Full text of Commercial and Financial Chronicle : February 19, 1948, Vol. 167, No. 4674

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BUS. ADM.

LIBRARY

Ifeb

2 3

ESTABLISHED IS39

1S4Q<

Reg. U. 8. Pat. Office

Volume

167

Thank

Number

4674

New York, N.

State'

take

Than Inflation

boys

from

their

to

Government Bond Market Support

By IVAN WRIGHT

Wright, though laying inflation to excess money and goods
scarcity, warns deflation, by removing part of money
supply, may
create hardships worse than inflation.
Points out previous business
collapses were preceded by deflationary moves and cautions tem¬

homes, their
or

their chosen

occupations
and
subject
them

for

*

urges

year to the
arbitrary di¬

tary

officer

and

indoc-

t

Robert A. Taft

r

i

t i

n a

courses

Inflation

of

mili¬

some

commodity prices is no sign inflation is
Holds deflation spreads more
rapidly than inflation and
curbs on government spending and restoration of free markets and expanded investments as inflation
offsets.

over;

a

rection

collapse of

porary

has

Mr. Cortese proposes

need is

we

lems

o n

1

old

of the

be

directed

States.

It

"Not
the

defense

which

us

need,

we

but it will deter any threat of
attack
from
Russia
or
any

one

losses, and to

control credit.

credit

European Recovery

There is far

more

agreement

Of

of

the

money

two

prime

and

a

mass

-<$

cur¬

rency and fi¬
nancial man-

Ms We See It

for

re-

c o v e

ry,

the

Ivan

far

so

we

be solved

than

ing

more

While

our

other

country far more than
projected plan of com¬
pulsory
universal
military
training."—Senator Taft.

the

countries

seek¬

help have inflation prob¬

lems of their
tion is

quickly and easily

domestic inflation prob¬

our

lems.

are

Such Nonsense

stock markets

during

own

primarily

(Continued

a

to

solve, infla¬

domestic prob-

on page

any

32)

much too varied to be sized
up on
over a few days."

penings

PICTORIAL

pictures

taken

INSERT

at

NSTA

for

Tri-

City
sas

The

"exhaustiveness"

Parties in Chicago, Kan¬
City and St. Louis.

the basis of

a

few

hap¬

seems

to

be that.

If

by sometime in April
clearly told their own
story, the key men in the scheme of things under the socalled Full Employment Act will
undertake to enlighten the
President!

be

R. H. Johnson & Co.

developments have

not

Yet, said the President

Congress not much

more

in his "Economic

Report"

than

a
month ago, "The Em¬
the President at the
opening of
each year not
merely to review current trends but also to

ployment Act calls

Established
—

★

and

excessive

fte

-'

'

•'

r'

%

/ v

.

rest

of

n

o

the
m

it
ar¬

phe-

e

non.
■

T h

e r

ef

d <vt

any

mined
to

o r

jstf

f>.

effort

deal

the

e,

e r-

■

jr

with

basic

causes

flation

of

in¬

must

A.

be directed at

J.

Cortese

the money
supply.
The traditional power of the
Federal Reserve' System to con¬
trol credit has been
crippled by a

conflicting

policy

(Continued

on

Pictorial

of

supporting

XII of
Insert)
page

*Mr. Cortese is associated with
New York office of W. E. Hutton
& Co.

upon

(Continued

STATE

an

regu-

unpre¬

on

page 26)

State and

Havana

Lithographing Co.

great

the threatened

inflation,

in order to

.

Well, that

to

See

recent weeks,

of this

recent market

a

tempt the in¬

inquiry will, apparently, require that it consume the
European
next six weeks at least.
"Our
problems
in
economy," one member of
able to help can the Council is
quoted as saying, "is much too vigorous and

Wright

as

of

fluence

;•'3 £ rvd;;.t°

•

Di.

can

too

Somewhat in the grand
manner, the President's Coun¬
cil, of Economic Advisers late
last week announced that it
v Given the corwouldv make an /.exhaustive
; rect approach
study of the current situation
••••' and the
right in light of. what has happened in the commodities
and
ideas

to avoid

means

dictable to at¬

g e m e n t.

v; a

r

the monetary danger of

accuracy and
the
latter
is

and

war

on

lated with any

'■'V

is

and

money

buying psychology, only the former

EDITORIAL

of

would accord

expansion of

gross

ingredients

is

and

Federal Re-;

restore

program

supply.

inflation in this country than on the
disaster.
supply

Says

higher

government bond

market realities, and that increased cost of debt
service is

preferable to prospect of further

problem

as

deep

> prewar

in

only will that give

and

the

can

particular to
making U. S. the greatest air
power in history of the world.

the

power to

But

domestic

product

a

be

United

d.

e

seated

a

supplemented by
adequate reserves on a volun¬
tary basis without undertak¬
ing to dominate the entire life
can

t

a

inflation

■.«

the first and essential protec¬
tion to the people.
;
"It

and

re-<$>

are

our

pre¬

highly
trained, technical, professional
force.
That will always be

-

the. number

as

with

-

f

the two outstanding prob¬
Congress has to deal this session.* The two
prob¬

lems with which

some ideological bu¬
of the War Department.

"What

characterized

Program have been coupled together

pared by
reau

been

System's

f

government bonds at

withdrawal of support of

market without serious capital
serve

CORTESE*

refunding of

a

interest rates to permit

some

facing the American people.,. Inflation

A. J.

By

Dr.

-

education,

Copy

a

to

personal freedom than to per¬
the

Price 30 Cents

Yon, Sen. Taft!

"It is hard to think of
any
more
drastic
limitation
of
mit

Y., Thursday, February 19, 1948

Municipal

MUNICIPAL

Bonds

1927

BONDS

—

r

INVESTMENT SECURITIES

Hirsch & Co.
Members New

York

Exchange
and other Exchanges

25 Broad

St., New York 4, N. Y.

HAnover 2-0600

Chicago

Street, New York 5
"

BOSTON

Troy

Buffalo

Woonsocket

(Representative)

OF NEW YORK
Dept. Teletype: NY 1-708

*ABC

Underwriters and

-

OTIS & CO.
(Incorporated)

INSTITUTIONAL INVESTMENTS

Established

30 Broad

Street, New York 4, N. Y.

Tel. WHitehall 4-5770

Tele. NY 1-809




1899

CLEVELAND
-"

New York

Cincinnati

Chicago

Columbus

Buffalo

York Stock Exchange

Broadway, New York 5, N. Y.
Telephone: REctor 2-8600
Bell

Teletype:

Toronto

NATIONAL BANK
OF

THE

CITY OF

NEW YORK

I

Portland General

Electric

Company

Common

Stock

for Banks, Brokers
and Dealers

Bought—Sold1—Quoted

,

request

Reynolds & Co.
120

Denver

Toledo

1-3M

Brokerage

i

Members New

HAa*r«r t-MN

Service

Common
on

Y.

Montreal

Bond

*DeWaIt, Inc. Common

*Prospectus

Gordon Graves & Co.

New York

Emery Air Freight Corp.

Corporate Securities

'

N.

Teletype NY

Products, Inc. Com. & "A"

and

request

THE CHASE

Security Dealers Assn.

WILLIAM ST.,

Detroit Harvester Co. Com.

Distributors of Municipal

/

on

Vending Corp,
Common

*Air

PORTFOLIOS

Information

52

Bell

Bond

BANK

Analyzed and Appraised

New York

Springfield

Washington, D. C.

CO.

Members

Syracuse
Scranton

_

Wilkes-Barre

London

Bond Department

THE NATIONAL CITY BANK HART SMITH &

PHILADELPHIA

Albany

Harrisburg

Teletype NY 1-210

Cleveland

Geneva

64 Wall

Stock

NY 1-635

Hardy & Co.
Members New York Stock Exchange
Members New York Curb Exchange

30 Broad St.
Tel.

DIgby 4-7800

New York 4
Tele. NY 1-733

IRAHAUPT&CO.
Members New York Stock
and other Principal

Exchange
Exchanges

111

Broadway,

REctor 2-3100

Boston

N. Y, 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

Foreigit Dollar &

New York Hanseatic

LONDON
I

York 5
1-583

Teletype NY

7-">0(£0

REPRESENTATIVE:

London, E. C.4

Street

King William

The

Re¬

construction

permitted to take direct action or

and

to

for

hopes and as¬

pirations have
greatly faded
despite
the

York Curb Exchange

Hew

120

years

have
since

signing of

the

BROADWAY, NEW YORK 5
Tel. REctor 2-781S

A. M.

Bretton

the

Sakolski

Agree-

Woods

and

?

and with domestic cur-

of

the

rencies

has beeiv almost nil,, while
their negative or indirect influ¬

and Development

particularly as regards the
Fund, has been the reverse of the
objectives sought.

ence,

2Vi% due 7/15/57
due 7/15 A72

3%

inc.

wm. e. pollock & co.,
20 Pine Street, New

York 5, N. Y.

Teletype NY 1-2846

HAnover 2-8244

so

and

on

delayed

or

a

its operations

after

ferred

until

nomic

recovery

the

Fund."

Kittaning Coal

;.

American Coal Co.

Virginia-Pittsburgh Coal

West

II

eco¬

Members Baltimore Stock Exchange

V

k

1 ;

-

120

■

-

Bell

1

-

the

institutions.

It

Woods

the circumstances, there

,

would be

Engineering

gold standard,

to

Artcraft Manufacturing

K.R.

If

,

Clyde Porcelain Steel

the
of

Kirby Lumber

purchasing power of our

"

Established 1923

prices, the ind

e

the

and deposits into gold
through the Reserve banks and
running back to the gold held by

purchas¬

of

Time, Inc.

the

had

fallen

half

that

the

to

United Artists Theatre

of

United Piece Dye Works

pfd.

dollar

ity of

dexes

can

were

78.6

for

Merchants Distilling

and

159.5

Nov.

Warner & Swasey

1940

29,1947.)

If one thinks

Members N. Y. Security Dealers

Assn.

Wall St., N. Y. 5
Hanover 2-4850
Teletypes—NY 1-1126 & 1127
I

Bell

Established 1856

d

e

in

p

Walter

E.

Spahr

reciation
of relationship between

terms

our

with gold

so

long

as our reserves

ratios

this system does
not prevent, nor offer any great
restrictions on, the depreciation of
are

of currency

5Teeue<mACompaTW|

our paper money

be maintained under this sys¬

tem

for

.

important principle to
is that although the par¬

the

note here

1940. (The in-

Taca Airways

Telecoin Corp.

Treasury.

But

irredeemable

and gold, then, it
stood that there

paper

money

respected,

reason

H. Hentz & Co.

our

irredeem-

•

both dishonorable

are

Under

gold-coin standard and

a

the issuance of promises
to pay is confined to those that
are to be redeemed. This restricts
system

sharply

supply in
depreciation of
of goods

The

Stock

Exchange

Noranda

Curb

Exchange

Brown

Commodity
Chicago

Exchange

Cotton

York

of

New Orleans Cotton

And

other

Minn.

Inc.

Exchange,

Board

Trade

Exchange

Exchanges

the

Effects

NEW YORK 4, N. Y.

CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND




Mgr.

of Our

New York 6

39 Broadway
Digby 4-3122

.

Exchange

Exchange

Stock

Teletype NY 1-1610

of

direction

currency

of

Curb

York

New

Members

in terms

the

Botany Mills J

Depreciation?

Preferred—Class "A"

Currency in Terms of

Goods and Services

In

system has made,
and makes, easy a great issuance
fact,

our

depreciation

the

dollar

in

(Continued

:

in

the

value

of

goods

terms
on

24)

page

<

■*

pay

In

irredeemable.

likewise

The
of

other

*An address
31st Annual

sylvania
merce,

by Dr. Spahr at the
Meeting of the Penn¬

State Chamber of Com¬

Pittsburgh,

Pa.,

Feb.. 18,

'

Troster, Curries Summers
*

,

Members

.

New York Security

•'

•

Dealers Ass'n

Teletype—NY 1-376-377-378

v

1948.

NATIONAL BANE

Placer
-

Mines

& Ont.

United

Kingdom 4%

'90

of INDIA, LIMITED

Rhodesian Selection

Co.

Paper

Development

Canadian Securities

Department

Bankers to

the Government In

Common

Raytheon Manufacturing Co.
$2.40 Conv. Preferred

Solar Aircraft Co. 90c Conv. Pfd.

Kenya Colony and Uganda

Gaumont-British

Head

Scophony, Ltd.
British Securities

Twin Coach Co. $1.25 Conv. Pfd.

Office:

26, Bishopsgate,
London, E. C.

Branches

Department

,

in India, Burma,' Ceylon. Kenya
Colony and Aden and Zanzibar

*Uni?ersal

Capita!
Paid-Up Capital
Reserve

Goodbody & Co.
Member $ N. Y. Stock Exchange and Other
115 BROADWAY
T.l.olinn# ftArrliif 7-0100

Bank

Fund
conducts

banking

NEW YORK 6, N.Y.
1-672

-£2,300,000

The

Principal Exchanges
Teletvoe NY

_£4,000,000
£2.000,000

!

and

every
description
exchange business

Trusteeships and' Executorships
'•

also

&■ -\

:

i

*Prospectus

1

on

& Common

request

-

/

Reynolds & Co.
of

Members New York Stock
120

Exchange

Broadway, New York 5, N. Y.
Telephone: REctor 2-8600
Bell

undertaken

Winding Company

90c Conv. Preferred
•>

,

Asst.

Joseph McManus & Co.

and services.

Subscribed

N. Y. Cotton Exchange Bldg.

KANE,

^Georgia Hardwood Lumber Co.

York

New

MICHAEL HEANEY, Mgr.

WALTER

of the mone¬

any pressure

tary

We Maintain Active Marketa in U. S\ FUNDS for

York

New

HAnover 2-9470

Securities

Chicago

Members
New

'

Curb and Unlisted

dishonored,

and

domestic money and deposits
in terms of goods and services, ;

should be under¬ of promises to

why

r NEW YORK S

WALL ST.

our

since these,
has been none with the exception of silver cer¬
since the present weight of our tificates, are not redeemable but
gold standard unit was fixed on are
merely
exchangeable
for
Jan. 31, 1934.
other promises to pay which are
The

/

,

our

circulation,

pa¬

per money

Title Guaranty & Trust

U. S. Finishing com. &

operation of our sys¬

tem of indirect conversion of

and

ing: power

of the

.

York Curb Exchange

Teletype NY 1-1140

domestic promises to
pay as issued by the Treasury and
the Federal Reserve banks, and in

words,

currency

paper

cause

had

x

doubled

Pacific Telecoin

64

:

„■

Frank C. Masterson & Co.

of the Dollar in the U. S.
dollar in terms of goods and services,

has not de¬
preciated in terms of gold is be¬
able

•

/

<.

its varying effects on different groups,
Urges as basic correction quick return

<•>-

commodity

Newmarket Manufacturing

Taylor Wharton Iron & Steel

.

Common
.

.

depreciation has been pronounced and relatively rapid since 1940. The general cost
living at the end of 1947, as compared with the average for 1940, had risen some

65%. Irt terms
of
wholesale

Punta Alegre Sugar

,(ij-

Hoving Corp.
'•

i

people will regain control or r government abuse of public purse. Holds nation
by advocates of managed economy, and calls for new economic leadership.

considers the

one

International Detrola

Northern New England

V.*-'

Detroit Int'l Bridge

Depreciation in the Purchasing Power

The

Bates Manufacturing

37

so

has been misled

Steel

"A"

Common

1

Members Hew

' "

I

;

Economist National Committee 011 Monetary Policy

Spahr calls attention to dollar depreciation since 1940, and
Traces causes of depreciation and points out needed correctives.

American Time Corp.

Hood Chemical

Teletype NY 1-1227

Central States Elec. (Va.)

view of

(Continued on page 30)

University

Dr.

General Aniline & Film

I

,

the period.;

Today's No. 1 Problem—The
Depreciation of Our Currency

actualmarket s

Electric Bd. & Share Stubs

j

]

stressed by manv

was

would be assumed that in

>

Broadway, N. Y. 5
worth 2-4230

:

Tobin Packing

Executive Vice-President,

Boston & Maine

/

Hurd Coal & Iron

assets

the

in

when strongly endorsing

Bretton

plainly

became

confidence

other commentators of
even

de¬

Europe's

Professor of Economics, New York

Baltimore Porcelain

branch offices

our

Elk Horn Coal Com.

By WALTER E. SPAIIR*

Aetna Standard

to

WE WANT TO BUY—

to restore the basis

i.This view

basis. For this rea¬

there were warnings, that

as

integrity

inauguration of the Fund should

stabilized

both

safe and sound

be

NY 1-I5S7

La.-Birmingham, Ala.

Direct wires

national budgets
of fiscal
required if people are

have

commerce,

good

St., New York 4, N. Y.

New Orleans,

long run such an organization
function satisfactorily unless
there is a reduction of trade bar¬

to

and are endeav¬
function in accordance
with their primary objectives. Yet,
thus far, their direct influence for

son,

&Co!

York Stock Exchange

the balancing of

oring

to

'« 1

t'

HAnover 2-0700

can

normal

mestic and

'

f.

the

ex¬

have been set up

For Reconstruction

••

•

a

out its purposes only
conditions of do¬
international trade and

carry

under

True, the two great coop¬
erative international institutions

ments.

The international Bank

25 Broad

disequilibrium.
It was riers, firm rejection of the devices
generally recognized, though not of, restriction , and manipulation,
the funding of blocked balances
freely admitted, during the de¬
bates
which preceded and
fol¬ the writing off o£ clearly unpayable
lowed the Bretton Woods Confer¬ obligations, the'prevention of un¬
due internal inflation or deflation
ence that the International Monein the narticipating countries, and
tary Fund can successfully operate

three

hardly

foreign

international

'

■

Members Hew

change

that

elapsed

York Stock Exchange

.<;.•%

Steiner, Rouse

Mr. Murray Shields
symposium on Inter¬
national
Financial
Stabilization,
published by the Irving Trust Co.
of New York:—"It is doubtful in

bring about
remedy

cause

A; J

As stated by

in 1944, in

would

These

fact

considered

is

it

conditions which
the fundamental
maladjustments that create do¬
mestic monetary disturbances and

Develop¬

ment.

Hew

'*

manifest, and sound currency sys¬
tems restored arid maintained.

made clear

that both
the Fund and the Bank, under the
terms of their chartefs, are net

Bank

Members

be

can

reason

when

International

ffipONNELL&rp.

'•

Bought—Sold-—Quoted

unsat¬

French franc along with other chaotic or

The recent drastic devaluation of the

companion
institution, the

Bought—Sold—Quoted

1

isfactory monetary and economic happenings in Europe and the Far East calls for a review
and retrospect,of the hopes, purposes and aspirations underlying the International Mone¬
tary Fund and
•.
' '
<S>
:
——
—
—
.
:
its

Lcngchamps, Inc.

Louisiana Securities

a

Corporation
Broadway, New

■

,

Foreign Internals

Alabama &

:

Has It Done More Harm Than Good?
;
,
By A. M. SAKOL8KI • "
\/
Dr. Sakolski reviews operations of the International Monetary Fund and points out its inauguration and
activities, though limited, have been premature. Contends institution has had very little direct influence
in stabilizing currencies, but because of its regulations and restrictions on member nations, has been
factor in creating black markets in exchange oper ations and has hampered international and domestic
commerce, by causing "suppressed inflation." .

j

British Securities

129

£

International Monetary Fund

The

Sterling Obligations

BArctay

Thursday, February 19, 1948

CHRONICLE

FINANCIAL

&

THE COMMERCIAL

(798)

Teletype:

NY 1-635

I

<•:«-*<

1 'i

■>

Volume

167

Number

4674

THE

COMMERCI&L & FINANCIAL CHRONICLE
.

INDEX

"Pulling the Wool..."

'

Articles and

News
Pace
Refunding Project to Relieve Government Bond Market
Support—A. J. Cortese
i________"_Cever

A
;

-

Deflation:

—Ivan
The

A

Graver

Danger

Than

Wright
Than

Today's No.

Monetary

Fund

Good?)—A. M.

1 Problem—The

(Has

It

,

Our Fiscal

Recession
Business

of

Securities

4

.

Looms!—Raymond Rodgers_,—.._-___-_-__-_L
Optimism—With

Weather

a

Eye

6

the Telescope

on

Kempner
The Construction Outlook—Wilson Wrightfor

_1A____'___

9

-

Holden

S.

.

"I'm for the Middle Road"—Eric Johnston
Some Basic Foods—For

.

.

..The

! /

-—-11

A.

Vilas

—__i_____,.14

:

;

Britain's Balance of Payments—Sir Stafford
Crippsr_i-A__/ 19
Foreign Policy Must Be Reversed—Hon. Thomas E. Dewey-- 20

>

Municipal Bonds

,

■'

Thank You, Senator
"

"Puilihg the Wool

'

;;

•'

■

TaftJ_;_-__^_^__:__J-l__——_-ril-w—Cover 'J-

r

AEditorial>_l___^_______; 3;:;

.

Robert Boylan Sees Commodities Peak Reached But Warns
of Danger to Capital Markets-_1
1_6 >'
Edward F. Hutton Urges Cabinet "Doctors" to Cure
His of
"

'

Humanity
'

—

____

10

^
12/"

—

Paul Rowen Named by Truman for SEC
Post__f_^r_-_----No Recession in the Offing, Says Jules
Backman_'ji__ix-

Dutch Government Reported Requisitioning Dollar

j

Securities

_■

,,13

Y"

:

Ferdinand G. Smola Writes That Gold Standard Advocates
Ignore Changed Conditions

/

Mutual Savings Banks' Deposits Roach
Peak, Reports
Earl B. Schwulst-

22

;;V'/.
22/'-

of Boston

SEC

Enters

Accounting Controversy.-—--

Bank

and

Insurance

Stocks

~

U. S.

~

public^property and that,
were in effect, beyond
/.

/V

•

J.K.Rice,Jr.&Co.
Established

Broadway

Bell System

Hydraulic Press Mfg.
Lea Fabrics

In other

Warren Brothers "C"

dealers and

-

Susquehanna Mills

brokers, it is also within the ambit

,

From the response; that

.

to

that there

us

has

our

been

wide and

sympathetic

ac¬

DUNNE & CO.
Members N. Y. Security Dealers Assn.

25 Broad

contention.

our

brokers, mem¬
Congress and the Maine Security Dealers' Associa¬

tion have communicated with the SEC and
demanded that
it explain the failure to
give such confidential treatment.

34

Metal

accord confidential treatment to the annual financial
state¬
ments filed by

8

19

_w_9

News About Banks and Bankers

—17

______

Observations—A. Wilfred May
Our Reporter's Report

32

Our Reporter

21

5

Governments.

011

Prospective Security Offerings-_______
Utility Securities

Railroad

Securities

State of Trade and

The

__

Industry...:

Published

Twice

FINANCIAL
Reg.
WILLIAM
25

Weekly

B.

Park

Dominion
Other

COMMERCIAL

DANA

Bank

525.00

$25.00

D.

Every

RIGGS, Business

Thursday

vertising

issue)

(general

and

records,
»tate

corporation

and

Other

news,

city, news,
Offices:

ad¬

bank clearings,
La

S.

Salle

St.,
111.
(Telephone: State 0613);
Gardens, London, E. C., Eng¬
land, e/o Edwards & Smith.
Chicago

Quotation

year.

Earnings
year.

Record

(Foreign

account

of

the

—

made

in

New

York

Monthly,

postage extra.)
fluctuations in

funds.

3,

Copyright 1948 by William B. Dana

25,

as

1942,

York,
N.
I, 1879.

Y.,

CERTIFICATES
Bond &

post

the

under

the

office

Act

at

of

Possessions.

in

United-

"

Mtge. Guar. Co.

Territories

Pan-American

Union,

and

$35.00




Prudence Co.

New

Tele. NY 1-2425

Central Public Utility Sy^s

Southwest Natural Gas
Southwest Gas Producing

.

'

;

a

rule

came

from the industry in 1942."

The letter then goes on to
say that the representatives
of the industry asked the Commission to assist in the de¬

velopment of

a

uniform financial statement.

Over whose eyes is the SEC

wool?

Who does it guess are the

We

on

page

r ■

Commonwealth Gas

Edward A. Pureed & Co.
Members New York Stock Exchange
Members New

50

attempting to pull the
representatives of the

'•

United Public Utility (Common)

York Curb Exchange

Broadway WHitehall 4-8120

Bell

System
New

Teletype NY
York

4, N.

1-1919

Y.

32)

interested in offerings of

are

B. V. D.

High Grade Public Utility and Industrial

IT.

year;

S.
of

in

15 Broad

New

York

Stock

Corp.

PREFERRED STOCKS

Analysis available

Spencer Trask & Co.

Members

Members

Members
per

New York 5, N. Y.

Tel. IIA 2-8080 '

.:

Lawyers Mortgage Co.

Newburger, Loeb & Co.

States,

CORPORATION
52 Wall St.

by the Commission

New

York

Stock

Exchange

Members New«■ York

March

Subscription Rates
Subscriptions

sent

"Although the staff of the Commission has for some
years been studying the necessity and feasibility of a rule
requiring brokers and dealers to file financial reports, real

Lawyers Title & Guar. Co.

second-class matter Febru¬

at

were

/

(Continued

N. Y. Title & Mtge. Co..

Company

Reentered

QUOTED

Congress.

We quote:

Drapers'

>

attempted rationalization in all of

the Commission.

impetus for

Record—Monthly,

(Foreign postage extra.)

—

TITLE COMPANY

and

news

etc.).

135

year.

SOLD

quite similar.

Manager
1948

Monday (com¬
market quotation

—

per

year.

of exchange, remittances for for¬
eign subscriptions and advertisements must

be

every

plete statistical issue

$38.00
per

—

FIRST COLONY

typical, we would like to deal with one of them,
signed by Robert K. McConnaughey as Acting Chairman of

the rate

SEIBERT, Editor & Publisher

Thursday, February 19,

per

Note—On

to 9576

WILLIAM DANA SEIBERT, President

WILLIAM

and
per

Monthly

COMPANY,-Publishers

Place, New York 8, N. Y.

BERBERT D.

Canada,

44

Other Publications

CHRONICLE

REctor 2r9570

of

Countries, $42.00

and

S. Patent Office

U.

v

34
—_—_____

To say

are

As

5

„____

attention.

attention

A number of these letters

40

_______

Tomorrow's Markets (Walter Whyte
Say3)
Washington and You__„

The

18

_____________

our

our

the

as

to members of the

14

Registration—

to

come

inasmuch

them is

8

_____

Securities Salesman's Corner

Securities Now in

class

42

Public

to

come

the least, those
misleading.
These letters, regardless of who in the
employ of the
Commission wrote them,
may be treated pretty much as a
which have

16

Notes

BOUGHT

the

of which have

7
41

___

Funds

NSTA

On

..

Forming

Corporation

been asked to

registered dealers and brokers.
defensive, the Commission has attempted to
explain away its unseemly conduct in a series of letters, some

8

Mutual

St., New York 4, N. Y.

WHitehall 3-0272—Teletype NY 1-950

We have been informed that dealers and
bers of the

20

•

Teletype N. Y. 1-714

Punta Alegre Sugar

be accorded

By. this correspondence the Commission has

__________

1908

Members N, Y.
Security Dealers Assn.
REctor 2-4500—120

the rule de¬

Business Man's Bookshelf

ary

Engineers Public Service

contended if the Commission could make the

we

12

Einzig—Britain and the Marshall Plan
From Washington Ahead of the
News—Carlisle Bargeron—
Indications of Business Activity—.::

Finishing Com. & Pfd.

Electric Bd. & Share
(Stubs)

Canadian Securities

1

STREET, NEW YORK
Telephone: WHitehall 4-6551

to the material filed.

clear

.Cover

Dealer-Broker Investment Recommendations—.

some

pocket.

Kingan Com. & Pfd.

instant policy has received
in the securities field
among dealers and brokers, it seems

39

Cdming Events in the Investment Field

your

99 WALL

r

ceptance of

L

in

put

compelling the filing, it could also make
claring the nature of the treatment that shall

V

Regular Features
__i___________

home withr

Dorset Fabrics (w.d.)*

powers to direct that these statements be accorded
.confidential treatment.
<
/i

35

Speculation..______________

go

^ of its

to Business

Charles Slaughter Holds
Commodity Price Drop Shows
Value of Futures Market and

you

flesh-and-blood cash

We exploded this claim of helplessness
by demonstrat¬
ing that under the very rule in question, and
by its express
terms, a certain part of the information is
given confidential
treatment. We. further showed that the
requirements which
create the
duty to file these financial reports, are not statu¬
tory. The duty was created by rule of the
Commission, and
>

tered

30

,

See It (Editorial)

was

to which it

words, if it is in the power of the SEC to
compel the filing of annual financial statements by regis-

32

Cleveland Trust Co. Sees No General Rule
Trends in Election Years

As We

uses

23

Companies
2
N. Y. Curb Exchange Floor Clerks Form New
Association—
as

therefore, the
its control.

:

Truman and Snyder Announce New
Savings Bond Drive.___ 25
Chicago Exchange Clearing by Mail
_____' 29
Junior Investment Bankers Association to
Hear Dulles.
29
World Bank Bonds Made Legal Investment for Massachusetts

Insurance

was

/

___

yours

haunt the house at 99 Wall

Street* while

The Commission argued that the information contained

>

in these financial
statements

22

z

of

dead past. Leave

interesting

course
of a circulation
campaign,
promised to print these financial statements as an in'ducement to subscriptions.

22

Predicts Only Moderate

Food Price Decline

to

a

,

•,/'

/./;

____

campaign has made

rule
/

them

securities

relics of

mere

At first the Commission made claim to utter
helpdespite the demonstration that a financial

therefore

18

_______

Emil Schram Aids in Dramatization of "The
Big Board".
Homer Z. Martin Foresees Vast Souree of
Gasoline and Oil.
in Coal Re3erves__

Federal Reserve Bank

;

v.' *•
,16.

z-_

are

publication, in the

f.

;

Bank Investments—Harry L. Severson__ 21
* ■*'
%
'r
'■
' "
" '
V,:

as

.

obsolete

lessness

■)

r>

•—Homer

.

of that

progress

watching.

10

Thought—Francis L. Whitmarsh____ 12 *x
Commodity Prices and Business—Col. Herbert G. King_____ 14
..Venture Capital—"Seed Corn" of Our Economy
•" "

.

Those

:

Can

-

GHOSTS

segment of the

As our readers
know, we have been waging an editorial
campaign directed against the failure and refusal of the
Securities and
Exchange Commission to accord confidential

9

Future Wage Increases Be Passed to Consumers?
—Charles F., Roos

large

a

treatment to financial statements
filed annually
by-regis¬
tered dealers and brokers
pursuant to SEC rule X-17 A-5.

7

_:_

Construction Industry—Thomas

;<

4

_________

Policy—Hon. John W. Snyder

—S. Marshall

Outlook

'Z

•

renders

I

Z

•

AND COMPANY

industry disputed. Fear of reprisals
industry inarticulate. Commission's
j defensive letters to members of Congress
misleading. SEC owes
j duty to public to immediately pass a rule remedying this
wrong.

.

Depreciation of Our Currency

Investment Fundamentals—The Choice
'<■
—Carl T. Hyder__________-___^

;

More

__J

Walter E. Spahr_

*

25 Broad
Tel.:

Street, New York 4

Curb Exchange

135 S. La Salle St.,

HAnover 2-4300'

Tel.:

Exchange

Chicago 3

FINancial 2330

Teletype—NY 1-5

St., N.Y. 5

Bell

3

liCHTfnsifin

B. S.

is

creating a public furore. Commission claims that Rule X-17 A-5
received its impetus front
rep¬
resentatives of the securities

!

__Cover

Done

Sakolski.

hy registered dealers and brokers

i,

•

-

__________

Internationa!

Harm

Inflation

SEC failure to treat
confidentially the annual financial reports fifed

1

___

Drastic

(799)

"V

Teletype

WHitehall 4-6330
NY

1-2033

Aibunv

-

Boston

-

-

Glens Falls

-

C. E.

on Request

Unterberg & Co.

Members N.

Y. Security Dealers Ass'n

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

Schenectady

-

Worcester

Teletype NY 1-1666

4

THE COMMERCIAL

(800))

&

Our Fiscal

Fundamentals—-The

Investment

Thursday, February 19, 1948

CHRONICLE

FINANCIAL

]

Choice oi Securities

Secretary of Treasury

Asserting fiscal

By CARL T. IIYDER*

/ of

Economist, Shields & Company

-

of investment knowledge to small investor and describes briefly existing
types of securities. Explains meaning of "leverage" and reviews position of aviation stocks, bank stocks,
automobile and electric equipment company securities, as well as public utilities and mining shares.
Mr. Hyder stresses importance

Summarizes existing

,

!

market factors.

how

and

for

plan

had

very

'time

easy

with
if

investing

we

had

had not

two

wars

with the
Deal

New

sand¬

wiched

be¬

tween

to

spend

J*1 on

billion.

This

huge
t i

T. Hyder

Carl

destoi"-

o n

thereby multiplying

believe
better illustrate what

In securities

force.

I

the

corporation elect officers
for the corporation, who serve the

have
a

the other,

on

(state,
county,
school districts, paving districts
etc.); thirdly, we have first mor¬
tgages,
debentures,
preferred
stock,
common
stock.
In the
American way of life we use the
corporate form of organizing a
business, to a great extent.
Two
or more people apply to a
secre¬
tary of some state in the Union
for permission to set up a cor¬
poration.
The purposes of the
corporation in general, its busi¬
ness
to be followed, is stated in
its charter. The board of directors
of

and

Contends Administration believes in minimum restrictive

government

this

that
is

had

I

by leverage. If a com¬
with fixed charges on pre¬

meant

pany

budget surplus strongest anti-inflationary
Outlines plan for savings bond drive to reduce bank govern¬

bond holdings and foresees

ment

of tax structure.

revision

no

plans study of tax treatment of American foreign investments.
primary fiscal concern is the financial integrity of the United
The only way in which such integrity can be
sustained is by firm adherence to a sound national financial policy.
This policy must rest upon a revenue system that will adequately meet
States

government.

I

the

.

oi®

cost

$500,000 and has t>0,000 shares of
»
outstanding, -it
earns

sary

its

and

neces-

pacity

and

most

will

not

people

receive

is obvious that

in our lifetime
lk of that, so it
must make

we

plans for old

own

our

I rather

age.

after
a

default

the

year

or

stockholder

has

more.

etc.

directors

run

The

receives

after the fixed

preferred,

the

of

to

per share;
If the earnings
20% to $400,000 and fixed
charges remain constant at $250,000, the common earnings drop to
$2.50 per share, or 40%.- v
/

$4.25

drop

benefits for all.

manage,

service,

public debt.
In planning
fiscal

our

Now the stocks of a com¬

it is
question

program,

pany

not

a

what

of

should
have

we

like to
at

the

moment,

John W. Snyder

nor

it

is

what

of

might

and

circum¬

Our fiscal decisions must

stances.

be made with

a

term

seek

is

view to the long-

interest.

national

stabilize

to

What

we

present

our

welfare

material

level 'of

high

be desirable

different

under

proper

matter

a

while, at the same time, encour¬

aging
As

expanding

an

foundation

a

Federal

gram,

determined

be

must

pro¬

policies

by

com¬

a

all

for say

common
earnings

charges on bonds,

in

our

He

may

receive

economic outlook

may

be added to the working cap¬
ital of the corporation at the dis¬
cretion of the directors.
A great

out

and

rather

bonds

had

awes

asset

an

liability or who have not
training in accounting. I do
that

companies, due to having
paid their senior obligations, or
not ever having
had any, have
many

background of ac¬
• for
the
trained security analyst.
How¬ only one class of stock outstand¬
ever, the objectives of this course ing. Among the sounder and bet¬
are to
attempt to place before you ter companies in this category are:
Laboratories,
Allied
,the risk and danger of one in¬ Abbott
and
vestment as against the lesser risk Chemical
Dye;
Amerada
?or danger of loss of capital in an¬ Petroleum;
American
Chicle;
agree

counting

a

is

necessary

to

a limited number
outstanding — that is,

being issued has
of

a

shares

that

they
of

acter

a

of

are not
book and

just tearing it
that

the char¬

the

people who control
the corporation is good enough so
that they will not sell opt the

I

believe

are

being

before known in this coun¬

try, or in any other country.
aggregate output of goods
services
record

for

civilian

use

The
and

was

at

We had a peace¬
time
industrial
production
of
187% of the 1935-39 average. Em¬
heights.

record.., '

possible, attempt to balance the
sales of the business against

The

gross

the

number

market

shares

of

value.

this

From

its

times

some

,

r

of

(Continued

on page

28)

,

: '.■//

national

tributed

income

broadly

was

throughout

dis¬

the

country and all sectors shared in
prosperous business activity.

meeting increasing capital
quirements.
These

in

sition

pacity

the

in

storm

consolidate

to

factors
Because

face

of

po¬
ca¬

certain

signals, we now
gains. Economic

our

can

come

only from

take affirmative

reinforce

the

action

weaknesses

and

counter-balance the distortions

which

presently apparent.'

are

;

Inflation, Strongest Undermining
y\
Force >ir" <■4 v<\-':
The

strongest

undermining

force and the most definite threat

stability

our

months

has

during

in

out

the

past

inflation.

been

reality of this danger

was

The

pointed

President Truman's recent

warning to the Congress that "The
first objective for 1948 must be
halt

to

the

An
ary

trends

inflationary

effective

shalled

attack

could

from

on

not

trend."

inflation¬
be

mar¬

single source. It
was not a question of government
controls
versus
voluntary
re¬
straint, but a coordinated, sus¬
a

tained, well-balanced effort in¬
volving
both.
Business,, labor,
agriculture and government, all
had

problem.

in

unite

to

attacking

the

\

.

its, and farm income each reached

r'A most direct continuing
prosperity levels, American on scarcities and rising price and
in
1947
handled. the wage levels can be made by a
greatest peacetime traffic in his¬ broad national savings effort with
tory, Electric power output. and every individual keeping his or
oil production both set new rec¬ her
expenditures to a minimum.
ords.; The standard of living of
Every dollar we can save makes a
the American people, measured in direct contribution' toward con¬
terms of goods and services, was
trolling inflation by reducing the
higher than ever before.. Today, pressure on prices. /,. V
the supplies of raw materials, ma¬
Although some correction
in
chinery and Equipment, and labor
the upward spiral of the high cost
available for producing new goods
of living has been made in the
past week,by a decline in com¬
*An
.address
by Secretary
modity prices, these adjustments
JSnyder before the Association of
must be viewed carefully in terms
Stock Exchange /Firms and
the
Of our whole economy. In a tran¬
Atlanta
Chamber of Commerce,
new

railroads

,

t

'

,

sitional

Atlanta, Ga., Feb. 13, 1948.

Central Illinois Public Service Co.

in

period,

seeking

a

which

more

prices

stable

as we are now

Seligman, Lubetkin

inflation

tween

Oil

Certainly,
(when distributed)
cess

rela¬

hav¬

'

&>

Co.

INCORPORATED

New York 4,

N. Y.

1

V

f

'

j

Request
"

\
'

-r

•*

1,4

Goodbody & Co.
Members N. Y, Stock Exchange and
115 Broadway* New York
Telephone BArclay. 7-0100

-

.

,

>

'

' '

is

recognize that while

ments

ating
■

Other Principal Exchanges

j 105 West Adams St.. Chicago
Teletype NY 1-672

can

a

merely
our

way

for

room

ment in many
'

deflation.

of either.

there
Research Item On

and

do not want an ex¬

we

We should

Bought—Sold—Quoted




if,

obvious

to

positive

factors, we are in a
generate far greater

to

Wages and salaries, business prof¬

Guarantee & Trust

41 Broad Street

the

are

economic outlook.

our

of these

re¬

ing, there is a delicate balance be¬

DuMont Laboratories

v

far

more

tionship, such

Foundation Co.

Title

to

constantly

the

Electrol, Inc.
Crude

forward

our

to

are

General

within

expanded; our
than adequate
to
the task; our industrial and
business management is aggres¬
sive; and our savings are equal

to

1947, we achieved
a
peacetime
prosperity

During
never

consoli¬

future

;

well

business

labor force is

def¬

If

another

,

.

encouraging for
gain.

resultant

growth and in¬
dividual well-being. Our produc¬
tion
plant
and
equipment
are

entirely

are

friend if it turns out successfully.

or

that

.

and

ployment reached the 60 million
mark, a truly great employment

business to themselves

judgment can be obtained by cal¬
all the bank culating the net profit on gross
investing American News;
should be approached in a very stocks;
Beechnut Packing; most sales. Most sound businesses earn
sensible, calm, and practical way, of the copper companies; Colum¬ from 5% to 8% on their working
but you should first realize that bia
Carbon;
Congoleum-Nairn; capital. On promotions the sell¬
there
are
certain
fundamental Consolidated Mining and Smelt¬ ers
usually obtain from "20 to 80%
things that have made sound in¬ ing; Continental Oil; Creole Petro¬ of the amount you pay for a stock
vestments
sound
or,
in better leum; Freeport Sulphur; Hanover so that the working capital going
words, made the risk greater or Fire Insurance; Home Insurance; into a corporation must be re¬
less.
S. H. Kress; S. S. Kresge; Mason- duced
by a proportionate amount.
ite; Pepsi-Cola; Singer Manufac¬ In our -discussions we ,are elim¬
Choice of Securities Types
turing; South Penn Oil; Texas inating the field of real estate as
When we consider investing we
Gulf
Sulphur;
Union
Carbide; I feel that it is suitable for a home
have a choice of the following
Woolworth; Wm. Wrigley.
owner
or
a,;, resident
manager
types of securities.
First, gov¬
only. I am sure that you are all
leverage
ernment bonds; secondly, tax exfamiliar with government. bonds,
These stocks do not have what
the long-term 2 V2 %' issued .during
*Opening lecture by Mr. Hyder we call leverage} Leverage or¬
the war and "G" Bonds maturing
at the Small Investors forum at dinarily means a greater distance
in 10 or .12 .years and; the. "E"
Columbia University, New York from the fulcrum on one side of
bonds, which pay. no. interest unthe lever and a shorter distance
City, Feb. 5, 1947.

other.

real,

level

this in the form of dividends or it

from

and

should establish that the security

in

people who do not know

inite

dation and

subject

it

-

with
'

to .move

power

greater

pletely realistic appraisal of ex¬
isting facts. The positive factors

hearing of a
good buy at a cocktail party or
from an acquaintance but before
giving your money away you

think that the idea of investments
stocks

all

have

failure to

this

financial

income,

retrogression

economy.

for

We

the

.

stocks that have
considerable leverage is very easy

national

and

,

reduce

The example of

are

ca¬

levels.

Such facts argue for expansion
of economic activity and higher

.

number

being used practically at

func¬
tions,
and
provide funds

common

spending na* caused the normal
savings accounts and life insur¬
policies and our social se¬
curity to be worth less than xk or

certain

—

——

mentl are^

ance

Our social security gives a max¬
imum return of $87.50 a month

>

Treasury

Our

govern

corporation, which is a legal en¬ 3 sounder investment than a mort¬
tity. The corporation issues secur¬ gage of another company.
Just
ities in any of the several forms. here I might point out that due
The distinguishing characteristics to our
present tax laws the wellVz of its normal value. You will are that if a corporation defaults established
companies
have
a
recall
that prior
to
the cheap on a first mortgage a creditor can state-protected monopoly because
money policy of our government, apply to a district court for re¬
it is practically impossible to get
government
bonds -yielded
5%, ceivership. Under bankruptcy the venture capital as we no longer
savings banks paid 4% and life court-appointed receivers attempt have people with surplus incomes
insurance policy dividends were to salvage for first mortgage and
since it is all taxed away. It fol¬
at least 3%.
At the present time other
security holders .in turn
lows that we must therefore know
government
bonds
yield 2V2%, The debenture holder in case of something of the kinds of busi¬
savings accounts 1V2 to 2% and trouble ranks equally with cred¬
ness, including their past record,
life
insurance policies 2%.
We itors but not ahead of them, as is in order to judge the risks that
have already lengthened life
so the case with the first mortgage
one wishes to assume.
Before go¬
much that
insurance
companies bondholder. The preferred stock¬ ing into the. different categories
have changed their death tables holder has no recourse in case the
of business which we will deal
and it may be that through atomic dividend is
passed except that in with primarily in these discus¬
developments the span of life may some
corporations
he
has the sions I would like to issue a warn¬
be greatly lengthened.
power,, by the charter, to elect a
ing on promotional stocks.
We

budget and tax reduction. Urges

In subsequent address, says

ferred and bonds of $250,000 earns

to find.

con-

trols and aims at making

having only common shares
outstanding can be and often are

of

old
We

age.

would

empt bonds—that is, the divisions

to

Says recent price declines must be viewed
carefully, since there is delicate balance between inflation and defla-

undermining stability.

force.

important things in life are health, happiness and wealth—at least to some degree.
We have trained millions of people to make us healthy and more millions to • make us
happv, through entertainment and so on, but we have criminally neglected training in the

must be determined by realistic appraisal

program

existing facts, Secretary Snyder holds inflation is strongest force

tion.

.

The

investing
of
our
.savings

Policy

By HON. JOHN W. SNYDER*

,

price

adjust¬

fields, such adjustr

be made

serious

without

recession.

necessary

that

we

ere-'

is

It

steer

through the present sit¬

uation with courage and

(Continued

on page

energetic
33)

*

,

..

Volume

167

Number 4674

THE COMMERCIAL

FINANCIAL

&

CHRONICLE

(801)

5

W. R. Staats Co. Adds Two
(Special
Steel

The

Productloa

LOS

Electric Output

THE

STOCK

MARKET- CONTINUES

ITS

LOGICAL*

Commodity Price Indes
Food Price Index
Auto Production

and

BEHAVIOR

Industry

Business

this space on Jan. 29 last, has continued through, the
ensuing com¬
modity turbulence. This following of investment in lieu of specu¬
lative principles has been indicated from two distinct
approaches:

Failures

its past .unwillingness to

boom, and
tion

now

rise midst the business
in its abstention from the tempta¬

"fall out of bed"

to

at

the appearance ofi a

major deflation-depression threat.

'

J
Over-all industrial production the past

.v

week continued to reflect
modest decline, but the level of output generally held some¬

some

what above that of the like week

Order.volume

backlogs, too,
•

has

and
war

and

dividend return of 5%

a

on

the stocks

com¬

The Intelligent Investors
A. Wilfred

addition

In

May

its refusal

to

to

of

1947

1

-

capitalize prob¬

ably above-normal activity and profits, "the
ket"

of

1947

alert

was

in

mar¬

discerning

certain
specific weaknesses in the financial situation. Foremost among them
would be the vulnerability to the long-range profit cycle and to the
distributability of earnings rendered by the expansion of inventories
and accounts receivable.
Only recently—after the event—has it be¬
come
realized generally that the expansion of these balance sheet
items as an unavoidable accompaniment of greatly increased
business,
has posed financing problems to company managers. Similarly has
disturbance to the profit situation from the postwar rise in expenses
been tardily appreciated by the public.

>"/

For

example Montgomery Ward

/.

!

expansion of inventories added
to the recent competitively necessitated growth in its installment ac¬
counts to over $100 million have used up the proceeds of its 1946
$60 million common stock sale and a great part of its recent undis¬
tributed

earnings

stock market was

as

other

and

cash

The

.reserves.

shown by,the anticipatory two-year decline

in retail share prices, in foreseeing the cropping-out of such
corporate

financing problems.
v

A

,

Wisdom

.

,

:

the Downside

on

remained

As

for

;Jt

(Special

to

The

Financial

Chronicle)

ton

ANGELES, CALIF.—An¬
Gaspich has become connected

with

*

«

Turner-Poindexter

629 South

reports state that they were
slight drop occurring in claims
unemployment insurance during the week ended Jan. 24 for the

sustained
for

With Turner-Polndexter
LOS

and order

large

very

lines.

some

E.

the staff of

Co..

&

second

employment and payrolls,

at very

high levels with

a

the" Los

of

Angeles

Ex¬

Stock

change.

consecutive week.

In

quarters the

some

week

sharp

in

considered

commodity prices last

declines in

beneficial, since they worked to
reduce food costs to consumers and left more purchasing power to
be spent on other things.
At the same time it had the effect of
making possible stiffer resistance on management's part in wage
negotiations. The adverse reaction to such a decline is the impair¬
ment of confidence and the inroads it makes in farm income, which
is considered of major importance in our present prosperity.
On
were

a

sense

this score, however, some farmers were agreed that commodity
too

were

Spring Street, members,

high.

This

'

Robtert C. Buell Co. Adds
(Special

to

The

C. Buell &

to

The

CHICAGO,

especially true of grain prices which had reached a
point where the buying of grain for feed by livestock raisers and
dairy farmers amounted to a virtual prohibition. To them the decline
in commodity prices the past two weeks afforded some measure of
relief.
It should be pointed out, that while the present readjustment
of commodity prices is desirable from the standpoint of relieving
pressure on living costs, too drastic a decline would more than offset
any benefits to be gained by it.
was

ham

&

with

is

Robert

Co., 3-3 Pearl Street.

Joins Harris,
(Special

Chronicle)

CONN.-Law¬

Zahnke

E.

rence

prices

.

Financial

HARTFORD,

Co.,

Upham Staff

Financial

ILL.
135

Chronicle)

Harris,

—

Up¬
Salle

South La

Street, have added F. Wesley Bay¬
lor

to their staff.

s

depreciation

and

wise,

goods

Patricia

and

R>

Staats Co., 640 South
Spring Street, members of the Los
Angeles Stock Exchange. Mr. Gib¬
son
was
previously with Merrill
Lynch, Pierce, Fenner & Beane.

of last year.

substantial in

were
•

.

posing the Dow-Jones Industrial Average). In
having given this logical performance instead of
celebrating the postwar business boom by a con¬
tinuing bull market, it unfortunately left many
Lusiness-analyzing speculators high and dry.;

most

Chronjclk)

-

As

previously pointed out here, the market
wisely chosen fairly to capitalize business
profits mid-way between the pre- and post¬
levels (that is, at an earnings yield of VV2%

for

Financial

Gibson

William

The stock market's exceptionally intelligent behavior, cited in

;

The

Hawley have joined

Retail Trade

State of Trade

By A; WILFRED MAY

D.

ert

Carload ings

to

ANGELES, CALIF.—Rob¬

V.

;

..

i

r

Dollar

volume

of

retail

increased

trade

very

slightly during the

favorably with that of the
Adverse weather in some areas continued to
discourage shopping; and demand for Winter merchandise remained
large.
Consumer lesistance to high-priced goods reflected an in¬
crease and requests for credit were slightly more numerous.
Activity in the wholesale centers again proved sluggish With
week

past

and

like week

a

continued

to

compare

year ago.

Bulolo Gold

Dredging

,

Placer

Development, Ltd.

wholesale dollar volume off

Conversely in the ensuing bear period Montgomery Ward's

con¬

tradictorily steady action apparently denotes recognition of the fact
that this company has exceptionally been able to follow its
longterm aim of abstaining from debt-financing, even in the face of the
large acquisition of installment accounts, and that, it could sell

liquefy these accounts as do its competitors;
/V
j
Likewise, despite the public's proclivity to over-rationalize, and
particularly after an extraneous threat Tike the present commoditybreak, the present market has not seen fit to over-reflect the exist¬
ing bearish factors."'/ " *'
'/"/"'
•;/ '.■[ / /■ *
or

fractionally, but slightly above the level
corresponding week of 1947. Orders, generally, involved mod¬

of the

of

amounts

erate

merchandise

for

stock

current

replacement

improvement in deliveries was noted in some areas.

,

//'''/
v.On Monday of this week Secretary of the Treasury John W.
Snyder went on record as saying that he was not of the opinion
that the country is headed for a depression.
Declaring that he was
"not

at

disturbed" by

all

"We've

added:

he

Pato Consolidated Mines

and

HART SMITH & CO.
52 WILLIAM ST., N. Y. 5

HAnorer 2-0980

Bell Teletype NY

New York

1-395

Montreal

*

Toronto

the recent declines in commodity prices,

got all the elements of continued prosperity and

here." Continuing, he stated that the decline in com¬
prices were an adjustment to improved prospects at home

production
r;

'•

The Contradictory Citation of Supply-and-Demand

•

-

-

r

■'

For example, in recent months a hue and
cry has been everincreasingly v raised by the Wall Street community concerning the
insufficiency of capital available to the equity markets to absorb the

available

modity

and abroad.

,•?:

S/

,;

:>;••/■''■■/

.

up

incidence, etc.).
Yet ernment to reduce taxes in
of this factor arises, below the present levels.
from our remembrance that a major popularly-ascribed reason for
He stated further:
the great 1943-1946 bull market was the allegedly large increase in
supply

doubt

great

of

(because

stocks

about

the

of

tax

any; way

actual/importance

money

Let

us

in

made

in circulation.

also

1929

for

bubble

market

equities

even

of

at

.

that

remember

those

fantastic

belittling this misconceived

the

chief

supply-and-demand
."/•

of

conceive

\" •/,:,. Z

•

consideration

any

credo,

the market

.;

stringency of funds available

investment

As

.

'/ ,■:./

result of

a

Exports—Imports—Futures

DIgby

compared with $293,000,000 in the abnormally low earning year

of 1946,

William T. Faricy, President of the Association of American
reports.
However, states Mr. Faricy, higher railroad
last year were offset to a large extent by higher wages,

Railroads,

taxes.

ACTIVE MARKETS

higher prices for fuel and supplies, and a greater amount paid in

billion of government securities.
Also

'

public by mutual funds

figure.

revenues

'

,

Soya Corp.

/

the

complainants about unavailability of investment cap¬
ital must explain the market's selective rapid absorption of the siz¬
able Bendix and Gulf Oil offerings in the face of its Kaiser-Frazer
cold-shouldering. And the $178 million of new capital acquired from
the

4-2727

1947

market, there must be taken into account the
Treasury's possibly imminent purchase or retirement of up to $9

'•

in 1947—an amount 22 times the 1941

./,'...,

• ..s,?
Realism Toward the Financing Problem
.

It is difficult not to believe that the

public's present worry over
corporations' internal financing is correlated with the seeking )of
ex
post facto explanations for stock market action.- If the ruling
.

SUGAR
Raw—Refined—Liquid

higher level of freight traffic hauled at some¬

higher rates, railroad net income totaled $480,000,000 in

what
as

a

CO.,Inc.

STREET

NEW YORK 5. N. Y.

under

excuses

prices.' So here also, in currently

is acting with exceptional wisdom. T;
As an offset to the complained-of
to

the

of

popularly
the climactic blowing-up of the enormous stock
that time, was the supposed great scarcity of
one

cannot

WALL

\

existing condi¬
tions that would justify a tax policy or program that would fail to
balance the budget in the fiscal year 1949 and also make provision
for adequate retirement of the public debt."
"I

rising

•

'■:%,/>/■

0/l

,

supply looking for investment"; and also that the bear
swings of 1937-'38 and 1940-'42 occurred in the face of swollen and
money

99

that would cut Federal revenues

•

*'

"the

LAMBORN &

.

the question of tax reduction, he contended that, in
view of unsettled world conditions, it would be unwise for the gov¬
Taking

(Continued

h

on page

3J)

"»

STEEL

OUTPUT SCHEDULED

LEVEL

AT SLIGHTLY LOWER

Great Amer.

For the second week

in

a

row

market and steel prices

the steel

S.

U.

totally unaffected by commodity and stock market action.
week steel prices are stronger, demand is heavier, supplies are

have been

This

Indus.

FOR WEEK

lighter and gray market activity is unchanged, according to
Age," national metalworking weekly.

Radiator, Pfd.

"The

Iron

the
pipes

Steelmakers in the past week have shown their faith in

*

solidness of steel demand by raising prices on all types of

SIEGEL & CO.
S3 Broadway,

•/

V

." /

/

(Continued

on page

29)

DIgby 4-2370

N. Y. 6

NY

Teletype

1-1S4S

FOR BROKER-DEALERS ONLY

Time Inc.

,

Argo Oil Corporation
Capital Stock

(

/

Kingwood Oil Co.;

Dravo Corp.

A

»

American Maize Products Co.
A
...

crude oil

about-

producing

8%,.. with

Memorandum

-

..-i

*,5

property,

yielding

merger'..,possibilities.
on

J.W.Gould&>Co.

over

had

the

oil

producer

continual

past

Market

t.

f

FREDERIC H. HATCH A CO., IHC.
Established
MEMBERS N.

63 Wall

Y.

SECURITY

Street, New York 5, N. Y.

1888

DEALERS
>/■-

ASSOCIATION1

seven

years.

23/4-3%

Bell Teletype NY 1-897

.

'

/ '

PETER MORGAN & COi :
31 Nassau

-

that

earnings

Analysis Available

Broadway, "New York 5




Bought—Sold—Quoted

request

*

120

....

crude

has

Street.

Tel. BA 7-5161

.

New

5, N. Y.

Tele NY 1-2078

6

THE COMMERCIAL

(802)

Recession

FINANCIAL .CHRONICLE

&

..'7?a Commodities Peak Reached Jut
Capital Mails in Dangei: Boylan

Looms!

By RAYMOND RODGERS*
Professor of Banking, New York University

Dr.

Chairman of Board of Governors of N. Y. Stock Exchange in inter¬

Rodgers analyzes current economic and business developments and points out, despite recent '

(3) goods
inflation. Says stresses and strains have created instabilities in economic structure, and despite oppos¬
ing forces, there are still powerful factors leading to more inflation to be followed by a recession.

view holds it not

price drops, three forms of inflation exist, viz.: (1) price inflation; (2) credit inflation, and

"None is

blind

so

he who will not see," is an old, old

as

and in address

of

very

sons

of Adam
take the

mis¬

heady

tant

is

as

the

economic

thermometers

credit

Rodger*
men,

to

men,

of too

that

he handed

in one-dollar bills.

people claim

is

temptation,
"mob"

other¬

subject to economic

social

and

pressure,

psychology—furthermore,

t;:An

address

before

by

Prof.

dinner-meeting

a

Rodgers
of the

Passaic and Bergen County Credit

Bureau, Paterson, N. J., Feb.

17,

1948.

boom

the

hundred to

Willie

ness

sion

in

tions

are

In

contrast

there

these

to

optimists,

other business

are

embrace

who

men

the

fatalistic philosophy
of the Southern mountaineer who

leaky roof.

a

1947,

high time to oil the hinges,

of

business

Federal

Street, Boston 10

Tel. HUbbatd 2-3790

we

Company
OFFICE

•

that

our

must

we

billions to

main¬

billions

"umsteen"

or

to
toward atomic

race

well,

or—oh

sub¬

counterpart in

the

economics

namely, bad 'talk tends to

out

good talk!

We

learned the hard way that
greatly touted "New Era" of

the

Let

Teletype

Gresham's Law has

73

not

us

again

through the

go

-

Co.

•

„■

•

—★

■,

—

expansion

War

Incorporated

EDWARD L. BURTON
8c

1st

Floor, Kentucky Home Life Bldg
LOUISVILLE 2, KENTUCKY
,
Bell Tele. LS 186

PHILADELPHIA

SYSTEM

TELETYPE SU

country,

our

that

tions

can

tions

as

Eastern Corporation

larger

Textile Securities
AND

™t*buJ[£h' PaN. Y.

Telephone—WHitehall

Philadelphia, New

York and Los Angeles




Institutions

-7

kets,

do

or;we

1

„

in free mar-;

in'

believe

not

them.7 The attention of the Amer-~

lean people

to be focused

needs

the necessity of these mar-.;,
as ? fundamental
American r
institutions. -It is our' personal
responsibility'. to see to it- that

upon

kets;'

change firms follows:,

'

,

•*

,

kets

threatened

are

by

ious. encroachment

Now,: I' believe
would

become

an

insid¬

upon

them

that our "people
angrily excited if

worship,
and

the

of

all

expression, freedom o'
equality of justice

our

other

great

privi¬

leges granted under our Constitu¬
tion and Bill of Rights are no less

important than the liberty to bar¬
gain and to do business honorably
the

limits, of

thai

course,

thought in what I am saying of reflecting? upon
the
excellent
ticular 7 market.

rather,
the

to

Without

good

guard

conduct.

recognizing the fact, we

this country,
an unnatural development which
endangers our free markets. This
danger is serious and it must be
removed.
It can be removed only

by,

'permitted,' in

aroused public opinion.177

an

It

is

the

that

necessary

cam¬

paign which certain elements have
-

our

free

be 7 stopped. " Unfortu¬

is

awaken

to

heart of

and

system

purpose,

people

our

markets

them,

this system will
7

I

decay.
discuss, for a

shall

go

American

our

without

that,

par¬

our

My

fact that free

to the very

7

?

moment,

the operations of these markets of
I

which

speak... I do

out of a

so

considerable breath of experience.
I

not

do

appear

as

apologist

an

for these markets.*uNd apology

Markets

necessary.

for the service and

people/and
reason

necessarily

which regulates

agenqy

Tfor

benefit of

our

they have no other
existence? They may

corrrplex, but,

seem

is

conducted

are

matter of

as a

their? operation
is < very
simple. 7- / ; >~l7'. ' 7-' *'' 7.7 • j

fact,

There

is

is

which

impression

an

understandable, that
markets are made among. buyers
and sellers on a spontaneous basis.
entirely

This would be, I daresay, the ideal

concept of free markets. It

so

hap¬

however, that the orders! of
buyers and sellers do'not come

pens,;

together

as

evenly

as

we

would

.when there is

an

insufficient

con¬

us

not

am

a

cer¬

institur

first-class.de¬

they

In

today.

are

sense,

the

future

very

times misuse

the

facilities of our

markets, whether they be com¬
modity markets or security mar¬
7

.

.7,,

•

Where the public has
free

of

markets,

the

as

should have, there are

or

Execution

in markets.

proficiency

Quotes call TWX Sp-43
Exchange
Pac.

from

10:45

Orders

on

to

on page

35)

GA.

BONDS

11:30

LOCAL STOCKS

hours.

Std.

Time;

Sp-82

at

1892)

Members

Standard
of

Brokers

-

Stock

.

SPARTANBURG, S. C.
Teletype SPBQ 17

,

;

Exchange

Spokane

Dealers

-

Underwriters

Peyton Building, Spokane
Branches

•'

at

Kellogg,. Idaho and Yakima, Wn.

Established

\
RHODES-HAVERTY
,

BLDG.

Teletype AT 288

spe¬

-These

MUNICIPAL BONDS

CORPORATE

Floor

and

same.

They do it with great
and at great finan-

(Continued

episodes at

STATE AND

of

markets

professionals supply not only their
own
capital but intelligence in
taking care of the missing links

ATLANTA,

SECURITIES
Immediate

close

cialists who do the

to

NORTHWEST MINING

For

make

to

public

access

a

27)

on page

CORPORATION

A. M. LAW & COMPANY

L. D. 51

>

efficiency of these
There is, I assure you,;

STANDARD SECURITIES

(Established

do

not reduce the

markets.-

3-7253

Private Wire System between

7

Properties

of
New York Curb
Exchange

Angeles
Hagerstown, Md.

I

as

survive

A.M.,

Also Member

Los

Let

democratic

our

other

Members New York,
Philadelphia and
Los Angeles Stock
Exchanges

New York

t

no

SPOKANE, WASH.

of

Request

Walnut Street, Philadelphia 2

of

joint session

flowing

II.

(Continued

464

Southern

BUCKLEY BROTHERS

.7

We either believe

the Atlanta Chamber of Commerce

our

DuMont Laboratories

1420

the

before

kets.

SPARTANBURG

Portsmouth Steel Corporation
Buffalo Bolt Company

*

A

•

'•

...V

.

and the Association of Stock Ex¬

'

1899

160 S. Main Street
Salt lake City 1, Utah
BELL

on

dress

pression with international condi¬

COMPANY

ESTABLISHED

■"

■

Markets, Fundamental to Our

from stantly attempted and are still at¬
centration of orders.
\17*4, V V
frankly tempting to make scapegoats of
It is unfortunate that the nec¬
recognize the stakes involved. It's these;markets. * I am
not,- for a
not just the loan being extended,1
moment, defending the occasional essary services of the risk-bearer
the credit being granted.
It's not evils 'which occur under our free are not; fully, recognized. When I
just the solvency of your business. market system.
Human beings, speak of risk-bearers, I refer to
It's far more.
It's the very future fallible as they always are, some¬ floor traders whose function it is

tain

BANKERS BOND £21

vital

text of .Mr. Boylan's ad: clumsy and immature officials

v7 The

markets

of

y-

available upon request

„

is

society in the

have discovered

we

World

i.

Amalgamated Sugar
•

what

our

nately, the essential necessity of
like to have: them do.
The pro¬
these markets is not sufficiently
fessional,-: or as I prefer to call
economic perpetual motion in the understood. Uniformed
people in'
waste, economic dislocation, and pur national community have con¬ him,7; the risk-bearer,v steps .* in

New Analysis

y

V

Consider H. Willett

Data

future

near

destroy

system of free markets.
Free

recent

that *'in

stated

also

He

-

the

set'in motion to discredit

credit

7

;

Murphy Chair Company

Long Distance 238-9

Boylan

financial loss and the human mis¬

delusion that

American Air Filter

m

odity
prices will
again " reach

which is bound to follow our
being taken in by the snare and

PH

SALT LAKE CITY

American Turf Ass'n

Varnish

P.

Robert

cruel delusion;

a

was

to

•

have

that

ery

LOUISVILLE

Reliance

likely that

few irresponsible indi¬

a

and valuable to

c o m m

within

the late '20s

Stock Exchange Bldg. Phila. 2
•

every

position in the age of air

our

of talk,

Telephone

On

to maintain

are

debt;'or

"umsteen"

its

RIttenhouee 6-3717

is

freedom of

drive

Tele. BS 128

"it

they thought that our other free
institutions were in danger.
Bui

Warner Company

PHILADELPHIA

not

onstrate

~

Sterling Motor Truck
•

H. M. Byllesby &

viduals

view,

stitute your own figures of swob
len
billions
and
your
own
pet
idea! Such naive arguments dem¬

Pittsburgh Rys. Co.

Walter J. Connolly & Co., Inc.

duct

hand you hear that we must have
a national income of two hundred

Nazareth Cement

24

activity.

#

of

said
inter¬

an

efforts

our

My main point is that we must
not allow the discreditable con¬

in

the >'It is not generally appreciated
I believe, that our capital mar¬

on

1

There are too many so-called
experts going around rationalizing
the present fantastically high level

disintegration;

'

'

most of the

door to the storm cellar!

Empire Steel Co.

Traded in Round Lots

predic¬
the bullish

on

When

succeed in the

Empire Southern Gas

!

recent

nearly all

Botany Mills

Preferred

depress

a

rection.

•

the?great

some

the

oc¬

respon¬

.0

Boylan

their

economists predict prosperity, it ii

power;

Prior

not for

were

side for 1948.

tain

American Box Board \

RR.

market s,"

top of

apparent'that 1
time to cjisr

so

reaction, and

have

Maine

we

be
the

in

billions if

A friend took

PHILADELPHIA

&

rallies

-

national

&

the

prob¬

will

housewives will
see important though gradual re¬
number of rosy business forecasts
ductions in the price of essential
hat have showered down on iu
foods at retail.",;.
•; r V-A"
recently/particularly from Wash**
7v77v- '-••77;. 77,.;.-.
/..•?;?,
V
ington. Whereas at the end of 1946
7.7 ;
Text of Address >
it if it

cuss

One,- two, three,
and so on until he got to sixty-six,
sixty-seven, sixty-eight. Then he
stopped, saying: "O.K.; it's right
so
far, so it's probably right all
the way."

counting- them:

BOSTON

Boston

is

That

you.

near,

not take your

Willie started

had

B

very

most economists expected a busi¬

was

ably

khown

would

debt he

although I

He

story to

or

Our

occur.

prevent abuses.
We must be
continuingly vigilant in this di¬

greatest

ever

that these activities do not

sibility is to continue

though

"there

the

has

damage.

of our utmost effort to

spite

see

about

r—•

serious

do

and

collecting. A friend
of his, who owed him a hundred
dollars, had finally, after a long
time and a great deal of pressure,
brought in the money. The friend
was so angry at having to pay that
a

member of

heard

at,

in

are

world

old

an

are

the. credit grantor is a
—

is

we

the

In

cur,1 they do

gentlemen must not disre-

boom

——

which

times

stab iiized"

developments—
both business and banking have
social responsibilities which make
close study of economic phenom¬
ena imperative.
7 7*. '•' 7

available economic data is similar

the

family

busi¬

many

con¬

cerned, prices

gard * economic

to that of Willie Smith regarding

credit

stand
firm against public delusions, ma¬
nias, and fevers no matter how
long they may last.
This is al¬
most impossible to do. 7 After all,

wise!

are many

toward the great mass of

ness men

wholesale

have

and

mar¬

are

have

Developments
You

That

The attitude

Raymond

rain¬

Must Not Disregard Economic

believe?"

man

con¬

human

the

kets

ing, it don't need fixin'; when it
is rainin', but I can't fix it."

The

in fact, that is the trouble
—there are too many!
As a great
publicist once said, "What can a

credit

retail

or

prac¬

to read;

invest ment

bankers,

the

ain't

it

"insofar?-

mat

noCfixing it, only

"When

told:

be

of the

Exchange, who was in Atlanta on Feb. 13 to deliver
an
address before a joint session of the Atlanta Chamber of Com¬
merce and the Association of Stock Exchange Firms, told reporters

and see correctly,

see,

barometers.. And there

tion, of credit
granters, be
they commer¬
cial
bankers,
bankers,

for

us

him to task for
to

impor¬

so

it is in the field of credit.

the

para¬

sumer

of

a

bread and butter of all of us
depends on how well they read

func¬

mount

all

for

been

speculation and free markets.

on

New York Stock

adage, but it still epitomizes the

very

the

high function,
and

field is it

no

titioner to

true

prosperity.
It

has always
lonesome job!

Yet, in

wine of infla¬
for

right

attacks

Boylan, Chairman of the Board of Governors

as

being

the

present

tion

likely commodities will again reach recent highs,
scores

Eden,

do

so

P.

Robert

tragic short-sightedness of the sons of Adam. And even as Adam, who accepted the shortterm gratification of the apple and thereby forfeited the permanent satisfactions of the Gar¬
den

Thursday, February 19, 1948

•

1894

ATLANTA' 1,

GEORGIA

Long Distance 108

.

Volume 167

Number 4674

•

Ahead

THE

COMMERCIAL

&

FINANCIAL

school there

has been

For example,

sity and learn
to be a sten o

him.
a

former¬

three

months

at

business

a

col¬

a

called,"

\

tains inflation

j

patient is receiving

don't

know

of

two

"air-minded,"

Gil

young

Robb

It

j

seems

to

public

af¬

fairs in school
from

uate

Hawkes'- virtues.

which
Carlisle

grad¬

can

with

a

;

-

The

these

student

inflation; (4) the effects

schools

a

and

bu¬

learn

can

come

that

it

took

the

.

to

our

for

record

government

bonds.

While

that

letter of accreditation, that
government is formed in such

taining itself

keel, this

on an even

past

year

appears to

and

the

pos¬

the

sibilities

for

pic¬

should lend member banks against
governments at par, my own view
is that the Reserve Banks will

in¬

only make such loans when they

money
(not counting refunding
operations) through sale of stocks

believe the

and

this; (6) with¬
in

that

ture,
the

the

with

most

vorable

get

the

fa¬

be

Reserve

ing

out¬

support level, and
system
in
theory

a

credit

of the

borrow¬

institutions

loan.

justifies such a
This view, let me add, is

not

-

Now

?. *

out

a

———'

—

to

as,

first

—

popularly held. I can see the
possibility of long-rterm govern¬
ment bonds breaking par though

Having gotten the nomination
rise of inter¬ I do not believe that this is an
subsequent election, he has
est
our
rates.
In immediate
served as a staunch Republican, in j. Marshall Kempner
probability or that it
t-v •' ••
and such a way;'that it has be¬ a time when
r.~"
my
opinion will necessarily happen.
staunch Republicans
the most significant recent devel¬
come a vast
bureaucracy and that were needed, for. more than five
Where does all this lead us?
opment has been the creeping rise
it affords
men, who can • accom¬ years.
To me it means simply this—the
Now he is coming up for
in interest rates, the lower
prices banks are
plish .nothing else, a wonderful re-election.
But, apparently,; the of
going to be less lenient
government bonds due to the
opportunity of easy living. *
so-called
in making loans;
>i /
millionaire /Republican
the charge to
Change in the buying policy of the
There have always been such leader,
the borrower will be higher. Now
Vanderbilt, ; still doesn't Reserve
system, the resultant in¬ this is not in itself
schools
around
gloomy.
I feel
Washington but like him, and another develop¬ creased cost of new
capital raised confident that we still
have
only in recent years have the big¬ ment occurred. ' :r-'?■???
a
by the sale of high-grade secur¬
This
was
credit structure which is ample
that' there, was
ger/ and better universities, grab¬
an
ities, .the advance in the discount to
Wall
Streeter
who
bing the dollars as they can, gone ^ambitious
support a high level of business
rates y of
the
various
Reserve
in for such "higher
learning.?. Of aspired to-be Governor. The Gov¬ Banks and the tremendous effect activity, and commodity prices at
least as high as presently prevail¬
necessity, ' in ;these ' schools ■• is ernor, Driscoll,- didn't; like? this of all
this on the loan or credit
taught the eternal " conflict be¬ threat and he considered it ap¬
ing.
policies of the member banjts—
tween
the
bureautfat:::and the parently to be a seribjusbhfc and
Which will affect our customers
Corporations' Capital Position
he set out to divert his rival from
Congress; how it is necessary if
The creeping rise in inThis brings us to a
you are in the Bureau of Reclama¬ running for the governorship, to
considera-j
rates
is
an
.accomplished tion of the second
topic—the cap¬
tion,' for example, to create prop¬ running for the senatorship,, He
fact. Money had bean kept artifi¬
ital pbsition of corporations. Cor¬
aganda to get Congress to give iaid, if this ambitious rival would
cially; cheap to finance the war,
run for this, be would throw the
porations today are, in many cir¬
you more money for; your projects'
and the removal of the artificial
State organization behind him?
I believe I have just come to it
cles, considered flush and wellceiling only reflects an attempt, to heeled
because
of large'
So we saw the
but 3 thesev schools
dollar
are?, usually
amazing ; spec-' a limited
degree, to let the laws of
called departments of public in¬ itacle of the Republic
profits. A little thoughtful reflec¬
organization demand and
supply function; or tion will not lead to this conclu¬
struction. / They teach that poli¬ meeting and .the pot-bellied coun¬
in other words, to let natural lev¬
sion. According to data compiled
tics is a science, not an exact one- ty leaders, one after another, in¬
els of interest jrates assert them¬
by the SEC from the end of 1939
that the business of being elected cluding those South Jersey lead¬
selves. How far interest rates will
to the middle of 1947, the working
to Congress is an
writer
knows,
understanding ers, - whom this
rise, I do not know, but I should
of the mass
capital of all United States nonmind; .how. to get agreeing that - Hawkes was ; not think that
they will rise only financial
corporations increased
enough
and 'therefore
votes, and how to create propa¬ "liberal"
moderately—because of the neces¬ from
$24.6 billion to $59.8 billion.
they had to supplant him.
*•
ganda.
'
'■
sities of the Treasury Department.
On the face of it, this seems im¬
In this light, I think that every
My
first
thought i was
that I don't think that the Treasury
pressive, but if related to the
friends had
so-called school of public instruc¬ Hawkes'
not - given will want to
pay much
higher current level of corporate sales
tion, or the schools of govern¬ them as much money in 1942 as rates for money to finance our
volume, no gain whatever was re¬
ment, should teach as a classic they would like to have this year, huge debt.
Government obliga¬ corded.
If we
make
our
com¬
example, the experience of Sena¬ but obviously that is wrong, be¬ tions become due and have to be
parison
between
inid-1945 and
tor
Albert W. Hawkes of New cause in 1942 there was a Demo¬
refinanced, and the cost is vital.
cratic Governor of New Jersey, Of course the banks themselves mid-1947, to give effect to post¬
Jersey.
war changes, it will be found that
In 1942, Hawkes had long been Charles Edison, and now there is will pursue tighter lending pol¬
the relationship between sales and
a
Republican Governor wh» can icies. Consequently, it may well
an
outstanding businessman.
He
working capital varied hardly a';
k6ep the county leaders in line on be that individuals and corporahad
been
the President
of
the
all from the beginning to the end
United States Chamber of Com¬ just the statement that Hawkes is tions, may, to a degree, liquidate
of this two-year period.
While
"not liberal enough."
merce.
He
had
holdings of governments to ac¬ inventories rose from 11.1% to
contributed
to
X should like to ask the Gov¬ quire the additional cash needed
practically every charity known
13.5% of sales, and receivables
having come up from taw in the ernor of New 'Jersey, a Repub¬ in their operations. At this point, also increased slightly, holdings of
true American tradition and had
lican, and the other Republican let me
say that I do not believe
liquid assets (cash and govern¬
come
to
be
a
millionaire, and leaders just what they mean. Just
ments) declined from 19.1% to
therefore had the money to give what vote or action has Hawkes
,:An
address delivered by Mr.
taken in his five years of office
12% of current sales volume. (On
freely.
•
■?.' •
.■= JV:'-.-.
Kempner at meeting of Western
that has annoyed them. Just what
He aspired to be Senator from
Insulated Wire Co., Los Angeles, an absolute basis they fell from
action of his do they consider not
New Jersey.
This writer worked
Jan. 28,1948.
$45.5 billion to $34.8 billion.) In
"liberal enough."
•
;
•
<• ~
with him in the primary cam¬
with

consideration of several

a

rates; (2) the capital position of corporations; (3) the
economy of the European political and economic situa¬

the

unques¬

this

nomination.

same

•

man,

look.

is

economic freedom and

sedative at the

subject logically divides itself into

on

dustries

aim the

a

tion; (5)
the«*
—
:
:———-—t*
picture of there is anything sacrosanct about other
words, working-capitalwise,
business itself, the price of par for
long-term business had a hard time main¬

Wilson.

was

as

that my

know

•

-

degree entitling him to be
reaucrat.

He

me

tionably
the
more
outstanding
man, but what the students in the
"public instruction schools" should

Bargeron

7

high production, although now "the
time." Points to outstanding heavy hacksupport for continued high industrial activity.

stimulant and

a

main elements: (1) the rise of interest

it—poured plenty of money into
the South Jersey
leaders, who with
this
assistance,
came
to
see

of government

he stopped by reasonable
logs

why. It was
millionaires

dynamic

can

is not the slightest doubt
that to do this, Hawkes' friends—
not he because the law
prevented

Nowadays
too, we have
departments

(803)

asserts despite
creeping rise in interest rates and tightening of bank
lending, credit
nevertheless ample to support
present high business activity and commodity prices. Main-

There

.*

in

I

question

youngish,

lege.

one

go off to

clashing.
.
Hawkes, however, went to the
bat and in the
primary defeated
Vanderbilt's candidate, a so-called

ly you used to
pick that up
in

one now can

<♦>-

her,

g r a p

when

or

structure is

univer-

is

subjects taught.

CHRONICLE

Western banker

tre¬

a

advance, if that is what it is called, in the methods of teach¬
There has been a tremendous advance, if that is what it

ing.

vvV -1

■

By S. MARSHALL KEMPNER*

mendous

in the

i'Y* ""fftt1

i

*v

President, Industrial Capital Corporation, San Francisco
i

went to

»•'

Weather Eye on the Telescope

of the News

By CARLISLE BARGERON
Since your correspondent

*

and

.

.

.

•

the

remarkable

more

re|nembered
1945

and

that

>

it

is

between midcorporations

mid-1947

raised almost $6.2 billion of

bonds.

In

addition

to

new

this,

please remember that during the
two years undistributed
corporate
profits amounted to $13 billion.
Expressed more simply, it would
seem
that the large dollar addi¬
tions to working capital were in¬

adequate to maintain relative li¬

quidity,

due

volume

of

to

the

business

increase

which

in

neces¬

sitated

larger receivables and in¬
ventories, and due, of course, to
the rise in the general price level
which

has

unit

per

tied

sale

ventory.

up

or

dollars
unit of in¬

more

per

'

Mark Twain and Inflation

This leads
—the

to

;us

inflation.

minds

of

me

Mark

mark about the
one

third topic
subject re¬

our

The

Twain's

re¬

weather: "Every¬

.

,

when

talks about it, but no one does

anything about it."
not

that

mean*

By that I

there

do

not

are

tempts to control prices.

at¬

We all

read the papers, are familiar with
the
President's program, which

I'rn not.

sure I understand, as well
pinch caused by high taxes.
high taxes can do aught but
discourage production and new
capital investment, I do not kno\y.
as

the

How

The

for inflation must be in¬

cure

creased

production

in

crease

If we

goods.
strikes

and

the supply of

(Continued

Central

to have further

are

work

or

in¬

an

available

stoppages,

Illinois

Elec.

or

31)

on page

&

Gas

& Preferred

Common

Central Illinois Public Service
Common

Curtiss

& Preferred

Delhi Oil

Ft.

Inc., Com.

Companies,

Corp. Com

Wayne Corrugated Paper Co.
Common

Southern

Gas

Union

Co.

Com.

DAVID A. NOYES & COMPANY
Members

New

York

208 SOUTH LA

CHICAGO

■'

Stock

Exchange

SALLE STREET

4,

ILLINOIS

Tele. CG 730

Tel.: State 0400

r.

; The
so-called
organization headed

paign.

Vanderbilt of

The

Republican
by - Arthur

funny thing about

it, and

what should be tremendously - in-

Newark, didn't like 1

(Continued

on

page

36)

PUBLIC UTILITY COMMON STOCKS

?
"

,

Black

•

:

Hills

"Central

?
1

We

•y-y

*r-S ;■

arc

pleased

to announce -die' association' ••with
yir-i:/:-.!

'!■'?'l

*•.

-

'■,!,.:«' ;;

'•' V'

■

:

.

us

■•

> '

■

„V-

V

\ '
;

Electric

&

Indiana Gas &

>>v

George Noakes, Jr.
in

pur

Public Service

Superior District Power Company

Company

*

'

*

}

dividend

requirements

$156,000
*

Annual

Indiana, Inc.

Sioux City Gas & Electric Company

-

Callable @ 105

par

have been

covered approxi¬

mately

3.6

times

since

of

issuance.

Company

Public Service Company of
■

$100.00

38,889 sh. outstanding.

"Michigan Gas & Electric Company
Michigan Public Service Company

gales department

4% Preferred

:

Company

Lake

y

PATHE INDUSTRIES, INC.

Gas Company

Water

Missouri Utilities
«v

.♦

Power Company

Iowa

*

Mr.

Light Company

Gulf Public Service Company

-

*

:-r

'

•

&

Central Illinois Electric .& Gas Company

;
■'

Power

Central Arizona light

v

Market:

"
*

*

*

Southwestern Public Service Company

Detailed
and

Texas Public Service Company

its

54

—

description of

56

this company

operations available to inter¬

ested dealers

on

request.

