York in 1913 '

decline

third quarter of 1951.
u
►
> i,
,
portant segmdnt of
Even
though. Gross National;tionaj

vestryman at St.
of the Children's

Center and Chairman of the New Haven Committee for the .Gaylord Farm Sanitorium.- He is

drastic

net earnings, after taxes, between
the fourth quarter of 1950 and the

third

toward the end
quantitative
form,

expect

likely to be roughly as
Table I when compared

Grier

The

implications of the pattern ' augur

third quarter of

accounts

and savings and
accounts. These are
the
traditional
places that the
average American puts his extra
cash. Only the poor E-bond ap¬
pears to have fallen victim to the
"protect yourself against infla¬
tion" "talk, despite the fact that
all liquid asset holdings are sub¬
ject to the same hazard.

loan

J1952,

unprece¬

dented peacetime heights. Despite
the sonorous pronouncements that

to the levels

ing the recent months of 1951.

with
as

higher, and employment to be

greater by the end of 1952 as com-

after

the. second quarter of 1951 and the

levels

195Q
was

the

second

when> at
some

quarter

annual rate>

$7 billion less than in

completion of his education and, exceot for three years Army
third quarter of 195L the sharp: the
third quarter of 1951 and
has been engaged
.
..
./
.
whto> it
be rioted, the cotHe is a native of Elizabeth, New Jersey. Mr. Grier-- aeenne m tne ..private. seciOT, oi
net
• ^ft'er tax€S>
the economy was ominous. ILremember of the Finance Committee of the -Episcopal Diocese of
were arountj $2-$3 billion higher
Jne ecV

.upon

; Outlook for 1953

Now for 1952: Once again,
may

look forward .With

service at the Mexican Bowler and ia France,
,

relative

certaiiity to11 a rising' rate' oif de¬
fense-connected qiitlays and
tained

*A talk

•f

ia sus¬

ex-

by Mr; Cloos to the University
Chicago Alumni,
Chicago, Illinois,

Connecticut and

vestryman of St. John's Church..

member pf the New Haven .Country

He is also

and Quinnipiack Clubs.

;

fleeted

imbalance reminiscent

of the turning

than

Present partners of Chas. W.
ber of the New York Stock

Scranton & Co., which is

a mem¬

ExOharfge," are W. G. 'Hoye, P. W. Red-

field, W. J. Falsey, "all of l^ew Haven, B. B. Bailey of Waterbury,
and Paul W.

Sampsell of New London.

perity.to depression that have been'

experienced in the past.

■

* An
address by Prof. Nerlove before
the
University
of
Chicago
Business
Alumni, Chicago, 111., Dec. 5, 1951.
,

those that will

reported

points from pros- for the third qtiarter ef 1951.

•

high level of capita)

December 5, 1951.

it ever since.

Even though hpusehold and

un-

incorporated spending same level
remained
approximately the

in the SeCOlld and third quarter Of
*

•

nrt

COTltlTllLBCL 071 "pCL^O ul

Volume 174

Number 5076

The Commercial and Financial

Chronicle

(2515)

reasoned; that

Factors in Bond Price Trend
By

the

for

this

the

set

lower

demand

other sectors enumerated

above,

•

on his predict'on of forth'
coming heavy volume of bond offerings, holds bond prices are

to continue downward trend.

(1)

amount of

renewed

heavy

bank funds

Cites

inflow

possible offsetting
(2) greater

mand,

bond

prices

accumu¬

been a slow erosion
of bond prices since 1946. The de¬
cline has been
quite
tain times,

only to

sharp at

cline

cer¬

the

be erected

and

even

pro¬

The

gressed.first

sharp

decline;curred

oc¬

during

spring

1946;

the

ond,

which

was

sec¬

.m ore

intermediate

ance

trade.

should

not

previous
flow

This

advance

crest,

rising

above

Buttenwieser Again
•?

Gieat Britain

fall

1 9 4 7.

ensued

but

slow

re¬

which
r

change.

long

covery
c

There

by
to

bank

the

through until early 1950 on government
and high-grade
Corpo¬
rate Bonds, and until early 1951
Municipals

on
-

Corporates,

"were

and

but

the

achieved

not

Secondary

the

have

1946

highs

either

oc¬

casion.

The subsequent downturn
in almost all types of bonds
early
in 1951

unmistakable and apbe conclusive evidence

was

pears

that the crest in bond

prices was
achieved almost six years ago.
An

important development
marking the downturn in bond

"prices early in 1951
cord"- between

the Treasury De¬
partment and the Federal Reserve

The

Board.
draw

the

from

ket,
,

the

clear

evidence

strong

mar¬

that

element of

certain

least

was
one

artificiality

in
the attempted preservation of low
interest rates has

been

discarded.

ably the greatest single
demand in the bond

vestment

par,

insurance tunds

bond

seller

research
of

that

United

prob¬

source

market.

for

eral

Companies

would

the year of

the

assets

Life

$4.5
1951.

duplicate

all

increase

ap¬

during

This would just
the increase of

1950.

''some evidence of support admin¬
istered by the Open Market Com-

However, Mr. Bruce Sheppard, manager of "the Association,
recently pointed out that life in¬

-mittee

surance

Since that time

the

there has

Federal

been

Reserve

sales in the United

States

System, but the prevailing trend
in prices has been predominantly

during 1951 will be about 6%

downward.

continues,

•much
■

bond
in

However,

to the outlook

market than

just

article

there

for the

found

this
in

-attention

one
sector.
In
my
last Week's "Chronicle"

was

called

the possi¬

der the

1950

accrue

volume.

somewhat
the life

un¬

If this trend

less

might

insurance

com¬

panies in 1952 for investment pur¬
poses.
Furthermore, Mr. O'Leary
noted

that

$4.5

the

estimated

billion

increase

insurance

com¬

bility of enlarged financing dur¬
ing the coming years in order to

assets in 1951 was not suf¬
ficient to provide all
the funds

'accommodate the prevailing level
'of
capital
formation.
It
was

required

pointed out that only about 20%
of this capital formation was cur'rently being financed through the

jsale of bonds and stocks, but that
■

in the 1920s

j 50% of-the
<nanced> and

j of

the

jthrough
i
j
I

j
1

(the previous general

period of capital formation) about

expansion
in

1929

expansion
the

sale

was so fivirtually all

was

financed

securities,
Hence, it might be,expected that
enlarged security flotations could
well be expected in the coming
years, which will be largely composed of bonds.

pany

business
be

some

home

•

buyers
There

•

and

enterprises.
may
shading of mortgage de¬

mand next year,
but there is a
question whether or not it will be
of sufficient magnitude to offset
the greater demand of
corporate

ertheless;

ing;

d i

Benjamin Buttenwieser will be¬
come
a
limited partner in Kuhn,
Loeb & Co., 52
William Street,
New York City, members of the
New
York
Stock
Exchange, on
Dec.

Mr.

31.

partner

Buttenwieser

the

service

which he
until

firm,

Government

the

was

enter

United

States

Assistant

High

Commissioner for Germany.

Winthrop

than

true

Curvin

that

merchandiser.

his

wares

in¬

are

but

nevertheless, the banker
offering his product "as is"

the

product

not

is
so

satisfied

offered

him

election

the

Street

ing officers

were

for the year

President

selected to

serve

—

Kenneth

his

valued

customers.
revenue

nard, Jr., Dean Witter & Co.
Secretary—Grosve'nor
Farwell,

Jr., Blyth

Co.,

Inc.

Treasurer—Andrew

Pacific

National

Gaither,

Bank

San

least

Let

tomer

less of the

the

New

York

City,

York

Wall

members

constant,

offering is made.

required,
lull

The banker

in the first place, to
disclosure

can

regard¬

nature of the security
manner
in which

the

Secondly,

Admit 0. K, Williams
New

say, however, that the
responsibility to his cus¬

remains

offered

ough

Co.,'

ways

have

all

facts

bearing upon
the value of the security offered.

Barrett & £to. to
&

principal

are

instance.

banker's

which

Barrett

three

that there

make

Francisco.

must

analysis
that

sure

the

make

the

chaser

points

of the securities ard

Stock

thor¬

security

uniformed

Street,
the

fully protected

pur¬

such

validity of the issuance
the enforce¬

Exchange, will
admit Oscar K. Williams, member
of the Exchange, to partnership on

ability of his contract. Third, he
should make an effort, insofar'as
it is possible, to determine that

Jan.

the particular type of security of¬

Mr.

Williams

will

retire

this year and 1952 may not be
far,
if any below this

figure. Hence,
in spite of mortgage restraint life
not

meet

bond

the

for

bonds may

offerings

neW(

ready to keep his

Exchange,
will
withdraw
from
partnership in Barrett & Co.

customer

informed

Cowen Go. Partner

Morris E.

changes in

make recommendations

portfolio
nesses

changes

become

flotations.

The fourth and last general-area
of demand for bonds will come

the intrinsic value of the securities
and

M. E. Goldstein to Be

the

con¬

moneys

are

adequate, that
be
efficiently
operated and that, in the event of
a
default, the bondholders' inter¬
will

ests can and will be

protected. In

instances, the banker also
upon himself the responsi¬

many

takes

bond fi¬

which he may serve a municipality
or
other public agency, and his

Koch,

Vice-President—Harold D. Bar¬

feasible,

for

construction

In the field of

in each

Walston, Hoffman & Goodwin

as¬

eco¬

municipality, he bility for maintaining a market for
attempt to change the the bonds.
product, but, instead, refuses to \ In recent years, there has been
bid for the issue or to recbmrtiend offered an
ever increasing volume

responsibility to the issuer varies

1952:

who

issuing

banker often finds

annual

not

nancing, howevefy the investment

Club of San Francisco, the follow¬

and

provisions

project

SAN
the

the

servation

revenues

Calif.—At

that

the

with

The bank-

project is

necessary

and

customer

the

tangibles, the evaluation of which

speak.

and" untried

new

own

that

requires of seller and buyer alike
fairly broad range of knowledge,

what

for

far greater responsi¬

his

surance

nomically

San Francisco Elects
FRANCISCO,

public service by creat¬

depends upon his banker for

little

re¬

but nev¬

relatively small
he performs a

bond

assumes

bility

b i d-

does

The Street Club of

functioning
It

and" is

issuer

situdes of construction.

com¬

the

mates of

which.;

market

proposition.

enterprise, dependent upon esti¬
engineers and the, vicis¬

obligation

petitive

Benj. J. Buttenwieser

the

obviously has

for

per

market

it"

assume none,

often than not "a

gen¬

up rrar;.

leave

sponsibility

the

bidder

The

three

when

weak¬

apparent.

ways

which

been offered at competitive bid¬
ding—many without the assistance
of

investment

that

bankers.

bankers

seems

have

every

right

to be extremely critical in
their analysis of issues offered in
this manner, and should be ex¬

tremely careful about accepting
issues which are not fully sup¬
ported by independent engineer¬
ing surveys as well as- a fully

adequate indenture
lution.

The

bond

reso¬

practice of financing

facilities

new

the

basis

city engineer's report—or merely
an
estimate by the city comp¬
troller—should not be condoned.
Let

made

ing

cite

which

cities

two

market

recent

securities

banking advice.an

instances

the

past

costly mistakes by attempt¬

issue

You

bonds

without

recall
finance the
may

expansion of the Indianapolis Gas
Plant.

The

bonds

were

offered at

competitive bidding with a call
price starting at 110%. Within a
years,

the

excess

payment

issue

was

earnings and
a
premium of

five

was

necessary.

seven

points

called
upon

from

than

another

case,

the City of Nashville attempted to
refund
a
portion of its electric
revenue

investment banker may enter the
picture in revenue bond financing

new
revenue bond issues,
and
increasing number of these have

from partnership in E. D. Fox & fered
adequately naeets fhe h
few
borrowing.
About
1.1
million Co. as of Dec. 31.
On the same of the particular investor.
Finally, from
dwelling units have been started date Carl Sholtz, member of the he should stand

insurance demand

expected to

have been put-.,

Life

Insurance

billion

The

bank¬

bonds

Mr.

America, has esti¬

total

States

proximately
about

are

O'Leary, director of in¬

Association
mated

bonds

"take

issue;

obligation bonds The issuer places
the

va¬

much

issue

our

of demand for bonds
may be neg¬
ative rather than positive.
Life

the

valuable

balance to provide funds- joined in 1918, from 1932
loans.
Therefore this source 1949 when he withdrew to

James J.

below

may

shoes

er-bids for and »"•

pegs

permitting

decline

banks

bonds
for

with¬

government

thereby

bonds

that

Reserve

agreement

Federal

though

even

earn-

bond

revenue

prolit

might
have a reasonable inflow of
gold
into this country continuing into
1952, it would appear probable

the "ac¬

was

greater

come

Hence,

*
-

banker is in very much the same
as in bidding for general

ex¬

position

when

great and will be¬
as time progresses.

very

merchandiser

common.
*

loans
will
offer
competition to bonds for

same

and

foreign

assets.

the

offered

matter of fact,

availability

investment

much

types of
merchants

economy progresses, as suggested
in these letters, the demand for
commercial bank accommodation

will

merchandiser

rious

funds,

bank

indenture; and (5) adequacy of

automobiles

—and

light

distributes

Concerning
strong

upon as

securities—in

out¬

Canada

free

trust

An investment banker is usual¬

given investors in

ly looked

Knhn, Leeb Partner

gold might eventually be
in view of the recent
taken

Com-

financial adviser to municipalities
,

expected
actions

ings to meet charges.

trend

further

and

banker's role

contemplating issuing bonds, and lists as matters to be considered: (1) need for the new
facility; (2) its legal validity;
(3) its protection against undue competition; (4)
protection

devel¬

years to

some

judgment.

meats

Ir¬

come.

which erased about 10%- of
the gold stock in America, gold is
once more
flowing in to pay for
the foreigners' unfavorable bal¬

the

Witherspoon

through the bank¬

years

widespread,
happened
i n

William

forcibly.

structure' ously downward for

credit

ing operations of making loans or!
of purchasing
bonds,;. After.,
outflow of gold lasting almost two

time

the

which

upon
can

ground

for bonds of what
may he a new and untried enterprise, but
which he has passed a favorable financial

importance to our economy; opments, the outlook for the price
enlarges basic bank deposits of money-rate securities is obvi¬

part of

the

continue

mary

lost

recover

Stressing continuing responsibility of investment banker to his
customers, Mr. Curvin explains his work in creating a market

if bonds decline, high grade
preferred
stocks
will
also
de¬
respective of

has

Smith, Barney & Co.; Members, New York Stock Exchange
"

ago;

lation of life insurance and pension funds available for
place¬
ment in bonds.
There

will

Financing

By WINTIIROP S. CURVIN*

in the long-term downward trend
that was begun
some
six years

gold;

seeking investment; and (3)

In summary

it is suggested that
with an enlarging volume of bond
offerings in 1952, without a pro¬
portionate
increase
in« the de¬

Stock Markei analyst, in
enlarging

likely

In Revenue Bond

the

from

Members, New York Stock Exchange

factors:

Investment Banker's Role

source

might be expected, but it could
ha.dly be of sufficient size to off¬

WILLIAM WITHERSPOON

Statistical and Research Dep't, Newhard, Cook & Co.

enlargement

some

demand

debt to

save

interest, but

found, to the surprise of few in
the Street, that the market just

Goldstein, member of
would not provide any
saving.
rapidly growing pension the New York Stock
Exchange, are, briefly (I) as bidder at com¬
is virtually impossible
Financial Advisor
will become a partner in Cowen
petitive sale for a ready-made
j
If this greater volume of secu¬ to set a figure of this demand as &
In
Co., 54 Pine Street, New York bond issue; (2) as financial advisor,
order
to
obviate errors of
rity offerings does occur in com- based upon available statistics be¬
City, members of the Exchange. working for a fee on the same this sort and to insure that the
cause of rapid
i ing years, it will have, the ten¬
growth in this sec¬ Mr. Goldstein has been active as
footing as attorneys and engineers; bond issue is not only
It
m i g h t
properlydency to depress the bond market tor.
reasonably be an individual floor broker.
and
(3) as an underwriter in a set up but properly presented
as
.even further;-unless
the demand expected, however, that the en¬
On Dee. 31, Leo Trencher, mem¬ negotiated sale. The main
portion well, issuers occasional*v
I for" bonds
increases proportion- largement of these funds will pro¬
employ
ber of the Exchange, will' retire cf my talk will be a discussion of investment bankers
to serve as fi¬
vide
an
important demand for from
lately. This rests upon the ancient
partnership in Cowen. & Co. the role of the banker in each nancial advisors, the second
prin¬
;and abiding law of supply and bonds.
Nevertheless, the man¬
of these circumstances, for they
cipal way in which the banker can
t demand.
Hence, it is well to ex-. agers of these funds have been
differ materially.
server In serving as financial ad¬
May, Borg Admits
amine some of the demand fac¬ turning, more and more toward
visor, the banker puts himself on
tors.
The principal ones seem to common
stocks
to
Competitive Bidder
provide
a
May, Borg & Co., 61 Broadway,
the same plane as the bond attor¬
Ibe: the gold inflow, bank funds, larger return and also to provide New York City, members of the
As bidder for a competitively
neys and engineers as an
'life insurance funds, and pension some hedge
expert
against
the
infla¬ New York Curb Exchange, ad¬
with expert advice to offer.
*A talk by Mr. Curvin before the Mu¬
funds.
His
tionary
developments
in
our
mitted Gladys Y. Frank to part¬
nicipal Bondwomen's Club of New York,
Continued on
[ ' The inflow of gold is of pri¬ economy, .Therefore, it might be nership on Dec. 1.
New York City, Nov. 8, 1951.
from the

ivd V-.• •

Demand
v

Factors
*

•

.w-•- .*•••• ;.y••• •>

funds.

•

page 21

The Commercial and Financial Chronicle...

(2516)

_■

•

«■

Na IIhUTAVH If AHA 111 All AVI At NlAVllVlff

iiu

Vjiwaiu IlUVaAUCKftiyil VI MIUUUJ

tuation of the
about

the

fatal.
ation.

Dr.

Einzig, calling attention to deterioration of Britain's bal¬
of payments, and the argument of R.

ance

seller's market, which Britain does

not have in most

exportable products. Predicts new Conserva¬
Government will not change value of sterling.

tive

the

devaluation appears, however, fully
as
inexpedient as a revaluation in prevailing conditions.
Its
results would be equally, incalculable. In case of unsatisfactory re¬
sults the consequences would be equally grave; in fact, more so, be¬
cause a devaluation would
aggravate the inflationary trend.

F. Harrod that the

same

reason,

seems safe to assume
Conservative Government will ignore the advice of de¬

the

favor of

revaluation

sterling

ported

abated
.

Indeed, it gave way to speculation about the possi¬

bility of

devaluation,

Our

the ground that the

Reporter

might decide to resort to that
desperate device in order to stimulate exports.
Towards the end of the year agitation in favor
government

revaluation revived to

leading advocate

extent.

some

Mr. R. F. Harrod.

was

palatable

than

now

revaluation of sterling.

then.

was

ing lines: In order to counteract inflation,

The whole market
ment

ture, spending

under pressure as a

was

distant maturities.

capital investment, and con¬
purchasing power.
In addition, the
on

further deterioration

fact, it could

of the

Dr.

Paul

Einzig

near-terms

result of this develop¬

giving ground;,as well
y

the

•

spotlight,

trade balance—in

adverse

improvement of the trade balance—through
changing the terms of trade in Britain's favor, by means of raising
the exchange value of sterling.
He is strongly opposed to the
exported goods.

the

nevertheless,'was focused upon the higherincome issues, which gave
way sharply and very readily in still
very light trading. It is reported more of the decline was due to

cause an

pursuance of an export

with

The

supply position in the domestic market could
be improved by reducing the volume of exports.
In his opinion, this could be done
without

time,

rates, even though it had been realized some time ago
that higher prime rates were well within the realm of a
possibility.

is necessary to cut down government expendi¬
sumers'

This

this rise in

Mr. Harrod's argument runs on the follow¬

•

however, it came
about through an increase in the
prime bank rate by the commer¬
cial,banks from 2%% to 3%, instead of through a pulling of the
"pegs" by Federal.
The market was caught rather flatfooted by

problem not
by increasing the quantity of exports, but by
raising the price of the exported goods by
a

quoting down of prices than to the pressure of selling due to the
volume of securities in the market.
Also the spreading out of bid
and offered prices tended to accentuate the decline.
However, the
always,

drive in the form of cutting the prices of

the lack of buyers.

was

easily by selling less abroad at higher prices.
He brushes
argument that, while a revaluation would have been
justifiable so long as Britain had an influx of gold it would be a

The increase in the prime bank rate from 2%% to 3%
really
put the skids under the government bond market, as far as prices
were concerned.!
New all-time lows were registered in some of

mistake in present circumstances in view of the persistent outflow
of gold.

the

aside the

In Mr. Harrod's

opinion, it is not to be taken for granted that
a balance of payments and
necessarily make it worse.
It depends on
whether the country's productive system is
underemployed or
overemployed.
If industry is not fully occupied then a devalua¬
tion, by causing an increase of the output, can produce beneficial
results.
If, however, there is overfull employment, then the out¬
revaluation

necessarily improve

must

put cannot be increased by means of devaluation, and an increase
in the volume of exports through a devaluation would lead to a
depletion of domestic supplies and would thus aggravate domestic
inflation.
Mr. Harrod might have
added, to strengthen his case,
that while devaluation might be beneficial in a
buyers' market—
such as was developing in 1949—it would be a mistake in
a

market that is

developing

sellers'

now as a result of rearmament.

In spite of these arguments there

seems to be no likelihood of
the adoption of Mr. Harrod's proposal
by the new British Govern¬
ment.
Mr. Harrod, like most
economists, is inclined to think in
terms of global figures without
trying to analyze the detailed
effect of a revaluation on various
categories of exports.
He

overlooks, for instance, the vital importance of maintaining and,

longer-term obligations.

volume

activity, there was
been going on.
Quotations

had
with

only

remark

many

occasions.

Since rearmament keeps

engineering, automobile, electrical, etc., industries fully occupied
they are not in a position to play a very active part in the export
drive.

For this reason, Britain must depend
largely on the textile

industry to fill the

Possibly Mr. Harrod

gap.

may

argue

that

the

from

down

moved

were

standpoint of

different from what

little

very

by dealers,

handful of bonds changing

hands.
The following
descriptive way about the volume involved
sharp price deciine: "We would be willing to bet a

made in

was

in the very
substantial sum that the total volume involved in the
sharp reces¬
sion did not amount to $15,000,000 of bonds."

Nevertheless, for
rather
well

a short time the whole Treasury market was
thoroughly disorganized and that went for the shorts as
the longs. The rise in the prime rate was not
altogether a

surprise, and the seriousness of the reversal largely emphasized
the poor psychological condition of the market.
A market that is

con¬

the

approximately

are

outstanding,

about

value

when

one

price

seen

that

can

l6p2,

or a

common

$23,000,000,

that

at today's;

buys Pabco

practically

paying

nothing for Pabco's own earning
power and plant and equipment.
At
its current price of ,16^,
Pabco
is
selling within ' a/ fejw"
points of its lowest price in, tip
last eight years.
In 1946 Pabco
sold at $30 a share with earnings
of only 62 cents per share.
In
1948 Pabco sold at $28 a share
with earnings of $2.40.
.

Since

1948,

built

two

Jersey

own

has

Pabco
modern

new

itself has
plants in
to expand

in order
of operations, and
equity in its Fibre

scope

its

seen

Board

subsidiary appreciate very
sharply in value. It is obvious,

therefore, that the shrewd inves¬
tor

has

now

opportunity

acquire the common stock of this
very strong company at a bargain

price.

With the increasing

earn¬

ings that Pabco derives from its
.Fibre Board investment, together
with

its

stock

growth, it hardly
that the common

own

likely

seems

Pabco

will

stay

this

price of I6V2 for very long.

Gill fo Be Partner

heavily dependent upon official props for support must be ex¬
pected to be subjected to wide price gyrations from time to time.
This appears to be the "open market policy" of the
monetary
authorities, and they Will beyond doubt keep the market guessing
as long as the
pressure of loans is as great as it is.
However, there
will

be the

same

so-called

"stability support" when it is needed.

In Rodman & Linn
Robert Lee Gill, member of the
New

Linn,

partner

be there when not expected.

change,

Bank

2V2S Suffered Heavily

members

retiring

his

due

Salle Street,

the

Ex¬

Jan. 1. Mr. Gill, who

Havener,

The price decline in the highest income issues took some of
them down to the lowest levels
they ever sold at. The bank 2V2S

Exchange, will
in Rodman &

209 South La

Chicago,

expected and they will

Stock

York

become

This probably means that in order to
put greater uncertainty into
the situation, bids will not be there when

if possible, increasing the volume of
textile exports.
This was
emphasized by members of the former government and of the

present government

However,

and

sum

1,500,000 of Pabco common shares
with Pabco

its

Impact of Bank Rate Increase

of the $21,realized
by
considers

one

there

New

real reason, as

In his view, the desired result could be achieved

devaluation must

When

Pabco.

The government market got another helping of that "Christ¬
Pudding," which it had four year ago, and it wasn't any more

mas

to solve the balance of payments

mind but that

fact that

In a

siderably in excess
000,000
would
be

By JOHN T. CHIPPENDALE, JPv.

Its

number of articles he pressed the government

means

Governments

earnings were re¬
consolidated basis.
Moreover, were Pabco interested
in disposing of its ownership in
Fibre Board, there is no question
if

share,

per

LONDON, Eng.—As a result of the deterioration of Britain's
balance of payments during the second half of 1951, the formerly
considerably.

Security I

proximately eight times earnings
per share, Pabco is really selling
for less than four times earnings

valuationists and revaluationists alike.

persistent pressure in

page

Like Best

Allowing for all the above arguments it
that

from

The

For

remedy lies in upward revaluation of sterling, points out plan
would be effective only in

Continued

This is the

bound to

By PAUL EINZIG

pace of the outflow through an error of judgment
incalculable consequences of revalution might prove
reason why the trend of the flow of gold is
affect the weight of arguments for and against revalu¬

Thursday, December 27, 1951

from

Gill

partnership

Co.,

will

make

New

York

City.

Sept.

15,

because there
To

be sure,

1967/72
were

the

were

practically

the restricted issues

weakest

all

these

securities

buyers at all for this obligation.
went

down

fashion, but
nonethelss stabilizing bids for these issues, some from

this could be done by
exporting less textiles at higher prices. In
view of the growing international competition in the markets for

there

textiles, however,

practical businessman could possibly endorse
this argument.
If sterling were to be revalued Britain would
impose a grave handicap on textile exporters.
'+
v-

Benjamin
change

How far the decline in Treasury issues will
go appears to be
the leading question at the moment. No one can answer this accu¬

member,

Bampton,
will

Ex¬

withdraw

from the

While there is undoubtedly a sellers' market in.
respect of
goods affected by rearmament, there is decidedly a buyers' market
in respect of textiles,
pottery and many other secondary neces¬

headquarters

sities and luxuries.

theory Mr. Harrod

appear-to be right
in assuming that a decline in the volume of the
exports of these
goods resulting from the increase of their price through a revalua¬
tion of sterling would be more than offset
by the increase of the
proceeds per unit exported.
In practice, however, in a buyers'
market the decline in the volume of exports
might prove to be so
heavy as to result in a substantial net decline in the proceeds in
spite of the higher price of the goods exported in terms of
may

foreign
While there is
everything to be said in favor of raising

Currencies.

the prices of

engineering goods in which there

it would be difficult to make out

goods in which there is

case

for

buyers' market.

sellers'

market,

raising the prices of

were

private sources—small
to

them.

save

talking at this time.

and

low-priced goods will stand

their share in the
The least that

Markets

power.

gamble.

to take in

one

can

say

gold.

maintaining

against revaluation is that it would

It would entail risks which Britain could ill-afford

Wotild'tfoif'^ntd|I

devaluation^

During

unduly

period of gold influx

tpje-j!#pc$t

or check

the flow of gold.

But the

some of the recently imported

Duringperiod of heavy'gold outflow, however;

grave consequences.-' Pos¬

Avduld»^low down the influx,

altogether,;* £ossit$y <-1t; anight Reverse

puntry

U. S. TREASURY
STATE

an
easing trend. It could happen well before that time with some
help from the authorities. The reason for the belief that money

and

will be

plentiful after the turn of the year is due to the fact
that substantial tax payments to the
government the middle of
next month should begin to flowr back into the
money market.
The tax payments, if kept by the Treasury in commercial
banks,
will

MUNICIPAL

SECURITIES

bring about investments by these institutions in the short-

term market.

rates.

This should have

favorable effect upon near-term

Continued

Uncertainty Likely

As to the

likely to contract,

better chance of

shrinking markets.

prevailing conditions.

miscalculation'

sibly

are

from the firm Dec. 31.

substantial

It is, however, being guessed that the

ex¬

curtailing

purchasing

short-term rate will tend to stabilize below what has been reached
here recently, because after Jan. 15 the
money markets should show

consumers'

others

the monetary authorities, and they do not appear to

Nor is there any reason

believe that conditions might change in favor of
British
porters of textile and other goods not affected
by rearmament.
many countries efforts are made to check inflation by

sure—and

•

rately,
be

monetary authorities/ Treasury trust accounts, according
reports, were the main buyers with. Federal doing the job for

an accen-

est

longer-term, higher-income issues, where the great¬
demoralization has been, there will be stabilization
only when

the monetary authorities want it that
way—most likely on a wider
fluctuating scale than has been seen—but again, this depends upon
the powers that be.
The budget will be of prime importance to
these obligations because the deficit and its size—or the
lack of
it—will be one of the
determining factors. It will take time to

get the

answer

this one,

but unless defense expenditures

substantially larger—and this is

financial experts are looking for a
would be helpful to the
long market.

standpoint

ment

From

fraternity.

some

members of the invest¬

Broad

Street

45 Milk Street

New

BOSTON 9
HAncock 6:6463

Year

All

JJL

NEW YORK 5
WHitehall 3-1200

!•;.';

Happy

& Co.
INCORPORATED

purely arithmetical

yield of 2.74% to 2.75% for the longest bond issue is

looked upon as the rock bottom

Aubrey G. Lanston

are

debatable point—many of the
balance on a cash basis.
This

'".A:'''

Volume 174

Number 5076

The Commercial and Financial Chronicle

(2517)

Duties of Stockholders
Minority shareholder representative, asserting ten-share
important
of

ment

at national ballot

the

statement.

proxy

stockholders'

least to

Asserts

far exceeds their

votes

shareholders

box, gives advice

read

their

number, and
companies'

state¬

proxy

importantly further rise of American

economy as

individual investor's

tect

pro¬

right

than the

means more

receive

dividends!

Be-

cause, whether or not you realized

it, when

you

bought stock and
ceived

re-

your

certificate you
became a

partner

big

business.

;

need for

prised

old

reading

your

how

knew

you

many

stockholders tell me that if they
had read their proxy statements
first they would have voted differently.

This

does

not

have to read
statement.

every

that

mean

line of

not

you

proxy

frightened

C ertainly .by its size. If it:is bulky

proxy

For you would be sur-

you

will

ignore .find it summarized in ah accomrights panying letter from the President,

you can

WV " your

j* and

r u n

waste

tion,

any

the

;

basket

Un ited

can

proxy

also

part
in civic affairs
no

But if too many citizens do
this,

they

your minds how
you wish to vote on an issue you

will

generally

the

get

kind

same

last

way

want

vote

the

asking

But

let

It will help

understand other proxy statements when
year.

you

never

fijnH is

.our

will

Note I said this is

they

ilarly

too

when

their

and

sometimes

ten

your

the

just

100

important

vote in the ballot box

day.

Both

but

tor

and

which

right to be

well

him

assures

the

full partner in deed

suits

out as informative a proxy statement, but even here the trend is
in this direction. Eventually I exPect Congress to pass the Frear

and

both the

governmental

worlds.

stockholder you will have

the

right

and

where

informed

when

election

your

At present most
unlisted corporations do not send
as name.

Bill which would require the unlisted corporations to send out the

directors—those who manage your
business—will take place. In the

and personally I trust that when

corporation

blocks

many

quite

stock.

sometime

year,

this

vocal

because

learning

are

these

subjects

meetings..

The

have

you

received

notice it will be up
choose

the

attend

person, as many now

your

you

meeting in
do, or if you

prefer to be represented by proxy,
A proxy is merely the power to
allow
you

sole

else

someone

the meeting.
of the

which

you

notice of the

That

will

represent

That is the

purpose

proxy

find

with

meeting.

someone

may

card
your

statements,

proxy

be the rep-

pqwer, an opposing slate, if there
should happen.to be a contest, or

statement

proxy

looking at is that

now

are

Ameri-

can Tobacco for their April, 1951
meeting.
American
Tobacco
is
owned by about 75,000 stoekholders, all of whom receive the same

document.
the

first

You

are

and

will

page

notice of the
ers

ment

resentative of the management in

notice

devoted

meeting.

that

the

Stoekhold-

told where it will be held

what
will

matters
propose

the

for

manage-

•

vote.

At this particular company for
number of years many indepen¬
dent
stockholders felt the pay¬
ments

executives

Therefore

the

cor¬

used

the

proxy

statement
of
the corporation to
bring Up this question at a num¬
ber of meetings.
Each year, al¬
though of course still just a mi¬
nority vote, the size of the num¬
ber

1950

....

ballots
we

continued

had

over

grow.

the

many

other business

meeting

the

you

will

have

the day of the
location of the

meeting may be far removed from

?!)f„re%%7

i",-the C0FP01?-

7
°" ,w.
?
fTnd m eve2 Proxy statement
2,55 J17.Sef

dis-

and

of these people were
frightened by deflation
than by the possibility of inflation.
some

They did not yet realize fully the
disastrous effects of a prolonged
deflation, and the British had not
yet

demonstrated

and

that

incon¬

markets.

The question of "why?"

be covered

can

by saying it is an
national government

effort by one
to

achieve

advantages

some

enlarge

these rather

upon

flat statements.

Devaluation,

change

the

local currency value downward, is

frequent than its

op¬

posite. In fact, the opposite change
is

infrequent that

convenient

phrases

word

forced

are

describe

it,

such

awkward

"upward revaluation,"

"appreciation

rency."

have

one's

cur¬

was

mentioned iri these

remotely than last

terms

June,

when

the

Commission

for

Economic

"drastic

recommended

(ECE)

Europe

of European currency

unhappy conditions there

revisions"

the end of 1947, and so he

had hot

yet observed either the
the 1951 British crises.

1949

values in its

Americans, I firmly: believe,
write like

(and
Chinese, more
lately) who in recent times have

had actual experience with infla¬
tion. Our currency value has been

relatively stable for

time that

really

that there

was

sufficient amount

of interest in this question to

jus¬
tify the Board making reductions.
The figure chosen as a new maxi¬
mum is only slightly in excess of
the
$200,000 we had ^suggested,
assuming present tax rates con¬
tinue

racy

means

effect, and since democ¬
compromise

ac¬

cepted their proposals and did not
renew our

own.

I have gone

into

some

detail in

10-share

votes

can

you think the increase in number
of shares is warranted.
Remem¬

ber,

new

stock' does

equity and

dilute

On several occasions

1950 there

were

currencies.

that Aus¬

others,
"appreciate" their

Nothing

came

of these

Secretary

and

rumors,

during

perhaps

and

about

were

rumors

the

fear

still think

usual

in devalua¬
tion is deliberately to make one's
currency cheaper in terms of an¬
purpose

ing prices

high relative to a second country's
prices, this trade disadvantage can
be corrected by keeping them so
but making the currency in which
they are expressed available more

cheaply to foreign buyers.

to the flood of paper money, and

guillotine

and

continued;

native would be

the
No

word
one

cially

one

necessary
on

the

cause

anathema.

right mind, espe¬

in public office, would

mention

But times and ideas

can

opinion
more

stoutly

money

was

in order to do business

new

price level, but that
was in no sense

money
of high

prices.

The real

sought for, writes Edie 3

gance, and

host of other phe¬

nomena."
Just
there

couple

months

ago

a
London dispatch to
the "Wall Street Journal", saying,
in effect, that the rise in bank¬

was

notes and deposits was no occasion

for

alarm, since it
by higher prices.

was

necessitated

Devaluation No Longer:

change.

;

Dishonorable

alter¬

possibility
seriously to be considered.
even

relied upon to

"in profiteering,
scarcity of goods,
high wages, consumer extrava¬

deflation. Today

deflation
his

the

was

enforce control of prices.2
In. the
inflation of 1920 in England, "the

Thus

your

more stock outstand¬
SEC. I .might say, of course,: ing means it takes more money to
that SEC aets merely as a Board pay the same dividend you have
of EIections in giving stockholders been getting. On the other hand,
these data—it takes no sides-in if the company thinks it can use
how shareholders vote—its func- the extra amount of stock advan-,

the

the internal inflation can be main¬
tained

attributed to the

were

greed of shopkeepers rather than

other's, and the idea here usually
is that if local prices of goods are

That

always have done.
In post-revo,lutionary France, for example, ris¬

The

control it.

can

symptoms and describe causes,
just as people all over the world

cause was

the ECE recommenda¬

can

firmly

long

is open to doubt, because
still fail correctly to identify

Treasury Snyder put his foot down
tion.

apparently, do not
inflation at all.
We

we,

preponderant

Europe

can

Europeans

maintained that

this because it is only

Kingdom,

1950.

Survey

are any

sort of measuring stick. But: Dr.
Chandler's book was completed by

for

itself against the rest of the world.
Let

The British have not yet dem¬
onstrated it,: either, if the present

tralia, Canada, Mexico, the United

President

new

The next management proposal
a aidates for Officeaccredited representatives of orOn the next page you will find is one to increase the amount of
This
kind
of
ganizations such as the Federation the names of- the; candidates for stock authorized.
of Women Shareholders, who ex- the office of directors of the cor-, proposal comes up frequently and
pect to be at the meeting.
V
poration. Likewise the number of you must judge for yourself if

:: Since

home

less

Hahn, the capable

getting corporation reform.

In 4931

still

Economic

voting

are

govern¬

forerunner

rises

would have penalized any govern¬
ment that permitted it to happen.

with us.
We were
prepared to use the proxy state¬
ment again in 1951, but Paul M.

stock

ers expect to make at the meeting, fective
„

merely

which would be established in free

also told what regard to the background of this
Pr°POsals independent stockhold- question, because it shows how ef¬

Stockholders

which

subject to all the
weaknesses, of any attempt of
government to name and enforce
any prices different from those

other independent stockholders or

tues,

time comes, you will urge of the corporation, realized (since
in the spring of each your Representatives and Sena- he had been
presiding over these
the great majority of tors to vote for its passage,
meetings for a number of years)
happens

cases.

After

Now it

price

plied.)

to respectable

Also

the

world

kind

same

the

price

and

election

change

markets
astrous

Partly, it was just because; ments announce they-will pay for vertible paper money can be man¬
'many stockholders have learned- foreign currencies in terms of their aged
successfully." (Emphasis sup¬
yote independently and that 10- own. As such it has all the vir¬

later years.

election day

protection of the American inves-

rise

one

is the grand
total which make up the final recorporation

to the other.

Naturally, those devising the bo¬
nus plan then never expected the
amounts to be paid to anyone per¬
son
to reach the size they did in

be small items in

may

themselves,

your

mean

parity," which was
grains of gold, of
specified fineness, in each relative

vote

number of

This is one of the many fine
rules devised by the Securities
and Exchange Commission for the

dividends

"mint

the

much

I think all must agree that

cease.

is solicited,

an independent one.
You may wonder how this came

did not smoke.

your proxy

It used

the

proposal, not

deserve;

deteriorates

today, in the world

other.

management

many

investment

artificial

workings of supply and demand
are
deceptive. Concludes, currency

downward change in the ratio of
one national currency unit to an¬

reduce the amount of money paid
out in bonus payments to officers.

poration were out of line with that
sim- they start coming in your mail in
paid
competing companies and
investors a few weeks. A proxy statement
contrary to present day standards
take little or no interest in the is required of
every corporation
of thought.
The reason for this
corporation's affairs they too also which is fully listed on the New
state of affairs dates back to 1912
find that in the long run the value York Curb or Stock
Exchange, if at a time the ladies
government

Devaluation

management proposal to

fix

cannot offset

of modern economics and govern¬
ment
management, is simply a

you

item

revaluation

instability is product of "too much management" and quotes
late Dr. Anderson on greater
advantage of gold based currency.

the

with

proceed

and

managed currencies, but their efforts

and results of their actions

The

devaluation

exchange rates

•

both

out

managed currency system, and resort to them is
longer considered dishonorable. Says economic nationalists

want

con¬

someone

parts of

and

over.

proxy.; The next

our

other

them

vote it.

meetings.
I
will now pick at random a typical
interest in his government, proxy statement which came out

any

are

of you have read several proxies that
to
they generally follow similar pat- ;
share ballots add
as terns
and
therefore
once
you

just
citizen in have made

take

putting

Points

are

pertinent subject when returning

corpora-

States
Lewis D. Gilbert

mechanics.

these

explains meaning of devaluation, and describes

its

hesitate to note your views on any

ning

your

comments

Mr. Van Cleave

here

say

cards when returned.

days

take^ no giving .you. the .high spots at a.
•part in the -glance. You will also find after (about.

in¬

managements take into

interests.

statement.

American

;..

the

I might
will find that

sideration
proxy

Ownership

the

Incidentally,
that you
more

well

management

dependents who have your proxy,
they are bound to follow your
instructions.
^ 7

Concludes intelligent voting at company elections will

ments.

the

By ROBERT VAN CLEAVE*

C. F. Childs & Company, Inc.

(

all

urges

Devaluation: What It Is, and Why

directors

both

treat¬

of small

importance

no¬

proxy that your
be voted only for

your

should

owning at least 100
shares, for example. Your proxy
will automatically be so voted by

vote

shares
the

By LEWIS D. GILBERT*

Ycu have the right to make
tation

But this is

into

a digression, although
closely related matter. De¬

valuation and its

opposite, appre¬
instruments employed
techniques of currency man¬

ciation,
in the

are

agement. No longer is devaluation

brief thought of as something shameful,
th'e area in which vou live
vou
It is now
passage
a mod-, or even dishonorable.
ern
economist, Lester V. Chan¬ perfectly respectable and legiti¬
o
D OXY iorm.
to use the proxy form
dler.! Writing of a period 20 years
v? ..
mate, and rules can be laid down
ago, he says:
Read the Proxy!
as
to when to employ one, and
tageously
through
purchase
of.
"Some countries opposed such a
However, before you-sign and
*s f
■/
P^opfrly to other companies and so on, as op¬ depreciation of their money in ex¬ when the other. Crowther says:
execute the proxy to the manage- seem2 that you get the facts,
portunity comes up, then the earn¬
"The rough rule-of-thumb, there¬
ment or to any independent group,"
' This
information as to how ings may. r be increased and the change markets for various rea¬
sons: (1) In some of them, notably
fore, is: in times of war and scareyou should read your proxy state- many shares those who ask your
move may be a wise one.
Or again Germany and Austria, exchange
ment in order to find out what is suffrage own may help you decide
Continued on page 26
the
amount
of
present earning depreciation was popularly associ¬
to take place at the meeting. As a that your, proxy should be voted
power may be such as to justify
2 See
ated
with
inflation :of. internal
Andrew*
Dickson
White,
"Fiat
general rule you will find that in for
the management nominees, the issuing of new stock in the
Money, Inflation,;in, France."j
addition to the election of direc- either
through
returning
the formA of stock
dividends as
so
price levels. The people of those
tors, there will be other business Pr°xy to the corporation or asking many have been
v3 Lionel D._>Edie/r"Money, Bank Credit,
doing in recent countries would have viewed a
and Prices," p. 366.
of importance to the owners.
'
y°ur independent representatives years.
He also quotes Ed¬
'
'
fall of their money in ^exchange win vCirtnan,'»"An' Eebhdmist's Protest,"
It pannnt imnrpss' too strontdv t0 d° S0'
0r 0n the °ther hand
1
ieannot, impress too strongly
Now at this point a word about
p. X.;, "It is almost incredible now, but
you may think that the amount of
it
is a fact that everywhere most of
♦An address by Mr. Van Cleave be¬
how you mark your proxy. If you
♦A talk
bv Mr. Gilbert before Adult stock owned by some nominees is
those who were regarded by the public
fore the Municipal Analysts Group, New
decide you are in favor of the- York
Education Group,- Montciair, N. J., under
monetary experts refused to believe
insufficient or in some cases you
City, Dec. 14, 1951.
the auspices of-the Federation of Women
that, the paper issues of their own par-,
management proposals, vote an X
Shareholders
in
American
ticular country had anything tor do with
1 Lester V. Chandler, "The Economics
Business,
fl"d they-do not OWn any at
*
November 20, 1951.
Continued on page 17 of Money and Banking," p. 407.
all and you think they should.
the rise of prices in that country."

sfthe

I can cite
from the work of

prove

it,

x,.,«

The Commercial and Financial Chronicle... .Thursday,

(2518)

com¬ of the Dividend Thrift Plan has
1;04€,779 contributed materially to the in¬
date last year. crease in shareholders, tne report

to $15.04 on 1,201,490

with

pared

National

chares

Mutual Funds

investment

Nov.

17.10%
An

THE APPEAL

of mutual funds is

broadening

Open

include-the

income

Account

well

Prospectus

upon request

Theodore

NATIONAL

SECURITIES

laborer
120 Broadway, New York 5, N.

two
Fund
by

Wellington
R.

Kan.

vern,

RESEARCH CORPORATION

The

Holloway

railroad

—

Labor

had

earns

plus cash in
time.
holder

The

not

1951

of
Mr.
Holloway's
written in pencil, opened

tflUlf

The

2, PA.

Wellington

new

then

holder

went
owns

new

had

declined

railroad

do not have

financier,

buy

letter, etc."
The Wellington
common

/i Mutual

sion to

Investment Fund

him

Mr.

from

investment dealer

Established 11191

New York

One Wall Street

for

some

here

use

revealed

Kansan

the

corner

Fund

market

company."

with

the

would

for

Fund

vestors

nine

net

asset

creased

Oct.

with

pared

-1, 1950.

cash

fensive

31.5%
The Keystone Company

ten

prospectuses

describing

if/i.

,.C.......i.4.^,.;..:

id..'.;-..-'!..■

State.......

...

D 24

Hare's

stated,

15,

the

overseas

freight.
"In

our

opinion,

general realization by the public
net

earnings

OPEN-END
TOTAL

Wide

gross

NET

snould

Oct.

31, total net assets
$10,000,000 for the

passed

first

;

Dec.

the

and

stocks,;

15.6%

£//e

fact, Republic
currently as a bal¬

four-to-one

-from

stock

split,

45 cents per share

Nov.

30,

Nov.

1951

amounted

24.

■

machinery

and

3.90%

50 State

Fund

FUND reports total net

year

tribution

dividends

from

net

income for the year ended Oct. 31
amounted
a

than

share; in addition,

of $71.2 million

holdings
oils

utilities

were

11.1%?

Street, Boston

•

Oct. 31

•

11.5%,

and- chemicals

at
\,

6.6%.
LINE

totaled

Nov.

Fund's

assets

$7,700,000

com¬

pared with $1,700,000 at the begin¬

nearly

his

the

fund

Amsterdam

since

the

Stock

Netherlands

months

about

was

date,

first

produced

were

manufacture

the

than

six

Tripp

should

5,000,000

were

record high for the

history of the

company

the

year

according

stockholders.

1951

Assets

annual

report

$1.62

total
a

to,,
as-

gain of

was

1.7% in cash.

SINCE REOPENING for the issue
of

issued

Scudder,

1950,

Common

the

spring

Stevens

Stock

Clark

has

Fund

than quadrupled in size, with total

nit

assets

on Dec. 10,1951 amount¬
$3,096,485, equal to $29.08
share on 106,499 outstanding

ing to
per

shares.
value

The
a

per

ago

year

net

asset

$25.32,

was

52,499 shares.

Scudder, Stevens & Clark Fund,
reports

total

net

assets

10, 1951 of $37,362,000, equal

$58.91

per

outstanding

634,220

that

date.

This compares with total net assets
a

year

lent

were

new

Shares, Inc. at Oct. 31, 1951
fiscal

million for

Forty-six percent of
in cash, 13% in pre- 1
l'erred stocks, 24% in bonds and

any

Oct.

reported

months.

the fund

Dec.

FUND

approximately $200,000 in the last

Inc.

a year
,

1951.

$97,327,210,

against $10 million

over

half

quarter,
indicating,
Mr.
said,
that
the
industry

Loomis-

Output of television sets for the
nine

ago.

sets of $1.3

reception

mutual

The

ago.

year

shareholders

from

paid.

the Fund be¬

year

COMPOSITE

Bank established the approved list
of American securities in 1940.

end

Fund

million

cents

shareholders,

that

the first

units in

Mutual

$10.5

Sayles Second Fund reported as-sets of $11.9 million on the same

was

report

Tripp said

first

distribution

cents

capital gains

LOOMIS-SAYLES

lion

outstanding, as against
earlier. Total dis¬

were

of $33,475,000, equiva-

ago

$55.88

5.99,028

outstanding at that time.

50,956,652 out¬
earlier. In¬

total

assets

Oct.

Mutual Fund Notes
Lord, Abbett & Co. who manage
then

$200,000,000

assets

companies,

investment

have

31, 1951

was unrealized apprecia¬
agreed to a reduction in the man$24,307,307 compared with
agement fee paid on American
$15,360,608 one year earlier.
Business Shares from Vz of one
In noting that the growth
in

tion of

assets results not only from an ap¬
preciable gain in the value of se¬

curities.owned, but also from

per

cent to % of

Dec.

increase in the number of shares

one

effective

annum,

1951,

per

cent per

retroactively

the

beginning

with

owned

36,000,000
of

50%.

contrasted

31, 1950.
on

The

periodic

compared
1945, an in¬

More than

persons now own
as

1951

53,000

Dividend Shares

with

49,000

through

with

companies
ticable

desire

investors

whenever
do

so.

reduce

prac¬

use

Diversified Investment Fund

ports

that

1951

was

one

Business Shares
I'ra^jiecius

ujutu

request

LOKD, AimKTT & CO.
Chicago

con- %

investment

American

—

Oct.

purchase of shares
basis

formity
costs

The action is in

year.

American Business Shares current

purchased by investors, the report
points out that 54,000,000 shares tiscal

New York
.

building materials.

31, compared with $7.7 mil-'

George

Putnam Fund Distributors. Inc.

from realized profits will be paid
Dec. 31 to holders of record on
Dec.

trical

cf <Ojo6ton

per share
income and a

its

Oct.

31,

FUND

securities,
9.03% in chemicals, 7.15% in elec¬

assets

Oct.

PUTNAM

^ cents

investment

11.20%

petroleum

present

fund.

assets

Television-Electronics

462,953

crease

Nation-

$18,066,268 comparedwith
$15,601,721 on Nov. 30, 1950. Net
value

included

holdings

had

were

asset

year-end, Investors

758,445

time.

were

rise."

REPORTS

assets

Securities

At its fiscal

ning of the year.

Since

net

and

nearly

ending Oct. 31, shareholders were

relatively de¬

common

preferred

distribution of

City
J

run

dividend
Address

in¬

Fund announced that, on the num¬
ber of shares outstanding after the

•.

year

ago.

TRUSTEES of Massachusetts, Life

•

Nam

position

lis being

Organization and the shares of yotfr"

Funds.

over

cash and bonds.

anced
me

1951

first

moved to values over the long
term, thus the most advantageous
time to purchase stocks is prior to

$5,446,226, com¬
$1,803,945 on April

.time—52.9%

Please send

the

present^ prices of aviation stocks,
in relation to anticipated increas¬

equiva¬

$831,929 and

$12.91,
a

a year

that

and

$12.01

cluded

■-

The Fund is
(Series 51-52-53-54)

Fund

with

standing shares

passengers

31, 1951.

valued

assets

(Series K1-K2)

COMMON STOCKS

the

compared

equal to $1.79 a
54,181,431 shares out¬
standing and compared with tolal
net assets of $82,490,652, equal to

31,

lents equal to

PREFERRED STOCKS

Net asset value stood
as

80% of all domestic and

"It

leverage through
borrowings
amounted
to

.$800,000,

your

for

has

value

Oct.

bank

(Series B1-B2-B3-B4)

9, Mass.;

Aviation

its

told in the Fund's annual report.

VALUE

period in 1850.
Aviation
Group's investments, in addition
to holdings in aircraft manufac¬
turing, cover stocks of airlines
which are presently carrying over

many

by 27% from March

>1950 to

BONDS

50 Congress Street, Boston

months

gain

$12,000,000 during the fiscal year

TOTAL NET ASSETS of Dividend

same

The leverage was used primarily
for income purposes, although the

FUNDS

investing their capital in

tax-

are

Republic In¬
averaged about ing net earnings, seem low and
6.1 % since it has been under the thus appear to leave
plenty of
Pr i c es
management of E. W. Axe & Co. room for appreciation.

CbiistodianlEuntL
INVESTMENT

doubled

than

THE LEVERAGE of

Certificates of Participation in

Pennsylvania.

Shares, Hare's Ltd. says
that the net operation income of
the country's
15
major airlines

other
people to become shareholders of
Wellington Fund."

eystone

its

Investors

$1,619,942

issued

report

4,000,000 units of which well

Group

He concluded

for

REPORTING

any

recommendation:

good

by Axe Securities

foreign franchise tax.

Consequently

single stock purchase in
any one week amounted thus far
to
$74.
Of this transaction -he
wryly commented: "I do not aim

annual

free of the Penn¬

l'ree

his

that

Axe-Houghton

now

has paid the

largest

foreign corporation in Penn¬
sylvania, it is only subject to and
as

when I need it badly."
The

declining

Because the Fund has qualified

Melvern

$4,230,000, according to

by Chester D. Tripp, President.

con¬

Monday, Dec. 24.

