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BUS.
ADM,
LIBRARY
A
18
FEB
ESTABLISHED 1839
Chronicle
Reg. U. S. Pat. Office
Volume 169
Number 4778
New
York, N. Y., Thursday, February 17, 1949
Price 30 Cents
Copy
a
J
We
Hope There More Equity Investment
Chairman, Board
"There will have to be
of the
more
istration
would
vote
*
*
-
for
*
am
these
in-
if
so
greatly needs.
the
to
t lire ;
^emer¬
; "It
v
technical
would
law.It
-
that
*
Hartley
..tern
:• our
of
incen¬
*
; •
;
in business.
\
.
for
"'.risking capital
W. W. Aldrich
/
of
re-
*wards.
the
stop the last John L
*
of
tives and
injunction
*
the
:
^American sys-1
•
„
are
fruits
And
■
Lewis strike.
there is
capital—I do
not mean
a
If
flow
debt, I
mean
"In,my opinion he has
no
equity capital—to the utili¬
ties they will exhibit the
vigorous
economic virtues that
go with risk
parallel constitutional powers.
It just doesn't make sense to capital.
If
there
is
such
no
flow
of
give
the authority he does
up
have."
Senator
—
Harry
F.
will
who
stampeded.
We
number
a
be
not
hope
of
one
Corporation
Note
one
'550
share
their
in
of
Bought
the public
chartered.
are
There
is
6
Prospectus available
fjjpe See It
on
•
J;,
-
*
.
Needed
nothing better
on
page
calcu-
38)
*An address by Mr.
Aldrich at
dinner sponsored
by the West-
Electric
scene
a
to
seem
agree that
re¬
ality will fall
That "Deadest Pigeon"
Vf.;- Governor Dewey has issued
the
short
challenge to his party,
of
"paradise
the
on a
p latter," as
members of that
party who serve in Henry Hazlitt
recent years
have often pursued called the out¬
courses different from those
which Governor
Dewey would pour of prom¬
have selected, and
ises to almost
sometimes at least in contrast to party
particularly to those
Congress, '.and who
platforms.
dividuals
in
The-'honestly" held opinions
are
characterized
e v e r
of these latter in¬
y
b ody.
Congress
may
"personal prejudices" which water down
Dr. Melchior
Palyi
should not be permitted to
get in the way of the progress much of the
of the
demogogy, and wash out some en¬
party, which under the leadership of such men would
soon become "the
tirely,
Congress
deadest pigeon in the
already
has
shown that it does not
country."
We should like to
in
That
reverse.
is,
as
see
Governor Dewey succeed—
age
should
we
like
sincerely and fully to
of Alice-in-the-Wonderland
of course, concede to those
members
Mr.
as
to
see
the
common
party
sense
economics
—
in
and,
holding views such
Dewey's the right to get elected whenever and
wherever they can, but not under
the Republican ban¬
ner.
Governor Dewey has
the
issue, and in
definitely and clearly raised
doing has created an opportunity
so
for the party to shake off
"me-too-ism" wherever it has
appeared. If then the Democrats could find
a
way
blindly take
orders
from
the
White
House,
although a majority of the new
Congressmen has been elected on
the kind of
platform for which
on
the
President
latter's
is
of
stands.
economic
deeply split
policy.
Even
planning
the
team
vital questions
over
The "biggest" of the
President's
ideas is the Number One
target of
the skeptics.
It is the
fantastic-
(Continued
on
page
30)
to
separate their sheep from their
goats, it might be pos-
Corporation,
(Continued
on
page 28)
•
"■
1949.
State and
\
Inter¬
and
trans-
until
v
Funds,
Municipal
inc.
Bonds
—
COMMON STOCK FUND
request.
v..
Franklin Custodian
A Mutual Fund
Quoted
'
Capital
which
of
W ashi ngton
*
Stock,
Sold
for
Pittsburgh, Pa., Feb. 16,
Common
'•
but
capacity to render those
inghouse
amount);
fcrable; only as units
October 1, 1949
hill
health
financial
More Utility
a
principal
of
down
run
services to
they
in
Gas Pipe Line
im
only
(Continued
eachi consisting
Close ob¬
dedicate itself
there
others
T ranscontinent al
Units/
'
this
Congress.
*
has outlined the content of the
"bag"—or rather has set the upper
limits of his do-good
ideas, equalitarian reforms, and other wholly
-«e> admirable de¬
render
can
servers
into debt and will
in
Thank Heaven for this
are
prosperity and peace. <
The Presidential "cat" is out of the
big.
In his State of the Nation
message, the Budget message, and the
Inaugural Address, Mr. Truman
be¬
siderata.
equity capital to the utilities
they will be obliged to go further
not
Byrd.
Democrat
as
EDITORIAL
ec.onom ies
President used
power to
utilities
; ad-
vances, Va n d
the long-range
production.
-
The
the
tragedy to
of
that could lead to another de¬
Taft
adjustments.
new to the international picture
Holds Europe could be made selfsupporting if internecine commercial welfare ceased. Decries
theory
dollars sunk abroad will
produce democracy,
and will not
stop the Russians.
dynamic;
policies,
would invite strikes and thus
slow down
"The
•
are
na¬
gency strikes.
*
failed and it will not add
anything
threat of public
continue - with;
present
pression., *
as
services^
the y,
.
repeal
well
the
services which the nation
permitted
tional
.
as
glad of the opportunity to stand
up and be counted
against
little short
rates
necessary rate
I
j unction
be
are not
recovering ability to pay ;
buy, and U. S., by taking care of their adverse bal[
ances, relieves pressure that might otherwise
bring effective cure.
Claims American
military guarantee is admission U. N. has totally
for what they
lieving in certain fundamentals and ill
urging that for the public
benefit your
industry be allowed to render; in full measure
am
the
Dr. Palyi contends ECA countries
to continue
Cites difficulties
experienced by railroads in
consequence of failure of ICC to
grant
Hartley
Law and I
inadequate
competition.
power
original
Taft
are
unreason¬
able regulation and
for the
am
equity capital if utilities
and furnish their vital services to the
nation, Mr. Aldrich
against rising debt ratio in utilities'
capital structure. Lays
difficulty in obtaining equity capital to burdensome and
I
for it.
more
Program
By MELCHIOR PALYI
Bank of New York
warns
bill
"I
Directors, The Chase National
to progress
in the Admin¬
before
of
Stressing the need of
V
lot
a
Taft-Hartley Law
Harry F. Byrd
The Bold New
By WINTHROP W. ALDRICH*
Are Others
:
:
PREFERRED STOCK FUND
BOND FUND
V/;V']■
Members New York Slock
40 Wall
Boiton
Chicago Philadelphia
London
Exchange
Street, New York
Amsterdam
INCOME
(BALANCED) FUND
Prospectus
5
Providenc#
Buenos Aires
FRANKLIN
64 Wall
on
DISTRIBUTORS, Inc.
Street, New York
5
/London, E. C.
Colony,
India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
and
Zanzibar
Paid-Up Capital
Reserve Fund—
,
The
,
>•
Bank
conducts
£4,000,000
description
Trusteeships
and Executorships
also undertaken
and
Corporate Securities
OTIS & CO.
£2,000,000
every
have prepared
memorandum
Bell
Power
Established 1899
of
r
New York
'
Chicago
Cincinnati Columbus Toledo
Buffalo
NATIONAL BANK
OF
THE
CITY OF
NEW YORK
CANADIAN
bonds & stocks
(Minn.)
New
England
Public Service Co.
Common Stock
Copy
Analysis
upon "request
Dominion Securities
Grporatioti
sutro bros. & co.
Members New
Denver
Toronto
a
York
.
•
-
Stock Exchange
40
120 Broadway, New York 5
Telephone REctor 2-7340
Exchange Place, New York 5, N.Y,
-M:
'*■ V
i
—
Belt System
request
Members New York Stock
Exchange
111
WOrth
Teletype NY 1-702-3
upon
IRA HAUPT & CO.
and other
CLEVELAND
•
Connect
Montreal
on
if
(Incorporated)
Wires
1-395
Department
THE CHASE
HAnorcr 2-0980
Teletype NY
New York
Est. 1896
,
ST., N. Y. 5
Private
1-708
'
--£2,500,000
banking and exchange business
Dept. Teletype: NY
We
Underwriters and
Distributors of Municipal
Bishopsgate,
Subscribed Capital
Bond
52 WILLIAM
Northern States
Bankers! to the Government in
Kenyn Colony and Uganda
Head Oiffice:
26,
in
HART SMITH & CO.
OF NEW YORK
request
NATIONAL BANK
of INDIA, LIMITED
Branches
Bond
THE NATIONAL CITY BANK
UTILITIES FUND
Principal Exchanges
Broadway, N. Y. 6
4-6000
Teletype NY
Boston.Telephone: Enterprise
1-2708
1820
1
2
American
Orthodox Investing Methods
Light
& Traction W. D.
BOUGHT
SOLD
—
earnings and asset
Rights
QUOTED
—
York 5
120 Broadway, New
<$>-
behavior
wise
is going o.,
somewnere.
Yet nobody seems tc
understand quite what. The popu¬
Something peculiar
longer to hold
good. Look for
example
at
the
recent
let
downs
-
SCRIP
in
merely
There is
theories.
—★—
last ten years,
for two-thirds
stocks
McDonnell &fo.
f
York Curb Exchange
BROADWAY, NEW YORK S
120
2-7815
Tel. REctor
RAPING MARKETS IN
Com.
Mining
Standard Gas & Elec.
Copper Canyon
©Si Ventures
Gaspe
Maguire
Kinney
Industries
Coastal Oil
Works
Vulcan Iron
OIL STOCKS
MINING AND
the
direction to trade and
So what is the use oj
the accurate
forecasting of profits?
(2) The top in stocks came (in
1946) two years before the top in
trade (1948). So what is the use
idly changing our economy. The
alert investor
has got to, keep
earnings statistics, or
Stock Exchange
York
New
in
Major L. L. B. Angas
have
moved
profits.
Members
New
]
Actually it is we ourselves1 who
have changed—and who, by our
curious mental changes, are rap¬
time,
the
of
pace.
of business forecasting?
(3) Despite rising earnings (of¬
ten up 40%), many stocks have in
ory
opposite
Dealers, Inc.
27
I
5, N. Y.
William St., N. Y. C.
Tel. DIgby
4-2190
Tele.: NY 1-1055
.
Co.
Incorporated
tary
Life Bldg.
KENTUCKY
Floor, Kentucky Home
Bell Tele. LS 186
Distance 238-9
of
our
One sells in the booms—tc
re-buy in the panics.
Tinkers
tailors and soldiers do it. Every¬
one
now
knows the secret fo.;
Southern
proved most
costly.
public
ten years (a)
to realize that its
accepted orthodox theories of in¬
vestment
are - unprofitable;
and
(b) another ten years for it tc
learn some new-fangled unortho¬
dox approach—which in its turn
also later becomes, orthodox, and
What is
incoherently?
Properties
A. M. LAW & COMPANY
(Established 1892)
SPARTANBURG, S. C.
Teletype SPBG 17
1850
much
Too
vestment
.
company
the
Exchange
out of step (out
Stock
theory
for an in¬
automatically
makes that theory
York
Curb
Exchange
Cotton
Maintain
Exchange
York
Board
Chicago
,
CANADIAN
*
America^ Markets
For:
ice increases
CANADIAN MINING
CANADIAN OILS
Trade
of
Majority opinions are
prove wrong
too
Exchange
Cotton Exchange
NEW
CHICAGO
YORK
TETROIT
GENEVA,
4,
BRITISH
SECURITIES
PITTSBURGH
Co.
Goodbody &
Bldg.
N. Y.
SWITZERLAND
American
La France
/Bausch and Lomb
Dayton Malleable
Iron
;
Haskelite Manufacturing
Hydraulic Press Manufacturing
Stromberg-Carlson Co.
.
vy.iV;
-
Members N. Y.
115
H. M.
Byllesby & Company
PHILADELPHIA OFFICE
Bldg., Phila. 2
Teletype
Stock Exchange
Telephone
RIttcnhouse 6-3717
PH 73
rata with
bound to
(in finance) because
automatically
buying and
mathematically im¬
much company
sound
makes
both
sound
selling
NORTHWEST MINING
SECURITIES
For
or
of
Execution of Orders
TWX Sp-43 on Floor
10:45 to 11:30
Std. Time: Sp-82at
Immediate
Quotes call
from
Exchange
A.M.,
Pac.
other hours.
The
Death of
We live in a
Theory
a
world of
perpetual
order to survive fi¬
nancially one must adjust oneself
harmoniously—not too fast, nor
change, and in
too
slowly—to the
ever-changing
economic environment.
quotes: No phones: No Cyc¬
Theory—Nearly 20 years ago
I wrote an eccentric unorthodox
book, which was then a best seller
entitled "Investment For Appre¬
ciation" It was based on the then
more or less novel philosophy oi
investing (gambling) for cyclical
SECURITIES
STANDARD
CORPORATION
Members
Standard Stock Exchange
of
Brokers
Spokane
- Underwriters
Building, Spokane
Dealers
-
Peyton
lical
in common
Branches
Kellogg, Idaho
at
and Yakima, Wn.
BUY
SAVINGS
S.
U.
BONDS
Royal Bank of Scotland
Incorporated by Royal
Charter 1727
OFFICE—Edinburgh
HEAD
Branches throughout
Stock Exchange and Other
"Tortoise" Theory
(Agnostic Disper¬
chosen
one
Principal Exchanges
.
NEW YORK 6, N. Y.
Teletype NY 1-672
i
i
BROADWAY
Telephone BArclay 7-0100
'
■
■
i
i
i
i
i
■
■J
i
a
.
.it
i
not
not
stuck oneself
stock;
LONDON
stocks.
Archaic
come; one
Y.
and Los Angeles
York
New
of skaters.
the number
The
And other Exchanges
N.
pro
sion)—Without much pretense of
knowing what would happen in
any
one country or industry or
company, one spread erne's risks,
one diversified widely, and after-:
wards hoped for the best.
One
invested primarily for annual in¬
INDUSTRIALS
Inc.
Exchange,
New Orleans Cotton
ment
forecasting realize
danger of the invest¬
of Investment
We
New
between
Wire System
Private
Philadelphia,
your
this:—The
part
Exchange
Commodity
PEnnypacker 5-5976
different industries, and
(c) spreading part in bonds ano
Members
Stock
120 BroadwayNew York 5
BArclay 7-7835
Walnut St.
Philadelphia 2
Scotland
-among
H. Hentz & Co.
New
1420
No
unprofitable/-
hold good!
York
Quoted
Exchanges
Other Principal
and
dangerous! You
have
got to
have someone on
Committee seems
whom to unload (or to buy from
of date) when it continues to ad¬
at the bottom); for if all try a
vise a now utterly frantic public
to
"study the record," and to once, most must miss the bus, for
profit. It presumed to predict the
"know your company," and to "in¬ only a fraction can be successful'
You
have got to
out-cycle the "natural" business cycle—as ana¬
vestigate and then invest."
other cyclists, and pre-forecast all lyzed first by the great Wesley
The more you obey these ortho¬
Mitchell of Columbia University
other wise forecasters.
dox precepts, the greater seem to
and by Sir William Beveridge i
grow your losses.
One seems to Market Two Years Ahead of Trade his book "Unemployment."
be punished for being "conserva¬
This novel and then unorthodox
This is the stage now reaches,
tive" and for following respect¬
today. '■ *The market moves (ap¬ "positivist" theory was totally op¬
able (though apparently outworn)
parently) two years in advance posed to the preceding popular
shibboleths.
"agnostic" theory of (a)
geo¬
of trade! (At least, it did in 1946!)
Our financial worH is in
Meanwhile politicians have graphical distribution in different
chaos. None of our old rules seem
countries, (b) similar dispersion
learned just as much about the
to
Indeed
AND
all
In
Conclusion:—It takes the
use
move
Textile Securities
New
—
York Stock Exchange
Members New
possible!
success.
of "studying the record"
when stocks take no notice and
the
fashion of the
become
day.
stolen or puck-
posts have been
stocks. This has
the
now
sign¬
most revered
Semi-Cyclical switch from
bonds to common
theory?
All
has
Established
Sold
—
BUCKLEY BROTHERS
logical market.
(in
and the
ishly turned to point in the wrong
way. To do what was "orthodox"
L. D. 51
Bought
"
the Twenties) came
the theory (my beloved theory)
of the alternating Business Cycle,
economics have
also let us down.
Stocks do not
move either with the quantity of
money;
or rates of interest;
or
money saved on the sidelines! Nor
with gold supplies; nor with the
budget. What is the use of mone¬
™I BANKERS BOND
nne
tc
DETROLA
also seems to
Then
Monetary
(6)
Bought and Sold
2,
seems
dizzy levels.
and net worth are
(5) Neither net quick assets nor
forward orders seem to help. What
is the use of being an accountant?
Stock
Standard Oil Ky.
LOUISVILLE
history
suggest that, every two or three
decades, orthodox investment the¬
guide whatsoever! Nor are the
current replacement-costs of plant.
Bought and Sold
1st
in stocks may merge with
of trade, and the top.
in trade coincide with the hot
toms
in stocks!
Competition tc
INTERNATIONAL
the tops
the bottoms
Investment
no
Common
at l
Mobile, Ala.
branch offices
wires to our
Direct
buy
foresightedly in incipient
change.- V ; > slumps, may make stocks boon
Fifty years
ago ) the" banking when trade first starts slumping
Indeed the arrival of a mild
panic in England in 1893 sug¬
the last two years slumped in¬ gested the wisdom of spreading; slump in trade may make the ma¬
one's investments internationally
versely (sometimes 40%)!
What
jority of investors believe tha
is the use of economics? You can especially favoring young grow¬ the
slump will quickly
induce
self-interested politicians to turn
be right about trade, but wrong ing countries.
Fifteen years later, around 1807
on the gas and make trade revive
on stocks.
'
numerous defaults upset this the¬
Being now "super" cyclical theo¬
(4) Book values and assets are
ory.
rists, investors will super-discount
no longer a sound statistical guide:
People, it is true, continued to the future—and probably stage
—General Motors (price $60, book
"diversity" and spread their eggs their booms during slumps . . .
value $28); General Electric $36
in different industries (the strong¬
just as in 1946 they crazily (not a
(book value $16); U. S. Steel $71
est).
}
bit of it!)
stagedi a slump in a
(book value-$150); Illinois Cen¬
Later came
the craze for ro¬ boom.
/
V
tral $23 (book value $195); Radio
mantic "growing" industries—the
This
perhaps is the modern
$11 (book value $1.46); Western
Union $15
(book value $129). prices of whose stocks reached "logic" of our only apparently il¬
Nominal assets
Ashland Oil & Refining
...
NY 1-1557
La.-Birmingham, Ala.
No* Orleans.
,
City 2, N. J.
Montgomery St., Jersey
Time marches on
York 4, N. Y.
25 Broad St., New
HAnov* 2-«700
"natural" booms and slumps.
gallop.
•
STEIN & COMPANY
Members Nat'l Ass'n of Securities
convenient excuse for
collective ignorance.
clearly something brew¬
ing much more fundamental than
that. To blame the war is weakly
to shirk the whole real question.
the
In
(1)
a
obvious
our
shorten—the
The
result may be to reduce each le£
of each swing from around four
years down to two, or thereabouts
Observation:—The elected poli¬
tician (whose tenure depends on
continued prosperity is — despite
his verbal outbursts against prof¬
its) is the natural friend of the
bull, and the mortal enemy of the
bear (in early recessions).
Paradox:—Thus if future cycles
are
now to last only two years
and if smart discounters are tc
forecast them two years
ahead
York Stock Exchange
Members New
/
thus
out—and
iron
vaguely blaming "the
dislocation caused by the war" if
orthodox
of
i
Steiner, Rouse & Co.
business cycle as have erudite in¬
vestors.
They plan artificially t<
lar habit of
practice
the
Going On
Something Peculiar
any
seem
Teletype NY 1-583
BArclay 7-5660
ourselves? Someone or. something, apparently un¬
of all our standard investment signposts and land¬
in your bones.- None of the old accepted rules for
Bought—Sold•—Quoted
is the use of fooling
known, has in the last decade robbed us
marks. You, doubtless, all of you, feel it
Corporation
Louisiana Securities
find '
been
Concludes
wave."
What, gentlemen,
New York Hanseatic
Alabama &
precepts—such as business trends,
tests—tha greater are one's losses. Says it is now time for market followers to
some new-fangled unorthodox approach.
Declares p.actice of cyclical concept for timing market has
rendered obsolete by government intervention and public's out-anticipatmg of each other.
one must be an economic and psychiatric detective, and buy at the peak of the "anticipatory fear
United Light
& Railways,
follows orthodox market
maintains the more one now
Market analyst
Are Out-the-Window
L. B. ANGAS;
By MAJOR L.
1949
.Thursday, February 17,
FINANCIAL CHRONICLE
COMMERCIAL &
THE
(754)
one
3
8 West
49
OFFICES:
Bishopsgate, E. C. 2
Smithfield, E. C. 1
Charing Cross, S.
W. 1
Burlington Gardens, W.
64 New Bond
1
Street, W. I
TOTAL ASSETS
£153,656,759
with one's
held
forever;
telephone; one knew
the stock market; and one did
watch prices. Those were the
had no
(Continued on page 29)
Associated
Glyn
Williams
Banks:
Mills &
Co.
Deacon's Bank, Ltd.
Volume
169
Number 4778
THE;. COMMERCIAL
v.
*
\
...
»:
1
.
;
.
.
Articles and News
More
Program—Melchior Palyi....
Cover V
.,v...................
By
Equity Investment Essentia!-— Winthrop W. Aldrich.......... Cover
—Major L. L. b. Angus....
........
;
i
.
^( 7
^
B. McCabe.
Mixed Trends in the
3
i. .*•
Y
Snyder
Economy—Leon H. Keyserling
McCABE*
of
the
AND COMPANY
.
/Though acknowledging
Federal
Reserve
System
"THEY KNEW WHAT
of buyers' marked/Federal
reappearance
THEY WANTED"
Reserve Chairman urges additional powers to curb credit as
security
v
The State of the Federal Finances—Hon. John W.
B.
Governors
Chairman, Board of
Why More Monetary and1 Credit Controls Are Needed
—Thomas
THOMAS
6
'
'
Says Federal Reserve should be
equipped to prevent deflation as well as inflation, and contends cur¬
rent inflation may be merely interrupted rather than ended.
Upholds
support of government bond market and asserts heart of credit con7 trol problem is in higher bank reserves. Requests Federal Reserve
t
'
t
against renewal of price spiraling.
y
4
,
3
LlQHTfnSTEin
-
*'TV
-,
ty.yy2;A
•.............
(755)
,
/:
Orl hodox I n vestin g Methods A re Out-the-Window
CHRONICLE:
Credit Controls Are Needed
yPage';;
"v'rJ
-The Bold New
FINANCIAL
Why More Monetary and
INDEX
/
&
V
.
good
a
.
obsoletes,
office
so
99
at
price
they
Wall
*
for those
to
came
our
St.
•
Unstable Money,
Hindrance to Job Making Inventions
Philip M. McKenna.
a
7
Television—Tiie Giant—Raymond C. Cosgrove
Investment
Atomic
8
Salesmanship in 1949—Charles. B. Roth
11
Dynamic Economy—T. W. Johnson
a
Current Stock Market
*,
13
Prospects—John L. Rowe
The Outlook for Prices—Walter E. Hoadley,
"
defends curbs
Inasmuch
on
I
as
have
just
interest to this Committee if
7.7;
;
.
.
7. V,
..
policy by
I
Far-Reaching Implications
Wiesenberger
of
Company.;-Idea
Investment
the
;
the
I
brought
16
Industry—W. L. McMillan.. i.
i:
Electric
—Hon. J.
Power—Permanent .Part of
American
A. Krug„
to
——
me
to-face discussions
of
this
less than
'ill
12
19,-7
Banks
and
their
21 T
a
Hope There Are Others
Hartley Law)
(Sen. Harry F.
York
Curb
24
for
have
have
.Thomas
Exchange Had Deficit in
1948, Reports
4
12
SEC Files Complaint Against New
York Brokers Charging Defraud;r;r;. H:
ing of Keystone Custodian Funds, Inc..
Walter
Spahr Says
Investments
Abroad
South
Denies
7,
Approval of ..Gold Sale
Africa—Sen.
McCarran's
Bill
•
Would
Permit
the
the
slope
more
represent
Bridges Sees Federal Publications
Spending "Soft Spot"
a
top.
Business Decline in*1949
only banking but
widely diversified in¬
C. F. Childs & Co. Contrast Postwar Public Debt
25
_
Management
(Editorial)
Bank and Insurance Stocks
Business Man's
.
.>,.
4»x.16
Bookshelf
Recommendations
.
17
From
A
Washington Ahead of the News—Carlisle Bargeron............
Indications of Business Activity....*
7
Mutual Funds
6
Prominent Personalities in Mutual Fund
Business—Woodjord Matlock
20
NSTA Notes
and Bankers
Banks
Reporter's Report
Our
Reporter
Prospective Security Offerings
Public Utility Securities.
I
am
21
;
'23
...
Corner
."
24
Securities Now in Registration
The State of Trade and
Washington feel
as
I do,
well
as
as
facts, fig¬
opinions, which
thus able to assemble is in¬
.
'"Statement
Cabe
34
before
of
Chairman
the
sional Committee
Joint
on
Mc¬
1
Published Twice Weekly
Drapers'
and,
and
COMMERCIAL
FINANCIAL
Gardens,
Edwards
c/o
Copyright
Reentered
[LLIAM
DANA
B.
ary
COMPANY, Publishers:
Park Place, New York 8, N. Y.
25
REctor
PILLIAM
SEIBERT,
DANA
D.
RIGGS,
Manager
Possessions,
:ords,
ite
corporation
city
and
Other
lcago
news,
Offices:
3,
111-
news,
Union
Canada,
etc.).
135
$25.00
S.,
;>
La
,
Salle
State
of
$25.00
St.,,
0613);
of
and
per
$38.00
and
per
Note—On
Quotation
March
Earnings
year.
.-
•
of
year:
v
the
made
in
New
York
postage
Current Return Over Va%
5% Debentures of
very
that
naturally those
in
engaged
a
45-Yen
Old Institution
>
Net
quick assets a'orte $754 per
Debenture.
Earnings cover
charges nearly five times.
$1,000
i interest
agri¬
Price about 65
instances
some
Congres¬
have
risen.
is
It
Injormation on request.
George Birkins Company
40
Exchange Place, New York 5
WHitehall 4-8957
Tele. NY
1-1404
the
rapid changes in price rela¬
tionship in the over-all picture
that ; causes
people.
the
to
concern
so
many
I found few who excluded
possibility of
renewal of in¬
a
flation.
Among factors mentioned
that might bring this about were
(1)
deficit financing, (2) reap¬
pearance of critical shortages, (3)
further substantial wage
excessive
(4)
local
and
sumption
sion
and
rapid
99
WALL
STREET
NEW YORK 5, N. Y.
increases,
spending
by
governments,
of
LAMB0RN & CO., Inc.
credit
if expenditures
i
State
(5)
.
re-*
SUGAR
expan¬
for mil¬
Raw—Refined—Liquid
itary and foreign aid, by local and
tries
Exports—/m ports—F utures
governments, and by indus¬
and
consumers,' were
to in¬
crease.
have
I
better
found
increasingly
an
understanding
on
and
Dlgby
4-2727
appre-
page 35)
interested in offerings of
..."
The
High Grade Public Utility and Industrial
PREFERRED STOCKS
;
in
Bingham-Kerbrand
;7
Corporation
BOUGHT
•
»
extra.)
Spencer Trask & Co.
Members
.
New 'York Stock
Exchange
25 Broad Street, New York 4
extra.)
fluctuations
.,
mone¬
year.
Monthly,
postage
funds.
are
of
Members' New
Tel.: Financial 6-2330
~
SOLD
-
QUOTED
WM. I. MERICKA & CO.
York Curb Exchange
135 S. La Salle St., Chicago 3
Tel.: HAnover 2-4300
in
the rate of exchange, remittances for for¬
eign subscriptions and advertisements must
be
and'
Exchange Place, New York 5
Telephone WHitehall 4-2250
-
'•>
—
a
(Continued
S.
Record—Monthly,
Record
(Foreign
account
U.
per
per.year.
(Foreign
year.
40
New
Members
Other Publications
per
We
States.
$35.00
Countries, $42.00
Monthly
bank clearings,
(Telephone:-
Territories
found
optimism
1949.
Febru¬
at
Rates
United
Dominion
Other
.,
matter
Act
Young & Gersten
.
v.\ .-
in
Pan-American
Bank
Thursday (general news and ad^
and every Monday (comissue — market quotation
the
Eng-
......
"
Dana
office
post
under
C.,
B.
/ ■
,
.
rtising issue)
ite statistical
the
Subscription
Thursday, February 17, 1949
Every
second-class
at
Subscriptions
President
Business
1942,
N.
Y.,
8, 1879.
9576
to
SEIBERT, Editor & Publisher
JItBERT D.
WILLIAM
2-9570
as
25,
York.
E.
by William
Company
CHRONICLE
Patent Office
S.
U.
Reg.
Lo--don,
Smith.
&
1949
credit
of
general opinion
we
are
in the
midst of a healthy leveling off
adjustment and that the inflation
may have run its course.
Quite
of
the Economic
Report, Washington, D. C., Feb. 14,
The
I
State
44
..
of
It is supplemented from
time to time by visits such as the
5
(Walter Whyte Says)
;"i Washington and You
This is
masses
valuable.
40
'....
Industry
in
we are
*
.
Tomorrow's Markets
sources.
that the accumulation of
ures,
Salesman's
other
that all members of the
sure
Board
42
Railroad Securities
Securities
many
regularly compiled
analyzed by the Board staff.
:and
25
;
con¬
economic-data
42
v.
Governments
on
■from
'in addition to the vast
,
staff
from this great network as well as
5
V
Net Markets
periodic
stantly available current informa¬
tion, factual and statistical, drawn
;
18
Observations—A. Wilfred May
Our
advantage of
through
frequent
System
meetings. The System has
43
About
News
!
20
i
connected. For in¬
all of them, when
are
most
culture
or
the; manufacture of
meetings with
have suffered the
the presidents, with the chairmen items which
of the Banks,' with the Federal greatest
price decline were not
;Advisory- Council' consisting of happ.y about their positions in re¬
representative "bankers from each lation to other producers .whose
Federal Reserve
district, and prices have not declined and jn
377
'.v..
great
presidents, other officers
through
8
Einzig—"United Stales Aid in British Colonial Development".../...
4
very
and staffs of the 36 System offices,
.
22
Dealer-Broker—Investment
the
with the
14
Securities
Canadian
they
stance,
importance
close, contact with the vast fabric
of the entire
economy, by direct
communication with these
men,
Cover
'
1
The. Board here .in Washington tary policies.
has
Regular Features
As We See It
which
Congressional legislation, and the
|
25
;
UNITED LIGHT &
RAILWAYS, Rights, W.I.
,
professional affiliations.
or
i
TRACTION, Common
commenting on business prospects
spoke about the dangers in the in¬
ternational situation, the implica¬
tions qf a Federal surplus or defi¬
cit,
their concern >about future
ness
LIGHT &
AMERICAN
—
list of the directors and their busi¬
24
January Building Contracts Off 31%, Reports F. W. Dodge Corp..... j 24
E. F. Hutton Announces "Freedom Award" Project.......
international, legisla¬
tive; and monetary — which bear
upon-the activity profitability and
soundness of the enterprises with
and
dustrial, commercial, agricultural,
24
.T
.
fluences
There
compensation
alert and
more
sensitive to the major external in¬
directors, who
of
Industrialists See
Reserve.
educational and other occupations
this country.
I submit here a
23/
•-•••
the
250
found businessmen
in
not
of the
most
Redemption of Brazilian Bonds Announced
elevations
as
toward
than
-without
r
22'
Sen. Styles
Banks
1-1942
e x-
economy and its apex
Board of Governors.
The
are
serve
V
Federal
Reappearance of Buyers' Market
the
for
our
Reserve
*.;v 22T
Gold-Trading
made
McCabe
breadth and strength is in its base,
with the member banks and the
-
? • *"f. "Uv'-Y7'7
Premium Prices, by '
at
u. s
in
in
yy.\;
•
Fund
by'
Adoption
United States of Gold Standard...
World
.roots of
21
.'
Requires
B.
Teletype NY
different
not directly con¬
men
the
Dlgby 4-2370
Broadway. N. Y. (i
of business and
scores
with
39
Partly because, of the shift in
pansion of our country.' I have emphasis brought about by reap¬
.often
referred to it as a
great pearance of conditions of a buyers'
pyramid, with its base in the grass market since my previous trips, I
T 12
Philadelphia-Baltimore Exchange Merger...
E.
nected
SIEGEL & CO.
ana
tailor
economic
President
Francis Adams Truslow
SEC OKs
professional
system
Banks
in
talked
cities with
Southern Production
I have visited
Reserve
this country, a
Endorses Taft-
Advertising Campaign.............. 1.
Petroleum Ht. & Pr.
informed
of their branches, primarily
this
purpose.
In addition 1
branches
Cover
Emil Schram Announces NYSE
New
Ilyrd
with
year ago
Fecteral
throug h out
We
Lithium Corp.
gave
seven
Sys¬
with its
MARKETS
Kentucky Utilities
in
men
YORK
NEW
opportunity for frank, face-
an
tem,
Monopoly—Claude R. W.ickard....
STREET,
on
—
I have just made, which
one
Reserve
Life
;
Rural Electrification—A Check
trip.
nature
Sound Financing of Air Tran8portation--HaroZ</: ^4. Jones.r 17
Public
trip
business, banking, agricul¬
You
are
ture, and the many different inter¬
aware, I think, ests linked together in
tnis Re¬
of the unique serve System.
Since I took office
15 T
Problems of Air Transport
back
from this
v
15
Television—Roger W. Babson
8,030-mile
an
preface what I have to say on credit
sum-'y
manzing
iff
14
—Arthur
WALL
Telephone: WHitehall 4-6551
buying.
from
returned
impressions
The
instalment
99
for all banks, and
reserves
iwhich I visited the offices of the System in Seattle, Portland, San
iFrancisco, Los Angeles, El Paso, Dallas, and Houston, it may be of
13
Jr..
supplementary
ACTIVE
.10 y
Energy and Investment Opportunities—J. II. Allen....
Loan Problems in
be g«ven power to require
Incorporated
.
150
Broadway
Member
Cleveland
New York
:
Stock
Exchange
'
'7'"'.
Albany
-
Teletype—NY
,
Boston
-
Glens Falls
1-5
-
Union
Schenectady '
-
Worcester
Commerce Building
CLEVELAND
4
(756)
COMMERCIAL
THE
lic
The State of the Federal Finances
By HON. JOHN W.
; ;
!
at
state
for
y
1948
a
weeks
lew
-
like-
at
to
pre-
!>
in-
an
differences in national credit con¬
fidence
and to discuss
:,
*
■in
o
k
sition
United States Government has in¬
the
for
calendar
volved two separate
year
first
The
1949.
•
has
sound fiscal
In the 2V2 years that I have been
in the Treasury, my first objective
has
been
the
sound
financial
based
will
position of the U. S. Government.
but which will
period has, been a particu¬
larly critical one in our economic
yield a surplus for
gradual retirement of the public
a
debt.
It has covered in major
part
peacetime
a
The
depleted
accumulated
considerable
sition back to
markets
of buy¬
economy
and
normal
a
ment's
nomic
of
action
has
debt
public
our
not only to
as
in
the
accumulation
of
a
public debt
is
time and the cost of the last
The speed of reconversion
tribute to American manage¬
ment,
will
technical
was
good
and
the part of labor, manage-
on
ment,
skill
and
The
the
contrast
with
the
experi-
debt; for if
of
the
a
in
war
United States reached
That
War I
is
been
Stabilizer;
to;
use
in
tories
and
commodities
followed
bv
States
undertaking
is
coop¬
reconstruction.
and
responsibility for
of the
public
of the Treas¬
ury, who must, with the approval
of the President,
make the de¬
cisions of policy involved. There¬
management
debt in the Secretary
fore, I wish to discuss the Treas¬
ury's debt policy—particularly the
budget position of the govern¬
ment as it affects the cash position
of the Treasury, and the effect
pf
classes of
ous
ment securities.
Ju
depression.
The
speculative'boom
the
inven-
and
s
crisis
„p cllsia
collapse of
after World
War; I also broke the market for
government
bonds,
'helped
way
fidence
to
in
and
this
in
undermine
the
stability
con-
of
our
operating
surplus
billion in 1947 and
$8.9 billion in 1948. It will drop
to $2.8 billion in 1949, and to $1.5
time,
we
have
tion
today, is in
position.
a
financial
evidence
of
speculative
more
Our Na¬
far
stronger
There
than
Nevertheless it represents
ons'annnal cost
presentation, there is a
charts to which I will
refer from time to time to make
is
no
normal
holdings of commod¬
points clearer.
the
influencing the
or
tribute to ec0nomic stability ]
rather than stimulate speculation
on the one hand> or precipitate
When
in
most
came
to
would
materially
the
Inventories -in
I
confidence
ness
market, has not been
lines have been kept low by cau¬
stringency on the other
securities
both
the
in
and
to continue so for some
low of
The most
Confidence in
^ .//j,
.
$34 billion in 1948, and are
$40.2 billion for 1949 and $41.9
at
billion for 1950.
Receipts rose to
peak of $41
a
billion in
1945, and are estimatec.
1949 and $41
billion for 1950. Both the receipt
at
in¬
$39.6 billion for
expenditure
and
Treasury has sought to maintain
the stability of the bond market
are
Reserve
new
figures
are
or
basis of Federal financia.
whereby
reporting,
deducted
tax
the
from
refund*-
total
rev¬
during the year, instead oj
enues
cash
operating
and
1950
In annual report to
in
boom
a
took steps to arrest
in
government bonds
"'Statement of Secretary Snyder
the
Joint
Congressional
before
Economic
Re¬
port, Washington, D. C., Feb.
10,
1949.
sure
on
the difference between
receipt and the expenditure
sented by
the
figures.
deficit
As
was
our
there was a surplus of
billion. ,The President's
budget indicates that, because of
In
the bond market and we
1948,
over
again selling to stabilize prices.
Such
actions are important not
are
tax
$8
reduction and in the absence
legislation, deficits
in both 1949 and 1950—
tax
new
will occur
-
Central-Ill. Pub. Serv *
i
•
in
Durez Plastics t Chem.
-
amounts of approximately
the
$600 million
respectively.
Grinned Corp.
■
More
Cleveland-Cliffs Iran Co.
Portsmouth Steel
Detroit Harvester
know, a budget
during .each
from 1931 up through 1946.
In
1947, there was a surplus of
three-quarters of ^ billion dollars.
of
Art Metal Construction
you
incurred
year
practice and pur¬
chased bonds. In recent months,
there has again been upward pres¬
changed
we
Stromber|-Carlson, Com.
$900
and
million,
et
Needed
Taxes
Bought
—
Sold
—
:
.
Budg¬
Message that it was not sound
public policy for the government
to operate at a deficit in times
♦Prospectus on Request
high prosperity. I have, as you
always taken this view;
and I feel that I cannot emphasize
of
Quoted
know,
Goodbody & Co.
Members N. Y. Stock Exchange and Other Principal
Broadway, New York
:
Exchanges
105 West Adams St., Chicago.,
Teletype NY
1-672
its
importance too strongly. It is
vitally important that the Federal
Government have
a
substantial
,
surplus
to
the
of
one
Insurance
result of
This
Fund.
is
a
cash dividend of about
a
$2 billion to be paid to veterans.
Among the other reconciliation
items, are the savings bond inter¬
est accruals, which are a budget
expenditure
which
but
require
cash from the Treasury only when
savings
bonds
cash,
mature.
or
Also
,in
redeemed for
are
the
reconciliation
are
items referring to the notes issued
to
the
Monetary Fund and Inter¬
Bank, and the bonds is¬
national
in
sued
connection
the
with
Armed Forces Leave Act.
In both
cases,
the
items
were
budget
charges when the notes and bonds
issued.
were
They affect the cash
occasion of their
balance only on
redemption.
There
large
were
re¬
demptions in 1948. J Redemptions
in 1949. and 1950 are 'expected to
be relalively; small.
There
are
!v
-.
some
other' minor
'
items in reconciling the two con¬
cepts; but I have discussed the
principal ones.
The net of the
situation
cash
is
that
surplus
1949
years
fact
be
a
fiscal
the
nothwithis a
1950,
and
standing the
will
there
during
that there
budget deficit during those years.
This
not
addition
net
to reduce
however,
us,
I mentioned
as
will
cash
to
actually
the public debt—which,
permit
a
few minutes ago,
is of most importance at this time.
funds.
money
in the Government's
account
one
issue
we
to
debt
on
That is,
obligations
trust funds when money
our
(Continued
The
liabilities,
another.
or
public
on
page
is
39)
in
permit
a
prosperity
reduction in the pub¬
periods of
Advertising Campaign
policy of spreading listing fees
new
over
years.
■...
In
releasing his annual report tp members, Emil' Schram, Presi¬
dent of the New York Stock Exchange, announced a net loss on oper¬
ations in 1948 amounting to $435,597 compared with a net loss of
$116,171 in the previous
e
x
1
p
i ned,
a
year.
The increase in the deficit, Mr, Schram
;
caused
the needs of industry.
weakness lies
fidence in equities on
icy of credit¬
ing income
not be
1 i
from
s
t
great
to
is
"Our people have come to take
them
Emil
a
decrease of $171,-389
1947.
The listing
with
fees credited in 1948 were
161,
against
$1,139,in 1947.
$1,466,148
The purpose of
spreading the pay¬
by listing corpora¬
made
ments
tions, Mr. Schram stated,
assure
enue
"a
to
more
the
was
stable flow of
Exchange
in
to
Schram
for
a
in
subse¬
more
interest
in listed stocks stated:
is
a
disturbing
under the conditions
fact
that
of our post¬
economy, the ownership of
shares in industry does not seem
to have the attractiveness to most
war
Americans that it should have.
"The
weakness
does
not
lie
.
in
lack
of
savings,
as
there
are
ample unemployed funds to pro¬
duce
equity market of ade¬
quate proportions to finance all
an
translated
the
improvement can be
better living.
y
into
"Without
.
the
participation
of
investor, this continuing bet-7
is, of course, impossible.
.Consequently, the time has
terment
.
.
.
come
for
kind of
of
Americans to do
new
a
thinking about the causes
American
tion
which
industrial
produc¬
supports
now
them
substantially to
the support of the civilized world.
and
The
announcing the
advertising
national
campaign to create
"It
and that this
rev¬
quent years."'
Mr.
give
can
productivity can increase through
better tools and better equipment,
Schram
paid. ' As
a
result, the gross income of the
Exchange in 1948 was reported as
compared
that industry
higher standard of living
after year; that each year its
a
year
to
when
$6,890,140,
sound proportion of equity
a
for granted
full
amount
year
private investment and
the
assumption
upon
capital will be maintained.
a
credit-
the
but for the fact that the
economic system is
built upon
that
pay¬
over
matter of national conse¬
revolves
spread
ments
con¬
the part of a
This would
American
ing fees. The
present policy
these
a
quence
-
people.
many
Part of the
in the lack of
mainly by a
change in pol¬
plan
The President said in his
7-0100
Life
period of
ing
The
we
from
funds, the National Service
ownership of corporate shares. Reports net loss of $435,597 for
budget surplus or deficit oi
the Federal Government is repre¬
1947,
1950
year
trust
members he deplores current lack of interest
1948, due largely to
of
up
large outflow during the fis¬
a
cal
Schram Announces NYSE
being included in the expenditure
our
stability at the pres¬ When conditions were reversed
high levels of employment and selling pressure on the gov¬
and production depends to a great, ernment bond market developed,
relay
invest¬
securities.
Government
in
1950, the figure is $2 billion.
1949 This cash will represent increases
for
fund
"trust
totals.
It has been
Economic
R A
is
surplus]
ments." This represents the money
objective to keep bond prices from
ent
—»
important item [in the
period
of
years • instead
of
Government Credit
T"-K
budget
too rapidly or going
down too sharply.
In the Spring
the
num¬
surplus and
the
cash
operating surplus for
fiscal years 1947 to 1950.
was
the
Federal
- •
$99 billion for 1945, dropped to a
in cooperation with
System, the
Therefore,
going
115
the
some
estimated in the President's budget
aid
our
for
so
Expenditures reached a peak of
busi¬
would
promoting
types of goods.
on
„nntin,ie
.
Treasury
encourage
in both directions.
Committee
be
in the reconciliation
ber of items
between
a
that economic activity is high and
development.
tious inventory policies, and by
continuing
shortages
of
many
Must Have
1950. There are
billion in
^^get 19aU» ,de?pit?deficit lac*
foiecasts a }■., for
J,949 and
June, 1946, I felt that stability
the markets for
government
in
stock
cause
a senand the existence
of a larSe deb't requires careful] j? likely
management so that it can con- "me.;-
dustrial
concern.
For
It would have been higher except
for the fact that there is likely to
of
of
some
ous annual cost and me existence.
In fact, speculation recently,
in commodities and in the
ities.
$6.7
on
the
tate
booklet
un-
£><; national income of the people.
able
been
to avoid these disasters.
at
.
war
the economy of this country ex-,
financial
economy.
This
cash
The
intq
the
trust
the vari¬ flowing
investors. To facili¬ The Treasury invests this
policy actions
our
which is then invested in govern¬
stood
The law vests
the
1948, and 1949.
sharn
sharn
a
the debt
'by iaditional- .items, which, .bring
fiscal icash into the Treasury. The cash
-
nod
tion
shall
we
budget surplus or deficit, but also
important role in promot¬
an
eration
Fortunately,
levels.
do not,
we
able to reduce
be
approximately
years 1947,
$3 billion for the fiscal
.;
Panded during the war period so
ine oasic tacior miiuencmg ine
that
war was followed bv a nethat this hupp public debt rtir? not 4 ^
thls huSe nublin debt did not Treasury's financing outlook is
/ Z-J?
jTi.
y
S
f ronsfitufp ton areat n burden on
the budget picture. As you know,
of rapid inflation, specula-^ consuiuie too great a ouraen on,
fnrprW* a dpfirit for
after World
ences
for
as
ing international economic
great that the public debt
so
public.' precedented
consuming
inevitable
is
United
the
such
as¬
large
imperative. We must have
surplus during times of pros¬
perity, with which to reduce the
,
govern¬
tition.
a
ment is
a
policy 'as/a stabilized to the econ-. :operating "surplus " is ;/typically
omy of the nation. :■ While this is 'higher, than the- budget! "surplus.
important
im¬ -This is primarily because of the
perative at the present time when money flowing into trust accounts
credit, but to promote eco¬
stability.
The
compe¬
way
confidence
sure
.
an
manage
in such
shortages, and, to
extent, the tran¬
line
second
to
been
the restocking of warinventories, the easing
economy,
ers'
to
a
not
only meet the cost of
prescribed government functions,
This
reconversion
on
lines of action.
to develop a
been
policy, which must be
revenue
system that
/
life.
Policy
Fiscal
■,
sound //financialpositipp
era! fiscal po¬
for the Federal Govern¬
,
,
:
"The objective of sustaining the
of .the
JV for the Fed-
in¬
to
the standpoint of in the manner which I feel is
finance and role of necessary and desirable. '
government debt in the monetary |
In considering the Treasury's
system, they are important for financing-outlook, it is necessary
the whole level of the security
to
examine
the
budget figures
markets, since the prices of other with a view toward determining
bonds are, to a large degree, in¬ their effect on the Treasury's cash
fluenced by the prices of United
balance. The Treasury cash bal¬
States securities. •: h
/
ance is not only affected by the
Our aim has
progress.
is
by
$4
billion;
and the need for these additional
amount involved is
revenues
from
merely
reflected in
in the rate of economic
'
The
government
plainly
are
differences
detail
some
£.'■ the out lo
John W. Shyd«r
power¬
a
as
be
termed
/
governments,
is clearly evi¬
dent among the countries of the
world today, when even moderate
terim ~ report,
;
.
soundness of na¬
ful economic factor,
what
sent
might
,
tional
confidence
of
importance
the financial
in
this
time
;
The
should
I
ago.
Administration
the
of
crease
never
degree on continued confidence in
the government's credit.
fiscal
the
the
and
Committee.
Finance
revenues
reports
a
year
'
a
Committee
Means
Treasury has been working with
these committees. • The objective
know, the Secretary of the Treasury since the creation of
such
as
development of tax
Senate
the Department, has
submitting to the Congress at its opening session each year an annual report on the
of the finances of the Federal Government for the preceding fiscal year. I submitted
been
of
by
and.
holdings of U. S. bonds.
the
suggested
the President, be enacted by
Congress as soon as possible.
same
As you
essential
be
program,
legis¬
lation, as you know, is within the
(jurisdiction of the House Ways
to attain excess
are
it to
feel
I
tax
a
The
,
of Treasury revenues over expenditures and,
time, manage public debt so as to assure confidence in government credit and promote economic
stability, Treasury Secretary approves pegging of Government bonds and using fiscal policy as stabilizer
of nation's economy. Points out probable 1949 and 1950 budget deficits are hidden by Treasury cash
operating surplus, and urges increased taxes to balance budget and reduce debt. Notes reduction in
government bondhcldings of insurance and savings institutions, but denies expansion in Federal Reserve
Asserting objectives of Federal finance
debt.
that
the
SNYDER*
Secretary of the Treasury
Thursday.,- February 17f 1949
CHRONICLE
FINANCIAL
&
contributes
time is here for the majority
to understand the process of
busi¬
to evaluate
the conditions that motivate it so
that
new
national
policies de¬
ness
expansion
and
signed to foster progress will bear
the approval of the majority.
"We believe the time is here to
interest
millions
satisfaction
part
of
inherent
people in the
in owning a
industry and we hope to
stimulate this kind of thinking in
a
of
series of advertisements to
national
newspapers."
pear
in
magazines
ap¬
and
Volume
169
Number 4778
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(757)
5
in the three prewar years 1937-39.
Also casting doubt on the al¬
leged disappearance of an equity
market -,are the $911' "million of
open-end mutual funds sold di¬
rectly to the public in the past
By A. WILFRED MAY
THE HUMAN
Particularly true
elsewhere
in
ELEMENT
A Two-Way
—
this
issue
must
primarily be
psychiatric as well
Apart from
that
stricture* laid
the
timer
Sherlock Holmes operating as
a
the economic spheres.
as
market
rising by 8%, produc¬
tion indexes were actually falling
fective
"t h
by 27%.
able
to
crowd"
e
ing . to
outanticipate the
of
rest
boom
of
excess
investment
offerings
the
investment (?)
viduals'
deposits
process—is its
ernment's
bear period to
resulting from the gov¬
expansionary borrow¬
ing and spending policies.
The
simple credo was that as there
the
v
were
return
in
this
proclivity
of chasing the
ticker
make
with
conformi
n
insufficient
A. Wilfred
did
news.
Exemplifying
exist.
ket"
supply
the
being
laid
demand
in
the
observers
and
equation
stock
common
follows the
in
elements
supply-and-demand
This
the
on
-picture.
habit of market
participants
situation
of
for
the
mar¬
available
securities
was
decline,
1936
vember
tailed
which
March
and
No¬
1938
ever
Average from 185 to 99.. And that
prccipitious decline occurred dur¬
dearth
available
of
and
stocks
er,
actual rise in buying
an
pow¬
supposed supply-and-demand ele¬
as
explanation
cause
ket
over-simplified single-
an
movements.
ized
that
just
of
stock
mar¬
real¬
must be
It
the
that of the comparable period one
year ago.
For the week ended Jan. 29 it was found that continued
for
unemployment insurance
while
This
modities, the amount of available
purchasing
the
in relation to
distorted in both
power
is
supply
by
the
public
to
last
to
one
the
existence
deny the
paralyzing inroads
of
the tra¬
on
ditional investors' available capital
of ; taxation
and
other gov¬
•
"interventions."
ernment
would offer
tion
the
as
a
community's opinion
versals—always
after
he
But
for reflec¬
cause
the
re¬
correlation
iiave
taken
place.
Merging With Lyons
*
LOUISVILLE,
vestment
firm
KY.
—
in¬
The
of Urban
J.
Alex-
in
the
of
mand and
resulted
not
actually
in
'
reached
"Scarcity
in
a
stock
market
a
hicles.
al¬
the
chief
late
.-•
Likewise, public fear of stock
scarcity in relation to the swollen
the fantastically, rising
advanced alike in eco¬
of
port
markets,
and "inflated" money supply was
again widely voiced in 1945 after
nomic
in
arguments
treatise,
board
the
of
one
golf
room,
club locker, and barber shop, was
the alleged great scarcity value
three
bull
of
.years
critically
market
commented >
(and
by
the
Yet—stocks
on
writer in this vein).
being gobbled up thereafter suffered a precipitous
at
'200
times
earnings. .( There decline of 25%, into a trough in
could
never
be
enough
good which they have floundered ever
of
the
stocks
equities to supply the permanent
since.
New
-
flected
Era
demand, - itwas
then
in
demand
as
.J During
.
the
and
•
the aftermath of "1929"
extinction
tiable" demand
of
this
"insa¬
along with the $12
billion
of
which it
was
created, by 1932 that
demand'
-
had
become1: recognized
having
as
broker
*
been
d
Midst
loansr ■ from
-
somewhat
ficti-
,not-so~"insatiable."
the
popping-off of 15,000
-'of- the;?nation's banks before the
>
New
Deal's
revival, .the"demand
securities
for
faded
By
away.
March 3, 1933, when all the coun¬
try's' depositors
their institutions'
"bdildings, the investor's frame of
mind was typically portrayed in
the rhetorical question "who will
bother
ever
to
-The
'
current
his
spend
iot
common
can
complete
-
to
answer
emasculation
-
of
-
the
invest¬
ing-capital thesis, this writer does
not
to
presume
would1 offer
.
know.
But
additional
as
he
evidence the $12 billion
of. public
financing (others than
private placements)
consum¬
the
War.
•
•
*
*
.
:
form
J.
Alexander
Edward L. Birchler
ander & Co.,
Inc., has been ab¬
sorbed by W. L. Lyons & Co., 235
South Fifth Street, members of
the. New
Urban J.
York
Stock
Alexander
Exchange.
and
of
common
stock, compared
'
.
a
/
V.'v
1948
factory
the
into
entered
one-
is
excited
"'
market.
speculative
their
1937
40
to
rise
far
outran
plastics, to mention but
article
'
■
-
.
'
1936,
•
I.
■■■'
while
'
t
the1
Louisville
office
of
L,
W.
Lyons & Co.
Frank M. Bush will
represent the
Lyons firm
in
Paducah.
observes.
"Here
a
few
lower
products of process industries,"
prices have served to stimulate
$
production."
*
-
consideration for allocation extension, though
being made of the aluminum supply situation.
v
77(
buying
last
As
formerly
Vice-President
Trusteed Funds, Inc.
'
Casebolt With
Da vies &
(Special
SAN
Bernard
:*r ; '•
was
approximately
Most
year.
even
consumers
with that of the corresponding week
to be selective as they re¬
continued
was approximately equal
slightly above the level of
bookings increased in volume.
BOSTON, MASS. —Herbert B.
Paquet will shortly open offices
to engage in a securities business
was,
•;>;-;v
;
(7 Despite unfavorable weather in many parts of the nation, total
retail dollar volume increased
slightly in the past week. Consumer
in
year
of
"
with that of the previous week and
very
the similar week a year ago.
Spring
Herbert B. Paquet to
He
study also is
a
sponded to promotional events.
Total wholesale dollar value last week
to
Mejia
The-FiNANtnL
FRANCISCO,
Casebolt
York
CALIF.—
&
members
and
San
recent
ago.
STEEL
OUTPUT
RATE
v
weeks, collections
77 77'"".v.-;/./
77.7*1,7■
AGAIN
FOR
not
were
777.
SCHEDULED
WEEK
prompt
as
77.:(''
they
as
7.:
v
-■
\
SLIGHTLY
AT
were
LOWER
■
•
as¬
Mejia,
the
of
following weeks. The month of January
all-time high, too, of more than 8,000,000 tons of ingots and
castings.
This week's operating rate of 100% of capacity
indicates that the first quarter will probably also be an all-time
an
was
steel
for
record for production of
steel, states this steel trade authority.
Every week the industry continues this tremendous production
Francisco
Exchanges. He was former¬
i(Continued
ly with Wilson, Johnson & Higgins
on
page
32)
;r777777/:.7.-7.-
and Denault & Co.
Kingan & Co.
Continental Airlines
McGraw (F.
H.) & Co.
>.
Established
ATLANTA
Lon?
-
I
' .1..
1888
i
Teletype AT 288
).Ui
1
FREDERIC H. HATCH & CO.. INC.
1894
RHODES-HAVERTY BLDG.
a:
<fj
L,;
MEMBERS
GEORGIA
1.
Distance
[
g
421- 1
-M.tyj
63
(
:
Record-breaking steel production continues to make news this
week.
For the fifth consecutive week the operating rate has been
at 100% of rated capacity or more and equivalent to an annual rate
of more than 97,000,000
tons, according to-"The Iron Age," national
metalworking weekly, in its current review of the steel trade.
Since the first of the year the
operating rate has not been below
98% of rated capacity with all-time weekly production records estab¬
Stock
Established
a
V 7.7'
lished only to be broken on
Chronicle)
has become
Davies
Building,
New
the
\
for
is
under
Robinson-Humphrey Gompanij
business
..
quarter,, of
it
industry. However, voluntary steel allocations author¬
ity has been extended through September so that well over 500,000
tons monthly will continue to.move into consumption under
prefer¬
ence
orders.
Beyond that date the fate of allocations presents a
question mark.
At the moment, steel is the only major material
The
•improvement; in fact, during the
first
magazine, adding:
only sound basis
"How wrong we are in that conclusion is evident from some of
wholesome changes that have already occurred in tires, textiles
the
times
upper-cycle earnings.
market
that
notes
•Bought—Sold—Quoted
The
10 %£
of total output.
the
public to
prices
'
by
faulty reasoning to view the
period apprehensively and conclude that the end of good
LOCAL STOCKS
tune of 3-milliofi-share days raised
(equity, share
v'
By
1947
near.
of
in history,: prices,
^quadrupling during the next four
bull
of
industry and profession."
publication
CORPORATE BONDS
3ts greatest rises
year
those
Time Inc.
immediately thereafter
market
exceeded
sales
The change from a seller's to a buyer's market can be essentially
healthy development for chemical, as well as other industries,
according to a current issue of "Chemical Engineering," a McGrawHill publication.
"A buyer's market is but a challenge for more efficient and eco¬
"Scarcity" Again
-—
1948, with
Total output
man
*
;:t
in
exports decreased nearly 15%., In 1948, 436,217 motor vehicles
wer^
exported, as compared with 512,333 units in the preceding yean
STATE AND MUNICIPAL BONDS
But
v7'''V
record
money
when
1
)
.»
;
all-time
an
.
■
1
/
.
.,'•••■
established
be glad he's eating?"
stocks
•
Edward
L. Birchler will be associated with
Russ
with merely $580 million so raised
.
metal working
Urban
sociated; with
*
Of this capital financing no less
than $1.9 billion has been in the
:
•
■
*
mated
during the past three years,
representing over twice the sales
during the three years preceding
*
..
Pressure for mandatory government controls over distribution of
steel and other materials that have been in short
supply is noticeably
off as soft spots in the economy show a tendency to fan out, states
"Steel Magazine," in a summary of latest news developments in the
con¬
flicting
barred from ,l. "■' :■"
were
' entering
even
billion.
*
•
,
demand and bring back a balance with efficient
present, has risen
further, from $105 billion to $111'
"Surplus"-"
-
"C
producers
Although
the
June 1946 to the
:
'.vr-V'-;
units.-
and
re¬
our
deposit-currency
during 4 this period-from
figure
proclaimed^ '
the
But
.
factory sales of 1,363,856 units, according to the AMA.
of passenger cars for 1948 reached 3,909,270
units; motor buses, 12,299
the
most 50%.
Value"
sup¬
bull
1920s
claims
factory sales of motor vehicles
5,285,425 units, it was announced on Monday of this
total of
Truck
times
by 40%
of
a
transition
rise, but
fall
initial
by the Automobile Manufacturers Association.
The second highest total in the industry's
history, it was exceeded
only by 1929, when factory sales amounted to 5,358,420 motor ve¬
The
between
and deposits
currency
*
.,•••.
...
further swelling
a
"
In
-
Era
New
>
supply element.
interval
1942
which
in
week
week
progress in
(market buying-power) showed a
14% during the period.
and
consecutive
nomical production and distribution," says the
"And that, in the final analysis, is the
net rise of
And
to
a
supply-andprice:—between 1929
and 1938 stock price averages fell
by two-thirds, but concurrently
demand
deposits -and
currency
1937
third
J
..
between
event—before day's great emphasis on the markets' supposed de¬
continued
Exports in 1948 accounted for only 8%
Urban Alexander Gc. Is
demand and
market
the
was
Final tabulations show 1948 U. S.
ex¬
plain price movements after they
■
r,
claims
on
declined.
They were, however, 19% higher than last year with con¬
tinued claims about 68% above those of a year ago.
-
■
initial
claims
the increase, rising 2%
recede, falling about 4% for the
again
were
latest week.
with other com¬
as
deposits-p 1 u s-currency
oVer-supply of money, and con- demand
versely-in bear periods (as now) outside the banks. .((V;
.the
inadequacy
of
investible
Money Up—Price Down
funds.
V;: ••
"■:-v
v.\
Also showing the same inverse
| Surely the writer would be the :i
•
slight falling off in total industrial output for
country in the previous week, production moderately surpassed
.
should desist from
ment
Index
a
-
the
investor
embracing the
event,
any
,
reflected in the statistics of
as
Notwithstanding
.
In
en¬
since the 1920s of recurrently pro¬
claiming. during bull markets the* ing
pur¬
mar¬
between
drop in the D-J Industrial
a
securities
for
per¬
versely followed by another
ket
of indi¬
earmarking
of
mental
savings
chasing.
directions
But this favorable "sellers'
emphasis
now
of the funds, they sim¬
use
such rationalization-after-the-fact
is
the
great
deteriorated
to
ply circulated around Wall Street
raising the prices of those that
May
g
interpretations of the
securities
ef¬
consisting
as
their
quantity of investment
having been made avail¬
is
of this the
Short
merely
over
able in the form of increased bank
securities
fective demand may be conceived
of
Production
■J
market-
the human activation of the avail¬
funds.
Industry
Price
Auto
Business Failures
reversals
and
for
demand
with
of securities;
large
funds
a
questionable
the
was
money-seeking
new
"the
mob"—itself
explanation given for that
market
try¬
on
was
The
con ce n-
trate
■-
above-cited
of, monetary-cause
growing
tendency
o f
-
the
From
* :<
*
Trade
Mental Earmarking
of
effect, one must conclude that the
determining influence on the ef¬
<♦>-
the
Matter
A
movements
detective in the
a
*
•
,
market
stock
of
—
down by Major Angas
Retail
Commodity Price Index
Food
*and
vestment.
•
Stock Market Factor
is the
now
Carloadings
well as the plethora
pressing for realty in¬
funds
of
Production
Electric Output
State of Trade
three years as
BUYING POWER
IN
Steel
The
;
o
J |
Wall
Z~
r
N.
Y.
SECURITY
Street, New York 5, N. Y.
r-f ' c'
:
z
r
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DEALERS
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ASSOCIATION
Bell Teletype NY 1-897
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(758)
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COMMERCIAL
THE
,
Mixed Trends in the
'
•
■
.
...
Economy f
•>,
From
By LEON H. KEYSERLING*
Ahead
Stressing need of cooperation
among all economic groups and denying lack of sympathy toward Amer¬
business, President's economic expert states thsre is still need to cope with inflationary forces de¬
spite downward trend of
prices.
threaten maintenance of economic
income.
sumer
,
-There is seldom
example of Russian
being done to us by
On
'
I
deeply appreciate your invitation to ap Dear at these hearings, through which reprfe/
of tne Congress and of the Exec hive Branch undertake a legally-prescribed
process of cooperation under the Employment Act of 1946.
In this process, policies vitally
economy
bust cycle.
and
ooom
task
this
are
broad
tion
or re-
of
world
our
position
Inaugural
degree of
mer¬
it
,
they
con¬
of
which
,
seem
to
tain.
.
At
the
outset, let
The
me
you of
the keen real¬
ization
Leon H.
Keyserling
membership
the
of
The
that
of
the
Economic
role
of
the
the
sources
economist is only to suggest poli¬
traditional liberties.
to
because
.suited
to
he
that
has
the
trusted
people
him
It is not
purpose.-
his function to decide
cause
policies, be¬
have
with
tools
some
not
en¬
that
responsi¬
bility, and because such decisions
involve
than
broader perspective and
a
wider
a
variety of measurements
confined
are
within
chest of the economist.
the tool
If at any
point in my testimony I do not
^recognize this line of demarcation,
it
could
be
attained,
recognize that
tion
growth—we shall not
with anyone's easy
instead
yet
created
of
corps
-Yet
course.
it
amazing
was
how
passed
many
press
ists Could check in
ago
dents
ap¬
places as. the National/ Press, Club,/ the
galleries and the White House where the journal¬
such ^convenient
who
had
and
been
get the coveted badges.
inclined
to
dismiss
The few
this
correspon¬
with
show
army
a
/s'hru^'Yipoh seejng; the
.> of the-bHicer giv
missing something and made haste to get
checked and sign up.
/ .•'.'V'-".r^V'.v] /
fS'5' Well, it was -a very worthwhile afternoon for. the Military: Miii-
r
decided
/'serious;
they
might be
.
tary busses carried the journalists to the show' and returned them'.
Jet. propelled planes: screamed and- dived and
rguided' missiles ex/hibited- as. much discipline; as^GFsT ^he: journalists :Cai^-feck
that
•
pro¬
which
Under
radio
thp
^
that
nmht
anrT
thp
"foilmurines
Ynhrninfcr
nnnprs
;
"pres'ent;[- shouted the miracle of it all.
pal-|
One radio- commentator reported solemnly that/the Military
pably inconsistent to have said last' needed a 3,000 mile strip of land: for further experimentation. This
year' that inflation was dangerous 1 is th$ approximate distance from New.York to California. It wouldn't
on
the theoretical ground that it | be long, we were assured, when these guided missiles,
equipped
might some day lead to extreme | with human minds and radar, would reach the moon,
declines in employment and pro- I
,
It so happens that the Military appropriation bill is pending
duction,
but
to
stop • •worrying > and the Big Brass don't intend to stay within Mr. Truman's pre-
be
as¬
We shall
accord."
own
concern
a
employment or'
at
peared
suf-l Congressional
more
told their wives of how glad they*
had gotten into such an interesting-:
game, assured these young wives that although:
paper,
But the forces of. infla¬
disappeared.
circumstances, it
that "the boom is leveling
.
or
year
secrets,
;V'rthe tests. .During the, forenoon high braid
operate toward
f>ved - anrt
disastrous ultimate oUtc&^e^hqylfi' gy^j-^hd-
at
task
our
satisfied
off of its
a
not
we
surance
not
downturn
$5 # 4wb-f Old
steady
''steps
duction.
that price.
Once
as
shown
being
lazy,. felt a rise of their blood pressure as
they contemplated what was in store for them.
They all had to be carefully screened,v."of
Carlisle Bargeron.
situa¬
stop the maladjustments, being
has
The dynamic
by* standing Still; and
stability would not be worthwhile,
if
economic
strong, but it is not
it would haive been?
by the process of inflation.
Fortunately for us, despite, this
neglect the process of inflation-
stability
even
still
privilege of
Military's scientific
the
and
.
caused
American economy cannot achieve
,
is.
trans-i
had taken positive and
we
ficent
pro¬
cies,
.
if
is
strong
as
prosperity of our economy
most
rapid rate ouV re¬
permit consistent with our
the
at
enlarge
to
concern
be
of
unusual
they were. not married to men in the higher
brackets and therefore,- could not sport minks,
they were married to men who led fascinating;
lives.; Even the oldsters of the corps, cynical
/•
soothing
prosperity
lot
the
were : they
; :
should
fundamental
tion
has
This is to promote the
and
ductive
Council
Advisers
growth
contuse".'justic¬
our
last
to
,-i
y:
formed into constructive channels.*
economy.
President
ment Act.
the
of
going
frequently
underscored another equally im¬
portant purpose of the Employ¬
/assure
.
American
the
whether
correspon¬
how
they had advanced in jet propelled-planes, in,
guided missiles.
The youngsters of the news-
with
increasing /
The
syrup.
about
>
the Washington
the horde of them along with the radio
.correspondents, were tin van unusual state of
excitemerit;:^ Tn /the afternoori 'they were ..to - be
a
bright outlook v into
within the year.;/,! y
should
confidence
iable
sense
one
one
ivo
of
increasing the
strength and securing the stability
new
a
gloomy
a
and
set forth in the
Address of the Presi¬
dent, will gather
-the
urgency
of*
this
convert
responsibilities,
in
jected depend¬
ing upon the
.
than
All those who agree; even
outline with the depic¬
today.-
adopted
,
u
propagandists.
our own
.
pessimism to the effect that it. is
too late now to do anything., could,
Never was
challenging
more
gge st ed,
carefully sift¬
ed, and then
s
pundits do not point out some
We had better look to what is
our
propaganda.
accorded
<$>-
.domestic
our
day that
a
dents,
•..
sentatives
.affecting
of the News
Monday morning of this week,
a
.
■
..
By CARLISLE BARGERON
Does not lo3k for immediate depression but sees factors which
stability and gro vth and indicates another big depression might cost
nation $800 billion. Lists as "emerging maladjustm mts" (1) high cost of living in relation to personal
incomes; (2) growing disparity between industrial and agricultural sectors; (3) continuing price infla¬
tion in certain key industrial areas; and (4) .distorions in relation between business income and consome
•
.
Thursday, February 17, 1949
Washington
Vice Chairman, Council of Economic Advisers
ican
...
:
:
CHRONICLE
FINANCIAL
&
ourselves imme¬
would
be
inflation now that we are
scribed $15 trillion limit if they can possibly help it. 'V ;u •beginning to see the first; cori- j. Y6urs.cof respondent> ha s read with interest fthe explanations of
sloughing off crete
although as yet very mod- why Dwight Eisenhower has been called back. If you would stop to
ance in advance.
the dangerous ingredients of in¬
erate
signs
that this theory
is analyze them you would find some amazing things.J He has come
v
To succeed fully in the task be¬ flation so that we may achieve
valid in fact.
Instead, it/should .back, we are told, to bring about unification of the services so that
fore us, it is essential that every¬ continuous maximum employment
be frankly recognized that* there
we will be more effectively
prepared to meet the enemy. His pres¬
one, everywhere, and particularly through the full absorption of a are some
strong elements of,in¬ tige with the American people will make this accomplishment on
every
segment of the businesss growing labor force and continu¬
creasing danger in the current- .his part possible—so the propaganda goes.
community, appreciate the spirit ous maximum production through
This is to say that neither the Secretary of National Defense,
economic^ situation, that a com¬ :
in which this task is being under¬ growth
in our national output
prehensive program for stabiliza¬ Mr. Forrestal, nor the President of the United States, the Com¬
taken.
Or is the
The idea that any respon¬ from year to year?
tion
and
growth is even more mander-in-Chief, the man, incidentally who doesn't need any law
boom going to "level off" in the
sible
person
anywhere
in
our
the
error
on
part will be
my
un¬
intentional and I ask your toler¬
governmental
structure
should
Is
a partial currency.
Employment Act of 1946 was
in itself
was
a repudiation of this idea.
written, and I know it is
being administered, by
know
that
our
who
men
cannot
economy
prosperity. Far-sighted busi¬
ness
know
nessmen
that
such
pros-
perity cannot be maintained with¬
out their help, but they also know
that
they alone cannot do the
whole job.; They are aware that,
under modern conditions, the role
"of
government
significant
even
is
tremendously
if
not
decisive.
-
For this
nothing could do
promote business confi¬
reason,
to
more
dence
than
the
firm
assurance
that the pledges
contained in the
Employment Act will have ap¬
plied to their fulfillment all the
wisdom
and
tained
form
fairness
determination
of
government
others is competent
and
sus¬
that
our
above
all
economic
mutually embarked is clearly de-
•] fined by the Act itself.
endeavor,
sources
to make
and
through
available to
our
more
It is to
all
a
the
economy more
secure
to the best of
our
re-
free people,
stable
by protecting it
ability from the
find
of statement of
Dr.
Key¬
serling before the Joint Committee
of Congress on the Economic Re¬
port,
Washington,
D.
C.,
1949.
Feb.
8,
we
situation,
workable
in
We
six months ago,*,
now
in
an
•
still vigorous in many parts
are
in some very
of
predominant
it
"I told you
excellent
;
inflation
so"
a
with
labor
in
national
emergencies because of
itself"
life.
whole
Watch
doesn't- appear
threat to
that inflation
resulting- in slight un¬
employment and slight hesitancy
in production.
Let us ;not tarry
by
"takes
of
we
and
see
if I
our
not
am
Congress
security is great.
before
inflation
self"
right. Watch and
testify "reluctantly"
and
are
which
,
if he
that the
see
yV-a .is it
in the name of heaven, against what enemy
spending $15 billion a year, that we are pressing
against
that
scien¬
our
calling for universal military service, that
are
developing supersonic weapons, are
discussing an encircling net of radar? If I were to say to you that
it is China, you would laugh. You have just as much laugh coming
enemy
fully by bringing on an ac¬
care
are
tific genius, that we
it¬
until
inherent
,
barely begun to "take care of Vtl'i Now,
has
the
of the Presidency—neither of these meri can carry oiit the
law calling for a merger.
:
'
' •
r:
It is a fact that they seem not to have been able to do so. But
Ike, on account of his great stature, will be able to accomplish it.
Sheer bunk!
Eisenhower has been called back as part of the
propaganda game to get additional appropriations. It is the plan
for him to lend his great build-up to this.
He has. bluntly, come
back to save the jobs and the rank and the power of the men with
whom he was educated and trained, with whom he has served his
of itself in
position to say
now
deal
to
power
care
not in
are
that
said
takes
"always
time"
important parts.
who
Those
to
their
yet unfulfilled purposes
as
the economy and still
"/■{
are
still
can
working
forces
flationary
evil but
key
before
answers
program
effectively applied. Such a pro¬
gram must reflect the fact that in¬
need to
order
a
be
position to act to protect and ad¬
vance
our
economy before
it is
too
late.
Civilian
employment,
according to the January,
1949
figures, exceeds that of January
or
February, 1948. Unemployment
in January o'f this year was higher
than in January, -1948 but
about;
we
depression.Then. /because-the
enemy is a nation only slightly more civilized, a degree
or so, perhaps; is only a degree
of so stronger in military might, j
//-//There is* scarcely a day around here that we do not observe
but in a manner that would leave
the same as in
February, 1948, and ; us with problems' infinitely more a hack or broken down newspaperman, or a similarly equipped]
1948 was considered a boom year. I
difficult to surmount.
lawyer getting a job back with the Military. They have been un¬
Industrial
production is fluctu¬
When I make the statement that employed since shortly after V-J Day, or if not unemployed,)/pn
ating within about \%% of its there are some elements of in¬ much]shorter 'rations than they were accustomed to during the
tual recession
inflation
or
indeed
would
be
over,
,
postwar peak.
able
figures,
and
others
show
'
The latest
some
on
a
avail¬
creasing
quarterly
monthly basis,
on
a
tal
savings
t
large.
are
for
e s
this yeai
are
in
Total;
The best esti-i
business
very
investment,
high, and
gov-
the
current
prompt
the
situation
six
rising
was
and
general, why do
there js
|
months
even
an
situation
,
ago,
types of prices
when inflation
when almost all
Were
many
"If great danger was seen
sources:
national^output at before post- j
higher
levels than
ever
in
danger
situation, it may
the following question from
consumer
war
•
economic
incomes, personal
incomes, national income and to¬
you
say
recent increases of
in
some.
permitted
to
produce
unemployment
places,
should
not be
to distort judgment or
a
outlook
"fear of psychology."
for
1949
is
still
bright, and by optimism combined
with the right course of action we
can keep it bright.
But optimism
so
unquestioning as to produce
further
neglect,
or
unwarranted
to
seems
place,
at
me
some
some
today,
clear.
In
the
first
important prices
vital spots in the
very
have not been; leveling
off, but instead have continued^
now
at
<an
at
threaten
fact,
aeceleratinghfjrfe^'kre
their all-time
to
Asia,
or
rise
according to
(Continued
on
the;, latest 'figpage
26)
that
some
newspaper-;,
trip by plane to Europe,,to
just across'the country.
or even
The whole conduct of the Brass arid what:they are getting by
with these days is a gigantic racket, the like of which the country
experienced, even in
has -never
the Harding days.
With Brainard-Judd Co.
:
/ / (Special
to
The
Fjnanciai.
Chronicle)
Cornelius Ryle
HARTFORD, CONN.—Helen F.
has joined the staff of
&
Co., 75 Pearl
(Sneoial
Madden
Brainard-Judd
Street.;
Miss
Madden
previ¬
was
ously with Fahnestock & Co. and
Robert C. Buell &
to
*
)
Financial
G.
Ryle
with
has
Harris,
//
Chronicle)
MO.—Cornelius
become associated
Upham & Co., 912
Baltimore Avenue.
&
Mr.
Ryle
was
Co.
With Goughlin & Co. :V
DENVER,
'Coughlfn
ing.
With
A;,/ formerly
Abilene, Tex., Manager
Co.
VfsppctaL.tQ -Ttis • Financial Ckhontcle)
x:-
The
KANSAS CITY,
for Bush
a
;v.
Harris, Upham & Co.
.
COLO'.—Charles
-,%• V ;
r
He
& Co., Security
was
Boettcher & Co.
Build¬
formerly
with
-
Bache Adds Two •'* V.-v
]
(Spectal' to
W.
peaks/' arid Ap'pel has become affiliated with
still furtherr//Iri;
passes
a
:-]/
very
economy
rise
Seldom a day
editor hasn't euchred himself
prosperity of the war.
man
that
greater danger in
when some
ernment demands for goods and
lprices are leveling off or ,declinservices will increase considerably
ing and when some soft spots are
throughout the year.
Sensational
appearing in the economy*?
magnification of a few soft spots
The
answer
to
this
question
in the economy, and of some very
The
*Part
the
are
which
is too late.
ma
to exert.
The purpose upon which we are
These
upon
that such
and
centralize attention in the current
remain prosperous unless business
remains prosperous, and that busi¬
ness confidence is a factor in busi-
5
that corM
so
of
decline?
nes
questions
It
;
fashion,
growing amounts
ill-will or show lack of
of 5 employment
and
production
sympathy toward American 'busi¬
will be only connecting links on
ness and its problems has
always
the road that leads ultimately to
seemed
to
me
unthinkable. Yet
serious unemployment and busi-;
we know that this idea sometimes
gains at least
,
abcut
ques¬
needed now than
traditional
The
.
these further
the .boom
•stant instead
harbor
'
diately with
tions:
•.
MIAMI,
and
Fred
The
Financial
FLA.
W.
—
chnontrt.ft.-"
Victor
Clifton
Hager, have
been
added to the staff,of Bache &
96
N.
E.,Second Avenue.
,
Co.,
...
^
Volume
169
COMMERCIAL
THE
Number 4778
Unstable Money, A Hindrance
To Job Making Inventions
By PHILIP M. McKENNA
President, Kennametal, Inc., Latrobe, Pa.
Mr.
McKenna, revealing story of his
inventions and their role
own
in
How do
lor
0
The
Financial
ANGELES,
CHRONICLE
Opens
(759)
Thomas C. Bowles has opened of¬
With W. E. Hutton & Co.
New Office in New York
CALIF.—
Barron III is with W. E. Hutton &
BOSTON,
MASS.—'William
with
able
buy
Co., 75 Federal Street.
Sills, Minton & Co., Inc., mem¬
of the Chicago Stock Ex¬
With Allen & Co.
business.
Mr.
change, have opened a branch of¬
formerly a partner in MacDonald fice at 52 Wall
LAKELAND, FLA.—Frederick
Street, New York
& Bowles.
W. Stopford is with Allen & Co.,
City,
under
the
direction
of
211 East Lemon Street.
Eugene L. De Staebler, who has
vard
to
in the securities
Bowles was for-
engage
to
The
staff of
bers
been
May Adds
Financial
J. Earle
the
Chronicle)
elected
firm.
a
Vice-President
Mr.
De
Staebler
of
was
CALIF.—Edward formerly in the municipal depart¬
ment of F. S. Moseley & Co.
the
with
which he had been associated for
May & Co., 601
many years.
Bryant Street.
With Thomson
& McKinnon
MIAMI BEACH,
FLA.—Francis
is with Thomson &
McKinnon, 927 Lincoln Road.
M.
