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ESTABLISHED 1839
Reg. U. S. Pat. Office
J Volume 166
i
Number 4652
New
Shall We Construe!
By JOHN M. SWOMLEY, JR.
Against Conscription
Mr.
Copy
1;
Swomley,
urging military
training proposal be dropped,
fays probable $20 billion con¬
j
scription
Marshall
plus
cost,
eY^Pfat outlay, would caiise
nomic
kt
eco-
collapse.
America must choose either to
^ Help reconstruct
Europe
to
or
|
pass
[c^bulsory miUtary trairiing. It
| cannbt do both without injuring
*'j: i /'
I..
a
Acting Director, National Council
j
k,
I '
Price 30 Cents
Division of Family Income
A Tax Red Herring
j Or Conscript?
5
York, N. Y., Thursday, December 4, 1947
:
■,
" '
American
tne
$20
c'.°,s.e
John M. Swomley, Jr.
billion.
The Marshall Plan for recpn-
I
struction
provides
American
for
aid to Europe to supplerrient what
the European nations are jointly
I
I
I
themselves. For
four-year program beginning In
western Europe wants $22,j 440,0000,000, of which about $19
i able to do to help
a
1948
billion
would
come
I
I
I
I
I
with -rsdmewhat
I
(Continued
United
Staters.
billion
would
from
be drawn
World Bank.
the
The remaining $3
from the
The schedule of aid
calls fer about $8 billions
smaller
on
in 1948,
amounts
page 33)
Slate and
Municipal
R. H. Johnson & Co,
Established
Bonds
1927
INVESTMENT SECURITIES
Bond Department
Hirsch & Co
64 Wall
Members New York Stock Exchange
and (ther Exchanges
BOSTON
*5 Broad St., New York 4,N.Y.
BAnover 2-0600
Chicago
,
Teletype NT 1-210
Cleveland
Street, New York 5
Troy
PHILADELPHIA
Albany
Baltimore
Dallas
Pittsburgh
London
Geneva. (Representative)
1
Buffalo
Woonsocket
NATIONAL BANK
•
Bankers to' the Government- in
Office:
!
Branches
-
In
Colony
j
Underwriters and
.
Paid-Up Capital
Fund-
Reserve
The
Bank
Distributors of
26,. Bishops gate,
London, E. C.// v."
conducts
banking and exchange
!
Company
Common x & 4 %
^
(Incorporated)
Established
business
1-395
OF
Toronto
*Prospectus
on
,
'Service
Utilities
Analysis
CLEVELAND
:
New York'
Cincinnati
Chicago
Columbus
120
Buffalo
York
Broadway,
Telephone:
Denver '
Toledo
New
;
Stock
New York
REctor
Bell Teletype:
upon
request
>and Dealers
Members
and
Members New York Stock Exchange
Members
f
request
,
1899
NEW YORK
THE CITY OF
Northwest
Hardy & Co
'
of
aUo undertaken ";•,
NY
Montreal
for Banks, Brokers
Con v. Preferred
%
!
£2.300,000
description
NATIONAL BANK
HAnover 2-0980
-
*Robert$baw-Fulton Controls
Municipal
v
Corporate Securities
Trusteeships and Executorships
■
.
Y.
-Bell Teletype
|
Dealers Assn.
Bond Brokerage
Common
£4,000,000
£2.000,000
.
every
and
■
India, Burma, Ceylon, Kenya
and Aden and Zanzibar
Subscribed Capital
Vending Corp.
>r£<•;n £'?'i
Kenya Colony 4md Uganda
Head
; ,*ABC
'
New York
CHASE
THE
Members. '
Security
WILLIAM ST., N.
•
Bond Dept. Teletype: NY 1-708
r
\
of INDIA, LIMITED
-
52
Wilkes-Barre
Springfield
/
,
New York
Syracuse
Harrisburg
Scranton
Williamsport
'
Exchange
5, N. Y.
Members New
York Curb Exchange
39 Broad St.
■
NY 1-635
;
>
|Tel. DIgby
4-7S00
-
.111
New York 4
2-8600
Tele, NY: 1-733
New
other
Broadway,
REctor 2-3100
|
Boston
York Stock Exchange
Principal Exchanges
N. Y. 6
Teletype NY 1-2708
Telephone:
Enterprise 1820
2
COMMERCIAL
THE
(2262)
Thursday ,• fiecember 4,1947
FINANCIAL CHRONICLE
&
.
:;v
M:
Program oi Limited Price and Wage Controls
Amer. Tel. & Tel.
Secretary of Commerce
When issued
/
Louisiana Securities
essential to promote stability in domestic economy and, at same
control consumer credit,
materials, as well as reprice and wage controls in selected categories.
Denies desire to renew overall wartime
controls, but holds some government action is required.
time, to implement foreign aid program, urges power be given government to
allocation of railroad equipment and facilities, exports, inventories of scarce
Rtehts*
♦Expire December 15th
instalation of
'
))'_ Prospectus
\
Commerce Secretary, maintaining it is
&
#4.r- Jp
Alabama &
HARRIMAN*
By HON. W. AVERELL
2%% Cv. Deb. 1957
on request
i
S
Bought—Sold—Quoted
v
New York Hanseatic
m
120 Broadway,
the domestic economy,
New York 5
Teletype NY 1-583
BArclay 7-5660
lack
we
can
•
3/6s, 1956
ed
the, Department, is related to its
The other is a field in
achiev-^ work.
without which I share a joint responsibil-
definite
The
.
e s
Bag
Members New York Curb Exchange
31 Nassau Street, New York 5
Telephone COrtlandt 7-4070
Teletype NY
con-
1-1548
of
American Water Works
primary
to
concern
partment *^of
the
year.
Another
billion dollars would be added to
First,
Commerce
total
past
the
during
De¬
however, I wish to refer to
Common
ing
Request
I
>
York
Curb
.
General
i
.
Decontrol
above
and
the enactment of the Second
Exchange
Committee,
sumer
credit.
that resulting
trend
of
goods sold on con¬
I share the convic¬
By HON. HOWARD H.
o1
fill
Members Baltimore Stock Exchange
WOrth
Bell
1947. I, therefore
that these powers be
to emphasize
achieved in this in¬
appropriate
is
It
the
results
limited
stance with the aid of
Wharton Iron & Steel
U. S; Finishing * com. & pfd/
Baltimore
Porcelain
Steel
Electric Bd. & Share Stubs
Title
East
Transmission
(Continued on
Central States Elec. (Va.)
Northern
Artcraft
United
Detroit Int'l Bridge
Inflation
Frank C. Masterson & Co.
New
Artists
Bates
travelogue series, I am
rising
confess that I speak on
3^4-47
Theatre
Laboratories
Manufacturing
Boston & Maine R.R.
cost
of
lem with some
living.
I
must
For
con¬
that
cede
«?
the
in
tional
Punta Alegre Sugar
appeal
that
eign events.
Federal Liq. Corp.
of this
It is hard to
Southern Oil
dramatize
Warner & Swasey
confronts
by the thrifty
frugal
Hood Chemical
and
Kirby Lumber
U. S. Glass Co.
people
Howard
Buffett
of
America, who have seen their dol¬
lar savings more than cut in two
in purchasing power.
IntT Detrola
Time, Inc.
OYeencieandCompami
Members N. Y.
Security Dealers Assn.
37 Wall St., N. Y. 5
Hanover 2-4850
Bell Teletypes—NY 1-1126 & 1127
expert
does not have to be
nor
a
an
prophet to foresee
the eventual disaster if this money
delivered
in
the
House of Representatives by Con>1850
speech
gressman
Buffett, Nov. 28, 1947.
on
inflation.
was
and
the matter with
what might be
done
king did not pretend to be
But he sensed that
economist.
there
might be
between the
some
connection
economic distress of
people and his dilution of the
money by frequent coin-clipping.
Copernicus made a study and
opened his report with these ob¬
his
Members
^
them.
of
take
any
Neir. York
New
New
York
York
Commodity
Chicago
.Stock
Exchange
Curb
Exchange
Cotton
But
Board
of
Inc.
Trade
New Orleans Cotton Exchange
And other Exchanges
interest
NEW
CHICAGO
YORK
DETROIT
GENEVA.
few
it.
This is
.
.
in
.
not
Union
at
but by small degrees, by
once,
ruins
Copernicus
The
4, N, Y.
PITTSBURGH
SWITZERLAND
Bag & Paper
an
the
action which is in
state
certain
a
Stock &
sense
certainly right.
was
deterioration
of
money
is
Rights
Trading Market
Prospectus
Request
on
a
hidden and long-drawn-out proc¬
ess.
People Are Aroused About Prices
Troster, Currie & Summers
Members
But while the processes of cur¬
rency
deterioration
(Continued
may
New York Security
in-
t•
;>i
•'
Dealers Ass'n
r
.
Teletype—NY 1-376-377-378
32)
page
on
be
Indiana Gas &
for
United Kingdom 4 %
*Air
Water Company
Abitibi
Pow. & Paper
Common,
'90
Brown Co.
„
Minn. & Ont.
Noranda
Paper
Mines
Southwestern
Public Service
Gaumont-British
Scophony, Ltd.
British
Securities
Department
*'
.
Bought—Sold—Quoted
.
115 BROADWAY
Telephone BArclay 7-0100
.
Principal Exchanges
NEW YORK 6, N. Y,
Teletype NY
.
1-672
INCORPORATED,
37 WALL STREET
Common
,
*'
0
^Prospectus
iJ;G*WHiTE£( Company
Goodbody & Co.
Members N. Y. Stock Exchange and Other
i?V
Common
^Georgia Hardwood Lumber Co.
•
Securities
Department
'
Emery Air'.Freight Corp,j
Company
Common
,
Canadian
Products, Inc. Com. & *A?
Detroit Harvester Co. Com,
,
;
Rhodesian Selection
r
N. Y. Cotton Exchange Bldg.
New York 6
Teletype NY 1-1610
the
Exchange
Exchange,
Exchange
Exchange
39 Broadway
Digby 4-3122
regards
as
money—very
it
because
^
.
Curb
York
Stock
fourth—concerning the deteriora¬
servations:
We Maintain Active Markets in U. S. FUNDS
V
Mgr.
great that nobody dares ig¬
so
nore
H. Hentz & Co.
:
Asst.
"The evidence of the first three
hidden."
about it.
an
one
what
Poland
Inflation Is Involved Problem
*A
Established
cover
The
But
us
1526 King
KANE,
New
Chicago
Copernicus continued:
tion
Sigismund of Po¬
land called in Copernicus to dis¬
In
Members
"(3) Sterility of the soil.
"(4) Deterioration of money."
is
problem.
WALTER
Joseph McManus & Co.
"(1) Discord.
"(2) Great mortality.
easily confuse the student
Copernicus, the great scientist,
once
pictured the difficulty that
the
losses suffered
Newmarket Mfg.
so
MICHAEL HEANEY, Mgr.
republics, there are
palities, and
four, which according to my opin¬
ion are the most dangerous ones:
in my life. Yet, after
those years of study, I still often
find myself temporarily following
one
of the countless blind alleys
of current for¬
Utah
Securities
downfall of the kingdoms, princi¬
first place
emo¬
Aetna Standard Eng.
Curb and Unlisted
"Among the innumerable calam¬
ities which ordinarily cause the
deterioration has held
and money
has
not
,
14 years the endeavor
over
clearly comprehend and under¬
stand the intricacies of inflation
problem of inf lation
this prob¬
reluctance.
to
the
America
NEW YORK 8
HAnover 2-9470
Teletype NY 1-1140
<S>-
America—the
Clyde Porcelain Steel
Dumont
this
1923
York Curb Exchange
WALL ST.
the risk of interrupting
going to discuss briefly the most talked about problem on the
deterioration continues. Yet I must
Manufacturing
Piece Dye Wks.
Established
Members New
64
that time we have had
Congress has been in special session for two weeks. ^During
reports about conditions in Europe and Asia.
At
number of
Units
Aspinook Corp.
form of regimentation will stop present money
main streets of
Boston Terminal
United
a
no
Trust
&
Stock
Common
22)
page
Nebraska
England
Guaranty
2-4230
Teletype NY 1-1227
con-
depreciation, and political parties will not
stop inflationary spending.
Proposes introducing bill to restore gold coin standard and concludes in¬
flation will not end until people again possess final power of restraint on government spending.
ard and
^
'
Texas
Broadway, N. Y. 5
120
De¬
Congressman Buffett, in stressing evils of inflation, holds our money deterioration started in 1933, when
revolution in U* S. money system took place.
Says real anchor for sound currency is gold coin stand¬
;
Automatic Sprinkler
BUFFETT*
rU. S. Congressman from
GenT Aniline & Film "A"
Russell Pfd.
-riscom
Act of
control
Cement Wts.
Minerals Co.
reendale
■I lobe
Copper
Portland
eneral
Of controls over the use «>f transr
I
Taylor
Cananea
reene
by recommend
if con¬ continued.
This amount
upward
basic
the
the amount of
120 BROADWAY, NEW YORK 5
Tel. REctor 2-7815
actual mafketa On
Rayon "A"
of
Act
continuat'or
authorized 'the
1947
A Gold Coin Standard to Halt
York Stock Exchange
New
.
Second
Tudor City
Members
New
over
from
1, 1947.
McDonnell &fo.
f't-"
is
of
Currency
and
Dec.
1
The
simply
credit
consumer
trols remain lapsed.
on
branch offices
our
reversion to prewar terms,
two
Secretary
Harriman before the House Bank¬
statement
♦From
Bought-—'Sold-—Quoted
Direct wires to
My second
portation equipment and facilities
These controls
1 p a r tic u 1 a r expansion of such credit. Relaxa¬ by rail carriers.
tion
under
present conditions— are administered by the Office oi
segments of
when the
supply of goods, - and Defense Transportation, subject
the economyparticularly -- consumer
durable to my over-all review. In the first
are presenting
W. Averell Harriman
to
you
their goods, can not be substantially quarterly report to the Congress
to the upward under the Second Decontrol Ac\
detailed der expanded—adds
pressure on the price level.
In¬ I stated that there is greater neer
scriptions of the existing situation
stalment credit has increased by
now for controls over such facil¬
and their proposed actions.
My
more
than
two
billion
dollars ities than existed at the time o'
testimony is directed toward areas
with
Acerned
Vanderhoef & Robinson
[
Controls
NY 1-1557
proposal.; relates to
,the extension of authority to al*
locate transportation facilities and
.
equipment.
to instalment cred¬
it controls, it .is evident that re¬
straints used prior to last month
were
a
factor- in restricting the
prin¬
cipally
Common
Prospectus
Controls
Instalment Credit
.With regard
agen¬
do i
Bell System
ac-
tion.
|
Kty
:ty.
gov-
ernment
Class
Transportation
St., New York 4, N, Y.
HAnover 2-0700
Now Orleans, La.-Birmingham. Ala.
be
*
Savoy Plaza
i 25 Broad
One of these, though tion that these ebntrdls should be
direct responsibility of promptly reenacted. •
the
not
Co!
Members, New York Stock Exchange
proposals.
present time
that these ends
Savoy Plaza
Chase
<&
as-
at the
surance
'.-V
Steiner, Rouse &
with a minimum effect
It is apparent that positive steps are required, since
and to implement the foreign aid program
domestic supply and demand.
upon
stability in
given measures necessary to promote
It is essential that consideration be
Corporation
,
,
.
NEW YORK 5
Tel. HAnover 2-9300'
;
Tele; NY 1-1815
.
;>'•..:
request
;>
Reynolds & Co.
Members
120
,y: ESTABLISHED IS?O
on
New York Stock Exchange
Broadway; New York S, N. Y. ^
Telephone:
Bell
REctor 2-8600
Teletype:
NY 1-635
COMMERCIAL
THE
Number 4652
Volume 166
I N D E X
Articles and
Economy to Offset Spiraling Prices
Cover
Program of Limited Price and Wage Controls
W.
—Hon.
2
—Rep. Howard H. Buffett
More Production and Government Economy to
Offset
3
Spiraling Prices—Sen, Robert A. Taft
Transitions in Securities Business—James F. Burns, Jr.——
Stock Market Formulas—Theodore Prince. ___
on
In the domestic
Depressions—Elmer C. Bratt—
Lewis
B.
7
Schwellenbach
Accounting
Current Problems in Depreciation
the basic
Criticizes Definitions of Free Enterprise—R. C.
Hoiles
II
Income Taxes from Investor's Viewpoint—L. Scudder Mott_
11
Industry's Answer to the Police State—Earl Bunting
13
ity,
is
9
Gain
National City Bank Opposes Forcing Banks to
the
Monetary Fund Appoints Parsons Director of Operations— 13
Federal Advisory Council Says Banking Policies Are
Not
15
Inflationary
15
Secretary Snyder Discusses Credit Controls
Belgium Obtains Large Export-Import Bank Credit___
19
Uruguay Bonds Drawn for Redemption
21
We Could Do Without Them! (Boxed)
27
Regular Features
__Cover
As We See It (Editorial)
„
St£>cks_—
Bank and Insurance
12
—
32
Business Man's Bookshelf
18
^Canadian Securities
8
Coming Events in the Investment Field
8
Recommendations
Investment
Dealer-Broker
13
Einzig—Britain's Dwindling Gold Reserve
•
From Washington Ahead of the
News—Carlisle Bargeron
7
Activity
37
News About Banks and Bankers
Mutual
Business
of
16
Funds
Observations—A. Wilfred
Our Reporter on
May
21
Governments
43
Prospective Security Offerings
43
*
Public
Securities
Railroad
Estate
Real
8
Securities
Utility
—
Salesman's
Securities
19
Corner
5
Washington
44
Published
Twice" Weekly
Other
COMMERCIAL
The
Other
FINANCIAL CHRONICLE
Bank
$25.00
(J. S. Patent Office
Reg.
and
per
25
COMPANY, Publishers
DANA
B.
Park Place,
New York 8, N.
REctor 2-9570
Y.
$25.00
$42.00
year.
Note—On
per
year.
year.
Record—Monthly,
(Foreign postage extra.)
Earnings
per
$38.00
per
Publications
Record
(Foreign
account
of
the
Publisher
HERBERT D. SEIBERT, Editor &
fluctuations in
rate,of exchange, remittances for for¬
eign subscriptions and advertisements must
be
made
in
New
York
funds.
D.
plete Statistical issue — market quotation
records,' corporation news, bank clearings,
and
•Other
city news,
Offices:
ad¬
some
United
workers
live
on
condition with
of
cost
groups
have
a
in
White
increase
in
the
ket
their
tax
unable
receipts
to
as
in
another
we
S.
135
La
Salle
St.,
Bond & Mtge. Guar. Co,
-•>:
;
as
v
kind
of
create
a
in¬
52 Wall St.
in
United
Territories
Pan-American
Union,
5, N. Y.
Tele. NY 1-2425
American
export mar¬
Hardware
Company
ciencies.
Bought—Sold—Quoted
production is abnormal
up
for wartime defi¬
This abnormal inflation
production where it exists can¬
further extremes
of
not be carried to
danger.
without serious
as
Deficit
Dinner of
Society, Philadel¬
200th Anniversary
St.
Andrew's
and
Standing and High Prices
political stand¬
point, it is somewhat futile to dis¬
continued on page 38)
Except from
a
1
other leading exchanges
WALL ST.
NEW YORK 5
Telephone DIgby 4-2S2S
are
B. V. D. Corporation
interested in offerings of
Public National Bank
& Trust Co.*
PREFERRED STOCKS
*Third
Prudence Co.
and
$35.00
• -
States,
.
■<£*
of
year;
in
per
Newburger, Loeb & Co.
Member's
_
XI. S.
Members
15 Broad
New
York'
St, N Y. S
Bell
Spencer Trask & Co.
Members New "York Stock Exchange
25 Broad Street* New York 4
Tel.: HAnover 2-4300
Stock" Exchangei
WllUeh.il 4-6330
Teletype NY 1-2033
quarter
available
Company
Subscription Rates il,
Subscription*
New York
Tel HA 2-8080
retain, the sud¬
Lawyers Title & Guar. Co.
second-class matter Febru¬
25, 1942, at the post office • at New
York, N. Y., under the Act of March
•» 1879.^^
t 'i^
!
great ac¬
High Grade Public Utility and Industrial
•
ary
Possessions.
QUOTED
on
bring sudden and dan¬
unemployment.
So, also,
various manufacturing
fields
make
to
Senator Taft at
the
Lawyers Mortgage Co.
N. Y. Title & Mtge.-Co.
Copyright 1947 by William B. Dana
'
—
FIRST COLONY
land, c/o Edwards & Smith.
Reentered
SOLD
Members New York Stock Exchange
:::An address by
We
CERTIFICATES
i
etc.).
Chicago 3, 111. (Telephone: State 0613);
1 ^Drapers' Gardens, London, E. C., Eng¬
■'
—
the
may
where the
increase
rapidly
BOUGHT
gerous
of
decreased, to meet increased ex¬
penses. States and municipal gov¬
are
is
den cessation of that
Institutions relying on en¬
ernments
Lamston, Inc.
CORPORATION
cannot hope to
we
collar
cost
M. H.
tivity in some industries based on
an abnormal export market which
pitiful
and unorganized workmen
had
increases
much
less1
the
of
v-
should do what
we
going
instance,
1-956
of
also. We are
building up our production
in
some
fields beyond what can be
hoped for in normal times. If, for
increase in
65%
living.
a
N.Y.
WHitehall 3-0272—Teletype NY
jo prevent further in¬
There
flation
Members N. Y. Security Dealers Assn.
25 Broad St.y New York 4,
f
creases.
fixed return
a
are
world
can
we
like farmers and
has
increased
living, but
investments
prosperity
continued
entire
DUNNE & CO.
tremendous factor
a
ship to the poorer families, and
they get bad enough, will seek a
The income
Susquehanna Mills
TITLE COMPANY
Every Thursday (general news and ad¬
vertising issue) and every Monday (com¬
state
to
States is such
violent readjustment.
of certain groups
Warren Brothers "C"
present high prices in
60% above prewar. The
the
Alegre Sugar
left be¬
been
new price level,
below where it is today, but 50%
decreased
1-714
Business Manager
RIGGS,
Thursday, December 4, 1947
-
have
whole economy can be
justed
phia, Pa., Dec. 1, 1947.
WILLIAM DANA SEIBERT, President
•
WILLIAM
who
The
hind.
or
Broadway
Lea Fabrics
can
themselves may not be dangerous
postage extra.)
the
to 9576
Punta
Monthly,
—
2-4500—120
Haytian Corporation
un¬
cumu¬
gradually increase the wages
those
of
dowment funds find their income
Quotation
year.
Monthly
WILLIAM
Canada,
Countries,
and
the
prices
and
continuation of the pres^
a
living.
of
rapidly
could increase the minimum wage,
spiral of prices and wages is
dangerous because it creates all
kinds of distortions which, when
than
See article on page 9.
REctor
Bell System Teletype N. Y.
be stabilized where
they were, it may be possible to
correct the present distortion. We
ent
the
Dominion
for
If
Price Spiraling Dangerous
from
34
production
can
weight of cattle and hogs cdmin£ in" the worlds-today that world
to market because of his campaign
prices will tend to adjust them¬
education, but I think even he selves to American prices, so that
will admit that the high price of there
may be no, great distortion
grain is a much greater factor. If in* international, trader But
a
we arbitrarily reduce the price of
gradual stabilization may be im¬
grain, its use for feed will rapidly possible if prices, and the wages
increase
and their will be less in all highly organized industries,
wheat
for
human
consumption continue to rise. From the point
and shipment abroad.
of view of the increasing hard¬
those who
You
employment
laster than the cost of
Tomorrow's Market (Walter Whyte Says)
Without
duction.
Robert A. Taft
of
40
Securities Now in Registration.
and
credit
some
23
The State of Trade and Industry
Established 1908
Member* N. Y. Security Dealers Assn.
obstacle to continued pro¬
an
if the
factory
*
Securities
J.K.Rice,Jr.&Co.
particular labor and mate¬
rials
of
high price of grain is conserving
grain for shipment abroad because
it does not pay to feed it to live¬
stock.
Mr. Anderson is claiming
But
5
Report
Our Reporter's
their
best
Finishing Com. & Pfd.
late.
24
Indications
peo¬
wages.
Rising
prices are not an unmixed evil.
As prices of a commodity
rise,
people buy or use other things so
that
consumption tends to de¬
crease and production to increase,
:o that the
problem of that par¬
ticular commodity is ultimately
solved. Thus, at the moment the
12
Haile Mines
U. S.
Once this purchasing
power falls off, many manufac¬
turers will find the high cost of
stopping this
spiral.
11
J. Stewart Baker Hits Price Controls and High Taxes
all
but there
practically
agreement
method
Hold
Securities
Government
stabil¬
our
power
Jersey Worsted Mills
Moore Drop Forging
ple which may bring a violent re¬
duction of prices such as occurred
in 1920 after prices had outrun
on
Commercial Building
of millions of
chasing
to
18
New
ex¬
pre-
n o
Expects
increased
meet
the
17
Understanding the Tax Laws—Victor R. Wolder____i
Aeronca Aircraft Com. & Pfd.
pay
sents
17
Joseph W. Martin, Jr
and
adequate compen¬
sation to their employees. These
income groups are using up their
savings.
Sooner or later there
will be falling off in the pur¬
f
o
to
necessary
penses
greatest threat
Aranha
Oswaldo
Problems—Dr.
we
equine.
savings.
wages
14
Temple and Henry Hazlitt
encourage
as
and
prices
Expanded World Income Will Solve Present Economic
The Legislative Outlook—Rep.
for
week
HORSFIELD
prin¬
increase
Economic Outlook and What to Do About It
—Alan
field,
ciples. Accord¬
ing to prevaili n g
opinion,
the spiraling
9
1
—James V. Toner
an
reserved
This
Vote for
con¬
in the international, the principles of
economics which can bring good times or bad times are infinitely
complicated.
The relative strength of conflicting economic forces is
impossible to measure and there is plenty of disagreement, even on
___
Wage and Price Restraints to Combat Inflation
—Hon.
leader attacks President's proposed price
spending and to
courage
Speculation Not Cause of Rising Prices—William J. Reid—
How to Avoid Deep
usually
canines.
devote it to
spiraling prices can only be curbed by more pro*
dnction and less government spending.
Says Jhere is distortion in
price structure, and warns we are building up production in some
fields beyond normal level.
Recommends increased workers' pro¬
ductivity, decreased government spending, limits on exports, re¬
straint of bank and consumer credits, and reduced percentage of
government guarantee on housing loans. Urges campaign to dis¬
A Gold Coin Standard to Halt Inflation
Comments
and
trols and asserts
2
Harriman-i
Averell
3
U. S. Senator from Ohio
*
*
Senate Republican
is
space
felines
By HON. ROBERT A. TAFT*
Conscript?—John M. Swomley, Jr.-Cover
or
(2263)
This
Cover
Lutz
L.
Shall We Construct
CHRONICLE
More Production and Government
Income—A Tax Red Herring
Division of Family
—Harley
FINANCIAL
Page
News
Standard—Melchior Palyi
The Inflationary Bond
&
Members New York Curb-Exchange
'
135 S. La Salle St., Chicago 3
Tel.: And over 4690
v
C. E*
on
analysis
request
Unterberg & Co*
Members N. Y. Security, Dealers Ass'n
61 Broadway, New York 6, N.Y.
Telephone BOwling Green 9-3565
Albany
-
Boston
-
Glens Falls!'
-
Schenectady
-
Worcester
Teletype NY 1-1660
U.-y
4
(2264)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, December 4,1947
tfr
Transitions in SecuritiesiSusiness
By JAMES F. BURNS, JR.*
jfV.4.
L
-
Partner, Harris, Upham & Co,
^
,
Former President, Association of Stock Exchange. Firms
-
>
.
Securities broker points out new concepts of securities business which has
placed it on a better and
sounder basis.
Says there is better public .understanding- of securities transactions and* recognition
of importance of economic functions on securities business/ Sees profitable use of
greater investment
research and more corporate publicity, and cites valuable work of NYSE
public relations
r
r
;
LETTER TO EDITOR:
f of stock transactions.
to general decline in volume
Scores Federal Reserve margin restrictions and contends certain Federal
lations and
heavy taxation
Market Formulas U-
r
Theodore Prince, securities consultant, in
commenting on Mr. May's
articles, points out limitations and shortcomings of Dow
Theory
and other mathematical formulas for
forecasting market trends.
Also takes issue with Mr. Barbour on "Defense of Dow
Theory."
*
i
i
program*
0 Holds ■; shift has been from speculation to prudent investment and points
"Comments |on|StoclC;-
I
.
#
regu-
Editor, Commercial
impeding flow of investment capital.
are
and'Financial'Chronicleft.'"X"'
To be invited to speak before the members of the Junior Investment Bankers and
Brokers -Association is indeed a great honor.
I know that sounds like the usual hack¬
■
so,
You have just entered the securities
——
instances, at the outset, at least,
knew little, if anything, con¬
have done
I hope, to
you
it with all sincerity.
say
and
make
it
life's
he
cerning the
work.
your
values or the
pros¬
and an appreciation on
part of our obligations to the
public in the services which we
render.
find out about
can assure you
change business
its
sonal ; experience.
You
its
want
problems,
objectives;
and
for
onfe
>
me as
qualified
talk
these
matters
I
ing of
that I
am
F.
Burns,
Jr,
you
happy indeed to be
very
a new
new
concept of
understand¬
obligations to the public
fuller appreciation of the
a
part that
here.
The
our
—and
James
least.
assure
developed
business—a
our
extremely
flattering, t o
the
the dam since those days. We
over
play in the system of
free enterprise. During this period
—this period of the last 15 years—
we
vital and important transitions af¬
founding and rapid growth
of your organization is a signifi¬
cant development in the securities
fecting our business have taken
place. Some of them have resulted
in
making
our
business
a
better
Others
have
industry.
The
seriousness,
the. and sounder one.
thoughtfulness, and the cautious acted as deterrents to its progress
and to the proper fulfillment of its
planning which has characterized
your undertaking from its incep¬ economic functions. It is concern¬
tion
typifies the spirit today which
in
my
opinion exemplifies our
business in this year of 1947.
|
And
your
initiative in this
re¬
spect is catching on in other parts
of the country. I am delighted to
ing
some
that
I
of
these
would
like
developments
to
talk
to
you
today.
Some of you are principally in¬
terested in the securities commis¬
sion
business; some of you are
learn
of
similar
developments working in the investment bank¬
among
the
younger
men
and ing field; and others are engaged
Women in other
financial
commu¬
This
serious
approach
which
you have made to the field of
deavor
en¬
which
you have chosen
augurs well for the future of our
industry
the
over-the-counter business.
These three
nities.
>1
in
and
for
the
leadership
with which you will
eventually
supply it. It is certainly in great
contrast to that which existed in
the 1920's, when to a
large extent
the approach was haphazard and
inter-dependent func¬
tions when taken together consti¬
tute what is referred to as the
securities
industry. In that respect,
personal experience has been
my
confined
tions
of
primarily to the
opera¬
securities exchanges
and their member firms,; and what
our
by
may
icism and suspicion.
-—the failure of those of us in the
business at that time to do. any¬
volve
curities
se¬
may
In my
ensue.
opinion,
such
operations in¬
and
fect
thing
about it, along with the
"holier-than-thou" attitude which
f
o
Theodore Prince
the
a
to the public
by which cap-
ital
Today, however, instead of such
atmosphere we find that our
industry is more highly respected
preservation of capital and income
is urgent, not
only on account of
heavy taxes but also because our
and
more
as
fundamental American insti¬
economy
ther and
an
a
tution,
completely
carrying
American
than
recognized
fundamental
on
economic
before
ever
functions,
its history.
in
Briefly what has caused this.
The
personnel
engaged in
our business, from the top to the
bottom, understand that they are
performing a definite economic
and
social
now
function
in
American
They possess a new and
healthy attitude toward the in¬
dustry and a revised and broader
conception of its functions and
obligations. Such an attitude re¬
progress.
flects
itself
in
the
have
facilities
tive
approach
that
(Continued
and Publicity
on
understanding
of
the
being extended fur¬
deeper in all the causa¬
To
throughout
secure
the
better under¬
a
standing of the method by which
capital is made, preserved and
supplied to our great industrial
empires that give us the power for
security, prosperity and the will
to "save the world for
is,
therefore,
democracy"
of outstanding im¬
portance.
Mr. May has in these articles
"de-bunked"
in
an
impressive
certain
pseudo
mathematical and
physical laws, rhythms and cycles.
It
is
time
nomic
that
part
28)
page
of
functioning
longer be based
Research
to
a
is
symptoms
world.
for
ities by investment or
speculation
are made to
appear amenable to
developed to such an
today we are better
equipped to render proper service
to the public.
business in the past decade
scientific
need
business
our
been
extent
The
be¬
relations
of
more
secured,
judicial review, critically yet con¬
structively, the various methods
by which the purchase of secur¬
tween broker and client.
The
is
series
on
our
of
configurations,
table
theory of.
roulette
tions.
eco¬
should
no
pari-mutuel
a
or
a
opera¬
It is time that Wall Street
should acquire a serious scientific
professional atmosphere instead of
being indoctrinated by a hap¬
hazard
philosophy
or
unsound
dogmas Which in effect, Mr. May
challenges.
a
Since this is
fundamental and sound cause I
think
further
analysis of these
articles might be in order.
;
The
Dow
Jones
theory
has
usurped
come
Bought—Sold—Quoted at Net Prices
1,4,
the stock market.
Mr.
barom¬
as¬
of
May claims
the followers of this
cult (article
9) "commit the same error
indulged in by gamblers which
of Oct.
the
mathematician
the
termed
chances'"
dence
face
of
coin
a
logical.
of
also
who
the
in
evi¬
risk
their
the theory that repeti¬
chance
a
is
those
by
money on
tion of
Steinmetz
'maturity
which
number, color
or
its reversal
makes
»•
The Dow Jones theory
maintained
sense
has in no
prescience
the
claimed for it by its adherents as
Mr. May points out in particular
instances.
Conspicuously, the Dow
failed in giving its
signal and remained om¬
inously quiescent, regarding the
slump from May 1946 from a high
Jones average
"bear"
of 212.50 in the Dow Jones aver¬
age to
reason
The
163.12 on Oct. 9, 1947.
of
that violent and
unex¬
pected decline is still shrouded in
labyrinth of quixotic market
and economic behavior.
In fact,
the behavior excited the curiosity
the
of the SEC which took a full year
compile and analyze the vari¬
factors underlying these un¬
to
ous
accountable
The
movements.
re¬
indicates that the bear sig¬
nal was given by the Dow Jones
average when the February low
of 186.02 was broken at 12 o'clock
Sept; 3, with the averages clos¬
to
(That would be 26
points from the high or from
10% of the decline to Oct.
The SEC further gives impor¬
the
tance
to
Jones
effect
average
on
of
the
Dow
the slump fol¬
Street, New York 16, N. Y.
Teletype: NY 1-2948
;
,
May emphasizes the above
analysis by the SEC and adds that
"The
mechanistic
50 times as
Vas broker
sory
A
or
trend < reason
preponderant \<as
investment r£dyi<-
influence."
V
recent extended article
the citadel of Dow Jones
ity—"Barron's National
and Financial Weekly"
Water & Gas
i:
a
although it records the various
cending or descending forces
wa&
Portsmouth Steel
•
sooth¬
Mr. May points out,
eter and cannot foretell the future
Mr.
Corporation
ESTABLISHED 1927
•'
22 East 46th
4
j
.
as
precipitous decline.
Central National,
Telephone: LExington 2-7300
.
ancient
thermometer not
a
lowing, but finds no business or
economic reason for the market,
Long Bell Lumber
■
the
But,
it is
53
v
■
of
sayer.
to 34
our
Crowell-Collier
•
the
ing at 178.68.
Aspinook
Federal
decades
many
revered, respected imple¬
a
mentation
9.)
*
for
judgment that comes to men of
maturity and experience and be¬
on
EASTERN CORPORATION
:Mir-
then become. respected " in¬
being the subject of crit¬
port
The level of Wall Street
opera¬
tions should be raised to that of
half.
public
af¬
s3le
securities
exhibited — was certainly
the
political
investigations and
regulations which ensued.
many
Association, New > ^ons involves the development of
Xork City, Nov. 25, 1947.
The
stead of
in
The first of these major transi-
fore the Junior Investment Bank¬
ers and Brokers
engineer.
the activities of
the "Street" should be to the eco¬
nomic system not just to brokers
or bankers.
In time, Wall Street
of
tions
Instead of the old sales psychol¬
a
and
contribution
itable transac¬
voted to; the operations and prob¬
our
-
doctor
yer,
afflicted with
It pos¬
sessed an atmosphere of unsavoriness, which perhaps was due to
some questionable use of the in-dustry's facilities. The result of it
was
an
and
Jones
unfortunate glamour.
More
*An address by Mr. Burns be¬
Dow
.
whereby prof¬
I have to say to you is based upon
that experience and will be de¬
ing
|
and the
"
averages
lems '6f: that segmeht of the indus¬ ogy of advising a client to pur¬
atmosphere
;' chase or sell securities on almost
of "Get rich quick—win or lose.'' try. •
Transitions
!
anyone's say-so, today we present
In those days trainee courses were
the facts. We indicate the merito¬
almost unheard of. An individual
; For the purpose of this discus¬
rious or unsatisfactory elements of
overnight could become a custom¬ sion, I have grouped into three
er's man or customer's broker or broad general categories what I a security and the degree of risk
believe can be considered as the which may be involved in pur¬
account
executive, or whatever
most important transitions affect¬ chasing or retaining that security.
you want to call it, and in many
Was surrounded
"sys¬
\.
•-
t h-
e
ods,"
tems"
In the late 1920?s the stock, ex¬
an
A great deal of water has gone
have
on'
i s,
say
was my per¬
Business
to
you
that;
A New (Concept of Securities
therefore
consider
to
to
-
-
"m
ious
business
our
pers of the securities which lie
was; discussing; withthis clients. I
Wil¬
-Jsubjects;relate
■.
ing to the var- the experienced and Skilled law¬
.
business
'
by A
fred May, published in "The Commercial
and Financial Chronicle" of
Oct. 9, 16, 23, 30 and Nov. 13 of this
year, covering a wide range of
.
neyed introduction, but I
'
;
I should like to comment,on the
five articles written
Graham-Paige Motors Corporation
■
i ;
,
1j
a
V:
♦SPECIAL REPORT AVAILABLE
"•
v
i
1947 written by
4% Conyertible
Debentures due 1956
Foundation 1 Co.
imi'Wellman Engineering Co.
•'
Analyses on request
y
'
1
«
Business
of Nov. 17,
A. J. Cortese, un¬
supervision of Barron's regu¬
lar commentator on that theory,
states
in
effect
that the Dow
Jones theory, is discarded as a
market forecaster but "is merely
a definition of a rising or falling
market.
The formula describes
der
>Tenn;ossee Products & Chemical
\
from
author¬
'
.
.
.,
...
120
Ward
Established
&
Co.
Broadway, New York
Phone:
Tele.
REctor
NY
5
Seli^man, Euhetkin
2-8700
1-1286-7-3
Co.
&>
INCORPORATED
192G :
'
-Mi
Members New
York Security Dealers Association
^
11
•
Ki f ?
f,I
Members New York Security Dealers Association
2J"">'
41 Broad StREfcT
Direct,Wires to PHILADELPHIA & LOS ANGELES
I
•
^j ■ y
New York
4, N. Y1
only what has
Bear
.
./> .i
rift •'5 '
f:
,,v
.
•...
•.■
'
•}
»
Signals" from 1899 to Sept.
cruelest "deception
Signal of June 20,
1923; "Down 5 points (5V2%) i*V
1936.
was
:
happened and says
nothing about the future of the
market." The author sets uo 13
definite terms "Deceptive Bull or
The
the
Bear
(Continued, on page 30)
?1
;;Viaw>*4wu.t> >i MJfrUn«*
M»»»w»it»i>«wi»ii^wii»wii«ii»«»'iww»«i^<i^^y''Wi>)iiW^^-ta,^'*f'>^i1,ff'i-w't1>v'''v
Volume 166
THE
Number 4652
In
ness
was
'A;';
'•.
'
on
behavior
relation
in
and
August, 1939, when the war's outbreak was recog¬
nized as imminent, stocks declined sharply, pre¬
sumably as the result of both long- and shortsales.-: Consequently, rafter
Hitler had .actually
on'Friday, Sept. 1,
and England and France finally declared war on
Sunday the third, the reonenin? of the New York
marched into Poland at dawn
the
long
Labor Day weekend was
awaited with fear and trembling by the longs
with pleasant anticipation by the shorts.
But
the
to
HOUSTON, TEX.
Commodity Price Index
ment
Price Index
of
Auto Production
Industry
Business
of
of
and
.
.
.
surprise of most of the public
(including the London and Paris financial cen¬
ters) the news was received that the New York
For
of
the
current
capacity,
the
week
a
of
rise
very
week
of
1.4
high level with output generally
high peak.
steel operations are scheduled at 97.7%
points,
or
June
textile field,
of
*
_
business
Rowles
the
firm
Russell
&
are
-
R.
Rowles, PresiR. R. Rowlea
dentft JamesO. ' Winston,
Jr. and Allterton
Cushman,
Vice-President,
and
George A. Small, Jr., Secretary-
continued to operate at a very high
level with bookings for many fabrics considerably in excess of cur¬
rent output.
Output of clothing made some slight gains with orders
for shoes, hosiery and some other items on the increase.
Lumber
shipments of 402 mills for the week ending Nov. 22, 1947, advanced
6.2% above production with the year-to-date increase of reporting
identical mills, according to the National Lumber Trade Barometer
1.6% above output.
*
o
Co. Officers of
mills
complete
t
invest¬
ment
The
the
as
successors
probability that production in general will hold
up well into the future is sustained by present large backlogs of
orders in many lines and new orders booked well into 1948.
In
Na¬
Bank
Building
the
5, 1944.
Following the pattern of recent months, employment and pay¬
roll in the week held close to record highs with labor disputes at a
minimum.
Co;
City
tional
being the highest since
1.5%,
Win-
&
o n
the
modest variations in the prevailing
a
the
with offices in
picture of industrial production for the past week reflected
being maintained at
t
Announce¬
forma¬
firm
s
The
—
is made
the
tion
Failures
predictions of busi¬
to
after
Trade
Rowles,
through 1938 and 1939 stock prices suffered warjittery sinking spells, correlated with Herr Hit¬
ler's recurring Sportpalast and similar oratorical
blasts. Then in tne climactic days at the end of
market
Retail
investing problems)
specific external events.
Looking
back
at the
years immediately
preceding the
Second World War. we remember that recurrently
■-:
Formed in Houston
Electric Output
Food
general economic trends in terms of stock market behavior
pointed out. Now we shall see the similar perversity of stock
.
Si Rowles, Winston Co.*
Production
Steel
State of Trade
Forecasting
last article the insufficiency of correct
our
(2265)"" 5
Carloadings
and
market
■
series
CHRONICLE
.
.
.
.
,
Obstacles to Stock Market
a
FINANCIAL
The
By A. WILFRED MAY
(Eighth of
&
?>'&'"<
y.fci:
Observations
COMMERCIAL
Treasurer.
Cassati; Bait. Exch. Member
*
BALTIMORE, MD. — Anthony
Reviewing the business situation for November last, the National
D. Cassatt, a partner in Merrill
of Purchasing Agents revealed that 46% of its agents
Lynch, Pierce, Fenner & Beane,
market had reopened after the actual outbreak of hostilities at sharp¬
reported a general upward trend in business.
It noted a marked
ly higher instead of lower prices, with a subsequent further general change of trend, compared with the June, low point of the yearof
rise of about 20%.
when only 6% reported increases, with 'the figure for November ■Kammore otocx n^xcnange.
said to be "the highest number so far this year."
Divergent Effects on Industry
These. advances were coupled with a leveling off of the over¬
In a somewhat narrower way we have seen wholly unexpected
all price trend, for the number that reported moderate increases
and varying consequences tp specific industries resulting from cru¬
was equalled by those who noted no change for .the month.,
I
cial external events.
For example, after Pearl Harbor the rumored
The general policy it reported was "watchful waiting, while
and actually promulgated rationing in this country was viewed by
exercising extreme caution."
Purchases were held to be more
investors and speculators as ail-inclusively bearish.
Since the vary¬ selective, with increasing competition found, particularly in fabri¬
ing effects of rationing throughout the economy were not realized cated items.
by either financial economists or the investing public, that event
Noting a real bright spot in the picture, it stated that 58%
resulted in the decline to their 10-year lows of the share prices of
cited an increase in labor productivity, while only 4% reported a
our petroleum as well as consumer
finance companies—prices that decrease.
Bralorne Mines Ltd.
in both cases logically could
tj;
tjt
«
only reflect the expectation of perma¬
Noranda Mines Ltd.
nently extinguished earning power or near-bankruptcy.
Actually,
Consumers responded very favorably to promotional sales of
however, the reduced sales of gasoline to civilian consumers was
holiday items the past week resulting in retail volume rising moder- 1
St. Lawrence Corporation
soon
more
than compensated for by the tremendous military de¬
ately above the level of the preceding week and holding well above
'"A"' Preferred &< Common svmands, while for the other industry there was little offset to fill the that of the
corresponding week a year ago.
Considerable interest j
void left by the cessation of hard-goods production.
The unforeseen was evidenced: in Christmas
gifts and toys; and with Thanksgiving
consequence, therefore,, was that oil company earnings during the
Day occurring within the week many varieties of foods were I
war
years
rose
considerably above the pre-war average, while
purchased.
*■
'1.
^*,
62 WILLIAM ST., N. Y. 5
HAnover 2-0980
the consumer finance earnings were sharply
reduced, and only now
Practically all types of merchandise were sought by retailers
Bell Teletype NY 1-395
are entering the upgrade.
as
they endeavored to augment;
A. Wilfred May
Association
.^e
«
w.
*«''
"
:■/
•
.
$
;.
HART SMITH & CO.
.
.
-•
.<*
v
inyentories. ^Wholesale volume in
-V
the
Long-Term Selective Price Behavior
m
r
The
great
permanent
difficulty
of appraising
the price move¬
companies in peacetime also, is
proved by the record.
A recent compilation shows that despite the
intervening reduction of the Dow Jones Industrial Average by more
than 50% since the 1929 all-time
peak; nevertheless 185 stocks are
selling above their 1929 highs.
Furthermore, 147 are higher than
both 1937 and 1929, and 38 issues are higher than 1929 but7 lower
than 1937.
For the period since V-J Day we have withessed .a
virtual crazy-quilt of simultaneous net advances and decliries; show¬
ing the great double-difficulty of correctly appraising individual
industries, even if, for one reason or another, one manages to pre¬
ment
of
individual
industries
and
dict the trend of the general market average.
of
the
important outgrowth of the prevalent concept of the liquidity
stock
market
is
the
fallacious
continued
rise
to
moderately
remained
and
well
conclusion
that
the
share
the corporate equity that is Exchange-listed is
esesentially a
of property than is the share in a business concern
ent kind
of
differ¬
OPERATIONS
STEEL
ESTABLISH
AT
SCHEDULED
NEW
HIGH
SINCE
97.7%
JUNE
5,
OF
99
national metalworking
weekly in its current survey of the steel industry.
Government officials apparently have no definite plans while
they ask for allocation powers and have lost sight of the important
fact that peacetime steel business is a far cry from wartime output,
the
Today
actual
the
orders
Individual
destinations
of steel customers
number
placed
are
steel orders call
and
end
for different sizes,
For
uses.
government
any
tbe investor (speculator)
long the trend will be extended, from
"external"
may
(a
causes
la
Dow
Theory);
suit his decisions, not even
or
According
tQ, bis expectation of future extrinsic events, but to his estimate of
the' psychological effect of those events.
do not stop at the next level but
are
Sometimes these
judgments
extended to the third
or
fourth
"degree"; that is, in estimating what the "smart operators" will esti(Continued
.
on
page
attempt
essential
to
and
determine
the
v»<; MM...
'
1'*"'
'•
•
Exports—Imports—Futures
■i
a
circular
on
*
in
,
7
DIgby 4-2727
any
company
nonessential demand
in peacetime could result in
in¬
allocation
breakdown
which
occurred
(Continued
on
in
this
29)
page
75 Years
country
of
ADVERTISING
SERVICE
; i
v
Commonwealth Gas
?We have prepared
|
SUGAR
Raw—Refined—Liquid
difference—if there is any—between
dustrial suicide, the above trade authority points out.
Great Britain, it says, is going through the same
14)
ATTENTION DEALERS!
-
•
grades, tonnage,
or
process of
during the
early years of the war* and early this year set up allocations or
priorities favoring steel demand for fuel, power and oil conversion
uses.
By the second quarter of this year such priorities earmarked
the complete
output of light plate production in Great Britain.
Nov/, faced with the need for even higher priorities for the export
drive, a whole new system is being planned.
There is already in this country the present week complete
than
|§
STREET
the number of
and
ternal"
rather
WALL
NEW YORK 5, N. Y.
far in excess of the normal war year.
(not values). This frequently takes therform- of trying to
out-"psychologize" the rest of the "public." During a major bull or
bear swing this may merely consist of-estimating by means of "in¬
market "tools" how
-
magazine notes.
to
"technical"
Toronto
LAMBORN & CO., Inc.
CAPACITY
1944 WEEK
Capitulation of Congress to the government's demand for steel
allocation powers would carry with it the power to destroy the
present peacetime steel distribution setup.
The current voluntary
quota system rin the steel, industry has its weak:. points but it is
based
on
practical applications and administered by those who
realize the explosive
character of the delicate balance between
is not traded
prices
Montreal
that of the corresponding week of 1946.
Articles appropriate for |
holiday promotion were in large demand and in addition, interest
in Spring apparel was enthusiastic.
which
in on the market place.
As a result the investmentspeculative public buys and speculates on changes in price rather
than appraisable value; in other
words, each individual engages in
a
game of trying to outguess the other players on the course of
New York
above
supply and demand, states "The Iron Age,"
"Liquidity" and Outguessing the Crowd
An
week
the
1947
'
Southwest Gas Producing
STEEL INDUSTRY
*•»t<
American Maize Products Co.
and
Companies
-
"
low-priced stocks of several speculative Steel
available,
for
'
Retail"
v:■
Albert
Distribution.
.Bought—Sold—Quoted
Frank:
Guenther Law
} MERCER HICKS
J.''/....
& CO.
FREDERIC H. HATGH S COm IRC.
'
■
Members Napi
150
Assoclatlon
of Scckrlties Dealers, Inc.-
,
;.
EmtablUhed 11888
DIgby 9-4224
——
>-Teletype:
NY
;
b
1-2813
•
83 W«U
N~ T ' SBCOKITY
Street,
New-York S,
N.'-Yj
'
j DEALERS
-
K V '„ i
,1 *
•:
i
>
;
Bell Teletype NY l-897
n-
A
NIW YOIKmiLAt>BU>HIA
CHICAGO
ASSOCIATION
y.t'.-f
r.
letftforaltd*.
.
«
■
5
■
BROADWAY, NEW:YOKK 7, N. Y.
Telephone:
1:';
- >
'
BOSTON
SAN franc.isco
'
6
COMMERCIAL
THE
(2266)
Thursday, December 4,1947
CHRONICLE
FINANCIAL
&
How to Avoid Deep
Specnlation Not Cause of Rising Prices
Member of stock brokerage firm attacks recent attempts to
blame rising prices
speculation and "big
on
>■
Economist, in analyzing
,
business."
Says speculation can influence markets only temporarily and has beneficial effect in pro-,
moting enterprise' and progress. Lauds services of organized exchanges and points out hedging through,
futures markets is form of insurance.
undoubtedly read in the papers about rising prices being generally attrib¬
speculation and with the usual tendency to place the blame on Big Business and
commodity exchanges.
Well, in the first'place, I would say you have to make a
You have
these
sharp
4-
differ¬
entiation
tween
In
be¬
has been stressed and I think one
specu-
lations
one
not
they lay down certain principles
insuring that everybody will get
a
square deal. I don't believe it
is generally appreciated to what
extent
they are of tremendous
benefit to the business and agri¬
the
condemn
tendency
t
speculate
the
part
o n
o
of
who
put
their
money in con¬
structing the
people
railroads
-
i
n
tunity to
Many of them
lost
their
could go on and
such
instances,
like
quote many
the specula¬
greatly increased; The operations
conducted on these exchanges are
great many
who spend
some time and study
find that a
good deal can be done with them.
simple, but yet like
Henry Ford, and others to start
enterprises and what resulted out
other
of it.
certainly
a
vast stretch
through various degrees of spec¬
from investments in gov¬
ulation
ernment
to
the
bonds, real estate, down
other
suppose
would
we
I
where
extreme
reach
race
tracks, betting, and slot machines.
*An address by Mr. Reid at
Third Annual Meeting of the
the
Na¬
tional Hide Association, Chicago,
111., Dec. 3, 1947.
of
cost
the
them
of
agricultural
and
other products which are dealt in
on
these
exchanges
would
be
handling
tion that, induced Marshall Field,
There is
the
to
and
these exchanges and
workings appreciate
without
that
but
use
their
know
Reid
J.
William
their tendency to
speculate certainly had very bene¬
ficial effects on this country and
one
interests
cultural
people in the country generally.
People who have had the oppor¬
this country.
money,
enough, that the
exchanges do hot do any business,
but
just keep a market where
buyers and sellers can meet and
various kinds.
could
it
stress
cannot
of
Certainly
exchanges, it
to these
regard
things,
a
those
porarily influence the market, but
only temporarily and not for over
Main Purpose of Exchanges
The main purpose of these ex¬
changes is to lessen the extreme
swings from high to low prices,
although when
people,
listen to some
you
would
you
exchanges
treme
swings. I have had
many
years
of
that
think
these
the
cause
a
experience
LYNCHBURG
ex¬
good
of the commodity be¬
cause
once
a
speculator buys it,
the sure thing is that he is going
to have to sell it;again.and in the
long run only what is actually
produced and consumed affects
the price.
A good deal of comparison has
been made in the last year with
the period subsequent to the end¬
ing of World War I. I was in .this
industry at that time when hides
ran
up to about 640 for Chicago
packers and I remember quite
sumption
the
memory
my
Boston & Maine RR.
hide
★
Traded in Round Lots
♦
Walter J. Connolly & Co., Inc.
24 Federal
Street, Boston 10
Tel. Hubbard 3790
Tele.
BS
128
—
Scott, Horner &
Mason, Inc.
Tele. LY 83
LD 11
Boston Edison
Stix & Co.
stocks
sold
of
two
companies
leather
dealt in
which
the N. Y. Stock
on
in that way
part of
he got back a substantial
inventory loss.
of
some
you
not
may
losses
SECURITIES
in
the
tanning
indus¬
try and the hide business in the
period,subsequent to World War I
continuing right
into the 30's,
am
fairly
is right, that the
up
tremendous.
my memory
I
company whicb^is now known as
U. S. Leather Co., and then known
the
Central
Leather
Co., had
a working capital at the close of
World War I in excess of $50 mil¬
lion and this had gone down in
some years by millions of dollars
to a point where it was, at the
beginning of the recent World
War, in the neighborhood of $10
million. The tanning business was
certainly a sick industry between
the two wars. It now has enjoyed
(Continued
STREET
28)
page
on
Franklin
Street, Boston
Members St. Louis Stock Exchange
County
Continued
poration's
SPOKANE, WASH.
record
coals
par
value)
SECURITIES
For
or
Consider H. Willett
Estimated
Immediate Execution of Orders
Quotes call TWX Sp-43
on
Floor
this
cor¬
substantial
assures
mon
$5.95
dividends.
3947
stock
preferred stock
carries
accumulated
American Air Filter
American Turf Ass'n
for
are
accumulations
on
the
j
per
for
the
share
com¬
before
preferred.
Murphy Chair Company
APPROXIMATE MARKET
other hours.
Reliance
Varnish
Co.
7%
preferred
Common
stock
stock
13%
6%
standard securities
BANKERS BOND
Incorporated
™
-
Members Standard Stock
of
Brokers
-
1st
Floor, Kentucky Home Life BIdg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS 186
Peyton
Exchange
Spokane
Dealers
-
Underwriters
Building, Spokane
Branches at
Kellogg. Idaho and Yakima, Wn.
e
p
r
V
so
i
condi¬
the
achieving
required by the first of these
policies. Because of the fear of
inflation and of making the econ¬
inflexible, the American peo¬
unlikely to accept such
It is therefore
probable that full
employment
omy
appear
unlimited spending.
ond
characterized by the sec¬
than
rather
the
first policy.
of the present article
to contrast methods of moderat¬
The purpose
is
ing business fluctuation.
Need for moderating
the varia¬
tion in business activity
has been
The
long time.
recognized for a
now
most frequently pro¬
posed is variation in government
spending. When the private econ¬
omy begins to falter government
spending would be called on to
make up the deficiency.
Various
types of expenditure
increased.
The
most
famous is "public investment," a
be
may
concept frequently used to include
somewhat
more
than
public
works.
However, it represents the
well-known position' that the gov¬
ernment
should
recession
a
its
defer
ditures. for durable
until
expen¬
improvements
and
threatens
then implement a program
of ex¬
penditure large enough to offset
the threatened
decline in private
The practical diffi¬
culties in the way of such an idea
are
so
great and now so well-
expenditure.
that
known
sion
is
no
discus¬
extended
Problems are
likely to arise in finding a satis¬
factory volume of works, in sav¬
ing up projects during prosperity
in view of the political advantages
required.
shifting
workers
from
one
region to another, and in shrink¬
ing the public-works programs as
private activity increases.
The
government could
pay
out
funds directly to consumers rather
than
compensation
as
performed
on
for
work
public projects. Un¬
insurance is a type
payment now generally
accepted.
Unemployment insur¬
ance
payments, however, never
could provide enough certain sup¬
port of consumer expenditures to
employment
direct
an
assured
limit
to
the
decline.
Comstock & Co.
CHICAGO 4, ILL.
231 So. La Salle St.
advocated
by
Dearborn 1501
Theoretically,
supple¬
mentation might be provided by
a
uniform consumer subsidy, of
such
an
amount
penditure.
Teletype CG 955
of
the
are
as
to maintain
However,
in¬
Income tax
nevertheless.
rates would have to be made vari¬
able by an administrative agency,
the
and
Congress is
grant such
tax
come
a power.
rates
unlikely to
Reduced in¬
would
dis¬
add
posable income disproportionately
in the upper income tax brackets
because of the graduated nature
Considerable doubt
of the tax.
ists
ex¬
to the extent to which in¬
as
recipients in these brackets
immediately increase their
come
will
expenditures with
Even
taxes.
reduction in
a
though the total re¬
ceipts qf the income tax now come
to a very large figure, it might be
Compensatory Spending
method
This method has
Notable difficulties
volved
Elmer C. Bratt
tions
will be
strongly
ment.
Dr.
means
ple
increase in dis-
an
Committee for Economic Develop¬
penditure
i s
the only prac-,
for
to effect
as
been
n
ticable
gross
Instead
oosable income.
ex¬
known
the
of increas¬
ing the total government expendi¬
ture in a period of business reces¬
sion this plan is to reduce taxes
ing at the first
private
business
in
rather< than
expenditure.
n
hesitation
net
the
spend¬
establish
corporation
™
g o v
of
of
Exchange from 10:45 to 11:30
A.M., Pac. Std. Time: Sp-82 at
m
income tax
the
to
cycle provides for a variation in
unlimited
brent
($10
share
-
earnings
$2.00
per
o
according
to authorize
necessary
vadd
to
employers
credit"
instead of
"tax
a
deducting for taxes as in the
withholding procedure. This
would
as
come
direct
a
Various
out
the
be
to
consumer
same
subsidy.
compensatory
methods
directly force spending by
consumers rather than supplement
which
it
by government spending have
usually in¬
volve taxes to discourage saving.
been advocated. These
An important case
for
tax
a
on
has
method
workable
or
is the proposal
This
bank deposits.
been
neither
proven
unworkable, but
ex¬
the mailing
government checks of sufficient
cer¬
tainly would require substantial
perfection beyond the mechanical
methods so far proposed, so that
an
effective arrangement is not
now available.
It seems unlikely,
expenditure is declining, that
on
deposits could keep it
from continuing to decline. Also,
the implications of forcing con¬
sumers to spend when there are
once
tax
a
goods they desire to buy have
fully developed. Taxing
deposits might lead to a
hoarding of commodities. If suc¬
cessful, it would force consumers
no
not been
bank
to
larger amounts .in
in prosperity be¬
investment expenditure is
spend
even
recession
than
cause
sure
to decline at such
a
timei >■'
•
Alternatives to Compensatory
]
Controls
in
earnings.
Corporation's 7%
NORTHWEST MINING
demand
r
three million
Modification of the
rate
entirely. ')
P
or
size is unlikely to attain a wide
following in the near future.
■
to "eliminate it
and
two
'<§>-
what point in the recession fullscale expansion should be begun,
2-5035
LOUISVILLE
irreducible "float" of
an
to be gained by immediate devel¬
opment, because of the time re¬
quired to get public-works proj¬
ects under way,
in deciding at
Coal Corporation
Private New York Telephone—
REctor
time,
St. Louis LMo.
DAYTON HAIGNEY & CO., Inc.
y 75 Federal
that
at
Exchange short and
his
as
Trading Markets
509 OLIVE
who
tanner who
sure
lllllllllllllllllillllllllllllllllllllllllll
INVESTMENT
around
at
dealer
were
Lynchburg, Va.
New England Lime Common
right,, we
400.
We
me
have gone through that period or
been closely in touch with it,-but
ST. LOUIS
Boston & Maine Prior Pfd.
was
the loss he sustained. I also know
the
-
I
marked off between $500,000 and
$600,000 from our inventory that
year.
In that period there was
no
hide exchange.
I know one
Perhaps
Prior Preferred
I
which
serves
them
sold
Dan River Mills
—
with
firm
associated buying dried Java cow
hides over a dollar a pound.' If
were
b< m
implementing measures to sus¬
employment," as ordinarily conceived in America, involves
relatively distinct policies: (1) • that of keeping unemployment
period, It goes with-; down to the level of
saying, if a lot of people get
persons at all
quickly that wheat, cot¬
times;
(2)
ton or hides, are going up and a
that of mod¬
wave of buying sets, in prices will
erating busibe influenced sharply upward, but
ne s s
fluctu¬
the fact that these speculators go
ation, instead
in and buy a lot of one commodity
o f
expecting
does not alter the supply or con¬
large
Bassett Furniture Ind.
The widely heralded demand for
tain "full
two
out
a
American Furniture Co.
as
•
v
very. long
a
with foreseeing a drastic fall in hide
prices, sold cotton futures short
against his hide inventory and in
that way he recouped a part Of
Trading Markets
'
propose;
the idea
well
'usmiuuimmimiiiiiiimimiiiiiiiM
BOSTON
exchanges and I am con¬
vinced that speculators can tem¬
these
as inadequate, and
alferimtive : to prevent deep and enduring business
depressions(1) a national Lousing program; (2) coordinated
Mong-range government economic program; (3) dynamic -price
policy; (4) encouragement of small business; (5) national credit
policy:; (6) national wage policy; (7) international buffer-stock
plan- for raw materials; and -(8) private planning in advance for
long-term changes in consumer demand.
.'
uted to
to sustain fall employment, dis¬
"compensatory government spending"
misses
•
measures
i
,
Lehigh University
of Economics,
Professor
Stock Exchange
Partner, Baclie & Co., Members, New York
Depressions
By ELMER C. BRATT
By WILLIAM J. REID*
Few advocates of compensatory
controls
by
methods
spending or other
deny the charges
would
made in the
above section.
Their
reply would be: what is the al¬
Many persons fear $nd
disagree
with
full-employment
controls
while
high
prosperity
lasts, but what will their attitude
be when recession comes? In fact,
not a great deal of exception can
ternative?
be taken to the
position that when
recession is again in full swing
almost any expedients will be ac¬
a
cepted
rather
activity
de¬
pression.
Convincing arguments
in this respect are fear that the
Great Depression may be dupli¬
drift into
cated,
a
than
see
bottomless pit of
conviction that the system
(Continued
on
page
26)
Volume 166
Number 4652
COMMERCIAL
THE
Washington
Ahead of the News
By HON. LEWIS B. SCHWELLENBACII*
>(
is
]
of rival Presi¬
dential
the friendly, votes
On
leagues,
candi-
Connecticut,
possibly,
reers.
from
Baldwin
of
it
doubtful
this
o
if
dark
Carlisle Bargeron
potentiality
and
it
is
unlikely
he
dented
domestic
than ';
whole¬
1946
31%
were
that
though
body,
I
time.
part in the "rebuke"—Aiken and
Flanders of Vermont, and Smith
Jersey,
hardly had any
such joint motive as to embarrass
Taft's Presidential candidacy. Ai¬
has
long harbored left-oftendencies; there is un¬
center
questionably a wide gulf in their
political philosophies and the po¬
litical support they
seek.
Both
Flanders and Smith
"business
are
men", and not schooled in
tHe
me¬
chanics of politics,
but they, par¬
ticularly Flanders, do present an
arresting study in human nature.
Flanders
courted
and
got CIO
support in his campaign for the
Senate. Considering both him and
Aiken you wonder what is hap¬
pening in the so-called rock-ribbed
Republican
state
of
Vermont.
Smith apparently has been used
being
to
having,
in business.
to the Senate, he is
consulted
perhaps, his
A
18%
newcomer
wanted
takes
That
been in
time
to
look
before
speeches
the
he
there
is
in party
them.
many
It is hard
majority of them can take decontrol and that higher prices
him by "rebukes," would provide an incentive to
or in any other way.
greater production which, in turn,
This writer has seen too much
would lower prices when supply
of politicians and statesmen to be
overtook demand. Production did
by votes
a
hero
did
one
admiration
I
find
But my
Taft is high.
for
Bob
has
been
levels of demand and
now
in
in
him
1938
the
wouldn't
For
of
Senatorial
that
appeared
First, the extensive damage to
corn crop, coincid¬
of
:;:Testimony
Mr:
Banking
on
price level within about 5% of the
all-time high of 1920.
The in-,
creases in living costs have been
mand, immediately touched off
particularly serious.
Just since
speculative price increases that
affected not only
corn
but all May 1947 the Consumers' Price
that
record
tistics has risen b.y
and dairy
prices to the record levels where
they
As
stocks
ventory
were
1
i>'
V
'
controls in July, rose 4% in
raises,
in¬
rent
largely
in¬
three months. The prices
creased which resulted in a slow¬
7'".
Food
rents.
and
have risen by 8V2%; and
rents, after the relaxation of the
the fear engen¬
price
these
by
Further¬
prices
result of
a
dered
foods
families:
now.
are
*
5%.
the increases have been
greatest in those very items of
daily expenditure which affect all
more,
dairy
eggs,
products
—
products,
the
,
of
mainstays
(Continued
,
of meats,
and cereal
page
on
the
36)
V
*
in*
yVe Arc Pleased to Announce the
Installation of
Dec.
a
Direct Private Wire
2,1947.
Connecting Our Offices
WE
ARE
AS
US
IN
OFFICERS
DAVID
ASSOCIATION
THE
ANNOUNCE
TO
PLEASED
WITH
LAIRD, BISSELL & MEEDS
CHICAGO
Members New York Stock
DAN IELSON
N.
EDGAR
Broadway, New York 5, N. Y.
Telephone BArclay 7-3500
Teletype NY 1-1248
AND
OPENING
THE
ROOM
135
OF
2348
SOUTH
A
CHICAGO
LA
OFFICE
KITCHEN & MURPHY
BUILDING
FIELD
SALLE
Members Chicago
STREET
135 S. LaSalte
200 EQUITABLE
was ever
what
a
Stock Exchange
St., Chicago 3, III.
Teletype CG 28
Telephone STatc 4950
INC.
& CUMMINS,
WHEELOCK
Exchange
120
GRIMM
F.
BUILDING
DES
CHICAGO
IOWA
MOINES,
DES
TELEPHONE
ANDOVER
TELETYPE
TELETYPE
248
CG
MOINES
PHONE
6700
DECEMBER
1.
4-7159
DM
184
1947
Announcing the formation of the firm
of
Republican
a
accused of being
"clever."
Snuffy Smith would
"scandal to the jay¬
We
ore
pleased to
announce
the opening of
Rowles, Winston & Co.
an
Investment Securities
birds," what is really one of the
most
Index of the Bureau of Labor Sta¬
grains and cereals, livestock,
products as well. These
price increases, more than any
other influence,
have sent food
other
Schwellen-
Currency,
and
Unlisted
rollicking pieces of comedy
time, is this
Trading Department
(formerly Rowles & Co.)
I have seen in a long
under the
group's challenge to Taft's leader¬
ship
and
their insistence that
when he makes a speech he point
out that he is speaking only for
himself. I wish some of the New
Deal
columnists who
tell
of
th?s
supervision of
RUSSELL R. ROWLES
JAMES O. WINSTON, JR.
President
Vice-President
ALLERTON CUSHMAN
GEORGE A. SMALL, JR.
Vice-President
Secretary-T reasurer
v
•
ALTON
B. PLUNKETT
Telephone: Rector 2-4930
Teletype: New York 1-1434
with such mocked solemnity would
describe
just how
lenge is evolved.
such
a
chal¬
Bob Taft has no title as Repub¬
lican
held
Senate leader.
That h'tle is
Orvis Brothers s 6
Established
CITY NATIONAL
Policy Committee but that mantle
could be shed tomorrow and he
Would still be just what he is—-
Members New York Stock
14
WALL
Tel. Capitol
Exchange and other principal Exchanges
STREET, NEW YORK 5, N. Y.
BANK BUILDING
HOUSTON 2, TEXAS
1872
by Wallace White of Maine
He is Chairman of the Republican
Dec.
1,
9945
1S47
regardless of any title, the Repub¬
f
ing with crop failures in Europe
and Asia, in the face of heavy de¬
probably constitutes the first time
as
sum¬
price increases which have
pushed the cost of living higher
than at any time in our history:
and have brought the wholesale
the American
ness," instead of just the straightout, dull Republican facts.
This
But
the
during
have touched off a new wave
of
goods into the tnarket.
time, in the early months
it
mer
consuming ing down of the normal flow of
before.
ever
events
These
prospect of maintaining
stability was shattered in mid1947
by several events — which
greatly influenced prices.
bach before the House Committee
36)
page
on
terances contain too much "clever¬
describe
Mid-1947
in
The
(
primary
"they couldn't win with
They supported a former
(Continued
a
1947,
extreme
influ¬
more
likely to attain.
Aiken's complaint and I believe
Smith's, too, was that Reece's ut¬
speaker
raised, primarily because of
shortage of scrap
which sent scrap prices to
extraordinary heights.
were
support
because
him."
than
£md
producing
more
that
sort of stuff for a long time.
In¬
deed, the Ohio Republican organi¬
zation
consumption
by the American people who are
against
up
The
unprecedented
been
have
results
his
can't win with him.
He
At the same time na¬
tional income rose steadily.
ability and honesty
and
courage,
in fact.
But it is
said he won't get the Presidential
nomination because the Republi¬
cans
higher than ever before in
now
peacetime.
rather general admira¬
a
for
is
clay feet.
rapidly and
fact increase very
in
observation
that close
reveal
not
tion
I have never
worshipper.
known
councils than Smith
ever
on
spring of 1947
during the pre¬
the
has
Reece
a pretty Ion?
scarcely room
doubt that he has
ence
is
in living
hardships,
increase
the
worked
especially on people of low or
fixed incomes, it was argued that
this was the inevitable result of
a
his
over
made
cake.
politics for
and
ever
been, we
a stable econ¬
Shattered
Stability
L. B. Schwellenbacb
a
he
unprece¬
exports higher
very
steel
the
Though
;
have been
steel
ceding year.
this away from
"administer¬
rebuke" to Taft, then set out
to
put the National Chairman,
Carroll Reece, in his place. At a
social gathering a couple of nights
ago, I heard Smith telling Reece
for
leadership.
at
the industrial economy,
In
increases in the prices of coal
Even with
at
and
and Aiken, after
ing
to
nearer
than at any time
higher
-
costs
how any group, of Senators
see
necessary.
own way,
determined to be consulted there.
He
this is his
to
or
The other three Senators taking
ken
had
they
during,, the
omy
beginning of the year.
New
demand
levels and
seemed
prices
•
than
have no doubt that he will in due
controls when
the
and
influential
in the general price rise.
Fol¬
lowing the wage increase in coal,
which added
(on the average)
about 50 cents per ton to coal
costs, coal prices increased more
than $1 at wholesale, even before
the increase in freight rates.
At
about the same time steel prices
i
soon
most
least become stabilized at the
levels then prevailing.
sale
which he deals, his inescapable
himself, logic, his almost uncanny ability
not
having been in the Senate to take the most difficult propo¬
very
long and thus not having sition to pieces, analyze them and
had the opportunity to distinguish put the whole back together again
of
production would
with demand, in
at
ator to attract attention to
in
up
By the end of
•
the understanding of the subjects with
in
joined
wage
in the midst of the second wave of inflation that
prices rose
very
sharply.
recent "rebuke" of the Ohio Sen¬
himself
now
..
not
that
picture, with authority to impose
is
lines, at any rate, and that prices,
if they did not come down, would
In
recogni-
a
by voluntary and cooperative action of labor and management, with
wage
this "wave
,
It rests upon
Holds price legislation
increases and advocates price fixing, but states restraints
wage
catch
higher;
and
ion of this by these Senators, by; the; prices
of
he
Washington
and
correspondents, good s
services to
by
anyone
who
observes
the
Washington scene. His complete con su mers
horse
-
rests
enators.
/
a;
as
'
,
of inflation, cites increased living costs since midare responsible, and asserts prices have risen
demands
be explained by increased wage costs.
can
creased
and
fall of 1946.
standing
k sf upon
himself
4
wave
wage
*■; <$-
the
summer
solely upon his. out¬
abilityj'upon a, stature
that completely dwarfs his fellow
It
is
the
Baldwin
case.
lb
is
in
trol
does not rest upon patronage, he
has to dispense to make men ad¬
here to him, on any power to do
them harm or good in their ca¬
aside
must necessarily come
careful watching of
wages
period of
price
decon¬
of his col¬
t.tle they have
him. Certainly it
bestowed upon
But
dates.
workers
required to avoid another round of
on
*
began shortly after the end of the war. The first wave began in the first quarter of
1946, when controls were progressively relaxed, and proceeded with great vigor through the
any
on
in second
The United States economy
ership is not something that rests
a
nor
constant and
by the high glee with which the New Deal columnists-spread it as
a serious division within the Republican ranks.
Many objec¬
tive observers
lican leader that he is. His lead¬
it
we are
Says neither farmers
much faster and much farther than
By CARLISLE BARGERON
clash
Secretary, warning
1947.
spectacle of three or four Republican Senators challenging
the leadership of Bob Taft is just about one of the most comical
episodes to occur in what is wittingly called the Nation's Capital in'a
long time.
It is equalled in its mirth-provoking characteristics only
in
7
Secretary of Labor
.
Labor
'me
natural
(2267)
CHRONICLE
Wage and Price Restraints to Combat Inflation
From
see
FINANCIAL
&
r
/;
£
» : (2268)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, December 4? 1947/
March
12,
1948
(Toronto,
Ont.,
Canada) '
Dealer-Broker Investment
Annual .Dinner
Bond
Recommendations and Literature
It is understood that the
Consolidated Edison Situation Improving
send
to
interested
ferred stock for several months
of the Toronto
Association
the
at
King Edward Hotel.
Nov. 15-18, 1948
firms mentioned will be pleased
parties the following literature'.
While Consolidated Edison has deferred the refunding of its pre¬
Traders
National
(Dallas, Tex.)
Security Traders Asso¬
ciation Convention.
(the next available redemption date
is May 1) the company is
proceeding with its plans to issue $57,382,600
convertible debentures, and the conversion feature was authorized by
the stockholders at a special meeting Dec. 1.
When issued, the de¬
common stockholders in a, ratio of $5
share yheld, and will be convertible into ter subsidiary has also requested
an increase.
A $1,000,000 increase
common stock at a price to be set
in steam rates has already been
at an amount ranging from ap¬
will
bentures
principal
offered
be
to
stock
common
(6)
deben¬
tures,
to not more than
15%
above such market price. Sale of
indirect
is
debentures
an
considered
the
to
period) President Tapscott pointed
out at the meeting that:
(1) Rate reductions in the past
decade amount to about $26,000,000, of which $15,500,000 reflected
electric rate reductions in the past
two
(2) In June, 1946, the New York
tiated
Service
ini¬
Commission
broad
a
investigation of the
electric
rates.
Two
company's
later
months
the
pro¬
company
posed a decrease of $9,300,000,
together with a reduction in the
classifications
service
number
of
from
.
the
completed, only
now
half
over
September
Commission
at
was
reflected
statement.
last
spring,
annual rate
a
in
now
are
ment
comes
As
some
into service.
(3) Despite these adjustments,
investigation has continued
for well over a year. New York
State law permits the Commission
to fix temporary rates providing
for a return of only 5% on net
original plant cost, but final rates
must be "just and reasonable".
the
Tn
view of rising
costs,
President Tapscott stated that he
(4)
does not feel that the Commission
would
be
warranted
materially
the
electric
our
he
hand,
in
present
rates.
hopes
On
that
reducing
to
as
crease
(5)
the
require
were
a
operating
For the first
system
in
the red
10 months of
operations
$1,400,000, in
of $2,500,000
of last year,
a substantial
gas
by
earnings
for the same period
thus accounting for
part of the decline in share
contrast to
ings. The company has
for
a
in¬
material
now
earn¬
asked
temporary increase of $8,-
200,000 in
gas rates in New York
City territory, and the Westches¬
ment
portunities—J. R. Williston & Co.,
115 Broadway, New York 6, N. Y.
than
$750,000 above
1946. The man¬
agement feels that the $1.60 divi¬
dend will be fully earned for the
was
more
of
October,
calendar year.
Natural
Broad
ment of
its
as man¬
ment.