Holloway's reply: "You

letter in ways to help
sell
Wellington Fund shares to
railroaders, labor union men or
others you have in mind.
"I believe," he continued, "it is
a
good
idea to buy shares of
Wellington Fund and other shares
of other Funds, besides keeping

CALVIN BULLOCK

the

than

Fund's

the

cent from mid-

announced

was

may use my

the

net

sylvania Personal Property Tax, it

Here are some of the comments

write

its fiscal year, from $5,560,022 on
Oct. 31 last year, an increase of
more

Exchange

permis¬
the letter publicly.

use

1951,

Inc.
rose- to
Oct. 31, 1951, end of

came

SHARES OF

$28,383,764,

from

compared with $563 million a year
ago.
The largest common stock

Fund,

August of this

Fund B are

assets

rose

Electronics

$9,792,619

listed

and

Fund

Stock

assets

the Fund's shares by Dut.ch inves¬
tors had been quite favorable. In

NET

TOTAL

BOSTON

asked

and

From

was

humor

3.99%; railroads, 3.13%; and auto¬
motive, 3.07%.

1951.

of the Kansan that

sense

wrote

the

with

struck

assets; oil, 6.19%; retail trade,

February to mid-September

executive

common

Mr.

one-half of

60??.

15,

decline

considerably,

Thanks for your

time.

one

rate

Feb.

1951, largest indus¬

utilities, 9.37% of total

were

adds.

Stock Fund's principal investment

sumers' dollar has slowed up

and

laborer

rich uncle to be

shares at

track

additional 5C.

Since

lington Fund shares.
I like to be
shareholder or stockholder.
I
a

declined

pur¬

of the dollar

coming effective, the dollar

the

Korea,

power

15,1951,
when
the
Gereral
Ceiling
price Regulations were be¬

con¬

with this assurance:

bonds,
45.91%;

other
stocks,

holdings

group

have

June 15, 1950 to Feb.

including

funds.

try

by the end of

June

tilities

disappointed with the Wel¬

not

your

1939, the

it stood at 77C.

war

share¬
explain

shares in

companies

mutual

cluded

<<■

free prospectus

1914,
$1.47 (1935-

chasing

variety

$1.01, and

the

1951."

several

For

highest

value of the dollar had fallen

good letter and folders and

that

»v«. >»:«»:•

the dollar

15,
1950, just
prior to the outbreak of hos¬

•

that

Oct. 1,

ifliWAflfklAJil

PHILADHPHU

be¬

prospectus'for Wellington Fund, I
have bought two shares, and have
received a dividend of 40 cents on

from

prospectus

City

September

of World War II in

polite acknowledgement:
."Greetings," he wrote, "I received

Nov.

cash, etc., 3.39%.

stocks

39=$1.00). At the beginning

your

and

its

16.27%

purchasing

York

1914

when it stood at

first

The

with

New

reveals

was

wrote.

letters,

cents

bonds

assets;

common

Holdings

amounted

At Nov. 30,

net

increased from

were

19.04%;

net

pre¬

TOTAL NET assets of Television-

trend

tween

sharecropper,"

54.8

of the consumers' dol¬

lar

share or two at a
to
be a share¬

fallen

power

want

In terms

mid-September.

philosopher who
his money the hard way,
it, and then Invests his sur¬

homespun

saves

Department's Bureau

prices, the pur¬
chasing power of the dollar

Wilkins, Vice¬

and

holdings of

Government

15.39%,

15, 1951,

report by the

1935-39

The Kansan's letters reveal him
a

of
all-

1951

>total

power

Sept.

of Labor Statistics.

-President to the Fund.

low

according to

track
himself

described

to A. J.

letters

time

Mel-

purchasing

the dollar dropped to an

in the purchase of

recently

30,

Dollar at New Low

An
in¬
furnished

groups.

stance of this trend was
Details and

lower

the middle- and

higher-income

30,

ferred stocks

By ROBERT R. RICH

Investment

same

During the three-month period
ended

Program

shares,

$14.90-on

the

December 27, 1951

—

Atlanta

—

•

Los Aiigclcx

re-

the >

Volume 174

Number 5076

The Commercial and Financial Chronicle

best years in its
history. Total net
assets
increased
by more than

$5,000,000,000—over 25%.
4

..s,

Common

T /'

■

stocks

acquired

Nation-Wide Securities
during the
three months ended Nov.
30, 1951
included
1,000
Bigelow-Sanford
Carpet Company, Inc., 1,800 Equit¬
able Gas
Company, 3,000 Falstaff

Brewing Corp., 5,000 Interlake
Iron Corp., 2,000 Pfeiffer
Brewing
Co., 2,000 J. P. Stevens & Co., Inc/
1,700 West Penn Electric Co. Sales?
of

stocks

common

Illinois

Central

Consolidated
General:

and

ford

ing, is
F.

shares, including

available

request.

upon

EBERSTADT
39

of offer¬

terms

Broadway

•

ioin* 1Jj?et*ng ,of clients to

'near

talk

from

than

accomplished when the Roekford,

tion should be maintenance of stable dollar.

firm

angles:

(1)

The

fact

that

these

in full in

Investment

favorable

tax

rata

pro

the

Trust

voted, subject
ruling, to dis-

economics addresses investment
and salesmen, .or s some

Chronicle1 oealers

of The

the

share--.

general group, suqh as .a business

club' where

a portion y of those
Present may. but'many'may not,
be interested in securities. ; : ? /
,

holders part of the Trusts

holding
The method of - organizing this
Corp. of America. The. project
was
unique.
The
six
Trust owns 38,600 shares of Shera- dealers constituting the Roekford
ton purchased
at a cost of less Securities Dealers Association
than 60 cents per

.V'-/v.;

Board

The

Mutual
dend
per

has declared

thirteen

'-V

Consecutive Dividend.

of Directors

Investors

quarterly divi¬

and

payable

one-half

cents

January

shareholders of record

1952 to

December

31.

21,

1951.

H. K. Bradford, President

special

place

MUTUAL, INC.

Minneapolis, Minnesota

sent the same letter to 1,500 o£
their clients and prospects, invit-

share. The
should take

ing them to attend a forum at
which Edward P. Rubin, of Chi-

time in 1952;

;

Other trustees and members of

the

Advisory Board are Chandler
Hovey, a senior partner of Kidder,
Peabody & Co.; William B. SnowJ
Seamen;

on which" the recipient was asked

and

Ernest and George
Robert Lowell Moore of Sheraton

the

Securities

Co. of Mass.; and
Payson Rowe, Treasurer of

the

John

Hancock

Insurance

Mutual

Co.

Life

400 requesting tickets to the meet-;
ing and more than 200 thanking

the dealer for the invitation
though the
attend., /
The

Providing

facilities

needed

urb

1952,

executives

the

mailed

those

would

who

Approximately 350
present

the

versified

ucKeis

indicated

along with

8 p.m. on Dec.

predicted

meeting, the

acmnssion

had

attend,

mortgage division of Investors DiServices

co-

/ When

speak of defense, what?
defending? We must de-,
fend something riiore than a piece
are

of real estate and the right of the
l

fit

tenants

what

t'h

do
e

to whether

civilian

new

con¬

The National

Planning Association has just is¬

collectively

sued

and

managing it.

statement

Economic

Military

de¬

are

for

money

defense expenditures are

not urgently needed.

please
We

materials and

men,

defense,
the
question
is being
raised more and more frequently
trols

"Efficient

Management

Expenditure,"

mending

that

recom¬

highly

qualified

fending

a way

civilian

of life,

not

regular agency of government for

body be established

ast a

specific investigation of the- de¬
expenditures. It seems clear

is, but as it
become.
The objectives

fense

may

,to the National Planning Associa¬
tion, and to others too; and I srispect it will becoftie evident to a
growing body of opinion as the
months go by, that neither, the

defense

our

effort

are

protect the
territory of 1
Uiti

States

lilt t u

Executive

Beardsiey

its

and

the

basic to

Faust

evolving

our

Rumi

arately

defense

with
justice
throughout the

establishing

peace

permanently
If these

things

effort

defense

our

Hotel

which

result

before

see

period

likely

true?

way

abnormal

the

are

situation.

Perhaps it's the
Perhaps

around.

period which

the

left in 1914

was

the abnormal period.

Roekford.

we are

continue? It is generally assumed
that
the
defense
requirements

other

held

what

are

defending, for how long

The

meeting,

the

Congress,

sep-

working together, can

give the reassurance to the public
that

is required to

the sacrifices that

large

and

obtain from it
required in

are

long-continuing de-

The Transition Now Taking Place
The

profound
nature
of
now
taking place

the-

transition

world.

But is this

5, in the ballroom

nor

itself; and to- join with fense program,

other nations and other peoples in

note

persons were

of life;

way

guard against the dangers of

they

of thinks for the interest shown,

challenging jobs facing the

nation

tax structure.

is
newspapers

A week before the

the

operated with advance publicity.

nation's expanded submarkets will be one of the

most

except in great emergencies, despite changes in rev¬
receipts, and calls for reorganization of whole Federal

enue

even

person was unable

Roekford

dealers

serve

Advocates stable

tax rates

Growth or Inflationary Bust?"/
safeguard the essential principles
They enclosed a penny postcard

to indicate if he would or would
n0* attend; and if he did or did'
Others; not have an interest.
•
• *
^
Henderson and '"-"5 Some 800 replies were received;

(for

Corp. of America; Charles C. Cabot, attorney, and director, Old
Colony Trust Co.; Joseph Furst of

1925

speak on "Dynamic

cago, was to

President of the Suffolk Savings

FOUNDED

value

per

distribution

some

Bank

'f/Wfjfo/S

share, compared

market

approximately $11

MUTUAL, Inc.
>v.

present

of Federal taxa¬

purpose

of Sheraton

with

times

inflationary, and most important

law

reported
issue

trustees

tribute

Notice of 45th

incurred in

has

trustees

Boston

was

20th

Says Federal deficits, prudently
unemployment, are deflationary rather

highly successful project recently

;i"

'■

Bradford

to -the

of Boston have also
to

shall be alerted to constant threats

security and welfare.

Something new m getting: a
message across to investors was a

University, a trustee or director' prospects as highly secret assets.*
financial, charitable and edu-> (2) Tne fact that the speaker had
cational institutions and former a selected audience of known inGovernor of Massachusetts.
y
! vestors; as a rule a speaker on
Dec.

world in which

our

port-

the

ahead
to

are in process of changing one kind of civilizaanother," former Federal Reserve Bank executive sees

tiori for

;

inflation.

Asserting "we

•

Palmer, Dodge, Garner, Bickford dealers were willing to have their
&
Bradford, a member of the clients' meet competitors; most'
Board of
Overseers of Harvard'dealers regard • their clients and

CO. INC.

New York City

By BEARDSLEY RUML*

prominent

its

"'/J/

been {Illinois) Securities Dealers AssoInvest-?ciation staged a joint meeting for
Trust of Boston. Mr. Brad- their clients and prospects.
The'
is a senior partner of the Pr°ject
was
unusual from two

ment

and

Defense, Taxes and Your Business

Experiment
ci

Co.f

Theatres, Inc.
States Gypsum Co.

.-.-'V '

Robert

price and

Gas

Formerly Chairman, Federal Reserve Bank of New York

and

Utilities •'Corp.;

Public

elected

the

Co.

Natural

eliminated

folio.

Prospectus describing the Com¬

/Conduct Hew Sales

1,200

Paramount

United

were

pany

Railroad

Roekford Dealers :/

2,3G0V Socony-Vacuum • Oil
Co.
Holdings of the common stocks of

United

included

(2519)

human

;

animal, throughout

most of human

had to allocate

overstated.

not

can¬

in the

are

changing from one kind
civilization to another. We aire
leaving a world which was dommated by aspiration tor gentlemanly leisure, With ^ll the corn*orL vamty and cynicism that

process of

adorns
We

income

every

level.

moving into a world in
which we shall be alert, and in.
which we shall be alerted, to conare

tinuing threats to our security and
wejfare
-

history, has always
a

substantial por¬

Problem

Taxation

The

year-end statement.

Announces

new

SYSTEMATIC

INVESTMENT PROGRAM

for Purchasing its Shares
Prospectus

be obtained

may

from

investment

The

Parker

200 Berkeley

dealers

Corporation
Boston, Mass.

St.

They were greeted at the entrance tion of his resources and energy
"The remarkable growth of out- by members of thh dealer organic for defense. And we do not have
lying residential areas near met- zation, who collected the admis- for the world today a system of
ropolitan cities during the past 10 sion tickets.
It had been agreed law, justice, and the enforcement
to 30 years presents an
entirely that no one would be admitted of justice. Until we do, defense
new set oc
pioneering responsibili- .without, a ticket,1 thus setting a expenditures and defensive al¬
ties and opportunities not only for' standard of value for future meetliances must be the normal way
real estate, building and mortgage ings.
of life for those who believe they
investment industries, but also for
With Robert G. Lewis/ Presi- have something material and
government, business and industry dent of the Association, presiding, moral to safeguard against the
in general," said Donald E,
Ryan/the first hour was devoted to pressures
of
their
predatory,
Vice-President in charge of In- introductions,
discussion
of
the cousins.
vestors'
nationwide
mortgage purpose of the meeting, and the
The need for defense establish¬
operations.
tavlk by Mr/ Rubin.
There fol- ments will end
only

Sirce

pointed out/ lowed- a full hour of questions
popula- Tram the floor and Mr. Rubin'stion has greatly exceeded growth answers.
A copy of the talk and
of central city population in such
the questions and answers is being
metropolitan areas as New York; sent by the dealers to all who ex1920,

was

growth of suburban

area

Los Angeles; Chicago; Washing- pressed interest, as well as those
ton, D. C.; Detroit; St. Louis; Port-- who attended the meeting.This,

land.

Bank Group Shares

Group Shares

Commission

Institutional

registration

states

capital stock to be offered at the
through Lord, Abbett.

•

Shares,

Ltd.

justice. There will be no peace
there
is total
peace.
And

;

husbands' business. ,
*
While the talk at the meeting
a general one on economics, itjs interesting to note that after-

Cincinnati Fund

with justice, the new order
be defended against

peace

will

HARE'S
19

RECTOR

NEW

YORK

time

sacrifices

meet

emer-

We
are
changing
per¬
manently the fabric of our lives.
gency.

There

will

return

the

dream-world that seemed to exist

during the three generations
fore 1914.

be¬

LTD.
6,

filed

registration

statement

with-the Securities and

Exchange

Commission
Prospectus may be obtained from
the above or local dealer.

through

covering

stock

Neuberger

New York.

the

200,000

distributed

Berman,

curities
Conrads

Dealers- Association
&

Co.;

Boyd

are:'

Easton;

King Olson Surprise & Co.; Rob-;
ert G. Lewis & Co.; Ralston Securities
& Co.

Co.,

and

A.-Sandeeri
'

evening

I shall dis¬
connection

economics of defense

the taxation

problem—and closely
questions in the area of

fiscal and

monetary policy.

Many changes are occurring in
the

world,

them

we
cannot
Management

and

away.

wish

arid

statesmanship that do not take the
new
technology into account are
dream world. The dis-:
insights coming out

living in

coveries

and

World

War

are

limited

not

physical sciences. Advances
have also been made in the fields
to the

finance and

For example,

economics.

•

indeed.

productivity.

ard of living

production came out of produc¬

actual output for
We
in

the

also

flationary.

15 years.

learned

Federal

that

budget is

Federal

deficit
in¬

not

deficits

pru¬

dently incurred in times of unem¬

ployment tend to be deflationary
rather than inflationary.
These discoveries or in&ights .in
the field of economiCs

and finance

real as radar, D. D. T.,
and atomic energy. The plain fact
that the war was actually financed

Banquet

in 1944 was at least

tivity that had been growing un¬
noticed
beneath the
surface oi

stand-

high as in 1941> and in addition
we
produced some $80 billion
worth of armament. The miracln

Ruml
1951.

Qur

by' Mr.

York City, Dec. 13,

tween

Manufacturing Chemists Association, New

view,of these high and probablytong-continuing requirements

that we would have to choose be~

just

talk

from $45
™

are

during World War

II the national debt rose

Dec. 17 filed

„

STREET

this

with

which

b,llho" l.° .f» b^°" tLnd
and,c mn®
/
'
may was at no time a hm./t'on to our

have to

Distributed

cuss

after the world has achieved

even

subject

until

y
ward people voluntarily asked lor
/
Because of the high
point of
literature regarding the fund of
defense requirements two or three
with the Securities and Exchange which
Mr. Rubin is President.
Commission a registration state- The dealers had available pros-' years from now, it is true, in a
ment
covering
10,000 shares of pectuses and sales literature, and' special sense, that these years are
capital stock to be offered at mar- the supply was rapidly exhausted emergency years. But the end of
ket through' Cartwright & Co.
although there was no promotion the short period will still leave
effort in this regard.
requirements
that,
by
'/-: / * defense
Guardian Mutual Fund on Dec// Members of The Roekford Sepast standards, will be very large

/*;

Funds)

Investment
Of

dividend, - stimulating the wives'
Exchange interest in economics and in their

Dec. 17 filed

covering 20,000,000 shares of ;

market

Shares
(Mutual

law, justice, and the enforcement

Houston;

Affiliated Fund

ment

Stock and Bond Group

have been established in the world

San

with the Securities and

Insurance

there

Dallas; Sari- it is hoped, would stimulate: internegligence, inner corruption
Francisco-Oakland; est .in/the series :of meetingsdecay. For this reason we
Miami:
Atlanta; Minneapolis-St- plarned for the early future.
truthfully say that the moral asPaul, and Cleveland.
Prior to the meeting the deal¬ rwte of defense will last forever
pects oi deiense will last forever.
ers, speaker and their wives met
We are not ony making shortREGISTRATIONS
V
for dinner.
This proved an extra

Ore.;

Antonio;

Aviation Group Shares

when

The

declining rate of interest
Continued

page

The Commercial and Financial Chronicle,,

(2520)

prices are concerned—by more
proportional increases in the

Bow Bad Is Inflation?
Dr. Moulton -reviewi'iucent

movement♦ of prices, and ascribes

The

level of costs

the

contracts.

last

ades.

rates of pay, wage

sys¬

been

buffeted

fore

arising out of
the world mili t a

trick.J But in

C'i.'i

The

tion

itu

is,

ever, not

out

(9) Some contend that a restric¬
tion of bank credit will do the

prob^

lems.
t

result of expand¬

and salary dis¬
bursements increased in fiscal 1951
over fiscal 1950 by $24 billion.
To
prevent this increase in the quan¬
tity of money in circulation would
have required freezing the level
of production and the rates of pay.

the

new

period of expand¬

Harold G. Moulton

re¬

were

The most that could

frozen.

be accomplished would be to re¬
assuring
feahires. Following eight months of strain somewhat excessive inven-

rapid price advances ,we have had tory speculation,
so toe healthful
readjustment. Of
(io> Raising interest'rates when
primary importance has been the business is flush would have no
phenomenal increase in over-all effect. In manufacturing industry
production and in man-hour out- the interest item is but a fraction
put. Thus far we have been able 0f 1% of the total costs. Business
to

continue

high level of

con-

decisions

sumption despite the requirements the
of

war.

But this

fine

evening

shall

attention

our

least

costs.

the

con-

recent

movement of prices. My views are
rsharply at variance with those of
many economists.
Hence, instead
of contenting myself with generalities, I shall cite the evidence
in support of my position.

(1) From May 1950 to February
prices of basic commodities
48%; manufactures 15%; and

1951
rose

revolve

not

significant

In Gross & Co.
Miss
been

Mabel

for Gross &

Avenue,

will

general

New

Jg|'

woman

better

Bleick

of-

•,

Bleich

••

Corporation, Counsel for

Y'YYY

Curling
Team Against Scots
on

An American curling team com¬

Cliub.

jng
I.

Paul

More-

a n

further evidence that competitive
consumer

buying was
not
the
price inflation.
(3)
From February,
1951
to
August 1951 basic commodities fell
of

source

about

the

17%;

mained

manufactures

re-

about

stable; and retail
goods rose 1%. The initial readjustment preceded the decline in
retail

buying.

(4) Increasing

advance both wholesale and re¬
tal1 P«ces will work higher. And
because of the agricultural parity
f°™ula- as city prices nse farm
P"ces will be automatically advanced-which in turn provides
the basis for further increases in
industrial costs and further demands

for

higher

money

wages.

merry-go-round on

u*Suls

will

.e 12?^ \ think,.hope, to restrain the rate of price advances
^rou*?J?. .ever~increasing produc-

,en(^

sharply rising, we had a large
budget surplus. In the five fiscal
years July 1, 1946 to June 30, 1951
there

was

net

aggregate

cash

surplus of $22 billion; and wholesale prices rose
roughly 50%
(7) If costs continue to rise,
wholesale

and,
in
turn,
retail
prices will continue to advance

Detroit

regardless

budget
(8) Many

bility

the

state

the

Stevenson, Spence to

could

e^terprises;. and <4>

that price sta-

have

been,

main-

nsmg lab°r eff>ciency, m ?°nse-

tained

simply by restricting the
quantity of money- in circulation.
rl:

statement

Dr.

Moulton

S6tb

the

Congress "-cf ? American'; Industry,
sponsored by^the National Association of
Manufacturers, New York City, Dec; 5,
19S1>•

industrial re-

Kill, !,' 1 5 rfsult °f tbls com"
bmation of factors it takes pro-

Sressively fewer people to produce
given result

a
.

•

i^uch
may,

should

the

public utility
into

3, Walker W. Steven¬

is; also
horse

PORTLAND,

Ore. —Robert

Atkinson is

forming Atkinson and
Company with offices in the U. S.
Building.

Mr. Atkinson

partner

was

Atkinson-

Jones & Co.

might

The

Financial

CLEVELAND,
with

half years.

has

the

Ohio —Fred
&

Exchange.
many

associated

Co.,

He
years

was

the

make up a

right. People

fication

Next,

the

available.

The

market

offers

this field. If you

might

you

even-

both

offering
to

diversi¬

companies

for¬

with Otis

...

John Coman Partner
In G. J. Devine Go.
C.

Devine

the

fact

that

income

are

the

announces

that

John

Coman

utilities

this

are

today
most

general

partner,
effective

Jan.

1952.

Mr.

Coman
the

joined

firm

1937*.

was

previ ously
a ssoc

iated

with

the
John

Guaranty

Co.

Coman

and

Ripley & Co. Inc.

Pasquier & Landeau

To Be Formed in N. Y.
Pierre

Pasquier and

Serge

Landeau will form the New York
Stock
Du

Exchange member firm of
Pasquier & Landeau with of-

fices at 61 Broadway, New York
City,

Jan. 4.

Mr. Landeau will

hold the firm's Exchange member-

ship.

Cohu & Co. to

the

and

You

story

bit.

Cohu & Co., 1 Wall
York

even

can

Admit Two Partners?

re¬

recognized.

dramatize

has

the firm

com¬

growing population
make excellent companions is now
and

power,

Wall

bring out the stability
earnings of these com¬
The
fact
that
electric

panies.

St., N. Y. City, 'j:

geographically. You could

exceptionally high
pared to 1946 levels.

;

package of 10 different

stocks—thereby

stress

time

choicest- investment

idea

like-the

well

—Robert Brewster Beattie

good oper¬
First of all,

ago.

opportunities

turns

good cheer,

you,

safety and
than they were

over-the-counter

Street, New

City, members of the New

York. Stock Exchange, will admit
Henry G. W. Parmele and Charles
W. Snow to

partnership

Jan. 3.

Mr. Snow has been associated with

the firm for many years.

The

Cinderella stocks

they

become

may

Mitchell to Be Thomson

popular investments to¬
If past

history

runs

McKinnon Partner

true

form, undervalued stocks have

always

Chronicle)

become

Hawkins

to be

months

merchandise

well

interested in

now

some

world's

Trust

Now

good

very

seems

several

Leader
Building, members' of the Midwest

& Co.

have been

appeals

available

morrow.

Hoffman

advertising campaign
the opportunities that

based upon

the

Joins Hawkins Co.
(Special

good,

sense

You could

Forming Own Company

formerly

common

that

as we

thought

start

are

war—certainly good been admitted

or,

category.
again, where it is- possible

Bank

well

fare

purchase values that have not

Robert H. Atkinson

efficiency merly for

however, be nullified—so far

that

fall

income,

son, Jr., and Robert R. Spence will
be
admitted
to
partnership; in

Stock

•

increases

peace

are

Be Partners in Firm

organization and management
argue

industries

ating utility stocks.

ff, aY in» manufacturing.

capital goods, (2) a
^ea1 ^Provement in the quality
? P ant and equipment; (3) bet-

nevertheless al¬
lows for the inclusion of stocks in
program

The
-fruits of this; great upsurge of
Producing capacity have not as yet
£een realized though there has
£een a striking increase in manh°^r °Htput dui™g the Past yeaY
?ur lncrease in productive efficiency is the result of four fac% vast increase in the

sound

the time

Jan.

Is to have and give
A Happy New Year.

•

present portfolios still
to
the
inflation hedge

favorites of the past few years. A

Moreland

new.

lift his load;

Harriman
I.

Paul

that's

To add your gift

geared

year

investors have too much of

many

their

segment of the
quite possible that

Investor Inquiries

labor

situation and prices. For
example,
in fiscal 1951 while
prices were

neglected

market.

This Idea Could Be Used to Create

World War II this country has had Hemphill, .'Noyes, Graham, ;.Par¬
gradually; forced price a P^en0^nena^ expansion of plant sons & Co., 15 Broad Street, New
advances all along the: line.
>
a
equipment and an extraordi- York City, members of the New
J (6) Price changes are not di- nary grease in productive effi- York Stock Exchange. Mr. Ste¬
jrectly. related to budget, deficits ?ie?£y* ^
t.r"e
.a6n?ulture;. venson, is. sales-, manager for the
and surpluses. The facts show no
the mineral industries; m pub-, firm. rMr. Spehee-is manager of
•correlation
between
the
budget
utilities and transportation,,as the Statistical; Department.
mid

very;

Along the road,

are

—

help.your brother

And

people in
who

To do his work

that the investing public is
becoming interested in this

having-for two and

(including
Mr. Moreland)
will compete in
the British open championships.

anytime. Certainly it is true dur¬
ing the latter phases of a long

(5) In short, instead of competitive consumer buying
pulling up
the whole price
structure, progressively rising costs of materials

Of the
To

same

r>--with:a purpose true, '

selling

;

•'

To the unknown task

100

from

of all this. Yet it ap¬

aware

which

two

the

many

enthusiasm,
this
solid, investment

days, two men
from
Chicago
and

/"i e

i To dare to

utility

were

']f ■"'/

that's past."

year

the not worth while
Of the days grown old;

were

last

YOf

up •;

over

sound

business

bull market such

tour,

pears

scheduled

the

.
>

industrial

near

may

That bind you fast
the vain regrets

To have the strength
:
To let go your hold,

1950

same

cases

the

% Of the

been over-inflated by speculative

the

completion

we are

advances

in prices of manufactures,

and may be ex-

pect?d tPrlselurthef- These costs
ilx the floor for prices. As they

raw material and

costs necessitated

wage

rat®s aI"e up 12

well

Then

team.

After

burst

return

holding

rise of

1946,

investment

stocks

Co.,

.....

bottom in September and are now
about 15% ab°v® May> 1950 Wage

many,

still

are

operating

land of More1

since

There
the

just

Moreland

commodities
(excluding ou/,^'al';T
Penobscot
only
10%.
Retail
prices
(12) My conclusion is that for Building, De¬
lagged all the way. The competi- som® tlmf to, come prlc?s wl11
troit, has been
tive "bidding-up" of prices was continue to advance —not specselected
as
a
not at the consumer end but in tacularly but gradually. Raw mamember of
business inventory accumulation 'e"al P"ces apparently reached
the American

(2) During this period production of consumer goods increased
faster than consumption—which is

recall

And

.were

42nd prices at which they
general back in July, 1946. - *

rent)

and government stock-piling.

points
stocks

posed of 26 members has been
materials and wage rates. Lest
formed for a tour of Scotland in
it be feared that I am here arguing in favor of the present direct competition with the Royal Cale¬
donian
Curl- '
'
control program, I hasten to add

current

■

the

raw

instances

stocks have had

the City of New York.

has demonstrated that to be effective controls must start with

retail

a' 7 %

period, and. in
forging ahead.

who has become

former

(11) Experience in former wars,
and in this and other countries,

that experience has also- demon-

available

were

Mabel

considerably-above 6%.

than

most

partnerrin ^i stock exchange firm.
She
sister of Isidor Bleich,

strated that direct controls cannot
be enforced except in time ot all-

basis'. Twentyveight were yielding
Kofiiroovi
ft OfJ"
HOfbetween 6%~ and 7%. "Earnings in

Manager
atY
the
Fifth
Miss

With

stocks

group

Where

Avenue

YEAR

NEW

leave the old

for fhe

resident

fice.

WAY TO

HAPPY

50%;higher than in 1946.

average

well- compared with the

co-

list

common

cus¬
tomers and be

in¬

of song,
right
forgive the wrong;
To forget the things

Whole

continue,

will

noticed

Thirteen issues

She

nounced.

recently

direct

answer

safety. They make the best clients
for any firm.
/■

vestor, rather than the speculator
groups in their communities.
-

The
/M

•

1,
has

the

will

almost

Jan.

next,

primarily

who

people

to be especially true among

appealing

any

mail, or newspaper advertising,
along these lines, should be interested primarily in income and

ahead. This

years

representative of the public utility
industry. - Their yields today are

part¬

been

better

also thinking of

are

recommend

firm that is desirous of enlarging
its clientele
of
investors.- The

security
looking

the clients of firms that have been

effective
of

They

over-the-counter*

the

mitted

ner

has

ad¬

firm-

element
U

definite swing f seems

* a m o n g 5

weather in the
seems

Stock

change,

who

Company of 509 Fifth

Members

York
E

Bleich

Registered Representative

around

;v'Y-

"income"

run

ing business and rising costs the servicing

renlarged dollar contracts could not
be carried out if the credit supply

how¬
with¬

some

Today there is
to %

securities that will hold up, if we
into
some
rough financial

Miss Bleicb Partner

ing employment and increases in

has

tem

problem is to
relationship be¬

return.

tur¬

Since

then

our

productivity, wages, ;s and „buyers. Many people are
around for stability and
:;; J# • '—"fY Y

tween

dec¬

two

bulent

a proper

By JOHN BUTTON

prices. '.V f '•

fixed in business

Securities Salesman's Corner

reduction

increasing

Congress

the

course

say

-crux

maintain

buying.

over

tem

materials/If

have

effi¬
5%, wage rates are
raised say 10%, the dollar price
of goods could not be reduced.

American Additional quantities of money
Industry two years ago I em- enter the income stream chiefly
phasized the Temarkable vitality in response to business requireand resiliency-of
the American ments. The volume is determined
economic sys¬
by the scale of operations and the
the

and

costs—due

ciency—of

level to rising costs endh not to heavier conSays, if costs continue to rise, inflation will
continue, whether Federal budget is balanced or not, - Sees
necessity of greater credit and increased money supply to meet
business ^expansion. -

labor

time

every

increased price

sumer

costs

President, Brookings Institution

than

MOULTON*

By HAROLD G.

Thursday, December 27, 1951

been

profitable

ments for those who had the fore-

sight,

and

them when
with the

the
they

patience,

buy

popular

were not

investing and speculating

There is another

advertising

mitted

reason

for such

campaign,

which

Mitchell

will

ad-

partnership in Thomson

& McKinnon, 11 Wall
.'

Street, New

-»T.

*^ortc City, members of the New
York

public.

Daniel

invest-

Stock

Robert

Exchange
Kiernan,

from the firm

Jan, 2.

will; > retire

Dec. 31.

■»

d.?

Volume 174

Number 5076

Continued

from

The Commercial and Financial Chronicle

both sets of

page

(2521)

proxies to your.repre¬

sentatives.
Remember that by

Rights and Duties of Stockholders
,

in the box provided in the proxy,
If you are
opposed to it, mark

where the head offices of the corporation are. It was sponsored by
marked against, members of the Federation
of

your proxy square

These

two

the

ones

proposals

asked

management

stockholders to vote

the
the

were

At other

on.

meetings there were proposals
pensions and stock options
executives.

feel

how

know

You

these questions,

P^ble

nothing

say

something

and that

aLljfbtn?| *° l,™

own

Carriers and the ICC

Once

again

0IQW6S 3(1(1

Commission

merce

market

•

nnr

number

sals.

ply takes

of. independent propoare
to be found in-

and

position, leaving it,

completely

These

branch

in the St. Paul

to the shareholder

Building, Cin-

corporation
Every independent proxy proposal should
be read over with care, they

vote. Nevertheless the uninstruct-%;
ed proxies were still cast against u
the proposal—showing you again
why it is so important to read your

should

proxy statement and to be sure to

Smart,

Presi-

supported or opposed. They mark your ballot the way you
should stand on their'own merits want your shares • voted.. In spite

dent

arid

creasingly

many

statements today.

proxy

automatically

never

and you should mark your

X after
you have read what both sides had
to say. Remember however that at
the present time if you do not
mark your X it is automatically
cast against an independent proposal.
I hope to see. this rule
changed someday, but that is the
way the rule works at present
Howpvpr
rnnpprnpfi

should

nnp

whpfhpr

npvpr

mot

proposal wili carry Because
handicap just mentioned, I
it will not; that is not the
purpose of
introducing the proposal. It has been introduced in
order to air the difference of opinthe

of the

many

other

stockholders share the

same

view-

point
to be
if

this

this is shown

many cases

and

the

have just seen

eventual

case

of> management

change

policy
though the pro-

often results even
test vote

was

ity

one.

Now

such

still merely

minor-

theie weie
there were two
al
independent
proposals
at
yeai
-year

American Tobacco

raising

of whether

in-

first

The

John

Treasurer;

directors

the

present

prove

E'.

•

■

the

exhibits

last

filed

week

■

be at

record peak.

new

Mount-

level and will be well below that
realized during the war years. Net
operating income for 1951 was es-

.. n»
mn»»r
wmv
The other way is

Chapman

"RnarH

couSsel

ordor

ton

benefit

hmvm

vpvh.hi

the
ae

bavo

?d
disinterested

decidTnrissues

so
counsel in deciding issues and also
n
and also

afford

better

to
lldllOn
lO
representation to

thpA

the

find

last

page

you

that

linh
la
public shareholders.
becoming increasingly the case

Hare's, Ltd. lor the past 1-4

years.

and

house

and

Vaccum

<Jers®y'_Spalding, Lorillard,
-

■

are

rea^h you automatically. But if it

wrUe fQr u

way yQU

thig ig

the

begt

wiU have of really know_

i«i_.

i^4.1—

—..

ing what takes place at the meet-

your

in this second school

now

of thought.

Refining

and

the

read
ments for yourselves.
can

you

argu-

proxy

independent.

annual

Cumulative Voting
,

...

_-In this proxy statement, which
I

you

few

purely as an example, and
will see our proposal calls for rpbe

usuig

cumulative

voting

^ccomplish

tnat

out

if recent

even

the

best

electing outside

way

would

they
elected

thi ough pooling

roughly

shares to elect

vote

let

Meeting

turn

the

independent proposal. It is
.change
from

the

New

want

about

voting

cases

parfneipartnei

1951

say

contests
proxies then,

proxy

have mentioned

.mtil

tamlly
SJtnnlr

01 w. n.

old

108-year

the

J01n

r.vphancfp

momhor

Stock Exchange member firm. Mr.
lSJrux/hnlrl'e

the

admiccinn

tic

proved

Joday,

Dec'.

Governors

\ork

Stock

was

John Ml.

Mayer Rates
Congratulations Today

through¬

Forecasting

the

future, it

was

estimated that) unless some further rate relief is granted net
operating income next year will
fall to $879 million. If the full

pears

?Lpa2LexPa''F.nc®'ap"
idle
to hope for the
even

arantina
granting of tko antim amount tho
the entire ommmt the
seeking.

are

Arguments for

John

Mayer

_.^obn M. Mayer, Men ill Lynch,
renner
y^k Ckv is & Beane, J\cw
celebrating
fierce,

y ^oc^aY> Dec. 27.

further

the most important

con-

too

Newbold, 30

ap-

World War n the major

Louis McClure & Co.
TAMPA, Fla.—Effective Feb. 1,
f
^

l^uis" C." McClure,'"Tampa'street
Building

0f the railroads
_,

has'bVen theVMn-

-i_

;i.

•

Newbold.
old, is

years

are

University

1943.

mediately to offset increased costs

^ey

were

Taken

side/if

you

meeting

late proxy.

prefer to let independent

which

the floor-of the

way

your

should be cast, then merely give

Janne'y

earners

Chairman

& Co., Phila-

away Dec. 22

With Waddell & Reed
(Special

no means represent a poor

the

rail-

will be able to carry

Thf

LINCOLN,

Financial .Chkonxcle)

Neb.

—.

Edwin

Stratton has joined the staff of
Waddell & Reed, Inc.," Barkley

Bu^
With Kirchofer & Arnold
(Special to The Financial Chronicle)

RALEIGH,
Tabb

III

with

—

James

Kirchofer

W.
&

[
"
'u/' '
•
through under less favorable con- Arnold Associates, Inc., Insurance
With Hamilton Managem't ditions. Obviously peak business Building.
(special to "the Ymmcnu
can not be expected to last for,

ever.

Edward J. Ott,

DENVER, Colo.

Corporation,.445 Grant Street,
'

- .

particular,

cause

the

predicament

York

—.

Christian H.

show

any

Oberheide has- rejoined Paine ■ spite
Webber, Jackson & Curtis, -209 y-ears
,outh La baiie,btieet.
cl'

With Shields
V {Special

to the

BOSTON,

OL-

Financial chronicle")

Mass.—Lawrence M.

24 Federal Street.

Two

Specialists in

the

RAILROAD

and

now

Pennsylvania,
hard ' pressed
to

real earning
heavv

th^ teary.

power

freieht

SECURITIES

de-

volume
Selected Situations at all

fQr property improvements
.and modern efficient equipment.

Company

Ripiey-islwith""^Shields

concern.

Central

are'- even

CHICAGO, 111.

pany,

for

largest units in the industry, New

Rejoins Paine, Webber

Do not'"

Even aj,e

Mason,

—^^

the age of 83.

itself net operating
income of over $900 million would
by

business

incurred. They have

not Jr. is with Hamilton Management of*"ran7Mds'7A The TasFgiTes

induce you. to change your mind,

•

1 ^u:„

".ability to raise their prices im- delphia, passed

the*board of
„

founded

was

John H. Mason
John

a]ways had to wait out protracted
jqq hearings.

New

the

will

Louis C. McClure & Company.

difficulty

by the

20,

1844 by Wm. Henry
Mr.

nartnpv

Exchange.

Newbold's Son & Co.
in

Philadelphia firm

Board

such

one
some sllb-.letters of the other side

to: groups deckle on

York

near

have been only 3.7/% compared
with 3.96% in 1950.

one

have'rr^drwhat'i r

you

ides ^ave t

then sign and vote

second

the rate of return would

Newbold^Son siderati?n®'doand ,on that f°fe
i\ewDOias &on prospects
not appear to be

of W

;

one

aTr

fights. Then both sides will

sequent

•

place-: of the meeting

Flemington

votiftg. fQr

of ,the

director.

Place of
So

10%

Words

bombard you with letters.

o/stoc-..^^

holder votes, when required, thus

allowing

conclusion

pr0Xy

can_really, be inde-,

corn-

freight rate in¬

had been in effect

creases

some

Princeton

meeting.

Proxy
contests. But every year
there art about half a dozen Or so

think this kind ot voting provides

directors who

If enough share-.

as_American^ Tobacco

ls+-u^c,u^t:-Jvc

means

re¬

holders urge this, these manage- great - great grandson of the road year. It is only when it is
mente which sm'xIbmM sendout founder ^and^^began^^ .his ^business^ related^^td the peak;grpss revenues
post-meeting reports will change career with the firm in 1946, after that it is discouraging. If no more
their policy or improve their re- ??r^in5T as. a Lieutenant 111 the than that can be earned at the
ports, giving more details about JL. S. Naval Reserve. He attended present level of business and trafyour company's
business as re- St. George s School in Newport, lie the question arises as to just
fleeted in the discussion at the
*' i.andTT^Yas
Scaduated from how much of the revenue dollar

not going to tell

which kind* you "should favor;
a reading of the arguments in the
various proxy statements
where
the issue comes up can be consultyou

some

an<f direct approach is
term prospect. ;

goe^ out to you only on reQuest,' & Co-, ^17 Locust Street, on Jan. encouraging. All through the inas at American Tobacco, be sure }, 1952, the fifth generation of the fiationary period since the end of

that you want one
changed their policy when you send it in or give it to
Atlantic

and

have recently
and

others.

many

that

in®'
If y°u are in doubt as to
whether your company sends a
Socony post-meeting
report, mark on

among

feeling

of only 3.54% on net invest¬
ment.
It was further pointed out

roads

management of American Tobacco

corporations
having this method of election are
United Aircraft, Swift, Westingtoday

There is consid-

•

the

statement

■

with
On

in the rate mak-

nor

ing machinery.

'"'A..?? auicklv e.L requested are
c r.e,a,s
granted
this could be inoaxion.wno gramea quicia> tnis couia ne insumcienuy aispieased, in tne has been in the investment busi- creased to $1,161 million. On the
„nmripnt1v

,rA„

the

capital improvements. This factor
is not recognized in the present

...

will

to have several
ae
officials on the

non-management

much more difficult to offset by

turn

hikes, however, are
management 01 American fopaccq^yyu * if
|i A M A tl mi t O
compelling and the general feeling
two ways.
Some, like American will send a post-stockholder meet- H. 11. H6WD0IQ UQmllS
Tobacco and Standard Oil of New '"8 report to any stockholder on
P*flL A
I"
among security analysts is that the
S' Fifth yfinerSllOR Commission will adopt a sympaJersey, still only have management
^"eSsucl1 as™ tSndard^U ofPNew
u
h
officials on the Board of Directors
tlons'
as -tanc1ard Ul1 01 New
BmiAnriPHrA
p,
,„hthetic attitude. The time lag (is

American corporations are run in

out of line with road haul
the increase has been

and

preceding

This would represent

year.

On tbe next page of the proxy
statement we find some very -un¬
Walsh &
Portant data which is also, obligaReginald W. Saxton has be^ reading in every proxy staternent. This is the amount of com- come associated with Walsh &
Pensatmn and pension payments Chapman, 84 State Street, Boston,
which officers have or can receive. Mass., wholesale distributors of
f? is ixom a^readrngvof this data Televisions Electronics' Fund and
t
shareholders ape able, to e*- Hud§qp -Fund, as. wholesale repPress themselves as- sa.tisfied( or reseritative in the states of New
ul
m!
J?6 management-* jersey. Delaware, Maryland, Dis.a?d
fr0m the floor of the meeting, or, ^ Virginia
^est
Mr
Saxton
who
^

up way

costs

Eventually some such action presumably will be taken but there
Is 110 indication that such a logical

pointed out that gross revenues of the industry this year will

timated at $903 million, compared

R.W.Saxton With

ing theory and machinery. One of
the big troubles in the case of
maiiy of the Eastern carriers is
thnir
pvtpmm/o
their extensive terminal operations. Terminal costs haye gone

rail-

the

with $973 million in the

The feeling is growing, particu-

Pensate^: directly for such cos:s.

favor the change to justify its Smart & Wagner.
adoption

solved the question,

the

with

ing costs, .however,: have taken a
heavy toll. Net operating income
will not come up to last year's

compensation Factor

that

completely

erable

Commission

xhe

has ' not

the rate structure

system

roads

7,600

action

It is obvious

however,

will have to be devised to

ecutive

about

such

figures,

probable bankruptcy before they

Phillips, vi Ex-

from

votes

the

can-get any relief.

700,000

Board

the

under

companies virtually have to

Viceproxies, thus showing considerPresident;
able stockholder sentiment for a
vand John R.
change in the meeting place. No
Clowes, Vicedoubt this proposal will be re¬
John W. Smart
P res id e n t.
introduced and if, sentiment conMr. Smart has
tinues to rise for a change in the
place of meeting, it is quite pos- recently been In business as an
sible that the management may individual in
Louisville, prior
feel
that
enough
stockholders thereto he was "a principal of

question

the

not there should

age of 9% for the Eastern roads
and 6% -for the rest of the country. It is indeed unfortunate that

Howard

"for the

troduced by the writer, was

outside

*will

"cers

•

last

purpose

Offi-

against which the Commission a
few months ago granted an aver-

of this handicap it polled nearly

know

ion, and to find out if

cinnati.

from

has

LOUISVILLE, Ky. — Effective
tral location.
Jan. 1, the firm'of Smart, Clowes relief
have been filed and the
Independent Proposal
you will note that the manage& Phillips, Inc., will be formed opening hearing has been set for
Tn nrnpppd with
pxamina- ment does not oDDOse this oroDo- witb main office in the Washing- Jan,
The carrierstr«z, attemptare
io proceed with oui
examina- mem aoesnoi oppose tnis propoin? tn
apt
thp
full
innmaco
ton
Building, *ng to get the full 15% increase
tion of the ; proxy statement
of sal, as it did in the case of the
Louisville, that was requested last March and
American Tobacco. We next find first independent proposal. It sim-

be cast

tions of the country.

reopened larly among railroad analysts, that
the- rate case.
Briefs supporting what is needed is an
entirely new
the
request for additional rate approach to the whole rate mak-

r0rffl6d

rail

psychological handicap of the wide publicity given management's pleas
of poverty.
The Interstate Com-

tA!:'iTnlllipS lO
J*

the

forced to labor under the

ballot should would be more convenient if the
' '
meeting took place in a more cen-

is the way your Own

doing

your

system of American enterprise,

thoughts for their courtesy, but^;^|D2rt|
nevertheless it does represent an

you

really

protect

investment and the future of the

to visiting shareholders
have only^ the ,^kindest

care¬

much to further the steady rise of
economic democracy in America,

Shareholders. I must say
here that Flemington is most hos-

voting

fully at both contested and non-*
contested
elections
you
will d'o

Commission has itself taken
peculiar probby these large Eastern,

into

cognizance of the
lems faced

carriers in that larger freight rate
in,

Com-, increases^ have been allowed
'
that territory than in other see-

Times

tAjAMx ••».».

?5 Broad Street
r

New York 4, N. Y,

felrplionc BOwltng Green 9-6400

Members NatT

a'ssii. Securities Dealers, IHO,

The Cofnmercial and Financial Chronicle...

(2522)

Continued

jrom

page

Thursday, December 27, 1951

preference for short-term securi¬
ties may

exist, but this would be
if intermediate and
long-term bonds
offer a
yield
less

The Investor, the Treasury,
And the Federal Reserve

WILLIAM J. McKAY

Although the Dominion of Can- a domestic economic balance. The
ada
strangely enough is not a absence of emphasis on further
jhember
of "the
Sterling Area, external grants and loans points
nevertheless
thecurrent
grave to the probability that it is now
crisis of this vast British economic resolved to make the herioc at-

equal to

Also, when the prospective trend
of

funds

the

available

As this outlook reversed

to them.

largely by short-term issues after
the withdrawal of support, and

itself, they became sellers of longterm Treasury bonds. The inten¬

(3) if it were likely that such
financing would be done against

sifying of the public

dispute be¬
tween the Treasury and the Fed¬

level of interest rates that

might

not fail to have serious tempt to find a solution to overbe insufficiently high to reverse
repercussions within the senior come the Sterling Area's economic
Canada of course will crisis within the British Common- eral led investors to have decreas¬ the balance between the supply of
confidence in support ren¬ private loans and investments and
be represented, and it is to be ex- wealth. Following the meeting of ing
pected will play a leading role at the members
of the Common- dered only at successively reduced the supply of investible funds.
of these
were
present in
the highly important meeting of wealth there is little question that prices. The reluctant artd person¬ Each
the Commonwealth members early bold proposals along these lines alized methods employed by the March, 1951.
Dominion.

Federal

Reserve

factor of
Several
far more
At this time vital and will be formally announced,
appropriate
dramatic decisions will
No country within the British importance in increasing the de¬ opportunities have existed. The
sire of lending institutions to sell first
be made in order to avoid the dis- orbit can contribute more to the
was before the opening of the
astrous consequences of the ex- success of a plan for greater Com- long-term bonds in advance of books on the Victory Loan in the
their immediate needs and to dis¬
tjreme economic disorder off the monwealth economic cooperation
fall of 1945.
The second was in the middle
sterling bloc.
!
"
<
than the Dominion of Canada. This play an increasing preference for

next year.

were

probably

* It is

generally believed that the

economic

decline

Isles has

been

the

but relatively empty land
with its tremendous wealth

vast

British

area

issues.

short-term

Insurance

of 1949 when the Federal reversed

companies and other

of natural resources could alone
sentially as a result of the finan- absorb the redundant population
cial ravages of two world wars, of the British Isles without apThis is not strictly correct as the proaching its ultimate potential,
deterioration

brought about

British

In the initial stages of course

fortunes

had already set'in prior to World
War I.
No drastic policies were

acceptance of British immigrants made at several points below par.
on a scale now envisaged would As old commitments were taken
involve considerable sacrifice on up and new commitments were
made
the part of the Dominion.
many
investors accepted
In the event of a British mass such losses in lieu of reducing
migration to Canada a severe their liquidity position. The de¬

adopted to arrest this trend and
generally speaking the various
British

governments

content

were

concerned

bury their heads

in- the sand and ignore unpleasant

Realities.

sjrghted

This

expediency

strain would be imposed on the

rendered

was

possible by the ability to live on
the capital built up during Britain's

great ;"

supremacy

rich

the fruits of her
territories.

These

have long been insufficient to fill
the gap of current trade and the

increasing requirements of

re-

dundant population.Then to add
to the disastrous impact on the
British

economy

conflicts

the

two

Labor

global

Government

in the last postwar

period placed
a further
crushing burden on the
crumbling economic fabric. Social
benefits of

order that

this

even

when

Isles
of

than

'ible

that

stated

with

afford

not

the

growing
50

monwealth

British

million

government

now

had

nec^sarv*

necessary

hrmv

essary to

own

not

can

nec-

disturb the present state

comfortable economic balance,
the future results w|n benefit not

about

bring

its

policies. If at the outset it is

the

courage to propose the mass emirration
gratio

stand

be achieved
without the adoption of bolder
and more imaginative economic

million,

has

This

feet.

The solution is obvious but hitherto

about

Dominion itself but also

onjy

British

the

Commonwealth

and

the entire free world.

During the week both

the

ex¬

ternal and internal sections of the

CANADIAN BONDS

market

again lower but deal¬
continued on a restricted

ings

3#
*

were

The

scale.

Government

Canadian

steady around 2V±%
at this

Provincial

level there

dollar

was

discount but

was

distinct

resistance to further

improvement.
Stocks were dull and mostly lower
although the Western oil and gold
groups continued to attract mod¬
erate support. The removal of the
exchange restrictions and the re¬

Municipal

v
,}i

,-v

•

■

Corporation

•;

•

sultant arbitrage operations with
New
York
brought inter-listed

CANADIAN STOCKS

into

•quotations
with
on

the

only

freedom
trend

A. E. Ames & Co.

the

closer

volume

it is to be

alignment

transactions

small scale. Eventually
anticipated that the new

action

in favor

expense

will
U.

create

issues

their

Canadian

counterparts.

incorporated

■

WORTH 4-2400

■

NY 1-1045

MILWAUKEE, Wis.
j£V Kcmmerer

Boston 9, Mau.

bonds in March, 1951?

other

'•

rjnJisi*?

was

If not,

have considered it

you

wise at another time

conditions?

and

of both

of the

favored

the

would you have

If you

exists

and

may

non-

ex¬

abandonment, pected that such excess should
preferred that flow into Treasury'securities un¬

it be done earlier?

When?

:i0 der all ordinary circumstances.

in the Treasury
security market from December,
1949 through March, 1951, the def¬
icit outlook for the Treasury's cash
budget, and the prospective large
demand for private loans and in¬
vestments, a less opportune mo¬
ment than March, 1951 to abandon
par
support could hardly have
developed

cess
a

the

ing place
able.

primarily whether the

ex¬

of investible funds will assert

preference for short, intermedi¬

assert

cash) would be when
price of intermediate

the

same

tak¬

was

seemed highly prob¬

When such

tion exists

market condi¬

is indicated and, at

time, the supply of pri¬

vate loans and investments is like¬

the

exceed

investible

centive

funds,

availability of
maximum in¬

intermediate

sell

long-term Treasury bonds
up.

What

set

types

securities

believe

you

should

vehicle

principal

do
the

United

States Government borrowing

(a)

under present conditions,

(b) in the event of the

neces¬

sity » for substantial net Gov¬
ernment
both

borrowing?

marketable

Discuss

and

non-

securities.

;

securities

Non-marketable

media

undesirable

for

are.

Treasury

financing except where these
designed for individuals, and
made

are

available

tively

subject to rela¬
maximum-purchase

small

limitations.

...

The present types of non-mar¬
ketable securities,- once offered,
tend to

cause

them to be held in'

increasing amounts during periods
of business depression, and in de¬
creasing amounts during periods
of boom.

tithesis

This is

debt'

exactly the an¬
objective toward

the

which

management

too

needs.

should

Non-marketable
also

securities

inflexible

This

are

suit

clearly

our

demon¬

strated

in the lack of changes in
the terms offered by the
savings
bonds of various series.

In the latter instance the ques¬
tion is

bound to

long-term securities

aim.

desirable

media,

Treasury

such

immediate decline, or slow de¬

cline in

of investible funds

excess

relative

would be

securities (or

have

United

for

strong preference for short-term

met, such securities became

residual investment.
If

In view of the situation that had

been

investor for

...

One circumstance, in which in¬
vestors

long-

would

rates

then

would

erence

securities.

A clear-cut with¬

support

short-term

been
a

under

When,

under what conditions?

believe, therefore, that

marketable

securities

discontinued

except

non-

should

for

uals, that is, except for

individ¬
modified

ate, or long-term Treasury securi¬

Series E type of bond, and these

ties.

should be subject to small maxi¬
mum-purchase limitations.

