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,feb 14 1948
Reg. U. S. Pat. Office
Volume
167
Number 4672
New
Why I Am Opposed
To Military Training
| By
j.
The Devaluation oi the Franc
HON. ARTHUR CAPPER*
ing is conscription, Senator Capcites France's experience as,
best minds
from
have
I
letters
expressing
received
asking
views.
number
a
to state
me
my pn-
sition
(
versal
it is idle to go
counter to na-^
mili¬
training,
so-called.
lieving
who
tural forces.
Be¬
action
have not
written
9 n e t a r y
Fund ^ a,ud
from England.
of
some
the
From
reasons
for
taking and
Fund
that
Capper
I
to
uni¬
versal
military training.
I am
opposed to military conscription
in peacetime.
The two may not be the same,
but it is my firm
belief that uni-
l versal military training, so-called,
would be just the preliminary, the
first step, the camel's nose under
the tent, toward military conscrip¬
tion in peacetime.
.
If
'
any
universal
1 to
of; the bills authorizing
military training come
vote in the Senate while I
a
(Continued
am
36)
on page
and
op¬
am
' r*:
by Sen. Capper
Station KAKE, Feb. 12, 1948.
over
acted
rules
in
viola -
and
the
regulations.
From England because of fear that
the
Pound
would be
undermined.
Although
seemingly justified
these objections had
the slightest validity as it is here
neither
—
here, therefore, to confine
v
The
only
new
a
nation of
gold
and
their
subscriptions
paid in gold
of
the
or
the
for
their purposes.
Experience may or may not
have proved this to be the best
way of getting oneself
elected to public office.
For second raters, it may indeed
be about the
only
way open
But
:
to
(Continued
however all
will
not recover as
long
as
pean
-
govern¬
ments
retain
Euro¬
Henry Hazlitt
economic
policies they have been following
since the end of the war. Europe
has driven
j
more
of its
own
private
long as socialization, nationaliza¬
tion, unbalanced budgets, mone¬
tary
debasement,
and the rest of the world
appear to
have fallen in recent i fore N.
it is particularly disheartening. It leaves him no { Analysts.
choice but to select one candidate or another from a
list, j
all of whom have been
playing about the same political I
game and about the real views and intentions of whom ;V
be
years
eco¬
28)
STATE
R. H. Johnson & Co.
Established
no;
general
price-
[ fixing, exchange
control, and the
ability are so much needed in all hold- j
whole collectivist network of govers
of public office, legislative or executive.
To the j
(Continued on page 26)
:
thoughtful citizen who is eager to do what he can to
help lead his country out of the morass into which it ;
♦An address by Mr. Hazlitt be¬
currencies.
page
or
Marshall Plan,1
and constructive
(Continued
on
Marshall
Plan
capital underground than the total
amount it is asking from us.
As
-
this may be, the scene is never
It is particularly discouraging in times like
these when good hard
sense, a knowledge of history,
nomic positions of the various na-
Havana
to them.
edifying.
its equivalent in
various
;r
,
number
equivalence
were
/
Europe
maintained by way of facilitating
conversion between them. Mem¬
terms
The Silly Season in Politics
.
The
quadrennial silly season in national politics is upon
agaiq. A. Px^skientr a .Vice President, one-third of the
Senate and the JS^tire House' of
Representatives are to be
elected next November.
Candidates, would-be 'candidates,
and dummy candidates have as usual
begun to spend many
hours
strutting and fretting upon the stage in hopes of
attracting favorable attention from voters sufficient in
in terms of
gold
some
reasons
gestions.
:
form. All currencies
to be expressed
expla¬
of the
was set up with the
restoring the gold stand¬
were
inci-
an
for these sug¬
Fund
ard in
with
gram,
dental
'
view of
myself to suggestions for
~positive pio-
/:.
■
EDITORIAL
v,
,
Despite the inequality in the
Lithographing Co.
—
of
proposed to demonstrate:/
bers'
*A radio address
because
tion of
V;
Fund's
e
independently
Rene Leon
position.
posed
t h
France
maintaining
Sen. Arthur
like
should
proposed program of foreign aid in a book which
have read called "Will Dollars Save the World?"
may
■
—
the
M
position,
;«my
and
you
;
International
I am
t/* state
-glad
I
Tttn&dy dealt at length with the basic facts and principles
in the
of
came
from
subject,
.■
r
some
i ncipally
p r
in-
are
terested in the
.
I have
involved
to France's
you
.
that
Objections
that
of
many
;
bankruptcy of the system of
further proofs, if proofs were
"managed currency." For these are
needed, that<S>
declares
with continuation of socialization,
nationalization, monetary
debasement, exchange control, and general collectivism, our help
V will only worsen Europe's situation.
France's recent decision to open a free market for
gold and for¬
eign currencies, coming on the neels of Italy's action liberating the
Lira from its former fixity, presages the
uni¬
on
tary
of
Hazlitt
tains
'
system, but are"
oppose
barred
:
armed
in
Foreign Aid
irrespective of institution of Marshall
Plan, or of the size of American aid, decisive determinant of ■
Europe's recovery will be abandonment of economic and political ;
postwar policies recipient governments have been following. Main¬
today for fixing monetary parities, and criticizes Britain's
policy of maintaining Sterling Area intact. Holds France, as regards
international payments, is in better position than Britain./
Copy
Associate, "Newsweek"
Mr.
stick exists
| proving peacetime conscription is'
j not effective defense weapon.
a
By HENRY HAZLITT*
..
,
per
services
Tie Realities oi
Holding return of France and Italy to free money markets presages
bankruptcy of "managed currency," Mr. Leon lays failure of Inter¬
national Monetary Fund to avert move to its
neglect of fundamental
disequilibrium in international payments. Says no suitable yard¬
U. S. Senator from Kansas
Contends
Price 30 Cents
By RENE LEON
j Asserting universal military train¬
.
York, N. Y., Thursday,- February 12, 1948
and
on
page
26)
;
V
.
Y.
Society
of
Security
Jan. 30, 1948.
State and
Municipal
MUNICIPAL
Bonds
1927
BONDS
INVESTMENT SECURITIES
Hirsch & Co.
York
Members New
Stock
Exchange
BOSTON
and other Exchanges
25 Broad
St., New York 4, N. Y.
HAnover 2-0600-
Teletype NY 1-210
Cleveland
Chicago
Geneva
London
(Representative).
Bond Department
64 Wall Street, New York 5
Troy
PHILADELPHIA
Albany
Buffalo
Scranton
Harrisburg
THE NATIONAL CITY BANK HART SMITH &
OF NEW YORK
.
*
m-
Wilkes-Barre
Woonsocket
Springfield
Washington, D. C.
MemberJi
.:
Syracuse
*
I
\
~
Bond
1
*
>
r*
*
■
«
New
' *
•
52
'
'
■
'
York
WILLIAM ST.,
New York
^
CO.
*
THE CHASE
Security Dealers Assn.
N.
V.
Bell Teletype
Dept. Teletype: NY 1-708
*
.
NY
HAnover t-MN
NATIONAL BANK
1-398
Montreal
Toronto
OF
THE
CITY OF
NEW YORK
,
^Georgia Hardwood Lumber Co.
/
BANK
£
.Common
("
T
'
*
•/!_
,
Raytheon Manufacturing Co.
PORTFOLIOS
$2.40
Conv.
Preferred
Bond
Brokerage
New
Underwriters and
Analyzed and Appraised
Solar Aircraft Co. 90c Conv. Pfd.
Service
Distributors of Municipal
Twin Coach Co. $1.25 Conv. Pfd.
for Banks, Brokers
A
and Dealers
Analysis
Public Service Co.
new
and
Information
on
request
Gordon Graves & Co.
Corporate Securities
(Incorporated)
Established
Street, New York 4, N. Y.
Tel. WHitehall 4-5770
Tele. NY 1-809
*Prospectus
New York
Chicago
Columbus
on
Members New York Stock Exchange
120
Denver
Toledo
Buffalo
Broadway, New York 5, N. Y.
Hardy & Co.
Members New York Stock
Exchange
Members New York Curb Exchange
30 Broad St.
Telephone: REctor 2-8600
Bell
study
upon
*
"
request
Common
request
Reynolds & Co.
1R99
CLEVELAND
Cincinnati
Winding Company
90c Conv. Preferred &
OTIS & CO.
INSTITUTIONAL INVESTMENTS
30 Broad
*Universa!
England
Teletype: NY 1-635
•
Tel. DIgby 4-7800
New York 4
Tele. NY 1-733
ira haupt &co.
Members New York Stock
and other Principal
Exchange
Exchanges
111
Broadway,
REctor 2-3100
Boston
N. Y. 6
Teletype NY 1-2708
Telephone: Enterprise 1820
2
Questions and Answers
Portland Elec. Power 6/50
WALTER E. SPAHR
By
Portland Elec. Power. Co.
Professor of .Economics,
Prior Preferred
7%
>
*
Common
.
Dr.
.
Examines causes of decline in purchasing power
our r,dollar and isuggesus
Explains how irredeemable paper money makes Congress subservient to pressure groups.
cures.
5
1-583
ggold.
the
to
that
t
is,
New
120
of money
if
(
and
the
prices
term
"infla-;
from
employed to de¬
cise words were
monetary situ¬
scribe the price or
For Reconstruction
and
-. ■
vocabularies and if more pre¬
our
The International Bank
Spahr
JfZ.
Walter
ti on", were
dropped
ation
we
If
country?
21/4% due 7/15/57
"inflation"
of
ond
term
trela-
the
uses
a
V
has been
the gold
Hurd Coal & Iron
l'l; V
in
<v(3) JDid
of
in
money
think of "inflation'*
one
terms
depreciation
respect
to
of
•West Virginia
our
there has been none in the United
the
since
weight
of
Lar?
Rising
.,
,
HAnover 2-8244
•M l; 120 Broadway, N!-Y. 5
^
isidor
sack,
the
of
nature
our
Detroit Canada Tunnei
(Continued
our
on
page
20)
Detroit Int'l
Artcraft Manufacturing
Baltimore Porcelain Steel
Bates Manufacturing
"
Tobin Packing
Hoving Corp.
v:
**''
"A"
Hood Chemical
t h
International Detrola
Northern New England
ties
securi-,
Steel
sale
are
neatly de¬
scribed
in
;
United Artists Theatre
v.
(C.
;i
pfd.
1947);
The
!
;
Curb and Unlisted
;
Securities
puted
-
4
or
when,
Security Dealers Assn.
St., N. Y. 5
Hanover 2-4850
Bell Teletypes—NY 1-1126-& 1127
37 Wall
is
com¬
the
when
the difference
of securities de¬
is the
date
sale) Us
of
the transaction is
v
completed.
H. Hentz & Co.
Commis¬
sale
delivery
by
trades open,; and in a press
i
wise be
how
as
short-term gaim into a
a
long-term gain.
To illustrate: It an
until
Members
,
.
York
Stock
Exchange
New
York
Curb
Exchange
Chicago
Exchange
Cotton
York
jNew
-Commodity
Inc.
Exchange,
Board
.
of
New Orleans Cotton
Trade
'Exchange
V
.j|
investor owns
a-
trader could make
(Continued
.
•i'UfAn
on. page
;
by .Mr.
address
ta
NEW
CHICAGO
YORK
DETROIT
4,
N.
Bldg.
Y.
PITTSBURGH
GENEVA, SWITZERLAND
-
Teletype NY t-1610^
i;
Southwestern
r
Public Service
short
Indiana
Northern
/^Public Service^fs-v-;^
profit
22)
;Prospectus
Sack
Federal '.Tax Lecture Series,
1948.
.
f
on
request
**
■.
at
spon-^
sored
Troster,Currie* Summers
.^Members
'
"
: <;
•
>
-New York Security ^Dealers Aeft'n
;
*. Teletype—NY 1 -376-377-378
NATIONAL BANK
S.-FUNDS for
Noranda
United Kingdom 4%
Mines
Powell River Co.,
Ltd.
Minn. l&^t>nt. .'Paper
Placer
Development
'90
of INDIA,
Rhodesian Selection
'
-
:!
Banker*
Head
Scophony, Ltd.
British
Branches
Securities
,
Department
115 BROADWAY
Telephone BArclay 17*0160
the
i
:'.
and Other Principal Exchanges
NEW YORK 6, N. Y.
Products, Inc. Com. & "A"
Detroit Harvester Co. Com., t
Government in
.;fDeWalt,-: Inc. Common
,
;
Office t
26, Bishopsgate,
'London,-rtE..t.C. ; ...
in
India,
■
Burma,-Ceylon,
Colony and Aden
and
Emery Air 'Freight Corp.;;:
v
-
Kenya
Zanzibar,
Common,
>
'
'.;
Goodbody & Co.
Members N. Y. Stock Exchange
to
Kenya Colony and Uganda
Gaumont-British
-1
Canadian Securities
*Air
LIMITED:
Subscribed Capital
Paid-Up Capital
Reserve ,Fund.
£4,000,000
£2,000,000
—£2,300,000
•.'
v*Prospectus on request
.Reynolds & Co.
Members
The
Bank (conducts
banking
and
-every
description
exchange business
Trusteeships and Executorships
also
undertaken
New.York Stock
of
'
'
120
Exchange
Broadway, New York 5, N. Y.
Telephone: REctor 2-8600
Bell
Teletype:
NY
•
\ Jt
Common
'
-
N. Y. Cotton Exchange
New York 4,
39 Broadway
*ABC Vending Corp.h1;;-.;
We Maintain Active Markets in U.
Department
And other Exchanges
Exchange
Exchange
Curb
Stock
Digby 4-3122 ^
security which has increased, in
ing period, he can make a
York
New
'Chicago
Members
New
Mgr.
Joseph McManus &lo.
release J
Iby -the ?New York 'State*
Society rof ^Certified Public Ac¬
price before the six-month hold¬ countants, 'New York' City, Feb. 3J
a
Mgr.
Asst.
the early part of this year showed
owned.
loss and the date of de¬
(not the
date
The decisions and the
well
KANE,
practice of keeping:long and short
securities that are not
This makes possible the l:;
conversion of what would other^
as
Sack
Isidor
livered and 'the sales priee
or
gain will be short term;
rulings
sanction " short
sales of securities that are owned
(between the basis
livery
period is deter-f.
the length of time durf plete the
sioner's
pleted by the
delivery
of
the securities and
profit
Established 1856
-
transac¬
tion ;
and;
the
com¬
the
Warner & Swasey
MICHAEL HEANEY,
WALTER
U In commodity trading similar
securi¬ rules apply and .the Commodity
ties only for the purpose of mak¬ Exchange;, Authority has - made
ing the delivery against the sale, public disclosure of rfhe .common:
V
•
gain
lis
loss
Merchants Distilling
i
NEW YORK B
HAnover 2-9470
Teletype NY 1-1140
:If, however, he Bought the
;
,
Taca Airways
Telecoin Corp.*
Wilson, ,163
(2d) 680
C., A.
9,
Fed.
'
United Piece Dye Works
U. S. Finishing com. &
Curb Exchange ^
'
I
ing which the securities delivered after he has held the stock for six
were
held by the vendor.
If he months and then use the shares he
always owned the securities he owns for delivery against the short
will have a long or short-term sale, thus completing 'the.' trans¬
gain depending on the span of action after the long-term;holding
time between
date of purchase period has commenced. ; - ' VVU
and date of delivery to the buyer.
Commissioner
^
»
York
New
sale of that security and not com¬
holding
mined by
of
short
a
Title Guaranty & Trust
Members N. Y.
The
,
Pacific Telecoin
Time, Inc.
1923
Established
WALL ST.
64
,
sold.; The
mechanics
Punta Alegre Sugar
:V
:
•;
Frank C. Masterson & Co.
c.p. a.*
delivery
e
of ?the
Kirby Lumber
Newmarket Manufacturing
Taylor Wharton Iron &
\
■;/'' /1 ll';.
/
Clyde Porcelain Steel
Electric Bd. & SharefStubs
General Aniline & Film
.%■>', r-V
j
.
Common
Short Sales of Securities ,
*
We ordinarily'think . df a sale as being the. taxable event .-in a business deal rbut a
short sale is an anomalous transaction in that it may be made before the securities are
owned by the seller and the taxable event does not*occur, until the sale is completed by
/
Boston & Maine R.K.
Bridge
j
„
Members
Engineering
American Time Corp.
-
'/ 1
Teletype NY 1-1227.
dol-j
been,
of which
monetary sys-j
of Federal tax regulations dealing with short sales,
.puts and calls, 'When issued" transactions, premiums on bonds, defaulted interest bonds, payments
:of dividend ^arrears, ,dealers' sales, and stock options <to officers and employees. Says Treasury regulations dealing with short sales are a wide open .invitation to tax manipulation. .Holds rules dealing
with "when issued" transactions are equally unreal, and criticizes (tax regulations given regarding
employee stock options. Advises as to tax on, preferred -stock arrears. : \
Aetna Standard
l
WOrth 2-4230
•
Bell
have
prices
;Mr. Sack discusses legal and accounting aspects
QctualTRaTkels Qu
/
f
Members Baltimore Stock Exchange
^
By
\
caused by several factors
And Sale of Securities
Teletype NY 1-2846
-
^
ftinnipii
?
I'
York 5, N. Y.
Pittsburgh Coal
v.
;
WM. E. POLLOCK & CO., INC.
j
American- Goal Co.:
system
in
20 Pine Street, New
;
depreciation of;
the
.the purchasing;power of our
then
gold,
to
monetary
our
contribute
29, 1947.)
States
-;,'l
?:
;;•:"}Kittaning Coal
This means that at kept on a parity with
1947 "the consumers';, dollar.; But this maintenance; of
78.6 for 1940 and 159.8 for October
in
branch offices
our
per
^Should
describe
to
redeemable paper money
due 7/15 £72
3%
La.-Birmingham, Ala.
Elk Horn Coal Com.
general,: would bUy parity: of our irredeemable paper;
cent as much as in money with gold by our .system of !
is
not, the
1940, and that it required .$1.65 to indirect. 'conversion
buy what $1.00 would buy in .1940: same thing as the maintenance of
In terms of wholesale commod¬ the' purchasing power of the peo-J
ity prices, the purchasingpower pie's money, and bankVdeposits.;
of the dollar had declined ap¬ Thisr purchasing
power has de¬
proximately 50 per cent during clined Sharply, and with relative;
that period.
(The indexes were rapidity, since 1940. ^
have sin mind.
(2) Is currency depreciation, or
"inflation," pronounced
in •'this
Development
cent.
end
dollars,
only 61
discussions
.
gold held by the Treasury, our.ir¬
per
the
much
tribute
in
NEW YORK 5
Tel. REctor 2-7815
.
65
It
con¬
to exactness
Exchange
York Curb Exchange
BROADWAY,
1 d
compared with the
for 1940, had risen sOme
average
4, N„ Y.
NY 1-1557
WE WANT TO BUY-±
eral Reserve banks and back to the5
end of 1947, as
o
sharply rising
prices.
general cost of,living at the
The
and services—
Members
New Orleans.
dollar was fixed on
January 31, 1934. By a system of
indirect conversion', running from
our commercial banks through the
gold •certificates held by the;Fed¬
.
terms of goods
New York Stock
HAnover 2-0700
standard .gold
sharp depreciation in the
purchasing power of our money
in terms of goods and services,
then
«uch
"inflation"
is
pro¬
nounced in the United States.
-•
tively
in
currency
wo u
25 Broad St., New York
Direct wires to
depre¬
of
a
ciation
frjC PONNELL & ft).
Members. New. York Stock Exchange
"infla-
refers
-Quoted
Steiner,Rouse & Co.
no'widely-accepted precise mean¬
ing in Economic science. A popular conception of it is'that it refers to something that is
socially injurious. Perhaps the most popular and useful meaning attached to the word is
tion
Bought—Sold—Quoted
,.
The word "inflation" has
(1) What is "inflation"?
that
Longchamps, Inc.
B ought—Sold-
Holds present,monetary system is ^defective because not
important factor in causing rising prices.
an
New York
Teletype NY
7-5(560
BArclay
Louisiana Securities
V'•
and points out desirability of using more precise
Spahr analyzes various "inflation"-concepts
^redeemable >in
Corporation
Broadway,
>■':•
Says best monetary system cannot prevent rise and fall in prices, since, causes-of price fluc¬
tuations are'found in forces effecting supply and demand, but that a defective monetary system.can be
New York Hanseatic
'
;
-
terms.
Bought—Sold—Quoted
120
;
Committee on
A
Monetary 'Policy
•'
".
Alabama &
/ -V
-
New'York^University ;
Economists' National
Vice-President,
.Executive
Portland Genl. Elec. Co.
Combating inflation"
V.--'v
an
'
Thursday,: February 12, • 1948
CHRONICLE
FINANCIAL
&
THE COMMERCIAL
(702)
1-635
•
167 Number 467.2'.;. "
Volume
'
;
v
THE COMMERCIAL & FINANCIAL CHRONICLE
'
I N D E
and
Articles
»-
The Realities of Foreign
News
Time to Retire SEC
Page
Aid—Henry Hazlitt
SEC created because of belief in 1934 of
——Cover
The Devaluation of the Franc—Rene Leon—
—Cover
Questions and Answers
—Walter
E.
;
—*
Spahr
Special Tax Problems in Purchase and Sale of
—lsidor
Securities,
Sack
hardships contrary
there
4
a
7
of that Act entitled "Necessities for
9
in
Trust
Common
Administration
—Marcus
6
_
Stocks—Thomas W. Phelps
and
Current
__
In
Economic Problems
Nadler
r
11
.
An emergency
diate action. Thus
An. Honest Approach to Inflation—Joseph Stagg Lawrence. 13
U. S. Now Tops Swiss Foreign Trade
—Frederick Bek-Andreae
4
'•
•
Time
to
:•!*
J-s
Retire
SEC
*
■
15
______
__—_________
Theodore Prince Calls Baruch Modern Santa Claus
N. Y. State to Market $300 Million Bonus Bonds,
Comptroller Moore Announces
National Rockland Bank of Boston Suggests IIow Individuals
Can Help Stop Inflation....
New York Security Dealers Association to Hold 22nd Annual
Dinner on March 5.
.
answer
K
12
End
This
Nonsense (Boxed)
17
_____
proposed
Credit but Ample
with
18 ;
George Bauer Urges Private Enterprise Participation in ERP 19
Public Bequests of Thomas W. Lamont Total $10,000,000___1
Australian Gold Mining Operators Seek Subsidy—___
accorded
dealers
■;
19
.
McFarlane Director of Fund and World Bank;
IVilliam Iliff
v •
Now Bank's Loan Director
f-'
~
.would
obsolete
an
which
be
we
won't
miracle!
a
Canadian
Securities
Dealer-Broker
Investment
_!____
Recommendations_&
_^
_£
_
*
8
_i^8
9
.
From Washington Ahead of the News—Carlisle Bargeron___
7
Indications of Business Activity____________J__jr^___iL_:_\;i 41;
-Mutual
NSTA
Funds
an
Nates
:
18:
"
Observations—A.
Wilfred
May______-_,_____
:__T5
Our Reporter's Report
Our Reporter
Railroad
'.z
inducement in
€orner_____
37
Twice
Weekly
Dominion
Canada,
838.00
per
Countries, $42.00 per year.
Other
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FIRST COLONY
CORPORATION
52 Wall St
New York 5, N.Y.
Tel. HA 2-8080
Tele. NY 1-2425
representative
a
Commission:
the
opportunity to ascertain the financial responsibility
they do business. iAs a matter of fact
most
exchanges and the National Association of Securities
Dealers, Inc., have rules requiring their members to furnish
their financial reports
of
to customers
on
request."
(Our
HODSON &
re¬
::i
search shows that the NASD has no such rule and we
doubt,
too, that most of the exchanges of the
county, with the ex¬
COMPANY,
Inc.
ception of the New York Stock Exchange, have one—Editor.)
.
-
Note—On
With the contention that inter
se, a customer has the
cright to ask his broker or his dealer for a financial statement,
we find no
fault; even in everyday commerce this is not an
(Continued
on
page
22)
•
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_______
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Tomorrow's Markets (Walter Whyte Says)
.Washington and You
and
a
(Stubs)
Engineers Public Service
"The obvious
purpose of requiring
brokers and dealers to file financial
reports is not only to
aid us in the enforcement of the
Act, but also to afford per¬
18
------
__
Published
of
14
__.
Salesman's
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filed
only by rule of the Commission, it is utterly powerless
prescribe confidential treatment for such statements.
Here is
38
Securities Now in Registration
The State of Trade and Industry
Other
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Finishing Com. & Ffd.
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Offerings
Utility Securities...
U. S.
interference
made
32
;
Governments,
on
Prospective Security
Public
atate
and
can do
nothing about it. ; ■ ; :
The Commission says, in effect, that even
though the
Aci itself does not prescribe the
filing of annual financial
statements by brokers and dealers and such
requirement is
;
__.___T.14;
and Bankers.
Kingan Com. & Pfd.
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rertislng
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to
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4-6551
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Punta
Despite the fact that part of the filings under this rule
are treated as confidential under
certain prescribed circum¬
stances^, the Commission has declared itself helpless with re¬
spect to the financial 'statements claiming that these are
public records, hence available to everyone and that the
~
WILLIAM
;
X-17A-5 should be treated
20r:
---
Einzig—The End of Bretton Woods?-__i_____l-__i_____
I
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WHitehall
These communications to the Commission have
protested
such conduct and have insisted that the
16
Coming Events in the Investment Field
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STREET, NEW YORK
Telephone:
the correct
filing under Rule
Business Man's Bookshelf-___-___
,
on
it
>
.Cover
;::X^.JBanks
v
find
can
bond
99 WALL
al^ this i&;high-lighted in the tfeatme^ being
pursuant
statements.
\
As We See It (Editorial)
-
But
financial publication is
arranging.to publish these financial
20
_
v
.;
was
"
7Through many letters, brokers, dealers, and their associ¬
ations have called to the attention of the
Commission that
as
19
...
.
or
bid!
existing in 1934 is not free from
th<^ financial statements
to
Commission.
19
Market_-i___T--___-:_L
housing
emergency, a
created hardship, injustice
cure
1d
Regular Features ;-;
war
system of free enterprise.
our
":"T.
Platinum As A Hedge Against Inflation_tf_5.----
CED Favors European Aid Program___•
Survey.on Probable Trend of Bond
a
.Jy-: The search for a whipping boy lighted upon Wall Street
and as is frequently the case in a
punitive expedition the
Werle Again Chairman of New York Curb Exchange Board., 15
Bankers Trust Co. Foresees Tighter Bank
Investment Funds in 1948.
the conditions
to
considerable doubt.
12
Crops Flourish in Europe__-.:__-_—
Let's
hear of
emergency shall and will never end. Whether the creation of the Commission
10
_____________
.
HAPPEN
you
stock
sudden condition calling for imme¬
a
Commission has made of the
powers entrusted to it, the wide
and continued extension of those
powers, it must be the be¬
lief and the intention of this Commission that the instant
v :
—
W. Randolph Burgess Says Now Is Time for Caution in
is
we
If we are correct in our
position that the Securities Ex¬
change Act of 1934 was the jproduct of an existing emer¬
gency, then judging by the use the Securities and Exchange
...
(Editorial)
Regulation as Provided
of saying that there then
emergency, an emergency caused by a hurricane or disaster.
Tt is one of chief characteristics of an
emergency that
sooner or later it comes to an end
because in and of itself
it constitutes a
departure from normal conditions. '
14
Free Enterprise and National Employment Act
—Edwin G. Nourse.
_.L
effect, the rationalization contained in Section Two
this Title" is but another
way
existed a national
emergency.
Prices, Profits and Productivity—Jules Backman__________:_ 11
;
MIRACLE
gency
form of administrative control.
Mortgage. Interest Rates for 1948—Sigurd R. Wendin^
i
A
CAN
Exchange Act* of 1934 was passed
feeling in some spheres that a national emer¬
existed in the securities industry which required some
was
Technical Considerations in Market Analysis
—Alexander H. Wheelan
;
a
Maybe
6
The Case for
T
public
but par-
When the Securities
2
1948—An Appraisal and Forecast—Julian D. Weiss.
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system of free enterprise, endangered by the Commission's existence.
2
What Business May Do From Now On—A. W. Zelomek
passage
existing
an
occasional
i
' v
:
_
Attempts to curtail its
tially rev/ardad by
_t—Cover
Combating "Inflation"
on
lis regime marked by imposition of
interest.
Why I Am Opposed to Military Training
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(703)
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THE COMMERCIAL
(704)
Thursday, February 12, 1948
CHRONICLE
FINANCIAL
&
Editor
Letter to the
May Do From Now On
What Business
Calls Baiuch Modern Santa Claus
By A. W. ZELOMEK*
Theodore Prince writes Editor views expressed
Statistical Bureau
Economist, International
V*
'
and,
tions
Editor, "Commercial and Financial Chronicle":
consider first the commodity price inflation. Perhaps I shall disappoint you
that the commodity price inflation, in my opinion will end of itself whether
do anything about it or not. That does not mean that nothing should be done about
Let
me
when I say
we
But
it.
can
I
if
opinion
the
prices
that
ty
make
guess
a
late
is
da y
in
Prematurely
third
of
remedies
as'I
So
Zelomek
W.
A.
of all, let me admit that
support the
to
continues
unlimited
almost
to
access
can
almost,^ unlimited
credit
of
fire than
the banks are
a
poor
verse
a
become
provided
price in¬
and
mass-
After > re¬
building ; were re¬
industry recovered
start.
Payments to
sales that had
increasingly unfavorable
trend
all caution to the winds, drawing
on bank credit and other resources
the
fullest
expenditures
new
Perhaps
the
assumed,
inventories
for
equipment..
will
possible extent,
increase
abandon
to
and
plant and
banks will
caution
they have
perhaps investors
and
suddenly: become
eager
to
absorb^ large;amounts o„f new se¬
curities. j adjnit t^ese; possibi It-*
ties. But to me it seems 3 little
v
*afer at
them
this stage to bet
than
of
to
bet
against
them.
on
believe
we
safe
will
equally
are
This is the situation that worries
in
and
ensuing
impotencies
combi¬
complications
are
legion.
;
•
the
Would Kill the Marshall Plan
of
result
first
The
these
sug¬
Presi¬
gestions would be to kill the Mar¬
shall Plan, for sufficent fear has
dent's
present
already been manifested by some
tariff
author¬
the
Theodore Prince
ity
next
three
tries
of
years;
the
for
that the coun¬
a "political,
Europe form
economic and defensive union
un¬
der the United
Nations"; that the
United States guarantee a "firm
promise to go to war in joint de¬
fense
if
any
of them are at¬
tacked"; that the European na¬
tions organize "to liberate and use
every productive resource of the
continent"
and
certain
for
pur¬
mentioned by him "so as to
protect the peaceful interest of
Germany's neighbor"; "stabilize
all European currency and estab¬
poses
lish-realistic fates of exchange."
A
the
of
lish this plan to
munists
battle
for
work
peace
sover¬
give all the
tee peace?
the
at
successful
any
against
are we
com¬
a
such plan.
Europe
of
Peace
/
going to guaran¬
Wilson tried it. Byrnes
Confer¬
Oaks
Dumbarton
side-stepped the elimination
of the veto for fear the Security
ence
Council
us
Nations
United
the
of
could vote
into
war.
¥ *> *
J
What Caused Inflation?
f
issued some
We have
$265 bil¬
in effect, spent
lion of fiat money
$400 billion for goods that
some
have been thrown into the gutter
—that's
Are
war.
going
we
to
That's I11flation, but we can't stop it by
working less and paying more and
in return for begin all over again?
next
three
this
rollback,
stabilization
of
Set up a capital issues
years;
cry
Again>
as
we worked for war"; reduction of
major food and agriculture prices
in
exchange
for
guaranteeing
farmers an assured price for the
of
Guarantee
peace
"to
their
that
nations
eignty will be impaired by foreign
regimentation. The Soviet Union
is already pounding this idea into
the heads of all people of the six¬
teen nations.
We only need pub¬
proposition
drive here with longer hours and
two-year
overtime
Credit Conditions Tighter
I
of
years"; extend
_
1947, to keep things humming.
Perhaps businesmen will throw
processes,
innumerable
The
nation
world "for the
(6) The amount of speculatively
further
tudes.
producedany¬
held
to
i shabe
nextfour
commodities, gray market
supplies, is probably greater.
Of course, any guess about fu¬
ture psychology is no more than
a guess.
Perhaps there will again
democratic
'
materials
where
higher and there¬
through August. The Government in guessing that the banks
helped ¥ speculative
psychology not ease up in their credit oolites
along by steadily bidding up the during the next few months. The
price of wheat. At the same time, official steps to tighten money
inflationary fears were stimulated markets have been comparatively
by' rather irresponsible discus¬ mild—lowering of
the
support
want
willing.
raw
vulnerable.
more
of
that 1 not the piling on of complicated
webuyallnon- systems and bureaucratic ampli¬
p e r
helped re¬
veterans in September
businessmen and individuals
to use it and
on
this
moved,
from
steel
industries.
production
strictions
sharp
coal,
in
creases
have now, provided
we
for
excuse
an
inflationary
hotter
far
coal miners
for
creases
to use it
and if the banks want to provide
it. Similarly, there is still a large
supply of liquid assets and credit
iipon which individuals can draw,
If they want to. There is plenty
of'-fuel ready and available to
a
ordered
quarter,
in preparation for the fall and
holiday selling periods. Wage in¬
bail draw, if they want
stoke
whom
of
some
undercommitted,
heavily during the third
businessmen
which
upon
amount
Retailers,
crop.
were
re¬
be expanded at
the rate of approximately six to
one
into bank credit.
There is
which
interrupted.
spoiled the corn
weather
Poor
price of Treasury securities, have
an
v.'
But the decline was
the banks, so long as the Federal
serves,
fore
fication
Baruch
Mr.
:
are
pensers
legisla¬
Capitol
proposes
(4) Money is harder to get and
little more costly.
(5) Prices
on
_
of economic harmony and
well being, is just a beneficient
dream.
We need simplicatioii of
processes and thought and ampli¬
se¬
Hill.
to increase its
new security flo¬
particularly in prices, and be a
rapid succession of stimulat¬
most of the distortions
ing outside events, as there was
our economy would have been
in
in
nior
tors
its
believe
I
it.
Reserve
¥ :
much
our
troubled
assets, and
tations.
a
further
reduce
to
year,
let
ironed out.
N;5First
declined
ties
d
describe the present situation
see
and
slightly, and individual commodi¬
dropped more
sharply.
A
little further decline during the
third and fourth quarters of last
been
good.
and
Pro¬
about 7 ¥2%
July.
The
by
March
year.
wholesale price average
might do more
lia'rm than
me
declined
between
that
have
quarter of last
duction
the
second
the
during
activity
be
,-p r o p o s e
to
levels last
nevertheless
business
but
forced
liquid
recession in business
moderate
a
talking about
remedies, and
sbme
to
high
bank debts and
that there was
The first fact is
it
the
to
Interrupted
record
at
year,
Last Year's Recession
not
then
of Utopian remedies to our much troubled Congress, that
place Santa Claus as the presiding and bounteous giver
panacea
seemed
Profits
deteriorated.
business has
Were
was
far from their
peak,
to its prob¬
as
able psychology.
even
are
now
economic facts by which we
can
d i
comm o
a
Foreign Relations
<&-
defend the
by Mr. Bernard M. Baruch to the
Committee on the Marshall Plan offered
The extended statement made
Senate
c'V'
by Mr. Baruch to
Relations Committee are Utopian and would kill
Marshall Plan. Attacks plans to stop inflation.
Senate Foreign
will end of itself, warns credit inflation may continue
though less spectacular, is more dangerous. Says business position is weaker and credit condi¬
tighter, and commodity peak price near. Holds government buying partly responsible for cur)
rent high prices, and concludes new powers over credit are badly needed.
Zelomek, holding commodity price inflation
Mr.
\
wages.
committee to review all capital taking on a new "cold war" with
ex¬
issues, public and private. r Set far extended obligations all over
The sions of the Marshall Plan.
the
world
unless
we
conceive
price for Treasury securities; an Up a digging committee to scru
inflationary potential is there in
These developments were all increase * in the rediscount rate; tinize all Federal works and ex- these problems fundamentally and
the banking system, bigger and
!
stimulating, and they came along and an increase in reserve re¬ penditures. Postpone tax reduc¬ try to simplify them rather than
stronger than it has ever been
in
rapid succession.
The mild quirements for Chicago and New tion for two years and restora¬ complicate them. We cannot un¬
before
in history.
But I don't
recession in business activity was York banks. But the banks them¬ tion of the excess
It
profits tax by do a great calamity in a day.
agree with them that our greatest
cut short, and new highs were selves have joined in voluntary
We are still paying
50% of the cut from war levels. takes time.
inflationary danger is now, or that
reached by most business indexes action that promises to be most
it
lies
in the commodity price
Systematic substantial lowering off veterans of the Civil War.
effective. Every piece of commer¬ of the national debt "which is a v The destruction incalculable is
structure.: What will determine by the end of the year.
the
financial
perts.
monetary
and
blame them.
don't
I
.
the
duration,
of
price inflation,
as
the
cial
commodity
I see it, is what
Now
businessmen, banks, and the buy¬
what
could do.
start
community,
the
and
to
discover
Mr.
now
business
Zelomek
with
try
we
to
come
second fact,
a
*An
before
sional
address
the
by
Business
ness
had
Order
(1)
Profes¬
and
the
scrutinized
applications that
in
are
any
way
may
are
a
backlogs
Group, University
of
Cincinnati, Cincinnati, Ohio,
Feb. 6, 1948.
effectiveness
The
measures.
too often have
little lower.
(2) Stock-sales
Men's
the
generally
ratios have gen¬
restricts
voluntary
of
affected
a
their
groups
self-interest that
full
terrible
Loan
care.
in estimating questionable are being bv-passed.
do from Lending policies, at this point,
on.
This recovery left busi¬ are impressively tight.
in a weaker position than it
Frankly, gentlemen, I do not
been
in March, before the usually have much confidence in
businessmen
moderate decline began:
•
is being
greatest of
paper
with
which will help us
ing public will do; not what they
Let's
Position Now Weaker
Business
cooperation.
threat
to
our
security."
claims these
Baruch
Mr.
here stated in substance
ures
effect
into
promptly,
sufficiently
production
position
of
recently made a trip through
;ome 23 states, and I talked to a
lot of bankers. They were badly
worried last October and Novem¬
ber.
I
prised
am
in
not
least
the
sur¬
they have joined so
quickly and so effectively in the
voluntary program suggested by
CIRCULARS AVAILABLE—
the
that
Board
of
Governors
of
the
Federal Reserve System, and out¬
lined
Eleetrolux Corp. ;
more
boost
to
formally by the Amer¬
Retirement of Government debt
(Continued
on page
34)
If
before the war.
Title
—
of
property
in
money
New
A
Despotism
gargantuan aggregation of
remedies if finally set up as en¬
by
visaged
Mr.
Soviet
Baruch
would
autocracy
look
make
the
like
Sunday School Choral So¬
a
The blessings of this furi¬
welter of politics, economics,
ciety.
ous
bureaucracy,
with
new
of
classes
with
an
systems of controls and
top
army
and
abroad,
men,
of all
middle men,
of regulars and dis-
world.
We
Crude
Broadway, New York 5
Phone:
Tele.'
REctor
NY
2-8700
1-1286-7-8
Association
I
Oil
payment or dollars.
To the ex¬
tent that this margin is wide we
almost worthless
have
in Hungary
money as
money,
here and in Switzerland,
that
this
real
actual buying power
the
this
There
war.
is
stored for years
than before
no
imbalance
high
economists
& Trust
INCORPORATED
!
New York 4, N. Y.
f
LOS ANGELES
as
and China, against real
is worth less in terms, of
money
that
way
can
be
re¬
to come.
Spending—No
Cure
j
of
the
administration
would have a reces¬
sion in the Spring of 1946 with 8
million unemployed. That started
the orgy of raising wages to stem
the coming depression.
The ef¬
fort to keep these raises from ef¬
fecting heavy costs was futile as
any
repression
simply
brings
predicted
Seligman, Luljetkin &) Co.
41 Broad Street
im¬
have
poverished ourselves in goods and
enriched ourselves in insignias of
great architect of this in¬
flationary structure was the Gov¬
ernment itself.
In 1945, the head'
Laboratories
Guarantee
of
other all
or
The
.
to PHILADELPHIA &
form
some
experimentation notwithstanding
here
bureaus
the
over
This
dollars
trillion
a
much
created
and
than
more
we
markets into being,
black
where
'
Direct Wires
goods in
pression.
If we have too much
money and too little
goods we
have prosperity or inflation.
We
have destroyed a trillion dollars
most
Bought—Sold—Quoted
T
much
too
present inflationary cycle al¬
immediately."
Mr. Baruch
emphasizes "Work—Production—
Thrift
They made America—
They can now save the World."
Who is going to do all this?
the
Foundation Co.
DuMont
■
have
we
For Inflation
General
1
enough
goods to put us back to where we
were
Government
Engineering Works
York Security Dealers
take
will
produce
to
us
it
that
nature
for
relation to money we have a de¬
Electrol, Inc.
Member's New
such
years
cover
Northern
Establ&hed 1026
of
the Marshall Plan and still break
ican Bankers Association.
during the first quarter will also
120
"put
can
But I
erally increased.
(3) The financial
Ward&Co.
meas-
million
and
every
more
are
every¬
time.
Now, 12
employed than
(Continued on page 32)
Volume 167 Number 4672
THE COMMERCIAL
&
FINANCIAL
N. Y. State to Market
<
i.
4
Ji
4
if
t
-a
r
1
'
1
Productloa
Steel
The
$300,000,000 Bonus
Electric Output
Carloading*
The Economic
Follies
of
Retail Trade
State of Trade
By A. WILFRED MAY
Bond Issue in March
Commodity Price Index
Food Price Index
Frank C. Moore,
Auto Production
and
1948
Industry
on
Feb.
or
that
10
week
.
:;
The first
,
scene
!
in the latest act employing the politician's Stunt
of dressing-up in the costume of
economist, con¬
decline
with-output in
in
occurred
manufacturing
A
:
activity the past
issue of
$400,000,000 bonds
proceeds of
which will be;
used to pay a
to the
.
precedented coup of reelecting a party-in-power
even in the event- of a possible depression, his
,
sense
1
af-timing went askew.
.V
A'"
•' "A.,.-.
•
„>
A'
i..'
A.
'#
*
.
A
*
' '
-V-' '
!
•
■
.A", -V*#'
For the simultane-,
crash.
and
in
in
his show in
on
the price of wheat
a
vacuum
was
Taken at its face value, the President's
statement to the nation
only mean that he opposes the existing orderly
can
and at the
time predicts a
same
Unfortunately for
our
price-recession—crash if his program is not adopted..
democratic
and
the -UkeAweek
of
Retailers continued to be cautious both
1947,;
ordering large amounts of merchandise and in making long-term
commitmentsXCollections were generally reported to be prompt with
deliveries slow in
some
>A ,:?A AY A A'AA'A-'
\
areas.
jA/aaaV.
,
'T'--* '
■'
r.','A
''
"
At the close of last week the United States Census Bureau re¬
ported
due
drop of -798,000 workers from employment rolls in January
factors.
The decline brought the total number of
a
was
after
Frank
ori
series
a
of conferences
CA Moore-
Mrj
between
&pdAA representatives J" of
Moqre A,
b anki n g:
groups.AThe" $300,000,000
equal annual
bonds will mature in
installments from Jan.
1, 1949- to
Jan. 1, 1958 inclusive. A constituA
tional amendment providing for
the $400,000,000 authorization was
ratified by the voters of the-{State
the
at
..
a
offering-
decided
elections Although* full faith and
credit obligations of the State, the
■
fit into
the
holding jobs down to 57,149,000, the lowest level since last
;"A ; '"AA; y:AA .AAA A-.: • A;'AA';;' '> ."A:.;.\ A
/'A
persons
.
assurance
of
seasonal
to
dignity sup¬ April.
posedly surrounding the position of Chief Executive of the nation, ;V;Yr'A -V'.A v-'v:.'.''v AAvA.:' !'!
•'
■ 'S
\
,A
one is forced to the conclusion
that—during the balance of 1948 at
The decline experienced in commodity markets last week was
least—his own statements cannot be viewed at their
face value, nor looked
upon by many as a wholesome turn from the upward spiral
can
his economics verbiage
be considered anything other than of
commodity prices experienced since the close of the war and more
deliberate camouflage and prostitution of that
profession's integrity in the nature of a long-overdue corrective.
.Vrt'.
for his capture of the electorate.
v
This was especially true of grain prices which .were inflated by
In what other light can Mr. Truman's
repeated professions of the the world demand for food.
However, with crop conditions showing
dire necessity for price reduction be
viewed, when before the nat¬ improvement both at home and abroad,^ less justification obtains for
urally-induced decline in wheat has fairly got under
Away his such'high prices and they could not hope to continue at such peak
Secretary of Agriculture rushes to the press, with the announcement
levels'.
A\AAtA,X?'Av-;aX;-;a'X:XX'V'A.-'a; aXa'v A-Va —
,
that the government will soon
again bull the market to the tune of
Looking back to a somewhat similar period following- World
40 -million bushel purchases?
Just how dop~> this "comforting" re¬ War
I, it appears that history is once again repeating itself. >■
processes
vet¬
Date of
sale
•
of unreality.
For
dramatically extending a
.,t.. .
....
three-week fall, to the extent ;of 60 cents per
bushel, without those controls the President was reiterating are in¬
dispensable to prevent its further rise. A VViA^AAA^;;
r put
A..Wilfred May
World
II
forthcoming
^result, retail volume declined moderately.
a
Mr., Truman
.
War
erans.
-
further. inflation
State's
•
The dollar volume of
FA moditymarkets -(a situation>about which
he pro-i consumer buying was slightly above the level of the corresponding
r i fessed
ignorance) i suhpliedl the 'out^of?powef
week; a year; ago and shoppers generally continued to seek staple
[:.;;jpublieansi withAthev'niost^ effective*^ imaginable- items of good quality.;
r
a;':-'a
:-v-a-"'; a/.aaaa
b: ^ rebuttal to the Democrats', strategic line that
only
Dollar volume bf^ wholesale trade declined fractionally in the
If ^ the .granting of the demanded controls can pre- week, but-reflected, modest improvement above the level obtaining,
vent
bonus
Inclement weather in many sections of the country the past week
continued to have an adverse effect on consumer purchasing and,* as
ibhs; natural and orderly fall in the nation-s -conirr
I':;
authorized
an
.Production generally, however, was. somewhat in
excess of that which prevailed in the like week of 1947.
.
sisted of Mr. Truman's across-the-chest demon-'
Deliveries of raw materials were delayed in some areas and
stration of an elaborate price-chart at his
bad. weather and continued scarcity of some fuels hampered pro¬
press
conference of last Thursday.
duction in certain lines.
:
The Bureau of Mines in its current estimate
»■:
'Unfortunately for the progress of the Pres¬ of domestic crude petroleum necessary to meet the demand in Feb?,
ident's valiant campaign to accomplish the un¬ ruary,; 1948, placed the amount at 5,331,000 barrels daily..
preceding week.
*
;
sell
$300,000,000 of
.
lines moderately under the level of the
some
plans to
2, the initial
installment of
a
,
1
modest
he
March
about
.
A
Comptroller of
the State of New York, announced
Failures
Business
-
on
The Political Show Is Getting a Record Run
Apparently the most definite result of the commodity markets'
sharp declines, is the fillip given to the economics show
being
staged in the nation's political theater. '
• :
>,
- A-,
.....,
5
(705)
CHRONICLE
the
entire
general
November,^ 1947,
debt is to be
retired from
the proceeds of special taxes sanc¬
tioned
by
the
that
for
voters
To implement the bonus
purpose.
payments,
Comptroller
Moore
borrowed $100,000,000 on one-year
notes
early \in
January.
checks to! veterans
are
Bonus
being
now
#
serious deflation program?
transmitted
a
day,
the
at
with
the
rate of
total
13,000
daily
dis¬
bursement aggregating about $3,•
Those
"Greedy
Speculators"
Encouraging
'.a,'
But the
Pauley cause celebre furnished the real Gilbert-andSullivan political burlesque in this area. Act one saw the President
pontifically scolding the "greedy speculators" for allegedly trading
the
on
people's misery for their
profit.
own
Act two disclosed Mr.
Stassen's
charges that Mr. Truman's and his administration's very
Pauley was actually one of the most prolific of those spec¬
ulating devils. In Act three Mr. Pauley, after denying the charges,
Mr.
own
admitted
them
motivation
Truman.
with
bitter
of "Candidate
(The epilogue
recrimination
concerning
the
political
Stassen" rather than of the
office-holding
occupied with Mr. Pauley's resignation).
was
output in 1947.
show is staged by Congressman Andresen,
enriching the speculators through
disseminating largesse of "inside knowledge" of the coming break;
and of
ruining the wheat farmers by causing "the bottom to fall out"
V- va-..-.-a,. '•
■■v."
of the markets.
■
were
assisted by the highest annual price since
improvement in over-all mine labor supply.
New Directions in Brain-Trusting
vava
Whatever may have been the
shortcomings of President Roose¬
earlier and original
brain-trusters, their efforts at least were
devoted to furthering the welfare of the nation as
they saw it.
Mr.
Truman's present board of strategy, on the other
most
ably but wholly in the
chief elected.
Here
a
hand, is performing
toward the goal of getting its
groove
most effective
job
putting their political opponents in
them
into
the
Hobson's-choice
a
to have been done in
seems
hole—in
dilemma
of
very
being
subtly
subject
getting
to the
public's future blame in the
event of either a further
price upswing
This is the result of Mr. Truman's warnings of both
inflation and "crash"—most cutely designed and
accomplished, but
a
kind of strategy whose use by the
highest officer in the land at
or
a
collapse.
this crucially epochal time in world affairs is to
decidedly on the disgusting side.
some
of
our
citizenry
Misrepresentations about our domestic economy's workings have
seriously affected the legislative course of the Marshall Plan's adop¬
tion, because here again the President has sowed his political alibi
seeds
in advance.
In
discussing the amount of funds for a project
whose needs have not the slightest scientific
measure, Mr. Truman
has "warned" that if the Congress does not
give him every penny
he has demanded, he cannot be responsible for the result of
another
"operation rat-hole."
'
-.♦v'.
-•
•'
-
A
trucks
and
a
y,Then,
Tax
.
too,
we
and
have
Budget
the
Skulduggery
top-level
political
1946
impost,
on
coaches.
December
And his attitude toward
a
prerequisite to
v
"•
Brown
ai \ ;
Bonds
19%
increase over
by 7.5%.
Exports of motor vehicles in 1947 amounted to 512,353
units, or 10.7% of the year's total production, the above authority
a'-:'.
*
*
*
Noranda Mines, Ltd.
HART SMITH & CO
52 WILLIAM ST., N. Y. 5
Bell
;
.
'(•
*
*
(Continued
on
page
99
WALL
STREET
NEW YORK 5, N. Y.
1
SUGAR
Raw—Refined—Liquid
Exports—Imports—Futures
skulduggery about
a
Time Inc.
Kingwood Oil Co. !
American Maize Products Co.
$40-a-head
,
No inference should be made from the above observations of
A
had
producer
continual
the
over
Bought—Sold—-Quoted
a
•
.
''/•*.•
a
,
A
.
*•
•
•
thatA
earnings1'
past-seven
Market
'
2%-3
years.
*
•'i
1
A'
1
A
Analysis Available
FREDERIC H. HATCH A CO., IRC.
a
and to further the continuance of the democratic form of
government
in its last remaining stronghold.
crude; oil
has
charge of White House monopoly on political motivation.
But this
writer does feel that some slight measure of
self-discipline should be
looked for there, both to preserve some
dignity in the Presidency
Toronto
DIgby 4-2727
budget-cutting, which should
#
Montreal
LAMBORN&CO.,Inc.
25)
any manner of tax
*
HAnover 2-ftMO
Teletype NY 1-395
New York
.
•
,
'
(...
Maintaining that industry's staggering expenditure for plant and
equipment continues a key factor in our economy, "Business Week,"
in its current editorial "Outlook," emphasizes how immense is the
job of building for the postwar market not to speak of problems
encountered in marketing the new production.
Showing anew how all industry prospers from expenditures in
hard-goods lines, particularly on production equipment, it dramatizes
the role of profits in today's expansion and states that planning rests
more
and more on ability to plow back earnings.
Taking up its
final point of the survey of industry's capital expenditure plans, it
warns of the impact if spending suddenly should be cut.
Present plans of corporations with regard to expansion, it points
out, call for smaller outlays on plant and equipment in 1949.
It
states, however, that additions to budgets must not be ruled out as
relief, is one of
nose-thumbing at the constructive economizing aims of
responsible Congressional committee members who happen to be his
Apolitical adversaries.
V
-
Common
•—
stated.
advance
A
Company
Preferred
] Bell Telephone of Canada
a/ua';f A A^aa Ai.y
a a* aa\_
by 55%, and was topped only by 1929's
a
—
.
proposing
as
a-laa-
factory sales represented
the major ground of the inflationary repercussions, the
be welcomed
"a va
slight
factory sales of 5,358,420 units and 1937's 4,808,974 cars, trucks and
President nevertheless could turn about to woo the voter
by offering
to
swell
the spending
stream > through
bonus device.
*
a
November, and exceeded the previous high month for 1947, October,
taxes and the budget.
After twice vetoing Republican-generated
bills designed to relieve the taxpayer of a small
part of the wartime
.
1
1
a: a
coaches, the Automobile Manufacturers Association an¬
recently.
*
•.
'
a*;, a
1918 and
factory sales of motor vehicles totaling 468,704 units in
December—the high month for 1947—the automotive industry wound
up the year with total United States factory sales of 4,796,399 cars,
The total exceeded
velt's
000,000, Mr. Moore disclosed.
y-'fc'r-
With
•
a.
a;a:xa'x'v aava.:;' !a'a^\a'';a aa-a:';'
-v,
According to the Bureau, the general absence of labor-manage¬
disputes, such as plagued 1946, featured the production phase
of the copper industry in 1947 and was chiefly responsible for the
gains of 39% in mine output, of 42% in smelter production from
domestic ores and of 58% in refinery output from domestic primary
materials.
The Bureau also stated that gains in 1947 production
nounced
:Xa\ :'a;a
the report from the Bureau of Mines of the
Saturday, last, on copper
ment
This week's political
in accusing the Administration of
was
United States Department of the Interior on
Established
MEMBERS N.
63
Wall
Y.
SECURITY
Street, New York 5, N.-V.¬
1888
DEALERS
ASSOCIATION
Bell
Teletype NY 1-897
PETER MORGAN & CO.
31 Nassau Street A
New York 5, N.
Y.|
Tel. BA 7-516L Tele NY 1-2078
€
THE COMMERCIAL
(706)
Joins Frank Newman Staff
(Special
Chronicle)1
Financial
The
to
*
MIAMI, FLA.—Joseph F. Mazy
has been added to the staff of
1948—An Appraisal and
''
•\
The Case for Common
Forecast
{.-.i
A
By JULIAN D. WEISS*
By
'i
;
.
*
D.
Frank
In-
Co.,
&
Newman
;
First Investment Corporation,
President,
Though admitting current
year
investment
t
of stocks
tages
over
ascribes
market
low
levels
opinion
B
&
look.
RR.
Maine
&
the*
that
is
embodie
Inc.
Tele. BS 128
Tel. HUbbard 2-3790
greater
risks
7
than
a
year
1948
ago:
10
Federal Street, Boston
24
v
As
low,
p.o r
is
busi¬
in
cline
Julian D. Weiss
is-, not
activity
\
anticipated over the
term.
However,
ness
American Air Filter ;
/
•
may
have
third
Chair Company
or
1-
,
analysis,
Our
submitted be¬
as
*.i....
Incorporated ~
1st
' '■<-
'
..
Life Bldg.
2, KENTUCKY
Floor, Kentucky Home
LOUISVILLE
A.
*Mr.
this
prepared
Weiss
-
ar¬
ticle as* of Jan. 26.—Editor.
.
Bell Tele. LS 186
Long Distance 238-9
rate in excess of
ST. LOUIS
IllllllllllllllVlfltlllflllfllllllllllllffl!
Trading Markets
Stix & Co.
Bassett Furniture Ind.
INVESTMENT
•
Dan River Mills
STREET
Members St. Louis Stock Szchang*
Lynchburg, Va.
LD 33
SALT LAKE CITY
fiiHiiiiiitfiriiiiiiiiiiiiiiiifiififtifiiii
PHILADELPHIA
Analysis
Portsmouth Steel Corporation
Company
DuMont Laboratories
Eastern
Data
Request
•
^
,
Stock Exchanges
1420 Walnut
Street, Philadelphia 2
Salt lake City
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253
BELL
SYSTEM
the
1, Utah
TELETYPE SU
that
464
*
Botany Mills
v
For
Empire Steel Co.
;
Empire Southern Gas
r
.
But
vance
winning side as mucl*
the
on
of the
possibly can
how do we decide in ad¬
which side is going to win?
time
you
as
Pittsburgh Rys. Co.
or
>
of
Exchange
Sterling Motor Truck
from
Std.
Pac.
other
10:45
to
but rather on the
forecasting view¬
than
reasons
absolute
economic
our
levels;
apparent (for
enumerated below)
is
risks
page
draw
to
between
line
a
what is
really a common stock and whal
is really a bond. For all practical
purposes, however,
is as clear as that
the distinction
between dark-
*An
address by Mr.
the
fore
Club
Bond
Phelps be¬
of Buffalo.
COMMON STOCK
,
OFFICE
Stock Exchange Bldg.
Telephone
••
RIttenhouse 6-3717
•
-
Phila. 2
Teletvne
PH
73
Members
.
.
Sold
.
,
•'.
.
Co.
'
:
•
•
-
-
.«
Members:
Kellogg, Idaho and'
225
Spokane
Branches at
Yakima,",Wn.
was
|
EAST
MASON
PHONES—Daly 5392
.
.
.
Quoted
y.
pretty close to compelling them
to work, period.
Men work best
when fear of punishment if they
don't work is combined
★
''.7.
with hope '
if they do. The mine ;
built villages, offered free
reward
owners
housing
as
to the natives, and, as
they were settled in those
;;
Chicago: State 0933
PHONES—Daly 5392 Chicag
\
stores. Once the na1to do competi¬
company
tive
wives
began
tive
buying in the company
the
heat
was
Joneses.
Aside from
yv-
-'--i:.
Chicago Stock■ Exchange
STj
im¬
taxes, however, comes
work to pay
stores, 1-
their men folk
with the Afri¬
'
x,
S:;
inherent value, taxes
on
and
•
purchasing
another
factor
power
which
there
tends
sustain the value of money.
Underwriters
Peyton Building,
tax
each year just for
factor is habit,
Spokane
Dealers
head
to work to keep up
.
.
'
a
villages, tempted the women with
attractive displays of merchandise f
Standard Stock Exchange
of
Brokers
trancs
can
Bought
at
..
First
ilege of breathing
soon
1948.
Y., Jan. 28,
STANDARD SECURITIES
Byllesby & Company
PHILADELPHIA
was
but
for money,
posed. That meant that each adult
male native had to raise a few
of
CORPORATION
H. M.
Native, labor
the copper mines
,
N.
24)
sometime
Such contracts, 1
delivery of money
the
in¬
are
Our economy is becom-
•-
-
Congo.
the priv¬
the fresh air of
the Congo, For most of the natives,
in the future.
the only way those francs could
do not need to tell" this group, are
what people know as bonds. Ad¬ be obtained was by working in
Compelling men to
mittedly it is sometimes difficult the mines.
bank
of
because- it
in
pockets; the deposits in our
accounts and contracts fov
oqr
Nazareth Cement
Warner Company
gian
lines.
11:30,
„
work
the natives had no use
"things."
Nekoosa- Edwards Paper
Sp-82
Time:;
hours.
purchasing
the
both
saw
and taxing power theories
out in practice in the Bel¬
power
■
Execution of Orders
Quotes call TWX Sp-43 on Floor
A.M.,
:
I
ago
in
SECURITIES
Immediate
valuable if the issu¬
be made
wanted for
Things
The Choice Between
NORTHWEST MINING
American Box Board
inherently worthless money
An
can
•
(Continued on
SPOKANE. WASH.
J
light
creasing.
Philadelphia, New York and Los Angeles
>
be
V Money includes the currency
and
Private Wire System between
■
building,
important
160 S. Main Street
7
Los Angeles
..
1899
ESTABLISHED
I.
As Francis
simple.1
duPont, the founder of my
Phelps
If any time there¬ ing government has the power to
require enough of it to be paid
after you think the other side i
back to the government in the
going to win you change sides as
fast as you can. The object is to form of taxes., Twenty-five years
point, prospective trends are more
& COMPANY
of
economics
in a
■
join that side.
idea that from a
EDWARD L. BURTON
New York Curb Exchange,
New York
,
weaknesses;
York, Philadelphia and
Also Member o)
V
Thomas W.
$17 billion,'(ad-, sole object is to decide in advance
which side is going to win, and to
these factors, .why
is
our
broad viewpoint, one, of
caution?
This approach and con¬
clusion is not predicated on abso¬
lute levels nor major current
BUCKLEY BROTHERS
Los Angeles
are
never
!
stocks if I tell
same
In
available upon ^request
,
.
problems
mind,
el
about common
promises a slightly lower
Further, unlike the 1921
crack-up period, credit currently
is not strained.
■
y; .
J,'
Members New
e
that addi-Gold meets;
Unfortunately for our peace
level.1
>
Amalgamated Sugar
Corporation
on
f
as
test.
that
clear
h owl
additional
an
money
unit will buy,
tional
•••
l.pv to
produce
to
of that
unit
1948
New
-
Buffalo Bolt
e
much
V.y V"and Money PS.'.'-'
though it was good money by civ¬
oil
and
farm * The most basic of all invest¬ ilized standards, convertible into
equipment face demands guaran¬ ment decisions is whether to pu' gold. The trouble was that the
teeing' capacity operations. These our
savines
in
"things" or ir natives wore almost no clothing,
strong demand factors promise a money,"Things" include land, their women did what little work
continued high level of business
buildings,
mines,
ships, 7 grain was necessarly for their existence,
activity in 1948; with a working .cottorr, pepper,, oil and diamonds and much of their food grew wild.
premisev being that in the first to mention- only a few. Common Having; no use for money the
half of the year it will approxi¬
stocks are pieces of paper evi¬ natives naturally would not work
for it. Ultimately the money-labor
mate the peaks of the second half
dencing ownership of "things" in
of 1947; and the second half of
problem was solved along two
common with other owners of the
St.LouisI.Mo*
Tele. LY 83
h
make
way.
biles,
Scott, Horner &.
Mason; Inc.
will
in contrast to the de¬
cline in March-May, 1947. There
is virtual assurance that such key
basic industries as steel, automo¬
that
W
SECURITIES
509 OLIVE
-J;
v
justed for seasonal factors), and
at a slightly lower rate than for
the last quarter of 1947.
Unfilled
orders,
particularly for heavy
goods manufacturers, are remain-,
ing around peak levels; and in¬
coming orders in recent months
have
been
strong and continue
LYNCHBURG
American Furniture Co.
-
■
low,-, first considers the business
outlook and then fhe market out-
m BANKERS BOND
!
favor¬
under
started
has
; 7
Situation
j
,
the
in
inception
its
fourth quarters of 1948.
Co.
Varnish
Reliance
vul¬
nerable; particularly thinking in
terms
of the treed which well
Consider H. Willett "7
Murphy
near
by way of illus¬
tration, corporate profits are
American Turf Ass'ir
Prospective
sue-
my;
firm,
used to put it, in economics we
:sf
peak levels, as measured by the you something ■£'
FRB Index of Industrial Produc-; that
always are working vwith dirty
happened;7; 7
tion, (physical volume measure¬
at home this week.
Much to my test tubes. He meant that it; is
ment). National income (a dollar surprise, my 13-year-old son asked riever V possible to isolate; a single ?■ •
figure and affected by price level) me,-"How was the market today? ' cause arid study its effects.: Thus
we find money is valued not alone
is running at a rate well above
"All right," I said (actually it
$2Q0 billion, which compares;.with had declined a little), "but what for what it is but for what we can
about $164 billion in 1946;; aropnd
buy with it.
That ".really is' the
makes you ask?"
v
basis of the argument ofr those
$161 billion in 1944 and 1945; with
.;"I just wanted to know if it was who
say that inflation of the mon-r
$97 billion in 1941; $72 billion in
ey supply can be cured by pro¬
1937; and $83 billion in 1929. Con¬ going your way,™ he replied.
.1 could see that something was duction. "Conversely, when people^
sumer purchases have been at all
time
peaks and continue to, be worrying him, so I gave him this can't buy the things they want,
favorable. Business expenditures,
f't- *Vvr»"
.Vi",'"*'\ / '(.i.v'l- some of them buy whatever they
for
capital gqqds have; be£n at'
When you play football you be¬ can without much regard for what
high levels, especially the latter long to one team and you stay on it costs.
part of 1947, Budgeted expendi¬ that team until the end of the
Making Worthless Money'
tures for heavy goods for the first
game, win, lose or draw: But when
Valuable
quarter of 1948 are at an annual you go into the stock moiket you
imnt de¬
a
and
Economic
,
.
mind, the acid test of
sound money is that over the years
it
shall
cost
approximately a&
To
ing. 'vh.•*
Perhaps it
able
e-
an
t
cess
auspices.
Business activity;:
being maintained at all "time
dis¬
b
^
cussed
LOUISVILLE
\
Current
f
s
be¬
in invest-
and
sense
Production.?
of Industrial
Index
cor¬
that
in
ness
-and
able
Walter J. Connolly & Co.,
par¬
(though with some anticipa¬
tion) the Federal Reserve Board
now
of ?
meek- :
tween
allel
vulner-
more
i
roughly
that the market will
eco¬
high
observed
per¬
a
valid
distinction even'
though most of us would be hard
put to it to draw a line between
day and night. ;
fectly-
relation I have
conclude
simply
basis
1—-—
———
light, which is
and
ness
on
so
the
radically
two
are
can't
one
sons,
situa¬
tion
Traded in Round Lots
but I do
For psychologi¬
cal and technical and other rea¬
submit
nomic
Prior Preferred
These
^
or-humble,
different things.
We
meek,
the
magazine.
Boston
This is
re-
ported in
7
the stock
To my
the
are
including the recent poll of executive
"F ortun e"
v
mind the best financial advice in the Bible is "Blessed
for they shall inherit the earth."
I may be taking
liberties with the Good Book to translate meek as. meaning modest'
pessimistic.
optimistic.
contrast, the current year's forecasts are
In
under-supply of available, equity
opinion more expensive than in
Nowhere is pride of
Subsequent events proved their conclusions incorrect.
illustrated by various surveys
to
capital related to supply of stocks, and urges tax reform, together
with effort to sell them to farmers and union members, y
market.
business forecasters were overwhelmingly
both existing and expected, he
ing the bullish industrial elements,
;
-
A year ago
*•:
List-,
both inert assets and our present money.
•
BOSTON
"
duPont & ,Co.
between "things" or money as the most basic
decision, Mr. Phelps points oat the numerous advan-
iv Citing the choice
forecasts are optimistic, and- no
V;
important near-term decline in business is anticipated, Mr. Weiss
Courts Adds to Staff
*warns
that large business volume, higher break-even points, and
(Special to The Financial Chronicle)
more rigid cost structure increases vulnerability of industry, lessens 7 1
ATLANTA, GA.—Joseph H. At¬
kinson is now with Courts & Co.,
proportion of earnings prudently paid in dividends, and increases v
11 Marietta Street, N. W., mem¬
reliance on capital markets for new financing. Sees no sustained ■
bers of the New York Stock Ex¬
major upward movement of stock prices in immediate months
change,
•
•
ahead, and advises selectivity in purchases.
*
THOMAS W. PHELPS*
PartneF of Francis I.
.
Califj ,7;
Angeles,
Los
Building.
graham
12,.. 1948.
Thursday, February
FINANCIAL. (CHRONICLE.
&
MILWAUKEE (2)
Teletype MI 488
call
...
The
the
That
what we might .;
rigidity
the
structure.
society,
or
is
to
of
more
more
the
social A
complex
a
economically
(Continued on page 28) f
Volume .167 Number 4672
*•
'■
\
f
*
*
THE! COMMERCIAL
w
asntngton
Ahead
i
The
Truman
;
\
of
i
By CARLISLE BARGERON
Administration
•
is
acting quite smug about the
Undoubtedly its attitude has been bolstered
by the reports of the cynical newspapermen who covered the" recent
meeting of Southern governors at Wakulla Springs; Fla," All of*these
; v ■■ y o u n g men »>!
/'T','/./
u'-.\ ^
concluded that, bama
and
Georgia, returned a
,
"revolt" in
(707)
Technical Considerations in Market
A
om
FINANCIAL ' CHRONICLE
&
largely studies in law of probability
are
relating to market5
as
j of fundamental?and technical considerations in testing market, and
:
Counselors
given time on trend
basis; Mr» Wheel&n discusses methods of tracing trends of both general market and of individual issuesi
Indicates limitations of general averages as trend index, and contends? studies in-market technique
?
the South;
Vice-President, Morgan, Rogers & Roberts, Inc., investment
•
Analysis
By ALEXANDER II. WHEELAN*
Asserting function of market technician is to determine where market is
7
wilf be
atr any
Stresses
movements.
co-ordination
conditions warrant view 1948
says
but holds* basic .factor in investment policy should be prudent selection of stocks.
prosperous,
*
technical considerations
p i In discussing
in market analysis, it is pertinent to review the
majority for Hoover but they were elements that create market movements. Market fluctuations result from the operation of
lot of
i counted in the Democratic ranks/
supply and demand. This simply means that thousands of individuals create price changes
<$>ingoff on the ' It so happened that I was* a tre- as 'a result of
part of these
mendous admirer of A1 Smith and buying; and
mortality rate has been large in value. Great differences of opin¬
governors and j this disgusted me, but'it happened
the past and every bull market ion are always present, also dif¬
selimg which
attracts a new crop of uninformed ference in the needs and
ihey all agreed nevertheless. >
r
motivated
'*,'?</ •"'/••• is
objec¬
•
-it:
just a
spout-
was
■
that
;
in
the
|
end the South
■
woul d
i
.a g a
m
e
the
.column.
Administration had better do
Bargeron
I
the
case.
On
-
should- not
surprised to
in
nGi:
the
slightest
fensive.
be
if g to match
the "revolt" grow
see
serious proportions. For one
thing, I have been in the South
"Democrats"
1
intense.;
with
have. only
people
to-be
down
there
comes
for
say
either, because it is
10
lip
ji 4 helping; hii; Presidential
jdidacy
thets you hear about Truman are
.
by' having
can-
n s
The
deal
of
turned
by
ferent circum-
A
-
A
...
Stances who have
and
Wheelan
H.
Alex.
'
widely divergent
bbjectives in their market opera¬
tions.
Some
vestors,
institutional
are
in¬
companies, invest¬
Other "profes¬
trust
etc.
trusts,
Stock Exchange
sionals" A include
members, market advisory organ-
SenatorIVes izations' and
"insiders"
such
as
,
elect
to-
a-
•
One
ministratibn; which the Southern-
one
have always held in contempt
ers;
ibecausevof Theif
is because; several
have talked with him at
time or another in The past
reason
of them
about New York state's FEPC dnd
he has told them, that/it sickened
politicalVsolici-
tude for the Negro.
the
South'
can."
as
The Republican party'
spondents
turned
is
been
on
them
forcing
the
nucleus,
in A', adversity,
and
they
as
see
in
has
it and
down ' their ; throats
worse than any¬
thing.. the Republicans ever at¬
tempted. They have every reason
believe, indeed', that under the
next four years of Republican ad¬
ministration
they will have, less
the
Democrats,
not that
the
Republicans aren't giving lip serv¬
ice to the very same things which
the
New A Deal' Democrats
are
mouthing
and
but their racial prob¬
It
was
hasn't
been
its
way
siderations
of management; com¬
position
and
related
values, etc. Technical studies are
petitive
an
of
of
Corriwell of Bra-
B.
Fla.,*
are
connected
with
It
operations
successful
in
they
not long remain in business
could
or
business. It is also
the
market
the
of
the
market
individual
of
•.».
(Special, to /The,Financial
ANDERSON
campaign.
are
unsuccessful
activities
in
ChhonIcle)
-
,'/.v
untary
inc.,; Citizens. Barrk ABuild-
The'
market
-
the
Mr.
by
Association'
in
is
are
of
AiA/'A-A-I take; pleasure in announcing that
to
changes in the composite Sup¬
ply-Demand relationship in the
for
market.
As
action is plotted on
charts, it becomes imme¬
diately apparent that activity con¬
general
market
One
stock
uses
devices
fined
analysis
to
the
relative
narrow
in
market
strength
of* Supply
market, and in
commodities,
to determine when to buy, when
to sell, how much of a price move¬
a
buying
stocks
.
around
go
;
i\
;
v
,
would
Four
likely
States
South/ Virginia
Florida:. and
turned.
have
',/,
»■
^:'is. ■n^W^^sbciated: with ;me
ager Aof
of
North
Texas
no
the
Transactions
varying
more
are
made because of
estimates
particuarly
of
of
value- and
position for
sooner or
later either
power or
fromJ the
create
trend
trading
either
action.
represents
wish
to
The
trading range
field
in' which
the
and sellers battle it out
finally reach a conclusion as
powerful. If
the
total
composite urgency to
sell at a certain price level is
greater than the willingness to
buy, the price will decline to a
level which attracts buyers. On
the other hand an excess of buy¬
ing power at a given price level
and
will
cause
advance
an
(Continued
member
new york stock
a'n
City;
that
firm
we
of
have
the
exchange
associate! member
of
the
to
1
■
believe
that
.•,(
has
as man-
continue:/to
specialize in-
Bottling Stocks
become
in
a
general
our
partner/
firm
.