Howard Elected Secretary
elected
Secretary
American Investors
it
was
announced
has
of
Ill
General
Company, Inc.
The
urer.
formerly
ment
new
Railroad
Research
of the
was
was
the
Special
Department
National
Situation—Analysis
The
Master
of
several
&
Co.,
Utility
&
61
Trust
Broadway
of
Puget Sound Power & Light
Federal Water and Gas
each
six
shares
Stocks
Street, Philadel¬
Also
of
record
available
are
valuation
a
and
1947.
1,
Rights to subscribe will expire at
3 p.m.
(EST)
Proceeds
Dec.
on
from
the
16,
tion
and
used
rate purposes.
Philadelphia Bonds.
number
of
the
Thatcher
Glass
Manufacturing
of
for
general
corpo¬
The company for a
has had
years
continuing
way a
and stocks
under
program for the
improvement and expansion of its
existing facilities and for the
N.
quisition
*
$
Hicks &
&
Co.,
120
Also available is
Utica
Inc.
Broadway,
—
Mohawk
&
Circular
Cotton Mills
imately
Mohawk Valley
—
Investing Co., Inc., 238
Street, Utica 2, N. Y.
special report
a
new
facilities.
ac¬
It
is
Genesee
to
complete
proved. Major items in the
uncom¬
pleted part of the approved pro¬
call
gram
Co.
discussing that unrec¬
ognized improvement in system
provides
interesting investment
Investment
the
purchase
of
additional
equipment
EVENTS
—Brochure
In
for
installation
COMING
Ohio Railroad
$10,000,000
parts of the program already ap¬
Portsmouth Steel.
Baltimore &
of
estimated that it will cost approx¬
New York 5, N. Y.
on
Y.
*
Aspinook Corp.—Special Report
—Ward
".
1947.
sale
additional shares will be placed in
appraisal of Railroad Equip¬
ment
Certificates
and
City
of
low-priced speculative
Dec.
being
the general funds of the corpora¬
at
the
and
power
corporation's
Savannah, Georgia, plant, the
quisition
Field
of
two
jac-
additional
box
factories and the purchase of ad¬
N.
ditional box factory equipment.
Y.
Nov.
30-Dec. 5,
1947
(Hollywood
The
Industries—AnalysisOtto Fuerst &
Co., 57 William
Street, New York 5, N. Y.
the
wide
Annual Convention at the Hollyvood Beach Hotel.
Dec.
County Coal Corp.—
information—Comstock
&
Co., 231 South
Chicago 4, 111.
Salle
La
New
York
Annual
Meeting
and
by buffet
Graham-Paige
Motors
supper at the Produce
Exchange Luncheon Club.
Corp.—
Dec. 5, 1947 (San Francisco, Calif.)
San
Yew York.
Available
Co.,
and
are
Association
analyses of
Wellman
Tennessee
Francisco
Engi¬
Products
Dec. 15, 1947
&
1
Party
anc
(Cincinnati, Ohio)
Co., 1
N. Y.;
Wall
I
Street,
/
.
.
'
Christmas
Hotel Sinton.
Dec. 24,1947
New
Annual
-
Party
.
(Toronto, Ont., Can.)
Buffet
Luncheon
The
tures
Tor¬
onto Bond Traders Association at
Lumber
Company—
Feb, 3, 1948
analysis for dealers only
Mid-Winter Dinner of the Bond
Street, Chicago 4, 111.
La Salle Hotel.
Michigan
Steel
Casting
Club
March 5, 1948
Co,—
of
Chicago
and
New York Security Dealers
sociation- 22nd Annual
the Waldorf Astoria.
Street, Chicago 3, III.
the
at
As¬
Dinner
We Maintain
an
I
and
COMMON
STOCK
(Stock Dividend distributed by North
it
paper.
In
water¬
manufactures
sells
from
by-products
its
which tall-oil (used in soap, paint
cipal plants
and
are
Georgia,
nah,
located at Savan¬
Hudson
and
Falls
Moreau, New York.
nine
the
Sept.
30,
1947,
months
the
ended
,
corporation's
>
net sales amounted to $46,052,058 '
income
net
per
outstanding
was
share
on
on
$8,897,953, ;
the shares
that date.
;
,
f
Firemen's Ins. Coy Stock
'Placed
Active Market in
Wisconsin Electric Power Co.
•
cellophane
proof paper and some kraft paper
issue
stock
'
of
(par
An
..
as
at
<■
S3E
United Transit
manufac¬
also
film, such
equal to $7
(New York City)
Adams
southern
glassine and white
and
Analysis—Adams & Co., 105 West
from
made
corporation
For
(Chicago,, 111.)
Traders
a
con¬
bags made from purchased
paper and
the King Edward Hotel.
Long-Bell
bags,
the and other products) is the most
'v, important. The corporation's prin¬
at
•,
paper
in
of
pulp manufacturing operations, of
Cincinnati Stock and Bond Club
graph—Memorandum—A. M. Kidier
Christmas
boxes
addition
Traders
installation of officers.
Chemical,
York 5,
Bond
sale
kraft pulp of its own manufacture.
and
Election of Officers to be followed
Analysis—Seligman, Lubetkin &
Co., 41 Broad Street, New York 4
variety of
engaged
and
tainer board and corrugated sheets
5, 1947( New York City)
Security Traders Association of
Street,
is
manufacture
Investment Bankers Associatioi
Franklin
Also
corporation
Fla.)
Dresser
—Comstock & Co., 231 S. La Salle
Commonwealth Gas
for
The additional stock is
N. Y.
Revised
Missouri Utilities
share
one
holders
Common
123 South Broad
International Telephone & Tele¬
Tennessee Gas Transmission
A
now
offered at $26 per share to stock¬
Annual
Public Service Co. of Indiana
1879
Paper Corp. capital stock
being offered by the corporation
Co.—Analysis—Stanley Heller &
Co., 30 Pine Street, New York 5,
&
Established
Bank
phia 9, Pa."
in Common Stocks
Paisk. Webber. Jackson & Curtis
&
Bryson
—Price earnings ratios and yields
on 123 stocks—Stroud &
Co., Inc.,
Metal—Cir¬
the industry
on
neering,
•
issue of 211,-
an
held.
Public
85-year-old New England com¬
with large dividend accumu¬
lation—Raymond & Co., 148 State
Street, Boston 9, Mass.
of
Associate Financial Edi¬
Texas Public Service
informa¬
New York 6, N.Y.
pany
tor of the "Journal of Commerce."
Southwestern Public Service
has underwritten
Unterberg
the
developments in
industry—Vilas & Hickey, 49
Street, New York 5, N. Y.
Foundation
Trading Markets
of
Invest¬
Dreyfus & Co. and prior to June,
1946,
Developments
iA
-
group
861 additional shares of Union Bag
Mr.
Treas¬
Secretary
manager
<J/;
banking
headed by Morgan Stanley & Co.
Walnut
&
,l'
v/».*
to present stockholders at the rate
Public
Broadway, New York 6, N. Y.
Late
of
on
Black, Sivalls
Beryllium Corp,
and
Week—Current
been
yesterday.
office
1240
C
investment
Co.—Third quarter analysis—C. E
Howard succeeds Oscar M. Miller
who retains the
Brothers,
Street, Philadelphia 2, Pa.
tion
£-"^«J %V::n
opportunities—Kidder, Peabody &
Co., 17 Wall Street, New York 5,
•Of
Howard
Buckley
810
Also available is late
appoint¬
Joseph R. Miller
F.
Co.,
4
Co., 150 Broadway, New York 7,
ager of its Dealer Service Depart¬
Leonard
&
Offer to Stockholders
An
Portsmouth Steel Corp.—Data-
Memoran¬
—
Robbins
teel companies—Mercer
Cantor,
Fitzgerald & Go., 61
Broadway, New York City, con¬
tinues the steady expansion of its
Retail Sales Department by the
addition of three security sales¬
men
of long experience: Arthur
L. Williamson, Benjamin F. Harburger and A. E. Giguere. The
announces
D.
Railroad Earnings—List of cur¬
rent earnings of common and
pre¬
ferred stocks—Ira Haupt & Co.,
jf
Adds Four to Staff
also
appraisal—Kalb, Voorhis &
Co., 15 Broad Street, New York 5,
Street, Newark 2, N. J.
Steel,
firm
Resources
dum—C.
cular
Cantor, Fitzgerald
Morgan Stanley Group
Underwrites Union Bag
N. Y.
prospects and
indication of current im¬
an
other
in electric rates.
year
6, N. Y.
Phillips Petroleum Co.—Invest¬
Industry—Study of
investment op¬
provement, net income in October
of
level
the
costs will not go up much further
so
Utilities—Analysis—
Co., Ill Broadway:
Haupt &
New York
Street, New York 4, N. Y.
Wall
to 4.
14
Ira
Co.,
More¬
$3,000,000
less than the figures shown in
the last published statement. Cur¬
rent maintenance figures should
begin to decline as new equip¬
an
that
years.
Public
&
annual
current
depreciation
ac¬
cruals, based on an order of the
in
decline
for the 12 months
ending Sept. 30, ($1.61 as con¬
trasted with $2.25 in the previous
$3,000,000
the
over,
equity capital.
Referring
Northwest
Review
Equipment
industry—Hirsch
Natural Gas
its
savings from the bond refunding
little
as
share earnings
Of
program
raising
of
means
received.
the
about
at
time of the offering of the
the
the
25 Broad
for each
amount
proximately the market price of
the
Electrical
of
$5)
Co.
surance
offered for
American Co.)
Northern Indiana Public Service
holders.
of
on
•;
Market-
120,462 shares*
of Firemen's In¬
is
Newark
being
subscription by stock-
The
offering
has1 been
underwritten by Blyth &
»
Co., Inc.
The stockholders of record Dec. 3
I
are
Gilbert J. Postley
&
Co.
29 BROADWAY. NEW YORK 6. N, Y.
Direct
Wire to Chicago
Members:
225
EAST
MASON
PHONES—Daly 5392
Chicago
Stock
ST.
Chicago: State 093$
Exchange
to
■
MILWAUKEE
(2)
Teletype MI 488
I
j
given the right to
the
new
stock
in
subscribe
the
two; new shares for each 31 shares;
held.
(EST)
:
Rights
on
expire
Dec. 16.
at
-
ratio of
3
p.m.
.
Volume 166
Number 4652
THE
COMMERCIAL
& .FINANCIAL* CHRONICLE
(2269) N 9
--
Current Problems in
National Association of Real Estate Boards' survey reports exten¬
sive
of industrial and commercial structures is
construction
pected in 1948 by
ex¬
President, Boston Edison Company
than one-fourth of nation's cities.
no
Utility executive and accounting expert reviews problem of determining depreciation charges under ris¬
ing replacement costs.
Points out misconceptions of depreciation reserves and confusion caused by
varying methods of reporting reserves in financial statements.
Disapproves change from dollar-unit or
more
Sees
substantial increase in real estate sales.
Extensive
is expected
the
construction
during 1948 in
of
industrial and
more
annual
the real estates
Oi
survey
market.
Of
\
the
reporting cities, 26%
sizable volume of in¬
anticipate
dustrial,
a
29%
for the erection of a large
number of commercial buildings.
Only 13% expect no industrial
construction
at
all, and only 7%,
commercial building.
A
shortage of retail
business
noted
by 90% of the
cities, and not one listed an over-
space
was
supply.
Office
is
space
short
in
81% of the cities and in every one
of
the
largest
population
The
cities
will
it
500,000
be
con¬
adverse
because
make
of
to
on
Moreover, it will not delay house
building through its call on labor
supply, 61% of the cities said.
Some
competition for materials is
anticipated by 18%, and for labor,
by 39%.
The most general hum of indus¬
trial
expansion
and riveting of
commercial
new
expected
in
structures
cities
100,000 population
half
million
these
size.
cities
siderable
and
feel
of
more
of
of
con¬
and
(61%)
of
factory
new
space,
quite two-thirds
than
half
assured
warehouse
are
but under the
Almost
volume
r.ot
expect
a
marked number of business build¬
ings to
go
within the coming
up
year.
the
in
present trend
tralize
industry,
smaller
cities
decen¬
to
some
the
of
undergoing in¬
dustrial expansion big enough to
step up their housing need. In
ether cities industrial expansion
is contingent on their ability to
supply
sufficient
housing
and
are
labor.
estate
for
commercial
real
reflecting the post-war
retail demand for consumer goods
and years of little or no new con¬
are
struction
in
established
Offerings,
which
have
few since the last year of
was
a
cities,
scarcer.
The
the war,
volume
the
same
about
ago
year
but
been
is
getting
turnover
lack
Sales
acceler¬
have
largest cities have
of the function of
ing
a
seen
general drop
would
be* not
with
only
oracti-
in market activity,
reporting a lower vol¬
of commercial property sales
86%
ume
last
than
not
one,
a
the
farm
land
The
volume
lower
than
boom
farm
munities
the
in
was
period in 49%
replying,
sales
com¬
holds
to
last year's level in 40%. A higher
volume than 1946 was listed by
u%.
the
typical farm community
today, one-fourth of all farm sales
are
being made for cash. Half or
of
more
all
in
cash
farm
21%
sales
of
the
for
are
reporting
communities.
community,
buyers whose object is to make a
:juick turnover have disappeared
as
market factor.
a
than
ess
13%
of
5%
the
communities.
long-term
■or
up
today's
Buyers
investment
median
a
They comprise
of the purchasers in
of
about
make
31%
of
purchasers.
Tables
showing expected indus¬
construction, the supply of
retail
and
business
the
and
volume
office
of
space,
turnover
and
prices of farm property follow:
as
in 52% of the
of listings has
New
has
change,
the
New York
announce
firm's
branch
office.
Hazleton, the
mem¬
Stock
Ex¬
the opening
third
Located
new
of
Pennsylvania
Traders Bank & Trust
under
in
the
Building in
office
will
be
the
management of Robert
L. Klotz, Jr.
I
Extensive
Little
No
Increase
Increase
Increase
42%
58%
48
48
Population of City500,000 or over
100,000-499,999
10,000
with any
in
the
only that some reason¬
able
plan
of
distribution
be
adopted."
It is not, therefore, the periodic
.
the
in
loss
be
to
replaced.
tion"
90
12
count
7
93
15
85
49.999
___
18
81
100
2
98
9
91
1
19
80
2
37
61
_
seems
III
as
Compared with One Year Ago
-Market
Size of Cities
Toatl
for
500.000
or
U.
S._
over.
10.000 to
Under
my
to
confusion
relation
to
careless
in
of
accumulation of
determining the peri¬
allocation
of
the
total
loss.
speak of depreciation methods,
really mean the method
of distributing the total loss to the
various periods, et cetera.
we
Before
leaving
the
subject
of
the periodic charge for allocating
the portion of the cost to the oper¬
of
ations
the
period, I desire to
attention, for later
reference, the effect of this charge.
call
to
busi¬
the
in
or
of
in
as
there is
of
the
no
of
some
asset
the
-Selling PricesHigher Same Lower
Higher
Same
Lower
11
40
49
24
55
21
14
86
29
42
provision
The
amount
for
so
depreciation.
withheld,
and capital side
Twenty-five
could
as
have
years
this
answered
categorically
as
any¬
but i must admit that
swer
these
is
questions by
a
wished,
today
1
have
person
of
who
sheet
in
within
$50,000,000
Reserve
required now
$15,000,000 to pay for
capital additions? Why, to the ex¬
you
borrow
of the Reserve for
Why, if
ance
well
difficulty
in
types
this
account
"Reserve
as
the
use
commonly associated with
in
the
admit
"sock"
that I
and
I
know
of
to
way
to
no
put across to the layman the real
function
of
the
account, with all
its implications. A change in the
of the account to
name
which
one
specifically indicate its
might cause even more
may more
function
confusion.
with you
the
But I do want to leave
most emphatically, that
account
what
man
"Reserve
ants
it
for
mean
Depre¬
to the lay¬
to
means
account¬
and comptrollers.
Balance Sheet Statement of
Depreciable
of
my
ing
phase
subject without comment¬
the showing of depreci¬
upon
able
assets
on
balance
the
sheet.
cost
;
of
these
reserve
assets.
up
There
to date for
has
been
a
growing tendency to net these two
figures in recent years, and it is
my opinion that by so doing two
very significant facts, namely the
as¬
briefly
very
do
the
as
analyzing
the
statement.
The
for
reserve
depreciation is the net accumula¬
tions of the provisions for
depre¬
ciation
based, not
loss in
value
date, but
on
of
an
upon the actual
the assets up to
arbitrary alloca¬
tion
of the total loss
during the
service life of the
capital invested
in the assets. The
difference be¬
tween these two accounts
does not
represent value in any sense of
the word, but it
merely represents
the cost of the fixed assets
not yet
allocated to operations. This dif¬
is
often
referred
so
are
synonymous
yet allocated
they
to
as
value," "carrying value,"
forth, and if those terms
and
is The
cumulated
with
"cost
not
to
operations" then
properly used, otherwise
are
carry a wrong
impression.
Another thing that troubles
me,
when the
is
reserve
deducted
from
for depreciation
the fixed asset
costs, and when there is no spe¬
cific depreciation fund, is the ac¬
counting for the net assets that
have been reclaimed and withheld
in the business through the allo-
(Continued
on
page
39)
ACTIVE MARKETS
Amott.Baker&Go.
Industrial Off. Bldg.
6's
1947
—
Bonds
&
INCORPORATED
c/d's
unless
Wholesaler and Retailer of
Lexington Ave. & 42nd St.
(Chanin Bldg.)
Investment Securities
Our
Trading
Department
specializes in real estate bonds
29
—
—
there
is
specific
fund set up on the
8
54
38
19
64
17
40
46
32
44
24
Toner
49,999
14
39
47
22
58
20
stitute of
6
29
65
30
44
26
Nov.
a
*A
paper
18,
replacement
and
All
issues
by
Controller^
SIEGEL & CO.
Mr.
In¬
America, Boston, Mass.,
1947. k
stocks, title
company and
bank participation
books, becomes
presented
before the
on
sheet,
fixed assets is a
fact,
stated previously, a
very
important fact for one
and,
Tl^e first point I desire to stress they
desirability of showing the
depreciable assets at cost, and the
showing of the amount of the ac¬
most
it
when we show the
for depreciation as a de¬
duction from
the cost of fixed
assets on the balance
sheet. The
"book
I do not want to leave this
examine
us
we
ference
Assets
in
common
business,
reserve
is
money
now
of
Let
of
frank
am
al¬
was
Reserve, Lia¬
deduction from the fixed
a
what
the
This word
the
sets.
for Depre¬
from
comes
the word "Reserve."
on
to show
the asset side of the balance
understanding of the function of
ciation"
Depreciation
sheet. And I remember
very
the change to the present
practice,
have invested your
entire assets resulting
from the
provision for depreciation in new
plant, have you still a balance of
$50,000,000?"
the
for
bility and Capital side of the bal¬
Deprecia¬
same
you
Much, of
recollection when the
my
shown
ways
capital being
operations
twice?
tion, isn't the
charged
into
that
whatever way it most
clearly reflects the facts. It is well
"Why, if you have a Reserve for
Depreciation account balance oi
are
considerable
a
conservatism
age, and I must an¬
this question by
saying that
it should be shown on the
balance
supposed to be quite informed:
to
the
with
comes
the
amount equal to
an
I
question
asked
was
provision for deprecia¬
tion, there is withheld in the form
of
sheet.'
ance
Only the other day I
actual dis¬
amount
liability
the
balance sneet, or as a de¬
duction irom the so-called related
assets on the asset siae of the bal¬
in
use
your
Inasmuch
of
Depreciation
account
no
tne
—on
the
amount
much
existing in
depreciation, Recount¬
an
naturally to
"old chestnut": Where on the
balance sheet snouid the Reserve
for Depreciation account be
shown
one
"hair
non-descriptive terms
relation
thereto.
We
rates of depreciation,
reality we mean the
re-
opera-
Not only
the
pletely misunderstood as* the ac¬
count "Reserve for Depreciation."
question
or
to
separately.
accounting, the functions and im¬
plications of which are so com¬
very
now
is
ciation" does not
an ac¬
like
no
mind but that
the
14
10,000
little
a
of
99,999
100,000 to 499 999
50,000 to
Activity-
in
of the cost
recovery
periodic
Percentage of Cities Reporting Higher, Same, or Lower Market
Activity and Higher, Same, or Lower Selling Prices for Farm
Lands
should be
Deprecia¬
for
Cost Allocated
in
bursement
TABLE
is
just called "Depreciation.''
when
Office Space
Over Normal Short
to
loss
of
Operations," rather than to
We
88
10.000
"Plant
or
and have
account
period
"Provision
called
used
II
10
10 000 to
each
charged
The
allocation
this
which
method
100,000 to 499.999
50,000 to 99,999
Under
some
end of their service life
13
1
assets
portion of the
total loss to be experienced when
the depreciable assets reach the
61
over.
or
depreciable
themselves that the accountant is
in
75
is
it
allocations
lost sight of.
That separate
showing of these
accounts leads quite
ago
tent
end
by
are
shown
al¬
use
depreciable
should, in
It
soinewnere
a
as
There
lecessary
when
500,000
To that
retirement.
.ts
32
90
The
.
depreciable
plant,
an
amount
equal to the total net expense ol
54
Short
.
end of the service life of the
the
of
10
years
there shall be produced,
through annual contributions, by
speak
25
.
sin¬
a
ciation
6
Normal
Over
im¬
be
irrespective of the date of depre¬
11
Building Supply: Percentage of Cities Reporting Oversupply,
Normal Supply, or Undersupply
Size of Cities
will
than the service life.
iess
61
Total for U. S—
life
to what
paired by the operations of
gle year or of a series of
•39
Retail Business Space
experts,
of
to say
men
service
extent
odic
TABLE
training
which enables
26
National Total
in the
mathematical law. There
14
.
case.
nothing in business experience,
is
20
_
West
regularity
no
tions,
Reserve
United R.
development of depreciation.
It
does not proceed in
accordance
33
50,000- 99.999
10,000- 49,999
Under
is
"Tnere
ing is due to
~4%
of
ctace.
Misconceptions
& iiiiectric Co. vs.
cost wmch has been
covered
to
come
attention than the following
quotation trom tne opinion oi Mi.
splitting" but there is
Industrial Construction Expected Before the End of the Year 1948
to
up
my
This
TABLE
point
attempting to record, but rather
he is allocating to each period's
Green, Ellis Branch
bers of the
this
i that
other words, reflect the net assets
original capital invested
atpreciable assets.
of
Toner
V.
James
operations
Green, Ellis & Anderson,
assets
witnheid
summary
of
the
the
ness
main purpose of the charge is that
In the average farm
ownership
ana/or
of
of
cost
ter
or
In
tne
ership of such
war-
of the
but
r
own¬
of
assets. No bet¬
justice Brandeis on tne
of
it
and/or
use
,
accumulation
accumulation
net
die
the
the
operations, the account "Reserve: are these two tacts very signififor rtonraMaUnn" ic used, and the I Cant, but they are
Depreciation" is
entirely differ¬
balance of this account represents ent,
and
snouid
tnerciore
be
location
from
total cost of the fixed assets used
in the business, and the portion of
periodic allocations of loss to
loss
resulting
periodic
show
stability with a slight edge up¬
ward. They are about the same a
•.hey were a year ago in 55% Oi
the reporting communities, higher
in 24%, and lower in 21%.
with
record
Ao
accuracy
showed. In the typical
reporting,
part-time
farmers now make
up
21%
of
today's farm buyers.
of
de¬
to
degree of
the
any
survey
Prices
the
impossi¬
termine
present farm land market,
with the other assets
of the business and loses its iden-
tity.
bility
People buying farms primarily
residences, expecting to keep
a
city job and to do part-time
larming, are an important factor
the
'intermingled
cal, but also a
theoreti¬
for
in
a
cal
and
year,
business
districts, They are still on last
year's level in 49% of the report¬
ing cities, but they are higher in
45% and down in only 6%.
are
The
trial
Prices
cities.
the
reasons for confusion in
regard to depreciation is a misunderstanding
depreciation accounting.
It is not the tunction of depreciation account¬
to attempt to record the loss occurring from the use and/or ownership of depreciable
One of the basic
—
ated in only 18% of the cities.
any
materials,
in the opinion of 81% of the cities.
may
of
depreciation accounting, but urges changes in depreciation rates be made when required by
Advises retaining present policies until modification is proven to be necessity.
price changes.
community
commercial
not
building
drain
of
or more.
expected
struction
home
*
basis in
cost
higher volume.
no
it
structures
cut down volume of sales in 30%
and
construction,
look
of
commercial
than one-fourth of the nation's cities,
National Association of Real Estate Boards reported on Nov. 29
the basis of reports from 372 cities in 46 states in its 47th semi¬
on
Depreciation Accounting
By JAMES V. TONER*
i
Broadway, N.fY. 6
Teletype NY
DIgby 4-2370
1-1942
150 BROADWAY
Boston
certificates.
NEW YORK
7, N.
PhM
:
;
10
THE: COMMERCIAL
(2270)
FINANCIAL
&
CHRONICLE
Delaware
PHILADELPHIA
Net
Pennsylvania Brevities
-.
Corporation
.,
.
1
..
After discussions which have been in progress for
over
year,
a
John T.
Whiting, President of Alan Wood Steel Co., has announced
representatives of holders of substantial amounts of the com¬
pany's preferred and common stocks have tentatively agreed upon a
plan of recapitalization which will
eliminate the present issue of 7%
months basis. For the year ended
preferred now carrying $5o per Sept. 30, 1947, net earnings, after
taxes were
share in arrearages.
$225,967, equivalent,
after preferred dividends, to $1.46
It is proposed that Alan Wood
on the 154,749 shares of common.
Steel be merged with its whol¬
The company has no funded debt
ly-owned
subsidiary,
Raineyand only 8,191 shares of $100 par
Wood Coke Co. and' that Wood
7% preferred.
7% preferred be exchanged for
A year-end common dividend
one share of new 5% preferred
of 75 cents per share has been
and four shares common in the
declared payable Dec. 15.
new company, plus $20 in cash.
The
1946 year-end disbursement was
The present 200,000
shares of
50 cents and, in 1945, 10 cents.
common
would
be
exchanged
that
Data on.Request
BUCKLEY BROTHERS
Members New York, Philadelphia and
Angeles Stock Exchanges
Also Member of
New
York Curb Exchange
Philadelphia 2
Los Angeles
Hagerstown, Md:
N. Y. Telephone—WHitehall 3-7253
New York
Pittsburgh, Pa.
^
Private Wire System
:i
between
Philadelphia, New York and Los
Angeles
'
Philadelphia
for
new
In
the
Co.
to
eries
WHitehall 4-2400
Under
Mr.
said
Pew
have
would
the
to
been
The
Phjlco Extras
Botany Mills
In addition to the
Empire Steel Co.
regular
Pittsburgh Rys. Co.
extra of 50 cents and
Sterling Motor Truck
of
idend
Nazareth Cement
one
share
of
In commenting
H. M. Byllesby & Company
that
that
Stock Exchange Bldg. Phila. 2
73
v
stock
current
which
will
1947
be
ceive
oper¬
indicate
Monday.
the
among
in
recent' years.
.amount
used
Phila. Transportation Issues
in
volume
Riverside Metal Co. Com.
at
^
of
An
working
Philadelphia
Exchange
Stock
Packard Bldg., Philadelphia 2
Teletype
PH
N. Y. Phone
COrtlandt 7-6814
375
Sales
business.
of
times
three
the
the
production
in
1948
and New
three
every
Jersey
the
component
Securities & Exchange Commis¬
leans
strongly to the theory that the
production of net income is the
predominant factor for consid¬
in
pointed
months
on
12-
a
proceedings^
analysts
Some
out
car-miles
that
is,
in
in
general
report
his
the bridge
over
52,091
averaged
in
October,
record for the month.
new
the count
year,
49,157,
was
During
1947
the
total
first
traffic
the
10
months
of
was
preparation
of
report
a
widening of tbc bridge road¬
way from six to eight lanes has
without
the
that
prove
great
ModjeskL and
ingston
and
as¬
architects,
Larson,
and Louis T. Klauder and Asso¬
ciates,
Third
Round
Spiral
Wage
Starts
System
tial"
increase
wage
manded
in its
"substan¬
a
will
1948
new
be
de¬
contract.
union's
membership consists
of
approximately 11,000 motormen, conductors, bus drivers and
maintenance employees of Phila¬
delphia Transportation Co.
The
announcement was made by Jo¬
seph B. Dougherty, President of
the local.
From
learned
other
that
it
sources,
the
increase
was
to
be
asked for would be 40 cents
for
a
40-hcur week.
The
pres¬
ent average pay is $1.20 an hour.
In addition to the wage increase,
the Union will seek an improved
pension
the
plan,
in
improvement
extra-men
seven
guarantee
and
paid holidays.
Phila. Elec. Co. Common
123 Public
•Roberts & Mander Common
*Offered
E.
which
with
President
might be forced to ask for
pany
another
there
on
fare
was
increase, although
no
this point.
direct
In
statement
recent state¬
a
Incorporated*
PHILADELPHIA
York
'
San
Boston
Chicago
Francisco
'
harmonious
>
4
j.*.] \
Allentown
r
f.'j»«**•-» *•» ■;* »:* 4*»y
dividend
of
Costs
power
ad¬
although
have
dropped slightly due to the high
he
vanced,
said,
maintenance
well
and,
of
new
equipment
use,
Property Law Voided
Pittsburgh
Lancaster
far
were
from
adequately
cov¬
is
There
is
strong movement,
a
expected
find
to
pression in Congress next
revise
Tax law in
married
come
Federal
the
ex¬
year,
Income
mariner to permit
a
divide
to
persons
for tax purposes.
in¬
This, it
is thought, can be accomplished
without
involvement
problems
inherent
the
in
existing
in
community property laws.
Earle Gatchell,
Mgr.
Hayden Stone Dept.
Of
Hayden, Stone & Co., 25 Broad
Street, New York City, members
of the New York Stock
announce
that Earle
joined
firm as
Exchange,
Gatchell has
tne
man¬
of
ager
dealer
o
r
and.::
r
spondent
e
-
de¬
of
manager
partment of F.
S.
&
Moseley
Go.
the
for
last ten years,
except
four
for
Earle
Catchell
he
years
with the
of
rank
his
U.
S.
Army.
Colonel
the
to
his
Prior
release.
He
at
association with F. S.
Moseley, he
manager of the wholesale de¬
partment of Cohu & Torrey.
was
Hecht & Co., NYSE
Member Firm
Announcement
formation
of
a
Opens
is- made
of
New
new
the
York
Hecht & Co.
The firm will be
Alfred
Hecht,
who
has been associated with Sartorius
Co.
&
for
the
past 15
and
prior to that was with McGlinn &
Co., G. Axel von Nolcken, floor
years
,
on
Trading Department Active in
offices
its
Western Pennsylvania
Issues
•****-» *•*,
of
partner, formerly with the Guar¬
anty Trust Co. and Chaplin & Co.,
and
Mrs.
Edna
Wolff,
limited
partner. The new firm will make
and
N. Y. Stock Exch.
y:
- -
< *\****
Scranton;
PITTSBURGH 22, PA.
Grant 3900*
Bell
New
York
new
firm
>
was
previously reported in the "Finan¬
Chronicle"
of
July 24.
COMPANY
Pitts. Stock
Exch.
New York-Curb Exch. (Assoc.)
10th Floor, Peoplda Bk. Bldg.
the
& Delafield at 14 Wall Street.
cial
CHAPLIN
with
Stock Exchange firm of Delafield
Formation of the
Members
~i '■
as
oF
composed
Last, week the Supreme Court of
Pennsylvania wiped the Common¬
wealth's
recently-enacted
com¬
munity property law from the
REctor 2-6528-29
'
relations
Stock Exchange firm to be known
NEW YORK 5, N. Y.
■
marital
probably function
written. But, in the opin¬
charges
they may be ex¬
pected
to
rise
again
as
the
equipment ages. The profit out¬
look for 1948, Ebert added, is no
put into
120 BROADWAY
' '
property in
held an un¬
would
of
Incorporated;
PEnnypacker 5-7330
.
law
time
preferred
cover
requirements.
and materials have steadily
With. Link, Gorman & Co.
(Special
61 Broadway.
n
1528 Walnut St., Philadelphia 2
ly
the
the
Request
9, PA.
spouse
than
STROUD & COMPANY
'
common
held
proportion
Appraisal
123 SO. BROAD STREET
as
each
served
Direct Wire to New YotkCity
L H. Rollins & Sons
PEnnypacker 5-0100
sidered
the dealer de¬
Ebert,
of PTC, indicated that the com¬
only by prospectus
Bought—Sold—Quoted
New
on
liability. In
this result,
are
Charles
Utility Common Stocks.
Copies
tax
accomplish
carried
taking home a pay
the,y can carry on."
>
•Atlantic City Elec. Co. Com.
income
to
a
familiar tone.
partment in
asking for increases in the New York*
wages," Mr. Dougherty said, "be¬ office.
cause, due to the high cost of liv¬
Mr. Gatchell
ing, many of our people are not had been,
? V
Price-Earnings Ratios and Yields
Harshaw Chem. Co. Common
the
provided that all property
acquired
during
marriage
and
c
Reasons advanced for the union
and
5-4646
•Nor. Ind. Pub. Serv. Com.
by
after the law's effective date (with
minor exceptions) was to be con¬
as
Valuation and
income,
as
the law
an
hour, amounting to $16 advance
pro¬
CITY OF PHILADELPHIA BONDS
;
vide
order
to
Valuation and Appraisal
Teletype—PHS 299
all
earned,
joint in¬
come, thus enabling them to di¬
has served notice that
RAILROAD EQUIPMENT CERTIFICATES
New York—HAnover 2-9369
consider
ered.
Philadelphia
better than for the present year.
Telephones:
Bell
right to
the
Court, the potential
problems posed b,v estrangement,
separation, desertion and divorce
Fidelity
Philadelphia—PEnnypacker
enforce¬
The law's principal purpose was
afford a husband and wife the
which
Available Publications
Philadelphia Trust Building*
PHILADELPHIA 9
to
The
CIO
Transport
Workers
Union, Local 234, the largest sin¬
gle labor union in Philadelphia,
—^
Dolphin & Co.
judicial
or
ment.
ion
electrical consultants.
in
fair and equitable to all.
Municipal Bonds
Masters,
sisted by Ilarbeson, Hough, Liv¬
ensuing allocations will
\
pretation
1947 earnings will do little more
delay
con¬
divided half interest. Under ideal¬
and
be
uncer¬
incomplete,
flicting and inconsistent" that it
is incapable of rational inter¬
ment, Mr. Ebert estimated that
will
"so
and
of
the factor of
their opinion,
formula
tain"
which
The over-all outlook is that an
acceptable
"vague, indefinite and
as
been started under the direction
discarded.
should be
The opinion, written by Judge
Horace Stern, describes the law
whichever
15,199,871}
compared with 14,166,356 during
the corresponding period of 1946,
a
gain of 1,083,515, or 7.68%.
The
eral income taxes.
a
Last
increase being 5.97 %.
have
variable
irrelevant:
an
limited
earnings
the
eration.
duced
reports
company
stated
manager,
"We
applied to
underIt is understood that the
of
liers.
are
1941
cars.
The
Costello,
K.
demands
each
expects
company
over
that daily traffic
and gross revenues as
is
only by the availability of freight
Pennsylvania
of
formula
arbitrary
sion, which will take an active
and
Joseph
factors of car-miles, track-miles
Reflecting the rapid expansion
in postwar building and construc¬
tion, Nazareth Cement Co., with
an
annual
capacity of 1,800,000
barrels, is operating at near ca¬
peak
the
be
his proposed allocations
the three equally-weighted
on
handling the expanded
almost
pacity
last
basing
increased
capital
will
attack
Trustees'
Nazareth Cement Co.
Members
the
the
continue for quite some time,
part
Samuel K. Phillips & Co.
the Trustees' pro¬
Because of the conflict¬
Under
-level."
Northern Liberties Gas Com.
on
stockholders should re-'
special dividend at this
A stock dividend was in¬
large capital expenditures made
Phila. Warwick Com.
i[:
ing claims of many creditors, it is
assuhied that the proceedings will
the company's
cluded because of the unushally
1500 Walnut Sfc 6-1950
bond
maturity
and sinking fund reserve require¬
ments of $1,172,768, an increase of1
$178,750 over the preceding year.
The
Company's
claims
against
debtor, were begun before
District Court in Pittsburgh
a
time.
over-the-
traded
is
Hearings
for
history, jthe board ibelieved thb'
common
Ben Franklin Hotel Com.
of
results,
most profitable in
Teletype
PH
"in view
ating
near
posed amendments to the plan of
reorganization
for
Pittsburgh
Railways Co., and on the question
of subordination of Philadelphia
John Ballantyne, President, said
PHILADELPHIA OFFICE
stoek
:1:
the action,
on
program
Pittsburgh Rwys. Hearings
each 20 held.
Warner Company
the
quar¬
stock div¬
a
income
an
prop¬
counter.
terly dividend of 37 % cents pay¬
able Dec. 12, directors of Philco
Corp. have declared a year-end
Empire Southern Gas
With
the
into
completion, it is believed that a
larger proportion of net income
could
conservatively
be
dis¬
tributed in common dividends.
forces.
Telephone
Rlttenhouse 6-3717
re¬
pro¬
1946, approxi¬
in
back
put
erty.
at
mands of customers and the armed
American Box Board
net
mately $800,000 of earnings have
refin¬
operate
modernization
a
begun
gram,
will increase by 50
barrel the price paid for
capacity in order to meet the de¬
PH 257
of
quality
operations on the basis of present
production.
company
crude.
New York Phone
Teletype
effort
an
cents per
Street, PhUadelphia 2
Phila. Phnv
Oil
oil, John G. Pew, Vice-President
of Sun Oil Co., has announced that
Common
Hi. N. NASH & CO.
Locust 7-1477
cement rock
is regarded
in the industry, as being of the
highest and reserves are estimated
to be sufficient for 100 years of
provide itself
with adequate supplies of crude
Philadelphia Transportation Co.
Chestnut
The
owned by the company
Sun
1421
Bridge
week
on
for
share
common,
share.
Bank & Insurance
3-6s 2039, Pfd. &
River
this
Commission
Joint
books, thus voiding the hopes of
anticipated saving
estimated $10,000,000 in Fed¬
residents, who
ported for the year ended Oct; 31
Beryllium Corporation
1420 Walnut Street,
Up
\
Alan Wood Steel Recapitalization
Black, Sivalls & Bryson
Los
River Bridge
Income
Delaware
The
•
Portsmouth Steel
Thursday, December 4, 1947
NEW YORK, N. Y.
Bowling Green 9-3987
System Teletype—PG 4V3
>«■»<><■
to
The
Financial
Chronicle)
GREEN BAY,
WIS. — William
A. McCarthy and Andrew C. Olson
have become associated with Link,
Gorman
Building.
&
Company,
Northern
h
YjWfjtfl'jiMfrsi Wv 'i»
p*t
*
<tj«•>»'(*« (*»->
COMMERCIAL
THE
Number 4652
166
Volume
V; iiY"# |
-'-'''■
"WH^>. U-»AM «*<***,
v^f T Irv-w«?
&
FINANCIAL
11111
1
.
CHRONICLE
11
(2271)
f
r
j
LETTER TO EDITOR;
By, L. SCUDDER MOTT*
%'i*
Editor, "Investment Timing"
ir-TU~--xj*
T.-i*-<■» »■•.-■—«■,*
»
Though foreseeing
^
examine
Editor, Commercial and Financial Chronicle:
in
error as
profits because of, 1948
sonal opinions.
garded
endorsing
as
a
form of government planning are of
danger, to , your readers., Truthseekers- do not read them,.- The,
articles, that
little
aicfy
the judge of.whether or not .a so¬
written :by men who are regardet,
as
representing free enterprise,, ciety is to foster competition?
but really do not themselves truly
Another, error, in h.s definition,
They
understand free- enterprise.
cannot define their terms.
heading of "The Origin and Evo¬
lution
of
Our
Free
Enterprise
["Chronicle" of.Nov. 6,
It was written by a pro¬
System."
2.]
page.
fessor who is regarded
a -man
as
jf fairness is leaving the. impres¬
competitors
of competition of it¬
competition
also be fair. And fairness of
must
enough;
competition implies conformity to
the rules of fairness
acceptable
to that society which is endeavor¬
ing to foster competition. The test
the
of
of
fairness
found in whether
not
is
rules
these
or
they tend
conditions that
would prevail if the competitors
-had equal strength and accorded
to
the
produce
to each the same
freedom in
com¬
petition."
'
Now
the first place rules o
in
fairness
accepted
never
are
The
of rules of fairness and
the actual rules of fairness never
are
buying for
haggling of the
a
They
eternal.
''
Again,,he is loose in his quali¬
virtually certain that
,
that
contend
poor
a
man
buying
from Sears, Roebuck, Montgomery
or J. C, Penney isn't prac¬
ticing fair competition because, the
are
stronger than the
Ward,
merchants
taxes
extension-
year
failed, as
all know,
override
to
the
Presiden¬
sideration
tial-
to
vetoes.
indi¬
Hence
vidual
ained
same
19 4
in
which,
L. Scudder Mott
Editor
reduction
as
of
confuses
and
normal
and
surtax
compared with 1945.
At this time last year there was
widespread expectation of tax re¬
though
are.
deposits,
to
in U.
out,editorially
who
is
new
a
and
or,
Nov.
Continuing
states:
"At
the
To be
to
the
if
point,
"Moreover,
the
would
take
now
•banks cannot
by.:. the.
command a market
banks
-
taxes
alterna-
term
gains
rities
that
losses (i.e., on secu¬
have. been, held six
or
rate payable on, such ties h,el,d for ?n?re than six months)
are
taken into account
only to
We reproduce below the.
the extent of 50%.
Since the tax
table on effective tax ra,tes given
on net capital gains by the- alter¬
in, "Investment- Timing'! Dec. 5,
native method, is 50%, and only
1946,i which is, still applicable. It
will be. noted that the maximum
effective rate (25%)
long-term
the $18,000
on
reached at
profits -is
If, for example, a 20% cut should
made
long-term gains. are taken
account, the effective rate
into
here is 25%,
representing a max¬
imum.
bracket.
be
50 % of
All short-term
(Continued
in,income tax rates, the
capital gains and
on
page
35)
t-
tions.
stand
government
it
source
money
and
source
Equipment Trust Certificates
annually $500,000-on each December,15, 1948 to .1962, inclusive.
is
by endorsement by j,
MATURITIES AND YIELDS
(Accrued dividends
to
be added)
1948
1.40%
1953
2.25%
1958
2.75%
1.65
1954
2.375
1959
2.80
1950
1.85
1955
2.50
I960
2.85
1951
2.00
1956
2.60
1961
2.90
1952
are
2.125
1957
2.65
1962
2.95
is
securities
Issuance and sale of these
The
institu¬
Certificates are subject to authorization by the Interstate Commerce Commission.
Offering Circular may be obtained in any State in which this announcement is
circulatedfrom only such of the undersigned and other dealers as may
lawfully offer these securities in such State.
questionable,
whether Mr. Eccles really goes to
the root
7?'
Certificates are to be issued under an Agreement to be dated as of December 15, 1947,
provide for the issuance oi $7,500,000 principal amount of Certificates t;o be
secured by new railroad equipment to cost not less than $10,015,411.
X
ready to
of. credit-granting
Thus
4
which will
held outside the banking sys¬
types
v.
as to payment of principal and dividends
Seaboard Air Line Railroad Company
Banks
Reserve
themselves
over
Line Railroad
..
1949
banks
assumption
the
Federal
*
These
halsey, stuart &, co. iNC.
of the creation, of
credit.
That
root
is Federal Reserve credit."
OrvisBros.Opeit;
Unlisted Trading Dept.
W
Oryig Brothers & Co., 14 Waif
.
of rth^New
.
orfeCity* mgmbecs
Yprk Stock ^Exchange,,
announce, the,
openhjg^oL an vunp;
lifted t trading.* department, \ -under,
if. they; are thsnsupervisiopuof i
Altoni>B.,Piunr
securities whose yields are-not at¬ kctt -who. has been associated with
tractive to outside- investors, or, the firm^ fortmany years*, ';
the
outside,
income
of the
unconditionally guaranteed
tem, including tho'se held by other
the
/
Before passing to consideration
of what investors could advan¬
(Philadelphia Plan)
otis &, co.
phelps, fenn & co.
r. w. pressprich & co.
blair & co., inc.
(INCORPORATED)
equitable securities corporation
freeman
held
Reduction
gains.
2%-%
compelled to retain them.
the,, Bank,
letter
the same time,- the
Securities
also
lower rate.
l. f. rothschild
& co.
any
government, during and
to shift as much of
debt. as. possible outside, the
year.
below
a
reduce- the
Chairman of the Board of
more
since the war,
banks.
equal—until
next
$18,000 would
Those
have
Equipment. Trust, Series C
Mr. Hoil.es is
a r i o u s news¬
Bank Letter" of the
the control of bank
out forcibly against
"Monthly
principle of compelling banks to,
hold government debt is diametri¬
cally opposite to the efforts madp,
by
being
C. HOILES
wishes."
terms. it
'
de¬
on.,net. long,-term
Seaboard
Calif:
Ana,
[Editor's Note:
co-publisher of, v
papers.]
sell its
on
have
$7,500,000
12, 1947'
that
Treasury could
at,any rate or
to
methods of
enterprise.
free
in
Santa
Compulsion has been used only by.
the police states.' Under compul¬
the
$38,000)
and
off
by some .person
R.
placing the citizens of the country
under legal compulsion to buy its
bonds." says "the Letter." Here¬
tofore one of the greatest protec¬
tions against unsound fiscal poli¬
cies in any country has been the
need for selling its obligations.
securities
individual
■
principle to introduce into the fi¬
nancing of the government — of
sion
-
-
S.
dangerous
be
computing taxes months or less) are 100% taken
capital gain, a*' ihto account for tax purposes,
reduction in income taxes would Long-term transactions (on sqcuri-
tive
be pointed
actually understands, and ,be¬
lieves
Government securities.
"This
better
•
ferred taking profits—other things
confounds, the
*
like this should
icles
proposition of Marriner S. Eccles,
Governors of the Federal Reserved
portioned
Possible
But because
The errors- in ar-
voter.
iverage
the
that banks be compelled
special reserve, pro¬
($18,000
would
until
kind of, thing
Yes, this; is., the
hat
the
to maintain a
brackets
reached
Basically the investors' tax in¬
terest-is, of ..-course, in the capital tageously do tax-wise, it, will be
gains taxes,'which will probably, well to recapitulate briefly the
Shortnot be- changed next year.; even pertinent tax provisions.
National City Bank of New York, in discussing
credit in the light of, recent, proposals, comes
System
long-term prof¬
be
rqual strength.,
of. Nv Y. in its December "Bank Letter" says
financing, government.
of
be
not
i
"Investment, riming"
reducr
tion of three percentage points in
each surtax bracket and an overall
of 5%
investors- of action
would
Current Tax Provisions,
to be sure, en¬
a
by
Effects of
the
as
6,
prop¬
its
tax
rates have re¬
in
"community
taken for tax purposes be¬
fore-the end of-this year.
That. idea that men have duction for 1947. Though, or even
equal, in strength,, in, order because, this expectation was not
to have free and fair, competition
*
Reprinted. from
"Investment
leads! to the belief that business
>s like war, that the gain ,of one. is
Timing," Nov. 26, 1947, published
the loss of another; that wealth by the Economics & Investment
doesn't ha,ye to be distributed in Department,
National
Securities
order to benefit its owners; that and Research Corporation, New
the government, must interfere to
York, N. Y.
keep people more,nearly having,
and dangerous principle in
December, issue
The
of
erty" provisions) will come- about
for next year.
This expectation,
has an important bearing on con¬
we
Government Securities
new
about the $38,000 bracket. Hence
all those in between these two
(through rate reductions, or
including raising exemptions and
for, the
current
maximum 25% on
taxes
alleviate
To be due
it is
tax reduction, prospects.
char ge is to be made in individual income taxes
no
realized,.. there is. greater prob¬
ability that reduction in individual
Congress
by
to
be
OpposesForcingBanks
National City Bank
tax
Sees advantage in postponing taking
two earlier atr
buyer?
to
writer, says itis desirable t*-
year,
what might be done to improve investors'
see
during the special session of Congress—and even if the situation were otherwise, there was
no expectation whatever that any
changes would be made applicable to 1947 taxes,, The
joyed
s
its ideas
"change with time or. place.
means
Would the author of the article
by
changes
majority
another
It
will try to
man
from
no
market.
by a higher law.
If the. writer
pleads that he means that the
dilemma.
that
for;
.linder
anybody but individuals. Society
never accepts anything.
And fairr
ness is not .determined by hum^
beings. Fairness is determined bj
rules that no map made, and nc
man can unmake; in other; words
majority accepts, then he is in
any
competition
icss.
not
in
free transaction..
means that no
.nan expects to get . more than an¬
other will perform the same, serv¬
pendence. Yet listen to this vague
and loose statement in trying to
define free enterprise. I quote:
is
no
coercion,
Free
ice.
"Freedom
is
There
principles se,t
forth in the Declaration of Inde.who believes in the
self
be fair, if
had equal strength.)
strength or force or
sion that things would
One such article was under the,
now
tempts made
phrase of endeavoring tc;
oster competition Who is; to be,
fying
dangerous,
are
^ *s
*
magazine carries articles setting forth a multitude of per¬
Those articles that are written by men who are. re¬
Your
change in taxes, affecting individuals for .current
portfolios^ and transactions promptly to
status, because of; likelihood of lower tax rates inc oming year.
well as "vague and .loose statements"
defining conditions of free? enterprise and: planned; economy.
Says free competition means "a haggling of the market."
Correspondent sees
no
.;
& company
graham, parsons &, co.
wm, e. pollock & co., inc.
first of
michigan
f. s. yantis &, co.
corporation
mason; moran & co„
kean, taylor & co.
r, l. day & co,
mullaney, ross & company
thomas & company
INCORPORATED-,
To be dated December 15, 1947.
Principal and semi-annual dividends.(December 15 and June 15) payable in New York City.
Definitive .Certificates, wit)v dividend warrants attached, in the. denomination of $1,000, registerable as to principal. Not
redeemable prior to niatwity.. Jliese'Certificates are offered,when, as and if received-by us, It is expected fhat certificates
in temporary or definitiye form will be ready, for delivery at theoffiee of JIalsey, Stuart & Co. Inc.. 35 Wall St, New York 5,
N.-.Y. oripr abeut December 24,1947;,iThe information contained herein has been carefully cpmpUedirom sources considered
rdinble.and.'rwhyejpot guara^^.as tq^mprej3nes^gf,.accuraQy, we;believe ifctQ,be(pofreet as of this dat?v,~.
December 2, 1947.
/
y
12
(2272)
v:m&4!q0]«
'
?.
■-■■■
-
I
V-
-
■
In his
Chairman of the Board at the 149th annual
meeting of the stock¬
Company, J. Stewart Baker, after reviewing the
past year's operations of the, bank, makes some pointed remarks
regarding national eco¬
This Week
nomic
Insurance Stocks
and
and
casualty
insurance
stocks,
as
measured
Standard
by
.& Poor's weekly indices, have moved in diametrically opposite di¬
rections
over
the past
12 months,
as
follows:
•*;
.
"the
main"
ing to stop
r|
by
Casualty Index
flation
156.3
elaborate
152.2
trols.
con¬
Movements of individual stocks, however, have been extremely
irregular in both groups, some going contrary to their respective
indices, as will be noted in Table I and Table II which follow:
circles
to
that,
form
a
be
Board
651/2
171/4
16
.
of
721/2
+
641/2
671/4
+
46%
533/4
+ 15.0
9.8
4.3
,
that there is
J. Stewart Baker
•>.,
no
to stem the
way
tide of
481/2
403/4
—16.0
283/g
+
Hanover Fire
27%
26%
26%
n. c.
*Hartford Fire
98%
im/2
+ 12.9
*Home
27
24%
"'Insurance Company of N. A
"'National Fire
911/2
95
521/2
47
—10.5
rising prices except by in¬
creasing the supply of goods and
services
available
for
purchase
and by halting the expansion in
the supply of money and credit.
"To this end every effort should
be made by management and la¬
bor to increase production; and
government should lose no oppor¬
tunity of encouraging them in this
important patriotic duty.
In the
battle against inflation we should
453/4
—11.2
not be satisfied with less than the
ll3/4
—13.0
maximum
national
24%
+ 12.5
2.3
goods
services.
^Continental
Insurance
~
*Fidelity-Phenix
531/4
561/4
:I:Fire
54
50
22
20
Association
Franklin
Glens
Fire
Falls
*Great American
New
Hampshire
New
York
*North
51V2
Fire
131/2
River
•
22
*Phoenix
87
Providence-Washington
5.6
7.4
—
9.1
2.3
8.3
—
+
85
341/2
—
+
—
33
3.8
meet
4.3
States
own
65
711/2
+ 10.0
without
a
251/2
—19.7
duction
and this
45%
401/4
—12.3
only if
48
Security Insurance
*f Springfield F. & M
*United
our
313/4
50
+
•
*St. Paul F. & M
Fire
output
of
We cannot
needs, not to men¬
tion those of the wartorn nations,
—
—
and
Average
—
decided increase in pro¬
can
.be obtained
our whole economy is op¬
efficiently and new facil¬
ities are provided when they are
2.8%
its
Federal
turn
,
per
t i
a
trol
over
and
the
initiative
for
its
for
much
the
Board
to
"Based
first
con¬
expan¬
realized
and
the
recently
the
taken
threat
of
inflation
is
to
or
and
we
sult
of
cheap
securities
taxes
in
effect of
the
oh
arriv¬
all
or
re¬
transr
whether
company,
not included
securities
in
know
that inflation is the inevitable
of
deducted in
ar¬
riving at net operating earnings,
except net profits on the sale of
Inflation is too high a price to pay
money
tax
actions of
by
unlimited expansion of credit.
cheap
sale
deducting
taxes deducted
flects the
holding interest rates low
for
the
ing at net operating earnings
substituted for the present policy
an
on
sion for
If
be
eliminated, effective control over
the quantity of money must be
of
estimated
profits, will amoung to slight¬
ly more than $4,000,000 compared
with $5,111,000 last
year. Provi¬
to
short-term interest rates.
and
such
more
measures
firm
figures for the
months
without
a
fundamental change in
policies than was involved in
its
actual
on
nine
figures for the last three months,
the net operating
earnings for this
year,
not including
net profits
base
make
to pay more for their credit
ness
requirements.
sion rests outside the System. Un¬
der these conditions it is neces¬
sary
earning assets for
months
rates have firmed
slightly and
borrowers have shown a
willing¬
,y.
the Nation's credit
our
11
was approxi¬
2%
as
compared
with
1.80% for the year 1946. Interest
securities is directly
o n a r
Com-
mately
to
powers
the* free
annum against
1.53%
The average rate of re¬
all
on
the first
Reserve
virtually abandoned effective
net
net
which
not
are
operating
profits
included
earnings.
realized
The
the sale
of securities have amounted to
ap¬
re¬
on
artificially maintaining
by the expansion of proximately $350,000 after deduct¬
ing an appropriate amount for
bank credit.
money
central
"While
erated
4.2
of
the
inBy subordinating
other considerations, which should
have heavy weight- in determin¬
ing credit policies, the Board has
f 1
can
stopped by
applica-
by
ernment
i n,
lion of elaborate controls, but his¬
tory demonstrates all too clearly
7.2
—
1.61%
supoort
the prices of United States Gov¬
by
—12.7
45
75
assumed
Federal Reserve Powers
.
"Use
—17.4%
54i/2
Agricultural
has
last year.
th
e
situation
to
pany, Mr. Baker said:
"The average yield on our
gov¬
ernment
obligations
has
been
explosive possibilities.
be¬
lieve
the
dedicated
.
n"
o
inflation
66
a
is
enterprise system.
>
*
Reporting on the operations of
delayed
"in certain
er,
legerdem
Aetna Insurance
the Bank of the Manhattan
said Mr. Bak¬
some
TABLE I
25 Fire Insurance Stocks
which
until
is
disposi t i
-2.2%
+3.7%
.
Bankers & Shippers
Boston
ities in such a way that further
expansion in the credit base would
be prevented. This would be the
in-
118.0
Insurance
A
minimum program, but it may be
necessary to go Still further since
restrictive action has been
of try-"
113.8
'American Equitable
v
-
legerde-+
"There
*
as
policy.
condemns
Fire Index
November 27, 1946November 26, 1947
Change
report
holders of the Bank of the Manhattan
By E. A. VAN DEUSEN
Fire
•'?*w:
^rri»--r-
control
commodities
was
over
prices
taxes. You will recall that for
eral years, in view of our
of
sev¬
large
holdings of government securities,
terminated with
the passing of the OPA, control
or can be used to advan¬
many of
them purchased above
There is certainly no sound over the price of credit has con¬ par, it was our
practice to add to
in
the
Federal
Reserve
way to finance the acquisition of tinued
the reserve for
government obli¬
these facilities except by the in¬ Board and has been exercised by
gations an amount equal to the
vestment of private capital. There¬ it in a manner that has encouraged net
profits realized after taxes on
fore, it is imperative that every rather than checked inflation. It the sale of these
securities.
As
encouragement be given our peo¬ would seem that the Board's sole our portfolio of these
securities
ple to increase their savings5 so objective has been to maintain the jjas keen
substantially reduced
that there
may
be more funds price of government securities,' an(j as the total
"ui,rtn
premium is relaavailable to finance a substantial feeling perhaps it has an obliga-.
'tively small, the present reserve
expansion in our industrial ca¬ tion to do so because of having is considered
ample and, there¬
joined with the Treasury Depart- fore, this
pacity.
i
year the practice was
in
"The required savings, however, ment
managing the money, | discontinued. The
"same procedure
will never be forthcoming until market so that government secur- v,n« h«or»
needed
tage.
*Stocks in Standard & Poor's Index.
tAdjusted for 2lk for 1 stock split, October 1947.
It will be observed that, although the index shows a modest
appreciation of 3.7%, yet the average movement of the 25 stocks
listed has been
a
decline of 2.8%.
This discrepancy is accounted for
by the difference in the composition of the two groups. Only 14 of
above 25 stocks are comprised in the index, as marked with
asterisks, while the index includes, in addition, American Insurance,
the
Fireman's Fund Insurance, Firemen's Insurance and National Liberty
Insurance. Eleven of the above group of stocks are-not represented
in the index.
Dilution of equity through capital increases has doubtless caused
such stocks
Aetna, Gleins Falls and Springfield Fire & Marine to
decline so much more than average. Aetna increased its capital in
July by 33.3%, Glens Falls in October by 30% and Springfield Fire
& Marine in October by 40%. On the other hand, Providence-Wash¬
ington increased its capital by 33.3% in October, yet its stock is down
pnly 4.3%.
as
Outstanding market gains are shown by Bankers & Shippers,
Continental, Hartford Fire, North River and St. Paul Fire & Marine.
TABLE II
I
n.
611/4
4.1%
—
5.7
—
that
United
the
future
have
States
small
153
brackets
tax
where
35%
291/4
+
5OV2
451/4
471/2
84
Guarantee
29%
27%
661/2
savings originated in the past,
forced
been
1.8%
^Stocks in Standard & Poor's Index,
In
this
case
an
average
the
which
BANK
are
index.
are
INSURANCE
STOCKS
The
seven
includes,
ford
Steam
in
asterisks; the in¬
addition, Hart¬
Boiler and
Preferred
Accident, while this list includes
Maryland
Casualty,
Seaboard
Surety and U. S. Guarantee, which
are
not represented in the index.
As in the fire group, so
Laird, Bissell % w*eds
Members New York Stock Exchange
120 BROADWAY, NEW YORK 5, N. Y,
Telephone: BArclay 7-3500
Bell
(L. A.
Teletype—NY 1-1248-49
Gibbs, Manager Trading Dept.)
stocks
comprised in the index
marked with
dex
and
are
decline of 1.8% is indicated, which
is fairly close to the 2.2% decline
of
in this
group there has been some dilu¬
tion pf equity. For instance, Con¬
tinental
capital
Casualty increased
its
by 20%
in July, and
v.
Massachusetts Bonding by 25% in
October.
however,
Continental's
has
s
t
o c
actually to
With lower
rates the capital needs
or
industry could be met by the
^stdcks
to
bona
fide
in¬
^MSnagement may well
to ^iirtail its plans for ex¬
"While
t Adjusted for 2Vo for 1 stock split, October 1947.
shown.
se¬
their capital.
income tax
5.0
the movements of 10 casualty insurance stocks
curtail
to
pansion if tfte only way they can
be financed is by bank credit.
—20.8
Average
In Table II,
spend
prefer
7.3
+
of
vestors!
n. c.
•
most
k,
there
seems
to
be
a
on
millions of
our
to
In order
(reserve did not have to be carried
has cost savings depositors, against the
large U. S. Treasury
pensioners, beneficiaries of trust deposit. Because of the
increased
funds, life insurance policyhold¬ cost
of
doing
business,
some
icy
ers
and
those
who
must
live
on
the income from investments. One
declined
should
abandon
all
whether
it
all individuals
or
17.4%.
bodies who
ex¬
over
ernment
obligations held by the
still
Federal Reserve Banks and by in¬
creasing the rediscount rate, and
certainly should be given no more
powers until it has used those it
insurance
appreciated --2-. 6/++dustrials.
stocks
are
now
possesses and
adequate.
our
is
dragging,
and
when
measured
against the Dow Jones Industrials,
they have put in a poor perform¬
ance for several years.
However,
during the past four months they
have
steadied
somewhat,
and
have
been
performing < slightly
better than the^Pow Jones,
Jiff
Fire
months ago a study was made of
»chedule of service
charges
appropri¬ and many of our fees
were revised
ate for a group of men, appointed
upward.
It has been
gratifying
by the government, to have the that with few
exceptions our cus¬
power of fixing interest rates or tomers have
recognized the rea¬
whether
such
rates, like other sonableness of these
increases and
prices, should be left to the free have accepted them
willingly. Due
forces of supply and demand.
to a larger volume of
business,
"It might be helpful at this time as well as to
higher rates which
for Congress tp appoint a com- were in effect for a
part of the
wonders
any
measure
of control
others, the Federal Reserve
commitments—stated or implied
Board is now asking for
more
to hold yields on United States powers, even though it has not
Government securities at specific made full use of those Congress
levels.
It would then be free to has already granted it. The Board
adjust its holdings of these secur¬ has, at the present time, the abil¬
ity to deal with the present situa¬
but
Massachusetts
Bonding has tion by selling United States Gov¬
Board
^^^reSntravereged'smf
deed
accomplish this the Federal Re¬ ercise
serve
J
W1 ^
*5®*+uW*St.?*J
f
ttewvernmL^S'Sesm^lindue to togherdedee<f comparedI to what this Vol- POSlts ani? j° the fact that the 20 %
compared to
what^ thiss pto
growing recognition that greater
production is needed to combat mission of experienced men to
inflation, relatively few people make a thorough study of the use
Federal Reserve Board has
appear to understand that to stem the
the tide of rising prices, expan-* made of its powers and the pol¬
sion in the supply of money and icies it has been following.
Like
credit must be curtailed.
securities.
inrnmATV.iel°ur
5» avn?ifwffattest
relative to savings, we feet it has had
acquired a tax structure so
steeply graded that individuals in!
the
net profits on other securities
our
,
capital
common
+ 24.4
—17.4
501/2
Amsterdam
in
for
sale of bonds, preferred stocks and
8.9
—
14
would
demands
have
of
2.6
+
111/4
'Seaboard Surety
*U. S. Fidelity & Guaranty.
S.
493/4
168
'^Massachusetts Bonding
U.
573/4
481/2
•Maryland Casualty
*New
82
been followed with regard to
abnormally
low
interest rates.
"Tt
Except for a few recent timid oneratinff
steps, the Board has followed its ^ust ahouL the
policy of cheap money., in utter 1946 in Dit
disregard of the unfortunate ef-1 vear ou
have
851/2
Casualty
"'American Surety
"'Continental Casualty
^Fidelity & Deposit
he floated originally at
oe iioatea orieinallv at
ities could
lues couia
a decided change in pol¬
regarding the income tax.
From the • period when govern¬
ment officials commonly assumed
UVVMilVlV/U.
i
there is
verely their savings
*Aetna
^
V1AVMV
icy
our
10 Casualty Insurance Stocks
—i—--
VJ.
year, commissions and fees
pected to be
than last
a
small
are exf-
$300,000 greater
year.
"Total expenses
are estimated at
6%
more
than
last
year, of which $2,300,000 will
rep¬
$16,100,000,
resent taxes which will be
$950,-!
000 less this year.
Salaries
account for
vyjll
approximately half of
the expenses and will show
crease of about
14% or
Other
16%
or
an
in-H
$980,000,,.
expenses
$5,700,000,
an
over
are
estimated aft
increase of $775,000
last
year.
About
$370,000 of this increase is due to
the higher rates of
interest being'
paid
On
on
special interest accounts.
January first of
rates
they prove in¬ into
To delegate to
some
were
raised
this year these
to
bring them
line with those
paid by
our
competitors. Higher prices for the
complete control
materials and services we use
ac¬
over such an important part of our
country's economy is a matter of count for most of the balance of
grave importance in a democracy the increase."
group
of
men
Volume 166
Number 4652
•
THEnqpipiERClAIi^FINANCIAL. iCKRONIGLE
Britain's Dwindling Gold Reserve
ioj
Industry's Answer to the Police State
By PAUL EINZIG
By EARL BUNTING*
j
Dr. Einzig pictures gloom in England regarding prospect of deple¬
tion of the nation's gold reserve by middle of 1948,
Says progress
President, O'Sullivan Rubber Corp. and President of NAM
i
of export drive is not encouraging,
Attacking
Prime Minister with the Trades Union Council.
gathering
storm
the
on
the
inter¬
national
po¬
litical horizon,
but the pros¬
pects of grave
of
the
gold
all
now
but
generally
Britain
will
have
no
gold left by the middle of
that nothing short of
miracle or, what is considered
more
1948,
a
to
and
amount
almost
to
the
same
could
avert
rations
would
reduction
a
to
level
a
health and
which
at
be inadequate
food
of
to maintain
is
productivity.
abnormally large.
Treasury's loss of gold
lars
continues
siderably
And the
and dol¬
exceed
to
Once all the wages
con¬
of
lease
of
the
dollar
balance
frozen
loan
have
been
up
there
any
*s
Nor
the
progress
textiles
very
the
lands which have been leveled
therefore,
is,
Unions
Trades
to
and
Minister
the
and
Council.
Unions
If
enthusiasm that is
the
joy
high priority,
a
is
become
the
desired,
leave
owing
much
lack
to
York
the
of
the
latter
are
cleared.
government initiated
a
been
on
the initiation of the
paign *
50,000
a
great
over
cleared.
But
has
Will have to
:that
the transport
meets
winter
Mr.
Even
reserve
,!. '
Union
so,
have been
the
indicates
that
the
achieved
or
ulated by
Deal
times
—
it
'
offer to sell
ihe offer
nor a
lower prices through
output and lower unit
costs
is bound to bring certaiiv
defeat to this country and to all
by
greater
the
people in it.
was
Truman
President
in ef¬
to defeat
the
"police state" abroad is -to:
adopt "police state" methods ati
fect
that
not
the
only
by
Mr.
I do not believe this.
think
for
(Continued
a
on
British
Alternate
'
Private
years
value)
issued by the Company to holders of its Capital Slock, which
$26
a
Share
undersigned, intend to offer shares
Capital Stock acquired by them pursuant to the underwriting agreement
and through the exercise of rights at prices not less than the subscription
price set forth above, and not above a price equal to the sum of the last sale
price on the New York Stock Exchange during the current or the previous
of
been
Executive
trading session and
an amount
equal to the Stock Exchange commission.
as
Montagu
to
and
to
more
Chief
a
As
it is
Governor,
former
the
recently
as
Copies of the Prospectus are obtainable from the undersigned only in States in
the undersign ed is legally authorized to act as a dealer in securities and
in which sucli Prospectus may be legally distributed.
Assistant
Cashier.
Director
will
of
Operations, Mr.
have
has
sure-
tions for the
!
charge
Fund.
of
health.
resigned
for
the
MORGAN STANLEY & CO.
Mr. Parsons
replaces Mr. J. L. Fisher, who
j cently
page
Bag & Paper Corporation
Ca¬
1938 to 1943
Secretary
Norman,
to
moment
solicitation Of art offer to buy any of these Shares.
The several underwriters, including the
has
who
says
way
made only by the Prospectus.
par
reasons
re¬
*
i*,.. December 8,19Iff.
of
.
A
'j
"
—
'=
•
of
skillfully manip¬
the diehards of a Dead
which
interferes with
achieving
in, recent
what
combination
act—any
events however
whose wage has gone up
three
pro¬
ductivity.
home.
one
»
de¬
greater
greater
more
ly the effort of the British work-
mil¬
buying
much
much
with
Managing Director of
Parsons,
during the
cam¬
Possibly
tide
validate
to
mand
Subscription Price to Warrant Holders
Department handling all transac-
it
is
bs'.ifu.
Director
as
year, has for 19 years been con¬
nected with the Bank of England,
the workers to
turned, and that slowly but
cure
riylits^i U^ expire at 3 o'clock p.m., Eastern Standard Time, December id,
1947ifj inure fully set forth in the Prospectus.
Operations.
able
the government's appeal.
cure
Rights^evidenced by Subscription Warrants, to subscribe for these shares
M. H. Parsons to
Parsons
of
living
Americans
(without
satisfactory to register the favorresponse
one
for this situation. That
There
Capital Stock
Director of the Fund for the past
system
requirements
degree.
we talk about.
is one,
and only
prosperity
years.
No
living only about half as
of
great. All they know or care about
is that they're not sharing in the
211,861 Shares
the Fund.
as
be done in order
ensure
reasonable
deal
more
now
percent increase
pos¬
Director
Monetary
announced
been
mille Gutt,
cam¬
were
cars
of
hundred
a
manufacturing
wages,
con¬
trasted with an increase in the
in
our
of
millions
the International Monetary Fund,
during'the first weekend follow¬
ing
standard
appointment of M. H. Par¬
as Director of Operations of
sons,
So
gratifying,
over
The
paign in favor of clearing goods
Wagons during weekends. So far
the' result has
we
good thing that some
a
of
any
two
1947.
cars.
during this winter, owing to the
decline in the number of engines
and trucks, and the slow pace at
the
3,
■
Operations
succeed J. F. Fisher
British opinion is being prepared
for -a
grave
crisis of transport
which
gold
man¬
railroad
Dec.
National
are
such*
are not impressed when
boast that there has been well
people
people are being
penalized by vast increases in the
imports. But
International
the
effort to accelerate
of
the
before
Fund appoints
turnover
It is not
or
This announcement is neither an
exhausted.
of
One of the few bright spots has
new
City,
by
people
as
standard incomes. Therefore
Any
why the cost of living has
of
in
in their incomes
great as the in¬
millions of pre-war sub- j-
nearly
be
Camille Gutt, Managing
power.
been the
sponsored
why
of increase
not
crease
mendous increase in demand.
little time to lose, if
desired result is hoped to be
Director of
be
to
of
or
by Mr. Sullivan at
Congress of American
52nd
is
the good things of life, production
has not kept pace with this tre¬
but
starving
from
lions
Fund Has lessf
to revise the
priority list. The output of textiles
to
people,
some,
cent
growing
food
it will be
reinforced
necessary
continues
all
keep
and
straight from the shoulder
increased is that while
en¬
that it has
so
in
engaged
be
achieved
satisfactory, but
they
remain
far
behind
the
greatly
increased
reauirernents.
The government has allotted far
who
to
The
reason
there is very
more
claimants
takes
how
is suffering from
war
highly skilled craftsmen, much of
the self-employed, and on many
white
collar workers. The per¬
it.
about
done
average
it
see
the
prices even though they are up
some
65% since 1939.
But this has put a squeeze on
Trades
should
it
sible to reduce food
quite out of proportion to the ac¬
tual extent of the progress. Steel
to
His
Industry,
can
steel
told.
Let's
high prices are hitting flesh and
blood people, and what can be
Association of Manufacturers, New
power
more
is
let's
life.
real
:;:An address
agriculture. Britain's
to
Prime
export
prevailing conditions the
public has to be thankful
the modest
increase of coal output is wel¬
are
except
see exactly what is
in our economy—not
just
on
the
average,
because
things don't happen that way in
Well,
liquidated. His job is—
he
as
we
happening
is the statistical average of
not
to discriminatory
in favor of coal mining,
Amidst
figures
do
one
what
to
for small mercies, and
an
he is
no
con¬
British
comed with
to
this
ghost, this "average" tool of the
total state, is permitted to exist.
His thoughts are average thoughts
possible to divert manpower to
coal mining and textiles the ex¬
port
drive
will
have
a
good
chance of succeeding. If the man¬
has
the aver¬
job, simply doesn't exist in a
free land. On the contrary, in those
negotiations that are in pro¬
gress
to that end between the
encouraging.
some
or
the
It is true, for
weeks past the coal output
been
improving
slightly.
of
man,
age
—or
thinking of Villu¬
as the "average
"average profit."
or an
before
cost
to Moscow.
collectivism,
en¬
Why High Prices
even
The average
rises
shall
Bunting
in our thoughts, or there will be
bloody backs and slave labor from
here
we
the rest of the world.
owe
Earl
up
balance her trade de¬
pends largely on the outcome of
of produc¬
dtive
and
individuals
it.
average
gain at home but for the
lightened economic leadership
American
with
His
heard
for the material benefits
mixed
to agree
ability
Marshall Plan.
tion
the
increases
prospects
sistance under the
problem
cerned
optimism about
to obtain as¬
Britain's
our
Don't let's
get
death.
to
have
skepticism here at home.
| There, in a nut shell, is our
supreme challenge—to make our
system work better not merely
wage
The
induce
by most people.
Nor is
a
ient
color
"average wage,"
today
that
system, with
freedom, is being
eyed, from various quarters of
(he world, enviously, bitterly or
skeptically. And there is some
today!
demands have
higher wages
the
is
n
or an
individual
its
cut.
attract additional labor.
prac¬
given
the
if
.
plan of foreign aid.
America's economic
thinking
paid in the key industries cease to
of
tically
satisfied
been
long before the middle
Hopes for an early re¬
1948.
the
adverse
end
an
it
next best thing
labor by means of
concerned
We
But don't let
granted lead to an all-round de¬
mand
for
corresponding
rises.
visible
balance of trade. It is feared that,
unless some drastic change should
occur, the gold reserve may come
to
the
industries
expan-
Cautions against further wage increases
profit is—nil!
necessary
short
The
attract
live
and
higher wages. It is of no use, how¬
ever, to pay higher wages in the
Although the trade balance has
improved somewhat, the deficit is
still
to
freezing
endeavor
on
negligible.
profits taxation.
<e-
statistical
average
exceptional powers has been quite
it
Urges decontrol of interest rates to curb bank credit
"average business"
fields
f
-,c o
ing, textiles, agriculture. The ex¬
tent
to
which
the
Ministry of
Labor has so far made use of its
thing, timely American assistance,
or an
tool.
the
,o
government is now trying to
is discriminatory increases
of wages. Evidently, the govern¬
ment is not likely to make much
use
of its power to direct labor
towards the key industries which
are short of man power: coal min¬
Dr. Paul Einzig
useful
In many
adopt
as¬
that
sumed
a
of
the
v
is
It
reserve.
woman,"
or
Statistically,
the average is
of
wages
condi¬
higher output. The latt
est aim of the wages policy which
tional
exhaustion
an
man
increases
ther
more
Industrial management must set an example
by clearing its own
sions—the rankest of which is that there is any such
thing in our land
the aim of making any fur¬
even
hardships re¬
sulting from
sees
and outlines
less
seems
willingness
in estimating prices and
averages
situation and
sion and abandonment of all undistributed
promising is
the working
classes to agree to a wages policy.
The government appears to have
abandoned as hopeless the aim of
fixing a ceiling to wages, and
What
clouds
of
ernment bonds to redeem bank-held debt.
increase.
now
wage
wages, Mr. Bunting points out inequities in present
productivity as only remedy against price inflation.
Poses
problem as three-fold: (a) to reduce inflationary pressures; (b) to maintain high living standards and ?
(c) to provide necessary amount of foreign aid. Analyzes NAM's 12-point program and denies tax
reduction is inflationary.
Sees need of encouraging capital formation and favors new long-term gov¬
sees a
LONDON, ENG.—In spite of the fine weather that is quite un¬
usual in Britain this time of the
year, and in spite of the modest
but noteworthy increases of output registered in some branches of
production, the general sentiment in Britain is one of deepening
gloom. The
main cause of
ing classes to back up their gov¬
it
is
ernment by means of deeds and
not,' as
one
would
not merely words and votes will
expect, the
use
price and
better labor
situation, and greater willingness of workers to cooperate with the
government.
Says outcome depends on successful negotiations of
though he
which
34)
I do?
that;
14
(2274)
rnmmmmm
i
THE
COMMERCIAL
& 'FINANCIAL
CHRONICLE
Thursday, December 4, 1947
i
Economic XJutlook and What toDoAfccutlt
,<3>
By HENRY HAZLITT*
we
Associate, Newsweek Magazine
Stressing political above economic factors in business'outlook, Mr.
HazHtt maintains we will not'have a repetition of 1932 depression,
but "maybe something worse." "Says \ve> may -Stiffer like Europe
from "repressed inflation," i. e., a government following inflationary
policies on monetary side, and endeavoring at same time to curb
Ht'has long been customary for most business forecasting to dis¬
only "endogenous" factors—that is, factors within the economic
itself—and to ignore what are called "extrogenous" factors—
that is, disturbances to the economic system which come from the
process
"o
u
t
the
fore¬
ly
year
of
existence
by
until it has at last
year
"dominant;
in
mar¬
underestimates
in
com¬
very
and
labor,
sumes
>
ex¬
isting political
*
interventions
remain
will
world
substantially
unchanged.