In part, the preferences ex¬

pressed will be determined by: (a)
the investors' estimate of the

price

We suggest that

...

fluctuations likely to be incurred
in each of these maturity classi¬

fications,

exceed

teed minimum interest
be

guaran¬

rate

provided,

probably
not
to
Changing rates of
Three requirements should have rates of return at which noninterest would be paid on both
been
met
before
unexpectedly Treasury media may become avail¬ current income and
appreciation
withdrawing par support. One was able in increasing quantity in the bonds and
would be determined
that the Treasury be fortified with future.
/_
by fluctuations in the yields avail¬
an extraordinarily large cash sur¬
When investors contemplate that able on long-term Treasury bonds.
plus to be used to redeem the an excess of investible
funds, rela¬
During the Spring of 1949 such
short-term holdings of investors,
tive to other media, may be a a bond
might have paid interest
particularly banks and institu¬
long-run prospect, or if they con¬ at a rate of
2%%, compared with
tional investors and to underwrite
template an increase in their mini¬ the guaranteed minimum of
2%.
an orderly market condition.
Sec¬ mum
Treasury security require¬ In the Spring of 1950, the applic¬
ond, the authorities should have
ments, a greater preference will able rate might have been 3%.
been prepared to permit a wide
be shown for intermediate and
Today, it might be 3%%._ It would
increase in rates (and decline in
long-term Treasury securities. To follow the trend of general mar¬
prices) overnight. Third, the back¬
the extent that the time element ket
rates, which should be high in
ground of the business economy
is short or the prospects favor periods of inflation
and low in
should have been such that the
resultant sharp increases in inter¬ higher rates of return from non- periods of recession.
media,
an
increasing
est rates could be counted upon Treasury
Restricted bonds, ones that can¬
to decrease marginal capital and preference may be expected for not
be
generally purchased by
short-term Treasury securities....
credit demand to the point that
commercial banks, are undesirable
When
the
trend
seems and
the
then
prospective
demand
should be discontinued.
They
would be preferably less and cer¬ clearly to be toward higher rates, serve to
compartmentalize Treas¬
tainly not more than the amount the demand for Treasury securi¬ ury debt and to interfere with the
of money willing to accept such ties, if any, will be largely for
fluidity of the market.
been chosen.

and

(b)

the

changing

2%.

...

The

—

now-

...

worst

possible
par

Freeman

associated

shortest-term securities-.

conditions

support could

have been withdrawn

With Paul H. Davis & Co. of Chi-

Fifty Congreiw Street
b

drawal

was

ments

against which

(Special to The Financial Chronicle)

January, 1950.

occasion

States Government securities have

would

With Paul H. Davis Co.

NewYork5,N.Y.

i
nr**

best

trend

...

Two Wall Street

the

just his requirements to the yields
offered
by long-term Treasury
bonds. In such a case, the pref¬

in, the

investments.

■

;

The

toward

and

to be of long duration, the
investor may be required to ad¬

(5)

ings for those who believed they
could understand it.

wise to abandon the par sup¬

were

population

support only

held differing mean¬

and

port of long-term government

Thus the Canadian economy,
recklessly granted, and freedom which at the present time, has
of enterprise, the mainspring of reached a balanced stage comparprevious British commercial great- able with the mature economies
Jiess, was deliberately stifled.
of older countries, is likely to re| Happily the leader of the new vert to a state more in keeping
British
Government,
Winston with its youthful stage of expand(Shurchill, is fully aware of the ing development. The opportunity
stern facts of the situation.
Al- is now offered for Canada to play
he has diagnosed the root an appropriate part in a British
cause
of Britain's economic ills effort to permit the British Comcould

country

vestors

levels,

is apt

commercial

era

and

colonial

cline

unduly prolonged program of
selling bonds coincident with a
general policy statement that, at
the time, was incapable of ade¬
quate interpretation by most in¬
an

market prices was had fewer adverse repercussions
closely managed Canadian econ- stopped finally only because the then, than the policies and methods
omy. As the experience of Aus- Federal continued to buy substan¬ subsequently pursued,
y
>.
The last possible occasion on
tralia. has clearly demonstrated it tial amounts and evidenced a more
which support might have been
is difficult to sustain a large im- realistic attitude.
migration influx and avoid severe
The present situation is one in advisedly withdrawn was shortly
inflationary
pressures.
At
the which investors
generally have a after our involvement in Korea.
same time it is impossible to adopt
reduced desire to hold interme¬
(4) To what extent is the demand
strictly deflationary policies as diate and
for long-term United
long-term Treasury se¬
Stages
this would jeopardize the success
Government and other highcurities, and little or no confi¬
of any plan for large scale im- dence in the level of long-term
grade, fixed-interest-bearing
migration. During the early stages bond
securities by nonbank invest¬
prices. The preference for
also Canada would be more de- short-term issues, such as bills,
ors influenced by (a) the cur¬
pendent than ever on external has broadened partly because of
rent level
of
interest rates,
capital for the development of the the desire for
(b) expectations with respect
liquidity via ma¬
expanded economy. Similarly the
to changes in interest rates,
turity and because of the increase, [
need particularly for conveniently in
(c) other factors?
corporate tax liabilities.
L
available U. S. manufactured goods
Once
the
minimum
(3) Do you believe that it was
require¬
wrould be further accentuated,

short-

course

long-term investors continued to
prefer private loans and invest¬
ments, even when, following the
Treasury-Federal Reserve accord,
the Treasury bond sales had to be

es-

stable

rates

lower

absorb

greater than the in¬
requirements.

vestor's earning

group can

likely

were:

(1) when the prospective sup¬
ply of private loans and invest¬
-

ments

was

substantially in

excess

formerly associated of to-be-available funds,

with the Wisconsin

Company and

Robert W. Baird & Co.

(2) .the Treasury faced

deficit

which would have to be financed

the

likely trend of rates is
reasonably certain to be stable or
toward lower yields,
then,- and
only then, is the level of rates a
factor of importance.

period such

when

the

stantial

the present

government faces

net

government

sub¬

borrow¬

ing, its offerings should be con¬
fined to (a) a savings bond of the

In such cir¬

type described above, and (b) to
cumstances investors must deter¬ issues of
whatever type will meet
mine whether the period of stabil¬ -the
preferences of investors who
ity or the trend will be short-lived have * substantial amounts avail¬
or of long duration.
If the trend able for investment in this resid¬
is apt to be short-lived a continued ual type
of

security.

the

.jr....

Volume *4

Number 5076

The Commercial and Financial Chronicle

(2523)

3>3

rv 3 .moment,; this is confined .to. short- 5
3'3"3 "est-term securities. :
>:' 3.;•"■>■;.»_;
;*£
'.,T';n Since the difference between
-'
money and Treasury securities lies
4
in the interest paid on the latter,
33/ it becomes relatively unimportant
\. during
such
deficit
financing,

*;■

)l|&

•

whether the securities offered are

of, short- or long-term character.

SEATTLE SECURITY

fact, during subsequent periods,
a
divestment of Treasury

when

•

securities

may

problems

would

•33-' the deficit

decreased if

TRADERS ASSOCIATION

have been fi-

largely, in the initial in¬

nanced

the

expected,

were

stance, by short-term securities.
' Intermediate and long-term

sold during the

should

bonds
3

deficit period

investment

only as a bona fide

demand

appears.

Annual Christmas Party

:«

''-V

Obviously, if the government is
-forced to incur large, deficits of

/■

•333
'.•>••'

only

avoided

inflation; can

£3this order/ long-run

the

December 7th

govern-3

j ment iater provides 'theiTreasury
-3 33 withsubstantial^ca^sdi^luses; | v

fc*vt

•343'

rate ' that; might con- 3a program,
and to

short-term

form

;■

such

Gene

Erckenbrack, Grande A Co., Inc.; Richard Lanjfton, Conrad, Brace A■ Co.;
Reilly Atkinson, Jr., H. P. Pratt A Co.; Townley W. Bale, Dean Witter -A .Co.;
Donald H. Brazier, Donald H. Brazier A Co.; William T. Patten, Jr., Blyth A Co., Inc.

the potential

inflation in the econ¬
might be 2t^% or 3% for

omy,

securities

„

with =

of one-year term,

this would bring

whatever yields

about in the longer-term areas.

Investment Course to
Be Given in Edmonton
:3v3;; 1Preliminary f arrangements

have /

3 been made for the offering of the

33 11 Second E d

m o n

t b ii Investment:

W$1'^£ -3 Course under the joint • auspices;
'of

Edmonton

the

School

Public

Board and the Alberta District of
:

the

Associa¬

Dealers

Investment

Mr. Eric M. Dug-

tion of Canada.
;

D. M. Duggan Investments
Limited,
Vice-Chairman of the
Alberta District Public Relations
gan,

and Education Committee,

from

will act

Co-ordinator.

Course

3 Plans call for the

run

through to Feb. 18,

Jan.

Course to

1952.

•

lecturers

The

are

follows:

Gundy &
Co. Limited; Carl A. MacDonald,
Tanner &
Co. Limited;
George
R.

•

Morgan, Wood,

James Richardson &
B.
Brookes,
Royal
Corporation
Limited;
1Walter Jackson, C. L. Jackson &
Hey wood,

Sons;

Securities

Company;
J.
E. , Sydie,
Sydie,
Sutherland & Driscoll Limited;
and Eric M. Duggan, D. M. Dug¬

•:

Investments Limited.

gan

Officers

Security Traders Association: Waldemar L. Stein, Bramhall A
Homer J. Bateman, Pacific Northwest Company, President; Clyde

Seattle

Stein, Treasurer;

Berryman, Merrill Lynch, Pierce, Fenner A Beane, Secretary;
Blyth A Co., Inc., Vice-President

Ontario

Speakers Panel
Program in 1952

Paul Johnson,

Members of the Party Committee: Kenneth
Foster A Marshall; William H.
C. Arnold Taylor, Wm. P. Harper A Son A
Pierce, Fenner A Beane; John I.

Sanders,

Easter, Dean Witter A Co.; Sidney JL
Oper, Walston, Hoffman A Goodwin;
Co.; Robert A. Nathane, Merrill Lynch.
Rohde, John R. Lewis A Co.
1

TORONTO, Ont., Can.-— Speak¬
of the Ontario District

Panel

ers

of the

Investment

Dealers

ciation

announces

Canada,

Asso¬

the

following engagements scheduled
1952:

'}, ;Kinsmeh Cluh of; Bowmanyille
Jan.
15>r Mr;
D? ''Armour,. 3*333,,
:.Brawley/ Cathi^
.

3j Rotary Club,of ; Rreston Jan. ,3—3
Mr. N. *H. ;Gunh^ Bell, Gouinlock
& Co;, Ltd.
'
v
.

Rotary Club of Port Hope Jan.

'il--Mr.; d: W; ;McBride, .Midland5

Securities Corpn. Ltd.
3 ^ Klwanis

Club of: Lindsay Jan.

15—Mr. D. S. Beatty, Burns Bros,

Limited. 1

& Denton

Kiwanis3
Marie

Club3 of
16—Mr.

Jan.

shall, W. C. Pitfield &
Ltd.
:

■

;

Sault

Ste.
Mar¬

Company

...

Rotary Club of Orangeville Jan.

10—Mr.. F.

Company.

Lace, Matthews &

;

33 Rotary Club of Acton March—
Mr.

■

Cathers

London

Bradbury,'

Brawley,

Company.

Rotary Club Speaker to

selected.
St.

Catharines Lions

15—Mr.

Club Apr.

Baker,

Wood,

Gundy & Company Limited. 33.

Georee
A

Co
■

Sherwood,

•

McMahon

Burns, Ltd.;

Charles Dale;

Harold Lefever,

Co.; Carl I. Hall, Hall Securities, Ltd.; Harry Duke, A. E. Ames A
Roydcn Morris, Nelson & Co., Ltd.; Ron Gunn, A. E. Ames & Co., Ltd.;
guctts of the Association, all from Vancouver, Canada
•

Jukes &

Ltd

H. W. Jones, Jr., National Securities Corp.;' J. H. Waterman, Earl F. Waterman A
Co.; J. Barney Lee, Hughbanks Incorporated; M. Lawrence Bissell, Securities
Exchange, Inc.; John R. Lewis, John R. Lewis, Inc.; G. Edward Ledbetter, Merrill
Lynch, Pierce, Fenner A Beane; Josul C;.i Phillips, Pacific Northwest Company ■

The Commercial and Financial Chronicle

(2524)

Thursday, December 27, 1951

...

might!

IBA Texas

Bank and Insurance Stocks

penditures
running at

Group Installs Officers

addition,
recently
a

than
at

Operating earnings of New York City banks, to be published
next week along with the year-end condition statements, are ex¬

high

the other hand,

Rearmament
In

trends in evidence over the

past

Dana

Richardson

William C. Porter

Jr. W. E. Knickerbocker

Gilbert,

the end of

banks

have

reflection of the

increased

the

total

$10.6 billion,

est rates.

This

Thomas

security holdings have been gen¬

Beckett,

Underwood

Jr.

Chas. B, White

£dward H. Austin

Operating expenses have continued
same

operating

Milton

The record

to increase.

been

Underwood

The

which

were

the tax

While

Thus, in the final period

provide for the retroactive feature of the

This will

mean

that

some

banks which

were

Committeemen

and Lewis F. Rodgers,
revenue

bill will be necessary as well as current earnings on a 52%

Smith

Thomas

—

porting higher operating earnings in the first nine months,
as much of a gain, if any, for the full year.

Central Investment Company, Dallas.
Smith, Texas Bond Reporter.

Executive Secretary—R. B. (Brud)

Continued from page

result

net

should

equal to that of last year or possibly

Looking

forward

banks should

enjoy

indications

current

that

are

•/»

are

record

Captain Henry
As¬
sociation, put it recently, "If there

seems

indicate

that

were

Interest

have

rates

been

increasing.

The

latest advance

viously this change will have little influence
ings.

As old loans

are

costs

lower

Ob¬

this year's earn¬

demn

that is,

expediency,

renewed at the higher rates, however, the

trim our

means!

dreams to fit our

Taxes, of

course,

will remain

With many of the banks

subject to

excess

major problem for the banks.

approaching

for

banks

are

with

respect

income

some

taxes.

■

special consideration

any

consideration

obtained could be of major significance to the
banks, the efforts of

these officials will be followed with considerable interest.

OUR

bUTLOOK
on

Brooks Co., Inc.,

request

Wichita, Kans.

Members

New

York

Stock

York

Curb

Exchange

Wood, Walker

Exchange

Members New

12#

BROADWAY, NEW YORK 5, N. Y.
Telephone:

fighting and rearmament, by
the "refusal to cut non-military
rean

tion of mortgage credit

credit.

Jan.

will be admitted to limited

fort in the
1

part¬

Manager Trading Dept j
Specialists in Bank, Stacks '
.

New York City,

members of the New York Stock

Exchange.

' ■

* \

fight

Fortunately,
business

tionary

Street,

con¬

shall

fort.

Wall

and

com¬

(L. A. Gibhs,

Clearly,

nership in Wood, Walker .& Co.",

BArclay 7-3500

Bell-Teletype—NY J-1243-49;

that

believe

bureaucrats

labor

that

either

leaders will

stupid.

The

find

reversal

trend

inflation.

when

last

look to

end of
of

the

com¬

infla¬

March, "tem¬

porary though it was, should be
sufficient answer. to those.. whq
say we are

will

recovery

call

their

So far

street

than

really needed. There
better proof of this

happened last March.
could
have expected that

what

condemned to perpet¬

Korea, rearm for defense, aid the

maintain the highest
standard of living in history, and,
at
the
same
time, produce so
much
goods that
inventories
would become so large they would
cause
an
"inventory recession"?
But, as you know, that's exactly
what happened! And, remember,
free

world,

happen again if American
business is given half a chance.
can

that

must

the

ma¬

that

the

man

his

wife

and

have

regained

in
the

faith: in

developments

conclusion.
current

limited

Korea
This

that

will

recovery

the

support

means

increase

dis¬

posable income and, thus, will not
have the dangerous further im¬

petus

the

use

savings

and

business itself is con¬

question as to ability to pro¬
be

buying rush

capacity to produce, a
stampede to buy does not
likely — and the favorable

seem

Durable Consumer Goods

cerned—despite the recent attacks
Washington—there can be

could

income

not cause people
savings unless, of

other liquid assets.

Who

After all,

have to look elsewhere for

to Admit

George S. Cochrane

hard

galloping, inflation,

even

America could carry on a war

very

inflation.

sumer

Laird, Bissell & Meeds

duce what is

the govern¬
to load the

CHICAGO, 111.—The Executive spending, by the maintenance of
agricultural price supports, by the
Committee of the Midwest
Stpck
opposition to controls legislation
Exchange has elected to member¬ with
teeth, and by the inflationary
ship War O. Brooks, Sullivan* interferences in the administra¬

BANK STOCK

Available

Midwest Exch. Member j

BULLETIN

declining prices. Such

this

heavily in favor of
the Adminis¬
tration is publicly committed to
an expanding
economy program.
Likewise, the strong inflation bias
of the Congress is clearly dem¬
onstrated
by the insistence on
business-as-usual during the Ko¬
flation

endeavoring to obtain

consumer

rather than

the

con¬

to the cruelties of creep¬

Spring.

for the lines de¬

increasing

labor

balance between inflation and de¬

material increase in earnings.

ing officials

continue

will

ment

any

banking, responsible bank-

Deflation

Until that happens,

point where they will be

profits tax, it will be difficult to show

Because of conditions peculiar to

ing,

vs.

last

quite
it is being caused by

vs.

from

benefit to earnings should be considerable.

Inflation

started

unusual,

third

to an ever

can

re¬

pressed since last spring is

admit that both

and

government

the

America's

smaller dollar. While

must frankly

depends on our ability to sub¬
stitute self-discipline for political

oc¬

during the past ten days when the prime rate in New York

increased by most of the major banks from 2%% to 3%.

was

hope

inflation—that is,

ual

smaller and

government, then there would be
very little hope for the type of
government we have." In short,
the
very
future
of
democracy

loan volume will be maintained.

curred

friend,

good

Heimann, head of your great

high and the prospects of

high level of business activity

Basic Conflicts in Out Economy
our

This recovery

kitchen

the

favorable period of operations.

Commercial loans
continued

1952,

earnings approximately
little higher.
'

plague sectors

metals,

the

level

will

course, another
terializes. Now

not show

The

ten¬

economy

dependent

re¬

may

controls

'which

basis.

successful in

the

mainder of the economy will con¬
tinue to emerge from the recession

Jr., First Southwest Company, Dallas (3 years); Robert A.
Underwood, R. A. Underwood & Co., Inc., Dallas (2 years); Edward
H. Auslin. Austin, Hart & Parvin, San Antonio (1 year).
Ex-Officio—Charles B. White, Chas. B. White & Co., Houston,

imposed in October, most of the institutions computed

high civilian

contradictory

rule

allocation

Beckett

earmarked funds lor the higher corporate taxes

liability at the old 47% rate.

allowance

few banks in the Sep¬

ment

Co., San

Dittmar

Antonio.

Lewis F. Rodgers

will

of the economy

Secretary-Treasurer—William
Porter,

maxi¬

in
coming
months.
Whereas
shortages and increasing govern¬

supply,

the

Knickerbocker,

Houston.

policy,

dencies

las, and Waldo E.Knickerbocker,

necessity of providing for increased taxes has absorbed

tember quarter

as many

of metals in short

result of this

output

McClung

■

large part of the gain in earnings.

pro¬

higher

possible production.

Co.,

Jr., First National Bank in Dal¬

been less than the

expenses have

considerably higher.

expected,

and labor will insist

mum

Richardson,

Vice-Chairmen—R. R. Gilbert,

gain in gross earnings with the result that income before taxes
has

much

Other than the reductions

use

ness

Chairman—D.

higher wage costs.

These increases in

was

this high level of civilian produc¬

of America;

being transacted has meant increased employ¬
time the banks along with industry generally

have had to absorb

been

tion may be expected to continue.
The pressure groups of both busi¬

Houston.

the

;be

of full-

case

—

Bankers Association

Investment

from other activities, including service and trust
have been increasing. The contribution to higher
earnings from this source, however, has not been large as
of the gain results from the income from loans.

re¬

can

output caused by restrictions

the

The follow¬
ing officers were installed Nov.
30, by the Texas Group of the
DALLAS, Tex.

Earnings

ees.

which

this policy, civilian
has

sorrow.

departments,

volume of business

materialize.

industrial

businessmen have learned to their

ings.

most

levels than

erally lower, reflecting the smaller holdings of such investments.
Although the rate of return on these holdings has improved, the
increase has not been sufficient to offset the smaller total of hold¬

gross

can

war.

duction

from loans.

Interest and dividends from

should

war

serve-in-being
quickly called

large

that

conveniently, con¬
military production if

gives

scale

much* additional

facilities

and

all-out

by firming inter¬

The combination of these two factors has meant

increase in the earnings

that

Under

This increase in loans has been accompanied

inventories—but also to

quickly,

by the end of the year

and

military
goods, every

high levels
only large
goods—particularly in

just

verted

billion.

the figure will be close to $11.0

consumer

production

As of Sept. 30, 1951 expansion of loans had

$9.8 billion.

was

Goods

between

to maintain not

consumer

16 large New York

of loans of

Consumer

vs.

battle

stocks' of

will not be

rapidly over the past year.

the total

1950

rearma¬

civilian production at
in order

quarters have generally shown large gains in gross earnings. Most
of this increase resulted from the expansion of income from loans.
The loan portfolio has increased

the

goods and

Operating figures for past

year.

the

effort has been made to maintain

however, such transactions have not been particu¬

results for 1951 would, thus, be a

justments in the market values of securities have been substantial.
Thus, some losses in this phase of operations are to be expected.

The final

point,

goal is future, not present,
production.

may compare un¬

larly important and the results for the current period
too significant in the overall showing.

the

misses

favorably with those of last year. The rise in interest rates which
has occurred during the past year has been considerable and ad¬

In recent years,

mili¬

ment

the different institutions
with some showing gains and others declines, changes are expected
to be relatively minor.
While there will be variations among

criticism of

wave

tary output is not fairly based. It

rearmament

recent

those

pected to show final results for the year about the same as
reported for 1950.

Profits l'rom securities,

level throughout most
As a matter of fact,
program is pri¬
marily concerned with expansion
of facilities for the production of
military goods. It follows that the

Bank Stocks

—

yearly rate of

$25 billion and will continue

the

This Week

capital ex¬
have
been

of next year.

E. JOHNSON

By H

never

overlooked

Soft Goods

Many businessmen

the

decline in

consumer

output

goods

%■

expect

will

that

durable
the

cause

rising disposable income to "spill
over" into the soft goods field.
While it is quite true that this

happen, the effect will

may

not

fact, competition will be keen

the

eral.

the

great

most people think.

soft goods sector in
gen¬
This conclusion is based on

conviction

continue at

that savings will
high level because

inventories
are
large
people think prices are high.
In addition, taxes are
taking some
$12 billion morei than before.
consumer

and

This conclusion is also based

capacity of the
knowledge
that
soft-goods
this country is very great and is
production capacity in this coun¬
continually increasing. For several try
and
those
countries 1 with
years, capital expenditures have which we trade has
been con¬
been
so
large
that
they can siderably
expanded, and that only
properly be-characterized as ab¬ an insignificant part of that- out¬
normal.
More
specifically, pro¬ put will be needed for
military
productive

duction facilities

greatly ex¬
War II; and
nearly $110 billion
were

panded .in«World

sinc^ then,
more

plants

and

machinery"

have been added to" our

use.

Any
rising'

•

businessman
consumer

waiting

income

for

which

can't foe spent for
cpnsuiper
industrial. able goods to rescue

dur¬

him, should

X*
Volume 174

Number 5076

The Commercial and Financial Chronicle

ponder the paradox of increasing:
income and declining spending,
which prevailed from last

March

until just a few weeks ago. It not

only

happen; it has happened;
and, it could continue at a rate
can

which would offset

the increased

military spending of the next few
months,
In

the

durable

competition

and

consumer's

follows

get

soft

dollar, it by

that

the

between

goods

what

other

j
not;

does

one

will

the

for

no means

this,

will often find that and the many other vital issues
not what they seem to permeating our economy, can, bebe; so, nowadays it's particularly yond question, be solved in favor
dangerous to jump to conclusions.: of the future of our great country
It has become imperative to as- -^in favor of your children and
certain and carefully weigh- the. my children — if the American
real facts, if serious mistakes are people can only be made to see the
to be avoided.
issues involved. Now, more than
These basic conflicts of inflation
ever' before,
the future will be
versus deflation, tax eaters versus
what we make it There is a time

things

you

are

producers,

rearmament

goods,

consumer

versus

durable

Encroachments

tle

lines

which the bat¬

battle?
:

from

page

estimates

fic in the event of

Financing

finance.

■

increase in

infrequent trips, would

create

serious

modern

and may or may not stipulate the
price which he will pay for the
bonds.
In some cases, a bottom

the facility? A slow ferry,

with

In Revenue Bond

Y
"Unfair"
The role is often a difficult one
Trade, "Cost" Survey and similar
for the banker since he is called
types of legislation, designed to
protect sellers from the rigors of upon to subjugate to a certain
extent his usual role as watchdog
competition, are not sufficently
for the investor in preference to
recognized.
Fundamentally,
all
such price legislation reflects a advising the issurer as to how best
to set up his bond issue to make
lack of confidence in the function¬

Trade,

While

an invalid instrument and
unenforceable contract.

rates

fully appreciated by the general counsel must be independent, un- contract for the purchase of a new
public as well as by business. But biased, and based upon a fund of revenue bond issue. That contract
the equally undesirable economic knowledge which can come only will customarily provide for the
and social consequences of the so- from experience * in the field of services the banker is to render
"Fair"

acquisition of

new

facil¬

some

the

average, engineers'
have
proven
reliable

(although
too
conservative
in
some cases), we have been pass¬
Are there any toll-free facilities ing through a series of "abnormal"
sufficiently close as to draw traf¬ periods—depression, World War

are

called

construction of

ity

Is there adequate protection
against competition?

Investment Banker's Role

being drawn in the
American economy is that of pres¬
ervation of competition. The uning under normal conditions is

nance

at large

part

your

"Unfair" Trade and Other

Another issue

three years before the public
ever hears of it.

(3)

Continued

"Fair" Trade,

vs.

abling legislation, and arguing the five questions to answer, because
test case may take a considerable it depends for the most part on
period of time, a revenue bond individual judgment. Most reve¬
issue may be in process for two nue bond issues are sold to fi¬

he has

...

action ana tnis

doing

and taxes must be reckoned with!

Competition

goods

soft goods, maintenance of

versus

existing
Insuring the validity of an issue one which had been privately
before it comes to market may operated. In the first case, there ■
save both the borrower and the can be no actual operating experi-..*
ultimate investor much future ence to draw upon so the analyst
.
.
A
vou
grief and costly litigation. Where must rely upon the estimates of
it is. Are you.
precauti0ns have not been engineers and others as to the pos¬
in this vital taken, the investor may find that sible earning power of the project.

Savings. competition against encrachments,

get.

(2525)

bridge

not

competition for a
on a main route,

H
were necessary to raise
£°11 rates moderately on the
bridge. However, a free bridge on
<*n alternative route, involving a

detour of several miles, might absorb a substantial amount of trafilc

" Xe

rate on the toll bridge

II, post-war boom.
estimate

would

behave

under

projects
"normal"

Many projects depend¬
motor vehicle traffic

economy.

ing

It is difficult
these

how

upon

severely affected by the re¬
on
the use of gasoline
during World War II;
and
many transit facilities have
been pleasantly surprised by the
steady rise in highway revenues

were

strictions

tires

and

since the end of the

war.

Since each revenue project has
were raised.
eluded.
'
■In r e case
utilities such as its own peculiar problems, it is
If the banker is brought into the electric power systems, the_ pres- impossible to set up absolute cri¬
picture at a very early stage, the ence of any other body haying teria for what constitutes satis¬
contract may provide that he will jurisdiction over the rate-making factory coverage, and it is up to
it attractive to bidders.
~
furnish, at his own expense, the Powers oi the municipality or au- the analyst to decide whether or
ing of free markets. Protecting the
The
financial advisor should necessary traffic and construction thority would be an important not the earnings coverage as in¬
inefficient producer or distributor
enter the picture as early as pos- engineers'
surveys
and prelim- consideration. The enabling legis- dicated by the estimates will pro¬
from competition means that the
sible in the

gets less for his

consumer

money.

Protecting the efficient from
petition

that

means

com¬

ever-in¬

bond
be
of

financing of

revenue

offers which

other system can

approach. In

even

it is not

fact,

too much to say that the preserva¬
tion of capitalism depends on the

may

ning of the project has begun. The
financial

advisor,

things,

other

among

required

cooperate

with the engineers in studying the

The

Federal

Still

Reserve

the Treasury

vs.

another

the economy

basic

conflict

is that between the

Treasury and the Federal Reserve
System. You may wonder why I
mention

this

discussion

controversy
what

business, but the
hand.

The

lies ahead

for

is close

answer

so-called

com¬

promise, in which the pegs under
bonds

government
and market

lowered

were

support became flex¬

ible, is merely
the

the

an uneasy truce—
issue, which is whether

real

Treasury

the

Federal

shall set the terms and

serve

ditions

credit,

has

access

Re¬
bank

means

sponsibilities

outside

this

Onrp thp fprm«: of thp hnnH?

expected

issue

for

volve

the

market.

This

will

in-

preparing of an official
statement
or
offering
circular,
stimulating interest in the bonds
not only among prospective bidders
but among logical
institutional investors as well, arranging
for
the receipt of
bids for the
bonds

eenerallv

and

holding

hand of the issuer to be

the

receint

the

is done

of"

that

sure

the

as-

highest

nossible bid for the bonds
can

view

the

forth¬

problem

with

rsicfmnariiv

th*

Customarily,
on

equanimity.

Patton, who heads
sub-committee, is a known

does

visor

when

alit

employed

should

increase

the

powers

Treasury over the central banking
mechanism. This means that those
oppose

control of credit by

administration

power

—

ad-

bonds
an

in-

nosition

that

be completelv uri-

can

completely un

biased

the

since" ifpta

be,

his advice

the Federal Reserve banks and

financial
for

the banker in such

has favored the nationalization of

f;MQ

the
bid

not

ing. Furthermore, in the past,-he

the

aro

the bond

prepare

inflationist of many years stand¬

who

par-

determined, the financial advisor

Congressman
the

his

ticular sphere.

sure

Nor

this reason, and because the con- v Careful study of the trust intract to purchase at a future date strument is required here. The
involves other risks, the spread— indenture should not place so
or per bond profit—in this type many restrictions on the borrower
of financing is usually greater as to hamper the proper operation
than in financing through com- and management of the project,

adequate margin of safety

the

for

particular issue.
For a
relatively stable undertaking such
as a water system, where the user
has

real alternative but to sub¬

scribe to

the service,

relatively

slim

margin may be adequate (ex.
coverage
of 1.25-1.50). On the
other hand, when we are consid¬
ering a facility such as a toll high¬
way or bridge used primarily by
pleasure vehicles, a substantially
higher margin may be considered
necessary.

summarize, the problems
by
the investment

encountered

stricting operating expenses, for banker in connection with a reve¬
example, to a certain stipulated nue bond issue are many and
dollar amount, may actually prove varied. His association with an
detrimental to the interests of the issue may begin long before the
investor and the borrower alike, project has arrived at the perma¬
should some future contingency nent financing stage, and continue
arise which would require a long after the bonds have been
larger outlay for some legitimate placed in the hands of the perma¬
the average person, revenue bond operating need. While it may be nent investor. When sought early
issues have many points of dis- possible to overcome such an ob- enough and conscientiously fol¬
similarity, and it cannot safely be stacle by then obtaining specific lowed, his advice, based on sound

advisor, the banker proceeds to
cooperate with engineers and attorneys in setting up a salable
bond issue, taking cognizance of
sound bond issue is a joint venture the peculiar legal and engineering
of issuer, attorneys, engineers and features of the particular situabankers, and none should reason- tion. Much as they may seem to
ably be expected to assume re- parallel each other, in the mind of

been

coming Congressional hearings

vide

evervthin£ nossible

settled.

■

feasibility of the under- petitive bidding.
.nr^An indenture which too rigidly
taking and with the bond attor'As in the case of the financial directs the flow of revenues, re-

con¬

central

penses

economic

neys in drawing up a bond indenpreservation of competition. So, it
ture which will provide the necesmust be preserved from all en¬
sary safeguards to issuer and incroachments, whether from with¬
vestor alike.
The preparing of a
out or within business.

latl0n sbould ?lvf tbe administrators of the project absolute control
ovfi\1 ^ rate-fixing policy,
(4) Are the issuer and the many rate, the banker assumes a ^estor Pr°tected by the trust mcertain amount of expense which denture.
may be lost should the project r
ta) Is the investor protected in
prove
to be impracticable. For the event oi.a default,

inary attorneys' opinions, such ex-

in most cases to be reimhelpful in the earliest stages bursed from the proceeds of the
planning—even in the formula- bonds, when, as, and if issued. At
project, since his advice

creasing subsidy is given, and it
tion of the authorizing legislation
comes
directly out of the con¬
—but it is seldom that his advice
sumer's pocket! The adverse ef¬
is sought at so early a juncture,
fects on the standard of living and
Let us say, then, that the banker
future progress are obvious.
comes
in after the legislation is
Competitive
capitalism
has passed and the preliminary planmade America great. Competition
is the one advantage capitalism

limit of the purchase price is in-

Underwriter in

Negotiated Sale

Projects involving large amounts

construction

new

^ampinl^ of
ture

the

complete

sai(i that what will be sound in a"thoi ization ^hl^rp^friptTvP^nm"
ecluaI1y sound
In another.
vision, such a process is cumber?ne ls?"e wl" be
Since

fre-

issues
..

it is particularly
dl«lcu" for the banker °.r tbe
a,na'y?t to compare new and ou standing revenue issues when attempting to arrive at ail evalua0 a ne^ Pr°Ject- However,
be interested in hearing
the criteria of one analyst.
There are five questions which
* ask myseH when analyzing a
revenue bond issue.
(The questions are very simple, but the anyou may

swers

are

often

very

difficult to

ascertain.)
(i)

some and

and

Z !L f?JutJ

°"s

or perhaps default on its obligaturns.
On

the

should

faciiity needed?

other

readily enough when we

interests

borrowers

and

Elliot Stein Forms
Own Firm in St. Louis

there
safeguards

sion of project funds.

Provision

diver-

should be made for the building
up of bond and interest reserve
funds in an amount sufficient to
provide for all current principal
and

interest

requirements and to

"nest-egg" in the event

future decline in the earning

The answ,e''to this "rst <»uestion p™er of the
comes

best

investing public alike.

hand,

adequate

against mismanagement

provide

time-consuming at best,

vary so widely

.projec!;

Some provision should be made

considering an important in the trust indenture, giving the
crossing over the Hudson River, borrower the right to accelerate
are

like
the George
Washington
Bridge, or a high speed route

retirement
call.

The

call

the

issue

premiums

through
should

the congested be so set as to provide the bond—
areas of northern New Jersey, as holder with adequate compensawhich will

fl£ncMu£ *\th*
issuer
most

...

the

are

bond

revenue

knowledge and supported by ex¬
perience, may serve to protect the

Elliot H. Stein

avoid

case of tbe nefw T^npike; tion for the shortened life of his

but the necessity of a publicly investment, but should not be

ST.

LOUIS,

Stein has
&

Co.

Mo. —Elliot

formed

with

Elliot H.

offices at

411

Stein
North

privately owned tran- high as to penalize the borrower Seventh Street, to engage in the
securities business. Mr. Stein was
method
known
as
a
negotiated sit system in Chicago
(Chicago unduly, and thereby prevent him
formerly associated with Mark C.
up and
be counted. It is of the Sle" That tmn may need a bit Transit Authority), or a public from
exercising prudent debt
Steinberg & Co.
utmost importance to the future of of exnlanation
It imnlies that the Power project in an area already management policies,
whatever

political party it may
be—had better get ready to stand

auentlv

financed

through

thp

owned vs.

private enterprise that such a vital issuer and the banker come to an served by private enterprises, is
<pke rjghts 0f the investor in the
Now SHaver Co.
national problem as the control of agreement as to
the conditions less easily determined.
event of default, and a clear statecredit, particularly reserve credit, under which the banker will pur(2) Is it legally valid? (Has the ment of just what constitutes a
ST. PETERSBURG, Fla.—The
be solved on economic, and not chase
an
issue of
bonds
when borrower the legal right to bor- "default" should be contained in firm name of Shaver & Cook, has
partisan, lines.
' v
*
ready for market. In most cases, row money and to carry out the the indenture. In most revenue been changed to Shaver & Co.
,

mean that there is no
project?)
bonds, the investor has a lien on Offices are in the Florida Theatre
competition—for the competition
Has
the
enabling
legislation revenues, but no mortgage on the Building.
among bankers
for a purchase been well drawn? We can have properties themselves. The rights
in our economy today than ever contract is often as keen as at the utmost assurance in the valid- of the investor with
regard to
before. This makes it doubly nec¬ open competitive bidding. For one ity of an issue when it has been court action to enforce carrying

it does not

Conclusions

There

essary,

are

basic conflicts

difficult though it

may

'be,

to cut through the fog of propa¬

reason

tion,

another—price, reputa- reviewed

favorable

contacts,

ganda and welter of counterclaims haps salesmanship—let
to the bedrock of facts. When you

that

or. per-

us assume
banker is able to obtain a

Court

by
a

the State Supreme ou* °f the terms of the indenture
test case. Since the should also be considered,

legal work of preparing the indenture, securing necessary en-'

jji Robert B. Fogg
Robert
B.

Fogg, in

the municipal

charge of
department of

(5) Are the earnings adequate? Blyth & Co., Inc., Boston, Mass.,
This is the most difficult of the

passed away Dec. 18.

The Commercial and Financial Chronicle...
22

Public

Utility Securities

agents, the percentage remains

Southwestern Public Service Company

years

(Millions)

Earnings

Dividends

such facilities

1951

$21.30

$1.31

$1.12

1950

18.48

1.34

1.08
0.98
0.80
0.63

1949

16.62

1.36

"Vv 1948

14.73

1.32

I;.-V;1947___

1.16

11.88

•

10.10

1946—

'»■

-10.58
9.64

*0.72

1943

8.48

1.08

1945_

0.50
0.31
0.26
0.13

0.58

1944

0.99

♦After provision
♦♦Calendar years.

P
i.

18V4-13%
17V4-13
14%-10V4 7.7
12%-10
11%- 8!/2

Continued

tightly

be¬

Reserve, anti-inflation

Federal

Under such conditions price

sales.

changes should be negligible dur¬

1952^'^;;,;v'C^

: ing

(31) While'.Canada; arid, SoutJi

Africa have permitted

from first page 7; ^T'---^

revaluation

"free

mar¬

kets"

opposed. Hid Gold Stock df the
United

may be more important strikes
in the first part of 1952, there

as earned

should be

decline in work stop¬

(8) Tightness in the labor sup¬

ply will continue through 1952,
particularly of highly skilled

is, however, likely

upward when the

nation,, in the'Opinionj of ^govern¬
ment economists, "needs another

(17) The above forecast .is based
the assumption that unless

shot

inflation."

be in 1952.

This

will

not

;•

Stalin starts World War III during

the early months of 1952,

in the last half-year.

pages

States

be revalued

Outlook lor 1952

fiscal year ending August,

of increases in costs of. pro¬

gold, be¬

duction, the Administration is still

Business and Financial

share.

cause

in the 12 months ended Oct. 31, and for the
1952, earnings are budgeted at $1.45$1.50 on an increased number of shares. The 6-7c saving on the
omission of the electrical energy tax will exceed the increase in
the income tax rate in 1952 (as compared with the 1951 tax rate).
The company is budgeting a 20% increase in revenues in the cur¬
rent fiscal year, reflecting higher rates, new defense business re$1.35

held

support purchases and the ceiling

10V2- 5%
,6%- 3%
5
- 1%

for contingencies equal to $0.42 a common

continue

will

bonds

tween the floor of Federal Reserve

arise

„

EPT, and it is estimated that

earnings could increase substantially before such a tax would be
payable.
1
•
' - '
•
•
"

surely

Government

(30)

Application with respect to over $34,000,000 of
(in the company's defense area) are now pending

The company does not pay any

will

(29)
Government
loans
will
gradually increase during 1952
and there will be some strength-*
ening of basic interest rates. > ;

portion of the cost of new

deficit

during the balance of the year;

before DPA.

17V2-15

Aug. 31—

result of high National Income
increased
taxation.,
But
a

Federal

The com¬

considerably greater than in 1952 if accel¬

is granted

amortization

erated

plant facilities.

—Range—

be large.

of the Dec. 1 dividend nontaxable. In the fiscal
1953-54, the company anticipates that the nontaxable portion

of the dividends will be

''- Approximate

and

report 20%

follows:
Revenues

as a

subject to final determination, but

believed that any adjustment will not

Deficit Financing

(28) The first quarter of 1952
may actually see a budget surplus

pany's budget for the fiscal year ending Aug. 31, 1952, indicates
that if dividends are continued at the present rate, about 20% of
them will be nontaxable. Accordingly, stockholders were advised

operates in the Pan¬
handle section of Texas, and in New Mexico, using natural gas as
fuel.
Growth has been rapid, revenues have doubled in five years,
to around $21 million.
Selling over-counter around 18 and paying
$1.12, the stock yields 6.2%. The annual dividend payments have
increased in each of the last eight years; and the market price of
the stock, after adjustment for slit-ups, has advanced from 1 %
during this period, with each year's median price (between high
and low) showing some gain.
The common stock record is as
Southwestern Public Service Company

legislation will result.

% by this amount.
Since the 1951 return has not yet been examined by revenue

By OWEN ELY

Year Ended

cal tariff

taxable income for the
current year. Thus, the excess of dividend over taxable income'
represents a return of capital, and treated as such by the stock¬
holder, who marks down the cost of his stock on his tax books
comparison of the dividends paid with

tection will be heard; but no radi-

subsequent dividends is determined solely by

that taxability of

Thursday, December 27, 1951

(2526)

he has Stock Market and Bond Market
7

his mind to forget World
War III until the United States
made up

Outlook

(32) Until the danger of war- isi
past, wise people who can easily
do so.Will move out ol large bomb-.

and our Allies again "go to sleep,"
which may be some years hence.
w^uirm
about 50,000 kw., and growth of the regular busi-. workers, Wages of such workers
Wer give tWs.es ^ definite predic-;
*.tiqss.. Actually during the fiscal year which began Sept. 1 revenues, \ will be advanced voluntarily in
tioh as to" the' outlook for World
'•'have been running about 25% over last year'and 4% above the
order to hold them.
:
War III.
Mv-4 * * Af
•'
t)Lldget.y-7 '■
V ] "i
"
^
;%--7
(9) The Taft-Hartley Law will
stocks will1 sell lower than current
(18) There are three ways of
: c'
The company has not yet benefitted by television to any great
not be repealed during 1952, but
preventing inflation: (1) increased quotations.. This applies especially
extent but within 12 to 18 months coaxial cables should be ready
may be amended.
The adminis¬
to oils and certain "blue chips."
.

;

•

this

serve

$500,000 in

area

The company

the

and

television load may

mean

extra

wink at some of its clauses.

has pursued an aggressive policy in the

Remain Firm

steam

new

(10) Wholesale prices of many
commodities will suffer a mild
with

provide

268,000

kw.

name-plate

remaining over-the-counter issues
over-the-counter

dealers

stock

for

split

may

that
on

■

of the dividends

■notice

are

"tax-free."

stockholders,

On Nov.

stating that

j income tax return to be filed by the

29, the company sent

the basis of the

company

Federal

for the fiscal year

j .ended Aug. 31, the three 28c dividends, paid March 1, June 1,
! and Sept. 1, were nontaxable to the extent of 40.63%.

•j "tax-free" or "nontaxable"

mean

The words

the basis of

earnings as reported to the Treasury Dept. As in the case of most
! utilities, these taxable earnings vary considerably from earnings as
I reported to stockholders.
The company's income as reported to

| stockholders is computed according to the uniform system of ac¬
counts of the Federal Power Commission and among the principal
are

the amounts charged for depreciation and

the item of interest during construction which is not considered
as

income for tax purposes.

A considerable portion of the 1949 and

1950 fiscal year dividends would have been nontaxable but for the

the

half

now

year

freight and passenger rates.

who

those
to

the

carefully

will emphasize diver¬
only by company

program

and

Completions of fewer
as a

industry, but also by quality

and cash.

damper

furniture sales.

(37) Highest grade taxable cor¬
bonds should hold in a
price range, during 1952,

(23)
will

decline in department

I predict

volume.

sales

variety

when

consumers

com¬

are

manufacturers

some

will

up on distributors, elimmating those who won't sign Fair

should

government will
of its

since the

attack

inflation.

If the weather

„

the gov¬
ernment
will be asked to give
away surplus crops.
~ 7
7 7 ;•
extremely favorable,

(15) With prospects good for
rising, supply of feed grains,

most meat should be
ful next year
for

plenti¬

than in 1951.

guns',

by high wages and military needs.
Local

Taxes

Will

1952

above

the

advance

income over dividend<f'paid in prior years. However, the remain¬
ing balance of this ex6e$s was applied to the Dec. 1, 1950 dividend,

1951.

State

and

municipal taxes,

however, will

late

higher again.

This

obsolete.

come

new

should

maturities

TiitiWa' »

are

their

carefully di¬

some
ntj

Inves¬

that

part, of their

wrr..

will

ma rke

t^fb^t ax Hexe mpts :wh enan A
estateHis;viiquidated,';it:;is; wise to

Th A'l

^7VaV\'1

Ir* V* UaW/1

■£i

Vitillt

w-» a

they be¬

activity,;

will operate much as the automo¬

industry has operated. I fore¬
that

will

this

and

-1,4

Real/Estate;.

p,,

n v. <«,j

■ -r.^

(39) 7:Much ;of ;the,7recent] real f

estate boomtwas-; the7 result of easy idevelop¬ credit—almostjnothihg down and?;),
ments, I look for continued shrink-- small payments for- years whence.
age in our civilian exports during. Under: the recent legislation .there
more

recognized throughout 1952.

(25) Barring

1952.

new war

Imports, however, may rise

further.

Exports to South Amer¬

ica will be off.

Total foreign

trade

should not be changed

much, but
the exporters will be on the short
end of this business with the im¬

porters gaining.

vince

Congress

abroad.

will

turers

Many
will

liberal; terms;77:

-7

;

supplies, it

war

difficult to

con¬

additional

that

should be granted

domestic

manufac¬

increasing

com¬

barring

World

will

lessened

creased.

War

control!

III,

rather

than

in¬

..."

(41) The decline in new build¬
ing will continue to throw; a wet
over

speculation in

suburban lots during 1952.-

(42)

The

scare

caused

vacapj
rr

by the

petition from foreign merchandise.

Korean-China War and fears of atf

early

cry

for

increased

tariff pro¬

Nonessential; commercial!

"(40)

feel

built

1952;7 butV some■ credit r restrict
tions will be. modified.,- Mortgage
money:' should^: soon; be rj had or$

blanket

(27)

fewer small-homes

building will be hit in 1952—but.

(26) Except for
will become

heavy credits

Higher

(16) The burden of Federal
taxes, both corporate and personal,
will not be increased again during

munitions

and

constantly be replaced

Prices

beef, however, will be held

permanent

industry at least for: many years.
come..
Airplanes, tanks,, artiI-7

cast

1951,

and

new

nAnH

see

versified,/with
-

bile

raise planting quotas as part

v v,

(24)believe
a

unless they

tax-exempt bonds
continue in good demand.
tors

price to become

Trade

Fair

for individual

reason

taxes,

drug

Foreign Trade Outlook

With present high income

(38)

rise in

and

see

CONVERTIBLES.

are

above trend forecast

The

mean

store

porate

chains.

Good

Outlook

(22)

(14) Barring crop failures,, the
total
supply of food 'available
should be larger in 1952 than for

have

planned investment program. Such

for

equipment.

dwellings will also act

Trade contracts.

•

values

sification—not

the

fact that the company then had an accumulated excess of taxable

PATIENCE

automobiles and certain household

during

existed

that

levels

first

tighten
<

that the dividend (or the desig-

{ nated portion thereof) is not considered income

items of difference

demand

good

(36) Successful investors of 1952
will

Uncertain

the

down

where

investors to buy them

But

An interesting new feature of the stock is the fact that part

hold

Stocks

be demonstrated.

but I

cally

utility analysts, including talks by officers
•

Trade

can

(21) Credit curbs will continue
to

plaining about the cost of living. lery,

keeping stockholders advised of current earnings and develop¬
It has just completed its annual series of meetings with
and color sound movies.

backlog of demand for sound In¬

come

lic's spending for food and lower-

maintenance.' It's too risky politi¬

ments.

investment dealers and

cycle.

Domestic

(13) Congress will not take any
1952 to legally bol¬

some 25%, with new holders
The management takes an active interest in

past

States

(20) There will be no increase
in "luxury taxes" during 1952.

living costs
continue above the

action during
ster
so-called

1950, the

the

stocks, certain movie stocks
and possibly the air-transporta¬
and municipalities
tion issues.,
will again be under pressure to
(35) Investment Trust funds,
find adequate sources of revenue.
pension funds, and insurance com¬
Further increases in sales taxes by
panies may provide an excellent
states and municipalities can be
(19)

bond

number of stockholders has increased

priced soft goods.

Farm

reason.

hedges

I like good chain variety

store

narrow

attract greater

Aug.

inflation

months.

this

for

It is understood that the company

Following the two-for-one

;

only

closing. I also predict further rises

b-.y: The company has no plans to list its common stock. A num-.
^:v7her of utility stocks have been transferred from the over-the-.
; counter list to the Big Board or the Curb, and the management

in almost every state.

peaks

Falling demand for hard
goods should stimulate the pub¬

the

has arranged to place privately $10 million bonds.

from

their

yet

business

our

conservative inventory.

lower

company

interest

and ac¬

diction recognizes that

in 1944. Senior securities have been
largely placed with institutions. During 1951 the company sold
about $3.5 million common stock, $1 million 4.25% preferred stock
(sold to two institutions), and $12 million bonds also sold privately.
In 1952 some $4 million common stock will be offered on a l-for-13

that

exploitation

in the best pq-f

now

thai, have not been popular

those

next year may

They have been underwritten by
syndicate headed by Dillon Read & Co., who have acted as bank¬
ers for the company since its metamorphasis from a holding com¬

feels

current

7(34) -Stocks

sition! for l952 should be many of

that

forecast

looked for next year.

(12) The cost of living will re¬
main high during 1952. This pre¬

high

the

Retail prices for

merchants will operate with

have been well over-subscribed.

l-for-14 basis around Feb. 1.

from

steep
1951.

expanding
stockpiles of strategic materials
present a real price threat in the
event
of
a
peace
scare.
Such
stockpiles could then act strongly
as
a
depressant on prices.
Wise

financing program has been consistent and
Beginning in 1947, the company early in each year has
issued rights for additional common stock; each of these issues
have included an over-subscription privilege, and the last four

Commodity speculation for
rise
will not pay in
1952.

company's

operating

quite

Furthermore,

This

regular.

pany to an

some

(1)

three years.
The

compared

1952 will hold steady.

rating (perhaps
10-20% more in actual capability), as compared with present ca¬
pacity pf about 350,000—a projected increase of 75% over the next
will

program

levels

when

1952

price level for Dec. 31,
lines the drop may

the

1951..

In addition, an

plant in Eddy County, New Mexico.

18.000 kw. unit will be installed at Carlsbad in August, 1952.

decline

taxes.

companying fear of inflation are
not

generating unit called "Plant X," in the center of the
system. It is located "out in the open" (not near any large city)
on a 1,000-acre plot.
It is within a mile of a natural gas pipe line,
so that gas will be readily available for fuel.
The company has
obtained water rights on 10,000 acres in order to provide the nec¬
essary water supply for the plant.
The first generating unit will be 50,000 kw. to be installed in
June, 1952, and about a year later a second unit of 100,000 kw. will
be installed. Also, the company has on order two 50,000 kw. units
for installation in 1954, one at its Moore County, Texas plant, and
one

the

Commodity Prices Will

period with respect to construction, so that it has had excess power
They are now building a large

production; (2) decreased spend¬
ing; and (3) as a last resort, in¬

creased

postwar

available for sale to other utilities.
new

will continue to

trators of the law

it is estimated.

revenues,

outbreak in other sectiohi

Number 5076

Volume 174

The Commercial and Financial Chronicle

...

(2527)

adversely affect the demand

will

Brooklyn, N. Y., since 1906, died partment.
Subsequently he was
Dec. 10. Mr. Brown, who was
engaged in new business activities
born in the Bushwick section of and
is, at present, assistant to EdBrooklyn, went to work, according ward N. Dean, Vice-President and
to the Brooklyn
"Eagle," as an Cashier, in the operations of the
office boy at the Bushwick Bank bank.

for big city real estate.

This fear,
however, is declining and many
who had put their city properties
Bp for sale are withdrawing them.
V (43)
Small
sustenance farms
should hold up well in price as

News About Banks
CONSOLIDATIONS
NEW BRANCHES

REVISED

flation hedges.

Demand for large
commercial farms, however, should
weaken

(44)
.

the

rent control will act
on

building.
.

—

There is

further

New

yet no m-

eentive to build homes for rental

be}d

and

Rodd,
C.

Eilmore

Buffalo "Evening News" reports
that Mr. Kleindinst reliquishes the
Presidency of the Liberty Bank

j}ec
19
elected after serving in that capacity for
John E. Hopkins, 24 years. From the Buffalo paper

on
_

Thomas

income, although rent control is
gradually lessenmg.
(4o) Tighter credit controls will

the regular meet-

York, at

jng
0

v.Av\fnl

—

public,

institution.