Brady
to
is
try
to
to
the
it
only
known
steel.
tool
whom
had
I
and
business
have
practical,
inventhat the
i saw
they could be brought into
the benefits proved to
way
use
off. If he
doesn't
then
were
uoiao
works out and
pays
with
companies with
worked did not believe my
idea
if
see
mimiiMM
cut
The
op¬
anu
carbide tool material
would
ible
pay
people to
a
steel, in lathes,
boring mills and milling machines
witn three times the speed feas¬
10
what
needed
erate
hard
which
is
men
many
myself.
I had saved up
himself, to
start, he may
do it
to
was
enough money
in
take
inventions. I rented
who
enough
Philip M. McKenna
money among
them which they can risk.
When Henry Bessemer
V
in 1856
believed it practicable to make steel
by blowing air through molten
pig iron he had already earned
Jand saved considerable sums of
by
money
his earlier in¬
of
use
vention, notably the manufacture
of bronze paint.
He says in his
Autobiography, "After
full and
a
deliberate
consideration
whole
I
process
my
as
case
until I had
commercial
a
scientific
a
the
success
.
made
well
as
.
there
.
duties which I owed to my¬
were
self
of
resolved to continue
researches
my
andv to
Having
thought over thoroughly the risks
and powerful opposition I had to
fight, I came to the conclusion
that it was my. duty to settle the
sum
of £10,000 ($50,000) on my
wife, under trustees, so that I could
not be ruined absolutely in the
further pursuit of my invention or
by litigation in defense of my pat¬
ent rights.
After this investment
1 still had
£12,000 ($60,000) to
spend in perfecting my process
if found necessary.
My partner,
Mr. Longsdon, who had implicit
faith in me, intimated; his resolve
to go heart arid soul with me in
bearing his share of the cost."
Within
cision
five
years
constructing
Bessemer
within
12
in
sons
this
of
de¬
1,000 men were em¬
making Bessemer steel,
;
and in
and
family.
my
over
ployed
years
solved to risk it in trying out my
few
a
partners
have
$71,500 during the
1 had worked as a
and chemist. I re¬
metallurgist
new
furnaces
converter^
years
and
•
20,000 per¬
companies
in
over
various
;
a storage gar¬
in our small town of 10,000
people and to the amusement of
age
members
of
established
the
car¬
bide industry employed 12 men in
1938 and started to make and sell
"Kennametal."
did
not
profit
I
superiority
the
proved
steel-cutting metal in
our
year
I
"broke" although no
made.
The second year
go
was
had
first
The
of
so many-
shops
that
we
had
50 people
making tools from it and that
earned enough
money
operations.
By 1940
year
expand
to
our
sales reached $5,000,000 a year, the
cost
of
cemented
hard
carbide
reduced to one-third of what
was
had
it
when
been
who
thus
earn
and
started
I
and
employing 300 people
had art., opportunity to
were
we
in
save
£12,000
that it had
or
been
in irredeemable paper money de¬
teriorating so that it was only one
third enough in buying power in
1856
compared to its value when
saved,
10
semer
could
previously.
years
have
not
Bes¬
made
the
attempt and built his first furnace.
I
assure
you
that the big firms
-represented in the British Iron &
Steel
able
Institute
this
to
making,
not
were
innovation
in
favor¬
steel-
which
rendered
their
But by the pow¬
little real money the in¬
with courage can create
plants obsolete.
of
er
a
ventor
industry and give profitable
new
employment to
many
At the risk of
tell
you
ventor.
of
my
story as
own
an
in¬
.
an
Pennsylvania,
invention of
a
I
new
.
hadn't had the initial
in 1938, or if it had
if I
But
cash
to risk,
been
in
deteriorating
rapidly as
in
buying
value
as
has gone down
recently I
money
power
shouldn't have been able to make
Ihe
Thus
start.
from
savings
workers
and
jobs
in
hands
the
inventors.
attempt to
save
A
and
on
country
thou¬
A
concerned.
are
sand dollars saved in 1938 is today
worth
only
as
buying power as it was
Suppose my invention had
then.
been
thought
until
of
1949.
Then my $71,500 would
have been
the workers to
metal.
believed
it would solve
I
problem of providing America
LIABILITIES
T
—
Policyholders' Reserve
$
884,226,476
Policyholders' Funds
Policy Claims in
Dividends
to
255,019,011,
process
of settlement
4,460,616
Policyholders
14,358,265
Taxes
2,145,368
Miscellaneous Liabilities...
5,223,319
save
in safe
forms, such
accounts, bonds,
But so long as the
or
insurance.
Security Fluctuation Fund
dollar
paper
is
not
$ 5,500,000
Unassigned Funds
63,463,568
Surplus to Policyholders
Total Liabilities and
68,963,568
,
Contingency Funds
$1,234,396,623
United States Registered Bonds included in the above statement
are
deposited
as
required by
law; State of Massachusetts $300,000; State of Georgia $10,000.
•"Admitted Assets"
are
assets
determined in accordance with rules established
by the National
Association of Insurance Commissioners.
savings bank
A
COMPLETE
ANNUAL
REPORT
redeemable
WILL
BE
SENT
ON
REQUEST
by payment into anything of any
particular value as exists now and
since Mar. 6, 1933 in the U. S. A.,
economists realize it will continue
deteriorate
in the
long run,
buying only half as
much in another ten years.
A
deteriorating dollar stops the op¬
portunities for new jobs in Amer¬
ica.
Restoring
the
gold
coin
standard of money in the U. S. A.
now, with all paner money to be
to
likely
very
made
good
the
stop
rate
ounce,
of
the
of
the
the
inventors
lay
useful
aside
projects
of
and
will
buying
This
confidence
enable
to
dollar.-
will
savers
ORGANIZED 1851
•
SPRINGFIELD. MASSACHUSETTS
ALEXANDER T. MACLEAN. President
i :*&$&&
GENERAL AGENTS IN GREATER NEW
YORK
Lawrence E, Simon
Donald C. Keane
Lloyd Patterson
20 Pine Street
37 West 43rd Street
17 East 42nd Street
inno¬
money
which;
for
in
spell jobs and opportunities
for many.
LIFE INSURANCE COMPANY
into gold
an
restore
turn
of
demand
$35
power
their
on
deterioration
vators
called Kenna¬
the
He has to
as
and
I
$1,234,396,623
i
in
much
not
one-third
about
8,528,186
15,039,195
Total Admitted Assets*
grave
earn
America is
today.
$1,210,829,242
Premiums, due and accrued
of
the gold standard so far as
American
citizens
within
the
not
Bonds, Mortgages and other Assets
Interest, due and accrued
come
may
danger threatens all who
had
which
1948
ASSETS
tool
material,
December 31,
that.
at
In 1937 at the little town
Latrobe,
made
people.
being personal I'll
at
as
they hadn't had these jobs before
England had jobs that hadn't ex¬ insufficient to pay
isted before, and steel was plen¬ construct my furnaces and equip¬
I could not have started
tiful enough to build railways and ment.
bridges of high strength compared with only $18,000 in buying power.
The busy workman or inventor
to wrought iron or to wood.
hasn't time and knowledge to pro¬
Now suppose Bessemer and his
tect' his savings
by speculation.
partner at the start had not had
the
97"> ANNUAL STATEMENT
when
town
our
A.
fices at 8941 Santa Monica Boule¬
an
he
f
Sills, Minion Opens
Chronicle)
J. Demson has been added to
come up
ltunity,
p p o
it
LOS
to
PALO ALTO,
in your town? Somebody has an idea.
Very often it's an invention. Sometimes it's what we may call an
innovation, that is, trying out something brand new in your town. It
the inventor or innovator has enough money on hand, already saved
jobs
new
(Special
(Special
Says depreciation of dollar would be stopped by return to
gold coin standard.
prise.
Thomas C. Bowles
J. Earle
industry building, points out how deteriorating value of monetary
unit discourages and prevents inventive genius and individual enter¬
FINANCIAL
&
Thomas P. Allen, One Hanson Place,
Brooklyn
8
THE
v
twi
■
■
• ■
COMMERCIAL- &" FINANCIAL
■
mi
m
.
..
Executive
;
Dealer-Broker Investment
'
By RAYMOND C. COSGROVE*
'
Vice-President, Avco Manufacturing Corporation
.
Recommendations and Literature
Though holding television will not displace radio, Mr. Cosgrove asserts it is growing into one of na¬
tion's top industries, and its dollar volume will in next few years far overshadow everything radio has
achieved. Says advertisers are flocking into telerision and predicts 400 video stations by 1953.
Having said that television is not replacing radio, I should like to go in,to that, very
important point a little further. Television is perhaps the most interesting, certainly the
most significant, and l am sure the most mobile, of the subjects we are talking about today.
A few
<&-
peo-
It. is understood that the
send interested
to
firms mentioned will be pleased
parties the following literature:
Airlines—Circular with data
Airlines
and
Co., Commercial Credit Co., Con¬
tinental Can Co., S. H. Kress &
Co., Phillips Petroleum Co., Ster¬
Airlines—
Delta
has
—
years
Ohio Railroad, Coca-Cola
&
more
on
American Overseas Airlines, Con¬
tinental Airlines, Mid Continent
Washington, Phila¬ Schwamm ;& Co, 50
will far overshadow three cities
Broadway,
everything radio has achieved. delphia arid New York.
New York 4, N. Y.
An East Coast network is made
The whole television picture
is
Also available is a memoran¬
developing and expanding so fast up of Boston, New York, Newark, dum on Maxson Food
Systems.
that strange things are beginning Albany-Schenectady, Philadel¬
to happen in certain segments. At phia, Baltimore, Washington and
Bank
Stocks
Tabulation
on
A Midwest net¬
the moment, we are seeing the Richmond, Va.
banks
of New
York City and
spectacle of considerable price- work includes St. Louis, Chicago,
Westchester, Suffolk arid Nassau
cutting of receivers at the dealer Milwaukee, Toledo, Detroit, Cleve¬
few
pie are flatly
saying that
television
Thursday, February 17, 1949
-
Television—The Giant
V/J'f'.;' ■.^,
CHRONICLE
ling Drug, Inc., Texas Co; and Tide
Water Associated Oil.
_
completely
doomed radio.
I respect these
H. C. Bohack Co., Inc.—Circular
Wall
McDermott
P.
—Peter
&
Co., 44
Street, New York 5, N. Y.
—
opinions, but I
put j them
in
the same cate¬
Just one. month ago today, a
supply and is among the most coaxial cable between Cleveland
that radio
sought-after by the public on the and Philadelphia, passing through
market!
Pittsburgh, linked these two Sys¬
would kill the
tems together.
This means /that
This
kind
of
phonograph,
activity is, of
30% of the nation's population has
cr ipple our
course, injurious to everyone, in¬
been brought into a single tele¬
Newspapers,
R. C. Cosgrove
cluding the dealers who practice
vision pool, in- which the same
and knock the
/..
;
it, and I believe that as soon as
programs can* be shown, whether
Wind out ot motion pictures. Talkthe smaller marginal dealers learn
irig pictures, you may recall, were that television receivers have been originating in New York, Chicago
to blight the legitimate theatre. standardized and that they can or elsewhere along the line.
As a result, the program poten¬
The airplane was to put the rail¬ have three or four sets on their
roads out of business. The tele¬ tloor more than a day or two tialities, that haye been envisioned
announcing
' the
t
without
tend
panic, this situation will
to
realization.- For
disappear.
also
We
it went.
for television for years are nearer
seeing
are
20
manufac¬
Actually,
know that in every
one of these cases the competition
we
to
to
one
reae^ec^
ket, even before their sets with
heights it had! the
before.
|
smaller size
next
0ff the lines.
have
Arrears—List
stocks
arrears—A.
M.
with
of
20
dividend
Kidder
&
Co.,
1
Wall Street, New York 5, N. Y.
come
75,000,000 radio sets
are
"Investments"
vs.
Op¬
at Home—Analysis—
Elworthy & Co., Ill Sutter Street,
San Francisco 4, Calif.
watched by people as far
46-inch
ca^us^we^know
New
England Municipal
Letter
the
ttSf
the
.......
The
number
has
risen
of
radio
steadilv
sta¬
even
as
television
has
developed,
until
2,©00 radio stations are operating
at the present time. But even more
significant,
3,300
announced
their
have
concerns
plans
radio stations and have obtained
FCC permission to do so!
in
•
Avco,
we
are
continuing to
strengthen Radio Station WLW at
Cincinnati and WINS in New York
and,
mentioned,
have con¬
tracted to purchase Radio Station
as
we
WHAS at Louisville.
With
no
radio producers who
rushing to convert their facil¬
ities entirely to television, or who
have any plans to do so. Rather,
are
they are working out a balance
which puts the emphasis on tele¬
vision, but still maintains
stantial
Now, before
am
vision.
I
a
you
a
sub¬
begin to suspect
little bearish
to
want
about this
is
five and one-half
in
1947
times the total in 1946.
war
total
is
now
and
Today the number is 800. Already
150
The post¬
about
1,250,000
rew
growing
go
on
on
tele¬
record
industry. Televi¬
into one of the
an
average of
operating
Three
•
40% of the time of
stations
New
successfully
rate is
programming and
l
175,000.
v
During the present
year we ex¬
pect the
industry to turn out at
2,000 000 receivers. This to¬
tal probably will be higher if we
obtain
in
increase
substantial
a
output of cathode-ray
tubes.
by
picture
Production is being limited
shortage of these key com¬
Our
Crosley Division,
for example, now has a produc¬
a
tion
a
capacity
of
20,000
receivers
month, but is actually producing
less
|
tubes
because
sufficient
picture
are not available.
All signs
point to a sizable increase
the supply of these tubes be¬
ginning in June or July.
day-long
into
gone
may
we
this trend to continue
least
can
is j sponsored.
stations have
York
receivers, and the current monthly
as
expect
Advertisers
and U. S. Steel.
top
ten
industries,
and
its momentous services and is dol¬
lar
volume
*Part of
grove
of
an
before
Customers'
sales in
the
next
address by Mr. Cos-
the
Assocation
Brokers,
New
City, Feb. 11, 1949.
of
York
Lindsay Light & Chemical Co.—
Analysis—Fahnestock & Co.,
Broadway, New York 6, N. Y.
Mexican
Gulf
Sulphur
Missouri
Pacific
—
Bache & Co., 36 Wall
York 5,'NrY.
New England
growing into an effective and
profitable medium.
Viewer re¬
sponse
offers
advertised;
to
television programs
.;■/
is running as
radio
corresponding
Bros.
&
Pennroad
Corp.
—
Circular
Hoffman
gomery
& Goodwin, 265 Mont>
Street, San Francisco^ 4,
Calif.
available
Also
dum
Pinellas
sue
of
is
a
memoran¬
Pressed Steel Car Co.
on
County, Fla.—New
revenue
Also
available
ton
Sugar
Company
L. Bur¬
Company, 160 South Main
Street, Salt Lake City 1, Utah.
Can
Co.—Memoran¬
dum—G. H'. Walker & Co., 1 Wall
United
on
available
American
American
American
are
bulletin
4%
write
& Co., 208 South
are
operating in 32 cities, an ex¬
pansion of 500% over the total a
year ago.
enterprising are moving
steadily toward the other side of
the ledger, j Avco has been mak¬
ing rapid progress with Station
WLW-T, and we have found that
Intercity television networks to¬
we are losing less
money'propor¬
day consist of some 5,000 miles of
tionately than other large / tele¬
channels, linking 34 stations in
vision stations on which we. have
15
major cities from the East
i
operating figures. However, bach
Coast to the Mississippi.
A little of our new stations will have to
-
P
La Salle Street,
Fuel
Co.
—
Descriptive
Co.,
Co.,
Foundries, Balti¬
literature—George Birkins Com¬
pany,
40 Exchange Place, New
York 5, N.
Y.
•
- •
over
a
year
miles
ago,
of
there
were
channels,
just j go
jriiningj.
through
at
(Continued
least
a
on page
two-year
32)
,
ROE & COMPANY
; .-ivy
San Antonio
I
2';.; J ls in Town, Staying at the Ritz
2"
.,
Funding
up—Zippin
roe
;
on
Rail¬
Chicago 4, 111.
Victor
Light
&
in
memoranda
C y a n a m i d
Power.
Steel
Kingdom
Loan—Special
Street, New York 5, N. Y.
Also
a
roads and Greyhound Corp.
&
American
is
developments
are
Fifty-six television stations
is¬
bonds—Circular-
most
now
—
'■H
—New analysis—Edward
Practically all television stations
operating at a loss, but the
Television Networks Growing
120
Pennsylvania
Dixie
Cement
Corp.— Memorandum —Walston,
advertising
'
/ "■<
j
any
Co.,
Newburger & Co., 1342 Walnut
Street, Philadelphia 7, Pa.
figures j for
other
or,
medium.
y;;/7y/
Broadway, New York 5, N. Y.
averaging 70%.
/These per¬
centages, as you know,' are far
above
—
Northern States Power—Memo¬
is
in
450
Report
Street, New
Public Service Co.
randum—Sutro
current
on
high as 40%, and sponsor identi¬
fication for regular weekly shows
Co.—
—Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.
,
Amalgamated
flocking into
television, riot hierelyf to experi¬
ment, but because experience has
shown
that
it
is. very
rapidly
65
Analysis—George B. Wallace &
Co.,
15
William
Street,
New
York 5, N. Y.
:
//
*
%
•
nation's
Co. — Analysis — BenLuitweiler & Co., 52 Wall
Street, New York 5, N. Y.
dix,
Allen
&
Company,, 30
Broad
and leaflets on American
Radiator, /Brooklyn Union Gas, Street, New York 4, N. Y.
Standard Steel Spring Co.—An¬
Chicago, Milwaukee, St. Paul &
Pacific* Dome Mines, Farnsworth, alysis—Eastman, Dillon & Co., 15
General Motors, Great Northern Broad Street, New York 5, N. Y. :
increased
are
Cor¬
issues
sponsorship makes it possible.
now
place for radio.
that I
sion
total
ponents.
respect to manufacturers,
I know of
was
the
times
build
to
That
ers.
Light
of
Erie Railroad Co.
Study —
Smith, Barney & Co., 14 Wall
Street, New York 5, N. Y.
.
,
tions
&
—
the
cash.
Power
Koppers
-
induction
Electric
poration—Discussion
—
portunities
tire tenure in the White House.
The current trend is
12- and 16-inch pic-
'
of Natural Gas Pipe Lines.
Foreign
Actually, this network is sim¬ —Current
developments — First
toward the
ply the nucleus of a nation-wide National Bank of Boston, 45 Milk
in use in American homes and1
ure tube.
The bigger pictures are
web
that will
continue to
the Street, Boston 6, Mass.
cars, and anything this big must
excellent, of course but pictures
Coast
and
will spread
be, something the public deeply provided by 10-inch tubes are West
New York City Banks—Break¬
Wants and needs. Even if a new
through the major cities of. the
fully adequate for small, family
downs of government bond port¬
Midwest and the South. :
service were to duplicate it exactgroups.
In
Avco
we
are
building a folios and sources of growth in¬
ly, which television does not, it
w
' . Croslev are beginning regional network around Cincin¬ come 1948 onii9 New York City
would stay with us a long time.
"J. tR
Bank Stocks
Laird, Bissell &
Television adds sight to sound
of
receivers, nati. In' addition to WLW-T, we
will soon be operating stations in Meeds, 120 Broadway, New York
—«nd that certainly gives
it a
nwe arf not abandoning Columbus and in Dayton.
wider scope than radio. But radio
Our 5, N. Y.
that
does some things well which tele-1 cause we ■ Know mat tneii prices purchase of WHAS in Louisville,
prices
Preferred
Stocks—Data—Ben¬
if approved.by the FCC, will give
vision cannot do well. Television j
f£e m0^e ia
ra£ge of
thousands who are shopping for us a television construction
nett
&
Palmer, 165 -Broadway,
is a demanding instrument—if you
per¬
television receivers today.
New York 6, N. Y.
mit there.
We have applied for a
are to enjoy it
properly, you must
Because of
the very physical construction permit in Indianapo¬
give it your attention. Radio does
St. Lawrence Seaway & Power
We envision, in the not too
required
Not ask for attention.
by
these large lis.
You can space
Project—Review—James Richard¬
Work, read, play, drive a car and tubes, I do not believe, the general distant future, a spur :from the
son & Sons, 80 King Street West,
enjoy your radio at the same time. trend in direct-view sets will go New York to St. Louis cable, com¬
I should say that 95% of broad¬
beyond the 16-inch. We will have ing down thrpygh Cleveland, or Toronto, Ont., Canada, and 367
Main Street, W i n n i p e g, Man.,
larger pictures, when we Toledo which will pass throiugh
casters and manufacturers inter- still
Canada*
fested in both radio and television want them, at such time as a fully Columbus - and- Daytori
to feed
believe, as we do, that* radio defi¬ practical projection system is de¬ Cincinnati and. these other sta¬
Stock, and Curb Exchange Com¬
tions.
This - will give: television
nitely will feel the impact of tele¬ veloped.
mission Charts—Charts and meth¬
vision, but that radio will continue
Television is expanding at a homes in this' broad area both od
of- using—Goodbody & Co., 115
to be an important service.
rate equalled by no other major regional
and national
network
Broadway, New York 6, N. Y.
service.
-'
' ■'* [
Broadcasters have expressed industry in ottr history.
*.
In the"
Also available is an analysis of
Two years*- ago, 20 advertisers
their conviction Jn radio through year just
ended, the industry pro¬
were
a
most expressive medium—hard duced
sponsoring television ; time Baltimore & ' Ohio Junior Bond
975,000 television receivThere
Stock—Hay den,
Stone & Co., 25 Broad Street, New
York 4, N..Y.:"\v
plan for
dissolution in "Fortnightly Mar¬
; Equipment
Trust
Certificates ket and Business Survey"—E. F.
Isued During 1948—Tabulation— Hutton & Co., 61 Broadway, New
Union Securities Corp., 65 Broad¬ York 6, N. Y.
way, New York 6, N. Y.
In the same issue is a discussion
President's home State i Natural Gas—Analysis—Fridley
More people; saw jMr. & Hess, First National Bank
Truman's inauguration than saw Building, Houston
2, Tex.
President Lincoln during his en¬
larger picture tubes on the mar-
-
ft?- inew service spurred the
established
Dividend
away as the
if Missouri.
and still
put sets with larger
inauguration'of President Tru¬
man was
turers, full of enthusiasm, racing
example,; the Jan.
of ~commoh
ysis
preferred
Corp,—Anal¬
Cooper-Bessemer
Broadway, New York 4, N. Y.
past
graph was to wither the postal
system, and the telephone would
obsolete the telegraph.
And so
& Co., 30 Broad
Street, New York 4, N. Y.
\ ./ •
Counties—Edwin L. Tatro Co., 50
land and Buffalo.
level, while at the same time
television merchandise is in short
gory' as those
in
City of West Palm Beach, Fla.—
Circular—Allen
Carlton Hotel through Feb. 24.
£.Jedd Roe
Volume
Number 4778
169
THE
now..
COMMERCIAL
& 1 FINANCIAL
CHRONICLE
and in the future!
.
■
In 1948, International Harvester had the
est sales and dollar
ever,
larg¬
profit in its history. How¬
rate of profit per dollar of sales—4.7 cents
the lowest of any normal
—was
It
years.
was
when rate of
period in
only three-fifths that of 1941,
profit
was
plowed
back" in the business
domestic
and
How have
DOLLAR
OF
from
p
both
—
4.7
SALES
seen
creased. Government
"plowed back" profits benefited
on
figures show that the prices
materials have increased 81% since 1941.
Price
on
metals and metal
products is
up
78%.
But the price increases on IH products are less
work for
at
CENTS PER
DOLLAR
prices. You have
how much wages and salaries have been in¬
8.3 cents.
PER
of cost that govern our
provided
v
operations
employes, customers, and stockholders?
our
Profits
8.3 CENTS
foreign
—
$113,600,000 toward this.
many
(761)
employes
OF SALES
than any of these
on
motor
figures. They have been 72.0%
trucks; 74.0%
products; and 60.0%
on
on
industrial power
farm machines.
94,700
Profits
at
work for stockholders
57,400
1941
PROFIT
PER
LESS
DOLLAR
IN
OF
THAN
1948
SALES
IN
$44,909,000. The
come
company
profits
also had in¬
of $10,770,000 in dividends from sub¬
total
making
profit after taxes of $55,679,000. Of this,
cbghtly less than half
$27,155,090.
$28,524,000
was
Slightly
was
paid in dividends—
more
our
1948
policy to provide well paid jobs, with
ample opportunities for advancement, at good
places to work, to the largest number of men
1941
sidiaries and in miscellaneous income,
a
It is
43 4
On sales of 945 million dollars, our
were
1941
1948
than half—
plowed back into the business.
and
women
who
can
be
productively employed.
"Profits plowed back" have
ing the
average
helped in increas¬
number of employes from
57,400 in 1941 to 94,700 in 1948. Average
earn¬
ings have increased 92.6% for non-salaried fac¬
The 46,000 IH stockholders
of all
tory workers; 84.0% for non-managerial sal¬
workers, and others.
aried
on
employes; 83.0% for managerial salaried
employes.
are a cross
sectioii
groups—farmers, housewives, factory
common
stock
In 1948, dividends paid
represent an increase in
"wages" of stockholders of 63%
over
1941.
Dividends from operations in foreign countries
represent
a
substantial part of the
money
Profits
work for customers
at
Profits at work in the future
plowed back.
TRUCKS
"Profits
plowed back"
are
profits at work
"Profits plowed back" are not
so many
Profits at work made it
1947—148,700
actual
—employes, customers, and stockholders—in
Harvester, in 1948, to
greater measure than
dollars under lock and key in banks. They are
not like the money
TRACTORS
that King Midas used to
to
earn a
profit,
1948—-146,777
just for money's sake.
serve more
1947—110,937
admire
possible for Interna¬
1948—165,600
tional
before.
-
we
ever
serve more
people
before. By continuing
hope also to continue
people in greater
measure
than
to
ever
''o;:'
REFRIGERATION
1948—128,397
1947—
"Profits
35,005
plowed back" have aided in the de¬
velopment of
our
extensive manufacturing
search facilities and in the
products such
as
creation
of
re¬
new
the little Farmall "Cub"
Tractor, the cotton picker, refrigeration, and
many
They
are
profits at work—now... and in the
our
future!
They
lines and
new
are
money
in
new
equipment. They
production
are money
new
are
the principal items
plants,
greatly; increased inventory. "Profits
Wages and materials
plants, has made
extensive improvements in existing
and has
more
goods at the lowest possible prices.
through 1948, International
Harvester has built six
possible to furnish customers with
in
parts and inventories of all kinds.
From 1941
it
other items. They have contributed to
expanded plant capacity which has made
HARVESTER
a
.10
(762)
COMMERCIAL
THE
remaining
Missouri Brevities
within the next 40 days).
1948
a
net of
against
$1,602,516,
Dec.
or
27,
chased
for
the
1948,
100%
per common share, for the
$15,054,844,^——
—
$3.99
were
$15,154,856
pur¬
outstanding
Co., Newhard, Cook & Co., Rein-
$5.60
Gardner and Dempsey-
1947.
holdt &
capital stock of the Ruddy Free¬
Tegeler & Co.,
born
the
Co., Ltd., of Brantford, Ont.,
Canada, manufacturers of com¬
mercial refrigerators.
Working
capital at Dec. 31, 1948, was $5,145,881, an increase for the year
of $877,703.
The ratio of current
assets
liabilities
current
to
the
392,706 shares of common
stock .outstanding at Dec. 31, 1948,
compared with $11.28 per share at
Dec.
the lesser num¬
shares then outstanding.
1947,
31,
ber of
stock
mon
$19.50
on
Stifel, Nicolaus & Co., Inc., St.
Jan.
20
offered
publicly
000.000
Central
notification
and
Co.
Service
bonds, series C, 3H%, due Jan.
1, 1979, at 102.375% and accrued
Stifel, Nicolaus & Co.,
interest.
Inc., also
the
on
date,
same
par¬
ticipated in the public offering
$7,500,000 Mississippi Power
Light
Co.
first
mortgage
of
&
3%% series due 1979, at
102.06% and accrued interest.
bonds,
*
*
*
.
•
Mid-Continent Airlines. Inc., on
Jan. 20 filed with the SEC a letter
notification
of
13,273
covering
shares of its common stock which
are
at
to be offered to its
$6
per
employees
share, the net proceeds
to be used for additional working
capital.
volved.
years
No underwriting is in¬
Employees will have three
V r
to pay for the stock.
*
*
Scherck,
Louis,
*
Richter
Martin
and
Belcher of Kansas
St.
Holloway r
of
Co.
-
City
on
Jan.
with
the
Securities
Exchange Commission cover¬
11,000 shares of- its 6% pre¬
ing
ferred
stock
offered
be
to
($25
per
share).
are
to
be
at
par
The net proceeds
of
($100 per share) and divi-i
dends, were Edward D. Jones &
Cook
Newhard,
Co.,
&
Gardner,
M.
I.
Simon & Co. and Stern Brothers
As a result of negotiations with
the
officers
and
directors
of
Southern
Acid
and
Sulphur Co.,
Inc., Mathieson Chemical Corp. is
contracting to purchase the busi¬
and
Under
ers
of
terms
shares
of that
assets
Mathieson
issued
will
agreement,
265,000
distribute
authorized
its
of
the
company.
but
un¬
stock to the hold¬
common
of the 384,000 shares of Southf
ern Acid common stock presently
outstanding. The executive offices
of the Southerns Acid firm,
in
cated
St. Louis.
lo¬
are
mon
$14.75
per
of Insur¬
$10)
(par
Exchange
ance
at
of 82,500 shares of com¬
stock
Building
Corp.
share.
consolidated
mortgage
30-
sinking
30, 1948, reports a net profit, after
taxes,
of $2,165,682, or
the Bethlehem Steel Corp., were
sas
year
X'-^vtv .f.
Co., Kan¬
income
share, as com¬
pared with $2,857,690, or $12.38
per common share, for the preced¬
ing fiscal year. There has been
set aside in a sinking fund $45,000
for purchase and retirement of a
like Amount of prior preference
$9.23
per
common
,
value)
at
$32.50
the following
per
share,
Missouri bankers:
Gardner, I. M. Simon & Co.,
Smith, Moore
&
Co. and
Stern
charges and Federal income taxes,
amounted
689,
LOUIS
for
to
$1,399,681, or $2.80
share,; for the full
1948, compared with $1,263,-
common
$2.52
or
the
per
common
1947.
year
During
share,
1948,
the ' company
box
cars,
and
one
acquired 300 new
nine Diesel locomotives
streamline
senger train
tough¬
buyer
harder
;
first
and
Feb.
1979
1,
The
interest.
crued
awarded the bonds at
sale Feb. 15
electric
pas¬
(delivery of the two
with
good many investment
salesmen are pondering their fate
ket, and
new
a salesman who has either
himself tough or who will
toughen up, the buyer's market is
an
opportunity to do his best.
Th'e advent of the buyer's mar¬
kept
construc¬
ket, of course, is not news.
For
two years investment men have
been expecting it and going
through the motions of preparing
for it.
And, it may not have
any
prices
redemption
bonds
are
scaled
you
is
The'
the
the
sale,
skill
com¬
soft.
in
so
far as
ran
any
longer.
however,
1949,
successfully
invest¬
every
ment salesman is going to have to
re-lcarn
manufac¬
re-practice
and
'some
age-old selling virtues, if he is
going to remain in the investment
gas systems
business.
<
BUILDING
going to have to forget the
foisted on him by" the
He is
lazy days of the past
He is going to have to
tric business accounted for 87.24%
lush, easy,
five years.
of the company's
disabuse his mind of his
operating reve¬
cherishec
inter¬
contains such
which
credo
.
attractive
and
beliefs
Commonwealth Gas
Consolidated Dearborn
;
Stix: & Co.
INVESTMENT
Supply
509 OLIVE
vestments
Southern Union Gas
Bought
—
Sold
—
man
Members St. Louis Stock Exchange
—
it's
make
can
Quoted
Those
SCHERCK, RICHTER COMPANY
Bell
Teletype
SL
456'
St.
beliefs
Group
Garfield 0225
Mo.
work very well
clamoring to buy
*A talk by Mr. Roth before a
joint meeting of Rocky Mountain
Building
Louis 2,
.contacts." ' " "No
more than
four
k
when buyers are
Landreth
his
day and be at his best,
because making sales calls takes
a
lot but of a salesman."
«
calls
STREET
St.Louis l.Mo.
the
body is in on Saturday morning."
"It isn't hard work ihat. sells in¬
Southwest Gas Producing
SECURITIES
is
pect and he won't buy." : "Don'twork on Saturday morning—no¬
Rockwell Mfg.
;
11 in
busy with
enthusiasm, discourages the pros¬
Hugoton Production
Mountain Fuel
trine is so well avoided.
gardless
of
But. re¬
conditions, regardless
of
the'time
of
the
the
day
or
year,
any
invest¬
of
the
brilliant investment bank¬
One
er,
into
went
of
of
head
now
his
firm,
own
business
the
quarter
a
deal
succeed.
To begin with,, he had no charm
or poise
and hadn't even been to
century ago with
a
against
his
expensive
an
good
a
to
chances
he
college,
a
he
contacts and
had
no
memberships
v/ith
clubs.
clusive
was
stranger in town, so
larm-bred,
no*
uncle
the
in
And,
ex¬
larmer
a
boy, he was no wizard as a natThose things
urai-born salesman.
he saw,
He
looking for some advantage
was
because he was alert.
call
could
he
least
give
better-fconnected
his competitors on
were
the Street.
c
it.
found
He
/
*
found
He
*
these boys
habits.
He
the
that
it
in
their
and
investment
calls-a
four
made
j
discovered
average
salesman
at
cnance
even
an
with tne smarter,
laGs who
would
that
his
him
day.
make
twice as many, which would make
him and the bright boyst about
even.
But then he decided he
didn't want merely to be -even—
He
he
wanted
be
to
make
would
he
himself
told
He
ahead.
out
calls
20
day, if it
a
:
He
the
morning.
He
worked till
six.
Some nights he worked till eight.
On many nights he worked till 10.
calls
So 20
day he made.
work at eight \ in
a
started
to
But
worked-^-that is the
he
main
" *
..r
the" inevitable happened.
point—he worked.
And
He
where the
making
began making sales
called "wonderful
contacts." ' Presently he Was out¬
selling the rest of the staff.
An
assistant
salesmanagership
was
what
they
his
first step up, then the salesmanagership, then a partnership,
and' eventually the presidency—
all because he worked, worked,
worked.
>•.'
Obviously,., a salesman who is
trained, who knows the prin¬
mail.""You cannot very
well
ciples of salesmanship; who will
call after four; your prospects quit
practice scientific methods in his
early.'-' "Do not attempt to call
when it is raining—rain dampens work, will outsell the man who
Spinning
Black, Sivalls & Bryson
!
ai
calls
before
prospect
a
morning—he
L.D.240
Teletype—SL 486
either, which must
account for the fact that the doc¬
other pleasant chaps were
J
-
traditions
on
ST. LOUIS 2, MO.
the
make
took him 24 hours.
esting
LANDRETH
wants to
1949 ' is
attractive in it
working
process
and
To sell investments
serving 15 mu¬
nicipalities,
local transportation
systems serving 12 municipalities,
and water supply systems serving
three municipalities. In 1947, elec¬
Berkshire Fine
the
bo
investment
any
simply
this:
Work harder; make more calls..,,
There
is nothing new "in this
doctrine, and there s nothing very
studying
these: "You should not make
Peltason Jenenbaum Co.
who
in
grade
hazards.
American
salesmen
sections of North and South Caro¬
nues.
salesman
work,
as
for
of degeneration se,
"its course, with the
result that salesmen are, well, no
in
company's principal busi¬
the production, purchase,
operates
rule
would
swift
transmission, distribution and sale
of electric energy in the Piedmont
also
known
virtue
first
investment
new
that
They have forgotten how tc
During the past decade the}
how, so s
sell.
1977.
^It
only
haven't needed to know
$40,000,000 -first
and
refunding
mortgage bonds, 2.65% series due
lina.
new
up
application are con¬
salesmen are
and
cerned.
$40,000,000 of new bonds and
tured"
is
about' touching bottom,
pany's funded debt will comprise
is
creates
fact',
sets
salesmanship in this country to¬
day—in common with every other
form
of
salesmanship—is
just
31, 1950 to 100% in the 12
ending Jan. 31, 1979.
/
Following
salesman,
difficulties,
in the 12 months ending
months
the
believe the signs that i
setting in.
Its coming
new problems for every in¬
vestment
31, 1950 to 100% in the 12
months ending Jan. 31, 1979. Spe¬
cial redemption prices range from
101.31% in the 12 months ending
Bui
yet.
may
poses
for
force
now
from
Jan.
Jan.
us'in'full
struck
bonds.
new
might.
they
to
man,
repayment by the
bank borrowings
made for the purpose of providing
funds necessafy for such construc¬
tion program pending the sale of
the
Well
Many such salesmen are hot going
to survive.
But to a real sales¬
31, 1948 (estimated at ap¬
proximately $10,550,000 of net ad¬
ditions as at Dec. 31, 1948)1, in¬
the
of
a
mow.1
even
Aug.
company
solvent for the
pruolems,
they grow, is an old-fashioned
as
month
easy
and
lusn
conditions
which characterize a seller's mar¬
tion program made subsequent to
cluding
the
investment '.salesmen's
the
was
competitive
the
.
.
Now
wilLmaxe the
A buyer's market sounds pretty,
harsh to salesmen who are used to calls will make the sales.
proceeds will be used for
purpose of financing in part
the completion of the company's
construction program and for the
purpose of reimbursing the com¬
pany's treasury for expenditures
connection
.
But
ment salesman who
Net
in
s"
salesman
its bid of 100.803.
on
e
the
him to buy.
urges
refunding
group
"Y
1
series due
101.31% and ac¬
at
"No'
oftener
•
when
Roth
B.
be¬
up, -
convince,
than
Charles
is
in
the
which
mortgage bonds, 2%%
*
Net 'profit of Illinois Terminal
stock,, which amount will be re¬
Railroad
Co.,
St. "Louis,
after
tired on March 1, 1949.
ST.
Co.
Power
The
*
mar¬
That
market
.a
Stuart & Co. Iric. 'and
underwriters
offered
a
as
buyer's
ket.
publicly Feb. 16, $40,000,000 Duke
ness
*
year
known
now
af¬
can
ford to be independent.
is
what
and says
Halsey,
ore
middle
the
of
comes
Brothers & Co.
per
in
ens
of
Newhard, Cook & Co., Reinholdt
&
themselves, investments and salesmen
on cem
after
sales wer£ $10,118,694 in the
1948 year, as against $10,716,449 in
the preceding 12 months' period.
104.31%
City, for the year ended Nov.
Cook Paint & Varnish
income,
pany
associated
practically been selling
the months of 1949 unfold themselves, until salesmen
will
fin d^
:
—
•
as
$320,458, or $1.55 per
share, as compared with
General
Participating
in
the
public
offering on Jan. 19 of $50,000,000
net
changes
more
$420,087, or $2 07 per common
share, in the preceding fiscal year.
Net
sales,
excluding inter-com¬
the
fund. 3% bonds,
series K, due Jan. 1, 1979, at
10014 and interest, and 627,960
shares of common stock (no par
'
'
of
common
•
26 participated in the public of¬
fering
sis
the
Co.
ness
consolidated
10 years investments have
to
close
For
themselves; with the investment salesman going along for the outing.
as of now that condition has changed, and there will be more and
Stephens & Shinkle
Shoe Co., St, Louis, for the fiscal
year ended Nov. 30, 1948, reports
un¬
Jan. 20 pub¬
on
Co.
&
*
so
But
far
par
&
$121,-
Halsey, Stuart Group
4% cumula¬
tive preferred stock, series A, at
Reinholdt
*
•
Offers Duke Few. Bonds
licly offered 15,815.80 shares of
Co.,
year
were
to
Included in the group
Haas
"
•
as
re-
•
derwriters who
&
the
far
application is concerned, Mr. Roth urges salesmen to
learn and repractice old fashioned virtue of hard work.,
skill and
or
1948
against
as
Asserting investment salesmanship is touching bottom
share, as
general
There will be
for
and
underwriting.
Rohm
for
for
Charles B. Roth and Associates
Sales- and Public Relations Counselors, Denver, Colo.
of
taxes,
per
Salesmanship in 1949
By CHARLES B. ROTH*
additional
for
used
capital
corporate purposes.
no
a
Co., St.
letter of
Sis
•
,
taxes,
>•:
Plastics
Jan. 26 filed
on
at
^
Johnson,
a
)\i
Louis,
In¬
com¬
value)
par
The Household
$10,-
Illinois Public
first
mortgage
(no
Co.
share.
per
working
Louis, was included in the group
of1 investment bankers who on
Southern
of
Electric
&
was
$892,738 to $6,477,493, equivalent
to a bpok value of $13.77 per share
for
shares
Gas
<' \
395,031 for the previous year.
of' underwriters
Jan. 18 publicly offered
on
685,000
increased
worth
Net
4.10-to-l.
who
diana
1
1948,
$4,205,014,
sales
$125,987,662,
included in
were
list
large
$7.65
share,
Net
•
earnings,
net
with
per
'
year
income
or
compared
Co., Stix &
Investment
L..
\
Supply Co., Kan¬
reports
Federal
$5,750,418,
—
&
City,
sas
after
:J:
calendar
Western Auto
preceding
year
Stern Brothers
On
company
the
of
1947.
the
For
reported net earnings of $1,648,654, equal to $4.06 per common
after preferred dividend requirements, which compares with
Net sales for 1948
sfc
:,*i
Hussman Refrigerator Co., St. Louis, for the year ended Dec. 31,
share
expected
is
order
on
Thursday, February 17, 1949
CHRONICLE
FINANCIAL
&
L. D. 123
r-^.^er,
r
4
1949.
-
Investment
of
Association
Bankers
and
Bond
Club
Denver,
Colo.,
Feb.
r
of
15,
well
rule-of-thumb methods.
uses
But
fail unless
salesman will
the
best
he
links
solvent
up
all
of
his skill with that
selling problems—
the good old-fashioned'work I am
recommending here.
If
rule
cess
my
I
were
in
to
narrow
investment
for
1949
to
one
.
down the
selling suc¬
simple rule,
rule would be this: Between
in the morning and five in
evening of every day of the
week, either be in the presence of
a
prospect explaining your in¬
vestments, or on the way to see a
nine
the
prospect.
That
problems
way of an
'
'
one
rule
1949
will handle
can
any
throw in the
investment- salesman.
Volume 169"
'
Number 4778
"
;
THE
COMMERCIAL
f
&
<t
FINANCIAL
fpturie, however, in new
Energy and Investment
analyzirig'
ing,
coritroF
measur¬
cally
unsolved
what
happens is
stood.
By using
fbr
industry. Iri
is expected isotopes
the future it
will he at work in factories doing
done
Special Partner, Cohu & Co.
They
!
-
Asserting there
ah
seems
.
in
stands today on
which
the threshold
of the
Atomic
Age,
the
peacetime blessings of nuclear fission
greatly overshadow the destructive effects of the atom bomb.
to date is much
extensive than many realize';
more
mediate result
far
so
is
(7)
scientific
i t h
tant
and the
a
years are well
J. H. Allen
however,
already commercial
These
used'
are
as
"tracers"
by hospital, university
industrial
laboratories, in¬
and
cluding a growing list of oil, steel,
machinery,
rubber,
gasoline,
plastics, rayon, chemical arid drug
manufacturers.
tool,
much
those
now
A
in use,
research
new
effective
more
uncovering
.,,
they
than
rapidly
are
information
new
on
industrial processes,
adding to in¬
of
"tracer"
"radioisotopes"
.
World
War
II.
The
government's
Oak Ridge then
atomic
plant at
began releasing
a
radioisotopes at
reasonable prices.
This is
wide variety of
boon to research and in¬
a
dustry, opening
explored fields
creating
entirely
up
hitherto
un¬
of
science
and
expanding demand for
types
of
instru¬
*
)
an
new
ments.
Iri
simple, non-technical lan¬
guage, a "radioisotope" is a radio¬
ment,
in¬
were
extremely high prices. This
situation changed at the end of
and
and
radium,
as
at
active
reactions
such
available only in small quantities
dustry's understanding of natural
chemical
variation
of
basic
a
"unstable" form
an
ele¬
of
the
"know-how."
element itself. Radioactive
carbon,
possibilities in the field of
research are almost unlimited.
copper, cobalt, sulphur and radiosodium are examples. Tlteir value
creasing
industrial
•
Their
Scope of Program
The
sists'
atomic
of
employing
now
different
con¬
projects
75,000 people. David
Lilienthal, Chairman of the U. S.
Atomic
cently
•
Energy
Commission,
summarized
by saying, "We
gaged in
a
are
re¬
the situation
currently en¬
tremendous undertak¬
ing . . . the largest scientific, edu¬
cational, industrial and Weaponmaking project in the history of
the world." Now in its fifth
year,
government's program gains
ttiri
mprfymtum steadily. Expenditures
in
-1948
totalled
$5d0,000,000,
approxiihately
are scheduled to rise
to
$700,000,000 this year.. Contrary
tcripufolic impression a reasonable
portion
of
directed'
this
huge
toward
velopments.
As
surti
peacetime'
an
is
de¬
indication" of
growing interest, it is noteworthy
that New York City and Rhode
Island
Will
energy
schools.
ih
include" atomic
soon
in
courses
short—there
their
public;
little
seems
doubt that atomic
many
energy and its
ramifications will play an
increasingly important part in the
future economy of the
country.
.-The field and its related
ties,
many
in
activi¬
their early
stages,
(include:
-(2)
"Tracer" chemistry, a field
of unusual promise.
:(3) Medical therapy such as the
treatment of thyroid cancer.
Benefits
principally
in
to
agriculture,
fertilizing,,
plant
growth and animal diseases.
!
'(5) Production
arid
graphite, beryllium,
cadmium, bismuth, aluriiirium,
lead, and to a lesser extent, zirit
and copper.
.
."
'
electronic
the
devices-
number
pipes,
quality
of products
production ma¬
control
requiring
external supply
no
A
partial list of industrial users,
together with comments, include:
of
arid5 degree
which
and
count
impulses.
radiochemist mixes
can
Cyanamid
Co.,
American
Scientific Co., American Smelting
of: the
Refining,
Amperex
Elect.
Corp., Arthur D. Little, Inc., B. F.
Goodrich
Co.,
Bell
Telephone
Labratories,
Brush
Developing
Co., Consolidated Engineering
troit
Glass Works, De¬
Co.,
Distillation
Edison
Products,
Dow
Laboratories, Merck &- Company,
Metal
Hydrides; Inc., Monsanto
Chemical Co., National Research
Corp., National Technical Labora¬
tories^ North* American Phillips,
&
Davis-
Petroleum
Phillips
Pittsburgh Plate
Co:,
him
to
"trace"
process or
Co.,
GlasS,
R.
C.
A-.
Laboratories,
Raytheon Manufacturing Co.,
Shell Oil Co.,
Sinclair Refining
Co.,
Socony-Vaciium,
Standard
Oil of Indiana, Stuart Oxygen Co.,
Sun
Chemical
Corp.
Sim
Oil
Company, S y 1 v a n i a Elec.
products, Tli'e Texas Co., Uri ion
Oil Co. of California, U. S. Rubber
Co.,
Vickers;
Inc.,
Westirlghouse
Electric.
IB:
F.
of
ness
Uses
—
extremely thiri transparent
td
use
iri
racy
to
inch.
The
dubious
ten-thousandth
a
new
curacy
to
one
sandth
of
an
of
from
comes
the
rolls
—
The
oldest
application
logging,
is
in
.
Radio-active
oil-well
materials
off
radiations
which
hit
the sides and "bounce back"
into the instruments. The manrier
in
which
materials
lining the
back-reveals
valuable information on the un¬
derground formations.
The Siriwalls
are
clair Oil
reflected
Co.,
well
as
as
Shell,
uses-
radiocarbon
to
determine
the
mechanisms of catalytic oil crack¬
ing.
A' subsidiary "of- Gulf Oil
radiocobalt to determine the
uses
settling rate of
added
ing oil.
search
sult
to
lubricat¬
The Texas Co., says "Re¬
radiocarbon may re¬
with
in
increased
production
of
and
is
practi-
,v !
Ray cm Industry—Lubricants
on
textile materials
as an
spinning and weaving. In
a
sired
raydn
to
manufacturer
are
de-
at
the
the
JElectric — Metals are
internally as they ap¬
Atoms migrate in¬
be.
A block of silver
with
a
This
announcement is not
than
a-human
from
the
tested
waS
hair
face
for
of
block
radioactive
tliese
found
then
were
the
the
industrial
an
migrated
at
an'inch*
the
rate
of one-tenth
week.
a
An
highUerision alloys
plied' to the
gas
complicated
the
process
amoun
being carried out, using
as
tracers;
General
Electric is the largest government
contractor in atomic
energy, oper¬
ating the plutonium plant
those
ordinary analysis,
Atomic Laboratory mear Schendctady.. JX;}: : - '' A}
Westinghouse; Electric
Uses
radioactive carbon for research in
metallurgy.
Ford Motor Co;—Ford uses iso¬
topes for research in determining
the thickness of steel
means-
of
within
the
sheets,
and
far
tool.
( the
slag line
cupola in the priocess
of
making steel and in determin¬
ing. when the molten metal is
readY to pour. ;
Db\^
bon
for
criuld
'
*•.
Chemicals-Uses
research
not
radiocar¬
projects
distribu¬
otherwise
(Continued
on
American
Development
a
new
research
Research
Corp.
is
&
authority
First' and
Refunding Mortgage Bonds, 2Vs% Series Due 1979
for the statement that this method
"a
possesses
million
sensitivity
times
greater
several
than
Dated
February 1, 1949
Due
February 1, 1979
con¬
ventional
laboratory
analysis."
Using isotopes, industrial labora¬
tories are'almost daily
uncovering
new
information of importance.
Price 101.31% and accrued interest
For
example, the Shell Oil Co. is
analyzirig the changes undergone
by crude oil in modern oil-crack¬
ing processes. Oil problems which
could
not
be
solved
in any other
study. According
Shell, "These experiments will
to
lead' to
better
a
chemical
r e a c
petroleum
Co.
may be obtained in any State in which this announcement is circulated from
only such
of the undersigned and other dealers as may lawfully offer these securities in such State.
understanding of
o n's*
involving
manufacture
gasoline
Prospectus
t i
products."
from
gas, to cite
of many.
to
of
coal
HALSEY, STUART & CO. INC.
Texas
The
radiocarbon
uses
the
The
under
are
analyze
a. g. becker
natural
co.
dick
merrill
lynch, pielrce, fenner
& beane
otis & co.
only two examples out
merle-smith
e. h. rollins &. sons
(INCORPORATED)
blair & co.,
v?}'}.
&.
INCORPORATED
synthetic
and
&
inc.;
burr
&,
,
company, inc.
INCORPORATED
gregory
lie
ahead.
Profound
rapid-progress
well
*
as
in
changes and
new
fields
'a.
.
,
t
Industrial Applications
The
greatest
usb' for
•
.
appear
to' have
a
loebj- rhoades &, co;
WEEDEN &, CO.
a. c. allyn and
INCORPORATED
HIRSCH
& CO.
AUCHINCLOSS, PACKER
GREEN, ELLIS &, ANDERSON }
THE
radioiso¬
brilliant'
son
&
fllE ILLINOIS
company
INCORPORATED
REDPATH
cooley
&
company
COMPANY
Mcdonald
&,
company
:
topes at present is still iri research
They
carl M.
as
old may result.
-
a
INCORPORATED
Tracer
chemistry is in its in¬
Interesting
developments,
'February id, 194#
'
which
have
page
by
be located
effective
more
The
MILWAUKEE COMPANY
WM. E. POLLOCK
'
•
'
:
"
as- a
locating
detectable
can
at Han-
ford, Washington,v and the Knolls
much
and measured. The result is
ra¬
dioisotopes
$40,000,000
be.
may
ts,
as ap¬
field is
turbine
chemical reactions Us¬
smaller than
of
investiga¬
ing
Infinitesimal
It
along
the, internal face of crystals iri the
metal
offer to sell or a solicitation of an offer to buy these securities.
offering is made only by the' Prospectus.
instruments, he can see ex¬
actly what happens, no matter how
cut
and
atoms:
"
determine
iso¬
tope and heated at 500 degrees C.
hours.
Slices thinner
an
The
elec¬
was
radioactive
The
material
ulti¬
fori several
aid
one
aimed
This has been demonstrated'
General Electric labora¬
tories:
rust inhibitors and
other material
Radio-
the
alsb'
case
rubber
side.
in
tion of
the
in
to
topes
give
—
solid
as
pear
lowered1 into wells along with
detection instrurnents.
The iso¬
are
is
and
General
not
useS^
to; the testing of' the final
product
in engine operation.
Possibly the
Inc.
study the role of
production of better steel.
troplated
isotopic tracers, both actual
and potential,
range all the way
frbm surveying the location
and
quantity of underground materials
used
problems
topes
mate
the film
of
Little,
industry. This could not have
been carried out without radioiso¬
v
Petroleum Industry
D.
steel
ac¬
without in¬
mechanical gauges.*
investiga¬
sulfur in coking processes for the
terrupting production, a big ad¬
vantage not always possible with
radio-
of
one
Arthur
be used to check
as
Tracer
—
sulfur is used to
an
one-hundred-thou¬
inch. lb is hoped to
can
dissipate
metals.
accu¬
radioactive gauge,
thickness continuously
in
is
Metallurgy
accuracy to a millionth of
inch. Iri
addition, the radio¬
active gauge
yarn.
success¬
tions are under way in the struc¬
ture, manufacture, durability, cor¬
rosion, friction and alloying of
obtain
an
rayon
used
moving webs
the smallest
change
gives a false reading.
average thickness of a sheet
of
pliofilm is about
one
onethousandth of an inch. Present
with
on
was:
Paper Industry—An instrument
using isotopes as a source of high-
since
read
lubricant
fully for this purpose,
measuring
the coating on thread so
light it
weighs less tham an ounce to a
of paper.
pressure
gauges
of
Radiosodium
energy radiation helps to
static electricity on
The
the
This
11
mile.
film has long been; a headache iri
the industry. Mechanical
gauges
now
on
the market are difficult
of
science' of
irri the
.
Goodiyear Tire &■ Rubtier Cdi—
The problerii'of
gauging the thick¬
sulfur to anlyze the vulcanisation
fundamental
agent
,
tion
under¬
synthetic petroleum."
GdOdi-ibli
rubber.
that
sense
now
radioactive
a
through each step of
Chemical-
Co.,
itodak Co., E. L du Pont,
Fairchild Engineering Corp., Ford
Motor Co., General Aniline Film,
General Electric,' General Radio
Company; Goodyear Tire & Rub¬
ber, Gulf Research & Developing
Co.,
Hercules -Powder,
Houdry
Process
Corp.,
Humble
Oil
&
Refining
Co.,
Industrial
Radio
Parke*
vulcanizing
final product.
&
dorp.;*7Cpttring-*
not
using radiocarbon, reads with
Allied Chemical & Dye, Ameri¬
isotope with its ordinary element.
This "tags" or labels if,
enabling
'
i (6)
Equipment
required' by
atomic
energy
plants
Electro¬
magnets, valves, precision instru¬
location
which
utilizing Geiger-Muller tubes
fancy.
of uraniurti
thorium ores,
they give Off
radiations
of concentration. Such data are as¬
certained by means of instruments
way
-(1)
Nuclear
fission.
"Atom
^splitting" and the production of
weapons."\ '
'
.(4)
lies in the fact that
characteristic;
reveal* their
industry
1,270
within
Eastman
someyear^RadibactivC'materials,
range of possibility, Atomic power
is a long way off. But atomic ma¬
terials
known
as
"radioactive
realities.
by
w
have beeri knowri to scientists for
period of
are
advantages
chemistry' "and
over
isotopes"
.
Tracer Chemistry
The
}
within the}
r
stiidy
.
world's
economy
powe|r for electricity
propulsion of aircraft and
Revolutionary
changes
in
*
now in their
warships, now under
leading companies.,
and
in¬
of power.
industrial'
expected to increase.
are
(8) Atomic
agriculture.
e
may
Prog¬
analyzing and
for industry. In¬
applications;
infancy,
industry,
t h
a
Measuring,
devices
for
medicine
piping;
control
implica-
tions
the
even
the
equipment
The most im¬
dustrial
impor¬
of
chinery. They are already provid¬
ing a source of high-radiation en¬
screens, et cetera.
in
knowledge,
w
ahd
millionth of
a
corrosion
as
thickness;
reveal
gram,
time.
Industrial Users
control
ments,
vast: potential
increase
or
<?--
a
present
measure
condition
analyze
ergy
world
era
ress
inch
such
analyzes industrial applications of atomic research and corporations
which are 1 kely to be its users. Holds most immediate
profit possi¬
bilities lie in stocks of small concerns
supplying atomic materials.
The
at' the
will'
ternal
little doubt that atomic energy and its
many
ramifications will play important
part in future economy, Mr. Allen
new
all
Weight and size to
Members New York Stock Exchange
;
at
thel
in
radiosulfur it is
hoped to determine the diSpdsition
a| number of jobs which cannot be
By J. II. ALLEN
(763)
prodUfctiori-
and
devices
CHRONICLE
.''i
<
..
&.
r
COl, INC.
33)
been
12
(764)
THE
COMMERCIAL
Allyn
111.
Michigan Brevities
Co.,
&
used to pay
Chicago,
to be
of
for construction
N. Y. Curb
:i:
the largest expan¬
f'He-' v sJs- '■
sion program in its history, the effect of which will begin to be felt
The
directors
of
Michigan
in the summer of 1949 when a new 100,000 kilowatt generator will go
j Bumper Corp., Grand Rapids, have
into service,". Prentiss M. Brown, Chairman of the board, and James
authorized
the
purchase by the
_
upon
^
|
President, state in the<^
company's annual report for the.
ended Dec.
year
facilities
31,
needed
Other'
1948.
to
transmit
and
distribute this power will be ready
also.
The program calls for add¬
ing to the system three other gen¬
erators of the same capacity and
facilities.
related
this
The
connection,
report, in
adds:
"The
also
stock
The two Detroit bankers also on
participated in the offer¬
ing of 15,815.80 shares of Rohm &
Haas Co. 4% cumulative preferred
Jan.
20
construction program, as now con¬
versified
templated, will require some fur¬
long-term financing in 1949.
The type of security which will
be issued, at that time will be de¬
ucts.
termined later."
t
v
,
;f
The Detroit Edison stockholders
>
will,
their. annual
at
March
scheduled for
meeting,
15, 'consider
increasing the authorized capital
stock,
par
$20, from
10,000,000
shares to 15,000,000 shares. It was
explained that the purpose of this
line
chemical
of
prod¬
addition, First of Michigan
Corp.
the
Jan. 19 participated in
on
offering
public
the
to
of
-
Bethlehem Steel:
Corp. consolidated mortgage 30year
sinking fund 3% bonds,
series K,
due Jan. 1, 1979, at
of
$50,000,000
IOO14 and interest, and of 627,of the steel firm's no par
Brewing
Co.,
value
share.
per
increase is to have sufficient stock
stock
common
;
...
-,.y.
*
*
*
.
of
insurance
tax
expenses
Motor
Packard
i
Car
-
Co.,
.
Ah
the balance
cilities to
the
of
produce
Detroit,
share) by
Greenfield, Lax & Co., Inc., New
engine.
*
*
*
York,
The Detroit Stock Exchange re¬
ties
figures
compare
with
294,474
shares, having a dollar value of
pany,
changed hands
ijn December.
most
ten
The
during
January
Edison
Co.,
active
McClanahan
stocks
Commonwealth
Co.,
income
in 1 y
m a
of
be¬
a
the related markets for new cap¬
loss
,
De-
name
Co. has been
Brewing Co.
i:
*
:
announced
Brewing
of Tivoli
changed
sis
j
also
Exchange
Altes
to
*
$
Watling, Lerchen
Co. and
&
included
of investment
First of Michigan were
in
large group
a
houses
which
offered
licly
on
18
Jan.
685,000
pub¬
shares of
Electric
Southern Indiana Gas &
,
!
Co.
(no ; par
stock
common
value)
at $19.50 per share.
The
for
of
the
FIXTURES
all
Atlas
household
of
retailing
furnishings,
and
the budget plan,
on
operates
Michigan,
in
$609,990.57
of
-
sale of real
on
for
retained
working
Net income of
Michigan Consol¬
Gas Co. and
its subsidiary,
Austin Field Pipe Line
Co., for the
1948, after taxes and
calendar year
Latter
$312,860. V"
Motor
Car
stock
and
dend
of
payment
all
cents
the
to
4,
will
be
in
shares.
three
idend
of
■which
10
,
record
of
of
each
to
other
charges,
tions made last year to
was
of
necessity
manufacturing
of
more
than five billion cubic feet of gas
meet' customers'
weather
ary."
in
The
bic
feet
demands, par¬
protracted
during
January
and
company
cold
Febru¬
expects
about six billion
to
cu¬
$1,665,834,
of
common
the
basis
as
per
shares),
The company
stock
common
two-for-one
•!*
*
$5.03
share (on 260,000
its
520,000
stock),
or
1947 period.
$3.11
to
(on
common
$1,359,598,
against
in
equal
share
common
shares
split-up
this year.
>•:
totaled
per
;■
Earnings for the 1948 period
1947.
as
a
on
of March
30,
and
PRECISION CASTING
Of the
value, recently of¬
fered to its stockholders, 11,298
stock,
Moreland & Co.
Member Detroit Stock Exchange
1051 Penobscot Building
DETROIT 26, MICH.
Pi*
City
—
Lansing
—
Muskegon
18,000 shares of Mich¬
shares
no
par
were
subscribed
the subscription
per
share.
for
at
price of $16.371/4
The
6,702
unsub¬
scribed shares have been sold by
the underwriters,
&
Co.~ of
Cray, McFawn
Detroit,
and
A.
C.
!j!
❖
have
declared
a
quarterly
1l/i cents per share,
payable Feb. 25 to stockholders
ment
made
consisted
lar and
of 50
ZVii
Previous
Nov.
011
per
per
and
by
an
waited
"We
perceive
to
more
clearly whether the trend at home
strongly in favor
would
run
of
ancient freedoms
our
more
of the
be di¬
or
socialization
verted toward greater
incentives, if not the owners-
ship, of business.
"We waited to
whether free¬
see
honesty
and
dom
(Continued
slavery and
or
43)
page
on
fully
•
their losses.
cover
26,
pay¬
1948,
share regu¬
share extra.
the
with
Funds, Inc.
trustee in violation
Custodian
acting
as
Section
17(a)(1)
of
the Secu¬
Securities Exchange Act of
of the
Rule X-10B-5(1)
and
1934
there¬
"
6
;•'< 1
6.6,'.i/V,;
According to the complaint, be¬
under.
.
Jan. 18,
1949, the defendant Gabriel Cap¬
Jan.
tween
lan.
in
1946
1,
and
securities trader
a
Stock
York
City
York
New
by
employed
the
New
Exchange firm of J.
R. Williston & Co., and William A.
Hancock,
ployed
a
in
Custodian
securities trader em¬
by Keystone
Boston
Funds, Inc.,'
ment company,
firm
who
ness
of
and the brokerage
conducted
a
invest¬
Junger, Anderson & Co.,
a
securities busi¬
in New York City
is not
an
(but who
member of the New York
Exchange),
operated
a
formed
Caplan
that it had
curities
to
place
ders
would
which such or¬
lor
be
entered,
'
It
that
is
the
I scheme
the complaint
defendants employed a
charged
to
in
defraud
the
Keystone
j Custodian Funds in the following
i manner: Hancock, without the
the
the
the
placement of purchase orders by
to
such orders with
brokers. Prior to
placq
executing
Hancock
fected
proposed
Hancock
behalf
todian
such
dummy ac¬
securities
same
.
buy
Cus¬
Funds and after effecting
which
on
in
the
in
de¬
Hancock ef¬
purchases
counts
Key¬
the
Funds,
than
other
fendants
the
of
behalf
on
Custodian
stone
of
the
purchases,
to
Keystone
defendants
the
other than Hancock placed orders
to
sell
of
out
such
counts
dummy
securities
with
prices,
natural
such
the
at
ac¬
higher
intended
and
that
the
consequences
Keystone Custodian Funds bought
such securities from the dummy
were
mating $300,000 from trading prof¬
its and commissions.
and
time when he (Hancock) proposed
accounts when its
an
profited to
amount approxi¬
together
Funds,
prices and the amount of
securities
the
behalf of the Key¬
on
Custodian
stone
(Hancock)
purchase and
which he
for
intended
sale orders
with the
Junger, An¬
particular se¬
and
Co. of the
derson &
the extent of
Plywood
dividend of
of record Feb. 15.
taxation
international conflict
which held the possibilities of ac¬
tive
warfare,- economic war or
merely an uncertain peace.
government spending and
scheme whereby they
......'c.
of
directors
The
Inc..
*
national
rities Act of 1933 or Section 10(b)
Stock
1948.
igan Public Service Co. common
any
defraud
was
70 cents
•'
,
of
connection
in
Keystone
distribu¬
total
facilities
devices, schemes or artifices
the funds for which
any
per share.
$2,328,668,
."
•''.
J
❖
£
❖
[;.\v 1
'
as
compared with $3,139,965 for
Sales of the
Gerber Products
the year 1947. Operating revenue
increased from $39,432,346 in 1947 Co., Fremont, producers of baby
to $39,733,318 for 1948. Operating foods, for the nine months ended
expenses, including taxes and de¬ Dec.
31, 1948, amounted to $27,preciation, increased 2.7%. "This
874,733, compared to $19,840,733
rise in expenses was due, in large
in
the
corresponding period
in
part," the company states, "to the
all
policies of
over
Co.
di¬
purchase or sale of any security,
cents
brought
During 1948
made uncertain by
was
conflict
J. R. Williston & Co. issues statement /
as
Anderson &
Junger,
ploying
the
of
of
the
or
extra cash div¬
per
share,
an
well
securities exchange, using or em¬
frac¬
1948, the
quarters of
paid
company
share,
per
lieu
In
in
share
certificates
Scrip
issued
domestic
knowledge or consent of. his employer, Keystone Custodian Funds,
rectly or indirectly, by the use of Inc., delayed the entry of orders
the mails or any means or instru¬ lor purchases and sales of secu¬
ments of transportation or com¬ rities for the portfolio of the Key¬
munication in interstate commerce stone Custodian Funds, and in¬
quarterly
10 cents
of
1949.
the country.
scheme to defraud Keystone Custodian Funds, Inc;
as
William A. Hancock, from
and
divi¬
cash
per
usual
stockholders
to
Feb.
of
ture
that future
complaint in the United States District Court for the Southern
final judgment enjoining Gabriel
a
firm
5%
a
pay
extra
an
10
addition
will
Co.
chase of shares in the business fu¬
Caplan, Samuel Howard Junger, George Theodore Anderson, Robert
Selig Junger, and the brokerages———
r——
Hudson
1949,
1,
going.
are
District of New York, demanding dT
*
$
March
On
filed
"
«
we
Securities and Exchange Commission announced
The
liabilities
current
and
hopeful waiting for some clearer
indications of where
The purchase of stocks is the pur¬
recoveries and insurance will
Nov: 30; 1948. Current as¬
sets at the close of the year totaled
on
$734,827,
concern
from
increased
of
Complaint Against New York Brokers
with operating a
May 31, 1948, to $421,-
on
ital, the basic attitude of our coun¬
try toward the future—an attitude
Charges Junger, Anderson & Co., together with several individuals
the business,
in
use
capital
$232,357
967
last
idated
SEC Files
se¬
plan and
equipment. As a result of this fi¬
nancing, together with net income
tional
Ohio and Indiana.
manufacture
DISPLAY
Modern
of
stock
owns
(Mich.), which is engaged
the
ticularly
Common Stock
firm
The Mid-States
to
L. A. DARLING
com¬
loan
term
a
only 8%
during the
preceding ten years, despite the
fact that in 1948, the index of our
of national production reached a new
$28,727.70 for high.
the previous
"In many ways 1948 exhibited
year,
but in our
exchange markets, and in
cured by a mortgage on
for expansion and
additional working capital.
Modern
iCo., General Motors Corp., De&
Cleveland Navigation
Co and Gerity-Michigan Corp.
The
finance
to
Itiroit
that the
retire
principally through sales agents.
&
Southern Corp., Parke, Davis &
to
used
and
stock,
mon
to pay
specialists,
Motor Car Co., Friars Ale Brew-
jing
indebtedness
the
of
Securi¬
of
The net pro--'
Inc.
be
are
equipment,
Electromaster, Inc.,
Oil
Co., Packard
member
a
to
in
Detroit
were:
per
Association
Dealers,
ceeds
Corp.
1
($3
Y.,
N.
National
ports that trading volume in Jan¬
uary was 201,545 shares, having a
dollar value of $3,347,173.
These
$3,546,783, which
of
publicly offered on
was
Jan. 19 at par
truck
new
shares
98,750
7% cumulative convertible stock
of
Mid-States Equipment
Co.,
loan for fa¬
a
of
issue
exchange
our
was
with
compares
an
the sale of 150,000 shares of com¬
total,
Of this
loan.
by volume of trans¬
use of
in
1948
the
above the average use
,
term
actions,
facilities
r,
year
v
shares, 1948—75 million
"Measured
Francis A. Truslow
property
Continental7 Motors Corp. and
ly $100,000 in new equipment
recent issue of $46,641,400 3% con-'
consolidated subsidiaries, includ¬
V
■
^
charged off in
and improvements at the Port¬
vertible debentures, due Dec. 1,
ing Wisconsin Motor Corp., had
1947, the reduction in the surplus
land (Ore.) zone office, accord¬
1958, and to have stock available net
earnings of $3,378,123 in the
account in 1948 was less, amount¬
ing to C. E. Briggs, Assistant
for sale, if necessary, to carry on
fiscal year ended Oct. 31,
1948,
ing,
after adjustments, to $79,General
Sales
Manager,
who
the company's $150,000,000 plant
C.
J.
Reese, President, recently
854.30, compared with $583,142.87
added that Packard expects to
expansion program.
reported. This was equal to $1.02
in
1947.
On Dec. 31,
do a wholesale volume of nearly
1948, the
I Net income for the year 1948, per share on outstanding common
surplus of the Exchange was re¬
$13,000,000 in new cars, parts
after all charges and Federal in¬
stock.
It compared with net loss
and accessories during 1949 in
ported at $4,859,138.56.
>
come taxes, amounted to $10,450,of $1,292,874 for the same com¬
this zone.
In his report regarding opera¬
641, or $1.49 per share, as against panies in the preceding fiscal year.
*
*
*
tions and outlook, President Trus¬
$1.59 earned in 1947 and $1.67 in Consolidated net sales for the 12
Net earnings of Industrial Stamp¬ low stated:
1946.
Although gross revenues in months ended Oct.
31, 1948, were
ing & Mfg. Co., Detroit, for the
1948 were 12.4% of those of the
"The year 1948 reflected little
$108,157,527, against $91,505,042 in fiscal
year ended Nov. 30,
1948,
preceding > year, costs of doing the 1947 fiscal year. Net working
change from the pattern estab¬
after all charges and Federal in¬
business also reached a new high capital at Oct. 31, 1948, was $20,lished in our business during 1947.
come
taxes, were $238,476, equal The
so that net income was 5.9% below
average of stock prices was
486,835, against $19,053,117 a year to
approximately 31 cents per about the same at the
that of 1947.
earlier.
year end,
share on the outstanding common
The
directors
of
Continental stock. During the second half of $18.05 per share, as it was at the
Joseph S. Sherer, Jr., Presi¬
Motors Corp. on Feb. 2 declared a the
beginning of the year, $18.59 per
year the company took steps
dent of Reo Motors, Inc., on Jan.
dividend of 10 cents per share on to reimburse its
treasury for ex¬ per share, and the volume of stock
28 announced completion of ne¬
its common stock, payable March 3 penditures made in the plan ex¬
transactions in. the two years re¬
gotiations with the Reconstruc¬
to holders of record Feb. 11, 1949.
pansion program, and to further
tion
Finance
Corporation
and
mained almost unchanged, 1947—
The previous payment was 150 on
strengthen its financial position.
the Michigan National Bank of
May 29, 1946.
This
was
accomplished
through
Lansing for a $5,700,000 five-
$1,694,000 will be used for set¬
tlement
of
1945
renegotiation
"refund to the Government and
of in-7
an excess
surplus
investing approximate¬
troit, is
of
This
203.79.
cause
,•
*j.
shares.
over
.
'■.>
72 million
showing
deficit
a
reported to be approxi¬
ahead of January.
>
*V
> '
and<*>
income of $80,-
40%
*
.
of Governors covering,
to the Board
reserves,
thus
the annual div¬
idend rate was $1.40 per share.
Sales for the first month of this
#
'
the New York Curb Exchange had consolidated receipts
$1,419,926.97 and expenses of $1,500,130.76, before adjustments for.
Detroit, on Feb. 1
$2 dividend rate for
stock by declaring a
r
of $80,204, compared with
Curb Exchange
York
The previous year
year were
'.1 A
(- '
the year 1948,
Pfeiffer
the
»j
.
According to the report of Francis Adams Truslow, President of
New
the
ac¬
so
quarterly dividend of 50 cents per
share, payable March 10, 1949, to
holders of record Feb. 19, 1949.
•
available for the conversion of the
1
!.'!
of
6*
7
■
.
*
1948.
$32.50
at
a
common
mately
960
Any shares
directors
The
established
In
the
on
Exchange and the
V
the
ther
I
quired will be held in the treasury
for general corporate purposes.
di¬
Haas manufactures and sells a
time
to
1
of $28,728 the previous year. Reduction in surplus was less,
however, due to real estate loss of approximately $610,000 in 1947.
President Truslow tells members public faith in free business is
'
increasing and nation is seeing need for equity capital.
Chicago Board of Trade where the
stock is listed.
($100 per
Rohm &
stock, series A, at par
share) and dividends.
time
from
New York Curb
'
•
come
of shares of its common
company
proceeds are to be used to
for new construction, etc.
net
pay
••
•
Report of .Francis Adams Truslow, its President, shows
1 expenses over income
.
,
W. Parker,
jr
Annual
1
17, 1949
Exchange Reports Deficit in 1948 ;
f
ex¬
•''
penses.
"The Detroit Edison Co. has embarked
Inc.,
net proceeds are
The
Thursday, February
CHRONICLE
FINANCIAL
&
entered
and
purchase orders
executed (ex¬
cept when somone else happened
"to get
ahead" of Keystone in the
Conversely, prior to the
market).
placement
orders
on
Custodian
by
Hancock
of
sales
behalf of the Keystone
Funds,
(Continued
the
defendants
43)
on page
Volume 169
Number 4778
COMMERCIAL
THE
Current Stock Market Prospects
By JOHN L; ROWE
■
W'«
.
•**
•
*
i' i
4
i "• «i')
-t
* '
Mr. Rowe contends stocks will be in
"g <i
"
m,
,
-
• • ■
,,
;
.
,
,,
-
''
t' ■
and June and
'
13
Dynamic Economy
a
'
j:
,
Vice-President, Security-First National Bank of Los Angeles'
;
a
Predicts, despite international and domestic political and ecofears, Dow-Jones Industrial Averages will end year in the
nomic
(765)
By T. W. JOHNSON*
'
year;
CHRONICLE
Loan Problems in
zsy.
buying area between March
high grade bond market will remain stable throughout
'
FINANCIAL
■
v
'
&
<
West Coast banker points out, because our
economy never has and will not remain stable
effect of
violent changes must be always considered in
extending credit. Urges banks to put and keep their
houses in order, and says time to be
pessimist, is in a boom and optimist in depression. Advises busi-
*
100-200 bracket.
When
relate
i
;*'■'
.
ber
elections
3will
Congressional
berthe heated
President's
'discus sions
-s
e
r
v
lions
ti
th
5hand
e
dabor
in
normal
of
With 'few
war
-
would
would
merely
a pre-
power •
by
the
My
big
tax idea will be
John
L.
is that the
guess
Rowe
four
•
-
sizable
a
eral retail
during the
Many of labor's friends
confidence
Congress.
Lack
manifest
can
itself
id the stock market very quickly.
The market is thin;
The short
interest
is
be
savage
negligible.
tain
quarters
community in
There
will
attacks from
cer¬
the
on
general
business
-
Wall
and
maleficent giants in par¬
This, is always a popular
though meaningless crusade. The
public loves- it!
We could have a
series of shocks which could
un¬
cover
some
grand bargains. Those
with
cash-
should
.
and
•
Private enterprise has al¬
shown the vitality to bounce
under
Just
alert
be
kind
any
of
attack;
remember, the wisdom of the
itself
would
yield
sum.
financed.
is par¬
portant
we
have
cycle
Commodity prices and the gen¬
price level should
There
year.
ease
will
be
We
two
we
T. W. Johnson
be
slightly
lower, but Federal price supports
on
farm
output will be main¬
tained.
*
Since business is
be¬
now
coming highly competitive, some
price concessions are inevitable.
up
must
Our
...U
generation
several
is
has
catastrophic
-
We
We
stock market has been
room
account for
time.
some
intelligent people become inured to
the Dow
as
fanciful
Theory
schemes to
ing and buying
ample,
the
of
these
or
indicate
sell¬
For
pressure.
investment
exr
trust
so
depression
saw
our
and
and
is
of
approxi¬
When
we
in
,
1929
to
a
of
"existence
$40 billion in
in successive
economy.
They
local national
theii
effect
will
pression
much
In this matter of
is
>
significant
spent
to
: more
on
pass
perspective, it
realize
that
we
the
12
for
money
months ending Sept 30,
1944, than
we
did in the first 150 years of
nation's
our
existence.;
■
Generations of accumulation of
level"
savings
1932; then build
to $77 bil¬
income
your
Our national debt
definite factor in the number'
is also tjuite a burden to
to our children.
and
money
have been
doubled in total in the short space
years
years.
—
welfare
—
in
and
have
family's
your
they can buy—and
what their savings will be worth;
These are quite personal
matters,
don't.you think?
Incidentally, it
and other in¬
come of the people in the United
States—drop from $83- billion in
mere
your every>
well-being
happiness.
a
how
the
,
affects
and
jobs open—the wages or income
people will receive
what and
all wages
had
national
our
billion, hav¬
billions.
of
.national Jncome^—
is,
lion
on
by
now
language." Far from it! One
and
of
1940, only to skyrocket to
greatest convulsions.
No
previous single ^generation evei $96 billion in 1941; to $122 billion
in 1942; $149 billion in 1943; and
experienced such cumulative up¬
heavals. All of these events have $160 billion in 1*944, the last full
necessarily had a tremendous ef¬ year of the war—four times pur;
fect
we
our
life
participated in the
up
the
world's
f It is unfortunate'that so-called
such
events,
some
and
saw
em-,
world powers.
that
witnessec
This will result in lower earnings
for many companies, a factor the
have witnessed
as
modern history of man.
all
affecting our economy. This has
been a very significant period in
world history. Those within this
taking into
history.
violent
most
vice
in
to add,
they were
costly and sacrificial wars in
eliminated
no
shoulo
we
-down, yand
A'-v
come
,
a
there
and -that
versa.
$270
day
and,
the
wars
.
always remember that what goes
will
participated
We saw two large world
constant pires completely destroyed
Farm
fluxp that
quo,
mately
Last
Years
and
saw
recorded
should constantly
our
economy
is
that
always has been in
of
June, 1943)
billion, and
$140
June, 1944, to $202 billion. It
own
in
needless
We
years.
remember
to
stands at about $250
ing reached a high
their
!
:
\
Happened
world-shaking
most
have experienced for, say, the last
business failures among the
small fry. • There will be furious
business competition during 1949.
incomes
Has
25
good
as
(by
year
talk of
,
What
cli¬
status
loan -officer,
next
soared
must realize it
long
a
of
state
the
time.
and
many
decision
every
have complicated manage¬
problems as well .as those
been
economic
ten
ito
im¬
when
in -such
-had
debt, taxes, balancing
v
Let us
review -only a few of <of budgets,
etc., the conception
those events which are outstand¬ many times is that this is only of
ing in our minds at the present interest to financiers—or "talking
cycle, j
a
.
it
mate
in
which
Organized labor has a- strong
militant lobby.
They are amply
to
profit
percent boost in the normal
tax
such
ticularly
wholly discarded.
e
banking busi- j
ness
through j
and
The compromise could be a two or
menced with
t h
n
tax;
profit
excess
i
in
have
made by management, and neces¬
a
im¬
inequity
excess
viewtothe
the convening
1
:
•
of the Eighty-first Congress.
exceptions
whereasthey,
•
the
escape
-
posed
show
tooth
Upping the normal
adversely affect their
years.
earning
back
considered
j
tax
ways
be
been
was
eager.