This
Henry Hazlitt
tradi-
tional
type of forecasting, which
terms of
charts_and curves showing past
prices or production or inven¬
tories, or probable supply and de¬
mand, has always been liable to
grave error precisely because it
leaves out the political factor. In
is usually conducted in
economic
system today is
political interventions,
subject to
to political dominance, to politi¬
cal
whim, mood, and dictation.
We have reached the point where
have
we
much
consider
to
what
to' decide
ployers
workers,
producers
or
-Industry,
Dec. 3, >947.
New
can
©
York
City,
as
going
are
the body of
consumers,
would
decide
for
themselves.
This basic
*A statement by Mr. Hazlitt in
a
panel discussion at the NAM
52nd Annual Congress of Ameri¬
or
if*left free to
decide
least
what individual em¬
as
or
at
politicians
of
decision
most
change in the center
forgotten today' in
is
,
This is under
it, is likely to go
wrong.
looking
into
the
future,
therefore, we will be well advised
if we give our attention niore to
so-called political factors than to
what
-are
traditionally
called
purely economic factors. The
as¬
that
or
In
or
tacitly
economic
any
forecasting which leaves it out,
free
-
modities
.
generation the political
grown
in importance
has
become
omplete-
it
last
factor
casting either
implies the
kets
cheering statement;
but what they overlook is that
the substitute for a 1932 depres¬
a
sion
discussions
current
whether
or
when
are
we
from boom to bust.
of
going
A great many
people, for example, still fear that
circumstances to f>e construed as an offering of these securities for sale,
to buy'or as a solicitation of an offer to buy, any of such securities.
The offer is made only by means of lite Prospectus.
no
NEW ISSUE
or as an
December 4,
offer
be
may
something;
even
want to
we
continue
what
are
we
most
What is
ir
repressed inflation?
follows
ernment
ary
policies
and
then
effects
tion.
on
On
ernment
on
to
the
holders of its
!
the
hand
one
gov¬
usually continues to keep
succeeds, after 16 years of deficit,
in bringing its budget for a
year
or
two into balance, it nonethe¬
less
continues
to 'follow
cheap
money and other policies'that in¬
evitably encourage an increase in
the
volume
credit
of
in
—
ir.
crease
other
bank
and
money
words
in¬
an
the
monetary purchas¬
ing power bidding for goods; On
the other hand, the government
tries to prevent the consequences
price
con¬
controls,
exchange
controls, rationing, allocations—
In short, by government domina¬
wage
of
the
entire
of
economy/ This
leads
course,
by the individual.
also
ly
to
to
15, 1947,
as more
fully
set
December
forth in the Prospectus.
Subscription Price $100
per
share
The several
(at
underwriters, including the undersigned, may offer these shares
$100 per share, subject to stockholder subscription, to allotment and
'prior sale and
to
series
a
necks
to
termination of the offer without notice.
—
an
And
it
interminable
We
dealers in securities and in which such Prospectus may legally be distributed.
The First Boston Corporation
Goldman, Sachs & Co.
.
Union Securities Corporation
Kidder, Peabody & Co.
Lehman Brothers
f
%
Smith, Barney & Co.
Stone & Webster Securities Corporation
Equitable Securities Corporation
Central Republic
L
W. C. Langley & Co.
i
Scott & Stringfellow
Estabrook & Co.
Company
(Incorporated)
Mason-Hagan, Inc.
White, Weld & Co.
Spencer Trask & CoHarris, Hall & Company
(Incorporated)
Stroud &
Company
Laurence M. Marks & Co.
Incorporated
The Milwaukee
Kay, Richards & Co.
Company
A. E. Masten & Company
The Ohio
Company
Strader, Taylor & Co., Inc.
Laird, Bissell & Meeds
C. F. Cassell &
Company; Inc.
tries
n
d
im¬
and
utilities
prove
'and
public
services; to in¬
vastly
crease
the
supply
or
housing;
and
to help feed
Western
Alan
H.
'Eu¬
rope and assist
in its economic
Temple
recopstruc¬
tion. This is
tremendous
mands.
conjunction
In
of
a
de¬
the
aggregate it is
imore than the country can satisfy,
as rising prices show.
might
call
these
always astonished when they
occur,
and
invariably
attribute
to
the weather or.
wickedness
beyond
Professor
or
their
Jewkes
of
"We
of
the
some
other
control.
the
British
do
believe the
not
boom
will
be ended by a slump in consumer
expenditures until there is a pre¬
ceding slump in employment and
consumer income.
Experience has
fehown that fluctuations in employ¬
ment and
consumer
income are
traceable
to
more
variations
in
capital goods industries than to
other influence. Therefore 1
any
believe
the
boom
will
end:
(a)
When you, gentlemen of the NAM,
and other heads of businesses, de¬
cide that the
and
cost
of
construction
equipment is too high, in
le-
lation to your prospective markets
and
earnings;
cide
as
that
is
you
prudent
(b)
when
have
in
gone
far
as
incurring
debt
in relation to the capital you have
or
attract.
can
this decision
You
reach
may
independently,
in
or
consultation with your bankers.
The
boom
might
also
c-nd
through contraction of credit,
en¬
forced
Reserve
and
curtailing
the
by federal
Treasury
policy,
As
Univer¬
re¬
situation:
even
the
:::A statement by
the
consequences
inflation.
we
This
seem
is
Of
the
■
of the export
surplus, with obvi¬
ous effects on demand and
prices
in this country.
Some or all these things will
eventually happen. I do not ex¬
pect them to happen tomorrow-—
-ertainl.y not in a degree that
would
cut
heavily into
very
otisiness activity.
our
The situation in
construction, in the railway, util¬
ity and farm ^equipment indust¬
ries, in automobiles, seems to
provide
'assurance
df
high production for
to
be
continued
good many
Housing continues
months ahead.
a
underwritten
by
Federal
a
financing
program Which Mr. Eccles has called "possibly the most
inflationary factor in the present
situation." The export surplus will
be large, • although not^so
large
as
last spring. ;Farm income is
practically
guaranteed
by a de¬
products that will
mand for farm
continue into the 1948 crops.
I
do
have
not
how
see
anyone
can
very firm opinion about
the latter part of 1948 until it is
seen whether the
tightening in the
a
supply of capital that is beginning
to appear is supplemented
by a
tightening of credit also. B.y
ent
signs,
capital
needs
harder to finance in
know
not
right
that is
now
Any forecast
will
continue
prices
ever,
will
employment
full
are
implies
firm.
now
tised.
be
may
They
that
How¬
three factors which
suggest that the inflation
right
be
Wq.do
harder, and
$64 question.
a
that
continue
there
pres¬
will
1948.
how much
are,
menace
over-adver¬
first,
that
the
government will take many billion
dollars
more away
the first
half of
pay back to
now
may
to
lines
more
from people in
1948
than
it will
people. Second, prices
be discounting
some
extent.
filled.
Dec. 3, 1947.
the
Third,
fu¬
pipe
inflationary forces.
panel
and
more
Nevertheless
are
we
becoming
cannot, in
setting policy, safely disregard the
(Continued from page 5)
mate
the
should
or
general
investing
public's
subsequent
prevalent
opinion
will be.
to be fac¬
Style Sense
versus
Economic Analysis
Such predicting of changes in public
psychology takes the form
merchandise-styling when applied to individual securities and
categories of securities.
To a considerable degree and for extended
periods their prices follow popularity curves in lieu of economic
or
quantitative statistical factors, and this style motivation to a
considerable
degree governs the election of particular issues to
admission in the exclusive "Blue Chip Club," as well as the size of
their price-earnings ratios..
of
Nowhere, to this writer's knowledge, has this behavior been
aptly depicted as by Lord Keynes as follows:
as
"Professional investment may he likened to those newspaper
com,petitions in which the competitors have to pick oat the six
prettiest faces from a hundred photographs, the prize being awarded
to the competitor whose choice most nearly corresponds to the aver¬
age preferences of the competitors as a whole so that each competitor
has to pick, not those faces which he himself finds prettiest, but
those which he thinks likeliest to catch the fancy of the other com¬
petitors, all of whom are looking at the problem from the same point
of View. It is not a case of choosing those which, to the best of one's
judgment, are really ■ the prettiest, nor even those which average
opinion genuinely thinks the .prettiest. We have reached, the third,
degree where the 'devote our intelligences to anticipating what aver¬
age opinion expects the average opinion to he. And there are some,
I believe, who practice the fourth, fifth, and higher degrees."—From
General Theory cf Employment, Interest, and Money, frew York,
1936,
p.
156.
.
Finally, it.
ihight end through disappearance
Mr. Temple in
discussion at the NAM
52nd Annual Congress of Amer¬
ican Industry, New York
City,
a
merely in prevent¬
ing the vicious upward spiral bf
prices at the cost of having > a
vicious downward-spiral of prices
at the cost; of having a viciobs
downward spiral of productivity."
are
productive loans.
ture
ability of banks to make
succeed
[These
L——
most
de¬
you
reaction¬
sity of Manchester remarked
cently
I
bottle¬
are
ing today.
may be obtained from any of the undersigned several
only in States in which such underwriters are qualified to act as
sudden
"crises according to plan" except
that the planners who create them
repressed
Copies of the Prospectus
of
food
prospect that
underwriters
a
"expand indus¬
a
shortages,
steel
shortages, coal shortages — which
disrupt or paralyze the " whole
ary
on
mod¬
ernize
prevent
its budget out of balance. Where,
in the United'States, it finally
them
tion period to terminate at 3:00 P. M. Eastern Standard Time
ment to
as
economy.
being offered by the Company for subscription to the
outstanding 4y£% Cumulative Preferred Stock, the-subscrip-
la¬
bor and equip¬
It
having their inevitable
prices and on distribu¬
the $—
materials,
the monetary side,
leads
are
supply
inflation¬
basic
endeavors
these from
factor
The above shares
fundamental-question before this Round Table is when the
will end, and what will
stop it. The productive facilities of
the United States are being called on to
satisfy the greatest demand
for consumer goods ever known.
At the same time
they are asked to
system under which the gov¬
a
series of sudden crises, particular¬
Par Value $100 Per Share
The
boom
prevail, is
likely to suffer
erties
(Series with Sinking Fund)
many
months ahead.
to
steady loss of his traditional lib¬
4.50% Cumulative Preferred Stock
Soys, however, boom can come to
an end through credit toiitraction
forced by Federal Reserve and
Treasury policy. Predicts continued high production for
from tomorrow.
system,
Company
;
income.
consumer
the most like¬
see
fashion
tion
Appalachian Electric Rower
employ¬
ment and
rope. What Europe is mainly suf¬
fering from today is what has
been called "repressed inflation."
And this, if the economic ideals in
trols,
75,000 Shares
Temple-'does'not foreseeehd *6f present boom through decline
ly course we will follow today—
assuming that the present world
temper and ideology continue—
we
have merely ' to Took at Eu¬
of its own inflation by
194)
Mr.
very
worse.
If
Vice-President, National City Bank of New York
It seems
i d e."
s
Such
c
like
By ALAN TEMPLE*
into
danger of sliding
to me that a
repetition of that
particular pattern of depression is
one of the last things we have to
fear
today.
The present public
temper will not permit it; "and
therefore politicians will not per¬
mit it. To some this may sound
its effects.
cuss
in
are
another 1932 depression.
Volume
166
Number 4652
COMMERCIAL ,&
THE
FINANCIAL
CHRONICLE
Banking Policies Hot Inflationary Secretary Snyder
Federal
Advisory Council of Reserve tBoard challenges Board's
characterizaton of "serious situation in bank credit"
Supports President Truman's
Credit Controls
on
for curbing consumer credit, but holds Eccles' proposal to have
banks maintain special reserves in addition to regular reserve
requirements will not accomplish antiinflation objective. Says, prime object at present is to maintain fiscal soundness of
government
evidenced
as
by bank loans and investments, and deposits.
States
policies of Government itself are inflationary. 'Opposes
15
(2275)
numerous
consumer
program
Secretary of the Treasury John W. Snyder, in a statement made to the Joint Con¬
gressional Committee on the Economic Report on Nov. 28, just three days after he testified
before the House Banking and Currency Committee on the Administration's anti-inflation
credit
control; and also special bank reserve scheme because it is
impractical, imposes centralized direction, and Reserve System and
Treasury already possess sufficient powers.
(see
program
the
of the Federal Reserve System is
very much concerned about the rapid1 expansion of bank credit.
The Eoard, therefore, desires to have the views of its Federal
Advisory Council as to the further steps that might be taken to
coirect this serious situation through monetary or fiscal means."
"Chroni¬
strike
at
cle," Nov. 27,
*1947, page 2),
again sup¬
"The Board of Governors
credit
extension
of
dent Truman's
The above statement by the Board of Governors of the
Jt
proposals
individual forms
which
are
of
con¬
tributing to inflationary pressures.
The most important single form
Presi¬
ported
the
such
credit
extention
present time is in
the
at
consumer
credit.
be placed on inflationary bank
credit,' this is a matter under the
jurisdiction of the Board of Gov¬
of
ernors
Federal
the
Reserve
System which has the responsibil¬
ity for overall bank credit control.
JVlr. Eccles has discussed this: mat¬
Federal
following Memorandum prepared
by the Federal Advisory Council* as part of the agenda lor a joint
meeting on Nov. 18, 1947:
expansion, but
disagreed
standing at the end of September
reached an all-time peak of $11,400,000,000. At the end of 1945,
ter with you in considerable de¬
tail.
He and I have discussed it
the3>—
with the prop-
it amounted to
and
.
Reserve System was refuted in the
The
Council
question
credit
the
of
both
reviewed
has
in
volume
the
oi
they
'familiar.
are
We do
in
Board has
in
"serious ,ing
credit
,bank
the
,
power
and
events
together with unusudl
public policies since
"Total
„laid
on
down
Prior
by
Eccles
of
one
S.
the
For
past
As bank loans have increased, the i cost
banks have decreased
their in-
j
vestments.
of
living
productivity,
or
A shorter working week,
^ short
corn
crop.
nothing in bank loans!
Veterans'
bonuses
and
relief
themselves to suggest that growth payments.
of loans has been an active in¬
Agricultural price subsidies.
U. S./ Government spending of
flationary factor. It rather ap¬
pears to have been a reflection of $36 billion a. year.
We find
the
very high
level of business
activity and high prices.
Housing subsidies.
In
the
ments
Result
To
of
large
a
loans is
ment
Government
extent
For
increase
of
the
estate
real
growth
of
nearly
since
example,
$4 billion
loans
the
of
an
in
insured
by
end
the
war
reflects
directly the purchase of
.FHA and *GI mortgages in the
housing program.
The
Reconstruction
Finance
Corporation is encouraging bank
lending
by
guaranteeing
risky
,
'
loans.
Commercial
enced
loans
by high
products
banks
and
the
for
langers
here
materials
care
have
needed
ness
high
and
that
meant
more
of
costs
busi¬
to take
money
of its customers.
There
the figures
experience to suggest that
there exists any substantial lend¬
ing for speculation or for unnec¬
or
our
essary
uses.
securities
'.In
this
Loans
for
carrying
much reduced.
are
been making loans that the banks
refrained from
making because
their speculative
o
nature. The Re¬
System itself is asking for
more
power
to guarantee loam
on
the
presumption that bank
lending-is too cautious.
serve
Federal
body
Reserve
Act
to
its
The
to
is
a
System
policies.
Council
is
resentative "• from
District
Council
set
up
by the Federal
advise with the Board: of
of the Federal Reserve
Governors
as
Advisory
made
each
up
of
Federal
one
rep¬
Reserve
directors of
the Federal Reserve Bank in that district,
and
its
present
membership comprises
the following:
Edward E.' Brown, Chairman, First Na¬
tional Bank, Chicago, 111., President.
Charles E. Spencer, Jr., President," First
National Bank,'Boston, Mass., Vice-Presi¬
appointed
by
the
dent.
W.
Randolph Burgess, Vice-Chairman,
City Bank, New York, N. Y.
Williams, President, Corn Ex¬
change National Bank & Trust Co., Phila¬
delphia, Pa.
John H. McCoy, President, City Na¬
tional Bank & Trust Co., Columbus, Ohio
Robert
V.
Fleming,
President
and
Chairman, Riggs National Bank, Wash¬
ington, D. C.
J. T. Brown, President, Capital National
Bank, Jackson, Miss.
James
H.
Penick,
President, W.
B.
Worthen Co., Little Rock,, Ark.
Henry E. Atwood, President, First Na¬
tional Bank, Minneapolis, Minn.
James M. Kemper, President and Chair¬
man, Commerce Trust Co., Kansas
City,
National
David E.
Mo.
■
'Ed.
H.
National
Reno
National
Winton, President, Continental
Bank, Fort Worth, Texas.
Odlin, President. * Puget Sound
Bank,
Tacoma, Wash.
restraint. The
situation
present
by
bankers
and
ing its customers against overexpansion. The loans being made
are
mostly for direct production.
The first thing to do-is to re:onsider
which
government
policies
inflationary
are
and
es-
aecially excessive government
spending and subsidies.
Reserve
System
Should
We
of inflation
the
though
largely
even
sphere
are
of
monetary
policy, the Reserve System has a
special
responsibility -for
bank
credit and in this situation should
all
reasonable
conservative
sure
to
care
credit
as¬
policies.
In this special area we suggest
'hat the System and the Treasury
loans
had
outstanding at.
never
any
the
reached
of
increased
used
of
con¬
credit in the present period
sumer
inflationary
only
add to those pressures. As we all
know, the curtailment of the pro¬
duction of consumer goods during
the war period gave rise to a tre¬
pressures can
deferred
mendous
demand
for
such goods.
As we all know, de¬
spite the fact that industrial pro¬
duction during 1947 has reached
the
highest » level ever attained
Credit Controls should be restored
during peacetime, we have not yet
arid
some
restraint
should
be been
able
to
produce
enough
placed on inflationary bank credit; goods to satisfy this deferred de¬
two, Legislation should be pro¬ mand. There still exist many im¬
vided to prevent excessive specu¬
portant shortages of goods. But
lation
on
the
Commodity
Ex¬ with
production
near
capacity
changes; three, intensified activity levels, purchasing power made
in the sale of savings bonds.
available by consumer loans can
"The last item is the only one be. used only to bid up prices of
of those suggested which comes consumers' goods, not to purchase
goods.
It
is
imperative,
completely under the jurisdiction more
of the Treasury Department, and therefore, that efforts be made to
I shall devote my time principally restrain
the demand
for scarce
to a discussion of that particular goods until supply approaches de¬
item.
I
shall touch but .briefly mand.
upon
the first two as they are
"Money market interest rates
primarily the concern of other form a small part of the total cost
Government departments and are
being discussed by representatives
of those departments as they ap¬
pear and testify.
*
item one,
Restraint
Credit,
these
discussed
ficials.
I
maters
to
am
Bank
have
been
credit
consumer
in
favor
of
their
restoration.
"The
credit
rates
are
to
down
cover
such
neces¬
specifically by regu¬
matters
over
spread
chases
order
It is
as,
minimum
of
to
which payments may
on
installment
consumers'
restrain
pur¬
goods
control
are
types <of
those
which
control
inflation
the
program.
I do not
believe, however, that the
specific proposal that he has made
will accomplish the objective in
question.
would like to point out
that
positive feeling that the
major objective at this time is to
"I
I have
a
maintain
the
fiscal
soundness, of
the
government and the continued
confidence of the public in gov¬
ernment obligations.
I feel that
the attack on the problem can best
be handled
by the application of a
budget surplus to the
reduction of the public debt in the
substantial
which will extinguish an
manner
equivalent amount of bank-held
government securities. Since the
end of the war, the Treasury has
conducted its program
of debt
management in such a way as to
reduce
inflationary
pressures
whenever possible by paying off
bank-held securities."
Buckley Bros, to Admit
Loveland
as
Partner
—
Al¬
Loveland who has been
as-
LOS ANGELES, CALIF.
fred
sbciated with the Los Angeles of¬
fice of Buckley
Sixth
ner
Brothers, 530 West
Street, will become a part¬
in
firm,
the
firm
whose
"In reference to the second
the New
Los
on
main
Dec.
One of these powers is the dis¬
rate
which
is
This is not
an
recognized
instrument for serving notice on
the public of the need for re¬
straint
in
the
Similarly
erations
use-of
by
the
a
open
System
York, Philadelphia, and
of E. F. Hutton &
formerly
Co., and Charles
H. Richards, previously with Hill
part Richards & Co., have joined Buck¬
of item I 'some restrictions should
ley Bros. Los Angeles staff.
offer of these Shares for sale, or an offer to buy, or a solicitation of an offer to buy, any of such Shares.
The offer is made only by the Prospectus.
credit.
market
op¬
120,462 Shares
control
can
he reserves of the member banks
and
limit their
Board
to
power
in
ments
and
so
lending power.'
also,
raise
Central
tighten
still
Firemen's Insurance Company
the
has
require¬
reserve
Reserve
of
Cities
money.
•The Treasury by the pricing of
new
issues and the handling of
its
balances
hps
great
Treasury have used these
effectively.
The
($5 Par Value)
The
Company is offering to its stockholders the right to purchase these shares
Stock, as more fully set forth in the Prospectus, at the rate of
shares for each thirty-one shares held of record on December 3, 1947,
through the exercise of subscription warrants. The subscription warrants
expire at 3 P. M., Eastern Standard Time, on December 16, 1947.
powers
of Common
two
markets and the
policies of business men are to¬
day so sensitive to action of these
and
money
which
sorts
the
Reserve
the Treasury
Newark, New Jersey
Common Stock
influence
the rate and volume of money.
In the past year the System and
on
System
take that
pres¬
ent powers are
ample to place all
restraints
on
credit
expansion
which the System and the Treas¬
ury may consider necessary.
Inflation
The
Fear
Council
understood
it
clearly
that it shares the
ap-:
prehension of the Board of Gov¬
ernors
with respect to inflation
dangers. It does, however, most
strenuously object to the singling
out
of the increase
(Continued
on
Copies of the Prospectus may be obtained from the undersigned only by persons to
undersigned may legally offer these securities under applicable securities la ws.
whom the
Shared
wishes
Blyth & Co., Inc.
December 4,
in bank loans
page
16)
w
1947
in
is
Angeles Stock Exchanges.
already have large powers, with¬
out
new
legislation,
to
place
count
The
15.
office
John H. Auerbach, Jr.,
in
this type of in¬
flationary credit.
effective
most
to
on a
we are
payments and the maximum Philadelphia, holds membership in
periods
be
powerless
almost
to limit its extension.
sary
by Federal Reserve of¬
As
controls,
such
lation
and
credit, and changes in
consumer
Controls
Inflationary
on
of
Restoration of
Credit
Consumer
recognize that
causes
Snyder said: "The President has
suggested that consideration be
given to the following monetary
measures:
one,
/that
Consumer
"A« to
Use
Powers
The
*The
statutory
the
time
number of occasions
entirely in agreement
that the objective is fundamental
together
credit under broad restraints.
period the government,
various
agencies,
has
through
in
is
take
is nothing in
develop¬
increase
hardly a bank in the
country which has not been warn¬
the
program.
wages
shown
in
understood
are
these
inevitable and the
was
have
autside
High
of
substantial
active
and
agricultural
manufactured
foreign aid
influ¬
are
prices
of
movement
face
a
bank loans
direct result of govern¬
a
policies.
banks
Policies
to
"This
ernors
of the
that time. Among recent inflaReserve
year
the total volume of bank iitionar.y causes may be listed the Federal
System
that
credit (i.e. the available amount
banks be required to set up addi¬
following:
of bank money) as measured by
tional cash reserves against de¬
|
The foreign aid program,
adjusted
demand
deposits
has1
A cycle of wage increases in posits.
Shown only a moderate increase.
In
his
statement,
Secretary
| excess of increases in either the
mind.
only $6,600,000,000.
December,
1946, total
$10,000,000,000 level.
the
Board of Gov¬
John W. Snyder
out¬
credit
consumer
consumer
Chairman
Marriner
[ great war-time expansion of buy-
know what
not
situation"
ositi
The causes of our present in-,
flation are not in current banking
policies but are found
in .the
Darns
aggregate and
shown in the banks with which
as
o
credit
curb
"
16
(2276)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
Joins Reagan & Co. Staff
PASADENa,
CALIF.
—
ported net assets of $27,390,000
of Oct. 31 divided
Tim
was
ter &
previously with
Co., Cruttenden
bonds
Co.
common
Opportunity Still Knocking
ard
&
out
"As mutual fund dividends go,
sales" seems to be the score
Mutual fund investors are
showing a definite preference for the "income type" fund over the
»
—
"appreciation type" variety. Funds^
that
have
been
able
to
yes, despite the fact that no corpse
pay
sizable dividends out of security has ever married again—to our
profits this year have been the knowledge!
best sellers, along with shares of
so
among distributors of these shares
SHARES
funds with
above average
an
yield
and
been written about the difference
between
mutual fund dividends
more
derived
000.
from
profits,
a
prospectus
ference
or
steadily
income
from
of
dif¬
Street, New York 5, N. Y.
idends!
\
He
is
not
interested
to
idends
long
so
as
he gets them.
the
Fund
it
it is
pay
of
an
his
income tax
own
ceives it.
to
your
upon request from,
investment dealer, or from
RESEARCH
120
SECURITIES
re¬
his
investment
the
day
"ex," rather than the
day before.
In
NATIONAL
the return
capital when he
He would be better off
make
after it goes
Prospectus
on
will
&
CORPORATION
BROADWAY, NEW YORK 5, N. Y.
the
of
industry group
nutual funds, which by and
large
afford a below average income reurn, liquidations have exceeded
^ales
in
some
.cases
during
the
aast few months.
that
It would appear
fund investors are
mutual
seeking
fox-hole lined with "de¬
a
pendable"
Fund
General Distributor
Coffin & Burr
Incorporated
with
is
money
who
prewar
also
a
a
purpose
10
today;
10
National
Prewar Period
real contribution
The
clared
recently
National
frbm
investment
in¬
Distributors
in
Group
states 'that
recent
a
the
.nan
to marry
a
his widow's sister?"
rule, the
Statistics
Labor
will
answer
witness
with
at
Prices, excluding farm
&
food
construction
new
1948
expect
to
as
estimated
compared
for
$12,663,000,000
1947.
Vance, Sanders Boston Fund
re-
71.3%
__
Stock Prices
34.0%
_
commenting
Standard
the above,
on
article
Poor's
&
states
that
while
backing and filling for
than
a
the
stock
ating
with
year,
market
has
more
prices fluctu¬
meaninglessly
in
a
range
17% to 29% below the 1946 highs,
corporate
profits
have been
the
result
ratios
dividends
and
mounting steadily, with
are
that
now
price-earnings
the
among
record and
on
unusually
most
yields
generous."
«
born
"Jersey
Arnold
will be
one
Joe"
Walcott,
Raymond
of
the
fourth round
Corp.
Co.
award
today
at
Iff
the
price
a
100.10
The bonds
by
2
re¬
Power
dated
of
1, 1977, on
for
are
The
1NCORPOR
New York
—
Chicago
A T
W
cessful
Angeles
tytyty
a
3x/8%
and
bidders
accrued
to matu¬
cost
to
Power
Appala¬
Company
for these funds, based on the suc¬
V
(VK Los
s/nrtVd')
interest
Electric
hid,
was
3.12%.
.'1
Participation in.
experience
of
Reg¬
The American Bankers
Association is undertaking with
considerable
insure
to
success
maintenance
b,v banks of
standards.
This
lending
toward
effort
voluntary
cooperation
the sensible
the
democratic
with
dealing
with
sound
to the Council
seems
and
this
respect
to
method
of
problem, both
the banks and
The Council is op¬
to
this matter.
Special Reserve Plan Unwise
Suggestions in the President's
message to Congress with respect
of
Federal
present
may
short-term
The
state
to
Reserve
Congress
in its 1945 Annual
required bank re¬
to
government
Council
its
therefore
views
on
this
proposal.
The proposal as we understand
it is that banks should be required
by law to maintain, in addition to
cash reserves, reserves of shortterm government securities in a
percentage
relationship
to
de¬
posits, to be fixed from time to
by
the
Federal
Reserve
time
Board.
The Council is
unanimously
op¬
posed to this scheme for the fol¬
lowing reasons:
It
(1)
is
impractical.
erations of banks
The
op¬
different,
reflecting as they do adaptation
to the varying needs of their com¬
munities and customers, that;no
percentage of short-term govern¬
ment security holdings can be hpplied fairly or practically to all
banks.
Any
percentage
high
enough 4o bffer any measure; of
are
so
a
substantial number
have disastrous ef¬
fects
Fundanmnlul
BONDS
(Series B1-B2-B3-B4)
Investors Inc.
on
other banks, com¬
liquidate sound
and necessary loans and thus ac¬
tually
check
production, tyV The
very banks which have served the
business
in
their
communities
on
pelling
IN
most
many
them
to
aggressively
helpfully
and
would be hardest hit.
(Series K.1-K2)
(2)
COMMON STOCKS
Such
the
tute
a
plan would substi¬
edicts
of
a
board, in
Washington for the judgments of
(Series S1-S2-SS-S4)
the
boards
banks
Prospectus from
your
which to judge the
on
effect of the termination
ulation W.
restraint
SHARES OF CAPITAL STOCK OF
PREFERRED STOCKS
availability of
of banks will
INVESTMENT FUNDS
investing their capital
re¬
automobiles and household appli¬
ances.
There is so far too little
reoffered
successful
IOOV2
Co.
Dec.
rity.
chian
Lord, Abbett & Co.
Cert iftcates of
Electric
of
in
increased substantially, much
of this reflects the
securities.
$28,000,000
interest, to yield 3.10%
Custodian
Funds
of
1947, and due Dec.
bid
credit
consumer
proposal
Report for a
Union
and
Dec.
on
mortgage bonds,
coupon.
'yfz, W§<
in
lation to the termination of Regu¬
lation W. While consumer credit
serve
Group
Loeb &
the
a
The Council has studied the in¬
crease
wishes
Xuhn Loeb
ceived
doing
"p.
the
Appalachian Electric
Bonds Offered by
their
<•• | * |
today
are
Consumer Credit Control Opposed
Board
§ American Business
g|g
loans
sibility that the
1,
jj
that
to credit control indicate the pos¬
tomorrow night.
first
Prospectus upon request
we
pansion beyond that which could
Cream,
"Whipped Cream" be¬
the end
Appalachian
Keystone
But
on the record, there
evidence of bank credit ex¬
no
legislation giving the
Board new regulatory powers in
A Prediction
That
M
Shares, Inc.
op¬
that,
other lenders.
PORTLAND
'
in judgment.
errors
posed
Securities
BANGOR
is
has
*Estimated.
"In
Kuhn,
BOSTON
endeavor,
human beings. It would
amazing if there were not
submit
71.6%
Industrial production
Depart¬
all time building peak
$15,200,000,000
with
be
an
form of human
a
erated by
economy.
75.0%*
.
ment of Commerce and Bureau of
Here's a good one to try on a
lawyer friend.
Ask him, "Is it
legal in New York State for a
is
.174.0%*
deposits
Corporate dividends
fore
alone.
come
This is not to say that there
have not been unwise bank loans
in some cases. After
all, banking
.141.4%
income
Bank
its 72nd consecutive quar¬
derived
which
barometer.
a
wholesome and constructive work
in
their
intended
place in the
de¬
terly dividend amounting to 40c a
share making a total of $1 a share
paid during 1947. Of this $1, 58c
inflation—of
be expected under all the circum¬
stances.
There is every evidence
Money in circulation..
Corporate profits
.240.0% *
Farm commodity prices .139.2%
are
Fund
of
by
.383.3%
purpose
George Putnam
elements
bank loans are
be
Increased
his
trusteeship of
great responsibility. It
great opportunity for
Wellington
pe¬
on average, are
a
some
seeks
of
Notes:
Founded 1898
HARTFORD
1939
Percentage Gain in
conservative
Legal Puzzler
As
NEW YORK
the
riod, stock prices,
up only 34%.
Put¬
service."
bulletin
A
ORGANIZED 1931
a
lars and cents.
high cost of living.
New England
average
sure,
to the financial security and wellbeing
of
its
beneficiaries — in
'peace of mind' as well as in dol¬
was
above
pared
been
our
the
want
divdend checks to protect themselves
against either a depression or the
or
the
from today.
"We
is
case
of the indices of
many
economic prosperity showing two¬
fold or threefold increases as com¬
unchanged—
our purpose
be
will
Fund to make
and
are
George
was our
"load"
dividend
to
employment
years
the
the
investor
This
years ago;
we
remains
the
issue just before it goes ex-divi¬
dend realizes that he is paying a
on
is
should
of
prudent
and
recent bul¬
it
thing
aim
savings.
We also doubt if the average in¬
vestor who buys a mutual fund
than 9,-
more
"But
we
one
serve
the
of
assets
give most
thoughts and attention to¬
Of
nam
in
theirs
that
our
day.
the whys or wherefores of his div¬
numbering
of
that
has grown
present
To quote from a
future
if the average
understands this
with
which
boom¬
are
an¬
than $22,000,000 and share¬
letin
security
realizes that the latter
or
of Boston
holders
represents return of capital. What
he wants is bigger and better div¬
Distributors Group, Incorporated
63 Wall
doubt
we
shareholder
request
on
from your investment dealer
investment
derived
ing, with
all
economy
Indexes Over
Last month marked the 10th
Fund
those
"whereas
pointing
phases of
niversary of the George Putnam
ment
and
national
Putnam Fund 10 Years Old
balanced funds which stress
steady income among their invest¬
objectives.
Despite the fact that much has
OF
Group Securities, inc.
go
today.
that
our
Investors Income Minded
Stand¬
"Outlook"
Poor's
15)
principal contributing factor;
and it has attempted to
point out
above, the vastly more important
as
Ltd. quotes from
Hare's
By HENRY HUNT
EQUIPMENT
Banking Policies
Not Inflationary
(Continued from page
and
First California Co.
ELECTRICAL
15.5%; corporate
preferred
stocks
stocks 60%.
14.2%;
10.3%;
Dean Wit¬
&
as
follows: cash
as
and governments
McLaughlin is now with Reagan
& Co., Inc.; 575 East Green
Street.
He
Thursday, December 4, 1947
local investment dealer or
of
directors
throughout the
of
15,000
country as
to the employment of a substantial
part of the funds of their banks.
Tke
This ic
Keystone Company
Prospectus
of Boston
your
50
of
be obtained from
may
local investment dealer,
Prospectus from
THE
PARKER
CORPORATION
HUGH W. LONG & CO.
••
:
INCO«»OSA1TC
48 WALL
ONE COURT STREET. BOSTON 8. MASS.
\
IW
STREET, NEW YORK 5, N Y
iNCmii' '
.CHICAGO
.
...
'V-t -'cyv....
:
.
-
Investment Dealer or
:
.
*rrr
(3)
As
indicated
earlier, the
System and the
Treasury
already
possess
large
powers of credit control ■ not how
being fully used. Such new pow4
ers as those proposed are not ne¬
Federal
Congress Street
Boston 9, Massachusetts
your
or
0 <^ep towards socialization
banking.
:
cessary.
Reserve
Volume ;l()6rft :Kun^er 4652
THE COMMERCIAL
^ f^NT^CIAJL CHRONICLE
■
.V
The
Expanded Weild Income Will Solve
By HON. JOSEPH W. MARTIN, JR.*
U.
By DR. OSWALDO ARANHA*
Brazilian statesman recounts efforts at international cooperation in
solving world economic problems and stresses importance of pro¬
moting economic well-being on international rather than national
Holds income and wealth of each nation
be raised if
can
A grave
and
economic
political policy is adopted and says world
leadership of democratic United States.
needs
situation has been brought about in this nation. We are asked to assume,
our own,
peacetime restrictions, controls and regimentations as
wartime controls were. We are asked to continue on under a staggering bur-
because of
stringent
fault of
no
as
There is hardly a subject upon which I may talk to you that can
be unfamiliar to the members of
aen
of
the
of
It is
former.
*
characteriz
;|not only by
v'; the growing
intervent i
:Jof
in
;
o n
the
State
private in¬
itiatives
act i
I
e
s
through legisV; 1 a t i o n
and
fluence of
ternal i
o
factors
Oswaldo Aranha
in
life
people and
even
in¬
n a
of
1
the
each
of each individ¬
ual.
The
United
Nations, with its
tendency toward the super-State,
is adopting, for
instance, through
the Economic
resolutions
and
Social
which
will
Council,
take
ef¬
The aim of the recent meetings
of the Preparatory Committee in
Geneva and of the coming Inter¬
national
Trade
Conference
in
Havana is precisely
need
-
the
for
in
the
increasing
Third
The
—
limits
are
be said, in another sec¬
can
the
world.
The
tor, of the International Maritime
Conference which is to meet
in
early
1948.
The role of the United
in
international
not
Nations
economic
life
nation
political
belief
which
cannot
Fourth
we
Some other aspects of
tervention.
fundamental
importance
are
the
object of the attention of that or¬
ganization
and
its
specialized
agencies.
Among them
I may
mention relief and the reconstruc¬
tion
devastated
of
areas,
mone¬
restoration of
of capital
and goods, economic betterment
and stability of under-developed
areas, agricultural production and
distribution, improvement of nu¬
tritional levels, health conditions
and labor standards, regulation of
stabilization,
tary
international
the
there
income
air transport
and telecommunica¬
so-called
The
is
example of interna¬
interdependence
another
economic
tional
hand and, on the other, of
one
on
Plan"
"Marshall
growing predominance of social
and political factors over the eco¬
nomic life of the peoples, a new
a
determined
trend
causes, some
others
and
by
several
of which are political
ideological. I do not
wish to enter here into an exam¬
ination
are
these
of
problems.
They
historical and involve old is¬
the
sues,
solution of which will
require time and the exercise of
all the wisdom of which the hu¬
man
mind is capable.
The Fear Complex of World
—
show that such
outcome is
an
possible,
if despite world unrest
we succeed in laying the founda¬
tions for this better era, ours will
have been a great achievement.
There is
shadows
moral
one
order.
order
This
ated.
aspect which over¬
considerations
all
material
It
a
with the
deals
which
of
must
be
cre¬
will
depend not only
on how the "new majorities" will
adjust themselves to the task of
destinies of mankind.
Apart
universal
insecurity
and
of na¬
international
order
from
creatures
arise
and
from
many
causes.
Among
by His Excellency,
Dr. Oswaldo Aranha, before the
Economic Club of New York, Nov.
*An address
20, 1947.
burdens is that there is
effort
sive
taxation.
hear
we
talk
ing
from the
that we
degree,
in the
conflicts
aris¬
ing from progress itself, from the
growing aspirations of mankind
and from the demands created by
the expansion of peoples.
foundations,
same
exces¬
hand,
preserving
lips
should,
men
com¬
which
to
We could lose
and
gave
even
for
whicl
their lives
some
abandon
same
speakers
who argue that prices
high—and they are—con¬
that
tend
the
the trouble
only
way
to
cure
is to take away from
people more money in taxes
they will have less with which
living costs.
meet
We
must
freedom
destroyed.
"An
not
and
to
be
powers
be
so
they will not be able
before
Congress
economic
If they are, the
for liberty will
address
Martin
allow
self-reliance
of
by
the
Congressman
52nd
American
are
excessive, then,
of course, we cannot reduce taxes.
We must be
fully aware as to
what the
A
alternatives
Balanced
are.
There is
and
that
Budget Essential
one
is
balanced.
to
thing
keep
With
a
we must
the
do,
budget
national debt of
than eight thousand dollars
every family in America, we
cannot continue to
go into debt.
American horse-sense demands
spending when we shoult
curtailing it. Reports are bein^
allowed to go out of the govern¬
that
the
be
with
the
is
budget will be forty billion dollars
this brand of cooperation.
The great heart of America, as
has been demonstrated in the last
or
more.
Wild government spending sim¬
ply
must
be
reduced,
in¬
not
creased. And the reductions which
must
be
made, cannot be
plished unless
we
accom¬
have the whole¬
hearted support of the people who
nomic collapse.
too
ing demands
send
we
will have to
we
And if the spend¬
for
It is proposed we increase gov¬
mentation and controls.
are
money
ernment
want to
The
more
spend at home.
more
Spending
democracy
in
favor of stringent peacetime regi¬
to
two
great
beyond doubt
to be incapable of reconciling the
Human
by
The
abroad, the less
of the civiliza¬
essence
Should Curtail Government
one
about
argue
so
the
and
the
democracy here in America
of
proved
contradictions
On
the
of
can determine the proper
distribution of the tax money.
mental circles that the next year'?
high-wage
hands
the
of
out
abroad next year.
he
wants
for
much
With the total demands known,
we
many
too much
people who earn them
of
in prevalence
between
were
those
take
to
dollars
weakened
period
its
hands of the people.
hand, we see high
On the other, we see an
wages.
slaughter
life of the peoples.
wars
to
more
money in the
On
the one
the
norms
asked
how
spending at home.
have inherited from gen¬
erations which fought hard to lay
Meantime, one of the arguments
being made by those who propose
these
dangerous and staggering
standing
The
tion
money.
destruction
the
great danger.
we
add
Martin, Jr.
achievements, the war
brought evidence of the emptiness
and insecurity of the political con¬
ceptions until then presiding over
Annual
save
government shall
join
Republican Congress in
keeping this country solvent.
It
high time the people demanded
two years, will
the call of the
always respond to
hungry. But we
guard ourselves against any
must
who would fill their
own
pockets
with American funds.
Feeding the world
eco¬
mous
is
an
task and it cannot be
plished
without the fullest co¬
the people of every
operation of
this coun¬ land. Waste and dishonesty must
We all like to spend be reduced to the minimum.
American dollars alone cannot
money; every human appeal finds
in us a responsiv.e, chord, But the do this job.
These dollars must
cold facts are there is only so be prudently spent. And we must
try solvent.
much
money available.
The only money the government
has to spend is money taken from
the people in taxes.
The
more
the
government
spends, the more it is obliged to
tax the people. This fact must be
brought home to the people.
That
is
why
it
President
that
Dec. 3,
Congress
earliest
is
imperative
Truman
the
at
possible moment shall tell
l^pw
much
money
have
full
cooperation
nations which seek
our
from
aid.
This advertisement is not
solving and overcoming its dif¬
ficulties, to embark on the tragic
experiment of our days.
Peace, which we labor so hard
insure,
cannot
be
attained
through
a
concert
of
material
forces alone, but rather through
an
The
NEW
offer to sell
or a
solicitation of
an
not go on indefinitely paying high
taxes to help other peoples with¬
out evidence they are doing their
best to help themselves. For the
sake of those
he
peoples themselves,
(Continued on page 33)
offer to buy these securities.
offering is made only by the Prospectus,
ISSUE
to
their subordination to
der, to
will
a
$28,000,000
or¬
conception of life which
correct
errors
ent
the
and
these
overcome
contradictions
and
to
moral
a
evolutional
inher¬
process
Appalachian Electric Power Company
of
First Mortgage
humanity.
Until
noble
this
despite all the
been
day,
attempts which have
made,
culminating
in
the
Bonds, 3V&% Series Due 1977
Due December 1,1977
struc¬
ture of the United Nations, there
still prevails the same old antag¬
onism
and
cal
between
the
authoritarian
the liberal currents of politi¬
thought.
There
indications
of
an
are,
toward
understanding and conciliation of
the thoughts and of the spirit of
mankind, so necessary to a cor¬
dial interchange between peoples
all
fields of human
Must
Reach
a
For
We
tional
must
life
New
endeavor.
Formula
that
interna¬
continue
to
be
plagued with uncertainty, insecur¬
ity and danger, until we reach this
new
formula and until each nation
finds within
i^s borders the solu-
(Continued
Copies of the Prospectus may he obtained from such of the several underwriters,
including the undersigned, as may legally offer these securities in
compliance with the securities laws of the respective States.
Peace
realize
will
Price 100y2% and accrued interest
however,
effort
on
page
19)
Kuhn, Loeb & Co.
December 4,
1947
the
They
must be ready and willing to go
to work, to help themselves.
After all, American money is
not inexhaustible. Our people will
intelligence appeared to
of
enor¬
accom¬
ministration is keeping
Industry,
1947.
the nation from
One of the most acute problems
given scant attention by the Ad¬
sponsored by National Association
of
Manufacturers,
New
York,
have been deflected from the task
unrest and the disturbance
tional
the
and
thought and speech, and the
independence of business and oi
science, would be exposed to a
very
And,
people
of
the whole
the
material
present fear complex of the
The
Hon. J. W.
is
gradually
might noi
even realize what is
actually hap¬
pening. Personal liberty, freedon
fighting,
lack space for the world's ever
can
treasure
resistance
the
are
that
assumption
we
wants to spend
Congress
up—the
during
surpass.
The
We submit, therefore, to experi¬
mentation, in the hope that a new
era
will eventually arise.
If we
in
world,
and
and
tion.
flow
tions.
be
sacrifices
power.
that
the
increasing population and for the
spread of our common civiliza¬
is
confined, however, to such in¬
To
this
If
given
added to the
immeasurable
the trade of the world and of each
entire
same
of
we
follow¬
made in blood
the
life
war
it
their
mercial relations which will have
repercussions
generally.
as
,
won.
government, but also on whether
the leading nations will formulate
a
conception capable of guiding
its
enemies
alike,
ing a
con¬
that of restor¬
ing the flow of international trade
and establishing a code of com¬
economic
to allies
tions,
four which
are
ception of a world order or a
pattern for world-wide unity. ;J
Second—Uncertainty as to how
the
"new
majorities"
will
use
fect in the fields of economic de¬
velopment and stability, of fiscal
problems and of transportation.
there
causes
First—The
taxation,
but
also by the in¬
—
to offer any effective resistance tc
the progressive extension of sucl
destruction to contitutional gov¬
ernment and the people's liberties
to pay repara-
think, deserve special attention:
and
i t i
v
these
d
e
order
and
times is
our
predom-^
inance
taxa-<3>
in
were,
The feature
the interpedence of political and economic aspects, with a trend to¬
ward
of
tion
organization bearing the name
an
of the "Economic Club of New York."
*
Speaker, House of Representatives
S. Congressman from Massachusetts
Speaker Martin likens our foreign aid to war reparations added to blood and treasure expended in fight¬
ing, and cautions heavy spending for such purpose is threatening nation's solvency. Calls upon Presi¬
dent Truman to state how much U. S. money is to be
spent abroad next year, and insists outlays must
be kept within balanced budget.
Recommends using private capital in rebuilding industries abroad.
Denounces rationing and price
controls, and advocates stringent government economy.
President, United Nations General Assembly
sound
17
Legislative Outlook
Piesent Economic Problems
basis!
(2277)
Union Securities
Corporation
18
THE
(2278)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, December 4, 1947
Understanding The Tax Laws
Canadian Securities
By VICTOR R. WOLDER*
Attorney ancl Counselor at Law, New York City
Mr. Wolder stresses value of knowledge of tax laws, and points out cases in which such
By WILLIAM J. McKAY
has resulted in tax savings
In this unsettled world the desirability of a
fixed price for gold
is unquestioned. This is also true with regard to the objective of the
establishment of the parities of the currencies of the world at fixed
ratios in relation to gold. But gold should be the servant of interna¬
tional monetary policies and not<S>
the master. The necessary rigidity Fund but it has also signally failed
of a fixed standard must inevit¬ to discourage dealings in gold at
ably give rise to a high degree premium prices. If on the other
of artificiality but efforts should hand the gold producing members
be made to introduce realism into of the Fund were permitted to sell
an
otherwise
purely
artificial freely in the world's markets the
situation.
following results would be
The arbitrary
maintenance of achieved:
the price of gold and the value;
(1) Gold production generally
of
international
currencies was would be naturally stimulated.
(2) The "free" price of gold
designed to create a stable foun¬
dation for the promotion of a freer; would ultimately be brought in
state of world trade. But two of line with the official level and
the greatest obstacles which bar the pressure on existing currency
the attainment of this objective parities would be relieved.
(3) The elimination of the pre¬
are:
(1) A universal shortage of U.
dollars.
S.
(2) The existence of flourish¬
ing black markets in gold
in
mium
tend
the official level would
over
force out for
to
official
ropean
at the
sale
price the extensive Eu¬
holdings of hoarded gold.
cen¬
Thus Canada, which has already
throughout the world.
made many valuable contributions
towards a more practical approach
the
ters
Canada
as
"free"
various
a
of the dis¬
result
standard in the interna¬
sense, but domestically it
tional
is
commodity of which the Do¬
a
minion
is
a
proceeds to purchase partners' stock, annuities and deferred compensation, carry-back and
credits, and the like. Holds on any transaction of sizable amount, that is not in regular ordi¬
nary course of business, understanding the law will often result in tax savings and refunds.
carry-over
I
It is essential for every person
in business, or who has an income, or who may qual¬
ify as a 'Taxpayer," to know the tax law and have competent help and assistance. In¬
variably, this help and assistance is supplied by the accountant and the tax attorney who
devoteconsid-
"
'
these
is
regret¬
table,
though,
to
how
see
short
tax
sighted
-
in
programs
leading
producer.
Without delving into the merits of
the case of the gold-mining indus¬
•
try whose product has been arbi¬
trarily maintained at a fixed price
while all other prices have risen
substantially, the payment of a
"gold production bonus is fully
justified as it represents a prac¬
tical step towards the alleviation
of the U. S. dollar shortage. As
such it will help to solve Canada's
particular problem in this respect
and
it also avoided the
course
the
Canadian
U.
S.
dollar
situation.
Now that this first natural step
has been taken perhaps more se¬
rious consideration can be given
to means
whereby the black mar¬
kets in gold can be eliminated,
likewise without jeopardizing the
official price level. Hitherto the
idealistic and impractical approach
to the solution of this problem by
self-imposed restrictions on free
action by members of the Inter¬
national
Monetary
funds.
Stocks
tax¬
the
Section
Victor
R.
Wolder
taxable
Fund has not
only profited non-members of the
however,
are
now
agents and out of the Collector's
office, are every-day, work-a-day
trying to do their job as
how in an honest
and honorable way. Occasionally,
here and there, one of them will
best they know
that the fellows who work in the
Thomas F. Welch With
field
that
announces
Thomas
F..
Welch,'
formerly
with
Lazard
Freres & Co., has become associ¬
with
ated
the
firm
in
its
New
York
to
office, 63 Wall Street. Prior
joining Lazard Freres & Co., in
1934,
Mr.
Welch
had been asso¬
Bonbright & Company
ciated with
since
1925.
au¬
by the Commissioner of Internal
Revenue, and by the policy estab¬
within
lished
the
Bureau
itself.
Often times you
who personally
will find an agent
agrees with you,
must make a report ad¬
verse and detrimental, because of
the regulations or Bureau policy.
That, however, should not prevent
the taxpayer from pursuing every
right that he believes right and
and yet
proper.
Yonng Joins
Clokey & Miller Staff
York
City,
Donald Young,
ald Young &
announce
varied
Retire From
that
Backs."
S.
Allen,
Jr.,
York
New
retired
a
Stock
from
member
a
Henry
of
the
Exchange, have
partnership in Gar¬
much
it
COMPANY
that
there
is
a
on
this subject, not
the part of the Bureau
on
Revenue,
but
rather
its application and the scope
taxpayers and ac¬
countants and tax experts.
From
a
the
by
study I
made of the law, and
from discussions I have had with
numerous
accountants, it appears
repeatedly, they overlook
certain rights of the clients with
the result that large refunds, to
which their clients are entitled,
that,
obtained, and yet I have
instances
where
the
full,
not
seen
TAYLOR, DEALE
seems
of Internal
are
CANADIAN STOCKS
It
understanding
upon
vin, Bantel & Co., New York City.
'&
how
briefly
are,
tremendous lack of knowledge and
so
now
Garvin, Bantel
William A. Hauhuth and
laws
the
there came
to my attention just the other day
a provision in the law which ap¬
plies to "Operating Loss Carry
formerly of Don¬
Company, is
demonstrate
To
Donald
of
CORPORATION
unlimited
and discretion. They are
by the regulations issued
bound
Schoellkopf, Hutton & Pomeroy,
Inc.
have
not
do
thority
Schoellkopf, Hutton
general partner of the firm.
MUNICIPAL
government.
out of
work
study of further concessions. Pulp go off half-cocked, but that is to
and paper issues on the other hand be expected. The laws are so dif¬
were
buoyant in anticipation Of ficult and complex that it cannot
an imminent price increase,
V' be expected that the agents know
it all, and then we must remember
GOVERNMENT
PROVINCIAL
who
agents,
fellows
New
BONDS:
ized branches of the
organ¬
Discussions,
Clokey & Miller, 61 Broadway,
CANADIAN
large groups of
of the largest
rights of the taxpayer were pur¬
sued, and the refunds were made
promptly by the Collector of; In¬
A. E. AMES & CO.
,
Street, New York 5
WHitehall 3-1874
NEW YORK 5,
N. Y.
am
items
outline
a
few
demonstrate
a
few
going
which
to
things that the taxpayer should
keep in mind constantly.
They
touch upon such subjects as Divi-j
INCORPORATED
TWO WALL STREET
I
CANADIAN
SECURITIES
the
of
deals
Code
ordinary income, they
of earnings of the
as
be
must
current
a
nontaxable
a
recent
year,
earnings
of
out
or
stock
duced
dends, Insurance Proceeds to Pur¬
chase
Partners'- Stock, * Annuity
and Deferred Compensation, An¬
the
a
of property which
appreciated in value does not
cor¬
poration
income
ate
the
to
has
cre¬
corporation to
In
if
what ex¬
taxpayer
is
the
any,
have
to
taxable.
received
tax¬
a
Be¬
act.
you
in
men
closed
corporations,
all the stock.
own
They
into
agreements whereby
each applies for and pays premi¬
ums
of
life insurance
on
the
used
other.
the
life
proceeds
The
are
on
by the survivor to buy the
of
the
who
one
dies
first.
existing contracts should be
reviewed at this time.
computing to
deemed
able
and
S. 200.)
stock¬
Partner's Stock
Such
(b)
hence
and
Often,
Operating
(General Utilities
held
Insurance Proceeds to Purchase
stock
Co. 296 U.
the
to
its
of
Court
liquidation of their
really out of earned
before
ware,
capital
part
Circuit
payments
in
was
surplus
its
of
liquidated
The
holders
stock
the extent of the increased value.
tent,
amount
and
enter
by
In
$300,000.
later the corporation re¬
the
two
The distribution
dividend.
dividends totaling
In years
factors here to
(a)
stock
(Sheehanis Dana
CCA 8th), the corporation in ear¬
lier years had capitalized earned
surplus by distributing tax-free
beginning of the current
taxable year,
accumulated since
Feb. 28, 1913.
There are several
remember.
that
sure
case
of the
as
make
out
contracts
ance
the
on
Riecher
(T.
Many such
in
prepared
were
of
case
C.
reli¬
Herbert
Memo
No.
G.
2871),
of the
earnings of the corporation avail¬
able for dividend purposes is to
be computed without regard to
for under that
the
the Commissioner of Internal Rev¬
income,
the
increased
extent
value
the
of
prop¬
(Timkens Estate
erty distributed.
141 F
(2) 625.)
(c) In determining whether the
corporation has earnings accumu¬
lated since 2-28-13, it is necessary
ascertain exactly what the ac¬
to
tual
the
If
earned
surplus
corporation was
there
was
deficit of
on
2-28-13.
or
deficit
a
as
of
that
date, then such deficit is first used
to
wipe out
of earned
lates
or
reduce the amount
surplus which accumu¬
thereafter.
though,
However,
between
as
2-28-13
even
and
that
the
it
case
proceeds
assumed
was
not
were
tax¬
able in the estate of the decedent.
Recently,
enue
state
in
on
of
informal
an
substantially
a
facts
took
the
ruling,
similar
position
that under Sec. 81.25 of Regs. 105,
the insurance carried on his life
by his partner
taxable in the
was
deceased
partner's estate on the
that he had "indirectly"
ground
paid
the
premiums.
He relies
on
the doctrine of the reciprical trust
theory of the Lehman
(2)
(109 F
Commis¬
case
Whether
is
the
right
99).
sioner
wrong
or
ruling is not for
in
his
to determine
us
now.
The courts will do that later.
beginning of the taxable year,
the corporation might have an ac¬
But
taxpayers proceed on dan¬
grounds if they ignore
tual
large
the
deficit,
with
yet
combined
when
situation
a
where
the
cor¬
gerous
tax liability. In many
stances
the
problem
can
poration had a high earned sur¬
plus prior to 2-28-13, the corpora¬
worked
tion
in¬
be
and pay
might have an actual earned
surplus since 2-28-13 for dividend
purposes.
Thus: Corporation "A"
has
as
operating deficit
of
2-28-13.
$100,000
of
2-28-13
From
to
out
poration
ration
buy
sult
12-31-46
to
it has
a
deficit of
dividend out of accumulated earn¬
ings,
even
though from 2-28-13 to
the
the
cor¬
insurance
receipt of the proceeds (Sec. 22
(b) (1) ). Then have the corpo¬
ings of $150,000, and from 12-31-
$50,000. Any distribution it makes
cannot be taxed as an ordinary
having
out
the premiums. The cor¬
poration would not be taxed on
decedent's
30
by
take
12-31-30 it has accumulated earn¬
is
stock
The
achieved
method
risks,
the
estate.
and
by
with
from
the
same
re¬
different
a
less
taxable
involved.
Thoughts should
be given to reviewing and revis¬
ing agreements touching on this
subject.
12-31-46 it has accumulated earn¬
ings of $100,000.
On the other
hand, if the same corporation had
a
$100,000 earned surplus as of
2-28-13; lost $100,000 from 2-28-13
to
12-31-30
and
had accumulated
earnings of $50,000 from 12-31-30
to 12-31-46, it would be deemed
to have
ulated
poses.
actually $50,000 of accum¬
earnings for dividend pur¬
(See Canfield Estate Case
and Estate of Bedford Case.
decided by U. S. Supreme
Both
Court.)
reporting a substantial
ordinary income, it is
worthwhile to check the history
Before
ternal Revenue.
64 Wall
115
the
to
surplus is not tied up in
capital which had been created by
capital.
subject of dividends. It
provides that, for dividends to be
the office of the Internal Revenue
taking place between the repre¬
sentatives of the industry and the
Department of Finance for the
of other fac¬
careful
earned
stock
with
the law.
These
taxable, or
dependent
Be
that
by sim¬
ple lack of
knowledge of
one
or
Dividends
about
in
either
income,
existence
ways,
transaction
same
tors.
brought
been
the
upon
This
generally has
payer.
again irregular with the
golds still reflecting disappoint¬
ment concerning the new subsidy.
were
of
currency devaluation which would
have aggravated rather than as¬
sisted
widening of the
free
in
nontaxable
ternals were also weaker in sym¬
on
result
can
hardship
to
different
two
and
men
with the
of
one
inevitable cost
must depend upon
pathy
—
seeing how the
to
led
have
—
Estate Planning;, Reor¬
ganizations, Black Market Deal¬
ings, and a few other items. These
points will demonstrate how read¬
ily a definite tax liability results
by handling the same transaction
matters.
It
&
nuity and
erable time to
tered further declines and the in¬
discount
knowledge
dividends,
on
insurance
There is a general bugaboo that
to the solution of the world's com¬
locating impact on her economy of
mercial and financial problems, the Commissioner of Internal Rev¬
the world scarcity of U. S. dollars
now
has the opportunity to pro¬ enue, and his large host of collec¬
has
now
reluctantly taken the
tors and agents, seek to drain the
initiative in adopting a realistic pose the introduction of greater
realism in the
consideration of taxpayer of his last tax dollar.
attitude
towards
this
problem,
the gold question in which she is From my experience, such seems
without infringing however the
to
be
farthest
from the
truth.
so vitally interested.
spirit of the international curren¬
We must remember that the Com¬
During the week the external
cy agreements.
As far as Canada
missioner
of
Internal
Revenue
is concerned gold constitutes
a section of the bond market regis¬
currency
Traces interpretation of laws relating to taxes
and refunds.
dividend
of the
as
corporation. Sometimes you
seems to be ordi¬
find that what
nary dividends are really return
of: capital for tax purpQses ,ta be
used to reduce cost basis.
Samuel
Annuity
and
Deferred
Compensation
Employers paying large salaries
employees, let's say $80,000 or
$100,000 a year, which the eEhtployees do not presently need in
to
full and
after
are
concerned about them
they reach retirement age,
might do
well
form
deferred
of
consider
to
same
compensation
plan.
Virtually every substantial
employer is familiar with' em¬
ployee pension and profit-sharing
plans which qualify under; Section
165 of the Code.
There
are, some
other plans,
individual
though, excellent for
cases which, while not
qualifying
under
Section
165,
nevertheless affect substantial tax
relief.
Section 23 (p) of the Code pro¬
Gpldwyn did, as will appear from
recent5 tax court decision^ and vides that if- a: contributions is
made by an ; employer under a
paiicli to his benef^^
U
Government
RECTOR 2-7231
Municipal
Provincial
Corporate
NY-1-1045
*An address
fore
the
by Mr. Wolder. be¬
Accountants
of New York, Oct.
Association
2, 1947.
j
.
/
Before
dividends,
leaving the "subject of
one further admonition.
stock bonus, ^pension; profit shar-
(Continued
on
page
31)
Volume
166
THE
Number 4652
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2279)
19
Expanded Income Will Solve Economic Problems
(Continued from page 17)
tion for the difficulties which be¬
set
and all.
one
Humanity is witnessing the end
There is considerable comment these
days to the effect that the
railroad
industry is deteriorating rapidly, that railroad securities
unattractive, and that the railroads are not going to make any
money.
A year and a half to two years ago there was considerable
comment to the effect that the railroad industry had entered a new
are
of
prosperity, that railroad securities were attractive, and that
the railroads were going to show<S>—~—
—-—~
phenomenal
earnings.
General- it was the high cost factor that
ities of this nature are just as mis¬ brought on bankruptcy in the firs,
leading today as they were two place in many instances.
It h
that
transportation
years ago.
Whenever there is a axiomatic
costs can not be cut merely b>
tendency on the part of the in¬
era
vesting and speculating public to
look upon the railroad industry as
single unit, with identical prob¬
lems and prospects for every road,
the
it
is
time
look
to
at
the
record
again.
It has
been possible, and
possible, to appraise
the railroads as a group.
It would
be just as logical to try and assess
never
will be
never
the
process of scaling down
capitalization.
a
The wide difference in individ¬
ual performances
this
is well
year
demonstrated by a comparison oi
the results of New York Central
with those of Southern
Pacific. In
the first nine months of 1946 both
roads reported about the same in¬
come available for charges before
de¬
are
For
taxes.
tne
Pacific's
income
available before
Federal
income
taxes
nancial
with
difficulties.
general
our
constant
bound
of
state
to
be
Moreover,
in
economy
flux
constant
there
a
are
have been able tc
the same avail¬
income.
again
show very close to
Jaffe and Klocker Now
With Skall,
Joseph Go.
CLEVELAND,
E.
OHIO —George
of the Cleve¬
Paul H.
formerly with W.
P- Quinn &
Co., have be-
member
Jaffe,
land Stock Exchange, and
Klocker,
both
,.-,v
associ¬
come
ated
with
Skall,
road
Joseph,
Miller, & Co.,
Union
Com¬
merce
versely, dynamic territorial devel¬
opments or internal changes with¬
in the individual property may
eventually
transform
the
ugly
duckling of today into the glamor
girl of tomorrow.
For these rea¬
Build¬
ing,
of
members
the
New
York
and
.
each
individual
curity must always
on
its
ing
railroad
conditions
Cleveland
Stock
might
road
must
be
followed
of
the
transportation
individual
roads
i
enough to convince any analyst of
the fallacy of considering the rail¬
road industry as a single invest¬
ment problem.
This is the most
important expense item.
In thr
first
place, transportation costs
account for
more
ject to the
costs
as
same
are
short term manip¬
the
maintenance
which make up most of the
remaining
operating
expenses
Transportation costs consist main¬
ly of wages and fuel.
As wage
and
fuel
rates
prices have in¬
creased it will be found generall
that the spread between the mos'
efficient and least efficient of the
carriers has tended to widen.
there is
no
political
nations force
the
world
today, in
naiion and within each peo¬
ple.
is
that
true,
secure
this
has been
nevertheless,
as
done.
that
L
if
we
and, consequently, in
that of nations and of the individ¬
ual,
the ensuing prosperity will
peace—internal and world¬
favor
brilliance
and
even
the
In the period
ceding
the
immediately
first
World
of
other
evil
forces
the
conditions
that the world has
indicates
never
been in
greater need of wisdom, of cour¬
age and unselfishness in the coun¬
of
governments, of peoples
nations, that humanity
of
may
resume
its
onward
and civilization be
In
&
with
Co.
short, you are not asked to
world, but to save your¬
the
save
selves for the world, which needs
the leadership of your great coun¬
try and of its democratic people.
the
to
each
of
if
nation
sound
a
be
can
economic
and
political policy is adopted.
subsequent
expansion
of
total
world's
income
will
Belgium Gets Large
Export-Import Credit
Export-Import Bank announces
loan to be repaid over period of
five years, and used for pur¬
chases of essential
The
the
inevit¬
raw
and equipment in
On
materials
U. S.
Nov.
the
27, the Export-Import
Washington reported that
arrangements have been made for
a grant of a credit to Belgium of
$50 million, to be used for pur¬
chases by Belgium in the United
States for the purchase of essen¬
and of other
tial
further
the
solution of the
economic problems which we face
today.
each
When
nation
and
each
does the utmost to curtail
possibilities of other nations
individuals, — then,
surely, all will be poor—all wii
troubled.
be
if every
On the other hand
nation and
individ¬
every
Bank in
raw
"which
level
materials and
would
of
permit
equipment
the high
industrial
Belgium."
production in
The money, which will
perturbed all human activ¬
ity and, in the prevailing confu¬
sion, dominated national and in¬
ternational action, creating an at¬
mosphere of insecurity and unrest
which has spread over the entire
ual seek
promote the well-be¬
their neighbors, then all
because of the inevit¬
able increase in production anc
consumption and in confidence.
New vistas must be opened; th(
be available to the
world.
achievements
an
purchases and the rate of interest
and
have not yet
have
Until each nation and each peo¬
ple find the solution of this prob¬
lem,
national
international
and
order alike will continue to suffer
the
hardships which this struggle
to
Belgium Gov¬
during the year 1948, is
repaid in semi-annual in¬
stalments of $5 million each, over
a period of five years.
Final nego¬
of
ernment
prosper
to
ing
can
culture
their
civilization
available
are
proper
economic
of
use
can
betterment
all
to
ensure
of
the
under¬
developed areas, thus dispelling
fallacy that the world lacks
the
for its growing population.
be
tiations regarding the schedule of
in
his
been concluded, but
letter
to
Maurice
was
Belgium, President William McC.
Martin stated that these arrange¬
ments will be determined "in ac¬
entails.
In a world of highly prosperous
nations, each nation would gain
advantage from the prosperity oi
the United Nations. In my opinior
cordance with the policy of the
Export-Import Bank not to com¬
it
pete with private capital."
.
This is
is
also
one
one
of the functions of
of
your
problems.
This is
not
and is under
or as a
no
circumstances to be construed
solicitation of
an
offer to buy,
The offering is
any
as an
offer to sell,
or as an
offer to buy,
of the securities herein mentioned.
made only by the Prospectus.
NEW ISSUE
connected from 1924 to 1930, when
he
joined the Quinn Company, of
recently been Vice-
which he has
150,000 Shares
President.
New York
Mack Trucks, Inc.
Municipal Forum
To Hear J. S. Lawrence
The
Municipal
definite indication that
the upward spiral of prices has as
yet run its full course the factor
of
low
transportation ratios is
still of the utmost importance.
For the current year to date
transportation costs for the in¬
dustry as a whole have absorbed
just short of 40% of
gross. Among
roads, however,
the
ratio has ranged all the way from
a
low of 23.7% for Virginian to
47.8% for Pennsylvania.
Except
for the large coal roads it is not¬
able that a majority of the East¬
Common Stock
of New
Stagg Law¬
rence, Vice-President of the Em¬
pire Trust Company of New York,
as speaker at its luncheon meeting
to be held at the Lawyers Club
on
Friday, Dec. 12.
Mr. Law¬
rence's subject will be
"Money
Forum
York will have Joseph
Pri<|:e $51.25
per
share
Rates and the Bond Market."
With C. N. White & Co.
(Special to
The
Financial
Chronicle)
As
Copies of the Prospectus
OAKLAND, CALIF.—S. C. Bettencourt is
& Co., 1201
ing.
now
may
be obtained in
any
State from only such
of the undersigned as may lawfully offer these Securities in
pliance with the Securities laws of the respective States.
with C. N. White
com¬
Central Bank Build¬
Adamex Securities Corporation
Haydeti, Stone & Co.
Guaranteed Stocks
Bonds
Blyth &. Co., Inc.
Eastman, Dillon & Co.
Glore, Forgan & Co.
Individual
ern
well
Also
carriers
have
above the
of
Goldman, Sachs & Co.
Harriman
Ripley & Co.
are
a
large
the roads that
the hig
propor¬
have
A. G. Becker & Co.
Hallgarten & Co.
Hemphill, Noyes & Co.
gone
through, or are going through, re¬
organization. As a matter of fact
Incorporated
GUARANTEED RAILROAD STOCKS-BONDS
E5 Broad Street
Hornblower &. Weeks
New York 4, N. Y.
Telephone BOwling Green 9-6400
Teletype NY 1-1063
Co.
Smith, Barney & Co.
Merrill Lynch, Pierce, Fenner & Beane
running
Kidder, Peabody
Incorporated
average.
to be found among
ratio railroads
tion
been
industry
Special Securities
Frere,
Governor of the National Bank of
space
Harris,
which he
march
safeguarded.
in
business
world
pre¬
War
total income of the world amount¬
person
Nationalism, ra¬
cial expansion, political ambitions,
economic
penetration,
military
predominance, international rival¬
ries, revenge, envy, fear, hate and
States
wide.
ably
march.
United
present-day
increase in the income
an
of the world
justice of human achievements is
dimmed by the full play given to
instinct and passion whenever any
opposition is encountered in the
multitude
the
and
dominated
masses or
leaders
cannot rise from its present state
of chaos.
A careful analysis of
cils
ed
a
of
well.
said
The
unhappy world.
know,
and
you
know, that without the leadership
Up to the present, it cannot be
income, but world income
manner.
and
poor
than 50% of ah
operating
expenses.
Secondly,
transportation costs are not sub¬
ulation
invest¬
ment
E. Jaffe
with
the
at
steps
a
Your
r.
career
the
Geo.
Forbes
look
ratios
M
his
mate¬
carefully.
A
or
in
Jaffe started
rially alter the status of each in¬
dividual
Ex¬
changes.
be appraised
that
sooner
compelled to do
Your wealth and
prosperity, great
as tney
are, could not long endure
se¬
merits and the chang¬
own
The
phenomenon
is
similar to the socal one; a strug¬
gle between the old order which
refuses to part with its idols, its
ideas and its practices, and the
new order which indulges in dan¬
gerous excesses at the very first
sign of opposition to its over¬
reaching innovations.
Political history shows us that
in such periods, when formerly
...
level—and
must take immediate
increase not only the national
to
forward
would
is in the top credit group today is
no reason to be complacent.
Con¬
sons
unwise
of production
elevation of the gen¬
snail be
we
so—we
every
changes in
a
wealth
later
to
want
we
problem
the
been
the relative status of the individ¬
ual railroads. Just because
eral
the
raised
a
entirely possible, as has
been amply demonstrated in the
past; for some railroads to be enjoying a high degree of prosperity
while others are just scraping by
or
are
actually encountering fi¬
Right. Tne Leftist movement has
gained ground, but the fact is
indisputable that its promotion
and the resistance against it are
being carried out- in an equally
opinion, if
my
wealth
able pre-tax
is
of
In
throughout
However, had Central
able
to
realize the same
location.
It
and
solve
This is exactly what is happening
of
that
double
transportation ratio as Southern
Pacific
(39.0%)
instead of the
44.4% it did report, both roads
varying influence on traffic vol¬
ume, revenues, and expenses.
between the so-called Left and
Central.
different types oi
traffic.
They vary in the import¬
ance
of
passenger
business and
l.c.1. freight. They differ as to the
density of their traffic and the
average length of haul.
Operat¬
ing problems differ with physical
All of these factors have
on
political history ana
the birth of a new one. Through¬
out the world the struggle goes
York
than
railroads
an
in
pov¬
affects
today the welfare not only of the
wond at large but of each
people
and of each individual.
of
era
the
nations
many
New
The
upon
conversely,
so
more
first nine months of 1947 Southern
individual
of
was
Federal
ganization without differentiating
between one selling food and an¬
other selling expensive jewelry.
pendent
others;
erty
$125,000,000,000, and today
their way
up
to the status of it amounts to well over $200,000,These figures are but a
dominance, the process of evolu¬ 000,000.
tion is disturbed and its rhythm fraction of the latent possibilities
The income and the
broken violently, even tragically. of the world.
the prospects of a retail sales or¬
income
the
December 3, 1947
Paine, Webber, Jackson & Curtis
20
THE
(2280)
<
COMMERCIAL & FINANCIAL
owner
of the property given or
(Continued from first page)
If so, then as the
If the married taxpayers transferred?
of the country fall for this scheme new owner the
beneficiary be¬
they will be settling for far less comes liable for the tax on the in¬
come thereafter produced
than half a loaf.
by the
corpus of the trust and the former
Alleged Discriminations
owner is no longer liable.
This is
owner.
The Treasury has been the
sion
the alleged
over
discrimina¬
The most
tions in the income tax.
recent
trouble
found
be
the
this
in
in
efforts
to
direction is
recent study
a
staff.
research
tax
its
of
example
incite
to
main
of the turmoil and discus¬
source
The
by
fol¬
lowing passage is taken from that
document:1
discriminates
law
"Present
tween families
be¬
the basis of
res¬
on
it should be.
as
culties
The present diffi¬
because of the de-
arise
into
income
tax returns
separate
fringe
in
cases
of trusts have
also
the basis of the nature of
on
by requiring earned in¬
in non-community-property
income,
come
states
be
to
taxed
the
to
earner,
but affording recipients of
inent income
investopportuni¬
numerous
ties fbr
splitting that income with
Finally,
between recipi¬
ents
of
investment
income
by
favoring families who avail them¬
selves of opportunities to split in¬
come by gift and such devices as
family trusts, corporations, and
partnerships."
members of their family.
discriminates
it
The
-
first
type
of
alleged
dis-
4Crimination mentioned in this
ex-
jcerpt will receive the chief atten¬
tion
this
in
discussion.
Before
proceeding with the main subject,
"however, the other two types
should be dealt with briefly.
which
been caught in the
twilight
or
settlors
Funda¬
zone.
Donors
and
settlors
have
been
caught because they have not al¬
given evidence of a suffici-
bias of the foregoing cita¬
tion from the Treasury's report is
'
clear-cut
establish
legal,
divestment
ownership
to
the
of
income elsewhere.
the
of income from
amount
same
investments
is
able
to
split
this
income with members of his fam¬
ily.
Among the devices available
for
such
alleged tax-dodging are
gifts, family trusts,
corporations,
and
partnerships.
said
to
These
be
the
as
mentioned
are
methods
recipients
are
devices
same
able
by which some
investment income
of
to
get
with lower
away
There
that
is
a
definite
division
any
implication
of
investment
income among members of
ily is
a
painless
fam¬
a
costless proce¬
or
dure.
The Federal gift tax is the
second part of the story.
It is
casually mentioned but it is not
allowed to interfere with the main
impression sought to be conveyed,
namely, that gifts or other parti¬
tions of income within the family
are
a
profitable tax-dodging pro¬
Furthermore, the impres¬
cedure.
sion is
intended that
fosters
and
the
tax
encourages
H
is
as
owns
no
such
implied. If
substantial
a
wishes
property
property
who
amount
to
divide
of
that
the members of
his family, either as direct gifts
or as transfers in
trust, he has al¬
ways been, and should always be,
among
entirely free to do
Such dis¬
so.
thereof.
of property has
In the
case
principal issue
transfer such
beneficiary
IT he
come,
Tax
as
the
of
always
would
bona
Treatment
of
a
much
trusts, the
is: Is the
make
fide
the
legal
Family
In¬
Division of Tax Research, Treasury
Department, June, 1947 (Mimeographed).
can be said, by way of
argument, in support of dividing
family income into two parts
return.
In
is
fact, the latter
proce¬
preferable, from
real
i/J with the
difficulty
Joint returns would in¬
ments within the
ent excessive rates.
cost¬
a
which
to
well
by the passage
quoted above from the Treasury
study, to the effect that there is
discrimination
a
payers
Married
couples
in
the
other
There is
states
is whether
a
discrimination.
like
the
family
of
tax
burden,
income
is
cur¬
so
a
The
Treasury
which he is the
the
tax
der
the
difference
a
is
tween
or
one.
It is sheer
there
nonsense
tax
to
that
say
discrimination
those
families
be¬
which
dis¬
tribute
definite
called
evidence
partners
either
capital
services of
agement
that
have
these
so-
contributed
active, valuable
or
sort in
some
the
man¬
operation of the enter¬
prise.- And if there has been such
contribution, either of capital or
services, the allocation to them of
share of the earnings, on an ap¬
propriate
and
defensible
loses all taint of
The
stock.
not
is
same
If the wife
that
prove
basis,
tax-dodging.
true
distribution
a
with
of
or
respect
corporation
children
they
bought
can¬
the
stock, then its distribution to them
constitutes
a
series of
donor is caught
Case
of
gifts and the
with the gift tax.
Mandatory Joint Returns
history
unsuccessful
of
the
Treasury's
efforts to write into
the tax law the rule of
mandatory
joint returns by married couples
provides the clue to the allega¬
tions
of
,
discrimination
really exists.
way to
These
one
revise
If
owner
more
unit
persons
should
comprising
be required
a
family
to
this
incomes for the determina¬
tion of the tax upon the whole. In
families
children who
there
are
are
minor
the legal
owners
of
more
than two persons in
a
fam¬
become
taxation
of
the
income
of
the
family as a whole, regardless
of its ownership by the several
members of the
oughly
themselves.2
done
properly, the real
discriminations
will
alleged
or
rates
of
less
importance.