*Tide Water Power Company
v

Tucson Gas Electric Light and Power Company

Wm. E. Pollock & Co., Inc.
20

PINE

STREET,

Telephone: HAnover 2-8244




NEW YORK

*

Prospectus Available

5, N. V."

Teletype: NY 1-2846

AjCALLYN*®COMPANY
Incorporated
Chicago

■*

New York

Boston

Milwaukee

COMSTOCK & CO.
CHICAGO 4, ILL.
231 So. La Salle St.

Minneapolis

Omaha

Dearborn 1501

Teletype CG 955

8

THE COMMERCIAL

(804)

CHRONICLE

FINANCIAL

&

Thursday, February 19, 1943

*

„

products, alcohol, steeL and wood
products.

Dealer-Broker Investment

retailed to 254
to
10,000,000
rural population), gas to two com¬
munities, bus service to two com¬
is

Electricity

communities

(and

Recommendations and Literature

munities, etc.
Electric

Company

Interstate Power

operating utility controlled by Ogden
of liquidation. Interstate is highly over¬
capitalized in relation to earnings power and the SEC some time
ago ordered the company to recapitalize. In October, 1946, the com¬
pany filed with the SEC two al-^
The earnings statement in the
ternative plans to reorganization,
'red herring" prospectus does not
which were approved by the Com¬
mission in January, 1947, and by give pro forma earnings except
for
the latest 12 months period
the U. S. District Court in April,
ended Nov. 30, 1947.
Actual net
1947.
Under the plan the com¬
income during 1942-47 was rela¬
pany proposed to sell $19,400,000
new
fhst mortgage bonds
and tively small because of the high
Interstate Power Co. is an

Corp., which is in process

3,000,000 shares of $3.50 par com¬
mon stock.
These securities were

registered with the SEC on May
13th but public offering was de¬
layed until Sept. 25th.
As a re¬
sult of competitive bidding Halsey Stuart bid 100.9 for the bonds,
and Lehman Brpthfrs, Goldman
Sachs and Wertheim bid $4.05 for
2,132,223 shares of common stock.
After hearing oral argument on

Commission held
that sale at this price would not
effectuate a plan which would be
fair and equitable.
Since the bid

charges under the old set¬

fixed

hand Federal
small be¬
interest de¬
revenues,
and

the 'other

On

up.

income taxes were very

the

of

cause

heavy

Gross

ductions.

before income
with
miscel¬
laneous net income), have been
oproximately as follows (in mil¬
operating income
i xes
(combined

lions of dollars):

'

„

Oper. Income
Before

vfar

Revenues

Inc. Taxes

*1947

$10.0

1946

9.1

1945

receiving a

1944

payment of $8 635,500 for
the
stock, the sale of the bonds was

1943

1942

company

the

2.5

7.8

Based

consoli¬
30,

canitalization

1947,

will be

pany

the

of

com¬

follows:

as

a

Long-term

%
82

debt.. $25,000,000

Com. stock & surp.

18

5,320,000

or
shares.

000

94c

Nov. 30.

share on 1,500,-

a

'

According

;

$30,320,000 100

Under the previous set-up

last

as

September, the funded

of

debt

ratio would have been about 64%
and

the

stock

common

equity

36%. The present debt ratio seems
rather high as compared with the
50% usually required by the SEC
in the past.
However, retirement
the

of

debenture

bonds

through
operation of the sinking fund will
gradually reduce the ratio
at
least $3,750,000 debentures should
—

retired by maturity.

be

fhat

preferred

no

outstanding
v/iigh
ra

s

io.

explains

the

be

high

debt

consideration
to

n

the fact

may

that

duccj.

rently

also

the

prop¬

sharply

Net plant account is

carried

million

:pmpint

-

at

whereas

was

in

be

re-

cur¬

only about $30
in

excess

1943

the

of $50 mil¬

Present plant values reflect

Original cost.

Charts

Corporation owns
$2,475,000 demand note, a small
amount of preferred shares and
the

ale of

1957

of

retire

to

lows, earnings, dividends, capi¬
talizations, and volume on virtu¬

stock will

bonds and

new

used

be

the

ally every stock listed on the New
York Stock and Curb Exchanges

5s

present

and showing monthly highs,

years,

Proceeds of the

common.

at. 100,- prepay $2 million

-^-single

$3 million collateral prom¬
issory notes due April 15, and

of the

issues)
William

accrued interest to the effec¬
tive date of the plan on other
pay

the

to

the bond indenture.

in

i

debt.

unded

million

The

bank

$10—yearly -(six
$50—F. W. Stephens*" 15
Street, New York 5, N. Y.
copy

will

to December 31.

of

be

Emphasis

placed in

The bal¬

escrow

ferred

million and of the

stock $1.6 million,

total of $6.2;

mand

note,

about

total

$8.7 /, million.

dividend

represents

rate

about 64% of net
income. The sinking fund amounts
of

pay-out

a

to

in

$250,000
of

cash

ties

courts for

1952.

ments will be
17c

a

share

fund

,;

The company operates

in some¬
what scattered territory in north¬
Iowa

eastern

the

headquarters

with

nesota,

Dubuque,

in

Operations

28

counties

of

Minnesota

county in South Dakota.
Lwo

and

It

has

Company

of Wisconsin

and

Dubuque Electric Company.
principal activities in the
farming,

are

East

grains,

Milwaukee

Bond

4, N.

beans,

poultry,

cattle and hogs; packing,

Commodity
Memorandum
—Mackubin, Legg & Company,
22 Light Street, Baltimore 3, Md.

:

%

T

soy

canning and processing operations,
such

as

flour

mills,

/

tories, packing plants and frozen
food locker

operations

plants. Manufacturing
are

carried

on

in fur¬

niture, tractors, cellophane,

corn

—

'

v

■

of

served

market

North Eighth

San Francisco

Upiversitv

California?
about .*< the
by the * Bank of
facts

20,.,Calif;

H. Child, :- Inc:, . Salt
Exchange Building,

change—W.

dinner

at- the .Houston

Club.

V

Salt Lake City,

Country

.

on

Lake, Stock

day and

v

Also

-

available

Foundation

are

analyses of'

Weliman, Engl-;

Co.,

and Tennessee Products
& Chemical.
;
:
V \
.

Co.— Special

Oil

Kingwood

-

survey—Peter Morgan & Co., 31
.

York 5, N.Y.

Milliron's—Supplemental Mem¬
orandum—Maxwell, Marshall/&
Co., 647 South Spring Street, Los
Angeles 14, Calif.
•

New

Service

Public

England

of apprecia¬
possibilities—Ira
Haupt &

Company—Analysis
tion

Co.,

Ill

Broadway, New York 6,

Y.

.

Pathe Industries,

Inc.—Detailed

description of company and its
operations—Comstock & Co.. 231'

Street, Chicago 4,

Portsmouth Steel Corp.—Data-

Buckley

*

\Y

*

ytah.Wi^.^AV>;^
*

*

Walnut'

1240

available is late informa-:
Du
Mont Laboratories,

on

and Buffalo Bolt Co.

r

<

Shepard Niles Crane & Heist—r

Currie & Sum-;

Report—Troster,
mers,

74 Trinity Place, New York

6, N. Y.

'

Brothers,

Street, Philadelphia 2, Pa.

:

.

• ;

•

-

V

>

*v

Amalgamated • S u g a r ■— New
Wilson Line
Memorandum
Analysis—Edward • LY'Burton- &
CO., 160 South Main Street,. Salt Newburger & Co., 1342' Walnut
Lake City 1,- -Utah.,,.?. : Y
y*' Y Street, Philadelphia 7, Pa.r4

V;

—

27, 1948 (Philadelphia. JPa.)

Investment Traders Association
of

Corp.—

New York.

Also

Summary of Transac¬
Salt Lake
Stock Ex¬

Yearly

Association

annual field

Feb.

5, N. Y.;

Analysis-—Seligman, Lubetkin &'
Co., 41 Broad Street, New York 4,

tion

Feb. 23, 1948 (Houston, Tex.)

Houston

Motors

Graham-Paige

South La Salle

,»«

America, 300 Montgomery Street,

tions-

of

Wall Street, New York

What's Happening in
—Brochure

Yv-'.Y,

Investment Dealers

Public Service-New
Service—Memo¬
M.
Kidder
& * Co.,

111.

annua)

i;"..

ation Luncheon at the

on

Public

randum—A.

and

Philadelphia Securities Associ¬

mills,

feed

canneries, creameries, cheese fac¬

Prices

Compared

Dividends on In¬
vestment
Trusts ~ for
1947—De¬
tailed tabulation-rTaussig, Day &

Feb. 20, 1948 (Philadelphia, Pa.)

Club.

circular

Engineering Works.

Tax Status of

Milwaukee

-

York 5, N. Y.
Also available-is a

N.

freezing,

peas,-

Y.

Stock

Club

—

the
Prices

the

at

Athletic Club.

including

dairy farming and the raising of

Street, New York

Co., 60 Beaver

(Milwaukee, Wis.)

winter, party

Circular

Outlook—Anal¬

Market

Stock

ysis of situation s view of break
in commodity prices—H. Heptz &

The
areas

Hickey,

&

Street, St. Louis 1, Mo..
Feb. 20, 1948

—

Nassau Street, New

1

subsidiaries, Interstate Power

.

Street, New York 5, N. Y.

Company, Inc., 316

ex¬

Iowa.

tend through 21 counties of Iowa,

the
developments ' in

industry—Vilas

.

49 Wall

Min¬

southern

and

De¬

Developments of

Railroad

Week—Current

be

com¬

and

In Investment Field

Corp.

neering,

EVENTS

the common stock.

on

—

COMING

require¬
equivalent to about

Sinking

Company

England

State

148

annually,,

debentures

'.

•

company—Raymond & Co.,
Street, Boston 9, Mass.

land

time.

some

Street, New

Co., 120 Broadway, New

&

Engineers

scriptive analysis of special Situ¬
ation on 86-year-old New Eng¬

Estimated

SEC

Electrolux
Ward

1

New

principal

or

but does not begin to operate un¬
til

the

control

hydraulic

Inc., 41 Broad
N. Y.
;

Co.,

Colorado.

and the issues involved may

before

of

equipment for aviation and indus¬
trial uses—Seligman, Lubetkin &

England

stock might be slightly below

remain

Electrol, Inc.—Analysis of man¬
ufacturer

Northern

'

making

market value of the unsold
mon

61 Broadway, New York 6,

Y.

United States
National Bank Building, Denver 2,

pre¬

would

/

Company—Summary

&

opinion—E. F. Hutton & Com¬

pany,

N.

Trusts—Brochure

Investment

adding Ogden's de¬

the

1

Frederic A. Adams,

ing recently around 62 and the
preferred stock around 7^:Total
market value of the bonds would

a

120

more,

for fu¬
(1) Og¬

The debenture 6s have been sell¬

$4.6

Broadway,

berger & Company, 61
New York 6, N.-^

allocation; between
Corp.,
(2) holders of the
debenture 6s of 1942, and (3) pub¬
lic holders of the preferred stock.

be

Meeds,

&

Ineome—Analysis

on

opportunities for ineome in in¬
vestment
trust
preferred Y and
common
stocks—Arthur Wiesen-

1,500,000 shares not
probably in the neighbor¬

be

Deere

and

of

ex¬

the

or

Bisseli

York 4,

remaining $1

debt

spiral
complete

Building,

Broadway, New York 5, N. Y.

in

charts

922

—

bound book covering 12

the SEC has not im¬ thi§ amount. There is no present
posed the restrictions which
it
indication as
how the stock will
occasionally has done in the past
be split between the three par¬
where the debt ratio is high.

served

het ty account has been

lion.

to

factor

,

.

e

;$vc

is

stock

another

considering the capital ratio

l

*©::

is

The fact

surplus account of nearly $17

nil1 ion). Ogden

a

all

New York 4, N. Y.

30 Broad Street,

net deficit

a

However,

amount

Total

(together with

Service

National Bank—Circular

Chase

—Laird,

Detailed

—

Public

Trade

Co.,
Board
of
Chicago 4, 111.

in¬

Portfolios

Bank

common

den

pro

412,000,

The
Amount

stock
in

million

and i $6

dock

Illinois

Company—Circular—Kneeland* &

formation—Gordon Graves & Co.,

$10 million preferred

'unded debt

ture

2.2

months ended

dividends

the pro forma

on

tion

Stocks—Memorandum-

Joseph Faroll & Co., 29 Broadway,
New York 6, N. Y.
'

kwh. sales 1,239.
outstanding capitaliza¬
includes about $36 million

Present

Central

and

Industry

Transport

Selected

and average

will

2.3

Y

preliminary
prospectus, which may be sub¬
Only such amount of the common ject to amendment, it is the pres¬
ent intention (subject to various
are to be sold as will be necessary
to raise $3,635,000.
Smith Barney contingencies) to pay dividends at
the rate of 60c per annum begin¬
& Company are managing the un¬
derwriting on the new basis and ning October of this year. There
the offering is .currently sched¬ are the customary restrictions on

dated balance sheet as of Nov.

the

for

Air

per

hood of 1 million shares

$5

uled for Feb. 26th.

Average
kwh.
latest period

revenues.

revenues

3.62c

were

sold,

forma basis the latest
"ieures show net income of $1,On

million 20year sinking fund debentures and
1,500,000 shares of common stock.
bonds,

mortgage

8.2

;

*12

the

5th

proposed new capi¬
talization and registered with the
SEC
$20
million 30-year
first

changed

;
"

also cancelled.

Feb.

total

residential

ance

2.8

7.1

On

of

13%

2.9

7.3

company's

the

upon

total, and industrial sales
relatively small—only about

are

tended

$3.0
,

conditioned

for the new bonds was

'

Gross

interested parties the

send

to

.

the bid price; the

mentioned will be pleased
following literature:
'

understood that the firms

is

about 89%

revenues are

the

of

—

Philadelphia C Twenty-fourth

Annual Mid-Winter

Dinner, at the

Benjamin Franklin

.J American Wate? Workkifc EJeetric—Analysis—A,' M. -KIdder A;
Co.. 1 Wall Street;' New

<

York 5,

March 5,1948 (New York City)
New York

"American Red
wGarrieslo/r t

Security Dealers As¬

Argo Oil Corporatrofi-^Analysis
sociation 22nd Annual. Dinner *1; ]
for
broker-dealers On lyYYlY"WV;
the Waldorf Astoria.

Federal Water & Gas

March

12, 1948
Canada)

Annual

Southwestern Public Service

Bond

Northern Indiana Public Service

Gould & Co., 120
■"York

(Toronto,

Out*

"YY

';t ;

Dinner of

Traders

;

the Toronto

Association at the

King Edward Hotel.

;;Y

,

.

;

;

Security Traders Association of

Gilbert J. Postley
,

&

29 BROADWAY. NEW YORK 6, N. Y.




Direct Wire to

Chicago

Co.

the

12th Annual Dinner at

Waldorf-Astoria

Nov. 15-18, 1948

Hotel.

■

•

'

w

1'"

"

*

■

'

B. V. D.

1-u K-

n r-

'

port

—

of

"•i-P'vr' '

America—Special

&

Dempseyi-Tegeler

210 West Seventh

geles 14, Calif. 7
Illinois

re¬

Co.,

Street, Los An¬
.

:

;

.:

;

> 'ft 'r'

f-

Corp.—Analysis—C. E.:
Unterberg & Co:, 61 Broadway,
New York 6, N.i Y.
'
'■-/
,

Central

(Dallas, Tex.)

Broadway, New

5, N. Y.Yf,

*

Bank

April 19, 1948 (New York City)

New York

-

Public

^
Service

Cb.^—Research item—Goodbody &

National Security Traders Asso¬ i
Co.,115 Broadwayr New York

ciation Convention.

'

iN. Y;

6,
:•

i

Volume 167

Number 4674

THE COMMERCIAL

The Construction Outlook
By

&

FINANCIAL

CHRONICLE

Outlook for Construction

WRIGHT*

WILSON

President, F. W. Dodge Corporation

Asserting prices and production are at level commensurate with
dilution of money supply, construction economist says it is evident
residential building probably will be reduced as

Extolling fluidity and diversity of free enterprise, Mr. Holden points out abuses and
shortcomings of
industry as due both to legal and trade union restrictions and to
operating on trial and
error basis.
Sees progress in redjcing
housing costs, and expresses confidence in further
expansion.
Cites construction growth during
depression following World War I as basis for bel.ef in current ex¬
pansion, but warns this is year for critical decisions.

construction

stimulating effects
losses and shortage of equity capital.

■

Prices and production have been increased to within
striking
distance of the level determined by the wartime dilution of the
money
supply. While it is evident that the inflation of bank deposits and
currency would support still higher price levels, the combination of
increased pro«>-

duction

increased

significantly

appar¬

inflation.

ently

is

extension

ap¬

proaching the

sioin

limits

will be

method

fi¬

of

the

consequence,

bank

current

credit

infla¬

tion the

struction

earning

assets

rather

sort

Wilson Wright

reduction

have

reduction

introduced

been

and

in
of

inventories,

progressively magnified. Consider,

of

for

example, the current relation
prices of agricultural
products and rents, between the
prices of capital equipment and
the prices charged for these in the
form of depreciation charges, be¬
tween the market price of cor¬

and

between the

of

investment

ernment

in

plant
constriction

a

available

for

non-gov¬

borrowers
ordinarily
interpreted as indicating

reduced

volume of expenditure
In this connec¬

for construction.
tion it is

significant that

porate equities and the prices paid

tracts

for

for the services of

have

new con¬

been

development
equilibria

of

may

indicative of

a

employees. The

dis-

price

these

be considered as
situation in which

expenditure for consumption and
investment eventually will be de¬
ferred,
because
of unfavorable
price-value judgments on the part
of marginal buyers and investors.
ft,

;

Moreover, during recent months
has become apparent that the
combination of rising prices and
it

the

steeply progressive income tax
rates have siphoned savings from
the possession of that kind of in¬

industrial

construction

declining for
past.
Presumably

months

some

this

change in trend will be made evi¬
dent

in contracts for commercial
construction in the not too distant
future.

Expenditure for residential
struction

stimulated

was

dropping of rent control

con¬

by

over new

.onstruction at the end of the first
1947.
At the same time
ial

contractors

buyers

of

abandoned
costs

and

hope

that

be

reduced

would

poten-

residential

space

building
in

the

dividual who, in the past, custom¬
arily invested savings in equities.

foreseeable future.

At the

penditure for residential construc¬

dent

time it has been evi¬

same

that

important effect of

an

price inflation has been
tion

of

a

distor¬

profits in the
direction of enlarging the figures
reported without a commensurate
corporate

increase

in

earnings.
of

disposable corporate
Thus a critical shortage

equity capital has been devel¬
at a time when corporate

oped

management is learning that ex¬

pansion

programs

be financed

of funds.

opments,

longer

no

from internal

reduction

a

in

plant

in

business

and

equip¬

V

Not

only
the

are

of

inade¬

an

quate supply of equity capital but
also there
an

is

automatic

limit

think

to

reason

to

that

credit

pansion is being developed.

loans

of

the

commercial

result of

expectations,

dential

current

ex¬

level

of

resi¬

construction

evident

that

the

volume

resi¬

of

dential construction

be reduced, as
are

worn

probably will
stimulating effects

off.

of

ager

a

viewpoint of the

N.

in

prices.

by

But

Association, Atlantic

J., Feb. 6, 1948.

the
the

City,

struction

developed from the
foregoing statements.
"
First:

From

now

the risk of

on

inventory loss probably is greater
the opportunity for gains.

than

The

responsibility

for

of

speak

industry

contractors

and

who

actually

erect structures On

builders.

ment

losses

categories exist to serve the
varying needs of the American

it is

to understand

necessary

free

enterprise
itself

has

economy,
recent years

in

vilified,

misunderstood,

Simple

Formula

American

It

fit any simple formula.

of natural

maos
inventories




planning to

is

not

resources,

factories

of

schools,

,

Here

is

what

outstanding

one

L'lienthal

David

t*nation

he

is

is

his

going.

His

business,

own

finds the way to get

and

inability to bomprehend the fdiaims

verse

and

the

of

purposes

people
The Urere

actually, is not

a

new

to Grow and

Expand

sysiem

all, but almost its opposite, that
a society of the greatest imag¬
inable
diversity and flexibility

to produce things more

ways

cheaply and make them available
to

people,

to improve
our
communities and the living
standards of our people. The times
more

describe

we

times

too

tired
The

be

'system'

might

svstem

by saying that
is something which de¬
up

whereas

society

defies

tem

our

limita¬

The American economv in¬

million

3V2

farms,

of

independent

6% mil¬

of 10 million
economic initiative. I

total

a

that

no

conceivable

sys¬

be originated by plan-

could

society.

our

by Mr. Holden be¬
Association of
and Industry, Chicago,

Chicago

Commerce

111., Feb. 11, 1948.

1

com¬

greatest

with

competence

that

has

in

construction

industry didn't need to convert to
war, or reconvert to peace; always

ready to tackle

any

did what

naturally.

For

came

production
from

it

office

churches and
ties

to

job, it simply

mobilization

war

naval

and

war

switched

overnight
buildings,
schools,
other civilian facili¬
bases, cantonments,

quonset huts, flying fields, ship¬
yards, war plants and war hous¬
ing. It quickly doubled its Drewar

capacity, completing in 1942 the
largest total volume of construc¬
tion of any year in the
country's
history.
The
war
construction
miracle

1942

of

production
naval

was

forerunner

necessary

miracle

the

of

vitally

the

of

war

1943.

The

bases,

supply depots and
landing strips laid down by con¬
struction men organized as Seabees and army engineers
prepared
the way for victory.

During

the

startling
and

itself

war

innovations

construction

in

many

design

methods

were

adopted. A modern efficient home-

building

industry

created.

was

Builders

adapted their assemblyline techniques to building
ships,
their

management

operating
shipping of
One
to

I

us

have known

before.

in

war

man

wartime

who

rose

shipbuilding

manufacturing automobiles.
would say that the American

now

industry is character-

(Continued

on page

34)

anything about

As Walter Lippmann put
five years ago:
"There

some

out of the nation itself

ends,
and

veritable explosion of

a

tional

ALBERT FRANK-

this

people who have not
been very pleased with themselves
for 20 years because they were
not using their faculties for great

which

energy

shape and
the

alter

great

will
the

GUENTHER LAW
Incorporated

na¬

shake

world."

expansion

of

society is capable, we
Every new industrial
enterprise, every new social or¬
our

Advertising

ganization. every new means of
transportation and Communication
every new

family,

every new pro¬

religion, education and
public health requires appropriate
gram

in

facilities

of

the

most

advanced

type.
What

131 Cedar

of

construction

in¬

dustry can best serve this dy¬
namic, vital and expansive Amer¬

Diversity and Flexibility of
Construction Industry
Should

not

the

American

con¬

Street, New York 6

Boston

Chicago
kind

to

towns,
to
materials abroad.

construction

fame

know-how

industrial

economy faces a potential ex¬
pansion greater than anything any

it

a

the

served

admirably

The

war.

technical

competence,

people

and

peace

diversity and

high

managerial

can

*An address

the

and

con¬

which

one

I am convinced that at
this present moment, the Ameri¬

ican society?
fore

the

our

industries,

the

new con¬

must build.

sum

American

of the

bines

is

struction.

which

limitations,

tions.

depres¬

downs

production facilities and

'system' is to have

system."

I

expand,

a

that, of all

American

construction

For

a

to

call

is

expands by invest¬
ing capital in new enterprises, new

is

to

economy

sick

we

ex¬

An economy

of

said

convinced

am

construction industry measure the
flow and the ebb of the expansive

come

be

I

great

forces of

out

self—cdmng what comes natu¬
rally.' The only way in which it

at

is

has

things as thev come, de¬
how to handle situation?
by the facts of each situation it¬

the

and

ups

is

economy

too

what

the

prosperous are

the

or

have

is,

taking

ways

When

at

ciding

as

when

panding.

of

short while ago: "What

a

have

centers

Security Traders Association of New York has announced
that the date of the organization's I2th Annual Dinner has been
changed from April 23 to April 19, 1948, since it is felt that this is

where

destination

sion.

churches, hospitals, automobiles,
telephones and radios.

contend

The

for

explained by censuses of pooiila-

tion,

lion

OF NEW YORK

and woman and child knows

exactly

we

does not
It is not

business enterprises and

are

been

abused

society

understand.

to

easy

cludes

convenient date for out-of-town dealers who

which

System

American

Our

a

ASSOCIATION

our

grossly lied about.

even

No

fines

NSTA Notes

Every

gen¬

eral

we

remember

it isn't chaos.

produce

American.

inventory

But

Some
organiza¬
One of the most striking char¬
complete buildings
acteristics of our dynamic free en¬
for sale, either singly or in cmanterprise economy is its eternal
tity; thev are merchant builders
urge to grow and expand.
Our
or
operative builders, formerly
population is not static; the ideas
spoken of as speculative builders.
of our people are not static.
We
The varying types of ' profes¬
are
eternally thinking up new
sional and business organizations
things to do, new things to make
that fall within these several
tions

about it

and

that the first loss is the least loss.

attend.

ac-

count with the intent of operating

-

more

own

producing, with minimum time
effort, any kind of structure,
any time, anywhere?

and

American

man

|

their

them for income; these are invest¬

no

a

con-

material

install

of

flexibility

equipment they sell combine j there. The chaos which the Marand supply functions, tian seems to see rests in his oWn
building organizations

to sav that our

^TRADERS

con¬

Some

can

SECURITY

the

as

progress

it not live by
rules that
guide but do not reg.ment or re¬
strict?
Should it not be
capable

struction

service

the

is

reduced

to

not

Should

chaos,"

and

a

debt should be kept to proportions
which will be bearable if income
sustained.

me

asked

in¬

a
large number ana variety of, whether| it be Chicago, Montreal
supply organizations. The service. Mamaroneck, or the Lexington
organizations include the design-1 Avenue ex't. He expects terminal
ers (architects and engineers), the 1 offic'als
to supply an information
contracting builders and the sub-1 booth, ticket windows, gates with
contractors. Supply organizations the trains
plainly designated, and
include producers and distributors
j a few other essential services and
of materials and equipment. Sub- (conveniences. He decides his
des-

distribution of building
materials,
policy decisions of impor¬

tance may be

He

way.

an

it

ever-improving standards, with¬
out itself
becoming standardized?

hour. Viewing the milling crowds
moving in " all directions at once
he
would
likely say: "This is

Holden

large number and variety of service organizations, and

three

situation, it is well to

rise

swollen

S.

confused

grossly

we

s;sts of

business engaged in the

men's

general

been

Thomas

man¬

/ *Remarks by Mr. Wright be¬
fore the Middle Atlantic Lumber¬

have

What

our

society in

Should

himself in New York's Grand Cen¬
tral
Terminal
during the rush

misled.

and
From the

Third: If sales are
reduced, the
prices charged for goods on inven¬
tory should be reduced promptly
to prevent inventory accumulation
and a tight cash position.
In this

banks

been

enterpr'se

imagine the bewilderment of a
visitor from Mars who might find

activity re¬
free enterorise economy.
To un¬
jects the effects of these
changes
derstand the construction industry
in expectations in the
past, it is

ex¬

commercial, agricultural and real
estate

the

Second:

The

a

was

cause

confronted

we

problem

As

increased rapidly during
the second half of last
year.
Be¬

can

ment is indicated.

with

tion

sources

Because of these devel¬

investment

these changes in

has

not

be harnessed to

fluidity and diversity of

teresting

extent that

an

the

half of

numerous

the

such

to

will

system.

free

public opinion

probable reduction

equipment, and

would be
a

a probable
investment in

new

of

slogans,

ance

they

in
permit

A friend of mine once described

has grown and

probable

a

exports,
a

business

credit

re¬

wholeheartedly

their economy to

gained accept¬

The combination of

price disequilibria

during the

believe

freedom,
a

truths

-

and

maximum

ity?

c o m-

pounded
half

industry be itself vital
dynamic, characterized by
diversity and flexibil¬

and

through development of sound and

of our dy¬
So long as Ameri¬

society.

cans

myth¬

ology,

mainder of the current year.

ganized in the

time

some

gener-

of

the out¬

are

'

namic

are

11 y
misun¬
derstood.
A

to

This

invention which

and

^

struction

standing characteristics

a

involving

been

that

in-

industry

credit at

sense

con¬
.

presumably

^

which would not measurably
curtail the resourcefulness, energy
ners

the

of

are

A

tr*

American

limited

price
system has
d isor-

processes

the char¬

acter

an

expan-

Construction

functions

and

situation, rather than high inter¬
est
charges or Federal Reserve
policy, apparently will represent
a factor limiting the
expansion of

In the proc¬

of

of

a

the

capital is further increased.

war.

ess

the

price

risk

our

nancing

As
of

by

by the magnitude
of bank capital when the ratio of

estab¬

by

are among the most familiar
objects in our
in themselves fairly simple,
though frequently
employed in elaborate combinations; there is nothing mysterious about them.
-Pi
Nevertheless

capital of these banks has not been

prices

lished

Buildings and engineering structures

environment.
A

and

in creased

9

Industry

By THOMAS S. HOLDEN*

Economist, Armstrong Cork Company

end. Cautions against inventory

(805)

Philadelphia
San Francisco

10

THE COMMERCIAL

(806)

Urges Cabinet

Connecticut Brevities
stockholders of Bigelow-

meeting on March 29,

annual

the

At

•

proposal of the
preliminary re¬
ended Dec. 31. 1947, showed net sales of $62,872,093

Co., Inc., will be asked to vote on a
directors to split the common stock two-for-one. A
Sanford Carpet

port for the year
compared
with

$39,222,359 the^
Glass Works, Thatcher Glass Man¬
preceding year.
Net profit was
ufacturing Co. and others.
$3,446,729 or $10.64 a share on the
*t
*
❖
common
stock
compared
with
$3.53 a share in 1946.
Earnings on the "6%
preferred
were
$130.54 and $47.27 respec¬

has an¬
nounced
that
directors
have authorized the sale of 7,500

tively.

shares

$1,248,095

or

1947

of

$2.97

were

$2.55

and

Feb.

1946.
share
respec¬

tively.

to

if

Icto

business

the

company,

three

for

improvement,

and

*

the increased volume of sales re¬
quired

capital

working

more

to

keep the business operating, and a
contingency fund
is needed to

it

100.22 for

of

gross

the Southern New England Tel¬

ephone Company was $3,983,791

$3,297,254 a year ago.
Net income was $432,921, against

against

$325,153.
For

the

1947, gross was

year

for

income

the

4>

♦

"

*■"

of Russell Manufac¬

stockholders

turing Company, it was reported
that the business of the company

currently continuing at a high
volume.
Sales for 1947 totaled

is

bidding for

ion,

issue

a

1%

carrying

the

in¬

a scale ranging from
1.55% basis.
*

Far

r

18,

"Dear

Mr.

Edward

F.

1

Hutton

d

ea

on a

directors

Power Company
reported sales of 97,277,000 kilo¬
watt hours., This compares with
95,036,000 kilowatt hours for the

This

does

not

the

change

about

e rs

h i p

obliga¬
whipli professional serv¬
you are paid a very substan¬
fee, and, Doctor, your patient
vigor is your primary

ices

tial
is

dangerously ill.

all-time

is

There

another.

have

or

New

dropped

1947

amounted

which

was

times the level of

1933,

awards

to

still in¬

are

creasing. Business inventories in
the aggregate are today not ex¬
cessive in relation to the existing
level of business sales. However,
is

there

maldistribution

in

in¬

leads to wage and

economy.

In the light of this

substantial general increase in in¬
ventories from the. current level

living

and

inevitably

salary demands
which are outbid in
the; market.
Consequently ade¬
groups

appraisal

course

of

of
rates

wage

the future
and prices
condi¬

must take into account the

or

would

not

conditions con¬
excess of currently

following
to

tribute

an

ed to about $11.4 billion, and even

equipment

plant construction:
employed in the pro¬

or

are

of

goods which do

these

immediately increase the sup¬

an¬

ply of consumers' goods or serv¬

They receive wages, salaries
or
other income for the produc¬
tion1 of
these investment
goods

patient, either because

they did not know when it was in
its death struggle, or they were
too self-satisfied, preoccupied, in¬
dolent, disinterested, or incompe¬
tent to diagnose the nature of the
malady and prescribe the effective
treatment—the kind of medicine
business needs. Or, perhaps some
of them were even splitting fees

ices.

the

this

income

available

and

supply

use

consumers' goods and

to

bid

for

of civilian
services.

(2) An increase in business in¬
ventories: Income is created in the

production
tories

goods for inven¬
transportation of

of
the

or

such

full

the

Marshall

Plan

is

en¬

unlikely to exceed $7.0

are

but

goods,

the

fall

last year?

below

billion.

by $4 to $5

Expenditures

building

resi¬

up

consumers'

1947

;n

the fourth quarter of 1946 to

a

from

for

sharply
billion rate

were

in

(1) An increase in the expendi¬
by
industry
for
durable

tures

not

deflationary

a

force. In 1947 net exports amount¬

dential

generated purchasing power:

Workers

lead to

soon

any

billion in 1948 and will therefore

income.
The

else in this worldin other lands have

doctors

1947,

1933.

billion,

contract

and

in

of

goods

existing throughout the

of

duction

patient dies, you won't

"If your

in

about six

if

and

level

these

$3.9

acted,

their

au¬

for

struction

rently generated purchasing power

lost

This would be ac¬

durable

an

billion

$17.7

of

Doctor, and, gentlemen, your
patient is dying.
You are the
Doctor of the profit and loss and

The

complished
by
changing the
200,000 shares of $25 par stock
to 400,000 shares of $12.50 par.

for

reached

times the

ten

tions which lead to excessive cur¬

of

split the stock

to

high

should become

on

Company
recommendation of

two-for-one.

necticut Light &

meeting

stockholders

the

Expenditures

equipment

ventories

cost

quate

,

"Industrial

other anywhere

el-Birmingham

will act

the

if

*

annual

the

At

were

down.

rrom

to

dustry?
Blank:

and

goods

Roos

services boosts

ad¬

were

on

to a

March

a coupon

bonds

The

1.50%.

of

reoffered

For the month of January, Con¬

1946.

sold to F. S. Moseley at

was

100.02 for bonds

F.

Dr.. Charles

following let¬

tion, for

rate

are

circumstances,

opin¬
if
the

your

competitive system based on free¬
dom.
The defense of its health

1, 1950 to 1959 inclusive. The

than

seats. In these

Point Beach School
Building bonds da(ed Feb. 1, 1948
and due serially $50,000 each year
issued $500,000

$13,874,620 which exceeded the
peacetime sales of 1941 of $6,659,725, by an increase of 108.33%.

month of January

show

in

■

meetiifj? of the

annual'

the

At

.

recently

Milford

of

Town

the

to

tickets

con¬

Feb.

was

year

$2,255,501 against $3,339,188.
*

The

*

*

dis¬
more

there

I

the

<i

tributed

of

would happen,

for

facturing gas.

econ¬

Just what

dressed

Commission

the

has

omy

which

Connecticut

the

to

national

humanity," in

& Electric Corp.

Utilities

ills

at

whenever

"We

the

to

cur.

authority to raise its gas rates to
meet the increased cost of manu¬

$40,827,907
against $37,284,525
tor the
preceding 12 months.
Net

applied

Public

supply

doctor

a

current

the

administer

to

*

it

to

exceed

goods

the

upon

need

ter

The Derby Gas
has

letter

subject,

l%s.
it

1947

December

The

claims

sharply from the middle of 1946
to the fall of 1947.
They have,
however, in the past four months
been rising slightly.
Plant con¬

Day, Stoddard & Williams at

to

currents

me

prices; that is,

the

of

Recently you touched

serial
bonds dated Feb. 1, 1948

school

equivalent of $1.29 a share on the
309,109 shares outstanding.

a

follows:

text

The

15-year

$150,000

val

orders

of Easton recently

Town

The

currently generated purchasing power exceeds the retail
services produced in a corresponding time inter¬
few months before. In other words, business is good whenever

value of goods and

existing

if

'

negotiations should be greater productivity.

of a letter which he has re¬
cently written to a friend regard¬
ing remedies for present "ills of
humanity."

Inc.

it

sold

tion in wage

Business is easy to get and prices of goods and services are strong

copy

has acquired a
knitting and
warping plant at
Willimantic, Conn., for manufac¬
turing Nyton Tricot lingerie.

reserve

to pass

"putting Uncle Sam in
Attacks "power politics"

*

*

excess

of about 9% in

sharpening competition may make it difficult, if not impossible,
the increase on to the consumer. Says primary considera¬

out

Hutton, of E. F. Hut¬
ton & Co., members of the New
York Stock Exchange, has fur¬
nished
the
"Chronicle" with a

Manager.

for future uncertainties.
$400,000 was set aside as
for contingencies, the

provide
Ici 1947,
a

of

it

purchasing power, looks for an average inwage levels during current year, but points

allaying

crease

,

recent factors which have

some

v/henever

has retired as
Vice-President and General Man¬

Textron,

been

•

thermometer and who
will advise just how far America
can
assume obligations of ERP

rea¬

the need for extensive plant

sons:

ir-odernization

Inc.

consideration

in Marshall Plan.

Elmer P. Bradley

ager

ROOS*

F.

Econometric Institute,

The

Mr. Roos, taking into

Edward F.

Southern New England
Telephone Company after more
James
DeCamp
Wise,
recently
than 41 years' service. Mr. Brad¬
stated that the major portion of
ley is succeeded by Lucius S.
earnings was being pumped back
Rowe, formerly Assistant General
of the

President

The

President,

Cabinet, who will honestly read

bed."

1948.

15,

in,

political

a

CHARLES

By

,

reveals

Hutton

letter need of able "doctors" in

month.
be in by

28c

Humanity
F.

Edward

without

em¬

share pay¬

a

must

Subscriptions

against $14,544,022 for the cor¬

responding
quarter
of
Earnings
per
common

at $12.75

able at the rate of

$19,133,619

were

stock

their

of

ployees

Net sales for the fourth quar¬
ter

Inc.
their

Pitney-Bowes,

Can Further Wage Increases Be
Passed to Consumer?

*

"Doctors" to Cure
Ills of

Thursday, February 19, 1948

CHRONICLE

FINANCIAL

&

billion rate at the end

$6.5

1947.

They

ceed

current

likely
If

in

of

ex¬

national

of

cash

receipts

are

$48 billion un¬
substantially.

exceed

to

taxes

to

1948.

levels

Federal

income

less

unlikely

are

billion

$7

At

$4.0

a

cut

are

present tax rates

are

continued,

the Federal receipts would there¬
fore

exceed

expenditures of $37
billion by a huge figure which in
itself would be highly deflation¬
ary.

offset

It would be only partially
by increased spending by

city

State,

county

and

ments.

govern¬

v

/.

.

the all-im¬
portant question of what will hap¬
but would make possible wider
with the quacks who eventually increased.
*
pen to
wages and salaries. Will
ownership of the company.
killed the'patient.
(3) An increase in net exports:
they increase sufficiently to over¬
*
it
it
"Capitalism, free enterprise, the Production for net export like¬ come the deflation arising from
Stockholders of the Connecticut profit and loss system has died in wise creates current purchasing excessive Treasury receipts? ;;
/
Light & Power Company will be one nation after another through power unmatched by a civilian
The value of private domestic
asked to approve an increase in
the negligence of those respon¬ supply.
product1 has for many years been
authorized capital stock at their sible
(4) An increase in the value of closely correlated with the value
for
its
maintenance
and
residential construction: Although
annual meeting on March 17. This vigor. Only in the United States
of salaries and wages of all pri¬
increase is being sought to enable and
in
Canada does
it remain residential building may be re¬ vate industry and government enthe company to develop a plan alive, but fearful of communistic garded as a consumers' good, insti-.
terprises.In fact, deviations from
for financing its expansion pro¬ germs in foreign lands. The basic tutional factors are such that it is the line of relationship or regres¬
for the consumer to sion have been negligible over the
gram which is expected to require issue facing us today is just this customary
between $20 million and $25 mil¬ —Americanism — or Communism! pay down only a small part of the whole
range of a fourfold increase
the whole in the value of salaries and wages.11
That is the crux of all political; purchase price. /Yet
lion over the next few years. •
thorized

capital

of

$5,000,000,

This-

leads

to

up

supply at retail is not immediately
„

The Bridgeport

United

division of the

Illuminating

Company

reported sales of 39,486,944 kilo¬
watt hours for the month of

exclusive of those to

January,

Connecticut

Light

Power

&

with
37,857,244 for the correspond¬
ing month last year. The New
This

Company.

compares

division

Haven

reported

sales

last
29,123,603

©f 29,999,119 kilowatt hours
month compared with
a

year ago.

Court

February
at

dismissal

5;

.

the

.

a

The authorized preferred stock

,

would be increased from 600,000

Federal

shares

approved

Indianapolis
of

$15,000,000

Co.,

against

Hazel-Atlas

Glass

Glass

Co.,

value, but

par

an

par

1,704,000

Corning

Co.,

no

but stated value of $60,000,000.
Authorized
common
stock would be increased from

no

Hartford-Empire

Owens-Illinois

of

aggregate stated value of $30,000,000, to 1.2 million shares of

anti¬

trust suit brought by Turner Glass

Corp.

-

.

*

*

*

On

.

million

shares

no-par

no par

to

shares.

2.5

social

and

ernment

One

ism

labor issues; all gov¬
and mandates.

controls

American¬
will gain
will survive!

system, not two;
or
Communism

strength.

Only one

the face of

"Show us where on

this earth has there been a coun¬
try or
which

a

form

of government by

collectivism,

communism,

(Continued

on page

39)

>.

Tifft Brothers

Connecticut Securities

Members

New

York

and

Boston

Exchanges
Associate

Members New

York

"

Exchange

PRIMARY MARKETS

Curb
'

Information

Hartford

&

CO.

NEW

YORK

STOCK

Hartford 7-2669




Hartford

governments: Such a

represents cur¬
generated purchasing
although ' the goods pro¬

rently
power,

duced

or

services

•

paid for by the consumer.
(6) A general increase in wages
and salaries: Such an increase is
itself
conducive
to
unbalancing
and

Waterbury 3-3106

Teletype NH 194

Danbury 6600

Bell

supply-at

existing

prices,/because retail prices tend
to lag manufacturers' prices, par¬
ticularly when business is in an

mere

tions

listing of these condi¬

inflation¬
have rapidly died

suggests that the
pressures

7-3191 *

York:

BArclay

are

not

*Summary
New

New York Canal 6-3662

rendered

7-3542

System Teletype: HF 365

Mr.

Roos

at

of
the

the

remarks

American

of

Man¬

Association
Personnel
Conference, Chicago, 111., Feb. 17,
agement
1948.

'

Consequently, it must be expected
that

deficit.. usually

A

EXCHANGE

New Haveii 6-0171
New London 2-4301

and county

ary
.

MEMBERS

by

spending

ment and business inventories.

and

Connecticut Securities

CHAS. W. SCRANTON

,

in deficit
Federal, state, city

(5) An /increase

upward trend. They also increase
the demand for durable equip¬

Primary Markets in
Statistical

repre¬

sents income t.o some one.

demand

Stock

construction

the

of

value

increase

substantial

a

in

and salaries this year will
the
aggregate
domestic

wages

boOst

product. Since the economy is al¬
ready operating at capacity with
respect to its labor and raw ma¬
terial
supply and practically at
plant capacity, such a boost could
be
achieved only
by price in¬
creases.
These increases, in turn,

demands

would lead to new wage
and

the

spiral of the

past

years

would continue into 1949 or 1950.

This, leads up
tion.

How

crease

to the $64. ques¬

much

answer can

a

wagfc

in¬

for

1948?

An

of.

is .indicated

be obtained by .study¬

ing the first rounds of wage, ne¬
gotiations. Settlements range from
about 10% over 1947 for certain

industries to
around
Although a pattern has not

low-wage
7%.

1 Computed
by The Econometric
In¬
stitute,
Inc.
from
data
published ' in
Income Supplement, Department of Com¬
merce,

July, 1947;

pp.

(Continued

3 and 5.

on page

35)

Volume 167

Number 4674

THE COMMERCIAL

"

Michigan Brevities «
Gross

of

revenues

Detroit Edison

the

for

Co.

.the

preceding

unprecedented heights.
the

total

above
roll

in

the

1947

Pay increases and
to
13%3>

paid

wages

1946,

operating

being in
Fuel costs

$30,000,000.

pay*

of
45%

excess
were

The

to

proceeds

discharge, its

Domestic

nearly

being

Jan.

electricity, steam and gas each set
new high record..
*; •'
;;
Net income for the

This

share, and

per

net

with

compares

1946

for

of

equal

was

share

the

on

to

The

$1.52

6,995,904

proceeds

chattel

a

and

$10,631,040,

outstanding at Dec.

per

2,

in

1946

of

dustrial

'.

«-vi

■'

Dollar

the

yolume of trading in

1947

was
$41,491,002,
shares changing
which total December

year

with

3,408,746

hands,

of

alone accounted for

Co.,

Co.,

332,332 shares..

Peninsular

.

000
;

Co.,

Davis

&

Co., Avco Manufacturing Corp.
(unlisted department), Detroit^
Michigan

Stove Co.,

Industries,
Motors

Inc.,

Gar Wood

and

General

of

troit,_at $1.25
ing

capital.

sale

exchange for each $100 of de¬

bentures four shares of its $1

value

common

stock.

The

par

offer

will expire at 3 p.m., June 5, 1948.

ings.

of

the

Manhattan

Co.,

Air

7 stock7

fied list

of

work-;

On

Jan.

U.

Army

S.
a

stock,

A

stock,

Manufacturing
$3

owned

The

net

the

by

proceeds

the sale of the class A stock

will

used

be

for

the

by

purchase

the Kerr firm
of machinery

and for additional

ital.

Current

1947

totaled

rent

working

cap¬

assets at Oct, 31,,
$662,758, and-cur¬

liabilities, $378,464.

-

'

if

if

if

;

.

First

of Michigan

Jan. 28 participated in

public offering of $60,000,-

C00

New

%

& Co. and Wm. C.

of Detroit, and E.
&

Roney & Co.,
H. Schneider

Co., Kalamazoo, participated
the public offering of 399,-

in

990

shares

Corp.

$5

stock

at

of

$28

which

sue,

account

Corp.,

was

common

share. The is¬

was

of

sold

for

General

the

Motors

if

Co.

present

strengthen the
:

|
'

"An

address
the

series

ciation

of

and

due

E,

interest.

at

1978,
The

101.43%

offering

was

arm

(Continued

before

his views

believe

by

Motion

Net

&

Truck

bonds

due

1968,

offered

Dean

Arbor,
fered

W.

40,000
of

net

the

Titus

Feb.

on

par

Co.,

The

established

of¬

.

Broach

($5 per share),

proceeds to be

1947

records for Cook

new

Plaint & Varnish Co., Kansas City,
both in sales and profits. Net sales
wtere $27,495,002, an increase over*
the

previous

31%.

of

year

profits, before provision
eral and State income

$4,686,691,or

Net

for Fed¬

taxes,

were

over

1946.

49.8%

After
come

providing $1,829,000 for in¬
taxes,- and also for the

ment

of

dividends

share

the

on

pay¬

the

on

stock

common

$12.38, compared with $7.58

and

Stix

G. Edwards &

&

Co., all of

St.

,

earnings

*

ff

of

'*

.

Hussman

ex¬

:

Re¬

the previous year.
After de¬
ducting preferred dividends, such
earnings were equivalent to $3.99

/

Asso¬

America, Los Angeles,

share

outstanding
compared
earnings of $2.72 per share
for
the
year
1946
(after
al¬
lowing for two-for-one split ac¬
tually made in: 1947). Net sales
for
1947 were
$15,154,856 com¬
common

Dec.

on

31,

1947,

with

pared

with $9,853,263

gain of 53%.
ings

were

in

1946,

a

1947 sales and earn¬

the largest in the his¬

tory of the company. Sales in the
first half

of

1947

were

the

year

30, 1946.
%

„.

(par
'

for

*

%

Glass Fibers, Inc. common stock

/

7*

Utt

ended Nov.
.

share

common

$8,214,438

$1)

at $10

net proceeds to

pansion

and

per

share, the

be used for

working

if(

Operating
souri

(H

v

#

revenues

Pacific

ex¬

capital,

and to pay RFC loan.

RR.

of the Mis¬

in

Dec., 1947
$18,894,440, compared
with
$15,698,533
in
the
same
month in 1946 and $14,317,359 in
Dec., 1945. For the full year 1947
they were $199,622,368, as against

amounted to

$174,495,869

for

1946

038,534 for 1945.

and

$218,-

Net income for

Dec., 1947 totaled $1,691,956,

com¬

pared with $2,500,231 in Dec., 1946
and

deficit

of

December,

1945.

Net

the

1947

was

a

net

year

(Continued

$4,921,362 in
income

for

$8,271,925,
38)

on page

Bought

—

Sold

—

Quoted

follows:
ities

$45,000 to retire liabil¬

which

the

Berkshire Fine

Spinning

com.

is

corporation

purchase of Acme Broach Corp.

publicly at $7

per

share.

(Ky.); $65,000 for acquisition of

property

near

of

a

L. A.

Charles A. Parcells & Co.
1919

Milan

Chicago & Southern Airlines

Old Ben Coal

Collins Radio

St. Louis Public Service "A"

Commonwealth Gas

Southern Union Gas

Consolidated Dearborn

Southwest Gas Producing

Delhi Oil Co.

Southwest Natural Gas

Ely & Walker Dry Goods

Taca Airways
Tennessee Gas & Transmission

the

and

building thereon;

(Continued

on page

36)

.

Darling

Company

'

Members Detroit Stock Exchange

Estimated

Earnings for 1947

$1.25

per

LOUIS

LaPIant-Choate

assuming in connection with the

erection

ST.

used as

be

company
also
proposes -to
place privately an issue of $600,000 4%% debentures and $250,000 6% debentures (subordinated).

Peltason Jenenbaum Co.
LANDRETH

Hearst Consol. Publicat'ns A

Kansas City Pub Serv.

com.

Kansas City Pub. Serv.

pfd.

Stix: & Co.

Western Natural Gas
INVESTMENT SECURITIES

T

DETROIT 26, MICH.
Telephone

Teletype

Randolph 5625

DE 206




i

509 OLIVE

Moreland & Co.
Member Detroit Stock Exchange

1051

Penobscot Building

DETROIT
Bay City

—

26, MICH.

Lansing

—

Muskegon

L.D.240

Texas Eastern Transmission

Velvet Freeze

.

Building

BUILDING

ST. LOUIS 2, M0.
Teletype—SL 486

Share

Michigan Markets

1

7

30,

Corp.

to

Penobscot

Nov.

Dempsey-Tegeler & Co., of
St. Louis and Barret, Fitch &
Co., Inc. of Kansas City on Jan.
22
participated in the public
offering of 343,000 shares of

for

Calif., Jan. 15, 1948.

of -common

are

The

639

*

*

ended

year

Ann

publicly

shares

Acme

at

&

9

which

Established

*

l

i

100%

at

Gulf Public Service

Securities
and
Exchange
Com¬
mission covering 80,000 shares of

stock,

7

heavily oversubscribed.

(Mich.)

*

Caster

Corp., Albion, on Jan. 30 filed a
registration statement with the

common

This

Corp;,
common
(par $5) at $28 per share.
offering
wasoversub¬

scribed.

per

frigerator Co,, St. Louis, for the
year ended Dec. 31, 1947 were $1,602,516 compared with $1,003,369

Johnston

Mr.

Picture

if

Northeastern Water

.

about

38)

$

5% sinking fund collateral

Sons

of democratic

on page

City plant last

St. Louis Co., A.

should

we

Aviation

were

Louis.

our

an

Texas

and interest, were Metropolitan

per

in

the

trust

strife-torn world.

does not

refunding mortgage 3^ % bonds,

stock

oversubscribed.

Service

Telephone

Co.

ap¬

sees,

'

.

*

Aviation

value

per

if

The

Bendix

par

York

He

dix

stock

.

$10,000,000

pansionist mood. His rose-colored

He

earnings do

Among those participating in*

Mr7 Wallace does not

war.

per

the public offering on Jan. 22 of

us

her.

*

per

of

$

Mr.

by

peace

Communist Russia

see

share. These

#

,

-

7

.

plan.

prevailing foreign policy as an
imperialistic plot hatched in Wall
Street by capitalists who are al¬
ready counting the profits of an¬
other

stock.

cents

equiva¬

tion

umbrella, and he

an

understand

to

73

$5,584,755,

prior
preference stock, the jnet earnings

April.

of Munich./His plan
isj more likely to lead to .war "than
to
peace.
Mr Wallace says the
tiding to do about Russia is to try

De¬

the

on

reminds

our

Corp.,

:

Wallace

proposes

Wallace

-

to

book value of $11.28 per
stock outstand¬

common

from in¬
surance
claims covering loss of
profits
nor
have
they
beeri
charged with the continuing ex¬
penses resulting from the destruc¬

the

glasses distorted

/ 7

.

troit,

ff

,

sh^re.v The com-v

was

June 5,

%

Mr.

priced at,

was

accept the debentures up to 3 p.m.,

On Jan. 27, Watling, Lerchen

Wallace

earned

a

Newhard, Cook & Co., on Jan.
27 participated in the public of¬
fering of 399,990 shares of Ben¬

G.

subsidi¬

preference

lent to

)

not include any recovery

peasement and disarmament. Give

Detroit.

of

Co.

share and the latter issue

stock

common

or¬

There's the

Australian

$6,940,418 in the second half.

The

ing at Dec. 31, 1947.

Sons.

the

on

company

Idok at them.

•

$1, of Kerr

par

issue

former

per

of

participating

$3, and 110,080 shares

par

common

The

,

A.

new

——-——

reduced operations
during the
second half of the year were due
primarily to increased shortages
of sheet steel,
according to W. B.
McMillan,
President*
Working
capital at Dec. 31/1947 was $4,268,178, an increase for the year
of $1,298,2Q2. Net worth increased

share of

Bitting,

and

——————

and

$1,368,911
-

Co.,

For the fourth quarter' of 1947 the

b.y day¬
dreaming or
Eric A. Johnston
repeating mis¬
takes of the past.
! Today/ America
is
debating
three approaches to the goal. Let's

'

7

Co.,

&

Inc.

Co.,

and

dends

are

af-

in

&

aries/amounting to $143,403,161
for 1947, and net earnings of $15,561,228, equal to $3.59 per share
oq the 4,253,019 shares of common
stock outstanding at the. end "of
the year,
after .; deducting/ divi¬

and: sta¬

>

Moore

Company reports
excluding
those ' of
its

British

'

world

Co., De¬
100,000

&

offered

class

of

;

diversi¬

-

der

bility

Navy.

U.

Carr

publicly

shares

can't

can't gain

the;

S.

^

28

?

Stix

&

sales,

mean

'high /that

\ye

in

The Monsanto

e

,

troit,

stakes

investment

participated

Smith,

Edwards &

we*can

e

industrial customers.

of

-

approximately 2,000
*

-

purposes.

Louis

who

Inc.,

Jones

jT h is/time

sp

ftord- to' b

the

and

Co.,

also

/

v(r ohg/W

Force,

Ordnance

~

-

*

be

bank
and for

D. Jones & Co., I. M.
Simon & Co., Stifel, Nicolaus &

prosperity and

Inc/is/

It is also said to have

Wall Street, New York, N. Y., will

the offer.

and

ay peace

proceeds will

outstanding

Edward

prosper¬

we

St.

Gardner,

common
human yearn¬

40

1948, for exchange under

apart on what

common

offering were:. Newhard, Cook & Co., Reinholdt &

„

thisi

Its customers include

National Bank of Detroit and The
Bank

bje pofes

at

Monsanto

how to achieve

of plastic protective cover-'

U. :S.

>has

irrAmerica. But

production and;

the

underwriter.

in

1

unanimous

Inc./De/: the

Seal-Peel,

engaged in

mon

Detroit Steel Corp.'has offered
holders of its 20-year 6% sinking
fund debentures due July 1, 1964

•

share, the net V

per:

Wallace

peace-and

net

repay

The

ity—!■ guess that about makes-it

de-

;'/'/■/

common

of Seal-Peel,

at 75 cents per

Corp.

out for

come

The
to

1958

$100 for the preferred

bankers

it won't shake you out
when I tell you
for peace and prosperity.

Since «Henry
;

\

-

shares

(par $1)

and

general corporate

chairs

1 m

1,

loans totaling $10,000,000

sure

your

A. H. Vogel & Co., Detroit, on'
January 21 publicly offered 60)-/ ing.''.:':'''--

Oil

Corp.,

Metal Products

Corp., Parke,

Udylite
;

McClanahan

Gerity-Michigan

other Use.

j*

/» The ten most active stocks
during January were:-Detroit
Edison

of

I'm

that

April

011

purpose

proceeds to be added to

-/
The Detroit Stock Exchange re¬
ports that trading volume in Janu¬
ary,
1948, totaled 228,055 shares
having a market value of $3,240,-

672.

/•* r*

*

'

stock

used

of

i

current^construction-pro-..

■

Michigan

or any

announces

stock.

*

unse¬

and the

March

to

the rate of $57.50 for the

industrialist

•

machinery'

on

conveying equipment for in-

"

>

.

A

in

used

signing,, manufacturing, selling/'!
erecting and servicing all types -

to

7?'/**■::'F:,//: V./ ::/

to be

are

for the

part,

gram.

speculation. The

a

inventory, to reduce

pcrated

in 1947 accom¬
$60,000,000
mortgage

company

for the

as

mortgage

proceeds of which

•

$1,

par

balance added to working capi¬
tal. The corporation was incor-

shares

31, 1947.

were used, in
retire, before • maturity,
the remaining outstanding
$30,000,000 4%. bonds and ; to - repay
short-term bank borrowings. The
remaining funds are being spent

50,000

stock,

cured accounts payable

plished
a\
bond financing operation,' the net
.

'

convertible into commony-4—

prior

self-help for Western Europe
and some denial by us. Says key
Word is "rehabilitation," and cau¬
tions
against loading program
iwith niggling restrictions;, and
f
haggling conditions.

payment of account secured by-

"

which

share

net

$1.59

equal to

was

offered

common

per

$11,112,568 after charges
and provision for Federal income
was

taxes.

publicly

stock

on

•

The

stock is

support of Marshall Plan, based
,

Co., Detroit,

of Planet Corp. of Lansing at $2

1947

year

16

shares of

a

Leading

if

Smith, Hague &

Taxes totaled $13,000,000. Sales of

to

nation-wide

underwriting group of 110 members headed br
Smith, Barney & Co, New York, on Feb. 6
publicly offered 250,000
preference stock, series B, no par value of
Monsanto Chemical Works at $101 a share and
dividends.

Association of America

.

U

shares of $4 cumulative

By ERIC JOHNSTON*

used

indebtedness
7

Credit Corp.
if

$24,000,000.

to be

are

(807)

Missouri Brevities
A

President, Motion Picture

net

above the previous year, the fuel
bill

/

employees brought

new

CHRONICLE

Middle Road!"

but balanced against this, expenses also reached

year,

FINANCIAL

m

yedi; ended

Dec. 31, 1947, totaled $106,960,000, a new high which was 18% above
the

&

•

STREET

SCHERCK, mCHTER COMPANY
Landreth
Bell

;

Teletype

SL456

St. Louis

Building
2, Mo.

St. Louis l.Mo,
Garfield 0225
l. d.123

Members St. Louis Stock Exchange

12

FINANCIAL

&

THE COMMERCIAL

(808)

and subsequently to 1947. The year 1945 was the year of
Total figures are in thousands of dollars

of victory,

Rowen Named for SEC
President

selects

peak deposits and assets.

Bank and Insurance Stocks

Re¬

Boston

President

Rowen

It.

as

.Securities and Exchange

;ion,
the

the

of

member

a

Commis-

fill

to

v

Dec.

on

31,
1947, of James

Whether

proposition

to

be finally consummated, it

may

institutions and to review their

the two

compare

certain significant ratios.

tabulation also compares

Continental

($000)
$25,000
75,000
8,150

Surplus
Undivided Profits

Rowen

—

($000)
$5,000

$108,150

Capital

Total

Regional
the

for

Funds

Capital

Deposits

SEC

$12,282

U.

service since 1934

formerly principal at¬
torney for the SEC. His term as
Commissioner
will
not
expire

School,

Law

member of the Massa¬

chusetts bar in' 1926.

Samuel S, Allen Joins
(Special

to

The

OHIO —Samuel

Allen, formerly manager of the

buying
White

&

with

Co.,

has

become asso¬

Clark

Fahey,

& Co.,

Union Commerce Building, Cleve¬

land, members of

Cleveland

the

Stock Exchange.

539,144

447,284

1,373,604

74.9%

260.9%

28.4,%

36.8%

adjustment for

258.2%

449,401

92.1%

25%

259.9 %

"

of

Deposits

number of

Dec.

Earning

Book

Net Oper.

Divi-

Assets

Value

Earns/

dend

$

$

$

were

Increase

i

of the Sun
of Canada
all-tirre

new

are a

24,679

49,333

21.23

0.91

0.80

68,115
176.0%

163,093

•22.67

*1.77

•0.80

162.2%

33.5%

12,282
44.6%

1,193.0%

188,437

1940-

141.3%

in

various

sections

and

320

City as follows:—(1)

York

New

of

Street:
Street;
at 49th
Street;
Brook¬

Also, United Nation branches are maintained at Lake Success
405 East 42nd Street, New York City.

market

faster rate.

a

performance

each stock

of

Sun Life policy

an

in

the

textile

advantageous

by the New York State Legislature to the "New York Chemica'
Manufacturing Co.," permitting it to manufacture chemicals.
Ar
amendment to the charter on April 1, 1824 allowed the company also

in the banking business; the chemical business was aban¬
In the panic of 1857, it was the only bank in New

in 1844.

maintain

to

The

specie payments and was therefore dubbed "Old
title of Chemical Bank & Trust Co. was

present

It

goes

Continental Bank & Trust Co. of New York.
may

banks from

Asserting

47.1%

39%

~

__

41%

4.4%

THE CHASE

NEW JERSEY

no

concrete signs of set-back

SECURITIES

on

high prices and business expansion culminated in buyers' strike.
price control program will not correct present inflated
Wants government out of business, and

position.

reforms.

tax

Sees need for

urges income
capital and extols free enterprise1

new

system.
I

"

•

4

A

'

This is my swan song. And after listening to me for three years,
well imagine how happy many of you will be for the opportu¬

nity to listen to
what
mind

what

the

viewpoints.

outlook

for

bear

to

you

in

fresh

some

wondering

not

the

neces¬

reflect
opinions

1.'. f

,

J. S. Rippel & Co.

>20 BBOADWAY, NEW YORK

Established

5, N. Y

18 Clinton

Telephone: BArclay 7-3500

'

N.

Dept.)

Y. Phone—REctor 2-4383

most

It

NEW YORK 5:

67

WHITKHAU. 3-0782

.

'

BOSTON 9

CHICAGO 4

10 Post Office Square

231 S. LaSalle Street

HUbbard 2-0650

■

good
I honestly don't believe

to
predict with any degree of riccuracy beyond the first few months,
is

possible for

because

there

FRAnklin 7535

BS-297

CG-105

1947

There

no

are

PRIVATE WIRE SYSTEM CONNECTING:

4

Providence, Enterprise 7008

a

period of rising costs,

during which
talk about,
problems
before—as the head of

a

,

think

will
act

on

ever

and

more

money

family and as a businessman.

prices

pocketbook

will

and

ances, and you

affect

your

bank bal¬

your

will feel and hear

*An address

Portland, Enterprise 7008

Detroit, Enterprise 6066

at

American

by Mr. Whitmarsh
of National

conference

annual

Wholesale

Grocers

As¬

sociation, Atlantic City, N. J., Jan.
19, 1948.
r
_

living.

Business will be

or

when the pressure of all

will

ease
off, but ease off it
it always has done in the

as

••

,

,

.

1.

Prices are going to come down
when the people won't pay them.
Demand sets prices but prices don't

always set demand. Right now I
see a great parallel with our eco¬
nomic position in 1920, after the
first World War.
If you will re¬

member, the demand in 1920

was
terrific when the recegsibn hit us.I

The public just decided that prices
were too high and
stopped buying.

When the high prices—arid a lot
of business organizations as well—
washed out, trade was re¬
sumed but at prices that attracted

were

customers.

At

time,

that

prices

set the demand. In the

1930s, when
the
big depression" hit us and"
prices were brought down to a

very low
er

point, there

was no

buy¬

response anyway.

The
any

prices just failed to create

demand. Here is the big dif¬

ference.

still
up

In 1920,

there.

for

the demand

was

It had. been building

five

or

six

years

and

it

responded to prices, and there fol¬
lowed

nine

straight

years

proving business, filling

SF-573

NEW YORK, BOSTON, CHICAGO,

TELEPHONES TO: Hartford, Enterprise 6011




Russ Building
YUkon 6-2332

.

CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO

•

•

time,

Rising
SAN FRANCISCO 4

-

Michigan 2837

of

Building,

of

210 West Seventh Street
LA-1086

factors

that would indicate a
set-back or a depression for 1948.
At least for the first six months
this

than

NY 1-2875

.

many

one another.
concrete signs, at

upon

and

Wall Street

LOS ANGELES 14

>

person

any

are

depending

you

INCORPORATED

&

F.. L. Whitmarsh

will

1948 will be year

6EYER & CO.

LIFE

Washington 6, D. C.

a

deci¬

of

as

BANK and INSURANCE STOCKS

$3,837,724,159.

Life

this

materials, transportation, as well
rising prices. Employment will
reach a new high and then slow
down as the most urgent produc¬
tion demands are met, or as prices
take the urgency out of demand.

WHOLESALE MARKETS IN

Total Assurances in force:

ASSURANCE COMPANY

;•

"I

MArket 3-3439

1-1248-49

(L. A. Gibbs, Manager Trading

1891

St., Newark 2, N. J.

high cost of

past.

*t

!

the

of

where

con¬

it will be

Sun

——

will,

sions.

$380,659,514;

from:

of

theme

I

tory profit margins.
There will
be
inventory problems because
goods are more costly and will tie
up
more money.
I don't know

of the officers

our

of us are
would like

many

be.

squeezed by a shortage of work-r
ing capital and higher financing
costs, and because of higher oper¬
ating costs the volume of business
you do may result in unsatisfac¬

thoughts and
do

good

Debts will rise.

own

my

A

might

more

have

express

are

1948

<$>

that

I

and bad.

^

;

..

can

year,

Request

depression in 1948 exist,

Maintains

•

1948 will be

issued in 1871:

T ransportation

or

vention is that

| New Assurances issued in 1947:

obtained

Thought

Mr. .Whitmarsh, however, cautions year is similar to 1920, when

The

Laird, Bissell & Meeds

Copy of the Annual Report for

Appreciation

22%

is understood

sarily

be of interest to note the comparative growth of both
1940, the year before "Pearl Harbor," to 1945, the year

.

OF CANADA

to

Retiring President, National American Wholesale Grocers' Association

to

.

back to 1870, in which year it was
incorporated in New York as "The German American Bank." Its title
was subsequently changed to Continental Bank of New York and in

Bell Teletype—NY

SUN

1947

By FRANCIS L. WHITMARSH*

of these locations would appear to be

district; both
Chemical.

,

...

2-17-48

Some Basic Foods—For

to

■

was

Dec. 31,

15V8

Chemical's history dates back to 1823, when a charter was grantee

during the year:

$2,021,889,123;

from

that, under the proposed plan, the capital, sur¬
plus and undivided profits of Continental, in other words its "book
value," will be distributed to the stockholders (plus a premium of $1
a share).
As of Dec. 31, 1947 this book value was $24.56 per share,
which is above the current asked price of the stock at this writing.

Jhe acquisition of .Continental by Chemical would give the latter
office nearer the center of the financial district, and also a brand

Members New York Stock Exchange

J

25.0%

,

—and decisions can be both

$101,914,657;

a,

®0.80

120.9%

14, 1948, has been as follows:

It

Street, New York, near Wall Street. Two branches are maintained
one in the textile district at 512 Seventh Avenue, and the second ir.
the Grand Central district at 345 Madison Avenue.

Circular

Total benefits paid s:nce the first

be

25.0%

*1.61

44.6%

Continental Bank & Trust Co.'s main office is located at 30 Broac

d to policyholders and

i beneficiaries

ad

142.6%

•24.56

202.0%

interesting to observe that the rate of growth qf the smaller
institution has been substantially faster than that of the larger. In
1940 Continental's deposits were only 9% of Chemical's, whereas in
1947 they represented 14.7%; similarly, earning assets in 1945, were
9.2% and in 1947, 14.8%. Continental's growth in book value per

certainly

on

33.5%

148,976

121.4%

Continental

r

1

230,6%

54,636"

75,961
1,248.0%

Bid Prices——

79.1%

<

Broadway, near Worth Street; (2) Tenth Avenue at 23rd
(3) Fifth Avenue at 29th Street; (4) Broadway at 44th
(5) Madison Avenue at 46th Street; (6) Lexington Avenue
Street; (7) 11 West 51st Street; (8) Eighth Avenue at 57th
(9) Madison Avenue at 74th Street; and (10) 50 Court Street,

few of the

highlights:

C

$.

5,635
72,858

1947_

The

73.7%

NATIONAL BANK

during 1947. Here

tnay

$

78,082

of

•jj

$

204,765

Canada's largest life company

'

are:

Percent increases

Loans &

NAWGA.

\

*1.80

figures

Discounts

governors

j

equivalent

25.0%

8,491

of

:

h

11,336

1940_
1945.

31,
31,

or

i

25.0%

2,61

25-4%

U.S.

Deposits

S

established by

iV

the

1945,

48.1%.

38.8%

-Per Share-

Feb.

Several branches are main¬

New York, near Cortlandt Street.

tained

1929 to

Life Assurance Company

pa

28.4%

87.0%

Govts.-

Capital

$202,055

adopted in 1929.

■

The 77th Annual Report

Benefits

1.80

CONTINENTAL BANK &. TRUST CO.

Chemical

Total

Bullion."

.

f

1.80

„

148,976

•

71.3%
78.5%

Assets

of

Continental's history

•'

records which

2.60

♦3.08

•43.26

1,008,298

in

dividend

stock

$

38.95

*40.02

154.8%

420,749

47.3%

.

share has also been at

Chemical Bank & Trust Co.'s main office is located at 165 Broad¬
way,

York

a

124,871

790.555

$50.03, $3.85 and $2.25 for 1945 and $54.08, $3-26 and $2.25 for 1947.
are adjusted accordingly,

18,379

54,636

$1,413,980

Percent

doned

PROGRESS

6.5%

-

1,008,298

Assets

Percent

to engage

reveals

219,031

108,150' 1,284,087

1947-

Earning Assets:

A.

J.

for

department

ciated

871,655

1,524,161

Divi¬
dend

$

.

$52,211
75,961

135,649
449,401

Total Assets

Chronicle)

Financial

CINCINNATI,
S.

77,905
100.C51

12-31-47

lyn,

Fahey, Clark Co. Staff

Obligations....

Discounts.—

&

Earning

Mr. Rowen is 48
years old,
was born in
Boston
and was graduated from George¬
town University and the Boston
University Law School.
He also
Harvard

Government

S.

Loans

until June, 1950.

a

$

•After adjustment for 25%
stock dividend in 1945, the equivalent figures are:
$28.34, $2.21 and $1.00 for 1945, and $30.70, $2.01 and $1.00 for 1947. Percent increases
are adjusted accordingly..

$188,437

$394,152
420,749

Other Securities

was

becoming

$

1940_

%

2,282

8.4%

Capital Funds, Perc't of Deposits

been

attended

31,

Dec. 31,
% Over

5,000

$1,284,087

—

Rowen

Paul R.

in government

and

$

Increase-

Over

%

Dec,

Novem¬

has

$

It is

ber, 1941.
He
is a Democrat
and

Earns.

$

Date—

Administrator
since

%
Dec.

-

-

has been Bos¬
ton

Net Oper.

Value

Funds

Chemical
i ' '

of

sion.

Mr.

Chemical

•After

not the

or

interest

of

Commis¬

the

Book

Assets

Deposits1

S

31, 1940_
31, 1945_

Bank & Trust Co.

Caffrey, the

Chairman

Earning

during recent years.
'\
Chemical is by far the larger institution, as the following figures
show from their respective balance sheets of Dec. 31, 1947,
The

December

J.

Loans &

Discounts

progress

caused by the

resignation

banking and financial circles is the

in

news-of-the-week

The

proposed acquisition of Continental Bank & Trust Co. by

is

vacancy

U. 8.'

Funds
Date-

Feb. 12,

Truman, on

•

Govts.

Capital

This Week—Bank Stocks

nnounced the nomination of Paul

'

•

•

' CHEMICAL BANK & TRUST CO.

.

Dec.

'

.<

By E. A. VAN DEUSEN

Chairman.

as

($000).

Per Share-

gional Administrator to succeed
J. Caffrey who recently

James

resigned

Thursday, February 19, 1948

CHRONICLE

lated and
mands.

of im¬

accumu¬

subsequent normal de¬

By 1930, all demands had

been met.

There

(Continued

was

no

on page

backlog
36)

Volume

167

THE

Number 4674

ing, it is well to be cautious. As
the longer, term perspective,
when, as, and if, some decline
does take place in business activ¬
ity, it. will be moderate and of
short duration. I do not anticipate
a repetition of the 1920-21 break.
"An analysis of the impact 6f

No Recession
In the
Says

does not mark
1920-21

will

recession of the

a

type, but,

have

slump

price

able

it

on

was

able

Dr.

Jules

Backman,

Dr.,

hardware sales

On

record

goods production

was

43%,

and

steel

fell

50%.

No

goods

such

4 times

decline

production

are

The

level.

more

than

(Snecial

at

great

as

during the

all-time
in

was

1947

almost

Buckley Bros:'
Financial

Chronicle)

,

West

530

Sixth

Street.

Mr.

Baumgardner was formerly with
Crowell, Weedon & Co. Mr. Tor¬

great as

as

The

ANGELES, CALIF,—
George
M.
Baumgardner
and
Robert W. Torney have become
associated with Buckley Brothers,

in the 1936-39

as

period and 2xk times

in

seems*

an

total

to

LOS

that

^reported

$2.2 billion which

was

able

reflected mainly in the dur¬

Backman

a

the other hand, the decline in dur¬

goods industries," Dr. Back- durable

Two With

'

13

ney was

with Herrick, Waddell &

Co. and E. F. Hutton & Co.

war years.

*

Associate

Economics

of

ately ahead."

rion-dur-

moderate decline of only 5%.

production

(809)

in the months immedi¬

probable

23%

was

goods industries recorded^

business.

Professor

CHRONICLE

"Although total indus¬

trial production in 1921
lower than in 1920, the

the 1920-21 depression shows that

contrary,

on

sobering effect

a

said;

man

to

Offing

commodity

COMMERCIAL & FINANCIAL

New

at

York

Univer¬

sity's

School

r

'

-

*

•

(

of

Commerce,
Accounts, and
Finance,
told
the

i

It's the old familiar story

Pennsyl-

v a n

and

a

Atlantic

Sea¬

board

Hard¬

in

Asso¬

ware

ciation

Con-

t i

v e n

o n

at
*

'

i

Philadelphia
F

that

b.

10

"The

on

de¬

e

cline

in

prices

the

long-awaited
depression."

It's an old familiar story, the story of Life
forget,
Insurance.

food

does

not mark
beginning

Jules Backman

1920-21

the

old it's

So

familiar it's
easy to

the
or

of

our Jives

it's easy to

type of

keep reminding

easy to

overlook,

dustries, of transportation systems, of roads, of

so

much

so

a

part

ignore. That's why

Best of all

we

"The basic question is not are
these price declines
desirable," Dr.
Backman
continued.
"By
any

people living securely. Millions of dollars for

been

and

are

in

equal opportunity for all. A

We think Life Insurance is

a

good business

be in.,

to

much

too high.
A
prices would be
a
most
healthy development.
Rather, the $64 question is does

decline

an

better America.

gether. More children being educated. Elderly

standard selected, food prices have

worth-while enterprises.

many

More families kept to¬

you.

development of farms, of utilities, of in¬

food

Seventy-five million people
The

John Hancock insures

more

are insured in the United States

than eight

and

this

one-half million

—

in every nine

one

sharp cut in prices mark the
beginning of a sharp business de¬
pression?
the

Is this the repetition of

1920-21

depression

Dr.
"a

which

^Balance Sheet— December

so

have forecast?"

many persons

pointed out that
price decline in the basic

severe

ASSETS

commodity markets, if continued,
would have

sobering effect upon
However, an examina¬

business."

tion of the varioqs forces at work
the speaker to conclude "that
1948

will

be

basic

another

good

'U. S. Government

busi¬

the large

mand.

divisions

is

difficult

...

Public Utilities
Railroads

.

.

,

t

.

...

.

.

$1,771,149,779.55
,V:'-/' J

.

Policy Reserve

.

.•

of bus;ness

activity so long as the
industry can continue
to sell, all of the cars it produces,
and so long as the various heavy
durable goods industries, such as
farm equipment, railroad equip¬
ment,

electrical

building,

supplies,

continue

to

very

high levels. While

cern

has

been

Reserve for Year's Dividends

mind

is

in

to

whether

that

moderately

point

,

.

.

Policies

con¬

keep

.

92,108,469*36

.

.

.

.

.

.

.

'J !

Company's

...

.

,

.

.

.

Reserve for

Reserve for ultimate

196,650,360.94

Reserve for

61,843,436.54

>

•

.

•
,

';

■.

other Assets

.

.

.

.

7 26,196,830.26

.

'

.

17,077,692.28

32.808.570.10

sundry items

*

44,795,597.13

1

5K

»

,

.

*

,

Contingencies

4,669,000.00

31.128.633.11

3,102,467.08

••••*,♦*
..

•w

higher than it was in the prewar
In the efforts to measure

45,000,000.00

Special Reserve for Group Insurance

..

♦

Cash in Banks and Offices

>

»

Reserve for Accrued Taxes

.

substantially

♦

changes in

.

.

.

building art.'vitv will
remain

*

11,549,892.39

Prepaid Interest,

Premiums and

Premiums due and deferred and

building is

continue

t

,

-

>1;

...

30,557,552.00

Death, Endowment and

Disability Claims in settlement

1

.

Interest and Rents due and accrued

*

»

f'

»

»

•

policy valuation standards
on

139,220,999.05

>

1

,

Home Office and other Real Estate

in

eral level of
to

Policyholders in 1948

1

1

$78,001,521.00
14,106,948.36

Mortgages

Loans and Liens

at

down, the gen¬

or

up

>

.
,

♦

to

1
:

some con¬

expressed

important

Preferred

Real Estate

nection with building activity be¬
cause
of the high level of costs
the

or

Common

and

operate

....

Guaranteed

due

or not yet

•

'

1

automobile

Deposits and other items

awaiting order
-

1.

Stocks Owned

.$1,783,547,990.00

♦

•

m

Reserve for

significant decline in the level

any

>

>

4

.

.

86,027,748.63
644,465,550.31
128,550,773.47
164,424,135.95

.

.

Industrials

to "visualize

.

.

.

36,719,279.6^)

.

States and other civil

volume of deferred de¬

It

.

$710,962,291.50

it/;

|Dominion of Canada

year.

sustaining

force

Bonds and Notes Owned

activity will continue to be

ness

liabilities

a

led

The

31, 1947

Backman

f. Wt '
cj

It

Surplus to Policyholders

.

Total

•

166,520,274.49

*

period.
the

Total Admitted Assets

precise level of this activity,

this

fundamental

point

.

$2,228,963,772.14

Balance Assets

to

$2,228,963,772.14

.

be

may

easily overlooked."
Dr.

Backman

cannot
eral

ignore

warned

the

spots have

danger

All securities

"we

that

that

fact

sev¬

been

are

valued in

\

conformity with the laws of the several States, and

Securities carried

at

$495,893.00 in the above

as

prescribed by the National Association of Insurance Commissioners

deposited for

statement are

de¬

veloping in the business structure;

purposes

required by law

.

These include the relatively high
level of food prices, the uncer¬

DIRECTORS

tainty created by the recent de¬
clines

in

food

nence

of

a

prices,

third

the

immi¬

of

round

elwyn g. preston

shortages of working canitai.

some

These

in

the

months

speculate in inventories
overextended

come

john m. hancock

-

william m. rand

charles

*

ralph lowell

j. diman

albert m. creighton

edward dane

joseph e. o'connell

daniel l. marsh

charles e. spencer, jr.

carl p. dennett

paul f. clark

byron k. elliott

karl t. compton

to be¬

credit-wise."

speaker stated that his "op¬

timism
the

or

james v. toner
jr.

guy w. cox

ahead.

Certainly this is not the time to

The

sidney w. winslow,

charles f. adams

will have to be closely

areas

watched

frank g. allen

charles l. ayling

wage

increases, and the development of

for

1948

is

hv

tempered

development of these signifi¬

cant

danger

spots.

It

does

this

time,

however,

though

those

areas

of

will

sufficient

to

reversal

of

seem

at

be

nificant

"J

dicting
lapse at

of

1948.

that the
the

end

I

the

am

boom
of

a

MUTUA

sig¬

LIFE

present

not

will

,

INSURANCE

BOSTON.

if

col¬

that

•

)i

COMPANY

MASSACHUSETTS

New England's Largest Financial Institution

i •

pre¬

period.

I merely would like to
emphasize
that when danger- signals are




■

as

high level of business activity
during
the
first
six
or
eight
months

paul f. clark, President

weakness

cause

t

i

guy w. cox, Chairman

not

fly¬

A

% COPY

OF

THE

COMPLETE

ANNUAL

"if t

.....A

."

'

-

.

•

■

REPORT

1

WILL
*

,

-

•

•

BE

SENT

ON

"' *
•

REQ u E

s7

14

THE COMMERCIAL

(810)

/CHRONICLE

FI

&

'Thursday, February 19, 1948 ;

Commodity Prices

Capital—"Seed Com" of
Onr Economy

And Business
By COL. HERBERT G.

RING

By HOMER A. VILAS*

York Stock Exch,

Member, New

'

Rock Island & Pacific

The hew Board of Directors of Chicago,

Partner, Cyrus J. Lawrence

commodity
price break will'have salutary,,

Col.