...
-
MODEL, ROLAND & STONE
Members New York Stock Exchange
::
Members New York Curb Exchange
C. G. NOVOTNY
over¬
that at least two other States, Ala-
"
Trading? Department
Broadway
New
,
reason
announce
Mr. frits markus
'
■
•■"'/'
■■
Solid
120
good
-
pleased1 to
Telephone WOrth 2-0194
.
..
.
' ,A
•
York
5, N. Y.
Teletype NY
1-56
76 Beaver Street,
to
on page
new york curb exchange.
are
to
down¬
buyers
announce
a
or '
to which is the more
prospective
become
and
range
uptrend
Cus¬
such
Carolina,
were
the
Soft Drink
A
continue
It did
-
will
us
reported complacently
notwithstanding this feeling,
South
(Formerly of Elder/ Wheeler & Co.)
is
selling pressure
will
dominate
to
the
point of
causing the. price to rise or fall
or
Mr. A Walter/E.'% Sullivan
,i'v/">>" >'»?-*'.'•
the
limits
range
neutral
a
while. But
and Demand in the
individual
we
/
market.
the response
giving buying and selling in¬ followed by a definite move to a
The Dow Theory is in substantially
higher or lower price
this
category,
as
are
relative level where another trading range
occurs before the next' important
velocity studies; Trend barometers,
oscillators,
moving; averages, price swing takes place. These
cycle studies and countless means phases of - market action within a
for reducing the market to mathe¬ trading range result from the op¬
matical formulae. Another branch eration of supply and demand at
of technical' analysis- is directed the price level in which it occurs
result of
the
toward the development of good The
activity of
market- judgment irr estimating buyers and sellers may keep the
atmd
Brokers; New- York
11, 1948. V ': v *
reflected
the
dications.
Wheelan
cam¬
campaign A testing
to vote Democratic.
I
Price fluctuations
'"invol¬
tomers'
Feb.
of
thing.
this
by
as
in*
investors."
AfAn ; address
sentiment.;'1*
the
and
changes
their
indicated
as
their; being locked
before
A A All. of us felt.' the i itenseness in
the A South but practically-every
one
price
For the first time
These/fellows
every /
that
by
for
LNR.—James Col-
paign because of' the/furore That;
had > been: stirred up against Al
•
altered
are
3}
went'into the South* in that'
in
the price. As the
thoughts and emotions of
traders change from day to day,
even from
hour to hour, the* bid
and asked quotations of equities
•
political writers of the newspapers
Smith.
in
mechanical
.naug]ht?'.AA^
1928
determines
needs,
future
stocks.
technical
or
itself
probable
we
&J Assoc.
,
wa s'',
decisions to buy
total
of what
sum
fair assump¬
a
sionals
Liberty Street, New York City.
reporter-s td. write under the cir¬
cumstances, t h a t the Wakulla ates,
Springs meeting ; will .come to ing.
v
their
The
•^-for trading in securities is their
market
peo-
is rather: ridiculous for the young
that the
assume
are
most* of their
55
1'.TT/ A
pie in the South are thinking.
permanent and
active in the market only to
tions. It is fair to
political
influential
more-or-less
with
sell.
reac¬
great deal
a
^
judging
or
do
and
entirely different'approach to
analysis; using'only the
course:
emotional
prospective value of an equity is
crystalized in the market place
market
action
the
tion that many of the non-profes¬
'
:
the
Herricky Waddell & Co., Inc. of
troublesome:
own
party came into power.
A This is the
Harold
denton,
first made troublesome for
South when
the
Pre
professionals
|' (Special; to The Financial Chronicle?
I Carl H. Dekle of Lakeland, Fla.;
lem. under the Republicans here¬
tofore
dominates
none
of
different
a-t*
(lave investment accounts which
are
Two With Herrick;^ A A
Wadd ell in Fla;
trouble than they are having un¬
der
Ives pressing it as
see
into back¬
Bob Taft wants- the 'Negro vote jteep commitments in favorably ment is
indicated and how tb limit
situated industries and
to
alter
3 ust as much/ as^aTry* of tlaeni ibtit
balance between stock
and risk. The Point and Figure Method
it is another one of the decent the
bond
investment
in
line> with falls into- thi£ last category of
things about him that he will not
market analytical procedure and.
in the business cycle.
support this measure. If is utterly Changes
Others: take/market positions to I place great emphasis^ on this
nonsense
to say that it is- a bill,
to prevent discrimination
ptch intermediate term; swings particular method* of technical
against
analysis.
and these individuals may remain
A///;:/
the Negro in employment/1.It is a
but of the market for long periods
Every transaction in the market
bill to telf the
employer that he
of time. Still others are active in is both a purchase and a sale. The
can't employ whom-he wants to
the market most of the time; al¬ reasons/ that * motivate
human
employ. A/ ;■ & ■:.
P'ffi A
ways ready to catch trading moves
beings in their purchase and sale
either with long; or short posi¬ of
equities are infinite in number.
things' infinitely
to
influence
The
varies
any/group
times and v?
research
buyers and sellers both
long and short-term basis.
everybody knows or believes, or
hopes or fears about the value and
??.;
/'They wonder now what if has
availed them: The party of which
have
corre¬
^/matter of Federal legislation.
had the one/partysystem;
they
Now, i these editors? and.
£
is solely
responsible for the South's having
success
market.
stock,
long;. The: individuals
comprising certain of these groups
are
.long range : investors. Some
titude towards the Negro
'
Theroperatibn1 of'these compon¬
groups
is what- makes the
ent
market for
Ti' They refer
/
great many differ¬
of market analysis.
sheets, earnings
profit margin factors and con¬
automatic
would' only
Republican Ad-
or
studies of balance
many
people in dif¬
branch
......
to
ground economic factors is widely
employed, together with statistical
marxet
dealt in
no
the Scruth's1 part" now
Analysis
use a
shocking.£4
has
or
of
a
tions of traders have
Fundamental
are
on
people who
give market
of
securities
methods
South
.'The
tend
in
guidance
press in the Senate a version of bankers and
large corporation ex¬
vv ;
New York State's FEPC. The Gov- ecutives-Then
there
are
the
feeling: towards
the Republicans ; on this ernor is mistaken; - It* is causing professional operators, the busimatter because they have neveH rim. in fact, to lose friends arhfmg^, hessmen;.s p*e ciiT;atpr-s, the oeexpected any better.'of'them.-*' It' Washington correspondents ? ind easional traders- and the board¬
u:/1
Arlitncc nrpinrnielv HoxmJbA: tA Kim
editors previously devoted to him. room sitters.
is a fact/ too; that any revolt on
indeed
thousands
tives
Moreover,
A' :
Market
ent
ment
Governor Dewey may think he
and the epi¬
up
shouldn't
"talking1 the ^ Dealers ^who-are pressing
matter.
minutes when the "race question"
inevitably
One
hopes;
—
of
ktock
try-
him/admittedly, but
■Democrats.
recently and the feeling is
You0
are
somehow* they don't seem to'be as
offensive on. the subject' as-the
into
twice
The RepubTcans
/- Methods
week in the
the Negro vote is downright' of¬
other hand,
the
hold
prove
p v e revery
the way-in
which Truman is trying to exploit
s- WUi
■
be
much,
i 1
shares
so.
'
tp be too high.
fears, etc, The
m
who
buy and
prices which later
by emo-
tions
back and read what happened
^ ihe '28 campaign. The Truman'
I'll:, say. this
Carlisle
or
go
\
shares- at
g so
| who
cratic
o
individuals'
who
be; Springs meeting as just a lot. of
sheep-j plowing off of steam, had better
.-in
ishly
-
now
n
found
D
i
once
t h e i-rare writ-, by
cocksurely about the South, knowledge
and reasoning;
are ;dismissing the Wakulla
The fellows
(Associate)
New York 5, N. Y.
a
34)
level
$
THE COMMERCIAL
(708)
Phil. T. Barmonde
First
Philip
Atlanta Gas
Consolidated
Electric
Light Company
Gas
&
Company,
a
The exchange
stock.
common
Dealer-Broker Investment
T.
the
trading
depart-
of its own pre¬
of Atlantic Gas
date
the
tion
of
of the
the
According to
plan.
Annual Review of Business and
of the
shares
had
been
a
of
local
double
of Atlanta gas
ac¬
in
investors
Beaver
will
line
allel
the
company.
The company was incorporated
9& years ago, and in recent years
has benefited by the war-stimu¬
inability
30 Broad
growth of Atlanta, plus the
Increasing demand for natural gas
(only about 7% of output is man¬
ufactured gas).
Continued rapid
growth for the Atlanta area is
anticipated by the company, since
years
Bissell
in
1937
ment of Seaver & Co.;
sociated
with
is now as¬
First
the
the
of
ment.
ended
Wall
52
manager
C,"'v
Street,
trading
i
■
depart¬
•>r.!
-
•
as
How Individual Can
1947; and an increase to nearly
planning its expansion pro¬ $16,000,000 is forecast by 1950. In
common, with
other utilities, the
gram.; to service
a
metropolitan
area population of 900.000 in 1956
company's share earnings have
compared with 500,000 in 1947. v failed to keep pace with the gain
The use of natural gas is partic¬ in gross, but nevertheless have in¬
ularly important in the
south creased from 790 in 1942 to $2.01
the
since it can be used advantage¬ in
September
1947 period
ously for house heating as well as (both figures based on the new
An
cooking -and hot -water heating. number of shares, 802,553).
are
practically
coal
that there
low
ao
competition
no :
initial
is
^
under,
•as
two
contracts
•
Southern Natural
contracts
inasmuch
one
of
Gas
Southern's
largest
the extension
mers
$276,000
of
custo¬
these
con¬
tracts is anticipated. To bear out
this assumption, we note that the
company
rate cut may soon
be absorbed.
The pro
recently contracted with
as
Southern Natural Gas Co. to sup¬
forma capital structure
Sept.
30,
1947,
was
as
stantially reduced:-
of
Work to the best of your
ability to increase the productioii
distribution
and
Stock, 4%% (20,000 shares, $100 par)__
Common Stock & Surplus (802,553 shares, $10 par)
and services.
36.3
10.4
53.3
Help
scarce
supply.
of yield and PE ratio:
table
prepared
to compare favorably with
other natural gas stocks on a basis
pear
by
in
for
production
creases
aids distri¬
or
bution.
The six-point program outlined
above
bank
A-B-C
in
of
Inflation
in
the
States," by Roger Amory,
Inflation, its
ML Y.
dies
announced
come
that
the
firm
has
be¬
member firm of the New
a
(Special
Roland
& V, Stone,
76
Street, New York City,
Yaazk Stock
Exchange and
an
as-
LOS
to The
Financial
Chronicle)
set forth in
are
rities and the Money Market—Re¬
Bankers Trust Company,
of the
some
being applied
and stresses the need of concerted
interest
and
action
if
the
against inflation is to be
:
Goodwin,
He
r-ciate member of the New York
Street.
Garb
reme¬
suggested,
or
ciated
Walston, Hoffman &
550
South -Spring
;Exchange. The firm also
that:
v ounces
become
Fritsr -Markus
an-
un¬
A. tW.
Lindgren Is With j
Copies
tainable
A. H. Bennett Coi Staff j
With Herrick Waddell Co.
I
l
*,
v.'
(Special
to
0-. •
The
'PHILLIPS
^(Special
;v
Financial
Chronicle)
■
'
mqi).
•
to The
Financial
Chronicle)!
The
at
KANSAS CITY, MO.—Axel W.
with- A. !H.- Bennett
&
Co.;
Inc., 55 Lib¬
erty Street,1-New York City.
'
—
Baltimore
Avenue.
He
fight
of
National
:
r
Rock¬
r
St.
Louis
that their
;
————i
;• ?;r ;v
1—
•—;
Wilson with Hannaford Co.
SAN
to
The
Financial
FRANCISCO,
Chronicle)
CALIF.
Guy E. Wilson, has become
ciated
519
Portland General Electric
with Hannaford
California
.
Street.
&
'
previously with Wilson,
Central Illinois Public Service
In
Investment
Field
&
—
was
(Atlanta, Ga.)
N. Y.
Firms.
Central
Public
Illinois
Service
Co.—Analysis—Edward D. Jones
& Co., 300 North Fourth Street,
St. Louis 2, Mo.
Delta Airlines
&
Schwamm
New York
—
Co.,
Analysis —
50 Broadway,
Feb.
(Boston, Mass.)
13, 1948
Boston Securities Traders Asso¬
ciation
ner
24th Annual
Winter Din¬
at the Hotel Somerset.
Feb. 18, 1948 (Chicago, 111.)
Bond Club of Chicago
dinner
nual
4, N. Y.
and
37th
an¬
meeting of
the
Chicago Club.
Electrol, Inc.—Analysis of man¬
control
Feb. 20, 1948
equipment for aviation a/id indus¬
trial uses—Seligman, Lubetkin &
Milwaukee
ufacturer
Co.,
York
hydraulic
of
Street, New
Inc., 41 Broad
4, N. Y.
ElectroIux^Corp.
Ward
Circular
Y-v
•
available ,is a
circular
!
Motors
Graham-Paige
(Milwaukee, Wis.)
Bond
at
party
Club
annual
Milwaukee
the
Athletic Club.
1948
(Philadelphia, Pa.)
Philadelphia Securities Associ¬
ation Luncheon at the University
:
—
120 Broadway, New
& Co.;
winter
Feb. 20,
—
on
Corp.—
Club.
Feb; 23,1948 (Houston, Tex.)
Analysis—Seligman, Lubetkin 8
/
;
Investment Dealers Association
dinner
Club.
and
annual field day
the ;" Houston
at
Country
rZ/v-f ;V'.:
po^v4I Broad Street New York 4
Feb; 27; 1948 (Philadelphia, Pa.)
New-YbrtcYY'v. *
i "Alsqr available are analyses ©f !• Investment Traders Association
Foundation it1 Co., Wellman Engi¬ pf, PhiladelphiaTwenty-fourth*
neering, and Tennessee Products Annual Mid^Winter Dinner at the:
.
Clieiiiiealiv^\v
&
Benjamin Franklin Hotel. 7
:
7
York City)
Oil
Co. — Special
New York Security Dealers As¬
survey—Peter Morgan & Co., 31
sociation 22nd Annual Dinner
Nassau Street, New York 5, N.Y.
March 5, 1948 (New
Kingwood
>
the Waldorf Astoria.
New England
Public Service Co<
—Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.
Johnson
\YY'r;'
Higgins.
12-14, 1948
asso¬
Talbot,
He
Feb.
of, Houston
& Trust Co.
Bank
announces
additional maefeine.- rfe
(Special
United Public Utilities
EVENTS
Meeting of Board of Governors
of Association of Stock Exchange
York.5, N.Y.
i
teletype number, h^s been changed
for^
merly with Slayton & Co.,* Inc.
an
Products,
COMING
American Water Works & Elec¬
ob¬
are
ST. LOUIS, MO>-The Mercan-
l()04
was
Stocks and
Y'YVY/
New
New Teletype Number
]
an
IWaddell.tSc'.Cd.,
Bank
Thompson
tric—Analysis—A. M. Kidder &
Co., 1 Wall Street, New York 5,
Also
tile-rCommerce
!'
BURG; KANS.— Lindgren : has become associated
Oa&ance. W. Glasseii is with Her-;
Sugar
won.
this article
of
land Bank of Boston.
VF
V
Inc.
on
of
data
analysis
16 Wall
Northerjir Engineering Works.
has
genera! partner.:; v; t:
a
an
.
States Plywood Corp.—
United
Analysis—Edward L. Burton &
Co., 160 South Main Street, Salt
Lake City 1, Utah.
listed trader for J. A. Hogle & Co.
formerly
was
.',
Memorandum-r-Freehling, Meyerhoff & Co., 120 South La Salle
Street, Chicago 3, 111.
YY
* \.
*
*
x/:
Amalgamated
Mr. Amory emphasizes the
neth C. Cameron has become asso¬
with
Illinois.
the
Government Secu¬
; ; United States
and effects,
causes
curbs,
weaknesses of
ANGELES, CALIF.—Ken¬
'■ 36: Wall Street,
N. Y.
VW./7/
& -Co.,
Electric—Re¬
&
analysis—Hicks & Price, 231
South La Salle Street, Chicago 4,
Special Situation—Analysis of
Worthington Pump and Machin-:
85-year-old New England; com¬ ery' Corp.—Investment appraisal
pany with large dividend accumu¬ —Kalb, Voorhis & Co., 15 Broad
lation—Raymond & Co., 148 State Street, New York 5, N.Y.
Also available is a tabulation of
Street, Boston 9, Mass. v v
booklet,
new
a
Board Chairman.
Model, Roland & Stone Kenneth Canteron Is
Model,
brochure
Platinum—Analytical
i
Gas
Standard
cent
N. Y;
is suggested to individuals
the
by
way.
Beaver
6, N. Y.
Carrie & Sum¬
74 Trinity Place, New York
mers,
(5) Practice thrift generally.
ah easily read and understandable
Exchg.
Co.,
Broadway, New York 6, N. Y.
Street, New York 15, N. Y.
personally
only
absolutely necessary and
your business only when it in¬
and various
Members With Walston, Hoffman
61
and showing monthly highs,
lows, earnings, dividends, capi¬
talizations, and volume on virtu¬
ally every stock listed on the New
York Stock and Curb Exchanges
.
years,
when
United
Based
Trust
&
analysis—C. E. Unterberg &
Report—Troster,
(4) / Borrow
Blair & Co. the stock would ap-
a
articles
conserve
100.0
$19,301,000
selling
around 17 to yield 7.1%, with a
price-earnings ratio of about 8V2.
currently
Bank
view of 1947 and outlook for 1948
'■■J; (3)
"The
Total
on
goods/ food,
v
*5
Bonds.
%
$7,015,000
2,000,000
10,286,000
First Mortgage Bonds, 3% due 1962
is
of
National
spiral
bound book covering 12 complete
(6) Buy and hold U. S. Savings
Preferred
stock
;
L (2)
follows:
Amount
The
tailed and the national debt sub¬
.
Shepard Niles Crane & Hoist—
in
charts
922
—
New York 5,
:
r
informa¬
Laboratories,
City Banks;'-
L—Bache
"
•
After
Atlanta Gas Light is
as
v
a year effective Jan. 2.
allowing for the 38% Fed¬
eral tax saving this would amount
to about 210 a share. However,
with the anticipated growth the
These
Co.
expire in 1949. However,
York
William Street, New York 5,
t (X) Write your. Congressmen to¬
day, telling them you .want_government expenditures sharply cur¬
State Commission to reduce rates
from
New
help stop inflation: V
600
.
"The " company pur¬
chases its entire supply of natural
is late
Mont
Du
Company of New York—Year-end
National Rockland .Bank of
The
a
follows:
available
on
Public
Broadway,
5, N. Y.
Boston suggests six definite steps
each individual ,can take today to
per
Regarding the' company's nat¬
ural gas supply Blair & Co. report
m
of
120
Meeds,
—single
copy
$10—yearly
(six
issues) $50—F. W. Stephens, 15
Help Stop Inflation
share was paid fn December
quarterly dividend of 300 will
be paid March 1, indicating a reg¬
ular $1.20 rate.
T
,!
Earnings for 1948 will be affect¬
ed moderately by an order of the
from
oil for house heating.
or
dividend
common
&
Colony
i£ is
Rates
Also
tion
Government
of
Down
Charts
Corporation,
$13,901,000 in
Sept. 30,
to
months
12
the
in¬
of Sources of Gross Income for 20
has been rapid and consist¬
612,000
.
Detailed
Also available is a Break Down
Barmonde
Philip T.
Revenues increased from $5,-
ent.
—
Portsmouth Steel Corp.—Data—
Buckley Brothers, 1240 Walnut
Street, Philadelphia 2, Pa.
Portfolios—Circular—Laird,
New York
capacity."
The company's growth in recent
lated
Chicago 4,
60
and Buffalo Bolt Co.
large
get
Co.,
Street, New York 4, N. Y.
Break
Bond
Light Co. This par¬
be delayed due to
to
Portfolios
Bank
pipe.
However, in the meantime, the
capacity of the present line is be¬
ing enlarged by about 30% by in¬
creasing
the ' pumping
station
the
&
Hentz
formation—Gordon Graves & Co.,
present supply
the
South La Salle Street,
Street, New York 4, N. Y.
expan¬
program.
would
quired by residents of Georgia as
of Dec. 23, indicating the confi¬
dence
an
on
1948—H.
for
It is the intention
of Southern to build a duplicate
line to the Atlanta area which
sion
study of Atlanta Gas Light re¬
cently prepared by Blair & Co.,
38%
has embarked
ural
confirma¬
Court
firms mentioned will be pleased
parties the following literature:
the Security Markets and Forecast
no^
indicated opposition to the Court ply Atlanta Gas Light with 200,000,000 cubic feet of gas per day
proceedings.
/>
S
There has been
an
over-the- by the end of 1948. Southern Nat¬
counter market in the stock since
interested
send
holding company in
Federal District Court, with
a
It is understood that the
to
approved by the SEC and
was
•
Recommendations and Literature
formerly
Barmonde,
of
f
process of integration, recently issued to each share
ferred stock (in retirement of same) seven shares
Eight
Mgr.
Colony Dept.
manager
^
Thursday, February 12, 1948
FINANCIALS CHRONICLE
&
"Y
March
Annual
Bond
Park
City
Consolidated
Mines
1948
12,
(Toronto,
Ont,
Canada)
Dinner of
Traders
the Toronto
Association at
the
King Edward Hotel.
Co.—Year-end analysis and infor¬
Harris, Upham Co. Adds
(Special
SAN
Gilbert J. Postley
&
Co.
added
-
[ Direct Wire to Chicago
The
Financial
FRANCISCO,
William W. Adams,
29 BROADWAY. NEW YORK 6, N. Y.
'
to
Upham
Street.
,to
&
Chronicle)
CALIF.—
Jr., has been
the
staff
Co.,
232
of
Harris,
Montgomery
mation
which is list¬
City Stock
Exchange—R. V. Klein Co., 170
Broadway, New York 7, N. Y.
ed
on
on
the
company
Salt
Lake
Pathe Industries,
Inc.—Detailed
of company and its
operations—Comstock & Co., 231
description
April 23, 1948
(New York City)
Security Traders Association of
New York
the
12th Annual Dinner at
Waldorf-Astoria Hotel.
Nov. 15-18,
National
1948 (Dallas, Tex.)
/
Security Traders Asso¬
ciation Convention.
f
(709)
The End of Bieiton Woods?
9
■■r
Mortgage Interest Rates for 1948
By PAUL EINZIG
By SIGURD R. WENDIN*
Commenting on British opinion regarding French defiance of
national Monetary
Fund, Dr. Einzig reports opponents hail
*
permitting Britain
Fund is
it
to defy
\
decision of the French Government
.
the International Monetary Fund by
disregarding its objec¬
tions to the establishment of a
f^ee market in francs and of a dual
currency has been widely interpreted here as a mortal blow to
the
system estab¬
lished at Bretton
main
Its4
novations
contained
the
in
Bretton
ifcfj
Woods Agree¬
acceptance
a
the
Mm
lip-
question of what has caused the drastic changes of the last several months in
money market is not only of vital importance to real estate
appraisers, but
to
every thinking person, but the answer is involved with
many factors affecting the well
being and se<$>-
the French action.
By protesting
against it in public without doing
anything about it, the Fund has
disclosed its impotence, which is
curity
Mortgage
terest
are
psychological effects of
publicity of the unsuccessful
basic
uveiall
were
\
W
and
particularly
est
pronounced.
Apart from the failure
of the
the
inter¬
not
it
di¬
is
in¬
and
than
of
es
member
Dr. Paul
coun¬
Einzig
ment Irom
tries,
and an
•
unprecedented degree of discipline
.
.
to
which
member
prepared
submit
to
France has
countries
were
voluntarily.
departed from the
now
llth-hour attempt
the French " Govern¬
an
dissuade
to
taking the course de¬
cided upon was apt to
exaggerate
the importance of the event from
the point
of view of its possible
repercussions on sterling;
It is
pointed out that an attempt to
rules of uniformity which outlaw
persuade
multiple currency practices and
fluctuating exchanges. She ;has
also disobeyed the International
Monetary Fund. This was the first
their freak system is not the
only
one that could
possibly solve their
breach of discipline since the
application of the Bretton Woods
difficulties
the
able to
was
International
Monetary
Fund with apparent impunity has
created
profound impression
a
on
British opinion.' Opponents of the
Bretton
Woods Plan have wel¬
comed
the
relief and
even
to
decision
with
enthusiasm.
For,
-
though its immediate effects
to
apt
are
French
even
be highly detrimental
British interests, the precedent
created
by France is considered
highly valuable from a British
point of view.
Fears that vital
British interests would have to be
sacrificed by blindly obeying the
majority rulings of the Executive
of
the
Fund have
become
on
the
possibility of
was
based
refusal to
a
authorize Britain to devalue ster¬
ling
adequately notwithstanding
the imperative need for such a de¬
valuation.
is
It
should such
a
now
felt
that,
situation
ever
arise,
all the British Government would
have to do would be to follow the
French
example.
No
sanctions
applied against France, be¬
yond withholding the facilities of
the Fund, and it is assumed, there¬
fore, that in a similar situation no
were
sanctions would be applied against
Britain.
This being so, the International
Monetary Fund is no longer re¬
garded as a super-State ruling
sovereign States in monetary
over
matters.
It
has
to
to
come
be
a
public
itself has
accepted this limitation
of its
powers,
bors
and
ambitions
no longer har¬
that were in the
minds of its authors.
rate
appears
from the absence of
disciplinary
any
France.
Fund
sever
This at any
action
against
The rule under which the
can
require its members to
all relations with a Govern¬
ment is not
applied. And, accord¬
ing to reports, the Fund has not
even tried to
stop Chile from fol¬
lowing the French example by es¬
tablishing officially a system of
multiple currencies and fluctuat¬
ing exchange rates.
-
"Supporters of
deeply
deplore
events.
Bretton
this
Woods
course
They feel that if, for
of
no
matter what reason, the Fund had
ro wish to enforce its
authority in
the
case
of
France,
have concealed its
it
ought
to
disapproval of
common
stocks.y J be¬
lieve the rate is
merely the price
of credit set
by demand and sup¬
ply .and
governmental
policies
rather
than
the
interest rates
influencing
substantial
degree
in
in
money • arid
You all may
conditions.
an
when
the
that perhaps the rules of the Fund
tiqu c^pp^rinto. power* in the early
thirties, it was thought if interest
too rigid, or their
attempted
application' premature. ; The rules
are
devised as the ideal towards
which the world should
progress.
It is arguable that in
were
ditions
existing con¬
disequilibrium it would
of
be difficult to expect countries
to
adapt themselves to rules which
suit to conditions of
absence of
the
public
protest in
Chilean decision
indicate that the Func
to
seems
has
any
of
case
stability. The
the
realized
the
need
for
high
degree of elasticity in the applica¬
tion of its rules.
,
..
a
J ;
One of the most deplorable ef¬
fects of the French experience has
been the development of
a
wave
iates
example of the reverse
Roosevelt Administra-
could
be
lowered
tially business would
to
borrow
money,
business would
little
very
in
improve. Actually,
money
the
cause
prospects
were
You, as appraisers, hold
the keys to the
causes, for
raise
lower
or
was
rial
worth while to reduce
Impe¬
Preference, under the Geneva
Pact, seeing that interna¬
Trade
tional trade agreements are
apt to
be treated by other countries
like
of
scraps
paper.
It
will
take
der
and
thus
to
in
the
the
trict
mortgage field.
would not have been
we
ers
of
will
be
at
the
University
and will be presided over
Club
by Dud¬
ley R. Atherton, Jr.; of F. S.
Moseley & Co.,'recently elected
President of the Association.
Had
so
Newberger, Loeb Co.
mem¬
industry*
the
or
HOLG,was
aerful
big
that the FHA
or
because
loans
with
was
back.
credit.
ties
been
to
was
Now
The
?
provide
of
avowed
low
low volume
as
possibility. If
we
can
istration
coincided
with
of
the
day,
which
the
creased
available
demand
we
in
supply
for
turn
of
while
credit
in¬
the
once
1932
to
re-1
1946
balanced the bud¬
get. Duiing this period the deficit
of
bank
deposits in¬
supply. It also
apparent many countries of
the world had unstable currencies
and
political
was
for
availability of the
credit, the causes for
of
never
period
creased the credit
analyze the
mortgage interest rate
should become evident.
when in
changes
■
cided
to
uncertainty,
and
February of 1934 we de¬
pay $35.00 an ounce for
gold instead of $20.67, gold began
Effect
In
of
Fiscal
order
to
Policy
obtain
sweeping prospective,
view
would
a
on
Rates
a
broad
brief
re¬
worth while,
especially so because it will
illustrate the tremendous influ¬
appear
and
ence
as
of
government fiscal policy
modifying
or
attempting to
con¬
trol certain fundamental forces. It
was not until after the 1929
crash
that
much
though
our
was
control
of
given
to
most
of
activities. Looking back
upon the period prior to 1929 it
might be termed that such a pe-1
change and other Exchanges, an¬
nounce
that Sidney N.
Baruch,
registered: representative,
has
enterprise
was
the
one
was
as
in
which
close
to
free
being
to flow into this
country at in¬
creasing speed. Gold is the basic
credit supply. At the end of Janu¬
by Mr. Wendin be¬
fore the
Society of Residential
Appraisers, Detroit, Mich., Jan.
27, 1948.
offset.
;
,
approximately $15V£ billions, and
1934, monetary gold stock
$4 billion $36 million. In Feb¬
ruary as the result of valuation it
ary,
types of securities went up
so that most of the-, decline was caused
by redemption of
slightly,
up
ioans.
For these
loans went up almost
two
years
$12 billion..
During that two-year period de¬
posits declined approximately $8
billion, but the gold supply increased
~$2~ b¥lion.TThese"''facts
thrown
into
proper
relationship
other, drive home
something has hap¬
pened to the relationship existing
from 1932 through
1945, and that
one
with
the
the point that
something
credit
is
the
demand
for
in
relation;-to the supply
changed in favor of a greater
demand and
therefore, in a free
economy the end result is a stif¬
fening of the interest rate or the
price to be paid for credit.
has
Since you are
predominantly in¬
in mortgages and if we
terested
(Continued
on
page
29)
was
$7
was
billion $438 million, and
point on the trend was
ACTIVE MARKETS
from that
almost
constantly
the end of the
upward
By the end of
supply had reached
$22 billion, or
roughly three times that existing
in February, 1934.
During the war
level
years
urse
of
ALL
until
war.
1941 the gold
a
about
for the most part, the figwas
between $20 and $21
REAL ESTATE
STOCKS & BONDS
Bought
—
Sold
—
Quoted
billion, but last spring the trend
again
the
*An address
an
Investments in banks .dropped
during the years 1946 and 1947
banking structure in order to take
,
dollars
lending,
private
for
generation
im¬
demand
to
supply, and
government securities, or sale of
government ; securities
by
the
basically
favorable fundamental conditions.
Deficit financing was the order
the
and
money
j
.
causes'
an
bank
re-
|
5 7 Pollpy
easy
money
adopted by the Roosevelt Admin-
ap¬
hand in hand.' A
of credit is
$93 billions. The
investments tends
of
the increase of private credit acts
no
the
a
around
duction
reduce
of; these institutions have
virtually eliminated. The
during
go
were
held in the
banking
structure remained relatively constant. On Jan. 1,
1934, investments
are
cost
activi-
fundamental that credit and busi¬
should
the 1934 fig-
increases
$511 million, with the peak being
reached in 1945 of $109
billion,
$865 million, and current figures
though
part or
the
over
totalled $18 billion $542 million
and at the end of 1941 $34 billion
of these institu-
some
and
investments
make
equities, but
many cases,
paid
was
1934
largely the result of government
financing, because other types of
to borrow the
money to start most
of
these
ventures, even
all
between
Investment
ure.
the point which you cannot overr
look is that the government had
eventually in
90% increase
a
a
won-
could
you
low
26%
1941, and current figures present
fine setup because it
helped to
bail you out of some
poor mortgages
of
crease
you
relatively low. Remember,
riod
(38th Street), New York City.
say;, that
*
difficult, to ade-
or more
mained
bers of the New York Stock Ex¬
joined their organization at their
branch office at 525 7th Avenue
Depending
it should be emphasized that un¬
der the capitalistic
system it is
all of
Newburger, Loeb & Co.,
easier,
1934, there were approxi$22 billion of loans.. At
end
I other
rapid and
discussing specific
governmental
With
fa¬
personal
viewpoint,
argue that the SEC made
quately finance
may
the
as a result of debt re-
As
of 1941 the
figure was
$26 billion, 616 millions, and the
latest
preliminary figures for the
year end indicate about $42 billion of loans. That is
only an in-
purpose
or
credit.
the
your
you may
lt
of
of,
mately
Decline in Bank Mortgage Credit.
still might have been in sell¬
market for mortgages. •
Before
Sixth
cently returned from a tour of 19
foreign countries. The luncheon
cilitation
upon
control
indi¬
or
their
part
praisals been lower, then the ris¬
ing trend
of mortgage demand
credit
Congressional! Dis¬
Pennsylvania, who re¬
the
for"
manufactured, but
an indication of the
demand for credit loans in? all
banks may be used as a guide. On
,
GI
supply
of
contracting
longer buys G.I. loans
for example. Now the
easy money
days appear to be over.
Irom the excessive appraisal
practices which arose immediate¬
ly after World War II, mainly in
probabilities for the
Friday, February 20 will be
Congressman Hugh D. Scott, Jr.,
had
either
RFC
high rate of business activity with
on
,
stem
ness
Phila. Securities flss'n
rectly
the
ject to credit changes and fluctu¬
ates; more than gold. If either
type contracts it lowers the sup-'
ply of credit and bank money is
Jan. 1,
stitutions, which directly
tions
which
been
governmental financial control in-
purpose of many
ap¬
while
during the
tirement.
per
have not
the present
had
tion, the Reconstruction Finance
Corporation, the Federal Housing
Association, and many other quasi
you
you
is aroynd
that
the volume of bank
money is sub¬
Owners Loan Corpora-
as
anything but conservative
praisals
a
little time before the shock admin¬
istered by the unilateral French
action is forgotten. '
of
unit of property so is the mort¬
gage volume raised or lowered.
Of course, none of
you would ren¬
been Contributors
inclined to
reconsider their attitude. They ask
themselves whether after all it
one
other
concern
values
your
upset. Conditions
are now
for
profits
not
particularly good.
tracts.
lateral system
borrowed
was
spite of low interest rates be¬
of distrust in the
sanctity of con¬
Many people who were
formerly in favor of the multi¬
induced
because of the cheap¬
and then in turn
of
ness
substan¬
be
controls
we
another
$143 billion.
gold supply
war period,
deposits
increased
almost
2Vz
times. Plenty of
money to loan
Note
those
the Home
any
recall
PHILADELPHIA,
PA. — Phil¬
adelphia Securities Association's
guest speaker at their luncheon
that the Fund
on
flagrant departure
a
re¬
binding to the
turn
from its basic rules the answer
is
decisionsare not
seems
Sigurd R. Wendin
reflected
credit
To Hold Luncheon
It
rates
py government bond
yields; cor*,
porate bond
yields, and the re¬
protest
garded as a voluntary association
of Governments in which
majority
minority.
as
currently
The
a
discussion
as
31, 1934,
by 1941 the figure had risen
$63 billion $436 million, and
to
affecting the money
us only
indirectly,
but during the post crash
period
there came into being the Securities
and
Exchange Commission,
other types of
interest
this
market
■■
argument that the Fund
make
mate¬
rially allayed;; The main opposi¬
tion to Bretton Woods
to
probable r
directions
of
themselves
To the
had
that
foredoomed
■
against such
The fact that France
defy
was ;
failure.
open
Agreement.
cranks
currency
by
stable. If
deposits
and
was
Rather
change.
after which it
measures, the volume was $37 bil¬
lion $766 million on Jan.
out
of
chequer in
i
c
alone.
total bank
use
stabilized
the current
1 i
country
1941,
ren.ained^relatively
managed economy
was;, evident
everywhere,
but
varying in degree.
For purposes
visit of the Chancellor of the Ex¬
po
us
world wide
a
trend toward
tervention of the
monetary
systems
and
in this
saw
peculiar to
was
principles of
fluenced
we
until
crease
civilization, but
individual; Every phenomena
which
problem,
rection
in¬
the
the
Fund, the Paris
modern
a
brought into be¬
ing newer concepts of the rela¬
tionship between the State and
one
their
in
ihe crash of 1929
rates
phase.; of
ef¬
would be piactically pos¬
as
sible
in-
but,
the
free
of
citizen.
every
detrimental to its prestige.5' From
British point of view the ad¬
verse
„
rates.
mortgage
forts to try to prevent France to
apply the solution of her choice
of
high degree
uniformity
in
m!
Pt
%
ment were tne
of
*
in-
high grade risks at higher
The
the
<S>-
Woods.
The
Heber-Fuger-Wendin, Inc., Detroit, Mich.
After reviewing mortgage interest rates as affected
by government fiscal policy and New Deal
legislation,
Mr. Wendin concludes easy
money days appear to be over. Holds that basically government interest
rate sets the pattern for all rates.
Notes relative decline of mortgage investment
by banks, and says
indications point to further stiffening of interest
rates, but looks for continued pegging of government
bonds. Sees ample credit available on
as
monetary policy, since the
a super-State in monetary matters.
Says French
distrust in sanctity of international contracts,
r
creates
LONDON, ENGLAND.—The
v
own
President,
V
■
longer
no
move
follow her
to
Inter¬
started upward and today
gold supply is at an all time
high,
$800
approximately $22 billion
million.
Clearly then, the
supply of credit as reflected by
gold was constantly on the in-
SIEGEL & CO.
89 Broadway,
>
N, Y, 6
DIfby 4-2370
Teletype NY 1-1M8
total
A
Illinois Brevities
were
in
Inc., managers of the investment
banking group. These figures add
total
to slightly more than the
up
is
which
issue,
doubt due to
no
the circumstance that some bonds
which
included
were
The most
or
25%
with
third with $5,599,000.
corporations
other
of
been
17
the
of
sol¬
$385,000,000
which
issue
bonus
diers'
the
was
ap¬
proved by the voters in Nov., 1946.
On
v
known
to
of
Trust
at
Chicago,
of
all
and
100.06,
at
be
Callable @ 105
par
to
a
0.75% to 1.80%,
maturity.
Of
yield
38,889 sh. outstanding.
requirements
dividend
covered
s
Market:
54
—
56
f
ested dealers on request.
,
Blair
&
Co.
COMSTOCK & CO.
ment of
capital.
Dearborn 1501
including,
Republic
Hall
Harris,
Illinois
Serving Investment Dealers
mick
exclusively in under¬
writing and distribution of securities,
providing investment dealers with at¬
tractive issues for their clients. Main¬
of
specialize
taining
retail
no
we
own,
dealers,
of
department
our
compete 'in no way with
but serve them exclusively..
Kebbon,
Co.,
Co., Bacon, Whipple
&
Co.,
We
Collins &
Julien
Chapman
Farwell
Chicago,
all
Co.,
&
&
and
Co.
Jan. 27 publicly
on
of Ben-
399,990 shares
offered
Corp.
Aviation
t!ix
(Inc), The
McCor-
Co.
&
(Inc.),-
Co.
common
a
^
Correspondence invited.
stock, par $5, at $28 per share,
account of General Mo¬
for the;
tors
selling
the
Corp.,
stock¬
holder.^ The offering was over¬
subscribed.
FLOYD D. CERF CO.
;
120 South La Salle Street
The
Chicago
first annual. report of the
, that
the
producing 25
"pilot
cars"
for
introductory
showing this' Spring, and that it
has spent $5,651,208 from June,
1946 to December, 1947 in getting
ready to produce its new automo¬
Tucker
Bowser
.
Common
Central
-v. '•
•
Paper V
Common
;
bile.
Detroit Harvester
is
rent
Common
year
■ • ■.
STRAUS & BLOSSER
York
Exchange.
Stock
Members
Chicago
Stock
Associate
Member
New
close
of
last
tric Co.
done through the
offering.
and
ceived
111.
Tele. CG 650-651
public
a
net
The
from
sale of dealer
the
stock
amount
sale
of
re¬
fran¬
dends.
to
1,394
distributors
and 75
$7,397,415.
Seligman
Editor of the 1948 Year Book, and
A.
business
mortgage
construction
planned
tbr^i^h
Lee
will
program \
tional
investors
Chicago,
Corp.,
on
fered 75,712 shs. of common
stock
(par $1) of Wolf & Dessauer Co.,
Fort
at $8 per share.
underwriters placed
privately with two life insurance
companies an issue of $1,200,000
Wayne, Ind.
The ;; same
4y8% notes. Of the 75,712 common
shares
50,000 shares are
estate, the remaining 25,712 shares being sold by the com¬
pany from its treasury stock. Net
proceeds to the company are to be
added to its general funds.
' '-v
offered,
an
John
syndicate:
underwriting
An
Stuart & Co.,:
Chicago, and including
J.
Inc.
of
among
Detmar
of
others, Dempsey & Co.*;
&
Co.,
Ketcham\ &*\
Mullaney,
Ross
&
Co.,
Inc.,
Jan.
on
and
22*
LeRoy
*
*
Woodland,
•
"
Treasurer
the 'full
redemption price (par), plus ac¬
mediate
payment
accrued
and
Allyn; &
1, 1948
Common
Stock
•
Governments
:
,
V
Co/-,}:[y:
Straus
$10,000,000 5%'. sinking fund col-
V-,'
'
v.
also
•'
—
CHICAGO 4
Tele. CG 156
of
110,000
Inc.
(Pa.)
.'V/C
'■'"•//
TRADING MARKETS -ri
y
Tucker Corp. •'/y/y:■
'
Class
•
:-MA
/ Chicago, North Shore &
V
Milwaukee Railway
Regarding
NEW PLAN Furnished
on
.iCommon
J-
Stock
v
Request
'
ZIPPIN
&
COMPANY
Brailsford & Go.
Specialists in Foreign Securities
208
Phone Andover 1430
DeWalt,
stock, (par $2.50) at $15
share.
Nutrine Candy Co.
;-v,
208 So. La Salle St.
offering
of
common
per
Jan.. 20 participated in
public
shares
4% Trustees Ctfs. V
Common
FAROLL & COMPANY
York Stock Exchange
'
Blosser, both of Chi¬
&
on
-
and other Principal Exchanges
C.
Inc.. and. Bacon,
'
Information
Member New
/
100%
A.
were
Sills/ Minton & Co. Inc. and
/
/the
those participating in
the public offering on Jan. 22 of
•
>
interest,
Co.,
Whipple &
cago,
Among
//
Municipals
1968,. of
Water Co., at
of
/(the redemption date).
•
Corporates
bonds due
trust
Northeastern
District of. Cook
crued interest to March
'
lateral
/called bonds may receive im¬
Co.
mortgage;;
i2%% bonds, series A, due 1973,y
at 102.187% and interest. The
offering was oversubscribed.
*
Park
have : been called for
redemption.
Holders; of . the
$40,000,000
offered
refunding
$2,966,000
County,
Kendall, Inc., and F, S.
Southern California Edison
first
Chicago
Alfred
Co.,
District, anof re¬
Park
that
funding bonds, series B, of The
Patterson, Cope-
O'Gara & Co.
land &
&
Chicago
nounces
:
Nongard, Mason, Moran & Co.,
ITALIAN
Standard Silica Corp.
George A. Searight
R.'Amott
H.
O'Kane, "Jr.
headed by Halsey,
Stock
v
United
the
throughout
-
Common
approx¬
H. Murch & Co.,
Jan. 28 publicly of¬
Maynard
Trading Markets—
Corporation
to
States.
Hunter
Chgo. & West Towns 5/47
Merchants Distilling
distributed
be
imately 5,000 dealers, banks and institu¬
Duke
Cleveland,
space
which
1948 and the early part
Higginson
125 dealers, banks and
already have re¬
in the forthcoming issue
organizations
served
of 1949.
and
Aetna : Securities
Corp.,
Advertising Committee
■,
the
of
report that over
and from
E le ct r ic V: Co.'s
Philadelphia
Searight,
Chairman
capital for the
new
Harry R. Amott,! Amott, Baker & Co.,
George
v.
Elec¬
1978 series, will be used
provide
made/promptly
Program.
*
to
12.50
tickets
permit printing of names of members
.and their guests in the official Dinner
$25,000,000
refunding
and
bonds,
be
must
to
Bertram
underwriters
63
of this stock
sale
the
dealers
totaled
i
the proposed sale of
,
chises
,»•'»
;
Individual
Reservations
4.3% preferred stock at
and accrued divi-y
The net proceeds from
publicly
$2,683,846.
Chairman of the Entertain¬
Subscription: Tables seating 10_$125.00
v
.
($100)
par
liabilities totaled
Financing of the company was
O'Kane, Jr., John J., O'Kane,
standard
of
000 shares of Philadelphia
Yantis
franchises
Exchange
York Curb
135 South La Salle St., Chicago 3,
Tel. ANDover 5700
the
J.
ment Committee. •'
Morgan
$12,577,718 (including
$12,000,000 in cash) and cur¬
were
John
Jr: & Co., is
Stanley &
Co., and including, among others
Glore, Forgan & Co., Chicago,
on Feb. 5 publicly offered 150,by
rent
Disintegrating
New
at
assets
Cur¬
out-of-town guests.
-
¬
Corp.
»):
of
group
over
Common'
Members
produc¬
public is
the
to
cars
cf
scheduled for later in 1948.
Portsmouth Steel
Metals
now
deliveries
First
tion-line
Common
reveals
Corp.
company
line
a
$
from
.
Ja
and also various special items. "V:
makes
headed
A. G. Becker & Co., Inc.,
& Co.,
Central
at
bolts and rivets
nuts,
an¬
Glore, Forgan
Co.,
&
Davis
H.
*i
7;
Wellington Hunter of Aetna Securities
proceeds
Nut
Lock
The
fabricates
the
Stanley & Co., and
among
others,: Paul
Morgan
^
balance to be added to working ;
first
syndicate
banking
A
by
CQ 955
Teletype
a
/;
/
Seligman, of Ward & Co., is
Corp.,j is handling hotel, reservations for
chattel mortgage ob¬
a
the
Chairman of Ticket Committee.; V
ligation and taxes, etc.. and the
■vr.
CHICAGO 4, ILL.
St.
at
21
net
The
as
intended-to be used in pay
are
reoffered
price to yield
-V':
*
•/>'.:
1.40%.
share)
per
speculation.
Co. .They were
Jan.
on
231 So. La Salle
($12.50
par
1948 tax
Chicago,
America,
of
Corp.
1948, were purchased on Jan. 20
by a syndicate headed by Halsey
Stuart
& Co. Inc. and William
to inter¬
operations available
of
convertible
cumulative
5%
or¬
,
present.
Bertram
referred stock of The Lock Nut
ticipation warrants, dated Feb. 13,
its
and
this company
description of
Detailed
; " :'*■
V.
York
New
well as the financial
leading New York papers
will be
Kuehner
E.
Exchange,
as
editors
Hanns
f offered publicly 24,000 shares
13,4%
$25,900,000
of Education
Board
>!'
Exchange, banks and business
ganizations,
Ray T. Haas, Chicago, on Jan..
headed
of
issue
*
Stock-
York
Curb
an
*
Exchange Commission,
New
bonded mat
a
air filter plant; and
balance
of
approximately
A
An
to
$1,637,934 for further expansion
working capital.
^ ^ ; :.
issuance.
times
3.6
$549,850
Members
planning to attend.
are
of the Securities &
and for
approxi¬
since
have been
$156,000
mately
construction of
the
$300,000,000 issue, one-half car¬
ries a 1V»% interest rate, and
the balance a 1%% rate.
of
follows:
as
large number of reservations have
guests
in full debt to RFC; $800,000
plant and
ac¬
to
cording
Annual
used
for
immediately *
were
A
-already been made and many out-of-town
$10 per share, the proceeds to
pay
reoffered to the public at prices
$100.00
Friday
on
Kuehner, Joyce, Kuehner & Co., Chairman
of the Dinner Committee. v-/!'/:
Allyn & Co., Inc., Ames, Em& Co., Inc., and Mullaney,
Ross &
Co., all of Chicago, !on
Jan. 22
publicly offered 343,000
shares of $1 par value icommon
stock of Glass Fibers, Inc. (Ohio)
erich
Co. Inc.,
price of
Stuart &
Halsey,
and
Hotel
Waldorf Astoria
the
C.
Ill¬
Continental
Co.,
inois National Bank & Trust
4% Preferred
of
evening, March 5th, according to Hanns E.
Bank, North¬
Savings
&
Trust
ern
PATHE INDUSTRIES, INC.
'
Security Dealers
place in the Grand Ballroom
syndicate headed
Kebbon, McCormick & Co.,
and including, among others,1! A.
$300,000,000 of these bonds, des¬
owners
The 22nd Annual Dinner of the New York
the
and
22nd Annual Dinner March 5th
vs
.
Association is scheduled to take
A nationwide
ignated series A, were awarded
to
a
syndicate headed by the
First National Bank, the Harris
to
Security Dealers
This resulted
sales
franchise
New iYork
<
first
the
1947,
29,
April
or¬
were
made
Feb.
of $4,953,000
Sales
bonds
the
have
and
re¬
represents
This
bonds.
balance
insurance compa¬
orders and pen¬
sion funds, $17,602,000, or 21%,
to banks, and $6,786,000, or 8%,
to
ganizations.
until
bids
sealed
will
the
pon
nies, fraternal
to
Illinois
of
State
purchase of $85,000,000
service recognition, series B, cou¬
investors,
19%,
or
Service Recognition Board
the
for
sold to 4,132 in¬
$15,659,000,
were
dividual
placements were made
$31,691,000 bonds
sold, with New York next
$24,985,000 and Pennsylvania
were
ceive
of the group, it
about $43,101,000,
that
value class
par
by
in Illinois where
The
members
by
appears
re->;
3,490^'.;
•
of
retail
at
$1
was
of
sale
stock offering.
and
han¬
were
sold
amount
the
Surface
Chicago
Elevated Lines.
dled twice.
Of
of
bonds
the
proceeds of $22,226,606
total
from
281,000 were sold to other dealers by means
according to a study released by'«>;
Harris, Hall & Co., The First Bos¬
ton Corporation and Blyth & Co.,
$14,829,191
A common stock.
$83,148,000 at retail and $22,of 7,931 separate sales,
writing group apparently distributed
of
from
000 shares of
$105,000,000 Chicago Transit Authority revenue bonds
marketed last August, the 211 members of the under¬
the
Of
which
ceived
Thursday,4 February 12, 1948
FINANCIAL f CHRONICLE
&
THE COMMERCIAL
(710)
10
208 S. La Salle St., Chicago 4,
Telephone Randolph 4696
'
Illinois
Teletype CG 451.
1
:
Tel.AState
9868
''
4
'
r',
'
Common
'
>
CG 95
,
•
„■
William A.Fuller&Co.
Members of Chicago Stock
S. La Salle Street
CHICAGO
,•
209 S. La Salle Street •
-Tel. Dearborn.5800
-
Exchange
Chicago 4
Tele. CG 148
167 Number 4672?
Volume
THE COMMERCIAL
&
FINANCIAL
Trust Administration and Current
By JULES
:Vv//
Finance, New York University
'
•■'/;
Contend
j
prices act
ng
11
Professor
rationing
as
of
well
as
BACKMAN*
Economics,
New
York
University
stimulating device, and the black market
as
is merely the
price system in operation, Dr. Backman asserts free price system "is one of greatest inventions of all
time." Says profits are lubricating oil in our
economy and represent charge for taking risks.
Pictures
i
Dr.
-
Associate
.
By MARCUS' NADLER*
Professor of
1
(711)
Prof its and Productivity
,
Economic Problems
•••.■
CHRONICLE
Nadler, in commenting on trust officers' problems, points out 0"
j increased productivity as bridge between wage increases and their impact on prices and profits, and
deflationary forces are growing and readjustment is nearer at hand
I Holds probJem is not merely a question of stable
than generally believed. Sees possibility of a'.d to Europe as off¬
price level but of balanced price relationships.
The manifold activities in our
setting effects of deflation, and says problem of credit control is'
economy are integrated through the operation of the
.more difficult because of inflow of
price system. Prices furnish the guideposts which indicate how resources will be utilized.
gold and its repercussions on
business. Recommends, should recession set in, trust officers should Ii like to
distinguish between the rationing function of price and the stimulating function
:!
"
'
of
price. An'$>-—■—•—:
—
aga!n buy without hesitation long-term bonds and high grade pre-,
•
<
.
understanding
,
benefit often of
to
conserve
task
to
policy,
into
preserve
take
wealth; it has
nomic
been
because
account
and
particu¬
larly difficult
during the last
the
future.
three and
the
forces
one-
half
decades.
The
invest¬
ering
present
political
they
marked
In
United
the
of
inflation
momentum.
are'
V-J
in
1910
the
at
of 25
age
is
63..
now
He
'
can
on
Dr. Marcus Nadler
look
World
back
is
and
Nov. 15,1947,
on
higher than
qpw
peak reached in 1920.
at
the
witnessed
of
great
the
of
one
which
em¬
greatest
booms in American
to
history, based
large extent on speculation
credit; and one of the
a
and
bank
severest
has risen from 105.5
rising.
depressions that ever be¬
fell-mankind, one which ;wiped
out
or' dfasticaly
reduced
the
only
value of assets in which trust of¬
to
ficers invest funds.
distant future.
the
rise
fall of
and
Nazism
He
and
the
witnessed
Fascism
greatest
and
war
in
'
history of mankind, which was
accompanied by more destruction
than all the wars fought during
the 19th century.
t
to
an
income
clined
price
average
high-grade
of
80
corporate ;< bonds
from
in
few years ago was
a
be
achieved
to
acquire
a
time
some
1947
are
too
U, S. Governments pf 1946/49 de¬
East
and
clined from
Civil
1931
83
to
witnessed
1932; while 3Vs%
1012/32
Jan.
on
the rise
on
11,
of
July
22,
1932.
He
indus¬
new
tries and the liquidation of many
marginal and obsolete enterprises.
He
the growth of the income
saw
tpx from its infancy in 1913 to a
giant during World War II, and
he
becoming
rigid. Yet, in spite
of all these great changes and con¬
fusion, the tasks of the investment
or
saw
more
and
officers
economy '
more
successfully
were
Most of them
to
increase
them.
able
were
but in many
conserve
to
the
wealth
met.
not
only
instances
enti
listed
indeed a great
tribute to the ability of the trust
to adjust himself to rap¬
■to
This
is
officer
idly
changing ' conditions.
This
•performance of the past gives us
hope for the future.
; \ .
^Although this
ficer
has
past
few
seen
he has
hypothetical
ever
are
are
great
as
any
faced in the past.
It
these problems
because" conditions
perhaps
difficult
more
than
today
complicated and
ever
they exist just the
The
during the
the problem's
as
is not easy to see
clearly
of¬
much
decades,
ahead of him
•'
re¬
When
the
before.
Current Economic
Political
But.
same.
'
^ »«••
In
studying ;. what
in
position
a
r*An
fore
address by
the
ference
to
us
adopt
in
the
future
as
a
to
be
sound
Trust
American
Con¬
Bankers
Association, New York City, Feb.
10, 1948.*
(Continued
on
39)
page
•
,
Knowing the right people.
Under this arrangement, contacts
*An
address
by
Dr.
Backman
{before the Mortgage Bankers As-
the
important determi- i sociation of America at the New
nant of allocation of supplies.
'York University Graduate School
The black market is
•
price
If
in
system
merely the : of Business Administration,
operation.
An'York City, Jan. 29, 1948.
' ?*•*
f
*
Reports
the
Increased Production
:
"
V
"*
>''7)
"
•
•
••
1
'
'V*
'
'
"
"
f
7*'
V;" 7
Expansion
in
:7'; '
'
'
;
'77:
'7.
'
'
•
T
; •*
'
77"
777 7
' 7"7
'
brings results
program
helping meet tuition's needs
less fixed.--'.*>
is., split in
between the
West
Johns-Manville in the record year
'
materials
Widening.
is raging in China, and
world.
parts of
An
ideological,war is be¬
between
the
ideas
emanating from the Soviet Union,
ing
trol
of
the
means
of
//Two
:/
and
from
the
the
emanating
which
of private
the
enterprise,
system
political
democracy,
and freedom of the individual.
war,
part
one
United
States
assistance.
for
What
we
guidance
do
:
-
across
_/
Here
'
7
were
the country.
These
v.
thousand separate
a
■
the
are
For all
x;/. //
VU';.
;/*
:
••
of J-M's efforts
to
to
Profits
1
were
/•.
7Mo
.
More
shown below)
cents
>
per
j
■■
■
'
7
.......
63
million
$
$ 5314 million
for taxes
$
SV4 million
4lA million
5!/i million
Earnings after
:vVv;.".
one
★
dollar of total sales.
split of the
Taxes
mon
taxes
stock after
were
$3.23
were
per
adjustment for
common
equivalent
a
share of
thrce-for-
stock in May, 1947.
to $2.87 per
share of
com¬
everything
pos¬
stock.
f
Employes
7
/
*•
an
on
compared with $92 mil.
million
Reinvested in the business....$
help offset shortages.
/•/*.
'•/';■ )
$134
To stockholders in dividends.$
increase the
★
$134 million
"
as
To government
lion in 1946.
/
INCOME
employes for
common
.
an¬
1947:*
salaries and wages
completed in 16 plants
Mteeord Sales
were
highlights of Johns-Manville's
costs
(except
To
improvement and
-
were some
Sales
much
as
for building materials in general.
average
nual statement for the
year
started and will be pro-
were
supply of goods needed
during the
important
has the
.
plants
and
critical year of 1948 will have
as
J-M's Annual Statement
completed and put into
were
expansion projects
-
the world looks toward the Soviet
Union for guidance; other nations,
notably those in western Europe,
where democracy and freedom are
deeply rooted, look toward the
...
More than
of
ideological
1 Yi to 5
/;
1946.
ducing in 1918.
/
In
this
..
TOTAL
production
-ideas
•
Two other
UnitedStates,
stands for
plants
new
operation.
con¬
by the State and does not recog¬
nize political and individual free¬
dom,
was
,
'V'
waged
which stands for the absolute
1947.
badly needed items
times that of pre-war
the
since 1941 have increased less than half
the
was
/ Production of
;
-
other
many
prices of Johns-Manville building materials
age
eREATER production of building and industrial
big accomplishment of
is
gap.
bearing
conditions in
also
ilization.
events
of
only
Employes numbered 18,500 compared with 15,800
Jolins-Manville will continue
in 1946.
sible
to meet
trial
country but
products and
■/,'//;-•"'<■'7/7-..v.,. /'
The.
course
of coming
determine the future
work ;: of /-trust
officers,
Higher Payrolls
consumer
will
the
since
not
our own
the future of western civ¬
on
it
will
determine
whether
Payrolls amounted
-;
not there will be
any accumu¬
lated wealth to administer.
Our
to
to
do
to
the demands for
building and indus¬
provide greater value for the
dollar*.
.
•
-
'
$53]/4 million compared
with $39^2 million in 1946.
-
!
or
a
as great as that which
most
the
important
nation
re¬
(Continued
on
page
are
30)
/■"'.
to
CHAIRMAN OF THE BOARD
new J-M
Center, biggest of its kind in the world.
were
rising at the
Moderate price
increases
skyrocketing
costs
JOHNS-MANVIU.K CORPORATION
*Tlme
Moderate Price Increases
offset
problems
today
^
buildings
7
en¬
The Problem of Inflation
The
Research
sons
country against an "external
emy.
Will we live up to our
sponsibilities?
before
Additional
con¬
when they were
called to the colors to defend the
our
Expanded Research
respon¬
Dr. Nadler be¬
Mid-Winter
of
the.
so
postwar
(3)
become
The impor¬
latter point has been
well illustrated in many European
countries where supplies have of-
outstanding
Johns-Manville
dream
world
the
the
war
in
fronted
holds in store for
-
>
tance of the
v
■ftttr:
there is unrest in the Middle East
and
sibility
Scene
early
an
in bringing the
those whose
or
more or
generation is faced with
and
and
war
represent
illustration.
af¬
can
product.
the
period
gets
or
goods to the market.
But in spite of this
/The
rosy.
and
June
supply of goods
of
The situation abroad is also not
de¬
in August 1930
100.8
salaries
Under this
V*
•f
of
cost
The
stimulating
function
of
price refers to how the price sys¬
tem operates to induce a
larger
sup¬
question
a
prices
accom¬
noDucts
people whose income has not kept
with the constant increase
the
is
when
131
pace
in
it
that
JOMNSMAWVlLLt
prosperity, many people are dis~
turbed and puzzled. These are the
two^
in
60.6
'•to
,
who
buyers find that they
practically full employment
of
nearly 60 million people, which
unbelievable ,extent. For, ex-; ficiaries of trusts
'"ample, -the
'
determin¬
!
prices
rise,
the"; least necessitous buyers are
out off, .while when prices decline,
living and whose
standard of living has decreased.
The great prosperity - the United
During his 38 years of service,
this trust officer saw wide flue*; States enjoys at the present time
tuations in; prices of e<juiLies, He has been achieved largely at the
expense of those people who lived
saw bonds of corporations which
he considered gilt-edge depreciate on fixed income, such as bene¬
.
Waiting in line.
arrangement
ra¬
insist
controlled, it must be
panied by rationing.
decides
the available
alternative
V-J
on
$200 billiqn»*,We had
over
problem
ing
a
what
Jan. 10 and is still
on
National
to
rose
distributing goods in¬
these
are
under
government
get
would
Day to 164.5
methods of
;
(2)
--
sources.
Jules Backman
ford
100)
destruction
the
I,
of
dicates why most students of this
first come, first served.
The long
lines outside butcher shops dur¬
as
ing
new
He
■
the
shall
ply.
to
Prices
allocations
by
predictions that the repeal of
controls imposed during the war
pires and the rise of Communism.
saw
.
who
stimulate production, thus
increasing competition and pre¬
venting a rapid rise in prices, the
index of wholesale prices (1926=
War
awareness
per-
tioning device
Despite all
the
and
which
of
time
act
-
Day to 164.9
to
/ (1) Government rationing, pri¬
which
time.
gath¬
his
career
permitted
rationing
function;
be allocated only by
can
orities
suggested
from
-The
who started
officer
of
are
States,
spiral'of
wages and - prices is accelerating.
The index of the cost of living
(1935-39=100) rose from 129.3 on
ment
not
of three other methods.
one
various
control
have
goods
an
measures
to
eco¬
to
is
to
appraisal
conditions in
on
two
tions
u n c
the
conditions,
bound
are
effect
have
we
these
vital
the wealth left in trust for the
investment
a
this
f
helpless people, widows, and orphans.-•> It has always
been
a
diffi-^>
cult
are
form
.
No other profession has been confronted with so many difficult
problems during the past generation as that of the trust officer. The
trust officer's function is
prices
of
ferred stocks.
desiring
more
complete information should refer
containing the formal Annual Report
were
required to help
of production. But
aver¬
l>e
glad
to furnish on request.
to
to a
Stockholders which
booklet
we
will
Address: Johns-Manville Corporation,
22 East 40th Street. JYetp York 16,
jV, Y.
„
1
New
12
Vincent M. Doherty
Bank and Insurance Stocks
=====
A Time for Caution in
Leedy, Wheeier
& Alleman
=5
VAN DEUSEN
By E. A.
With
Prominent
MIAMI, FLA.—Vincent M. Do¬
This Week—Insurance Stocks
Co.,
Bank of New
parent
but
equity,
is re¬
share. Net in¬
in premium reserve
crease
net
the
equivalent to
company was
per share on 1,000,000 shares,
when
adjusted for, the in¬
$4.38
loss
underwriting
duced to $1.12 per
vestment
income
$2.19
was
per
share, and
total net operating
profits were equivalent to $1.17
per share. In 1946 net investment
income for the parent copipany
was
$2,10 per share on .750,000
shares
and
net
underwriting
were $2.00 per share.
commenting on underwriting
profits
In
losses in his "Letter to the Stock¬
holders", Mr. W.
President, said:
"This
has
year.
losses
have
to
the
f
been
Many
McCain?
Ross
*
-
heavy
a
and
large
unusual
in
addition
occurred
normal
\losses; such as
Texas City, the tornado losses )in
Texas
other
and
Oklahoma
and
western
states, the. great FloridaMississippi - Louisiana hurricane;
forest fires of Maine, the large
dock
and
become
the abnormal in
expect
may
we
New
conditions
business
normal,
in
losses
wharf
Until
York.
industry, but
our
it is not expected
that the unusual
type of losses will continue.
results
of
$2.21
per
showed
net
.
We enter the
...
a
share, but adjusted
profit of $1.77-'per
share; net investment income was
$2.36
and
total
net operating
profits, $4.13 per share. In 1946,
net
underwriting
results
were
;• ■V'-.
$1.85.
was
United
Insurance
Fire
States
Company wrote 21.3% and 11.7%
more
net business, respectively,
earnings
in 1947 than in 1946. No
figures have
yet been reported.
as
summarize:
To
in
crease
net
written in
the
in¬
average
volume
premium
1946 for the
1947 oyer
companies,cited, was 27,9%,
ranging* between a maximtim of
seven
for St. Paul Fire & Marine
a
minimum
of
11.7%
for
40%
and
Underwriting
losses
were
re¬
and
Automobile,
adjusted
an
on
net basis.
in
1946
Aetna, approximately the
same
were
for
earning?
operating
lower
in
in both years
and
higher
1947
than
for Fidelity-Phenix,
for Continental, St.
Continental
pany's premium
advanced
983,678.
37%
1946
1947
underwriting
Statutory
results showed
in
to $50,-
share, but net underwriting
sults,
after
adjustment for
re¬
in¬
crease in premium reserve equity,
amounted to a profit of $1.37 per
share, while net investment in¬
come
Anderson Heads Exec,
$2.95; after Federal in¬
come
taxes
of
$0.18, total net
operating earnings were $4.14 per
share
compared
with
$3.65 .in
was
Comm. of J. P.
George
Whitney,
J. P. Morgan &
23
Wall
Street,
Morgan
President
of
Co. Incorporated,
New
announced that at
a
City,
York
special meet¬
ing of the board of directors, R. C.
Leffingwell was elected Chairman
the
of
board
to
succeed
Mr.
Lamont, and Arthur M. Anderson
1946.
was
Fidelity-Phenix reported
mium
volume
of
a pre¬
elected
Executive
Chairman
Committee
of
to
the
succeed
in Mr.
Leffingwell.
1947, a gain of approximately 39%
Mr. Leffingwell became a part¬
over 1946. Statutory underwriting
results were equivalent to a loss ner in J. P. Morgan & Co. in 1923
Both
of $1.92 per share, but adjusted and Mr. Anderson in 1926.
results were equivalent to a profit have been officers and directors
of $0.85 per share; net investment of the incorporated company since
•
income was $3.29, and total net its formation in 1940.
Mr; Whitney,
who became a
operating profits, after Federal
partner in J. P. Morgan & Co. in
taxes
of
$0.10, were $4.04 per
share compared with $4.05 in 1946. 1919,, continues to be the Presi¬
St.
Paul
Fire
office of
Co.,
Inc.
with
Strauss
and
Marine
Corn-
dent
and
Chief Executive
of
prior
•
•
Break
Down
•
of
"
,
The
' •"
of
Sources
LOS
20 N. Y. City Banks
Winkle
Chronicle)
ANGELES, CALIF.—Willy
has
become
Circulars
on
Request
'
Laird, Bissell & Meeds
Members
120
New York
Stock Exchange
BROADWAY, NEW YORK 5, N. Y.
Telephone: BArclay 7-3500
Bell
T*i*twe—RY 1-1248-49
(L. A. Ofbba. Manager
Tracfrig Department)
Quincy Cass Associates, 523
West 6th Street, members of the
Co.,
he
directors
of
the
o
f
Y.
F.
manufac¬
:
turing,
of California. Prior thereto
with Huff, Geyer & Hecht.
in New York City and was
Inc.
with Mackubin, Legg &
in Baltimore.
Company,
are
do
can
are
things
some
about
a
inflation.
in which
ways
we
can
Continuing,
Mr.
ber. it
W. R.
"Wholesale
Burgess
well.
as
not
in
the
after
reached
was
Similar, but
1779.
such high prices were
quite
nounced
e a
1 e,
by
last
same
in
monetary
was
cause
expansion
the
of
but
developed
over
months.
There have been
plenty of warnings.
/ .
"The
four
previous
wartime
'
Presi¬
-
dent
price inflations all had a common
They all broke disas¬
since
conclusion.
and in
this
capacity
supervised the
98
year - old
trously and sharply from their
high points, and the country ex¬
1927,
depression. There is,
of course, no inevitable law that
the present boom in the United
perienced
chemical
pany's
Hardcastle
Y. F.
com¬
period of its greatest expansion.
is
Hardcastle
Mr.
director of
a
than
wisdom
of the four
is
and
the
of
member
a
a
serious de¬
this time unless we show greater
Philadel¬
Beltjng, Co.,
Main
in
end
the pression, but it will happen again
operations through
facturing
a
will
States
manu¬
did
we
in
one
any
"The economic forces which will
result
decide. the
are,
the
beyond
them,
merits
the
To Be
Granbery,
Marache & Coof
52
Broadway,
York
New
Exchange, will be
budget
under
all
the
be
curtailed.
changed
in
partner
a
March
Alexisson will
A.
Gustave
come
He
1.
was
be¬
firm on
the
formerly with
Hornblower & Weeks and
G.. M.-P.
Murphy & Co.
vv
Howard Andrews Dead
Howard E.
the
in
Andrews, a partner
brokerage
stock
former
of James B.
Colgate & Co.,
of
forces
rules
inflation, and
when
blow
the
downturn
The great swings of busi¬
comes.
not
are
ness
soften
so
the
solely
of
matter
a
cold economic forces, but a matter
of how human beings
behave; and
daily activity
bankers
in
have
influence
an
people.
their
"The
point I want to make
one
tonight is that
are under test
banking educa¬
we
to whether our
as
tion has been
an
ornament which
have enjoyed, or a
we
which
from
and
of
millions
on
..<•
enabled
has
useful tool
learn
to
us
the
experience of the past,
which can make banking a
better servant of the
"There
people.
encouraging
are
1
'
,
signs
today that bankers do understand
this problem
We
fore.
great
I
are,
and
of
banks
to¬
nature
behaviour.
The
believe,
the
about
more
of
forces
human
day
better than ever be¬
know
and
stronger
safer than they ever were before
at such
critical time. I think we
a
job better.
our
"Looking beyond the particular
economic danger zone in which
we
now
find ourselves,, there is
also solid ground for courage
hope. In the
adjustment,
war
ness
war
and
and in the post¬
American
busi¬
has demonstrated unheard of
and
power
flexibility.
We
have
opened new vistas of invention
and
production. We are slowly
learning how to be a great world
power.
And we always need to
remember
that
this
country's
spells of political insanity are not
continuous, but reach their worst
at four-year intervals.
.
•
This Year's
Harvests to Equal Prewar Levels
contrast to most of the weather news in this country
which we have received the past two weeks, London advices report
that a "mild winter has tempered European misery and given prom¬
ise of bumper crops."
Abundant rainfalls with high temperatures
are expected to produce crops that^will equal those harvested before exposure
or
malnutrition
have
been reported in Berlin this year.
the war. In contrast to the severe
In striking
winter
temperatures in our
Britain has enjoyed
highest temperatures
since
own
land,
war
the
the
with the result that the fields
Londoti
advices
peans
have
tense
privations
which
not
will
be
state
that
suffered
of
last
Euro¬
in¬
the
winter,
remembered
them
dissolution several years ago.
Denmark and
winging their
by
in
Staff of Bacon & Co.
associated
an
He
died at the age of
illness
had
several
of
been
with the
Colgate firm for 25 years
At
will not only
institutions and our
customers, but will contribute to
dampening
down
the
upward
course
a
In Italy, flowers are
said to be blooming in the north¬
ern
prpvinces, winter wheat is
six inches high and fruit trees are
blossoming in orchards outside of
Rome. Crocuses, are blooming in
after
its
time for caution—
Crops Flourish in Europe
Granbery, Marache & Co.
to
'compensatory
should
when
boom
the
a
York
City, members of the New
Stock
&
Marache
Granbery,
Lord,
firm
the
1,
March
Effective
name
of
under which the gov¬
ernment would spend heavily in
depression
but
cut
down
its
spending in a boom. Yet here we
are,
with the largest peacetime
budget in history, at a time of
spending,'
Will Admit Alexisson;
cus¬
our
shall do
previous occasions.
many
of
reach of the
example, the
ciety, the Philadelphia Chamber
inflationary force of huge govern¬
of
Commerce
and the Chemist
ment
spending. The economists
Club of New York.
for years have been talking about
Chemical? So¬
Electro
the
In
our
,
protect
year
many
Mr. Hard-
Vice
the
was
of these five war experi¬
That
ing that happened last month or
com-
dent.
'
prices
one
country's money supply to meet
wartime expenditures. It is noth¬
Presi¬
p a n y
of these high com¬
cause
inflation—an
Leoiwrd TL
B
"The
;
"Such
are now
ences.
was an-
problems.
banks and
our
vesting, and caution in new, un¬
dertakings.
It
is
time
for
a
steady hand and for courage as
Burgess
stated:
modity
mem¬
present
our
tomers this is
each
a
as
board
his
death
with Gude,
he
was
before
are
green.
migratory birds
way
Russian
there.
Winmill & Co.
France too
areas
On Brady
Charles
W.