These factors
ment's
other.
ticular.
d
e
prices and costs of doing busi¬
ness.
sarily
taxes,
industry was subject to
prof it taxes during the lush
the
Street's
d
n
e
on
.
j
politicians
some
t
s
s
"not,
least have not
nail.
This
of
x
e
has
de-•
pression or at j
and
elected
life
through
on
were
The
taxes.
excess
the
com¬
"shake-
a
whose
busin
neither
leaders
which
keep in liquid condition. Foresees
talking on the specific subject, it would be well to get a proper over-all
per¬
applied to our economy and without which our conclusions as loan officers and
may be faulty.
A constant review and perspective is particularly needed for
as
men
those
e
and
one
and
bil¬
utility
for • four
request
new
the
over
increase
v e
bu sinessmen
on
of
'battle
arid railroad lobbies will fight any
con-
a
Before
spective
credit
<S>-
'
remem¬
between
management to check inventories, watch credits, and
ness
business
activity to the present level of stock
prices a new channel for discussion is opened. It is my studied judg¬
ment that stocks will be in a buying area between March and June.
Anyone who listened to the Town Hall debates preceding the Novemwe
tial
four years.
The credit poten¬
and inflationary pressure in
this structure
As
is tremendous.
result of all these stupen¬
dous upheavals, and this - is the
point I wish to emphasize again
during the de¬
Income in 1946
a
and
again, our ordinary concep¬
tion of what is normal in that
banking house, their marks for generations to ning at the rate of over $210 bil¬ economy, based on the rule of
rivers run into the sea—yet the would have long since passed into come on our
by far,
than
any
thumb we used in the "old days,"
every-day life, and lions—more,
sea Js
not full."
oblivion
had
their, investment certainly are Of utmost importance other income in this or any other has entirely
changed.
We must
•committee yielded .to current hys¬ in our
analysis and consideration country in the world. Our econ¬ throw-away the old ruler or other
^Tlhe re-election of President
teria or the fleeting despair which of loads
omy cannot possibly be the same
Truman
and credits.
Each and
undoubtedly
means
a
guides and weigh the
answers
the chart hounds can muster at a
economy with a $210 billion in¬
continuation of our managed Fed¬
and decisions in the light of these
every one of these factors has had
moment's notice.
The sound in¬
come as it was at a $40 billion in¬
eral debt.
Many bank and insurstaggering changes in our econ¬
a profound effect on business, and
come.
vestor
-need never
stray
from
rance executives have
been fran¬
omy, for they go to the very heart
proven fundamentals.
History re¬ especially banking, and more par¬
We saw, our, national debt rise and roots of our
tically urging withdrawal of Fed¬
everyday life
and ticularly has had a violent effect from $25 billion at the close of and, as I have
eral support on long-term govern¬ peats itself in trade cycles
stated, affect each
other
proven
phenomena
in
a
World
War I,
ment bonds. The point to remember
to $37 billion in daily decision we
may
make "as
manner that no; individual, be he
•\*A' talk by Mr. Johnson at the 1938. We crossed $40 billion in
is that should long-term govern¬
individuals; as loan officers and
genius or demagogue, can long up¬ Bankers
Forum
and
Seminar, 1939, and in 1942 (six months af¬
ments fall below par there is little
set. Just because 1929 saw the end
American Institute
of Banking, ter the war had. started), it had credit men.
doubt that the Treasury would be
|
of
a
phenomenal era • it doesn't Los Angeles,
Galled
(Continued on page 34)
Calif.,' Jan. 21, 1949. risen tp-$72 billion.. Within the I ;
upon
to redeem a great
necessarily
follow» that
history
portion
of
the
savings
bonds
need repeat itself: in 1949.
which have been acquired by
For one thing we are not on
small investors.
There are some
10% margins, nor do we have 14
is
ages
be
to
found
outside
headlines. •
newspaper
the
the
"All •
ably, managed
the
New
Lehman
by
Bros,
and
continue
to
leave
was
146 billions. Now
we are run¬
-York;
.
.50 millions of Series E,
F and
G
bonds in the hands of the public.
The
Treasury is obligated to
these
deem
bonds
at
re¬
Obvi-
par.
;ously if investors could buy longterm governments below par why
should
they not redeem the savings
at face value and
bonds
other governments at a
So the
'horns
purchase
discount?
debt managers are
of
a
dilemma
the
on
unless
they
deliver the
wish to
financial community into
lived panic.
•/
deliberately
short¬
a
victory we
can safely conclude that the highgrade bond market will remain
stable throughout this year. LongFederals
premium
over
will
command
par.
Because
tax
threatened
increases
brackets,
upper
the
in
basic
existing
is
security
yield
of
the
municipal
market will be very firm.
the
a
Where
strong
spread
the
between
taxable Federals and tax-free top-
municipals should widen
name
the
year
as
High-grade
progresses.
utility, industrial and railroad is¬
sues
should
current
remain
levels.
not
The
far
from
exception
will be those situations where
ing in business activity
ings becomes apparent
new
capital
borrowing
eas¬
Hoffman,
a
earn¬
or
when
is under¬
tremendous
year
commences.
Economic
$3,800,000
Cooperation
Administrator, has described as
making Hitler seem like a baby.
Says Mr. Hoffman, "... If there
ever was a drive going on in the
world—a power drive—Hitler was
a
baby compared with this gang."
So
when,
we
to
The
•
talk
about
Dow-Jones Industrial
178%
the
averages
(Philadelphia Plan)
To be clue
Messrs. Stalin & Co. cannot be ig¬
Were it not for him, a good
be
of
our common
the
most
levels.
leader,
it
is
Dow-Jones
will
end
bracket.'
should
spring
1949
in
each February 1,1950
to
1959, inclusive
guaranteed unconditionally as to payment oj principal and dividends by endorsement
by The Virginian Railway Company.
commence
Priced
yield 1.30%
to
2.23%, according
to
maturity
Issuance and sale of these
Certificates are subject to authorization by the Interstate Commerce Commission,
Offering Circular may be obtained in any State in which this announcement is circulated from only
such of the undersigned and other dealers as may lawfully offer these securities in such State.
190-200
The
movement
until
to
the
averages
the
upward
pres¬
Russian
that
Industrial
The
not
the
guess
my
on
late
early summer. It will be
intensely selective affair just
an
as
Despite
annually $380,000,
inflationary
hedge in the world—even at
ent
To be
stocks could
liquid
Equipment Trust Certificates
as
nored.
many
Virginian Railway Company
Equipment Trust, Series A
inevitably do when referring
the'stock market, the actions of
it
or
has
while,
been
since
1946.
Mean¬
term pressures against
speculation can be enumerated as
follows:
HALSEY, STUART & CO. INC.
near
R. W. PRESSPRICH
& CO.
OTIS &. CO.
FREEMAN
& COMPANY
(1)
International fears—prima¬
rily fear of a show-down with So¬
viet
Russia
Tito's
should, be
new
(INCORPORATED)
or
taken.
There
this
as
Unfortunately, we do have an am¬
bitious Stalin, whom Mr. Paul G.
we
With the Democratic
term
billions of brokers' loans to haunt
us
either
Yugoslavia.
(Continued
on
over
The
page
China
or
shown-
34)
THE
■v.
ILLINOIS COMPANY
■■■
V
February 11, 1949.
■
.
,
v"
McMASTER HUTCHINSON & CO.
■■
v.
,
■
14
(766)
COMMERCIAL
THE
Connecticut Brevities
&
FINANCIAL
428, slightly below the 1947 record level. The drop occurred in the
half, for second half sales were 5.2% higher than the 1947
volume.
Net income of $404,255,<e>
or
$3.41 a share, was somewhat holders not accepting the cash
,
below
the
previous year's net of
$4.71.
tric Light Company and the Sims-
bury
Electric
Company
recommended
the
The
cut
ap¬
$1.93
by stockholders of both
companies and by the Public Util¬
ities Commission.
The plan pro¬
vides for the exchange of four
shares of Hartford Electric Light
($25 par) for each share of Simsbury Electric ($100 par.) A total
of 4,000 additional shares of Hart¬
proved
ford stock will be
required. If the
place, a rate de¬
crease will be put into effect for
Simsbury customers.
takes
merger
The
Connecticut Light & Power
Company has filed
registration
statement with the SEC covering
163,133 shares of no par value
stock
common
3%
and
$8,156,650.y of
debentures, c(ue
convertible
1959.
a
Stockholders
fered
will
of¬
right to buy either
the
be
one
share of new qommon stock at $50
purchase $50 principal amount
of
debentures
for
each
eigbt
shares of common stock held. An
or
underwriting
by
beaded
group
W. Scranton'&
Putnam, Charles
Co. and Estabrook & Co. will buy-
unsubscribed debentures.
any
A
Chance
new
plane
"of
hour"
an
the
fpr
speeds
Vought fighter
Navy ,has shown
than t600 miles
more
during recent tests
ac¬
shares
of
&
Power
ings for
Co.
shows
.Connecti¬
that
earn¬
$1,380,683, or
If the rate in¬
1948
were
share.
which
became
per
effective
Jan. 15, 1949, had been in effect
throughout 1948 earnings would
have
been
increased
by about
$226,000 to $2.25 per share. Divi¬
dends paid were equal to $2.25 a
share.
Total operating revenues
crease,
for
1948
of
crease
1947
$12,874,685,
were
6.8%
in¬
an
combined
over
revenues.
The
for
1948
Co.'s
net
$771,903,
was
liew
the XF7U-1
cost reducing force, which, if passed along to consumers instead of in wage in¬
lower prices. ^Foresees in 1949 a leveling to slightly declining trend in prices along
with sales-price adjustments by individual companies.
There is no basis for
expecting the years ahead to be free of cyclical variations in
prices and employment, but the severity of future price declines promises to be lessened
somewhat by a combination of institutional price "floors" already in existence and others
<£-
likely to be
adopted by
nation's ability to expand its level
present
gover n m e n t"
of output,
e.g.,
whenever
whether prices
seri¬
or
ously
threat-.
All major j
in which {
e d
en.
j
have been followed
sets and this amount was included
as
.goodwill.
amortize
this
at
come
It
planned to
charges to in¬
was
by
the rate of 25%
in 1948
and thereafter at the rate of 15%
per .year
.applied
pn
.declining
a
balance basis.
reveals
also
returns
tax
The annual report
that Federal income
the year
for
1935 to
l9^mqiusive;have been adjusted,
respiting
in
$817,072.
reduction
net
a
of
-
mon
taining
i
danger that
will interfere
scarcities
supplies become more difficult to
acquire from domestic or nearby
pro¬
p r
to
major
appears
raw
materials, however,
certainly will increase as
almost
j
by}
1 y
longed
real
there,
with peacetime needs during the
.next generation. The costs of ob¬
partj
a
little
.resource
has!
States
source
c e
W.
E.
Hoadley, Jr.
The
Recent increases in
areas.
manufacturing capacity point to
still closer balance with,available
present .situation, however, dif-r resources.
Slowly rising produc¬
in many important respects, tivity, which long characterized
fers
from
previous
periods.
postwar
This is
particulaiy true in the (1)
persistence of economic conditions,
marked by defense .preparation^
and possibly new war rather than
peace and disarmament, and
(2)
rising general fears of deflation,
largely rooted in the depressed
era
of the 1930's with increasing
public belief that in government
lies the responsibility for • meefc
ing the economic insecurities of
life.
.
broad
Three
currently
forces
production,
national
was
inter¬
rupted, during the war years, but
points to a ,re¬
sumption of the prewar upward
trend.Increasing productive ef¬
recent ^evidence
ficiency is an important cost-re¬
ducing force, but does not neces¬
sarily mean lower prices unless
cost savings are passed along to
rather
consumers,
than 5
more
probably—paid out in the form of
higher wages or retained in the
business.
This general appraisal
-vould
to lead to the conclu¬
se^m
Underlie general price develop-; sion that higher resource costs
ments: (1) the volume of purchas¬ arising
from
limited
supplies
ing power and its rate of turn¬ and secularly expanding demands
over, (2) the level of production, for finished products will tend to
and (3) the economic power of offset
expected
cost reductions
government and certain special from
improved
productivity,
interest groups.' -Changes in each thereby minimizing the possibili¬
of these forces promise to deter¬ ties' of longer-run price reduc¬
mine the over-all course of prices tions.
t
in the years
ahead.
Since the early 1930's a funda¬
supply, includ¬ mental shift appears to have oc¬
ing currency and bank deposits curred in public economic think¬
subject to check, nearly tripled ing—from a basic concern over
during
the
war years,
greatly inflation and its adverse effect
The total money
based.".
The Eagle
Lock Company ,of
Terryville has purchased the Bell
Company of Michigan City,
.Indiana, and will transfer manu¬
Lock
facture of the Bell Lock to Terry¬
ville.
The
lock,
which
will
be
the "Bell-Eagle" Lock, is
by more than 70% of the
vending machine industry and is
"unique in its pickproof design."
Basing-Point
System,
(Economic. Analysis of
The—An
Contro¬
a
,
versial Pricing Practice — Fritz
Machlup — The Blakiston Com¬
pany,
Philadelphia, Pa.—cloth.
called
Consumer Buying
used
Crab
Orchard
David
J.
annual
Sanford
report of BigelowCompany shows
Carpet
earnings for 1948 equal to $8.11 a
share compared to $5.97 in 1947
on .the present stock.
Sales ,arid
earnings of $2.34 in the fourth
quarter of 1948 were at record
levels. Profits in both years were
.equal to 6.1% o'f sales and do not
include
inventory
profits.
The
President
stated
that
the
market
tion,
Habits in the
cf
Illinois—
Luck—College of Com¬
and
merce
Area
Business
University
of
Administra¬
Illinois,
Ur-
bana, 111.—paper.
facilitated the enlarged volume of
power
to
a
money
deep-rooted fear of deflation and
from
war
accompanying
expenditures arising
needs.
During 1948-47
purchasing
power
leveled, and declined slightly - in
1948, but total spending neverthe¬
less
has
continued
velocity of
has
money
expanded
as
to
increase
as
turnover or use
well. The total
supply seems less likely to
Market, The—Some Basic decline' in the future than" in the
and
Changes—Vergil D. past, .principally because of ~j;he
money
Farm
dollar purchasing
upon
total
aggregate
In
circumstances such
be
wars
theUn i t
creating new shortages,
failures, strikes, war
or
crop
scare.
the past decade,
wide.spread'
occur
but considerable doubt
generally could be
reduced in doing so.
Although natural resource sup¬
plies were heavily drained during
price breaks
declines.
goodwill.
The price paid for
Standjard-Knapp .Corporation in
1947 ,was $1,912,088 in excess.of
fair value of the underlying as¬
wings, two jet engines and no .tail
at all.
The plane, which looks
more
like a guided missile than
an
airplane, • "is potentially ca¬
pable of flying faster that any
other
service
type jet aircraft
now in operation, land or carrier-
The
as
mean
of
Cutlas, the
sweptback
features
plane
will
deep and com- j
to the United Aircraft
Corporation's quarterly magazine.
as
efficiency
equal to $2.86 a share after a spe¬
cial charge of $478,022
or $1.77
per share to write down the item
cording
Known
ductive
creases,
had
Hartford-Empire
income
Chicago
Dr. Hoadley analyzes broad forces underlying general price developments, and stresses increasing pro¬
for
Billings
The annual report of
-
the
3J.
merger
Bipgham-Herbrand
three
Spencer owned.
have
of
firms, effective March
merger
must first be
two
each
By WALTER E. IIOADLEY, JR.*
Senior Economist, Federal Reserve Bank of
expected to receive two
are
shares of
Directors of the Hartford Elec¬
v
offer
Thursday, February 17, 1949
The Outlook for Prices-
if
The annual report of Russell Manufacturing Company for the fiscal
year ended Nov. 30, 1948 shows that sales for the year were $13,043,first
CHRONICLE
ment and
was
little
ment
income.
or
no
action to
clines
losses
in
all
in
employ¬
Whereas there
contrast, for coming
to be marked
by sharp
general price breaks would seem
months
necessitate
to
tude
of actual
ment
some
govern¬
ening the price support program,
and any of q number of shocks to
personal and business expecta¬
tions
leading to a contraction of
expenditures, e.g., large-scale tax
increases,: • spectacular '■>; business
failures, widespread lay-offs,, sud¬
den appearance of a buyers' mar¬
in
ket
steel.
middle
A
ground
position between these extremes
seems
There
that
tenable.
more
the
-
be
can
;
tempo
ciably,
but
slowed
most
\
r
,
question
no
but
inflationary
postwar
has
down
prices
appre¬
the
and
generally seem support- v
ed by underlying tones of strength:
Not all backlogs have disappeared,
economy
replacement
demand
of
even
—
items purchased since the end fit
the war—is enormous, consider¬
able
further
plant expansion and
modernization
is
scheduled
,.^*
for
!competltlve ieasGns alone' con~
are
demonstrating
that
sumers
they
and will spend freely
confronted with goods and
can
when
services ' which
prices
they
they
want
at
afford to pay,
can
housing
requirements
remain
large and can be expected to ex¬
pand in relation to whatever costprice reductions
are
achieved, and
rising
and
government
expenditures
institutional "supports" have
important inflationary or anti-de¬
flationary implications which can¬
not be ignored.
Sales-price
almost
previous
to
a
broad swing now is
evident toward in¬
public responsibility for
mitigating downward price and
allied economic trends. Moreover,
expanded
expenditures, tightening of
availability, new burden¬
agricultural output threat¬
credit
vigorous govern¬
periods,
of
substantial
as:
contraction in private investment,
delayed timing or limited magni¬
forestall price de¬
postwar
combination
a
spread to
vidual
everywhere
Such
creased
more
as
adjustments
certain
to
and
and more indi¬
more
companies
and
adjustments
numerous
seem
continue
in
products.
have
become
recent
output has caught
up
months
with de¬
mand
backlogs
and .consumer
government,
in contrast to its budget problems have' increased
greatly increased importance ' of
comparatively weak status in ear¬ price-quality consciousness. The
pany, 410 Lexington Avenue, New the public debt in influencing the
lier years, at present constitutes cumulative effects of these shifts
York 17, N. Y.—paper.
amount
of
over-all
purchasing
a
major economic force in the from abnormal-sellers' to custom¬
Monetary
^Reconstruction,
in power.
nation, being responsible for more ary buyers' markets have been
Italy — Bruno Foa — Columbia
Although physical production is than one-fifth of total money ex¬ fairly> limited to date and may
University Press, Morningside now double the prewar level, it
penditures.
In addition, various well continue so if positive action
Heights, New York, N. Y.—cloth seems reasonable to anticipate.still special interest groups, notably is taken quickly and wherever
rising
national
production
re¬
—$2.25.
unions, farmers, and management possible in advance by manage¬
quirements in coming years be¬ representatives,
evidence
wide¬ ments to improve products and
Security
Dealers
of
North
cause
of
expanding population,
America 1949 Edition
spread interest in obtaining pro¬ production-distribution efficiency.
Entirely
desired advances in living stand¬
tection
from
the
exigencies of The current year will not be a
revised edition of complete direc¬
ards, defense needs, and perhaps economic distress.
It is far from happy one for producers of high
tory of stock and bond houses in
still greater foreign commitments.
the United States and Canada—
clear, however, that government cost-high price-fair quality goods
There is no question about this
action can be so properly timed and services.
iabrikoid—$9.00.
and independently forceful as to
Most upward price pressure re¬
Surety Rate-Making — A study
"Summary of' remarks by Dr. eliminate future
cyclical disturb¬ mains in metals, utility rates, and
of the Economics of SuretyshipHoadley at University of Chi¬ ances
7 in prices and other eco¬ some forms of freight transporta¬
Jules Backman—Surety Associa¬
cago
Executive
Program
Club nomic measures.
tion.
The price trend in foods
tion of America, 60 John Street, lecture-discussiom series,
Chicago,
The best prospects now seem to is downward but price supports
New York 7, N. Y.—cloth.
111., Feb. 8, 1949.
be that prices generally will fol¬
limit
much
further
decline
in
low a leveling-to-slightly declin¬ coming months, with spotty short¬
Trends
Reed—J.
Walter Thompson Com¬
-
yvalue of the inventory on Dec. 31,
;1948 was about $31 million, which
is $10 million above the amount
stated in the balance
Stockholders
►Spencer
$7.50
}the
a
of
have
Co.
sheet.
—
Billings
share for their
stock
acting
as
by
Trust
Hartford-Connecticut
Co.
&
offered
been
agent for the BingCorporation, To¬
Jham-Herbrand
ledo, Ohio.
on
The offer will expire
Feb. 28, 1949.
Plans have been
(announced >to reorganize
date
or
Billings & Spencer.
liqui¬
Stock¬
Tifft Brothers
Connecticut Securities
Members
7\ "
■
:
New
■■'7;:
Associate
York
and
Boston
!
Exchanges.
Members .New
Stock
For
York Curb
Exchange
PRIMARY MARKETS
Primary ' Markets in
Hartford
Statistical Information
and
,
Connecticut
Chas.W. Scranton
MEMBERS
NEW
YORK
London
Hartford
2-4301
7-2669
New
York
Co.
Hartford
STOCK' EXCHANGE
New Haven
New
&
6-QI71
Canal
6-3662
Teletype NH 194
BArclay
Danbury 5600
Bell
'
1
-
Securities
7-3191
New iYork:
Waterbury 3-3166
.
ing trend during 1949.
Neither
a
sharp increase nor an abrupt
drop appears probable.
*
7-3542
System Teletype* HF 365
months of
by notice¬
ably more inflation would require
an unlikely combination
of indi¬
vidually
possible
developments
such as: record-breaking private
investment,
immediate
heavily
expanded
government
expendi¬
tures at all
levels, further im¬
portant .credit expansion, wide¬
spread substantial fourth round
wage increases not offset by ris¬
ing productivity, and several farreaching events aggravating
the
remaining
this year to be marked
offering new price strengths
few items. Clothing prices
dropping as excessive inven¬
tories are being liquidated, but
curtailed production in many lines
points to new price firming if cur¬
ages
for
a
are
rent demand
persists.
Most fuels
in adequate supply and some
scattered
price breaks are re¬
are
ported,
mand
but
continued
heavy de¬
promises to limit price cuts
this year.
Household furnishings
face a determined buyers' market
but
widespread
not
foreseen
has
encountered
for well
over
in
a
price
this
distress
field
is
which
buyer resistance
year.
Volume 169
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
million
The
:
Number 4778
By ARTHUR WIESENBERGER*
Arthur Wiesenberger & Co.
tremendous contribution to the economic welfare of
this country by extending its service
to the millions of individuals who
savirr "
ident
and
this
year
bil¬
indus
U.
and
S.
and
men
don't
securities
Too
con-
must
Arthur
he
Wiesenberger
the
years
shares
jlist
attention
for Now Capital
about
best
can
be
served
Yet
for
been
has
in
in¬
an
$5,000 because
not
represent
these
a
investment
or
the
are
ideal
U.
company
Census Bureau
S.
that
this
89%
of
the
country had an
less than $6,the people
are
their money .by putting
the
has
of
government
Our studies
indicate that they are
investing
$100 in these well promoted forms
investment
of
they
are
for
$1
every
putting
now
in
that
mutual
funds.
from
463,000
to
decline of 34% for the
Various factors contrib¬
a
on
sion production
eom-
Open-End Versus Closed-End
.
There have been two divergent
...
.
trenas wlth aspect to open-end
Mutual
retirements
senior
of
Adams
Express
International
of debt and
capital;
with
are
eliminated
$19
taking
slack in output of radio sets.
up
serious matter.
sees
televi- %
Says televi¬
its
senior
However, the radio sets sold in 1948
are
about $33 million of preferred, and
U. S. & Foreign and its
subsidiary
U. S.
& International
over
examples. Among the
panies consistently retiring
stock
common
counts
and
com¬
their
at substantial
dis¬
are—Atlas, Niagara Share,
Pennroad.
The
logic of a
buying in its own com¬
at 30%. to 4Cf%
dis¬
counts seems sound, in my opin¬
ion—it
certainly looks like an
stock
easier profit than
commitment
making
with
new
a
the
s a m e
sold
much larger number of
Most radio programs will
need very little rehearsing and rio
in
pre¬
years.
Radio
manu¬
facturers
are
much
d i
turbed
the
over
Despite
the
retirement
$206
of
1949,
lieving
2,000,000
''
;
/
s-
be¬
that
tele¬
Television
of
will
not
business.
Here
is
my
rea¬
For many years
son:
very
I have been
interested in public
much
forums; that is, groups that meet
come
on
the in cities Sunday nights with one
or more speakers who discuss
market
this
pub¬
Are
good
Roger W. Babson
ment
lic problems.
they
a
invest¬
at
this
I do not
Remember, however, that
be,
may
most of the stable television
man¬
also radio manufac¬
Therefore, although this
of television may seem
spectacular, yet it
may
o
ily suc¬
in taking up the slack which
these
companies
radio sales.
In
have
lost
from
view, therefore, of
the large profits which some hold¬
ers
these
of
may
stocks
must
have, it
be wise to sell half of them.
ment
monopoly
industry.
will
not
sion
exhibits.
be
of
the
necessary
for televi¬
Hence, the income
once
feared that
speak¬
ers
discuss
by radio
our
these
same
problems
they would not
forum
meetings.
flock to these forum
come
to
Yet, people
meetings to¬
day in greater numbers than
ever.
People like-an excuse to get
out, away from home and a change
of
scenery.
Movie
theaters
cool in summer, warm in
are
winter,
and
have
comfortable
instinctively like
of
people.
seats.
We
to be with groups
Movie
receipts may
off, yet I doubt if the industry
will be seriously
handicapped.
fall
Bonks and
amuse¬
Highly paid stars
I
when people could sit at home and
hear even more important
Television may break up Holly¬
wood's
are
far
Just compare these other forms of
probably
totaled
over
growth
of
$100
million.
ment
in
future
the
present
day
totals.
1,1
<
invest¬
No. of
open-end
type.
As
stated
Life
U.
million
of
invested
capital has been
since
1940
and
assets
Value
(in billions)
Insurance._
S.
$47.5
Bds._
80
55.0
64
57.3
Sav. & Ln. Assns.
6
10.8
Invest. Cos.
1
2.2
Sav.
Saw
78
Peps..
in
$950
some
Present
Owners
(in millions)
companies is unquestionably
previously,
new
any
savings:
'
The
REDEMPTION
Bk.
Magazines
From the first I
forecasted that
radio would not interfere with tile
sale
of
books and
magazines, and
NOTICE
State of San Paulo (Brazil)
7% Secured Sinking Fund Gold Bonds
Coffee Realization Loan 1930
(Reconstituted
as
I
Therefore,
To the Holders of Bonds of the issue
Notice
Holders
of
Dollar
that, pursuant to the provisions of the Offer to
(hereinafter called the "Offer"), dated as of
Bonds
surrender
the
same
such
redemption date, with all then unmatured
at the principal office of the Fiscal Agent for such
Schroder Trust Company, Trust Department, No. 48 Wall Street,
Borough of Manhattan, City and State of New York, for redemption at the
said redemption price. Notice is also given that interest on such Bonds will
interest coupons
on
attached,
can
a
feel
I
and after the redemption date. All interest
coupons pertaining
Bonds, which shall have matured prior to the redemption date, shall
continue to be payable to the
respective Holders thereof, at the rates speci-fied above, but without interest thereon. Interest for
periods not represented
by coupons will be paid only upon surrender of the respective Bonds.
New York
competi¬
especially
from
such
to
City, N. Y.
•
February 14, 1949.
State of San Paulof
By Mario
ap¬
fear
to
from
that
completely
that
will
many
put
be
a
radio
news
It is
Estados Unidos do Brasil
even
television
sets
(United States of Brazil)
of the radio col¬
features out of
news
Therefore,
help to the
3%% External Dollar Bonds of 1944, Series 6
television
newspaper
issued in
industry.
Future
improvements
"around
are
Moreover,
and
now
screens.
in
the
To the Holders of Bonds of the series
televi¬
they
have
are
selling
very
much
When I
a boy,
lantern;
stereopticon; then
came
the silent movie; then the
sound movie; to be followed
by
had
we
then
only
was
had the
a
magic
the colored movie.
s
,
The next step will be the "Three
Dimension
Movie"
which
may
again revolutionize the entire
en¬
tertainment industry. Personally,
I would rather have
my money in
good
newspapers than in movies,
radios, television, book or maga¬
zine publishing. This is
especially
true
the
now
may
while the laboratories of
American
work
on
make
notice!
Tel.
&
something
us
Notice
corner."
day TV sets will
some
sell for half what
larger
exchange for Bonds of State of
San Paulo Coffee Realization Loan 1930
Looking at the
Great
NOTICE
have
newspapers
the
REDEMPTION
television.
survived
possible
we
Camara,
newspapers are
releases and columnists.
for
da
Delegate of the Brazilian Treasury in New York
more
Remember
sion
designated above:
is hereby given
using
illustrations in order
to
compete with these picture
magazines, I see nothing for news¬
may
below)
January 1, 1944, made by United States of Brazil upon behalf of itself and
certain of its states and
municipalities therein named, the State of San Paulo
will redeem on April 1, 1949
(hereinafter called the "redemption date"),
all the outstanding Dollar Bonds of the
above-designated issue (whether
stamped or unstamped pursuant to the Offer), at a redemption price equal to
the principal amount thereof and accrued
interest, which interest, with respect
to the stamped Bonds, will be
paid at the rate of 3.3% per annum to such
redemption date, and with respect to the unstamped Bonds, will be paid at
the following rates per annum: for the
period from October 1, 1938, to
April 1, 1942, both inclusive, at 3.5%; for the period from April 1, 1942,
to and
including October 1, 1943, at .875%; and thereafter to such redemp¬
tion date at 3.5%, to the extent that
payments or settlements at such rates
have not previously been made. An amount
equal to Vgth of 1% of the
principal amount oft unstamped Bonds presented will be deducted and paid
to
Foreign Bondholders Protective Council, Inc., as provided in the' said Offer.
The respective Holders of the said Bonds are
hereby called upon to
magazine pub¬
The above
Although
many
"Plan A Bonds" in accordance
with the provisions of the Offer described
plies to the new picture magazines
which have become so popular.
business.
put movies
vision sets will
year.
screen-..
that television will be
umnists and
How Will TV Affect Movies?
out
forecast has been true.
a
expensive scenery.
to
as
spread
people.
outlook
for
ceed
gains
Bonds,
amount of money.
papers
from the business will be
vious
growth
capital
that
obligations
by calling $21 million of 6% pre¬
stock; Blue Ridge and its
affiliate, American Cities, retired
lishers.
considerably ♦>
turers.
large
now
tor to the book and
less than those
are
growth .figures are
my humble opin¬
beyond
million
ferred
vision
radio and television stocks, Mr. Babson
It
ufacturers
the
American
and
retired
read a book or magazine while
listening to the radio, but I can¬
not do so while looking at a tele¬
is estimated that some
850,000 television sets were sold during
1948 and that double this number will be sold
during 1949, Consider¬
ing the fact that 15,150,000 other radio sets were sold in 1948, this does
know.
these
tal
(2)
non-leverage
funds; Atlas Corporation likewise
my
cheaper TV sets.
They
While
distributions in the past few years
substantial repurchases of common
stocks at large! .discounts.
.
.
sion will not put movies out of business and looks for
better and
time?
722,-
over
impressive it is
(1) greater conserva¬
tism in their operation with large
mon
By ROGER W. BABSON
a
296,000 to
000 in the same period.
uted to this
company
by
Television
seem
creased from
ion that the real potentials
cease
not
$448 million to $1.5
1948 year-end. The
stockholders has in¬
of
shareholders
able
banks,
Funds," at New York Institute of funds and closed-end funds.
The
Finance, Feb. 1, 1949.
'former
have
been
expanding
u
number
creditable showing
very
leading funds have in¬
from
decreased
number
repurchased
$13
million of their preferreds—these are the more not¬
savings
Funds
Commenting
at
year-end compared with
million eight years earlier.
a
87
billion at the
1948
$613
the
creased
funds
million
$744
of
con-
and loan associations.
'•"Excerpts from a lecture by Mr.
Wiesenberger in the course, "Re-
Salesmanship
been
investment
in
save
in
it
people who do not
security investments
properly chosen investment
tail
have
bonds, life insurance and savings
Companies
$477,246,205 $146,016,000
623,253,018
178,192,000
729,653,742
226.741,000
$1,830,155,965 $551,549,000
who
who
trading
reported
who
.
has
average broker to the
average income of
000 in 1947. These
of Open-End
during
period.
today
about
anything
does
The
families
Net Sales
Financing
and
she
sales.
capital.
Common Stock
know
of
$206 million of capthe past eight years
ital
309,000,
of less than
or
people
were
equivalent • to about 30 % of the
total money raised from
the sale
of common stock for new
of
closed-end
.
34%
stock¬
The 37 leading closed-end funds
have retired
nation
woman
account.
During the past three
net sales of
open-end
Millions
so-
who hold the
the
investments.
or
worthwhile
equity capital.
___
or
come
raised
through
1946
be
of
little
man
1947
latter
and
know
ceded'that
1948
the
women
bags
money
this
be
while
return
must
Much needs to be done to reach
paid by the
sum
them
billion.
It is
ry.
generally
give
liberal
a
investment
$50
the
ib neeued
for the
expan¬
of
will
licited_ to^ provide a large part of
lion
sion
their
on
during
$50
that
supervision, and
have
repeal ed 1 ty
stated
past
the
the
of
15
diversification, expert continuous tracting.
go ve;rnment
that
assets
these funds
issues
party
various
agencies
the
provide the greatly needed equity capital from their
Pres¬
Truman
showed
and
number
considering the depletion of capi¬
great challenge facing the investment company business
today. It can make a
can
capital
the
the
This is
Investment company expert traces contraction in
closed-end, and the contrasting enormous expansion
wjn open-end, funds. Maintains the much larger number of holders and dollar savings left with competing
investment media, as life
insurance, savings and loan associations, etc., should incite confidence in
Mutual Funds' further
growth. Declares investment company business can make tremendous contri¬
bution to national welfare
by enabling millions of middle-income citizens to supply needed equity capital.
a
in
holders,
Of the Investment Company Idea
There is
of
decline
Far-Reaching Implications
(767)
Tel.
are
else
which
at
all sit up and take
Bond, dated
is
as
designated above:
hereby'given
that, pursuant to the provisions of the General
of January 1, 1944, of the United States of Brazil under which
the Bonds of the
above-designated scries were issued, the undersigned intends
redeem, and will redeem, on April 1, 1949 (hereinafter called the "re¬
demption date"), all of the Bonds of the above-designated series then out¬
standing under the said General Bond at a redemption price equal to the
principal amount thereof, together with accrued interest thereon to the
redemption date; and thq respective holders of the Bonds of the said series
to
are
hereby called
upon to
surrender the
such
redemption date, with
principal office of the
Agent for such series, Schroder Trust Company, Trust Department,
No. 48 Wall Street, Borough of Manhattan, City and State of New
York,
for redemption at the said redemption price. Notice is also
given that interest
on such
Bonds will cease from and after such redemption date. All interest
coupons which pertain to the said Bonds and which shall have matured prior
to the redemption date shall continue to be
payable to the respective holders
of such interest coupons at the place of payment therein
designated therefor,
all
then
unmatured
interest
coupons
same
attached,
on
at the
Fiscal
but without interest thereon.
v-
(J/, j
"
--
New York
City, N. Y.
February 14, 1949.
United States of
By Mario
da
Brazil,
Camara,
Delegate of the Brazilian Treasury in New York
16
(768)
COMMERCIAL
THE
&
Problems of Air Transport
Bank and Insurance Stocks
Asserting air transport industry has no economic problems that cannot be solved by greater net reve¬
nues, Mr. McMilien lays losses and low earnings of aviation companies to non-recurring expenses and
During and since the war many of the banks outside of New
City have shown favorable trends in deposits, earnings and
replacement costs arising from
York
•'
One of the primary
in
reasons for this has been the rapid
growth
is
improving and unit costs
tion of lion-certified
deposits of banks away from the financial centers. National income
more widely distributed with agricultural areas receiving
and better equipment
new
as
well
competition. Says sit¬
to excessive
as
higher
tolera¬
scheduled field, for unsatisfactory competitive situation;
unwise to push up fares to
Blames;; bolstering of weak carriers through payment of high mail subsidies, as well as
uation
■
levels.
j;
;VV"1 )
'■
American Air Lines, Inc.
Assistant Secretary and Assistant Treasurer,
By H. E. JOHNSON
1949
Industry
By W. L. McMILLEN
This Week—Bank Stocks
dividends.
Thursday, February 17,
CHRONICLE
FINANCIAL
coming down and it
are
carriers in
passenger
appears
has become
considerable
West.
At
the
benefits.^ Population has tended to move South and
time, the decentralization of industry has pro¬
same
ceeded
at
rn
results
in
the
accelerated
areas
favorable
with
rate
effected.
Nevertheless,
business
bf
trade
and
interest
investment
most of the smaller banks continues to be localized.
in
Even in the case
of the larger banks only a limited market exists for the stock.
However, in order to show some comparison of operating results
and figures for a selected group of the more
widely known banks
Outside of New York, the
some
There is
is
nothing much
wouldn't
enues
mistake
a
attribute
to
with the air transport industry that some more net rev¬
war have been record breaking.
Yet it
wrong
Losses since the end of the
cure.
the
results
to
ing
f 1
from
fact, that
unprofit¬
finds
it
services
28.9c, and during the last half of
the
those
1948 it
in-
t i on. The
a
breakeven
unit expenses or increased
runaway
point result-
able, and (d) right to discriminate
reduced to 27.5c.
was
Another
."
this
of
measure
prog¬
between
groups
persons,
tions of the country.
industry
was
ress
is
following tabulation has been prepared.
Tt shows operating earnings and dividends for the past two years,
together with the 1948 price range, current price and yield for
in
u
load
factor.
healthy state
during the
in
1947, 74%; in 1948, 62%, and
during the last six months of 1948
all
12
late
it
sec¬
or
\
'
Some utilities
.
banks located in various parts of the country.
Net
'American
Hank
of
First
Illinois
National
National
Harris
Bank.
Bank
of
$2.00
2.50
2.25
46
31.20
8.00
267
8.00
4.4
46 y2
5.4
39'A
-
4.00
4.00
82 V2-
73
76
5.3
2.25
2.25
50 3A-
44'/2
48
4.7
12.23
Detroit...
11.66
ts.oo
6.40
184
12.00
12.00
340
-300
300
9.00
302
-274
270
3.3
3.69
3.25
111.60
35.13
18.00
18.00
6.72
5.S7
5.00
5.00
7.58
6.24
113.00
240
81.30
34.04
•
2.40
-173 r
33 !/2
-
5.1
31 y4
29'/2
Tnrt. Chicago
Philadelphia National
Security-First Nat'l,
r
Los Ang.
580
62
-
3.6
500
-500
102 y2-
95
96 Mi
52%;
5.2
59 3 4
.
5.0
^Including Old Colony Trust Co.
tPresent rate—$G.40 paid on present outstand¬
§Plus 20% in stock.
UPresent rate—National Bank of Detroit paid $1.70
ing shares.
1948;
Security-First National paid $2.70 in
1948.
The above earnings have been adjusted to the shares outstanding
at the end of 1948. Since that time Cleveland Trust has paid a stock
dividend of
share for each HVz
one
shares held.
In general the above results are
banks.
In
similar to those of New York
number of instances 1948
operating earnings show mod¬
Only three show declines.
changes in dividend payments between the two years are
•indicated and payments are conservative in relation to operating
earnings. Yields vary from a low of 3.1% to a high of 5.4%/"
erate
a
improvement
the previous year.
over
-Several
The following table presents. a comparison for the same 12 banks
of the deposits, loans and capital funds at the end of 1947 and 1948.
(000's Omitted)——
Loans & Discounts
Total Deposits
1948
American
Bank
of
Trust, San
available
Cleveland
First
Illinois
Nat'l
1948
.
Capital Funds
1948
.1^47
1947
%
This progress
,
was
1946; 5.7 in
utility expects some benefits.
are given freedom
the
from
and
competition
any
it
is
expected that in any utility busi^
ness competition will ;be carefully
controlled or regulated.
!;
paid
have
airlines
The
their
made in the
prjice but have not. received the.
face of rapidly increasing wages benefits.
; So much competition
American un¬
and prices.
Confirmation of the has been permitted' and encour¬
dertook
the
W- L- McMilien
improvement is the profit and
aged by the Civil Aeronautics
most
ambi¬
loss data.
American showed a
Board that the scheduled airline
tious and burdensome transition profit in every quarter of 1948,
industry operates in the competi¬
ever
known to our industry and except the first when the DC6's
tive atmosphere of an bnreguI dare say to almost any other— were not operating.
Each month lated
business, yet with all the
that of complete replacement of of the last quarter was profitable
restrictions of a utility.
every revenue producing unit (its for the first time since 1944. There
There are two distinct types of
airplanes) as well as a large ex- remains much to be done in im¬
competitors: (a) those known as
pan sion in capacity.
provement
of
procedures
and
scheduled
airlines
and
holding
Inasmuch as the new postwar otherwise reducing expenses but
regular route certificates or fran¬
airplanes would not be available to understand fully the plight of
chises, and (b) those known as
the airlines we must examine the
490,001
50,158
169,053
502,053
540,878
107,966
2,078,526
2,153,198
844,049
797,885
143,934
133,559
257,402
263.902
167.471
27,042
1,131,028
373,753
171,844
1,208,313
1,177,121
179,860
172,345
57,712
Chicago..
656,262
622,270
91,571
104,376
21,158
656,777
698,794
176,977
155,156
59,711
26,107
167,442
54,953
20,677
58,486
L. A.
1.619,817
1,650,555
418,458
of Old Colony Trust Company.
377,167
84,000
80,000
Philadelphia
National
"Security-First
Nat'l,
^Includes
Loans
5C8.577
ligures
the
at
of
end
169,572
508,356
1948
408,001
with
compared
a
earlier were
year
as
a
over
that period.
Purchase, modifica¬
tion and inauguration of service
with these planes was in itself a
major undertaking requiring the
entire year of 1946.
This job was scarcely completed
when
deliveries started on the
ice
458,735
1,337,883
1.030,169
com¬
it
tide
to
Yet all of them
2.229,664
1,370,657
257,172
50,196
162,400
105,463
the
DC4's
46
fleet
$32,488
1,202,077
^Northern Trust,
purchased
transition
279,518
Boston
of
extended period,
an
pany
$37,761
$377,497
Detroit.
Eank
for
$326,120
$945,511
National
postwar DC6, and this serv¬
ice was inaugurated in April, 1947.
new
not in serv¬
were
until. May,
1948 due to tem¬
porary withdrawal and modifica¬
tion
of
all
of
them.
In
the
meantime, deliveries of the new
postwar
two-engine
Convairs
had started.
Service was inaugu¬
rated in
June, 1948.
(
Deposits showed little change—being higher for
All passenger DC4s were retired
some banks and
lower for others. Capital funds continued to grow
trom retained earnings and in one case by the sale of more shares.
In general, results for the past year are similar to those of New
York banks, indicating that some of the same forces were present
by the first week of ,1949 and all
higher in.most
cases.
•
•and at work
DCS's will be replaced by April 1,'
at which time American will be
the
only
The
Robert S. Lord Joins
BREAKDOWNS
GOVT BONO PORTFOLIOS
(Special
to
Financial
Chkonicle)
WIS.
The
MADISON,
SOURCES OF
Robert)
Holley,
GROWTH INCOME 1948
Gernon,
&
Dayton
—
National Bank Building.
N. Y. CITY
Sent
BANK STOCKS
for
business
the
S.
last
but
Members New
York
Stock
(Special
BROADWAY, NEW YORK 5, N. Y.
Telephone:
Bell
BArclay
to
The
with Paine,
was
Teletype—NY 1-1248-49
Financial
has
years
new
one
intro¬
fleets.
Large
training ex¬
non-recurring
pensive job of proving and per¬
fecting the product imposes heavy
It
and
of
we
the
of
that
about
prewar
years
begin to understand some
difficulties of this period.
Coming
Down
are
hand, these efforts
beginning to bear fruit.
Be¬
sides being faster and
more com¬
fortable
the
much
efficient, and our unit
coming down even dur¬
costs
ing
fiG¥ER k CO.
equipment
is
more
are
a
new.
period when we have been
with heavy non-recur¬
burdened
ring
expenses.
INCORPORATED
The postwar record
IOSTON
20 Post
HUbbard
NEW YORK 5
9
Office
67
Square
NY
\
•PRIVATE
WIRE
TELEPHONES
SYSTEM
.
:
LOUIS,
NEW
LOS
Hartford, Enterprise 6611
Building
remarkable
,In
been
past
two years.
American's' expense
available
SF-573
ST.
Providence, Enterprise 7008
1946,
has
the
ton
mile
30.6c,
was
per
in
YUkon 6-2332
CONNECTING.:
PHILADELPHIA,
TO
Russ
Street
Michigan 2837
LA-1086
SUperior 7644
CV-294
CLEVELAND,
W. Seventh
210
during
SAN FRANCISCO 4
LOS ANGELES 14
15
Schofield Building
CG-ios
12875
of my own
company may not be entirely rep¬
resentative of the industry, but
progress
FRanklin 2-7535
WHitehall 3-0782
2-0650
BS-297
CLEVELAND
CHICAGO 4
221 S. La SalLc Street
Wall Street
YORK,
BOSTON,
ANGELES,
SAN
Portland,
Detroit.
1947
CHICAGO,
FRANCISCO
Enterprise
Enterprise
6H6G
7008
it
:;:Talk
was
31.5c, in 1948 it was
before
Provi¬
dence, Providence, Rr. I. Feb. 10,
the
1949.
by
Mr. McMilien
Analysts
Society
of
•
total
in
common
Rail
level.
war
the
pas¬
miles have declined from
senger
about 90
billion annually to about
billion. ^Against this rail de¬
40
cline of
has
than 50%, air travel
more
increased; except for the year
I believe the slight decline
1948.
in
1948
attributed
be
can
to
the
withdrawal of the DC6 which af¬
fected
very
adversely
results.
half
Airlines
first
the
Although American
transported
pas¬
more
in 1948 than in any pre¬
year the average trip was
slightly shorter resulting
in a
small decline in passsenger miles.
Although the rail decline is ex¬
sengers
vious
acted to continue in 1949, it is
expected that; air travel will hold
its
own
show slight
or
gains.
In¬
dustry volume should be between
55% and 60 % that of first class
rail,
or
about 6 billion passenger
>
non-scheduled
carriers.
Let
of
80%
in
miles
ton
the
Air
and mail volume
moderately. Total rev¬
enues were the highest in our his ¬
tory and a further increase is ex¬
express
increased
the
In
fares
and
past
Competition
among certificated carriers.
Du¬
plication wasL piled on top of
duplication until there were in
many cases four carriers where
business was not sufficent for two,
and many more cases where sev¬
eral
lines
were
competing ' for
rates
were
too low and
have
increased, but it appears that
it would be unwise to push pres¬
much
above
those
now
Current load factors at
the present
fare level are none too
and
efficient
more
planes
were
situation.
aggravated
this
Now, this would riot
have
been
so
been
willing
larger
planes
quences
the conse¬
of such competition, but
take
not.
was
;
the Board
bad had
to
Weaker Carriers Bolstered
In
industries^such
most
would
takes
been
have
mis¬
self-cor-.
recting. Weaker companies would
have had
a
strong incentive to
correct their situation and by this
time
would
situation
the
have
repetitive
mail
pay
increases
to the weaker carriers in order to
bolster them,
efficient
Incentive for more
disappears as
operation
continues.
this
As
carriers
still
many
little business
too
result,
too
compete
that by
now
a
so
for
the strong ones
have become weak
now
they, too, require sub¬
stantially higher mail pay.
•
and
high.
More aggressive selling and ex¬
perimentation with promotional
fares designed to fill empty space
and attract
new
business have im¬
proved our revenues to some ex¬
tent;
But an unrealistic competi¬
tive situation makes it difficult
for many
carriers to achieve satis¬
factory loads.
A
The fact that- the new
only one*
by
of our
some
been
rates
certification
a
result
was
a
ridiculous amount of competition
greatly improved.
But the
mistakes have been perpetuated
Unrealistic
•
on
the
and
been
pected in 1949.
;
went
CAB
spree
over
.3
refer first to those in the
us
first category, the certificated air¬
lines.
During the years 1943-1947
1948, American's scheduled
freight showed an increase in ex¬
cess
latter be¬
of the
regularly scheduled oper¬
ators illegally. The passenger car¬
riers are still operating illegally,
but the Board legalized the oper¬
ations of the freight operators by
a temporary exemption order.
In
that of 1947.
non-certificated
or
Most
came
it
miles.
existing.
On the other
and
INSURANCE STOCKS
abnormal
ent
Cost
Unit
decline
sharp
carrier passenger travel from
very
was
Bank
Building.
BANK
side of the picture as well
the expense side.
Since the war there has been a
revenue
as
Add to this the fact that
times
five
of
main¬
service
efficient
of
the
makes
the volume of business
Chkonicle)
National
First
Omaha,
even
expensive
the company during
three
difficult.
is with The National Company
(L. A. Glbbs. Manager Trading
Dept.)
of
planes is
three
burdens.
OMAHA. NEB.—Robert K. Knox
7-35HO
world
pense, unusually high depreciation
First charges, and the tedious and ex¬
Mr. Lord
With National Co.
Exchange
of
and
tenance
Laird, Bissell & Meeds
the
planes.
introduction
duced
Webber, Jackson & Curtis.
request
on
years
many
in
associated with
become
has
Lord
passenger
fleet
new
Holley, Dayton & Gernon
AND
airline
which has completely replaced its
throughout the banking system during the period.
obsolete
-
We
flown.
1947, and 4.6 in 1948.
af¬
5,467,199 2,807,070 2,492,980
Bank, Chicago.
Harris Trust, Chicago
Mellon
National, Pittsb'gh
120
per
rights and privileges
these
of
of
the surrender
for
war
2,159,927
Nat'l__
Nat'l
Bank,
1947
$927,884
;
Tru t
Continental
19
miles
ton
is the
10,000
measure
personnel
Shortly
5,639,523
1,044,600
Fran.
America
'•First
;
of
return
In
-
.
...
Northern
In
82%;
was
57%.
number
ter the end of
4.0"
16.00
passenger
1946 it
In
still further-
A
:
breakeven
find that to be 7.1 in
the
4.3
21.75
17.45
9.00 •<
obscured
was
the
load factors.
3.1;'
254
-233
6.90
4.13
years
11 y hig h
ma
$45 Mi
$51%-$44»/2
23.69
Chicago_______
National, Pittsburgh.
"National
$2.00
4.64
n-
by the abnor-
.
6.84
Boston
Chicago
Trust.
"Mellon
$6.17
in
r
3.94
National
Bank,
1947
$7.09
Fran.
1948
42.44
San
Tnrt
Continental
Price
1947
5.51
Trust,
Yield
Current
1948
1948
•
America
Cleveland
"•First
Range
Dividends
Earnings
.-'j
r
war
was
Price
Operating
■
K:V.
an
public utility
■
•
pays
a
pretty
high price for a franchise or cer¬
tificate for it gives up many priv¬
ileges which other businesses con¬
sider
important
to
profitable
operation
and
self-preservation.
Among the things it surrenders
is
its
(a)
freedom
to
change
prices at will, (b) right to operate when, where and as it pleases,
i (c) the right to withdraw quickly
.
Imposed
upon
this
already
chaotic competitive structure are
the noncertificated carriers. The
carriers
cargo
entered scheduled
Many filed ap¬
service illegally.
certificates.
The
legalized their oper-:
ation by exempting them from
them the provisions of the Civil
Aeronautics Act.
They have lost
plications
Board
for
then
20c to 50e for each
taken
enue
vided
as
no
all
in.
new
of their
dollar of
They
services
rev-:
have pro¬
inasmuch
service is between
major cities where
there
are
already from two to
four certificated lines.
They have
achieved their volume byrates
a
dozen
or
so
(Continued on page 35)
:
*
Volume 169
Number 4778
THE .COMMERCIAL
&
United States Aid in
Sound
British Colonial Development
^.•7.';''
:By
East Africa another Argentina
Bank
of
Reconstruction
•
and
of food supply.
as source
LONDON, ENG.—The prospects of
loan
a
Development
British
Colonial
Development Corporation are viewed with much satisfaction in Lon¬
don. Following as it does close on President Truman's
reference to
I
the
m
entirely
t
t
n
ther the size of their uneconomic
herds
of
it
the
imp ression
their
words
tical
long
imporis
Dr.
as
Paul
■}
■'v.X
:
the
only
Marshall Plan
not
1952,
if
device
which
for
achieve
only
in
that
because
itself
end
by
Britain
be drawn into
is
arrange¬
ments under which she will have
to
make
considerable
sacrifices
for the sake of
helping other less
placed Western Euro¬
favorably
pean countries.
Beyond
>
doubt
considerable
there
are
possibilities
very
within
easy reach. It is generally known
that, with the aid of American
•rolling
stock
the
railroads
of
Central
Africa
could
make
immediately
that
in
West
groundnuts
solution
would
this
have
in
areas
of
Africa
which
there
are
could
be
transport facilities.
There
many
The
mobilizable
earnings
rencies
is
other similar in¬
total
sum
easily
savings in hard
believed
cur¬
to
be
very
T'-
:
Z:i
large.
When
-
of
in terms of
resources
or
it
to
comes
Africa
inclined
to
feel
that
the government is
over-optimistic
about the extent of the
possibili¬
ties.
Recent
official
foreshadowing the
East Africa into
tina
statement
conversion
second
a
of
Argen¬
from
cattle
with
The
the point of view of
breeding are looked upon
skepticism among experts.
idea
their
the
take
of
wealth.
problem
into
account
backward
and
elsewhere
livestock is used
where
rency should
the issue of
as
cur¬
attract
deposits by
ornamental badges
indicating the size of deposits.'It
reasonable
seems
necessary to remind you that I am speaking
member of the Civil Aeronautics Board. The
The subject assigned to
my own.
n."
o
I
to
Financing
great ■; many natives would ac¬
quire the banking habit if some
such
device
to
were
be
adopted.
At present they derive no satis¬
faction from possessing large, de¬
posits with banks, as there is
nothing
to
show
for
such
de¬
posits.
V
This is
only on# instance of the
practical? devices which
kinds
of
could
and
should
embarking
of
be
large-scale
breeding as
projected develop¬
on
a
part
of
the
ment
of
Africa.
that
politicians
What
matters
is
financiers
and
This
ting,
acquainted with local
conditions, instead of trying to
proceed
but
of
on
false
the
the
basis
of
popular
analogies, such
creation
of
a
as
that
second
Ar¬
gentine in Africa amids conditions
utterly unlike those
in the Argentine.
Any
all
require
as they
are, are not inexhaustible,
and should be
employed for prac¬
schemes
diate
return
fit¬
finan-^
ised
structure
busi¬
any
the
venture;
outlook
air
t
must
Harold A. Jones
t i o n
depend
on
solid,
a
1
sound
foundation.
attain
never
the
We
broad
promising
instead
are
finan¬
cially sound, because the airlines
are
the tools of
Air
Policy.
Forgive
to be
the
the
being
risked in magnificent but dubious
enterprise.
to
gard soil erosion
as
portant
of
problem
re¬
the most im¬
Africa.
It
is
feared
that, while at present the
fly-infested regions are at any
rate protected against overstock¬
ing of livestock leading to soil
erosion, there would be no such
restraining factor in operation if
extermination
of
tse-tse
proceeded with before the
native population can be ihduced
to change its present attitude to¬
The. root
widespread
South
riieep
of
J,., j
the
evil
practice
in
is
the
East
Africa
to
regard
cattle,
goats as a form of cur¬
It is because of this that
natives are inclined to keep much
larger herds and flocks than is
justified by grazing facilities and
water
cattle
store
are
supplies.
are
of
is
wealth
as
that
because
the
the
Unless
custom
this
characteristics of
culty, of
course, is to define these
characteristics correctly.
Just
what
creature is
(1)
kind
Is it
of
corporate
a
airline?
an
Transfer of the
Exchange
in free competition operated
for the profit of management and
ness
investor?
(2)
Is it
public utility anal¬
a
phone company,
utility?
other
or
tele¬
such
the
by
policy—economic, dip¬
military?
(4) Or, finally, is it
composite
a
of all these factors?
should be apparent.
to have
1
.
of
charges. (regulated by the
Board) without unjust discrimina¬
undue
preferences
ad¬
or
is
estimate
we
airlift,
It
is
trained
how.
It
or unfair or destructive
competitive practices." x - K
Competition was to be permit¬
only to the extent necessary to
ted
assure
on
Feb.
tinue
24.
con¬
partner of Dobbs & Co.
as a
Interest
Hardt
Mr. Dobbs will
of
in
the
late
Frank
Montgomery,
M.
Scott
&
Co. ceased Jan. 30.
the
Board
as
r
to
The
Financial
It sometimes seems
guson
is
with
Harris, Upham
Co., 1620 Farnum Street.
&
a year, $166.00 a
day, to
each of the smaller cities
serve
This
petty mat¬
a
a
granted
by
showing
of
so
competition
.
.
un¬
re-
V >;:.V
capital
in the
doing
might
system
invested
was
the
condition
Act.
As
is
line
break
even,
earn
fair return
last
It
war.
than
the
to
more
was
estly and efficiently managed air¬
certainly
national
de¬
sufficient
a
to
permit it
in addition,
and,
useful
airline
carries out
ships sunk at Pearl Harbor.
bargain: that is
on
investment,
lions of dollars invested in battle¬
the
many,
mil¬
many
so
to
to
its used and
long
as
the
its part
of the
maintains and
—
continues
the development of its
system to the extent necessary to
us if
at the time of our entry in furnish an honest utility service to
World War II we had not had an the citizens at reasonable charges
unjust
American airline industry and an without
discriminations,
the
postal
service re¬
aircraft manufacturing industry? perform
quired of it, and keep itself ready
The answer is apparent. It would
Expressed
in
another
way
—
have cost
us
the war—if
billions
we
more
could have
to
to win
it
won
aid
in
Airline
of
Having
Composite Creature
a
We must then
come
to the
kind
ment
instrumentality,
and
we
later
and
with
the
promised
address
an
Airline
determined
<
just
what
of
What
are
its
teristics from
govern¬
inherent
charac¬
earnings and in¬
an
vestment standpoint?
financed
consider airline
defense.
structure it should have, we may
next ask ourselves this question:
with private capital and managed
When
national
corporate creature the
airline is, and before we can de¬
termine what kind of a financial
con¬
clusion that the domestic and for¬
a
the
Inherent Economic Characteristics
under such circumstances.
We
have
a
sufficient
back¬
ground of experience to recognize
many of these economic character¬
national istics, although in the airline busi¬
ness we can
expect surprises al¬
most daily. We do know that the
welfare in mind, we must answer
this question: Whose primary duty
is it to
curity
see
that these national
objectives
shall
be
un¬
sound airline financial conditions?
dent's Air Policy Commission and
the Congressional Aviation Policy
Board emphasize the absolute ne¬
The
business
se¬
not
University, Washington, D. C.,
2, 1949.
can
airline's'system.
I said
this
by Mr. Jones at
Third
Annual
Meeting
of
Air
Transport Institute of the Ameri¬
Feb.
an
contribution made by the aviation
industry to the national defense in
financing,
grant them if by
necessary
sult.
on
recognized in
before, in my
ly small amount paid in mail pay opinion, the Act requires that the
to the airlines in relation to the Board allow mail
pay to an hon¬
placed in jeopardy because of
J. Fer¬
free enterprise in open com¬
It costs approximately
a
and towns
consider the relative¬
we
to
*An
Chronicle)
OMAHA, NEB.—Robert
on
passengers
and
that
many
points
served
$60,000
and
air¬
by private individuals.
Private
With Harris, Upham Co.
be
manufacturers to keep in The business
generated at these
being manufacturing facilities points seldom
pays half this cost.
readily convertible to the build¬ It isn't good business to
serve
ing of military aircraft.
them, but they must be served.
jthe characteristics of
be
profit¬
served.
of
demand
.
frame
public convenience and necessity,
and impliedly, the Board was not
used
(Special
only
to
in
be
petition.
of
the
were
a
which would not
be served by an airline
operating
air
Routes
•
demands
citizens,
traffic
would
carriage
must
vantages,
an
its
Likewise, rapid communication by
value
personnel,
permits the
volume
the
.
its
for
generating
mail
of
reservoir
a
welfare
service
what would have been the cost to
some
public util¬
a
ties
able
adjunct of the Military Es¬
know
.
,
was
can
an
fense
able
tion,
as
interior
beyond estimation.
Nor
worth
Public Utility
answer
value
the
national
great deal of which must be
per¬
formed
at
an
operating
loss.
Otherwise, only the principal ci¬
of essential personnel within
of
crea¬
airline there must
an
security for his investment.
The
munications and rapid transporta¬
zone
as
:
corporate
some conflict of in¬
The investor is
naturally
in profits and reason¬
utility
national income many
its cost to the govern¬
over
ter when
(3) Is it primarily an instrument
of national
lomatic and
mem¬
bership of Newell B. Whitcomb to
Candler Dobbs will be considered
ex¬
fur¬
however,
production - of
materials it must in¬
tablishment.
free enterprise busi¬
a
composite
interested
Of course, in a war econ¬
when the winning of the wat
depends on the speed of produc¬
tion of war materials,
rapid com¬
the
financing. The diffi¬
Pol¬
necessarily be
the
up
and
crease
about airline
•
deeply-rooted
increase
Materially,
speeding
tion
basic
a
ture such
the value of
assess
sound development of eign
airline, as a matter of basic
transport system properly 'national policy, is a composite
The New York Stock
Exchange adapted to needs of commerce, the 'creature with
the characteristics
has announced the
following firm Postal Service, and the national
\of a public utility, combined with
changes:' '
y
;'y-v' defense.
*<■
is
natives to
It is hard to
In
ment.
■
-
kept
National Interest
Objectives
com¬
welfare and not for the profit
of the individual.
the air transport industry must be
stated before we can even talk
natives
changed the extension
grazing land would, merely en¬
able the
Poughkeepsie
main
reluctant to sell them for
port.
of
It
employed
in
Exchange
Weekly Firm Changes
and
or
rency.
Pratt
southern Duchess County. >'
and the
national
omy
the characteristics of
fly New York Stock
were
wards livestock.
A. Jerome
and
all
are
mon
times
Basic Problems and Policy
be
icy Board said:
able
of* acti¬
military auxil¬
Congressional Aviation
fare.
are
question^ them¬
Aeronautics Act.
with them of Samuel Markson in
their
Albany territory and of
The
terests.
Congress spelled it out in the Civil
Newbery
designed for the
practical
consequences
vated policies.
The airline
Chilson
These
goods
basic
potential
iary, the airlines must
strong and healthy."
rapid movement of persons, prop¬
erty and mail to the common wel¬
KINGSTON, N. Y. —Chilson, ity, i.e., "the promotion of ade¬
Newbery and Co., Inc., 48 Main quate, economical, and efficient
services by air carriers at reason¬
Street, announce the association
quarters which
defense."
objectives
Most probably the correct
answers will only be found
by the
Certain
a
questions
my
implicit in the
selves.
The
^
enterprise.
The President's
war.
Policy Commission said:
"As
if I state that
me
uneasiness in
cattle
Air
in¬
"National security
requires a fi¬
policy — economic, diplomatic and nancially
sound, and technically
military. They were to be "adapt¬ modern air transport
industry."
ed to the present and future needs
Let us remember
this special
of the foreign and domestic com¬
emphasis.
merce of the United
States, of the
Postal Service, and of the national Conflict Between the Profit Motive
I
outset
employing the Socratic
answers
not
at
if
me
National Civil
our
method. Believe
imme¬
of
ob¬
jectives of the Civil Aeronautics
Act unless the airlines
seem
private money
Congress also intended the air¬
lines to be instruments of national
transa
financial
will
the event of
unnecessary
an assurance of a
Instrument of National Policy
of
The
r
from
on
vested in the
that
in
a
very
foundation
p o
protection
fair return
venture
ness'
is
all characteristics of
are
competition, and
ogous to a power company, a
careful preparation. Even the re¬
sources of the United
States, large
tical
is
the
of
prevailing
schemes
grand
These
cessity of maintaining and
pro¬
moting a financially sound air
transportation
system,
pointing
public utility — a regulated busi¬ out that the
rapid transportation
ness,
the price for its product and communication
furnished by
regulated by government, obliged the
airlines, and the reservoir of
to perform services whether
prof¬ trained personnel and airlift, are
itable or not, but in return
prom¬ vitally necessary and
invaluable in
for after
rial
should take the advice of anthro¬
pologists
n
tion."
applied be¬
animal
i
Air
Transporta¬
that
assume
"Sound
to
Two With
the
tonight as plain "John
opinions I express are
"The Outlook in Air Transpor-
was
fair return under honest and ef¬
ficient management.
a
extending the zones
breeding is pos¬
sible, through the extermination
of the tse-tse
fly is causing some
which
on
tonight
me
<$>
changed
Civil
a
long-term
schemes, quarters well-connected
with
that
their
of
to
Africa
extension
brought to Britain with the aid of
are
is
attitude; Banks in
fore
and
additional
stances.
a
deriye satisfaction by the
cop¬
available,
large immobilized stocks of
very
go
evidence
very
large supplies of Rhodesian
per
be
prac¬
would
used
'
bound to
to
simple
a
towards the reduction of
are • so
The
hope
develop¬
could
problem
is
visible
Einzig
Britain to balance her internation¬
al trade with hard
currency coun¬
tries. It is now realized that in the
absence of such colonial
the
this
owners
de¬
it
breeding
There
way
they
accelerated
ment
the
not
and
monetary
use
of
domestic
animals. One of the reasons why
tached here to
velopment,
practically
is
have
fact
of
the
at¬
colonial
the
would
the
tackled?
deeds. The uttance
And
number
matters
quality
How
be
translated into
t
the
that
prevent
that the Presi¬
m o s
flocks.
is
effectively
of
good
quality cattle for the require¬
ments of meat export.
conveys
soon
it
animals
countries,
will
and
that
backward
dent's
t i
a
as a
—
in
develop-
e
hardly think it
Citizen" and not
Am erican
assistance
Member, Civil Aeronautics Board, Washington, D. C.
by the International
the
to
17
Stressing importance of sound financing of civic air transportation as a national
polciy, Civic Aero¬
nautics Board member points out conflict
between profit motive and national
objectives. Holds law
requires Board to fix mail pay to efficiently
managed airline that will give fair return on investment
and lays financial distress of
many airlines to excessive competition rather than
poor management
Says difficulty is being remedied and looks for more
efficiency in air operation. Suggests emergency
i.:..\!
loans to air transportation companies
by RFC.
Foresees difficulties in trying to make
materials.
raw
(769)
By HAROLD A. JONES*
PAUL EINZIG
Commenting on prospects of World Bank loan to British Colonial
Development Corporation, Dr. Einzig points out its beneficial effect
in making available
supplies of Rhodesian copper and other
CHRONICLE
Financing of Air Transportation
,
'
important
FINANCIAL
reports of both the Presi¬
expenses.
is
one
of
Under
high variable
normal condi¬
tions it should be free from large
fixed investments,
eral
now,
since the Fed¬
government has erected and
maintains its right-of-way,
and Federal and local funds have
:
,
(Continued
on
page
31)
18
these
old
two
Charles
well-known
and
BRANCHES
NEW
REVISED
Bankers
and
ETC.
•NEW OFFICERS,
i
which at that time had 37 employ¬
nounced
Switzerland,
of
Bank
Union
advices from the
fice
Today Central Hanover has more
an*
employees and one and
one-half billions in resources. Mr.
the
Feb. 25,
the dis¬
porate Trust Department of Cen¬
tral Hanover. After his retirement
than 2,600
of
receipt
14
Wolfe served as head of the Cor¬
Zurich stating that at
at
stockholders'
meeting
on
the directors will propose
tribution of
tinue
capital of Sfr. 60,000,000.
the stock
the
crease
Sfr,
director of several cor¬
a
'
-'
of
Bank
served
its President,
as
by the issuance of new shares of
Sfr. 500 par value, the new shares
to be issued to the stockholders
helped
at Sfr. 600, as
ville Center.
ket
price
Teb.
of
11. "The
compared to a mar¬
Sfr. 830 quoted on
premium will be
1
.i
••
•
South
in
Rock-
Company
-
v
,
sjs
's!s
21,* the Union Square
Manufacturers
Trust
Feb'.
On
of
added to the reserves of the bank
Office
"which
Company of New York
will
be raised to
amount of approximately Sfr.
an
thereby
Feb.- 11
on
their
at
statement of condition
31,
at Fourth Avenue
and 18th Street. This new office is
bank's
location,
the carry-over
which is added to
corresponding 1947 figures were,
net profit Sfr. 4,137,629, and un¬
divided
profits
carry-over
Sfr.
=:<
President
years.
bankers. Commissioned in 1941 as
the
U.
S.
African
was
duty
as
Africa.
World
Belgian
Azores,
is
He
-Marston and
L. Marston
a
a
s):
Schacht
Empire
also
Trust
been
Brunie.
and
Metropolitan
George
Company
in
Office
ir"
.
Frank
-
'
of
S.
U.
,'sjs
Schacht,
New
the
;*
Wolfe, Vice-President of
York
bank's
will
retire
retirement
under
plan
tury with the bank. Known
of
corporate
trust
as
the
oificers,
Mr. Wolfe has watched the in stir
the years'. He
started as an office boy in 1900
with the Central Trust Company,
tution
grow
of
and
York,
with
inactive
bank
and
insurance
STOCKS
announced
was
ri*'
•.
$
'
J
■•• :>•
■'
•
on
with several New York bank¬
was
ing institutions before going with
the Federal in 1926, became As¬
Secretary of the latter in
sistant
according
"News."
•»?.
joint statement issued
a
Feb.
1866
*1*
»!*
»jt
^
In
on
William
G.
Semisch,
President
of
Second
National
Bank of Philadelphia, and Wesley
15,
Marquette staff in 1930, was pro¬
moted from mortgage loan officer
| rison,
Assistant:' Vice-President,
iwas; elected Cashier to succeed
Smith, President of Tioga Na¬
delphia, announced that the direc¬
mously approved
the
a
proposal under
will pur¬
National
Second
chase
and
assets
the
assume
liabilities of Tioga Na¬
tional. At meetings to be called
deposit
tunity to
cial
their approval of
complete commer¬
vote
action.
this
Assistant Vice-President.
an
in
both
A
banking service will be avail¬
at the Tioga office of the
National
and
of
Bank
the
Phila¬
customers
posits
of
State
The
Savings
1834
of-New
$25,000,000
total
and
❖
of the bank's Montreal branch for
:
'
•
A.
,
V.
.
'■
>
•
President
Malcolm,
of The Drovers National Bank
of
Chicago, announced
North
York
following promotions:
Frank M.
Covert and Robert Lough, Vice-
were
on
Feb. 9 the
Presidents; Leo R. Gruber, Viceand. Cashier;
President
Fred
D.
Cummings, Assistant Vice-Presi¬
dent, and Wesson S. Hertrais, As¬
sistant Cashier.
succeeded there by G. B. Neapole.'
Lowenfels Pres. of
Curb
East
Grand
42nd
Central;
Street,
34th
Street and 5th Avenue;
130 Bow¬
ery^ at Grand; and at 34th and
and 33rd Streets, just west: of 7th
Avenue,
opposite
Pennsylvania
Station. The Bowery is the only
mutual savings bank with an of¬
fice directly opposite each rail¬
terminal.
The
new
officer
*is
as
jfollows:
Henry
Bruere, President and Chairman
of the
board; Harris A. Dunn,
Vice-Chairman of the Board; Earl
B. Schwulst, Executive Vice-Pres¬
ident; Robert W. Sparks, First
Vice-President; P. Raymond Haulset-up
Administrative
Vice
-
Vi
Presidents:
MacDowell,
c e-
J.
Donald
Richart, R. Benson Ray, Fred C.
Smith and Henry
"The purpose
F.
G. Raab.
of the merger of
Clearing Corp/
Following
the
resignation
.
from
Moffatt
C.
Fred
of
Presi¬
the
dency of the N. Y. Curb Exchange
Securities Clearing Corp., an office
almost
held
had
he
since the
continuously,
cor¬
organization of the
poration in 1931, Bertram R. Low-;
enfels, a regular member of the
Curb Exchange since 1925,
was
unanimously elected to that ex¬
ecutive
post at
directors' meet-.-
a
ing last night. Mr. .Moffatt, who
resigned for reasons of health, will
continue
as
director of the cor¬
a
poration,; according
to
Francis
Adams Truslow, President of the
Curb
who
Exchange,
thei
made
Lowenfels-
Mr.
announcement.
will also be Executive Committee
Chairman.
i
•
and
stock
of
of
dividend,
a
it has
Joseph B.
been an¬
Montedonico, Chairman of the Board and
President.
In reporting this the
Memphis"Commercial Appeal" of
nounced
by
Mr. Lowenfels became a direc¬
tor of the
Clearing Corp. in March,
a
member
of the Executive Committee since
March, 1946..
Active
in
the
since
ness
has been
Richard
brokerage busi¬
Mr. Lowenfels
1915,
partner in the firm of
a
K.
Kaufman, Alsberg &
Co., since 1942.
The partnership
of Byck & Lowenfels was formed
in
dissolved in
and
1927
the latter year
Feb. 5 said:
and
Treasurer
the
"With
subscrio-
stock
new
came
In
1935.
Mr. Lowenfels be¬
of
partner
a
tions
the
and
^payment of the
the bank will have
a capital stock of $100,000, surplus
of $86,000 and undivided profits
of
$63,000.
Total capital assets
stock dividend,
Richard K;
eventually
will be $249,000."
Co. which
Kaufman &
became the
The
/
resignation of Mr. Moffatt,
of the
one
present day firm.
principal organizers of
Clearing Cor¬
the Curb Exchange
poration in 1931, was received by
the the Board of Directors with deep
stockholders, it is said, have sub¬ regret.' Mr. Moffatt became first
scribed to 360 shares (par $100) at President of the corporation and
$200 per share; the stock dividend had held that post continuouslly
In furtherance of the plans
of
shares
140
final
the
will, it is said, be
in increasing the
shares, from 500 to
step
outstanding
1,000./ The bank was founded in
1887
with
J.
S.
Montedonico,
present head of the
father of the
bank,
from 1935
a period of four years
through 1938, when he
President
was
of
Curb
the
Ex¬
change. During this period he was
Director
a
of
the
time
At
the
he
of the organizers.
as one
except for
was
Corp.
resignation;
Clearing
his
of
*
'
The
boards
Hi
Hi
.
Chairman
also
Executive
the
of
directors
of
McLarin, Jr., President of
W.
S.
the
Federal Reserve Bank of At¬
member of the Federal
Open Market Committee for the
year beginning March 1 and have
elected Chester C. Davis,* Presi¬
dent of the Federal Reserve Bank
as a
St.
of
Louis,,
member to
the
of
the Commit¬
on
tee in the absence of Mr.
R;
Gilbert,
R.
Federal
is
as
a
of
Dallas,
of the
ending
the
for
the
of
member
Bank
Reserve
serving
Committee
McLarin.
President
•
year
Hi
si!
Feb. 28,
Hi
1949.
Ff Verhelle was named
the initial meeting of the direc¬
tors
the first President of the
as
City Bank of Detroit, to be
new
located in the Penobscot Building.
At the
time, John H. French,
Jr., Vice-President of the French
Mortgage
and
Bend. Company,
same
is
who
also
a
member. of
Directors
Board
of
Bank,
was
of-
the
the
City
elected Vice-President
Board. Also
elected Vice-President of the City
Bank
was
Laurence
P.
Smith,
and Secretary to the
who
was
President of the Central
to the time of
the First National
and later was a partner of the
firm of Bennett, Smith & Com¬
Savings Bank
ernors
the
of
the
served
Board
of
as
Gov¬
of the Curb Exchange from
through
1944
and
as
( its
President pro tern from July, 1942
through
He is at present a
Exchange and
1945.
Governor
of
the
Chairman
of
the
Committee
on
Public Relations.
his Wall
Beginning
1904
in
reer
office
as
Street ca¬
boy with
Sternberger, Sinn & Co., Mr. Mof-.
fatt shortly became a telegrapher
for
B.
Edward
Smith &
Co.-/ He
thereafter joined J. W. Davis
soon
&
£
He also served as President
of the Detroit Stock
Exchange
and was a member of the Board
of Governors of the Association of
pany.
New York Stock Exchange
firms.
telegrapher,
as
and
re¬
mained with that Stock Exchange
At the
of the
25
annual meeting on Jan.
Barnett National
Fla.,
Jacksonville,
of
W.v R.
Bank
President
the
announced
McQuaid
promotion of E. G. Haskell from
Assistant Vice-President to Vice-
President; A. B. Davis, from As¬
sistant Cashier to Assistant Vice-
President;. O.
Assistant
Johnson,
L.
Cashier
Vice-President,
to-
and
D.
firm,
to
G.
Cashier,
Assistant
Sept.
acquired
his
hi$
12,
1923,
when
membership
the New York Curb
on
*
Exchange.
With Merrill Lynch Co.
(Special
to
The
Financial
"V
Chronicle)
GREENSBORO, N. C.—Chester
learned from the Florida "Times-
W.
Union" of Jacksonville.
Merrill
$
of
until
Stod¬
is
exception
War,
he
from
it
the
service during the 1st World
~
dard
with
army
Assistant
Hill
has
joined
the
staff
of
Lynch, Pierce, Fenner &
Hi
Hi
Beane, 107 West Gaston Street.
up
its merger with
Co.,
Hi
Hi
Joseph
at
Chairman
1941
also
Moffatt
"Mr.
of
*
Clearing Corp.
alternate
an
as
serve
Committee
•
'
Four offices are lo¬
110
past three years and will be
the
sale of new
declaration
the
stock
'■
$888,000,000.
Watson
pointed as Assistant General Man¬
ager of The Royal Bank of Canada.
Mr. Sedgewick has been manager
1944, and has been serving as As¬
Bank
Savings'
its capital through the
lanta,
❖
Bank,
the
and
'
Sedgewick has been ap¬
sistant
%
Memphis, Tenn., plans to double
the
of $27,000,000.
resources
George
V
*
$787,000,000. Depositors
number more than 500,000. Com¬
bined "assets
total
more, than
road
*
i
can
business with
continue to do
same
"♦ '■
V'
,
Hi
j.i
'
delphia,
years.
of
opposite
f.i
,
ond National Bank will have de¬
20
•
from
.
tional Bank and Trust Co., Phila¬
which
were
advices
<
.
S.
the
and
Bank
-
Lyle Stotesbery. Signor R. Silver¬
ness, Assistant Cashier, was named
mechanical engineering
merged on Feb. 15 as The Bowery
Savings Bank. Deposits are in ex¬
at:
Ronald B. Har-
Dallas and St. Louis have elected
bank.
Savings Bank, chartered in
cated
who
completion of the purchase, Sec¬
Bowery
River
Newark
the
to
elected
Marquette.
joined the
Mr,
the
*
■
post
As-
an
was
the
of
Petterson,
the
Hi
Federal Reserve Banks of Atlanta,
for the past
The
that
in
succeeds
Coonrod,
! to Vice-President.
^
Henry
.
S.
officers and personnel. Upon
of
a
President;
NEW YORK
of
by Harvey L. Schwamm,
enbeek,
Kenney & Powell
Bank
Bronx
Cashier
been
reported
George
I Paul
La¬
shortly, stockholders of both in¬
stitutions will be given 'an oppor¬
/
President,
New
'
cess
on
March 1, after almost half a cen¬
.dean
•
,
graduate of the Stevens Institute
of Technology has been in
the
structural steel and building fields
At¬
'' t>:
it
York,
13
President
has
Central Hanover Bank & Trust Co.
of
'
,
also
I Vice-President
Coates
the
1943 and for'
been As¬
Officer.
sistant Trust
Second
chartered
■
in
National
Feb.
torney.
'!•
'
"Star'.'
said
of years has
number
a
The
New
S.
Newton, Lombard & Irvine served
overseas in World War Las pilot
in A.E.F., was chief of Criminal
•Division
with
associated
fayette National in
J., has been elected a director
by
Mr.
Leisure, ' who is a
Donovan,
Leisure,
of
Company
%
had
Savings jsistant Vice-President,
of
League
and Loan Associations, Mr.
became
on, j
and1, the
Association
Loan
able
announced
Mr.
partner
of
Russell L. Stotesbery, was
proImoted to Vice-President. The new
■
,,
President
of
that before
Feb. 8, according ito an announce¬ i joining the bank last year, he had
been President of the Union Say¬
ment by Col. Walter Jeffreys Carlin, President. A former President ings Bank at Grand Mound, Iowa,
of the South
Brooklyn Savings jfor 16 years,/The same paper also
of
the board of directors
to
,v
■ i
meeting
York at the directors'
N.
of the founders of
election
The
•Leisure
i
brother
of Brooklyn in New ; since June, 1948. The Minneapolis
Bank
tional
plants in the Bronx and Hillside,
grandson of Edgar
one
Henry
Construction,.*. Inc.,
Steel
offices
with
Hunter
of
«
Schacht,
Lawrence
Airways in
and
Congo
son
J.