The
great danger is, that by accepting
the division of family income as a
major element in tax revision, the
existing rates will be retained or
only slightly modified for the
middle
and
privilege
income
incomes.
upper
of
dividing
into
two
the
parts
The
family
is then
likely to be all the tax reduction
that
in
whose
persons
the
middle
brackets will
the
even
and
incomes
upper
get.
ever
fall
income
They face
serious danger that,
more
having once acquiesced in a de¬
parture from the basic income tax
principle of taxation according to
legal ownership, they may later be
forced into compulsory joint re¬
turns. However this may turn out,
it is clear that single persons and
unmarried
benefit
of
families
can
only through rate revision,
the
and
heads
cost
revenue
of
income
splitting will diminish their
pects in this direction.
pros¬
family, is a thor¬
indefensible proposition.
un¬
is
no
a
manner
that dis¬
individual
there
case
No
is
Discrimination Where
Property
Still
Exists
crimination
involved in
the
com¬
munity property rule since it does
apply the principle of taxing in¬
to
the
legal owner thereof.
community in question is the
community of husband
and wife, in which each
spouse
has a, presently vested
ownership
come
The
marital
and
title in the property of the
community, by halves. Regardless
of which spouse is
responsible for
producing the income or assets
belonging to the community, the
spouse is immediately and
automatically a co-owner, having
legal title to his or her half.
The significance of the
"present,
other
vested
interest"
propaganda, mainly origi¬
nated by the Treasury, relative to
the
supposed
large
advantages
enjoyed by citizens of the
community property states has
been the principal reason for the
developing
pressure
to
divide
family income. It has also been
responsible for the enactment of
community property principle
The whole mat¬
should
Federal
not
switch
as a way
income
why
reason
tax.
state
any
from
law
mon
property
rules to- the
rules
well
It had
law, but the Supreme Court found
that
the
wife's
interest
in
the
community property was an "ex¬
pectancy" or future interest and
not
present, vested interest.
a
statutory changes
necessary
made
It
in
is
The
were
1927.
often
inferred
that
every
married
couple in a community
property state is free to report the
entire family income, by halves,
in separate tax returns.
This mis¬
was
made
by Dr. George
Gallup, whose question on the
subject
in
recent
polls
was
phrased in part as follows:
"For
in
13
purposes
states
the
com¬
community
of property
cept
It
own¬
and
ad¬
difficulties
which
projected far into the fu¬
should not
after
the
be
most
thorough examination
To
rush
erty
2 Cf.
Tax
into
system
made
careful
(Nebraska, Oklahoma,
and Pennsylvania), the
property is
community income. This does not
Oregon,
income from separate
that the separate property,
assets, loses its identity as part
of the estate Of the owning spouse.
mean
as
Community Property by Contract
A
characteristic
further
of
the
community property system is that
the status
of
property may be
altered by contract.
Parties to a
marriage may enter into an ante¬
nuptial contract as to how their
rights are to be gov¬
after marriage.
It is pos¬
by such a contract to forego
community property.
It is also
possible, after marriage, to change
the status of property by means of
agreement or contract between
property
erned
sible
the
Spouses.
The
extent
which
to
married
couples have modified the appli¬
cation
of the general principle
through ante- or post-nuptial con¬
The existence
tracts is unknown.
of the
opportunity
doubt means
no
that
advantage has been taken by
some, perhaps by a considerable
These
number.
agreements
valid
provided
against
public
are
not
not
they
are
policy,
do
change the order of descent un¬
law, are not entered into
through fraud, duress, undue in¬
fluence, or to defraud creditors.
Data
regarding
such
contracts
der local
would be valuable evidence of the
drawbacks which
some
have per¬
ceived in the system.
That there are drawbacks i9 ob¬
vious,
and
become
social
and
nomic
have no doubt
serious with the eco¬
they
more
transition
from
the
of
countries
Latin
the complex
Europe
to
integrated society of
the
present day. With respect to
personal earnings, the law and the
of domicile apply, but with
respect
to
assets,
notably real
fact
property, the law of the jurisdic¬
of situs ordinarily prevails.
tion
Thus, money earned in a com¬
munity property state by a resi¬
dent of a non-community prop¬
become com¬
The
income
erty state does not
property.
munity
in
land
from
a
non-community
property state does not always be¬
come
community property when
received by a resident of a com¬
munity property state. The many
variations of the theme of domi¬
of
tions
involve
situs
and
cile
complica¬
and adminis¬
accounting
tration, both for income tax pur¬
be¬
poses
poses
income
and
man
tax."
This
may
well
as
as
neglects
the
vided
in
be separate prop¬
community prop¬
The income from
property cannot be di¬
separate
returns
in
all
community property states.
This
fact emphasizes the position taken
here, namely, that in the commu¬
nity property states there is taxa¬
according to legaL
Each
spouse
respective spouses.
fact
possess.
separate
and for the ultimate pur¬
of determining the estates
of the
belief
that there
must
re¬
Limitation
of
System in Devising
Property
The
serious
most
probably,
all,
which
the
is
drawback
the
community
of
limitation
property
system imposes upon the producer
of community
income with re¬
by gift
Normally, the hus¬
spect to final disposition
or
testament.
band
the bulk
earns
of the
com¬
income, and the bulk of
any estate that may be accumu¬
lated out of savings would there¬
fore be from his earnings.
But
munity
a
the estate that is accumulated out
of
property owned.
Since each
owns half of the community
in¬
ex¬
come
from the moment it is real¬
ized,
that
should report one-half in a
of both the
community prop¬
merely in
port the income from any separ¬
and
order
to
H. L. Lutz, "The Right Kind of
Reduction," in The Commercial and
Chronicle, October 30, 1947.
Financial
system
ate
ministrative
ture.
recently
property
can
tion of income
will be
have
community
themselves to reduce their
tween
erty
of income taxes,
income
ownership.
legal
the
wife
a
their
and
both
which
four
equally
divide
ership. The change is fundamental
involves
in
enacted
the
community property
apparently served
enough for purposes of local
doctrine.
may
no
aind
In three
the
community property rule
the
bequest is separ¬
of the orig¬
inal
community property states
(Idaho,
Louisiana, and Texas),
or
income.
ate
has
erty, with complete recognition of
the title of either spouse to such
separate property as he or she
beat
through gift
by
a
badly handled, main¬
ly because of acceptance without
thorough
consideration
of
the
There is
Either
primitive conditions
under
which the principle developed in
shown
of California.
case
always had
are
ter has been
to
faculties of
spouse is com¬
munity income, while that de¬
rived from property owned at the
time of marriage or later acquired
This state
is
take
The
advantages and the disadvantages.
ily return.
The
is
tax
taxpayers, is to
pool
their
some
the
all
in several states.
provide,
to
the
legal
thereof, or whether two or
the wisest
procedure, and the
that will provide decent
treatment for
efforts
to
family in¬
or
correct
the
involved a very important
principle of income taxation. It is
question whether income
should be taxed, as the law now
of
there
present writer takes the
position that there is no real dis¬
get the desired tax relief.
The
where
the
aims
division
is not the best
come
that
The
the
or
a
a
But
view
The
Essential
only
ly be regarded as an influential
splitting of
A Revision of Rates More
family
Ownership. In
a
departure
from the rule of taxing income to
its legal owner.
either
Community
many good reasons for
controlling
increase
the
principle between
pooling the family income in one
return
and
splitting it between
$744 million.
a
hard¬
billion,
revenue
decrease under income
material reduction of income tax.
can
$166
owner, or to
of
in
Under mandatory joint returns of
$542 million, as against a revenue
of
legal
latter
a
net gain through income tax
saving only after the gift tax has
been amortized, and that will re¬
quire a goodly number of years
whenever the gift itself is large,
avoidance of income tax
is, in fact,
As pointed out above,
group.
regards
but
have.
.
income
show
life,
not
with respect to the income of
son
which
during
do
not this
or
two returns in
gifts
community
rate reporting of half of the com¬
munity income. The real question
income
are
in
doubt about the sepa¬
no
tional
making
tax¬
property states are said to have an
advantage, through the division of
community income for income tax
purposes, which married couples
stantial slice out of any large gift
or transfer in trust.
There can be
There
between
the basis of residence.
on
study referred to presents esti¬
mates, based on an assumed na¬
it must be in order to effect
propa¬
expressed
less operation. It is not, of course,
for the gift tax will take a sub¬
as
the
That line is
erty relationships of husband and
wife. In general, the income de¬
rived during marridge from the
labor, talbnts, or other productive
an
popular because it looks
good way to beat the pres¬
family is
extent
ganda line is sound.
The answer to this question will
ad¬
standpoint, since it depend upon the respondent's con¬
would
reduce
by one half the ception of the basic purpose of the
number of returns to be
examined, income tax, that is, whether the
handled, and stored.
purpose should be to tax each per¬
dure
rently
confusion
no
the
ministrative
about whether resort to any of the
devices
for partitioning
invest¬
be
income, either as earnings or
longer, history than does the Fed¬ as .income from property held in
eral income tax.
The tax law is trust for their benefit, and thus
would
be possible,
not entirely clear at all points, there
under
hut it can be said that the intent mandatory joint returns, a com¬
is to tax income to the legal owner pulsory pooling of the incomes of
position
ing that
the
division
none
discrimina¬
return. There is noth¬
one
tax rates.
a
have
any one
in
while
law
In this issue of misrepresenta¬
tion there is
tion
return, is a twin brother to the
Treasury's scheme to require the
of the total family in¬
should
There
these
tricks.
a
crease
to
them.
use
two
report one
separate tax
Costless Device
income taxes than other investors
who do not elect to
into
to
spouse
half of the total in
The
Partitioning Income Not
investments, at the cost of
the gift tax, and those which do
not.
There
are
enough
things
clear and its misleading character
Is demonstrated by the failure to wrong with the income tax, as it
is, without dragging in such a
tell the whole story. With respect
to the alleged discrimination based purile contention as this one. The
Bureau has ruled that a man can¬
on the nature of income, it is said
that the recipient of earned in¬ not divide his income with1!his
wife or childreh merely by mak¬
come must pay tax on the whole
amount, while the person who has ing therm partners. There must be
The
each
mentally, however, the intent of that cannot also be said in sup¬
the law has clearly been that of port of
compelling the whole fam¬
taxing income to its legal owner. ily income to be reported in one
discriminates
It
couples to divide
combined incomes
parts,
come
reducing their taxes
the double use of the
lower rates of the progressive tax
schedule.
their
provision to author¬
married
divestment, and there have been
numerous
thereby
through
rate
all
a
inclusion
idence
by enabling
couples
in
community-property states to di¬ ently
investment
Federal law
ize
Herring
height of legislative folly2
The principal issue involved 'is
enough,
however, the
for introducing into the
scheme
ficiences of the statutory tests of
ways
vide their earned and
Oddly
Thursday, December 4, 1947
beat the Federal income tax is the
Income—A fax Red
Division of
CHRONICLE
each
it
is
entirely
proper
tax return.
The
erty
various
states
community
have
prop¬
introduced
dif¬
3 Cf.
Frank
L.
Seidman,
"The
Com¬
munity Property Gold Brick," in The Tax
Magazine, November,
1947,
pp.
973-980.
savings
is
also
from community
community prop¬
erty, and half of it belongs to the
wife. She is entirely free to dis¬
of her half of the estate by
will. Should the wife pre¬
decease the husband, leaving her
pose
gift
ferences in the details of the prop-
the
income
or
estate
to
taxes
to
him, he must pay death
inherit, although the
wife's entire estate may have been
created
out
of
savings from the
husband's income. Conversely,
the
Volume 166
wife as
the
survivor and
husband's estate,
inheritor of
pays tax
only
his
on
half. These statements do
take account of the
notorious
amendments to the Revenue Act
not
of
1942, under which the husband
as
survivor is taxable
at
on
least
half of the total
estate
(the wife's
share) but the wife
survivor is
taxable
all
on
of
cept that which
as
the
estate
ex¬
be proved to
can
have
originated out
earnings or income.
of
her
COMMERCIAL
THE
Number 4652
own
FINANCIAL
CHRONICLE
it
is conceded
that tage to married couples is non¬
depend upon the extent existent, or at best slight, through
to
which the income
of minor the second taxable income brack¬
children is drawn upon as part of et, that is, the $2,000-$4,000 brack¬
much will
rather than be¬ et. Even' with a net income of
ing used, as in the case of separata $5,000, the married man with two
trusts, for the present or future children would gain very little.
benefit of the child.
The discus¬ In 1947 it is estimated, by the
sion leads eventually to consid¬ Treasury, that there will be 18,eration of the possibility of split¬ 977,500
income
recipients with
ting the family income in as many net incomes in the net income
ways
there
as
parents and
This would re¬
are
classes
$2,000
two-thirds
to
$4,000.
of these will
About
be
mar¬
family tax liability ried taxpayers.
The immensely greater tax
a
mere
division
duce the total
of the total between husband and
duction that can be made for all
extent
wife. The joker in the
is that it would cause
taxpayers,
residence,
come
to
which
has
the
separate in¬
into the accu¬
entered
the
who
details
of
the
law
tax
come
of
income
division
sensible revision of the tax rate
scale
down
50%,
over
between
and
husband
afforded
to
a
to
which
few
a
of 12% to
range
that
would
be
income
from
some
of the tax
vision
privilege
nothing
and
a
same
The
rates.
Mack Trucks Common
division of
want the
in¬
an
regardless of income,
marital status, from
or
splitting needs no emphasis be¬
yond what the figures themselves
show. There is time yet to get this
peared to that effect.
This would be the ultimate dis¬ kind of tax reduction if enough
aster.
It
would
finally demon¬ people would prefer a whole loaf
strate the folly of even offering to to somewhat less than half a loaf.
settle for a gadget like income
splitting instead of going all out
for
a
drastic and thorough re¬
the
rule for the
require
re¬
indirect and quite
unofficial hints have already ap¬
ownership
and disposition of
property. The
fact
that
many
who
are
now
pressing for a general Federal in¬
family income
great a
so
be found in the income
may
wife, for
com¬
property would be able
to add
enormously to the list of
difficulties
and
complexities
surround
suggestion
By JOHN T. CHIPPENDALE, JR.
The government
market has turned inactive on very light vol¬
prices virtually unchanged for the past several days.
Quotations are just slightly above the lows of the year, as investors
and traders try to
figure out what is likely to happen next.
The
big question seems to be "Is the down-trend over, and will pegged
with
ume
.
.
prices hold at current levels?"
of
rates.
It
community
property
law.
The
Special Tax Study Committee
ap¬
pointed to report to the Ways and
Means
Committee
this
on
point.
marital
It
crimination
tion if
or
any
prop¬
erty, yet the Committee rests the
for
case
the
its
recommendation
on
difference of Federal income
tax that would be
paid on
income
by
residents
of
given
a
the
two
groups of states, and it then says:
"The fact that the legal
rights of
the wife under the state law
may
differ in the two cases does not
to
seem
justify the significant dif¬
ferences in
Federal
income taxes
of
either spouse
aside
as
of
legal rights
is to
be
brushed
no
consequence, it may
be asked why
general state adop¬
tion of
community property
not
advocated.
would
be
couples
such
In
to
assured
determine
of
income
that
would
that
taken
some
division
out
The
of
There
are
a
manner
beyond the
later
time
the
might
be
Federal
is
too
in
rule
the
reason
law
constitute
put them
risk
income
dividing
state
to
community
at
married
the
as
was
there
way
all
privilege
a
income
might
this
quite
the
situa¬
present
of
thereof.
income
If the
taxation
family basis
accepted,
be
then compulsory joint returns be¬
come
of
defensible
as
income,
well
as
and
legal
of
owner
the wife is the
half
of
the
com¬
facture
simpler and
important
the admin¬
istrative
The
standpoint.
backs and difficulties of
nity
property
and
as
zens
who
to
system
important.
such
to
live
commu¬
a
serious
are
In fact,
indicate
draw¬
they
that
under
it
the
are
more
pitied than envied, despite
alleged advantage they may
any
have
in
paying income tax.-
The
complete recasting of the individ¬
income
most
lem
tax
scale
rate
is
the
important tax revision prob¬
before
should
with
be
the
the people.
permitted to
prompt
this task,
Nothing
interfere
performance
of
yet there is grave dan¬
ger that too eager acceptance of
income division may result in fail¬
ure
to
do
the
more
important
thing.
The Treasury study of the tax¬
of
family
income, men¬
tioned above, outlines some of the
To
all
that
the
middle
and
income taxpayers will get.
the
matter
is
of minor children.
It
is
pointed
an
equal income tax basis will not
be
achieved, if minor children
income, unless that income
out
that
the
goal
putting equal-income families
of
on
have
is also taken into account.
At the
show
just
how
much
less
a loaf the income split¬
ting gadget can be there is pre¬
sented, in the following table, a
comparison
of
the
tax
burden
also from
tax
rate
sample of the kind of
a
revision
that
time, namely
12%
surtax
possible
.
The
financing has been
largely because of
business and higher
new
made necessary
expanding
costs.
the
Proceeds
will
stock
from
SNYDER AND ECCLES
Secretary of the Treasury Snyder and Chairman Eccles of the
Federal Reserve Board appear to be in agreement on:
(a) That higher interest rates are not desirable and shortterm rates have advanced about enough for the time
being.
The
2V4% rate
(normal
combined)
of
50%
all
on
taxable income above $100,000.
Income
the
be
no
total
noted
4
The
the
to
the
balance
funds
of
funds
Means,
of
to
of
of
the
obviously pro¬
tax reduction for single
individual
tax.
further that
the
Committee
November
5,
funded
debt.
paid
It
the
on
1947,
and
12.
York
Stock
Jr.,
Mr.
Barnett
the
American
Foreign
10
Uruguay Bonds Drawn
For Redemption
Uruguay
bonds
of
5%
in
1919
694
694
450
380
380
240
of
922
922
600
589
570
380
at the Direccion
10,000
2,347
2,347
9,362
1,500
5,690
1,596
25,137
15,350
1,862
8,522
24,111
6,099
18,164
1,200
5,180
14,720
63,541
38,715
62,301
49,590
37,980
no
in
£9,180
have
been
drawn by lot for redemption and
payment at par on Jan. 1, 1948,
at
benefit from income division.
has income.
The
tax
savings
proportion as the second spouse
has income, and disappear entirely, at any income level, when both
spouses
have equal incomes.
external
gold
the
principal
of
amount
Chemical Bank
pany j
&
Trust
Com¬
N. Y.; at the banking house
Glyn, Mills & Co., London, or
de Credito Pub-
licto, Montevideo.
.
ities.
.
.
already
.
.
.
.
.
This
.
.
expenditures
heavy
to
used
step
the
up
to
debt
enlarge
the
redemption
of
.
would
be
to
employed
retire
bank-owned
secur-
,
.
(d) Consumer credit controls.
...
The
point of disagreement between the two money managers is
concerning "Special Reserves," which Mr. Eccles sponsors and Mr.
Snyder opposes.
r
If past history means anything, Mr. Snyder will
.
.
win
out
where
cases
of
this
011
policy.
one,
there
because the Treasury has been the victor in
has
conflict
been
with
the
Board
matters
over
<
•
...
Testimony before the Congress of Mr. Snyder and Mr. Eccles on
more specifically the money
markets, indicates that
higher interest rates would not halt the inflationary trend of loans,
because money rates are only a small part of the whole, and would
credit control and
not be
an
effective way of
fighting the credit expansion.
Capital Securities
to
The
Financial
Chronicle)
.
.
Higher
.
interest rates would also bring about chaotic conditions in the money
markets which would greatly impede the refunding operation.
*
.
Also
have shown
.
.
.
upping of reserve requirements in New York and Chicago
accomplish little because proportionately loans and deposits*
an
would
Excess
smaller increase in these centers than in other
a
areas.
,
reserves
in these cities have been rather limited.
Eccles opposes such action.
.
.
.
Mr.
Likewise, he is against the raising of
the discount rate by itself because this would not accomplish
very
.
.
.
much and might be harmful to the government bond market.
...
Although the request by Mr. Eccles for "Special Reserves" of
25% against demand deposits and 10% against time deposits which
would apply to all banks and not just to members of the Federal
Reserve System is very undesirable and will most likely not be
granted, there may be food for thought in this suggestion, because the
various classifications now in use are not given consideration in the
new recommendation.
Many cities and areas have so completely
changed in recent years that new classifications could be in the mak¬
ing.
There are some good-sized banks in cities that have grown
considerably which still enjoy country bank classifications, when Ik
comes to reserve requirements.
The statement by the monetary authorities that short-term yields
have gone up about enough seems .to indicate that 114% for certifi¬
.
.
.
.
.
will be
maintained
.
.
for some, time
to
come.
214%
will
rate
be
maintained
and
the
...
A
refunding
action
of
fluctuating
program.
the
.
.
.
Federal
Reserve Banks in buying more than
due in five years or longer, in the
$163,000,000 of government bonds,
past two weeks, including $120,no fooling about this matter and
support will be there to make sure that the 100 level is not violated
by the longest tap issues.
.-.There is no doubt about the ability of
the powers that be to do this.
They took prices down and they
will stabilize them at levels they consider desirable for the govern¬
000,000 last week, indicates there is
.
.
ment
market.
.
.
Despite the uncertainty that still prevails, there
.
.
.
>will eventually be a breaking of the "bearish psychology" which the
have created.
Where the stopping point for the
longest tap issues will be is a matter of conjecture because of yearend adjustments and tax selling.
money managers
.
.
.
.
.
is what the authorities consider to
area
be the best support range, then the longest ineligibles will be held
at that level.
down
trend
quotations.
.
.
in
Many believe that it will be easier to stop the
.
101 level than at somewhat lower
prices at the
...
BANK ELIGIBLES
As for the bank eligibles, there could be further downward ad¬
justments, but there should be stabilization in these issues, as the
market realizes the importance of a stepped-up program for redemp¬
tion of bank-owned obligations.
While the deposit institutions
will no doubt be pinched by the credit restrictive measures, they will
be losing high coupon obligations in the intensified debt retirement
program in the coming year.
This will create a problem for banks
that are losing the 2s and 23/4S next March, especially those that own
them at 100, and are not getting a demand for loans. . . .
...
..
It is believed
3 With
(Special
spouse
be
would
.
5,000
one
which
However, if the 101
4.000
diminish
with
Investing
years.
$120
only
by
Corp. as secretary for more than
$190
would get
associated
was
$190
that
made
Exchange, that D. B.
has become associ¬
180
division
government
the
(c) Intensification of the sales of savings bonds, the proceeds
cates
ated with them in charge of their
Investment Research Department.
310
$60
in
increase
.
which
of
The
Street, New
York City, members of the New
485
persons
is
Announcement
485
Rates
Economy
to
short-term rate would be very adverse to the
Stern & Co., 25 Broad
3,000
income
common
Is With Stern & Go.
285
Split
its
D. B. Barnett, Jr.
$95
Rates
12-50%
not
.
285
Rates
Income
as
bank-held debt.
.
on
will
Married, Two Dependents1**
1945
has
company
stock in every year since 1922.
$95
12-50%
will consist
of
common
has
no
advan¬
Ways
p.
The
2,000
**Assumes
or
company
$1,000
:!:Single
added
subsidiaries.
its
dividend
a
long-term debt will be maintained.
..
surplus,
.
shares
The
Split
from
be
company,
company
747,335
Rates
100,000
will
the
Personal Exemptions
Income
9,362
of
During the 21 month period ended
Sept. 30, 1947 capital expenditures
of the company and its subsidi¬
aries amounted to $3,148,385.
Barnett,
division
Report of the Special Tax Study Com¬
mittee
Single, No Dependents111
25,137
63,541
sale
Manufacturing Corp., prin¬
cipal subsidiary of Mack Trucks,
Inc.
011
so
done
be
(b)
Mack
1945
25,000
the
be
applied, to the
extent required, to the -payment
of $4,000,000 of bank
loans of
to
.
.
FOR THE RECORD
name.
Deductions but Before
50,000
.
engines, all marketed
"Mack"
under
first brack¬
a
less, rising to a
tax and
or
rate
is
A Comparison of Tax Burden under Present Rates, Income Splitting
at Present Rates, and a New Rate Scale, 12% to 50%.
Net Income After
diesel
stock.
persons.
In 1944 there were 14,696,697 tax returns by single per¬
sons,
on
which there was paid
$4,119,121,000 of tax, or 25.4% of
these
rine
tion
be
upper
when
of
an
since
Present production includes
also buses, fire apparatus and ma¬
will
vides
One
and
producer
After completion of the present
financing outstanding capitaliza¬
problems which will arise if and
active consideration of this
trucks
truck
In such event, income divi¬
sion, with continued imposition of
the present, or even higher rates,
maximum
ation
motor
of
1911.
are
citi¬
be
et rate of
Minor Children Income
begins.
Hayden, Stone & Co. and AdaSecurities
Corp. headed a
nationwide
underwriting
group
which on Dec. 3 made a public
offering of 150,000 shares of Mack
Trucks, Inc. no par value com¬
mon stock at $51.25 per share. The
company, through its subsidiaries,
has been a pioneer in the manu¬
the splitting
easier to handle from
at this
munity income.
subject
.
taking
burden.
as
disadvantages in the com¬
munity property system, all stem¬ under present rates with that re¬
ming from the basic fact that sulting from income splitting and
under this system
.
.
nervous
ities
must
as
than half
law.
obvious.
drawbacks
many
in
dis¬
no
accept the basic princi¬
we
owner
ual
payable."4
If this matter of the
is
There
ple of taxing income to the legal
agreements
community
conclude:
To
very frank
does not want
for the division of
income
other part of
.
longest
development in some quarters, since this might indicate
selling has been about completed.
With the author¬
a hand in stabilizing quotations, it" is believed
there
will be a tendency for the market attitude to
improve, if offering
should dry up at these levels
the
mex
is
partnership
.
the
favorable
would
Conclusion
state
a
It is believed that
...
.
.
crucify the unmarried taxpayers.
indicates that they are not
prepared to secure this
privilege
acceptance
.
.
.
are pegged as are the bank 2s due 1952/54.
The
longest bank eligible is the doubtful one, since some further liquida¬
tion is likely in this issue.
However, there will probably be sup¬
port on the way down, if needed, so as to cushion the decline and
keep the market for this bond more orderly than in the recent past.
A period of minor price movements would be looked
upon as a
more
through
Governments
on
...
joker
with
of
to
as
tax
of
crease
munity
which
loss
revenue
division
familiar
are
Reporter
Victory loan 2V2S
than
more
even
mulation of assets in order to de¬
termine the rights of each
spouse
in the total
family possessions.
Those
Our
the family support
husband and wife have
sep¬
income, careful accounting
must be maintained to
show the
arate
21
(2281)
time
same
children together.
If
&
in
some
.
quarters that there
may
be important
changes in the ownership of government obligations in 1948 if
the demand for loans and purchases of non-goverments by in¬
companies and savings banks continues as in the past....
a moving out of Treasury obligations by these
OAKLAND, CALIF. — H. M.
Fisher, Oxen O. Heyenfeldt, and
surance
James M. Miller have been added
non-bank investors in order to get funds that would be used to
to
the
staff
of
Capital Securities
Co., 2038 Broadway.
There would be
finance the needs of business.
from private to
Holdings of Treasuries would shift
public ownership.
j
22
(2282)
THE
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, December 4, 1947
s«nr
will
delegated to the Depart¬ making use of our own estab¬
normally having jurisdiction lished committees of businessmen
particular commodity or and some of the Industry Advisory
set
up
during the
the expiration date of the original dency for inflated world prices of product. Under such an arrange¬ Committees
law so that it had to be renewed commodities to infiltrate into the ment, the Department of Agricul¬ war. These committees, composed
ture would handle foods, the De¬ of representatives of all segments
by joint resolution for 15 days. domestic economy. Foreign pur¬
Finally, on July 15, agreement chasers are often willing to pay partment of the Interior would of the industry in question, large
handle fuels, and the Department and small, and representative in
was
reached to extend the con¬ prices
substantially
above
the
Program oi Limited Price and Wage Controls
(Continued from page 2)
-frols, through the active coopera¬
tion
of
the
railroads
Office of Defense
This
with
the
Transportation.
has
program
increased
the
average load per car,
detention,
reduced car
accomplished the
and
distribution
available
of
freight
cars in a manner
so as to spread
equitably - among
shippers
the
.burdens
resulting from the de¬
ficiency in freight car equipment.
But, while this program has
alleviated the freight car short¬
be
ment
trols
domestic price of scarce materials.
ruary.
Exporters
only until the end of Feb¬
Meanwhile, we were re¬
quired to reduce our export con¬
staffs
trol
tions
in
as
result
a
reduc¬
of
appropriation
our
re¬
quests.
tion
sell
to
circumstances,
we
them
excessive
at
prices and hence to pay excessive
prices
supplies,
thus
available
supplies
their
for
bidding
these
Under
in posi¬
therefore
are
the
the
over
away.
The world needs
Commerce
of
products.
other materials and
My testimony is limited
latter
curtailed
and nature of
our
the
extent
controls. Never¬
solution.
a
national program, and in the stim¬ to protect the U. S. domestic econ¬
ulation of the domestic output of omy against the danger of run¬
goods and their distribution.
away inflation as well as extreme
I
shall
immediate
the
to
first
turn
now
and
to
of
areas
primary
Department,
United
concern
discuss
and
scarcity in the most critical items
which,
while
scarce
here, are
much
much
and
scarce
more
the
I also want to
with
nection
point out, in con¬
foreign policy
our
objectives and, in particular, the
accomplishment of any program
world
of
which
have
ical
needs
and
of
our
domestic
also to carry out our foreign
to carry out our foreign
as
policy.
Decontrol
Second
The
econ-f
in order to combat inflation
omy,
well
as
the
authorizes
exports
for
powers
of
use
Act
priorities
which
to
I
policy.
Inventory controls and have previously referred.
The
the extent to authority to limit and curtail the power to require the shipment of
recovery,
we
value to us
area.
It is not contemplated that any¬
goods from the
States.
If our goods are
theless, export controls have in¬ sold at inflated prices, the result
|f the present voluntary program directly assisted in the control of is a more rapid depletion of dol¬
for the construction of new
By spreading foreign lar exchange reserves of receiving
freight, inflation.
cars for use in this
We have a direct in¬
power
over
country has purchasing
many countries.
§hown substantial results, it has kinds of goods and preventing a terest
in
providing
necessary
also
not
fully met our hopes. concentration of foreign buying goods to foreign^ buyers at fair
Clearly, transportation occupies a on those goods which are scarcest prices. This is to our long-term direction of materials for use in
meeting the most urgent and crit¬
Central place in both our inter¬ here, export controls have helped foreign trade advantage.
it has not effected
age,
necessarily
other respects, have been of great
in bringing to us the
experience and knowledge of the
industry.
thing approaching a comprehen¬
Priority powers are required
sive system of controls over ma¬
chiefly in order to have the legal
terials, products and productive right to direct materials to cer¬
facilities, such as we had during tain end uses which are deter¬
the
war,
will be necessary to mined to be critical; for meeting
achieve the objectives indicated our own urgent
needs through
by the President. Adequate au¬ increasing industrial production in
thority to carry out restricted critical
industries;
to
prevent
priority, limitation on use, and breakdowns in domestic produc¬
inventory controls is necessary. tion of short supply materials and
Priority controls would permit the products; and to combat inflation,
this
to
exercising
been
consumption of short supply
terials in less essential
uses
ma¬
would
abroad
materials
has
been
used
sparingly, principally for tin
plate (earmarked exclusively for
Before any food
a
chart included in the material most essential uses.
preservation
abroad),
for
authority and the administration ply, demand, and production sit¬ furnished you which shows that, further discussion of the necessity nitrogenous fertilizer materials,
thereof should be strengthened.
uation in the major categories of in July 1947, for example, more for new controls and the extension and for a few items of equipment
%
of
the
commodities now under individ¬ than
exports which of existing ones, I want to briefly needed abroad to expand the pro¬
export control program* higher priced abroad.
•=—what the Department has done
We have submitted to you de¬
?md is now doing, and how this tailed information as to the sup¬
Export Controls
Before
this problem, I want to call
atten¬
tion again to our previously men¬
tioned quarterly report under the
Second Decontrol Act. This
report
explains
method
trols,
our
of
the
export
organization and
our
operating export
criteria
for
our
con¬
approving
licenses, and the nature
of
more
important export pro-!
such as steel, coal, petro-j
chemicals and drugs, and
lumber. A copy of the report is
Included in the material on export
grams,
leum,
control
for
which has
this
been
hearing,
prepared
is
and
in
your
hands.
The
Second
Decontrol
know, gave
you
Act, as
to the Secretary
of Commerce certain
broad ex¬
port control powers which enable5
to
US
specify
be
may
what
exported
to what
amounts,
for what
commodities
and
in
what
countries
purposes,
and
to
licensing
note
that
short of dollars, and have accord¬
effective
ingly established import and
sources,
change
exercised
ties.
throughout the
war
conjunction with the various
such
powers,
allocations
as
priorities, rationing
trol.
and
price
in
war
and
con¬
The latter powers,
however,
as to
a
very few items,
except
were
limited Price Control Act.
connection, I call to your
attention particularly the provi¬
sions of Public Law 475, 79th Con¬
gress, approved
June 29,
1946, to
iffye effect that,
mitted
except as per¬
by the Price Control Act
then limited, no other Federal
Jaw shall be construed to author¬
as
ize the establishment of maximum
prices for any commodity. I call
to
your
attention
also
the
stated
.policies of this Congress
in pass¬
ing the Second Decontrol Act and
Which
were
made
specifically
applicable to our administration
Of export controls.
generally
directed
to
speaking,
we
were
eliminate all but the
JPQst essential commodities
from
export licensing controls, and as
:to those that remained, we were
authorized to control their export
frpm this country for two main
in
purposes:
the
first
place,
to
limit the quantity exported in re¬
lation to our own supplies; and
secondly, to direct their flow
the
countries
where
need
greatest
policy
and
where
our
interest would
be
to
is
foreign
served
best. It was, however, no
longer
permissible to regulate prices on
export sales.
I
should
also
mention
point that the Senate
had
at
this
origi¬
nally voted to extend these con¬
trols, as we then requested, until
1948, but the House ap¬
proved their renewal only until
tj)e end of January. Deliberations
of the conferees extended beyond
June 30,
such
controls
In
other
words,
in
the
absence of our export controls,
the exports of these commodities
would
not
and would
There
in
the
table
refer
my
general types of
being administered
now
Department.
Under
The
Decontrol
Government
exercised
Tin
tin
Second
Act
controls
over
and
a
has
also
showing
been
included
few
are
now
materials.
products,
you
a
the
total produc¬
of leading noncommodities,
and
exports
agricultural
production
and
for
1946,
there
the
is
years
first-half
and
also
showing apparent
another
per
sumption of fpods.
Generally speaking,
capita
1929,
1947,
table
will
percentages exported
have':been running at more than
pre*Wsir, although less so, I might
add, than in 1920, the comparable
year
after World War I.
Domes¬
Services Committee of the House.
For
example,
full
purchased in
now
are
States by those coun¬
tries, whether in short supply or
not.
On this subject, the Presi¬
dent's Committee on Foreign Aid
export
the
over
licenses
issuance
of
participating
to
be of the greatest
Where a partici¬
may
importance
pating country proposes to use
substantial portions of its funds to
get from the United States goods
.
not
.
.
important
relatively
achievement of
duction
and
its
the
clear
the
Govern¬
power
to pre¬
thereby supplementing
by
the import controls established
the participating country."
To
sum
extent.
to
a
authorized
very
believe
up—there
are
two main
over
consideiable
small
a
needed
by
to
domestic
our
is a case in point. An¬
example is that steel may
made available for increased
other
be
production of farm equipment so
essential to maintain
our own
food
production on high levels and bo
increase food
supplies in other
countries. Other examples might
be nails, oil pipe and other ma¬
terials for oil production and dis¬
tribution.
It
is
crease
equally
important
to
in¬
production of steel it¬
the
self.
Although the industry has a
program for expansion
of basic
steel output and additional fin¬
new
capacity,
facilities
those
the
overcome
proposed
not expected to
immediate
short
are
many of its uses, and the use of
tin
for
many
purposes
is pro¬
hibited entirely. Since the outlook
supply situation.
An immediate
objective is to obtain the highest
possible output from existing ca¬
for increased supply of tin to meet
pacity.
Shortages of scrap and
our
full needs is not promising, suitable
coking coal are limiting
these controls should be extended. factors in
obtaining the highest
I want to emphasize, however,
possible production.
that I do not anticipate that under
existing conditions the very broad Limitations on Use of Materials
In
modities.
to be used
Authority also exists for the
granting of priorities for export
for two purposes; exports that are
designed to increase the produc¬
authority
tion abroad of materials
critically
Supply
best advantage,
needed to conserve
the supply by reducing the quan¬
to the
is
tities for less essential
be
uses.
This
done
by restricting the
production of less essential items
can
strengthen needed
or
by
of
less
in this country; and ex¬
ports where the Secretary of State
certifies that the prompt export
of material and equipment is es¬
Short
If materials in short supply are
control. In
first
direct
steel
of
economy,
Primary pig tin is fully ishing
allocated, rigorous specifications
are imposed
on the use of tin in
could
we
greatly
our
the
to
the most
essential programs. The increased
production
of
freight cars,
so
ways
in which we could
exercise of export
present authority
no
proportion
promised pro¬ controls exercised over tin will be
goals, it necessary for other scarce qom-
that
have
this,
exercised
now
materials.
critical
of
is
priorities powers for similar
purposes in the domestic field.
The most
important place in
which this power can be exercised
is over steel. By the use of lim¬
ited priority powers over steel, I
monetary
should
ment
in
are
There
emergency
items which
the United
vent
you
fiftjd~ttiat the
and
tin, which continues in very short
supplv,
and
these
powers
are
seems
con¬
bark
controls
given to a broad extension of
export controls over the principal
countries
furnished
such exports as a percent of total
1939,
re¬
cinchona
duction
use
Priority. Limitation and Inventory
Controls
very
the
these
to
controls
by
for
be
"Control
material
and
dollar
their
of
use
consideration would also
otherwise be impeded
surely be greater than said:
at present.
tion
In this
controls,
ex¬
generally are not applicable to
the foregoing types of commodi¬
terminated before that time
by the First and Second Decon¬
trol Acts, and
by enactment of a
control.
among
materials
such
conserve
antimony,
quinidine,
nitrogenous
fertilizer
materials,
products and iron and steel manu¬ fitted to the quantity of any com¬
rice and rice products, and fats
factures; copper, brass, lead, zinc, modity which the economy of the
tin and tin manufactures; build- United States can spare, and this and oils, have remained under va¬
can
be directed most rious kinds of emergency controls
ng materials and plumbing sup- quantity
lies; and certain types of ma¬ effectively to accomplish the ob¬ by authority of the Second De¬
control Act of 1947 (Public Law
chinery
still
in
short
supply. jectives of the recovery program
80th Congress).
This Act
These
are
items which
are
in with the least harm to the econ¬ 188,
short supply in this country, and omies of other countries which expires Feb. 29, 1948. Government
controls
over
rubber
are
also
for which, at the same time, there are dependent upon United States
is an even greater foreign demand supplies.
In order to make sure exercised under Public Law 24,
80th Congress, which is now un¬
than' at
home.
Although most that countries participating in a
Countries J of the world are very recovery program make the most der consideration by the Armed
grant
or deny licenses to
exporters ac¬
cordingly. These powers had been
and
to
power
You will were controlled moved to Europe,
the goods still as compared to shipments to Eu¬
subject to export restrictions are rope of a little more than lk of
essential
exports
of
non-controlled
foods,
including meat the
products, fats and oils, butter, commodities.
The adoption of a European re¬
wheat, and other essential grains
and
preparations;
fodders
and covery program would, of course,
feeds; seeds and fertilizers; soap; emphasize the need for directing
lumber and lumber products; coal; exports in that manner.
The re¬
petroleum; many of the more im¬ quirements of such a program on
portant chemicals; steel-mill the United States can thereby be
ual
going into the details of
channel those ex¬
ports which we license. There is
our
requiring
critical
the
substitution
materials.
It
can
place, with increased
specification and
could
undertake
a
simplification controls. For ex¬
the aggregate have risen far more
broader program of export control sential to the success of the U. S.
ample, we now limit the thickness
than the volume of exports. Our
along the lines previously men¬ foreign policy. My report on the of the tin plate used in cans to
tic production and consumption in
funds,
we
also be done by
economy, because of its tremen¬
dous increases in production, is
Decontrol
Act
contains the minimum
tioned. In this connection I would Second
required for the
like to point out that on VJ-Day recommendations for the exten¬ particular product which will be
the current rate of there were about 800 employees sion of controls on tin and other
put in the can. It is also possible
export with relatively few areas
engaged in this work, as compared limited controls now in effect. As to reduce the variety of sizes and
of strain, but in these areas the
to less than 200 now. In the sec¬ these recommendations are a mat¬ shapes of
an
item, thereby in¬
effect is substantial.
ond place, with increased statu¬ ter of record, I shall not review creasing the rate of production by
There are certain commodities
tory authority, we could strength¬ or repeat them here.
standardizing the product and rewhich we are not now controlling en the drive against profiteering
ddueing the number of items which
because they are not in critically in
Proposal for Limited
tjA must be kept in stock. The kinds
exports, and at the same time
short supply, but for which the assist in
New Control Powers
of control which should be used
making our foreign aid
demand is heavy throughout the program more effective.
Before describing the ways in for ^ny particular material would,
world. The prices of these com¬
which
these
powers
would be of course, depend on the materials
modities have been rising steadily
Priorities, Limitations on Use
used, and the benefits which might and the trade practices of the
despite the efforts of producers to
And Inventory Controls
be
expected from their use, I manufacturers, distributors, and
limit the amounts of these com¬
In the seventh point in his mes¬ would like to state my firm con¬ users of the materials.
modities they allocate for export.
Any program to conserve criti¬
sage, the President recommended viction that these controls should
The use of export controls furlegislative authority for "alloca¬ be
imposed only after careful cal materials in short supply could
their to reduce the quantity of
tion
and
consideration by the government be undertaken only after a very
inventory control
of
such commodities now being ex¬
scarce
commodities
which
bas¬ as to the urgency or need and careful survey
and consultation
ported would have the result of
ically affect the cost of living or their effect on business and only with affected industries.
increasing the domestic supply industrial production."
At the present time we do not
after consultation with the in¬
and to that extent ease the pres¬
It is planned that any specific dustry,
consumers
and
labor have authority or personnel to
sure on prices.
control
powers
which
may
be groups affected. In the Depart¬ make the kinds of investigations
supporting
Furthermore
there
is
a
ten¬
authorized
over
any
commodity ment of Commerce
we
have been
which would be necessary to de-
Volume
termine
166
COMMERCIAL
THE
Number 4652
&
FINANCIAL
CHRONICLE
supply on an equitable basis
voluntary program, however, can and at a fair price taken .under
be undermined by a thoughtless authority granted by the repre¬
controls would be most effective. or selfish minority. I feel, there¬ sentatives of the people in Con¬
We do, however, have sufficient fore, that the power to impose gress, is the democratic way of
information about steel to feel limited direct control of prices and dealing with an emergency.
If it
whether
be exercised
terials,
certain
controls
over
if
and
that
so
what
prevent these increases. Any such
of
benefits
and to institute consumer
wages
rationing
termine
groups
are
ap¬
propriate.
Inventory Controls
I also
in
economy.
our
believe
that
trols
authority to
inventories of
granted
scarce
ma¬
It will
authority
impose
to
now
limited
in
con¬
feel that
areas, I
greatly increase the chances
of success of a
voluntary program.
Moreover, it is essential to have
terials that basically affect indus¬
trial production or the cost of liv¬
this power now
ing would be of considerable value
the voluntary program should
in
the
anti-inflation
program.
Such controls would have two ef¬
fects.
They would help to prevent
speculative hoarding
by people
waiting for further price rises and
would thereby tend to get more
goods on the market now.
They
would also help to increase overall
production, by preventing situa¬
tions where
manufacturer has
one
to
reduce or stop his operations
because his supply of materials is
too
while another manufac¬
low,
turer
has
unnecessarily large
supply of the same materials.
an
Rationing and Price Controls
I have stated my
reasons for
urging the use of consumer credit
controls, the allocation of railroad
equipment and facilities, export
controls, and the priority and allo¬
cation powers, in order to assist
in the anti-inflation program.
I
do not want to give you the im¬
pression that these controls can be
exercised without any inconveni¬
to
ence
any
In spite of the
which can be re¬
one.
inconvenience,
duced
greatly by enlisting the
operation of the
consumer
co¬
and by
voluntary cooperation of industry
and labor, assisted and encouraged
by the government. I am firmly
convinced that these controls
make
It
be
would
failed
we
can
substantial contribution to
anti-inflation
the
if
a
to
would
and
take
into account
authorize
consumer
between
Furthermore, the administration
of
any
fail to prepare and disaster results
from
unpreparedness,
our
the President has
as
gambled with
—and
not
lost.
Such
merely
nomic
our
stated, have
national safety
of
the
repercussions
eco¬
this country;
program of controls is a
task.
We cannot fail to
take
into
for
reasons
the
account
time
same
gravely
threaten the security and peace of
the'peoples of the world.
Win. A. Titus, Jr. Now
that
You
With Wertheim & Co.
enacted
Adequate
months
it is advisable to
was
ceed
correct the
to
of
in¬
and
distribution of the
available sup¬
ply of certain essential items for
personal
maintain
to
the
necessary
ceilings.
price
In
stating my opinion that this
authority should be granted now,
I do not wish to give the impres¬
that
sion
would
I
recommend
program of overall gov¬
ernment controls of prices similar
starting
a
to that carried out
during the war.
I think that it is clear that no such
program is necessary
at the pres¬
time, and that it is equally
clear that no such program would
ent
work.
In the first place I
believe
possible now to proceed
selective basis, and to limit
that it is
a
on
controls to those items which the
average
as
family needs to live, such
food, fuel, clothing and shelter,
and
to those key areas in indus¬
trial
production where a price rise
would
ramified
have
the
second
place,
emphasis should be placed
cooperative action.
the
I
believe
that
on
of prices.
In
I believe that
level
general
the
effects
the
on
appropriate
tance
cost
inequities
in
a
in
as
the
determining
I
a
use
Wm.
A.
living
rises
well
as
in
the
serious
to
limit
re¬
such
a
nec¬
power
nounce that
has
William A. Titus, Jr.,
become
firm.
associated
Mr.
Titus
of
with
J.
the
formerly
was
F.
Young &
Co.
people,
wage
ad¬
ties
in
short
supply
which
bas¬
ically affect the cost of living or
industrial production and deter¬
mine
those
creases
in
areas
in
which
in¬
prices, both those that
have already been put into effect
and
those which
imminent,
endanger the
seem
making these
Halsey, Stuart Group
resides
will
in
mention
the
tions now, I am frank to
say
I do not like rationing, price
Halsey, Stuart & Co.
associates
reoffered
cates to the
terstate
are
the
BEEN
HAVE
CORPORA¬
THE
same
will
who
men
send
have
again
the
great
over-the-counter
public
dealers
annual
their
out
what wonderful
us
re¬
things they have
just passed.
year
confidence
of this
some¬
running
been
which
now
country which they
Commerce
payable for the coming
now
SECURITIES
BUSINESS
TAXATION
DOUBLE
of
WAS
BE A STIMULANT TO THE FORMATION
INVESTMENT
TO
AND
THE
MORE
A
AT
DE¬
THE ELIMINATION OF
WOULD >
DIVIDENDS
OF PRIVATE CAPITAL
SECURITIES
INDUSTRY
GEN¬
IN
ERAL, AND WOULD ADD IMMEASURABLY TO THE WELFARE
certifi¬
OF
THE
WANNA
ENTIRE
WILL
NATION.
THE
NASD
BE
THERE
....
BET?
Commission
They were priced to
yield from 1.40% for those matur¬
ing Dec. 15, 1948, to 2.95% for
those
maturing Dec. 15, 1962.
.
$10,000,000 equipment program
which
under
chase
25
freight
Seaboard
will
diesel engines
pur¬
change,
and 1,300
135
cars.
and
South
Kitchen &
La
Salle
Murphy,
Street,
Chi¬
the installation of
direct private wire connecting
cago, announce
a
Four Join
(Special
to
Herrick, Waddeli
The
Financial
V
For
Laird, Bissell & Meeds,
120
Broadway, New York City, mem-}'
bers of the New York Stock Ex.-'
Proceeds will be applied toward
a
s
Laird, Bissell Wire to
Kitchen & Murphy, Chicago
Profit
The
of
stoek
Preferred
$5
85-year-old New England
pany,
has
which
a
an
com¬
Braham in Butte, Mont.
LINCOLN, NEB.—John Lemly,
Newmeyer, Opal M. Pier-
Dan K.
BUTTE,
Braham is
business
MONT.
engaging in
from
106
Harold
—
a
securities
West
Street.
A.
Ganite
share.
accumulation
of
the previous ten
years
over
have
$77
averaged
a
$21.30
a
share.
While
no
dividends have been
number of years,
nine of the pasl
ten years covered
annual divi¬
dend requirements by a wide
paid
for
earnings
a
in
margin.
PRIMARY TRADING
Ten-year
the
earnings
a
in
share.
prbe 7
Descriptive analysis of this
WYOMING
special situation mailed
request
on
SECURITIES
rationing of
$4.07
Recent
IN
price 37
average
Common
BROKERS, DEALERS and BANKS
COLORADO and
.
Recent
MARKETS
FOR
Established 1929
B. E.
Simpson & Company
California Building, Denver 2, Colorado
Telephone KEystone 3101
Bell Teletype DN 157
1
dividend
Earnings
their offices.
Chlonicle)
that
and
(not too
AND DESPITE ALL THIS,
year.
NEVER
CORPORATION
ON
place again
same
approval.
the necessities of life that results
from
BY
subject. We all know
the
on
PRESSED LEVEL THAN EXISTS TODAY.
public, subject to In¬
however, that the vast
majority recognize that in
an
emergency they would want to
share those things which are in
short
supply
in
a
democratic
The form
TAXES
BEFORE
claim, is due primarily to their efforts in behalf of the industry.
THE
Inc., and
sure,
fashion.
ARE SUBJECT TO THIS SAME.
of double taxation of stock dividends
years
wage control and I know that the
I am
50*
going to be another session of Congress
will tell
recommenda¬
price increases gives a dis¬
appear
clearly to
proportionate share to those with
stability of the economy, and un¬ higher incomes at the expense of
dertake, by appeals to industry those with low'er incomes. Ration¬
and to consumers, to correct or ing of the necessities which are in
these
all
creases.
agencies of the government should great majority of the Congress and
analyze at once the existing price of the people share this feeling.
structure of those vital commodi¬
is
again the
once
port and in it they
They will
that'
money
in the securities business knows these things.
that there
hearings will be held
NASD
extra
AND ON TOP OF IT ALL
THOUGH
ONCE
SOURCE
the
with his taxes running 40,
THE DISBURSEMENT.
thing else, that
the
find
accomplished for the securities industry during the
justments through collective bar¬ sol and
Arthur H. Schmale have
gaining will be consistent with become connected
with Herrick,
productivity and will avoid an Waddeli &
Co., Inc., 55 Liberty
inflationary round of wage in¬
Street, New York City.
In
THEY
EVEN
that will take up this matter
Titus, Jr.
to
can
of the
know
and that
structure
wage
whether
be brought and held
in reasonable relationship to the
incomes
all
The investor in the higher
loss to
a
purposes
PAID
Well, everybody
We
no
conspicuously of course) and they will remind everybody that dues
limit wages. I am confident that,
as the President
said, if the cost
of
THEIR
only has
Inc., and
hope that it will not be
to
AT
at
90% of his income.
TAXATION,
not
Halsey, Stuart & Co.
change in the price ceiling.
essary
much
as
he
They will also post their salaries in the
a
increase which would
wage
quire
OF
TION MAKING
include
living
bonds,
a
over
savings in speculative securities, but he
investment
high
as
$10,000
Equip.
substantial
of
limited
as
for
save
makes
Offers Seaboard
by
authority to
limit wage increases in those in¬
dustries which would require in¬
creases
in ceiling prices.
When
any wage ceiling is contemplated,
the government should take into
account
just
who
man
rationing. This
consumer
must
the
pro¬
consumption
of
gram
is
even
PAID
stabilizing
will have
with
up
his $2,500 in taxes, higher costs, and looks
DIVIDENDS ARE
IF
Vice-President
possible.
as
well be that a program
the cost of living
to include the equitable
may
caught
pays
his
risk
to
can
developing
individual
rapidly
as
has
After he
RATE
hasty action later
when
the
only feasible
course
might be to put on the brakes
by some type of general freeze of
prices and wages and then to pro¬
equities
so
of
before
of
need
income
dwindling nest egg of government
he
associates submitted the better of
rationing on products in short authority should also be granted
now so that adequate preparations
two bids received by Seaboard Air
supply which basically affect the
can be started so that if the pro¬
Line RR. Co. Dec. 1 for $7,500,000
cost of living, the imposition of
equipment trust certificates,
maximum prices on products in gram should become necessary it of
could be put into effect with the maturing Dec. 15, 1948-62.
short supply which basically af¬
They
least possible delay.
offered
a
price of 99.262 for a
fect the cost of living or industrial
The
authority to set ceiling 2%% coupon, a net interest cost
production, and the establishment
of such wage ceilings as are essen¬ prices in fields of critical impor¬ of about 2.728%.
tial
fallen
program now rather than to risk
the
one
...
brackets
I believe that
start
made
ever
moribund
doesn't have the where-with-all to do it.
preparation
advance
Dealers
,
tax laws. I can remember many instances
organization attempted to squeeze the profit
margins of the securities dealers of this country
in fact they
are still at it. That job they are always
ready to do.
Today, all over this land, the security dealers, investment
bankers and brokers are finding it more and more difficult to in¬
terest the people in investments. Trading volume on the exchanges
desire
authorized.
makes for fairness.
a
of the
this
when
his
may
that it
and
some
the controls
of
when the National Association of Securities
Inflation
possible to make extensive
was
use
Exchange and Curb Exchange have appeared before these Congres¬
sional hearings and have stated the case for tax reduction as it
applies to the stockholder and investor. But I cannot remember
year.
Price Control Act of
nevertheless
it
present their case for sensible tax revision. During the past decade
there have been times when representatives of the New York Stock
buying presents itself.
was working in the price con¬
trol field for 20 months before the
was
months
taxation.
low it is becoming necessary to dispense with the
highly trained personnel because operating losses can
no longer be sustained. At a time when business, especially smaller
business, is in dire need of equity capital, security dealers cannot
sell new issues except in those rare instances when institutional
size
1942
of
staff of considerable
a
Emergency
matter
has
the
now.
few
the Congress will once again take up
Hearings will be held and an opportunity
presented for the leading associations in the securities industry to
the
services
slowly, but at
compelling rea¬
are
action
for
sons
recall
going
another
revision
its
would
Wertheim & Co., 120 Broadway,
organiza¬ New York City, members of the
tional problems that are involved. New York Stock Exchange, anThese difficulties are compelling
difficult
Will They Muff It Again?
In
single effort to better the lot of the investor class, or the securities
dealers of this country, by having their Executive Director attend
one
of these special hearings and plead the case for a sensible
gamble would
a
jeopardize
health
will,
we
disastrous
ill-considered
hasty,
a
law.
It
the possibility that these measures
alone may prove to be inadequate.
Further action must be considered
which
choice
delay
program.
reckless, however,
in the event that
fail
and it is necessary to impose di¬
rect
controls
promptly.
If
we
should wait too long, the Con¬
gress may well be faced with the
hard
By JOHN DUTTON
a
In recommending that
be
control
on
Securities Salesman9s Corner
turns out that the other measures
few items should which have been discussed, to¬
be granted now, if we are to make
gether with the program of volun¬
every effort to keep the price of
vital cost of living commodities tary cooperation, are effective in
inflation, the
cost
of
poses.
There are a number of within the reach of the average stopping
other materials which we believe purse and to prevent an infla¬
having been prepared will be for¬
should be studied further, to de¬ tionary spiral which will hurt all
gotten. If, on the other hand, we
of priorities
and set-asides to channel steel to
the most essential
uses, and
to
limit its use in less essential pur¬
use
whether controls
23
ma¬
kind
substantial
would result from
should
particular
(2283)
short
148
Tel.
State, St., Boston 9, Mass.
CAP. 0425
N. Y.
:
:
Teletype BS 250
Telephones: HAnover 2-7914
and WHitehall 3-9030
t
24
THE
(2284)
COMMERCIAL
ilar
position with
and
News About Banks
REVISED
CAPITALIZATIONS
Chairman if
.N. Baxter Jackson,
the Chemical Bank & Trust Com¬
of New York announced on
pany
Nov. 26 the
appointment of James
'M. Clark, Joseph F. Emmerich
and W. Brewster Winton as As¬
sistant Trust Officers in the Per¬
Trust
sonal
the
of
Department
Bank.
*
Board
of
York
meeting
a
held
Bierwirth
tions of the
New
of
New
Company
on Nov.
announced
the
of
The
of
Trustees
Trust
,York
*
*
Following
John E.
25,
the
promo¬
following members of
the clerical staff to be officers of
the
Walter
Marvin
E.
company:
Camp,
P.
Moran, and Byron B.
were
appointed Assistant
Girard
Trust
delphia,
that
Pa.
day
by
President.
effective
announced
on
James
E.
Gowan,
appointments are
The
Dec. 12 said the paper
on
indicated, which added:
"Robert E. MacDougall, Trust
officer, has been advanced to As¬
sistant
Vice-President,
while
Robert H. Wilson, John W. WoerWilliam
and
r<er
have been
G.
Odell
sistant
named
Trust
Officers.
formerly
Of¬
Assistant Corporate Trust Officer,
is
named
Assistant
Secretary.
Other
Pennock, who have been
*
John
the
T.
*
President
Madden,
Emigrant
named
Assistant Treasurers."
*
Industrial
of
Savings
Bank of New York announced
*
on
business
charitable
and
that
its
office
Madison
*
57th
at
Avenue
Through
the
Centralia, 111.
on
move
dividend
stock
a
tal
that day to Park Avenue and 57th
Street. The bank states that the
Nov.
on
$200,000 it
increased
of
its
capi¬
from
3
was
$120,000 to
noted in the Nov.
10 Bulletin of the Office of Comp¬
office, with air-con¬ troller of the Currency.
ditioning, the latest equipment,
*
*
*
and ample floor space, provides
Otto G. Wismer, President of
efficient, convenient banking
Park Avenue
service
in
ings with
comfortable
'%,
*
*
*
Announcement
the
19-story
been
office
made
building
at
291-295 Broadway, New York,
at the northwest corner of Reade
Street, is under contract of sale
by the East River Savings Bank
of New York to the International
Committee
of
Young
Men's
Christian Association. It is under¬
stood the Association intends to
the
Detroit,
«
named
Trust
has
of
Mich, has announced five promo¬
tions viz. Nelson F. Adams nvas
complete banking and
trust facilities.
that
the Bankers Trust Co.
suround-
Vice-President
a
Officer;
has
Harry
become
James
Korney
of
Assistant
cording
J.
Officers, and Herbert J.
Jr., was named to the
Goodall,
post
Officer;
John
and
promoted to Assist¬
were
ant Trust
and
Millard
A.
Trust
a
Leenhouts
to
Treasurer,
the
Detroit
ac¬
"Free
Press" of Nov. 27.
Hi
%
quarters. The East River Savings
An increase in the capital of the
First
National
Bank
in
Grand
Bank will continue
Forks,
use
building
its
as
to
head¬
its
occupy
Neb.
from
$225,000
to
stock dividend
banking quarters under the terms $300,000, through a
of a lease entered into simulta¬ of $75,000 was made known re¬
neously with the sale of the office cently by the office of the Comp¬
building. Its branch at this loca¬ troller of the Currency. The in¬
tion, known as the Broadway Of¬ crease became effective Oct. 31.
fice,
the
was
established in 1911 when
building
erected and
was
was
the main office of the bank until
1935 when the executive offices
were
moved
to
its
building
new
at 26 Cortlandt.
*
*
*
In
the
the
First
National
Bank
of
election
Federal
of
directors
Reserve
of
Bank,
The
*
Bank
of
of
the
Boatmen's
St.
elected
Louis,
by
native
associated with the
was
Bank
Hatties¬
of
Correspondent Bank
became
He
of
ager
when
man¬
A
Bank
of
called
the
of the lat-
National
Mo.,
member
was
re¬
banks
in
Election
of
Robert
bridge and
Wilfred
the
of
Board
E.
Directors
Philadelphia
National
Philadelphia,
Pa.
has
Straw-
Gillen
D.
of
to
The
Bank
been
of
an¬
class B
banks
Each
Chairman of the Board of Straw-
bridge & Clothier, takes the place
on
the bank's board of the late
Morris L. Clothier, who died
Sept.
8. Mr. Gillen is Vice-President in
charge of operations of the Bell
Telephone Company of Pennsyl¬
vania
and
Diamond
State
Tele¬
of
Russell
Chairman
was
three years
nounced
by Frederic A. Potts,
President. Mr. Strawbridge,
Group 3
as
director, according to
nouncement
mont,
in
of
chosen
L.
the
for
a
a
an¬
term
of
beginning Jan. 1, 1948.
*
Hi
Hi
*
of
share¬
Republic National
has been
Texas
idated
Mining and Smelting Com¬
pany of Canada, Ltd., was elected
a
director of the bank following
the annual meeting.
Mr. Ball has
of
following
the
Unanimous
of
ap¬
approval
by the stockholders is expected.
"The
proposal,"
Mr.
Florence
pointed out, "will increase the
capital stock of the bank from
$10,000,000 to $12,000,000 and the
surplus from $10,000,000 to $12,000,000." An additional $1,000,000
transferred
from
un¬
divided profits account to surplus,
making total
surplus $13,000,000.
Mr. Florence explained that 100,000 additional shares of stock will
be
issued
and
offered
ratably to
the present shareholders
at $40 a
board
of
directors
of
Bank
*
Collier
has
been
Vice-President and
Executive
Committes
of
both
companies.
charge
of
respondent
that
institution's
Bank
Cor¬
Department,
Norfleet Turner, the First National
The Philadelphia "Evening Bul¬
letin" of Nov. 24 reported that 9
President, has announced. He suc¬
ceeds Cliff Wood, who is resigning
personnel promotions at the as Vice-President to accept a sim¬
three
past
years; just past his fiftieth year,
the
General Manager of Can¬
bank began his ca¬
new
was
Texas,
effective
on
a
named
director of
P.
12
senior
33-years
reer
the
at
ago
bank's
as
New
From New York he
treal
as
were
York
later
the
taxes
ab¬
at the rate of 10% absorbed
enlarged when he
title of
eral
To
created
total
creased
over
mercial
loans
Canada
was
and
the
made
Gen¬
newly-
Executive
of
post
A
office.
bank, with the
Vice-President
Manager.
000.
General
responsibilities
his
The
Vice-
a
$17,106,000.
and
aggregating
increase of
an
in
$127,584,000,'
record total for the
sent
Com¬
discounts
bank,
over
repre¬
$38,000,-
000 for the year while dominion
and provincial Government secu¬
rities
have
000,000.
decreased
Cash
represent
over
over
$30,$64,331,000
assets
19% of public lia¬
bilities and
immediately available
assets
of
$211,621 are approxi¬
mately 64% of total liabilities to
the public. Total assets now ex¬
ceed $360,000,000, the highest ever
published in the history of the
bank.
held
The annual meeting will be
in
Toronto
on
Dec
10.
Inilationaiy Bond Standard
Nov. 15,
❖
exports at the monthly
rate of some $1V2 billion could not
be maintained. Moreover, domes¬
tic
resistance
was
sup¬
posed to develop because the
pur¬
consumer
chasing power would "run out"'
pretty soon.
Production was to
"catch up" with and to overtake
the
demand.
And
anyhow, the
boom
bust
must
"unsound."
—
because
it
is
If
prices depended on
vagaries of "psychology"
the
by banks, to cover a national def¬
icit.
Evidently, there could be
no fiat money inflation when the
national budget is balanced; in the
United
States, it even yields a
surplus at present. (For how long,
is another question.)
Inflation of
a self-inflaming or run-away type
never
occurred
before
except
under fiat money which is out of
the question at present, leaving
us with the only other alternative
rather than
of
of
—gold—standard,
on the tangible forces
supply and demand, the United
conviction
we
are
is
still
prevalent
in the first half of
a
the
that
of it.
Complex
makes
*
think
in
for
of San Francisco is announced by
M. Giannini, President.
from the bank's
and e10
tellers
will
Japanese
complete
the staff for the first few months.
-
people
thing, the fact that
one
are
still
many
"obsessed
with
complex—a
of
an
hang¬
from the thirties," as the Lon¬
don "Time and Tide" puts it, with
over
reference
to
economists,
as
Britain.
and such
Lippmann
Walter
(Keynesian
dilettantes
and Leon
Henderson, consider depression
the
natural
state
of
best suited for their
as
capitalism,
own
political
propensities.) And most people do
not comprehend the nature of the
monetary
their
set-up
under
hard
money
or some
variety
Under the rule of
the
gold, the
system has to adjust itself
gold reserve.
Credit ex¬
must come to an " end
when the credit volume has out¬
pansion
grown,
or grown
close to, the
limit
set
by a legal mimimum
ratio of gold to central bank
lia¬
bilities.
ex¬
Sooner
or
later, the
panded volume of money must
contract, and the price inflation
must break. This is, in a nutshell,;
the
famous
self-adjusting auto¬
matism of the gold standard, that
is
supposed
the past.
in
tation of
an
to operate as
If it did, the
it did
expec¬
automatic reversal of
the boom would be fully justified.
Our Monetary
it
But
System
not
operate
any
The United States is not
longer.
back
does
to
except for certain;
A new kind of
emerged. Its base is
gold in part only; credit can and
must expand far beyond any pro¬
portion to the metallic base that
limited
gold,
purposes.
standard has
Obsessed With Anti-Deflation
What
the
textbook:
typir
—
Mr. Gar¬
*
*
(Continued from first page)»
that
was
Opening of a branch in Tokyo,
Japan, by the Bank of America anti-deflation
and
government
to Mon¬
came
such boom-and-bust terms is,
branch,
for
a
Assistant
an
director of the
them
clerks
invest¬
Profits
$1,254,757; depreciation on
premises, $214,766; dividends
bank
B.
rett said.
:!:
consequent
$700,$271,678 was carried
junior at forward to profit and loss account
Mr. Gardner, now .increasing it to $1,632,413, from
Perth, Ont.
Executive Vice-President of the which
$1,000,000 was transferred
bank, has just completed a two- to the bank's reserve fund which
year term as President of the Can¬ now stands at
$10,000,000, over a
adian Bankers' Association.
Like
paid-up
capital
of
$7,000,000.
Mr. Ball, he was once first agent Total
deposits of $323,277,000 in¬
ada's
cal
boom-and-bust
cycle, even
Garrett, though the date of the second
President, has announced. Accord¬ phase is being postponed to '48 or
ing to the Dallas "News," the ap¬ '49
with
the
wholesale
index
pointment of Mr. Collier, who has then to settle at 140 or so J
Dallas,
a
bank's
were
the Texas Bank & Trust Company
of
the
with
credit
H.
with
in
$2,441,201, compared
$2,225,045 for the previous
months' period. Dominion and
year
to
Manila
phone Company, and a member the First National Bank of Mem¬
of the Boards of Directors and
phis, Tenn., has been placed in
the
thereby providing $4,000,- States would be in the throes of a
that amount, $2,000,000 serious recession, instead of reach¬
allocated to new capital ing new highs of business activity
stock, and $2,000,000 will be al¬ this fall.
located to surplus. "This, he said
At stake is an unprecedented
"will provide the bank with a paid
boom, its duration and prospects.
up capital and surplus of $25,000,- Were the bearish forecasts mal000 as compared with its present timed
only? Is America heading
$20,000,000." The Republic pres¬ automatically for a "May, 1920," if
ently
has
outstanding
500,000 only a delayed one, with a sudden
shares of common stock with a break in
propped up prices and
par value of $20 each. The new an upsurge of unemployment? Or
plan would give the bank a total will the boom peter out, with or
of 600,000 shares of $20 par value, without a mild recession
(what¬
with book value in excess of $45 ever that
means), giving way to
per share.
the famous "high plateau" of pros¬
*
•'/
*
perity at stabilized prices?
The
R.
loans
portfolio.
Of
the
Denham, Vice-President of
ment
be
been transferred
*
Joe
mercial
reduction
000.
and
Trust Officer.
position, substantially higher de-.
posits, a marked increase in com¬
sorbed
for
agency
share,
Y. J.j
Johnson, a veteran of Far Eastern
banking, is manager of the new?
Trust Co. of St. Louis on Nov. 6 branch.
He is assisted by Assist¬
appointed George F. Torrey as ant Cashier Leonard Link, for¬
Trust Officer of the bank.
Mr. merly of San Francisco. Winthrop
Torrey was formerly Associate E. Davis, American Teller, has
The
showing results of the bank's >
operations for the year ended Oct.
31, 1947, indicates a strong cash
will
a
of
ers,
York
stockholders and
be
statement
special meeting
a
directors.
given by the board to
the resolution calling the meeting
will
annual
was
was
the
77th
Dominion
Bank,
Toronto,
Canada, just issued to sharehold¬
provincial
Dec.
announcement
The
The
been head of the institution's New
to
proval
L.
Mercantile-Commerce
Vice-
8, to vote on a
President,
Mr.
Gardner brings
increase the capital
and surplus of the bank to $25,- outstanding experience in the va¬
000,000, Fred F. Florence, Presi¬ rious fields of the bank's opera¬
dent, announced on Nov. 25. Mr. tions.
proposal
DearBoard.
Executive
becomes
President,
was
announced
by
George W. Spinney, President of
the bank, following its 130th an¬
nual meeting on Dec. 1.
R. Ewart
Stavert, President of the Consol¬
Farmingdale, N. Y., increased its Group 1 as a class A
director, and
capital on Nov. 4 from $100,000 to Louis
Ruthenburg, President and been in Dallas 25 years as Chief
$200,000 by a stock dividend of General
Manager, Servel, Inc., National Bank Examiner of the
£>100,000.
Evansville, Ind., was re-elected by Eleventh Federal Reserve District,
*
*
*
member
of Gordon R.
general manager of the
Montreal, at Montreal,
Canada, succeeding B. C. Gardner,
who
a
meeting
Dallas,
for
of
years
Department
entered
*
the
of
as
Bank
time
the
special
The appointment
Ball
1942 and became
ter's transfer to the Correspondent
holders
Thursday, December 4, 1947
Manager at the head office, a po¬
sition he held until 1942, when he
became
general manager.
Two
Denham
at
acting
Bond
the
Mr.
armed forces in
manager
with the bank
made
was
Depart¬
Mr. Davis
1944.
associated
in 1928.
St.
Louis, which ended on Nov. 18,
Tom K. Smith, Chairman of the
Board
*
*
a
Miss., and a son of
Denham, who for
K.
ment since June,
made
*
*
$80,000, the City National Bank of
and
Street
would
years
He is
1932.
J.
Florence's
if
The Bankers Trust Company of
York announced on Dec. 1
20
The Washington National Bank
Bulletin of the Comptroller of
New
late
the
*
Currency.
>:s
the bank in
of Hattiesburg,
Bank Department.
$50,Nov. 24 that Raymond H. Reiss 000
was
placed
in
voluntary
has been elected to the Board of
liquidation effective Nov. 3 hav¬
Trustees. Mr. Reiss is Vice-Presi¬
ing been absorbed by the Citizens
dent of the Reiss Manufacturing National
Bank
of
Washington,
Corp.
He
is
also
director
of Pa. it is learned from the Nov. 10
several
of
*
*
of Burgcttstown, Pa.; capital
organizations.
himself a former manager
the Bond Department, came to
He has been connected with
lard and Edwin D. Roll were ap¬
William G. Ful-
and
Mr. Den¬
eral banking operations.
ham,
National
pointed Assistant Secretaries.
Treasurers,
First National to transit and gen¬
First
promotions anounced are:
Raymond J. Euler, from Credit
Manager to Assistant Treasurer,
and Otto S. Bauer and Ralph B.
Porter
with the
burg.
Williams,
R.
in
As¬
Investments
Herbert
commercial
devoted more
equally qualified
banking,
having
than half of his 20 years
Officer,
Investment
Trust
and
Blackmail
Trust
Fletcher,
becomes
ficer,
F.
duties. Joe H.Davis,
new
a
tory. An outstanding executive in
the securities field, Mr. Davis is
Company of Phila¬
were
Dallas bank
Memphis
a
leave
Vice-President, and former
manager of the bank's Bond De¬
partment, has been promoted to
the post formerly held by. Mr.
Denham and will represent the
bank in its correspondent terri¬
Bankers
and
OFFICERS, ETC.
his
sume
also
STEW
will
who
CHRONICLE
around the first of the year to as¬
CONSOLIDATIONS
*EW BRANCHES
FINANCIAL
&
which
country
labors.
It
is
a
unique set-up, with no precedent
in practical experience or in the
has ceased to function
as
the ulti¬
mate
regulator of money supply.
Of course, if gold flows in—it does
so
at the annual rate of almost
$2
billion—it enlarges the monetary
foundation on which the house of
bank
deposits rests. But the point
a gold outflow need not re¬
is that
duce the
the
base,
as
the Chairman of
Federal Reserve Board made
clear
to
a
Congressional
mittee, and certainly
bring down the house
Com¬
does not
of paper.
Decline of the actual gold reserve
ratio near to or below the legal
limit
does
not
affect
longer
potential;
Building but, for the time being,
gold reserve requirement is
mail communications are to be> books.
simply being reduced, as it was
addressed as follows: Tokyo Of¬
The
textbooks
of
economics reduced last year (to 25%).
A
fice, Bank of America, A. P. O. know of two kinds of inflation substantial gold loss, if it should
500, c/o Postmaster, San Fran¬ only. One is fiat money, "print¬ occur, would merely compel the'
cisco, Calif.
ed" by the note-press or created commercial banks to hand over an
The branch is located in the Yaesu
any
the central bank's credit
the
Volume 166
Number 4652
THE COMMERCIAL
FINANCIAL CHRONICLE
&
(2285)
yr-r-1"
equivalent amount of bonds to the
Reserve
banks.
The
American
credit system does riot
depend any
•'longer On gold movements, not by
long shot. The "automatism" of
gold affects the system in one di¬
rection only—in the
inflationary
a
direction.
is
Presently, the monetary system
different
from
anything we
works One way only
— upward—
Tbrings about reduction of output—
self-correcting adjustment Oven oh the farm—and the i price
downward.
The question is not is restored pretty Soon to the in¬
whether the process will continue flated
level, "as
happened last
(unless the bond standard itself is summer along numerous "soit"
with
no
abandoned, as we shall see pres¬
ently), but how fast will it pro¬
goods lines.
with domestic
shortages in steelfreight
cars,
specialized
equipment, and construction facil¬
ities, plus international shortage
of and pent-up demand for almost
scrap,
extend
credit
recklessly.
How
they extend and how fast, i
depends on the availability of as¬
sets on which they can loan. As
all basic commodities
open up
pansion. On top of that, a new and prices rise, more eligible collateral
mOre bottlenecks.
One shortage
far more dangerous inflation-po¬ becomes
available, and the value enhances the other; as one is
tential has been created, one that of the old
rises, too. Therefore, healed, another breaks out. Infla¬
is not self-corrective.
This new the inflationary
process tends to tion, if left
alone, progresses as
set-up deserves a name of its own. accelerate itself: the more prices
long as the fundamental bottle¬
-Let us call it the bond (or debt)
rise, the more the banks are able neck
persists. But the (skilled)
standard.
Its essential feature is and inclined to
give fresh credits, labor
bottleneck, for one, hitist
the automatic monetization of the
using a proportionate fraction Of grOW Worse as the inflation
prog¬
national debt.
Federal bonds in their short-term
government port¬ resses. The remarkable
thing is
bank portfolios can be sold, and folios to
replenish their legal re¬ hot that
prices rise; the remark¬
are
being sold gradually to the serves. Left to itself, this self-in¬
able thing is that they are not ris¬
Federal Reserve System against
flaming process of bond monetiza¬ ing faster than
they do.
legal tender or its equivalent. tion would lead into a run-away
In final analysis, the price boom
Bonds held by the public may be inflation.
rests on the consumer's willingSold to the banks or redeemed; in
ness to spend. But American con¬
The Self-Inflaming Inflation
either case, they would be mone¬
have known in the past. It takes
in gold, and enough of it comes in
to sustain a man-sized credit ex¬
much
—
•
requirements
New
York
from
and
20 to
ed" demand
far
as
ing
for
the
big
Chicago banks
of their "adjust¬
26%
deposits, which is
as
the Reserve System's power
reaches at
Ihe labor bottleneck, combined
ceed and how far will it go? Need¬
less
to
say,
the banks do riot
serve
Ruckdeschel, Monroe S
With
Boenning & Go.
PHILADELPHIA,
present, and by freez¬
amount
an
short-term
of
25
PA. —Boen¬
ning & Co.,
bonds equal to 50 % of' all demand
1606
deposits in commercial banks, as
is
being
discussed
at
present.
Street,
mem¬
bers
rif
Such measures would reduce
Philadel¬
lending
of
power
the
the
banks,
phia
of
not
sufficiently to
cause more than a
temporary dis¬
turbance.
There would be enough
bonds
left
continue
in
over
the
the
banks
the
Stock
Exchange,
but
course,
Walnut
an¬
-that
nounce
John K. Ruck¬
deschel is
to
debt-monetization;
now
ssociated
a
also, gold imports and the back-
with
flow of currency from circulation
trading de¬
partment, and
might keep refilling the
of
the
market.
money
reserves
All
John
that
their
J.