The Board of Directors of J. P.
Morgan & Co. incorporated, of

apartment house

new

from

years later he became head of the

„

damper

CAPITALIZATIONS

toward

back

graduating

school in 1878, the year the bank
was
established.
Twenty-eight

progresses.

year

swing

Any

after

Bankers

and

NEW OFFICERS, ETC.

continue to be valuable in¬

these

Patterson

the

Mr. Brown had been

?jL
*p^q

also quote:

nnff

resident

a
Tc<1

commod-

increase is "secured" by

•

s.4

•

■

.
iA

many

occasions.

di-

1° submit the same to their stockh°lders> Provided it meets with

He became Assistant Treasurer of

"Mr

McGinley took

^reer

his

banking

immediatelv

upon

(47) Those who can do so should J. P. Morgan & Co. Inc. in 1944, graduation from the Wharton
defense orders if and Assistant Vice-President in School of Finance and Business at
needed to hold up production vol- 1948.
Mr. Patterson was gradu- the
University of Pennsylvania in
limes and reduce overhead. Ljiot ated from the University of Chi- 1925.
too much profit from such war cago in 1935. He joined the staff
"He was with the National Bank
business should be expected. These of J. P. Morgan & Co. in 1935, of Commerce and the
Guaranty
contracts will be subject to tight- and became an Assistant Vice- Trust
Company from December,
fisted renegotiations.
■
President of J. P. Morgan & Co. 1925 to September, 1930. These
(48),; The political outlook ior Incorporated, in 1948.
institutions Avere merged in May,
2952 will be completely, dominated
*
*
*
1929.
He joined the Chemical
iorkeving

nosition

for

little

new

pass

dent,

erans.
onv

ctm

nJiiV ^
Jiated by

rLlitton

South coalition

curb

Dec.

the same time 11 men ™ere Pr°mni„j
A<:<?istant.
Vire-Presito Assistant Vice-Presidents, while another was elected

Zh i'aT 3 moted

fil ni
Southern Demociats.
c

announced

was

This Mnrth
Northstill be

will

onslaughts

Trust

officer.

Trust

able

q£

staff

Thirteen

also

were

members

elected

Comnanv

1930

Sen-

1939.
1Q.R

rf>mmit+pp
...

Both

The directors of both
institutions have already voted to
go forward with the proposal and

aPP™val of the State Banking
Reserve
5^ kj.»
supervisory authonties. Mr. Wilson, Chairman,
"Gn Joseph E. Hughes, Piesident,

cen+g

dividends for the
rate

extra

paVmpnt

vear

annl

$10()

the

1950

Der

24, -.H1!3
ic
1ftn„

HiviHpnH

pvtr_

Dec. 26

record

195?

thf

wPH

™

value

dividend
gi

rate

bank

founding

annuai

Christmas

Nationa1

Bank

Close to 300 officers and

membeS

message

tainment
Bois

was

provided by Richard

television and radio star

tors meeting

stock

toe

Dec. 17, Edward

F. Sheridan was promoted from
Assistant Cashier to Assistant
Vice-President. Mr. Sheridan was
New

York

Ch^,>al holdinSs in
Chemical
pft]1r,tv

University

the ratio of 8 shares Institute of Banking.

of County Tr„5t fnr panh Q cViqvpo his hnnkiricf
Trust for each 9 shares his banking

Pd
hppt?
sunervisfnn
mitml
®up rv sion of metion

rp<snnn

by New official
positiotis.

School

He began

in
in FLck
The

narppy

career

Trifcf
First

°f Mount Vernon Trust Company National Bank of New York in
stock now held' or 1 share of the 1924 and a year later went with
fnr.
cLdvoc of the
former for.1% shares nf tho latter,

thn rhnmi
the Chemical Bank & Trust Com-

The new ViceFractional shares will be adjusted pany where he remained untU
Dealers.
Presidents in the banking departbrancb 0ffices»»
in casb and for this purpose a 1945. In 1946 he became affiliated
(50) Democrats, as well as Re- ment are Paul Bonynge, Jr., who
value of $45 per share for County with the Second National Bank
publicans, in Congress are mak- handles business in the Middle
Trust stock has been agreed upon, of Paterson, and
upon the merger
*
*
*
ing every effort to avoid antago- West District; J. Morden Murphy,
of that institution
Horace C. Flanigan," President
into, the First
nizing farmers. Again, in 1952— of the Foreign Division banking of Manufacturers Trust Company,
The New York State Banking National Bank in 1948 he assumed
as in 1948—the farmers will hold
staff, who travels in the Far East, of New York, announced on Dec. Department
approved " on Dec* 3 the
title of Assistant Cashier
the balance of power in the Presi- and John F. Rath, who supervises 20 that Gerald W. L. Andrew, a
certificate providing for an in- which he had held in The Second
•

dential

and

Congressional

the Securities Custodian Division.

Philip H. Milner and Thomas E.

Sections. Midwest states can make

Mr. Bonynge joined the bank staff
in 1930, Mr. Murphy came with

Speer,
all
formerly
Assistant
Vice-Presidents, have been named

break

dates.

many

the

The

Presidential

labor

candi-

vote

Bankers

over-

Rath

rated.

Trust

has

1946

with

been

since 1913.

Other

Mr.

and

the

bank

promotions in-

Vice-Presidents.

who

serves

Mr.

Andrew,

the bank's Out-of-

rnfinh
V

R. V. Voorhees

Swayze

Guy R

plam'J n°rgw 'n, ^ i
Edward
D.
Veatherhead,

Trust
Officer, Hugh F. Curran; AssistTreasurers:

ant

Trust

of the

Company

National Bank.
*

Schenectady, N. Y., from $1,500,000 to $1,600,000. The stock is in
shares of $100 each.

Town Business Department, began

Victor C. Ander-

Slvn WR?1 Jne^^npnniit0
Ji, \.»mo to Manufacturers
came

rmt

ment,

Mercer

President

the

Fidelity and Deposit Company of

Maryland, at
elected t

'th

Baltimore

has been

position in the

Trust

Company

from

with Manufacturers Trust in 1929.

nedy

McDougal and C. GorTebbitt; Assistant Secretary,

■

don

Ledlie C.Pitt, and Assistant Trust

Officer, James H. Raprager.
*

Ginley of New York City
falo, N\

T ib

the

rhJiZ
Charles

Pres-

Y., at

special meeting

f N

CiOra-L.ee ^

bank's

Stewart, President of
the trust company, addressed the

staff.

Announcement

*
has

been

made

President of the Chemical Bank that Adam C. Muller has been
& Trust Co. of New York, will elected a trustee of the bank. Mr.
succeed as President of the Buf- Muller started with the bank in

Gora-Lee

C o

been

^nrp«?pnt

Inc

company.

""elected

of the Liberty Bank's Executive reports he is

(Stratford,

r p.

Reserve

System.

director

the

Dec.

"Evening News"

dency

;

will

and

the

assume

Liberty

the

Presi-

Bank

holders of record
shares

streth

Cashier.

The

capital is

ter

First

City

Assistant
National

Cashier
Bank

was announced on

Board.

Mr.

The

Jersey

Dec. 20 by

of the

Meister

career

began his
1940 with the

Savings Banks Auditors and
Controllers Forum of New York

became part of the First National

sociation of New York.

the

He relinquishes his past

&
~

Jere E.

Harrison

Ulv

National

>*MVJ

rank

mander.

U V

Bank,

1 IkJUig

Lieutenant

the

which

Oct.

dividend
voted

Dec. 17. The

aggregating

at the close of business

now

tion

to shareholders of record
on

will also be distributed
14

5,000

by the directors

at the rate of

one

this

Jan. 2

share for each

outstanding.

with

Dec. 17

connee-

dividend,

bearer scrip will be issued in lieu
of fractional shares. Details of the
declaration of
5,000

common

stock dividend of

shares, to be dis-

tributed Jan. 2 to stockholders of
record Dec. 17

Com-

termination

were

noted in our

^JdR^Caae and B. F. Macdona
have

beeiy,, appointed

General

President of hostilities he returned to the bank, Manager^ of Barclays Bank (DoSavings Bank of joining the staff of the Trust De- mmion, Colonial and Overseas),

Brown,

in the Chemical on Dec. 31. The the Bushwick

declared. Both dividends
payable Jan. 2, next, to share-

are

Under the primary organization the President is G. H.

VV1.UA

6th

financial': advisers-to the Jan.

15.

past President of banking

Schroder Rockefeller &

According to advices the

Buffalo

that

Bank

This has been

bank opened for business

new

fak> institution, George G. Klein- 1916 and has been its Treasurer Kelley Graham Chairman

Committee.

Union

Trust Co. of Los Angeles at their

Niemeyer, and George B. Loug-

Federal

L/irecior

announced

of
—

New York, through Allan Sproul, December meeting declared a regPresident, announced on Dec. 14 ular quarterly dividend of $1.50

of the directors of the latter on by President Charles D. Behrens, $150,000.
Dec. 6 was recently announced. President of the Kingrs County
* " *
*
Mr. McGinley, who is a Vice- Savings Bank of Brooklyn, N. Y.,
Appointment of James H. Meis-

vorp.

The Fe<deral Reserve Bank of

recently

directors

dinst, who has become Chairman since 1945. The Brooklyn "Eagle"
r

Jkat the First National Bank in per share for the quarter ending
>VestPort, a newly orgamzed bank Dec. 31, and a special dividend of
^
^asngrant/d a
for the year 1951. This is the
?arler by
of he Mist successive quarterly diviCurrency on Dec. 12, and on the dend paid by the bank and the
staf?' ?ttend^ same day became a member of the 8th year in which the $1 extra
h

T
J.

ident of the Liberty Bank of Buf-

Effective
Wash.
Jan. i, Earl F. Waterman will admit Joslyn H. Waterman to partnership in the firm of Earl F.
Waterman
&
Co., 1411 Fourth
Avenue Building. Both have been
associated
in
the business
for

SEATTLE,

„

Chairman of the Board Ben R.

COmDrMnf of emDlov^rof the
xew York TrJt Comuam
he d
gs™ nual^Chr^tmLZtv at the
Hotel A^tor
28 T
MO
of

The election of Edward F. Mc-

Joslyn H. Waterman

many years.

capital," ef-

the

White.

Edward F.

the

Bank

1908 until the merger of that bank

Randall, Jr., H. Carleton
George B. Denious, Frederick 'R. Hal 1, Leon R. Shaffer,

re's'ult ofJwhich

Meyer

Alfred Brittain, III, Daniel B.

son,

Vineyard National Bank of Tis- at a special meeting of the Amerbury- Vineyard Haven, Mass., as ican Bonding Company's directors.
a

ntrallri at tho
located at the bank s taQ Broad- fective Nov. 19, was raised from
149
^10o?000 to $150,000. v
way office, was with the State *
,u
\

Elliott John W. Hannon. Jr.. Ken-

in the capital stock

Schenectady

F, Waterman Admits

Ji K. Waterman tc Firm Srhaliies ?'

hac

crease

lnhhv

J gathered ^ the ?«iee ^
}fe s\a" rfhriltmas
S
ChaSSan KelleviGraha^ Ente^
f th

associated with him will be added
of the
stockholderg of the Mount Vernon
County Trust

;

held'

was

0fft>e

•

pplehra

* as

record

?avments to
Payment-S to

its stockholders
The

thrt

1864

unbroken

conseCutive dividend

Der

a£d J?ther+ e*ecatiY,e ofBcers of
F. Raymond Peterson, ChairThe County Trust Co. will retain man of the Board of The First
their posts. Mr. Goldmann, now National Bank & Trust Company
Resident of/The: Mount Vernon of Paterson and Clifton, N, J., anTrust. £0. pother^
nounced that at the regular diroc-

'
-

panned bv the Board- thenurmnt

exchange for their present stock of Commerce, and The American

cLlman

been
_

stitutions.

Ap to the executive staff
lnd aL merged institution. The
t

gf^nt secreta?^ in l934
J «ant
1934 wd

24 hy s- Sloan Colt, President. At '""n.

Ho Hnrvni

COnser\atl\e coalition

T Vnilwn

of
j

Bank

Three officers of the banking
department of Bankers Trust
Company of New York have been

wifl
legi^lation^ except

World War I l ICongr e ss
verv

the

Barring

Rml952

race

payable

fncrease

re-

^ed by officers of the two in-

attempt to get

joint statement

:joined J* p- Morgan & Co- in 1936-

Orders and Politics

Presidential

cording to

Hopkins joined the staff of rector of the Buffalo branch of
& Co., Philadelphia, in the New York Federal Reserve
1922, and after a year on the^taff Bank, he has played an active role
of Morgan, Stanley & Co. Inc., in shaping banking policies.

V4-

tion

Pfi

stockholders

A tentative agreement has been
*—,

Drexel

Defense

Morgan & Co. Inc. in 1949.

Mr.

Sty and property values that can
shrink greatly when defense spendjingends.

common stock,
are

continuing

secutive dividend of $1
per share
and in addition declared the 11th
.v,in

office of

Much of the credit

The Board of Directors of The
First National Bank of JerseyCity, at its regular meeting on
Dec. 19, declared the 261st con-

L«« th!
the banks
dividends

•

r-Ur

■,

Vice-President, Mr. Rodd
"Mr. Kleindinst spent his entire reached for the merger of The
to hold the office of banking career with the
Liberty Mount Vernon Trust Company of
make it more difficult to improve Treasurer. The directors also
ap- Bank.
He joined its staff as a Mt. Vernon, N. Y., with The Counolder residential properties. Hence
pointed P. Hurley Bogardus, As- cierk on June 3, 1906. He soon ^ Trust Company of White Plains,
the prices for these should weaken sistant
Vice-President,
and
D. took over executive responsibili- N- Y-» following a series of coneven
though these are now the Raymond Bowen and George Kle- ties
and, after moving to various fences between Andrew Wilson,.
)>est buys.
mann, Assistant Treasurers.
Mr. departments, was placed in charge Chairman, and Joseph E. Hughes,
(46)
Volume
of money and Rodd was graduated from Yale of the bank's investments. He was President of The County Trust
credit in circulation will continue University in 1935, and joined the made
President July 13, 1927.
Co-; Fred E- Goldmann, President,
to increase to about the peak of staff of J. P. Morgan & Co. in that «He has been President of the
a committee of directors of
a few years back. The big rise has
year.
He became Treasurer of Buffalo Clearing House Associa- The Mount Vernon Trust Co., acbeen in credit.

The Commercial and Financial Chronicle

(2528)

Continued

seeing everything as black and white, almost all of
which, in the eyes of other peoples of the world, appears

relatively small number of so-called first-class
powers. The vast areas and the vast populations constitut¬
ing what we now Gall underdeveloped areas or backward
peoples did not count except as prizes for the mighty.
among a

Characters Changed

large admixture of all this in the
international machinations of this day and time, but the
caste of characters has changed considerably and the roles
There

similar to the third.
mercial

in many

The fourth factor of increase is

from first page

very

assigned have been radically altered. Fully as important,
perhaps more important, techniques have been revolu¬
tionized.
The older imperialist nations—Holland, Spain,
Great Britain, Denmark, France and others, if we go

shades of gray and even of other colors. And this
disposition of ours to force upon others our code of right
and wrong! And our willingness to concede a great deal to
expediency! These are traits which are costing us many
friends and supporters these days.
Then there is the theory—to question which is almost
treason in this country—that we must have bases and
other concessions almost everywhere in order to defend
our shores, often on the other side of the
globe. Never
mind what our motives really are. The fact remains that
were we bent
upon vast imperialistic designs we should
almost certainly proceed in some such
way as this. We
must not be surprised, then, that
many exploited lands
see
nothing but imperialist designs in our activity of this
sort.
' v.v.
•:
Vc";r.
'•;/.>
And, finally, there is

back far

enough into history—have (some long ago, some
recently) lost place. Some lost to others in their
own class; others have more recently suffered from un¬
rest, if not active rebellion, among the exploited.
Rem¬
nants of some of the older empires remain, and inter¬

national rivalries built around them

are

at times still in

changes of mind, and

our

plain blundering,

well as world leaders for freedom.
recognize the fact at once.

very

chases

ment

from

In either

com¬

"Bank

loan,

For

pur¬

example,

A" may buy government
directly from the govern¬

bonds

of its customers.

one

it pays for the bonds

case

crediting

books

the

seller

the

bank, thereby in¬
creasing deposits. Again the seller
—whether

be the

individual,

check

can

government,
corporation—

this

deposit

out

"Bank

A," but it will reappear in
other bank in the system and

some

will

not be

the

total

lost

"Bank

bank

sells

increase in

deposits

until

the

system
other

some

equivalent amount

of securities.

our

The

fifth factor of deposit in¬
results from a purchase of
securities by the,Federal Reserve
Banks. Assume, for example, that

are

crease

the

from first

For the

described

securities.

"Bank

wise to

Continued

bank

A," instead of making

hasty
not doing
We should be

inconsistency. We

our

Thursday, December 27, 1951

...

Federal

dealer

$1,000,000

page

Reserve, through a
intermediary, buys

government

■

bonds

evidence, but the positions of such countries as Britain,

from

Holland, and France in the Far East, the Middle East

pany/1 The minute the insurance

and
a

neighboring areas are far from what they were even

decade

two ago.

developments are in part, of course, historical
trends which probably had to come at one time or another,
but world events have unquestionably hastened their
arrival.
Such cataclysmic struggles as the two world
These

always reverberate 'round the world. But there are
had a great deal to do with
this.
There has arisen in Russia (a land always seeped

wars

Why Our Money Supply Increased

that

all

our

has succeeded in

convincing a very substantial num¬
ber of people, both in the backward areas of the world and
among the more advanced nations, that it and its com¬
munism are their best hope.
What is more, the Kremlin, itself established by
exploiting the exploited, is past master at fishing in trou¬
bled waters the world over.
It has succeeded in drawing
a substantial and influential
group of Chinese leaders into
its orbit.
It has infiltrated with one degree of success or
another all the discontented areas and peoples of Asia.
This is but another effort to exploit peoples who them¬
selves have been exploited by one strong power or another
for centuries, but the situation at best (from the stand¬
point of the West) is that in the eyes of these unhappy
peoples iit is merely a question of who exploits them,
Western might or Soviet might.
As between the two,
many are inclined to prefer the Kremlin—the more so
since it seems to them that the Russians are in a position
to have their way in these regions anyhow.
Thanks to
the techniques now used, those who harbor rational doubt
are in no
position to exert their influence.
more

Now, if it

possible to ascertain the facts in the
suspect, find that the historically
or the majority of the people who
compose them, are but little interested in what happens
in China, India, Iran, or any of the other areas now in fer¬
were

would,
imperialist nations

matter,

ment

one

except as it seems to affect the financial interests of

the

imperialist peoples. The cries about freedom, self-deter¬
mination, self-rule, and all the rest of it, except as a con¬
cession upon which hopes of a continuation of much the
same old relations are founded, leave most
peoples in other
countries cold.
been

some

of these lands

prescription for their

own

liberty has always
only; in

constitution

others freedom

event any more

than popular faith in its curative

has

know it has

never

existed in

any

powers

flourished.
A

Into such

Complicated Situation

situation

the United

States of America

steps and "assumes" leadership—a situation complicated
by centuries-old and devious relationships, a situation in
the past always dominated
by intrigue and unpublished
"bargains," a situation where migrations of peoples,
changes in state boundaries, semi-colonization and all the
rest have left a whirlpool of confusion and ill-will. And
this United States of America, with a few
relatively minor
exceptions, has come to maturity and pursued its own
course

aloof from all this.

assailed

Small wonder the "oldtimers"

by doubt abqut the understanding of world
problems in a country so waiting in experience. Nor are
these doubts and apprehensions ameliorated
by our habit
are

namely,

involved

and

money

the

unfortunate

discussion

fact

bank

company

"Bank

deposits

that any

deposits

re¬

"ABC

Insurance

Com¬

deposits that money in'
or in any other bank,
increased correspond¬

are

ingly.

understanding of how
Having outlined the five major,
of this discussion we shall make the banking system functions in factors resulting
in deposit in¬
only the briefest mention of the the creation of deposits and par¬ crease, it is now necessary to note
second
component by assuming ticularly of the role of the Federal a highly important distinction be¬
goods.

and

imperialistic notions) a regime built upon intrigue
and permanently cast in the role of the protector, the
liberator, the savior of the oppressed throughout the world.
Of course this concern for the under-dog is spurious,
either a simple fraud or the product of self-deception, or
a mixture of both; but the Kremlin for three decades or

components

inflation:

other elements which have

with

two

are

the

However, for the purpose quires

was not, Reserve Banks in the over-all pic¬
the primary cause of ture. Thus some of. the succeeding
discussion will be of a technical
present inflationary dangers.

shortage of goods

have

perfectly

had

that

true

shortages of

particular

nature,

even

though

factor, in which "Bank A"
(i.e., the commercial banking sys¬
tem) purchased the securities, and

effort
the discus¬

the fifth factor, in which the Fed¬

particular times in the sion in language reasonably fa¬
recent past.
During the war, for miliar to the layman:
To understand the "why" and
example, we obviously could not
have an adequate supply of tanks the "how" of a change in the de¬
simultaneously
with
a
normal posits of commercial banks, it is
supply of automobiles.
Further¬ necessary to go back to our col¬
more, in the first few years after lege economics for a review of the
the war the factories of the coun¬ factors which cause such deposit
try could
not suddenly ? supply changes.
There are five major
items

civilian demand

normal

the

both

the abnormal

and

demand1 result¬

ing from wartime shortages. How¬

in spite of these

factors which

eral

marked

limited, there

increase

Reserve

chaser.
case

Bank

the

pur¬

each

$1,000,000, the actual
increase in deposits was

initial

the

made

whether
purchase

"Bank

-A"

whether it

made by the Federal Reserve
Banks. The potential effect, how¬

was

ever, was very

col¬

different.

Effect of Reserve

The

difference

requirement

commercial

the

was

purchase

was

$1,000,000,

lectively will always be found to
be primarily responsible for any

particular
periods when certain items were
ever,

individually

effect of the

potential

fourth

every

will be made to phrase

the

tween

not,

Requirements

arises

that

the

from

the

commercial

Each of these will banks carry with the Federal Re¬
briefly, though not serve Banks a reserve amounting
actual necessities of life missing necessarily in the order of their to approximately 20% of deposits.
Because of this reserve require¬
from our daily living,: certainly respective
importance.
in contrast with the rest of the
The first factor might be de¬ ment, the commercial bank de¬
scribed
as
"Bank
A"
world.
Actually,
except for
a scribed
actually
as
an
inflow of gold to
would have been unable either to
short period during the war itself,
this country. Irrespective of who
make a loan or to buy securities
the supply of civilian goods has
the seller may be, the government
in an ;amourit which would raise
been far above prewar levels. We
will pay for the gold by the is¬
learned, in other words, the tre¬ suance of a check to the order of its deposits $1,000,000 unless it
mendous
already had excess reserves at the
productive capacity of the
importer and when the im¬
Federal
Reserve
Bank
in
an
this nation, its ability to turn out
porter deposits that check in his
amount at least $200,000 greater
both guns and butter, and its re¬
own
bank, the deposits of the
than its actual reserve require¬
siliency to very great obstacles.
banking system automatically are
ments on the date of the purchase.
Because of our productive capacity
increased.
shortages of goods have been, and
The second factor tending to in¬ Assume, however, that" the Fed¬
eral Reserve Bank buys $1,000,003
seemingly will be, only temporary. crease bank
deposits is found in a
On

were

basis

this

the

justified

pears

relatively few

assumption

that

inflation

ap¬

bank deposits.

described

reduction of actual currency.

previously noted that money takes
this country is far less the result
the form either of currency or of
of shortages of goods than the re¬
bank deposits, and since they are
sult of an excess money supply.
interchangeable, a reduction in

When

focus

our

automatically

currency

Two Forms of Money
attention

A."

already

from

this

customer

case

have

that the deposits of

seen

"Bank A"
more

ever,

increases

the

For example, at the end
of the Christmas season a depart¬
deposits.

securities

"Bank

rise by $1,000,000. The
important significance, how¬
of this latter transaction is

fact

deposits

that

when

"Bank

the

customer

the

check

supply, we are imme¬ ment store will find itself holding on the Federal Reserve Bank, the
reserves of "Bank A" at the Fed¬
diately confronted with a realiza¬ much more actual
currency than
eral are increased $1,000,000. With
tion that there are primarily two
it needs for its normal operations.
fprms of money: currency and When it returns the excess cur¬ its reserves at the Federal thus up
bank deposits. It is true that mon¬
by $1,000,000, "Bank A" is poten¬
rency to its bank, its account at
tially in a position to make loans
ey in circulation between the end
the. bank goes up and the deposit's or
to
of 1939 and the end of 1945 quad¬
purchase
securities
in
of the banking system have been
amounts which will result in a
rupled from $6 billion to $26 bil-r increased
by that amount.
the

money

total increase of deposits of $5,000,The third factor increasing de¬
000. This is because its excess re¬
posits of the commercial banking
serves
at the Federal potentially
in view of the intense business
system is found in an increase of
can
become
activity during that period, great¬ loans
required
reserves
made by those banks.
For when
needed and $1,000,000 ex¬
ly increased employment, higher
example, the "XYZ-Corporation" cess
reserves-at the 20% rate thus
wages, and higher prices.
Large borrows
$1,000,000 from "Bank A" will
as was the rise in
support a $5,000,000 increase
currency in cir¬ and receives
the amount of the
in deposits.
culation, it was almost dwarfed by loan in the form of a
deposit credit
the- rise in bank deposits during
Because this distinction between
on
the books of ."Bank A."
De¬
that same six-year period^ such
the^ activity of "Bank A" (the com- *
posits have been increased $1,deposits
mercial banking system) and the
having
almost
tripled
000,000. 1 Even though the bor¬
from $58 billion to $150 billion,
rowing corporation .may draw the activity of the Federal Reserve
for the staggering increase of $92
System is as important as it may
money out of "Bank A" immedi¬
billion.
seem
/
:
:
complicated, perhaps it can
ately by
issuing
10 - checks of
Up to this point we have nar¬ $100,000 each, those checks in turn be restated" and summarized as)
lion.
not

However, this increase can¬
regarded as too surprising

rowed

from

down
an

our

line

over-all

inflation to

thought

discussion

concentration

the

increase in the money supply and
have moved from that to a further
concentration
bank

•

deposits.

the

increase

From here

going will become

in
the

rough due

may

ents

follows.

be redeposited by the recipi¬
in

different

haps located

banks,

per¬

"Bank

in different sections

of the country.

serve

The fact remains,

On the initial transaction

purchase of securities either by
A"

by the Federal Re¬

is equally effective

in rais¬

that the jeriginal in¬ ing deposits by the amount of the
crease in the deposits of the bank¬ .purchase.
Potentially, however,
a purchase
by the Federal Reserve
ing >.system- is--mot- extinguished

however,

until the loan is repaM>.

-' v

is five times

effective

pur-

•

,-v

•» ;-iF.

Volume 174;'Number 5076 i

The Commercial and Financial Chronicle

(2529)

chase by "Bank A" since the pur¬ scribed.
The
Federal
Reserve
chase /by >the ./Federal/ Reserve Banks
absorbed .'approximately.
creates

mate

excess

reserves, the ulti¬
hf -which will lead to an

use

student
of
our
economy
could mary purpose of rehabilitating or fort
to control or to "reduce the*
hardly fail to be impressed \vith enlarging our nation's facilities for
terrific cost of government opera¬
the dangers inherent in a money the production and distribution of
20% of the residual financing, or
tions.
v
$22 billion. "Their purchases and supply * Which ' had
practically goods, and to this extent they
If we return to the list of
the reserves which were created tripled over a six-year period as were
logical
anti-inflationary. It would
thereby allowed the private bank¬ a result of the staggering increase be useless to argue and impossible objectives which the money maning system to absorb the other in that supply of $112 billion. to prove the net effect of this loan agers might have set as their goal
at the end of the war, we will rep¬
80% of the residual financing, or Furthermore, he could know with increase as far as the
single issue eal! that one of
those objectiy*
approximately $83 billion.
certainty
that,
unless
drastic of inflation lis concerned. It is
was
to reduce the money suppl
measures were taken to offset it,
probably safe to assume, however,
War Financing Through Banks
by
transferring
debt from the*
the money supply would be auto¬ that on balance the largest
part of hands of the commercial
banking:
From
the
standpoint
of
our
matically increased by a rise in the loan increase was both desir¬
system to the hands of individuals:
post-war and future economy, we loans necessary to finance the re¬ able and almost
necessary for the and other institutions.
In otherwell might wish that it had not
sumption and enlargement of our particular period in question.
words, even if total debt were not
been necessary to finance as much
productive facilities in order to
In view of this necessary and really
reduced, can we not at least:
of the wartime borrowing through make
up for all of the shortages
large expansion of loans, it was hope to find that its ownershipthe banking system as was actu¬
of goods created by the waste of
indeed fortunate that a large part has been transferred to less infla¬
ally the case. However, it prob¬ war. Even though we are
looking of th'e
deposit increase resulting tionary hands? Remembering that
ably would be difficult and unfair at this problem with the benefit of
from the loan expansion could be the total debt during this postwar
to assign the blame for what hap¬
hindsight, it seems rather obvious offset
during the same period by a period was reduced $22 billion, wepened to any one individual or that certain
steps were absolutely reduction of
are
at first pleased to find that
$22 billion in the
group
other than possibly Mr.
requisite in attacking this prob¬
government debt. Unfortunately, holdings of government securities
Hitler. The main job was to. win
lem. * These
would
include
im¬
however, the Government cannot; by commercial banks and by the*
the war and to the extent:; that
mediate and continuing curtail¬
be given credit for any part of Federal Reserve Banks declined
money to finance it was not avail¬
ment of unnecessary government
that debt reduction because of one during these five years by almost
able, it was necessary to manu¬
expenditures; a continuation of
$32 billion. Thus at first blush It
very large "joker" in the situation.
facture it, not in this case bjr the
would appear that the Treasury
relatively high rates of taxation; In
December, 1945, just before the
printing of currency but by the
a/ consequent
budget
surplus start of this Postwar Period the Department had been able to ef¬
printing of bonds. Tax rates were which would
allow some reduction
fect a $10 billion transfer in own¬
Government borrowed about
relatively high and there was a
of government debt to decrease, at
$23 V2 billion at the time of what ership by the sale of securities t®
natural and general reluctance to
least in part, the money supply in
non-bank investors.
.' •/".
was
called : the
raise them further.
Individuals
Victory
Loan
.

increase.in,deposits five

times

great

as that which results when
"Bank A"* is the purchaser.
.

Money Supply In Postwar Period
With this necessary
background

behind

us; we

can

return to

now

our

original study ..of how and
why the money supply as repre¬
sented

primarily by bank deposits
so drastically in recent

has risen

For the sake of clarity the

years.

time since the beginning of World
War II will be divided into two

periods. The first period is
six years,

1939,
scious

ing,

one

beginning at the end of

when
of

first

were

the necessity

con¬

rearm¬

and

ending at the close of
1945 shortly after the end of the

World War.

The second period is

represented by the first five post¬
war

beginning at the close

years

1945

and

ending at the close

Of 1950.

V■/'///;/// ■:/../'< ■ V

f * For "any . periods of * this length
and for any
as

subject

complicated

that/qi/tl%m^

has to chose between-1
brevity and
clarity on one hand- and detailed

discussioii of all factors concerned
on

the other hand.

In what is to

shall pursue the former

course and attempt to hit
only the
major highspots of what has hap¬

pened. We-admit in all frankness
that
will

ignore some of the
minor factors which had a

bearing!
also

doing the discussion

seem

this problem att?%ill

to ignore shorter-term

seem

periods

within

the

years when trends

full

were

eleven

spqjeyrhat

mairr "trend

divergent

from

which

shall follow.

the

First let us look at the six-year
period from the end of 1939 to the
end of

1945, which we shall refer
the. Wartime Period. During

those six years the fact of major
interest to us is this: The supply
of money- as represented
by total

deposits plus

currency in circula¬
practically tripled from $64
billion to $176 billion, a stagger¬
ing increase of $112 billion. As

tion

class subscribed to' the bonds*

as a

This increase in bank de¬

of the

costly

war

in fact that

be financed

practical matter

out of current taxation but had to

be financed in part by borrowing:
Everyone connected with the fi¬

nancing effort recognized that

much of the borrowing as possible
should be accomplished through
sales

individuals

and

institu-

tions^ outside the banking system
in order;to-avoid the
inflationary
dangers of a drastic deposit in.,

crease.
All of us well remember
the strenuous efforts made to sell

bonds

banking
those

the public

and

institutions.

efforts

than

sold

absorbed

The balance

could
the
or

had

would

non-bank

Remembering
of

ments,
could

our

bank

the

could

serves

field.

previous dis¬

reserve

require¬

commercial

banks

only buy if they had

increased

of
be

residue of the fi¬

nancing necessarily had
placed with the banks.
cussion

non-

spite

bonds

reserves.

access

Those

re¬

only be supplied by

the Federal Reserve Banks them¬

selves,
through

and

they

were

Federal

chases of part

supplied

Reserve

pur¬

of the government

security offerings. In view of our
/previous discussion it is interest-

ing to find that the

actual

rfor this Wartime Period

the

techniques

previously

de¬

Drive. Since the

war

was

over

at!

amount,

the fact that the government debt

Wartime

during

reached.

were

tunately,

Unfor¬

acterized

Wartime

lion, any
give the Treasury Department and
Federal

the

Banks

Reserve

rates

dis¬

adroit

the

part of

for

some

their

currency.

char¬

describe

the

Postwar Period the five years be¬
tween the end of 1945 and the end
of

1950, it is discouraging in the

extreme

find

that

the

money

supply not only did not decrease
all

but

actually increased $4
Incidentally, it should be
remembered that this particular
five-year period includes only six
billion.

months

the

Korean

War

and

that, although the so-called "cold
war" had started

years

in question

securities, and the burden of debt

years

quota

earlier, the five
essentially

were

peace.

and taxation which had been built
up

in the

add to
war

the

pre-war

the

years

Considering the objectives which
did not. seemed so logical for our money

of financing the
balance, however,
Government should be given

itself.

ease

managers to

all due credit both for

which

pay

"joker"

really

indicates

at the end of

incredible

raising the

made in

money
and for their efforts to
place it outside the banking sys¬

consider and to stress
1945, it seems almost

that

progress

reducing the

was

money <sup-

ply during the next five years. To

Here

again

the

reason

harpl to find because in those
ticular

five

the

causes

have

would

non-bank,

terest

rates

found

hands
that

its

way

had
time

;

in¬

been

and

vested in government bonds by the
administrators of the various

ities

Having completed

study of
what happened during the War¬
time Period, it is interesting to
the

situation

which,

the

and

end

the

fiscal affairs. Included in that

latter

group

Executive
ury

the

Social

Security and
During the first

programs.

five postwar years the investment
of those various funds in govern¬
ment bonds rose by $12 billion*

$12

debt

billion
its

found

government

through th®

way

involuntary method of taxation
into the portfolio of these govern¬
ment

agencies,; and
found

ready
debt

have al¬

that

$22 billion of
by the proceeds

retired

was

over-borrowing in 1945. Since
billion is in ex¬
cess of the
actual $32 billion re¬
not
this total of $34
duction

par¬

years

government

securities

held by the

the

Government had

banking system, it is

obvious that

calendar

balance the Treas¬

a budget surplus
ury Department was not able t®
only about $1 billion. To call
individuals
and
nonthis a "missed opportunity" of the persuade
institutions
to
add
a
first magnitude would be to put it banking
single bond to their holdings dur¬
mildly in view of the high state
ing the five years in question. la
of business activity during this
fact, there was a net reduction in
particular five-year period. The
such
non-bank
holdings during
Administration, for example, has
that period.
always been more than willing to

endorse

the

philosophy of Lord
The "Easy Money" Policy
that
governments
are
If we are justified in
looking
justified in operating, at deficits
upon
this record as another
for the sake
of stimulating the
"missed opportunity," we are also
economy during a period of de¬
justified in seeking the reasons
pression.
However,
during this therefor.
Chief among these ap¬
period of prosperity they showed pears to have been the reluctance
all too clearly how difficult it is of
the Treasury Department dur¬
Keynes

for

free-6pending administration ing practically all of this period to
depart from its almost stubborn*
philosophy which recommends the fondess for very easy money and
building of government surpluses low rates on its security offerings.
a

to follow that part of the Keynes

Any official of the Treasury De¬
partment
natural

willingness
side

found

higher wages and

can

pardoned

for

tendency to wish to keep*
the

.down

cost

debt

service.

However, the colossal rise in our
money supply during the war ob¬
viously had placed

a powder keg
inflationary dynamite

of potential
under

our

whole economy. Under

such circumstances it
that

seemed

the

siderably

higher

would have

inflation

greater

was

danger

con¬

than

are

particularly

the

Department, the Treas¬

Department,

Congress,

the Federal Reserve

farm

prices. Congress also must
accept
its proper share of the

modest rise in the cost of borrow¬

blame

becomes

discussed

briefly.

Since the increase

of loans ob¬

our

1945, faced those charged with the
management of our debt and of
our

standing government debt of $22
billion. Because of the importance

other

for

decrease of out¬

question and the bond*
against the future liabil¬

held

are

will

Objectives of Postwar Period

problem,

funds

of these two factors each of them

slightly higher.

visualize

$30 billion and

aggregating between $3
$4 million. These taxes are in¬

money

ing

"joker**

understood

Each year
special
taxes, particularly the Social Se¬
curity Tax, substantial sums of"

Furthermore,

into

aFt*>

another

little

the government collects in

this failure during periods of high business
although the within the framework of both
activity. While giving lip service
yields afforded by the securities
brevity and clarity, again it is to economy and while urging a
offered during the war were rel¬
necessary to concentrate entirely higher level of taxes than Con¬
atively meager/ especially after- on the
'major highlights in an- gress was willing to vote, the Ad¬
the impact of taxation, the future
alyzing the happenings of that ministration provided the poorest
interest burden
of
the Govern¬
period. The two chief factors af¬ ^possible leadership in any real
ment was
reduced
thereby and
fecting the money supply in those move to combat inflation by its
it is questionable whether a much
five years were represented by an unwillingness to cut non-essential
larger proportion of the financ¬
increase of loans of approximately spending and by its almost eager
tem.

seek

however,

with

is all too

;

:;/// ;//■ '/

by citizens generally,

that in the first five postwar years
the Government simply reduced

could

duction of the supply of money as

investors to

full

Immediately,
confronted

quite
What Thus

Period

represented by total deposits plus

securities

government

they started
off debt.

promptly to
this

/ Another "Joker" in Treasury
Financing

as
one
of
"necessary
evils,-the Postwar Period prob¬ its debt by the amount of its overably should be characterized as borrowing in December, 1945. Or
one of "missed opportunities."
to put it another way, there was
One of the objectives on which no real reduction in debt
during
special stress was laid was a re¬ the entire five-year period.

six years in question
by a total of $231 bil¬
fair observer should

tinct commendation for

and

the picture which we
a happy one and if the

find is not

the

increased

figures

bear out

manner

their actual needs by roughly that

during this period of
financing.
Considering

ernment

tremendously
to finance, so costly
it obviously could not

to the

was

objectives

Gov¬

posits, in turn, was caused pri¬
were
not
allowed
to rise from
marily by an increase of $105 bil¬
the time the wartime pattern of
lion in the holdings of govern¬
rates was set in early 1942 to the
ment bonds by the banking sys¬
end of the period in 1945.
The
tem.
free
spending and easy money
The background of this terrific
proclivities of the Administration
increase
in
bank-held ..govern¬
proir to the war may have had
ment debt is not difficult to dis¬
something to do with a reluctance
cern.
We
had;

converse

failure the extent to which these

It would be difficult to be dog¬

matic about the role

previously mentioned, a relatively
job of raising this colossal sum of
small part of this was represented
money.
The adroitness and their
by an increase in currency. By
technique is particularly note¬
far the largest part,
however, rep¬
worthy when one remembers that
resented an increase in bank de¬
during the raising of this money,
posits.

manner

,m:which it

increased; a will/ that
.time,,there has always been
relatively heavy amounts both
irtgnes's to see interest rates rise a
question &s to why the Govern¬
directly and
through savings
by an amount necessary to attract ment
banks
and
insurace
thought it needed to borrow
companies.
individuals and non-banking in¬
Whether
such a cblossal sum, but * at least
they saved and sub¬
stitutions to purchase government
the financing was successful in
scribed to the fullest extent pos¬
securities held by the banks; a
the
sense
of
sible probably varies greatly in
placing
a
large
policy on the part of the Federal amount of the debt outside of the
the
case
of
one
individual
or
Reserve System to restrict and to
banking system.
another, but we do know that it
contract credit to the greatest ex¬
was a period: during which indi¬
As a result of this financing the
tent possible without interfering
vidual saving was necessarily di¬
General
Fund
balance
of
the
with the creation of legitimate
minished by high, taxation.
The
Treasury Department at the start
credit for productive purposes.
of the Postwar Period on Jan. 1,
subscriptions of the commercial
If these were logical objectives 1946, was over $26
banks and of the Federal Reserve
billion, or per¬
Banks were necessarily as large for the Postwar Period, we are haps
$22 billion in excess„ of
as, but limited to, the amount of justified in critically examining normal cash requirements. It be¬
financing which could not be ab¬ the years after the war and in us¬ came evident quite soon that they
sorbed by other investors.
ing as our criterion of success or had overborrowed in excess of
in

and

System. Any

viously tended to hold

the total

not

about which

written

natural to ask if this loan expan¬

ment of which

sion

also

much

toward
so

was

the

little

extent
the

they

other

The

money,
were

hand,

loans

and

created

that

inflationary. On
there

little

question but that the great bulk
of those loans were for the pri¬

year.

Congress
voters

and

resent

and

was

but

done.

again, however,
knew
that
the
taxpayers would both
Here

well

resist

increased

taxes

at a time when the administrative

leadership

was

making

statement
one

following three

con¬

points:

(1) Any increase in interest cost

each

this.
or

this

would apply not to the total debt

deposits,

logic

apparent when

said and

real ef¬

only

refunded

that
at

portion

maturity

exchange offers.
.

reason

the

achieve¬

question is, it cannot be
categorically.
The

answered

can

The

sider

charged with the
failure to keep taxes high enough
to provide a real budget surplus

were

the

inflationary. Logical

but

supply of money, it would be only
not

ing.

during this same period for
insisting on the budget cuts

which

(2j.r,Then Treasury Department

would
1.,

automatically
,lU

f«

substantial part: of

recapture

tflt

any

increased

interest costs/through taxes levied

Continued

page

■<¥»>%>tVyn^t^^s*. (^.<W^iff*"*»»iH'fWi»^

(2530)

The Commercial and Financial Chronicle

Continued

from

holders. Instead of contracting the
money supply, this central bank

Why Our Money Supply Increased
,

the income of holders of these

securities.

(3)
The
Government is
the
^world's largest single buyer and
consumer

The

policy of the
Department
following

easy

goods

and

services.

money

Treasury
the

tended

war

tunity" through its failure to
tribute

substantially to
inflationary poten¬

"freeze in" the

tials which resulted from the
Thus the Government's

war.

the

This

failure

Federal

the

Reserve

tributable

con¬

the

supply.

money

that

reduction

the

System

the

at¬

basic

one

market

open

the

part of the
fact

operations

Reserve

System during
most of the five years in question
geared to the preservation of

were

poli¬

the

easy

cies may well have raised the cost

the

Treasury

everything which the Govern¬
buys by amounts far in ex¬

ment
cess

of the

cost

of higher

relatively modest net
interest

its
-i'-'rv-V.

curities.

se¬

and

rates favored

money

Department.

the Treasury

worked

time

remarkable

smoothness

fining practically all of its offer¬
ings to short maturities. For a

remarkably

low

that at least

four

from the

years—

end of December,
1945, to De¬
cember, 1949 — the Treasury of¬
fered to the public no securities

not

ever,

in¬

dicated by a price of 103V2 on the
longest-term
2V2%
bond,
the
Treasury Department, instead of
meeting that demand, offered a
4%-year l%% note of obviously
interest

Thus

its

served

long-term buyers.

choice

maturities

complement

its

easy

policy in failing to attract

money

buyers

outside

the

banking

system.

noted

the

potentially

impact which

study

sharp

market

open

pur¬

chase and sales of securities
by the
Federal
Reserve
System
could
have upon the money

supply. It

therefore becomes pertinent to

ex¬

amine the role

played by the Fed¬

eral

Reserve

postwar

these

five

operations
influenced
and

are

complicated

first

Their

years.

admittedly

varying, and at
objectives. For
example, it should be granted that

times

the

conflicting,

size

times
the

their

influenced

rates

hold

this

which

the

banks

were required
deposits. During

against

period

the

System also

Reserve

the latter part of

until

handled in such

1950

Federal

had

consider

the
con¬

ditions which would make it
pos¬
sible for industry to

way as

Enemy

Number

its

primary ob¬
jective the reduction of the money
Si

supply at the end of the

serve

System

attainment

made

that

the Re¬

toward

the

objective. We

have previously found that the
total debt of the Government was
reduced $22 billion and that an

additional $12 billion of the debt
transferred to the

was

ownership

the

cies.

various government
agen¬
this total of $34 billion
been applied to the

could

have

reduction

banking

debt

system,

held

would

the
nor¬

mally expect to find the
holdings
of the Federal Reserve
Banks
duced at least
by 20%

thereof,

by $6.8 billion. Instead of that
find that the

holdings of the

re¬

or
we

Fed¬

eral

Reserve

System in the first

five

postwar

years

reduced

were

only $3 V2 billion. Thus, even
making allowance for some neces¬
sity of creating an atmosphere
favorable
seems

productive

evident

Reserve

charged

that

System
with

loans,

'the

can-

also

"missed

Federal
be

oppor¬

freedom

re¬

important

the

the
con¬

fight against in¬
recognized

was

higher level of interest
increase in the cost of

the

government

possible

debt,

abandonment

Reserve
bonds

support
at

of gov¬

fixed

were

prices.

upon

ment

tween

purchased
approximately
billion of long-term govern¬

cation

for

tween

this

action

the

fact

sue

holdings

March,

1951,

made of

was

an¬

"ac¬

the

Federal

Reserve

and

carrying a higher rate than
which had been offered since

any

the

beginning of the war. There is
nothing on the record to indicate

billion. This seeming inconsistency
is explained by the fact that the

whether

the

"accord"

included

the number

was

one

ob¬

short

jective, the cash surplus could and
should

have been

debt

held

and

used

consequently

by the banking system
to reduce the

ket

and

effect

practically used

low

wasted

the

The

was

with

view to

maintenance

available.

high

level

our

the

Federal

Federal Reserve not
a

buyer

seller,

but

to the amount

has

all

initiative

a
as

of securities which

purchase. In order to
protect a fixed price level, it must
purchase from all holders of
gov¬
ernment bonds
use

which

put.

central

bank

irrespective of the

the proceeds

longer
for

are

becomes

bankers

but

a
a

residual

buyer from bondholders
generally, With the decision as to
whether the Federal will
buy and
how much ib will
buy resting not
with the Federal but with the
in¬

dividual

and

institutional

bond¬

Continued

contribution

that

from

apy

pur¬

page

ity,

five

somewhat

the

other

years

supply.

money

however,

Shortly

the

overvalue

currency;

your

times of

slump and surfeit, undern
value your currency." 4

same

economic
is

aim

a weapon

nationalism,

insulate, the

In the old

its

and

domestic

days of the true gold

standard, money
the

cur¬

from foreign influenced

economy

domestic

as,

management. It is

rency

thing

everywhere
worth about the

world,

was,

in terms of similar commod¬

same

ities. The

adjusting and equalizing

mechanism

largely automatic;
then possessed, in actual fact,

was

international

currency

that
man¬

nowadays to account for the

agers

fact that it did work,

say

(they usually

due to accidental and

was

non-recurrent

circumstances),

while the synthetic substitutes for

it such

Union

as the European Payments
(EPU) will not work at all

Reserve

of International

repeated

injections

dollars.

because

fixed

standard

whose

was

disci¬

pline people submitted, and with
which

One

did

governments

tamper. All currencies

were

not

inter¬

changeable

because

composed

their

units

known

and

fixed numbers of grains of a cer¬

tain

purity

away

small

very

from

fractions

gold

shipping

the

be¬

rates

principal currencies. It
going to do this without any

was

automatic

short-time

member

nations

but

advances ,to

suffering

tem¬

disequilibria in their balr

porary

of payments.

ances

the rate

run,

standard,

gold

means

precisely

Over the long

should

that

be fixed

need

not

changed;

trade balances,appar¬
ently, should? be adjusted to the
rate

and

around.

rate.

the

not

There

lieved,

such

other

way

was,

real

and; correct

be¬

was

the

early days of the
Fund, Mr. Camille Gutt, its first
executive head, said:

"By

that

trade

exchange

real

simply

the

could

real

rate

terms -of

restore

the

bal¬

of payments. To these terms

trade

would

coefficient

have

of prices
applied to get

the nominal exchange rates.
But this was not intended .to
.

well-adjusted

rate for

other currencies vis-a-vis the dol¬

lar, it appeared. In the
Mr.

place

same

Gutt continued:

"There

This had the

effect, however, of
equalize
commodity
prices at home and abroad, and
this does not please economic na-r
to

tionalists. They wish to be masters
of events in their own countries,

possible miscon¬

one

ception that should be dealt with.
There

may

feeling

the

part of some people that if Euro¬

and

these

which

experiencing

such

view.

dollars

The

the

great

cor¬

largely

very

exceptionally

these countries. In

not

basis for

shortage'of

Europe is

reflection

countries

would

rected. I think there is

prices

properly adjusted the dollar

shortage
are

rates

exchange

pean
were

points.
tending

fixed

exchange

gold.

basis; and their exchange
values in practice hardly ever got
than

maintain

all

tween

They ex¬
changed readily for each other on

of the in¬

purposes

and

schedule

mean

were

of the

install

ance

worked

1
,

ternational Monetary Fund was to

mean

without

says

Monetary Fund

counterpart of, if not indeed

the

Crowther.5

Purposes

the

Why

abroad."

from

chases

Managemen t of the inter¬
national value of one's currency

this

retain

and

independence

exercise

the

fight

a rise
(or, more particularly,
fall) of prices, having its origin

events

abroad, they regard

tolerated.

They there¬
fore determine for themselves, the
rates at which their currencies

change for foreign currencies and
change them from time to time as

stable economy.

seems

needful.

paradox,

moment.

supply was increased to a
tremendous figure and no progress

flation

study

may

be summed

money

was

made in

reducing that supply

In looking at the pessimistic
side of the future outlook, we find
an
Administration which as yet

has given

evidence of any con-

structive leadership toward econ¬
omy
in even the non-essential
items

government

operations.

Most members of

interested

Congress appear
cutting expenses or

keeping taxes at realistic levels
only if those economies and those
taxes
to

be devised in

can

hurt

their

the

"manner

particular constitu¬

ents the least.
mains

There likewise

suspicion

re¬

the

Treasury Department is less inter¬
ested
tion

the

than

relatively
Naturally,
factor

battle

the

against

infla¬

maintenance

involves

shall

ex¬

see

internal

the

prices rise,
budgets and in¬

supply, for
example, exports-may fall off. It

is therefore

value

money

the- currency

ex¬

ternally, in relation to other paper
units. This is thought preferable
to

internal

Where,
the

need

volumes
needs

-deflation

supply rand

money

the

prices.

the other hand, there is
to buy - large physical
abroad,-- where
these

cannot

duced,

and

ternal

value

materially

where

forithe

lower

not

thought likely to increase ex¬
ports, "there is every justification
for the government

intervening to

prevent the sharp fall in the
value

would

occur

easy

all

money

most
the

rates.

This

ex¬

of the currency that
in a .market that was

left free. Overvaluation is usually
a
desirable policy for any coun¬

large

situation

Crowther

at higher

currency

that

pounds

offered

its

than

for

willingly

would

dollars

fewer

the

fact,

the

government permitted.

For,

matter

prices of inconvertible
rencies

fixed

are

paper cur¬

completely

supply and demand forces and by

nothing else. These currencies
wanted

for

two

are v

to buy
goods and services in the country
of

purposes:

issue, and for the transfer/of
■ '

capital.
A

government
these

forces

enter

the

case).
itself

market

supply)

market

(or

of them, as seems, to

often

some

demand

ways

the force tending in the
it does not want; and it
vent

interfere

and

of two

one

the

can

supply

combination

pur-

very

the

at
$4.03 to the pound when the ac¬
tual demand for dollars is such

nec¬

essity of makingt

free market levels. That is, e.g.,

the

can

offset

direction
can

demand

from

pre¬

(or of

the

reaching

by restriction, regulation,.
"

Crowther,

op. cit., p
238.
;
Gntt, "The Practical Problem <
Exchange Rates," an address at; Har- s
.

6 Camille

pessimistic
international

with

resources

part, this may
reflection of the phenomenon

ex¬

currency

real

for

apparently has in mind which, in
his opinion, justifies maintenance

re¬

try that is underrthe sudden
the

need

of inflation."

appropriate to reduce
of

ternal

that

This

due to unbalanced

the

in the first five postwar
years,

makes

understand¬

Devaluation: What It Is, and

briefly with a look to the future.
During the Wartime Period our

supports

balance, instead of
loses

that this study

extent

Our

Federal

policy the
only becomes

A Look Into the Future

government bonds at fixed prices.
a fixed
support

Under

country. There

our

tenance of

System with what actu¬
happens
under
a
policy

whereby

cite the

can

against inflation and in the main¬

Reserve

ally

capacity of

and

that

Contrast that normal and ortho¬

the

broadened understand¬

tinue

reduce the sup¬

optimistic side of

ing

System regained its independence
the
Treasury Department,
and we can hope that it will con¬

period of inflationary

functioning

time

from

ply of money by reducing its hold¬
ings of government securities.
dox

the

thereafter,

employment, stable values, and a
rising standard of living." Thus

pressures was to

swollen

contributing to the
a

first

With other agencies of government
for
their
failure
to
attack
the

primary function

announcement

ending
with the close of
1950, the Federal
Reserve
System could be cited

illogical nature of the Fed¬

look at the

the

for

par

phases.

eral Reserve operations
during the
Postwar Period becomes evident
if

the

study ends on
happier
note
than

anti-inflationary

ammunition which

time

decade. Thus this particular phase
of

arms.