King contends

lost little time in disillusioning the common stockholders of the reor-,
ganized company. Holders of the new income bonds and the new
effect and investors, therefore,.
5% preferred received, along with the delivery of their securities,
should not sacrifice holdings.
cash payments equivalent to in-<s>
:
r~
terest and dividends for the four However, this attitude of apparThe break in commodity prices
years
1944-1947, inclusive.
The ent disregard for the equitable
will have a very salutary effect
effective date of the
plan had rights of the new common stock
upon world economy and those
been set by the Interstate Com¬ holders seems to be fairly com.investors who became frightened
mon in the case of new reorgan¬
merce Commission as Jan, 1,1944,
arid sacrificed
although the new company did ized. railroads. This Is "/particularly
their holdings
agree¬
not take over operations, and the true Wherfc voting trust
of good com¬
new
securities were not dated, ments have, been set up and there
mon
stocks
until Jan. 1, 1948.
It had been is no effective way for the stock
will regret it.
expected in many quarters that holder,to protect „his interests for
First, of all,
the directors would take similar some years ajt least. Even in the
the prices Of
cognizance of their responsibili¬ case of preferred (stocks the fcecord

Mn Vilas, in stressing stock exchange industry
of U. S. economy, points out its importance in

stock, which also, represents old

the

"cries out for solution."
If the United States is to continue to grow and progress in the

b ov.e/t

bonds,

Supposedly the .capitalizations
by the Interstate Commerce
Commission were designed to
listing of "the hew securities the
give reasonable assurance of divi¬
company had filed a
statement
dends in -reasonably prosperous
showing pro-forma earnings, for
periods. As a iriatter of fact, there
the period from the effective "date
have/been, ipany complaints that
of the plan to the consummation
the reductions in debt and charges
date. This covered a span of four
In connectioh with' consumma¬
tion of the reorganization and

have

been

too

severe

that

and

he

neces-

'/

■

'

Col. Herbert G- King
-

'

•

no

was

tual

„

,

^;W7i':t;';lt

knowp. gov*
ernmerit support; there!
.

ly it is (recog¬

-

$11.97; 1945, $8.37;
1946* $5.75; and 1947, $9.18. Out of
such substantial earnings it was
1944,

lows;

holders,

felt

that

now

holding common stock, should

the

old

bond

be entitled to some consideration.

particularly true inas¬
much as the Rock Island during
Its entire trusteeship had been far
less generous in distributing earn¬
ings to the old bond holders as
interest than practically any other
major railroad.

This

was

financial

in

Guesses

circles

as

.

^

been paid in full the dates of dec¬
laration have in many cases been
erratic.
For example, even Chi¬

& North Western, which has
common dividends in every
year since consummation
of its
earnings varied widely, some go¬
reorganization .(including 1947)
ing as high as $12 a share. In a
paid its $5 preferred dividend last
rather petulant statement follow*
year in two instalments. Although
ing the board meeting on Feb. 9,
this dividend had been earned by
in
which
he
commenting on
a
fair margin in 1946 the first
"propaganda'Lput out by "broker¬
instalment
was
not
paid until
age houses," President Farrington
Dec. 1, 1947, The second instal¬
effectively blighted these hopes.
ment was paid on the last day of
He went so far as to say that the*
the year.. This dividend uncer¬
directors had no intention.of pay¬
tainty that is characteristic Of
ing ^common dividends for the
most of, the /reorganized carriers
period 1944 to 1948. . If this state¬

distribution might

to how large a

out

made

be

is

ment

to

the

of

be

1944-1947

at

taken

its

face

cago

paid

has

had

serious adverse influ¬

a

ence on public confidence in
the^e
mean
that this
securities., as is quite obvious from
are-the earliest
just a casual glance ai recent mar¬
from which common stock'hold-'
ket quotations.
'
ers may expect any income.
No
dividend could be paid on the
common out of 1948 earnings un-.

value

it

year's

earnings

must

.

M1 income bond interest and
ferred dividends from
the

same

year

pre

earnings, of,

(payable next year) *

Unless

there

is

heart the

common

Chicago,

Rock

a

change

Geo. A. McDowell & Co.
DETROIT, MICH.—-The broker¬

stock holders ofage firih df Mercier, McDowell

Island

Pacific

&

ing to wait at least until .quite late
in the current year for any divi¬
dend action, and they may have
to wait until 1949. It is not cus¬
tomary for reorganized railroads
declare

interest

bond

dividends
for

set

or

or

until

aside

income

preferred- stock
the

final

results

the

ments

year to which the pay¬
apply are in. Meanwhile, so

far as the stock holders

cerned the

more

are

con¬

than $35 a share

earned in 1944-1947 is apparently

Just

so much water" over the dam.
Were the Chicago, Rock Island

&

Pacific

case

it

situation

would

Firm Name Is Now

1

face the gloomy prospect o£ hav-.

to

..

of

had been declared and set aside.
-

.

be

an

isolated

bad

enough.

jk

Dolphynwill hereafter be known
as
George A, McDowell & Co.,
according to announcement made
.

by representative's of the house.
Partners

will

be

unchanged.

tinue.in their present capacities.
Organized in March, 1943, by
Mercier and McDowell, at which
time they became members of the
Detroit Stock Exchange, the firm
has been actively indentified with
many

popular local issues includ¬

ing Gerity-Michigrin. Corporation,
Sheller
Manufacturing, Electromaster, arid others. The company
offices

with

are

in the

branch

a

Clemens

in

Buhl Building
office
in
Mt.

charge- of

Ray

B.

Da vies..

Guaranteed Stocks
Bonds

Special Securities

Is With ArthurV. Grace
(Special

to' The

Financial

/CLEVELAND; OHIO

Chronicle)

George

—

W. Bryam has become associated
with
Arthur
V.
Grace
&
Co.,

Union
GUARANTEED RAILROAD STOCKS-BOMPS
2S Broad Street
?

New York 4, N. Y.

Telephdjte BOwling Gfeen "fl-6400
Teletype NY 1-1063




Byram

Commerce

Building.
Mr.
George

in the past with

,

I. Griffith & Co. and prior there¬

to: conducted his

own investment
business under the firm name of

Byram & Co.

*

of

It is

present only in free countries

like ours..

^

If today's leadership isrnot quite
measuring up to the requirements*

-,

and the demands

upon

raw

jnaterials, -increased businessiactivity and the great back¬
logs and continued demarid for

products, companies#are bound to
make money.
The outlook for a
renewed public interest in stocks
is bright for a great deal of
capi¬
tal

will

market

gravitate
as

the best

to

the

stock

place for in¬

blame.

The European situation
greatly benefited ris the

paid for

our

products

place the
It simply means all of us

prices

were

loans and the credits

which

know

we

con¬

were

be¬

ing used too quickly.
Now" they
will last longer and
give- Etirope

gave

us

It will require greater

appreciation of each other's prob¬
lems
by government, industry,
commerce, labor and finance.
One of
the

of

the elemental

purposes

Association-r-which is the

trade

body of member firms of
the New York Stock Exchangeis to be a sounding board of busi¬
ness thinking. Its Board of Gov¬
ernors attempts to familiarize it¬
self* so far as possible with con¬
all

the

over

will be that Its decisions

siderably . higher than had been
anticipated -when we 'negotiated
our

spirit

ditions

vestment and return.

by" reputable

this fundamental

quarters
"subject.

on

I am/ riot going:/to take yorir
time; and try to add to the excel¬
lent literature that you haVe in

ofmy/life on; ri/farrri; p real dairy
farm with no Saturday/ closings.
<One

: of

country so
represent

may

the broad thinking of our industry
and-of business. Thus our organ¬

ization is

a

true democracy, basec'

the old town meeting concept
and streamlined to meet modern

on

conditions.
Our

Z

Z:',

;

-

decisions

for

a

long: time

better chance to get on its *:feefc. toZcome/will be influenced by
With the-cost of*
observed
rind
living- dbwn, what ;,we-. have
and the fear of unbridled infla¬ learned here;
We will have ' a
tion arid its attendant evils of 'ra¬ broader knowledge of the 'work¬

a

trie

;

things

that

every

knows is the necessity of
setting aside the "seed corn." The/
farmer /who fails to provide it or
the farmer who cats it up gets

farmer

irito trouble.
Venture Capital Is "Seed Corn"

it, it does

America.

for

of the excellent studies pre¬

pared

good to attempt to

no

have lost their appeal to even the
boldest of labor leaders. With im¬
proved labor relations, lower costs
.

myself, has received and read

.

ceptance

the problems of the other fellow.

must take stock and return to that

To

'venture

me

"peed corn."
rich

of

crop

is the I

capital

Some will sprout a .
products

new

arid

wealth fpr the entire community;
some
of
the-seed
will
fail
to

sprout, which is the factor of risk,.
In

this connection, the figures];
savings on a national basis|

on

for the last four years are a

sUf*i

ficienf warning to me that we are]
not

setting

corn."

In

aside
1944

-

enough

"seed"

saved

thirty- /
billion, six hundred million
dollars, or 21.6% of our national
income.
Last year we saved only
eleven billion,, two hundred mil¬
lion dollars, or only 5.6% of our
we

five

national income.
To

!

>:

/

mind that simple sta¬
tistic* points tip this entire prob¬
lem of 'venture capital and cries
my

out for a*

solutioho ''/ :
r *•/";
tyhbTbye their coiih-:
try;; "rather ' thariof
the,/sricuritiesindustry,we:shouid
keep ' this matter before oUr" congressrrieft/ regaridlesk Of /political
party; * .arid/'; cdhstaritiy ^urge :/tbri
As, citizens

,

.

tioning and black haarkets * rib ings'/of our industry In the South* study'arid xeyisiori/of ourtax laws,.
longer ' present, the domestic sit¬ eastr-and a better understanding te
he/"" end /that there;: iriay be/
uation will be much
brighter." • A ofUts. relationship to" the >welfare rilenty of "seed corn" for the
/Z
, /;'■ i.-; /
very good base for several years off this section- of our country and future.
of

of

made.

The Stock Exchange Industry is
composed of several hundred rela¬

business^ prosperity i§ .> being
The- future * looks /very
bright, indeed.
"
/ \
;
.

,thp country

as a

Lloyd Jammer Joins
Boettcher in Chicago

(Special to The Financial Chsonict e)

CHICAGO,
Jammer

has

[ILL. — Lloyd R.
jbecomg: associated

with Boettcher & Co., 135 South
La Salle Street. He was
formerly
officer of R; S. Dickson & Co.,

an

Charlotte, making his headauarters in the firm's
Chicago office.

Is

(Special to The Financial Chronici e)

MINNEAPOLIS, MINN.—Don.
aid

H.

Ricker

has

become

asso¬

ciated with Bache & Co., Minne¬
apolis Grain Exchange Building.
In the past he was an officer of

,

:.

But in total It

large and important field. We
are/an integraL part of the econ¬
omy
of the United States; We
have played a big part in provide
a

ing the machinery through which
venture capital—in all degrees of
risk—has flowed to the industry
and commerce of America as it
was needed.
We fully expect to
be able to continue to perform
this important function.
We are
constantly striving to do it better.
We are making progress.
.

Demand

Donald H. Ricker With

Minneapolis;

whole.

-

tively small units.

Bache in

George W, Byram Now

nition and ac¬

Homer A. Vilas

.

of increased wage demands
has been discouraged and strikes

wave

C.

Edwin Mercier, Roger G. Dolphyn
and Mackenzie C. Baird will'con*

-mu¬

respect

like

and integrity;
your own .desks; " However, I do
Cooper a tion like to'jptill.those.; problems" down
ca n n o t
b e* to
earthy terms and common un¬
found in the
derstanding.
You. iriay riot know *
statute books.
it, birt; I spent twenty rtwo years 7
Fundamental¬

nd, producf

a

e'r

■
justification evenwas no danger of these levels, be¬
for
eliminating the oldf equity
holders. This feeling was height¬ ing broken. Commodity prices, had,
soared so high that they were act¬
ened by the large cash surpluses
built up by these roads during the ing as a brake upon general busi*
ness.
The public felt that
prices
war.
Nevertheless,, we now have
were too high and. were
a spectacle of record traffic vol¬
confining
their purchases to absolute neces¬
umes and in many instances high
sities.
,/. ./. ,
earnings, but what amounts to
With lower prices, business ac¬
almost a mania for keeping swol¬
tivity is bound to increase.; The
len cash, balances
intact.
Even
where preferred .dividends have labor picture will improve..; The,

there

requires

the. farmers
;

sure

some

things for all
our people.
Cooperation

sriryfo.br ing
prosperity to

.

.

years and indicated per-share re¬
sults for the now common as fol¬

levels

set up

thai everyone in this room,

ership must
work together
toward better

still ; far

are
a

,

pattern which has been set in the past—if our pattern of freedom is
to prevail—we must accept more seriously than ever the tremendous
responsibilities that are ours. We who undertake to assume that
political
and ~
;
—1
—
—
business lead¬ of vitality in the future.
I am

Commodities

has

reorganized carriers
not been a happy one.

of

as. integral part
providing venture

capital to insure vitality of future. Says we are not setting aside
enough "seed corn" in form of venture capital, and problem

"

ties to holders of the new common

Sons

&

President, Association of Stock Exchange Firms.

For Venture

Capital

Peningion, Golkef & Go.
To Admit Horion, Smith
PHILADELPHIA,

PA.—Arthur

Horton arid W. Albert Smith, Jr.
will become partners in Pening-

ton, Colket & Co., 123 South Broad
Street, members of the New York/
and
on

Philadelphia Stock Exchanges,

March 1.

the

Mr. Horton is

of the bond

ager

firm's

man-?

department * in

/

Philadelphia office.

John,: S. P. Makiver, general
partner, and G. Dawson Coleman
and Edwin H. Vare, Jr., limited

partners, will retire from the firm

/We hear, a great deal today of
the
extraordinary
demand for
venture
capital
fpr
American
business.
This
demand, springs
frorri both old and new businesses,
The demand/ranges from some of
Our best known companies oper¬
ating ;all over the world down to
shiall

local

J. M. Dain & Co.

Venture

,

enterprises.
capital

is

new

With Shields & Co.
The Financial Chronicle)
"
/.*Remarks by Mr. Vilas before
CHICAGO, ILL. — William D. a; Joint .Meeting of the Atlanta
Bost
has
joined
the
staff :Z of .Chamber of Commerce and the
Shields & Co., 135 South La Salle Association
of
Stock
Exchange
Street.
Firms, . Atlanta, Ga., Feb. 13, 1948.
.

.

Feb.

29.

-

-

.—j—4—;

^

Reinholdi Gardner Add

Chrisfophel, Hayward
,

ST.

;

LOUIS,. MO.—Reinholdt &

Gardner, 400 Locust.Street, mem¬
the

blood of business; the insurance
(Special to

on

bers

of

the

New

York

and St.

Louis Stock

Exchanges, will admit
Arthur A. Christophel and John
H; Hayward to partnership in the
firm on March, 1. Mr... Christophel
is Sales Manager fop. the firm,
with which Mr, Hayward has also
been associated, for some time.

Volume

167

Number 4674

THE COMMERCIAL

&

FINANCIAL

(811)

CHRONICLE

'

185,000,000

State of Illinois
l3A% and

ecivreS%2
Recognition Bonds Series B

Dated March 1, 1948.

Principal and annual interest,.May 1, (first coupon due May 1, 1949), payable at the office of the State Treasurer in
Springfield, Illinois. Under existing arrangements with the Treasurer of the State, both
principal and interest on these bonds may,
the

at

option of the holder, be collected

Continental Illinois National Bank and Trust

at the

Chase National Bank in New York.

Owing to the lack of

Company in Chicago

The

or

legal authority the continuance of {he holders'

express

option of collection in New York
not

or
Chicago cannot be guaranteed but the discontinuance thereof is
anticipated. Coupon bonds in denomination of $1,000 registerable as to
principal if desired.
Temporary bonds will be delivered pending issuance of definitive bonds.
'
.

.

.

Interest exempt, in the opinion of
counsel, from all present Federal Income Taxes

\

Legal Investment, in the opinion of counsel, for Savings Banks and Trust Funds in New York,

-iv.

Illinois, Massachusetts, Connecticut and certain other States
;

y
*

'

*

*

:rV" THESE SERVICE RECOGNITION BONDS, the final part of

f 946^ will, in the opinion of counsel, constitute full faith

j

pledged and general property taxes
funds for the payment of

be levied without limit

may

'

.

v

'

?-■

x

all the taxable property

as to rate or amount on

-

-

amounts; maturities

.-v—-—

•

—

and prices

>

—

■■

,

i

z-J'.'-r:*>r,
"V. • »•
>•:'i.aAmount-"• -v..-;■'Due

'•

.

$7,700,000

Coupon'

vy.
..

'•

\tJ:

" »'•••

May 1, 1950

"i To Yield

;*

<?.:

".vis y'V

v

.-<••..

.'*•

...

V

•

"

'

*

>1 1.10%

May 1, 1951 ££

v

*

'

'•

'

''

'

"J

'

*

"

•

H"

■

1

*

-

J

■

.

i

,..U

......

7,700,000

May 1, 1955

VVY

A

r

<■

2

The

or

Price

2%

;

;

May 1, 1957

1.75%

2

1-85%

2...;.:.

May 1, 1956

1.95%

>

'
r

#>1

7,700,000

May 1, 1958

•

7,700,000

2

May 1, 1959

;

100

'

7

.

{

.; 2

May 1, 1960

8,000,000

Offered'for delivery ivhen,'as, and if issued and received by

offering circular

-

99'/z

;

.

and subject to approval of legality by

us

Messrs.' Chapman and Cutler, Attorneys, Chicago, Illinois,

be obtained in

may

'

;

Harris Trust anil
.,►*

Rat«

•.

V

.

Du^

(Accrued interest to be added)

•

..

.

To Yield

Coupon
'

7,700,000
,

1.65%

*;

/

.

.

,:i953v^fi%^"-:. 1.40%
May ^ 1/ 1954 ■■■)%
1.55%
r'/r-'v- r;X\ S

■

<

$7,700,000

L20%
,

,;'f

within the State to provide

■"t'.

Amount

Price

7^700,000A.1.30%
^

specifically

taxes are

:

.

l3i%^:

•:

or

,

7;700,000

election held November 5,

an

obligations of the State of Illinois. Certain special

principal and interest ion these bonds.

y';
•t.v

authorized issue of $385,000,000 ratified at

an

and credit

'A',

.

Savings Bank

any

state

-

from only such of the under writers, including the undersigned, as may;

legally offer these bonds in such Slate♦

The Northern Trust Company

The First National Bank of Chicago

Continental Illinois National Bank andjTrust Company)
>'

.i

'OF CHICAGQ

«

The^Cfcase National Bank Bankers Trust Company The National City Bank of New York First National Bank Bank of America Guaranty Trust Company of Now York Halsey, Stuart & Co. Inc,
New

Chemical Bank & Trust

Glore, Forgan & Co.

Company

Drexel & Co.

'Salomon Bros. & Hutzler

Harriman

Blyth & Co., Inc..

Kidder, Peabody & Co.

4
'

Central Republic Company^

A. C. Allyn and Company

Incorporated

(Incorporated)'

"

Eastman, Dillon 4 Co.

Incorporated

/-•

Julien Collins 4

; i"

'

;

y

*.'j

»

'

'

Corporation

'*

/' /•

Commerce Trust Coupany
..

!

.

..."

Hornblower 4 Weeks

a

r

1

*

;

.

Stern Brothers 4 Co.

'
.

The Milwaukee Company

California Bank

R. S. Dickson 4 Company

[Otis 4 Co,

[The Wisconsin Company

City National Bank 4 Trust Co,
"

,

•

-

Geo. B. Gibbons 4 Company

Francis 1. DuPont 4 Co.

Incorporated

L F. Rothschild 4 Co.

Roosevelt 4 Cross, Inc.

Martin, Burns 4 Corbett, Inc.

Whiting, Weeks 4 Stubbs

Trust Company of Georgia

*

'

•

Coffin 4 Burr
Incorporated

Kansas City

Incorporated

Kean, Taylor 4 Co..Kebbon, McCormick 4 Co.
'

Incorporated

Los Angeles

Cruttenden 4 Co.(Paul H. Davis 4 Co.

C. F. Childs and Company

1

,

Bacon, Whipple 4 Co.

~

Heller, Bruce 4 Co.
"

:

4

.

•

'

Lee Higginson Corporation

'

Alex. Brown 4 Sons

'

H 3mphill, Noyes 4 Co; ??T;

/

R. WTressprich 4 Co.

Seattle-First National Bank

San Francisco.

William Blair 4 Company

•'*' °V'. '

<

....

American Trust Company

The First National Bank

B. J. Van Ingen 4 Co, Inc. ?v:s: Weeden 4 Co., Inc.

Mercantile-Commerce Bank and Trust Company

R. H. Moulton 4 Company

F. S. Moseley 4Co.

CF PORTLAND, OREGON

'

.

Schoellkopf, Hutton 4 Pomeroy, Inc.'

Estabrook 4 Co,

American National Bank and Trust Company; - Bacon, Stevenson 4 Co.
OF CHICAGO
'.I T.v
y.y.y.
'

Graham, Parsons 4 Co.'
*

First of Michigan

Hallgarten 4 Co.

.

Lehman Brothers

.

Merrill Lynch, Pierce, Fenner 4 Beane

Paine, Webber, Jackson 4 Curtis

;

'

Company

..."

Company

:

•

Adams, McEntee 4 Co.

The Illinois

Equitable Securities Corporaticfr

-

Stranahan, Harris 4 Co»■;

r

1

•

Incorporated

";Incorporated ..*^.V

Ripley^& Co«»

Incorporated

Braun, Bosworth 4 Co.

'

•

>

Blair & Co.

Phelps, Fenn & Co.

r

A. G. Becker & Co.

John Nuveen 4 Co.

Barr Brothers 4 Co. Inc.

'

*

(Incorporated)
a

A.. ;:-

Smith, Barney & Co.

v

C. J. Dpvine & Co.

N. T. & S. A.

,/

Harris, Hall 4 Company

f

>

The First Boston Corporation

York

4

-t

*

.

~
»

.February 18, 1948




.

'

-•

-

*

*

15

1«

Chronicle)

CINCINNATI, OHIO—Lester J.
has
become
associated

way

years.

with Mr. Bathis'direction or
.xave access to his sources of in¬
formation. In fact, most investors,
left to their own devices, have
he unhappy
faculty of buying
either the wrong security or the
vestors

With Akin-Lambert Co.
(Special

The

to

Financial

Chronicle)

ANGELES, CALIF.—
Bethke has become
connected with Akin-Lambert Co.,
LOS

W.

Robert

Street, members
Stock Ex¬
In the past he was with

639 South Spring
of

the

Angeles

Los

change.

Sutro & Co.

have to buy a portfolio of securi¬
in-<?>>'

Unfortunately, very tew

gifted

are

ruch's talents in

time.
portfolio in¬

istics. And, when we

of

stead

a

"Buy a
single issue,"

applies

have selected

individual security, we find
that its cost is materially higher,
the return is lower, and the pos¬

of

sibility

suffers the largest, on/ a
percentage basis. He is the one
who ought to be satisfied to ob¬
tain
average
results, but often

down a bottom¬
an
attempt to
nake a small killing.
Should he
select a bond, a preferred, or a
common
stock, "on his own" he
night pick a "lemon."
However,
f he puts his money into a mutual
fond, whether its portfolio conhis money
rat-hole in

pours
less

Prmpectm
for

upon

request from

ierettment dealer, or from

NATIONAL
RESEARCH

SECURITIES

A

CORPORATION

Of BROADWAY, NEW YORK 5. N.

Y.

ists of bonds,

preferreds or com¬

stocks, or a combination of
all three, he is virtually assured
of at least average results."

Simian

to

1939

nation's

which
that

dividends

and

been

have

traffic

because

afraid

folio.*. To match th6 quality char¬
acteristics of any mutual fund

HUGH W. LONG & CO.
18

WAlt

smtr.

NEW YORK

individual

with

an

must

5, N Y

select

higher

this

security,'

we

security from a

class, and

then

shares

of

offer

excellent

long-term growth."

'

increases

This

become

assurance

million

$600

would

/.Over

a

our

at
to

3'

■U

.<§>-

requisition all
U. S. d

11

o

during

a r

last two years; there
of
liquidation of
in the New York

the

securities in

were

rumors

private

these

shares

pos¬

in

Lief¬

the
to be

compensate Dutch sellers of Amer¬

not

explain
to

courage

Lieftinck

'

prepared

was

The plan,

industrial

depression, even to the

of

sacrificing the nation's

Under the plan,

exchanged.

also

Netherlands

owned American

States

United

met with
securities

few

and

were

do

to

everything possible to prevent an

residents

have;been

mates of Dutch

various esti¬

holdings of dollar

permitted to

were

U. S. se¬

and,* at various

times

curity to another, but 25%

had

Certificates of Participation in

be

to

lands

of

amount

dollar

who

securities in the

effect switches from one

gold reserves.

securities,

success

guilders,

in

however, is said to have
little

govern¬

new

payable

but linked to the dollar.
Pieter

Gov-

'

bonds

ment

into

ernment

with

securities

ican

put

proposed

There

may

value

billion.

During 1947, in order to en¬
voluntary liquidation, the
Dutch
Government
offered
to

did

extent

S.

still

$1

the

that

exceed

crisis.

Dutch

U.

esti¬

mated

a

dollar

held

securities is not known, it is

or¬

der to avoid

Dutch

the

the

although

However,
of

extent

resi¬

Dutch

dents,

market.

of

session

stated that the

of the

exchange

the

offered to the Nether¬

Bank

to

be exchanged

for

remaining
for repurchase of

guilders with only the

Massachusetts i

INVESTMENT FUNDS
investing tlieir capital

'r.

r-

despatch from the Hague, Netherlands, on
Prof. P. Lieftinck,
a session of the Dutch Legislature, has announced that, in addition
an immediate reduction of U. S. imports,
the government would

effect, but he

X\

>-

1

An Associated Press

decree

ftAassachusetts

'

Feb. 18 states that the Dutch Minister of Finance,

the

Funds

:-F

Dutch Minister of Finance will require

announces

'"'.Tdollar crisis.

used

OF BOSTON

He received nearly

by domestic holders of U. S. securities as step to avoid

surrender

cannot match all of the character¬

Custodian

Corporation's "Fore¬

cast for 1948."

-

'

m e a n s

Bond Fund

copies of National Securities

Research

Securities

Andrew Carnegie once said to the

.eystone

ran

are

Associated Press

after the formation of U. S. Steel,

WJe

&

new

recently

Reported Dutch Government Requisitions Dollar

tinck

luncheon table. shortly

free

if* further

encountered.
30% better than

1947 earnings.

Co.

several segments of .400 replies from a single insertion
5
economy
about whose 1948 of the ad.

'"There

we

even

leads, Herzog
a three-inch,
one-column ad in the Sunday New
York "Times" offering investors

are

be

the excellent

Prof.

$100,000,000 Lost

even

the railroads of an¬
heavy traffic."

assures

Looking for

&

1947, the railroads' net in¬

cost

The good

tonnage.

Pays to Advertise

in 1948 should be in excess

of

In 1946,

accounted for

than three quarters of orig¬

other year of

If railroad

in

as

high rate.

a

they

instance,

ally

is about the same

1948

mined at

inated freight

wage

come

that

higher wages and higher material
costs. Investors are not likely to

chemical

in

industry

outlook for these industries virtu¬

January,

proving 1948 earnings.

auto

an

more

increases.
Ef¬
1948,
another
rate increase was granted.
of this will go toward im¬

10%

present high earnings would not
last but would
be squeezed by

for

sufficient

year's

Most

port continues, "that stock prices
have remained low in relation to

a

was

fective

port of Group Securities, Inc.
"It has become clear," the re¬

investors

given

were

price inflation may be imminent
or
already under way, according
to the February Investment Re¬

for

oil—even though coal

ley el of railroad traffic.

7.5

1935..,,

1947,. the railroads
10% rate increase,
to absorb

"In October,

The shortage

(4)

astonishing extent, these
industries are responsible for the

1936_,_ 164.6

93.2
123.5 deficit

1938_—

in

Fuel is short—coal

(5)
as

is being

$ 98.1

1937

$188.9

dwellings

of

established

The prospect, therefore,
increase in building ac¬
1948.

much

"To

1940

peeling an onion as he tries
find the edible part.

their

less than the number

outlook

the

of

(in Millions)

Years

and

earnings

an

activity.

monkey peeling

take

does its significance in terms

nor

Railroad Net Earnings—Prewar

Simile

As anxious as a

re¬

of automobiles needs no comment,

clear.

aggressive buyers of stocks
until they are convinced that the
vicious spiral of wages and prices
The income from a portfolio Of Is hearing its end. For this reason
securities is far more dependable we find encouragement in any in¬
than from a single issue of the dications, such as those mentioned
above, of a reversal of the long
lame class. As the Keystone Com¬
inflationary trend.
pany of Boston aptly puts it: "Any
"Common stocks of leading com¬
individual security may decline
and
disappear, but the various panies in the durable and capital
classes of securities are as inde¬ goods industries remain the most
structible as the
market itself.;. sharply ; undervalued.
There is
reason to expect that se¬
There is no way of knowing what good
lected companies in the following
any individual security may do,
but the long-term action of a class industries will, in 1948, equal or
their
high
earnings of
of securities under given condi¬ exceed
agricultural,
automobile,
tions may be predicted with a 1947:
reasonable degree of accuracy.
building,
electrical
equipment,
industrial machinery, railroad
"A mutual fund, with the ad7
equipment,
railroad
stock
and
vantages of selection, diversifi¬
steel.
Their stocks appear to be
cation, supervision, land multiple-1
at bargain levels.. Aviation shares,
source return, is logically a more
more
speculative, are attractive
conservative investment than is
for long-term appreciation, while
any individual security in its port¬
mon

is for

as

A

would

families

tivity in

the table below makes

as

—

was

new

that year.

1946, railroad earnings were $288
Even these were good

appreciation in rising earnings,

particularly to investors with lim¬
Inflation Spiral Over?
ited capital.
He is the one who
can
least afford losses, but gen¬ .iA topping off of the
erally

1947,

million.

markets is less."

right security at the wrong
The slogan,

the country's rail¬
roads will shortly report net in¬
come
of some $460 million.
In

this

customers

some

number

the

1947,

erected
of

"For

if

good deal of building was done in

as

follows:

Bernard Baruch can, you don't

ties.

outlook

railroad

the

(1)

place. Thus, a high rate of steel
output may be expected. (3) The
need for housing throughout the
country is desperate. Although a

Hugh W. Long in his February
York Letter" comments in
on

quarrel.

demand for all

a

demands, others—domestic

foreign

or

"New

part

that

duced

Railroad Outlook

"Buy a portfolio instead of a single issue" is a phrase coined by
Douglas Laird of National Securities & Research Corp. The idea has
much to recommend it.
If you can pick an individual security the

will

products that the farmers can
(2) Steel supplies are so

short

lunch.

"Buy A Portfolio"

merly in the municipal and cor¬

porate trading department of Ed¬

HUNT

By HENRY

& Co., Union
He was for¬

few

produce.

epjoy the balance of his

failed to

Buschle

ward Brockhaus & Co. with which
he had been associated for many

the

$100,000,000 more
properties."
"If you had, I would have paid
it,'.' was the financier's reply.
It is said that the Scotchman
you

J. A. While 1 Company

with J. A. White
Central Building.

activity

There should be

I think I should have

J. P.,

LI Batchle Is With

"You know,

asked
for my steel

Morgan:

P.

J.

elder

(Special to Th* Financial

Thursday, February 19, J948

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(812)

available

75%
assets

;

in the United States.

Investors Second Fund
IN

WELLINGTON

BONDS
'...-•/■••v.

.

;

,

J

;

...

(Series B1-B2-B3-B4)

etfjo&ton

PREFERRED STOCKS
(Series K.1-K2)

ANNOUNCING

COMMON STOCKS
si

(Series 51-32-53-54)

prospectus

investment

local investment dealer

or

New and

larger quarters for

WELLINGTON

VANCE, SANDERS

\

& COMPANY

and W. L.

BOSTON

-

1420

\V

V

The Board of Directors

Fond, Inc., has

FUND

■

Street,

o

quarterly divi¬

share payable on
shareholders on record
February 28, 1948.
t. E. Crabb, President

March 20,1948, to

Morgan & Company

Walnut

of Investors Selective

declared

dend of seven cents per

as

DEVONSHIRE STREET

111

Tke Keystone Company
of Boston

FUND, INC.
Dividend Notice

'■*'■

Prospectus from

,

pour

relating to the shares of any of these separate
mav he obtained from the undersigned. '

funds

INVESTORS SELECTIVE

~

Philadelphia 2, Penna.

of

Principal Underwriter

and

Investment Manager

50

Congress Street

Boston 9, MassackusettJ




NEW

*

YORK

6t Broadway

I20

LOS ANGELES

CHICAGO

South LaSalle Street

2io

Telephones:PE5-0851,5-6771.

a

INVESTORS SYNDICATE

West Seventh Street

Minneapolis, Minnesota

Si

H

THE COMMERCIAL

Number 4674

Volume 167

Elizabeth

1923

Chapter of the Ameri¬
of Banking and in

served

had

also

Bankers'

Middlesex,

Bankers

and

OFFICERS, ETC.

REVISED

eral

chairman

banking
Wall Street, New York, has announced

Bank of New York at 48

joint
of

conference

Jersey Bankers' Associa¬

can

Trust

said

the

icle"

from

"Mr.

Sept.

San

which

1865,

born

the

McKee

son

who

quote:

here

On January 30th common capi¬
stock
of
the
First National

the

of
in

1850

Co.

joined the firm in 1885

Bank

of

Tom's

increased
000

by

River, N. J.,

was

from

$550,000 to $575,stock dividend of $25,-

a

000.
*

,

The

*

$

placing in voluntary liqui¬

dation

of

Bank of

the

Forbes

National

Pittsburgh, effective Dec.

was

recently reported by the
Office of the Comptroller of the
Currency.
The bank, which had
a
capital of $500,000, was ab¬
sorbed
by the Mellon National
Bank

Trust

&

Co.

of

Pittsburgh.

known

now

ing Co.,

as a

the Tallant Bank¬

as

sold to the Crocker

was

Louis

McAlister, Jr.

C.

A.

Jr.

Owens,

"Shortly thereafter Mr. McKee
and others organized the Mercan¬
tile Trust Company of San Fran¬
cisco.
He
became
successively

Nov.

The

in charge of New

charge of Southern territory, Mr. Owens is

is in

England interests, and Mr. Stous-*^
land is head of the Foreign De¬ to these places. An advisory board

Appointed as Assistant

partment.

Presidents

Vice

Investment

G.

Earl

were

Harvey E. Mole, Jr.,

Holmes and

Officers, and LeRoy A.

will be established for the Broad

tinental

will

McKee

Clark, Jr. of the Bank's Madison

Mr.

come

proposal which will result in
business

the

Trust

Bank

&

York

being

Continental

the

of

of

Company

New

of

that

with

joined

the Chemical Bank & Trust Com¬

of New York has been made
in a let¬

pany

to the former institution

sent

ter

them

to

by

Baxter

N.

to be¬

asked

be

Chairman of this board.
*

A

also absorbed
tional

The

O'Brien

Savings Bank of Brooklyn, N. Y.,

tee of the

trus¬

of

John

and

F.

Murphy

as

Beitzel

as

Assist¬

ant Cashier. G. d'Andelot Belin is

President of the bank.
*

made

was

to the Board of Directors of Paul

Feb. 17,

C. Clovis, President, of the Twen¬
tieth Century PresSj*Inc. and Karl

the

"The

the

in its

Directors

of

1948;

13,

Feb,

of

from

follows:

as

Board

meeting

on

advices

of

receipt

ap¬

proved the statement of condition
of the bank as of Dec. 31, 1947 and
the income statement covering the

Total Resources of the

1947.

Fischer, Vice President, Execu¬
tive Department of the Chicago,
Burlington & Quincy RR. Co. At
the same time the following ap¬

"Mr. McKee

was

President of the

California-Oregon
Power
Co.
organization in 1920 until
it was taken over by the Byllesby

from its

Assistant

N. Baxter Jackson

K.

jQhn

McKee

Jackson, Chairman of the Chemi¬
that

stated

Jackson

Company.' Mr.

& Trust

cal Bank

the

directors
& Trust

of The Continental Bank

forth in

set

acceptable

this letter are

them and that a
meeting
will
be

to

stockholders'

shortly for approval.

called

the

that

advised

have

Company
terms

The

proposal as submitted is also sub¬
ject to the approval of the Super¬
intendent ofL Banks and the Bank¬

ing Board. Following the consoli¬
dation of the business of The Con¬
Company
that of the Chemical Bank
Bank

tinental
with

Trust

Company, the main office
Continental at 30 Broad

& Trust

The

of

&

Street

will

Street

Office

Broad
Chemical,

of

the

which will give

it a more conve¬
nient location for serving many of
its customers in the financial dis¬
trict.
The Chemical which has
always had a large textile clientele
has for some time wanted an of¬
fice

.

the

in

district

textile

on

of
The Continental at 38th Street and
Seventh

Avenue.

Seventh

Profits from

branch

provides

the Grand Central

area.

place

occasion

will

also

be

invited

organization of the
is stated

employees

to

join

the

Chemical. It

that the directors of the

latter will be increased from 22 to
25

and that three of the directors

of The Continental will be elected




and

Feb. 27,

on

the

at which

of

Directors

Board

the distribution of

ers

of

6%

the

on

Sfrs. 60,000,000,
year."

'

as

dividend

a

Capital

Stock

of

done last

was

W. H. Stalder is the bank's rep¬

'

*

The

$

certifcate. of

of

the

State

Banking

on

Feb.

of

increase

the

6

stock

of 65,000 shares of the
of $10 each, to $700,000,

of 70,000 shares of the
of $10 each. The bank

located

<s

205

ax

West

33rd

former President
Frank Wolf.

er,

#

Hutchinson

the
that

a

director

of

the

Plainfield

Trust Co. of Plainfield, N. J., since

died
of

illness

on

Feb.

several

York

New

57

13

after

months.
years

an

Born

ago,

he

had lived in Plainfield since boy¬

Plainfield advices
"Evening News"
Feb. 14, which further stated:
"Mr. Walsh joined the staff
the trust company in 1905 and
the

1913

said

Newark

made

was

tary and

assisted

Assistant

to
of

Paauhau

Sugar Plantation Companies of
Honolulu, the Russ Building Com¬
pany and other corporations."
McKee

had

for

also

many

been active in the Musical

1958
at

a

the

to

1960, inclusive.
The
priced to yield from

1.95%

for

maturities,

the

and

1950

to

offered

are

dollar price of 100 to 99% for
1959 and 1960 maturities.

This

offering
represents
the
an authorized issue of

balance of

$385,000 000 of service recognition
bonds authorized by the voters of
Illinois in November, 1946. In the
opinion of counsel the bonds are
interest

exempt from

all present

Federal income taxes and

are

legal

investment for savings banks and
trust funds in New York, Illinois,

Massachusetts,

Connecticut

and

certain other States.

Association of San Francisco.

Caldwell-Phillips Adds
(Special

ST.

to

The

Financial

With Kidder,
(Special

Chronicle)

to

The

Peabody Co.

Financial

Chronicle)

CHICAGO, ILL.—James R. Buck,

MINN.—Paul
B.
Bremicher, Jr. has become asso¬
ciated with Caldwell-Phillips &

Jr., formerly with Shields & Co.,

Co., First National Bank Building.
He
was
formerly
with Smith,

Peabody

Salle Street:

PAUL,

This is under

Secre¬

no

circumstances to be construed

offer to buy,

is

now

connected

Co.,

&

with

135

Kidder,

South

La

as an

offering of these securities for sale,

or as

solicitation of an offer to buy, any of such securities.
offer is made only by means of the Prospectus.

or as a

The

'

NEW ISSUE

February 18, 1948

$25,000,000-

Philadelphia Electric

Bank

of

First and

Refunding Mortgage Bonds

2%% Series Due 1978

Chair¬

and

Dated

Due

February 1,1918

February 1,1978

Comptroller of

National

Battle

of

Bank

Creek,

increased,
effective
Jan. 5, from $400,000 to $600,000
by the sale of $200,000 of new
Mich.,

was

stock.

Price 99.25% and accrued interest

:
«

£

dividend

stock

a

of

$100,000, the First National Bank
Bessemer, Ala., increased its

at

capital,

Jan.

effective

'Copies of the Prospectus may be obtained from any

from

16,

writers

$100,000 to $200,000.
*

dealers

of the several under-

only in States in which such underwriters are qualified to act as
in securities and in which such Prospectus may legally be distributed.

*

*

The Anglo

Bank 20-Year Club,

composed of staff members of the
Anglo California National Bank of
Francisco

San
or

more

of

with twenty

held

service,

banquet

on

in

Hotel
new

ducted

into

ceived

Feb.
San

7

club

at

the

were

and

36

in¬

jeweled

of their
40 year

189

Edwin

A.

Wertheim & Co.

binger, assistant manager, Mont¬
Street Office, San Fran¬
cisco, is President.
John D. McKee, member of a
pioneer San Francisco banking
family, died on Feb. 6, at the age
of

82.

death he

Up
was

to

Central

Republic Company

the

time

of

his

still active as Chair¬

F. S.

Corporation

Moseley & Co.

(Incorporated)

E. H. Rollins & Sons

Estabrook & Co.

The Milwaukee

Company

Incorporated

Stern Brothers & Co.

Bacon, Whipple & Co.

H. F.

The Illinois Company

Boynton & Co., Inc.

*

*

Lehman Brothers

Stone & Webster Securities

L. F. Rothschild & Co.

Gum-

gomery

*

Eastman, Dillon & Co.

Goldman, Sachs & Co.

re¬

pins emblematic
graduation into 25, 30 and
classes. The Club now has

members.

Corporation

an¬

Francisco.

members

the

The First Boston

years

its

J. M. Dain &

of
in

Assistant Treasurer. He
the formation of the

in

the

1954

Currency recently reported
the capital of the Security

Palace

*

*

Irving Walsh, Vice President

and

and

1,

President

*

*

The office of the

Seventeen
F.

May 1, 1950

man,

nual

Street.
*

held

Pacific

the

Detroit, Mich., recently announced
the death on Jan. 17 of the found¬

of New York from $650,000

consisting
par value
consisting
par value

Parshall,

Commonwealth

Through

of the Bank of Athens Trust Com¬
pany

$30,800,000

bonds maturing from

Halsey,
offering
of 1%%

*

*

P.

*

*

approved

Department
a

*;

York

New

of

,

*

resentative in New York.

hood,

officers and

were,

will recommend to the stockhold¬

Chemical Bank & Trust Company.
other

1946

3,610,388

of Undivided Profits
3,150,882.
"The Stockholders' Meeting will

take

consists

Inc.

Division.

Howard

Sfrs.

in

All

corre¬

carry-over

1928,
K.

amount

The

for

Sfrs.

Profit

McKee, President of
The Continental, has been asked
to become a senior officer of the
John

figures

sponding
Net

the

in

1946

3,406,271.

this.

also gives an additional loca¬

tion for serving

Sfrs.

of

branch at 345 Madison Aye-

The
nue

Avenue

The

the

ed

the

become

4,137,629, to which is add¬
carry-over of Undivided

to Sfrs.

Co.

Trust

Credit

Sfrs.

to

amounted

1947

banking in¬
directorships in
Gas &
Electric Co.,

he

pointments to the official staff was
made known: Peter F. Kaufman,

The Net Profit for 1947 amounted

of

&

National

and
The

are

an

1,413,591,668, as compared to Sfrs.
1,318,972,498 at the end of 1946.

Union Bank of Switzerland at the
end

Stuart

Chicago,

to

Officer;
Miss
Marion E. Edgren, Assistant Sec¬
retary; Albert A. Lentsch, Assist¬
ant
Auditor,
and
William
W.
Wegner,
Manager, Consumer

year

of

Company

First

on

by the Mercantile National
of Chicago of the election

Bank

announced

head office

Bank

Trust

The

Jan. 20
*

*

The Union Bank of Switzerland

at Zurich,

and

*

*

Announcement

Bank

Chicago,

Barney & Co. in New York.

as

Chester A.

tional

the elec¬

announces

Presidents; Walter B. Kra¬
Assistant Vice President,

mer

Manufacturing

Co. of Brooklyn.
*

Bank

Company, Continental Illinois Na¬

1.10%

years

National

He is President

bank.

Scoville

the

of

T.

Selden
a

First

rec¬

bonds

on

on

and

Williams has been named

was

*

*

Scranton, Pa.,

Vice

,

that

Co.,

Illinois 1%% and 2% service

ognition bonds, series B, was made
Feb. 18 by a banking syndicate
managed
by Harris Trust and
Savings Bank, Tne Northern Trust

become the American Trust Co.

Mr.
*

Brooklyn "Eagle" of Feb.
14 reported that Leo. M. O'Neil,
President of the East Brooklyn
announced

Trust

&

Jan. 13 of Leon Ehrhardt,
Kenneth A. Burdon, William B.

The

has

by the Mellon Na¬

Bank

Nov. 28.

tion

*

*

of

placed in voluntary liquidation

Trust Company.

&

Bank

Bank

Wilmerding, Pa. (capital $500,000)

of the directors of The Con¬

up

Avenue Office.

.

which will be made

Street Office,

National

First

Market

on

Offering of $85,000,000 State of

to 1953, inclusive, and $54,200,000
of 2% bonds maturing from May

terests,

27, page 2193.

Placed

Vice Presi¬
dent, President and Board Chair¬
man.
In 1927 this company and
the
American Bank
merged, to

Cashier and Secretary,

appeared in these columns

Stousland

C.

Bonus Bonds Issue

of

National Bank in 1898.

Reference to the plans of the lat-'
interests in 1926.
ter to take over the Forbes Na¬
"In addition to his
tional
J. S.

$85 Million Illinois

on

formed with D. J. Tallant the pri¬
vate banking house of Tallant &
"He

17

"Chron¬

also

we

was

Ameri¬

Francisco,

Francisco

McKee

John

of the

of

San

29,

laxe

Board
Co.

upon his father's death
in 1893 became Cashier. The firm,

*

*

tal

19

of the

man

(813)'

clerk and
*

Mr. McAlistc*

and A.

gen¬

tion.

C. Owens, Jr.,

following promotions: J. S. McAlister, Jr., Louis
C. Stousland were appointed Vice-Presidents.

the

was

first

the

of

trust

and

the New

of

County

Association,
now
the
Somerset and Union

Bankers' Association. He

CAPITALIZATIONS

He

President

as

Somerset

and

NEW BRANCHES

President.

its

as

served

Union

the

CONSOLIDATIONS

NEW

CHRONICLE

Institute

can

News About Banks

FINANCIAL

&

Company

Kalb, Voorhis & Co.

Farwell, Chapman & Co.

McJunkin, Patton & Co.

Baker, Watts &U
Moore, Leonard & Lynch
Pacific Northwest Company

Smith, Moore & Co.

13

THE COMMERCIAL

(814)

&

FINANCIAL

CHRONICLE

,

Letter to the Editor

Cayne and Conners
With

tilth

have

become

Cunningham

associated

Co.,

&

Union

Commerce Building, as vice-presi¬

Russell

dents.
member

I.

the

of

Cunningham,
Ex¬

Cleveland

change and formerly proprietor of
the firm, is now president.
Mr.
Cunningham
will
be
in
charge of the buying department.
Mr. Connors in charge of
sales
and

syndicate department, and Mr.
Cayne, trading', department.
Mr.

Cayne

cipal

of

was

Cayne,

Mr. Conners
Cleveland

was

formerly prin¬
Robbins & Co.
manager of the

office

the

of

Central

Republic Co.
with

associated

Also

Robert

are

firm

the

Solt and David

D.

G.

previously
with Cayne, Robbins & Co.
Callahan,

who

were

Mr.

Cunningham
is
a
pastpresident of the Cleveland Stock
Exchange and is

member of the

a

Eoard Of Governors of the
S.

N.

A.

D.

representing
District
10.
Cayne is a former president

Mr.
of

Cleveland

the

ers

Holds Gold Standard Advocates

Cunningham Co.^ Securities Salesman's Corner

CLEVELAND, OHIO. —Morton
A. Cayne, member-of the Cleve¬
land Stock -Exchange and Harry
Conners

Association

Security

and

at

Thursday, February 19, -1948

1

lt

Trad¬

present is

Chairman of the Public Relations
Committee of the National Secur¬

ity Traders Association.

By JOHN DUTTON
During the past 10 days the commodity markets and the stock
have been front page news. This is the first time in years
have made the headlines. The lay public does not
seem to be concerned over the possibilities of serious repercussions
as a result of the drop in prices.
In fact, most people believe that
the decline in retail food prices is a good thing—which it is.
BUT
THIS

NOT THE TIME

IS

ALA.— Ralph
shortly open offices
■in Birmingham to engage in the

among

<

securities

business.

He

for-

was

President of the Alabama

m.erly

Securities Corp.

Dick & Merle-Smiih to
Admit Sherman L,
Sherman

L.

Lyon

Lyon

20

Pine

Street,

York

New

members of the New York

Exchange,

on

March 1.

Las been with

because your office has not been deluged with calls from
clients, asking you what is going on, is no reason why you

should

neglect your customers. Telephone to them, talk with them,
what is going on, this ,is the time your customers .will
appeciate a call from you. They want to hear some reassuring words
from you, even if they are r.ot really alarmed.
If you write letters
them

tell

the best you can do is to make some general assertions.

If you think
that the decline i-rt commodity prices is a good thing (and Mr. Ber¬
nard Baruch said so) quote him. One thing a security dealer can still
do in writing (under present restrictive regulations) is to quote wellknown public figures. Some day we would like to have a clarifica¬
tion of what a securities dealer can put in writing and what he can¬
not say.' No one has ever found out to our> knowledge.
But if you
write

must

town

out of

to

clients,

who

others

or

may

not have

a

telephone—this is the time to do it. Customers expect their dealer,
broker or salesman to lead them through the darkness that surrounds
today.

us

too many learned

economists writing articles and mak¬
ing speeches that are printed in the "Chronicle,"' for this column to
put in its two cents worth regarding the current situation in the stock
and commodity markets. But this is the way we look at it, in a few
words.
The commodity break is a natural market development.
It is healthy because it will bolster purchasing power in the lower
brackets, but if the investors and everybody else in this country
expect good times, healthy progress,
and a better future for
.

are

,

the

xn

Jan.

their

and

children,

it is

much

imnortant

more

that the

fallacies advocated by

the present administration are re¬
polls next November.
If you want to quote John

pudiated at the
that

on

ahead; only we're not a public figure.* Besides
customers unfortunately might be New Dealers.
j

of your

go

29th

"Chronicle"

and

of

agreement,

some

judgment

issue

of

provokes

thoughts of
doubt

some

time.

even

of

paper

As often in the matter

(Special

to

The

Financial

Chronicle)

ILL.

James

CHICAGO,

—

Steel has become connected
A. C.

'

K.

the

treasure

The return to such period
presumes
the
same
conditions
both

authors

envisage

in

count.

They seem to know what makes the wheels
go around.
Do you think you would take a pushing around from
every arrogant little bureaucrat that has tied himself to the govern¬
ment payroll whenever you turn around, if we hdd an Administration
that

men can

believed

in

sound

American

Monroe

Street.

With Maxson Securities Co.
(Special

to

The

Financial

SOUTH BEND,

MacKenzie

For

cline

in

part

our

either

we

are

the stock

definitive

upon

/ V

/

!

-

not worrying one bit about the present de¬
or commodity markets.
One of the things

remember is that there

to

bfsed

.

ganized labor.

.

.

.

are

It is the

way

these

15

million stockholders

are

going to vote next November that will decide the fate of the stock
market, your business, everybody's business, and also the jobs of the

If

every

line for the

corral

anti-New

we'll all have at least

maybe begin to

broker and dealer in the United States
customer he can get, and go down the

every

Deal
one

candidate

more

live again.

'•

whomsoever

chance to

save

•»'•••

be

may

this country

\

,

he

...

•

and

Franklin

Cole

Company, 120 Broadway, New York
City 5, for a copy of "Economic Progress—Tax Revision and the
Capital Markets." This is a tax study made in collaboration with
Mr. Emil Schram of the New York Stock Exchange. Your Congress¬
man should have a copy!
This is an excellent portrayal of why the
the equity markets are

Chronicle)

&

DO

TO

REVIVE

drying up—and what GOVERNMENT MUST

THEM.

with

will

produce
production

tween

tion,
and

supply

Co.,

East

Irvingr

J

balance

a

and

and

fact.

advocacy

its

of

return

by

announce

firm.
in

England Company J

Common

stock

averaged $4.58
over

previous

earnings
per

10

&

Co.,

Inc.,
City,
that George Noakes. Jr.
New

York

share

Mr.

Noakes

formerly
the government bond depart¬
was

ment of the New York

office
under

firm, has opened
in

the

was

Reily.

Mr.

officer of Kugel, Stone & Co.,

a

Shoreham

the direction

Hanseatic

Corporation. Prior thereto he
an

ment

lieve

honor
a

of

respecting the
contract or living u*-

obligation

any

is

have been

best

at

great rival to that of
I

no

politician.

a

in business for
many
learned to know

have

and

that the quest of a personal gain
is not always redeemable into so¬
cial consciousness concerned with

in

IA [

r.

Fort

people

Knox

of the

belongs

tc

The

country.

government, its guardian, may not
be a good manager over the func¬
tion
of

it

should

perform.

credit,

currency,

Control

government

spending, etc., are justly subjected
by both articles aforementioned
scrutiny and criticism.

On the

hand, gold in the hands of

Reily

of
was

Phil J. K.

formerly

Washington Manager for J. Arthur
Warner &

Co.

and W. H.

Bell

period

per

co.

.•

-

Over-the-Counter Quotation Services

that

remembered

the

way

through
of

we

say,

may

tissue

have

other

hand

with

the

lack

of

A

N.

Y.

:

WHitehall

a

metal
There

lot of gold at Fort Knox

but

comparatively little in rela¬
tion to paper money in circulation

of intangible property, to
nothing of 250 billion of Fed¬

NATIONAL QUOTATION
Established

age

BUREAU, Inc.

46 Front




^

Chicago

exchange

sacred

Street, New York 4, N. Y.
San Francisco

is to

prerogative of

say,

gold coin¬
that

assume

will be exercised

1913

Teletype BS 259
3-9030

,

gold for

speck of
dollar. How many

a paper

dollars it may take to return this
speck of gold owned by a "Fort
Knox" at Podunk to circulation is
to

open

speculation.

morale

of

greater

than

the

Perhaps the

private

that

of

citizen

his

is

govern¬

ment, it

may even be that his wis¬
dom, skill and judgment are su¬
perior.
It seems, however, that
the
common
intelligence would

find
the

it

office

effective

more

mood

of

than

the

to

change

in

man

public

changing the temper

of the masses thrown into
of comparative

state

a

monetary confu¬

sion.

'

There
may

.

not favor the

gold

coinage

concerned
moral

to

■

other

are

'•

..

...

this

is

of
in

.

.

which

return

of free

both

authors

but

themselves

aspect

' '

factors

>

with

the

part

the

problem,
an

answer

their plea.
F. G.

Feb. 9, 1948
312 Patterson

Bldg.

SMOLA

-

-

.

Omaha 2, Nebraska

,

;

H

New York Stock

Exchange
Weekly Firm Changes ; A
changes:

say

Telephones: HAnover 2-7914
and

into

to

The New York Stock
Exchange
has announced the
following firm

The defenders of free

:

convertible

dollar was just
get as the gold dollar.
It may not be that
way now.
hard

as

paper

confidence in paper money people
should turn to hoarding of gold,

forms

request

148 State St., Boston
9, Mass.

was

The

un¬

such

not the pa¬

from

generated

eral debt

Tel. CAP. 0425

dollar

per

coin.

was

make

or

This

paper.

shortages in the presence of large
buying power and savings.
If on
the

didn't

difference whether

war

hoarding

before seen, that

never

plus (he i large peoples' holdings
in Government Bonds and other

For 35 Years

Descriptive analysis of this
special situation mailed
on

be

learned

it hoarded anything from food to,

imay be

1947
share.

scale

habit

In times

now.

during the last

as

It

groups

shortage of, this precious
would
become
obvious.

Inc.

years.

$13.08;

earnings $6.32

&

experience

shall

assailable.

worry

are

depression gold standard

hence

should

public
a

large savings

don't

paper dollar. The government
may
refuse to surrender a

his

years

but

there

It

with the

worry

I be¬

sanctity of
to

Kentucky.

quality of the private
knowing what he is about

the

citizen
and

people

such

the

much

because

now

in

But

stress

but

the

is not thought

dollar

it.

may

With gold scattered, in private
hands I wonder what our
man, in
the street would think of a mere

of such nature is warranted.

It

branch

of

responsi¬

private citizen may fail to
provide any solution to the evils

Building

Highest annual earnings
for

of

sense

the government.
I hold no brief for the
politician
but neither do I feel that discredit

on

Pollock

Street,

with

pledge of the Treasury to redeem
paper with gold coin will restore

government's

dollar

that gold

about

moral

that

the 61c dollar

famished

This

exchange

exists

is true that

government to
the governed and is dedicated to
the thought that operation of the

WASHINGTON, D. C.—R. H.
Johnson & Co., New York invest¬

E.

coinage

do

depreciated

both

attacked.

has become associated with their

in Business
New

the

on

likewise.

absurd to the proponents of

possibility

material fac¬

on

There

citizen

our

gold

thrift

Furthermore, the

authors rests not

that

not

all

in

The

contend

may

venture, government economy
spending, has no

the

Pine

to

ever

assurance

as

Opening D. C. Branch

Wm.

this

two

seem

be¬

consump¬

demand,

no

of

R. H. Johnson & Co.

20

of

circulation

in hiding.

goes

Europeans hide dollars,
sterling. Swiss franc and

pound

of

George Noakes, Jr.,

J

86 Years

in

money

had

experience

presence

with, all

basis

With W. E. Pollock Go.

222

French

as

in

money

and government

other

Maxson

Avenue.

good

The supposition that gold stand¬

.

ard

to

IND. —Herbert

now

monetary

that

is

Gold
to

wells

the citizenry of¬

on

to those of the past.

the
Write

little

vaults,

securities evalued in them.

general weal.

\

the

real, whereas in truth, many fac¬
tors in the present economic state
of the country are distinctly alien

the

Securities
ton

is

doctrine,

law, and orthodox economics?

wise

kinds I of

bility in spending and the people's
confidence in money and thus in

you

can

investment

for

fear of

no

improve.

A

teaches

oi

gold.

with

Allyn and Co., Inc., 100 West

ment

favored the effective operation oi
on

in

stockings

be

Obviously,

fer no guarantee that confidence
in paper currency will be restored
and the
policies of the govern¬

contemplation of the period of ex¬
perience and record which most
based

there

money.

Knox'

and

philosophy, the¬
the desire for the return to

tors
but, > rather,
obligation of the

seriously,

be

this fall would

With A. C. Allyn & Co.

Fort

the gold standard stems from the

money

should

of

error

imagine how much healthier the outlook
new ventures,
for risk taking, for the
stockholders, bondholders, insurance policy holders, owners of gov¬
ernment bonds, postal savings, bank deposits, real estate and private
business of every sort, under a President such as Bob Taft, Harry
Flood Byrd, Walter George, Joseph Martin, Jesse Wolcott, or Tom
Dewey? Here are men,.both Republicans and Democrats alike
would

eight million in labor.
i

gold coin in circulation, and hav¬
ing acquired it, shall put' it away

some

the

on

the

many

fundamental

ory,

.

economic

But

Spending Check," by, Howard Buffett, and "Is Soundness of the Dollar
Affected?" by Walter E. Spahr.^-

which

There

supposed to be 15,000,000 stockholders
Stock' in American business in this
country. There are only 8,000,000 in or¬

Mr. Lyon

firm for

the

City,

1

'

.The clamor for the return of the gold standard and gold coinage
exchange voiced in two articles: "Gold Standard as Government
-

will become

partner in Dick & Merle-Smith,

a

«■

-

.

Editor, "Commercial and Financial Chronicle":

but these

A. Lahan will

Fort Knox than .scattered

at

public.

GRANTED

FOR

THE SECURITIES BUSINESS.

Just
your

some

BIRMINGHAM,

ANYTHING

gold is concentrated

.

IF YOU ARE IN

Dutton

Own Investment Firm

TO TAKE

better if

it is

favoring return to fold standard
merely with moral aspects of the problem.! Says

themselves

concern

that the markets

themselves

Galph A. Lalian Forms

Ferdinand G. Smola holds authors

market

as

the

this

citizen

before.

That

they feel that the privi¬

lege will be there but seldom be
used.

It is true that people don't

like coin.

They won't

ever

like

■

Thomas
retire

cott

Jones,
partnership

from

&

-

Hoyt

*

>>

Jr., < will
in Pres-

Co., Cleveland, on March

1st.
F. K.

M. Hunter will withdraw

from

partnership in Carlisle &
Jacquelin on Feb. 29th.
George C. Riley of Cincinnati,
retired from
partnership in W. E.
Hutton & Co.

on

Jan. 31st.

George Brown, member of the
Exchange, withdrew from part¬
nership in J. Robinson Duff & Co.,
New York,

Joseph
Carlisle
died

on

on

Jan. 31st.

J.
&

O'Brien, partner in
Jacquelin, New York,

Feb. 8th.

Volume 167

Number 4674-

THE COMMERCIAL

.

(815)

FINANCIAL CHRONICLE

&

19

Britain and Marshall Plan
!'

By SIR STAFFORD CRIPPS*

By PAUL EINZIG

Chancellor of the Exchequer, Great Britain

Britain expects final enactment by Con¬
gress of Marshall Plan, points out nation is not relying on it, as
indicated by recent austerity wage regulation policy.
Foresees
British efforts to further discourage domestic consumption and
Dr. Einzig, though stating

notes

year's deficit in payment at £675 millions against
Western Hemisphere, and aim is to reduce dollar
requirements to minimum. Blames rising prices abroad as partly responsible for trade deficit, and points
out loss of "invisible payments" to Britain.
Promises supreme effort to remedy Britain's external pay¬

American aid.

continuing opposition in Britain against

some

Britain's financial spokesman places his nation's last
£380 millions in 1946. Says bulk of deficit is with

ments

the passage by Con¬
Britain with growing
optimism. While a month or two ago the majority of Englishmen
thought that if the Plan is adopted at all, it is sure to be "too late

LONDON, ENGLAND.—The prospects of
gress of the Marshall Plan are now viewed in

and too

little,''
the

chances

of

aid

divert

be

reasonably
good.
Even

lihood

is

sought

to

not

there

belief
is

without

Einzig

Dr. Paul

it

fundamental

not

later

than

the

early

alterations

summer.

the

late

spring

Even so, the government

ceeding

is

or

pro¬

the assumption that it

on

cannot rely on the Marshall Plan
being adopted in time, if at all.

This accounts partly for its refusal
to relax austerity measures such
the ban

as

basic petrol rations.

on

Although the refusal to reconsider
this

most

unpopular,
government is firm in resist¬

ing
it

is

measure

the

brought

pressure

by

opponents

alike.

to

and

bear

on

supporters

Nor is the government pre¬

pared to compromise

the

on

pro¬

hibitive

import duty on films,
though it is expected to re¬

even

in the closing down
three
thousand
picture
sult

for

lack

of

abolish

to

films.

new

bread

of

some

theatres

Agitation

rationing is also

ignored.
Above

all, the government

con¬

tinues its export drive at the cost
of
depriving the domestic con¬
of

sumer

In

much-needed

spite

of

supplies.
increase in the

the

output of textiles there is
likelihood

of

tailors

their

British

in

cut

And

forced

are

strong

a

further

a

British cloth rations.
Row

use

government's recently ac¬

and the government is
likely to avoid making extensive
use of
either of them so long as
there is reasonable hope to expect

is

that

extensive

more

popular,

justifiable
expect the Plan to be adopted

to

with

Both solutions would be most un¬

be

widespread

a

the

Savile

to

customers

keep

waiting

literally for years, while they are
busily engaged in executing prior¬
ity orders for the

United

States
who

and Latin America. Exporters

early American aid.

his

introducing

when

budget in April, will propose fur¬
ther measures tending to discour¬

consumption. There is strong
by Left-wing members
the government to induce him
discourage
the
demand for

age

pressure

of
to

hy people living on their
capital, but the likelihood of a
capital levy in this year's budget
appears to be remote.
goods

is

There

all

that

would

and

these
not

feeling
other policies

widespread

a

Britain

save

from

a

of the nonadoption or delay of the Marshall
Plan.
They are considered to be
a
useful supplementation of that
plan under which, it is believed,
major crisis in case

would

Britain

aid

ficient

receive

not

suf¬

with

dispense

to

the

necessity for making the utmost
effort to achieve equilibrium.
A
substantial relaxation of austerity
is

measures

not* expected

to fol¬

of the Marshall
immediately and automati¬

the adoption

low
Plan

Sir Stafford Cripps is like¬
ly to live up to his austere repu¬
tation by postponing relaxation as

cally.

possible.
In all probabil¬
ity, he will try to hold out till
the late part of 1949 when the
anticipation of the coming general
election will make political con¬

long

as

siderations prevail,

and the gov¬
ernment is certain to overrule him
in

a

bid for

what

and

we

expenditure
reached

Fund

rently earning
to

to

acing

mt:n-

propor¬

tions, despite
an
expansion
in

home

these

exports which
in

themselves

Sir

most

praiseworthy.
It is

a

our

gap

own

which we
efforts, supported

we

earnestly hope, by Marshall aid.
If we failed, the gap would close
itself through the drying up of our
essential supplies of food and raw
materials
for which
we
would
have

no

Last

means

of paying.

year's deficit on current
including "invisible"
amounted to £675

account

transactions,

(compared with £380 mil¬
1946).
The deficit with
the
Western
Hemisphere, was
£680 million and the deficit with
the rest of the world outside the

million
lion

in

line

of

after

and,

a

the

least

resistance

buyers abroad, they would
satisfy the clamoring demand at

home.

government's unwillingness

the Marshall Plan is
also indicated by the recent enun¬
rely

on

of its wages policy.

ciation

Even

of

pation

Marshall

out her

own

loan

1945

m

as

harder work

vocate

of wages

gesture,

a

it

is

certainly

gesture in the right direction.
was to be expected, it is most

popular
unions.
it

is

a

As
un¬

among
the
workers'
The only sphere in which

likely

results

is

to

that

produce
of

positive

industries

pro¬

ducing goods the price of which
is

controlled

The

by the government.

warning that the government

not authorize wages increases
passed on to the consumer
the form of higher prices is

may

to

in

equally

of Sterling

be

the

as

ready

existing

tween

wages

and

widen the al¬
discrepancy be¬

to

paid

in

controlled

uncontrolled industries.




The

of

the

of

Trade

difficulties

The

created

for

us

by the adverse movements in the
terms
of
trade
were
strikingly
demonstrated in 1947.
The ad¬
verse
visible balance on a f.o.b.
basis

trade

of

which

upon

expenditure of gold and dollars
in 1947 by the whole sterling area
including the U. K. was £1,098

we

operating in 1938 obtained
year, this deficit would have

lc.-3t

been

given by Sir Staf¬
ford Cripps at a press conference,
London, Eng. Feb. 10, 1948.

267%.

world's

226%

The pressure
for food

materials has created this

raw

since

pendence

imported

face

the

the

fact

part

our

on

on

materials is

raw

This

announcement

which
prices moved against us over the
past year alone, it is worth noting

evidence

of

the

way

in

that while the volume of our ex¬

ports increased by about 10% and
the volume bf

of

our

exports
cost

increased

Incidentally,

our

imports by lit¬

in the value

only half the
our
imoorts.

v/as

of

slightly

the

despite

higher volume of imports to which
I have referred, we were still re¬

ceiving in 1947 only about 75% of
the Quantity of goods we imported
in 1938.

Any general rise in prices must
of a coun¬

basis of a def¬

try working on the

icit in

same

that

is

our

own

food

great,

so

to

amount of essential sup¬

visible, trade

Lower "Invisible" Income

compensated

Before

the

the

invisible

our

excess

of

war

we

relied upon

receipts to pay for
our commodity im¬

a quarter of our total
imports were in fact paid for by
this means in 1938. *The war de¬

Over

ports.

stroyed .that

favorable

is not

only were we obliged to sell
large part of our investments,
but
we
also engaged in heavy
borrowing, with the consequence
that our net income from invest¬
ments is only a fraction of its
former amount.
Loss of shipping
and the need to charter foreign
vessels has had to be met.
So,
instead of an invisible surplus of
million

£232

1946

1938, we had in
invisible ac¬
including

in

net deficit on

a

count

of

£176 million,

(Continued

offer to sell or a solicitation of an offer to
offering is made only by the Prospectus.

an

on page

buy these securities.

$6,000,000

Iowa Power and
First Mortgage

Light Company

Bonds, 3% Series due 1978
Due February 1,1978

Dated February 1, 1948

Price 100.99% and

accrued interest

Left-

sympathizers

among

wing

Socialists

also opposed

to

Marshall

the

turn

are

Plan.

They

in

believe that closer economic

The Prospectus may

this announcement is circulated from only
dealers as may lawfully offer these securities in such State.

be obtained in any State in which

of the undersigned and other

such

cooperation with Eastern Europe
enable

would

the

government to

dispense with American aid.

overwhelming
British

majority

opinion

would

of

regard,

however, a failure to secure Mar¬
shall

aid

major

disaster

halsey, stuart A co. inc.

The
vocal

istence,

or

a

at

any

living and might
social

unrest

upheaval.

rate

otis

dick a merle-smith
william

l.

a co.

f.

rothschild A co.

(INCORPORATED)

blair A company

the

illinois company

that

it might

result in grave

leading to political

mullaney, ross A
thomas A

February 19, 1948

company

company

position.

Not

a

and

their

must
effort
obtain

we

greater

needed

de¬
and

plies.

by invisible earnings or bal¬

for

The

acceptable

Communists

British

reasons

an

of 1938

demand

position and

As

£300 million less.

some

be to the disadvantage

:::A statement

was

were

were

tle more, the increase

these

Had the

£449 million.

was

terms

figures suggest. We are bankers
to the sterling area and finance
the
dollar
requirements of all
sterling area countries.
The net

drastically lower the standard of

tend

Terms

and

The strain on'our resources was.

totally different

For

will

only

stiffen

Empire

might endanger Britain's very ex¬

to

while the corresponding figure for

They ad¬

the employers'
resistance to wage demands.
But
in so far as the new policy will
achieve its end in this respect it
likely

quarter 1947)
imports

Area

however, even greater than

on

f

op¬

at home and

is

invest¬

from

of the resources

better utilization

alternative.

than

now

are

American

the

to

Britain is concerned.

of

increase

income

work

Those who

salvation.

opposed

were

to

price

ments—and there is therefore lit¬

dependence

excessive

The

tends to

aid

efforts

Britain's

slacken

the,

disapproval of
is barely more

of

case

con¬

noticeable

They believe that antici¬

papers.

though the statement embodying

government's

the

and;

in

commodity

ity of British politicians and news¬

posed to the Marshall Plan as far

The

to

Plan is economic

the Marshall

bare show of effort

to find

with

income
move

movements—most

have

Western Hemisphere.

the

surplus of £80 million with the
sterling area, which gave the over¬
all deficit of £675 million.
Drain

The items which

invisible

now

world's

sterling area £75 million, making
a
total of
£755 million, less a

.

reserves

area

be met by invisible

expenditure do not

that

clear

to

the coun¬
tle compensation from invisibles
drawing upon them. The
for the wider gap in the visible
sterling countries are working to¬
gether to reduce their dollar re¬ account, but the«actual situation
is even less favorable than that
quirements to a minimum and in¬
Stafford Cripps
which would result from a doub¬
crease their own production, thus
making a contribution of great ling of import and export prices.
must close by importance to the removal of the Export average values (third
tries

and

duction

be

to

our

loans.

constitute

been contributed to by

pro¬

or

sonance

like

sterling

was

has

income

1947'.

in

should

I

collapse is not shared by a minor¬

the

which

on

resources

that

meet

—

position in 1947
by overseas borrowing. A doublings
of both import and export prices
for
example,
doubles
the
gap

our gold and dollar
(including drawings on
the American and Canadian loans)
and on the International Monetary

cur¬

were

as

alternative

the

that

ing stocks of goods abroad apply
in vain to the Board of Trade for

permission to unload their surplus
at home.
The government takes
the view that, should such per¬
mits be granted too easily, many
firms would be tempted to take

drain

net

——
anced

After

popularity.

view

The

overseas

-

were

expected that Sir Stafford

It is

Cripps,

find it difficult to sell their grow¬

>

our

1
>—;
allowing for gold
purchase from the sterling area,
mainly South Africa, we get a
figure of £1,023 million for the

v
million.

expenditure

quired powers to direct labor to
undermanned essential industries.

minimized.
But

to

of

and

delays

scope

the
between

gap

necessary

make

or

dif¬

of

ficulties

be

extend the

the like¬

now

would

it

fully justified and must indeed be pursued with vigor and determination. In the

are

past year,

To prevent this
either to
of price control

controlled prices.

to

goods

essential

producing

are

considered

hands from industries

more

figures for the U. K. current balance of payments in 1947 now available can leave
doubt that our national efforts to increase exports and reduce imports to an essential min¬

imum

produce mainly goods of
secondary importance, and a fur¬
ther increase in their wages would

adequate and
timely Amer¬
ican

no

latter

today

position.

The

stern brothers A co.
walter stokes A co.

26)

20

THE COMMERCIAL

(816)

'

*

McKAY

doubt concern¬

sterling devaluation cast the shadow of

Ruhr.

the

but

crisis of best

references to the coming

liquidation

consid¬

due

this moment

a

our

of

al¬

does

however

constitute

not

by

unwilling

of

-

the nancial and economic disaster as
seceding areas are now free of the foregone conclusions. In the mean¬
colonial
yoke, but still remain time the Canadian situation has
wealth

of

Nations.

in

Also

Middle East,

Britain is disencum¬
bering herself of a heavy burden

Dominion

the

contrary;

foreign trade figures for 1947 reg¬
istered an all-time record, and re¬

have

into

turn

the

catastrophe; of
war.
/' ;..A

great

of

so

won

again

may

Why
the

opportunity

the

afraid

dearly

are we

Is it not be¬

anxious and afraid?
cause

mi-

a

we

'

Dewey

out

overshadowing

time

our

the

—

building of peace—has been , con¬
and frittered away for lack

fused

plan andr

great pur¬

of

of

native attention to the accelerated

stage of dynamic development. As

pose?
For the sake of the Amer¬
ican people and the peace of the
world it is time we find out where

development of the vast

far

political responsibility, while cent reports from throughout the
still retaining her economic inter¬ Dominion clearly indicate that the
ests, and is now directing imagi¬ Canadian economy is at another
resources

of South, East, and West Africa.
Another accompanying phenomr
enon of British crises is the habit
of

deriving

new

direct
doubt

that

strength from the

disasters.

Britain

little

the last year
through her eco¬
spiritual "Dunkirk"

during

and

British morale,

touched

bottom,

upward
of

is

went

nomic
and

There

climb.

An

an

examination

cross-section of British senti¬

a

ment

which,

would, have

pessimism

a few months ago
revealed unrelieved

and

would show

a

discontent,

now

spirit of

reso¬

new

lution to rise above

adversity and
revived hopes for a brighter fu¬
ture.

•

knit Dominion's

are

ating

staunchly
Mother Country.

resources

are

effort

ganized

British

now

to

cooper¬

assist

the

Their combined

now

supreme

available for

to

serve

a

a

reor¬

Commonwealth

and to save the pound.

; The new Chancellor of the Ex¬
chequer Cripps is not another
Keynes

or

is

concerned, there is

Dalton.

His

clearly
enunciated policy of maintaining
the present level of
sterling does
jJ
'*

sourceful Minister of Finance Ab¬

bott, like the British Chancellor
Cripps, will be able to cope effec¬
tively, with any development that
might jeopardize the successful
implementation

avowed

the

the .pressure

week

devaluationary.sentiment!
cerning the pound affected

versely both the internal and

ex¬

: '

PROVINCIAL

Canadian
after

on

stocks

-

in

scale.

decline

on

to the strength dis¬
the London market and

-the
exaggerated
importance
given by the Dominion gold-min¬

world.

ing industry

Government

and

sistance

of

to

«

on

new

to
instead

as¬

concentration

development..

-..

..

Expanding
ILY. Commodities Dep't
Witter" &

commodity markets.

R..Herrick, commodity
expert,

is

being

trans¬

office

to

head

the

up

en¬

to

supervising

all

traders
on

with current

Prior

to

his

association

with

Dean
was

Witter
in

the

&

Co., Mr.

business under his




"

Herrick

and

own

previous .experience
NY-1-1045

world

export

name." His

was

export depaitments

eral

Mills.

blundered

conquest.

with

expense

Most

,

In

the

Far
a

Marshal

East,; our

secret agree¬

Stalin

at

the

of China, enabling Russia

of

Gen¬

on

Asia

to

tractors and

Harbor

here?

from

the

in

the

heads

our

peat^ itself?

before

course

It

war.

that

it

and

again

led

to

To follow

always will.

course,

followed

have

We

the

be

would

only perfectly sure way to send
boys and mine into another
war.
n '
"•
v.. ■' V
'

your

a new road.
for peace; there is
a
great abiding hope burning in
the breasts of our people and of

about

•

this

at

even

I

building

In

the

for

peace

set

now.

tragically late date,

confident

am

we

achieve it.

can

and

two

one-half

years

pulled

peoples and those behind the iron
That is

curtain.
is

more

proposed

now

than

money

for

four-year

a

European program.

Berlin

the

so

could advance

Europe.
we

got

armies

into the middle

the fruits of

In such ways

our

have
victory been al¬

wholly tossed away.
thing
policies of
one

we

can

the

:

<

be

Na¬

tional Administration which have

brought us to this pass should be
thrown overboard lock, stock and
barrel.
Those
are
the
policies
which

resulted

in

into

Russia

and

the

middle Eu¬

clutches

of

Soviet

rapidly delivering
people of China
intoth'e Same hands.
i
the

400

are

million

Address

by Gov. Dewey at

German
then

be

servant

a

Europe.

Yet

posite

and Europe and
suffering as a result.

are

op-f

America
t

*

-v.

of

the

Potsdam policies did the exact

\

#

•

Policies Must Be Reversed

*;

4

The policies which created this

paralysis

and

must

be

Our Government

versed.

can

can

re¬

-

still

job, unless the National Ad¬

a

political

in

country
crisis

actually

for

keep

this

continuing state of

a

and

wants,

to

purposes,

of

high prices caused
by shortages of goods. We have a

In the mili¬

Government

called

to

save

Europe

America

from

better get

busy.

a

—

industrial

greatest

world—have done

possible
world.

us

nation

set of

new

the

industrial

of the worst

one

induslrial

in

the

jobs

the

in

minute.

Then

mines

coal

Europe

of

West

the

as

Virginia,

Illinois,
the
Pittsburgh, Gary
Younngstown are to America.
.

and

mills

of

The Ruhr in
dustrial

It had better get

Germany is the in¬
mainspring and the heart

genius of America and
face

the

of

half years

a

to finance

$17

billion
habilitation of

anxiety

ous

They

neverthe¬

re¬

Europe.

.

our
people.
Is it "just, an¬
Is it only, a "fii-,

tile effort to bolster, up these na¬

~

these.

less launched at Potsdam the pol¬
icies which have paralyzed the

...

,

.; A

,

I know it does not have to

be

Ruhr

;;

,

it will be neither of

I; hope

Knowing this, the present Na¬
tional:- Administration

cost

the

among

asking:

are

tions?"

'

now

a

The long delay in conceiving a
plan and the frightful waste which
has preceded it have caused seri¬

products. 7

' "

for

Western

other handout?"

v

are

we

plan at

a

more

of ; Europe's
production", of coal,
steel ' and
many
other essential
-

"and

next

Partly by reason
the unhappy failures of the last

asked

Pennsylvania- and
steel

and

policies, call on'the

we

two and

to

ruin

hardship 'and
have, it had

larger problem.
of

Importance of Ruhr
is

If

get going.

Let's look at it for just a

Ruhr

them.

on

Administration honestly wants

our

know-how which has made

will

and ;

Europe.
niiie

crippled

Today,

months

the

two;

after

Western

and

years

V-E

Day, the
production of coal

daily

Ruhr

all

is only

254,000 ton$,
compared with 440 000 before the
That is 57%

of prewar pro¬

who

are

v'

this with

the

producing

now

British

over

be,,restored when the free
nations become strong enough and
united

enough

selves.

In

1917 and

a

prelude to

must make

1940

eco¬

our

going to

our

certain

We

war.

that this time

economic, aid is

a

prelude to

peace.

is

There

aid

of

difference

a

difference

Compare it with the French who
now actually producing more

,

to preserve them¬

nomic aid to Western Europe was

90%

of their prewar output.

V/'

The peace of the world can and

our

Compare

between

and

the

—

this

vast

a

program

ordinary

run-of-

are

the-mill.

New Deal venture.

This

coal than they did in 1937. But it
is
the ' Ruhr which has
always
been the principal source of coal,

time

can't

suc¬

the Ruhr is not producing.
It is no wonder that the people

and

of

Europe

ter.

freezing this win¬

are

It is

no

cess.

we

The stakes

the

total destruction.

even

in

the

Ruhr

ferrous

products

metals

is

and

-running

quarter of prewar
of

is

in other respects. Pro¬

worse

duction of iron and steel,

war

or

of

of nonfoundry

about

one-

less and

damage

can

no

alibi

that failure.

needs

of

It

is

no

wonder* that

tractors

for

the

Europe

production

food, heeds rails for the ship-

/

_

<

1

-

Last

November, I urged that a
be formulated in straight¬

government

situation

too great. The

are

and

forward

The

10%

between
success, and
this time may well mean 1
difference between suryjval

prevent

collapse.

a

difference

ships have been busy carry¬
ing American coal and oil to help
a

stand

failure

wonder that Ameri¬

can

Feb. 12, 1948.

*

of

as

the

the Annual Lincoln Day Dinner of
the Middlesex Club, Boston, Mass.,

'

blast

people

of
it

that

j

now

amount

*An

the

revival

a

and

full

we

surrendering

200 million people in

prevent

militarism
started

from

sure:

present

to

shortages

of

That, in short, is the way
into our present fix in

world affairs.

The

Soviet

years
ago
that I proposed
that the Ruhr be internationalized

tary occupation of Germany, we
Americans
we
who have the

back

triumphant American troops west

the

at

was,almost

wealth

duction.

actually

arise

/It

of
have spent over*
engineers, coal mining
billion in foreign aid, indis¬ experts and industrial managers
who could do the job if only the
criminately scattered among free

to

and

">

$20

war.

the enslavement of the Balkan

would

war.

ministration

ple of Poland; it yielded weakly
States

the

do

in

ernment sacrificed the heroic peo¬

problem
of

is reason for that

we

clothing to

four

good people the world over. There

hope., If

ship
>

end

must follow

we

coal
des¬

so

home, ;to

Every informed American knew

There is. hope

average

qf
Gov¬

and

at

■

No,

ship

we

Europe.

from

withdraw

bury

to

steel

food

us

sand, hoping history will not re¬
that

and

need

Pearl

go

we

we

world

fuel oil

and

Europe to

one

to

has been compelled

this

Where ,do

to dominate-Manchuria and, all
our

purpose. At
nation in history. Yet

any

perately

the other.

on

North China., In

Europe,

than

side of

across

move

Harbor

Should

of

gained

in the commodity and the
import
and

of /that .fact,

has now come to fight-r¬
hope there's no more to

out.

ment

rope

import

face

Government made

Of

1

the

rule- the

to

Government

at least I
come

In

Eastern Seaboard activities.

ambition

compromised from conference

com¬

information

Marshal

conference, each time aiding
and abetting that very scheme of

most

traders and provide West Coast

ern

plain.

are

\

-

to

of

West Coast information for East¬

RECTOR 2-7231

In

own

the story

addition

N. Y.

our

Soviet

Dean Witter

not

repeatedly proclaimed

Soviet

the

modity services, he will correlate

NEW .YORK 5,

had

elsewhere, is perhaps attributable

larged New York department.