& Co. Staff
Dolbeer
with
Broadway, New
Brady & Co., 52
York City.
is
V
winter
war
expects
harvests
are
a
are
one
since
of the best
before
the
and danger to the wheat crop
the worst experienced
Vincent B. Hackett Joins
(Special
SAN
having
50 years.
as
century.
back to home
the warmest weather in
Stock Exchange. He
formerly with Butler-Huff &
was
up¬
practicing
caution in lending, caution in in¬
Revolution
Los Angeles
was
living
flation."
same
Hardcastle,
Vice-President in charge
Pennsalt
connected
with
of
we are
history of in¬
after the Civil War.
elected
months.
The Financial
there
interest of
reached after the War of 1812 and
has
Of Quincy Cass Associates
to
universal
Co.
66
Income
cost
apply the experience. of the past
Pennsylvania Salt Manufacturing
New York City,
'
There
within a few points
of the peak which they reached in
1920. This peak is also about the
board
Willy Winkle Joins Staff
r •" *
the
to
was
Hardcastle Elected
,
firm
(Special
of Gross
thereto
.
Bond Portfolios
■
and
prices
the
as he has been since its
incorporation in 1940.
Break Down of Gov't
"But
Bros., Inc. and Cor- commodity
company,
:
Ranson-Davidson
rigan & Co.
$41,959,460
&
Politically
ostrich economics.
banker. There is, for
loss of $0.49 per
a
Miami
American
Leffingwell Chairman;
led
ward.
banker
the
Leedy, Wheeler & Alleman, Inc.,
Bank Building, Orlando,
Fla.
He
was
formerly in the
phia,
Com¬
volume
over
^
/
.
new year
Insurance
,
Doherty
Florida
the
of 1948 with confidence."
situa-
a
countries. It is
Paul Fire & Marine and Automo¬
bile Insurance.
Bankers
other civilized
Vincent M.
-
net
American
have
of
United
States
the
Also the government is supporting
farm
prices when those prices
history of
the
rastlehas been
ported by Aetna for 1947, and
underwriting profits: by Conti¬
nental, Fidelity-Phenix, St. Paul
us,
old
terms
the
United States Fire.
"
of
but very
Co. and
North River Insurance
ex¬
in
of
to
new
perience
many
of
equivalent to a loss of $0.17 per
share and net investment income
"The
cured.
equivalent to a loss
were
and former President
York
warned his hearers that "today banking faces
the actual
Automobile Insurance Co., sub*
sidiary of Aetna Life, reported a
net premium volume of $35,675,859 for 1947, an increase of 27.7%
over 1946. Statutory underwriting
Total
heavy losses have had the
effect of convincing the super¬
visory state authorities of the
necessity for rate increases and
in practically every state, some
help along this line has been se¬
tion
$2.17,
net
investment
income,
$3.70 and taxes, $0.18, or a total
of $5.69 per share. •
loss
>
Association,
and $0.32 taxes.
underwriting
was
net
1946
similar
Addressing the American Institute of Banking in New York on
7, W. Randolph Burgess, Vice-Chairman, The National City
i
vestment income
In
other
at
Feb.
1
parent company, wrote, $53,886,830
in 1947 compared with $46,366,276
.n 1946, an increase of 16.2%. Due
to the many unusual and large
catastrophe
losses
during
1947,
underwriting
losses
were
sus¬
tained for the year. On a statutory
basis the underwriting loss of the
banks' role in curbing inflation,
periods, banks should exercise caution in lending, in invest¬
ing and in new undertakings.
•
released by fire
-
on
.
critical
few
a
banker, commenting
although banking situation is safer than
says,
associated with
herty has become
annual reports for the year 1947 thus far have
insurance companies. Among them are: Aetna
Continental Insurance Co., Fidelity-Phenix Fire
msurance Co., St. Paul Fire & Marine Insurance Co. and Automo¬
bile Insurance Company.'
®
*
Premium volume of Aetna In- pany
and affiliates wrote 40%
more
business in 1947. Consoli¬
:urance
Company and affiliates
totaled $93,638,410 in 1947, a gain dated net earnings for the com¬
of $14,598,033 over 1946 or 18.5%. pany were $9.07, comprising $5.59
Aetna
Insurance
Co. alone, the net underwriting, $3.80 net in¬
Only
oeen
Insurance
Thursday, February 12, 1948
CHRONICLE
FINANCIAL
&
THE COMMERCIAL
.(712)
to
The
Financial
FRANCISCO,
Vincent
Hackett
B.
Chronicle)
CALIF.—
has
become
associated with Bacon & Co., 256
Street,
members
Francisco
and
Montgomery
San
the
of
Los
Germans
this
Angeles Stock Exchanges. He was
exnerienced
last
in
the
winter's hardships. No deaths from
&
Co.
is
considered
year
have
past.
not
past, with Barbour, Smith
Co.
and Franklin Wulff &
U i.V*i
Volume
167
Number
COMMERCIAL
THE
4672
&
FINANCIAL
CHRONICLE
(713)
By
Approach to Inflation
JOSEPH
STAGG
LAWRENCE*
Vice-President, Empire Trust Co., New York City
Bank economist
in
sharp drop in commodity prices: (1) lower
living costs; (2) reduced pressure for wage increases* and (3) test
of sincerity of this
government in checking inflation.
Says price
control, rationing, allocation and credit curbs are untenable propositions, and lays responsibility for price rises at doorstep of White
7
C
sees
House.
Wants
return to
gold standard.
,
The
wages..
first
will
from
be
-
tegrity
i
lead
at
return
enough
is
currency
.
government to
the
once
There
the
of
this
time and
the
to
gold
this
in
to
The
Financial
credit
cation
of
is
and
buyers;
to
Chronicle)
MO. —John
has
the
the
been added
:
i~
F.
to
408 Olive Street.
of
staff
Slayton & Co., Inc.,
in¬
instal¬
demand
Sloan & Wilcox Adds
\
(Special
rationing and allo¬
simply
LOUIS,
Broeckelmann
the
by
the alleged
monopolies
price control,
following
to
The
PORTLAND
false
Financial
Chronicle)
ORE.—James Mc-
trails and will lead most certainly
time
Guire has been added to the. staff
to
standard.
present
interference
exchanges,
ment
should
decisions,
To whip the bankers,
dustrial
explore
price
own
from
grain
in¬
manner
gold
the
at
their
State.,
:
solicitude for the
A sincere
ST.
do well to let economic forces de¬
velop
buying or holding such se¬
curities,
With Slayton & Co.
(Special
Finally, this government might
thereafter
prevented
a
feasible.
program
13
of Sloan &
greater mischief and possibly
ultimate stagnation.
country, to
Wilcox, Cascade Build¬
ing. ;
immediately give the worker added buying
wit hT-t•. _.■■■ .tl
present could demand
—~j~
f
IV; hisi
as
much as 25%
higher wages without causing any
increase in prices.
This hint origanized labor i; i)Ttmediately took,
envelope,
7 pay
v
the
seed
n
r..:will avoid
1
free
|
.
power
d
an -
other increase
With the; tesult; that we have had
two general rounds of substantial
in production
■a:
make the consideration of such
•
The sharp drop in
commodity prices last week has at least two
conspicuous virtues.
First, it will lower the cost of living and,
second, it will reduce the pressure for a third round of higher
.^. •.
inflation, it should prepare a pro¬
gram
under; which the Federal
Reserve Banks over a period of
years would dispose of all their
holdings of U. S. securities and
would
An Honest
iV
costs
and ,'a
/probable
incfeases, i i They
wage
have
had
com; ?■!
;
,'R.-
'r^ that thisViad-
.
.
ustmeift takes
-1^-r',^
J-
!H^o; place> at
will
in ore
the
-
drastic
SinSS S
\vilfalso test the sincerity of this
/Sincerity
: government's
intentions to check
inflation.: On the second
day of
i.sharp commodity price ' declines
last week, the President, of the
V '
,
war.-
sought
durinj
fin
program; the government
ommodity
:
had/been
implementing thi
stepped
avoid tho-pein from time to time and bought
potatoes,;y ci t ru s: fruits; eggs,
adjustments:^ later;
^tag* Lawrence
";
$upl
duction
this
bme.v'it
tixe governm ent und ertook to
port, the' prices of; some 20 f am.
Commodities whose increased pro¬
.Mi
™Wn* fbacco, turkeys,' prunes,
elc" for th« Purposetn'eath-casb
of
preventing
prices
from
t
going
down;
\
7 Beginning in the late Summer
of 1947; the Department of
Agri¬
culture and the Commodity Credit
nu
$57.125,0001
7; United States at a press confer;/V->ence demanded the full, program Corporation proceeded to acquire
of controls which
7
he
had
previ-
the huge quantities of gra'n
neces¬
'
/ously presented
■
.
to
Congress
as
a
part of the program to
ty yaid Europe. This schedule of ex¬
i;i,,
necessary
.
ecutive
in
mand
constituted
power
which
peacetime
for
de¬
a
authority
American
governments in
the past had found necessary
only
in periods of the gravest emer¬
.
gency.
It
control
prices, ration
goods,
and
forms
of
ference
.
included
the
power
regulate
virtually all
private credit.
in
this
to
allocate
and
The
demand
is
in-
were
so
obvious,"
7,000-odd government em¬
ployees bought on their own
account, eager to take advantage
$1
of the price for wheat.
This
grain is the keystone in the arch
of
commodity
ture.
and which lead to the
the
White
House
In
eral has had
astrous crop
summer, and
have
failure in Europe last
an extremely disap-
this
pointing harvest in American corn.
.' However, aside from these fortui¬
The demand for price
ures
for
almost
deliberately
prices
r
y
;
up.
price
and
controls faces
The
consciously
designed
in
war came
fo* the
potentials set
ernment in the
the
up
ment
deficit
conclusion
indicated
by
to
of
labor
.
1. if.: '
,7,.
7,863,166
14,738,552
$1,153,762,775
$
828,600,378
237,773,964
4,487,527
13,591,035
1,903,611
2,926,998
518,469
-
W
.....
$ 5,000,000
^58,960,793
Surplus to Policyholders
7
V
Total Liabilities and
63,960,793
Contingency Funds
$1,153,762,775
'
.
United States Registered Bonds included in the above statement
Slate of Massachusetts $300,000; State of
Georgia $10,000.
not
was
:
""Admitted Assets"
are
.;y
\
•
are
A
deposited
assets determined in accordance with rules
Association of Insurance Commissioners.
inflationary
7
Complete Annual Report will be sent
on
as
required by law;
established by the
National
request
\ "
■i.vv
MactuMw/)/ILiimal
Organized
judgment of. objective land
political
uted
gov¬
students,
to
high
long-term
have
prices.
monetary
the
nonj-
HIT;
INSURANCE' COUP \\Y
MMtl V iKIIII.O
•
\)
!H 'SI".!' !
1
J
Wrrv. < '.kairman of I he Boar-
Alexander 1.
MaOean, I'me/co!
contrib-
Insofar
factors
as
are
war,
State
that
it
Clearing
House Association, New York City,
Feb. 10, 1948.
to
as
govern¬
tool
a
will be
eschew deficit financing
of
economic
helpful.
helpful
to
between
sever
the
planning
GENERAL AGENTS IN GREATER NEW YORK
all
connections
and
the
money, market. If the government
.
is
sincere
in
its
Lawrence E. Simon
20 Pine Street"
Donald C. Keane
37 West 43rd Street
Lloyd Patterson
17 East 42nd Street
It would also be
Treasury
efforts
to
fight
-
771
responsible, the resolution by the
Westchester
renewed
.those/causal factors which, in
<:Remarks by Mr. Lawrence be¬
the
,'
the remedies should be directed at
purpose
the
.
Special Reserves
Special Surplus Funds
Unassigncd Funds
ing from dangerously high priceis
rates
inflation¬
same
4
:If this country today is suffer¬
per-
When the
our
.
Miscellaneous Liabilities.
bring the price
down to pre-postwar
'thirties.
high officials in that
f
between
that the reinstatement of controls
levels.yy.
.7
test, for it is quite
would not of itself
along, its great demands
inevitably realized the
At
/
money
promoting inflation.
fore
Taxes
the result of OP A termination and
calculated,
reduction
,;y. were ajl
ary
>
reflect
obvious that $3.20 wheat
abandonment of
a
a
i.
Liabilities
Controls
for
program
,
Policyholders'Reserve
Policyholders'Funds ..'
Policy Claims in process of settlement
Dividends to Policyholders
have
meas¬
were
of; gold,":deliberate
sistent
of
prices
$1,131,161,057
s
» ,
The
surprising
now
Bonds, Mortgages and Other Assets.
,
develops,
years,
16
Assets
Total Admitted Assets*
last year at
not
that
ernment's
gold standard, the rise in the
" financing and
v
Mois¬
ideal.
now
was
is
VVv;
Interest, due and accrued
Premiums, due and accrued.
It is at this point that the gov¬
authority
taken for the purpose of
pushing
y ^
;
Faces Test
came
Among its first steps
the
It
it
Program for New
from the head of
administration which has been
power
4
•
causes.
last week
in
been
a
changed relationship
supply and demand.
necessarily accept responsi¬
bility for the inflationary pressure
which may have
aggravated the
impact of the foregoing unavoid-
an
time.
December 31, 1947
v
.
parts
greater
crops.
dropped, because thev
tous causes, the government itself
able
bumper
likewise
therefore,
must
,
the
various
indicating
wheat carry-over,
is greater than it
>
:
pre¬
ture conditions in Europe and on
the
North
American
continent
all
fairness it is necessary to exclude
from this the fact of
war, a dis¬
v
of
of
harvests during the coming year.
southern hemisphere in gen¬
doorstep of
itself.
end
It also coincides
from
world
as at
commodity
the
program
reports
the
of
96* ANNUAL STATEMENT
The
unmistakable
are
at
comes
emptive buying.
not tenable. The
prices has been the result
of causes which
collapse in
government's
This position is
rise
-
The
with
,
prices and its
necessarily reflected through¬
the commodity price struc¬
prices
rise in
a
a
speculative sure bet.,
It is
fair to say that this inept
buying
accounted for possibly as much as
been responsbile for the
great rise
in the cost of living s nce the end
of the war. y
:
1947
of
out
Responsibility
POLICYHOLDERS
BENEFICIARIES IN
purchases
namely, that the- absence of price
control, of rationing, allocation
and full-scale credit control had
White House
AND
TO
some
was
clear,
PAID
sary for European aid.
The mag¬
nitude and the timing of. these
Thomas P. Allen,
One Hanson Place, Brooklyn
jr
.
14
market
conditions
tirement
CHRONICLE:
& ; FINANCIAL
THE COMMERCIAL
(714)
debt)
the
pn;;
Thursday.,/ February! 12 *>1948
re¬
augmented by low
coupon
refunding
operations,
Fixed charges are now down to
was
In
roundly $7.7 million a year. '
the
To
quite
railroad
few
a
analysts
the
one
disappointing
most
stocks from a market point of view during the past year has been
Great Northern.
Aside from the general apathy of speculators and
investors
towards
has apparently
all
railroad
influences.
Pe¬
there
have been com¬
ments in the press relative to the
riodically
depletion
gradual
iron
high grade
in the company's
reserves
ore
securities,
suffered from two<£
external
specific
virtually
of
'
.———-—-—
.
.
Northern
Great
-
.
The
Great
industry
Northern
realize
to
manage¬
Burlington & Quincy hqs.
materially improved its, position
turities
portant
debt
The
has
well
been
ma¬
spaced
virtue of favorable money
period and dividend
same
this
for
substantially,
have
the
from
and by
reduced
been
in
the
ested in the
end,
that
toward
cago,
need
the
supportingNorthern's
Great
should begin to
its
element
-
i*
.earning!
own
slide off. Burling¬
paid out less than a •third
ton has
of
could be an im¬
source
earnings' in dividends ove'r
question
no
try
:the
in
served
areas
5
reserves
Already beneficiation plants
partially reduce these lower
grade ores before shipment .to the
Lakes
Great
operation,
in
are
less in
or
more
the experimental
It is the opinion of a vast
majority of steel men, therefore,
stage.
that
far ahead as any one can
so
and even after the high grade
see,
are),
(if they ever
domestic steel industry
exhausted
are
ores
our
continue
will
the same
is
Certainly there
for pessimism
reason
Northern
Great
toward
at'least-a
requirements from
ranges.
valid
no
draw
to
bulk of its iron
count.1
/
":•
this
on
.V-r".'
»
second factor affecting the
attitude toward Great
; The
public
its iron
around
also
stock
Northern
centers
Re¬
tonnage.
ore
cently iron ore has been account¬
under
just
for
ing
10%
of
the
total freight revenues, and
road's
many past years it has run to
considerably higher proportions.
In both of its mbst recent rate de¬
in
Interstate
the
cisions
Commerce
excluded \ this
has
Commission
now
over
to
have
would
rates
considerable
of
been
ore
bene¬
fit/to Great Northern, its exclu¬
sion can not be considered as' too
serious
to
the
blow
a
nor
as
any
•
threat
company's earnings.
Even,
without iron ore Great Northern's
net: benefit
from the two interim
will
increases
work
out
higher
proportionately: than will the in¬
granted most of .the east¬
.
•;
its most im-
:
cause
;
very
in her for¬
ner
carriers.
ern
only
■
A ,sister
Republic in
g r e,a
new
the
r
than
the
amounted to $7.28.
above the
This
was
well
present $3 dividend re¬
in
\
/
19351937; E. M. Everham, Baker, Simonds & Co.; 19371938; Claude G. Porter, Baker Simonds & Co.,
1938-1939; Bert F. Luclington, Baker, Simonds &
Co., 1939-1940; Frank P. Meyer, First of Michi¬
Kemp, R.. C.
O'Donnell
&
Co.,
1940-1941; John K. Roney, Wm. R;
Co.', ' 1941-1942;
Ray
P.
Co.;v'.,1945-1946;
Moore
Harold R. Chapel, McDonald
CO». 1946-1947, and Clarence A. Horn,
&
First/of IVJichigan
Corp., 1947-1948.
.
Resident
of the
new
and continuing organization.-,,...,
R.
,
.
Chapel"""
.^
in
than
40%
as
not
in
only to the
imports from
United
zerland,
of
cargos
States,
y
.
electricity.
port of Swiss merchandise to the
for
States.
from
coal
well
as
member—since
far
has not
es
we
statistics
re¬
have
been,
published, and for this rea¬
it may be of interest, even for
American
readers
stu¬
and
dents of economic affairs, to know
some
details.
;
:
><■
(
..
.Better
ures..
than .words,, a
few fig¬
.illustrate, , what
this
may..
Merchandise
means.
Switzerland
States
1,031
=
from
'
reached
• -
in
.
imports
the
1947
*
to
United
roughly
million swiss francs ($100
The United States of
430 Frs.).
America
is
not
factories
Uriitea
tne
and
the
The export of goods from
to
1947
of
list
-
we
is therefore 637 'millions.
,
;
\
<!.
astonishing if
that*
we
and
But
with
and
the
deficit
is
France
with
only
Belgium
less, 122
In the long run
consider the fact
population
of
remedy lies with America.
zerland
expects
an
ever
Frank D. Frederic (Manager, Mem¬
Treasurer—Harding -Carney
&
%
(Associated
Co.);■ •;;;;'■"
.
F. Mitchell.
.
F.
■
.
-
(Asstr.
.
,
Vice-President,-; Union
.7
■
held at the University
Club on Dec. 19, and was by far the most successful party ever held
by the organization/. This party is rather unique in that no wives are
invited. " The feminine guests are those who are employees of the
various security firms of the City.
No other feminine guests are
eligible to attend, so it is really a closed trade party.
. ,
...
,
-'/The Club's annual Christmas Party,
SECURITY TRADERS ASSOCIATION
<-
12th
The
New
annual dinner of the
York, Inc. will be held on April
was
OF NEW YORK, INC.
Security Traders Association of
23 at the Waldorf Astoria Hotel.
Swit¬
growing
Switzerland is only about 4V2 mil¬
number of American tourists. The
lions. Thus, in other terms, Swit¬
zerland is buying per head from
hotel
industry
everybody
as
in
is
im¬
also
who
Switzerland
knows,
a
very
quirement and compared with av¬ U..S. A. more than 200 francs (or portant industry here, and
earnings of $6.32 a share in more than $50) in goods. We are well organized. Foreigners,
preceding 10 years. This lat- inclined to believe that no country come to Switzerland, realize eas¬
ter figure is without adjusting for in the
world, at least not in Eu¬ ily that in no other country in
the
sharp
reduction there has rope, is such a good customer of
Europe could they feel better. And
the United
States, and- we may as regards prices, even though
modestly add to this that every they are higher than before the
Guaranteed Stocks
ton
shipped
from
the
United war, they are still, when, the dol¬
States to our country is paid for lar taken for Frs.
4.24, is cheaper
Bonds
in cash against documents, at the than even in the United States.
erage
,
,
the
moment
Special Securities
the
steamer
port of embarkment,
on
arrival
leaves
or
a
United
amount
.
25
GUARANTEED RAILROAD STOCKS-BONDS
Broad
Street
New York 4,
N. Y.
is, therefore,
customer
of
States
as
'regards
good
Telephone BOwling Green 9-6400
Teletype NY 1-1063
which reduces the
losses in this trade to
Switzerland
;
not
the
the
involved, but also for her
credit standing,
has
Let
us
secular
hope, that the traditional
friendship
existing
be¬
Arnold
J.
Wechsler
Leslie
Barbier
Wellington Hunter
tween the United States and Swit¬
Switzerland
only
the
otherwise
in Europe.
a
minimum.
always
been
dependent on U. S. A. for the im¬
port of cereals, fats, cotton, cop¬
zerland
the
will
benefit
develop
not
only
further to
of the two
Chairman
Co.
,
of the pommittee
is Arnold Wechsler, Ogden, Wechsler &
is Leslie Barbier, G. A.
Chairman of the reservation committee
Co., Inc. Room reservations are in charge of Wellington
countries, but of all humanity,
^ I
which, as regards Europe, leaves .•"Duke''."Hunter, Aetna Securities Corporation: .%
this little country in the midst of.
INVESTMENT TRADERS ASSOCIATION OF PHILADELPHIA the old continent, a "terrain d'enThe Investment Traders Associat:on of Philadelphia will hold its
tente" and so many monuments
Saxton
of centuries ago
are
untouched which
destroyed in other countries.
&
24th annual mid-w.'nter dinner at; the Benjamin
day, Feb.-27.
„
\ y'';
- V/,
.1
;
.Thompson
Planters National Bank & Trust Co.).
Treasurer—-Edwz
,
with Bullington-Sachs
(Leftwich & Ross).;//, ; j,
President—W. Groom Leftwich
..
of J. C.
■
The retiring officers were:
of exports
160 millions •»,//Secretary—Early
even
Carney
r
;
by France with Frs. 298 mil-'
lion.
Harding
Frederic
Secretary—R. Fred Trexler (Manager, Memphis Office
Bradford & Co.).
'
v
*!
\
,
to
whole
the
,
Swiss export trade, U.
S. A.
the
leading 'nation, is followed
by Belgium with Frs. 305 million
D.
phis Office of Equitable Securities Co.).
;
In
Frank
Mitchell
F.
Vice-President—(reelected)
total
The
a
Frs.; 394 million.'
deficit of exports to United States
only
of. importers
Early
States, bye
have to pay
import, shows
our
Swit¬
United
the
of which
part of
in
in.
heating
:
;
zerland
meang
But
•
"suffi¬
now
all kinds of oils
as
homes.
This phenomenon
observed—so
more
have to import heavy
we
Bek-Andreae
Fred.
but
also-'rtf.
industry, it is lacking
raw
materials,--with
electricity is not
even
-
not
years
exception,
v.
but
of the. population ,ahc
sufficient
cient and
-
ex-
been
only
can
The Swi&s Soil c&h'
best
the
for Swiss
one
States to Switalso to the
by nature .a
and
agriculture,
in
industry.
feed
world.
This applies
the
is
country
..
industry.
Even
without the benefit of any higher
rates
oh
iron
ore,
earnings
lower
1
get along by very hard work not
eign trade the
the
Switzerland
poor
leading the millions of francs.
Switzerland, it will be difficult for Switzer¬
but outstrips the next competitor,
land to pay out of her exports to
! Great Northern is traditionally France,- by • double the amount. other countries of the Dollar-Area
an efficient property, and consist¬
Belgium and Luxembourg ranks
(South America, Central Amer¬
ently its ratio of wage costs to third / with *427-; million* Swiss ica
and
some
other
countries
francs.
-;
* •
*
• ■
gross revenues has been below the
which
are
not
in
the Sterlingindustry average.
Last year its
The total of Swiss import trade
Area) and with the proceeds ot
transportation
ratio
was
about in 1947 amounted to Frs. 4,820 her capital invested in the United
four points below the /indicated
million.;, Therefore
the
United States, notwithstanding the fact
Class I average and its total op¬ States
imports comprise 21%. But that they are very important/ def¬
erating ratio was about 4.5 points these
statistics
are
even
more
icit
in
1947
is
excessive.
The
creases
Presidents of this organization were
past
.
,
..
portant part-
as
the
iron
the
■/
.....
son
in
all
The following men were present:
Frank
past Presidents, individually and collectively, want tor beBERNE, SWITZERLAND-^-With a precision which is inique in
called upon at any time by the President and Members of the Secur-;
Europe and probably in the whole world, the Swiss Ministry of
Finance published on Jan.: 15 the statistics of the Swiss foreign
trade for the month of December, and for the year, 1947.: It is a
MEMPHIS SECURITY DEALERS' CLUB
real
pleasure
*>' ■. ■. V
V
' ..— :
'^r^At/the last' meeting of the Memphis Security Dealers'.Club, the ; ,
to announce
per, lead,, or in other words for
following officers were elected:
v % \zv
that the oldest /
raw materials of,
every kind, be-)
z•^President—Earlv F.: Mitchell (Vice-President; in charge of the;
republic in the V:'
ginning with food to the materials
Bond "Department, First National Bank.
V
% J;
J *« f;
/
•
world has now
necessary
for her industry, -be¬
While it is true that an
increase
In which
Inc..
attendance.
rt
:
-4'f;,
Suisse, Berne
offset from Swiss investments in U. S. and American tourist traffic.
iron ore-movement from any rate
increase.
%
' On" Jan. 30, 1948, there was a luncheon meeting at the Penobscot
Club of the Securities Traders Association of Detroit and'Michigan,
;
z
TAt* •this,'-.*.meeting,- a: new organization;, com-.. ■
significance of U. S.-Swiss trade, which /
pose<4 qf all these past Presidents, was organized.
exceeds, by large margin, Swiss trade with any othfr nation i.
Har'oldv;R. 'Chapel, as the most recent ex-Pres- r\"
in exports and imports. Reveals large excess of U. S. imports 1
ident of the Securities Traders Association of.
Harold
exports into Switzerland, and expresses belief deficit can be
|' Letroit and Michigan, Inc., was elected Honorary.^.'^sV-i/i
both
dres.
DETROIT
OF
Swiss banker points out
are
almost un¬
of lower grade
there
Northern
limited
Manager, Credit
Great
by
FREDERICK BEK-ANDREAE
By
ASSOCIATION
Hv, Russell Hastings,
Bernardi, Cray McFawn &
Co., 1943-1944; Don W.. Miller, McDonald Moore
Co;, .1944-1045/ Paul I. Moreland, Moreland &
t|be high grade ores in this coun¬
are gradually i being used up.
Nevertheless, merely on the basis
of reserves already proven there
is still enough left for at least 12
to 15 more years at the present
rate
of consumption.
Moreover,
TRADERS
MICHIGAN, INC.
1942-1943,
that
but
AND
Roney :&
•
is
•
gan,' Corp.,
the past 10 years.
ada's rich iron ore.
There
SECURITIES
Moreover, the jointly owned Chi¬
in
first
of the
one
was
reducing charges, and one of the
earliest to take aggressive action
development of Can¬
reduction is equivalent to $2.35 .a
share
on
the
outsanding stock;.
,,in
the
company's
fixed
charges during the past decade.
These have been par¬
ticularly
persistent
in
recent
months, being stressed repeatedly
by proponents of the St. Law¬
rence Seaway and quarters inter¬
territory.
obligatory
requirements. ,, .w a s
above $19.3 million. Allowing fora
38% Federal income tax, this
been
ment
burden ,of
the
1930s
middle
Franklin Hotel, Fri¬
This jet-propelled, guided-missile affair..is/under the
>
...
Volume 167 Number 4672
command
of
co-Chairmen
THE
John
B.
Swann,< Jr.,
Lilley
&
COMMERCIAL'&
Co,,
Fens.ermacher, M. M. Freeman & Co.
INVESTMENT DEALERS ASSOCIATION
•
;
and
urged to attend the Investment Dealers
are
7';.
cordially invited
should
be forwarded
Gordon
to
Bank
Crockett, c/o B, V. Christie & Co.,
Guest fee is $5.00, with
golf and $1.00 for tennis.
/
": f
Building, Houston.
additional $2.50 fee for
an
NOURSE*
of
Economic
Advisers
not propose
trick remedy
a
or
the Economic Report, and
on
contends neither agency constrains freedom of individual
Stresses role of Council as preventing risks of "under
Association of Houston
unusually good program has been laid out—all
visitor attendance is anticipated.
Reservations
836 First National
G.
Council
Nourse, in explaining National Employment Act, asserts it does
panacea.
Outlines its relationship with Joint Committee of Congress
or of
groups in our traditional way of life.
prosperity," and points out inter-related respon¬
checking inflation and preventing business depres-.
sibilities of government, management and labor in
v;
sion. Concludes private institutions should a:t in
conjunction
an
large
a
EDWIN
Dr.
Day and Dinner, to be held Monday; Feb. 23, 1948 (a
legal and New York Stock Exchange holiday) at the Houston Coun¬
try Club.
; 7
v: .'7.' >7fun—and
15
Enterprise and National Employment Act
By
Annual Field
It is felt that
(715)
Chairman, President's
OF HOUSTON
All investment dealers in the United States
Free
;
\
CHRONICLE
and
William Raffel, Raffel & Co. Bomb-proof shelters for out-of-town
guests will be provided upon application to Newton H; Parkes, Jr.,
E. H. Rollins & Sons.
Battle stations will be assigned by John F.
Weller, Buckley Brothers. Home Guard mobilization is in charge
of A1
FINANCIAL
.There is
certain
a
with .government agencies.
amount of
misunderstanding of what is perhaps a rather compli¬
certainly a novel setup within the frame of our government and the system of
conducting the business affairs of this nation. And so I want to preface my remarks
by
some
brief
cated and
<$>-
comments
Werie ReeEecfed Chairman of the Board of the
a s
this
to
ployment
;;;7:cv:v:;
C., Werle, a partner in the firm
to his second consecutive term
was'elected
of
Act
&
Wood,5
chairman
of.the
almost
lor these purposes. Now I believe
t h a t
n o
intelligent American
ex-
signed
of
t
ferred
to
"t he
So
re¬
o r s
m
n
ended
Edwin
G.
; ..-.v.-;.*.■■■■
Council
9th
the
in
sworn
was
on
of
August, 1946. I hope
familiar to some extent
with the Employment Act, a very
Edward C. W^rle
John J. Mann
John J. Nolan
William E
brief statute covering barely four
It
is
in
my. judgment
pages.
board of governors of the New York Curb
Exchange at the annual
election, it;was announced by Francis Adams Truslow, president potentially an epoch-making piece
of legislation, and I should say
of the exchange.
7.
^v4y f
that it is essentially conservative
The entire slate proposed by the
Standing committees appointed
you
by Mr. Truslow to. direct the,ad¬
Fred
and
C.
Moffatt, Present ^ the
Exchange Securities Clearing Corporation ;.Ql V., Quayle and
HoWard C.' Sykes • were elected to
Curb
*
,
-
—
•-
three year terms
of the
ernors
•
Barry
and
-
Curb
Mr.
announced
members.
JTient. * adopted
new
Quayle was
during 1947 to
named
a
fill the
unexpired term of Thomas
W.
Bartsch; resigned. Mr. Moffatt
and
Mr.
Sykes
reelected.
were
Caspar C. deGersdorff of Harris,
Upham & Co., William E Dugan
of Laidlaw & Co.,
Bayard C, Hoppin of: Hoppin Bros. & Co. and
John J. Nolan of G. H.
Co.
elected to
were
years
board.
Walker &
for three
Class B members of the
as
serve
tr.ition
and
reducing the number
cf committees from 15 to 10.
;Chairmen of
.«
elected
as
to
three
terms
year
trustees of the Curb Exchange
gratuity fund.
,,
Andrew Baird, a partner in the
firm of Josephthal & Co. and a
member
of
the
New
Exchange since 1938
Vice-Chairman
of
governors
of
York
that
board
of
exchange
for
the 38th
an¬
the ensuing year at
nual organization
-
Mr.
' Baird
Frederick J. Roth/
Mr.
character in the best
its
of that word.
aims
to
succeeds
1
its
conserve
manpower,
its natural resources, and its man-
serial;'ability by keeping these
at
resources
level
continuous
a
high
efficient
of
standing commit¬
Wcrle,
appointed
committee',
who
is
follows
as
utilization, in¬
stead
of
permitting
again
or
longer the gigantic wastes which
Edward
C.
Chairman ?of
the
have;
past
of
our
industrial history* with
depressions.
>
its
periodic
exchange board; committee on ad¬
77 The
missions, Charles J. Kershaw, Rey¬
it-
act
does
is
noteworthy
in
&
James
R.
Dyer,
Mr,
Baird;
finance,
& Dyer;
transactions,
Dates
floor
on
committee
supervision,
committee
Charles
Moran,
public
on.
outside
on
Jr.;
relations;
Fred C. Moffatt;:
realty commit¬
tee,; David U. Page; aid commit¬
tee on securities, Howard C.
Sykes
Officers
of
reappointed
the
Curb
Exchange
Charles E. Mc-
were
such
not
that of the '30's which
as
economic system has
The
characteristic
systematize
our
experienced.
feature
the
of
efforts
the
of
participants in the economic
in
ess
behalf
ventive
of
all
proc¬
intelligent,
measures
pre¬
and of the sound
living habits which make for the
continuance
of
health/
spirit
The
economic
good
of
the
act
is
department of administra¬
governor
which
there
will
be
Goodrich
continue
as
Chairman of the floor
transactions
committee
capacity he served last
will be
suing
.The
ment
,
"* .'1
5
exchange board
of
,
^
v
gover¬
by Mr. Truslow of "Edward
Barrett, President of Long Is¬
land
.
of the executive and fi¬
committees:
also approved the reappoint¬
nors
F;
which
year, and
t.
.Lighting
Company;Dean
John T. Madden Of New York Uni¬
versity;' and Benjamin H. Namm,
Chairman
Store,
as
renamed
directors
ments
outside
of
Namm
Department
public governors of the
exchange .for the ensuing
year.
of
curities,
public
of
were
the depart¬
supervision,
relations
se¬
and
the
building department, respectively;
member during the'en¬
a
year
nance
in
mittee
tions.
the Economic Report of
the President.,
77777. ■
;
.•
V:,"
■
In their respective
spheres, both
these agencies undertake/to co¬
ordinate
and
integrate
govern¬
ment
policy and action by bring¬
ing the best of professional eco¬
nomic thinking and of proven and
progressive business experience to
bear
the
on
.
nation's
problem.
tinuous
the
instances, this is
con¬
however,
climax each year when
session of Congress con¬
and /the
to them
President
reports
the economic state of
on
the
nation and
tor
its
presents proposals
preservation and better¬
ment, and when the Congress
pro¬
ceeds to the actual process of
leg¬
islation under the
guidance of a
by
which
ing
is
this
to
agency
nomic
joint
serve
as
committee
integrat¬
an
embodying
for
program
forded useful employment oppor¬
Beginning his Wall Street
in 1919
as
a
page
boy
on
of the New York Stock
Mr.
Werle
for
the
Wade,
became
stock
an
career
the floor
Exchange;
order clerk
exchange1 firm
Templeton & Co., worked
for two years with Morin S.
&
of
Hare
narket
was
appointed salaried
employee
for
A y m a r
Johnson of Johnson & Wood and
(Continued
on
able
page-27)
of
and
seeking to work and to
promote
an
eco¬
power.":;;
This
seems
is
to
me
which
purpose,
a
it
loyal and intelli¬
no
gent American should fail to sub¬
scribe to.
,
exist
gress.
Council
of
nor
constrains
for
the
individual
or
is traditional
of life.
means
agencies,
the
the Joint Committee
action which
But they do
systematizing
free¬
group
to
our
■
'
the
Fifth
by
Annual
ference sponsored
Chapter
of
the
Underwriters,
27.
1948.
Dr. Nourse
Economic
ways
.
,
Chartered
Chicago,
111.,
in
its
refer
to
agencies."
Some
of
war-time
well
Some
Board
agencies
administrative
analytical func¬
only advisory
as
had
characteristics
like
the
National
I
to
had. great
was
of
days,
early
inclined
were
Such
....
formation
old
ourselves.
and
ill-starred
Resources
which
was
Planning
definitely
repudiated
by
the
Congress.
Among those predecessors of ours
I
wish to
I
refer
to
assistants
mous
said
that
I
very
the six
to
anony-President.
the
thought
would
we
probably
be
well-advised
in
adopting that word "anonymous,"
or the phrase Mr. Roosevelt
used,
"people with a passion for ano¬
nymity,"; because obviously, there
must be
distinction between the
a
professional analyst and
the rec-f
ommending agencies.
v
The Council is made up of econ-*
with
professional
omists
staff,
with
numerous
contracts
with
other professional staff who serve!
the
policymaking
and
political
heads of the
more
departments
must :be
of
less
or
ex
parte
We
government.
distinctively- profes¬
a
service
and
and
President
adopt
the
and
present
his
the
now,
his
I
mention
has
this
understand
tween
these
report
of
we
President
in
I
think
failure
to
be¬
documents,
Council
it
.
distinction
two
the
the statute
as
—
Congress
a
some
the
and
party.
because
been
the
must
own
Congress
before
of the other political
there
report,
which
position
make
to
happens
economic
program
in
the
which
by
must submit to the
December
of
each
and the report of the Presi¬
year,
dent to the
Congress which is his
document transmitted to the Con¬
between
the
voice
Council
dent;, the Economic Report of the
President, transmitted to the Con¬
gress, the most recent
14,
1948.
just
This
is
a
one
book
on
of
Jan.
136
it
furnished to him by
the Council. As his letter of trans¬
as
was
mittal to the Congress very clear¬
ly
states,
at
into
that material is taken
stage and converted
that
an
economic
President
at
is
Con¬
"I
by the Chicago
the
confusion, namely, the
distinction
the
frame
address
•,..
..
gress at the opening of its ses¬
of sion each year. The Council in its
and the voice of the report does not make recommen¬
President, a report of the Coun¬ dations. It cannot espouse a policy
make
specific
conclusions
cil; and the report of the Presi¬ or
amount of
of
within
our
'
"An
often
powers as
initiate
our
of dealing with the nation's busi¬
over
it is the continuing policy and re-
Council
policy,
these
in any way
dom of the
way
Con¬
in
'
Neither
..
Second, the acri "declares'that
na¬
political
a
ensuing sional service
agency set up as an
year. This procedure ties
together arm of the Chief
Executive, a
the formerly
random, often in¬ continuing
agency to serve every
consistent and
conflicting, work president, as he comes to that
of the large membership function¬
office. There must be a distinction
ing through the complex array of between that confidential
advisory
committees which
including
50
pages
of
employment, pages,
purchasing tables, graphs, charts and support¬
ing material, this latter material
and
year.-:
the
maximum
production
em^
ploy of Johnson & Wood. In 1928,
Mr. Werle
complaint of guar¬
jobs or of constraint of
labor—-"opportunities for. useful
employment
for
those
willing,
antee
.•"
Co., and in 1923 joined the
avoid' the
to
of
.
a
a
new
venes
which,
process
to
comes
head
as
"predecessor
economic
\v:.77\ 7*77
In both
Report is
that policy which
discussing
which
af¬
including " self-employ¬
Exchange for the past, tion. Henry H. Badenberger, Mar¬ tunities
five years, serving on most of the
tin J./Keena, H. Vernon
Lee, Jr.,- ment,! for those able, willing, and
seeking to work"—that was put in
standing committees of the ex¬ and Wilmont H.
He will
In
them
.
the
ensuing
Office of the President, and
(2) in the Congress, a Joint Com¬
Gowan, / secretary;
Christopher well epitomized in two phrases
Hengeveld,
Jr..
Treasurer; and from its declaration of policy. ness— now a two. .billion dollar
business
and
Joseph R. Mayer, Assistant Treas¬
for supplying of
First, that it shall seek the "creat¬
coordination which has been
urer.
Mr. McGowari was also re¬
sadly
ing and maintaining in a manner
lacking in the past.
V
f
appointed director of the depart¬ calculated to foster and promote
I perhaps should at this
point
free, ^ competitive enterprise and
ment of transactions and
quota¬
the
general welfare, conditions explain one thing which seems to
tions and Mr/ Hengeveld director
have
caused
a
considerable
of the Curb
change during that time.
pur¬
tive
act is that it seeks'to mobilize and
to
general
to implemen¬
was
report
that
trick
propose
any
Co.; committee oil arbi¬
tration, Caspar C. de Gersdorff, remedy or suggest anything in the
Harris, Upham & Co.; committee nature of a panacea for the com¬
on
business conduct,1 Ed win Pos- plex causes or the widely varying
ner,
Andrews, Posner &'■ Roth¬ conditions which mark the acute
illnesses or the prolonged debility
schild;
committee: on
nolds
of
a
characteristic
been
and
the
on
of
Economic
Chief Executive of the
as
Congress sought to imple¬
high purposes through
two agencies: (1) the Council of
processes
by which the United States under¬
under
Baird has been
sense
The act in essence
systematize the
takes"! to
the
now
Council
members
party — looking at the matter
realistically takes as his economic
policy and his program for the
—
meeting of the
board held
February 9, Francis
Adams
Truslow, President, an¬
nounced.
were
executive
Curb
elected
was
the
tees
committee
7/7* 77'!. 77777;'-
Thomas Morris and E. J. Muller
were
last.^ November
-.
are
,
are
Mr.'
governor
following "the
Streamlining- exchange .'admihis-
Exchange. Mr.
Mann
-
-
meeting. They reflect the amend-
'
board
approved
were
-
Class A gov¬
as
year
ensuing
the* exchange for
in
for
Turning
his
definitely
Economic Advisers in the Execu¬
Nourse
appointment of the Council, took
place some five months after that.
'.The
but
ment these
-
the
in
ple,
very
tation.
which
hunt"'
much
pose.
as
a
of such
consequences
The Two Agencies
commen-
t
a
the
the
had had the counsel of many peo¬
tion
of
role of government.
of
Advisers,
of
the cabinet, and heads of inde¬
pendent agencies." Obviously he
he
a
e
the
Economic
fear
on
20th
.
and. assistance
should expect less than this from
his government and need have no
bruary,
1946, although
what one
of
the
Gov¬
practicable
to coordinate and utilize all
means
actly two
years* old.
It
thev
of
all
its plans, functions and resources''
F
ministration
the Federal
use
1946 which
was
nominating committee was elected
to
office.
Eugene P.Barry of
Shields •&
Co.; John " J. Mann;
of
to
is
Johson
as
ernment
of
New York Curb Exchange
Edward
sponsibility
Em¬
a
report
the
government
cabinet government.
am
presenting
economic
Life
as
Jan.
ment
report
required
Act
of
to
under
1946.
of
which
the
the
selves the role which
my
Congress,
take
full
soring
idea
are
sup¬
responsibility for spon¬
the v beginning
the
from
that
tional
there
role
was
which
we
educa¬
an
could
well
by exploring the general
meaning of the economic philos¬
ophy of the Employment Act in
general
terms
without
recom¬
serve
mendations, without involving any
possible ~v conflict
between
any¬
thing that we say or any constraint
our
part to keep ourselves in
the
recommendations
line
with
that
the
make
a
Employ¬
preparing
this report, I have had the advice
we
posed to play in this matter and I
on
He says,
herewith
In
the
traditional
growing out of its analytical worfe;.
We have had to interpret for our¬
variety
.
President
month
of
counsel
(Continued
is
later,
and
on page
going' to
under
of
35)
a
p'res-
i«
(716)
THE. COMMERCIAL &
.
FINANCIAL CHRONICLE
Thursday, February 12, 1948 f
.'A
->■
which
Joins Hansen Co. Staff'
(Suecial
ST.
to The
Financial
■
Chronicle)
MO —Robert G.
Grace, Jr. has joined the staff of
Hansen & Co., Inc., Ambassador
securities and then doing nothing
until some one or more of these
i
shareholders of mutual funds have increased
127%, from 296,000 to 673,000. During the same period, shareholders
decreased 32%, from 466,000 to
318,000.
request from
investment dealer, or from
NATIONAL
and
SECURITIES
194
on
of some preferred stock is¬
by closed-end trusts. Certain
close-end trusts, such
as Atlas
Corporation, have also followed a
policy of buying in their own
ing
&
sues
CORPORATION
BROADWAY, NEW YORK 5, N. Y.
counts
values
asset
below
seven
years
present assets
approximately $1.4 billion are
equal. to only % of ,1 % of the
value
the
all
of
N.
securities
listed
gross s sales, less liquidations,
amounted to $805,000,000 whereas
lions of dollars in unlisted bonds
INC.
Prospectus
on
Request
'-•*
The
INVESTMENT MANAGER
UNDERWRITE*
AND
■[[
'
Year V
"/
••
75 Federal Street, Boston
TBLBTHONE
LIBERTY
\
'
;
„•$
•
new
funds
seven
^1046
Investors Int.
>
not
resting
us are
Immortal
their oars."
on
bil¬
did
Daniel
Boone
say
the Indians coming
the mountain?
saw
Answer—"Here
the
come
dians."
"■
In¬
J1
George Putnam's Policy
The
Annual
George
comments
as
of
Report
Putnam
Fund
of
The
Boston
policy but
t-:-
We
When the Flood Subsides
end
:Total
__
$805,000,000
•
During 1947, mutual funds dis¬
tributed a total of $78,600,000 in
dividends* equal to a little more
than 5V2 % on year-e.nd net as¬
sets:
Of these dividends, approxi¬
mately 28% was derived from
security profits, the balance from
r
1
((MM
r,
\iiiir \K* Vir
1
>
'
'
dertake
or
take
his behalf. We at
on
hire
someone
Fund conceive it
Fidelity
our
shareholders to endeavor to main¬
tain
a
portfolio
securities
of
V
*
A
v
'j ]P
wM
j American Business ||
Shares. Inc.
•
7
■
Prospectus upon request
KIMMNir
: /
SSSShhotI
of
v• ^
• w- •
y 'x"
^
m
U
v. ■-
M
' ^
New York
are
Fund's
long-term
Common
Government
stock
holdings
companies
that
strong
in
are
should
"Over the longer picture we
genuinely optimistic because
are
we
believe that no'other country of¬
the
investor
such
a
large
Chicago
of
measure
the "Wall Street Journal."
-
—
A-B-C.
Inflation
of
.
United ^tiatesc^ Boger
security
and
New Orleans
Bradstreet,
Notes
"J-.'v
out
charge.
"
*
Corporation
in
a
recent
bulletin
points out that the cost of buying
Los Angeles
Series exceeds
13%
of the
Y.
the
in
JAmory^ •
Broadway,
—
Paper
i
Accounting
Report—Franzy Eakin—Economic
Accounting,
Inc., Decatur, 111.
Silver Market, 32nd Annual Re¬
(1947)—Handy
Fulton
Street,
&
Harman,
New
York
Technological S t
Britain
Great
Allied
—
Products
and odd lot fees.
a g n a
ti
0 n
prepared
Institute,
folder titled "The Investment
It' Offers
to
Large
and
be
INVESTMENT FUNDS
SHARES OF CAPITAL STOCK OF
dealers.
J,
V.VWellington
dividend
\-
SAFE
PROFITABLE
Fund's
year'
end
40c
represented its
consecutive quarterly div¬
72nd
BONDS
of
SURE
idend.
;
k
-
:
(Series B1-B2-B3-B4)
i
•
•
,
.
,
«
'
.
-
PREFERRED STOCKS
Gannon With Dean Witter
(Series K1-K2)
'
'
■_
1
(Special
•
OSeries 51-52-53-S4)
V
"
;
■
filiated
'
632
,
Prospectus from
your local
Tke
'"l
of Boston
50
-Prospectus
may
Chronicle)
with Dean Witter &
South Spring Street.
He
Go.,
was
With J. Earth & Co.
be obtained from
(Special
your
local investment dealer,
or
Congress Street
Boston 9, .Massachusetts
Financial
previously with Fewel & Co.
investment dealer or
Keystone Company
to The
LOS. ANGELES, C A LIF.—J.
Pierce Gannon, Jr. has become af¬
COMMON STOCKS
THE
PARKER
CORPORATION
ONE COURT STREET. BOSTON 8,
MASS.
to
The
Financial
Chronicle)
SAN
FRANCISCO,
CALIF.—
Joseph Andrews has been added
to the staff of J. Barth & Co., 482
California Street, members of the
New
York
and
Stock Exchanges.
San
Francisco
U. S.
120
Street, Chicago 3,
a
Small Investors" which may
used without a prospectus by
in
Machinery and
111.—paper—25c.
has
7,
N. Y.—Paper.
South La Salle
Abbett
—
paper—$1.00.
cost, including commissions, taxes
Lord
—
request with¬
on
Price Problems—An
82
National Securities & Research
290
N.
8,
Copies available
oppor¬
:
Inc.,
York
New
tunity."
underlying issues in its National
Participation in v
■
Gun ther Law,
William T. Cobb
Inc., and pre¬
viously was an editorial writer on
indications
no
bonds into short-term certificates.
Fund—What
*
ing agency of
Albert Frank-
any
new
-•
f
o
advertis¬
must
and selling one share lots of the
INCORPORATED
IN *-V".
Vice-
important change in the
any
Stock
investing their capital
the
view
JLord, Abbett & Co.
.;A'.
Group,
was
President
and, if history is
any guide, we can expect a read¬
justment of some severity. At the
fers
Custodian
Certificates of
he
to under¬
duty to
our
.
V
joinr
Distrib¬
—
'
,
1 ''v':
Funds
g
g e r.
.
-
!"i|«
eystone
a
sometime
through any readjustment
period without serious difficulty.
CHICAGO
n
likelihood of a serious de¬ National Rockland Bank of Bos¬
pression such as this country went
ton, 30 Congress Street, Boston,
may largely,fbe floated, by the thrppgh Jin the early 30's. With a
Mass.—Paper—Copies on request.
strong world-wide dqmand for
boom
flood. lEvery
investor's
International Financial Statis¬
question to himself might be: goods of all sorts, the worst that
we can see is a temporary period
'When
the
flood subsides
into
tics
January* 1948 — published
of readjustment.
Such a period
normal flow, where do I sit?'
On
monthly—$5.00 per year in United
the other hand, the decline in the can be painful, however, unless
one is properly prepared.
States, rates for foreign subscrip¬
purchasing power of the dollar
has emphasized that today a static
"Under present conditions we tions on request — International
investment policy may be a los¬ are not trying to look too far
Monetary Fund, 1818 H Street,
ahead. The Fund has a strong pro¬
ing policy. ;
:•
'•
N. W., Washington 6, D. C.
"A program which will meet tective backlog position of 23%,
these and other current and pro¬ largely in short-term Government
Organization of British Subsid¬
spective problems is something obligations and cash. Recently, in iaries by American Business Cor¬
which every investor should un¬ view of the uncertainty in the
bond market, we converted the porations—Roy A. Foulke—Dun &
trapped into enterprises showing
high
apparent
earnings; which
"
iN&fUi
a
m
adn
1
ire not pessimistic.
we
all feel that this boom
moment there
i':
The following is an excerpt by
Edward C. Johnson II, President
178,000,000
lNCO»»0«,A!Li?
lOS
vertis
"Caution is always a part of our
Says
too!"'
Despite the decline in stock¬
holders, closed-end trusts showed
a gain in assets during the period
under review of 26%, from $614,000,000 to $771,000,000. However,
mutual funds showed the phe¬
nomenal gain in assets of 215%,
from $448,000,000 to $1,409,000,000.
While the
growth in mutual
STREET, NEW YORK 5, N,Y
Oct.
as
follows:
come
WAIL
since
i n g
utors
Words
What
Ex¬
Y.
HUGHW. LONG & CO.
48
been with the
Prior to
...
226,Oooyooo :
1947
let investment income.
Prospectus from your Investment Dealer or
vestment funds intrusted to
general business picture and man¬
agements with whom we talk are
generally optimistic: By and large
Report:
\ '.'J" ■■
their 1948 earnings estimates com¬
"At a time: like the present
pare
very
favorably with last
especially, when business activity
year's record-breaking results.
is roaring along -at boom levels,
"We don't believe that there is
one
should guard against being
v4M^.-™ivI82#ooo,opoP r;
'•
had"
of Fidelity Fund from its Ainiual
8,000,000
48,000,000
65,000,000
-98,000,000
1944
-
of
Securr
He
.
1943
v
Stock
mention the
"Thq best things in life are free
—but you can go to jail that Way
New Capital—Net
1942
9550
lists
change, not to
Abe Burrows
years.
Russell, Berg & Company
Invtstment Counsel
following table
capital: added to mutual
during each of the past
approach. Our shareholders
be very sure that their in¬
may
and stocks.
only $54,000j000 new capital, in¬
cluding bank loans but excluding
redemption of shares, found its
way into closed-end trusts during
the same period.
;
Capital Stock
and
ities:
1946,
in mind that their
on
sound
Present
promotion
Group
organization
over
market
policy.
Inc., 63 Wall Street,
prospective events would seem to
dictate a flexible and constantly
when he
of
that
place
average
during this seven year period new
capital for mutual
funds, i.e.,
RUSSELL BERG FUND
investment
this connection it is well to bear
and
cancelling these shares.
It is interesting to note
believed
take
Within the frame work of
growth of
$200,000,000 a year would increase
assets only 100%), there is still
plenty of room for expansion. In
(an
years
shares at substantial dis¬
common
the one
on
is apt to be less on a percentage
oasis than during the past seven
the other hand to the call¬
should
tors Group,
alert
of closed-end investment trusts have
The apparent anomaly Of this situation is due
hand to intelligent sales efforts on<^
he part of mutual fund sponsors funds over the next
to securities
undervalued
Since Jan. 1, 1941,
upon
RESEARCH
120
New York City, in charge of sales
overvalued
Shareholders Increase 127% in Seven Years
Prospectus
Group
We believe
securities go wrong.
TRtUST FUNDS
Of Distributors
William T. Cobb lias been elec¬
ted a vice-president of Distribu¬
that
By HENRY HUNT
J''
T. 1Mb, V.-P.
a
gradual
and deliberate
shifting from securities believed
Building.
NATION AL
A'
:i
We
belieye, that modern, investment
management calls for, much: more
than simply buying a list of good
■
LOUIS,
your
will avoid extremes.
S AV I N G S
B O N'D S
"Volume .167 Number 4672
THE COMMERCIAL
v'7.7 "In the
of
the national income and
r
Our
By JOHN X. CHIPPENDALE, JK.
Dealers, Inc.,<
ment of the
appoint¬
announces
following committees:
.
investors
be
provided for the total labor force.
"A sound national
economy
stabilization
greater
-reduce 'the -risks
labor
to
-
in
ting
"
;
and
the
1
Li Raymond Billett
almost
■'
-
•;
■'
■
down
'l-'
J.
'■
i
•
•
/•-"**•
\
•'
at
the
time
same
the ^bank
opinion that there Will he
little
sees
premiums.
into
Securities /and the; Money
Market,"; The Bankers Trust Co.'
of New York says that the Treasury may have
$8 or $9 billion
available for the fpurChase-br reJ
States
tirement
of
marketable
debt
this
To the extent Ihat the Treas¬
ury uses these funds for the pur¬
chase of Government securities,
they
made} available to the
are
investment: market. i.This shoulcl
enable the monetary authorities
maintain
to
the
<2 xfe% >
yield
on
long-term Government obligations
without
adding v. to 'inflationary
7 / ;N/ /••
pressures.
Interest
rates
•
7 //:
■;
/
in
1947, accord¬
Company,
moved upward-chiefly because of
ing to
the
Bankers
efforts
thorities
of
to
tions^-In
refers'-to
monetary
au¬
tighten credit condi¬
the
-
Trust
the
Review, the bank
the; / various
measures
adopted by the Treasury and the
Federal Reserve System to min¬
imize
the
expansion
of
bank
credit,
but -emphasizes
that
the
recent increase in bank loans has
been
largely
rather than
a
a
John
cause.
Fur¬
thermore, most of the increase in
bank-
last
loans
:
;
"1
-
foreign
Executive
'•
the
'
\
In
i.,-7
requirements,7 and
penditures.
and
rising level% of
prices : and ; business activity in
1947, says the review,..confronted
the banks with large, demands for
credit.
"Some. ; tbusinbss ..-enmrprises.are required to carry larger
..
dollar .volumes of inventories and
receivables
and
others ifind
their
cash
World'War-1;
however, there ;is little evidence
of--borrowing from,;banks 4o in¬
speculative holdings of in¬
crease
ventories.
Real
sumer
loans
banks
estate
increased
of
the
and
con¬
commercial
irather
-steadily
The
study cautions against the
of
use
stated
credit
.that
controls.
"under.
It
present
strongly
inflationary.:/conditions,
by the retirement of Government
measures
of credit control would
securities
be
year;
was
offset
banking
held} in /the
system, and" continued substantial
retirements, arein
1948'out
of
the
"
fiifidsi;
•The
prospect ;' for
large
volume
of
accriiing^7^Tlhe7Treaspryv
real
inflation
causes
lie
of
the
present
side current
almost entirely out¬
bank lending opera¬
tions.
of
One
the
basic
causes
of 'the postwar
really
with
effective
sufficient
production
create
and
only
force
reduce
employment
and
pronounced deflationary
movement. A disorganized bond
a
market and rigid restraints-on es¬
sential credits.might seriously in-;'
terfere
funds
with
the
normal
flow .of
into
productive .enterprise
and disrupt the Whole
economy.
increase in prices
7is*fhe largmiiicrease in the money The consequences of such a course
^supply in former years. /'Since the
cannot be
contemplated lightly,
early fhirties ^he 'Federal- Gov¬
of up resent
ernment has been following an especially,; in Tview
,
7inflationary
•
course which is nowbearing? bitter fruit. These poli¬
cies;'began With ihe devaluation
oF the. dollar- and ^deficit
world
conditions .and
our
inter¬
forces
Kirchofer & Arnold, Inc.,
Raleigh;
G. M. Phillips, Caldwell
Co.,
•
Phillips
L. Ryons,
St.
Paul; Joseph
Pacific
Company of California,
Los 7 Angeles;
John
O.
Stubbs,
Whiting, Weeks & Stubbs, Boston;
•
J.
S.
Strauss &, Co.
(Special
to
The
Financial
Adds
-Finance
resultedv from
'..tipnary '
.
methods,
of
the
•
infla-
'financing
SAN
Chronicle)
the
other'factors/haveaccentuated -in-
155
FRANCISCO,
-CALIF.—
i-Tohn A.. Chartz has .been radded 40
World War, II." In addition,
many
staff
of
J. S.
Strauss
Montgomery Street.
&
Some
.
still
'
time cutting '<
1950 in demand
same
of
the"
smaller
Co.
.
.
.
.
V
whole
banks
market
that
Committee:
T.
;
is
y.
are
bit
a
from
The
these
sales ;are
.
being
.
into the longest
/balance is kept in cash or Invested in; shorts.
are
getting conscious of the increase in their
•
put
.■V
.-
/
/'■
'y^>77v'
7^7; fy,- -..^7 ■ ->
'
.
,
/.
77'.r'-
'^y-.
.
a
trend.
•
take
.lit
.could be that the
deflationary
going to be stronger .than-the
Inflationary ones from .here
taking place in the money markets and
no
.
-doubt
the
that
.': ,:;;7
.
This ,is
by
-
.
.
Great changes are
.
tionary.
r
,
.
level
drop in commodity prices is
encouraging, but It will
are
.
.
looking around for outside buyers of "these
lighten their-positions.
Part of the funds
time to indicate
'there
,
credit
is
/:■.
well Illustrated
being [restricted which Is
77:7V'.
;•■•'.• :>-;7
by :the
fact
that
despite
Central .Banks -of
defla¬
7
purchases
$4,370,099,000 of bonds since Nov." 5,
.1947, when support was-first thrown into the bond
market, .gov- .7
ernment security
holdings of- the [Federal -Reserve "Banks by
Feb. 4, 1948 had declined
by $1,596,286,000. .'.
Bills and certif-. /
.
.
icates
Jerrold
.up
Bryce, Clark, /Dodge '•& Co., New
York, Chairman; W. Rex Crom¬
decreased
by
$6,670,585,000 while notes
by $5,074,299,000.
.
,: '■
and
bonds
were
y-•■
:
■
-
7>
7/Gold during this period increased
by $598,000,000 while currency
well; Dallas Rupe & Son, Dallas; in circulation decreased by
$511,000,000. .7. Despite the reserve build-J
Waldo Hemphill, Waldo Hemphill ing qualities of these two
forces excess reserves between Nov.
5, .1947
&.\Co.7 Seattle; Wilbur G. Hoye, and Feb. 4, 1948 have declined by
$170,000,000, 7.
Increased revenue
•Chas. 'W. Scrantoh
Co., New, requirements in New York City and-'Chicago the end of this
month
Haven; Walter E. Kistner, A. C. will further limit the credit base. /
V/
^
./ 7; /- •■:'//:•■ 7/-'>'•-• •
Allyn &. Co., Inc., Chicago. Mr.
Billett is also a member of this
FOTENTIALINFLUENCES
''/
-'
.
.
.
JTohn O.
"r;y;:'7
Fulton
is
Credit restrictive
a
those
Committee:
securities
held
measures/such
by the Reserve
increased .,reserve ^requirements
Stubbs, Whiting, Weeks
mercial
banks
Stubbs, Boston, Chairman: Ele¬
A.'
Evans, - Clement
A.
Evans & Co.; Inc.,
Atlanta; S. Da¬
vidson Herron, the First Boston
Corp., Pittsburgh; Francis, Ker-
decided
and
debt
as
nan,
White,
:
Weld
&
Co.,
cess
the
iierchen
Taylor,
:Co.,
Dean
Banks," higher interest rates,
voluntary action by the com¬
Francisco.
7
7:
.Legislatiye
^
&
Boynton ,&
Since
to
limit
while
Co., Inc., New York,
the
the
reserves
Banks
.that
Treasuries
do
the
at
The other important factor
and
markets.
^upningliam
Harlan r':
Co., vClevelan4;.
Herrick,
the
Lathrop-
carry on
Sullivan, Bosworth, Sullivan &
in
the
credit
would
lose
their s credit
press on
END
•
With Hemphill,
.7
Noyes & Go. 7';77f:/'7::*'7
nounce
now
that
Exchange,
with
the
firm
an¬
as
registered representative in their
office at 123 South Broad
as
.
.
program of
The powers
down
there is
reserves
surplus of
a
powers (Over
the
au¬
money
reserve
OF
balances and decrease deposits.
LIQUIDATION?
"While
it
is
not
J
•
possible
to
indicate
...
7. 7/.7/y-
' 7,7;
'■
yet what
will
take
place,
continued restriction of credit-that will bear down on
reserve
balances and cut down deposits, while at the same time
maintaining
present support levels-for government
security prices. ... The trend
of commodity prices and loans will
give clues
ing in- the fight against inflationary forces
general economic -conditions.
;'.
.! 7
7
as
as
to what is
well
as
the
develop¬
course
of
.
Sheldon Potter III is
associated
restricting
.means
//PHILADELPHIA, PA.—Hemp¬
hill, Noyes & Co., members of the
Stock
.
.
feeling seems to be gaining followers that the
monetary author¬
ities will be able to
carry through .their program successfully, which
>|
York
up,
co¬
Treasury surplus the
limiting
the
New
he
-.This makes It irather,imperative that tax
reductions are
not too steep and that
expenditures be cut in order to still insure a
sizable government surplus that could
be used to retire debt and
Co., Denver.
;
build
must
-.".
Hawk-Herrick Co., Wichita; John
J.
•
position
a
can
there
fiscal>poliey; of the government.
debt redemption, which will cut
deposits of member banks only so
long
over expenditures.:
With no
thorities
Inc.,
in
.
.can
New
Co.,
banks
levels,
pres-
7
.
POLICY
the-authoritiesIs the
that be
4.' ^Cunningham;,
&
to he
.
ret, :.Gammons
.
inflation
7
commercial
pegged
revenues
Russell
to the
suc¬
upon
balances that
reserve
not appear
have, very-
small measure
no
...
Chairman; Philip L. Carret, Car-,
*^fork;
could
However,-the
Z7y77y.7;7;:;1 y-'y/:/ :•
Central
keeping
.
operation from the member banks in order
to make the policy
effective.
.'Otherwise the anchor on prices
might have to be
lifted or new powers -Obtained from
the Congress.
Advisory / Commit- i; i
JF.
.yy;
.
IFISCAL
Jler^ert: F. Boynton, IL
.
creating
//
San
77-.7/7
•
.
could Tbe used to make loans which
would add
New
Co.,
difficult
.more
upon Ihe -money markets.
of this credit limit
program depends in
attitude of the member banks in
sure.y.
Detroit:, Eatons
Witter
In- making lending
/ '• :; 7/ '.
retirement/especially
influences
6
ment
'
ever,
assets.
on.
Fulton, of Washington
(ex; officio). 7-7v//-■/■••' /•
;
obtained
The
Wallace H.
5
national responsibilities."
financ¬
ing in the" thirties.'The- major in¬
crease in. the money supply, howr
Rex '-Cromwell,
Dallas Rupe 1 &
Son, Dallas; Robert C. Kirchofer,
if. used
to
trend
are
to
These institutions
.
more
•Louisa Max J.- Stringer, Wallipg,;
in several years."
unwise
the-up-side) unless the
"
.
is
(on
:.
.
DEFLATIONARY
throughout 1947, but the volume
York; John D. MeCutcheon, John
of bank credit used to
carry se-:
D. MeCutcheon & Co.,
Inc., -St.
curities /declined
to
the
lowest
level
.
risk
Committee:
.
conditions following
.'7 '
;;/ V
the
Billett,
resources
strained /by ;the.
Committee, and Mr.
expectedly high cost of/ pliant member ex officio.
expansion.: In contrast vwithi the
Business Conduct
un
advance.
are
L. Ray¬
Kebbom,
McCor'&/Co:;4 Chicago, Chairman;
Herbert F. Boynton, H. F.
Boyn¬
ton .& Co., Inc., New
York; W.
record peacetime Government, exThe ;high
Herbert F. Boynton
frrick
7
parts of the world, large domestic
and
Stubbs
O.
mond
dur¬
support
~
with
7:'This is
.
resistance
eligible issue.
.
iiatronaty conditions, such-as *re~:
duced food production in mapy
result of inflation
primary
to
market
and at the
.
that
shortage of investment funds.
a
its annual review;entitled "United^-
year.
evidence
•"'j, •:/
switching .is going -on in .the
shortening maturities
heavy in mortgages
obligations in order
ing 1948 is expressed by the Bond Departments Bankers Trust Co.,
but
f
...
.
7 7.
..y
•
felt that
keeping Hhe iy2s due
tending to1 move quotations for this issue,ahead
slightly.
However, as it approachesdhe 100y2' area, it is believed that it will
difficult to obtain
more
If these buyers
...
go
and
nonsense
run:
,
that
jproved prices tin [these securities.
Some
for investment market.,
'•
a
the
in the direction of
tighten bank credit, but Inake funds available
'•[~.,h' *■
-
of
shot,
...
Bankers Trust Co., ?in annual review of the money market,
points
out that when Treasury uses surplus funds for retirement of market-'*
t.
start
long
a
best,
,p,nd this along with the small floating
supply is making for im-
_
Foresees Tighter Bank Credit but lmple
Investment Funds in 1948
,
the
by
institutions that can use income are
put¬
their funds Unto the
Uiigher yielding obliga¬
-
tosput this sort of
The view that bank credit will be
fact
purchase
should
4.
maturities
...
aside for good and all.
able debt it may
indicate
not
distant
sharply slower, they would most likely not
purchasers of ithe partially-exempts 'because of
their'vulner¬
able position,-due to :the -rather
sizable premium involved.
The -market for these bonds Is
very thin so that a not too large
buy or sell order,-could move them quite
sharply in either direc¬
tion.
For the present at ileast The
demand side is the
T. Jerrold Bryce
really to be .reached when all
collectively guarantee to each of us individ¬
ually all that the heart desires?
//77/// //;*7 7/
come
This (does
.
more
some
of
quotations would
us
The time has
.
the
some
be
;Is the millenium
of
part
the
fear of further price adjustments.
a
"
we suppose,
into
com¬
.
the larger commercial
banks are continuing
longer maturities of the * eligible
partiallyexempts at advancing sprices, seems to
signify a lessening of the
hazards
....
obligations.
back
The
■
year^and,
anything is to be expected, but
with
.
few-of the middle maturities of
occasional buyer
appearing -for the
a
...
to
to
money
Venturing into
taxables
minor
a
tions.
industry/V
Senate Committee on Agri¬
election
an
of
now
but it does Show that
in agriculture .and
—^Subcommittee of the
This is
values
investments
to
employed
culture. ;7-"r
the
eligible
movement
j
•
likewise requires
are
longer-term
employment should be maintained
expanding basis to absorb mew
to prevent
the mass movement of
people vfrom cities to farms where they cannot be
productively employed. Continued national progress
requires that reasonably full and stable employ-,
ment
a
long-Treasuries might be taken on; in
vlimited amounts, if the
modity price trend, should continue downward.
Better still
on an
and
on
cautious attitude holds
sway in the government se¬
curities markets, investors as well
as traders and dealers have become
bold enough to at least,
entertain the thought that intermediate and
"Industrial
workers
Repo rter
Although
the
*
17
National Association of Securities
.
permanently
(717)
L. Raymond Billett, Chairman of
the Board of Governors* of the
that agricultural pro¬
be directed to that end, rather than to
emphasize only parity prices for agriculture, which
may or-may not approach 'parity on income depending upon.available volume of products and cost
and income relationships;
j
CHRONICLE
Appointments Made
long run -it 4s believed" to "be highly
agriculture receive an equitable share
grams
FINANCIAL
NASD Committee
let's End This Nonsense!
;: desirable that
&
Street. :
If credit -restricting measures work
(and they have in the
,past), sales of Treasury obligations by Insurance companies andsavings banks will not-last too long because with fewer outlets
for
funds,
reversed.
this
liquidation
will
dry
,up
and 4he
process
be
18
THE
(718)
COMMERCIAL
&, FINANCIAL
CHRONICLE
Thursday, February 12, 1948
Walter E. Sullivan
With C. G. Novotny
C.
G.
CONSOLIDATIONS
Novotny, 120 Broadway,
City, announces that
E.
Sullivan,
formerly
NEW BRANCHES
York
New
Walter
News About Banks
Securities Salesman's Corner
By JOHN DUTTON
NEW
customer holding files you will probably find some secu¬
rities that have declined in price since the time they were offered.
Today, very few investment dealers have customers that do not hold
securities which have declined in market value since they were orig¬
CAPITALIZATIONS
Here
turn
a
new
with
the
Sullivan
E.
New
Ex¬
Stock
York
change firm of Elder, Wheeler &
Co., has become associated with
him
as
manager of the trading de¬
partment
will
and
to
continue
specialize in Soft Drink Bottling
Stocks.
Phillip West Asst. V-P of
New York Slock Exck.
Emil
Stock
President.
Mr. West has been Di¬
rector of the
since
which he
Department of Stock
Feb.,
was
years
Colonel
prior
1946,
to
Acting Director for
during the absence of
John
Haskell
who
was
with the U. S.
Army abroad.
Born in
West
was
New
graduated in 1929 from
with
University,
the
New
Exchange for 23
and
has
Stock
York
years.
Lange and Crabb Now With
W. E. Burnet Co. Staff
-,
,5erI?an
with
R-
Rtftter
Lange,
formerly
&
Co., and William
Crabb, previously with Drey¬
.
W.
fus
&
Co.,
are
with
now
W.
E.
Burnet &
Co., 11 Wall Street, New
York City, members of the
New
York Stock
Exchange.
*
-
Herbert A. Cone Dead
Herbert
the
New
A.
Cone
York
of
Exchange,
died at his home at
the age of 54.
J'
$5
Preferred
stock
of
which
pany,
,
has
an
com¬
accumulation
of
Earnings
have
years
$77
share.
a
averaged
$21.30
share.
earnings
years
a
in
number
of
Platinum
average
Common $4.07
Hedge
Against Inflation
as a
immemorial
time
of
metals of the world.
during
economic
have
metal
virtually
as
an
eliminated
investment
me¬
In
During recent months, accord¬
ing to Bache & Co., platinum has
attracted wide recognition
as
a
a
study
released
over
the
week-end, Bache & Co., 36 Wall
The nightmare
refuge for capital.
ing
depreciation.
interest
best
ance
out
in
in
reflected
trade
by
past
platinum heretofore overshadowed
in
wide
a
famous rivals,
silver
its
advance
of
$3
during the past week.
PRIMARY TRADING MARKETS
v
FOR
BROKERS, DEALERS and BANKS
IN
COMPANY
MACKINNIE OIL & DRILLING COMPANY
.
Y.
Telephones:
and
Teletype BS 259
'
HAnover
Wfiitehall
B. E.
Gardner
re¬
Assistant
as an
Manager
From
cember.
became
and
last
August,
De¬
to
1915
1918, he served with the Canadian
Expeditionary Force, was twice
wounded
and
the
awarded
was
Military Cross. Mr. Gardner is a
past President of the Canadian
:
Simpson €h Company.