Mon¬
with
might, and probably would hap¬
roe
pen, is a stiffening of the inter¬
est rate on commercial loans—not
retail
ment.
John K. Ruckdeschel
the
depart¬
Mr.
■
•
enough to
credit.
Given
reservoir,
Ru ckde
stifle the demand for
the
vast
black
-even
markets in loans
liquidity
or
gray
schel
-
formerly with Stroud
Co., Inc. for many years.
&
was
might develop.
.
tized,
True,
serve
not go on
too, since the Federal ReSystem
would
hold
the
money-bag. In addition, billions
.
■
of cash
<
"in circulation" which
not circulate
•
do
yet; demand de¬
as
posits not used so far; savings de¬
posits still dormant — largely
previous debt-monetizations
they
all
may
be
brought into active use and in¬
products of
•
—
the
crease
inflationary
pressure on
prices.
'We have financed the war by
building up a $200-odd billion
liquidity-reservoir.
Now,
the
'monetary chickens
are
"coming
•
•
•
•
home to
The
roost.
liquidity-po-
teritial turns into actual inflation.
And this is not
matter of acci¬
a
dent that may or may
Debt-monetization
is
'
not happen.
"auto¬
as
matic"—i.e., rationally predictable
—as is the monetization of gold.
On the one hand, it is to the in¬
terest of the banks to utilize their
Lbond portfolios, and of the public
to use its liquid holdings. ? On the
oth'er
•
hand,
the
Reserve- Banks
must make good on the debt cer¬
!
tificates; their refusal to do so
depreciate the bonds and
cause
a
financial
catastrophe.
Thus, while the holders of bonds,
would
especially
the
:
most
of pri-
banks
can.
bonds
so
held
as
by
corii-
to
put
on
the
maintain their "sec¬
(i.e., by the printing
the
latter is under an
equally potent
of public
interest to maintain the par value
of the government paper on which
entire
pressure
financial
the nation rests.
of
whole cannot "lag" behind prices,
since they are two aspects of the
sarnie
thing. Demand being sus¬
tained by more and more money,
inflation
tends
in
course
to
run
its
cumulative
a
fatal
fashion.
Demand may shift or may be held
back for a while, of course, caus¬
ing temporary set-backs, as hap¬
pened in April, '47, and is likely
to happen again.
But such set¬
backs
do
not
affect
trend. At best,
Less
by
demand
one
they
general
delay it.
product, or
of buyers, is com¬
for
group
the
can
one
pensated by more purchasers else¬
as
Board
has learned by this
after the heydays of the
pocket - owes - it - to - the -
serve
time,
"one
of
-
other"
theory
-
which
in
himself.
dulged
Of
where.
its
Moreover, inflation feeds
own
momentum:
rising costs
prices call for expansion of
plants and substitution of ma¬
chines
for
create
labor,
which
in
turn
demand for labor and
more
materials (and for credit), raising
prices and costs further, etc.
curse
over-expanded
national
the Chairman of the Re¬
an
debt,
structure
That is the
he
in¬
Under
the
Law
of
Diminishing
Returns
Once under way, the inflation of
profits and farm incomes
provides the incentive to extend
production to the limits of plant
wages,
but
capacity—to the point of creating
"shortages."
Bottlenecks
arise
the two pockets are not owned by
the identical people, a "little" fact
when the supply of one or several
basic elements cannot be increased
of vast consequences.
age"
further, or only at the cost of rais¬
ing their prices disproportionate¬
ly. A Full Employment Economy
may
operates under the Law of Dimin¬
pocket
owes
course,
one
it to the other,
It may not be difficult to "man¬
a national debt, large as it
be in the sense of replacing
maturities, and to carry the inter¬
est
burden.
The
trouble
is
that
ishing Returns, which means ris¬
ing costs per unit of output.
the
debt approaches astro¬
Labor, at least skilled labor,
dimensions, much of it constitutes the fundamental bot¬
can
only be placed with banks tleneck. Higher wages cannot at¬
and other liquidity-minded hold¬ tract more workers than are avail¬
ers
who would not keep it if it able.
Once Full Employment is
were not for the liquidation possireached, additional workers can
bility guaranteed at par. In other only be engaged by one producer
words, the market for the bonds at the detriment of another. Wages
once
nomical
•
is
in
the
Central
Bank;
without
must
its support
•'
ber of hours
nancial
;
increase, but no increase can
greatly enhance either the num¬
would
'
efficiency of its
higher wages go
— at
par — the market
break, bringing about a
general liquidation. Once the fi¬
institutions
are
loaded
with low interest yielding government paper, its value must be
maintained
with
■
reduced
•
fall
set free
tent
that
as
them
to
search
for
outlets
at
a
"
higher
i
;
1
return
—
to
monetize
the
debt.
,
structure of this self-perpetuat-
off
hand
hours
does
at
ing
system
vicious
that
progress.
would
Its
curb
its
automatism
hoard
cash
more
except
during
war
or
depression, as shown by the
a
current 'decline
and
partly
point, but labor
end, if and when
is absorbed at an¬
simply bides its time. So
or
in
fresh
liquid
products
duce"
reality,
not
inflation
an
holding; and
consonant
with
is
excess
a
of
less
of
liquid
more Of the pre¬
as
national
permit its continued
we
at
even
mone¬
slowed-down
a
rate, the price
structure will be
inflated to the point at Which the
of five lines of pol¬
means one
icy,
their piecemeal combina¬
(a) eliminating the inflam¬
or
tion:
mable
substance, i.e., raising taxes
"sky-high," and using the pro¬
ceeds to reduce
the national debt
ities and other "substance" values.?'
In
other
words,
continued infla¬
tion leads into run-away inflation.
But if we stop the process effec¬
Presently, the virtually contin¬
uous rise of prices, and the threat
of fresh wage hikes, have aroused
meriibCtfs
the
of
New
York
and
causes
in turn more which bears their name. A son,
Stopping inflation re¬ Walter K. Barnes, until recently
duces
the
employment volume, the active head of the business,
throwing millions on the street. joined the firm in 1910. Another
That is the crucial problem We are son of the founder, T. Ellis Barnes,
facing, the choice between keep¬ became a partner in 1925.
The
firm's
the
gold influx and the debtmonetization got under way.
But
new
that
of
the
was
time when
depression
the fear
still
was
at
its
bring the
money
flow into balance with the flow of
goods and services.
time,
a
keep
In the
mean¬
serious price-inflation will
upsetting the balance of
American
threaten
world's
and
economy,
the
whole
Barnes.
with
economic
function
if
financial
structure
its
The
inter¬
center,
of
the
the
United
States, is stricken with inflation¬
ary
ex¬
Prior
to
association
his
the
set himself to the task of compil¬
ing such records, thus developing
an
ever-increasing list of potential
security buyers.
Since last February, when Wal¬
ter
Barnes
health,
retired because
business
the
has
of
ill
been
managed by his daughter, Ann M.
Barnes, who "dropped in
one
day"
shortly after her graduation from
Rosemont College in 1933. She in¬
herited
her
father's
and
her
grandfather's zest for the business,
even
the
to
the extent of
conducting
periodic auctions.
Now With Milwaukee Co.
(Special
to
The
Chronicle)
Financial
WAUKESHA, WIS.—James A.
Boggis is now with The Mil¬
waukee
Company of
207
East
Michigan Street. He was previous¬
ly with Loewi & Co.
will
system cannot
very
success
firm, no records were
kept of the unsuccessful bids made
for securities sold at auction. He
western
equilibrium.
national
unique
tending over many years was due
largely to the efforts of Walter K.
in the second half of 1945—before
will be needed to
supply, at
the risk of an international panic;
(e) withdrawing the Federal Re¬
serve support to the bond market
and letting interest rates rise by
refusing to buy bonds with fresh
money, at the risk of a domestic
panic. In any case, it will take a
painful deflation to stop the in¬
flationary trend and to reverse it.
business ris the Barries & Ldfland
Division of Jenks, Kirkland & Co.,
inflation.
commodities
short
firm would henceforth conduct its
flation rind
at a rapid rate, such as by $10 to
$20 billion annually; (b) stopping
further
debt
monetization
by
freezing the bonds in bank (and
other) portfolios, or by drastically
restricting the expansion of bank
credit;
(c)
"neutralizing"
the
gold reserve, at least the new ac¬
cruals to it; (d) compressing to a
minimum the export of essential
in
securities auction house of Barries
Philadelphia Stock Exchanges and
tively, then the present level of
of the New York Curb Exchange.
employment or anything approxi¬
In 1892, John H. Barnes and
mating it cannot be maintained.
Full employment results from in¬ John Lofland organized the "firm
pathological best. The longer the
naive belief persists that the dol¬
lar's
purchasing power can be
straightened out by
restricting
and policing the markets (thus re¬
ducing the flow of supplies and
raising prices) or by straining our
productive forces beyond their
true capacity (thus inviting new
money-creation and also raising
costs), the more drastic measures
-
9
PHILADELPHIA, PA.—A hew
chapter in the history of the old
expectation
of
further
rising & Lofland was started
last month
prides will bring abbtit rill riiritihd
with the announcement that the
"hedging," a rush into commdd-
ing the machine blazing at fullemployment pace and with costs
and prices rising, or putting on
or (what is the
same) the circula¬ (the brakes at the risk of
conjur¬
tion
velocity of
the
available ing up a depression.
Sooner or
money volume accelerates, offset¬
later we must pay that
price; it
ting on the demand side any im¬ will be the
higher the longer we
provement of the supply situation.
postpone it. Needless to say. that
at this juncture the mood of the
Deflation?
American people would not per¬
There is only one way to stop a mit the abandonment of the infla¬
self-inflaming monetary process: tionary Full Employment.
The time to stabilize the Amer¬
by an effective deflation that ex¬
tinguishes the fire.
In practice, ican cost and price structure was
this
Merges With
debt.
credit flows into the pocketbooks,
With Coburn & Co.
(Special
to The
Chronicle)
P.
Henderson has joined the staff of
William
H.
Devonshire
convulsions.
Financial
BOSTON, MASS.—Warwick
Coburn
&
Co.,
68
Street.
sufficient inflation-fear to call for
action.
But
the
plated by the
far
are
actions
contem¬
Administration
With G. Brashears & Co.
so
(Special
either of the kind that does
not deserve consideration in
LOS
earn¬
to
The
Financial
ANGELES,
CALIF.
best
controls and
ma¬
allocations, which would at
canalize
chasing
the
excessive
—
before Nov. 1.
production
lem be solved
Nor can the prob¬
by raising the re¬
BOSTON,
Jacoby is
MASS.
now
H. Goddard &
Chronicle)
—
Chas.
,,
W.
connected with J.
Co., 85 Devonshire
Street.
Angeles Stock
Exchange.
Two With Kean, Taylor
pur¬
without reducing
it.
Or they would be "drops in
the bucket," even if big drops,
such as restoring the mild con¬
sumer credit regulations in force
power,
"out-pro¬
mirage. In
members of the Los
J. H. Goddard Co. Adds
(Special to The Financial
Chronicle)
est, such as clamping down on Waldo E. Finnoff has been added
"speculators" through higher mar¬ to the staff of G. Brashears &
gin requirements, and reinstating Company, 510 South Spring Street,
war-time price
The idea to
as
viously accumulated liquidity goes
begging for goods. And as pro¬
duction increases (if it does), new
terial
is
their costs.
in circulation;
the income is put away for
policy is
dilemma,
of having created
astronomical
an
tization
mOney
Barnes & Lofland
economic
the consequence
If
of the average consumer must rise
as more bank loans
bring more
Crucial Problem
beset by a fundamental
low levels in comparison to paidout incomes. By and large, we use
one
the entrepreneur, and even
farmer, if the price of their
The
American
holdings of the public to record
some
at
'
-
Indeed,
in hand
occurs,
other,
the
There is nothing in the nature
or
work.
with reduced per-man-hour
labor efforts.
True, demand may
at par, while the low
interest rates on that paper reduce
earnings to such an exto stimulate, if not compel,
labor puts in or the
even
the banks'
<
needed,
in
not
similar liquidity than actually
ondary liquidity" position.
But
the Triilk Of our purchasing pbwer
given the average 20% or a simi¬
for consumers' goods, or lend it to
lar legal reserve requirement for
producers.
We may concentrate
demand deposits, monetization to
our
spending on semi-durables
the tune of another $10 or $20 bil¬
One year, On automobiles the next.
lion would suffice to over-inflate
We
may
then
spend
on
new
the credit volume and send prices
homes, on new furniture, on grand
sky-high.
pianos, or on trips aboard — by
Under such conditions, no short¬
which time we may have to buy
age of purchasing power can oc¬ new shirts
again. Human demand
cur
to
reduce the demand
for is insatiable if it
is bolstered by
goods.
Individual incomes as a the wherewithal. 'But the income
and
bank
do
sumers
or
as
liquidated, the
are
have
may
brakes
could
fiat money
LOrig before the $70-
billion
odd
tral
the
•
under
are
endlessly,
mercial banks
on
press),
•
banks,
creation
vate interest to take advantage of
the market-support by the cen-
■
•
the
potent pressure
debt-monetization
Kean, Taylor & Co., 14 Wall
New York City, members
Joins J. A. Hogle Co. Staff Street,
■
(Special
LOS
to
The
Financial
Chronicle)
of the New York Stock
Exchange,
announce that Robert W. Kean, Jr.
CALIF.
—
has become and Charles J. Waldmann, Jr.
affiliated with J. A. Hogle & Co., have become associated with the
Reginald
ANGELES,
A.
Powell
507 West Sixth Street.
firm
as
registered representatives.
»?;■»» ' » » ■^:l* «*««■*»'1 'M »''»"' '»«■ -/*»-
26
't
COMMERCIAL
THE
(2286)
&'■
r.
I
ments in the
evident enough that there are a good many other materials "in short supply" which, according to Washington
authorities, must be dealt with in a similar manner.
j
;
Of
no
one
the official list of "essential"
moment that
drastic
one
need doubt for
system of allocation is restored many
uses will be discovered, with the result
once a
other nonessential
that
No
uses.
alterations
economy and through
undertaken.
All this,
in
the
of
the
flow
of
materials
into
the
to the consumer will be
is part and parcel of the
economy
course,
managed economy idea which as always rests upon the
implicit assumption that some small group of politicians
somewhere knows what is best for the
people far better than
the people themselves know.
contemplate?
Of course not.
Whether we like it or not it is the very basis of the economic
system which has made us the envy of the world.
If the
poor man is "entitled" to as much at least of the so-called
necessaries (a term which nowadays includes a great deal)
as the more successful man, and if the more successful man
is obligated to deny himself in order that his less well
situated neighbor may have what is his "due"
(according to
many current standards), then why should anyone exert
himself to the uttermost to "get ahead" in the world?
And
if a substantial minority do not exhibit this ambition and
energy, may we not expect a sharp slowing down in the rate
of economic progress?
Should we not be in danger, as a
matter of fact, if the process is carried far
enough, of caus¬
ing all progress to cease altogether? -
is the fact that almost
progress
ability in
are
some
other
places, that production in most lines is now at a
practical maximum, that higher prices could not in the
nature of the case raise the volume of output, and hence
such higher prices could
perform no useful function.
i
nonsense
is this?
of
duction in
number of lines immediately.
some branches no greater
a
It is
possible that in
would result
be that in
a
even
in the
longer
number of instances
is warranted
the
on
basis
run
no
of time.
It
But what of it?
Nearly
prospective
every one appears to
gotten that prices have other functions in
Rarely do
-economy.
realization
limit
of
demand
from
one
rium
or
in
a
direction
Is
Persians
have for¬
normal free
longer see evidence of any broad
prices in a free marketplace
natural way, and
quite often divert it
to another, thus
promoting that equilib¬
we
fact
that
"balance" about which
circles.
prices?
the
a
there, for example,
which entitles
all
so
much is heard in official
any
comers
law of the Medes and
to
fuel
oil
at
increased
toward
gov¬
functions, the effective¬
in attain¬
special interests.
Of
even
that deep depression would bring
another world war.
demand.
current
Or gasoline?
Certainly it Would be better to
plan ahead with perspective for
action in
recession than to wait
a
until one is upon us and then be
stampeded into poorly developed
expedients. Compensatory action
is
better than
The
plan for action.
no
"full-employment"
cates hold this truth to be
advo¬
so
much
important than the need for
flexibility that, by comparison-,
they feel the latter can be ignored.
more
And yet, as indicated above, ana¬
lysts
generally
there
is
little
recession
will
that
recognize
likelihood
be
that
all
avoided
by the
measures which can gain approval
in America. This being true, we
are, after all, committed to enough
Or heating oils?
If so, it must also
assume
responsibility for vastly increased supplies within variation to permit flexible re¬
the coming years.
Demand for these things today is in very adjustment.
The single aim of compensatory
large part a result of consumers turning from other equip¬
ment to devices
now
requiring such fuels. If price relationships
existing continue indefinitely it would appear little less
than certain that demand for the oils will
more
or
less per
manently exceed supply.
It would appear to us that, con
.sidered broadly, the
prices of oil products are in general not
too high, but too
low, in relation to coal.
Let that mal
adjustment be corrected, and we should have an end to this
eternal
shortage of oil products. And we
likely to be permanently rid of it until some
ment relieves
are
such
not
very
develop
us.
adjustment is to offset declines in
private expenditure.
Maladjust¬
ments are disregarded. If, for in¬
stance, prices should get out of
line
in
action
prosperity,
compensatory
impede re¬
action would be
would tend
adjustment,
for
to
taken to maintain
activity insofar
as possible
without regard to its
effect on prices.
Compensatory Action
The
The Role of Prices
fine, through the century and half during which we
have grown to
greatness, prices, particularly the relation of
one
price to another, have been the most effective, indeed
for most time the
such emergency exists at the present time.
naturally are well aware of the popular reply
to such suggestions as this.
It is that such rationing
makes it possible for the well-to-do to have what
they
want
and
obvious to
denies
us
the
poor
man
his due.
While
it
is
that this -poor man's due" idea is
vastly
overworked, almost criminally overworked in current
discussions, there can be no question that this type of
reasons
of the movement
than
as
for thinking
trend rather
long cycle. To the busi¬
a
nessman
as a
decline
a
projected
beyond
be
must
that
temporary
a
business-cycle recession is indis¬
tinguishable from the fundamental
movement. By necessity the sec¬
ondary
trend
establishes ' the
of
compensatory
spending may not be lightly dis¬
regarded. Private and government
spending
tends
in
to
pointed
which
prosperity
mak^
to
with
prices
rise
disfavor.
stance, would much better
must gear
his operations. The
deep depression are
equipment up
would be
nec¬
if the
country's resources
were
employed effectively, be¬
cause of the great uncertainty re¬
garding
the
movement
of the
secondary
trend.
The
general
change in the rate of activity re¬
quired to make effective use of
may be designated the
primary or secular trend. The
secondary
trend
drifts
indefi¬
nitely away from the primary
trend. It is visionary to plan fu¬
resources
contraction
and
are
of
public works
great.
The action which
quired
would be
re¬
point
directly at the
elimination
of
deep depressions
instead of depending on compen¬
satory action may not be immedi¬
ately apparent. The fundamental
problem is to differentiate be¬
to
tween the influences which oper¬
ate in
cyclical recession and those
which operate in deep depression.
Fortunately for our purposes the
business-cycle movement is now
widely distinguished from longer
cyclical movement.
The occur¬
rence
of
no
than
more
the
busi¬
ness cycle itself need not be par¬
ticularly
disturbing.
Even
the
full-employment advocates sadly
recognize that a variation about
equivalent to what we are dif¬
ferentiating as the business cycle
is almost certain to
tended
world
An
occur.
depression is
deep
sarily part of
A
ex¬
neces¬
longer cycle.
a
will
war
not
be
bred
by a business recession which is
universally recognized as tem¬
Such a recession will gen¬
pessimism but will not con¬
porary.
erate
vince the enterpriser that he must
sight indefinitely at a distressingly
low market level, which the Com¬
mittee for Economic Development
has shown to be
The
pernicious.
so
Secondary
Trend
uncertainty exists
to the nature of longer cyclical
as
is
And
occur
in depressed periods to the extent
that arrangements can readily be
effected.
The issue is best drawn between
policy which judges every decision
by the extent to which it pro¬
duces compensatory action and
policy which is directly pointed
to the prevention of deep depres¬
sions. The disadvantages of at¬
this
Most of
problem
so
the work
on
far has been di¬
rected along the lines of statistical
analysis. Since the method typi¬
cally employed to measure the
business cycle
is to obtain the
with
residual
the
secular
trend
arid seasonal variation eliminated,
the
measurement of longer
cal
movement
cycli¬
in the complex of
cyclical change is particularly dif¬
ficult.
The present tendency in
fact
is
to
assume
more
than
one
longer cyclical movement in the
hope that periodic cycles may be
developed.
Since
we
know
that
deep
de¬
pressions
are
necessarily con¬
nected with long cycles, a plausi¬
ble
approach is to try to keep the
long cycle from occurring.
working
with the
primary trend when the
secondary trend is drifting away
from it.
tempting constant variation in tax
rates and the alternate expansion
movement.
lessons
only, rationing device.
We
of these economies.
vs.
We wonder if, similarly, other things being
-except perhaps in the most extreme emergencies and then equal, action which adds expen¬
diture in depression is favorable.
only so long as the emergency continues, they are not the Government
stockpiling and the
best of all
rationing devices. And we are not ready to building of public works, for in¬
concede that any
the exercise of really
Substantial
Prevention of Deep Depressions
In
it influences and is in¬
fluenced by entrepreneurial deci¬
sions. These influences represent
essary
Deep Depressions
of pressure groups
ing
-
principal
secondary
is with
way
the
pro¬
least
ture business needs in accordance
greater importance is the danger
greater production
of present and
trend
ness
even
may
many
ernmental
production
at
concern
our
the
build his plant and
of the false
laissez-faire has broken down,
the
possible, even
probable, that higher prices could not bring greater pro¬
trend,
are
or
the
moderate
major
greatly
we
prevent
to the level which
(Continued from page 6)
It is quite
to
Since
trend.
projected indefinitely into the fu¬
ture. There is no way to know
how long the low levels may last.
The enterpriser cannot afford to
incentive is left for
no
than average exertion or
more
How to Avoid
many
secular
posing
low levels of
assumptions upon which
policies of the day appear to rest.
The rank and
file would do well to give them very careful thought.
better off if the economic managers in
Washington took
control or direction of the
economy.
How often
do we hear it said, not only in
the
of
cyclical movement as a
secondary trend intermediate be¬
tween
the
business
cycle
and
man
domestic
over
But what
we
for themselves must now carry.
At any rate, such a
point has obviously long ago been reached in a number
or
foreign countries, notably in Europe.
Most observers
readily agree that one of the major impediments to
These
very limited function to perform in the economy, that
they have practically no function to perform at the
present time, and that, accordingly, all of us would be
]
minds that
own
even
constructive
a
Washington but in
our
today feeling some of the effects of this
sort of thing—what with taxes what they are and with
the labor load all enterprising individuals in business
What Arrogance!
.
far from certain in
are
not
are
by what right do they arrogate such knowledge or
wisdom to themselves?
In a free economy the people them¬
selves directly express their
judgment about such matters
in the market place.
Are they to be regarded as children to
be corrected by
fatherly politicians who seek their favor?
Another very common assumption—or should we
assertion—is to the effect that prices as such have
conceive
best
can
longer
benchmark to which the business¬
We
But
say
We
But is this too horrible to
should say no one has
are to be
regarded as
a
obtained, it is highly desirable to
analyze
logically the problems
faced
in
avoiding
this
longer
cyclical movement.
Natural Enough
has taken the pains, or perhaps we
had the hardihood, to explain which
the most "essential" or "important"
uses for these
things.
There have been intimations so strong
as to
be almost assertions that certain household articles,
and in one degree or another new automobiles, are not on
course
quate statistical measurements are
population.
(Continued from first page)
j
Thursday, December 4, 1947
rationing enables the higher income groups to enjoy
things that are out of reach of the lower income ele¬
As We See It
i;
FINANCIAL CHRONICLE
&
.
arrangement until
As
a
ade¬
is
It
agreement
general
forces which are responsible for
the
secondary-trend drift away
from secular levels. The following
factors are suggested:
(1) The long construction cycle.
(2) Cultural lag, representing
the failure to adjust social institu¬
could
possible
be
tional
on
the
individual
and
conform
that
reached
habits
to
to
changing economic,
political and social patterns, in¬
cluding the failure of agencies
like the government to recognize
their expanded responsibility with
respect to economic change.
(3) Social, political and eco¬
nomic
revolution,
found
environmental
involving pro¬
change in
community.
(4) Derived effects of tempo¬
rary
expedients implemented to
sustain prosperity or lighten the
burden of a business-cycle down¬
swing.
(5) Extended decline initiated
by
a
business-cycle
recession
which may have a paralyzing ef¬
fect on market relationships and
on
the mobility and ease of ad¬
justment of economic resources.
(6) A shift in confidence and
perspective, leading to a revised
appraisal of potential
markets,
the business
and
growing out of the successive
secondary trend
movement of the
itself
in
the
sense
that
the
rela¬
relatively high)
average sales of the recent past
are projected into the future.
The existence of the long con¬
struction cycle is well recognized,
tively
low
(or
and
the
tion
falls in
lows
which
to
construc¬
deep depression are
unquestionably
related
to
this
long
cycle.
The
piling
up
of
needed adjustments in depression,
because of cultural lag
such as
occurred
in
the
case
of
labor-
problems up to< the
time of the Great Depression, pro¬
management
duces
stagnating influence. As
recession moves
along, temporary expedients
which freeze market relationships
a
the business cycle
will
lower
the
level
of
the
sec¬
ondary trend. When the cyclical
downswing reaches a phase where
further declines are more paralyz¬
ing than adjusting, the secondary
+rend
is
more
influential
than
business cycle recession. Probably
the most pernicious influence of
ail
is
tne
shift
the enterpriser's
which
occurs
in
perspective when
Volume
166
Number 4652
.the secondary trend declines; this
is the problem which arises from
the
fact
that
to
comes
the
businessman
lay his plans for
a mar¬
ket in accordance with secondary.trend levels.
The
method
involved
in
pre¬
senting this list is frankly reflec¬
tion
in
the
light of
available
•knowledge. No effort is
made
to
set up a list of
mutually exclusive
forces, but rather to emphasize
inclusiveness, so that all impor¬
tant facets of the problem will
be
is
covered.
of
first
As indicated later, it
importance to include
all forces which
may
•considered
terested
•to
the
to
readers
have
contribute
stabilization
by
they may
for extending
ideas
any
the
on
could
of
cause
.submitting
be seriously
important. In¬
be
need
this list of factors.
THE
The most
COMMERCIAL
important problem in
an
integrated long-
developing
government
range
volves
program
in¬
reorientation in attitude
a
toward reforms—the development
of a long-range as opposed to a
short-range
point
of
view.
The
need is to avoid the accumulation
of cultural
is
lags to
point where
so
violent
impeded. Such
first
at
appear
developed
if
program
that
ance
proposal may
as it is likely
a
visionary
so
carefully
lends assur¬
a
long-range point of
view will generally be taken.
For,
if
all
a
parties
assured
in
plausible
of
tion
re¬
this
respect,
it
is
expect a modera¬
to
the
"while
the
sufficiently
are
demand
the iron
for
striking
is hot."
Rules
of
of
FINANCIAL
the
two,
leaves
vised ; policy
Such
the
a
CHRONICLE
re¬
enter¬
priser greater opportunity to price
his goods
dynamically, and thus
adjustments in prices to market
changes become
sible.
In
more
any
case,
readily pos¬
however, a
national wage policy can
scarcely
be expected to produce downward
flexibility in
In
desirable business enterprise
not be
to
a
taken must be
measures
that
bination
&
wage rates.
absence of
downward
the
material
raw
costs
not
be
per¬
mitted to become so dispropor¬
tionately great that raw-material
markets
A
reach
paralyzed state.
policy for raw
a
buffer-stock
materials would avoid this. Buffer
stocks
would
ment
envisage
for
program
perishable
govern¬
a
buying
non-
materials
raw
when
be revised more
deliberately even if a substantial
the
cultural lag has been permitted to
occur. A program for
possible should reach
A program can be
developed to
such
pected in business-cycle recession.
•prevent the operation of the fac¬
tors which appear to be
lend
A
Program for Eliminating the
Secondary Trend
the secondary
does
•program
with
the
not
trend. This
stand
particular set
fall
or
of
meas¬
may
dealing with
continuously will
problems
government
must
be
pre¬
pared to consider the influence
economic
of
predetermined
wide
as
low
on
conditions of the activ¬
ity it initiates. The result is
cer¬
a
method
its
tain to be harmful if government
long
materials did
prosperity even more rapidly than
private expenditure.
we
can
agree
also
can
the
on
agree
Agreement is im¬
portant because, with conviction
that high-level markets will con¬
tinue, the stage will be set to
permit
uninterrupted
readjust¬
ments
while business plans safely
anticipate a
exploitation
relatively
of
complete
The
resources.
following program is suggested to
bring concreteness to the pro¬
posals made in this article and
a
as
starting point for discussion:
(1) A national housing program.
(2) A coordinated, long-range
government
from
program
point of view of its effect
aggregate
level
of
the
on
economic
the
ac¬
(3)
Dynamic price policy.
Encouragement
of
small
(4)
business.
(7)
An
international
plan for
(8)
to
buffer-
satisfies
immediate
long-
consumer
needs, and therefore its construc¬
less
danger
idle
that
when
total
there
demand
is
may
decline. In the deepest depression
the housing
vacancy rate never
attains levels comparable to idle¬
ness
of industrial
equipment. A
which
program
will
permit little
decline below secular-trend levels
for residential
housing may be
policy.
their
For this purpose resort to
depression methods of compensa¬
tory action might be necessary in
housing. The writer proposes as
most
conservative
subsidized
on
-
reduction
large
interest
a
consumer
hdusej such
efforts
potential
to
of
interest
cost
repre¬
proportion of what
in buying a
pays
on!'slum
clearance
activity
depression
in
would, Of course, in any
desirable.
More
case
stringent
be
meas¬
'.»if
necessary,
should « be
worked"; out
by those intimate
ures,
-
.
1
With the problems of implementing a housing program. Since no
assumptions
cause
'
are made
as to the
of the construction cycle or
the' interrelation
between
it and
other forces upon which the
'
•
sec¬
ondary trend depends, it is possible that other parts of the
program may make the difficulties
of housing stabilization far less
than they would be if it were
taken
alone.
.
.
>
-
•
prices
of
other
raw
not decline to
necessary
amount
—
would
provide
force
a
favorable for preventing an undue
rise in the secondary trend. The
procedure
set
employed might be to
predetermined average price
a
above normally prosperous
levels,
at
which point the
appropriate
arrangement would be established
for the government to sell. Be¬
at
raw
materials
increasing costs
produced
are
the amount
as
demanded
familiar
rises
substantially, a
maladjustment now
reached
in
permit.
high prosperity
nates from
material
Not
business
only
taken
be
to
ments
small
encouraged to foster
but care should be
avoid
in
should
the
placing
of
way
the
does
top levels.
impedi¬
medium-
not
promote
levels,
business
do
Small
be
can
business
competition at
medium-sized
but
encouraged
to
A major function of
national
a
credit
policy snould be to pre¬
vent cyclical variation in credit.
Credit
is
promote
generally believed to
development in a pro¬
gressing economy, but credit ex¬
pansion which depends upon ris¬
ing
cyclical
conditions
is
ob¬
viously too unstabilizing to be de¬
sirable.
credit
Some
of
appears
This
consumer
upon
the
consumer
extended, for
to be cyclical.
credit
depends
extraordinary
current
requirements
has
the
being
now
instance,
It
extreme
rises
raw
prices. The buffer stock
should be established in¬
policy
ternationally because
proportion of many
is imported.
The
limited
by the
icies
ema¬
in
a
substantial
materials
raw
wage and buffer-stock
would
greatly
possible
pol-
reduce
materially
the
costs,
and
narrow
variation
thereby
the
in
variation in finished goods prices.
for
durable
goods.
lent
significant support to
expansion, but if prosperity
should
level
off
much
of
this
might be repaid. A reduc¬
making plans the enterpriser is
as much reassured
by the stability
of price as by the
stability of vol¬
If
ume.
ciently
grated
the
enterpriser is
impressed
the
inte¬
believe that
secular
needs.
to
investment
his
founded
program
Instead
of
most
on
adding
rapidly
when the market for his
product
is rising to peak levels, when costs
are
disproportionately
high,
could be prepared to take advan¬
tage of lower costs in businesscycle
recessions.
Such
action
would,
in
turn,
contribute
very
significantly to the avoidance
deep depressions
because
standing
izing
become
restric¬
of
all
types
of
economic
to
which
The
policy pointed
outline
for
A
preventing extended declines in suggested here will not work un¬
secondary trend differs sub¬ less its efficacy is accepted quite
stantially from a policy which universally. As noted in the above
depends on compensatory spend¬ paragraph, business men must be¬
ing to produce stabilization. In a lieve in the program or they are
at
all
times
When
so
as
to
limit
government spending.
attention
is
directed
to
avoiding secondary-trend
tion, concentration need
fixed
of
on
age
the
of
on
the immediate
varia¬
not
be
adequacy
purchasing
power, but, rather
factors which will keep aver¬
purchasing
over
power
The
approach
icies carry
along at an
number
of
decision
makers
re¬
are
likely to fade away. If, for in¬
stance, the stockpiling of raw ma¬
terials should
be
way,
the
rates
in
produc¬
the
variation
is
with
of
the
market
ad¬
can
be
reduced
to
a
minimum under continuous
policy.
No
attempt need be made to pre¬
business-cycle recessions. If
vent
market
readjustments, such as
price adjustment and the shifting
of resources, are contributed
by
tenor,
even
operation
justment
above
business-cycle
recession
the
vantages will not be lost.
es¬
fectively
when
hand,
variation
If
ad¬
mar¬
in
not
that current decisions
so
subject
made
to
under
hasty
ketadjustment is made
are
of
Decision makers
relieved of
are
constant
uncertainties to
the government must sub¬
which
ject them under
a
activity
policy, ignoring the
compensatory
spend
tax
rates
to
is
forced
outset
on
instead
of
of
immediate postwar depres¬
an
perous
levels
when,
being
they
ernment
compensatory action. It is
hardly likely that the revisions
required under, compensatory
ate
prosperity.
now
less drastic
await
extend
deep de¬
government
is
to
greatly
be
the
ernment operation.
of
area
gov¬
This position has
will
measures
depression
a
realize
spend¬
expected
attained,
perity to the contention that sta¬
bilization
A
be
adequate
shifted in the postwar pros¬
to be necessary to avoid
policy
could
felt,
spending could perpetu¬
than those agreed to at the outse
pressions.
sat¬
no
was
common, planners often
held the position that stabilization
would
be
difficult
until
pros¬
sult of
ing
way
sion
the economy as the re¬
any
our
isfactory alternative is developed.
During the War, when forecast
Under the continuous
policy ap¬
proach necessary revisions in eco¬
nomic procedures are established
the
disad¬
almost certain to follow if
added, while indeterminate risks
are
already the most important
difficulty in developing prompt
market adjustments.
at
policy
tactical
out of depression
chips fall where they
may. Advocacy of such spending
makes
little
contribution, how¬
ever, for it is the method we are
be
risk
additional
continuous
decided
and let the
amply al¬
lowed for may yet become inex
pedient because the government
An
the
development of the sec¬
ondary trend. It is far simpler to
be
increased.
This
that decisions made where
market risks have been
adjusting
mar¬
vantage of requiring initial estab¬
lishment of policies
required to
would
finds
that
have
when
compensatory
action
will be required to avoid the dan¬
to
ger
gov¬
If government
"If the ERP is
a
blow to
the
Must
of
interminable
we
depression.
wait for the fire?
passed this will
harm than
good. No program, such as is sug¬
gested here, can be satisfactory
tivity. It is of first importance
There is no single panacea for
that
adjustment be made with preventing
deep depressions. An
reasonable promptness for
chang¬ integrated program is required.
ing productivity in either wage The proposals
tentatively made
rates or price or better in
a com¬ must be considered as a unit
or, if
the first
mean, in
mighty moral defeat for the Kremlin, a
its
authority and a blazing illustration of
fallacy of its policies.
"If the
plan is not accepted, the activities of the
Kremlin
seized
and
can
succeed.
Complete
by the Communists.
the
democracies
world and
by the
will
same:
power
can
be
The prestige of America
fall
everywhere in the
token the authority of the
Kremlin will rise and be
spurred to new adventures
Europe and Asia.
.
5!.
.
"Should inflation grow and lead to
a
crisis in
America it would drag down into the
abyss all the
countries
would
participating in the Marshall Plan.
This
bring about economic and political chaos in
world, and furnish the Kremlin with fertile
one
mer
success
to stand in the
Soviet
because there would be then
no
way."—Victor Kravchenko, for¬
official,
now an
anti-Kremlin propagan¬
dist.
It appears to be our misfortune to have
in
our
midst
aliens
of
and
us
our
ways,
always
quite without understanding
but quite ready to give
us
of
their Old-World wisdom.
It is
many
pose
our
of
us
still greater misfortune that
at least—are somehow
that they know
than do
we.
more
so
we—or so
likely to
sup¬
about almost anything
■»*>'
.-i
We could do very
to
people
We Conld Do Without Them!
place,
re¬
prevent
means
necessary.
contrast,
faces
As the gov¬
of
aggregate
activity rises, presumably the tax
rate
for
support
adjustment.
In
varying the tax rate.
measure
continuous
need
in economic areas where the
ket is far out of
ap¬
gregate level of activity. Assume
compensation
is
attempted
by
ernment
as
adjustment may provide
derived from the ag¬
are
enough
may
tion in total
compensatory
approach. The government deci¬
sions under the
proach
ef¬
more
is
tinuous policy
emo¬
tional stress.
the
there
activity that market
be declined, the con¬
approach has dis¬
tinct advantages. While the com¬
pensatory approach in practice is
likely to involve as great varia¬
offers
reversals
conditions
measure
until it has faced the fire of public
opinion.
wage
changed
more
in
it is well established by
benchmarks set up long before¬
withdrawn just
the purchase of raw materials
satisfactory got well under
economy are likely to have been
effected in the process.
sential,
mar¬
substantial
main unimpressed the controls
as
support
changes
unvarying from prosperity to de¬
Where
respon¬
government
forces
outlined
ruthless dictates of the
a
the
calcu¬
are
the
decline in the
designated continuous pol¬
icy as distinguished from com¬
pensatory spending. Accepted pol¬
upon
ket, and therefore if
para¬
may be
pression.'
If
Interference
ground for
depend
readjustments; of
to
a
the
would have done
proportion
for
program
period of two or three
Therefore it becomes less
important to press for immediate
a
years.
counteract
The
not
above
there must
necessary,
some reason or reasons
is provided without
any effort to
correct
the
basic
difficulties,
As very briefly
the
likely to reduce investment un¬
duly in business-cycle recessions.
does
sible.
Continuous Policy Approach
stabilization
the
approach
temptation is to force out as
large a wage payment as possible
similar
secondary trend.
at
the
be
a
measures
make
in
activity.
A national wage
lated
of
invest¬
ment has been the most unstabil¬
would
in
graphs, these
he
tion in the aggregate amount out¬
tive.
summarized
deep depressions will be avoided,
he will find highly profitable an
investment
substi¬
contribute
type of stability.
support is
be
27
suffi¬
by
to
program
which
spending will be
stability provided
In
so.
burden
keep
su¬
accumulated—and we would have
to be prepared for any
needed that entry will be
kept as
and open as our institutions
compensatory-spending
a
to
the
as
cause
free
tration of the government
•
anticipate
markets.
measure might be
the level of
hbusing (construction from falling
below secular levels.
A concen¬
sufficient
,
costs
encouragement
of
small
business aids in keeping the econ¬
omy competitive. Reassurance is
procedure
housing loans in depres¬
Since
so
historical
The
cycle.
the
with
continuous
credit
sents
Instead of setting prices in
they can aid substantially in pre¬
serving
market
adjustment
by
the
sion.
positive
stabilization.
produce
accordance
justified in view of the indicated
obstinacy
of
the
construction
rates
con¬
for
part they can play may be
identified
with
dynamic
price
these
combating a major portion of the
long construction cycle. Unlike
industrial
construction,
housing
is
need
The
at
A national housing
program is
admirably suited as a method of
the
the
becoming big. Com¬
petition probably is most needed
materials,
raw
Private planning of
changes in demand.
tion
of
action
far
deep
depression levels. Any stock pile
sized business
(5) A national credit policy.
(6) A national wage policy.
term
scious
competition,
tivity.
stock
Businessmen have become
essential
on
prophlylactics.
be
own
which lead to
secondary depres¬
sion, it is plausible to expect that
.
would
ex¬
must
measures
tuted
level be¬
a
material would be left to seek
level on the market as
raw
expenditure is permitted to rise in
tentatively suggested below.
we
of
group
perior to individual support prices
or
agreed cartel prices, for each
forces
ures
If
price
them as
average
reasonable decline to be
a
This
reassurance.
The
responsi¬
ble for
game
part of the program is omitted,
a
other
flexibility of
wage rates, it is im¬
perative that the readjustment in
(2287)
«■>•}•'
-ion-'
well without the Kravchenkos.
I
28
THE
(2288)
COMMERCIAL
&
FINANCIAL
CHRONICLE
.
Thursday, December 4; 1947
6/10ths of 1% of the value of the
Transitions in Securities Business
In
regard
of dustry in fulfilling its economic
number
the
to
(Continued from page 4)
Where the statistical departments
stockholders
who
of
shares,
only rely upon es¬
member firms 15 years ago
our
used to consist of
a
relatively few
individuals, today they have be¬
important divisions, includ¬
ing in many instances experienced
research organizations—all to the
end that the public may be pro¬
come
with
vided
facts—not
basic
the
we can
the more
conservative of these, it appears
that there are at least, perhaps
Based
timates.
who
that excludes those
indirect in¬
have an
might
terest in such securities.
a
number
their values.
record
Corporate
organizations have
also changed their point of view.
Instead of maintaining certain de¬
of member firms is not
conclu¬
These facts
their
affairs from which
sions
can
be
drawn.
public by these
companies—they are available to
being made
are
bankers
investment
and
brokers
all—and
making them avail¬
public. Cor¬
are
able to the "investing
have
therefore,
officials,
porate
conscious
become more and more
cordial, factual re¬
of maintaining
lations with stockholders and po¬
tential
stockholders.
well-rounded
to
importance of a
public relations
the New York Stock Ex¬
its
members
and
collective¬
program,
all indications are that our memben firms today
have the greatest
investors
of
number
than
clients
as
previous time. And
the investors who have purchased
securities in the amounts of $1,000,
at
any
$2,000, $3,000 or $4,000 are legion.
In this respect the Association of
Stock
Exchange Firms recently
completed
study which disclosed
a
that the average amount of money
in
involved
transaction
a
was
shares.
100
than
less
of
Exchange.
Reduced Borrowing and Turnover
by Clients
by clients
approxi¬
borrowings
Further,
member firms, are now
of member
ly and individually telling the
story of our business to the public
so that the public can know and
understand the part that the Ex¬
mately the lowest level since rec¬
change plays in our national econ¬
This program was not un¬
haphazardly but only
after
careful
consideration and
omy.
dertaken
painstaking analysis. The story is
being told in several ways—prin¬
cipally by means of the advertiseing program of the Exchange, and,
incidentally, these advertisements
of the Exchange are today the
best read financial advertisements;
it is being
told through the motion
picture, "Money at Work," which
already has been seen this year
by more than half a million peo¬
ple; and it is also being told by
individual members of our busi¬
who, through the media of
speakers' bureaus located all over
the United States, are talking be¬
ness,
local groups.
All of this has resulted in a tre¬
fore
mendously improved public un¬
derstanding of the
New York
Stock Exchange and the industry
of which it is the foeal point, and
I believe that it can be said that
firms
at
are
ords in respect to
them have been
maintained. These borrowings de¬
clined from
$1,540,000,000
Nov.
on
30, 1931, the date of the first com¬
pilation of such records by the
Exchange to $906,000,000 on Jan.
1, 1940. On Oct. 31, of this year,
such
borrowings
amounted
to
$527,000,000 (excluding $78,000,-
borrowed
000
government
on
se¬
curities), and these borrowings
are the equivalent of 6/10 of
1%
of the value of the securities listed
the
Exchange,
excluding
government securities and world
upon
bank bonds
as
of the
The trend in the same period
in the reported volume of sales
,,
upon
the New York Stock Ex¬
change is of particular importance
in
this discussion.
the
For
1929, the
year
volume
reported by the Exchange amount¬
ed to
was
1,125,000,000 shares, and this
the equivalent of 119% of the
the Exchange, the vol¬
amounted
ume
14%
to
the
of
Shift to Prudent Investment
10, the trading amounted to 363,000,000 shares, or 22% of the total
major tran¬
sitions
concerns
the
change in
the fundamental characteristic of
business
our
has
which
in the past 15 years.
from
which
one
occurred
It has shifted
essentially
was
listed.
If
we
the
use
volume
of
the first 10 months of the current
base, it can be estimated
approximately 250,000,000
year as a
that
shares will be the volume for this
and
year,
such would amount to
speculation to 13.8% of the total listed shares.
investment pri¬ ...fWhile I have just used these
marily but also of intelligent and yplume figures to emphasize the
informed speculation.
investment characteristic of our
that of unintelligent
of
one
This
prudent
has
ndt
been
couragement from
without
our own
en¬
indus¬
market, I ask that you keep them
clearly in mind when in a moment
examine
The theme of the advertising
program of the Exchange and cer¬
tain member firms, our research
and statistical
departments, our
better understanding of our obli¬
we
gations to the public—all of this
contributed to this develop¬
ment.
In my opinion it is a sound
development—one that
is con¬
structive and in the public inter¬
the
effect
of
other
has
est.
major
a
developments
seems
to
me
the
extent
of
To
Board
I
recapitulate for
a
investment
a
We
little.
and
By
1940
creased
1, 1929, 753 companies
listings had in¬
854
companies and
these
to
1,435,000,000 shares, and on Jan.
I, 1947, there were 962 compa¬
nies with 1,771,000,000 shares.
In
the course of 18 years, therefore,
the
the
type
shift from
velopment
On Jan.
number of shares listed
Exchange has
mor^
upon
tthan dou¬
a
a
of
business
also
in
market—and
one
find
our
a
using
using
con¬
very
sound
sales
de¬
methods
sales
phychology—and
a
healthy increase in public respect.
All of this is to the good and rec¬
ognized
Given
mal
as
such.
these factors under
conditions,
properly
should
our
nor¬
industry
fulfill
its
nomic functions and return
eco¬
a
sat¬
isfactory profit to its management
employees.
and
However, there has been a dan¬
gerous ,trend which could in the
bled and has increased since 1940
future result in
alone
plete futility of the securities in¬
approximately 23%.
that
trust
will permit
you
to make one observation
me
in regard
taxes.
to
the
almost
com¬
gins.
If
also
we
examine The
credit
the
establishment
Our
is
structure
tax
present
drying
3
and
of
If you will examine statis¬
pertaining to capital forma¬
tions in this country during the
tics
past 25 years, I daresay that you
be
shocked
by what you
learn.
Without a sufficient and
will
of venture
free flow
1
capital—ana
reservedly—our econ¬
and our industrial expansion
this
say
omy
Unless
continue.
cannot
ta>.
our
structure is
is
changed—unless there
reduction in personal income
a
taxes, a revision in the method o
levying double taxes upon corpo¬
rate
earnings, and a realization
that the taking
of risks is the
essence of progress and should not
therefore, be penalized by unjus
and
discretionary taxes — unless
ed
tem
nate
deteriorate
and
that
extent
it
such
to
an
mar¬
of all loans, and as
of
1946
1
were
and
On Oct. 31,
they actually amount¬
total
have
The
that
million
$222
of
75%
And
statistics
is
has
we
conclusion
drawn
be
of
yet
margins.
sensible
only
can
99/100
or
loans.
from
securi¬
welfare of
national economy.
our
But, likewise, none of us want to
see
the imposition and mainte¬
nance
of unjustified regulations
which affect the free and
proper
flow of venture capital and the
conduct,of our free and
curity markets.
open se¬
excessive
credit
been
not
that
employed at any
time in recent years for purchas¬
carrying listed securities.
Furthermore, there can be no log¬
ical reason for prohibiting sub¬
stitutions in under-margined ac¬
ing
or
counts
have
the
when
of
amount
cept in
such
effect
no
substitutions
upon
credit utilized
restriction, which also
prohibits a customer from substi¬
tuting a security which may be
of greater
merit than the
held
one
his account, can only be char¬
acterized
as
arbitrary and per¬
in
nicious.
us
want to
turn of unrestricted
securities.
Go
do
From
Here?
find
we
our¬
selves
today, and where do
go from here? (1On one hand
we
we
find that in the past 15 years we
made great strides in im¬
have
proving the facilities and
tions of
vice
that
hand,
we
ser¬
public.
will
re¬
find that the proper and
of venture capital and
conduct of
been
the
benefit. On the other
our
free flow
the
render
we
improvements
dound to
opera¬
business and the
our
These
our
markets
have
hampered by taxation and
so
certain
governmental restrictions
that while in the year 1947 Amer¬
ica is enjoying its greatest
pros¬
perity, our
pression.
business
is
in
de¬
a
Obviously we cannot afford to
complacent.
We must move
be
forward.
None
the
see
re¬
speculation in
of
desire
us
We
must
continue
to
improve our operations, our sales
technique, and our public stand¬
ing. We must strive with all the
vigor we possess to correct what¬
factors
ever
detrimental to the
are
of
business.
our
confident that
the
we
I
am
have the ability,
and the desire to do
energy,
this.
I
sincerely
hope
that
what
I
have said to you today may stim¬
ulate further and more detailed
objective thinking by you in re¬
gard to these developments and
problems, for you and other young
like
men
None of
We
where
ex¬
instances to reduce
many
Do
Now
welfare
whatsoever
That
it.
Where
these
will be
longer
no
end
to
still
such changes occur,
then our sys¬
of free enterprise will stag¬
100%
2/10% of total loans.
is the lifeblood of American proggress.
7/10%
the
of this year,
venture capital, which
up
of
gins, these loans had declined to
1%
in various parts of
the future lead¬
you
this
country
are
ers
of
great
this
securities
in¬
dustry.
able to function.
is
one
of the
problems affect¬
ing the welfare of our national
economy.
The effects upon the
free flow of venture capital and
therefore upon our business,
of
the
discriminatory
and
unjust
most
today
important
securities,
are
the Federal
of
restrictions
credit
Reserve Board in
regard to listed
serious indeed.
gave
which
mandate
Congress
of
be
imposed for the purpose
preventing the excessive use of
credit in such stock market oper¬
ations.
I believe that you—at least
who have studied the
agree that it is a fair,
those of you
act—will
concise
power
Board.
the
upon
the
of
statement
conferred
But,
gentlemen, that statement is not
mine, and I did not compose itit is word for word part of a state¬
ment
made by
Mariner Eccles on
Jan. 18 of this year.
I refer to it
I
am
particularly because
anxious that you understand
—difficult
unique
what
as'
is—Mr.
it
method
determining
of
constitutes excessive
In July,
Eccles,
use
of
operations.
1945, when margin re¬
quirements were raised from 50%
to
75%, credit extended by mem¬
bers of the
New York Stock Ex¬
change to their customers on listed
securities other than
governments
amounted to approximately $1 bil¬
lion.
It would seem logical to
believe that when margins were
increased from 75% to 100%, this
figure of $1 billion had increased,
and that such action was taken to
prevent further use of such credit.
This was not the case at all, for
on
the
contrary, just prior to the
of
100%
margin,
for s-veral years nast very orotic-
fortunately they
insuring them¬
selves against incurring such tre¬
mendous losses again by the use
of the hide exchange.
of
means
I think the word
a
good
the
the end of 1946 it had declined to
still had
100% margins. As of Oct. 31, this
year, it amounted to $527 million,
the equivalent, as I have said, of
$470
million—and
we
to look
main
make of
out
hedges,
which you
use
it, is not
per¬
than anything else.
guarantee you a profit
any more
neither
does
fire
insurance
when
you take
it out, but you
would not think of going without
it. But where there is some loss
involved, it usually is not such a
that
would
cripple
you.
If
you
buy hides and put out a
hedge and the market goes up,
certainly in the position
gain anything by
rise in price, but you have
are
your
that
do
where
and
the
way
your
priced
that
tremendous discount which exists
between
the
the further
nearby
likely
and
off months. This
abnormal
very
price
condition
is
and
a
is
remain
for some con¬
believe it is
likely to remain until you have
a
drastic decl'T.e- in prices. The
main reason for the large dis¬
to
siderable time yet. I
count
on
futures
is
the
current
large
ness,
and
consumption
or
good busi¬
whatever you like to call it,
the fact that high prices are
rendering people cautjous about
covering
ahead.
commitments
away
is
will
going
the
use
will
a
drastic fall in price
sell
highfairly
but in doing so, you al¬
have to have in mind that
ways
a
you
can
which
a
is
concentrated
long interest
may
have the bulk of the nearby posi¬
tions and by sitting pat with them
up
until
may
the
the
squeeze
main
pretty
The
you have to be
the fall is imminent.
jure
best
is
course,
delivery time, they
the price. This is
reason
hedge in the world, of
if you buy hides and
leather to
yourself in the position
a terrible
licking as a result of a drastic de¬
cline
in
price. Hedge
markets
today, not only in hides, but in
cotton and grain,
are
very un¬
satisfactory hedge markets. The
reason for
this, of course, is the
one
have
nearby,
the
put
You
market
you
month
you
where you cannot take
mind. No
you.
depend upon
conclusion is. If you
imminent,
that you cannot
also
the
market
what
is
own
for
the situation and de¬
over
cide
decide
putting
the
It does not
you
make up
will
of
can
one
one thing you must
always
using the hide market is to
hedge
means
—
connection
use
which is
fect,
in
use
The
do in
in the industry. Now
of the hide exchange as a
use
folks
to
one
with the
"insurance" is
page 6)
Factors In Judging Market Trends
able business and
establishment
this $1 billion figure had declined
to approximately $900 million. By
prices
(Continued from
to the Reserve Board applies
only to listed securities and spe¬
cifies
that
margin requirements
shall
Of Rising
have
Margin Requirements
The
moment.
we find our personnel and
facilities improved.
We find
shift from a speculative to an
our
this transition
had 757,000,000 shares listed upon
the New York Stock Exchange.
concerning listed securities,
credit in stock market
measured
may very well be
by the following:
have
ness.
siderable credit to
It
which
direct influence upon our busi¬
margins were last at 50%.
yet we still have 75% mar¬
listed
on
an excessive amount
which would be detrimental to the
our
restrictions of the Federal Reserve
So far
try.
extended
by member firms to their clients
and
governmental reg¬
ulations. While, therefore, I will
confine my remarks to the credit
in that year.
year upon
credit
Ex¬
of the
extended by reporting banks to
af¬
member firms, for carrying listed
business, and it in¬
securities, other than governments,
volves the change in the Federal
we find that it was and is a neg¬
tax structure and the development
ligible fraction of total outstand¬
of certain governmental regula¬
ing credit and that the same trend,
tions and restrictions pertaining
as in the prior example, prevails.
to our business operations and the
Again in July, 1945, just prior
conduct of our markets.
to the increase in margins from
I know that men more qualified
50% to 75%, these loans accounted
than I am have already addressed
for
only 5%
of the
reporting
you
in regard to taxation and
banks' total loans.
Shortly before
some aspects of
fecting
number of shares listed
In 1940, an inactive
average
shares listed; and in 1946, one of
the most active years in the past
The second of these
This brings me to the third
final category of transitions
Taxation
date.
same
public position of both is
stronger today than ever before.
the
Federal Regulation and Taxation
the
upon
such
of
amount
And
$2,000, and that 41% of the
transactions handled involved
amounts
ties to rise to
listed
change—and is only 47%
when
system of free enterprise.
about
and
change
maintained,
based upon reports
submitted by firms accounting for
42% of the business done on cue
After failing for many years
the
clients
of
This study was
NYSE Public Relations
appreciate
the
of
composite
while
Similar!y,
functions and the paralysis of our
upon
12 million such stock¬
many more,
holders—and
tips—in respect to securities and
grees of secrecy/ they now provide
factual
information
concerning
these
own
credit extended
securities
have
sale of these hides
a
or
good buyer who will
a
take delivery of them
even
if the
price declines.
However,
let
us
say
buy
you
hides and you are a bit un¬
certain about the future. I would
some
sell
a
too
far
month not too
off
near
because
of
and not
the
wide
disparity of price the farther
go,
but
I
you
would
undoubtedly,
within a short space of
time, dis¬
pose of my hides and
buy in the
hedge. In other words, I would
close out the lot of hides and the
hedge
realize
fairly
that
tapering
future
month
as
soon.
with
off
as
You
can
gll
these discounts
you
go
into the
the time passes and the
which
have sold ap¬
proaches, the price will come up
towards the spot level. It is there¬
you
fore advisable to
use
der present conditions
short-term
turn
until
hedges
un¬
only for
you
a
have
reached the period when
#ou are
Volume 166
Number 4652
convinced that the drastic
THE
evidence
and
I think your life method will
ap¬
ply more to that end of the busi¬
the
last
steel
well
some
the
that
Industry
WHOLESALE
TO
voluntary
to
build
15,000 freight
cars
a
month.
This extra
material
to
can
a
the
enlarged
companies will be
informed
for
that
their
forced
customers
The
of
freight
in
to
slash
which
quotas
have
been
set
that it
put
selves
is
It
is
future
a
sale
out
cation
controls
steel,
'The
in
Iron
order
Age"
to
eliminate
notes.
Such
the
so-called
demand
a
like to
allo¬
Corn
market in
in the face
of
who
have
loss.
a
One of the
tons
buying hides
in
a
if
you
down market. In other words
have
been
in
the habit of
taking the products of one pack¬
ing plant you don't have to stop
buying because the outlook
down
a
warn
hide
however
you
danger
You
market.
of
hedging
I
future
base
Winter
any
country
hides
other
or
at
the
have
is
market
is
that
you
large additional customer
there
day
every
in
the
always ready to buy hides
year,
at
hide
one
who
price
a
it
and
is
cash
a
cus¬
active
slow
TORONTO,
ciation
ONT.,
Bond
tons
of
steel
ingots
request for peacetime
CANADA—
an¬
—
small
a
controls
amount
the
over
President
Hachez
of
will be
Corp.
firm,
new
partner
in
was
L.
y
Standard
<
•/;*•
.
Securities
(Special
The
Financial
ANGELES,
CALIF.
Joseph Stern has joined the
which
on
of
Fi H.
Breen
&
—
Co., 609 South
Grand Avenue.
(Special
LOS
to
The
Financial
Chronicle)
sales
to
Monday
on
RAILROAD
FREIGHT LOADINGS
PRECEDING WEEK
ADVANCE
2.8%
Valentine is engaging in
ties
business
from
•
a
offices
Bank Building.
James
securi¬
in
the
slightly
easier
while
sheep
and
lambs
remained
Continued
the
was
foreign
countries.
4,963,816,000 kwh
freely in
cotton
prices
to
Japan
New
York
at
half for the week.
a
Southwest
but
there
also
was
Farmers
indications
were
Consumption of cotton during October,
the Census Bureau, amounted to 826,280
areas.
reported
Spot
cent and
a
the
by
line
output
movement
of
domestic
seasonally slow last week.
sharply
active
on
RETAIL
AND
FOR
The
week
of
WEEK
AND
United
the
States
TRADE
WELL
number
in
Boston
to
a
daily
daily rate
a
in
market
was
Melbourne
fine wools in
on
reduction
a
WHOLESALE
increased
wools
Prices
bidding by
last
announcement
rose
buyers,
the
following the
tariff
ABOVE
YEAR
wool.
raw
on
MODERATELY
HIGHER
AGO.
of
displays and promotions of holiday
merchandise evoked very favorable consumer
response last week.
Retail
volume rose moderatly above the level of the
preceding
week
and
year
remained
Dun &
Christmas
tovs
well
shopping
considerable.
was
above
Bradstreet,
ago.
trade.
that
Inc.
of
the
reports
increased
corresponding
in
and
its
the
current
week
survey
a
of
buying of gifts and
on moderately-
Interest continued to center
priced articles of good quality.
The current figure
vear.
the week encie<* Oct- 25> 1947 when
QAQ
totaled
strong demand for textiles
of further heavy shipments
prospect
bales.
ABOVE
The
advent
of
Thanksgiving Day gave impetus to the buying
Poultry and dairy products were in large demand
vegetables continued to sell well.
The cheaper
cuts of meat and both fresh and frozen fish were
heavily purchased.
The volume of canned foods
too, was large.
Consumer interest in
dried fruits increased and baked
goods and confectionery continued^
of food
week.
and fresh fruits and
AUTOMOTIVE OUTPUT DECLINES FOR WEEK
DUE TO HOLIDAY AND FORD
SUSPENSION
As
the
Ford
result
of the
assemblies
for
cars
Thanksgiving holiday and the suspension
additional two days for
inventory, last
an
and trucks
in the U.
S.
and
Canada
was
by Ward's Automotive Reports to have fallen to 82,932 units
week's revised postwar record
figure of 115,197.
The current week's total comprises
57,937 cars and 20,167
trucks built in the U. S. and 3,910 cars and 918
trucks in Canada.
Output in the comparable week of 1946 was 77,222 units
and,
in 1941, it was 96,495.
In the
FAILURES
EDGE
LOWER
Thanksgiving-shortened
industrial failures fell
&
off
in
as
the
IN
HOLIDAY
The
1946
same
week
week
of
were
far
prewar
short
of
failing with liabilities of $5,000 or
only two from last week, numbering 62 against 64.
of
more
were
and
marked
In
decline
other
increased.
occurred
total
of
five
■
in
retailing failures during the j
industry and trade groups failures held steady
only one geographic region, the Pacific States, did
by more than two from the previous week's total.
jewelry,
especially
blouses
and
skirts
was
very
large
a»
rainwear.
failures
overcoats
and
for
automobile supplies were steadily
hunting equipment remained large in
pur¬
some
'
,
Retail
volume
for
the
country
Wednesday of the past week
above
a
that of
a
year
in
the
period
ended
on
ago.
by the following percentages: New England 10 to 14,
South and Middle West 6 to 10, Northwest and
Pacific Coast 9 to 13 and Southwest 7 to 11.
to
8
The
12,
interest of retailers
increased
in
the
week.
in
practically all types of merchandise
Wholesale
volume
continued
rise
to
mod¬
erately and remained well above that of the corresponding week a
year ago.
Reorders of Fall and Winter articles were substantial
with considerable interest evidenced in
Spring merchandise.
.^-Department store sales on a country-wide basis, as taken from
■
the
Federal
Reserve
Board's
index
for
the
week
1947^ increased by 9%, from the like period of last
pared
with
year
an
increase
of
11%
in
Nov.
This
22,
com¬
the
preceding week.
For the
22, 1947, sales increased by 11% and for the
Here in New York retail trade reflected
due
to
the
comparison
which followed
year
ery
ended
year.
to date increased by 8%.
chiefly
as
an
with
the
a
decline last week
heavy
purchases
last
aftermath of the trucking and deliv¬
strike.
week
Nov. 25
the
comparative
The
1946 figure
of $643.
index represents the sum total
of
the
pfice
per
pound
,
estimated to be from 8 to 12%
Regional estimates exceeded those of
was
year ago
East
PRICE INDEX APPROACHES ALL-TIME PEAK
general upward pressure in prices of foods during the past
pushed the Dun & Bradstreet wholesale food
price index for
to $7.06, from $6.95 a week earlier.
This represents a rise
of 1.6% and puts the current
level less than 1% under the all-time,
high of $7.12 recorded on Sept. 17. The latest index is 9.8% above
with
appliances evident.
paints
four weeks ended Nov.
In
gifts
as
Christmas
chased and demand
down
Over three times
failures occurred in this size group as a year
ago when 19
were
reported.
A somewhat sharper decline from the
preceding
week's level appeared in small failures
involving losses under $5,000
fell off from 15 to 10.
This compared with a
failures in the corresponding week of last
year.
and
areas.
264
many
vary
coats
Hardware,
when
total
well, with
suitable
novelties were sought by consumers
past week with increased interest in electric irons, toasters
the
1939.
Concerns
small
Toys
WEEK
the
clothing sold
items
large,
72,*
of
other
demand for women's
suits,
as
Concerns failing were„Jttoee timesweek
women's
and
continuing to be heavily purchased.
only 24
Twice as many businesses failed as in the
corresponding
any of the four preceding years.
However, despite the
registered in the
which
gloves
Interest in children's clothing
increased somewhat and wool sweaters and snowsuits sold well.
The
volume of men's suits and sportswear was
week ended Nov. 27, commercial
the previous weel&i#«3^<to
comparable
attention.
and
popular.
„
from
Bradstreet, Inc. reports.
numerous
of
men's
and other small
BUSINESS
and
lingerie,
well
The preliminary figure for November was
reported as 415,930
units, bringing output for the first 11 months of the year to
4,559,936
Ci
favorable
Both
last
units.
attract
to
esti¬
The
Open
to
net rise of almost
The
produced in the corresponding week of last
FOOD
—
and
Registrations under the cotton export program, totalling 38,065
in the week ended Nov. 14, were the
largest for any weds:
this season, and brought the total for the season to date to
206,297
by the electric light
power industry for the week ended Nov.
29, 1947 was 4,983,439,000 kwh., according to the Edison Electric Institute.
This com¬
pares with 5,180,496,000 kwh.
(the all-time high figure) reached in
the preceding week, and was 12% in excess
of the 4.448,193,000
kwh.,
Building.
to
rather
reflecting
the rising
bales
and
or
MEXICO
continued
purposes,
with earlier expectations, this was
equal
consumption of 36,300 bales, as compared with
of 33,800 in September and 40.500 in October 1946.
holiday.
joined the staff of King Merritt &
N.
export.
as
other
In
increase of 24,335 cars above the
preceding week.
They also repre¬
sented an increase of
96,079 cars, or 11.9% above the corresponding
week in 1946, and an increase of
186,116 cars, or 26% above the same
week in 1945, which included the
Thanksgiving Day
T. Robinson and E. B. Stone have
TAOS,
flour
fill-in
average
Loadings for the latest week Nov. 22, 1947, totaled
902,672 cars,
according to the Association of American Railroads.
This was an
A
James Valentine
for
for
bales.
Current operations represent an increase of 1.4
points,
from the preceding week.
The week's operating rate is
equivalent to 1,710,000 tons of
steel ingots and castings compared to
1,685,200 tons last week,
1,681,700 tons a month ago and 1,061,000 tons one
year ago.
week.
merce
for
factor
a
1.5%
ANGELES, CALIF.—Jack
Company, Inc., Chamber of Com¬
lots
tight and prices continued to climb.
Cottonseed oil and lard registered substantial
gains in the week.
Cotton prices trended upward
throughout the week influenced
to a large degree by active mill
buying and short covering against
year ago.
as
{With» King Merritt & Co.
supplies
officially
sharp rise, failures in last
staff
small
firm.
holding in other
occurred.
Chronicle)
steady
were
as
weeks
to
demand
possible legislative developments
prices.
of
or
as
/ LOS
to
Trading in oats was quite
influenced by substantial gov¬
upward,
Domestic
over
the
Dun
Joins Breen Staff
that the government will ship as
Government buying of cash wheat
week.
the Chicago livestock
market, hogs were in liberal supply
steady to slightly higher than a week ago.
Cattle
Cocoa
and
F.
Mr. Brown, who
Vice-President, in the past
the
£rain
cotton
mated
Co.
with
Was
the
a
&
a
corresponding date
In
companies having 94%
steel-making capacity of the industry will be 97.7% of
capacity for the week beginning Dec. 1, 1947.
This compares
with 96.3% one week ago,
96.1% one month ago and 60.2% one
SPOKANE, WASH. —Louis H.
Hachez and Alden J. Brown will
previously
1.5%
rose
represented
of
a
from
Building. Mr. Hachez, who will be
figure
This
the
but finished
bapic steel indus¬
The American Iron and Steel Institute
announced
week the operating rate of steel
week's output of
form Hachez & Brown,
Inc., as of
Jan. 1, with offices in the Paulsen
during
limited
was
showed
of
To Be Formed
25.
on
the
reports
possible.
as
trended
offered
nual dinner, scheduled for Mar. 12.
Hachez & Brawn
and
prices
nual
buffet luncheon at the
King
Edward Hotel. Also to be held at
the King Edward Hotel is the an¬
prices
this
Traders Asso¬
Dec. 24 will hold its
on
in
and
purchases.
uncertainties
The amount of electrical
energy distributed
The Toronto
belt
moderate
and
trend
ELECTRIC OUTPUT LOWEST IN OVER A
MONTH
To Hold Lunch, Dinner
only
ernment
in 1948 has been scaled down to 2.3 million
for raw steel only a small part of the
tomer.
Toronto Bond Traders
wheat
of
based
cheap quality. You can take quite
a
licking in the market hedging
cheap hides. The one way to look
leader
of
packer market and that
advance that takes place is
in
the
is for
likely to be in the futures market
than
was
request
try, the magazine concludes.
the
on
index
Nov.
cereal failed to meet the
much wheat abroad
Marshall
million
one
would
is
The
on
recorded
,
against the
cheap hides.
market
week.
297.49
rising movement as country offer¬
continuing high demand.
tight supply and prices rose sharply toward the
close, aided by freezing weather over parts of the Southwestern
Plan steel requirements will be
part of the total
export shipments which would ordinarily be made in 1948.
The
net increase because of the
plan represents about 800,000 tons or
1.2% of this year's steel production and will
require no more than
appreciate that if you
buy country hides at a much
lower
price than packer hides,
the
to
240.56
in
was
remained
The
can
that
the
total.
advantages in using
the hedge market is that
you can
keep sources where you
have
been in the habit of
with
the
was
Cash wheat
have
year
taking
last
18
the
over
ings of the yellow
found it lucrative to
against it
dispose of steel inventories
when it is 100, you don't let the 1 and steel shipments which
they do not need at the present time.
profit get away from you. Most! It is unlikely that on the basis of
governmental testimony before
firms today have large
reserves, Congress that the latter will authorize steel allocations or steel
buried in their
inventory and I price wage controls.
hope not too many of them are
Latest data on the steel phase of the
Marshall Plan indi¬
deluding themselves that the last
cate that the former
program
of 3.1 million tons of raw and
in, first out will prevent them
finished steel a
from
UPWARD
continued to move upward in the past week
practically all deliveries of wheat, corn and oats reaching
high levels for the season.
new
gray
is
SHARPLY
Grain prices
up
silly
the fact that 96% of the total steel
shipped today is at the socalled legitimate mill prices which
average $100 per ton or more
under gray market
prices.
Furthermore, gray market steel sup¬
plies for the most part are derived from steel consumers them¬
losses.
would
MOVES
HIGH
ago.
with
indicated
LEVEL
heights
Nov.
on
23.8%
year
1948.
government has
postwar
293.10
gain of
rolling stock.
practically all steel
program
car
pricing
insurance
against
nothing of the kind.
It merely is
just as if you buy
100 shares of Steel Common at
50,1
watch it go to 100, and watch it
j
go back to 50, whereas if you can
inventory
new
from
of
PRICE
NEW POSTWAR
Soaring grain prices and sustained strength in other markets
boosted the Dun & Bradstreet
daily wholesale commodity price index
Because
my con¬
impression
in, first out method
29
foods in general use and its chief function
is to show the general
food prices at the wholesale level.
\
only come from other steel consumers, many of whom consider their
requirements to be just as important as railroad
dealers,
industry in the past
few months,
people have
(2289)
trend of
allocation by the steel industry under
extreme government pressure will
upset the distribution applecart.
The industry has promised to
begin shipping early next year enough
facturing end of the business
in
CHRONICLE
31
(Continued from page 5)
I don't believe that
many of you
here are interested in the manu¬
tacts
FINANCIAL
The State of Trade and
Inventory Valuation Problems
than it does to hide
but I have found that in
&
fall in
price is imminent.
ness
COMMERCIAL
According
to the Federal Reserve Board's index department
store sales in New York City for the weekly
period to Nov. 22, 1947,
increased 5% above the
same period last year.
This compared with
increase of 9%. (revised figure) in the
preceding week.
For the
Lour..weeks .ended Nov. 22, 1947, sales increased 12% and for the
ah
of f^ar tb
dath"rdse by
10%.
30
THE
(2290)
^ ^1 *
,.r,
Comments
•
peak will be reached in
January and February of next
a
bull signal would make stocks
scarce
to buy and a bear signal
|
a
hard to sell—so we would have a
The 1937 peak was followed
:
by World War II, 1929 peak by "straight line" furious rise and a
market collapse and depression, I corresponding as furious a decline
1917
peak was associated with I—without a bear signal!
It does
not seem fit for the
World War I and 1907 peak with
economic depression. This repre¬ writer to strengthen by additional
year.
not
Department of Cosmic Terrestrial
Relations,
standing
in
relates
.an
his
article
of
connection
any
the
between
We thus observe there is
the
to
end
no
various
happenings that
may determine the course of our
future because they did at some
other time appear as precursor of
practices
.xowned
to
sound
and
perseverance and toil.
methods which Mr. May
York
ket."
4, N. Y.
Barbour's statements are
criticisms
such
re¬
of
personal nature
"Mr. May
a
statement
commu¬
simply does not understand the
of the world,' Dow Theory.
." "He does not
accidents,1 see the wisdom and usefulness of
Technique and other "systems" thefts, sickness, death, etc. per the philosophy Of Dow, Hamilton
which Mr. May bars as market person in a given year, depending and Rhea." (The boldface is Mr.
on the place, protection, hygiene,
Barbour's and if he had not used it,
forecasters seem to the writer to
be based on the subconscious at¬ etc.; one could start anywhere and I would.) For all of us are trying
in a certain number of years form
traction that all forms of systems
by open discussion to find out
a series of tables and percentages
whether
the
wisdom
and > pre¬
have, that save the conflict of the
and astronomical
seasons
But
ena.
these
with
life,
phenom¬
the
Ratio
nity,
in
there
part
any
are
so
report
analysis of 255
written
by
Hamilton
.
.
an
market based
accomplishments and
the
as
fallible in
are
the Dow
theory."
major¬
ity i of five readers (the Cowles
group) of these editorials con¬
cluded
"they »were -sufficiently
definite to permit a scoring-of 90
on
Mr. Barbour claims that
article, as I have
stated in my letter of Nov.s 16, is in
the nature of an impartial, judicial
review in which personal attach¬
ments or experiences are omitted.
with
mar¬
a period of 26 years
"which
presented forecasts for the stock
May's
plete
the
over
"arraignments" offers certain ob¬
Mr.
and
were
representing
vious conclusions.
Mr.
of
many
bullish
as
bearish."
or
a
Other de¬
tails given were intended,
I should
favorable
judgment ,upon these editorials.
But, Mr. Barbour concludes as
assume,
to strengthen
a
statistical
delusions
of
is
another
factor;.
mathe- j dom
The
grandeur.
maticsf
The futility of all these systems
is evidenced in the calamitous de¬
pressions
which
from
this
coun¬
obvious and
sub¬
stantially arithmetical.
are
are
erage
was
points or 21% be¬
market peak because
81
low its bull
the 20 railroad stocks on Wednes¬
day, Oct. 23, confirmed a bearish
indication given by the
When, however, we take the ex¬
tended panorama of economic ac¬
tivities of a country of 140,000,000
(
try has suffered (about 21 since
1789). "Notwithstanding, we have people and throw in the rest of the
world for "good luck"(?), we have
always emerged in most instances
a
to
series of variables of individual
a more prosperous future.
Prosperity ■ falls from a height opinions, judgments, tempera¬
ment, resources,
business, fi¬
a depression and vice
versa;
only the unanimity of good times nances, taxes, social disparities,
labor, psycholo¬
and a bright future bring in their manufacturing,
train a reversal to bad times and gies and other endless activities,
gloomy future. There is a cycle reaching a startling number of in¬
fluences and factors entering into
for the "cyclists!"
a
series of action, reaction and
Mr. May points out in his ar¬
counter-action which defy certain
ticle of Oct. 16 how before V-E
and definite analysis as to partic¬
Day "one of the country's ablest ular results. We have
in mathe¬
into
and best informed economists
.
en¬
joying the advantage of his ex¬
tremely well-equipped
advisory
organization and unparalleled con¬
tacts wrote a most convincing and
widely accepted book giving a
plethora of perfectly logical and
well-documented
reasons
such
as
wartime over-expansion
of plant,
over-consumption etc. — why the
country was without doubt headed
matics, permutation and combina¬
tions, .which enables one to com¬
pute the various patterns you can
make, for example, with four rail¬
road signals which is figured by
the formula
1x2x3x4=24.
If each
road
of
road of inflation.
dictions
of
indeterminable
an
Since then pre¬
depressions
and
re¬
cessions have been pouring in on
us
from all sides and from every
source
ever,
of authority.1
only
the
tively
substantially
1 Editor's
is
in
Chronicle"
Have
a
below
the
Note—Mr. Theodore Prince's
article in "The
of
Commercial and Financial
Nov.
14,
tion that these forces
determined
by
writer,
seems
This
offered
is
can
be pre¬
systems, to the
to be fantastical.
in
no
sense
positive formula but only
as
as
a
field
1946
Depression?" indicated
belief.
"Need
We
a contrary
We have
devised
and
of
through centuries the experienced,
matured, able individuals who in
collaboration with
means
at their
disposal have brought civilization
to this point. We need the fullest
exercise of our power and ability
days; any more than the sig¬
nal for the momentous rise could
himself
be
However,
he
states
and
90.8
14
.
these
come
.
.
.