Corporation
Trust
New York.
Blair & Company.
•of
Banking
Schroder
a
American
Pan
:the
of
Treasurer
and
discharged from active
Lieutenant Colonel in
.1946-." Since then he has served
;and
<•'
tors of the two banks had unani¬
elected
been
Schroder
Theaters
European
has
Kuster
Assistant
in the North
overseas
and
\J'f
•
Emil
Army, he served with the Army
•Air Forces
.
Bank
quote.
we
M.
long name,
old South
*
meeting in Jan¬
Marquette National
Minneapolis,
Lyle
J.
Trust Officer of the Lafayette Naf- iVice-President
of the Federation Bank and Trust
Company of New York announced
appointment of Edgar L.
on Feb. 9 that William B. Oakes,
Marston as Assistant Vice-Presi*
^Treasurer of the Charles Francis
dent of Empire Trust Company of
Press, has been elected a director*
;New York is announced by Henry
of the bank. Mr. Oakes has been
C. Brunie, President. Before the
director of the Federation Safe
war Mr. Marston was with Glore,
Deposit Company for a number of
;Forgan & Company, investment
in
>!sj
which
State
annual
of
the
National
said
merged,
the
of
Stotesbery,
•
>:•
when
Commercial
K.
the
borne
National;
Texas
joined
White
Mr.
1928.
the
Bank
Albert T.
Martin, resigned, who was also
Vice-President.
Mr. Hegel, who
Thomas J. Shanahan,
Lieutenant
issue of
our
Whitfield C. Coates was elected
The
First
uary
23, page 2612.
1945,
,3,406,271.
a
At
Dec.. 20,
on
to- in
referred
were
proposed
the
for
announced
merger,
H. Hegel was elected
Secretary of the Federal Trust Co.
of Newark, N. J., on Feb., 10. He
by Frederick Becker and Russell
B.
Wilkes, Assistant Secretaries
and
John
Cagney,
Assistant
Branch Manager.
of undivided profits of 1947 in the
amount
of
Sfr.
3,798,900.
The
.
Plans
bank.
Deposit "Company.
William
H.
Hill, Jr., Assistant Vice-President
is the Officer-in-Charge, assisted
Sfr.
to
1912,
Peoples
the
>:•
posit facilities will be made avail¬
able through Manufacturers Safe
1,461,492,982,
compared to Sfr. 1,413,591,668 at
the end of 1947. The net profit for
1948. amounted to Sfr. 5,248,106,
amounted
spacious than the present
and increased safe de¬
more
of Dec,.
as
that date the total resources
on
quarters
new
meeting
approved the
Square
will move to its
East for 20 years,
directors
The
which has
located at 44 Union
been
'45,000,000.
and later
the
organize
to
Trust
Shore
and
Merrick
National
in
iBank
the staff of the merged
on
Merrick, L. I., for
past 40 years,, Mr. Wolfe was
of the organizers of the First
one
60,000,000 to Sfr. 70,000,000,
increase to be accomplished
retained
Dec.
"
,
A resident of
board
.the
as
porations.
year's dividend was 6%. The
will also propose an in¬
of the stock capital from
Last
he intends to con¬
from the latter,
dividend of 7% on
a
million.
of $53
resources
bank's head of¬
Feb.
on
and
ees
the
had
since
investment of the armed services in 1942 and on
The
greater his return became one of the orBowery will continue to devote iganizers of the Hazel Park State
special effort to financing new iBank. He was named Cashier and
housing, notably in the New York ;a director at the opening of that
metropolitan area and in other jbank and was later promoted to
nearby localities.'.'. It is announced i Vice-President. The opening of
that every officer and employee ; the
bank is scheduled for the
of the merging banks is
being latter part of this month,
savers'
W. H. Stalder, New York repre¬
bank
the
of
director
for useful
deposits.
tunity
sentative at 14 Wall Street, of
with
ginning
better—through broadened oppor¬
CAPITALIZATIONS
Vice-
former
White,
and
Peoples State Bank of Hazel Park,,
Mich., was named Cashier. Mr.
White's banking experience ex¬
tends over a 20-year period, be¬
pective depositors. The union will
also enable the greater institution
to
serve
the
entire« community
CONSOLIDATIONS
D.
President
according to President
Bruere, "is to permit increased
service to its present and pros¬
banks,"
News About Banks
Thursday, February 17, 1949-
CHRONICLE*
FINANCIAL
&
COMMERCIAL
THE
(770)
The
South
National
has
Commercial
Texas
Bank
of
Houston,
Tex.,
dropped the word Commercial
from
its
name
as
a
matter
of
convenience to the customers, the
bank announced,
With Ralph E. Petersen:
(Special
to
BERLIN,
The
Financial
Chronicle)
WIS.—Lloyd
according to spe¬
cial advices from Houston, Feb. 5,
is with
to the Dallas "Times Herald." The
180 North Adams Avenue.
•
Watters
Ralph E. Petersen &
Co.,
Volume
169
Number 4778
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Public Electric Power—Permanent
\
critical
shortage
Federal Government in
with
resources
stressing
of electric
urges
business chiefly as a
vate water
power ownership can be reconciled and private equities and interests can and should be
protected fully. Sees need for doubling present electric power capacity in next decade, and advocates
government power marketing be on a businesslike basis.
*
power
private
effort
We've
got
fast
to
What
dustry.
ele¬
got
well
may
The water
to
position.
The drive
which
to
be
the
people's benefit.
first* Roosevelt
had
bitter
The
your
organization is
opposition,
own
supply
a
conductor,
cent
J.
that
fighting
you
that
needed
conductor
equipment and
backing of the
ment in that
But
will
you
you
are
get
have the full
activity.
—
- :
service
perfected* the
how"
The
to
the
idea
the
ment
fit
little
with
favor
and
I
less
tremendous
tunities
and
government's
with
the
In
power.
wholesaler
authorized
transmission
the
to
power
construction
facilities
load
to
oi
take
;
froir
centers
which it
can
out that
authority the only buyers
would
be distributed.
those
be
who
With¬
could
come
to
the dams, or principally
utilities already operating in
the
the
region.
Of
equal
importance
busi¬
to
nesslike
clear
the
decision
mental
groups,
of
source
such as
energy,
steam
generating plants, to "firm
hydroelectric, energy which
up"
otherwise
at
would
bargain
prices
H&ve to be sold
basement
wholesale
secondary
as
dump
or
resold at retail at the
power to be
existing rate of the private utility
benefit to the
It is good business for the
country, too, to develop its con¬
stantly-renewed water resources
been
Johnsonville
steam
in
The
attack.
to
plant
generation
is
of
nc
consumer.
order that their energy
poten¬
tial
may
help conserve our
exhaustible energy resources—oil
of
TV A,
fac¬
that
Clearly
has
developments
power
subjected
the steam plant and market¬
ing facilities for the great Central
Valley Project in California, the
hours to
where
the
keep
breaking
down
he must wait
two years or more before he can
get- it. - We are far from having
Only
any
new
find
to
that
cushion of reserves to meet
loads or emergency require¬
ments.
an
national
be that
our
sufficient
meet
to
quirements of
economy
all
essential part of
policy should
supply must be
power
power
a
all
the
of
re¬
full employment
and provide reserves for
emergencies whether those of
operating
an
character
or
those
threatening our national security
icy
into
involves
we
start to put that pol¬
effect,
States
electric
dams
the
we
that
find
construction
the
United
and
of
and
facilities
by
it
the
more
hydro¬
power
houses
for
marketing
their output.
And that will bring
another very
critical barrage from
certain
■
Some
ent and
segments of the power in-
great—; ment
are
'■
.
■_
have been employed.
Most of
you
at
the
Annual
National
Rural
Convention of the
Electric
ative Association, New
Cooper¬
York City,
Feb. 2, 1949.
in
the -power
witness
i
to
companies
business.
this
fact, the private
the Southwest are
of
in
the
three
next
while
years,
total annual pay of any five
i President's
nine Cabinet
and
ried forward in time.
the
officers.
Only last week this gent
commanded
leading
the
Many
"The
In it
have
you
lobby's
a
power
plete
by
Valley Authority.
of
Power
the
picture,
Free
People."
a
was
used to char¬
government's
repre¬
working for a public
In order to com¬
agency.
the
raised
the
seen
motion
of
swastika
acterize
our
damning
proposal
for
a
President's
Columbia
power
headlines in
news
newspapers
confusion,
of
"socialism"
munism."
It
is
cries
are
"com¬
or
charged that the
government's power activities-are
the
that
advance
dustry.
I
will
am
guard
socialize
will
of
an
army
American
in¬
that
I
and
transmission
Public
fail,
as
assumptions.
that
this
it
rests
It
tries
opposition
on
to
false
pervert
few
low-cost
hydro¬
its sale dt low
rates where that kind of
develop¬
at
It
is
going to
it
to
shoulder
load.
effectively
;i.
.,
this
meeting should take posi¬
steps to prepare for this fu¬
tive
ments.
and
This precedent can be fol¬
lowed elsewhere if Federal
power
of
expanded
expanded
plies.
If
public
you
or
needs
power
public
any
power
sup¬
of the
other
groups in the coun¬
ready when the need
hand, you will be by-passed.
Your past progress has not been
com¬
power
munities desire to undertake their
try
own
power distribution business.
In other areas, arrangements such
the one with the Georgia Power
is at
as
achieved because of any magic in
Co. may suggest the answer.
''public
are" not
power" ibut
initiative
Electric Power
Capacity Should
believe
the
in
that
kind
same
there
of
hydro-electric
there
should
change of
through
the
resourcefulness
In that lies
of
hope
for future progress. You should be
ready to double your t activities
just as the country doubles its
be
pace
development
and
leaders.
your
Be Doubled
I
power
as
our
activity.
industry must at least be doubled
in the next ten years or so.
During
Again I want to pledge to you
the wholehearted? cooperation of
the Interior Department and its
power agencies.
The power using
the
public has benefited much
in
was
The
total
last
capacity
15
million
rural electrification.
of
years,
the
added
we
kilowatts
of
power
6.3
past
hydro-elec¬
capacity in this country.
In
from
and
you
in
association
our
we
the
with
expect the benefits to
"snow-ball" in the future.
the
next 15 years, we should add
at least 25 million kilowatts. Most
of this additional
built
capacity will be
an
integral part of our
multipurpose river con¬
as
Federal
trol programs.
developed in
our
where
power
cheap
possible
to
veloped
where
Equipment Trust Ctfs.
Much of it will be
.
western regions
the
use
mineral
Tabulated by Union Sec.
Union
will make it
65
unde¬
now
Securities
Broadway,
has
and
resources
prepared
Corporation,
New
York
City,
giving
tabulation
a
additional
power develop¬ j details of the equipment trust cerprovide the basis for ! tificates sold by the principal rail¬
financing badly needed new irri¬ roads last year.. The tabulation
lists 78 individual certifcates is¬
gation facilities.
sued in an aggregate face amount
We need to be as decisive about
of $426,502,000 by 37 railroads.
our
power
supply as we were;
about our electrification of rural!
Pennsylvania Railroad sold cer¬
ment
can
America.
We
need
efforts |
great
the next decade
the part
on
j
of the entire power
public' and
enough
industry, both
private, to provide
electric
America's
We should provide
part
of
our
power
meet j
substantial
capacity
inexhaustible
resources.
veloped
a
additional
our
of
out
to
power
needs.
by
The
the
water
power
United
de¬
States!
tificates
in
the
principal amount
the largest total
single railroad, and cov¬
ered by seven (7) trusts. Chesa¬
peake & Ohio Railway, with eight
of
$70,050,000,
for
any
separate issues,
numerically.
topped
the
With the exception of
which
purchased
was
all of the issues
investment
were
issue
one
by
list
bank,
a
acquired by
bankers.
issues
Two
placed privately while there
reoffering of the issue
on
a
basis which will assure its
bought by the bank. The remain¬
widespread use by the ultimate:
ing 75 issues were reoffered to the
consumer at
the lowest possible I
public.
*
should
.
continue
to
were
be
marketed
was
no...
rates.
Power Marketing
Should Be on Business Basis
The tabulation gives, for each
issue, the date of sale; principal
cases,
the interests of private man¬
agement and the public. The latest
Georgia
Power
Co.
for
the
sale
that company of the output of
the
Allatoona Dam, being built
to
by
the
Corps
flood control
near
the Etowah
for
contract
River,
States
will
over
yield
the
$1,000,000
a
It will also permit the gov¬
year.
ernment at
firm
Engineers
of
on
Cartersville, Georgia.
That
power
purchase
of
job.
now
I think that the National Rural
Electric
Cooperative Association
the
We will continue to uphold the'
principle that power from Federal!
of these occurred a few months projects in a region is developed
for the benefit of the people of the
ago when the Interior Department
executed
a
contract
with
the region as a whole and is not to be
cile
nopoly.
development
the
| amount; maturity dates; Moody
Obviously, the power marketing j rating; name of successful bidder;
there has been
operations
of
the
Government! coupon rate; successful bid price;
an
encouraging demonstration of
should and will be conducted on a! interest yield by year; average rethe kind of industrial statesman¬
offering price, and average yield.
businesslike basis.
ship which is required to recon¬
a
ments
electric power and
distribution—is going to
organized and pre¬
i
sys¬
and
other
public
public and co¬
be
start
new
ture
Power Ownership
In
language of liberty and free¬
dom to cover privilege and mo¬
It strives to prevent the
allow
this
municipalities
predominate
and
the operational
planning and research which will
speak
and
by
only generation
by the Federal
but also
for
pared
have to
tre¬
are
power—and
not
mean
Government
and
electric
TVA
opportu¬
the
Government
Reconciling- Private and Public
United
-
sure
the
•
nities and responsibilities
experience, the pri¬
of
•
mendous.
private
I
V
•
re¬
can
and
area,
the Federal agencies
power to you at whole¬
v
As I said earlier, these
-
which it serves, received 100 cents
on
the
dollar for
their invest¬
As
times
asmuch
water
know that the top power lobbyist several
in Washington receives a larger: power could have been available
annual salary than the combined if its development had been car¬
the
*An address bv Secretary Krug
considerations, while im-
high-priced lobbying tal¬ installing over 1,000.000 kilowatts
of fuel-burning generating plants
some vicious propaganda
sentatives
and welfare.
When
V"-.'
strung.
of
Certainly,
our
needs
power
have all been hampered and ham¬
completely.
Any industrialist who wants to
jbuild a plant to use a large block
of power will search the nation
These
program
•
systems
power
TVA
owners
over
and coal.
of the South-1 portant to the nation and its fu¬
western Power Administration— ture
welfare,a cannot determine
every one projected in areas
the decisions of private manage¬
marketing
the
tric
operation, in most re¬
gions of the country, is a supple¬
developed for the bene¬
the people and are not to
Federal
us.
from
and
marketing
the
protected fully.
tems acquired by
cooperatives
and
Congress
We are now in a period
of
critical
shortage of, electric
power.
In some regions of the
Country, consumers are voluntar¬
ily reducing their use during peak
ing
the Agricultural Extension
as
Service
some
by
case,
interests
and
be
operate
can
businesslike basis,
a
In
order
nation's
be
of
on
hi.1
of
wholesaler
a
the
monopolized by limited
new
oppor¬
responsibilities
part
as
•
In
#the face of growing power
shortages, one after another of the
be¬
even
lines
develop
of
try to which I refer have elected
a "rule or ruin" policy.
present Congress.
with
move¬
forthright stand for
and publicly-owned
that
to follow
that
favor in the
are
or
the segments of the power indus¬
The
meet
There
to
are
public power should be developed
only as "incidental" to irrigation
met
to
has
people—as expressed many
times by the Executive and the
Congress—that our waterresources
by
lieve it will
Truman
S.
strength to the
power
Faced
three.
summer
interest
of the
be
last
public
degree surpassing
progress.
And now
resources.
favor of
advanced
the
transmission
"know
platforms is another.
tradition
a
his
program
renewed
great
Harry
new
in
public
running on full public-
people in
this
previous
added
one
decision
champions of the
Roosevelt
brought
President
have
you
other
political
American
power
businessmen
agencies, such as your co¬
operatives, should distribute the
in
10 and what
distribution
reach
recent
candidates
from
important,
equally
of
Local
has
fight
equities
should
sources
properly
that
all
-
has jumped the number of
States farms with central
out of 10 to seven in
is
poll
a
Valley and
able reply.
D.
and
United
electric
and the
into action to
Interior"-Depart¬
striking evidence. Unprecedented
rural line
building in less than 15
station
take
the
other
country's
record
in
electrification is the most
years
support
vate
Franklin
the
rural
in
developed
either
from personal
rights and in most of
them,- the people lost.
The late
1
your
and
the
between
people's
in
minute.
every
believe
fought
were
sources
/
•
of
Federal
especially-
representatives of special interests
who wished to exploit these re¬
Krue
re-
evidence
there
A.
is
most
kind
party.
tles
aluminum
the
the
Role in Power Business
from
his
The Federal Goovernment'f
During the interven-,
ing period before 1933, many bat¬ role in the power business b
to
it¬
guarantee
is just
ment
In
down to the Tennessee
of America
resources
for
sources
conducting
of
that
Federal Government may be such
that the entire power market will
belong 1 to all the people.
Since even bankers as to whether pri¬
the days of Theodore
Roosevelt,; vate
enterprise
has
prospered
our
national policy has been to with the TVA
program without
conserve
and. develop • these re-j getting an
overwhelmingly favor¬
improve
self
be
and
more
cooperative
action
interested
agencies,
other
such
_
encouragement which private
enterprise needs for rapid progress
and expansion.
No one could go
}
Development
t
fast
very
our
for
sale.
sources
and
•
•
Federal Water Power
the
in
are
we've
♦
the basic
are
ments of this controversy?
competitive
field. And,
|
tunities
agement.
It
work
effectively- and- thereby to
improve their level of living. In
this work, there are
great oppor¬
with
ferent.
stay where
to
to
service ' to
your
19
imore
develop¬
as in the TVA region,
predominance of the power
<£-
power
run
run
for
of
gov¬
of American life. But we ultimately be served from Fed¬
agencies,
dynamic people and we keep our economic, social and political patterns alive by con¬ eral projects. In still other
areas, operative
change. To survive, public power will have to be as good as and a little better than relationships may be entirely dif¬ have to
a
stant
we
the
areas,
Public power, in the broad
sense, is now a permanent part
to
parts
to
program
'
are
of
industry
develop workable
arrangements which both meet the
requirements of public policy and
yield a fair deal to private man¬
public development of water
wholesaler. Holds public and pri¬
power,
opposition
ernment's
faith
Secretary of the Interior
Krug,
power
marketing of power will
be abandoned in favor of a
good-
By HON. J. A. KRUG*
Secretary
blind
the
ment and
Part of American Life
,»
the
(771)
of
operatives
any
time to withdraw
to meet
public
the
bodies
which
require¬
and
co¬
desire to
directly from the gov¬
may
ernment.
This
sides.
monopolized. This is the purpose
of the provisions of law which di¬
rect
preference
is
It
me
leads
good
to
the
sale
of!
On General Mills
PHILADELPHIA, PA. — Newberger & Co., 1342 Walnut Street,
members
the
of
New
York
and
to public bodies and non-,
Philadelphia
Stock
Exchanges,
profit cooperative organizations.
are
continuing their "Visualiza¬
In carrying on the electric busi¬
tion Program" of Exhibits of the
ness, your cooperatives must rec¬
latest products of companies
ognize increasingly the importance
power
whose
of
assisting their members to de¬
velop their use of electricity. It is
not enough
to deliver electrical
at
energy
the
customer's
meter
and then forget about it. In order
for your service to do the
job it
can
do
farm,
contract
in
Newburger Exhibit
in
the
both
charge
hope
that
vise your
must
and
on
the
effectively dis¬
responsibility to ad¬
members of ways to put
you
for
home
your
New
stocks
York
listed
are
Stock
the
on
Exchange.
General Mills, Inc., is the third
of
a
series
of
exhibits,
the
having been Philco Corp., the
ond
Radio
future
Corp.
schedules
of
being
first
sec¬
America,
Cluett,
Peabody, Westinghouse Electric &
Manufacturing Co. and I. B. M.
20
THE
(772)
FINANCIAL
&
COMMERCIAL
Thursday, February 17, 1949
CHRONICLE
——
r'kVY'
IATIONAL
Y.f Y
By HENRY HUNT
«
-
Prospectus
your
NATIONAL
or
*
^Devotees
from
SECURITIES
that
&
w*
of formula
Trust
Mutual
First
plan investing will be interested to know
Fund, sponsored by National Securities &
Fund, Ltd.
Bullock
(1) He is
Inc.
Nation-Wide Securities Co.
Prospectuses
available
from
Investment
Dealers or
"The results for the first full years of
Difficult periods for security evaluation were passed through
based on a sound
balance between bonds and
fying.
Established 1894
operation of First Mutual
formula plan, have been most grati¬
confidence
with
security price trends. A satisfactory income
position was maintained, and the year-end position of capital assets
was
favorable to any comparable index
or investment portfolio.
We believe that results in the future will be equally satisfactory. The
stocks
of
regardless
Plan allows for adjustment
in
in the event that there are major changes
security price levels resulting from a changing economy."
250 for
the Dow?
the. average of about
Output per capita
capita
be ac¬
complished only by giving men more and better equipment with
which to work. In 1929, for example, capital per worker, expressed
in dollars of constant purchasing power, was about 2.1 times as large
2%
on
year—in-some decades considerably more.
a
has grown almost as fast. Between 1889 and 1929, output per
more than double.
It is plain that such a large increase can
as
in
1889.
increasing amounts of capital and
constant improvement in' the equality of capital which has permitted
the people of this country, who comprise only 6% of the world's
population to produce between one-third- and two-fifths of the
"It
is
the
world's goods.
use
.
,
of
large and
the full re¬
pays
in
Born
Denver, Colorado,'. 50 years
November, Woody graduated
last
ago
Princeton
from
in
where
1920
he
shone
pitcher on -the varsity - ?
baseball team. Shortly after; graduating, ^
U; thanks to his proficiency in his studies at
as
southpaw
a
U college,
he
offered
was*
a.
job
by
a
:
Y Denver bank at twice the normal start- Vt*.
salary, y (Editotfs;
ing
also-had
no
longer curves them
he
Matlock
Woodford
bowls
a
fund business, having started
1927
From
Roberts &
1944
to
over
the
Woody.;-'.'
corners,
respectable average of
very
He also goes in for gardening
170.
Mr. Matlock is
leisure moments.
CNote-^Th^^anki--,;
team. which" needed Y
baseball
a
left hhnded pitcher:.)*:Although
a
v
he
in his
old hand at the mutual
an
retailing these shares in 1930.
with Sidlo, Simons,
years as Vice-Presi¬
associated
was
Co., in Denver; the last seven
1945
he
dent.
Since
Sales-
Corporation,
has
President
been
of
Broad
Street
of National Investors, "Broad
Street" and the Whitehall Fund, all managed by the Union
Service Corn., a
sponsors
Seligman affiliate.
Woody married at an early age and is-the father of two y
and
grandfather of
already. He commutes from Scarsevening on the 5:44. When
best, he replied, "Be it ever so
smeP.v—just give rne a hunk of good ripe cheese!"
To get back to brass tacks, Mr. Matlock believes that the
mutual fund business today is in the same position from a
a
and
dale
one
seen
likes to
he
every
eat
standpoint that the
He
1914.
be
may
what
asked
believes
also
that
life insurance
the
time
in
business was
will
come
the
when
purchase of mutual funds will be as accepted a procedure
as opening a savings account or taking out life insurance.
The Group report continues, "we see no reason to expect any
in prices, but rather a readjustment of farm and in¬
ately."
balanced relationship. These overall corrective
highly constructive. They should diminish con¬
siderably the constant demands for higher and higher wage rates. As
costs of food and clothing decline an increased proportion of na¬
tional income should become available to maintain the present high
prices to
developments
level of the
expansion
a
are
And-also
stabilize.
Working capital and
of businessmen should ease, or in any event
highly important, the change in the outlook
important durable goods industries.
problems
will
probably prevent contemplated government controls on business
Substantially modify, if not entirely eliminate, proposed in¬
creased corporate and Social Security taxation."
and may
The
scarcity
economy as a
of business from a
affect favorably our
that "the passing
peacetime prosperity will
whole."
concludes
report
boom
to
a
Nice Odds!
A Britisher
recently wagered six
.
sobering fact that ownership of shares in American In¬
dustry seems to have so little attraction for most Americans. Outside
of the one-fifth of the labor force represented by the self-employed,
"It is
and, incidentally,
tail price.
dustrial
in Los Angeles, Professor Sumner' Slichter asserted
that in 44 of the 60 years between 1889 dnd 1929, inclusive, the na¬
tional product, expressed in dollars of constant purchasing power
greater than in the.preceding year.
"Output per man hour has increased
every
serious decline
Untapped Source of Capital
"Speaking
was
funds
study made by Karl D. Pettit & Co., managers of
An
He regularly invests part of his
month in his own mutual
(3)
salary
growth
the Knicker¬
bocker Fund, indicates that the "Dow" will break out of its "valley
of indecision" this year and may hit 250 before a bear market de¬
velops. According to Mr. Pettit, the 165 level will not be penetrated
before the upswing in prices gets under way.
If he's right, it's
about time to get aboard some common stock funds.
A
statistics.
on
•
designed to take emotionalism out
is
Trust Fund under- the 'National'
CALVIN BULLOCK
demon
a
>
of investing by auto¬
matically forcing action when stock prices, as determined by a recog¬
nized index, attain certain levels in both up and down cyclical price
movements.
Y"Y'
Y
Y-; Y.''Y
YjY-'Y: Y'Y'iY
"The objective is (1) to preserve accumulated capital by selling
stocks at high levels and investing in bonds to protect capital during
periods of declining stock prices; (2) to obtain an increase of capital
by selling the bonds and purchasing stocks when stocks are at
low levels and offer appreciation opportunities.
"The 'National' formula plan was originated and developed dur¬
ing 1947, especially for National Securities- & Research Corporation,
sponsors of First Mutual Trust Fund by Dr. Frederick R. Macaulay,
economist and noted authority von; cyclical movements of securities
prices. The Plan is now being used as a guide to effect changes in
the percentages of assets invested in bonds and stocks in accordance
with changing levels of general stock prices.
"It
r : '
»(2) He occupies the smallest private office of any mutual
fund president.
;
has been operated on such a
vested in stocks.
Dividend Shares,
MATLOCK
"Woody""Matlock, also known as "Tot" (Yes, his mother y
wished that one on him), has three claims to distinction:
plan for more than a
year.
To quote from a recent "National" folder:
\
r
"A formula plan of investment is not a means of forecasting
future stock prices but simply a method of predetermining the gen¬
eral levels of stock prices at which (a) a certain proportion of stocks
held are to be sold and the proceeds invested in bonds, or (b) a
certain proportion of bonds held are to be sold and the proceeds in¬
120 BROADWAY, NEW YORK 5. N. Y.
;-;YYv'Oy
(Sixth of a Series)
\
.....
President, Broad Street Sales Corporation
V
Formula Plan Investing
-
Research Corp.,
CORPORATION
RESEARCH
v
request from
upon
investment dealer,
;
.
WOODFORD
SECURITIES5ERIES
/Yty<
Prominent Personalities
"****>!
cult
football
a
parlay
and
hit.
His
(a thin dime) on
penc~
winnings:
$295,000,
all
a
tax
diffi¬
free!
The odds: 2,950,000 to 1.
do not, as a rule, seek to invest their savings in equity capital
industry. Consequently, the time seems to have come for Ameri¬
savers
K :yston e
of
cans
to
begin to do
a
new
kind of thinking.
"If the other four-fifths of the labor force are to
.
.
.
.
.
-
;':;V :
sav¬
ings in industry, the first and most logical place for these invest¬
ments is with the investment companies.
While funds so invested
would not and should not find their way into new, venture capital,
jjCitstodian
I
invest their
,
Lord, Abbett & Go, Partnership Formed
H.
I.
Prankard, II, Leon Abbett and A. R. Hughes announce the
formation of the
partnership of Lord, Abbett & Co., 63 Wall Street,
they would release the funds of others for more speculative enterf
EiuicLs
•
•
prises."—From
Certificates of Participation in
investing tlieir
"Are
capital
IN
bulletin issued by The Parker Corporation.
End of
INVESTMENT FUNDS
■
a
>
■
:
we
on
"Scarcity Boom"
the verge of a sharp decline in
business activity and
commodity prices?" asks Group Securities in its current monthly
report, and answers:
"We expect industrial production to decline, but only moder-
Y
BONDS
.
(S<«
B1-B2-B3-B4)
PREFERRED STOCKS
-
eon
£7/ie A
New England
(Series K1-K2)
.
(Series
S1-S2-S5-S4)
Albert
Abbett
Leon
Harry Prankard, 2nd
COMMON STOCKS
R.
Hughes
Fund
PUTNAM
ORGANI2ED
1931
New York City, to manage
and be the national distributor for Affil¬
Fund, Incl, American Business Shares, Inc., and Union Trus¬
Funds, Inc., with total assets in excess of $100,000,000. : These
activities were formerly carried on by Lord, Abbett & Co., Inc., which
iated
Prospectus from
your
teed
FUND
local investment dealer or
General Distributor
Coffin & Burr
Tke Keystone Company
of Boston
50
NEW YORK
Massachusetts
Putnam Fund Distributors, Inc.
50 State
Street, Boston
Leon
which
Congre.ss Street
BOSTON
PORTLAND
HARTFORD
Y;i>: •'' >:!
;,Y':
Mr. Prankard, formerly Executive Vice-President of the corpora¬
Y\Y;;,vYY
tion, will be managing partner of the new firm.
Incorporated
Founded 1898
Prospectus upon request
Boston 9,
is being dissolved.
:';T
CHICAGO
BANGOR
Abbett
he
has
is
been
organization in 1929.
one
of the
associated
founders
as
an
Y
of
original firm with
and director since its
the
officer
,
:
-
.
;'Y YYY
;
;;Y.
Y'YYjf
Hughes, formerly President of the Chicago investment finn
of A. R. Hughes & Co., has more recently been a Vice-President and
A. R.
director, of
sales.
Lord, Abbett & Co., Inc.
He will be in charge of national
Volume 169
THE
Number 4778
COMMERCIAL &
(773)
FINANCIAL CHRONICLE
Rural Electrification—A Check to
Public
Utility Securities
I
By CLAUDE R. WICKARD*
21
Monopoly
i
;
,
Administrator, Rural Electrification Administration
By OWEN ELY
Contending REA program is outstanding financial success, after use of over $1 billion of government
funds, its chief administrator holds it is basic bulwark of free enterprise system and a check to monop¬
oly concentration in electric utilities services. Assails private power companies for utilizing high-priced
lobbyists and high pressure propaganda, <and^ asserts free enterprise system is jeopardized by big corporations. Contrasts R$A success with "long record of failure of utility industry/'
+
NewvYork State Electric & Gas
v
;
General Public Utilities
:
Corp, has decided to divest itself of its
subsidiaries^,as part of its broad program to con¬ V
form to the Utility.1 Holding" Company Act. Accordingly, the company
is filing with the SEC an application to offer to its own stookbolders
substantially all the common stock of New York State Electric &
This occasion gives me an; opportunity to carry out one of the responsibilities that I
Gas Corp., for subscription in the ratio of l-for-10. The subscription
have under the REA Act. Section 2 of the Act says: "The Administrator is authorized and
price will be determined just prior to the mailing of the warrants to
for rural electrification . . . to make ... studies/inves¬
stockholders, which may be around March 10—15.
Stockholders empowered to make loans . .
tigations and<$whose rights would call for a fractional share will be permitted to
New York
State
subscribe for
The
a
reports con¬
cerning the
full share.
the
same
manner
as
that of Columbia Gas several months ago.
The
offering is not underwritten, but a large group of dealers is being
formed, to obtain subscriptions on a per share'fee basis.
This will
be-headed by The First Boston Corp., and will include Lehman
Bros., Wertheim & Company, and Merrill Lynch, Pierce, Fenner &
subscription
is
program
Beane.
being
handled
in
somewhat
condition
progress of
the
electrifi¬
be
systems
national well-being will not con¬
tinue to be jeopardized again by
would have to take these
off your hands, after a
great financial loss to the tax¬
payers.
They have been wrong on
all counts.
Incidentally,
one com¬
cation of rural
pany
areas."
Virginia, that it couldn't take
over-—even by slipping up on the
learned the hard way, down
m
This is one of
the best oppor¬
York
$45,000,000.
Slate
Electric
&
Gas
has
annual
revenues
of
about
to
14%, and miscellaneous operations 1%. The company purchased
substantial amount of its electricity and gas in 1943 at a cost
of $10,839,533.
to
Electric
revenues
gas
of
the
miles, or about 35% of the area of the State. It serves 13
cities, 146 villages and 388 towns, as well as numerous rural areas,
in the central, eastern and western parts of the State. The popula¬
tion of the territory provided with one or more services by the
company is estimated, on the basis of the 1940 Federal census, at
approximately 1,128,000, of which about 70% is estimated to be
square
outside the corporate limits of cities.
:
:
V)
S
Let
and
report
discuss the
condition
and
when
reach
most
to you
The
I
am
grateful
and determined effort is made to
calendar
just closed
was
by all odds the greatest in
REA history.
A total of 147,000
miles of line
and
468,900 con¬
sumers were
added on REA-fi¬
year
worthy objective.
a
going to need that
effort
for it.
have
can be accomplished
conscientious, intelligent
a
to
attain
same
,
We are
kind of
ultimate ob¬
our
jective, which is to make plenty
of
reliable, low-cost
able to every rural
this nation.
There
power avail¬
community of
are
many
diffi¬
cult problems to solve; there are
That is 106,700 many important decisions to make.
voted to dairying and farming, particularly within the south-central nanced Systems.
consumers more than the highest
Many of these decisions involve
part and along the eastern edge of the State, and vacation and re¬
The territories
sort
served
by the company include large areas
de¬
in the Adirondack Mountain regions, in
the Catskill
regions, in the Harlem Valley region and in the Finger
Lakes section.
Manufacturing activities, located in various parts of
the territory served, generally consist of diversified plants devoted
to many different kinds of operations, including the manufacture of
shoes, business machines, photographic supplies, steel products, glass
and glass products, gypsum, chemicals, machinery and other items.
The most important manufacturing industry located within the terri¬
tory is the boot and shoe industry in and about Binghamton, Endicott
and Johnson City.
areas
Mountain
2, 1948, when the company issued $5,500,000 new 3s
and 35,000 shares of 4.50% preferred stock, the capital ratios approxi¬
59%
and 23% common stock equity.
aside in "Unearned Surplus—Special"
some
$13,970,000 for write-offs and adjustment of depreciation re¬
serve, in accordance with an order by the Public Service Commis¬
sion.
Since the company had already restated- its plant account on
the basis of original cost through a charge of $10,870,000, it is possible
that part or all of the earmarked portion of surplus can eventually
be restored, if the courts find that the Commission is unauthorized
to require further changes in depreciation reserve or plant account.
Restoration of this reserve would of course lower the debt ratio/and
would step up the equity proportion, of capitalization to about 32%.
The book value of the common stock is $25 per share and book value
debt,
However, this
was
preferred
18%
after setting
power
was
generation, etc.
3.3
cents,
rural
portion of
1,513 kwh.
In the
which
In 1947 the average residential rate
seems
areas.
per
considering the large
residential use per annum
reasonable
Average
kwh.
pro¬
was
;X':
•//;'/Vy':^
calendar year 1948 the company earned $4.61
ice—as
was
against
serv¬
when
11%
REA
started less than 14 years ago.
There
lion
are
now
.total of 2% mil¬
a
consumers
REA-financed
on
systems.
These
impressive
are
figures,
not the sole measure
of
the
progress
that has been
made.
The most' important thing,
of
they
are
is the tremendous in¬
the
happiness, health
and economic well-being of rural
course,
in
crease
people which the program has
brought about.
Rural people are
using electricity in ever more
and in ever greater amounts
ways
to achieve
a
better life.
We esti¬
REA
co-dp members
were
getting service five
ago
have - about doubled
consumption since that time.
that
mate
who
years
their
Success
I
proud to report that the
REA program continues its record
of outstanding financial success.
am
financial
must
record
com¬
mand
respect even here in New
the common stock compared with $4.63 in 1947. In the fourth quarter,' York, the financial center of the
world.
Since the start of the pro¬
however, earnings were $1.40 vs. $1.05 indicating a favorable recent
gram we have advanced $1,100,trend.
Based on the 1948 earnings, it is conjectured that the stock
000,000.
I want to call attention
the fact
that
may be offered to stockholders somewhere in the neighborhood of to
approximately
35-40,, but it is difficult to appraise market value until the dividend: 60% of this amount has been ad¬
policy is known.
not be
a
on
It is unfortunate that the number of shares could;
split up, to place the stock in a more popular price range.
in
vanced
This
to
OKsBaltimore-Philadelphia Exfth. Merger
Exchange Commission on Feb. 14 announced
it
last
three
much
that
means
that
chance
The Securities and
the
years.
of
construction
REA-financed
new
SEC
has
not
the
is
so
had
yet
a
the
contribute toward
amortization of the indebtedness.
Despite this fact, REA borrowers
have paid, as part of their debt
Philadelphia Stock service,, a total of $185,000,000 of
.Exchanges by permitting the Baltimore Exchange to withdraw its reg¬ which $106,000,000 has been paid
Does anyone know
istration as a national securities exchange. In its announcement ap¬ on principal.
its approval of the merger of the Baltimore and
proving the merger, the SEC gave notice that the merged exchange
must notify
all firms having trading privileges on the Baltimore Ex¬
change of its merger with the Philadelphia Exchange and, in addition,
must maintain its own records for a
period of three years.
of
a
better record in the electrical
utility business?
From
i
Opens Syracuse Office
general brokerage and investment
banking business.
Before joining G. H. Walker &
only the
with
failure which
record
that
the
con¬
prophecies
were
made
of
by the
people who opposed this program!
The prophets of doom said that
farmers would
not use enough
of the REA
success
program but the welfare of the
nation and even its leadership in
Let
first
consider
those
was
dent of Management
our
shortages.
First,
we
must develop our
great
hydro-electric
resources;
This can be done effectively only
through
the
Federal
agencies
which are charged with respon¬
sibility for flood control, naviga¬
power
and reclamatioh,
generating ca¬
pacity by proper development Ofthese resources. Fortunately,
inmany instances, they are situatedadjacent to plentiful supplies of
cheap fuel which can and should
be used for firming up the hydro-generators.
r
Second, the power from our
river developments must be made
available to the consuming cen-.
ters at low and equitable rates if
the country is to get maximum
We
irrigation
can
double
benefit
our
its
from
best
own
resources.,
accomplished
through the Federal financing of
the necessary transmission sys-s
This
can
The
terns.
be
decisions
in
all
matters must be made in
world affairs.
these
the in-,
terest of the
consuming public andt
which pertain directly not for the benefit of the power
bringing of service to every monopolies.
:
■
rural community.
There is the y The growing needs of REA co¬
matter of loan funds.
Although operatives and the shrinking sup¬
the
Congress
has
made
large ply bf low-cost wholesale power,
amounts available for loans in the has made it necessary for REA to
postwar years, substantial amounts make an increasing proportion of
us
problems
to the
are
to
.
still needed if construction Is
continue
its
loans
for
the
construction
of
its
rapid progress.
generation and transmission facili¬
needed in larger ties.
From July 1, 1948 up to the
quantities.
The
availability
of middle of January we have loaned
aluminum conductor is the con¬ $45
million for generation and
trolling factor in construction for transmission systems. We antici-'
many REA borrowers.
The sup¬ pat^ we will have to more than
ply situation on other types of double this amount of loans be¬
conductor
has
been
tightening. fore the end of the fiscal year
The Wisconsin Electric Coopera¬ because of the inadequacy of lowMaterials
are
tive's contract with the Reynolds
Metals Co. for aluminum conduc¬
tor offers
of hope on
darkening
deserves
your careful consideration.
Despite our combined efforts to
hold costs down, construction and
operating costs have gone up, in¬
creasing the difficulty of estab¬
lishing
economic
feasibility
in
a
bright
otherwise
ray
is
a
picture in this field.
It
of low financial return; This
cost power.
The increase in these
loans is not due to any change in
REA policy.
That policy, as you
know, is to make such loans only
when it is necessary to solve a
power shortage or to effect sav¬
ings for consumers.
It was estab*
lished at the very
REA program
beginning of the
and has been dis^
cussed and confirmed in
Congres¬
sional debates.
sumers
Despite the strict standards we
following, virtually all of the
generation and transmission loans
which we have made recently have
been violently opposed by the com-,
mercial power companies. It is ap-.
parent that they are going to con¬
tinue to seek legislative action to
stop us from following our policy,
Your representatives in Congress
are the only people who can make
a
change in the policy.
Until
there is a change I am going to
follow conscientiously our present
of power.
policy in regard to these loans.
areas
places
the responsibility for
persistent in our
resist the inflationary
on us
being
ever more
efforts
to
tendencies and to find economies
wherever
possible ; all along the
may havevto look to
solutions as well. In some
line.
We
other
instances
a
amortization
lengthening of the
period from thirty-
five to fifty years would help to
insure economic feasibility.
Of vital importance to REA con¬
everywhere is the problem
In fact, solution of this
problem on a broad front is vital
to
the
welfare
of
our
entire
na¬
are
So far I have
reported to
you
the condition and the
of rural electrification. I
cannot make loans for distribution
have
pointed out some of the
lines until the power problem is
problems and decisions facing us
solved.
The energization of lines and our fellow citizens as we con¬
tion.
We find sometimes that
we
already completed has been de¬
layed in some places because of
lack
of
service is poor
shortage.
costs
are
In other
because of
power.
areas
power
Rising wholesale power
hampering the program
Vice-Presi¬
in many ways.
Planning of electricity to make it profitable
to serve them.,
SYRACUSE, N. Y.—G. H.
They also said
Washington, Inc., and was also
Shortage of Electric Power
Walker & Co., members New York
that only men of long experience
formerly sales manager of Bond
Stock
Exchange,
announce
the & Goodwin, Inc. During the late in the utility field could make a.
Steady growth of our national
success of managing an electrical, economy' to
opening of an office in Syracuse, war Mr. Roberts served as a
meet the expanding
major
New
York,
in
the Lin coin in the U. S. Army Air Force. enterprise.
They predicted that needs of our people is essential
to
our
Bank Building, under the man¬ Prior to
national
welfare.
This
army service, he was a
*An address by Mr. Wickard at -growth is being restricted today
agement of C. Wesley Roberts. general partner in the investment
Established in 1900, G. H. Walker
Annual
Convention of National by the shortage of electric power.
firm
of
Roberts &
Morgan at
& Co. maintains offices in New
Rural Electric Cooperative Asso¬ That shortage must be eliminated
Watertown, New York, of which ciation New York City, Feb. 1, :by nation-wide action.
York. St. Louis, Providence and
We have
the natural resources.
1949.
They must
Hartford, where it conducts a he was co-founder in 1932.
„
Co., Mr. Roberts
standpoint
this
made a remarkable
every
program has
record.
How
trasts
G. H, Walker & Co.
not
what
Program Outstanding Financial
Our
share
in
of American farms
Today 70%
have central station electric
would
approximate $43 a share including the earmarked' portion of
surplus. .When the new prospectus on the common stock is available
some
time in March the 1948 data may become available on rates,
established
record
1947.
but
As of June
mated
previous
developed to insure that
tion,
look ahead to the future.
shown what
fication,
Wickard
R.
Claude
us
You directors and managers
progr e ss of
rural
electri¬
electric or gas service or both within
State of New York aggregating approximately 16,700
provides
company
v
Looking Ahead
such
make
"a
very
The
blind side,
tunities 1 have
last year were about 85% of the total,
areas
they
..
New
a
and
briefly
on
progress
tinue
to
move
forward
in
this
Now I would like to dis¬
with you some of my thoughts
farmer and as a citizen about
program.
cuss
as a
this
program
in
which
we
are
engaged.
In the future we
should devote
thought and effort to gain¬
ing a better understanding of the
opportunities and responsibilities
that we REA members and offU
more
cials have in this great program.
The
our
principles and objectives of
program
are
basic to our
democracy.
As many
of
you
(Continued
know,11 am
on page
33)
a
& FINANCIAL
COMMERCIAL
THE
(774)
22
including Alaska, for any
sions,
Spahr Says Investments Abroad Requires
:
Adoption by United States of Gold Standard
Canadian Securities
with American
adopt
to
continues
Canada
the imposition
taxes, the re¬
quirement of licenses, permits, or
any restrictions whatsoever.
Sec. 2.
Gold imported' into the
United States after the effective
date of this
Act may be held,
exported without
of
duties, excise
a relatively passive attitude
Dominion risks to miss an out¬
"Adoption by the United States of a gold coin standard at $35 per
standing opportunity to pave the way towards the solution of other
ounce should provide an effective start toward international
mone¬
chronic problems.
The undeniable fact that so much has been
tary stabilization and, by reducing uncertainty as to the quality of
achieved in spite of the .low level
money in which long-term loans abroad are to be repaid, should
of population only serves to aggra-1 were world conditions more proencourage private a vulnerable situation.
The ! pitious. In addition to the natural
and which is needed if private in¬
vate invest¬
high per capita volume of Cana¬ urge of the countless would-be
vestments are to be made in other
ments in pro¬
dian production is certainly grat¬ emigrants from Europe and else¬
nations.
ductive pro¬
ifying during periods of boom and where, there is now a universal
"(2) After the United States
new
appreciation of the tremen¬ jects in other
sellers markets, but with the in¬
leads the way by the adoption of
countries," Dr.
evitable subsequent recession and dous possibilities for Canadian de¬
Walter E.
a
fixed gold coin standard and
declining export markets, Canada's velopment in the field of industry.
system, other nations, possibly one
previous Canadian inhibi¬ Spahr, Execulimited domestic market provides Also
Viceat a time, should be more inclined
tions born partly of fears of loss tive
an inadequate cushion against the
to link their paper money to gold
of
racial
dominance,
partly of President of
impact of the forces of depression.
While
subject of immigration, the
the
on
or traded upon the
market within the United
States, its Territories and posses¬
bought, sold,
open
port
ing only too apparent.
With the
end in sight of the sellers market
popula¬
greatly expanded
a
tion,
largely replaced
confidence in the high
Aid,
Mutual
obliged
long-term con¬
well below the
and
prices
at
tracts
purpose
exported
quirement of licenses,
hibits
sentiment in Britishcommercial
relations.
any
Canadian
lack of any hard
agreement with
the
Similarly
and fast economic
this country will
jeopardize U. S.¬
trade as
Canadian
soon
Cana¬
as
this country seri¬
ously compete with domestic pro¬
duction. While the U. S. producer
can fall
back upon the vast do¬
dian exports to
mestic market and has wide scope
in the various schemes
for export
which
induce
can
era
new
a
of
dynamic expansion.
Without
however
adequate population
an
expansionist
The
Canadian
be realized.
dreams will not
Dominion should
consequently not
the barriers to im¬
migration, but should also take
active steps to bring immigrants
into the country; if necessary to
only
remove
expand the merchant marine
air-transport facilities for
and
this
Honors John O'Kane
ducer on the
long as Canada is obliged
an
uncertain economic
persist
as
chart
to
course
governed by the influences
;
United States, so esr
sions of monetary
private ..investments
expand, as recently
Truman,"
Spahr contends, "should lead
to the realization in other coun¬
tries of those undertakings that
have merit when appraised from
;
experts to con¬
themselves with the monetary
cern
abroad are to
of
matters
than
with
single
nations
group
a
rather
global
a
on
basis should assure proper proce¬
dure in the
Dr.
establishment of sound
systems adapted to the
needs or limitations of each na¬
money
tion; / ";
/
...
."With only about eight coun¬
points of view of need, costs
of operation, and possible profits tries unhampered today by foreign
exchange
controls,"
Dr.
Spahr
to private institutions or individ¬
"it becomes increas¬
uals risking their capital in them. concluded,
"The proper procedure to pur¬ ingly important that the United
States lead the way toward inter¬
sue in the attainment of interna¬
national monetary stabilization by
tional monetary stabilization in¬
creation of a gold coin standard
volves the following steps:
the
"(1) Introduction by
of a gold coin
States
by her great neighbor to
on
the one hand, and
exerted
South
the
partner
U.
other.
Without
of the time-honored
the
on
breaking
economic
British
traditional
her
any
S.-British
ties,
a
at
nomic
independence
greater
virile policy
Canadian
aimed
eco¬
ulti¬
not only beneficial
would
mately prove
to Canadian interests but it would
also tend to
sible
friction
relations
of pos^
remove causes
with
in
Dominion's
and this
the
Britain
country.
No
this
the United
at
system on
fine ounce
$35 per fine ounce, thus
making
gold and other dollars readily
throughout the world by
individuals as well as by central
our
method
desirable
than
of achieving
objective
the
could
adoption
be
of
of
previous
the
tained demand for
grade bonds but
Internal
maintained.
showed little
animation and have
stabilized around IVz %.
once more
The corporate-arbitrage rate
lowing its recent decline
firmer tendency
a
hood of 14%.
cline.
in the neighbor¬
Canadian stock mar¬
mostly lower with
were
issues leading
industrial
a
vigorous immigration policy; never
a
strong exception to
trend,
proved
the general
and Western oils,
by reports from
the
the de¬
The golds however
inspired
Calgary of a new
field in the Woodbend area, were
also notably
steady.
CANADIAN BONDS
William H. Boggs
GOVERNMENT
,
PROVINCIAL
Gimbernat
MUNICIPAL
V
Joins
Simbernat & Sellwood
Sellwood,
&
Broadway, New
Premium
Insists
111
York City, mem-
on
With
reference
measures
be
that
industrial,
purposes."
professional
African Government
informed the Fund last week that
to sell a quantity
of semi-processed gold at a pre¬
bers
Wm.
H. Boggs
of the New York
had
mium
Stock Ex¬
agreed
price.
information
change, announce that
William H.
Boggs is now associated
firm
as
registered
with the
representative.
Summers,
having him with
at
the next
ward to
and
and
connection
his old friends while
recuperating. The Associa¬
him a box of cigars
labeled
with
a
large band on
which all of those present signed
their names/ indicating in many
cases with a few lines the
affectiori and esteem " in which they
from any of
he
is
sent
tion
hold him.
indus¬
artistic
the
with
sure
are
purposes.
In
Bill lives at 177 Wallace
Freeport, L. I., and we
he will be glad to hear
Street,
prices
customary
them as
annual
meeting.
wants gold
professional
trial,
fore¬
going attitude of the International
Monetary
Fund regarding gold
In the light of the
submitted to the Fund
bill
South
on
the
prices
t
Senator
(S. 15) reads as
A
of
Kassebaum,
E.
John
Van
Alstyne, Noel & Co., is perennial
President of the Alumni Associa¬
tion;
Frank
Mackessy,
& Paine, acts as
Abbott,
Secre¬
Proctor
tary and Treasurer.
Ebasco Services
Appoints D. U. Pinder
Services
Ebasco
the
announces
McCarran's
follows:
Smith Barney Co.
BILL
(Special
to
The
Financial
Adds
Chronicle)
j. >
CHICAGO, ILL. —Charles D.(
permit the sale of gold within
Turgrimson is with Smith, Barney ,
the United States, its Territories
& Co., 105 West Adams Street.
,. ,
and possessions, including Alaska,
To
and
for other purposes.
by the Senate and
Representatives of the
in Con¬
Be it enacted
House
of
United States of America
gress
f
assembled, That,
notwith¬
With J. Arthur Warner
(Special
any
law
its Territories and
possessions, in¬
Alaska, may be bought,
sold, or traded upon the
market within the United
Financial
&
Co.
Chronicle)
Co., Inc., Clapp
(Special
Build-
_______
With Lincoln E.
cluding
Territories and posses-
The
PORTLAND,' MAINE — Roscoe
Wing has joined J. Arthur,
or
this Act within the United States,
to
A.
Executive Warner
order, gold in any form, mined ing.
subsequent to the enactment of
standing
Africa, including that
and quantities in¬ held,
volved, the Fund has found it open
necessary to get in touch with the
States, its
by
ensure
The South
•
1-1045
plan unless
it can take ef¬
to
under the plan will in
used for
bonafide and
artistic
it
NY
Africa should not en¬
in the proposed
sold
or
N. Y.
bonafide
territories.
circumstances,"
is satisfied that
customary
4-2400
"disturbed
the
added, "the Fund believes
these
fective
WALL STREET
Bill
Incorporated
appointment of
Daniel U. Pinder to its staff of
prices for other than legitimate sales, it is interesting to note that,
Mr. Pinder
industrial, professional or artistic despite U. S. adherence to the business consultants.
world
monetary
compact,
Sen. previously was engaged in re¬
purposes/ It felt that this would
Pat
McCarran
(Dem., Nev.) on search and analytical work for
almost
certainly be the conse¬
Jan.
5
reintroduced his bill to Kalb, Voorhis & Co., F. J. Young
quence if the proposed transac¬
trading in newly mined & Co., Inc., and Dun & Bradtions are to be on a scale suffi¬ permit
cient to
ensure
an
appreciable gold in the United States and its street, Inc.
fact
WORTH
was
that the trade in semiprocessed gold which it contem¬
plated
by
the
South African
Government would involve con¬
siderable sales of gold at premium
gold
YORK 5,
it
that
ernment
by the fear
it
INCORPORATED
of
Currie & Summers, who
has
been
at home for
several
months on account of ill-health.
The members are all looking for¬
will be used only for industrial,
about a gold sale at premium
of
with
Presidents
Troster,
the^
South African Government with
South African Government with
a view, particularly, to determin¬
regard to a proposed plan to sell
semi-processed gold at premium ing whether the safeguards
adopted are, in the Fund's opin¬
prices for industrial, professional
or
artistic purposes.
The Fund ion, adequate to ensure that any
advised the South African Gov¬ gold sold will, in fact, be used for
gage
A. E. AMIES & CO.
gift was pre¬
the Association.
at the dinner
were
exception
the
gold sales at a premium
consulted four months ago by
that South
CANADIAN STOCKS
former
All
STANY
has issued a
any specific
price. According to statement the Fund was
Fund
NEW
to reports
J.
John
Jr.,
a
sented to him by
by South Africa, the International Monetary Fund
statement to make it. clear that it has never approved
made
"In
TWO
safeguards that sold gold
profit to gold producers.
CORPORATION
and
dinner
the
Approval of Gold Sale at
Prices by South Africa
professional and artistic purposes. Sen. McCarran
trading in United States Resumed.
fol¬
displayed
annual meeting
Whyte's Restaurant.
at
O'Kane,
J.
O'Kane, Jr., & Co., retiring Pres-;
ident of STANY, was honored at
World Fund Denies
3's
Free funds also
in demand at 91.
6
Feb.
on
John
heretofore
Dominions
with the longest
quiet
were
external high-
John E. Kassebaum
Jr.
O'Kane,
New York held its
sus¬
prices were well
J.
John
usable
door
kets
better
devised
purpose
relaxation
Association of
Traders
commis¬
of
Appointment
the basis of $35 per
alone. The previous openimmigration policy that laid which would make 35 paper or
silver dollars freely interchange¬ banks, and thereby making effec¬
the foundations of the economic
turn as a last resort to a grievously
able on demand with gold at that tive our desire to invite private
greatness of the United States can
inadequate internal market.
rate.
This step would make im¬ investments of 'all types every¬
well serve as a constructive ex¬
This unsatisfactory state of
mediately available a currency in
where that capital can profitably
Canadian
economic affairs will ample to its northern neighbor.
gold or interchangeable in gold—
which is universally acceptable— go."
During the week there was a
foreign aid, the Canadian pro¬
other hand can only
for
of the
Alumni Association
The
gold coin system.
"(4)
Spahr
the
part of the
sential
if
Ass^iT
exchange controls
the
Walter E.
"Such an ac¬
on
STANY Alumni
should be
undertaken at approximately the
same time that a nation establishes
icy, ; remarked
in a statement
issued Feb; 9.
tion
permits, or
restrictions whatsoever.
any
"(3). Removal of foreign trade Security
and
Monetary Pol¬
The ma¬
country. On the contrary, a healthy
nationalism has sprung into being
level, the difficulty of the
British
economic situation pro¬
on
whatsoever, and may be
without the imposition
excise taxes, the re¬
duties,
of
fixed rate.
a
;
Committee
link its fortunes
to
world
at
economic necessity
with any other proposed by President
an
as
c o n o-
mists'National
markets from other pro¬
jority of enlightened Canadians
ducers of primary products, Can¬
no
longer visualize their country
ada is faced with the acute prob¬
as
a
strip of habitable territory
lem of securing outlets for her
limited to some 200 miles north of
considerable s u r p luses in this
the U. S. border. It is likewise no
field.
Despite wartime generosity
longer believed
that Canada is
towards Britain in the shape of
export
E
the
have been
by a new
destinies of the country/:
in
with growing competition
and
ability to sup¬
doubts of Canada's
becom¬
This harsh truth is now
^including Alaska, for any
sions,
v
;
be
whatsoever, and may
purpose
proposed Truman policy of aiding undeveloped nations
capital could not he attained without international
monetary stabilization on gold basis.
Points out
By WILLIAM J. McKAY i
1949
Thursday, February 17,
CHRONICLE
to
The
Financial
McRae
Chronicle)
ROCKLAND, MAINE—Howard
associated with Lincoln
W. Rice is
E.
McRae, 449 Main Street.
Volume '169
Number 4778
.
Sees Fed. Publications A
Senator Styles Bridges says
Book-of-the-
a
received
;
recent address
a
(R., N.H.)
called attention to the heavy
government printing and publication.
expenditure and
in
waste
"My attention," said Sen. Bridges, "was first drawn to this field
of government
the
colossal
magnitude
activity
during Budget
hearings
thesq establishments
when
presses.
I
essed
no¬
and
indication of
i
gleaned
ing
estimates
printing
mittee
and
binding
when
I
ing and bind¬
ing appropri¬
ations
on-the
Sen.
Styles Bridges
grounds of.
large ^backlogs of unpublished material, and
when a large number of Federal
publications
began
streaming
across
desk whose
my
titles
very
had.. virtually
taken
all
knowledge as their field. "
:
/
i
.
"I asked the staff of the
Committee
gate and
Appro¬
investi¬
to
wealth of information
a
uncovered.
was
Some
this
of
I
■
*"No
the number of
knows
one
which
printed
are
and processed
yearly by the Fed¬
departments and agencies,"
eral
the Senator added.
is
done
have complete records.
done
But much
the
by
we
agencies
printing
themselves, in their own
plants
country,
throughout the
and through contracts with out¬
side
"For
the
Committee,
agency
Committee
the
one
asked
I
to submit to
copy of each
publication issued during the past
fiscal
year
which went to the
general public. The response was
overwhelming.
The
Committee
actually received 83,723 different
publications.
As you can see, 1
have with
here
me
few of these
a
I did not dare bring
publications,
all of them to the floor with
There just isn't room
>
me.
enough.
"Even the 83-odd thousand pub¬
which
the
Committee
lications
received
than
comprise
not
do
fraction of the total publi¬
a
cations
the
of
issued
were
internal
last
government
contain any
year."
They do not
of the multitude of
which
more
publications
solely for the
workings of the govern¬
exclude also thou¬
sands of publications which the
agencies indicated would be ex¬
ment.
They
to
begged off
One bureau
stack of publica¬
collect.
pensive
on
a
tions estimated to be 52 feet high.
group
a
estimates,
own
cabinets
on
according
fill,
would
their
off
begged
Another
which
seven
draws each.
four
of
to
file
A
third estimated that just one type
from
publication
of
would
fill
that
warehouse,
a
could ever be collected.
what I
ber,
am
agency
if they
Remem¬
talking about is
just one copy of each publication
going to the general public in the
past fiscal year.
"The Government Printing Of¬
;
fice
told
me
years—from
that
in the past
10
1948—-
1939 through
they delivered 133,582,867,587
copies of printed matter. This in¬
cludes work done for all branches
government.
And it in¬
cludes all types of printed matter
—not
exclusively
publications.
the
of
1948, there were
12,000,000,000 such copies of
printed matter delivered, a marked
Last
year,
in
over
reduction
totals,
1939
from
but still
mense
turned
can
war
year
nearly double the
figure.
"This does not
and
the
plants.
Another 23.
had 61.
'
a popular
pamphlet could be
quantities of material
out by the departments
aeencies themselves.
tell,
no one can even
No one
for
months
a
the
next
gov¬
fur¬
several
account of higher pub¬
on
January railroad earnings reports, which will begin to appear
week, are going to present a particularly mixed picture.
For
roads the results are obviously going to be pretty grim in
I'm
many cases.
For one thing, for many of these roads the opening
own
medicine.
I'm willing
quarter represents the seasonal low, with operating deficits normal
to
take
a
lesser number
of
for the period. This condition will be aggravated in the current year
publications for free distribution
by the worst winter weather on record. Traffic was completely dis¬
to
help the cause of lower
rupted in many areas and expenses for snow removal, etc. have
publications cost. In the long run,
been
heavy.
These
adverse
influences
have
carried
the people are not getting these naturally
through to date.
•!
publications free of charge; the
In contrast with the rather depressing
early 1949 outlook for
cost isn't paid directly, but it is
roads in the affected areas, many roads in other sections of the
paid indirectly in higher taxes.
lishing costs.
the
rest
of
don't
I
know
how
feel about it, but
willing to take a dose of my
you
next
western
country
Washington
include
Printing
the
you—does
Government
Office
operation itself,
which had 15 plants, since reduced
to nine.
Do you wonder when 1
told you that it is impossible to
estimate
impossible
to
over¬
—
ment
is
volume
of
govern¬
printing and processing that
outside
done
the
Rather
the
Pay?
time.
same
I
Control
contradicts
which
incidentally,
is
comment.
The trick
of
is
from Buildings.
passed
the Amer¬
to
on
ican
taxpayer who is plagued by
bats in his home or barn is to first
should
show
quite
favorable
comparisons.
Weather in
the
the
Cats.
Vagrant
bats
should
all
should
out
be
be
the
for
plugged.
The
It's remark¬
simple—but
ably
do
brochure
government
we
to
need
pass
a
on
hint?"
this
though she may well have
to
rather poor
a
of
January 1949 was more than double that of a
expectations that the road is off to such
these
years.
One of the outstanding accomplishments of the Illinois Central
management has been the progress with respect to the debt maturifcv
schedule
Fitzgerald
lic
years ago was considered well
nigh
beginning of 1941 the company has re¬
duced its non-equipment debt by
roundly $128 million. This alone
is equivalent to more than $94 a share of common
outstanding. The
formidable
once
tated
ILL,—On March
1,
Simmons, 208 South
al¬
the
on
nominal
a
the
cost
plus
"Last
of
markup.
a
the
year
Documents
the
on
is
reprint
•
Superintendent
issued
of
free
charge for the agencies—I repeat,
free of
tions.
charge, 61,979,102 publica¬
How many million publi¬
cations which the
selves
can't
agencies them¬
issued free of charge.
even
We
surmise.
"Now I would be remiss
in my
to
our
citizens.
Many of
W. J.
La
Salle
members
Street,
York
and
of
the
Chicago Stock
admit Walter J.
firm's municipal department.
G. Paul Miller is withdrawing
not
if
a
expect
price
partnership
vast
is
flood
asked for them.
not
of
to
free
condone
the
publications
which daily clutter our mails.
businessman,
conceivably
from
Commerce
for
example,
/
can
of
charge
CHICAGO,
is
can
a
ILL.
—
Vice-President
to the department.
gress
And the Con¬
itself is not above criticism
estimate in this
respect,
as
we
all know.
with
which
on
It is difficult to
establish
the
is still pending.
the
dividend
Even
if
1931.
distributions
judge just when
Representatives of
preferred
cumulative
as
pay
the
div¬
common
preferred
stock
however, it should not delay resumption of
com¬
dividend requirement
quickly under
Without any
control
with
of
the
the
New
York
membership
of
Gaines,
on
and
to
Admit
1938-1947
years
average
amounted
hit $14.60 a share.
Earnings
above
the
early in
sible
in
$0.28
the
a
share earned
to
year
probably
were
make
a
any
year
Stock
the
Exchange
late
Feb.
24
Chester
will
be
admitted to partnership in Gaines
&
$0.45
The main
ities
are
died
on
&
Feb. 8.
Co.,
a
Chicago,
share.
Meeting
$0.50
share
a
of
sharply
1949
too
pos¬
the
year
earnings' this
year
as
Moreover, further substantial debt
a
possibility that
1950-1955
plan
some
maturity problem.
most of these matur¬
Exchange
held
be
in
of the
Stock
Building at 3:15 p.m. on
Tuesday, March 1, 1949, for the
purpose
of receiving suggestions
filled
at
the Annual Election to be held
on
May 9, 1949.
to
be
/
Vacancies
nominations
the
March 8, 15, 22
partners
nominees. Those unable
will
are
in
occur
to
be
made
five
governors,
two
trustees of the Gratuity Fund, five
members of the
Nominating Com¬
mittee.
>
-Members
of
the
Nominating
are: Augustus
Field, Jr., Jos. Walker & Sons,
Committee for 1949
Chairman; Francis Kernan, White,
Weld
&
Co.,
Secretary;
I.
the
Webber, Jackson & Curtis.
will
lor
Chairman of the Board of Gov¬
Burnham
Commitee
the
the
following positions:
suggest nominees
by letter. For the convenience of
any
members or partners who
may wish to appear individually,
may
Nominating
with
ernors,
B.
invited to attend this meeting
attend
on
Exchange.
Ex¬
change
positions
meetings
and 29. Appointments
may be ar¬
on
Sixth Floor
will
hold
Secretary of
open
the
year,
common
ranged by communicating
John C. Korn,
meeting of the' Nomi¬
nating Committee of the New York
for
to
visualize
difficulty in achieving this end is that
To Hold
to
111.,
to
this year, with
All members and their
Joseph J. Rice, partner in Dan¬
Rice
$10
is expected
difficult
NYSE Nom. Committee
An
the
on
non-callable.
to suggest
F.
as
is
be devised for settling the entire
may
are
iel
low
Last
Obviously it is
Even if business declines
it
as
share
common
$7.77.
intelligent estimates
however,
Co., 1 Wall Street.
Jos. J. Rice Dead
to
earlier.
earnings.
retirement
declining
;
January
share
the
signs of
allowance for the interim reduction in fixed
the Board of Governors' Room
Gaines will acquire
outstanding ability
any
charges reduced further to $10,344,000, earnings
Stock
Gaines & Co.
Thomas A.
by
merely mailing a penny postcard
to
class
Obviously it will not be feasible to
this suit
expenses
dropping
Manage
Dickson Chicago Office
secure
465 publica¬
the
Department
of
free
suit
its
of
resumed
were
lapse since
a
In, particular, the management has shown
get
Feb. 28.
on
Quncan to
could
general dissemination
were
"But this
one
few
expected.
instituted
while
the
after
progresses,
from
control and the
of such nature that
be
may
earnings for the 10
prevention 01
forest fires, to mention only two
are
of
one
Payments
year
charges from $16.5 million to $10.7 million,
Fitzgerald, Jr
them, in all justice should be dis¬
organization.
tributed free of charge.
Items on
rat
have
business.
Sidney V.
duties if I made this a blanket
Duncan has been appointed resi¬
condemnation.
And I do not wish
dent manager of the Chicago of¬
to
be
so
understood.
Many of fice of R. S. Dickson &
Co., 135
these
publications
undoubtedly South La Salle
Street, after 15
are highly necessary to the work¬
years' association with the New
ings of our government and the York office of he firm. Mr. Dun¬
welfare of
reduced
Illinois Central's long-term earnings record has been
quite favor-,
able.
Exchanges, will
Fitzgerald,
Jr.,
to
partnership.
Mr. Fitzgerald is manager of the
indicated,
have
been
amountsj.to only $1,118,742 a year.
—which,
I
have
property improvements dic¬
dividends too long as the total preferred
mon
New
as
maturities
preferred issue last
holders should win,
his sale is based, not on total cost
unobtainable—but
mortgage
yet been resumed.
even
dividend
idends
pub¬
loses money, for
government
is
when earned.
Even then
charge.
1950-1955
6%
common
shares
the
government is attempting to sell.
This is not true of just one publi¬
cation.
It is a general practice
for the departments and agencies
to offer free of charge—as long as
the supply lasts—copies of publi¬
cations which the Superintendent
of Documents is attempting to sell
at
small
have not
of
agency
many
the
very' conservative dividend policies.
The
charge to the pub¬
another
which
so
Since
build up cash, and the funds needed for
"No, I am
referring to the
seemingly paradoxical situation
whereby one agency of the gov¬
lication free of
not
Naturally, the heavy debt retirement program, the necessity to
To Admit
a gooa
same
which
unsurmountable.
any
offer the
earlier. Despite
year
a
good comparative
immune to the growl¬
start this year the common stock has not been
point there.
ernment will
The road got off
beginning in January 1948, with net income of $472,-
Unofficial reports indicate the likelihood that net for the month
761.
approximately $84 million. As of the end of last November the
had cash and equivalent of slightly more than
$84 million.
Obviously these maturities no longer constitute a threat.
Blunt Ellis & Simmons
Blunt Ellis &
Commerce,
'
road
tional Cat Week sponsored by the
of
v:
to
CHICAGO,
Department
V';.'v.vv.rv
{ One of the best comparative showings in the opening month of
the year is expected to be that of Illinois Central.
ing pessimism surrounding the entire rail market in recent months.
all but one or two of the The stock under recent
pressure has declined well below two times
openings that the bats use in get¬ 1948
earnings. It hardly seems reasonable that it will continue indef¬
ting in and out of the buildingv
initely to ignore present high earnings as well as the vast improve¬
After this he is advised to wait
ment that has taken place in the road's basic status in the
past few
until
about
midnight when the
Na¬
of
purposes
'
roads.
close up
not
am
complaining that the Depart¬
of
Interior's
publication.
to
worthy
Bats
on
one,
bats are locked out.
referring to the lady who wrote to
How
last
publications
contradictory activi¬
carry on
at
Eliminating
holes
"One of the amazing character¬
istics of our government is that it
me
them
weT; send
That
the Injant
send
let's think twice before
night, and then, to complete the
'bat proofing,' the remaining
It's Free—Or Would You
ties
and
Government
Printing Office?
can
continue to
Care
.
all.this—mind
"And
not
tions
include the im¬
23
Senators
us
month of
a
nished
Let's
ment
printing firms.
each Federal
there
agencies with
printing or
duplicating plants located all over
the
country.
One city had 25
through the Government
is
This
time
and
"Much of this
Printing Office, and of these
more
that
at
estimate—the
want to pass on to you today..,
publications
that
of
(775)
"In
consequence,
I hope my eastern
territory has been particularly mild. From a traffic stand¬
colleagues here and in the House
point this has had its unfavorable, repercussions in slowing down the
cating plants located throughout of
Representatives will join with
the country.
movement of coal.
On the other hand, there will not be the
One department had me in
heavy
a conscientious endeavor to
44 printing plants.
storm expenses with which these roads were saddled in the
Another 41.
opening
order only those publications for
months of 1948.
It has already been announced in ,the press that
Another 23.
One agency had 100
distribution
to
our
constituents
Erie's January earnings were slightly above a year earlier and sub¬
duplicating plants.
Another 43.
that will really be of use to them.
In all, there were 32 departments
stantial earnings improvement is expected from the New
England
indicated that the government bu¬
reaus
priations
at
Com¬
government
printing
plants and 256 government dupli¬
Budget
offi¬
justify
larger
print-:
V
be
Joint
the
of
may
made
survey
133
were
cers
•
volume
a
Printing in 1947.
on
showed
.
heard
the
from
instance
the
for
proc¬
printed on their own
However, some slight
ticed ; evern c r e a s
what
of
have
all
CHRONICLE
government agency which apolo¬
gized
to
us-"because
only
10C
copies
the Senate floor, Senator Styles Bridges
on
*
FINANCIAL
communication from
a
ernment
In
&
"Recently,
Spending 'Soft Spot'
Uncle Sam maintains
Club, Unlimited.
Minute
COMMERCIAL
THE
Basil B.
Co.;
II,
Burnham
&
W.
Co.;
Elmer, Eastman, Dillon &
and
Stuart
R.
Reed, Paine,
*
'tTV
24
CHRONICLE
FINANCIAL
&
THE .COMMERCIAL
(776)
Thursday, February 17, 1949
Delegate of the Brazilian Treasury in New
York, announced on Feb. 11 that two outstanding issues of Brazilian
dollar bonds will be redeemed in their entirety on April 1, 1949.
Securities Salesman's Corner
Delegation's
prospect for the first time you can save
much wasted effort if you properly qualify your man.
The faculty
of judging people comes as a result of trial and error.
Yet, there
are some definite reactions that you will encounter if you look for
When
meet
you
a
Camara,
in
office
Co.,
fiscal
agent, a check for $10,413,505.33 representing funds for the
redemption
of
all
outstanding
State of San Paulo (Brazil) 7%
secured sinking fund gold bonds,
Coffee Realization Loan 1930 (Re¬
alert observation. You judge
That is why it is important to give
him an opportunity to have his say.
There is also the attitude he constituted as "Plan A bonds")
assumes when he talks.
It may be an inflection of the voice, or a and United States of Brazil 3%%
physical response such as arising from a chair, or relaxing.
It may external dollar bonds of 1944,
be even a glancing look in his eyes, or a moment of hesitation.
series 6, issued in exchange for
Selling intangibles is not based upon a sort of hypnotism as some bonds of State of San Paulo Cof¬
are
wont to believe.
But it is important that clues to another's fee Realization Loan 1930.
The
mood, or prejudices can be discovered.
Selling securities particu¬ State of San Paulo bonds will be
larly, demands that sort of attention to the other fellow's personality redeemed at a price equal to the
traits that enables the salesman. to steer his course around the
principal
and
accrued
interest,
obstacles that are always present when you try to persuade another
which
interest, with respect to
Good selling also depends upon
them.
by the things he says.
your man
to
anything.
do
securities
the
In
stamped
and
SALE.
Not if we are
for
customers.
our
business
we
must first
trustworthy relationship.
cordial
trying' to build a business and do a good job
There are some' lines of selling where the
objective is to make one call and make the sale.
This, too, is a
specialized field wherein the salesman has to size up his man. But
in our business the main approach is to eliminate the barriers of
distrust, strangeness, and sometimes
been left by another
mouth that has
trates the
the bad taste in our prospect's
salesman.
of
attention and it illus¬
A certain salesman
about as follows:
making
a
Saturday afternoon call in answer
advertise¬
The prospect
told him that he had just answered the advertisement out of curios¬
ity, that he really didn't have any interest in securities, and he arose
from his chair and started to edge the salesman toward the door.
Our man noticed annoyance and a slight touch of belligerency in
to
whicli his firm had run several weeks before.
saw
was
But there was something else—
ready to meet him half way, but that he
that this man was
about something.
sore
was
man
dark—he guessed this
He started to walk right out of the
He took a shot in the
hurt and annoyed.
broad, smile and he made no effort to cut
subsided.
that it was alright with him, that he was glad he
house, he put on a good,
off the torrent until it had
Then he said
He put
the carpet and
replaced him with a friendly fellow who didn't need business, who
had a job to do, but was not the least interested in any high-pressure
selling.
He said he wouldn't even think of trying to do business
with anyone until they got acquainted, until he found out that he
could be of some assistance.
He told his man that his firm wasn't
had made the call and
on
the low
that kind
to
was
do
had the chance to meet his
prospect.
pressure—he took the salesman right off
of
a
concern—that, of course, his main idea
business, but that came
in working
later—after he proved up, so to
'
'.
speak.
up—invited him
back into the house.
Told him that a high-pressure fellow had
been out to see him just a few days before and had tried to get him
to sell a certain security which he owned and to buy something
else.
(We thought that sort of security selling went out of vogue
years ago, but apparently here was the old first call, trade and
switch, proposition still going strong.)
After a very satisfactory
first interview our salesman left with a job to do.
He checked up
on one of the customer's securities and told him he thought it would
be wise to HOLD IT, not to SELL.
As a result of his service, he
received a friendly letter of thanks and an invitation to keep in
His prospect warmed right
And he was right.
touch for future
Now
new
business.
the roadway
account
properly and
are
to
annum
been made.
equal to % of 1% ol
not
previously
-
possibilities of opening this
sized up his man
hazard which some blunderer had left
is clear and the
good.
date,
Industrial
National
certain
states
its
of
and
tract volume last
munici¬
crued
Holders
than
and
amount
both
of
issues
picture"
amount
2,229.680
of
ling for the
least severe
Middle
Chicago
San Francisco
build¬
contracts
in "New England,
Atlantic
and
South¬
especially
pounds ster¬
nounced in
redemption thereof
The Dodge
residential
awards.
Conference
Board
survey
of
a
and
ber
a
37
the
last
$159,128,000
fleeting
indicates business
a
in
volume
contract
pro¬
residential and heavy
engineering
rather than "the oft-§>
depression or violent re¬ cluding
funds
The
Pessimist
Side
states
month,
re*
38% drop from Decem¬
.33% decline from the
total
reported in January of last
year.
The declines affected apart¬
house building as well as
ment
built
the
than in either
half of 1948 in the opinion of more
than half the executives queried.
Only
a
bond
stock, and
is
quarter of the businessmen
ance
Residential
bank
ber in aU
15
down
were
with Decern-
reporting re¬
}
Rockies,
with
exception of Louisiana and
Mis_
ions
f
east
tlie
sissippi, and were down in Janu¬
compared with the corre¬
sponding month of last year in all
but three regions,
namely, New
ary
satisfaction of
demand and
awards
jas|. month compared
notes.
company
General
for their
being down 33% compared
ume
capital and long-term insur¬
ing
orders
last month's vol-
with December but up 2% com*
pared to January of last year,
issues !
short-term
include
owners'
to
occupancy,
own
loans, depreciation reserves, work¬
1949
of
half
phases of
undertaken
Others
,
New orders will be lower in
first
pent-un
the resultant drop in
England;
upstate
New
York;
are reasons given as to Minnesota,
North
Dakota
and
why many companies are curtail¬ South Dakota.
Inventories are expected to be ing plant expansion. Others, who
Heavy engineering awards last
that
larger in half the companies, while believe
potential
markets
month aggregated $101 973,000 to
only one company in five expects warrant further expansion, state
show
a
40 per cent drop from.
to have lower inventories. Smaller that they are "delaying building at
December and 25% decline from
backlogs of orders are reported by this time because of high costs."
January, 1948.
Only three of the
six out of ten companies included
15 reporting regions showed
an
Effect of the Buyer's Market
in the survey while only one com¬
upswing
in
heavy
engineering
Increased emphasis in improved
pany in seven expects backlogs to
awards comDared with December
increase during the first half of sales methods and plans are re¬
and
with January of last year,
1949.
ported by many companies. This
namely,
the
Middle
Atlantic
Adding to the general air of has been brought about "by grow¬
States;
southern Michigan; and
pessimism are predictions as to ing resistance to higher prices, ev¬
the region comprised of northern
higher- labor and material costs idence of receding consumer de¬
(with resultant higher break-even mand, and more critical buying by Illinois, Indiana, Iowa, Wisconsin
consumers
and
industrial and northern Michigan.
points), a probable- increase in both
corporate taxes, a drop in the gen¬ companies."
•
Nonresidential Drop Less Severe
eral level of business activity be¬
Increases
in awards for hos¬
Forecasts by Industry Groupings
cause
of the completion of many
surveyed expect new orders to
in¬ backlogs
crease.
postwar expansion programs, and
the prospect of a larger share of
sales being diverted to govern¬
While
comments
favorable
on
pitals, institutional buildings and
churches last month lessened the
and severity of the drop in nonresi¬
ment
manufacturers,
the
com¬ dential buildings as a group, the
agencies
with
attendant
The
lower profits.
panies
"most
encouraged"
are Dodge corporation reported.
those in the petroleum, aircraft volume of nonresidential awards
Foreign shipments and govern¬
last month was $221,883,000. This
ment-sponsored
allocation
pro¬ equipment, automobile equipment,
miscellaneous metals and chemical total was 17% less than Decem¬
grams are cited as having made
ber's and 8% less than in January
industries.
f
the procurement of important raw
of
last
year.
Manufacturing
A lower level of activity, how¬
materials, like copper and lead,
building awards, and contracts for
more difficult.
ever, is anticipated in all but a
the 1949 outlook
are
made by rep-
resentatives of primary, metal
other
,
few
Optimist Side
The
In addition to
volume
in
1949"
firms
in
the
industrial
chinery, machine tool and
ma¬
textile
"will hold
up
Prospects in Pricing
Upward
the face of
price
adjustments
in
higher labor costs are
optimistic outlook.