On the

But

just mentioned long-term govern¬
ment bonds actually were allowed
by the Federal Reserve to fall be¬

reduce

force of

willingness on the • part of the
Treasury had a very substantial
Treasury
Department
td allow
cash
surplus
during
that "' par-'
outstanding long-term bonds lo
ticular
period. Had there been sell at
prices below par. The fact
agreement that the fight against remains that within
a
relatively
inflation

causes

inflation. This factor would be

the public generally of
what has really happened to. our
money supply, the reasons behind
it, and the cures for it. To the

Treasury Department concern¬
ing the terms of a new bond is¬

of the Reserve System went up in
that one-year period by only $1

the basic

sus¬

found in

they might be able to do by

really worked. It puzzles the

the

In justifi¬

par.

their

cord'' which had been reached be¬

prevent those issues

selling below

this vital subject.

nouncement

Banks

Reserve officials

Finally

vember, 1948, the Federal Reserve

attack

and

by fostering further inflation here

never

controversy with the
officials of the Treasury Depart¬

implications. For example, be¬
November, 1947, and No¬

ary

tained

real

than

that

might well

some

Federal

any,

effect

continuing

war. In there seems little question that the
light of that objective it is
proper
function
of
the
Federal
probably not unfair to determine Reserve in

contribution,; if

since

restoring

the

what

inhibited

committee

Reserve

continued

Treasury offerings at
low rates in spite of the inflation¬

country

toward

road

mone¬

anti-inflationary

been

The

ties at levels designed to facilitate

the

actually
by Congress, but they
undoubtedly helped materially to
strengthen the backbone of the

sup¬

this

sions which would put us back
the

war

acted

expand its which has been delegated to the
Reserve
System.
This
primary
However,
one
would
have function is "to regulate the
supply,
thought it logical for the Federal
availability and cost of money

One and to take

restrictive

as an

had

committee

productive facilities.

Reserve System to consider infla¬
tion
as
Public

use

released

that

out

The recommendations of the sub¬

port prices of government securi¬

Reserve

desirability of creating credit

subcommittee

pointing

ernment

were

incidents

and

ing, it will have fulfilled its

and

System

harm

Russian

series

pose.

this

report

servicing

market op¬

open

the

their

poten¬

tive

1950,

rates,

how¬

that the

which

factor

regained independence of the Fed¬
eral
Reserve
System and par¬
ticularly the tremendous produc¬

involve

money supply. Instead of that, the
holdings was at Federal Reserve operation of
sup¬
by changes in porting the government bond mar¬

of ' reserves

commercial

sometimes cited that total

In earlier sections of this
we

the actual

erations

from

Reserve

reluctance,

being too cycnical

suspected

third

tially could exert a powerful in¬
fluence^toward high level deci¬

chairmanship of Senator Paul
Douglas of Illinois. In January,

Federal

their

the future outlook

flation.

were

accused

not

might

mittee of Congress under the able

tribution to

war.

Despite

1949,
sub-com¬

such credit restriction

policy favored by the
Department after the

ment bonds to

Conflicting Objectives of Federal

scrutiny of

strict credit

easy money

December, 1949, when the poten¬
was

prominent offi¬

some

under the

curities.

equally enthusiastic about the

Treasury

ties by non-bank investors

in the latter part of

came,

Federal

interest.

cials of the Federal Reserve

with
a
maturity
of
over
18
months, other than savings bonds
and savings notes. Even as late as

cy tial demand for long-term securi¬

and

rate of

maneuvers

recommended

handled with

was

warlike

Fortunately, the completely il^
logical position in which the Fed^
eral Reserve System found itself

by the policy of support¬
ing the prices of government se¬

There is good evidence to indicate

period

financing

supply of money.

the

closely

One

hope

tary policy

cooperation
with
the
result
that the colossal amount of war¬

Russia.

leaders

measure

exemplified by the at¬

vigorous

has

Not only did the Treasury keep
rates low, but it insisted on con¬

situation

policy of fixed price sup¬
port becomes potentially the most,
powerful factor in increasing the

already been pointed out that dur¬
ing the war the Federal Reserve

own

titude

under

page

Thursday, December 27, 1951

...

4 Geoffrey
Crowther, "An
Money," rev. ed., pS240.

Outline

vard

University.

Feb.

13.

1948.

»-»

Volume 174

Number 5076

The Commercial and Financial Chronicle

(2531)
prohibition.

dole

out

the .exchange

foreign exchange only for offi¬
cially approved purposes; it can

rencies'when

require that all ioreign exchange
earned * by
its citizens be sur¬

desirable.

rendered forthwith;

rates

can

■:

:'v'v The Paradox
Now

■;

„.

make

and

that

value of-their
internal

considered

again

They?
of exchange

of the American
^Economy by the End el 1952

approach the pairadox template rates fixed openly by
earlier.
How
can
and demand.
Even
the
a. supply
government maintain a rate for Canadian abrogation of fixed ex¬

its paper in terms of the
currency
of another sovereign power
higher
than the free market would es¬

change rate in 1950 does not

mean

free

market; all the old
phernalia of controls still
a

tablish? Only by having a supply
of the demanded foreign
exchange

(say,

Fund

dollars)

meet all

large

enough

approved demands. Where

instance,

important de¬ eign investment of $1.2 billion, at

residential

the

construction

spending

was

ter

durable

consumption

spending

durables and

the

non-

rates

determined

rate,

currency

pendent, to an. extent,
friendly cooperation of
To

government.
the

maintenance

dollar-pound
certainly tied

American loans

$4.03

rate

Private
Residential

construction

have

not

long

the

been

with¬

was

out them.
•For

despite

all

the

efforts

governments, supply and demand
still

determine the

currencies

the
tend

and

terms

all

outside

of their

their

own

This

the

forces

same

similar

tav

principle has been reduced

Cassel.

tempt

tween

some

the

parity"

be¬

two currencies, and

it was
figuring that
said, in September,
such

persons

1949, that the British devaluation
had

been

much

drastic.

too

would have been

better, they said,
$3.20 in¬

make the value about

stead

of $2.80, because' at the lat¬

figure the pound

valued.

the

under¬

was

absence

free

market,

of course, there was no
of testing it, but today, a bit

way

than

two

years

rumors

r5of

another

find

later,

Altogether,

case,

argument

be made that the effort of

ernment to maintain
rate

for

world

its

gov¬

arbitrary

currency

deceives

Mises,s and

with the argu¬

now

is that

Dr.

Ludwig

bit

are

that gov¬

difficulties

us¬

ing the idea, including that of selecting
a
price index containing only suitable

deciding

what to in¬
clude and what
to
leave
out.
Then a
suitable "base period" must
be chosen,
time

e.,

the

when everything
was
"normal," or at least satisfactory.
Having these, however, the formula is
simple.
One adapted from Crowther i*;
Multipiy the old par of exchange, by the
ratio
of
the old
British price index
to
the new, and divide the result by
the
the

ratio

new.

for

old

past

American

British

use

example, of

and

index

American

the

just

course,

8 Ludwig von Mises, section or. "For¬
eign Exchange Control and Bilateral Ex¬
change
Agreements," in
"Human
Ac¬
tion." pp. 794-799.
Mises' argument, in
.

brief:
over

exporter is
forced to hand
dollars at the official rate, say
1. sHe. could get a pound for only

dollars

the

ma>ket,|So the govern¬
ment must pay a subsidy or he will not
export.
Official rate plus subsidy equals
market rate. Importers must buy dollars
to ,pay for imports;
the government, to
maintain
4

in -the

often

have

official
If

the

market

rate, supplies
them at
importer bought dollars

could

only 3 for 1.
Hence the government imposes a
special
tax, and the lax plus official rate equals
get

market

rate.

-.1

net

the

pri¬

in¬

economy,

foreign

1952,

ally"

implemented
into
actual
spending on war material and
-

Accordingly,

ness

services.
we

not wit¬

may

important over-all decline

in general business

activity during

the coming election year only be-

cause

outstanding appropriations
by Congress for defense spending
already exceed $100 billion and
not

because
we
had
hot
yet
reached in recent months a turn¬

ing point in the level of

new

gross

private investment with its prob¬
able negative multiplier effect on
national incomes.

investments,
If such a pattern
may easily be subjected to a de¬
develops, in
cline well over $20 billion, at an quantitative form, the end of 1952
annual rate, by the end of 1952 is likely to compare with the third
from

the

levels

end

reached

1951.

toward

the

Will

pro¬

quarter

1951

roughly

the

outlined in Table III, in¬
of the implications of the

manner

stead

magnitude?

difficult

how

Should, however, the reduction

con¬

goods

will

see

The

durable

quarter of 1950 and the

fourth

second in the first quarter of 1951.
When this is coupled with the im¬

plementation
in

creases

will
of

projected

defense

divert

spending

larger

even

in¬

well

justified.

Thus

the

chance

reduction

billion, at
important
tion

real

that

segment

of'

will

goods

and

offset

will

private

consump¬

But

in¬

annual

attempts

decline

investing

stop

business

ac¬

outlined

sector

spending and
above

the

substantial

reduction

and

spending

services by the end of 1952.
Under these circumstances the re¬
on

cent

approximate state of balance

between

inflationary and defla¬
forces will not continue
throughout 1952. Instead, there is
tionary

chance

will

the

take

deflationary

control

forces

the

business

actual

defense

unless

spending is stepped

the

increase
out

arose

defense

1951,

spending

urgent needs to

ex¬

pand capacity for defense produc¬

this

"Too

clines

the very eve of

will

Much

Management"

where

cases

not

occur

the

beyond the

quarter" of 1950
quarter of 1951.

fourth

the

and

only if the de¬

other

segments

the

ing

Britain

dollar
and

imports

France, the

But
speculators find a great deal
justification in the interna¬

tional

monetary history of recent
During the accidental
of the gold standard, in
contrast, such speculators living
by
these
means
would
have

fore,

net

for¬ rate

death.

viction that the

rencies,

type

con¬

instability of
which

upon

vicious

the

think

has

speculation may
product of too much

better

long,

than

steal

who

was

old-

economist:

which

country

afraid

'hot money,' money which
may
suddenly jump to another country,
has

simple way of avoiding
danger. ;It does not need to

this

very

control capital movements. It pro¬
tects

itself

having

from

sound

this

danger

keeping control of its

ties

Covernment

services

rate,

its

gold,

balanced

budget

financial

environment

—

making
in

purchases of goods and
net foreign investment

off

cools

and

Plant

and

Household

Personal

$37.0

$38.6
44.7

6.1

inventories

213.5

11.0

Monetary

Report," July 12,
Benjasnin
the

Public

1951,

Fund,
p.

9.0

229.0

38.

$327.6

of
of

the

finance

committee

TABLE II

Bechtel

Gross National Product in Second and Third Quarters of 1951

poration.
Mord M.

(Seasonally Adjusted at Annual Rates in Billions of Dollars)
2nd Quarter

Government p u r c

services

Corporate

Plant

and

net

and

a s e s

3rd Quarter 1951

■

$39.4

investment:

$37.7

inventories

since

and

44.7

6.1

unincorporated'spending:
__^$201.7
Residential construction (incl. farm)
12.1

425.

the

1935.

Joins Hannaford Talbot
SAN

$202.5

consumption

213.8

11.0

213.5

to The Financial Chronicle)

FRANCISCO,

erett S. Brown has

of Hannaford
Gross national product

Railways

Chairman

$38.6
53.-3

15.9

(Special

Household

1930

Mr.

Simpson had
been a Di¬

International

since
board

$60.4

investment

equipment
to

1951

Bogie

•.

rector

of goods and

foreign

private

gross

Additions

Cor¬

$327.6

$327.8

Calif.—Ev¬

joined the staff

Talbot, 519 Cali¬

fornia Street.

TABLE III

(Seasonally Adjusted at Annual Rates)
1951

Government purchases of goods and
net

foreign investment
Corporate gross private investment
Household and unincorp. spending..-

SAN
At End of 1952
.

$69,400,000,000
44,700,000,000
213,500,000,000

With Hooker &

Fay

(Special to The Financial Chronicle)

$90,000,000,000
31.000,000,000
207,000,000,000

FRANCISCO,

fred R. Volandri is

with

Hooker
■fi

Calif.—Al¬

now

Fay,

associated

340

cisco Stock Exchange.
Gross national

product--

$327,600,000,000 $328,000,000,000

Pine

Street, members of the San Fran¬
He

was

Anderson, "Economics

Welfare,"

position

$360.0

"An¬

John

Chairman
Gross national product.

services &

9 intern&tional

nual

ceeds

$220.0

$202.5

(incl. farm)

Mr.
suc¬

Simpson
who
has
resigned
to accept the

Gross National Product Third Quarter of 1951 and the End of 1952

a n-

Bogie
39.0

2.0

unincorporated spending:

consumption
construction

the

company

$92.0

nounced.

equipment

Additions

which

wants

America,
$69.4

stay." io

and

Railways

Central

3rd Quarter of

money

and

International

and

re¬

by keeping

director

-(Estimate)-

money

that its demand liabili¬

Co., Inc.,

Acting Chairman of the board of

Corporate gross private investment:

Personal

do not grow excessive in

lation

elected

The End of 1952

firmly

currency,

anchored to gold at a fixed

market

been

President

Rockefeller

-1951-

which I realize

paper,

Anderson,

fashioned

Director

Bogie,

Third Quarter of

quotation from the late Dr. B.

Schroder
has

Residential

can

too

run

Mord

closing this

Bogie

same

between the fourth quarter

(Seasonally Adjusted at Annual Rates in Billions of Dollars)

cur¬

most

Gross National Product in Third Quarter of 1951 and at End of 1952

period

the projected increase

TABLE I

decades.

starved

that

Great in defense spending at the

strong.

very

In full view of the recent curb¬

deny, of course, that
may actually compel

than $20 billion annual rate
increase between the fourth.,:

almost the end of

Up to

nondurable consumption goods

American situation,

the

economy.

non-durable

services.

billion reduction in.

reduction probably
^partially offset by in¬

spending

rate

tivity started by the incipient $20

Tl]is
be

creased

Unless

in defense spending can be

over-all

spending toward the end of

1952.

this

political

annual rate, in this

1951.

maintained unless it is stepped up

there

around

develops, it is hard to

war

how

crease

that

amounts

raw

will

quarter

all-out
see

of the

source

In any case, the present indica¬
tion, to modernize equipment for
the armed forces, for stockpiling tions are that aggregate real out¬
devaluing
to supply a rapidly enlarged Army, put will not be larger, the general
the private sector of the
his
economy
country's currency.
If
any
commodity price level will not be
are
not accompanied by an in¬ Navy, and Air Corps; and the need
speculator believed him, and did
for military aid to Western Eu¬ higher and unemployment will be
not withdraw his funds, he suf¬ crease in unemployment and the
greater, by at least the increase
fered a rather substantial mone¬ associated reduction in disposable rope. Unless we have all-out war,
in the present labor force, toward
personal incomes. This kind of the most urgent needs probably
tary loss the next day.
the end of 1952 as compared to
development is already being ex¬ will have been met by the end of
the levels reached during the re¬
Currency Instability, Product of perienced in the Detroit area.
1951. There is a real chance, there¬
cent months in 1951.
lies

The

his

specu¬

spectacle
of
Sir
Stafford Cripps, an honorable and
an
honest man, compelled to tell

commodities, i.

is noticeable that

lators, leading to flights of capital,

earlier

several

are

withdrawing

of the fears of the

von

ernments nowadays wish to alter
7 There

what-|

thrive, is a
will enjoy read-. management rather than too little.

you

currency

speculators,

many

ing it for yourself;
said

the

Now the fact
so

I do not wish to burden

here and

ment;

some

poli¬

their capital.

position

can

there

the

only itit pays, necessarily, the mar¬

ket rate.
you

any

paper

markets

account,

from

wicked

devaluation

any

sumption

flights

thought speculation

Arbitrary Exchange Rate
Is Deceptive

sector

cluding

materials from the produc¬
tion of durable consumption
goods,

too low.

vate

the

therefore,

less "arti ici-

jected expansion in the govern¬
construction, including
billion American economy
ment sector of the economy, ex¬ $360
farm, could be reduced to $7 bil¬
expected by other observers w.-ich
lion, at an annual rate, by the end cluding; net foreign investments,
offset an incipient decline of this was shown above.
of 1952.

it is called, in good working
order.
Otherwise, there will be

devalua¬

tion from the figure then

seif;

form their

stabilization

at¬

determine

power

result of

formula,?

made

"purchasing

ter

should

ever

computation, largely and at
first, I believe, by Professor Gus-

ments

eco¬

cies that the rate will not
change
—or at
least, not very often.

commodities

to"

Outlays

projected ex¬ in corporate gross private invest¬
ment take hold before the rate of
remain
at
levels that justify a pansion in the government sector
of the economy is almost entirely defense spending is actually inThis seems to say, if I read it projection of $220 billion, at an defense
spending. In the fourth creased sufficiently to offset this
annual rate, for all consumption
correctly, that policies internal
quarter of 1950, about $24 billion, decline in the private sector of
and external will determine wnat spending toward the end of 1952.
at an annual rate, was being spent the
economy,
the resulting in¬
At least two anticipatory waves
the proper r^e should be- never¬
On defense.
It is estimated that crease in unemployment accom¬
cf buying of these goods were re¬
theless, stability is desirable and
around $45 billion, at an annual panied by a reduction in personal
presumably the several govern¬ cently experienced. The first in rate, will be spent during the disposable incomes will induce a
the third

the world.

over

will, in each case,
the economic, fi¬
nancial
and
monetary policies
followed
by
the
country
con¬
cerned
and
by other countries
upon

And,
it goes without saying,
they should
long-run make these values
toward about the same levels keep their exchange control board,

borders,

value

Government

and

dential

The proper rate

depend

1950.

has

who. advocate

with whom it has important
is al¬
further nomic: relationships."?

rate

grants, and the

could

maintained

even

present
most

foreign
brutally,

put

de¬
the

upon

entire year,

services.

allowing been declining since the third
get the supply? From the
find their 'natural' level,;
quarter of .1950, when it was some
foreign funds taken from its na¬ permitting market forces to de¬
$4 billion larger, at an annual
tionals as. the proceeds of their termine a rate of
exchange that rate, than the amount
reported in
earnings abroad; by borrowing will be,stabilized, seek to provide the third
quarter of 1951.
This
abroad, or by grants and gifts a simple solution for a very com¬ trend is
likely to continue into
from abroad. Thus we have a na¬ plex problem.
There is no such
1952, largely because of restric¬
tionalistic government in the very thing, as a 'natural' level for the
tions.
Should this happen resi¬
a^t of defending its unilaterally rate of exchange of a currency.
it

can

annual rate, in the third quar¬
of 1951 might be reduced to

the
minus quantity of approxi¬
mately $2.3 billion it was during

goods, all of which
offset by an increase in con¬

sumption

Monetary

says:

"Those

the

crease

and

was

para¬

operation, at last report.
For

1951, there

the fourth quarter of

and

will not materialize

unless it is

Air Appraisal

con¬

mentioned

1950

1951

putting

1951.

speak, nevertheless,
'"stability"/' and they do not

They devalued in 1949,

least

Continued from page 10

conditions

convenient

seem

merly with Davies & Mejia.

for¬

The Commercial and Financial Chronicle

(2532)

Continued from page

so big and labybewildering, that they
thing to remember is that de¬ are rather solicitous about our In¬ almost give up in sheer despair
sirable as it may be, notwithstand¬ dian welfare.
I make no bones and say, "Oh, what's the use?"
Secondly, it destroys a sense of
ing a
lot
of
controversy
and about saying on occasion I think
argument, some of which will not the Indians would be better off if value. I had the head of a bureau
dinner one night
stand up with respect to our med¬ the Indian Bureau were abolished invite me to

versity and college wouldn't jump

Bigness in Government—
Our Greatest Danger

back for

moment and just spell

out the size of

government and its

When

Washington

President
the

the

was

United

the

number

States,

civilians upon the

Federal payroll was, roughly, one
for

saw.

the

public

services

interesting growth.

30,000 in our popula¬
tion.
By the time Lincoln had
piloted us through the Civil War,
every

The idea

ever

health

facilities

to every
States
of

United

bring them

county

and

the

America

and

to a standard that
fived by the Surgeon-General

was

the

What

Shouldn't

Service.

Health

Public

wrong with
nice?
Isn't
it

to extend

was

there

Isn't

that?

desirable?

sani¬

it had

tariums,

tors, more of everything, in every

jumped from one to 30,000
one
to -360.
When McKinley

became

President

States, in the

the

that I

year

the number of civilians
bad increase
under

one

United

born,

was

the roll

300, and

per

the

present incumbent of
the White House, the number on
the

roll

presently about
60 men, women

for

every
childen in
«ot

population.

our

question

just took

one

and
It is

guesswork.

look at the little sheet

^that Harry Byrd's Committee gets
^ut:

"Civilian

Personnel

Executive Branch in
—total

2,498,110."

into the

the

October, 1951

Just divide it

population of the country,
roughly with an

and you come up

equation

one

person

the

rolls for every 60 men, women
and children in the United States
of America.

Now, those folks
Not

reason.

around.

position.

rolls

has

because

been

the

and

They

express

staffing

people, voting the

providing

money,

will

neces¬

the

sup¬

carry out

intent

and

for

there is

a
reaching
long as there are
more
functions added

and

the

Federal

statute

is going to

government

books,

grow, the

payroll is going to grow, and the
of

expense

government

to grow.

going

{

billion

alone.

for

year

payroll

September, the payroll
$691,434,000 a month. If you
multiply it by 12, you see that
was

the Federal payroll
today is over
$8 billion a year, and it is grow¬
ing, because the effect of the

inflationary

spiral

just

disastrous to the person who is on
Uncle Sam's payroll, and there¬

fore he, like every other segment
of

our

society,

beats

doors of Congress and
•*>.

the

upon

asks for

increase.

wage

counties
health

the

they

that

the

might
of

needs

people?

there is
The only

they

took

members of
selves

had

testimony
I

testimony and the
the. committee them¬
forgotten

ofthe

for

House

increases

and

pay,

that amount will go up.
*
But I make the
thesis, of course,
that as government moves into
,

new

functional

there

are new

ground,

purposes

and

constantly

thrown upon the Federal Govern¬

ment, it will grow in size, it will
grow

sults from
Of

and

expense,

spending

effect

larger

their

which

re¬

cause.

course,

things
mand

so
many
of
these
the result of group de¬

are

and

pressure

today.

floor

sitting
in

Senator
come

now

take

afternoon,
turn, having
hours

two

and say,

over

objection

clock

the

the Sen¬

the

patiently waiting
one

this

and

"There is
bill.

The

five o'clock, so let's
get it passed without a roll call."
says

"But," I said, "Senator, look, I
am

opposed to it."

"Well,"

he said, "I am aston¬
ished that you should.be opposed."

said, "Let's take

and

until

little look,"

got my turn.

seven

I kept on

o'clock, got

called, and there

quorum

was

quorum

because they had all gone
dinner at the Statler Hotel.
But

what

this.

was

lion

happened

Here

year.

testimony, and I
embarrassed
floor.

was

saw a

faces

What

that

was

of the Federal
a

Senate

going to be the
cost

was

out

a year

Treasury, and $160

year

treasuries,
a

their

good many
the

Roughly,
the
going to be $80 million

million

actually
bill

them

read

cost?

local

said would cost $15 mil¬

sponsors

year.

out

State

and

or a total of

$24.0

That would be

Wagner-

Ellenbogen

support
I think

Senatehad? great
Tkith sides of the aisle.

or
20 Senators, both
Democrats and Republicans, were
the dual sponsors of the bill.
It

was

one

the

most

disarming I

bill

which

addresses

itself to the question of socialized
medicine.
Some
months

later,

there

came

desirable

the,

de¬

group

some

and so there are

areas,

Senators

and

would

better off.

But it

becomes

ture

who rinthian,

Congressmen

costs

down at the Cosmos Club, because

when I

Chairman of the sub¬
Agricultural Ap¬

was

committee

propriations, I took some money
out

his

When

estimates.

the dinner
table, he said, "Dirksen, why do
pressures upon government as you year.
You know something about the you fuss about $3 million.
so
well
know.'
Think
of
the
After
Brannan Plan and the socializa¬ Veterans Administration. What an all, it is only $3 million, and what
is that against the whole amount
tion of agriculture.
After all, if astonishing thing that a Veterans
you
are
going
to
guarantee Hospital should be built in Dub¬ that is reflected in the budget?"
farmers something, you must have lin, Georgia, and it is 58 miles
Now, that is not something sing¬
watchmen out in the field, you from the nearest railroad station. ular. That is a rather a common
must
have watchmen in Wash¬ How does an indigent veteran get attitude in Washington today. The
It would certainly be a billion has nosed- million off the
ington, and so you pyramid the there?
Or, front page and out of the budget
payroll of another department of tragedy if he had to walk.
government and you add to its to build a hospital at Miles City, figures, and what it has done is
mands, there will continue to

between

$25

and

million

$40

around

sitting

were

bigness and
Are

The
me

second

some

and

the

factor that
of

disturbs

the

course

waste

inefficiency,
and

the over¬
duplication in

the

had

served

gether for
both

chinning

were

his

the

to¬

long time, and in fact,
served

the

another

to. dip

ahd

bill.

into
say

How

the Federal

the

uni¬

and

medical

country, -if

you

schools

will

put

extra

ing

cause

behind the

spending that makes spend¬
effect.

House
Loose

when

and

Inadequate

Budgetary

Away back in 1947,

still

was

have

Congress,

seen before, and
responsibility in so
many
agencies and bureaus of
government.
And then, of course,
the waste
and
inefficiency and

you

such

never

lack

cost has become

household word.

Think, for instance, of
dian

That

Bureau.

used

our
to

In¬

Prior

evening?'"

The old

just looked at him

man

and said,

"Well, boss, I'll tell you.
know, I has been serving a

You

lot of Secretaries around here for
a

Congress

1921,

something of

wilderness.

was

Every

committee of Congress did its own

appropriating.

Legislative

The

for

Committee

the

Navy Depart¬

long time, and I always thought ment not only authorized battle¬
day that the government ax ships and cruisers and submarines,

some

would drop on my neck, and I but then it appropriated the mon¬
I want just as many buffers be¬ ey also. The Legislative Commit¬
sent John Collier, the head of the tween me and that ax as
possible." tee on Agriculture would do what
Indian Bureau, a note.
I said:
Well, there you are. So it be¬ it wanted in that field, and then

pet with

me.

Many

years

"Dear Collier: What is

(Si gn

Yours,

ago,

Indian?

Congressman

comes

case

buffers, and

you

rolls.

So, if they find

teaspoon-

ful of Indian blood in you some¬

ago

friend

Colonel

the

mine

War

who

Department,
by one of

justify

Indians.

total, and that will
people to look after

So today we have 12,000

full-fledged,

its

Appropria¬

own

Committee.

was

long

authorized
been

how

and

much

It got

expended.

had

bad, in

fact, that students of the fiscal
aspects of government finally or¬
ganized and

came

to Washington^

and out of their efforts there came

the Budget and

Accounting Act of

1921.

v-'
roughly was this:
into one commit¬

;yr-

What

did

It set up and put

the Generals because he wouldn't

tee, the exclusive power to ap¬
propriate money, the Appropria¬

put another 30 people

tions Committee of the House and

was

roundly

scolded

the rolls

in his agency.

Senate.

get

Budget

He said, "You will
increase in pay; you may

where, they will get your name get an increase in grade; and
the rolls.
They will add it to will get one at the same time."
Indian

served

time after Congress convened be¬
fore anybodycould telf .yvhat wa£

the

tions

add to the rolls.

Dirksen." Four weeks later, I got
four
pages
single-spaced,
and
when I got through I couldn't tell

right
it

-■

Secondly, it created the
It is the fiscal

Bureau.

arm

set

what

certain

least,

of the President. Third,
the
General' Comp¬

office

troller's

Stockpiling Personnel
That

you
call stock¬
full-paid
workers piling
personnel in Washington
looking after 393,000 Indians, and today. Finally, they fall all over
extra
students,;- over and above that makes one per 37 Indians. each other. '
your normal complement, we will That
is pretty good, isn't it.
But
Now, what happens out of this
give you $2,000 for each extra
you pay the bill.
business?
First, a sense of fu¬
and $200 a student for
your reg¬
'And so it carries on and on, tility. There are lots of good peo¬
ular student
body.
What uni¬ because Indians vote, as you know, ple in
government, but the struc¬

versities

the

So there is the

office.

House

Appropriations Committee to¬
Accounting
gether. An old man came in and
Now
one
other factor
that I
so my friend,
the Secretary, said,
created the Hoover Commission.
I think we have got to consider,
They hired 300 of the finest ex¬ "Dirksen, you know that old man
who was just In here is quite a and that is the rather loose and
perts in the country.
They or¬
'tickle.' He has been on the rolls inadequate
budgetary
and
ac¬
ganized
them
into
groups
and
a long, long time." He said, "When
counting procedures of the gov¬
called them task forces.
I think
I took over this Cabinet post. I ernment. I think I can speak with
there were some 24 of them. They
called him in one day and said, some authority because I was on
compiled 2xk
million words of
'Sam, why is it that you meet me the House Appropriations Com¬
testimony and then got out some
at the door in the morning, and mittee for nearly 12 years. In that
60
recommendations,
some
of
time I was the Chairman of the
which have been adopted by the open the door? Then, when I get
on
Agricultural
upstairs, there is somebody else sub-committee
Congress, and others of which are
who takes my hat and coat. About Appropriations and dealt in the
either pending in committee or
eleven-thirty, still another person billion dollar class, and more. I
are in the process of preparation
brings in a tray with my lunch; want to sketch for you briefly
to
be introduced in the session
at twelve-thirty, still another per¬ something that in my judgment is
which will convene January next.
son
comes
in and takes out the one of the most compelling and
But what a bewildering thing
most
challenging
problems
dishes. And then somebody else the
they finally laid before the Amer¬ hands me my hat and coat when both in and out of government
ican people, a structure such as I
go home at six o'clock in the today.
government.

But

Treasury

continue

will

interested in the socialized medi-"
there was a suspicion that if you
cine program, that item
that" I had 1/64
Indian blood in your
encountered early in my Sena¬
veins,s that justified and qualified
torial career was one of the first
your name on the trial balance
six
titles
of
the
old

It is

tered

the

But

Then, of course, you have this
strange business of pyramiding
and stockpiling of personnel, on
what an Indian was.
So I sent the theory that the more people
another note to Mr. J. C. Capp,
you have working for you,
the
the head of the Census Bureau. more likely
you are to get a pro¬
will do the
spending for what is a I
said, "Dear Mr. Capp, what is motion and a very substantial in¬
desirable project,
notwithstanding^ an Indian? Yours very truly, Con¬ crease, in
pay,
that we are going into the hole. "
gressman Dirksen."
I think I got
Why, and I can say this on my
Incidentally, you being insiir-. seven or
eight pages. I still didn't own authority, only three weeks
ance men,
certainly you must be know what an Indian was.

rather interesting how they work.
One of the first bills I encoun¬

deal?

ical
needs
in
the
country,
it in its entirety and Indians were
simply means another $58 million regarded as normal American citi¬
a year.
zens.
Probably they would be bet¬
Now, that is not the end. There ter off and the Federal Treasury

lapping

remember

ate

what

was.

about $700 million a
continuing cost with which to
year, and that will not be the end, burden the
taxpayers of the coun¬
for in proportion as there are new
try in their Federal aspect, and so
demands, in proportion as there you add it to the
burden of gov¬
may be a price increase, postal
ernment, because there is a
workers, all civilian workers of
clamor-—you spell it out in terms
government will be besetting the of
people — and so government
committees

roughly,

Senate

kind of

that

Montana, where the bed cost is to distort a sense of values such
you add to its cost.
going to nationalize the $50,000 per bed. Any private hos¬ as I have never seen before.
difficulty is that it costs a lot of
How do you get frugality? How
healing arts of the country?
It pital that undertook to do that
money and the question is, can
has been variously estimated that would go broke in a hurry. But do y0u get economy? How do you
we afford it
at a time when our
it will take over 100,000 additional it is an evidence of waste today. get a regard for " the taxpayers'
deficit even in this year is vari¬
I served ior a while on the dollar when futility and frustra¬
civilian employees on the Federal
ously estimated at $24 */2 billion rolls in order to do that
Post Office Committee.
What a tion and "destruction of values goes
job, and
and $7% billion?
Next year, it that is
"
~ '
'>
understandable because by lot of fussing we had to do, and on day after day?
may
be infinitely larger.
But the chain
So there you have a cause of
of demand, it goes down you get your heart torn out for it,
there you have an example of a
but Uncle Sam at a cost of 2% which spending is the * effect, for
to every village and hamlet and
demand that was in part espoused
cents has for years been printing as a very distinguished man, a
county in America, and the cost
by
the
American Legion,
the will be
billions of commercial post cards great -American, who lives in this
stupendous.
Council of the CIO and the AFL,
So you see in this element of which he sells for one cent, and hotel, stated to the Congress, "If
some, segments
of the medical
recommendations
of
the
if you keep that up long enough, the
bigness,
in these accretions to
Hoover
Commission
organizations, the deans of the Federal
could
have
power, you make possible you will not only break the post
medical schools scattered around
been effectuated and v. you could
the
funds
that
move
into
the office department but the Federal
the country, and just about every¬
put somebody to bear down upon
blood stream of America and that Government as well.
body who thought that was a very
There
are
some
other rather the administrative heads of gov¬
aggravate the inflation problem
desirable function of government.
ernment and insist, the chances
that is so squarely before your intriguing samples of inefficiency,
The strange thing -to me was
overlapping and duplicating and are that along the line, in the first
industry today.
that the proponents of the bill had
waste. I went down to see a Cab¬ full year of its application, you
inet member a couple of years may save as much as $3 billion
Overlapping and Duplication in
forgotten what it was going to
cost.
Government
It was a year before that
ago, a good friend of mine, and a year."

million

The wage increase in the first
session of the 82nd Congress
was,

3,105

States,

doc¬

Offhand,
nothing wrong with it.

As you look at the amount that
is involved here, it runs well over

the

long

power,

upon

United

then

the Congress.

the

minister

function

an agency,

so-called

are

function

plies, and then let them
the

lay

by Congress,
that you can

way

creating

with

sary

them

some

created

only

articulate
is by

there for

Not all of these pursue a

sinecure
the

are

all

one

nurses,

Thursday, December 27, 1951

...

powers.

good

accounting
?

out

So, at

had the framework of a

reasonably
tem.
It

marked

and

additional

well

it has been

; ;

Sys¬

look, because
the books for near-'

now

ly 30 years. So let's see what' hap¬
pened. The first astonishing thing
you encounter in this business is

Volume 174

Number 5076

The Commercial and Financial

Chronicle

(2533)
that

the

people who spend the
are
also the people who

money

to the Congress for action in the

were

riding

the head of the budget service in

following January."
I said, "Mr. Director, the members of Congress know more about
the budget of the United States

any^ bureau

than the President and the Budget

government,

jreau."
Bureau."

estimate their needs, and who ask
for the money. Suppose
you were

government and
said, "Well

the head of the
agency

it is September, it is about

now,

His

time to be thinking of the
budget
for the next fiscal
year.
I sug¬

But,

gest,
therefore, that you start
making some estimates for the
next year."
If you are in that
bureau, your friends work there,
is
or

probably
70

ask for

ehen

stove,

the

Congress will

theory

scale

that

down.

to sit down with the budget

Let's take agriculture

ex-

ample.

The

then

to
are

with

correspond

and

bills

the

sit yourself down with

you

subcommittee,
the

come

who

men

the money

are

and who

here

asking for

going to
Five members

'spend the money.
of the

and
are

the

subcommittee,

a room filled

Now

might

they will not spend money on
themselves.
After five years of effort, I managed to join in an endeavor to get

the

House

fund for

set

up
a
$150,000
implement the

staff to

Appropriations Committee.
very

contrive

what

they

think

How many times I have had to
caution them that I didn't want

„

reasonably firm figure for all
agricultural and economic studies
in that department, and also for
the crop reporting service. When
the other agencies have done liker—

there is one of the bright
boys to give him the answer.
,

from

answer

one

T wanfprf

mpn

his

research
fmm

answpr

of it

Not all

spent, and it wasn't used

was

effectively.

have

said

the

Con-

could be urged to spend $5

gress

million for the best kind

of staff-

ing and talent that the United
States of America would yield, it
will show up probably in a
saving
of $500 million for every million
that you spend. How else
do the job and do it

Cabinet officer himself,

can

you

right?

Six weeks of

—

hearings, 400 witAnd so we come to an internesses.
But, gentlemen, this is the mediate conclusion. You have to
key to the thing, and you can for- look behind the
spending busiwise, it is all compounded in one
get the buildup. But I have gone ness. a little bit. When
you think
volume, and that becomes the.
through the agony year after year of spending as the moving cause
preliminary, estimate for. the de- of
conducting appropriations hear- for taxes and say, "All right, what
partment.
ings with not a single witness of makes you spend?" and once
you
Then, what happens? The Sec-, my own at my elbow to
help me come to growth in government,
retary of Agriculture, his budget with cross-examination.
So, cross- you come to waste
...

officer

and

people,

move

Bureau.

two

three

the

over

Perhaps-

five

other

Budget

hundred

people, work in the Budget Bureau,
which was set up to assist the
President.
They sit down and
they begin to examine these estimates.
are

And what happens?

questions, there

there

are

There

answers,

suggestions that perhaps
right, or that ought to
and after three or four

are

this is all

cut,

sessions

contrive

that,

they

the

Budget Bureau who have
handled it together with the Director of the Budget Bureau walk
to

the

White

House

and

sit

down with the President and indicate about what the estimates

are

for the next year for all agricul¬
tural functions.
I

remember

when

went

what you

sends

and

they would fill
single session, but
haven't got a single witness

this

you,

for

room

you

who has lived in the

department,

wh0 has gone through
cedures and their

their

techniques, and

who

can

say

"ask him this,

you

ask him that."

would

lawsuit,

like to

you

how would

to defend the life of

fore
a

you

person be-

jury when you didn't have
single witness in your corner?

Year after year. Congress is
going

through that rather agonizing performance, and how does it show
-

shows

guesswork.

It shows up

in the meat-axe tech-

nique when

you

ought to be using
a scalpel, and it shows
up in overappropriation and in over-esti-

taxes

Bureau, "Now, tell
me, how much time do you spend
with the people from the department who are asking for this
money?"

"Oh," he said, "one period, two
periods, three periods."
"How much is

"Oh, it could be

hour, maybe

that are ultimately levied
against the people of the United
of

America,

two hours."
I

said, "All right. Let's take it
at the maximum, two hours, three
periods, six hours perhaps.
It
.

Now I give you one current

ample.

considered

the

ex-

Mili-

tary Appropriation bill in the last
session

the

Congress,

and

Senator
O'Mahoney, who
piloting that bill, to tell me

was

hnw
no w

mprnhpr? ne nad
many mem ners hp barf nn ibA
on me

iully short period of time, it seems
to me, to be thinking about billions of dollars in

swer.

a package for a
single agency of government."
"Now," I said, "Mr. Director,

to the

march

you

White

House,

The tragedy is that such
staff as the Appropriations Committee of the House and Senate
have at the present time do clenbusiness.

You sit down with the President,

cal

How much time do you spend with
the President?"

elbow

riods

said

"One

at the

"How

period, two

pe-

outside."

much

period in the

President's life?"

body

two

hours,

said,

sit

your

there. But we have nothe departments here or

up
m

determine whether

not

study to
we

are

appropriating

too much money
and how much of it is wasted.
And

then,"

They

in the field to make

"One hour."
"In

ineffi-

saw

the

I got no answer.

strange

But I

spectacle

long
V

recommendations that require a
reduction in personnel or a
reduction in spending. Isn't
that wonderful?

has

and

think

the

One of the weaknesses
in it of
course, was the fact that it didn't
provide
for
some
person
with
authority to bear down upon
evervjf
will administrator in government and
make
him
carry
through until

spending

second

thing

those recommendations

that

must be done is to
carry on some
kind of a crusade
that will make
the average citizen
realize that

effectuated.

gram.

cold, probably because they didn't
appreciate

had

been

simple
V-'

pro^

form

oegins

extracted

from

the

That

tion,
we

matter

then

come

unhappy situa¬

very

of fact,

discourse.

and

the end of

WhatTo

this

what

goes

however, that it

must be done.

isn't enough that
cause

cannot

you

spenders

are

authority today

and in theconsummation of the value of the

j-ne

wu-u

make

which

lecunnnenaaiion

that

is, after all,

the heart of

business.

the
is

tonic
tools

made

once an

litte

some

there some years ago consisting of
six Hous,e members and six Sen-

nractical

remedv

and

ft ou? jusfas bTefly

lav

We had

ators

who

1952

urogram

govern-.

.t.

within

r<aner»naKia

oSa

to extend another tax hill in
in order to close that pan

between income and outeo which
6
sets up an

Spjrai

•

inflationary wage-price

and

threatens

and this basic

Keep

the

country

that

one con¬

and above
every¬

over

thing else because

our

worked

for

too dangerous already

'•
*

several

Conflict of Federal and State

01ly^ ,tni.111K

Pi ye£

K
» * .er.e ware four ot five of
applying for a job T will
you 5°YS a
problem,
little anecdote.

"A farmer grabbed his
"A farmer
gun i
and

similar to the Hoover Commission

n01'edin, my Judgment, was a went out to the barn to shoot an
to examine into the whole field Pretty sound piece of legislation, ®wl.
The blaze from the shotgun
o£ conflict of
authority between because among other things, we blast ignited the hay. The hay
the
Federal
and
State
governa Pr°Posal there that you
^a^n burned down,
ments.
Where do we draw the ?ouldn^
raise an appropriation The farmer s wife came out.to put
ijne finally? Is the Federal Gov- it?m. 011
.fl°or unless it was out the fire and lost her life, and
eminent going to grow in power
JY^j1 tJ?e cY!?ing that was estab- the farmer almost lost his life.
and

ship?
not

1^1"

authority to the point where

becomes

centralized dictator-

It has

the least

many

of them

one

«Str*!L^?u'^ a"fhow

but

aspects,

there helping them
o\ er tnere neiping incin

niques

think he

the collective farms.

great

was

many

the

takpn

out

di°s^

there for three years,
and he became acquainted with a

They

£ult

ances

ever

were

there,

bis

state

achieving that

had

some

,fvelv

re-

bal.

but jt bas been very

once

tben

ctn+.e
a™*,™
the United States of America with

ideology.
the

w-3
th.e^e Wtt.3

ment

department of the governthat has got $1,600,000,000

in;,j^; apd he is expected to know

something about it

and

write

budget message when he sends it

propriations on the floor of the
Senate. Would you take that kind

deal

Inv.
T

Our job will be to tions that
have been made by the
Our job will
Hoover
Commission.
They are

■

•

Management Corp.
o
v

Manaepmpnt

S Tork
to

.pmpnt

Torn

Management corp-

Corn

CUv

fit

has

InvestmeS:
investmen*

Joins King Merritt
(Special to The Financial Chronicle)

the fine recommenda-

states.

Rr^d *

in addition thereto

through

finitely

was

cut if you thought your bill
good when you brought it in

in the first instance?

only with

governmental

record

instrumentality, and it will be in-

mittee

one

session

and

of a, Senate

saying,

DENVER,
Colo.—Kenneth W.
Kutter has been added to the staf

Com-

our

are

>?-.m

many

easier to pressure it, to words, they like the Hoover
infiltrate that kind of a govern- ommendations
except that

ment, and probably move it in

'•>'<»

H^oland
MS ftiy

i;7

rec-

partner ia,

they Miller & George, passed away on.'
unequivocally opposed to those Uec. 7.
1
v
.

■

■
.

'
•
.

•
.

>•

c...\

MONTGOMERY, Ala.—Sellers,Doe & Co. has been formed with
°^|ces i" 'he First National Bank
Building, to engage in the sec^Uies business. Philip A. Se.lers is a principal in the firm,

to follow
t{ien'ir} aaaiJl,10n„.nYYeio! ro iu L_

our

there

Q<JiAvc

made this obser- procedure is tightened
up and the
vation to him. He said, "So long
tools are there in order to do it.
as you have got virile and
strong
xhose are the recommendations
state government, so long it will
that i thjnk one would make. And
be impossible to do too much to

weaken

(AU

bellerS» Doe hormed

sibiHtv' of

Commissars.

from

rather unhappy to have
nicely ignored.
It had some of
him go.
But in those meetings the tools
that are necessary. So I
and those fellowships that they
say humbly, as a member of the
had, he came back with one conlegislative branch of the governelusion that intrigued me a good
ment, that it is an inadequate
deal, because this one Commissar, procedure
today, but there is not
high on the ladder of authority going to be real relief until that
over

Jate hur^ng "ay'.t>Vt
9urnml Lv^but

tiie

was

of their agricultural tech-

whati happened to the owl^
h£d at lea-S,V £°T have $25 mil- Keep y0U1 eye °" the °wL
S0ng^!sm?"
TT
who
W1uing to

was over

some

(

t
.S03! ^ 1° SPeCU;
u

somebody out in Illinois one boy who had the right ar_wanted to get $25
^J^on for swer. He came up and said, MisCalumet Harbor, he would have to ter

from the Ukraine.
He

t works,

to my mind some years ago,
when a friend of mine came back
came

that

doubt,
for.

freedom.

your eye on

sideration

can.

progress in
joint committee down that
direction has been
altogether

years upon the so-called le«Wative reorganization
plan, to pro--'
vide for a single package
budget.
There were plenty of
Authority
safeguards
No. 1 I think the time has come ^ that bill.
What has happened
for the'creation of a commission t0
Nothing. It has been igas

...

dhwn

sarv

prog-

thing.
One
can
good many weaknesses,
but the question is, can one
supply

Program

v„_

in-

tried

Congress,

government, must have
with which to work. It
adequate

Practical

Government

would

nractical

welfare of America

a5„a^airls?Yf°rces of infla-

To ff3'

smo.ke hi the
ai?£
1S a Sreaf
V01cl *n the British Treasury,

and the spenders have at their
Needed:
command the propaganda instrumentalities of government up to•
Tn
•
^ much as $75 million a year.
we have a durable interest in the-,

important

point out

be-„es

forget that the

a!ld vary Promptly it was
lgnored or tflrown overboard.

and that is

?uUurai commodity supply there
1S ^-Y-0
!n
eir suPPly of corn-

few people in
government raise their voices
a

always

You see, that is

that is involved,

billions

that

tbe *reedo.m of this country-. You
Washington in the field of bigness see' *nflati°n begets danger. Danand authority
finally gets down to ger beSe*.s fear. Fear causes peothe grass roots level and to
the ple
*.n terms of controls
average man in the form of
taxes.
greater dimensions, and the
I doubt
very much whether a more control you have, the closer
campaign of that kind can be un- you
.wbcde question of
dertaken unless it is done
by pri- a
socialism, like that
vate organizations
who are inter+1? ?t
^ns^0n Churchill
ested in ending the dilution of
the +2
5-e Pmted States of America
dollar and the possible
destruction P*e
week in January to say
of our economy, and it is
if .
" to us what he said in the Guild
going to 1? $
take a real, honest-J
ali in Lo."don !iv?
.-lo-goodueS S311
ae?.f
crusade to do that job. I
think, ^aJ
*s a y<?jd *n thmr aSri- »

come

pockets of the taxpayers.

rrianv

Senate Appropriations staff who

had lived in the department of the
Army, Navy and Air Force, who
had something more than a casual
idea of what this spending was
a11 abo"L and 1 never got an an-

could be longer. But it is an aw-

you

necessarily

in the

that must be

asked

period?"

they have to be reflected in the

States

max

the

try

up?

won,

pyramid

little

mates that should not be, because

the

then

and

about it?

Budgetary Guesswork

rector

ciency,

pro-

through the lesson book with the
ith
Budget Bureau, I said to the Divhe
—

poke through all the
justifications that the department

How

whole

time

money,
continue.

You

finally

department, involving billions of
dollars, then what? The two men

over

examination is based

firm figure.

When it is all done for

and

read.

how
\

the

And then, at the end, I would
bigness in government
spells itself add this one thing.
I think as
order to develop a
staff, but the out in terms of the
citizens'pocket- never before, as we consider this
tragedy is today that Congress, book. Over the
years, I have gone whole question of inflation and
being a political body, is so afraid up and down the
land and drama- wba* it does to the insurance dolof columnists and commentators, tized the
budget issue as well as *ar>
be sure a*so that we don't
so
afraid of criticism and abuse I
could, but so often it left people tske our eye off the one great

thousand times that if

suddenly

think

means

with that that I have made some
effort over a period of years in

little wavery about an
answer, he
can
look over his shoulder and

with

down

budget service
for .the whole department.
They
spar around; they estimate ♦k^
their
needs. They talk about what
might
happen in the future and then

the

in connection

say

matter

come for
Commission with real talent on
it to demark these
lines, for otherwise centralization in
power will
grow.
You spell it out in
terms
of bigness and new
bureaus. That

until you went broke.

estimate, then it sits
the

appropriating

member,

headi of

and

with

experts to fortify a Cabinet
so that in case he is a

direction

may take."

nothing

confession

If the Bureau of Agricultu'ral Economics has made
up its
the

that

your

goes

and

times.

the

officer for the department.

anywhere

for

if you ran your
business on that basis, it would
only be a question of a short time

way

up,

hearings
begin. Oh, I have been through it,
not a hundred, maybe a thousand

preliminary estimates
made, the head of the bureau

are

the

Roebuck, that will

dollars.

estimates,

when

made

are

show

billion

drawn

that

invariably those esticeiling. They will
everything except the kit-

looseness

you are confronted with
book the size of an unexpurgated

edition of Sears

high? Well, my own experience
a
long period of time indi-

cates

see,-that

you

and

than

technique,

suddenly
a

over

mates reach the

"I wouldn't be

was,

these estimates

estimate going to be low

your

answer

herd

billion, and they
accepted $1V2 billion. That, to me
was one of the most
astonishing
things that I have ever seen in

bit surprised."
surprised

economy

•,

The Commercial and Financial Chronicle

(2534)

turn

little

The chances

omorrow s

result

Waller Whxlc
%/

the

Says—

with

short session

traders

most of

from their

away

desks and off the floor. Prob¬

ably home figuring who sent

sBy WALTER WHYTEes

the Christmas cards and

page

Although
risen

won¬

Securities and
expenditure, twenty
pounds ought and six; result, mis¬
ery.
The blossom is blighted,1 the
leaf

account for

the god of day

withered,

goes down

the dreary

upon

and—and,

short, you

floored.

doubted

for¬

are

billion.

week and the week before.

Starting next week you'll
begin reading annual fore¬
casts of what the market

will

do for

the coming year.- At
point, I too should say a

this

Don't

few words about 1952.

think I don't want to: Trouble
is I don't know what to say.

>'fi

i\:

for A

could

if the market

say

those out) it will then

verted in

is di¬

figures

—

and

figured out) then
will happen.
Oh

well!

How

As I

pointed out last week,
getting out and waiting
so
simple any longer.

this

either.

loss

Sticking to facts,

save a

Orders Executed

Pacific

oil

puts

picture on almost
transaction. If you have
nothing to do New Year's
Day, I suggest you sit down
and figure some of this out.
If you come to any conclu¬
sions I hope you'll drop me a
line and tell

about it.

Coast Exchanges

Established

1919

Members
New

Stock

York

Curb

Exchange

Exchange (Associate)
Francisco Stock
Exchange

San

Board

Chicago
New
14 Wall

7-4150

Private

San

Wirts

Trade

Exchange

New York 5, N. Y.

Street

COrtlandt

Cotton

Yoik

Teletype NY 1-928
to

Principal

Francisco—Santa

[The

Fullerton

has

Ohio—Howard

Westheimer

with

members

111.

....@92

Central...@54

No. Pacific

.@68

Feb. 21 $487.50
Jan. 23

Feb. 18

Canadian

Pac.@35%Feb.
Atlantic Ref.. @74
Jan.
Sinclair Oil;..@41%Feb.
Am. Cyanamid @112 Mar.
Mont. Dak. Utl.@25%Mar.
JVs & L'ghIin@23%Mar;
.

U. S. Steel.

Cities

..@40

Cincinnati

14
23

the

and

York

487.50

sociated

be Roland

McCabe.

with

the

new

office will

pany,

also

with McDonald &

May 15

250.00

...

24
6

officer.

Mr.

(Special

nelius

250.00

ated

Merck & Co..

275.00

Co., 722 South Spring Street.
was
formerly
manager
of

Subject

to prior sale or price change

Explanatory

pamphlet

request

THOMAS, HAAB & BOTTS
Members Put &

CaUs Brokers & Dealers

Association, Inc.
50

Broadway, N. Y. 4, Tel BO 9-8470

LOS

ANGELES,
Cole II

with

stock

Francis

Hills office.
with
ner

Co.

Merrill

Co.

for

that

inflation

were

What of the future?

will depend

ume

our

It has been stated that a* settle¬
of

ment
and

the

when

Korean

the

effect

structure

York

past

The United

States seems

ocably committed to
are

over

large degree
pleased to des¬

the Free World. We have
where

interesting
cor¬

earnings

the

days

The question which the investor

is no longer easy to govern
control millions of natives.
They

have awakened

and

dependence

freedom, even
instances they are

though in
not

many

therefore

must

than

ever

before. Even if

well be doubted whether
nent

other

merous

se¬

created at the

be paid,

begin with,

mal"

when

the term "abnor¬

misleading,

situation

may

because

with

compared

any

abnormal

'seem

certain

other situation.
Furthermore, any
situation, however abnormal, be.

comes

and is regarded

continues

time.
As

high

for

normal,

length of

any

;

to
or

whether* *ttt& -market

low,

contained

"is

few

Table

statistics, as
II, may be of

Burma,

Indo-China and Malaya, Formosa,

Kashmir, Syria, Egypt, Iran, Ger¬
many, East and West, Yugoslavia,
Trieste, Czechoslovakia, Hungary,
are

going to

re¬

possibly other

questions, foremost among which
are
the
menacing expansionist
policies of Russia and the designs
men

in the Kremlin, dream¬

and

planning and plotting

conquest and domination?
have been told again arid

order

overcome

the sinister forces of communism,
it
is
necessary
to * "lead
from

strength."