TWO WALL STREET

facts

The

Moreover, if

/

Russian Policy

Stalin

betrayal of

a

they will allow the iron

across

The

respond

cisco

INCORPORATED

despotism.

and

aggressive

another

of

registered a substantial
recovery. The failure of the golds
to

Administration

policy for peace but
helped to build up the
no

quently

played

This time

had saved.

National

actually

subse¬

•

use our victory
and "buttress the free

we

strength

ferred from the firm's San Fran¬

-

failed to

rebuild

to

the

-

York,

.

When the first
the victors

over,

was

Again, aft^r the second World

War, we

and

reflected

-

New

initial

an '

reduced

a

called

are

failed to make,,a lasting peace. *

only had

.Martin

A. E. AMES & CO*

Wan

our

trading

CANADIAN STOCKS

tarian despotism.

Free funds also weakened but the

ous

CORPORATION

save

people

to make a mighty effort to
Western Europe from totali¬

turnover

ily growing clientele of llie vari¬

MUNICIPAL

American

the

upon

in 30 years,

time

third

the

For

are

since the war, we

permanent peace,*
■«-.

nations

was

to

propose

ternal sections of the bond market.

Co., 14 Wall
Street, New York City, are ex¬
panding the trading facilities of
their New. York commodity de¬
partment, to enable the firm to
serve'more efficiently the stead¬

CANADIAN BONDS

I

con¬

ad¬

start going. 7
state to you to¬

night some of the steps I believe
necessary
if we are to achieve

-

of

a

want to go and

we

World
,

During

;■

his

of

(policy.

Dean

GOVERNMENT

every reason

to believe that the Dominion's re¬

movements

In the hour of need the
loosely-

ex¬

isting level of the Canadian dollar

after having

commenced

the maintenance of the

as

great

a

Boston

that the peace

I

On

the

be

r

by no means'a sickly appearance.

members of the British Common¬

curtain,to

:

with direct British rule,

ance

rity

turn

rage;

.

-

£.

policies

the American hope.
continued

to

Thomas

of

area

Those

apparent

pres-

p r o s p e

resources

was, ment of goods and needs steel to
outside
the! rebuild and expand its factories
cooperation. 1 It is no wonder our Government

wholly
bi-partisan

our

may

fi¬

imminent British

1
we are con¬

of those policies

one

ent

.

to
the

early

too

devaluation

the

and

pound

still

is

it

write-off

Every

formulated

that

■

the

Thus

total loss, In plate of
and- enforced compli¬

They

afraid

are

.Calls for

years.

1 e<£-

are con-

fused.

.

living standards and

uneasy.

They

-

any means a

p e o p

are

loopholes in the British
ready been relinquished, and to control system, and steps designed
this extent there has been a par¬ to discourage bear attacks on thb
tial liquidation of the British Em¬ pound, are also logical and likely
pire in its old imperial form. This developments.
countries has

Eastern

Middle

richer in

we are

in U. S.

break

The recent

period of

over

avoidance of waste in aid program.

our

possible development for
the future but, in large part, an tered by a program designed to
already accomplished fact. Direct prevent a further rise in British
British control of India, Burma, wages and prices.
Other defen¬
Ceylon, Egypt, Palestine and other sive measures such as the closing
not

d*

country is beset with deep anxiety. As in Lincoln's day
fronted with historic decisions.
Yet today we have no clear vision of a great

again

prices which constituted a greater
threat
to
this policy than
the
French devaluation is being coun¬

Empire.
It
in reality that this is

would seem

after

Once

British interests at this

serves

time.

King¬

United

the

British

the

end

dom

in

decision

a

4

Says if aid is given it should be adequate and extend
-

eration to follow the course which

first consider the recent

*

Dewey scores Administration's foreign policy as having betrayed American ideals by appease¬
ment of Russia, and urges it should be thrown overboard "lock, stock and barrel."
Warns Marshall
Plan may be "just another handout"; and urges a federation of Europe, with internationalization of

and the many prophets of British disaster have
gone into high crescendo at a time £
~~
k~~
7"
when it is now possible to discern not represent further lip-service
a
few encouraging glimmers on to the cause of managed money,
us

*

Governor

seminators of gloom

Let

Thursday, February 19,; 1948

Governor of State of New York

ing its probable effect on the Canadian dollar and the course of the
external market for Canadian securities. Curiously enough the dis¬

the horizon.

CHRONICLE

By HON. THOMAS E. DEWEY*

*

Fears of

FINANCIAL

Foreign Policy Must Be Reversed!

Canadian Securities
By WILLIAM J.

&

plan

fashion

partisan
ablest

be

to

by

run

authority under

directors

business

with

and

men

in

the

a

bi¬
the

coun¬

try in charge.
way

lic

to do

or

a

I know of only one
job well, either pub¬

private, and that is to get

the ablest people we have to.

run

it

and

give

them

full

authority

hold them strictly accountable for
results. I also urged that we agree
among

ourselves

(Continued

that

we

on page

would

31)

"*

Volume

167

Number 4674

THE COMMERCIAL

FINANCIAL

&

(817)

CHRONICLE

21

'

r

Our

Reporter

Municipal Bonds

Governments

on

Amsterdam Wins Over

as

NYSE Chess Team
first

The

By JOHN T. CHIPPENDALE, JR.

cable

By HARRY L. SEVERSON*
A

slightly firmer tone has

been in evidence

in the taxable elig¬

ible

,

obligations with some of the longer maturities still trading above
support levels, which indicates that these securities are being bought
by commercial banks instead of the Federal Reserve banks.
The
statement on Monday by Treasury
Secretary Snyder that government
bonds would not go below pegged levels and that interest rates
,

would continue

.

to hold

holdings,

.

Liquidation of restricted
with insurance companies still

which

...

fairly large

way

the principal sellers

.

ON

COMMODITIES

The attitude of

.

longer-term taxable bank issues appears to be changing, even
though it has not yet been transferred from a potential demand
a sizable actual one.
There is less switching from the middle
and long maturities into
shorts, and; certain commercial banks are
even
letting out a few shorts to go back into the more distant
into

.

tive

It is

.

measures

.

believed

Treasury issues.

.

mean
.

in

loans

important bearing

closely by followers of the

very

of these

of the

State
cal

securities

government

prices, if

it should

i

t n e

While

...

be

sharp

enough

to

the

signal

.

_

.

to

The

new

Harry L. Severson

absorb

increased

the

be¬

market.

volume

pion.
York

of

Some observers

im¬

are

pressed with the large volume of
new

financing and be¬

lieve

the

margin

inertia.

this

took

that'

widened

still

It is argued

position

which

has

than

nicipals for

be

overcome

in support of
institution

an

been

not

must

to

more

buying

mu¬

time will hesi¬

some

'

END

«\4..

PRODUCT

advantage of this favorable mar¬

may

be indicated by the eruption

Jn

the commodity markets, would most likely, result in
/demand for 1 bank credit.
There should not be the
.

.

..

.

vto accumulate inventories, forward buying would be
and would

doubt be curtailed

no

substantially.

need

...

loaning institutions, especially commercial banks,would
cautious and .careful because with the ending of the
would be. greater, risks involved in lending.. This
,'iri fewer; loans,, as well as the calling of less desirable
can be liquidated.
V'.:-r.V v'

.

.

WHAT?,,^;^;:.;V,::;^< • .r.7^^ 77y,

|With ^the

for- expansion; through bank loans, curtailed
<5r ended by a deterioration of economic'
conditions, where; would
bank -and non-bank investors put the funds
they have-been accumu¬
lating (now in shorts) through the sale of longer-term government
.obligations? :;. While it is not indicated that the greater part of the

)^:W

pressure

near-term maturities that have been
be disposed

of, it is believed that

be let out in order to take
,

-With

.

business

the risk

the higher income longer

on

factor

bought by these investors would

substantial amount of them would

a

increasing because of

conditions, institutions would be

maturities!

.

.

.

likely to make
commitments in the longest Treasuries in preference to making

.

loans

that

could

turn

funds.
There

and

to

be

too

not

'

•'

,

wise

7

'

.

on

securities.

government

.

.

.

Now

.

.

: ;••

with

the

market

.

inducement to

buy government securities especially the longerwith the boom ended there would be no need to

because

terms,

about the monetary authorities keeping prices at present

worry

port levels.

\

...

If there is to be

.7

observers

feel

is

"risk

the

then

a down-trend
forecast by the

now

factor"

petitive basis profits
the margin of safety

becomes

more

tions.

This

...

:

.

,

Thus

or

governments

and

AAA

„

a

would

for fixed charges would

lower rated credit

more

com¬

.

,

.

.

going * nearly as far
hoped. With the depletion

as

was

of

these

local

cash

sues
an

are

'•

•With the-increased

the

spread between

credit

bonds (would

be

it

coming to the market at

unprecedented rate.

A consid¬
increase in

securities

tax-exempt

declining

is

finding

doubt recede in price.

...

!<

Long-Term

which showed

and

Bonds,

yield of 1.29% in

a

has

fluctuating

been

around this level for the past few

Thus

weeks.

nicipals than it

upon govern¬

can

A number of factors have

ments.

contributed to this decline in price
increase in

yield

on

;■■'

municipal

Interest rates have risen.

Federal

Reserve

tightened the

money

anti-inflationary
the .large

funds

System has

market

measure.

as an

In view

for capital
business ex¬
as
public im¬

demand

for, housing,*

well

as

provements, and the general feel¬
ing that the danger of still further

tight

policy

money

can

be aban¬

doned in the immediate future.
Second:

EXPECTED

"■ Refunding

of the March

maturities of 2s and

1

7/g%

certificates

...

March/15
no

great

Federal

rate

of

vol¬

tax-exempt bonds comes
market

''An

address

it

becomes neces-

Minnesota,

not

known,

.




.

but

informed

sources

less attractive to
than

inves¬

some

formerly.
There is so
being said, both for and

against

reduction in the income

a

rate

at

this

time, and-larger

exemptions, that it is only neces¬
sary to mention the fact in passing
the

taxes
ence

possibilities
exert

may

Other members of the New
team

included:

Herbert

W.

Dr.

Hutzler!

&

*■

'

Max Euwe, former

World's

the

on

of

reduced

prices

of

municipal

bonds and point out that reduced
comes,

Also,

well

as

the

as

lower

reduced

in¬

rates.

high tax rates have in

instances reduced the" vol¬

many,

of

ume

result from

may

funds

,

..

„

prised: T. D.

which

the

very

wealthy have for investment.

<

Scheltinga, Ve-

reeniging voor den EffectenhandeJ;
H. Kleefstra, De Twentsche Back:
N.V.; U. Crabbendam, Broekman's
Commissie
Bank; W. C.. A.. .L.,
Muller, Labouchere & Co. N.V.;
J. Kempes, De Twentsche Bank.
N.V.; J. Ph. Grondman, J. Ph. -

Grondman; C. L. C. Dekker, Brom
&

Co.;

J.

J.

Weering, Am-,
N.V.; F. van:
Vereeniging
voor
den:
Effectenhandel;
Justus - Meijer,
Kraayenhagen & Co. Reserve wasr
W. J. Bos, Vereeniging voor den
sterdamsche

van

Bank

Setten,

Effectanhandel.

Lynn A. Hart Now
Flynn & Levitt in LA.
(Special

to

A., Hart

has

be given to this question.

The market shows occasional

signs

of

Mr.

411
Hart

West
wes

of the bond
Los Angeles

manager

for

„

associated

Levitt,

Street.

department

Chronicle)

CALIF.—Lynn

become

&

Flynn

Seventh

previously
Our main interest is, of course,
in what will happen from now On,
and as usual, no very definite an¬

Financial

The

LOS ANGELES,
with

What Will Happen from Now On?

swer can

van

bearish influ¬

a

the

office of Carter H. Corbrey & Co.

and

prior thereto

California

was

with First

Co.

some

strength,

and

.

expected

a

to

tion

there

is

most

that

support the conten¬
of the decline has

taken place or, at least, that fur¬
ther declines will be gradual. On

the other
resulted
declines
be

still

heard

just discussed appear to
operating,
and - I have

predict a
marked increase in the prices of
municipal bonds in the immediate
future! What, then, is a sensible
no

.

ers

Feb.

by

Conference,

Mr.

of
Minn.,

University

Minneapolis,

12, 1948.

Severson

We

Offer I

one

recently

dogpaw
gold
Price

wines, ltd.
40(f per

investment

policy in a market
which has just declined and which
may or may not have hit the bot¬
I believe that the

tom?

of

investment

opinion

consensus

is

that

works out best to keep
fully invested. Ordinarily
does not pay to try to pick up

usually

market.

is

substantial,

soon,

bottom of the

Unless the drop

and

in price

comes

rather

the loss in income will more
(Continued

on page

23)

Share

be

obtained

(roffTy® "r Investment Oeeler or
the

undersie"8"1

it

funds
it

V.

.

hand, the forces which
in the substantial price

investments at the
before the Ninth Minnesota Bank¬

is

issues

cash repayment.

of

the

to

increased

the

months that the Treasury has not increased the
that were being offered. .
What the
banks will do with their holdings of the matured

certificates

Reserve

called

ume

As

It was, however, the

time in recent

interest

or

the

23/4S with iys% certificates occasioned

amount of surprise in the financial district.
first

and

exemption fea¬

pear

evidence

•

-

problem at this time, there seems
little reason to expect that the

rather

of

,

Third: The tax

ture of municipal bonds may ap¬

bank with satisfac¬

a

tory earnings, to which tax ex¬
emption is an advantage,.can ob¬
tain a higher net return on mu¬

X

.

.

.

bonds at present rates

relatively attractive to banks.

are

taxes

The narrowing of the spread between bonds irrespective
quality or rating that took place during the war period because
of; the scarcity factor seems to have gone by the board,'* not to
return for some time.
**
• •
.

obtain

can

to,

municipal

resentative

inflation is the foremost domestic

nent.

it

investors
in
the
higher brackets. As noted before,

that

perma¬

■

attractive

yield available on long-term mu¬
nicipal bonds is higher than it has
been for a number of years.
The
"Bond Buyer's" Index of 20 Rep¬

of
-

corporates and lower rated
be

what

securities to investors in the 50%
tax. bracket, and are even more

tax

in

First:

supply of corporate bonds, the widening, of
should

Coe

Bros.

mon

Classes of securities which it

tors

portfolios,

early 1946, or stated
more realistically, perhaps, from
the viewpoint of the investor, "the

The

earnings

/

and

above

upon

much

bonds.

.

increased

finding

are

to borrow, and new is¬

erable volume of this

likely

would be affected by changed

governments, AAA

State and

balances

governments

necessary

pansion,
-

co-

,

most

between top quality issues and the

bonds, which

business conditions.

no

entering into this field
get yields substan-

can

,

not

are

ances

or

purposes.7

corporates

whereas lower rated corporate issues, with
Greater would be the spread

I

on

advance in price, under the aforementioned economic conditions,

V protection
.

some

desirable

funds that must be put to work for income
-

as

decline in commodity prices,
important in the lending and

With business

.

.

in general business,

that governments and only the highest quality
investments for institutions that have

means

be

.

was

and

March and April of 1946, had risen
to 2.36% for the week of Jan. 8,

quite likely to decline and this will cut
protection for fixed charges of corpora¬

are

changed again.
State
governments began to

1948,

investing policies of institutions.

AAA!s. would

sup¬

•.

vV/;"''';

PROBABILITIES

it

ially

reached

price "pegged," every Treasury issue a commercial bank owns is
liquid, be it short or long.
The would seem to be a very'power¬
ful

nice profit. With

v

investable

of

use

a

the end of hostilities the situation

Prices of municipal bonds have
receded from their all-time high

more

has been any doubt about the payment of principal

never

interest

out

...

,

nicipal bonds at

its way into bank

competitive

more

unless

sell their holdings of mu¬

to

team

by I. Kashdan, of
8c Co., U, S. open

local is accustomed to holding. Also, in¬ Champion, and I. A. Horowitz,
stitutions which cannot use tax editor of the
Chess Review of
carry out
;their plans for repairing and ex¬ exemption to advantage, can still New York, adjudicated all games
also be more
tending., their capital
improve¬ get as good or better net returns The Amsterdam Exchange was
boom there
ments.
Other market represented in New York by Hans
Many local governments on taxable issues.
could result
had wisely built up cash balances observers take a different view
Kmoch, international chess player;
ones, if they
for this purpose during the war, and cite the fact that the present the New York team in Amster¬
J. van Weering.
but the costs of construction nave yields on municipals are equal to dam by
Vf.
increased so much tftat these bal¬ yields of almost 5% on taxable
The
Amsterdam
team
com¬

cautious
The attitude of
more

.

THEN

lessened

a

same

tate before

ket

,'r

i

The. ending of the boom, whieh

>.

York

Marache, Granbery, Marache &
Lord; Jacob Menkes, Wood, Walk¬
er &
Co.; Sol Ranheim, Sulzbacfoer, Granger & Co.; Julius Hallgarten;
Hay den,
Stone 1 &
Co.;
Donald Hart, Stokes, Hoyt & Co.;
Joseph O'Reilly, New York Stock
Exchange; James Limberg; Neuberger & Berman; Howard Harnershlag, Hamershlag, Borg & Co.
Alternates were Eric Hassberg, H.
Hentz & Co.: Jacques Coe, Jacques
Coe & Co.; Alfred E. Tonne, Salo¬

coming to the

prospective

.^anks

made

Co., former U. S. Amateur Cham¬

miums for the

;

New

Jacques

municipals are sufficient
bring in enough new buying to

declining supp 1 y. *; Many

the

The in¬

was

opinion about whether

ingly valuable,
bid higher and
higher pre¬

the inter-,

Holland

captained

favor of

tax-exempt bonds

increas¬

in

move

present yield differentials in

the

to

York

champion, and by E. Schuyler
Jackson, of Penington, Colkef &

ference of

ex¬

came

is

t

—

emption

the ;
it

of

end

upon

wealthy

/

'

V boom, then it should have a favorable influence
mediate and longer maturities of Treasuries.

debts,

r

New

by Carel F. Overhoff, President of
the Amsterdam Exchange.

,

still too early to predict the extent of the recession in commodity
i v

govern¬

ments paid off

money

influence

turn

itial

There is considerable dif¬

buyers.

Executive

the

for the New York team.

mu¬

other securities to attract

whom tax

two indices will have

markets.

as

lo¬

and

—

to

Davis,
of

Exchange, made the first
move, in the
absence from the
city of Emil Schram, President,

to offer better yields relative

sary

S.

Stock

.

the policies of the monetary author-

upon

re-<^

during

war

individuals

prices and the course of bank

ities.yJV The kind of action taken will in
position

I

the

and

being watched

are

a

Howland

Vice-President

an

was

versed

;

markets because the future trend
an

trend

.

quarters, with credit restric¬
decline in the loan demand,
higher coupon

some

The movement of commodity

.

;-(.

funds available for the

more

.

.

becoming

„

working, there will be

which will in turn

immediately preceding the Second World War

were

between Exchanges by

RCA.

increasingly popular form of invest¬
ment with commercial banks.
With few exceptions, each new call
report showed an increase in total holdings of insured banks. This

portfolio managers toward the intermediate

some

teletyped

Sees main problem in selection of
commitments be limited to situations

advocates

In the years

nicipal bonds

,

,and

maturities.

in

crease

score

a

satisfactory and improving. Warns of unwarranted in¬
municipal loans and gives advice on bank's portfolio.

••

••

EYE

and

are

Ex¬

Stock Exchange, was
by the Amsterdam team with
of 5V2-4V2, Moves ' were

won

acquire municipals.

or

Chess

Stock

Amsterdam

(2)' increased volume of tax exempt bonds; and
(3) decline in attractiveness of tax exemption. Holds unless fur¬
ther drop in bond prices is soon and substantia], it will pay banks

low, coupled with the loss of income through redemp¬

a

municipal bond prices to (1) rise

in interest rates;

.

between

changes took place on Feb! 14, be¬
tween teams representing the New
York
Stock
Exchange and the

Municipal Service Department, Dun & Bradstreet, Ine.

,

Mr. Severson ascribes decline in

tion of higher coupon obligations and the
feeling that business may
turn down somewhat, are
given as the main reasons for the not too
sizable commitments in the bank issues.
bonds continues in

-

International

match

tellier &
WBreaawoy,

Newark4.N-7-

22

concluding part of a half-hour dramatization of the w^rk
Exchange on Feb. 15, conducted by the Com¬
merce and Industry Association of New York, as the: fifth in t
"Adventures in Industry Series" over Radio Station vV ML-A, rmil
a

Schram
i dent

e s

r

" the

partners operate more than 1,500
in
cities in the United

Ex-

offices

change,
pointed

out

that

Hawaii

by enab¬

ling

corpora¬

there

plants
e

s

and

u

ties

i

r

York

-

Stock

Exchange
are
making a

Emil

Schram

vital contribu¬
tion

to the

American

standard

of

living.
"The

-

of

essence

is the
flow of capital
into
productive
enterprise," Mr. Schram declared.
"Aided by securities markets like
the

Stock

progress

Exchange, corporations

enabled to obtain funds with
which to build plants and equip
are

them.

This, in turn,

better

and

able

to

result
of

is

living

world.

—

American

the

avail¬

people.

The

standard

highest

in

the

The New York Stock Ex¬
takes pride in its vital

change

contribution
•

made

more

the

this

to

progress."

Contending that the Exchange

was
was

an
an

international
uhciwuhiwi

securities,
its

605

Deposits in
almost $1

awarded

the

to

at

group

Mr.

market
mamd

Schram

member

said

firms

and

for
xc

that

their,

of

says 25% of
supply oil for 1500 years. Reports on
development in synthetic oil production.

recent

Enough gasoline
1,500
coal

years

Dr.

of
at

an

of

Society's

New

York

it

is

indicated

gasoline
from

cheaply

it

as

-

can

natural
be

can

that
be

now

gas

as

extracted

from petroleum, the nation's nat¬
ural gas resources

are

limited, Dr.

Martin pointed out.

"The estimated

dition

of

such

reserves

of coal

A quarter of the
proven reserves
natural gas. if

aoplied

to

the

technological improve¬

ments

nls1^ only 400,000 barrels a
day of
gasohne, about 15% of the current
demrnd,
in
addition
to
small
amounts of other

A'n

equal

resources

need

fuels, he said.

fraction

the

of

In addition

liquid fuel—

iil and Diesel oil as well
as
gasoline—for 1,500
years, although
the ^ost would
probably be some"rhrA

fuel-j
i

higher than that of natural
from

petroleum,

Dr. Martin.

Noting

that

two

according

plants,

ican

-q''pped to make 7,000 barrels

of

to

engineers

radically
known

have

different

devised

basic

a

process,

the fluid catalyst tech¬

as

nique, Dr. Martin said.
In

the

German

and

packed

through

with

hot

steel

granular

a

catalyst, emerging

as gasoline and
The tremendous heat

oil vapors.

evolved

was

difficult

to

control

cumbersome apparatus was

a

required.
is

technique, the cata¬
to

ground

and suspended as

in

a

stream

fine

a
a

powder
inside

in

the

Moines

and

either

have

period.

ness

The

the

remainder

is

the
are

furnace

and

fuel

drawn off at the top.

In

Texas

stated

and

that

a

day from nat-

being completed

Kansas, Dr. Martin

the

output

of

these

plants will be of such high quality
it

can

be used for aviation fuel.

As it comes from the
converters,
the gasoline will have an
octane

rating of 95, which

can

be raised




con¬

trolled easily.

of

natural

gasoline

gasoline
gas

is

are

that the

produced

competitive

produced

from

change in savings banks' invest¬

than

more

the

$1

increase

The

outlets.

home,

in

unturn

in

expansion awakened

re¬

building

business

and

interest
among
savings
banks in these channels of invest¬

newed

All indications point to in¬

ment.

banks

activity by mutual savings
in

year

lending 'and

mortgage

financing of industrial expansion

during 1948."

declines

during the current year, the Federal Reserve Bank
An article appearing in the current issue of the bank's
monthly publication, "New Eng-^—
—
—-—
land Farm Finance News," holds earlier and compared with a fivethat
although
some
price
de- year average for the same month
creases may result from the drop
of 64 million pounds
in the grain market, the supply
Lowered
grain prices
should
situation

does

not portend

a

ma¬

jor price collapse in foods which
are
based on grain consumption.
"A
common
assumption," the
article states, "is that good do¬
mestic grain crops in 1948 would
much

erase

of

food

price
problem.
Such
an
assumption
overlook the high percentage of
our
grain crop that is marketed
meat.

as

increased
the

our

Actually, good

1948 could

not

crops

be translated

in

into

numbers of pigs

spring

before
The
pigs

1949.

of

ease the critical position
dairymen, but are not likely to

help to
of

milk

lower

prices

ply
it

two

is

bred

before

her

be

that human

conceded

be

must

the
strength of which
cannot
be appraised,
can
upset
economic reasoning.
"If marked

factors,

develops,

unemployment

if con¬

demand slackens, if heavy

sumer

distressed selling of inventory ac¬
whole

be

analysis of sup¬

an

demand factors might be

or

cumulations

cow

consumers

The article added that however
well-founded

fall of 1949.

Furthermore, it would
years
from the time a

to

below the usual seasonal drops.

would not be marketed before the

and

the

re-as¬

consumption of

sessed because our

meat

be

must

calf

milk,

then

occurs,

outlook

is enough

eggs

yield to rapid correction."

business.

$13,903,691,

ciation

and

all

and

after

taxes

available for interest
603.

Maximum

charges

by

depre¬

financing
$770,000.

the

1951,

that

the

so

baby beef stage, say
it should be obvious

meat

situation

will

not

the

balance

$3,433,-

against a large-scale reduction in
food prices were listed as follows:

annual

interest

all * First
Mortgage
outstanding after this
will require less than

Because

of

decreased

ORLEANS, LA.

as

compared to 156 pounds

and

—

of

was

Institute,
to

woman

cent

bred to farrow in the

1948

in

head

the total

heifers

Morgan,

Los

Vice-President,

wood

Vice-President.

two

number
years

C.

on

feed

of

old

cows

or

chairman of

is

The number of

Jan.

Storage stocks
1, 1948, were 24

Second
L

versus

Class

protective

a

A preferred

Edward G. Mc¬

Corporation, Ltd.

Laughlin has been named Secre¬
tary and the law firms of
man,

1,

1948

of

butter

million

28 million pounds

was

and
Jan

pounds
a

Kauf¬

Gallop, Climenko, Gould &

Lynton in New York, and Hyde &
Montreal

in

have

been

made counsel.

The Superior Court in Montreal
on

Jan.

27th

year

set

aside

the

com¬

pany's reorganization plan at his
request,

Mr.

committee

El-

of

and

over

12% less than a year earlier
the lowest since 1940.

Angeles,

and

Knapp, Pittsburgh,

Ed¬

as

Ahern

cattle

were

spring

A reduction of V-k million head

Other

chosen

sows

production.

be¬

ment

of Joseph Mayr

has announced his appoint¬

as

with

officers

fewel*

compared with last
spring. It would take two to four
years of fairly good corn crops to
get a marked increase in hog

Mrs.

Loan

could

stated.

stockholders of the St. Lawrence
per

expected in 1948.

O.

Mayr,

committee

were

Milwaukee

of

coming the first

First

Joseph
& Co.,

Eleven

Am. Savs. & Loan Inst,
Lowe

was

Mayr to Act for Stkhldrs.

pounds

Mrs. Ruth Lowe Pres.

ward

accumulate," it

supplies,
per capita meat consumption in
1948
is
likely to be only 144
in 1947.

NEW

above prewar that surpluses

.Other factors which would work

was

on

thesis from coal is not yet devel¬
■

of

rate

creased

reaches

ice

oped to this point."

-.

each

,

during

the 26-year-old educational body.

syn¬

;

of

from

petrol¬

eum," Dr. Martin said, "but

10.7%

behind

During
that 12 months period total oper¬
ating revenues were reported to

and

Savings

"Present indications
cost

goods have reduced the
saving from the abnorm¬
ally high figures attained during
the war years, deposits in mutual

consumer

shortage of meats and other products.

erate

elected President of the American

be

save.

of Boston states.

its

Ruth

can

to

Barring unpredictable changes in demand, the supply picture
indicates that prices of food can be expected to register only mod¬

serv¬

and

temperature

the

deter¬

Federal Reserve Bank of Boston gives data indicating continued

in Des

The process is rapid and efficient
the

the

is

people

our

Although the high cost of living
and
the greater availability of

ment

assets

in

t

-

nthetic gasoline
*:ral gas, are now

over

brought this figure to a new high
total of $19.7 billion.
Principal

the

from

added

an average of

increase

billion

350,000.

and

been

additional
reserve
dollar of deposits.

population in
During the 12
months ended Oct. 31, 1947, ap¬
proximately 74% of its gross op¬
erating revenue was derived from
its electric business, approximate¬
ly 25% from its natural gas busi¬
of

same

representing

estimated

an

special

Surplus and guarantee funds in¬
creased
$110,000,000 and at the
year-end
stood
at $1.9 billion,

counties in the State of Iowa hav¬
1940

other

and

the

ices in other municipalities, com¬
munities and rural territory in 23

ing

Schwulst

B.

of

The gain in depositors has

accounts

com¬

both

or

Earl

against

struggle
inflation

of

savings banks increased $169,000,steady, with savings banks 000 during December, 1947 (the
serving nearly 1,000,000 more largest average monthly gain
regular depositors than at the time since 1945) to bring the yearly
of VJ-Day.
In addition, 700,000 total to nearly $1 billion.
;
special depositors in school or club
"The
year
1947 witnessed» a

Iowa Power and Light Co. fur¬
gas

forces

mination

now

additions.

electricity and

most

been

additions already acquired or con¬
structed and for further property

nishes

Schwulst

continuing

Christmas

clubs.

property

for net

commenting to the report,
said, "One of the
encouraging factors in the

In

of school children and individuals

a

Gas

gas

furnace.

continually pumped in at the bot¬
of

pany's treasury

of

sale

reimburse

Mr.

savings banks, of which 14,500,000
are regular deposit accounts and
3,800,000 are made up of savings

swirling cloud

hot

of

chimney-like
tom

will

in

accounts
in
mutual

Bonds to be

In the fluid

lyst

bonds

the

Governments.

18,300,000

now

2.95%.
from

in
of

peak
years

operation

approximately

yield

to

$116,000,000 in corporates and mu¬
nicipals and $1,095 billion in U. S.

this country.
There
are

Halsey, Stuart & Co. Inc. and
associates,
on
Feb.
16
were
awarded
$6,000,000 Iowa Power
and Light Co. first mortgage bonds,
3% Series due 1978, on their bid
of
100.51%.
Public offering of
the
bonds
is
being
made
at

Proceeds

pared with increases during 1946
of $249 000,000 in mortgages,

savings banks
to
$17.8
bil¬
lion,
an
all132

in

mortgage loans, $330,000,000 in
corporate and municipal securi¬
ties ancl $260,000,000 in U. S. Gov¬
ernment
securities.
This com¬

out,

deposits

time

were

$380,000,000

of

increase

an

This

gain

the $1 billion

items in

Mr.

mutual

of

recent

100.99%,

National

Mutual Savings Banks and Executive Vice-President,

brings

total

com¬

petitive bidding Feb. 17.
Proceeds from
this financing,

heat

process,

passed

were

vapors

each

fur¬

developing a far
efficient iron catalyst, Amer¬

more

would supply the entire

for all tvoes of

fue1

that

tinued, pointing out that the co¬
balt
catalyst,
or
chemical
stimulant, used by the Germans
produced only a low-octane fuel.

and

coal

plants

nished Germany with much of her
gasoline during the war, he con¬

tubes

fur-

the

over

gases

decades,

ex¬

resent vast

dur'rg which time

would

he

installations will rep¬

manufacture of liquid fuel,
would
be exhausted within
two
it

compounds

lead,

new

so much

greater than those of
atural gas as to suggest that the
I ng-term
development must be
v th
coal," he asserted.

anti-knock

.tetraethyl

as

plained.

•

of

required 100 rating by ad¬

The

Although

r re

from

the' to the

City,

synthesized

for

Standard

Section in the Hunter

Playhouse,

premium

demand

only a quarter of its known
Martin, Assistant Director of the De¬
Oil Development Co., Eliza¬
all-day^

the

symposium
on
Feb.
14
American Chemical

College

meet the nation's total

Homer Z.

velopment Division
beth, N. J., .declared

New York

to

be manufactured

can

reserves.

and oil

5.6%,

pointed

Foiesees Vast Source of Gasoline Halsey, Stuart Group
And Oil in Coal Reserves V Offers Iowa Pwr. Bonds
Homer Z. Martin, of Standard Oil
Development Co.,
U. S. coal reserves can

U. S. increased

banks of the

savings

Schwulst

yield approxi¬
The bonds were

2.91%.

mutual

bowery Savings Bank, New York, reported on Feb. 12.

accrued interest to

mately

the

represents an
increase

$25,000,000 Philadelphia Electric
Co. first an.d refunding mortgage
bonds, 2%% series due 1978. The
bonds were offered at 99.25 and

together with proceeds from the
sale of 150,000 shares of
4.3%
$100 par value preferred
stock, will be used to finance a
construction program through
this country, Mr. Schram pointed 1948 and the early part of 1949.
but that a substantial majority of The program contemplates expen¬
the most successful comoanies in ditures of approximately $235,the nation are listed, and observed 000,000 during the six year period,
that "there is a certain prestige 1947 to 1952, inclusive, of which
attached to a company which has about $48,000,000 was expended in
and* about
qualified
for admission
to
the 1947
$50,000,000
is
Stock
Exchange
list."
As
to planned for 1948.
The bonds will be redeemable
benefits, in addition to "superior
marketability," corporat'ons listed upon not less than 30 days' no¬
on
the "Big Board" obtain, Mr. tice, at the option of the com¬
Schram noted:
pany, as a whole or in part, at
;
"The
stock
ticker
keeps
in¬ prices ranging from 103 if re¬
vestors constantly informed about deemed during the 12 months pe¬
orices paid for securities on the riod ending Jan. 31, 1949, to 100
Exchange.
Newspapers and fi¬ if redeemed during the 12 months
nancial services give wide public¬ ending Jan. 31, 1978.
Following completion of the
ity to the record of prices on the
Ucker.
Corporations whose se¬ present financing the company
curities are bought and sold on will have outstanding $205,000,the Exchange are named daily in 000 first and refunding mortgage
these
newspapers,
thus further bonds, $73,640,910 of preferred
stock, including premium of $1,Publicizing the companies and, in¬ 168,910, and $137,816,005 of com¬
directly,' drawing attention to mon stock.
Outstanding funded
debt ' of
their products or services."
; subsidiary
companies
amounted' to $40,168,185.
of com¬

number

5.6% during 1947, with 18,300,000
savings.

billion during 1947, Earl B. Schwulst, President,

m2l0<ia^on
The

.

means more

products

ever

with

relationship

Although the

New

the

concerns

Mortgage Bonds

underwriting group headed
by The First Boston Corp. on
Feb. 18 offered
a
new
issue of
An

panies listed on the Exchange is
?mall compared to the several
hundred thousand corporations in

markets

like

of other
which have a

First

the member firms.

them,

c

addition,

in

offices

2,700

are

correspondent

which to build

equip

that,

and

securities

with

foreign countries

six

and

well,

as

tions to ob+ain

funds

in Cuba, Puerto Rico,

States and

Savings Banks Deposits Reach Peak

Earl B. Schwulst reports gain of

accounts, aggregating $17.8 billions in

of the New York Stock

P

Thursday, February 19, 1948

Mutual

Offers Phila. Electric

At concision of story, N. Y. S. E. President points out importance
of securities markets to national and world economy.

of

CHRONICLE

Board' First Boston Group

Schram Aids in Dramatization of 'The Big

As

FINANCIAL

&

THE COMMERCIAL

(818)

with
ers.

Mayr

other

he said.

stated.

The

to

correspond

preferred

sharehold¬

intends

Volume 167

Number 4674

SEG Enters

THE COMMERCIAL

the

Accounting Controversy

would

materially distort it as a
reflection of the results achieved
by the business

under

tions prevailing

the

condi¬

satisfy the needs of investors

during the period.

this

subject

special item to permit

a

reader

to

judge

item to

an

cluded

be

its propriety

included

ex¬

or

in

such abuses

its

on

noted

prominent
banking
house
has
in practice, it is im-

that,

the loans.

as

regard

that

to

they

which

not.

do

The

therefore,

urges,

accountant

reliance

a

the

on

interpretations
of
management
professional accountants to

and

make

this

distinction.

The

or

a

and

which

funds

if

cline,

be sold

to

obtain

convictions.

I

have

I

this

at

price

differentials

between

low

and

grade municipal
increase.
In the war

will

years

much money as

tion

the

cost

at

reasonable

be to

to

seems

investment

lower

A

work

out

based

program

a

posi¬
an

upon

the probable trend of deposits arid
demand for loans, and to invest

funds,
plan,
A

in

accordance

they

as

mistake

with

become

this

available.

in

arranging the ma¬
turity schedule of a bank is seri¬
indeed.

ous

The

banks

which

Stayed in shorts from the middle
of the

1930's to the middle of the

1940's

because

increase

though

true,

an

rate, lost

income

even

expectations

later

of

their

came

interest

deal

great

a

they expected

the

in

while

those

banks

■which switched into long maturi¬
ties three

to

take

four years

or

substantial

a

What Bonds

stand

ago

capital loss.

and

low

decreased.

grade bonds

The

quite different.

outlook

is

The ability of the

the larger budgets, due to a higher
price level, deferred maintenance,

as

you

Should Be

that

agree

should be invested

as

they become

purchased.
a

With

so

many

new

coming to the market and

considerable volume of old

ones

constantly reappearing in the sec¬
ondary market, there is no reason
why a bank should not be able to
find
exactly what it needs to
round
out
its portfolio.
If you
have doubts about the credit qual¬

ity of

a

bond,

or

if

you

group it would be a
to overlook its bonds
of investment.

feel that

the maturity is too long for your

The

mis¬
as

a

banker,

lives, but it is sometimes difficult
evaluate

one's

home

situation

both

able
we

favorable

factors

to

is difficult to

basic

if

situation

a

and

it

spectacular

have little real

Most of

us

sig¬

find it easier

neighbor's faults than

our

own,

or

dislike

we

on

the mother

hand,

the

Mayor there is
tendency to feel that everything

he

does

is

wrong.

In

the

trouble

banker

can

influence

fiscal

policy,

interests

as

a

in

but

times
often

favor

of

seem

Moreover, his

as

of
use

sound

sometimes

citizen

counter to his interests

tor.

to

his
run

credi¬

a

position

as

a

creditor may make certain groups
suspicious of his advice. In de¬

ciding the amount of local bonds
to hold, consideration should be
given to the fact that the price

trends

the next few months,

over

of bonds with

tancy in letting it pass. The time
is definitely passed when an in¬
vestor

to accept a second
Furthermore, there is no
to hurry in making a deci¬

obligations of

You

vestors

you

need

have

no

hesi¬

needs

choice.
need

sion.

to
of

can

take

an

extra

day
fear

study the credit without
missing a rare investment

op¬

portunity.
There

are

advantages and dis¬

advantages to
in

the

cality,

a

bank's

investing

obligations of its
and the amount




market

a

who

unknown in

names
were

stances eagerly

in

bought

were

in¬

many

by in¬

up

familiar

the

particular situation.

sult

with

The

re¬

that prices of many bonds
of this type reached levels equal
to those of the best known names,
and
were

such

tions

in

some

state
or

individuals,

fore

they

afford them.

can

a

prehensive and current files

municipal
folios.

bonds

These

in

releases

to

cases

and

local

where
tax

there

exemp¬

other privileges of value,

The time

trouble is while
still high and signs

are

weakness

of

both

for

prepare

incomes

all

port¬

are

constructive" and timely.
to

on

their

are

just

beginning

appear.

which

Obviously,
credit file
A

building

is

not

of

mass

thick

a

in itself.

end

an

miscellaneous

pam¬

phlets, folders and clinpings,
contain

much

valuable

may

informa¬

tion. but it is certainly forbidding
until
the
irrelevent and unim¬

portant data has been sorted

out

and the

in

significant facts presented
orderly manner.
A credit

an

file

should

be regarded

without which careful

as

a

tool

analysis is

impossible.

Seven years ago, Ed¬
die Wayne and I presented an out¬
line for the analysis of full faith
and credit

ference.

obligations to this

This

material

was

con¬
re¬

leased in

an expanded form later
in 1941 in the Report of the Com¬

mittee

on

Municipal

Obligations

of the National Association of Su-

oervisors

often
Pres¬

cannot

Banks

"Municipals."

under

Most of

this audience will recall that Larry
Lunden
was
a
member of
this

committee, and that Eddie Wayne
its Chairman. Since Part II of

was

this report deals with the analysis
of the credit quality of general

obligation bonds, and since I wish
to

save

for

as

the

much time

less

formal

as

part

possible
of

this

afternoon's session, I shall not at¬

tempt to
the

outline

analysis

of

but rather point
lems

which

I

a

be

financed within
of

framework

system.

the

procedure for

municipal bonds,
up

think

a

few prob¬

are

particu¬

a

duced only with great
pain, and it
be added that most so-;
called reform measures add to

this
The debt retirement pro¬
gram should be set
up with the
definite goal of getting the debt
paid and maintaining as much

flexibility

possible.

as

ment

in
good
amortization of

riods

This

can

Increased

years.

It is, of course,

It makes possible re¬
duced appropriations for debt re¬
tirement in depressions, and drains

system
tions

before

are

additional

obliga¬

incurred, since it is much

easier to get a new

or

pressure

is

be

worth

but

most

to meet debt service.

which

have

Com¬

expanded

find the high costs of
construction particularly burden¬
recently

it

for

in

them

its

pet

themselves,
will

maintain and

auguration

would

require
their

build

in¬
a

up

higher level of expenditures and

en¬

shortage of

a

while
of

to

money

contribute to further rigidities.

over the prospects of a
improvement than when the

pressure comes from

of

group
hand to

on

Many of these projects

are

thusiastic
new

part

a

project.

higher tax

levy when the community is

since every
almost sure to

ness,

capture

Before

we

the

to

go

question

period

I would like to bring to¬
gether the material which I have

attempted to present.
It appears
that the money market will con¬
tinue to be tight for some time to

However, we should not come, but there is reason to ex¬
quick to conclude that the pect that the Federal Reserve Sys¬
bonds of these growing communi¬ tem, through its
policy of support¬
ties are not satisfactory invest¬ ing the government bond
market,
some.

be too

ments, for such areas are likely to
have some very definite advan¬

which

tages.

for

account

their

growth, and they may be fortu¬
nate in being spared from accu¬
mulated unsolved problems of the

which
neighbors.
past,

(3)

their

plague

will be successful in
keeping any
declines in the prices of bonds

orderly.

record

of

a

community is always an important
indicator of credit quality, but it

In

generaly

the

been

it has

past

profitable

vestors to hold

for

idle funds

that

banks

it

to

funds

would

make

become

available,

turities that fit in with

plan

wise

be

in

an

indications.

as

A quick review of
experience of the last few
years
may
be very misleading.
During the war it was almost im¬
possible for a local government

posits.

to

tion,

Consequently, prac¬

maturity

as

ma¬

overall

out in relation to the other

the

of

for

investments

which should be

much effort.

in¬

in the

is necessary in a period such as
the present to look behind surface

spend money, and taxes, even
delinquent levies, came in without

not

expectation that interest rates will
go higher.
It would seem, there¬

fore,

financial

The

older

distribution,

carefully worked
assets,

well as the character of the de¬

At present market prices

the yields on

banks, which

municipals will give
can

use

tax exemp¬

relatively attractive yield.
Since the floating supply is
large,
a

bank

tically

all tax collection records
good'. The real question is.
has the unit taken advantage of

suited

to

select particular issues
its
individual
needs.

look

There

are

great differences in the

this

ernments to meet

its

period of high incomes to put
house

order?

in

the

Is

com¬

munity making

a

can

ability of the different local
den

caused

by

gov¬
the added bur¬

higher prices and

an adequate ap¬
propriation for capital improve¬
ments?
This, of course, may be

mental services, and commitments,
even more than
usual, should be

either

restricted

paying

by

struction

out

of

for

new con¬
income

current

by retiring debt. The various
plans which have become quite

popular in

poning
some

principal
vague

likely to be
are

quarters for post¬
retirements to
future
period
are

some

slick.

as

dangerous as they

Incomes

are

excellent

and contributions toward the pay¬

of

ment

capital

improvements

should be heavy now.
.

(4)

Since

it

is

inevitable

ments
a

must

unit

should

be

to

advance,
increase

the
its

ability
receipts

carefully studied.

are

The

income of the community may be

to

situations which

are

only

satisfactory bur which
also improving. In a period In

which many basic economic read¬
justments are taking place, it is

extremely

important

bonds issued by a
a

to

select

community with

promising future, rather than

good record.

a

Investment decisions

based

upon
vague
impressions
gained in the past may prove very
costly indeed.

that

the budgets of most local govern¬

of

the demand for improved govern¬

not

At last

we

have

ket in municipals.

a

buyers

There

mar¬

are now

relatively good investment
opportunities to be found in this

many

field

for institutions and

uals who
to

>

principal in pe->
high income serves two

of

purposes.

existing

or

State

of

the title of

but difficult to
proposition.
budget can be res-

practical

a

might

Are

public policy to make any
necessary changes in the revenue

Problems in Municipal
Portfolios

as

Most items in

off the cash
during prosperity. A
infrequently argue substantial cash
balance is always
for improvements, which, in them¬
a potential source of serious
weak¬
selves, are highly desirable, but

munities

officer, a little careless¬
period such as the pres¬
ent will result in a portfolio of
bonds which were good. The bank
supervisory authorities have re¬
cently issued a number of releases
urging bankers to maintain com¬
in

on the expendi¬
budget is likewise

groups not

vestment

ness

was

lo¬

own

of

the

like

sure

cash

When

distinguish between

trends

see

our

consider.

too close to

are

munities,

improved
services, varies widely. Decisions
based upon past impressions are
subject to an accumulation of er¬
rors.
If luck is not with an in¬

unfavor¬

and

strictly local mar¬
ket, may be unsatisfactory. Dur¬
ing the war, when there was a
shortage of tax exempt securities,

portfolio,

demands for

as

objectively, especially when there Significant
are

his

issues

the

of

course,
knows a great deal
about the community in which he

of- course,

be

Some

of

available,
and
that
municipal
bonds provide a suitable field for
investment, the next question is,
should

is

should

ferred

a

what bonds

which

squarely.

nificance.

funds

hold

but relatively unknown local gov¬
ernments, and if the bank's home
town happens to be in this pre¬

to

excess

which it wishes to

question

well

as

highest grade municipal
bonds
are
obligations of well managed

to

improvements.

sounder

emphasizes

painful.

highly desirable,
obtain

issue?

desire the finer things of life be¬

revenue

policy
be faced

take

bond

passage

problems

new

Flexibility

ture side pf the

a We

be

at present prices?
What are the
projected building programs? A.re
they in line With the financial
abiiity of the community? Com¬

now

a

means

citizens

that the

make the reorganiza¬

even more

(5)

re¬

be clone only
by providing for
community afford to build heavy contributions to debt
retire¬

the

can

were

events which

Purchased?
If

bonds

the

capital

high

share basis,

per

the importance of this point.

tion

to

needed

system.

bring

will

will

governments

revenue

are

which

prod¬

is likely

of
make

of time

How

produce

to

their

The chances

com¬

the schools, streets and water sys¬
tem reasonably adequate? If not,

the

(Continued from page 21 >
period.

in

taxes throughout the

the

of

sult that the differentials between

Bank Investments
offset

the

the

are

all municipal bonds
appeared, on
superficial analysis, to be improv¬
ing. It was almost impossible for
the local governments to spend as

fail

forms

(2) The extremely high cost of rigidity.

that

high
bonds

it

there

obligations

which

been

construction makes it necessary to
look critically at the condition of

time should

be limited to situations which
not only

will

pay

life

the

Have

as:

If so, are there other pos¬
of income?
In other

to

definite

convinced

am

commitments

Does
which

words,

deposits should de¬
if the demand for loans
should increase.

point

especially

period of rising

a

sion is usually found.
The con¬
servative course would be to avoid

sources

they wished, and
taxes, including delinquent levies,
were easy to
collect, with the re¬

Municipal Bonds
than

assets?

the

one

become

may

Prospective investors will
do well to
investigate the methods

steady and profitable mar¬
Does it depend upon
wasting

sible

or

On

for

a

ket?

available,

various local governments to meet

later

ucts
be

obligations, about

can

machinery will

prices.

community withstand de¬

pression?

home town are high qual¬
and put the balance of the
funds available for investment in

ity,

shorter period, on a total

even

or

will the

of your

is

questions

postwar

adjustments
made satisfactorily?
Is the
munity making progress?

volume of local issues, if the bonds

information

legal

burdensome in

trivial, and there
which need to be
further research to

by

such

answer

the

limited

a

the

services

gaps

in

a year

emphasis of net profits for

George D. Bailey, President of

im¬

but very prevalent, over¬

proper,

or

filled

municipal bonds which has always
is

thorough.

this is

arid

often

are

local

of

unusually

reason,

irrelevent

sub¬
general hazards
are

holding

be

some

the bondholders any good

unless

gather it in to the public treasury.
Tax rate limitations and other re¬
strictions on charges for various

sort

One compromise in

the

entirely satisfactory, but this will

munity, but it is a tedious task to which are used to avoid these lim¬
the significant data from the
itations, for some method of eva¬

most

holding

satisfactory but which
management to de¬ are also
improving, or at least not
so
that the report
deteriorating. I expect that the

ating performance and those

sus¬

manipu¬
lations could be" occomplished, if
So
desired, under any rules of
practice.

is

same

which

the issuing corporation

on

investment

in misleading income and earned
Surplus statements."
Obviously,

however,

bonds

to the

The
of

present

a part of
analysis which it is easy to
slight. There is usually no short¬
age of information about a com¬

roughly the

quality.
disadvantage

general market

and

result

may

local

ject

of

names

credit

ing) is

exceptions to the conclusions stated
in the bulletin because of fear that

ceptible to abuse and

known

same

the

the

for comparable maturities of bet¬

determining income.
Respons'bility (for so determin¬

takes

For

markets

money

at

23

not do

should

to have considerable

-

nrocedures "seem to be

prevailing in the

purchase

supports, although not unani¬ oossible for
mously, the current onerating per¬ scribe items
formance concept.
The Security reader can
properly distinguish
and Exchange Commission; how¬ "those
which affect current oner¬

Such

the

me

as

American Institute of Accountants

it

all

offered, the price will natu¬
rally sink to something below that

to

respect to

A recent bulletin (No. 32) of the

that

able to absorb

are

merit

public accountants."
Certainly, the judgment of man¬
with other years and with similar
agement and professional account¬
figures for other companies.- Ob¬ ants would seem to be
better than
viously,
the
current
operating the reflection of no judgment at
performance concept accomplishes all.
this best.
An accountant of a

has indicated

buyers

seemed to

"It is seldom possible
enough information with

give

the

might be
accounting

t^ey must be able to compare net
income of a company for one year

ever,

longer

local

to

regarded solely as an
problem, investors and creditors
should be vitally concerned since

.

the

market

creditors.

The "all-inclusive" concept would
include all items regardless of the
distortion involved. Although os¬

tensibly

and

investment

significant

(1) In a period of rapid read¬
justments the study of the eco¬
nomic
basis
of
the
community

bonds

serious

countants, in an article in the Jan¬
uary
issue of "The Journal of
Accountancy," indicates the fail¬
ure of the all-inclusive
concept to

would

and

ter

(819)

time,

the

no

the American Institute of Ac¬

cept sharpens net income for* the
period
to
eliminate
items
that

larly

again,

Discussion has increased in recent
weeks regarding a subject of
real concern to all members of
the financial
community. Involved
are two different
concepts of "net income" in corporation reports,
undoubtedly the most important single factor used in
measuring a
company's performance. The "cur-f,
con¬

bonds

went

enter

enter

operating performance"

such

CHRONICLE

higher than those of general
obligations. As these units

even

only items relating to "current
operating performance" in income statement.

rent

of

prices

FINANCIAL

market

Takes exception to conclusions in Bulletin of
American Institute of

Accountants which

&

can

advantage.

use

tax

individ¬

exemptions

24

THE COMMERCIAL

(820)

FINANCIAL

&

individuals

When

Today's No. 1 Problem—The
Depreciation of Our Currency
(Continued from page 2)
services means various things

and

to the

sale

for

fered

and

the

relatively

large demand for them.
In brief, on the

people of the United States.

supply side, the

whether one is long-drawn-out business depres¬
sion of the 1930's kept production,
dealing with the cost of living of
with some exceptions, at relatively
people in general or of a certain
low levels.
Then the period of
grpup of people, with the values
the war reduced
production of
of
people's property,
with the
purchasing power of people's sav¬ goods for civilian use to an ex¬
ings accounts, insurance policies, tremely low point. Various gov¬
It

depends upon

in

investments

and

government

with the purchasing
power of the wages and salaries
of people in general or of groups
of people, and so on.
If
an
individual is obtaining

securities,

*

dollars

power

of his dollar de¬

clines, he is gaining in the face
of rising prices. For example, this
tends to be the case often, per¬

in general, with farmers—
their incomes, for a time, tend to
rise faster than their costs, and

haps

give them, for
that period of time, a real increase
in purchasing power.
Because
the
early stages
of
sharply rising prices tend to bene¬
fit farmers, they and the officers
their

profits

may

!

of

farm

organizations are gen¬
erally pleased with that state of
The fact that such a rise

affairs.
in

prices is a prelude to a later
drop does not seem to alter the

generally

position
farmers

as

a

by

taken

group

the

and by many,

if not most, of the officers of farm
organizations.
As another example, the bank¬
ers'
business
interests
are
pri¬

policies during the 1930's

the

and

acted

as

period of the war also
depressants on produc¬

tive

activity.
Monopolies,
both
business and labor, have also been

factors.
On

rapidly than the pur¬

more

chasing

ernment

the

demand

been

factors

have

ment's

policies

chief

side, the
the

of

govern¬

and

money

credit

expansion in which were
employed a variety of devices; the
low interest rate policies of the
government which invited heavy
borrowing
and
spending;
the
abandonment
of
the
gold-coin
standard, thus depriv¬
ing the people of a direct control
over their government's manage¬
ment of the public purse; the war,
monetary

which caused and invited unprece¬
dented

spending and the growth
of an unprecedented volume (for
the United States) of money and

resting largely on gov¬
ernment debt; the widspread no¬
tion that debt and spending, rather
than production, saving, and hard
work, provided the roads to sound
economic prosperity; the loans and
gifts extended to foreign coun¬
deposits

gold-coin standard forces
the redemption of promises and,
therefore, restricts the banks and
government to the issuance of
promises that can be redeemed.
Any issuances of promises to pay
banks. A

to

intent

without

is

redeem

immoral.

economic and

un¬

Much of

trouble with currency depre¬

our

today has its origin in
immorality. All our paper

ciation
such

outside the Federal
Reserve banks, except silver cer¬
tificates, carries a promise to pay
which is "fulfilled" by the sub¬
stitution of another promise of the
same
kind.
The only exception
in

money

use

arises when silver and minor coin

is

this money
overvalued money in so far

utilized, and

are

an

When

cerned.

even

is

content

metallic

its

as

a

Thursday, February 19, 1948

CHRONICLE

con¬

government and

banks issue promises that are not

fulfilled, the standard of integ¬
rity is besmirched by a lack of
good faith. The promises of our
government and banks today are
not good, in so far as our circu¬
lating paper money is concerned
(silver certificates excepted), and
the value of these promises is de¬

choose

can

and other
coin and paper money, they will
choose what they
regard as the
silver,

gold,

between

in doubt

most valuable one when

regarding the value of any of the
other money. The factor of con¬
in

venience

the

of

use

paper

gives way to the desire for
When
governments
or
other prom¬

money

safety.

banks issue money or

that raises
value, those

ises to pay in a manner

doubts

their

to

as

entertaining such doubts
demand gold in lieu of the

people
will

silver,

deposits,

bank
securi¬

or

money,

paper

or

government

or

These demands for gold be¬

ties.

flags of warning to the

red

come

issuing
fulfill

authorities.
They
must
their promises to pay or

trouble; they must put their

face

affairs

financial
A

in

order.

standard and sys¬
place in the hands of
every individual who uses money
some
power
to express his ap¬
proval or disapproval of his gov¬
ernment's
management
of
the
gold-coin
thus

tem

people's monetary and fiscal af¬
fairs.
It gives the people
of a

in

funds

the

competitive money
markets at competitive rates.
Most of

our

Federal debt should

be funded into

long-term consols

try in which no stigma is attached
to those leaders who run to Wash¬

ington for a handout. Indeed, it is
an
accepted practice.
While we
uneasy

are

all doing it and

people in general have not under- *
stood clearly the causes of what
has

happened to them. Congress-'
are
worried; they are, ap-;

men

parently, not weaker in character^
nor more corrupt than Congress¬
of

men

generation ago. The dif^I
they are caught in-

a

ference is that
a

the

spending of their money was

largely

destroyed

brake

that

since

been

on

public

spending and the creation of cur¬
rency was removed.
. ■«
The hope of the people now lies
with
their
Representatives and

Senators
in
Congress. 1 But all
bearing a rate of interest suf¬
these legislators have been, and
by the government, ficiently high to induce non-bank
marily in the market value of
like
monopolies, has tended to institutions and savers to invest are, subjected to the merciless
their assets whereas the public's
drives » of
all sorts of' pressure
affect both supply and demand in them and to hold them.' These
interest is primarily in the pur¬
adversely. Price fixing, except in higher rates would put sharp re¬ groups. Most members of Congress
chasing power of their deposits,
those cases in which rising prices strictions on government borrow¬ can stay in office only if they
securities,, insurance and other
would not have encouraged greater ing and properly allow people a accede to, the demands of these
savings.
As a consequence, the
production, has tended to aggra¬ better, rate of return on their sav^ highly-organized -pressure groups;
banking fraternity as a group is
The facts in respect to this situa¬
vate the distortions by depressing ings. •
rarely aroused when a nation be¬
Government buying of goods to tion should be clear by this time.
production and by encouraging a
comes involved in a depreciating
aid Europe should, in so far as is We point out that Congress has
greater demand.
currency
resulting from rising
possible, be diverted from the degenerated into a body that does
prices.
It is for this
reason,
The Needed Correctives
United States to other countries little more these days than to vote
among others, that the banking
Since the causes of our currency as should the purchases by those away the people's money and tc
systems
throughout
the
world
depreciation are many, so are the governments to whom we extend dissipate our national patrimony
have usually gone along with an
cures.
In principle, those forces loans.
This is imperative in the in response to the demands of all
inflationary tide and have in gen¬
that increase production relative case of such depleted natural re¬ pressure groups that command a
eral done practically nothing to
substantial number of votes. Tha'
to demand and decrease demand sources as oil.
help
a
government
save
the
But what we do
relative to the available supply
Thus far, the chief attention in is true enough.
people from the depreciation in
of goods and services should tend Washington and in popular dis¬ not seem to recognize is the fact
the
value
of
their
purchasing
that every Congressman has been
to bring the decline in purchasing cussions has been centered in at¬
power.
Where central banks are
tacks on symptoms, not causes, of placed in a weak position in the
power of money to an end.
tools
of
government treasuries,
face of the demands that can be
Price fixing is not helpful, ex¬ our currency depreciation.
this
complacency is most pro¬
made upon him because the peo¬
cept where rising prices will not
nounced.
A
Return to a Gold-Coin
ple have lost direct control over
induce
greater
production, be¬
Were one to survey the effects cause
the public purse as a consequence
Monetary Standard and
it
discourages production
of currency depreciation on dif¬
of the loss of a gold-coin standard
System as a Basic
and invites greater demand.
Ra¬
ferent
Corrective
and system.
individuals,
groups
of tioning, ordinarily an adjunct to
So long as the Treasury and
people, and institutions, he would price fixing, deals with results
Of
the
recommendations
just
find that many individuals and or
symptoms; it does not in any made for terminating the depre¬ Reserve banks can issue promises
businesses occupy a mixed posi¬
ciation of our currency, probably to pay which they do not intend
important way reach causes.
tion.
Some own property which
Lower taxes on producers should the most potent would be a return to redeem, and do not redeem ex¬
appreciates in value while the encourage greater production.
by this country to a gold-coin cept in other promises which are
value of their bonds, insurance,
irredeemable, Congress
Lower tariffs and the removal monetary standard and system. At likewise
and savings accounts depreciates.
of obstructions, domestic and for¬ the same time, it is, apparently, can spend and spend and generate
The effect of the declining purthe very thing of which we are
eign, to trade should stimulate the corrective that is least under¬
now beginning to be,afraid at this
ing power of the dollar is, there¬ production and enable people to stood by the general public
and,
fore, different for people occupy¬ buy more goods and services with
late date.
possibly, by the majority of Con¬
ing different positions, having dif¬ their money.
Were we on a gold-coin stand¬
'
gress.
ferent
sources
of
income, and
Monopolies—both business and
profligate
spending would
When
the
gold-coin standard ard,
owning property in differing labor
should
be
broken
send
up.
up
red flags ofj warning
was withdrawn in
1933, the peo¬
forms, in our economic system.
Feather-bedding and all obstruc¬
throughout
the
nation.
People

tries.

Price fixing

-

been'

country, toward the destruction inthe value of our dollar by un¬

precedented and endless spending;
of the money and the dissipation:
of the wealth of the' people of
this

v;

country.

'

/ '

*

trouble goes;
of the;

the

of

source

abandonment

the

to

'

Abandonment,

Gold Standard

of the

The

'

'

Source of Trouble Is

and system,
withdrawal'
people of their control-

standard

and to the consequent
from

our

the

over

public purse.
'
*
history is replete;
chapters on this par—,

world's

The

black

with

type of abuse of a people,

ticular

and on the.
failure
to
understand,;
what their govern-;
ment was doing to them, It would,
appear
that our people are no
by their government,

people's

until too late,

in<

smarter than others have been

sort of abuse by'
government and that the'
to this

respect
their

prospects are that we, like many <
other people, are going to learn
our lesson the hard
way.- Unless

is

leadership

by

provided

Con¬

and the Administration, and;
public are in-1

gress

unless the general
structed

these' leaders,;-there,

by

to be little hope that the
people of this country will under¬
stand what has happened to them
or how to get at the basic sources
appears

of their trouble in so far as rising

profligategovernment4

prices,

spending, and the depreciation of :
our

concerned.

currency are

It is

emphasized that the

to be

general public do not understand;
what has happened to them. They
do not understand the nature and

,

'

has

sweeping them, just as it has been
sweeping all the people of this

gold-coin

public purse.

people's control over

which

situation

new

and abuse of their

the

we say

stopped."
The important point is that the

back

Since

"they
it cannot be

about it,

are

nation direct control over the use

by the with¬
drawal of the gold-coin standard
and system in
1933, most , adult
clining with relative rapidity in
persons should be able to see what
terms of what they will buy.
Interest rates should be permit¬ the spending orgy and government
ted to rise to their natural levels. abuse of the people's purse have
The government should borrow its

proceeds to demand its share. We
have reached a stage in this coun¬

implications of

a

ard and system.

derstand

that

gold-coin stand-:,
They do not un-.
"man*;

so-called

a

inconvertible paper cur-,
rency system and a
governmen-:
tally-managed economy go hand)
in hand, and that under a system:
of
a
governmentally - managed
economy the people lose much of:
their independence and power to
control their government.
More-}
over, they do not seem to be con- aged"

about the fact that, under

cerned

so-called

our

"managed"

irre¬

deemable currency system and our

pronounced development of a gov¬
ernmentally - managed
economy,
our
Treasury and Reserve banks
issue

promises to pay which, with;
exceptions, are both dis¬

minor

dishonorable.

and

honored

—

ple of the United States

In

short, the decline in the pur¬
chasing power of the dollar is one
thing; its effects are something
else.

The

latter

differ

with

re¬

spect to different people and dif¬
institutions.

ferent
:

In general, and in the

time, few people

can

evil consequences of a

ing

currency

nomic

course of
the

escape

depreciat¬

because of the

maladjustments

eco¬

tions to production, except where
matters of health, safety, etc., are

involved, should be ended.
The

tending

the

tion and

subsequent

liquida¬

business recession.

The Causes of the Depreciation

Since prices are the result of
the forces of supply and demand,

....

of

group,

they could point to falling

The country should be returned

not understand the difference be¬

the

tween

ties

available goods and services.

gold-coin

a

ment's

use

lic purse.
force

taining what caused the relative
scarcity of goods and services of¬




so

that

and abuse of the

Such

a

pub¬
standard should

contraction in the gov¬
ernment's and banks' promises to

outstanding. Return to
gold-coin
standard
probably

pay

now

a

would be

been

of the

one

since

has

ascer¬

standard

some

factors in

by

fallf the prices of

behalf

lems

found

would

their monetary system has meant
to them.
In large part, they do

the answers to the resulting probbe

reserves

what that

against

power

to

currency

one

our

the

most

of

the

potent

deprecia¬
important

sharply rising prices

great expansion of
irredeemable promises to pay, is¬
sued
by
the
government
and

the

of

obvious

have

government's

a

clear

understanding of
fundamental change in

good

and

Most people

the

fuse

and

public purse.
It is
that the general
public

no

money.

use

the

an

inferior

seem

to con¬

convenience-

of

paper

with the far-reaching and
fundamental monetary functions
performed by gold—its services as
money

a

against promises to pay,
clearing functions (domestic

reserve

its
and

foreign), its superior ability
indefinitely.

to store up values
The

manner

in

which

a

gold-

coin standard and system place a

high degree of direct control over
the government's use and abuse
of the people's purse needs to be
understood in this country.

is charac¬

concern

amount of attention to these mat-,

the

tion

to

control

purchasing

correctives

are

direct

ductive buyers' credit adds to the

ciation of

currency are many,

their

abuse

except in the instances of govern¬
ment price fixing, and since the
causes of rising prices or
depre¬
our

of

of

teristic not only of the. busy man

begin
to
exchange; the
promises to pay qOhe Treasury
and Reserve banks'for gold. Bank

over

the people, once more, would have
direct control over the
govern¬

at¬

also

lack

would

credit, except in
self-liquidating
productive activities, should be
restricted sharply since non-pro¬

generated
strains

de¬

with

and

and

were

valuable and

of

use

connection

to

stresses

a

important property right in gold
but

during the period of rising prices
the

prived not only of

This

government securities would de¬
cline. Should pressure then be put
Congressmen

upon

bank

this

reserves

and

that

and the

pressure

decline in

prices of government

vote

securi-;

and sufficient rea¬
why they could not possibly
for further spending of the
good

as

sons

in

spend

to

people's

1

money.

Today Congressmen have no
protection. As a consequence,

such
both
eral

they and the public in gen¬
are

which have grown in num¬
size and aggressiveness

groups

ber

victims of these pressure

and

until today
most

they

ominous

tional

are

probably the

danger to our na¬

well-being.

Each

group sees other groups
demanding and getting something
at

the

public

feed

trough,

and

and

ters

who

woman

pected

to

give

could

or

our

selves

ex-;

them j

is also*
number
people who regard them¬
as
able to understand, to

characteristic
of

be

important -

hardly be expected

understand

to

cannot
any

of

a

it

great

lead, and to advise others.
Leading bankers and industrial¬
ists are marching along

tide of events.

with this

Most Congressmen,

practically the whole Federal
Administration, seem likewise to
and

be

going

along.

Indeed,

they

praise and defend the course be-1
ing

taken.

modern

—

It is said to be the
progressive — way.

the

Having been so labeled, it is not
to
be
questioned—not in these
days when the act of labeling is
popularly deemed to provide the
final and correct answers as to
nature of the thing so
There

are

a

few

labeled.
members

of.

Congress who understand the re-

Volume 167

Number 4674

lationship between
ment

of

system
has

the

abandon¬

in

this country

in

us

Representative
of

them; and

Nebraska

on

who

women

are

significance of
ard

and

of

ple

of

the

public

some

men

the

country

leadership

of

is

these

not

to

generation
make

it

and to

of

that

of

today

a

system

pleasant

paper

of

which they do not intend to
honor
do not honor. This is
a fun¬
damental issue.\ *.

the

currency—is

banks

issue promises

return to

seem

making it clear that what

unlimited
authority to issue promises to
pay
without being required to

with

business

our

emphasized that the
aest currency system ever
devised
'by man cannot of itself

prevent

rising prices and a depreciation of
purchasing power of the currency

in

terms

since

be

can

also

1929-1933, a great many people
responsibility for redeeming
regard the gold standard as in
They talk much of their some manner
a, or the, cause of
responsibilities, but thev are set¬ that ..business
recession.
Because
ting up resistance against
being man's mismanagement of credit

factor

*

4

do well to

*

scrutinize

in respect to the
move
in Congress, to return

tem

-

*

redeem.

/

Seeking rights to
deemable promises to

;

ing their issuance

issue

It

ifre-

quired

to

hold

reserves,, while
evade responsibilites

*

fighting
'

for

to

redemption of their promises

constitute

a

highly

accurate

pic¬
ture of the
thinking and position
of

;

considerable number of lead-

a

ing bankers, Reserve, and Treas¬
officials in this country today.
It is a case of
seeking rights withury

out

*

manifesting ;,willingness
to
assume
corresponding responsibil¬
ities.
This is an enterprise that

*

clear

seems

losing value,

were

appreci¬

was

■(

77.

■

^that the people

aged" that sharp depreciation will
not
ultimately set in, no matter
how

totalitarian

a

government

be, if the forces that can
depreciation become suf¬
ficiently strong.
The fact that
may

cause

Russia

has

recently

provided

demonstration of this truth
thus far not .to be

in

face

this

of
of

sons

the

this
the

country.

and

a

seems

widely

nized

recog¬

In

the

other les¬

many

kind, including
depreciation of our

same

present

the contentions are still
invites retribution of a serious
advanced, as they have been dur
3 sort.
It definitely is not good
ing our period of suspension of
leadership.
<
*7
gold payments, that our govern¬
When a people and their
gov¬ ment has sufficient
power to main¬
ernment depart from standards tain the
5
purchasing power of our
of common
honesty they are not irredeemable
paper money or that
only headed for trouble but they
it will hot permit depreciation to
are in trouble.
r

is

money,

done

defective

abuse

and

it has

of

cause

The

of

to

the

.

•'

not valid and

*

There

to

pear

the

"

no

adoption

valid
or

irredeemable

an
r

be

would

ap¬

defense

for

continuance
paper

.

of

money

system^ in this country.
More¬
over, it is by the establishment
of a monetary system
involving

*

; honorable

honored

promises
should expect to find our

that

we

best

cure

currency

*

and

services..

for

in

depreciation of
terms

of

goods
'7

.
,

-

our

and
-

go "too far."

That paper is paper

and

gold

the

gold
great

People
•

of

fact

a

that

majority of the people

commonly

are

a

so-called

easily answered.
old; they have

the

same

attitude toward the lessons which

through

painful experience.

It would

in this

we

ap¬

country - are

determined to repeat this type of
performance.
7
7
Since this is in general the state
affairs in respect to the
pop¬
ular attitude toward our
of

currency

is

a

promise; and the peo¬
decide to treat such prom¬

ises with the contempt that
fulfilled promise invites.

a

Besides the fact that most
peo¬
ple do not understand the nature
and far-reaching implications of

gold-coin standard and system,
our people have
been badly misled by the advocates of a
governa

'

*

~

-

**

*

Our

!

mentally-managed economy, by

a

variety of economic and political
agitators, and by those people who
float with the tide under the ban¬
of sweet reasonableness to¬

people

do

White, one-time
and

not

1876)

he

described

ward everything that comes
along
regardless of whether or not they

roughly, 1789 to 1800.

For
-

'

example,

has become the

J.

it. "

Because

his

cannot

do




as

he

the

in

in the

paper

money

from,

Said White

reason

careful

issue

of

a

the idea of

standard
commerce

coin

currency

redemp¬

recognized

of civilized

na¬

citizens

or

another,

consideration

thoroughly grounded in the
history and principles of monetary
standards and systems.
In

a

to

similar

manner,

understand,

or

we

we

seem

are

willing to profit from, past

un¬

expe¬

riences of people in respect to the
other measures that also should
be

taken to retard

and

of

this

leadership

it

country. This
people in
avoid, and it is
our

insidious

seems reasonable

appears

will

may

highly

continue

perilous

It

to

which

be

further

save

our

ably
in

monetary

pursuit

of

people
a

seems

more

any

that

present
and

can

unfor7

people of the

reasonably

clear that
is

prob¬

important in this than

other

field

of

domestic

affairs at the present time.
value of the contribution of

leadership to the
people

from

of

this

welfare

country

of

The
such
the

promises

to be immeasurable. The
need for
this leadership should be

the

course

assert

most

a

for the

one

the

leadership of statesmen

will be leaders and at¬

to

are

to sup¬

probable
on

course,

prove

tunate

depreciating

tempt

and

leadership,

it
we

and of the related funda¬
mental causes of our

currency

banks

clear.

Announce New Savings Bond Drive
Treasury Snyder

drive to

say

to promote

ownership of debt.

*•

off bank-held

'A great volunteer
army of Sav¬

ings

Bonds

in

the
wartime

the

and

same

bond-selling

that

paigns

were organized.
Definite
quotas are in process of de¬
termination and
probably will be

be

a

held

national confer¬
in

Washington

March 18-20.

President

Truman

sounded

a

call

for
intensified Government
efforts to sell Savings Bonds when

he sent

a

special message to Con¬
gress last Nov. 17. He pointed
out
that increased savings by the
pub¬
lic provide one of the
effective
weapons against inflation.

Secre¬

tary

Presi¬

Snyder

dent's

quoted

words

in

the

announcing

the

Security Loan.
The drive will

emphasize sales
Series E Savings Bonds—"the
people's bond."
These will be
termed "Security Bonds"
during
the
campaign.
Every American
will be urged to
contribute to his
of

own

future

security and the

se¬

curity of the national economy by
buying them.

Secretary Snyder said:
"The Treasury has two
specific
purposes in conducting the Secur¬
ity Loan.
One is to encourage
Americans to build greater

secur¬

ity for themselves through greater
savings.
The other is to relieve

inflationary
poses are

one

"During the Security Loan, ef¬

assistance of

a

great many patri'r-

otic, volunteer workers.
But the
Savings Bonds program always
has been a people's
program.
Its
success

has been due to the volun¬

teer spirit
I

and volunteer

activity.

that there will be an¬
other resounding
response to the
am

sure

Government's appeal."
The

18-20

three-day conference March
in Washington to decide

sales goals and other final
prob¬
lems of the drive will be attended

by

public-spirited

leaders

of

groups expected to head up the
volunteer selling organization. In¬
cluded will be representatives of

industry, labor, retailers, newspa¬
pers.
radio, magazines, banking

and business.

Already, according to Secretary
Snyder, President Truman's call
of

last November has
brought
widespread assurances of volun¬
teer help for the
campaign, along
with comment from
many sources
that such a
bond-selling effort is

vitally needed

to

ease

the present

dangerous price situation.

Edward W. Clucas Dies

serves

fare of the nation.

potentially

of the public

now

forts will be made to reach
every
family. This task will require the

These pur¬

pressures.

interlocking;

the other, and both serve the
wel¬

other

outstanding. This shift¬
ing of ownership of the debt is
sound debt
management.
^ '

cam¬

area

to

debt

for the

manner

or

inflationary portions

sales¬

is being recruited

women

drive,

salesmen

Edward W. Clucas, senior part¬
ner of E. W. Clucas &

Co., 70 Pine
Street, New York City, members

"There is general recognition of
the fact that buying
Savings Bonds
is one of the best investments an

died at Harkness Pavilion, Colum¬

in addition, we
stultify ourselves by playing the

American

bia

cheapest sort

war

ing prices.
symptoms
of

novice

or

Instead,
like

the

to

we

end ris¬

deal with

greenest

sort

and,

of

so-called

"poli¬

tics" with these serious matters.

A proposal to provide this coun¬
try
with
a
gold-coin
standard

the intoxication of

on

expe¬

are

should raise

the

such

as

thoughtful

one

nation intrusts to its leg¬

not based

tion

and

except

from those

Money Inflation in
(1912 edition); "When¬

any

short, it islators
generally-accepted

he

for

ago

"Fiat

France"

in

practice in this country to blame
; gold for man's
mismanagement of
-

in

ever

and

Cornell

years

benefit of the people of this coun¬
try the lessons learned by France
when she experimented with ir¬
redeemable

understand it.

under¬

of

many

ner

-

yet

historian, diplo¬

president

University* when
(in

system
comes

to the issue, and from those
spe¬
cialists in the field of
money who

not

stand the wisdom in the statement
made
by' Dr. Andrew Dickson

mat,

rienced

non-

,

"
•

pressure

given

It

not

likely to be
nation-wide pressure on
Congress
and
the
Administration, unless
leadership is provided, to correct
the
far-reaching defects in our

have

bad sort of
can

structure, there is

that

that is not fulfilled.

pay

ture

correc¬

that many of those now in¬
adequately informed and indif¬
ferent would give
support to those
advocating the wise and proper
course.
Without such

into the
question of whether government
officials who understand the na¬

the

experiences of still earlier
generations should have taught
them, and, as a consequence, they
learned the old lessons

government

chiefly to harmless United States.

ence

much

basic-

standard

pose

and ineffective
protests.
The issue resolves itself

made public at

gen¬

adopted

most

monetary

itself, it

their "positive" action
against fur¬
ther increases

erations

for

able paper money can
depreciate
to any degree. It is a
promise to

to

understand the lessons of the
past,
or
they think these lessons are
of no value
today. Earlier

who,

of the matter is

wish

a

the

honorable and honored.
Should good

and using them to shift

are

gold-coin standard and
The people either do not

monetary

rise

better

of

system in which the promises of
the

this

that

is

leader¬

President Truman at his
press conference and
Secretary Snyder
announced on Feb. 12
Treasury plans for a Security Loan drive start¬
ing April 15 and continuing
through June 30. Its purpose is to pro¬
mote savings and
fight inflation. The United States
Savings Bonds
Division of the
Treasury will be<£in charge.

given

a

"managed" irredeem¬

The truth

ple

Mislead by Advocates
Managed Economy

is

of this country are not
yet ready
to admit in respect to
money.

"

-

is

price

the

comes

the

m^ny times and at
many places in the past.
Never¬
theless, the public in general ap¬
parently thinks today that it does

that

a

illu¬

precisely for this reason that the
majority of them prefer to fide
the
tide
to
higher and higher
price levels while they confine

purse;

in

been advanced

pear

a

question

enough

symptoms, and to give
of the United
States,

people
one

tives,

recession, and the

for

medicine

general

j

to

an

is

the

savings and fight
withdrawing funds from consumers

power of our currency.

,

"

it

use

'

-

that

potent

a

depreciation

reasons

system.

need

be

is

that

the

by positive action
causing some recession.

sooner

peo¬

the

public

there

in

Federal government
to deal with causal
factors rather

President Truman and
Secretary of
extend from April 15 to June 30
is
inflation. See advantages in

these days for not
returning to a
gold-coin standard and system are

not wish

think

should

and

our

over

been, and is,

the

purchasing
1

caused

control

Moreover, they

of this country do not
yet under¬
stand that no irredeemable
paper
money is likely to be so "man

pay, defend¬
irredeemable

of

promises, and even advancing the
idea that they should not
be re¬

while practically

things

gold, almost alone,
ating in value.
:

,

.

the fact that,

be

us.

fundamental

ship

be arrested

may
be a potent
depreciation.

such

system

and

responsible for these catastrophes
has been widespread in the face
of

and

ple to lose

being made
tips country

all other

of

Our

to

us

It is

ago.

indicated, that disease

as

should

dangerous; it has

sys¬

impaired

or

cluding governments
and
gold
standards, the belief that gold was

are

to a gold-coin
system which would
require the Treasury and
Reserve
banks
to
limit
the
issuance
of
their promises to those
they can

*

economic

destroyed

other

are

of

enough

high

currency depreciation,
defective monetary sys¬

a

can,

cause

other

our

large number of institutions in¬

a

eare-

and

of

taking

fully the position they
4

things undermined
tems

Treasury officials)

-would

multitude

a

to

whereas

.

of

and

services

rising prices

There

many.

can

and

of

bring rising prices to an end. The
point is, however, that a good cur¬
rency need not be a
contributing

of

any

and

goods

causes

important things,

them.

compelled to make good on their
promises to pay.
' >
7"
;
It is suggested'
here that such
bankers {and

of

the

more

without
We

system of direct

intelligent people.

deemed

or

sion
can

circulation, since they
irredeemable, than would be

this clear to all
It is to be

level

year

govern¬

should make

A

as

a

larger volume of promises

a

engulfs
whether

than with

anything that might return

currency

the

power of our
money

without

recession

our

redemption. The present degree
of depreciation in the
purchasing

paper

assume

t

of

that

reason

much

are

Because the suspension of gold
payments
is
widely
associated

almost

the

activity in behalf

our
people, trusting to luck
waiting until a possible crash

as an ever
higher level is reached,
there is general
objection to doing

radi¬

a

and

compre¬

with
and

observe much dis¬

we

public does not

arresting
any
further
rise
in
prices, it should be noticed that

main¬

in

not safe from

possible under

gold standard.

a

ir¬

our

January,
to understand

important

are

cussion

parity with gold at

depreciation

a

govern-

pay

of

system

to pay into

relatively free

to

our

ment and Federal
Reserve banks
have been able
to, and can, pump

"the

"managed"
integral part

an

we

temporarily experiencing real

Although

money

established

for

irredeemable

so-called

a

cal

intelli¬

a

rate

that

paper

on

1934, it is

being compelled to fulfill them,
are, if consistent, opposed to a

?

is

tains it

argument

versus

Currency

fact that

general

25

hend, or whether these officials
Will simply ride out
the course

gains from the current rise in
prices may be expected, in gen¬
eral, to oppose a return to a goldcoin standard.