They generally accepted as necessary by
cite the
"improvement that has the majority of the executives in¬
Reluctance
taken place in the supply of labor" cluded in the survey.
during the past year. A minority to charge higher prices is evident
(less than 25%) expect difficulty and some companies report that
in
obtaining labor during 1949.
they plan to make an effort to ab¬
The
material situation has also
"shown
some
improvement" al¬ sorb higher costs.
an
be¬
ing in short supply.
Now
Plant Expansion
Capital
expenditures
LOS
in
1949
|De made by only 40% of the
companies surveyed and in many
cases, these will be for "the con¬
will
showed
tions.
quite
(despite pessimism
general business conditions),
basis
educational and
Proprietorship
ANGELES, CALIF.—Hans
Klehmet is now sole
Klehmet & Co.,
Street.
proprietor of
215 West Seventh
science buildings
sharpest
the
nonresidential
among
feeling that their fields.
number of executives see a
Established 1913
New York 4, N. Y.
in
decline
the
and
though steel is still reported as
46 Front Street,
volume
construction
and
was
asked to surrender their bonds at
the
of last year:
January
over-all
The
ing
are
building pro-!
grams
earlier in the j
cession."
Despite general pessimism, how¬ postwar period." Most companies
ever, three out of five executives report that plant expansion pro-j
will be financed out of i
believe that the 1949 level of oper¬ grams
ation in their own companies will earnings. The next most-frequent- ■.
ly mentioned source for
such
equal or top the 1948 figures.
heralded
for
BUREAU, Inc.
lower than
22%
reported in
thereof, together with ac¬
interest to the redemption
date.
month of $482,-
This total was 31% less
that reported-in December
business practices conducted by the National Industrial Conference single-family houses. The decline
was
less
pronounced in houses
Board.
The executives foresee a "mild adjustment in the economic
a
NATIONAL QUOTATION
a
re¬
984,000.
palities.
The" United States oi
Brazil 3%% bonds, series 6, will
be
redeemed
at
the
principal
"leaders, however, do not look for violent recession.
over
For 36 Years
Rocky
showed
the
general business decline in 1949 is foreseen by most of the in¬
dustrial executives who participated in the latest survey of current
well
Over-the-Counter Quotation Services
the
of
month
amount
ported in December and in Janu¬
principal amount of unstamped ary of last year, it was reported
bonds presented will be deducted by F.
W. Dodge Corporation, a
and paid to
the Foreign Bond¬ fact-finding organization for the
holders
Protective Council, Inc. building industry.
as provided by the offer to hold¬
A statistical summary of invest¬
ers of dollar bonds, dated Jan. 1,
ment
commitments
reported
in
1944, made by United States oi field
reports showed a total con*
Brazil upon behalf of itself and
An
A
own
behind him.
last
sharp break from the volume
Industrialists See Business Decline in 1949 I
All because our salesman
eliminated a
east
states
Mountains
corporation reported
prospect's speech and manner.
his
he
that had been received from a newspaper
respones
a
ment
37
settlements at such rates
or
have
3.5%,. to the extent that pay¬
at
"get
out and sty
few
days before and had made a general nuisance of himself.
It is too
bad that some men go out and try to ride roughshod over their
prospects. It doesn't happen very often anymore, but there are still
a few high-pressure
bunglers around who think they are salesmen.
The securities business doesn't have very many of them within its
ranks, but in this particular case, whoever had been there before
our friend, fixed things so that the reception that awaited him when
was
paid at
ments
whom we know made
point very well.
Our salesman was
per
for building
heavy engineering projects in
with the office of the Schroder Trust
eastern
states,
and
the
region
respect to unstamped bonds, Co., 48 Wall Street, New York.
comprised of northern Illinois, In¬
will
be
paid at the following In London, Vieira Machado, as
diana, Iowa, Wisconsin and north-'
rates
per ' annum: from
Oct. 1, special representative of the Bra¬
ern Michigan.
1938
to April
1, 1942, at 3.5%; zilian Government, deposited with
from April 1, 1942 to and includ¬ the fiscal agents for the British
Residential Awards Down Sharply
tranche
of
the
same
loan
the
ing Oct. 1, 1943, at .875%;_and
The decline was
and almost received an invitation to
out," all because someone else had been there a
he called
3.5%
redemption
the
call on a new prospect
a
rate
be
31%
awarded
the
thereafter to such redemption date
this kind came to our
Last week a case of
the
establish a friendly,
We don't go out to mak,e a
will
bonds,
Contracts
and
York<S>-
New
to Schroder Trust
presented
Contracts Off
in the Brazilian Treasury
Camara, at a press conference held
Mr. Da
By JOHN DUTTON
Da
'
January Building
Redemption of Brazilian Bonds
Mario
Nonresidential
declines
classifica¬
building
gains were reported in New Eng¬
land, in the Southeastern states,
in
Ohio, Kentucky, Minnesota and
the
Dakotas.
Approximately
one-third
by
dollar volume of all commitments
made last
classified
month
was
for projects
publicly owned, ac¬
cording to an analysis of con¬
tracts
by the Dodge
statistical
division.
The percentage of total
contract volume reported under
as
public ownership
the
as
three
follows:
nonresidential
residential 8%;
utilities
last month for
major classifications is
82%.
28%;
public works and
.
Volume
E. F. Hufton Makes
P&ffi
COMMERCIAL
THE
Number 4778
169
to rise to full dignity
happiness. As our great elder
statesman, Herbert Hoover, has
by current attacks on freedom.
and
$25,000
Plan
"
These awards will
to
ual
vy-
V!
j
m
s
e
Kli|t
ly
to
a
ries
been"
F|||;r:,manner, the
efforts
of
with
of
The government bond market's display of strength goes on in an
orderly
way, with investors and traders adding to their holdings,
especially the longer-term higher-income obligations
As was
the case in the previous week, the 2&s due June and December
15, 1967/72 are the market leaders with the qligible issues not far
behind.
A minor setback that was short-lived took place in the
Constitu¬
as
will
them
further
country."
:
free
men
...
important price changes being noted
Economic forces which have an
important bearing on the government market are displaying a trend
that is favorable to the money markets.
paritally-exempts,
after
centu¬
come
to
greatness
our
•
-
Although
spread
Federal
elf
group
in
reality.
walks of life to make it a
rights
and
Edward
would
to any citizen,
go
$1,000
each
$25,000
to
awarded
200 awards of from
year
State and
each
be
to
"Constitution
on
with awards for
Day"
every
Mr. Hutton proposed that every
.....
ing $1
the
a
management.
According to the bulletin:
the solution for a^
ried
is often helpful to
death
through
So¬
problem,
it
Mr.
Hutton
that
declared
"No
documents written by mortal man
are
as
important to civilization
as
Constitution and Bill of Rights.
our
The purpose of my proposal is to
defend and extend our cherished
philosophy of freedom and liberty
given
us,
if
keep
we
it, by
our
Constitution and Bill of Rights."
Mr.
;
every
Hutton
also
business
proposed
in
this
that
country
should increase its advertising ap¬
propriation
by
1%
to
carry
out
problem
similar
such
possible that
it is
and
handled,
was
comparison
-a
some¬
be learned
about what may be expected in
the
way
of
management from
value
of
thing
can
some of which
greater impor¬
should1 examine and
look the contrasts,
of
be
even
We
tance.
carefully the back¬
circumstances against
very
compare
of
ground
which decisions were made.
the
from
over
rates
interest
of
course
two
the
and
disposition which will be made of
issues becoming due or callable
hereafter.
Will the floating debt
long-term bonds,
funded with
be
increased by the re¬
will it be
or
redeemable
bonds
the
with additional short-term
paper?
of
National
Ad¬
of
placement
interest will short
long-term bonds be sold?
vertisers and the American Asso¬
At what rates of
ciation of Advertising Agencies on
Oct. 27, 1948, that "If business is
paper or
going to continue to sell through
the
"A
exhaustive study of
really
similarities and dissimilarities
the
decades, it must also promote between the postwar periods fol¬
understanding of what made lowing World War I and World
those products possible, what is War II obviously could be re¬
an
necessary
to
what
fi'ee
our
a
free market, and
market means to
At
war.
a
ported
only . /an
lengthy book.
a
ourselves
confine
shall
We
individual
and substantially, and
a
policy of funding a
tinuously
followed
large additional part of the
to
a
with
debt
ing
float¬
bonds.
operation may be seen again.
"(4)
The
funding
operation,
after it was begun; was carried
forward in an environment of de¬
'destroy freedom, liberty and
per-
gonial: responsibility, will object to
' proposals.
But every ob-
such
jector
,
t
will
squarely
be
putting himself
limelight as opConstitutional law, op-
in
.
the
posed
/•
to
posed
to defense
philosophy
and
of
Bill
of
of the
the
of
Rights, and in favor
scrapping Americanism for a
socialistic government designed to
rule, not serve our people.
As
part of the plan, a non¬
partisan and non-sectarian awards
could be drawn from offi¬
cials
or
patriotic societies and
from State Supreme Court jurists
to select the annual recipients of
jury
the "Freedom Awards."
.
Mr. Hutton emphasized that lib¬
erty has been defeated in a score
,
incide
most
in
are
each
periods
co¬
that each followed the
-costly
history
and
up
war was
destructive
war
to their times, and
accompanied by un¬
precedented
expansion
of
the
public debt to new high record
levels.
freedom
Constitution
is
believed that
Banks
move
the longer taps as
made by
were
marked
again
prices
selling
up
of
these
...
est
resemblance
the
"There,
The
strong
a
rates
to
higher
has been
toward
tendency
adopted as
icy.
a
part of official pol¬
was
banking
held in the
system, including Federal Reserve
and commercial banks. At the end
of the second war more than twofifths of the total debt was in
the
banking system. Furthermore, the
innovations. of special issues and
public securities nonmarketable
payable on demand of the
holder had been adopted. If these
are
deducted and marketable se-
of
riod
Federal
of
factors
Several
debt
here, but the end-product clearly
present postwar
period
which there has
in
current
money
"All
been
considerable decline in
a
supply, the
boom notwithstanding.
the
these
of
matters
are
in¬
and
no
by itself.
growth in recent years of the so-
a
state
No peace now
of undeclared
by methods short
of actual hostilities.
"(2)
on
Roughly
three
and
one-
quarter years after the cessation
fighting in the second war, our
economy is still poised near the
of
peak of
a
shorter
continuous boom car¬
such
as,
There are other factors
example, the large
for
called "welfare
economics" school
thought and the changed
litico-economic
atmosphere
of
po¬
in
general.
But these may be re¬
garded as outside the scope of
the present investigation, although
their presence must be noted and
their significance borne
.
.
.
.
.
due
Sept.
1958/63
some
1967/72.
Trades from the 2%s due 1956/59 and
longest bank 2V2S are also being carried out by
15,
.
the
into
institutions.
.
partially-exempt
bonds,
especially the
long¬
maturity, will continue to have attraction for many institu¬
tions
are
.
.
the
Although
est
the constructive side, it is
economic
conditions.
RESERVES
EXCESS
price
much in
not react
will
and
011
issues have lost a great deal
as
long
the taxables
as
believed that these tax-protected
of their appeal, because of changed
...
WORK
AT
to the out-ofwork in order to
maintain earnings./.
Since the first of the year bond holdings of
the banks in the 12 Federal Reserve Districts have increased by
town
.
banking
system
belong
the
York
New
$53,000,000.
The
.
.
each of these areas showing an increase except
City district which reported a decrease of
$329,000,000, with
for
the
of
reserves
institutions and they continue to put them to
.
.
largest increase
was
in the
Chicago district, followed
Cleveland, Boston, Atlanta, Richmond, St.
Louis and Kansas City.
Many of the deposit banks in the
southwest and far west were reported to have been heavy buyers
Francisco,
San
by
.
.
.
of the longest eligible issue.
recently
.
.
.
CURBS
CREDIT
AND
INFLATION
expenditures evidently to be contained with¬
With rearmament
limits and European relief not likely to go
in budget
beyond esti¬
mates, it is believed in many quarters that the inflation
run
its course.
This means that the long postponed
.
.
.
spiral has
transition
taking place and further downward adjust¬
be witnessed in coiping months. ... The
in economic conditions is
business
in
ments
will
is off the money markets and this
government securities. . . .
pressure
Because
the
politicians and
money
should be favorable to
have a real
managers
if important devel¬
deflation it would not be surprising
fear of
opments were in the making so far as the credit picture is con¬
cerned.
These may come all at once' or as a series of changes,
.
.
.
Regulation
with
most
watched
ADVANCING
bank
and
W,
closely.
.
,
reserve
requirements
being
.
in mind."
"ELIGIBLE"
DATE
ending of the inflation is a favorable factor for the goyernment bond market and this is being reflected in the uptrend in
The
maturities. .[ . . The
have not been sharp
on
a
day-to-day basis. ... There has been some minor backing
and filling, but the longer eligible issues have shown a very steady
advance.
This has raised the question as to whether the author¬
ities have enough of the bank issues to supply the sizable demand
that seems to be around for the higher income issues. . . . Since an
orderly bond market is the policy of the authorities they must be
in a position to temper a move on the way up as well as to cushion
prices of all Treasuries especially the longer
market has been orderly and price advances
.
related to each other,
single one can be explained
by relatively complete world dis¬
armament, and by a peace which
carried
partially-exempt obligations have lost all of the
yield advantage over the taxables and when the higher
premium is considered they are less attractive than the taxable
issues for many institutions.
This has resulted in switches from
the partials into comparable short maturities of the taxables. . . .
The yield spread between the longer tax-protected bonds and the
taxables has narrowed to, the point where a number of institutions
are no longer interested in the partials. . .
The large premium the
partially-exempts carry is also a deterrent. . .
Since the trend is
toward
longer maturities in order to /maintain income several
switches have been made from the 2%s due 1955/60 into the 2V2S
The
involved
were
contrasts with the
thus far
.
FAVOR
tax-free
reduction.
lasted for 20 years.
war
limited attractiveness?
but
;pprjtiesi comparable to those exis-
in taxes expected,
(if any)
changes
minor
very
partially-exempts at levels now that give them only
not the
Excess
"(5) The Federal debt was dif¬
ferently
distributed among the
various classes of holders. At the
end of the first war only about
one-fifth
only
...
TAXABLES GAIN
by monetary measures
extricably
"(1) The first war was followed
exists, but
With
,
there is no doubt they are scared to
they fear inflation
of deflation.
are
In the pres¬
there has
tendency for inter¬
move
The
levels.
countered
ends.
main contrasts are:
.
.
.
.
say
death
far,
thus
period,
,
periences of the two
.
cians
clining interest rates.
ent
-
^'^t^ha,profess to be true Americans
^4;!^'^kut--/advance socialistic ideas to
it
OUTLOOK
we
liberty of each of consideration of the, main; points/ ■teriV
cltiTing the earlier period are
us, to be certain that the freedoms of resemblance and contrast hav¬
considered
alone,
the
banking
under which this nation was born ing most direct bearing upon the
system held more than one-half
and brought to this point shall problem.
of the public marketable debt.
"We find at once that the dis¬
:
'^'^tp&dure in the future . . . for
"(6) After a brief drop accom¬
*America is the product of our similarities are more numerous
panying the first postwar depres¬
*
* J. freedoms."
and
of
far
greater
importance
sion, the money supply began a
Hutton said that the Yan- than the similarities.
Practically
rise which continued steadily al¬
the only points at which the ex¬
^ v^{,>fkee Doodle Communists — those
most to the end of the 11-year pe¬
the
Central
.
comparable
war,
been
points of
greatest practical interest to the
government securities market of
today
are
the probable future
the
"Perhaps
General Dwight D. Eisenhower's
suggestion, made in New York to
Association
unexpected,
be
not
increasing unemployment and a rapidly receding stock market indi¬
cate the period of readjustment is here and the inflation spiral is
broken.
Deflation is not cured by deflationary measures, which
Is what a sizable increase in taxes would do.
: Although politi¬
time after the first
had been through a pri¬
mary
postwar
depression, and
many of its effects were behind us.
"(3)
The government, during
public debt. For comparison, we
the 11 years following November,
will have the record of how a
previous great postwar debt was 1919, reduced the public debt con¬
and see how a
look at the record
may
cialism to Communism.
would
.
finding
"In
day in the fight against
creeping
keeping the dealers and
are
Although there is caution in the market and
tax law, despite requests by President Truman and Treasury
Secretary Snyder for higher taxes.
Declining commodity prices,
The post¬
war
issuance of long-term bonds
was
not
begun, however, until
Freedom
Foundation"—and
that here on.
"Such
comparisons
may
be nearly four years after the end
all patriots with adequate income
of the first war, and so the pos¬
In seeking simi¬
express their support by subscrib¬ pushed too far.
sibility is not barred that this
larities we may be led to over¬
American be given opportunity to
subscribe a dollar or more to "A
.
market is broad and
the
C. F. Childs and Company,
January Bulletin,
its
In
from
Territory.
.
*the
sizable,
purchases
money
,
reaction
is
governments moved up sharply because of
and uncertainty over taxes. . . . How¬
changes in economic trends and the appearance of maladjust¬
ments on the horizon make less likely important modifications of
War II.
after World War I and World
handled in
in the philosophy of the Constitu¬ the past. A problem of the present
tion and Bill of Rights. Mr. Hutton day is the handling of the Federal
recommended
.
ever,
of the Public Debt
and differences^in>. handling
similarities
lists
awards
worker,
manager,
preacher, Congressman- business¬
man, student, whose contributions
most effectively preserved the lib¬
erties, rights, freedoms and privi¬
leges of the people as expressed
.
the favorable tax-free yield
Company, specialists in Government Securities,
F. Childs and
C.
New York
whether City, specialists in Government securities, lists and analyzes the simi¬
teacher, laritiesand differences in the two postwar periods in public debt
The
.
Partially-exempt
American life.
F. Hutton
.
.
New highs for the
.
the
TAX
of
freedoms
.
securities.
behalf
basic
over.
setback will be largely technical and a buying opportunity.
any
.
new
busy.
minor
a
people from all
in-.
the
of
without
was
in Treasuries
switches and
dividual$,',;in
i^l-'-allv-walks of
life
flurry
Activity
Mr.
ready under way among a wide¬
possible.
Hope need not die, but
a greait dramatic event is ne.eded
to lend tangible support to' the
the
.
Hutton revealed
his plan in terms of proposal only,
he indicated that steps were al¬
liberty are just and
freedom and
values
human
And
"of nations, and that faith has
established
reward, in
-competitive
our
meaning of the word AMERICAN.
larger than I scorned, hope has been abandoned,
'• the Nobel and treachery has been rewarded
Peace
Prize, as fear has spread all over the
responsibility,
be permanent¬ world.J Personal
'
~
"
t i
undergird
qualities which rise alone in
men, which will fulfill the
free
$4,000,000, ♦>
Governments
on
By JOHN T. CHIPPENDALE, JR.
Club of Miami on said, "It is those moral and spirit¬
10, E. F. Hutton, former Chairman of the Board of General
l^oodS Corporation, proposed a startling and forthright plan for de¬
fense of freedom and liberty. He proposed that an annual prize fund
lOO
to
tional
MIAMI, FLA.—Speaking before the Rotary
Reporter
provide such
put all Americans in competi¬
tion
Feb.
of
Our
needed and dramatic inspiration
a
a^
desire overthrow
\ challenge to all who seek dictatorial privileges, or
;
of Constitutional government.
25
and women,
Proposal
'] Recommends $4,000,600 Fund for Awards of $1,000 to
Annually for Basic Contributions to Freedom and Liberty.
(777)
people whose faith is sorely tried
Far-Reaching "Freedom
Vl
CHRONICLE
FINANCIAL
&
it
on
.
.
the way down.
.
.
.
>
eligibles should not be as plentiful as
with the monetary authorities, could this situation
If long
they might be
not be met by
eligible for purchases ahead of
deposit institutions? <<. This is a point that is being
making
some
time by
the
of the tap bonds
given much consideration by some money market
Such action would increase the amount of bonds
cial banks could buy
in order to maintain
followers.
. . .
that commer¬
income.
THE
(778)
2fi
ture years.
While forecasting has
very valuable usages, and while I
the average of wholesale
shall necessarily attempt it to a
prices for other than farm and
food products is now at approxi¬ degree in the course of my anal¬
mately its all-time peak.
Con¬ ysis, I think that much damage
can be done to sound policy if we
tinued and disproportionate price
where economic . analysis
increases are now an even greater forget
(Continued from page 6)
begins.
I
bring before you, and I do
clairvoyance
and
ends
danger to the economy, at a time
when some soft spots are begin¬
cannot
that
think
not
else
anyone
can
maladjustment
of
danger in
which should
or
the current economy
neglected until they bear
These maladjust¬
be
not
their evil fruit.
whether
these
changes, are bringing the
economy into
better balance for
sustained growth and stability, or
whether these changes are merely
But
.
our
and the relationships among
certainty,
absolute
with
ture
most
inability to view the fu¬
vari¬
bands ••in
despair
and
.
allowing
economic
analysis toward
apply
of
evaluation
eral
main
some
gen¬
of
the
directed
proposals
specific
a
growth and sta¬
toward economic
TheA main task
signs that we
of economic policy ur\cler current bility which this Committee and
could be moving toward a more
the Congress now have or will
conditions is to address ourselves
general business downturn and
shortly have before them for con¬
vigorously to trends that have al¬
should take preventive action be¬
sideration.
ready appeared and facts that are
fore it comes.
This gives us a
Of course, if we waited until already known.
Significance of Problem of
warning
first
the-
matters
drift.
to
well
was
over
$300 inflation.
tion
depending upon whether
10 years,
we
achieve
a
stable rate of growth
repeat the pattern of boom and
bust.
Depending upon which of
these two courses we follow, the
total
difference in our national
or
inflation caused a sound foundation on' which to
with heavy un¬ stand, and if we are both clear
and
courageous
in dealing now
employment, it would then be too
of
Economic Growth and
serious deflation
late for an
with
anti-inflation program
situation
the
a
called
infla¬
demand
for
confronting us
Viewed
in
and
of
its
not
the
tract
It
is
>"
money
the
reduce
esti¬
precise
mates, but rather the use of broad
strokes
to
paint a picture which
has great meaning even if its de¬
tails
not
are
Let
clear.
the
price level."
that
true
the
total
money
available
of
volume
goods,77'
proposition that the rela-j £
the money supply ■ -1
and the available supply of goods 7:
has a
basic influence upon the
"
and the
between
tion
repeat this figure,
$800 level of prices and incomes of all
possible difference kinds is obviously correct as a' vi
years of stable pros¬
statement of fact.
7 :y> 7;
perity and 10 years of bust and
But it is a fallacy to
derive
slow recovery.
This difference, from this the conclusion that" a
me
as
between
which
the
10
might be called the cost of
big depression,- is more
2Vz times the total money
another
than
cost
to
us
than
more
of
World
times
our
the
is
It
It is
War II.
total
our
^
income
before
na¬
more-than
national
total
highest
had
ever
times
debt.
tional
in
3
the
9
main
year
It
economic sta-, '7
: ' :-
to
tic contraction of the money sup-
V
is not demonstrable
generally rising price level
interacting with a generally rising
*
For it
ply.
that
income
war.
approach
bility should be through the dras-'.
we
is
enough to lift those in the lowest
income groups to a decent Ameri¬
the American
can
standard
of living,
provide
capacity for
only out-dis¬ plenty of profits for those who
invest and do business, clear all
the world but
long-time span,
any
the productivity
economy
Stability
dangers is to consupply and thus
supposed
or
-
„
the neglect
are
this
since
And
reflects
supply, which was $54.6 billions
in 1929, rose to $63.3 billions in
income
over
the
next
decade
1939, to $170 billions in 1947, and
might come to about $800 billion,
stood at $168 billions December,
or an average of about $80 billion
1948.
Manifestly, the money sup-; 7.
a
year.
All of us should realize
ply has increased much more than 7.
that these are not
billion,
pressing problems;
Sixth. I shall endeavor to
a
gift never granted to any man, is
no
reason
for throwing up our
This cost
.,
weakened, we must pause
examine t carefully
to
in late prices and costs which
which started
depression
1929.
-
,
goods
relationship billion, or approximately the dol¬
in excess of the supply of goods,
lar cost to us of World War II.
between the cost of living and the
which in turn reflects a money
income structure, the relationship Further, this chart undertakes to
estimate the - total, difference
in supply unusually high in relation
between
divergent price trends
to the volume of available goods,; <•'{
our national income over the next
such as industrial and agricultural,
the cure for inflation and its real 7
l
mand has
employment and production—
ments arise out of the
than
ous
main groupings of expendi¬
bring before you, any perfect and
they were when the pulse through¬
tures
and
income
within
the
guaranteed judgment as to ex¬
out
the economy was uniformly
framework of our total national
actly what prices and employment
strong.
In the second place, the
are going to be this year.
Nor can output and income;
leveling off or softening of, some
Fourth, I shall deal with the
I
or
anyone
else prove beyond
prices has been exaggerated or
question whether so-called "in¬ problem of maintaining maximum
misinterpreted. The cost of living
flationary" or so-called "defla¬ production and the adequacy of
has declined only about 2% from
tionary" forces will gain ground capacities required for that pur¬
its
all-time peak,
is still 74%
.
in the near future.
This does not pose;
higher than in June, 1939, and we mean that we cannot study recent
Fifth, I shall in summary fash¬
cannot be sure that it will not go
economic trends and make some ion describe the current economic
up again. Furthermore, when some
useful projections; it does mean situation in its main phases, touch
prices begin to soften or decline, that we should carefully distin¬ upon such aspects of the economic
not primarily because supply has
guish between what we observe outlook as seem discernible at this
increased but rather because de¬
and what we predict.
time, and identify some of the
ning to show in other areas,
in
has in other words a .-recession or: a
become more
highly integrated depression. Therefore, the way to
and interdependent.
A chart here prevent a serious recession or de¬
is to
stop the
rising
shows the dollar cost to us of the pression
our. economy
as
severe
more
Mixed Trends in the Economy
progressively
become
have
turns
ixres,
Thursday, February 17, 1949
FINANCIAL CHRONICLE
COMMERCIAL &
a
supply is bad per se. We -7
falling price level after
money
had
a
the country was certhe way to prosperity.
We had a rising price level
after 1932, and yet the country
was on the way to increasing em¬
and
tainly not
1929,
on
y
7
anti-defla¬ now, we may with some confi- >
progress
have
Fortunately, we deuce rely upon our abilitjrto deal tanced the rest of
ployment and production. We had
have not yet arrived at this stage, with any changed situation which have also out-distanced even our our slums, provide decent housing a
fairly stable price level in the 7
and those who now say,
"Let's may appear later on. But if we own
and adequate
medical care and later' 1920's, and yet obviously
expectations. This has re¬
underestimate the importance of
education for all our people, cover
worry about deflation instead of
flected
a
something must have been wrong
growing labor force,
inflation," are like the doctor who what we know has happened, and combined
any foreseeable needs for national with the economy in view of what
with
unequalled
re¬
the
importance of
defense in
looks up the address of the under¬ overestimate
peacetime, finance a resulted although everyone will
sources, managerial skills and en¬
taker instead of realizing that the what we think is going to happen,
progressive program of resource not agree as to just what was
terprising spirit.
our
perspective may become dis¬
patient can be made completely
The growth of the labor force development, and leave a big sur¬ wrong.
In short, there is no ar- 7
torted and our decisions unsafe.
whole by effective treatment.
plus after all these things are bitrarily sound or even preferable
■*»'.
and its utilization is shown in this
done. And all this, I firmly be¬
The Employment Act of 1946, in
7. If
we
were
now faced with
price level or course of price 7
chart. Civilian employment, which
either the extreme of all-out in¬ truth, reflects the sound action of
lieve, can be accomplished under movements—such as those of 1926
was about 47.6 million in 1929 and
and
would need an
we
tion
program.
flation
extreme of all-out
the
or
deflation, we would need to apply
an all-out
anti-inflation program
But it
over-simplification
the case might be.
gram as
is
anti-deflation pro¬
all-out
or- an
dangerous
a
characterize
to
outlook
nomic
the
as
current eco¬
being either
wholly "inflationary" or wholly
"deflationary," and the remedies
required for the present
be derived from
simplifica¬
tion.
There are, it is true, some
economic
situations
which
are
which
are
situation
cannot
such-
unwarranted
an
clearly and violently inflationary,
such as the current one in France.
There
are
others which are clearly
deflationary, such as
own
troubles in 1932.
arid violently
were
our
But in
such
.
a
as
period of high prosperity
we now enjoy, the econ¬
omy contains a mixture of trends.
Some prices are too high and ris¬
fast and some activities
too hectic, and these have an
ing
too
are
inflationary cast. Other prices may
be too low or falling too rapidly
and some activities are softening
much
too
or
not
expanding
rap¬
idly enough, and this has a defla¬
tionary cast.
The problem is at
one and the same time to prevent
the
becoming
either the inflationary cast or
deflationary
cast
from
Congress which had confidence
affirmative
in
policies
applied
currently to unfolding events. The
to
use
act
before
is late.
the hour
One
that
seriously affected.
7
For these reasons, we need a dis¬
and selective com¬
policies, to deal with
inflationary cast and defla¬
criminating
bination
the
of
tionary cast at the same time, and
we should not look for the all-out
one-way
solutions called for dur¬
a period of galloping inflation
paralyzing deflation.
The best
time to act is before we are caught
profitable to maintain prosoerity
than to recapture it after it is lost.
An
With
if
we
these
extremes, and
act in time we can prevent
of
them both.
Action
now,
we
can
know.
upon
•
in
time
action
means
primarily
what
already observe or already
It is not based primarily
indulgence
sweeping forecasts
in
as
upon
general
or
to the eco¬
nomic outlook for 1949
or
considerations
First,
to
I
outline
shall
attempt
the significance
for fu¬
without
further
progress
tion
.
the
we
may
At
an average an¬
growth of about 3%, we can
lift our output (1939 dollars) from
$146.7
billion in 1948 to about
$200 billion in 1958.
How far be¬
yond
tion
us.
the
setting of this $800
principles which may guide us
toward
improved economic sta¬
and
bility
in
current
some
of the fallacies
which
thinking
may
this the progress of inven¬
discovery might carry
and
no
one
can
tell.
of
sound
general principles;
principles, I
shall
identify areas
7
:
\
;
7
(
7:
v
.
■ ;
In almost every peace¬
time decade since the middle of
Basic
Principles
and
Current
Fallacies
period since the war, gen¬
speaking, has been char¬
acterized by rising prices, wages
The
erally
and
other
incomes,
accompanied
ness
cause
must
whatever
goes
uu
rapidly
eventually come down rap¬
busi¬ idly, and when prices come down
downturns, and these down¬ rapidly there will be sharp drops
the last century we have had
from
away
any
.7
•
■
7
7
7
arbitrary 017
of prices
absolute levels or trends
and wages
focuses
and other incomes, and
interest instead upon
7
our
relationships
among
various
of income as these are af- 7?
fected by prices and wages
an<J by
national policy.
For it is the re- 7
types
strong,
strength.
tion
the
stand in the way.
Our economy,
ly
Third, guided by these general
-
bil¬
jective and not defeat it.
lion question, we may turn to a
This turns our primary attenconsideration of some of the basic
In
nual
of the
perception and applica¬
7
further this ob-
which will
those
while preeminent¬ j by rising costs.
This is popularly
With this as a
has not been preemi¬ called "inflation."
Second, I shall cover quickly, nently stable—and its high degree starting point, a frequently heard
and I hope dispose of, a few of the
of
instability in peacetime has argument runs somewhat as fol¬
"Inflation is dangerous be¬
current fallacies which interfere robbed it of some of its potential lows:
with
1
!
can
reasonably and con¬
servatively expect to make over
the next decade,, even without any
startling technological changes, if
we
maintain maximum employ¬
ment and avoid the ravages of the
that
briefly
problem of maintaining maximum
economic growth and stability in
1939, aver¬
.
the
shows
also
business cycle.
these basic
the United States;
-
based
prevention is worth
into five main parts:
ing
either
of
always in mind my treatment of
the subject before us is divided
or
in
ounce
pound of cure.
a
45.7 'millionwin
aboiit
aged nearly 59.4 million in 1948.
The second chart shows employ¬
the time available to us to
pronounced and so prominent thing upon which we can all agree
the whole economy becomes is
that
it
is
easier
and
more
so
economic
system
departure from the Ameri¬
existing
our
or
1939 or 1948—as distinguished
from some other price level or
principle of enterprise and course of price movements; and.
unequalled
reward
based upon therefore, there is no arbitrarily
Act goes even further: It assumes
ment
and
unemployment
by
varying degrees of ability and ini¬ sound or ideal relationship bethat in the pragmatic American
months since 1946. Unemployment
tiative.
fashion of dealing with concrete
tween the size of the money sup¬
has been very
low during this
And another major depression ply and the available supply of
problems as we meet them, we can whole
period, and I shall refer
help to mold our own future in¬
might not only cost us this $800 goods.
later on to the most recent trends
stead of waiting helplessly to see
billion. It would certainly cost us
To be sure, a drastic contraction
in 1949. Civilian employment rose
what befalls us through some act
our leadership
in world affairs. It of the money supply would bring
above 61 million during the sum¬
would certainly strengthen abroad prices
of
uncontrollable fate.
That is
and incomes downward,
mer of 1948.
the voices of those who say that but it would also drive employ¬
why the Act calls for the setting
The third chart shows that our
our
democratic system
of
of free ment and production downward
objectives toward which we
national output over the last few
should strive, even though we may
enterprise cannot work, and here and probably injure most those
decades has grown
much faster
at home
it would produce mil¬ who already have been hurt most
not
be
completely successful in
than
the
number
of people at
lions of people who would join in by inflation.
reaching them.
Those who propose
work, not only in terms of dollars
that dismal chorus of despair.
I this "remedy" admit, its results,
Above all, it is perilous to delay
of
changing value but also in
believe that our democracy would However, they
seem
to assume
action until we think we know terms of actual
goods and services.
survive even such a crisis, but not that we are suffering from an ex->
just when a serious business downr In dollars of constant value (1939),
without changes which none of us cess of employment and producturn is going to occur, or to set
our
total output rose from $67.2
would
like to
contemplate and tion as well as certain excesses in
action aside if we think that the billion in 1919 to $84.3 billion in
which all of' us should dedicate the
price
structure,
and
they
downturn is some months or years
1929, to $90.4. billion in 1939 to our best efforts to avoid.
would
try to cure both at the
away.
That kind of delay or tem¬ $146.7 billion in 1948.
This is a
same time.
But there is no salvaIf
weconcentrate
upon
this
porizing violates both reason and vivid demonstration of what peo¬
tion td be found in curing inflaexperience. The significant fact is ple mean when they say that we $800 billion question, we see the
real problem before us in a per¬ tion by generating a: depression
that we know that the economy
have the best economic system in
even
a "small"
one.
The central
spective which rises above par¬
will not automatically and per¬
the world; and this is one reason
petty differences,
or problem is to maintain maximum
petually stabilize itself; it requires why I believe so profoundly that tisanship,
employment and production, and
policies directed toward that end. we should contemplate nothing to selfish interests. We see a task—
the task of economic stability— the central reason for being con¬
If the evil of a serious downturn
alter fundamentally the essential
which calls for and should receive cerned about the price structure
is
not ' imminent
in
terms
of character of that
system. 7 the eager and
generous cooper¬ is that it threatens this objective.
months—and I do not believe that
Nor have we come to the last ation
of every citizen in every The only kind of price and income
it is—that is all the more cause
frontier of our growth.:
adjustments that we want are
Chart 3 walk of life.
7
a
lafionships rather than the abso¬
lutes
which
determine
mainly '•
whether
our
economy
can
con-
?•
stable
growth. If business receives too :
large a share of national income 7
tinue
along
a
and
consumers
the
eventual
path
of
too small a
result
is
share,
either
savings" which are not
or a rate of investment
so
high in relation to consjmer
buying
power
that
so-called
"over-production" finally results.
"frozen
invested,
Volume
169
Conversely,
Number 4778
if
the
share
of
THE
na¬
tional income going to business is
too small and the share going to
is
cpnsumers
are
eating
too
fast
too
large, then we
sustenance
away
our
and
impoverishing the
productive plant and equipment
upon which the basic growth and
of
progress
Likewise,
our
unsound
between
rests.
economy
relationships
industrial
and
agricul¬
tural income, or excessive mal¬
distribution
of
personal income,
jeopardize the full functioning of
the
whole
These
economy.
are
fairly accepted propositions,- al¬
though different people call them
by different names.
The * more
technical
supply and demand in balance
or
keeping production and
consump¬
tion
all
in
balance—but
to the
it
thing.
then
to
same
comes
;
■%.,
Turing
this
central
problem of relationships, a chart
shows the enormous changes that
*
have
taken
place since the last
To select a few
employment from 1939 to
prewar
year.
items,
the
end
30%;
increased
1948
of
about
prices about ,72%;
prices
about
114%;
consumer
wholesale
weekly
earnings in manufactur¬
ing about 123%; gross national
product in current dollars about
180%; prices received by farmers
about
its
202%, and corporate prof¬
after
taxes
about
The
316%.
base year that I have
chosen, 1939,
only to illustrate, the point
generally that relationships have
changed greatly. The use of this
base year should not be taken as
there to be a leveling off in
major lines of prices, which is
far from the case at present, that
u/ould
leave,., unanswered
the
question of whether we were then
undergoing
from
assertion
that
it
is
the
base year for all purposes
of
best
com¬
parison
or analysis. ,
directing our attention to
this .• problem of changing rela¬
tionships,
we
need
again
to
guard against certain fallacies
First, it is fallacious to assume
that dangers or maladjustments
exist simply because the indexes
In
of various
items have
moved up¬
ward, or that the cure lies simply
in holding them all where they
now
are
or
moving them down¬
ward. For example, it is certainly
desirable that employment and
production are much higher now
than in 1939. Likewise, it is to be
expected
that both wages and
profits should be higher now than
in
rent
maladjustment in the cur¬
situation
simply
because
of
these
items
have
moved
faster than others. In a
and growing economy
some
items must move
upward
faster than others.
For example
upward
changing
wages
should be expected to move
faster
than
consumer
upward
prices
between
and
the period since 1939
when
there
has
been vastin¬
creases in production and civilian
use.
Profits should be expected to
over
,
upward faster .than prices
over
a
period which has carried
us
from, large-scale
unemploy¬
ment to full employment.
It is
move
-
economic
that
If changes in
needed to make
year.
prewar
relationships
are
the economy more
not
stable,
we can¬
these
desirable
changes simply by saying that the
items which have moved up fast
identify
should
est
be
brought
which have
those
that
down,
or
moved
up
slowly are per se not too
high. Adjustments are needed se
lectively both jupward and down¬
ward, but they cannot be derived
simply by comparing past trends
more
*
For
the
lacious to
same
reason,
assume
into
better
prices
are
being brough
balance
tain
response
mand.
it is fal
without analysis
that the economy is
in
is
essential
ther into
a
because
cer
leveling off
softening in de
now
to a
As I have
already pointed
falling, while others
still rising, may be generating
worse set of relationships
even
when
almost
all
types
by
in
living
of
has
It is very significant to note
recent downturn is due
that
al¬
On the other hand, the rent
in the
cost
of
living moved
nc
have
or
quarter suffered actual decreases
of
dollar
riod,
in
of
lies
who
in¬
been
least
able
to
during
the
Further, the
194-3 is more signifi¬
ground
of inflation.
process
since
trend
their
also the fami¬
are
have
their
the
advancing
because
low
Thus,
been
have
the
in¬
no
income.
of
living
are
hold
cant
who
victims
of
45%
received
dollar
families
worst
during this pe¬
additional
an
families
creases
the
income
and
cost
1948.
received
with incomes under $2,000, about
comes
item
income
than
the
since
trend
1939,
steadily upward about 3% during
because
our
1948, and apparel moved upward
about 5% during the first three
quarters of the year and then de¬
put
is rather close to what it
now
national
total
out¬
or
of living is still hovering within
about 2% of its all-time peak, has
shown
In
situation, this dis¬
no
v
trend
pronounced
downward, and is now about 74%
above June, 1939.
if maximum employ¬
maintained, the weight
opinion is that the cost of liv¬
1949,
is
ment
of
ing is not likely to deviate sub¬
stantially from its very high cur¬
rent
With
level.
normal
crops,
the total
about
supply of food should be
the same per capita in 1949
in
as
The
1948.
total
meat is estimated
same
supply
of
to be about the
for this year as for last year
ward and others downward at the
time, and to cause contrac¬
some spots and
expansion
same
tion
at
at
others, in order to correct mal¬
adjustments which have not yet
interfered
with
our
very ; high
I
threat to it.
a
believe
that
maladjustments
of
some
are
now
these
discern¬
ible; that they are now inflicting
hardship upon millions of individ¬
uals; that they are now interfer¬
ing with essential national objec¬
tives; and that through their dis¬
torting effect upon price-income
relationships they are affecting
the
pattern of production, con¬
sumption and national income in
ways
which threaten a general
economic decline if they are not
corrected.
But I believe with equal convic¬
tion * that
these
maladjustments
can
be corrected
that
ward
examine
in time,
end* it
just what they
Areas of Current
;
and to¬
to
urgent
are.
or
This
now
velopments in the cost of living
and family standards of living.
;
Since June
1939, as Chart 7
shows, the cost of living index for
outlook for
extremely pertinent
evaluate the effect of the
to
vast increases in living costs
since
1939, and particularly since mid-
in
1946,
terms
of
there
an
come
distribution
the
1947,
which
As
the
undoubt¬
improvement
in
in¬
shows,
edly;
and
relating
facts
distribution.
income
to
chart
between
latest
details
full
was
1941
year
are
for
available.
situation after
taxes, which is most significant,
the average income of families in
The first serious maladjustment
which attention should be di¬ .42%
rected arises out of connected de¬
of living
cost
1949 makes it
at
the lowest
to
from
the
income fifth increased
1941 to 1947, while the
increase
average
income fifth
was
in
34%
the
and
second
in the
highest income fifth 18%. Part of
this
lower brackets,
to higher levels
employment and output and to
all items has riser^.,74%, and for.
a
larger number of workers per
food it has risen' 1X9E%. The most
rapid
increases
occurred
after family. Unfortunately, these fig¬
ures, while allowing for Federal
June 1946;* since then the rise has
been 29% for all items and 41%
taxes, do not include the effects
for food.
a
Looking at the Chart as
whole, it appears .that there has
a slight downturn in the line
been
representing
all
cost
of
living
items since early autumn of 1948*
But it should be noted that we
have
as
yet no
assurance that this
slight downturn will be continued
or
augmented;
which
shows
for
example,
several
the
downturns
the middle of
was
1946, each of
followed by a resump-
I tion of the upward trend,
of'
This chart shows on,a larger
These
relationships between'
family
living
may
social
rather
incomes
problem.
and
the
be called
than
But
of
some
a
economic
an
even
cost
by
as
J
social'
a
problem, they demand the atten¬
tion of those concerned with na¬
tional economic policies. Further,
I
convinced that these condi¬
am
tions
portend
also
serious
eco-
„
nomic
maladjustment because
they may contribute ultimately to
inadequacy
an
mand
which
of consumer
might throw
*
:
de¬
our
whole economic
machinery out of
The full implications of this
gear.
will
be
treated
fully when
more
general
problems raised by the composi¬
I
to
come
tion
of
more
discuss
national
income
and
ex¬
penditures.
A
second
where
area
maladjustments
serious
present
are
or
,
brewing is in the field of whole¬
sale prices.
v 1 ■ "
According
to
the
chart,
the
wholesale price index for all com¬
modities has
risen by
112%
since
the middle of 1939, 42% since the
middle of 1946 when the sharpest
"
rise commenced, and 8% since the
middle of 1947. From the begin¬
ning of 1948 up to the present, as
reasonably ade¬ the
heavy black line on the chart
quate living standards in urban
shows, the index for all commodi-'
areas
for a family of four, and
ties rose to an all-time peak in the
between $2,000 and $2,300 for a
late summer of 1948, and since
family of two. Yet, as the lower then has
declined until it is now
curve on this Chart shows, more
about 3% lower than at the begin¬
than 53% of all urban families of
ning of last year although less
2
or
more
1947
maintain
to
had
$3,500
and
incomes
almost
below
20%
below
had
in¬
The upper
line on the Chart shows that, tak¬
ing all families throughout the
country, including families of 1
comes
$2,000.
person, about 46%
had incomes
below $3,000 and about 29% had
incomes
below
than 1% lower than the low point
for that year reached in February"
the
after
prices.
is
it
still extremely high, and that
are
net
the
;average
$2,000.
break
in
commodity"
Viewed in the aggregate,
that wholesale prices
clear
changes
in
were
The
people
who
have
been
hit by the rising cost of
living, as. we all know, are those
living on fixed or relatively fixed
hardest
incomes which have not followed
the price level upward. Our chart
shows
the
slight.
As to the outlook for
are
some
all
1949, there
who think that the
wholesale
of
average
will
remain
who
think
fairly
that
it
stable,
go
may
still others who
and
general
during 1948 and the first
month of 1949
over¬
prices
others
down,
think that it
that, while wage earners
There are strong ar¬
in manufacturing have about kept may go up.
Department of Agriculture will pace with the rising cost of living guments in support of each of
these views, but for reasons that I
undoubtedly be able to present since mid-1946, clerical and pro¬
have given and for others that I
the food supply situation much fessional workers have lost sub¬
shall now give, I believe that the
more fully than I.
In short, how¬ stantial ground. This disparity be¬
among
various
even
more
pronounced relationships
ever, it seems unlikely that any¬ comes
wholesale prices, and the relation¬
thing on the supply side will when the whole history since 1939
change the cost of living much is considered. Wage earners in ship of wholesale prices to the in¬
come
structure, are vastly mor'e
this year, which means ,that a manufacturing have lifted their
about
30%
since important than the absolute trend
•much lower, cost. of, living wquld real 'incomes
of the index reflecting all whole¬
come
only through a large drop 1939, and those in mining have
sale prices averaged together.
their
real
incomes
in demand resulting from lower lifted
more
The
most ^important
of these
employment
in consequence of than 51%. These developments are
some of the
maladjustments now in no way extraordinary because changing relationships has to do
our
total national output now is with the prices of farm products'
operating within the economy.
Looking
Emerging
Maladjustments
'
:
is
while the loss of ground
lower-income groups is con¬
tinuing.
majority
a
either
ol
actually suffered decreases in dol¬
lar income.
Among-all families
prices
entirely to the drop in food
since July, 1948, although
food prices are still at a
higher level than the level to
which they had dropped in March,
have
cost
lowest
increases in dollar income
most
these
the
dollar in¬
the
as
advanced,
in
brackets
these'
this
income
those
according to the most recent fig¬
than at the beginning of 1948.
27
groups
brackets have received
creases
a
ures
(779)
middle income and upper income
September, 1948. With
this decline, the cost of living in¬
dex is now about 1% % higher
retarding or contracting measures, with supplies increasing in the
or
calling it "deflationary" and last quarter. Barring a further sub¬
relying solely upon a uniform set stantial decrease in demand, it is.
of
accelerating tf'or
expanding within ; the range * of - probability
measures.
Instead, we need not that meat prices will start to rise
only some general overall meas¬ seasonally in the near future and
continue upward through the
ures but also some highly selective
measures to move some items up¬
summer.
Representatives of the
Chart
than
to
criminating
approach
to
basic
economic analysis should warn us
against
relying
upon
over-all
averages which conceal differen¬
tiated trends.
It should equally
warn us against the over-simplifi¬
cation of calling the situation or
outlook "inflationary" and rely¬
ing solely upon a uniform set of
since
are
CHRONICLE
middle of
of danger.
zone
In the current
out, the fact that some prices and
are
bust.
causing further discernible, mal¬
adjustments;
in
short,
whether
they are moving us nearer to a
zone of safety or further and fur¬
incomes
an
a
ing discernible maladjustments
rapidly since 1939 than
other types of income, be¬
it was relatively, too low in
cause
FINANCIAL
was in 1946 but very much high¬
apply a far
er than it was before the war.
more
discriminating analysis to clined less than V2 of 1% in the
Another chart here is highly
the relative movements of prices,
fourth quarter.
I do not attach
significant because it relates fam¬
wages and other incomes, and to
too much significance to the very
ily income distribution to living
see
whether by soundly derived
short-run swings in the lines from
costs. Depending upon the size of
objective
tests
they
reflect an
month to month or from quarter
the family, studies indicate that
economy moving into a state of
to quarter; I do attach much sig¬
an income of about $3,000 to about
better balance or worse balance;
nificance to the fact that the cost
$3,450 a year was necessary in
whether these movements are cur¬
It
more
some
call
we
breakdown.
well that farm income has moved
up
what
prices leveled off between
1921
and 1928, but this did not
produce a sustainable relationship
among incomes; on the contrary,
it
crystalized
maladjustments
which finally led to a catastrophic
tute
fallacy to be avoided
ife the idea-that there is any dan¬
some
different
intervening
what we call a
prosperity but nonetheless consti¬
1939.
The second
ger or
anything
traditional
the
Most
is used
an
even
were
Doom
to'
And
all
phase
refer
downward.
economy
the
people
&
the
trends
in
consumer
prices and incomes were rising. A scale
softening of demand in some parts prices during 1948 alone. A word
of the economy, accompanied by of warning is called for in con¬
a lowering o£
pricgs, may not in¬ nection with this chart: the scale
dicate an
improvement in eco¬ is so large that slight percentage
nomic health
bur may indicate changes
upward
or
downward
instead the spotty development of seem very big.
Looking at the
unfavorable
conditions
line representing all items in the
which,
should they becofne more gener¬ cost of living, the chart shows a
alized,
would „4&irn
the whole decline of about 2% ;since the
of keeping savings and
investment* in equilibrium.
Less
technical people call, it keeping
problem
COMMERCIAL
gain in the
about
But
and
62%
higher than in 1939.
earnings of clerical
professional workers are al¬
the
real
most 3%
lower than in 1939. Not
only have they failed to share in
the
increasing prosperity; more
than that, their absolute standards
of
living have
It
is
gone
downward.
perfectly
clear, even al¬
lowing
liberally
for
errors
in
statistics and other measurements,
that millions of families through¬
out the country are literally un¬
able
cost
to
make
ends meet with the
of
living what it is. This is
by another chart,
which
indicates
(although
the
statistics
are
imperfect)
that
demonstrated
about
56%
of
the
families
with
incomes below $1,000 and 41% of
the families with incomes between
and
foods
the
prices
on
the
one
hand,
of industrial
and
products
the other.
As the chart shows,
since the middle of 1939 the price
on
rise has been 175% for farm
prod-;
ucts, 143% for foods, and 91% for
other than farm products and food.
However, since mid-1946, when
the
most
increases in the
of
wholesale
prices have taken place, the in¬
creases in farm products and food
over-all
have
rapid
average
assumed
a
diminishing im-'
portance and the increases in in¬
dustrial
an
increasing
Thus, since the mid¬
dle of 1946 the wholesale price in¬
products
importance.
dex for all commodities has risen
42%, for farm products it has risen
22%, for foods 45%,,and for indus¬
trial products 45%. Since the mid¬
dle of 1947, the rise has been 8%
$2,000 either spent
for all commodities and 16% for
they earned or barely
products, while foods
broke even. And by early 1948, as industrial
risen
only 1%
and farm
Chart 14 shows, about 27% of all have
spending units had no liquid as¬ products have declined 4%. And
since the beginning of 1948, as
sets,
while
another
15%
had
Chart 16 shows, the index for all
liquid assets of less than $200 and
of other taxes. Not since the TNEC
still another 13% had liquid as¬ commodities has gone down about
studies have all types of taxes
sets
between " $200
and
$500. 3%, but this has reflected a de¬
been included in examination of
cline of almost 14% for farm prod¬
Cumulatively, about 55% of all
the income distribution picture.
ucts
and
almost 9%
for foods,,
spending units had liquid assets
while industrial prices have gone
Since 1946, however, when the of less than $500.
up about 3%.
cost of living began to increase
It is true that rather tentative
These sharp and divergent
more
rapidly while total output and incomplete figures for 1948
has increased more slowly, it ap¬ show an increase in the rate of trends of agricultural and indus¬
pears that improvement in income saving by consumers as a whole, trial prices seem to me to be of
distribution has been arrested and compared with 1947. But when an high and unfavorable significance.
no
doufcjt,
was due
of
$1,000
more
and
than
trend has com¬ analysis is made of the nature of It is no answer to say that the
My chart shows these savings, it seems that they prices of farm products and foods
have
increased
more
since
the
that between 1946 and 1947, while are converging more
largely in
a majority of the families in the
upper-income and middle-income
(Continued on page 28)
that
a
contrary
menced to appear.
-
28
COMMERCIAL
THE
(780)
FINANCIAL
&
CHRONICLE
Mixed Trends in the Economy
bread rose slightly and the bak¬
Lead—100; 157.3; 182.9;
182.9;
(Continued from page 27)
retailers' margins in¬ 213.4; 262.2 for Januarv 1949.
'year
1939
than
other ers' and
I
should like to call particu¬
prices, because we would all admit creased 15%. This is but one ex¬
that the farmer was very disad¬ ample
of what I have already larly to the attention of the Com¬
called
the revival
of the farm mittee that most of these price in¬
vantageous^ positioned in 1939
.
prewar
its more traditional
•,
;.\V:
a whole. Even if farm aspects. ;
The prime
problem of prices
relatively too high in
and that this
economy as
prices
were
not good for the
was
1947, the trends since then show
clearly how quickly agricultural,
problem
in
rising
incomes
with
line
of
out
and
other prices and
incomes is
farm area, but
prices respond to changes in con¬ not now in the
in
the
industrial
area.
ditions of supply or demand. Ac¬ rather
tually, I believe that recent trends Thus, since the beginning of 1948,
the
wholesale
price index for
show the clear emergence of the
farm problem in its more tradi¬ other than farm and food prod¬
This problem is to ucts has risen by about 3% while,
I
have
said, the
wholesale
incomes as
in a high enough relationship to prices of farm and food products
In
other prices and incomes to do have been declining sharply.
justice to the farmer, to further fact, the weekly figures for the
the desirable objective of bring¬ last week in January, 1949, which
ing his standards of living into a are not shown on the chart, indi¬
that
wholesale
closer proximity to those of other cate
prices
for
groups, and thus to maintain his other than farm and food prod¬
tional aspects.
maintain farm prices and
.
the products
share of demand for
ucts
full
prosperity of the
large.
In 1919,
country at
all wholesale prices
tell
not
do
peak.
figures which give the
for
average
all-time
their
But these
industry and contribute to the
of
at
are
important
most
the
K
this Chart shows, net
income derived from agriculture
was
at the unusually high level
■
of 17.9%
as
of total national income.
it sank to 9%, and in
1932 it was only 7.4%.
Consis¬
tently the farmer has lost ground
fastest when the economy has run
downhill, because he is less favor¬
ably positioned in the economy
than other groups.
By 1946, net
income derived from agriculture
had risen again to 11V2%, but this
percentage dropped
slightly in
1947 and dropped at a faster rate
1921,
By
in 1948.
story. The most im¬
portant part of the story, as shown
by the same chart, is that such
critically
important
items
as
metals
and
metal products and
part of
fuel
and
This loss of relative
position by
desirable
lighting materials have
steadily in price
almost
climbed
throughout 1948 and on into 1949,
have not been at all affected
and
leveling off of the aver¬
since the middle of
the
by
index
age
1948.
:
■
continuation of price
This solid
advances
involving
in
materials
the
during
economy
1948 i3 shown by our
ing
the
of
some
commodities
vital
most
whole
the farmer hardly seems
the
1947 and
chart. Build¬
in
9.7%
increased
as any chart shows, the per the second half of 1947, 3% in the
capita net income of persons on first half of 1948, and 2.6% in
farms was estimated at only $909 the second half of 1948. Fuel and
in 1948, contrasted with $1,569 for lighting materials increased 19.8%
in the second half of 1947, 6.8%
persons not on farms. This is far
better than the 1935-39 average fry the first half of 1948, and 2.9%
House
when the figures were $243 for in the second half of 1948.
farm
individuals
and
$603 for furnishings—an important cost of
non-farm individuals, but it is by living item — increased
7.5% in
no
means
good enough.
Nor is the second half of 1947, 2.7% in
the loss of ground by the farmer the first half of 1948, and 3.6%
when,
Metals
to be
in the second half of 1948.
taken
in some re¬
spects the most important cate¬
gory
of all, increased 6.7% in
the second half of 1947, 4.6% in
the first half of 1948, and showed
justified by use of the mis¬
theory that the demand for
farm products has been abnormal
during the past few years and
should
If
in
decrease
years.
maximum
maintain
we
future
em¬
ployment and production through¬
out the economy as a whole, we
shall need even higher farm out¬
put—though with same changes
in composition—in the years ahead
to
industry running at full
keep
satisfy
and to
speed
requirements
for good
nutrition
of
standards
American
all
for
dietary
the
families.
Our
for
objectives
should
not
be
farm incomes
let
to
agriculture
forces drive
to bring
can
sistently with
of
cost
but rather
the two into better bal¬
This
ance.
in rela¬
still lower
tion to other incomes,
living,
be achieved
con¬
somewhat lower
a
if
farmer
the
is
helped
to
improved
efficiency
through a variety of agricultural
measures) if the prices of dur¬
ables
the
and
of
incomes
durables
producing
those
not
al¬
dispropor¬
are
lowed to continue their
tionate
increase, and if there is a
of the spread between
what the consumer pays and what
the farmer gets through more at¬
reduction
tention
to
distributive
distributive profits.
costs
and
As the Chart
the farmers' share of the
consumer dollar spent for a typi¬
shows,
cal
market
basket
has
from 54% in 1946 to 53%
declined
in 1947,
to 52% in 1948, and the marketing
margin has correspondingly risen.
From January
through Novem¬
ber, 1948, the prices received by
farmers for farm food products
almost 10%, while the
prices of farm food prod¬
only 3%.
From
dropped
retail
ucts
declined
January
through
October,
1948,
the farm prices of wheat dropped
about
30%; the price of flour at
and the miller's margin
after
allowance
for
change
in
value of feed byproducts dropped
by about 20%; but the price of
the mill
metal
and
the
increase of all—9.7%
biggest
—in
half of
second
the
second half of
the
increased
zinc
of
products,
In
1948.
1948, the price
44.4% and of
22.9%.
lead
Between
the
week ending
Dec.
1948, and the week ending
Jan. ' 25,
1949, while wholesale
prices for farm products de¬
clined 6.3% and for foods 6.1%,
the
wholesale
price
index
for
other
than
farm
products
and
28,
have not
creases
at
come
even
an
month to month, nor
half-year to half-year.
Sometimes,
for
a
few
months
from
pace
from
even
there has been
substantial level¬
a
off. After that, the upward
has been resumed.
This
ing
sweep
process has been repeated several
times, and therefore one should be
careful not to draw great signif¬
icance from a leveling-off period
of
where
months
few
a
separate
analysis of general conditions in¬
dicates
that
the
upswing
may
again be resumed.
These
persistent price increases
in vital
sent
of the economy pre¬
areas
with
us
clear short-run
some
difficulties.
the
increase
They
cost of the
preparedness and for¬
programs and diminish
their benefits. They provide fuel
aid
eign
for extensive wage
sensitive
in
profits
high
upon
demands based
and thus add momentum to
areas
the
price-wage spiral in these
areas.
This price-wage spiral, in
Thursday, February 17, 1949
worrying about rising and exces¬
sive prices in some areas of the
economy
because
employment
and demand may be softening in
other areas would be to neglect
the real problem of inflation just
the
when it becomes most dangerous.
million
is
It
duction
in
volume
of
house
In
May
of
1948,
housing starts reached a postwar
peak of 99,400 units, or an annual
rate—allowing for seasonal varia¬
tions—in
the
neighborhood of a
year. But then a
in, apd in every month
since August the number of starts
units
a
decline set
true
maximum
monthly
construction.
that, if we maintain
employment and pro¬
a
stable and growing
fell
below
the
corresponding
preceding year 1947.
sustained decline certainly
economy,
the need for these vital
industrial products should be even
month of the
higher than it is now. But need
and buying
power
are
not the
same
thing.
And
full
buying
does not reflect the satisfaction of
This
basic housing needs or the
working
down of
the
housing
shortage to tolerable levels; it re¬
flects instead a clearly unwork¬
able
relationship
between
the
prices of building materials and
our
cannot indefinitely be sus¬
power
tained
at
price
level
backlogs and
during the war
period have been further worked
down, and when—we all hope—
the
extraordinary
demands for
national defense and foreign aid
begin to taper off with an im¬
proved international outlook.
when
savings
In
rising
a
the
of
some
created
there
fact,
finished
the
and
who
houses
on
buying
need
most
the
one
hand,
of
those
power
houses
the
on
other hand.
•
It is imperative
interest
market in
the
is
this
that
in the national
out-pricing
vital field
of
already one
striking illustration of out-pricing
ceive prompt
and decisive atten¬
the
tion.
It
that
similar
more
imperative
out-pricing of the
permitted to spread
market.
The
residential
struction industry in
been
con¬
the past has
notoriously
out
we
to
instability of
contributed
the
whole
witnessed
economy.
a
has
ramifying
effects
throughout the rest of the econ¬
omy
because it takes place at
vital spots toward which the at¬
tention of the whole economy is
other
may
re¬
even
market not be
unstable, and
a vast industry
significantly to
the boom and bust cycle through¬
this
has
is
one
vital
While
fields.
this
not be imminent in the year
unavoidable in • the
unless adjustments are
promptly made.
1949,
longer
In 1948,
serious decline in
it
is
run
turn,
As We See It
(Continued from first page)
directed.
.
But
far
in the
that these
persistent price increases in vital
important
more
long-run
is
the
industrial
areas
sible to have two
and
constitute
a
grow¬
The voter,
ion.
est
indicate
production. To
so, it would
this point to summarize
and
the conclusions to be drawn from
review of retail and
price developments in
the foregoing
wholesale
was
the "dead¬
f
Let the Governor
Lest
why this is
be well at
then, could decide which
pigeon."
ing threat to the maintenance of
economic stability and maximum
employment
parties in this country which sincerely
coherently hold respectively to two bodies of opin¬
fact
someone
Speak for Himself
gain the impression that we are misinter¬
preting what the New York Governor had to say in his
Washington Lincoln Day address, we let some of his cogent
passages speak for themselves. Here are some of them:
"We havq in our party some fine, high-minded patriotic
people, who honestly oppose farm price support, unemploy¬
months a "leveling off" or slight ment
insurance, old-age benefits, slum clearance and other
reduction in the cost of living.
such programs. These people consider these programs hor¬
This reflects in part a sharp de¬
rendous departures into paternalism and would actually re¬
cline
in farm
prices. However,
while
the problem now is that peal them all.
These people believe in a laissez-jaire society
farm prices and incomes may de¬
and look back wistfully to the miscalled 'good old days' of the
various fields.
•i
There
cline
has
r-
far
too
recent
in
been
to
relatively
prices and incomes, only
other
a
small
part of the decline in farm prices
has thus far been translated into
lower
retail
food
Another
costs.
factor in the
slight decline in the
cost of living which has recently
taken
place besides some
im¬
provement in the supply situation,
is a softening of consumer de¬
mand. This softening of demand
is
also
reflected
in
the
clothing
and, as I shall shortly in¬
dicate, in the housing area. Since
the
consumer
needs of a large
area,
nineteenth century.
'...it.!;,':/.
■v
''.i
V.,;.
';;
,
;
>
.
Vi"; J
"This group
also honestly believes and says with con¬
vigor that all Republicans who support these for¬
ward-looking programs are 'me too' Republicans and no
siderable
better than New Dealers.
"If,
as
party, we try to go back to the
a
century, or even to the 1920's, you can bury
nineteenth
the Republican
party as the deadest pigeon in the country.
'
part of the population are not yet
'V
•.
'•
*
*
❖
'• ;
k
'
.
I
perfectly clear that only a progressive, forwardadequately satisfied, this soften¬
looking Republican party can provide the leadership this
foods, including about 115 items,
ing reflects an inadequacy of buy¬
reached their postwar peak.
All
ing power among large segments country needs and must ultimately get. The overwhelming
major industrial categories, except of the
population.
majority of all Americans in both parties believe that gov¬
textiles, showed increases, and the
The softening of consumer de¬ ernment today has to be more than a cold and impartial
increase
for
metals
and
metal
mand in certain areas such as food
products was 2.4% over the fourumpire.
V,
does not lead quickly to reduc¬
week period.
"That has been the position of our party consistently,
tions in employment and produc¬
The persistent upward
move¬
tion, because agricultural prices both in the Congress and in our party's platforms.
That
ment of some immensely impor¬
respond quickly and sensitively to
position has been repeatedly affirmed in national conven¬
tant
key prices cannot be too this
kind of softening and an au¬
tions. In 1948, our platform was unanimously voted without
strongly emphasized at this stage tomatic
adjustment takes place.
the
of
economic
studies
of
some
show
these
base
increases
selected
ities from June 1946
uary
Our
situation.
price
for
commod¬
through Jan¬
1949. Using Jfme 1946 as the
period, let me read some in¬
covering June 1946, Janu¬
dexes
1947, June 1947, January 1948,
June 1948 and January 1949 (or
ary
But
the
of
one
is
softening
reasons
that
amount of income is
for
this
being drained
by relatively high levels of
prices and profits in certain key
industrial
areas.
the
extends
If the time comes
softening
to
the
vital
of
demand
industrial
where
prices, unlike those
agricultural area, do not
respond quickly or sensitively, the
Farm
machinery —100;
114.8; typical reaction would be cut¬
115.5; 123.9: 127.8; 139.7 for De¬ backs in empoyment and produc¬
cember 1948.
tion, and the down-spiral towards
or
depression is then
Brick and tile—100; 109.2; 111; recession
124.4; 126.4; 132.3 for December under way. That is why, from the
viewpoint
of
maintaining eco¬
1948.
nomic'
stability,
the
industrial
Iron and steel—100;
116; 118;
price situation is so crucial and
131.3; 135.7; 150.2 for December
why the continuance of current
1948.
price trends in some of these areas
Plumbing - and
heating — 100: is so serious. The softening in
109.7: 112.4; 130.9; 137; 148.4 for other
areas
accentuates
rather
December
ary
1948
where
the
Janu¬
areas
in
the
figures are not yet available):
December 1948.
Zinc —100;
144.8;;. 209.2
126.4;
V
than
126.4;
for January
134.5;
1949;
a
one
dissent at the National Convention.
It must
mean some¬
designed to deceive, its various sections
say and mean that we are a liberal and progressive party.
"To be entirely specific, they say and mean that our
party has solemnly declared that we believe wholeheartedly
in unemployment insurance, in old-age assistance on an in¬
creased basis, in broader social security generally, in slum
clearance and public housing, in public development of our
water power resources, in farm price supports, in vigorous
protection of the rights of labor.
excessive thing. Unless it was
an
off
when
"It is
mitigates the danger;
warning signal.
As I have said earlier, to
are good.
They are necessary; they are right;
the officially declared principles of the Republican
party as solemnly adopted in convention assembled. I be¬
lieve that we, as representatives of our party, are bound by
"All these
they
are
these
principles and
"Those who
are
under
a
duty to carry them out.
disapprove of these principles and want to
fight them ought to go out and try to get elected in a typical
American community and see what happens to them. But
it is
they ought not to do it as Republicans. They ought not to
stop get their personal prejudices confused with the basic aims
Volume 1G9
the
THE COMMERCIAL
Number 4778
intellectually)—i.e. the more mid¬
dle
minded
and
less,, snobbish
classes —degrade
ourselves and
Republican party has repeatedly set forth in its plat¬
forms."
/ "W
To
'"■•■'V',''■
'
,"1
the
dispassionate observer it appears that the
Governor has succeeded in getting a number of things
rather badly confused—that much overworked "forward
looking" attribute, political opportunism, "personal prej¬
udice," and sound statesmanship among them,
But in
v
much firmer
"It is
of his
one
sink
frequently into
more
.
lower
the
classes
and
since
In that
And
financial
upper
Nemesis
When
country last elected a Re¬
whole period we elected a
..
.
(9)
and
the
the
(12)
of
And
principle of
has
dangerous
to
become
would-be
conservative practitioners thereof.
They
money
likely habitually to miss
are
the last bus.
Finance
help.
the whole apparatus
managed
orthodox)
investment
highly
(11). European
same
(now
cyclical
inflation.
Reconstruction
Corporation.
financial
on
enlarged defense.
A policy of cheap
bond-rescue
(10)
???■•; £■;
in
everybody
society tries to skate
our
,
clists trying to ride the cycle si¬
with consumers.
'
/
Bank deposit insurance.
(8) Stock piling commodities.
.
2$
buying - multaneously, that the exercise of
more/
(7)
their
to
leave
to
power
specu¬
daily (minor) or
cyclical (major) jiggles.
\
20 years
.
(781)
(6) Cyclical taxation (perhaps).
Reduced
lative sin by trying to exploit the
intermediates instead
leaving
introductory generalizations he is on
ground:
now
CHRONICLE
FINANCIAL
&
money.
?
Today there
are
so
taneously, that the exercise of the
(now-orthodox) principle of cyc¬
lical investment has become
■
cycl¬
many
ists trying to ride the cycle simul¬
highly
bit of economic ice at the same
publican President.
etaoin slirl ucmfwyp ytasvo din
The Tinkering Politicians Have
time, they habitually get a col¬
dangerous to would-be conserva¬
Republican Congress once, two years ago. This is a dismal lective
Robbed Us
ducking.
tive practitioners thereof.
record that is important not merely to Republicans.
They
It is
Indeed too much company on
Now if one or more of the fore¬ are
likely habitually to miss the
of desperate importance to the country lest we slip uncon¬
the same idea automatically be¬ going
cushions are effective in last bus.
comes unsafe
even if, for some
sciously into the abyss of one-party government.
ironing out the business cycle and
The Hunt of the Jackal Pack
"Without seeking to find scapegoats or to make excuses, decades before, the pursuit of that in saving us from normal cumu¬
For Suckers
idea used to lead to much profit lative cyclical slumps, the general
I would like to bring out in the open one basic problem.
and
much
happiness, m a k i n g theory of cyclical investment is
The trouble is this. If you are
The Republican party is split wide open. It has been split
gentlemen out of utter cads who probably not as sound (for U5 to succeed at any time in your
wide open for years, but we have tried to gloss it over. We 'ad discovered the secret trick oi bell-hops
and
barbers)
as* she venal quest of capital gains, you
have tried to deny it to ourselves and conceal it. That doesn't riding the cycle. (It was every¬ used to be, especially if inflation¬ must always find some other more
...
work.
I
body's1 secret!)
suggest that we face it, get it right out in the open
Then, let's see what we can do about it.
It is true,
of
course,
that the Republican party is
ing it has made during the past two decades. It certainly
follow, however, that it should, and its
mem¬
bership should (or could) unite as a second version of
the Rooseveltian New Deal organization. Neither does
it follow that it would have been
one
whit
more
ary
of
success¬
the
cumulative
Cycle;
during the past two decades had it hastened to the
last man to support all the weird collection of nonsense
which today is regarded as "modern."
For
Indeed
are
ironed out also
.
it
is
axiomatic
.
innocent sucker
on Whom to un¬
(before the boom ends) Who
is going to be
wrong if you are
.
load
are
to
that the
successful the
depression
laws
which
at
bause
breed revival anc
recession, auto¬
matically
with violent "cu¬
mulative?movements in between.
boom
to
to
breed
Inspiring
.«►<*
..
his comperes.
must
the
same
find
you
yellow-haired
some
Nordic who will
sell his stocks at
quite the wrong time, thus en¬
abling you (darkly) to buy them
shrewdly.
You need a victimcounterpart (a meal) to each deal.
For
.
if
you
right,
are
poor fellow must
my dear brethren,
time as the cycle is
jungle
is
game
be
the
other
wrong. This
of dog-eat-
one
being ironed out—or at all events dog; or of wolf-eat-lamb; or biillsnortened—by the evil politicians, eat-bear; and bear make-a-meal
A
the number of investors who out of bull.
charming living
smugly understand the
(now
moribund) cycle is increasing!
.
<
right.
Conversely in the slumps,
Furthermore,
those curious economic
nor
bee-and-bird
be
'
more
Credit
Bank
...
Not
booms
they ought to be—though
not always.
as
author and
ing detail the subtle ins-and-outs
ful
P
>.,
tinkering poli¬
ticians are in ironing out the busi¬
mass
of brokers,
bankers, cho¬ ness cycle, the less valuable be¬
rines and barbers have more or comes the now-orthodox theory
less got themselves that way. •
of cyclical investment, as ex¬
;
Certainly they, will not be able pounded (rather as a novelty) 20
to describe to you in any convinc¬ years ago in the writings of this
"split wide open." Indeed, it may even be splintered.
It is also true, probably, that to this state of affairs may
be attributed in substantial part at least the poor show¬
does not
.
there are still (even in
1949) quite a lot of old fogies, and
new
fogies, who have not yet
quite awakened to the theory oi
cyclical investment; but the great
True,
and look at it.
The net result is that
and
more
delicatessen
the
this
—
Wall
of
canyon
over
infested
-
Street.
Passing
buck; passing the stock; find¬
It Is All So Simple
candidate to tell the voters that he can and will
ing some hick to hold the sinking
more of us have in fact less and
do all the things the other fellow thought up and do them
But they do roughly know the
baby.
less (profitably)
to go for
better—which appears to be very nearly the essence of the nature of the bucking beast whose since the
It is quite an art: this survival
politicians are cutting
back they try to ride economi¬
off
the
bottom portions of the of the fittest; this outwitting of
Dewey idea—is not a particularly inspiring appeal. Cer¬
cally, even though it sometimes
one's
less
intelligent competing
tainly it is not when what the other fellow thought up is throws them inelegantly in elo¬ troughs, and the peaks, thus mak¬
ing the economic country flatter hyenas.
boots and baggage undesirable.
We strongly suspect that quent rodeo manner.
and less profitable to established
But time strides on
without
the Dewey campaigns have failed chiefly because the mil¬
The business cycle nevertheless cyclical traders.
blowing whistles.
lions who believe in the traditions of this country found it is accepted as "here" and inescap¬ f.. Dow 'theorists- are
particularly
How Spreading Knowledge Makes
able. Boom, slump, boom, is re¬
difficult to arouse themselves to much enthusiasm, while
likely to
suffer
since
their
Itself Useless
garded as normal
and as part mechanical
system deliberately
those who wanted to support the New Deal and its like and
parcel of the capitalist system. "plans in advance" to be
The dismal dirge which I am
late, and
could mostly see no good reason why they should desert the It is regarded in fact as pre-or¬
to miss a large part of each cycli¬ trying for the nth time to ram
a
.
.
.
..
.
.
dained
party which brought it into existence—particularly when,
thank heaven, there was evidently a fairly strong element
Governor
in
to New Deal
Dewey's party which
prodding.
was
not very amenable
and
taxes
Crosby's
immut-
us
forever,
death
music.
and
cal
are
swing.
The money managers
the mortal foes of Dow theo¬
Bing
for
much
.
fluctuations
| Five Million Sheep]
spread
this
of
is both dangerous
if
all
of
.
.
knowledge
and funny;
.
know
us
it, it isn't
use.
with the blasted
start
tink¬
knows
and
lative
held
had no specu¬
One bought; one
In fact
agility.
cycle."
one
infact one "invested."
growth and reason¬
ably good management. One saved
and "invested" (for one's grand¬
on;
One relied on
might, if we
lucky, make 72% per annum
were
instead
6% if we played
thoughtfully and clev¬
erly. This lure (to destruction)
is prepossessing.
We moderi
.
.
Prigs—Some
We Greedy Hare-brained Mod¬
of
us,
of
fathers—who invested for income
vices
That
did not
and
was
the
old,
and
play the market. On
depraved
the other hand we more
hare-like moderns are inter¬
and
ested
more
in
quiekish
capita
gains than in income—particularly
if we are rather rich and in a
high income tax bracket.
fast for our (lat¬
spendthrift wives, who are
trying to outshine the (latest)
rudely
We need money
est)
wives of the Joneses.
Gambling Bacillus—More¬
since now-a-days few good
The
over
stocks bring in an
6%
per
every
per
annum,
income of over
and since almost
stock fluctuates almost 6%
month,
we
most of us sort of
are
men
of
of
board
.
it
.
not
are
we
"habituals."
Of
the
as
who
bred
are
not
of
so
(and who
us
of
are
less dishonest
12
check
from
us
Invention
Padded
and
booms
as
have
high
as
it would otherwise
if cyclical
done
speculators
had not possessed their new-found
"orthodox"
knowledge.
It should
have gone to 400 in 1948, if it had
the good manners to behave itself
(The
Dow
is
each
normal
of
"Cushions"
Cycle—These
and
Trade fly
are
.
.
foresighted riders of the invest¬
cycle—who believe that all
slumps eventually cure them¬
automatically,
Minimum
wages
and
high
wages.
(3)
Just
the
ing
(4)
y
v
;':
public
planned
,
in
i
a man¬
their
grand¬
their
advis¬
in defiance
stocks mak¬
And yet that is (was)
followers,
ing losses!
to make big money!
the
reflation.
double
a
ploit
But
time marches
on
.
.
.
getting, rich
Today
there
are
many
account
on
ex¬
of
by
our
Sherlock Holmes Needed
Exchange Committee see m s to
think it is—but rather the "mental
condition" of the
"opinions
fluctuate
dence
such
value"
which
fluctuating
with
.
.
public, and their
confi¬
about
regardless of whether
.
"opinion"
is
soundly
based,
otherwise.
or
This
all
forecast
the
short
job
is
to
public opinion—
(guess)
OR
OTHERWISE!
professional
must guess
in
our
events,
SENSIBLE
The
that,
means
at
run
guesser,
in fact,
the guesses of millions
of other guessers—who (probably)
have
less data than himself!
even
is
Holmes
interesting
work
.
.
.
S h
e r
being
1
an
or
k
eco¬
nomic—and psychiatric—detective
.
ALWAYS
.
with
inadequate
clues.
must
curves
*•
•
specialize
.
.
.
.
in
"
•
a
peak
fear-wave!
of
waves
of confidence, and
~
In other words, you must
cy¬
can
wits,
our
fellowmen
Of course, what actually makes
prices move it NOT all the statis¬
tical factors—although the Stock
the
so
by
knowledge (in relation to their
own
comparative ignorance).
fear.
at
disaster, and
lovable
our
We
(The New Jungle Law)
STOCK MARKET
longer idly,
and
Cyclists
,
(5) A cyclical budget (perhaps).
about
lops off the tops and
our
speculators will suffer
we
from
;no
It
|< Deliberately unbalanced to bring j gallop, sometimes.
1
cycle,
anc
of the record, to buy
the way
;
buy
Nineties
Nefarious
Support farm prices.
Cyclically
lend
imagine the financial blades
Out-Cycling
works.
not
which would rudely shock the
spirits of
fathers (if any).
of
if the
even
managers do
hand—will puckishly
money
.
the
on
earn¬
itself
ment
rescue
safety-first cushions
Truman
(2)
course
well
nets,
of
Likewise, if slumps are theo¬
retically the right time in which
to buy
(from a cyclical angle),
whole
(1) Unemployment insurance.
course
financially
and
danger
Thus the Dow Index will never
rise
historically.
ing $22!)
more
nearly all
high trapeze:
don't "believe in" speculation
Cads—Those
the
by
the
departed
true, by gambling all right
only do it twice a cycle
We have the grand manner.
Wf
bottoms of
fairly ripe.
ner
we
time
ironed
be
during business slumps, in
The
is
but
have
era,
anti-cyclical nostrums in¬
save
The
We sin
profits
and
to
the bottom.
.
investment world.
trade
about
selves
aristocratic and
are
in
bust, and
cyclical
nosedives into the ugly rocks at
to
self-respecting enough to be eclectically high-hat, dubbing our¬
selves as calm • thoughtful think¬
ers,
as
students of
money,
as
cyclical theorists
the peerage
jaf the
the
Roosevelt
gadgets to
room
.
We
the
cushions
trading
.'.'nor pollute ourselves
with in-and-out, day-to-day op
erations.
politicians, particularly
tribe oi
cycle-hating economists (like my¬
self). And now, in America, we
have at this moment', a galaxy ol
great
short-term
cycle
our
us.
less adopted all, or
vented
course,
of intelligence among us wicked
intelligent investors at the same
safety of slumps, people
are
going to stop buying common
stocks when booms begin to look
now
are
.
of
called
charmingly agnostic, tortoise pol¬
icy of our telephoneless grand¬
—
.
or
austerity and
prudish character, and will have
nothing to do with the baudy
erns
fact
In
Hurry.
children).