What

mind is this:

one

Vast

must bear in

masses

of hu¬

manity, notably in Asia, the Near
East,

Africa- and

Latin

America,}'

have aspirations and desires

which, |
resembling somewhat Marx-|

while

ist
ideologies, ware,'-in the final!
analysis, genuine ambitions to ef¬

fect

improvement

lievably

low

their

standard

unbe¬

living,

enormously high illiteracy and ig¬
norance.

interest.

perma¬

spots through¬

sore

out the world—China and

again' that

difficult

satisfactory solution is go¬
ing to be found—what about nu¬

mally" high level.

reach

of the

greater
we

to Korea
—and from all indications it may

rising more or
ing
continuously for the past sev¬

accept this view at face value.

Our ef¬

agreement in regard

world

for in¬

yearn

and

quite ready lor them.

eral years, is it wise to enter the
market at what may be an "abnor¬

Germany,

scheduled to

apt to raise is: Since securities

less

continued

markets have been

possible

has

Britain

of Rhodes

days

likely

securities'

Great

Clive.

fort

decade

irrev¬

policy of

a very

erably since

hundred

one

our

aid program.

and

years
is
well-managed private enter¬

from

our

it may

expenditures and foreign

for

State

and

the

upon

that

marked reduction in

the

prices

most

problem, if
about, will

comes

adverse

not

lost through

the- extent

upon

participation in world af¬

appreciate."

time

econ¬

omy
seems
inextricably tied to
the international situation arid the
rise and fall of our business vol¬

same

Our

could

revise

the

slogan "to lead from strength" to
TABLE II

one%

National

He
the

Shearsoiv
Beverly
was

Fen-

Schwabacher &

income

1938

274.4

Wages

176.3

Corporate profits bef. taxes
Corporate taxes

67.4

3.3

27.5

1.0

"True" Dollar

126.6

1.300.6

669.7

2,650.0

1,410.0
'

Corporate prof, after taxes' 15.4
Dividends

9.3 "

2.3

Id., in % of prof, after taxes
53.1
tlndustrial shares index--_"208.IT""
♦Computed

equals

basis

100 of Standard

of
and

Jan.-Sept.
Poor's

figures.

recent index

569.6

3.2

•

190.6

317.4
90.6

139.1

100.0
^Computed"
of

108.0
on

basis

305 stocks ^Dec.

14.4
1937

1951).

the-ignorant; food to the hun¬
clothes* to the naked; shelter

gry;

123.9

311.4

•42.8

46.2

Gain

307.1

"leading to knowledge," i.e.,
could bring enlightenment

if
to

Gain

Billed

their

Lynch, Pierce,

& Beane and

Interdependence

have

bonds and other fixed-income

Pont

Prior thereto he

"k:

Economic

solve all these and

rampant

Calif. —Cor¬
I.

behind.

Austria? How

purchasing power
currency.
It may perhaps

were

but have rather lagged

economy,

'risk

decline in the

curities which

teria have not only not advanced
in -accordance with the rise in oifr

Dilemma

preserve what may be

recalled

■

It would thus appear that prices
as
measured by dependable cri¬

next, the corporate dollar invested

It is in this connection that the

our

the

sugar, kilowatts, etc.
above, one might
advantage refer to certain ob¬

render

profits plus- a
portion of corporate

They

without at the

the

off, without realizing that
times have changed very consid¬

purchasing

The creation of additional

half

reported

cur¬

are

ap¬

has left

study of

the future.

Investor's

about

surplus.

rye,

power

remains, thus, the fourth

may

total

considerable

ignate

(Nov. Hi)

While the value of the government
dollar has declined in

governmental attempts

prosperity through

has become associ¬

department

Hammill

1945 (July D-1951

*1951

137.50

mos.

relief,

only

cooperation to

to The Financial Chronicle)

287.50

some

was

Company.

,@31

afford

succeeded and

These

1789.

prise has, on the long pull, given
a
greater measure of protection
to the savers and investors of the
nation than has the
government.

our

than

particularly sig¬

with what

over

our

increase

Francis I. du Pont & Co.

200.00

was

McCabe

.@49%Feb. 19
Chrysler .,.,.@66%May 10

Cornelius Cole II With'

162.50

Inc., of "which Mr. Bopp

since

that

in turn, would

This,

the

by the

poration stock prices

en¬

providing for corresponding cov¬
erage, thereby furthering already
existing inflationary trends.

time,

350.00

succeed

175.00
487.50

value

manipulation.

rency

212.50

the

possible

create

J..@74%Mar.
So. Pacific
@58% Feb.
Kansas Cy. So.@63% Jan.
So. Railway
.@50% Feb.
..

formerly
Com¬

incurred

conclusions from the

only be of a temporary
History is replete with in¬

stances

Fullerton

than one-third of

Government

"One

would

nature.

Fullerton

Mr.

President

rev¬

corresponding

method would

137.50

present

Trust Division,
New
Banking Association:

currency in circulation. While this

Bopp and John M.

425.00

the

servations in the report issued by
the Trust Investment Committee,

Exchanges, as present and potential investor re¬
their newly opened quires financial aid and guidance.

Std. Oil N.

absorb

also

In view of the

Stock

manager of
office at 30 East Broad Street. As¬

275.00
225.00

of additional

times the

expected profits after taxes, while
in 1938, disbursements aggregated

estimated' lead to
Administration defense

Chamber

expenditures

gold stocks.
make

the

281,800,000,000

of tlie major

one

are

source

hancement

than

years

488,800,000,000

devaluation, that
is, the increase in the price of gold
from the present figure of $35 an

and

200.00

six

(See table I.)

of "inflation."

Company

New

Service.@104 Feb.

Gulf Oil

its

Federal

that date, it is nevertheless aware

will

business

the

What

have

that

that the financial operations of the

and

figure.

Ad-J

collected

but rather

source:

associated

become

had

world

money,

OPTIONS

according
Truman's

basis

never

Mgr. of New

States

"President

wheat,

There

Rosa

Per 100 Shares

United

$262,600,000,000

most

nificant is the fact that dividends

the

The

dollar,
receipts after July, 1945 had not
been equivalent to those prior to

Barbara

SPECIAL

fairs.

$254,200,000,000

over

been less liberal

administrations.".

In pass¬

pronouncedly.

Dividend distfibutiohs

taken
__

power

would

have

purchasing

enue

1938 total.

a recent study
by the Chamber of Commerce of

not in currency,

A third

still well

were

the Ameri¬

that because of the decline in the

COLUMBUS,

presented as

those of the author only.]

Fullerton

duPont

are

this

at any
of the

those

with

They

what

and

In this connection it may be of

ex¬

ad¬

spectacular gain in taxes of 2,650%,

this is
the free

of life.

way

1789-1945 (June 30)

Revenue

Government

the

interest to refer to

TABLE

necessarily

not

Chronicle.

Christmas

expressed

views

coincide

time

make

will

Offices

Monterey—Oakland—"Sacramento
Fresno—Santa

1952

that

your subsequent
real celebration.

article

Merry Christmas and

wish

INVESTMENT SECURITIES

New

belated

here's

meantime

the

system

proudly designated
can

ing, it may be of interest to point

causes

For

retained

was

owners

to preserve

way

had spent more

of the total income.

Obviously,

all

ounce,

Schwabacher & Co.

the

enterprise

the

have

wages

even

total of all previous United States

The immenseness of this

Disbursements

any

Securities

not

which

1939, income taxes yielded only

profit.

This income tax bite

much

the' so-called

42%

cor¬

1942-50, Federal, state

corporations.

Although the Chamber realizes

just be¬

Pacific Coast

3% times

Deficits

They started different

fore Christmas.

period

figure is evident from the fact that

than

better

dollars.

and local taxes amounted to about

and

Income taxes for 1951-52,are
income.

billion

one

regard to
porate taxes is not different:

pected to produce 83% of the total

know

you

that stocks did little

Cover

authori¬

stated

Government

situation

ministration

figure if taking

would

trying to

has to be

man

accountant to
a

❖

The

developments.

devaluation

taxes,

dangerously

if the
100%'

tax

less than

the

And

all incomes
$25,000, the total would be

above

money.

such

return.

been

that

taxes

also haven't

bomb

corporate
new

fashion.

some

something. isn't
Or I could get cute and say There's the little matter of
if they go down and penetrate taxes to consider. And it's no
still other figures (which I longer such a little matter
other

tatively

they'll go down, These, together with more aid for
if they do, I'll leave to others our friends and allies overseas,to estimate or guess. When I may bring our total deficit up to
think a reaction -is coming, $25 and perhaps $30 billion. Where
will all this money come from?
and other things are equal, I
There
are
only four possible
usually get out arid wait until sources: Personal income taxes,

through cer¬
gotta figure

goes up and goes
tain figures (I

and

there

It has

has

times

well be pears warranted by the increase
could, with in
profits, amounting to slightly
further in¬ less than three times the
prewar

any

that

income

four

may
we

personal income taxes.

seem

it.

were

These

How much

either the storm hits
I

point of

taxed na¬
income taxes

world,

Remember

thing

figures do not in¬
clude probable additional appro¬
priations for more air groups and

suppos¬

about one-half of the

effect

creases

Let us in the light of this un¬
read this back.
questionably sound philosophy ex¬
the Christmas holiday will be
*
*
<:-•
amine the budgetary position of
over but you'll still have New
our
government:
For the fiscal
Seriously though, the mar¬
Year's Eve and New Year's
ket doesn't look like any im¬ year ending June 30, 1953, the
Federal Government is scheduled
Day to look forward to. Here's mediate
Merry Christmas or to spend about $90 billion of which
hoping that whatever happens
Happy New Year. There are nearly three-quarters will be used
up to then won't make your
things in the immediate offing for national defense, Against this,
head throb any worse than
that spell decline rather than revenues are expected to provide
the celebrations on these days
about $70 billion, .so that there
rally. All this, however, isn't may be a deficit of as much as $20
normally call for.
new.
I've said as much last
*

vanced

Britain,

whether

impunity,

dering if they should send any

you

the

income.

total

scene,

am!"

figures,

prewar

edly the most heavily
tion

than

Corporate profits, despite

out that in Great

ever

By the time

Security

annual

national

impressively, amount¬

very

ing to

rather

disinterest

from

the

was

than any basic cause.
The
day before Christmas was just

Markets

Continued

reactionary.
this

are

Thursday, December 27, 1951

...

to the
poor, we

-much
"

more-

should accomplish,

concrete

and

lasting

results

than through the employ¬
ment of guns and bombs of the
various varieties.
Let us hear
what

prominent New York cler¬

has to say on this point:
"Does the heart of the American
people really go with their treas¬
gyman

ure

they

pour

it out to pay the

Volume 174

Number 5076

The Commercial and Financial

Chronicle

(2535)

bill of

war?

believe that

communism, against which
an

Continued

from

page

ing

generation

boys?

18-year-old

The State of Trade and Industry

Each time the misery and

wayt

haircas

cforii atwer 19i8

Output Scheduled tti Decline 3.5 Ppints
Result of Christinas Holiday

Militant ias-

1945.

after

and

Kotn times these social malforma¬

ment is achieved before that

tions tnrived amid

zine

standard

miserably sub¬

out of

living conditions, as de¬
amid high living

succeea

prosperity.- We may

blasting the Kremlin
but poverty, dis¬

hopelessness will stalk

earth

and

shall

ex¬

hausted to heal the global wpuaas-.
'*We

the

win

the

wretched

from

the

communists,

can

earth

hour

per

the

too

creases

sick

the

igno¬

and

rant; clothes, jspindles and looms
for the naked. These are the means

although demands for the

nage

facturers

"'"America, with the help of likeminded nations,
'

Let

hope

Americans

shall
towards the creation
If'

the way

pave
a

that
here

will heed these wise

exhortations.
of

do this."

and pray
their allies

and

abroad

and

can

do,

better world and the realiza¬

hominibus bonae vol¬
untatis—On earth, peace to men

of
'

■

Exchange

Weekly Firm Changes
Stock Exchange

New York

The

•

for

considerable

with

has announced the following firm

Light,

completion.
■

Direct

new

Interest

Adams

late

the

uJr., in Dominick
Dominiqk will cease Dec. 31.
'

defense

and

■

was, however, a limited expansion in hard Winter wheat
varieties, and a fair number of bookings were reported in Spring
wheat flours as the week closed.
Cocoa was irregular with a
sharp rise at the finish canceling out earlier declines.

•

Production

Administration

based

allotments

the

for

There

suppliers

American Iron

The
the

operating

steel-making

capacity

capacity for the week
tons

ingots

points below last week
week's

Last

steel

for

Institute announced

Steel

and

rate

the

companies

entire

beginning

steel

and
as

having

period

industry

Dec. 24,

of the
101.4%

decline

Lambs declined sharply at the close

rate

operating

equivalent

was

104.9%,

Dec.

Carl

partnership

fi^om

: J. Claire

Sowers will retire from

Mead, Miller & Co., Dec. 31.
Gilbert Stanley will retire from
*

partnership in Merrill Lynch,
Pierce, Fenner & Beane, Dec. 31.
Lambert

partnership in Moore,
Lynch on Dec. 31.

-Frank Fletcher Garlock will re¬

tire

from

Dec. 31.

Moseley

Co.,

partnership

in G. H. Wal¬

the

change
T.

Exchange will
of the Ex¬

the

"Jan.

consider

and second-hands.

Talmage

electric

energy

distributed

the

electric

industry for the week ended Dec. 22, 1951, was
7,823,731,000 kwh., according to the Edison Electric

The current total

was

preceding week and set
It

try.

790,991,000 kwh,,

was

Trade

156,867,000 kwh. more than that of the
all-time high record for the indus¬
or

11.2% above the total output for

ping continued at

753,194 cars, according to the Association of American
Railroads, representing a decrease of 20,326 cars, or 2.6% below
the preceding week.
a

decrease

reduced by a

were

Francis

Edward

came

Declines

Total

Result of

production in the United States the past week,

Automotive, -Reports," declined to 103,838
units, compared with the previous week's total of 111,410 (revised)
units, and 152,812 units in the like week of 1950.
"Ward's

Passenger

brokers, who are this month oper¬

loweii

than

the

previous week,

and

another segment in

24,311

and

25,927 trucks last week and 119,266

monthly

leading

operational displays of
corporations quoted on
Exchange.

John L. Weeks

John

Dec.

Weeks

at the

age

passed

•

With Campbell & Robbins
'{Spec:0' f Tte Financial

: •

PORT", *

Robbin

ot Car

Chuonicle)

Oreg.-r-James G.
s joined the staff
Robbins, Incorpo¬

tional Bank BIdg.
rated,"*

The
a

total

year

and

coats

receipts of apparel

earlier.

retailers was
Children's toggery sold in

States, against 85,483
cars and

and

total

for

cars

respectively."

seasonal

merchandise

Dip Sharply Below Corresponding

with

prewar

1939,

Dec. 18, from $6.69 the week

inquiries for

on a

Board's

country-wide basis,

taken from

index for the week ended Dec.

15,

advance of 3%.

sales in New York City for the weekly period ended Dec.
15, 1951,
declined 6% below the like period of last year.
In the preceding

1951 Low

the Dun & Bradstreet wholesale food price index declined rather

were

; v& MM
j.
According to Federal Reserve Board's index, department store

down 53% from the total of 249 recorded in the similar week

Reversing the mild upward movement of the previous week,

within striking distance of the high level for the like 1950 preChristmas week. "

failures

of that year.

Wholesale Food Price Index Declines to New

numerous

Retail trade in New York last week displayed a pronounced
pick-up spurred by the impetus of Christmas buying. Sales vol¬
ume, according to estimates by trade sources was expected to come

the week

143 in the preceding

In" comparison

Federal Reserve

were

post-holiday sales.

1951, declined 4% from the like period of last year.
In the pre¬
ceding week a decrease of 1% was registered under the like 1950
week, but an increase of 1% for the four weeks ended Dec. 15,
1951.
For the year to Dec. 15, department store sales registered

1950 and 1949 Levels

sharply last week to stand at $6.63

dollar

Department store sales
the

1,607 trucks,

week; Dun & Bradstreet,
Inc., reports. This decrease brought casualties considerably below
the corresponding 1950 and 1949 levels when 174 and 196 oc¬
curred

+2, East and Midwest —1 to +3, South
+2 to +6, Northwest 0 to +4, and Pacific Coast

items suitable for special

33,546 trucks in

Commercial and industrial failures dipped to 117 in
ended Dec. 20 from

Southwest

volume of wholesale trade declined
slightly in the
week, but remained slightly above the year-ago level.
Reorders

cars and

Business Failures

retail

was

with

1,585 trucks in the preceding week and 5,868'
2,353 trucks in the similar period of 1950.

against 2,632

were

the United

Canadian output last week rose to 2,727 cars and

■

Mr. Weeks was senior
partner of Luke, .Banks & Weeks,
New York City, and a" member of
the Ne^r vork Stock Exchange. V

long illness.

trucks built in

away

of 67 after a

limited.

Activity in the major wholesale centers slackened noticeably
buyer attendance about half as large as a week ago.
The

weather

bad

the comparable 1950 week.

cars

-•

due to

Total output for the current week was made up of 79,527 cars

the New York Stock

ago

+ 1 to +5.

conditions, and rrjiore than 33% below the like week of last year.

ating a Lionel train in the firm's
display window at 1370 Broadway.
company's program to present

summary

New England—2 to

and

production in the United States last week was

car

man'&^Goojdwin,:i n yes tip e h t

The exhibit is

year

trade in the period ended on
Wednesday of last
estimated to be from unchanged to 4% higher than a
year ago.
Regional estimates varied from the levels of a year
earlier by the following percentages:

week

about

the

slightly higher than

•

all-time high

Christmas shop¬

increasingly popular, the interest in men's suits

remained

Bad Weather
Motor vehicle

Bulls, Bears, or both—it makes
no
difference to Walston, Hoff-

new

accelerated

increased volume.

Automotive Output in U. S.

according

Walston Hoffman Display

Wednesday of last week

Shoppers bought much more apparel than in the preceding
The sharpest rises were in the demand for
lingerie, hosiery,
loungewear, sportswear and accessories. While haberdashery be¬

three-day working week in the coal fields.

Point in Pre-

week.

19,937 cars, or
rise of 113,466
17.7% above the comparable period of 1949, when loadingsrepresented

in its weekly

higher than

Loadings of revende freight for the week ended Dec. 15, 1951,

total

All-Time High

pace, states Dun & Bradstreet,
of trade.
Total trade was slightly
although retailers in some cities affected
by severe weather had yearly declines. Shoppers, generally quite
bargain-conscious, favored gift items of a practical nature.

Inc.,

totaled

2.6% below the corresponding week of 1950, but

The dollar volume of retail trade reached
in the period ended on

Carloadings Continue Decline of Preceding Week

week's

Soars

Christmas Week

23, 1950, and 1,829,788,000 kwh. in excess of
the output reported for the corresponding period two years ago.

The

Volume

new

the week ended Dec.

Sweeney.

transfer

membership

crop.
Activity in spot markets
following release of the report.
10 markets fell to 289,200
bales, from 414,200 the week
compared with 167,400 in the corresponding week a

Institute.

cars, or

ker &.Co. Dec. 31.

year's

slackened

amount

•

H. Prenatt Green will withdraw

from

this

power

from limited
Leonard &

Sales in the

before, and

Previous Week

demand

light and

will withdraw

Turner

estimated

The

Loeb,

Rhoades & Co., Jan. l.f

estimate

year ago.
Foreign inquiries and sales held in moderate volume.
Trading in cotton gray cloths remained dull. Movement of print
cloths was slow with a slight
easing of prices noted in both first-

Raymond ' Ritti

Emmett Lawshe will retire

declined

Output Breaks Through Historical High Level
of

largest receipts in al¬

following

2,097,000 tons of steel ingots and castings Tor the entire industry,
compared to 104.0%, or 2,079,000 tons a month ago. A year ago
production stood at 100.1%, or 1,930,600 tons.

Electric

Domestic cotton prices lost considerable
ground the past week
a mild dip the week before.
The decline was largely
attributed to year-end tax
sales, continued dullness in cotton tex¬
tiles, and weakness in outside markets.
Some early selling re¬
sulted from the smaller than expected drop shown in the official

3.5

most two years.

result of the Christmas Holiday

Raw sugar

Brazilian
Brazilian
prices held fairly steady

Department of Agriculture to be announced late this week. Mar¬
ket receipts of cattle and
hogs were heavy last week with prices
slightly lower.

1951, equivalent to

castings,

lor

will

the week ended.

by heavy buying by
lower supply estimate by the

slightly lower level as traders showed little inclination to
buy pending announcement of the 1952 consumption estimate of

this week

93%

aided

was

Government late last week.

that

sentiment

interests, following the

the military

sharp advance in coffee futures

was a

Bullish

The heavy take reflects the

greatly increased defense order loan
program gets into full swing.
;

corn

government's

under the Controlled Materials Plan.

will withdraw
from partnership in Colgate Hoyt
& Co., Dec. 31.

more liberal receipts and weakness in
The final estimate of the Department of
Agri¬

Cautiousness continued to rule in the domestic flour market.

facilities
will be in

steel

changes:
Batcheller,

downward, due to

There

steelmaking

flat-rolled

fairly heavy marked arrivals coupled

147,000 below the estimate of

the

production and construction, be¬
ginning the first" quarter, will take more than 40% of the carbon
steel supply, and about 60% of the supplies of aluminum and
copper and brass mill products. These are estimates of the Defense

2,027,000

New York Stock

wheat included

crop at 2,941,423,000 bushels, a drop
a month ago, 435,000,000 short of
goal, and well below the 10-year average of
2,980,777,000 bushels. The latest forecast compares with a revised
estimate of 3,057,803,000 bushels last
year.

paper.

noticeably increased supply by mid-year, this trade weekly points

good-will.

culture placed the 1951

plates and alloy bars will be in short supply throughout the year.
However, many products will be in progressively better tonnage

tion of the Evangelist's dream of—
In terra pax

turned

shortages in many major products promise to extend
In fact, all the signs indicate such items as pipe,

advances

reactionary last week with

displayed strength early in the period, influenced by unfavorable
harvesting weather and reports of further deterioration, but later

durable goods manu¬

well into 1952.

out.

decline

1952

unsettled and

with slow domestic demand in both wheat
and flour, and concern
over
the possibility of an armistice agreement in Korea.
Corn

ally all products for the first quarter, declares this trade

the like date last year.

Wheat prices slumped as export
fell sharply below recent weeks.
Other factors in the

other commodities.

Severe

index, compiled by Dun & Bradstreet,
18, comparing with 310.71 a week

Dec.

were

noticeably off.
The slack is more than offet by
expanding defense requirements. The mills are sold out on virtu¬

bombs.

Grain markets

business

for ton¬

pressure

308.95

with 315.36

prices generally moving lower.

are

making friends and influencing
people, not guns and planes and
r

consumer

earlier and

by the government to price in¬
boost appeared to write off the

wage

Meanwhile, the steel mills continue under

scheduled

Inc., stood

are

by terrifying them with our
military might (the Russians can
do that, too) but by programs of
gpod will on an unprecedented
scale: food, plows and land for the
hungry, and* housing and tools for
the homeless; medicine and in¬
for

Opposition

offset

Commodity Price Index Adversely Affected
by Lower Grain and Cotton Values

wholesale commodity price

satisfactory to union and management for settling

increase.

The general price level showed a further
mild decline last
week, due largely to lower grain and cotton values.
The daily

date, says "Steel," the weekly maga¬
week.
Chances vfor working

current

possibility cf settling the issue through straight collective bargain¬
ing.
So solution of the problem appears to rest almost entirely
with the government.
A truce to delay the strike is, of course,
possible, the magazine adds.

not

struction

formula

the

foods

Wholesale

slight. The union and steel
management at last week-end appeared miles apart in their think¬
ing with union demands estimated to average around 35 to 40 cents

in the next war,

ease,

metalworking

the issue before the strike deadline

mocracy thrives

standards and

The index represents the sum total of the
price per pound of
in general use, and its chief function is to show
the
general trend of food prices at the wholesale level.
31

as a

Approach of year-end finds the steel markets highly disturbed
by threat of an industry-wide strike Jan. 1 unless a wage settle¬

militant com-

ana

before

lifUAjism-

Steel

have begotten new

oi war

greater terrors:

aiid

Twice

have tried this

This represents a new low for over a
year, or since Nov.
14, 1950, when it was $6.58, The current level compares with $-3.80
this time a year ago, or a drop of 2.5%.
The 1951 high was
$7.31 on Feb. 20,
at

ing up of arguments or the draft¬

before.

we are

united, can be stoppea by pil¬

;

week, a decrease of 8% was recorded from the similar week of
1950, and for the four weeks ended Dec. 15, 1951, a decrease of
3% was registered below the level of a year ago.
For the year
to date volume advanced 4% above the like period of last year.

The Commercial and Financial Chronicle

(2536)

The following statistical tabulations cover

Indications of

latest week
week

^Business Activity
Dec. 30

Week

Ago

that date,

Dec. 30

2,027,000

—

Mixed

(bbls.)

Kerosene

at—..

Residual fuel oil

(bbls.) at—

116,553,000

(bbls.)

at—

6,610,000

6,616,000

5,925,000

22,276,000

22,381,000

22,114,000

20,254,000

2,705,000

2,802,000

2,267,000

Month

10,113.000

9,688.000

8,864.000

Adjusted

8,993,000

9,403,000

8,567,000

Without

114,612,000

113,590,000

110,381,000

28,434,000
91,649,000

29,293,000

32,729,000

110,943,000
23,152,000

94,270,000

100,200,000

76,913,000

44,157,000

46,218,000

48,434,000

41,598,000

2,523,000
10,270,000
8,703,000

Dec. 15
Dec. 15

—

SERVE

COAL

ENGINEERING CONSTRUCTION

OiyiL

—

and

State

$192,563,000

$163,148,000

66,734,000

87,982,000

93,962.000

72,271,000

104,581,000

680,428

69,186,000

48,027,000
24,244,000

Dec. 20

Dec- 20

Federal

$139,005,000

Dec. 20
Dec. 20

municipal—

56,201,000

12,985,000

57,382,000
47,199,000

$692,041,000
112,439,000

Dec. 15

11,350,000

•11,245,000

Noith

935,000

160,900

927,000
•165,200

993,000

Dec. 15

Europe

TEM—1935-39 AVERAGE

RESERVE

Dec. 15

tons)

ELECTRIC

Electric

CROP
'

IF1ILURES

INDUSTRIAL)—DUN

AND

(COMMERCIAL

8TREET,

BANK

NEW

CROP

—

Buckwheat

PRICES:

COMPOSITE

AGE

4.131c

$52.72

$52.69

.Dec. 18

$42.00

$45.13

PRICES

(E.

Electrolytic copper—
Domestic refinery at
Export refinery at__.
Lead

Lead

(New York)

24.200c

Dec. 19

27.425c

(bushels)
(bushels)

(bushels)

103.000c

155.000c

19.000c

Red

Alsikc

17.000c

Dec. 19

13.800c

18.800c

19.500c

Sweetclover

"16.800c

Dec. 19

DAILY

PRICES

Government

17.500c

Lespedeza

Bonds

97.05

96.39

Dec. 24

101.40

96.91

Dec. 24

108.52

109.06

112.75

112.93

113.70

119.82

Dec. 24

112.00

112.19

112.56

118.60

107.98

114.85

Aa
A

Dec. 24

107.30
101.97

102.13

102.80

241,495

1,372,246
.

1,410,464
303,533

254,409 .'/
25,138 /

21,264

3,634

4,439

32,284

40.23S

44,564

38,689-

242,070

153,205

165,805

233,278

15,771

10,012
4,105

108,351

113,859

102,340

12,563

13,496

12,015

6,410

6,592

5,622
15,290

4,926

0.186

2,055

(bushels)

2,155

1,790

(bushels)

seed

2,787

310

315

903

(bushels)

(pounds)
(bushels)

1,527

148,390

103.97

105.00

112.00

108.70

109.06

115.82

Dec. 24

113.12

113.31

113.50

119.00

Potatoes

Sugar

beets

2.70

2.71

2.39

Maple

sugar

3.25

3.22

2.87

Maple sirup

3.02

3.01

2.97

2.66

Broomcorn

3.06

3.05

3.03

2.72

3.29

3.30

3.28

2.91

Apples,

3.63

3.62

3.58

3.19

Dec. 24

3.51

3.45

3.06

Pears

Dec. 24

3.24

3.22

2.86

Grapes

Dec. 24

3.00

2.99

2.98

2.70

Dec. 24

335.651

429,896

28,273
2,282,386

34,796

49,825

2,271,670

2,030,645

2,831

"5,441

3,691

5,601

6;S38

6,944

5,140

7,056

9,230

10,584

Hops (pounds)

Dec, 24

Dec. 24

299,279

2,021,730

325,708

(pounds)sirup (gallons)

2.74

AVERAGES:

277,590

1,637,935

10,741

13,535

2,734

242

Sugarcane for sugar and seed (tons)
Sugarcane sirup (gallons;

Dec. 24

.DAILY

corporate

3,206

1,595,025

(bushels)

Dec. 24

BOND 1'IELD

Government Bonds

16,886

3,717

2,061

(pounds)

Tobacco
Sorgo

1,508
16,607

3,763
230,512

(bushels)

Sweetpotatoes

175,870

976

17,446

Velvetbeans (tons.)

—Dec. 24

278,707
37,212

306,491 t

191,579

Cowpeas for peas (bushels)
Peauuts picked and threshed

109.60

103.97

Dec. 24

-Dec. 24

Dec. 24

Baa

107.62

Railroad Group
Public Utilities Group
Industrials Group

43,805

Soybeans for beans (bushels)

115.63

Dec. 24

Average corporate

Average

740,683

36,369,

33,802

Timothy seed
dry edible (bags)—.
Peas, dry field (bags)

AVERAGES:

Aaa

MOODY'S

1,019,389

342,860 ■>,.

3,340

Beans,
BOND

;

.»

■

Louis)
Zinc (East St. Louis)

IKOODY'S

21,395

seed

clover

650,738

254,668

(bushels)

clover

993,598

300,185
1,316.396

(bushels)

3,057,803"

3,088,092

342,005.
35,820

Hay, all (tons)
Hay, wild (tons)
Alfalfa seed (bushels)

24.425c

Dec. 19

—_

at_.
at

(St.

24.200c

Dec. 19

Btraits tin (New York)

24.200c

\ i

y\Hv

987,474
645,469

Cottonseed (tons)

.Dec. 19

•»

2,941,423

Sorghum forage (tons)
Sorghum silage (tons)
Cotton, lint (bales)

QUOTATIONS):

•

$325,000

•

thousands):

(bags)
Popcorn (pounds)
Sorghum grain (bushels)

4.131c

$52.72

]?ec- ^

•

(per gross ton)
Bcrap steel (per gross ton)
iron

1KEETAL

Dec. 18

Finished steel (per lb.)

■'

AGRI¬

(bushels)

*$410,006

REPORTING

(in

report

606,000

:k*\
■,

$435,000

(bushels)-.

spring

3,355,000

620,100/ ; y

YORK—

omitted)

Rice

Pig

45,512,000

4,548.000 "

572,400

Barley (bushels)
Rye (bushels)
174

•:%'

51,530,000

3,990,000

(bushels)

all

Flaxseed

OON

49,035,000
„

DEPARTMENT

Other spring
Oats (bushels)

7,032,740

149

143

117

Dec. 20

311,223

OUTSTANDING—FED¬

(000's

all

479,553

PRODUCTION

Wheat,

BRAD-

INC.

605;123

"i 479,549
293,573
'•
y
sot?:;;

/■

tons)__

(net

RESERVE

Winter

7,157,038

7,666,864

7,823,731

Dec. 22

351,623

tons)—

PAPER

Durum
—-—

•

(BUREAU OF MINES)—Month

Nov.

BOARD.

INSTITUTE:

(in 000 kwh.)

output

—

354,283
•

(net tons)

coke

As of

All

IL3IS0N

705,921 /J
(net tons)

(net tons)—

638

374

"•50

611

—

■"

SYS¬

100

355

anthracite*

November:/.;:

Corn,

INDEX—FEDERAL

MINES)

Central America

(net

COMMERCIAL

164,900

140,200.

Pennsylvania

CULTURE—Final

SALES

290

*322

variations

—^4—^-

and

Asia

Eeehive

12,194,000
847,000

11,560,000

Dec. 15

STORE

*303

380

RE¬

and lignite (net tons)
Pennsylvania anthracite (net ton3)

509,298,000

Pennsylvania anthracite (tons)—

©APARTMENT

92,800

Average=J<M»)

Bituminous coal

579,602,000
70,304,000

Beehive coke

(tons)

145,000

108.270

132,512

(FEDERAL

(BUREAU

To.-South America

ERAL

1DAL OUTPUT (U. S. BUREAU OF MINES):
Bituminous coal and lignite (tons)

2,866,200

90.700

of September:

exports
(net1 .tons

To Africa

3.104,200

2,930,413

—

adjustment

EXPORTS

Dec. 20

—

3.179,333

100,912

311

therms)

SALES

for seasonal
seasonal

construction

Public

694,345

668,914

STORE

COAL OUTPUT
nrt

sales

SYSTEM—(1935-39

773,131

ENGINEERING NEWS-

—

construction

Private

814,435
687,557

773,520

753,194

Dec. 15
Dec. 15

RECORD:

■Total U. S. construction

3,601,959
3,368,535

(M therms)—:

gas

'ASSOCIATION OF AMERICAN RAILROADS:
Revenue

Ago

of November:

Month

'
"
(number of cars)——
freight received from connections (number of cars)

Year

Month

For

sales (M therms)

DEPARTMENT

Revenue freight loaded

5,723,320

15
15

—5ec*

——.

Distillate fuel oil

6,237,150

6,225,200

Dec. 15
Dec. 15

(bbls.)

Residual fuel oil output (bbls.)

sales

gas

6,221,350

(Stocks at refineries, at bulk terminals, in transit and in pipe linesFinished and unfinished gasoline (bbls.) at
Dec. 15

—

<M therms)

Manufactured

average (bbls. of 42
—-————-——-—-———Dec.
Crude runs to stills—daily ^average (bbls.)—.
Dec.
Gasoline output (bbls,)
—
———-——•—Dec.
Kerosene output (bbls.)
Dec,

date:*

of that

October:

Natural

Distillate fuel oil output

ASSOCIATION

GAS

Total gas

1,930,600

AMERICAN PETROLEUM INSTITUTE:
Crude oil and condensate output — daily

gallons each)

are as

Month

AMERICAN

100.1

2,079,000

2,097,000

of quotations,

cases

the#

either for the

are

Latest

Equivalent to—
Steel ingots and castings (net tons)

or,

Ago

104.0

104D

101.4

Year

Month

Week

capacity)

steel operations (percent of

Indicated

production and other figures for

Dates shown in first column

month available.

month ended

Latest

INSTITUTE:

4LXE&ICAX IRON AND STEEL

Thursday, December 27, 1951

...

(tons)

(pounds)

258

200

(gallons)

257

1,809

(tons)

2,062

Aa
A

—

Baa

Railroad

Group

Public Utilities

Group

Industrials Group

ttSOODY'S

COMMODITY

NATIONAL

INDEX

PAPERBOARD

Dec. 15

169.359

265,609

186.612

Dec. 15

200,151

201,888

208,429

Dec. 15

387,000

428,921

426,284

681,676

AVERAGE

—

DRUG

PRICE

REPORTER

100

69,932

53,485

32,687

32.228

31,140

3,281

3,199

2,707

236

232

242

181

177

215

102

(2 states)

dried

SPECIALISTS

AND

Cranberries
Pecans

THE

Index

28,029'

31.030

Dec.

—Dec.

.'896,086

$40,201,080

Dec.

784,854 1

$35,599,366

34.021

25,435

,
'

715,703

...

1.018.326

$31,940,676

$41,167,123

•

Dec.

total sales

25,382

21,750

20,094

sales

—Dec.

268

232

267

other

sales

Dec.

25,114

21.518

19.827

Number of shares—Total sales

713,267

Dec,

sales

Customers' other sales

Number

569,897

945,517

7,932

9,255

11,716

560,642

933.801

$24,174,760

$36,398,654

$28,900,779

Capacity used

COMMERCE):

to Dec. 13—

13,554,489

■UliUIMJlH

9,178,376

122.2

120.6

125.2

22,269,000

22,461,000

23,256,000

24,167,000

*10,287,000

5,945,000

S. DEPT.

22,737,000
26,140,000
6,914.000
;:v ar: 99%

(bbls.)

291,120

165/730

148~840

29l"l20

Income

384,250

380,680

300,600

396,690

Income

OF LABOR—

available

193.2

products

*177.1

193.1

377 2

193.7

137.6

198.9

Meats

235.3

231.3

188.4

189.8

266.5

269.8

253.1

for

fixed

from

$80,881,473
17,340,841

$122,955,546

fixed

income

4,606,686
93,615,628
58,606,561
3,109;639
55,496,922

charges

income

(way & structures & equip.)
of

income

defense

—

projects

22,849,587

98,222,314

86,427,826
53,364,711
3,109,724
50,254,987
40,900,933
4,386,012
52,551,476

38,064,525

145,805,133
»

4,044,322
141,760,811
103,002,284

3,583,906
99,418,378
36.867,333

4,236,294

1,368,408

55,911,400

81,420,421

11,386,349
1,580.832

24,558,491

14,788,783

5,703,086

1,341,893

2.61

taxes-

2.67

appropriations:

common

stock

On preferred stock

179.0

265.4

Foods

236.5

189.3

Livestock

19.. 9

231.2

Grains

jnr o

102%.

4,653,008

deductions

Net

Depreciation
Federal

171.1

100%

$75,724,640
15,356,194
91,080,834

income

deductions

after

Dividend
.Dec.

income

143,840

Other
.Dec.

commodities

Farm

125,622

—Month of September:

165,730

1926=100:
All

984

147,905

—

Net railway operating
Other income

Miscellaneous

by dealers-

914

SELECTED INCOME ITEMS OF U. S. CLASS I
Rl'S.
(Interstate Commerce
Commission)

199/240

Dec.

TRICES, NEW SERIES

(tons)

Employment at middle
(1935-39 average=100)

Amortization

WHOLESALE

13,400

932

Railway

199,240

Dec.

purchases
of

46,580

12,900
I

(at end of month—barrels)

Total

of^ shares—Total sales

Number

617,187

609,255
$25,109,638

by dealers-

Other sales

Round-lot

31,423

8,301

Dec.

;

704,966

Dec.

sales

121,610

319

short

Round-lot

40,690

(excl. of linters)

Shipment from mills

31,742

Customers'

■■

(BUREAU OF MINES)—•
Month of October:
y,

Stocks

Customers'

short

■

122,325

(barrels)

(DEPT.

Production (bbls.)

Pdd-lot purchases by dealers (customers' sales)—

Customers'

■,

PORTLAND CEMENT

;

Number of orders—Customers'

COMMERCE COMMISSION—

November

purchases)—
-

Dollar value

143,137

GINNING

150

(pounds)

Running bales

STOCK

(tons)

(boxes)

states)

182

186

COMMISSION:

Number of orders
Number of shares

(tons)

(boxes)

Tung nuts (5 states)

146.5

149.3

147.2

147.1

Dec. 21

EXCHANGE

Odd-lot sales by dealers (customers'

states)

Lemons, California

UTOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDDEALERS

(tons).

(4 states)

INTERSTATE
LOT

(tons)

COTTON

INDEX —1926-36

EXCHANGE—SECURITIES

(bushels)

crop

(bushels)

Grapefruit

105

(tons)

AND

58,351
123,126

Prunes,

204,724
239,164

Dec. 15

PAINT

61,755
113,268

Cherries .(12 states) (tonsj_.
Apricots (3 states) (tons)

ASSOCIATION:

Percentage of activity
Unfilled orders (tons) at end of period

OIL,

63,239
112,935
70,265

commercial

Prunes, other than dried (3 states)
Oranges (5 slates) (boxes)

Production (tons)

Orders received

Peaches

507.3

456.1

457.3

4G1.0

Dec. 24

Plums

Aaa

165.6

165.1

167.2

160.1

159.6

158.6

172.2

138.8

138.7

190.9

185.1

Building materials

224.7

*224.7

224.8

221.9

347.9

♦347.9

347.5

138.2

*138.0

140.0

140.1

WINTER
ING

RYE

CONDITION—CROP

BOARD

DEPT.

•

3.66

REPORT¬
AGRICUL¬

136.1

Metals and metal products-

Ratio of income to fixed charges

All commodities
Textile

other

than

farm and

foods

products

Fuel and

lighting materials.

Lumber
Chemicals

•Revised,

and

allied

products.

fNot available,

Ilncludes 415,000 barrels of foreign, crude

TURE—As of Dec. 1

WINTER

WHEAT

PORTING

(bushels)—

BOARD

CULTURE—As of Dec.

♦Revised figure.

S.
1

DEPT.

RE-

war

years.

91%:
-

AGRI-

(bushels)

§Includes non-recurring

adjustment of income taxes for
V.'■ "i

£9 %

PRODUCTION —CROP

•')'

913,303,000\

•

645,469,000

tax credit of $12,766,437 resulting from
-

ffolume 174

Number 5076

...

The Commercial and Financial Chronicle

Securities
Allied
Dec. 10

Now in

Registration

Corp., Springfield, Mass.

Common

Philadelphia
Southern

held

Preferred

Pacific

Bonds

Electric

Equip. Trust Ctfs.

Van Norman Co

Debentures

—

Public

Service

Co.

of North

January 15,
Florida

Power

Mitchell

Seaboard

1952

Co.-1

Finance

preferred and one share of com¬
mon
stock. Price—$250 per unit.
Underwriter^—None
Proceeds
For acquisition of property, construction oi:
race track, etc.; Office—c/o Morris Orenstein, 31 Mamar-"
oneck Ave., White Plains, N. Y.
4
'

Indiana

Preferred
—Common

1952

Michigan Electric Co.
(EST)-.-——

a.m.

-Bonds & Notes
Common

January 29,
United Gas

tal.

Bonds

Common

Co-

Birmingham Fire Insurance Co.
1 (letter of notification) 12,500 shares of common
stock, to be offered to stockholders of record Nov. 15 at
share for each

seven

shares held. Price—At

($10 per share). Underwriter—None. Proceeds—To
enlarge insurance business. Office—221 No. 21st St., Bir¬
mingham 3, Ala.

par

Telephone Co.

July 18 (letter of notification) $175,000 of first mort¬
gage 4% bonds, series A, due 1971. Price—101 and
crued interest.
Underwriter — Wachob-Bender

ac¬

Corp.,
Omaha, Neb. Proceeds—To retire first mortgage (closed)
3%% bonds and to convert to dial operation.
Burlington Mills Corp.
March 5 filed 300,000 shares of convertible
preferred
stock (par $100)
Price—To be supplied by amendment.
,

Underwriter—Kidder, Peabody & Co., New York.
ceeds—For

additions

equipment.

Offering date postponed.

and

improvements

plant

Pro¬
and

•

Light Co.—Preferred & Com.

;

..Common

——

Controls, Inc
Co., Inc.Pioneer Air Lines, Inc

Common

Preferred & Com.

Common

Pampa

Panhandle,

and

Texas;

Exolon Co.,

Nov.

rate

Price—$16

share for

one

share.

per

For working

capital.

each

heldL

Underwriter—None. Proceeds—
Office—6'0 State St., Boston, Mast.

Brewing Corp., St. Louis, Mo.
Dec. 10 (letter of notification) 20,000 shares of common
stock (par $1). Price—At market (approximately $12.56
per share).
Underwriter — J. H. Williston & Co., Nero
Proceeds—To Estate of Frederick R.

Bauer.;

First Western Co., Seattle, Wash.
'
Dec. 10 (letter of notification) 6,000 shares of class

;

Price—At par

stock.

BnT

share). Under¬
writer—None, but A. F. Crawford and R. B. Magner will
handle sales.
Proceeds—For construction and working,
capital. Office—8050—35th Street, Seattle, Wash.
($50

per

(1/15-16)
convertible preferred stock
(par $100). Price—To be supplied by amendment. Uhk
derwriters—Kidder, Peabody & Co. and Merrill Lynch*
Pierce, Fenner & Beane, both of New York. Proceed®—
Corp.

Dec. 12 filed 51,550 shares of

For construction

program.

•

Oxygen Co

Corp

Packing Corp., San Diego, Calif.
notification) $300,000 of 6% convertible

sinking fund debentures due Oct. 1, 1966.
Wahler, White & Co., Kansas City, Mo.

Underwriter—

Proceeds—For

corporate purposes.
Price—At 100% and ac¬
Office—2305 East Belt St., San Diego 2,

crued interest.

—

it Form Moulding, Inc., Marion, Ind.
Dec. 17 (letter of notification) 31,740 shares of class ®
stock (par 10 cents), of which 20,000 shares will be is¬
sued

holders

Preferred

of class

value

for

will

each

class
each

stock

ratio

of class A held, with a

$1.25.

The

balance

of 11,740

be offered

stock.

Foods, Inc., Spokane, Wash.

(letter of notification) 20,000 shares of common
Price—$1 per share. Underwriter—None. Pro¬

ceeds—For

working

capital.

Office—1327 No. Division

Street, Spokane 2, Wash.
Columbus National

Life Insurance Co.,

Columbus, Ga.
Dec. 13 (letter of notification)
5,000 shares of capital
stock (par $10), to be offered first for subscription by
stockholders. Price—$30 per share. Underwriter—None.
Proceeds
For increased capital.
Office—400 Murray
—

Bldg., Columbus, Ga.
it Cooperative Grange League Federation
Exchange, Inc., Ithaca, N. Y.
Dec. 21 filed 100,000 shares of 4% cumulative preferred
stock (par $100) and 1,000,000 shares of common stock
(par $5), the preferred to be offered to farmer and nonfarmer GLF patrons, and the common stock to farmer
patrons only. Underwriter—None. Proceeds—To repay
bank loans and working capital.
Dallas

Smith

Indianapolis, Ind.
Dec. 7 (letter of notification) 4,997 shares of common
stock (par $8). Price—$18.50 per share. Underwriter—
Raffensperger, Hughes & Co., Inc.
Indianapolis, Ind.
Proceeds—For working capital. Office—-118 So. Penn¬
sylvania St., Indianapolis, Ind.
Corp.,

Deardorf Oil Corp., Oklahoma City, Okla.
Sept. 24 (letter of notification) 175,000 shares of common
(par 10 cents). Price—40 cents per share. Under¬
writer—None.
Proceeds—For operating expenses.
Of¬
fice—219 Fidelity

class

stock.

Cooperative (Fl*«>)
Nov. 13 (amendment) filed 452 shares of class A common
stock (par $100); 5,706 shares of 5% preferred stock (par
$100), cumulative beginning three years from July 10,
1950); 7,597 shares of 4% revolving fund class C stock
(par $100); 2,000 shares of 4% revolving fund class C
stock (par $50); and 4,000 shares of 4% revolving fund
class C stock (par $25).
Of the 5,706 shares of 5%
class B stock, 706 shares are for the account of Fosgata
Growers
Cooperative.
Price—At par.
Underwriter®'
—None. Proceeds—To construct and equip frozen con¬
centrate plant at Forest City, Fla.
Fosgate

Giant
Nov.

Citrus Concentrate

Portland

Cement Co.

(letter of notification) 16,650 shares of common*
stock (par $1). Price—At market (about $6 per share>„
Underwriter—Craigmyle, Pinney & Co., New York. Pro¬
7

Louise

ceeds—To

Craigmyle, the selling stockholder*

Carolina

Power

Light Co.
shares of $5 cumulative preferred
stock (no par) to be offered in
exchange for $1.35 cu¬
mulative preferred stock (par $25) of Tide Water Power
Co. on basis of one $5 preferred share for each 4 shares of
14

filed

Price— X
Underwriter—George F. Breen^

April 9 filed 750,000 shares of common stock.
At par

($1

New York.

per

share).

Proceeds—For drilling expenses, repayment

of advances and

Grand

working capital.

Offering—Date not set

Union

Co., New York
Aug. 7 filed 64,000 shares of common stock (par $16)
to be issued pursuant to an "employees' restricted stoclt
option plan." Price —To be supplied by amendment,
Underwriter—None.
Proceeds—For general
corporate!
purposes.

Office—50 Church St., New^York.

Continued

Building, Oklahoma City, Okla.

page

Disco

Industries, Inc.
Dec. 4 (letter of notification) 299,500 shares of common
stock (par 10 cents).
Price—$1 per share. Underwriter
I. J. Schenin Co., New York.
Proceeds — For new
equipment and working capital. Offering—Not expected

Water

merger

until after Jan. 1.

33,000

preferred,

connection

of the two companies.

with

proposed
Underwriter—None.

Distributors

Corp. of America

Nov. 16 filed 281,243 shares of
be offered for subscription
rate of

and
common

stock (par $1)

by common stockholders at
share for each two shares held. Price—To be
by amendment. Underwriter—None. Proceeds

one

supplied
—For capital expenditures and
working capital.

class A common stock (par

$10) and 50,000 shares of class B common stock (no par),
of which the class A stock and 25,000 shares of class B
stock

Catalin

Candy Co. (name to be changed to
Co.), Chicago, III.

Schutter Candy

Nov. 19 filed 200,000 shares of

are

to be offered in

units of eight shares of class A

of class B;

the remaining 25,000 class B
an
option to acquire the
Schutter Candy Division of Universal Match Corp. Price
—$82 per unit. Underwriter—None.
Proceeds—To be
applied toward purchase of Schutter properties. With¬
drawal—Request filed Dec. 19 to withdraw statement.
one

are

issued

for

Golconda Mines Ltd., Montreal, Canada

—

Calif.

one-fifths

publicly. Price—To public, $1.15
per share.
Underwriter—American Shares Corp., New
York.
Proceeds—To clear up dividend arrearages oil

stock

California Tuna

D-

stock (no par). Price—$20 per share. Under*
Tifft Brothers, Springfield, Mass., and F. S.
Moseley & Co., Boston, Mass. Proceeds—To A. B. Wal¬
lace, the selling stockholder. Office — 1414 Main St»
Springfield 2, Mass.

writers

Debentures

Southern California Petroleum

Southern

.—Common

—...Common

—*

Penn Fruit

Dec.

.Common

Resistance Co

Owens-Corning Fibreglas Corp.-New Britain Machine Corp

Chef Frozen

Manufacturing Co., Burlingame, Calif.

Nov.

Tide

Common

Penn

notification) 85,000 shares of capital
stock (par $1), of which 10,000 shares are to be offered
first to stockholders and 75,000 shares offered publicly.
Price—$3 per share. Underwriter—None, but Davies &
Co., San Francisco, Calif., acts as agent. Proceeds—To
retire debt and for working capital. Office—1285 Rollins
Road, Burlingame, Calif.

Dec.

common,

Olsen, Inc.

Badger Manufacturing Co., Cambridge, Mass.
Nov. 5 (letter of notification) 17,500 shares of common
stock (par $10).
Price—$15 per share. Underwriter—
None, but sales will be handled by H. W. Cooms, E. I.
Clapp, R. W. Carlson and C. L. Campbell, all of Cam¬
bridge, Mass. Proceeds—For working capital. Office—
230 Bent St., Cambridge, Mass.

general

systems

Office—2509 West Barry Street, Fort Worth 9, Texas.

Florida Power

Industries, Inc

International

v".

Oct. 4 (letter of

company.
Price—$26.75 per share.
Proceeds—To purchase natural gas

Forbes & Wallace, Inc., Springfield, Mass.
Dec. 13 (letter of notification) 1,050 shares of class

Kansas City Power &

supplied by amendment. Underwriter — Van
Alstyne Noel Corp., New York. Proceeds—To repay $2,500,000 bank loans and for expansion and working capi¬

(Neb.)

the

Disco

(1/8-9)

Bfair

'.'V '

Additional Financing Expected in January

ible preferred stock (par $25), as amended Dec. 17. Price

one

officers

distribution

Central Illinois Public Service Co.—Debs. & Pfd.

Atlas Plywood Corp.

rate of

1952

Corp., 11:30 a.m. (EST)

Southwestern Public Service

Office—70 Washington St.,

Nov. 21, filed 240,000 shares of $1.25 cumulative convert¬

(letter

•.

February 1, 1952

Brooklyn 1, N. Y.

—

-v

•

Precision Casting Corp. i
Nov. 13 (letter of notification) $100,000 of unsecured
4% debentures due Oct. 1, 1961. Price—At par (in de¬
nominations of $100 each). Underwriter — None.
Pro¬

Benbow

and

Underwriter—None.

common

Pacific Power & Light Co.

Arwood

Dec.

Empire Southern Gas Co., Ft. Worth, Texas
10 (letter of notification) 10,300 shares of common
stock (par $10), to be offered to stockholders, employee®

York.

-Preferred

,-——

—

Statement ef¬

Falstaff

Corp

January 22,

in units of 50 shares of

•—To

Interim Notes
Common

(Harry) Brewing Co
January 16,

Racing Corp.

Nov. 14 (letter of notification) 60,000 shares of preferrei
stock (par $5) and 1,200 shares of common stock (no par;«

ceeds—For working capital.

cilities and for other corporate purposes.

Boston, Mass.
(letter of notification) 12,653 shares of common
stock (no par), being offered to stockholders of record

American Motor

share for

Nov. 21

1952

Carolina, Inc.
South Jersey Gas Co., 11 a.m. (EST)

Orlando, Fla.
Dec. 19-(letter of notification) 11,100 shares of common
stock (par $10). Price — $27 per share.
Underwriter —
Guardian
Credit Corp., Orlando, Fla.
Proceed — For
purchase of securities.
Office — American Building,

one

fective Dec. 10.

January 10,

^ American Fire & Casualty Co.,

Orlando, Fla.

at rate of

Subscriptions must be filed between,'!'
Jan. 3 and Jan. 25, 1952.
Approximately 46,798 share®
are to be offered to
employees of the company and it®
subsidiaries.
Price—$82.50 per share.
Underwriter—
None.
Proceeds—For capital additions to'plants and fa¬

Dec.

Preferred

Corp

Kellogg Co.

Offering—Not expected until after Jan. 1.

purposes.