*
Telephone KEystone 3101
v
Bell Teletype DN 157
Y., died
'
Brooklyn
Brooklyn,
Feb. 5. He
on
77
was
of age. Stating that he had
been in the banking business for
in
ness
week
Brooklyn
the
years,
-
banking busi¬
as a $5-a-
1880s
late
the
"Eagle"
■
the
of the Exchange
On Nov. 15, 1890
old Nassau Trust
Company. He advanced to Assist¬
ant Secretary and when the com¬
pany opened a branch at Fulton
employee
National
Bank.
he
joined
St.
and
the
Hook
Red
he
Lane
was
in charge of it. Several
years .later he was elected Secre¬
tary of the company and was ac¬
tive in its management during the
panic of 1907, when the Nassau
remained open while several other
banks
in
the
city closed their
doors.
;
■'
-SV..';/
placed
the
"After
Nassau
Trust
Com¬
of the executive committee of the
merged with the Mechanics
Bank in 1914, Mr. Weekes con¬
tinued in charge of the
bank's
Canadian Chamber of Commerce,
a
life Governor of the Montreal
that
bank
merged with the Brooklyn
Trust
Bankers'
Association,
member
a
General Hospital, and a
of
board
the
of
member
of
governors
pany
branch
When
office.
Company in 1929, Mr. Weekes
elected
was
Vice-President."
a
"
''
College,
Ridley
Ontario,
y.:,.
Catharines,
St.
y;"'.
yVr'-'
■:*'
The New York Agency of Swiss
Corporation announces that
Bank
the
general meeting of the
corporation's stockholders to be
at
Basle, Switzerland, on
it will be proposed to pay
dividend of 6% for 1947 against
Feb. 27,
for 1946. It will also be pro¬
5%
to
posed
Fund
the
to
and
Swiss
500,000
donate
to
Francs
Pension
Bank's
create
special re¬
serve
of 1,000,000
Swiss Francs
for proposed new bank buildings
An amount of 5,007,042.40 Swiss
will
Francs
a
carried
be
forward
4,387,663.53 for the pre¬
cable to the Agency
also reported that the Board of
Directors at a meeting in Basle
against
approved accounts for 1947. These
it
accounts
is
stated
showed
net
of
16,223,851.81
Swiss
including carryover, as
profits
Francs,
compared with 13,387,663.53 Swiss
Francs for 1946. Total assets as of
Dec.
■
Through
He
.
stock
a
sV/'l
■'
dividend
of
$65,000, the Second National Barifc
Co.* of
Trust
&
Hemstead,
Long
Island, N. Y. increased its capital,
effective
to
Jan.
19,
from
$325,000
$390,000.
in
held
a
*
He
1
yr7-;
r*>-'.*
1947,
31,
are
"■
v.,—
-
-
/
;, ■
v
-
He
He'
He
<"•
'
.
,y\
.
banking and
trust institutions to be established
the
of
One
first
midtown
the
branch
area,
the
of
and the
Guaranty
City,
—the Fifth Avenue Office of the
bank — observed its 50th anni¬
Trust Company in New York
versary
on
Fifth
at
1898
Feb. 7. Established in
Avenue
43rd
and
Street, the. year greater New York
consolidated under one gov¬
.A stock dividend of
in
resulted
the
of
$20,000 has
increasing the capital
Lincoln
Buffalo,
National
Bank
of
from
Y.
N.
$200,000 to
$220,000. The effective date of the
increase
Jan. 28.
was
The Mechanics National Bank of
Burlington,
J.
N.
increased
its
capital from $100,000 to $200,000
effective
Jan.
27,
through the
sale of
$100,000 of
According
to
Gazette"
"Post
new
named
Bank
v
Pittsburgh
of Jan. 26, three
"Vice-Presidents
new
stock,
the
have
been
by
the Mellon National
Trust Company of Pitts¬
&
burgh; they are James T. Brown,
William
Howard
E.
McClintic who
the
and
Stewart
promoted to
were
posts from Assistant Vice-
new
President.
Walter
T.
Schmitt,
formerly Assistant Secretary, was
named
Assistant
Trust
Officer,
John L. Propst was made an As¬
sistant Trust Officer and Theodore
O. Harris
Assistant Cashier.
an
He
Stating
have
been
Peoples
5|S'
that
:)i
six
promotions
announced
National
First
the
by
Bank
&
Trust Company of Pittsburgh, the
"Post
on
Gazette"
of
that city' said
Shepard H. Pat¬
Johnston M.
Palframan
Feb.
2
terson,
that
and James D. Harlan
were
nhmed
since 1920 in its
Assistant Vice-Presidents; J. Law¬
present location at 44th Street, the
rence
Turner
and
J.
Judson
branch's
growth has paralleled
Brooks were elected Trust Offi¬
the development of midtown New
and
Leo
P.
Larkin
was
York from a largely residential cers,
elected Assistant Trust Officer.
section to its present position of a
and
central city within a city.
When the office was opened most
business
the
districts
of
the
city were below 34th Street and
the neighborhood of the bank was
mainly one of homes. As business
northward
moved
California Building, Denver 2, Colorado
2-7914
3-9030
Mr.
1935,
Vice-President
ecutive
of
request
:
In
turned to Montreal
great
KINNEY-COASTAL OIL
.■
St., Boston 9, Mass.
*P' 0425
office.
was
Established 1929
'
office
later took charge of this important
oldest
in
share.
the head
to
foreign branches. In 1932, he came
to New York as second agent and
is
ounce
the
of
years
was,
in Montreal, as Superintendent of
ernment,
special situation mailed1
148 State
his transfer
to
circles,
per
N.
of
Company,
for a
period, Manager for the Bank in
St.
John's, Newfoundland, prior
in
increasing demand resulting
an
Vice-President
Trust
entered
is
disappear¬
*
who retired as
in part:
it
into investment channels, and
divimore
The grow¬
platinum,
*
*
Francis Weekes,
"He
-
the
by its
which would
protect them against losses from
currency
is at 140 Broadway.
57
1946.
goods,
1918, and the Rockefeller Center
at
40
Rockefeller
Plaza,
opened in 1946. The main office
Office
added
and
for
of inflation in almost all countries
tangible
60th Street,
Columbia
Maritimes
the
has made prudent investors search
annual
earnings
important posi¬
reported as of
2,306,046,947 Swiss Francs against
2,139,391,383
Swiss
Francs
for
pointed
Recent price 7
Descriptive analysis of this
on
gold, is now beginning to as¬
sume
its rightful position as one
of the important investment
'
a
Recent price 37
Ten-year
which
General Manager in 1942 and Ex¬
and
in its
a
of
Bank
America
held
He
General
Some people will understand that no one can be right all the time.
They take mistakes for granted. They only expect you to make them
as infrequently as possible.
There are others .who will continue to
do business with you, after you have sold them a security that has
been unprofitable, because they want you to think that they "can
take it." This may seem far fetched, but the world is composed of
all kinds of people.
There are those who need tax losses and for
this reason they do not consider them burdensome.
•
Remember, you probably think that' your customer's losses are
more serious than they do themselves.
No one ever disliked the
fellow who came up and said, "It looks better now, we've waited
quite a while, we've made a check up, things are looking up with old
'Paradise,' here's your chance not only to get even but possibly make
a profit, we wanted you to know what we've found out,
etc., etc."•" Re¬
member, it is sometimes easier to go back and bring an old account
back to life than to dig up a new one.
Street, New York City, state that
dend
requirements by
margin.
North
1918.
to
This is unavoidable, it is part of the risk in business.
years,
ninei of
covered
former
The
the Madison Avenue Of¬
established in
are
of Canada from British
them and suggest that they buy more of the same. It is
when a salesman, or a firm loses hope, that the customer loses faith—
both in the security in question, and the salesman.
'
There are all kinds of reasons why people buy securities. If you
are in this business for any length of time you will have your share
"lemons."
city
fice at
tions in branches in various parts
upon
dium.
dividends have been
no
paid^ for
the
in
clients he has avoided because of their losses would rather have him
that
--,V';
■
While
ten
British
the
merged with the Bank of Montreal
him, especially if your latest field report, and the
indicates that here is his chance
to get his money out and possibly a profit too?
No one is responsible for market declines—no one can stop them
—but a security dealer is derelict in his duty toward his clients if
he does not bring such situations to their attention. When a stock
declines in market value, primarily because an entire market has
been shot to pieces, rather than because of intrinsic weakness, your
customers should know about it. Many a salesman will find that the
silver
the previous ten
over
Feb.
on
individuals.
of
as
other branches of the bank in the
Mr.
Gardner,
Bristol, England, be¬
banking career in Can¬
with
ada
In other words, for $2,000 your customer once was
old "Rainbow." Today for
uncertainty
men have hoarded gold and sliver.
Today that is difficult or impos¬
sible.
National legislation
in a
large part of the world has out¬
lawed the private holding of gold,
while the prohibitive 50% tax on
profits derived from trading in
dividend
a
items.
well
as
of
his
gan
attractive to
From
85-year-old New England
to
Bank
George W. Spin-
same
periods
The
Officer of the
has
Chief
vious year. A
member
Stock
native
a
information you can now give "him
of
these
of
$2,000 he can buy 400 shares. If he buys 400 more his aver¬
age will be only $8 instead of $20. Don't you think that "Rainbow,"
with a book value of several times this average cost of $8, should
be
Canada,
of
1 is referred to in detail at the end
There is plenty of book value, plus earnings that ap¬
to be fairly secure at the rate of about $1.50 a share per annum,
and a management that is still alert and on its toes. However, a dead
and sloppy market indicates that all your good friends and customers
could obtain for their shares is about 25% of the price which they
paid for them.
Bank
C.M.G., whose death
new,
opportunities
Why not check up on the most likely
approach.
the
President and
succeed the late
unfavorable
available at $5.
call
Jersey City in 1906, Mr.
York
been
Executive
opportunity for you to do more business. You can
situation into one that is favorable by finding
an
of
Montreal,
elected
been
price recovery?
a
the
Exchange, an¬
nounced the appointment of Phil¬
lip L. West as Assistant Vice
five
Montreal,
.
able to obtain 100 shares of stock in good
Schram, President of the
York
List
,
„
pear
—1WUu
New
is
,
Gardner, M. C., Executive
Vice-President
Then go over these situations once more in a
thorough manner. Visit the plant, meet the management, find out
what is going on, then go to see your customers and suggest new
purchases at prevailing low levels.
They are familiar with the se¬
curity in question, it is something they will no longer find strange
to them.
Quite likely they would appreciate some up-to-the-minute
information—and some encouragement. After all, everyone likes to
live in hope. It is a peculiar thing that the investing public always
likes to read the Market Letters that are written by the optimists.
The "bulls" are always more popular than the "bears."
Take the case of the customer who purchased 100 shares of
"Truman's Rainbow Preferred" from you at $20 a share. Today it is
for
Walter
an
losses.
C.
B.
inally recommended. The events of the past 18 months, as far as
the market is concerned, have now taken their toll of high grade
bonds as well as common stocks. This situation is general—everyone
has paper
Bankers
and
OFFICERS, ETC.
REVISED
In your
tions
and
increasing numbers es¬
tablished
headquarters
in
the
branch
names
area; the
carried
books
more
of firms and
W.
Walker,
Vice-Presi¬
Keesport, at McKeesport, Pa.,
curred
years
on
Jan.
24.
He
oc¬
was
53
of age.
He
He
He
corpora¬
in
midtown
Foster
dent of the National Bank of Mc-
and
of
the
more
corporations,
Thethe
common '
First
Liverpool, Ohio,
Jan.
13
capital
National
from
Bank
was
stock
of
of
East
increased
on
$300,000 to $600,000
(Continued
on
page
31)
THE COMMERCIAL
167 Number 4672
Volume
Paul G. Hoffman
1/
European Aid Program
apolis.
Committee for Economic Develop¬
announces
and
an
and
CED Research
Davis, president, Federal Reserve
Bank of St. Louis, St. Louis, vice
chairman; John D. Biggers, presi¬
dent, Libbey-Owens-Ford Glass
Economic cooperation by the United States with Western Europe,
including both relief and help in reconstruction, is endorsed in a Co., Toledo; James F. Brownlee,
Fairfield, Conn.; Gardner Cowles,
statement on national policy issued on Feb. 11 by the Research and
Policy Committee of the Committee for Economic Development. The president and publisher, Des
Moines
<$>-
e-
difficult.
As
the
more
funds
be
provided
in
amounts
sufficient
have
we
responsibilities to
recommended
is
It
close
make the pro¬
be
gram
between the
a
suc¬
tions
should
authorized
to
carry
at least
out
four
a
ment, entitled
"An American
Hoffman
G.
Paul
Program of
European Cooperation," was
drafted by a special CED sub¬
committee, of which Wayne C.
Taylor of Washington, D. C. is
Chairman, and was announced by
Paul G.
Hoffman, CED Chairman,
and Raymond Rubicam, Chairman
of the Research and Policy Com¬
mittee.
The
Committee
the
that
agency
Department
would
be
recom¬
be ad¬
ministered by a new single-pur¬
pose agency directed by a single
program
Credit
that the National
created
cil
recommends
Advisory Coun¬
by Congress in 1945,
should be established
as
the inter¬
departmental body to advise and
President
the
assist
and
the Ad¬
in the formulation of
ministrator
in deciding where aid
should be provided through gifts
and
where
through loans, and
with
respect
to
allocation
of
programs,
commodities.
•scarce
Administrator
the
addition
In
have
must
trator should be
ample power to surround himself
with
business
and
professional
be
men
Administrator.
This
Adminis¬
appointed by and
responsible to
the
directly
of broad
President.
establish
Congress should determine the
basic policies governing the pro¬
boards.
and
gram,
cise
should
to
powers
Chief
delegate
the
pre¬
President,
as
Executive, for execution of
these policies, the statement says,
it recommends that Congress
and
should
other
policies
The
statement
should
be
countries
ments
V
purposes
the
of the act.
emphasizes that
condition
minimum
that
made
aid
of
the
out
carry
they
European
the commit¬
at the Paris
Conference, and that these undertakings should be implemented
in the specific agreements to be
made with the
"The
in
maintenance
the
societies
of free
mies
separate countries.
to
key
Western
free
and
Europe
econo¬
is
pro¬
duction," the statement declares.
"If production can be increased
by
one-third
quickly,
Western
Europe wili be on the way to
prosperity—and prosperity is a
powerful antidote for communism.
The
primary responsibility
for
bringing about the required sharp
increase in
production must of
necessity rest with the people of
Western
Europe.
However,
all
indicates
evidence
Europe
not
can
increased
Western
that
accomplish this
without
production
American aid."
L!
The
any
of foreign aid, priority
must be given to the maintenance
of a strong, productive America.
A program of European aid will,
of course, contribute to inflation¬
program
ary pressures at home.
ment goes on to say
The state¬
that
"We
;must face the problem of inflation
or
program.
not
is
there
an
aid
We should be able to
deal with it and still carry on ac¬
tivities vital to the national wel¬
fare."
V' The Committee declares that we
cannot
and
isolate
have
it
free
our
work.
economy
"Regimenta¬
tion of international trade inevit¬
ably
creates
regimentation
merce.
ciety
pressures
of
maintenance
of
would
of
for
domestic
Breakdown
abroad
the
of
joint
recommen¬
Administrator
Fund and World Bank
a
com¬
free
make
freedom
the
for Reconstruction
Feb.
on
and
Develop¬
the
announced
5,
election of Stuart Gordon McFar-
lane^ of Austraba*
ah Execu¬
tive Director of both institutions.
At their Second
Annual Meet¬
ing at London in September 1947,
to
a
Western Europe.
accomplished in
ways which will not lead to re¬
surgence
of
German
military
power and will not prevent the
be
future unification of Germany.
The Committee further
that
mends
insofar
recom¬
possible,
truly loans, and
gifts should be gifts, the division
varying from country to country
depending on needs and resources.
It is pointed out that recent tariff
reductions negotiated at Geneva
will make repayments easier.
loans
as
should be
The aid program
should not be
used as a method of financing ac¬
quisition by the American gov¬
ernment
of
property rights in
Europe or its colonies.
Recovery
will be speeded, the statement as¬
various European
by increasing freedom
of movement of people, by joint
development
of
controlled
re¬
riers
Director.
Executive
Governors
The
for
In
addition to
Mr.
which
Taylor, the
drafted
the
policy statement included Henry
P.
Bristol,
president,
Bristol-:
Myers Co., New York; Mr. Hoff¬
man; Jay C. Hormel, chairman of
the board, Geo. A. Hormel & Co.
Austin, Minn.; Thomas B. McCabe,
president, Scott Paper Co., Ches¬
ter, Pa.; Philip D. Reed, chairman
of
the board,
General Electric
Co., New York; Nelson A. Rocke¬
feller, New York; Mr. Rubicam;
Beardsley
Ruml,
Chairman
of
the
Inc.,
the
man,
United
on
States
taxpayers, should be able to work
out ways to provide any machines
materials that
or
sis of each
detailed analy¬
a
project reveals
procedure
as nec¬
would
also
is
sound, regardless of what funds,
private or United States taxpayers'
are
finally used.
achieve the objectives of the Mar¬
shall ' Plan.
y
;; ■■ >',
.
"First, the Plan needs to be
clearly stated in projects, equip¬
ment, products and services re¬
quired under it.
"Second, cancellation is vital of
paragraph B of Public Law 395,
signed by the President on Dec. 30.
1947, which authorized the De¬
partment of Commerce to blanket
European and United States trade
with an export license system that
suffocates
all
normally private
.
efforts.
;"Third, our own currency needs
be put on a gold coin basis.
Such action
is proposed in Bill
H. R. 5031,
introduced by Con¬
to
firms are gressman Howard Buffet of Ne¬
willing to help reconstruction of braska. It provides for a dollar
European establishments even as of 15 and 21/100 grains of gold
far as advancing raw materials on on basis of ratio of $35 per ounce
pledge of a share of more valuable supposedly existing today.
"Enactment of the bill leaves
goods resulting after addition of
enhanced qualities by European no doubt as to likely value of
dollar at time a business transac¬
workmanship.
•
t
"Hampering restrictions by our tion is started or completed.
Board,
R. H. Macy & Co.,
York;- Harry Scherpresident,
Book - of - the -
New
Month Club, New York; J. Cam¬
own
the U.
Australia,
total is
combination of the votes
a
allotted to these three countries as
Australia
follows:
Syria,
2,250;
295,
315; Lebanon,
gold coin dollar, thereby provid¬
ing an instrument of prime im¬
portance to help private enterprise
in making more goods available
to peonle everywhere," Mr. Bauer
S.
Military and Economic
Germany,
licensing
are so
complicated, un¬
in
Control
systems
certain
pliance
costly in their com¬
that they discourage pri¬
and
Public
of 2,860 votes at meetings
of the Boards of Directors.
This
concluded.
Bequests of Lamont Total $10,000,000
on
Feb.
2, contains bequests for various cultural, educational, reli¬
he
was
Secretary of
Council, Sec¬
retary of the National Debt Com¬
mission, Director of the Common¬
Oil Refiners
wealth
of
Director
and
Commonwealth
the
York
New
Bank's Loan Director
A.
William
Britain,
B.
Iliff,
of
Loan Director of
the
Inter¬
national Bank for Reconstruction
: As
Loan Director, Mr. Iliff is
respsonsible for the development
application of Bank policies per¬
taining. to loans made
teed
Mr.
Iliff has
the
from
had
or guaran¬
:;
by the Bank.
.
;
recently returned
Middle
for
Representative
Kingdom
merly
where
he
several
years
as
of
United
East
the
Treasury.
held
He had for¬
appointments
as
Fi¬
nancial Counsellor at the British
Embassy,
Tehran,
Financial
Advisor
nor
North
of Burma.
Iran,
to
the
Haven,
$50,000 designed
the people of
of
Maine.
$100,000, for the
of honoring the memory
of Mr. Lamont's eldest grandson
and
namesake Thomas
William
of
purpose
Lamont II who lost his life in the
service
Society
of
York, New York City, and
Australian Gold Mining
":L Australia
has
been
of
his
country in World
War II.
and
as
Gover¬
Operators Seek Subsidy
the possibility of
reviewing
digging more
gold from mines. The Australian gold mining industry has sug¬
gested that the government stabilize the price per ounce by means
of a subsidy.
Present price of gold in Australia is $34.44 an ounce.
A general gold policy has yet to<£
be defined by the Federal Gov- manpower and equipment, mining
ernment, but the Victorian State experts anticipate increased pro¬
Government
to
subsidize
has
already decided
the
duction
during 1948.
industry in that
State, free of interest, so that Vic¬
companies may
achieve
production. Last year
the Federal Government abolished
Kessler With
the gold tax of
$2.76 an ounce.
with Brand,
gold mines have paid
bers of the
torian
acted
New
New
Great
duties Feb.
assumed his
Service
Community
benefit
the
A trust fund of
Academy
York
Society,
$100,000;
$5,000.
A trust fund of
for
Medicine, New York City, $200,000; Council on Foreign Relations,
Inc., New York City, $100,000;
William A. B. Iliff Now
as
each
$250,000; Un¬
Church, $50,000.
New
each
■
University, New York City,
$50,000; American School of Clas¬
sical Studies, at Athens, Greece.
$25,000; The Harvard Club of New
York
City and The University
Club in the City of New York,
Theological
The
City,
.
Aid
York
Seminary, New
York, $50,000; New York Confer¬
ence
of the Methodist Episcopal
ion
Bank
Board.
9
Tilden Foundations,
Children's
the
who has served Phillips Exeter Academy, $2,000,capacities in the govern¬ 000; Union College, Schenectady,
ment of Australia throughout his New York, $200,000; The Metro¬
career, has been Secretary to the politan Museum of Art, Netv Yprk
Commonwealth
Treasury
since City, $1,000,000; The American
1938, and a member of the Ad¬ Museum of Natural History, New
visory Council of the Common¬ York, $250,000; The New York
wealth Bank since 1945.
Earlier Public Library—Astor, Lenox and
the Australian Loan
The principal
gious and welfare purposes aggregating $10 million.
bequests were: 5 *
i V
*
"
.
Harvard
College,
$5,000,000 <$>-
Mr. McFarlane,
in his career,
died at Boca Grande, Fla.,
The will of Thomas W. Lamont, who
in many
and Development.
and in other ways.
subcommittee
enterprise without in¬
burden
power
between
countries,
sources
"Private
resources: of private enter¬
prise can be called, upon to help
vast
Governors
unified
of
should
This
York
con¬
"Other countries would also be
Germany should be
integral part of the de¬
velopment
New
Board of Trade, in a-brief to Sen¬
ate Foreign Relations Committee.
Bauer
encouraged to put their currencies
in suitable relationships to the
Western
an
of
Section
Mr.
Government make that form
Europe," the statement declares.
made
tional
George F. Bauer
of
Interna¬
tax¬
'
tinued, "three vital steps are im¬
mediately needed in order that the
Bank
problems of economic coopera¬
Syria and Lebanon participated in
tion involving two or more partic¬
this election and Mr. McFarlane
ipating countries and should be
will, as a result, cast the votes of
equally responsible to the Secre¬
these governments in the Execu¬
tary of State and the Administra¬
tive Boards of the Fund and the
tor. "He may well become our
Bank.
He will exercise a voting
Ambassador
the
American
:
of the Fund and of
cooperation between private
passed resolutions pro¬ business
groups
most
difficult.
As
viding for the election of an ad¬ Even in the American Zone, under
the
on
so¬
here
Monetary
Fund and the International Bank
the -President in Western Europe
first
Vice-
Chairman
the
"Numerous American
International
The
the
Senate.
F.
show whether the undertaking
McFarlane Director of
and
the
made
was
George
on
"Specifically,"
under¬
Bauer,;
"Such
State, subject to
serts, by reducing the trade bar¬
report asserts that, in
whether
on
payer.
.
a
representative with am*bassadorial rank be appointed by
special
the President
burdened
This sugges¬
by
"Charity economy in Germany
the alternative with its costs
is
in
taking."
tion
industrial
output
and
organizations of an
be
to
essary.
Ambassador, he would represent ditional
of
defined.
In this con¬
nection it is urged that no un¬
necessary
restrictions be placed
on the agency responsible for car¬
a
thai
is recommended
services
each
creased
-
providing
efficient type.
required
son,
to
the
as
rying out the
program
Mr.
Scherman, Mr. Taylor, Mr. Thom¬
as
execution
the
for
the
Ruml,
Mr.
Reed;
Mr.
cago;
agencies
governmental
needed
nati; Mr. McCabe; Fowler McCormick, chairman of the board,
International Harvester Co., Chi¬
the Secretary of
confirmation by
authorize
issue
to
abroad it
dation
Jr.
president,
Federated
Department Stores, Inc., Cincin¬
arus,
ment
..
facilitate
To
Corp.,
from
distribution
found
Associates, Inc.,
Universal
C.
I. T.
Detroit; Fred Laz¬
board,
housing,
or
Kanzler, chairman of
Ernest
directives
specifically
President
*
experience, and to
competent advisor y
C.;
enterprise
performed,
equip¬
ment,
goods
Mr.
——
—
vate
the
Hoffman;
Mr.
Hormel; Eric A. Johnston, Presi¬
dent, Motion Picture Association
of America, Inc., Washington, D.
the
Committee
&
Heller
Cleveland;
the
are
dean,
Also, Robert Heller, president*
sponsible for foreign policy..
The
values unit in e>
transactions
Kodak Co., Roch¬
ester, N. Y.; George L. Harrison,
president, New York Life Insur¬
ance
Co., New York.
Robert
currency.
sums
which
Eastman
subject to
directives from the
President, who is ultimately re¬
state¬
mends
State
the
year program.
The
new
The report
emphasizes that the actions of the
new independent agency must be
consistent with the foreign policy
of the United States.
It is pointed
out that both the new agency and
that appropribe
relationship
and the
working
gold basis for
a
of money, need to be listed in detail
under the Marshall Plan, and private investors and business firms
given a chance, through removal of licensing complications and
restoration of gold coin standard, to offer with confidence in the
School of Business Ad¬
urer,
Urges
ticipate.
"Projects, not lump
Boston; Marion B. Foisom, treas¬
there
that
Department of State.
and that
cess,
a
Relations Committee proposing projects under
which private investors and business firms par¬
Foreign
ministration, Harvard University,
our¬
selves and to the world."
to
David,
Donald
Enterprise Participation in ERP
Marshall Plan, in
Des
Graduate
advocate of freedom in the world,
should
& Tribune,
Register
Moines;
strongest
clares that
Senate
Committee are Mr.
Chairman; Chester C.
Rubicam,
19
George F. Bauer of New York Board of Trade files brief with 1
Policy
responsible to the President. Wants Western Germany made integral
part of program.
statement d
Wants Private
■
Members of the
adequate appropriations to make program a success,
administration by a new single-purpose agency directly
(719)
CHRONICLE
president, North¬
Bancorporation,
Minne¬
west
favors
ment
FINANCIAL
Thomson,
eron
GEO Favors
&
maximum
Australian
almost $95,000,000 to
in 16 years. Western
shareholders
Australia is
still the leading gold producing
State, with Victoria second.
De¬
spite rising costs and shortages of
Brand, Grumet
Ben
Kessler
is
now
associated
Grumet & Co., mem¬
New York
Stock Ex¬
change, 55 Broadway, New York
City, it is announced.
Mr. Kessler was previously with
•
Townsend, Graff & Co. and Lewisohn & Co.
>
20
THE COMMERCIAL
(720)
& .FINANCIAL, .CHRONICLE
Thursday;: February 12;; 1948
Questions and Answers
(Continued from
l.y
tern
has-been
important!
an
j
2);
page
one.
Since alb our paper money except
silver certificates are irredeem¬
By WILLIAM J. McKAY
Oil increasingly constitutes the life blood of
modern .civilization
and steel continues as its essential framework. - The current
able—that is, they are "redeemed"
produc-- only in other promises to: pay
of both commodities is: at an
unprecedented1 high level -in this which are likewise irredeemable
country but the demand increasingly outstrips the supply to an almost except where over-valued silver
fantastic degree. This is a« grave U—
and minor coin are employed—the
problem
in
normal
times
but the total of the known oil-reserves Treasury
and
Federal
Reserve
when consideration is given to the of the entire world.
banks have been
able
to issue
subject of war reserves, the situa¬
Also in the case of steel, why many more of these promises to?
tion takes on an almost alarming
look' to
the
iron-ore
in
South' pay than would have been possi¬
ble
had
these
aspect.
issuing agencies'
America
and
Africa
while
the
,
tion
Undue attention has been given
to the study of past statistics. In¬
richest
sufficient
border, in
importance
attached
to
has
'
factor
the
been
of
popula¬
tion growth and the rising livingstandards throughout the world.
this
For
reason previous produc¬
peaks are no criterion of
present needs and. certainly notof
industries, is
to
whereby the
means
find
-
iron
enormous po¬
be
met. in face
domestic
There
the
of
supply.
is
/.
dwindling
•
V
m
little
now
can
doubt
;
increasing /reliance
that
will have to
be placed on foreign sources of
supply. For the most part* how¬
,
the location of the contem¬
ever,
plated
abroad introduces
resources
new'-political'and economic com¬
plications. For example the secur¬
ing of an assured supply of oil
from the Middle East not only will
entail huge initial outlays
the'final
for de¬
transport; but in
analysis the eventual
protection
of
velopment
also
and
these interests will
involve still greater indirect
As
expenditure.
been
lie
oil
and
resources
such
on
that
U.
Sr. dollar problem
automatically solved.
there
is
that
every
the
reason
purchasing
an
emergency
shale.
and
Before
.
recourse
roic
measures
be
well
costly
by
look
to
practical
it is not
solu¬
necessary
afield for the
appropriate answer to this prob¬
lem/ According to the consensus
of geological opinion, almost the
entire
far
very
of
area
the
Dominion
of
against the fears of chain-reaction
though
has
so
recent
duc
the
far
berta,
area
been
in
the
Province
of
Al¬
are highly promising.
An¬
interesting possibility is the
extraction
basca
this
of
merely scratched
results, notably in the Le-
field
other
surface
Al¬
of
oil
the
from
Atha¬
"Tar-sands," where accord¬
ing to reliable estimates, there is
a
potential production equal to
It
GOVERNMENT:
PROVINCIAL
33
of
president
of
Stock
E
change to
ceeed
E.'
7
ment
securities, with
chasing power of the
If
lars
seven
of
is
of
thirteen
Mr.-
Baker;
W.
Gee.
William
De>
De
&
Haven,
Haven-
&
&
Bodine.
Towns-
Townsend,
j.../u.:
/ '
Survey
Probable
on
and
2%%
-rate?
ward
increase
tinues
will
NY-1-1045
for a
give them
may
in
purchasing
power- of
money
con¬
sharply upward* the time
arrive
when
the
the
purchasing
lar
wil'l overtake
decrease
in
of ihe dol¬
power
the
increase
in
United
States-government' securi¬
October, 1947.
If these
institutions
attempted
to
buy
ties
in
goods
and
services
of' the
same
general
type as those bought by
individuals, then the loss in value
here,
as
compared
with
1940;
would
in
be
the
$32.3
billion.
of
case
institutions
But,
individuals,
held
much
a
as
these
smaller
volume
in
1940
($11.5 billion);
heavy buying began chieflyin 1943-1944.
Furthermore, since
their
such
institutions do not
funds
their
use
do individuals, the ef¬
rising, prices on them is a
as
fects of
matter
tion..
for
separate determina¬
'/ •' Y •' ;/'/•;./■•/•
/ ; "/ /. "
/
The value of insurance policies
held in 1947, that were purchased
in;l940
or
earlier,
is probably
a
large
item.The value of
life insurance policies alone,' out¬
very
Because
some
own
property which
appre¬
ciates in value while the value of
their bonds, insurance, and sav¬
ings
depreciates.
accounts
effect
of
the
declining
The
purchas¬
ing power of the dollar is, there¬
fore, different for people occupy¬
ing I different positions,
havihg
different sources of income, and
owning
property
in
differing
forms, in our economic system...
.
In
short, the decline in the
purchasing power of the dollar is
one
thing; its effects are1 some¬
thing else? The latter differ with
respect
to
different
people
and
different institutions.
In
general, and in the course of
time, few people can escape the
evil
ing
of a depreciat¬
because of the eco¬
consequences
currency
nomic
maladjustments generated
during the period' of rising-prices
and
the
stresses
tending
and
strains^ at¬
the
subsequent/ liquida¬
tion and
business; recession. /
(5) WHaL caused-this "inflation"
in
farm organizations are gener¬
ally pleased with.that state.of af¬
fairs.
in
f
The
prices
position
fact
is
drop, does
that
seem
generally
as
such
prelude to
a
not
rise
a
a
later
alter
to
taken
by
the
the
a
still
still
Are
maintain
we
the
headed
higher interest
to¬
rates?
At what point will
Corporates be
a
buy?"—in eight instalments with
trial
Poor's
subscription to Standard &
Bond
descriptive
'
Outlook—write
brochure " and
127"—Standard
ration,
York
345
&
Poor's
Hudson
for
com¬
14, N. Y,
Corpo¬
Street,
If
New.
and
insurance
1940
and
se¬
policies
have
sav¬
1940
almost
were
pre¬
cisely half the dollar volume of
October, 1947.
Therefore, all that'we
is
that
the
the
purchasing
dollar
drastically;
has
in
October-,
1947.
On. this item they would
have lost the equivalent of over
$32 billion in purchasing power
a
small
proportion
this,
might have
since individuals held
only $9.7 billion. government
se¬
the
war
been
the
ment's
declining
demand
pro¬
have
side,, the chief
been
the
govern¬
policies of
money
and
expansion in which were
employed a variety of devices; the
-
credit
know
low
curacy
government, which
quantitatively with any ac¬
how holders of govern¬
ment securities, insurance policies,
and of savings or other time de¬
posits
are
affected
since
such
on
activity. Monopolies, both
factors
interest Irate
borrowing
policies
and
of
the
invited heavy
spending;
the
abandonment
of
the
gold-coin
monetary standard, thus permit¬
knowledge would7 require that we ting the issuance of irredeemable
have the data on each person and- promises to pay and depriving the
institution involved.
people of direct control over their
;
; ..
Commercial
serve
banks
Federal
and'
Re¬
held/approximately
,
$92 billion of government securities in
governments management of the
public
the
purse;
caused and invited
spending
and
unprecedented
market
United
value
of
these
securities
rather \ than /
power
the
in/the purchasing
of this market value since?
business of the
banker is
one
of
maintaining - assets at
least
equal? in market value- of' the
banks/ liabilities^ The decline;; in
purchasing power of money is of
more
to
concern
the
banks'
de¬
/
is for these
banking
reasons
fraternity
as
that the
group is
nation be¬
a
a.
in a depreciating
resulting
from
rising
prices.Since the bankers' busi¬
ness interests are primarily in the
comes
involved
currency-
market value of their assets while
the
in
public's interest is primarily
purchasing power of their
the
deposits, securities, insurance, and
savings,
banking
systems
throughout the world have usu-?
ally .gone along with an inflation¬
ary
tide and have in general done
Because wages and salaries can¬
idly
States.-
•
Many
nesses
•
•
.
individuals
occupy
a
and
mixed
volume
States)
of
(for
an
the
of money and'de¬
posits resting largely
on
govern¬
ment
debt; the widespread notion
that debt and spending, rather than
production,
saving,
and
hard
work, .provided the roads to sound
economic
and
prosperity;
gifts
the- loans
foreign
extended
to
countries.
'
Price fixing by the government,
*
-
.
positors than to the banks them¬
It
which
war,
unprecedented
the-growth
October, 1947. The princi¬
pal interest of bankers is in the
not'generally be adjusted as* rap¬
as prices rise, the purchasing !
power of those who depend largely/
Since 1940 had they'bought these- or solely upon such income tends
securities ■ in
that--year.
It
jus to- decline.. This is a large seg¬
ment of the people of the United
obvious that
at the
most, only
done
during
period of the
depressants
as
.
On
of
power
do not and cannot
we
ductive
know-
can
States gov¬
securities
policies
the
to
business and labor, have also been
factors.
■
in
ings accounts established then, the practically nothing to help a gov¬
ernment save the people from the
purchasing power* of the dollars'
depreciation in the value of their
represented by these securities;
insurance policies, and savings ac¬ purchasing power. Where central
banks- are tools- of
government
counts has declined approximate¬
treasuries,
this
complacency is
ly 50 per cent;
Individuals held?
most pronounced,.
$65.7 billion of United
ernment-
1930's and
use
Various
posits
other?
people hold government
purchased in
government
also acted
farmers, they and the officers' 'rarely aroused when
of
goods for civilian
extremely low-point.
an
could be true, at the most, of only
half-that amount since time De¬
the
early stagesm of
sharply rising prices tend to bene¬
fit
This would represent a loss of $28
billion ' in purchasing, power if
selves.
the supply of dollar profits.
curities
con¬
plete information—refer to "A6582-7231
their costs and,
If the depreciation in the
power.
.
a
RECTOR
gen¬
'
fronting bond investors including
/economy
N. Y<
to
organizations.
"Can the Government stabilize the
NEW YORK 5,
tends
group and by many
if not most of the officers of farm
Detailed study of problems
TWO WALL STREET
This
.
often, perhaps in
purchasing
Greenwood
Co.; Paul
Haffner, Boenning & Co.; Arleigh P. Hess, Hess & Co.; H.
Gates Lloyd, Drexel &
Co.; Harry
MacDonald, Bioren & Go.; George
E. Nehrbas, Parris &
Co.; Ralph
E. Pendergast, Paul &
Co., Inc.;
Samuel K.
Phillips, Samuel K.
Phillips & Co.; Charles Sheridan,
Sheridan, Began Co.; Edward B.
Smith, Jr., Smith, Barney & Co.;
and
real
a
Wm. K. Barclay, Jr.
.
Greenwood,
T.
case
time, their profits
Elkins, Morris
& Co.; Herbert
T.
raising prices.
faster than
Elkins, .Jr.,
Hi
more
eral,
with
farmers .during
the
early stages, of. currency depre¬
ciation—Their incomes tend to rise
can¬
didates:
and
individual is obtaining dol¬
an
be the
by
year
wages
rapidly than the pur¬
chasing power of his dollar de¬
clines, he is gaining in the face
on
being contestthis
pur¬
groups of people, and so on.
Harden.
governors
the
salaries of people in general or of
of
board
with
people's
suc-
Trend of; Bond Market
-
governments held $64.7 billion of
with .the
,
Weeks
The
group/of- people,
-
savings accounts, insurance poli¬
cies, and; investments in govern¬
Philadelphia
x-
Baker
Baker,
&
the
different
dealing with the cost of living
people in general or of \a cer¬
farmers
INCORPORATED
porations and associations, mutual
Savings banks, and sttite and local
to- that amount had been established
States?
in 1940 and held until 1947, This
values of people's
property,
the purchasing power of
Frank
Croucer
A. E. AMES & CO;
Insurance companies, other cor¬
mean
people of the United
tain
PHILADELPHIA, PA. — Wil¬
K. Barclay, Jr., Stein Bros.
MUNICIPAL
CANADIAN STOCKS
The point- is
,
What does this depreciation
means
is
Election To Be Contest
end,
CORPORATION
are
things to dif¬
ferent peOple/and' institutions/Its
effects depend upon whether one
A.
CANADIAN BONDS
fluctuations,
1943-1944.
defective monetary
a
(4)
the
the
commercial quantities.
those
in the value of the dollar
devaluations.
currency
vacancies
oil in
of
began in
"
possibilities for
discovery of
prevent'
purchases
.
Canada apart from the Laurentian
Shield and the Rockies, has great
the
itself
of
Combating' "Inflation''
on
in'1940. The large volume
the United States? Since
prices
are
the
result ^of the forces of
standing in the United States on
system
taneously removed, /■
supply and demand; except in the
December
31*
1945, • was
can. be
a
over
potent causal factor in;
instances of government price fix¬
During. the; week the internal
affecting
prices and, therefore; $174.5- billion; —- an- increase of- ing, the answers lie in
and external -sections of the bond
ascertain¬
$56.7" billion over the amount out¬
when such a system
exists, it should1
market continued to
ing
what
caused / the
sag.Free
relative
standing in 1940. The purchasing
be corrected and made the
passive
funds after- earlier strength, ehsed'
scarcity Of goods;and .services of¬
agent that-it is supposed to be;"?// power? of this, $56.7 billion has fered forin sympathy with the weak ten¬
sale and the
been cut'-in half; and those life
relatively
Our monetary system is defec¬
large demand for them.
dency of sterling. Stocks also de¬
;
insurance policies- purchased
tive because practically all/do¬
clined following the break in the
In brief, on the
earlier and at any time since 1929
supply side, the
New« York- stock and- commodity mestic-money is irredeemable? in
have depreciated still more,' '
long-drawn-out business depres¬
As a consequence of this
markets.
The gold issues showed gold,
sion of the 1930's kept
.'
Time" deposits/in
commercial
production,
isolated resistance to the general unfortunate characteristic, it- has
with
some
banks, mutual savings banks, and
exceptions, at rela¬
an
downward trend and this section been
important contributing theThen the pe¬
postal savings system totaled tively low levels.
is likely to-attract increasing in¬ factor in the depreciation of the
$56 billion in November,
19471. riod of the war reduced* produc¬
vestment
interest
as
a
hedge purchasing power of our dollar.
tion of
that
& Boyce, has been nominated for
more
of
falling prices since the
or
causes
liam
fact
In
cannot
man
supply and demand.
of this kind it would
less
that
vital commodities would be simul¬
made to he¬
other
emphasized
found in all the forces that affect
consider
to
and
tions.
is
from coal
/ ■/ //;///
be
: %,
side of the border concerning im¬
minent' acute shortages of these
measure
to' the production of oil
goods and services;
should
rising
this
been suggested that
$9 billions of- public funds be de¬
as
depreciation in the
power
of our dollar
the best monetary system" devised
has recently
voted
the
in terms of
alternative it
an
de¬
upon
short, our monetary
has invited and contrib¬
to
It
to those
In
system
would be
In return
to believe
on
they could redeem
uted
in¬
Canada's
apprehensions
of their promises
mand,
in Canada
that
scale
a.
would
compelled to restrict the is¬
suance
Quebec and Labrador?
volve U. S. .investment
the
tential' demands of the future
world
Furthermore the full exploitation
of
the
Dominion's
undeveloped
future1
steel
the
in
few hundred miles north of the
a
tion
requirements;
The basic
concern therefore of-the iron and
deposits
curities
like monopolies, has tended to af¬
fect both supply and demand ad¬
versely.
Price
fixing,
except in
rising prices
would
not
have
encouraged
greater production, has tended* to
aggravate the distortions by de¬
pressing production and by en¬
couraging a greater demand.
(6) What
aref
the
cures
for
those
this
cases
depreciation
ing
power
the
causes
In
cures.
that
to
which
in
of
are
in
the
purchas¬
currency?
several,
so
Since
are
the
principle, those forces
increase
demand
our
production
and
decrease
relative
demand
relative to the available supply of
goods and services should tend to
bring
the decline in purchasing
of our currency to an end.
fixing is not helpful, ex¬
cept perhaps where rising prices
power
Price
would not induce greater
produc¬
tion, because is discourages pro¬
duction
and
invites
greater
de¬
mand.
Rationing is ordinarily an
adjunct to price fixing; it is lan
effort
on
the part of some author¬
ity to apportion unusually scarce
goods according to some notion ;of
fairness;
it deals with
results
or
| symptoms-, it does not deal in any
busi- i important way with causes.
position;
•
Lower
taxes
on
producers
'
*
'•
'
-
,
Volume
•
should
167
duction..,
-
tariffs
and
the
United
pro-
-
-
'
removal
should
—
(7)
business
be
and
broken
-
and
•
ices
:
to
put
should
be
On
of
side:
govern-
be
ices
ises
converted
into
consols
;
-
long maturity
place
have
as
,
reserve
against prom¬
its clearing functions
pay,
and
been
foreign),
relatively
its
free
su-
eral
for
a
them,
upon;
governmental
many
ficials neglect or
matter.
•
who
against in¬
be expected to use their
come, can
•.?: funds
does
-
:more
r
productively
(b)
r.
Since
government of¬
con-
gold-coin monetary standard. This
nection with
self-liquidating pro¬
ductive activities, should be restricted sharply since non-produc-
•
tive
buyerspurchasing, .;
i
available
-
to
-
once
honest
an
currency
control
use
\
standard:
people,
more,
the
over
'•
hands
those
that
now
would
direct
correctives to
/
"
tion
since
factors in
most
they
relatively free
promises to pay without
compelled
to
fulfill
them,
if consistent, opposed to a
turn to a gold standard.
(c) Because the suspension
a
gold
payments
ated
potent
depreciaimportant
sharply rising prices
of
Therefore,
people.
think
are,
currency
one
our
to
issue
being
probably
of the
one
the
to
force
the
Return
standard
be
who
desire a
high degree of governmental dic¬
tatorship, with the government
have
should
outstanding.
gold-coin
-
of
with
of
the
regard
the
is
widely
business
our
1929-1933,
people
of
rise
to
farther.
a
When
cide
when
still
it
lower
levels.
the
In
be
arrested
without
a
tive
and
re¬
it
associ¬
recession
great many people
gold, standard as in
a
on
we
a
is
of
defense
promises to
for
pay
not redeem and
redeem.
t
j
-
--
;
"
f'
of
promre-
origin in such immorality.
our
money in
Federal
Reserve
paper
government
and
our
All
of it.
less
so
far
paper money
certificates
,
value
,
of
as
our
is concerned
these
condemns
it.
things of
paper
gold
as
he
money,
without
re¬
be compelled to redeem his
promises in gold. He even argues
nations, because of
their abuse of gold and reckless
issuances of promises to pay, have
driven gold into hiding and have
(silver
and
value, such^as
that since most
circulating
excepted),
it, he
as
not
The
good; in
in
deeming them directly or indi¬
rectly in gold, he blames gold for
his unhappy experiences and attemps to fix things so that he will
banks
by a lack of good
promises of our government and banks today are not
,
with
valuable
as
besmirched
-
dis¬
case
Because he cannot do
Because he cannot make
issue promises that are not fulfilled, the standard of integrity is
"faith;
that
This has been the
pleases
~
-
in
appreciating in value.
In short, gold has
been, and is,
blamed for man's mismanagement
banks, except silver certificates, carries a
promise to pay which is "fulfilled" by the substitution of an-,
other promise of the same kind.
a
factor
the-
way
important
an
was
outside
use
some
least
the face of the fact
that, while
practically all other things were
losing value, gold, almost alone,
to
trouble with "inflation" today has
its
When
.
not intend
ises to pay without intent to
deem is immoral.
Much of
the
•
do
Any issuance
aster.
in
was
at
contributing
which the United States Treasury
and
Federal
Reserve
banks
do
-
gold
cause. or
the
caused
promises
these nations to slip down
has de- to cheap
paper currencies, the lat¬
rapidity since: ter currencies are therefore to be
they will preferred. The cheaper
money be¬
-v:-'-1,'.:
-V.'.'
comes
"the best,", and the more
rates should
be".per-- valuable "the worst." 1, Such is
dined with relative
.
1940
in
terms
buy.
Interest
of what
mitted
•
to
rise r' to: their
natural
levels.
:
Ther" government
should
man's
argument today
borrow its -funds in the competitive money markets at. competi-
»
.
tive
-
rates.
would
put
These
sharp
a
higher " rates
restrictions
savers
.
a
better return for the
of their funds.
„
■
'
versus
paper
irre¬
central-banking
systems,
reason
Federal
a
a
loss
their incomes; and
they
drop in prices lest it bring
in
incomes.
time,
realize
others
^
are
fail
to
real
hopeful.
understand
Many,
for
a
gains.
Many
Perhaps most
the
extent
to
from
our
that
the
volume
for
healthy characteristics.
living in
are
system
except as such pressure
from those experienced and
reason
citizens
who, for
one
or
Ther issue
resolves
itself
this
insidious
pursuit
comprehend,
procedure
causes.
is
a
old story in man's behavior.
generation
learn
to
seems
from
the
very
Each
refuse
painful
to
experi¬
suffered by preceding gen¬
erations when such a course has
ences
been pursued.
net
these
—if, indeed, they understand these
lessons. Instead, they, like
many
others of the past, are taking a
course which, if
continued, prom¬
ises
to teach the
people of this
country an old lesson in a very
painful way.
(f) It seems clear that the peo¬
ple of this country do not yet un¬
derstand
paper
is
aged" that
not
that
inconvertible
no
likely
to
severe
be
depreciation will
ultimately set in,
how totalitarian
"man¬
so
no
matter
a
government may,
be, if the forces that can cause de¬
preciation
become
sufficiently
strong.
The fact that Russia has
recently provided a demonstra¬
tion of this fact
to
be
recognized in this
In the face of this and
other
lessons
of
the
same
kind, including the present depre¬
our
money, the conten¬
tions are still
advanced, as they
have been
during our period of
government
has
sufficient
power to maintain the
purchasing
power of our
irredeemable paper
that it will not permit
depreciation to go "too far." That
money
or
leaders
a
course
reserves and to sag¬
will
simply
to; a
gold
of
would once more be, in
large degree, in the hands of the
purse
people rather
than at the mercy
of these pressure
groups.
It is probably not too much to
that
say
cess
of
day
coun -
perhaps ; the', most
operating against
sanity in this
lying behind this
country.
But
situation is the loss of control
by
the
people over their
govern¬
ment's
of
a
the
It
to
return
drives
of
tend
There
is
away the
a
to
much
to
more
taxpayers'
the
the
leadership
.
of
not
to
the
credit
of
this
that*
not honored.
that
is
Nor
in
nature
to
we
the
con¬
public purse.
and
honored
promises
should expect to find our
for what we
generally
"inflation."
quately informed and indifferent
would give support to those advo¬
cating the wise and proper
Without
such
ilous
course
to
prove
be
for the
has
probable
it
ap¬
that
we
the present per¬
which can and may
on
a
most
States.
been
course.
leadership,
highly
pears
one
Avenue, New York 10, New
of
ar¬
cure
relatively
Monetary Policy,
must
Should good leadership assert it¬
self, it seems reasonable.to suppose
that many of those now inade¬
Con¬
system, may obtain them
the office of the Economists'
the
credit
And, it is by the establishment
a
monetary system involving
call
pres¬
and
of
the
one
return to the people of
honorable
of
Anyone concerned with the answers
objections commonly offered these
to a return to a
gold-coin monetary
on
it
country of appropriate
best
than
the
Committee
Yet, fundamen¬
the
is
over
that
con¬
davs
in
honorable and
are
trol
have
given to the reasons why the bestintentioned members of Congress
have been unable, in
large degree,
York.
provide
this
money
yielding to this
has been
common,
little serious attention
Madison
gold-coin
■
will continue
sure
writing
enough
gue for a
gold-
demands
condemnation
gressmen for
by
a
will
this generation that
of
to consist of little
National
is
issue.
callousness,
One
is
tally,
pressure
would
effect.
standard
of
they
are
monetary standard free Con¬
response
1
the
tem
of
honorable
promises
preference to one in which
pressure
groups
which
clearly
have gained in
number, size, and
to
of
consequence
.
Would
While
a
circumstances
make' it necessary to
argue for,
and to fight to
establish, a sys¬
Congressmen these
days because their chief activities
in
as
influences
generation
of
seem
purse
abuse
being deprived of the benefi¬
It
standard.1
voting
and
use
honored;
ation may be expected, in
general,
to oppose a return to a
gold-coin
this
dan¬
gerous elements
and system'in
which the promises of the
govern¬
gains from the current rise
in prices and are not able or will¬
ing to take a long view of the situ¬
groups?
suc¬
the return to fiscal
ment and banks
real
demnation
and
groups to¬
monetary standard
a
are not
likely to wel¬
withdrawal of the intoxi¬
of
pressure
the Federal government to
give
the people of the United
States a
should
cating stimulant. Similarly, those
who are temporarily
experiencing
gress
existence
these
to this very fundamental and
grave
The question is'* whether
ter-effects.
coin
the
are
there
tion and,
not understanding its
nature, causes,, and probable af¬
(8)
why their
issue.
depreciating cur¬
rency- runs its course ending in
the blue "morning after" with its
economic
sickness
and
head¬
ache.
People enjoy the intoxica¬
a
understand
these
groups
people of this country in respect
raise the question,
quickly, of re¬
turning to sobriety before the in*.
toxication
pressure
requests could not be granted. In
short, control over the public
Administration
ride
us.
standard
and
ership
with these people,
to luck and waiting until
A proposal to return this
try
most
the risks
run
to be found in the
degree of lead¬
which Congress and the
they
whether
or
more
monetary standard and system.
(9) What is the answer? It is
and
people from
our
of
possible crash engulfs
a
suspension of gold payments, that
our
be
mone¬
course
trusting
thus far not
widely
country.
many
seems
save
officials
out the
come
The people of the United States
today
seem
determined
not
to
profit from the lessons of the past
spend
spending under
well
cent
of
attempt to
sort' of
further
people's
do
This
to
Congressmen could
Congressmen; for the
nature
We
would
point to falling bank
Treasury
question of whether govern¬
ment officials who understand the
further
basic
into
the
recession.
with
would
conditions,
likely to<
Congress and the
Administration,, unless leadership
is provided, to correct the farreaching defects in our monetary
tary disease will
deal
and
rather
than causes, there is not
be pressure on
unhealthy post¬
boom and such a
boom, with
its
abnormalties, is a prelude to a
to
these
money,
re¬
such conditions,
attempted to per¬
could
an
a consequence, there would
appear to be no good reason for
under
pressure groups
suade
Congress
the
war
than
When,
Bank
securities
of
thoughtful
a
decline; the prices
part, would refuse to
these
J: As
excessive.
as
would
ties.:
comes
on
individuals
issuance, in the opin¬
individuals, was re¬
understanding and attitude in
to our depreciating cur¬
rency, our monetary system, and
It is satu¬
States
these
characteristics of the general pub¬
de¬
pressure
ging prices of government securi¬
United
contain
United
standard,
the
of
serves
to be the chief
another, have given
al'or bank)—action is taken to curb .careful^consider^atioh to the jssue,
and from'those specialists in the
the responsiveness of prices to the
field of money who are
thorough¬
balancing of supply and demand
ly grounded in the; history and
at prevailing prices,
;
principles of monetary standards
The
present demand,
supply,
and" systems.
and price situation in the
not
the
garded
con¬
larger
symptoms
means
satisfy these
respect
on-
in
upon their
relentless
lic's
is attained and because no posi¬
tive—that is, outside (government¬
does
to
to
people
levy
a
to
pay
ion
and
attacks
these
promises
the
effective
order
gold-coin
a
seem
because
relatively free
no
and
Reserve
could put direct pressure
upon the
Treasury and Reserve banks to
redeem
their
promises
to
er
cease rising without fall¬
ing is when a country is recover¬
ing from a depression and when
States
in
Were
of our money should make this
clear to all intelligent
principle, the only
rising-prices could straighten
with
have
ruthless
system of direct redemp¬
tion. The present degree of de¬
preciation in the purchasing pow¬
out and
up
are
of
Since these
and
demanded
promises to pay into1 of government
circulation than would be possible fall.
under
of
groups.
have
can
rea¬
inability
the great expen¬
opposing such
when
much
meet
and' because
banks
and
basic
to resist these
pres¬
be found in the fact
irredeemable
government
Reserve
V
most
Treasury
can
issue
of
,
radical
a
currency
been able to pump,
tinue to pump,
a
is
ciation of
money.
increase
fear
use
.
aid Europe should, in so far as-is
possible, be diverted from the
to gold
(d) With rising prices* people
attempt in every way possible to
on
Government buying of goods to
r
as
governmentally-managed
deemable
government borrowing and allow
.
intelligence, thinking, and
safe
and
action, such as' that some¬
employed by governments
widespread
valid
no
issuance
;
the
banks
system ! wealth
our
demands' of. these
general
to
general
people.
•
There
not
are
the
reces¬
-
the
"
,
that
a
depreciation of
-
that
'
is
sures
pay
parity with gold at the
rate established in
January, 1934,
it is important to understand that
short,
rated with unhealthy factors;
of
has
redeemed.-V
21
Congressmen
]
non-fulfilled
a
the
institutions
de-
promises with
contempt that
for
ditures
of indirect conversion of our irre¬
deemable paper money maintains
taken to arrest the upward trend
in prices.
In
time
such
Despite the fact that
following.
times
treat
promise invites..
reached
was
to
the
Apparently the
I
can
resist
son
j
any
promise; and the people
and
high
to
pressure groups.
paper
depreciate to
can
.
•
w
(721)
degree.
It is a promise to
pay that
is not fulfilled.
It is a bad sort of
be¬
are
pressure
some
manner a, or the, cause of
been the; issuance of a great
that business
recession.. Because supposing that any positive action
volume of irredeemable promisesman's' mismanagement of credit" can be taken against rising prices
to pay by the Treasury and Fedand of a multitude of our other without a recession being a result
eral Reserve banks.
A gold-coin
if such action is effective.
things
impaired
economic
sys¬
Cr(
>-. standard5
forces
redemption
of tems ahd
Because people fear a
destroyed or impaired
recession,
*. promises and, therefoife:- restricts
a large number of
institutions in¬ they oppose effective action; They
:
the banks and government to the
cluding
governments
and
gold prefer to deal with symptoms and
issuance of promises that can be
thus create new maladjustments
standards, the belief is
;
*
■
■
"managed" inconvertible
money
mand and prices cease to rise and
do not fall because a nice balance
and Reserve banks
in
our
a
indications
production- catches
basically the people's
not so
exclusively the
money
of the government, and
that the control over the
public
purse
is in high degree, in. the
government's and banks' promises to pay
<
that the money of
public purse.
standard
a
contraction
some
and
means
government's
and abuse of the
Such
so'
may
-of
be
money,
the
services.
to
the nation is
the
to
against
power
goods and
gold-coin
a
the
■
•
adds
standard
The country should be returned
;
•
credit
not
There appears to be no sound
basis for such-a hope where posi¬
a.
-
'
mitted-
sion
aged". paper currency—-is ^ ari ink
tegral part of a governmentally-
than
credit, except in
some
new
can
avoid this basic
government:
managed economy, all who think
Price: maintenance mnd1 subsi-.
they desire such an economy and
dies (except those in the interest'
government sh ould bef expected, to
:; ofcmilitarjs naval, and air
prot^c- oppose,> if they are consistent, a
v'
tion) should-be ended.
return by the United States to a
The
of
has
people wish to see a further rise
stopped but they do not wish to
see a fall.
They hope that the rise
inconvertible pa¬
so-called "man¬
an
per; money
a
use
stage
depreciating real, income.
Many
people, apparently, are still in the
state of relatively high money in¬
comes, relatively large cash sav¬
ings, and fairly free spending.
They are enjoying the feeling
that
they can buy much—until
they try it.
(e) As prices rise people protest
and urge that prices not be per¬
f
institutions,
must; balance- costs
'
•
money.
:
The truth of the matter
is that
any impor¬
in this country, although
appear
from
.
~
•"
.
CKRONICLE
in
ginning to feel the
too
from
people in gen¬
return to a gold-coin
Without sucli pressure
sthndarcL
reduction to encourage production
and because individuals and non¬
i
a
to
demands from the
accidental surpluses make
this possible; The chief emphasis
in this respect should be on tax
h
,
higher level is reached,
peripr ability to store up values they continue to protest but they
indefinitely., : •\t.;- oppose the taking of steps that
As a
consequence, members of would cause prices to fall to a
Congress and the Administration lower- level that was regarded as
tions and individuals to invest in
them and to. hold them.
The reduction of the debt should take
-
as
(domestic
bearing an interest rate
sufficiently high to iriduce non-bank
investing; institu-
'
that
of
money
curbed
be
adoption
with the far-reaching
and fundamental
monetary func¬
tions performed by gold—its serv¬
per
Most of the Federal debt
sharply.
should
-
goods and servdisposal of people
demand
the
between a good and an
inferior money. Most people seem
to confuse the convenience of
pa¬
more
spending should
to
last
reached
tant way
there
corrective?
ference
beneficial.
the
ment
.
,1 ■
.
FINANCIAL
•
This
yet' been
are
part, does not understand the dif¬
stimulate production
the
at
a
Briefly they
following:
(a) The general public, in large
,.
that tend to
for currency
return to a golcl-
cure
would appear to" be the
health, safety, etc.,-are
involved,; should - be ended!
In
'short,
practically
all
measures
•
basic
a
live.
to
obstacles
this
matters of
'
.
&
other'
monetary standard, what
the
up.r
:
1
oil.
as
If
coin
Feather-bedding and all obstruc¬
tions to production, except where
•
to
depreciation is
Monopolies—both
labor
States
sources
their money;
•
■
countries,, which their real purchasing power- paper is
paper and gold is gold
as should the
purchases by those isi declining
until, prices
have is a fact that the
great majority
governments to whom we extend risen to great' heights and it be¬ of
the people of this
country are
loans;
This is imperative in the comes
necessary tO' utilize
sav¬
not yet
ready to admit in respect
case of such
depleted natural re¬ ings and to sell property in •order- to
of
obstructions,
domestic
and
foreign, to trade should stimulate
production and enable people to
buy more goods and services with
'»
<(
THE COMMERCIAL
' ":
-
Lower
•
'
greater
encourage
,
■
.
Number 4672
unfortunate
people of the United
'•
.
.
It
seems
reasonably clear that
leadership of statesmen is prob¬
ably more important in this than
in any other field at the present
time.
The
bution
of
value
such
of
the
contri¬
leadership to the
welfare of the people of this
coun¬
try promises to be immeasurable.
The
need
should
be
for
clear.
this
leadership
COMMERCIAL
THE
(722)
account for the
Time to Retire SEC
tutes
(Continued from page 3)
-<
,
The entity to which such request is
made may then furnish such statement or else refuse to do
so.
The prospective customer can then make his choice of
either dealing with the firm or not. The whole affair then
becomes a matter of personal volition.
There is
consideration to the question
ments should be treated as
Brokers
and
on
a
These
exchange"
securities
are
sale takes
is
by the following contrasting ef¬
hand the Commission, through its rule
making powers, has been constantly reaching out for more
power and oh the other, both the public and the securities
industry have been constantly attempting to curtail the
powers of the Commission.
•
'
• ;7.
efforts
and
then
the
crowned with
some
success,
Now
been
have
curtailment
at
long campaign, the Administrative Procedure Act was
passed. This stopped the Commission from acting in a multi
form capacity, as investigator, prosecutor, judge and jury
of its
activities.
own
The
Commission's
attempt at price control have also
met various set-backs.
public and the securities industry, we claim that there exists
emergency which justifies the continuance of an adminis
trative body to regulate the securities industry.
xi o
emerge
There is
question that these
no
tax results flow from the
regula¬
trader in
securities
tions and, decisions in their pres¬
ent state. I am of the opinion that
they have grown away from the
basic law to such an extent that
terest
have
nomic reality.
now
The
ness
results
relation to eco¬
al¬
peculiar,
are
same
modity at the
the
stock
com¬
or
I think
time.
same
Commissioner
difficult
would
find
it
to
explain 'this result
to the intelligent layman unac¬
quainted with the mass of merely
formalistic
of
our
son
and
which
dures,
technical
make
tax rules.
for
a
up
nomic
time.
He
much
no
rea¬
being both long
can
interest
proce¬
so
There is
person
and short of the same
same
in
thing at the
have
no
the
eco¬
stock
or
commodity and the rules can be
criticized as being a wide open
invitation to tax manipulation.
I
will
not
be
Commissioner
up
not
surprised
or
if the
Congress wakes
to the fact that short sales do
have
to
a
as
to
busi¬
in the nature of in¬
V In
my
777.
experience T r5 observed
that
the
Treasury
paid.
•'
7"
■
they will constitute
the law of the land.
reversed
are
Puts and Calls
be
treated
this
way
One way
a
a
in which to establish
long-term gain without taking
long-term
risk,
if you
it
was
buy
is
This
a
'%:7 ■ ;;•;■':]"■[7;77
put.
a
a
own
rise before
held for six months, is to
security which had
which
agreement
an
\
gives the holder the option to de¬
liver
stock
put at
the
the
an
to
the
issuer
of
wait until
Jyou
for
six
stock
sell it out and have
is
If
securities
the
do
and
the
comes
Section
If
amount
a
the
paid
short-term
It
existence the delivery date is the
date for tax purposes for
117
(g)
stock
changed
buy a stock on a when-issued
basis in
1944 and sell it on a
distinction
between
dividends
occurs
effect is that you
in 1947 the tax
bought and sold
on
contract
when-issued
their
the
If there is
eral
the
is
securities
of
treated
issued an
164.
These rules create many oppor¬
profit
under
stories
emerge
in circulation concern¬
difference
between the
and the tax re¬
results
of
tax
interest to
as
such
tax
for
results will
.
have a
is
it
receipts
capital
as
in¬
purposes
security
the
If
municipal
bond
is
a
will
not
fully taxable, and
the capital pro
be
to
add
77777'
Co.,
Transportation
phia
9
T.C
(No. 133) held that interes
indebtedness may be deducted
not
the indebtedness
though
even
is
outstanding during the entire
interest
case
accrual
the course of
reorganization and
requiring the pay
a
bonds
issued
ment
period.
In this
was created in
corporation
a
interest from
of
a
date be
ginning a year prior to the actua
organization of the company,
was held that the payment of in
terest
was
deductible
interest
the
even
though
period began before
the fiscal year.
In
the
of
case
If
preferred stock is redeemed
paid on redemp¬
tion, even though it includes divi¬
dend arrears, is considered as the
redemption
and
payment of interest for the period
beyond the redemption date the
payment is for interest
received in full
on
indebt
payment
for the stock, (I.R.C., Sec. 115 [c]>
and enters into the computation of
capital gain
or loss, no part thereof
being ordinary income. However,
if a corporation, without redeem¬
ing the stock, pays a large amount
of
at
arrears
is
received
time
one
the
and
such
retains
both
for
its
the
character
corporation
debtor and the bondholder.
Bonds
The
dends.
when stock
was
from
ferent
interest
for
rule
which
dividends
in
When
bonds
are
purchased the
buyer ordinarily pays accrued in
terest at the coupon rate to the
of
default
purchased is dif¬
that
of
taxation
for
default
in
taxation
were
when
bone)
a
bought, because interest ac¬
automatically from day to
was
crues
day but dividends do not.
If a taxpayer in the high
tax
come
with
is
brackets
in*
threatened1
large payment of dividends
a
he
arrears
be better
may
off to
sell his stock and receive the value
the dividend in
of
the price, and
thus convert it into
capital gain,
a
the
purchase involves
of money, finding
sum
large
a
buyer
a
who wants to receive a large tax¬
able dividend which Will come off
the
quotation for the stock, is not
easy.
A
corporate
dealer
in
securities
buyer
a
or
the
are
ones
to look
for when presented with
problem of disposing of such
stock.
•
v'7,v7V v7'7':
the
a
.
Dealers* Sales
v.
Sales of Capital
Assets
."7
.
With
respect to security trans¬
actions, a distinction is drawn both
in the regulations and the deci¬
sions between
his
one
who trades for
account and
one who buys
for resale to customers. The ques¬
own
tions in this connection
are
largely
factual.
The definition
of
assets
capital
(I.R.C. Sec. 117 [a] [1]) excludes
(a) stock in trade and inventory,
property held primarily
(b)
and
for sale to customers in the ordi¬
nary
course
Regs.
Ill,
of business. //.
Sec.
(c)! (5)
29.22
states that "A dealer in securities
is
a
merchant
securities/*.
of
.
•
regularly engaged in the purchase
of
securities
customers;
resale
their
and
that is
who
one
as
to
a
merchant buys and sells them to
customers with a view to the gain
and
profits that
therefrom.
If
may
such
be derived
business
is
simply a branch of the activities
carried on by such persons/ the
securities inventoried
may in¬
.
clude only those
pose
held for the pur¬
of resale and not for invest¬
ment.
It
Purchased With Defaulted
Interest Coupons
in¬
was
acquired after the default in divi¬
.
edness
total
dividend
taxable
though the stock
even
come
then
from
The recent decision in Philadel
as
gain,
the total amount
are
Correspondingly
corporate bond the in¬
ceeds.
on
entire
the
and
Payment of Dividend Arrears
If
federal taxation.
interested will find
to make a large
be
to
as
such interest will be exempt
tunities for tax
the
so
interest for the
as
that
tax-free
a
it in I.T. 3721, 1945 C.B.
that
paid
income.
terest
will
the
bonds"
of
money
terest
sults
"amounts
as
the holder upon the
by
partment
if
economic
sur-
and from my ex¬
perience I have observed that it is
recognized by the Treasury De¬
use
outlining the tax
which arise from
types of transactions in
this field. This ruling is too elab¬
orate to be discussed at this time.
ing
refers to
being paid
is
consequences
are
is
bond
though the interest is not
earned in a technical sense, I be¬
lieve nevertheless that the amount
various
person
the
amount
elaborate ruling
and
with
Even
entered into.
you
tendering
of
be treated as interest income.
price. This is a sale of a
capital asset, namely, a contract
to buy, and the holding period of
the contract is the date it was
The Commisioner has
or
part of the capital proceeds, or
a
able
of
month
a
Now,
retirement
belief that the plan will ul¬
Those
date
retirement
for
statute
received
timately go through there is an
occasional opportunity to do that,
in
which event they sell their
when-issued contracts to buy, that
is, they do not sell the
bank
a
when
date
the
gen¬
a
bonds
the
of
on
the
to
then, does the
interest for the period between
the payment of the bond and the
redemption date constitute what
speculators who
phantom profits dur¬
into existence.
cor¬
a
payment of interest in full to the
date of redemption, so that he re¬
ceives interest for a period beyond
or
auto¬
Redemption of Preferred Stock-*
amount
that
the
bonds
rendered.
made
777"
interest
the- privilege
given
years
"flat"
bond
profit will then be
redemption date
bondholders are usually
the
and
before.
Investors
'
occurs
payment
before
two
the delivery date in
1947 and you have a short-term
gain or loss. If you bought, but
did not sell, the holding date be¬
gins on the settlement date in
1947 and not when you purchased
security
a
7/7
the funds with
it be¬
know until its expiration how to
the
redemption. It is a very common
practice for a corporation on the
redemption of bonds to deposit
if de¬
in 1946,
basis
when-issued
price of the bond will
matically rise to reflect that fact.
One way of converting ordinary
income to capital gain is to sell
We know that
loss.
or
pays
of
you
-
a
the
the
that
means
frequently
date
trading in when-issued
the put you deliver
securities.
to
give effect to the economic your shares at the agreed price
to the issuer of the put, in which
"The rules dealing with the tax
realities of the transactions.
event you
protect your original results of short sales and transac¬
Incidentally, dividends paid by
capital gain at the price of the tions in when-issued securities,"
the person who is short of stock
cost of the put. This gain will be are
equally unreal. By a series of
is now held to be a deductible
long term and may result in a fictions, they permit traders to
business expense and
is not to
higher net after taxes than the have an economic gain but a tax¬
enter into the computation on the
larger amount of short-term gain able net loss. The net result of this
gain or loss of the transaction.
which you would have had if you is to
place security traders along¬
(Comm. v. Wiesler, 16 Fed. (2d)
sold the stock without buying the side churches and charitable in¬
997 (CCA oth Circuit), and Comm.
put.
stitutions as partially tax exempt.
v. Wilson, 163 Fed. (2d) 680 (CCA
The issuer, of the put, who re¬ The rules should be changed ei¬
9th Circuit), 1947.)
ther by statute or regulation so
Prior to these cases there was ceives payment for it, will not
and that the rules may be
of
of
payment
a
several years' interest at one time
called for redemption beyond
for
(2) of the Code.
should go down
gain
poration
all trans¬
actions. To illustrate: Even though
loss
after you buy
which
announce
by
retirement
upon
"7'7: 7
tion.
into
come
ex¬
element in the computation
an
of the
777:7'77 V; 777777/: •77777'
event.
sale,
a
several years'. interest
on
should
entire amount is to be entered as
without tax liability,
just as in the case of commodity
trading alluded to. Many fantastic
larger long-term gain. You do
not exercise the put which expires,
a
received
question arises, as to which there
may be a doubt, as to the payment
of interest at the time of redemp¬
are
as
default
the Code pro¬
amounts
holder
therefor,
a
You
your
on
bonds, etc., shall be considered as
amounts
received
in
exchange
further you
time.
held
that
the
months and if the stock has risen
the
have
on
date.
Section 117 (f) of
planning although
it seems to me that manipulation
would be the more correct term.
These rules make it -possible for
at
place
delivery date and not
vides
or
agreed price, for¬
mally somewhat below the market
does not arise from
purchase is ordinary income.
If a corporation which was in
into existence at what is a favor¬
these
have
taxable
it
loss, except for the commis¬
sions. which must be paid in any
trades
believe
ordinary income as
is
the premium paid upon retirement
is covered by this section, but
decisions
unless
but
cases
agents
takes
but is gain, which I
come
of
se¬
case
Paid On Retirement of Bonds
(which are not yet in existence)
but merely sell their right to buy
the securities when they do come
regulations • and decisions
permit a person to be long and
the
is entitled
dividends
expense
The
of
ordinary
an
the
Premium and Interest to Maturity
into
been instructed not to follow these
no
though we practitioners probably
can follow through the fine tech¬
nicalities out of which they arise.
snort
that
hold
the
between
but these
trader
a
decisions
deduct
they
securities
paid on short
a
dealer and
sale
the
contract
ing the pendency of the plan fre¬
quently desire to cash in on such
profits before the securities come
(Continued from page 2)
with a deductible
capital loss nevertheless.
end
in
and
all
canceled without gain
have
And Sale of Securities
basis the excess is not interest in-
place when the security
and
bondholder's
the
exceed
nterest
short sales the
the
the
unenforceable
is
tract
the
Special Tax Problems in Purchase
If, however, the payments of such
oc¬
that part of the capital proceeds and
so
come
never
date of purchase is a return of
capital and is not taxable income,
or
I
what
on
payment
change or retirement of borcdSi
Receipts in payment of interest
which accrued after the date of
In that event the con¬
existence.
livery date
The line of battle is well defined and in behalf of the
changed,
radically
turn
all
case of
delivered
curities
plan is not adopted
securities
the
for example, when after a
as
is
or
"sale
a
Any
interest which accrued before the
situations
transactions in "when-issued"
issued according to
to find that the
the
together.
coupons
received thereafter in payment of
loss
or
which the sale
on
In the
curs.,
the
sion has been characterized
date
un¬
remembered
be
must
and
discussed
is the
is
cost of the bonds and the defaulted
better
are
it
capital gain
a
there
have
the
unless
commitment
binding
small,
treated and
arises
of his work. Encroachments of
In the case of railroad reorgani¬
this kind constitute the precedent which make for a con¬ zations these contracts may be
trolled econoniy and may ultimately destroy the capitalistic outstanding for many years. Per¬
sons
may, and do, buy and sell
system which has made this a great country.
these securities and accumulate
The creation of the Securities and Exchange Commis¬ a substantial profit or loss only
one
when
ganization or recapitalization of a
corporation are sometimes dealt
in before they come into existence.