.
our
political busi¬
iron out both
and of de¬
in
.
infection
masters,
trying to
from
away
moths get singed, by the thousand,
in these flames
victims oi
an
of
these,
liberately trying to take
of only
and
that
is
booms and slumps
the market
greed
result
the professional
ness
we
and
investors and economists.
us
net
well-informed
in
kind of feel that
NESS cycle; and if (b) the spread
the
politicians
have
days before the ticker, before the
Dow Theory, and before the ad¬
vent of the "crack-pot cult of the
even
itself tends to iron out the cyclical
fluctuation in stocks. For if every¬
one
The
2)
of
out, the spread of knowledge oi
cyclical investment (among 5,000,000 happily
"trained" investors)
statesmen
ering
Are Out-the-Window
Half
not now
were
V#;
the Nut¬
if
cyclical
Cyclists
Other
crackers— But
50,000 Frenchmen!
The
.
The
have (on paper) learned almost as
much about the business cycle as
page
is that if (a) the
patriotic money man¬
from us investors
(wicked speculators) a large per¬
centage of our precious BUSI¬
Out-Cycling the "Orthodox"
ing the simple rules!)
To
(Continued from
through?you
miserable
agers take away
rists.
obviously
(And
any young bellhop or barber can
make a fine fortune, by just play¬
politics aside, is there no leader of public
thought in this country who has the convictions and the
courage to undertake to lead the people rather than
merely to-sense what they are already thinking and
cater to their sentiment without much regard to where
it is leading? Certainly, such a thought appears remote
from the mind of the Governor of the State df New York.
-
an
as
.
But,
7
dogma, and
.
able law which is with
like
.
the
-
buy at
(anticipatory)
30
COMMERCIAL
THE
(782)
FINANCIAL
&
CHRONICLE
Thursday, February 17, 1949
"unsalable" coal in Belgium while
their
(Continued from first page)
sounding Bold New Program of
Inaugural Address—its Point
the
Four, the author of which is,
posedly,
the
sup¬
each
annual $400
exports
other added up to an
million
from
excess
to
their imports
over
to have
has
national trade
of
armed
Europe will need at least $3
the
fathered
Truman
capital and know-how in a gran¬
diose scheme for the development
of backward areas and for rais¬
for
is
China
in
fiasco
The
complete.
The occupied countries are more
ing their living standards.
or
less
permanent
wards
of
At first, this program has been
America.
And new problems have
interpreted as one more of the
arisen.
pious enunciations of the Atlantic
is
Latin America
in the
throes
or
Four Freedoms type,
of a foreign exchange crisis re¬
expression of high-flung hu¬
flected in nine revolutions within
manitarian longings rather than'
one year—a far better than aver¬
of
concrete objectives,
a
longer
age
performance for the juntaterm vision rather than a plan of
politicos.
The Bogota conference
immediate action.
Charter
an
In other
words, nothing much of
follow-up should be expected. If
the Atlantic Charter is the pat¬
offered
the
illustration
painful
a
that
fact
the
Good
might be
tern, an acute betrayal
policy went
on
Latin
shortage.
easy-going
an
interpre¬
tation, based perhaps on the rec¬
ord
of
the
imaginative
Mr.
Roosevelt's
ideological
perform¬
ances, is not warranted either by
the personality of the new Presi¬
his
and
dent
ments
tion.
subsequent
com¬
by the facts of the situa¬
or
As
matter of fact,
a
the idea
embarking on a colossal capi¬
tal expansion and industrial
education program in under-de¬
veloped regions follows with irre¬
pressible logic as a sequence to
our postwar international policies.
Originally,
the
Roosevelt
Churchill conception of the post¬
war
Utopia was based on two
from
tion
that
One was the expecta¬
would
Europe
restore
the
Israel
keep
rocks of
the
and
the
Arabs
cutting each others' throats,
has
it
taken
lately $100 million
Export-Import Bank loans to the
(on top of $250 million col¬
lected privately by the American
Zionists last year alone), and sub¬
stantial pipeline investments plus
one
oil royalities to the other.
take more than that.
To
of
hypotheses.
dollar
To
in store.
Such
of
Neighbor
a
Pakistan
prevent
dustan from
Siam
being
and
They
already
from
will
funds
last
shreds
One
the
of
Truman Doctrine, and a
stepped-up rearmament program,
were
as
many admissions of the
failure of the previous interna¬
Plan,
should be restored
tional
and
new
planning,
financial.
diplomatic
both
signified
"pattern of peace."
They
was
at the
And
labor
one
expense of an¬
productivity is
limping.
is
less
half
than
scarcely
of
the
in
one-fifth
British coal mines.
only
what it
was
still
85%
in 1938—when it
of
was
Accomplished?
Countries Not
ECA
"show
by
of
force."
In
fact, the two objectives are
closely tied together, as it is gen¬
erally understood. Restoring
bankrupt nations is supposed to
keep them away from bolshevism.
And keeping the bolshevik wolves
the
from
doors
is supposed
"democracies"
of
to enable the the lat¬
ter to restore themselves.
By 1949, unfortunately, little is
con¬
domestic re¬
armaments, or of restoring Eu¬
rope's
solvency
in the
visible
Russia
by
future.
Harriman
report
about Europe's inability to become
self-supporting by 1952 has been
But the 19 recipient
suppressed.
governments
selves
came
of
the
ECA them¬
proclaim¬
out plainly
ing that they consider it imposrsible
to
with
the
balance
their
Americans
accounts
after
the
Marshall Plan ends.
They promise, however, to re¬
their foreign trade deficits.
duce
Their
was
"planning"
highlighted by the fact that
\
restricting
their
imports as they do, they bankrupt
the rest of the world, from Can¬
ada to Argentina and from France
to Ceylon.
Bankruptcy spreads:
By
Portugal and South Africa
latest
in
comers
the
are
the
ranks
fact
The
care
of
all
the
America
sick
takes
balances
of
relieves
the pressure
that might otherwise bring the ef¬
fective cure.
It permits Europe's
wasteful socialistic practices and
commercial
warfare
hodge-podge
which
main¬
tain the deficiency economies
"hopeless
perate"
adage.)
(quoting
As
an
ruptcy
not
a
des¬
Viennese
a
example, most European
would
if they had
trade, and
it.
face
no
no
bank¬
deficit in
American
France:
she sells the Marshall Plan goods
help
to
to her
cover
Take
citizens, and gradually uses
the proceeds — the "counterpart"
funds in "local" currency—to fill
the hole in her budget, swollen as
it is with political subsidies and
excessive "social" spending.
She
the
on
American
force
instead
Germans
of
letting them import the higher
quality Danish farm products.
the U. S. itself is to
profit—believe it or not! Here is
Thirdly,
how.
The Marshall Plan foresaw that
should get from Europe
we
change
for
amount of
Of
Europe
in
donations
our
strategic
produces
But
emerged so far; some insiders hint
that
global R. F. C.; other con¬
a
of
noisseurs
the
State
ment's
mind, 'notably
Krock,
ponder
Depart¬
Artnur
"concessions"
on
like that of the Arabian-American
Oil
in
Co.
United
Arabia
Saudi
Fruit
the
and
semipublic treaties in Latin America.
Combination
Will
ex¬
Company's
Private
of
and
Government Investment Work
some
it.
of
to
none,
his
both the President and
Secretary of State emphasize that
this time the approach would' be
different. No clear conception has
Anyhow, the emphasis is clearly
materials.
raw
nothing -*• came
course,
the
speak
indigenous
populations shall
living standards;
powers would
save
benefit by rising
the
colonial
dollars; and Uncle Sam would get
strategic
materials—at
no
the
added
piling.
of
it
offer
b i 11 i
arms. We
all comers,
plus
guarantee,
to
now
plus
(not-as-yet-budgeted)
o n s
lend-lease.
The
that
is
trouble
cost—it
If there
skin
for
was
method to
ever
a
fox three times over,
a
here
it is.
Fourth:
Americans.
Latin
The
They, too, would be "developed."
It remains unclear, so far:
how
we
shall
persuade
our
Good
Amer¬
an
stock¬
needs
lyeighbors to let
natural
anxfous
an
develop their
us
when
resources
ican military
they
are
lonial" stigma
guarantee—which is
admission that the U. N. has
combining:
on
American
private
witn
investment
of
sort
some
shake
to
"co¬
that
off
of one-sided econ¬
omies and strive to become indus¬
character
term
the "new" in¬
of
vestments.
•
wonderful
A
was
ever
one.
Program, if
there
that should be sat¬
isfactory to everybody. The Plan¬
ner
comes
into his right, and so
does Free Enterprise. Government
and the Individual, the destitute
native and the rich capitalist, the
colonial subject and the empire
ruler—each gets his share.
a
But, of course, it all amounts to
revised
edition
of the
much
International
heralded
Constitutionally,
institution
tr>at
all the objectives and
^covers
for
Bank
Development.
Reconstruction and
pro¬
implied
totally failed in its main purpose
in the Bold New Plan, including
—does not add anything new to trialized.
Or
who the
eventual the Treasury guarantee and the
the international picture. Nor will buyer of industrial products is
productive purpose of each invest¬
it stop the Russians—who do not going to be if everyone manufac¬
ment,
etc.
Why,
then, is the
attack. They merely infiltrate. If tures them.
Bank's multi-billion lending ca¬
Finland
Austria
or
is taken
over
Indo-China
or
tomorrow by a Bol¬
shevist revolution, as China is to¬
to
Will
war?
Alliance
Atlantic
the
will
day:
declare
recognize the
we
new
trolled
government,
each time, and as
ly
intend
do
to
France, for one,
not prefer
as
did
we
so
apparent¬
we
ih
China,
too?
will be little in¬
clined to become the battleground.
what
And
if
swings
rearm
we
of the countries
one
into
over
the
Soviet camp?
then, does one stop Bol¬
How,
shevist
infiltration—especially
countries
under-developed
in
most
experi¬
(as
of additional capital ex¬
Plan
son
top of
the annual $5 to $7 billion already
in the pot, land
on top of the
forthcoming lend-lease. Its prime
purpose is: not to miss the boat
in Indo-China, Siam, Burma, etc.,
ports enter
the
scene—on
it has been missed in China.
as
in
Investments
those
a re as
tion, the worst cause of social un¬
rest, raise hygienic standards and
strengthen the local governments
against foreign-sponsored revolu¬
tionary movements.
bitter
any
cut
down
the
only
irony
kill
to
a
Europe's
however,
is,
improvement will
their mortality rates—
same
otherwise
population.
on
boundless rise of
But the
an
stone is
second "bird"
ailment
supposed
as
well.
is—allegedly—
If
incurable dollar deficiency.
an
faces
issues:
the
the
Chinese
Stalin's
soft-speaking helps, too.
it
His latest peacetalk offer makes
treaties and raise
the Berlin blockade (for a while)
if we "postpone" creating a West
German state. That, indeed, is his
chief
worry,
after
swallowing
ing to sign
China:
threat
Germany
food
and
raw
badly
materials—
to sell to
presumably, whether or
like to do so—"hard
money" could be saved. The dead¬
ly hole left in Europe's interna¬
Europe,
not
they
tional accounts after the Marshall
Plan's
expiration would
thus
be
filled.
In
(sixth)
advantage is
offered for the politicians and
the
behind
them: the possibility of boondog¬
gling without burdening directly
the
pressure
Budget!
groups
merely
By
guaran¬
(and interest),
the cost to the taxpayer is post¬
poned for later—to plague some
future Congress and Administra¬
teeing the capital
tion.
Seventh: Shifting part or
of the
from
C.
E.
the
whole
type of financing
A.
Europe
vides
to
its colonies
with the
former
kind of benefits
as
pro¬
governments will be en¬
from
having freed them¬
aid;
the
American
colonies have of
course no
"pride."
The Bold New Plan is bold
in¬
deed, but scarcely new. It is a
continuation of the Marshall Plan
and
Truman
Doctrine
spending—
continuing the
charitble UNRRA, and the gen¬
erous
Anglo - American
Loan —
just
as
time
they
in
were
turn
followed
Lend-Lease.
the
There
would
such facts
as
kind of
will produce
and
2.75%
a
return on
municipals.
capital proper: what
(say) in Pakistan when
corporations pay 8%
more
in dividends?
With the
one
hand. Truman dis¬
American investment at
With the other, he wants
courages
home.
into remote jungles
canalize it
to
and deserts—in the face of
of the
experience
verse
all ad¬
past, of
dangers, Bolshevik "peaceful"
threats,
and, risks
beyond
the
war
prudent capitalist's endurance.
Note that McCloy
is looking forJ
"good projects" to be financed by
the World Bank—and cannot find'
them.
No
uine
doubt, some amount of gen¬
capital could be at¬
venture
tracted
into
exotic
undertakings
full
by
guarantees, tax exemp¬
tions, and other "incentives."
As'
a
rule, it would have gone thereanyway;
if so, the new schememerely provides a subsidy to the'
participants.
Basically, it makes little differ¬
whether the money is dis-'
ence
by
the
of
case
bureaucrats as in
defunct Anglo-
the
spending is;
American loan; or the
managed by
men
a
is just
la
a
group
Hoffman-Harriman;
In
either
be political spending.
will
sults
of business¬
ori
"guaranteed" by the gov-,
ernment.
be,
by
case,
it
will
And the re¬
and
large,
the>
same.
Harry V. Long Dead
no
Democracy, Prosper¬
coun¬
return would have to be
a
expected
Harry V. Long,
of
stop
the accumulation of
Bank
best domestic
war¬
is
European
American
class
the
without the stigma
"beggaring"
attached. Their
almost at once— getting away, apparently, from a
its internecine principle
once
established:
the
commercial warfare, illustrated by lofty idea that dollars sunk abroad
it
first
of
self-supporting
if
with
compete
As to venture
bursed
socialist
of
S.
U.
World
tries, to say nothing of Siam or
Paraguay—at a 3% yield cannot
same
under the Mar¬
(partial)
a
guarantee.
bonds—even
shall Plan, but
which
reality, Europe could be made
rehabilitated
Soviet hege¬
to
means
further
A
a
in Europe.!
mony
selves
the
with
Even
Treasury
new
the
tecnniques
pacity virtually dormant (beyond
nurturing an appalling number of.
highly paid anu tax-exempt job¬
holders)?!
clear what he is after: he is will¬
abled to claim
needed
catastrophe,
increasingly evident failure of
international spending.
A New Plan, and a Bold
one
at that, is a godsend to distract
the
American ^ public — always
ready to escape from unpleasant
realities into general and vague
but ontimistin speculations
rica
produce
embarrassing
the
all
vides
in
mess
the dependencies in Asia and Af¬
would
The Adminis¬
most
the
such
check
objective is amed at
tration
economic
should alleviate recurrent starva¬
The
The fifth
the domestic front.
Japan, no peace in
Soviet-con¬ Austria, cold war in Germany, and
which they would have
governments
foreign
but
in
flour
the coal
Bizonia because
authorities
1939:- by offering the
"little" powers Britain's territorial
to
spring
that
that
cannot pay for
she imports from
our
we are
the Marshall funds.
of
use
Denmark
discourage Hitler in the
tried
of
dollar-beggars.
condition
recent
The
gravitate.
Chamberlain
which
with
trick
payments
left of both dreams: either of
taining
It.amounts in effect to the same
That's where the Truman-Ache-
early 1947, our foreign
Anyhow, the ECA countries are
is serving two essential
purposes: to finance, the rehabili¬ not recovering their ability to pay
tation, within five years, of West¬ for what they buy. The exports of
Western Europe as a whole match
ern Europe as well as of the Far
and Middle East, including Greece barely 50% of its imports.
and Turkey, at the cost of spend¬
Britain and Germany, between
ing another $20 billion or so; and them, constitute the centers to¬
to contain Russia, i.e., to discour¬ ward which normally the bulk of
age her armed intervention in ad¬ raw material and luxury exports
countries,
principle is simple; the difficult
question is to package it so as to
make it palatable to the Senate.
Recovering
Since
policy
jacent
same
better
Incidentally,
more
many
exposed to Marxism
ence shows)?
much too low.
Has Anything Been
the
along
forc¬
ing food and tobacco surpluses on
Europeans who could make much
months.
directions. Also, of, and not enough grows in most Administration guarantee; capital
the procedure is to be changed, colonies to take care of the mother from trie U. S. with local savings;
or
supplemented, the diplomatic countries. Also, the latter dis¬ governmental direction and super¬
vision with business management;
technique as well as the financial. criminate
systematically against
of
local
interests
To
begin with,
the
Atlantic American venture capital going safeguarding
("no exploitation") with paying
Alliance,
under
negotiation
in into the colonies.
interest and repaying the princi¬
great secrecy, is essentially Cor¬
Now, the Bold Plan would pro¬
related with the new program. Its duce results for all and sundry: pal; and the productive and longin
French labor
productivity is
a
action
prompt
general lines as presently, but in
a
vastly intensified measure and
far
in
Man-day output in British fac¬
tories
anything, it means far more than
just another long-term outlook on
a Better World.
Action is meant,
Russians
But much of the progress
American:
Program.
but
facilities.
other.
AcheIf
Mr.
(and
New
Bold
son's)
Indo-China,
for
anything like normal func¬
tioning.
Many signs indicate progress
toward economic sanity in Europe
country
President's
the
Military Aid Will Not Stop
to
still sadly
bank¬
rupting the United States.
Such is the background behind
late
,
The
ultimately
of
danger
raise
too
be
may
itself, as it did after World War I,
given a short transition period;
given also American aid by way
—reconstruction of war damages
of UNRRA, Bretton Woods, Ex¬
and raising of consumption levels;
port-Import Bank, and the British
Loan.
The other was the political partial control of the inflationary
flood and
(outside Britain) re¬
dream of One World with Russia,
duction of subsidies; partial elimi¬
organized in and managed through
nation (outside France) of ration¬
the U. N.
The Age of Reason and Light ing and of related controls; even a
moderate expansion of production
was at hand.
World fantasy were rent asunder
in the course of 1947.
Marshall
it does is to
All
war.
be
Korea, Japan and the Philippines
are
to
be
great
consumers
of
dollars if they
tual
shall
bolshevized,
boiling
Java
further—American
needed.
Hin¬
and
fighting, Burma and
from
Sumatra
It will
the policy
neither
worse,
preparedness
eliminate
the
generation.
a
The failure in Greece is obvious.
to balance her
Soviet expansion, nor does
the danger of even¬
stops
it
bil¬
annually, and will need them,
Doctrine and the Marshall Plan—
to "foster" the use of American according to the experts, maybe
who
so as
What may be
the Marshall Plans ends,
lion
State
unbalanced inter¬
an
materials.
nine
coal in the last
of American
domestic accounts!
another!
one
When
of
Secretary
new
projected
ity, and Peace, in addition to raw
Italy has imported 3.5 million tons
The Bold New Program
the
Boston
oldest member,
Stock
Exchange,,
died at his home in Boston at the^
age
of 91.
^Volume 169
THE
Number 4778
COMMERCIAL
&
CHRONICLE
FINANCIAL
lines
Sound Financing of Air
(Continued from page 17)
airports.
Properly
vate
provided
nanced this should
fi¬
low fixed
mean
.charges. An efficient management
*,With
good expense control sys¬
a
tem should
of the airiine than
cess
4;al
mean more to
the
suc¬
large capi-
resources.
Probably the control of operat¬
ing expenses Js \the most impor¬
tant of airline
variables, but un¬
fortunately there are many other
.variables
,in this intensely
business, such as:
namic
dy¬
(a) Extent of competition.
(b) ; Safety and reliability
fixed invest¬
free of large
subject to high variable
expense, but unburdened by pub¬
lic utility and
national welfare
obligations, the problem of .corpo¬
rate finance would be relatively
ment,
craft
manufacturers
first
all
class
traffic
by air,
estimated air cargo by the
air
feeder
routes)
cluding
p a n
amount of long-term loan
money.
;Its great need would be
for a large margin of free work¬
ing capital and ! large liquid re¬
serves
for
contingencies • and
But it
d
were
equipment
ex-
235%.
Enough
new
dered to
fly all this dream traffic.
only
was
probably
a
is
It will
dream.
true in large part
come
eventually—but not just
It
or¬
was
.
of
operations.
new
money"
„
medium.
girlines
graced
distress of many
in large .part .be
may
to
blithe
a
freedom
from
effective expense control sys¬
<any
tem;' prior .to the
that
1947,
y<?ar
is
water
no
does
good to beat
the
over
nomic operations the
record of the
airlines as a group today compares
favorably with private industries
with
any
and
most
certainly
other transportation in¬
dustry. The cost of operation
available
ton
mile
in
cents.
third
1948,
quarter
been
of
reduced
although
about
to
prices
30 %
was
the
Jp
this
about
had
27
cents,
increased
had
during the
same
riod. Of course, there is still
pe¬
room
for
plenty of improvement.
I am not going to deal at
any
length upon the variable listed as
''Extent
of
Competition"—that is
pretty thin ice.
Suffice it to say
that if the CAB was carried
away
by the wave of postwar optimism,
so
the
were
and
airlines,
financial
be
the
banks
prophets.
There
too
much
competition
routes, but the Board
and Industry are
working on it,
may
pver
many
and
the condition
will
be
92.4%
represented by
Safety and reliability of opera¬
are, of course, a most im¬
portant variable.
A series of bad
accidents
or
period
a
of
bad
weather is immediately reflected
Jan.
of
ferred
Much
used
of
very
dustry. The railroads
sa'fe
-
neither
were
reliable for many, many
nor
years.
-
Quantity and quality of equip¬
ment can be coupled with tech¬
nological advances.
A new and
improved aircraft purchased and
operated
over
the
airways of
airline places an immediate
one
neces¬
sity upon a competing airline to
.acquire and operate new and im¬
aircraft,
proved
may soon
otb^rwWe
or
it
be flying empty planes.
loan
agreements
contain
tude
the
of
ment,
and
Committee
have
a
policy of the Civil
Board, and the atti¬
Post
the
on
Office
Depart¬
Appropriations
Capitol
funded
debt
,
definite bearing on
earning
prospects.
There
is
all
_
lost
airlines
or
the
1947,
and in
governmental agen¬
All these ghosts rise up to haunt
the
investor of "risk money"—
the
banker—when
of airline
they lost over $20,000,000,
1948, they will lose an esti¬
mated $8,000,000 or more
Consequently,
Free
The
an
the
subject
financing is mentioned.
Ideal
airline
Finance
Plan
merely
the surplus
important
wiped
out.
many
beeri
have
working capital has become
non-existent
almost
had
been
rowing
factor
resort
to
short-term
bor¬
received
from
This
sales.
condition
the
and
cash
and
loss
for
of
is
a
pre¬
industry
only two pas¬
an
below the breakeven load
means
of
loss
a
$2,500,000
month.?
Moreover, not all the lines
fully equipped with
aircraft.
Funds
new,
are
needed
to
acquire this equipment—not only
enable the partially equipped
lines to compete with their fully
equipped rivals, but also to reduce
expenses by more economic oper¬
ation, and to fulfill their obliga¬
tions
the
to
national
defense.
a
critical financial situation of
sev¬
Wjait qn
carefully planned correction of
a
route
pattern,, and the work¬
ing out or methods to eliminate
duplicating facilities and attract¬
ing oe>Y §qu^
A
recession,
,short reces¬
would
even a
sion and modest in amount,
probably
very
the
factor to
the
reduce
of
extent
those
the air in
be financial chaos in
There
was
a
brief period
very
immediately after the war when
such financing could have been
had.
The sky was the limit—and
is
pun
60-passenger aircraft, such as
Douglas DC-6 or the Lockheed Con¬
stellation, costs approximately $1,000,000
and
is
fully depreciated in seven years
at
something more,than 12% per year,
compared
coach
is
not
met
actions of the Board);
amounts necessary
to
(b)
their
commercial
funded
debt.
RFC, in my opinion, has
authority to make such loans.
only requirements are (a) if
approved by the Civil Aeronautics
Board, and (b) if there is reason¬
the
The
able
assurance of payment of in¬
terest, and repayment of the loan.
The present mail pay policy of the
Civil
Aeronautics
give
reasonable
Board
should
and
undue
an
hardship
The RFC
during
,
,
the Civil Aeronautics Board. Most
of the
equipment under order for
and
This
one.
not
car
with
77-passenger train
which costs about $85,000 and
depreciated
at
a
about
3%
per
year
of
service.
2 Revenue
1948
miles
were
25,000,000
10 cents
a
flewn
with
approximately
a
month.
it would
mile,
or
If
mean
passengers
300,000,000,
they lost
two
approximately
$2,500,000
per
month.
purchased at
was
addition, the RFC has the
not
is
a
situation
a
which
assur¬
is
national
a
the
national
It
defense.
problem
and not
rate
tion.
But that
begs the
ques¬
There is
bility
no present possi¬
obtaining
sufficient
of
equity financing to remedy the
situation. Likewise, the possibility
of
obtaining
banks
large
insurance
or
companies is
remote, if not nil. The banks and
insurance companies are already
in too deeply.
The present
the
mail pay policy of
Civil Aeronautics Board is
a
help and will continue to be a
help, but it is not the whole
answer. Only approximately 8&%
of
the
airlines
would
in
mean
airmail.
from
comes
loss
10%
domestic
the
of
revenues
A
airline
revenues;
increase of 115%
an
airmail pay
sions if such
lowed
A
and
an
would
be
Suggested
the
repercus¬
increase
immediate
and
Interim Program
It is my belief that the
will
al¬
were
continue
to
effect
sound
Voluntary
—
a
record
of
reasonable
cost.
times
arrives,
must
be
But
some
adopted.
until
this
interim plan
National
se¬
curity alone makes it unthinkable
that
the
present critical financial
conditions of
so
many
of the air¬
debenture
Bankruptcy Court should
line's
situation
financial
air¬
an
deterio¬
It is my
opinion that the recom¬
mendations above set forth would
effectively
the interim
serve
pur¬
The public purse would be
protected in that all the refinanc¬
pose.
The
airlines would
by
RFC
railroad
of
equipment
trust certificates. This section was
in
enacted
1934
relieve
to
the
ment trust certificates.
guaranteed by the RFC.
As
anteed
equipment
by
and
security
should
would
be
Such
have
all
a
the
Treasury note and
require much more
of
a
not
retirement
interest.
The
could
be
prolonged
fund
requirements
effect
term
sinking
and
less
made
OnerOUS.
(2) I suggest that until the leg¬
above suggested is en¬
fact, /this plan
considerable
a
sav¬
ing to the government. The sink¬
ing fund payments and interest
charges on the present funded
debt of the airlines, amounts to
over $20,000,000 annually. Insofar
as it is not paid by other revenues
is
it
the
paid
form
the
by
government
airmail
of
RFC
-charges,
the
saves
it
pay.
the
reduces
airmail
of
in
If the
reduces these
refinancing
fixed
and
payments
government
just
that
amount'.
guar¬
certifi¬
trust
investors.
to
now
could
RFC
new
equipment
sold
loans
of
matter
a
amount
commercial
Current
be removed
threat of receivership
since practically all of the funded
debt
of
the
weaker
companies
any
should
I suggest that new legisla¬
tion be introduced, modeled after
the former §605 of the RFC Act
(1)
Once the airlines have weathered
this transition period
they should
equity financing,-except
resort to
believe it
I
tional
the
would
interest
in
be
retain
to
the
in
na¬
RFC
authority to guarantee equip¬
ment trust certificates
airline, as
auxiliary,
so
that the
potentially military
may take full advan¬
tage of every technological ad¬
vance in planes and equipment.
•
a
islation
acted, all financially embarrassed
carriers whose funded debt posi¬
tion is
now
such that it works
Geo. E. Rieber Honored
an
undue
hardship on the carrier and
jeopardizes it financially should
be permitted to enter into a vol¬
untary refinancing plan with ap¬
proval of the Board; and that the
RFC
refinance
the
equipment
At Testimonial Dinner
at
a
loans
10
at Miller's Restaurant, to com¬
which
constitute
the
large
George
tional
Rieber
E.
Association
Dealers, Inc.,
was
of
of
the
Na¬
Securities
guest of honor
testimonial dinner held Feb.
his
part of such funded debt on a fair
and
equitable
basis
permitting
memorate
more
reasonable
interest terms,
sinking fund terms and repayment
terms. Such refinancing could be
accomplished by direct loans or
the purchase of equipment trust
certificates by RFC. It may do
mittee of the NASD.
both
or
under
of the RFC Act. The
of
reasonable
Section
604
requirement
of
assurance
of
present.
interest
Most
of
and
the
needed
upon
to
refinancing.
that,
mail
pay
the
secure
should
under
efficient
enable
to
and
The
the
dinner
by 150 friends
representing all
New
acted
was
as
York
toast-
attended
of Mr. Rieber,
branches of the
securities business. Alden H. Tur-
Frederick H. Hatch & Co.,
in
charge of the arrange¬
ments.
Mr. Rieber has long been active
with the NASD.
In addi¬
may
rely
policy of the Board
which
management
RFC
a
of
Exchange,
master.
ton,
present value sufficient to
tion
Stock
principal is
equipment
as
Mr. Edward C. Gray, Executive
Vice-President
was
the
appointment
Secretary of District No. 13 Com¬
pay¬
purchased with bank loans has
establish
and
rate further.
financing
advantage of
technological ad¬
vances, and if uneconomic com¬
petitive situations are remedied,
will
ba nkers
holders would have to look to the
Re¬
ment
they
the
or
Long-Term
economies and to control expenses;
and if they are permitted to take
regular earnings which will per¬
mit proper equity financing at a
of
would be in the hands of the RFC
B.
either
airlines
debentures
preciation (which could be put
into a sinking fund), and insur¬
ance on the new equipment.
from
loans
the
of
from
certificate
be had.
holders
Civil Aeronautics Board.
time
price might
cooperation and agreement
part of the bankers and
the
management receive suf¬
ficient funds to cover interest, de¬
cates
a
government
a
ing would be under the supervi¬
sion and with the approval of the
secured
equity financing at
seeking
corporations
would,
of
course,
be necessary to accom¬
plish any such voluntary refinanc¬
ing, and it follows that if such
cooperation be not present, then
nomical
a
conditions,
na¬
car¬
refinanced
market
the
eco¬
Equity financing is not present¬
ly possible. Of course, after sev¬
eral years of good earnings at a
good
and
efficient and
rier will under
private airline problem alone.
of
airlines
policy of the Board the
the present mail
that under
ance
affects the airline in¬ plight of the railroads, and was re¬
vestor and the travelling public,
pealed on June 30, 1947. It per¬
but is vital to the national wel¬
mits the RFC to guarantee equip¬
and
the
a
only
fare
confront
tion, and I am sure would coop¬
erate
whole-heartedly. The air¬
line, as an instrument of national
policy, is in an entirely different
airline
authority to
such loans if approved by
make
sought
the
has
now
even if all the
refinancing; and
please remember, the RFC would
not be giving away this money.
It would only-be lending it, or
guaranteeing a loan. The RFC
was created
to meet exactly the
contingencies which presently
airlines
on
equipment, the payment for which
financial emergency.
amount involved would be
$250,000,000
Full
principal of the loan.
(2) I suggest that the RFC make
this
The
loan.
temporary
equipment
loans
to
those companies which are com¬
mitted
to
the purchase
of new
work
the assistance
for
reason
business
RFC that the carrier will be pro¬
vided with funds to pay the inter¬
est
interest,
category than the ordinary private
the
to
assurance
national
recommended.
about
which provides for the guarantee
a factual
theoretical
Again, I repeat, this is
situation
severe.
as
is
the
pelling
(a)
the
supply
capital (to
need
think
em¬
to
two
dustry.
much in the national interest
the
the
I
national defense, and the welfare
of the people generally is a com¬
pay
service
depreciation require¬
the interests
or
and to pay
loan
RFC
financially
carriers
that
by mail
load
vital passengers. The result might
in
or
pri-
over-pessimism
it.
However, the
and
correct
cannot
the question of airline fi¬
nancing is not a theoretical one,
but a very practical one and very
Thus,
no
to
sums
working
extent
and
that
suggest
price below the present market
price and that in itself should be
sufficent security for the loan.
In
modern
needed
are
to
passengers,
were
all
of
reserves
airlines
in
If
in
1 One
cies will remain constant.
or
of
years
$5,500,000;
over
no
guarantee that the policy of Con¬
gress
three
are
heavy losses. In 1946, the domestic
has
I
31
Conclusion
Working
these carriers
highly
intended. Investors,
airline' bankers, the airlines, and the air-
Hill,
r____
chattel
and
restrictive cove¬
nants limiting to a
considerable
extent managerial flexibility
On top of this heavy burden of
The mail pay
Aeronautics
aircraft is rapid1,
on
mortgages securing the debt often
in¬
young
equipment.
purchase
sinking fund requirements and
have become a
tremendous
burden.
Likewise,,
a
a
was
the service charges
available.
time.
money
the
sengers
take
debt
Since the rate of depreciation and
obsolescence
"When completed ; will make ontime, reliable, all-weather service
will
the
to
The
it
cumulative pre¬
30% by common
by
equity.
advanced
But
1, 1948, the picture
reversed. 'Ap¬
stock and
where
After all this is
receivership cannot
in speculative adventures
or
experiments.
If
haste
and
over-optimism created the situa¬
the
carious
program
with
faced
for
engage
loans—20%
the
airline
An
resources.
eral of The airlines cannot
in the "revenue ton-miles" record
airways
and
proximately 50% of the financial
structure was represented by bank
and in that old devil "load factor."
national
com¬
completely
was
and
tions
common
preferred stock, mostly
As
reme¬
died.
was
of the capitaliza¬
pattoro, elimination of some du¬
plicating facilities, and the tap¬
ping of new sources of traffic take
time
ments
tion,-haste
was
mon.
per
1947
approximately 31
airlines
of debt.
tion
and
honestly believe that from a
Standpoint of efficient' and eco¬
in the form
tificated
It
dam.
dead horse.
a
In 1940 only 7.6% of the total
capitalization of the domestic cer¬
but
J
generally,
all the ideal structures
at
which I just described.
The- financial
■
not
are
ing fund
!
Financing—Emer¬
Loans
barrassed
.
investment
plan
,
.The
nqw.
criticize the air¬
mistakes and mis-
to
easy
The
.Capital and Equipment
(1)
billions
(in¬
continue.
Term
gency
and
routes
approximately
d
e
A. Short
sufficient
domestic
The
should
Suggest is as follows:
of
of ton miles.
simple.
Such a business would
be attractive to "risk capital" but
would not be able to obtain any
great
envisioned
the carriage of the greater part
lines for past
equipment.
The
"risk judgment, but it serves no good
would . place
its
bet purpose. ' The "why didn't you"
(c) .Quantity
and
qualtiy of on
managerial
efficiency
and and "what might have been" ap¬
.equipment.
ability.
If it won in the battle of* proach does not provide the fi¬
(a) current mail pay policy of free and
unregulated competition,- nancially
sound,
operationally
the CAB. '
it would
win handsomely.;
■■■/ '
The efficient, and technological mod¬
,(e) Current
attitude
of* the modern aircraft .is a highly pro¬ ern air
transport system declared
Post Oxxice,Department and Con¬
ductive
vehicle when employed to be so
necessary by the Presi¬
gress.
over
a
route segment of heavy dent's Air
Policy Commission and
(f) Technological advances in traffic
potential and reasonable the Congressional Aviation Policy
the art.
competition.
Board. ; ;
" ! ;
These variables seldom affect
Unfortunately, we are not start¬
Nor is it in the national interest
the long established
public utility, ing from scratch. We are dealing
for a critic to say "first make a
but the airline must reckon with
with a factual situation and we record of
earnings and then we
them and they do affect its earn¬
must face it.
The airlines now will
help you." "This evades the
ings
greatly
and
consequently have financial structures and they
problem. The correcton of a route
airlines stock as an
.
,
Transportation
enterprise in open competi¬
tion,
I
(783)
the
carrier
economical
receive
enough
mail pay to take care of all sink¬
With Hornblower & Weeks
(Special
to
The
Financial
Chronicle)
DETROIT,. MICH.—Richard
Mead
is
now
Hornblower
Building.
&
connected
L.
with
Weeks, Penobscot
COMMERCIAL
THE
(784)
32
&
products, continued at
and food
Stations
Hundred Video
Four
these losses, the same
faith is being shown
in television's future as has been
shown by "astute businessmen in
the
formative
period of every
Despite
tremendous
great industry's development.
Station application records
FCC
indi¬
the
1953 at the latest, we
television stations
the air in 140 cities.
This is
maximum possible in the pres-
est
frequency band.
that by
cate
on
400
have
will
In
there seems
this connection,
misunderstanding as
to the extent of the ''freeze" ac¬
tion taken by the FCC last fall.
This action did not halt the con¬
struction of stations for which
permits already had been granted.
Since that action was taken, 20
stations have been completed and
put into operation and others are
going on the air every week. The
order
did
"freeze" applications
pending for construction permits.
to
be
some
It
was
tonnages
operating
This
c
:
of the old
one
year ago
effect
that means
so
»
4
be
can
ing now for that time.
current |
models are selling very well, is
in effect a jockeying for position.
At my latest count, there were
divisions accounted
ler
:
new
features,
•
185
around
vision
even
as *
available.
sets
again, if I may use my own company to illustrate, we are prepared
to maintain Crosley among the in¬
dustry's
values
and
leaders by
in first-class
giving
output consisted of 80,688
built in the United States and Canada.
j
BUSINESS FAILURES EXTEND RISE IN
Commercial
The
to
quicken the distribution of goods
and
v
services
its
benefits
new
—
business, commerce,
power
162
agriculture alike, which is to say,
the entire public.
from
than
a
among
127
year
small
ago
and
were
as
numerous
tinued
(Special
to
The
Financial
Chronicle)
MO—Joseph
LOUIS,
Grant is with
a
A.
King Merritt & Co.,
Inc., 408 Olive Street.
Merrill Lynch
(Special
to
The
underwear
Housewives
reductions for
CHARLOTTE,
N.
,C.—William
is with Merrill
Lynch, Pierce, Fenner & Beane,
Liberty Life Building.
H.
Jones,
Jr.,
\
a
further
new
LATEST WEEK
32.4% to 192
in
rose
more
the
•
The
downward
i
r
<"
weather
in
i
r.)
to
affect adversely
sales of furniture and housewares in
clearance
of last week
a year
the response
many
areas.-
.
.
f
i.
V
year ago.
country in the period ended on Wednesday
estimated to be from 2% below to 2% above that
was
■;> /
ago.
the corresponding levels of
a
year
ago by
the following percentages:New England and; Southwest down 2 to up 2, East down 3 to up> l, South down ,
1
when it stood at $5.40;,
,
a
Regional estimates varied from
numerous
to
3,
up
31
.
'
Midwest unchanged
to
down 1 and Pacific Coast down 4 to
up
4, Northwest down 5 to,)/
unchanged.
-The total dollar volume of wholesale orders
close to that of the previous week
the comparable
week
a
year ago.
:
:
last week continued
and fractionally exceeded that of
The number of buyers attending
wholesale markets rose moderately during the week and sub¬
last year.
v
Department store sales on g country-wide basis, as taken from
the Federal Reserve Board's index for the week ended Feb. 5, 1949,
showed a decrease of 4% from the like period of last yeal.
This
many
stantially surpassed that of the corresponding week
with
compared
a
decrease of 7% in the preceding week.
5, 1949, sales decreased by 1% and
ended Feb.
four
weeks
year
For the
for the
to date increased by 1%.
Retail
declines
at
trade
the
for
here
in
NewT
with
period
about 8% under the
York last week again reflected,
department store sales estimated*'
like week of 1948.
-
\
the Federal Reserve Board's index, department
store sales in New York City for the weekly period to Feb. 5, 1949,
According
declined
week
a
to
by 7% from the same period last year.
In the preceding
registered under the similar week of 1947.
decrease of 8% was
For the four weeks ended
below that
commodity prices, particularly -farm. by 2%.
>
continued
Retail volume for the
of
to
SHARPEST BREAK IN YEAR
1
trend
Vv'*/r'v/'-V...."
previous week.
below that of
week of
TURNS SHARPLY DOWNWARD
LATEST WEEK
*
and pantry staples rose slightly.!
their purchases: of "canned and frozen foods.
volume level close to
that of the preceding week.
Floor coverings continued to be eagerly
sought by many consumers. There was a fractional rise in the retail
volume of small radios following some sharp price reductions, j The
retail volume of many major electrical appliances continued to be
to 35 from 18.
North Central
•
'
<
the
to
they rose to
foods in general use.
IN
and
Price//
buying the past week
to that of a year ago.
foods occurred 4n many-areas. .>/,
for meat, poultry
increased
Severe
1942,
the sum total of the price per pound of
COMMODITY PRICE INDEX
their food
over-'
Supplies of fresh fruit and vegetables were curtailed by storms in
some localities.
Bakers' goods were sold at a high level close to that
An increase also appeared
low since Oct. 8, 1946,
increased
some
The demand
as
The index represents
spring suits in some areas. Sweaters and lingerie
generally sold well.
Promotions of men's and
well received. The sales volume of men's heavy
total dollar volume continued close
grains and foods in the corresponding 1948 week, when the index
dropped from $7.14 to $6.83.
The current figure of $5.66 is 23.1%
below the record high of $7.36 recorded on July 13, 1948, and repre¬
Chronicle)
dipped slightly; consumer
fractionally.
The demand for men's suits and
to be limited.
'
' yV;.':,/L.
rose
Consumers
-week,j
purchases during the
their apparel
were
continued
coats
This represented a decrease of 22 cents, or 3.7%, in the
The decline coincided with the sharp break that occurred in
week.
to
prices
women's shoes
week ago.
sents
Adds
Financial
reduced
at
drop since this week a year ago, the Dun & Bradstreet wholesale food price index fell to $5.66 as of Feb. 8, from $5.88
King Merritt Co. Adds
areas.
decreased
interest shifted
In its sharpest
ST.
most
The retail volume of women's winter coats
higher in the current week, reaching the
INDEX REGISTERS
in
Shoppers
States.
PRICE
in the period ended on
The level of buying did not vary consider¬
ably from that'of the similar Week a year ago/Dun & Bradstreet,
Inc., reports in its current survey of trade.
•'
Promotional sales of apparel, furniture and housewares con- y
and 28,345 trucks
year's 26.
In the New England States casualties rose
Slight increases were reported in the Pacific and East
FOOD
of the
Although hampered by inclement weather in many parts
Wednesday of last week.
in manufacturing and
In
SHOWS
TRADE
country, retail dollar volume rose fractionally
Both wholesale and construction failures
last week, while slight declines occurred
commercial services.
the Middle Atlantic States casualties more than doubled last
twice
were
i
FAVORABLE
WITH LIKE WEEK OF 1948
v '
WHOLESALE
AND
COMPARISON
highest level in six years.
■
'''"V
ago.
RETAIL
83,996 units and
failures with liabilities under $5,000;
were
u
•.
228,000 the previous week and 112,700 in, theCorresponding
year
30 from 18 in the previous week and 13 last year.
Retail casualties
cents-per pound,
Lamps, cutlery and dishes were sold at a
considerably
when 115 occurred.
announced at'30.75
moderately active with inquiries fairly,
Reported sales ;in the ten
spot markets last week amounted to 178,300 bales/compared with
reaching the highest level since June,
week
last
was
but volume of sales declined.
numerous,
involving liabilities of $5,000 or more increased
Failures
to
industry and
10,
price
parity
Spot cotton markets were
.
1939.
in American en¬
through
Feb.
failures
saleS
higher mid-January parity'price than had been
a
unchanged from the revised December
the corre¬
of 85,158
below the prewar total of 318 reported in the same
tinued
tertainment and education, it also
—
industrial
and
cars
\
recent weeks, cotton prices 4
looked for.
reported Dun & Bradstreet, Inc. Casualties exceeded the 128 and 45
which occurred in the comparable weeks of 1948 and 1947, but con¬
performance
our sets,
programs
means a new era
means
ending
week
good
conducting
by
week's
Last
steady.
extent by price-fixingJ^auiat^x-port
some
and
the staple
of
of
intensified
through
an expanded sales organization.
All in all, it is evident that tele¬
vision is growing into an element
of primary importance in our en¬
tire national economy.
While it
and
merchandising
cushioned to
were
manufacturers reported gains
Output in the similar period a year ago was
1941, 127,510 units.
design in
advanced
three
reported at the 'lowest
also sharply lower,
were
the nearby export
over
for the 6,000 unit increase, the reporting
big
were
lambs
Average fselling v:
Foreign demand was fairly active, buticentinued- uncertainty
outlook was an unsetil*tfci»Rueraee.v- Declines
grains.
-
in the like week of
here
And
the
AH
said.
and
the!
deluged with
;<
lower toward the end of the week.
Considerable
developed as the week progressed, with liquidation
influenced in large part by weakness in outside markets, particularly
last week.
model tele¬
different
service
Chicago
at
were
months.
many
sharply
output by Chevrolet and the Chrys¬
Increased passenger car
The con¬
in
pressure
Automotive Reports."
stant introduction of new sets and
Midwest
the
Sheep
hogs comparatively
selling
The amount of electrical energy
intense and are gird¬
steers
OPA.
turned
,
more
in
cattle
of
Following comparative firmness in
distributed by the electric light
ditional
stations
and
to
avoid and
power industry for the week ended Feb. 12 was estimated at
overlapping. The industry is con¬
5,722,086,000 kwh., according to the Edison Electric Institute.
This
fident that this will be accom¬
represented a decrease of 56,390,000 kwh. below output in the pre¬
plished.
' 1
. ceding week; 337,141,000 kwh. or 6.3% higher than the figure re¬
As new
television areas open, ported for the week ended Feb. 14, 1948 and 943,852,000 kwh. in
and as existing ones become more excess of the output reported lor the corresponding period two years
attractive with the opening of ad¬ ago.
ditional
stations,
television re¬
ALTO OUTPUT SHOWS GAINS IN LATEST WEEK
ceivers continue to move rapidly.
Production of cars and trucks in the United States and Canada
However, in this field too, the
for the past week advanced to an estimated 109,033 units compared to
more alert companies are looking
102,977 (revised) units in the week preceding, according to "Ward's
to the day when competition be¬
comes
beef
of
since
with
12
FEB.
ENDED
most
VVj;'t
;•'• -/, S
■
markets
receipts
;
levels
LATEST
SHOW SLIGHT IMPROVEMENT IN
-v/v
..
prices
WEEK
for ad¬
'V
•
result of
market was unsettled with prices generally lower on
Livestock
1,667,300 tons, or 92.5%
quently reception generally stops ceding week, but a decrease of -34,793 cars, or 8.7% under
sponding week in 1948. - It also represented a decrease
at the horizon giving most stations
a 70-mile maximum
coverage ra¬ cars, or 11.1% below the similar period in 1947.
dius.
The FCC put the "freeze"
ELECTRIC OUTPUT RECEDES FURTHER IN WEEK
in
«(
advances
heaviest
like radio,
worked out to make room
.
Liquidation and selling continued to feature the lard market.
support lacking, prices dropped- almost two cents per pound;
reach a new six-year low in the cash market.
^' y y
'■"* 7
to
and service._ ; Un¬
Loadings of revenue freight for the week ended Feb. 5, 1949,
television audio signals
do not tend to follow the curva¬ totaled 682,143 cars, according to the Association of American Rail¬
roads:
This was an increase of 2,888 cars, or 0.4% above the pre¬
ture
of
the
earth,
and
conse¬
vision coverage
f '
With
and 1,281,210 tons for the aver¬
week in 1940, highest prewar year.
age
CARLO ADINGS
.
was
grades. •:•/ "
castings compared to 1,845,400 tons a week ago,
capacity
Corn
The egg
rate
1,845,400 tons, or 100.1% a month ago, and
setup, there
simply was not enough room for
the stations necessary to give this
country the best possible tele¬
*
.
,
^
Prices-of wheat Hours, however, were firm arrd showed
despite marked weakness' in wheat futures::
Demand for cocoa remained slow and prices turned lower late W
the week
following an early display of steadiness.
The butter
market revealed a better tone with prices up slightly for the week.1'
The institute reports the schedule of operations
0.1 point or 0.1% from the previous week.
- ' *;
< *
week's operating rate is equivalent to 1,843,500 tons of
steel' ingots and
found that under
present frequency
254.37,if ,
J
",h
With holdings of most grains reported at record
ago.
year
moderate
preceding week.
is down
' ■
shipment.
announced this week
of steel companies having 94% of the
steel-making capacity of the industry will be 160% of capacity
for the week beginning Feb.: 14, 1949, as against 100.1% in the
the
.
offerings met with little sup¬
the most active grain and except for rye, showed the
largest decline in price.
Trading in grain futures on the Chicago
Board of Trade rose to the highest level in more than a year.
Daily
average sales of 48,300,000 bushels, compared with 35,000,000 the pre¬
vious week, and 41,200,000 in the like week a year ago.
Domestic
flour business continued to be restricted to small quantities for quick
well received at first by steel
were
Iron and Steel Institute
The American
a
port.
,
that
1
•
levels, demand was lacking and heavy
customers, they found
until they could get a
clearer picture of business ahead.
They are still viewing the "critical
months," according to "The Iron Age."
L;'-Carbon steel buyers are not in this class at all, since demand for
almost all carbon steel products still tops supply.
Although a few
buyers have cancelled or declined to accept quotas, others are still
anxious to take all tonnage available with mills having no trouble
disposing of it elsewhere.
y" "
\
,
'■/LaL-V
Steel people believe the next 60 days will answer a lot of ques¬
tions on demand.
Meanwhile, production plans now being made by
some
companies contemplate capacity operations into'June.
They
do not say June will be the turning point, but they simply are un¬
willing to guess too far ahead, concludes "The Iron Age."
purpose
the FCC.
time
However, after checking with their
increasing tendency to dig into inventories
an
behind this step
,iw£as a
good. one,. and I believe
every responsible member of the
industry was in agreement with
the
alloy
extra
••
■
decline of'2.7% from 261.72-a week earlier
with 278.92 on the corresponding date a year ago.
Activity in grain markets quickened last week as the
buyers.
'
/ The
of
offers
*
.
general liquidation which carried prices sharply lower. > The decline
was the largest since the severe break in grains that occurred at this
Demand, however, is still good with steelmakers believing that
the steel business will be good this year with a further easing in
demand for carbon steel as there has already been for alloy, stainless
and tool steels.
What they do not know is when carbon steel supply
will balance demand.
To guide their thinking this trade paper points
out that their customers' customers are getting cautious, inventory
conscious and, to some extent, price conscious. , ■ ' .
Cancellations in certain products have been substantial and initial
by 1953
i
' -■
.*
i,
This represents a
and compares
spot cancellations.
of
cause
'
:
v'"1
supply and demand nearer to the
point of balance.
Results of the high output observed thus far are
the almost complete reduction of the potency of the gray market;
(Continued from page 8)
consumers' cancellations and growing hesitancy to extend conversion
period of red ink before becoming
deals; cancellations by some lines of consumers■, of, existing regular,
a
profitable operation.
mill orders, and increased offerings of bonus tonnages by mills be¬
it moves the market factors of
pace
2, 1947, when it stood at
low since June
(Continued from page 5)
The Giant
somewhat accelerated pace in the:
a
past week. The daily wholesale comm^ty«JtttoWd'e%<f6mpHed';6yj
Dun & Bradstreet, Inc., dropped to 254.74 on Feb. 8 to reach a new
The State of Trade and Industry
Television—
Thursday, February 17, 1949
CHRONICLE
FINANCIAL
.• -v"-"
Feb. 5, 1949, a decrease
last year and for the
of
-
-•
■
....
year
of 2% was recorded
to date volume decreased
Volume 169
&
COMMERCIAL
THE
Number 4778
gram. To my
Rural Electrification—
FINANCIAL
knowledge, this
CHRONICLE
pro¬
gram
is unique throughout the
world in its demonstration of how
government nationally and the
people locally can work together
to promote the economic welfare
of people and communities within
a
A Check to
Monopoly
(Continued from page 21)
member
of an REA cooperative
by choice rather than by happen¬
tions and monopolies.
was
decades
You
see,
before
REA
created, I had tried for years
to get the power company to build
couple of miles of line to
a
neighbors and
my
terested unless
build
the
them
over
The power
me.
officials
company
would
and
to
in¬
not
were
we
lines
serve
agree
then
their
to
turn
company.
When, in/1936, there was talk of
in
my
neighborhood, the
power * company people suddenly
changed their attitude and offered
REA
to
lines
put the
and, do
pense
in
it
their
at
ex¬
immediately.
said, "No, I will wait until I
get service through my own
operative."
I waited
,1 am very
made that decision.
I
can
co¬
couple of
that I
a
happy
years.
Together with
all of my neighbors, I am enjoy¬
ing reliable and adequate electric
service today.
We have no com-
plaint of
■
kind.
Every year
we
have an annual meeting at
which reports are made and poli¬
cies and plans are discussed. The
directors
ed
any
are
from
are
.
democratically elect¬
the
nominations
in
made
which
district
smaller
our
meetings. These directors are my
neighbors and friends.
They aire
capable,
conscientious
publicspirited
They have selected
who is courteous, effi¬
cient and interested in our commu¬
a
men.
manager
nity. I know these
always
men are
thinking and working in the in¬
terest of my neighbors and me.
I know, that none of the money
I pay for
for
electricity is being used
high-priced lobbyists, highpropaganda, fancy enter-,
pressure
tainment, retainer fees, and otherquestionable activities which are
completely unrelated to the
ice I
serv¬
I know that all money
needed for
legitimate oper¬
use.
not
ating
is
expenses
,
being
used
to
retire the indebtedness of my co-
I am being
contribution to
the capital of my cooperative un¬
der the capital credits plan adopt¬
ed by my cooperative.
I am pleased that my co-op is
operative.
credited
a
I
know
for
my
of-
purpose
that it is
National
a
Rural
Association
tive
fectively
and
represehting-
that level.: I am
member of the
Electric Coopera¬
at
interests
glad
which
so
ef¬
protecting
wisely
and
is
promoting the REA program
at the national level.
From
member of
am a
more
important reason for my
this program offers a most
way
effec¬
of preserving and pro¬
moting free enterprise and democ¬
racy.
As
proper
One
ment.
is
dictate
should
we
two
today
conflicting
the
have in the
divergent and
ideologies concerning
function of govern¬
know,
you
world
that
and
government
dominate the
citizens
■*—-in the interest of the State. The
lives and activities of all
other
is
that
the
and
true
function of government
only
is to pro¬
opportunity and protection
for its people—in the interest of
the
people.
We
liberty-loving
Americans hold to the latter con¬
vide
cept.
We know it is sound and
satisfying in practice as well as in
principle.
Under it we have en¬
joyed both liberty and prosperity.
But we must be ever alert if
we
to
are
preserve
and promote
democracy and free enterprise.
We
Americans look after the
political
well.
responsibilities
We
profit
a-few
of
is
it-in
the
of
name
the
free
enterprise. In 1939, 1/10 of 1%-of
all business firms employed 40%
of all wage and salaried workers
outside agriculture. I suspect this
exercise
economic
of
monopolistic
actually
owner¬
service and pay the .bills.
The
;
which
formula
REA
program
really
a
the
is
It is based on
farm people
are
one.
that
belief
the
made
successful
so
simple
capable
power
tions insure
efficiency. That is the
way
defenders 1 of big business
rationalize
the
absorption
and
elimination
of
until
Moreover,
monopolistic
conditions big corporations are in
a
position to dictate when and to
what extent the public may have
their services without being chal¬
under
lenged by competition. These
porations
have
hold
the
back
inventions
If
ends.
function of government to encour¬
instead
age,
tiative
and
tljiings
of suppress, the ini¬
desire of people to do
themselves/ through
for
*
they
there is a
is little
and more efficient methods.
usually
newer
of
voluntary organization and action,
the
field. provided such action is not in con¬
flict with the public welfare. The
monopoly there
formula itself merely provides for
incentive to try
competitors
completely
dominate
When
another
after
one
their
of
of
are
to
patents and
further
steps
troduce
cor¬
known
been
use
to
their
taken
in¬
to
their
fields,
does
big corporation? For all
tical purposes
does
told
are
pre¬
And neither
none.
the customer.
We
over
visory services
has
group
it
takes
needed until the
as
developed
its
enter¬
of
governmental assistance.
Curiously enough, while
I
was
organizing my thoughts for this
talk, I received a rather unusual
letter
from
Dr.
College. I
of
am
praisal of
M.
Illinois
sure
terested—as
big
Horace
Economics
of
I
the
monopoly that is big.
it has not produced the steel
need for national well being.
Yet
we
our
aluminum
haps
the
sorely need. Per¬
Wisconsin Electric Co¬
so
we
op-Reynolds plan is
breaking this
oly.
a
step toward
very type
of monop¬
•/
.
The telephone business is in the
hands of the biggest corporation of
all.
Yet
the
telephone
monopoly
has not given us farmers the kind
of
telephone service as far as
rates
coverage,
service
must
...
As
have
a
matter
often
power
quality
of
which
in this modern
promoting
too
and
concerned,
are
we
age.
Graduate
of
efficiency,
monopoly
it. The electric
failed
to
use
their
opportunity to provide rural
people with electric service. Not
only have they failed to take care
of the power needs of the Nation,
they have vigorously opposed the
efforts of the people to provide
adequate power for themselves.
Further concentration of
in
the
hands of
the
power
officials
of
a
few
big
corporations
must
be
stopped if we are to satisfy the
ever growing needs of our people,
and in order to protect our compet¬
pretty
itive free enterprise system, which
I consider in turn absolutely es¬
voting
sential
to
the
opinion, is more responsive to our
wishes than ever before.
ward
preservation
of
1 free
enterprise
One
acting
our
ap¬
from
v
v
;
.
in
New
York
head¬
organizations.
Until REA proved
this, I could never quite convince
my
students .that large, compli¬
cated,
expensive
organizations
were
been
of
to get electricity
unnecessary
distributed.
After
brought
up
them
eration
is
it
all
on
propanganda
vince
requires
to
they have
steady diet
a
designed to
that
con¬
large-scale
always
onstration
more
op¬
efficient,
is
what
Economics
Illinois
too
Far
at
wrote
them
loose
perhaps, completely.
REA
]
Another in¬
teresting application lies in the de¬
Cobalt <30 shows
cancer.
considerable
promise
as
and
plentiful substitute
um
in
the
types.
are
How
radioisotopes in medicine
under
study.
The Atomic Energy Commission
claims that the atom
revolution
a
tests
in
farming."
showing the way
yields and cut costs.
Tracers are employed to study the
process by which plants turn the
are
crease
crop
carbon
dioxide
and
sugars
methods
entists
time
Fertilizing
being improved and
if
been
to
we
REA ap¬
work is
contrast
REA
cooperatives
which
records
established
have
in
by your
so
short a
extended
an
es¬
sential service to millions of rural
people who otherwise might
received
it.
standards for
You
have
where
as
early as three
after construction starts.
The Commission is
scheduling
certain
diseases
ani¬
of
plants worked out. Sci¬
assert
when
they
the
see
can,
synthetic
some
power
1960.
foods
possibly be made in factories
instead of by plants and animals.
may
plants
and
Hiroshima,
that
atomic
the
unprotected
is
feels
highly
case
Actu¬
exposure.
are
materials
than
be
may
coal,,
suppying
is
vantage
about
the
cation.
expensive
more
hydroelectric
than
One
ad¬
costs
are
power.
that
fuel
.
regardless of lo¬
same,
Hence
its greatest impor¬
tance could,lie in areas where fuel
is
relatively
such
scarce,
-
,r ;
\\
Although
J
The ores of uranium and thor¬
atomic power may take- years to- develop, its future
possibilities cannot be ignored. - A
ium
the
are
which
from
only
the
obtained.
fuel
is
energy
the
In
iftaterials
raw
nuclear
quired for atomic
words
activities
of
the
Energy Commission: "All
manifold
applications of atomic
energy depend
on
uranium and
thorium
rials."'
primary
as
Since
duction
mate*
raw
United
States
pro¬
is
small, we arelargely dependent for these
still
ores
other
exploration, however, is
As knowledge r of
atomic
matters
increases,
lowgrade ores will probably be de-r
veloped and new materials dis¬
covered.
Graphite is an import
tant item.
Large blocks of this
way.
material
greater
mium
no
are
than those given off from the
used
are
in
Beryllium is
the
"atomic
good "mod¬
a
minous
watch
You
never
have
quality of
made
a
officials
set
serv¬
financial
of
power
monopolies said success was im¬
power into fewer and fewer hands possible.
You have kept the own¬
is exemplified by the REA pro¬ ership and control of your organ¬
also
excellent
this
for
ordinary wrist
the small luminous but¬
erated in the fission process. Alu-
dial
or
is
purpose./. Liquid Bismuth is used
to cool the tremendous heat gen¬
of
an
tons
sometimes
attached
ends
of
light
electric
to
lu¬
the
chains for
mium, lead, zinc and
expected to become
for various
tant
location in the dark.
The Atomic Energy
Commission
discharge of
have
may
some
copper
are
impor¬
more
Potassium
uses.
possibilities
as
future fissionable material.
a
/
radioactive wastes into the Clinch
Stocks for Purchase
River from the great
Oak Ridge,
Tennessee, plants creates less ra¬
dioactivity in the river than exists
in many
mineral waters which
are
bottled and sold
Radioactive
used
on
beneficial.
materials 'cannot
many consumer
in which
ful.
as
In
they could
industrial
prove
and
be
products,
harm¬
medical
procedures,
however, the danger
comes largely from ill-advised ex¬
posure
by
people
ignorant
of
proper
protection
methods.
not
considered
as
extcushc
The
are
as
cial
po\ver,
even
The
the
government
is
fostering
development of atomic enter¬
prises,
providing
support
with
government contracts. A healthy,
flourishing and efficient industry
is essential for defense.
As
a
re¬
increasing number of
companies, large and small, are
rapidly
acquiring
the
atomic
sult,
an
"know-how" which will form the
basis for the profitable and farreaching developments of the fu¬
ture.
Some of the government's
leading contractors, for example,
will
in limited instal¬
unquestionably
attain
lead¬
ership in the atomic field. Lead¬
ership which will extend far be¬
yond the boundaries of the United
States.
The most immediate
lations, is not imminent. But the
importance of atomic energy to
sibilities
the future of the electrical indus¬
stocks
appear
of
the
to
profit
lie in
smaller
pos¬
the
concerns
atomic
materials
to
contractors and de¬
products and appli¬
"The use of nuclear energy as a cations.
We are conducting an
intensive
source of power is recognized as a
survey
to
ascertain
possibility which may profoundly, which issues provide the best and
affect
many
lines of
electrical most profitable opportunities. The
equipment in the years ahead. "atomic stocks" with the greatest
Westinghouse now has an atomic- future profit possibilities. Many
are
involved,
including
division, concentrating solely on fields
the harnessing of nuclear energy chemicals,
mining,
electrical
for
the
production
of
useful equipment, tracer chemistry, new
recently emphasized by
Gwilym Price, President of
Westingnouse Electric, who said:
supplying
power." General Electric, the gov¬
instruments
ernment's
atomic
con¬
tractor, will operate a new experi¬
various
mental
plants.
Our
completed.
try
was
Mr.
County,
largest
power
N.
station in
Y., for the
Saratoga
Commis¬
;
re-'
than
many
]
now
erator," a moderator being a sub¬
For
they are no more dangerous stance used for slowing down the
speed of neutrons. Control of the
ordinary poison and highvoltage electricity, both of which atomic reaction is obtained by in¬
have to be handled properly. The serting strips of neutron-absorb^
radiations emitted in the course of ing materials in the piles.
Cad¬
personnel.
•
Atomic
pile."
by
.
the:;
as
Balkans and Western Russia.
trained
example,
it
is
properly
"
20% to 25% of the country's pow-"Y
er needs.
It could prove cheaper' 7
under
public
radioactive
handled
energy
mestic
ally, however, health hazards
when
following
that by 1970 (they say),
so
publicity
dangerous. This is true in the
of
the
it contemplates additional
atomic
Nagasaki
radiation
a
lands, principally the
Belgian Congo and Canada.
Do¬
Hazards
Probably due to the
given the bombing of
produce
plant sometime around
Throughout
10 years
on
Health
to
program
commercial
;
time to perfect. Likewise commer¬
the
the
have
have
into
of
made
apparent
You
air
the
starches.
are
for
of
day.
other
utility industry's long record
time.
New
to in¬
Propulsion of .warships and air¬
craft, now under study, will take
the
effectively
of failure with
"set off
can
University
the
me
be
certain
of
people seem to be
aware
of what
the
can
for radi¬
of
Numerous other beneficial
for
uses
treatment
cheap
a
Professor
is demonstrating in
practice.
proach
readily
the
the
program
actual
or
generally believed.
few
adequately
thyroid
clear cut dem-' hazards to informed personnel
a
shake
from this conviction."
That
of
destroy the tumor partially
tection of
The plant is expected to be
operation
said
the
sociated with large private utility
success
economic
treatment
states that the entire
this
of
sion.
its
under-
are
through the body.
This
pick up sufficient radioiodine
may
to
small
aspect of the REA
one
experts,
ice.
concentration
the
easy
new
way of counter
dangerous trend to¬
study
common
including the type which
tions
effective
-
opportunity and prosperity with¬
out
sacrificing liberty and de¬
mocracy.
years
billion-dollar corporations, expen¬
sive
legal counsel, public rela¬
stifles
monopolies
the
spreads
are
his
I quote:
"Aside
and
of fact, instead
way-in
cancer,
will be in¬
—
sheer physical
corporations to fill our needs for feat of making electricity avail¬
and services, usually the able
to
rural
people,
I
have
basic goods and services. We are
always
felt
that
the
greatest
told to wait—that everything will social
contribution
of REA was
be provided in proper time and in the demonstration that the distri¬
the quantities needed. Let us ex¬ bution of
electricity is, after all,
amine that theory in the light of a rather
simple undertaking which
the present situation—in the light people can manage
cooperatively
of our own experience.
for themselves without benefit of
a
including
Medicine and Agriculture
in
you
was
Gray,
at
goods
Steel is
manner.
all, you .have demon¬
strated that it is possible to
have
Energy and Investments
Significant advances
prise and has learned to operate
it effectively without further need
program.
that
re¬
sources of a given group of people
with loan funds and technical ad¬
University
control
open,
chemicals.
mals and
stockholders.
What
an
of toxic effect of certain
cures
Professor
the average stockholder have
the
to
forthright and efficient
;»-Above
(Continued from page 11)
limited financial and technical
corporation officials weep
bitterly about the interests of their
the
business in-
undertaken,
the government to supplement the
own
competition '.into
privileges. We debate political is¬
sues in and out of our legislative
halls.
Our
government,
in my
our
of
cencerns
working together ef¬
may be even greater today when fectively in their joint interest and
that they assume obligations with
200 corporations own 55%
of all
of the assets of all the non-finan¬ an adequate sense of responsibil¬
cial corporations of the country,;] ; ity. It grows out of the philosophy
in a democrary, it is the
We are.'told that big corpora¬ that,
concentration
your
Atomic
private
ship and control back to the grass
roots, back to the people who use
democracy.
However,
huge
by
or
leads to decentralization of
is stifling free enterprise in
fields today and, ironically,
doing
State,
elaborate impedimenta that are as¬
being proud to be identified with
the REA program. 1 believe that
tive
many
responsive
your
more cen¬
the
big corporations. That increase in
power
about
mem¬
made
of the people dependent
for service. You have gone
you
control by
REA coopera¬
However, there is a broader
tive.
and
an
officials
making for greater and
tralized ownership and
Aluminum is a
monoply that is quarters, holding companies, util¬
big. Yet it "is not giving us the ity commissions, and all the other
very
am
have
self-interest
glad that I
purely,
a
standpoint I
tendencies, this program
my
member of the State Association
for'the
hands
We
of. the
welfare
on
For several ;'i The REA Act contemplates no
or
operation
by the
about ownership
passed
anti-trust legislation. We have set
up
regulatory bodies. We have
sought remedies
in our
courts.
These are all proper and in the
interest of our people. Yet they
have failed to halt the alarming
concentration of
power into the
problem.
have
You
organizations
terprise system.
government. It is clearly designed
to aid the people locally to own,
operate and control the electric
systems serving them. Instead of
this
bers.
worried
have
we
izations in the hands of the
33
the framework of the private en¬
system is being jeopardized a little
more all the time by big corpora¬
stance.
(785)'
government
veloping
erection
new
for
industry
products needed
and
and the
for
the
operation of atomic
study
will
soon
be
'
34
THE
,(786)
COMMERCIAL
FINANCIAL
&
CHRONICLE
Thursday, February 17, 1949 "
for
Business
to weeks—still in units
ing the inevitable crucial testing
period as our price level continues
to
adjust itself to the postwar
plateau.' While there is rlo indica¬
tion of any immediate drastic ad¬
justment, there are positive'signs
of a rapid return to real competi¬
stocks to postpone their opinion,!'coincidental.
Action
promised performance. Later of the' public?, however, on
the time period was stretched such' news, is another thing.
Tomorrow's
Markets
$
Walter
Whyte
For
months
of
it
By WALTER WHYTE=
=
few
past
showing up
Important thing
stretched
months.
clude
again
now
was
I
in¬
to
realize
this
kind of
reasoning can be car¬
potentials.
ried to absurdity. If it is ap¬
now is the recent low rather
plied, to days, later to weeks
than how strong they cart be and now
months, why can't it
from here on.
apply equally well to years,
or centuries, or aeons?
I can't
Whether or not the stock
market
stand
can
watch
aside
and
the
If there is
heavy public in¬
a
unfavorable
and
terest
sj:
the
signs appeared that the unit
ten still obtained, though
Says—
Market
of ten.
news
the reaction iS likely
be sharp. If there is gdod
occurs,
to
the
and
public is in, a
rally is likely to be equally
sharp: But the profits aren't
news
made
the
on
news
splurges.
in
to be enter¬
appears
business.
time
The
is
at
hand when companies with weak,
inefficient management and un¬
sound
financial policies
will find
Quality of
management in this era will be of
it
difficult to survive.
It is in between those
paramount consideration in judg¬
that the so-called
ing bank credit.
Business must
promptly get its house in order,
and small business,
particularly,
should heed these impending sig¬
nals and plan accordingly while
there may be time.
and
periods
good buying
good selling
i-fi
occurs.
t\i
•
t-
Cooper Bessemer is the only
stock you still hold, the others
I'm merely
not an ex¬ have been stopped.
So long
argue the point.
an
observer and
tion
now
various stocks.
ities
accompanies
rally.
§1 *// *
*
particularly
business
logic and the stock
ket
have
in
possible reason
markets
anticipate'
flection there is
is thaf
rather
comes
re¬
from
a
public which is constantly in
a
state of alarm.
;
:;•«
t-
One
of seeing if the
was due to
pub¬
lic selling is if any subsequent
rally from * here will hold be¬
yond normal retracing levels.
A
normal
rally from here
should carry the averages "to
way
recent break
about
176-177.
On
any
new
to go as
those
of
the
Chronicle. ; They aire presented) as
those of the author only.]
(Continued from
down:
will
until
the
probably
be
delayed
Department
is
wholly manned by civilians in¬
stead of the military.
(2) Domestic business fears—the
CIO will push for a 50% tax on
capital gains and punitive taxation
against unreasonable business
profits;
(3) Domestic political fears —
State
13)
page
concerns, would
to consider the
Federal
This
take.
deplorable fact indicates that most
investors
jUst'
for
along
go
the
ride.
I daresay as this New Yeaf com¬
new
mences, a" lot of foolish people
have again balanced stock market
the coattails of the AFL losses against1 gains so that the net
and CIO political action groups.
result is a stand-off.
As always
(4) Historical fears — that the a lot of others will continue to be
stock
market measured
by the confused by investment counsel¬
Dow-Jones Industrial averages is lors who can produce statistics by
too high in relation to its 1942 the mile and hopeful gUesses from
crop
of Senators who rode to vic¬
tory
on
lows.
those multi-colored lines
will
It
be
these
fears
on
elab¬
orate charts.
Believe it
or
world1
the recent
continue
this
and
whispering
rumors will again as¬
sume as importance which will be
difficult to minimize.
As always,
the stock market will probably
which,
exaggerated by the press
radio, could provide capital
will
last,
as
to
low as that would be
a favorable
sign.
edge
to act plus the knowl¬
discern values based on
to
careful research and analysis.
Al¬
stocks
;
be
A refusal opportunities for those who have
gallery and
the courage
not, the
year
a
move
in the direction least ex¬
remember, common
Going still deeper into the' provide no hedge against the re¬ pected. As it does, the financial
duced
purchasing power of the writers will grow glum and write
technical picture of the mar¬
dollar unless you multiple those
resentfully of those idle conditions
ket, iL might be pointed out dollars. In other words, you sim¬
that stocks (and markets) fre¬ ply don't carry Transcontinental imposed' when the mafket pauses
and Western Airlines from 18 to to regain its breath, whether its
quently move in cycles of ten. 71 and
still own it when it reaches direction be downward or upward;
This figure "ten" refers to
ways
days, weeks and months. Time
and agairt a; stock action"1 will
Then
some¬
thing. happens and the
move:
doesn't materialize.
days later it
confirms
its
A
Then ten
and
comes out
previous action.
In the old days- when a
heavy public attracted1 hy thin
margins, was' in the market,
ten days was the uSual period
Pacific Coast
prewar
There Is
I
Pacific
Coast
v.
■
'l
••
our
times
,*■
Members
New
New
San
New York 5,
COrtlandt 7-4150
Private Wires
San
perspective
to
analyzing loans
and extending credit.
I
am
sur^ that
climate
there
that
the
outside of the
can
be
no
"economic
N. Y.
and
what1
we
can
not
or
we
deter¬
by
in balance.
If
strong and work
economy
remain
problems, war can be pre¬
vented. If we fail to do so, serious
out our
in
weaknesses
result
and
our
we
may
vital factor in the extension
credit, and is another way of
expressing
the
importance
of
avail
oe
The
a
be
our
"ismS."
is
whether
may
what Russia does,
Military does, but
do in America to main¬
not
mined
nor
of
question
war
prey for
bank"
of
to
economy
then be easy
It will be of no
militarily strong
economically
may
but
Principal Offices
Francisco—Santa Barbara
Fresno1
In
normal
times, 90%
of
business is transacted through the
use
of
credit
instruments.
Ob¬
of
the
■
Keep in
liquid position.
of having a
cash reserve for the present, if
you are
fortunate enough to be
Economy Is Basically
Basically,
country
to
be
can
a
assured
volume
or
duced
on
present
your
further
a
volume.
point
possible
Reduce
to
lowest
re¬
break¬
practical
minimum.
andM
a
economic life.
Lack
of
■/
Business
Knowledge
Lack of business
knowledge on
part of management has been-1
the
attributed to
business
more
than 90% of1all
.
failures.
Representing
our
profession, we have a great
responsibility for these failures,
and we should do a better job.
More
-•
and
•
r
;
.
emphasis should
more
be placed by the bankers on
constructive advice to his
;
good,
,
cus-
•
tomers, and the insistence that his i
follow
customers
sound
business
principles to avoid these pitfalls'.
The
establishment
of'
the
'
Pa¬
cific Coast Banking School, at the
University of Washington at Seat- *
tie, and the support of that in- »'
stitution by all of the State bank- *
erss associations of the west, is art A;-
indication that banking,, as
profession, has recognized these <
problems- and is going to do' its ;
part'in their solution.
other
.
a
-If there
were one
with
leave
to
also
you
"financial
you,
single thought
it' would be
business,
•
-
the role of
assume
Our
doctor."
"body,"
this1 professional
needs
talent very badly. Let us be frank
in
telling our client that he is: '
treading'
go over
on
thin financial ice—
his statement with him—
'
'
poirit out the weaknesses and the
•
risks'
-
his
being
assumed
unbalanced
tion.
because
financial
of
condi¬
If he needs permanent cap-
*
ital, explain why he needs it artd
why he should determine to get it
'
•
rather' than
taking- the precarious 1
depending on his short- •
road' of1
creditors to furnish it. Make
term
him
conscious
of financial plartning and the danger of drifting on
'
_
uncharted sea:
(6) Inflationary, statistics are
misleading. Translate them into
units of goods rather than dol¬
an
and' the
wage
lars.
tend
become
War
causes
to
high prices always; *
advances of labor •
frozen
into
'
our
v
(7) Analyze your sales program" economy and- result in constantly
with emphasis.
higher prices: Labop is so strongthat'wages cannot'fte reduced irl :
A "Shake-out" Starting
proper proportion/in a
decline; k
Until the "shake-out" is com¬ hence, when the time comes busi- [
ness will be compelled' to absorb
pleted, and it certainly appears to
mOst of these increased labor costs^ '
be starting now after many false
starts,' clearly " a
credit
policy
out' of its
should
cannot do
lose
be
of caution.
one
little income
a
Better
than
lot of
a
Let
that all of us in the
banking business have a tremen¬
dous opportunity and a vast re¬
sponsibility with' respect to our
me
say
the
and
economy
growth
Southern California-
the"
business
banks in
so-called
"small
the
Most of
area.
customers
Southern
of
of
the
California
business."
are
In
is
"small
business"
with
It is
profits, and if it '
;
it will be in trouble:
hear
we
much1 pbOut1 '
so
these days
is constantly- assuming
greater importance.
Some
even
falling off of the'volume of busi¬
ness- is
inevitable, and
busihesls'
a
mUst be able to reduce costfe
to
a
have
more
a
so
as"
profitable operation ori
reduced volume. The lower the
a
break-evert
point,
sound
credit,
event
of
is
the
therefore,
the business, from
point- of vieW, in the'
drop in sales volume.
a
Study Causes of Business Ills-
20
As:
very-
a
grossso
This is the reason the break-evert' 1
point
capital.
is
the
economy
sound—we
eliminate
the
ness
previously stated;, ak bank- •
es^we mUsf giy^rcbrtSid
;
growth see-'
is true in any growth1 thought and constant-study to the •
cause of business ills;
as well ak
the risks of doing busi¬
much greater, and this is more study to the remedies fdrt *
"are
Sound
of the
ohly have
maladjustments.
ills.
certainly true in the banking busi¬
such
ness.^ Our
eastern
doctors—not undertakers.
throw
their' hands
up
when-they
thaf
Southern
of
see
banker
by
friends
in
the
California
banks
as;
a
in
matter
day-to-day activity. Such ac¬
and thinking on the part of
tion
bankers
here
has, in
consider¬
a
able
measure, accounted for
rapid progress of business.
Business is
the
hard, competitive
struggle, and the yearly mortal¬
ity is high. Nearly as many busi¬
a
discontinue
nesses
start up.
each
year
as'
Obviously, most of these
businesses started on
hope and
ambition, with a dreadful lack of
knowledge and know-how. That
is why nearly a third of these new
failed
concerns
another
in
the
Some
horror
Of the loans
some
made
are
but
We
must
be
losses must
they
be
should' be
in
business ;
expected, *
relation
.
and' in
proper proportion to lbdil!
activity.
A loan officer is not !
fully qualified tb make loans urt- '
til
he is thoroughly experienced '
collecting them and, more especially,
able
to
analyze
the "
troubles and cure the patient.
If "
is very simple, when a customer
gets into difficulty, to deliver the ;
"coup de grace" and liquidate ther'
business realizing whatever may
come
therefrom, absorbing: the
lbss, and' being content to salve *
in
your conscience with the old
mide
"the first
est."
Some
loss
is
bankers,
the
for
bro^/
small-
lack
'
of
first
courage,
or
year;
possibly/lack
ofin the sec¬ knowledge,
consistently
follow
high as 70% are. that practice. It takes courage to
by the end of five bolster a business—to make new '
14%
15%
or
ond year; and as
usually
gone
These
years.
are
figures
a
bank
loan officer must ponder.
nomic
,
loans.
rea¬
Get used to the idea
Apart
weak.
Teletype NY 1-928
to
Monterey—Oakland-—Sacramento
x
in
very
Chicago Board of Trade
rough
can
you
"timing" in the extension of bank
Exchange (Associate)
Francism Stock Exchange
14 Wall Street
comes
question but
York Stock Exchange
York Curb
eco¬
be sure that
your bank will develop its share
of loan' problems
and, I might
stormy,
have
economy does not remain
considered
when it
Schwabacher & Co.
outside
is
climate
nomic
The
Authority
plant
in
recovery
;//;>/:
section;
the
when
viously,
stable, and that the effect of these what we
violent changes must be at all
tain our
Exchanges
'
1'
Stable
no
repeat, the point of all this is
that
on
a
problems
go
tion and, as
possibility that retail prices will mention, losses.
fall to the days of 1936-1937, or
•Now is" thd time to get your
1938, etc.; are our taxes, either house in order. The time to be art
real estate or
personal, apt to di¬ optimist is in a depression; the
minish greatly over the next sev¬ time to be a
pessimist is in a
eral years; what can
reasonably boom;
Again; let me emphasize
be the trend of purchasing power
that timing is a most important
of the dollar, etc.
factor in credit.
Securities
Orders Executed
days; whether there is
such
result
employees or less?
fast-moving,> .virile
(Continued from page 13)
Applying these factors in our
reasoning, we can glean a ray of
light on the questions of whether
real estate prices will go down to
(4)
will
as
quick
'
cost.
here
Dynamic
the
will
Icing waytoward improving this bldt on ourJ
that
(3)* Consider only
thr -Lbs? Angeles- area, small en¬
terprise has flourished.