.
included."
not
from
800%, in¬
Again, how
range
went
up
was
money
hundred
One
amounts?
now
of> Schenley
financial
his
advocacy
further
Rhea
I find
as
certainly
statement
"and
not Ihis
that
other
Robert
Dow
theorists
missed the 1932 bottoms both be¬
fore and after the event."
?
It is difficult to discern any con¬
tribution given by Mr. Barbour
to the support of the Dow Jones
f
t i
h.
His
advocacy bristles
illusions of suc¬
cessful
operations supported by
equally illusionary financial com¬
putations founded on adherence to
e
s
with
glittering
the Dow Jones
confirms my
the
theory. Perhaps it
opinion contained in
that
letter
above
they
com¬
prise instances of wishful think¬
ing
combined
with
cerebrated
statistical delusions of grandeur.
A
Dow
business
eral
and
they :bear
as
stock in which dealings
contemplated."
upon
are
any
Three quarters
(approximately)
of the
brochure is devoted to five
sound
reasons
(including money,
profits,
Russia,
taxes,
business,
markets, etc.) why the "bears are
slipping."
I suggest Mr.
Barbour
reads that brochure instead of my
letter!
THEODORE PRINCE, L. L. M.
Dec. 1,
1947
Street,
4, N. Y.
Jtiroau
ou
York
New
[Theodore Prince is an Econo¬
mist,
Investment
Counsel
and
to
Joins Heath & Co.
(Special
The
to
Chronicle}
Financial
ELGIN, ILL.—Dwight S. Flood
now
with Heath & Company,
Building.
Tower
3 With C.E.
(Special
LOS
The
to
Abbett &iCo.
Chronicle)
Financial
CALIF.—Mrs.
ANGELES,
Dorothy R. Irwin, Elvin G. Prit-
buy only IV3 times the-amount chard, and Thomas D. Richardson
are with C. E. Abbett & Company,
your cash margins) call loans
were
outstanding, in amount of 3277 Wilshire Boulevard.
around
around
accom¬
$8 billion (now they are
one-fiffednth
of
that
amount) and call money was 20%
in March and 15% in July. Under
Mr.
>such
circumstances,
does
our
Barbour makes no statement in
astute investor or speculator wait
connection
therewith except to
to sell and thus risk his profits
point out alleged certain errors in
and capital for six years and for
Mr. May's article and states "he
almost a 300 points rise for a Dow
overlooks these two points: > (1)
Jones fortuitous signal?
Most of the time competent Dow
Net, prof its are not necessarily
theorists trade well in advance of
the points of confirmation; . . ." computed only by the Dow Jones
with the
Barbour's article
of
What have they to do
plishments.
not
the major arguments
are
can
selling at 30 would fulfill
claimed
Mr.
when
High grade bonds were yield¬
ing 50% over the yield on common
stocks (now we have the reverse)
margins were 20% (which meant
you
could
buy five times the
amount of cash margin, now you
about
to
bought at 10
now selling at 33
(which means
100 including split up) and a 100
shares of Allied Stores bought at
these
there
Particularly
1929.)
.
funds
100%
invested, how
much capital funds were there and
much
6
from
and
in
supervision of certain
periods running from 5 with all earmarks of a dangerous
years.
The capital gains over-extended
position.
about
but
them and if they do not vindicate
the 1929 year thus indicated a rise
of almost 300 points in this period
complete
of
opera¬
computed
accurately
381
funds for
to
30
Of
when the Dow Jones average was
had
"has
the
loss.
Lawyer specializing in corporate
given at six years practices and taxes, and a finan¬
before—quite the contrary.
(A cial circle figure for 30 years, and
deceptive signal for a bear market was for 20 years head of the Stock
Signal was given, indicated in my Exchange firm which bore his
letter above,
on
June 20, 1923 name—Editor.]
was
loss."
entirely different industry in
two
shares a gain of
realized for each $100
at the best,
how much in money are net prof¬
its measured in the proportion of
4.36 gains to one in losses?
That
could mean $4 million to $1 mil¬
lion or $4.36 to $1.
Then, Mr. Barbour speaks for
$436.19
Dow Jones theory?
Brown Bros, in San
Angelo
TEX.—Kenneth
is engaging in a securi¬
SAN ANGELO,
W. Brown
ties
business
the
under
offices
from
Bank
National
Central
firm
name
in
the
Building,
of
Brojwn
Brothers.
•
.
from Mr.
enlighten¬
averages,
These further excerpts
Barbour's
articles
are
;
"I doubt if Robert Rhea ever
of waiting for
confirmation of major change to
ing.
had the experience
initially take
tion."
perfected
and
total transactions in¬
on
is, therefore, difficult to be¬
precedented
bull
market could
give after six years a forecasting
of its end by a fortuitous (for so
it
must
be)
decline in another
601,612
volving
shares
up
makes
So far, how¬ for serious consideration.
recession
stocks which are selling compara¬
that
what
have 1x2x3x4x5
you
which
12
It
in support there¬
of, a published audit by a certified
accountant stating "My findings
were
cf
a
in actual operation.
These
in
10
took
theoretical
be
can
proven
lieve that the tremendous and un¬
1938 and quotes
positions
479,002,688
positions possible. Now if you take
any situation at any given time
for a tremendous postwar depres¬
and compute, if you can the num¬
sion." I quote this in full because
ber of factors and forces with the
if such an array of talent, mate¬
accompanying
number
possible
rial, cooperation, experience and actions
and
reactions
to
and
work can't do any better how can
among each other, you reach by
a
series of blank checks on the this formula a
number of possible
future
be
» filled
prophetically
resulting combinations,
which
through systems, commutations or would reach an astronomical
fig¬
techniques?
The above forecast
ure, that would fill this page with
was undoubtedly the 8,000,000 un¬
zeros.
In life these finally assert
employment "gag" that fooled the themselves in a unified
force, like
administration and caused them to
all the drops of rain that make our
boost up wages and start us on
rivers, lakes and oceans. The no¬
the
accomplishment.
proceeds to state
how much money Mr. Rhea made
between Dec. 28 and March 25,
Barbour
railroad signal should have three
to
two
or
Mr.
these
course,
tions
market
never
prominent exponent of the
Jones Theory, Thomas W.
follows:
"The
fallacy
of
the Phelps, has issued a brochure of
some
Cowles; study is in its use of un¬
2,000 words, entitled "Dow
warranted
assumptions."
(These Theory in Practice" [see "Chron¬
icle" of Nov. 13, page 3] in which
are Mr. Barbour's boldface)
Mr.: Barbour attempts to glorify he advises the investor facing a
the bear signal
given by Ham¬ problem in the Dow Theory to
ilton .(leading
exponent of the "fall back on Dow's dictum that
Dow Theory) in an editorial in the one way to forecast the mar¬
the "Wall Street Journal" of Oct. ket is to comprehend the tendence
25, 1929 when "this industrial av¬ of events both as applied to gen¬
industrials
days before." This was "after
a major bull market with the un¬
precedented duration of almost
that would
serve
as
a
base of science
claimed
individual with the unknown and
by these Dow six
years."
As is well known,
workable computation. What ex- ! theorists
inscrutable
future.
really exists. That re¬ 32 months
Otherwise,
later, July 8, 1932, those
ceptions are to be made for major , quires proof not self-serving dec¬
they may very well be instances
averages were 41.22 in the indus¬
wholesale catastrophes, war, etc. |
of
wishful
larations of superiority in wis¬
thinking and cere¬
trials and 13.23 in the rails.
brated
the
and
years
Yet,
theorists
[see "Chronicle" of Nov. 27, page
4] wherein he takes up the chal¬
lenge of Mr. May's "de-bunking"
of the Dow Jones theory.; I think
a casual
examination of the two
these tables have been used over
fact of actual cycles in human
movements
of
out
their judgment."
He refers to the Cowles
urged to supplement my
reply to the
article of Mr. Justin F. Barbour,
entitled "Defense of Dow Theory"
important events.
a
period of many years and are
The cycle technique is bewild¬
ering if one listens attentively to recognized as authoritative data.
Insurance Companies have been
the mass of accumulative evidence
of its existence even as affecting able to rely upon the percentages
^rabbits and other animals!
The they compute, the risk they take
and the coverage they must ob¬
overpowering influence on those
addicted to such theories is the tain. These are drawn up on the
how
and
further on he states
"Dow theorist knows, that Dow
feel
I
Accident and
Companies
figure out a fair ap¬
proximation of the risk involved
in the happening of certain events,
including
death.
Northampton
Tables have figured the expecta¬
tion of life of any individual of
good health from a given age;
any
1947
Broad Street,
mediate
letter of the 16th by a
Insurance
In
vital
a
Editor, "Commercial and
Financial Chronicle":
can
law of averages.
maintains
taxes
.,1 %
in
54, and opeiated per¬
fectly, selling every bull market
top and buying every bear market
bottom, he would have made only
$51,000 and would have remained
learned these Dow Jones theorists
editorials
be
Casualty,
Fire,
enraptured
description of
wise, experienced, diligent
invested
of the Dow Jones average,
then around
represent an approach to or
are and how efficient the theory is
contact with, our complex and in¬
as a "philosophy for stock market
terrelated economic functionings
analysis and interpretation, and
that can assist us in the solution of
the forecasting
of the probably
these critical problems, in which
prevailing major trend and inter¬
the creation and preservation of
New
upon.
shares
Mr. Barbour then proceeds to an
genius,
criticizes
their judgment,
have been successful.
if they
These
do not
30
analyze why certain tables and
statistics can be workable for Life,
which
,•
theoretically
the
must presume—on
power
THEODORE PRINCE, L.L.M.
io
Health
outstanding
from
comes
the
world,
the
finan¬
to
are
can
we
destroy
of
traders
theory—they trade in advance, we
Nov. 20,
However, it might be interesting
latest
two.
conformable
cial
astronomer and out¬
authority on sun-spots,
an
findings in connection between
sun-spots and the business cycle,
but he remains entirely noncom¬
mittal concerning
the existence
while
understand, that
split the atom and
should
we
capital
Mr. May's thesis, that
form of mathematical or de¬
vised form or system by which
Massachusetts Institute of Tech¬
future events can be foretold, are
nology, head of the world's only
successful
point don't rely on the Dow Jones
world crisis now before us
our
and
role.
any
Theory after all! Well, per¬
here we have the (secret!
These
arguments
sents the last four peaks.
Dr. Harlan True Stetson of the
Dow
•
haps
in
Thursday, December 4, 1947
CHRONICLE
Stock Market
on
level
of
all commodities,
food, >
(Continued from page 4)
1
four months; then up 15 points in service,
manufactured products,
four months; then down 13 points etc.
in
three
Any system that could or would
months; then up 292
points in five years, three months." ,be 100% actually successful in fact
'The cycle of peaks in sun-spots over a period of time would prove
is not unrelated to this discussion. I its own inefficacy, for in that case,
Such
& FINANCIAL
COMMERCIAL
"It
or
can
and of other
be
said
of
Mr.
from
Rhea, 11945 in
a
1915
series of industries that
days, so to speak, dur¬
period (beginning with
automobiles and ending in depart¬
rists, that they erred in judgment ing
frequently, but that they were
quick to recognize their errors; -It
that
ment stores)
5
would have reached
in the market."
$70,000 which is 700 times the in¬
dividual investment or 70;000%.
more
If, however,
can
also be said that they
on
did well
Perhaps they rely
"horse sense" than the
(Special
LOS
liam
to
Corbrsy Co.
Financial
Millener
S.
with
sociated
&
The
Co.,
650
Chronicle)
CALIF.—Wil¬
ANGELES,
has become as¬
Carter
South
H.: Corbrey
Spring
Street.
to September
had their
competent Dow theo¬
With Carter H.
Barbour
points out in a 49 year period of
$1,000 theoretical investment now
worth $46,502.02. It has been com¬
puted that $100 invested and re¬
invested
liquidate a posi¬
which
this $100 had
been
With J. A. Hogle & Co.
(Special
LOS
now
West
The
Financial
Chronicle)
CALIF.'
—
previously
Maxwell, Marshall
Co.", is
with J. A. Hogle & Co., 507
Richard
with
to
ANGELES,
•
C.
Stickney,
Sixth Street.
Volume 166
Number 4652
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(2291)
•
ti
mtm
gift.
World Bank
as
On
the - rrrain iSsue, consid¬
saving is indicated—at
erable tax
least where
Lean Director
fore
McCloy, President of the International Bank for Recon¬
Development, announced on Nov. 26 the appointment
Iliff, of Great Britain, as Loan Director to replace
Charles C.Pineo, of Canada,, who'recently resigned.
Mr. Iliffs ap¬
pointment is effective Jan. 2, 1948, when he will assume his duties
at the Bank.
Mr. Iliff has been serving in various financial positions
the
British
throughout
of
course
the
his
Governments
world.
he
career
engaged in the
the
In
has
—
tary forces at Dunkirk.
Other as¬
signments with the British Gov¬
ernment, prior to the war, includ¬
ed service wtih the Ministry of
been
study' of national
finances and budgets and has tak¬
en "an
active part in negotiation
Labor
of loan and settlement
held
that
over
to
transferred
(See Security
Trust'& Savings Bank 11BTA833
<
with
the
of the countries in that
finances
Northern
His
area.
Middle
Office.
East
War
of
During World
the British Mili-
was
he
Indian
Southern
and
born
was
Oct.
on
2,
1898, son of John Boyd Iliff, at
Kircubbin, County Down, Ireland.
In 1923 he married Beryl Mary
Chambers of County Down.
They
| In 1944 he
Burma.
II, he
the
to
Persia
Iliff
Mr.
Financial Advisor to the Gov¬
ernor
1916
Russia.
present post is Cairo, where he is
Financial Advisor to the British
was
In
annuity.
have two children.
ihg
annuity plan, or if the com¬
pensation is paid or accrued on
account of an employee under a
plan deferring the receipt of such
compensation, such contributions
or compensation are deductible, if
they are necessary or ordinary
expenses, to the following extent:
ceived
|l)
If
sharing
exempt under
then they are
plan
which
Section
165
deductible
(A),
paid.
A
as
payment
is
oUggests that
revocable,
the employer in the taxable
year when payment is made, if the
employee's rights to or derived
compensation
be
Section T65
(3)
that
a
payment
(C)
made
s
provides
to
a
employees'
taxable
in
year
is
ment
income
made
which
to
the
the
contract
continues
is
in
as
its
re¬
posses-
sole owner,
a
that
pay-
rents in the year
(151
the
The
cided
trict
of Oscar M.
case
(4)
Section
(B) provides
amounts paid into a quali¬
that any
fied
trust
is
not
taxable
employee until the
he
is
in
actual
year
receipt
to
the
Burke
handy.
in
Burke
made
3977)?
the
the
It
Estate
Planning
Burke said: "Warner, you buy the
sticks. If there's a gain, you give
by the employee
reportable by him as longterm capital gains and not as ordi¬
nary income.
owns
But
now
the
law
let
is
very
take
us
the
clear.
case
of
a
is
reasonably
board
along and
You
are
these
We
you
after
that
directors
much.
comes
to the- employee:
60. years old.
One of
says
days
want
worth
of
plan
you
look
to
retire.
carefully
retire.
you
to
for
We suggest
you
are
let
years,
a
us
of
say
a
by
this
well
person
have
or
70 or 80
relative
of
that age, and who
block of valuable stock in
a
77 years old.
She had 8 chil¬
In that year she transferred
block of stock worth $240,000
to the children.
$100,000
The
was
on
poses,
basis for tax pur¬
cash
a
his
gave
note
for half the loss.
Warner
to
Although; Burke
financial condi¬
then in poor
tion, he Was nevertheless
was
cially
able
whole
or
from
to
1930
the
pay
in> part
in
finan¬
note (in
every
year
he had
so
desired, or had Warner com¬
pelled him.
Burke paid off the
note.
After
1940 if
to
up
Burke
filed
his
tax
return for 1940 and paid his taxes
due, he filed
the
on
from
for
claim for
a
ground
of
loss
a
transaction
a
profit.
Internal
The
refund
a
arising
into
entered
Commissioner
" Revenue
denied
the
claim, and Bufke pressed the
in
United
the
Court.
It
States
the
was
oJ
to pay
Each child agreed
her $3,000
case
contention that Burke and Warner
partners
were
in
the
transaction
If sOj Burke should have deducted
the loss in 1930 when the part¬
nership incurred the
must
50%
a
it
a year
while she
1930
an
the first year
he
annuity
was
in
operation
Bertha reported as income
$6,540
which
said
have
the
stod
that
and
Burke
should
the
of
have
the loss
stock
in
sold.
was
position and upheld Burke, the
taxpayer.
Burke
contended
he
never was a
owned
he
partner, that he
interest
an
Warner, all he did
a
in
borrowed
never
contract.
him
This
never
stock,
that
from
money
was
enter into
contract
merely
right of action against
Warner for debt if there had been
gave
a
a
profit,
debt
annuity
from
an
insurance
company,
it
would have cost her $218,000. On
returns for
of
in
The court denied the Government's
If
tax
Or
to
purchased,
his share
when
Warner
her
loss.
Government
owner
was
deducted
lived, or* $24,000 in the aggregate.
bought
the
event
anv
and likewise,0 it gave
Claim against iBurke for
'
Bertha had
a
if 'there
Under such
a
had
been
contract. Burke said
| he couldn't possibly have
ductible
debt
loss
because
basis.
The
loss.
a
until
he
court
he
was
said
a
paid
on
cash
a
Burke
was
right, allowed
The Commissioner claimed that—
(1) Bertha had
determining the type of contract
for ' the next seven years.
After your retirement the corpo¬
that
make
you
a
contract with you
may
enter
year
.
ration will pay you
for
10
years.
In
$28,000
the
a year
event
you
die prior to the time you receive
the full benefits of the contract,
the corporation will pay your es¬
tate or beneficiaries 50% of the
sum
you
otherwise
would
have
received.
tal
annuity
was
that
in
such
case
the
on
the
of
$218,000,
would
have
long term capi¬
the transfer and (2)
a
correct
amount' of
reportable
in
each
The
tax
issue
court
that
individual
has
to
the
on
is
actually
re¬
first
of
pay
by an
life annuity
a
computing
capital gain.
the second issue, the court
that, the amount of the' an¬
on
held
nuity
excess
reported
as
taxable
in' the absence' of
of
the
transferred
commercial
to be entered into.
simple
facts,
Here
on
these
the
parties could
have either had a partnership or
have been joint owners of stock,
;or ju*t have a debtor and creditor
relation between them.
agreement
fair market value for pur-
no
noses
ruled
an
ing by the Commissioner
it
year
3% of the actual cost of $240,not
$3%
of $218,000.
correct
when
the
000—and
tions when the payments are ac¬
income
to
annuity.
corporation would take the deduc¬
tually "made (or if accrual basis,
When they mature), and the em¬
ployee only needs to report the
the
had
commercial
a
gain
And
A careful study of the law seems
to rfeveal
she
for
pay
3%
was
amount
seven
value
over
for
case
with
nei
the
year
the
Oscar
previously mentioned.
In that case under the law in
ef¬
in 1929 and 1930, when the
.
transaction
incurred
have
constituted
The
of
the
a
was
show¬
that the
the
cost
stock
of
a
Carry-Back—Carry-Over
and
partner¬
no
the
Credits
in
law: in
carry
back
loss
The
credits.
took
loss
Market Dealings
few
a
two
were
Court.
The
held that
ment
back
by
of
OPA fine
with
Tax
them
settle¬
or
OPA for
maximum
viola¬
price
reg-
deductible.
not
were
there
the
substance
an
made
tions of the
ulatitons
weeks
decisions
These decisions appear to be very
much
in
tonio
and
cases
decided
Court
a
line
with
the
Portland
San
the
by
An¬
Cement
Co.
* Supreme
few years back. "But I do
not believe'
tharwe should accept
as final.
Suppose
these 'decisions
take the-case of
we
ment
instead
of
an
overpay¬
overcharge.
the taxpayer deduct as his
proper cost the price he actually
paid even though it is in excess
of the maximum price fixed by
an
-
Can
law. I believe that the actual
paid is deductible,
price
though it
even
is violative of the law.
There'are
several dedsions which" have been
place
handed down
paid,
and other courts to the effect that
was
same
regard
loss
a
thing
to " the
was
effect in
held the
the
by
though
Tax
Court
was
law
on
even
themselves
the
part of an
are
a
1929
1940.
and
The court
1930
law
con¬
trol
here
you
have
carry
over, or a loss which has
transaction taking place to¬
although the history goes
some
day
back
a
also.
Thus,
loss
a
whenever
back,
carry
a
do not rule out the
way,
view.
But what the
deductibility of the loss.
Survey the facts carefully. You
might come up with something
valuable.
,
,
>
-
Reorganizations
.
The
Supreme
Court
decided
summer
the
this
past
Adams case
nd
real
answer
is always depends on the precise
facts
and
circumstances
of
the
case.
lip
a
in
not 'advisable
is
It
give
is worthwhile
It
case.
a
to
struggle at too early a stage
pur¬
suing each matter thoroughly and
carefully.
present
Conclusion
Whether
not you have found
foregoing of interest depends
on whether you have had the par¬
ticular problem.
But, regardless
or
the
of
that, I
action
in
say to you,
of
any
trans¬
amount,
sizable
anv
in
the Bazley case. They make
worthwhile reading,
showing
any matter that is not in the reg¬
ular ordinary course of business,
how, in'those cases, the taxpayers
themselves into a sorry mess.
of the iaw
Then
in
•?ot
read
Cleveland
Adolph
160F2, 1012.
Realty Corp.
the
Adams
and
mid.
Bazley
were
closely
case
the corporations
case,
Each corporation
was
careful study and understanding
a
tax
will "oftentimes
savings-vand
(Special
to
The
J.
with1 Flynn
an
exchange of stock
in
a
securities
or
corporation for stock
curities in the
same
or
se¬
corporation
or
debentures.
interests of
both
same
The
the
before
and
recapitalizations.
Court
held
The
that
the
were
the
after
the
Supreme
issuance
the Corporate debentures
were
of
poration
Co.
cash
pay
no
a
to
the
were
was
and
Merrill
•mi
SEATTLE,
WASH. —Ewing A.
Gabryel is engaging in
ties
business
a
securi¬
from' offices
at
920
Second Avenue.
With First California
(Special
therefore
to
The
Financial
Chronicle)
SAN FRANCISCO, CALIF.— J.
cash dividend
as
&
E. A. Gabryel in Seattle
practical difference
between this and
idends
and
Fewel
Lynch, Pierce, Fenner & Beane.
that
to
411 West
formerly
He
cor¬
was
associated
Levitt,
&
the
equivalent to promises by the
there
become
has
with
respective
parties
CALIF.—Cecil
Seventh Street.
another corporation. In each
case,
the stockholders turned in their
old stock and received new stock
and
Downs
Chronicle)
Financial
LOS ANGELES,
tions of 112
(b) which permitted
result
refunds.
Downs With Flynn>& Levitt
reor¬
ganized and recapitalized and ap¬
parently complied with the sec¬
F. Furlong, Jr. has been added to
ordinary div¬ the staff
that they
of First California
Com¬
extent
represented earned
surplus.
Now
pany,
300 Montgomery Street.
read the Cleveland
Realty
Adolph Mayer
Corporation
case.
The
issue there was a little
different,
its applicability is apparent.
In that
case, the stockholders of
With Herrick, Waddell Co.
(Special
but
the
old
corporation
transferred
their stock to the
new corporation
in return for stock debentures of
the new corporation up to the
value of the stock transferred to
it.
Later
The
court
There
or
law in effect
Black
Just
.
over
recent
the
112
expenditures
illegal
capital loss business, they must be allowed as
tor an
ordinary loss. The defini¬ deductions where they produce
tion in effect in 1929 had a dif¬ taxable income. Ask
any 'Revenue
ferent definition as to
wbat con¬ agent what the law is on the sub¬
stituted a capital
asset/^rom the ject and he wilT take- the -opposite
true
Whether
valid
One
partnership.
transaction
controlled.
subject
with
which
either generally or
expertly familiar deals with carry
are
a
not when the
the
old
merged into the
"Another
taxpayers
said
court
when
de¬ The debentures
his held to be taxable
years,
at which time
retire. You agree not to
competing
busihess.
The
corporation will pay youv$60,000 a
we
for
case
a
should
over
is
this
fect
Distric'
the deduction for
1940, and gave him a refund. The
philosophy of this case ! demon¬
strates that care must be used ir
that
Burke
Government'?
cumstances,
August
dren.
the employee who for years makes
a year, and the Commis¬
sioner concedes that the employee
were
Warner had loaned him the money
for this purpose. Under these cir¬
a
closely held corporation, you
ought to read it. In 1939, Bertha
was
far
bought and
Finally, when they stopped
buying and selling in 1930, War¬
ner
accounted, and there was a
loss. Warner; paid it. Burke, who
when
client
or
received
was
of age,
years
are
So
with
his
substance,
down
(T.
handed
in
If
in
on
tribution from the trust, and then
certain conditions such pay¬
-
verbally
1929
agreement
Warner.
In
an
friend,
in
come
C. Memo
Kann
court
tax
year.
on
ments
will
case
In
S.
law
loss
compare
Mayer
Bertha
carry
the
the
deemed
)f
dis¬
a
under
partnership, ther
in which
of
tor
when
is
no
Have you ever heard of the case
165
whether
was
claimed
be
Annuity and
Moore,
incurred. The
especially true
court there held that the law
when
If two or more men contemplate
the deduction is claimed is the
forming a syndicate or pool. An
year
that -controls.
However,
understanding of the principles of
This
reading.
been
non¬
on
In that
toe computed under the-law in
ef¬
fect when the deduction is
Burke
forfeitable.
■
problem
if there were
em¬
ployee in the contribution is
is worthwhile
1944
dissent
F(2)527).
operating law
Burke, de¬
States Dis¬
the United
by
Court in
his
section
under
(b)(6).
law
Inc.
income until he is in receipt of it.
that
the
in effect in 1941,
that it purchases
annuity contract and the emnloyee would not have to report
ihe
pay¬
extent
contract
slight possibility
the employer can deduct the
the
the beneficial interest of the
or
and
on
here
non-
for
annuity
making the em¬
his estate beneficiaries
the
ams
exempt trust is to be included in
the
assignable, ir¬
surrenderable and
thereunder, and the employer
able at the time payment is made.
if
purchased,
ployee
non-forfeit-
are
that
volition,
own
a non
non
forfeitable
non
from such employer's contribution
writer
seems
part of an employment contract
as
deductible
the
to
employer of its
an
by
or
study of the law also
indicate
to
'
the
fie 'died.
paid
by the estate and the estate taxes
specified in the law.
(2) 'If the plan is not a quali¬
fied !plan under Section 165 (A),
then
date,
tween eventual income taxes
is
up ' to
the' eertain maximum amounts
the
on
Section
126
would
come
into operation so that an
adjustment ' would be made be¬
the
profit
or
It
Eventually
payment or contri¬
bution is made into a pension trust
,
him.
benefits of the contract,' his estate
tax might include the value of the
contract
be
must
as
is
sold.
18)
by
'
tax
corporation
based
Case
'an ordinary dividend.
later taxable • year, the
corporation causes a straight
free liquidation of the vo'ld
a•
court
and
The Burke
new
carry
shows that proper estate planning
worthwhile.
attribute to
Then, < in
of
1942, the loss
required by
treated
thfe* debentures, it had no earned
surplus, which could be said to
The
purposes
ship existed. Yet, as a result of
jthe change in the law which took
me
50%
of the profit,
and if
there's a loss, I'll pay you 50% of place in 1932 and which continued
ever
since, the transaction could
the
loss." ( Quite •« a
number of
most likely
would
be that if the employee
died without
receiving the full
or
for
This case seems
to be good law. But do not take
it as final.
One judge dissented
shares of stock
(Continued from page
fully deductible.
—"Estate of Johnson 10BTA 411.)
The principle of the Kann 5case
Secre¬
Army. He saw duty on the North¬
west
Frontier, Mesopotamia,
the Middle East where he has be¬
familiar
commissioned
was
Recently he has been active in
come
Northern Ireland.
in
been interested.
Permanent
" as
the
or
tary, Ministry of Public Security
agreements
in Which'the British. Treasury has
and
See. 23(g) effective^for
years end¬
ing after Dec. 31, 1941, such a loss
,was
A. B.
as
acapital loss.
Under the 1942
Revenue Act ,jan amendment to
Value of the property
struction and
in
full cost has been recouped.
;n
the 1'941 law it treated the loss*
In that: case, the capital/ gains tax
s
avoided.
Moreover, no estate
tax appears to be payable on the
John J.
of William
annuitant dies be¬
an
31
li
for
lowed the
duct
held
tax
was no
the
The
Financial
Chronicle)
ST. PETERSBURG, FLA.—Wil¬
liam L. Eckert is
now
with
Her¬
rick, Waddell & Co., Inc.
Joins A. M. Kidder Staff
corporation
corporation.
transaction
(Special
to
The
Financial
Chronicle)
ST. PETERSBURG, FLA.—Wil¬
liam M. Powell is
now
connected
and al¬
corporation to de¬ with A. M. Kidder & Co., Florida
purposes,
new
interest
new
to
'
on
the
debentures.
question in the
National
Bank
Building.
case
brought to light of the taxability of the deben¬
a point Of law which is well worth
tures to 'the stockholders. How¬
remembering. (Reo Motors, Inc. ever. the problem of creating tax¬
(9T.C.No. 47); In this case, the able dividend as in the Adams
taxpayer sustained a loss in 1941 and Bazley cases seems to have
case
With Herrick Waddell Staff
(Special
to
The
Financial
Chronicle)
CHICAGO, ILL.—Jesse L. Whit-
annuity
constituted from worthlessness of stock in its been < eliminated because, at the lock is with Herrick, Waddell &
paid rather than a wholly owned subsidiary. Undertime the new corporation issued Co., Inc.
consideration
.
32
\
(2292)
s-
K;
THE COMMERCIAL & FINANCIAL CHRONICLE
.■ih'.v/.y.
Thursday, December 4, 1947rt
fy*V
I.
prevent, further
A Gold Coin Standard to Halt Inflation
(Continued from
volved and difficult to
When
2)
understand,
page
mediate
portray
money deterioration are painfully
apparent today to the American
people. A spiraling cost of living
is
decisive factor in Amer¬
political
affairs.
Develop-
ments in this field will influence
ajnd probably determine the out¬
of 1948 elections.
come
And
it
our
on
not
have
While
the
real
anchor
for
Exports Currently
Inflation
Fuel
No
but
one
New Deal
$1,000 bond of March
shrunk
There
the
most
partisan will
zealous
was
mediate
significant
no
effect
the
on
im¬
rel with the fact that
those who knew the perils of pa¬
now quar¬
gigantic for¬
the immediate
cause of most spiraling prices. Ex¬
ceptional rises have taken place
mostly in products and materials
directly affected by this export
exports
are
And so it requires no special
ability to foresee that if this out¬
pouring continues, the momentum
of rising prices will continue. Especially is this true if public resistance
to
handouts
and
high
prices takes the form of lowered
productivity. That possibility is
important.
Besides
as
these
un¬
1939
has
Novemoer
in
Novem-
ber 1947
doz. eggs
$0.35
5
lbs.
lbs.
$1.18
.85
2.75
.47
chuck
3
1.12
Crisco
1
12
lb.
butter
1
lb.
10
roast
.26
cofiee
.45
.14
.39
And
so the orgy of reckless
pub¬
spending using printing-press
money that got under way prompt¬
ly met with no effective resist¬
lic
j
I
Deficit
ance.
into
the
spending
billions
running
brought
gen¬
a
eral
like
the'continuou's decline in the pur¬
tell
2
cans
pork
and
pound
cans
chasing power of the American
dollar, and flow can it be cured?
This is the real problem.
On its
sound solution rests the future of
America,
with
all
that
America
to the rest of the world.
means
"
this
easy
money
demonstrated by the 1936 elections.
This
reckless 'spending
spree
continued unabated until the out¬
break of the war.
A
1933
seeds for
the present har¬
of inflation
1933.
At
that
planted in
were
time
changed
we
sound currency redeemable
a
gold
on
system
printing
demand
a
money
domestically tied to the
press and internationally
gold/'
This
to
'""
mongrel
or
mixed-breed
the
paper-money
system
in Russia and other totalita¬
rian states. Here,
the
in Russia, the
cannot own gold.
a
(Niblets)_-
Secretary
to
came
our
of
.20
.2^
cans pears (Del Monte)
box Rinso (large pkg.i
.30
.36
lb.
interesting, I filed it
wjiat has happened
flation
front
since
in
away
inflation file started, in
,
on.
terms
of
this
will take
in
1947
It
is
headed
the
1939
That basic freedom is verboten in
22,
1939.
both
"The
Treasury."
can
per¬
lands.
am
pound
not
the
expert enough to ex¬
technicalities of the
abandonment
.standard.
pects
do
not
moment.
that
of
And
the
the
gold-coin
technical
concern
at
us
as¬
this
The
important fact is
departed
from
sound
we
redeemable on demand in
gold, and today have a managed
system of printing-press currency.
money
Secretary of
It
It is dated March
is
signed
by
Henry
These foods
I
as
could
cost
of
given
response
to
my
previous
letters
concerning United States
savings bonds. The amount sold
has already passed the
000 mark in
maturity
sale
$2,000,000,-
value, and
these securities is in¬
of
creasing."
I
on
"This
page
2, it
makes them
says:
ideally suit¬
able for many objectives for
which
individuals and families
lay aside
money,
such things
tion
children, the purchase of
a
of
,
as
the educa¬
home, the creation of
ment
fund, and
so
a
retire¬
on."
Included with this letter
was an
attractive
booklet setting out va¬
rious alleged, benefits that
would
to the purchaser of the
.accrue
Brooklyn
Union
Gas
Company
Review of Operations for 15 Years
1932-1946 -—Brooklyn
Union
Company,
176
Remsen
Brooklyn 2, N. Y.—paper.
Survey
and
Nations
Tendencies
Department
—
of
Economic Affairs—Columbia Uni¬
versity
Press,
Morningside
Heights, New York, N. Y.—paper
—50c.
vjr'■
■
.
-
i'-:
"A
On the
cover
is this claim*
practical way to establish fi¬
nancial
same
'
•
.35
market
$2,500
this
buy the
in
list
a
They show the
market
basket
$4.96
in
March
on
about
was
house.
our
according to ads in
the
Washington papers, this same
market basket of food would have
cost $12.68. That is an increase of
were
the
promises
and
offered the prospec¬
tive purchaser of
savings bonds in
1939.
Over one billion one hun¬
dred million of
maturity value of
savings bonds were sold that year
to
purchasers
relying
on
the
soundness of the doRar.
"tl.
What has happened to their
vestment
in
the, 8Vr years
sirice
so
This
that
means
$387.
terms
of
measured
This
the
investment,
amount
of
in
food
Standard
it
in!
in¬
investment
any
calling for fixed repayment in
dollars, has lost, in food-buying
power,
inal
one-half of his orig¬
over
purchasing
power.
Taken
and
far
I
am
flation
the
march
ideas
the
President
and
have
we
road
of
cur¬
in America.
currency
be cured by
never
plans proposed by
in
The
gestions
money
toward
can
the
Congress.
his
best
message
of
his
to
sug¬
helpful palliatives,
simply economic
narcotics which might delay an
inflationary smash-up but deepen
are
are
its evil consequences.
our
deaden
will
be
the
task
is
not
pain of
and
cure
to
try
infla¬
the
the
but
us,
cause
or
causes.
•Mi
no i
effective brake
on
gov¬
ernment ^pending?
The issuance
of fiat money and bonds payable
in printing-press money are sub¬
ject to no effective control by the
people. The taxpaying citizens are
no longer able to
prevent govern¬
ment spending from continuing to
the point of currency destruction.
The
power
of
the
al¬
purse,
though technically lodged in the
House of Representatives, basi¬
cally remained in the hands of
the people so long as our currency
was
redeemable in gold coin.
Not
Stop
Inflationary Spending
The events since V-J Day have
demonstrated that neither political
party will stop this spending un¬
der a
fiat-money system. Let me
illustrate. Suppose a major party
exhibited the integrity to stand
firm for economy and against fur¬
ther inflation? '- It • lis* extremely
doubtful if it could maintain <iits
ing
deteriorat¬
a
currency.
In the
meantime, except for in¬
are headed higher
and higher.
^ \
tervals, prices
Until we restore to our people
the American heritage of an hon¬
est dollar redeemable in gold, in¬
stead of the totalitarian device of
printing-press currency, our eco¬
nomic, political, and social struc¬
will
ture
continue
to
deteriorate.
a
Favorite
Nicolai
Lenin,
the
first Presi¬
dent
of Communist Russia, is re¬
ported to have declared that the
surest way to overturn the exist¬
ing social order is to debauch the
currency.
Mr. Roosevelt adopted
this
economic
munism
in
technique of
1933.
We
com¬
have
been
Unless
repudiate
we
ultimately
it,
that
bring communism to
Printing-press money is
working and trusting people while
currency.
Regimentation Will Not Stop
device that
a
robs and cheats the
his
Paper money is
the
President
power to regiment the
people in peacetime. He believes
part,
wants the
stabilize
can
political
our
currency
regulation
by
natural
oi
economic forces.
I
President
would
carefully
the history of previous attempts
of
this
kind, his views would
change. He would no longer be¬
study
skillful the regulating
authorities might be.
The natural
laws of
economics, like all natural
laws, are not changed by human
desire or caprice.
Many people still nurse the hope
even.
.
■
to
more
be
an enemy
feared
than
military power, real
Since
been
a
litical
is
it
respectfully suggest that if the
en¬
rich themselves.
Depreciation
Money
For
fancied.
has
money
decisive device in the po¬
success
of the New Deal,
obvious
restore
to
or
printing-press
much
Soviet
dollar
that
any
honest
an
in
redeemable
real fight
American
gold
must
from the Republican Party.
come
And conversely, if we of the
Republican Party do not make this
fight for the people, the people
will
to
have
no
honest
have
reason
In
power.
gold
to restore
us
this drive for an
dollar, all patriots
a common
interest. But with¬
out
vigorous leadership little prog¬
ress is possible.
Until
restore ' an .;
we
American
dollar
honest
this situation.
They forget that
production always creates its own
redeemable; in
gold, prices are headed "higher
and higher.
Survey, if you will,
purchasing
the shattered and worthless paper
that increased production
in
1948
power.
$150
If
will
we
billions
cure
produce
of
goods,
there will be $150 billions of new
created to buy those goods.
Also, there is good reason to
money
that
without
stabilization of
radic lags in
segments
of
our
prompt
currency, spo¬
productivity by
our
general.
come
the
some
people will be¬
industrious
Our
currencies of
will
the
see
,
the absence of
in
an
honest
There you
Europe.
that awaits
chaos
dollar,
us
restoration of
a
redeemable
in
gold on demand.
when
Eventually,
find that
rating,
our
they
the people
is deterio¬
currency
will
lose
their
thusiasm for saving dollars.
en¬
Many
who
have been working shrewd people have been for years
saving dollars for the putting their savings into land,
future, are certainly human. They jewels, works of art, and real
will not continue to do so if they wealth of all kinds. Some day that
hard
and
become
convinced
that
the
dete¬
rioration of such
savings will con¬
tinue indefinitely.
Somewhere along the line these
thrifty and frugal people will de¬
cide that depriving themselves of
immediate enjoyment by saving
dollars is unwise. Then, like the
populations of many European
lands, ' these
workers
will
no
longer put their trust in an irre¬
deemable
If
paper
Congress
currency.
does not
.
soon
ef¬
fectively deal with the problem,
this peril may not be too far away.
mass
saving
abandonment
habits
would
of
be
a
dollar
major
calamity, especially as ' a mass
flight from the dollar would al¬
most surely follow. '
The
People
Should
Have
alarm about the value of
our
cur¬
will spread to the rank and
file. No person is knowingly go¬
ing to invest in securities that are
steadily
deteriorating
in
real
rency
value.
Bacon, Stevenson Co.
Admit G. R. Hayes
Clarence
R.' Hayes
j is.ftylay,
being admitted to partnership. in
Bacon, Stevenson & Co., 39 Broad¬
way, New York City, members of.
the New York Stock Exchange.'
Mr. Hayes has
been with the; firm,
held,
membership in the New ;Y6rlt
Stock Exchange.
for
some
time. In the past he
the
Power to Prevent Money
Deterioration
;'t. I do not speak on this subject
with the assurance of a Complete
understanding of all the intricatemporarily,, let ciej£ of this' problem. But I believe
alone long
f 'Sm correct on the fundamentals,
enough to effectively
ranks
to inflation and
cure
of
A
Political Parties Will
3wn
American
America.
people,
•//!."
May nq$0the basic cause of our
currency, (ijfeterioration stem out of
this faqti ihat since 1933 the people
have
the
It is the only
constructively and
permanently halt the deterioration
our
sickness.
believe
tionary infection afflicting
find
of
action that will
tioned and
our
that
proves
down
rency depreciation
This
hands
Lenin-favored device in itself will
bills
regimen¬
tation could stop money deteriora¬
tion, no matter how well inten-
Place
debasement of
bonds
gone
the
people where it belongs, we have
not put in operation the only final
convinced that the restora¬
similar
lieve that governmental
Large-Scale Debasement Has
This
in
tion of the free circulation of gold
is the only sound cure for our in¬
that
introduced in the Senate.
he
vestor in savings bonds or in
or
;
people
using, with clever variations, that
totalitarian printing-press money
system ever since.
pected
by
will buy, has shrunk 60%.
surance,
J?-.-
the shrewd and well-informed
1939 prices a 1939 $1,000
savings
bond today has a buying power of
only
'/
^
are
150%.
over
;o
Gold
bills
being prepared,
to restore the right of
private ownership of. gold and
to provide for the minting
and
free circulation of gold coins.
I
expect to introduce these bills to¬
gether with the appropriate corol¬
lary legislation needed to achieve
this constructive goal.
It is ex¬
the
day that Mr. Morgenthau's
Last week,
-.M'v' /"vV >.*•.£?.:
Inflation will'hot end until the
Printing-Press Money
designed
basxet,
to
purchase
typical
as
sales letter reached
independence."
These
allurements
of Current Inflationary
Deflationary
"United
Gas
Street,
..
bonds.
are
select.
by printing-
well.
as
Restore
And
12.68
would
Washington was
23, 1939.
That
to
"Dear Mrs. Bufl'ett: I
appreciate
the cordial interest shown
and the
Then
over
branch
1939.
Surely
It starts out like this:
the
.17
typical
$1,000
while others
Morgenthau.
citizen
plain
that
<:*
;
summed up as fol¬
Communist Tactic
4.96
destruction
in¬
the
know hold in
my hand.
as
butter____
peanut
In
my
1933.
haps best be illustrated by read¬
ing to you from that letter, which
I
dressing--
Total
it
rise,
even more power¬
.86
.19
salad
« n;«
• •
.
be
.13
.17
1
the
ful, not only for the executive de¬
partments but for the legislative
1.29
pint
the
house.
is
press money
.36
.45
1
Sales Letter
Treasury
Sensing that
restraining
.23
.05
picnic ham
form letter from
the day would come when the con¬
tents of that letter
might prove
J' ;V;,'/
system is not too different
money
1939 Treasury
Early in 1939
and
.13
lbs.
1
advantage
tation to meet deficits
head lettuce
Money Deterioration Started in
The
political
.22
That indicates that the 1939 in¬
Our fiat money was
similarly
intoxicating in its early stages, as
The
of prolonging the boom prevents
the "ins" from curtailing expen¬
.45
beans
each)
corn
present.
ir¬
period of high
revenues
like the
a
.38
.19
i
1
sooner?"
about
me
Take
indecisive remedies.
alarms
easily drowned out by ad¬
ministration
ballyhoo sugarcoating the change.
inflation is almost
resistible.
Similarly in times of falling
governmental revenues the temp¬
quarts milk
2
terioration
long
so
.28
2
2
• .*:v.
can
again possess the final
as
our
currency is not anchored
power of restraint over govern¬
to free coinage and circulation of
ment spending.
••
gold.
They only possess that restrain¬
Vvith printing-press money eas¬ ing power when they can
exchange
ily available, the temptation to paper currency for gold.
"•
Until that basic control is again
stay on the
slide currency de¬
us
.15
O'clock)
(8
lbs. potatoes
lbs. oread
(1
situation thai conironts
ditures
1.02
.22
1
sugar
%
which
lows:
except for campaign oratory and
.85
.39
lbs. flour
lbs.
-iff,
currency,
governmental
Prices in
1939
2
were
feeling of prosperity not un¬
that of the greenhorn who
.something to think about.
| drifted into a brokerage office and
But today I want to get at the deposited $1,000 to speculate. With
root of this problem, the under¬ unusual luck he soon had a $500
lying basic cause of the dilution paper profit, whereupon he ex¬
claimed: "How long has this been
in
the/purchasing power of the
American dollar. What is causing going on? Why did not somebody
I
$3$;
March
groceries
dismissed
per money were
boom.
used
to
Prices in
domestic
eign
from
mar¬
1947
purchasing power of the dollar.
The vigorous alarms sounded by
to
gives
2
Quickly Discovered
Fires
in
that
3
Evils of Printing-Press Money Not
f rom
here
Measured by 1947 food prices, the
5
a
sion.
vest
chart
a
the prices and total cost of a
ket basket of food in 1939:
This
not
was
ter?
I
of
Realistically this is the political
Morgenthau's let¬
of
surprising sound currency, gold coins of a
that the rising cost of living, called fixed weight and fineness
freely
the "march of inflation" by the available upon demand was
gone,
President, is one of the two rea¬ the loss seemed of little impor¬
sons why he called a special ses¬
tance.
so
the date of Mr.
our
century-long rec¬
stability,
coupled
with
the
seeming
security
which
Treasury-owned gold stocks cre¬
ated, served to keep the vast ma¬
jority of people complacent.
ord
Already it has almost certainly
ican
effects
were
Civil War.
fact.
a
in
disturbing.
Public faith in our money system
rested on a long heritage of sound
money redeemable in gold.
We had been on a gold coin
standard from 1837 until 1933, ex¬
cept for a lapse caused by the
longer a theoretical' danger
discussed only by Republicans and
economists. Not any more.! It is a
.
surface
currency
no
become
revolution
system took place, the im¬
money
the consequences are not.
The rising prices that
this
our
deterioration
'*
With Merrill
Lynch Firm
(Special to The Finanwai CHRomm*)
PORTLAND, ORE. —r Hugh V.
Crawford has been "added
staff
of
Merrill
to
the
Lynch, Pierce,
Fenner & Beane, Wilcox Building.
Volume- 166 vNumber 4652J*"
^THE-ymMl^eiAt'&PINANCIAL'^
-" J,,-'A—
ts **'w*.'?..i?
not
only
*■
A ' -»-i; f *
ourselves
•If thV torch of freedom is ever
allowed to go out in America the
•'
been made that our defense in the save wear?
Can you remember
(Continued from page ID—
they must thus cooperate while air is '& hDftowjshell because Con-; when a solemn order was sefl.t out, J world will be in spiritual dark¬
the money is available—and they
that there should be no more ness;';;
gress was too tight-fisted, *
v:;;:
.'« '
have their chance.
God forbid that. % r *
Now let's look at the *
:!
butchering of "female steers"?
This enormous job of rebuilding:
The budget requests for the Do we waftt any jnofe of that sort
America will stand.
Europe cannot be financed entire- Army and Navy air forces were Of, thing?
America will lead the world. :• *
IV.
,fly from the United States Treas¬ $1,379 million cash and $553 mil¬
~A8ter^ will (continue, to be the
-'Controls ilirottle ProductloR' :
ury. Wfe must enlist and encour¬ lion contractual authority,; a total!
torch of hope"and-the beacon of.
-
building up the agricultural arrd
industrial life of Europe so that
thfr
age
aid:
of-
private sources
willing to risk venture capital in
rebuilding industries abroad.
There must be improved methods for the distribution of relief
;
abroad.
Good business executives
should
the
be
selected
to
expenditures if
supervise
we
ever
are
to fin'sh successfully the job we
have started. The job should not
be
given
warmers
;
theorists
to
chair-
and
whose chief aim is to
re-
main on the government payroll.
Congress hopes to evolve a plan
to meet these requirements.
4
And
in
all
this,
must con-
we
sider America, too.
v
All
in
real
Americans
wanting to
glorious,
You
grand,
and 267
Public laws 202;
containing the final action
Controls throttle down produc¬
progress for all the
tion.' We know the salvation of; world.
these requests, show that Con¬ America lies in a constantly ex¬
gress gave the air forces in cash; panding economy.
For the sake
???uS.h,,to. support a decent stand¬
ard of living. Such
aid to Europe
Will-Of course provide
marketsr
Wants
authority
an
ag¬
gregate of $76 million more with
which to function than was origi¬
to recruit.
chil¬
that
Price
Control
!
of the wage earners, as
else,
everybody
we
Reliable information is
give
every
wage
earner,
every
the
tioning.
Do
remember
which
lack
of
for
and
sugar?
fruits and
the
allowed to
were
mental
when
begging
were
butter
and
-
remember
you
people
.
1.3%,
fense.
all
The Administration wants a re¬
turn
of
price controls and ra¬
the
can
the
sugar,
because govern¬
price-fixers and rationers
activities
they doing with aries
are
billions
which
were
ap¬
left the wages and
The goods
at
services
sal¬
home.
went
have
we
Economy Will Not Embarrass
National
berries
for
the national de¬
wreck
What
and
overseas
and
were
propriated? Certainly, with proper lost to us. Now the inflationary
supervision, the nine billion, 539 condition is being aggravated by
million should have provided ade¬ the drain
on
our
supplies—the
billions of dollars worth of goods
quate defense.
bacon,
Do you
spoil
abroad
Defense
and
sent
since
sending
are
the
ended.
war
Drouths and unusual winters have
The revelations in the Ferguson
Senate
Committee
are
timely.
added to the burdens of the world.
The law of supply and demand
The
has
Michigan Senator should
appeared to be ignorant that they
But
go
coincided
with
further
and
even
were
Do
you- recall
how the store
clerks—if they liked you—would
go down under the counter for
the
Let me say
to you, we had bet¬
keep uppermost in our think¬
ing one very pertinent fact. It is
scarce
items while they blandly
easy enough to shackle the people'
told other customers they were of
this country
under govern¬
out of the commodities?
mental controls, price fixing, wage
You will recall that before the
regulations, and regimentation by
CPA was abolished by executive a bare
majority of both houses of
order of the President during the
Congress. But it will take a two79th Congress, black markets were thirds
vote of both houses to strike
springing up everywhere.
Meat off those shackles and recapture
ter
.
■
butchered
flies
under
swarming
the
on
with
trees
it
being
was
sold to the helpless public. Every¬
thing from
sugar
ings, ' from
coffee
tires,
going
was
market
prices
to nylon stock¬
faster
automobile
to
into
black
faster.
and
the
And
skyrocketing.
And
been proved a dis¬
Prices were high and
were
OPA had
the
mal failure.
the food difficult to secure.
The Administration
seeks
^
the
power to return to all that.
Now,
fellow
citizens,
the rest of the world is commend¬
able.
But it must not be made the
for taking the brakes off
governmental spending at home.
■excuse
Wei
Spending
'started
wasteful
to
cut
reckless,
governmental
soending
the
in
first session of the 80th
'Congress, and we are going to do
it again in the second regular
session 6f this Congress.
We, saved three billions of dol¬
lars'; for' ,the
taxpayers
by
cuts
where cuts could safely be made,
but
tho' bureaucrats don't like to
talk ,about that.
Just while I
am
on
this
national defense.
There is
lives and
Of
on
powers
activities of
all
course,
over
our
the
"the
the
people.
Conscript?
unless
used
necessary
are
pure
twaddle.
saying
They are like the lion
to the lamb: "Come and
lie down between my paws.
I
won't eat you unless I
get hungry."
Did you ever see a bureaucrat
who
wasn't
can
those
hungry
bet
for rnwer9
last dollar if
your
powers
granted to the
Executive Department of the
gov¬
ernment they
will promptly be
are
invoked and used.
And when the
people get tired of them and want
billion
with
suggested
that its
so
be
almost
es¬
about
$17
$5,750,000,000
the grant for 1948.
as
The Army's proposal for
peace¬
time
military conscription would
between
cost
$3 and $5 billion
a
fat
jobs.
It will
require
twothirds majority of both houses of
the Congress to break their hold.
It has not been
charge
has
society.
It
free
and
economy
start our slide
into the abyss of the police state.
No
man,
no
bureau,
can
run
it.
Give them
the truth; let them know the facts,
and they will do a>good job of
governing
:s
the
themselves.'^r'danger
citizens may
clever,
bb^&iiled by
skillfully-man¬
cunning,
well-financed propa¬
ganda aimed to bring 'the Amer¬
ican people into subjection to a
aged
and
according
to
the President's Commission
Universal Training
on
$1,750,000,000
seventy-six
thousand Administrative regula¬
tions which had the force and ef¬
of
law.
In
many cases even
recourse to the courts was denied.
R.OT.C.
In
and
addition
estimates
a
technical
training
this,
to
about
a
govern¬
Sehickele,
billion
a
dollars
replacement cost for weap¬
ons, and about $2- billion a year
in goods and services, which
would
year
be
lost
through
withdrawing
?.
million draftees from
production.
Thus the total cost of compulsory
training would be not less than
$5 billions each year.
Unlimited
or
judgment
insufficient information.
Con¬
gress is determined to do its part
solved
the
right
take team-play
ole,
the
That will
way.
between the
Administration
peo-
and
the
Spending and Our
Two
problems
ican.
Our
must
be
stamp
given by the New Deal
bureaucrats to farmers to take the.
shoes off their horses at night to look
must
be
kept
incomparable
perpetuated.
worry
proposal for conscription,
bear¬
a
and the
how-
are
to prevent the
spread of Commu¬
nism and how to avoid a seriouc
financial
crisis.
The
Army
has
played
up the fear of Russia as
motive for expanding American
armaments and passing conscrip¬
tion.
The State Department has
stressed the need for
aiding the
a
economy if we are tr
prevent the kind of financial col¬
ands
which
of
would
people
drive
into the
arms
of
Communism.
On the other
ex¬
spending
would
injure
out 'the'-fifth
American economy.
to
see
No
economic
an
America both because
source
lions
also
of economic
throughout
because
create
wants
one
collapse
we
are
ir
the
hope for mil¬
the
world
Comr^Liinism in jtMs country and
our
liberties.
We
owe
it
on
military 1
to main-1
more
which democ-
on
Vniheir feet" and
for the next war."
If
.
ion
"Prepare
"
we cannot add $3 to $5 bil-
each year to
our
military
ex¬
penditures without the
possibility
of economic
collapse, it would be
ioiiy to pass conscription. Noth¬
ing would do more to
encourage
>the growth of
communism at home
and abroad than the
economic col¬
lapse of America.
h»;,°l°"ly must.a ehoice
reconstruction
between
be made
and
con¬
scription, but if the Marshall Plan
is
going to cost about $20
billion,
there
ought
to be a reasonable
that it will succeed. In¬
on
the passage of com¬
assurance
sistence
pulsory
military
would
certainly
confidence in the
Marshall Plan to
5y£?os9;
training now
imply lack of
ability of the
accomplish
its
would obviously be
.
difficult to make
a
case
for
com¬
pulsory training if the reconstruc¬
tion
of Europe does
accomplish
like
the
would
a
provocative
move
adoption of conscription
to imply that the re-
seem
consti uction
of
Europe
just
strug¬
was
another aspect of the
power
gle between Russia and America
and not
really intended to help
achieve peace. This in itself
would1
America.
injure
writing
from
Marquis Childs,
Paris, was quoted
^?e Pct' 8' 1947 Los
Daily News"
"If
in
as
Marshall
Plan
Angeles
saying:
coming into
takes
,
being
the i
the
ap-j
on
pearance
of another and grander
in the struggle for
s*prem—i
acy, the chances of final
success)
will be small. The
move
who has
to
endured
believe
hope of
To
a
give
that
to
man-!
much wants i
represents
better world."
the
reconstruction
chance
so
it
Marshall
the
best
succeed,
the
for compulsory
military
should be dropped.
thei
Plan
of ]
possible!
proposal
training
collapse here would
conditions
on
which
Jacquin, Bliss
do¬
thrive
recon¬
$20 billion
four years and the $20 billion uni¬
versal
military
of
spent
ex-
and
system
column
mg
own
our
struction
must
we
conditions
ordinary
hand, financial
perts both in and out of Congress
have warned us that unlimited
would
cost
in
the
next
Jacquin,
Bliss
to Admit
&
Stanley, 61
Broadway, New York City, mem¬
bers
of the New York
Stock Ex¬
training
cost in the
same
would change, will admit Ernest Jellinek
period, it is im¬ to
partnership on Dec. 11. Mr. Jel¬
portant >to ask which is
to
thous¬
Amer¬
We
better to reduce
less
tain
Moreover,
which
Congress and which have
ing both on reconstruction
In view of the
America
Se su£gested that1
k
its purpose.
mestic communism would
Congress.
m
forces if
Economy
lapse
snap
one
.
decide either to stay an¬
other six months in camp or take
four years R.O.T.C. in
college, or
gress is going to examine every
of those proposals most care¬
on
vim T'
would be
would cover the cost of the
European
those decisions
are
mportant factors that
contribute
camp racy and peace depend." He inditraining. At the end of six months'
basic
training each boy would £a!fd tha* a choice must be made
between helping
"get democracies
have to
centralized power at Washington.
You may be assured the Con¬
one
that
comprising,
budifgest single itemthe most
in the
budget
of
An exact breakdown of the
cost
has not been made, but
very
themselves
"rnilitamf expenditures and
unch.e.cked>
military
}ures °" the nation's mil!-'
wl could spend said' Ult maV be
™°^eS* H5
we
power
last, very desperate re¬
sort. No clique in Washington can
run America as well as the
people
a
York'
p
26 as warning
that the
country faces danger of '
economic
collapse" if inflation
it
clique,
no
Board
New
oy the nation's leading
military
writer, Hanson Baldwin.
is to be trusted with
in peacetime, except
party,
such
as
coyld
long ago that to solve the problem of high prices
struggling —the American way. It is a prob¬
along trying to operate and help
lem we
recognize.
It must be
to win a war under
advice
the
free
was
money and wrecked our national
defense. Several times within the
weeks
American system of free gov¬
our
ernment,
so
American business
ness, of agriculture, as to astound
the country.
Do you recall the
few
easily mark the end of
a
branch that the 80th Congress re¬
to
appropriate
sufficient
past
It could
Reserve
in
...
year, according to an article in
the July, 1947 "Readers'
Digest"
ment economist, Rainer
to ration supplies,
prorate and fix prices
and wages, is the gravest demand
ever
made upon
the American
people in peacetime.
powers
Federal
revised downward the cost of the
reconstruction plan
timated cost would
time
regiment,
along. They will fight to the last
fully. We are facing fateful deci¬
ditch to resist losing their powers
sions. We do not intend to make
They will try to hold on to their
grow¬
fused
-
con?
would add still other millions.
no
rationing powers and regimentating restrictions will not be1
They were so contradictory, so in
ing propaganda emanating from consistent, and, in some gases,
•officials high
in the Executive displayed such ignorance of busi¬
a
^ Communism
is unlikely to
spread among people whose needs
^
tisan problem, nor is it a partisan
question. The demand of the Pres¬
ident for a restoration of his war¬
assurances
these
subject, fect
I want to recall the record
delegated
to be freed, those bureaucrats will
do exactly as they have done all
Cut Reckless Government
j.
those
You
helping
CommS
ore
us
deeper into these questions. aggravated inflation.
facts and figures which
In the
face of the stark fact
three or more years in the Na¬
that sort of thing?
stand
in
the
record
prove
the. lbat more of everything, is needed
tional Guard and Reserves. The
Do you remember those days absolute falsity of the charges and by a
suffering world, in many
President's Commission estimates
when1
you
stood
in
line
and insinuations that the Congress has foreign countries communist
the cost of the National
Guard
adopted1 a mighty meek attitude embarrassed the national defense, strikes are now under way to
program at about $765,000,000 and
when the clerks in the rationing much less weakened it, by reduced produce less.
Chaos is their ob¬
the Organized Reserve
boards barked at you and acted appropriations. The services
at about
may jective, of course.
$400,000,000, the bulk of1 which
as though you were some kind of
be embarrassed but if so it is not
would be
Not a Partisan Problem
a
criminal because you wanted by being denied funds by the Con¬
directly chargeable to a
ration coupons for food7
This whole issue is not a par-1 compulsory training program. The
gress.
deliberately wasting food by
well as
as
being met.
the si ren^t*;
and the wisdom to lead
all other
which is far ,
countries of this world to
less
May God give
Or
ours.
or
*?r American products
Pfevent the growth of
nism.
Shall We Constiuct
of
Rationing
no
.
Training;
well as of
adopt
frightening than'
have got to and work
under a world-wide the atom
bomb, would neither
produce more goods and services
Russia
slogan-T~"Pull Together for Peace scare
nor
prevent
the
nally requested in the President's at lower prices. That Cannot be: and
growth of Communism in
Progress."
done by raising wages, and then
Europe
budget.
ii all our other
vast military
The total effective reduction of raising prices, and then
prepl
raising
defense
budgetary requests, all. wages and prices all over again.
rlluU*S Instead, it
TaV+e ".0t Produced these
lesults.
would with¬
items considered, was a net re¬ That, of
course, is an inflationary
draw much-needed labor
from the'
duction of only $120 millions or spiral. The wage earners see that
production of consumer
1.3% of the President's request. as plainly as other people do. We
goods in
this country. A
shortage of
Significant factors to consider in¬ must employ our most skillful
sumer
:' (Continued
goods and a
from first page)
clude the fact that funds for per¬ engineers to produce new tech¬
surplus of
each year through 1951. On Nov.
sonnel, both civilian and military, niques for us. We must increase
t]?e hands of consumers
±actor ln
were
the per man hour output. Lower 8, 1947, a Committee appointed by
predicated on the Depart¬
causing inflaton
ment's estimates of their ability prices and improved quality would President Truman on foreign trade
MamnerEedes, Chairman
Ot
the
contractual
and
recruiting
is
behind farmer—every man, woman and
dren to have the fair chance you schedule. They
may not be able child in this nation—an increased
have had.
You want the young to spend all the money they have. real income.
veterans and the rest of America's
Since the national defense has
Deficit spending, currency in¬
youth to know and make stronger been treated so generously one flation, and the inflationary ef¬
the freedom and the richness of begins to wonder how it can be fects of war
production are re¬
that a net cut of $120
life in the America you love.
million, or sponsible for high prices.
War
your
people <5f the
on
children's
rich land
free,
want
united
are
preserve this
of $1,932 million.
may produce for
themselves and for
-foreign trade
,
v.-
jhO people, there
,
.
an
essen¬
tia}; iexpenditure and which could linek
we
postpone
or
eliminate entirely.
&
Co.
was
formerly with Dreyfus
34
THE
(2294)
if.
CHRONICLE
Thursday, December 4, 1947
Industry's Answer lo the. Police Stale
top levels .(or covering part of<
short
FINANCIAL
&
you're short) and disposing
part of your long stock at
of
Tomorrow's
COMMERCIAL
(Continued* from page-13)
positions
/
a
"ricbuman's program," or>"relief
at lower America believes that the way to top thq greedy, at^the expense pf
levels) is one way that helps. fight totalitarianism, abroad 4s.to the
^that
allowances for
A word of warning: stops are adopt totalitarianism here.
emergency
per¬
I know, and from what Presi¬ sonal expenditures such as
large,
not insurance.
In a roaring,
dent Truman himself has. said, of outlays
for
medical
expenses
market, up or down, stops, the police state, I feel sure he should be liberalized. And Amer¬
v
r.
Walter
J/
n
Whyte
J'-:
become
broken
=By WALTER WHYTE=
Market
repeated,
move
in
violent;
point
-
near
to
future.
❖
same
ternative
The market is still
of
kind
some
again.
which both
%
A
vork
(b) To maintain the standard of
living of the American public,
thus
and
To
amount
controls
of aid to
And .let's be practical about it.
a
signal the chances are
that,, the signal is completely
meaningless. Or worse still,
may be entirely erroneous.
—Walter
and two children would be re¬
with them. By putting out a bond
quired to pay, at the maximum., which is more attractive to .in¬
dividual
only 60j cents a week in Federa
investors, still further
income taxes—the price of one excess purchasing power would
be removed from the competition
movie a week.
But of even greater benefit to; for. goods, and thus, further re¬
all people of moderate and small lieve
the
upward, pressure
on
means,
is the basic principle - o' prices.
plowed back one-fifth of our gross
national product into the forma¬
tion
of new, job-creating, prog¬
ress-making
capital.
On
this
proven basis of what it takes to.
create
prosperous
New Deal decade our deficit
capital.formation amounted to,
Rich
$125 billion.
every
poor,
or
American's future depends on our
making
this loss
much as
up as
to
our
we can
economy,
reestablishing
our
to:
Discourage inflationary expan¬
sion of bank credit.by. permitting
interest
rates
to
during; leyels free of
years,
the
in
In this field NAM
interest rates.
proposes
of
and in
for¬
the, 20%
mula for future, years.
seek
their
own
government, domi¬
nation.
the risk of
At
over-simplifying
something that could- be discussed
hours, we can agree that peo¬
ple
will < always r borrow
more
money at 2% interest than they
will at; 6%.
But for. many years
now
the
government has hejd
for
Amprteaps.arp; b^n^p^4 % epb-i
Fair play across the board in down the interest rates andjthns
jerve, to
economize and to, buy!
faxes;4s imperative, if there is to encouraged a greater, demaM?fpr
Thursday.
More next
,
for example, so that z, tractive. to individual, investors,
the
banks
are
man with a
wife: and
overloaded
year
assuring our ability
provide the necessary
foreign nations.. ^aortal formation, which we are
There we have three simple,
Wants. Uncontrolled Interest,
fighting for.
Rates
decent, necessary objectives.
ijurmg tne tragic thirties we in¬
What's more, here are 12 things
NAM's fifth plank, to stem; in¬
curred a staggering deficit in the,
we must do to reach these
objec¬
capital formation which is needed flation deals with the vastly cointives—a. 12-point program of ac¬ before
plicated
problem, of, expanded
any American can prosper.
tion.
Prior to 1930 we had consistently bank credits and artificially fixed
(c)
shore.
recognize
a
,
(a) To reduce inflationary pres¬
on
prices in this country,
;hereby making it possible—
sures
,
people
out,
$2,500
.
certain
pro-
invested
Three-Fold Problem
Such patterns are interest¬
Let's look at this program. And
were
the only things facing
ing to watch* ii^ watching, is
let's realize that if we're going to
all you're interesting in. But the market, the outlook! get out of the woods and reach
wouldn't be so obscure.
It is our objectives,, there's no "hop,;
if you're committed to either
the foreign picture of which skip and jump" route around ,the
the long or short .side in such
the Marshall Plan is such a problem, simply because, the an¬
a hp(arkei?you stand an excel¬
swer may be
politically, or other¬
lent, chance of becoming a major part that is back of all wise unpopular.
this uncertainty. And so long
We've got, to take every step,,
man
people" point to as one
as the market shows this un¬
courageously, with, our eyes and
who's always talking to him¬
cur
hearts, fixed, regardless of
self. This goes back to a mar¬ certainty, I see no point in >elfish group or indiyidyal intergetting too far away from ?sts, on the national welfare.
ket, fundamental
that
if
enough
greater
.
Why start it,
Our problem is threefold:
combination
If
have
r
parties will agree
result.
will
on
a
face.
should
in life insurance. Actu¬ government, the proceeds,
to^ be
ally, under the NAM's plan, low! used. to.retire government bojrds
We hear it argued that no one inepme groups would receive!, the; heldby banJks.
proposes, a
"full scale" police greatest amount of tax reduction
Artificially lo,w interest ratp^
s|atev' What,! foolishness! Who s—ja .minimum! of 37 % arid raiigihg. on Federal bonds, lead to credit
oyer heard of "just a little small-; up tP 60!% reduction in their, pen-' inflation.
Today government, se'r
sonal income. taxesX1/. It !
pox?"
wp.ulc; curjties are not. sufficiently at¬
-
#
❖
we
Then, why do it?
step by step?
develop
litics being what . they are,
into
the/real, thing, pricjes
maybe the controls .won't be
start backing .away
pefpre
Truman's, or the GOP's. But
a .week 1 is over the averages
back around 180
government
,
issue having an interest
bearing rate attractive to indi¬
..
icans
t
....,
long-term
new
iectiqh throughL, income tax de¬ vidual investors should be offered
ductions for. .moderate;, aihounts! and vigorously promoted by thje
making now.
were known you can be sure
rupi along / scxniethin^;;liHe
this; Stocksy as; represented by thp market/wpujdj reflect it>
The Washington picture is a
the averages, manage to climb
little clearer. It's almost a cer¬
up to about the 184 level. But
ihis'i^c^yery .staytjs tainty that some kind of con¬
trols will come through.
Po¬
to look life, it will
are
A
bond
is, the most deadly dangerous al¬
mulling
the French,, Italian and
in
the
Washington, situation.
is
How they will turn out is ap¬
the market-1 is
The. pattern parently unknown. If they
one
12
knows that its establishment here
*
....
of its
that:
or
over
The pattern I described
the two previous^ columns
the
*
Accordingly, as the fourth
plans NAM recommends
spend.
or¬
one
half dozen of another.
constantly
patterns,
market
Still it's six of
ders.
prices is to give people an in¬
ducement
to.. sayev rather- than
on
^'
mly necessities
Whyte
so
that
we
,
shall
be enough capital to spark-plug credit than could be; justified,; Our
jobs and goods and lower! proposal is simply to allow intp;cexpressed; in, tftt*. halt .or.
more of the world. And
prices/that all Americans need. est; rates to. find!; their own level
article do not n^cessaTily.atyaxiy every American
sis
*
*
worthy of the! In tne- medium and
sp dhati if too many people/want
upper income
tim$ coittpidp,. with thps& of th*
'naipe.;agv^^
groups, .from 60 to 80,% of! the to bpjfrow, it will discourage'thpse
Right now it seems almost Cfironfcfo They are presented op; tor government too!
" !"fcMv.
amount save4r,from taxes can be who,, shpuld notj get> or. dp.; not
an automatic procedure. Buy
Tp paraphrase a copy-book, theme
relied on-for creative investment. really need. tthe; moppy,
■
,
et's have some official
practising^ ^What this'situation- demands. is
them when they're at 180 or
Thp present^ system: makes, it
af official preaching!
~
>
possibie for commercial,. banks to
statesmanship on the part of our
so; sell them atT84 or better*
So,,, the., first plank. in NAM's
national' legislators as well, as on build
up
reserves., and. expand
It's; all so simple/ v If
plajfprpi' deals., with,; government the; parts of, management and credit without any possible penal¬
fiscal; policies
If ; iSy, directed at
multiplication table.. Aty-ypu,
ty. It serves as a constant Incen¬
labor.
;xcessiye goyernmient spending! as
for
banks
to
The easiest way—the political— tive
dump their
:
a major
inflation factor, We rec- the
demagogic way with an eye bonds on the Federal Reserve SysV
sit back and make profits.
CHICAGO, ILL—Russell ;Gartr ontrnehd.; tbat'
on
the
next
national
elections tern in order to increase their
SfS
i'fi
*
ley has be.con>e associated with
Government spending should be
would be to give all the tax re- loans and discounts.
^—1
First Securities Co. of Chicago,. 134
to the $5,00Q and under
Up to this point, we have been
Unfortunately m a r k e t s
income
bracket.
There's where discussing those aspects of gov¬
don't behave so rationally.
excessiye
goyernment personnel
ernment policy which;. contribute
the. yotps. lie. But it's about time
The chances are. that just
and activities; and postponement
inflation.
that
our
' government
Management, toO,
and
our to
all
government i expenditures
when you have everything
Congress gave, some thought to bears a heavy responsibility.
So,
not
immediately necessary.
the jobs, the goods, the higher in our sixth proposal,, we say thai:
nic|*
Pat« the, whole thing
After exhaustive consideration,j
Management must ■ redouble its
standards these same people and.
will blow up in your face
our
de. able
[The
to
feed
views
and rehabilitate!
the
'
'
s?th^U
_
First Securities Co.
jiayi|^
,
»
l--
,
•
Association is convinced that
sprayed with
losses.
As. a matter of, fact,
the pattern discusscd.4u the
first paragraph may well be
the one that can explode.
leaving
he,
you
There is
rule
that
*
*
no
can
all
Russell
South
Gartley
La Salle Street.
Mr.
Gart¬
ley was formerly manager of the
Chicago office, of, the RangonDavidson Co. Prior to serving in
the armed forces he was a partner
Pacific Coast
of A.
sible
S Huyck & Company.
Securities
Orders Executed .on
Open Chicago Office
Pacific Coast Exchanges
J
Schwabapher. & Co,
a-.
14
;
.
h«
3.
with
frin^g^:idff^ie^§
Sap \ Fraaelseo'>4:Jfcautp'
Monterey— Oakland
** V
—
announce
the opening
fcar|»a*a'/;f
S^r%ipentov
/ Fresno K
Chicago office at 135 South
'f
'
?V
'v.-»
'$■
*
them
•
as
of David N.
Teletype, NY 1-928
to
firm,
-
La Salle Street and the association
Chicago Boar4pf;Trad$,K
New Yorfc.& Jl. Y.
COrtla ndt; 7-4150
Cummins, Inc., Des Moines invest¬
ment
*
^l/treet
% /Private Wires
CHICAGO, ILL. —Wheelock &
of,a
Stock Exchange
(Associate)
New York Curfi Exchange
Sto'ck Exchange
and
prices.
better
Therefore
goods
we
at
rec¬
Fj, Grimm,
officers in
Chicago
Danielson and Edgar
Mr,- Dapiplson.
was,
formerly,- with j F* S>. Moseley< &,
Co,
Mr. Grimm
/
T^eabody & Co.
was
with Kidder,
an
for
excuse
crushes
our
payments.
a
tax
power
The
debt
emphasize that tax
reduction,,is NOT inflationary. Jt
simply means that you. and mil¬
lions
of
me
other
Americans ,r can,
p|! coiirse) rtlip.
program
Handing ? iL
over
to ^ the govern-4,
mentito. spend forvyou'^
shrink
power
f
NAM "proposes that f ait'playi be^ prices
restored as ,a basic ingredient; of ! .Gne
•
ta^atio^,. Tjift;<dqe^tnot ..raake^ it.; 10^
for
increase;
production,
tivity to the public.
Management: must
the
easy
reached
rock.
of
never
take
out
by assuming
item of cost has reached
way
that any
rock, bottom.
rock
If
it
really
has
bottom—blast
the
We must fight this problem
production
and
distribution
costs with modern scientific meth¬
ods—with
constant
studies
of
element that goes into cost
every
—with constant research and
ex¬
perimentation to reduce unit costs.
As
produce
now stands
costs
lowered—through
are
new
to
methods,
equipment,
new
processes—any saving abpve
amount necessary to earn a
an
reasonable
return
investors
or
should be passed on to the
in the form of price
piib|ik?
reduction^.
If
we
lose
ever
sight of the fact
that we've got to
satisfy our cus¬
in businessman#
lose sight of1 the fact
constantly more and better
tomers
if
we
that
to
.
stay
ever
^will bp, paid goods^ for less money is the jojb
America
By adopting such a systematic
spend your,own money instead o£ debti
to.
lower unit costs,, and pass on the
benefits of such increased produc¬
new
off in about 6Q. years./
[
efforts,
which
level
at $257 • billion.
When our gov¬
Funds for further capital invest¬
ernment adopts, a plan for apply¬
ment should' be provided: by an
ing a total annual sum equal to
'mmediate and substantial .reduc¬
the present interest burden" plus
tion
of J'individual
income
tax;
$2 %. billion, and applies the same
rates.
+
sum each year in the future
(di¬
Reduced Taxation Not
viding it differently between, in¬
terest and amortization each year,
Inflationary
Now let
Members
J
more,
ommend that:
Wheelock&Cummins
New York
The third plank
in. the program
,t9|! our platform planks to fight the inflationary spiral
;s a realistic approach to the prob- calls for adoption of a. systemati-c
'em
of relieving the inflationary
nlan for paying off. the PubUe
pressures on prices by revision of
debt providing
for a minimum
Lher; Federal tax policy which;
annual debt retirement of. $2!-2
drains away at its source the in¬
billion.
vestment capital, needed to expand
This
debt
must
be
faithfully
existingv industries, create new
enterprises and : thus make pos¬ met, but it should not be used as
lower
San Francisco
even,
Second
con¬
tingencies.
Placing stops at
bottom points (or top points
$31.billion,
lished national policy.
hard and fast
cover
their children will need tomorrow,
can- —it's time Washington gave some
provid- real
thought to the formation of
:ng» $4. billion i for. contingencies
investment capital for the jobs,,
ncluding international affairs and the
goods and the, prosperity and,
'inance. This $31 billion, also in¬
security, of tomorrow.
cludes adequate, provision for mil¬
itary needs on the basis of estab¬
Plan of Debt Redemption
v.
*
oypTalJ Federal. budget
be cut to
retirement
of
the
pays
free
enterprise/to
dor^-th.en,. gentlemen, We shall be
cn
our
way
opt,
•
Our seventh, plank, designed to
will,
the
volume
of
buying reduce
"priced .incjrpgse, liying
which today is bidding up, Standards .fitn4 help ■ us- meet oiiy
held
by
banks,
we
of goods , in Short ^supply,
^oi,thje.: most ,effectlvp .^wpys
v inf laj^pn^ryV
ii? ternS
v
jiiPrial^r^^iremehts!is thaj:
Jtp^bpslp^s^l^ plpw^ck
Volume* 166
Number 4652
£jict increase output, through elim¬
ination of present U. S. Treasury
at'least
70% of its profits as
does
ask
for
peal of that section of
our
not
the
re¬
tax law
designed to prevent the withhold¬
ing, of earnings as a means for
evading taxes. But we do recom¬
mend
that
ing out of at least 70% of all earn¬
ings be modified so that business
feel
free
retain
to
earnings
as
it
invested
to
increase
finds
much
as
best
output.
can
be
A
dividend
moderate
policy with a
earnings going into
investment should be the
maximum
plant
Emergency foreign relief should
of
objective
be
in
American
ing
manufacturing
all
of
business.
the
Against Renewed Wage
kets, here
abroad,
or
economical
and
labor has re¬
sponsibilities
too
in
this fight
against inflation. As we see it:
course,
Labor leaders should forego de¬
mands
further
for
in
crease
general
without
wages-
in¬
cor¬
a
The
(a)
for this
reasons
ity i except
equity.
in
cases
of
gross
in¬
Certainly by this time labor lead¬
should have learned that wage
ers
increases which
are not paralleled
by increases in worker output can
have
to
effect than to
other
no
the
add
There is only
thereby add to
selling price
that
workers
have to pay for the goods they
buy.