These transactions are on a whenissued basis and according to the
customs of the Street there is no
to
are
ual to be free in the pursuit
On the
cific payment for the accrued in¬
terest. The purchase price is the
nearly approximate a
problems
derstood
plan in effect at the time the
make their insistence known both to the Commission and to transaction was entered into, and
settlement is not made until the
the members of our Congress.
issue and the delivery of the se¬
Here are involved the fundamental rights of the individ¬
curities.
forts.
promulgate rules which
more
that before
dealers, all of them, large and
so
and
would
If, however^
reorganization, its bonds are soldi
"flat," that is, without any spe-
through the realities of the situa¬
be is¬
sued in connection with the reor¬
which
Securities
confidential."
be
the Commissioner
of
is unfortunate that he did not see
tion
settlement.
of
corporation has defaulted in
;he payment of interest, which
happens when a corporation is in
only technically sound and it
are
When-Issued Basis
"whether these financial state¬
should immediately insist that these reports
Securities
in
Transactions
of hope in the Commission's letter from
ray
date
fair tax result in this field.
vastly different from the compulsion enforced
a
(g)
him reduces the basis of
quote above, indicating that it would give further
we
economic
nhe
The rules
stock; the amount received by
his stock.
the
toy .SEC regulations.
which
under Sec¬
(2), but if the put is
exercised and he is obliged to buy
unusual proceeding.
All this is
short-term gain
a
tion 117
the
to
realities.
consti¬
received
he
amount
Thursday, February 12, 1948
relation
closer
price he received
If the. put is not exercised
for it.
the
CHRONICLE
FINANCIAL
&
.
.
."
frequently
happens
that
dealer in securities wishes to
a
&
make
long-term investment in securi¬
of the same type which it
the ordinary
ties
sells to customers in
v-h.
Volume
167 Number 4672
Course of business.
sioner
to
The Commis¬
have
should
such an
THE COMMERCIAL
objection
no
investment
tinguished between investors and
traders,
sts
investment
stock in trade
maximum
securities
so
tax
and
its
12V2%
to obtain the
as
the latter
advantage in each
traders
court
Department has issued
a ruling
(I.T. 3828, 1946—2 C.B.
68) which states, in effect, that
a security dealer may acquire se¬
which
(1) the
acquired and are
substantially different
it
is
regularly dealt in for
In
investment securities
are
different
from
customers
of
of
a
retailed
those
in the
the
type
(4)
ordinary
duces
a
raises
In
the
first
place,
there
tention
be determined whether
investment
security is of
different from
the
if
even
re¬
In the second
"A
or
time he
same
other
whether
purchased
were
vestment
for
or
held
tax¬
ventory
tain
its
to
account
in¬
vice versa, so as to ob¬
unfair
tax
advantage,
or
an
there is
no
cates
de¬
invest¬
an
Commissioner
is
of
securities
sioner's
of
that
in requiring clear segrega¬
tion of investment securities from
case
the inventory, but
segregation
the
date
is
of
so
long
as
clear
made
such
original
acquisition
and is maintained consistently un¬
til the security is disposed of, the
Federal
is
revenue
adequately
protected.
i
I do not think this requirement
is
justified
law
or
by any provision of
the decisions and it is to be
tioped
the
Commissioner
amend it to conform
sions.
A
review
of
will
to the deci¬
the
decisions
Will be of interest.
Vaughn
guess
my
v.
606, dealt with specialists
'on the New York Stock
They
Exchange.
held to be dealers
were
the stocks in which they acted
specialists and to be investors
in
on
the
securities
The
and
not
to
as
be the facts of the purchase
may
for investment.
The
V
of Richards
case
>
v.
Comm.,
Fed,. (2d) 369. (CCA 9th, 1936),
•although involving real estate, is
81
significant in its holding that the
that
the
too.
valuable
for
farming
divided it for resale
held
court
held
that
lots.
as
the
lots
The
were
primarily for sale and
profits
constituted
an
gain.
/
Fuld
v.
the
a
•
capital
•'.<
Comm.-, 139 Fed. (2d)
(CCA 2,
Under
the
ordinary
business profit and not
465,
sub-
1943)
1932
was
decided
Act, which dis¬
the
options
in fact,
satory
to
as
the purchase was
bargain
purchase"
a
stock
that
there
was
was
sold, at which time
capital gain or loss. In
distinguishing
that
case
taxpayer
a
to one class of
as
the
time
same
other securities
about
two
price, whether or not the option
was
contingent upon continued
employment, whether the option
was
assignable, all-entered into
"a dealer
may be
securities, and at
may
be holding
the
to which he is
as
This
classes
statement
of
in
securities
The
by the
and
regulations
be
not
ernment
an
investor
bonds, etc. I
drastic
The
gov¬
to
;
problems
arising
when
out
loss
or
gain
no
is realized at the time
is
asset
an
purchased, however low
the
purchase price
however attractive
be
may
and
bargain
a
The
it
tax
problems raised
by
stock options given to
employees
is another field where the
purely
technical tax rules are
destroying
what
might become
revenue.
In
a
addition
source
of
the regula¬
tions prevent business from
using
valuable tool for securing and
rewarding key employees and of¬
:
The <' Commissioner
that
stock
and officers
options
to
has
and that they
validity. It should
ruled
employees
are always
compensa¬
tory and that the officer or em¬
to
deduction
a
paid,
corpora¬
and
the
option
the
purchased.
price
'
this
would
courts
Treasury at all.
flatly held such
tion to be invalid.
regula¬
a
the
are
the
any
less
,
similiar
1930's
regulations
that
them, it will still be
in
despite
necessary to
that the option
prove
for
vulnerable
and
were
given
was
compensation in order for the
adhere, although of course
tax to
the burden of proof
payers.
'
is
on
the tax¬
-
the
the
views
contained
in
regulations, and the de¬
termination
option
his part that every
on
shall
treated as being
compensatory in nature, and it is
lair to say that every plan, how¬
be
much it may be motivated
by investment, and not compen¬
sation purposes, will be attacked
by the Commissioner as being a
ever
method of compensation.
As
all
we
the
know,
lating
and
a
plan of stimu¬
to management
common
incentive
Important
Congressional
sympathetic to the
pleas of industry and some have
urged the Treasury to amend the
regulations to ease this situation.
Treasury has, however,
that
its
regulations
sound and that the
islative and
borne
of
the
not
to
increase
.
employees. <,-V
number
a
of
and
which
sympathetic
have
ear.
The Committee
received
a
with
Federal Tax¬
on
deal with
an
individual, not in the
business, you have no
insurance
of valuing the contract.
That such an annuity contract
way
has
fair
no
market
"
loss
Chairman,
made the following recommenda¬
tions:
' •'
f<
1
'
shall
income
result
from
the
receipt or exercise of any
stock option granted to an em¬
ployee as compensation for per¬
sonal services. Where the option
price and market value of the
stock
time
at
option
issuance
of
of
the
substantially the same,
or exchange shall
be treated as a capital gain. Where
the option price is substantially
are
the gain on sale
If the
intended
as
of
the
stock
the issuance
the
or
at
the
time
the exercise of
option, the portion of the gain
on sale or exchange equal to the
spread between said option price
and said lower of market values,
shall
be
treated
as
income from
compensation
capital gain. A loss on the
sale, exchange or worthlessness of
the
stock
or
option
shall
be
treated as a capital loss."
be
for services, then,
regulations, no tax
imposed upon the em¬
ployee
at the time he acquired
either the option or the stock.
In the Smith case it was con¬
ceded that the
granting of the
op¬
tion
intended
was
compensation.
decision
as
additional
Accordingly,
cannot
fairly
be
the
con¬
strued to have laid down
any rule
as
and
the
remainder
a
Another
acceptable proposal is
that contained in the report of the
Special Tax Study Committee, of
a
the exchange of securities
private annuity.
...;
1
Darise Lloyd, 33 B.T.A. 903
J.
(1936);
Frank
C.
Deering, 4 0
(1939); Bella Hommell,
7 T.C. 992
(1946), all of which are
based on Burnet v. Logan, 283
B.T.A. 985
U. S. 404.
B.
In the Estate of Bertha F.
T.
Memo. Docket No.
July 31, 1947, such
held to have
The
Nevertheless,
the
Treasury Department gave addi¬
tional significance to this decision
amended
v.
the
was
fair market value.
no
taxpayer reported
equal to 3%
sum
annuity
as
of insurance
company's rates
for the annuity,
ordinary income, and that was
not questioned
by the Commis¬
sioner.'
In
(1939)
where
ration
in
companies
tion
securities
244
were
charitable corpo¬
a
that
so
transferred
the
B.T.A,.
exchange for annuities,
held
was
for
-A
••
40
Raymond,
would
annuities,
the
for
much of
the
insurance
as
have
charged
considera¬
was
thereof
annuities
and
3%
regulations
in
of
excess
held to be
such
amount
was
gift.
a
In Hill v.
Maloney, (U.S. D.C.—•
N.J.
1944) 58 Fed. Supp. 164, the
Court used these principles in an
interesting
when
way
and
held that
annuity payments ex¬
the
ceeded the cost the taxpayer then
had
capital
a
gain. In addition,
receipts are annuity re¬
same
the
of
as
such on the basis
agreed value of
the stock
sold, that is to
value
say:
3% of such
taxable annuity un¬
(b)(2) of the Internal
was
a
der Sec. 22
Revenue Code. The result
same
the
was
the
if the taxpayer had sold
stock! and
purchased
the
as
annuity.
:
,
With Newberger, Loeb
& Co.,
15
York City,
members of the New York Stock
Newburger,
Broad
Street,
other
_
Exchanges,
mend that:
"(1)
employee
realizes
warrants from his employer
effected
that Rudolf Gerstenber-
With Trusteed Funds, Inc.
An
no
income from the purchase of stock
or
announce
and
Loeb
New
has joined its Investment Re¬
search Department.
others,
Smith, 324 U. S. 177 (1945).
in¬
The value of the securities
come.
in
represented ordinary
ger
"Congress should adopt explicit
statutory amendments to provide
Comm.
8977,
contract
a
Exchange
Mr.
Roswell
Magill
is
Chairman, in which they recom¬
that:
1
Kann,
which
applicable to situations where the
option was not granted as com-
and
within
on
for
ciety of Certified Accountants, of
compensation
would
value
meaning of the law has been
passed on many times.
There'is therefore no gain or
it
is
com¬
annuity you can value
annuity both for the purpose
of determining gain or loss on the
exchange and the cost of the an¬
nuity, but if you make such a
the
amount
Lasser
securities
pany for an
ation of the New York State So¬
Mr.
exchange
you
solvent life insurance
a
transferred to
/
•
Annuity Contract
When
,
as
under
the
bnt
of tax revenue (at capital gains
rates) and at the same time deny¬
ing industry a valuable tool for
rewarding management and key
ceipts taxable
not
that
merely to prevent the adoption of
such plans, thus destroying what
might otherwise become a source
of
validity of the regu¬
effect at that time.
These regulations, only
imposed
tax on the employee if the
grant¬
ing of the option was intended as
was
mind
revenue
a
proposals made
the Congressional, committees,
which
in
present rules is
tax
income, taxable at surtax rates,
remedy is leg¬
been
have
of
be
inT
not administrative.
conferences
some
of
are
sisted
to
must
effect
lead¬
have been
There
that
the
key employees by means of
The
It
,
options and stock purchase plans.
ers
plan
requirements
the
question
the Smith decision has been
bar to the
the
business and would not hurt the
Commissioner's
rulings, since the regulations were
amended, indicate a strict adher¬
new
meet
Transfer of Securities for Private
However,
to
.
In my opinion
there is nothing in the Smith case
to indicate that the present regu¬
lations
actual cost to him."
This is a practicable
values
than
in
transaction
stock-
compensatory intent, using lan¬
guage almost identical to that in
the present regulations, but the
lations.
compensation for services.
a
or
confirm the
more
employee's
stock-option plan.
'"(4) The tax basis of the stock
purchased by an employee is '.'la
purchase
the
no
compensation
point in the early 1930's at¬
tempted to impose tax on all such
transactions regardless of the ex¬
istence or non-existence of the
less than the. lower of the market
This decision did
for
on account of his
purchase of stock under
on
pensation.
a
ficers.
a
decided
stock
the
'
,
the time he exercises the
value
;
employees' stock options have
always been perplexing.
On the
know that
Court
officer of
as a
long-term capital gain.
"(3) An employer is not entitled!
case
be noted that the regulations
"No
option, the income being measured
by the difference between the ac¬
of
we
an
from the sale shall be treated
of the decision
scope
Smith
of doubtful
not
:
ever.
buy stock-he has ordinary in¬
come at
tual
Employees
hand,
the
tion receives from his
employer as
compensation options
Stock Options to Officers and
one
and
nothing' additional
see
a
tax
Supreme
case
and
Supreme
that where
ruling and I hope the
Commissioner will modify it.
The
the
greater confusion than
in the regulations or decisions for
so
of
Smith1
rulings of the
Commissioner following the deci¬
throw
this
question
into
stocks
in
varying de¬
sion
cannot
common
decision
Court in the
dealer in government bonds
a
may
stocks
common
investor in
final decision in
grees.
Commissioner for the purpose of
the startling
ruling which has
been made.
As it now reads a
an
two
of the option price to the
market
to have been seized
seems
the
In
dealer."
a
between
the court decided
narily sells to his customers.
the Stokes
the
em¬
without tax consequence until the
a dealer mayinvestments must be of a
as
in
are
of
given
were
compen¬
the
by
decisions
beyond the
the
promote the incentive of the
establish
justified
com¬
of holding, attracting and reward¬
bought under! the op¬
Where, however, the court ing top management is a very ur¬
gent one throughout all industry
was of the opinion that the sur¬
and
the Treasury interpretation
rounding circumstances indicated
is
circumstances
of
sale
and
not may seem.
On the other hand,
those
of
purchase
determine stock options to
employees are fre¬
whether the property is sold as a
quently given as additional com¬
dealer or as an investor. In this
pensation and may even have a
case'the taxpayer bought a farm, value at the time they are given.
but later when the land became
time
as
tax practitioners
wag
classes—and the line of demarca¬
tion is indistinct—the
relationship
ruling casts doubt on the
right of a dealer in common stocks
being allowed investors' status of
stocks, however clear
the
at
taxable
intended
was
Most
tion.
type different from those he ordi¬
new
any. common
the op¬
over
constituted
treat
be
others.
would
not
or
for
the securities which
dealer
proposition that a
a dealer as to some
be
person may
regulations
as
sion is in accord with the regula¬
tions
limitation
be
phraseology and ployee by giving him a
proprie¬
opinion in this tary interest and was not
the
rule
new
to
purposes. Where
found
price
treated
or
speculators, in any event not deal¬
ers, in other securities which they
occasionally bought.
This deci¬
of
said
were
compensation
which led him to publish I.T.
The
a
not
Comm., 85 Fed. (2d)
497, (CCA. 2, 1936), cert, denied,
299 U. S.
thinking
from
the
was
other
compensation and
the market price
stock
not in the Commis¬
confidence
it
each
attempted to dis¬
options which
as
court
tion
3828.
course,
_
of
,
am
re¬
compensation
present they held that the excess
importance of
While I
given
the
securities
the
all
pensation.
price
a
"(2) If such stock is sold by the
employee two years or more after
the option is
granted, the gain
not the
or
feel that these new regulations
go
are not
between
those which
The court's opinion indi¬
the
courts
were
cus¬
vestment and those bought for re¬
' :
The
reasonable,
to
sale.
in the very same securities
ment
which he sells to customers.
:
The
weight of evidence general
incentive
dealer
a
consistent with
tinguish
in¬
keeping
accounts which would
distinguish
between securities bought for in¬
why he should
reason
not be allowed to make
was
regard
in issue.
all
transaction
the
with
transfer any
its investment
,
at
They
regardless of whether
all influence the final
decision.
the
payer
often
decisions
than the fair market value of the
stock.
ence
tomers. On the
arbitrarily
given security from
agreements
intended.
The
flect this confusions
the court concluded that the tax¬
not
give anything
for nothing the surrounding
lesa»
at
atmosphere surrounding the facts
of "type of security"
found, the requirement
is still, too stringent. So long as
does
a
cannot
substantially
as
of
than
However, <, because
and
to provide that
property to an
employee
for, less
than
value
would give rise to taxable
income
23
so
to
definition
dealer
proprietary interest in the
5507,
(723)
any. transfer
and the facts in each case and the
could
be
a
T.D.
be
as
to
to
was
mer¬
for
resale
given,
try to spell out something of value
received by the employer and that
makes it look as if compensation
to
securities
any
or
but
resolutions
his
it is the duty of the court to
termine
rule
give the employee
additional
incentive
arising
away
dealer" and that
a
the
-
frequently
are
corporation
in¬
may
securities
/
consider the development
company.
to one class of securities
the
at
that
dealer
a
which he is not
workable
some
be
it,
an
year
the nature of
employees,
changed.
us
from
inven¬
his
merchandising
stated
court
may
as
holding
type
a
securities
tailed to customers.
and
can
an
for
securities
accordance with his
from
reward
Options
securities
certain
to shift
The
payer
no
not
or
in
in¬
an
not as compensation or substitute
investing.
chant
workable rule under which it
place,
that
in
count
to
and
is
Supp.
444,
aff'd
without
dealer
a
business- and
of this problem.
v.
Fed.
withdrawn from
were
vexing questions.
some
Stokes
tory prior to the end of the
intro¬
problem
and
must be
and transferred to his personal ac¬
element in the deter-
of
the
1946)
clajmed
course
requirement
new
-mination
1945)
Pa.
business
last
of
case
61
3,
business.
This
which
Let
(E.D.
is clearly indicated at the time of
and
the
the
centive to greater efforts. If busi¬
ness is to be allowed to
expand
profit as being
in the case of dealers,
or
of
owners
thereby provide them with
opinion, 154 Fed. (2d) 1022 (CCA
ment securities is determined and
original acquisition,
part
a
Rothensis,
invest¬
as
by
dealer's profit.
a
customers; (2) the securi¬
ties
are
physically
segregated
from security inventory and are
separately accounted for; (3) the
of giving employees stock
options,
usually is to make them
which
allowable
customers
employee
of his stock in order
purpose
illustrate that
cases
to
sales
ordinary,
securities
classification
These
is
the
cases,
this tax. This stubborn re¬
fusal of the Commissioner to face
this fact defeats the
very
such
sales
of
some
to pay
The
after
as
the loss
characterizes
sale to
separate
majority
i
must sell
date.
sales
regarded
and
in full.
certain
a
that
were
traders
are
are
on
held
date
curities for investment if
than
as
the tax-
case
bought securities while they
investors but changed their
business operations and became
Treasury
circumstances
and market value of the stock at
the time he buys.
In the great
were
recognization of this problem the
securities
term, losses,
In this
CHRONICLE
pay a tax on the dif¬
ference between the option price
being allowed
payer
where the security either de¬
clines or increases in value.
In
case
held under
long
on
then defined.
FINANCIAL
ployee must
losses in full, whereas the former
were
limited to a deduction of
long as
the taxpayer does not manipulate
so
&
or
provided the purchase is
or
the option is granted
(Special to The Financial
MIAMI BEACH,
lin
E.
Funds,
Frederic
Inc.
Building.
Chronicle)
FLA.—Frank¬
with
Trusteed
of Florida,
Biscayne
is
24
THE COMMERCIAL
(724)
&
FINANCIAL
CHRONICLE
there is once again a.' normal stock
to sales ratio.: Thby are not ex¬
1948—An
cessive in relation to Current de¬
;and public
ness
(Continued from page 6,)
more vulnerable to adverse
influences than was the case a
ing
psychology, and
on corporate.profits and
policies,
securities markets, etc., will not
be pleasant.
and, sad to say, neither
(4) Foreign Situation:
Recur¬
government nor private ; interests
show any inclination to do more ring
scares
are
anticipated
in
than pay lip-service to fundamen¬ 1948,
Certainly no basic progress
tals.
Labor wants higher wages, has been made relative to resolu¬
tion
of
but controlled prices and profits;
the
problems vis-a-vis
and does not appear to be in¬
Russia*
The proposed Western
Power Alliance, and increase in
terested in increasing productiv¬
ity. Business endeavors to pass on budgeted expenditures for mili¬
wage increases in the form of tary aircraft, etc., are straws in
higher prices.
(High, corporate the wind.
profits are a necessary element to
(5) Political (Domestic) Situa¬
an
expanding economy under a tion: The forthcoming election
capitalistic system; but it appears will preclude any really construc¬
sounder to enjoy somewhat lower tive
approach to economic prob¬
peak profits and have the average lems.
All actions will be taken
level of profits better sustained with a view to
getting votes. In
for longer periods.)
Government this regard, capitalistic confidence
is striving for votes, and will con¬
(with particular respect to indi¬
tinue to shape policies with that vidual investors of means who in
end in view, as indicated by Ad¬
large part finance corporate ex¬
ministration statements, the obvi¬ pansion) will be shaken by Presi¬
ous .fallacies of which are too nu¬
dent Truman's obvious policy of
merous
to mention here.
Thus, taking a "left Wing" approach.
history is /repeating itself. The in¬ His proposals on individual tax
flationary boom and concomitant reduction .(increase exemptions),
dislocations go
forward in the to increase " corporate taxes, to
uSual way.
No one can tell when broaden social security, etc., clear¬
we
shall hit the drop off point ly represent an attempt to lose as
and the usual slide will Start; but
few "left wingers" as possible to
developments indicate this will Wallace.
happen, though probably not be¬
(6) Labor: Any study of the
fore another year.
7- ;
programs
of
the
major
labor
•The following summarizes some
groups shows their determination
of the significant elements 'that to
press for a third round of wage
have been developing:
f;V
;
increases, and to limit corporate
As illustrative,^ the
(1) The bond price structure (profits, etc.
year ago;
-
,
has undergone sharp decline.
conditions,
credit
reflects
historically has been
a
This
recent CIO executive board meet¬
and
ing resulted in the following plat¬
forms, among other things: (a)
For price and credit controls; (b)
harbinger
Other segments of
The large increase
in demand for credits by corpo¬
of
trouble
our
in
economy.
rations
in
the
wake
of
deterio¬
rating financial position; large fi¬
nancial requirements of corpora¬
and the poor market for
new
equity issues, 'coupled with
the cautious attitude of suppliers
of funds and government policy
on
the
Treasury bond market,
promise at best a bond price pla¬
teau around present levels. Banks
are expected to further tighten up
rates on usual type of commercial
tions;
loans ..and to continue further re¬
strictions
on
term loans.
(2) .Also, in terms of the abroad
credit picture, further retirement
An
profits tax on corpo¬
rations; (c) Tax reductions in the
dower brackets; (d) Further wage
excess
increases.
7
'
(7) Status
■
7-7':»
The ele¬
of Boom:
below
mentioned
ments
7;:
have
•been
major causative factors in
producing the current boom, aided
by a rising price level:
,
must be predicated on one?s esti¬
mate of government
policy. From
viewpoint, the ex¬
economic
i n cost of
living have been declin¬
ing since late 1944. Some studies
show
real
levels;
income
other
down
studies
to
rise
of
1947
has
and
increased
the
the^
in our
economic picture.
Farm prices
particularly have risen sharply,,
squeezing real purchasing power
of lower income groups and re¬
ducing their ability to purchase
other types of goods.
It has tend¬
ed (together with higher labor
costs) to squeeze many businesses.
It is believed prices will" hit their
peak the second or -third quarter
up,
at
debt
consumer
the
time increased greatly. Con¬
same
credit has reached
sumer
total
a
a
increase
in
individual
in¬
comes.2
dangers
It is known that
businessmen
are
setting up re¬
against possible inventory
depreciation; and that bankers
other
ice
types of consumer goods
expenditures.
The effects have
been - most markedly noticed in
the luxury fields—theatre
admis¬
liquor sales, fur, jewelry,
etc.; and has been spreading to
ladies' apparel and other soft goods
lines.
Even in other basic dines,
sions,
many
tures
of the necessitous expendi¬
have been made.
Buyers
becoming more price con¬
now are
scious and selective.
In
our
purchasing power remains high,
over all ability
to buy has been
decreasing in the face of pyra¬
miding cost of living; and many
non-unionized workers are ibeing
severely squeezed.
We recognize
that cyclical changes usually are
induced by changes in the smaller
dollar-Wise but
volatile ^in¬
more
dex of
capital goods expenditures
—but that .element ( discussed be¬
low) can be affected by recogni¬
tion of the weakening consumer
picture.
estimates
current
Some
billion
$16-18
tures in 1948.
it
7 ,\v.
'
expenditures:
(b) Business
would be
a
forecast
in
executive esti¬
quarterly • with the
SEC); but it appears probable the
reverse
will occur in 1948 be¬
■"
cause:
77'" ' 77'
Savings were high .in 1947—
around $12 billions, against the
pre-war
of
$5
billions.
The 4947 figure, however, is low¬
er as a percentagerof -national in¬
come
war
average
than
was
years.
the
case
in pre¬
We do not consider
total
savings
most
commentators.
as
significant
creased.
as
Attention
do
is'
'
'■
■V
7
;
v.;
77", f
?(3) Difficulties in financing. On
the one hand, construction costs
high, as indicated above; on
the
other, equity capital com¬
mands a low price in the market,
which likely means dilution -of
are
ing necessary.
■
■,
directed to the qualitative aspects.
S.
News, Jan.
23,
issues and, even, more, for new .is¬
'No change is in prospect, j
(Increasing
financing
through,
sues.
convertible preferreds is to be
of this
(though in lim¬
'>
;v■
(4) Business faces a third.round
increases . .-. but labor,
of wage
rient
Conditions
render. it
page
11.
.
appro-;
ited
priate to recall the old admonition::
as
"It's not the gross you do, it's the»
degree);will obtain in 1948,
pointed out above.
(8) Financial position of busi¬
ness:.
For
detail, reference
js made to the illuminating study?
"Financial Trends of Large Manu¬
facturing Corps. 1936-46," Survey
of Current Business (U. S. Dept.
of Commerce) Nov., 1947. -Dollar
more
value
of
gross assets increased
sharply between 1939 and 1946.
Much of the increase went into
plant and other capital assets; and
much into inventories.
Both
were
made
greater by increases in the
price level.
In the face of the
sharp rises in; net capital assets
and inventories, other assets de¬
clined markedly, about 22% for a
representative sample of Corpora¬
tions, excluding the 200 largest
•V'i
concerns.
Current -assets
the
of
entire
1,000 major concerns sampled, more
than
doubled
at
the
1946
year
end; but current liabilities almost
net
profit remaining :that counts.":
Corporate profits have made,
pleasant reading, but they are >il->
lusory.
The 1947 net profit fig-.
ures
were
around
$17 billion,
compared with around $12 billion >■'
in 1946; $4Y4 billion in 1936r39;:
and about 8 % billion in 1929. But,:
in
1947, as in 1946, profits in¬
cluded a very large percentage ofinventory profits.
They also are \
after inadequate depreciation. De- :
p.reciation- charges are based on,
cost.
The replacement cost is far
larger,
and • this, coupled with greater working capital require^
ments, reduces funds available for»
distribution to stockholders. ;
7
,
•
It is predicted that
and
higher labor
other costs will not be fully
offset 7
by
increased
efficiency,
higher selling prices; and/that
profits-will be lower, even if vol-;
ume is sustained.
A 10% decline
and
sales
in
(which is not likely in ;
all) would mean a ma-;
terial decline in profits.
In aiiy;
event, it seems clear that corpora- j
tion profits will be a lesser percentage of national income than
1948
over
the
was
•,.(11.
in 1947.
case
.7,7
Dividends: The U.
of
current ratio includes inventories
held corporations attained
in current assets.
time high of $5,174 million, about 1
set"
18% above 1946. In 1948 dividend:
payments likely will be: lower, in
the wake of lower earnings and
higher capital assets and working ;
The "quick as¬
(ratio of cash and re¬
ceivables, etc., to current liabili¬
ties) showed even greater decline.
It: is likely the quick asset posi^
tion deteriorated further during
ratio
4947.7:7 ;.'7::;r77
;^7-
This
situation,
coupled ; with
large vplupie of business, jhigher
point, and i i a more
rigid cost structure, increases the
breakrcven
and increases reliance on. the cap¬
ital
markets
for
We consider this
new
financing.
of the most
one
important: cautionary: aspects of
the present situation, especially
if taken in conjunction with num¬
Commerce
S. Dept. :
that ,1947 P
measured against the big increase
in dollar volume of business. Also,
reports
dividend; payments 'of
publicly
an
'•
all
capital 'requirements. Observers 1
who-ppfnt out the lower than ;average
ratio of, dividends to earn1947 must recognize the
irigs in
.
/
valid reasons; rooted in sound fi¬
nancial policy; and that,the Situa- V
tion
will. be
Stockholders'
than
the
was
worse
(from the
viewpoint) in 4948
.
ease
last year; 7Qn
made to
this .point, reference is
the "Chronicle" of Jan.
A
well
that
in
;
<
;
15, 11948.7
study reveals 7
industry, for ex- ,
prepared
the
oil
ample, 1946 dividends represented
90% of adjusted earnings; Vad- V
j listed earnings" being after a )
50%
increase
in
depreciation >
,
government, and consumers are
showing greater resistance to -high
prices.
;7: /7,;/)'.•
'.7:77:7 ber 9 below.7r7: ;
77*7 777 7- charges tp provide increased re- 7
It is recognized that oil and .util¬
(9) Capital
requirements : of placement costs.3 7 77^
7 ** '
ity
industry
expenditures will corporations: At the recent con¬
continue high; and that business¬ ference of the American
i The Stock Market 77 7
Manage¬
.
,
estimates
men's
filed -with
the
project first quarter 1948 ex¬
penditures at $4.1 billion,, about
$1 billion above first quarter /of
1947 and only $330 million below
the fourth quarter of 4947. I Thus
the current situation is strong,)butf
SEC
trend
downward
Association, :it was' esti¬ 7 Stocks are one of the/least in- V
that corporations in 1948 flated sectors of our
.economy. '.In
would, require 422 ~23 billion 'for
itsolf ihiS' doekTibt^^|>r(hdde basi^ ^
plan equipment vand working ca pforheUevirig-eqiutieswilleujay
ital.-. fEven; granting fthei estimate an
important upsiving.The market >
that .$14-15 ^billion can; be-pro- has 'beeh realistic in
;its approach
ment
mated
vided from retained /earningsarid irTre^ectioit of fee^towing: /7 j
(a) There, is pb .major chrrela- ».
tibrifbetween stock price ahd/co'm^ modity-.price moyeinehts, as dem- *
7':::" ,,77/ mean \$8r9 (billion ;to be ? raised
onstrated by/ecbrioriciic history. ;
,
of the iboom from7 outside
sources. '. This
is
(though/per¬ depreciation charges, (andthis,fig¬
haps moderate) likely wilLbe in-v ure appears rhigh after .allowing
itiated by the third quarter of for * dividend
payments), it would
a
1948.
"
,
.
n
(c) The third crop
has been inventory accumulation*
slightly * below the 1947 /figure.
start tof Corporations - had . considerable earning ratios are Jo® However^, ■>>
1947: that for several reasons; con¬ difficulty in connection with >1947 this is to, be expect^/in periods;tinued inventory building/was; to financing.Presentiridicationsare of- peak ieCOhprnic/'^aCtivity; Tfib ;
be anticipated during the year;', that large scale public financing point' is- 4haf /common stoCksisell >
This resulted
in production. to will encounter even greater dif- on iuture expectations. /With the >
meet consumption plus inventory fieURies, 4n: 194877; 7-^777,
productive m a c h i h e ^already >
We
pointed
increases.
less
out
This
at
the
will be
a
-much
stimulating
'
The/cost Of equity financing is
high.
The 'market's
absorptive
capacity ;has not: beeri /good, new
equity capital being raised (even
for /prime
corporations)'
concessions.
In
the
at. price
face
Qf
the
strained to-the utmost, and
with
virtual,/certainty
eco-r
,
tories have been built
un
to where
less,favorable basis
on
which
new
that
for
;
nomic apd;
politieal);reasons,/:earn- »
ipgs and dividends will not in- /
3
"
Commercial -&■ Financial
Jan.
Chronidle, /
1-5, -1948» . "Current kReplacemcnt
Co&ts and Corporate Earnings" - (by) W.
1948,
an¬
7v'7'7'77 7 77/.
ticipated.)
.
converse
Bulletin." Jan. 15, 1948.
2 U.
.
.
below
,
improvements these funds are to
provide.
77 /,-> .. 7; -,7V.'7;. .y,
The preferred stock market :has
beeh weak, both for outstanding J
7
(For more details;
relative to vulnerability of industry to vol¬
ume decline; lessens proportion of
new financing.) Less favorable fi¬
earnings that prudently; > can ?be
nancial position of corporations
paid out inrthevform of dividends;
renders large scale public -financ¬
earning power.
discussion
-be marketed; there ds,/
dbriormally' high rcost of the.
Debt financing continues. Thecautious inventory poli¬ :
7 -77
: "•
! costs will be higher; and the fi-j
(d) Exports have been declin¬ nancial wisdom Of adding to debt»
ing steadily the second half of at the top of a boom, especially i
1947.7 This likely will continue, for. cyclical type companies,
is.
even
The building
assuming adoption of the open to question.
Marshall Plan—and that plan can up of a large debt structure to,
pass Congress only
in curtailed finance high cost expansion is
form.
history (unpleasantly) repeating,
(e) The fifth major contribut¬ itself—especially as business, is *-so '
vulnerable to even moderate coning factor has been credit expan¬
traction in volume.
7
:
j"
sion, resulting from wartime gov¬
ernment 'debt
(10) 'Corporation profits: Gur-:
financing.
The
cies.
-
i
see
■the
to pursue
on
filed
mates
real public serv¬
counseling their accounts
a
.
which has sup¬
ported the current boom.
There
is basis for believing the accepted
estimate is on the high side. Busi¬
ness
expenditures
can
change
rapidly, depending on psychology.
In 1947, actual expenditures were
in excess of estimated expendi¬
(based
performing
capital expendi¬ necessary to meet the expanded
If this materializes, volume of business; and, of course,
furtherance of .the; inventory
requirements
w e r e
second main prop
tures
are
: equities-can
,
opinion, while Consumer
--
level of demand.
serves
factor In. 11948..
The
high absolute levels, plus
Certainly most family groups with business caution, plus greaiterivulof *1948, and thereafter will start
Incomes of $3,000 or less' "disnerability to commodity price',de¬
an
irregularly declining trendcline, should make for conserva¬
1 Cleveland
Trust Company "Business
Over the long term this is .bullish,
tive inventory Dolides.
Inven¬
but the short-term effects on busi¬
mand, but might well be large in
relation -to a moderately lower
$12 billion, an all -time high.
The great increase in food costs
has diminished ability to make
of
1941
indicate
pectation would be moderately decline to
1942
levels.1.
It
is
higher rates
and
lower
bond
granted that real wages still are
prices.
'Actually, if "Fed" and
above pre-war figures, but they
Treasury Department pronounce¬
must be far above these levels to
ments to maintain the present-pat¬
support a boom of current propor¬
tern on long Treasuries be taken
tions, and to maintain substantial¬
at face value, there should be a
ly full employment.
floor around present levels. How¬
The
greater
availability
of
ever, -the yield spread between
Treasury bonds and prime corpo- goods in 1947, the stimulus of the
rates
is
likely to continue to big second round of wage in¬
creases, the soldiers' bonug, the
widen further. 7
high
accumulated
savings,
all
'(3) Commodity Prices: A year
made for peak consumer expendi¬
ago sharp disagreement was ex¬
tures the past year.
It is .esti¬
pressed by the writer with the
mated,that spending by consumers
views of
forecasters
of
lower
was at a rate of
$3.y2 billion above
prices. 'Since then the sharp price
dislocations
went
Also, while total savings
cially Tor consumers' durables not final decisions are dependant on
available
during the war. The business psychology and estimates
ability and willingness to buy has of future profits, including dura¬
been favorable, as wages through¬ tion of:boom. .7- ; 7 ;
j,; •... 77.' • • ;7
out the war period increased far
(2) Construction
and
equip¬
more
than
costs
have
greatly ■ in¬
commodity
prices ment
,
tive to the trend of interest rates
saved."
tripled since 1939. : Current ratio
7V7 r
(1) Some of the most urgent dropped to 3.1 times vs. 4.5 times
in 1939. Excluding the .200 ilargest
(a) Consumer Demand — has expenditures have been >made. In
been extremely high because of larger degree, we are entering the corporations, ratio was 2.7 in 1946
need and desire for goods, espe¬ period of optional outlays; where vs. 4.1 in 1939. ■.« This should 'be
of government
bonds, held :by. (Which Were controlled) and cost
banks, (constricts the credit base. of living; and the increases .per¬
Even recognizing the odds strong¬
colated down to the lower income
ly /opposing Federal Reserve groups.
77/ • 7- 7777':r;7> "77
Bank (proposals for special bank
The 'favorable
trend
of
real
reserves
to curb lending, both
wages has been reversed.
Com¬
government policy and caution by
modity prices have gone up more
bankers should combine to limit
than wages.
Over all, it is esti¬
further
> credit
expansion,
and
mated that real wages have de¬
more likely will induce moderate
clined about 8% the past year. In
contraction. Any conclusions relafact/earnings adjusted for changes
an
Thursday, February 12j 194?
H. -Garbade.
»
.
Volume 167 Number '4672
crease, the market would
be imprudent to
THE COMMERCIAL
under
more
whether
normal.,
The
The State oi Trade and
economic
question
earnings
is
and
we
dividends
when and
how
much
will
they decline.
,
of
Looking
programs
task
In addition to the basic factors
earnings and dividends, the de¬
in prices of senior securi¬
ties and the implications of
tight¬
er
credit, plus the unsettled for¬
made from
if
STEEL OUTPUT
not
fidence.
again
Jn
in
Feb.,
not
a
year
and
the-in¬
Within
cut
in
Or
major
market
over
a
upward
as
a
whole
is
viewpoint,
cal
a
tax
by growing
reductions.
cient
cross
currents
at
investment
not
commitments.
tive
for
Also,
long-term
commitments
Selected
Should
as
in
Certain
in
properly
1948
investment
in
the
equities..
on
general
is in
(3)- Hundreds
of
new-
postwar
production
steel?-customers
of
source
plus the
general
demand
export
which
is
take
care
only by the inability of American mills to
A";\' 7/.';.:'.
of these bullish
being
held
pig
in
influences
check
iron
and
by
the
on
cold weather,
growing spectre
A'7
A
;./7A
■■
held
of
should
a
of
are
iron
an
-'A
vA
pres¬
shortages,
scrap
high operating rate for
to
some
time to
the steel-making capacity of the
tor
94.0%
pro¬
the
93.7%
was
This
of
steel
week's
a
year
operating
tons
a
month
ago
policies,
is
equivalent
to
1,670,900
tons
1,694,300 tons last week,
and 1,639,700 tons one year ago.
,
level
■
of
week in the
V'A-
looked
■'
auctions.
interfered
with industrial and rail¬
road
operations. It also represented a decrease
12.9% below the corresponding week in 1947, but
cars, or 0.5% above the same week in 1946.
of
108,013
cars,
or
increase of 3,737
an
AUTO OUTPUT CURTAILED BY INDUSTRIAL GAS
SHORTAGES
Estimated output of cars and trucks in the United
Canada the past week amounted to
82,802 units, "Ward's
Report" states.
States
and
Automotive
This compared with a revised total of
101,044 in the
preceding week, 89,958 units in the corresponding week of last
year,
and 127,675 units in the same week of
1941.
7".
..
total comprised 58,093 cars and 22,291 trucks built
Canadian truck output totaled
1,185 units and
the United States.
passenger car production declined to
1,233 units.
*
29
1947.
®
■
week, failures
were
TRADE
DECLINE
decline
DUE
A / ;/>
-
A A.
TO
.
in
The
to
higher
than
in
demand for food was steady
interest centered
sumer
on
and at a high level with con¬
staple items. Meat substitutes continued
be sought and cheaper meat cuts, fish and
any
poultry sold well.
Winter clothing continued to attract favorable attention with
heavy coats, rubbers and storm boots remaining in large demand.
Interest
in
early
slight, but resort
men's
mas
wear
wear
promotions of spring apparel was generallysold well. Promotional and clearance sales of
stimulated volume
continued to sell well.
children's and
moderately
as
suits, shirts, and paja¬
Considerable activity was also evident in
infants' apparel departments.
Clearance sales of furniture
were generally in full
swing last
substantial price reductions.
Nationally advertised electrical appliances continued to be sought
with a moderate rise in the demand for hardware. Automobile
ment remained in
some
equip¬
large demand, but tire chains and anti-freeze were
somewhat difficult to buy in some areas.
,
'
.
Activity in the wholesale centers slackened somewhat during the
as dollar volume of wholesale trade
dipped fractionally below
that of the preceding week.
Department store sales on a country-wide basis, as taken from
week
the Federal Reserve Board's index for the week ended Jan.
31,
1948,
7 % from the like period of last year.
This compared
with an increase of 3% in the
preceding week;
For the four weeksended Jan. 31, 1948, sales increased
by 6% and for the year to date
increased by 6%.
increased by
....
Notwithstanding
weather
York
was
the
the
slump
major drawback
in
to
commodity
retail
markets,
trade
here
in
bad
New
the past week.
as
a
was
looked upon in
trend toward sharper price compe¬
tition in many lines.
Except for the
week since May
ago.
Jan.
moderate
wholesale markets here
.
Rising slightly in the week ending Feb. 5, commercial and indus¬
trial failures reached a total of
97, Dun & Bradstreet, Inc., reports.
The number of failures increased from 91 in
the preceding week but
did not rebound to the high level of two
weeks
of
WHOLESALE
The effect of the decline in commodities
BUSINESS FAILURES INCREASE SLIGHTLY
•
AND
week accompanied by
Loadings for the weeke ended Jan. 31, 1948, totaled 727,038 cars,
according to the Association of American Railroads,.: This was a de¬
crease of 44,954 cars, or 5.8% below the
preceding week, due to ad¬
in
during the month
and
A A
Last week's
inactivity featured cotton textile markets with,
wool business in the Boston market
of January was said to have been on a rather' broad
scale. With the
finer types of wool in scant
supply, demand spread to' a variety of
other less attractive wools. Price trends in
foreign wool markets con¬
tinued upward. United States buyers were
A
history of the industry.
weather conditions which
Relative
featured
A.7
FREIGHT LOADINGS AFFECTED BY BAD WEATHER
verse
for.
reports in its current survey of trade. Clearance sales continued to be
with price reductions on some articles substantial.
SHOWS A FURTHER
kwh., according to the Edison Electric Institute.
below the previous week and 24,069,000 kwh. less than
pro¬
duced in the week ended Jan. 24, 1948 which was a record
for all
time. It was, however, 611,182,000 kwh., or
12.7%, in excess of the
4,801,179,000 kwh. turned out in the week ended Feb. 8, 1947. The
Feb. 7, 1948 week was the fifth consecutive week that
production of
electricity exceeded the 5,000,000,000 kwh. mark, and the 13th such
rather
According to a report issued last Friday by the Department of
Agriculture, the mid-January parity price was 31.12 cents per pound,
an
advance of 74 points
and-considerably greater than had been
retail volume which occurred
during
generally attributed to the continuing severe, cold
weather.
The dollar volume of consumer
purchasing was slightly
above that of the corresponding week a year
ago, but unit volume
remained somewhat below the 1947 level, Dun &
Bradstreet, Inc.,
kwh.
the
expectation and later realization
substantial rise in parity.
a
The
light
5,412,361,000
This was 16,841,000
selec¬
-
A further influence was the
of
INCLEMENT WEATHER
The amount of electrical energy distributed
by the electric
and power industry for the week ended Feb.
7, 1948 was
just
offerings were
mostly pf lower qualities. The slightly firmer price tone visible dur¬
ing the week was attributed to price-fixing against sales of cotton
to the Army for export to Korea and sales of the
staple to France and
Germany. /A- / - A.J.-AA;" ){£ Y-//A:
/ AA A/A'
vA'AA,' ■ A; ■■■ AA
'
RETAIL
against
SLIGHT DECLINE
signifcant change
price
PRODUCTION
demand for cotton of good grade but
the past week was
rate
as
was a
capac¬
ago.
ingots and castings
1,723,200
carefully
activity declined.
i 7vThere
again active in Australian
Imports of apparel wools received at Boston, New
Philadelphia in the week ended Jan. 23 amounted to 10,163,100 clean pounds, compared with 8,255,000 a week previous.
companies having 94% of
industry will be 92.7% of
holding
mill offerings for immediate shipment at material
'K''...*:
'
Cotton prices fluctuated unevenly in a
narrowing range during
the past week. Values in
leading spot markets finished slightly higher
than a week ago. Inquiries from trade sources were less numerous
than in the previous week and market
York
Monday
week
shown
some
concessions under current market prices. Lard
prices showed a steady
downward trend with prices off more than 2 cents a
pound for the
week. '•/ •''.-.v.''-'P", '• A:";
Domestic
beginning Feb. 9, 1948.
This compares with
week ago, a decrease of 1.3 points, or 1.4%. A month
indicated rate was 98.7%, while an operating rate of
the
ago
despite
wool
on
said to have caused considerable liqui¬
are
prices holding fairly steady.
ore
come.
situations
be
High feed prices
one
ELECTRIC
*
buying program was nearing an end and a continued lag
demand for flour.
General liquidation in corn lowered prices
sharply particularly in the closing days of the week largely due to
reluctance of consumers to pay current high
asking prices. Shipping
demand for corn was relatively slow.
in
A-A'A
The American Iron and Steel Institute
announced
of this week the operating rate of steel
attrac¬
on
snows in the southwestern winter wheat areas.
Weakness in the bread cereal also reflected
reports that the govern¬
in
the
V.; 7v. A" A
the steel market
displayed firmness in the fore part of the week but turned
closing sessions under liquidation prompted by reports
Domestic flour business remained slow with bakers still
three
small compared with
rather
,
ment wheat
off
more
are
Wheat
■
,
prices fluctuated
*
of further beneficial
ex¬
con¬
no
shortlived coal mine shutdown.
Scrap was easier to obtain this week at prices which steel mills
willing to pay, states the magazine. The long-term position on
scrap is unchanged and the demand for steel is such as to
support
dominant consideration in shaping
than reliance
the steel industry
year ago.
dation of livestock and poultry in various parts of the country.
seem
Cer¬
advantageous,
1947.7 Emphasis
tivity
to
a
a
downward in
on
investment.
"work-out"
prove
even
shortage.
industry
relatively
appear
shutdown
markets
ently
pitious for large scale speculative
groups
two
the
insufficient
suffi¬
seem
mine
coal
a
dwindling coal reserves, brought about by
(2) Steel inventories
All
ity
tainly the time does
face
oil
check
stimu¬
policies.
should
domestic market.
render it advisable to pursue cau¬
tious
of
direct
gray
the
work
was
months
there
are
it
as
several
expectation .of
' There
bad
as
heavy.
techni¬
rally which might be
lated
of
no
ments,
envisioned
might well be basis for
slight rise in the early part of the week, the Dun &
markets were irregular and
widely during the past week.
were
supply and will continue to lean heavily
and conversion setups/
(4) Freight car require¬
industry and farm implement demands -are extremely
(5) The full effects of the Marshall Plan will not be felt for
on
sustained
for
nation
consumption.
have
the months just ahead. From
short-term
a
and
that the
trend
prices
back steel
apparent.
issues at levels where
they could
be 'considered
sound
long-term
no
it expected to have
commodity
weeks following such a disastrous strike
important steel companies would be forced to
operations as much as 50%.
Major factors which are expected to keep the basic steel
industry
sellers' market for some time to
come, "The Iron Age" states, are:
(1) Over-all steel demand continues high, with no weak
spots
several
necessarily imply
Conversely,
the
treme cold-weather conditions,
160-163 level (from which the last
leg of the 1942-46 bull market
started) would at least put many
values.
.nor is
time
steel
dition to weather
A:,-'
appear
market,
very
by further
if
cuts
Because
that another sharp break is in the
It would
the
was
scarcity problem is almost
Steel customers are again faced with
ago.
drastic
follow through. Recently, the
industrials declined to around 172,
pr;below the so-called 175 ^'sup¬
offing.
a
Grain
April 1, the above trade authority notes.
even
level.''-V•;;:•
WHOLESALE COMMODITY PRICE LEVEL LOWER FOR WEEK
similar date
a
drop in their
quarter—even before any concrete plans
have been made for the special allocation of
steel to so-called essen¬
tial groups.
This tightness in supplies would be increased
no
This does not
decrease
effect
no
steel quotas for the second
attempt
to follow
suit; and the rails them¬
selves (like mid-1946)
displayed
port
At
demand
This week the
Finally, in early Jan., 1948, the
rails attained new
highs; but the
did
iron and steel
increasing, output had contracted due
to cold weather and material
shortages, and substantial purchases
of steel scrap were made at the
going price, according to "The Iron
Age," national metalworking weekly.
dustrials registered new
highs; but
the rails were unable to confirm.
industrials
the
Following
slump in the commodity markets has had
reaction.
tumbling, steel
ap¬
1947
mid-1947,
only 3 cents, bringing the Feb. 3 figure
Compared with the all-time high of$7.28 touched on Jan. 13>
was
1.9%, but contrast with the corresponding 1947
figure of $6.29 showed a rise of 13.5%,
to $7.14.
Bradstreet daily wholesale commodity
price index resumed the lower
trend shown in the preceding period. The index closed at 299.77 on
Feb. 3, comparing with 301.01 a week
SCHEDULED AT 92.7% CAPACITY
the
on
adverse
any
parently had well discounted the
uncertainties.
went lower last week as
against only four that moved higher. Cush¬
ioned somewhat by a
sharp advance in butter and eggs, the decline
for the week amounted to
v
WEEK
drastic
whatsoever
irregularly lower, than in
August-early Sept ember
then
The wholesale food price
index, compiled by Dun & Bradstreet*
Inc., dropped for the third straight week as 16 of the 31 food items
earlier, and with 239.37 for the
The
nally confirmed the industrials on
the upside.
There was no follow
through. The market worked its
it
healthy level—even though they
a
the boom.
preserve
FOR
The technical action of the mar*ket is not too dissimilar to 194G.
Around June 1, 1946 the rails fi¬
where
and, the magazine observes,
time it right, the paper
concludes, we then shift from catching
with demand into normal growth and replacement., These needs
to
level
time to time
should keep capital expansion at
con¬
WHOLESALE FOOD PRICE INDEX DIPS FOR THIRD
STRAIGHT WEEK
does
we
up
may
a
of the week's failures were concentrated in the
States with 25, the Middle Atlantic States with
24, and the
East North Central States with 22.
Pacific
to
came
market would turn out as big as it is.
day capacity will catch up with
demand, states the edi¬
The point is to know when that
happens, not to overbuild,
coupled with the
Administration's play for the left
wing vote, are scarcely conducive
to
the time
as
Some
torial.
situation,
cracked
the week's increase.
necessarily
had to be
,v
cline
way
Most of the week's failures, 84 out of 97, involved liabilities
or more with manufacturing
accounting for nearly all
of $5,000
1947, it notes
nobody had dared believe the
of
late
upward
was
and
the beginning of a
depression, since the postwar program was
designed to build what had to be put off during the war and the
depression that preceded it.
Upward revisions in the size of the
upwards.
capitalistic
consistently
25
Three-fourths
1946
years
mean
earnings were at lower levels,
the projected trend
pointed
of
the
to
expansion plans into budgeted cash.
Contemplating the supposition that industrial expansion
taper off in 1949, it points out that such a turn does not
but
retoration
back
(725)
convert
submitted that higher market
prices better could be anticipated
eign
along.
go
revision
It
is
if
CHRONICLE
Industry
(Continued from page 5)
not
decline, but rather
will
FINANCIAL
.
indeed
capitalize earn¬
ings at ratios which might obtain
conditions.
&
*
.
t
■
•
According
to
the
Federal
Reserve Board's index, department
City for the weekly period to Jan. 31, 1948,
period last year. This compared with
an
increase of 3% (revised) in the preceding week.
For the four
weeks ended Jan. 31, 1948, sales increased 7% and for the
year to
date rose by 5%.
7
■
'
store sales in New1 York
increased 11% above the same
-
26
THE COMMERCIAL
(726)
&
would
As We See It
only give
and-out
us
supporter!
good ground for becoming an out/' "/• •1 'V :•/>
'■ r;
(Continued from first page)
no
way
sound as
poles apart on current issues, but which
really like the Colonel's lady and Julia O'Grady are
they
were
sisters under the skin.
Need for Clarification
really no way in which the public can oblige
the two major political parties and their candidates to emerge
from behind the meaningless slogans and protestations and
let it be known definitely what they believe should be the
course of the United States both at home and in the inter¬
Is there
immediately ahead — def¬
initely enough at least so that the intelligent voter carchoose among them with some feeling of satisfaction and
some sense of participating intelligently and effectively in
the direction of the affairs of his country? If not, more and
more
of the good citizens of this country wilf inevitably
grow more and more to feel the futility of elections in this
democracy of ours — and probably sooner or later lose no
little of their enthusiasm for the form of government under
national field
during the
years
which they live.
V
^
*
;
what passes for such, has
been in power in the White House for about a decade
and a half. Throughout all that time until last year it
was likewise in clear control of both branches of Con¬
The Democratic
gress.
party,
or
The present regime has at times given
the im¬
pression that it was not wholly in sympathy with what
has been done during that period by the party to which
it belongs,
but it has become clearer and clearer as
time
passed that the differences between the Roosevelt
and Truman regimes are quite superficial, having to do
more with personnel than with policies.
The platform
has
Congress and the public by the
President during the past few months leaves it quite
manifest that this is still the New Deal in the saddle
at the White House.
Of course, the politicians in the
Democratic party have been slippery as only politicians
can be, but
for all that the voter can scarcely doubt :
what the party's position is at least in broad outline.
repeatedly urged
upon
has
long been
a
He
will
to
much
have
build
his
his record there
consideration not
for
claim
so
as
-
radical change
many
But how
of others.
abandonment
in
can
But, meanwhile,
in the
appear
.
can
—
only regret that nowhere
at least not among those who
to be in the forefront of the race for Presidential
nomination
that
we
Republican party
is there
—
take
will
it
a
great deal to encourage belief
sharp,
with
issue
constructive
the
take
could ask for.
a
year.
this year is apparently about what it was last year.
place, the extent of the proposed trimming is
hardly less than trifling. Fully five times such an amount
ought to be squeezed out. But it is again far from certain
that even the amounts now being mentioned will actually
be removed. The trouble is, of course, these swollen outlays
can
not be greatly reduced without pain to some group
or clique who control-votes*-— qnd this is an election year.
sequence
first
In the
The
silly
season
in national politics
and un¬
only be repeated on a much vaster
scale. Europe will be in a much
worse
situation after our help is
than it
in
It has made noise
which to boast.
what the President said
to
It has at other times sent to
give him what he wanted.
his desk
legislation which defied him
when those who voted for
sure
But
that
a
veto
was
nowhere, not
it,
more
even
enough at times about
requested. It has at times refused
or
or
or
—
mostly,
one
suspects,
of current evils
or
began.
solutions.
constructive
part preferred to denounce,
and then to wince and relent and refrain when it came to
taking action.
When the citizen studies what the various would-be
Republican candidates are saying or doing at the present
time, he can scarcely fail quickly to develop much the
same sense of futility.
Some of them, like Senator Taft,
are in
Congress where they have for years past had
continuing opportunity to lay out and battle for a con¬
structive national program.
The Senator himself is
exceptionally outspoken and often has pungent and quite
sound criticism of the Administration to offer.
He is
one
of the few members of either branch of Congress
legislation labor
unionism does not want, in fact, very actively dislikes.
But even so, it is evident enough that at many points
the Senator is not ready to go the full length necessary
who has had the hardihood to sponsor
to set
things aright in this country. Indeed, it is far from
clear at many
points precisely what the Senator would
in control
he in the White House and his party
do
were
of
Congress.
Senator's.
long been
with him about
We have
We agree
we
decide
to
brought home by Congress to the
American people and to the peo¬
ple of Europe.
portant
the
to
What is most im¬
revival of Europe
plete change in the internal eco¬
nomic volicies of Europe., Unless
a
really fundamental and
most
not
any
foregone conclusion.
less
in the much discussed Taft-Hartley
It has for the
or
conditions with our
help, therefore, this basic economic
situation must in some way be
impose
is not American loans, hut a com¬
stemming from New Deal tactics, and to
propose
before it
at least some of them, felt
Act, has Congress made even an attempt to go to the roots
present
was
admirer of the
many things. If he
an
to
a
that
dependent, independent
variables.
indeterminable
and
is
There
such thing as a pre-;
no
destined trade deficit independent
V;
outside, of internal
the problem.
of
is
real
no
Whether
basis
not
or
for
But there
this> view.
Europe
recover*
economically in'" the
next few
years has little to do with the ex¬
act amount of money and good*
we send her; it depends prlmarilj
upon the policies followed withii
Europe itself.
If those i policies
continue
to
be
of
those
the
las;
then even if we poui
in the whole $29,000,000,000 tha<
Europe
originally asked for i
would not bring European revival
it would only weaken and
im¬
two
years,
peril
our
economy.
Unles'
T-er>0)?n''7PS tbic r)0'"t Vown
the political
("VnCTrfxjs
advance, and makes it clear in its
not
legislation
conditions of revival
itself, Europe will
revive. There is only one way
production, and that is
produce
to restore the freedom to
the incentives to produce.
This is the central point that
and
'
in its reports, it will
be blamed for any failure of the
program.
Congress will be told
that the program failed because
or
Deficits'
Trade
r*
under the amount
requested by the State Depart¬
ment will "not meet the require¬
ments
,,Loans and Gifts Determine
-
sum
any
be able
export even a year ahead. As
statistician would say, there are
too many
Aid
exist in Europe
to restore
know
can
going to have to import or
inflation, of price fixing, of tariff
policies, of trade controls, of do¬
mestic production, of price levels
and; of -foreign exchange" rates.
;
prohibitions, permits, li-vthat it should "either undertake
orders are retained, to meet the requirements of the
any amount of dollars, we pour problem or don't.- undertake-, it al
into Europe will be more than all.":' The implication, of this is
poured
No na¬
completely totalitarian,
exactly how much it is
not
tion,
of loans from
and
censes
procedure was utterly
this whole
was never more
The Realities of Foreign
,,
arbitrary and unscientific.
depressing than this
experience with Great Britain will
Its record there is hardly one about
total of
putting together the
In
the European
Plentiful Opportunity
governments used what we may
call the balance-of-payments ap¬
And, certainly there is no want of opportunity. The
proach. That is to say they added
budget proposed by the President offers a golden oppor¬ up all the imports they thought
tunity — one of the many, of course, but a very important they needed from us and the rest
one.
A movement for trimming the enormous outlays de¬ of the world, set against them the
manded by the President has gotten under way just as it exports they thought they could
sell; and asked us for the differ¬
did last year — and the prospect of anything of great con¬ ence; I need
hardly point out that
Whether
than
more
this
show remarkable precience
of Mr. Cohen.
But I
suggest that there is a simpler ex¬
planation: the nations of Europe
were publicly tipped off last June
by an official of the State Depart¬
ment .concerning how much they
the part
their alleged needs,
who will
equivocally state the courses of action which he or it would
substitute for the present one? Hardly the Republican party.
It has been in the majority in both houses of Congress for
life
proposed
The
may
President and his New Deal programs.
offset and nullified by stifled pro¬
duction and chronic crises./ Our
they turn for a party or a, candidate
definite, unmistakable issue with all this,
the
was
on
of them, and total
they. accomplish it?
Where will
of
plan is still four years, as it
in-Mr. Cohen's speech.
All
lion.
in spite
of it. We should be
the first to congratulate and support him were he to succeed
m
developing a solid claim. :
' > /
on
(Continued from first page)
Now, there are many citizens—a great many citizens—
who do not believe these to be the best policies. They would
force
a
$22 billion; our own Administra¬
tion reduced the figure to $17 bil¬
member of the House of Representatives.
ernment
to
Department, and
selor to the State
responsible spokesman,
Of the Same Cloth v
v
made a
speech at Long Beach,
In the other branch, there is Mr. Martin, who of late Calif., in which he declared that
has been giving evidence of an understanding of many of Europe needed from us $5 or $6
billion a year for, the next three
our
fundamental problems.
Here, too, however, there is or four years. This meant a top
great need of further clarification of, position if we and figure of $24 billion and a mini¬
millions of other voters throughout the land'are to form mum of $15 billion. Now all suc¬
ceeding estimates since then have
some reasonably clear and certain idea what this member
kept the Marshall Plan figures
of the lower house would do were he to enter the White
precisely within that range. The
House with a Congress controlled by his party., Mr. Martin 16 European countries asked for
Where Is the Leader?
like
V.
Benjamin
„
of knowing. Nor is he likely to be much
helped in choosing between two parties who
if
plan at Harvard,
Cohen, then coun¬
first hint of his
surely
he has
12, 1948
Thursday, February
FINANCIAL : CHRONICLE
loans
--
nomic
that the
obvious
be
should
;,
■
simply the first of these
from outside — it
-To take
factors
s':
eco¬
the
is precisely
causation
of what the 16 nations' re¬
reverse
It is
port tacitly assumes it to be.
gifts, credits, or loans from
outside that permit a trade deficit
to continue. • Otherwise the only
only
trade deficit that is possible
is
one
paid for by the sale of for¬
that is
eign securities or foreign curren¬
cies previously
held,
or
by the di¬
shipment of gold. In the long
imports and exports must bal¬
rect
run
simply because people insist
ance.
getting paid for what they
we extend no further gifts
upon
sell.
If
credit, the outside world cannot
to have a trade deficit.
or
continue
ii
themselves
is the loans and gifts
that loill chiefly determine the fu¬
ture
European
with
In
the
•;
short,
trade
net
us.
if
even
deficit
./
■
we
accept all
ecqnomic and political assump¬
tions
of
must
recognize
Marshall
the
Plan,
we
that the $6,800,000,000 figure is completely arbi¬
trary; It is sheer guesswork. There
it gave too little, or because it did
emphasize in its not accept the organizational set¬
foreign aid prografrv It is more up proposed by the Administra¬ is no foundation whatever for pre¬
important than any other. If it is tion. Yet the real reason for the senting it as a figure which repre¬
thought impracticable to write this failure will be the economic poli¬ sents the difference between chaos
central point into the legislation cies of Europe itself. \
and recovery, or, the difference
between communism and free en¬
itself, or in a preamble to it, the
:No Scientific Foundation for r
point ought certainly to be em¬
terprise, or communism and de¬
phasized and underlined, for the '.>■ ..'V••• Estimates...'/;;;C''.,\\ ., mocracy. or war and peace, or any
Congress
must
of
to
record, in the reports
Congressional Committees
the two Houses. ;-'*S •
the
Once
point,
we
we
recognize this central
must recognize also the
completely arbitrary and unscien¬
tific nature of the calculations
of
Europe's needs for American aid.
either
in their
own
figures or
those of the State Department.
It
said that if Congress
$6,800,000,000 that
the State Department asks for the
first 15 months, or the $17,000,000,000 that it originally proposed
for four years, we should be giv¬
ing only enough for "relief" and
not enough for "recovery."
Sec¬
retary Marshall has told Congress
is frequently
cuts
down
the
State
The
sake of the
edly
Department
contends
it
amounts
that
proposes
repeat¬
the * dollai
to pour into
of the other
frightful alternatives
consequences
Europe under the Marshall Plar
have been closely and scientifi¬
cisely this
The truth is, as
I
have
there
is
already pointed out, that
no
scientific foundation
whatever for these estimates. They
completely arbitrary. To rec¬
ognize their a priori and arbitrary
character, we have only to recall
a little of the history of how they
are
were
I
compiled.
might begin by reminding you
fact whose sigmficance seems
a
to
have gone virtually unnoticed.
12 of last year, just one
On June
week
after
Secretary
Marshall's
{ y■
sum.
• -
?
:
••'
ii•;/,;:V
One of the most important con¬
particularly as it
States, is the
pegging of exchange rates at levels
trols in Europe,
affects
ropean
crime
United
the
above
far
the real
currencies.
in
Europe
values of Eu¬
:
It is made a
for
anyone
to
sell these currencies at less
than their official value. The ef¬
buy
of
not
of
/>"
cally calculated.
the
giving pre¬
that have been put forward as
fect
or
of
this
stimulate
to
is
systematically
to
imports to Europe and
discourage
or
prevent
exports
167 Number 4672 *-i
Volume
•T'V,
from1Europe; Uby making -. them
prohibitively high in terms of
dollars.
European exchange con¬
is
trol has
COMMERCIAL
THE
^■S
&
have
try in the world.
brougnt about the present
chronic ceLcic in European trade.
Here
is
United
^/something
States
does
-some
month
a
longer
on
Agreements of the pro¬
vision (ArTcm IV, Sections 3 and
4) whicn. makes it ootigato.y ior
statement
Germans
work
and
be
to
all member governments in the
International Bund to prevent tree
markets in their currencies.
Tne
Fund
and
fortunately per¬
to
mits any nation to withdraw iiom
our
advance
notice.
minimum
States
the
the
major
a
standpoint
standpoint
alone
clause.
from
or
to
reta.n
it
our
the
any
fails
act
form
in
of:,', itself,
Congress
re¬
its aid. program.
Ar
When I a,nd others analyzed the
effects pf this European exchange
■
control many months ago, it Was
receiving practically
whatever
from
attention
no
the
redistribute
IV
It
supporters
would
this
or
time
be
great mistake at
a
initiate
to
any explicit
implied "four-year pro¬
for Europe. The situation
even
gram"
is
too
ahead.
far
for farmers to feed
If
European
make
forms
15-month
aid
we
to alleviate it.
• ■*/v'V
Elan.
Suggestions thqt
this ".exchangecontrol should be
terminated
should-, noti' commit ourselves
to European aid, either directly or
we
*
-
best
our
vs• ^ -*'V y-vCr-;'.V■
Hunger Alleviation f\ Food
program
the may. . be, ^aljL -vthsit • .we; .reasonably !
need to undertake.
In any case;
of
Marshall
should do
exists, and
re-*
.shouidr 1 'the-'--.' present
they
proposed
on.
so
But the European food shortage
govern¬
econoniic,
wheat waste-
fully to livestock; and
unpredictable to work that
ments
Euro¬
weather, the truth is that a great
part of the present European food
shortage is the result of their own
bad policies.
They have not al¬
lowed the price system to work;
they have destroyed the incentive
of farmers to sell crops to' legal
markets or to produce them at
all; they have made it profitable
It would do more;
world produc¬
not merely
shortages.
the
governments put the blame
solely on the war and on bad
pro¬
under
though
Furthermore,
pean
Bretton
this minimum
on
64,000,000 as compared with an
of less than 62,700,000 in
the
four
years
before the war.
would
the
"de¬
average
of
of
had
war
of
increase
world
exchange control provision
longer, If the Administration
to
billions
and
world
Woods
should insist
reform
A
the
hoof in those nations is in excess
so
expenditures
.
would
tion
brought
Germany
Marshall Plan.
It
from
the
in,
save
posed
Linited
existence
error
policy
on
quietly point out to
withdrawal
!
would be
without
insisting
governments
this
of
In
reforms,
could
other
time
any
they
destruction.
much
the
which
that
16 nations published by the De¬
partment of State, shows among
other things
that cattle cn the
permitted
to support
work, not merely
themselves, but to help make lestitution to the neighboring coun¬
tries of Europe which they looted
at
side, to cite
example, Secretary
stroyed livestock herds" in Eur¬
ope.
"Destroyed" is a big word.
Yet Volume II of the report of the
reparations,: can solve; th-S; prob¬
lem. Congress must insist that the
ton Woods
Fund
Matter
/<■' /■/-■:/
to
suggest that the
do
best agency
the Interna¬
If this is not
this
might be
were dismissed as ir¬
tional Red Cross.
implication/ for more than
apdeyem heartless. ^But by
thought suitable, then we should
these 15 months. In order to ex¬
last, the. subject is begm/
set c up
a
new
American Relief
ning to attract the attention it ercise whatever! control is reason-• Administration. This administra¬
ably possible, and to act in ac¬
deserves.' f The
harmful
conse¬
at
of
quences
overvalued
currencies
have
Euronean
recently
been
pojnted out,'Tdr exahfiple, bbth by
the Harrison Committee and
by
Bernard
Baruch.
interest,
tries
been
moving
Italy, about two
reform.
•
ago,
low
its
approximate
France
is
franc
free
at
214
its
level.
two-
a
official
an
to
al¬
seek
market
with
system,
franc valued
situation
as
leave
it
our¬
it looks; a
how
see
coun¬
months
adopting
now
the
should.
.
that European hatiens mhst krrbw;
toward
unit to
currency
we
free to
own
that it would
announced
with
develops,
from now before committ'ng
'.ourselves further; If it is argued
their '
European
several
have
In
cordance
selves
the
dollar
compared with the present rate of
119, and a relatively free franc
year
what
be
contribution is
our
four
for
they
that
so
that
is
whether
it
is
worth
ing more.;] ' T
The
.<
while
\
.
offer¬
proposal for limiting com¬
legally and morally
to
than
in
months has
no
more
We
the
question the wisdom of
mav
particular
shape
that
these
others.
many
for
15
Committee, by for¬
President
mer
first
already been made by
the Harriman
Shachtism Must Be Abolished
the
Hoover,
and
by
I think it advisable
Congress
to
go
further.
even
It should
taken.
explicitly state that this
legislation is not to be taken to
a
imply further
Italian
French
and
reforms, have
But they are significant as
recognition of the impossibility
of retaining rigid control of Eu¬
currencies
ropean
at
overvalued
15
months,
States
aid
but
.will
the
at
that
wait
end
the
to
Some
governments
insist that most
contribute
of
United
see
what
:
to
ropeans,
for ex¬
penditures for other and perhaps
undesirable activities.
that
tent
that
insist
food
should
they
to
continue
go
system
pean
aid
Which
until
now
this system is one of the minimum
reforms that America should in¬
aid
in
return
program.
Ill
Germany. The German eco¬
nomic collapse is one of the .chief
for
stagnation
collapse
-
the
in
present
economic
Europe.
has
this
largely
been
But
im¬
posed, not only by the policies of
Russia,-and of France and Great
Britain
but
by
Germany.
misconceived
plan,
We
many
a
addition
level
-
of
-
have imposed
continuation
Schachtian
policies
our- own
In
program
because
.
controls
to
the
industry
Ger¬
on
of
over
the
wages
and
has already been prom¬
ised to Europe by the Secretary
of State.
There is certainly no
good reason why this Congress
the
or
or
implied,
the
the next Con¬
after that.
In the demands of the 16 Euro¬
governments
pean
upon
the
our
of
try to meet the food
Europe
far
as
we
as
should
reasongbly
can.
meet
these
needs
sible
by gifts, and not by loans.
I
would hesitate
to keep
going
far
so
that
sure
am
And
to
make
to share with them,.
I feel bound
that in recent discussions of
Marshall
the
plus
of
war,
food
Plan
the United
lc>>s than
9%
of
supply;
large part
us
other European countries.
,v
By our
own
in
insistence Germany
we
were
importing
of
net
food
today
even
balance
country;
$294
produced
Before the
from 1936 to 1940
average
sur¬
need
Before the
States
produces
on
our
the world's
only about 12%.
it
both
Europe's
and
make
a
These
the
in
we
a
the
war
food
years
exported
million of
an
Export-Import
be
Bank
authorized
European
to
should
make
loans
than
strictest
business
Bank
either
If
I
make
loans
directly to socialistic
ernments
their nationalized
to
or
gov¬
industries, it would merely under¬
write and subsidize the deficits of
those industries.
would
this way
we
directly supporting
be
so¬
cialization
and
In
retarding Eu¬
so
ropean recovery. Congress should
write the basic conditions for for¬
eign loans
Import
into the
that
the
Export-
new
authorization.
It
past
should
record
of
firm, and its exist¬
ing facilities, must be such as to
give reasonable prospect that the
loan will be
loan
must
repaid. The American
be
an obligation prior
outstanding obligations
except to the extent that the bor¬
do
We
funds
is
rower
prevented by previous
contract from making it so.
Even if the loans
to
private
are
industries
made, only
and firms,
however, the government
borrowers
should
be
to establish certain minimum
eligible
The
to
receive
governments
the
of
called*, upon
these
must
con¬
to be
are
loans.
agree
in
advance, for example, not to so¬
cialize, nationalize or expropriate
the borrowing industry or firm
during the life of the loans. They
much
not
agree
conversion
payments
under
problem
and
thus
strictly business
a
wage
the loans.
on
to
They must
impose
price regulations
or
fresh
any
which
made
tions
would
They
must
to
agree
per¬
be
money
would
It will be noticed that the
.
are
we
pro¬
loans
into
entirely separate cate¬
The gifts would be made
gories.
by
'
organization, the loans by
This is important.