Do you
realize that 72% of the business
Loan Problems in
move
a
be antici¬
can
pated.
even
these will emanate from the
aver¬
considered
forecast
increased failures
as
12; the present quotation; You can
Federal Government able to accumulate
one.
25% on long-term capital gains,
r (5)
Be -sure all war extrava¬
yef tax collections on speculative
gances"
have
been
eliminated.
profits ate still a very minUte/part Costs should be reduced so
profit
of the annual
still pay the
when
break, or set-back, the
ages should hold at
lows at the outside.
with
sonably
mar¬
What
news.
my
coincide
Current Stock Market Prospects
common.
One
reflect
in
is,
time
expansion
Experience, however, shows
than
this
that
'
that
little
news
The
into
.
Management,
smaller
gyrations of the
as
this one doesn't break its be well advised
ponent of any new rules.
commodity markets without
following vital points in planning
critical price of 25, hold it.
for the immediate future:
further
being affected re¬
More next Thursday.
(1) Check your inventories. Be
mains to be seen. Last week
Nevertheless, the market is
sure they are not over-valued and
—Walter Whyte
stocks sank rapidly on* what now getting to a ten-month
are
moving out; avoid specula¬
[The views expressed in this tion.
was attributed to a commod¬ point
and is recognizing it
article do not necessarily at any
(2) Watch credits more closely
in
ity break. Logically, therefor, through positive action
stocks should rise if commod¬
research
ramifications
the
from
waste
tragedy
nancial
our
is
an
matters.
eco¬
agement
by
propping
up
'
weak
heartaches, and' points
by
business
collective
ness-
terrific;
caused
and
certainly
the
and
advances—and to step in and alle¬
viate the shortcomings of mail-
such
and,
failures', it
loan
indictment'
upon
intelligence'in-busi¬
Endless
in the business structure
in many'cases, increase the'
until'-the turning point or
drisis may be
reached and the '
fi¬
study and:
business
more,
restored
to' health
incidentally,
a
once
business
'
Volume
169
cannot go
Number
its
customer
of
the
instances
businesses,
Many
where
such
other
no
f
it
bank
successfully solicit the
business because help
when
>
are
firms
nationally-known
and
ever
—
benefit¬
better future
a
bank.
have grown into
could
experience
management
ing and becoming
the
THE
through this crucible—
tjhis soul-searching
without
4778
given
was
sorely needed.
was
All businesses
cannot
be
saved
and, indeed,, should not be.
The
elimination of many is socially
useful, and
competitive society
sloughing off some of
by
grows
the weak
either,
a
sisters.
that
money
is
make
in
the
a
It is not
all
meant,
cases", more
prime requirement to
business
a
is, certainly, great danger
thinking so. In too many in¬
stances, too much money has been
in
it has aggravated the
problem by enabling the business
to expand and spread out far be¬
yond any reasonable proportions.
Many times the problem is
■
not
must
careful
very
of
absurd that there should be
loan
officers
attending
who
would
some
risk
not
creditors meeting for
fear
of
the
legal consequences.
However, it is certainly not sug¬
a
gested that you step in where an¬
gels fear to tread. If you have the
knowledge, and know what you
are
doing, you will know just how
whatever
practical
be.
risks there may
legal
The path of a loan officer is not
an
one—he must make vital
easy
decisions,
hoping that they may
to be right.
You need not
reminded, as bankers, what
happens if your batting average in
the matter of your judgment turns
prove
be
out
too low.
one
Our economy needs more broad-
deficiency.
What
is needed, in most instances, is for
gauged management and bankers
of management
who
—men
by the enforcement by the
an intelligent and
pre¬
arranged plan of procedure. The
greatest opportunity in the banking business lies in this particular
field
concerns
eured
banker of
of
.constructive
credit.
In
this type of work: a
>
temperament,
philosophy, and technique are re¬
quired unlike general credit. It
requires a profound study and a
technical and practical knowledge
of
the
fundamental
factors
of
business,
but
worth any
make to so
the
is
end
well
effort that one
qualify himself.
Bankers'
chart
dangers
and
deavor
the
weaknesses
correct
to
for
need
and
sell
forecasts
and
financial
planning and other
agerial functions if needed.
If
continue
we
things, then,
real
a
man¬
liberal
a
lending pol¬
the Reserve
Banks.
credit,
importance of arming it at
all
times with the authority to
deal with changing economic con¬
ditions, and of its record, particu¬
larly in maintaining an orderly
market for government securities
in which all classes of our
people
have
such, great
interest.
I
have
the
part
the
Reserve
on
of
Banks
have
authority to make so-called Sec¬
tion 13b loans for
working capital
to business and industry
purposes
when
other
35
credit
is
unavailable
needs of business and finance.
work
we
contribution
will
to
our
of life by saving what other¬
wise might be financial wrecks, on
way
for
stabilized
a
and that in doing
omy,
the
serve
must
so we
dustry, agriculture, and
commerce
and
not
any
particular groups. This pur¬
is fully in accord with the
pose
the
limited
interests
of
similarily
in
ability
sition
functions
Report,
the
previous occasions
be
monetary
their
that
I
position to
a
traditional
carry
function
erting effective restraint
of
out
ex¬
upon ex¬
cessive credit expansion
in an
inflationary period and conversely
of easing credit conditions in a
time of deflationary pressures, The
temporary authority to increase
requirements
reserve
of
lems
of
the
down¬
possible
will be in
we
up¬
better po¬
a
to perform at all times the
that
the
are
of
primary
monetary
au¬
of
member
Federal
Reasons for Credit
As
bank
of 1948. Also there
was
cessation
almost
an
late
in
the
of sales of government bonds
year
to the Federal Reserve
System by
nonbank investors to obtain funds
for other uses, a factor that had
previously been an important in¬
flationary influence. Taking the
a
whole, there was a
decline, amounting to a bil¬
lion dollars, in the total volume
year
as
small
of bank deposits last
year, due to
the Federal Government
surplus
early in the
part
President
the
of
and the
year
that
surplus
of
use
to
retire
refers?
I
shall not
time to go over familiar
ground which has been well cov¬
ered
by other witnesses before
this Committee, but I should like
to summarize, as we see it, the
situation
which
protective
measures.
War finance
Reserve
30,
of
calls
for
theSe
liquid
It
is
assets—bank
deposits,
and government securi¬
possible, but it is by no
certain, that postwar infla¬
means
tion
has
its
run
additional
for
be
sure
are
that
no
one
can
inflationary dangers
rather
over
anti-in-
not have to
applied. However,
be
that
and
course
restraints
flation purposes will
than
merely in¬
terrupted. We have had a number
of readjustments since the end
the
resulted in
a huge
expansion in the amount
currency,
expiration of this
further action
Further Inflation Uncertain
take your
and rapid
The
Curbs
Why is it necessary to ask Con¬
gress at this time for the mone¬
tary and credit measures to which
System, granted by the Congress
last August, will expire on June
1949.
authority
the
on
further
a
responsibility
have
adequate
provided in order that
authorities may at all
times be in
of demands have
urgency
evident, however, in the
housing and of many dur¬
able goods, now that the more
pressing
shortages
have
been
of
bank-held securities.
recommended
means
to
abatement
some
been
case
complete
thorities.
President said:
"On
the
swing in order to emphasize and
make clear why we say that if we
are
equipped with the proposed
authority to deal with the prob¬
swing,
Economic
market
with
to the
problems
and
his
regulations
stock
System's
effectively with
deal
to
credit
imum
In
and
accordance
have referred
I
objectives of the Employment Act
of 1946, namely, to promote max¬
production, employment
purchasing power.
adjust
instalment
on
credit
econ¬
broader interests of in¬
the
for credit, the increase in
loans, which had been very
large in previous years, slackened
considerably in the last quarter
that
to
in
housing have
Resistance
overcome.
a
would lower reserve requirements
tions
objective
large.
in
And, of course,
downswing the Reserve Board
emphasized and re-emphasized to
various groups who have
been
subject to the System's regula¬
primary
continued
to the borrowers.
and
our
and builders for new
high, prices and
Also
of the
banks
these
do
to
bankers,
as
en¬
them—to
cash
of
surance
icy
with
course
regard to the then existing eco¬
nomic climate—to point out the
may
Responsibilities
their
page 3)
eral Reserve in the field of
.
make
1
(Continued from
ciation of the actions of the Fed¬
look
beyond the fig¬
ures and try to
develop successful
enterprises by sound counsel and
advice on the ever-changing busi¬
ness perspective^
Some business
management is grossly inadequate
when faced with changing prob¬
lems.
It is our job to help these
bank to allow time for payment
until
the
weaknesses
may
be
a
(787)
is
far you can and must go to protect
the bank's position and its loan,
taking
CHRONICLE
be
con¬
these
legal conse¬
On the other hand, it is
quences.
FINANCIAL
responsibility
instances, legal lia¬
without
sideration
&
some
and, in some
bility, and moves
made
success.
_
There
loaned and
banker entails
COMMERCIAL
the
as
Each
war.
Each
end
was
of
of
hailed by some
was
the postwar boom.
succeeded, in turn, by
inflationary spiral.
so
vividly the strong
renewal of the
I
bankers,
know that ag¬
gressive and positive action by the
we
recall
the
sea
of business.
statements made to
Congress would automat¬
ically release a substantial volume
pansion represented the
of
As
ties—held by the public. This ex¬
cial and business leaders
just be¬
fore I took office last
spring that
and
of
the
bank
credit
Problems of Air
(Continued from
forced others to do the
The
.
same.
non-certificated
carriers
entered
scheduled
•field
illegally and continue ille¬
gally. It is an accepted fact that
.unit costs on long-haul flights are
way
below those on short-haul
flights.
for
Not having responsibility
network
a
riers
of
lines these
only
operate
the
car¬
long-haul
confine their operations to
and
dozen
or
have
no
a
fewer major cities. They
obligation
to
operate
when the load is not
satisfactory.
Nor do
they
quirements
safety. reapproaching
of
those
have
even
certificated
the
carriers
safety record shows it.
Dispatchers
are
not
required.
They are not required to show
financial strength to insure safe
operations. They are not required
show
•to
that
there
are
proper
for
There is
pilots
check
instruction.
ment
for
.-
requirement
periodic pilot
There is no require¬
no
the
of
dozens
■are
pilots
are
not
other
of
similar
in¬
Certificated airlines op¬
ments of the non-certificated
car-
jiers would eliminate millions of
dollars of
mean
and thus offer
expense
But that would
much lower rates.
the
end
of the
indus¬
try. 7It has been estimated that if
i the
safety
'
of
record
carriers
cated
was
the
certifi¬
comparable to
that of these carriers there would
have
ger
been
thousands
of
passen¬
and crew facilities during the
last three years.
*
The general
of these
but
,
V
:
J
;
aware
things and well-meaning
.
the
"frills"
transportation.
It
mystery and there
to be a single logi¬
why they should be
to
operate
scheduled
no
reason
permitted
service
Sometimes
to
day longer under
the standards now permitted. The
Board
has
belatedly
started
a
even
one
toward
move
more
strict law
en¬
'7
people
7
:
wonder
7,7.
■
.7
System to require
hold supplemental re¬
banks
to
serves
up
the
to
limit
efforts
of
airlines
to
aggressively their product and
the continued
emphasis on cost
reductions would do much to ad¬
Board of Governors should not be
confined to member banks of the
Federal
Reserve
System
but
should be applicable to all banks
insured
by the Federal
Insurance Corporation.
the day when the industry
whole is in sound condition.
influence
;
meantime, if the investor is
selective in his buying, there
at
7
.
/
complete
soon
its postwar transition period.
Be¬
sides our improved
competitive
position due to the new equip¬
ment, many special and non-re¬
curring expenses are behind us.
-Elimination
of
the
planes has permitted
obsolete
the closing
of the New York engine overhaul
shop,
as
overhaul
transition
well
as
shop.
the
Ft.
Worth
Completion
training
has
of
enabled
the closing of the Ardmore train¬
ing
facility.
Retirement
DC-4 has reduced
this time
of
the
sharply the de¬
preciation charges. These unusual
alone accounted for
January traffic
portunity
seems
for
good,
was
profit
at
present.
in
sev¬
good.
Op¬
for
1949
•.
that
the
the
commodity markets
early 1948 was the beginning
the long
anticipated recession.
curities,
which
se¬
be readily
converted into money, increased
from about $20 billion dollars to
$130 billion dollars.
The expan¬
the
can
sion
in
more
than three and
combined
Today,
physical
a
total
of all
of
pro¬
goods and services,
including output of farms, mines,
factories
and
and
various
other
activities, so far as such a total
can
be measured, is only about
half again as large as in the maxi¬
mum
prewar year.
as
measures
are
a
form
proposed
of
insur¬
of
the
business
be
mejnber
reassuring
very
banks
cycle.
and
the
to
It
to
entire
banking community to recall that
Reserve
System is far better
than ever before to
now
combat
deflationary
forces.
Through open market operations,
that is, by purchase of govern¬
ment securities, the System has
virtually unlimited means of sup¬
plying the money market with
additional
if the
reserves,
tion
should
The
Reserve
call
for
such
Banks
situa¬
action.
have
about
$23 billion of gold certificate
serves,
only half of which
needed
at
re¬
are
this time to meet gold
reserve
requirement.
Accord¬
ingly, the System could more than
double its note and deposit lia¬
bilities.
Furthermore, the Bank¬
ing Act of 1935, by freeing Re¬
Banks
technical
from
some
limitations
of
on
the
their
lending functions, placed the Re¬
serve Banks in a position to lend
to
member
that
the
banks
<
;
any
Reserve Banks
ing to accept
vances.
on
are
assets
will¬
security for ad¬
This is an important asIVj7V '-7
■
t
"'-V.
as
•
flation.
items
of
measured
Bureau
by
75%
still
are
dollar
consequence
Consumers' prices for all
as
the
rose
a
money
above
close
value
by the indexes
of Labor
to
of
that
the
Statistics
and
prewar
The
peak.
annual
gross
national product, as shown on the
chart
has
increased
from
about
$100 billion dollars in 1940 to an
annual rate of over $260 billion
dollars in the last quarter of 1948,
expansion of
an
half times.
over
two and
a
The
existing and po¬
money supply could still
generate strong inflationary pres¬
tential
sures.
■
i
will
recall
In view
the
of the
outlook
temptation
that
that there
a
uncertainties in
at
is
this
time,
strong
to
the
assume
inflationary forces have
dissipated. This
an
was
feeling in the spring of
7777:;--7
7 777777
1947.
may
unwarranted
prove
been
to
be
assumption.
enlarged defense
The needs for
is
half times.
volume
You
Non-
of an
supply relative
to production, we have already
experienced a large degree of in¬
against the possible renewal
of the upward spiral. Let me say
a word, however, about the down¬
serve
expenses
dollars
holdings of government
Partly
ance
equipped
.
econ¬
'
credit
the
will
sta¬
a
the
on
Price Spiraling
The
should be substantial rewards for
American
billion
bank
services
and
duction
Insurance Against Renewal of
7
should
In the
takes.
goods
excessive
side
very
Deposit
"Authority for the regulation of
consumer instalment
credit, which
likewise
expires under present
law on June 30, 1949, should be
vance
a
requested
August, 10% against demand
deposits and 4% against time de¬
posits.
This
authority
to
the
omy."
sell
confident
were
break
by finan¬
me
similar
spite of
these
conditions,
of the scheduled airlines
current
they
increased from about
$60 billion dollars in 1940 to $170
gradually recovering. More
enlightened regulation added to
the
of
excess
the supplies
currency
Reserve
of
-
,
Scheduled Air Lines Recovering
many
the
over
eral
bilizing
In
by
necessary
wartime incomes
possible
of
continued in order to exert
forcement.
eral million per year.
public is not
uninformed,
:j.
cal
at
seem
re¬
erating with the safety require¬
soon
be
does not
made
available
the risk he
air¬
quired ^to hold Scheduled Air¬
line Transport certificates. There
stances.
scheduled
or
overhaul
Their
frame.
fare.
it
pas¬
operate
can
lower
attribute
should
of
The
last
non-certificated
carriers
a
time.
savings
for purchase. The result, as shown
in the chart, is that deposits and
as
safety devices and facilities at air¬
ports.
.
such
they
of
the
at
of
in
are
their
and
the
senger
passenger
the
16)
page
why
irrespective
reserves
needs
lation
accumu¬
Congress should promptly pro¬
vide continuing authority to the
Board of Governors of the Fed¬
Transport Industry
considerably under cost, and have
without
expenditures, particularly if they
involve the purchase of materials
in
short
supply and if they lead
budgetary deficit, are a con¬
tinuing force making for inflation.
to
a
Unless
total
production
be
can
expanded, and the ability to
ex¬
pand
in
any
short
period
limited by available resources
is
of
materials,
manpower and equip-'
ment, additions to the goods and
services
devoted
to
defense
,
must
be diverted from those
going into
consumption and invest¬
private
demands
for
private
ment.
If
goods and services
strains
not
corres¬
then
higher
are
pondingly adjusted,
prices
will
result.
With
such
the economy, it is im¬
portant that governmental expen¬
on
ditures be fully covered
by reve¬
nues.
Not
only is the surplus or deficit
financial
operations
of
the
in
government
important, the econ¬
is also affected by cash sur¬
plus Or deficit operations of the
omy
private sector. In
fully-employed
a
capitalistic economy, business and
investment should be fi¬
other
Easing of Inflatonary Pressures
Some
pressures
easing
of
has been
inflationary
indicated
re¬
cently
by marked
declines in
prices
of
various
commodities,
principally those that had risen
most sharply.
This easing was
brought about in part by the rec¬
ord volume of production of both
agriculture and industry in the
past
year.
Over-all
ings
incomes
holdings
of
liquid assets,
nevertheless, have continued at
high levels and are fairly widely
distributed. Expenditures by busi¬
nesses for capital investment, by
State and local governments for
public works, and by home owners
r*
'.-77M 7-
1
•
-
largely from current sav¬
the public. If, however,
of
over-all
sumption
expenditures
for
con¬
and investment exceed
current
receipts—which is possi¬
they are financed from ac¬
ble if
cumulations
from
of
bank
past
credit
then the result is
savings
or
expansion
—
likely to be in¬
flationary.
In view of the general
of
consumers'
and
7;7
nanced
the
economy,
complacent
of
one
about
renewed
financing
by
dividuals
in
still have
or
the
liquidity
not
can
continued
deficit
a
for
a
businesses
the
be
possibility
and
aggregate.
in-
Wd
tremendous potential
further increase in deposits
(Continued
on page
36)
t
COMMERCIAL
THE
(788)
36
Thursday, February 17, 1949
CHRONICLE
& FINANCIAL
Moreover, it
reserves.
Why Moie Monetary and Credit Controls Are Needed
borne in mind
should be
that monetary pol¬
such needs
refer
for
to the
Congress
special legislative action of a
street. It has temporary character. The ap¬
to
meet
adapted to propriate instrument
serve
System must be concerned
(Continued from page 35)
changing requirements of the possible inflationary or deflation¬
with changes in the
volume of
and bank reserves as well as for
Bank reserves immo¬ ary developments must be con¬
used part of its newly-acquired economy.
bank reserves, which have a direct
bilized in a period of inflationary stantly available to the monetary
a
more
rapid use
of existing
temporary authority to increase
authorities
for
use
as
circum¬
bearing on the volume of bank
pressure would be released when
money.
Commercial banks alone
reserve requirements for all mem¬
large volume and the demand for
bank credit was active, the Board
hold
sibility for the over-all volume of
bank deposits and, to some extent,
which
could at will convert into
reserves capable of supporting an
enormous deposit expansion.
The
turnover of bank deposits is cur¬
they
general quality of bank
credit rests primarily
upon
the
monetary and banking authorities
rather than
has been
previous periods of high
for
spending
all
The
authority merely because we were
given it. We have used only a
part of it, cautiously and with
discretion, to meet a specific de¬
velopment.
be
is to
deposits
prepared at all times to
additional
with inflationary possibilities
that may develop just as we must
cope
reserves
direction
site
when
straints
held in cheek,
arising princi¬
pally from these sources have to
to be
absorbed or immobilized.
by relaxing
re¬
deflationary influ¬
to this end.
of
Government Bonds
of
confronted
with the necessity of balancing
our several objectives, one of the
most important of which is main¬
tenance of stability in the Gov¬
ernment securities market. To ac¬
We
investors.
1
additional
reserves
v
were
such securities when there
to buy
largely absorbed or offset through
established
measures.
other ouyers at
no
and
fiscal
monetary
The most important of these was
prices and also to sell securities
the large excess of cash receipts
when demhnd is heavy.
I think
over expenditures by the Federal
the System's support of the Gov¬
Government during the early part
ernment
securities
market has
been wise and necessary.
of
the,
of
It is one
period. As
out in his
Economic Report, such stability in
the
Government
bond
market
"contributes
to
the
underlying
strength of the financial structure
At
*
time
same
we
absorbed
deposits
and
bank
reserves.
The Treasury used
a
also
large part of these funds to re¬
tire
in
turn
now
maintained their reserve positions
sion
Banks.
to
Federal
the
securities
government
selling
by
want to
Banks
The
Reserve.
a
realize that the program
System's ability to re¬
strain credit expansion. The meas¬
fully
we
designed
recommending
are
ation.
Bank
heart
The
bank
at
reserves.
all
Reserves
the
of
If
problem
we
are
ourselves
reserves.
is
prob¬
subject of bank
There are other lenders
to
element
restraint
means
the
middle
lowed
very
in
of
1947
to
have
rates
been
;
and
98%
hold
of
reserves^th^n: npnmembers,;
nonmember banks
benefit
actions in the monetary
field
un¬
the public interest.
I have found member banks, par¬
dertaken
in
ticularly small member banks, be¬
loans,
but
banking
is
olour money sup¬
and
had I
j
impair
the
effectiveness
tional monetary
of na¬
policy.
Re-1
of
short-term
used
to extend
willing
instalment
credits
mindful of the
problems that con¬
have the job of
those who
front
When economic recession Regulation W with the least pos¬
accumulated credit re¬ sible interference with usual busi¬
mains to be paid off in the period ness operations.,I believe we have
of contraction.
The drain on con¬ achived reasonable success in that
income for debt
sumer
We
well
purchasing
current
curtails
interested in stability as
are
as
growth
in our economy.
risen
$2
the
since
from
of
end
billion
to
$8
I want to say
have
we
at this point that
strong
and
received
friendly cooperation from an
overwhelming majority of those
subject to the regulation. We have
a
sympathetic interest in their
problems and we believe that in
most
cases
they^ have made an
honest effort to understand ours.
-
The
the
Board
is
fully
aware
of
problems which consumer in¬
regulation pre¬
sents to retailers, as well as to
sales
finance companies,
banks,
and other credit-granting
agen¬
the war cies.
We are very conscious of
billion at
This is an impressive in¬
and has contributed to the
present.
crease
endeavor.
stalment
credit
problems that increased re¬
requirements raise for any
bank that may have to obtain the
the
serve
tributed to rising consumer
Were
these
securi- ' the
monetary
authorities
with
rates
debt
of
prices.
in
increase
continued,
we
might eventually, and perhaps in
not too long a period, exhaust our
cushion
of
consumer
borrowing
for
use
would
of further restraints.
only
use
felt it necessary
to
We
them because we
to do so in order
protect the economy. I can as¬
you that we will modify these
sure
restraints
as
the economic condi¬
and thus endanger our eco¬ tions warrant it and will not hesi¬
tate
to
relax
them
when they
nomic stability.
power
of performing
have
served their purpose.
In
,Regulation W in its present]
function. The pend¬
the
world of today
the United
ing proposal, however, is a neces- ] form, which some have criticized j
States,
occupying as it does a
sary step in the
right direction, j as stringent, has not prevented
expansion of instalment credit. J place of world leadership, should
System holdings of bonds were ! Together with other powers now i
be equipped, at all
times, with
it would
equip our j But it has operated to restrain
gratitude to commercial bankers increased
through
the
support j available,
modern, effective means of carry¬
generally for their service in the program. It would be unwise, monetary mechanism with auth- j overly-ambitious instalment credit j
spenders and overly-eager instal- ] ing out appropriate monetary and
task of financing the war, and re¬
however, to rely on this means of i ority to cope with over-expansion I
credit policies, adapted to chang¬
conversion from war.
I also feel absorbing additional reserves that of the money supply in case that j ment credit vendors, especially in j
j
ing economic circumstances.
that the bankers are indebted to
danger again threatens us. As I| the markets for consumer durable ;
might - be made available from'
Most of my business "life has
have
already indicated, we are ] goods.
The restraint has been on :
the Federal Reserve System for
System
purchases of bonds or!
been spent in private industry. I
the part it has played in this pe¬ from other sources, particularly if i amply forearmed to deal with the demand and on the merchandis- ;
would be the last to want gov¬
riod of strain.
Never before in there should be a substantial de- j credit needs of the opposite swing ing of credit terms rather than
of the business cycle.
quality and prices. Such restraint ] ernment to have power and au¬
the history of this nation has the mand for loans.
'*\
for the sake of
The additional authority would has served as a useful brake on ] thority merely
banking system been in a stronger
Still another means of dealing <
further advances in retail prices i having power and authority.
In
be used to absorb future additions
position.
•
h'
with the problem of reserves was |
in the
consumer
areas
affected j the complex and fluid monetary
Action by monetary authorities to increase reserve requirements.'] to reserves. It would not be used
the
timeliness
of
policy
to force banks to liquidate out¬ by regulation, as well as on the field,
to prevent newly-created reserves Under
authority
of
permanent
excessive expansion of instalment ] moves is of critical import. That
standing loans.
At present most
from becoming the basis for fur¬ law, the Board of Governors in¬
is why we think that, in the in¬
credit volume.
ther deposit and bank credit ex- creased reserve requirements at of the banks of the country hold
■The all-important thing is that] terest of a stabilized, progressive,
short-term Government securities
pansion is in no sense a reflection central reserve city banks in New
the authority to restrain be in ] economy, it is essential that our
on the banking community.
If ef¬ York and Chicago in February in amounts more than adequate to
hand when the need to restrain j monetary machinery be preoared
fective restraint is to be exercised and again in June. Then, in the meet their needs for liquidity, as
in
advance
to
adapt
itself to
is present.
In a dynamic econ- ]
over
the money supply and the third-quarter, when nonbank in¬ well as to accommodate their cus¬
amy, it is not feasible always to changing economic needs.
tomers or to set aside additional
were
credit situation, the Federal Re¬ vestors
selling
bonds
in
ply.
ties in the market, together with
I have be¬ retirements by the Treasury, re- !
fore that I am not singling out duced the
System's holdings of!
bankers for criticism. In my opin¬ such securities
by fully as much
ion this nation owes a debt of as
Let
me
emphasize
as
,
*
role
in,
consumer
early
sales
be
restive because
of the
heavy pressures of demand against additional reserves by liquidating
inequitable application of reserve
available supplies of goods for others assets. We earnestly hope
requirements. Failure to include
purchase, which in turn have con¬ that the need will not again arise
all insured banks would seriously
serve
for
compete with
and in the econ¬
grows.
coming
on
the largest part
banks
market who
New
the
unique because bank deposits are
the
important
credit, should
strengfc'which ,*the .very; Regulation of instalment credit is
existence of the,. Federal Reserve designed to help maintain stabil¬
System gives,credit struc¬ ity without preventing sustainable
ture. It is unfair to have member
long-term growth in such credit.
banks bear the entire burden of
Consumer instalment credit has
by
al¬
war
banks
It is not suggested that the pro¬
postwar period.
In- j
vestors were encouraged by these j posed
supplemental reserve tre¬
higher rates to purchase and hold ; quirement is the perfect or final
solution of the problem of arming
short-term
issues.
Federal
in
sound credit conditions
repayments on old credits carrying on a business.
We have
outstanding credit
volume tried to achieve the purposes of
sets
while
rise somewhat from the
depression and that
been maintained during the
more
are
credits.
of all com¬
tive
low levels that were reached
the
instal¬
the main¬
omy
repayment
of
slightly less than half of the total consumer goods and services gen¬
number and'%old aibout 85% of erally.
The over-all effect is to
the deposits^;^fT-v :
amplify fluctuations in consumer
It would be .grossly inequitable
expenditures, directly for durable
to
limit
tK^^rbquirements .^to: goods and indirectly for all types
member
banks... mlonp.Member of goods. This makes for greater
banks alreadymarry higher effec¬
instability of the entire economy.
|
of
interest
*
as
exceed
deposits in. commercial banks,
member banks of the Fed¬
eral
Reserver-'iSystem
include
reserves was
securities
such
ers
and
while
is
important
well
in this area. • It
but not abused.
Sound credit conditions should be
with the distribution and financ¬
maintained at all times for the
ing of durable goods.
In an ad¬ protection of consumers, of lend¬
to Federal supervi¬
enjoying the protection
Federal insurance of their de¬
all
longer available.
absorbing
tenance of
as
associated
furthermore, is directly
subject
mercial
of the year.
of
credit
in this credit area
credit.
instalment
Consumer
and
posits comprise 95%
the sale of
; short-term government securities
by the Reserve Banks.
Since the
must devote
we
for the rest
this
Another
to deal
effectively with the
lems of inflation
no
are
deal with this situ¬
to
deficit
Thus
limits the
of
ne¬
prevent any excess reserves sup¬
cessity to make these sales ex¬
plied to banks by our stabilizing erted a
degree of restraint on the
operations in the securities markets from becoming the basis for' lading activities of banks.
The cash surplus of $6 billion
manifold expansion of credit and
in 1947 and $8 billion in 1948, used
of deposits.
We also need to ab¬
in the way I have described, was
sorb reserves made available from
the
largest
single
restraining
other sources, notably gold
in¬
force on the money supply. But,
flow. It would, of course, be pos¬
at best, the prospects for this cal¬
sible to curb expansion of reserves
endar year, in view of our en¬
by failing to support Government
larged defense expenditures, are
securities in the market. I am confor a cash surplus of less than $2
vinced, however, that the conse¬
billion, which is more than ac¬
quences which might result from
counted for by the excess of re¬
abandoning the support program
ceipts in the first quarter, leaving
would be disastrous, although I
ures
clusively to member banks of the
Federal Reserve System.
Banks
public debt held by the Re¬
serve
country."
the
to
held
President pointed
of the
these
Treasury account at the
Reserve Banks reduced privately-
ments of the postwar
the
of
transfer
The
1948.
funds
accomplish¬
outstanding
contraction of consumer
ment
the
expansion
against vanced
and rich economy such as
ers, and of the entire economy. It
granted
ours, the standard of living of the should not be overlooked that its
authority up to 4% on demand
great mass of the people takes users are primarily low and mid¬
deposits and 1V2% on time de¬
more
and
more
the
form
of dle
income
households.
These
posits,
applicable
to
member
possession and enjoyment of a economic units suffer most the
banks only, and expiring June 30,
variety of durable goods. Instal¬ hardships of instability.
A regu¬
1949. The present request would
ment financing,
thus, is subject lation of credit terms in the field
replace this temporary authority.
to a growth force that is basic and that
will
help
maintain sound
Since the temporary authority
conditions and also help
has been used in part to require persisting and is becoming a more credit
member banks to hold additional important element in.the economy. moderate excessive fluctuations in
The unregulated use of instal¬ instalment
financing. can
serve
reserves, expiration of the power
ment credit financing tends to ac¬ well
the
public interest.
Also,
on June 30 would immediately re¬
centuate instability of demand for smaller business enterprises in the
lease about $2 billion of reserves
durable goods. Credit spending is affected areas can compete more
that could be used as a basis for
stimulated during periods of busi¬ equitably and safely when com¬
a manifold credit expansion.
it is vitally important that the ness expansion when consumers petitive credit factors are limited
;•{
requirements be made applicable are more inclined to make com¬ to reasonable standards.
The Board has consistently been
to all insured banks, and not ex¬ mitments for the future and lend¬
gold inflow and return
from circulation sup¬
plied banks with over $2 billion
These
dynamic element in consumer
of all consumer
deposits . and 4%
deposits. Congress
time
of currency
of reserve funds.
prevention of excessive
pervasive effect on consumer de¬
mand and prices.
During the past
are
mand
addition,
Committee
Market
direction, would have in view
financing.
It is subject to the
widest fluctuations and exerts a
require supplemental reserves up
to a maximum of 10% against de¬
largely from nonbank
These
purchases
bonds,
amounted to about $10 billions. In
this, the Federal Open
stands ready
complish
are
still
also
are
volatile
or
and
may
again asking, as we did
last summer, for authorization to
We
large amounts of reserves
were
supplied to banks as a re¬
sult of Federal Reserve purchases
tober,
Maintain Stability
Must
ment credit
Supplemental Reserves
During the year ending last Oc¬
dominant.
ences are
to continue consumer instal¬
regulation.
; ■;
you
generally. It would thus help
to carry out the objectives of the
year, Jor example, nearly 80% of
Employment Act of 1946.
the $2.5 billion increase in total
Consumer instalment financing
cantly. That is why adequate con¬ consumer credit was accounted for
has played an important part in
tinuing authority is needed to re¬
by instalment credit.
The instal¬ the development of the American
quire banks to hold supplemental ment credit
portion has increased
system of mass distribution of
reserves, in the form of balances
in the past two years from about
consumer goods.
We believe that
at the Reserve Banks.
one-third to one-half of the total
it should continue to perform an
prepared to move in the oppo¬ Monetary policy has been directed
be
for
to
regulation
the
adapting
changing
economic
conditions,
authority with
under
continuing authority, the
respect to bank reserves, we urge Board of
Governors, by statutory
In addition to the
Instalment credit is the
prepared
be
In
Instalment Curbs
Continue
develop. No one
can know how the volume of re¬
serves will change in the
future.
We should
be prepared to deal
with
the
problems that would
arise if reserves increase signifi¬
whatever
stances warrant.
business needs require.
.
,
should
We
from circula¬
in
tion,-and (3) purchases of govern¬
ment
securities by the Federal
Reserve Banks.
If the volume of
further increase in the amount
of the outstanding money supply.
Under
these
circumstances, we
be
the temporary
have
been flexible,
always
emphasize that
not used
we
today ac¬
imports
(1)
of
ber banks. Let me
three major
of gold, (2-)
currency
ways:
any
must
individual bankers.
reserves
return
could
purposes
expanded without
be considerably
on
banking system
quires
current
and
activity,
economic
the
for
rently much less than it
in many
deposits. Respon¬
credit and bank
$60 billions of market¬
over
able Government securities,
icy is not a one-way
adequate
means
their primary
Volume 169
Number 4778
COMMERCIAL
THE
&
CHRONICLE
FINANCIAL
(789)
'37
Indications of Current Business Activity
The
following statistical tabulations
shown in first column
cover
or
month endc d
on
that date,
■
Latest
AMERICAN
steel
Indicated
operations
Previous
Week
Ago
Crude
100.1
100.1
1,843,500
1,845,400
1,845,400
5,438,850
5,453,850
5,33Si,57f
5,490,000
5,752,000
PETROLEUM
1,667,300
*
43,401
10,263
19,650
8,172,236
*7,771,175
7,472,776
6,056,282
5,732,256
5,613,036
AMERICAN
5
5
5,351,200
115,389,000
Feb.
5
16,464,000
17,531,000
18.278,000
15,476,001
Feb.
output
5
2,274,000
2,588.000
2,468,000
9,154,OCC
Feb.
5
7,O03,OCO
7,547,000
2,493,000
7,789,000
•Feb.
Stocks at refineries, at bulk
IRON
ingots
and
5
8,221,000
8,178,000
9,153,000
7,870,000
terminals, in transit and in pipe lines—
105,100,000
Feb.
5
*114,970,000
107,111,000
Feb.
5
21,239,000
21,873.000
23,368,000
5
64,175,000
67,432,000
73,941,000
38,538,000
.Feb.
5
82,383,000
84,462,000
85,544,000
Shipments
and
of
of
A.
CIVIL
7
•
117,169,000
Total
U.
CONSTRUCTION
and
721,507
746,93(
BANK
DEBITS
OF
THE
Month
;
•
"
January
.
'
•
Feb.
5
599,866
599,666
594,516
670,985
OUTPUT
$131,155,000
$209,703,000
$133,534.00C
$132,583,000
COAL
(U.
Beehive
coal
BUREAU
S.
coke
and
and
OUTPUT
of
68.319.00C
lignite
OF
(BUREAU
66,413,000
73,340,000
65,215,00(
Bituminous
61,043,000
58,736,000
33,185,000
Pennsylvania anthracite
10,193,000
5,370,000
14,604,000
32,030,000
Beehive coke
coal
(BUREAU
coke
Oven
5
11,360,000
*10,480,000
11,585,000
11,350,00(
Feb.
5
687,000
653,000
1,032,000
1,170,00(
Feb.
,
TEM—1935-89
INDEX—FEDERAL
RESERVE
!
5
161,400
*150,600
149,200
Electric
output
Feb.
240
272
*218
231
5
—
(COMMERCIAL
-Feb. 12
INDUSTRIAL)—DUN
AND
INC.
STREET,
&
5,384,945
5,726,708
5,778,476
5,722,086
OF
millions
Dec.
128
127
145
192
COMPOSITE
Finished
steel
(per
Pig
(per
gross
iron
Scrap steel
Fob,
Feb.
ton)
ton)__lk:
(per. gross
PRICES
Feb.
(E.
M. J.
&
Export
refinery
tin
(New
Lead
(St.
Zinc
York)
* 7^'
;
CONSUMER
PRICE
INDEX
3.75628c
3.75628c
3.24816c
8
$46.74
$46.74
$46.82
$40.17
INCOME
$40.42
$40.92
$40.5C
1935-1939—100—As
$37.58
8
FAMILIES
.
'
"
15:
U.
S.
23.200c
21.200c
;|
171.4
21.450c
94.000c
23,425c
103.000c
103.000c
103.000c
Feb.
21.500c
21.500c
21.500c
reo.
21.300C
21.300c
21.300c
Feb.
17.500c
17.500c
17.500c
:
__
__
..
_
101.42
101.14
11-2.93.
110.7C
118.80
118.80
118.80
117.00
117.00
:
111.81
109.6(
105.17
104.66
103.47
108.52
108.70
108.34
105.17
113.31
Industrials
.
_____
113.31
113.31
112.37
117.20
Feb. 15
.
_
Group
_
_
117.40
117.20
BOND
YIELD
DAILY
Feb. 15
2.71
i
•;
2.42
3.01
2.71
..vj
2.71
(tons
Refined
U.
of
2.94
2.81
3.06
3.05
3.07
3.44
3.47
3.54
Feb. 15
3.25
3.24
3.26
2.99
2.99
2.99
Feb. 15
2.79
2.78
2.79
2.91
Without
FERTILIZER ASSOCIATION—WHOLESALE
BY GROUPS—15)35-39—100;
of
212.8
218.2
223.8
of
154.5
166.4
175.4
231.5
223.4
232.0
239.6
245.1
305.9
311.5
307.8
300.6
Annuity
Feb.12
192.5
201.2
208.2
219.0
229.2
240.2
238.3
238.1
238.3
241.2
166.7
169.5
172.2
173.4
Feb.12
190.7
192.4
195.4
211.7
Feb.12
190.1
190.4
190.4
162.2
Feb. 12
217.9
217.9
227.1
233.5
Feb. 12
143.8
145.5
147.8
143.3
143.4
143.5
137.7
.Feb. 12
151.3
155.6
___
PAINT
AND
DRUG
AVERAGE—100
207.1
210.8
•
Shipments
MONEY
As
143.C
136.5
215.6
216.2
REPORTER
of
167,930
204,405
222,730
Banks
5
180,379
181.483
158.780
177J884
5
87
88
79
100
5
343,983
304,146
361,252
Feb. ii
(15)
140.4
;,v
8
156.9
158.8
160.5
8
162.5
168.9
174.3
156.9
8
'
160.9
1
182.5
164.4
158.6
152.9
*
Special indexes—
—
Meats
'!
J
Hides
•
^Revised
•—1
—
———
—
8,:,
138.0
138.0
137.1
lilncludes
390,000 barrels
$28,867,631
Jan.:
6.62
6.57
5.62
6.84
6.78
5,66
7.77
7.67
5.77
6.04
6.09
5:ft0
4.67
4.74
4.63
3.33
8
178.3
178.3
175.3
8
200.4
200.8
200.9
192.2
8
131.4
132.9
133.5
136.5
v
>
—.Feb.
——Feb.
/
•
of foreign crude runs.
:
(200)
FACTORY
U.
IN
of
S.
SALES
3.34
3.49
(AUTOMOBILE
FROM
MANU¬
passenger
of
•
•
—
AMER.
.
'
.
..
CLASS
I
ROADS
RRS.)—Month
Total
operating
operating
of
.
ratio—per
cent
-—
154.8
Net
Net
railway operating income before charges
income after charges (est.)————:
STATES
BUREAU
161.6
170.1
209 r
195.1
206.8
217.4
214.7
215.5
226.0
234.8
Exports
190.5
194.3
197.0
22U.'»
Imports
'
•
(000's
OF
EXPORTS
AND
1,721
$825,325,812
$804,316,810
637,471,662
631,369,661
80.43
77.24
78 30
$90,304,661
$80,852,694
64,661,939
84.065,711
.76,669,093
58,000,000
63,000,000
$1,283,700
$819,900
$1,172,000
721,400
550,100
602,841
December:
expenses
Operating
101,569
i'
(ASSOC.
revenues
Total
\'v •;
;■ '
545
648,741,565
/
366,939
103,837
$806,553,949
1
coaches
470,981
364.440
824
:
468.822
107,702
cars
trucks
motor
'
486,981
378,455
vehicles
motor
EARNINGS
207.3
148.4
i
number of
OF
130.8
Feb.
skins
figure,
.Feb.
Fb
r—
and
143.5
'
«•_—_•—
of
„
VEHICLE
UNITED
■
Livestock
153.5
143.1
.Feb.
—-—
$28,331,043
OF
YIELD
$81,604,936
149.r
3 52.9
8
.Feb.
•J
and lighting
RR.
"
8
•
•
147.7
144.3
•
174.3
.Feb.
materials.
Metals and metal products———
•Building materials—-—
—
Fuel
$28,223,786
omitted)
AVERAGE
STOCKS—Month
(10)
Number
Feb."
—
275,000
FACTURERS' ASSOC.)—Month of December:
Total
.Feb.
and foods—
' 532,000
DEPT.
——
yield
Average
147.3
142.1
141.1
Feb.
Textile products
$283,410,000
December:
—
Number of
.Feb.
All commodities other than farm
,
(000"s
$257,971,000
728,000
ol
36,017,000
69,114,000
477,216
.Feb.
<
16,216,000
38,133,000
36,687,000
(DEPT.
PRODUCTS
(125)
Insurance
INDEX —1926-36
_——
31
(25)
Number
All commodities——
31,168,000
8,118,000
18,937,000
80,727,000
(25)
220,321
PRICES NEW SERIES—U. S. DEPT. OF LABORuoio^ioo:w.
■
8,212,000
50,796,000
WEIGHTED
5
WHOLESALE
i'
_____
_
—
COMMON
:»00
Feb.
__
—
(in pounds)
Dec.
MOODY'S
Feb.
PRICE
—L
IN CIRCULATION—TREASURY
Feb.
—
—
.
_.
WROUGHT
PLANTS
OIL,
$122,777,000
37,644,000
8,812,000
LIFE
$333,180,000
MOTOR
,
$118,358,000
42,975,000
.' 18,641,000
OF
December:
COMMERCE)—Month
OF
Utilities
„—
of
Total
MAGNESIUM
Feb.
Percentage of activity—
Unfilled orders (tons) at
-
134.2
of
TO
values
Railroads
._
•1-130.1
$131,229,000
middle
at
PAYMENTS
-----
payments
Industrials
..
225
—
average=100)_.
dividends
Policy
PAPERBOARD ASSOCIATION:
(tons)
288
*495
1128.0
—
„
Employment
payments
Surrender
256.4
.
155.2
155.6
Feb. 12
.
150.8
151.3
Feb.12
Production
*309
228
Average=H)0)
155.1
Feb.12
—
71,533
228.8
Feb. 12
(tons)
118,855
96,080
91,053
RE¬
COMMISSION
COMMERCE
(1935-39
Disability
Feb.12
-
102,292
82,427
.:
.
endowments
Matured
Feb. 12
received
102,314
96,070 V:
(FEDERAL
variation
benelits
Feb. 12
Orders
96,117
of period (tons
adjustment
Railway
Feb. 12
NATIONAL
SALES
INSURANCE—BENEFIT
Death
229.9
Feb. 12
—
*64.451
78,298
———_2^„
INSURANCE—Month
Feb.12
:
191.4
144:4
'69,973
2,000 lbs.)
POLICYHOLDERS—INSTITUTE
COMMOD-
INDEX
Grains
198.7
153.9
January:
January:
seasonal
(January
LIFE
ITY
129.8
290
of
__
stocks at end
STORE
INTERSTATE
403.2
392.5
370.1
171.1
138.0
'■■■•<v.<
SYSTEM)—( 1935-39
Month
Index
375.6
92.6
191.6
•
lbs.)——.
2,000 lbs.)—
SERVE
3.04
Feb. 15
of
(tons
115.4
127.8
95.4
198.6
lbs.)
2,000
Adjusted for seasonal
3.44
.Feb. 15
INDEX '
A.
copper
DEPARTMENT
3.16
3.46
Feb. 15
of
(tons
Month
in U. S. A.—
2,000
191.2
154.0
—
to customers—
S.
Refined
of
•
118.8
137.9
2.85
»
2.80
2.80
.Feb. 15
■
201.4
138.4
J
.
INSTITUTE—For
Crude
3.13
.Feb.15
NATIONAL
183.7
191.3
—
Copper production
2.45
3.00
3.01
Feb. 15
COMMODITY
198.5
208.2
173.3
95.3
_T—
:
COPPER
In
2.40
2.38
electricity
Miscellaneous
AVERAGES:
Feb.15
MOODY'S
205.3
189.4
137.8
Housefurnishings
114.85
r
and
Deliveries
MOODY'S
189.4
206.4
119.5
—
refrigerators.-
ice
114.27
112.19
104.83
_
Group
236.1
173.0
Other fuels
116.0-
116.80
_
—
.
204.9
244.3
184.4
__I
Gas
100.7C
113.12
112.00
Group
227.3
199.5
207.3
oils
Sugar and sweets
12.000c
101.62
'
Utilities
246.7
192.3
vegetables
—
and
Fats
14.800c
112.93
Feb. 15
Feb. 15
Public
241.3
200.4
and
Beverages
Fuel, electricity and
-
_
170.5
217.3
Clothing
_
Aaa
206.9
169.9
199.2
V
——
—
Fruits
15.000c
AVERAGES:
DAILY
167.0
207.5
170.2
Eggs
r__
PRICES
172.2
205.0
products
Dairy
23.425c
23.425c
Feb.
at
Government Bonds
Railroad
920
'
23.200c
:
Average corporate
Baa
2,707
968
.
i.
—
Rent
BOND
3,612
2,893
CITIES
LARGE
Dec.
:
foods
23.200c
at
(East St. Louis) at
MOODY'S
3,557
MODERATE
FOR
IN
of
items
—Feb.
Feb.
at
Louis)
7,239
2,902
:
credit
7,418
972
loans
payment
J.H08
3,348
7,728
:
1 OK7
4,032
3.854
credit
Cereals and bakery products
at
at
York)
(New
Lead
1,151
2.3 65
,
Meats
Straits
6,1:87
2,839
1,922
4,101
-
:
3.75628c
QUOTATIONS):
copper—
refinery
7,921
3,889
1,963
8
All
Domestic
$13,426
8,229
4,128
.„
PRICES:
lb.)
Electrolytic
$15,339
*
v
Charge accounts
All
METAL
.—
T
__—
Service
AGE
$15,957
short-term
:
credit
Single
LRON
1,019,856
31:
^
Noninstalment
Feb. 10
614,200
*1,588,884
FEDERAL
THE
of
as
credit
Other
BRAD-
*
5,920,000
*610,240
1,590,608
tons)
Automobile
Loan
FAILURES
6,065,764
638,241
OUTSTANDING—BOARD
credit
Sale
kwh.).
000
*6,417,179
*5,806,939
6,704,005
"
,
month (net
of
SYSTEM—Estimated
in
credit
INSTITUTE:
(in
607,200
6,534,000
Dec.:
——_
—
GOVERNORS
RESERVE
Instalment
ELECTRIC
of
tons)—
Total consumer credit
EDISON
4,921,000
*638,200
131,200
(net
coke stocks at end
Oven
SYS¬
AVERAGE—100
tons)
tons)--
(net
Beehive coke
OF
SALES
(net tons)——
(net
MINES)—Month
OF
CONSUMER CREDIT
STORE
DEPARTMENT
lignite
tons)
(net tons)
Production
(tons)
and
(net
"
Feb.
—
55,780,000
4,499,000
662,000
MINES)—Month
OF
January:''
143,290,000
35,587,000
MINES):
(tons)
49,045,000
3,719,000
Municipal—i,-—— '•
-iL—
—,(,1
*.' 129,897,000
45,780,000
'.'•••
47,170,000
.336,012,000
85,375,000
59,243,000
71,744,000
$843,544,000
505,899,000
337,645,000
206,115,000 i 265,901,000
229,814,000
——
—
Feb. io
1
Pennsylvania anthracite (tons)_i__iJ__l—
Bituminous
construction.
$441,955,000
207,529,000
234,426,000.
178,259,000
- 56,167,000
$565,826,000
—
construction
Federal
COKE
COAL
$105,193,000
.
State
Feb. 10
l
$122,277,000
of
NEWS-RECORD —Month
Feb. 10
•
$105,204,000
I—
thousands)
construction-—
S.
Public
!
NEWS-
U.
Private
-V
.'
•
271
2,430,189
CONSTRUCTION—EN¬
ENGINEERING
Feb. 10
.
.
*2,626,142
SYSTEM—
RESERVE
(in
Feb. lo
■
*271
2,572,410
—
GOVERNORS
OF
BOAR.D
—
FEDERAL
of
Total
7-♦
• >v
^
I
'
679,255
municipal
Federal
t
682,143
-
construction,
State
5
:
construction---
Public
■;
>■
ENGINEERING
—
';•?!/7
•
construction-
S.
Private
;•
.
Feb.
(number of cars)
-•
271
.
(tons)
50,257,000
.
.
ENGINEERING
RECORD:
reporting
January:
cars)
Revenue freight received from connections
'
carriers
motor
GINEERING
of
ASSOCIATION—
TRUCKING
Volume of freight transported
AMERICAN" RAILROADS:
OF
freight loaded (number
castings produced ;
for
products, including alloy
(net tons)—Month of Dec—
Month of December:
Number
CIVIL
Revenue
steel
steel
stainless
AMERICAN
11,119,001
Feb.
ASSOCIATION
INSTITUTE:
STEEL
AND
(net tons)—Month of January
Feb.
Feb.
Gasoline
Ago
8,075
INSTITUTE:
(bbls
Year
Month
(in short tons)—Month of November—_—
5,348,00(
'!
oil output—daily average
Previous
54,526
Steel
AMERICAN
Latest
Month
aluminum in the U. S.
primary
Stocks of aluminum—short tons (end of Nov.)
100.0
to—
of
of that date):
are as
MINES)—
OF
50,714
92.C
Feb. 20
cap
(BUREAU
Production
Ago
month available (dates
or
of quotations,
cases
ALUMINUM
.Feb. 20
Equivalent
of
(percent
in
or,
Year
Month
Week
STEEL INSTITUTE:
AND
IRON
the latest week
production and other figures for
either for the week
are
CENSUS—Month of December
omitted)
-"-H-vf-
——111—r—
"Revised
76,000,000
IMPORTS-
'
—_———
—
figure.^ jPreliminary figure.
m
38
More
lated
to
lation and
enhance
prosperity than
stability and
continuous flow
a
capital to the utility companies.
spending of this capital for
the production of more and better
The
service
will
add
comfort
and
convenience
citizens
and
to
the
to
of
our
effectiveness
the
industry. It will employ people
making electrical equipment,
in the utility business, and will
stimulate employment in a great
of
in
.
other businesses which
many
use
electric power.
And
this
new
large part flow back into the
ital
market
competition, the investors' dollars
veer away from the regulated
industries. If the regulatory com¬
missions do
not allow
earnings
will
to
ready
cap¬
start
some
only if utility common stocks re¬
tain their 'investor appeal'. To do
made.
avail.
failure
or
act
to
whether
cause
particular
a
company
will have adequate earnings,
then
company's financial position
be injured so that it will take
some time to recover.
If the com¬
may
missions tend to assert the mana¬
gerial
role or
judicial
unreason¬
assume
a
because
the
of
that
demands
are
upon you and because of the na¬
ture of your business, it is perhaps
more characteristic of the utilities
The
If there are
similar effect.
a
plans to build public power sys¬
tems in many parts of the coun¬
plants as well as
hydro-electric plants—the private
than of other industries that if investor begins to question the
you get the money you will spend
safety of investments in the elec¬
-it
constructively.
ture
will
mediate
not
The
expendi¬
public
interest
miti¬
in
recession but it has an
equally great long-range advan¬
tage.
The electric
utility industry has
industry of rapid tech¬
an
nological improvement which has
resulted in a long-term downward
trend in the cost of electricity. If
the utilities get the money that
they should have now and spend
it, the processes of technological
improvement and benefits will go
unabated.
For
instance, we
have recently been informed by
on
one
our
he has
And
it is
for
easily within the power
government to subsidize
public plants which by means of
unjust competition may destroy
the investment values of privately
owned electric utilities.
The gov¬
the
of
indeed
ernment
add
efforts to
by its
electric energy avail¬
the
to
public may instead ac¬
tually diminish it. For it might
well happen that through the use
able to the
supplying
in
methods
unfair
of
15% of the power, the government
reduce the effectiveness of
could
the other 85%.
The
utility customers that
bill
before
now
Congress
installation
of
in
units
new
Its record
is remarkable.
With
almost half the electric energy
in
the world.
Although government
plants make some of this power,
these
state-owned
for
responsible
habit
of
tricity.
plants are not
the
American
not
result of government ac-
'•'>
tion.
'
.
also the blighting
this matter, and
taxation
double
of
effects
discuss
will
doubt
no
upon
capital investments in all indus¬
try, including the utilities. I wish
to devote further attention to the
matter of
Unreasonable Regulation
How much justification
for
apprehension concerning un¬
regulation of the elec¬
reasonable
since World War II.
that the
the
few
fulfilled
industries
great
among
which
national need that
every
There
unique
having since the war
actually reduced rates to the pub¬
lic during a period of rapid in¬
in
flation.
Whether this
was
wise is
be
to question, but that it could
done
Here
at
all
is
then
is
extraordinary.
business' with
a
a
background of technological prog¬
ress, with a remarkable record of
service in the war and
after, with an ever-increasing de¬
mand by the public for its serv¬
ditions
ice—service
which
is worth
costs many times
of its
an
to
sounds
be
definition
the
prosperous
and
all
the
attract
one
that
partners'
that it could put to prof¬
money
In
Regulation
Power
are
two
as
and
Public
you
quite
all
influences
utilities
Lester
required to
public at miserly rates
the
return
on
are
their investments in
property dedicated to public
the
public
well
as
use,
the utility
as
suffers."
acter have
of
come
fair return is
tract
new
similar
a
the
from other State
that
one
capital.
National
char¬
It has been said that
commissions.
a
will
at¬
The addresses
convention of
Association
of Rail¬
road and Utility
investment
By
been
not
in
the
that
on -new
arises.-.
need
utilities have
position. Your
which
to
wish
I
problem
of
industry
discuss briefly.
your
to
trend
increasing
tionate
should be
a
return.
expressed
you
a
Also,
desire to
and assist in
efforts to meet this amazing¬
expanding
demand
for
your
that
practically
prohibits
new
capital
and
the
advantages
it
brings. In the present situation
there is more than minor danger
managerial
this time
this may have been
theVcheapest
I fully
easiest way to finance.
and
the
understand
True,
on.
of
attraction
ext¬
payment^' result ?:ih;
interest
commissions
state
the
same
same
R.
B.
and
gathering Commis¬
Mclntire of
Exchange
the Se¬
Commis¬
may
utilities
the r electric
to
pattern.
The
do
industries
have
not
regula¬
the
risks
competition, people will invest
in
loss.
lower rate of return
a
non-regulated
there
On the
is
industries
smaller
other hand,
risk
the
of
op
for capital gains are
limited in comparison with such
other industries as manufacturing
chemicals, merchandising, etc. The
portunities
:utility
investor
with
content
must
only
be
dividenc
a
However,
electric utility common
borrowing- capacity
last ( resource-'in
the
the
emergency has been fully utilized
before
the emergency arises, it
will
not
be
available .when
most
And the common stock¬
needed.
is
not
easily- attracted to
heavily indebted companies.
There are many reasons for this
situation which I am not going to
try to analyze. I am merely
to
trying
point out where you are now
why you will need great
and
sure
that you main¬
strength
financial
tain
the
serve
the nation well.
,
-to
.
The electric utilities are
rapidly
approaching a.-situation where
prompt and affirmative action in
their behalf by the commissions
is essential. In many cases, the
cost
of providing
been
a
now
being af¬
nothing or
acting too late,
are
Just by doing
fected.
doing too little or
the
electric service
rising rapidly and that
real problem because
net,earnings
commissions
can
make
income
yond; the
stocks
un
alone to make
that-investment attractive.
a
ting
forth
business
the
companies
facts
the
and
about
your
of
your
needs
the
before
cujtomers and the
your
years
have
capacity to attract equity
seems to me the very es¬
of the safety of your busi¬
It is
ness.
These facts
be
to
my
many
been engaged
in re¬
matter of the protec¬
a
stockholders' values,
protection for your
tion of your
a
of
matter
employees,
matter of service to
a
It is even more
customers.
It is
matter of great
a
vital force that we can k§ep
ourselves in
in action to maintain
strength to meet the burdens we
now
have and the uncertainties
mind should
presented against a simple fi¬
nancial background:
(1) Long range economy is de¬
We cannot
face.
we
full
afford
regulation, remove
not, by
out
industries
free economy
establish
ception.
You
of
our
when
that
capitalistic
we are
our
trying
is
freedom
the totalitarian
than
better
any
their
And we
pull
not
weight in the boat.
must
to
do
that
industries
con¬
\.
'
therefore,
have,
great
a
opportunity to serve this country.
will make yourselves strong
with equity capital you will be
performing a vital service to the
nation.
y!.
If you
If
billions
the
of
dollars
being
put into the industries of Western
rehabilitate the
can
econ¬
omies of those countries it is not
reasonable
to
expect that billions
dollars needed by the utility
industry
here
in
this country
would help to stabilize our econ¬
omy?
In the years just ahead the
utilises
coul d
advantageously
of
spend huge sums.
And there is
little doubt in my mind that they
can
get
money
substantial part of the
equity capital if earn¬
made sufficiently attrac¬
a
as
ings
are
tive
and
if
the threat
of govern¬
competition is minimized.
ment
stockholders of
at large.
Increased
earnings
would
investments
increased
tract
at¬
in
equity securities from investors.
No government debt and no added
taxes would be required.
The
President
States in his
of
the
United
inaugural address re¬
constant techno¬
cently suggested that American
logical improvement.
I
private capital be encouraged to
(2) This means constant ex¬
pendent
upon
make
penditure.
investments
abroad to
help
raise the living standards
of other
(3) This is only possible if the peoples and to foster a peaceful
companies
can
raise
adequate world.
I
believe this construc¬
funds.r
T
tive proposal will receive earnest
(4) That can only be done when and
sympathetic
consideration,
rates are sufficient to make earn¬ although
the practical problems
ings that will attract new stock¬ involved are exceedingly difficult.
holder capital.
The President also said that it
.
(5) If
a company
risks its prop¬ is
clear "we must have continued
erty by going in debt it deserves
prosperity in this country and we
extra profit that comes from must keep ourselves1 strong."
any
for
commis¬
companies, and to the public
taking the risk.
-
commissions
sence
Europe
sions, the governors and the ap¬
propriate legislative committees
with great clarity and emphasis.
It means telling the facts to the
decision.
The
The
capital
less there is some inducement be
—
is
States,
latory policy.
usually
under existing
conditions the investor may not
be willing to put his funds into
yield.
in
However,
done.
be
can
some
every
general theory of
tion has been that since regulated
^•My guess is that unless there
higher 'earnings Hot
-.are continued extraordinary exer¬
your
stocks.
The ••■'debt
trend1
tions-on your part, what will be
should,
however,
be
reversed;
done-about this situation will be
When high need for construction
too little and too late to allow the
comes along with high prices: for
utilities to render their best serv¬
construction
and they always
ice to the public. That means set¬
come
together—it becomes clear
that\ if
business.
your
importance to the nation. We need
Encouraged
>
somewhat
which
into
tal
your
The Utilities Investor Not
momentous and even a disastrous
At the
curities
matter of
a
from
concern
securities
of debt
amount
creates
was
an
industry brought
about by the sale of a dispropor-J
the need for such
there
toward
to attract new
that may well in¬
volve substantial changes in regu¬
because
another
that it is essential
and you serve,
for you
this
than
Structure
importance
it, to perform a service to the na¬
tion which you can do only if you
t hose in authority
can
convince
and the public, which both they
increasing debt intermingled
with receiverships. The I.C.C. did
by
in them at
Increasing Debt in Capital
Capital
obligation as I see
You have an
general rule, for 20 years
roads have beep' chiefly financed
of
is
Essential to Attract Equity
than that.
industry should be
it is not
long if
progressive
be
prosperous.
equity capi¬
In most
the rail¬ parts of the country undoubtedly
slide into that
developed.
There
tc
give the railroads an average re¬
turn of .about:.^% %. In fact, as a
that
quired for new plant and equip¬
ment, a more realistic approach
to the
problem of an adequate
rate
of
return
for .capital
em¬
The
business
for the blast 2Qryears has been
pefmit
prevailing high costs and to pro¬
vide
the
enormous
capital re¬
your
equity
Therein lies not, I think, intend to follow this
capital method of regulating the railroads
in many cases, has
been unduly restricted under the
standards of the past. To meet the
ployed in
for
necessity
be
should
industry
your
any¬
At various time:
Yet the actual result of regulatior
rate of return,
has
ly
return
such
large,
and
as
i:
further
for
as
That
Canita]L'?Mythe^aiIroad
to
investment.
incentive
the
could want!
about "tHe
of wages,
cost
attractive
more
capital
Commissioners in
Savannah quite generally endorsed
in
situa¬
a
able
property.
selves rpade.- admirable statement:
other
exertion to be
Statements
sioner
months ago,
Hooker
some
H.
Virginia commission stated:
"When
of
and
been
of -their
That
progressive and prosperous is of
great importance to the general
welfare of the country.
It cannqt
members of the I.C.C. have them¬
materials. They
cope with the
decreased
purchasing power! of
the dollar.rTheir appeals for fur-:
ther capital have been buttressed
by larger profits, thereby creating
fuel,
have
holder
of the
complete
know. There
a
the
not be
may
service.
Competition
But this is not
picture,
address
an
Commissioner
your
of
apprehension
cooperate with
use.
Effects
which
made at the recent
like
industry that could not fail
could
itable
over,because
usefulness.
That
of
what
of
justified. There are many state¬
ments supporting this view.
public
it
number
a
granting increases
inflationary con¬
are
hopeful signs
in rates to meet
serve
open
been
have
recent decisions
du^ng the war. It is almost
arose
increased
modify
favorable a/statement
as
one
Those engaged in unregulated
enterprises usually are able to
raise the prices of their products
meet
interest rates.
fair
value
at prevailing low
with debt even
so that
carrier^ ak -a (Whole will earn
return :hpoh; the aggregate
e
desire."
all
lijg initiate,
overloading your companies
about
e^ablish^i&I^Sjtflf; rates
will
we
is^ie %^eriehce of the rail¬
of
measure
a
jptejjstate Commerce
a
provides
actually
which
capital
Commissibn;
ably serve the com¬
munity, the investor, and the na¬
tion—and this result is certainly
what
Railroads
the
structing ;the:
before the investing
case
of
things which makes
Congress, passed The Trans¬
portation. Act, "authorizing and in¬
The result,. I believe, will
great and strong industry
which
for
is there
tric utilities?
was
a
the
that
capitalization of your companies
should include substantial equity
^
roads.-
raordinarily low intere^J rates
which, together with-ythx" credits
regulation.
What the industry itself has de¬
veloped has been vital in Amer¬
ican success
both in peace and
war.
And the industry has had an
almost unique record during and
It
be
desirable.
protection for the
apprehensive about this situ¬ debt. You must not be complacent
ation
debt ratio in the
a
Others
making and using elec¬
The techniques by which
the
public.
long-term bonds is
it also is essential
and
me
hanker
investment
the
The
a policy
threat to the American
system of free enterprise.
that habit has been developed are
and
form
But
Experience
work
proportion of debt in the
of commercial bank loans
sonable
suffi¬
in
rapidly
or
A rea¬
by going into debt.
money
were
enough
amounts
One of the
con¬
together in keeping
common
stocks
strong
and in¬
herently attractive. Let manage¬
ment
insurance of good service
the public.
to
unless some-unusual efforts are
management and regulatory
bodies
is
and
7% of the world's population, the
United States produces and uses
"Let
limitations of such
the
deserves capital.
Mclntire
Mr.
increases
rate
forthcoming
not
cient
cluded his address with the plea—
to
to question,
reason
appropriating funds 'to build a
steam-generating plant at New
one of its plants which we have
Johnsonville, Tenn., in the TVA
helped to finance has resulted in
system, is a specific illustration of.
reducing operating costs by ap¬
this point. Such a project involves
proximately $5,000 a day.
This
a
departure from Congressional
exaipple is typical of what new
policy to date. That policy in sub¬
plant equipment means in reduc¬
stance is that hydro-electric power
ing costs.
plants are to be erected as inci¬
Record of Electric Utility Industry dental to flood control, irrigation,
and navigation.
A steam-gener¬
Let us look at the utility in¬
ating plant certainly is not within
dustry for a minute to see if it
the
,
of
tric utilities everywhere.
only be in the im¬
gating
been
try— steam
either
this, earnings and dividends must
take the
and produc¬
by the government
development
tion of power
has
similar
powers,
may come
be attractive."
of
test
the only
It is true, of course, that as vast
are needed right
away." Therefore, ...in spite of the pools of public savings are by law
actions of. some commissions and prevented from going into equities,
the speeches of some commission¬ the utilities can only reach this
equity foundation under
the capital structure of our utility
companies as we go through this
period of rapid growth. The time
strong
doubts to
arise in the investors' minds as to
.conditions
attract stock¬
to
is the only prac¬
adequate rates and
increases which
this
all other
will
not
If the commissions' actions
that will attract capital,
favorable
in
limiting the
extent of any recession that might
be lurking around the corner. And
tical
confronted with requests for rate
begin
we
maintain
and
needed
doubts will be reflected.
effect
build
suddenly
be
change-to
a
ability
money
run
it would not be surprising if
ate
It cannot fail to have
importance that
to
now
quite
the
the
able
jobs.
utmost
therefore of
ers,
other wheel turning that will cre¬
beneficial
said—"It is
sion
for some of them when
it is too late to act. The industry's
construction program can be fi¬
nanced
successfully, of
course,
that
capital has an¬
advantage. Its earnings in
other
public power.
regulation seems to the in¬
vestor to be a greater hazard than
If
of
electric
emphasis—'•regu¬
tion that require
the
holders'
ducing your rates; as your techno¬
logical adyances and increases in
volume made it- possible.
It is
Equity Investment Essential
(Continued from first page)
Thursday, February 17, 1949
CHRONICLE.
& FINANCIAL
COMMERCIAL
THE
(790)
It
take such risks or
seems
wishes to. factor
not, in the long latory
-^(6) But whether
it
to
me
that
an
essential
in doing
so'is for the regu¬
commissions
to
pursue
•"
r
.'if
'Volume
policies*, which
enable
will
vital utilities to carry
is
It
essential that the utili¬
also
ties not be subjected to the
of unjust
competition from public
confidence at
able
and
home
en¬
American utilities, which
our
lead
the
their
threat
projects.? That will stimu¬
power
late
our
vig¬
enterprises.
as
on
and prosperous
orous
THE
Number 4778
169
world
in
the
public, service,
quality of
continue
to
demonstrating
American
our
COMMERCIAL
the -superiority
system: ?*•
'
.
&
FINANCIAL
refunding to do
of
should
i
v
The
ment
regulated industries that
provide electric power, light, heat,
communication, and transporta¬
of
tion
during
Treasury
the
next
The Treasury Chart
few
week.
opportunities unfold¬
Dec.
oillion.
essen¬
safety and progress of
United
States
that
in¬
these
vitality and render their ut¬
most service to the nation.
ma¬
$37
In
$900
Because it is
there will be
<
million
unlikely that
significant vol¬
any
of debt reduction
1949
these
on
a
during the
maturities—
of ma-
ity in his Budget Message, but he
did not include any amount in his
Budget because he wasn't;- sure
all familiar, with
are
the
savings bond program. It has been
a program of tremendous impor¬
and
tance
years.!.
significance
for
Receipts from
many
cash
sales
what the
It
is.
amount
Congress
should; permit
such
1949,
year
they
in
the
1950
into
securities
maturing
future; and the maturities
are
already scheduled for
and
subsequent years, will
be
increased
by
the
.amount carried over from 1949.
thereby
The Treasury will thus have, as
4s evident, a substantial refunding
Y
problem this year, next year, and
for. many years to come.
It will
I should like to mention at this
;
'
i
"point
that
the
reduction; in
likely
tne
to
be
of
sales
casn
sumption of high business .activity
and full employment.
If unem¬
the ployment should, develop during
received
savings
•bonds and notes in 1949 and 19o0
^amounts
Yfrom
as¬
the year
to
and business should drop
lower level than
a
we
now
en-
the
war
as
During this period, these
companies were,
on
the
hand, expanding their hold¬
of corporate securities and
same
ings
their
holdings of mortgage loans.
Expansion along these lines was
to be expected as insurance com¬
panies entered actively in pro¬
viding funds for postwar develop¬
ment of private industry.
Mutual savings banks also sold
government
some
A posi¬
they
on
Tlie decision
matures
is,
each issue
know, a
on
as
as
you
problem,
and
it
spe¬
will
have
to be handled
their' deposits
and
by
industrial,
in
1948
the
war.
of
more
their
Federal
other
manage-
;meht\' operations are conducted
joy, revenues would "be smaller;
with; fhC "objective of providing
odes not represent any change in
If, on the othef hahdj .the business the
various investor classes with
the promotion aspects of the pro- levels
should
advance, revenues the
types of securities andthe ma¬
gram during these two years. The. would be higherYY'v*
turities which best suit their par¬
1 difference represents the amount
New tax legislation
may
also ticular
needs. This helps us in our
Received from the special offering affect the cash balance during; the
objective of spreading the owner¬
of F and G bonds to institutional last
part of the calendar year 1949.
ship of the debt as broadly as
investors, which was made during The effect would depend upon the
possible.
: ...the first part of July,, 1948, and type of /tax legislation enacted,
Some reflection of the extent to
.which is a part of the figures tor however. • Many types of taxes
which this goal has been accom¬
,the fiscal year 1949.
•
\
applicable to '1949 would not be
plished is indicated by the fol¬
i
-Special offerings are made to paid into the Treasury until the
lowing data.
Two-thirds of the
facilitate the investment of funds first part of the calendar^^year.
Federal debt, that is some $167
by some of the large institutional 1950. They would have no sub¬
billion, is now held outside of
stantial efect on the cash balance
purcnasers of Government securithe banking system.
Over a
,vties when conditions warrant; and picture during the calendar year.
quarter of the public debt, some
•"Another
factor
Tit
is
too
affecting our
early
to
determine
$68 billion, is held by individuals
whether there will be a need for cash position is the possibility that
alone.
Insurance companies hold
; -an
offering of this type during the? dividend to be paid by the
$21j/2 billion of Federal securities,
National Service
Life Insurance
■the next fiscal year.
mutual savings banks have $11V2
Fund in the fall may be delayed
53/ In order to summarize the cash
billion, and
corporations
other
in part by the many mechanical
1
than banks and insurance com¬
position for the calendar year
difficulties connected with the op1949, I should like to direct atten¬
panies hold $13 billion. Govern¬
*.
at
have
50%
invested
funds
of loans
in
in
than
all
and securi¬
ties combined.
Holdings of government securi¬
ties by insured savings and loan
associations have shown
some
cline since the end of the
residential
As
de¬
war
as
mortgages
expanded.
with
insurance
contrasted
companies
and
savings
banks,
however, most of the decline took
in
holdings
Our financ¬
debt
the period up through
1948, is attributable en¬
1946
and
1947, rather
large part of these
in long-term bank-
than in 1948. A
are
a reduction in the hold¬
ings of government securities by
the commercial banks of the
Dec. 31, 1948.
Since
1948, Federal Reserve
holdings of government securities
and
debt,
Dec.
31,
have
declined.
The government's debt manage¬
ment
in
policy since the end of the
it is obvious, has not resulted
expansion of Federal Re¬
war,
an
holdings of government se¬
All purchases of longterm bonds have been more than
serve
curities.
offset by
bank-held
As
period since the end of the
war, nonbank holdings expanded
in the aggregate, notwithstanding
the sale of some government se¬
curities by some of the investor
classes. Government security hold¬
also true of
of the trust and investment
of
state
fore the
war.
y 1
During 1946, corporations other
continued
the
been
invest¬
ment of the
savings of individuals
accumulating in Federal Govern¬
of
$1 billion, as compared to hold¬
ings of only about_$5Q million be¬
important reason why
ownership has increased
nonbank
has
funds
governments.
local
and
Another
still
of
fire, casualty and
companies, and
insurance
marine
associations
excess
This
ings by individuals increased.
was
social insurance funds.
ment
in
in
declined
debt
the
It is interesting
holdings of these
are
the liquidation of short-
issues.
term
to note that the
restricted bonds.
coun¬
Holdings by the Federal Re¬
serve banks were, on net balance,
practically
unchanged
between
February, 1946, the peak of the
In fact, mu¬
securities
types
did
they
banks
savings
Federal
more
than
the end of the
short-term balances.
and
hold
now
tual
place
activities
process
still
securities
commercial and mercantile corpo¬
rations for the investment of their
ing
for
31,
try.
tive, /refunding
/ r
The reduction in the bank-held
try, have declined from $19 bil¬
lion to $15 billion since the end
expanded in the early 1950's
by the maturity of the wartime
that
debt.
Federal Reserve Bond Holdings
Not Increased
tirely to
issues of savings bonds.
program
total
ed.
Present holdings of 49 lead¬
ing companies, which hold 90% of
life insurance assets in the coun¬
^
the
of
securities, in
of meeting
private demands for capital, but
•be
separately; but this
Trom savings bonds and notes will
balance >f igure/ of*'•$3;2/billiqn:^ by '■ projection
gives you a general
amount to $2.5-billion in 1949 and a
outline of our position.
;<^mrnensur ate; amc^nLv Y/Y
$1.5 billion in 1950; and these
There is also, as- you know,.•the{The maturities that I have been
.amounts, when added to the cash
possibility that revenues?:! might; discussing are at the short end of
operating surplus, represent the
the Federal' debt structure.
Most
vary from the amount, shown .in;,
issues involved are owned
aggregate amount of cash inflow the President's
Budget.? Revenues
wnicn
the
Treasury will have have been estimated on
by/b^rflcs jfor the investment of
available.
end
investment
other
which
.
government
the
funded
have the, cialized
would
effect of reducing the Dec. 31 cash
important
in
insurance companies.
of 1945.
account/will have to be underlikely to., be. iaken/in 195T and thereafter.
expenditures during the calendar
.
tors
refunding—the entire $49 billion
on net balance is
likely to be re¬
4)
page
.
Savings Bond Program
You
$31 billion
holdings of Federal securities
by the banking system—a decline
in
full
in war.It is
.
v
there
of
debt
the
in
either
covers
the bond, note, and certificate
turities
in
1949.
They total
our
'
One
time
same
new
the
(Continued from
honds and notes.
classes.
the
decline
a
since
tial to
or
has
,
>
investor
At
been
approximately
peacetime
it
years.
most
liability uec. ai. There are, however, Ya
on
the savings bonds outstanding number
of factors • which
could
.grows
as
Li.eir value increases have an important influence on
the picture,; which have, not been
through interest accruals. The cash
operating surplus
comes
about, taken account of. .,".'..
tnerefore primarily because the
There is, first, the
possibilityGovernment's liability is increas- that expenditures might turn
put;
ing through a series of public debt .to be higher than the Budget, :tpr
programs already in operation.
<j example, there is the possibility :
;
Besides the cash operating sur-l0f
expenditures for the^security
plus,
the
Government
receives 0f the North Atlantic area./The
money from the sale of savings President mentioned this possibiL.
f
important
has
dustries be enabled to retain their
services
the
are
not turned in for
*
the
billion.
addition, there are $12
billion of Treasury bills outstand¬
ing which mature at the rate of
vital
nation
year
paid into them; and
of
some
affect the posi¬
they
as
greater than tne reduction in the
the
to
The State of the Federal Finances •^cep.t^for.^the tail-ends
Turing-. securities
'
them
39
class of inves¬
securities is
Life insur¬
ance companies
have been liqui¬
dating a small proportion of their
government
security
holdings
tion
ume
•
(791)
and I should like to discuss
important
the
maturities
issues mature,
as
like to spend a mo¬
now
on.
CHRONICLE
The
bar at the right-hand side
Treasury Chart sets forth
my estimate of where the public
debtf will stand at the end of the
1
the
calendar
the
1949.
year
it
as
same
The level is
was
on
Dec.
31,
,
-
than banks and insurance compa¬
nies liquidated about $6 billion of
Federal
securities
cilitate
their
.
.
,
-
"
tion
for
-Table
moment to the Treasury
a
which
'.Inflow
f fiscal
into
the cash
Treasury for the
segregates
the
1949
years
by
1950
and
.tYv-
shorter time periods.
eration.Y
16 mil¬
lion policies involved; and it may
be that payments may run behind
schedule and not be completed by
the end of 1949.
If this should
happen, the cash balance would
"Jv/ In the July-September quarter be
higher temporarily by a com¬
of the fiscal year 1949, the Treas¬
mensurate amount.
ury
had a cash-inflow of $2.7
With /ail these factors iri;
billion.
however, and on the basis of the
In the October-December-quar¬
,
ter- of the fiscal year,
there
cash
million^
j
was a
the January-March quarter
In
this
of
of $500
outflow
fiscal
,/;,(
/•-;.-!
■
J'
Y
,
" In the April-June quarter, there
"Will be a/ c&sh outflow of $900
million; and in the six months
1
*
5:
we
assumptions,
make
at this
poses
this
a/projection
realistic
as
can
for
time
operating
of the
is,; fthe ury's rcpsh; outlook.
;! !
a re X now
The movement of the
!quarter in which we
operating—the Treasury witLl^ave
;
cash inflow of approximately $4
,
about
year—that
.
.billion.
necessary:
? Y'Y
Y
cash bal¬
from $4.2 billion on Dec. 31,
ance
accounts—large¬
ly individuals' savings which are
reinvested
security
funds
in
the
and
form
ernments own $8 billion and non¬
profit institutions and miscellane¬
ous
investors another $7% billion.
The remaining $86 billion is held
in the banking system—that
is,
commercial
banks
and
,
YYY/Y:"
.
The Federal debt at $253 billion
represents
than
more
one-half of
total
the
present time. Before the
and falls.
the
Federal debt
This will be in
a
man¬
similar to that experienced in
ner
A
-
cash
YY
of
Increased
Gov-
eminent Expenditures
reoperations affect the cash balance
during the, calendar
l
-
one
as
I
that
•
year
have before
connection
With
the
public debt.
thing
now
run
daily
policy
which have to be made
ment of the
....
1949 is
me
consider/the various
decisions
in
I
figure
Dec. 31,
1949, would be
low
drop
as
the
we
should
Treasury
balance at the end of
the
of
a
year
$3.2
pru¬
cash
when
quarter
country.
debt
of
of
the
the
If
country
at
war
less than
was
total
debt
of
a
the
-As the result of the tre¬
mendous
growth
.•d.ebt during the
in
the
war
the Federal
a new
debt has taken
portance
in
Federal
place of im¬
our
to the Federal
Ac¬
happens
economy.
cordingly, anything
that
debt
is an impor¬
respect to the
whole; credit, picture of the coun¬
try. r On the other hand, whatever
tant/ factor /with
annual
expenditure
budget
running in the neighborhood happens-with, respect to the Na¬
$40 billion.. Please note that tion's, private debt and the posihave bern discussing cash bal¬ .tipnve&the.-various investor classes
was
We
ances
and not surplus balances.
of
by individuals
are
at
now
time high of $-38 billion.
an
tually increased since the end of
the
represents
war
most
of
would
us
Treasury Refunding
every¬
In
our
ury
/
addition
cash
to taking
care
of
requirements, the Treas-
will have
a
large amount of
4ie riebt/too;/*
a
trend that
guessed
incorrectly three years ago. Sav¬
ings bonds alone account for twothirds of individual holdings of
Federal
securities.