Certainly if labor leaders
the
will
devote
time
much
as
available—the
in short
have
in
driving
to
past
uneconomic
in¬
the inevitable result will
creases,
be
the
wage
steady decrease in the cost
living and a steady increase
the real wages of American
a
of
in
workers.
supply should not be sent
incredible
seems
being
food
serve
and
to
This
never
is
was
time—and
no
a
time—for stiff-
necked management;
And the ninth
plank in this
tional effort toward
sound
a
na¬
econ¬
which we believe
would contribute mightily toward
balking inflation by increasing
production. Here we say:
is
omy
All
one
restrictions
productivity
safety
all
and^
not
should
individual
on
essential
health
and
of
to
the
employees
rules
feather-bedding
be set aside.
Restriction
a
on productivity was
theory hatched with that
false
equally false notion of economic
maturity in the late twenties. Re¬
strictions
schemed
on
up
sharing
productivity were
for the purpose of
when
work
there
don't
We
have
retarded
so
to
keep
living
know
and
were
much
make-work
the production
desperately
do
how
know
feather-bedding
we
were
job hunters than there
available.
more
jods
need
at
we
this time
costs down.
But
that the myth of
economic maturity created a def¬
icit
of
capital
amounts
to
formation
$125
billion.
which
I
am
convinced that if we could trans¬
late the equally cockeyed results
of the feather-bed theory into the
actual
cost
finch "that
of
every
rot
that
urged
aid
our
for
controls
the
—
basic
petitive
which
interferes
elements
of
enterprise
free
will
with
com¬
only
re¬
tard and delay the reconstruction
we
are
anxious to bring
so
should
they
could
dehydrated and substituted for
grains.
(b)
Unless
relief is handled by an
agency,
will
we
whether
needs
the
doing
foreign
American
emergency
have
job
is
check
no
which
being
most
done,
and
and
would
(2295)
make
amount
erous
possible
of
Believing
As
ica
countries such
new
great—as
grow
such
nesses
assume
let's
small
busi¬
big—
thing.
one
We
struction to those countries which
free
will make the best
lives without let
use
of
aid.
our
The decision is up to the individ¬
ual country.
But whatever that
country decides will indicate pret¬
clearly
use
how
our
constructively
it
aid.
NAM believes the 12
enumerated
are
fair
points just
valid
and
to the three great prob¬
lems that we face.
They are the
direct route to the wholesome ob¬
jectives we seek.
They
would
nullify the Administration's pro¬
posal to establish a "police state"
America.
They
maintenance
of
of
the
would
the
be
—free
to
to
living,
individual
own
hindrance.
or
personal
our
All free
selves
decent
a
our
This is not
tricity.
individual
our
earn
lead
eccen¬
share these
men
convictions.
wherever
they
then, here today, repre¬
American manufacturing
industry, declare to the American
people
our
determination that,
assure
standard
American
of
public,
with
their
blessing,
to be
help and with God's
America shall continue
land of free men, of free
individual enterprise dedicated to
a
the greatest good for
number
and
the greatest
inspiration
an
freedom-seeking" people
to
every-
our
living,
year
we
relief
realize
that
would
it is extort¬
ing many billions of dollars in
higher''prices from the American
treated
together
at
100%, and likewise the long-term
are
at 50%.
After the net short-term
aid, we
gains or losses and the net longagainst term
gains or losses have been
relief goods being misrepresented
computed, they are combined. A
as the donations of
"philanthropic net
long-term gain or loss is added
totalitarian"—God
—governments.
save
This is
the
mark
imagi¬
nary danger.
It has already hap¬
pened. Many foreign beneficiaries
no
connection
a
Russian province.
In
with
to
a
If
one
net
is
short-term
a
loss
and
gain
the
or
loss.
other
a
gain, the smaller is deducted from
the larger (after taking any capi¬
tal loss caryover into account) to
get a final result. *
loans, gifts or
If this
result
is
a
long-term
grants to foreign countries, NAM,
as the
11th plank in its program, capital gain (in excess of shdrtterm losses) taxes are computed
believes:
To the greatest extent
feasible, reconstruction loans to by the alternative methods of (1)
foreign countries,
gifts and grants,
as
distinct from
should
be
fi¬
The
preceding
with tax laws
less
comments
and
now
standard
present
are
deal
more
considerations
conditions.
The
only consideration that is specifi¬
cally different this time relates
to
the
extremely likely prospects
for
tax reduction next year.
Of
the major items
proposed, raising
exemptions would have the least
bearing
on
present
our
subject;
the effect of
done
and
lowering rates would
largely on how it was
in
the
different
extension
of
brackets;
community
the
property provisions would be im¬
portant for higher brackets.
If the presumption of lower tax
next year be
rates
accepted, it
first be
advisable, other
things being equal, to postpone
taking profits until next year,
would
when the effective rate would be
lower. This of course would not
since if the taking of profits
postponed to next year, the
year,
(Continued from page
losses
of
elapsed.
Adjusting to Prospects
investment standpoint, to take this
himself.
America is supplying the
will have no protection
have
the desirability of
offsetting, by
taking losses,
any
profits that
might seem advisable, from the
Income Taxes from
foreign
relief,
and. again
through unnecessarily forcing up
cost of the goods he buys for
ents
ihclusion in
ordinary income, (2)
considering
capital
gains
sep¬
arately, and the lower tax figure
is paid.
A net short-term gain
is simply added to ordinary in¬
were
11)
effective
transactions
short-term
Since
rate
(in
a>
number
of
brackets)
would presumably be
given full
effect, whereas less. The
short-selling method of
only 50% of long-term are taken
postponing profit realization could
into account, it is advantageous
also be advantageouly employed.
when possible to take losses in
It is of course, always a tax ob¬
securities held for six months or
jective to offset gains as much as
less, and to register gains in those
soundly possible.
are
held
for
more
six
than
When
this
course
enables
losses,
but addition
of
be
can
The
be
i
of
of
of
i
half
only
v
.
long-established rhle must
remembered)
does
it
deduction
full
gains.
months.
done,
not
that
(it
losses
apply to gains)
are
not
allowed for tax purposes if "sub¬
stantially, identical" s e c u r i t i e s
acquired 30 days before
have been
or
after
the
date
of
sale,
a
total
of 61
There is of
course
no
reason
postpone
the
taking losses.
presumption would
losses
now
would
be
to
Indeed,
be
that
better
than
next year, since more taxes could
be
cancelled
out
for
a
given
amount this year
than next. How¬
particular tax
reason to accumulate a large loss
carryover this year (though there
might be investment reasons, de¬
pending largely on opinions as
to future movements of security
prices).
ever,
there
is
no
days, A short sale,-however,
results in a gain or loss when cov¬
and private sources rather than
ered by delivery of stock, and a
There seems no especial disad¬
out of taxes collected from the
come.
A net capital loss can be recognized loss is snot barred by vantage in
tempering tax action
American public.
used to cut, by up to $1,000, ordi¬ the 30-day provision.
It applies this year on the premise of lower
We cannot too sharply differ¬
only on purchase within 30 days taxes in 1948. Even if lower taxes
nary income and any remainder
entiate, even in our own thinking can be carried over into the suc¬ before or after the date of buying are
not realized, one is no worse
between outright
gifts to meet ceeding years
in to cover the short sale
(not off
up to five, wherein
(other things being equal)
dire
need,
and
reconstruction it can be used to offset
the date of the short sale).
In¬ with taxes left the same as this
gains, and
loans. And we should never take
$1,000 of ordinary income each cidentally, a Supreme Court de¬ year.
the shortsighted, slipshod way of
cision this year killed »the avoid¬
Conclusion
year.
thinking that foreign aid for re¬
ance
of the 30-day provision by
For those who have the type of
With no change in the tax laws
construction is a charitable oper¬
having a wife or other close per¬
affecting individuals this year, the
ation. For the sake of our future ordinary income where a loss can son in
a
family sell while the
be recorded, it is possible to ab¬
general course of action that tax¬
relations
with
the
countries to
sorb capital gains through such taxpayer bought back the same payers should take is the same as
which such aid will be extended,
losses. It is also possible in some security, or vice versa.
last year. Only about a month re¬
we
ought to develop a business¬
Short
cases
to
hold
selling also provides a mains for action, and it is desir¬
ordinary income
like
method of doing this job.
down
(such as by deferring in¬ means of postponing the recording able to examine portfolios and
Dealings between friends can be
of profits to next year. By selling transactions
come
and anticipating expenses)
promptly to see what
put on a businesslike basis with
and use capital gains, which will short a security held, and keeping might
be done to improve tax
mutual benefit. Whatever we can
the security (selling "against the
result in a
lower effective tax
status.
The
great likelihood of
do in putting foreign reconstruc¬
rate
for
those
in
the
'higher box") and then covering the short lower taxes next year makes it
tion
loans
through
either the
brackets.
sale next year, the gain (or loss)
advisable to adjust tax actions to
World Bank or private banking
this prospect—the principal fea¬
sources
will
develop
a
much Effective Tax Rates Applicable to Profits on
Security Sales in 1947t ture being to consider postponing
sounder basis for harmonious fu¬
Brackets of Income
On Excess
Net—
Net—
taking profits this year, where
ture relations with the countries
After Exemptions
Over
Short-Term
Long-Term
other
reasons
do
not
interfere,
involved.
$ 2,000— 4,000
20.90%
10.45%
$ 2,000
because profits may cost less tax4,000— 6,000
It is unthinkable, of course, that
24.70
12.35
4,000
wise in 1948, in view of reduction
6,000—
NAM as the proponent of a free,
28.50
14.25
8,000
6,000
prospects.
8,000— 10,000
32.30
16.15
individual enterprise economy at
8,000
After it has been decided what
36.10
18.05
home would endorse the encour¬
10,000— 12,000
10,000
might be most desirable from the
12,000— 14,000
40.85
20.43
12,000
agement, at the expense of Amer¬
tax angle, the final test of sound¬
ican taxpayers and consumers, of
14,000— 16,000
44.65
22.33
14,000
ness, as always, should be that no
controlled
47.50
23.75
16,000— 18,000
economies elsewhere.
16,000
action taken would appear to rep¬
So the 12th and final phase of
50.35
25.00*
18,000— 20,000
18,000
resent
more
disadvantage from
our program urges that:
53.20
25.00*
20,000— 22,000
20,000
the investment (or appreciation)
22,000— 26,000
56.05
25.00*
22,000
standpoint than the advantage ap¬
More Production Abroad
26,000— 32,000
58.90
25.00*
26,000
parently involved on a tax basis.
Maximum
incentive
for- in¬
61.75
25.00*
32,000— 38,000
32,000,
creased production abroad should
65.55
25.00*
38,000— 44,000
38,000
he provided by requiring, foreign
68.40
25.00*
44,000^- 50,000
44,000
71.25
25.00*
nations, as a condition of -ouraid,
50,000— 60,000 *
50,000'
to estaolish sound currencies and
70.10
66,000— 70,000
25.00*
60,000
76.95
25.00*
70,000— 80,000 <
modify and - eventually eliminate
70,000
79.80
25.00*
price control and* other* controls
80,000— 90,000
80,000
(Special to Thk 'Fuwwoial > Chbonicls)
82.65
25.00*
over the-internal production*and
90,000—100,000«
90,000 CHICAGO, IL L. — Elliott^ P.¬
distribution of commodities;
84.55
25.00*
100,000—150,000
100,000y,
Woodruff has become associated
nanced
through
the
World
Bank
,
'
We have
in the
briefest possible fashion, nine of
the 12 planks in a program, NAM
believes will enable us to reduce
;
inflationary
now
covered,
pressures
on
prices
maintain
our
American
standard of living and fulfill our
obligations: to our stricken neigh¬
here,
bors
abroad.
'At: this very moment Congress
is in special session
wrestling with
tho knotty, problem - of what, Row
much,
and
where American
shall be extended.
aid
And NAM has
'
,
Elliott P; Woodruff
With Paine, Webber Co.
:
Believing in fair incentives
we
•
150,000—200,000
as
Over 200,000,
do, and^ able as We: are tb de^-
are
enterprise, we
convinced that application of
competitive
o
150,000;
200,000;.
85.50
.
25.00*
86.45-
25.00*
vfCombined riormal tax and surtax after adjustment for 5%
MbhstrSte^the^^benefitS-oflfr^^ri^
vate
a
effective maximum in any event.
On the other hand, it adds to
the
Unless the ultimate recipi¬
year's
gain can,
be important to those who would
probably be subject to the 25%
where.
are
cheapest, the American taxpayer
is twice penalized; once through
unnecessarily high cost he pays
(d)
months
depend
Let us,
senting
answers
living
goods
six
under
total states or total
other evil thing. We
any
next
effect, be converted into long-
Americans don't like to be kicked
to
in
A short-term
by selling the security in
question short and covering after
or
by
included
term
responsibilities. Then
new
(c) Unless the agency buys re¬
lief
be
35
the National
as
remember
or
well.
will
tax return.
Association of Manufacturers must
like
in
Amer¬
as
oursrgrow
as
associations such
war
should
will
foreign
in
in our own system,
certainly be most in¬
terested in giving aid for recon¬
ty
gen¬
a
to
around
about.
we
aid
nations.
reconstruction
con¬
scarce
done
eco¬
We believe anything—
cartels, state monopolies or other
millions
potatoes
when
with
to
with
starving,
left
UNRRA is
Management has much todearn
The ideas, suggestions arid
problems of our employees and
their^spokesmen should never be
ignored.
American
of American relief still think that
i
too.
there
kind of
when their equivalent is available
elsewhere in relative abundance.
and
thought and energy to helping
management increase output per
worker and per machine as they
through
one
taxpayer's dollar.
But there is a
wide variety of goods that will do
the job of emergency relief. Goods
be
our
are:
dollar
It
principles of
CHRONICLE
for
and
cost,
recommen¬
FINANCIAL
purposes.
which
dation
on
responding increase in productiv¬
most
prove
identifying them
be
of
of
provided by the United States.
as
abroad
Increases
Now,
mak¬
agency
purchases
necessary
Americans
Cautions
need
goods, not in dollars, with
relief
&
nomic system offers the brightest
future for those countries which
\ihatever goods in whatever mar¬
the
present pressure
of the Treasury to force the pay¬
will
proposal is that:
an
dividends.
NAM
tenth
Our
basic
the
pronounced views here too.
business to distrib¬
pressure upon
ute
THE-COMMERCIAL
with
all reduction.
4
Paine,
Webber,
Jackson
&
Curtis, 209 South La Salle Street;
over¬
*Maximum rate of 25% applies to net long-term capital gains.
Mr.
Woodruff
partner
Co.
in
was
Woodruff,
formerly
a
Sholten &
COMMERCIAL
THE
(2296)
36.
&
FINANCIAL
CHRONICLE
TKursdayv Decembeif 4;->Jj947
■«
within
Wage and Price Restraints to Combat Inflation
American
diet
most
have been
—
commodities
specific price situations.
at
directed
(Continued from page 7
Between May and Sep¬
tember meats rose 21% and dairy
and
temporarily—heavy slaugh¬
tering of this fall checked the rise
in meat prices. During the sum¬
mer
and early fall the price of
eggs advanced seasonally by 29%,
and
and
which have been rising
about 1% a month, will rise mucn
Rents,
after February unless rent
control is extended. Up to June,
faster
1947, just before the amended Rent
Control
Act
went
into
effect,
there had
been an over-all in¬
in rents charged for
homes
in American cities
cf nearly 5% from August, 1939.
crease
and apartments
de¬
greatly
stocks,
storage
Rents
the amendment of the Rent
With
were less than . half of
normal.
Butter prices rose 30%,
pleted,
Control Act, rents began to rise
and by September had advanced
.
bringing the average price
early fall to 92' cents a pound.
by
On
evels,
top of this, in October, the: e was
nationwide wave of increases of
to two cents a loaf in the
but
and oranges;
declines were
potatoes
less
than the seasonal expectations. As
a
consequence, the average city
housewife who goes to buy fcod
of
the
today must take nearly $21 to buy
what $10 bought in 1939 and what
less than $15 bought on V-J Day.
Even as recently as 18 months ago
the
been
have
could
food
same
bought for $15.
Blame
to
Not
Are
Farmers
in
corn
our
belt
in the grain
or
growing belts in the rest of the
if they
world. Nor can they, even
joined up to try, stop the rises
prices which come from the
all
in
market-speculation.
commodity
to remember
of such large
increases
in
food
prices
falls
heaviest on those sections of our
is
It
important
also that the burden
population who are least able to
bear it. The low income groups—
low-
whether the families of the
paid
veterans
or
earners,
wage
pensioners on small fixed al¬
and
lowances,
workers
—
clerical
low-paid
or
always spend a very
large proportion of their incomes
on food. When the price of bread
have to pay it.
When the prices of milk and meat
and butter increase they and their
increases
children
consume
foods.
essential
these
nowhere
clearly
more
less of
This
is
than
seen
of
food
ef
relatively
This
than
more
increased
much
a
so
smatl
prices
much
more
costs. The shortage of
has
contro¬
much
been
the relationship be¬
rising wages and rising
over
tween
prices, particularly since V-J Day.
The fact is that wage rates, be¬
V-J
tween
of
1946,
the
On
Day and the middle
faster than prices.
other hand, earnings of
rose
workers, which dropped
sharply after the reduction of
factory
so
working hours at the end of the
had scarcely more
than re¬
middle of 1946
war,
gained by the
what they lost at V-J Day.
During the war and postwar
periods, profits have been ample,
and there is no doubt that for
the
profits
months
18
last
—
prices
and
—
have risen consistently
Wage increases,
middle of 1946,^ have
faster than wages.
the
since
in
been
of
pursuit of
cost
rising
a
living, and real wages have not
what they
decontrol period.
lost
regained
the
in
Rising Faster Than Wages
The
general level of prices has
ther
than
increased
that in
be
explained by
It is true
industries, especially
can
costs.
wage
some
in
much far¬
faster and
much
those
which
costs
labor
are
a
consumption of fluid milk,
which has declined by 10% per
large fraction of total costs, wage
capita since 1945 in the face of a
directly
Nor
sence
can
of
we
almost 25%.
be
action
positive
pro¬
as
posed by the President, that prices
will level off
much less decline
—
to
have
in
even
prices
risen
in
by
such
•—as
have
occurred
and
in
in¬
those
negligible factor in direct costs,
as
grains, livestock, hides,
raw
cotton, scrap steel. If prices
had risen by no more than the
amount
necessary
to cover in¬
creased wage costs, even leaving
profits undiminished, the price
level would be very much lower
than it is now. And conversely, if
wages had not risen at all since
the middle of 1946, there is little
doubt that the price level would
have risen substantially, tfiougn
as
American incomes remain high,
and
foreign demands for grain
continue, there will be upward
pressures on the prices of cereals,
meats and dairy products. And if
we
in
should have
1948,
food
the
a
poor crop year
effect
on
farm
and
prices could be explosive.
Meanwhile
non-agricultural
prices continue to creep up month
by month. The same speculation
that has driven up grain and live¬
stock prices has been at work on
hides, raw cotton, scrap steel, and
other
basic
quickly
are
raw
no
major
structure
fidently
segment
in
which
expect
price
can
declines
in
con¬
the
future. It is not alarmist, but
sober fact, to say that only action
near
1
^
-.m
by the government, at certain key
points in the economy where sup*
plies cannot quickly be increased,
can
prevent
increases
costs.
in
This
further
prices
action
substantial
and
living
should
be I
able
be
wages
are
less than it has.
Wage increases have been
—but
of
by
no means
additions
the
power
fuel
for
the only
to
current
which
the
one
one—
pur¬
have pro¬
inflationary
fire. Increased incomes of farmers
have
been
another.
to
from
keep
asking for sizable wage increases
assurances are not given.
are already pressures for a
if such
There
price
w
continue their upward- trend.
11
Once
a
few
key wage increases are
sought and obtained in a few
basic organized industries, there
little
likelihood
of
keeping
from
tribute
full
its
share
action
from
and
to
re¬
would
upset
the
economy.
The
fu'l
variety of efforts which the Presi¬
dent has outlined is necessary to
provide
the
assurances
which
will
labor
require.
The pressure for
of
third round
a
increases can be offset
way only: by prompt End
wage
in
one
firm
action
the
reduce
to
cost
of
living, and particularly the cost
of food, and to restrain further
increases in other prices. It is es¬
sential
that
we
check
the
rise
in
bring down the
we
price of common foods. The Pres¬
ident's
program
is designed to
provide the means for doing this,
on the one hand by lessening the
inflationary
general
pressures
through control of credit and the
maintenance of high government
revenues; and on the other hand,
direct- government action at
points in the price struc¬
where it is requited to bring
by
those
Avoidance of further substantial
general wage
that
mean
increases does not
should
we
anclr; salaries
wages
Jo^pose
creases,
the viqtiiias.pl
or
freeze
deny
in¬
groups who are
well-recognized inwage
structure
disadvantaged
groups iujjpoth private and public
employment, whose wages or sal¬
aries need to rise in order to pro¬
vide
before
very
ice
with
them
standard
of
the
the
same
real
living that they had
war.
Wages are still
low in many trade and serv¬
not subject to the
industries
Fair Labor Standards Act and in
branches of public employ¬
The employees of the Fed¬
eral Government, whose pay has
risen since the beginning of the
war
by only about half as much
as the cost of living, are anothei
many
ment.
example.
Restraint
on
Wages
Voluntary
In
Should
Be
sarily
again,
or
them
as a
companion to price
would npt neces-
this
mean
a
there
freeze.
wage
is
Here
for
adjust¬
ment of inequities in the
process
room
of
ord in the last year
by
basis. For this reason, it is neither
essential nor possible to plan in
has been aided
notable reduction of major
disputes. This record should
be continued and improved by
encouraging: the peaceful settle¬
ment of disputes and the adoption
a
labor
of sound industrial relations p ac-
f
on
a case
by
case
detail the kind of administrative
machinery that will be needed. It
may be that the wage board which
I have mentioned would be a suit-
sporadic I able body to entrust with the ad¬
interruptions of work. Production ministration of any necessary con¬
tices Which will minimize
increases will have
positive effects trols.
in
relieving inflationary pressures
as well as in permitting the kinds
of wage increases which do not
create price pressures.
This will
require labor and management co¬
operation of a very hign ocaer.
My Department, wherever it can
do
so
connection
in
with
its
es¬
It may well be, however,
that the few
be
so
best
to
handle
unique that it will be
dividual
coopeiation.
price
boards
whose
these
will
than
in
through allocations, I am of
belief that
it may well be
the
possible through voluntary action,
assuming that the cost of living i:
held, to insure that wage costs
are
kept in line with the con¬
trolled prices in the same product
lines.
This will require constant
and careful watching of the wage
both
picture,
the
voluntary action
important role, since
an
no
of
au¬
labor-manage¬
tary methods to maintain
price-wage
a
relationship
proper
in
the
anti-inflation program. I have also
discussed the need for authority
for
the
imposition
trols which
of
wage
con¬
essential to main¬
are
tain
price ceilings which may be
placed in effect. I am hopeful that
in this field
methods
the
of
use
be
may
The
swer.
voluntary
sufficient
a
an¬
situa¬
tion, however, is such that I be¬
lieve
of the
urgency
authority should be granted
involuntary action if such
to take
controls should
From
prices are controlled, and
in the key industries where na¬
tionwide wage movements begin
is
request for
wage settlements
absence
views concern¬
ing the accelerated use of volun¬
where
It
it
ment agreement.
I have given my
industries
the
in
wage-
function
cases,
play
thority to order
Restraints
Voluntary
special
or
would be to achieve settlements or
to make recommendations.
Even
there has been
of
by
boards
wage
this
kind
them
means, such as the creation of in¬
in
Expects
which arise will
cases
each
tablished piogram, will be glad to
offer its good offices in fostering
a
which
controls,
may
It is my belief that the stabil¬
full third ization of our economy in such
round. It is of first importance,! a
way as to avoid fuither p. ice
therefore, that we have labor's spiral as an essential part of the
full cooperation at the outset of
total
program,
can
be achieved
this
program.
Labor
cannot through voluntary restraint if the
reasonably be asked, however, to other parts of the program are
bear a solitary burden in the anticarried forward. Even if it is de¬
inflation effort, although it very
cided to control prices of certain
properly should be asked to con¬ industrial products, directly ratner
frain
take
head
Even where wage controls have
to be used
manage¬
spreading and assum¬
ing the proportions of
Increased
profits have been still another.
and
to
to
..
is
There ^.are^ some
vided
the
of
we
will
labor
equitie%.}Xpv ths
chasing
prices of finished goods. There is
real assurances that
price rises will be checked. But
I have little hope that organized
a
These
by
if given some
such
rising
materials.
reflected
increases that are followed
by price rises. It is my belief that
labor will cooperate in this effort
wage
labor
be
necessary.
Washington
Ahead of the News
recommendation that, as
(Continued from page 7)
the counterpart of such machin¬
chiet justice of the State, a man
ery as might be established to deal of an
illustrious family and an
with piice questions, there be es¬ illustrious
career
of
his
own.
my
tablished
Labor
a
the
in
wage
Department
of
board to watch and
report on the course of
companion
Seemingly the only person that
thought Taft could win was his
wife,
Martha.
Together
they
This board might toured the State denounc'ng John
government offi¬ L. Lewis and his CIO when both
cials, of public members, or might were at the height of their popu¬
well be tripartite and include rep¬
larity. It made the orthodox poli¬
wage questions.
be composed of
of
labor,
the
public.
resentatives
ment,
and
are
prices of
grains and related livestock prod¬
ucts next year than this. As long
higher
than
which
board
measures
have to be taken
to
has testified—is for rather shorter
and
brought home more clearly
ever
before the futility of
have
propose
off.
establishing both wage and
In fact, one of our objectives price levels.
Any action that is
during this period should be to ; likely to be taken in controlling
increase output by every avail¬ wages—in the few cases than can
able meam. Our production rec¬ be envisaged at this time—would
nuate supplies.
commodities in
supplies
which
years
function of the
are
may
reach to pay increased
earnings on increased productiv¬
ity, or otherwise to adjust wages
in ways that will not result in in¬
creased prices.
ment
prices down in the absence of atte¬
the
than
most spectacular price
creases
two
this
preclude the many kinds of agree¬
in¬
cases
many
more
last
the
of
increases
there
where
today be possible. Neither does it
ments
ture
material costs. Furthermore, some
of the
standards of the work and the success of the
President's program is indispen¬
sable to labor's welfare. The price
the living
ingman,
of
that
believe
I
be made and. long • before they. appear to
existing bej .imminent,it • WQUld^be the
to
structure
situations
some
On
amount of the increased wage
—next year.
The outlook for food
the Secretary of Agriculture
prices.
increased
other hand,
dustries,
contributed
have
nc r e a s e s
the
in the ab¬
sure,
i
increases—at least tempo¬
rarily—while we, as a nation, try
to
achieve
a
basis of stability.
Labor has a vital stake in this
endeavor.
Inflation hits first a.
rents and that
Prices
risen
further
wage
them
rapidly.
There
for
increases of the last four
months and the fear that prices
of
proportion
demands
third wage round, based upon the
family living
housing for
cent is so great that it is evident
;c all of us, I am sure, that if con¬
trols are removed, rents will in¬
crease by large amounts and very
tant
withhold
to
has
in the
price increase of
movement of prices
lowering the costs of com¬
mon foods, we shall have a basis
for calling on labor voluntarily
upward
impor¬
food
that
rents
become
low
by
Statistics
Labor
have
the
of
index
effect is due to the fact that
they
simply
it is esti¬
raise 'the
would
price
2%.
about
versy
Certainly the farmers are not
to be blamed for the increases
in the cost of food. They had no
control over the weather—either
it
that
in
increase
15%
the board,
consumers'
3ureau
almost 9%. If
1939
a
across
mated
improved supplies, for example,
goods, vegetable shorten¬
most
were
cents
canned
ing,
from
ncrease
.here
one
"
from their June
making the total over-all
another 4%
•y
a
price of bread—equivalent to 10
or 15%.
It is true that there were
a number of declines, either from
seasonal influences or because of
the
the
prices:
successful in checking
are
we
and in
alarming.
products 14%. Between mid-June
and
mid-September pork prices
rose 15%, beef and veal 11%, and
lamb 8%.
Only the unusually —
If
selected
labor
and
agement
manage¬
Such
a
board would also be of direct use
ticians
shudder.
with
up
good
But
turned
Bob
400,000 votes to the
some
subsequently
and
won the
about the same size.
trying, on a
The reoorters who accompanied
to maintain price-wage stability "him on his recent
trip to the West
Such a board should be within the Coast
agree that he helped the
Department but should have the oarty tremendously but some of
same independence that the Wage
them express doubt that he helped
Stabilization Board had when it himself. I don't see how this could
labor who
voluntary basis,
and
management
in the Department.
was
There may
cal
be
situations
a
be
handful of criti¬
within
pricequestions
the
control industries where
will become crucial fac¬
that cannot be solved by vol¬
of wages
tors
It is for this
untary action alone.
reason
posed
that the President has pro¬
authority to
impose
"such
ceilings as are necessary to
maintain the necessary price ceil¬
wage
ings."
area
This standard
election
defines the
where controls may be neces¬
and at the outset restricts
application to a very small
segment of the economy. In view
of the highly selective nature of
the price controls proposed, and
the fact that many of them will
affect agricultural prices, it is un¬
likely that the need for wage con¬
trols would arise in more than
a
general, any attempt to hold very few eases. Before compul¬
wages while we act to restrain sory authority is invoked, how¬
Price Legislation Required
and reduce prices must necessar¬ ever, every effort should be made
The problem that confronts us ily come by the voluntary and co¬ to
exhaust
voluntary
methods.
now is to enact legislation which
operative action -of labor and marU One of the functions of the board
will stop the present price rise agement. This does not, as I have L have mentioned :would be to
and will /reduce ffhe/pricqsaid, preclude adju^mentsitPjC^; a^id' the ;impositipn'/of> controls
bv
rect inequities..rvNpr;. does
the
so
as
to make unnecessary
exercise
of
foresight.
mands for a compensating >,thijc
Cltide moderate a#ustment&
Wjiere it appears that controls
round cf wage increases.
if a are
clearly understood by man-! might, eventually-j be necessary,:
possible.
It is but a part of the
that although he is
honest and courageous, he
orooaganda
able,
^an't
because of these
virtues, be
President.
The plain
the
and
afraid
facts
of
that Truman
are
Dealers
New
more
are
than
him
they are of
other candidate. That is the
any
^eas^n
tbev
nre
working
louslv to kill him
Lo mv mi"d,
the
so
assid-
off,. He would,
devastate Truman in
campaign.
I am sure I don't know whether
sary,
their
by
he
r
will
the nomination.
get
ouite
am
convinced
going
to
'o
fcom him.
run
down
profit
because
it
But
is
not
Republicans
the
If tbev turn him
CIO
pickets;
undoubtedly be
of
which there wUl
arnirnd his headquarter* at
Philab
'elphia. or because of his record,
inescapable Republican sense,
they may as well rot make the
his
Those
"unnmglv
who
are
say'ng
they
hone
most
the
Reoublmans will not commit sui¬
cide
and
nominate
him,
do
not
fq tew? to vote RepiVhi t'can under;
any,circumstances. They are not
well
wishers
party at all.
H
of
the
Republican
?
Volume 166
Number 4652
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE"
(2297)
Indications of Current Business
Activity
The following statistical tabulations cover
production and other figures for the latest week or month available
(dates
showiv in first column are either for the week or month ended on that
date, or, in cases of quotations, are as of that
date):
tMEFICAN IRON AND
Indicated
operations
Equivalent to-1- '
Steel
Latest
STEEL
steel
INSTITUTE:
ingots and castings produced
AMERICAN PETROLEUM
Crude
oil
Dec.
(net tons)
Gas
oil
distillate
7
Year
Ago
Ago
96.3
1,710,000
Latest
60.2
1,681,700
1,061,000
AMERICAN
Steel
1,685,200
fuel
oil
output
Nov. 22
5,275,000
5,229,000
5,257,100
5,229,000
5,165,000
16,086,000
16,529,000
15,188,000
2,192,000
2,107,000
Nov. 22
2,050,000
6,574,000
6,159,000
6,638,000
1,896,000
5,691,000
8,447,000
8,556,000
8,666,000
7,872,000
Nov. 22
Nov. 22
(bbls.) at—
83,041,000
82,003,000
21,218,000
21,473,000
23,014,000
57,827,000
62,609,000
57,419,000
zinc
of
2,000
902,672
878,337
Nov. 22
954,627
733,139
714,848
742,077
BANK
CONSTRUCTION,
ENGINEERING
THE
806,593
681,854
and
49,693,000
54,084,000
Nov. 27
:
—
municipal
$116,802,000
Nov. 27
construction
33,509,000
COAL OUTPUT
(U.
coal
S. BUREAU
and
lignite
Pennsylvania
anthracite
Beehive coke
OF
46,846,000
48,728,000
44,894,000
11,739,000
42,655,000
4,191,000
$100,930,000
$82,237,000
FEDERAL
of
all
OF
(in
DOLLAR
NEW
Nov. 22
(tons)
12,900,000
1,213,000
Nov. 22
Nov. 22
12,600,000
12,635,000
1,230,000
132,200
1,097,000
"123,800
132,200
DEPARTMENT STORE SALES INDEX—FEDERAL
SYSTEM—1935-39 AVERAGE=1«0
FED.
—
on
Oct.
6,519,000
1,187,000
BUILDING
(in 000 kwh.)
(COMMERCIAL
Nov. 29
AND
380
INDUSTRIAL)—DUN
&
Finished steel
306
of
Residential
(St.
Louis)
St.
79
70
Public
24
3.18925c
3.18925c
2.70711c
Nov. 25
$35.96
$36.96
Nov. 25
$36.96
$41.25
$42.58
$25.00
All
21.200c
All
21.200c
19.275c
21.550c
Nov. 23
21.500c
21.425c
80.000c
80.000c
70.000c
at
X
15.000c
15.000c
14.80Ge
U. S.'Govt.
14.800c
10.500c
Bonds
10.500c
10.500c
2
101.87
_
2
_
114.85
2
Baa
BUSINESS
__
Utilities
_
—Dec.
113.50
116.22
Retail
120.34
Construction
Group
118.60
115.04
111.62
116.80
112.37
119.00
113.31
105.86
Commercial
109.60
108.16
Total
S.
Govt.
..
111.31
113.89
115.24
115.04
117.60
115.63
Wholesale
117.40
119.61
Retail
2.98
2
2.82
2.80
2.72
.Dec.
2
2.61
2.91
2.81
3.08
2.70
ERAL
3.04
2.99
3.49
2.85
3.45
3.40
3.19
October
3.35
3.33
3.27
2.98
3.07
2.96
2.89
2.90
ITY INDEX
ASSOCIATION—WHOLESALE
GROUP—1935-39=100:
BY
2.78
2.67
2
456.7
455.7
444.1
DEPT.
228.7
216.9
282.2
235.5
2(3.5
268.6
261.2
256.7
324.8
306.4
288.2
205.2
252.1
Fuels
245.1
246.5
240.9
Nov. 29
—
Building materials
Fertilizer
Fertilizers:
198.2
195.0
and,
177.9
172.9
217.0
159.4
159.6
136.4
236.4
235.4
232.6
157.1
157.1
154.5
Nov. 29
136.8
136.7,'
1_ Nov. 29
140.6
Orders: received' - (tons)
production,(tons),,
•
,
■'<.' ■:
129.3
128.3
218.1
__
Percentage^olXaetivity—
Unfilled orders- (tons)
:
OIL, PAINT* ANIP DRUG REPORTER PRICE
INDEK^-m6-8d AVERAGE=H)0—
WROX ESAU
All commodities Xi!i.-
122.4
136.9
Stock
.v.
X; Housefurnishings goods
.
Miscellaneous
Nov.22
Nov. 22
.
1
Nov. 22
,
•
100
431,860
188.6
•
j'r -
'
150.3
7
Manufactured
of
200.4
.i
144.0
118.7
151.3
186.1
IX
199.6
)v?,. T90.1 >
J
*
178.0
>
:
v'
'142.9 '
X
118.7.,
r
(
158.6
v'v
X
94.9
117.2
185.3
184.4
Nov.
1:
21.147,000
OF
21,143,000
11,508,000
8,640,000'
6,767,485
5,726,145
COMMERCE)—
DEPT.
—
OF
•
COM¬
BALES—
of. October
826,216
727,448
1,479,136
1,137,516
933,615
2,019,238
5,101.358
31
2,583.306
5,913,230
103,116
90,926
142,817
127,766
67,052
53,491
46,01*
21,563,000
21,410,000
21,773,008'
2,452,918
1,094,707
943,425
1,633,19V
447,489
834.451
1,457,739
594,275
916,546
t133J2
31
tl33.7
134.JP
193.1
171.at
79,547
158,352
DEPT.
Aug.
Oct.
1
COMMERCE—
OF
Aug. 1 to Oct. 31
Oct.
to
31—!
31
—
COMMERCE
—
Employment at middle
Average=10Q_X———
PRICE
*,U.
COMMISSION
INDEX
IN
S. DEPT. OF LABOR
uaXxXai.
—
of
LARGE
—
1335-
15:
————
196.5
—
155.7
Pork.
142.0
135*
220.8
180.®
229.3
216.4
182.*
228.6
189.®
181.9
260.6
183.8
*
180.5
262.4
.
178.8 ;
175#
237.®
'
£.
.,
212.3
vegetables
202.0
204.2
180.X
■
203.0
199.8
202.1
——_X
1
and
181#
230.5
•
,1
j.Fish, fresh and canned
Dairy products
»J_,
Fruits
186.®
219.6
-232,1
.——
2— U
•
:
220.2
229.3
__
155.0
228.4
:
173.®
X. X
'
jjFresh
!:>—X
X_—
_____:
;
Canned
z._J-,
165.7
168.5
X 178.3
X;135.*
140.T
136.5
131.3
126.9
123.1
Dried
134.7
263.4
263.6
133.5
132.9
183.®
118.0
118.1
Beverages
181.7
180.8
126.®
117.1
106.1
Fats
178.5
382.0
180.3
179,3
179.7
140.3
418.1
products
1
Nov. 22
176.7
156.1
155.4
175.8
177.0
■■
and
.154.1,
TREASURY
155.3
128.2
commodities
Nov.22
other
than
152.2
farm
products..!
151.*?'
commodities other
Nov. 22
than
farm
152.7
152.3
products and foods.
>1-150.9
Nov. 22
129.7
142.0
141.5
140.2
116.9
147,000
$6,400,000
11,505,900
Eggs
129.6
117.4
151.3
All
„
of
j-Chickens
165.0
142.1
.
829,000
$10,034,000
S.
1
(DEPT.
—
FOOD
Lamb
172.1
191.3
151.3
Nov. 22
articles
<.
PRODUCTION—U.
Cereals & bakery products
!! Meats; poultry & fish—_—£
137.3
176.2
>,v
426,000
YORK—
lint
Month
1935-39
oils
Sugar and
»■
500,00®
$283,000,000 $242,000,000 $202,000,000
AND
RUNNING
Railway
foods
|-.
,
All
•Revised figure.
352,000
444,000
1,407,000
Nov. 22
.—
v.*.
$4,975,000
1,390,000
Nov. 22
—
—
materials
Semi-manufactured
$5,964,000
FED¬
—
NEW
Meats •
..•'{!( Beef and veal
Special groups—
■<: Raw
OF
*1939—100—- As of August
*'
158.0
t
186.91
'
X
11
123
1,074,000
OUTSTANDING
BANK
at mills (tons)
CITIES
•
147.9
.,458.5
»
178.8
V
28
292
8,361,685
(tons)
(tons)
•RETAIL
554,982
'
"
•
159.2
»,
Nov. 22
—4___
commodities—
,
Nov. 22
Nov. 22
X-XfChemicals- and allied products—.
101
150.7
14
2,289,000
2,301,000
LINTERS
—
October
170,53?
161
436,819
151.0
Nov. 22
—
^le-tal and metal products.,—
Building materials——
£
.
•
.■•V
418,582
•ft"
Nov. 22
(Textile! products
___.
X'iXX Fuel: and. lighting materials—
,-
Crushed
.
145,507
182,173
v.
17:
21
29
192.0
169.061
1812,686
£.;•/
102
NoV. 22r ■%
20
$13,337,000
2,321,000
;
.—_
60
40
103
1:
SEED
Received
125.6
116.7
212.0
■154,639
f
'
„Hides, and. leather products_i.__-.___
!
'
Nov. 28
i«:
,
C
Nov.
AND
COTTON
All
PRICES—U. S.DEPT, LABOR—1926=100:
Farm, products
165,882
Nov. 22
101
—/a*
consuming establishments as of Oct.
public storage as of Oct. 31
Cotton spindles active as of Oct. 31—
152.8
128.3
•«,,
215.9
182,9C4
Nov..22.
at-.——_
6 CP
25
In
Index
_
Nov. 22
Nov. 22
_
——j.
66
65
„
bales
INTERSTATE
—
70
129
_£
In
NATIONAL PAPERBOARD ASSOCIATION:
,
70
_
207.0
-■
-135.5
"140.6
Nov. 29
;
combined—_—*——*
47
!r
consuming establishment as of Oct.
In public storage as of Oct. 31
Linters—Consumed Month of October
210.4
Nov. 29
__——■
groups
"70
_
30"
:t
In
162.3
221.1
—
drugs
materials
17*
BRADSTREET,
AGRICULTURE—As
bales
Lint—Consumed
156.9
179.4
223.1
159.4
machinery
All
198.2
Nov.. 29
Nov. 29
—
Chemicals
Farm
to
MERCE
295.2
304.5
...
Nov. 29
"205
65
—
liabilities
GINNING
COTTON
235.1
326.6
311.8
Cotton
.
233.6
287.6
Miscellaneous commodities
Textiles
:
&
--
Prior
oils
Metals
_
number
PAPER
OF
Running
Grains
-
374.7
23S.3
Livestock
IT
207
98
_
336
ACREAGE
Production,
COMMOD¬
Farm products
„
"20
55
RESERVE
COTTON
Foods
and
_
As of-October 31
2.77
2.87
v';
COTTON
FERTILIZER
24»
17
dLUi-
Acreage
Dec.
99t'
27
_
2.84
2
2
Fats
_
140
"40
2.29
2
NATIONAL
—
liabilities
COMMERCIAL
2.90
2
2
*
23
$21,322,000
2.32
3.05
INDEX
20
,
72
_
_
Commercial service liabilities
2.37
3.08
_Dec.
COMMODITY
"21
27
_
development
liabilities
2.37
..Dec.
"1
,1.44
39
_
and
liabilities
.^Dec.
MOODY'S
1
19
140
water
of
Manufacturing
113.50
2
Railroad Group
6®
3a
42
—
service
2
..Dec.
9
"45
______
facilities
-J
i 150.6'
131.1
sweets
MARKET
RECT AND
! ■'!
•:
——
'*(iU. S. A.—Month
N£t
Net
sales
of
IN
SECURITIES
DI¬
OF
October:
—
purchase^
"Revised
TRANSACTIONS
GUARANTEED
—
i
.1—-i.
.__i—£_
—
figure. * t Preliminary figure.
»
v
4(JV,
43
_
_
number—
Construction
Bonds
2sa-
9
-
number
2
MOODY'S BOND YIELD DAILY AVERAGES:
U.
33
"302
116.02
105.00
107.09
65
"132
number
number
2
Industrials Group
5*
_
building (except military
facilities)
Manufacturing number
Wholesale
104.31
'
2
93-
50
_
FAILURES—DUN
103.16
106.74
2
Group
17*
82
53
;
102.71
117.00
_
naval
Farm
112.19
U,
116.61
2
Public
building
building repairs
101.89
O
111.62
"140
127
_
public
INC.—Month
j
;
Aaa
Railroad
and
7R»:
55
____
building (uonfarm)
Nonresidential building
(nonfarm)
11.650c
10.500c
corporate
313
138
_
_
Residential
11.300c
14.800c
Nov. 26
_
15.000c
Nov. 26
at
Louis)
341
"275
294
_
other
other
Minor
17.925c
80.000c
Nov. 26
at
-
utilities
Conservation
MOODY'S BOND PRICES DAILY AVERAGES:
Average
construction
Sewer
21.200c
_
construction
Military and
Highways
QUOTATIONS):
Nov. 26
"485
281
88
..
Industrial
$28.13
$40.58
Nov. 26
l.OT*
"957
500
(nonfarm)4
$1,243"
"1,259
958
(nonfarm)_
"$1,464
1,252
_
and naval
3.18925c
OF
__
other
Nonresidential
Electrolytic copper—
Domestic refinery atExport reiinery at
Straits tin (New York) at
York)
All
Farm
Nov. 25
M. J.
&
4,448,193
PRICES:
(per gross ton)
Scrap steel (per gross ton)
(E.
5,009,286
8,212,00®
millions):
_
building
Residential
(per lb.)
DEPT.
(In
construction
Public
72
S.
October
Commercial
5,180,496
11,260,000
$1,459
construction
363
BRAD-
Pig iron
METAL PRICES
4,983,439
Nov. 27
IRON AGE COMPOSITE
between
construction
Nonresidential building
Industrial
STREET, INC
(East
OF
$144,466,000 $140,078,000 $154,203,000
54,335,000
41,940,000
18,195,00®
8,977,000
9,210,000
10,216,000
14,444,000
14,352,000
12,292,000*
4,100,000
2,100,000
724,000'
shipped
CONSTRUCTION—U.
LABOR—Month
__
Electric output
Lead
BANK
10,339,000
84,000
Private
394
$91,340,00®
$236,661,000 $218,940,000 $203,842,000
New
Nov. 22
$91,889,000
31:
foreign countries
EDISON ELECTRIC INSTITUTE:
Zinc
$105,320,000
credits
and
52,694
OUT¬
:
stored
38,041
SYSTEM—
——
goods
220,384
OF
—
exchange-
Based
73,915
*136,574
49,361
(tons)£
GOVERNORS
RESERVE
of
64,138
"92,549
138,568
thousands)
YORK—As
"67,867
69,751
ACCEPTANCES
warehouse
Dollar
RESERVE
1
4,994,377
of
Total
(tons)
6,951,742)
5,278,223
(tons
X,
shipments
Total
(New
grades
RESERVE
October
Domestic
7,572,000
4,167,000
3,834,000
Ago
"6,788,642
71,745
Domestic
$32,574,000
MINES):
(tons)
Lead
INC.—Month
output,
of
STANDING
20,835,000
67,109,000
55,680,000
11,429,000
Nov. 27
Nov. 27
FAILURES
7,564,302
5,118,839
(tons
Exports
Nov. 27
Year
alloy
Imports
Federal
Bituminous
;
including
INSTITUTE,
NEWS
Total U. S. construction
Private construction
State
produced
i
lbs.)
end
BANKERS
RECORD:
Public
October
products,
DEBITS—BOARD
OF
ENGINEERING
castings
of 2,000 lbs.)
period (tons)
orders at end of period
at
Unbilled
68,646,000
59,744,000
Nov. 22
—
for
Month
INSTITUTE:
(net tons)—Month of Sept
smelter
Shipments
Month
(number of cars)
Revenue freight ree'd from connections (number of
cars)W--.
steel
steel
ZINC
Slab
21,038,000
63,283,000
56,774,000
STEEL
October:
ASSOCIATION OF AMERICAN RAILROADS:
Revenue freight loaded
of
AMERICAN
87,620,000
62,643,000
Nov. 22
and
4,809,650
Stock
84,777,000
.Nov. 22,
—Nov. 22
at—.
5,295,350
AND
met tons)—Month of
4,612,000
16,136,000
Nov. 22
(bbls.)—__.
Gas oil and distillate fuel oil
(bbls.)
Residual fuel oil (bbls.) at.,—.
v
ingots
and stainless
Nov. 22
_
CIVIL
IRON
Previous
Month
96.1
Shipments
average
Residual fuel oil output (bbls.)
Nov. 22
Stocks at refineries,.at bulk terminals, In transit and
in pipe lines—
Finished and unfinished gasoline (bbls.) at—
Kerosine
Month
Week
97.7
INSTITUTE:
output—daily
and
7
Dec.
(bbls. of 42 gallons each)
Crude runs to
stills—daily average (bbls.)
Gasoline output (bbls.)
Kerosine output (bbls.)
i
.
Previous
Week
'percent of capacity)
$14,128,500 $123,096,300 $122,054,250'
THE
(2298)
38
COMMERCIAL
Moie Production and Government
&
FINANCIAL
CHRONICLE
Thursday^Decemter 4/T947
largely balanced by imports, and good faith; how that. its has coL back-' in sufficients quantity until
limit our assistance to foreign na¬
; price? Cdh-|';
jlapsecL f . -;,*/<>* 1V ; ./.? / > we goLrid of
■'
Mr. Eccles says that the increase trol you increase every shortage,
housing credit guaranteed by necessarily because you increase
(4) Restrain the increase of the government is a serious dan* the demands When prices, are held
bank, credit; either by the ^tradir ger, but Mr. Harriman says that too rigid, you also decrease pro¬
tional methods, or by Mr. Eccles' the - necessity
for a continued duction.
(Continued front
proposal for increased reserves in housing program is so great that
Furthermore, no matter how i
families.
Therefore, savings are short-term
cuss how we reached the present
no change snouid be maue.
well price control might work in *
government bonds, as
than
would be normal in
situation of high prices when all less
may
be determined to be most "Withregard to^he ^ppbrth^ce theory, there isn't anybody in the
the Administration economic ex¬ times < of such prosperity as we
sound.
world who knows enough; toi^do ^
program, while I think it. has not
have today.
perts predicted a collapse after
(5) Reduce the percentage ■ of had a tremendous effect under it right in a country the size of
(2) Increase in bank loans now
the end of the war, serious unem¬
government guarantee on housing present conditions and must be the United States. There isn't any
ployment and lower prices. Some proceeding at the rate of $5 bil¬ loans.
continued to keep our promises to evidence that the government cap
lion a year. Of course if we are to
time
ago
in San Francisco, I
(6) Impose some limit on con¬ the farmer, certainly the Depart¬ distribute better than the natural
increase
production,
and
keep
pointed out that in my opinion it
sumer credit.
ment of Agriculture up to this laws of supply and demand.
is the inevitable result of the poli¬ business going with the increased
time has gone out of its way to in¬
costs of inventories and replace¬
Finally, price controls won't
(7) Carry on a campaign to dis¬
cies pursued by our government.
dicate a desire to maintain farm Workin ifie UhRed States; In lime
The
policy of deficit spending ment, this increase in bank loans courage spending and encourage
be; completely
The Secretary of the prices at a high level, and the of war a certain morale: develops
checked. saving.
which reached $50 billion a year cannot
This dilemma faces us in every Treasury has excellent plans for bureaus lower down seem to have ] which makes it possible to retain
during the war, increased tremen¬
effort to control prices, and yet the sale of more "E" bonds, but np conception of thev danger - of.■■j' control.. I-served with Hoover in
dously the amount of currency,
the campaign should include sav¬ overdoing these prices. They be-? the World War,l and he relied aldeposits and "E" bonds available surely the increase should be re¬
ing in all directions, and particu¬ gin to buy before the price reaches ■ most ^entirely lori ^that - "morale.11
for spending to meet our needs strained.
the level fixed. I. could find no was .always convinced .then that (3) Increase in mortgages on larly the reduction of the pur¬
deferred by the war. The OP A
chase of scarce foods by those who indication in their testimony that w#cbuldmt have^ donesthes^me s
deliberately held down prices lew homes estimated to be about
To a certain can afford to waste less and eat they would cooperate in any gen¬ job in time of peace. Certainly
while it let wages rise, creating B5 billion a year.
less.
extent
this
comes
from
new
Only
let it be carefully eral effort to lower meat prices as that was our experience with the
a false relationship
by 1945 when
OPA afte^ the war, IWhehever the
This thought put and made reasonable; of today.
wage rates of factory workers had savings, but not entirely.
Increase
is
deliberately stimu¬ to the people,,and the trades,.
> •'
Except Tdr the saving .Oajnpaiga ecpn<^c;pn^^
I
gone up 56% compared to 30%
commodity, was' above! the OPA
irt the cost PL living. This rela¬ lated by government guarantees
(8) Carry out the Obligation to and f tha proposed limit.-on'
amounting to from 90% to 100% support prices With ;:|discr^iphj sumer credit which amounts to price, the commodity went into
tionship created by inflation and
of the cost.
Again, the program and only to the extent required about 5% of the increase in total the black market to seek the na¬
deficits, the wage earners have
tural level of prices.
The Amer- „
naturally attempted to maintain. cannot be abandoned, but it could to keep our promise to the farm¬ credit, the Administration has ap¬
parently no interest in the funda¬ icari people don-1 like to be regi? v
ers.
Prices
have
constantly had to be placed on a sounder basis.
men ted and they don't like to be
mental causes of the present sit¬
Administration's Proposals
chase wages, to make production
(4) Increase in consumer credit,
uation.
Congress will certainly ordered around by Federal offi¬
Ineffective
buying,
amounting
possible at all. This policy was installment
consider their proposals to restore cials. There was no regret when
accentuated after the war when from $1 to $2 billion a year.
Up to this time the Adminis¬
Regulation W on consume!** credit OPA closed 'down ahd free pro--:
the Administration adopted the
(5) Exports of $11 billion more tration proposals to prevent fur¬
and larger apprdpMatioris to con* duction started. No, the remedy
curious theory that Wages could of
goods and services than we ther price increase do not seem
duct a proper saving campaign. for present conditions Im America Ij
be generally increased on top of
import.
About $6 billion of this to hit any vital spot. They are
Congress will furthermore con¬ does not lie in price control. It
the condition created by the OPA,
surplus
is
clearly
inflationary demanding indefinite power to
It
sider most seriously the question lies in saving and restraint.
without further increase in prices. since it rises out of various kinds impose controls of all
kinds, but
of power to fix margins on com¬ lies in sound government fiscal i
This theory was disapproved al¬ of
foreign credit from the Bretton avoiding the fundamental actions
most at once, but it started the Woods Fund and
modity exchanges, although the policy. It lies in more produc¬
Bank, and from which might really reduce prices.
evidence to date shows that such tion and every incentive to more
upward spiral.
the dollars accumulated abroad Surely, after the experience with
margins have no long term ef¬ production.
The maintenance of high gov¬ through lend-lease or war trad¬ GPA in the postwar period, a
fect on commodity prices.
And
modifications
the
with
ernment
These
reflected
complete reliance by the Admin¬
tions. to specific fields which we
know can be effective.'*V
—
■;
of
Economy to Offset Spiraling Prices
,
.
in
im¬
prices.
heavy as they
expenses
dollars
ing.
are
now
com¬
The Administration policy today
short istration on a return to controls at
is to leave all the fundamental
of goods, least raises the question whether
reasons alone, particularly if they
without providing any imports to it is in good faith in its denuncia¬
When taxes are as
to interfere with some
be purchased by our people. The tion of high prices. Up to this time happen
are today, they are passed on into
the cost and the price of every other $5
billion is covered by the government officials them¬ favored policy or special interest,
article that is purchased by the taxes, but still provides purchas¬ selves have disagreed on nearly and put their whole cause on a
restoration of a planned economy
consumer.
ing .power which competes for every important proposal.
Is it
to restrain the prices which other
If the removal of price control goods in short supply here and possible that they would like to
policies cause to rise They want
see the present condition continue
took place too soon, then it is thus raises prices.
high taxes has also been
portant factor in raising
an
clearly due to the President's
own
action in vetoing a perfectly ade¬
quate price control bill, and then
himself removing all price con¬
trol
the
before
Congress met
in
The real
question is not so much
past history as present policy. I
confidence
no
supply
in
any
pro¬
of
many
our
types
tremendous
cost
of
government in this country with
until after the November election
full
in
the
the slightest chance of a falling off
in the boom so favorable to any¬
ties, to regulate their use, to fix
prices and to ration consumers
goods.
These
are
police
state
methods abandoned by themselves
The
(6)
corresponding burden of taxa¬
tion which is largely passed on by
the taxpayer, Reflected in the gen¬
cost
eral
January, 1947.
have
ing back to compete for
to
added
everything
If
we
commodities
of
the price
buy.
we
wish to stop the
really
that
there
may
not be
in power?
one
and
of practically
order
Take the
discussed.
before
subjects which I have
There has been
no
sug¬
gestion that labor might be more
productive.
The suggestion that
limit
exports, which has al¬
how we can best meet these fun¬ ways been in the power of the
tions create a demand in excess damental causes.
We can't meet Administration,
has been com¬
of supply at the fixed price, I these causes by any panacea of pletely discouraged by Mr. Harriman's testimony last week, and
don't believe price fixing in peace¬ fixed prices and rationing and a
time will prevent a black market controlled
economy.
We
can't by the submission of a greatly in¬
or
prevent prices reaching their have our cake and eat it too. If creased program for shipments to
natural level. Even if it were suc¬ we don't want high prices, we, and Western Europe.
With regard to the increase in
cessful, it would tend to increase our
government, will have to
demand and decrease supply, cre¬ spend less.
We can't build new bank loans, Mr. Eccles submits an
ating new shortages and furnish¬ houses for everyone who wants elaborate plan for increased re¬
remedy of restoring price
ceilings. If the underlying condi¬
posed
ing
ultimate solution.
no
ever
we
toward
at
What¬
do Qught to be directed
increased
least
a
demand.
production and
temporary decrease of
I was for price control
rise of
them.
prices,
we
should consider
lions
We can't export many
more than we import.
can't
spend
money.
If
borrowed
don't want to sac¬
too
we
bil¬
We
much
we
serves
which meets the universal
disapproval of bankers, and is op¬
posed apparently by Mr. Snyder,
Secretary of the Treasury. In the
rifice any of these pleasant, and
oolitically advantageous, activities
meantime, the government refuses
had better face the fact
against inflation, by increasing the
rediscount rate and selling some
during the war, because there was
no
possibility of reaching a bal¬ then
we
to
use
the
orthodox
methods
to
power
the
allocate
end
of
commodi¬
1946
because
they were" so ineffective and un¬
popular. There is a good deal of
talk of limited control, but the
authority requested by the Presi¬
dent
and
Mr.
Harriman
is
un¬
limited
authority with the state¬
they will only use that
authority to a limited degree.
ment that
the
when
freedom and less govern¬
more
ment attempts to
Even
more
restrain.
than
most
strongly that
prosperous
world
based
ultimately
that, I believe
freedom. In time of
dom
if
in
rendered
will
But
sur¬
never
it must
time
peacetime
some
that free¬
war
be
admit that
we
can
surrendered.-
be
must
peaceful and
only be
on
individual
a
find
of
peace*
for
emergency,
we
time
the
when
(
that emergency does not
we
exist. If
admit that in peacetime
once
must
we
individual
surrender
liberty, then it will never return.
This country is today the bulwark
of the piinciples of liberty. If we
abandon them, the whole world
follow.
must
The
this
has a
in such
is that
we have
pursued a system based
on personal and economic liberty.
If we go back to government re¬
strictions, the time will come
when there won't be any surplus
to
ship
abroad. Our European
friends can point out that by strict
rationing we could
save
more
food for foreign shipment. That
might be so this year, but in the
end if accomplished by compul¬
sory controls we would be subject
to the same paralysis of initiative
which exists in Europe today. In
other words, Europe has to take
reason
surplus
of food
to
country
ship
tremendous amount today
Limited Controls Require
Complete Controls
I do not say
it is absolutely im¬
possible to regulate one commod¬
ity without extending controls to
all.
Every experience we have
had, however, shows that controls
of this kind are closely interre¬
lated— that you cannot regulate
grain without regulating meat,
you cannot regulate meat without
regulating chickens and eggs and
dairy products. You cannot well
regulate steel without regulating
government was that we will have high prices.
of the Federal Reserve System's the hundreds of industries that de¬
hundred billion dol¬
Suggested Remedies
lars of goods for the war.
bonds on the open market. But
pend on steel. We face the issue
Certainly I do not have any
certainly today, we must be fairly
Mr.
Eccles
agrees
completely Of returning to a controlled econ¬
close to a proper balance between stock solution of remedies, but I
with my proposal that a program omy, the same kind of economy
production and purchasing power. suggest that the following fields to
prevent inflation means the which exists in nearly every other
Current wages and other in¬ should be carefully explored in cutting of government
It is an
expenses. country in the world.
every case.
Remedies which ap¬ He said: "It means
come
such as profits and return
rigid govern¬ issue greater than that of high
pear effective on the surface may
on capital, represent
ment economy.
roughly the
It means defer¬ prices.
be too drastic, or
may interfere ment of all
value of the goods and services
expenditures—Federal,
From an economic standpoint, it
with
the production which we
produced by those who receive
State or local, to the greatest ex¬ is
not
a
remedy,
although
it
the income and so should be in ultimately wish to attain, but cer¬ tent consistent with
public obliga¬ might hold prices back at least on
reasonable
balance.
In
fact
if tainly none of them can be ig¬ tions at home and abroad.
ance
purchasing
remedy for world conditions lies
in
a
the limitations which
are
inherent
.
.
there is
a
normal amount of
ing production ought to be
than
adequate.
there
But
many other sources of
power
income.
sav¬
more
are
purchasing
than current wages
The factors which
and
seem
to
nored:
This
Conduct
a
campaign to
upset the balance by creating
unbalanced purchasing power, are
further
the following:
wage
increases
granted, they may well be
(1)
Accumulated
savings
in
deposits; and,
cash,
There
seems
in the
to be
total net
^E'V bonds.
no net
decrease
amount
of such
savings, but probably money and
bonds saved during the war are
being spent by many lower in¬
come
families
amount
of
thus
total
reducing the
savings of all
.
.
the
greatest possible
economy in all government ex¬
penditures." But the President has
means
the surface
it
for
a
few months.
If
effective,
however,
it
would choke production instead of
cure
an
increased
productivity
increasing it and our ultimate
per man from all workmen, both
fought bitterly every effort to cut solution must be more production
through
the
improvement
of any item of his budget* and we
to give people what they need at
methods and machinery by man¬
now read in the papers that next
reasonable prices. Certainly, price
agement
and
better
individual year's
budget is to be $40 billion, control has not increased produc¬
work by the men.
Certainly, if $2 or $3 billion in excess of this
tion in any foreign country.
It
(1)
se¬
are
con¬
year's budget.
were
has had the
opposite effect.
Here
in
a
free system if they want the
benefits produced by
The
it.
of
advocates
a
planned
have
had
their
day.'
They have made a complete fail¬
ure throughout the world, except
in some
closely confined areas.
Certainly, the government
can
greatly improve any condition by ,
economy
sound
prove
policy, but it cannot im*those conditions by a de¬
tailed attempt to regulate millionsf
of
transactions throughout
vast
'
areas.....
A
return
to
OPA
means
an
end to economic freedom. An end
of
economic
peace
freedom
leads to the
in
end
time
of
of
polit¬
under ical freedom.
Surely we should
important not turn now to the methods that *
from the have failed in every nation which
(2) Cut government expenses
adopted them. - Surely, "w"e
market. There was no butter, no has
and activity with a corresponding
to date there has been no -official meat, no soap or canned goods, no should not abandon now all ;of
reduction in taxes.
warning against our ge n er a I white shirts or new suits, no the
principles of liberty which
(3) Limit our exports particu¬ spending, and the campaign to leather and no. shoes. There was
have made this country today the
larly to countries outside of West¬ save food was so poorly organized no lumber or any other building
ern
Europe so that they are that we must almost • question its materials, and none of them came envy of the world. .*
,
* I;
ditioned
work.
on a more
complete day's
The
government fully agrees
general idea of a cam¬
paign to
encourage
saving by
others than the government but up
with
the
,
in
America
OPA
we
saw
controls, many
products disappeared
how
%
Volume
166
the;^
Number 4652
(2299)
-39
been
based on the expectation of Industrial Conference Board Re¬
high demand for the next three port of August, 1947, pages 233
to. five years, during which they and 236.
Current Problems in Depreciation Accounting
(Continued from
cations
of
to
depreciable assets.
these
part of my subject, namely, xur-.
problems of depreciation -ac¬
counting.
Limitations
of
time
9)
page
operations of
the
rent
cost
Where
are
net
assets -shown" ' on the
Some of them may
be reflected in the fixed asset ac7
counts on account - of
-
make it necessary fon me to: con¬
fine my discussion to ihe three. of
these problems which I consider
balance sheet?
_
additions;
;
some of them may be reflected in
any or all of the current asset
-
ac-
7 counts; and some of them may be
reflected by a decrease in liabil-
'
ity accounts.
*>,
•'
*..?
on
If
*■•*»<.> w
Condition
there
current
ment
is
in
assets
i
suiting from
v
preciation,
a
^own
business,
a
t
c
»sition
<
-The
of
the
is
company
are
given.
good il¬
come
which
was
originally invested in depreciable
fixed
-
has
assets
been
\
-
Reserve
r>
shown
-
for
on
the
Depreciation
liability
this
<*
be
tion
or account¬
the business because of the
covery and
the capital
do,' in
opinion,
my
.
are
of
re-
some
all the assets that
ered
as
part
of
the
are
cost
of
ities
of
original capital invested in depre-
,,
ciable
assets
7/. tional fixed
reinvested
assets.
in
known
present
connected
with
such
the¬
a
look at the variations
a
the
purchasing power of the
dollar for the past 40 years; or, to
bring it within the memory of
the
(
only
take
ory,
recov¬
of
the
factor, the cost at date of acquisi¬
tion, and would substitute tnerefor a prophecy as to future cost;
which could be just as wrong on
the up side as on the down side.
To realize the practical absurd¬
originally invested in
depreciable assets?
Rarely
the
7
retention
addi-
of
most
Large amounts
let
us,
us
since
variations
look
these
at
The
1929.
Na¬
of such recoveries flow into other
,
,
I
7:.
tional Industrial Conference Board
assets, and
flect these
7
released
it
would
facts
to
seem
more
re¬
clearly if
in the United States from
used
the
j
which
ered
as
a
not
been
recov-
date
of
preciation
the
Reserve
for
De-
from
the
cost
account
of the depreciable assets to ob-
7
tain this figure.
;
One of the frequent questions
asked by business
to management's
analysts relates
policy in regard
to the reinvestment of the net as¬
sets resulting from the allocation
•
to operations of the
provision for
depreciation. They want to know
the ratio of the periodic charge to
...
.
the amount invested in
ital additions.
the
for
on
new
cap¬
never
I have
Reserve
broken down
t
seen
Depreciation
was
1929
a
1935-1939
valuable if
4 more
facts
were
this
statement.
worth
.
some
disclosed
unit of measurement,
t
thinking
'Financial,
sent
are
convey.'
countants
Admittedly,
ac¬
people with ac¬
i 11 i n g understand
counting tr a
these and can interpret them, but
mapy
of those for whom:; they
were
/ them.
•
the
believe that it
prepared do not comprehend
Accountants
should
at-
tempt to talk the language of their
audience, rather than try to get
the audience to Understand the ac¬
countant's language,
Now, let
us
-
consider the second
ip such assets, and it is
ficer, if those dollars
have
of
originally
were
as
obligation of the financial of¬
ficient 'to
now
and:
dollars
invested
to
should
of
ber
Certainly it is
about, ' particu-
statements
provision
method, has been, given some
support by the Treasury Depart¬
but it; is
ment,
doubtful
able
assets can become
surplus
facilities just as soon as the
pres¬
ent condition changes.
An asset
reach the end of its
may
life in
out.
more
in each individual case, and
cision reached
letin of
The
that
ways
Problems Are
most
the
see
current
third
problem
reinstatement
be allowable for tax purposes.
The
-
cost of
of
life
those
assets
is
of
depreciation policy, and I
know of no good reason why this
policy need be immutable. Under
present conditions of known high
business activity, I can see some
very convincing reasons why it
is not only good business but also
good . accounting
to
allocate
a
one
the
service
normal
lives
of
such assets.
It is somewhat difficult to sup¬
the
port
on
matter
of spreading the
depreciable assets over the
estimated
to
the
been
suggestion
books
written
with
which
in
off
restoring
of
assets
have
accordance
planned depreciable pol¬
icy and which are still usable and
being used, in order that some
charge may be made to the cur¬
rent operations for the use of such
assets, unless the whole depreci¬
ation
policy
is
reviewed
and
proper
adjustments
made.
If
a
these assets have been written
because
of
too
larger portion of the cost to these
to
operations
periods. In depreciation account¬
ing we have become slaves to pe¬
riods of time, rather than units of
production or use of the assets.
it
is
liberal
reasonable
to
off,
allocations
prior
over
periods,
that
assume
are
replace.1 the
to
or
other ways
not suf¬
assets,
provided through
profits
to
retention
provide through
the additional capital
required to replace the assets.
•
I
like the
October
heading used in the
issue of the
Accountancy,"
special
mittee
statement
other
mal
costs
under
to
you
this
to
the
consideration of depreciation pol¬
In
in my humble
be improper ac¬
counting.
Again
this subject-— "Appro¬
Charges,
Cover
Cost."
Recom¬
Inflated
In
connection
subject, I would
that
statement,
Re¬
refer
reprinted
in
the
past, and justify re¬
icy.
Now, in regard to the restora¬
tion of asseits acquired under cer¬
the
following
quotation
from the special statement by the
Committee
•
on
Accounting
Pro¬
cedure is pertinent:
tificates
of
off
the period of the emer¬
over
necessity and written
gency, much more support can be
disapproves im¬ given to this proposition. These
mediate write-downs of plant cost assets were not written off in ac¬
by charges against current income
cordance with a systematic depre¬
"The committee
in amounts
excessive
sioned
or
by
believed
to represent
abnormal costs
price
current
occa¬
levels.
ciation plan, but were written off
during
the
period
of the
emer¬
However, the committee calls at¬ gency because of the tax advan¬
tention to the fact that plants ex¬
tage in so doing.
If the normal
pected ior have less than normal
useful life can properly be depre¬ provision for depreciation on such
is
a
ciated on a systematic basis re¬ assets
significant amount,
to
lated
economic
usefulness."
greater
C. G. Blough, CPA, in his article
to
placement
by
of
the
or
do so,
This problem is covered by Mr.
Not
mended
"Journal
reprinting
operations
other.
present
method
some
not to
time
Com¬
on
priation,
.
the
The difference I
situation
was
today
from
in the twenties is in
the higher income tax rates,
the
fears in regard
to the application
of Section 102, the greater amount
of replacements that have to be
made because of low replacement
records
of
the strong
the
period
1930-1946,
likelihood that the in¬
in costs will
prevail longer
because of the support to the cur¬
rent scales given by labor, and the
increasing evidence
and
belief
creases
that the business volume is going
to maintain a new plateau, thus
requiring not only replacement of
existing facilities, but also the ac¬
quiring of additional ones to take
care
of the increased volume.
In any
event, from the various
studies that have been made, some
of which have been referred to
herein, it is most evident that the
facts indicate that, at the present
time, the abnormalities of the
present price situation as they re¬
late to depreciation accounting are
being treated in different ways
even
by comparable businesses.
This seems to make it mandatory
that every business incorporate in
its financial
statements
explicit
definitions of its present deprecia¬
tion policies and practices. Under
these varying conditions the bare
assets, not yet completely
depreciated, are being depreciated
under the same liberal plan, with
| statement of the amount of the
high
charges
to periodic charge for depreciation is
Consistency is a word you; hear corresponding
much about in accounting, but its Current operations.
Certainly, if not going to suffice to answer the
observance is not universally man¬ depreciation
charges
for ' assets, questions that analysts will ask.
It must always be kept in mind
datory. Consideration should and written off were added to the I
must
be given to the charging current charges, there would be that accounting is not an exact
against income of each period of a pyramiding of charges against science, and is not governed by
current operations.
the proper costs of producing this
any natural or immutable laws.
income.
As the subject matter of account¬
Depreciation Policy Should Not
ing changes (as it has in the past
7 In cases of costs of depreciable
Be Immutable
and will in the future),; the con¬
assets which do not vary widely
Accounting Procedure,
on
A. I. A.
with
in
confusing.
in
is what it
the
on
Confusing
The present problems of depre¬
ciation accounting are real and
August, 1947.
of
de¬
useful
than by wearing
speaking of this problem,
In
a
applicable to such
case.
I would like to refer you to
page
235 of the Conference Board Bul¬
the
if
write-off of abnormal costs would
opinion, would
other words, I
during: the useful life of the de¬
o£ these preciable assets the same num¬
investors, employees, and
in-many cases to the public at
large, but we have failed and are
still failing to put across the mes¬
sage
.which
these
statements
;
ance
fact
is the accountant's duty to recover
larly. tbday when the* financial
statements have such a broad cir¬
culation.
.'
7 4
•
greater
us
may
in
cor-
the face of
on
that
of
some
-
the balance sheet wouldn't be far
•
suggested
Tor depreciation be made in early
of values, the dollar, irrespective
of its purchasing power.
Stated
the balance sheet
to show the disposition of the
In
spent
the
of
ured by our
responding assets, but I wonder if
•
assets may not be a burden on the
more
remote future years, it is
doubt in the minds of
restoration
of fully
depreciated
that some of these new depreci¬
assets would have to be weighed
for construction
purchasing power, of
dollar; the
dollar spent in 1932 a purchasing
power of about 140 of the base;
the dollar spent in 1940 a purchasr
from normal costs, and in which
However, if a business decides
ing power of about 90 of the base;: the income of the
period does not that it has been depreciating at
and a dollar spent in September,
vary
between wide limits, then too high a rate, or the basic
1947, has been reduced in. pur¬ the allocation of the costs of the premises on which the deprecia¬
chasing power to only 53 cents.tion policy was based are changed,
use of depreciable assets in equal
Is there any living individual amounts over the
expected service I do not see any, reason in the
who can predict today, with all life of such does not
produce re¬ world why the depreciation policy
the economic, political, and social sults
that
are
too
inequitable. cannot be changed, as long as full
complications that exist, what the However, present costs of assets disclosure is made in reporting.
1935-1939 dollar will purchase in are
abnormally high, and business It would seem to me rather dog¬
1952?
activity is also abnormally high. matic to say that once a certain
The abnormal costs of acquisition depreciation policy has been es¬
I believe, with all deference, to
those who hold otherwise, that it of new or additional depreciable tablished, no changes therein may
The present high
is the accountant's responsibility assets were assumed to take ad¬ ever be made.
to recover during the service life vantage of this abnormal business price of replacement assets may
of the depreciable assets the orig¬
activity, and it seems realistic and very well extend the actual serv¬
inal
cost
of such
assets meas¬
equitable to charge these abnor¬ ice life of assets acquired some
108
through charges
provision for depreciation, it is
simple matter to subtract the
( balance
•
has
to
up
1929 to
1939 dollar
100 in this chart.
would have
the portion of the
capital invested in depreciable as-
sets
.
as
dollar
a
of equities in, or claims
the assets. If anyone .wants
to, determine
f
The 1935 to
1947.
source
upon
recently a chart showing
purchasing value of the dollar
the
the Reserve for Depreciation was
shpwn on the so-called liability
side of the balance sheet with the
other accounts which reflect
at the
prevailing high
prices. In order that the provision
for depreciation on these high cost
depreciair!
put one more guess or- vari¬
able into the determination of the
to show the amount of assets, net
or gross, which are
presently in
r.
7
..
of the life of the assets, so
&
that a considerable portion of the
involves
^excess cost of the depreciable as-
is to
ability side of the balance sheet,
4
■
•'
.case of. new assets constructed or
or.net
7,
Periodic
of
jj: Charge
years
:
-
current charge to'be aUocdted7tb
the business in the form of gross
the eperatione of each peridd^ffe
assets, why shouldn't the would remove from such calcula¬
t
Determination
7
obUy^dn"
•
All this would
recovered
through the charges as provision
for depreciation, and retained in
i
idea,
in mv;
new
Obviously, there would not be
any tax advantage from the de¬
words, these as¬ preciation charges on fully depre¬
sets were bought or constructed
ciated assets, and• some compli¬
to meet the
extraordinary demand cated inventory adjustment might
resulting from little or no produc¬ be necessary. The
advantages and
tion during the war. There is no
disadvantages resulting from the
In other
books of fully depreciated assets,!
be allocated to opera* in order that some charge for de¬
tion accounting should be based
tions during the prevailing high
preciation may be made to pres¬
on
the dollar as a fixed unit of
-prices.
ent
operations for the - use of
measurement, i.e. the dollar cost, ''
To
accomplish this objective, those*: assets. 7 This problem in¬
or
upon the continuously vary¬
volves assets, which, in pursuance
ing purchasing power of the dol¬ the declining-balance method of
lar: Under this latter theory the calculating the periodic provision of a system atic, depreciation pol¬
capital to be recovered by the de¬ for depreciation could he used, or icy, have been written off, and
also assets constructed under cer¬
preciation policy would not be the some arbitrary write-off of the
tificates of necessity which were
original cost of the asset but- the abnormal costs over a relatively
off
over
the
so-called
cost of the replacement of the as¬ few years would accomplish this written
The declining-bal¬ emergency period, without regard
set at the end of its service life. same result.
or to show the creditor and
stockholder equities in those as7* sets. If some of the creditors' or
stockholders';* capital
a
expected to be reimbursed for
their investment to a considerable
extent.
ofig*-: purchased
on
re-agitated
Fundamentally,
from,
.