Not Exempt

conversion

redeemable

of

a

to

and

want

and

irredeemable

an

and Reserve

pay

^Numerous bankers today

man's

a

indirect

of

governmentally-m a n a g e d
economy, all who think they de¬
sire a high degree of
governmental
dictatorship, with the government

attempt to de¬
system in which the Treas^
ury and Reserve banks are
per¬
mitted to issue - promises to

they

valuable

managed

-

money—a

are

a

to'be

is

to gold

as

Since

prefer¬

responsibility

fend

abuse

paper money.

in positions

men

Despite the
of

na¬

issuances

more

Such

mentally

It is not

thing to listen to

,

their

thinking,

gence,

for,

they

not honored.

worst."

this

argue

promises in
in which

one

best,"and the

to

a

of

reckless

Monetary System

Depreciation

He

most

are

.

From Radical

per

circumstances

fight to establish,

to

because
and

since

Our

(821)

withdrawal of the
intoxicating
stimulant.
Similarly, those who
a

depress the value of
the possession of
every citizen.

nations to slip down to
cheap pa¬
currencies, the latter curren¬
cies are therefore to be
preferred.
The cheaper
money becomes "the

the

of

to them the
power

or

re¬

over

people

credit

necessary

honorable

ence

the

raise

CHRONICLE

every article in

promises to pay, have driven
gold
hiding and have caused these

prospects for a return to
fiscal and
monetary sanity in the
United States appear to rest.
is

that

argues

tions,

that the

It

to

into

upon

few

be compelled to
promises in gold.

peo¬

control

It

purse.

not

his

gold

gold-coin stand¬

a

will

even

and

returning to the

this

he

deem

Outside

understand

also

FINANCIAL

tions, it intrusts

deeming them in gold, he blames
gold for his unhappy
experience
and attempts to fix
things so that

duced a bill (H. R.
5031) to put
this country on a
gold-coin stand¬
ard on
January

Congress? there

&

.

January 20 he intro¬

2u, 1949.

he; condemns it.
cannot make
things of

as

of

one

it,

less value, such as
paper money,
valuable as gold Without re¬

this

Howard

is

with

Because he

and what

since happened to

Buffett

pleases

gold-coin standard and

a

country.

THE COMMERCIAL

the

question, quick¬
ly, of returning to sohriety before
a

depreciating
currency runs its course ending
in the blue
"morning after" with
its

economic

ache.

cation

sickness

and

head¬

People enjoying the intoxi¬
are not likely to welcome

bought
are

can

these

make. Millions who

bonds

during

the

of the New York Stock

Exchange,

Presbyterian Medical Center,

at the age of 68.

continue to buy them.
able

to

more—and

asked.

We

Many
buy more—by saving
so if they are

will do
are

about

to

do

will

Kinney-Coastal

Oil

Company

directors have declared

"The relief of
sures

Kinney-Coastal Oil Div.

the

asking.

inflationary

pres¬

be

accomplished
through the Security Loan in two

dividend of 3V2 cents

able

March

of record

13th

to

Feb. 26th.

an

annual

share pay¬
stockholders

a

A

dividend

The money received from
the public will be withdrawn from

of

the

The company has outstanding
3,-

ways.

consumer

markets, and it will
be used by the Treasury to
pay

IV2

cents

was

paid last

650,000 shares of 5 cents

par

year.

value.

Thursday, February

CHRONICLE

COMMERCIAL & FINANCIAL

THE

As We See It
(Continued from first
state what

page)

production, and purchasing
are needed to carry out the
to recommend measures by
attained/' The report from
undertook, of course, to do
Chief Executive.

during the ensuing year
;.policy declared in the Act and
which these objectives may be
which these words are quoted
what was thus required of the
power

Yet

apparently

we

must conclude

that in less than 30

reach any definite

can

weeks or more before they
conclusion about current events!

that they must take six

were,

•J

the

in

j
;

/

,

•"

?

But 30

have

or so ago

or

the President did not appear, to

the

realize profits through

and downs of business, prices and profit margins
are
geared to the expectation that full use of capacity is
not a normal situation. This means that, in periods of
high production, pricing policies and practices are followed
that produce a level of profits designed to protect the
individual company during future declines in business
activity rather than to. contribute to the prevention of
such declines.
Such policies are not conducive to the
continued health of the business community because they
the ups

.

act

that it will not continue.

the assumption

on

"The

price mechanism may serve either to promote

•.

to prevent a safe balance among prices, wages and
profits. The greater the success of our free enterprise

'»

system in maintaining this balance, the less need

or

,

there
will be for direct governmental intervention in the eco¬
nomic system. This imposes a heavy responsibility upon
those business managers
whose decisions importantly

#

"One

of the

purposes

• .

of the Employment Act is to

provide a new climate for pricing policies. The act con¬
templates that the combined resources of business, labor,
agriculture and the Government will be used to do away

.

with business fluctuations

of the violence known in the

past."
From An

And

now

we

have

Unexpected Quarter?
a

lightning thrust in

a

sector of the

where none of all this, or almost none of it, can
possibly be said to apply (if it really applies anywhere)—
and the powers that be are struck dumb! It is just possible,
as they say in the kindergarten, that Mother Nature knows
best, after all!
economy

If it be asserted that the President also had
deal
'

•

to

say

in his "Economic Report"

good

and elsewhere

about speculation, credit control and kindred topics, the
obvious reply is that there is no reason whatever to sup*
pose

that the markets which have "collapsed,"

less, had reached unreasonable heights
,

credit. On the contrary,




very

on

little credit, comparatively

investment

yet fceera
there were
assets

our

been made
onerous by the fact that we
had to meet interest charges

more

have

has

1947,

in

abroad

borrowing of
combined

wartime

our

on

of

sales

continued

million,

£3,500

particularly last year with heavy
transfers
of
profits by foreign
firms operating
in this country
The net result is that our net in¬
come
from
investments was1 no
more than
£51 million in 1947, a
decline of
£24 million on 1946

other potentially

£1241 million on 1938*
decline means against

of

and

this

What

rising prices is
demonstrated by the
1938 investment in¬
come
paid for some 21% of our
total
imports, while the corresnonding figure in 1946 was only
7% and last year little over 3%,

its

background of

strikingly

drop the non¬
the whole Full Employment Act notion
along with it the managed economy folly?

in

that

fact

Payments

(Continued from page 19)

£290

government expenditure of
Last year, though

million.

gov¬

expenditure overseas was
reduced by £79 million to £211
million, the net deficit was £50
million higher at £22-3 million.
Large savings in government ex¬
penditure were offset by an in¬
crease
in non-governmental out¬

ernment

goings and by smaller receipts.

.

double that of 1946 and amounted
to

No exact

million.

£50

some

sources

and

correction

tion

more

as

becomes

to later
exact informa¬

subject

are

But

available.

no

in the over¬
revealed need be

change

important

all position now

expected.

detailed

A

invisible

examination

items

shows

Cut
of

that

stantial changes occurred in

sub¬

1947,

Net mili¬
tary expenditure overseas at £80
million was only about one-third
of the 1946 figure (£230 million),
while relief and rehabilitation at

as

compared with 1946

£62

million

about

half

These two

accounted

of

our

items

for

1946

only

outlay.

together show a

saving of nearly £200 million a
year.
There were, however,
heavy offsets in the increased cost
of

Germany which, at £79 mil¬
lion, was nearly double that at
1946 and through much
smaller
receipts (£ 10 million, as compared
with £90 million) from the sale
of government surplus stocks, es¬

pecially wool, and from certain
postwar militarv settlements. This
heavier expenditure on Germany
and smaller receipts together off¬
set

by £119 million the savings
nearly £200 million on mili¬

tary and relief expenditure. Net
government expenditure overseas
in 1947 was thus only about £80
million less than in the previous
year.

Despite the ban which operated
in

the

tourist

claims

last

quarter of
expenditure in

as

insurance

premiums,

and

payments

royalties and copyrights, com¬

diture, development of our
prises overseas, personal

considerable.

and 1947 was

Shipping: Losses
There is

need to

no

on

advertising expen¬

mercial travel,

enter¬
remit¬
tances, including legacies and be¬
quests and a host of other forms of
expenditure.

income and

enlarge

only about
volume of

importing

currently

formation

in expenditure,
productive char¬
can be
expected to

increase

large

it of

much of

which

acter

yield

field

uncertain, but there was

is rather
a

Our in¬

much of this

over

a

return in the near future.

a

connected with estab¬
markets and business
connections overseas as part of
the export drive and, of course,
country has been correspondingly
also on the restoration of plants
reduced.

75%

the

of

prewar

goods and the claims upon British
shipping for carrying goods to this

of

ures

the

such

transactions,

It is largely

lishing

and

Spending

our

unfavorable,

country, but there is little doubt
that
the increase between
1946

be noted that the fig¬

It should
Government

remaining

experience in 194T
a credit of
£70
million in 1946 having turned into
a:" debit of £20 million in 1947,
"Other
receipts"
cover
a
vast
number of varied activities and

invisibles

and

that

emphasize

Receipts"

"Other

Over the field of the

figure is available for expendi¬
ture by
tourists coming to this

the our wartime shipping losses. The
figures relating to invisible trade effect of these losses upon our net
are
provisional in the sense that shipping earnings has been
they are collected from numerous masked by the fact that we are
should

I

more or

the basis of

finally arrested since

but, then, the Secretary is

Britain's Balance oi

of
a

our

which has not

income,

was

affect the levels of

prices, wages, and profits. Management
recognize that sustained maximum production re¬
quires that gains in productivity be passed on through
lower prices and better wages to the fullest extent con¬
sistent with adequate incentives to business enterprise.

in

decline

which supports

—and

'

must

Investments

From

Income

The

But, seriously, has not the time come to
sense

of the elasticity needed
adjust relative changes in cost and demand.
in the effort to

.net

current year.

speak to his Secretary of
but following
suggestions made by the President last November,
—

our

income still further,
while the heavy cost of repairing
in foreign ports—which pressure
on
our
own
yards made inevit¬
able—has also contributed to the
reduction in our shipping earnings
overseas.
Expenditure on both',
these counts should be less in the;
shipping

Yes, the President should

a

"Moreover,

reduced

has

bunkering

Lincoln's Birthday, the

on

the Treasury

system is thereby deprived of much
to

of British ships
substantially. For
example, the necessity of foreign

have risen very

over

by the Treasury to pay off bank-held or
inflationary portions of the public debt."

practical businessman:
business manager fears that, the use of
price reductions to expand his share of the market will
merely result in retaliatory price changes by other firms.
Business therefore has sought, as far as possible, to place
/ the competition for, markets * which it must meet upon
:some
other basis than price competition.
The pricing
"Many

war.

expenses

overseas

Secretary of the Treasury
issued a formal statement about the forthcoming savings
bond drive, in the course of which he said: "The relief of
inflationary pressures will be accomplished through the
security loan in two ways. The money received will be
withdrawn from the consumer markets, and it will be used
Yet

of his lectures to the

one

the

fore

is less than be¬
In addition, the

route

crosstrade

Wrongheadedness

More

-the profitable

available for us on

a

Indeed this idea, now so fully and
apparently permanently official in Washington, that lack of
"purchasing power" is what causes business to recede inter¬
mittently from high levels appears to be one of the cardinal
principles of the President's economic thinking. This, of
course, is in a sense a political counterpart of the popular
idea that consumer goods generally are being or may shortly
be "priced out of the market."

great deal of doubt that Government either knew
could soon learn what was best. Here is a part of

a

best

days

our

prices now being asked.

surviving.

of the fittest

a

event if the President is convinced that lack of
purchasing power is the real danger in the imme¬
diate or early future, he certainly ought to speak to his
Secretary of the Treasury! And he certainly does appear to
be concerned about the ability of the consumer to pay the

posed to make up the collective mind of the nation. All
that he needs to do is to arrive at some conclusion of
his own both as to the meaning of such developments
and as to their effect upon his business. The result of
any mistakes or wrongheadedness on his part is upon
his own head.
If his blunders are bad enough, he is
likely to disappear from the picture and be replaced by
some
other whose understanding is superior to his.
Meanwhile the community at large profits from the
wisdom of the wisest as selected in this ruthless process

;

fact that we are using a
volume of shipping for
own
imports, the „ amount

smaller

In any

more

level.

the

of

consumer

in being uncertain of

course,

developments

several times
As it is, in spite

to

amounted

the prewar

lack of consumer pur¬
chasing power. If lack of purchasing power is at the
bottom of the break in corn, cotton, wheat and the rest
during the past week or two, it certainly was not "con¬
sumer" purchasing power — unless such a lack reached
the markets by a most circuitous route.
from what

the meaning of
highly speculative
markets, neither the President nor his advisers are any
worse off than many businessmen.
The important dif¬
ference is that the individual businessman is not supOf

recent

present
have

"bust." His fears of a
invariably been derived

of

almost
he conceived of as

have, however,

"bust"

Caught Off Balance

days after the President, with the most painstaking advice
from his Council has made such a deliverance to Congress,
his advisers find themselves so thrown off balance, as it

and the possibility

creases

levels of employment,

continuing at their
restricted level would

imports

with

extended

speaking, other possibly than that indirectly
to producers by the Federal Government itself, is to be
found in these markets.
It is likewise true that the
President has had a good deal to say about price in¬

19, 1948

U.

K.

import and export

new

other physical property dam¬

trade published each month in the
trade and

navigation accounts give

the cost of imnorts on a c.i.f. basis

This

means

that

figures in¬
freight as

the

during the war.

aged or neglected
Future

Prospects

<

the prosnects for our
invisible trade in 1948?
We can¬
What

are

improvement in
position this year.
The loss of income from invest¬
exports are shown f.o.b., which ment in the devastated areas of
means
that only the cost of the
the Far East will not rapidly be
goods is shown with no addition restored.
But shipping should do
for freight
and insurance.
So, better. More ships will be avail¬
what we call the visible gap be¬ able
through new building and
tween
imports
and
exports as our passenger fleet particularly
shown in the trade and navigation should make an increased contri¬
accounts is larger than the differ¬ bution.
The heavy drain for re¬
ence
between the price we pay lief and for
Germany should be
overseas for the goods themselves
reduced to only about one-tenth

clude
well

as

insurance

and

and the value of the

goods we ex¬

port.
The freight and insurance
charge included in the import fig¬
ures
consists in fact largely of

payments made to British
and insurance companies.

shipping

on

expect

any

investment

a

of the

figure for 1947 and we'may

expect less to be

payments purposes
f.o.b. basis and shinping
of

spent by tourists

despite the lifting of the ban.'be¬
sides increased income from tour¬
ists

this

visiting
for

allowing

.The import figures we now use
for balance
are

not

our

the cost of the goods, while

country.

But,

the minimum over¬

military and other commit¬
maintain, we
shall still be some distance from

seas

ments that we must

being

striking

Dayments of an internal nature.
On this basis, the net earnings of

invisible

account.

earnings are thus excluded,

shipping in 1947 was esti¬
at £17 million as against
£10 million in 1946 and £20 mil¬

U.

lion before the war.

the year, available
1947 was shipping,

our

our

Had we now

on our

'(

have been speaking
about the most important points
in
our
current account;
I will
So

tonnage of speak
net shipping income count.
prewar

balance

Capital Account

K.

mated

a

far,

now

I

about,our capital ac¬

For this purpose, I take aS

Volume 167

our

all

reserves

and

also

Number 4674

the

the gold we had

United

States

Canadian credits and
of

£60

tional
year

million

other

£626

of

pared with

tive.

In

the

deficit

a

(that is, the
Canada and the

American

tries)

account

million,

com¬

1946.

£266

million, as compared with
•£38 n)illion in 1946.
In addition,
on' behalf of the whole sterling

including the U.

area,

net

a

transfer

K., there
gold and

of

dollars to other countries of

as compared with a sur¬
plus of £80 million in 1946. There
one

two

or

figures

to

smaller additional

add

in,

but

the

result is that the net drain
reserves

was

£1,023

compared with
1946.
"

During the
was

in the.

sterling

of

there

debt.

In

years and

creasingly
factor in

price

of the

U.

rising costs
well

as

K.

Balance

of

there

on

ments

ing,

U.

U.

to

and
the

K.

of

withdrawals

the

sterling

area

up
;

A supreme effort must be made
year to
remedv our external

this
t

position.

Abnormal world condi¬

adverse

balance

follows:

as

sphere,

man

can

an

a

to

way
than

more

have

240

at

the

The

made

1947

$2,720 million;
sterling area, plus $320 million;
rest of
world, minus $300 million.

According
the

to

trade

sales

at

were

the

rate

of

420,000,000 pairs.

not

•

Different

Kinds

of

Inflation

•;
Several different kinds of in¬
flation are rampant in the conn-

try today.
on
'

I

concentrate

the three most dangerous

price
I and

inflation,

credit

goods'inflation.

know,

these

terdependent.
•may

vary

'•separate

analysis

them

well

inter¬

mutually in¬

their behavior

widely,

and

Price

As you

are

Yet

ones:

inflation,

closely

are

twined—in fact,

•>

to

want

so

for

we

must

understanding.

inflation

is

Credit

,

own

dis¬
re¬

inflation

is

apparent

on

.every hand. The general tendency
'is to ascribe it all to the
expansion
in bank credit caused

by the

com-

^mercial banks'

wartime purchases
'. of spme $70 billion of
government
securities.
Yet since
V-J

Day,

.commercial

>

?!
.

■i

\

i

*

commercial

banks,

loans

iwere expanded just about as fast
as the bonds were redeemed.
Bank
real

estate

000,000
as

banks)

at the end of

turbing

in

1941.

is

since

consumers

of

by

com¬

$13,368,-

December,

$9,695,000,000
The most dis¬

feature of the
of

particular,

doubled

reached
end

with

situation

increase

to

all-time peak,

(including the

at the

compared

credit

than

Loans

agencies

an

loans,

more

prewar.

'.all

at

are now

mercial

-

in-

ties tried to restrict credit
by retiring government securities held

having
■

have

some $15 billion.
In fact,
1947, as the monetary authori-

,;rloans
«.

loans

creased

in

(•'by the

'

bank

the

consumer
enormous

$739,000,000

month of December alone.




in

For

example,

the

(including

the

have

increased
have filled

be

true in many
were not for the

increase

however,

in

of

October,

10.9%.

1946,

This

an

was

unneeded

below

the

dropped

power

level

the

of

4.7%

previous

to

fold

chandise.
trickle

alization

the

cheap-dollar
the

of

bank

credit
is

area,

current

and

ration¬

totals

applied

in

an

urban

glaring defects become

ob¬

vious. Wages

lag prices even for
organized labor. And, as for un¬
organized labor and white-collar

workers,
those

professional

living

men,

fixed

on

and

incomes,

most of you know from
first-hand
experience that the dollars they
get
are
not cheap^dollars
even
though those they spend may be
Gentlemen, debts are paid,, if
paid, with what I call difference-

dollars.
As
a
practical matter,
the difference in dollars between
the

current

cost

of

food, shelter,

clothing, etc., arid

current income

measures the debt

extinction abil¬

ity of the American people. Early

in 194-3 personal consumption
took
about 89% of income after
taxes.
This had increased to
95% by the
middle of 1947; and we have
every
reason
to believe that the
per¬

centage has increased since then.

Furthermore,
the

limit

pansion!
ous:

While

on

The

we must be close to
consumer

credit

conclusion

"Where is the

is

money

ex¬

obvi¬

going

this

is

it

the

on

of

retail

throw

market

in¬

withholding goods from

in the last two years.

as

In competitive

inflation

capitalism, goods

can

have

consequences.

And

production
will take

serious

very

the

machine

is

wav

our

rolling

it

than the economic

more

blood-letting of
to

prices

or

much and will

very

goods

mer¬

only a
develop into

will

it

now,

torrent if either sales

a

Marshall

a

prevent supply

from

Plan

reaching

proportions

in

many

lines.

of

accounts receiv¬

beginning

and dump their

up

dangerous

When

"gray" markets

distributors

16.5%

purchasing

fields if it

more

danger to the entire economy. Al¬
ready, here and there, you see

increase,

not enough to equal
increase in the price
of goods bought
by the farmers,
with the result that the
farmers'

the

now

would

the greatly increased number
of wholesale
and
retail
outlets.
And
this, of course, is a great

stead

with $3,-

are

and

773,000,000
401,000,000

compared

and

up

many

beginning to overflow. This

drop

as

jijut little?^ The

pipelines of distribution in
lines

government benefit payments) in
October, 1947 amounted to $3,-

able

products!

f

work.

year.

painfully

so

e'apparent that no businessman
putes it—except, of course,
garding his

of

purooses

always

total farm cash income

inventory
boom has been
chiefly a price
mark-up proposition; quantities

^angers
turn

and

the

on

advertising

beginning

are

"heat"

that

Do you real¬

manufacturers

premiums

of

30%

and

advertising is

straw in the wind.

ize

sales

The sudden

pressure.

growth of premium
a

of

to

the

use

for

American

production of china, 10% of alu¬
minum utensils, and great quan¬
tities of novelties and glassware?
The

Premium Advertisers Asso¬
ciation of America estimates that
the total of premiums to be used
as
sales stimulants during
1948
will reach the staggering value of
$1

billion.

This is

twice the

per pound

to $.17%

Or, let

in

in

any

sellers'

$1

markets.

billion

is

a

In

level of 61 to
level

lot

of

symptomatic

an
August, 1939
January 17, 1948,
nearly 3%

a

of 201.5 which is

times

the

old

level.

Department

store

of

end

1947

were

rate of 300%

The

age.

it

so

really
will

food
Do

believe

that

that

prices

will

under

anv

bait

an

nomic

process.

They

in

circulation;

times
It

better

be

difficult

malady
which

so

of

find

period last year. In
it is the longest list in the

21 years existence of the Exhibit¬

in

the spring

and

not

Administration in Washington
Europe, regardless of our

crop
yields, drove food prices
higher and postponed the day of
readjustment.
Despite the downward pressure

occupa¬

economists

True, quantity is impor¬
but it is by no means con¬
trolling, as I have pointed out
many times before.
For myself, I
prefer to weigh the impact of the
more, important of
the countless
other factors which affect our eco¬
nomic destiny.

the list should be put
the classic causes for the end of
a boom.
First, I would place the
wastes

of

Then, there
what

"over-employment."

I

Also,

call
man¬

agement slows up when the lash
of competition is not
present. Mis¬
takes
of
all
kinds,

particularly

over-expansion, are made.
Ex¬
travagance and waste are accept¬
instead of attacked.

they

can

be passed

on

(After all,
to the

con¬

sumer, so why worry?) The quick
and easy profits of
speculating in

inventories

are

sought by many;
the worry, sweat, and toil of
pro¬
duction are looked down on

ever-increasing

by
Why

numbers.

produce when speculation is
profitable and ever so much

more

These stresses and strains create
structure.

Failures increase; dis¬
goods are dumped on a
reluctant market; and the classic
tressed

spiral of deflation is under way.
The Outlook

What then is the outlook?
The

monetary authorities
continuing to tighten credit.

a

economy; I
it.
There is

continue

to

don't,expect

great deal of money,

the hands of
mentum

of

our

people. The

mo¬

the

inflation is ter¬
Little decisive
deflationary

rific.
action

be
expected
from
until the election is
over.
Neither party wants to face
the electorate and take
responsi¬
can

Washington

bility for causing "bad business."
On the
contrary, additional fuel
undoubtedly will be poured on
the fires of inflation
by reducing
the taxes of millions of voters.
It seems reasonable to
expect
that wage

increases, tax reduc¬
tion, European relief, and deter¬
mined political assistance will be
sufficient to keep the boom
going
the first six
months, at least.
After that, the long
delayed busifor

should

mate-

course, a new
rabbit is pulled out of the hat!
As I said the other

keep

day, to really
going, it will be

the boom
for

necessary

the

following

to

continue:

(1)

Bank credit 'to industry

carry inventories and accounts

to
re¬

ceivable must continue to
expand
despite the active opposition of
the Federal Reserve
the bank examiners.

System and
•

Expansion of plant and

duction
erated

(3)

facilities

must

Individuals
and

more

be

pro¬

accel¬

despite higher capital costs.
must

less

save

spend

despite

the

coming intensification of E bond
savings drives.

and other

(4) Individuals must be will¬
ing (and able) to go deeper into
debt despite the uncertain out¬
look.
It
of

seems

these
In

to

too much to expect all
eventuate.

conclusion, let

me

say

that

the current period of inflation has
to be followed by a recession. How
serious
on

that will

how

be, will depend

it

soon

comes.
If we
could only have gone
through with
the
readjustment which started

last

April,

it

would

comparatively
have

the

should

mild.

have

If

readjustment

not

be

too

been

we

can

soon,

drastic

or

it
of

long duration. Basically, the
economy of the country is sound;
we
only have to eliminate the
maladjustments. Until this shakevery

is completed—and it
may be
starting now or it may not start
out

for

another

six

outrun

Plan

decline.

is

In¬

pur¬

Foreign trade,

months

to

one

we

had

was

a

your

should be
lose

one

credit

policy

of caution.

little income than

a

Better
a

lot of

capital.

Hiscox, Van Meter
Opens Branch Office
Meter

&

opened

a

PA. — Hiscox,
Co.,
Inc., have

branch office at 28 South

Seventh Street under the manage¬
ment of Hugh L. Van Meter.

even

passed,

These

—clearly^

ALLENTOWN,

increase

pointed downward in
and all

frankly
a

credit,
and
liquid
purchasing
power,(E bonds, for;example) in

Van

and

other basic factors point to
a
downward readjustment of
business.
But most of these in¬
1947

foregone

for

are

many

dices

round

year, no one can be certain when

instabilities in the entire economic

to

a

more

interesting?

rates

is

It would be a modern
labor leaders to take
stand for the good of the entire

miracle

on

the

are

increases

wage

conclusion.

suffer.

tightening of credit.

indication, another

any

(2)

tant,

High

past

is

a

over-emphasis

many

Marshall

Advisory Council.

to

illustration of the

tional
from

ergo, nearly three
price is inevitable.

much

as

would

the

same

the

a

Such

on the
quantity of money.
reasoning
runs
like
this:
Nearly three times as much money

bound

than

rain

to feed

largely

are

based

is

ors

just

The

power.

fact,

believe

levels.

generally come .from
over-simplification of the eco¬

continue -to

for the

do

stabilize

if

greater

much

prices'n.es®

conclusions

terest
develon-

wide¬

enough rain in the summer. These
crop failures and the decision of

readjustment
rialize—unless, of

these

present

Prices

53%

1935-39,

businessmen

economists

chasing

is

was

continue?

Some

ment is the great number of trade

the year

aver¬

index

the basis of

on

goes.

shows scheduled for 1948. The 718
listed for the fhst eight months
of

at' the

of the 1935-39

retail

around 203
and

sales

running at the

pre¬

kind of market!

Another

take the index of all
which shows that

us

products

they soared from

vearly average. I don't have
to tell you that premiums are not
used

in

hogs!

war

event,

of

dropped from
in November. 1946
September, 1947, de¬
spite the continuing high price of
$.53

ed

Many businessmen realize these

the behavior

on

prices, which

little

In recent months, the

(Continued from page 6)
humanity is
at
stake
because
Most experts
say that the dif¬
1 America is the
hope of the world. ference between the
prewar and
't So let us not again kid our¬ current credit
totals are not as
selves that we can stay in the eco¬
great as the changes in the
pur¬
nomic stratosphere forever. Somechasing power of the dollar. They
time we have to come down
and, argue that $10 billion 50-cent dolpav for our ride. Don't let anyone > lars are
no
more
difficult to re¬
tell
you
anything different.
I pay than $5 billion 100-cent dol¬
don't mean that we are
going back lars—that, of course, is nonsense.
to
the
depressed levels of the
If this
cheap-dollar theory ap¬
i
'30s, but I do mean that we cannot
plies to any group in our economic
maintain the hundred-yard dash
family, it would apply to the
speed of recent months.
farmers. Yet even there it does

lard

to losing

running at a rate in excess nf
460,000,000 pairs annually, while
retail

Recession Looms!

high

Even the automo¬

Council,

hogs,

Likewise, lard which

should reflect

get people to
pair of shoes

rate.

performer,

who may think that prices
cannot
come down because
costs are

yet

association of the leather industry,
shoe production in December was

Hemi¬

minus

1948.

farm

Tanners'

aerial

$.06 per pound rose to $.28
in the same period. Those of
you

sit

bile
manufacturers don't exoect
people forever to buy automobiles

per

was

one

the

of Deity

were

failures in Europe
caused by too little
rain; there
was
a
short corn
crop
in the
United States because we
had too

of

ary,

time!

a

There

crop

of the factors I
enumerated, thefe
are powerful forces
in the direc¬
tion of more inflation.
If the

$.35%

which were $5.52
per hundred¬
weight in August, 1939, but had
skyrocketed to $27.19
by Janu¬

The

not

True,_the hand

intervened.
spread

other

seat

one

march.

rose from $.09%
pound, and cotton¬
seed oil increased from
$.05% to
$.29V2 per pound.
Or take an¬

bushel; cotton

per

to

time!

time!

a

manufacturers

office declines.

Western

increased from $.04 5/16 to $.46%
pound; coffee rose from $.07M>
to $.26% per
pound; corn at the
farm increased from
$.45% to $2.37
per

most profitable
part of the
international market, is also ex¬
periencing serious domestic box-

420

is

only

occupy

automobile at

To get a con¬

take the C's from

us

commodity price list I was
studying the other day. From Au¬
gust, 1939 to Jan. 27, 1948, cocoa

un¬

can

a

idea, let

a

can

is

man

Hollywood, in addition

4,064
iThis

A

at

2,600

K.
withdrawals from
Canadian credit--——___

crete

practical

a

answer

seat at

from

Monetary Fund-

coun¬

In

the

one movie

wear

604

area are together reflected
in the decrease in the
sterling bal¬

of

think

deyised

gold

U. K. withdrawals from Internat'l

tries.

I

only

shoe

4,092

diminution

facilities

consume?

can

A

dol¬

sterling
ances

production

Yet I wonder if familiar¬

the price spiral?

on

no

in

U.

dollar holdings_____

K.

be

qualifiedly, "yes!"

568

on

say;
that

insatiable.

are

in

lars and gold
K.
and

wants

all quite fa¬

are

1%

hesitation in April in the
upward

to price inflation

ity has not bred contempt, to
paraphrase an old saying. Do you
fully realize how high up we are

accepted, it leads in¬
to the conclusion that

can

sense.

U. S. credit.

The

area

capital1 movements

f2,700

ances

attributable

sterling

pay¬

824

drain

plagued

you,

produce more than
America, the
richest country in the
world, and
with the highest standard of liv¬

Repayments of sterling bal¬

U.

of

Inflation

us

which you

miliar.

be

panded

_____

look at goods

a

overproduction
except at a price. Certainly, this
has been true in the
past, even
in the United States.
Yet, is it
not " possible
that
our
war-ex¬

5,720

overseas

Net

human

this

there

and

Payments for capital assets

reserves,

spoken.

to the rest of the

If

evitably

_

Most

This brings
with

my

that

was

needs, but these changes
not, of course, directly con¬

reserves

be

8,420

services

redemption

nected with the drain
of
which I
have

our

Payments, 1947

Rece'pts from Exports

year,

investment

some

as

'•

...

consume, even in a physical sense.
The first principle of economics
is

then

will

take

us now

(823)

Price

opinion we are now pro¬
ducing in many lines at a rate
considerably in excess of the ca¬
pacity of the American people to

Payments for imports and

nomic

the

supplies

Goods Inflation

going to
nonetheless, I must point out
in

$ Million

area

addition,

the

if

prices ris¬

with "shortages," will find it dif¬
ficult, if not impossible, to agree
with what I am

means

the market,

of

to keep

.

j ;

..

inflation.

in

Africa—some movement of
capital funds over and above eco¬

on

sales and

FINANCIAL CHRONICLE

,

•

Let

decisive

a

industrial
employment
placed in jeopardy.

South

drain

becoming

out

us

food

our

^undoubtedly—and, particularly, to

are

this, in turn,

Adverse balance of

and

ing?"
:

&

from

come

:

that the competitive
power of our
products must be hiaintained
and,
if possible,
improved. Price is in¬

as

million

substantial

alterna¬

no

either export and

services

our

for the restor¬
ation and development of indus¬
tries

must

enough to pay for our food
materials, or do without.
Upon our capacity to export and
earn, ; depends
our
capacity
to
work our
way through these try¬

total

on

million,

£266

course

there

We

£ 157

-million,
are

is

to

and raw

ing

coun¬

as

£340 million in

.The rest of the
sterling area had
a
deficit with the dollar area of

was

difficult, but there

particularly

earn

area

States,

tions render the task

drawing

Fund.

U. K. had

with the dollar

United

and

interna¬

our

the

on

Monetary

1947 the

THE COMMERCIAL

early
slight

Joe N. Solter

Opens

WICHITA, KANS.—Joe N. Sol¬
ter has formed Joe N. Solter Com¬

to engage
business
from
pany

in the securities
offices

in

the

Wheeler-Kelly-Hagny Building.

THE
28

(824)

industry

Fundamentals—The

but
of

along share¬
holders have fared, as far as in¬
til maturity 10 years after pur¬
come
is concerned, very badly.
chase. The yield on the "E" bonds
The policy of the government has
is about 2.90% and until recently been to lower mail pay in spite of
the amount one might purchase costs.
For
example they have
has been restricted to $3,750. This raised the
price of ordinary mail
limit may be raised by a conver¬
50% but at the same time they
sion offer.
I believe that these have lowered the pay for carry¬
1932 and all the v/ay

4)

that

indefinitely. (Elec¬
Battery,
Electric
Bower Roller Bearing,

they

Storage

Auto-Lite,

Roller Bearing, LibbyOwens-Ford Glass, Briggs Mfg.,

Timken

Auto manu¬

etc.).

Corp.,

Dana

facturers look

market.

nies

can

Canada

others—Dr.

of
to

compa¬

quite a number of bottling and
distributing shares on the market.

Since the automo¬

the

offset

retailing

of

higher costs.

ond point is

in the

The

sec¬

answered by the fact
of holding

dissolution

the

that

although

companies,

not

nearly

completed, will end some time and
stocks
will
bring
their
true

the

of this
The
Interstate Com¬

major portion

A

worth.

field

tends

inefficient old plant sufficiently to

Stores

Retail

the

In

basis

the overhead

reduced

has

There
are
Nehi, with

Dry.

Pepper,

attractive

more

a

depress the market.
The answer to the first of these

questions is that new equipment

Pepsi-Cola

Coca-Cola,

are

and

best

The

outlets.

nient

better than the av¬

erage

expand

should

good business
tric

the war years
rapidly now
increase conve¬

during

sugar

and

Choice of Securities
(Continued from page

of rapid growth.
The
enjoys low labor costs
has been held back by lack

period

a

Investment

Thursday; February 19, 1948

FINANCIAL CHRONICLE

COMMERCIAL &

divestment has taken place.

of

attitude

the

the stores that are carrying high- merce Commission in the last few
this country it priced clothes, particularly woula weeks on freight rates and the
to
be vulnerable
at this attitude of
is a good index of business. On'y seem
public service commis¬
time.
If credit accounts shou.d
a bad depression can hurt business
sions
themselves
on
telephone
be restricted by Congress it would
in the near future.
rates leads one to believe that if
add to their troubles.
Without
for an older person—say in his seasonal traffic peaks and higher
necessary
public
utility
rates
Electrical Equipment Industries
the ability to
purchase over a would be allowed to come up to
50s—who wants an income after
wages.
Electrical Equipment industries
60 and can afford to
buy them
To
improve
service the air reached an all-time peacetime fairly long period on time the old a fair rate on invested capital. We
look
would quite often prevail have had also a rise in the rates
every
month now. Otherwise I lines must consolidate routes to
high in 1947. The point at which over new prices.
The resistance of Brooklyn Union Gas and other
think for most persons they are
provide
more
non-stop flights. the break even is reached, and
by the public to higher pricei appeals are pending.
a particularly bad form of invest¬
All in all,
Secondly, they must provide for
profit margins on present busi¬ caused by higher wages for fewer
ment as they pay nothing for 10 more interchange of equipment.
the outlook is for a good yield
ness are lower than normal expec¬
working hours will be further ac
and a fairly stable market in pub¬
years.
The Constitution of the Third, they must improve reserva¬
tancy. The huge volume suggests centuated
by the coming third lic
United States provides that the tion
utility stocks. The outlook with
procedure through inter-line that the net profits will hold at
round
of
wage
increases.
The relation to municipal and govern¬
Federal government cannot tax sales agreements.
Further con¬
present high levels for some time chances for any price break foi
the lesser
divisions of govern¬ solidation of terminal and main¬
ment
ownership
has
improved
to come.
The percentage of for¬ 1948 seem rather slim.
The low¬ in the last few years as more
ment.
This, therefore,
protects tenance service would be eco¬
eign business being done is larger ering of prices and larger turn¬
the buyer of bonds of the states, nomical.
and
more
voters
have
turned
than normal. Public utilities spent over
would
be the
thing tha
etc., from any taxes now or here¬
down the non-taxes, politicallyBank Stocks
$1,300,000,000 for new construc¬ would be the thing that would
after.
The security behind the
run, publicly-owned utility plants.
Any discussion of bank stocks tion in 1947 and almost regardless turn the market in dry goods
bonds varies from unlimited tax¬
The
outstanding feature of the
of
business
conditions
should stocks. As it stands now the highr
able power down to revenue as brings one squarely into the dis¬
communication systems — Ameri¬
several
years
of equally of 1946 are probably the all-time
cussion of government control of have
earned, for example, from some
can
Telephone
and
Western
large expenditure.
money rates and then the control
highs for many a day.
The spe¬ Union—will be their expansion.
water district only.
of the banks by the government.
The prospects for radio stocks cialty
chain stores like Wool- Western Union expects to spend
Aviation Securities
The outstanding feature in 1947 on the other hand are not good ex¬ worth, Grant, Kress, Kresge, Mc$60 million in 1950 in mechaniza¬
This brings us therefore to that was the rapid growth of commer¬ cept as the television boom may Crory and the grocery chains—

particularly suitable ing air mail. It follows that one
for
certain
situations where a cannot be sure of solvency, much
young couple wish to establish a less
income,
considering
that
fund for education in 10 years or there are other troubles such as
bonds

are

large

with

particularly con¬

are

we

securities

of

group

which

was

none

ended
although it

industry

aviation

The

too happy,

$2 billion industry.
This
will be the most criticial of
postwar period to date. Today
manufacturing companies can¬
depend on the air lines for
a

year

the

the
not

real estate loans
loans," while security
loans do not reach 10% of the to¬
tal.
Since the trend in the banks
has been the reduction of earn¬

the British

or

duced and the

with

Russians have pro¬
Douglas D 598 Skya
world record of

were

velopments.

air world
international
miles than all

-give promise of a new
field

the

In

come.

fly more
the rest of the world together and
we

we

circle

covering all

the globe,

Russia. Domestic
transport miles gained 713% dur¬
ing the year and domestic air
mail
was
off
slightly.
150,000

countries except

people were flown over the ocean.
planes

We have the most efficient

and

personnel, second to none. No

country is geared, both in busi¬
ness and socially, for flying as we
are.
Fares were reduced from 120
a

since the beginning

mile to

of 1946 and are now back to

The

5V20.

government's policy will de¬
life
or
death for the

termine

shareholder in the manufacturing

With labor, fuel and
rising sharply even
with cutting down on food and
chewing gum the transport com¬
panies have not yet been able to
reach profits.'
The Civil Aero¬
nautics Board blasted hopes for
companies.
other

costs

higher mail pay so the outlook
for
anything except
long-term
speculation in the transportation
shares of the airplane industry is
If you must go

bad

in, I would
stick to Eastern
United Air Lines and

suggest that

you

Airlines,
United Aircraft.
est

companies

Even the strong¬
are

results

beginning
the

to

the

drop.

I have followed very close¬

ly the history

of

terrific

show

of aviation




since

towards

a

increased, the trend

better picture in bank¬

ing is quite noticeable. Expenses
of banks are still rising but not
as

fast

as

instead of
1947

in

they were in 1946 and
15% drop in earnings

a

1946

over

as

expected,

they came up fairly close to the
same
amount.
I would expect

in

earnings

bank

1948

to

about

1947 if business conditions
remain at a relatively high turn¬

equal

by

may

than average.

have

stocks

and

been

the

copper

good

showing

purchas¬
and
some

earnings due to foreign

materials
stockpiling by our government.
International Nickel continues to
sell
to
the
steel industry
for
nickel chromium, stainless steel
heat
resistant,
corrosion
and

ing,

raw

wear,
a

resulting in
profit. During

and other uses

very

the

favorable

war

the price of copper

was

pegged at 120 a pound and since
it is now substantially above this
and historically
at a very high

legis¬ price, purchase of shares in these
companies carries with it the in¬
herent risk that prices might fall
still be under
warnings of State and Federal and all goods in process would
supervisory agencies.
As a mat¬ have to be marked down to the
of
profits.
Phelps
ter of fact, the boards of some detriment
banks have loaned all the money Dodge is more of a domestic com¬
they wish to loan at present in¬ pany than Cerro de Pasco. Kenneflated prices.
and
Anaconda
are
very
The Internal Rev¬ cott
enue
Department has ruled that strong in South America.
Cal¬
a portion of revenue before taxes
culating the yield in these shares
could be set up as a reserve for you must realize that the assets
bad loans.
of the company are
being dis¬
The
appeal of bank stocks is tributed as the-reserves are mined
Again, Phelps
largely limited to long-pull in¬ from the ground.
vestors.
Since the average bank Dodge is probably in a better posi¬
pays about 60%
of its earnings tion on reserves. The best of the
in dividends, there is small chance gold mining shares is Homestake
of any cut in dividends and thus which is the Hearst Company in
late

on

there

loans by

is

this

banks they will
pressure
by the

continuity of

stable income.
Auto

Industry

Auto industry

slightly lower number of trucks
and a slightly higher number of

than were made in
1947.
I would expect the cars to
sell
at a
slightly higher price,
depending on the third round of
wage
increases.
The
luxury,
higher-priced cars will be in sup¬
ply after the middle of this year.
Exports of 7% of the passenger
car
production and 20% of the
truck production are expected if
the Marshall Plan becomes effec¬

passenger cars

P—rep

invest¬

Doing

for

cash

all their business
and with a much more

they

turnover,

sounder

more

represent

values wit!

depression-proof qualities

higher cost of food cuts intc
the ability of people to spend on
Other things, especially since au¬
tomobiles take so much of the
The

and

excess

of

currencies

realistic

and

which
would be
constructive,
gold

probably have a con¬
They
consolidated
Mining
and

shares will

siderable increase in value.
are

Smelting,

Homestake

and

Mcln-

tyre Porcupine.

During the war, of course, the
distilling companies had a very
favorable time due to two factors

their
normal
distilling
being limited to about
month left them in
the position to furnish alcohol for
war
purposes for the balance of
the time.
The inventories which

—first,

functions

five days per

much

telephone company

the

amounts.

larger

Such

stocks

as

Houston Light¬

ing, Idaho Power, Utah Power

and

El Paso Natural Gas, Co¬
lumbia Gas and Electric, Cleve¬
land
Electric Illuminating have
Light,

given good market performances
and should continue to do same.
Bonds and preferreds have defi¬
given

nitely
value

to

up

10%

about
in

change

the

of

money

rates.

high in price.

so

are

Market Factors

Utilities

Public

public utility stocks cover
electricity,
gas,
tramways
and
telephones.
Their existence
is
based on a franchise given for a
The

good
things
about the
market are tangibles such as high
rate
of earnings and
dividends
The

and operations, whereas the bad
things about the market are in¬
perpetually by
tangible, psychological and pros¬
the regulating authority.
Almost
pective with
tendencies rather
every state has a
public service
than actualities. First, inflation is
commission and the Securities and
not
bullish unless carried to a
Exchange Commission since 1934
very
comparative degree. Infla¬
has control of interestate utilities
tion actually causes a corporation
Since the end of the war electrical

term

of

years

consumption

has

into

broken

or

continually

new

record

high

The prices for the serv¬
are at the lowest
with the excep¬
tion of telephone, in spite of the
increased cost and the electrical

ground.
ices

rendered
in

level

industry

is

tre¬

higherpriced business from the inven¬
tory to the finished product. This
endangers the stockholder through
the principle of leverage and large
borrowings ahead of common. In
mendously to carry on a

words

other

it

equity

dilutes

continually lowering
earnings
through expansion of
The building commercial debt and capitaliza¬

several

large

transcontinental

pipe lines has given the gas dis¬
tributing utilities a terrific boost.
The

borrowings

its

increase

to

if possible.

prices
of

history,

with com¬
petitive fuels such as coal has be¬
come
much more favorable.
All
companies have a large backlog
fairly South Dakota which has a long of orders for new connections and
record of dividends and produc¬ new customers which so far they
There
tion.
If we have remonetization have been unable to fill.

will try for
4 million pasenger cars in 1948
and
about
1,100,000
trucks,
a
The

of

type

another

ment.

much

If Congress does not

over.

resent

certain

metal

Base

and

tion

Safeway, Firs

Kroger, Jewel Tea,

National Stores, and A &

rapid

Mining Industry

ing

yields have

country

this group

in

Philco

better

be

the

across

way

1949.

lowest

outstanding de¬
The two jet planes

650.6

will have es¬
television stations all

tablished

assets in items bearing the
yield the paying off of
short term Treasury
bonds and
the
assets
showing the highest

I hear that

public fancy.

American Telephone
the

business, with the re¬
sult that the industry is entirely
dependent
on
military orders.
Although military business is sub¬
stantial, the 15 major companies
last year lost around $100 mil¬
lion.
After tax carrybacks and
application of postwar reserves
the net loss will still be twice as
much as the $11 million in 1946'.
Military planes produced in 1947
were
about 1,800 compared with
a wartime peak of 96,000 and 250
transports
were
produced and
about 15,000 personal planes com¬
pared with 35,000 in 1946.
The
new Eastern Air Lines Constella¬
tions
and
the
American
and
United Air Lines DC6s and the
Lockheed
Shooting Star, which
did 625 M.P.H., beating any that

to

catch

and "other

profitable

streak

been

since January in

cerned.

1947

smallest hamlet of

Successive new peaks
reached each month

cial loans.
have

business penetrates even

bile

price relationship

tion.

As

a

result this has caused

stresses and

strains

on

the work¬

ing capital position and therefore
has caused much higher operat¬

costs and a higher break¬
point. In the face of this we
rising interest rates on large
short-term borrowings in many
instances. Hence the sale by some

ing

even

have

of

our

stronger companies of com¬

investors an
mon
stock.
Third, there is an
something
intensified competition as we pass
wrong with investing in our elec¬
from a buyer's market to a sell¬
trical operating companies.
The
er's market in everything. Fourth,
first argument is that utility com¬
we
have
defintely entered the
panies will eventually bs.squeezed
stage where the long-term bond
between rising costs and unalter¬
trend is downward and this car¬
able rate structures which would
ries with it, of course, preferred
prevent them from maintaining
stocks.
This
is
caused
by the
their present standard of earn¬
change from a government-spon¬
ings.
Secondly, investors have sored

has developed among

that

idea

there

is

of securi¬
sale—about $500,000,000 last year—of the compa¬
seen

the terrific volume

ties offered for

nies

being dissolved
the Public Utility Holding

which

are

cheap

interest
least

credit

rate.

money

Fifth,

to

we

a

higher

have at

begun to over-extend bank
in many lines.
This does

apply to loans on stocks but
probably to real estate and com¬
This is the break¬ mercial loans. The commercial
expansion program of
ing up of systems into smaller
loans of all insured banks plus
the industry is now 90%
com¬ higher prices and later, of course,
operating units.
Thirdly, invest¬
pleted but retooling and extensive began cutting it more and more ors have seen that the five-year consumer credit are now esti¬
with alcohol.
This operation at
mated at 18% of our gross na¬
improvement changes push new
program
of expansion to raise
tional
models about the 1947 counter¬ capacity for the government of
production as compared
course caused
them to receive a kilowatt production to a safe point with 9.4% at the end of 1944. The
parts.
Thus 1948 Hudsons were
demand
would
require
double income.
National Distil¬ above
sixth reason I would give as the
$178
to
$220
above the
1947
about $5 billion, a part of which
sureness of a large decline in our
models.
Even
minor
changes lers and Hiram Walker are prob¬
would be raised through the sale
ably the more conservative of the
caused Nash to raise prices $12 to
exports in 1948 over 1947.
The
of common stocks." When the $5
companies as they have followed
seventh reason I would place as
$45, Studebaker $67 to $100. The
billion is being spent in a rising
trade
practices protecting their
being caused by inventories hav¬
large companies will have new
market with persistent offerings
models for 1949.
The accessory j trade name and avoiding undue
ing been filled, which factor, of
of common stocks, each of which
course,
made
the demand for
companies, since we now have 38 pyramiding of inventory.
must be sold at a small fraction
The soft drink field is still in
million
cars,
should have very'
j
tive.

The

they held they sold at higher and

under

Company Act.

not

Volume 167

goods

last

Number 4674

THE COMMERCIAL

urgent.

ac¬

FINANCIAL

CHRONICLE

A

moderate decline in industrial

&

year

very

The State oi Trade and

tivity could result at present, with
the

high break-even point, in a
sharp decline in net earnings. The
conjunction of impaired consumer
purchasing power, reduced ex¬
ports, lower demand for inventory

(Continued from

and

bulk

by

higher

ing by Mail" plan took place

Central

&'-South

stock

placed

the

at

Brothers

&

Missouri.

West

the

at

on

Co.

of

by

firm's

was

Kansas

City,
the

broker,

16

of

first

the

and

were

able

teletype.

interest
new

been

some

Mr.

Settle¬
will

shown

in

the

the

Ass'n to Hear Dulles
of

for

ago

New

one

of

week ago,

indicated

This

meeting to be held in

Marshall

American
a

Plan

Business."

steel

a

was

year

96.1%, while

Mr.

I
j

livan & Cromwell, was head of a
division of the O. S. S. in
Europe

during the war and played an
important part in arranging the
Italian armistice.

legal

At present he is

advisor
of

for

the

Herter

Congress, which is

studying the Marshall plan.

Wilmer R. Wright, Management
members

of the Brooklyn Chapter, National
Association of Cost

Accountants,

the

Costs,"
on

subject
the

at

Feb.

18th

of

"Standard

Chapter's

at

meeting

Michel's

Restau¬

ing
case

tems

of standard

installed

and

the

standard

cost

a

sys¬

supervised by

His talk included
of

stand¬

on

installations, presented

study

him.
sion

engineering, includ¬

considerable work

a

application

cost

methods

by the New
change, Atlas

discus¬
of

the

Powder

the
and

York

American
the

Ex¬

Company,
Thread Company

Pittsburgh

Company.
braced

employed

Stock

The

some

Plate Glass
discussion
em¬

of the latest

develop¬

ments in the application of stand¬
ard costs to industrial

accounting

and demonstrated how this

develops

system

important

management
controls and information for pol¬

icy decisions, whereas other cost
systems fail to supply such neces¬
sary

Age"

month

ago

1,646,700 tons

one

J

yea^ago."

(

The amount of electrical
energy distributed

by the electric light
industry for the week ended Feb. 14, 1948 was 5,384,945,kwh., according to the Edison Electric Institute. This was
27,416,000 kwh. below the
previous week and 51,485,000 kwh. less than
duced

time.

in

It

the

week

ended

Jan. 24,

1948 which

however, 606,711,000 kwh.,

v/as,

or

was

record

a

12.7%, in

excess

pro¬
for all

of the

4,778,234,000 kwh. turned out in the week ended Feb.
15, 1947. The
14, 1948 week was the sixth Consecutive week that
production
of electricity exceeded the
5,000,000,000 kwh. mark, and the 14th
such week in the
history of the industry.
Feb.

LOADINGS

IMPROVED

DESPITE

BAD

WEATHER

*\

increase of 20,356 cars, or 2.8% above the
preceding week, notwith¬
standing adverse weather conditions which interfered with industrial
and

railroad operations.
It represented
2.6% below the corresponding week in

cars, or 4.8% above tne

decrease of 19,907 cars, or
1947, but an increase of 34,154

same

week in

a

1946.

Boston

—

Bald-

Co., members of the

Stoek

Exchange,« have
branch office at 804 Main
Street, under the management of
Albert H. Clay.;
r
* \

opened

a




about $1 lower.

down

Coffee

3

cents

and

per

pound

futures

cocoa

hundredweight in the

Fats and oils continued weak

in

the

showed

general

substantial

liquidating
losses

but

the market for actuals held

fairly steady. Flour prices slumped about
pounds; demand at the lower levels showed a

60

cents per hundred
little improvement.

Cotton prices showed

a

firming tendency in the closing days

the week following a moderate downtrend movement
during
most of the period, in sympathy with the break in other markets.
of

At the
a

close, the New York spot quotation was off 63 points from
Mill buying continued slow and demand was principally

week ago.

fears

better grades.

of

Part of the early weakness was attributed to
European Recovery program and of further

delay in' the

revaluation of foreign currencies. ^Registrations of cotton .under the
export sales program showed a marked increase in the week ended
Jan. 30 to 44,150 bales, as compared with 12,500 a week
previous.
Textile markets were relatively quiet although some fourth
quar¬
cotton sheetings were reported at the week-end. Textile

ter sales of

prices generally

were

firm and unchanged.

RETAIL AND WHOLESALE TRADE SHOWS SLIGHT CHANGES
FOR WEEK
,

While

consumer

interest continued to center

on staple winter mer¬
chandise, the response to early spring promotions improved consider¬
ably. The total volume of consumer purchasing increased very slight¬
ly last week and retail dollar volume was generally moderately above

the level of

the corresponding week a year ago, Dun &
Bradstreet,
Inc., reports in its weekly survey of trade. The approach of St. Valen¬
tine's Day stimulated the demand for gift items, and as a
consequence,
orders for

candy and flowers increased considerably. the prices of some foods generally
had little effect on grocery volume.
.

The fractional reductions in

The purchasing of food was
consumers

steady at a very high level with
continuing to seek inexpensive items of good quality.

The arrival of the lenten

manufacturing

There

was

consumer

stimulated the demand for fresh

a

moderate increase in the

buying of canned

preserves.

Promotional sales of spring

cen¬

held down production of cars and
trucks in the United States
Canada again the past week.
Estimated output of cars and trucks in the
United States and
Canada the past week amounted to

season

Poultry and the cheaper cuts of meat also continued

appayel emphasized Easter items and

generally favorable.

response was

and

85,262 units, "Ward's Automotive

Report" states.

This

compared with a revised total of 82,717 units
preceding week, 97,276 units in the corresponding week of
last year, and 127,510 units in the same
week of 1941.

in

the

Last

Clearance

sales

of

some

winter clothing stimulated

buying

with the demand for heavy coats and footwear large.
t
„

Activity in lingerie and jewelry departments increased with in¬
improved somewhat. The volume of men's wear
remained large. Shirts and haberdashery were steadily purchased.
terest in millinery

week's total comprised 57,429 cars and
25,233 trucks built
States.
Canadian truck output totaled
1,375 units and
passenger car production to 1,225 units.

Clearance and promotional sales of furniture continued to attract
favorable attention, though dining and bedroom suites of good qual¬
ity remained somewhat difficult to obtain. Fine grade floor coverings:
sold well and demand for radios increased. The volume of automo¬

BUSINESS FAILURES CONTINUE UPWARD

bile

in the United

Commercial

and

industrial

sharply

rose

in

as

compared with 97 in the preceding week and 62 in the
corresponding
week of 1947.
Twice as heavy as a year
ago, failures were over
five

times

as

numerous

considerably below the

as

in the

prewar

in the comparable week of 1939.
and

same

level,

supplies and accessories continued to

that of

failures

the week
ending Feb. 12, reaching the highest total for any week since Janu¬
ary, 1943.
Dun & Bradstreet, Inc., reports 128
concerns failed

week
or

of 1946, but remained
only one-half as high as

Nearly all of the failures involved liabilities of
$5,000
totaled 115, 84 a week
ago and 55 last year.

two

MASS.

was

movement.

Steers fell about $3 per

were

vegetables, fruits and

or more

Ten of these failures involved
liabilities of $100,000 or more
more than a million
dollars were incurred in

FITCHBURfc,

lard

and

sheep

to sell well.

each and losses of

Win. White &

the market.

on

week while

and canned fish.

AUTO OUTPUT SHOWS SLIGHT GAIN
FOR WEEK

details.

Baldwin, White Branch

Hogs declined around $5 per hundredweight to the lowest in 16
Dwindling demand at the lower prices left many unsold

months.

for the

and

'

Livestock values continued to fall sharply under the impact
of the heaviest market receipts in maitfy months.

swine

ago.

ters

ard cost

their low marks, May wheat and corn contracts showed declines of
about 52 and 40 cents, respectively, from their
high levels recorded
earlier in the week. There was a partial
recovery in all grains on.
the closing days of the week.
,

0.2%. A month
operating rate of

Industrial gas shortages in Detroit and other

Wright, long experienced in

management

to

and power

rant, Brooklyn.
Mr.

Maximum daily losses occurred in wheat, corn and
soybeans for
successive trading days on the Chicago Board of Trade.
At

week's operating rate is equivalent to
1,667,300 tons
ingots and castings as against 1,670,900 tons last
week,
a

4

three

Loadings for the week ended Feb. 7, 1948, totaled
747,394 cars,
according to the Association of American Railroads. This was an

B'klyn Chapter of NACA
Engineer, addressed the

their recent peaks,

000

FREIGHT

Wilmer Wright Addresses

on

All grain futures markets were subjected to a
general wave
df liquidation last week which brought prices down
sharply from

or

an

points, or 7.0%, to 278.92 on Feb. 10, from 299.77 a week
This represents a cumulative decline of 9.7 % from the
post¬

war peak of 308.82 recorded less than a month
ago on Jan. 16. Al¬
though the current figure is still above the 1947 comparative of 244.96,
the year-to-year rise has been narrowed to 13.9%.

annual

Iron

20.85

earlier.

on

Dulles,

Committee

fell

ELECTRIC PRODUCTION AGAIN FALLS
OFF

and

partner in the law firm of Sul-

the

a result of the severe break in grain and livestock
Registering the sharpest drop ever recorded in so short a
period, the Dun & Bradstreet daily wholesale commodity price index

from

decrease of 0.2 point,

a

rate

shown

1,732,200 tons

Feb. 19. His topic will

p.m.,
"The

an

products, alloy bar extras, nails
It could possibly be

"The

general level of wholesale prices trended sharply lower in

prices.

steel company
profits,
commodity market break to affect

Exchange at

3:45

on

gleefully sticking the harpoon

was

a year ago, a rise of
8.1%, which is considerably smaller than
13.5% gain shown a week ago.

the

economic

of

the

94.1%

the Board of Governor's Room of
the New York Curb
be

time

The

are

a

or

back

the past week as

specialties.

any

92.7%

Allen Welsh Dulles will address
Junior
Investment
Bankers

the

Association

increases

rolled

COMMODITY PRICE INDEX REGISTERS FIRST MAJOR
POSTWAR BREAK

be

The American Iron and Steel
Institute announced on Monday
of this week the
operating rate of steel companies
having 94% of
the steel-making capacity of the
industry will be 92.5% of capac¬
ity for the week beginning Feb. 16, 1948. This
compares with

Junior Inv, Bankers

a

4.3%, the widest weekly break since the govern¬
prices on livestock and meat at the beginning
of
September, 1946.
The
current
figure is the lowest since
Nov. 4, 1947, when it stood at $6.78.
It compares with $6.32 at this
ment

high

and all scrap dealers who had their confidence
shaken by
the commodity price
drop. This was reflected in the
Chicago market
where the price of No. 1
heavy melting declined an average of
75 cents a ton and in
Philadelphia an average of 50 cents a ton.

application for membership in the

at

to

new

anticipating the wage demand
by Philip Murray, steel union head.
Murray will indicate this week that his union's

cost

into

Exchange.

Brokers

these

railroad

living for steel workers. The
union,
observes, will ask for a substantial increase.
Scrap consumers this week were

plan, and several pew out-offirms have already made

York

certain

wage increase stems
tax rebates and the failure of the

be

town

and

and

of

foundation

on

has

first

be made this week

Thursday through
Clearing Corporation.
Much

the

fencing

that

day that

transactions

made by mail

was

floor brokers

own

the

over

ment

stock

members

to contact their

direct

in

by steel officials advocating lower steel
prices has not
been supported by these
price increases and by others which
have been made since the first of
the year.
These increases included tin mill

the

was

out-of-town

the

in grains and livestock were reflected in the
wholesale food price index this week.
TRe index
Feb. 10, from $7.14 a week previous.
This, was a

to $6.83 on
drop of 31 cents,

Talk

Turner. The actual execution took

place at 9:10, and
purchased at 8%.
Feb.

decline

weather has

a

products from these items will find their cost
increased
basis by approximately
$10 million.

by that
Alfred
E.

declines

fell

received

was

"floor

basic

pay higher
charges on structural shapes. Estimated on a
yearly basis
this change in extras will
cost structural fabricators
approximately
$15 million, the above trade
authority points out.
Major steel firms which sell
forging and rerolling billets, blooms
and slabs have
changed their pricing system to a net ton
price basis
instead of gross tons.
Nonintegrated makers who make finished steel

Stern

The order reached

and

in

used
'

«

fabricating industry this week began to

size extra

floor of the
Exchange over the
newly installed teletypewriter at

8:58

pipe

•

recent

The structural

Corpora¬

market

opening

,

Gray market steel prices which would
be the
affected by adverse market
conditions have reached
in the past week.

first

the Chicago Stock Exchange Feb.
16. An order to buy 100 shares of
tion

by the oil, gas
will also find their

merchant

on

the steel

"Clear¬

new

prices

ingot rate and the loss of output due to cold
met head-on with
increased consumer
requirements.

The

—

borne

group

increased

Drastic

A special check
by "The Iron Age" editors this week failed to
disclose any crack in the steel
demand wall. The

Chicago Exchange
Clearing by Mail
ILL.

WHOLESALE FOOD PRICE INDEX LOWEST IN THREE MONTHS
Dun & Bradstreet

these higher prices will be
industries. The construction

water

costs

sharpest increase both from the previous week and from
1947 level appeared in the New England Region where failutes
jumped from only 2 last week to 25 in the week just ended.
the

5)

of

construction work.

CHICAGO,

Industry

tubes, certain semi-finished material
and, the magazine notes,
have sharply boosted extra
charges on structural steel shapes.
The

29

The

and

and moderately lower industrial
output will I believe feature 1948.

transaction under the

page

(825)

cases.

The week's increase occurred
principally in
almost two times as
many casualties occurred

manufacturing where

as last week.
At 56,
manufacturers failed than in
any other week since 1941. Retail
trade mortality remained at
42, and was about twice that of a

a

year ago..

There

was

a

*

*.;v*

compare

.....

favorably with
.

.

fractional decline in the dollar volume of wholesale

trade the past week and the week

ended this Wednesday. While it
somewhat above the level of the corresponding week a
unit volume was slightly lower. Caution marked the re¬
tailers' attitude in making long-term commitments and resistance to
high prices remained considerable.
Department store sales on a country-wide basis, as taken from
remained

year ago,

the Federal Reserve Board's index for the week ended Feb. 7,
1948,
increased by 10% from the like period of last year.
This compared
with an increase of 8% in the preceding week.
For the four weeks
ended Feb. 7, 1948, sales increased
by 6% and for the year to date
increased by

7%.

Retail trade in New York the previous week was hardest hit
in food lines as a result of the drastic decline in commodities and
such reductions ranged from 5 to

10% in these lines.

more

year

ago.

The

largest number of failures, almost

occurred in

the Pacific

States.

a

third of the total,

According

to

the

Federal

Board's index, department
City for the weekly period to Feb. 7, 1948,
increased 12% above the same period last year.
This compared with
an increase of 11% in the
preceding week. For the four weeks endfed
Feb. 7,1948, sales increased 8% and for the
year to date rose by 6%.
store sales

in New York

Reserve

^

THE COMMERCIAL

(826)

30

&

FINANCIAL

CHRONICLE

(Continued from page 2)

Monetary Fund

tively

scale.

to

ganization, but in the endeavor to
get down to business while the
enthusiasm for the project per¬

limited
offic.al

statement,

an

Nov.

aiding

other

to

in

faux

a

pas,

and one
unde¬

$8,045,000.

lowing

has been slow

True, the Fund

Danish Kroner

Francs

French

Pesos

Mexican

Netherlands Guilders
Turkish Liras

Sterling

Pounds

that

inserted

were

Woods

Bretton

behalf

member

of

territories

in

One

the

Agreements

the transitional postwar

on

whose

states

occupied.

were

gold

ier

U.

S.

Switzerland,

tion

hindering through its

or

efforts

the

that

other

ac¬

mit

coun¬

gold

tries may make in the same direc¬
tion
while
employing different
suitable

means

their

to

cir¬

own

few

needed

"It regrets that

The Effect of Negative

this

Undoubtedly,

of

if

the

Fund

adhered

to

banking and financial prin¬
ciples, and ignored political con¬
sound

siderations in its operations. -But

it is not the exchange operations,

regulations thus
important. The or¬

Fund's

but

the

far

that

are

ganization,
enforced

on

its

members

in

of

some

Charter

the

existence, has had, on the
whole, a negative unwholesome
very

effect.

drawn

notwithstanding

may,

Mr.
the

as

virtually

forced

maintain

to

an

artificial exchange
currencies. This

unwarranted

their

for

value

in some cases,

condition has now become

widely
"suppressed inflation."
greater force for evil than

known
It isf
for

as

a

It has hampered

good.

and

reduced both domestic and inter¬
national trade transactions, and is

leading factor in creating and
maintaining
black
markets
in
currency and goods. It has pre¬
vented domestic prices from fluc¬
tuating in accordance with domes¬
tic or foreign money values, has
a

led to loss of public

confidence in
fiscal affairs, and has added fuel
to

the

present postwar economic
chaos that makes the implementa¬
tion of the Marshall Plan of doubt¬
ful

success.

As

in

remarked

was

the

viewing
in 1947

currency
on

New

in

"Herald-Tribune"

York

re¬

developments

Jan. 2;

"Acknowledged changes in

cur¬

rates and relations were not
numerous in 1947, partly because
rency

of certain commitments by mem¬
bers

the

of

observed
ever,

International

nominal

were

beset

kets in which

would

of

parities, how¬
by black

mar¬

dollars, for instance,

purchase

number

Mone¬

Many countries which

tary Fund.

many

local

times the

units

indicated

by official exchange rates. In Ger¬
many a crude sort of barter pre¬
vailed, based mainly upon ciga¬

five

been

a

might

It

years.

the

ated

and

before in

monetary

adhere

at

fixed
upon

to

of

a

which

their

have

would

run

the

"Although the need of virtually
all countries for dollars

was

des¬

perate at all times, the artificial
exchange relationships made it

it

following

doubly difficult for countries like
France and Italy, for instance, to
obtain dollars by means of ex¬
ports. The French and Italian

ex¬

porters were forced to use official
exchange rates, which made the

prices of their wares in the United
States egregiously high and even
prohibitive."
It is thus

quite apparent that a
serious error was made by the
Fund authorities in calling for
"tentative parties" to be fixed by
the members for their individual
a

period of

re¬

adjustment
had
been
accom¬
plished and political and eco¬




not have achieved its purpose, or

it would have been too great and
would have inflicted

an

excessive

rise in prices and impoverishment
of the French economy.
"It therefore is necessary to pass

through

offers and

sets

can

market

"The

currency, parities
Fund last year for¬

Fund

tendency
in

member

to

Fund's

the

countries

articles

where

rates

as¬

other in
are

a

estab¬

Government's

is to return

knows

that

the

following is the best

a

loopholes

for

grope

of

agree¬

exchange me¬
of value

let
of

look

us

back

speculation which
seems
to have been ignored by
pundits of the International Mone¬
causes

gold

tary Fund.
back
grouhd of present
premiums is very simple!
War, together with a paper money

system, causes
the

have the

surplus

rency

or

face

of

property

cur¬

having

expressed

small size in relation to

be

easily

stored

value, so
or trans¬

in

universal

ity is

demand.

in

currency

are

stabil¬

restored, ~ the incentive

to
other similar

final

from

circulation

gold
and

of

hoardings
elsewhere

bears di-

rectlyafin. anothej-'policy enunci¬
ated at Paris—namely exchange
stabilization. ^Inflat'on

Unless

is

bound

fall of the real ex¬
a Ration's currency.

co&tinuoUjS depreciation of

rate| of exchange is

the*, official

or

from

mone¬

the

large

private

in Europe, Asia
(impossible to es¬

!

.

)

exchange

whether

should precede or

-

stabilization

/follow

recovery.

Long experience fpti many • coun¬
tries, including Europe after the
last war, has

taught that exchange

stabilization

is

usually

thev prior

requirement. As ih 1924 exchange
stabilization
a

as

should,

be regarded

foundation stOpe on which to

rebuild shattered gconomic struc¬
tures.

It follows that the internal

depreciation
be

of

currencies

must

a*

Universal
Be

The

Gold

Standard

Adopted?

and

throughout

of

a

gold

Europe

is

signature,

the

International

construction

both Houses
Legislature

to the
making

for

Governor

of

bonds

Bank

Re¬

for

Development

and

investments for life insur¬
companies
and all
other

legal
ance

insurance

domestic

State.

the

within

Bank bonds

ments

are

now

Life

for

companies
International
legal invest¬

Insurance

com¬

which does not

except Vermont,
have

a

session
this

scheduled

its Legislature

of

Eleven im-

year.

companies

oortant

life

having

assets of more than $4.6

billion

are

insurance

domiciled

life

featuring

in

Massachu¬

which also are covered

and

assets of

by this legislation have
$42,400,000.
J.

John

the

which

insurance

headquarters

over

Massa¬

in

Fraternal organizations

chusetts.

,

International

construction

,

,

*
of

President

McClov,

for

Bank

Re¬

Development,

and

informed of the passage of

when

this important

Massachusetts leg¬

islation, said:
"We

legislature has approved

bill

the

glad that the Massa¬

are

chusetts

authorizing

companies

in

the

Bank.

the

insurance

State

the

bonds

chase

of

the

to

pur¬

Interna¬

The willingness of

Legislature to authorize insur¬

most

funds to be thuS invested

gratifying,

standard

the light of

possible,

servative

since this would assure some sta¬

»•

goes

now

ance

question now arises whether

adoption

Massachusetts

the

tional

checked."

Will

matically.
view

continuing|requests for aid.

"Fiscal^ solvency also

tary use is restored.
Gold pre¬
miums,
so-cailed,
cease
auto¬
In

vitaT consideration in pass¬

lead to the

has passed

bill

A

of

attained must panies in all North Eastern States

degree of., .progress

When

as

policy it is

tion and real national income. The

ternal value of

Mass, Insurance Cos,

setts

imperishable; that have relatively
to

immediate

an

tion to the expansion of produc¬

on

Legal Investments for

sequent adverse effect on exports
and a great stirrfulus to imports.
It
is
always *9^ .nice
question

the

of the

as

as

balancing of budgets may be im¬
practicable. It is^Insisted, how¬
ever, that progress in this d:rection must be achieved in propor¬

a

*,'

World Bank Bds. Made

national

of

holdings

other

value

that

and banking transactions*

have

in terms
monetary unit, such as debt
claims, leases, etc., into a com¬
modity or commodities that are

a

con¬

are

be|-recognized

well as the fact

international

chaotic conditions in

contemplated thefce will be a con¬

Therefore, people who
means, seek to transform

their

must

fronted

and;

markets Jn foreign exchange
trade

*

*

it will lead to black

in these pages,

loss of confidence

a

stability

currency.

difficulties with

countries

to

The

gold

enterprise and prevent

tion.
The great
which many

the

at

of

As

success.

pointed out previously

has- been

throttle the

the essential expansion of produc¬

ing

acquire gold or any
commodity for hoarding gradually
ceases. The gold thus withdrawn

means—con¬

spirit

,of

is little indication

re¬

instability of the

nation's finances vnll

be

as they apply to maintenance
parities."

rf*oney; printing

procure funds with

to

process)

quirements the

attempt to do this, but there

may

goyernrh.ent con¬
to central

which to finance it$ manifold

gold, since no nation can

long have its currency valued in
gold abroad at a fixed rate and
not have the same value applied
to it in domestic dealings, France

I.CXU.'s

paper

suitable, European docan
again be

are

linked to

been recognized

a

sell

to

mean

mestic-currencies

question? iV-yv'"*VV>*
has

'•"So long as
banks Ja

of

Now

fact

"nest

a

But it can mean that once the con¬

deficits

operating

a

ditions

by the President's' Committee or
Foreign Aid. the Harrirrian Com¬
mittee; which in its- report stated:'

ment

confidence

each

aim,
quickly
as possible
to stability—but to a
real and lasting stability, not to
an. artificially and purely appar¬
ent stability.
"It

a

ferred, and, above all, whidh

balance

course

where

transition period dur¬
at least part of the

lished freelv.

of

unofficial

world

bids of convertible

a

which

ing

many

the

of

the

some

insufficient and would

have been

mem¬

in gold
exaggerated

mally accepted cannot be wished
away merely by saying that the
volume of trading in black-mar¬
ket- gold is very limited.
More¬
over, there has been evident in

new

franc

about

structure

commercial

the

values

Fund

of

par

premium.
Yet the precarious nature of the

in

of

by Mr.

expressed

gold is traded in at

prematurely to give

definition

be

sometimes

a

markets

it appeared impossible to

"In seeking

the

importance to the

non-commercial.

such

that

currencies

must

gives

exchange rate satisfactory for all
or

stated

As

This

form

can

This does not neces¬
the reestablishment
gold coin standard, however.

sarily
of

current revenues and ;cease

tinues

fact

the

bers

stated:

abroad,

waves!

"The

present state of French

transactions

Can¬

condemned

and

war,

cies to gold.

can

is out of the

and

further

much

official

through
additional printing
bank notes, currency 'stabilization

of Jan. 8:

valua¬

a

their

covering

Herbert Bratter in the "Chronicle"

difficulties,

define

move was

strongly

ocesih

Communique issued

Government to

the

it by le¬
backed

suppress

last

'is ( government " deficit
spending, and, in this matter, ihc
International
Monetary: Fund ' h
lelpless to act. Unless and until
European" governments■/ .live -■ on

manifestos will not wash back the

economist, is duly cognizant
practical as well as the
theoretical
aspects of monetary
problems.
In his Communique
announcing the French franc de¬
valuation and proposed adherence
to a free domestic gold market,

economy

by the Fund, and
the member nations

proper

tion,

course,

offering a bonus on gold
domestically produced.
But such

the

"In the

dollar

the

When

egg" for linking domestic curren¬

primary cause of all this, o-

The

coming to the
conditions

is

or

States.

for currency stabiliza¬
of the hoarded gold
will reappear as it did after the

are

standards

as

or

in

now

United

domes¬

regulations

parity

is

no

and

currencies
fixedk

or

by individuals and busi¬
Some of this hoard

ness concerns.

the

in

confidence

no

tic

ada for

and

Mr. Mayer

is

tle

by Rene Mayer, the French Min¬
ister of Finance, who as a banker
of

Throughout
Central ' Europe, !
with
the
exception of Switzerland,- there

by Secretary of the
Treasury Snyder, who went a lit¬

reflection of this situation is

A

above

strenuously

up

borders.

found in the

transactions in gold

gal action. This

have

within

transactions

Camille

premiums

value

tions, and permitted them at the
same
time
to control,
regulate
and restrict foreign exchange and
trade

Mr.

called

"parities,"

stated

their

to

June

there

are

amount, it is undoubtedly

hoarded

gold.

for

diums

coming under
the
jurisdiction
of the Fund's
provisions. But it did not do this!
Instead,
either
by
persuasion,
prestige, or influence, it practi¬
cally forced all member nations
to

inhabitants

the

grasping

restore their use as

way

any

mar¬

by the International Mone¬

international

and to otherwise settle their eco¬
nomic

level,

free

a

and

French

Gutt, the
Fund's Managing Director, issued
a
statement strongly denouncing

these war devastated na¬
tions this period in which to de¬
currency

total

bal¬

Europe and elsewhere. Though
in the central banks in suf-

icient

gradually
eclipse

are *

.

last

wise step if the Fund had

their

currencies
toward

tary Fund. It will be recalled that

given
clare

value of the

gold, is, of course, in direct
opposition to the policy enunci¬

risk: Either the devaluation would

rettes.

currencies before

was

Mayer's proposal to permit

internal

ket in

provisions of any article of this
Agreement, maintain and adapt to
changing circumstances (and in
the case of members whose terri¬
tories have been occupied by the

gold market within their

free

Gold

notwithstanding the re¬
strictions
on
gold trading and
hoarding, and the adherance to
official
parities" several Euro¬
pean

through operation of

enemy,
introduce where neces¬
nations, which are
sary)
restrictions on payments
enjoined not to revalue their cur¬
and transfers for current interna¬
rencies beyond 10% of their "of¬
tional transactions," and members,
ficial parities" without consulta¬
desiring to take advantage of this
tion and approval of the Fund,
remission, are required to give
and are
directed not to permit
notice to the Fund.
The supposed
free foreign exchange transactions
limit of the "transitional period"

borders have been,

Free

franc to sink to its natural

The member

or a

to

adverse

meet

not

But,

tending

Conference,

bers

Opposition

to

payments.

of

Moreover, gold is still in supply
in

Stabilization

Markets

by the Bretton

up

accept it in entirety."

Fund's

Woods
providing
"in the
postwar transitional period, mem¬

its

by

XIV

Article

regulations

through

to

safe
manner assured.
Some indication
that immediate operations by the
Fund would be difficult and inef¬
fective was
indeed forecast by

transactions would have been even
smaller

dollars against gold. plan, did not consider itself able

stabilization

nomic

Operations

volume

ing certain important parts of the

sale

ernments

Currency

of

Basis

"de¬

of gold in the United
recently in sizable amounts
by the British and Canadian gov¬

the

ances

The

the International

been

not

as

States

greater ad¬

a

has

"

the late Lord Keynes
contended, and this is proven by

cumstances.

$439,445,000.00
the Fund sold $24,164.52 of U. S.

to

for

payments
throned,"

vantage.

Monetary Fund, although approv¬
In addition,

conditions, gold as a
currency in Europe is
non-existent,
and
it is
likely to remain thus for some
time. Yet, despite this, gold as a
means
of
making
international

countries, such as
which have surplus

imports

two

almost

hoarded dollars, to dispose
holdings
for
greatly

or

than

more

after its establishment is an
that,
under
present

basis

their

of

during

very

world-wide

importers, and would per¬

the

to

were

fact
has been relatively
The

gold.

indication

purchases of foreign goods by

mising

3,400,000.00
125,000,000.00
22,500,000.00
36,045,000.00
5,000,000.00
240,000,000.00

dormant

restoration
of
greater
equilibrium in the supplies of the
metal throughout the world.
It
would undoubtedly lead to heav¬

for

period

that a free mar¬
would serve is the

purpose

in

"The Government knows, fur¬
thermore, that it is not compro¬

Equiv. Dollars
$7,500,000.00

232,500,000.00
16,316,599.99
14,888,375,000.00
109,237,500.00
95,622,001.94
14,000,000.00
59,553,349-17 -8

Chilean Pesos

to

gradual

countries:

seven

Currency Bought—

currencies

national

linked

be

years

ex¬

was

basis), the visible stock of

War I.

ket

wished,

International

Monetary Fund definitely implied

that the Fund

by

exchange
a consum¬

be

to

the

of

gold will undergo considerable in¬
crease. This happened after World

changed for the money of the fol¬

repercussions.

sirable

total

The

charter

sions

duly set
amount of $433,445,000 and bought
up, and this meant calling for a
filing of "official parities" of their pounds sterling to the amount of
currencies by the member nations £1,500,000 or the equivalent of
which has led indirectly to

in the

devoutly

of the objectives
the
International
Monetary Fund.
"For arriving at these ends, the
Government refers to the provi¬

sisted, the institution was

—certainly

of

consequence

adopted

U. S. dollars to the

countries for

attaining

realization

member

of

that

a

organization

1947, the
currencies

28,

bought

universal gold standard or some

rency

this aim and,

According
up

The

a

international

in

parities. It certainly is
mation

normal stable cur¬
situation (whether through

turning/to

ment—of

transactions have been on a rela¬

long time deferment of the In¬
ternational Monetary Fund's or¬

a

pected that if the trading nations
succeed in re¬

of the world again

sidering the dificulties our econ¬
omy is going through at the mo¬

and its

operations,

beginning

in

bility

accurately), it may be ex¬

timate

The International

Thursday, February 19, 1948

setts

particularly

is

in

the traditionally con¬

character of Massachu¬

institutions."

-■

.**

Volume 167

-Number 4674

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

ples

and France

way

of Europe can in the same
become spiritually and mate¬
rially strong enough to assure

and

their

Weather
(Continued from page 7)

Eye

cations,

certain

and

the Telescope

on

inventory

with

10.5

million

in

1939.

The

own

They

can

optimism for the appliance busi¬
ness
is, to a degree, correlated

I

to the construction

to

space and we can¬
working dollar is going
into other channels; the veteran not live in an insulated segment
of the globe—not if we wish to
is
shying away from spending
sell insulated wire, a pun my chil¬
$10,000 to $12,000 for a $6,000
dren would call corny.
house; Ma decides she will con¬

market.

that

nated time and

the

her old

vert

Look"

rather

outfit.

new

sistance

into the "New

dress

than

buy a fancy
efforts at re¬

These

minor

are'

at

present.

They will become
increasingly
important if food prices continue
high or go higher.
32% of net
spendable income of the average
American family in 1947, after in¬

taxes, went for food—more
than was spent for any other cate¬
come

living expense. The price
of food will, to a considerable de¬
gree, determine what part of the
dollar
may' be spent for other
things. ■ ■:£ "A;
;■
gory of

.

this

point, I "would like to
parenthetically that, the
rise in the price level has been
contributed
to
gratuitously
by
At

observe

,

manufacturers

certain

unwar-

rantedly hoisting prices—or join¬

ing the

much

more

Electric

General

the

like

Com¬

devoting their thinking
prices. The secret of
has always
mass
production at
low

pany, are

to lowering

in this country

success

been

prices.
-

our

course

will

inflation

.

that

run,

present
is Any¬

though I believe it
will not progress much further—
at least after the first monihs of
body's guess,

this

.

Inflation is economi¬
and politically too - disas¬
A look at what happened

year.

cally
trous.

Italy and France in
the 20's is all we need to recall
in

Germany,

the

Our own inflation
in time by rea¬
economic
freedom
and

danger.

be stopped

may

sonable

high production.
If severe arti¬
ficial
price controls are intro¬
duced, black or gray markets will
probably flourish; The difficulty
in
analyzing -our economy
at
present is that there are two pros¬
pective counter-forces in opera¬
tion.
A government policy on the.
one
hand
seeking lower: prices
.

availability
of
goods; while on the other hand
the export to Europe will tend to
and

a

greater

*

goods

some*:

remove

-

from

our

and keep certain prices
high.In. other words, the pa¬
tient is receiving a stimulant and
economy

a

sedative at the same time,
■"

*■

y:

from

come

business

of

the

past

for

this.

itself,

Europe

the

•.

ord—notunit—was

remarkable.

the Department of
preliminary survey
of, business in 1947, V goods and
services " produced
had
a- total
value of $230 billions, exceeding
the previous record year* 1945, by
$17 billion.,. Our national income
also set a new dollar (I emphasize
the word) all-time high at $200
billion, exceeding by $6.3 billion
the
preceding record -made
in
1946.
Let us leave generalities a
moment and consider two specific
companies, well-known to allGeneral
Electric
and
WestingAccording

to

Commerce's-

^ ■"

;

as

r;

-

Marshall

and not too much is known about

mark

Incidentally
for

that

necessities

as

our

well

I re¬
political

may

own

as

I think there is no
other course to pursue. The cost is
small compared with the cost of
recent

war.