The savings
bond picture is most encouraging.
More than $32 billion of E bonds
alone are outstanding—an amount
you will be interested to know is
;;We,'/of ^necessity,
close. *■ watch
; on
the
must
various
keep
de¬
velopments in the financial world,
deficit for the
another
year
course
of action.
Wm. B. Goldie With
Lee
Higginson Corp.
(Special
to
The
Financial
Chronicle)
ILL. —William B.
Goldie has become associated with
CHICAGO,
than $1 billion higher than
end of our last wartime
the
drive.
Savings accounts have also in¬
creased
during the last three
years.
Currency and checking accounts,
after early postwar increases, have
recently shown some slight de¬
cline.
\
"
■
Y
Our debt management
since the end of the
directed
war
activities
have been
toward
W. B. Goldie
the
objective of
increasing nonbank holdings of
the public debt. We were able to
Lee
La
Higginson
Salle
off part of the debt, as you
know; partly from cash balances
formerly
available
pay
and
plus
war
Co.
partly from the budget
sur¬
as
at
the
during
end
of
peak
debt
of
1946, to
billion.
the
has
$280
a
past
declined
This
is
a
a
on Feb. 28,
level of $253
decline of $27
billion,
current
from
Corp.,
Street.
and
John
&
waukee.
Co.
Nuveen
the past he did
individual dealer
In
an
South
231
Mr. Goldie was
Riley
with
Milwaukee
the
The
.
and
have
the bank-held portion of the debt.
intimately
deficit for the fiscal year
a
1949
fiscal
arrived at on the
budget, which fore¬
all-
The fact
that'individuals' holdings have ac¬
connected
-
the
securities
Federal
two fiscal
years.
In managing these debt
pay-offs, we have been successful
in concentrating them entirely on
is,; rathe^
/
is
and
of
casts
this
Holdings
with the management of the pub-
of
manage¬
works out exactly as we
estimate, the balance would
down to $3.2 billion by next
as
dently
This picture of how the various
•?
about
on
balance
cant increase.
at
Debt
order to fa¬
-
1950. The main thing
wrong with that bar is that it is
too high.
It should be lower, and
by these corporations.
Corporate the only way that it could be low¬
holdings of* currency and bank ered is for the government to
deposits show arf unusually stable achieve a surplus of receipts over
level throughout the
last three expenditures during this calendar
years.
At the same time other year.
The President has stated
current
assets
of
corporations, that new taxes will be needed,
principally inventories and re-1 and must be enacted if the surplus
ceivables, have shown a signifi¬ is to be achieved. I strongly urge
more
Size of Public
/
the
billion
Y Possibilities
Federal
Reserve Banks.
'
<
social
insurance
1948, to $3.2 billion on Dec. 31,
1949, will-involve some sharp rises
previous years. The cash balance
July-December, which is the first will probably reach a peak -im
part of the fiscal year 1950, there March; but the level will, drop;
will
be a
cash outflow of $1.4 rapidly.
billion..
;
of
military
account for $37 V2 billion
of the debt.
State and local gov¬
—
Treas¬
••
.
is
as
pur¬
ment investment
in
early postwar ex¬
pansion.
Since the end of 1946
there has been little change in the
holdings of government securities
1948,
basis
of
&
business
in
Mil¬
.
With Merrill Lynch Firm
(Special
to
The
Financial
Chronicle)
ORLANDO, FLA.—Clarke Berdan has
joined the
staif of Merrill
Lynch, Pierce, Fenner & Beane,
100 East Robinson
Avenue.
40
(792)
THE
COMMERCIAL
Now
Securities
•
•
American Bakers Cooperative, Inc., Ithaca,
N.Y.
Feb. 9 (letter of notification) 200 shares of common stock
(par $100).
capital.
Price,
,
American
Jan.
5
Working
Underwriting—None.
par.
filed
Board
Box
Co.
(2/21)
15-year 414%
$5,400,000
convertible sink¬
ing fund debentures. Underwriter—Paine, Webber, Jack¬
son & Curtis.
Proceeds—To pay off a long-term obliga¬
involved in a pro¬
pulp and paper mill.
tion and to pay tor part of tlie costs
improve and expand
gram to
a
American
Light & Traction Co., Chicago
Railways Co. filed 634,667 shares
of American Light common ($25 par).
Underwriter—
None. Offering—Offered at $12 per share to holders of
Jan. 10 United Light &
United Light common of
Feb. 7, on
record at the close of business
share of American Light com¬
for each five shares of United Light common. Rights
mon
will
the basis of
one
expire March 9.
Animal
3
publicly offered in units of five shares.of preferred stock
and one share of common stock.
Price—$100 per unit.
Underwriter—None.
Proceeds
To purchase
—
property
Beneficial
due Feb.
(2/24)
Loan Corp.
Industrial
Underwriters—Eastman, Dillon & Co.,
Price—To be supplied by
Proceeds—To reduce outstanding bank loans
New York, will head a group.
amendment.
maturing
the next several months.
over
•
Big Tree Timber Co., Samoa, Calif.
Feb. 9 (letter of notification) 2,950 shares of Series B
common stock.- Price—$100 per share.
No underwriter.
machinery, to make timber contract pay¬
ments, to pay salaries and wages, and for other oper¬
ating requirements.
•/•/
To
purchase
L. I.
Feb. 11 (letter of notification) $12,000 10-year 2% (nonconvertible)
notes;
Price, par.
Underwriting—None.
•
Beach
Bittmore
Construct
•
National
of
Stock,
expenses
'
erence
liam
C.
D.
Y 1
other' obligations.
or
Electric
California
24
Co.-
Power
shares of 514% convertible pref¬
stock,. 1949 series ($20 par). Underwriter—Wil¬
filed
100,000
Co.; San Francisco, Calif/. Proceeds—To
additions and betterments.
Staats
R.
finance property
Electric
California
•
(2/23)
Co.
Power
bidding. Probable bidders include Halsey,
Stuart & Co. Inc.; Shields & Co.; Kidder, Peabody & Co.;
Blyth & Co., Inc. Proceeds—To retire $500,000 of bank
notes and to finance part of the construction progran*
of the company and its subsidiaries. Bids—Bids for pur¬
chase of bonds will be received by company at Bankers
competitive
Trust
Co.,
Wall Street, New York, up to
16
(EST) Feb. 23. /.f /-•/■'.-
Y/Yy-.Y
11:30
Y--/.Y/,< '•:
<
ton, D. C.' To operate company, purchase an excursion
securities of other transportation
boat and invest in the
amusement
•
9,285 shares will be sold by Norgreen Associates Inc. and!
others. Underwriting — None. Proceeds — Company will
Bank of Boston.
use
•
Casa
19, filed 10,666 shares of capital stock, of which
1,381 shares will be sold in behalf of the company and
Chemical Crops, Inc.,
Mitchell, Neb. v
Feb. 10 (letter of notification) 7,100 shares of common
stock.
Price—$5 per share.
No underwriter. For oper¬
Cleveland
Feb. 8
Illuminating Co.
Electric
464,912 shares of common stock (no par).
Underwriting—None, Offering—To be offered to holders
of outstanding common
of
In addition
14.
the
holders
the basis of
on
right
to
expects to offer share¬
company
purchase
same
Colorado Milling & Elevator
•
Columbia
companies.
De
Paga
*
'
-
,
Wash.
Seattle,
Gold Co.,
Gas
filed
14
writers—Names
to
be
25-year
determined
about March
or
notes and 4,500 common shares are of-:
of notes and 30 shares at $1,030
Gas Co.
notification) $14,000 first mortgage
sinking fund 5% bonds, due Aug. 1, 1960. Underwriter—
Braun, Monroe & Co., Milwaukee, Wis.
For working!
capital.
',
j
Hastings' (Minn.)
New York. (3/15)
debentures.
Under¬
competitive
•
through
27
(letter
of
(letter of notification) 780 shares ($2 par) com-;
stock. Underwriter—First of Michigan Corp. Pro-'
9
mon
ceeds to selling
'■
of notification) $50,000 of promissory notes
.with which 50,000 shares of corporation's common stock
supplies and
pay
Central
Jan.
10
mon
To purchase machinery,
No underwriter.
obligations.
.will be sold.
Power
Maine
.
Co.
(3/1)
stock.
ferred
(by amendment) 286,496 shares ($10 par) com¬
Offering—Company's common and 6% pre¬
stockholders have
such stock.
77.8% of
to
New England
common
preemptive rights to purchase
Public Service Co., which holds
stock, will waive its preemptive right
purchase 219,196 shares of the total issue, making such
shares
immediate
for
available
Underwriter—Harriman Ripley &
duce outstanding short-term
in
March.
•
1
11
filed
to
underwriter.
Proceeds—To
re¬
notes.- Expected first week
'
Co.
—
(no par) common stock at $50 per share or $8,156,650
of
3%
convertible debentures,
due 1959.
OfferingStockholders will be allowed to purchase, for
distribute
•
& Co.; Chas. W.
Co. will head a group
'$2,570,000 of bank borrowings and to future construction
outlays. Expected about Feb. 18, v/ith rights expiring
March 4.
1974;
4.
Power &
Light Co.
Rights
expire
will
March
Co., Augusta, Me;
$5,000,000 30-year first and general mort-
share.
t
\ J.f
Wash. /
Jan.
I
Ft
No underwriter. For explo¬
mi
and
Las
25
If
r
(Nev.) Thoroughbred Racing Assn.
500,000 shares, 6% cumulative preferred
Vegas
filed
500,000 shares common stock (no par).
Offering—To be sold in units of
one share of each at $5 per unit.
Proceeds—To purchase
land and construct racing plant and for working capital.
stock (par $5) and
shares ($13.50 par) common stock.
Offering:—To be offered to common stockholders of rec¬
ord Feb. 28 in ratio, of one new share for each five
held.
per
development of properties and purchase of
equipment.'
7 .F YYYm
>:/ 7.7"' ■//'/ '//■ Y'-'-'Y-Y, YY- ;■
X-
ration
(3/3)
writing—Unsubscribed shares will be sold at
$11
(letter of notification) 187,500 shares of common
stock., Price—500 per share.
31 filed 232,520
shares
15,
Idaho Consolidated Mines, Inc*, Seattle,
Feb.
•
Delaware
Jan.
(letter of notification)
8
July
•
Continental
•
Co., Jersey City, N. J.
$10.50 per share and the common at
Underwriting—None. Working capital.
Proceeds—To
tures.
Loan
$74,000 4xk% debentures
1,000 shares of 5% preferred stock
(par $10) and 500 shares of common stock (par $10).
The debentures will be offered at par, the preferred at
clue
purchasing the unsubscribed deben¬
be applied to the payment of
underwriters in
Hub
-
Feb.
Underwriters—Putnam
stock.
Scranton & Co. and Estabrook &
/YYYyY'
television innovation.
a
each eight
held, either one share of common at $50 or $50
of debentures for $50 in cash.
Unsubscribed shares
will be reserved for conversion of debentures into com¬
of
Proceeds—To develop, exploit and
Price—$3 per share.
shares
Underwriting—None.
21.
Under¬
competitive
Macoil Corp.,
•
Paramount, Calif.
Feb. 7 (letter of notification) 1,000 shares of common
bidding. Probable bidders: The First Boston Corp. and
stock (par $1); Price, market. No underwriter. Proceeds
Blyth & Co. (jointly); Morgan Stanley & Co., Harriman
to selling stockholder.
:■
Ripley & Co., White, Weld & Co. and Shields & Co.
(jointly); Lehman Brothers; Otis & Co. Proceeds—For
7 Macoil Corp., Paramount, Calif. ~
construction.. Expected March 3.
//.',• 4-7/Y;,''y Jan. 26 (letter of notification) 1,000 shares' ($1 par) o
common
stock being sold by < a director: at over-the•
Detroit & Cleveland Navigation Co., Detroit
counter
market price.
Underwriter —Dean Witter &
Feb. 8 (letter of notification) 15,000 shares of commonCo., San Francisco, Calif.
■
. •<;7.Y-7;.>
,
V/vY-'Y
($5 par). To be offered to stockholders. No underwriter.
To reimburse the issuer for shares purchased by the
Magma Copper Co., New York 77
7 7
issuer.
• ■■■'"'% /Y
'/ '■
:' »/'
Jan. 25 filed 204,000 shares of common stock (par $10);
.
,.
...
Offering—Offered for subscription by stockholders of
Feb. 15 in ratio of one new share for each two
Emery Hill Stores Co., Greenville, S. C.
Feb. 8 (letter of notification) 5,000 shares of common
stock. Present stockholders, other than the management,
•
will
be
share,
given until March
one
1949, to buy at $5
15,
record
per
agreed to purchase any unsubscribed shares, but have no
intention of making any public offering -thereof.
Pro-,
ceeds—Provide funds with which company may increase
share for each four shares now held. Under¬
S. Smith & Co., Inc., Columbia, ; S. C.
working capital.
/
:
:
,
its investment in San
Eureka, Inc., Central City, Colo.
Feb. 11 (letter of notification) 8,375 shares of common
stock.
Price—$1 per share.
No underwriter.
For pur¬
chase of truck and mining equipment and part for salary
•
payment.
Television
&
Radio
Corp.*.
;
shares ($1 par) common stock. Un¬
First. Guardian Securities Corp., New
Jan. 12 filed 270,000
The
—
To pay past due debts, to reestablish
credit position and for general corporate
purposes. Offering has been indefinitely postponed. International Telephone & Telegraph Corp. directors on
Feb. 9 voted to enter the television field and expand in
manufacture of other radio consumer goods through ac¬
York.
Manuel Copper Corp., a subsidiary.
.
Farnsworth
derwriter
.
$16.75 per share. Rights expire March 8.
Lazard Freres & Co. and Newmont Mining Corp. have
shares held at
writer—Frank
For
Central Maine Power
Feb.
sale
Co.
]
/.Y
L. I. City 1 (2/23-25)
Y/t!
Nov. 3 filed 160,000 shares ($1 par) class A stock.
Un-T
derwriter
Cantor, Fitzgerald & Co., Inc., New York*
Inc.,
.
Feb. 8 (letter
jj
Helicopter Air
poses.
alternative to issue either 163,133 shares
an
;
stockholder.
Service, Inc., Chicago, HI.
; |"
Feb. 11 (letter of notification) 30,000 shares (no par)
common.
Price—$3 per share.
No underwriter. - For
working capital to be used for general corporate pur-;
•
Hotelevision,
Jan. 31 filed
Manufacturing Co.
(Mich.)
Hastings
Feb.
15.
Connecticut Light & Power
71/1
.w
in units of $1,000
Dec.
bidding. Probable bidders: Morgan Stanley & Co.; Hal¬
sey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner &
Beane and White, Weld & Co. (jointly); Lehman Broth¬
ers, Goldman, Sachs & Co. and Union Securities Corp.
(jointly); Salomon Bros. & Hutzler, The First Boston
Corp.
Proceeds—To be used to finance part of the
1949 construction program.
Bids expected to be opened
on
N. Y.
unit and the balance of $50,000 notes and 4,700 shares
be purchased by three individuals at par.
Pay
salaries, corporate expenses, etc.
Co., Denver, Colo.
System, Inc.,
$20,000,000
of notification)
(letter
will
(letter of notification) 500 shares ($1 par) com¬
mon, to be sold at market on behalf of Thomas E. Murchison.
Underwriter—Paul H. Davis & Co., Chicago.
•
general corporate purposes.
per
Feb. 10
Feb.
No
10
fered
construction.
and for
•
Building Co.,
total $150,000 of
price any
stockholders.
Proceeds—To pay off
the
at
unit.
per
(letter of notification) $200,000 10-year (non-i
convertible) notes, due Feb. 1, 1959, and 9,200 shares
of common stock (par $1). Underwriting—None. Of the;
the original offering to
on
$5;20
Harrington, Righter & Parsons, Inc.,
•
Feb.
share
one
each five held at the close of business
stock for
new
March
shares
at
and for
stock
Hall
Feb., 11
filed
15
B
Minneapolis, Minn.
1
$23,500 4% first mort¬
gage bonds and 500 shares
(no par) common (to ba
sold at $100 per share).. No underwriter.
For addition
and improvements to one of its present buildings.
}
•
expenses
Cleveland
Feb.
class
of
common
of the corporation's existing FM radio
station and its proposed AM radio station.
erating
.
underwriter.
purchase 11,664 shares of Continental Electric Co.
To
development, capital expenses and op¬
the
For
9
shares
(letter of notification) 1,500 shares (no par) com¬
To be sold at $150 per share.
No under¬
writer.
Electronic & Television Corp.
(III.)
(letter of notification) 54,370 shares class A ($5
par) stock and 108,740 shares class B stock (100 par).
To be offered in units of one share of class A and two
stock.
mon
Geneva
Feb.
Broadcasting Inc.
(Ohio)
additional working capital.
its proceeds for
•
ating capital.
•
York
Gauiey Mountain Coal Co., New
Engineering Co. Carrizozo, N. M.
Jan. 28 (letter of notification) 500,000 shares of common
stock
a.m.
(par 50c).
Price par. Underwriter—William C.
For equipment and expenses.
■ >'// '' 'Hitchman Co., New York.
Capital City Boating Corp., Washington, D. C.
Jan."4 (letter of notification) 50,000 shares ($2 par) 6%
non-cumulative preferred stock;
Price, $3 per. share.
Underwriter—Lawrence R. Shepherd & Co., Washing¬
or
White, Weld & Co. (jointly); Shields & Co.; Otis & Co.
First National
mon
;
$3,000,000 of 3% first mortgage bonds, due
Underwriters—Names to be determined through
Jan. 28 filed
1978.
Proceeds—To reduce notes payable to The
.
operating
Jan.
Wash.,
Inc.,
Affairs,
(letter of notification) 1,000 shares of common
Price $15 per :share., No underwriter. For cur¬
26
rent
Massapequa,
Inc.,
Club,
club.
new
Bureau
Jan.
Jan.
loans
1, 1964.
.
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Salo¬
mon Bros. & Hutzler; Kidder, Peabody & Co.; Harriman
Ripley & Co.; Merrill Lynch, Pierce, Fenner & Beane and
Rights will expire about April 5.
V.
Price—$153.60 per share. No underwriter. To
capital.
//'V
. //'/'/,:■ :
/ jj
(no par).
increase working
$20,000,000 15-year sinking fund debentures
4 filed
Feb.
ISSUE
mined
shares not taken
equipment and to provide working capital.
and
Registration
PREVIOUS
SINCE
ADDITIONS
bonds, series R. Underwriters—Names to be deter¬
through competitive bidding.
Probable bidders:
gage
•
Inc., Buffalo, N. Y.
Foundation,
filed
5,000 shares of 6% cumulative participat¬
ing non-convertible preferred stock (par $100) "and 1,000
shares of common stock (no par value). Offering—To be
Feb.
INDICATES
in
Thursday, February 17, 1949
CHRONICLE
FINANCIAL
&
Proceeds
i
xjs e:mi-y
-■
i
m
i
am %
—
4*1
the. corporation's
quisition of Farnsworth Television; &-Radio.
Private Wires to
Chicago
Pittsburgh
Boston
New York
Offices in other Principal Cities
shares of Farnsworth stock
•
I
..
Y
f
>
.
:
I
L
■if\
.
outstanding.
Fuller & Smith & Ross
Inc., Cleveland, Ohio
stock
(letter of notification) 1,500 shares common
<iw7
.
;,
agreement has been reached in principle for an exchange
of one share of I. T. & T. stock for each 12 of the 1,680,568
Feb. 9
An
Corp.
«
>
*•••<•<
'
,.qicJ
I-
'/T
'"'-1
'
! > i
*-
<■
I
>
)
)
i 1
If
f
i
t
i,
i
:•
i
t
I
1
.'1
«
169
Volume
COMMERCIAL
THE
Number 4778
(jointly);
March
about
21,
1949
Television Corp
1949
held.
California Electric Power Co.,
11:30
(EST)_____
a.m.
Hotelevision Inc.
•
_Claes A Stock
____
Rockland Light &
Common
New
Common
March
Delaware Power &
VOMarcb '7,
r
West Penn Power
^
—Bonds, Pref.
1949
9,
Ry.
Equip. Trust Ctfs.
__
March
1949
10,
Staten Island Edison Corp
March
Columbia Gas System,
^
Bonds
21,
1949
March
New
•
a
stockholder
at
WQQW,
Securities being sold solely for benefit
& Co., Chicago.
A. O'Connor.
of Richard
New York (2/21)
Jan. 28 (letter of notification) 299,600 shares of common
stock
(par 250).
Underwriter—Mencher & JCo., New
York.
Price—$1 per share.
To finance manufacture
and sale of television receivers and cathode ray tubes.
Mineral
•
Jan. 26
stock.
Resources
H
M.
Corp., Santa Fe, N.
,;)
(letter of notification) 250,000 shares of Common
be sold at $1 per share. No underwriter. To
To
continue
development,
equipment and
purchase
to
for
Mineralized
Products
West
Inc.,
Beach,
Palm
Florida
Feb.
11
($1 par)
100,000 shares
(letter of notification)
capital stock.
Price—$2.50 per share. No underwriter.
For equipment, buildings and working capital.
:
Power &
Minnesota
Jan.
27
common
Minn.
Light Co., Duluth,
of notification)
(letter
59,090
shares
(no par)
Feb.
To be sold to stockholders of record
stock.
3, 1949 on basis of one new share for each 11 shares held.
American Power & Light Co. (parent) will exercise its
Price—$21 per ,share.
right to purchase 50,000 shares.
Underwriter
—
None.
Proceeds
—
For construction and
;
~
Minnesota Power & Light Co.
Jan.
28 filed
Underwriters—Names
to
be
(3/7)
bonds, due 1979.
determined through com¬
Probable bidders: Shields & Co.; The
First Boston Corp.; IJalsey, Stuart & Co. Inc.; Lehman
Brothers; Kidder, Peabody & Co.; Glore, Forgan & Co.;
Harriman Ripley & Co.; Otis & Co/ Proceeds—For con¬
struction or to pay off short-term bank borrowings.
Service
Public
Navajo Petroleum Co., Glenwood Springs, Colo.
Feb. 7 (letter of notification) 49,700 shares of common.
Pjrice—$1 per share. No underwriter. For leases, over¬
head, and development of property.
New
Feb.
York
State
Electric
&
Gas
Corp.,
Ithaca,
11
held by
filed
880,000
shares
($25
par)
common
stock
Offering
•—Shares will be offered to stockholders of G.P.U. at the
rate
held.
of
one
share for each
10 shares of G.P.U. common
Underwriters—A fee is to be paid by G.P.U. to par¬
ticipating dealers who have been instrumental in obtain¬
ing subscriptions. The First Boston Corp.; Lehman Bro¬
thers; Wertheim & Co. and Merrill Lynch, Pierce, Fenner
& Beane, will act as dealer managers.
Northern States
Power Co.
(Wis.)
(3/7)
first mortgage bonds,'due 1979.
Underwriters—Names to be determined through com¬
bidding.
Probable bidders: Halsey, Stuart &
Co. Inc.; Kidder, Peabody & Co. and White, Weld & Co.
(jointly); Glore, Forgan & Co.; The First Boston Corp.;
Blyth & Co., Inc.; Lehman Brothers and Riter & Co.
petitive
A
due
American
their
at
ers
issue
pro
cash
each
(par $1). To
of
Under¬
that
ments
The
of not,
20,
11
at
on
pany
•
one-fifth
new
com.
charter
share for each share held.
at
rate
to
10 %
and
rights to
to
expire
holders.
Feb. 7
Phosphate Co., Clearfield,
Utah
(letter of notification) 55,415 shares ($1 par) com¬
Price—$1.50
equipment.
Walthall
per
No underwriter. To install
share.
Y
Natural
Gas
Co.,
.
Y
Inc., Tylertown,
Mississippi
(letter of notification) 6,500 shares ($25 par) 5%
preferred and 26,000 shares ($1 par) common.
To be
offered in units of one preferred and two common at
$30 per unit. Underwriter—T. J. Feibleman & Co., New
Feb. 4
Orleans,
La.
gas
and
Water
(par
ganize
To
line and natural
contingencies.
gas
Well
Journal, Inc., Chicago, lll.y
(letter of notification) 1,000 shares of common
28
stock
Feb.
construct
for working capital
system;
a
$100).
Price
v
publication.
West
Indies
14 filed
par.
No
underwriter.
To
or¬
to
Of¬
a
It
rate
price
or
prices not exceeding $150
per
Power
($12.50
of the
on
more
sum of secured indebtedness, capital, stock
Company would like to eliminate this 10%
indebtedness which would
unsecured
than 10 years.
ma¬
/
If company's preferred holders, adopt these
amendments, company plans to. sell later, this year $4,000,000 of common stock to Electric Power and to market
amendment.
publicly about $8,300,000 in long-term debentures. Pro•
ceeds would
be used for
construction,
Bell
Telephone Co. of Pa.
Jan. 3 company filed with the Pennsylvania Utility Com¬
mission an application for authority to issue $25,000,000
25-year debentures on a competitive basis. Proceeds will
be applied to the payment of advances from the Ameri¬
can
Telephone & Telegraph Co. for expenditures on
additions and improvements to plant. Probable bidders:
Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.; The
First Boston Corp.; White, Welct & Co. and Union Secu4
rities Corp. (jointly).
•
Feb.
Bohack
9
(HI.
C.)
Co.,
Inc.
arranging new long-term
linancing to take care of capital outlays and strengthen
working capital. May be arranged privately.
reported
company
;
Cambridge Electric Light Co.
Jan. 10 The Massachusetts Department of
authorized company to issue $2,750,000
the interest
rate
to
be
determined
Public Utilities
25-year notes,
through competitive
Proceeds will be used to retire $1,750,000 bank
notes and to
Sugar Corp., New York
74,880 shares ($1 par) common stock.
that they would bear interest at
& Light Co.
asked SEC for authority to change its
increase its common stock capital and unse¬
surplus.
bidding.
•
to
improve¬
Company's parent, Electric Power & Light Corp., has
to vote its holdings of 1,780,000 shares of out¬
Arkansas common in favor of the proposed
purchase 297,304 shares. Rights are
on or about March 2.
Underwriter
Proceeds—For general funds.
Utah
and
and
used
standing
Hughes Tool Co.
Lynch, Pierce, Fenner & Beane, will head a
group
of Y underwriters purchasing any unsubscribed
shares of remaining 106,808 shares not taken by stock¬
additions
be
agreed
of
(owner of 74% of outstanding shares) will exercise sub¬
scription
debentures
would
Company wants to increase its au¬
par) common stock from 2,000,000 to
3,000,000 shares. The amount of unsecured indebtedness
which may be issued under the present charter is limited
Inc.
16
the
indebtedness.
cured
stock. Offering—
Feb.
extensions,
for
of
stock
14 company
ture in
of record
sale
into
than 3%%, would mature not later than June
Arkansas
Feb.
projection receivers, working capital.
($5 par)
the
thereof
April 20. If stockholder approval is granted, com¬
expects that assignable warrants to subscribe to
debentures at their face amount will be
of
stockholders
from
sent to stockholders on or about May 15, 1949, following
registration of the issue with the SEC.
(par 10): Price—25c per share. Underwriter
Co., New York.
Organizational expense,
offered
outstanding is made. It is expected
meeting will be mailed early in
It is expected that final decision as to amount and
limitation
be
the
1949,
the convertible
&
Jan. 28 filed 404,112 shs.
basis of
15,
debentures would be dated June 20, 1949.
more
purchase of component parts required for manufacture
Air,
the
Feb.
the
conversion
a
ing
Asbury Park,N.J. (2/21)
1,200,000 shares of com¬
Western
On
at
terms of the issue will be announced at the annual meet¬
(letter of notification)
&
held.
1964, and would be convertible into A. T. & T. stock
thorized
Transcontinental
$100 of convertible debentures
T. & T. and its subsidary and
companies, and for general corporate purposes.
new
share.
capital.
stock
new
the plant of A.
is contemplated
(letter of
15-year 4V2%
sinking fund debentures, due Feb. 1, 1964. Underwriter
Ohio Co., Columbus, Ohio.
To construct ware¬
house, pay off bank loans and provide additional work¬
mon
for
funds
to
associated
—The
Feb.
a
be offered
The amount is to be determined
stock
outstanding
of stock
Proceeds
'
Co., Tiffin, O.
notification) $200,000
Trad Television Corp.,
of
shares
conversions
provide
Metal
•
shares
proxies
March.
No underwriter.
ing
authorize
20
the
approximately $391,000,000
if the maximum offering of $100 of debentures for each
to acquire outstanding stock of the
Mammoth Mines Corp. and for further development of
properties.
Art
°
amount of the issue would be
share
advanced,
8
meeting April
debentures which would
not to exceed
six
number
rights expiring March 8.
Tiffin
annual
rata to stockholders.
for
per share and balance will be issued for
previously advanced for property development.
underwriter.
To
liquidate promissory notes and
•
be
Telephone & Telegraph Co.
of convertible
later but is
cents
10
Jan.
Underwriters—Names to
1969.
through
Feb. 16 directors voted to recommend that the stockhold¬
money
•
.Y/J..'
deter¬
•
.
.
■;
Prospective Offerings
To
Mining Co., Seattle, Wash.
*
Feb, 7. (letter.of notification) 2,989,001 shares of common
stock,, of which 680,000 shares will be sold to public
to
YvC■■■
Y;
competitive bidding. Probable bidders*;
Halsey, Stuart & Co. Inc.; The First Boston Corp.; Kidf
der, Peabody & Co. Proceeds — To prepay short-term
notes, refund 3J/2% first mortgage bonds due 1954 and
pay short-term promissory note.
Expected Feb. 28.
Stella
•
treasury for capital * :exJ
Y• Y Y■ YyA<YYY;'Y • Y1 Y
thecompany's
series
(2/25)
Co.
Price—By amendment.
and Lillian M. Webster.
Feb.
of a group
Proceeds-^-*
bonds;
mined
Standard-Thompson Corp., Dayton, O.
Feb. 11
(letter of notification) 31,000 shares ($1 par)
common, to be offered at market by Reginald N. Webster
at
co-managers
subscriptions:
Jan. 26 filed $2,150,000 first mortgage sinking fund
•
•
are
solicit
Y YY" Worcester. Gas/Light Co.. (2/28)
from
•
Jan. 28 filed $10,000,000
reimburse
& Co.
will
pendi.tures.7YvY; Y:-
25 with
mon.
General Public Utilities Corp., parent.
W. Baird
which
six shares
•
New York
dealers
held, plus additional shares not taken by
other stockholders.
Lehman Brothers
by
and Robert
To
—Merrill
'
V
shares held.
expected
Expected about March 7.
•
10 shares
subscription
writer—Dillon, Read & Co. Inc. will head a group to
purchase the unsubscribed shares. Proceeds—For con¬
struction and to repay bank loans. Expected about Feb.
$4,000,000 first mortgage
petitive bidding.
•
for each 11
—Tellier
other purposes.
v
each
11
No
operating expenses.
•
Co., Milwaukee, Wis.
due 1979,
and 266,093 shares ($10 par) common stock. Underwrit¬
ers—Bonds will be sold at competitive bidding.
Prob¬
able bidders include Halsey, Stuart & Co. Inc.; Equitable
Securities Corp.; Lehman Brothers and Salomon Bros.
& Hutzler
(jointly); Merrill Lynch, Pierce, Fenner' &
Beane; Union Securities Corp.; The First Boston Corp.J
Blyth & Co., Inc.;' Glore, Forgan & Co. Stock will be
offered to existing holders at the rate of one share for
Metals, Inc., Reno, Nev.
(letter of notification) 1,000,000 shares of capital
.
Major Television Corp.,
Electric Power
filed $10,000,000 first mortgage bonds,
14
of
be offered to stockholders at the rate of one new
Magnavox Co., Fort Wayne, Ind.
notification) 3,500 shares ($1 par) com¬
stock. Price at market. Underwriter — Cruttenden
preferred about March 8.
Wisconsin
Feb.
operating capital.
Feb. 3 filed 112,486 shares of common stock
Feb. 7 (letter of
common.
Feb. 23.
Southwestern
mon
•
.
Preferred
Pittsburgh, Pa. (3/8)
30-year first mortgage bonds,
(parent) and to public holders of
outstanding common at $28.50 per share. Proceeds—To
pay off bank loans and to finance construction.
Bids for
share first to each of
stockholders on a pro rata basis.
For additional
Co.,
West Penn Electric Co.
To be offered at $25 per
common
Power
$10,000,000
series C ($100
Underwriters
competitive bidding.
Probable bidders: Halsey, Stuart & Co Inc. (bonds only);.
Kidder, Peabody & Co.; Lehman Brothers; The First Bos¬
ton Corp.; W. C. Langley & Co.; Smith, Barney & Co.;
Harriman Ripley & Co. Common stock will be sold to
Factors Corp.,
Charlotte, N. C.
(letter of notification) 1,400 shares of common
stock
(par $100).
Price, par.
No underwriter.
For
working capital. Y
1949
24,
Staten Island Edison Corp
•
$3
Inc., Washington, D. C.
notification) 2,000 shares of Class A
of
Penn
filed
par), and 70,000 shares (no par)
Southeastern
Feb.
Bonds
England Telephone & Telegraph
March
of
Price—25 cents per share.
No underwriter.
equip and develop mining property.
-Bonds
11
—Bonds and preferred to be sold at
1949
22,
Co
Power
behalf
on
share;
27,500
stock.
_____Bonds
Eastern Gas & Fuel Associates
West
Sound State
Feb. 10
March
Gulf
'/•
—Debentures
Inc.__.
•
30
(EST)
1949
15,
public at $3 per
to trade accounts;
series C,
due 1978. Underwriting—Names will be determined by
competitive bidding./'Probable bidders: -'Halsey, Stuart
& Co. Inc., Harriman Ripley & Co., Merrill Lynch, Pierce,
Fenner & Beane and Kidder, Peabody & Co. (jointly);
Carl M. Loeb, Rhoades & Co. Proceeds-—For construc¬
tion and the retirement of bank borrowings.
Bids—Bids
for purchase of bonds will be received at office of Bank¬
ers
Trust Co., 16 Wall Street, New York, up to 2 p.m.
/Y'-Y'yYYyY'
,__
March
v
Southern
Co
(letter
fering—To be offered in exchange for 16,000 shares ($100
par) common stock of Compania Azucarera Boca Chica,
C or A. Underwriting—None.
'
<
bonds and
Rockland Light & • Power Co. (2/23)
filed $7,500,000 first mortgage bonds,
;
Dec.
Equip. Trust Ctfs.,
Missouri-Kansas-Texas RR
Indefinite.
Y',.v
Station
present
1949
8,v 1949
3
the
Light Co.___
—Bonds
(Wis.)__________Boiids
/March
>
par)
($1
Underwriter—Otis
10,000
No underwriter.
Northern States Power Co.
Y_:: YY/Y/Y',YY/
to
offered
be
1.
common.
.
Minnesota Power &
to
sold
be
offered
be
Radio
Feb.
-Common
Light Co:
Cleveland, O.
100,000 shares
For working capital.
to
share and
•
Trust Ctfs.
3, 1949
Corp.__-Equip. Trust Ctfs.
Delaware & Hudson RR.
to
March
1949
RR.__Y______Equip.
Central
York
Pro¬
options at 10 per share.
Under¬
writer—Willis E. Burnside & Co., Inc., New York.
For
working capital and payment of taxes. Expected about
of Wash. (D. C.)-Common
•''IWni*ch ':2
stock
shares
per
Central Maine Power Co:_____-____-
Pepsi-Cola Bottling Co.
Co., Cleveland.
shares
1949
1,
Inc.,
To be sold at market.
stock.
40,000
Bonds
Light Co
March
Industries,
41
series N, 50,000 shares of preferred stock,
(par $25).
Underwriting—None.
(letter of notification)
common
1949
28,
February
Gas
Co.
Electric
Pepsi-Cola Bottling Co. of Wash., D. C. (3/1)
JDec. 21 (letter of notification) 31,500 shares (100 par)
1949
25,
Southwestern Public Service Co
Worcester
&
Debentures
RR., Noon (EST)__Equip. Tr. Ctfs.
February
27
common
February
Northern Pacific
&
extensions, additions, etc.
Pathe
Jan.
Power Co., 2 p.m. (EST)__Bonds
24, 1949
Beneficial Industrial Loan Corp
Gas
Rights expire April 8.
ceeds—For
__Bonds
________
(793)
Feb.
Offering—To be offered at par to stockholders of record*
Feb. 25 at the rate of one new share for each 10 shares
—.Common
__
23,
February
Lynch,
Merrill
Jan. 28 filed 754,038 shares of common stock
Major Television Corp.________________—Common
Trad
(Inc.);
Co.
&
7.
Pacific
T.___Bonds
—Y
American Box Board Co._i.
Hall
CHRONICLE
Pierce, Fenner & Beane; Harriman, Ripley & Co. and
Union Securities Corp.
(jointly). Proceeds—For con¬
struction or to pay off temporary borrowings. Expected
NEW ISSUE CALENDAR
February
Harris,
FINANCIAL
&
restore replacement funds borrowed to fi-
(Continued
on page
42)
42
(Continued from page 41)..
Pierce, Fenner & Beane and White, Weld & Cq: (jointly); r shares of 2,638,160; Following approval of the SEC, the*
common stock and bond offerings would he registered?
Stone & Webster Securities Corp.
for 'sale by Ohio Public Service. Underwriters would be?
i•«' Illinois Central RR;
\VW'
:•
invited to submit bids op. both the stock and bonds tqj
Jan. 28 reported company planning sale of $6,800,000
be offered. ^Probable bidders; Halsey,,Stuart & Co. IneL
equipment trust ctfs. in March. Probable bidders: Hal¬
(bonds orily); Blyth & Co.," Inc.; Merrill Lynch, Pierce,
sey, Stuart & Co. Inc.; Harriman Ripley & Co. and Leh¬
Fenner & Beane and Kidder Peabody & Co. (jointly)
man Brothers
(jointly); Harris Hall & Co. (Inc.};: The
otis & Co. • *
First Boston Corp.; Salomon Bros., & Hutzler.
1.
•;<*? •• Pacific Lighting Corp.,f •//•;/;
•
Hollingsworth & Whitney Co*, Boston, Mass.
Feb. 12 reported company plans sale of 100,000 shares
Feb. 15, company announced that it is contemplating the
new preferred stock
(par $100). Blyth & Co., Inc. Will
issuance of $8,500,000 20-year sinking fund debentures
probably be underwriter.:*
r -r; V*-:'/ •> *
'
'
and the sale of 61,510 additional shares of common stock,
:
improvements. Probable bidders: Halsey,
Stuart & Co. Inc.; Harriman Ripley & Co.; The First
Boston Corp.; Kidaer, Peabody & Co.; Otis & Co.
plant
nance
Chesapeake & Ohio Ry. < ■
1 reported planning sale of an additional block of
equipment trust certificates early in March. Probable
bidders: Halsey, Stuart & Co. Inc.; Harriman Ripley &
Co. and Lehman Brothers (jointly) Harris, Hall & Co.
(Inc.); Salomon Bros. & Hutzler.
•
Colorado
Fuel
&
.
Iron
Corp.
consider issuing approxi¬
mately $12,0OO,0C0 first mortgage bonds.
stockholders
21,
RR. Corp.
•
net
Feb. 9 company was granted
Mobile
(3/3)
Feb. 1 company
asked authority of ICC to issue $4,800,000
of equipment certificates to help finance the purchase of
29 diesel locomotives and 600 freight cars which are ex¬
completion. Probable underwriters: Harriman Ripley &
Co. and Paine, Webber, Jackson & Curtis.
.
pected to cost $6,492,925. Probable bidders: Halsey, Stuart
& Co. Inc.; Salomon Bros. & Hutzler; Harriman Ripley
Feb. 15 reported
&
Co.
Co.
Date
(Inc.).
March
for
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co., and
Lehman Brothers
(jointly); The First Boston Corp.?
New
to carry on the $150,000,000 plant expansion
Company expects to rely on capital stock and
bond financing for its near-term capital requirements
and has no plans for issuing preferred stock.
permission
SEC
sell
to
com¬
petitively $12,000,000 25-year bonds, the proceeds to
provide funds for its construction program. Probable
bidders: Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Coast
East
Florida
•
company
Brothers
(jointly).
Jan.
their
at
meeting March
annual
preferred stock from 80,000 to 120,000 shares; increasing
the authorized common stock from 1,210,000 to 1,600,000
•
unless after such issuance the
aggregate amount thereof shall be less than 75% of the
total capitalization. Traditional underwriters of stocks:
Kidder, Peabody & Co.; Merrill Lynch, Pierce, Fenner &
shares of preferred stock
ized
common
trust
SEC
1950,
Fla. (3/22)
permission to sell competitively $2,-
500,000 30-year first mortgage bonds.
Expected com¬
f.- -^
v
(3/2)
V
of
March
to
Probable bidders:
Corp.
son
Expected about March 22.
•
Ohio
The
Feb. 11 asked the SEC for permission to
361,840 shares of common stock and
around
:
mium
for
terest
rates
dealers and traders con^
loan
due in
&< These
for
what
The bankers go right on pay¬
the
guided
whether
buy
*
and
on
a
a
new
task
of
has
apparently
impasse.
it
de¬
velops, just won't be moved in
Prospective
buyers,
their views
of what the
should
on
varying
be
ratings.
new
Right
the
their
they
such
now
own
will
or
will
return
of
issues
And
bankers,
by the same token, are still in¬
clined to stand by their judg¬
condiditions in the market call for in
way
of
yields
on
new
'
gives
judging by cur¬
reports.
paid the
group
for
successful
The
100.803
company
and will reoffer at 101.31 to yield 2.81%.
man¬
a
2%%
coupon,
especially adamant judging by re¬
cent experiences
in new offer¬
2,85% basis, so the
story goes, the issue would have
moved.
But on the basis fixed,
it looks decidedly sticky despite
the triple A rating which it car¬
ries.
who
agers
bulk
constitute
the
vast
of the market for top-grade
bonds
appear
to be
investment
The
Edison
bulk
Co.'s
of
the
of new
brought
out
a
fortnight
ago
priced
at
102.399
to
yield
approximately
2.88% are still in the syndicate's
$50
million
first and refunding bonds,
hands for
This struggle has been
on
Yet
was
bids
the
the
example.
Now the Duke Power Issue
quite
not1 deter
evidently
bankers
this
from
the
did
bid
of
the
runners-up
four
was but 66 cents per $100 off
best, indicating pretty much
while
same
the
of
lowest
line of thinking.
High
Some
paying
a
on
only 37 cents lower per $100
piece
,
But
going
Well,
Consolidated
se¬
curities.
.
rent
not
ment of what pervading
the
writers' hands,
011
figures.
these portfolio
however,
into the under¬
"worker"
other
are
lights
action,
indication of having brought an¬
mar¬
issues,
new
30 years.
Their
ings.
investors
placing
basis to yield satisfacr
the
returns
reached
securities
marketing
institutional
have
funds
tory
is
those
who
those whose
between
The feud
at
think
prospective buyers
by
White
bidders:
They point to
yield of around 2.80%
and double A bonds.
both factions.
and
of
Competitive bidding is expected
Probable
high enough, all
anything beyond the obstinacy of
for
bonds.
Weld
&
Co.;
Fenner &
levels which
intermissions
they
1.
Inc.;
they considered a resonable
price, under going conditions, for
Duke Power Co.'s $40 million of
new
first and refunding bonds,
warrants
new
June
discuss plans for sale
to
Salomon Bros. & Hutzler; Merrill Lynch, Pierce;
Beane and Hallgarten & Co. (jointly); Glore,
Forgan & Co. and W. C. Langley & Co. (jointly).
months and as yet does not
appear to have definitely proved
what
•».'' v
it-'
18 directors scheduled
parent, Cities Service Co., has also applied to the com¬
mission for authority to sell 638,160 shares of its Ohio
Public Service common of which it owns all outstanding
an
many
ket
exceed
UniomSeeurities Corp., and Kuhn, Loeb & Co. (jointly);
Stone & Webster Securities Corp.; Halsey, Stuart & Co'.
$10,000,000 of 30-year first mortgage bonds.
ing
Corp.
Company's
additional
sell
expects to raise additional new
through sale of from $6,000,000 to $7,000,000 in
new mortgage bonds.
Probable bidders: Halsey, Stuart
& Co. Inc.; Salomon Bros. & Hutzler and Union Secu¬
rities Corp. (jointly); Lehman Brothers; Merrill Lynch,
occasional
Probab^
Stearns
Virginia Electric & Power Co.
$20,000,000
money
with
■'
v
•
Feb.
^
company
Foods
Bear,
(to be placed privately) an
an increase in the authorized common stock
by 110,00
shares, the latter to be sold at not less than $10 per
share. Net proceeds are to be used to retire $1,100,006
demand notes held by Orange^ Concentrates Associates,
Inc. and for plant expansion and working capital.
Service Co.
Public
and
$2,000,000 of funded debt
Harriman Ripley & Co. and Lehman
(jointly); Salomon Bros. & Hutzler; Harris,
Co. (Inc.); Kidder, Peabody & Co.; Lee Higgin-
&
Hall
Light Co.
Feb. 9 stockholders authorized issuance of not to
Halsey,
bidders:
Probable
1964.
15,
&
Lehman' Brothers
Vacuum
•
(2/24)
Railway
Power
& Co.
(jointly); Halsey, Stuart & Co, Inc.; White, Weld & Co.;
Harriman Ripley & Co., Inc.; Salomon Bros. & Hutzler;
The First Boston Corp.; Blyth & Co., Inc.; Otis & Col
Company is expected to raise new money through sale^
probably in May, of 148,000 additional shares of common
stock. The stock will first be offered for subscription by
present stockholders. Probable bidders: The First Boston
Corp.; Kidder, Peabody & Co. and Merrill Lynch, Pierce,
Fenner & Beane (jointly); Harriman Ripley & Co.
-v--."'./
Jan. 14 reported company
business
stock by March 24.
reported company is expected to sell $3,000,000
bidders:
Brothers
Utilities Co.
Gulf Slates
the preferred
on
bonds in April to finance its plant expansion.
Stuart & Co. Inc.;
Equitable Securities Corp.; Halsey, Stuart & Co.; Otis &
Co.; Kidder, Peabody & Co,
RR.
21
Jan.
certificates, to be dated March 15, 1949, and to ma¬
in 15 equal annual instalments from March 15,
tures
& Co.
Gulf Power Co.* Pensacola,
Feb. 7 asked
new
retire the company's short-term
Thompson's industries, Inc.
Utah
25-year ^deben-
$35,000,000
Company has issued invitations for bids to be received
before noon
(EST) Feb. 24 for $6,000,000 equipment
upon.
underwriter: Estabrook
sale
for
Northern Pacific
on
$2.50. Disposition of additional shares not decided
No financing said to be imminent. Traditional
par
©
receive bids March
$12,300,000 equipment trust certificates.
Probable bidders: Halsey, Stuart & Co. Inc.; The First
Boston Corp.; Harriman Ripley & Co. and Lehman Bro¬
thers (jointly); Salomon Bros. & Hutzler.
2
increasing author¬
stock from 25,000 shares to 100,000 shares,
vote
covering
York Central
New
Co.
stockholders will
10 and
March
Feb. 9 reported company expects to
Beane.
29
bonds would
directors authorized the preparation of a, regis¬
statement
will open bids March 22.
pany
restricting
Foote Mineral
in
$4,000,000
(3/8)
Stanley & Co.; Halsey, Stuart & Co. Inc.
the issuance of additional in¬
debtedness maturing more than 12 months, or additional
March
first mortgage bonds and
preferred stock. Proceeds from the
indebted¬
ness and jifbvide funds required for expansion. Proceeds
from preferred stock would be used by company to carry
cut its plan of recapitalization.
Probable bidders .on
bonds: Halsey, Stuart & Co. Inc.; The First Boston Corp.;
Harriman Ripley & Co.; Kidder, Peabody & Co.; Otis
& Co. On preferred: W. C. Langley & Co.; Kidder, Pea¬
body & Co;;; Stone & Webster Securities Corp. and(
White, Weld & Co. (jointly); Lehman Brothers; The
First Boston Corp.
Bids on bonds are to be received'by
tion to issue $2,750,000 30-year
tures, to be sold at competitive bidding in March. Pro—,
ceeds will be used to redeem on June 1, 1949, $35,000,000
outstanding first mortgage 5s. Probable bidders: Morgan
amendments to the certificate of
reincorporation to provide for increasing the authorized
and
18
tration
31
will consider proposed
shares
(3/10-24)
The stockholders of Thompson's Spa, Inc. (controlled by
equipment trust certificates. The proceeds will be
Sheraton Corp of America) have authorized the issuance
used in connection with a $3,320,035 purchase of 500 V.
of 120,000 shares ($1 par) convertible prefer.ed, also" an
freight cars and two diesel locomotives. Probable bid¬
increase in the authorized common to 2,100,000 shares
ders: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
from 300,000 to take care of conversion, privileges of xhe
Harriman Ripley & Co. and Lehman Brothers (jointly);
new preferred.
The new preferred is to be offered al(
Harris, Hall & Co. (Inc.).. Bids expected March 8.
not less than $15 a share. The name of Thompson's Spa,
Inc. has been changed to Thompson's Industries, Inc.'.
;
New England Teleph. & Telegraph Co. (3/22)
"
stockholders
Edison Corp.
000
has asked the ICC for permission to
Florida Power Corp.
The
equipment trust cer¬
Probable bidderss
9,
Feb. 15 company asked ICC for authority to issue $2,550,-
Ry.
sell
$2,060,000 equipment trust certificates, the proceeds to
be used for the purchase of 10 new diesel electric loco¬
motives, costing about 2,761,846. Probable bidders: Hal¬
sey, Stuart & Co. Inc., Salomon Bros. & Hutzler, Harris,
Hall & Co. (Inc.), Harriman Ripley & Co. and Lehman
The
RR.
Island
Staten
stock will include Otis & Co.
Mossouri-Kansas-Texas
March
received
Jan. 28 New York P. S. Commission authorized corpora¬
Co. (jointly); Lehman Bros.; Harris, Hall & Co. (Inc.);
Halsey, Stuart & Co. Inc. (bonds only); Harriman Rip¬
ley & Co., Inc.; Dillon, Read & Co.; First Boston Corp.
White, Weld & Co. and Kidder, Peabody & Co. (jointly).
Expected about March 21.
(3/9)
Ry.
Salomon Bros. & Hutzler.
to provide funds for
necessary
Michigan Consolidated Gas Co.
Feb. 1 reported company is planning sale of $14,000,000
in new bonds and $7,000,000 in preferred stock. Probable
bidders: White, Weld & Co. and Salomon Bros. & Hutz¬
ler (jointly); Glore, Forgan & Co. and W. C. Langley &
(3/21)
Fuel Associates
&
financing will be
common
program.
asked
Co.
Electric
&
Gas
Southern
:
tificates- ; Will be
contemplated plant additions aggregating about $3,000,000, according to the annual report, but the form and
amount of the financing have not yet been determined.
Of said amount, approximately $1,900,000 will be spent
in 1948 and the remainder in 1949. Probable bidders for
if necessary,
Gas
.
Bids for the purchase of $11,850,000
Madison
only enough stock for the probable conversion into
company
of ..the
Proceeds
bank loans and, provide
repay
,
Co.; Equitable Securities Corp.; Blyth & Co., Inc.
capital stock of the recent issue of $46,641,400 of deben¬
Eastern
.
f
on
tures, but also that it may have stock available for sale,
28
construction,
for
preferred.
or
common
bonds. Offering expected late in March or early
April.
Groups likely to compete include: Halsey,
Stuart & Co. Inc.; White, Weld & Co.; Glore, Forgan &
increasing the author¬
ized capital stock from 10,000,000 to 15,000,000 shares
(par $20). This authority is requested by the manage¬
ment in order that company may have available for issue
Jan.
of
financing will be used to
probable offering by company of $10,000,000 in new
a
five
each
4
'
f
.
in
3,
March 15 stockholders will vote
not
Light Co.
banking groups are being formed to bid
money
Detroit Edison Co.
•
Power &
Kansas
for
(jointly); Harris Hall &
opening bids expected to be
Brothers
Lehman
and
•
Pacific
Telephone & Telegraph Co,
authorization by the Cali¬
fornia PUC to issue'828;920 shares ($100 par) common?
for sale to present shareholders. The company intends to
offer the new stock in the ratio of one new share tor
proceeds of which are to be used to pay for its
(Ala.) expansion program;-It is estimated that a
further expenditure of $10,500,000 will be; required for its
the
will
Hudson
Delaware &
■
■
Feb.
March
Thursday, "February 17, 1949"
FINANCIAL; CHRONICLE
&
COMMERCIAL
THE
(794)
Grade
observers,
perhaps
market
has
average
triple
tend
that
directions they
conclusion
that
the
other
the
reach
offered
yields
enough.
.
the
achieved
institutions look
when
in
around
not
are
liberal
and
the
ing
apparently
on
suit
a
American Tel.
seeking to set
margin.
of
financing in
for naught
Latest
can
bid
New
for
Orleans
Terminal
the
$15
Union
revenue
high bidder offered a
Telephone
convertible
naturally
Passenger
The
$42,000 pre¬
&
i!
Tel.
that Arnern
Telegraph
&
up
Co;,
its next piece
a manner
debenture
would
first
fered
that
will
to
have
is
stockholders
on
nies
any
story is that the
would
a
_
endeavoring to
so
a
issue, ;_i,t
to be of¬
"rights" basis.
million nancing
bonds.
are
placement.
Expected to take the form of
One
the ease when three
reports
insure quick
for some unforeseen reason-.
was
rejected,
contend¬
ing the issue is illegal.
is
to have their efforts go
reoffer-
were
filed
was
only 40 to 45
thereabouts,
above
Treasuries,
and, they
wonder if this isn't too thin a
in a while that
bankers go through the task of
calculating a deal, shaping up
their bids accordingly, and suc¬
ceed in capturing the issue only
the
won
1.10% to 2.70% basis,
course,
to award./
a
But then all bids
or
It happens once
a
2.5725%.
subject,, of
where the yield is
basis ' points,
in^
or
successful
with
proceeded
group
of
maturities,
Convinced that it had
when
They point out that top-grade
combination
a
net interest cost basis of
corporates have reached a level
groups
majority, feel that the high-grade
corporate
an
for
That
Market
are
things considered.
company
set'up
the*fi¬
that insurance compa¬
be
ready to
take'ur)
portion which might remain
unsubscribed
by stockholders.
Volume
169
Number 4778
THE
COMMERCIAL
FINANCIAL
U
CHRONICLE
(795)
SEG Files Complaint Against New York Brokers
(Continued from
NSTA Notes
other than Hancock
in these dummy accounts sales of
the
particular
securities
which
Hancock
half
proposed
the
of
Funds
sales
SECURITY TRADERS ASSOCIATION OF NEW YORK
effected
were
Keystone
after
and
the
sell
to
Custodian
natural
ac¬
quiring the securities from the
Keystone Custodian Funds (ex¬
cept when
else happened
someone
"to get ahead" of Keystone in the
market).
The
"
t ***&
M
complaint
further
charges
that in executing this scheme the
defendants maintained brokerage
accounts in the
w-
names
of the fol¬
Matter
similar
D. Raymond
Kenney
Arnold
J.
Duke
Wechsler
Hunter
Junger, Anderson &
Co., Young,
& Golkin, J. R. Williston &
Aal
the arrangements committee is D. Raymond Kenney, Kenney &
ell. Arnold Wechsler, Ogden Wechsler & Co., is Chairman of
Pow¬
ticket
reservations, and "Duke" Hunter, Hunter & Co., is in charge of room
Exchange Reports Deficit for 1948
gain
would
the
officials
ernment
upper
have
just
been
hand in world affairs.
Gabriel
Caplan, a former em¬
our
firm, and others.
ployee
of
We
understand that it is charged
that Mr.
Caplan obtained from
an
employee
sale
orders
to
be
conditions
it
Administrator.
is
not
lend
against
money,
in full in
repay
they
promise to
a
where
from
to place it unreservedly
were
at the risk of a business.
edged
were
fixed time, than
a
the
redeem
to
foster
This atti¬
with
doubt
money
this
them.
debt.
'
effect
those
on
,
\
ture
issued
of
such thing occurred,
If
Custodian
.
Funds,
Inc.,
sions
to
the
individuals
con¬
cerned, the extent to whieh such
profits and commissions may have
some
indications
of
public and gov¬
a
proceedings.
Williston
if
which
has
suffered
have
The
I. Case
else
anyone
March
12,
H.
D.
February
a
quar¬
ALEXANDER,
Secretary,
1949.
9,
as
The United Corporation
Cumulative
$3
Preference
Stock
The Board of Directors of The
United Corporation has declared the
Company
the
declared
has
dividend of $1.50 per share and an extra
of $1.50 per share payable on March
14, 1949 to stockholders of record at the close
of business on February 21, 1949.
regular
close
of
quarterly dividend of 75(f
share upon the outstanding $3
per
February 15, 1949.
A dividend of $1.75 per share upon the out¬
standing Preferred Stock of. this Company has
been
declared
payable
April
1, '.1949,
and
a
dividend of 40c per share upon the outstanding
$25 par value Common Stock of this Company
has
been
declared
payable April 1,
1949,
tc
at
Directors
terly
Wis.,
record
of
dividend
(Incorporated)
of
Board
any loss;
liability—
any
deny—to
we
at the
anyone
Manufacturing
Company
Singer
Cumulative
able
of
Preference
April
1,
record
1949
to
close
the
at
Stock,
the
pay¬
holders
business
THOMAS H.
March 22,
business
of
STACY,
1949.
Secretary.
February 16, 1949
Wilmington, Delaware
1949.
WM. B. PETERS, Secretary.
f
The Colorado Fuel & Iron
UNION
Corporation
Dividend
-At
of
a
the
held
meeting of
Colorado
the
in
declared
March
the
Fuel
February
on
dividend
was
Common
on
1949,
31,
to
at close of business
D.
Iron
CARBON
of
CORPORATION
Corporation
the regular
1949,
15,
its
CARBIDE
Board of Directors
&
amount
on
AND
Stock
25c
share
per
033
common
stock, payable
stockholders of record
on
March 7,
C. McGREW,
1949.
A cash
per
Secretary.
dividend of Fifty cents
share
stock
of
(500)
capital
Corporation has been
payable April 1, 1949 to
the outstanding
on
this
declared,
stockholders of record
the
Securities
and
Exchange
encouraging
are
as
No customer of J. R-
we
Racine,
yet been ascertained.
Repre¬
of Keystone Custodian
Funds, Inc., are study i n g the
According to the statement, it is
point'of view which were portents for 1949.
believed that the recovery of the
First, the sub¬
from these
transactions
"It is a slightly frustrating fact profits
stantial increase in public interest
about the business of providing a will exceed any losses which the
in stocks which suddenly appeared
Funds may have sustained. While
free market for
securities, that the
in
the spring
it is expected that such recovery
of 1948 when it
people who provide the market
seemed that the depressing weight
will be made from the
parties
have little or no influence on the
of taxes might be eased and that
market, but the market has a concerned, the former employees
bur strong stand in international
are also covered by surety bonds.
profound effect on them.
When
affairs might check the creeping
the nation is using its stock mar¬ The management is therefore as¬
spread of Russian power. Second, kets we are all
busy and therefore
DIVIDEND NOTICES
the dawning concern of some gov¬
happy- When the nation is tem¬
ernment '.spokesmen at the lack of
porarily disinterested, as it was in
willingness on the part of inves¬
1948, there is very little that we
tors to supply basic, equity capi¬
can
do except struggle to revive
Atlas
it,
surprised
resulted in losses to the Funds has
Commission.
equity capital and
new
getting
entirely without
and we are as
knowledge,
much
The
not
to
isn't
ROGER HACKNEY, Treasurer
sentatives
iness needs
is, however, a source of
encouragement to note two
course
oi
tioned in the SEC complaint have
resulted in profits and commis¬
beginning to understand that bus¬
It
any
of
was
business
private business is not
"It should be no surprise to any¬ deeply buried but is near the sur¬ transactions; and their final ac¬
one that the facilities of our capi¬
face, and the evidence it furnished counting, which is in the process
of completion, will be submitted
tal market were not more used in
that our present
government is
1948.
by
ing.
holders
dividend
February 28. 1949.
that
improperly for trad¬
by Key¬
Boston, it is announced that
although these transactions men¬
for managing
(
statement
a
stone
force this doubt, because the al¬
re¬
business. ternative to the caution they may
Unable to obtain more capital on produce will be a spending and
a
fair
partnership
basis
and taxing spree that will drive pri¬
pressed by increased needs for vate capital deeper into the false
capital to. repair and expand their security of private loans and pub¬
productive
machinery,
they lic debt.
plowed back profits (62% in 1948)
"The evidence that 1948 gave us
and reluctantly went further into that
public confidence in the fu¬
its
had
tude
sponsible
In
must
rein¬
and
able
per
Keystone Custodian Funds, Inc.
come
We
uneasiness
to
as
would
made
used
J.
Regional
a
share on the Common Stock pay¬
March 11, 1949, to holders of record
40fS-
of
information
our
DIVIDEND
The Board of Directors declared
of
Funds,
vance
and
Co rporation
Keystone Cus¬
Inc., private ad¬
information as to purchase
todian
*
Johns-Manville
proceedings have been
brought
by
the
SEC
against
DIVIDEND NOTICES
uneasy about the unwillingness of ment
Attorney, and E. G. Blum¬
people to make risk capital avail¬ ner, attorney, appear as attorneys
able. This uneasiness was partly
surprising that people with the
of record for the Commission in
responsibility for handling their hidden by the grand promises the action filed today.
that are always made in an elec¬
own and others' capital were cau¬
tious. They were more willing to tion year; but even those promises Statement by the Management of
these
"Under
.
DIVIDEND NOTICES
attorney,
William D. Moran, Chief Enforce¬
Building.
informed
and investi¬
gators John J. Shaw, Harry S.
Prime and Joseph Barton of the
Byrne,
becoming
were
developed by E. G.
case was
Hotel
that
and
under the supervision of Peter T.
(Continued from page 12)
deception
The
Blumner,
was
Security and Exchange Commis¬
sion's New York Regional Office,
reservations./
II. Y. Curb
Co. and Butler Moser & Co.
Co., Hillsboro
,
111
"We
it
including
TAMPA, FLA. — Norman D.
Zeigler has been added to the staff
issued by J. R. Williston & Co.,
New York City, which states;
Lewis, Ethel Strasberg, Leonard
Strasberg, Edith Challenger and
Margaret Lewis at various New
firms
on
A. M. Kidder Co. Adds
of A. M. Kidder &
...
Keystone, and that he
securities
the
announcement
lowing dummies: Harriet F.
Squire, Edward Caplan, Mrs. Ida
York
result of anything done
by
Caplan while he was in our
employ, we are covered by insur¬
to
J. R. Williston & Co. Comment
such
of
consequence
result
Keystone
Funds
from
transactions complained of.
A
the
Mr.
ance."
will
loss
no
the
than
other
Hancock placed orders to buy such
The Security Traders Association of New York will hold their
securities in such dummy accounts
spring dinner on April 22 at the Waldorf-Astoria Hotel. Chairman of
at lower prices, with the intended
and
that
be¬
on
effecting
defendants
12)
page
sured
43
ernment
observable in 1948.
MORSE G.
Corporation
Dividend No.
On
at
the close of
February 25, 1949.
Newmont Mining
DIAL,
Secretary and Treasurer
,
82
dividend of SEV¬
ENTY-FIVE CENTS (75c) per share was
declared on the Capital Stock of NEWMONT
MINING CORPORATION, payable March
15, 1949, to stockholders of record at the close
of business February 25, 1949.
■
February 15,
1949,
a
,
GUS MRKVICKA, Treasurer.
-
tal to
business.
the public interest and watch
"Last
i
ly
a
can
an
spring we saw how quick¬
new confidence in the future
spring up. It should not take
a
country
trained
and
which
the
has
the
unless
that
confidence
in
a
James
best
people, the greatest productive
capacity and the most ably dem¬
onstrated ability to defend itself
of any country in the world. But
free
vacancy
capital
without
which
Continue healthy.
,
it
cannot
..
"The second indication is there¬
fore
important.
rities business,
work
of
iS hard
average
We, in the secu¬
are
so
close to the
Greenwich,
was
Brands,
that
to
President
of
Inc.,
Executive
and
us
The
1948
report
to
LibbeyOwens-Ford shareholders will be
mailed about
month
a
meeting
held in Toledo
before the
scheduled to
April 13.
be
and
(Special
the average politician, has not un¬
to
The
CHICAGO,
Chronicle)
ILL. —William
H.
Reed, Inc., 332 South Mich¬
igan Avenue.
-
i
>
i
-
-
.»
p
».>
i
'i
\
1
the
close
of business
March 3, 1949. The transfer books
of the
payable
Company will not be closed.
J. E. REEVES, Treasurer
February 14, 1949
of record at the close of business
March
pay¬
1, 1949, to stockholders
at
15, 1949.
Henri Sadacca
President
February 10, 1949
American Cyanamid
DIVIDEND
The Board of Directors of Ameri¬
American
Radiator
can Cyanamid Company on Febru¬
ary 15,
1949, declared a quarterly
dividend of eighty-seven and onehalf cents (87 fat) per share on the
[Bricgs&StrattonI
Standard
Sanitary
1f},w TJorl,
CORPORATION
Pittdurfk
outstanding
pany's 3V2%
BRICCS & STRATTON
COMMON
A
per
share
share
on
the Common Stock has been
March
24,
1949,
to
stockholders of record at the close of busi¬
ness
on
The
Board
quarterly
payable
(25c)
per
fifteen
per
on
of
cents
cent
the
JOHN E. KING
Directors
dividend
of
share -and
an
(15c)
Wisconsin
capital
of
February 21, 1949.
Com¬
business
Cyanamid Company on Febru¬
ary 15,
1949, declared a quarterly
dividend of thirty-seven and one-
can
Feb¬
twenty-five cents (25(f)
the
The Board of Directors of Ameri¬
1949, to stockholders
21, 1949.
of
Cumulative Preferred
A, payable April 1,
to the holders of such stock
COMMON DIVIDEND
88th DIVIDEND
the Preferred Stock has been declared
on
1949,
shares
Series
record at the close of
March 4,1949.
CORPORATION
DIVIDEND
quarterly dividend of $1.75
on
Stock,
of
PREFERRED DIVIDEND
'
declared
dell &
evidence that legislators and gov¬
Corporation,
record
Company
per
Financial
that in 1948
see some
outstanding Capital Stock
this
of
PREFERRED
A dividend of
Chamberlin is with
Herrick, Wad¬
began to
-
March 31, 1949, to stockholders
a
1949.
of record at the close of business
derstood the process. We are there¬
fore impatient. But it seems to me
we
able April
3%
per
dividend of 25c
extra
an
share have been declared,
February 11, 1949.
ruary
particularly
the
of
stock dividend of
per
t
inc.
NOTICE
quarterly dividend of 25c
share and
Peterson, Treasurer
payable March 1,
on
With Herrick, Waddell
to realize that the
citizen,
of business February 28,
Walter A.
a
record at the close
Vice-
Colgate-Palmolive-
capital formation that it
for
that
St., New York 11, N. Y.
Mr.
Peet Co.
annual
on
for six years President
Standard
prior
given
A
resulting from the resig¬
nation of Thomas W. Childs.
of
high living stand¬
Adams,
is
of such stock of
elected a director of LibbeyOwens-Ford Glass Co., to fill the
Adams
our
S.
clared
regular quarterly dividend of 40tf per
share has been declared on the Com¬
mon
Stock of
Atlas
Corporation,
payable March 21, 1949. to holders
was
tic economy, which produces our
ards and pays our taxes, will not
receive the inflow of basic, equity
hereby
did
we
Conn., a general partner of
Lazard Freres & Co., New York,
future is unleashed, our capitalis¬
strength and
on
Adams Director
in
self-reliant
most
as
in 1948."
unreasonable amount of leader¬
ship to evoke that confidence
care,
55 W. 13th
Corporation
The Board of Directors has de¬
Common Stock
Dividend
Notice
with
expenses
DIVIDEND
Electric
Corporation
our
REEVES BROTHERS,
Noma
the
to
stockholders
per
has
extra
less
dividend
(without
par
a
cents
dividend
share,
privilege
stock
declared
twenty-five
of
2.81
tax,
value)
Corporation, payable March 15, 1949,
of
L.
Treasurer
February
15,
1949
record
G.
March
REGNER,
1,
1949. '
Secretary
half cents (37 V2f) per share
on the
outstanding shares of the Common
Stock
of
the
Company,
payable
April 1, 1949, to the holders of such
stock of record at the close of busi¬
March 4, 1949.
ness
H. W. WILSON,
Assistant Secretary
>-
j
il
44
(796)
THE
COMMERCIAL
FINANCIAL
&
5 -f:
CHRONICLE
Thursday, February, 17, 1949
said
BUSINESS BUZZ
thorized
Capital
all
ft
/■
/M f
wr
tlit/
xJL
;
that
so
housing
its
to take
up
the
home-building activity.
There is also
"median
ber
of
the
President's
Economic
Joint
Council
Advisers,
Economic
before
of
the
President.
amounts
would
of.
,
to
be
is
mine whether
dent's economic program.
for
use
•
the
in
a
raising
arising
Mr. Clark, along with Leon
Keyscrling, another member of
of
the
themselves
Under
costs.
wage
questioning,
by
plained
these
they
if
as
they
acquire
a
from
came
JEC,
C. O'Mahoney,
the
Congressional
of
has
for
months
some
mitted to raise the
It may
brand
prices of their
had
has
tunity to
pass upon
tion
the
for
an
'
either
Report
seemed
which
to this
message
to
give support
quirk, in addition to
his obvious interest in "standby"
price control power. Nevertheless,
it was not taken seriously until
particular
Mr.
Clark's
regarded
testimony,
as
idea
an
but
was
thrown
out
and
of
source
tions
This
New
some
was
to
agency
creases
price
veto
basic
on
as
elsewhere
saying about the stifling ef¬
taxation upon the ability
and willingness of businessmen to
launch
of
business ventures.
new
"Capital
in¬
creation
commodities
mittee
questioning, Mr. Clark
pooh-poohed the idea that indus¬
the
firstly,
capital
really
start
to
individual
existing stockholders at
the
favor¬
able
price, industry had no diffi¬
culty getting equity money, he
also
to
reason
trend
said
was
with
dogma which
century
arose
"The
more than a
interest rates
high, renewal or substitution
maturity if times were
was
seldom
accomplished:,
and
bankruptcy was rigorously
imposed upon default has little
validity in these days when in¬
terest rates are very low, many
credit openings are arranged for
cases
of hardship,
and defaults
hard
lead
seldom
to
only*' to reorganization
enterprises, 'y u
,
Mr.
Clark
disclosed
of
in
j to engage in the
production of
; any scarce materials to meet de¬
mands, except synthetic fuels.
He said that development of
synthetic fuel production under
auspices
too
was
important
of
slow
the
of
to
make
laws,
plenishing
lost
capital
in
face of the big tax levy on
One
»sequent income."
1
-
small
;
fiscal
While ! discussing
iother; problems
the
sub-;
and
not
bureaucratic manage¬
yia some
Business Committee made clear
its: opinion that tax policy was
equally harmful to all business, j
"It
be
may
enough to
remove
ness,
liberal deduction of
thing
which the Con¬
gress
can
always
count,
note
members
of
the
appropriations
committees, is that no two budg¬
up
the
lot
quite the^same basis. So
Congressmen' have to have a
of staff work done 'onf the
President's
;
called
"new
bracket,
help
putting
capital to
business
to
get
new
a
started,
finds
pany earns
up
that
if
the
.
obligational
appropriations
plus
authority.
is
an
contract
top
to
year
j
au¬
thority" which consists of new
thority
the
each
means.
;
Mr. Truman adopted a new
wrinkles with the 1350 Budget,
and it has the boys guessing.
He
employs a new category
the Committee suggested.
in
Budget
know what it
tract
taxpayer
upon
on
depreciation,
research, and development costs,"
"A
in
things
ships
that
to step in. Thus he inferentially
ruled out the possibility of gov- v
ernment steel plants.
The
real
problem,
he
said,
is
to persuade business to make in¬
vestments that may not pay off in
money
tax
get
out
as
new
con¬
Contract
au¬
authorization
advance
or
for
to
such
aircraft, pro¬
of
appropriations from
authority.
Not
Mr.
so
obligational
excludes
date
contract
new
Truman.
His
authority"
period shorter than eight
years.
ment
brokers
appropriations to liqui¬
material
contracted
for
for, but includes
authority.
So
under
the
the
billion
for
category
new
President
"wage
controls"
proposed ;
"What
has
defense,
$15.3 of appropriations,
that $14.3 billion
proposes
estimates
be
the
Just
spent.
blindfold
and
eco¬
Mr.
Foley
is
that,
is
Agency.
chance
)
.
to
kill
the
in
the
donkey and
i|»
So far it
the
•
but
apparent
come
ifi
you
'
the
to
whole
off"
these
this
lads
success
"lay¬
on
amendment.
will
be
in
a
Senate,
on
the
if
even
floor
they
willing
to withhold their
initiative on the matter.
President Truman will
few
a
act
But
tough
trying to vote against such
amendment
the
in
the
ap¬
to
days to
Congress
read
for
of
are
own
'
begin \
the
riot
being
so
slow with his program. First to
get
the
the
members
dressing
of
down
the
will
be
Ways and
Means Committee, for being so
slow with social security and
Max legislation.
The
expected
bust-up
be¬
tween Mr. Truman and the Con¬
gress
is getting very close.
(This column is intended to
\
re¬
will have
and may or may not coincide with
the "Chronicle's" own views.
<i»
for
it will soon be¬
that the Truman
housing
vote
the
flect the "behind the scene" inter¬
Administration is worried stiff for
fear
for
pretation from, the nation's Capital
not been said
has
record,
'
will
Some of the boys
hot
on
tail
the correct figure.
i
bloc
the
apply
the
pin
boom
is really
smashing.
Trading Markets:
Rabton Steel Car
Oregon Portland Cement
The evidence of the Administra¬
tion's worry lays
in the emphasis
points in the
testimony
on
behalf
of
the
grandiose n public
housing > and
"median income" housing bill.
given
In
to
different
boosting the public housing
objective by almost twice from
last year's bill to 1,050,000
there
was
reaching
out
for
units,
than
more
power.
Trading Markets
mere
It
Riverside Cement A & B
Spokane Portland Cement
LERNER & CO.
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hubbard 1990
Teletype BS 89
is
Hill, Thompson & Co., Inc.
NEW
YORK 5
Executive A Underwriting Offices
10
and
happened
$15.9
proposes
national
FOREIGN SECURITIES
WALL
STREET
Tel. WHitehall 4-4540
PAUL MARKS & f!Q. INC.
FOREIGN SECURITIES
SPECIALISTS
.
the
but
not appropriated
contract
any
office
"new
category
All Issues
into
walk
this large
tool to promote eco¬
a
bill.
are
way
Teletype—NY 1-971
Firm
be
invest¬
buy a
Most businesses will not invest,
tax-exempt municipal bond which
he said, unless they can see their would
give him a net of 21,/2%, If
way clear to paying out in three he lost $100,000 put into the new
or four years.
venture, it would ^require about!
* *
*
half a million dollars in income
Finally, Mr. Clark explained i for him to make it up.
v
a
can
-full
7 "civil rights" program of
Administration have been
an
HAnover 2-0050
1%. Bonds must
return 6% for the holder to get
:l%.
"He
a
Congress has traditionally listed
under appropriations, new appro¬
priations plus appropriations to
pay for contracts previously au¬
his
after payment of double
would
have
to
housing business
in
sees
proached with
extend
corporate and individual income
would
defi¬
a
com¬
about 10%, the most
and the government might have
he
in
advance.
year or more in
and
ets in succession will ever be set
in relation to
business, the expiring Small
.
which will
duction of
the
and
tax
indicated,
all,
to remove recognized in¬
equity and rigidity in the overall
tax structure, and to defer col¬
lection of taxes by allowing more
"'j government would not be forced
private
Most
going
ques¬
source
a
government agency.
discrimination against small busi¬
tioning that in his opinion the
provide
should
ment of small business
but
dissolution,
of
that the
This is
problem is
out
to set up
the tremendous difficulty of re¬
were
of loans at
don't have enough money
business elsewhere!"
will
"(4)
borrowing.
when
ago
offered
friends
indirectly
Committee
restrictions deny full tax bene¬
fit if there should be a loss.
the
toward
The
sense
investment
the
"(3) The fact that capital Toss
no
concerned
be
there
if
return
professional
or
aside
tossed
nostrum
of equity capital for small busi¬
ness;
down
cut
does succeed.
said.
He
rates
the
directly
(2) The extent to which high
tax
business
requirements
small
Committee
customary
government
the
"
neyefr tried. Wherever an indus¬
try. Offered rights to stock to
a
with, due to
'venture'
or
few people will
very
small business.
"(1) A scarcity of investment
funds
had
you
take my
thorized. And it has separated all
The
the
tax bite out of current income.
industry
that
which
to
much that
by
saying
'risk'
true
used to look for its
*
try could not acquire new equity
capital
in the present market,
wants
best
the
ing
"for
these reasons":
Well, if
this bank I'll
;
-•
Com¬
the
explained,
report
"I'm overdrawn?
play."
of those that
$800
Foiey'3
racial discrimination
who
is being dried up; then, on what
is left, the odds are rigged so
and
going,"
already
are
Under
for
business
scarce
new
the expansion
for
foremost.
is;
of
the
big public housing bill is the
anti-segregation amendment*
providing that there should be
kill
have
of
greater
a
also
was
the
Democratic
Committee
Business.
and
See.
occupancy of housing units. If
■this
is
added,. the
southern
one
series by the ex¬
Senate
for
than
stabilization.
The
no
issued
was
a
special
York
fect
Mr. Clark in his formal pres¬
power
.
gov¬
been
entation and under questioning
this
•
is a good
the implica¬
Federal
previously
firm note: the Ad¬
Home Finance
in
During the
80th
Congress, this
Committee
was headed by Chairman Kenneth
S. Wherry, Nebraska, Republican.
It points out what businessmen in
practice, if not to please Sena¬
tor O'Mahoney.
that
report
Small
on
nomic
heading.
of the last in
piring
it
the
well
who
Administrator of the Housing and
seldom
one
not
be¬
Raymond
a
over
nomic field
Taxation"
said
or
quotes on
where
of
ernment is
for
.indicated
sign of
ministration
but the
"Small
on
and
said
Washington,
in¬
'
price
Finance
language in the President's Eco¬
nomic
nite
raising
country
report
new
hears
indirect and obscure
was
he
be old stuff to the busi¬
something which
says
oppor¬
*
,
There
Throughout
control
the
has
It
so
testimony, there
em¬
wages
for
reason
a
of
Business
the justifica¬
proposed
creases.
as
nessmen
products until the Federal Trade
Commission
the
additional
money
commitments
because it
ad¬
proposition that the
key industries should not be per¬
f'Arr
if
his prices.
the
vocated
Then
one
million it got last summer.
after
would have to justify the higher
wages
Joseph
Chairman
would
until
ployer granted higher
the
White House.
Senator
board
anything
completed.
important
as
the
that
do
VI.
lending authority
"free collective bargaining" was
things,
significance almost
not
any
Title
mitments that FHA has
Senator
ardent Truman 100 per centers,
and so with Clark speaking for
for
housing insurance have
many of their com-»
cancelled
Flanders (R., Vt.) ,Mr. Clark ex¬
CEA,'' disclosed
higher
close
renewal
additional
for
608 rental
out
to let the inflation¬
contractors
asked
as an excuse
prices
for
cause
industry could
an
control
wage
bill;
Administra¬
for
for
asked
deter¬
to
housing
the
its
asked
money
board
a
this
Yet the Administration has
not
this
All that
that
appointed
Congress, which is officially put¬
ting on the first act of the Presi¬
'
week
for
asked
year.
by
the
Committee
this
light
to
of
in
Title VI of FHA lapse, it has
ary
price increases by industry.
This surprising intelligence came
testimony of John D. Clark, mem-<j>
fears
before
tion planned
veto
evidence
some
income"
Whereas
WASHINGTON, D. C.—It was inferred here that President
Truman, of all his anti-inflationary program, most wants the power
govern¬
worth
slack in
JL Cr It/
be¬
it
be pushed for
can
Administration
to
when
that the hous¬
ing boom is sliding off,
ment
from the Nation's
Administration
apparent
comes
on...
Behind-the-Scene Interpretations
}■
the
that
wants to get a big program au¬
50 Broad Street
-
Trading Department
120 BROADWAY
New York 4, N. Y.
AFFILIATE: CARL MARKS A CO. Inc. CHICAGO
Tel. REctor 2-2020
"
i
T
i
1
@FedFRASER