This is not
the question of whether
lustrations of this possibility.
We keep liability accounts
and
equity capital accounts in order to
show where all of the assets
"Journal
cession..
are
1942-1945
years
pages 289-290 of the
Accountancy
prices; -and it sinks into:
every;.-time: there: is a
de-
awaiting
investment in replacements, it is
quite possible that a wrong impression regarding the current po-
-
than
rather
has been
replace*
on
memory
every,
time :7that
there, has been an ihereas^jifr
of
re-:
the charges for
which
it
as
..
accumulation
an
costs
inal cost.
Presentii^1, 0iki;r^nt- J:,
;
.2
.*•.
•
-
Effect
of
The second current problem re¬
most important.
7.7 'A,
lating to depreciation accounting
The first of these problems is is, the determination o^ the' pe-*
the current agitation ior theveur- riodic charge for depreciation to
be allocated to operations in the
rent charge as provision for
preciation to be based
-"7
■on
on
"Current Accounting Problems''
in the October issue of the "Jour¬
nal of
Accountancy,"
But I again would
that
many
decisions
on page
remind
to
buy
ating
distortions
results
charge for the
were
use
made than if
stored
on
of
would
true
occur
oper¬
if
no
of these assets
they
were re¬
the books and the
nor¬
336. mal charge for depreciation
you
or
construct additional facilities have
charged to current operations. For
some
would
examples of this practice I
refer
you
to the National
sensus
ing
of the authoritative think¬
of the
body
of
professional
accountants will recommend pro¬
cedures which will give effect to
the
changed
conditions,
without
abandoning long established and
accounting
proven
spective of the
not of
policies
and
In the meantime, irre¬
practices.
our
pressure
of those
profession, let
here closely to present
us
ad¬
policies in
depreciation accounting, until it is
proven
cation
may
self.
conclusively that modifi¬
is
necessary.
After all, it
be only history repeating it¬
40
(2300)
THE
COMMERCIAL
Securities
•
All
American
&
FINANCIAL
Now
in
.
to
quarter in which the stock is sold.
dollar for dollar
basis, and the balance will be offered to members and
pay
struction of warehouse,
property additions.
Lawrenceburg, Ind.
Allen
(Walter H.)
Co., Inc., Dallas Texas
Nov. 25 (letter of notification) 870 shares (no par) com¬
mon.
Price—$100 a share.
No underwriting. For addi¬
tional working capital.
;
;
n
Central
American
Bankers
Insurance Co. of
3
Florida,
2,500 shares of class A
5,000 shares ($10 par) class B com¬
mon, and 11,250 shares 8% ($10 par) cumulative pre¬
ferred. Price—$240 per unit, consisting of 2 shares of class
A, 4 shares of class B and 9 shares of preferred.
No
underwriting.
For capitalization of company to enter
(letter of notification)
common,
holders for
new
subscription
tenth share of
Box
Board
the basis of one-half share
on
new common
Proceeds—For construction and
Central Power & Light Co. (12/8)
Nov. 21 filed $6,000,000 first mortgage
bonds,
containers.
due
filed
1
repayment of bank loans.
100,000 shares
Americana
Furniture,
additipnal 285,000 sharps common issuable upon
conversion of preferred and exercise !<}f 35,000 common
stock warrants to be sold to underwriters.- TJnderwriters
—Gearhart & Co., Inc., New York; Herbert W. Schaefer
American Insurance Co.,
Newark, N. J.
set for Dec.
(12/19)
scribed
shares
•
Dec. 1 filed 204.000 shares ($8.50 par) common.
derwriting.
basis of
Price
by amendment. * Unsub¬
be publicly offered by underwriters.
to
;
f
American & Overseas Development
Corp., N. Y.
(letter of notification) $125,000 5-year 5% con¬
subordinate
ating
•
debentures.
Price—Par.
Manufacturing Co. of Colorado,
Denver, Colo.
Nov. .25
(letter of notification) 500 shares ($100 par)
preferred.
Priee—$100 per share.
No underwriting. To
purchase machinery and for working capital.,...
Brown
19
land.
filed
of stock
are
being sold
ceived
per
o
share.
holdings of
share.
,
common
Oct.
and
notes
at
face amount.
16
stock
Cascade Iron Corp., Canton, Ohio
Nov. 28 (letter of
notification) 4,000 shares (no par)
common and
$120,000 6% five-year notes.
Price—$20
share
No
Underwriters—To be sold at competitive
bidding.
Halsey, Stuart & Co. Inc.; The First
Boston Corp., and Blyth & Co., Inc.
(jointly); Morgan
Stanley & Co.; Lehman Brothers.
Proceeds would be
used in connection with the
company's construction pro¬
gram which involves an outlay of over
$30,000,000 of
additional generating,
transmission and distribution
facilities up to the end of 1949,
Bids for purchase of
bonds will be received by
company, 600 Market Street,
Wilmington, Del., before
up
to
at
Ice Co.,
the bonds
of
will
712, 75 Public
(EST) Dec. 9.
Room
noon
Price—$100
be
re¬
Square,
Greensboro, N. C.
a
No underwriting.
share.
($25
Kansas City,
Electric Steam Sterllzing
Co., Inc., N. Y.
f
Slept. 22 (letter of notification) 65,000 shares of common
,
stock
(par 100).
Price—65 cents per share," Under¬
writer—Reich & Co., New York.
Purchase of inventory,
etc.
Elliott
\lk% loan
No underwriting.
Offering—To
Common may be bought only by patrons and
members. Price—At face amount. Proceeds—For acqui¬
sition of additional office and plant facilities!.
un¬
and for
•
Curlette.
Inc., Los Angeles
YYl
(letter of notification) 125,000 shares ($1 par)
capital stock, iprice—$1 a share. • To be- sold through
Cooperative Wholesale, Superior, Wis.
Oct. 13 filed $750,000 of preferred stock.
No underwrit¬
ing. Offering—A portion of the stock,will. be offered
Nov. 24
president of company.
For operation of business con¬
sisting of in^nufacture of amusement
"Curlette.".
\/';Y
•\
Corporate and Public Financing
20
filed
—For construction and expansion
program.
j1
'•
*
Publishing Co.
Curtis
game
fY',9 Y
-
Y Y
.
known
*■/£ '■ •
"
->
par) common on behalf of officers and stockholders. The
80,000 shares will be sold at $3 a share;
Underwriter,
Ray T. Hass, Chicago.
Fidelity Corp. of Michigan, Grand Rapids, Mich*
Nov. 26 (letter of notification) $150,900 6%.. long term
notes and $150,000 5% short term notes.
To be sold
at face amount.
No underwriting.
To reduce indebted¬
and to carry on business.
ness
e
»
Fidelity
Nov.
Electric Co., Inc., Lancaster, Pa. >
(letter of notification) $99,900 5% convertible
28
subordinated notes.-
writing
Price—$150 per unit. /Under¬
Proceeds—Additional working capital and
none.
general working capital.
Firemen's Insurance
Nov.
12
filed
Co., Newark, N. J. (12/17)]
120,462 shares
($5 par)
common.
Under¬
writer—Blyth & Co., Inc., New York. Offering—Shares
are
offered to stockholders of record Dec. 3
two
on
basis of
shares
for each
31
shares held.
Rights expire
(EST) Dec. 16.
Unsubscribed shares will be
offered publicly.
Proceeds—To be added to company's
capital and surplus.
/
V
3
p.m.
O
First
Guardian
Securities Corp., New York
/
36,000 shares ($25 par) 5% cumulative
convertible preferred and 100,000 shares ($1 par) com¬
mon.
Underwriting to be filed by amendment. Price-*
Nov.
a
26
filed
preferred share and $10
Fischer
Nov.
17
share.
common
Pro¬
Baking Co., Newark, N.J.
(letter of notification)
non-voting preferred.
writers.
a
Business—Investment business.
To
and improve
.Florida
$299,000 5% cumulative
Price—$100 per share; No under¬
a part of corporate obligations
refinance
employee and employer relatioiis;
Products, lnc., Atlanta, Ga.
h
YY:
;
Nov. 26 (letter of notification) 20,000 shares pf cbmmoji.
Price—$5 a share.
To be sold through Samuel S.Tbm-
lin, President of the company. To pay off
plant trees and for working capital.
1
indebtedness,
sX;
as
h s
t);
Nov. 28 (lettef pf; npti^icatidh). 300 Shares of prior pre¬
ferred stockJ Price^At market« (about $62 )„ I Uhderwriter-r-The
First
Estate trustees.
„
1
Boston
»,
v
Corp.
Proceeds: to
Curtis
-
-f
'Li'- Hxi
o
FIRST BOSTON
&
•
fx i
r
v
Boston.
'
CORPORATION/X
New York
„
;
Pittsburgh-.
Chicago and other cities V
Curtis
Nov. 28
The
t"
stock.
Publishing
Co.
(letter of notification)
2,000 shares of common
Price—Market (about $9%). Underwriter—Gran-
§ bery, Marache & Lord,. New
York!
Proceeds to William
.r/Curtis>Bok;v.:.vo.x/:
•
•
•
Curtis
^
Nov. 28 (letter of notification >' 2.000 shares of comhadnr
stock. Price—Market (about $93/4). Underwriter—Hecker
&
Co., Philadelphia.
nd
BoMn
C«v
hi'
Publishing Co*
Proceeds to Cary William Bok.
,r.WA ;,;3W!9;Set".< V*
.
«'•'
.*■
•'
Empire Projector Corp., New York
Aug. 21 (letter, of notification) 80,000 shares ($1 par)
common on behalf of the
company, and 15,000 shares ($1
•
Central
Co., Jeannette,
Pa. (12/11)
f
60,000 shares ($50 par) 5% convertible
cumulative preference stock.
Underwriter—F. Eberstadt
& Co., Inc., New York.
Price by amendment.
Proceeds
$25
the public.
derwriting.. For construction of electric furnace plant
working capital.
;,
Y
(letter of notification) 50,000 shares of 6% pre¬
($5 par).
Price—$5.75 a share.
UnderwriterMcLaughlin, MacAfee & Co., Pittsburgh, to acquire and
equip a bottling plant.
ferred
ceeds—For investment.
$1,000,000.; of
-
.
$1,000,000 4% non-cumulative common
par); $4,000,000 of 3^% certificates of in¬
debtedness^^cumulativ^lahd
(EST) Dec. 9.
Oct. 22 filed 1,000,000 shares
($1 par) capital stock.
Underwriter—Tellier & Co. Price—400 per share. Pro*
ceeds—To develop mining properties in Flint Lake
local¬
ity of Ontario.
!
filed
certificates cumulative.
noon
Dogpaw Gold Mines Ltd;, Toronto
•
.
Proceeds—For corporate purposes.
common
A
Illuminating Co.
Consumers Cooperative Assoc.,
Missouri
•
per
1977.
Probable bidders:
and
purchase
company
Colonial
Chicago.
exchanged their
Price—$35 a
for preferred in 1945.
Electric
Nov. 25 (letter of notification) 990 shares $6 series cumu¬
lative preferred on behalf of A. C. Allyn and Co., Inc.,
Callaway Mills, LaGrange, Ga.
Aug. 28 filed 123,306 shares (no par) common.
Under¬
writing—No underwriting.
Offering — Shares will be
offered only to those stockholders who
by
Cleveland, O.,
outstanding shares of Quality Park Box
Co., Inc.; Consolidated Printing Ink Co., and John Beissel
Price—$9.50
Bids for
program.
by Charles A. Ward and other stockholders who will
receive the proceeds, and
163,645 shares are to be issued
in exchange for
Co.
Proceeds^-To finance, construction.
^ Cleveland (Ohio)
Illuminating Co. (12/9)
Nov. 12 filed $20,000,000 35-year first mortgage bonds.
Underwriters—To be determined by comoetitive bidding.
Probable bidders include: Blyth & Co.; Halsey, Stuart &
Co. Inc.; Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Dillon, Read & Co. Inc.; The First Boston
Corp.; White, Weld '& Co.Proceeds—For construction
&
Proceeds—874,562 shares
the
Cleveland Electric
Bigelow, St. Paul, Minn* (12/8-12)
1,038,207 shares of common stock (after
split-up of 10-for-l). Underwriter—Otis & Co., Cleve¬
Nov.
un¬
on
Price by
Offering—To be offered share for share plus a cash ad¬
justment for outstanding $4 50 preferred. Unexchanged
shares of new preferred will be sold publicly.
Price by
amendment.
Proceeds—To retire unexchanged shares
of old preferred.** Offering
indefinitely postponed.
oper¬
expenses.
Batchler
No
stockholders
—
Under¬
Working capital and day-to-day
common
share for each 10 shares held.
Sept. 26 filed 254,989 shares (no par) preferred, series of
1947.
Underwriter
Dillon, Head & Co., New York.
Nov. 18
vertible
Offering—To
one new
amendment.
Proceeds—To be used for capital funds.
writing—None.
Cincinnati Gas & Electric Co.
,
& Light Co.
(L2/9)
/
$10,000,000 1st mtge. coll. trust bonds, due
7 filed
Nov.
Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common. No under¬
writing. Price—$100 a share. Proceeds—To purchase
rolling mill, equipment and for working capital.
Nov. 14 filed 662,504 shares of
capital stock (par $2.50).
Underwriter—The First Boston Corp. Offering—To be
offered for subscription
by stockholders of record Dec. 5
on
basis of one new share for each two shares held.
18.
Bids—Bids for purchase of securities tentatively
15.
\'
penses.
& Co., Baltimore, Md., and Comstock &
Co., Chicago.
Offering—To be offered publicly in units of one share
of preferred and one share of common.
Price—$5.10 per
unit.
Proceeds—To finance completion of its factory
and for working capital.
Nov.
Oct. 24
series B,
1977; and 40,000 shares ($100 par) cumulative pre¬
Underwriting to be determined by competitive
bidding. Probable bidders include Halsey, Stuart & Co.
Inc. (bonds only);.The First Boston
Corp.; Blyth
Co.
and Harriman Ripley & Co. and
Smith, Barney & Co.
(jointly); Lehmdn Brothers and Glore, Forgan & Co.
(jointly); Salomon Bros, & Hutzler. Price—By competi¬
tive bidding.
Proceeds—For property additions and ex¬
an
,
Doughboy Bottling Co., Pittsburgh, Pa.
ferred.
Inc.
preferred (par $5) and 100,000 shares (100 par) common
Rights expire Dec.
St., Portland, Me., up to 11 a.m. (EST) for the
(EST) for the stock, on Dec. 8.
bonds and up to noon
Oct. 23 filed 100,000 shares of 6% cumulative convertible
and
Bids for the purchase of the
securities will be received at company's office 443 Con¬
gress
preferred will be offered publicly at
$10 a share and
the warrants will be sold to the
agent at 10 cents each.
Underwriter—Coburn & Middlebrook, Hartford.
For
for each common share held.
Co., Grand Rapids, Mich.
($1 par) common.
Under¬
writer—Paine, Webber, Jackson & Curtis, Boston. Price
by amendment.
Proceeds—To improve its plants and to
reimburse its treasury for funds invested in new sub¬
sidiary, American Pulp & Paper Co., Filer City, Mich.
Business—Manufacture of folding paper boxes and other
Dec.
Manufacturing Co., Danielson, Conn*
Delaware Power
for each preferred share held and one-
common
1
(letter of notification) 20,000 shares
($10 par)
preferred and 4,000 preferred stock option warrants. The
(12/8)
ing—The bonds will be offered publicly while the com¬
will be offered to 6%
preferred and common stock¬
of
Danielson
.
Dec.
working capital.
Maine Power Co.
Price by amendment.
American
inventories, and
./
mon
into stock fire insurance business.
•
expansion of
con¬
Underwriting—To be determined by competitive bid¬
ding. Probable bidders: Blyth & Co., Inc. and Kidder,
Peabody & Co. (jointly); Halsey, Stuart & Co. Inc.
(bonds only); Harriman Ripley & Co.; The First Boston
Corp. and Coffin & Burr (jointly); Shields & Co. Offer¬
I Miami.
(par $10)
Proceeds—For
Nov. 10 filed $4,000,000 first and general mortgage bonds,
series P, due 1977, and 160,000 shares ($10 par) common.
,
Nov.
eligible to become members.
Price—From $25
$25.75 from January to December, depending on the
patrons
off indebtedness incurred in
the acquisition of the capital stock of A. D. Cook, Inc.,
•
Registration
for conversion of outstanding notes, on a
ment.
Proceeds—To
Thursday; Decerriber *4,1947
INDICATES ADDITIONS SINCE PREVIOUS ISSUE
Industries, Inc., New York
100,000 shares ($1 par) common (name to
be changed to American Steel & Pump Corp.) Under¬
writing—To be filed by amendment.
Price by amendOct. 30 filed
•
:
CHRONICLE
Volume 166
THE
Number 4652
&
FINANCIAL CHRONICLE
Hanson-Van
1947
Phillips:*
•
Winkle-Munning Co., Matawan, N. J.
Oct. 30 filed 21,000 shares ($3.50 par)
indefinite.
Under¬
common.
writing— The registration said that "the initial public
December 8,
1947
_
Central Maine Power Co., Noon (EST)—___Stock
CentralPower & Light Co
.Bonds & Preferred
'f.
■
.
•
.
^
-
..p ■J."
December 9,
•-
Capital Stock
."V
V'v '
"
''
.
'
*
•:
1947
may be deemed an underwriter as that term is defined
in the Securities Act of 1933."
Offering—The shares are
Cleveland Electric Illuminating Co.
Noon (EST)
Georgia Power Co., 11:30 a.m. (EST)
December
upon
exercise of warrants issued
on
Preferred
10, 1947
000
of
Instrument
Common
Pittsburgh Steel Co
Reading Tube Co..
-
June
December
Elliott Co.
Preference
December 12,
1947
Indianapolis Power & Light Co
December 15,
Preferred
December
Missouri
Pacific
16, 1947
RR
Hickok
Equip. Trust Ctfs.
December
17, 1947
Co
Common
Monsanto Chemical Co
Preference
Northern Indiana Public Service Co
Preference
postponed indefinitely.
Hilo
(Hawaii)
Oct. 27 filed
December
19, 1S47
writing
American Insurance Co
Capital Stock
21
Products
filed
Legend Gold Mines, Ltd., Toronto, Canada
27 filed 300,000 shares
($1 par) common treasury
stock.
Underwriting
Price—50
100,000 shares
($1 par) common.
Under; writers — Campbell, McCarty & Co., and Keane & Co.,
both Detroit.
Price—$7 a share.
Proceeds—The shares
«
"are
being sold by 14 stockholders who will receive
ceeds.
pro¬
*
•
Unsubscribed
Co., Cleveland
(letter of notification) 10,000 shares ($1 par)
common, on behalf of Wm. H. Miller, a director of the
company, to be sold at market.
Underwriter—Sills, Minton & Co., Chicago.
Indefinitely postponed;
24
General
Finance,
Inc., Concordia, Kansas
Nov. 5 (letter of notification) $100,000 of 5% debenture
notes.
To be sold at face amount.
Underwriter—Robert
J. Long & Co., Abilene, Kansas.
To pay
indebtedness and for working capital.
*
General Instrument Corp.
-
off mortgage
being sold by four stockholders who will receive pro¬
ceeds.
Price by amendment.
Expected about Dec. 10.
Georgia
Power Co., Atlanta (12/9)
Nov. 7 filed $10,000,000 30-year first mortgage bonds.
Underwriting to be determined by competitive bidding.
Probable bidders include:
Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.; Blyth & Co.; Smith; Barney & Co.
and Kidder, Peabody & Co. (jointly); Lehman Brothers;
Harriman Ripley & Co.; Goldman, Sachs & Co.; Lazard
Freres & Co. and
Equitable Securities Corp. (jointly);
Shields
&
before 11:30
a.m.
(N, Y.), 20 Pine St., New York City,
(EST) Dec. 9.
Gerity-Michigan Corp., Adrian,
•
•
company
Greenwich
Nov.
Gas
President.
;
v
.
£5*: (letter of notification) 7,333 shares (no par)
cdmmon.
To stockholders
at $14
a
share.
•
<Lif
Insurance Co., Dallas, Texas
No under¬
:
•
r
stockholders ^nd unsubscribed
J
common $30 to the public.
For capital and surplus;
Gulf States Utilities Co., Baton Rouge, La.
jJov.
13
filed
"
272,852 shares (no par) common.
No
Offering—The shares will be offered, to
underwriting.
stockholders on the basis of: one new share for each
seven held,
The. Company also plans to sell privately
50,000 shares ($100* par) preferred $4.50 series.
Price
by amendment. - Proceeds—For new construction.
'^v
Corp., Chicago
in
filed
40,000 shares ($100 par) cumulative pre¬
Underwriters—Names by competitive bidding.
Lehman Brothers; Blyth & Co., Inc.;
Co.; Shields & Co., and White, Weld &
(jointly); Otis & Co. Proceeds—For new construc¬
tion purposes.
Bids—Bids for purchase of stock sched¬
uled for Dec. 2 postponed to not later than Dec. 12.
be
each.
Engineering
of
a
Corp.,
Cincinnati
notification) 500 shares (no par)
and 500 shares
mon
Price—$50
ness
share.
plastic
products
and
screw
Inc.
the
and
retire
common
bank
including the financ¬
Temporarily postponed.
Interstate Power Co., Dubuque, Iowa
May 13 filed $19,400,000 of first mortgage bonds, due
1977, and 2,132,223 shares ($3.50 par) capital stock.
Proceeds—For debt retireniefif, finance new construction
and for
other plant equip¬
&
Jobbers
Finance
Corp.,
Shelby, N. C.
•
Nov. 25
(letter of notification) 1,500 shares ($100 par)
preferred and 10,000 shares ($10 par) class B com¬
mon.
Price—$100 a preferred share and $15 a common
5%
share.'
No underwriting.
For additional working capi¬
tal.
•
Marshall
Nov.
(John) 'Insurance Co.,
Chicago
28
(letter of notification) 6,000 shares of capital
stock.
Price—$25 a share.
No underwriting. For gen¬
eral working capital.
•
Martinez-Bell
Mining Co., Superior, Ariz.
Nov. 26 (letter of notification) 102,100 shares of common.
•
For development
.
Massachusetts
Life Fund, Boston, Mass.
150,000 units of Beneficial Interest. Under¬
writing—None specified.
The Massachusetts Hospital
Life Insurance Co., Boston, is sole trustee.
Offering—
To the public.
Price based on market prices.
Proceeds
Nov. 28 filed
—For investment.
Maumes
Corp., Toledo, Ohio
(letter of notification) 2,900 shares
24
class A
Business—Investment business.
Oil
common
and 50 shares
(no
(no par) class B
par)
common.
Price—$100
to be
a share. No underwriting. Class A common
exchanged for oil leases and Class B proceeds will
defray expenses of incorporation.
be used to
shares of
S.
Hall
common
for $75 per
&
Co., Cincinnati, O.
general corporate purposes.
unit.
Underwriter—Clair
For working capital and
Middle States Telephone Co. of Illinois, Chicago
Nov. 7
(letter of notification)
No underwriting.
13,125 shares of
property.
•
effected; thereby.". The SEC's action also
the sale of the bonds.
hefjd
common.
For additions and replacements to its
Nov. 28 filed 250,000 shares (no par)
lative preference stock, series B.
Wertheim &. Co. The SEC on Sept. 25 rejected the bid
for the stock. The SEC in
its.$ecision declared, fhe price
5%
cumulative preferred and 20,000 shares (no par) common.
To be sold in units of seven shares of preferred and five
coupon: rate. StoCfc awarded.Sdpt. 24 on bid of $4.05*per
share to Lehman Brothers, Goldman, Sachs; &
C<v and
sons
shares at $4
and to
indebtedness
Nov. 17 (letter of notification) 28,000 shares (10 par)
and for general corporate purposes
stores.
par
McKay Davis Inc., Toledo, O.
Department Stores,
Oct. 30 filed $5,000,000 15-year sinking fund debentures.
Underwriter—Lehman Brothers, New York.
Price to
be filed by amendment.
Proceeds-—To repay, bank, loans
new
at
Manufacturers
Nov.
com¬
($50 par) 5% cumulative preferred.
No underwriting. To organize busi¬
manufacturing
offered
Proceeds—To
ment.
machine products.
Interstate
;
Corp., Atlanta, Ga.
serial debentures, due 1949-
finance purchase of machinery and
•
Industrial
Ky.
$500,000 5%
Price—$1 a share.
No underwriting.
of mining properties.
-y.
s*.
<
(12/22)
per¬
(letter of notification) 110,000 certificates of
rights to be exchanged for common in ratio of 11 rights
for' one share of common. Price — $27.50 to present
No underwriting.
will
on
offered for the stock "would not effectuate a
reorganiza¬
tion plan which would be fair and equitable to the
Novi 25
,
stockholders
W. C. Langley &
•
20 filed
working capital.
Bonds awarded Sept. 24 to
Halsey, Stuart &* Co. Inc. oni bid of 101.90 for a 3^>%
.
Co., Greenwich, Conn.
writing^ • To pay construction loans.
common
Probable bidders:
ing .of
Mich.
Sept. 29 filed 40,049 shares ($1 par) common.
Under¬
writer—Ames, Emerich & Co., Inc. and Dempsey & Co.
Price based on market: $10-$10.50 per share.
Proceeds—
The shares are being sold for the account of James
J Gerity,' Jr.;;
at
sold
tional Furniture Co.. both Michigan corporations.
Nov. 28 (letter of
Louisville,
ble preferred and 85,000 shares ($1 par) common.
Un¬
derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C. Price
—The debentures at 102.507, while the preferred shares
subscription warrants expire.
exchange for their holdings
of four furniture companies to be
merged with the regis¬
trant. The merging companies are Toccoa
Manufacturing
Co. and Stickley Brothers, Inc., both Illinois
corpo¬
rations, and the Luce Corp. and Stickley Bros. Institu¬
Co.
Inc.,
filed
26
Manhattan Coil
Building Co., Kansas City, Mo.
the sellers will receive
Co.; Drexel & Co.; The First Boston Corp.
Proceeds—For construction program.
Bids for purchase
of the bonds will be received at office of Commonwealth
& Southern Corp.
be
July 24 filed 120,000 shares ($1 par) common. Under¬
writers—Brailsford & Co., and Straus & Blosser, Chicago.
Price—$9.25 a share. Proceeds—The shares are being
sold by four stockholders and represent
part of the stock
9
notification) 24,000 shares of 5% cumu¬
(par $12.50)./ Under¬
Chicago. Price—$12.50 per share.
Louproco Realties,
May
Under¬
common.
poration deposited under the voting trust agreement.
ferred.
1 '• '■**' ■}-"v.!-'
Inc., New York
20,000 shares ($1 par) common. Under¬
Offering—Shares are being offered to
certain officers and employees under an
"employees
stock option plan." Price—$21 a share. Proceeds—To be
added to working capital.
-
Nov. 28 filed voting trust certificates in connection with
a maximum of 2,851 shares of common stock
of the cor-
Oct.
(par $1). Under¬
Proceeds—Stock
.
;;:v>':--vrv
-j
To be supplied by amendment.
Proceeds—To develop mining
*
writing—None.
Rochester,
shares will
Indianapolis Power & Light Co.
(12/10)
Nov. 14 filed 150,000 shares of common
writer—Burr & Co., Inc., New York.
—
share.
<;
Lowenstein & Sons,
for each two held.
Illinois-Rockford
Gabriel
Oct.
a
•
•
Huron
cents
properties.
Nov.
Price at par.
Proceeds—To repay bank loans and finance construction.
Co., Detroit, Mich.
as¬
1957; 12,000 shares ($25 par) 5V2% cumulative converti¬
25,000 shares ($20 par)
None.
—
have been
Dec. 31, 1947.
>
auction after Dec. 22, when
the basis of one share
Fraser
Inc.,
Electric* Light Co.
Offering—For subscription to
Oct.
v
To purchase sawmill
Co.,
meet
a
(letter of notification) $182,500 of 10-year first
mortgage refunding 6% bonds, due 1958.
To be sold at
face amount.
Underwriter—The Bankers Bond Co., Inc.,
Louisville, Ky.
To refund a like amount of bonds due
Sept. 19 filed 200,000 shares ($1 par) common.
Under¬
writer—E. H. Rollins & Sons, Inc., New York.
Price—
By amendment.
Proceeds—The shares are being sold
by 36 stockholders who will receive proceeds.
Offering
Debs. & Preierred
Insurance
Manufacturing
Monsanto Chemical
Co., St. Louis
(12/17)
$4 dividend
cumu¬
Underwriter—Smithy
Barney & Co., New York.
Price to be filed by amend-j
ment.
Proceeds for general corporate purposes includ¬
ing financing new plant construction and additions toj
present facilities.
up
•
...
Nationwide Home
Equipment Corp., New Haven,,
Conn.
•
Jardine Mining Co.,
Jardine, Mont.
Nov. 19
Nov. 24 (letter of notification) 62,500 shares of common.
Price—$1.50 a share.
Underwriter—Sulzbacher, Grang¬
er
&
Co., New York.
operation.
;
-
To improve efficiency of mill
'
'
r
^
Oct. 10 (letter of notification)1 *95.000 shares of common,
To be. sold at market,
Underwriter-—George F. Breen,
New York.
be placed
For additional
privately.
working capital.
*<'•
Issue will
*'*' "V A
n;-
(letter of notification)
100,000 shares of capital
stock (par $1).
Price—$2% per share.
UnderwriterHenry P. Rosenfeld Co., New York.
Proceeds — For
expansion. Business — Company sells furniture, house-,
hold
Johnson Automatics, Inc., Boston
;
and
June
•
New York
Common
Sunray Oil Corp
No underwriting.
working capital.
and for
RR.__Equip. Trust Ctfs.
.No
unit, consisting.of $1,-
Nov. 26
24
share of stock.
inc.
income
common.'
General corporate purposes.
(letter of notification) $301,200 2% unsecured
bonds and 66,560 shares ($1 par) capital stock.
Price—
$77.50 per $100 principal amount of bond and $1 per
Common
per
before definite dates for
Oct. 6 (letter of
5"
-
Kayward Milling Co.; Los Angeles
Nov.
Northern Natural Gas Co
Firemen's
•
1947
Permanente Cement Corp
International Great North.
'■
program.
cumulative
par)
lative convertible preferred stock
writer— Ray T. Haas,
equivalent to 50 cents).
Underwriting—No under¬
writing. Offering—For subscription by common stock¬
holders On the basis of one share for each 1% shares
owned. Price—$5 a share. Proceeds—For rehabilitation
11, 1947
———
6%
(10
Lock Nut Corp. of America
par
neco
Price—$1,001
debentures
be used
Sept. 24 filed 500 000 shares -7% cumulative preferred,
10 Philippines pesos peiT share (currehcy basis one
.Bonds
RacingAssociation,
10-year
signed to the association by the Maryland
Racing Com¬
mission.
Registration statement effective Nov. 20.
Hawaiian-PhilippineCo., Manila, P. I.r
Preferred & Class B
$490,000
100 shares Of common. Of the
$146,000 debentures and 14,600 common shares
will be held
by agent until lapse of escrow agreement.
Proceeds—Proceeds will be put in escrow and will not
.
Corp..
Harness
.
above
•
General
filed
underwriting.
28, 1946.
Price—Warrant holders are entitled to pur¬
chase 21,000 shares of common at $12,875 a share on and U
after June 28, 1947 up to June
27, 1948, or $14 per share
to June 27, 1949.
Proceeds—For general corporate pur¬
poses.
"
•;
Bonds
Southern California Edison Co
be issued
to
-—-Bonds
Delaware Power & Light Co., Noon (EbT;_—uonus
23
(Md.)
debentures; and 49,000 shares
N. J., and Harry P; Barrand/of, Stamford, Cbrin.j as
underwriters by sale on the over-the-counter market of
100 shares each at the market price at the time of sale.
In the event that any of :the holders, of the; warrants ex¬
change any such warrants for other than investment and
offer the shares received for public sale, such offerer
wan,
;
_—..Common
Central Maine Ptfwer Co., 11 a.m. (EST) —Bonds
••
Oct.
offering is being made by Van Winkle Todd, of Mata¬
Springfield Fire & Marine Ins. Co
41
^>
^Laurel
■
Brown & Bigelow_
Vn.
(2301)
Guyana Mines, Ltd., Toronto, Canada v; /
Johnson Bropze Co., New
Castle, Pa.
Nov. 26 filed 303,587! shares ($1 par) com'mbnr Under¬
Nov. 10 filed 30Q.000 shares common stock
(par 500).
writing—None. Price—50 cents a share. • Proceeds-r-fFor '
UnderwHter-i-Lee Higginson Corp. Proceeds
Stock
equipment and working capital.
1*
/; *•<< * ?
being sold lor account of certain stockholders. Offering
P NEW ISSUE CALENDAR
December 5,
COMMERCIAL
appliances, etc., at retail.
North
American
.
Oil
,
Co., Baltimore, Md.
Nov. 7 (letter of notification) 25.000 shares of conwj
mon.
Price—90 cents, a share, r Underwriter—Henry,
(Continued
on page
42)
J
42
•
Indiana
Northern
develop¬
For payment and
Md.
Service Co.
Public
(12/17)
($20 par) cumulative pref¬
Underwriters—Central Republic Co. Inc.,
erence
stock.
Chicago; The First Boston Corp., and Blyth & Co. Inc.,
New
York.
Offering—For
subscription by common
basis of one preferred
shares held. Rights expire
Unsubscribed shares will be offered publicly.
stockholders of record Dec. 2 on
share for each eight common
Dec.
16.
Price—$21
Proceeds—To improve its public
share.
a
utility system.
Northern Natural Gas
stock (par $10).
through competitive bidding.
Probable bidders: Blyth & Co., Inc.; Dillon, Read & Co.
Inc:
Proceeds—Shares being sold by North American
Light & Power Co. which will use proceeds to retire
109,255 shares of its own $6 preferred stock held by
others than North American Co.
Bids—Bids for pur¬
chase of stock tentatively set for Dec; 16.
'
Underwriters—To be sold
•
Ocean
Downs
Racing Association, Inc.,
Berlin, Md.
No un¬
derwriting.
Price — $10 a share.
Proceeds—To build
trotting and pacing race track near Ocean City, Md.
Business—Operation of race track.
Nov. 28 filed 34,900
shares ($10 par) common.
Kansas City, Mo.
(letter of notification) 2,950 shares ($100 par)
5% cumulative preferred, 1947 series.
Of the total 2,700
shares are being offered through the following under¬
writers: George K. Baum & Co., and Prescott-WrightSnider Co., both of Kansas City, Mo., and Kenneth Van
Sickle, Inc., Emporia, Kansas.
The remaining 250 shares
will be offered to certain officers, shareholders and
former shareholders directly by the company.
Price—
$100 a share. • Proceeds—To be used to retire outstand¬
ing 6% preferred.
•
Clothing Co.,
Palace
24
Nov.
Permanente
Cement
Co.,
Oakland,
Calif.
(12/15-19)
150,000 shares of common stock (pas $1).
Underwriters—Dean Witter & Co., and Schwabacher &
24 filed
Nov.
Price by amendment. Proceeds—
loans and for working capital.
Busi¬
Co., San Francisco.
To
reduce
bank
ness—Manufacturers of
Telephone Co., Inc., Kansas
City, Kansas
Nov. 6 (letter of notification) 10,000 shares of 5% cumu¬
lative preferred.
Price—$28 a share.
Underwriters—
The First Trust Co. of Lincoln, Neb., and Harris, Hall &
Co. (Inc.), Chicago.
For expansion of plant facilities.
(
Silver Buckle Mining Co., Wallace,
Idaho
1,500,000 shares of (10c
(letter of notification)
13
Oct.
White Motor Co., Cleveland, O.
Oct. 28 filed 275,000 shares ($1 par) stock.
Underwriter
—Hornblower & Weeks, New York. Offering—Proposed
stock. Price—20 cents a share. Underwriters—F.
E. Scott, Pennaluna & Co., J. E. Scott and Morris George,
all of Wallace, Idaho, and John Erickson and Harold
Gribble, both of Mullan, Idaho. For mine development.
par)
Silverore
Wallace,
Inc.,
Mines,
/
Idaho
offering
cement.
Phillips Petroleum Co., New York (12/5)
shares (no par) common..v Under¬
writer—The First Boston Corp., New York.
Offering—
Offered to common holders of record NoV. 19 in the
ratio of one new share for each five held at $49 per
Oct. 31 filed 1,007,517
Rights expire 3 p.m. Dec. 3|t Unsubscribed shares
will be offered publicly.
Proceeds—To repay bank loans
and for working capital.
share.
Pittsburgh Steel Co. (12/10)
Nov. 20 filed $6,500,000 of first mortgage bonds, due 1967.
Underwriters—Kuhn, Loeb & Co.; A. G. Becker & Co.,
Inc. and Hemphill, Noyes & Co.
Price by amendment.
Proceeds
To refund outstanding first mortgage bonds.
Business — Manufacturer of tubular, wire and semi¬
•
to
all
purchase
Pro¬
other funds will be used
•
ties
Va.
•
competi¬
bidding.
Probable bidders: The First Boston Corp.
Harris, Hall & Co. (Inc.)-(jointly); Blyth & Co., Inc.
and
finished steel products.
Public
Service
Nov. 25 filed
Co.
New
Hampshire
139,739 shares ($10 par) common and $3,-
000,000 30-year series C first mortgage bonds.
Under¬
writers—To be determined by competitive bidding. Prob¬
able bidders:
The First Boston Corp., Coffin & Burr,
(jointly); Kidder, Peabody & Co. and Blyth & Co.,
Inc. (jointly); W. C. Langley & Co. and Glore, Forgan
&
Co.
(jointly); Halsey, Stuart & Co. Inc.
(bonds
only); Kuhn, Loeb & Co., Harriman Ripley & Co. and
Smith, Barney & Co. (jointly). Offering—Common stock
first will be offered for subscription to present share¬
holders at the rate of one share for each five shares held.
Unsubscribed shares and the bonds will be offered pub¬
Inc.
licly.
Price to be determined by competitive bidding.
pay off loans and for construction pur¬
Proceeds—To
poses.
York
Oct. 3 filed 140,000 shares ($1 par) commop.
Under¬
writer—Reynolds & Co., New York. Price by amend¬
ment.
Proceeds — The shares are being sold by three
stockholders who will receive proceeds. Offering indefi¬
Publix Shirt Corp., New
expenditures for property and construc¬
to 9 a.m. (PST) on Dec. 9 at 610 West
Angeles, Calif.
28
filed
tive Nov.
19.
Regis Paper Co., New York
300,000 shares, ($5 par) common. Under¬
writing—No underwriting. To be offered on New York
Stock Exchange.
Price—At market. Proceeds—Shares
are being sold by Weco Corp., a wholly-owned subsid¬
26 filed
iary of Western Electric Co.
•
Save Rite Drug Stores,
Salt Lake City
(letter of notification) 196 shares ($100 par)
common and $68,600 5%
bonds.
Price—$100 per unit.
No underwriting.
For operating capital and expansion
Nov.
26
purposes.
„
;
;
;
1
!
!
Northern
Great
RR.
!
(12/16)
is
trustee
Halsey,
Southwestern
filed
5
Nov.
series B.
Elec. Co.
&
Gas
$7,000,000
30-year
(12/8)
•
first mortgage bonds,
Co.,
&
of
one
p.m.
licly.
share
ders:
•
14
Oct.
class
A
•
Offering—Offered to stock¬
Inc.,
Co.
Halsey,
Co.
Stuart &
Inc.;
The
First Boston '
Corp.; Harriman Ripley & Co.
•
Philadelphia Transportation Co.
Corp., an investment company under¬
going involuntary dissolution, will receive bids Dec. 10
for purchase of voting trust certificates for 7,203 shares
participating preferred and 3,795 shares common stock
of Philadelphia Transportation Co.
The voting trust
certificates for each class of stock will be sold separately.
Transit Investment
Southern
•
Dec.
(12/16-18)
9
*
.
■
Co.
will hold hearings on application of the
(subsidiary of Commonwealth & Southern 1
to sell a sufficient number of shares ($5 par)
SEC
$40,000,000 20-year debentures and a new
of cumulative convertible second preferred stock,
company
$100). The interest rate of the deben¬
and the dividend rate of the second preferred stock
The
purchase additional shares '
of common stocks of its subsidiary companies to assist 1
them in financing their construction programs.
"
•.
12 filed
be
filed
by
amendment.
Dillon & Co. heads a group
To financing
Mission Corp.
Corp.)
common
merger
Underwriters—Eastman,
of underwriters.
Purpose-
,
of Pacific Western Oil Corp. and
•
into Sunray.
Lumber
Co., Ravalli,
To be
Tropical
Underwriter—L. A. Dona¬
For payment of liabilities and con¬
\'i
sold at par.
struction of mill.
Service Co.
Public
.•»
reported new financing to provide funds for con¬
struction, besides the $9,700,000 obtained through bond
issue placed privately, is expected to be raised through '
the offering of additional common stock.
Probable bid- j
ders include Dillon, Read & Co. Inc.
\ V r
Mont.
common
hue, Billings, Mont.
Southwestern
Dec. 2
ferred.
27
stock to obtain approximately $20,000,000.
latter fund would be used to
(letter of notification) 1,152 shares ($100 par)
and 1,848 shares ($100 par) 6% cumulative pre¬
•
Service
company,
bidders:
series of 1947 (par
Oct.
1
Morgan Stanley & Co.;
in asking SEC for authority to borrow .
$3,000,000 from three banks and use the proceeds to.
repay a note of a like amount, stated it plans to sell at
competitive bidding $10,000,000 of new first mortgage,
bonds for construction and other purposes.
Probable
shares held;Rights expire
Power,
Ohio Public
Dec.
(letter of notification)
common.
Price—$5 a
Sunray Oil Corp.
Will
competitive '
Proceeds for capital ex- J*
penditures.
Probable bidders:
Halsey, Stuart & Co. Inc.
Ohio
Nov. 12 (letter of notification) 3,674 shares (no par)
common.
Price—$10 a share.
Underwriter — Gunn,
Carey and Co., Cleveland.
For operating expenses.
tures
1,
30-year refunding mortgage bonds through
Strong Manufacturing Co., Sebring,
Nov.
Telephone Co.
at hearing before Public Service Commission,
company counsel stated company hopes to sell $60,000,000 '
6 at $38 per share on the basis
each 2V2
Motive
New York
Dec.
Mishawaka, Ind.
60,000 shares ($1 par)
share. Underwriters—
Harrison & Austin, Inc.; Ferron R. Davis, Inc.; and Her¬
bert S. Wolff Securities Co., all of South Bend, Inc.
To
organize business and for working capital.
Steam
Harris, Hall & Co..;(Inc.); Halsey, Stuart & Co.
Inc.; Salomon Bros. & Hutzler.
Dec. 5.
Unsubscribed shares will be sold pub¬
Proceeds—To be added to company's capital funds.
Nov.
(12/16)
bidding about Jan. 27, next.
New York.
for
RR.
inviting bids to be considered Dec. 16 for
purchase of $5,248,000 equipment trust certificates, ;
maturing serially in one-to-eight years. Probable bid- ,
Springfield Fire & Marine Insurance Co. (12/8)
Oct. 29 filed 200,000 shares
($10 par) capital stock.
Underwriters—The First Boston Corp., and Kidder, Pea¬
holders of record
Pacific
(Inc.);
the
pected about Dec. 8.
body
Missouri
Harris, Hall & Co.
Co. Inc.;
Stuart &
The trustee is
Underwriting—To be determined at competi¬
tive bidding.
Probable bidders:. Halsey, Stuart & Co.
'Inc., Lehman Brothers and Lazard Freres & Co. (jointly);
White, Weld & Co. and Kidder, Peabody & Co. (jointly);
Blyth & Co., Inc. and Stone & Webster Securities Corp.
(jointly); Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Harriman, Ripley & Co. Proceeds—To finance
construction program.
Bids for purchase of bonds ex¬
UNITED STATES
Broadcasting Co., Washington, D. C.
(letter of notification) 10,000
5^cumulative preferred; 2,950 shares
Nov. 25
shares ($10 par)
GOVERNMENT,
,
' in!
STATE, MUNICIPAL AND
($2 par) Class A
52,050 shares ($2 par) Class B common.
Price—$10 a preferred share and Class A and Class B
common
at $2 67 per share. ■
No underwriting.
To
build frequency modulation radio station at Miami, Fla.
common
St.
Nov.
|
Salomon Bros. & Hutzler.
Thornton
(Pa.) Tube Co. (12/10)
200,000 shares (no par) 500 cumulative
class A and participating stock, 50,000 shares (100 par)
class B stock, and 50,000 shares class B stock issuable
upon redemption of the class A stock.
Underwriter—
Aetna Securities Corp., New York.
Offering—Class A
stock will be offered publicly at $6 and class B stock
will be sold to underwriters for investment at 100 per
share.
Proceeds—To pay bank loans. Statement effec¬
Reading
I
Power
by company up
nite.
Oct.
4, to whom warrants
that day which will entitle the holders
inviting bids to be considered Dec. 16 I
for the purchase of $2,496,000 equipment trust certificates, ?
to mature
in one-to-eight years.
Probable bidders: j
Bids—Bids for purchase of stock will be received
issue
:
xecord of the stockholders will be
5th Street, Los
3
of
on
International
The
*
—
a
Co., Inc.
Iowa
•
Proceeds—Repayment of current bank loans and reim¬
bursement for
not
& Light Co.
has under consideration plans for sale,
possibly in the latter part of January, of $6,000,000 additional bonds.
Probable bidders: Blyth & Co., Inc.; The
First Boston Corp.; Halsey, Stuart & Co. Inc.
(par $25). Underwriters—To be determined by
tive
at
Nov. 28 company
(12/9)
shares cumulative preferred stock
18 filed 800,000
Nov.
Co.,
corporation in accordance with the terms of the
plan of reorganization. The offering of stock has been
underwritten by Wertheim
& Co.; Graham Newman
Corp.;
Cullman Brothers,
Inc.; Arnold
Bros.; Bear,
Stearns & Co.; Hallgarten & Co.; Values, Inc.; Baker,
Evans & Co., Inc.; Kirkeby Corp., and Overseas Securi-
Washington, D. C.
Edison Co.
&
of the
52,050 shares ($2 par) Class B common.
Price—$10 per preferred share and the Class A and Class
B common at $2.67 per share.
No underwriting. To fi¬
nance
construction of frequency modulation radio sta¬
California
Schoellkopf
warrants to subscribe to shares of capital stock
of such
and
Southern
Doolittle,
28 announced
will be mailed
(letter of notification) 10,000 shares ($10 par)
5% cumulative preferred; 2,950 shares ($2 par) Class A
tion at Richmond,
;
97 V2.
taken at the close of business Dec.
25
common
j
Equitable Office Building Corp.
Nov.
Business—Public utility.
Southern Broadcasters, Inc.,
•
Nov.
issuance and !
10-year collateral trust (convertThe bonds will first be offered to the stock-
underwriters,
by
less than
shares
Carolina Power Co. from the Commonwealth & Southern
Corp.
\
Co.
holders and any unsubscribed portion will be purchased '
outstanding common of South
of the
Fisheries
$556,500 V/2%
ible) bonds.
preferred and 1,091,586 shares ($4.50 par) common.
Underwriter—Kidder, Peabody & Co., New York.
Of¬
fering—Shares initially will be offered for subscription
ible
ceeds—Proceeds together with
Coast
stockholders voted to authorize the
1
sale of
shares ($50 par) cumulative convert¬
by company's common stockholders. Unsubscribed
will be offered publicly.
Price by amendment.
Atlantic
Dec.
S. C.
Dec. 2 filed 80,858
1
18 filed
Anderson,
Electric & Gas Co.* Columbia,
Carolina
South
an¬
an
125,000 shares ($1 par) common.
Under¬
writer—Loewi & Co.
Price—$4 a share.
Proceeds—To
purchase aircraft, repay notes and for working capital.
both of Spokane, Wash., as underwriters.
The company
will use its proceeds for mining operations.
•
to
securities directly
with the aid of L. E. Nicholls & Co. and W. T.
tion.
Paul, Inc., Naugatuck, Conn.
Nov. 6 (letter of notification) 11,955 shares (no par)
common, to be offered for subscription at $25 a share
to present stockholders.
No underwriting. For expan¬
sion and working capital.
Peter
The Company will offer the
according
)
Nov.
(letter of notification) 1,345,000 shares of com¬
Company is selling 1,000,000 of the total and the,
balance is being sold by four stockholders.
Price—150
share.
indefinitely
17.
Wisconsin Central Airlines, Clintonville, Wis.
,
: i
Oct. 28
a
postponed
nouncement Nov.
mon.
Co. (12/16)
710,500 shares of common
Nov. 14 filed
•
...
Thursday, December 4, 1947
Western Light
(letter of notification) 10,000 shares ($1 par)
common.
Price—$6.50 a share.
Underwriter—First of
Michigan Corp., Detroit. For construction purposes and
for working capital.
j
29 filed 272,694 shares
Oct.
CHRONICLE
24
Oct.
White & Co., Baltimore,
ment of mining lease.
FINANCIAL
&
Sherer-Gillett Co., Marshall, Mich,
(Continued from page 41)
i
(
COMMERCIAL
THE
(2302)
and
Washington
(D. C.)
CORPORATE SECURITIES
1
Co.
Blair
Gas Light Co.
par) common.
No under¬
writing.
Offering—The shares will be offered for sub¬
scription to common stockholders of record Dec. 26 on
the basis of one share for each five held.
Subscription
warrants will expire Jan. 13,1948.
Price—$20 per share.
Proceeds—To be added to general funds for current con¬
struction program.
'
'
»
/ \
v
Nov. 7 filed 85,000 shares (no
..
INC.
(
t.
NEW
ATLANTA
•
BOSTON
PHILADELPHIA
.
•
«
YORK
BUFFALO.
PITTSBURGH,
•,
•
CHICAGO,
AT. LOUIS
' i
,
>
-I
Volume I§6
COMMfiRClAt & FINANCIAL" CHRONICLE
THE
Niunber 4652
tional
the sale of $10,000,000 of common
stock to the parent company and
investors,, particularly the
insurance companies.
the
underwriting
some
conclusion
has
circles
reached
been
that institutional investors
not
are
going to let the bankers realize
too-/wide a margin of profit on
any given undertaking.
'
other
'
The next two weeks promise to
iroiind out pretty well such corpo-,
financing
corporations
as
plan to complete before the close
of
the
it was indicated in
underwriting circles. Next Tuesday and Wednes¬
day promise to corral' the bulk
izable
Since
all
of
are
"Street size"
But
•
the
at
000,000
of
first
new
the
spread
is
fo»*
years,
Delaware
Light Co. and
Power
&
similar amount
a
first
new
mortgage bonds,
maturity for the
the Georgia Power
30-year
-account
of
On the
same
bidding
-
for
$20,000,000
Also
first
mortgage
Cleveland Electric Il¬
Tuesday underwriters
matching bids for $20,-
on
be
000,000 of
stock
?
of
Edison
nally
$25 par preferred
new
the
Southern
California
Co.,
a
deal which origin
to have been twice the
was
projected dimensions.
Wednesday's schedule calls for
the marketing, via
negotiation^, of
$6,500,000.20-year first mortgage
bonds of Pittsburgh Steel Corp.
now
'
j
j
t
i
Scheduled
Feeling
is
week
break¬
a
Common Dividend No.
that
is
the
once
down to
walk
a
in the
ol
Dividends
of
for
the
share
per
l
record
close of
the
at
November 24,
cents
share
per
the
on
been de¬
business
December
on
SUNDBERG
A.
1947
Amazingly
close
bidding
Electric
$28,000,000 first
Tuesday.
Power
bonds
of
bonds
winning
tender
second bid
on
separated
of
of
100.10
the
and
100.079 for
Two other
coupon.
each
a
102.18
for
3%%
a
coupon
Latest reports indicated that all
but a small portion of the issue,
end of the first
•
Just
world
its
on
of
December
record
be
cumulative
preferred
(par $100) to holders of its
presently outstanding 4%% cumu¬
competitive bidding for securities
was giving signs of determination
1947.
Nov.
on
24, 1947. Subscription
terminate
The
Electric
at
3
American
Gas
on
the
sale
of
preferred stock, together with
DIVIDEND
The
Board
86tj
be
Company,
18,
JOHN
W.
THE
c
HAMILTON,
New
The
Trust
($2.50)
the
payable
clared
by
earnings,
holders
1947, a special dividend
($1.00) per share was
No.
de¬
the Beard of Directors out of past
payable December 23, 1947, to stock¬
of
December
record
12,
at
the
close
of
business
1947.
F.
DUNNING,
Secretary.
close of
2,
1947,
(25c)
dividend No. 235 of
per share was declared
a
twenty-five cents
by the Board of Directors out of past earnings,
payable
January 2,
1948,
to stockholders
of
record
at
the
close
of
business
December
1947.
F.
The
dend
DUNNING.
for
of
the
of
1948,
out
close
of
business
ended
year
Preferred
books
of
December
also
declared
Dollar
being
30,
Fifty
Dividend
30,
and is
30,
and
$.35
Stock
registered
at
MILTON L. SELBY, Secretary.
November 14, 1947.
reg¬
day
Cents
No.
140,
a
the
S) CHEMICALS
divi¬
($1.50)
fa
on
the
on
close
of
the
books
business
of
MINERALS & CHEMICAL
the
January
checks
Preferred
have
filed
and
will
be
mailed
Common
Capital
suitable
orders
to
holders
Stock
therefor
at
General Offices
who
20 North Wacker
thie
CORPORATION OF AMERICA
office.
D.
C.
WILSON, Assistant Treasurer,
Broadway, New York 5, N. Y.
120
Avenue, New York 16, N. Y.
Dividends
4%
FIRST PREFERRED STOCK
year-end
Preferred Dividend No.
!
on
167
154
Common Dividend No. 155
7
't \ *
•. • i.
•
'
j..
...• • ■ i
A quarterly dividend of 75tf per share
'
•
Corporation's capital stock Dec.
24, 1.947, to holders of record at the
.dose of business
Common Dividend No.
.
(I XA%)
on
.
the Preferred Stock for the
quarter ending December 31, 1947 pay¬
Dec. 10, 1947.
able
January
2,
1948,
a>.yeaofend divi-
dend of 40£ per share on the Common
Stock
payable December 26, 1947 and
share
on
Stock payable January 2,1948 have
been declared, to respective
December
holders of
The stock
transfer books will remain open.
Commercial
./f
1947.
48
WAU
STREET,
NEW YORK
5, N. Y.
W. F. Colclough,
November 26, 1947
Jr.j
Secretary
Stock
Quarterly Dividend of One Dollar
($1.00) per share.
$5.00 Par Value Common Stock
Regular Quarterly Dividend of
Forty Cents (40c) per share.
Both
regular quarterly dividend for
dividends
are
payable De¬
the current quarter of $1.75 per share,
pay able January 1,194$ to holders of
cember 30,1947 to stockholders of
record at the close of business
record at the close of business Decem¬
December 12, 1947.
ber 16, 1947.
will
Checks
COMMON STOCK
40 cents per
York.
ber 31, 1947 to holders of record at
the close of business December 16,
1947.
i i
•"
.
'
.
,
December 2, 1947
I
:;y> ••
(
/
R.O.GILBERT
Secretary
^
mailed by the
Company of New
be
Trust
Bankers
share, payable Decem¬
:
&
Place,
8,
Preferred
7% SECOND PREFERRED STOCK
The
a
the Com¬
Cumulative
23rd Consecutive Regular
84.75 SERIES
The regular quarterly dividend for
the current
quarter of $1.18^4 per
share, payable January 1, 1948 to
holders of record at the close of busi¬
ness December
16, 1947.
Company
by the
on
October 20,1947, as follows:
THE Boardthe Directors has this day
of following dividends:
declared
Bank Note
the
institu-
declared
were
Board of Directors
INC*
on
Drive, Chicago
★
180 Madison
Secretary.
share—payable
stock¬
CORPORATION
Dividend
of
ordinary in¬
$.20 from capital gainsper
to
the close of busi¬
at
December 9, 1947.
ness
1948.
rThe Directors of Fundamental In*
total
to
the close of
1947,
at
American
come
at
payable January 1,1948
holders of record
New York, November 26,1947.
FUNDAMENTAL
INVESTORS
payable December 19,1947
1947.
this
on
and
June
the Common
of 25c per share
business December 9, 1947.
The dividend on the 5% Preferred
Stock is at the rate of $1.25
per share
on
undivided
Company
on
rate
stockholders of record
Company,
Capital Stock
the
the
at
on
of
on
Common Capital Stock of this Company, payable
March
1,
1948 to holders
of
said
Commor
12,
over-the-counter
and is
rec'
Cents
98,
this
in
Park
the
dividend
Stock is
C. A. Sanford, Treasurer
1947
declared
No.
record
25
at
dividends
Company's $5 Par Value Common
The
per
the Preferred Stock has
20, 1947, to stockholders of
Fifty
Dividend
Stock
2,
said
One
share,
per
and
Dollars
being
Capital
the
Board
mon
Chronicle,
N. Y.
on
Safeway
and 5% Preferred Stocks.
196
Checks will be mailed.
25,
day
to-'give service and
New York 8,
No.
been declared payable December
AND
this
business
Capital
December
1947 declared quarterly
COMPANY
November
Two
•
of
on
Y.,
Directors has
of
profits
istered
2,
N.
February
holders
to
TOPEKA
RAILWAY
share,
per
Preferred
net
THE YALE & TOWNE MFG. CO.
Board of
dividend
a
Secretary.
FE
York,
Stock Dividends
The Board of Directors of
Stores, Incorporated, on November 14,
,jif
quarterly dividend of $1.50
share
Treasurer.
ATCHISON,
SANTA
'
dollar
Dividend
*
A
business December 12, 1947.
1947
December
Safeway Stores, Incorporated
December 8, 1947.
mailed
by
Irving
Disbursing Agent.
Dividend
November
one
Preferred
2, 1948, to
the close of
declared dividend
will
of
at
H. F. Sanders,
snare1
hattan
the
ord
par
Resulting stock and scrip certificates
by Bank of the Man¬
Company.
will be mailed
Secretary & Treasurer
COMPANY
the
on
COMPANY
($.50)
The transfer books will not be closed.
ALLYN DILLARD, Secretary
ELEVATOR
per
A
value Capital Stock, payable Decem¬
ber
19,
1947 to stockholders
of
record
'3:00
o'clock P. M., December 8, 1947.
On
share
payable January
tion,
par
Checks
$1.50
December 2. 1947
has
cents
December 10,
will be issued
fractional shares.
Dated, November 25, 1947
on s
Preferred Stock of this Corpora'
$7
Directors
fifty
on
1947. Scrip certificates
for resulting
shareholders of record at the close
r>T
866
01
of
at the close of business
Manufacturing
Two Dollars ($2) per
the $6 Preferred Stock and
on
of
dividend
stockholders of record
DIVIDEND NOTICES
No.
(10%)
outstanding common stock of the
Company, has been declared payable
December 31, 1947, in common stock
of the Company, to holders of record
EXTRA DIVIDEND
NOTICE
dividend of $1.75 per
a
pro¬
No.
STOCK
COMMON
A dividend of ten percent
Preferred and Common
a
the
TRADER
Ml24,
IIAUTAU, Treasurer.
the
The Board of Directors has this day
dividend of 40(( per
Box
Secretary
REYNOLDS
<
declared
remaining from other fi¬
nancing of the company through
MINING
on
J. H. Miracle,
Corporation
&
DIVIDEND
businesss
1947
Power & Light
ceeds
HOMESTAKE
of
December 2, 1947
Company has declared a dividend of
share on the
outstanding common stock of the
Company, payable December 20,1947,
Bank
about December 30,
or
share
from
payable
stockholders of
to
close
H. C. STUESSY
on
situation wanted
orders
FRED W.
November 21,
sub¬
a
•
twenty-five
the Common
Corporation,
1948,
the
at
of
on
December 12, 1947.
lit-
a
share
stockholders of
at,the close of business December 10,
Electric
v
execute
record
of business December 5, 1947.
dividends of $.15 from
Financial
January 2,
CORPORATION,
to
per
the
of
will be mailed.
to
Co.
vestors, Inc. have declared
securities.
1948,
1947. The>transfcr books will not close. Checks
pe¬
p.m.
is
company
the
Proceeds
thousand, between
tlje foregoing figure and the price
paid for the issue.
,Celerity with which the' issue
moved, .indicated that the yield
position
record
of
LL. BAXTER, President
preferred for each four
shares pf the 4^> % preferred held
of record at the close of business
a
Wishes
FINANCIAL
1,
share in
(DIVIDEND No. 92)
Checks will
First National
mailed from The
Chicago
4.50%
dred,
attractive to
T.
payable January
per
the Common Stock
The Board of Directors
,947-
Securities Corp. Subscription will
be at the rate of one share of the
of 100.50 !to yield 3.10%, Indicating
a spread «of only 40 cents a
hun¬
was
I.
C.
on
of Eaton
The First Boston Corp. and Union
margin than
recently, the Appalachian Electric
£dle hro.ught a recurrence of efc*
tremely close pricing.
Reoffering was made at a price,
$4
of
1947,
j tie better working
or
quarterly dividend of 50 cents
cash has been declared
dividend
a
(25tf)
cents
Stock
J!S»i\
lative preferred, at $100 per share,
been underwritten by an in¬
vestment group headed jointly by
On
when the underwriting
beginning to think that
Common Stock
on
Cleveland, Ohio
has
THE YALE &*'TOWNE MFG. CO.
Small Margin
Dividend Notice
The Board of Directors has this date
EATON MANUFACTURING COMPANY
stock
common
15,
of
4.50%
Company
II of bidders to be assured of
holders
its
to
stock
day.
was
offered
LOUISIANA
Reynolds Metals Building
Richmond 19, Virginia
payable December 30,
share,
per
Offering by Appalachian Elec¬
75,000 shares of
234
rate.
Working
I
17, 1947, Transfer
C.I.T. FINANCIAL CORPORATION
quarterly dividend of twenty cents (20c)
tric Power Co. of
groups
| a couple of million, had been disi posed of on the reoffering by the
j
business
COMPANY
Board' of
Directors of
Arkansas
Western Gas Company has declared a
Priced at $100 per Sh.
$12.50
sought the issue bidding 100.13
-
of
MTT^R.AV.
November 26, 1947.
Th»
Co.'s
mortgage
Only about two cents
t
December
Common Stock
be-
on
i
business
GAS COMPANY
ian ELPfd.
market the sale of Ap-
runner-up
palachian
!
close
the
T.
Company, payable
Secretary
Dividend Notice
tween the winning group and the
and
at
1947.
ARKANSAS WESTERN
records.
15.
3Vh%
record
15,
M<YTTH*rVV
METALS;
gradually tapering off with an
toward the year-end and the
task of closing their books and
eye
sidiary of
the
close of
1947. Transfer books will not be closed,
11,
Potential issuers and major out¬
for new emissions alike are
Dec.
=
(
of
lets
Oil Corp. 20-year debentures
and $19,000,000 of the company's
cumulative second preferred stock,
depending on the outcome of the
present court proceedings.
ray
$100
this
1947,
Books will remain open. Checks will be mailed.
A
five
1, 1948 to holders of
CARL
will
»
!
Stock of
holders
December
,
the Preferred Stock and
on
year.
riod
Cutting It Close
j
Preferred
of
on
declared
_
90
seventy
thirty five cents (35tf)
clared payable January
issue
new
dollar
one
Common Stock of this Company have
next
passed, things will slow
following
week are the $40,000,000 of Sun-
the
declared
8,
January 2, 1948, to Stockholders of record at the
Dividend
158
No.
Dividend
Preferred
:
($1.75)
of
Co., which recently
decided to forego a somewhat
larger preferred stock under¬
taking.
will
and three-quarters per cent was
No. York 8. NY.
SO Cboreh Street
Preparing to Close Books
luminating
'
one
as
tendency to
a
step aside and hope for
day bankers will
35-year
new
bonds of
'
On November 25, 1947, a quarterly dividend
December
has
this
day
de¬
dividend of Three Dollars
($3.) per share on the Capital Stock of this
Company for the quarter ending D&iember 31,
1947,
payable on
January
2,
1948
to
stock¬
NOTICES
Co.
•
STOCK
York,
Directors
R. A. BURGER. Secretary.
AMERICAN LOCOMOTIVE COMPANY
;
be
company
can
PREFERRED
of
quarterly
one
be just
may
fetching, there is
mortgage
collateral trust bonds, due in 30
•
Board
a
6HREVEPORT,
market until after the turn of the
Tuesday will bring out $10,-
of
where
though the yield
1
so-called
issue.
also
1947
through
estimated
profit for the underwriter, even
bankers like to bid, prospects are
.
is
DIVIDEND
allotments.
that would suggest a reasonable
which investment
on
that the competition will be
lively
with several groups
seeking each
.
1948
years
New
The
clared
approximately $64,850,000.
take
to
the
1951, inclusive,
ing of the syndicate price.
for competitive bids.
.
inclined
more
program
GUARANTY TRUST COMPANY OF NEW YORK
AMERICAN
year,
of such remaining activity with
four issues, all for public utiIity companies, slated to go up
,
are
for
and
buying and selling price, that in¬
surance portfolio men, for exam¬
ple,
construction
for the last five months of
issue is offered
nominal spread between the
a
The
purposes.
43
DIVIDEND NOTICES
"
Robert P. Resch
Vice President and Treasurer
f
<4.
■
rate
at
an
corporate
company's
It has been noted in such quar¬
ters that where
DIVIDEND NOTICES
$28,000,000 first mortgage bonds
to the public, will be added to
the company's treasury funds to
be applied
to extensions, addi¬
tions and improvements, and for
Buyers Watch Spread
In
(2303)
r
■
■}>.+
$53
Mining and Manufacturing
Phosphate
•
Potash
♦
Fertilizer
•
Chemicals
44
(2304)
.
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, December 4, 1947
.
kets,
BUSINESS BUZZ
■
senseless
*
Washington . .I. sjf
Behind-the-Scene
Interpretations
I/IM/
from the Nation's Capital
The
♦
#
fact
propped his
*
,
that
'
'
had
Truman
program
on
Con¬
gress so
gJj Xr
/■ y*
jTjL I
bottlenecks; etc.,
to discredit the controls,
completely without ad¬
preparation, without
vance
JL Cr Ub,
agreement,
even
with such large
intra-Administration opposition,
was in w large measure to theni
windfall. A few of the leaders
a
at
President Truman is just
felt
beginning to understand the chagrin
by the Red bosses of the Kremlin when it began to dawh" upon
that their first and token attack
them
out to be a flop.
inflation"
the
seasoned
be
To
to
message
the
to
when
more
just
would
dusted
Con¬
have
off
would
tit
along.
go
$
eral
■
'■;/In the first several days of the
hearings 'on this prdgram, some
I amazing
developments
light. There was
to
sign whatever
no
came
that within the Administration ah
agreement had .• been reached i on
the broad program. The .signs
I were quite the opposite. Few of
1
those testifying appeared to want
i the program. None of the Cabinet
I
hoys
had
done any home work
they would do if they
got the. controls the President
sought. There was even good
j grounds for
suspicioning
that
some
v
ofr;* the
Cabinet
>
members
of
News
*
$
the
wigs said
if
were
inferentially
of
some
Even- 4he rank
GOP
the
this
still
though
Truman
the
knocked the
Take the
*
even
a
The
accepted
interpretation
$
Then,
policy for other
And
%
.J''.';
*
Clint
as
n't
the
very
sure
knew
he
was¬
of
any
way to compel farmers to mar¬
ket beef
cattle
and
hogs to
con¬
get the
of
story.
until the memoirs
tistics
plan for requiring secondary
re¬
ready
This would enable the Re¬
serves.
Board to restrain credit
serve
pansion.
It
ex¬
the only device
was
in the credit control
area feasible,
opinion, to make
possible the restraining of credit
in
Mr.
Eccles'
expansion.
; :%§*
outlined
feint.
the
anti-inflation
He
objec¬
European
Plan
Committee's
'
Under
Senator
close
Taft
Economic
Eccles
' *
*
-
questioning
before
the
*
,
by
shopping list, the President
thought he had tied
a
It may not be
smart.
so
get
it.
frankness
With
he
be
hand,
market
told
Reserve
system
blamed.
describe
what
they could dream
vice
also
to restrain
bank
bond
credit
and
people have been writing
saying, that there
are
a
basted the program whereby 10
million or more veterans can all
at one and the same time buy a
house with nothing down if they
want to.
v
"
*
'
-
yS..',.. V.
It is
*
a
Trumai)4<
-
v*
j
as
empower
the
.set
*
whole
is
of
the
former
be
will
is
.
a
held
widely
!
*
no
to
more
objective
have
now
the
M.S-Wien&Co.
ESTABLISHED 1919
Members N.
40
,
j
I
cut
requires
a
Trading Markets:
the
Ralston Steel Car
#
Oregon Portland Cement
Riverside Cement A & B
Spokane Portland Cement
by their questioning. They had
little
sion
view
HA. 2-8780
de-
of
Republicans have developed an
strategy of exposing the
Truman
program.
The
dissent
within the Cabinet was brought
out
Security Dealers Ast'n
Teletype N. Y. 1-139?
interim
the
Y.
Exchange PI., N. Y. S
that,
to
France
#
t'f
that when the Russians launched
HAnover 2-0050
New Issues
.
through Belgium.
idea,* however* this dissen¬
was
so
launched
There
is
election
suc¬
foreign
to
Foreign
Securities
the Kaiser's goal
World War.
Mr.
whether
passage
aid and inflation control, he has ' I
had
intended
wraiths
of
[
LERNER & CO.
pervasive when they
their
to
hearings.
conjure
shortages,
/nvestment
They
up
black
the
10 Post Office
Securities
Square, Boston 9, Mass.
Telephone Hubbard
1990
Teletjpe Ba <9
mar¬
Teletype—NY 1-971
Empire Steel Corp.
Firm Trading Markets
Administration
let
the
Presi¬
FOREIGN SECURITIES
It thus appears that
the
linking
was
First
national
restrictions,
tongue
in
Administration
as
>
a
*
tack upon inflation
was a
attack, not meant
to
Susquehanna Mills
J
All Issues
token
taken
concerned,
the
be
at¬
V
;
The most reasonable conjecture
PARI MABKS 4 TO- INC.
seriously
safe bet that but for Mr.
far
with
that
doomed
spokesmen have
so
side
down very much to size.
It is only possible to
conjecture how this developed.
is that the President
.
Washington
of
the
dent down.
*
the^Reserve
Only if the Commies
the
Truman
illuminated
of
to
far
so
continuance
credit
*
So
lot
of things promoting inflation be¬
sides bank credit. And he lam-
been
re-enactment
sales.
J:
expansion. He pointed out what
most
favor
commodity
margins, rent control renewal, and
the granting of 150 more
employes
to the Treasury to
baLyhoo baby
what de¬
in
It is almost everywhere believed
Administration
Domestic &
a
case
However,
power.
final
Belgium
for¬
it be brought back to the light.
controls,
government
bluntly
up there
range
ceed in taking over France, can
radio
as
have
may
control
Truman's
eign aid approved. The inflation
target has
exposed
he
control
inflation
It also is poor tactics
getting long
dark.
no
perhaps
(but
with
cheek) legislation to
they could fashion, if they
wanted
as
or
net,
installment
mechanism
up,
the
export
He
was
far
other way to get
but
Rails
The Russians in their
runts,
tion
or pre¬
few
reports.
spokesmen
defla¬
be
Congress he
or
through.
so
President's
In
would
public
and
rat-
indicated
the
Congressional
a
to
have
eco¬
re¬
Old Reorganization'
spank his Cabinet into line, and
decide to drive hard for infla¬
it permeates on
tration had not intended
in
were sucess-
system
more
some
feeding
the
cus¬
If, they failed to
inflation, on the other
would
of
newspaper
blamed.
arrest
to
Reserve
the
it
finds
now
some
by the President that long-term
foreign aid has been put in the
explain
corn
not
the
and
infested
didn't
in promoting a little
tion
Road
co
Committee, however,
that if the controls
ful
few agents down Tobac¬
a
nomics
want this control and hoped he
tomary
for "education" it could
money
who
he
at
Perhaps if
the department got a little more
farmers
that
weights
present grain prices.
against
the image of a pygmy chastising
The
pared to carry such a program
heaviest
will work
*
try something like that. In such
a case, although it conjures up
stock
to
hut time
newal of the Act.
with inflation, he may have to
smart poli¬
tical package.
know that it is a diminishing
returns business to finish live¬
Joint
admitted
would
are
*
re-formed, brought up the heavy
artillery, and won the war. If
Mr. Truman is really concerned
Marshall
consciousness that the Adminis¬
send
•
that farmers al¬
doing this. Farmers
show,
Agreements.
token
foolish the
old
was
Mr. Truman has cooked up a
anti-inflation
program.
written. But
are
it is easy to guess what happened.
The President's Economic Council
lighter weights.
his
trying to kill the
Trade
its
entirety.
Majority
sentiment would not go that far,
re¬
expectation
-
appeared
off
of
on
in
newspaper
President will be made to look
dusted
This
the brighter
spanked off.
boys will dig out the
:\/;Y W'
*
Possibly it won't come out
some
show
mere
Act
the advice of the fifth
columnists that they had done a
good job on the Finns.
So the
Russians cooked up a token re¬
sistance,
and
got
their
pants
for
He knows and
the department knows and sta¬
and
a
Reciprocal
based upon
*
■fi
Possibly
blame
after
sistance.
of
cles of the Federal Reserve Board
r
ulate
tives. Putting them down like the
'•
'
Anderson,
Secretary <of Agriculture,
*
would
concentrate
first attack upon Finland,
they expected the Finns to capit¬
the strategy being that the Con¬
the
lessons yet.
hit
*
the customs laws effected by the
23-nation agreements. They will
their
hearing, that he
failing to stop inflation.
priorities,
and rationing controls*
Mr. Harriman just hadn't done his
for instance. Chairman Ec-
trols,
without
felt safe merely to propose them
for politically strategic reasons;
gress
and
matter of credit
Com¬
Mr.
for .price
wind out of them.
*
.
"Wouldn't it be easier, Miss Finch, to just retype the letter."
en¬
He confined his first
members of the Cabinet.
as
had
Harriman.
n't want to speak
They
belt
Adminis¬
the
set asides, etc.,
jurisdiction
of
the
might be
used by the Department if Con¬
gress enacted the controls. He did¬
big¬
privately
Mr.
signals.
aons,
negative.
below
them
Secretary
*
lieve that they can do nothing to
upset the veritable revision of
"quarterback" for the
within
and file of the
crying
are
*.,Y
tit
was
the
two
High tariff Congresmen be¬
Jm
pro¬
Commerce Department
responses
fundamental.
there
o
of
the
limitations.
testimony only ■ as to how; ailpca-
membership has failed to
catch
broad
out
But
ministration controls, if and when
Congress enacts them—allocations,
priorities, inventory controls, use
No. 1
—
anti-inflation program,
the
of subjects,
scores
on
even
President's
House
Steel is the No. 1 target for Ad¬
sup¬
Harriman didn't want to carry the
ball. He didn't even want to call
words
Administration
the
themselves
program.
*
Snyder
restraining
hank credit expansion
talk
Truman
the
merce
pre-occupied with report?
what
the
also in
left
tire
*
the hundreds of
boys
That
for
the
doing a good job
letting the Administration
haven't got together.
members of
Administration offering to
program
of
is
its
of
in¬
zero
a
Wolcott
Committee
CO.
secondary
proposition.
exactly
port
to
Jesse
man
the
that
the
the
reserve
Then
dispatches of these
by
inclination
BIOTZ
Fed¬
pie,
Secretary
down
Banking Commit¬
ability nor the
do the job.
Chair¬
tee has neither the
stick
into
Reserve
dike.
threw
tration
the
to underline this situation. They
ing
"Feddy"
flation
SjJ
hearings necessarily have failed
were
that the Senate
big
credit
the
in
Economic
Committee, he
trying to get around the fact
was
very
a
Treasury would not
finger
along
with
•
the program.
;>
with
and
■
Joint
He
*
boss of the
<
-
ing to run away with the show.
he
asked/ both
Banking
Committees to sit jointly with the
posals.
trying to sabotage
were
debt
finger
of
what
on
*
*
the
as
.
tunately he gets blamed for try¬
of the
some
-
When
time
have
1945^..jplan.
have whittled
Even
.f-V
for
edges and polished it up to a finer
gloss.
■
#
not
the
he couldn't have expected Con¬
gress
time
the
he
Yet
to
not
big for his finger. With
inflation far
words
this
'
.
O
Note: Bob Taft is doing a bangup job on these hearings.
Unfor¬
in the dike.; The hole is too
ger
takes in account that
one
is
But
,
'•
"Feddy" Reserve to stick his ffor¬
sounded meaningful, even
gress
having
tap to restrain cred¬
it.
session
inflation.
stop
President's
the
the power on
was
\Administration; in¬
to carry the principle
enough
.
v,
Eccles does not believe in
President's
of its fight'against
never
plan at this 'time. It is not that Mr.
—ob¬
special
the
va program they could not adopt.
Chairman
the
,
tended
-
ted out the 1945 secondary reserve
most
there
sure,
before
doubt
that
cynical
or
—
would have trot-
generally, there will be far less
crying that Truman has put the
Congress on a spot by proposing
<&
turned
the
of
happening. When the
idea permeates the rank and file
turning
was
:
far beyond
phony
a
expectations
servers.
has
program
be
to
out
;
.
rresiaent Truman's "anti-
f or
the Finns
upon
this moment- are-conscious
of what is
Boardi
vinced
that
was so con¬
Republicans would
laugh off his control proposals
:
V
V
I? 50
,
V
Broad Street
V;
FOREIGN SECURITIES
cppr*Tat totcs
v
:
•.
'
,\
New York 4, N. YJ
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,
120
and
Situations
tor
Dealer*
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Tele. NY 1-2660
■
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