Any
single organization will find it
impossible to mix charity and bus¬
one
another.
iness.
The two things ; call not
only for different techniques but
quite different mental approaches.
It will be fatal either to
the aims
of
charity or to the aims of busi¬
ness to try to mix them in a sin¬
gle organization.
VII
May I - remind you, as a final
point, that the International Bank
for
Reconstruction
ment
and Develop¬
specifically to
of everything that the
set
was
take
care
up
Marshall plan proposes apart from
its purely charitable aspects.
To
the extent that
of
both
of
we
them,
International
port-Import
make
now
use
therefore,
Bank
Bank
and
the
the
should
Ex¬
be
di¬
rected to clear proposed loans with
each other so that they do not
find themselves
lapping
I
lining
like
over-
,
to end
by under¬
the point I made
beginning—that the de¬
once more
the
cisive
ery
duplicating,
competing.
or
should
factor
in
in the next
will not be the
and.
of Amer-.i
aid,
but
political
the
by
four years?
amount
governmental
followed
recov-'
European
year or
the/
policiesl
of
governments
Europe themselves.
Werle Reelected Chairman of the Board of the
New York Curb
Exchange
(Continued from
in
that
firm
constantly told that
are
capacity represented
the
on
the
New York Curb Ex¬
change floor until, in 1940, he ac¬
quired his membership on the
Curb and became a partner in the
firm.
change
at
of
governor
for
Werle
the
the
four
past
has been
Curb
Ex¬
years,
continuously
in
exchange affairs. He is
present Chairman of the Ex¬
ecutive Committee and has served
its feet is to lend
in the past on many of the stand¬
ing committees of the exchange.
on
materials
raw
they can turn into
goods to sell to us and
Mr.
Barry, governor of the As¬
would
nancial
really
do all this, then it
private inves¬
would be sound for
risk
It
their
cannot
own
be
funds' in
argued
that
private funds do not exist in suf¬
quantities. Our
ernment has
own
gov¬
legal
impediments
of private
to
in
the firm
in
and
1933,
a
ob¬
taining his Curb membership in
May, 1947. He is a director of Mc-
as
a
page
on
the New York Curb
Exchange during
the
summer
of
example, are removed.
gree
will;/ necessarily
under
the
best
take
time,
conditions,
:
Mr. Dugan and Mr. Nolan will
serve as Class B
governors for the
first time.
Mr.
Dugan began his financial
on September 3,
1929, after
graduating
from
the
Wharton
career
School
sity
of Finance of the
of
Pennsylvania.
Univer-
He
started
-
:
page with Laidlaw & Co.,
specialized in investment research
as
a
and
became
head
of
invest¬
the
a
partner
1930
versity, he received his A.B. de¬
Facilities
the*
on
Exchange. Five
years later,
in September, 1933,
he became a regular member of
the
Exchange, functioning as a
specialist.
firm in 1940. Mr. Dugan was made
in
manager
Europe. It should see that any
red
tape
or
unreasonable
re¬
quirements on the part of SEC, for
Export-Import
clerks
Curb
sales
credits
to
floor of the
Shields & Co. in 1927. He became
a
Quay-Norris, Inc., Colonial Air¬
ultimately take from private lines, Inc., and Maryland Drydock
funds. Congress should therefore
Co., Inc.
do what it can in removing any
Mr. Mann entered Wall Street
restoration
specialist's
ment research department of that
as
not
remaining
first
salesman with
career
funds that it does
no
15)
page
,
A
the rest of the world. If such loans
food¬ teven
condi¬
sucn
only
posal I make here puts gifts and
economic
sociation of Stock Exchange Firms
from 1940 to 1946, began his fi¬
It
not
we
is that
away
by us. but
bring the recovery
seeking.
ity of the borrowers to repay the
credit that
Use
without
made
thrown
ican
loans.
be
What
fail to
will imperil or wipe out the abil¬
mit free exchange rates, so as to
would
of, however,
sure
loans
at
to put Europe economi¬
manufacturers
the
loans
these conditions.
be
can
the
prevent
into dollars of any re¬
not
agree
to
of
pretend to know what
of
other
to
can
industries
food
on
cally back
to
credit-worthiness
not
volume
the
to
"business"
so-called
any
terms.
authorized
were
possibly could about the
we
applicants for loans.*
to
business
active
them.
at
In this way the American
not
private
industries
or
firms
and only on the
Mr.
tors
were
participation on the
European lending insti¬
a
tution.
^oreign governments, but only to
dealt with
finished
there
10%
a
individual
of, there is no reason
why the rest of the problem of
European rehabilitation cannot be
on
any
following
essentially what they would be for
obtaining
private
credits.
The
taken care
basis.
make
the
risk would be shared by European
creditors who would know more
States
VI
With
ficient
to point out. hovy-.
hundreds of millions of dollars
of the demands for aid from
sacrifices
long as we have the food
as
to
sponsible for causing
pos¬
the hungry and distressed
in
in
as
American
no
have been over-stated.
ficiency
we
locally to
United
the
of
partly to buy European goods to
import into the United States.
its
should
turn that
governments
be' deposited
private
ropean
We
needs
the
to
in
unless
part of
how¬
way,
loans
months
ever, for private credits.
There¬
fore it should make the require¬
ments for
obtaining such loans
partly to make
Export-Import Bank loan to Eu¬
the way
has
for the imposed de¬
output, but it is re¬
we
mately preparing the
ulti¬
of
means
a
•
part
Government.
should separate their requests for
food
from their 'other requests.
ever.,
not
only been costly to us
directly, by forcing us to support
our former
enemies, and to pour
us,
least
as
authorized
be
additional
then be used by us
on
one
sell
currencies received
of our food con¬
foreign
from
should impose any obligation, ex¬
plicit
prices under conditions which
paralyze German production. This
paralys's of German production
up
that
•
was
reasons
through with the Euro¬
program
gress
immediately
upon
For good or evil, the industrial
heart of Europe before the war
in
Con¬
is already being told that it
tating from the Schachtian system
in Nazi Germany. The abolition of
its
period.
gress
virtually all Europe has been imi¬
for
that
must
of
control
sist
of
end
heavily, for the mainte¬
; this
vicious exchange
pay
nance
the
at
the Export-Import Bank. It should
ex¬
government sends them,
our
should insist in
we
To the
governments
European
account
would
Eu¬
to make available to
or
the
it
of
their governments money
must
Plan
own peo¬
bill
the tax
reduce
sell
are
six
all that we would be doing would
be
Europe has done for itself in the
Marshall
pass
proceeds. In this case
meantime, and what its needs
the
must
them to their
the montary
paying
under
all of the
or
through their rationing system, to
be sold by
not
months the loan authorizations of
only
of
January 1 of next year, for exam¬
ple, the Export-Import Bank might
wish to consider bridging the
in the following manner.
It
might enlarge and extend for 15
gap
this
possible free conversion
One
further
possibility
that
might be considered. On and after
may
do
27
local currencies into dollars.
suggestions forward not without
considerable misgivings—Congress
ditions if their nationals
European
we
World
;
levels. The United States has been
and
Herbert
First
the
in
tribution which the
heavily,
in
ple while the governments retain
-
mitments both
relatively free market.
in
Belgium
W^r.
food
use
year's
which
in
manner
may
whose value would be determined
a
the
they make of our first
help before we can know
what
food
Hoover distributed American food
know
we-must
distribute
Europe'directly, making use ot
private
European
personnel
as
well as Americans. It should study
"make their plans," The
can
answer,
t
going to
ahead
years
tion': should
make
There¬
the borrowing
'
T
lending in substantial
fore—and I put these compromise
provide
relevant
now,
for private
(727)
volume to get under way.
European
Germany, subject, to 'American
ovei sight
and reasonable income
repeal in t..e Bret-
agreement
the
On
-
we
n
first of
unless we
tne
Here, where
the restoration oh a-free economy
power to^control. *. It wobld
be
tolly to extend foreign' aid"even
all insist
an
control, is'the place to show but a. single
iLurope^'hy an example io its,.very;, Marshall,-in testifying before the
heart;.what a retu^i^l^vat^^n^ Senate Foreign Relations Com¬
cerpEvSa can ao icr reco very-. : Gnly
mittee, f; made
the
astonishing
that** the
have
today, second only to Russia,) stuffs,-a year; we imported
outstanding collect!vist coun¬ average of $665 million.
the
<
"*
FINANCIAL CHRONICLE
1925.
a
Returning to Fordham Uni¬
in 1928 and
was
employed as
clerk in the office of Emil Moss-
bacher,
Curb
specialist.
tember, 1928 he became
In
one
Sep¬
of the
partner in that firm
on
Jan.
1,
1947.
Having entered Wall Street in
1921
as
a
Equitable
eign
general
Trust
department,
associated
in
clerk
Company's
Mr.
Nolan
the
for¬
was
with
Hayden, Stone &
Co. from 1923 to 1927. Serving in
every
department with that firm,
to Assistant Manager of
department from which
he
rose
its
bond
position he resigned in 1937. In
April, 1937 he organized and be¬
came
Manager, of
syndicate
Walker & Co.,
of
that
the
department
bond
for
becoming
firm in January
a
and
G.
H.
partner
1939.
^
23
THE COMMERCIAL
(728)
The
monetary considerations. It didn't
currencies were to be
"Laissez-Faire."
for
single super-
readjust¬
determination
Difficulties of Reconversion
issue
;
The Fund was conceived before
hostilities
from
war
ceased;
to
peace
reconversion
had not yet
begun; no currency was stable
owing to the growth of national
debts everywhere, to the over-
expansion of currency and credit
id all-centers arid to the distor¬
tions within all price structures
cue to scarcities -and; other warborn complications. Yet the Fund's
authors blithely :: proposed* upbn
this disorganized • base to^superimpose a system.-"whose limited
elasticity
was V suited
to more
normal
conditions.;;/.;.
V* \\]
•
creation of the; Fund was
the
triumph / Of hthe7: planners,
hitherto content to operate locally.
But now determined to: .action a
The
j:
.
.
global scale—always in the name
and for the sake
of "stability,"
Little wonder then that the Fund
broke down on its very, first-test.
Self preservation made hay of its
.
went
is
This
England and explains the imposi¬
tion of austerity on the British
people as a normal condition of
life. Any alteration in the value
of -the Pound would necessitate
has
And
area.
ful
of-
and
-''./J..'
•;
her
.
achieved
a
currency; can/continue
j
Our
sac¬
necessity,
These
monies are chiefly due to people
who owe their very existence to
war
/
a
the
right
the
ac¬
as her own. These
"blocked" and partly
now
Britain
as
in
occasion affords, place
a
They
drain
effort, England com¬
major blunder of
them
credits,
tion.
Both
of oiir money.
forced
her
on
export
constitute
posi¬
constant
a
slowly
economy
and
thus
inherent
prospects seem to
beneficial
it
may
for the value
Our chances of be¬
Marshall Plan.
The "habit value"
tends to decline with
of time.
Thus by
of
those
four
approaches
investing
in money seem
money
passage
particularly attractive.
It is not by oversight that I
have omitted price control from
the list of factors that give money
its value.
Price control imparts
which
means
prices reflecting what
both buyer and .seller think the
money is
worth, and ultimately
to
requisitioning, which means
ably
physical, prices
largely psycholog¬
ical and imponderable.
are
,
Owing chiefly to the expansion
of currency and credit the dollar
has lost 50% and
of its pur¬
more
chasing power, so has the' Pound
Sterling. Should the franc and the
of international
ancing
accounts.
If credits and debits attain undue
proportions they create
a
problem
transfer which leads straight
repudiation. For payments may
only be effected in goods and
of
to
services
and
no
United
all
the
to
throw
to
nation,
least
of
buy
he
States,
labor
at
depression than he was in the last.
If money is not a good invest¬
ment, then obviously contracts for
the delivery of money at a future
date
are
not • good
investments
By the process of
of
elimination we
"things."
to
turn
will agree
out
the
sales
7
for
/yeat<7/
first time in our
/
uprising
or
was
suc¬
rulers would
new
tained
railroads, factories and
stocks
common
such
conditions
be concealed
V
V
7
from
for
our
ex¬
7,'//7'7/ "7 '7 - y/V'Z-
Sometimes it
seems
to
that
me
the
basic division among men in
the world today is not a matter of
mathematical
symbols
ize the former.
of
(8) The "Bell System" added ,/,
2,800,000 telephones in 1947 but
about 1,500,4
000 on the waiting, list/for, telewV
phone service.,
7/77X^:4//''.;
(9) PhysicaUVolume of business 7
in the week ended Jan., 10, 1948, /.
division
human
the people symbolized by the
minus sign and division sign. The
world's wealth.
the
increase
to
seek
group
postwar high/,4/..»
to be sure, on what is expected to be,
than on what has been. But
reached
new
a
market
stock
The
moves
rather
foregoing items were not "has
a year and a half ago.
the
beens"
Developments
Future
can
those who
do
What
us
7\
random
again/are a few
Here
selections from the news
weeks*
The second group
,
think they
into the future tell
peer
now?
are
first
-
ended the year with
Those symbols are
basic
the
;
ton's/below eapa-»
character
the plus sign and the multiplica¬
tion sign.
Arrayed on the other
side
billion
city because 7 of/scrap/shortages,
(7) The number of / non-farm //•
workers rose to a record/ high of
51 million in December; 1947/C i. 7.
they would bring in order
buy precious
stones
which
ploiters.
peacetime- high, but
new
a
six
~
might
we
stocks
common
was
evi¬
what
could
A
We might expect if
prefer to sell
to
big*,//
ifv'rini; '"Q.f rlA1 Vo
rrairf
Our
Under
of. recent
'' *
Naturally in
cendancy
worth
less
are
the
stocks
common
ducers
than
when
are
■
the
That is
top.
on
pro
for
so
reason
common
that would make
stocks
same
decline
in the face of
In
(2)
Many steel producers have
business, for de¬
period when the
a
looters of humanity are in the as¬
in
probably
invasion.
a
value
declined to take
the second
in
livery
//.'
1948.
/:/
.
7'/'
•
quarter of
'
w.;
'
(3) Electric? power requirements
of the Pacific Northwest now ex¬
ceed
safe operating capacity of
success¬
generating facilities of the region,
(4) American business expects
to spend about $4,100,000,000 dur¬
ing the first quarter of 1948 for
new
plants and; equipment, ac¬
and the looters of mankind. Value
cording to a joint SEC-Departafter all is at least as much sub¬
ment of Commerce survey.
That
jective as objective. Cost of re¬
would be about a billion dollars
production means nothing to the above actual expenditures for the
bejewelled dowager adrift in
corresponding period in 1947. /,
lifeboat with insufficient drinking
(5) More farm machinery will
water.
After a day or two she
be made in 1948 than in any pre¬
ful enemy
The
stock
market
reflects, of
course, much more than the rel¬
ative
strength of the producers
will
gladly
her
trade
necklace for
extra
an
diamonc
drink.
But
?he must have the necklace to be
in
position
ket.
even
that
stock
mar¬
make
to
So it
trade.
is in
the
People must not only want
stocks, but they must have
with which to buy
to buy
the
money
Advantages of Stocks
work
(1)
preoccupied with subtracting
are
evasion,
to
sales
•
measures
were
1948 the United States
for the first time in more than a
no
lasting value to money./ It is from the store of those who have
quarter century will import more
a
public confession that money produced, and dividing the loot
oil than it exports. The petroleum
has lost its value. It leads inevit¬ among their camp followers.
shortage will last two more years,
.
and values are
as
(3) Paint sales /m 1947. rbachedl ,
the v billion dollar -mark for the "
dencing ownership of an interest
in those railroads; - factories and
mines
might become worthless.
countries, principally
France, have been the recipients bleeding her white and inexorundermining
the
Pound.
of much gratuitous advice from ably
without. They should, it is alleged, Were England to change her at¬ compelling , people to part with
towards
these
"Blocked" things they value for money they
adopt "a pricing and accounting titude
system based on a stable yard¬ Sterling credits she would at once don't want. Freedom loving peo¬
stick."- But the nature
of that strengthen her international posi¬ ple will not tolerate it long.
Perhaps more important than
yardstick is never defined, and tion, balance her accounts without
as
well as within, any
of
those
theoretical
ap¬
this for reasons obvious to any¬ the Empire
rescue
the Pound from jeopardy proaches to the value of money is
one willing to think the problem
and keep the sterling area intact. the practical fact that 15 years of
through: There is no stable yard¬
stick in the world today. Those Procrastination on this point can deficit financing, uninhibited by
who
believe
that
there
gold
standard brake have
is, are only lead Britain towards un¬ the
thinking in items of weights and certainty because the position of taught our people to attempt to
forced exporter is untenable in a spend their way through
every
measures, not in terms of prices
economy which
can
only crisis. Old Doc inflation will be
and values. They mistake fixity world
for stability; for whereas weights function in the approximate bal¬ called much earlier in the next
and
record
the
were
7
ing able to buy more of the things ideology but is fundamentally a
we
want* and thus enjoying an in¬ matter of whether they belong to
crease in the purchasing power of
the producers of the human race,
our
Two
money, are
clouded by the or to the looters.
simple
none
treating these debts
war
common
mitted
seize
weaken the tax prop
the
.
cleaners
on
the
greater
of
/high-*
December;.,'194?,: sales
(2)
vacuum
est
,
dustry in /1947.' coi^et^./.tbiei-
cessful that the
to be in the long run, is to
prove
of
lend-lease contributions to the
by
in
of
Instead
as
but
v..,/,/ /-./V
tion,: however
who,
...
Present
does
serviced
./■■
'
irredeemable
demonstrable
no
valid
Britain's Major Blunder
cepting
step
and
claims
circu¬
to
favor tax reduction this year, and
the immediate effect of tax reduc¬
respect - and
admiration of
all
mankind but, unfortunately, with¬
allies
slightly
increase
November,1947.
over
6)
the country.
the invasion
Money Irredeemable
is
money
value.
her
a
At present, for those of us liv¬
ing within the United States, our
fought the battle of Britain
in war
so
has
she
waged the
battle for Britain in peace to the
have no
moral grounds.
Decem¬
over
7 (4) More window'glass and poll-, X
plate glass;$^§rqaucbd in ;7
mines.
As she
and
volume
ished
late at par after it has lost its true
value/ -/•■/•
7/7
4 „///., v.;- •..
people, Britain
practical balance
therefore,
financial
.
v
a
financial
ber,
1946,7 and showed
more/ than
a
seasonal
Currency" and going onto
exchange France and Italy
free
dollar
and
By breaking away from "Man¬
aged
the
and ,the
of the newspapers in recent
weeks:
" ' '
;7' /4 :, 'f
/ 7
(1) 7 December • sales by retail
stores increased/both in physical
much'
cannot
from
'
selected
pages
yl.
illiterate/its^'-.people.;- the longer
has
completely
long
repressive;
items
;7(5)The/U:v^
of her accounts within the Empire.
as
direction.
is
longer endure.
the hori.* ■ V
Conditions
few
a
ticker
news
This, in short, was the meaning
of "Management" which, because
it
are
random
at
confronted with barriers of every
kind and yet expected to thrive.
Page
fortitude,
the. cost ;of/untold
at.
rifices. ..by
has
'
unbelievable
With
not
Lira,
Industrial
Here
has been
commerce
on
1947 than'
which / might
:
Pound.
the
monthly to accord with the condi¬
tions then obtaining. The franc
has been liberated in good part,
the
hampering devices,
subordinating the economic
to the monetary and making trade
ancillary to money. From produc¬
theory.
;
the British are fear¬
so
anything
weaken
the position of
as
for/
trade
thus
clouds
see
zon?
service than is generally realized.
reflects
faithfully
-
quotas,
of exchange and to
tion to market
began to
to
have rendered the world
:to ; their divorcement/from
Sterling. Be it remembered - that
England's monetary reserves : are
also those of the entire Sterling
on
the country's econ¬
omy, because it sells for what it is
worth, and because Italians know
that its rate will be readjusted
discarded
had
was
rationing
similar
revert
;
in the Lira has been restored be¬
rate
been
resort
well
as
,
.
lead
Britain
its
action
of
'course
we
tained
to
might
oper¬
to
pre-historic barter. That "Stabil¬
ity" of exchange might be main¬
ate,
demand, when alone brihgs about
readjustments in its relations to
Rupee, the South African,
Australian
and
New
Zealand
Pounds / which might conceivably
giving the natural forces a chance
to operate. As a result confidence
cause
cautious
a
not permitted to
are
1946, more than 20 months ago.
Just how bad was business a year
and a half after the stock market
the
imaginary stability, France and through
Italy discarded the straight jacket,
foreswore "Fixity" and are now
further than it did. This
price
And this despite
The free expression of supply and
regulations because, in human af¬
fairs, the need to survive invari¬ out equal results. For Britain's
ably takes precedence over all current.debt is outside the Empire
other considerations. And so, hav¬ not within it, and its chief item
consists 7 ofobligations
incurred
ing/wasted precious years in quest
of
no
pointing in the right direction.
Ever since the early 1930's the
world has been plagued by "man¬
agement," instances of Which are
visible on every hand. Practice
paramount in
be
to
seems
the
within
disparity between the official and
open
market
rates,
which
is
probably why official devaluation
main¬
to
tain intact the Sterling area.
worth
=$1—for half the proceed of their
exports, the balance in francs at
the open market rate. Any im¬
provement
in
France's
foreign
commerce is likely to narrow the
past and present, and with an eye
stubborn
is
francs at the official rate—Fr 214
to
alone could redress.
it
in terms of foreign cur¬
rencies;
exporters
will receive
country
tary policies. Conscious of changes
Minor
all.
what
po¬
correct "Fundamental to the future, Britain has granted
Disequilibrium," were provided independence to Burma, Domin¬
ion status to India, Pakistan and
for, but eyes were shut and minds
Ceylon; she has liberalized her
were closed to the stark and ob¬
policy, notably in the
vious fact that the entire world colonial
West Indies.
But her monetary
was in a state of fundamental dis¬
equilibrium which time and toil policy has been inspired by a
ments,
hence her recent reversal
policy. The franc is now to sell
for
departure: Whereas Britain's
than 16 months, ago. Peak prices
for stocks were reached in may of
the fact that, if the correctives of
though mone¬ litical policy has been most en¬
the same cannot be
tary policies, invariably suited to lightened,
individual national needs, could said of her economic and mone¬
policy
in
a
price system, has
contemptuously branded as
balance
been
work,
linked together as
be welded into one
Thursday,^ February 12, 1948
of
(Continued from first page)
lions their
CHRONICLE
subordinating economic to
rency,
ion of the Fianc
FINANCIAL
&
vious year,
of
according to Secretary
.
'
Agriculture Anderson.
(6) The next. 12 months
should
record-breaking U. S. pro¬
and,/, given'a fair crop
year, possibly an abatement of in¬
flation, according to Dr. Edwin G.
Nourse, Chairman of the Presi¬
dent's Council of Economic Ad¬
bring
duction
.
them, if they are to produce a bull
stocks market.
reasonably term stable a yard¬
visors/..; ,' 4.4.
have - an
advantage over . inert
stick which could and did shrink
(?) General Electric- lpoks for/ •,*
Market's Forecasting Value S
or
render.
The
raising of our things such as diamonds because
18 inches and more? Should they
a further gain of at deast:20%
iq »
tariffs after the first World War common, stocks, if properly
se¬
Once upon a time, the fluctua¬
be
linked
to 'gold?
The yellow
sales in 1948 oyfer -1947.;/4/
'/ >■;
led to, the repudiation of the war lected, grow and produce income; tions
of the stock market were
metal sells at $35 an ounce/ under
(8) But-for-the. shortage of .en* *
debts, and it is precisely because Common staocks are better for regarded by many as having a
compulsion in the- United Statesgineers and equipment, .th£,p,Verb¬
we
don't want, history to repeat most investors than farms because forecasting value for
it fetches $70 an ounce and more
general busi¬ al! road building program assured /
itself that we wisely put the Eu¬ the stock buyer acquires manage¬ ness.
It seems'logical that; that
in the free markets of the Orient.
for 1948 would .be almost double, /
ment with the stock. As compared
Lira be linked to either?
May
one
from others goods and
services she, herself, can produce
As investments,
common
~
May
s
one reasonably term stable
yardstick which measures 36
inches in
one
Either
these
are
pertin¬
ent
questions
the
planners, brush them aside
or
should,
we
like
as
inconsequential.
•
Let
us
now
objection1 to
The
Unlike
French
should
commodities, the advantage
of owning stocks is that time does
with
not
England, whose current
economy
that
start
normally well balanced,
increased
the
nation
production
on
the
can
path
to
To achieve this she has
England's
recovery.
monetary
heretofore relied 6n
a
fixed
cur¬
wither
them, nor moths cor¬
rupt.
indebtedness is external, France's
to
!a
Situation
France's
turn
on
foreign obligations are small; her
so
Britain's Objections
r
.
place and 72 inches
in others? Are there enough yard¬
sticks
(gold
reserves)
to
go
around?
ropean
Recovery - Program
gift basis.
were
stocks
are
inferior to
perhaps
monds
barometer
can.
pose we
or
a
feared
an enemy,
communist
invasion
uprising
within
even more
of sufficient
least
To illustrate what I mean, sup¬
so
when
the
ticipated
How
A
power
important,
to produce at
of the results
some
in
good
the
is
stock
the
stock
they
an¬
market.
market
bear
of 1947.
Total new
(9)
1948
is
market
was
in¬
and
have
investors.
dislike
more
billion
profitable business as we
had in 7 the last 20 months
7, Many
1946,
$15.2
1947^; - :
Never before in peacetime did
such a prolonged period of active
prices
September,
construction in
at
compared with $12.6 for
dicated by the movement of stock
in
forecast
produce so little
now?
major
that
in
the market
bankers and business men of
primarily because the
assets stocks represent cannot be
hidden from looters the way dia¬
other things
been
figures
great skill, foresight and courage,
and
Common
have
dominant
happiness among
Why?
Amencans;:;despite theifof
communism/ ;1 a c k
Volume 167 Number 4672
THE COMMERCIAL
enough faith in capitalism to risk
Statistics
their money on its
worker with three
duce
30%
are
ability to pro¬
prosperity.
They
sustained
waiting for
slump,
"
*
the
"inevitable"
,
Many other Americans, outside
the
reports
that
factory
dependents has
purchasing power now
more
than in 1939, based on a
compari¬
son of what a dollar will
purchase
with
now
1939
what
and
politically articulate farm and
union labor
groups, lack not faith
but cash to buy stocks after
rates.
pay
1940,
would
buy in
higher tax
of the economy
taxes
it
they
record-high personal income
and living costs.
They are
waiting, because they must, for a
tax cut
and/lower food prices.
Meantime
mains
the
stock
the/bnl.v
ment of
our
What
market
happened
Us, as one author puts
most
optimistic
pessimistic
What
half
the
are
change
it, from the
a
in
the
of the most
one
century
chances
later?
that
any¬
Economics
the
gain
sustantial, whether
in
terms
real
pay,
after
increase
an
ex¬
ad¬
in
prices
as it appears in
or
unadjusted dollar amounts.
To¬
gether farmers and factory work¬
ers make
up a substantial part of
income-producing population
United
States.
not have to be
One
Einstein
an
does
to
see
thing will change us back again?
Obviously the only way to con¬
that
vince
population, the other half must
have lost ground.- Such a reshuf¬
fling of the national income may
be important to the stock market
a
bear—that it is
man—or a
possible
to
have
sustained
pros¬
perity under capitalism is to have
it.
That
takes
time.
if half the population
gains
compared with the rest of the
if
Supply
:
and
*
Demand
in
whole farmers and
factory
workers
buy
fewer
common
the
Market
/
More
made
rapid
progress
be
may
results
rather
than
trary-to
lack
of
faith.
the
of
some
a
stocks
that part of the problem
from lack of cash
on
Which
as
Con¬
look
new
population.
statistics on the
own
the law of
gravity. One of those
laws is the law of supply and de¬
mand.
In this country for
many
ly
the
I
know
subject
of
no
but
our
experience strongly suggests
that farmers and
are
years
proportion to their ag¬
income than the rest of
the
economists,
there are basic eco¬
nomic laws just as immutable as
in
gregate
not
capital
major
in
factory workers
of
sources
this
reduced
provide
stocks
has
been
creased.-, The
decline
of
in
stock
level in
has
market
earnings
in
been
the
to
the
de¬
a
evaluation
than 20
more
common
artificially
result
the
decline
a
for
ability , of the
stock-minded public to
lowest
of
to
by
the
In
Federal
the
old
to
be
reach
of
into
over
safety-first
and
country
amount
the
anyone
capital
great pool
an
equal
from
pe¬
riod, except for a few months in
1942.''
-;y / •- V- ///;/'
-
the
lowest
level
in the
same
.
The
supply
of; stocks
for
sale
in the market has been increased
primarily by estate taxes and by
foreign liquidation.
The impor¬
tance
of
the
stock
the
fact
estate
and
gift taxes to
is
market
that
indicated
their
for
total
by
the
current fiscal year
is estimated at
$842 million. Most large estates
contain common stocks, and many
of the mare composed largely of
stocks.
common
It
is
common
stocks
in
proceeds
have
been
stocks
selling
the
the
in
first
10
whole
the
the
lower prices in
year
1946,
despite
1947, accord¬
ing to the New York Federal ReBank.
Serve
third
A
Stocks in
,/
our
//; /.
of
supply of
market has been li¬
source
by large investors, in¬
in many cases by tax
considerations.
fourth
A
factor
increasing
the
Federal
Reserve
to say to those portions
population showing the
greatest relative gains in income.
York, is
one,
of
eral
Reserve
than
$21
This field should appeal especially
to /salesmen of investment trust
them.
subject.
shares.
said:
equity capital of the country with
little or nothing to invest from
their current incomes,
i:
,The tax squeeze on
of the
come
population in the upper in¬
brackets
has
vated by a major
the
the portion
been
aggra¬
redistribution of
national income to their dis¬
advantage.
The Bureau of Labor
unions,
the
Such
a
program, like the
making common stocks
legal for all life insurance com¬
panies, probably would take years
idea
of
before it made
real
a
dent in the
problem.
Just
of
taken
billions of dollars of
equity, cap¬
ital. The subsequent reduction in
margin requirements to 75% did
not go far enough to
appeal to
many
would-be
When
a
of
man
General
other
stock
Motors
1,000
finds
it
borrowers.
owning 1,000 shares
can
shares
by
buy
using
an¬
the
collateral he
as
simple and
to
he
finds
t*hat
his
easy
1,000 shares of
Motors will enable
him
buy only 333 additional shares
is not only confused by the
fractions
of
directions,
investment
our
thinking, and of our laws gov¬
erning investing, has been based
the fallacious idea that
whether to
play
take
safe.
it
a
we
can
chance
Actually
our
but
to
Hopes %r
thus
arc
some
a
(laudable
We
that
know
stock
lower in relation to
prices
are
earnings than
the
cases
attitude
likely
Plan.
of
consequence
enactment
//
.
.•
the
of
whatever
purpose
or
market'
first
the
on
day
support
was withdrawn."
possibility of
any
such
S. bond prices prob¬
ably will be resisted with every
The
break
in U.
at the government's com¬
resource
mand;
If
it
other
repercussions ■■'on
markets.
But
still
I
like
the
use
figures^ of alh operating
loan associations as
savings
and
indicator
an
on
Jan. 1, 1934, gross
rapid increase in the grant¬
mortgage
credits
along
very
ing
of
these
lines.
The
billion
$3
$760
million,
after which it began to rise slow¬
ly, and reached the level of $4 bil¬
lion, $374 million on Jan. 1, 1941,
and during the
war
years this
figure stayed relatively constant.
total
volume
of
the
At
war's
end
the
figure
was
probably around about $5l/2 bil¬
lions, and currently is estimated
around $10 billion.
Indirectly, the
savings and loan associations felt
the.
inflationary increases in
same
share
net
banks
deposits
because
the
of
-did
as
the
the
deficit
fi¬
of the government, but
G.I. loan made its ap¬
the savings and loan
pearance
were
hard pressed to
sufficient volume of mort¬
a
investments
_
with
a
satisfactory
return.
Need for More
Since the
OPA
Credit
and
abolished
were
costs
the
has been
wage
contributing to
inflationary spiral, and
ing
Condition
a
have
do the
more
same
con¬
rapid rise
a
in
our
which means business
to
y-/';-' /. y/1
y/ y.
(2) A stabilizing of the general
price level, or decline in it, which
might accompany or follow good
credit
caus¬
economy
simply has
as
on
in
order
to
unit volume of busi¬
a
basis. Many
thought they
pre-war
corporations
which
in
(3) A change in estate tax laws
increase in sales and higher prices,
that
working
capital
positions
giving estates
to
settle
the
more
tax
the
world
time in which
claims
of
were
inadequate and credit had to
the
be
obtained either through the
banking structure or the new cap¬
(4) A reduction in personal in¬ ital market.
The
"term
loan"
come
taxes, and particularly the which had been developed to a
enactment of community property
high degree during the war, often
legislation applicable to residents in connection with various
types
states.. Governor Dewey of
New York state has estimated that
such
legislation
would
save
cit¬
izens of New York state $170 mil¬
lion
a
year
in Federal income
taxes.
Others have estimated the
total
of government guaranteed financ¬
ing, offered insurance
large banks an opportunity of
directly lending to industry on a
long range basis. This is currently
a
negligible factor.
time
saving would
and
accrue
primarily to
people who in the past have
companies
and
savings for the nation at be¬
tween $700 and $900 million. That
the
and
turn before
There
the
the
offered
GI
easy,
by
At the
financing
the
re-sale
RFC
same
program
privileges
induced
a
state
a
want
of'
of
the
of
"jit¬
sup¬
more
large
a
re¬
taking the risk.
are
tern for all other rates.
be
demand
was
2%% bonds due 1972-1967 and the
2lUs due 1962/1959 are pegged at
approximately
par
certificate rate
on
levels, and the
a one
is at 1V8% for the time
ticipated
ble
A
development,
corporate
and
bonds
dou¬
are
now
High grade prefer rMstocks yield
yield 5%
"T?ood
or
common
Should
more.
bonds
be
unpegged,
then further increases in
yield are
quite likely.! Much depends upon
the amount of money to be taken'
for the European recovery
plan,
how much tax reduction will take
place, and whether
headed
t
for
or
not
we
are
depression in the
My own guess is that
a
future.
near
pegging will not hold for
long
a
time because the demand for cred¬
it and the inflationary problems
are.
that
great
so
eventually
authorities
will
aware
Institutions
to
sophisticated
are
lenders
of
the
have
//-V.
,
money
to
basis
fluctuating around the 3% level.'
changing very rapidly in relation
supply, they became scared.
summer
year
being. The
corporate bond market adjusted
itself some months ago to this an¬
After the decision last
to the
It should
recognized that the long-term
yield.
the
contradictory
many
forces at work. Basically, the
gov¬
ernment interest rate sets the
pat¬
realized
should
and
be
these
changing trends.
pattern of When they can buy a high grade
short-term interest rates; institu¬ corporate
bond to yield around
tions began to see where on a pro¬ 3%, and when the mortgage yields
jected basis »their commitments after servicing charges and book
were
adequate in order to give costs, are such that there is vir¬
them satisfactory earning power. tually no
differential, then there
The pressure for earnings was off. is no inducement to take on lower
the
abandon
war
time
Psychology changed from
to
a
sellers
buyers market.
a
yielding mortgage loans.
the
In fact,
loan will not be made in
4%
volume
Increase in Treasury Borrowing
Rate
When the
next
terest
Federal Reserve
and
until
we
the
into
come
period of extremely low in¬
and
rates
low
de¬
credit
mand,
unless some government
agency is activated to buy them.
Many institutions have reached
the
point where the mortgage
subsequently, the certificate rate portfolio is ample for require¬
to increase, which in turn caused
ments, and the new comparative
pressure on the longer term Treas¬ yields are such that inducement
ury bonds, as yields progressively will have to be given to them to
went higher, a complete change in
buy.
psychology of markets also de¬
A reasonable conclusion based
veloped. Whenever markets show on the
figures presented would be
very little recovery then buyers
that "\ hile there is still ample
the Treasury decided last June to
allow the Treasury Bill rate to
seek its own market levels, and
back away
and look for lower and
lower
prices, whether such expec¬
tations' are
based upon fact or
not makes
attitude
overlooked.
look
stantial
vailed
difference. The psy¬
no
chological
Now
higher
two
that
and
back
cannot
bond
years
investors
that
sub¬
prices
pre¬
see
and they
is pegging
ago
the
know
be
Treasury
long-term bonds, the question ob¬
viously arises as to the consistency
of government policy. The various
fiscal measures taken by the gov¬
.
Federal government.
of all
selective,
fiscal
can
ness
had adequate working
capital po¬
sitions now found, because of an
throughout
market in
money
increase in
demand, and when they suddenly
woke up a few months ago and
as¬
sociations
find
the rapid
that
control
around 3.75 to 4%.
/
stocks.
common
certainly
it
came,
have
(Continued from page 9)
is
prob¬
various
restriction'
Contradictory Forces
Mortgage Interest Rates for 1948
that
Marshall
The Fed¬
made
the
for
government
following
the
has
for
and
stocks
prospects for a
level of business,
all of the
discouraged.
days ago he
otherwise)
would
likely to find an almost 'bot¬
would
chance to take.
on
high
or
many
the
better stock market
a
based
sustained
plus
in
take
be
ters," and consequently, the
pliers of credit are becoming
*
■
choice is limited to which kind of
gages at
satisfactory yields. As
they plunged into this phase of
the
small
amount
of additional mortgage activity, and as build¬
stock that he can buy is too little ing increased, a high mortgage
po¬
sition was quickly achieved in a
to be worth bothering about.
two year period, and now
they no
Conditions of Improved Market
longer are hard pressed to find
likely
be
,
Reserve
proposals
our
for
tomless
other
in
much
few
a
on
government bonds under-
must
run
New
support, under
conditions,
almost "any
present
be
Too
him
quote
me
/
Our hopes for early im¬
provement in the stock market
y
of
billion dollars worth of
Let
"Without
sale
Bank
for sure. His Fed¬
system owns more
not realized
1948.
persistent up¬
ward tendency in personal income
tax rates has left the people who
used to supply the bulk of the
U. S. Governments, but
Sproul, President of the
on
of
of stocks. Actually, how¬
the demand for stocks has
been reduced by a number of im¬
a
attempt, before this
1936
ever,
thing,
labor
shall not
requirements to
crops
For one
I
i,
building
postponed
until
supplies are available,
and
eral
•
The
Association
non-essential
can
should
bonds?
in¬
income.
Bankers
for
bonds in the world, U. S. govern¬
in¬
about
the
part in its program for
inflation that mortgage
which
ment
corporation
outstanding credit had remained
relatively low for so long that
grantors of credit apparently had
might be expected to depress the
portant new factors at the same
time that the supply of stocks for
sale has been increased.
loans
labor
How about the best
first capital into additional
equity
capital.
When it raised margin
ting the stock market on a cash
basis, the Federal Reserve Board
wiped out a potential source of
in
fighting
about bonds?
$5 billion $559 million,
and for several years thereafter
the figure declined to a low in
100%, thus put¬
said
1946
than
consumer
American
brief period in 1942. Still, stocks
are
not without risk.
But how
which is
able
price
over¬
in
crease
spending
over
more
banking structure. All of these
various proposals tend to keep the
done, which in turn has necessi¬
tated an increase in equity capi¬
Stocks, even if accompanied by an
unchanged
demand for stocks,
investments
funds
except for
million
Mr. Allan
trols
;
fa¬
inflationary effect,
1947
thority
in
/
of
of
members
(1) A reduction in foreign li¬
quidation which seems to be a
s,
earnings
more
$3V2
its
consumer
in
grave con¬
business to sell stocks to farmers
and
possibilities:
Such increases in the supply of
of
stock
yields to bond yields is
to
as
that
creased
cause
credit,
supply of stocks for sale has been
the rise in the general price level
and in
the volume of business
tal for many companies.
relationship
were
quidation
fluenced
and
been
except
last
to
as
group of experts, to pose as an au¬
General
of
at
have
years
rapidly in the
so
29
possible solution is a
greatly intensified effort on the
part of all of us in the financial
common
months
at
cern
the bottom of the bear markets in
1932 and 1942. We know that the
Another
the
1947 amounted to double the total
for
character
until
break of World War II, and such
sales
the
to
permitted for those
emphasize
debt
in
capital structures.
nancing
out¬
half of 1947
a
he
our
since
20
expanding
to
vorable to stocks than it has been
in more than 20 years
to ana¬
lyze the problems involved. When
Foreigners
bonds.
balance
on
reinvest
and
they
in
20
loans
practice for executors to sell those first 1,000 shares
common
in
as
companies each year is
that present limitations
in/this
capital
and■> borrow
time
any
than
relation
more
lower
it
that, putting up his
own
equity capital as security and
transmuting the borrowed safety-
yields to stock earnings yields to
insurance
than
Re¬
days
possible for
who had $1,000 of
equity
bond
years,
ratio
used
life
as
and
assets
so
equity
Board.
serve
for
eligible
they have been in
years,
large
choose
quirements
demand
other
(729)
surance
or
capital has been
the drastic increase in
margin re¬
the
stocks
common
investments
sharp¬
country.
the
ket has been
while
make
on
supply
of
common
stocks being pressed on the mar¬
artificially increased
two
possible solutions to the risk cap¬
ital shortage problem.
One is to
equity
A third factor which
has
American
least
in¬
for
as
at
are
na¬
justing
the
There
companies. The portion of the
pressed
of
provided the bulk of the country's
capital.
risk
tional income received by life
in the years since
According to the Bureau of
been
the
CHRONICLE
have
Agricultural
has
likewise
FINANCIAL
balance against the rest
on
farmers
to
people
.world in 1896 into
seg¬
<*
'
economy.
has
re¬
uninflated
considering
Farmers
gained
&
ernment authorities tend to be de¬
flationary
with
the
exception of
the
purchase of government bonds
by the Federal Reserve
Bank,
which in itself is decidedly infla¬
tionary, and increases the supply
of credit.
However, the govern¬
and
ment
the
Association
ord
as
credit.
American
are
definitely
Bankers
on
credit
risks
to
available
it
make
will
it
for
take
come
a
high grade
higher rate
out to
the
pro¬
spective borrower.
Whether
like these condi¬
they are the eco¬
nomic facts of life, and you will
have to adjust yourselves to them.
tions
or
you
not,
Davies &
(Special
to
The
Mejia Adds
Financial
/
Chronicle)
CALIF.—
James A. Landregan has become
connected with Davies & Mejia,
SAN'
FRANCISCO,
Russ
Building,
New
York
Stock
members
and
San
Exchanges.
He
the
of
Francisco
was
for¬
merly with First California Co.
Walston, Hoffman & Good¬
and
win.
rec¬
favoring the restriction of
It may be of interest to
With First California Co.
(Special
to
The
Financial
mention in
Chronicle)
passing that in the re¬
SAN'
FRANCISCO,
CALIF.—
by the President's Thomas J. White is now with
Council of Economic Advisors, it First
California
Company,
300
cent
forecast
was
mentioned
that
credit
was
Montgomery Street.
30
COMMERCIAL
THE
(730)
Whyte
===U
market
and
sider market weak
opportun¬
ity to buy.
valid
give you
single
a
for the break in
reason
commodities
stocks. And if
or
you're looking
for, I suggest you put this
down and look elsewhere. I've
heard lots of reasons.
I've
read scores more.
Yes siree.
that
what
is
list
full
the
However
WALTER WHYTE
can't
the
only ones to sell low
enough to come into the list.
were
commodity decline plentiful
as
New
York snow.
Con¬
T
17, of which the above
were
for
as
*
printed last week remains the
same.
Should any of these
stocks
down any further
go
they should be bought.
v
:|e
Again I want to repeat that
included in the list
should be rigidly observed.
I don't
stops because I don't want
For my own purposes
them
I
prefer to watch my
stocks and step in with a sell
order when a certain level is
for
But
broken.
uses,
your
—
to
Kv-
you.
is that a few
know
the market began
weeks ago
acting like things were going
to happen.
In my column of
January 8 I hung out a cau¬
tion flag.
In my column of
January 15 I repeated it by
"
...
and
wind
the
in
were
surprises
that
out
pointing
surprises will be in
decline."
these
the direction of
buying points and stop
quite a spell that I began
to see daylight, though at the
same time I could see stocks
in
levels:
-39
37
Amer. Chain
1914-2014 18
Amer. Locomotive. 18
-19
17
Anaconda
3114-3214 29
Avco
4
- 41/2-314
Bethlehem Steel
30
-31
28
38
-----
__
-22
-30
-55
-13
-52
20
28
53
11
48
-22
-14
20
12
-16
No. Amer. Aviat'n
7-8
Sinclair Oil
14
-15
United Aircraft— 23
-24
13
6
13
22
21
Briggs
29
Caterpillar Tractor 54
Boeing
r-
...
Consol Vultee
Douglas
____
—-------
,
L. Martin.
G.
still lower. How low, you
see
in last week's table
12
50
Industries. 21
Lockheed
13
15
Thursday.
More next
appeared in the col¬
and is repeated below.
umn
—Walter Whyte
for the first time
came out with
In any case,
I
months
in
in tnu
article do not necessarily at an%
time coincide with those of thi
Chronicle. They are presented oj
expressed
vievos
[The
specific buying advice, giving those of the author only.]
prices and stocks. That col¬
umn
was
written Monday, L. Courtney Parkes Now
Tuesday, Wed¬ Is With A. M. Kidder Co.
February 2.
nesday and Thursday stocks
broke all over the list, being
commodity
the
by
sparked
crack.
break
a
few
of the stocks recommended
the
M. Kidder
in
American Chain
were:
du Pont Building.
191^-20 V2;
Anaconda
dated
31 ^
Consoli¬
29-30;
V2; Briggs
12-13; Douglas
Vultee
In the past
principal of Nichols &
Co. of Nashville and prior there¬
to was with W. N. Estes & Co.,
Inc. and was an officer of Craig,
was
a
Parkes & Co.,
50-52; Dresser Industries 21-
also of Nashville.
Gross, Rodgers Adds Two
to The
Financial
LOS ANGELES,
colm
<
CALIF.—Mal¬
McFarlane
T.
Chronicle)
and
Irvin
the
staff of Gross, Rogers & Co., 458
South Spring Street, members of
Steinberg have been added to
Stock Exchange.
With Daniel Reeves & Co.
(Special
•
*"
\
(
E.
Financial
HILLS,
Chronic e>
CALIF.—
Martin has joined the
Pacific Coast Exchanges
Members
flew
Stock Exchange
York
(Associate)
New York Curv Exchange
San
& Co., 271
Drive, members of
the New York Stock Exchange.
Chicago
Private
San
*
Teletype NY 1-928
Wires to Principal
Francisco
Monterey
New York 5, N. Y.
7-4150
—
—
Barbara
Santa
Oakland
-r-
Offices
Sacramento
to our European respon¬
sibilities and commitments. Fur¬
up
the
assistance
the
thermore,
called upon to
Europe will undoubt¬
United
render
to
is
States
edly aggravate the problem of
flation in this country.
in¬
The forces of inflation are ram¬
pant in the United States.
They
are the result largely of the sharp
supply of purchas¬
increase in the
the
people during the war and the
great
pent-up
demand created
ing power put in the hands of
when half the
productive capacity of the coun¬
try was devoted to the war effort.
They are partly the result of the
too rapid repeal of the controls
imposed during the war. In part
they are due tQ the fact that the
during the
years,
the
to
contribute
to
of
rest
the
large amounts of goods in
world
supply
scarce
home.
at
-
Under
present conditions, it looks as if
the forces of inflation will have
to
run
their course, since neither
political party is willing to take
the necessary measures and none
of the important economic groups
is
willing
its
surrender
to
own
immediate advantages for the wel¬
fare of the
country
whole.-
as a
law
anti-inflationary
The
re¬
cently passed by Congress cannot
contribute
materially
toward
the forces of inflation.
stemming
It is
probable that
reduction in
a
individual income taxes will take
place, thus further increasing the
supply of purchasing power. New
York
and Ohio are paying and
other States will also pay veter¬
thereby again addr
bonuses,
the purchasing power of
the people.. Labor will insist on
another round of wage increases,
ing
to
which will
will
that
mean
more money
compete for the same quan¬
of food, thus driving food
prices higher and higher. Farmers
are insisting on floors without any
ceiling,
although
farm; income
during 1947 was the highest on
record.
The year 1947 was also
Bailey, Selland
Two With
to
The
Financial
Chronicle)
The
outlook
basic
for
indus¬
steel, iron, coal, oil,
railway and farm equipment, and
automobiles is very favorably; and
tries, such
as
decline
to The
DENVER,
COLO.—R.
Neher has become
Eugene
associated with
& Com¬
the staff of John G. Perry
pany,
Adds
Financial Chronicle)
Equitable Building.
to
lead
this
a
re¬
it undoubtedly would
spiral, of inflation and
set in motion a spiral of deflation.
continued,
duction in'the foreign demand for
from
food
credit
demand
the
in
for
the
with
banks
will
tutions.
would
of goods and thereby
inflationary
pressure.
i the
ease
Monetary measures
but
will
felt
be
work slowly,
J
term
may
denly and without
living,
forced
comes
increase
bring
the
That the infla¬
come to an
end some
quite certain. The longer which are, for all practical pur¬
the process lasts, the more difficult poses, redeemable on demand, the
redemption of only 1.0 or 20% of
will the period of readjustment
be and the longer its duration. It this amount could place the Treas¬
certainly would be to the interest ury in an. embarrassing position.
It is easy for those who do not
of the country as a whole if the
long-advertised and long-expect¬ have the duty of administering
credit control to propose drastic
ed readjustment should occur this
tion
will
is
day
.
and
year
measures
be postponed; for
conditions it
painful, it would not be
not
held
these
under
while
in
the
cost
of
States
higher
smaller
will
is
the
be
increasing;
prices
the
go,
number
Control
;
^7;
permit the government bond mar¬
ket to find its
Since the forces of inflation be¬
their
own
level and have
consequences
government bonds even
though they relaize that, this pol¬
rious controversy
icy tends to strengthen the infla¬
pronounced
so
came
7
and
pegged
fully realized, a se¬
has arisen over
of the type o%f credit
the efficacy
strictive
tionary
of
the
the;
restrictions
take the view that it is more im¬
obligations
government
and
prevent money rates from rising
sharply../■
What
tive
v
'
•
be
would
;
^
the
'
,:V
conse¬
of drastic credit restric¬
The
measures?
first
Reserve
has
credit
Bank
not
increased because the Federal Re¬
Banks
tions
opposed such measures. Those fa¬
credit
of
serve
of
Treasury authorities, have
drastic
So far, however,
large purchases of
forces.
despite, the
long-term government obligations
by the Reserve Banks, the volume
liquidated
more
shorMerm government obliga¬
Governors
Reserve System
Board
Federal
and the
in¬
Others,
measures.
cluding
step
than
dium-term
the
long-term
bonds
or
me¬
acquired.
they
The problem of credit control
rendered
been
difficult
more
has
by
the substantial inflow of gold,
the
gold holdings of the Treasury
having increased from $20,088 bil¬
lion at the end of August, 1945 to
$22,790 billion on Jan. 14, 1948.
Although the monetary authori¬
ties are not in a position to adopt
drastic
credit
restrictions,, they
will utilize the surplus of the Fed¬
the
would be for the Federal Reserve
eral
Banks to reduce member bank
re^
credit base of the country and to
market sales
tighten the money market, espe¬
cially by redeeming maturing ob¬
ligations held by the Federal Re¬
of
in
through
government
turn
would
open
obligations;
force
This
the member
Government
Banks,
serve
It may
to
•
narrow
-s
7.
-
be expected that sooner
the
inflationary forces
government
obligations.
Since
banks prefer not to be in¬
debted to the Reserve Banks, they
wouid ." undoubtedly choose the
second alternative, with the re¬
sult
that prices of government
readjustment will
bonds would go down
the economy
many
money
sharply and
rates would increase. Dras¬
the
the
banks to liquidate loans,
this is bound to have an
While exports under the
Marshall Plan will certainly be
business
substantial, it is likely that in
1948 they will be
smaller than
1947.
Should crops in Europe
and
effect on
states and
in
conse-
quences.
but
of
the
for
But it is quite under¬
standable why the monetary au¬
very serious.v?~thorities have adopted a different
The Controversy Over Credit
attitude, why they have refused to
would be
or
later
will
come
make
it
activity.
even
It would
more
difficult
also
for
municipalities and coroorations to sell long-term bonds
in the
open
market. These would
to
an
and
end
that
a
set in. Should
this take place sometime in 1948,
it
will
not
duration.
be
a
tic credit control would also force
buyers.
because they will not be
responsible
1
end sud¬ banks either to borrow from the
warpingv The Reserve;; Banks or to liquidate
particularly of food,
many families whose in¬
have not kept pace with
higher return and
a
sibility
an
and
yielding
offering at the same time the pos¬
: of
appreciation.
Since
there are over $50 billion of gov¬
ernment
obligations outstanding
strength;,, and. it remains to be
seen
which of these forces will
prevail in 1948.
to
order
tions
many
redeem their securities in
buy long-teim obliga¬
might
forces at work in the economy
of the country, the deflationary
forces are beginning to grow in
ary
should
holders
Savings Bonds
less,
or
States
United
of
there are inflation¬
Thus, wnile
of
bonds
government
;- decline to 90
...
holders
the
on
and G Savings Bonds.
They must take into account at
least the possibility that if long-
later their effects
in the economy of
the - country.
have
Series E, F
or
sooner
serves
which
big
cause
holders of substantial amounts of
for all types
flation.
other forces at work,
also
companies and
other institutional and individual
and municipalities as; government obligations. Thirdly,
the monetary authorities have to
well as by corporations, and may
consider carefully what effect a
slow down the volume of capital
expenditures.
Such a develop¬ sharp break in prices of longment would reduce the demand term government obligations
quences
are
would
states
by
it is no wonder that frequent
predictions are being made that
1948 is bound to witness a further
acceleration of the forces of in¬
There
financial insti¬
many
It
losses to insurance
and capital markets.,; may
be expected to cause a reduction
in the supply cf securities offered
money
circumstan¬
ces,
of
surplus
of
these
to
government securities
out the capital and
of
prevail.in the
which
large vol¬
a
obligations, a
ten points in
wipe
higher money rates and the un¬
certainties
five
of
prices
could
quantities of food and other com¬
in short supply in the
United
States
will
be
shipped
Under
of government
decline
in the
relatively
The
loans.
of
banks hold
member
the,:increase
retard
Secondly, since the
public debt.
ume
Banks,, thus further tightening the
credit base of the country.This
volume
first
refunding over $55 billion of
obligations,
and in¬
crease
the cost of carrying the
Reserve
the
more
short-term
and also the balances of the mem¬
ber
do
the
of
in this manner will re¬
the volume of bank deposits
the surplus
duce
drastic
that
could
good. -In
Treasury, which during 1948
be confronted with the task
will
portant to break the forces of in¬
flation
than
to maintain prices
abroad.
than-
place, it would materially compli¬
cate the refunding operations of
other, will be passed; and this in
turn
means
that
considerable
modities
restriction
The utilization of
Reserve Banks.
view
the
expressed
harm
the
and
banks
responsible for the credit
Those
policies of the United States have
ing obligations held primarily by
commercial
the
break
this
countiy, accom¬
panied by a decline in prices of
farm and food products.
Above
all, important changes
are taking place in the monetary
field.
1 he Treasury is expected
to have a surplus during the next
few months of $7 billion which
will be utilized to redeem matur¬
the
in
crease
voring
the
(Special
undoubtedly
capital
so
products is in sight.
The
Marshall Plan, in one form or an¬
United
John G. Perry & Co.
(and
year
profitable for industry, but control that has been employed
the constantly rising break-even;
up" to the present- time.
Some
point has rendered many enter-j believe that because of the seriosu
prises very sensitive to even a inflation the monetary authorities
slight drop in unit output.
should
adopt drastic credit re¬
CALIF.—Dudley L. the price advances to cease buy¬
Hayes and Redmond A. Rudolph ing goods which they considered
have been added to the staff of necessities before the sharp rise
Bailey,
Seeland
&
Davidson, in prices. Production in the
Building.
will
lead^ to a decline in
expenditures, and, an in¬
unemployment; and if
the credit contraction policy were
ultimately
be better
year
last
of
far the outlook is favorable),
very
FRESNO,
Fresno
those
than
tity
constant
Fresno
greater forces of in¬
United States, the
difficult it wil be for us to
the
in
however,
Board of Trade
14 Wall Street
COrtlandt
be¬
the
cause
flation
forces of inflation to
Stock Exchange
Francisco
closely interwoven
are
staff of Daniel Reeves
(Special
Schwabacher & Co.
lems
past.
the
in
played
which they
Both prob¬
roles
political
and
their econ¬
the economic
South Beverly
Orders Executed on
<
~
to The
BEVERLY
Horace
Securities
omies and to resume
no
the Los Angeles
Pacific Coast
enable
these
(Special
32
& Co., Alfred
available.
became
list
These
has
with A.
Courtney
associated
become
Parkes
I.
Chronicle)
Financial
FLA. —L.
MIAMI,
he
On the market
to The
(Special
rehabilitate
to
them
ans'
can
which
provide assistance to the coun¬
United States has been called upon
,
with
—Buy— Stop
Shoe_
Amer. Brake
Dresser
first time
Last week was the
go
V','
list
full
the
Here's
; All I
*
-fi
..jfi
*
sit
*
.
inflation and
tries of Western Europe to
record with the order
on
clerk.
to
live
the stops
use
combat the forces of
more
particularly if you don't watch
I'm loaded with reasons up to
the tape all day, a written
here
and
none
of them
stop is advised. It may not be
mean anything to me.
I can't the best method but it's the
make a dollar on them and if
only one I know that's prac¬
I can't I won't pass them on
tical.
„
during the current
(Continued from page 11)
recommended
stocks
Total
Says—
"Reasons"
I
s!«
:'f
sje
Markets
LssBy
t
a
United Aircraft 23-24.
Tomorrow's
Walter
i
and
23; G. L. Martin 15-16,
Thursday, February 12, 1948
FINANCIAL CHRONICLE'
&
•
be serious
and prices for
period. Such
undoubtedly
a
long
an
spiral of
indefinite
development could
wreak
to the economy
values and
of
greatest danger to
of the country would
continuation of the
wages
ously
or
The
great
havoc
and to investment
ultimately might seri¬
undermine
the
economic
Volume
and
;
•;,vv
political
foundations of - the
country
/•'
+"
•"'["»■
•
W-'K/
*■
; The course of business activity
will have a pronounced effect on
investment policies of trust com¬
/ '
,vv
panies. /-At present, a rather cauf
•
tious attitude
is
indicated
as
re¬
gards all types of investments, in}
eluding
■
well
THE COMMERCIAL .&
Number 4672-...
167
bonds? and
mortgages
as
*
anti-inflationary
forces
also
are
beginning to be felt in the econ¬
omy and that a readjustment may
be
than is gener¬
at hand
nearer
inflation
from
This
ther.
FINANCIAL
going
dividual's refraining from buying
anything not absolutely
ally believed;1 Basically, the econ¬ by
the corporation's
refraining
of the United States is sound; from making capital expenditures
A readjustment during 1948 could
unless they lead to an automatic
not be of long duration because increase in productivity of labor
there is still a great pent-up de¬ and hence to a reduction in the
for' all
kinds
commod¬
of
period of readjustment
will be'called upon for a number
of
the
long-term
high-grade obligations, since with
the rehabilitation
the
is clouded and complicated, to say
the least, in this respect also an
inflation
•>'
:
course
ities, notably housing, and because
it is clear that the United States
have
and that
/
again
••
i
a
begin
their
iun
to
buy
to contribute heavily to
years
of'the world.
While the international situation
realize
States
United
that
be
majority of the
people in the United States ap¬
parently realize that the Marshall
Reconstruction Abroad
possible
a
end
out
that
check
"may
course
the
retire
He
commodity
extreme
of Mr.
J.
the nation.
It has been argued that in view of the infla-
•
tionaiy
spiral
in
the 'United
States, the rendering of assist¬
•>.
t"
to Europe
ance
:
pro-
posed
by the President to the
Congress might undermine the
economic stability of the country
<
;
~
*
.
the scale
on
without contributing much to the
I
rehabilitation of Western Europe,
V: This .'view
is
not
contribution
will
v
small
•
fraction
•
product
v
;
United
States
Economic
the
>vthe
of
this
of
a
the-. national
country;, More-
it is hoped that a portion of
placed at the disposal
over,
,
;
the-
under
The
/Recovery Plan constitutes only
/;
.
make
'realistic,
funds
the
Western
ex¬
to the date of his
the
been
r
'
:
The
#
.
*
...
the
of
and
' '
1
,
-t
r
Com¬
of
spread
countries.'
those
A
the
Federal
Cleveland.
Fourth District
ing with
hold
strong United States,
important factor in
a
be
an
the
solving
international
acute
political problems confronting the
world at the present time.
Bank
of
banks in
the
Reserve
Member
total 711 and
now
approximately
of the
District.
85%
total bank deposits in the
Officers
/
'■
rehabilitation
of-Western
i-
to the United States,, It will
*ance
-
it
make
possible for the sixteen
Western European countries and
Western Germany to restore
-
,
economies
>
'
and
to
again
their
play
an
important rule in the international
interchange
of
commodities. It
Y
will create
•
market for American
a
products and will provide important
of
sources
supply
this
to
The
adoption
of
the
Recovery
Plan could
;lead toa better cooperation among
the nations affected and in the
./country.
.
i
•
European
i
-
Y
long
J-
ljun
;
ultimately
and
to the establishment of
.
Y\.\. union.
also
-/
.!
i-
The
a
customs
could
stable level during
few years, particularly
time
when
flation have
the
a
Plan
on a
theY next
;Y*«'at
Marshall
help maintain the American
economy
»c
r
elimination of
to the
restrictions
trade
t
>
the
their
run
in¬
forces of
course
and
period of readjustment sets in.
' While it cannot be denied that
;
far
as
the
so
European; Recovery
Yh/ Plan leads to increased purchases
Y
commodities
of
in
scarce
supply
in this country it tends to contribute to.the inflationarjir forces,
,'c.
Y
♦
•
>t
a
careful weighing of the pros and
cons
•
on
;
leads to the conclusion
the whole the
plan would be
the country.
.
'
i
that
adoption of the
of
advantage
to
the
fronted
world
with
at
the
serious
task
of
rectifying the maladjustments that
Were created during the war. Btecause of the long duration of the
>
war, the vast destruction and the
fhuge expenditures,-' leading to a
sharp increase in the supply /of
..•
? money in all countries, and be*
j
cause of the unfortunate split be*
■
«J
.
that
particularly those who are
unable to' increase their income
with
commensurate
the
increase in the cost of
in
spite
the- fact
of
know that
constant
living, and
that
all
we
period of inflation is
invariably followed by a period
of
deflation, the United States
shortly after V-J Day dropped
a
virtually all controls
ture take its
of
the
own
let
and
huge public debt and
knowledge that drastic credit
strictive
na¬
Because
course.
the
re¬
could
change
the inflationary trend into one of
serious
measures
deflation,
should
ures
situation
or
is
such
no.
meas¬
will be taken.
further
complicated
by the fact that 1948
is
dential
a
election
The
year,
a
presi¬
fact that
keeps Congress from taking
meas¬
that could curb the forces of
ures
inflation!
sighted
-
which
to
short¬
many
businessmen, and
labor
leaders is synonymous
business.
with good
it is always
However,
darkest before dawn, and
its
course
expected,
than
sooner
while. the
MarshalI' Plan
the
has' been
a
much
more
dif ¬
ficult job
ah
'
of combating the forces of
inflation, and preventing a further
sharp increase in prices of commodifies.
Greater inflation would
;
Y harm everybody, and particularly
V;-.< those who live on fixed incomes,
-
.
A
-
w
-
the
amount
the
increase
to
through
18.000
of
issuance
shares of
$50 par stock at $60 a
referring to the an¬
nouncement of the plans by John
share.
In
C.
Wright, President, in
of
the' meeting,
the
"Journal
of
Commerce,
part;'
advance
Chicago
said in
4:
:j!
'
4:
An increase of
"
"Of the
$1,080,000 to be raised
$900,000 will
credited to the capital stock
be
stock sale,
account, lifting the total to $1,500,000 from $600,000. New Sur¬
plus \ $900,000.
The
remaining
$180,000, plus a transfer of $120,000 from undivided profits, will
stock. The en¬
became effective
capital
"
4s
4s
addition
An
placed in the surplus account
to raise total surplus to: $900,000
from $600,000.
"This will increase the combined
$2,400,000,
which is double the present total."
capital and surplus to
;i
-
A'"';:''
The
Bank
to the
$200,000
capital of the First NationaLBank
of Beaumont, Tex. has resulted in
of
>'
4:
Chicago
Harry'; Krauspe,
to
*
' ■
.
,
,
National
Security
has
advanced
Assistant
the
office
of
ViceVice-
President it Was stated in the Chi-
cagto "Daily Tribune" of Jan. 28.
YYY;-'' A'/'
I
*
!;
*
*
„
amount
Trust
of
.
$2,000,000
/
regards investments in long-term
high-grade bonds and purchase of
meetings of the Ann Arbor
Company
of Ann Arbor,
Fritz
Mr.
as
4:
.
,
4'
*
National
The
Bank
election
the
by
Should the long expect¬ changes
ed and much advertised recession
set
in
other
was
Honorary Chairman; Andrew
Chairman of the Board;
Homer L. Boyd, Vice Chairman;
Arthur W. Faragher, Vice Chair¬
Price,
the
to
the
the
has resulted in
in
the
bank's
increase
an
capital
from
$10,-
$12,000,000. The in¬
capital was made effec¬
000,000
to
creased
4s
of
Salt
4s
48
State
Lake
National
City,
Bank
Utah, has in¬
native
A
Mr.
of
of
Spinney
the
Prior
Bank
Homer
L.
Heath
E. Foster and Edward M.
Heffer-
nan,
Trust Officers, C. Russell
ity bonds as Ywell as high-grade
Pryce, Comptroller, and Gene¬
preferred" stocks.;; Strange as it vieve M.
LeRoy, Secretary. Pearl
may seem, once the inflationary
I. Manning was elected Assistant
forces
may
vest
have
run
their
course,
it
also become advisable to in¬
in equities,'- because in that
the fear of a boom and bust
to
-
"v-V..;
J4.
The
; v
'.
■.
case
pension plan for members
of the staff of the Anglo California
Bank
National
San
of
Francisco,
by the shareholders at
their annual meeting on Jan. 13,
as
recently announced by Allard
approved
of
First
Canada's
Loan
■
S.,
campaigns
Four
in
Victory
the
Secbnd
Calkins, President, has met
practically unanimous ac¬
ceptance by the staff, Mr. Calkins
said. Participation by those who
were
members of the staff
on
Dec.
31, 1947, the effective date of the
plan,
voluntary.
was
New
staff
however,
will
automatically fall under the
provisions of the plan after one
year of employment and on at¬
taining
the
of 25
age
years.
normal retirement age is 65 years.
is made for retirement
with
modified benefits at age
for those who have completed
service.
60
20
The
in
The
its
or
more
paying the entire cost of
service benefits. This will
amount to
approximately $1,750,000, payable in installments over
an
liy2-year period. The first
payment of $155,000 was made by
the
bank
$108,000
a year on
ture service
about
Nov. 24, 1947. The
paying approximately
on
bank is also
account of fu¬
benefits, representing
two-thirds
the
to
of
for Social
bank's
the
annual
The
Bank
Anglo
of
granted
San
a
Van
Ness
*
of the
institution, including offices
Edmunston, N. B.;
Quebec,
Hamilton and Montreal, where he
at
to remain.
was
"Sir Frederick
Williams-Taylor,
who had been brought back from
the Bank of Montreal's London,
England, office to become general
manager, had! not been more than
two years in that position before
staff changesr-brought about
by
the
First
World
War—prompted
him to look about him for
National
Francisco has
"In
was
George
1915,
taken
from
department in
a
W.
the
Spinney
accountant's
Montreal branch
to
become
Secretary to the Gen¬
Manager.
"In 1922 Mr. Spinney was ap¬
eral
Manager, a
-
to the
General
Y
"Then in
came
with
M
a r
1928, Mr. Spinney be¬
general Manager
supervision
over
Quebec,
Assistant
i ti
and
m e
branches
the
of
supervision
Newfoundland
bank
as
well
as
the securities
department. Eventually as noted
above, he became Joint General
Manager, and finally President."
-
over
been
Dreyfus
New
York
&
Co.,
Stock
Currency in Wash¬
announced
that
by
the
branch office
on
(in San Fran¬
50
Broadway,
City, members of the
New York
Avenue
new
and transferred to the head office
Comp¬
a
a
Secretary;
Dreyfus Adds to Staff
California
open
part
Spinney served in various
capacities in numerous branches
1
4s
permit
troller of the
ington to
4:
in
expenditures
Security benefits.
4s
Yarmouth
"Gazette"
"Mr.
The
Provision
of
Montreal
further said:
with
tion
••
N.
service
in 1906.
President1 he
becoming
branch.
• •,.
directors
These
the
Montreal
had been designated Joint General
of
.••
•
Secretary. All other officers and
reelected.
1. He
capital from $500,000
Mr. Spinney's first position, ac¬
to
$750,000 through a $250,000
stock/dividend. The new capital cording to the Montreal "Gazette,"
was
as
a
clerk in a Yarmouth
was made effective as of Jan. 21,
it was indicated by the Office of drug store; some months later he
entered the service of the Bank
the Comptroller of the Currency.
cost. These payments are in addi¬
were
Feb,
Yarmouth,
entered
of
f
elected Vice-President, Harry
on
in his 59th year.
was
pointed Assistant
Title
Montreal
World War.
its
creased
Montreal,
Manager in December, 1936. kMr.
Spinney had also been Chairman
tive Jan. 5.
Utah
of
cember, 1942, died
Republic National Bank of Dallas,
Tex.,
Bank
past
serve
announced for five
officers.
of
well
to
;Committee.
were
Board
Jan. 13 of J. W. Max¬
on
bank is
continue
will
Com¬
of
of Seattle, Wash., announces
merce
years
director and member of the
a
Executive
capi¬
new
Canada, became President in De¬
by
members after that date,
'
Y At the annual stockholder and
board
that the
tal became effective Jan. 20.
Directors
A.
Lincoln
which reported
the
:
4s
of
(Jan. 2C; of the Office of
Comptroller of the Currency,
the
new
Jan. 2.
be
v
bulletin
$1,000,000 in the
raising it from $5,000,000 to $6,000,000 was effected by the sale of
larged
a
made
was
capital of the Citizens & Southern
National Bank of'Savannah, Ga.,
$1,000,000 of
through
$30,000,000
to
dividend of $6,000,000. This
known in the weekly
stock
Associates.
i
The
changes, says Mr. Cress, indicate
the growth and development of
and would undermine the system will have been eliminated.
?
; '
the
Company
and are
further
of private enterprise in the minds
Above all, the investment offi¬
evidence
of
the complete
trust
of
many
people at- home, and cer will always keep in mind, and
services provided.
abroad. -Y
y/' V' also
impress
upon
those with
r
i While the forces of inflation are
;
.-* '
* '
#*
whom he comes in daily contact,
still ./ pronounced,, there
are
al- the' necessity of doing everything A The Trust Company of Georgia,
ready in evidence signs that some possible to prevent- theforces of at; Atlanta, Ga., announces the
of Georgia
\,A/
from the
■
/-
13,
voted
without hesitation long-term qual¬
that
'
Jan.
Cal. has been increased from $24,-
000,000
vacancy.
caution and conservatism, both as
In the United
\
enlarging
.will naturally be Mich, the following changes were
guided Yiri"'; his •;policies by the announced
by
Earl
H.
Cress,
broad economic trends prevailing President. John C. Fritz retired
in the. country. ;• So long as the
as Treasurer and L. A. Tappe was
forces% of inflation/: are strong, promoted to Vice-President and
these
policies .Will be thoseY of Treasurer to fill that
;in' 1948, however, the in¬
vestment officer; could again buy
States, the principal
problem confronting the nation is
institu¬
the
Robinson, Jr.
Salle National troller of the Currency. ^
Chicago Jwas taken on
4s
4s
4s
when the stockholders
The sale of new stock
entrusted to him
than was generally ex¬
pected after the end of hostilities.
,:
toward
of
adoption of President
Would" be
important step toward the restora¬
tion of the ^conbmy of the West¬
ern;' World. "f," iYvA.".;! ;V'
tween East and West, reconstruc- equities.
tion has become
of
James D.
and
Qapital of Y the La
Bank
already
certain signs can be detected that
the period of inflation may , run
; The
trust / officer
confronted
large is corH with the task of investing funds
...}?
'
disease
economic
affects
Action
To summarize the economic out*'
look,
;
eral knowledge that inflation is a
Europe is of the utmost - import-, dangerous
/
'
enlarging the capital from $400,000 to $600,000. The increase, ef¬ man; and Maxwell Carlson, Pres¬
fective .Jan.
22,
was
brought ident.
4-.
*
if!
'
t
about through a stock dividend of
George W. Spinney, who after
$200,000 it is reported in the Bul¬
the letin of the Office of the Comp¬ serving in various capacities in
.
The
:
4!
The capital of the Security-First
National
Bank
of
Los
Angeles,
President of the Trust Company
as
National
First
the
of
Bank of Sebring, which has
„
./
'•
newly-organized First Na¬
strong Western Europe, cooperat¬
could-
President
as
tions
"/"
'4:
Jan. 13 of Marshall B.
on
Hall
stock
a
dividend of that amount.