1952

Chemical

Marshall Field & Co

(with over-subscription
privileges). Price—To be supplied by amendment. Un¬
derwriter—Allen & Co., New York. Proceeds—For capi¬
tal expenditures and working capital and other corporate
common

Preferred
Common

January 9,

filed

Inc.

Kaiser Aluminum

Bosch

1952

Plywood Corp

Uarco,

to be offered to employees through
Underwriter — None.
Proceeds — For
are

65,450 shares of cumulative convertible
second preferred stock, 1951 series, to be offered to com¬
mon stockholders at rate of one share of preferred foi
each

Common

January 8,
Atlas

working capital.
13

Chemical

Dow

Inc., New York

ployees through outstanding options at $11.70 per share,

American

stockholders of record Dec.

1952

January 3,

Dec. 5 filed 740,750 shares of common stock (par $1), of
which 135,750 shares are to be offered to executive em¬

above options.

(1/3)

each 50 shares held.

Proceeds—To Benjamin Simons, the selling
stockholder. ^ ; :

605,000 shares

Co., Midland, Mich.

ISSUg

of which about 133,202 shares will be offered to common,

NEW ISSUE CALENDAR

ton, Mass.

American Airlines,

Chemical

Nov. 16 filed 180,000 shares of common stock (par $15>

(par $5). Price—At market (estimated at $21 per
share). Underwriter—Schirmer, Atherton & Co., Bos¬

Nov.

SINCE

Dow

C
1,000 shares of common

stock

and

it INDICATES ADDITIONS!

Kid Co., Boston, Mass.

(letter of notification)

(2537)

New York.

Boston

Philadelphia
'

Pittsburgh

San Francisco
*

Private IVires to all

Chicago

Cleveland
<r

offices

'
'

The Commercial and Financial Chronicle... Thursday, December 27, 19d1

(2538)

per share).
Underwriter—John R. Kauffmann Co.; St.
Kingsburg Cotton Oil Co., Kingsburg, Calif.
Louis, Mo.
Proceeds—To Earl W. Muntz, the selling
22 (letter of notification) 2,0u0 shares of capital
stockholder.^ Office—1735 West. Belmont Ave^-Chicago,
(par $1). Price—$4.25 per share. Underwriter— /V
Hawkeye-Security Insurance Co. - : H i
Illinois.
Fewel & Go., Los Angeles, CaUtt Proceeds—To Richard
-i'Nov. 5 (letter of notification) 2,000 shares of 5% tiinm-r*
W. Fewel, the selling stockholder.
lative preferred stock (par $50). Price—At market (cur¬
Address—P. O. Box
:
Nash (F. C.) & Co., Pasadena, Calif. /
rently $50 per share).
Underwriter—Quail
Co., J 277,'Kingsburg, Calif...*> :
Dec. 7 (letter of notification) $200,000 of 5V2% convert*
XSXyv;
#
; Davenport, la., and Becker & Cownie, Des Moines,Jla. I
ible debentures to be first ottered to common stock¬
Knorr-Maynard, Inc., Detroit, Mich.
Proceeds
To six selling stockholders.
Office —1017
Oct. 31 (letter of notification) $250,000 of 6% 10-year ! holders on a pro rata basis; unsubscribed shares first
Walnut St., Des Moines 9, la.
Offering—Temporarily
to exchange, par for par, for $92,600 of outstanding 5Vz%
debentures due 1961. Price—At par (in denominations

Continued from page

Oct.

stock

—

delayed.

Helio Aircraft. Corp.,

July

Norwood, Mass.
(letter of notification) 7,750 shares

cumulative ^preferred
of

stock

common

stock

$1)

(par

and

of non7,750 share*

and

one

common

;

stock

Price—$25 per unit ($20 for preferred and $5 for com¬
mon). Underwriter—None. Proceeds—For development
and promotion expenses.
Office—Boston Metropolitan
Airport, Norwood, Mass.
Hex Foods, Inc., Kansas

Ideal Cement Co.,

Denver, Colo.
250,000 shares of capital stock (par $10) be¬
ing offered in exchange for shares of $10 par stock of

Statement effective Nov. 29.

-A-Indiana & Michigan Electric Co. (1/22)
Dec. 19 filed
$17,000,000 of first mortgage bonds due Jan.
1, 1982 and $6,000,000 of serial notes due Jan.* 1,", from
1956 to 1967, inclusive. Underwriters—To be determined
by competitive bidding. Probable bidders: Halsey, Stu¬
art & Co.

Inc.; The First Boston Corp.; Union Securities
Corp.; Harriman Ripley & Co. Inc. Proceeds—To repay
loans

and for

new

construction.

(EST)

Bids—To

poses..

For

re¬

Jan. 22.

bank

loans.

(par

Proceeds

For

—

Under¬

working capital and'to

Office
c y

Plumbing Stores Corp.

3^%

(letter of notification) $123,500 of 20-year
due

notes

Oct.

Price—100%. Under¬
general corporate pur¬
Office—79 Cliff Street, New York, N. Y.
1,

1971.

Proceeds—For

Oil & Gas Co., Reno, Nev. *
5 (letter of notification) 48,350 shares of common
stock.; Price—At par ($1 per share).
Underwriter.—
Nevada

Dec.

Priee~£Tb-be^supplied by
amendment.
Underwriters—Glore, 'Fprgabl/Ac'-Co. and
Lee Higginson Corp., New York^> Proceeds—To retire
.•

stock

writers—None.

Marshall Field & Co., Chicago, III. (1/9)
•
19 filed 150,000 shares; of cumulative convertible

preferred stock

income

par

—

Dec.

Pacific Portland Cement Co. of San Francisco on basis
of one share of Ideal for each two shares of Pacific stock.
Offer is subject to condition that 80% or more of Pacific

ceived up to 11 a.m.

Price—At

stock (par $10) and 26,650 shares of
$1) to be offered in units of one

preferred

National
Oct.

($100 per share). Underwriter—1
operating capital. Office — 2809
Race St., P. O. Box 7303, Fort Worth 11, Tex.

Nov. 9 filed

bank

of California

(letter of notification) 750 shares of common,
stock to be offered first to stockholders, and then to
Proceeds

lative

common

Bearing Co., Inc.
v.y /y'y.'
> >
Sept. 26 (letter of notification) 3,200 shares of common
stock (par $1). Price—$31.25 per share.
Underwriter—
Blyth & Co., Inc., Los Angeles, Calif. Proceeds—To Lloyd
A. Johnson, President, who is the selling stockholder*.

None.

' 41

National Motor

(letter of notification) 200,000 shares of capital
Price—At par ($1 per share).
Underwriter—
None.
Proceeds
For working capital.
Office — 244
South Pine St., Newhall, Calif.
Lubrication Engineers, Inc., Fort Worth, Tex.

public.

Calif.

purchase an additional interest in tuna clippers.
—1592 So. 28th St., San Diego 13, Calif.

Oct. 8

Nov.

remainder

National Marine Terminal, Inc., San Diego, Calif.
Oct. 24 (letter of notification) 26,650 shares of 0% cumu¬

writer—None.

—

Price—$18 per share. Underwriter—
Hornblower & Weeks, New York. Proceeds—To William
W. Steele, the selling stockholder.

Dec. 31.

& Hoverson Co.

stock.

(par $2.50).

$100);

(par

—

share of each class of stock. Price—$11 per unit.

filed

Loven Chemical
>•

common

outstanding stock must be tendered in exchange for Ideal
stock.
If exchange offer is
consummated, it is Ideal's
intention to operate the Pacific
company as a subsidiary.
Dealer-Managers—Boettcher & Co., Denver, Colo.; J.
Barth & Co., San
Francisco, Calif. Offer—To expire

(A. J.)

stock

Office—1*1 East Colorado Street Pasadena 1,

common

112,500 shares of common stock (par $1).
Price—To be supplied by amendment.
Underwriter—
Sills, Fairman & Harris, Inc., Chicago, 111. Proceeds—
To eight selling stockholders.
Offering—Date indefinite.

Hoover

Co., No. Canton, O.
(letter of notification) 4,000 shares of

preferred

At 100%. Underwriter5—.
Calif. Proceeds—To redeem
unexchanged preferred stock and for working capital.

stock, to be offered to present stockholders for subscrip- '
tion and in exchange for outstanding debentures. Price—
At par ($100 per share). Underwriter—None. Proceeds *
—To retire debt. Office—1526 Main St., Columbia, S. C.
Nov. 28

mo.

stock

Oct.

Lindemann

City, Mo.

Aug. 1 (letter of notification) 89 shares of 6% cumula¬
tive preferred stock (par $100) and 424 shares of com¬
mon stock
(no par). Price—For preferred, at par; and
tor common, at $20 per share. Underwriter — Prugh
Combest & Land, Inc., Kansas City, Mo., will .act^as
dealer. Proceeds—For plant improvements and general
corporate purposes. Office—412 W. 39th St., Kansas City,

Oct. 22

Kohn & Co., Columbia, S. C.
22 (letter of notification) 925?shares

cumulative

be publicly offered. Price
Pasaaena Corp., Pasadena,

(par $1) to be offered in units of one

preferred

of $1,000 each).
Underwriter—Lang-Heenan & Co., De¬
troit, Mich. Proceeds — For working capital. Office—
5743 Woodward Ave., Detroit 2, Mich.

None.'

Proceeds — To purchase drilling ^equipment.
Clay/Peters Building, 1.40 N.. Virginia

Office—304-305

(par $100).

Street/.-Reno,.Nevryy fH'>'•'-•
Nu-Enamel

„

Corp.,

Chicago,

111.

Nov. 8 "(letter of notification) $220,000 of, 5% convertible

McKesson & Bobbins, Inc., New York
Dec. 5 filed 100,000 shares of common stock
to

be offered under

employees of company and its subsidiaries.

writer—-None.

(par $18)

"executive stock purchase plan"

Proceeds—For

Under¬

notes, dated Dec. 1, 1951, and due Dec. 1, 1959.
Prick—
At par (in denominations of $100 each). -Underwriter—
None.- Proceeds—For working capital. Office—444 Lake
Shore Drive, Chicago, 111.

general corporate pur¬

•'

X^viy//

lOhio Edison Co. ;■

poses.

March 30 filed 150,000 shares of pfd. stock (par $100).

Mercantile Acceptance Corp. of California
Oct. 24 (letter of notification) $100,000 of 10-year

Removed from registration by amendment filed Dec.418.

5%^
Overseas Merchants Corp. /
y\
/ J'
junior subordinated debentures (in various denomina- ' Nov. 16
(letter of notification) 10 shares of common stock
tions) and 306 shares of 5% first preferred stock (par
(nonpar). Price—$1,000 per unit. Underwriter—E. M.
$20). Of latter, 271 shares will be offered to public and
JVamitrg & Co. Inc., New York. Proceeds—To Eric M.
35 shares to employees only on an instalment basis. Price
Warburg, the selling stockholder. Office—52 William
—At par. Underwriter—Guardian Securities Corp., San
St., New York.
/.
y.
.
.j Xyly
Francisco, Calif. Proceeds—For general corporate pur¬
ic Pacific Power & Light Co. (1/22)•i
s

Industrial
Dec.

Research, Inc., Miami, Fla.
(letter of notification) 8,000 shares of class A.

6% preferred stock.
derwriter—None.
—4016 N. W. 29th

Inland

Aug.
to

Steel

St., Miami, Fla.

issuable

under the

upon

shares of capital stock
exercise

stock

option

(no par)
issuable

of current fair market value
Proceeds—For working capital.

the

stQck..

International Aggregates Corp.,
Denver, Colo.

Dec. 10 (letter of
notification) 300,000 shares of
stock. Price —At par ($1 per
tal.

common

share). Underwriter —
Proceeds—For mill machinery and working capi¬
Equitable Building, Denver 2, Colo.,

Office—209

Iowa

Public

Service

Co.

Nov. 26

(letter of notification) 2,000 shares of common
stock (par $5). Price—At market
(approximately $19.50
per share).
Underwriter—A. C. Allyn & Co., Inc., Chi¬
cago, 111.
Proceeds — To Ray P.
Stevens, the selling

stockholder.

y'y y.

Kaiser Aluminum & Chemical
Corp.
Nov. 27 filed 350,000 shares of cumulative

(par $50), convertible into
Price—To

supplied

common

(1/9 )
preferred stock

stock

amendment.

through 1961.
Underwriter—

The First Bost™ Corp., New

York, and Dean Witter &
Co., San Francisco, Calif. Proceeds—From sale of
stock,
together with proceeds from private sale to
institutional

investors

$33,500,000 additional first mortgage bonds
and from $50,000,000 bank
loans, to be used to finance
the company's
$100,000,000 expansion program.
Kankakee Water
Co., Portland, Me.
29 (letter of
notification) 2,186 shares

Oct.

of 5Vz%
stock (par $100).
Price—$105 per
Underwriter—H. M. Payson &
Co., Portland Me.
Proceeds—For additions and
improvements. Office—95
Exchange Street, Portland 6, Me.
cumulative preferred

share.

Kellogg Co.,
Dec.

filed

Battle Creek,
shares of

415,060

Mich.

(1/9)

common

stock

(par

cents), of which 30,200 are for the account of the com¬
pany and 384,860 are owned by W. K.
Kellogg Founda¬
tion.
Price—To be supplied
by amendment.
Under¬
writers—Morgan Stanley & Co., Clark, Dodge & Co. and
Glore, Forgan & Co., all of New York.
Proceeds—To
company, to be used for

working capital.

Key Oil & Gas Co., Ltd.,
Calgary, Canada

Oct.

***•.'

^fr¬

•• •

it Mercantile Acceptance Corp. of California
Dec. 18 (letter of notification)
$33,902 of 10-year 5%
junior subordinated debentures. Price—At par. Under¬

tureholder.

filed

500,000 shares of common
stock, of which
5,000 shares have been reserved for issuance to

company
counsel for services. Price—At
par ($1 per share. Under¬
writer—None, but sales will be made by James H. Nel¬
son, promoter and a director of
company, of Longview,
Wash.
Proceeds—To drill well, for lease
acquisitions and

properties held pending development
work, and for other
corporate purposes.

Dec.

Midwestern Insurance Co.,

Oklahoma City, Okla.
Dec. HT(letter of notification) 3,000 shares of preferred
stock to be offered to present stockholders.
Price—At
par ($100 per share).
Underwriter—None.
Proceeds—
For increased

capital.

Inc., Elkhart, Ind.
6,000 shares of common
stock (par, $2). Price—Maximum, $18 per share; mini¬
mum, $16.50 per share.
Underwriter—Albert McGann
Securities
Co., Inc., South Bend, Ind.
Proceeds—To
Estate of Rachel B. Miles.

Products

Co., Pittsburg, Kansas
Oct. 4 (letter of notification) $225,000 of second mort¬
bonds to be offered to stockholders in ratio of

gage 5%

$300 of bonds for each share of stock held

of record

June 30, 1951, with an oversubscription privilege. Price
—At principal amount. Underwriter—None. Proceeds—
For

equipment.
burg, Kansas.
Mitchell
Dec.

Price—$6

Office—314 National Bank Bldg., Pitts¬

(Harry)

filed

Brewing Co.

99,500 shares of

per

share.

(1/15)

common

stock

Underwriters—Russ

Inc.,

Montana Hardwood Co., Inc., Missoula, Mont.
Sept. 26 (letter of notifictaion) 2,970 shares of 6% re¬
deemable preferred stock (par $100) and 2,970 shares of
common
stock (par $1) to be offered in units of one
preferred and one common share. Price—$101 per unit.
erect

plant.

Proceeds

—

To purchase

land and

Office—123 West Main St., Missoula, Mont.

Moore

stock.

International Television, Inc., N. Y.
(letter of notification) 299,000 shares of common
Price—At par ($1 per share).
Underwriter—

None.

Proceeds—For production

Dec. 5

presentation

and

of films for television

general

working capital. .Office— 20
Street, New York, N. Y. Offering—Expected
in January.
East

53rd

Muntz

TV, Inc., Chicago, III.
(letter of notification) 30,000 shares of common
stock (par $1). Price—At market
(approximately $2.87V2

Nov. 28

Underwriters-^

Go.Xi.and Dean Witter & Co. Proceeds—From sale of

Pacific

Telephone & Telegraph Co.
/
;
/:'/y|y
Oct, 19 filed 633,274 shares of common stock being-of¬
fered for subscription by common and preferred stock¬
holders in the ratio of

each nine shares of
as

of Nov.

At par

—To

share of common, stock

one

;fo£

and/or preferred stock held

common

27; with rights fo expire on Dec. 28, Prick—
Underwriter—None. Proceeds
bank loans and for plant improvements.

($100 per share).

reduce

Statement effective Nov. 20.

Peabody Coal Co.
March 26 filed 160,000 shares of 51/2%

;
"

prior preferred

(par $25), .Price—To bq supplied by amendment
Underwriter—A. C. Allyn & Co;, 'Inc.,-Chicago, 111. Pro¬
ceeds—For construction program. Offering—Indefinitely

postponed.

Penn

„

Controls, Inc., Goshenr Ind.
Oct. 25 filed 100,000' shares of common stock (par $2.50).
Price—To be supplied by amendment. Underwriter-*-F,
3 Moseley & Co., Boston, Mass. Proceeds—For expan¬
sion program and working capital.
Offering—Not .ex¬
,

pected until after Jan. 1.

Penn Fruit Co.,

Inc., Philadelphia, Pa. *
y
Nov. 21 filed 30,000 shares of 5% cumulative convertible
preferred stock (par $50) and 60,000 shares of common
stock (par $5), the preferred to be sold for the company's
account and the common stock for the account of six sell¬
ing stockholders.

(par $1)./
Co.,

San Antonio, Texas, and Harold S. Stewart &
Co., El
Paso, Texas. Proceeds—To certain selling stockholders.

Underwriter—None.

supplied by amendment.

stock

Laboratories,

(letter of notification)

Mineral

Angeles, Calif. Proceeds—To R. Wayne Hudelson, the
selling stockholder. Office—639 So. Spring Street, Los
Angeles 14, Calif."
^

17"

Miles

Price^To

Lehman Brothers; Union Securities Corp.; Bear, Stearns

200,000 shares, to be used for property additions and im¬
provements.
■:
v

(letter of notification) 4,000 shares of common
""stock (par $1).
Price— At market (approximately 65
cents per share)-.. Underwriter—Akin-Lambert &
Co., Los

Oct.

Decf 20" filed 552,792 shares of common stock (no par).,
of w'hicli 200,000 shares are for account of company and
352,792 shares for the account of selling stockholders.

•

Merchants Petroleum Co., Inc.,
Los Angeles, Calif.

company's proposed stock option plan. Price-

85%

None.

■

writer—Guardian Securities Corp., San Francisco, Calif.
Proceeds—To Harold G. Snodgrass, the selling deben-

Co.

27 filed 250,000

Price—At par ($25 per share). Un¬
Proceeds—For working capital. Officer

poses. ■.*,

Price—To be supplied by amendment.
Underwriter—Hemphill, Noyes, Graham, Parsons & C6.,
New York. Proceeds—To company, to reimburse treasury
for expenditures made for fixtures and equipment and
the balance will be added to working capital.
Offering
—Expected in about ten days.

Pennsylvania Salt Mfg. Co.
7 filed 88,497 shares of common stock

Nov.

offered

Chemicals
Salt

stock

exchange, for
Inc.
for

basis of

each

common

5.15

Sharpies

stock

'A
(par

$10)

Sharpies

of Pennsylvania

(conditioned

upon

deposit for exchange of at least 13,748 of the 17,184 out¬
standing shares of Sharpies stock; offer will expire on
Jan. 21.

Underwriter—None. Statement effective Dec, 19.

Pennzoil Co.
Dec.
stock

(letter of notification)
(par $10)

to be offered

39,658 shares of common
to common stockholders
18 shares

of record Dec. 10 at rate of one share for each

held; rights will expire on Dec. 28. South Penn Oil.Co.v
parent, will subscribe for 31,693 shares, or 79.915% of
the issue. Price—$33.25 per share. Underwriter—None.
Proceeds—To retire debt incurred through expansion of

Number 5076

Volume 174

The Commercial and Financial Chronicle

(2539)

/—TYMffc/ supplied by amendment.
Underwriter—John¬
ston^ iLemon & Co., Washington, D. C.
Proceeds—To
repay notes and for; working capital.
Offering — Ex¬

refjning and sales activities. Office1—DrakcTheater Bldg.,'
Oil City, Pa.
'
r
it Penobscot Chemical Fibre Co.f Bangor, Me.
Dec. 17-(letter of notification) 520 shares of common

pected in January.

Viking Plywood & Lumber Corp., Seattle, Wash.
19 filed 22,500 shares of common stock (no par) to

Oct.
be

(no par)-. Price—At approximately $15 per share
★ Southwest Lumber Milts, Inc., McNary, Ariz.
(to be offered at public auction conducted by K.JL Day^-J)ec. 14 (letter of notification) 3,000 shares of 5% cumu-

Co., Boston, Mass.).

lative

Underwriter—None. Proceeds—
the selling stockholder. Office
Me.

(1/9)
Dec. 10 filed $35,000,000 first and refunding mortgage
bonds due 1982.' Price—To be supplied by amendment.
gan

and for

new

Proceeds—To repay bank

tdvertising costs.

construction.

ham

new

equipment.

uary.

Dec.

Texas

;

•ransferable

Gamble

Co.

stock

and

Procter &

Price —At

warrants.

par

($5

per

Gamble Stock Purchase Plan filed 2,000 $

share)

per

share.

Proceeds—

Inc.

(letter of notification) 20,000 shares of class A
(par 10 cents).
Price—At market (about $2.37^i
share).
Underwriter—Gearhart, Kinnard & Otis

per

;

Proceeds—To O. Roy Chalk, President
the selling stockholder.

Transgulf Corp., Houston, Tex.

Queen City Fire Insurance Co.
notification) 500 shares of common stock

Dec.

(letter of notification) 200,000 shares of capital
(par 10 cents).
Price—$1.05 per share.
Under¬
Proceeds—For working capital.
Office

stock

(par $100) to be offered to stockholders of record about
12.
Price — $400 per share.
Underwriter — None.

Nov.

—1

capital. Office—Sioux Falls, S. D.
Corp.

in multiples

Kidder,

Underwriter—Cohu & Co., New York. Proceeds
purchase building. Office—2 East
Church St., Frederick, Md.

of $100.

Street, Las Vegas, Nev.

stock

par), each

(no

common

shares.

share to

convertible

preferred

be convertible into

IV2

First Boston Corp., New York.

Pro¬

Ida.
«ept. 25 (letter of notification) 290,000 shares of com¬
mon stock
(par 10 cents). Price—32V2 cents per share
Underwriter—Standard Securities Corp., Spokane, Wash.,
ind Kellogg,. Idaho. Proceeds — To six selling stock¬

(letter of notification) 6,000 shares of common
itock.
Price—$50 per share. Underwriter—None.
Proeeeds—For construction and operating capital for a proK

(EST)

(Alexander), Inc.
Dec. 3 (letter of notification) 6,250 shares of common
stock.
Price—Approximately $16 per share.
Under¬
writer—Alex. Brown & Sons, Baltimore, Md.
Proceeds

/uly 19( (letter
mon

stock.

Cochran, the selling stockholder.

of notification) 1,000,000 shares of com¬
Under-

writer—E;, W. McRoberts & Co., Twin Falls, Ida. Proceed*
—For development of mine.

Mass.

'Southern Oxygen Co.,

Bladensburg, Md. -'
Dec. 10 filed $1,400,000 of 6% convertible subordinated
debentures due Jan. 1, 1962 (convertible on basis of five
shares of common stock for each $100 debenture).■" Price

/Dec. 4

stock.

Underwriters—To

collateral

and

be determined

Co.

Proceeds—To finance in

(jointly),

Jan.

be received up to

11:30

a.m.

29.

Chicago, III.

(letter of notification)

Amurex
Dec.

class

Proceeds—To Forrest Parrott, the

selling stock¬
Okla

Office—3109 Apco Tower, Oklahoma City,

holder.

Detroit, Mich.
Oct. 22 (letter of notification) 5,085 shares of preferred
stock (par $50). Price—At market (estimated at $44 per
share). Underwriter — None. Proceeds — For working
capital. Office—300 Buhl Bldg., Detroit 25, Mich.
'

Van

States

Radiator

Corp.,

Norman

Co.> Springfield, Mass. (1/9)
$2,500,000 of convertible sinking fund
debentures due Dec. 1, 1971.
Price—To be supplied by
filed

amendtivent.

Curtis,

Webber, Jackson &
Proceeds—For machinery and

Underwriter—Paine,

Boston,

Mass.

working capital.

Vertientes-Camaguey

pania

Azucerera

(ComVertientes-Cameguey
d*

Sugar Co. of Cuba

shares of common stock being of¬
fered to common stockholders of record Dec. 18, 1951 6t
rate of one share for each two shares held, with an over-

Price—At
Underwriter—None. Proceeds—

-aubscription privilege; rights expire Jan. 18.
To

($6.50 per share).
reduce

capital.

short-term

indebtedness

Statement effective Dec. 12.

and

for

Development Co.
rumored that about

Oil
was

stock

Arkansas
Dec.

500,000 shares of
Underwriter—Probably
Co. Inc., Chicago, 111.
issued.

may

A. G. Becker &

Louisiana Gas Co.

reported

was

company

may

issue and sell

$35,000,000 of first mortgage bonds. Underwriters—May
be determined by competitive bidding.
Probable bid¬
ders: Halsey, Stuart & Co. Inc.; The First Boston Corp.
and Lazard Freres & Co. (jointly); Union Securities
Corp.; Smith, Barney & Co.;
Proceeds—To repay

Equitable Securities Corp.

bank loans, and for new construction.

^ Central Illinois Public Service Co,
Dec. 20 it was stated

SEC

that company soon plans to register
of bonds or debentures

issue of $5,000,000

50,000 shares of $100 par

and

preferred stock.

Under¬

preferred, probably The First Boston Corp.
and Blyth & Co., Inc.
For bonds, to be determined by
competaitive bidding, with the following probable bid¬
ders: Halsey, Stuart & Co. Inc.; Blyth & Co., Inc., Kid¬
writers—For

Merrill Lynch, Pierce, Fenner

der, Peabody & Co. and

(jointly); Kuhn, Loeb & Co. and A. C. Allyn
Co.,
Inc.
(jointly); Lehman Brothers and Bear
Stearns & Co. (jointly); Salomon Bros. & Hutzler; The
First Boston Corp. and Central Republic Co. (jointly);
&

Beane

Glore, Forgan & Co.
Central

Louisiana

Bids—Expected late in January.
Electric Co.,

Dec. 3 it was announced

Inc.

that company contemplates sale

$2,980,000 of additional debentures (probably pri¬
and $1,500,000 additional common stock early
in 1952 (probably to stockholders through rights), fol¬
lowing the merger into company of Gulf Public Service
of

vately)

Co., Inc.
Chicago & Western Indiana RR.
reported company expects to issue and

June 2 it was

sell

approximately $65,000,000 of first mortgage
Underwriter—
To be determined by competitive bidding. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.;
Lee Higginson Corp.; Harris, Hall & Co. (Inc.); Drexel &
Co.; Kuhn, Loeb & Co. and Salomon Bros. & Hutzler
(jointly); Harriman Ripley & Co., Inc.; First Boston
Corp.; Lehman Brothers; Paine, Webber, Jackson &
Curtis; Kidder, Peabody & Co.
Proceeds—To refund
$49,988,000 of 4% non-callable consolidated first mort*
gage bonds due July 1, 1952, and to redeem $13,747,000
first and refunding mortgage 4Y4% bonds, series D, due
Sept. 1, 1962. The remainder will go towards property
early in 1952
bonds due

1981. Price—Not less than par.

Cincinnati

working

Gas

& Electric Co.

7 it was reported company expects to market
in 1952 between $25,000,000 and $30,000,000 of
bonds. Probable bidders: Halsey, Stuart & Co. Inc.;

April
early
new

& Co. and Salomon
Co., Inc., and The
First Boston Corp.
(jointly); Union Securities Corp.;
Glore, Forgan & Co. and White, Weld & Co. (jointly);
Lehman Brothers; Harriman Ripley & Co., Inc.; Merrill
Lynch, Pierce, Fenner & Beane. Proceeds will be used
Morgan Stanley & Co.; Kuhn, Loeb
& Hutzler (jointly); Blyth &

Bros.

for construction program.

Columbia Gas

Nov. 26 it

was

System, Inc.

announced that it is the present

intention

to sell securities in 1952 for the purpose
of refunding the $20,000,000 of 2%% bank notes due
June 15, 1952. The type or aggregate amount of securi¬
ties which may be sold during 1952 cannot be determined
of the company

Cuba)
Nov. 23 filed 481,307

par

Improvements, etc.

Corp;, Oklahoma City, Okla.

(letter of notification) 400,000 shares of common
Price—At par (10 cents per share).
Underwrite?

—None.

;

Mass.
Oct. 8 (letter of notification) 9,000 shares of common
•tock
(no par).
Price—$20 per share.
Underwriter—
None. Proceeds—For working capital.
Office—15 Char-

1972.

1,100,000 shares of com¬
mon stock (par 10 cents).
Price—25 cents per share. Un¬
derwriter—Greenfield & Co., Inc., New York. Proceeds
—To develop mining properties. Office—231 So. La Salle
St., Chicago 4, 111.

Sonic Research Corp., Boston,

Ion St., Boston,

Casualty Co., Cedar Rapids, Iowa

United Minerals Reserve Corp.,
Dec.

Nov.

Co., Haifey, Idaho

Price—At par (25 cents per share).

United

.Smith

Snoose Mining

Proceeds —To

1951-52 construction program of corporation
its subsidiary, United Gas Pipe Line Co.
Bids—

United Oil

Sept. 10

—To Alexander S.

York,

the

and

Address—Box 469, Wallace, Idaho.

Skyway Broadcasting Co., Inc., Ashville, N. C.

Tentatively scheduled

Silver Buckie Mining Co., Wallace,

7;/'

New

(letter of notification)

Sachs &

man,

Dosed television station.

Co,,

2,161 shares of capital
stock (par $10) to be offered for subscription by stockholders. Price—$26 per share. Underwriter—None. Proceeds—To restore capital. Office—810 First Ave., N. E.,
Cedar Rapids, la.

part

(letter of notification) 3,000 shares of class B
itdck.
Price—At par ($100 per share).
Underwriter—
None.
Proceeds — To pay part of purchase price of
Sehttle steam heating properties and for working capital.
Office—1411 Fourth Ave., Seattle, Wash.
^

•

Probable bidders: Halsey, Stu¬
art & Co. Inc.; Morgan Stanley & Co., White, Weld &
Co. and Equitable Securities Corp. (jointly); The First
Boston Corp., Harriman Ripley & Co., Inc., and Gold¬

'Seattle Steam Corp., Seattle, Wash.

holders.

for any out¬
1, 1951.
Underwriter—Hill, Thompson & Co., Inc., New York.

by competitive bidding.

ceeds—For working capital.

Odt.

trust bonds due

Price—To be supplied by amendment.

Underwriter—The

Tex.

it United Gas Corp. (1/29)
Dec. 20 filed $50,000,000 first mortgage

(1/16)
of

Peabody

United Fire
Nov.

it Rose Marie Mining Co., Las Vegas, Nev.
Dec. 14 (letter of notification) 300,000 shares of commons/
stock.
Price—$1 per share.
Underwriter—None. Pro¬
ceeds—For mining machinery.
Office—124 So. Sixth

Street, Houston,

bank loans and for working capital.

repay

—To retire debts and

175,000

Main

Uarco, Inc., Chicago, III. (1/8)
Dec. 14 filed 65,000 shares of common stock (par $10).
Price—To be supplied by amendment.
Underwriter—

(letter of notification) $200,000 of 6% 15-yeai

filed

with

writer—None.

Irvington, N. J.

Nathan Chirelstein, Chairman, said it is probable
within a short time will register with
the SEC an issue of long-term convertible debentures,
Nov. 9,

that the company

part of which will be offered in exchange

Nov. 5 (letter of

Dec.

Allied Electric Products, Inc.,

standing three-year convertible notes dated Nov.

Inc., New York.

—

Seaboard Finance Co.

Prospective Offerings

Underwriter—'

stock

Price—$75 per share.
Underwriter—None.
Proceeds
For working capital.
Office — Turks Head
Bldg., Providence 1, R. I.

lebentures. dated July 1, 1951. to be issued

San Antonio, Tex.

Price—$10

Trans/ Caribbean Air Cargo Lines,

(letter of notification) 2,000 shares of capital stock

Sept. 18

"restricted

ployees.^ Price — Based on market (about $38.75 per
share). Underwriter — None. Proceeds — For general
corporate purposes.
-

Office—2409 Transit Tower, San Antonio 5, Tex.

Dec.

|Puritan life Insurance Co-v Providence* R. I*

Finance

under the company's

offered

stock (no par).

(par $25).

Ritchie Associates

option plan" to certain ofifcers and executive em¬

stock

Dec.

pansion program and company's changeover to natural
gas.
Offering—Expected to take place about Jan. 9, 1952.

Proceeds—For working

basis.

Proceeds—For working capital.

★ Tokheim Oil Tank & Pump Co., Ft. Wayne, Ind. "
18 (letter of notification) 5,600 shares of common
Price—$16.50 per share. Underwriters-—
stockholders'/
Underwriter—None.
4
Glore, Forgan & Co., Chicago, 111., and Fulton, Held &
Co., Cleveland, O. Proceeds—To Sarah N. Hall and RosePublic1 Service Co. of North Carolina, Inc. (1/10)
Dec. 11 filed $2,400,000 three-year interim notes due 4 mary N. Hallman, two selling stockholders.
Jan. 1, 195o (to be payable at maturity at company's
Toklan Royalty Corp., Tulsa, Okla.
Oct. J1 (letter of notification) 25,000 shares of common
option in an equivalent par value of convertible pre¬
stock (par 70 cents).
ferred stock of $25 par, at rate of one preferred share
Price—$4.50 per share.
Under¬
for each $25 principal amount of notes).
writer—None.
Proceeds—To purchase for investment
Price—To be
150,000 shares of capital stock of Palmer Stendel Oil Co.
supplied by amendment.
Underwriter—-The First Bos¬
Office—635-644 Kennedy Building, Tulsa, Okla.
ton Corp., New York.
Proceeds—To help finance ex¬

Oct. 9

(par $1)

Westinghouse Electric Corp., Pittsburgh, Pa.
27 filed 500,000
shares of common stock (par

To purchase Aztec Ceramics, Inc., and for working capi¬
tal;

participations in Profit .Shaving Dividend Plan, 1,100
participations in Stock Purchase Plan, and 34,000 shares
of .common stock (no par) to be purchased by trustees
for, the plans for company stockholders from selling

stock

shares of Maltino
Underwriter—None.
(F.

Nov.

(letter of notification) 10,000 shares of common

(no par).

common

nut, Inc.)

Gas

Wood; Struthers & Co., San Antonio, Tex.

Nov. 29 Procter & Gamble Profit Sharing Dividend Plan

293,960 shares of

in exchange for 146,980

two-for-one

$12.50)

Texstar Corp.,
Nov. 27

709, Wallace, Ida.

Inc.

Eberstadt & Co. is financial consultant for Warner-Hud¬

Southeastern

Underwriter—None.

change qt .time options are granted. Underwriter—none.
PtQceeds—For working capital.;*-; \

Hogle & Co., Salt Lake City, Utah. Pro¬
Zinc-Lead Co., the selling stock¬

Co., Bellville, Tex.
Hay 16 (letter of notification) 19,434 shares of commor
nock to be offered to common
stockholders through

of; the market price on the New York Stock E-

Procter &

Co.

Fla.

share. 'Under¬
50% of capital

Callahan

12 filed

Dec.

Tampa, Fla.

....

Plate Glass Co.
**, \
- v
June 27 filed 450,000 shares of common stock (par $10).
to be offered to certain employees of the company and
its' subsidiaries under a stock option plan.
PricesAt
25%

Tampa,

per

purchase

Co's Address—P. O. Box

Warner-Hudnut,

(letter of notification) 28,000 shares of common
stock (par $1).
Underwriter—None. Proceeds—For or¬
ganizational expenses and to purchase machinery. Office
Offering—Expected some time in Jan¬ —c/o Furman O. Ruff, 3817 Bay-to-Bay Boulevard,

^Pittsburgh

ceeds—To

to be offered

Corp.,

Price—$20

holder.

Proceeds—For operating capital and
Office—2807 Central Ave., Birming¬

Production

unit.

Proceeds—To

Vulcan Extension,

writer—J.

9,- Ala.

it Tape

filed 420,000

Dec.

Price—$1 per share. Underwriter—Carlson & Co.,

Birmingham, Ala.

employee-stockholders in minimum units

Inc., Wallace, Idaho
(letter of notification) 120,000 shares of capital
stock (par 20 cents). Price—82 cents per share. Under¬

*•

Specialized Products Corp., Birmingham, Ala.

Lines, Inc., Dallas, Tex. shares of common stock (par $1).
Price—To be supplied by amendment.
Underwriter—
Cruttenden & Co., Chicago, 111. < Proceeds—To purchase
29

Price—At

Mondet Corp.

Sept; 26 (letter of notification) 50,000 shares of common
r.ock

stock of Snellstrom Lumber Co.

Pioneer Air

Nov.

series A.

per

Philadelphia, Pa.J and Mor¬

Stanley & Co., New York.

loans

preferred stock,

share); Underwriter—The
Proceeds—For working capital.

Philadelphia Electric Co.

Underwriters—Drexel & Co.,

convertible

($100

par

125 shares per

writer—None.

stoek

To Miss Mary A. Clapp,
—6 State btreet, Bangor,

offered

;

this time.

it Columbus & Southern Ohio Electric Co.
Dec. 21 it was announced company contemplates

penditures of at least an additional $50,000,000
1953 to meet the demand for electric service.

ex¬

through
Further

financing is planned.
7

Continued

on page

The Commercial and Financial Chronicle...

(2540)

Dec.

fi Consolidated Grocers Corp.
plans issuance and sale ol
$10,000,000 of preferred stock (par $50). Underwriter—A.
C Allyn & Co., Inc., New York.
Proceeds—To retire
present outstanding 5% preferred stock and to expand
output of company's eight divisions.

Oct. 8 it was stated company

New Haven, Conn.
Aug. 22 it was stated that the company plans issuance
and sale of 30,000 shares of preferred stock (par $10)
each share to carry a bonus of common stock.
Under¬
writer
Ira Haupt & Co., New York. Proceeds — For
Cott Beverage Corp.,

—

County Gas Co., Atlantic Highlands, N. J.
Nov. 15 it was announced company will pay about $15,-

000,000 for the gas properties of Jersey Central Power
Light Co. Method and type of securities to be sold
finance this purchase not yet determined.

&
to

Dayton Power & Light Co.
was reported that company may soon do some

connection with its construction
Underwriters—For any bonds to be determined
by-competitive bidding. Probable bidders: Halsey, Stu¬
art & Co. Inc.; Morgan Stanley & Co.; Blyth & Co., Inc.
and The First Boston Corp. (jointly); Lehman Brothers;
Union Securities Corp.; Merrill Lynch, Pierce, Fenner
& Beane; Harriman Ripley & Co., Inc. If common stock,
underwriters may include Morgan Stanley & Co. and
program.

W. E. Hutton & Co.

Steel Corp.
Oct. 25 the stockholders approved a
Eastern Stainless

proposal increasing

the

authorized capital
stock to 750,000 shares from
600,000 shares, of which 420,000 shares are outstanding.
Additional shares may be issued to stockholders, and

Traditional

expansion.

for

used

proceeds

tional

reported that company may offer addi¬
stock early next year. Probable under¬

was

common

writer—A. C. Allyn & Co., Inc.,

Chicago, 111.

it Foote Mineral Co.
Dec.

announced

plans to increase
authorized common stock from 300,000 shares (259,422
shares outstanding) to 500,000 shares of $2.50 par value.
The company states that "there is no present plan of
capital financing either of an equity type or loan." The
directors, however, "are studying several plant expan¬
sion programs which may eventually require more capi¬
tal." A group headed by Estabrook & Co. underwrote an
issue of

was

company

stock to stockholders in

common

April

Aviation

Products,

Aug. 24 it was announced company proposes to offer
12,500 additional common stock (par $1), in addition to
17,500 shares recently offered. Underwriter r— None.
Proceeds

For

—

engineering, acquisition of machinery

and other corporate purposes. Office—2636 No. Hutchin¬

St., Philadelphia 33, Pa.

son

Idaho

seven

Power Co.

months of 1952.

required for

Of this amount,

interim

financing of

$10,225,000 would
new

construction

during 1952. The balance would be used, if required
prior to the time of permanent financing, to renew tem¬
porary bank loans

outstanding.

Illinois Central

Inc.; Kuhn, Loeb & Co.; Morgan Stanley &

Proceeds

retire

International
Dec.
sell

Resistance Co.,

announced

was

Philadelphia, Pa.

company

250,000 additional shares

plans to issue and

common

stock

(par 10

cents), with registration expected shortly.

Stockholders
on increasing authorized
common stock
1,097,225 shares (1,067,163 shares outstanding) to
1,500,000 shares. Underwriters—F. Eberstadt & Co Inc

will vote Jan. 9
from

and

Zuckerman, Smith & Co., both of New York. 'Pro¬
additional working capital and for
product

ceeds—For

development.

Interstate

Power

decided

competitive bidding. Probable bidders
Halsey, Stuart & Co. Inc.; White, Weld & Co •
Merrill Lynch, Pierce, Fenner &
Beane; Smith, Barney
& Co.; Salomon Bros. &
Hutzler. Probable bidders for
for bonds:

m^hiw st0^k:_.B1yth_& Co.,& Inc.; Lehman Brothers;
Pierce, Fenner
Merrill Lynch

Ripfey

& Co

Iowa

Nov.
sell

M
in

Southern Utilities Co.
it was announced
the

templates
securities

near

sale

bank loans.
Jamaica
3

future

company plans to issue and
first mortgage bonds and con¬

approximately

$5,000,000

1953.
Previous bond financing
Proceeds from bond
sale, to

additional

privately.

Dec

Beane and Kidder, Pea-

Smith' Barney & Co7 Harriman

Inc

repay

Water

was

done

$7,000,000
'

Supply Co.

stated

that company has
applied

^L8'^15810!1 for auth°Hty

to New

to issue and sell

$1,200,000 of first mortgage bonds (probably privately)
and approximately 13,600 shares of common
stock. Tra¬
ditional

announced stockholders will vote Jan. 15,

approving the creation of an authorized issue of
100,000 shares of convertible preferred stock (par $50).
Underwriter—Carl M. Loeb, Rhoades & Co. Proceeds—
For expansion program.
1952

Metropolitan Edison Co.
it

reported company is considering a $16,-

was

000,000 financing program for early next year, which will
include issue and sale of 40,000

shares of preferred stock

(par $100) and about $8,000,000 of bonds. -Underwriters
—To

determined

bidders for

by competitive

bidding.

Probable

bonds—Halsey, Stuart & Co. Inc.; Salomon

Bros.

Hutzler; Union Securities Corp.; Drexel & Co.;
Corp.; White, Weld & Co. and Equitable
Securities Corp. (jointly); Kidder, Peabody & Co.; Carl
M. Loeb, Rhoades & Co.
Probable bidders for preferred
—Kidder, Peabody & Co.; Smith, Barney & Co. and
Goldman, Sachs & Co. (jointly); Carl M. Loeb, Rhoades
& Co.; Drexel & Co.; Harriman Ripley & Co. Inc. and
Union Securities Corp. (jointly); Salomon Bros. & Hutz¬
ler; The First Boston Corp.
Offering—Expected at end
of February or the middle of March.
Oct.

Underwriter—Blyth

capitalization
securities

Industries

East

announced

was

with

the

near

SEC

Corp.,

company

future

N. Y.
plans to expand its
and to register its

preliminary to

offering, the funds to be used to build

large public
industrial

new

projects in Israel.
Midway Airlines, Inc.
Dec. 15 it

was

announced Illinois Commerce Commission

has authorized issuance and sale of
mon

stock (no par).

87,200 shares of com¬

Price—$1 per share. Underwriter—
general corporate purposes.

Proceeds—For

None.

Mississippi Valley Gas Co.
19, it was announced that subject to approval of
SEC and FPC Equitable Securities Corp. has agreed to
purchase the natural gas properties of Mississippi Power
&
Light Co. for approximately $11,000,000, effective
about Jan. 1, 1952. It is planned to organize Mississippi
Valley Gas Co. to operate these properties and later
Nov.

expects to issue and sell first mortgage bonds and com¬

Co.

reP°rted company plans to issue and sell
about $2,000,000 of first
mortgage bonds and $3,000 000 of
common stock before
April 15, 1952. Underwriters—To
was

was

Co., Inc.

mon

stock, following final approval by the Commissions.

National
Nov.

Union

Radio

Corp.

29, Kenneth C. Meinken, President, announced com¬

plans to raise more than $5,000,000 of "new money"
through sale of stock or from loans. Proceeds—For ex¬
pansion program, involving a new plant to be constructed
pany

Philadelphia. Underwriter—Probably Collin, Norton
Toledo, O. Registration—Expected in two months.

& Co.,

it New Britain Machine-Co.
Dec.

18 it

was

Pro¬

bank loans and for construction

repay

pro¬

it New England Telephone & Telegraph Co.
20, F. A. Cosgrove, Vice-President, said a perma¬
financing program will have to be undertaken next

nent

to repay about $43,000,000
rowings.

short-term bank bor¬

Northern Natural Gas Co.
■

Nov. 16 it

was

reported that permanent financing is not

expected to be concluded until 1952

(probable in Janu¬

February) to repay $42,000,000 of bank loans and
to provide additional funds for company's construction
program. This financing may consist of about $32,000,000
of debentures and $18,000,000 of common stock. Latter

may be offered to common stockholders, without under¬
writing. Probable bidders for debentures: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc.; The First Boston Corp. and
Kidder, Peabody & Co. (jointly).

Oct.

announced stockholders will vote Jan.

increasing authorized common stock from 200,000 to
400,000 shares. It is planned to offer 70,000 additional
shares for subscription by present stockholders on a onefor-two basis.
Underwriter
None.
Price
Probably

—

$20 per share.

Proceeds—For working capital. Offering
—Expected late in January, with warrants to expire
four weeks after commencement of offering.

it New England Power Co.
Dec. 12 company applied to SEC for authority to increase
authorized bank borrowings from $12,000,000 to $16,000,000. A major portion of this indebtedness may be
financed through issuance of common stock to parent
(New England Electric System) and first mortgage bonds
early in 1952. Underwriters — For bonds, to be deter¬
mined by competitive bidding. Probable bidders: Halsey,

announced

was

(Minn.)
estimates that

company

ap¬

proximately $32,500,000 of new money will be required
to finance its construction program for 1951 and 1952

through the sale next year of common stock, and seniorsecurities.
Probable bidders for stock and bonds: Smithy
& Co.; The First Boston Corp.; Glore, Forgan
Lehman Brothers and Riter & Co. (jointly);

Barney
& Co.;

Equitable Securities Corp.; Union Securities Corp.; Mer-

Lynch, Pierce, Fenner & Beane; Kidder, Peabody
Weld & Co. (jointly). Probable bidder
bonds only: Halsey, Stuart & Co. Inc.

rill

& Co. and White,
on

Merritt-Chapman & Scott Corp.
Oct. 23 it

debt

maturing in next four
years and to replace depleted working capital.
—

& Co.

Middle

16, the directors authorized, pending a favorable
market, the issue and sale of up to $25,000,000 of consoli¬
dated mortgage bonds. Underwriters —
May be deter¬
mined by competitive bidding. Probable bidders:
Halsey,
Stuart & Co.

the company's financial
plan to help finance a backlog

appointed

work out

Smith, Barney & Co., New

Mengel Co.
Aug. 10, Alvan A. Voit, President, stated that the com¬
pany plans to spend from $15,000,000 to $20,000,000 for
expansion, but that plans for financing have not yet
been completed. Traditional underwriter—F. S. Moseley

RR.

Nov.

Co.

announced that

been

Fenner

Langley & Co.; Harriman Ripley & Co., Inc.

Northern States Power Co.

Co.

(Glenn L.)

has

Pierce,

ary or

(J. M.) Co., Inc., N. J. (1/30)
11 a.m. (EST) on Jan. 30 at
the office of Alien Property, 120 Broadway, New York
5, N. Y., for the purchase from the Attorney General of
the United States of 1,225 shares of capital stock (par
$100) of this company. This constitutes 84.19% of the
issued and outstanding capital stock.

York,

Lynch,

Dec.

the SEC.

was

issue

gram.

Missis¬

The First Boston

Dec. 14 company applied to FPC for authority to borrow
from banks up to a total of $15,000,000 during the first

W. C.

it Lehmann

Martin

Merrill

Corp.;

year

announced company has requested

Bids will be received up to

Dec. 13 it

Boston

ceeds—To

sippi River Fuel Corp. to dispose of its Laclede Gas Co.
(248,400 shares, or 8.2% of total 3,039,860 shares out¬
standing). Latter has appealed to Missouri P. S. Com¬
mission and

plans to

Beane; Kidder, Peabody & Co.; The First Boston Corp.;

Laclede Gas Co.

April, 1951.

Inc.

First

to issue and sell

bidding.

was

company

50,000 shares of preferred stock. Under¬
bidding. Prob¬
Lehman Brothers; Equitable Securities

Corp. and Carl M. Loeb, Rhoades & Co. (jointly); The

May $12,000,000 30-year first mortgage bonds,
Underwriters—To be determined by competi¬

Nov. 10 it

Power Co.
reported that

was

bidders:

able

Probable bidders: Halsey, Stuart & Co.
Inc.; Kidder, Peabody & Co. and White, Weld & Co.
(jointly); Lehman Brothers and Salomon Bros. & Hutzler
(jointly); Blyth & Co., Inc.; Union Securities Corp. and
Merrill Lynch, Pierce, Fenner & Beane (jointly).
tive

writers—To be determined by competitive

series D.

Dec.

Hahn

Sept.

England

and sell about

ably Jan. 2).

Kentucky Utilities Co.
Dec. 10 it was reported company plans

(jointly).

New

Registration—Expected early next month (prob¬

tion.

of $425,000,000,

Machine Corp.

Foote Bros. Gear &

Hutzler

each six shares held. Under¬
writers—The First Boston Corp. and Blyth & Co., Inc.
Proceeds—To reduce bank loans and for new construc¬

advisers to

York.

writer: J. Arthur Warner & Co. Inc., New

Oct.

under¬

(jointly); Merrill Lynch, Pierce, Fenner & Beane; Harri¬
Ripley & Co., Inc.; The First Boston Corp.; Kuhn,
Loeb & Co., Union Securities Corp. and Salomon Bros. &
man

at rate of one share for

Nov. 13 it

additional financing in

19 the directors

signed to raise about $18,000,000 by issuance and sale
early in 1952 of 100,000 shares of cumulative preferred
stock and 317,792 shares of additional common stock, the
latter issue to be offered first to common stockholders

expansion program.

the

Co. Inc.; Lehman Brothers; Blyth & Co., Inc.;
Equitable Securities Corp. and Blair, Rollins & Co. Inc.
Stuart &

& Light Co.
approved a financing program de¬

Kansas City Power

Continued from page

Thursday, December 27, 1951

Olsen, Inc., Elyria,
19 it was reported

Oct.

O.
early registration is planned oJ

225,000 shares of common stock. Underwriter& Co., Cleveland, O.
Proceeds—To certain
selling stockholders.
Business—Manufactures hot air
furnaces.
Offering—Expected in January.

about

McDonald

Owens-Corning Fibreglas Corp.
7

Dec.

reported that early registration was ex¬

was

of between $15,000,000 and $20,000,000 common
stock, part of which will be additional financing by com*
pected

and part for benefit of Corning Glass Works and
Glass Co., which each own 42% of the

pany

Owens-Illinois

outstanding Fibreglas common stock. Probable under¬
writer: Goldman, Sachs & Co., New York. RegistrationExpected in January.
Pacific

June 29

sale of

Power

Light Co.

announced company plans issuance and

was

$15,000,000 of mortgage bonds in the early part
be determined by competitive

of 1952. Underwriters—To

bidding.

bidders: Halsey,

Probable

Stuart & Co. Inc.;

Rhoades &

Blair, Rollins & Co. Inc. and Carl M. Loeb,
Co.
and

(jointly); Lehman Brothers; W. C. Langley & Co.
The First Boston Corp. (jointly); Union Securities

Corp.; Kidder, Peabody & Co.; Blyth and Co.,
Weld & Co. and Harris, Hall &

Inc., White,

Co., Inc. (jointly). Pro¬

bank loans and for new construction

ceeds—To repay

(latter estimated to cost $26,450,000).
Public Service Electric & Gas Co. »
Dec. 7 it was announced stockholders will on Jan. 17
vote on approving a proposal to. increase the amounl
of authorized preferred stock from 500,000 to 1,000,000
shares and to increase the limit of unsecured indebt¬
There are, however, no

edness.
tional

financing.

present plans for addi¬
the company sold

November,

through Morgan Stanley 8c Co., Drexel & Co. and Glore,
Forgan & Co. an issue of 249,942 shares of 4.70%;
cumulative preferred stock (par $100), thus exhausting
the amount of presently authorized preferred stock.
{.
Robertson
Nov.