Nevertheless

the

implications of the Marshall Plan
as

to *

our

own

economy

are

marked, and we shall have to ad¬

just ourselves to it. The plan will
exert a very material influence
in

sustaining high levels of indus¬
trial activities, employment
and

purchasing power.
The impact,
however, will not be in all re¬
spects beneficial

many of
needed by

the
individual items
the
European nations are' those
in
shortest
supply here. Examples
include grain, steel, steel scrap,
rail equipment, farm machinery,
as

fertilizer, mining machinery, fats
and oils, lumber and heavy elec¬
trical
equipment.
Producers of
these

items

assured

of

high
demand, but may face
the nuisances of priorities, allo¬
levels

are

of




does

not

price

itself

out

of

of

total

about

equipment

heavy

liveries

extending

Westinghouse
booked

alone

$750 million with de¬

through

Electric's
the

for

1951.

orders

12-month

pe¬

riod

through September 1947 Were
$860 million vs. v $542 million a
year before, and sales billed were
$621 million vs. $339 million. The
picture presented by these two
giants is certainly-very encourag¬
ing and should auger well for the
future

of

industry. The ap¬
pliance business generally, as you
know better than I, has been ex¬
cellent and prospects seem rose¬
your

The

ate.

such

unabated.

seems

million

for

vacuum

semi-dur¬

as-

demand

able-goods

appliances

In

•

three

1947

cleaner sets

made' compared

were

million
in 1939; 3% million new washing
machines, more than double the
1.4 million produced in
1939; 3
million refrigerators were made, a
trifle

short

the

of

3 Vz

million

1941 ;• 17

in

made
sets

with5 LI

million radio
produced
compared

were

to

propose

be

another

it

must

for this

The goals are clear.

nual Forecast of construction

?nd

bring to

ing

drain

tivity,
rent

continuation' of the

a

cur¬

upward trend is

anticipated
during 1948. The Department says
construction

expenditures in

1948^ are expected to total $15.2
billion
mate

compared with the esti¬

as

of

$12.7

terms

will

billion

for 1947,
nearly 20%.', In
physical volume, 1948

increase

an

of

of

probably be only 10% above

1947 in view of the expected fur¬
rise
in
costs.
Practically

ther

type

every

of

construction

will

partment' of Commerce and
Bureau ' of
Labor
Statistics

visages
projects

agricultural income. Iron and steel
are
in short supply, as you all
realize.

Thus basic heavy indus¬
barring
labor
difficulties,
likely to sustain a i\\gh
level of operations.
Employment

try,

seems

result

a

A

at

look

continue high.
construction pro¬

should
the

of the American Telephone

gram

& Telegraph Company is an indi¬

cation

that

quantities

of

copper

will

be used.
That selling
competitive, there seems
little doubt, but that the demand
wire
will

be

is

there, I firmly believe.
general factors that I men¬
tioned,
such
as
interest
rates,
lending policies of banks, capital
position of corporations, the rate
of inflation, the European situa¬
tion and the general position of
The

should

business

determine

your

ability to supply it.
;
In conclusion, let me say that I
am optimistic for the industry but
cannot
ignore the fact that a
weather
eye ; to
the
telescope
.

essential.

seems

re¬

before

the

Congress. The amount of aid we
give should then be specifically
related
ward

the

to

the

progress made

goal

of

Europe, for only
toward

No

unity

one

Europe moving

a

achieve peace.

can

can

to¬

for free

unity

one

tell how rapidly produc¬
be increased and no one

can

effect
tell

on

the

weather

No

crops.

the

intensity

and

fore¬

one can

the

of

its

Soviet

economic offensive to sabotage re¬
covery. Many estimates have been
made.
We must create a sound

organization

with

genuinely

a

great purpose. I would rather pro¬
vide to such an organization the

full

which has been requested
limit
it
with
an
amount

sum

than

which

might

fail

Our aid

should

portion

to

do

the

job.

in

pro¬

be given

European effort to
achieve unity.
The faster it pro¬
the

gresses

sooner

will

we

or

four years

bate

is

this

mc

nearly

highly developed.

con¬

the hound

proach and I urge it again

ap¬

ization.

.

Then

heed

we

something

very

If Europe is going to

more.

get back on its feet; if we are
actually to build a permanent

bolder and better
in our Govern¬
ment has yet proposed.
What is
needed for Europe is unity.
Let
us squarely face one simple fact.
So long as Europe is divided into

peace, we

need

plan than

than

more

tions

a

anyone

a

score

it will be

vitation -for any
ern

wars

of

weak

na¬

continuing in¬
aggressor. Mod¬

a

have all been waged

against

dictatorships

weak

by
or

divided nations. Aggressors do not
attack

strong
great
.can

nations

and

united.

federation,

become

peace.

The

they

;

16

European

a

great

a
:

,

,

know
are
Joined in a
free

Europe

bulwark

/

nations involved
recovery

for

plan

the

plus

The

great lack

but

by cooperation
and coordinated effort Europe can
start

on

tically

that

road

European

no

Prac¬

now.

nation

now

dares

accept the money of an¬
other for fear of instability or in¬
flation.

currencies

Stable

developed or there can be no
exchange of goods and services.
Just suppose we in America were
48

separate States with different

differing currencies
high tariff barriers between
them.
We would be very little
better off than Europe is today.
languages,

and

united and back

its feet at the

on

Meanwhile,
show

that

careful

our

estimates

prospective

na¬

tional income, carefully
managed,
will permit both the full

aid

and

program

duction
well

of

as

our

national

our

tax

own

European

substantial

warranted

a

hands

such

as

the

We hold in

chance to
spread those blessings to much of
our

world

today

and

to

the

achieve

Then

inclusive

an

defense agreement to something
progressively more binding. West¬
ern
Europe so united for its own
military defense and its own eco¬

well-being

peace.

American foreign

and

can

it

be

must

world

peace.

Moving toward unity the peo¬

real

means

policy

directed

to

that goal.
I

still

deeply
repair

fear

war.

and

incompetence which has

believe

that

we

can

the bungling of this
Administration which has brought
us to a condition where all
people
We

avoid the waste

can

ac¬

companied the spending of more
than $20 billion
in foreign aid
since the end of the war. We can,
and

I

believe

program for

will

we must,
launch a
European unity which

bring about the greatest force

for permanent peace in the world

since

the

adoption

of

the

Con¬

stitution of the United States.
As

to

nation

a

meet

we can surely unite
challenge of this size.

a

debt

as

reduction of

burden.

people of Russia.
Can it be said that Europe does
not want unity? Mr. Churchill has
spoken most eloquently for it on
repeated occasions. Mr. Attlee has

"Europe

perish."

federate

must

President
has

said

and

or

Auriol

"Europe

live, and if she does

re¬

not

or a

Foreign Minister
come

rope."
and

Belgium, the Netherlands
Luxemburg, the three nations

which

have

postwar
a

unity

new

selves known
and

made

recovery,

created

France

starting.
ment.

greatest

have

our

own

We

capacity, in
must

our

into

move

an

era

We

where the

a

lowmen will animate mankind.
This

Lincoln's hope. He put

was

it this way:
"Our

principle

great

sentiment

in

the

is

go

not

alone

to

the

people

of

all future time.".
Let

that
use

us

rededicate

ourselves

ideal

great American

strength

our

for

the

as

varied

longer

products.

be

steady

the American people and for the

building

of

a

just

and

lasting

in the world.

peace

SURE

-

SAFE

PROFITABLE

mo¬

create

economic

has great and
Coal can come

from the Ruhr and Great
steel

can

come

tries

and

from

Britain;;

from these
France

and

coun¬

Bel¬

gium. There is lumber in Sweden.
There

are

mark and

dairy products in Den¬
the Netherlands.

Italy

to
we

improvement of the well-being of

freely to where they are
National boundaries

Europe

this

country but hope to the world for

most needed.
no

of

Independence which gave liberty

enough cooperation so that goods
will be produced where they can
be produced to greatest advantage
and

that

Declaration

Objective
to

re¬

of our fel-

nationalism

is

can

spirit

freedom, of love of God and

spect for the dignity

Cooperation of Europe First

object

own

withdraw from the world and

invite future catastrophe.

Italy

out

is the

now

Unless selfish

first

our

counsels of those who would have
us

is to be allowed to rise again the
time for unity is now.

The

us

reject the false

them¬

The movement is

Clearly

in

already

among

working

are

Customs Union.

the

BENELUX.

as

put behind

We must put aside

ideals.

humil¬

consolidation of Western Eu¬

a

the past.

of

must

Bevin ha§ said "The time has
for

to

vindictiveness and the blunders of

of

is creation, not conflict. It is good¬
will toward all men,
including the

said

have

re¬

The essential of this great
plan

barriers.

never seen.

from

move

fears, cherishing the highest faith

lowest possible cost.

should

both spiritual and

blessings

it should

shall

But in our magnificent Union we
maierial

the United Nations charter.

niggling arguments, th,e petty

have achieved
world has

Pan American defense agreement
which is specifically permitted by

must

be

the

in

our

The road to unity is long

difficult

and

much

of

resources.

is unity.

A Union of Europe

't

They are the
Western civil¬
They also have great ma¬

very source

terial
;

Their peoples are

have

confusion

and

vinced

tion

United States.

control of internal

the

task.

our

iating charity."

All the de¬

to do it.

or

The understanding might
the model of our own

We

of

gesture without future

have a popula¬
twice that of the

traditions

A real ad¬

the end

want American assistance to be a

this program through to its
conclusion whether it took three

growth of

start from

come

unite herself if she wishes to

carry

a

ministrator will spend the
money
only as rapidly as he can see con¬
crete
results
in
getting Europe

to

cover

Western Germany

There must also be

political unity.
This would not
require the surrender of languages

to

France

(Continued from page 20)

develop mass production and
consumption, accompanied
by a rising standard of living and
personal security.

nomic

with accuracy

say

how much money will be needed
in the first 15
months, because no
can

ness

American

now

and

multiply that great new capital
expenditures would be warranted

con¬

peace

about it? The
great purpose of European unity
should be set forth
specifically in

foretell

$6 billion against $4.8 billion. The
prospects for the automotive busi¬

means

go

legislation

skills

In this way the markets would

affairs.
we

their

to

end the exhaust¬

our

exchange

so

or

can

tal residential construction around

The

build

can

an

How shall

the

could

their products freely, for the first
time in modern history.
*

mass

profoundly

am

we

on

tion

1948

adven¬

creatively

sources.

the

home
building
as
against an
estimated 860,000 in 1947 with to¬

as

that

en¬

950,000
in

at hand. I

vinced

share in the

anticipated gain: resi¬
dential, public construction, pub¬
lic utility, commercial and indus¬
trial.
A joint study of the De¬

used

great, permanent good.

are

ac¬

disastrous
be

Goals Are Clear

the

have great industrial
agricultural production.
All
of
these products should move
through a United European econ¬
omy.
A great area of consumers

Recovery Program is not

ropean

ture,

that, if the Eu¬

you

According to the United
States Department of Labor's An¬

need no comment—just try to
buy a new car without a tradeat $1.2 billion vs. $679 million in ip.
Actually 5,050,000 autos and
1946, and President Wilson looks "trucks were produced in 1947. In
for a 20% gain in the new year. turn the farm machinery indus¬
Current
production
is
running try bids fair to continue high
30% higher than a year ago. Back¬ operations, especially with large

for humani¬

tarian purposes,

our

extremely bright prospects
in the general business picture—
provided, of course, the industry

:*.

it is still in the formative stage

details.

one

y :

Plan,
About the latter I wish to be brief
the

and

gen¬

position
record of

and the prospects
Last year's dollar rec¬

This brings us to the European
situation

these

year

logs

to- the

As

to

Now

eral considerations to the

The

of the

that

for the fun of it. house Electric. General Electric's
farsighted, sales for 1947 have been estimated

process

Others

Our Business Prospects

industry.

freedom and prosperity.

provide a new force in
the world great enough to assure
its peace for generations to come.

higher costs at either manufactur¬ controls. Should Western Europe
ing or distribution bases, it will become destitute or embrace a to¬
be hard to envisage a decline in talitarian form of government, the
effect on our own economy will
the price level.
Here and there
be most unfortunate.
However,
potshots are taken at inflation by
even
though we are removed in
consumer
resistance.
The enter¬
from
Europe,
modern
tainment industry, hotels*, movies, distance
restaurants, etc., reflect the fact technology has virtually elimi¬

need for construction itself is

.31

(827)

U

S.

SAVINGS

BONDS

32

THE COMMERCIAL

(828)

FINANCIAL

&

CHRONICLE

longer hours and in¬
production, the payment
of debts and building up the re¬
serves
of individuals and busi¬
nesses
for
the inevitable rainy
vestments,

Drastic Deflation: A Graver Danger
Than Inflation
put its
in order.

house

financial

own

inflation problems
of money

In brief, our

•

consist of an abundance
in

far

of

excess

needs and a

our

scarcity of goods. At first glance
it might seem that the solution of
the excess money problem would

reduce the supply of
money
by the
reverse
process
which created it.
An analysis of
be simply to

inflation and how the

the
of

who

it, indicates that a re¬
is next to impos¬

owns

duction

about and

came

money

excess

process

sible.

of

part of our bank deposits,
it is included in our swollen debits
a

Removing inflation

credits.

and

of deflation has al¬

by the

process

ways

created

which

hardships

to some worse than the hard¬

seem

by inflation. We
experiences both

created

ships
have

had

with

inflation

many

inflations

All

and deflation.

have

to

come

end

an

and deflations have followed. The

conditions and losses
from
deflations
have

depression

resulting

times

hard

caused

entwined with

now

duction

dreaded

more

tion

and

to¬

money

national debt that

a

excessive.

then

seemed

The de¬

flationary policies of reducing the
green backs outstanding and re¬
turning to hard money were ac¬
companied by unemployment and
hard times.
It is probably true

authorities

permitted to rise frantically.

been

the rediscount rates to 1*4%.

The banks have been re¬

creased.

quested to restrain loans, and it
is proposed that consumer credit
controls
be re-established.
The
10-point program

a

controls.

Congress

avoided if the men in
charge of Government monetary
and treasury policies at that time
could have foreseen the growth
and
expansion
ahead.
Now
it
it

have

would

to

the inflation control powers

use

it already has.
Inflation

The

increased

been

produc¬

which was fully within our
capacity and encouraged business
grow

of money

In

to the

up

excess

purchasing
recent

more

supply

power.

years

controls

of

dread

which

of

deflation.

a

symptoms

the

in

Government

The action
of the banks in raising rates and

flationary expansion.

and

prices,

de¬

a

large

market

and

world-wide

a

business depression generally re¬
garded as second-to-none-other
since the South Sea Bubble.
In 1937 the fear of over
expan¬
sion of credit lead to efforts to re¬

strict this expansion through the
sale of Government bonds by the

and

Reserve

of

time

Banks.

In

due

the

sharpest and
collapse of security
commodity prices in modern
severe

times followed, with

a depression
that
might have had a much
longer duration if the war prepa¬

rations of European countries had
hot bolstered

prices and

our

pro¬

Now

inflation

volume

of

has

money

reached

high.

records.

inflation.
our

by

and

bank

We know

The

monetary
more

we

de¬

have

multiplication

purchasing

than

500%

of

power

since

1940

with an increase of about 100%
in our total production is
enough

evidence,

if

themselves
prove to us
gerous

deflation

may

go

questions upper¬
in the minds of leading busi¬

bounds,

ness

is not

a

past,

executives.

It

however,

new

gone much

experiment.

In the

deflations
have
further than expected

desired.

Stopping an inflation
quite possible even after it
has grown to the dimensions of
our prescent inflation.
But stop¬
ping

the

were

that

inflation.

high
not

in

sufficient, to

we

A




prices

have

a

deflation

a

which

dan¬

temporary

a

the

Over

years

number of letters

have received

we

an

impressive

criticizing the Commission's activities,

thousands of them,

is

very

to our
unhealthy inflation. The Govern¬
ment can curb its spending and
should
cut its spending
to the
bone in order to discourage fur¬
the

lations
back

Government regu¬

red

and

that

tape

hold

production and business en¬

should be speedily cor¬
give every encourage¬
ment to production, enterprise and
terprise
rected

The solvents of free

thrift.

ternational affairs until

that

given

inflation

of the

part
not

absorb

which

without

removed

be

de¬

A-5?

treatment to financial statements filed under Rule X-17

Isn't it

a

fact that in the first instance this

Commission's

mar¬

we

for this request, the fear of reprisals.

as a reason

Why doesn't the Commission tell the Congress who it
considers to be the representatives of the securities industry
that persuaded the Commission not to accord confidential

to

kets, free competition, freedom of
enterprise, and' investment should
be given all their power to help
us grow
in our domestic and in¬

can

and with surprising uniformity, a
large percentage of these have asked that they be
treated confidentially and a great many of them have

largest contributor

ther inflation.

We quote

the

was

j

baby?

own

further from Mr. McConnaughey's letter:

•

brokers and dealers generally concede that
regulatory bodies requiring them to file financial
reports are within the proper scope of governmental regula¬
"I believe

rules of

We have

tion of their business.

never

received any protest

flation. It is not intended by these

against the filing requirements as such. Obviously, the re¬
to say that there is noth¬
ports are an important aid to enforcement of the Act.!'. . ..
can be done.
There is

remarks

ing that
plenty than

can

ample,

$80

the

be done.

For

nanced

deposits

of

investors.

of

refi¬
private

rates

should

should

the hands

into

Interest

be

be free and

competitive. The man¬
agement of the Government debt

should be so-revised that the de¬

clining

prices

Government

of

threat to the

bonds will

not be

money and

capital markets. Taxes

a

That this is Mr.

ex¬

billion worth

Government bonds held by banks

However,

McConnaughey's belief

enforcement.

Emphasis is laid by the Commission on the right of the
investing public to obtain financial reports showing the
of

condition

which

with

firms

the

nomic

in

volition

between

We

have

on

the

one

no

and

hand

peremptory direction on the other.

and create an eco¬

c

.

Compelling the filing of annual financial reports
by registered dealers and brokers is a burden upon business.
The failure to accord those reports confidential

will

which

environment

comes

deals.

it

Here, however, the dis¬

encour¬

aged to appeal to private investors
in this country

.

protests, we are not at all surprised. The fear of
reprisals prevents these.. The stock phrase of dealers and
brokers seems to be "Why should I stick my neck out?"

tinction

be

;

.

eign countries seeking our aid in
should

do not doubt.

As to

quarrel with that point of view.

reconstruction

we

dispute his contention relating to the aid to

we

and tariffs should be reduced. For¬

private
investors
to
their savings in the enter¬

encourage

treatment

have

we

N. Y. Curb Floor Clerks

is, in

opinion,

our

is something of

no

record

of

suc¬

Deflation spreads more rap¬

As in all other business,

Form New Association

are

financial

and

the

of

Formation
Curb

investor to ask his dealer
York

New

Exchange Floor Clerks As¬

sociation has been announced fol¬

lowing

meeting

organization

an

and

election

the

officers

of

held

an

;

abuse of the administra¬

was

of Joseph Mc-

&

of

Negri

Co.

of

course,

broker for

a

Proudfoot report,

it is proper for an
financial statement.
or a

Dun & Brad-

or

dealer refuses to furnish the informa¬

the latter

can

be guided accordingly.

That the

pertinent rule of the Commission can be used
financial magazine as the' means of stimulating its
Stern circulation is insupportable.
.;

elected the first

president of the organization, with
Jack

a

the investor,

tion to

Daniel Hannafin

draw down

or

report, or the report of some other agency.

If the broker

at

exchange.

Manus & Co.

He may
street

by

a

Herbert E.
president. Other
are August Fischer

.

vice

as

officers named
of Tucker,

The

the

furore

created

Commission

Anthony & Co., treas¬
urer;
Howard Schaal of Clark,
of deflation and the fact of de¬
Dodge & Co., financial secretary;
clining prices get under way, the
Eugene Ross of R. F. Lafferty &
process snowballs.
Business fail¬
Co., recording secretary; Rocco
ures increase.
Each new series of
Dragonette of Hardy & Co., cor¬
failures carries down with it or
responding
secretary;
James
weakens the contributors to these
Claire of Goodbody & Co., serbusinesses and the multiplication
geant-at-arms; and Peter Palermo

of

products in turn have their
bundles of contributors which suf¬
fer as a consequence of the failure
of their business outlets.

by the protest against the failure

of their brokers."

idly than inflation.

Once the fear

give this confidential treatment of
which we speak, has-apparently stirred it to reluctant action,
We quote again from Mr. McConnaughey's letter.
"We are,

a study, of the experi¬
rule, to ascertain the extent to which the

however, undertaking

under the

ence

to

.

public record of this information has been used, and useful,
as a
protection to public investors. On the basis of that study
of failures follow failures until
of
Peter
P.
McDermott
&
Co., we
hope to be able to reappraise the question whether the
liquidation runs its# course.
De¬ assistant sergeant-at-arms.
pressing inflation is somewhat like
Governors of the new group in¬ possible use of the information by the listed brokers' com¬
rolling, back prices., Every price clude in. addition to the officers petitors in seeking business is sufficiently, antagonistic, to
and every business is associated
George Hoff of Carl, M/ Loeb, the public interest to offset whatever advantage the public
with a vast variety of
contributing Rhoades & Co.; James Karle of
availability of these financial statements may have to the
costs and businesses.
A roll back Merrill
Lynch, Pierce, Fenner &
upsets the contributing producers. Beane; William Gerhard of Laird, public generally, and particularly to investors who, appar¬
Each of these contributors'
prices Bissell & Meeds; William Mira- ently everyone agrees, are entitled to know the condition
or

would

able

posits,
production,
employment
and high prices exceed all
previ¬
ous

far this

and whether it can be held with¬

in

frequently demonstrated, that
of fear of reprisals the existence of the SEC acts
gag upon the industry?
y
.■ .»
.
u

reason

tive function.

to

let

a

The

as

prises of these countries.

run

record

Isn't it true, as we have

by

ital issues.
How

;

Commission itself?

from the

come

part of both the Government and
business.
Government
spending

the declining market for new cap¬

It

all-time

for the rule

aggressive leadership on the

more

-

industry? In unadulterated fact, didn't the basic impetus

rainy day will require

a

risk

duction.

new

create considerable deflation,

cess.

Treasury and the
Federal Reserve Board policies of
restricting credit expansion were
followed by the collapse in the

course

restraints
inflationary expansion

seems

bond

for

already noticeable in the price of
bonds and preferred stock, and

or

In 1928-29 the

most

bring about some

1919-20

in production and a
increase in unemployment.

Federal

requirements

reserve

further

on

policies

crease

stock

or consequences

deep-seated

In

followed by a sharp
commodity prices and

soon

decline

created

entirely

controlling

of
inflation we al¬
ready have. The inflation bill as
passed can be administered so as
to restrain somewhat further in¬
the

deflation

Government
were

have

for

serves

Pulling thejWool.

and

costs

prices and to encourage the sound
policies necessary to enable the
country to grow up and absorb
this inflation and keep the re¬

against
program

almost

were

recommendations

most

have

we

had some experiences with infla¬
tion
and
Government deflation

policies

and What

Controls

Administration's

The

tion

to

for inflation
has passed a

four-point program of credit con¬
trol and urged the Administration

increasing

that

recommended

Administration has

will

to have

little

a

have been
taken to restrain the effects of
this inflation. Interest rates have

been partly

seems

becoming

are

alarmed about it. Steps

that these misfortunes could have

better

ex¬

large tax take would not be pos¬
sible without this inflation.
The

we

monetary infla¬

depreciated

gether with

and

They May Do

War in 1865

with

faced

were

very pro¬

Government's

the

Even

pense.

our

income,

costs,

and feared than inflation.

After the Civil

a

into our

part of our cost of

wages, a

large part of this
inflation has now been integrated
into our economic system.
It is
Moreover,

The
reserve requirements of the Cen¬
tral Reserve City Banks of New
York and Chicago'have been in¬

became interwoven

our

prices

sign that inflation is over.

no

The Reserve Banks have increased

whole economic fabric; it is a part

living,

is

inflation has

the

Because

now

supply

collapse of some commodity

of

distortion

further

//

(Continued from page 3)

days that may be ahead.
But to
restrain our vast inflation from a

(Continued from first page)
lem and each country must

\\

creased

Thursday, February 19, 1948

its

Francis L

Michael

Petruzzi

ney

&

Co.;

duPont
of

&

Smith,

Louis

Co.;

certainly be undesir¬
the
new

inflation

present
and

Arnold

unknown

Yes, entitled to know by volition and not by force or

of

duress.

Peter Barbis.

About

prices

carry

charter

150

members

heights; have joined the association, which

the

Commission

interest"

It is also undesirable to
bring on is comprised of order clerks repre¬
deflation with
its destructive
senting member firms on the Curb
consequences and the years of de¬
pression and reconstruction that Exchange trading floor, special¬
ists' clerks on the floor, and clerks
would necessarily follow.
admonish

thrifty,

people

buy less,

ernment

bonds

prices has
success.

very

There

invest
and

to

in

hold

little
would

be

Gov¬
down

promise of

be

hopes,

in

member firm

authorized
clerks.

offices

relieve

to

who

Curb

A

ier
run

are

tion is to promote

of

aowever, in encouraging new cap¬

ital expansion, ventures into

a

of

new

production', foreign in¬ cialists'

clerks.

•

alleged excuse for everything that it does,
to

the detriment of the small

is in the

public interest and cannot in the long cause of capitalism.
No one

do other than hurMhe

no use

square

for capitalism.

who

True public interest requires

deal all around, and that square deal cries for
by the SEC of a rule which will

the immediate passage

member firm floor clerks and spe¬

fields

-•

all this nonsense. It is high time: for
hiding behind the term "public

rule that works

ones

have

good will and

cooperation

an

j

cease

knows this better than the left-wingers in the SEC

floor

a

as

to

: -

dealers and brokers in securities and favors the wealth¬

Purpose of the organiza¬

spirit

v' r-"

-

It is time to stop

a

To

;';y

Bar¬

Brickman, Landsberg & Co.; and

course

and costs to

bella of

among

give confidential treatment to annual financial reports^
:

filed

by registered dealers and brokers.

Volume 167

Number

4674

THE

(Continued from page 4)
toward

the

objective of

a

& FINANCIAL

CHRONICLE

(829)

world-wide

Our Fiscal
effort

COMMERCIAL

Policy

present conditions that could jus¬
tify a tax policy or program fail¬

not

point

crept

into

revise

some

it.

There

is

need

to

conditions,

reduce

our

which

possible for

must

trade

to

we

revenues

would

tries, the flow of private Amer¬
ican investment funds into for¬

make- it

a

im¬

to meet the finan¬

us

mental loans and assistance.

cal year 1949 and also make
pro¬
vision for adequate retirement of

from

erty laws for the purpose of giv¬
ing tax benefits to their residents

the public debt.
It will take the cooperation and
the forbearance of all our
people

been reached remains to be
A

careful

balance

seen.

between

re¬

believes

controls

that

should

to

the minimum essential to the full

operation of our free enterprise
system. The job can best be done,
and

more quickly, if government,
business, and the public together

exercise

commonsense

restraints.

A government

surplus of receipts
expenditures is our most ef¬

over

fective weapon

in controlling the
aggregate volume of purchasing
power.
Government surplus rep¬
resents
money
which is taken
from the
and

spending stream by taxeg

is not returned to it by gov¬

ernment

expenditures.

A surplus

of receipts over" expenditures has
been one of the strong anti-infla¬

tionary

forces operating in the
during the present year.
When the proceeds of a gov¬
ernment surplus are used to re¬
tire debt held by the banking sys¬
economy

tem,

two

plished.

objectives are accom¬
The current
spending

^tream is cut down and the money

kiipply curtailed.

It has~ consaquently been the Treasury policy
to reduce as much as possible the
amount of debt held by the com¬
mercial banks.

Public

,

Debt

Question

tress,

and

not

ment,

Differentiations- of

debt

owner¬

for instance, have a wide¬
spread effect upon our economy.
Practical management is therefore

ship,

in

essential

retirement,

debt

the

reissuing of

and

in

maturities,

debt

distribution

in

of debt

hold¬

com¬

Reductions

of

through

reduce

cannot

rev¬

our

on

consumer

states

high-lighted the need for uni¬
taxation

of

family incomes

In the field of business

the

so-called

double

taxation,

taxation

of

a

United

States

for

the

ending

June

30,

1949,

fiscal

year

calls

for

total

expenditures of $39.7 billion.
This is a tremendous outlay, but
I
doubt
seriously,
considering
final net expenditures, that it will
be

reduced

time.

significantly

Of the

total

proposed budget,
related

the

to

effects

of

prevent
The

and

future

estimate

the

of

is directly
war, the

of

costs

war

a

amount

79%

this

at

efforts

our

to

war.

national

for

de¬

should

be

made

business
in

for the

losses

prosperous

Federal

in

off

profits realized
The

years.

estate

offset of

incurred

against the

years

and

role

be strengthened.
A better in¬
tegration of the estate with the
gift tax, and of both with the in¬

tax, will contribute to

end.

V'".

.

this

■

-

Several phases of the tax struc¬
ture involve problems of Federal.

State

tax

coordination.

fense alone is $11 billion. This one

tax

figure amounts to 28% of the 1949
budget.

mental

Postwar

tant contribution to

Provision

services

and

billion,

$6.1

$7 billion,
ternational
the

need

technical

debt

for in¬

needed

Interest

to

amounts

on

$5.3

This fixed

charge, total¬
is an inflexible item.
billion is provided ■ to

refunds of

which
the

is
of

finance.

public

billion.

There
number

amounts

18% of the budget,
be

receipts,

represents

of

in

taxes

analyzing the government's
peacetime operations, we find that
12%, or $5.0 billion of the budg¬
et

such

covers

items

flood

as

ings.
Ownership of the debt, broadly

which

would

better relations

be¬

including such groups as in¬ This leaves, then,
9%, or $3.3
companies, non-financial billion in the
budget to cover all
corporations
and
associations. the running expenses of the Gov¬
The
remaining three-eighths is ernment: the Executive
Office, the
owned by commercial banks and
Congress,
the
State,
Treasury,

the Federal Reserve Banks.

Justice,
Post
Office,
Interior,
public debt reached a peak Agriculture,
Commerce,
Labor,
of $280 billion in February, 1946. Atomic Energy Commission and
Since then, it has been reduced by the various other agencies..
To
over $25 billion.
Most of this re¬ cut large sums out of this group
duction was effected by drawing would be a difficult undertaking.
'"

The

down

the

^Treasury cash balance

peacetime
level.
We have only just begun
to make sizable reductions from
from

the

a

wartime

revenue

to

a

During the

surplus*

Opposed to Hasty Tax Reductions
I

our

present

we

have

period since the peak of the debt,
total holdings of government se¬
curities by commercial and Fed¬

total

eral Reserve Banks have been re¬

before

duced by $27

billion.

order to reduce

In

;

bank hold¬

ings of government securities by
billion during the period in

$27

which the total debt decrease was

it was necessary to
the government security

billion,

$25

increase

holdings tof nonbank investors.
sale
of savings bonds has

The

been

an

important factor in mak¬

ing this shift possible. We expect
to push the sale of savings bonds
even harder in the period ahead.
These, like other forms of savings,
are a means of taking money from

spending stream, and so of
cutting down inflationary pres¬
the

sures.
•

In the management

of the debt,

firmly opposed to

am

tax reduction

be

hasty

a

which would lower

revenue

I'evel before

determined

what

our

outlay of expenditures is to

for

the

fiscal

and

1949

year

complete and proper sur¬
of revision of our entire tax

vey

a

structure

is

undertaken.

,

.

For

many years, taxes have been ad¬
justed piecemeal to meet urgent
requirements.
The
depression
years,
followed by preparations

for

defense, and later by the
itself, called for continually

war

creased

Our

first

sources

step

structure

in

of

revenue.

changing

should

be

to

in¬

our

tax

iron

out

these

inequities. / The Treasury
Department began to lay plans
for the revision

ture

even

of the wan
before

of the

before

conclusion

It has

already placed
Congressional committees

fifteen tax studies.
I

the

tax struc¬

should

like

some.of those

to

*

mention

areas

here,

in which

attractive tempta¬
vision appears to be
tion to postpone debt reduction.
particularly
Tax reduction has a strong im¬ desirable in the interest of basic
mediate ~ appeal. 1 But because of economic goals.
;
it is always an

the

far-reaching effect upon our

national

economy,

ceive of any

I cannot con¬

considerations under




The

excise

tax

re¬

structure

was

rapidly expanded during the

war,

and

some

undesirable

features

the

mote

the

simplicity "of reporting for
taxpayer,

and

simplify

tax

administration.
Tax

the

United

States in

world

Department has

ury.

trade

the Treas¬

It

is

most

important

that

s

well-balanced^- and

a

we

fail?

tax

system.
However, we must
keep in mind that most revisions
to

necessary
ture

on

will

the

put

sound

a

involve

Therefore,

tax

and

loss

Since

policies
expan¬

competitive

vitality of
these policies
definitely must be predicated on
free

our

society,

the- permanent
and

not

national

interest

immediate advantages
individual wishes.

or

on

American free enterprise is the
consideration. But the hori¬
zons are
far broader. Today, the
first

entire

world

States
not

to

looks to

determine

the

United

whether

or

free society is capable of

our

of

countries, and might re¬
inter-govern¬

Consideration

preferential

must

be

tax

given,
which

to

treatment

might
strength

weaken the structure and
of our income taxes when

our

en¬

tax

system is becoming in¬
creasingly reliant on the income

and

not disguised in the form of
exemption or tax reduction.
Though taxation of income de¬

tax

undertaken,

affect the willingness of
to
send
their
capital

icans, it has the virtue of pre¬
venting the charge being made
against the United States Gov¬

abroad in pursuit of new ventures
the development of old ones.

pitizens to compete with nationals

doing business abroad.

Taxes

investors

or

The

policy of the United States

at this time is to make

no

special

foreign

is

sources

con¬

sidered too harsh by some Amer¬

that

ernment
of-other
home

it

subsidizes

countries

in

their

our

own

markets.

Particularly be¬
tax concessions to American cit¬ cause of our
leadership in world
izens
and
corporations who go trade and the world economy, and
into foreign markets. There have the
importance of our role in
been some departures from this stimulating world
rehabilitation,
policy when special circumstances we must exercise extreme care
not to give the false impression
required it. In general, however,
the effect of
make

business
own

our

laws has been to

Americans
abroad

engaging
stand

in

rely upon Amer¬
industrial
techniques
and

ican

to

acumen

of striving for foreign economic
penetration and domination.

their

on

feet and to

meet

com¬

One of the most persistent crit¬
icisms of this policy
is that it

As

lem

on

of

tax issue, the prob¬
taxing Americans doing

every

business abroad involves the bal¬

ancing of a number of considera¬
tions, and this is not a matter easy
to resolve.

But, let me repeat, we
making a special and careful
study of this important problem.

are

analyzing the

available facts
considerations,
There is no doubt that if we a creditable and satisfactory solu¬
accorded special tax treatment to tion to the problem should be de¬
other

countries.

American

income

By

the

and

derived from

a

relevant

veloped.

'

Observations

revenue,

overall fiscal

our

and

in

wise

essentially affect the

sion

rehabilitation

however, to the extent

tire

de¬

struc¬

judgment again
counsels against hasty dissipation
of our margin of surplus
through

will

economic

war-torn

the

areas,

rived from

fair, basis

of

the

cans

of

Revenue Loss

velopment of backward

among other studies, to reexam¬
ine the tax treatment of Ameri¬

places Americans at a disadvan¬
tage in competing with nationals

Revisions Will Involve

It would assist in

challenge

and economic
recovery,

business

ors,

surance

national

our

petition.

control, reclamation,
and other
If we ex¬
public works items, agricultural general 'tax reduction.
speaking, is divided three ways. programs and state
aid, that is, haust our revenue reserves pre¬
About one-fourth is owned by in¬
maturely, we may deny ourselves
public assistance and highways.
dividuals. About three-eighths is
It is doubtful that
these items the opportunity to make tax re¬
owned by other nonbank invest-;
will be materially cut this year. visions necessary to the economy.
,

of

aged.

of tax as its principal component.
maintaining our obligations while Past experience
indicates, too,
striving always to reduce as rap¬ that preferential tax treatment is
idly as is prudent the total cost of an
inefficient
technique.
Sub¬
sidies are generally more effective
operating our government.
In the light of the position of when
they are direct and specific

pro¬

create

In

large
adjustments
a

meet

gov¬

of

So,
the
foregoing
programs
make up nearly four-fifths of the
1949 expenditure estimate.

an

for

to

elements

ernment, improve tax equity,

and

\

,

law

present
to

also

all

tween the taxpayer and the

duties which the government must
repay.

the

contribute

figure

a

estimate

an

overpayment

impor¬
inter-govern¬
integration.

fiscal

of the total.

15%

or

to

make

can

to

benefits

or

is estimated

veteran

for

revision

and

of

gift taxes has

to

come

or
program that would fail
balance the budget in the fis¬

life

in all the states.

point which would dividends requires attention.
We
impossible for us to meet should also explore fully the po¬
the financial, economic and moral tentialities of the tax
system to
obligations of the people of this foster the growth of small busi¬
ness.
It would further seem de¬
country.
The
proposed Budget of the sirable that more liberal provision
to

enues

pol¬

to

The

form

present world dis¬
all nations, should

weight

make it

cover

The problems of debt manage¬
however, are much more
intricate than merely using rev¬
enue surplus to pay off the debt.
,

postwar

Tax

of

we,

ling 13%,
Nearly $2

Management

of

view

In

government
restricted

be

and

war

disproportionate

low income groups in the
process
of
shifting

has

straint and encouragement should
be maintained. This Administra¬

tion,

our

mitments.

encour¬

icy

tendency of more and more
to. adopt
community-prop¬

in the midst of the transitional

are

be

duce thewolume of

prices.

,

.

Inflationary

would

siderations under existing condi¬
tions that would justify a tax

period between a war and a peace
economy.
The high cost of gov¬
ernment today results in the main

Arresting

markets

with

We have been working earn¬
estly toward the goal of arresting
inflationary pressures.
Whether
the peak of these pressures has

of

eign

cial, economic and moral obliga¬
tions of the people of this
country.
I cannot conceive of
any con¬

Pressures

Goal

business in foreign coun¬

or

of these excises, espe¬
cially those which bear heavily
on
business costs or tend to fall

ing to balance tjhe budget, in the
fiscal year 1949 and making ne¬
cessary provision for adequate re¬
tirement of the public debt.
We

better balanced economy.

33

resolving

its fundamental prob¬
by overcoming forces that
endanger our economic structure.

(Continued from page 5)

popular

psychology were such thqt it promoted confidence in a
permanently higher plateau of industrial activity, there would be
no
qualms voiced over the accompanying expansion of corporate
balance

sheets.

For

the general situation is largely that the big
working capital of recent years are inadequate
to maintain former degrees of liquidity because of the increase in
business volume which has naturally necessitated greatly-expanded
receivables and inventories—realization of which is being shown by
the market's present steadiness.

dollar

additions

to

Much

pessimistic comment has been made because of the failure
keep pace with the enormous six-year increase in
dollar volume, in retail distribution.
While this indicates that the
absorption of actual goods is not as great as might seem at first
sight; the other, and healthy, side of this medal is that the "inven¬
tory" of the consumer is thereby really sounder and less overexpanded than might otherwise have been the case.
of

sales to

unit

recent relative steadiness of public utility shares the
again has wisely noted the beneficial effects of lower costs
on
this industry.
Lower prices would also create some savings in
the utilities' $6 billion construction program, and a recession would
the

In

market

provide

cut-back of this burden.

a

•

lems

»

Our
success
in
these
efforts
should demonstrate that the most

effective economic system to
the welfare and

sure

is found in

man

tive

as¬

economy.

happiness of
free, competi¬

a

note

its over-all

1929 and

On

on

1947 the Dow-Jones average

*

no

must

we

Between

less than 140

-f

all this indicate that the

intelligent investor is finally

displacing the speculator in the market's saddle? /

Investments

Feb.

16, subsequent to the
foregoing address, Secretary Sny¬
der,
speaking
at
the
Chicago
World

Trade

Conference

"World Trade—A

ponent
erated

of
his

on

revenues

and,

at

the same time, revealed that the
Treasury Department was mak¬
ing a study of tax treatment of

Americans doing business abroad.
In this
connection, Secretary Sny¬
der stated:

We

are

*

in

transitional
and

a

(Special -to

NEW

The

ULM,

Hinderscher,
and
come

Financial

Chronicle)

L.

Percy

Morsted,

MacNeil

Nash

have

associated

with

the

J.

Bond &

O.

MINN.—Arden

be¬

State

the

midst

period

of

between

economy.

a

The

high cost of government today re¬
sults from our war and postwar
In view of

existing

Salle
R.

& Co.

Chronicle)

Financial

Conrad

Bruce

america Co.

&

Co.

Co., Russ
was with

and

Banc-

•

Mortgage Co., 26North

to

The

CHICAGO,
Hammill

The

Building. In the past he

With Hulburd Warren
(Special

(Special

to

filiated with Denault &

Minnesota Street.

the

With Denault

SAN
FRANCISCO,
CALIF.—
George A. 'Curran has become af¬

&

Financial

ILL.
Co.,

—

208

Shearson,

Financial

Chronicle)

ILL. —Stanley

J.

of

Hulburd, Warren & Chandler,

La 208 South La Salle Street, mem¬

Street, have added Fredric

Clark, Jr. to their staff.

The

Weiler has been added to the staff

Chronicle)

"South

to

CHICAGO,

Shearson, Hammill Adds

peace

commitments.

(Special

Bond & Mortgage

Necessary Com¬

Economy," reit¬
objections to reduced

Curran

Three With State

Our

government

war

fell 51%, but

*

#

Foreign

intelligence,

long-term discrimination and selectivity.

individual stocks rose above their 1929 highs last year.

Does

Taxes

Long-Term Selectivity

And in giving the stock market credit for

bers
cago

of

the

New

York

Stock Exchanges.

and

Chi¬
;

34

THE COMMERCIAL

(830)

theoretically holding,
they'll advance an¬
two-three points before

are now

Tomorrow's

other

Markets

selling of any importance will
come
in.
Should they go

Walter

higher than that the chances
are
that the market will be
off on a real move. Some of

Whyte

Says—
WHYTE=

short

but don't
forget stops. Further advance
anticipated.
positions,

Retain

❖

#

#

however, that it accounted for
more than a small fraction of
the

But the market is

move.

in such

condition today that

a

concentrated buy¬
selling is enough to set

almost any

going to be much
ing or
column for reading mat¬
the wheels in motion.
There are too many other
*
*
❖

This isn't

of

buying was for
account. I don't believe,

recent

the

=By WALTER

a

ter.

Outlook for Construction

think

I

(Continued from page 9)
ized
by energy, resourcefulness
and invention, by diversity and
flexibility comparable with those
qualities as they exist in our econ¬
,

as

omy

things are, they're quite

Amer. Brake

Shoe.. 38

Chain

Amer.

r_

———

__

—

which
they were to be bought were
quite a number of points
away.
Readers must have
prices

the

stocks,

I

while

that

realized

at

action called
decline.
The decline
and stocks sold down

translated into
a

came

United

More next

Thursday. ;
—Walter

was

bullish, the buying points at
which this belief was to be
for

15
Aircraft— 23

Martin-

G. L.

article

do

necessarily at any
those of the

not

with

coincide

time

They are presented as

Chronicle.
those

this

only.]

of the author

of all the hulla¬
baloo about housing, the family of
In spite

world.

is better housed,
neighborhoods and with

income

average

in better
more

comforts
is

buying zone.

stocks] Practically all of them Street,

already in the black col¬
even if the profits are

are

JamdS'f M.

added

h?ve

O'Brien to their staff.

to

go

In

time.

stocks

to

The

MINNEAPOLIS

Scharling is with Holley, Dayton
Gernon, Rand Tower.

far.

how
the

had the time,

If I

the

and

inclination

pa¬

I might give over a
couple of paragraphs on the
subject. But having neither
the inclination or the patience
we'll simply have to stick to

MINNEAPOLIS
is

—

R o b e r t C.

with Keenan

now

was

Bank of New Ulm,

&

Building.

Inc., National
formerly with

Clarey,
He

the State
Minn.

tience

the market action and let the

academic

you

stuff

for

go

LOS

Eli

to

The

ANGELES,

Goulden

458

has

CALIF. —Dr.

been

added

to

Morton Seidel & Co.,

the staff of

Spring Street.

South

Business

this column!)
*

*

❖

stocks

individual

On

Man's

you

Bookshelf

Pacific Coast
Securities
on

1 Pacific Coast Exchanges

of

Bureau

Research, 1819 Broadway, New
23, N. Y.—paper—75£.

York

hind the Iron Curtain—Technique

Hew

York

Stock

Exchange
(Associate)

York Curb Exchange

Sxin

Praneif"

s*nck

Exchange

Chicago Board of Trade

New York 5, N. Y.

14 Wall Street

Teletype NY 1-928

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Sovietisation—Endel

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London, S.W. 7,
Lithuanian American
Information
Center, 233 Broad¬
England

or

New York 7, N. Y.—4 shil¬
lings net (80tf).

way,

Federal Reserve
Its

Purposes

Board
eral

of

System, The—

and

Governors

Reserve System,

25, D. C.—fabrikoid.

Functions—
of

the

modern

good rea¬

were some

this.

for

the first place,

In

building design and mod¬

construction methods stemmed

ern

from the development of

reinforced

the

of

invention

and

steel and

construction

concrete

ele¬

safety

These innovations had

vator.

no

In the second place, wide¬
spread
opportunities for large-

ings.

developments

small-house

scale

with the recent great move¬

came

population to urban cen¬

ters and the

growth of urban into
metropolitan communtiies.
...
•r The housing market
is not na¬
tional;: it consists of a large num¬
ber of local markets. Today in a
number

markets

local

of

large

enough to sustain very large smallhouse

operations,

homebuilders

-

progressive
all

using

are

the

During the war such countries as
Great Britain, Russia and France
sent official commissions of archi¬

niques, including the setting up
of plants for prefabrication at the
site.
In • such
operations large-

engineers and builders to
country to find out how our
construction
industry functions.

production of building sites
erection of houses
go together, under a single man¬
agement which can sell the com¬

tects,
this

time, American
builders, American building tech¬
niques
and American
building
this

At

present

in

are

demand all over

world.

the

frequent criticsm of
the American construction indus¬
The

most

the

whole

construction tech¬

scale

and large-scale

plete product ready for use.;

It is

belief that this is the practical

my

development of prefabrication; it
is succeeding today, when factory

and is inter¬
other, kinds erf

economy

with

related

all

business activity.

nificance of

The unique sig¬
construction

new

tivity is that it

ac¬

the

measures

ex¬

to which the economy and
people are creating new fa¬
cilities; it is a physical and tan¬
gible expression of their faith in
tent

the

expanding future.

an

In

ready application to small build¬

most advanced

in

total

1947

construction

new

United

the

States

amounted,

according to Commerce Deoartestimates, to $12,878,000,000.
about 5 lk % of the gross

ment

This

was

national

product.

; Private
con¬
amounting to an esti¬
mated $9,878,000,000, represented
just under a third of total private
investment;' public
construction was an estimated $3
billion in a
$28 billion total of goverhmental
purchases of;gbods and services.
New
construction
directly em¬
ployed 2.9% of the total civilian
labor forcer'• Probably 7 to 7M>%

struction,

of

total

the

civilian

labor

force

employed in new construc¬
tion, repairs and maintenance and
production
and \ distribution
of
materials and* equipment.
Con-''
were

.

structioncontributes

heavily

to

business and employment volume.
Its

activity is

measure

a

of eco¬

nomic health and prosperity. But
it takes a forward surge of all our

important economic activities to
of packaged houses generate national prosperity.
even
with government subsidies,
Headed for Great Economic
is limping along at a very unsat¬
Expansion

production

.

try is that it is not like the auto¬
motive industry.
I contend that
couldn't

the

and varied things it is

many

called upon to do.

]

The automotive industry makes

m^tor., vehicles,
senger

cars,

principally

pas¬
trailers.

and

trucks

r

the construction

It

builds

sales-rooms

the

public and

the service stations, the

builds the hardhighways,
the
scenic
and the bridges over

nrivate garages. It

surfaced

oarkways,
which

automobiles travel.

the

these

II

other
things.
It builds passenger and
freight terminals and airports. II
builds hotels and apartment build-*
ings and houses.
It lays down
water mains and sewers. In nearly
every
one
of these many cate¬
gories each structure is designed
makes

some

and

many

special set of needs

tailored

custom

to fit a par¬

isfactory rate.

:

;

I am firmly convinced that this
result of the devel¬
country is headed in the direction
opment of huge metropolitan mar¬ of
great economic expansion, per¬
kets for houses, partly from the
haps greater /than this or any
home-financing reforms of the other
country has ever known.
1930's. partly from the large-scale
That will mean larger construc¬
war
housing projects ,there has
tion volume than we ever had
been developed in this country a
before. When I speak of economic
full-fledged home-building indus¬
expansion I mean something that
try, which will soon match the
goes measurably beyond a mere
competence and the techniques of
catching up with deferred de¬
the master builders of large struc¬
mands; even that will probably
tures.
Even during the current
take another

Partly

.

*

as a

in

progress

The

houses.

after

come

stabilized,
stops
after

cutting the cost o*
real progress will

prices and wages are
after the government

demand,
real competition is restored.
inflating

housmg

Reducing

Progress in

Housing
when

Even

made

have

progress

I

which

the

Costs

builders
substantial

home

further

in reducing housing costs,
am
confident they will

called upon to create facilities

will not be able to

This

is

industry

for
transportation, com¬
merce.
education, recreation and
the 24-bour-a-day living require¬
ments of 140 million people, whose
demands are greater and whose
standards are higher than those of
any other country.

ict below

do not share the fear held by

I

people that there must be a

some

depression after deferred demands
have been taken care of. It didn't

that

happen
War

mands

after

way

World

Deferred construction de¬

I.

were

met

the end of

by

1924; instead of a depression,

the

five years had the
largest construction volume and
the greatest industrial prosperity
the country had ever known.
It
was the era characterized princi¬
succeeding

production,

site.

couple of years.

number of these

inflation period a

home-builders have made notable

do, they will probably not be able
to build new houses for families
in the lowest income groups. Thev

ticular

Fed¬

Washington

fairly

are

obvious

widely publicized.

...

and

widely

abuses

which

criticized

sell their prod-

cost any more than any

pally

by

great expansion of the

automotive industry and

the many

industries allied to it.
The
o

expansion

we

exnect is probable,

critical year;
will vi¬

This year 1943 is the

-Jp'-isiops p->ade

have reason
not certain. '

only partly
of
the
industry's making.
This
industry is the servant of the
are

.

American

economy, not its boss.
It
is obliged
to operate under
conditions, which are frequently
imposed by law and which are
frequently unduly restrictive. It

is

sufficient

munities
anti-trust

of

to

mention

labor

the

unions

prosecution,

im¬

from

licensing

laws and laws restricting or regu¬

lating bidding practices, and local

bidding practices.
these

outmoded

restrictive

trade

In addition to
laws

are

practices

costs

are

in private

men

this

yean

entitled to new housing

unstable

is

because

too

many

the vast things are out of balance.
In the present picture there is
majority of self-supporting fami¬
too much
government spending,
lies occupy used housing accom¬

most

are

other

public expense when

at

.

Construction Abuses

Those

Economic

East and West—Facts from Be¬

Schwabacher & Co.

There

tures.

get their own methods, up to date.

David Durand and Willis J. Winn

of Economic

and how to

know-how

struction

Their Measurement and Pattern—

—National

Orders Executed

orists,
uplifters
and
magazine
Writers, the rest of the world has
been
coming to us in order to
learn all it could about our con¬

faults
Basic Yields of Bonds 1926-1947;

\

of

erection

to

people it employs,
industry is im¬
portant, but it is only one of a
number
of
important activities.
Its
well-being is definitely de¬
pendent upon the well-being of*
construction

business can:
they should not be expected to. tally affect the future trends of
the
economy,
the
immediate
Tf the price of a new six-room
trends and the long-range trends.
house were cut to half of today's
Our present industrial and bus¬
"irice. there would be some fami¬
iness prosperity and our present
In soite of all its achievements,
lies who could not afford to buy
our
nrivate enterprise economy diem. The problem of families of rising construction trend are in
;s not without faults or shortcom- low income is not a housing prob- part soundly baseid upon produc¬
tion to meet legitimate needs. But
mgs.
It operates on a trial and !em, but a poverty problem, to be
error basis; it is a continuous ex¬
treated
as
relief.
Furthermore many current activities are overstimulated by monetary and price
periment.
The same is true of the notion that all the people who
Our present prosperity
the construction industry, whose cannot meet their own housing inflation.

some

there would be little in

was

being stigmatized
as
backward
and incompetent by our own the¬

and

Chronicle)

Financial

know-how

ment of

industry

construction

to meet

warned

I

(See,

time.

other

Morton Seidel Adds
(Special

.

During these recent years, while
our

made.

Stanley W.

—

&

Dummer

World Model

plants where the automobiles are

Chronicle)

Financial

thinking of getting out, the
question of how far up is at With Keenan & Clarey, Inc.
(Special to The Financial Chronicle)
best a debatable subject. The

important question is will
they go down from here and

any

Industry

Construction

a

But what does

Holley,

(Special

are

unless you're

fact

With

in

industry
make?
It makes the
parts factories and the assembling

Dayton & Gernon

likely
isn't important at this

How far up

,

%

#

v

counterpart

its

American

<

umn,

nothing to write home about.

and

possibly be like the
automotive industry if it is to do

this is
are

conveniences

country.

it

So, as With E. F. Hutton & Co.
(Special to The Financial Chronicle)
being written, readers
LOS ANGELES, CALIF.—E. F.
long a baker's dozen of Hutton & Co., 623 South Spring

into the

for

sons

products

Whyte

expressed -in

views

[The

12
12
22

-14
-16
-24

13

Lockheed

industry has
being slower
applying its modern assembly-

in

highway system in all
history, the best schools, hospitals
and institutional buildings in the
national

other

-39
37
19^2-20^ 18
Anaconda
311/^-321/4 29
simple. I'm in the hot sun in Avco
4
- 4Yi ZV'2,
Florida getting some of that Bethlehem Steel
30
-31
28
chill out of my bones. Okay, Boeing
21
-22
20
29 -30
28
now to get back to the mar¬ Briggs
Caterpillar Tractor 54
-55
53
ket.
Consol Vultee
12
-13
11
s<5
*
*
Douglas
50 -52
48
When I gave you a list of Dresser Industries- 21
-22
20

you're interested in what

If

construction

criticized

been

single-family houses than to other
building and engineering struc¬

—

these

The

Industry

number of

the

in other sectors of the economy.

Ifne

whole.

a

they have their counterparts the

ress;

Among the things the construc¬
tion industry has produced for
the American people are the finest

than

things happening around me
Up to this writing I see
things having nothing to little to indicate anything but
do with the stock market —
a
retention of all positions.
for me to waste a lot of words
These are:
on
action and counteraction.
Bought— Stop

Thursday, February 19, 1948

FINANCIAL CHRONICLE:

&

some

modations is a rather queer one.
Solving the problem of poverty
s one of the things the construc¬

industry cannot do. Another
thing it cannot do is to rp^ulate
the. American economy.
This is

tion

not

push-button economy; it is
an assembly line with a hop-

oer

at

not

1

i

one

end into which invest¬

to be auto¬
into prosper¬
it would be the

ment money is poured

matically processed
ity.

If

it

were

setup for government plan¬
ners.
Being diverse and flexible
it is
always possible for many
ideal

In terms of the volume of
ness

v

.

;

busi¬

transactions it generates and

taxation

much

the

of

wrong

kind,- too much inflation of hous¬

ing demand, too much wage boost¬
ing
without * corresponding
in¬
crease
in
production, too much
speculation
construction
and

in

commodities

like

and

fuel

materials

automobiles, too much reli¬
government for things the

ance on

Deople should do for
too
eral
ices

themselves,

much reliance upon the fed¬
government for public serv¬
that

states and

properly belong to the
the local governments.

We have too
per

thmgs to hapnen.

that

limit competition and block prog¬

a

too

man

little productivity

hour of labor, too

ro^netHion

(which

little incentive to

means

little
too

cost reduction),

Volume

top
a

167

Number 4674

little patience

THE COMMERCIAL

the part of

on

.buying public unwilling to. wait

until

shortages

are1

' caught
up
with, too little incentive to long¬

-term

investment, ; too /little risk
capital, too little faith in ourselves

and

our

capacity to lick

J

lems

with

horse

prob-

our

and

sense

hard

work.

Must

Corrected

These imbalances must be cor¬
rected and monetary and price
inflation

must

these

sooner

better.

A

checked... The

things

happen

recession

in

the

business

and construction activity this year,
accompanying a stabilization of
commodity prices and construc¬

.

tion

costs, could probably restore
adequate balance with only

an

moderate

declines

production,

,

volume

•

in

of

the

boom

year 1948

drastic

more

1949.

Con¬

present

quite possibly make

•

would

necessary a
correction in

Recent trends in

commodity

markets and recent price reduc¬
tions in certain lines of consumer

,

Estimates

1 •<"

:
<

•

long

Anticipating

■such

the

downturn

a)

time

of

this

year, F. W. Dodge Corp. has estimated the moderate increase of

7%

in dollar

and

volume of building

engineering contracts,

pared with 1947.

ity based

as com¬

is

ment.

•

'

that

ume

pate

by

a

very

^

'•

anticipate,

we

calendar

for

the

all Important
except
manufacturing buildings; for that
classification

for

expect

we

mod¬

a

struction volume

80th

con¬

the 1948

as

eco-

that will be made by

Congress and

that

will

the

made

be

Will
as

the

decisions

by the voters
,.
:

in November.

cial

they be reduced in such

ways

to restore inducements to long¬

-term

investment?: Will govern¬
spending be reduced? Will
; Congress say
thumbs down on
ment

proposed social welfare urograms
that are properly within the sphere

•
i

of

"

state and

Will

•

or

been

-

local

responsibility?

Congress sort out of the 30

more

risks,

terms

housing bills that have

introduced

enact

and

measures

neither

as

only

unduly

inflate

-

/

housing demand nor unhamstring the construction

duly

industry? ' Will
f

three

any

'

•

v

of

one

the

uplifters, manage to make a sound
and realistic appraisal of the contialities?

rewards,

in

If

Progressive Force

a

will

you

like

bear

economic

another

factor

There

I

me,

discuss

to

life.

particularly

with

in

has

our

been,

the last 15 years,
deliberate effort to discredit the

a

over

whole process of speculation. Now,
the people who attempt to under¬
line

the

business of

speculation

either uninformed

purposeful enemies of
of life.

way

nation

is

to

As you all know,
which made

what

it

I stress

vital.

it

is

to

this fact

We

keep

shall,

in

industry and its poten'I ' '

-

that

course,

measures

I frankly be¬

have gone possibly

we

too far in the way of restrictions,
and this situation needs to be cor¬

'•: 'i

rected?

'•

r.
.

•

•

We cannot live

without

free nation

a

as

speculation.

by

That

point

great many of

a

political

our

figures,
including
in the highest places. Spec¬

some

ulation

enters

into all of

our

ac¬

tivities in this country. You cannot
look out from your offices without

seeing

speculation going on all
around you.
It is the essence of
American way of life.
of your business

our

Every

element

tions

here

in

Atlanta

speculation.

upon

not

course,

opera¬

depends

These

thoughts
of people.

new

informed Taody

of

are,
to

an

I

am

giving emphasis to them for the
that so many people today
forgetting the conditions and

reason
are

the

forces

and

progress/

We
fact

under

cannot

that

through
that

,:

it

this

/•

lose

last

sight
the

of

use

live

of

the

expansion,

capital,
enterprises,

•

tion industry under tight governmental control. It was a program

could not have

we

General

war.

veloped, with the
bearers.

Mo¬

of riskis common-place in¬

It

formation

money

that these companies,
including General Electric, West-

in OPA.
It
failed in its avowed object of getpeople

inghouse

cause

,

houses

cheaply;

nounced

1

?

it

built
failed

quickly
in

its

and

unan¬

of

maintaining
controls over the free enterprise
economy. Are we going to permit
that sort of thing to be done
again? I assure you that nationalization of housing is the entering

wedge

purpose

for

nationalization

dustry generally.

I

urge

you

businessmen interested in the
vival

•

every

of

dustry

as

sur-

free

enterprise to scan
proposal for housing- legis-

lation with the utmost
The

in¬

of

American
serves

care..

construction

ing

the whole economy




say

last

to

of

the

risKS.

take

the

States

funds of

were

will¬

Without, this

risk-bearing, I venture

that

would have

we

We

war.

trend

to

cannot

in

set

that

development of

enterprise

in

lost this

permit

will

this

to

a

retard

kind

of

this

country. In¬
stead of apologizing for and at¬
tempting to defend speculation,
should be out proudly encour¬
aging it as a necessary force in
the further development of this

we

country.
We
I

in¬

use

United

American citizens who

•

ting

Electric,

of the

kind of

Need

happen.

creating wealth.
lation, we shall

a

Dynamic Atmosphere

standard

speculation
means

of

of

specu¬

inevitably stag¬

dy¬

namic economy can operate
only
in a friendly atmosphere. Unfor¬

tunately,
such

the

do

we

an

not

have

atmosphere.

political-

of

wealth

vancement

of

today

refer

which
of

and

will

the

of

crea¬

the

ad¬

cultural

our

to

to perform

us

profitably, in terms
tion

I

climate

make it possible for

life.

The impulses that
bring about the
favorable atmosphere of which I
speak

must

people.
opinions

originate

The

with

impact

of

will enforce
public officials.

our

■

'

'

'

'■

•»

the

their

action

'

by

' /

..

Today's Basic Need

as

our

improving
living and of

sumers' Price Index

(formerly the

Cost of

Living), excluding Rents,
compared
with
Hourly
Earnings in All Manufacturing.
The
relationship is not particu¬
larly close prior to 1933, for in
be

can

the pre-depression
period

steadily

inpreasing

productivity of labor
a
generally declining
index, the trend
being interrupted only by sharp
wage
or
salary increases.
Be¬
tween 1933 and 1945,
however, a
good
correlation
developed be¬
resulted

in

consumers' price

tween the consumers'
price index
and hourly
earnings in manufac¬
turing with hourly earnings rising
more steeply than the cost of liv¬
ing. Since 1945 productivity has

held

at

about

its

1941

level, but
wages
have
risen
sharply and
prices of food and clothing have
soared. A good part of the increase
in

prices of these

two

important
items in the cost of
living has been
brought about by the lack of pro¬
ductive help and the
consequent

We

have

facing

us.

been

tremendously
handicapped by ineptitude in our
policies.

It

observe that

is

gratifying

measures

are

to

being

taken to correct this tax
situation
give deserved credit to our dis¬

I

tinguished Secretary of the Treas¬
for the constructive
position
which he has taken with
respect
to
necessary tax reforms.
I am
encouraged
to
believe that the
constructive forces in our
national
ury

.

legislature will carry out
of

program

a

strong

tax

revision.
This
should not be long
delayed.
I hold the sincerest
convictions
that a reconstruction of
our

situation
I

is

cannot

overlook

prosperity.

the

fact

has

led to greater than
average
proportionate wage increases in
the low-wage industries/General¬
ly these have been cost-of-living
industries. Consequently, despite

earnings

increases

in

hourly
manufacturing

all

ly earnings based
stantial

tion

above

the

regressions

1933-1945

old

institutions, but who has the
courage
to express his
convic¬
tions. I have
reference, of course,
to your esteemed
Senator Walter
F. George.
see

everywhere evi¬
dence of the fact that
busy and
productive industry is the
product
of venture
capital. We see it
par¬

ticularly here

in

Atlanta

the

consumers'

price index in

December stood at about 179% of
the 1935-1939 average.
The line
value

of

hourly

earnings

corre¬

sponding to this cost of living is
244% of 1935-1939,
above

the

1947

or

is

about

14%

average

above

the

level

of

Sees No General Rule

know of

where

than

in

better example, of the
of venture capital

a

use

this

Originated

particular

by

Mr.

company.

Candler,

it

out
of
speculation.
You
have many other
companies here
which developed out of the same
incentives.
I cannot
grew

urge

upon

too strongly the
necessity for
vigilant and aggressive defense

you
a

of the

last

spirit which really, in the
analysis, invigorates our en¬

terprises and make
operate

our

successfully

economy
and
pros¬

perously.

grant such

an increase without a
substantial increase in prices

and

later

in

consumers' prices.
labor cannot rea¬
sonably continue to seek to main¬

Furthermbre,
tain
is

a

rate of gain which

prewar

becoming

World

tiles

demand for food

is

likely

enough
tween

to

that

so

some

consumers'

LOS

The

Street,
geles

Financial

ANGELES,
now

Chronicle)

CAlllF.—Gil¬
with

strong

spread

be¬

prices and the

artificially high regression
is likely to persist
despite
anything that industry or labor
line

do

can

to

raise

hourly earnings.
is, in fact, likely to
remain nearly as large as in 1947
This

if

spread

we

to fulfill the aims of the

are

Marshall

Plan

because

of

the

large amounts of foodstuffs, tex¬
tile fibers and textiles
likely to
be

required. It is probable, how¬
that with increasing quan¬

ever,

tities

of

agricultural

spread

about

10%.

average

9%

equipment
reaching the farms,
be

can

reduced

This would

increase

wage

to

mean

of

an

about

the 1947 average figure,
about 4% over the year-end
over

or

figure.
Such
an
increase
in
hourly
earnings, in view of the defla¬
tionary effects of the Federal sur¬

plus and the dying out of the in¬
flationary conditions listed above
would

largely have to be absorbed
by- industry without r price in¬
either

as

result of clos¬

a

ing of inefficient high cost plants,
unemployment and increased la¬
bor productivity or through an
overall

increase

Steadily
from

new,

make

it

the

productivity.
competition

efficient

plants will
if not impos¬
the increased costs

difficult,

sible, to
to

pass

consumer.

primary

a

in

increasing

Consequently,

consideration

of

all

wage negotiations should be ways
and

means

for

increasing

pro¬

ductivity.

to Business Trends in

Election Years
Commenting on the business outlook for the current presidential
election year, the "Business Bulletin" of the Cleveland Trust
Co.,
just published, analyzes business activity in election years during
last century

and half, and concludes from its analysis that in such
business usually moved in^

years

accordance with

the

years, except that they have usu¬

ally
the

"In

stage of the

current business cycle.
"There has been no general rule
as to
business trends in election
moved in accordance with
particular stage of the busi¬

as

the

shown

activity

average
on

has

the

Co., 458 South Spring
members of the Los An-

Exchange. He was
previously with Merrill Lynch,
Pierce, Fenner & Beane.

election

year,

diagram, business

been

stable

in

the

first two months and has then
declined to July, the low point of
the year.
The trend thereafter
has been reversed, and the curve
has moved up steadily for the rest
of the year.
The index, for De¬
cember is slightly higher than for

which

January.

all the

"This average movement should
pot be interpreted as having much
practical value in judging business

begins with 1790, includes
presidential election years
past except the first. Of
the 39 election years represented
in the series, business was above
normal in 24 years and below
normal in 15. In 20 cases, business
activity was higher at the end of
the year than at the beginning. In
18 years it was lower, and in one
year it was unchanged.
in

the

"While

narily

elections

seem

marked effect

do

have

to
on

not

ordi¬

had

any

business for the

whole, there have been
interesting variations in the

trends

in any particular election
There have been many in¬
stances where individual years did
not
follow
this pattern at all
closely. It is possible, however,
that in past election years there
year.

has been

a

cautious and hesitating

sentiment in business
for

presidential

proached,

and

the time

as

nominations
a

attitude

ap¬

confident

more

have been made.

month-to-month changes in busi¬
ness in all the election years com¬

after

the

nominations

"Over the period for which data
are

available, stock prices in the
years
have followed a

bined.

These

election

trated

by

month-to-month

Marache, shows

&

Stock

tex¬

and

remain

old

some

to

will-o-the-wisp.

a

year as a

With Marache, Sims & Co.
(Special

unreason¬

Moreover, it will
possible for industry to

be

very

as

developed so many ness cycle at the time," the "Busi¬
great
enterprises, such as the ness Bulletin" reports. This bank's
Coca-Cola Company.
I
do not long series on business activity,
effective

not

about 20%

hourly
earnings in all manufacturing. It

have

you

of

period.

that

have in this State of
Georgia
stateman, who not only
understands the problems of our

us

correla¬

line

an

able correlation.

creases

great

Ail of

sub¬

gains for labor.
consumers' prices were

8%
or

The

earlier

showed

relative

1947,

about

the

on

correlations" which
In

in

you
a

sent continuation of

labor.
repre¬

tax

urgently necessary if

to have further

we are

frequently demanded by
However, this level would

the

Also, the practice of
measuring wage increases in cents
per hour instead of in percentages

consumers' prices have advanced
to levels far out of line with hour¬

the problem

1947. This last represents
the increase which will be most

average level.

all

This is

end of

and fertilizers

substantial

today is the re¬
incompetent hands from
streams of decent business

hourly earnings prevailing at the

need to bid wages up towards the

The basic need
moval of

Sims

defend

Without

nate.
We need in this
country,
above everything
else, a dynamic
economy. Under no other system
can
we
make progress.
A

bert L. Reed is

fundamental
,our

(Continued from page 10)

is

permanently the rules of the game
decide that the game is over.
hope neither of these things will

i

became large and productive be¬

by

Construction

Wage Increases Be

whole

free

;;

risk

those

us

without which
won

we

:

was

the

gave

which

./

Steel, Bethlehem Steel and others

devised

the

tax

'

Program, which put the construc-

'

not

because

of

effect

prevent abuses.

lieve

Ameri¬

our

today. It
speculation which will
what it is to be in the

be

future.

it

are

speculation

was

make

they

or

In 1946, we had what was called
the Veteran's Emergency Housing

•

r

their

and

leading Republican

struction

.

.

-

inter¬

some

candif tors, the A. O. Smith Corpora¬
dates, all of whom appear to have
tion/Douglas Aircraft, the Glenn
adopted one or another of the Martin
Company and too many
panacea programs offered by the other
companies to mention de¬

'•

'

be

equip¬

of

Speculation

'

such

design,

profits, are not large.
They have no advantages over the
public in their activities./ '

■

.

federal taxes be reduced?

Will

construction

is overlooked

nomic trends will be the political
decisions made this year—the de¬
cisions

in

construction

of

erate decline this year.
Just as critical for future
•

our

There may

need

antici-

we

increases

year

classes

•

completion from

Within the moderate

moderate

of

35

Passed to Consumer?

the

(Continued from page 6)

will

increase in contract ..voir

.over-all

society.

for

private-en¬

Capital Marts in Danger: Boylan

it

for

over

starts.

terprise

its

Commodities Peak Reached But

this

,

carried

outlook

or

A mod¬

supplemented

the

is

United States and

I

midyear

large volume of continuing work
1947

living and community

industry

materials and construction

around

current contract vol¬

on

by sound

The outlook for the construction

r

(831)

Can Further

celeration.

construction methods, construction

Construction activ¬

likely.

seems

As

ruptions to the forward move¬
ment; progress and expansion do
not go forward with uniform ac¬

yet been firmly established, a good
show, but it is a
guess would place the
average in¬
uniquely important member of
crease oven the 1947 level at
the
about
private-enterprise team.
It
8%. A statistical answer
will be there
can/how¬
pitching until the
construction activity and American
ever, also be obtained. The Con¬
people decide to change

progress

quarter.

downturn

bar

CHRONICLE

are

of

umes

can

erate

a

people, as long
adequate incentives
to initiative
and
long-term in¬
vestment, -there will be large vol¬
there

are

into the second

crea¬

health;;

economic

the

means

Contract volume

ume

of

the urge to further raise

is
likely
to / run
very
heavy
through the first quarter, possibly

-

a

there is freedom, as long
as
there is
capacity to expand
the economy/ as long as there is

highly "-important

possibility

some

is

as

should

7% Increase
Building
'

in

'

rometer

goods may be signals that the turn
in price trends is not far off.
•

It

FINANCIAL

contract

employment.

through the entire
much

industrial

construction

and

tinuation
'•
,

be

well.

tor of economic*wealth and

as

Be

it

serves

standards

Imbalances

f

and

&

ments
and

the
of

business

below

level.

changes are illus¬
the
diagram,
which
average of the move¬

The

the

activity

normal

or

above
100%

course,

the

on

average, somewhat similar to that
of business. The low for both has
been

in

the

middle

diagram covers the
election years from 1792 to 1944

while

inclusive.

high for both."

December

has

of

the

year,

marked

the

36

FINANCIAL

&

THE COMMERCIAL

(832)

CHRONICLE

system

of Free Enterprise.
beyond the question itself
and the only reasons why such
a
question could be asked would
be
a
growing belief
by ' some
people, fostered by cleverly writ¬
can

Some Basic Foods—For Thought
that

so

prices

nothing

found

attract.
In

to

#

present position, we are

our

much closer to conditions in

is still

because there

1920

great un¬
satisfied demand for homes, auto¬

repeat it, I should like to see gov¬
ernment get
out of business as
quickly
as
is
practicable
and
and

stay

of

out

in¬

it

definitely.
have

has

third

a

round

Whether

mands.

but

a

of

de¬

wage

.,.

gain will be taken from you.
The

ten

All individuals who have to pay

carded

following are some of the
first steps that might be taken:
an

income tax to the Federal gov¬
be placed on

the privilege of dividing income
accumulating for a good
prove
to be the breaking point tax between husband and wife in
These demands must
in our price spiral remains to be the manner that is now practised
be fulfilled.
We may have a short
seen.
However, the better we un¬ only
in
community
property
period of recession* later in 1948
derstand the economic factors per¬ states.
or in
1949, but it will not be of
taining to a question, the better
Elminate
the double
taxation
long duration but will represent a
will
be our chances of making
of dividends, where the dividend
buyers' resentment against high
the right decisions on it.
prices which, when adjusted to
disbursing company pays a tax on
Whether we like it or not we the dividends
arouse the demand for goods, will
first, and the indi¬
again result in normal and profit¬ are already in an inflationary vidual is taxed once more when he
able business on a
much
more
period.
receives them.
If a company is
been

many years.

basis

stable

day.
a

sure

it to¬

know

we

,

■

v

;

I agree

.

.

made with

The constantly

■

■

that 1948 will
year
of decisions but be
that the right decisons are

Yes

be

than

good judgment. We no

increasing wages
and other costs of doing business
will result in losses to many small
profit businesses unless they pass
the increases along to the public
intead
In

longer can afford to guess.

of

profits
Wage Price Controls

the next few months,
going to hear a lot about
the necessity of price and wage
controls, rationing, how much aid
we should
give to other nations,
are

effect

what

and
our

own

will

it

have

on

and whether or

economy

be reduced, and if
much.
All of these
questions are very closely related
to one another, and decisions con¬
not

taxes

can

by how

so,

cerning them will affect the wel¬
fare of
our

each

of

standard

living,

of

and

distributor

High prices are not the cause of
They are the result.

And

prices are high today.
In
the near future, it is even possible
commodities which

some

we

still higher in
price, but there is only one direc¬
tion in which prices will eventu¬
ally go, and that is downward.
You

all

are

about

are numer¬
a new

price control program will correct
our present inflated position, nor
even

towards

contribute in

return to

a

small

normal
knew it before the

a

economy as we

a

war.

The

is both
difficult
and grave from the wholesaler's
standpoint.
There are a great
many
technical difficulties in¬
volved in setting up price controls
in a field as large as the food in¬
dustry. The difficulty of adminis¬
tering controls
in
an
industry
problem

which includes six millon growers,

fifty

thousand

and the best

distributors

plex.

is

along.

Prices

high

rapidly
since 1941.

wages

have

Wages

risen

not

as

nor

increases

these

but must pass them

longer,

any

all

aborb

cannot

as

definte cost factor

are a very
which
directly

for

accounts

a

great part of the costs of distri¬
bution and services.
Unless wage
increases

are compensated by in¬
production which will re¬

creased

duce the accumulated

costs by

at
least the amount of the increase,
both costs and

prices will

scili

go

higher.

earnings later disbursed as divi¬
it is eminently unfair tr
impose another tax

taxed

It

food

processors,

part of 600 thousand
all

of

has

kinds

is

com¬

been

emphasized
that it is extremely difficult to
confine price controls to only one
field of our food economy, such
as
growers
and retailers; it
must be made to

way

the individual

desirable.

been reduced from

brackets,

vidual
his

of

and

that

so

some

cover

all of

our

case.

kept posted

by the
thinking men of the area he rep¬
resents.
One of the outstanding
things on which he should be kept
posted is the subject of taxes. We
have

at

grees from excessive

believe
that
at

along

some

the

with

relief

can

time

same

Since

the

because

inventory. Some form of tax mor¬

atorium,

varying de¬
taxes, and I
many others

be

given, and

reduce

productive

and
through
increased
oroduction combat the problem of
inflation

This is important
seems

to

be

an

rates.

to

steer

tions.

some

creasing the shortage of supplies.

now

if

price control

a

to

be

set

up,

program

I doubt

our

na¬

to

as

would

business

impetus

Get Government Out of Business

firmly

believe

that

it

a

not

a

provide

to

combat

only
but

"shot

the
give
the

in

the necessary

in

will

anv

prob¬

individual

There

too many people

are

lis¬

tening to, and reading about, the
wonderful

advantages

of

and do

standpoint, I believe
any efforts to increase our
present corporate tax burdens will
simply be another step toward
killing the goose that lays the
aolden eggs of Federal revenues.
Great savings can be accomplished
practical

that

if the Federal and

other business
that

the

and

in this

man

Socialism

of

adherents

nation,

Communism have been mak¬

ing inroads into our
system and doctrines.
lack

American

and

Communism, and ignoranth

line

up

of

foreign "ism"

a

coated

with

the

long

so

label

it is

as

seems very

difference

between

ism and Communism
understand

it.

Thev

ownership
instead
ownership and both
their
free

tive.

hatred

of

Social¬

I

as

and

see

natura1

are

of

private

buddies ir

are

caoitah'sm

individuals

organizations

are

and

national

debt.

enterprise, and the profit mo¬
They differ only in their

degree

hatred

of

used toward

tives,

but

sociah'sm

the

and

means

attaining their objec¬

there is
is

to

tha

doubt

no

closer

communism

than to capitalism.
The

free

terms

of

enterprise

is

It

attention
to

and

well.

democracy
are

accident

no

and

synonymous

that

free

our

socialized

or

stalled,

personal

income

tax

load has jumped higher than 610%
since 1929.
There is no
doubt
that this is a prime target to be¬

gin with

in

reducing

prices and

costs.

being financial¬

record

feet,

Dec.

again

of

set

a

Fink, its
for

the

high

new

57,286,150,000

percentage

a

in¬

revenue

cubic

increase

of
The number of customers

by the company reached
626,317 in the eight operating dis¬

tricts of Detroit,
Grand Rapids,
Muskegon, Ann Arbor, Mt. Pleas¬
ant, Ludington, Greenville-Belding and Big Rapids.
*

'

•

General Motors Corp. produced

168,968
the

trucks

and

cars

United

in

States and Canada

month

the

during

of

January, as com¬
194,476 units in the
preceding month and 123,152 units
with

pared

the

and

corresponding

Of the total in

130,071

year,

38,897

month

in

January, this

were passengers cars

trucks.

were
*

We

the

in

a

freedom

#

4s

short time ago,; I was asVed
give my opinion of Free En¬
terprise and the possibilities of its
to

Co.,

Detroit,

announced

the

declaration of dividend No. 41 in¬

creasing

the

payment

from

25

cents to 35 cents per share, for the
first quarter, payable March 10,

next,
Feb.

to

stockholders

of' record

20, 1948.
if

if

if

For the
year
ended Oct. 31,
1947, Divco Corp., Detroit, reports
that net-earnings after all charges,
including provision for Federal
taxes, were $1,315,259, equal to
$3.41 per share on 450,000 shares
of common stock outstanding. This
compares

$2.12
of

with net of $954,138, or
on a like number

share

per

shares, for the preceding

From

has

United

States

year.

of

individual to hold

an

amuse

himself

as

he

dis¬

open

fit.

sees

are

jealously guarded rights. If there
is any other
country in the world
is

that

happier,

a

envied

nation

please tell
a

better,

than

about

me

more

our

it.

own.

Ours

is

nation of unlimited freedom of¬

itiative,

enterprise and wisdom
she should guarantee no so¬

cial
p

security for laziness, incomet-ence. and failure. Our free

of life has been rugged, and
extremely painful at times, but

there is

doubt that it has paid

no

biggest dividends

on

the face

the earth.

(Continued from page 7)

teresting to the GI's who
ting

eral

Experience

With

Jersey

wishers

during

in

our

the

own

past

And

ten

government
or
twelve

recently we've
all enjoyed the planned control o'
OPA which clung tenaciously to
its authorities and agencies and.
years.

more

while its power grew to tremend¬
ous

proportions, was nevertheless
communistic control.

short of

am

in favor of keep¬

ing and maintaining
Republic

which

our

American

guarantees

the

freedoms to every individual, and

had

organization of
met in solemn

conclave and decided that Hawkes

not

was

liberal

enough

it

and

would have to be another man, is
that man a few days later,

that
for

reasons that were clearly ap¬
parent, had to withdraw from the
campaign.
.

Whereupon the Republican

or-1

ganization, having missed up on
this "liberal," set about looking
for another "liberal."

quite

clear

that

It should be

the

Republican
organization in New Jersey doesn't
know what

most

economic

get¬

a

Republican

New

lightful

Planners

experiences with
"planners" and wellour

$100

are

month to go to
these schools on "public instruc¬
tion," is that after the great lib¬
some

In the

We've had

Washington

Ahead of the News

have

working Constitution and BiF
Rights, under which the rights

Gentlemen, I

Will Free Enterprise Work?

ing

been sacrificed.

far

A

business

1947

system has been in¬

individual

to

much

our

in¬

according to
Woolfolk, Chairman of

the company, and Henry
President.
Sales of gas

dent that where any collectivized

can

help. Everybody has
been complaining about the high
prices of food, and since 1929 food
prices have gone uo 153%. How¬
ever,

net

ended

year

operating
$6,218,074,

William G.

enterprise developed along with
free republic, nor is it any acci¬

your

They

the

the

Consolidated

a

of
your-

its

creased

and

the

as

the

meet

V

faster

problems

in

Michigan

Ameri¬

of

is

give

of

that

1947.

way

tax

and

gas to

31, 1947, of $322,750 under the
previous year, in spite of the fact

in

and industry
objectives and aimi

and all of the

If the government were run
economically as possible, these
savings would contribute to a

Please

reduction

a

Co. for

hous'ng, education

sary.

our

Gas

in droves to voice theii
acceptance of socialized medicine

And

of

in

come

#

understanding
i
clearly evident on the part o.
many
people
who
openly
de¬
nounce
the thought of Social'sn

and activities,
expenditures
immediately neces¬

reduction

sufficient

gas

needs

record-breaking demand result¬

ed

of

excessive personnel
and
postpone
all
not

natural

served

fering unlimited rewards for in¬

are

added to

£

customers'

24.5%.