270 million people tional Bank of Sebring, at Sebring,
the most skilled Ohio, opened for business on Feb.
and productive in the world, ; A
7, as a - member of the Federal
recovery in Western Europe will Reserve System, it was announced
eliminate the threat 6f social un¬
by President Ray M. Gidney of
rest
San
Bank
voluntary retire¬
4!
*
election
having
$300,000 additional
brought about by
among
munism : in
the
of
the
of
Reserve
ment in 1946.
about
are
Directors
Federal
(Continued from page 18)
increase in the standard of liv¬
who
many
member
charter
a
of
Francisco
News About Banks and Bankers
hope to
countries;
plan is properly adminr
istered, it could lead to the speedy
recovery of those nations and to
ing of
his
to
new
European
and if the
an
referred
of service of Mr.
Board
capi¬
European countries will -be
tal
of
$50,000 and surplus of
utilized for the purchase of com$50,000, are T. F. Shaffer, Presi¬
modifies outside r the United // ■A":
UY.A- Conclusion 'YCAA,;'. /
dent; W. G. Millner, Vice-Presi¬
States, thus reducing the pressure
In spite of our experience after dent, and J. R. Saunders, Cashier.
on prices in the United States. World War I, in spite of the gen¬
*
❖
*
of
,
Tnis will give
gress.
In expressing
Mcintosh, President James
years
,
ing
en¬
Mcintosh
not only to the bank; but in other
responsible
positions,
including
in
•
;
been
regret at the retirement
Hunter
that of
The pi-oposal to assist in the re-, Plan is a constructive
step, and
''/> habilitation of Western Europe is in all
probability it will be passed
another major problem confront- in one form or another
by Con¬
director.
and
had
he
that
Bank of California.
which
drop
officer
an
as
stated
gaged in banking for 58 years, of
He
,
Jan. 13, Charles
Board, announced his decision to
of events'
heavy
the
prices
on
changes."
factor
a
on
the Chairman of the
K. Mcintosh,
forerunner
inflation."
of
"may change the
they oppose inflation and expect
The
as
the
Francisco held
is action by the government that
unduly pessimistic attitude should
avoided.
course
pointed
ward.
•
demand
the
which 38 had been devoted to The
the
Congress could do much more to
combat the forces of inflation, and
for credit and capital will decline
and money rates will tend down-
inflation
stockholders of The Bank of Cali¬
fornia National Association of San
of
probably would do much more if
the people back home were to tell
their chosen representatives that
end of
of
looked
of production,
cost
meeting of the
foregoing address, Dr. Nadler,
by way of comment on the recent
heavy drop in prices on the com¬
modity exchanges, stated it is im¬
possible as yet to tell how much
significance should be attached to
it, but added "it cannot be over¬
Editor's Note—In
the
omy
mand
annual
the
At
4s
sS
:Js
whole.
a
necessary,
has set in, trust companies could
'
.
country as
31
cisco), it was recently announced
by President Calkins.
to forget politics and pass
legislation which will benefit the
and by adop¬
tion of the same policy by states
and municipalities.
F.nally, it is
essential that people throughout
equities. As it becomes evi-
as
dent, however, that the forces of
*■
;
them
fur¬
much
be done by the in¬
can
(731)
CHRONICLE
Exchange, have
Harry
Mitchell^
and Mrs. Joan Masi have become
associated with them.
32
Calls Baruch Modern Santa Claus
Baruch places on
1939—actually
in
required
were
than 60 million persons are
more
employed and we do
not come anywhere near supply¬
ing the tremendous demand that
we still have for goods that are
being
now
a
need
capitalistic production as
shortening hours,
panded
but all
if
been
only
not
here
Presumably,
Europe.
figure
has
more ex¬
a
on
program
over
we
that
go
can
10 year«,
out all the money
spent by the gov¬
last 6, 7, 8 or
to
earn
proper
a
No
production for what has
been paid in dollars, might have
a great deal to do with the theory
Of
inflation.
Extravagance / in
government is the same as spend¬
ing the money in the war becauce
that for which
the money was brought into being.
has
isn't
that
dollar
produced—
"somebody's
thinks he gets
Baruch
Mr.
More
.•/••• Av
.
Cure
No
Taxes
All taxes
For
So we give him (the
Government) more and that stops
inflation—beautiful!
:
/■'/ ;. y ;
the
will
less
have
Some of the bright New
.
from
boys
Franklin
Roosevelt's adminis¬
D.
this out
ther, under Mr. Baruch's plan the
Government would stop inflation
government will have more.
If taxation will cure inflation and
our economic situation,
why not increase taxes to the
vanishing point of income and
thus bring Utopia?
Our schizo¬
by continuous buying, paying sub¬
phrenic
administration believes
in shouting deflation while fuel¬
ing the fires of inflation because
they have been fed on payment of
subsidies, sustaining bureau¬
cracies, maintaining agricultural
prices, vast amounts for military
and defensive, veteran expendi¬
by the hard workers or
savers
(past or present).
These
last, dollars could possibly help
improve
sidies, taking on a new force of
experts, bureaucrats and officials
all
that
world
the
over
is
sup¬
plied
the
2
our much
who must pay
capital to
of
flow
needed
producers
machin¬
3 times more for the
or
and improvements than they
ery
formerly did.
./
.
tures that seem to know no limit.
Our
budgets
half
1939
of
our
The debt,
income
tional income is
in
1929
1932.
Mr.
In
entire
na¬
our
and
costs
a
—we
and
absorbed by
now
billion
of
which
and
we
21%
This
pro¬
the
work both ways.
because
the
latter
imposition
Neither
is
sure
a
suffer
the
cure
are
duction.
higher
in fact
In
taxes
fact
a
by
the
resulting
and
creased Government
recommended
invest
hold the base for
flationary
not
click
forces.
with
present in¬
All
the
this
stress
does
Mr.
by the private investor,
which he can either
or
spend.
a
Reserve Bank where it adds to its
reserves
and
could
debt
to
use
member bank.
of bonds
expenditures
our
we
I
may
give
inflation. vWe
to
more
laborer
the
production if
more
secure
we
means to
take
in high
cost
living and taxes; at the same time
we
would give more to the pro-
can
of Excess
Increase
ensue.
Profits Tax
cut from
to restore 50% of the
ex¬
All
Mr.
these
many suggestions of
together do not lend
Baruch
profit tax levels would themselves to efficient, construc¬
negation of his entire pro¬ tive and successful regime in a
gram. As one of the senior in¬ very difficult, perilous time which
dustrialists, he must know that require agreement, co-operation
every
additional thread, pin or and immediacy of many countries
additional
minute
of
labor
in and millions of
people not re¬
maunfacturing adds to the cost sponsible to our Government. To
and, therefore, to the price which throw into this hopper of urgent
is basically determined by cost,
need, so many conflicting, eco¬
including depreciation, reasonable nomic, political and financial the¬
war
cess
be the
the
from
resistance
and, therefore,
for decreased
buyer
a
ories with
pressure
production.
This
mental
even
for
seems
a
cursory
planation and casts doubt
undeterminable
height
folly.
For,
to follow his
mendations
recom¬
would embark
we
Mr.
tion and extension of
of
universal
of
a
sea
of
responsibilities,
the
ex^
on
ocean
seems
ele¬
too
world-wide
a
remedies,
on
experimenta¬
present
our
oppressive
brake
corporations
which
the
are
At
the produc¬
manufacturing
this
of
democratic
of
much
,
be
ary
a
or
be
of further
expansion
by
the
Thus, the purchase
retirement of debt will
direct and indirect inflation¬
threat respectively.
as
an
by the classic economist
unmitigated
needed
burden
pro¬
cunning
intrigue,
on
tence—bores
Feb.
The President, his Cabinet and
particularly
Secretary
Marshall
New
conditions to the two- to 25-year
and Congress, offically and unof¬
ficially, together with the atten¬
staffs
have
all
sweated
out
mist,
Europe's rehabili¬
tation as is Democracy's duty. As
America, that is all we have to
give to Europe
in
procedure,
methods,/conclusions and sacri¬
fices. And despite differences of
opinion,
determined
once
Counsel
and
basis in the state and
municipal market has risen sub4
stantially since the flotation of
bids
and
procedures
as
keen,
Meanwhile
;y
taxes,
retirement
of
an
three
monies
serious strain on mar¬
keting facilities.
Two
also
attempting to revive
a
market for
their
goods), abolish restrictions
(unusual and discriminatory mar¬
gin requirements, etc.) on crea¬
equity values necessary for
obtaining necessary capital for
production.
A solution in part or whole
of
be
the
in
market
However, in
instance is the total of
tions.
should
of burdensome
these
Rather
the
be
competition
moderate
Illinois
because
new
groups
least
at
that
are
on
nine
some
syndicates
■■
banking
seven
for the
•//.' V
compete
will
issue.
'<v
1
,
Still Popular
Testifying
wide appeal
the
to
which
investors
institutional
for
equipment trust certifi¬
week's experi¬
ence of. the New York, Chicago &
St. Louis Railroad, which offered
a
small issue, $1,400,000 of this
railroad
cates hold was this
type of security.
road
The
having received no
11
tenders for the
than
/•/ /./
successful
98.256
road
A ,;
inun¬
potential
bids from
purchasers,
less
\
:
.
literally
was
with
dated
paid the
group
for
reoffering
2V&%
a
at
was
coupon.
prices to
The return on the long
compared with 2.35%
recently returned on the longestterm maturity in the Chesapeake
maturities
Ohio issue.
reason
v
1
complaint
for
cor¬
as
for
months ahead.
&
Electric
asking for bids
$45,000,000 of new de¬
designed to
provide
will
Gas
on
of
of
issues
keen
their
totals.
will
be
in
the
market
'
for
$85,000,000 more to finance
the payment of the State bonus
to
servicemen and this offering
should
afford
a
real
cue
to
the
be
West Penn
subsidiary of West
Co., is seeking
expansion.
Co.,
Electric
of
approval
plans
$12,000,000 first mortgage bonds
50,000 shares of preferred
series
stock
B,
$100
par.
ers.
company
.
Power
&
Light
expected
shortly for
to
Southwestern Bell Tel.
When
Southwestern
Bell Tele¬
phone Co. enters the market early
in May for new funds, it will be
for the entire $100,000,000 of new
debentures authorized by share¬
holders recently.
undertaking, which will
the biggest in recent
This
rank
years,
with
is expected to see a dup¬
of the rivalry between
lication
marked
recent
years. The same two houses ai"e
expected to head the:, opposing
all
market
$300 O00.000 was sold last year.
The current issue is expected
Co.
file registration
$10,000,000 of new
mortgage bonds to be sold about
the 'ruddle of March.
/.
is
that
money
;
/•/-. V.
."
Louisiana
banking groups that has
section > of
the
since the initial
The
plans to take
up any unsubscribed portion of
additional common to be
offered to the subsidiary's holdparent
change which has taken place in
particular
,
sell
to
and
se¬
propor¬
two
center
on
neither
day.
curities
supporting bond prices),
a
plan of readf usfment of debt serv¬
ice on Government obligations to
meet market appraisal,
mainte¬
are
public ^utility companies
will
that
of
we
with
not be any
in
(thus afford¬
of
Illinois
bonds,
where
most
thus restrain inflationary process
of low tariffs
new
Soldier
bidding
likely will be limited to
commercial banks, there
should
Bonus
gold convertibil¬
ing the countries abroad
the
comprised
in
or¬
approach to the
excess
issue market
since
the
major issue, of
scheduled for that day, is4
in
But
ity and the convertibility of Gov¬
ernment
Bonds
into
cash
(and
nance
Monday promises to be a busy
day
expenditures including
the subsidence of subsidies, reduc¬
tion of
mortgage
maturity
years
SEC
State
connection with
is
issue of $6,000,-
bonds of 25the same day»
believed
prepared to make bids.:"
The Ohio Public Service
Co.,
a subsidiary of Cities Service Co.
will open bids on Wednesday for
its
$10,000,000
first'' mortgage
bonds, Vdue 1978.
The prospects
first
000
Penn
of Governmental
Reduction
der.
Co.
Power
Iowa
sell its
to
Power
may
be
slated
-;■"' ■/"'/'/ vLV''vy':. \
: [
,
be
will
competition
•
bentures
practices
should
syndicates
banking
that
ing,
soon
above outlined.
belief
writer's
four
suggesting, in view of the com¬
fortable size of the undertak¬
funds for
settle from
approximately the following
■
that
are
the bonds will be sought by at
least
Corp.,
be an or¬
der
of
precedence
which may
emphasize
the
relative
impor¬
tance of these problems which to
However, there
' '
,
,
indications
Current
Columbia
abroad, that represent
heritage from a catastrophic
fundamental
statement.
istration
business
problems
own
Prospective bidders al-*
chiefly the util¬
ities, continue to pile up potential
confused with these extraordinary
our
new
1978.
due
open
Monday for its $15,000,*
first mortgage bonds,
on
of
000
/
will
Co.
Power
porate borrowers,
and should not be intertwined or
must
Next Week
Bids Due
.
Illinois
real
theless, there are our own imme¬
problems that have been
discussed for years in Congress,
in the public press and otherwise
we
bankers, ac¬
cordingly, will be fitting their
bids to prevailing conditions/
/
&
diate
Those
initial issue and
the
•//.
practices and taxes, and a finan¬
cial circle figure for 30 years, and
"Plenty, of Work Ahead
. •
was for 20 years head of the Stock
| ■ These may be slow days in the
Exchange firm which bore his
seasoned
security
markets, but
name—Editor.]
investment
bankers
find
little
we should proceed with
vigor and determination. Never¬
war.
' ?
The yield
turity.
program
our
of¬
•
yield from 1.40% on one-year ma¬
turity to 2.45% for the 1958 ma¬
4, N. Y.
Investment
first
the
on
fering,/ //
The
Lawyer specializing in corporate
a
on
PRINCE, L. L. M.
[Theodore Prince is an Econo¬
this problem of
fixed
average
The
Street,
York
set by law is
omnipo¬ ■/paper.
and
11, 1948
30 Broad
shorter
maturity since. the in-?
hardly conducive under present
within!,
THEODORE
Our Purpose and Remedy
dant
the
of
waits without but with diabolical
power,
tax
history
the
and—the medieval Moloch
world
than in an
production to
swell government expenditures.
increased
present we are an island of
equaled; in
our
now
tion of
A Government debt is not con¬
sidered
"and
the
potency in a sea of tragic incompetency and disaster
never
country,
backbone
processes
under
"Barney Baruch" plan!
on
tion of the 470,000
world
whole
the
for
life itself, against reverses of any
kind.
There could
be
no
more
considerably
of
terest rate of 2%
.
profit and surplus.
Such a price makes
be
ready have been advised on the
information contained in the reg¬
Conclusions
recommendation
Baruch's
Mr.
and
If the debt be
bank the money fi¬
nally finds it way to the Federal
in¬
probably done much to form and
(at
a
paid off to
of
by Mr. Baruch have
fixed
he getx money
pro¬
theory
in
debt held
former.
on
was
in
buys Gov¬
order to peg
misguided attempt to
save
charges and taxpayers'
money, it is inflationary.
If the
Government buys bonds to reduce
for infla¬
tax
above
.
return) below the fair rate of in¬
tion—certainly not taxes which in
essence
curb production and
stimulate governmental expendi¬
ture and
bonds,
that
price
a
increased
will
of
-
can
Government
the
ernment
production do not go well together
the
And
could
and
curtail
and
stopped devising
'more
from
him
all,
taxes
should be reduced in order that
the
If
Travesty
a
inflation—it
of
effects
terest
and
it in 1947-1948 dollars
billion—50% over prewar.
merely tends to. illustrate
$600
and 79% for the first men¬
purposes — national
de¬
fense, etc.
As a processor of in¬
flationary forces this Democratic
administration has no equal.
Additional taxes
owe
are only worth around 50c
buying power.
We could then
figure our debt cut in half, or
roughly
$125 / billion,
and
our
national resources roughly worth
grams
tioned
Production and Taxes
$5 bil¬
in
lion; 29% for national defense,
foreign and veterans' interest and
71% for all other programs.
In
1949 the Government will spend
will be for other items
us
is already cut in half
spent it in 1941-1945 dollars
year
which
local, state and national taxes. In
1939 the Government spent $9 bil¬
$39
Baruch
to horrify
seems
lion
and
in
all
fact, one-third of
over
that
and
about
and
Debt, Taxes and Inflation
Our
20% of our na¬
equal to one-
are
income
tional
good debt is better than a
debt even if substantially
a
reduced.
Baruch. Fur¬
for brilliant Barney
and
Dealer
lamented
late
our
tration must have thought
The worker, producer and
investor
'
,
are
producers, workers and investors.
will add it to the
cost which will be paid by the
the
to do
or
buy them.
The producers
buyer.
poor
our economy
7
that dollar go?
$116,000,029 to buy wool, .eggs, po¬
tatoes, sweet potatoes and pea¬
nuts so that the poor people can't
spent by the Gov¬
taken from the
are
and
it, for
injure
or
duction
not
should
we
,
investment. Where Baruch's
glorification
of
thrift extravagant "set up" in money,
Why, to the and
production.
'
bureaus,
experts,
finances and
government.
The
government,
Surplus represents ravings (can farflung
extravagant operations
who is he? Why, the most profli¬
this be thrift?)
needed for new not only in our country but all
gate spender in the whole uni¬
over the
world, which could re¬
verse.;
Does he produce?
Not a machinery, depreciation of plant
and inventories, (all now in high sult in Mr.
Baruch finding his
thing.' Is he rich?
Hasn't a cent
"colcf war" has been heated up
except what we give him.
What price areas) and for "fat"—our
basic element of protection for all to a "hot war."
We might also
does he do with the money?
Mr.
processes,
including find that America will be working
Truman's budget has an item of productive
production
does
Inflation
ernment
come
corporate or individual
that represents earnings,
income
'
.•«
take
the
from
will have 64,000,000 em¬
annum!
wreck
exercises
taxes
dollars
The
ployment in 1958, but failed to
give proportion of males and fe¬
males employed! - Of course, one
can't have everything for $400,000 per,
is in
'/v/-/':
error.''
Their importance may
be judged from the fact that the
Vice-Chairman, Mr. Keyserling,
is reputed to have devised the
$40 a head (elect me) tax credit!
The council has also figured out
we
That's
by increasing taxes, but he
next year.
that
for
represents potential
which
what
of $350,000.
Mr. Tru¬
asking $400,000 for the
is
a cure
spending and/or lending.
year
man
.
prosperity
an
rent
physical
Every dollar of goods
dollar that is in
sock"
council, economic advisors
appropriation for the cur¬
with
is
more
the
luxuries outside of a new balcony
—his
it has
until
economic,
the
economic
new
but
reduced
be
not
produced creates a dollar to be
expended so the balance between
goods and dollars remains the
same.
You must use and reach
it fails to produce
Mr. Truman
itself
by
inflation
the
inflation.
in
turn
on
financial devastation of war.
and
re¬
and
in
for
cure
a
restored
might find out that
we
is
duction
ernment during the
the failure
of purpose with a freedom from
!
political maneuvering, would sub¬
viding the credit is sound and the
interest coverage ample. It should stantially stimulate savings, pro¬
4
the theory
zest to
lend
not
we
to
average
must give a singleness
we
be able to effect those 1
ducers who might then envisage
trial for its existence.
To .pun¬ things we want to effect. These
! a period * of stability on which
ish it and take away the fruits of huge and unprecedented inflation¬
plans for production, labor and
its planning and legitimate des¬ ary forces once generated are not
the
investor
all
would
have
a
serts to give additional power to so easily extinguished and a list
solid and enduring base. We must
governmental spending at this of apparent remedies are far from
correct
our
imbalances without
stage smacks of out-and-out so¬ a cure of so gigantic a terrestrial
which no permanent improvement
cialism and of Karl Marx.
Pro¬ calamity as a great war.
is
before—it
it
needed
never
that they
We
economic barbarism.
seems an
Certainly, the uninspiring ex¬
ample of the Government's attack
on keeping down prices by rais¬
does
a
which was accepted in
life and property.
To continue it
in peace when the resources of all
should
be
given to production
regime
unobtainable.
ing wages and
necessitated
war
To win
Spartan
"thrift."
these last mentioned problems, to
which
i
(Continued from page 4)
Thursday, February 12, 1948
CHRONICLE
FINANCIAL
&
THE COMMERCIAL
(732)
issues
Telephone
syndicates.
,
in
Volume 167. Number, 4672
"THE COMMERCIAL
&
FINANCIAL
CHRONICLE
(733)
33
li|illAdications of Current Business Activity
following statistical tabulations
The
cover
shown in first column
are
Equivalent to—
Steel ingots and
castings produced
AMERICAN
PETROLEUM
Feb. 15
(net tons)
Feb. 15
output—daily average (bbls. of 42 gallons each)
to stills—dally average (bbls.)
output (bbls.)
:
Jan. 31
output
Kerosine
Jan. 31
and
(bbls.)
distillate
;
fuel
oil
output
(bbls.)
Stocks at
output
(bbls.)
oil
and
Residual
distillate fuel
fuel
ASSOCIATION
oil
OF
(bbls.)
oil
(bbls.)
at
2,033,000
7,718,000
7,405,000
5,453,000
8,567,000
9,141,000
9,182,000
9,392,000
102,973,000
100,586,000
94,099,000
11,997,000
15,983,000
49,934,000
48,197,000
50,839,000
51,094,000
51,426,000
In
47,134,000
U.
CONSTRUCTION,
771,992
835,051
666,119
629,970
682,038
544,621
711,636
A.
and
to
Running
$99,683,000
$85,675,000
$111,546,000
66,640,000
46,614,000
34,834,000
78,138,000
Feb.
57,173,000
ft" 21,737,000
53,069,000
50,841,000
33,408,000
Sales
43,115,000
38,747,000
24,094,000
35,436,000
9,954,000
12,094,000
9,314,000
lignite
Pennsylvania
(tons)____
(tons)
anthracite
Beehive coke
Jan. 31
±
(DEPT.
(COMMERCIAL
12,200,000
; ft. STREET,
■ION AGE
,!
.
■f
'• L-.(;
11,470,000
13,760,000
INDUSTRIAL)—DUN
A
1,180,000
784,000
*130,600
127,900
'
.
."
233
-
Lead
V
204;'
"226
217
<St.
Zinc
(New
Louis)
St.
Govt.
Average
Feb.
.
5
5,277,680
r
.
97
87
1935-39
3.18925c
3.18928c
adjusted
ELECTRIC
of
of
as
Dec.
ultimate
to
November
(000's
from ultimate
IRON
consumers—
omitted)
$40.17
$40.17
$39.00
$40.83
$40.00
,
'
$31.67
.<>t
:
a,
f».' y
.
tons)—..
"
Feb.
4
...
Feb.
4
21.525c
.
_
■;
15.000c
15.000c
100.69
100.69
110.70
110.70
110.88
.115.63
116.02
MOODY'S
U.
S.
BOND
Govt,
.DAILY
114.27
114.27
114.08
Bonds
AVERAGES:
109.79
109.97
110.15
—
:
103.47
103.64
"Vl-
103.97
INSURANCE
LIFE
105.17
105.34
105.52
113.12
112.56
112.37
112.75
118.60
114.66
114.85
114.85
120.84
.
2.45
Feb. 10
3.13
2.86
Feb. 10
-
Y-Xj 2.45
ft
3.13
yy--¥"
2.94
Feb. 10
3.18
Feb.
2.45
-
WROUGHT
IRON
3.44
Shipments
For
2.95
3.00
3.04
3.02
2.92
2.91
2.91
:
tons)
ITY
INDEX
Fats
and
BY
407.2
442.2
V.
7
Feb:
7
452.8
238.8
242.0
7
.
Feb.
Cotton
235.5
260.8
'
Grains
Total
390.2
OF
and
salary
industries.
236.8
Less
,
259.1
270.1
238.8
217.3
162.2
7
181.4
178.8
154.1
Total
219.1
ftv
Personal
220.4
-162.1.
233.6
155.3
155.3
7
137.9
138.0
.Feb.
7
142.5
.142.5
Feb.
7
.
137.2
-
Feb.; 7
RATIONAL?.' F/4PERBOARD- ASSOCIATION:
_.
V/'
}■ Q>,Edersf
'A-ft.-?
.
—
Jan. 31
..
-
Jan. 31
!:.
103
432,911
-188,717 ft'ft"
'
"
transfer
RETAIL
155.0
125.5
CITrtES—U.
141.8
133.6
'
AH
124.3
'• V
"187,093
136,219
FOOD
All
Feb.
45;Hk-
15.0
13.fr
11.8
'r
," 'v
147.6
*
:
78
INDEX
DEPT.
of
OF
Hides
and
IN
products..
579,562
..
i
|
Textile products
|
Fuel and lighting materials
j
163.7
195.1
164.4
199.2
164.4
Chemicals
materials—..
199.2
177.4
202.2
164.8
181.3
201.5
154.1
.
171.0
145.8
145.5
147.5
135.8
131.2
130.4
128.5
98.5
153.9
Jan. 31
152.0
138.3
191.3
189.4
168.6
139.3
139.3
135.0
127.8
Jan. 31
137.5
137.2
135.3
122.8
Jan.31
!
commodities
154.1
191.3
Jan. 31
products
Housefurnishings goods
Miscellaneous
176.5
201.2
.Jan. 31
______
allied
and
140.3
.Jan.31
_______
Metal and metal products
!'.!'Building
151,6
Jan.31
—
ft'
•
.:
< v
227.3
,
-r
,_1
227.6%
ftft
221.5
302.3
—
'
vegetables
^-_
224.7
''205.3 ' "
•ft'
'190.5*
ft 187.tV
,193.3*
189.4!
267.6-
198.4 ''•••'
.'ft 236.1-
—
and
-r5'"
302.4
ft
/
•I98.fr'
-184.fr
.
.'
.
204.9
■
y
.ft- ft
y
227.1;
1
190.7
"ft-141.7
192.fr.
'•
223.6"
ft -219.7:
V*'
'
Fish, fresh and canned
Dairy products
Fruits
•
"
'
1—
1
185,9»
167.9
226.3
V-
218.2/,",..
'
Lamb
202,7
227.0
223.2 ft
;
veal—
•ft'
206,9
'170.5"
T
T;"
and.
Chickens
Eggs
150.6
Jan. 31
—
162/L
V
LARGE
"•
15:
—_
Canned
Jan. 31
leather
10.2
„"ft,
ft: ft;... >,22.8
*
•
ft,'./
199.6
' '
'•
200.fr*
2014
185.0*
212.1ft'"
Jan. 31
products.
l.ftr
LABOR—1935-
December
Meats
•
102
452,124
Jan.31
r •»
"
188.1
24.6
&
Beef
104
PRICE
S.
Pork
179,347
423,160
150.0
21.2
'
179.9
•
bakery products-—.
Meats, poultry & fish————r__ '
204,033
S. DEPT. LABOR—1926=100:
commodities
Farm
6
1.8
ft
1.8
,
PRICES—U.
19.7>
..
48.4
14.9
income
foods
Cereals
191.8
f 226.0
-
WHOLESALE
14.2.
"
payments
1
income
1939=100—As
134.5
*•
2.1
32.0
.
1.9
dividends— '
nonagricultural
agricultural
17.5
50.9
——
_____
and
15.2
social
_____•
income
36.4
213.2
•"
•IL» >AINT AND .DRUG REPORTER PRICE
"
INDEXi—1926-3G AVERAGE=100_________
interest
154.5
i;':ft:v224.5
.188,002
income
135.9
-
"
185,944
'
(tons)
Total
•
196,886
Jan. 31
activity^f_i"-Tf—
Total
142.4
'
.Jan.31
__
ft
236.2
•
137.2
220.7.
214.6
161.0
233.6
7
__i. Feb.
Feb.
ft. Production, (tons).
for
Proprietors' and rental income
157.5
49.fr
57.5
17.6
:___
contributions
252.1*
216.0
115.4
15.1
insurance
220.8
113.D
57.9
—
;
employee
labor
184.®
124.5
—4.26.6
36.5
Government
279.6
210.9
125.0
127.1
2.1
280.7
289.2
Month
—
industries
Other
7
36,802
278,443
industries
Service
205.9
7
*40,092
210,695
204.5
309.5
Feb.
—
sale
total___„_____
disbursements
337.1
Feb.
.
sale
receipts,
employer
213.8
271.9
178.4
29,659
income
personal
Distributive
244.0
278.9
220.8
68,987
39,323
36,306
UNITED STATES
310.8
Feb.
materials,ft___ft
Chemicals, and :;drugs_i_—
Fertiliser material^,
for
COMMERCE
310.2
7
83,979
'47,673
35,784
331.0
7
72,111
39,969
206,510
282.6
7
,
32,142
—
318.3
Feb.
Building
764,000
269,000
for
month,
7
Feb.
'Miscellaneous'commodities'
orders
of
7
Feb.
'
299,000
; .r
OF
tons)
cancellation
end
Feb.
■
Livestock
Unfilled
(short
Feb.
,
percentage- of
(DEPT.
____________—'
Commodity producing
,l_.
$1,962,873
October:
'
products
$1,797,389
(DEPT.
November:
PERSONAL INCOME IN THE
2.61
Total
Feb.
Farm
290,439
475,709
2.72
_
COMMOD-
____
$1,196,723
335,561
203,386
___________—
orders,
(short, tons)
GROUP—1935-39=109:
oils_____
$1,258,442
435,592
-
-
.
__________________
use
less
tons)
Unfilled
of
tons)
own
booked,
(short
2.79
ftft3.12
3.42
3.43
Orders
2.64
3.51
3.03
Feb. 10
ASSOCIATION—WHOLESALE
CASTINGS
(short
producers'
Wage
FERTILIZER
PRODUCTS
(short
sale
For
of
INDEX-
-
'
DEPARTMENT
NATIONAL
**
COMMERCE)—Month of November:;
Shipments (in pounds)
2.21
3 .TIB
,
Feb. 10
COMMODITY
$1,478,120
287,203
PURCHASES—INSTITUTE ;.v".
OF
2.55
Feb. 10
___
35,226,000
$213,743,000
■:
MAGNESIUM
2.78
2.94
3.53
10_.
.ft
3.12
ftft 2.85
.
2.87
3.17
■
Feb. 10
Industrials Group
38,527,000
$247,149,000
INSURANCE—Month of December
110.88
Feb. 10
Feb.10
...
35,323,000
—
117.20
Feb. 10
MOODY'S
16,466,000
24,772,000
COMMERCE)—Month
Average corporate
Railroad ."Group.
Public Utilities Group..
34,205,000
Group '
ft
.
27,829,000
31,022,000
$219,223,000
MALLEABLE
^
.
—_-:
Ordinary
120.22
^
Feb. 10
.____,
6,999,000
18,024,000
Industrial
"
.Feb. 10
r
YIELD
$99,258,000"
17,975,000
(000's omitted) %
122.09
_
Industrials Groups-,
$112,523,000.
ft__„ft
.
__wft__—
Total
117.40
115.82
.Feb. 10
•
November:
$2,200,915
104.34
J
_
of
TO
LIFE
OF
7,609,000
Policy dividends
10.500c
Feb. 10
_
Group
PAYMENTS
INSTITUTE
—
12.800c
"
OF
Group
Utilities
of
36,261,000
13.000c
-
14.800c
10.500C
134^
>
middle
6,924,000
70.000c
100.69
10
U32.5
COMMISSION—
2,668,781, 2,940,190
29,838,000
payments
Surrender values
14.800c
425,44a
month
$101,334,000
Annuity
15.000c
of
endowments
20.025c
12.000c
561,62ft.
499,766 '
Average=100)
Disability payments
V
LIFE
1 Feb
,___
end
BENEFIT
—
19.375c
21.200c
987,O0O»
654,426
458,579
Death benefits
12.000c
Feb. 10
Public
INSURANCE
POLICYHOLDERS
PRICES DAILY AVERAGES:
corporate
Railroad
LIFE
■:i/v
14.800c
.v.V;
at
Employment at
(1935-39
94.000c
94.000c
94.000c
Feb. 10
■
sale
COMMERCE
Railway
December
1.154,192
561,660
.2,687,244
21.425c
21.500c
^
4
Feb.
:
1
21.200c
4
Feb.
.
at
-21.200c
•
4
.Feb.
Bonds.;
for
35,989,107/
J;.
1,020,239
__
(short tons)-—
use
$300,599,300*
^«:
-I-
tons)______^_____£__—
own
orders
38,077,298
COM¬
'
.
(short
$328,208,600
38,248,940
30_
CASTINGS
(DEPT.* OF
Month of November:
sale1 (short
Matured
4
Nov.
123.9
123.6
121.8
109.9
Dried
Beverages
Fats
oils
STEEL
CASTINGS
Month
of
Shipments
For
For
sale
OF
251.7
-
268.0?
194.7
183.7 ft
' \
176.2*
196.4
208.2
•ft
—
(DEPT.
207.fr
183.2
175.3
COMMERCE)—
November:
(short
tons)
(short
producers'
Unfilled
—l—
——
172.(i,
198.5
—-—_—
and
Sugar and sweets
156.5
255.4
i
180.fr!
157.3
i—
*.
205.0 "ft ft
orders
■„
for
sale
(short tons)
at
(short tons)
end
of
'ft
148,358ft
.
,
130,606
97,143
111,288
32,982
37,070
36,72fr
ft 493,309
497,344
372,050
$256,650,614
$256,981,254
—•
——
use
130,125
—_______
tons)
own
—
93,870"
month
—.—
—
Special groups—
Raw
UNITED
materials
Jan. 31
Semi-manufactured
Manufactured
All
articles
products
All commodities
other
farm
products
.Jan.31
commodities'dther 'than
farm
products and foods
.Jan.31
-
figure.
'
.
'
!
,
!
.
'
..
...
,
184.5
152.6
15G.5
157.9
139.5
156.5
f
184.8
157.3
.Jan.31
than
"Revised
182.3
.Jan.31
...
t;
18,655,776 -"16,933,489
$335,687,200
producers'
of
:V.-
;
of
(short tons)
$30.15
$40.83
18,726,158
———'
customers—month
*■/'
y
■
INTERSTATE
3
3.18925c
31
INSTITUTE:
sales
For
2.87255c
3
.__.__.i__
at
'♦384;
;
23EL
GRAY
7
at
Louis)
304
408
AVERAGE
.
213>
45
.Feb. 10
'
Y.
232?
4,801,179
3
.Feb.
at
416
DISTRICT, FEDERAL RE¬
of
INSURANCE—Month
«
,
'
i
York)
York)
(East
S.
■V
5,429,202
Feb.
'(E,V&JM,;J^^lJCiTATIONS). *:,
MOODY'S BOND
U.
5,412,361;
.Feb.
_
relinery at
tin
8,165,034-
234
Index
ftft
10,596,350
236
month
...-j;
*,
11,373,407
FED¬
392"
-
copper—'
(New
Lead
•
SALES—SECOND
263
Revenue
Feb.
Domestic'refinery
Export
Straits
7
.Feb.
*
80,832.
211
123,400
-
'
66,622
248
MERCE)
Shipments
COMPOSITE' "PRICES:
Electrolytic
74,832
COMMERCE)
323
Unfilled
....
_
METAL PRICES'
141,218
241
1,240,000
:
BRAD
"Finished': steel-
■
OF
December:
>'
(average monthly), unadjusted—
(average daily), unadjusted—
Kilowatt-hour
;
Feb.
_____
Pig iron -(per gross ton)_ft_i_.
.Scrap steel (per gross ton)
77,578
106,232
(average daily), seasonally adjusted—.
Stocks, unadjusted as of Dec. 31—:
'
1,167,0001 V
136,600
;
Jan. 31
""Jftftftft'V ft'ft
AND
97,525
(tens
.
STORE
For
FAILURES
*72,534
113,446
bales
November
(In 000 kwh;)_
'
80,593
lbs.)
Number of ultimate customers at
J SYSTEM—1986-39 AVERAGE=1(M>_____
Hectric output
78,674
t
108,816
,
11,350,000 >
Jan.31
KDISON ELECTRIC INSTITUTE:
148,8821
;
Sales
EDISON
Jan. 31
(tons)..
!
206,360*
109,269
144,827
•
January 16:
=100—Month
(U. S. BUREAU OF MINES):
'
2,307,321"
189,777
"
Stocks seasonally
.
and
2,662,5636
2,088,959
Sales
Feb.
Federal
coal
2,000
SERVE BANK OF N.
$123,813,000
Feb.
municipal-..
COAL OUTPUT
2,388,005
233,368
r_„_,
GINNING
DEPARTMENT
Feb.
__
124.912J
2,608,912
____
stocks at end of period
ERAL RESERVE
Total U.
146,602
Month
therms)
(tons of
copper
—Prior
NEWS
•
((M
2,000 lbs.)
COTTON
Jan. 31
ENGINEERING
S.
Refined
of
727,038
133,154
2,987,107
For
—
(tons of 2,000 lbs.)
to customers—
Deliveries
RAILROADS:
Jan. 31
sales
gas
Refined
13,732,000
42,402,000
Ago
COPPER INSTITUTE—For month
of Dec.:
Copper production in U. S. A.—
Crude (tons of 2,000 lbs.)
98,696,000
11,702,000
40,580,000
Year
Month
(DEPT.
Natural gas sales (M
therms)____
Manufactured gas sales <M
therms)
Mixed gas sales (M
therms)
4,729,000
Jan. 31
freight loaded (number of cars)
Revenue freight ree'd from
connections (number of cars)
Bituminous
2,346,000
7,690,000
Jan. 31
S. construction
Private construction
Public construction
PRODUCTS
December:
Total
4,650,150
14,426,000
Jan. 31
_
at
at
AMERICAN
RECORD:
5,291,237
5,637,000
17,163,000
Jan. 31
(bbls.)
Revenue
ENGINEERING
5,336,287
5,446,000
Jan. 31
•.
Finished and unfinished gasoline
(bbls.) at
i
WROUGHT
COMMERCE)—Month of November:
shipments (thousands of pounds).
Total
1,639,700
2,561,000
refineries, at bulk terminals, in transit and in pipe lines—
oil
Kerosine
-
1,723,200
16,747,000'
2,403,000
5,434,000
15,986,000
Jan. 31
fuel
State
1,694,300
5,318,237
Jan. 31
Jan. 31
Residual
CIVIL
OF
AMERICAN GAS ASSOCIATION
_
Gas
ALUMINUM
93.7
Previous
Month
Ago
98.7
INSTITUTE:
Crude runs
Gasoline
oil
Latest
Ago
ftft 94.0
1,670,900
Year
Month
Week
92.7
of
Crude oil
Gas
Previous
Week
'percent ol capacity).
ft; "ft."", ftftftft'ftft'
■
production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of
quotations, are as of that date):
Latest
Indicated steel operations
'
••
either for the week
AMERICAN IRON AND STEEL INSTITUTE:
:
i
156.5
156.6
156.7
156.6
135.0
148.0
147.6
146.4
127.5
GROSS
DEBT
DIRECT
AND
135.6
156.8
STATES
GUARANTEED—AS of Jan. 31 (000's omitted)
General
fund
balance
—
Net i debt
Computed annual
»p.ov{rpH
ficm-p
interest
rate__;_—
tPrsliminarv
fieure.
^,648,247p
$252,002,367
,7 -2.i54%
.
p,0p7,0,78
$253,884,176
,
.
2.144.^;
$260,046,393
,
4,711,493
$255,334,903
2.059%
34
THE COMMERCIAL
(734)
CHRONICLE
FINANCIAL
&
those
invites
is
element
fessional
The pro¬
constantly
offerings.
orie
the
as
then another, selling
group and so on to observe
market's response. When these
which
they
attract
can
tive.'
it relates to
prospective market
Varying degrees of
unfavorable
technical
the
at
market
and
preferred stocks to equity in¬
vestment, as always, is dictated by
the nature of individual invest¬
bearish, in each case with com¬
plete assurance because of the
preponderance- of technical evi¬
given time, on
any
trendless
and
the
trend
and to
it
market,
direction
mine
fore
judge about how far
is in the early stages of a
phase,
The market
appreciates that cer¬
of
accuracy.
consideration
into
taken
be
factors
market
background
must
lied upon to
common
importance.
is placed on
the action of market
averages that there is
a wide¬
spread feeling that all stocks move
is
the
not
case,
however, except to a very limited
degree. Individual stocks ordinar¬
ily do not move, in a direction
counter to the averages. But while
the
be
can
the next trend and to
buying and selling
stocks. So much emphasis
Such
relation
tive
its
measure
•
Ken Ward of Delafield & Dela-
field
wrote
under the
Judging
excellent
an
article
provocative title "Stock
Charts—An
Aid
Handicap
or
Market
Trends?"
in
This
appeared in the issue of last Au¬
gust of the "Exchange Magazine."
The article gave a very fair out¬
line of the advantages and short¬
advances
substan¬
individual stocks will ad¬
comings of technical analysis. Mr.
vance only moderately if they are
Ward said: "The broad-gauge in¬
in a long-term downtrend. When
vestor requires a chart picture be¬
the average later dips somewhat,
cause he recognizes that the pub¬
such individual stocks are likely
lic buys and sells securities not
to continue their downward moves
only on a current earnings basis
rather substantially. Actually the
but' also on a prospective earnings
long-term major cycles of indi¬ basis. Value and
price are dis¬
vidual stocks reach their tops and
tinctly and radically different. The
bottoms at times totally unrelated
value of a stock is its worth in
average
tially,
each other
to
to the
or
Individual issues
averages.
in their
are
own
major bull or bear trends irre¬
spective of what the market com¬
posites may be doing and it might
take
two
in the
or
bear
more
averages
for
markets
individual
an
stock to reach its ultimate bottom.
The
following will
to il¬
serve
lustrate the disparity between the
action of the average and that of
individual stocks. The Dow Jones
Industrial Average advanced 200%
between 1919 and 1929 yet during
this period American Agricultural
Implement declined 80%, Ameri¬
Woolen
can
declined
Kelley-Springfield
86%.
The
84%
Tire
and
declined
Dow
Average declined
1929 and
the 1937 top but during this period
49%
between the high of
Cola
Coea
Mines
advanced
advanced
Machinery
347%, Dome
445%
advanced
and
Food
222%.
Be¬
tween the
highs of 1929 and 1947
the Dow Average was down 51%
in
but
tories
this
advanced
advanced
ing
time
only
Labora¬
988%,
Amerada
Minnesota Min¬
970%.
advanced
Abbott
900%.
These
.
are
few of
a great many issues
categories mentioned.
For instance, 142 big board stocks
topped their 1929 highs in 1947.
a
in all of the
The
not
of
foregoing
meant to
studies
averages.
comments
are
disparage the value
of
the
various
market
Charts of the averages
valuable
for
over-all
market
analysis, but it must be*
remem¬
are
bered
that all
posed
of
stocks
a
averages
number
which
are
com¬
of individual
in
are
different
phases of their
own
market cycles.
At
the
present,
times
there
like
are cross
trends
when
currents and mixed
within
the
market,
the
strong and weak components of the
averages are
likely to cancel each
other out and
inconclusive
averages.
tion
and
market
create
chart
a
somewhat
pattern in the
At such times the posi¬
prospects
of
the
stock
effectively
analyzed by market-action studies
of
a
are
more
considerable number of rep¬
resentative stocks. Even when this
is
accomplished
there
times when the evidence
will
be
of bull¬
tially liquid position,, from
be
selected.
holdings:
general pol/
This
jectives of individual investment
accounts, / continuous supervision
and review ."now, as always, is. a*
ject to the prime consideration o
capital conservation, seek a goot
measure
of capital growth witl.
very
If the needs of the account re ;
growth.;
relationship of price to
ings and dividends is to be at¬
tained, which is- a strong prob¬
ability.
The percentage of well
situated equities in investment ac¬
counts should therefore be as high
deposits
little
a
on
supply.
money
as
possible consistent with the
requirements of the account. As
early as February or as late as
the near-term
The decline in
pressure
reach $3 billiorf or
may
public, to encour¬
belief that commodity
price inflation will go on much*
age
that
Unit Consumption Lagging
\
needs
the
know
to
at
all
public is thinking.
anticipating
aided; in
optimism
cies,
cies,
high standard of investment per¬
an economy and in a
stock market that will continue to
mediately available.
a
two
between
formance in
ten-
contrasting
subject
to
In peeking to
.
outstanding " investment
uncover
values and to promote
sound tim*
Ward
that Ken
sider
has done
a
analysis
Fundamental
tions,
This conviction that the present-,
economic factors in¬
trends,
balance
background
clude
buyers
strike : has ever
cuffed.'
The public can be
of
industry
oc-
pended
upon
dd-
to spend practically
chartists
■
There
is
bound
prejudice
based
rience:
one
upon
and
to
investors.
a
natural
or the
personal
way
past
be
other
expe¬
But these difficulties
and
on
how these factors measure up.
?
important market advance.
Durable
vs.,
Consumer
,:
Industries
A:
basic
policy
tions
factor
v
which
industries
selec¬
have
completed their reconversion and
other adjustments and where large
power is indicated to con¬
through the year. In gen¬
earning
tinue
mind.
tion in those of consumers'- goods.
It
to
,
of interest for you
my firm of invest*
counselors
approach - the
may
be
know how
ment
subject of coordinating fundamen¬
tal and technical considerations in
supervision of our
accounts.
At
the
beginning of
each year we make it a practice
to outline our general investment
policy for the new year. Here is
the outline of such general invest¬
ment policy for 1948:
directing
eral, this involves substantial rep¬
in durable goods in¬
dustries
the
smaller
and
representa¬
Industries in which labor cost is
a
small
relatively
ly low in relation to income, sim-;
.ply; because so many/items, had
been in short supply. * Now this
Sav—.
margin has been removed.
dropped to only
about $9 billion, out of the record
high income that; approximated
$197 million. The public is spending up to the hilt now, and there
is not much margin for increase
last
ings
left
year
unless
keeps; on
income
percentage of
r^1 ^
y
ISS'S-
level
;///;.
The daily . index of primary
commodities published %by the
same Bureau, however, : has been *
declining for several weeks. This:,
index; is more heavily weighted*
with imported commodities and* I
need not point out to this group .
that United; States tariff coneessions, as:,; well as devaluations
abroad, will have a depressing effeet on the-domestic price level.
During this same period,, com¬
go¬
failed to
much - progress.. My. or~«
of course, has a stimulating in-: ganization maintains an index of
fluence on income.. I am allowcommodity futures prices, sinces:
ing for this when I say that in- these are; so1 sensitive and frecome will probably reach its peak
quently have such barometrical
sometime
during the first half > value. This index reached a high
of the year.
I base this conclu- on Nov. 28, declined sharply in
sion on offsetting influences, the December, and came back again
most important of which is the
in early January to': a new high.
modity futures markets
ing up.
;
investment
confining
for
calls
to
in
,
Goods
resentation
can
°£
t:P0Y?^Jn
be ironed out to
the advantage of all parties* con¬
cerned
if they
retain an open
prejudices
Ihe
weeKiyinqex:, or
prices published by the Bureau of
Labor Statistics advanced for/11%
vance.
.
useful job in giving a better
understanding
of the
technical
ticians,
during
•"
■Jljt: 6f
very
approach to market analysis and
at the same time promoting a bet¬
ter
understanding among statis¬
im~£
amount of credit that may be
no
a
considera¬
technical
andi
mental
pective earnings to effect proper
timing of purchases and to detect
evidences of distribution after an
of
con¬
by the
Jabiljty. ,;We frequently • 'heari.talk' (.tiori. : The action of prices
weight should be given to funda*
Thus he is
I
pasti
to
ing of purchases and sales, equal
ly to capitalize current' and pros¬
excesses
related
experience than they are
doubts whatso- commodity price inflation - may.
ever that the public will continue
not. be far from, a peak is based;,
to
spendto /the utmost of; its; not only on logic but on observa-l
First, I have
adjustments
many
mixed ^trends.>
and
of values
sense
dencies.
be
times what
pessimism"'
or
changes,
again'
poli-,
like the banks' lending poli¬
are determined more by a
May should witness the: best buy¬ V In' appraising
the: near-term
ing opportunities in 1948. :
price outlook, we> must finally
An unusual amount of discrim¬ consider the position of the buyination will be needed to maintain ing public.
Here we must weigh
ply-demand' relationship* of each
security under review seeks to
determine how the market is like¬
rest, high taxes, depreciated cur¬
the
longer." Let me remind you
the purchasing agents'
more.
in these days of social un¬
rencies and revolutionary
■
the consuming
Market action studies of the sup-
course
T;;
•.
(Continued from page 4)
bring
investment
safe
;
nor¬
time'
a
>;;V
~
earn¬
statisticians.
The
price of a stock reflects public
opinion. Therefore, the investor,
who is having
a. most
difficult
competent
planning
•
ingredient for atconservation and
prospec¬
more
a
On the other hand,, there ianof
sheet, earnings and management
the slack in purchasing power
considerations, a study? of profit
was available when the war endmargins and competitive position,
ed.
At that"time expenditures for;
etc.. and appraisal of value based
consumers'goods were abnormal-: ■
the economic cycle as determined
bv
necessary
taining' capital '
incomei-
moderate
|
,
ob¬
Regardless of the reeds and
icy is- indicated for businessmen'!
investment accounts which, sub¬
of
par-
time to
time.
equity' values
and
bound to rise if
mal
re¬
current? and
to
earnings
are
point the direction of
with regard to
together.
testing
broad testing area the
technician
competent
This: in¬
price uptrend.
taking a sideline,, or
well secured by earnings
Share prices are unusually low in
trend. If the market is in the latter
a
a
being
selling pressure will develop to
the point of dominating the next
phases of
in
are
tweerr cyclical and stable
high quality equities Wnert
%
dividends give every promise oi
under, heaven
buying power or
nobody
whether
knows
groups
volves
to
,
of -. stocks v and;, industrial
which at' different times
tage,
which will dictate the balance be*
commonplace
are
more
or
come,
.,
among
clusion obvious. The point I want
reasonably and consistently good
tain
5Vz%
con¬
to make here is that if the markel
likely to carry. This can be
accomplished by able and exper¬
ienced
market
analysts with
a
technician
the
next
the
is
degree
made
market
the
deter¬
to
of
entirely conclusive—and long be¬
sidewise
Yields
growth without regard to in¬
the
foregoing • procedure
be', followed except that
rotation
of investment, holdings,
would be needed to take advan¬
would
the
warranted.
is
are
have
cilities, thus creating even larger
earnings.
r* 7/ '• ', ■ i.;''^ " ■;
;
; The foregoing procedure must
be' integrated
with the specific
needs, objectives and preferences
of the individual investor, all'pi
constructive view of bond invest¬
ment
which
-
tal
for the first time in years, a more
made the conclusion
enterprises
modification of
foregoing'procedure would be
necessary.
On the other hand, in
accounts seeking accelerated capw.
back a considerable por¬
tion of earnings for expanded fa¬
-currently yield almost 3%, so-that,
dence which
growth
companies
be
the
plowed
present and inter¬
mediate future. High grade bonds
„
is, at
this
5 and *
minor for
of Market Technician
trend basis. Or if it is a
Money, rates-are
hardening
gradually
any
of
those
1"" ; "* •'/'
ment accounts.
an
gories
efficient and produc¬
more
,
rampantly bullish;, at other times
it has been possible to be abjectly
public
a
It is the function of the market
a
labor1 be¬
as
tendency may be expected to con¬
tinue although their further effect
on
bond prices is likely
to* be
technician to determine where the
market
also
and:
The ratio of investment in bonds
■
in
factors
come
investment, some
new products or processes
expanding industry. Par¬
ticularly attractive in these cate¬
time. There
have been times in the past when
it
has
been
possible
to
be
inaugurate trend action.
Function
comes
probability
tach to judgments arrived at by
weighing the favorable and the
following, their buying or selling
is done on a scale large enough
to
of
conclusiveness, therefore, will at¬
in
resistance
least
law
the
movements.
determine
operators
of
line
the
of
studies
group,
professional
market? available
of
emphasis
greater
on [securing; as.>much in¬
as is consistent With prudent
placed
in
plant and equipment become
new
techniques, to a large extent, are
subjecting the market to tests in
the nature of buying one indus¬
trial
Studies
balance.
even
that
quire
Among, the
having
fairly
ish and bearish factors is in
(Continued from page 7)
that
competitors.
1948'
Thursday, February 12,
growth companies would -be those
Technical Considerations in
.
of
:
V
Greater
use
downward-
of consumer credit,, make
trend
;
;v
Although
tures
have
its
But the new high
unit, con¬
in
sumption of most items.
dollar
expendi¬
high,
remained
Jthen
and
the
only 1.5%
level. Since
was
above the November
-
theses markets have
filied, showing:
more
backed
weak¬
ness than strength.... public has been squeezed by high
living costs and ;high prices;, for ^"/Prlce■ Test Likely, in Second
other merchandise. - For- au-inI"*'7 Quarter
•;; •: /•*'
creasing number of items, unit,
ment.
,;
;:;jf seems to me "that the entirevolume; has begun to taper off
Equity investment should be lor
price structure is moving forward
activity decline;, There are1'
to an important test at a relatively
concentrated
in
good
quality
stillexceptions. ancf sbmevoftheni
early date..///>;: '.vry.
stocks of companies having able
;-v ^>
product value should be given
p a r t ic u la r
consideration? also
makers - of
labor-saving ;Vequip*
the
.
'
■
•.
.
are
and
experienced management. The
to a competitive economy
return
important. :t The fact remains,.,
ihowever:;;^
/ That
.„
.Two sections of the
price struc*;
hire have been inflated to a par*
small -increase . in
ficularly great' extent. JI refer to
I production
during
the
latter
The Look Ahead
farm products and building mate«
part of 1947 was enough to supwhile
the
government wasthe
rials, particularly lumber.
:
From the standpoint of national only customer, must be strictly | ply a further inventory rise, de-.
As I shall point out later, a part,
I spite, the high level of sales;
;
income, industrial activity, corpo¬ avoided in investment accounts.
That last year's late recovery af¬ of the inflation in.farm products
rate earnings and dividend pay¬
Also to be avoided are compa¬
fected
dollar- measures
much is the direct responsibility of the
ments, 1947 was a good year. The nies having large,^high-cost in¬
more
than it did measures of Government and the buying pol¬
evidence currently available war¬ ventories
even
where
reserves
In particular, icy, it has -followed. ;.i Nevertheless,
rants
the. assumption
that 1948 have been set aside for possible ^physical volume.
it also reflects the partial failure
the increase in prices was sub¬
also will be a prosperous year.
inventory losses through declining
stantially greater than the gain of this- year's corn crop and- the
Somewhat lower volume of pro¬ commodity prices.
unsatisfactory volume of foreign
in sales.
'
Strong
emphasis
should > be
duction could be sustained with¬
crops, particularly European,
t
placed on companies in a longout seriously impairing earnings
Commodity Price Peak Near
Last Fall and this Winter, how¬
term
growth trend, where the
as
profit margins gradually im¬
Let me sum up briefly before ever;
weather^ conditions have
prove to a more normal level. This earnings curve has been advanc¬
been favorable.
Unless there is a
going on.
is expected despite the prospect ing through the years. This would
turn for the worse in the Spring,
ii
I find no evidence in last year's
of moderately higher labor cost. include companies which have not
developments, or in the current world crops will be substantially
Profit margins will improve with reached maturity and whose prod¬
larger
and
world
agricultural
ucts are in growing demand over position of business at large, or of
a better flow of raw materials as
requires that marginal companies;
which boomed
during y the:; war
a
very
.
•
.
-Volume
167 Number 4672
.prices
will , probably
Although most
gharpiy.
:
decline
public.
of
the
fall
the
thority,
n£w crop- movement falls in
second
half
of
doubt that
no
the
stances
and
ill
the
tions
will-
special, circum¬
field
construction
considered.
have
;
'
also
are
residential
building
in markets where -the demand' has
which
fallen
removed in
were
year,
homes
still
were
tion both
and
end.
But
unsold
they
uneom-
will
they
made by
suivey
the
at
be
7%
of
date
in the
of
class
over
"
But
were
ing
uncertain.
material prices
the
is
public
not
Free
Tax
start
before.
think
you
view
I
take
the*
toward
me: assure
do
have
great
credit
ous.
Let
,
the
dangers of
it is the
not
self-correcting does not
tinued
Government
should
But
that
sit
real
a
until
market
with
derlying
bring about
was
decline while there
fs still a chance that it might be
reasonably small.
/■
bear
a
for
also
the
high
present
prices.
It
has
been
level
the
tvpes
of
the
Government
to
until
bank
was
o*
dedicated
to
the
welfare
plainly
during
months.
I
realize4
how
the
past
if
wonder
+->m
much
very
of
one,
fully
Govern¬
ment
buying, not only for relief
but for support purposes, has ac¬
tually been;
;
pounds,
bee-keepers'
1 cents
of
honey, > paying
not less than ,10
,
pound,
a
$6 million has been ear-marked
Ro buy straight and concentrated
.
grapefruit juiced; 162,000 gallons
of
for
that
that
cer-
for
greatly
demand
goods will be far
nrevious
mand
be
happen that far
long-term
consumers'
above
levels.
The
de¬
capital
goods will be
bv the need of
inflated
are
time.
Just
word
one
sustained
followed
period
of
high
/.
by
level
less garbled accounts of a cer¬
or
of
amount
tension
mis¬
or
which
has
de¬
to whether the Council
veloped
as
should
come
Congress
to
measures
or
mendations
Economic
Hill
and
committees
of
discuss
particular
particular
recom¬
the
of
been
v
friend
We
can
of
with
the
our serving
through our
staff
(where
of
the
good
my
Charles
Hardy,
whom
is at the head
Committee staff)
be of
of- you- know,
some
4the
ture and reach
conclusion someT
a
thing like this—
concentrated
Joint Committee
Report
of
the
is the Economic
President
and
in
orange; juice
purchased. •
.Nearly one-third
of the
total
dried fruit crop had been pur¬
chased by the end of December.
be
there,, ready
sible for the Council: to debate the
and
use.
President's
[The
used.
An
[have already been
indeed
.
House and Senate have
*
ap-
have.
farmers
in
,
Government
loans
If
more
of farm
More
than
15
billion pounds
million
47
pounds
of
horsemeat and gravy were bought,
for whose relief or benefit I can-
pot imagine. As Secretary Ander¬
son testified before a Senate subcommittee,,
done
as
his
Department
much business in
a
not
I
am
me
to my last point.
right about the longer
has
year
the nation's ten largest private
food companies combined.
my
judgment, it is utterly impos¬
economic
policies.
they would have to stultify
Either
themselves
accomplish
other economic
through our united ac¬
tion
writers'
association,
bankers'
of
of
bers
great
a
nation
a
lines
in
its
we
will be stepping forward
appreciating
Preventing
and
go
down
the
I
hope
title
as
ful.
I
and
effort
before
the
to lay
buying
of the
use
tion think of it in the highly tech¬
nical, sense in which you use it in
professional
But, speaking
connections.
layman and in
the broad sense, the underwriter
is one who puts his name and
a
as
with it his resources and his
mercial
honor
the
at
end
com¬
of
an
explicit, carefully considered, and
legally binding commitment. It is
a
commitment which involves cal¬
culated
ductive
risks, which
business
contemplates
serves a pro¬
which
purpose,
proper
reward
for
party line as economic attorneys him who undertakes it and which
or
else they would have to de¬ provides useful protection to other
bate, shade, qualify, or oppose parties.
the
policies
Chief.
enunciated
by
Here
their
This
we
what
might contrast the
the
is
fact
that
use
"insured"
taken
administer
by
insurance is
against
inevi¬
then attempting to
those
losses, but
very
the various branches of insurance
seek
to
underwrite
losses and
lessen
to
inevitable
the
burden¬
and
some
demoralizing effect by
distributing them widely accord¬
ing to equitable principles of par¬
ticipation.
For
the purpose of
maximum contrast. I might say it
is the basic proposition of the Em¬
ployment Act that underprosper¬
ity derived from non-utilization of
is
resources
inevitable
as
not
regarded
risk .to
be
an
as
spread,
but
largely preventable waste to
a,
be
eliminated or greatly reduced
through wise managerial action.
And here
part
in
have the counter¬
we
your
Modern
limits
itself
losses
which
'experience.
own
insurance
to
by
the
it
prevent.
The
stitution
no
which
Life
means
for
payment
does
nothing
Extension
the
life
to
In¬
under¬
writers established and developed
health
promotes
death;
work
the
-
and
accident
sponsored
by
postpones
prevention
the
accident
insurance company saves eyes and
fingers
and
system
of
limbs;
the
the
defalcation;
surance
Patrol
property
a
at
or
company
the Fire In¬
works
near
to
protect
the
scene
fire. And think of all the fire
work
which has
insurance
that
all
are
detective
liability
reduced
striking
field.
cases
gone
These
of construc¬
tive and positive programs which
stem from
insurance operations,
and each
control
I think
tween
its particular area of
in
seeks
eliminate
to
that there
this
services
is
waste.
link be¬
a
concept of underwrit¬
ing, the conserving
the
of
or
productive
insurance
com¬
panies, and the purpose of under¬
writing prosperity as set forth in
the Employment Act.
It is not
straining a point to say that if
national prosperity is to be as¬
sured for all or most of us, it must
be by a frank recognition on the
part of all groups and interests
that
economic
life
is
a
"seamless
web," and that all parties are both
indispensable
and
inter-related.
Each must make his positive and
equitable
contribution
if
maximum
withdraw
to
all are
benefits
from the system.
fulness
differences to the problem of na¬
tional prosperity which we
are
fore
debt, the Federal Reserve has lost
in serving the President.
have, as a matter of prin¬
ciple, maintained what is some¬
make
So.
Rs control
times called
considering. In the early days, the
and
individual
thinking — some
thinking—and of
dangers
credit
of
inflation
its
misuse,
credit will
new
powers
over
be badly needed.
Be¬
public debt is now about
50% larger than private and other
cause
Open
the credit supply.
over
market
operations
cannot
be used effectively to reduce bank
and
reserves
limit
to
the
supply
of credit if the Reserve Svstem
also
to
bear
is
the
responsibility of
managing the public debt in an
orderly fashion and at reasonably
low interest rates.
>
Furthermore,
:
new
powers
will
Drdbably be harder to obtain later
they
At
pletely
I
aloofness
"aloofness." It is not
of
the
Ivory ' Tower
variety. It is simply an attempt
to soundly define the role of a
unique professional agency in the
Executive Office of the President
and to
nomic
all the
keep it strictly in the
eco¬
field and definitely out of
political and partisan issues
which the subject matter becomes
enmeshed in.
Now
I
want
to
talk
the
underwrite
word
word "insurance" which
used
in this
are
now.-
date, the effects
sioa will
of
credit
expan-
probably be far less .dra¬
give
a
with
with
the
We may
application
some
of
underwriter
these
of
the
Lloyd's variety and more gener¬
ally in modern practice, the great
underwriting company puts
its
name
to the
underwriting contract
In
my
Responsibilities
attempt
to
explore
the
meaning (and it is still there be¬
us
to be explored and be de¬
veloped) of the Employment Act
of the
kinds
of
economic
economic
new
economic be¬
havior—some reformed economic
behavior1—which it calls for,
led
to
stress
this
of
idea
I am
inter¬
and assumes an operative respon¬
related
sibility for carrying it into effect.
cludes
In
talist employer and of the organ¬
ized worker, the responsibility of
the
of
case
shareholder
of
an
a
individual
stock
or
company,
the
the
It
I
but at most it is a small factor in
the actual process of providing in¬
in¬
and
of
the
stress
ex-
This
responsibility.
responsibility of the capi¬
farmer
underwriter, at least nominal¬
ly, places his capital in jeopardy,
you
selected.
benefits. In
a very funda¬
it is the participants
posals. I shall present a general¬ themselves who are organized to
ized philosophy of how the pur¬ provide mutually each other with
poses of the Employment Act can 'maximum
safety.
The
titular
recommendations
Inter-related
always is
connection.
surance
organized
the
Naturally,
of the Underwriters' Associa¬
your
of
merely
into
find
ever
into
area
fdrrn.
prevention
"underwrite."
mental sense,
faets
of
unsophisticated
seem
may
not
evolving
or
its
of
char¬
definitely and very properly to¬
ward making savings and profits
by reducing those risks. In a very
bald form, it might be said that
of
unduly fanci¬
untechnical in the
word
you
will
you
or
any:
Risks
I set it down
ticular
real
and
accomplishing
of this new type of
the purposes
no par¬
out
I
act.
generalized
the
role—then
proper
you
quirements under the ERP, with¬
use
such
plantation, but shall make
re¬
different
and
think
shall
commodity
get an under¬
through two
organizations
of
cesses-provide a powerful and
dramatic argument for some limi¬
tation of bonk < credit. At a later
-
must
We
obvious nature- of speculative ex¬
and
corporation^?
standing of the fact that we ac¬
complish the economic purpose of
responsible for having encouraged
stockpiling
as mem¬
members of agricultural organ¬
izations.
have
about
much
of
-than
rumors
members
as
members of great trade unions or
title I
sort of
under¬
an
associations,
under the
wildest
of
members
as
think, the Government is also
the
through opr
just as
citizens
as
purposes
present,
the ris'ng cost of living and the
I
cooperative
.
would destroy com¬
the- friendly and - confi¬
dential relationship and their use¬
and
products were purchased.
than
If
term
any
ber;
did
we
.
of you gentlemen are
interested, I suggest that you ob¬
tain from the Department of Ag¬
riculture its most recent purchase
report. Between July and Novem¬
.
if
This brings
be
would
will
New Controls Needed
Up to $8 million
allowed if the market slumps.
base
for expansion
We would be optimistic
recognize
danger that it will be mis¬
the
proved bills granting fur ranchers
.the same loan privileges other
credit
enormous
accom¬
"Underprosperity"
nothing about
Congress.
action
to
us
my
great professional serviced in pro¬
moting
understanding
of
the
•
and
purposes
some
united
>
position that
we
are
set up - as a professional
body to serve the President. The
act says
plish
President's
Report.
has
It
the
to
before
appear
activity, similar to that of 1922-29
but on an even higher plane.
If that happens, we can draw problems brought before Congress.
on our knowledge of human na¬
:
But what is laid before the
.
that
or, in fact, who must
analysis underwrite the
ernment will enable
as
Don't mis¬
more.
understand if you read some more
Joint Committee
were
measures
controversial
:4-:4[A:;A^
spite the high level of wage rates.
not be surprising if our
recession,
roles
in
agencies
expectation that
representative form of gov¬
we
Congress and in
public"' thinking Sit the* present
staff work
It would
the
table risk and
complementary
eco¬
country.
personal
the
industry to reduce labor costs de¬
a
the
of
the
specific
highly
.
in
of
present
the
.
can
per¬
understanding
•
Nevertheless,
economic
originating in the war
changes
indicate
first
.The CCC expects to buy 12 mil¬
lion
I
"
is
properly discuss
matter
not
on
matters
soon
afraid
.
course,
nf w^t w'B
ahead.
the
twelve
you
extensive
Council
condition
which
tain
was
because
speak in public and only
may
views
in¬
inflation of many
capacity over and
plant
am
No
pay
of
tlrs
during the
something of that sort will happen
again within the next ten years.
high a price as it did for wheat.
The Department of Agriculture is
He
Un¬
an
as
farmer; that it.interprets this to
mean high prices has been shown
with
credit
little
a
the
of
subject
nomic
con¬
1929.
the amount that
found to be needed.
I
the
security
a
above
biggest
had
and
associated
of
twenties
buyer of graips. In any commer¬
cial market the biggest buyer usu¬
ally has a definite advantage. /1
simply cannot
convince myself
that
mitted to
all of these movements
a
Closely
Government, in fact, must
part of the responsibility
inflation
bank credit inflation, which
reached
its
peak in 1929.
a
flation
The
1925
inflation
its hands folded, doing nothing to
a
estate
explicitly
not
can
commitments
our
war the commod¬
inflation ended in 1920.
ity price
r
fact that insurance business is the
noting the
to explore
idiom in which the
same
Chairman
!j After the last
The prospect that the present
commodity price inflation will be
mean
this
on
in, which he may
Prices
not be possible except for
the premium contributions of the
insured.
Indeed it is a striking
One might comment also in this
.
elaborate
whcm, the present commodity
price inflation ends. '
Government Partly Responsible
this year
whole
process as a
would
matter
.
again-^-
inflation will
the
of
and
out
several
Who
the
in
undertaken
performs the
essential technical function in the
system, but the
mutualized
undertakings
through which national prosperity
what the meaning of maximum
shall be achieved? If we are going
production as laid down in that to move on into an
age of greater
act is. In subsequent years there
maturity and economic sophistica¬
are
a
variety of matters of that tion in the
handling of the affairs
sort which would be explored and
of the country under a system of
they are. general background ma¬ free
competitive enterprise as laid
terial of the sort that a profes¬
down in the act, this is a question
sional.agency ; may
.discuss. ; I we must answer. But this is a
danger¬
emphasize
me
have
we
document of
Let
not affect commodity
prices, in fact, merely means that
more
carried
the
in the last
So
disburse¬
the
He
acter of great economic undertak¬
tance
of
a
present
may
it will be4that much
ment of benefits.
that this point lies some dis¬
ahead.
:
and
not f be
are
the examina¬
and
principal business which has rec¬
ognized most completely and most
connection.
however, that I
respect for the
you,:
of funds,
of claims
obvious,
Production
en^-r
High
except to point
the dangers
of
say,
that
credit inflation will be the great¬
est when they are least
Meaning of Maximum
Later
perils of commodity-inflation.
Starts* I believer, would be enough
to precipitate a general price de-'
clinC this Spring.
•
H
the
and where decisions
sures
Perhaps
calm
and an
building
:of
up
(Continued from page 15)
hill,
down
-
crops
overestimated,
Enterprise and National
Employment Act
infla¬
so much nonsense.
-
high
,
are
inflation,
vestment
tion
ings by adopting
,
Current
therefore,
price
35
underwriter provides for -the col¬
lection *of premiums and the in¬
so
'■
.
For
believe,
:
that the
debate over new powers, such as
the special reserve should center
hew that any faltering of demand,
dangers of a later inflation of bank
•J'am afraid, will bring;about a credit.
•
;
A; A
sharp decline.in prices. *•;'>
\
That a later inflation of bank
; Favorable world
tjtnfayorable .level
completely orthodox.
dangers
attempt no brief sum¬
of what it has taken me
again
Greatest Inflationary Dangers
build¬
so:
are
shall
long to
made until the last moment. J
; And
I
out
are
production
not
high in January, largely
because of the carry-over of work
already started.
But the outlook
for new starts, at current prices,
best
commodity
-v
this
over
I
v-
[ Dollar volume of construction
is at
immediate
which I believe
the
the
relief should be given when prices
and
remained
;
of
of
the
on
the credit supply—would
to
tionary is
homes completed at
by speculative builders
$10,000 and
result
and
than
toration
Administra¬
more
the
still unsold.
unorthodox,
gers
ming
be
hands
ih late October showed that about
that
the
is
longer term dan¬
of credit*expansion rather
proposal—res¬
of Reserve System con¬
still in the major¬
pretend that putting
spendable income
in
the
ity.
A
sold?
:
trol
^backlogs' have
playing politics when
tax reductions. Tax
are
propose
lies, which
year-
organization
my
and that the. final decision should
be based on the
end
&&&£<
and
the ends rather than the
means,
on
dangerous.
more
relief is needed, badly needed by
moderate and low income fami¬
'
pleted
ordef
Congress
May and
July respectively. The industry
then experienced a late pickup.
An abnormally large number of
new'
and
been- exhausted,
non¬
(735)
matic, but they will probably be
situation
^
restric¬
last
CHRONICLE
some
be
must
were
FINANCIAL
&
f
far
Vltns.no wonder that sellers have
been,able to advance prices; even
both residential and
on
last
Administration
expected to ask for new snt-
building
of
that
There
The
.
THE COMMERCIAL
■
of which is .of ne4- I The special reserve
proposal; on
batabie necessity.
This may ex¬ which Congressional hearings will
plain the reason why it broadcast begin shoitiy, is disliked almost
its- -inflationary* fears, although it
unanimously by bankers and is
hardly;<:provides' :an excuse^;^^,:.;> branded as unorthodox.
But the
well ahead
crops
of time.
There
I
year,
futures prices
anticipate larger
'.M\
pro¬
seems
to
me
that
consumer.
we
need
to
also, as I touched on it be¬
fore, the fruitful responsibilities
of what we are pleased to call
private enterprise and of the gov¬
ernment and to learn what is the
most effective
complementary re-
(Continued
on page
36)
36
Enterprise and National Employment Act
Free
quite a body of experience. If not a whole page of a newspaper to
(Continued from page 35)
say "this is our constructive pol¬
lationship between the two types perfect by any manner of means,
it begins to give us something of icy. This is the commitment that
of
organization in which men
a guide.
I want to describe, since we make and our name signed at
and women associate themselves
bottom means that we are
I am stating general' principles, the
for the purpose of getting things
the one principle which seems to going to underwrite the security
done in the most orderly and ef¬
of this economy.
We could ride
me basic in determining the char¬
ficient fashion.
acter of those supporting meas¬ along and contribute to an infla¬
I have time only to give a very
ures.
They must be of the activat¬ tionary boom, or we can take some
brief statement of what seems to
ing type, that ; which makes for risk in putting our backs against
me the general principle of that
production—in the terms of the it. We don't know that all busi¬
division of responsibility and per¬
But
Employment Act useful produc¬ nessmen will join with us.
formance in my interpretation of
we
will take leadership."
Some
tive work, not leaf-raking.
Such
the Employment Act and of how
of them have sent out letters to
measures
also promote a sound
the various parties and interests
their suppliers and pointed out
reappraisal of the property situa¬
can
underwrite
that
sustained
common
interest that they
tion and the re-establishment of a the
prosperity and that avoidance of scale of
have in
resisting inflation and
capitalization and valua¬
Why I Am Opposed to
Military Training
(Continued from first page)
"UMT," Senator Taft says fur¬
ther, and I believe that not only
myself, but such men as Hanson
W.