(H. H.) Co., Pittsburgh, Pa.
announced stockholders will

was

in April,

1952, vote on a proposal to increase the authorized com-?
mon
stock from 250,000 shares (all outstanding) to 1,000,000 shares in order to make additional stock available
for such corporate purposes as acquisition of new proper*

ties, to provide additional capital funds or
stock dividends.

declaration o|

Rochester Gas

■

& Electric Corp.

expects to issuo
$5,000,000 additional first mortgage bonds and additional
debt securities or preferred or common stocks, bank
borrowings, or some combination thereof, in connection
Aug. 1 it was announced that company

The method of obtaining
requirement has not been deter¬
Previous bond financing was done privately.

with its construction program.
such

additional

mined.

cash

July 18, it was reported that the company expects tft
raise money through the sale of some preferred stock
late in 1951. Underwriter — Probably The First Boston

Corp., New York. Proceeds—To finance, in part, a $10,000,000 construction program the company has budgeted
for the next two years.
San Diego Gas & Electric Co.
...
July 19, L. M. Klauber, Chairman, announced that th$
company plans to sell $10,000,000 of bonds early in 1952.
Underwriters—To be determined by competitive bid¬

ding. Probable bidders: Halsey, Stuart & Co. Inc.; Blyth
& Co., Inc.; Merrill Lynch, Pierce, Fenner & Beane; The
First

Boston

Corp.; White, Weld & Co. and

Shields 8s

Number 5076

[Volume 174

Wty

JflhwWWIiT'f'i

-'*

•

iw^wvawKJWW1***

#rtfih*< «

The Commercial and. Financial Chronicle
(2541)

Co.

(jointly); Lehman Brothers.

sion program.

Southern

Proceeds—For expan¬

Dec.

sell

Sobering Corp.
was reported that the sale of the company's en¬
stock

issue

(440,000 shares)

was

the

Feb.

Price—$11.50

held.

one

new

(no

additional

stock

for

common

Underwriter—Dillon, Read & Co. Inc., New York.

Co.; Lehman
(jointly).

It is anticipated that about

Nov.

Southern California

Petroleum

oil

it Southern Pacific Co.

Jan.

around

reported company is expected to do some
Rollins & Co.

viding

issue

may

common

torted

considerably by

of state-sponsored veterans' bonus

bond issues.

abreast

keeping

techno¬

logical improvements and widen¬

Rail

rank

the

top

their

continued

utilities

Public

single in¬

dustry in seeking out new capital.
These corporations came into the

Industry came into the money
for
a
total of slightly
than

billions

six

new

capital this year to aid in financ¬
ing total outlays which ran to ap¬
proximately $25 billion, year-end
Thus

can

that

seen

cor¬

porations provided by far the bulk
their

•of
the

new

investments

during

by recourse to internal

year

They contributed in good meas¬
ure by calling upon their depre¬
reserves

and

plowing

Ijack into the business liberal por¬

tion

provisions

Defense

the

[production Act where the money

•spent went into plants that could

•qualify

essential

to the

armament program.

re¬

■■

{•'" Of the $6.1 billion which it is
•estimated corporations raised in
the open money

down

shows

market, a break¬

that about

75%,

$4.6 billion took the form of new
■debt securities. The balance of
about $1.5 billion came from the
sale of new common

fundings

currently out of the

total

and preferred

new

capital in¬

compared
with $19 billion so invested in the
of

trust certificates.

ing the

year.

million

was

$876

floated

mil¬

originated

bidding.

floated

industry

preceding year and with $20 bil¬
lion put into new plant, equip¬
ment, etc., in 1949.
total of such in¬
vestments in the six years since
It brought the

about

Of this

—

about

via

was

the

of the total. They
Smore to common stocks

turned

this year, with

"rights"

frequent offerings
through
the

and

ing the total of such flotations to

with the balance of

$330 million,

coming

million

$164

from

pre¬

which

utility

year's
was

direct

place¬

brief

period early this
issues in this field

month/ new
a tendency to
"back-up",
but a resurgence of demand with¬
in the fortnight lowered dealers'

showed

stocks

until

year-end

Lehman
The

financing,

will

bond issue and the
remaining
sale of West Perin Electric

the

stock.

Underwriters—To be determined
bidding.
Probable bidders for bonds:

Stuart & Co. Inc.; Kidder, Peabody &
Co.;
Brothers, Blyth & Co., Inc.; W. C. Langley & Co.:

First

Boston Corp.
Probable bidders for- stock:
Harriman Ripley & Co. Inc:; W. C.
Langley & Co. and
The First Boston Corp.
(jointly); Lehman Brothers and

Goldman, Sachs & Co. (jointly). Offering—Of

today referred to the Wage Stabilization
companies in

the steel
a

industry. This dispute has
stage where it gravely threat¬
the

arrived at

now

of national

progress

defense.
>;<

t'fi

"This Board will give both
sides

opportunity to present
they

the facts and arguments
think the Board should

con¬
con¬

sider

the

case,

best

trying to find

solution

the

r o m

standpoint of labor,

three. The Board will consider
the

case

promptly

mendations for

offerings, compared

The underwriting f r a t e r n i ty

with about $1.25 billion raised in

its merits and make

fair

sound stabilization

President Truman

recom¬

settlement, consistent with

must, of necessity, take a search¬
ing look at the secondary bond

billion

$1.55

total

latter

The

1950.

included

market

$735 million in bonds; plus $269
million in common stock and $252

fore

million in preferred

the

begins be¬

erations.

shares.

bank

the volume of mu¬
nicipals (state and sub-divisions)
Although

was

somewhat smaller than in the

preceding

year,

the total,

none¬

theless, was enormous.

new

year

venturing forth into

The

Municipals Bulk Large

mid-December

rates,

about

ment

urally

the

will

firming
which

renewed

of
has

adjust¬

Treasury's list,

nat¬

potential

make

buyers, especially institutions, cast
baleful eyes at yields which here¬

entities mar¬
of $3.2 billion
securities, swelled sub¬
political

tofore

"After the decision is reached

Office of Price Stabilization will be

money

brought

policies.

new op¬

had

been

"in

line"

determining whether
tifies
sure

or not any wage

increase jus¬

are

ances are

companies will get price increases

entitled to them. No other advance

/■<

Fortunately
the
investment
banking industry will have all of

stantially,
emissions

including

of
of

by
large
housing issues,

course,
new

two

huge

packages

sponsored by the Federal Housing
Authority.
The
about

thing more than $100 billion, pro¬

figure

foregoing total was down
$500 million from the 1950

which,

in turn, was

dis¬

assur¬

necessary."—President Harry S. Truman.

speak.

new

week

to consider

the

situa¬

tion, since there is not a single
important new issue on tap for
that period. The first offering ne¬
gotiated is Philadelphia Electric's
$35,000,000 of 30-year, first and
refunding bonds.
•
/■• ;;
.

A
we

simple and

suppose, to

dom

and

easy

solution—or

those with

courage

any

V;''.

it would seem,

faith left in the wis¬

of governmental bodies of this

sort—wisdom and courage sufficient to cope

governmentally instigated and encouraged
lies like the unions

with

monopo¬

today.

;

p.-"'
i.

*:uV

•

the

price increase. The law and regulations as¬

that the steel

they

to wages,

responsible for

keted an aggregate

the end of World War TT to some¬

Digitized f IFRASER
for

stock

pected in February and of bonds in March.

the

Need For Reappraisal

exceeded only by 1949's

from

come

less

estimated

carryover

expects to spend
construction in 1952, of

may

industry
and the
public—balancing the
equities and the interest of all

than $10 million.

ferred stock sales

This

contract"

For

new

sider. Then the Board will

ment methods.

64%

for

Board the labor dispute between the United Steelworkers of America, CIO, and various

the

that is by

choosing

roads

"sales

stock

$293

balance

The

$30,000,000

Co. by way of

Halsey,

ens

"Philadelphia plan"
public

utilities

The

These

vestment

are

question.

stocks.

Last year's

supply of serial
coming into the market
through flotations of equipment

billion, very largely in the form
new
money,
since with the
hardening of interest rates reof

tions of current profits thus taking

advantage of the rapid amortiza¬

dieselization,

goodly

Something like $540 million of

total of

about

competitive

such paper reached investors dur¬

for

medium of convertible issues, lift¬

resources.

ciation

kept

paper

lion through the sale of bonds, or

•estimates indicate.

programs

almost $1.4

market

common

"I have

The country's railroads, pushing
Utilities $1.37 Billion

Calif.
may

common

Simple and Easy!?

Equipments

ing markets for its products.

Co.

number

capital needs of modern industry

market

sell

and

stock early

&. Co.,

of the

picture

graphic

company

bidders: The First Boston Corp. and
Inc. (jointly); Union Securities Corp.;
Lehman Brothers and Bear, Stearns & Co.
(jointly);
Goldman, Sachs & Co. and Harriman Ripley & Co. Inc.
(jointly); Kidder, Peabody & Co. and Merrill Lynch,
Pierce, Fenner & Beane (jointly).

equity financing before June 30,1952. Traditional under¬
writer: Blair.

Power

1952. Probable

Blyth

it Southern Union Gas Co.
was

reported

was

require about $23,000,000 of new
capital in connection with its 1952 construction
pro¬
gram, with about one-half to be raised b^ West Pernt

Co.

400,000 additional shares of

Barney

West Penn Power Co.
Dec. 6, Earle S.
Thompson, President of West Penn Elec¬
tric Co., the parent, will

Utilities Co.

Sept. 24 Jt

Smith,

announced that company

was

one-half to

1952 and to mature in ten equal semi¬
annual instalments. Probable bidders: Halsey, Stuart &
Co. Inc.; Salomon Bros. & Hutzler.
Dec. 19 it

Dillon, Read & Co. Inc.

a 1,350-mile natural
gas transmission line extend¬
ing from Texas into West Virginia. The project is esti¬
mated to: host $184,989,683.
Underwriter—Kidder, Peabody & Co., New York.

Texas

and

writers—For stock, probably Stone & Webster SecuritiesCorp. For bonds, to be determined by competitive bid-*/
ding, with the following probable bidders:
Halsey, Stuart *
& Co. Inc.; Union Securities
Corp.; Salomon Bros. &
Hutzler; Stone & Webster Securities Corp.; White, Weld
& Co.;
Kuhn, Loeb & Co. and Wertheim & Co. (jointly)*

struct

the purchase from the

be raised through new
The company is said to be considering a stock
issue next spring and a bond sale in
the fall. Under¬

Texas-Ohio Gas Co., Houston, Tex.
Oct. 17 company applied to FPC for
authority to con¬

of $8,170,000 equipment trust certificates to be

•company

dated

9 for

York.

financing.

through sale of first mortgage bonds and other securi¬
ties and from cash in treasury. Underwriter—Bonds
may
be placed privately. Previous
preferred stock financing

(1/9)

Bids will be'received Jan.

share. Under¬

considering
(par $10)
$200,000. Underwriter—CrutCo., Chicago, 111.
to 11:30 a.m. (EST) on Jan. 30.

$40,000,000

ect

Expected

—

Dec. 12 it

for each share

which

handled by

per

basis

(with

$1,000,000 first mortgage bonds
(probably privately) and 4,000 shares of common stock
(par $100) to General Telephone Corp., the parent. *
Virginia Electric & Power Co.

preferred),

was

held

Upstate Telephone Corp. of New York

subscription at

common

Dec. 10 corporation applied to New York P. S.
Commis¬
sion for
authority to issue

Texas Gas Transmission Corp.
Dec. 6 company applied to FPC for permission to con¬
struct additional natural gas pipeline facilities at an esti¬
mated cost of $33,752,705. It is planned to finance proj¬

Corp.

Registration

producer.

stockholders for

common

conversion rate to be 12 shares of

fornia Co., Inc., San Francisco, Calif. Proceeds—To pur¬
chase outstanding stock of Culbertson & Irwin, Inc., in¬

dependent
■January.

of the

on Dec. 11
among other things, to make the second
preferred stock convertible into common stock (initial

Underwriter—The First Cali¬

$2,475,000.

owns

to vote

place of the previously authorized 75,000 shares of pre¬
ferred stock (par $10), none of which is outstanding.
% F. Woodward, President, states that company tenta¬
tively plans to issue and sell 112,000 of the new shares
about

ceived up

now

rate of one preferred share for each 12 common shares
held. Price—$105 per share. Meeting—Stockholders were

Dec. 17 stockholders approved proposal to create 250,000
shares of 6% cumulative preferred stock (par $25) in

net

tenden &

100%

18,750
shares of no par second preferred stock
(dividend rate
to be changed from $5.50 to $5 per
annum), will offer
stock

Brothers

issuance and sale of additional
which will involve about

Kahn, President, which

this

Transcon Lines, Los
Angeles,
19 it was reported
company

se¬

Nov. 5 announced that the
management, headed by A. M.

approximately $49,900,000 more through additional fi¬
nancing to take care of its 1951-1952 construction pro¬
gram. Probable bidders for bonds: Halsey, Stuart & Co
Inc.; Kuhn, Loeb & Co.; Blyth & Co., Inc.; The First
Boston Corp. and Harris, Hall & Co., Inc. (jointly). These
bankers bid for the $30,000,000 issue of 3V8% first and
refunding mortgage bonds which were sold last week
The nature, amounts and timing of the new financing
■cannot now be determined, and will depend in part on
market conditions existing from time to time and may
include temporary bank loans.

each

that the company expects to
spend approximately $46,500,000 for expansion in 1952
1955, and it has been stated that no further
financing
is contemplated before late
1952, when about 400,000
shares of common stock is
anticipated. Probable bidders:
Merrill Lynch,
Pierce, Fenner & Beane; W. C. Langley

curities.

announced company may have to raise

was

for

14 shares

$16,000,000 will be raised in 1952 from the sale of

Southern California Edison Co.

Toledo Edison Co.
20 it was reported

Proceeds—From sale of stock, together with funds from
bank loans or long-term debt, to be used

for 1952 expansion program.

Nov.

(2/1)

subscription by

23,539 shares of capital stock (par $1)

new

writer—Probably J. G. White & Co., Inc., New
Proceeds—For expansion and
working capital

program.

share for each 13

one

offering to stockholders

oversubscription privilege). Price—$9

Spear & Co.

Aug. 29 it

•

of about

$10,000,000

Co.

Nov.

per

Proceeds—For construction

stockholders at rate of

11 a.m.
(EST) on Jan. 10 for the purchase from it of its entire
interest, amounting to 28.3%, or 154,231.8 shares of $5
par South Jersey common stock. Probable bidders: Leh¬
man Brothers and Bear, Stearns & Co. (jointly); Allen &

stockholders at rate of

common

Thiokol Corp., Trenton, N. J.
16 directors authorized an

issue and

common

10, H. L. Nichols, Chairman, announced company
plans to raise about $4,000,000 through an offering about

asked for bids up to

Corp.

its

stock

company

Southwestern Public Service Co.

(1/10)

Gas Co.

United

the

Dec.

United States & International Securities Corp..
Dillon, Read & Co.; F. S. Moseley & Co.; Riter & Co.
21

additional

Hills, N. J.

formed by

Dec.

Co.

—

Lynch, Pierce, Fenner & Beane; Kidder, Peabody
Co.; F. Eberstadt & Co.; Allen & Co.; new company

South Jersey

Power

authorized

share. Under¬
writers
Smith, Polian & Co., Omaha, Neb.; Glidden,
Morris & Co., New York and C. D. Robbins &
Co., Short

Merrill
&

Utah
FPC

for each four shares held.

not ex¬
pected for at least two months. The sale will be made
to the highest bidder by the Office of Alien Property.
Probable bidders: A. G. Becker & Co. (Inc.), Union Se¬
curities Corp. and Ladenburg, Thalmann & Co. (jointly);
common

15,761

par)

Oct 3 it

tire

the

ex¬

The Commercial and Financial Chronicle

(2542)

(1)

huvin^^rseZ's^nLce^
,L, thf ZsuZnt's

how

thfs
this

t»v.

municipal finance must lenaer a

the

—

/•—

that

cnnnnv

11«

th#»ro

what
he

must

fewest

the

...nrric

manner

—r-r-

~r—

Involved

bond attorney.

nresented in

may

fi~

are to
in
the

latter

in-

fion

"77

and the

"V7"

studied

and
perhaps
improved.
should, be taken that; any
existing
inequities... in the rate

Care

of unusual
as

characteristics,

situations, such

sewer

industrial

some

tnbutmg

"es .and the problems that will the
entail. ;
. .
.
,
for

which surrounds(fl) The Nature of the New Ob-

arca

population

wnoiesaie

of future growth possibil-

views

state-

mips'and'p^tm^afap-

—a"—i

^1.

For instance, the

engineer will have to present his

well-chosen

possible

process

con-

unu?u?d burden

up.on

sewage works, or, if charges
sewage are based on .the vpl-

urae

water

used

ana

reian

some

Jpro-

ligation—Prior to the presentation:'! vision should be made toffeStabu'-~

irauesiaiea

previously,

mere

•'—"

must ~oe ; never gei mio me saniiary sewers

facilities^ completed the trust indenture, yor /at;-.all. Billing and/-collection
Q{,rinilitlirrii n^vpimimpnt
imHor
mri
in****—**,
its agricultural developmpnt^ andvo'rdinance, under .M/hir-h the revr^ methods and provisions as to enwhic^i

iGeg^

transportation

nanao

1P communrty
™ZZitvinvolve?Zeds £e real°,"S for
prov^on are its social ,e
mvolv^
neeasthoroughly understood. The final a presentation

requires

to be issued. That forcement of collections
consid.-. .document must be drawn by the to be improved"

to exp nd ^
^
document, of course, must be ap- era(,je amount of work in
services, and that such new proved by the governing body. "
,
.
facilities can best be financed via
Fourth
noitpodaeniwoUoi
of
8
necessary

accu-

sewer

Thin

««

'^ueT&Kte. are

T(j

a
the

money

makes

tm,pth«r with charts

;

reviewed with the city
so
that each detail and

tben

municipality which needs capital Q^fjcisds
I at

AnpntP

fnvestor

that the

understand

"i\X

drawn that the plan adopt_

will

that all of the provisions

in be sure

requirements

they

how

of course, is work not structure should be eliminated.
only for the financial consultant, Provisions should be included,in
but also the engineer and the sewer rate ordinances to take care

requires very considerable care to propriate description of its loca-

the bank to his cnem.

capital

and

Nature

f nnmmnnSv 5m

issuance of the bonds

"know-

subiect is money
suDject is
r

1 hp

fivTabC/™subject,;

drafting of the document au-

Thp

wnax

future

nancedJ

Principles in
'
Municipal Financing
Uni.

i'<t

What

n \

Investment

will also wish to know what the rendered by the utilities should be

grouped under the heading "general data" are*

Continued from page

Thursday, December 27, 1951

...

th®,

attorney acting as bond counsel in
financial

d a t a. collaboration with the

possible that

nged

may

consultant

be called in in event of lui-

may

SVSZ&SS&S2,W-feSStrs's bzsas;sariz«„ssg&'£KB the'stars
notaoiy norlaws of some states, notably Flor¬

Prospectus

the investanyway. Furthermore, the ipves/
Furthermore

nnvwav

public

is a type of obligaworth looking
fact, the well

such purposes

that

As a matter of

conceived revenue issues of many
—.in

munities

f'nntwinff

Tua

♦Hp
+?nn
uon

ic:

nittlinn

nonliduties in connecWith «:,Vrh 5
financing P
nrog
wun

sutn

the offering.

Sixth, the consultant must personally review all aspects of the
Program, including the prospectus and lhe indenture» with those
a8'encies reporting on or rating

tax bonds of such com-

municipal credits so that they may
possible data and
understanding of the financing be—
_

Sram>

have the fullest

Duties of the

consultant

' *7"

+ l.

7 ^ —"

, uvuvupnuu v* u»v pu.vtvuxu. UU11UU

growth and development of the (c) provisions, under which addibridge financing,
community.
tional bonds may be issued and
Wben y°u undertake to
(2) What is the Form of Local delivered, (d.) provisions as to the
types and characters of gov
Government, and What Are the redemption of the bonds prior to £rnafiental °r public agencies it is
Agencies of Government Overlap- their stated dates of maturity (e)
0 say witb wbat problems
----- ,a ,
„,urluf Provisions ■ as
and
ping the L
Community?—This de- n„M,tcirtnc.ats to +ho application
the annlyou may be confronted. Times a»u
scription must be carefully and of the bond proceeds (f) provi: change, and new types
accurately written so that the in- slons as to the apphcaton of rev- r1 Iirjancing are continually comvestor will know how the affairs enues with a description of the to know You would be surprised
along. how many things are
of the community and the sur- operation of each particular fund being financed today on a revenue
"user-pays"
basis.
Cities in
rounding area are administered. lnt« which revenue is distributed,
or

Investors want to know the extent

and the cost of all of the services
rendered
by
the
various
local
.—

tore presenting their reports to units of government to the people
of Revenue Bonds
their clients.
of the community.
\
First,
the consultant is conSeventh, the consultant must
(3) What is the Condition of the
froted with the necessity of know- make
himself available to the Community's General Finances?—
ing and thoroughly understanding lai'ger potential purchasers such This requires a presentation of
how much money is needed by as ba"ks, fraternal organizations, general budget operations over a
the utility and exactly what it is insurance companies, estates, etc., period of years, the present outneeded for
Investors are aware for discussion of any and all as- standing
debt, the overlapping
thnf
ntilitv" qprvipps both nnhlic uects of the financing program, debt, and the future general debt
Financing Improvements by Means

and

^st 'b^

expanded

private
the population

—1--J'

when

increases.

When money to finance such expansion is needed and when the

the^oan is

utility there are many

wfll

thfngs

the hivertor
want
know about the physical properextend credit. The

..11—4.

—1

wt,

„

that

the

confjict with other

JV^'\he

feasible and

~„i,

Y :Yi

-fnr

requirements

the new

financing

The mosi reasonable1 terms
tne mosT reasonaDie leuns

revenues

will
to

must

jje
He

tainable.

■

atav

that

3in'amount^'sufficient
in amounts sufficient

mafntaining

onerating

the-expenses

nav

uUlity

the

principal of and interest

meet the

/xMitra+irM-ic

annrnnriafp

fnr

renewals and replace
for

s,t

amount

moderate

financed

extensions and

the

the
tne

econnmv

economy

/A.

of the utility, and
this information on to inter-

exPanslon

faciHtes

mqri7P

n<i

marize

sum-

fn'Tlnws*

follows:

Financing

public

through the sale of
iS not

stated previously, to be sure they
appropriate and will achieve

three

works,

revenue

bonik

•

Great

care

mugt

ex_

with

competent
engineers
who
must edit ihe material to be pre-

it is factual and

sure

■

assigned

under

pretation of the actual indenture

provisions.

professional

serv-

Conclusion
v

You

will

important

elements

the* two foregoing

that

appreciate

discussion

data

the

necesgary

financhlg;

and (3) A qualified financial

con¬

sultant to "custom tailor" the

loan,
provide the appropriate infor-

mation which the investor will
*

re-

■'

quire and to give the municipality
the benefit

of his experience

and

judgment in connection with 4he

can_

properiv

successful conclusion

...,.,v,,,,:,^«ized bond attorney to draw the
c i a 1, proceedings and to issue the ap-

anmiinan

no^.

tvpes

denture- T^is is done by the con- the construction of the project
sultant and reviewed by the bond and to obtain certain of the basic

Eleventh, there are many other fill volumes, Such a the' investor
all-inclusive. but report could
volumes,
m
be D€rformed that
wants a conci
»»««« a concise description of the

wmcn mav oe Deriormea tnai can-

the sale to

^ f">^8 opinion, without which

incidental and collateral services fil1
wbich

i0b for-amateurs. To b"ine

"Prospectus", "O f f i

counsel

any particular item above. Some- utility systems. Judgment must
times it is necessary and advisable be exercised to give him enough

for tbe consultant to meet with to be able to forni an opinion and
yet not so much detail that it beorganizations to de- comes confusing.
scribe the work being done, and

financinj?

Sometime*

members

nVsir-

aba andgeffecti^e £orSthe

consult-

luncheon meetings
of

nrosoective

(5)

Financial

isting

History

Financial

and

±4-1

the

about

the

many

details necessary to get /the
on
the .most favorable

money,
terms

°W

8in8S0ns to describe S
an<lHt0 ans^eii qu,esti?,ns tainwantssoilness ami
its
concerning
the project.
In the He
t0
the

possible.

analysis

the

holder.

must not

the

same

be such

...

the

they

make his

The Prospectus

utility.

consultant

the

bond

must

confer

with

attorney who will

the indenture,

under which the bonds
and

who

will

Official

us now

information

are

issue

the

. r

must

st"cture^f

the

and
r)ew

finan*

Among

The

for

services

schedule

the

lection

might

interest

charges
are

services

■

Mich.

Car-|

—

become

atfso-

Wsters & Co.

•

enforce

charges.

The

the

The

col-.-

investor

Corporatin—Bulletin—Wm.

Rosenbaum

Madison Avertue, New York 17, N. Y.
Louis

San

Francisco

Co., 285

Railway—Analysis—Vilas &

Hickey,

rendered

aud"tfees.

Radio
St.

in-

investor also \vants"to knove^vhat
of

has

page

—.

existinTri^ht^d

rates

powers-exist to

that

Smith

Dealer-Broker Investment

hal

charging
by the
utility over a period of years
mUst be presented, together with
any contemplated changes in

wishes

know,

charges ;..,piude w.;foii.-'the

pro

method

the many things that
the purchaser of a revenue bond
to

and*

oMigatiQns

curred.

nished to the prospective purchas-

GRAND RAPIDS,
rou

Chronicle)-

many related « with Blair Rollins & Co.
^nc-' 60 Monroe
Avenue. In the
"^be nature i:.°J.«t.he rates and past, he was with Dudley j H

Uy.

the

Financial

te-aeSmnLhid DADAIHtMAH J allAHC 3M|1 T lloValnrA
also bc^Sfe lhc
.RCCOHUIICIiCIoIIOIIS OUfl Lllclal UIC

after the

examine the type of
that must be fur-

through the medium of
ordinance, cial statement.
pre-

approving their validity,

Let

fhSing

fo vhe

IsceJ" Contlnued from

reflecting

ctatement

principal

Statement

Third, after the general outline
of the plan has been conceived,
the

forma

....

operation

poSition

ance

and

(Special

25^^ adviSe °n

structure ot requirements debt>*nd
the existing to meeti*%the future

reputation.

interfere

future

sound

time

sultant must interest himself

warns ,10 see ine present oai*

will

consultant

analysis;.me consultant will

take every action which in hks ex-

With Blair, Rollins

document by which the revenue
.®ff®r®d ,has
been merely an outline. The con-

6 trend ?

nresent

«ec

final

dutie^ of ^ consultant and the

4.U4.J/!

WaniS

and financia,

community
community,

Ex-

Conditions—The

operating data must be presented
for a period of years
The in-

un-

incorporated into perience and judgment will obtain
the plan of financing must offer the best results for his client. The
adequate protection to the bond- results l)e gets, of course, are what

opinion

problem' from the fi-

sented to be

The safeguards

issued

en-

self to the financing of expansion

improvements

UKeiy loss in earnings occa
sioned by a downward trend in

pare

counsel,

This, of course,-'PrtfeHnts

different

delivery of existing facilities.

earnings

ant to arrange

any

of the

bond

plan*
going

the iSSUe

with

have

scnted.. to fhe .prospective pui- the bond cannot be maiketed, (2)
nancing of a new enterprise. FrdiiT^haser4 m+ust Par.aPhras.e the more A qualified firm of consulting enthis
int Qn j am confining my„ important provisions
of the in- gineers to design and supervise
a

delivery ofexLing

ested investors, bankers, etc.

care

occasioned by normal growth,

the
the

with,,

sultant

are

the financing of

terprise.

rp^p'rve wbat is to be accomplished by the

provide for appropriate reseive
funds, to pay the costs of ordinary
vide

/jnto
data

states

le
accrue

and

see

nnnrnnrrafo
innronriate

southern

trustees? ^wers and duties, (j) their municipal clients.
In conclusion, I would

ProYlslons fii-irl to(lr \ nlhov rnicnaj.
as
supplemental inhontnroo
dentures, and (k) other miscelAn^.TSST
laneOUS provisions. All SUCh prolaneous pTO/lsiOnS. All such pi O
visions'^ be reviewed by con-

•"
4~+l
ercised in the choice of language
Tenth, the consultant must keep
(4) Description of the Physical
j^e gure
tbe presentation
himself informed after the sale as Properties This description must cannot in any way mislead the
to the progress of construction and be made^arefully^in cooperation buyer or resuit jn any misinterpass

suitable plan for

and work out

on
on

r!ian

P3S~
a

must
rxf

financial

the

consultant

the

jlu

study
—

Second

/if
of

pre-

our

lately taken to_ building factories

^ as o the

improvements is essential to bim" range forthesigmng
before he can construct a financ- u
" :.u 18 7

care-

assemblage, review, and

are

1 t
writers may devote as much of
to the investor, from their attention as
possible to the
working closely with the consult- gale -n question
ing engineers. Knowledge of the
consultant must archaracter and the necessity of the

sound.

there is need for

course,

some

charges, to maintain the system in and other industrial or commergood repair, to keep it properly cial buildings, and selling revenue
insuled' to kAeep il. frae of en~ bonds secured by mortgages on
cumbJanfes; to. tmamtam proper such buildings and by rentals rerecords, to fuimsh proper reports, ceived therefrom..This type of ,fi;° CU Ou., water service for.failure nancing is today a cause of deep
to pay bllls' a?d to pay the bonds concern to consultants and > to
and c°.upons, (h) provisions as to bond attorneys who are considerremedies, (i) provisions as to the ing the long range interest of

the issuing b«dy as to appro•••
pi'iate conditions of sale, help the
All of the foregoing informabond counsel draft the appropriate tion is necesary in addition to the

be passed on

ing program that is

ful

contufinn
cpntation

,1
.

of{erings in order that the under.

information,

this

obtain

servic! requfre^

Eighth, the consultant must ad- sentation of appropriate data.

.pp

before he will
<®nsultant will

the utility

ties

—.

groups

of bidding for the bonds.

(S) particular covenants made to
tbe bondholder including coverian<ts to maintain a d e q u a t e

^ of Sa

mortgage on the earn-

ings of the

purp0£e

Vjse

the repayment of

nnlv security for

da the same for for the
underformed

He
writing

annexation proceeomgj

J'*)* d1lrectl°" otc the a"d the manner of their issuance,

^ 52

Fifth; the consultant must ad-

the

what

lafpr

littlp

document must contain
'

+Visteps to publicize

outsell

will

communities
valorem

bonds

as to wrjfrf ar\d 4
t ,
indenture will, be distributed, and
aIS0 supervise °thcr constructive

well

tion
into.

of the

offering

Hpscrjhp

: 11

that a properly conrevenue
bond issue for

ceived

8ndtoundistorted Picture not Such Such- an indenture will acontain w
only among other things, Ta) deffn?wv.
aS
detail, but over-all.
UClfU' ,uul. ovcl-au- 5UL'n among oiner wings, ia, a aenni- mumvfnal ^ent^T such matters
municiPal clients in
? data must also be Presented to tion of terms used therein (b) a muiucl?a.1
in ®ucn patters
I show, as conclusively as possible, description of the particular bonds 88 mun,c,Pa» bankruptcy, sales tax
Uf. me ydiucuidr oonas
cases, annexation proceedings, and

...Official State-

gradually becoming

W?,1C. *W4H.

torma,

aware

*£♦

way
that is about the only way
about the
ul
such financing is going to be done

ida,

^ 49 Wall Street^New York 5;3 N. ;Y.

Sei^Wsca Oil Company—Analysis-^Genesee Valley Securities Co.;
Powers Building, Rochester 14, N. Y.
Simpsons, Limited—Analysis—James Richardson & Sons, 367
Main Street, Winnipeg, Man., Canda and Royal Bank Build-t

ing, Toronto, Ont., Canada.
U. S. Theiano Control—Data—Raymond & Co., 148 State
Boston 79;. Mass.

King RafflWr"

available

Also
■

••

information
.

Street;

Thermo
1

•

Number 5076

Volume 174

Continued

from

The Commercial and Financial Chronicle

date.

page

(2543)

thus

Trustees

entering the

picture after

the

decedent's

switch from long-held individual issues

can

dollar when it

death

and

which appre¬

ciation had

■

institutional investors, they have barely begun to nibble
In the university field, Princeton, Swarthmore,
Vanderbilt and Rice Institute, are known to hold closed-end preferreci issues; but we can find no record of university purchases of

—■

tax

—;

: commons.

This is

■

Continued

despite the fact that the fund advantages exist to an

;

greater degree through use of those closed-end "trusts" whose
shares are habitually available at discounts from underlying asset

values, ranging from 10% to 40%.

c. even

the

possibility of cashing-in capital-gain-wise on the

income-wise

(accentuated for institutional holders through the
tax-free character of their own income.)
This is seen by noting
excess of the market discount of their shares over
the deduction from normal income for annual management exfollowing table. X
:

#*the frequent

jpense, as in the
1

between

market

'management

expense and discount of closed-end

companies*

investment

1969
Ratio of

Current

Management

Market

Expense to

Discount

Gross Income

of Shares

10.9

13.0

Company—

Adams

Express

*—

American

European

American

International

the

and

state.

discount existing on some closed-end companies is theoretical, this
is only of secondary importance.. The benefit is derived directly

the

The

We have learned that

served

single

most

the

taxes

aid

dollar

higher.

currency—and

They

should

they possibly can be without
putting the value of our money
in danger of inflation. The lower
as

the more purchas¬
will be left at home

Capital Administration

8.4

Carriers and General,

13.5

Electric Bond and Share

16.0

York

18.0

Niagara Share
Petroleum Corp.

ai-x
>

15.0

should

7.4

there

Tri-Continental

*)i\

U. S. and
'

12.6

shifts

emergency

public

Ride"

Management

When the discount enjoyed by

the "trust" shareholder exceeds

;the deduction for management services which is taken from the
f; income derived from the securities in the portfolio, the cited
the

from

investment

company

management are

gained

cost.
The professional full-time managers of
insurance company portfolios likewise have turned to investment

^literally free of
;

-.companies.

"free

This

should

ride"

eliminate

trustees'

other

invest-

qualms over possible criticism for delinincurrence of expense from enlistment of outside
-professional services. Assuredly they are performing constructive
fservice in taking advantage pf value wherever they find it.

■V: tmerit

committeemen's

y.quency

and

That criticism for duty-dereliction or delegation of powers
strongly, evidenced by^existing permissive legisRation and judicial decisions regarding fiduciaries.
Beginning with
^ Massachusetts in early 1948 theAaw already specifically permits
i-V; fiduciaries' investment in investment company shares in at least
>„•

baseless,, is

,fol2 Prudent Man or partial Prudent Man States (some of the States,"incidentally, limiting it to the closed-end funds exchange-listed
v.

f; units).
i

employment.

the

public

level

potential

Moving

into

defense period

important

policy

requires

re¬

rates.

should

noticed

the

that

setting of stable tax rates to bal¬
ance the budget at high employ¬
ment
means
that surpluses will

,;'a

buying-premium) has_wisely acquired over 70,000 shares. (aggre-

'gatinga value of $1,000,000) <of a large-discount closed-end (highleverage) unit; and that the entire holdings of another open-end
fund (Investment Company Shares of Group Distributors) consist
of various closed-end companies.; The professional full-time man-

creation

will

portant

factor

itself

Reorganization

Tax

Structure

this

Under

principle we can
move forward as rapidly as bud¬
getary requirements and increas¬
ing efficiency permit to a reorgan¬
ization

whole

our

Never

Federal

again

and

balance

disastrous

the

budget.

balanced

when

Lib-

bal-

company-type specializing

in securities of a

particular industry, offers the advantage of avoiding committee
squabbling- and recrimination over differences of opinion as to
which particular issues intro-industry to select.
The shares of
Petroleum Corporation, for example, fills this bill in the popular
As shown in the table above, it is presently selling
which far exceeds its 7.4% ratio of manage¬

oil category.
at

dividend notices

discount of 16%,

ment-expense.

MIAMI
61

York

extra

dividend

payable

transfer

books

II.

WESTLAKE,

The

butions

Capital Gains Tax and

the Testamentary

Fiduciary

setting, the price

basis

that? existing at the testator's death

the close of business

January 4, 1952.

Checks will be mailed.
H. R. Fardwell, Treasurer
New

York, December 20, 1951.

Vanadium Corporation

educational

scientific,

MANUFACTURING

AMERICAN

Noble

The

and

Board

York

New

Directors

COMPANY

Streets

West

Brooklyn 22,

Lexington Avenue, New York 17

420

Dividend Notice
At

Board of Direc¬
dividend
of
sixty
declared
on
the
common
stock of
the Corporation,
pay¬
able
March 3,
1952,
to stockholders of
meeting

tors

held

cents

record

American

the

Manufacturing Company has declared the regu¬
quarterly dividend of 25c per share and ayear-end
dividend of
50c
per
share on the
Common Stock, payable December 31,
1951 to

for

Stockholders

Record

December

21,

the

Transfer

1951.

was

o'clock

3:00

February

m„

Payment date fixed after March
tax
saving.
Checks

21, 1952.
2nd

■

the

today,
share

per

maximum

will be mailed.
O.

lar

ness

America

contri¬

corporate

BRAND,

Dated December 20,

Secretary.

1951.

busi¬

books

will

remain cpen.

MOISE, Treasurer.

COLUMBUS

PACIFIC

CANADIAN

RAILWAY COMPANY

held

Directors

dend

Board of
divi¬
seventy-five
cents
per
the
Ordinary
Capital

meeting

NOTICE

DIVIDEND

of
on

the

today

declared

was

final

Southern
Edison

respect of
Canadian

1952,

California
Company

DIVIDENDS

COMMON DIVIDEND NO. 168

dividend

this

cents

1951.

twenty-five

PREFERENCE STOCK

attributable

4.48% CONVERTIBLE SERIES |

railway

from

other

;

DIVIDEND NO. 19

earnings and fifty cents to income

PREFERENCE

sources.

STOCK

4.56% CONVERTIBLE SERIES
DIVIDEND NO. 15

By Order of the Board.
FREDERICK

BRAMLEY,

The Board of Directors has

Secretary.
Montreal,

December

10,

authorized the payment

of the
following quarterly dividends:

1951.
'

NOTICE

DIVIDEND

York

has declared

dividend of

40c per
the

share on the 7,100,000 shares of
capital stock of the Bank, payable

February 1,-1952 to holders of record
at

CHASE

the close of business

HATIOHAL

BAHK

THE

CITY OF NEW YORK

payment of this

dividend.
f

January 2, 1952.

The transfer books will not be closed

in connection with the

The advantage of the

of record

cents

per

the

Stock;

cents

Preference

28y2

THE

investment company medium to trustees
under a will is enhanced by the provision providing for the
elimination of tax on accrued capital gain at death, and instead

payable

welfare

and

the

New

;

Common

Stock has been declared,

of
with

also

The Chase National Bank of the City of

return of capital, to be reinvested.
,

per

value

per share on the
Stock, 4.48% Con¬

vertible Series;

would be to consider at least one-half of such dividends
;

$1.00

par

January 26, 1952, to stockholders

^WORLD-WIDE BANKING^

Common

problem of the handling of capital gains dividends
that is, whether to consider them as current income
available for spending,' or as the equivalent of a return of capital
for reinvestment. • I believe that a wise policy for institutional
as

the

com¬

to consider.

; investors

President.

by offsetting;investment in "defensive" common stock issues (as
of insurance companies, utilities, banks, etc.) or by "pairing" with
stable fixed interest securities.

27,

December

Also the

best

dividend

before.

1951

seventy-

must be faced;
.

Common Dividend No. 178

fact, in this competitive economy,
they
are
imperative
as
never

1951, to stockholders of record at
the close of business December 17,
The

COMPANY

extravagance, even if expense
are cheap.
However, long
are
more
interesting—in

December 28,

five (75<>) cents per share has been

declared,

OTIS

shareholders of record at 3 p.m. on

Y.
6,

notices

ELEVATOR

Management

position.

the year 1951, payable in
funds
on
February
29,

COMPANY

December

In weighing the advantages of the closed-end type, there are
course other elements
besides the discount and management

expense

the

dollars

Company will not close.

There is. for example, the. degree of leverage.
Such presence of prior capitalization is vital, particularly in accel\ erating the fluctuations in dividend;
However, this drawback of
$ leverage to institutional investors can be partially counteracted
-t

New

Broadway,

dividend

risks

1951.

Investment Limitations

COPPER

dollars

Stock

Usefulness of the Industry Fund

investment

ways

is only beginning to
the possibilities which
have been recently created. Man¬
agement will not tolerate waste

attempt to
Under this

should

products, to peaceful

life.

tax

need

princiole the budget will

new

our

new

generally

repeat the errors of 1930 and 1931
of increasing tax rates against a
declining national income in a
futile

peace, then we can devote our
time and our goods, our labor and

develop

bringing the
economy back to accepted levels
of high employment.

insurance company portfolios likewise have turned to the.
1 inyestjnent company medium'.,
t ,,v
•; *

im¬

establishment of world law,
justice and the enforcement of
justice.
When we achieve total

agers of

organizations.
Na¬
automatically arise., in times of turally the contribution must be
boom, and deficits will likewise of benefit to the corporation. But
occur under conditions of depres¬
the
question of benefit to the
sion. But the surpluses and defi¬
company was one thing at a time
cits will only be in proportion
when a
corporation saved one
to
the swing in the production
cycle that causes them, and their
DIVIDEND NOTICES

structure.

It is also highly significant to this question that one important
open-end fund (the acquisition of whose shares of course entails

Whether

petitive

and

one

changes

that

vision of tax

and

year,

excess

18-cent

.is

these

It
"Free

this:

set,

productivity.

8.9

(1951
ed.), Arthur WiesenCompanies'
berger,* and "Wiesenberger Investment Report, Supplement 1," De¬
cember, 1951..
Discounts shown do not include any allowance for
possible future tax on currently-existing unrealized appreciation.

^benefits

be
may

past

profits tax has pro¬
duced a multiple
currency sys¬
tem in the United
States, with
the
companies with the cheap

"Investment

the

have moved into

The

these
rates
left alone, except as
be important changes
policy or significant

16.5

1
:

Foreign

ASource:

levels
been

12.6

Railway and Light
Shawmut Association

high
Having

per¬

and different business economy.

tax rates should be set to balance

power

the hands of the people.
The new tax principle is

for defense; the other,
equally important, to attain

resources

•

actions

decision.

not,

taxes are,

our

moral, psychological and natural

responsibilities of manage¬
ment, that before the time for
large-scale tax reduction arrives,
we
shall doubtless see plenty of
examples of tax-oriented business

low

day

some

review and

reform, ^

elementary measures for protect¬
ing the company's tax position.
We must strive today for two
objectives:
one,
to
create
the

the

ing

First

the number

the

patchwork of

exemptions, and special

general

The

it i

surprised

particularly in the field of cor¬
porate taxation, have changed so
fundamentally the outlook and

Briefly the idea behind our tax
policy should be this: that our
taxes should be high enough to
do their part in protecting the

14.6

years.

our

haps evfen result in some .measure

has

Atlas

force

stable purchasing power over the

stability of

system which

tax

considerations that will

main¬

the

which

level

supported

Federal

measures,

purpose

high

have today is

by the imposition of Fed¬

tenance

when

balancing demand.

important
eral

anced

employment

private
national

13.9

.—

dollar brings four
along with it.

one

letting 1951
slip by without taking the most

page

relationship has been

means a new

created

Benefit Derived Income-Wise
While

■r

from

Defense, Taxes and Your Business
money

dollars

of companies that are

at the closed-ends.

many

tribution of

funds by

appropriated four,
quite different now when
companies a net con¬

for

accrued, to "discount" investment companies, and thus
avoid the perhaps sizable capital gains tax which had obstructed
prior liquidation by the testator while still living.

Observations...

;

KENNETH C. BELL
Vice President and Cashier

share on, the
Stock, 4.56% Con-}

cents per

Preference

venible Series.
The above dividends

are

pay¬

able January 31,1952, to stock¬
holders of record January 5,
1952. Checks will be mailed
from the
Ius

Company's office in
Angeles, January 31, 1952.
P.C.

hale,

December 21, 1951

Treasurer
•

Chronicle

The Commercial and Financial

Thursday, December 27, 1951

...

(2544)
pect has not panned out yet.
The
story from Canada's

BUSINESS BUZZ

change
a

Washington.
A

Behind -the -Scene Interpretation*
from the Nation'*

'O
0

\/|||

.CZD

<3 '/ ■■■■:

into Canada.

It is considered here

C. — From
■•the Rural Electrification Admin¬
istration has come a good, stan¬
D.

WASHINGTON,

barnyard specimen of mis¬
government propaganda.
This particular specimen smells
less fragrant than some of the
thousands
of
government press
releases issued each week, but is

dard,

leading

good type to put

croscope,

being

under the mi¬
average. • The

release reads, in part:

percentage of
telephones

"The

farms

with

American
is

almost

back to the level of 30 years ago,

analysis by the
TJ. S. Department of Agriculture
cf preliminary 1950 Census sta¬
tistics. This is the first State-bvState tabulation which has beaccording

farm

of World War I
prosperity, just before the

bust.

three

doesn't

shirts,

took a beauti¬
ful nose dive, but between 1940.3
and 1950, after the invention of
war
was
developed as the first
successful make-work project, the
number of telephones began to
rise, climbing over 500,000 between
1940 and 1950.
The government,
however,
did not finance this
phone recovery except as it pro¬
and other luxuries

release

concluded

with

"which

was

given

re¬

upon the rural telephone business
in establishing rural tele¬ and managed to land it. /
Several years from now, if gen¬
phones, and that although per¬
centagewise the proportion of erous government money con¬
and
government subsi¬
farms with phones is "almost" up tinues
to 30 years ago, there are actually dized rural phone lines are fairly
400,000 fewer phones, and (2) that well along, and the government is
eince REA in 1949 was put into neither strapped for customers to
the
telephone
business, ' things lend money nor gifted, with a
prudent Administration, REA will
have begun to pick up.
be back in the legislative market
From checking around town a
for new activities.
eomewhat different picture un¬
It's almost a logical bet that
folds. The year 1920 was a won¬
derful base year for REA to pick what REA will next propose is
of farm house
because this represented the peak the financing

dustry was doing a heck of a poor

1951

1930

for

Special Situations"

OVER-THE-COUNTER

Department

SECURITIES
for

v..

Banks, Brokers and Dealers
on

commission

placement

blocks of low priced

Security Dealers Association

Members National Association of Securities Dealers

27 Wall St., New York

Bell System Teletype

Tel. HAnover 2-4859

—

Whereas

done.

been

new

going

money

could be withdrawn

pre-war investments were
subject to exchange controls.

American

his

place

investor

into

money

can

form

any

of Canadian investment and with¬

at will—even

draw it
''

'■■■

■

;

■■

•

■■

caprice

—

at his own

the availability of

and

your electric
didn't keep

fan, Mr. Sneezer
you

—

S. dollars is free to Canadians

"Here's

well

Hope we

Ottawa

waiting too long"

to foreigners.
is

using

required

remarkable.

difficulty organizing somewhat

one

she

said since

repeatedly has

when that
its citizens

to turn them over to the govern¬

ment,

Canadians

required

their

"by-product"

sort

stabilization fund/

thing, it is said, it dem¬
onstrates that when Canada said,
For

government facades for
this lending activity, dummy as¬
sociations which also can be called
similar

store

her

dollars acquired

government

plumbing systems on easy, long- foreign exchange controls into the
term loans. It will probably find ash can is viewed by observers as

The

ernment.

are

surrender

dollars

their

gov¬

dollars

What may slay she first imposed import and ex¬ hand will be employed, it is ex¬
REA, however, in indulging in change controls, that she meant pected, to cushion sharp swings
this activity would be the logical some day to remove them, that in the market
price of the Cana¬
suggestion that it then change Canada really meant it.
dian dollar.
Ottawa, however, is
"cooperatives."

law, a person with $5,000 of in¬ change accounts because of her
come after deductions but before
particular military build-up. Ot¬
personal exemptions and without tawa has gone whole-heartedly
children, will pay $840 per year along
on
arms
standardization
in direct personal income taxes with the U. S. As a result, she
under the present set-up.
has placed to date some $500 mil¬
So about 193 plus U. S. income lions in war orders in the United
taxpayers

lower

the

their $840 per year to
kind

the cost
South building

There

let

When

Canada

defense

o-'' *■;

the

new

for

version

the

beautiful
of the World War II Hyde Park agree¬
Department of Agriculture which, ment was reached in the fall of
like
all
the
other government 1950, it was understood on both
monuments of
steel
and stone sides of the border that the U. S.
erected in the last 20 years, is would order liberally in Canada,

unpaid

for

except

price stabilization program by any
means.

It is also
was

action

the

con¬

where the Dominion had the man¬

There is ufacturing facilities and costs were

heat, not too

far out of line, for the
specific purpose of putting Can¬

expense,

ada

dollars

that

her

respects Canada's ac¬ defense program would not suffer
tion in tossing all its remaining on exchange account. This pros¬
In many

pointed out that there

connection

the

between

Churchill

the

govern-*

ment

making a timid step
liberalizing exchange re¬
strictions, and
Ottawa's action
toward

TJhe

two

were

unconnected

and

coincidental.

(This column is intended to refleet the "behind the scene" inter-

pretation from the nation's Capital
and may or may not coincide with
the "Chronicle's" own views.)

TRADING MARKETS

Boston Herald Traveler
Caribe Stores

the other hand,
in

millions

items.

the

contracts

$158

Actually, only

salary expenses are only a small

part.

This country, on

has

support this

"information."

not setting up
additional funds
for this purpose or a full-fledged

middle, States.

income brackets are parting with

large

&reeTve<»dConipax\u
Teletype Bids & Offerings

capital

freely,
Now

Eastern Racing Ass'n

*Gear Grinding Machine

National Company

Polaroid Co. 1st Pfd.
^Riverside Cement "B"
*Seneca Falls Machine
*

Write-up available

LERNER & CO.
Investment

Securities

10 Post Office Square, Boston
Telephone

9, Mass*

Teletype
BS 69

HUbbard 2-1990

Allied Electric Products
FIRM TRADING MARKETS

FOREIGN

Members New York

its

Over-the-

Counter Stocks and Bonds,

httsis.

one

maintained for the accumu¬

lation

Orders executed

invest¬

and

encourage

smashing of the

time

Canada

still

also stationery, typewriters,

has

some

into

light, phones, printing, and travel

Our

will

last vestiges of control

tractors who built them.

TRADING MARKETS

continue,

movements.

which

continuance is

Canada has
junked exchange
sponsibility for the telephone loan its name to the Rural Sewer Ad¬
controls in a year in which her
"In contrast with the farm tele¬ program" had something to do ministration.
;!t
t-s
adverse merchandise balance will
with this, is somewhat misleading.
phone situation, in the 16 years
How much the above kind of run upwards of $300 millions. This
since
the
Rural
Electrification REA did not announce the opera¬
Administration
was
established, tion of its first rural telephone propaganda costs the taxpayers is alone would afford a sufficient
excuse to any of the other several
the
percentage of farm homes project until Sept. 20, 1950. The something which may never be¬
with central station electricity has census of 1950 was taken the pre¬ come known. The Byrd committee nations among the State Depart¬
has never been able to nail down ment's wards (Canada is not one
jumped from around 11% to more vious April. Sj!
#
»j«
»
than 84% today."
propaganda expenses fully. REA of the wards), who profess to
REA's background was that it will admit that its "information" want to get rid of import and
annual exchange controls but in practice
It is conceded to be within the cleaned up all but the dregs cf staff totals 29 with an
realm of possibility that the REA the rural electrification business payroll of $162,250. According to will not do it, to renege on the
propaganda division wanted to back in 1949, and was looking for the Senate Finance Committee, promise.
Furthermore, Canada is facing
give the simple impression (1) some activity that could keep the under its version of the tax bill,
that
the private
telephone in¬ boys on the payroll. So they hit substantially the same as the final a substantial drain on her ex¬

job

capital

large

will

factor

this clincher:

progress

This

1949

titanium, in alu¬

ore,

ment

the

iron

Furthermore,

preliminary returns,
Year Farm Phones No. Farms
as compared with 38.7% in 1920,
19206,448,000
2,498,000
the first year the Census included
19306,288,000
2,139,000
farm telephone statistics.
6,096,000
19401,526,000
"Numerically, 4 0 0.000 fewer
19455,859,000
1,866,000
farms had telephones in 1950 than
19505,384,000
2,087,000
in 1920. Preliminary reports show
Thus from 1930 to 1950, the
that last year there were 2,059,of
farms
decreased
474 telephones on farms. In 1920 number
in 20 years while the
there were 2,498.493 farms that 904,000
number of farm phones declined
fcad telephones."
There followed some compari¬ only 52,000.
The implication that the REA,
sons of farm telephones by states,
end

minum, and in other lesser things.
Ottawa has confidence that the

inflation,

moted

done,

has

manifest her faith in
her own future, and cut the final
control
ropes.
Canada is expe¬
riencing a capital boom, in oil,

of 1921, the num¬

telephones, silk

Canada

What

said,

After the bust

merchandise bal¬

adverse

the

set

will at least off¬

1951

in calendar

CO.

in between.

ber of farm

safe bet

ance.

the number of
Y-: come
available showing farms farms has steadily declined while
'■'*
with telephones. The analysis was the number of farm telephones
made by the Rural Electrification has continued to climb in the last
Administration which in 1949 was decade. Here is a table showing
£iven responsibility for the tele¬ the number of farm phones and
phone loan program.
the number of farms for specified
"Census takers last year found
years, as reported by the Census
that 38.3% of all United States Bureau:
farms had telephone service, ac¬
No.
cording

useful
to
contrast, because it
show what has happened

year

years

that the net inflow of investments

And 1920 was also a

flow

widespread

the

of investment funds from the U. S,

"r *

portant

The lesser is new

municipal borrowing in the U. 3.
market. The other and more im¬

means

of U. S. funds.

any

Canada has had two large sources

6 ?/.S

not

'
.

GZ53

-y*

0
0

xJL f

Capital

a:'

■■■■■■■

•

ex¬

however, is
all adverse.

standpoint,

Kingwood Oil

SECURITIES

Leon Land €r Cattle

Standard Cable

HARL MARKS & P.O. INC.
FOREIGN SECURITIES SPECIALISTS

50 BROAD STREET...NEW YORK 4, N. Y.

Hill,Thompsons Co.,Inc.

TEL. HANOVER 2-0050...TELETYPE: NY 1-971

Trading Department

our expense

NY 1-1126 & 1127

70 WALL STREET, N.
•.

•

vW-1-

U-:»JJ.U i J*. mj .J.mi^iji.ijj.1 m

Tel.

WHitehall

4-4540

Y. 5