State govern¬
ments will eliminate all of their

that

a

"ism-' except Americanism. I
fully
realize as well as almost every

tax

But from

vote.

of

its

every

cussion, work, loaf, eat, sleep and

can

Lack

for

year

uals
a

present

our

inflationary tendencies.
Both

production, enterprise, and inven¬
tiveness, then I'll be glad to say
let's try it.

of

a

for

laws

taxpayer

arm," and

I

benefit

individual
every

enough to be of much help.

tax

our

to

years, and I believe
progressive measures taken

very

quickly

a

us

many

ation

enforced

good

as

to urge
congressmen
to

some

much if it could be put into oper¬
and

be

for each of

inequities in
great

in

standpoint, it is
a
good political move because cor¬
porations cannot vote and individ¬

numerous

distributor

some

From their

There have been

and

that

increase in corpo¬

reduction

be of

from those items which are
unprofitable, thus still further in¬

us

because there

doubt

no

representatives

Washington

organiza¬

well

giving all of

much concern.

so

business

as

is

that

these

to

seems

any

give

taxes

burdened

enable these tax

congressmen

away

of

abatement

or

relief to indivduals

give

con¬

rising

will

production at all levels, and cause
the farmer, processor, manufac¬

the

of

inventory
costs,
many are now in the precarious
position of needing more capital
funds to carry a normal prewar

stantly

modified and revised tax law that

stifle

own,

bed-fellows who believe in public

conditions,

to be

<<

•

The directors of Pfeiffer Brew¬

excess

Government

Now

our

as

suffered

all

equal

can

Fundamentally, there

profits
taxes
return
to
peacetime

high

able

not

me

world that

of

firms to increase their

position to act for his constituents

own

show

efforts,

affairs, and
to express their views freely and
convincingly to their representa¬
tives at local, state and national
levels.
No representative is in a

enjoyed througl
democracy?
If you can
one single
country in the

little

millions of workers in

in government

'have

we

During the war years, many
corporate organizations were un¬
able to set up reserves because

rate tax rates to offset

is

nation, in any part of the
world, has ever produced the re¬
our

#

cost of manufactured

any

sults

the balance

working capital.

dis¬
other

But what other system has ever
What successful system

n

(Continued from page 11)
and

Ameri¬

be

some

canism.

I believe it is important for all
business men to take an active in¬

he

taken

/"

respective
serious consideration

could

be

would

income

our

controls

than half

more

no

from him for taxes in any

away

as

And

their wartime

limita¬
tion should be placed on the max¬
imum taxes payable by an indi¬

high

time

were

would certainly be
rates have not

recommend

if

rates to

These

organizations,
government and industrial em¬
ployees,
school- teachers,
and
other white collar workers, whose
wages have not kept pace with
the times and who will be pain¬
fully hurt if any additional at¬
tempt to push up our present high

terest

be

of

favor

worked?

A

reduction in tax

Some

adequate without wage controls,
rationing, subsidy and allocation—
to mention only a few that would
be necessary to do a good job.

Even

dividends

the other, but

or

service

are

and

same

not both.

tional debt.

turer

the

Let

one

In addition, any price
controls would be completely in¬

industry.

this

on

in the hands of the indi¬

money
vidual.

would

There
trade

its

of

in

our

should

democracy

system.

More Capital Funds Needed

not only income, but

are

they

part

industrial

as

Costs

as

that

on

prices still further is successful.

against

I do not believe that

will it

he

sure

without
loss. This
means, of course, that we are a
part of the spiral, but many of us
have reached the point where we

govern¬

price controls, and the argu¬

ments for and
ous.

the

with

familiar

agitation

current
ment

rise

may

make

to

taxed

dends,

mut

our

inflation.

handle

a

it

dandling

Wages

that

this is

not be over¬
looked, and a study of each item
must be made by each individual

jobs.

way

which

incomes,

us—our

low,

very

are

danger

During

we

trying to absorb them.
of business,
where

line

our

be

to

propaganda, that

can

the

basis, and the Revenue Act
should be revised so as to extend
same

not this will

or

Michigan Brevities

It goes

small portion of such

very

ernment should

It is obvious that industry is to

innu¬

that

commodities

merable

I have said this before and I will

feasible,

a

mobiles, capital goods and

and real keen competition.

mand

(Continued from page 12)

Thursday, February 19, 1948

"liberal" is.

a

meantime* Hawkes, a de¬
fellow, and one of our

able

citizens,

is

making

a

speech.

He is trying to tell that
regardless of what is being done
to him by the "liberal" Republican

organization of New Jersey, in¬
cluding those "liberal" South Jer¬

leaders,

sey

hatred

more

that
than

he

holds

no

night or a day
against any man—well, in a mo¬
ment of flippancy, there's one ex¬
a

ception and he said, rather whim¬

sically: "That

man

lies buried in

Hyde Park."
This

the

has

apparently

incensed

"liberals," including the "lib¬

would not accomplish as much as

ly squeezed by tax laws that stifle

concept^ and ideals being widely

I

if

initiative

accepted world-wise,

"ism" regardless of its name, which

cluding the South Jersey Repub¬

would

the

lican

our

friends

we

were

ate under

a

to

continue

free conomy

to

oper¬

and let

prices and wages seek their
levels

through

our

own

fundamental

or

of

prohibit expansion

progressiveness

through

capital, because there is

centive to

economic laws of supply and de¬ gain




and

work

when it

is

for

a

lack

no

in¬

reasonable

realized that all

or

discarded

in favor of some other system.
an

It's

extremely sad state of affairs

when it becomes necessary to say

anything in defense of

our

Ameri¬

am

unalterably opposed to

act

freedoms

to
we

present form

deprive
enjoy

us

of

under

any

of American enter¬

prise and. American government.

eral"

Republicans

leaders
gave

few years ago.

incense

me.

to

and

whom

plenty

of

also

in¬

Hawkes'
money

a

Somehow, it doesn't

On

>

Volume 167

4674

Number

THE COMMERCIAL

&

CHRONICLE

FINANCIAL

#

Indications of Current Business

t

m

(833)

Activity

The following statistical tabulations cover production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that date, or, in cases of quotations, are as of that date):
Latest

AMERICAN

IRON

AND

STEEL

Indicated steel operations

INSTITUTE:
.Feb. 22

Week

92.5

Year

Month

Previous

Week

(percent of capacity).

Equivalent .to—
Steel

ingots and castings produced

AMERICAN

PETROLEUM

Crude

runs

to

1,667,300

1,646,700

1,732,200

1,670,900

5,313,137

4,770,250

GINEERING

5,434,000

5,289,000

4,788,000

15,986,000

16,289,000

14,684,000

2,468,000

2,561,000

2,290,000

2,422,000

7,870,000

7,690,000

7,471,000

5,159,000

fuel oil output (bbls.)
a
Feb.
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished gasoline (bbls.) at
Feb.
Kerosine (bbls.) at
Feb.

9,154,000

9,141,000

8,776,000

output

(bbls.)

Residual

•

Total

8,413,000

fuel oil

Gas oil

.

and

Residual

105,100,000

ASSOCIATION

OF

(bbls.)

*102,988,000

99,759,000

96,698,000

11,119,000

"11,719,000

14,536,000

(bbls.)

38,538,000

"40,607,000

46,785,000

44,867,000

50,257,000

50,839,000

51,935,000

46,701,000

Feb.

747,394

727,038

831,447

AMERICAN

U.

Public

668,783

629,970

675,434

669,300

COMMERCIAL

ENGINEERING

RECORD:
("Total

CONSTRUCTION,

-

.%>.

,,

ENGINEERING

(short

Unfilled orders

All

NEWS

and

Z

$54,778,000

66,640,000

32,201,000

57,173,000

51,033,000

21,212,000

33,185,000

21,737,000

32,615,000

17,146,000

32,030,000

35,436,000

18,468,000

4,066,000

Feb. 12

151,055,080

144,347,000
86,670,000

107,867,000
43,188,000

OF

103,740

INDEX

FOR

IN

CITIES

167.0

164.9

15323

206.9

202.7

185:9

170.5

167.9

o

227.3

227.0

'

204.9

198.4

236.1

224.7

—

products___l—

bakery

:_4

-_tJ

-

products—v-

Fruits

i.

—:
vegetables—-—-d—_

and

Beverages

726,733

15:

——

and

108,112

593,838

MODERATE

LARGE

December

of

123,830

585,818

(short tons)

foods

Eggs

33,566,000

65,215,000

Feb. 12

~r.~
z

,

68,319,000

Feb. 12

_

municipal—

Federal

$83,284,000

Feb. 12

:

construction

State

$123,813,000

$430,970,000
279,915,080

;

FAMILIES

Dairy
$133,534,000

272,367,000

November:

of

tons)

end of month

at

PRICE

Cereals

.—Feb. 12

(DEPT.

items

y

Private construction

—

-

231,017,000

178,259,000

FORGINGS

1935-1 !)H9=100—As

Meats

'*

U. S. construction

Public

STEEL

COMMERCE)—Month

Shipments

All

CIVIL

207,529,000
234,426,000

—

_1

Municipal—-:

INCOME

of cars)

of

56,167,000

and

CONSUMERS

RAILROADS:

Revenue freight loaded (number of cars)
Revenue freight ree'd from connections (number

$503,384,000

46.3S0

EN¬

—

RECORD—Month

Construction.:

S.

Construction

State

767,301

Feb.

at

at

31,876

$441,955,000

CONSTRUCTION

NEWS

Private Construction

13,441,000

Feb.
Feb.

distillate fuel oil

fuel oil

43,959

19,650

Federal

-

*.

43,461

November)

January:

15,476,000

and distillate

of

(end

ENGINEERING

5,318,237

Feb.

oil

aluminum

5,348,000

Feb.

Gas

of

5,332,575

Feb.

Kerosine output (bbls.)

Ago

S.

—

Stocks
CIVIL

(bbls.)

Year

Month

MINES):

OF

Production of primary aluminum in the U.
—Month of November

Feb.

(bbls.)

average

(BUREAU

Feb.

(bbls. of 42 gallons each)

average

stills—daily

Gasoline output

.Feb. 22

INSTITUTE:

oil output—daily

Crude

(net tons).

ALUMINUM

Previous

Month

94.1

96.1

92.7

Latest

Ago

Ago

.

205.3

OUTPUT

Bituminous

,

Beehive

BUREAU

cpai and

Pennsylvania
^

(U. S.

lignite

anthracite

OF

201.1
185iO

194.7

176,2

208.2

196.4

207/3

183.7

—i

——_—

183.2

Sugar and sweets——

175.3

(tons)

Feb.

11,525.000

"11,190,000

13,800,000

176.5

Feb.

,

7

1,170.000

.1,107,000

1,100,000

1,107,000

7

130,000

"136,000

139,300

117,600

Other

fuels

DEPARTMENT VSTORE

SALES

SYSTEM—liWS-Si)

t

INDEX—FEDERAL

AVERAGE=100.l'i«.

ELECTRIC

Electric'

>

INSTITUTE:

output i(in.000 kwh.)

ice——_.T

'

Feb.

—

240

7

233

219

251

COTTON

LINTERS—DEPT.

AND

-

AGE

In

ZZ.

Feb. 14

AND

INDUSTRIAL)—DUN

5,384,945

5,412,361

>

consuming

In

4,778,234

5,370,112

public storage

KtC&ZZZtZ-ZZiZjiJL-U,

COMPOSITE

PRICES

PRICES:

(E.

M.

&

Electrolytic copper—
Domestic

refinery

'

Export
Straits

t Lead

reiinery

tin

(New

(New

Lead

128

Feb. 12

:

'<•'

97

62

61

c

1

3.18925c

2.87255c

$40.17

$40.08

$30.15

$40.50,

Feb. 10

$40.83

$40.58

$33.75

St.

Average

21.200c

21.200c

19.325c

21.425c

21.525c

21.675c

94.000c

94.000c

omitted)

70.000c

15.000c

15.000c

15.000c

13.000c

.Feb. 11

14.800c

14.800c

14.800c

12.800c

Feb. 11

12.000c

12.000c

10.50QC

Feb. 11
——-

at—

PRICES

DAILY

cr\

r

110.88

110.70

110.70

117.40

116.02

115.82

116.02

BOND

Govt.

114.46

114.27

114.08

120.02

109.97

109.97

109.79

•

-

_

\••

YIELD

DAILY

103.47

103.80

STORE

SYSTEM

Gold

105.17

105.00

112.37

112.56

112.56

118.40

114.85

114.66

115.04

(in

(in

Zinc

2.45

2.45

2.21

3.12

3.13

3.13

2.78

New

2.85

2.86

2.85

2.55

St.

2.93

2.94

2.95

2.65

Lead

^

.

and

2.80

3.54

3.54

3.52

3.12

Silver,

3.43

3.44

3.45

3.01

Sterling

3.04

3.03

3.03

2.73

Feb. 17

-

2.91

2.92

2.90

2.61

,

282.G

323.4

210.1

252.1

266.8

239.9

220.8

220.8

216.0

158.5

173.4'

178.4

180.7

154.5

211.7

217.3

220.2

162.2

162.2

161.3

materials

Z

Feb. 14

233.5

"233.4

233.2

215.5

Feb. 14

155.1

"155.1

155.3

137.7

137.9

136.7

125.5

Farm
''

All

142.9

"142.9

—

-

Feb. 14

or

S.

refined,
(per

137.2

134.5

220.7

226.6

of Dec.

DEPT.—^As

124.3

214.7

CIRCULATION

IN

193.8

PLANTS

U.

IN

—

SALES

,,

(tons)

S.

(AUTOMOBILE

FACTURERS' ASSOCIATION)

December;
Number

"

-

..Feb.

Production (tons) vr——T—-—
Percehtage 'of "activity
I

..

PAINT AND

7

;

PRICE

222,730

-

7

"

..Feb.

DRUG. REPORTER

7

*

'*

*

196,886

99

104

459,989

599,009

147.6

/

151.2

152.0

147.3

Feb. 13

motor

of

motor

NEW. BUSINESS

—

—

commodities

Farm

-

.Feb.

products

-Feb.

-

7

163.8

7
,

"

195.5

>:

-

163.7

164.5

141.7

195.1

197.0

and leather products—_____-x-—

Textile

products-

Building

.'

-

v

177.9

176.5

182.1

?

198.0

201.2

200.3

172.9

7■ "*

147.0

145.8

145.8

137.7

131.4

131.2

130.0

98.6

154.2

154.1

..Feb.

J.

7

^Feb.

materials

Chemicals «nd

,;

;r

7

..Feb.

Fuel

:.

7

.Feb.

I

___—2___

and lighting materials
Metal and -rrtetal products—

7

;

*

152.8

f

156.7.

138.3

..Feb.

allied

192.1

191.3

189.7

170,6

7

134.3

139.3

139.0

127.6

.Feb.

7

137.7

137.5

..Feb.

1

Miscellaneous

7

..Feb.

products——

Housefurnishings good?
—;
commodities—

Raw

7

122.6

123.9

articles

136.7

122.1

123.0

110.0

AMER.

/

-

:

•Revised"Ufigure.




...

$65,692

$1,750

$1,750

$1,500

$1,775

$1,775

$1,525

$1,800

$1,550

$1,800

-

*

$57,038

15.000c

15.000c

15.000c

20.500c

20.500c

20.500c

10.500c

10.500c

$28,765,640

$28,952,496

I

394,176

,375,735

366,879

305,148

266,681:

87,611

107,616

1,444

.1,417

1,498

10,126

*7,873

9Q(|i

631,150,228

$755,324,174
595,314,499

$637,653,600
549,833,199

78.17

78.82

468,704

expenses..

ratio—per

—

cent

....

$80,843,092
Net
Net

railway operating income before charges
income
after
charges
(est.)

TRAILER

COACHES—HOUSING

(DEPT.

OF

TYPES

COMMERCE)—Month of

Production

(number of

(number of
(value of)_.

of

58,000,000

'..6,083
5,847

$10,001,422

(DEPT. OF COMMERCE)

of

units)-'.

7

132.3

182.3

182.9

153.1

Shinments

(number

7

156.6

157.3

158.4

141.3

Shipments

(value in dollars)

Feb.

7

156.7

156.5

157.3

137.5

7

15G.7

156.3

157.3

136.5

7

147.8

143.0

146.9

128.1

foods———Feb.

•"

-

-

"

5,567
5,512
$9,246,394

7,827
7,707
$13,236,706

—

November:

(number of units)

Feb.

—

86.23.

$80,116,364 Cr$28,772,759
65,577.488
103,754,010
44,000,000
86,000,000

Nov.:

units)

TRUCK TRAILERS

80,022,688

ONLY

uifits)

Shipments
Shipments

.

ROADS
(ASSOC.
of December:

operating

Operating

$28,867,631

&

revenues

Feb.

——^

All

.

$66,000

RRS.)—Month

Feb.

commodities other than, farm products
AH- cmfimuditifes other thanf farno
products and

———

INCORPORATIONS—DUN

operating

Production

s...

Mahnfacfcuxed>products-2_

"

28.625c

Nominal

^

J

materials 2.1——

Semi-manufactured

33.500c

Nominal

$807,428,182

coaches

EARNINGS—CLASS
OF

Month

Special'groups—

28.250c

33.000c

33.000c

33.500c
Nominal

100,381

cars.——.

165.5

Feb.

Hides

29.59.1c

MANU¬

trucks—

Total

(WHOLESALE..PRICES—U. S. DEPT. OF LABOR—1U26—100:
All

$88,000

36.030c

,

36.082c

Month of

BRADSTREET, INC.—Month of December.
RR.

—

passenger

Total

-

$35.00

$79,000

$78,303

•

of

Number

181,017

103

,477,216

•

177,964

of

Number

202.189

185,437

* 432,911

100

—

*

185,944

177i884

Tr

averagr«I©O_,J-1—ZZ-,

INDEX—J^C-ik;

Feb.

..'Feb. "7

i TJnfij^ed ordera. (tpns),. a t™—

yOIL,

69.1250

$35.00

FROM

Total number of vehicles—1_——_—---r>—

,

70.000c

84.156c

$35.00

TREASURY

(000's omitted)

31

FACTORY

VEHICIJ:

MOTOR

NATIONAL PAPERBOARD ASSOCIATION:

'-Orders -received"

85.385c

93.500c

11.077c

St.* Louis

East

MONEY

133.6

137.2

Feb. 14

.

»142.9

Feb. 14

machinery
r.grdtfpa cotfibined__—_.
.

U.

ounce

per ounce——
pound) ——————
JCadmium
(per
pound)————,
SCadmium (per pound)-——_L————ii-Aluminum, 99'/® plus, ingot (per pound) —
Magnesium, ingot (per pound)—
Zinc (per pound)—

155.0

Feb. 14

(per

142.9

Feb. 14

;

Chinese

York,

tCadmium

215.3

Feb. 14

55.500c

$4.02870

94.000c

-———

313.2

Fertilize^

'

—

337.8

.

Fertilizer-, materials

v..

Straits

318.3

238.3

45.000c

$4.02750

pound)—

York

300.6
256.4

76.500c

45.000c

Plafinum,

—Feb. 14

12.73T10

74.625c

.

$4.02679

"Cheeks"——-

218.1

——rr———.—i————. —.——.

n

12.931c

14.800c

74.625c

ounce)———

per

15.000c

14.800c

ounce)Pwr-^P—

(pence

Exchange,

19.270c
19.926c

.

286.6

Chemjcals and drugs——Z'ZZ

-

v

'* »*

.

238.8

—Feb. 14

Bui'ming

(per

21.200c
21.488c

-

.

300.5

—•——.——

,

.

—Feb. 14

Miscellaneous: commodities li—^
/Metals

.*

-

279.9

244.6

111,814,853
1147,149

21.200c

242.0

235.5

229.9

"48,332

21.532c

2C0.8

-

"2,857,310

QUOTATIONS)—

231.5

COMMOD-

11125,296
1127,706

"30,618

January:

245.1

338.2

451.8

407.2

Feb. 14

*

of

Exchange:-

York

London

(per

New

Gold

1150,296

"165,087

2,879,233

—

Feb. 14

406.2

——Feb. 17

—-1—

Wvts tOCk

M. J.

&

".

30,567

47,790

ounces).

month

"63,266

70,361
157,639

,

99(/c —
price).————
Quicksilver (per flash of 76 pounds)
;
HAntimony (per pound) (E. & M. J.)—•
Antimony (per pound) bulk, Laredo
—
Antimony (per pound), in cases, LaredoAntimony (per pound), Chinese, Spot—

Feb. 14

'"

Tin

New

Z&--

209

in

—

tons)—

(E.

Silver,. New

'

oils—

265

480

15.000c

3.18

produots

Cotton

:

r

b

metals

•

3.18

Feb. 14

Pats

Farm

"303

224

MINES)'-*"

OF

tons)

Sterling

Silver-and

3.17

ITY INDEX BY GROUPS—:
'

.

283

—_

York

Feb. 17

ASSOCIATION—WHOLESALE

362

—_

Feb. 14

NATIONAL* FERTILIZER

400

Average=J0»)

recoverable

pound)—

(per

Feb. 17

INDEX-.

8,670,795

402

RE¬

Louis

Feb. 17

—

COMMODITY

9,530,000

(per

.'.Feb. 17

,

1935-39

of

fine

for

Average

2.45

-

Feb. 17

Utilities

MOODY'S

21,688,028

9,544,000

_

in place,
Z—

(FEDERAL

(BUREAU

short

PRICES

METAL

Feb. 17

£

^'

SALES

—

short

(in

Silver

120.84

AVERAGES:

Group—
Industrials Group !
Z----Z-.

23,797,000
21,432,000

(000's

31

December:

of

112.93

Feb. 17

I'-.'-

Dec,

pound)—
Electrolytic, domestic refinery——
Electrolytic,
export,
refinery—

—

.*

23,730,000
21.412,000

Dec. 31-_

on
on

(in line ounces).—
(in short tons).———

Copper

.

r

73r®6
21.691.0WO

U.S.

Lead

Feb. 17

^

263,584.

of January:

OUTPUT

Copper

110.88

105.34

....

Bonds.

Group

79,497
.

"

117.00

103.47

Feb. 17

Feb. 17

Group

Average corporate

Public

21,432,000

31—

—

production

the

122.09

Feb. 17

"

.

'

SERVE

Month

Feb. 17

Industrials Group
v

—

—Month

104.34

Feb. 17

Group

Utilities

Railroad

21,412,000

of Dec,

as

Adjusted for seasonal variation.—
Without seasonal adjustment
METAL

100.69

Feb. 17

S.

31————

72,833

•

100.69

100.72

Feb. 17

Feb. 17

Railroad

U.

176,527

71,522

5,984,417

98,948

215,506

spindle hours, December.—;
spindle hours per spindle

Mine
_i

.

corporate

MOODY'S

101,645

31

of Dec.

as

^———-——:

DEPARTMENT

AVERAGES:

1.

Feb. 17

...

'

December——_

of Dec.

as

2,230,268

1,858,676
5,360,906

10.500c

Feb. 11

—.1——.

21.200c

Feb. 11

at

at

Bonds

Storage

spindles active

Spinning spindles in place
Spinning spindles active

20.425c

94.000c

Feb. 11

-

—

Public

2,153,547
5,478,623

V-

v.

at

Louis)

BOND

Govt.

S.

of

Public

December

§

MOODY'S

Month

consuming establishments

776,360

759,498

53,406

—

of Dec. 31

Average

QUOTATIONS):

«.' i

■

York)

York)

(East

J.

■

V'*U.

136.1

COM¬

COTTON SPINNING (DEPT. OF COMMERCE)—
3.18925c

$40.17

3.18925c

lo

Feb!

at

(St. Louis)- at

Zinc

-

177,1

143.0

31—,——

as

of Dec.

as

In

Active

.

OF

December.

of

establishment

In

BRAD-

&

„

METAL

136.3

188.9

BALES—

Month

Lint—Consumed

,'-'u

Finished steel (per lb.)
Pig iron'(per gross ton).
Scrap steel (per gross ton)__

•

160.5

RESERVE

Cotton

IRON

92.0

162.0

.

115.5

92.5

'

(COMMERCIAL

STREET,

•.<•*

_•

126.9

191.4

....—

_•

„:—

Linters—Consumed

FAILURES

>"

127.8

————

—

MERCE—RUNNING
EDISON

115.2

144.4

and

Housefurnishings
Miscellaneous

190.2

'

92.6

electricity and ice__—
Gas and electricity.—„—

Fuel,

12,300,000

Feb.

^

coke'(tons)_

7

'

115.4

MINES):

(tons)ili.

200®

199.6

»

191.2
COAL

197*8

i

.

198.5

——.——

Fats, and oils

141.7
:

'*

1.

——
—

0

t

nCo

3,266

4^605

$11,028,866

$11,952,284

a*d

7,449

3,962

4,232

7,263
.

$15,897,637

,

tBased on the producers' quotation.
JBased on the average,
of the producers' and platers' quotations.
§Based on platers' quotations. . tDomestic, ^
live
tons
or
more
but less than carload lot,
packed in cases, f.o.b. New -York.
"Revised

4+1 jT^ntViUr

figure.

otroroca

in

1 Q4fi_

I
38

Thursday, February 19, 1948

FINANCIAL CHRONICLE

&

COMMERCIAL,

THE

(834)

be in close co-ordi¬

program must

(Continued from page 11)
against

in

$6,309,122
*

Wallace
a

#

blessing
of the American Communists and

Co., St. Louis,

participated in the public offer¬

ing
of

DeWalt, Inc.

stock

(Pa.)

share.

headed

Reynolds

by

described

was

It is

*

*

Western

Supply

Co.

re¬

soft

luggage lines and on certain other
merchandise

of

items

better

balanced

effect

to

a

posi¬

inventory

tion at the end of the year; oper¬

ating costs, primarily salaries and

advertising, which were increased
because of competitive conditions
brought about by increased

merchandise

plies of
in

scarce

1946

which

in

and

sup¬

was

that

year

required comparatively little sell¬
ing effort; and as a matter of
policy Western Auto did not, in
many instances,
increase selling
prices on merchandise propor¬
tionate

increase in

the

to

manu¬

facturers' costs to the company.
*

*

13

participated

offering

stock

common

Jan.

$1)

(par

share.

The

offering

subscribed.

Johnson,
Shoe
the

Co.

ported

*

■

Shinkle

&

net income

a

'■

1947

re¬

of $420,087,

provision for
Federal and State income taxes,
and after provision of $50,000 for
contingencies. This was equal to
$2.07 per common share, and com¬
pares with $2.03 per share for the
year ended Nov.
30, 1946.
Net

the

customers

to

fiscal

and

year

the

were

to

the

largest

$10,716,449,

in
and

com¬

pared with $7,483,510 in the pre¬
vious
year.
Current
assets
at
Nov.

30,

1947

$3,397,036,
liabilities of $1,were

against current
168,311.
:

^

i

*

Stifel,
and

*

*

Nicolaus

Stix

&

Co.,

Co., Inc.
both of St.
&

of

Kansas

City,

Jan. 22

on

first and

series A, due
and

1973, at 102.187%
offering was

interest.

The

oversubscribed.

the extreme right.

We have tried
both before. They didn't work. We
sat

tight,

and

waited.

we

And

World War II cracked around
ears.

our

;

The doctrine of the extreme left

contains

big lie, and the doc¬
extreme right a big
fallacy. The big lie is that America
trine

of

a

the

imperialistic;
Russia;

that it wants to
for
war
that it wants to

American

unwilling

throats

of

Euro¬

be

to

received

from

the

sale of these shares will be added
to the

general funds of the

The initial objective is to
a shaft to 500 feet, and to
continue subsurface
exploration

pany.

compared to the cost of the last
war—or

another

There's

There's

a

middle

a

one

program

is

It

take,

I'm for.

of

lot of self-

a

some

Communist
cratic

Russia

and

demo¬

America, and that's this:

We covet

peoples.

lands, resourcse or
want recovery,'or¬

stability

Russian

around

the

Communism

chaos

wants

confusion

and

because that kind of program best
fits expansionist aims.

be

cleaned

requisite to

up

peace,

as

pre¬

a

jobs and free¬

dom.

We call this program the Mar¬
shall Plan.

More

technically

speaking, it's the European Rerecovery

the

Program.

Plan"

trenched

The

essence

but the phrase,

same,

shall

in

This isn't

has
our

is

"Mar¬

become

en¬

claims

£

southeast of Kenora.
The prop¬
erty comprises approximately 360
acres,

each

claim

proximately 40

covering

acres.




ap¬

of

it

balance

with

the

others,

on

word

is

to

It's

a

a

think,

world scale. The

not

blueprint

help western Europe work its

own

and

way

back to economic health

political stability.

We

com¬

mit ourselves under this blueprint
to

do

It is

want.

certain

both

of self-interest and a
compassion. And that's
something new in the world.

a

program

program of

It's

a

Participation

but

Alternative

No

kind of participation

new

toy the world's greatest power in
affairs of other nations.

world

ought to convince us

wars

there is

Two

alternative but partici¬

no

pation.
like

we

it

We're in

or

In

not..

history,
the
has had
the responsibility of contributing
to
order throughout the world.
England was on top for 150 years,
and England's influence was felt
period

every

world's

in

of

leading

of call around the

port

every

power

globe.

■,/

Yes, ours is a new kind of par¬
ticipation. It is peaceful partici¬
pation.
It is participation in the
spirit of partnership and not in
the spirit of exploitation.,
It used

to

world power

only

be aptly

had

interests.

friends

and

no

said that

a

friends, but

We

want

both

interests. -We

want

We

would

cannot

depressed and
economic

health

America.

If

and

vitality

have

we

learned

anything from history, we should
have learned this, for we have had
a disastrous
example within the

things; and the

16

I

have

self-help

said

we

abroad

need

a

lot

of

have

followed.

One of

*

We

could

a

our

in the Marshall Plan is
of

healthy,

a

vigorous,

traffic in international
For

be

not

world of distress
major self-interests

in

prosperous

revival

two-way
commerce.

we have
billions of
dollars worth of goods more than
we took in .by way of import. That
unbalance was to be expected af¬

been

some

years

exporting

many

ter the devastation

not continue for

reduces

long:

our'

has

overhung western

substance

and

Program, we expect to

which

with

convinced
more

we need imports of
products for a better bal¬
in our economy as well as

and

finished

poorhouse

is

around

a

as

tape

have
measure
is
to

have in the house, but
yardsticks and tape measures are
poor eating, and they seldom fit
as wearing appareL
*
' - :
:
We can take a good lesson from
old

King- Midas-,

hungry.:

of

matter,

But my

circumstances.
Give that kind
a
fellow a push, and he goes

is why

This

I'm willing to bet on the

people of western Europe and to
support a sensible program for
European recovery.
I

believe

the

choose

Americans

most

that

the

middle-way—not

of appeasement and not the
of sitting tight, but the way

way
wav

for peace with the tools
and the strength of the
American system.
'
We call this a year of decision
He got plenty for America in world affairs. But
I believe it's later than that.
I
of fighting
of peace

•

.

believe the American
Narrow Gap

,V;.:,

;;V-, :•

Between Exports and

Imports
l- ...
;
Yes, we've got to narrow;.the

.

v.:•

<

differences, between: exports

and

tials

the

to

success

of

the Euro¬

Recovery Program.
One, there must be adequate
appropriations to begin with; and
they must be voted promptly.
pean
„

on

Three,

a

sound basis.

administration

after
more

peace

the
than

the

up

one

thing

and freedom. /

That

/[

1948

will make

a

year

of

doing and a year of daring and a
year of fulfillment and not a year
of indecision and waiting.
I be¬
lieve the American people have
already

decided

to

exert-their

moral and economic leadership to

fight for the peace of the world
join in partnership with the

—to

peoples of western Europe in the
I

cause

believe

we

of freedom.
are

willing to pay

price of peace—and that we

have

of

people have
their minds to go'
they want
anything relse—jobs,)

already made

covery

Everywhere I go around
country, I find some degree

that

for

well.

do

flation.

this

or

on a ne'er
experience has
been that it pays to bet on the
man who wants to get along
but-,
is down because he is a victim

time

the

common

me.

money,

ahead under his own steam.

handy to

"

wasting

against

chronic

with

to

handy

it's

been

have

could

continue

taking in only gold in return
for our exports.
Gold after all
isn't real wealth.
As a yardstick
wealth,

western Europe

of

be

of

who be¬

I wish that some of us

is like lending money to a

to

export without importing.
And I don't think we ought to

was

and de¬

road

The

to

I

work—but

to

then,

lieve that helping

piles of material.
We aren't as
fabulously well-heeled with stra¬
tegic
items
as
we
were.
We
need fresh stockiples of raw ma¬

world.

coal

termination.

I'm

the

seen

British

on

still long on courage

are

loafer

of

example,

and I am now
than "ever, that the people

get and ought to get huge stock¬

that

.

,

V. We have, for
brighter figures

perately short on things—on tools

The unbal¬

to start a flow of goods
coming in from other quarters ot
the world. ^Out of the European

ance

is

Europe

beginning to show a little break.
There are signs that a turn for
the. better may be at hand.

con¬

except

terials,

;

The dark economic .cloud which

must

definitely contributes to inflation.
There is no way to stop that

Recovery

good deal to do with it.

production.
There is a slow, but
encouraging upturn in other lines
and areas.
Europe is still des¬

of world

unbalance

that

But

now

a

western Europe to rebuild for re¬

our

in

elections

in effective aid from America had

trap and tame the wild bull of in¬

It's in

there

back,

new

and we< all know what
happened: anti-Communist forces

interest to

self-

him

strengthen
/
*

France,

common

some

give

help

can

been

been

Two, there must be no ham¬
stringing conditions to thwart the
mobilization of the resources of

and

denial at home.

Rus¬

not

lifetime of mosLof us.:: We were gained strength.
Fear of Russian
enjoying relatively prosperous "domination and further evidence
that
Russia
is
not
a
worker's
years in the late 1920s.
Eurooe,
at
the same time,: was running paradise, as advertised,
con¬
•/.:>
down hill.
We tobogganed in the tributed to that outcome.
s i
am also convinced that faith
crash of ;'29 and the depression

-.

terests.

I've

Since

-

with

will

We

freedom.

He

it

that

knows

He

both
and
thus
world democracy.

chaotic will affect

Europe

combine

to

get

of

the

food.

have

must

like

Communism

him

the

with

things—food and free¬

He

sian

this: A Europe that remains long

with other

only interests. We think that
in international affairs in this era,
friends should have common in¬

I was
that

am now,

western

worker in

freedom.-

-

imports as nn essential feature of
nations to further their best in-^ administering a sound; business¬
terests as well as our own.
;
like European Recovery Program.
It's the opposite of no friends
I think there are three essen¬

working partnerships

I

faster

it

lose

two

would

So it is in the world today. I
too
strongly emphasize

•r

the

it whether

brute,

right kind of help from America.

go up or, we go down as a whole,

ance

and

rehabilitation,
two-way

industry won't
American
agriculture

ill-will and resentment of
the people of western Europe.
But taken as a whole, the sub¬
I

its

convinced then, as

flict.

spirit of the plan,
fit the picture of what

with

force and forced labor was los'.ng

ground in western Europe.

eco¬
It would invite the

stance and the

then convinced

our own country when
of the economic segments are

out

in

Communism

to

Communism

that

abroad. We know what

nor

Euro¬

a

as

from Europe even

be

be isolated neither

,

thinking.

international dole

an

WPA

a

the

and

psychological

We didn't ask for it.

revolution,

relief.

mining

restrictions
and
conditions that . -would

two-way blueprint. To do that
would be to
invite disaster on

the

no

We

and

1947

south shore of Flint Lake, 42 miles

can't

people,

the

any

niggling

most Americans

not

anti-anything.
It is
pro-democracy, pro-freedom and
pro-recovery.
It recognizes that
without recovery in western Eu¬
rope, there will be no peace. It
recognizes the basic issue between

key

contiguous
located
on
the

prosperity

can

knew

who

happens to

that

anger,

to

road

self-denial by us.

or

nine

'

these

must not load the program

We

nomic front.

help by western Europe, and

Dogpaw Gold Mines was incor¬
porated in Ontario on Jan. 24,
owns

doing

against

things:

the

Middle Road

a

and that's the

It's

one.

from the shaft.

and

I'm

But

program of recovery

com¬

deepen

/

.

Against Niggling Restrictions

haggling
make it in the end- a piece of in¬
in western tellectual and" economic flypaper
Europe. Facts cripple that fallacy. to
gum the works for us and the
The amount proposed for recov¬
rest of the world to boot. Vi-.V
ery in western Europe is but a I
If we do that, it won't work. It
fractional per cent of our current
J won't be a two-way program from
national income. It's a pittance
the
a

must

ceeds

the

I'm for do¬

supporting it.

ing all these things.

with

long as hunger, misery, priv¬
ilege and corruption exist. Those
breeding
areas
of
desperation

Tellier & Co. The stock is priced
at 40 cents per share. Net pro¬

assessing

for

I'm

answers.

cost of

so

Offering of 1,000,000 shares of
$1 par value (Canadian ; funds)
capital stock of < Dogpaw
Gold
Mines, Ltd., is being made by

to

course

proper

"amen" to every¬
thing in it.
I'm for having Con¬
gress punch it and probe it and
take its temperature and look at
its tongue. I'm for Congress ask¬
ing frank and open questions—
and demanding frank and honest

Europe

middle-way program rec¬
ognizes that dictatorship from left
or right is an ever-present threat

Gold Mines Stock

and

"i's." I don't say

capitalism down

western

The

Tellier & Co. Offers

at home

It

be effective.

I talked to

rebuffs

cent

dom.

re¬

bonds,

that

thethe

where

France and Italy, but I came home

funda¬

agement is stitched together.

world.

Co.

mental

isolated.

is

It

The

der

Edison

world.

prosperous

wants

ing of $40,000,000 Southern Cali¬

funding mortgage

cannot

suffers.

participated in the public offer¬
fornia

we

intensive

whole, backwards
and forwards and upside down.
Let me tell you a few of the
things I learned on that last tour
of Europe.
It was before the re¬

if

Louis, and George K. Baum &
Co.

run

the

them, and many of them

story

pean

The prosperity of labor and man¬

1947

history,

company's

amounted

in

hearts and minds is

our

wise

the

The big fallacy is that America
would go broke by underwriting

its subsidiaries for

ended Nov. 30,

charges

sales
■

Stephens

and

year

after

*>', '

*

,

decide in

Europe or its will to work and take. It's a grave decision.
and free¬
Let me make it very clear that
dom.
If this plan had a slogan, it
I'm not blindly for the Marshall
might be "wait and see."
Plan as it comes to Congress fiom
the Administration.
I wouldn't
There is nothing new in the
viewpoints of the extreme left or eross all the "t's" and dot all the

peans.

'/•
*

*

-

Congress does in the weeks ahead
will be
what we—the people—

long

have jobs and freedom in America
unless we live in a peaceful and

their

on

through

countries

men

ern

the

per

over¬

was

arguments

for it and

the

spiraling costs of living must be
the

were

sac¬

because

us

five

for

course

of

to work for demoncracy

against

of Joy

Manufacturing Co. at $38.75

the

all

heard

all about.

it's

of

controlled.
But in

what

know

all

of

prosper

choke

of

shares

by

the

that

say

Marshall Plan would

American

arm

public

the

in

185,000

of

on

We can't play politics with that
It must be met and met

Europe to

rebuild

to

traveled

I

European

,

rifices

You've
,

cept to leave some plunder which
an
aggressive Russia might pick
up. Many of its spokesmen have
little faith in the sincerity of west¬

is

Newhard, Cook & Co.

-

weeks

mini¬

we

I

.

Recently,

of depression.

ogre

and

basis of first-hand observation.

squarely
by
Congress and
people. It will mean some

against it. And it's you
and I and all the rest of us who
might break the United States and will decide whether we'll adopt it
accomplish nothing anyway ex-' or whether we'll ditch it. What

goods and

economies.

And

You

to

afford

cannot

States

giant

a

We delude ourselves if
mize that talk,

the

free

remain

scores

the

spend the dollars to aid recovery
in western Europe.
They say it

said, by markdowns in¬
to
the
closing out and
of

that

believe

adherents

United

company

of

self.

Its

with $7,546,828, or $10.04
per share in
1946. Earnings in
1947 were adversely affected, the

discontinuance

Rat-

"Operation

be

may

We propose to satis¬
fy ourselves that our help is con¬
tingent upon Europe helping it¬

hole."

pared

cident

would

haps,

inflation

that

I have a lot of
ability and desire of

part,

my

in

the peoples of western

issue.

this program.

yond bare emergency relief per¬

Net
earnings amounted to $4,205,014,
equal to $5.60 per share, the sec¬
ond highest in its history, com¬
with $107,619,168.

afraid

are

shoot up like Jack's beanstalk and
land us squarely in the clutches

oy re¬

traue

oi

me now

increase

us

For
faith

ducing bai riers and restrictions.
And we propose to keep a con¬
sistent check on the progress of

further aid to western Europe, be¬

ports total sales for 1947 of $121,395,031, the highest in its history,
compared

a

intensely nationalistic. It's against
Communism. But its creed is this:

*

Auto

of the extreme

that

as

gets of production of major com¬
modities; to strengthening their
internal financial stability; and to

fairly be

can

It has no particular leader.
"sit-tight" program.
It is

right.

of

Co.

York.

New

nations
commit themselves to annual tar¬
European

Western

The

fairly described

Plan Number Two

per

provide

machinery.

and

materials

food,

the plan of the extreme left.

as

common

$2.50) at $15
The
syndicate

(par

be

therefore

can

Jan. 20 of 110,000 shares

on

We commit ourselves to

has the

also

It

Moscow.

of worry about our own prosper¬

People aren't being a little on th"e
pessimistic side for fun. Lots of

foreign policy.

our

A Free Western Europe

ity—too much to be laughed aside.

commit
specific program

a

of reconstruction.

popular in

is very

plan

The

Europe.

western

in

forces

$7,327,909 in 1945.
J. W. Brady &

nations of western Europe

themselves to

(Continued from page 11)

and

1946

nation with

"I'm for the Middle Road \"

Missouri Brevities

forever

abandoned the

doc-

Volume' 167

Number 4674

THE COMMERCIAL

"Not

-

Uiges Cabinet "Doctors"

to

f

•

Humanity

(Continued from page 10)
despotism has given
the people more happiness bigger
or

it being
by

checks, less hours of work,

pay

dollar,

more

whether

and

comforts, more luxuries, and
have reduced the price of luxuries

country,

within the reach of
everyone, that
are
not even luxuries in
foreign

vented from

lands;

where

by

President

other country
to

its

that

arguments,

gave

other

ereign

that

other system

any

is

on

our

life, less liberty, less, oppor¬
tunity and less freedom than any
other system.
" 11..V/'/V'.
"It

reasonable

for

highly .and

so

-

handsomely

pays

:

you

so

keep him well?
"Do

tem

really want this

you

to Jive?

Do

sys¬

take your
responsibilities respecting public
questions, which gives you; the
right to receive your pay as man¬
agement of

you

profit and loss and
seriously

our

competitive

system

enough to warrant the inconveni¬
and

ence

effort

is

that

required
to find out why your patient is
sick and getting sicker?
Or do
want

you

if it will

our system to live only
respond to the prescrip¬

tions you have written in the past

—only if it lives

on

This may seem to be
bear with
for

marbles.

facing

We

me.

The

is

us

your

not

stark

whether

block

is

so

build

that

did

we

not

them.

answer

system
there

seems more1

who

will, in

desirable, and

believe

the

not

gov¬

of

that

tions

system.

and

the people
some of us.
"As I
to

-

all

of

a message

doubtedly

un¬

register, but it 4s my
opinion the reply

considered

'

;

"Not

a

this.' In other words, my reactions
to the thousands of letters which
I have received in response to the

thousands

I

indicate to

try—our

have

sent

out

that indus¬

me

leadership in this great

country—lacks the combative in¬
stinct and
save our

"The
the

a

stomach for

Freedom

worthy

lieve

are

On

Train

in

the

is

land

telling

that

our

dire

danger.
If
the fuss about?
of

the

other

church

hand,

the

Marshall Plan is telling us

plainly
that this generation is charged by
Almighty God with freedom on

this earth.
and

an

That's

16

a

explosive

If the allocation

the

doctors

who

are

;/• ;• ,:if■/1

Deal

.

doctors

enterprise
v

evoke

nations

large contract

responsibility.

of this money to

is

to

be

directed

by the State Department without




other

who

would

that

-

strong,

'

"Who

;

and

not

a

be¬

commitments

doctors

pass

how

they

will

tell

no

doubt

its

may

constitutionality.
"No doctors who will

political caprices of

branch of

6V2 cents and that the next spring

the

by

is

government

make

to

not

arbitrary

or

if

They

cotton

any

they have

for

the

fairness

in

and

retaliation.'

That

not observed

by

the

future.

justifiably reply that had they
left

alone,

that

big men, they

by

can

the

believe that by

rich,

they

can

destroy¬
help the

"Who

believe

imperialism.'

was

Then

the

ing the wage payer,
the wage earner—
"Who believe that

from Mr. Vishinsky and Mr.

more

Molotov.

"To

than their

can

—in

recall—the
War

South

after

reconstructed

the

the

ing the

lateral

pact
and, second,
with

to

the

that

by

inciting

man— *

"Not i:\ew Deal doctors who be¬

bureaucracy, which

increases the cost of government
—which lessens the worker's pay

envelopes.

for

"Not

an

who mistake

a

inheritance—

New

Do

not

involved.
his

and

When

Cabinet

of

those

and

will

political

a

his

undermine

so

of

ad¬

consti-

tutipnal government to. resort to

had

Deal

doctors

ing the Republic fatally by
grown abroad—

mort¬

germs

by those

the

"With
futures

who

of

further

of

functioning
operation, the
between the
thou¬

competition
sands

risk

normally

a

in

market

merchants

cotton

pre¬

of them from exacting

than

more

a

narrow

futures market the ideal level of

margins is a matter for a nice ex¬
of judgment. Even if this

ercise

legislation were enacted, the Sec¬
retary could not prevent a South¬
ern bank from lending 60 or 70 or
80%
or

of the

tion

market value

bales of

1000

th&

on

in

other

any

form

would mpan no

can

no

keep them in
longer appraise

such leadership as being anything
but destructive to the morals of

the dignity of
country is assum¬
catastrophic responsibilities

country

our

mankind.

ing

Where

and

Our

will

it

end,

on

the

spot cotton would require so much
less capital.
Shall we then say,
not

100%, but 50%

think not for the

33%.
We
already

or

reasons

knows.
me

length of this letter.
of

enthusiasm

in

the

It is because

country

which

"As always,

will

many

your

MILWAUKEE,
date

WIS. — Friday,
20, 1948 has been set as the
the annual meeting and

for

election of officers of the Milwau¬
kee

Bond

Sincerely, your friend, !
F. HUTTON"

Club.

erratic and

price spread between
much wider.

Arrange¬

Committee, under the di¬

rection

'

of

William

Moran &

(Mason,

forth

this

every

of the

one

will

fair

most

bethan

The

Milwaukee

in

The af¬

Eliza¬

the

of

Club

the

Milwaukee

at

Room

Athletic

make

outstanding

had.

ever

put¬

are

effort to

-

held

be

Johnson

A.

Co.)

mid-winter parties the

6:30

p.m.

of

Board

Governors

ap¬

pointed the following Nominating
Committee
the

to

name

coming

(Harris,

On Feb. 12, in a supplemental statement to the Senate Committee
Agriculture and Forestry, Charles Slaughter, a Director of the New
York Cotton Exchange, directed attention to the value of
futures mar¬

The

ments

ting

"EDWARD

consumer

sure

am

for

our great
prompts the free
flow of my mental stream to be
expressive of my thoughts, irre¬
spective of its logic.

mv

I

To Hold Elections
Feb.

with

bear

which

and

amply covered by

Milwaukee Bond Club

God

only

N. Y. Cotton Exchange tells Senate Com¬
Agriculture and Forestry that without such market fluc¬

producer and

speculation

Exchange, because speculation in

later witnesses."

I

power,

to

Charles Slaughter of

more

than

property.

of

Even Russia has not succeeded in

cited

Again—
in the

tuations would have been

be

accomplishing that. 100% margin

be

head

per

Commodity Price Drop Shows
#>Valne of Futures Market and Speculation
on

100

can

cannot be stopped any more

$40

Holds

mittee

of

Specula¬

Exchange

Bond Club has

1

cotton.

stopped but speculation in cotton

tions, to stoop to buying votes Jor

up

man;

Upham

W.

ticket for

a

Iver

Skaar

Co.),

Chair¬

year:

&

(Paine,

Fuller

Brock

on

kets in commodities.
'The

rise

in

In this

grain

statement, Mr. Slaughter said:

prices

any

(to

more

use

a

pact

of

hackneyed simile), than the ther¬

wheat

mometer

government

ernment

a

causes

patient

fever

the

may

from

suffer. Spec¬

of

in

grains was not the cause
inflation, but its result. The

recent

great

decline
many

cluded

that

flation

has

is

the

result

of

a

people having con¬
the peak of the in¬
been

reached.

These

than

would

it

have
the

and

did

had

purchases,

cost

the

millers
there

more

been

no

futures market.

They also believe
improving prospects of
the oncoming crops both here and
that

in

the

Western

induced

Europe

would

have

greater decline through
the selling by owners who had
overstayed their market. It can be
a

more
confidently asserted
that, lacking the fluidity of a fu¬
tures market, fluctuations would

millers who had not hedged

have

wheat
of

and,

no

speculators.

doubt,
•

a

number

G.

Hausmann

Milwaukee

(The

(The Wis¬

consin Co.), M. W. Sheldon (Bingham-Sheldon
The

ports

Co.).

Nominaing

Committee re¬

following

the

nominees:

gov¬

people include farmers, whq had
not heretofore sold their wheat,

their

Webber, Jackson & Curtis), Carl

Co.), Miles C. Reinke

last/<5>

*

infect¬

subsequent

the

realized

was

assumed

ward politics in order to win elec¬

accept

rise

"Not^hose

Truman

physicians

fear¬

class hatred, they can further the

in more

longer

the usual politi¬

brokerage

visors

multi¬
recipients,

States.

but

Dr.

with all
a bilateral agreement

United

the

of

no

plan under proner

a

cal

a

politics wrapped

power

Our Doc¬

rest

can

dollar shortage.

a

supervision,

provides that each govern¬
ment must sign two separate trea¬

itself

world

suoervision with

"Please

conditions—first,

the

with

the

definitely for

consequences.

committing

bed

of

assume,
Sir. that I am opnosed to a Marshall Plan.
I am

ther

ties

in

not

"This Administration's bill fur¬

these

assume

nations

16

remain the Doctor.

administer

Civil

are

can

to

tor

sick

ohilosophy today is some¬
thing for nothing. There are many
land who

obligations

can

Southern

brotherhood of

believe

from

upon the cotton which he
sold at 6 cents. The differ¬

Cabinet—men

weakening ourselves to
the danger point of nutting Uncle
Sam in bed among the sick of the
world.. Only
a
strong America

their belts and went to work. The

our

hard-

without

States.

people in

need

we

Doctor's

our

these

Why not
potentialities? Let's

these

un,

just how far America

of honest people.

posed

utilize

ulation, except over very short
periods, does not make price. The

"Who

6-cent

on

farmer reaped no

the

and

margin of
profit, which they are willing to
accept because their opportunity
who will honestly read the politi¬ to
hedge their purchases and sales
cal
thermometer respecting the
by offsetting operations in futures
health of our patients—who will
removes
their price risk.
If we
honestly advise the people as to are to have a normally functioning

—-those who risk savings are en¬
titled to a profit Failing in

which

keep out of trouble—

based

headed, able doctors—not quacks

production become pos¬
sible—which creates new wealth
new

deflation

income, they

12

bought few,
sheets or under¬

or

prices

vents any

sum

"Such matters are not suscep¬
winter did not cause
by destroy-, inflation, nor have the recent de¬ tible of
proof, but most commodity
they can lift clines in grains and cotton caused
experts believe that under the im¬

by spending

at

advantage

charges

will hear

we

fall and early

that

above

at

decline at the time they bought.

"We need doctors to preach that
only by the capital incentive risk

the

tearing
help the

to

play

tor.

r

believe

sold

5V2

had

Again such action would
into communistic hands by

of! of 'dollar diplomacy' and 'Yankee

former doc¬

our

not

from

consumer

shirts

any,

ence

—

cotton

The

crop.

be

fault

localities

same

^ise,

our

at

crop

cents after the farmer had sold his

they could have
The failure will be

made good.
claimed
to

its

spirit

statement

a

the

his

theirs.

ca¬

of

use

alibi

been

under

marketed

simultaneously varying in

wear

then

power,^ but to act with restraint seeming to confirm

and

farmer

com¬

ran

government to usurp the rights
and dulies of other branches. 'Our

sovereign
obligation

Ex¬

different

plete

permit the

our

Cotton

beginning of the
cotton harvesting season, at the
outbreak of World
War
I, the

sovereign na¬
Foreign countries will re¬
sent
our
attempt to carve out
their
thoughts
or
mould
their
opinions.
If they follow such a

the

legislation,

the

closed in the Fall of

1914 just at the

method,

who

to

when

was

prices

tions.

Congress

the

poor.

gage

their

that

change

turbances

shackles.

•*

man—

"Who

lieve

to

action,

countries

,

by- weakening
can strengthen

they

ing

such

ion, and it will only lead to dis¬

taxpayers

prices

for

recipient

Sir, we are
undertaking to be the Doctor for
the world—impossible in my opin¬

are

matter

up

the

in every respect.
"In other words,

financing the bills see
purpose in living under such

no

if

lived

ican people.'
That is the murder
of our Republic — our
who

recall

called

even

government

hands

ducer and that to the consumer
would be vastly widened and ac¬
centuated. It is only necessary to

who

suspicion

of size—

weak—

more

our

not, what is all
Why the ringing
bells?

fight to

a

heritage.

people of

liberties

New

process' to
cause

down

would

Deal

believe production must be made

small

majority that
interest should do

in

powers

'in

doctors

great

penalize success, but doctors who

'others

many

and

placed to the backs of the work¬

would be in the vast

of less

up

Deal

shackle the liberties of the Amer¬

"Not New Deal doctors who be¬

it. Sir, such

see

just not

us,

industrial heads would

our

ac¬

determined, by the .opin¬
beliefs'in the minds of

are

ions

In America

New.

ers—'>4iy,:• •;">>

distant

future, be existing under that
other system and the consequences

they

creased taxation, which burden is

otherwise
too

how

bureaucracy,nwhich creates the
bought vote — which' creates in¬

other

plenty of minds in

are

ernment
we

some

the
indepen¬

away

understand

" "Not New Deal doctors who be¬
lieve in more-government—more

it will continue.
men

I cannot

in

courage

attempting to create prosperity by
discouraging thrift—
; '
,
" ■ / '

men believe in its
ultimate!, good
and
superiority
all systems,

and

them. ;what

not

Our sys¬

peoplev If all

If in the minds of

New

that,

"prosperity—

persists only in the; minds of

over

not

in the

"Yes—we need doctors—a doc¬
tor who can create

greatest-economy on
by refusing to pose ques¬

tions and

it

up

could
should do for themselves.

the

earth

tem

for

lands, a id that
respecting our Republic, and
realize

built

39

package. The United States
could stop all aid to other coun¬
tries at any time America's-own

of; constitutional

They had no bounty from
they can help the people in for-; our Federal Government—no sub¬
eign lands permanently by doing sidies of any kind. They tightened

foreign

must

we

Is

people's

loss system is to con¬
Liberty is on the auction

in

which

borrowed 'inoney—to

on

character

dence.

our

profit and
tinue.

it.

politics' wrapped

foreign lands by taking
initiative and

playing
not

that

old package?

build

question

or

In

one sovereign gov¬
telling another sov¬

understand

security

terms?

little rough,

a

are

same

they take a ' loss. * That's what
:"As. I understand, the draft frill
"built the U.<6. A. from short
pants
stipulates - an* impressive list of to
number one power—the incen¬
changes in - the political and eco¬ tive to risk. nomic organization and operations
"We need doctors who
keep an
of Western Europe.
Yes, we need eye on our money, for we
are go¬
a doctor—a specialist in that field
ing to need it ourselves to get
to administer
to the
trials and well and remain
strong. We need
tribulations of a sickened world. doctors who will
keep $2 for our
These stipulations, however, are
Republic for every $1 sent else¬
given and must be carried out in where—we
shall have need of
order to get American aid.
Who them.
are going to be the doctors? Cer¬
"Help, yes^-but what kind of
tainly we need superlative minds
help and how much of these bil¬
—specialists
in
handling
other lions will reach political hands to
people's monies.
That type
of further political parties in foreign
vision, in my opinion, is not to be countries? The Red Cross
special¬
found
in the State Department. izes in
helping those who are in
They have not had any experi¬ distress. The Salvation
Army can
ence
in creating payrolls.
They make a dollar go farther than any
are attempting to establish sound
organization and they are com¬

management t to

as

used.

'we, the people,' to get it and

same

the life a* the patient who regards
you

is

be

may

government

power

to

who

can

then

bring
the attention of
our; industrial
Doctor and ask the question—are
you interested in • trying ;to save
seems

has

certify, before any aid
given, that such action is com¬
patible
with
American
foreign
policy.-, What is the American for¬
eign policy? * It is rather difficult

less

-

Truman,

is

that the system
Constitution gives

doctors

•

(835)

interests

death

"Not

.

great

our

shall must

better

than ours—prove

founded

which

they must do. That, too, is an ex¬
plosive picture.
It provides also
that, as I see it. Secretary Mar¬

"Show us—give us concrete evi¬
dence. Prove it by example. Prove

the

"No

providing for the

Mr.

aid

words,

ernment

people as America has al¬
given to us.

ways

(?).

American

that
much

as

dive into the

nose

laid before Congress stipulates or
defines
the
purposes
for which

where is, or was,

us

a

recovery program

dreams, blueprints or imaginary
figures, but with facts.
"Show

assuming such an
obligation, can be pre¬

"The draft bill

der the American system.
us—not

ten

financial hopper is the question.

better

food, better
entertainment, and greater •oppor¬
tunity than given by America un¬
"Show

this

not

or

by

enormous

NewDeal

CHRONICLE

packed the "Supreme Court to has¬

which

supervised and directed
who know the value of a

men

FINANCIAL

government—

Cure Ills of
socialism

&

William A. Johnson
ran

& Co.),

Barnum

President; Rolland A.

(Merrill

Fenner &

(Mason, Mo¬

Lynch,

Pierce,

Beane), Vice-President.

Board of Governors—Walter B.

Braun

(Braun,

Newman L.

Monroe

Dunne

&

Co.),

(The Wiscon¬

sin Co.), Earl Pryor (The

Milwau-

even

more

been

far

more

important,

between

the

erratic

and,

that the spread

price

to

the

pro¬

ke

Co.),

Lester

(Loewi & Co.),
(Straus
Vonier

&

McElhiney

Edward# D. Levy

Blosser),

(Paine,

& Curtis).

B.

Gilbert

M.

Webber, Jackson

40

Securities
All

American

Price by

& Co., New York.

writer—Herrick, Waddell
in the acquisition of the

indebtedness incurred
capital stock of A. D; Cook, Inc.,

Lawrenceburg, Ind.
•

American

Inc.,

Co.,

Broadcasting

New York

Feb.

13, filed 250,000 shares common ($1 par) at pro¬
posed maximum offering price of $12.50 per share. Un¬
derwriters—None.
Proceeds—For corporate purposes.

has plans to spend about $5,325,000 for
in New York, Los Angeles, Chicago
San Francisco and Detroit. Shares will be sold to "the

Company

now

television

facilities

with which the company had network

persons

affiliation

agreements at Jan. 31, 1948, and to such other persons
may be selected from time to time by the company."

as

•

Mines, Ltd., Montreal, Canada
600,000 shares of common capital stock ($1
Robb, New York.
Pro¬

Angus

Feb.

12 filed

Underwriter—James A.

par).

ceeds— To

Business

develop gold prospects.

—

Miners-

prospectors.
•

Ark-Tex

Inc., Dallas, Texas
Feb. 12 (letter of notification) 120,000 shares of common
stock.
Price —$1.50
each.
Underwriter — George R.
Cooper, Dallas. To purchase saw mill equipment.

•

Fisheries

Coast

filed

2

Co.,

Boston,

Mass.

general mortgage and col¬
lateral trust convertible bonds and 166,950 shares ($1
par) common stock.
Underwriter — Doolittle & Co.,
Buffalo.
Offering — The
bonds are being offered to
\xk %

$556,500

stockholders at the rate of $1,500 of
shares of

against
will

common

conversion

be

publicly

by

General corporate purposes.
•

Bardwell

&

Unsubscribed bonds
underwriter. Proceeds —

bonds.

the

of

offered

bonds for each 1,000

The stock will be reserved

stock held.

McAlister, Inc., Burbank, Calif.

conversion of preferred
&

Dunbar

Co.,

Los

Angeles.

Proceeds—$100,000 for working capital with
balance for construction and development of new items

1

•

to be added to the
ment.

basis

one-half

of

share

ferred

each

share held.

common

Power &

common

share
Price

of

for

new

each

by amendment.

Distilling Co., Chicago

Feb.

(letter of notification) 15(T,000 shares ($2 par)
common.
Price—$2 a share.
No underwriting.
For
working capital. Offered "to common stockholders of

Philip Blum & Co. Inc. of record Dec. 22.
Feb. 20.
•'

Rights expire

.

Boise

(Idaho)

Water Corp.

Feb. 9 (letter of notification) 3,000 shares of 5% cumula¬
tive preferred stock ($100 par). Price—$99.75 each. Un¬

derwriters—Butcher

-

Sherrerd, Battles & Co., Phila¬
delphia; Wagener & Daly, Boise, Idaho, and Southern
Securities Corp., Little Rock, Ark. To pay promissory

notes and
•

&

•

construction costs.

Bureau

of

Cameron Aero

Engine Corp. (2/24-27)
Dec. 29 (letter of notification) 101,000 shares of common
stock (par $1), of which 85,000 shares will be sold to
the public; 8,500 shares will be issued to underwriters

i}

as

additional underwriting consideration and 7,500 shares
to American Die & Tool Co. for invest¬

will be issued
ment

in

return

machine tools.

for cancelling $15,000 open account for
Price—$2 per share. Underwriters—R. A.

Keppler & Co., Inc. and Henry P. Rosenfeld & Co., New
operating funds, etc.
•

Cappel, MacDonald & Co.K Dayton,

,

10

O.
26,000 shares of

(letter of notification)

common

investment in additional capital.
•

Casa

Feb.

2

Paga Gold Co., Seattle
(letter of notification) $100,000

of production
(10 par) stock will be
issued with each $1 worth of production notes. Under¬
writer—Lobe, Inc. To purchase capital stock of Dry

notes.

A

Creek

bonus

of

one

Dredging Co. and

share

Light Co.

current

expenses.

formed to

bid if
Shields

share's

(jointly), the First Boston
property additions and expenses.

Proceeds—For

Clinton

(la.)

Industries,

Inc.

,

•

filed

15

in

nardino County.

exchange for 300,000 shares of Obear-Nester Glass Co.,
Effective Jan. .14, 1948.*

•

St. Louis.

New York

Finance

Co., Mount Rainier, Md.
Jan. 16 (letter of notification) $68,000 of 6% debenture
bonds.

S. Warren &

Underwriter—Emory

ington, D. C.

Cook

Fraser

Cooperative Assoc., Kansas City,

& Co., Inc., Washington, D. C.

Newsprint Co.

•

held.

Rights

new

expire

Feb.

•

York.

Proceeds—To

secured

Pittsburgh

)C

l-.

v

...

.

?

'

;

For mortgage indebtedness and mining
j.'

'/

*/

.•

Goldfield Great Bend,
12

.

;

Ltd., Reno, Nev.

(letter of notification) 65,000 shares of non¬
capital stock (10 pax). Price—11 cents each*
For mining operations.

Nov. 26 filed 303,587

writing—None.

Working

shares ($1 par) common.. Under¬
a share.
Proceeds—Fox

Price—50 cents

equipment and working capital.

Effective Feb. 5.

,

,

Herschel), Ashland, Wise.
Feb. 9 (letter of notification) $33,000 notes, to be sold
for cash.
Underwriters, none.
Notes will be sold in

(3/1-5)

retire

r;.

^

Guyana Mines, Ltd., Toronto, Canada

5 %% sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
($1 par) common stock. Underwriter—P. W. Brooks &
New

■

No underwriting.

•

Inc.,

"

assessable

capital.

Crampton Manufacturing Co.

'

Mining Co., Black Hawk, Colo. * T

Cooper, Denver.

shares for each

20.

:

(letter of notification) 248 shares of common
Price—$100 par Value. Underwriter—Richard R.

costs.

Offering—4,000 shares to be offered to stockhold¬
shares

:

,

16

stock.

Feb".

of record Jan. 13 in ratio of two

Co.,

Globe

Feb.

Co., Inc., Cayuga, N. Y.
Jan. 13 (letter of notification) 5,000 shares of capital
stock (par $5).
Price—$30 per share. Underwriters—

three

being sold by 14 ^stockholders who will re¬

Craigmyle, Pinney & Co., New York; Wirislow,' Douglas
& McEvay. New York, and Jenks, Kirkland & Co., Phil¬
adelphia. Offering—Stockholders subscribed for about
42% of the stock. Rights expired Feb.-14. Unsubscribed
shares will be offered by underwriter. Proceeds—To de¬
velop a plant and facilities for the company's subsidiary,
Carolina Giant Cement Co., Harleyville, S. C.
V

.

Cowles

ers

are

proceeds.

Jan. 12 filed 564,906 shares ($1 par) common and 282,453 commop stock purchase warrants.
Underwriters—

1948.'

None.

Co.,

100,000 shares

Giant Portland Cement Co/ (2/19

common (par $50). Under¬
writing none. Offering—Stock will be offered direct to
public through directors and officers. Price, par. Proceeds
—Erect and operate mill for manufacture of newsprint,
from Southern pine. Company also contemplates the sale
of $16,000,000 4% 1st mortgage bonds.
Effective Feb.

6,

Detroit, Mich. '
($1 par) common.
Under¬
Campbell, McCarty & Co., and Keane & Co.,
Detroit.
Price-r-$5.25Vper share.
Proceeds—The

ceive

9
(letter of notification) 1.500 shares (no par).
Price—$10 per share. Underwriters, none. For pharma¬
ceutical supplies.

River

For

—

shares

Feb.

Coosa

Products

filed

writers
both

(E. K.)

No underwriting.
: '
;l
"

Price—Par.

preferred stock.

Oct. 21

$1,000,000 4% non-cumulative common
stock ($25 par); $4,000,000 of 3%% certificates of in¬
debtedness cumulative; and $1,000,000 of
\xk% loan
certificates cumulative. No underwriting. Offering—To
the pablijc. Common may be bought only by patrons and
members. Price—At face amount. Proceeds—For acqui¬
sition of additional office and plant facilities.
•

Savings & Loan Co., Greenville, S. C.
20,000 shares ($10 par)

(letter of notification)

working capital.

Co., Wash¬

filed

16

12

5%

.♦

Consumers

Hardy

$1,200

and

(J.

units.

$600

To apply on down payment orj

purchase of Parkinson Hotel at Okmulgee, Okla.

in¬

•

capital.

Feb.

Dayton

(Ohio)

Power & Light Co.
170,000 shares ($7 par) common. Under¬
writing—None.
Offering—Offered for subscription by

Dec.

5

filed

stockholders of record Jan. 30

on

the basis of

one

for each nine shares held.

Rights expire Feb. 25.
—

share.

per

Feb.

Proceeds
-

.

Drilling Corp.,

To

finance

'

•

share

Price

Hastings (Mich.) Manufacturing Co.
10 (letter of notification) 600 shares of common

stock

'

Feb.
1

($2 par).

Home

Underwriter—First of Michigan Corp.

Telephone &

stock

($5

par).

Fasteners, Inc., Chattanooga, Tenn.r
(letter of notification) 39,870 shares ($5 par)
stock. To be exchanged pro rata for all out¬
standing shares of Charney Fasteners, Inc., under a
reorganization plan.
.

16

filed

Credit Corp., Chicago
150,000- shares ($1 par) Class A Common.

Offering—To

be

offered

ployees. executives and management personnel.

$3.49

a

share.

proceeds

will

Underwriters,, none.

%

Okla.

Dixie

29

;

f

shares capital
Of the proceeds

57,600

m

City,

(letter of notification) 1,000,000 shares common
(100 par). To be offered through Tellier & Co. For
expenses and working capital.

Dec.

Co. of Virginia*

construction
•

Oklahoma

Telegraph

Emporia, Va.
11
(letter of notification)

3

Underwriters—None.
—.

Chicago ^nd other cities




Franklin

Feb.

Commercial

*

'

Fitzsimmons Stores,

Ltd., Los Angeles, Calif.
Feb. 2 filed .10,000 shares of 6% cumulative first pre¬
ferred stock ($100 par).
Underwriting—Officers, direc¬
tors and employees of the company will offer the stock
to. friends and associates.
Price—$100 per share.
Pro¬
ceeds—To retire 7% preferred stock. Business:
"Super
Markets" in Los Angeles, Riverside, Colton and San Ber¬
-

Domestic

CORPORATION"

Boston

Corp., Denver, Colo.

(letter of notification) 2,500 shares of 4%% cu¬

19

common

FIRST BOSTON

.

ital.

•

-

Fund,

Finance

Jan.

Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common. No under¬
writing.
Price—$100 a share.
Proceeds—To purchase
rolling mill, equipment and for working capital.

Feb.

•.

working capital.

Corp.

Deardorf

The

a

mulative, non-convertible ($100 par) preferred and 5,000
($5 par) common. Underwriter—Robert L. Mitton Investments, Denver.
To supplement working cap¬

be negotiated. *Groups

may

issue is reoffered include: W. C. Langley & Co.,

program.

Corporate and Public Financing

Price—$15

& Co. and White Weld & Co.

Sale

$24

pay

Buffalo,.

Inc., Seattle, Wash.
shares of common. Underwriters—
Pacific Northwest Co., Seattle. Price based on market
prices. Proceeds—For investment.

debtedness, finance inventories and supplement working

de

Corp.,

Dec. 29 filed 103,089

repayment of bank loans.

Feb. 5 filed $600,000 first mortgage

stock ($10 par). Underwriters, none. To be used in the
ordinary course of current business and for permanent

Alloys

notification)

(letter of

Equity

York. To provide

Feb.

9

Additional

Dec. 23 filed 238.829 shares of

Affairs, Washington, D. C.
Feb. 12 (letter of notification) 1,260 shares of common
stock.
No underwriting.
To be sold to employees. To
meet current
operating expenses.

&

&

for

Pro¬

filed 40,000 shares ($100 par) cumulative pre¬
Underwriting to be determined by competitive
bidding.
No bids received at competitive bidding Dec.

-

National

Refractories

7,400 shares of common
share. Underwriter—Ham¬
Lunt, Buffalo. Offering—Stockholders of record
Feb. 13 given rights to subscribe at rate of 1/12th of one
warrant for each share held.
Rights expire Feb. 27.
lin

21

Oct.

Dec. 29

leases and balance for working capital,

or gas

stock (no par).

ferred.

v.1.

(James B.)

Un-'

New York

Missouri

Beam

of stock at $10.10.

none.

Electro

pre¬

common

and one share

Not less than 50% of the new proceeds
will be invested in oil and gas royalties underlying pro¬

ducing oil

new

and

construction

Central
Nov.

of

share

one-tenth

and

To be offered in units of $1Q of 5% income
notes

derwriters,

shares ($10 par) common. Under¬
writing—To be determined by competitive bidding. On
Dec. 8 only one bid, that of Blyth & Co., Inc. and
Kidder, Peabody & Co. was submitted and was rejected
by the company.
They bid $13.75, less $1.75 under¬
writing commission. Offering—To be offered to 6% pre¬
ferred and common stockholders for subscription on the

company's line of photographic equip-

'

.

(10c par).
debenture

210,000 shares ($1 par) capital stock.
Underwriting—None. Offering—Shares are to be offered

Feb. 9 (letter of notification) 29,500 shares of 6% cumu¬
lative convertible stock ($10 par) and 88,500 shares com¬
stock ($1 par)
issuable upon
stock.
Underwriters — John
B.

.

Co.

Power

Washington, D. C.

of

Eldridge Oil Corp., Carson City, Nev.
■
F
(letter of notification) $97,000 five-year 5% in'come debenture notes and 9,7000 shares of capital stock

Nov. 10 filed 160,000

Dec.

'

mon

Maine

(letter

Feb. '9

officers and employees.
Offering —To company
stockholders, employees and customers. Price—At par.
Proceeds—To retire indebtedness and for working capital.
Central

12

•

Md.

pany

Development Co.,

Atlantic

Hagerstown,

Corp.,

shares ($10 par) non cumulative 6%
stock and 70,643 shares ($10 par) non-voting common
Class B stock. Underwriters—To be sold through com¬
Dec. 29 filed 254,682

15.

Feb.

Chemical

Central

1832 Biltmore Corp.,

notification) 1,600 shares "common
stock (no par). Underwriters, none. To pay the owner
of the building for the value of the property.

(letter of notification)

16

ceeds—For

;

•

Feb.

100,000 shares ($1 par)
capital stock. Price—$2.50 each. No underwriting. To
engage in contracting business.
Feb.

Proceeds—To pay off

amendment.

ISSUE

Miami, Fla.

Cathedral Corp.,

•

Inc., New York

Industries,

Thursday,. February-19,-1948

Registration

in

Now

INDICATES ADDITIONS SINCE PREVIOUS

•

Oct. 30 filed 100,000 shares ($1 par) common (name to
be changed to American Steel & Pump Corp.) Under¬

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(836)

to

em¬

Price—

Proceeds—Company did not state how
be used.
1
...

1 * 11H i Ml
.

•

t

Volume" 167

Number 4674

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

&

Co., Inc. (jointly); the First Boston Corp.; Harriman,
Ripley & Co.; Glpre, Forgan & Co. and W. C. Langley &
(jointly); Kidder, Pea¬
body & Co. Proceeds—To pay $2,450,000 of short-term
bank loans and to reimburse
treasury for expense of
property extensions and improvements.
Business —A

NEW ISSUE CALENDAR
February 19, 1948
Giant Portland Cement Co.__

Common

Ohio Public Service Co

1948

Cameron Aero Engine Corp..

Myles Plastics

Common

Corp

Common

_<

February 25,

basis of

Interstate Power Co.—

_Bonds

•

Warren Petroleum Corp

Preferred

1, 1948
Crampton Manufacturing Co
County Gas Co.J—_

par).

..Common

23,

Market
Dec.

1948

Columbia Gas & Electric Corp..

30

Basket,

filed

public at

for funds used to purchase McFarland

over

common

over

•

Bonds

—

-

further company's construc¬

ian

Under-

For

cold by four stockholders and represent part of the stock
the sellers will receive in exchange for their holdingi

Co.,

Ltd.,

Sherbrooke,

filed

30

shares

1,500,000

($1

par)

common

stock.

•

Frechette, Hartford, Conn., is the
principal underwriter. Price
—$1 each.
Proceeds—To construct milling plant and
purchase equipment.
Interstate

Power

Co.,

Dubuque,

la.

(2/26)

'

stock

($3.50 par) common stock. Underwriter —
Smith, Barney & Co., New York. Price and interest
rates by amendment. Proceeds—To permit consumma¬
of

the

company's reorganization

Johnson

11

(no par)

common

*

•

stock.

Un¬

&

ley,

Co., Wichita, Kan.
$5,000,000 first mortgage bonds due 1978.
be determined through competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.; the
Feb.

11

filed

'

&

Co., Inc. (jointly); Mer¬
rill Lynch, Pierce, Fenner & Beane; Lehman Brothers,
Bear, Stearns & Co., and Stern Bros. & Co. (jointly);
Shields & Co., and E. H. Rollins & Sons (jointly); Kid¬

$1

■

,

•

y

Guffey.

on

by underwriters.

Price—

-By amendment/ Proceeds—Payment of outstanding 3V2%
'

■

Legend Gold Mines, Ltd., Toronto,

Canada

share.

Louisiana Power & Light Co., New Orleans, La.
Feb. 12, filed $10,000,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined through competi¬

bidding.

Probable

bidders:

Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; W. C. Langley & Co., the First
Boston Corp. and Glore, Forgan & Co. (jointly); Shields
& Co., White Weld & Co. (jointly); Harriman, Ripley
& Co.; Merrill Lynch, Pierce, Fenner & Beane
and
Kidder Peabody & Co. (jointly); Kuhn Loeb & Co. and
Lehman Brothers (jointly); Salomon Bros. & Hutzler.
Proceeds — Approximately $5,500,000 will be added to
company's general cash funds on the basis of unfunded
property additions, and the balance will be used for
construction purposes.
•

Mc~

.

Inc., Boston, Mass.
Dec. 24 filed 83,333 shares (no par) $1 cumulative con¬
vertible preferred. Underwriter—Atlas Corp., owner of
100,000 shares of the registrant's common stock, has
agreed to purchase all shares not subscribed for by other
stockholders. Offering—Offered for subscription by com¬
stockholders of record Feb. 2 at $20 on the basis of

share for each six

one

>

Ocean Downs

shares held. Rights expire
off indebtedness.
-

common

March 1. Proceeds—To pay

to

—To be used for construction.
•

Oil

1

filed

Halsey, Stuart & Co. Inc.; Lehman Brothers




Producers, Inc., Oklahoma City, Okla.
(letter of notification) 980,000 shares common
option warrants. Price—30 cents and
respectively. Underwriter—R. V. Klein Co., New
For drilling costs and working capital.

16

and 150.000

stock
cent

York.

and

Blyth

Jan.

29

filed

686,953

Underwriting—none.

shares

San Francisco

($25 par)

common

holders of outstanding common

shares

Hampshire (3/5). .'u.

($10

par)

stock.

stock of record Feb, 27
Rights expire

Proceeds—To finance a construction program.

stock.

New Eng¬
rights to subscribe

shares.

Service

Co. of Oklahoma, Tulsa, Okla.
$10,000,000 first mortgage bonds, series B,
due 1978. Underwriters—To be determined
by competi¬
tive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.;
Shields & Co. and White, Weld & Co.
(jointly); Harri¬
man Ripley &
Co., Blyth & Co., Inc,; Central Republic
Co. and Lee Higginson Corp.
(jointly); Glore, Forgan &
Co., the First Boston Corp.n Salomon Bros. & Hutzler.
Proceeds—Prepayment of $1,700,000 of bank notes due
April 20 and $1,375,000 of Oklahoma Power and Water
Co. bank notes, and for expansion purposes.

•

Raleigh Red Lake Mines, Ltd., Toronto, Can.
Jan. 7 filed 460,000 shares of common stock.
—Mark Daniels & Co., Toronto, Canada.

Underwriter

Price-j-25 cents

share in

Canadian

funds.

Proceeds—For exploration

.and development of mining property.
Red Rock

Bottling Co. of Cleveland
(letter of notification) 40,656 shares ($1 par)
common.
Price—$1 each. No underwriting. For work¬
ing capital.
Jan.

23

„

Reiter-Foster Oil
Jan. 16

stock.

Price—80

W. Bennett & Co.
•

Corp., New Yorl#
180,000 shares (50c par)

(letter of notification)

common

For

cents,"

Underwriter—Frank

working capital.

San

Francisco Metals Co., Prescott, Ariz.
(letter of notification) 100,000 shares (no par)
non-assessable capital stock. Price—$1 each. No under¬
Feb.

12

writing.

To develop mine.

30

filed

Caster

80,000

&

.

Truck

•

•

.

Corp., Albion, Mich.

shares of

common stock (par $1).
by amendment. Price
together with funds from
private sale of $600,000 of 4%% debentures and $250,000

Underwriters—Names to be filed

—$7.

6%

Proceeds—Proceeds
subordinated

debentures,

will

be

used

to

pay

off indebtedness.

South

Carolina

Electric

&

Gas

Co.

Dec. 2 filed

80,858 shares ($50 par) cumulative convert¬
ible preferred and 404,293 shares ($4.50 par) common
for sale, and 687,293 shares reserved for conversion of
preferred. Underwriter—Kidder, Peabody & Co., New
York. Offering—Shares initially will be offered for sub¬
scription by company's common stockholders, the pre¬
ferred
basis.

on

a

1-for-10 basis and the

Unsubscribed

common

shares

on

a

l-for-2

will be offered publicly.
Proceeds—Proceeds together with
other funds will be Used to purchase all of the outstand¬
ing common of South Carolina Power Co. from the
Commonwealth & Southern Corp.

at the rate of one share for each 10 held.

April 9.

common

share for each 3V2 shares held.

Price by amendment.

Offering—To be offered at par to

For work¬

Jan. 30 filed

of

(2/20)

$10,000,000 first mortgage bonds, series due
1978. Underwriting—Halsey, Stuart & Co. Inc. on Feb. 18
bid 100.2599 for a 3 V&% coupon. Price—100.75. Proceeds

underwriting.

Price—By amendment.
Proceeds—
Construction program and retire short-term loans.

Jan.

Dec. 22 filed

199,627

one

141,101

Racing Association, Inc.,

shares ($10 par) common. No un¬
derwriting.
Price — $10 a share. Proceeds—To build
trotting and pacing race track near Ocean City, Md.

Feb.

filed

Service

Berlin, Md.

Ohio Public Service Co.

6

at rate of

a

,

Co., Seattle, and Pennaluna &
For developing mining claims.

Pacific Gas and Electric,

Louisville
12

B.

No

V

land Public Service Co. will waive its

Northeast Airlines,

t

(Ky.) Gas and Electric Co.
$8,000,000 first and refunding mortgage
bonds, due March 1; 1978. Underwriters—To be deter¬
mined through competitive bidding.
Probable bidders:
Feb.

To raise surplus for policy reserves.

common

share.

Underwriters—Kidder, Peabody & Co., and Blyth & Co.t
Inc., New York. Offering—To be offered#present holders

Orlando, Fla.