Baldwin,, military authority
ago, in a radio
W1BW and the for the New York "Times," would
shall vote against
that legislation.
I might remind you that more
Senator,
two
than
I
years
'
waste which it sets up as an ob¬
jective.
must
As
I
it, all factors
see
subscribe
their
a
honorable
reorganizing
familiar
intentions to function responsibly
to
life.;'*
id support of the economy. That
is the basic concept of the act. the
Economic Report of the President,
I
of
which is
in business
process,
everyone
,!
am
'.-3.
'i-
going to take
.V
and the report
of the Joint Com¬
mittee.- They seek to produce an
:VY^7-
one
tion of what I think has
illustra¬
sponse or
into
come
broadcast
over
Sept. 28,1945,
President Tru¬
recommendation to Con¬
Kansas Network, on
commented
man's
on
that universal military serv¬
legislation be enacted. The
at that time
remarks I made
ap¬
or
Out kit of tools in the case of the
taking
pear
.
philosophy and in
accomplish
better stabilized pro¬
a
duction; .instead
each
man
-
for
-
behavior to
our
-
of the sort, of
himself and the -
devil-take-the-hindmost
we
found
our
in
which
periods of stress in
made to
local
now, I want to
state the three phases of the gov¬
ernment's side of this; problem.
First
let
times,
us
that in
say
normal
all the times, there is a
responsibility upon our represen¬
or
tative
government
good
business
to
establish
institutions,
not
partisan institutions, but institu¬
tions which will serve the eco¬
nomic interest of the people as a
whole. That is a high ideal. We
not
are
going
perfectly, but
•
to
accomplish
we are
pretty proud
of the institutions which
evolved
tional
in
on
the
recognize
still
life.
oars.
that
problems
We
should
We
should
there
are
unsolved
modification of those
to
have
we
175 years of na¬
some
economic
not rest
it
some
and
a
institutions,
a
phrase that CED was
of, "To provide the most
favorable climate within which
private enterprise can operate,"
use
structure
for defense
scaling
of
the
labor
union
of
activating,
constructive
cannot
sively through
spiral.
That
thinking
however, is not lacking. We have
an arrangement whereJvy-we can
talk intimately around our Coun¬
cil table with labor leaders and
reappraising,
operation
handled
be
on
tionary
of
sort
advances to an infla¬
will
pattern of the
a
legislation.
With
realize
statement
that
process
exclu¬
private insti¬
tutions but which our private in¬
our
send
Responsibility for Checking
ing.
all
members
in
line
to
carry
out
[
based
Since
as
talking of and thus of using some
principle.
a
time
my
is nearly gone,
power
of restraint;
on
betweeii -
and World War-
best
the
had
period
toe
World War I
in
army
H;
Europe,
of warfare.
1919-ideas
the training was static.!
But
The
of 1940 eliminated!
France's 1919 army with ridicu'7
lous ease. And in turn it was the
German army
of 1943-44 which
for the German
American army
much
too
was
Germany also had
of 1940.
army
peacetime*
military conscription in
might be interested in ^
further statement from Senator
You
quote: *
Taft, who says, and I
its
;
get overfanatical interest in UMT and
about building an efficient and
Army will once
"If the
that these
by
supplemented
be
course,
an
in
extension of the ROTC system
would be com¬
take military training.
Is Conscription
UMT
I
*wtoiitfa
compulsory military consyiip^
tion -during,
services,
to
Senator Taft speaking*
was
might say that France,
had
boys would be under compulsion
of a Federal law to enroll, and
under direction of officers in the
armed
war.
That
colleges, and the encourage¬
ment
of
military
and physical
our
training in our high schools."/
That
the
ends
quotation from
with whose conclu¬
this subject I thoroughly
Senator Taft,
ice.
policy of that sort even when they
Now I want to revert to the know its wisdom and would like
to carry it out.
So I say, instead
second point because it is the one
let's, say
which is concrete with us at the of being too critical,
"God bless you, we know you are
present time.
In boom times, if
in a tough spot. Do all you can."|
we
are to underwrite
prosperity,
the persons who are contributing And let us, instead of opposing
to
the
inflationary spiral must every move, instead of having an
take some responsibility for check¬ antagonistic attitude, build a co¬
ing inflation, not just climbing on operative attitude toward helping
them to acquire that sort of policy
the bandwagon
and riding the
boom to a common disaster.
I of moderation which I have been
state that
Dw>
time,
recommending such go
adequate reserve on a volunteer
'
basis, it could soon have as large
respect to President a reserve as we need. It can, of
Truman, I must observe
pelled
that
.
the
Inflation
fond
provide the
methodsof
transport for any such army.
conduct in
can
abroad, it would
army
a mass
require two years to
newweapons v. and
we
know that labor unions are
So I take with a grain of salt
conjunc¬ coming to that level of under¬ the President's contention that
tion with wisely considered gov¬ standing and to that sense of re¬
when we adopt universal military
ernment agencies.
sponsibility. -You know that they training, we are not, really, adopt¬
have a tough job to keep their
ing conscription for military serv¬
stitutions
tp
should become necessary
If it
foregoing is quoted directly
President Truman's message
Congress,
to
their part that they
the contribution of
and
on.
which
were
undue wage
debt
sort
briefly
from
movement to have a more genera
committees
- We
certainly do
such number of men
against sudden attack.
foresee.
not need any
The
possible within
the
reappraisal
I think that is
Responsibility
Very
solid basis
something of the
a
You know
Phases of Government's
a
and then to go
new
production
basis.
went
1
on
and
wish ,it
I
unlikely to occur in any way
can
we
additional meru
could be trained,;! and trained irii
"Universal military training, is
underwriting pholisophy
the methods of - war they, are tdi
calculated risk to-avoid not conscription," President Tru¬
fight instead of (the methods of)>"
man
building
of prosperity,"
pay out,
forward
the
past.
flation
scale the value of his debt obliga¬
tion to something that could be
mass
••
most
a greater danger.
told the Congress. "The op¬
agricultural depression which was
Now we have had the same kind ponents of training have labeled
so pivotal in the
last depression
integrated program, to look at the
it conscription; and by so doing
of business leadership manifested
period. A new device was set up.
affairs of the economy as a whole
have confused the minds of some
We recognized that if you allow in the banking, field. One of the
and our part in promoting effi¬
^ .>. y >'I :• '• '■;
manifestations of
a
boom that of our citizens, ■ «•'' y ?
nature, to take its course at such
ciency for that economy m order a
threatens to get out of hand is the
"Conscription ; is
compulsory
time, you will simply have fore¬
that we may share ih the benefits
closure precipitating new liqui¬ incautious extension of credit, ex¬ service in the Army or Navy in
of an economy of maximum pro¬
dation and more foreclosures and tending credit for undue expan¬ time of peace or war.
duction.
Because
if
you
have the
sion in
industrial areas or for
"Trainees under this proposed
displacing of farmers.
Here
maximum production, ipso facto
undue; valuation
of
property.
you have something which strikes
legislation, however"—I am still
you have maximum employment,
at the very root of the productive Credit is the life blood of busi¬ quoting from President Truman's
and from maximum
production, system. The life insurance com¬ ness, but you can get blood poi
message—"would not be enrolled
you derive maximum purchasing
panies, the local government and soning in a boom period and so I in any of the armed services. They
power. .v,
think it is tremendously signifi¬ would be
;
even the courts became involved
civilians in training.
.«
' As I just said, I think this in¬
cant that the American Bankers
as
you perhaps remember when
They would be no closer to mem¬
Association also put out a docu¬
volves some rethinking of the eco¬ there was practical defiance of the
bership in the armed forces than
nomic/philosophy by which we dispossession of tenants. Then a ment stating their philosophy and if they had no training. Special
Jive — no scrapping of our tradi¬ recognition
putting their names at the bottom rules and regulations would have
came
that
the
one
tion, but a clearer thinking of the thing to be accomplished was to saying, "We underwrite this effort to be adopted for their organiza¬
things which are necessary in our keep the farmer on the farm, to toward stemming the tides of in¬ tion, discipline and welfare."
1
partially trained men
movements which i?
12 million
for
gress
ice
"would^provide some 10
agree,'
or
in the Appendix to the Con¬
gressional
Record
of
Monday;
:
saying we cannot have prosperity Oct. 29, 1945.
At that time I quoted the fol¬
unless you go with us. That is the
No, 1 problem that is before bus¬ lowing from President Truman's
which
I
now ■ quote
iness management; at the present message,
.. ).yy.:;Y
time, to get enough of that, re¬ again; '. /
tion which is workable, a sort
1948
Thursday, February 12,
FINANCIAL, CHRONICLE
&
THE COMMERCIAL
(736)
.,In that same broadcast I noted
that
David Lawrence,
whom
have known for 30 years, as
,
sions
on
agree.
Top-Ranking
Generals Do Not
Favor It
It
is
understanding that a
my
number of the best minds in
armed
including
services,
the
some
top-ranking generals, do not be¬
lieve in compulsory military train¬
editor and ing, but these are barred from
publisher—who never has been expressing their view by Army
accused of being either a pacifist
regulations. We may hear from
reporter, columnist, as
isolationist—commented on
universal military
service
recommendation in the
an
or
the President's
following language:
"President
.
Truman
has
swal¬
hook, line and sinker, the
lowed
militaristic approach to
universal
accepted
plans of the high-ranking gen¬
military training. He has
some
of
them
later
on,
as
they
retired, or as their sense of
citizenship rises above Army regu¬
are
lations.;;; v.;
There is
a
:
'
.
real danger, as I see
it, of universal military training
courses being used to indoctrinate
our boys and young men with the
My time is up. It has been a,
the
militaristic
spirit — and perhaps
pleasure to present this matter to
erals and militaristically inclined
most
with the political and economic
favorable • economic them all
I think it suggests a chal¬
within recent times. One you.
civilians in the War Department
machinery for this great system is the action of certain business¬ lenging new type of business
philosophies of the Administration;
who believe that it is highly de¬
of private competitive
in power—as the youth of Ger¬
enterprise men, and I needn't cite them by thinking to which we all have to
sirable to interrupt higher edu¬
—don't forget that word
many
were
indoctrinated under
"compe¬ name. You can fill the names in give our hearts and our minds.
cation for military purposes, even
titive" as it is written into the act.
the
Hitler program.
That may
I believe that we should take a
some of them last
year and some
in times of peace."
sound far-fetched to you,. but be¬
Second,-the special role of gov¬ of them within the last few
weeks, good deal of encouragement from
ernment
to
Only a few days ago, Sen. Rob¬ lieve me, the danger is there. And
meet
the
stresses who have
said, "the nrocess of in¬ the plane on which discussion of
ert A. Taft|Of Ohio, in a speech in my opinion it is a very real
which come into
our
economic
flationary spiral threatens to. get national economic problems has
to the Rhode Island Republican threat to individual thinking, in¬
system. In boom times we natu¬ out of hand
It is a boom which been proceeding in the last year
and
to' the
Fortunately, I was born Club, at Providence, Rhode Island, dividual initiative,
rally and properly turn to the threatens
all
business
and
for or two.
liberty of the individual.
"
agencies of government to pro¬ whose checking the businessmen as a congenital optimist. I am in¬ said this which I quote:
mote and to exercise leadership themselves must take some re¬ clined to see the constructive fac¬
"Compulsory universal military
President Truman sees no dan¬
I want to illustrate it
or
the
perhaps
three.
by two cases
have had
We
.
and
to
trol
some
in
cause
limited extent
con¬
enforcing
we
know
restraints be¬
that it is char¬
acteristic of these great economic
swings
we
have had that people
throw restraint to
that
form
the winds and
of
popularly in¬
augurated discipline is necessary.
We recognize that every day from
some
*
the traffic laws, on up. There is a
special manifestation of that need
tn boom times.
'
The third general phase of gov¬
ernment's role is its responsibility
sponsibility." They
"we think
out
of
and let
this
and
someone
are
not saying
make
get
out
a
killing
in
time
else bear the bur¬
situation. I would go
job if I were frus¬
and disappointed by the
tors in this
down
in
trated
fact
you
don't get 100% results.
have tried to say
this
act becomes
the
The one thing I
of
the
playing
well-known
statement
company,
the
in
finest
made
a
kind
of
to
all
of
us
to
underwrite pros¬
perity.
quite
file of these by other business¬
ta
men.
That
J
is
,
< I
t
With Trusteed Funds, Fla.
something
of the
(Special
new
to The Financial
Chronicle)
MIAMI, FLA.—James C. Cooper
tion of government, under control
of the people, th inaugurate and
is
support these measures.
Florida,
with
Trusteed
Funds,
Inc.
Biscayne Building.
of
is
to every
To take a boy
contrary
American tradition.
from
his home, his
education, his
him
under the di¬
chosen occupation and force
to serve for a year
rection
of
the
Federal
Govern¬
of creating either a military
(generals and colonels and
majors and captains and non-coms
by the thousands would have jobsi
indoctrinating the boys and young
men
of America through UMT)
ger
caste
of or of a spirit of militarism in th£
proposed. UMT proposal. He maintains /it
It violates every principle of lib¬
will do just the opposite: increase
eral thought,
it should only be democracy and hold down the
carried through if absolutely es¬ militaristic spirit.
sential to the safety of our people.
ment is
the greatest limitation
individual
freedom yet
I cannot see
its • present
desirable nor
advisable as a means of training
our
men
efficiently for modern
warfare. It is not the best method
form
V '
thinking and practice of business,
that you have those statements
We have ! put out and companies paying for
training,
advocated
"As
economic terms, and I have
a
my
crash." They are not
that
themselves - against
the is
economy but playing themselves ground work and sets up a ma¬
as
an
integral and constructive chinery for a constructive attack
part of the economy. Several of on the problem of the economy
them, and one a distingufshed by all the responsible parties and
citizen of your city, head of a if it is to be carried out, it is up
den
in
establishing policy and action
recessionary times. We prop¬
erly look to the over-all organiza¬
can
we
it
is
in
that.
Of course, no
neither
or
abroad,
has
militarist, at home
ever
conceded q
the devel¬
militaristic spirit.- But
opment of a military caste can*
getting reserves, nor does it(
provide the kind of reserves we | n0^ be prevented
is not any intention of doing thalfe
might need.
of
by saying ther^
THE COMMERCIAL
Volume 167 Number 4672
while you take the steps that will
raise
a
do just that.
Militarism
doubt
as
that
of
can
is
mind
of
youth
Frederick
argument.
as
it
was
tnany years ago when he put uni¬
nor
military
effect.
And
*
as
-—which
started
•'
military conscription,
military training,
indoctrinated and disciplined
universal
.
for military conscription
inevitably is the next
step after military training—as¬
suring victory in wars, we have
only to look at the two World
Wars we have passed through to
major nations
on
for
of
•
Aeronca
Aircraft Corp.,
Feb. 3 (letter of notification)
common
All American
,
the
called
For
apparently calls
and
that
the
sized
Navy
had it.
the
and
Air
Forces
in
Now
INDICATES ADDITIONS SINCE
-
common
February 17,
stock held.
V
i
,
Eyes Mining Co.,
Cameron
Aero
Engine
Corp.
-
Dec. 29 (letter of notification) 101,000 shares of common
stock (par $1), of which 85,000 shares will be sold to
the public; 8,500 shares will be issued to underwriters
as additional underwriting consideration and 7,500 shares
Will be issued to American Die & Tool Co. for invest¬
ment in return
for cancelling $15,000 open account for
machine tools. Price—$2 per share.
Underwriters—R. A.
Keppler & Co., Inc. and Henry P. Rosenfeld & Co., Nev/
York. To provide operating funds, etc,
'
41
Colloidal
Operators, Inc., Reno, Nev.
Feb. 2 (letter of notification) 20,000 shares class A com¬
mon
($10 par). No underwriting. For working capital.
«
Crampton
Manufacturing Co., Holland, Mich.
Feb. 5 filed $600,000 first mortgage 5V2% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
($1 par) common stock. Underwriter—P. W. Brooks &
Co., Inc.,. New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working
capital. Business—Manufacture of plumbing hardware.
March
5
(Ohio)
Rower & Light Co.
.
filed
170,000 shares ($7 par) common. Under¬
writing—None.
Offering—Offered for subscription by
stockholders of record Jan. 30
on
the basis of
tion
--Bonds
...-Bonds
per
share.
Proceeds
one
Rights expire Feb. 25.
—
To
finance
share
♦
Price
construction
v.'b
program.
Deardorf
Drilling
Oklahoma City, Okla.
Feb. 3 (letter of notification) 1,000,000 shares common
<100 par). To be offered through Tellier & Co. For
expenses and working capital.
#
Electro
i../.; '
Feb.
Corp.,
Refractories
&
Alloys
Corp.,
Buffalo,
New York
9
(letter of notification)
7,400
shares of
common
sjock. (no par). Price—$15 a share. Underwriter—Ham¬
lin & Lunt, Buffalo. Offering—Stockholders of record
Feb. 13 given rights to subscribe at rate of l/12th of one
warrant for each share held.
Rights expire Feb. 27.
Additional working capital.
position
perfectly clear.
the
I am opposed
tary training,
Corporate and Public Financing
com¬
of
the
company's reorganization
.—Equip. Trust Ctfs.
Construction. Bids
—
Adams
St., Chicago,
.
by
up
to
Bids for purchase of the
—
at suite 2200, 105 W.
(CST) Feb. 16.
company
noon
Kansas Soya Products Co., Inc.,
Emporia, Kaits,
3 (letter of notification)
3,157 shares ($95 par)
preferred. Price—$95 a share. Undewriter—Kenneth Van
Sickle, Inc., Emporia. For additional working capital.
•
Corp..
Laclede Gas Light Co., St. Louis, Mo.
N
$6,084,000 15-year convertible sinking fund
debentures. Underwriters—Lehman Brothers,
Debentures
Feb. 4 filed
Goldman*
Feb.
6
Acceptance Corp., Minneapolis, Minn.
(letter of notification) 500 5% ($100 par) pre¬
ferred shares.
No underwriters.
For additional working
capital.
...
Sachs
be
&
Co., and "The First Bbston Corp:, Offering—1To
initially to common stockholders. Unsub¬
offered
scribed publicly by underwriters.
Price—By amendment.
-
Proceeds—Payment
notes. Business—Gas
Fitzsimmons Stores, Ltd., Los Angeles, Calif.
Feb* 2 filed 10,000 shares of 6% cumulative first pre¬
ferred stock
•
of outstanding
utility.
Lee
Paper Co., Vicksburg, Mich.
(letter o fnotification) 7,457 shares of ($10 par)
Feb. 6
•
stock (no
Gatesville
(Texas)
Industrial Foundation, Inc.
(letter of notification) 500 shares common stock
($50 par) to be issued in exchange for preorganization
subscriptions. No underwriters. To lend money for civil
improvements.
v:'
Feb.
6
.
Giant
Portland
Cement
Co.,
Philadelphia, Pa.
564,906 shares ($1 par) common and 282,453 common stock purchase warrants.
Underwriters—
Craigmyle, Pinney & Co., New York; Winslow, Douglas
& McEvay, New York, and Jenks, Kirkland &
Co., Phil¬
adelphia. Offering—Stockholders of record Feb. 4 are
given the right to subscribe for a securities
unit
consisting of two shares of stock and one warrant for
Jan.
12 filed
expire Feb.
stock held at
common
17.
$4.10 per-unit. Rights
a plant and fa¬
subsidiary, Carolina Giant Ce¬
Harleyville, S. C.
Gre-Nair
Corp., Washington, D. C.
(letter of notification) 499 shares 5% cumulative
preferred stock ($100 par) and 998 shares common ($1
par)/ No underwriters. To manufacture heating process.
Feb. 2
•
Greer
Hydraulics Inc., Brooklyn, N. Y.
Feb. 3 (letter of notification.) 28,850 shares of common
stock (par 500) to be issued upon exercise of outstand¬
ing warrants evidencing right to subscribe to one share
of stock at $4 a share. Underwriting—None. For addi¬
tional working capital.
•
Hollywood Colorfilm Corp., Burbank, Calif.
Feb. 3 (letter of notification) $300,000 first mortgage 5%
convertible
•
bonds.
Illinois
Jan.
20
series
No
Power Co.
(by
underwriters.
1978.
To in¬
McArthur
par). Price—$100.60
preferred
share
and
six
unit, consisting of
per
common
shares.
Offered
loans
of
and
the
for
bonds
—
be
Asbestos
30
filed
•
McClanahan Oil Co., Grand Rapids, Mich.
Dec. 30 filed 260,000 shares ($1
par) capital stock. Un¬
derwriters—None.
Offering—Shares will be exchanged
for $1 par stock of Great Lakes Chemical
Corp.
on
To
1st
be
mtge.
15, 1948.
McColl-Frontenac
Dec.
16
filed
21
are
on
the basis of
share
Oil
Co.,
Ltd.,
Montreal, Can*
900.000 shares
writing—None.
(no par) common. Under¬
Offering—Stockholders ; of record Jan.
given the right to subscribe for the
in
one
Canadian
pire Feb. 18.
new
stock
for each two shares held at $10
per
or United States funds.
Rights ex¬
Proceeds—For building
expenditures and
to repay bank loan.
Market
Dec.
30
filed
Basket, Pasadena, Calif.
27,788 shares (50c par) common.
writers—None.
exercise
of
Offering—Shares
common
to be
are
Under¬
issued upon
stock purchase warrants
issued in
July, 1945.
Price—Two shares per warrant at $6 a share.
Proceeds—For additional working capital.
bonds,
(Continued
determined
Bids—Bids
received
by
for
Inc.,
Kansas
City,
on page
38)
pur¬
company
up
to 11
at
\t)0£S
a.m.
Co.,
Ltd.,
•
Interstate
Sherbrooke,
Power Co., Dubuque, Iowa
$20,000,000 first mortgage bonds, due 1978;
$5,000,000 sinking fund debentures, due 1968, and 1,500,5 filed
CO
deJ
shares
($1 par) common stock.
Underwriter—Paul E. Frechette, Hartford,
Conn., is the
U. S. authorized agent and principal underwriter. Price
—$1 each.
Proceeds—To construct milling plant and
purchase equipment.
Feb.
the
basis of one share of McClanahan common for each two
shares of Great Lakes common. Offer will
expire March
tfeV)
1,500,000
for
ceeds for corporate purposes.
Probable bidders:
construction.
will
one
subscription by stockholders of record Jan. 9.
Rights
expire Feb. 16. Options to purchase not more than 2,500
common shares at 100
per share may be issued to em¬
ployees for assisting in distribution of the stock.
Pro¬
Halsey,
Stuart & Co. Inc.; The First Boston Corp.;
Harriman,
Ripley & Co., Inc.; Glore, Morgan & Co. (jointly);
and White, Weld & Co.
Proceeds—To pay short-term
bank
W
:
Advertising Corp., New York\
Mo.
Jan. 9 (letter of notification) 30,601 shares
($1 par) coni-
$15,000,000
Underwriters
No underwriters.
working capital.
Mid-Continent Airlines,
retire debts.
To
(2/16)
amendment)
due
•
Proceeds—To develop
cilities for the company's
ment Co.,
Price $20 per share.
common.
crease
Quebec
Pittsburgh
installment
Feb. 3 (letter of
notification) 1,600 shares of 5% nonconvertible preferred stock and 9,600 shares of common
Jan.
CORPORATION
3V2%
($100 par). Underwriting—Officers, direc¬
tors and employees of the company will offer the stock
to friends and associates.
Price—$100 per share.
Pro¬
ceeds—To retire 7% preferred stock.
Business:-.'."Super
Markets" in Los Angeles,
Riverside, Colton and San Ber¬
nardino County.
\
.
FIRST BOSTON.
Business—.
Dec.
First
International
The
plan.
utility holding company.
bonds will be received
1567, 231 South La Salle St., Chicago,
(CST) on Feb. 16.
in
« •
Boston
1948
Room
New York
conscription
Probable bidders: Blyth & Co., Inc.; The First
Corp.; Halsey, Stuart & Co., Inc.; Glore, Forgan
Co., and A. G. Becker & Co. (jointly); Harriman
Ripley & Co.; Kidder, Peabody & Co., White, Weld
& Co. and Shields & Co.
(jointly); Salomon Bros. St
Hutzler; Lehman Brothers. Price—By amendment, Pro¬
Bonds
*
chase
Chicago and other cities,
to universal mili¬
the preliminary
as
step to military
peacetime.
bidding.
(EST)__
23, 1948
through competitive bidding.
Boston
I trust I have made my
a
Iowa Power & Light Co. (2/16)
Dec. 22 filed $6,000,000 first
mortgage bonds, series duo
1973. Underwriting—To be determined
by competitive
———Stock
March
•
for each nine shares held.
$24
raises*
doubler
shares ($3.50 par) common stock. Underwriter —•
Smith, Barney & Co.,, New York. Price and interest
by amendment. Proceeds—To permit consumma¬
1, 1948
Columbia Gas & Electric
each share of
Dayton
Dec.
that
any
rates
Public
County Gas Co._
•
Reno, Nev.
Feb. 6 (letter of notification) 250,000 shares of common
<200 par). No underwriter. For development of mining
properties.
*
issue
ISSUE
ceeds
Missouri-Kansas-Texas RR
The stock will be reserved
*
the
talk.
World
least
military training but actual
-
Blue
in
at
as
face
squarely and without
I repeat, it is not universal
1948
February 19,
Co.,
against conversion of the bonds. Unsubscribed bonds
%ill be publicly offered by underwriter. Proceeds —
•
it
and
vic¬
Russia
strong possibility—if that is
case,
Ohio Public Service Co., 11:30 a.m. (EST)—-Bonds
Southern Ry., noon (EST)—
Equip. Trust Ctfs.
common
Boston, Mass.
$556,500 4J/2% general mortgage and col¬
lateral trust convertible bonds and 166,950 shares ($1
par)
common
stock.
Underwriter — Doolittle & Co.,
Buffalo.
Offering — The bonds are being offered to
stockholders at the rate of $1,500 of bonds for each 1,000
General corporate purposes.
participating
1948
noon
February 18,
Inc., Lakewood, O.
filed
common
the
Soviet
&
•"
Fisheries
that
for
point to
February 16, 1948
Philadelphia Electric Co.,
shares of
II
admit
won
NEW ISSUE CALENDAR
acquisition of the capital stock of A. D. Cook, Inc.,
Lawrenceburg, Ind.
Coast
through
PREVIOUS
In the
2
must
we
/•
Industries, Inc., New York
(letter of notification) 152,475 shares
<$1 par). Working capital for expansion.
we
Registration
(name to
be changed to American Steel & Pump Corp.) Under¬
writer—Herrick, Waddell & Co., New York.
Price by
amendment. Proceeds—To pay off indebtedness incurred
Atlantic
I
tories
War
Army
that
Eberstadt & Co., Inc.
T Associated Drug Industries,
pulsory military service that
will have to adopt.
1 say that if we
lasting peace
United Nations in
000
corporate purposes.
Feb*>3
un¬
and
secure
Middletown, O.
Oct. 30 filed 100,000 shares ($1 par)
Feb.
the
and
Americas;
Illinois Power Co., 11 a.m. (CST)—
Iowa Power & Light Co., noon (CST)
*
der
1,588 warrants to purchase
shares ($1 par) through F.
hnd Simond and Pontius.
of
Unless, of course, it should de¬
Securities
•
defense
velop
nations
United States must maintain
won
for defense of all the world.
the winning side
our
conscrip¬
another, and
defense
National
the
national security
in both wars.
Neither
had
37
seriously
called.
people taught to take orders—and
to depend upon orders for courses
of action—that brought the United
States and Great Britain through
World Wars I and II as the only
into
conscription
losers
form or
(737)
.
by the
must adopt
doubt if universal World War II are so large that compulsory military service lor
the necessary personnel cannot be
military training is the answer to
survival, then let the advocates
the problem of military defense, obtained by voluntary enlistments. of universal
military service, soor national
security as it now is
called, say so honestly and frankly*
However, if that is the case—
V
It was not
nor
Great
one
CHRONICLE
had had it for generations.
I
think
Germany—I
of
the
the
of
tion in
Example of Britain and U. S.
upon
that
versal
Most
validity of that
be foisted upon the youth
America, just
the
state
a
the
to
reasonable
than
more
FINANCIAL
&
AfnMS
°Ithi! c^ch^eS
%<°"s,ock
ar
dealers
UNDERWRITERS
■YoVvKEo
S-V°S
York
C*G°
Chv
:
,.i
yfv .
•(/'"w
■.
ry
• • i jr-.v. • •
y-
,» '
THE COMMERCIAL
(738)
38
and
ferred
(Continued from page 37)
two
Price—$6
stock.
mon
share.
per
Underwriting—None.
capital and equipment.
For working
Mines
Operating,
Minnesota Power & Light Co.,
If competitive, probable bid¬
include: The First Boston Corp. and Blyth & Co.,
competitive bidding.
ders
(jointly); Kidder, Peabody & Co. and Shields & Co.
(jointly).
Price—By amendment.
Proceeds—Toward
a $6,000,000 construction program and for other
corporate purposes, which may include payment of a
Inc.
equipment
building and working
V.
of
•
of
Co.
Service
N. H.
Feb 6 filed 199,627 shares ($10 par) common stock, of
which 141,101 shares will be purchased by the under¬
writers
from the New
England Public Service Co.
Manchester,
Nalley's Inc., Tacoma, Wash.
shares
are
to
Francisco.
San
Co.,
&
publicly offered
be
(25,000
acquisition of all publicly held stock or partnership in¬
in certain subsidiary and affiliated companies.
Co., the First Boston Corp., Salomon Bros. & Hutzler.
Proceeds—Prepayment of $1,700,000 of bank notes due
Business—Food
April 20 and $1,375,000 of Oklahoma Power and
Co. bank notes, and for expansion purposes.
products.
'
Spokane, Wash.
(letter of notification) 100,000 shares of non¬
assessable capital stock.
Price—32 cents each. Under¬
writers—H. M. Herrin & Co., Seattle, and Pennaluna &
Norden Laboratories,
•
Lincoln, Neb.
.'.'/V"
Underwriters
■off indebtedness.
!
y ;v
•
deposits and corporate pur¬
ital.'-:
Co.,
Ocean
Racing Association, Inc.,
Downs
Berlin,
• :;,
ible
shares ($10 par) common.
No un¬
derwriting.
Price — $10 a share.
Proceeds—To build,
trotting and pacing race track near Ocean City, Md.,
Nov. 28 filed 34,900
Washington,
Louis),
(J.
O'Connor
-•
for
D. C.
of notification) preorganization subscript
tlons for 1,000 shares common ($100 par). No under¬
writers. For benefit of corporation (not yet formed).
ferred
V Ohio Public Service Co. (2/18)
Dec. 22 filed $10,000,000 first mortgage bonds,
(EST) on Feb.
Pacific
filed
ing
Electric, San Francisco
686,953
Proceeds—To finance a construction program.
Parkview
Jan.
27
filed
Drugs,
Inc.,
100,000 shares
Kansas City, Mo.
of preferential cumulative
stock
($4.50 par).
Underwriter—
Straus
&
Blosser, Chicago.
Price—$5.25 per share.
Proceeds—$140,000 will be used to reimburse company
for funds used to purchase McFarland Drug Co., Topeka,
35c
will be
common
of. South
participating
will be used for working
capital and expansion of business: retail drug stores.
Kan., and the $332,500 balance
i
5
• •'■'
-
Proceeds—To
Beane.
program.
Corp.,
Southern
Steak
'n Shake,
Inc., Bloomington, III.
.
is
White
&
Co., St. Louis, Mo.* JPrlce
being
offered
family.
by stockholders who
"
are
%/:'/v'.-"
•
v
gent options to purchase 5,000 shares, at $10 each, will
be given to five stockholders.
Shares not purchased
by the options may be offered for sale by the corpo-1 s
ration. Corporate purposes.
■
\
ment.
Jan.
Philadelphia Electric Co. (2/17)
20 filed $25,000,000 first and refunding mortgage
Underwriter—To be offered under com¬
petitive bidding. Probable Bidders Include — Halsey,
Stuart & Co. Inc.; Morgan Stanley & Co.; Glore, Forgan
& Co., and W. C. Langley & Co. (jointly); the First
Boston Corp.; White, Weld & Co. Price by amendment.
Proceeds—To finance expansion program.
Bids—Bids
for purchase of bonds will be received up to noon (EST)
Feb. 17 at 900 Sansom St., Philadelphia.
bonds, due 1978.
Port Jervis
(N. Y.)
Packing Co.,
Feb. 10 (letter of notification) 6,000
shares
(par $1).
6% cumulative non-
(par $10) and 12,000 com¬
Price—$15 per unit of one pre¬
convertible preferred shares
mon
Inc.
,
%
;
.
.
.
(2/19)
RR.
./ /
.
m
,
m
Cq. Ine.;: Salomon Bros. & Hutzler*;
(Inc.); Harriman^ RipBrothers (jointly). • .
u.
(2/18L''
Ry.
^
&
Hutzler;
First
The
■'•
shares of capital stock.
Feb. 18.
Salomoh
Harrimarr,
' t
Corp.;
(Inc.).
.
Boston
Southwestern Bell Telephone Co."
11
that company's debenture financ¬
it is expected
petitive bidding on May 4, according to present plans.
Probable bidders:
Morgan Stanley & Co., the other by
Halsey, Stuart & Co. Inc.
• .;
Texas
peb. 7
r1:/../".•
¥:;\:
Co.
Service
-
r
reported company contemplates sale of
mortgage
bonds
and
">*
$5,000,000
about
debentures
of
$5,000,000
>
'
^
Halsey, Stuart & Co. Inc.,
Harriman, Ripley & Co., Blyth
Co., Inc., Kidder, Peabody & Co. and Smith, Barney
& Co. (jointly); W. C. Langley & Co., White Weld &
Co., Hemphill, Noyes & Co..and Drexel & Co. (jointly).
March
'
Electric
15.
Probable bidders:
The First Boston Corp.,
&
•
Texas Power &
Light Co.
.
.
of $7,000,000
of
bidders: / The
•
/Warren Petroleum Corp., Tulsa; Okla*■ *;
First Boston Corp., Halsey; Stuart & Co. Inc., BJ.yth &
Feb. 5 filed 150,000 shares ($ 100. ;par);; cumulative eon- 1
Co., Inc.; Smith, Barney *<& Co. and Kidder, Peabody &
verubie preferred stock. Underwriteh-^Merrill, Lynch,
Co. (jointly); Hemphill, Noyes & Co. and Drexel & Co.
Pierce, Fenner & Beane, New Yftvite Price and interest
rate
■■
:
to
be filed
}
reported company plans issuance
debentures early in April.
Probable
Feb.
..
by amendment. Proceeds—To
purchase
capital stock of Devonian .Oil Co. Business — Buying
natural gasoline from manufacturers and selling at to
refiners.
•
3
Feb.
for
6.000 shares new class A
($50 par). No underwriters. To increase
expansion.
'' -o
Western
Feb.
2
World
purposes.
capital
*
■
• •
Industries, Inc., Salt Lake City
(letter of notification)
able common
(jointly); W: C. Langley & Co.
'--• "-"West
(par 200).
Penn
The company
on
Power Co.
*
'¥/
J; •
for permission
,
.
Feb. 10 asked the SEC
publicly, at competitive bidding, $12,000,000 of
bonds, series M, and 50,000 shares of pre¬
stock, series B ($100- par).
Probable bidders:.
Halsey, Stuart & Co. Inc. (bonds only); W. C..Langley
& Co. and The First Boston Corp.
(jointly); Lehman
to
(letter of notification)
7
sell
first mortgage
Weather-Seal, Inc., Barberton, O.
common
•
•
-
Underwrit¬
ers—Lord, Abbett & Co., Inc., New York, is selling agent.
Frio*
based. on market prices.
Proceeds—For invest-
Dec. 29 filed 657,500
Expected-abOui
ing will be for the full $100,000,000 authorized by stock¬
holders.
The big issue-will be put up for sale at com¬
■
$8 for the
This stock
members of
,
-Vv
Funds, Inc., New York
Union Trusteed
Options to purchase 13,000 shares at
$10 per share will be given six directors and to the per¬
sonal representative of one deceased director.
Contin¬
(par $10).
Corp.;
2018, 70 Pine St., New York, up to noon (EST)
Prbbatle bidders: Halsey,: Stuart & Co. Inc.;
Feb.
•
stock
.
Lehman
First Boston
Ripley & Co.; Harris, Hall & Co.
50c cumulative convertible
participating preferred stock, ($1 par) and 160,000
shares (50c par) common stock, of which 40,000 will be
sold and the remainder reserved for conversion. Underpreferred stock and $2.50 fox the common.
v
purchase of $10,680,000 equipment. trust cer¬
tificates, series "NN," to mature in 20 equal semi-annual
installments; will be received at company's office. Room
Feb.- 2 filed 40,000 shares of
writer
i
for
Bids
Dayton,
.
'
Inc. (jointly ).
Missouri-Kansas-Texas
Bros.
Standard-Thomson
Inc.;. The
ley & Co. and Lehman
,
O.
'
Feb. 3. (letter of notification) 21,700 shares of common
($1 par).
To be sold through brokers on New York
Curb Exchange.
'
■
•
•
i
.
,Shields.& Co.; Harris Hall & Co.
construction
finance
Co.
&
16-19./.
dors: Halsey, Stuart &
,
$7,000,000 30-year first: mortgage bonds,
Underwriting—To be determined at competi¬
&
.__
_
Company will receive bids up to Feb, 19 for the purchase
of $1,620,000 equipment trust certificates; dated March i,
j„1948 and due semi-annually in 15 years.' Probable bid-
bidding.
Fenner
.
_.
_
-
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.; Merrill Lynch, Pierce.
tive
•..
...
Brothers and Blyth &-Co.r
March
filed
series B.
.
..Stuart
a;Ufor-2.
offered *' publicly.
Southwestern Gas & Electric
Nov.
the Belt
Pennsylvania Coal & Coke Corp.
Feb. 6 (letter of notification) 18,000 shares of capital
■
Kidder, Peabody & Co.; Blyth & Co:,
Louisville Gas & Electric Co. (Ky.)
Feb. 9 reported/possible sale of $8,000,000 of "new money '.t bonds in near future.,.Probable bidders: Halsey,
Carolina Power- Co. from the.
..Commonwealth & Southern Corp.
Underwriting—none.
April 9.
*1
by amendment. Proceeds—Proceeds together -with
purchase all of the outstand*
Price
shares ($25 par) common stock.
Offering—To be offered at par to
holders of outstanding common stock of record Feb. 27
at the rate of one share for each 10 held. Rights expire
29
Jan.
shares
will file a registration stater
$10,000,09.0 new mort¬
company
Stuart & Co. ine:;
other funds will be used to
18.
Gas and
l-for-10 basis and the common on
a
Unsubscribed
10 reported
t Inc.<
-
/ -•■
series due
1978. Underwriting—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp.; Harriman Ripley & Co.; Blyth
& Co.; W. C
Langley & Co., and Glore, FOrgan & Co.
(jointly); Lehman Brothers; Salomon Bros. & Hutzler.
Price—By amendment. Proceeds—To be used for con¬
struction.
Expected later this month.
Bids—Bids for
purchase of bonds will be received by the company at
Room 1600, 70 Pine St., New York, up to 11:30 a.m.
on
Louisiana.Power & Light
bonds, the proceeds to be used for construction
expenditures.
Bids expected to be opened about March
15. * Probable bidders: The First Boston Corp.; Halsey,
80,858 shares ($50 par) cumulative convert¬
preferred and 404,293 shares ($4.50 par)-common
sale, and 687,293 shares reserved for conversion of
basis.
Fenner &
Pierce,
Lynch,
.
gage
preferred. Underwriter—Kidder, Peabody & Co.y New
York. Offering—Shares initially will be offered for subscriDtion bv comnanv's common stockholders^ the orescription by company's common stockholders, the pre¬
Feb. 5 (letter
.
;
ment with SEC shortly covering
Co.
Gas
'vU'v".
Co.
Electric
(jointly);' Merrill
Inc.
Feb.
Dec. 2 filed
/■;■■'■/.■•/■■
Md.
&
Gas. &
Beane.
Inc.,
Electric
Carolina
Kansas
6 reported company plans sale of $5,000,090 "new
money" bonds in near future. Probable bidde s: Halsey,
Stuart & Co. Inc.; The First Boston Corp., and Blyt.i &
poses.
South
of
Aoril
sale in
the
plan
company
of
Feb.
Smith & Co., De¬
equipment, tooling costs and working cap¬
■// V''/'- /¥■"':'..-K/¥¥/¥¥/.
For
reported
.
Light Co.
& Co. Inc.;
Stuart
Stoetzer, Faulkner & Co. and Bennett,
troit.
' ■
-
&
debentures. : Probable -bidders:
Halsey,
The First Boston Corp., and Blyth &
Co. Inc. (jointly).'
'
'
/■/v'''..'1:¥U/¥%/V///':> -•
I
Mich.
U'1
.;
7
Feb.
'
Power
$4,000,000
Royal Oak, Mich.
f
Jan.- 26 (letter of ^notification)-il50,000 shares-(par $1)
common
stock.
Price — $2 per share.
Underwriters -1-
(letter of notification) 1,000,000 shares of com-r
non-assessable stock (par 100).- No underwriters.
For development of gypsum
.// ///
Products,
Dallas
•
80,000 shares of common stock (par $1)1.
names to he filed
by amendment. Price
Sherman
Spokane, Wash.
before March 1.
—$7.
Proceeds—Proceeds together with Yimds / fronii
private sale of $600,000 of 4%% debentures and $250,000
<of 6 % subordinated debentures, will be used to pay
30
mon
filed
30
Jan.
March 23. J-
(3/1)
County Gas Co.
The Public Service Corp. of New Jersey is inviting proposals for the purchase of 7,469 shares of common stock
of County Gas Co.
Proposals must be submitted on or
(50e par)
Albion,
Truck Corp.,
Caster &
Service
<
March 1. Proceeds—To pay off indebtedness.
Northwest Gypsum Co.,
•
For working capital.
W. Bennett & Co.
f
•
/J
Underwriter—Frank
cents.-,
offering price and
Interest rate,
will be governed by competitive
Probable bidders: - Morgan Stanley & Co.; The
First Boston Corp.; Halsey, Stuart & Co. Inc.
Company
plans to invite bids to be opened
Corp., New York/
180,000 shares
Priee—80
stock.
%
(3/23)
the SEC lor authority to issue
competitive bidding $45,000,000 of new de¬
at
bidding.
of Cleveland
(letter of notification)
16
Jan.
(common
& Hutzler.
bentures, due 1973.
underwriting terms
Water
(letter of notification) 40,656 shares ($1 par)
Price—$1 each. No underwriting. For work-
Reiter-Foster Oil
H
Northeast Airlines, Inc., Boston, Mass.
Dec. 24 filed 83,333 shares <po par) $1 cumulative con¬
vertible preferred. Underwriter—Atlas Corp., owner of
100,000 shares of the registrant's common stock, has
agreed to purchase all shares not subscribed for by other
stockholders. Offering—Offered for subscription by com¬
mon stockholders of record Feb. 2 at $20 on the basis of
one share for each six common shares held. Rights expire
Jan.
Bottling Co.
Bros.
sell
and
ing capital.
(letter of notification) 1,000 shares common. No
underwriters. For working capital and new plant equipment.
23
icommon-.
2
Feb.
'
(Jan.
For developing mining claims.
Co., Wallace, Idaho.
Rock
Red
28
Jan.
expending
Feb. 9 corporation asked
man
. ;
;
.
Mining Co.,
indebted¬
;,
•,,
&
authorized
directors
Columbia Gas & Electric Corp.
•
Ripley & Co., Blyth & Co., Inc., Central Republic
Co. and Lee Higginson Corp.,(jointly); Glore, Forgan &
Nevada-Stewart
;
,
and
Salomon
Shields & Co. and White,
terests
9
1943
Probable bidders: Halsey, Stuart & Co. Inc.;
Weld & Co.. (jointly); Harri¬
tive bidding.
and 38,785 for account of Marcus Nalley, Chair¬
man); 20,000 shares will be offered to employees, execu¬
tives and directors and 35,367 shares are to be issued in
company
/
Pacific Ry.
$14,688,000 in
$4,700,000 in 1949 for the purchase of new
equipment. Probable bidders: Halsey, Stuart & Co. Inc.;
Rock Island
Chicago
Feb.
TuIsa, Okla.
$10,000,000 first mortgage bonds,* series B,
Underwriters—To be determined by competi¬
due 1978.
behalf of
on
•
30 filed
Jan.
Offering—63,785
of Oklahoma,
Service Co.
Public
stock (par $1.25).
Underwriters—Walston, Hoffman & Goodwin and Hart¬
■
Prospective Offerings
Proceeds—Construction program.
amendment.
Jan. 15 filed 119,152 shares of common
Rogers
and for construction costs.
ness
Inc., New York. Offering—To be offered present holders
at rate of one share for each 3Vz shares held. Price—By
$750,000 temporary bank loan.
Proceeds—To pay bank
Price by amendment.
Blyth & Co.,
Underwriters—Kidder, Peabody & Co. and
financing
ley,
Co. Inc.: Glore, Forgan & Co.
Co. (jointly); W. C. Langley &
Co., White, Weld & Co. and Kidder, Peabody & Co.
(jointly); Blyth & Co., Inc.; The First Boston Corp.;
Shields & Co.
Offering—Bonds will be offered publicly
while stock will be offered to holders of 4V2% preferred.
bidders: Halsey, Stuart &
.and Harriman Ripley &
Hampshire,
New
Co.
preferred stock. Underwriters—Only the bonds will bf
competitive bidding terms. Probable
Sound Products Co., Seattle, Wash.
of notification) 50,000 shares common stock
For plant construction. No underwriters.
Public
Light
$3,000,000
underwritten under
Puget
•
&
Power
1948
30-year first mortgage bonds
Series B, and 30,000 shares. ($100 par) 4.80% cumulative
filed
29
Dec.
Feb. 4 (letter
($1 par).
Un¬
sale
purchase
plant,
capital.
Duluth
shares (no par) common stock.
derwriters—luoaupany has asked
SEC to exempt
Feb. 3 filed 100,000
from
locker
and
Inc., Seattle, Wash.
Feb. 3 (letter of notification) 100,000 shares common.
No underwriter.
For benefit of owner, T. B. Cosgrove.
•
Wisconsin
Underwriter—George
efforts to
shares.
common
Port Jervis, N. Y., will use his best
sell these shares.
Freezing and cold storage
Loose,
Thursday, February 12,
CHRONICLE
FINANCIAL
&
\
'
•
40,000 shares non-assess¬
No underwriters. For corporate
ferred
Brothers;
Kidder, Peabody
& Co.
The company also
to issue $2,500,000 of additional (no par value)
common stock, to be offered first to its stockholders. West
Penn
Electric Co. (parent)
proposes to purchase all
shares not subscribed for by stockholders.
proposes
4672 .a# vl:
167 Number
Volume
•
CL THE COMMERCIAL
.
FINANCIAL
&
the middle
until
i
;
((Continued fromipage ill)
-
been
.«ten
available
,
improvements in
while reflecting 4he
use
of all factors of production,
actuallyLhas resulted primarily
market place.
the use of the word stimu¬
lating, I do not mean to infer that
By
from:
machines
the direction lis always toward an
:
supplies. •
W-; Normally, the price system op•; erates so
quietly and effectively
;
that
take it for
granted. We are
vuble to convert the income reeeived into the myriad of-goods
apd services we require or desire
jfor-everyday .living. Through this
-price system our time -spent as
we
teachers
is
or
as
translated
additional
One
-
in
made
point
are
be
may
with
connection
so
these
The increase has paral¬
profits.
leled fairly closely the
Volume.3 A- number
increase in
of
public
opinion polls have been taken
concerning profits. Most of these
polls show that the people inter¬
wages are increased much more
rapidly than output per manhour, viewed estimated 25% as the pre¬
These
the net effect must be either a vailing return on sales.
I reduction : in profits, an increase same people considered 10% as
I in prices, or some combination of being fair. Actually over the
both. Over the years, the studies years, profits have taken only
I of Dr. . Fabricant have indicated about 5 cents -of the sales dollar.
(that for the economy as a whole, In 1946, the average was 5% cents,
j productivity increases at the rate While in 1947 it was somewhat
Sincfe there is consider¬
of about 2 to 3% annually.1 In higher.
time,- of course, the cumulative ef- able interest in the level of food
clothing',
.and the
Shelter, ' entertainment
other requisites of our everyday
living.: In my judgment, the free
price system is one <of sthe great
•
of
methods
new
which
adjusted figures
widely quoted.
new
,
mortgage bankers
into ffood,
of
is found that
in profits as
increase
compared with the prewar period,
is significantly less than the un¬
Productivity is particularly im¬
portant in connection with wages,
prices and profits.
Changes in
productivity represent the bridge
between; wage increases and their
impact on prices and profits.
If
lation to produce large
-
and
production.
expansion of supplies;
In some
cases, as where prices decline, tfie
effect may be to reduce the stimu-
>
.
introduction
the
it
factor,
real
the
productivity
but mot in the city
this
for
-1 l t machine.-v These
>uri' the farm,
feet
of '
these-'relatively
small '
I prices, it i? instructive to examine
be quite enormous. the relationships in that industry.
But there is no precedent in past For food processing, profits ac¬
inventions of; all time.
changes
'Profits:
L
10
;12%
difference between
income and outgo, both of which
-are
affected by the price level.
But profits are more than a re-
took
that
will
increase
in
152.2
1946 to 157.1
Similarly, the
wholesale price index fluctuated
between 1-40 and 148 during the
same period.
The second phase of
in
the
of
in
June
and
re¬
further rise of 10 points
a
in the consumers' price index and
16 points in the
price index. The rise
in the second phase was due in
large measure to the :cdrn crop
failure, second round wage in¬
rise
about
of
wholesale
a
level
record
of
was
little
a
At the retail level,
profit per dollar of
average
cents in
1.7
was
1946.
The large meatpacking companies
take
consumer
nnnnrtn-
inh
cent
profit
each pound
on
of
fiod. vThev affect'the nrice- level
riod.1 They affect the price level
and-processors were eliminated,'job opportu-;
"nities. For example, in 1939 we in two ways., By increasing the the reduction in food prices would'
be nominal.
»
<had 8 to
10 million people un-< volume of purchasing power they
^employed.
This: figure L is;. well have increased the demand for
In terms of the relationship of
fknown. But it is not .generally goods and services and hence ^profits to prices, however, the
i
-^realized that the volume , of em-;
jployment then was about the same
j
*as
in the middle l20's.The
prices.
people to the labor force. The
/barriers to profit opportunities beIcome in turn barriers to-the job
bers to the labor force. Alternathere was available to
jithem jobs only at the expense of
The
previously employed,
Profit represents rthe price paid
rfor taking risks.
/Here may be
^contrasted the difference in rej turn in mining with that received
tors
•profits to stockholders.
s
ample,!
of
.
.
:
their
For ex-
lion, while for 1947, they are
estiThese, un-
mated at $10.3 billion.
j distributed earnings -are used to
i
acquire new and better plant and
.
greater working capital.
which
would
the.
that
tax
of
of
the
This
moderately higher.
For food retailing it
2Vz
about
7%
cents.4
these
cents.
revenues
y
.Before
profits,
level/of
or
out
economy as a
run
extent
also
be
re¬
rise in
the
to
If
take
food
rise in
war
67%.
the subject
we
profit
refer
of
point
to
our
economy,
ac¬
profit and loss econ¬
a
omy.-
For example, from 1916 to
1943,
for which
tax
income
period
have
we
half of all
data,
the
companies reporting to the Treasury
operated at
the >four
loss. If we; take
a
1936
years
prewar
to
the
] plan and equipment, in turn, con-: cance of this level of nrofits. First, Ipanies reported no net income,
| tributes to greater, productivity, approximately y$5 billion yof 'the while an average of 200,000
per
which, in v turn, - makes possible total reported profits represented
f either higher wages, lower prices, inventory profits according to the year reported net income. The
i greater profits, or some eombina- U. S.- Department id 'Commerce. companies with no net income
1 tion of these
■»,
<
':^.'.rProductivity
final,; determination
): ; Productivity is -usually, ineasf ;lined in terms of manhours or the
» number of' workers:'Thistbasis ©f
f measurement is unavoidable because thes is no basis upon . which
i
| machines
i
managerial >know-
or
how can be reduced* to a common
f and
'The term
comparable base;
| labor: productivity represents an
i
unfortunate
Secondly j -"depreciation .reserves,
which are -deducted ^before the
conjunction'of words.
have
for vone-fourth
accounted
com-
of
the
total sales in that four-year period.
of; profits,
:Ih yother words,
estimated loir
during that
,pe-
usually been
the basis of original cost. This aiod, <we were buying many prod¬
^procedure Lis vfollowed -iii .large uct which were being subsidized
measure because of U. S. .Treasury
in part by the capital of the selltregulations.'; For ;.'tax 1 purposes,
depreciation is usually allowed ton
ers.
the ..basis
cost, lallo-
and loss economy
the ^prop¬
by the large number of business
cated
of
over
original
the
life of
erty. ;It 'has .been .estimated that
depreciation reserves have fallen
To . many people it ^ means !that la- short by a billion and a half dol¬
boris.responsibleffor theincrease lars of the amounts required ;to
Lin- productivity.
The fact is, -of replace; used up plant at present
.course, that improvementsin out- :
price
levels. -Finally, we :must
I
The fact that this is
failures
over
.y
a
profit
is also indicated
the years.!
Postwar Price
,
,
put reflect a combination of new
a
living costs has been
In contrast, weekly earnings
than
government workers, those living
-fixed
on
y1
^
white
incomes,
collar
other who have not
workers and
participated significantly in this
expansion in incomes. They are
the groups who are being, priced
out of the market for many prod¬
ucts. But when we take the econ¬
machines, improvements in mana-
keep Art mind
ing
power
been
i
ationSy and increases in efficiency
In many cases, new
of 'workers.
\ plant 'and equipment or developL ments' in managerial know-how
fare of much greater importance
I than increases in labor efficiency
|
in contributing to greater produe-
U tion.
Our
economy
j characterized by
;
the work load
a
over
,
has
; been
(lightening of
the years. The
automatic; machine has taken the
•
place
of
the
manually
operated
that the
;\ofLthese
vided
reduced
•
purchas¬
as., a whole, waiind that fe
comes have, more than kept pace
substantially. 'The
cost of doing businesses ireflected
in
tions costs, has risen
has
the
bust ; of
as
surely
living for:
as
wage
earners.2 When allowance is,made
1 Solomon
Fabricant, 'Employment-Jin
reau
of
1899-1939.
Economic
Research,
National .-Bu¬
1942.
»
2 Jules Backman, "Purchasing Power of
Profits," Commercial and Financial Chron¬
icle, Dec. 25, 1947.
March
1948.
been
business
of
close
books
Transfer
Checks
par
value, of this
declared,
payable
stockholders of record
$100
has
1948, to
5,
the
at
17,
closed.
February
will
not
be
will be mailed.
W. E. HAWKINRON,
Secretary-Treasurer.
February^ 9, 19J,8.
AIIIS-CHAIMERS
*»
MFG. CO.
DIVIDEND
95
NO.
A
regular quarterly dividend of forty
cents ($0.40)
per share upon the issued
„and outstanding,' Common Slock, without
par value, of this company, has 'been de¬
clared. payable March 31. 1-948, to stock¬
holders of record at the close of business
1918. Transfer books will not be
March 4,
closed. Checks will he mailed.
two
and
,
,
.
level
The
Secretary-Treasurer.
,.
THE ATLANTIC REFINING CO.
At
meeting of the Board of Directors
February 3, 1948, -a dividend of
thirty-seven and one-half cents (37^c)
per share was declared on the Common
Stock of the Company, payable March
15, 1948, to stockholders of record
at the close of business February 20,
a
held
1948. Checks will be mailed.
RICHARD ROLLINS
February 2,1948.
Secretary
CORPORATION
RADIO
of
prices alone tells
only part of the story. It is, also
OF AMERICA
Dividend
important to consider price rela¬
tionships.
balance,
ate
all
and
the
no
as
prices
at
a
high price level
low
a
pre¬
could oper¬
price level.
been indicated earlier that
It has
significant distortions prevail be¬
tween the incomes of some groups
the
and
must
general
also
noted
be
It
level.
price
that
At the
tors
1,
1948
clared
that
today,
dividend of 87 l/z
March 31,
to
the $3.50
on
1948,
was
of
record
business March
the
at
close
A. B.
TUTTLE, Treasurer
York, N. Y., February 6, 1948
have
undoubtedy developed within the
Food prices
price system.
of
line
by any standard.
true whether we use as
ure
farmers'
are
not
net
out
The
our meas¬
levels,5
Company
The Board of Directors has declared a quar¬
terly dividend of $1.50 per share and an extra
dividend of $1.50 per share payable on March
12, 1948 to stockholders of record at the close
of business on February 20,
1948.
rise for food ;•'"•/
or
the larger rates of
as
Manufacturing
Singer
This is
incomes, which
stratospheric
at
are
D
H. -ALEXANDER, Secretary.
compared with prices from any
February
period
in the past.
balance
one
the
in
the
present business picture.
velopments ;in this
closely
ahead.
watched
L
;
1948.
This lack of
the chief danger spots
of
9,
price structure is
in
area
the
in
De¬
must be
months
i
9
5 Net
1947
farm
was
World
income
twice
War
as
It-peak
of
large
year
$18.0
as
of
billion
^
i*v
in-the post1919.
*
•
DIVIDEND NOTICE
have declared the regular quar¬
terly dividends
on
the Company's
Common and 5% Preference
,the
Stocks
as
follows:
Preference Stock—12 V'i cents
share payable March 1,1948
stockholders of record Febru¬
ary 16,1948.
(b)'the rise since June, 1947.
per
to
1946. (From that time
Common Stock-25 cents per
3 For
an
interesting
survey
of
these
share
relationships, see "Data on Wages and
Profits," Legislative Reference Service,
Library of Congress, Senate Document
No. 21, March 28, ,1947.
tween
to
payable February 29,1948
Febru-
stockholders of record
'ary 16,1948.
Edward Mittelman
of the relationship be¬
and other economic vari¬
survey
profits
including
wages,
dividends, na¬
tional income, taxes, and net worth, see
'Jules Backman
and
M.
R. Gainsbrugh,
Profits
in tthe
National
Economy, The
Conference Board, 1947.
of
5, 1948.
The Directors of .Hunt Foods
(a)
de¬
Cumulative First
Stock, payable April 1, 1948,
holders
prices
disparities
a
share, for the period January
Preferred
:to
New
result
v
meeting of the Board of Direc¬
held
cents per
have risen at different rates with
the
on
First Preferred Stock
yin
were
distortions
economy
smoothly at
well
as
If
must be di¬
r
W. E, IIAWKINSON.
j
f
-
Rise
phases:
-
•'
February 9, 191,8.
general living standards have, as
a consequence, improved.
The first phase was completed by
4For.
Manufacturing,
into
the (fall of
materials and construe-'
wage,
Stock,
Company,
and that
with .rising living costs,
immediate post price control rise,
profits ;has
and
omy
The sharp rise in .prices since
the ,end ,pf ;the war
.
ferred
COMMON
,
\
6
eighty-one
of
-•ne-quarter cents ($.81 %)
per share on
the
Cumulative
Convertible
Pre¬
prices.
production workers have more
of
NO.
DIVIDEND
dividend
pur¬
longer range look,
it is found that the war and post¬
we
vailed,
.y ■
important to
is
while
tually it is
-
signifi-. 1939, it is found that 270,000
mind- in ^appraising
;For
reduced,
are
would
.L.; •' Ly
leaving
it
that
the
To
margins
duced. yy-y
Other factors include the
business,
be
about
of fac¬
level
significant de-
industry generally it would
;
represent
groups
affect
about 4%%.
'SeVetal factors must be kept in.
,j equipment, and to finance needs
for
discussed,
the
For.fbod processing, it would be
losses,
and the adequacy of depreciation
reserves.
Considerable publicity
has been given to the record'level
of corporation profits during the
past;two years.
In 1947, for ex¬
ample, it is estimated that .profits
before taxes totaled $28
billion
and profits,after taxes .about -$17
billion.
'
L
L
:LL.y-
I profits aggregated about $7 bil•
and
wages
of the .many
ages would be
\
.
more
a
reflect
taxes
gree^On ^this-basis, rthe -percent¬
between
productivity
taxes, inventory profits
1946 v undistributed
in
,
volume
government bonds. Profits also
represent a source of funds for
! re-investment.
Many companies
all
;
before
impact to
railroad
and
.
profits.
on
distribute
coal
Affecting Profits
previously:
one
:
profits
the pressure
relationships
prices,
not
for
"Factors
Jtively,
those
in
larly for industrial products and
many
services.
Outstanding il¬
lustrations are found in the price
services in 3 947.
j
rise
the
prices from, cost side, paiticu*
on
increases
"opportunities of these new mem¬
J do
to
By increasing costs,
largej they have increased
(number of unemployed reflected;
,the annual additions of, some 600,000
contributed
have
food
quarterly
chasing power.
For the entire
period 1946 and 1947, about 70%
of the rise in living costs was due
place in 1948. ..Wage increases of meat sold. It is clear from these of higher living rather than from
suit; they are also a cause. They, such magnitude have,-inevitably figures that high profits have riot the high cost of living. It must
•are
the lifeblood
of a dynamic: contributed to the pressure for caused high food prices. If the 1 fe ?.■> recognized,
of course, that
.and expanding economy.
(Profit higher prices in the postwar pe- entire profit obtained by retailers there are many groups including
-.nnnnrhinit.ip.q r-rpntp
.opportunities create
PREFERRED
A
surplus and
high export
creases,
MFG. CO.
1947.
started
rise
sulted in
a
AIIIS'CHilMmS
November,
June
NOTICES
DIVIDEND
plaints today stem from the cost
and"
1946
food sales
,
similar
a
had
we
comparative price
stablity.
example, the con¬
sumers' price index ranged from
Vi
the
and
v
1947
of
39
of
For
report that in 1947 they averaged
dollar- in
lower in 1947.
year as
in. 1.947, general wage
of : these
magnitudes
place. < ;It is already -clear
1946,
increases
represent the
a
cents of the sales
counted for 3.1
has been the
during the past few: years. In
or
case
period
a
doubled, while hourly earn¬
ings have almost doubled. In ad¬
dition, we have about 12 million
more people at, work.
The com¬
bination of higher weekly earn¬
ings and more people at work has
meant an increase in living stand¬
ards despite the sharp rise in liv-.
ing costs. In many respects, com-
can
changes in pioductivity for increases in wage rates, averaging 8
Closely related to the operation
of the price system is the role
played by profits.
Profits are: the
lubricating oil in our economy. As
•Va matter <>f bookkeeping,they j
(739)
CHRONICLE
Secretary
ables,.
V
SAV#®
Los Angeles,
California
40 '
COMMERCIAL & FINANCIAL
THE
(740)
Thursday ,• February 12, 1948
CHRONICLE
cuts of 80%
BUSINESS BUZZ
on
>!:>;<
#
fi
/\| a
jlM. I vU
from the Nation's Capital
A
\
30%; middle brackets, 12. to
15%; upper brackets, 4 to 5%.
A
Behind-the-Scene Interpretations
•
•
In the lower brae- 7
kets, 20% in the middle brac¬
kets, and 10% in the/upper
brackets it probably will work
out this" way: Lower brackets,
Certain newspaper stories indi¬
\JU
,JL
cating that a big, bad banker en¬
gineered the dethroning of Marriner S. Eccles
'
Chairman of the
as
signs that the GOP leadership belatedly recognizes
that the time for decisions has come. One of the sharpest signs was
Board of Governors of the Federal
In formal con¬
itself on record
regulation of bank holding com¬
There
are
the so-called "legislative budget."
clave last week the majority party leadership put
decision
the
on
billion slice off^
Truman's
bargain gether
Reserve
Mr.
from
There will be
$40-billion budget.
Regardless of the fact that the
majority resolved in formal ac¬
tion to trim spending by $2.5 bil¬
lion, it would be unwise to count
upon the prospect either that they
•will achieve a cut of $2.5 billion
won't try for more.
result of the assault
that they
final
The
upon spending is still a long way
off.
The "legislative budget" is
nothing more or less than a bear¬
ing taken after the first couple
of days at
Most
appeasement of the Left. In
reaching this decision the leaders
must settle two tough problems.
One is how far they can go toward
the 70-75 cents per hour minimum
demand of the Left.
The other is
what to do about wage-hour act
amendments.
On the one hand
these
amendments would elimi¬
nate some of the administrative
"abuses."
On
the
other
they
would extend the scope of the act
—make it cover more persons and
Truman
/:;/.'>/
of workers.:
groups
'
they
theory to suppose
15
Congress can
a
lioundaries of revenues
set the
and ex¬
not
budget might
aid. A legislative
something,
,
Congressmen
mean
Congress and the
were
of
the
think, if the
Administration
party. Then the Congress
same
'
could count on cooperation,
its
reaching
in
sabotage,
not
ob¬
jectives.
budget idea is now statu¬
lative
majority
the
Hence
was
afraid of being hooted down
tory.
-more
ignoring this provision than
chance.
But the nub
of the decision to make a record
.for
of taking a
promise of only a $2.5 billion cut
is that the GOP isn't taking big
Last year the
chances any "more.
;
resolved, for
House
-
$6
a
billion
Senate for $4.5 billion,
and both Houses jointly resolved
in no way whatever because they
couldn't agree.
The criticism the
GOP leadership got from the Opposition hurt.
They aren't risk¬
ing that again.
the
cut;
\
►
Actually
-C
feel
trim
majority
the
they can
$2.5 billion from domestic ex¬
penditures and at least $1 bil¬
lion from foreign aid, but they
aren't saying so for publication
as
a
party. They learned last
privately
,
•
can
give it to him. The power they
be willing to grant would
would
the
raise legal re¬
to
power
by much less than the 25%
serves
(in the form of a secondary re¬
serve)
former
Reserve
Board
Chairman Eccles asked.
•'./
*•
/
,
,
*
* "
* ' /❖
-
/
-
;
:
what will happen.
.
r
ered into hasty
one
That
of
of
the
Banking
House
the
While
Senate
has
been
allocations,
with
will
other.
any
Committee
Banking
flirting
legislation more
is Chairman Jesse P.
Committee.
price
monkey
other
word
has
gone
of that
be considered in the
House Banking Committee until
GOP
the
as
whole has taken
a
careful appraisal of its entire
a
legislative line and cast the die
firmly
as
or
a
party in
one
at
ing
Secretary Anderson
Also the distilling in¬
proposed.
dustry does not take bread out of
the mouths of European babies. In
order to work out something An¬
derson devised a formula for dis¬
Only 17 out of 189 members of
the
State Legislature opposed
not
big
as
will
the scarcity of grain
distillers that aroused dis¬
within
the
industry.
The
call
this
Another
sign will be a decision
*
on
Ma¬
trying to get to-
higher minimum wages.
jority leaders are
..
h <
,(■.*
-
distillers use is not the
bread type. Instead it is largely
livestock feed, and theoretically
grain
want
to
down
cut
Anderson
and
Truman
livestock
on
Thus Wolcott
the
obvious
'
*
took
Truman
"favoring whiskey
,
the
rap
.
for
opening of
bread for
Indiana Gas & Chemical
Ope-Timistic Places
South Shore Oil & Dev.
Thought after
Middle
West:
pessimists
on
V.
over
The Wide
out
a
-
swing through the
You
there
just
—
can't find
particularly
equities!
H. & B. Amer. Mach.
Pitts. Steel
after jilt¬
grain price
gal,
whether he
is
did
Agriculture
million
There is
fc
#
'
the
grain
at the
he
ule.
lution in
national
the
vention
that
of
One
in
to
well ahead
Democratic
July.
Furthermore,
will
convention
con¬
be
for
the
of nominating "a South¬
Democratic"
candidate
for
the
fruits of
first
the
Southern revolt has been to boost
great deal which has made
sched¬
President Truman's strong
cratic convention''
a
tax
Truman's veto.
Al¬
of
Mr.
passage
of
t.'Y
*
•:
It
now
looks
as
will
brackets
upper
"jy •'
though
take
the
the
passed tax cut is trimmed down
to around $4 billion necessary
man's veto. There are four pro¬
terming
are
Philadel¬
"mongrel" con¬
scheduled
the
phia convention
a
vention.
-
;
*
*
'
visions
too
; on
Lincoln's birthday (today) is
in¬
viting Democrats from all over
the
South to
a
big mass meet¬
Rails
Domestic & Foreign
Securities
New Issues
M.S.Wien&Co.
ESTABLISHED
Members N.
40
1919
Y. Security Dealers
Exchange PL, N. Y. 5
Ass'n
HA. 2-8780
Teletype N. Y. 1-1307
Trading Markets:
of
the
bill
Mr. Tru¬
which
\
Ralston Steel Car
Oregon Portland Cement
Riverside Cement A & B1
look
politically bewitching to be
Spokane Portland Cement
dropped. They are the increased
$100
*
Legislature
Reorganization
/
worst beating when the House-
to get it through over
boys
the
ties" issue in favor of the tax cut.
ern
Southern
Old
ready at least three Senate votes
have turned on the "civil liber¬
purpose
President.
depart*
over
,
over
"civil liberties" has
pushed ahead the time-table on
the
proposed "Southern Demo¬
of
fail.
or
cut
of
The
worried
politics must succeed
chances
advocacy
over.
port of voters. That is where revo¬
the
the headlines ahead of the
is
,
"thinness" of the grain market.
not
the
than
revolt
threw
also
organize the "grass roots" sup¬
to
low
eyes
gal
bushels
or
boost of
a
in
entirely apparent at the
Southern
Governors'
conference
at Tallahassee. The drive now is
...
to the South¬
even more
Democratic
very
revolt, even if it
this
to
can¬
its mind whether to
export goal, is making
50
V
*
*
tf
-.'v.'.;..
*
ern
Mississippi
revolt.
to
roots"
revolt.
Southern leaders are widely fa¬
vorable
Mississippi's
# I".
#
about high prices
exemption,
exemptions for
the
increased
persons over
65
LERNER & CO.
Investment
■
■
,<!.
:
of
not make up
electoral votes.
has nine
was
sent
to
back
to
movement
as
"grass
the
launch
among
direc¬
another.
1. This
March
Jackson
hungry." The distilling indus¬
try was willing to go along with
a substantial cut in
grain use, if
the
party
any
than to
man
man
Wolcott
tion
,
'".v
policy the GOP owes its good
luck in not getting steam-roll¬
to
Department
ment
,
absence
the
In
stuff
you
"Why surely a great big bank like yours isn't going to worry
the repayment of a little, itty-bitty, teeny-weeny loan
of fifty thousand dollars?" A
feeding.
r;/
Si-
by more
than half from last year is ac¬
GOP
|S|||L
ililsif1
<
about
rationing this, that, and the other
thing.
■■/''-./ V;. / ' ;
a
most
expect
not
prices and, by talking
Messrs.
.<
*
.
wondering
worry
party's boy scouts have run
off on tangents, fooling with meat
the
around quietly that none
The
two of
of resolution, one or
lack
and
what's ahead. And it
means to fight.
But the "legislative budget" itself doesn't tell
4",'*
^
tributing
phases of controls, the
GOP leadership has failed to re¬
solve thus far.
Because of this
On other
the
encouraging.
v#r
permit¬
legislation
wants
ting
the
contracting of bank
credit, Congress may be disposed
be
■SM
-
and if Mr. Truman decides he
really
chair
do
right after all. At the moment the
ready to make up its mind. When,
as,
They
high
the
now
also is about
the GOP leadership
business,
knows
ing
-
,
but to hug
down^
chairman's
Secretary Anderson,
one
controls,
tually
quieted
vice
his
point of President Tru¬
"anti-inflation"
program,
On
man's
how an entrenched payroll
its sights for economy
i
has
per
;. ,■<■')/
#
sji
in
system. His friends do not
expect him to quit after the fuss
And;
cents
fact that the majority party cut
I
serve
to 60 or
go
65
than
more
make them squirm. But the
year
r
that
signs of wanting to stay
the vestibule of the Federal Re¬
do
hour.■',:■■■ V
to
FoolislUbr otherwise, the legis¬
will
these probably
the
on
Incidentally, Mr. Eccles shows
no
in the
when taxes may be cut
and nobody knows yet what the
final outlay will be for foreign
Mr.
on
and
..
strict-'
penditures. It is a particularly
hazardous
undertaking
this
! year
that Mr.
out
him to depart in a few months.
wage-hour act will relate
ly to the minimum wages.
walked
credit control
,./ /;i./ 7.
neither. Thus the changes
.
idea
get the
had
will
have to be applied to revive Mr.
Eccles'
bank
holding company
regulation bill.
-
the major¬
decide to
to
likely
is
ity
warm
A powerful pullmotor
Left.
•
,
would
Eccles'
tightening up and
As between
broadening the act,
It is
that by
it, nonsense.
see
Feb.
1
"
•
•
a
afraid that the pub¬
were
securely.
recognize
"legislative budget" is,
pure
1
lic
for
sea.
as
All the time these
New Yorkers.
officials
Congressmen
that the
as
the
under
minimum
the
boost
over
southern breeze would be to cold
wage-hour act—a boost which is
expected to be the main GOP bid
at least another sign later.
or
Administration
the
they will
much
how
fight
a
panies have been as welcome to
for cutting a $2.5
on
in
system
Securities
and for the blind, and the "split
10 Post Office
income" feature. With those re¬
tained
instead
of
Square, Boston 9, Mass.
Teletype BS 69
Telephone Hubbard 19.90
percentage
Teletype—NY 1-971
HAnover 2-005$
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