Nov. 28 filed 34,900

~

tive

Co.,

writers—H. M. Herrin &

Proceeds—To develop mining

properties.
#

Insurance

(letter of notification) 5,296 shares of
Price—$30 each.
Underwriter—Nathan

Mining Co., Spokane; Wash.'
Jan. 28 (letter of notification)
100,000 shares of non¬
assessable capital stock.
Price—32 cents each. Under¬

mon

-

June 27 filed 300,000 shares. ($1 par) common treasury
stock.
Underwriting- — To be supplied by amendment'
a

products.

Standard

Co., Wallace, Idaho.

basis of $100 of debentures for each 40 shares

Frlce—50 cents

and

15-year convertible

Unsubscribed publicly

installment notes.'

subsidiary

Price—Par for each.

Public Service Co. of New

to be issued in

Nevada-Stewart

Light Co., St. Louis, Mo.

sinking fund
Brothers, Goldman,
Sachs & Co.; and The First Boston Corp. Offering—To
be offered initially to common stockholders of record
Feb. 24

16

stock.

debentures/ Underwriters—Lehman

held.

certain

National

Feb.

Kansas Soya Products Co., Inc., Emporia, Kans.
3 (letter of notification) 3,157 shares ($95 par)

Laclede Gas

in

terests

stock.

Feb.

common

partnership inaffiliated companies.

per

Procurement Services,

ing capital.

(2/24)

or

(lc par). Price—
100,000 shares will be of¬

than

Inc., Washington, D. C«
13 (letter of notification) 500 shares
($100 par)
preferred stock and 250 shares ($1 par) class A common

Offering—63,785

are

more

employees, and officers at 87 V2 cents

Public

Francisco.

Not

Feb.

to be publicly offered (25,000 on behalf of
and 38,785 for account of Marcus Nalley, Chair¬
man); 20,000 shares will be offered to employees, execu-

•

preferred. Price—$95 a share. Undewriter—Kenneth Van
Sickle, Inc., Emporia. For additional working capital.
;

San

share.

per

Co., New York. Proceeds—For
capital equipment and working funds. Business—Com¬
pany will manufacture small car in $1,000 price class.

are

Business—Food

Dec.

Feb. 4 filed $6,084,000

Co.,

&

outstanding first mortgage bonds.

Underwriter—Tellier &

common

35,367 shares
acquisition of all publicly held stock

der, Peabody & Co.
Proceeds —For construction and
other corporate purposes. Business—Utility company,
i

119,152 shares of

To refund

—

Playboy Motor Car Corp., Tonawanda, N. Y.

fered to

of

tives and directors and

Underwriters—To

First Boston Corp., and Blyth &

Rogers

shares

Electric

be

Feb. .13 filed 20 000,000 shares common

company

Kansas Gas

all

.

Proceeds

stock (par $1.25).
Underwriters—Walston, Hoffman & Goodwin and Hart¬

150,000

to

Inc. and

Nalley's Inc., Tacoma, Wash.

Bronze Co.,

■G

filed

balance

one

share

mortgage bonds, due 1967.
Underwriters—Kuhn, Loeb & Co.; A. G. Becker & Co.,
Hemphill, Noyes & Co.
Price by amendment.

Mo.

Price—$1,375 per share. Underwriter—
Olifiers & Co., New York. Proceeds to selling

Jan. 15 filed

10

the

one

Pittsburgh Steel Co.

.

stockholder.

plan.

offered initially

Price by
outstanding pre¬
applied to working

Proceeds—To redeem

with

capital.

(par $1).

New Castle, Pa.
shares common stock (par 50<J).
Underwriter—Lee Higginson Corp.
Proceeds — Stock
being sold for account J. P. Flaherty, a stockholder.
Nov.

,

Bean

(letter

H. Frazee

be

share for either

new

Temporarily deferred.

Myles Plastics Corp., Jersey City, N. J.
Feb. 10 (letter of notification) 5,000 shares of

shares

tion

Kansas City,

•

Feb. 5 filed $20,000,000 first mortgage bonds, due 1978;
$5,000,000 sinking fund debentures, due 1968, and 1,500,000

Morris

Feb.

U. S. authorized agent and

one

cumulative preferred stock or
cumulative second preferred stock.

4x/4%

ferred

pre¬

Co., Yellow Springs, O.
'
notification) $100,000 20-year 5%
promissory notes, second series. Underwriters, none. For
new
plant, machinery and equipment, materials and
suppiies for the operation of a non-ferrous foundry.

Underwriter—Paul E.

Offering—To

of 4^4%

amendment.

'

derwriters—Company has asked SEC to exempt sale
from competitive bidding. If competitive, probable bid¬
ders include: The First Boston Corp. and Blyth &
Co.,
Inc. (jointly); Kidder, Peabody & Co. and Shields & Co.
(jointly).
Price—By amendment.
Proceeds—Toward
financing a $6,000,000 construction program and for other
corporate purposes, which may include payment of a
$750,000 temporary bank loan.

Quebec

Co.

&

Nov. 20 filed $6,500,000 of first

Inc.,

Minnesota Power & Light Co., Duluth

with the regis¬
Manufacturing
Co. and Stickley Brothers, Inc., both Illinois corpo¬
rations, and the Luce Corp. and Stickley Bros. Institu¬
tional Furniture Co., both Michigan corporations.
In¬
definitely postponed.

Collins

share

working capital and equipment.

Feb. 3 filed 100,000 shares

of four furniture companies to be merged
trant. The merging companies are Toccoa

Jan.

Julien

Jan. 9 (letter of notification) 30,601 shares ($1 par) com¬
mon
stock.
Price—$6 per share. Underwriting—None.

writers—Brailsford & Co., and Straus & Blosser, Chicago.
Price—$9.25 a share.
Proceeds—The shares are being

Asbestos

Pet Milk

to stockholders on basis of

(par $20). Underwriter—Guard-,
General corporate purposes.

Securities Corp.

.

and

series stock

Mid-Continent Airlines,

Corp., Chicago
July 24 filed 120,000 shares ($1 par) common.

land

of

Co., St. Louis, Mo.
13; filed 100,000 shares of preferred. Underwriters
—Kidder, Peabody & Co.; G. H. Walker & Co,, and

working capital.

Acceptance Corp. of Calif.,
Francisco, Calif.
!
(letter of notification) 3,849V2 shares first

11

Purchase

none.

Feb.

.

Illinois-Rockford

International

•

Calif.
(50c par) common. Under¬
Offering—Shares are to be issued upon

Mercantile

ferred 5%

Underwriters,

construction of cotton oil mill.

of

Feb.

tion program.

($10 par).

the counter

Pasadena,

Proceeds—For additional

Pecos Valley Cotton Gil Co.,
Roswelt, N. M.
9 (letter of notification)
20,000 shares of common

Feb.

slock

of common stock purchase warrants issued in
July, 1945. Price—Two shares per warrant at $6 a share.

$150,000 will be used to reduce outstanding short-term
to

the

none.

San

loans and balance

Drug Co., Topeka,
Kan., and the $332,500 balance will be used for working
capital and expansion of business: retail drug stores.

common

27,788 shares

May 4. 1948

bank

&
Blosser, Chicago.
Price—$5.25 per share.
Proceeds—$140,000 will be used to reimburse company

exercise

———__——Bonds

Southern California Gas Co

to

Underwriters,

writers—None.

....Debentures

April 6, 1948

Counties Gas Co

To be offered

filed

Straus

•

Corp., Clearwater, Calif.
notification) 1,440 shares

market price.

1948

Public Service Co. of N. H

Southern

Macotl

($1

Common

_—

March

Offer will expire March

Feb. 9 (letter of

Bonds

Drugs, Inc., Kansas City, Mo.
100,000 shares of preferential cumulative
participating stock ($4.50 par).
Underwriter27

35c

Macco

•

March

5,

Parkview
Jan.

for each two

Corp., Clearwater, Calif.
Feb. 9 (letter of notification) *1,440 shares of
stock
($1 par). To be offered to public at
counter market price. Underwriters, none.

—Bonds, Debs. & Com.

March

common

15, 1948.

February 26, 1948
.

share of McClanahan

one

shares of Great Lakes common.

1948

Wisconsin Power & Light Co.
11:30 a.m. (EST)_____:

.

extensions, additions and im¬
provements to telephone plant and repay outstanding
advances to parent, American Telephone &
Telegraph
Co. Expected about March 16.;

Grand Rapids, Mich.
Dec. 30 filed 260,000 shares ($1
par) capital stock. Un¬
derwriters—None. Offering—Shares will be exchanged
for $1 par stock of Great Lakes Chemical
Corp. on the

.Bonds

24,

Telephone & Telegraph Co.

13 filed $75,000,000 30-year

burse treasury for costs of

McClanahan Oil Co.,

•

Pacific

41

debentures, due March
1, 1978. Underwriters—Names to be determined by. com¬
petitive bidding. Probable bidders: Morgan Stanley &
Co., and Halsey, Stuart & Co. Inc. Proceeds—To reim¬

utility company.

February 20, 1948

.v..February

•

Feb.

Co. and Equitable Securities Corp.

Missouri-Kansas-Texas RR.___--Equip. Trust Ctfs.

(837)

(Continued

on page

42)

42

THE COMMERCIAL

(838)
(Continued from page 41)
Southwestern Electric Service

Co., Waco, Tex.
Feb. 9 (letter of notification) 25,000 shares of common
stock

offered

be

to

Underwriters,

stockholders of record

to

Feb.

16.

For construction.

none.

Southwestern Gas & Electric Co.

Nov.

5

$7,000,000 30-year first mortgage bonds,
Underwriting—To be determined at competi¬

filed

series B.

tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc., Lehman Brothers and Lazard Freres&Co. (jointly);
White, Weld & Co. and Kidder, Peabody & Co. (jointly);
BIyth & Co., Inc. and Stone & Webster Securities Corp.
(Jointly); Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Harriman, Ripley & Co.; Merrill Lynch, Pierce,
Fenner

&

Proceeds—To

Beane.

reimburse

construction

finance

program,

States

Life

Insurance

Co.

Feb.

10

filed

reorganization certificates. Underwriters, none. To
as capital stock in a proposed old line life in¬

(letter of notification) William Burnest Palmer

be used
surance

Refrigerating & Warehousing Corp.,
Washington, D. C.*
Feb. 17 filed $700,000 4% 10-year first mortgage bonds
due 1958. Underwriter—Alex. Brown & Sons, Baltimore.
Price—Par. Proceeds—To retire $635,000 of 4 Vz % first
mortgage
•

Uni-Flow

Feb.

6

stock

(letter

participating* preferred

stock,

($1

par)

160,000

and

shares (50c par) common stock, of which 40,000 will be
sold and the remainder reserved for conversion. Under¬
writer—White

&

Co., St. Louis, Mo. Price—$8 for the
preferred stock.and $2.50 for the common. This stock
is- being offered by stockholders who are members of
the Belt family.
•

Sunland-Tujunga Telephone Co., Sunland, Calif.
Feb. 9 (letter of notification) 8,000 shares of 5%% cumu¬
lative first preferred ($25 par). Underwriters none. For
purchase and installation of extensions, additions and

1,

Business—Market

1948.

Engine Corp., Washington, D. C.
of notification) 15,000 shares common

Options to initial holders of such

($5 par).

stock

to be filed by amendment. Proceeds—To
purchase *
75% interest in the capital stock of Devonian Oil Co., the 5

other 25%

at

•

of

Feb., 11

common

Power Co.,

Underwrit¬

Richmond, Va.

$10,000,000 first and refunding mortgage
bonds due ,1978, and $11,753,800 convertible debentures^
Underwriters—Bonds

to

be

offered

.underwriting.

29

Power

&

Light Co.

j
.

J

'

(2/25)

!

filed

(jointly);

BIyth & Co., Inc.; The First Boston Corp.; ;
Offering—Bonds will be offered publicly )
will be offered to holders of 4%.% preferred- .

while stock
Price by

<

ness

&

Co., and W. C. Langley & Co. (jointly); Halsey, Stuart
& Co. Inc.; White, Weld & Co.; Merrill Lynch, Pierce,
Fenner & Beane, and Hallgarten & Co. (jointly). Deben¬

Security

No

Shields & Co.

under

competitive bidding. Probable bidders; Stone & Webster
Securities Corp.; The First Boston Corp.; Glore,. Forgan

Prospective

cents each.

$3,000,000 30-year first mortgage bonds. 1
Series B, and 30,000 shares ($100 par) 4.80% cumulative
;
preferred stock. Underwriters—Only the bonds will be i
underwritten under competitive bidding terms. Probable )
bidders: Halsey, Stuart & Co. Inc.; Glore, Forgan & Co.
j,
and Harriman Ripley & Co.
(jointly); W. C. Langley & j
Co., White,. Weld & Co. and Kidder, Peabody & Co. ;

filed

1963.

Price—25

Wisconsin

ment.

&

stock.

common

Trusteed^ Funds, Inc., New York

Virginia Electric

^

Mining & Milling Co., Inc., Seattle

(letter of notification) 200,000 shares (IOC par)

For general corporate purposes.

Dec.

657,500 shares of capital stock.

being acquired by Gulf Oil Corp.

Webfoot

$10 per share, in proportion to initial

ers—Lord, Abbett & Co., Inc., New York, is selling agent..
Price based on market prices.
Proceeds—For invest¬

due

,

rate

com¬

expenses.

17

'

150,000 shares ($100 par) cumulative con- I
preferred stock. Underwriter—Merrill, Lynch, ;
Pierce, Fenner & Beane, New York.'Price and interest j

stock.
Underwriters, none. For
manufacture, testing and production of the "Uni-Flow
Engine," the "Cobra Coaster Brake," and such other
products as may be produced by company, and for other

•

(2/26)

Feb. 5 filed

stock, exercisable in discretion of directors, to pur¬
chase
in
the
aggregate. 15,000 additional
shares of

Feb.

j

Warren Petroleum Corp.

mon

Dec. 29 filed

Inc., Bloomington, III.

April

to

finance construction.

vertible

Union

Steak 'n Shake,

due

bonds

Corp., Boston.

common

penditures, including $11,000,000 of bank notes issued

operators.

company.

Feb. 2 filed 40,000 shares of 50c cumulative convertible

by Stone & Webster Securi- '
Offering—Debentures to be offered i
stockholder? of record March -15 at rate of <
$100 of debentures for each 25 shares held. Price of \
debentures, 100. Proceeds—To pay for construction ex- *
ties

Terminal

•

Thursday, February 19, 1948

tures will be underwritten

treasury for expenditures made for such

purpose.

holdings

Southwestern

CHRONICLE

to

common

•

FINANCIAL

improvements to telephone properties and facilities and
to

•

&

amendment.

Proceeds—To pay bank indebtedBids—Bids for
purchase 7
.

and for construction costs.

of bonds will be received at office of Middle West Serv¬
ice Co., 20 North Wacker Drive, Chicago, up to 11:30 a.m. '

;

(CST) Feb. 25.

"V"

^

-

\ /:

v-' <\

"

Offerings

(NOT YET IN REGISTRATION)
INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

100,000 additional shares of

mortgage bonds and

com¬

stock. Plans call for opening of bids on the offering
March 30, with bonds and stock being offered to the

mon

on

public on April 1. Proceeds of the bonds will be used to
retire

bank

loans.

Funds

from

stock, will be used to take

the

additional

ders—Halsey, Stuart & Co. Inc.; BIyth & Co., Inc.; MerLynch, Pierce, Fenner & Beane; Harris, Hall &
Co. (inc.).
:

Boston

Corp.; Halsey, Stuart & Co. Inc.; Dillon, Read &
Co.; Coffin & Burr, Inc., and Spencer Trask & Co.
(jointly).
•

Gulf

*

,

Feb.

17

reported company may sell $1,000,000 bonds to

meet construction
•

Kansas

Gas

requirements.
&

>

v

Feb.

17

Shields & Co. (bonds only).

year

with $3 to $4 million bonds.

Columbia Gas & Electric Corp.

due

1973.

(3/23)

Connecticut

March
ized

17

Interest

rate,

offering

price and
competitive

preferred

1,200,000
from

stock

shares

will

from

(no

par)

1,704,000 shares

(no

vote

on

increasing author¬

600,000 shares (no
and the authorized
par)

to 2,500,000

Presjdent C. L. Campbell-

par)

to

says

but the increase is desirable to enable the
company to.

develop

a

suitable plan for financing its expansion

pro¬

gram.
-

Consolidated

Edison

Co.

of

New

York,

Inc.

Feb. 18 company applied to New York P. S. Commission
for authority to issue $57,382,600

which

are

to

be

convertible

15-year 3% debentures,
common stock at $25

into

a share.
Debentures will be offered to common stock¬
holders at par in ratio of $5 principal amount for each
share held.
Company will invite bids for underwriting
the issue and the purchase of any unsubscribed deben¬

tures.

Probable

bidders:

Morgan, Stanley & Co.
to

the

extent

Halsey, Stuart & Co. Inc.;
The proceeds will be applied

of

•

17

000,000

directors.
will

be

17

reported company may be in market this year
with $15 to $20 million new securities, the nature of which
>emains to be determined.

(3/1)

Proposals must be submitted

on

or

before March 1.

Light Co.

Feb. 7 reported company plan the sale in April of
$4,090,000 of debentures.
Probable bidders:
Halsey,
Stuart & Co. Inc.; The First Boston Corp., and BIyth &
Co, Inc. (jointly).
•

more

for construction purposes by the summer of
1948, but timing, and type of future financing will be
governed largely by progress and financial market con¬
new money




'

•

debentures.

Probable

bidders:

new

bonds
,

•

May 4, according to present plans.
Morgan Stanley & Co., the other by

on

bidders:

Standard Accident

March
stock

■

9

stockholders

Expected
issue.

The

First

Insurance

will

by 140,750 shares.

stockholders in ratio of

vote

Public

Service

New

one

new

Boston

increasing

shares will

Corp.

will

underwrite

of

New

•

Texas

Electric

Service

Co.

■*

-

Light Co.
plans issuance of $7,000,000
of. debentures early in April.
Probable bidders:
The
First Boston Corp., Halsey, Stuart & Co.
Inc., BIyth &
Co., Inc., Smith, Barney & Co. and Kidder, Peabody &
Co. (jointly); Hemphill, Noyes & Co. and Drexel & Co.
(jointly); W. C. Langley & Co., and Glore, Forgan & Co.
(jointly); White, Weld & Co.; Harriman Ripley & Co-.,
and F. S. Moseley & Co.
(jointly); Lehman Brothers.

bidders

include

BIyth & Co.,

Inc.; The First

7

reported

Utah

(jointly); Otis &

company

Power

&

Light Co.

Jan. 28 reported company
working on plans for
000 new mortgage bonds, plus

$5,000,000

San

Diego Gas & Electric Co.
Company has applied to the California P. U." Com¬
mission for authority to sell at
competitive bidding
$10,000,000

first

mortgage

bonds, series C, due 1978.
Halsey, Stuart & Co. Inc.;
BIyth & Co., Inc.; Harriman Ripley & Co.;
Kidder, Pea¬
body & Co., and Dean Witter & Co. (jointly); The First
Boston
Corp.;
Salomon
Bros.
&
Hutzler; Lehman
Brothers; Merrill Lynch, Pierce, Fenner & Beane:
Probable

Sierra

bidders

Pacific

reported

bonds.

Inc.;

,

,

V

Jan. 16 reported company plans
in March $15,000,000 in bonds,

The

bidders

First

Boston

include:

Corp.

Halsey,

and

BIyth

new

$3,000,- '
deben¬

Stuart &
&

Co.,

Gov

Ine.

(Jointly); Kidder, Peabody & Co., Merrill Lynch, Pierce,
Fenner & Beane, R. W. Pressprich & Co. and- Equitable
Securities Corp.
(Jointly); Smith, -Barney & Co. and
Securities

Corp.

(Jointly); "White, Weld. & Co>.:

Harriman Ripley & Co.

West Penn
:

Power Co.

The company on Feb. 10 asked the
to' sell publicly, at competitive

SEC for permission

bidding, $12,000,000 of

plans sale
Probable bidders

company

Probable

"Union

Power Co.

; first mortgage bonds, series
M, and 50,000 shares of pre¬
ferred stock, series B
($100 par). - Probable bidders:

competitively of
Halsey,

include:

-

Inc.; BIyth & Co., Inc.

May 4.

tures.

include

Southern California Gas Co.

on

-

"

Texas Power &

Feb.

Mexico

Corp., and White, Weld & Co.
Co.; Glore, Forgan & Co.

ered

the

...•■■

,

Langley & Co. (jointly); White, Weld & Co.;
Hemphill, Noyes & Co, and Drexel & Co. (jointly). Expected about March 15.

plans under consideration

Boston

11

to

for each 2 xk shares held.

\t Feb. 17 company asked SEC for permission to sell
through competitive bidding $5,000,000 mortgage bonds
and $5,000,000 of debentures. Probable bidders:
Halsey,
Stuart & Co. Inc.; The First Boston
Corp.; Harriman,
Ripley & Co.; BIyth & Co., In,c.; Kidder, Peabody & Co.,
Halsey, Stuart & Co.
and Smith, Barney & Co.
(jointly); Glore, Forgan & Co.,

Cities Service Co.

$3,500,000

capital

offered

(5/4)

filing with the SEC late
with bids to be consid¬
Proceeds for extensions. Probable Bid-

"

„

applied to the-SEC for per¬
mission to sell through
competitive sale 339,639 shares
(entire holdings) of Public Service Co. of New Mtexico.

Feb.

be

and W. C.

Co.

;

;

Co.

on

,

•

Inc.; The First Boston Corp.; Halsey, Stuart
& Co. Inc.; Glore, Forgan &
Co.; Harriman Ripley & Co.,
and Stone & Webster Securities
Corp. (jointly).

•

through sale of "bonds.

Halsey, Stuart & Co. Inc.

$40,000,000 bonds for new money pur¬
probably late in March. Probable bidders: Dillon,

11

:

J

*

*

Probable

Read & Co.

•

■

petitive bidding

(2/19)

Power Co.

Feb. 16 reported company has
for sale of about
poses,

(Jointly); White, Weld & Co.

Under the program, holders of common stock

up

Ohio

■..

Southwestern Beil Telephone Co.
Feb. 11 it is expected that company's debenture financ¬
ing will be for the full $100,000,000 authorized by stockholders.
The big issue will be put
up for sale at com¬

& Telegraph Co.

offered

Stuart & Co.

Detroit Ellison Co.

The 1941 annual report states: "We expect to need

$1,000,000

RR.

Inc.; Morgan Stanley & Co.

•

The Public Service Corp. of New Jersey is
inviting pro¬
posals for the purchase of 7,460 shares of common stock

Power &

the market this

rights to purchase new shares at par
to a total of $19,188,100. In addition, company
plans to offer under competitive bidding up to $25,000,000
($100)

a

''''

*

-

construction requirements

reported plans for sale of securities up to $45,to finance new construction were approved by

Probable

Consumers Power Co.

Dallas

be in

Mountain State Telephone

Feb.

•

of County Gas Co.

may

*

Southern Indiana Gas & Electric Co.
Feb. 17 reported company intends to raise

Company will receive bids up to Feb. 19 for the purchase
of $1,620,000 equipment trust certificates, dated March 1,
1948 and due semi-annually in 15 years. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler;
Shields & Co.; Harris Hall & Co. (Inc.); Harriman, Rip¬
ley & Co. and Lehman Brothers (jointly).

Feb.

County Gas Co.

•

Mississippi Power Co.

$24,995,329 toward the redemption of
273,566 shares of the 2,188,885 shares of $5 preferred
stock outstanding.
Bidding expected March 23.

Feb.

company

Missouri-Kansas-Texas

in
•

reported

\

1

$1,000,000 for

Feb. 17 reported company may sell
to meet construction requirements.

common

shares

(no
the company has
immediate plans for the issuance of additional
stock,

par).
no

Light & Power Co.

stockholders

Co.

Michigan Gas Storage Co.

•

underwriting terms will be governed by
bidding. Probable bidders: Morgan Stanley & Co.; The
First Boston Corp.; Halsey, Stuart & Co. Inc.
Company
plans to invite bids to be opened March 23.
•

.Light Co. has asked SEC per¬
mission to sell publicly 250,000 shares of its. Kansas
holdings.
It has also requested to be exempt from the
competitive bidding rule.
•

'''

-

First

&

*

Feb. 9 corporation asked the SEC for authority to issue
and sell at competitive bidding $45,000,000 of new de¬

bentures,

American Power

The

•

ders—BIyth & Co., Inc.; Halsey, Stuart & Co. Inc.; The Boston
Corp. and
Harris, Hall & Co.
(Inc.) :
(Jointly); W. C. Langley & Co. and Glore, Forgan, &

Electric Co.

of business expansion in
Halsey, Stuart & Co. Inc.
(bonds only); BIyth & Co., Inc., and The First Boston
Corp. (jointly); Merrill Lynch, Pierce, Fenner & Beane
(common); Harriman, Ripley & Co.; White, Weld. & Co.;
Merrill Lynch, Pierce, Fenner & Beane and Kidder, Pea¬
body & Co. (jointly on bonds); Salomon Bros. & Hutzler;
care

■

,

Southern Counties Gas Co. (4/6)
Jan. 16 reported company plans filing with the SEC late '•
in February $7,000,000 in
bonds, with bids to be conskt- »
ered on April 6. Proceeds for extensions. Probable Bid- •

Co.

Power

•

rill

common

1949. Probable bidders include:

.

"

Probable bidders for bonds if issued: The First

ditions."

California-Oregon Power Co.

-

Feb. 3, A. S. Cummings, President stated company has a
tentative working schedule for sale of $4,500,000 first

Halsey, Stuart & Co. Ine."(bonds"only); W. C. Langley
& .Co. and The First Boston
Corp. (jointly); Lehman
Brothers; Kidder, Peabody & Co.
The company also
issue $2,500,000 of additional (no1 par value)
stock, to be offered first to its stockholders. West

proposes to
common

Penn

Electric

Co.

(parent)

-eposes

to

purchase

all

*

Volume' 167

Number 4674

THE COMMERCIAL

^
price
the

fixed at

was

&

FINANCIAL

CHRONICLE

(839)

100.485 where

yielded

3.10%

.

and

all you need to get along is to get
enough of it. w..

Riehter Visting New York

Still Piling Up

issue

Henry J. -Riehter of Scherck,,
Riehter Co., St. Louis, is a visitor
in New York. While
here, he is

Quincy Cass Adda

.

moved rather well.

;

,

r

1

Philadelphia Electric

The

sobering effect of recent
developments
in
the
economic
world, such as the levelling -off of
commodity prices from their in¬

*

I
:

Latest entry into the new cap¬
ital handicap is the group of com¬

making his headquarters at East¬
man,
Dillon
&
Co.,
15
Broad
panies comprising Commonwealth
Street, New York City.
banking interests' are not keen & Southern Corp. Southern Com¬
for small undertakings is difficult pany, fofmed to replace Common-'
wealth as the
With Bache & Co.
holding unit for
to-explain particularly in view of
four-operating utilities in
the
MIAMI BEACH. FLA.—William
the apparent relish
with which South,
M. Jackson is with Bache &
proposes to raise $20,000,Co.,
OOO via the common stock route.
they go after such issues.
2809 Collins Avenue.
Just how

1

idea

that

some

New

people have the

York

investment

Power

Co.

is

a prospect for new financ¬
ing of between $15,000,000 and
$20,000,000 although no real de¬

DIVIDEND NOTICES

,

flated

peaks, can naturally be
expected to make for some degree

-

of

caution

industries
planning future expansion.
But;

unless

thing that
be

in

file "of

does

of

construction

facilities,

new

war.

upon as

v

its

t

vestors

ability

to

to

borrow

from

finance such

shaping

are

center

of

cannot

no

"small/'

counted

mor-

' Vi\

looked

groups

this

like the

New-York

simply

go

enjoyed

earnings, and, despite the tax pen¬
alty involved}-'has- been retaining
large portion

a

of such earnings

for reinvestment in its properties.

Studies
•

coming to

now

hand

Company
1948

industry

:

February 17, 1948, a dividend of Twenty(/5c) per sjiare was declared on
Capital: Stock of -MAGMA COPPER
COMPANY, ,payable March 15, 1948 to

*.

The

apply

to

rule
and

each

most likely will be in the mar¬
ket

for

funds,

from

but

the

point of view of the industry, it
appears well
" to
provide

/

fortified with cash
for

its

needs

February 17,'1948,
(56^)

Capital

Stock

The

State of

Illinois

this

bid which figured out

»

terest

;

nually.

basis of

cost

i

of

<

,

initial

-

i

•«

i

~

*'

-

'

'

Chipping to

Every
chasing

'

•

moved

I ideas

.

.

The

Dividend

of

1

their

mon

is

1

intention

COMMON
A
TKKASUIUiU

'..f

given

that

New Connection
trader

record

Capable

mediate compensation to

start.
Commercial & Fi¬

Chronicle,

Stockholders

of

Common

Stock

15c

idend

per

of

for

record

business

March

1948.

The

of

transfer

books

will

not

be

October

1st

September

In

CANADIAN PACIFIC

25

Park

If. Y.




Notice

on

meeting of the Board of

a

Directors

Railway

of,< Canadian

Company

dividend

of

held
three

Pacific

today
per

a

cent

(seventy-five cents per share) on
Ordinary Capital Stock in re¬
spect of, and out of earnings for
the

American Cyanamid
AT

.Company

-

A

can

DIVIDEND

dividends

1948.
A

$1.75
tive

DIVIDEND

Cyanamid Company on Febru"-

record

17.

pany,

record

at

the close of business March 4, 1948.

W. PI

STURTEVANT.

■

.

'

Secretary

to

stockholders

of

February 27,- 1948.

Transfer books will

payable April 1, 1948, to the
such stock of

1-948

closed

be

on

Preferred Stock dividend.

Dividend' checks will be mailed by

-

the

Guaranty

Trust

Company

of

New York.

m
^

February 11, 1948.

Treasurer.

also payable

the

on

1948.

obtain

to

these

divi¬

9th

the

Meeting, to be held
February next) on and
March

31st

holders

Ordinary Stock Warrants

of

de¬

must

posit Coupon No. 201 with the
Guaranty Trust Company of New
York, 32 Lombard Street, 'London,
E. C. 3, seven clear business days

(excluding Saturday)
ment

Both

before

pay¬

be made.

can

dividends

will

be

paid

only, namely, Coupon No. 201.
The usual half-yearly dividend

on

February 23, 1948.

to

dend

total
per

point out that this divi¬

of three per cent making a
dividend payment of five

cent in respect of operations

for the year 1947
'

by

only
other

fs made possible

income

than

from

railway

sources

operations;

of

one

Coupon

2V» %

on the
5% Preference
(less Income Tax) for, the
ending 30th September 1948
will also be payable on the 31st

Stock
year

March

1948.

Coupon No. 89 must be depos¬
ited

with

the

National

Provincial

Continued increases in gross earn¬

Bank Limited, Savoy Court,

ings from freight traffic had been
largely offset by decreases in pas¬
senger traffic and by increases in

London, W. C. 2, for examination
five clear business days (excluding

wages
and

and

the cost of materials

supplies.

Bramley,
Secretary

before

Saturday)

Strand,

payment

is

made.
DATED

By order of the Board,
Frederick

F. S. CONNETT,

Tax)

against the deposit of

p.m.

able

payable April

February 27, 1948 and will reopen
March 24, 1948. Transfer books will
not close
for the l°!o Cumulative

share on the outstanding shares

of the Common Stock of the Com¬

holders of

Stock

declared pay¬
on March

The Directors consider it desir¬

Preference

regular quarterly dividend of
per share on the 7% Cumula¬

Preferred

was

shilling

at 3

.

March

1948, declared a quarterly
dividend of twenty-flve cents ($.25)"
per

Prior

15, 1948 to stockholders of record
April 1, 1948.
A quarterly dividend of $1.50 per
share on the Common Stock payable

1943.

The Board of Directors of Ameri¬
ary

Convertible

1947

one

31, 1948, to Shareholders of record

declared:

Stock payable March 15,
1948 to
stockholders of record February 27,

($.8751 per share oh the
shares of
the Com¬

pany's 3Vnrk Cumulative Preferred
Stock, Series A, payable April 1,
1943, to the holders of such stock
of record at the close of business

can

were

year

the 30th

to

of

Or¬

from

General

the

after

able in Canadian funds

A

tive

17, 1948, declared a-quarterly
dividend of ,eighty-seven and one-

COMMON

of the American Woolen

regular quarterly dividend of
$1 .00 per share on the $4 Cumula¬
<■

Cyanamid Company on Febru¬

March 4,

the

meeting of the Board of Di-

Company, held today, the following

f

PREFERRED

a

rectors

year

1947

1948

order

nual
At

issued

the

for

dends (subject to the Final Divi¬
dend being sanctioned at the An¬

RAILWAY COMPANY
Dividend

Div¬

£1 of Ordinary Stock (free of

Income

February 17, 1948.

the

Final

a

the

on

Stock

the

'

incorporated

.

dividend

31st March

Peterson, Treasurer

of

1948

the

to
on

the issued

on

dinary

STEFFLER

American Woolen
lany

payment

the

terim

closed.

H.

GIVEN

their Annual

in

Ordinary Stock
year
ended 30th Septem¬
ber 1947 of one shilling per £1 of
Ordinary Stock (free of Income
Tax) and have declared a first in¬

have

payable April 1,

stockholders

HEREBY

the

March

31st

Preferred

dividend

close

IS

Report have recommended

of

4%%

the

Secretary & Treasurer

with

man

of accomplish¬
of taking full
charge or installing trading de¬
partment, building dealer busi-.
ness,
etc.
Opportunity more
important than; amount of im¬

nancial

the

dividend
on

Convertible
a

the

to

at

NOTICE

that the Directors

a

Stock

half cents

Place, New York 8,

share

declared, both

1948,

STOCK.

STOCK

February 10, 1948

outstanding

M 220,

and
on

been

ary

Box

FOR ORDINARY AND PREFERENCE

STOCK

quarterly
per

Stock

PHILLIES

The Board of Directors of Ameri¬

SITUATION WANTED

liaison

11/16c

share

report-

j

dealer

regular

29

Cumulative

Philadelphia, Pa.
February 13, 1918

at

NOTICE OF DIVIDENDS TO HOLDERS
OF STOCK WARRANTS TO BEARER

Youngwood, Pa.

1

PREFERRED

on

the close of

at

February 27, 1948.

MORSE G. DIAL,
Secretary and Treasurer

ROBERTSHAW-FULTON CONTROL!!

final

-

Desired by well-known

business

COMPANY

ZVs% coupon.

original

stockholders of record

BRITISH-AMERICAN

§

Checks will he mailed.

outstanding capital
Corporation has been
payable April 1, 1948, tp

this

TOBACCO COMPANY, LIMITED

record March 1, 1943.

.

($1.00)

the

on

of

declared,

1948.

Company

g
§§

Beachley,
Secretary-Treasurer

hereby

Walter A.

the Illinois

was

proven
ment.

Corporation

16, 1948, to stockholders of

gj-

February 27, 1948.

regular quarterly dividend of 40fr per
share has been declared on the Com¬

Co.'s

a

stock

per

of the market convinced the selli ing group that slight revision was
!• in order' and the final offering

and

this

Common Stock

on

share

per

1,

§

declared payable March

of such slock of record at the close
of business February 27, 1948.

case

April

February 16, 1948

1

Atlas Corporation

"

Notice

I

t

the Common**

quarterly

of
Atlas
Corporation,
payable March 20, 1948. to holders

the

payable

WALTER

to reoffer at 100.875 to
yield 3.08%. But evidently a feel

1

of

(37Hc)

cents

on

America's N?i ci<jar

Fit

reconsider

issue with

{ edly

wag

February 16, 1948

$15,000,000 of first
mortgage bonds. Bankers paid
the company
100.1499 for the

;

Stock

%

IV4

'

r

share

the Com¬

payable

first

in

Power

per

10,

.

This happened again the other

day

a

on

regards reoffering prices.

to

as

on

Charles E.

often bankers pur¬
issue find themselves

so
an

and one-half

I

•

carried

CARBON

133

i

mailed.

•

13A% coupons while this one
carries rates of 1% and 2%.

'

;

an-

interest cost

issue

Company,

the close of business

and

»-

•I

1.9485%.

The

,

an

per share

the

Checks will be

On the current offering

the best bid set

»

1.676%

cents

of

March, 12, 1948, to shareholders of record

net in-

a

of 50

Stock

mon

000,000 of the issue and received
a

' A dividend of thirty-seven

COMPANY

meeting held today, declared

a

dividend

Last April Illinois sold $300,-

STACY,

Secretary.

A cash dividend of One dollar

share has

per

J. M. REEVES, Treasurer

Jf'

1

COAL
at

stitutional investors,

declared,

CONSOLIDATION

ready market for them among in-

'•

CARBIDE

NOTICE

25c

78

dividend of FTFTY

PITTSBURGH

week

4'

;

a

Gl;S MRRV1CKA, Treasurer.

a

-

CORPORATION

will not be closed.

The Board of Directors of

I soldier bonus bonds and found

of

the close of business March 3,

February 27, 1948.

ness

| marketed the last $85,000,000 of its

i

DIVIDEND

dividend

The transfer books of the

j»er share wa;r declared on the
of
NEWMONT
MINING

Cost of Bonus Money

*

AND

"

REEVES BROTHERS, inc.

stockholders of record at the close of busi¬

for

-

,

THOMAS H.

February 16, 1948.

CORPORATION, payable March 15, 1948,
to

the close of business March

at

CNI8N
President.

A

time ahead.

some

t

record

22, 1948.

February 11, 1948.

,

Dividend No.
On

u|>on the outstanding $3
Preference Stock,, pay¬
April 1, 1948 to the holders of

able

SHUTTS,

Corporation
CENTS

share

per

Cumulative

share.

per

1948, to stockholders of record at

.

|

46l/i cents

record

INewmoiit Mining

every

accordingly some

company, and

.

of

been

does

.

Wilmington, Delaware

e: dodge, Treasurer.

h

■

Treasurer..

Corporation

February 18, 1948

stockholders of record at the close of business

February 27, 1948.

■,

SCHALL,

15,

stockholders

On

five Cents

M.

The Board of Directors of The
United Corporation has declared the
regular quarterly dividend of 75c

1, 1948.

EDWARD L.

No. 102

COMPANY

the

March

payable

SUGAR

$3 Cumulative Preference Stock

share

of

RIGO

of

The United

at the close

H. E. DODGE, Secretary.
New York. N. Y.,

a

Ex¬

divi¬

a

distribution after deduction
African non-resident sharehold¬

South

tax will amount to

retained approximate¬

purposes.

not

Stock

PORTO

■

By order of the Board of Directors

the

ly 65% of their net earnings for
<" such

to

March

any
Dividend

indicate that last year, for example, the oil companies as an

.»

Common

Stock

February 17, 1948.
Directors has this day declared
a
quarterly dividend of 50c per share on the
$25.00 par value 8% Preferred Stock outstand¬
ing; and a quarterly dividend of One Dollar
par share
on
the outstanding Common Stock;
all payable on April 1
1948 to stockholders of
record at the close of business on March,
12,

net

Delaware

dividend of 25c

a

the

Angeles

DIVIDEND NOTICES
SOOTH

The Board of Directors has de¬
clared

Associates,
Street, members

Sixth

Los

change.

Directors authorized the distribution of
said dividend on the same date to the

of the

Dividend Notice

on

.

the

March 10, 1948 to the holders of record Of

on

ers

of

DIVIDEND NOTICES

West

of

June

un¬

,,

.shillings six pence per share on
Ordinary Shares of the Company payable

the

24, 1946. The

by the rule

that business is business and that

substantial

very

523

1948.

Directors today declared

Chronicle)

Crouch has been added to the
staff of Quincy Cass

holders of American Shares issued under the
terms of the
Deposit Agreement dated

IOWA SOUTHERN

Financial

S.

dend of two

the

DIVIDEND NOTICES

Tire

No.

Ordinary Shares of the Company
February 27, 1948.

UTILITIES COMPANY

large/ has been fortunate in that
has

are

funds in

one.

The petroleum industry, by and
it

and

Co.,

new

?

less than six different houses

way

up.

Co.

Storage
seek

to

ANGELES, CALIF,—Lloyd

F.

Dividend
The Board of

The

or

derwriters

in-

to

on

Limited

Southern In¬

Electric

LOS

of business

first

after

units,

&

smaller amounts.

But here again

went

Gas

Michigan' Gas

.7

be

other

diana

O'okiep Copper Company

yet available.

are

Two

under-*

takings, judging from the
things

tails

Philadelphia Elec¬

issue,

Looks

industry, however, very
definitely will not be relying on

a

no

»

.

,

out

$15,000,000

Co.'s $25,000,000

in

since

Co.'s

four bids.

course

tgage

One

•

*

Of

of

such programs are do¬

brought

the

was

than

tric

will

little more than Overcoming
lag occasioned > by five years

the

less

appear

likely

very

with

most cases

offering

marked

now

Power

cards, the rank and

industry

needed

ing

not

bonds

total of nine bids this week, and

Illinois

rates, some¬

money

the

ahead-

go

is

there

tightening of
to

in

among

mortgage

(Special

The Board

con¬

sidered

first

new

Consumers

:

Iowa Power & Light Co/s of¬

fering of $6,000,009 of

43

i

ary,

the

16th

day of Janu¬

1948.

BY ORDER OF THE

E.

G.

BOARD,

LANGFORD,

Secretary./

Montreal, February 9, 1948.
Rusham House,

Egham, Sorrey.

44

FINANCIAL

&

THE COMMERCIAL

(840)

CHRONICLE

Thursday, February 19; "1948
not

is

BUSINESS BUZZ

most

be

to

yet

expected.
The
in the

substantial provision

reported

on.

ward

•

•

longer than two

yet

a

This

years.

one or

mature decision of the

Instead it is the

leaders.

And You

from the Nation's Capital

x

allow

be carried for¬

limited overall revision scheme is
not

BeVml-the-Scene Interpretations

would

program

business losses to

idea of

two men. Most believe that

overall revision is of little

an

use

unless it tackles some substantive

Likewise most people be¬

taxes.

lieve that any

Despite all the fuss and fury over the behavior of the commodity
markets, one need not look for any broad change in the direction
of Washington policies—Congressional or Administration—for quite
some time.
That change, if any, is not likely to come at all unless

time, and unless they com¬
municate their effects to the vol¬
long

and

construction

home

of

ume

production. Even if this
threatens, it will be quite a long
time before any sharp reversal in
the business picture, even if it
industrial

should

if

>";!

'

The official Washington

the

beginning
The

this:

was

commodity

in

drop

line at

week

the

of

cards"

not serious. Even if
it
lasts
it represents
only, the
Wash-out
of
excessive
values.

prices

was

flation than of deflation.

officials

words,

the

some

of

cried

over

will

blown

be

by

over

Senator

of

or

the

business calamity.
the

This is
'

appraisal, it may

reported,

be

has

which

to

markets,

clining

keeps

'

been

the President.
It is
with this diagnosis in mind that
the President, despite the de¬
given

GOP, in

a

•

renew¬

be

change of heart not

a

tion;

levels,
time.

but drag there for some
Then it will be time to be¬

t

Administration

the

might turn and twist and shuffle
off in another direction.
«

>£

There will be lots of talk

about

ity markets rally. Even the public
works planners will be pressing
for their programs of more court¬
houses

and

to

outhouses

more

depression. For some
time to come, however, none of
this talk will mean anything.
It
may never mean anything in 1948.
For

a

thing the President
fs committed to the forecast that
central

will

of

the

It is

remain.

theme

strategy.

election

his

The danger of defla¬

would have

incontrovertible,

to

become

loud,

that

the

spending
President

would

be

course

exactly 180 degrees.

forced

to

so

de¬

the

and

mand for government
so

his

change

Un¬

less the President becomes pan¬

icky, that just isn't in sight for
two

or

three months—and then

only

is

news

that

nearly

assuming

all

business
bad

into

spring.

threatened

is

almost

the

BACK ON THE JOB
.

i

/

not in

• -

a

people think that

a

sight.
they

Nevertheless,
if

that

the

caution
market

commodity

break is establishing a new bus¬
iness

the first breezes

climate,

of the

change

likely
here

reflect

to

out

on

loans.

will show

At

in

up

And the loans most

bank loans.

caution
real

are

moment

the

from
estate

great

a

deal of heavy thinking is being

officials to the prob¬

given by
lem
of

of the

started

ing

modities
torn
take

course

com¬

Officials

letting,
in

the

are

nature
interest

fighting inflation, and doing
about

it.

If

they

the

around

Country

I have decided to

STAY IN BUSINESS
—

★

lis
.

for

Senate

GI

'

*

and

1948

into

law

was

acts.

mittee

is

J

South Shore Oil &

Dev.3

H. & B. Amer. Mach.
Pitts. Steel

Foundry

fall.

If

Chairman

of

ripe

be

might

to

Senate

Foreign

Relations

actually

did

the

not,

Eisenhower, want

General

But

derstandable.

those

who

know/ Yandenberg

to

of

the

ury

press

will

get

House

Old

of

a

farm

new

the

syphon from

any

diameter

the Treas¬

Domestic &

.to the farmers.

beware

pro¬

a

It

a

premature

permanent farm
handicapped

riculture

a

a

about

group

tax

on

for

cut

drop;

will

forget

about

up

prices.

be

ESTABLISHED 1919
Members
40

N.

Y.

Security Dealers Ass'n

Exchange PI., N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1307

Trading Markets:
Ralston Steel Car

Oregon Portland Cement

fear

that

foreign

And
if

tan¬

the

its

pru¬

in

aid

a

so
*

Riverside Cement A &

Bj

Spokane Portland Cement.

on.
if

LERNER & CO.

'

Despite reports that the Con¬
gress will take up an overall tax

Committee, it has got

counter-balance

its

M. s. WlEN & Co.

panic to finance exports to hold

gential group in the Senate Ag¬
a

New issues

predic¬
will

GOP

will

dence

now

program.

by

of

obvious

the

majority

to

While the GOP leadership is se¬

verely

Foreign]

Securities

revenues

about the enactment

worry

of

is

the

That

afraid

Roosevelt.

probably

of

tions:

as

est dream of

.

There is bound to be lots of talk

brilliantly glittering
and potentially costly as the fond¬
is

-

Com-

fight

to

-

gram

pre-convention

Reorganization

or

frame-work

a

campaign.

Com¬

House

The

have to make

the

may

to frame a new per¬ about the new farm program. It
"long-range" farm pro¬ is given impetus by the fall in
prices of commodities. However,
gram. If this were to come about,
it would be something to worry barring
something super - duper
about. Any program for anybody bad, it will take a long time to
reconcile
opinions between the
during an election year is likely
to be costly.
A new farm pro¬ House and the Senate, and be¬
gram
this year would be even tween this, that, and the other
It still looks like
more
costly than would be ex¬ farm lobbies.
pected
normally
because
the an extension for one or two years
spark-pluggers for such legisla¬ of the present supports. There is
tion in 1948 are a group of Re¬ even a small chance that the level
publican New Dealers in the Sen¬ of these supports on the tempo¬
ate Agriculture Committee, head¬ rary
extension may be scaled
ed
by the left-leaning Senator down.
%
*
if
George Aiken of Vermont. Their
So, unless business gets worse,
general report recommending the
manent

hard-headed

something less

Indiana Gas & Chemical

out

be

Senator,

act this year

as

be

nomina¬

a

has to

the

though

the

going

a

from

nothing

to enlarge

/move

lot of talk that Con¬

a

elected

until

mittee

lit

imagine,

to

Even

propose,

*

Committee

Committee

of

would have to heave to and

of

1948 may

can¬

revision

as

which

the

HAnover 2-0050

bill

cost

limited

to

features

little in revenue,

Investment

10 Post Office

Securities

Square, Boston 9, Mass.
Teletype BS 69

Telephone Hubbard 1990

this

Teletype—NY 1-971
'

\

Firm Trading Markets

FOREIGN SECURITIES

Empire Steel Corp.
Susquehanna Mills

All Issues

Pfd. & Common

—

Herbert H. Blizzard & Co.
123 South Broad

revival

favored

I

the Boys

men

states.

the

are

season

don't, the home building boom

•

After visiting with

of

Following the commodity break

This think¬

before

even

slid.

between
its

gang

farm

as

apparent hardening

mortgage credit.

something

seri¬

is

course,

establish

ot

time

general decline in bank credit is

«

That good business is not

of

weeks,

a

Most

trend.

of
t

t?

ously

short

too

one

inflation

tion

Two

loans.

industrial

and

possible

a

for

Agriculture
is

the

extension

VI

*

there

commercial

in

Title

\

gress

contra-seasonal drop

House

.

econo¬

has been cocked up on the
member bank reports,
a

actually gets
Somebody

profess

suspenders!"

my

it

market

the

and

building

two

disclosing

keep

steps.

Many

eye

last

I

'S'—

out of the

Depart¬

Labor

secondary

a

course

loans to

and

ments. At the moment

loans

business.

an

where

10% boost in physical

Commerce

immediate

to the

as

bank

salmon sandwiches

your

volume forecast last fall by

FHA's

unanim¬

government

among

of

anti-deflation unless the commod¬

counteract

ity

reluctant

no

think he wants it—if he doesn't

of

&

#

There is not complete
mists

if

you'd keep

than the

Reserve

Federal

rule that

the nomination, it would be un«

wish

that's

secondary reserve plan.
>{s

worm

from

the

"I

substitute for the

dead

now

Board

gin to speculate on the possibility
that

who

high-cost-of-living

the

blessing

It is supposed to

ready to gather in the delegates

like

In particular the leaders

reserves,

avowed

Committee,

until several days ago were
disposed to clear the way for
an increase in banks' cash legal

merely if grains hit their support

as

giving

is

the

up

Watch for the President to be¬

a

didate

grain

in

fall

the

the

by

issue.

1940,

the candidate.

parts of the Truman program as
insurance against being burned
out

the demand for enactment
of his anti-inflation program.

Yet

just

wants to work quietly and even

pre-convention panic,

a

Senator,

Michigan

without

might have hooked on to some

•

ing

gin to have

to

Prior

•

between Senator

the personal
cold shoulder to everybody who
in

prices
there
was
an
outside
chance, should the cost of foods
have continued rising, that the

,

as

the tug of war

That was pret¬

inflation program.

they fear a repetition
1929-30 or any other

than

1920

senior Michigan
just about the

the

rates

Taft and Governor Dewey.

markets will resume the rise and ty well slated for the ash can any¬
may
even
press
their former way. The market slump practi¬
peaks.
They fear this prospect cally guarantees its demise.
more

;over

Senator

top dark horse to get the nom¬
ination in the event of a tie in

Prpbably the most definite bear¬

the grain

great deal of dis¬
the "strange
Vandenberg."

a

here

of

Generally

ing which the commodity market
break has had on anything has
been
on
the
President's
anti-

after
have

is

to

GOP

*

#

of in¬

fear that
speculators

their losses,

There

public psychology of deflation.
#

not

cussion
case

observe-

In other

is still more danger

There

all

They

say.

without pass¬

as an encourager

only to vote
but to work for that party.

parenthetically that there is al¬
ways
the
danger
that public
psychology will make a situation
which underlying factors would
not themselves permit.
Only one
or
two fear that the /'house of

scene.
if

all

most

sufficiently established to work a
revolution
in
the
Washington

business

underly¬
what al¬

ing power. There is no
ing weakness. That is

relief

tax

ing it in 1948,

There is the large purchas¬

age.

become

will

about,

come

business

private belief of the
top government economic think¬
ers.
They all point to strong sus¬
taining factors. There is the meat
shortage,
the housing
shortage,
the fuel shortage, the gas short¬
unanimous

stay down for quite a

and

more

impossible of achievement this
year. Still a possibility: That the
GOP will wrap up a package of

considerably^

drop

levels

price

business tax relief

is

St, Philadelphia 9, Pa.

Clear thru—-Montgomery,

Scott & Co.
New York & Philadelphia




LEWIS

&ST0EHR}

r.ARI MAMS 4 r.O. inc.
FOREIGN SECURITIES

Incorporated

<*PFPT A T

Established 1026

80 Broad St.

New York 4

Telephone: DIgby 4-0985-6-7-8

50 Broad Street

Hill, Thompson & Co., Inc.
Markets and Situations

New York 4, N. Y.

.AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

for Dealers

120 Broadway, New York 5
Tel. REctor 2-2020

Tele. NY 1 -2660

v

Volume 167

Number 4674

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Bond Traders Club oi

Star

C.

Koerner, Mitchell, Hutchins & Co., Chicago, President elect of the Bond
Chicago; Lawrence N. Marr, E. H. Rollins & Co.,
Chicago, retiring

Traders Club of

President

Chicago

Paul I.

Moreland, Moreland & Co., Detroit; Lawrence N. Marr, E. H. Rollins & Co.,
Chicago;' R. Victor Mosely, Stroud & Co., Philadelphia, President of the National
Security Traders Association
~

D. F.

Comstock, Comstock & Co., Chicago;
Co., Chicago

Chas. G. Scheuer, Scheuer &

Co.,

Chicago

Moelman, Spencer Trask & Co., Chicago; John Wasserman, Asiel & Co., New
York City; Toge V. Johnson, First Boston
Corp., Chicago

Harry C. Vonderhaar, Westheimer & Co., Cincinnati; Richard Thayer, Fred Latscha
& Co., Cincinnati; J. E.
Bennett, J. E. Bennett & Co., Inc., Cincinnati; Edw. E. Par¬
sons, Wm. J. Mericka & Co., Cleveland; Franklin O. Loveland, Field Richards, Cin¬

cinnati; John W. Bunn, Stifel, Nicolaus & Co., St. Louis

Alfred A. Harmet, A. A. Harmet & Co.,
&

Chicago; Elmer J. Giesen, David A. Noyes
Co., Chicago; Walter W. Prosser, J. P. O'Rourke & Co., Chicago; John D. Stillwell, Kidder, Peabody & Co., Chicago




-

Fred R. Tuerk, Cruttenden & Co., Chicago; H. Terry Snowday, E. H. Rollins & Sons,
Detroit; William B. Healy, Comstock & Co., Chicago; A. C. Sacco, Detmer &
1

E. J.

Pictorial Insert I

Don

W.

Detroit;

Miller, McDonald-Moore & Co.,
Rice, Irving J. Rice &

Irving'J.
•

Co., St. Paul

Gus M. Benson, Hulburd, Warren & Chandler,
Chicago; Larry A. Higgins, Hulburd,
Warren & Chandler, Chicago; E. L. Kent, Kneeland &
Co., Chicago

Paul Yarrow,

Clement, Curtis & Co., Chicago, Vice-President of the N. S. T. A.;
Collins, Julien Collins & Co., Chicago, President of the I. B. A.; Lawrence
Marr, E. H. Rollins & Sons, Inc., Chicago, President of Bond Traders Club of
Chicago; John L. Canavan, Rauscher, Pierce & Co., Dallas

Julien H.
N.

James F.

Jacques, First Southwest Co., Dallas; W. «T. Kitchen, Kitchen & Murphy,
Chicago

THE

Pictorial Insert II

Hosts

COMMERCIAL

as

&

FINANCIAL

Thursday, February 19, 1948

CHRONICLE

NSTA Tri-City Parties

Hicks &

O. D. Gr.ffin, Lord, Abbett & Co., New York City; Graham Walker, National
lion Bureau; New York City; James L. Canavan, Rauscher, Pierce & Co.,

QuotaDallas

Harry L. Nelson, Blyth & Co., Inc., Chicago; Wm. H. Marshall, The Marshall Co.,
Milwaukee; Joseph T. Fuller, Wm. A. Fuller & Co., Chicago
■

Howard L. Davidson, Zippin & Co., Inc., Chicago; Glenn Pierce, Western
Chicago; Geo. D. Parise, Fred W. Fairman & Co., Chicago

Union,

John D.

Stillwell, Kidder, Peabody & Co., Chicago; James W. Cunningham,
Price, Chicago; Martin Magee; H. M. Byllesby & Co., Chicago."

Leonard
cago;

Friedman, Boettcher &

Co^ Chi-

Herman Mell, Merrill Lynch, Pierce,
Fenner & Beane, Chicago

.

james H. Murphy, Kitchen & Murphy, Chicago; Wm. T. Schmidt, Laird, Bissell
Meeds, New York City; J.'Berges Reimer, Berwyn T. Moore & Co., Louisville

Hugh J. O'Connor, Betts, Borland & Co., Chicago; Edward J. Kelly, Carl M. Loeb,
& Co., New York; Jules Fellegi,
Farwell, Chapman & Co., Chicago;
R. Donald Jacobson, Floyd D. Cerf & Co., Chicago

Wm.

P.

Rhoades

Fred H. Gray, J.

Walter Thompson Co., Chicago; Richard A. Gottron, Gottron, Rus¬

Co., Cleveland; C. J. Odenweller, Securities & Exchange Commission, Cleve¬
land; Ralph Jones, E. H. Rollins & Sons, Chicago; Harold Gibbs, J. Walter Thompson
Co., Chicago (standing)

sell &




Robert

&

Ralph S. Longstaff, Rogers & Tracy, Ch,cago; Evar L. Linder, Panne, Webber,
Jackson & Curtis, Chicago

Springer, Carl Marks & Co., Chicago;
of Chicago; John W. Clarke, John

F.

Shields,

Bear,

Stearns

&

John H. Grier, First National
W. Clarke, Inc., Chicago

Co., Chicago;

Patrick J. Cummings, Bear,

Co., Chicago; Lyle F. Eikelbarner, Country Life Insurance Co.,
STANDING:
Carr Payne, Cumberland Securities Corp., Nashville; O. H.
Stearns

First

&

National

Bank

Chicago; Geo. Wendt, First National Bank
J. Knight, Blyth & Co., Inc., Chicago

of

E.

Bank

Chicago

Strong,
of Chicago;

Volume 167

Number 4674

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Pictorial Insert III

Open in Chicago, February 4th

Morton A.
Cayne, Cunningham & Co.,
Cleveland; Howard C. Morton, McMaster

Hutchinson & Co., Chicago

Wm. Noonan, Continental National Bank of Chicago; J. W. Day, C. J. Devine & Co.,
Chicago; Herbert Meyer> Continental National Bank, Chicago; W. C. Jones, C. J.
Devine & Co., Chicago; Lee H. Ray, Continental National Bank, Chicago; Chet. Mayer,
C. J. Devine &

Herman Tornga, DeYoung-Tornga & Co., Grand Rapids; Roy F. Delaney, Smith,
Hague & Co., Detroit; Neil DeYoung, DeYoung-Tornga & Co., Grand Rapids; Glenn
Pierce, Western Union, Chicago

Thomas E. King, Thomas E. King & Co., Chicago;
&

Oliver B. Scott, Maxwell. Marshall

Co., Los Angeles; J. F. Stephens, Herrick, Waddell & Co., Inc., Kansas City, Mo.;
T. R. Montgomery, Glore, Forgan & Co., Chicago

Robert

A.

Podesta,

Julien

Collins

&

Co.,

Chicago;
D.

Stephen A. Bachar, Hirsch & Co., Chicago; Morey
Sachnoff, Straus & Blosser, Chicago
,




Herbert

H

Blizzard

'&
~

Herbert H.

Blizzard

Co., Philadelphia

s

;

Co., Chicago

Parker Calahan, Armour & Co., Chicago; Harry O. Valleau, Harry O. Valleau & Co.,
Chicago; B. L. Decheine, J. M. Dain & Co., Minneapolis; Byron E. Karies, Merrill
Lynch, Pierce, Fenner & Beane, Minneapolis

•'

Geo. W. Schultz, Chesley & Co., Chicago; Arthur R. Sawers, Chesley & Co., Chicago;
John C. Rogers, Hickey & Co., Chicago; Arthur E. Farrell, H. M. Byllesby & Co.,
'
Chicago; Timothy A. Collins, Daniel F. Rice & Co., Chicago (standing)
.

Robert L. Erb, Green & Erb, Cleveland; Howard J. Elbe,
Wm. J. Mericka & Co., Cleveland; Don W. Miller,
McDonald-Moore & Co., Detroit

Herbert Petty, Equitable Securities Corp., Nashville;
Lloyd E. Lubetkin, Seligman, Lubetkin & Co., New York;
Milton J. Isaacs, Straus & Blosser, Chicago

THE

Pictorial Insert IV

COMMERCIAL

&

FINANCIAL CHRONICLE

Thursday, February 19, 1948

More Than Six Hundred Guests

Geo.
cago;

Smith. First Securities Co., ChiJohn E. Yates, Holmes, Yates & Co.,
Harvey, 111.

A.

Wm. A. Nelson, Bear, Stearns & Co., Chicago; Patrick J. Cummings, Bear. Stearns
& Co., Chicago; J. Berges Reimer, Berwyn T. Moore & Co., Louisville; Ralph Randall,
Mason, Moran &.Co., Chicago; Geo. Petrie, Brown Bros. & Harriman, Chicago

Thompson M. Wakeley,

A. C. Allyn and
Company, Inc., Chicago; Herbert J. Burke,
Rogers & Tracy, Inc., Chicago

James F.

Gallagher, Thomas E. King & Co., Chicago; Chas. J. Hofer, Ernst & Co.,
Chicago; Geo. Petrie, Brown Bros. & Harriman, Chicago; Harvey R. Koontz, Brown
Bros. Harriman & Co., Chicago; Chas. G. Scheuer, Scheuer & Co., Chicago -

James W.

Frank Herman,

First National Bank of Chicago; Elmer W. Hammell, Caswell & Co.,
Chicago; Ray W. Young, Remer, Mitchell & Reitzel, Chicago; Don H. Anderson, First
National Bank of St. Paul; Hugh J. O'Connor, Betts, Borland & Co., Chicago

B. Scott, Maxwell, Marshall &
Co., Los Angeles; G. Edward Slezak, Loewi &
Co., Milwaukee; L. B. McElhiney, Loewi & Co., Milwaukee; Evar L. Linder, Paine,
Webber, Jackson & Curtis, Chicago; Elmer W. Erzberger, Smith, Burris & Co., Chicago

Charles Carey, Harris Trust & Savings Bank, Chicago;

John A.

Oliver

Harry G. Williams, Quail &
Co., Davenport, Iowa; J. F. Marquardt, Wm. Fuller & Co., Chicago

Walter Cruttenden, Jr., Cruttenden &
Co., Chicago; Paul
Goldschmidt, Pacific Co. of California, Los Angeles;
Walter W. Cruttenden, Cruttenden & Co.,
Chicago




Cunningham, Hicks & Price, Chicago; Carmen G. King, Saunders, King &
Co., Toronto; Clifford H. Anderson, Hicks & Price, Chicago

Kelly, Smith, Barney & Co., Chicago; Stanley Schwiech, J. P. O'Rourke &
Co., Chicago; Leo E. Brown, Asiel & Co., New York City

Edward H. Welch, Sincere & Co., Chicago; Henry P.
Pulver, McMaster, Hutchinson & Co., Chicago; Audran
J. Cavanaugh, Wm. A. Fuller & Co., Chicago; James H.
Murpny, Kitchen & Murphy, Chicago; Frank G. Burch,

Kneeland

&

Co., Chicago

Arthur E.

Engdahl, Goldman, Sachs & Co., Boston; James
Duffy, Paine, Webber, Jackson & Curtis, Boston; Jay L.
Quigley, Quigley & Co., Inc., Cleveland

Volume

167

Number 4674

THE

COMMERCIAL

&

In Record

Audran J.

&

Cavanaugh, Wm. A. Fuller & Co., Chicago; Leo J. Doyle, Doyle, O'Connor
Co., Chicago; James H. Murphy, Kitchen & Murphy, Chicago; Ed. L. Kent, Kneeland & Co.,

Chicago; E. A. Stephan, Fred W. Fairman & Co., Chicago

A. L. Simmons, Mason* Moran & Co.,

Chicago;

Michael

L.

Dary,

Chicago; J. F. Partridge, Welsh, Davis & Co.,
Francis I. duPont & Co., Chicago; Ed. E. Goodman,
Bache & Co., Chicago

FINANCIAL

CHRONICLE

Pictorial Insert V

Attendance

Fred J. Casey,

Doyle, O'Connor ■& Co., Chicago; James P. Blaney, J. P. Blaney &
Co., Chicago; Wm. H. Lane, Harris Trust & Savings Bank, Chicago; Earl C. Glosser,
Thomson & McKinnon, Chicago

John

J. Colnitis, A. A. Harmet & Co., Chicago; Larry Sandberg, Norris & Kenly,
Chicago; Alfred E. Anderson, Faroll & Co., Chicago; Geo. E. Cleaver, Lehman Bros.,

Chicago

1

Don

N.

Anderson, First National

Bank of St. Paul; Preston V. Shute, Jameson &
Co., Minneapolis; Ben J. McPolin, McDonald & Co., Cleveland

Louis J. Sterling, Hirsch &

Co., Chicago; F. S. Yantis, F. S. Yantis & Co., Chicago,
Association; Wm. A. Anderson, Hickey
A. K. Sparks, F. A. Carlton & Co., Chicago

of

the Illinois Securities Dealers

&

President

Co., Chicago;

Raymond Hofer, Ernst & Co., Chicago; Geo. R. Torrey, Kebbon, McCormick & Co.,
Chicago; Ray A. Maher, Kebbon, McCormick & Co., Chicago

Wm> T

Anderson, Goodbody & Co., Chicago; John W. Bunn, Stifel, Nicolaus & Co.,
T Matz? Harriman Ripley & Co., Chicago; Morris M. Moss, Morfeld,

st# Louis; chas
Moss

&

Hartnett, St. Louis; Ed. A. Leinss, Stifel, Nicolaus & Co., Chicago

Wm

Paul Meinert,

Goshia & Co., Toledo; John J. Colnitis, A. A. Harmet & Co., Chicago;
Linard




Cooper, Goshia & Co., Toledo

Henry P.

& Co., Chicago; Arthur E. Engdahl, Goldman,
Arthur D. Lee, Goldman, Sachs & Co., Chicago

Meyers, Goldman, Sachs

Sachs & Co., Boston;

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Bond Traders Club of Kansas

John

;

Latshaw, Harris, Upham & Co., Kansas City; R. V. Mosley, Stroud & Co., Inc.,
Philadelphia; Paul Yarrow, Clement, Curtis & Co., Chicago; Michael J. Heaney,
Jos. McManus & Co., New York City; Edw. H. Welch, Sincere & Co., Chicago;
H. Frank Burkholder, Equitable Securities Corp., Nashville

Clair S. Hall, Jr.,

Clair S. Hall & Co., Cincinnati; Paul I. Moreland, Moreland & Co.,
Strader, Taylor & Co., Lynchburg; Lawrence Marr, E. H.
Rollins & Sons, Inc., Chicago; Oliver Scott, Maxwell, Marshall & Co., Los Angeles;
Star Koerner, Mitchell, Hutchins & Co., Chicago

Detro/t;

Lud Strader,

J.

Dewey Land, Prugh, Combest

Thursday, February 19, 1948

City

&

Land, Kansas

City;

M.

D.

Campbell; J.

Belcher, Martin~Holloway-Pur cell, Kansas City; Earl Combest, Prugh,
Combest & Land, Kansas City

Bill Springer, Carl Marks & Co.,

Chicago; J. E. Kempton, $tern Bros. & Co., Kansas
City; Frank W. North, Barret, Fitch & Co., Kansas City; B, F. Piercy, Stern Bros. &
Co., Kansas City; Harry Coleman, H. O. Peet & Co., Kansas City; Francis Bertrand,
H. O. Peet & Co., Kansas City

\

?

W^y?:£>i%
#&wty

JZ oh£> T&mcm mmm:

c*r fflfftizn*
rito

Wffrre/eTSftHqaer

/force- /iuejHL




,

^

F.

Stephens, Herrick, Waddell & Co., Kansas City; Charley Hahn, Scherck, Richter Co.,
St. Louis; Don

■

/■'.

'

'

Volume

167

Number 4674

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Pictorial Insert VII

Entertain Visiting Traders

Kneeland

Jones, A. E. Weltner & Co., Kansas City; George Lounsbery,
Waddell & Co., Inc., Kansas City; Fred Johnson, Barcus, Kendrick &
Co.,
Corwin Liston, Hawley, Shepard & Co., Cleveland; Fred O.

Milton

Donald,

Herrick,
Chicago;
Cloyes, Cruttenden & Co.,
Chicago; W. E. Davis, W. E. Davis & Co., Topeka

W.

McGreevy, Harris, Upham & Co., Kansas City, Mo.; Frederick H. MacBurke & MacDonald, Kansas City, Mo.; Carl A. Meyer, The Columbian
Securities Corp., Topeka, Kansas

Thos. A. Marneli,

B. C. Christopher & Co., Kansas City; N. S. Land, Prugh, CornLand, Inc., Kansas City; Henry Oetjen, McGinnis, Bampton & Sellger, New
York; W. E. Maher, Merrill Lynch, Pierce, Fenner & Beane, Kansas City; C. W.
Lonsdale, Merrill, Lynch, Pierce, Fenner & Beane, Kansas City; Leonard A. White,
Wahler, White & Co., Kansas City; T. F. Wagner, Harris, Upham & Co., Kansas City;
John A. Charmley, B. C. Christopher &
Co., Kansas City
best &




Ed.

Mader, B. C. Christopher & Co., Kansas City; A. W. Stoenner Prescott, Wright,
Wright, Snider & Co., Kansas City;
S. Rickson; Howard Eble, Wm. J. Mericka & Co., Cleveland; Ben McPolin,
McDonald & Co., Cleveland; Edward F. Otto, Dallas Rupe & Co., Dallas

Snider Co., Kansas City; E. W. Pauly, Prescott,
H.

„

Ben Schifman, The Kansas City Star, Kansas
City, Mo.; Robert Strauss, Strauss
Bros., Inc., Chicago, 111.; Hay ward H. Hunter, George K. Baum & Co., Inc., Kansas
City, Mo.; William W. Hogben, Harris, Upham & Co., Kansas City, Mo.

Earle

Gate; A. B. Woody, Beecroft, Cole & Co., Topeka; Bill Nelson, Bear, Stearns &
Co., Chicago; Joe Ballisch, A. C. Allyn & Co., Inc.. Chicago; John Yontz; Wm. Pesell,
Estes, Snyder & Co., Topeka

C. W. Lonsdale,

Merrill Lynch, Pierce, Fenner & Beane, Kansas City, Mo.; John A.
B. C. Christopher & Co., Kansas City, Mo.; Thomas Bates Huffaker,
Merrill Lynch, Pierce, Fenner & Beane, Kansas City, Mo.; Edward Mader, B. C.
Christopher & Co., Kansas City, Mo.

Charmley,
Moment

Musicale

THE

Pictorial Insert VIII

COMMERCIAL

With Lavish

FINANCIAL

Thursday, February 19. 1948

CHRONICLE

Party February 5th

Hogben, Harris, Upham & Co., Kansas

F. H. McDonald, Burke & McDonald, Kansas City; Norman Conway, Shaw, McDermott & Co., Des Moines; J. F. Fogarty, Soden-Zahner & Co., Kansas City; Ted Honig,

City; Wm. J. Dyer, E. W. Price & Co., Kansas City; Graham Walker, National
Quotation Bureau, New York; Bob Strauss, Strauss Bros., Chicago; R. K. Sparks,
Harris, Upham & Co., Kansas City

Dempsey-Tegeler & Co., St. Louis; John C. Hecht, Dempsey-Tegeler & Co., Los
Angeles; F, P. Barnes, H. O. Peet & Co., Kansas City; J. P. Sanden; A1 Siebert,
Prescott, Wright, Snider Co., Kansas City, Mo.

Earl W;

L. B. Carroll, Prescott, Wright, Snider & Co., Kansas City; Emma Hall, Commerce
Trust Co., Kansas City; Herb H. Blizzard, Herbert H. Blizzard & Co., Philadelphia;
A. R. Silberberg, Merrill Lynch, Pierce, Fenner & Beane, Kansas City; Henry C.
Welsh, Jr., Lilley & Co., Philadelphia; Walter Cole, Beecroft, Cole & Co., Topeka

Pete

Hunter, Geo. K.

Baum & Co., Kansas City;

Scribner, Pittsburgh; Jeanne Leitt; Wm. W.
„

&

Price, E. W. Price & Co., Kansas City; J. N. Russell, Gottron, Russell & Co.,

Cleveland; R. E. Fritz,
Weld

Chuck Fisher, Singer, Deane &

&

Co., Chicago;

R. E. Fritz Investment Co., Topeka; George King, White,
Fred Casey, Doyle, O'Connor & Co., Chicago; John Bunn,-

Stifel, Nicolaus & Co., St. Louis

Frank

H.

Jennings, Bonds, Incorporated, Kansas City, Mo.; Sam Sachn'off, First
John V. LaBarge, Kugel, Stone & Co., New York City;
McGreevy, Harris, Upham & Co., Kansas City; John F. McLaughlin,
McLaughlin, Reuss & Co., New York City; Edw. L. Meyer, Harris, Upham & Co.,

National

Bank, Chicago;

Milton

•Kansas

City

Fred

'

Frank J. Snyder, Beecroft, Cole & Co.,

Topeka; Carl A. Meyer,
Corp., Topeka; Ralph Harvey, Wahler, White & Co., Kansas
Beecroft, Cole & Co., Topeka; Don A. Seltsam, Seltsam & Co.,
Jr., Lucas, Eisen & Waeckerle, Inc., Kansas




Samuel Sachnoff, First National Bank, Chicago, 111.; Edward L. Meyer, Harris,
Upham & Co., Kansas City, Mo.; John V. La Barge, Kugel, Stone & Co., New York,
N. Y.; Jack Hecht, Dempsey-Tegeler & Co., Los Angeles, Calif.; Fred Cloyes, Cruttenden & Co., Chicago, 111.; William P. Springer, Carl Marks & Co., Inc., Chicago, 111.;
Lawrence N. Marr, E. H. Rollins & Sons, Inc., Chicago, 111.; Standing up in rear:

Columbian Securities
City; C. F. Adelman,
Topeka; Mark Lucas,
City

J.

Casey, Doyle, O'Connor &

Co., Inc., Chicago,

111.

K. W. Gosman, Wahler, White & Co., Kansas City; Ben Schifman, Kansas City Star;
J. D. Bjorkman, Commercial National Bank, Kansas City; Paul E. Cunningham,
Bache & Co., Kansas City; Fred Armentrout, McDonald & Co., Kansas City; C. M.
McDonald, McDonald & Co., Kansas City

V

Volume 167

Number 4674

THE

COMMERCIAL' &

FINANCIAL

CHRONICLE

Pictorial Insert IX

Security Traders Club of St. Louis

Mel

Bert

St.

St.

Taylor, Semple, Jacobs & Co., St. Louis; Henry Richter, Scherck, Richter Co.,
Louis; R. Victor Mosley, Stroud & Co., Inc., Philadelphia; Herb Blizzard, Herbert
H. Blizzard & Co., Philadelphia

Horning, Stifel, Nicolaus & Co., St. Louis; Chas. Hahn, Scherck, Richter Co.,
Louis; Oliver Scott, Maxwell, Marshall & Co., Los Angeles; Chris Newpart,
Merrill Lynch, Pierce, Fenner & Beane, Chicago

flpl

!




i'

Security Traders Club of St. Louis Presidents, past and present:

(Left to right) standing: Herman Brocksmith,

Stijel, Nicolaus & Co.; Henry J. Richter, Scherck, Richter Co.; William Darmstatter, Stifel, Nicolaus & Co.; seated:
J. William Brady, J. W.

Brady & Co.; Charles Hahn, Scherck, Richter Co., the newly elected President;
R. Emmett Byrne,

Dempsey-Tegeler & Co.

COMMERCIAL

THE

Pictorial Insert X

Winds Up

&

Thursday, February 19, 1948

FINANCIAL CHRONICLE

Tri-City Event
*

,

In

the

picture

Right to left:

(right to leftn

Stijel, Nicoldus & Co., St. Louis; Michael J. Heaney, Jos. McManus &
York City; Edward H. Welch, Sincere & Co., Chicago; C. T. Ayers, Taussig,
& Co., St. Louis; John Latshaw, Harris, Upham & Co., Kansas City

John Bunn,
New

Co.,
Day

Moreland, Moreland & Co., Detroit; Leonard Vogel, Glaser, Vogel & Co., St.
Louis; Paul Yarrow, Clement, Curtis & Co., Chicago; Charles Hahn, Scherck, Richter
Co., St. Louis; R. Victor Mosley, Stroud & Co., Inc., Philadelphia
Paul

,

'

r

.

:

"

•

*

\V

' *

■
.

J
*

ir/<rA<

<
.

|
;

,

•

<

*

>

iiy&s

Joseph G. Petersen, Eckhardt-Petersen & Co., St. Louis; Lowell G. Newcomb, St.
Louis Union Trust Co., St. Louis; Pierre Papin, Wm. F. Dowdall & Co., St. Louis;
Henry C. Welsh, Jr., Lilley & Co., Philadelphia; R. A. Walsh,
St. Louis

In

the

Dempsey-Tegeler & Co.,
,

.■<

Dempsey-Tegeler & Co., St. Louis; Joe Bronemeier, Semple, Jacobs & Co.,
St. Louis; Walter C. Haeussler, Paul Brown & Co., St. Louis; H. L. Brocksmith,
Stifel, Nicolaus & Co., St. Louis; J. F. Stephens, Herrick, Waddell & Co., Inc., Kansas
City; M. D. Campbell, Commissioner of Securities for Missouri, Jefferson City, Mo.;
Logan McKee, Herrick, Waddell & Co., Inc., St. Louis; David S. Matthew,
Scherck, Richter Company, St. Louis

*

J&

H

'WMi IlllSItffli

H. Frank Burkholder, Equitable Securities Corp., Nashville; Norman E. Heitner,
Blewer, Heitner & Glynn, St. Louis; Star C. Koerner, Mitchell, Hutchins & Co.,
Chicago; Larry Marr, E. H. Rollins & Sons, Inc., Chicago; Willis Summers, Troster,
"
Currie & Summers, New York

Cleveland; Fred O. Cloyes, Cruttenden & Co.,

Chicago; Ben McPolin, McDonald & Co., Cleveland; Chas. F. F.sher, National Quota¬

Bureau, Inc., Chicago; Dick Walsh, Newhard, Cook & Co., St. Louis; Earle C.
Gott, Geyer & Co., Inc., Chicago; Corb Liston, Prescott & Co., Cleveland; James C.
Vacha, R. S. Dickson & Co., Chicago
tion

Cloyes, Cruttenden & Co., Chicago; Arthur Engdahl,

Corb Liston, Prescott

Fred

H. M. Byllesby

Goldman, Sachs & Co., Boston;




'

m

'

Howard J. Eble, Wm. J. Mericka & Co.,

picture:

R. G. Mills,

& Co., Cleveland; Arthur Farrell,
& Co., Chicago; Arch Montague, W. E.
Hutton & Co., Cincinnati, Ohio; Howard Eble, Wm. J.
Mericka & Co., Cleveland

Pi

4

John McLaughlin, McLaughlin, Reuss & Co., New York; Howard Morton,
McMaster Hutchinson &

Co., Chicago

Herbert H. Blizzard, Herbert H. Blizzard & Co., Philadelphia; Clair S. Hall, Clair S. Hall & Co., Cincinnati;
Lud A. Strader, Strader, Taylor & Co., Lynchburg, Va.;
Jim Patke, G. H. Walker & Co., St. Louis

Volume

167

Number 4674

THE

COMMERCIAL

In Gala

Bob Mathews, G. H. Walker & Co., St.
Louis; Henry Richter, Scherck, Richter
Co., St. Louis; Ludwell Strader, Strader,
Taylor & Co., Lynchburg, Va.; Fred John¬
son,

&

FINANCIAL

Pictorial Insert XI

CHRONICLE

Style February 6th

Ted Honig, Dempsey-Tegeler & Co., St. Louis; Milt Isaacs, Straus & Blosser, Chicago;
Robert Strauss, Strauss Bros., Chicago; Larry Carroll, Prescott, Wright, Snider Co.,
Kansas

City; Earl Hagensieker, Reinholdt & Gardner, St. Louis; Les Knickmeyer,
Albert Theis & Son, St. Louis; Robt. M. Guion, Newhard, Cook & Co., St. Louis

Bert Horning, Stifel, Nicolaus & Co., St.
Louis; Paul Yarrow, Clement, Curtis &
Co., Chicago

Barcus, Kindred & Co., Chicago

In

Group watching floor show

the

picture:

Ray Denyven, Fusz-Schmelzle & Co., St. Louis; Hi Neuwoehner, White & Co., St.
Louis; Walter Hauessler, Paul Brown & Co., St. Louis; Rudy Graf, G. H. Walker &
Co., St. Louis; Elmer Barkau, Taussig, Day & Co., St. Louis

In

the

Dick

picture:

Sisler

and Joe Garagiola of the St. Louis Cardinals; Joe Fisher, Peltason,
Co., St. Louis; Clarence Maender, G. H. Walker & Co., St. Louis; Joe
Ballisch, A. C. Allyn & Co., Chicago; Bill Brady, J. W. Brady & Co., St. Louis; Bill
Nelson, Bear, Stearns & Co., Chicago; Ed Brockmeyer, Goldman, Sachs & Co.,

Tenenbaum

Charles Hahn, Scherck,

Richter Co., President of the St. Louis Club, introducing
out-of-town guests

1

St. Louis

Right to left:

Arthur Farrell, H.

R

Byllesby & Co., Chicago; Oliver
& Co., Los Angeles; Arthur
Engdahl, Goldman, Sachs & Co., Boston; Willis M. Sum¬
mers, Troster, Currie & Summers, New York City
M.

Scott, Maxwell, Marshall




Victor

Mosley,

Stroud

&

Co., Philadelphia; Henry

McGinnis Bampton & Sellger, New York; Paul
Moreland, Moreland & Co., Detroit; H. Frank Burkholder,
Equitable Securities Co., Nashville
Oetjen

Gordon Scherck, Scherck, Richter Co., St. Louis; Milt
Isaacs, Straus & Blosser, Chicago; John Hecht, DempseyTegeler & Co., Los Angeles; Clair Hall, Clair S. Hall
& Co., Cincinnati

COMMERCIAL

THE

Pictorial Insert XII

between the present rate

ference

Refunding Project to Relieve
Government Bond Market Support

A

(Continued from first page)
the

government

market at

bond

artificial level.

an

policy is

This

by far the greatest single threat
of

further

a

our

expansion of
credit supply at

gross

and

money

is widesp.ead

time when there

a

agreement, even by those who ad¬
vocate and pursue the policy, that
bank

reserves

should not be

ex¬

panded, and when the course of in¬
flation may even demand that the
reserves
be contracted.
Each $1
bonds

of

million

by

purchased

support, and the consequent fan¬
tastic expansion of the credit base.
Support at the present time has
two evident purposes—to prevent
serious capital losses, for reasons
of economic stability or of moral
obligation, and to hold down the
cost of debt service.
The second

is

purpose

false

of

example

extreme

an

economy.

(2) It would avoid large capital
losses.
Though some argue that
institutions need not take these

their bonds to

losses if they hold

they would, neverthe¬
less, have to carry them on their

System increases bank re¬
serves
by that amount and be¬
comes, therefore, the base for an

maturity,

approximate $6 million potential
expansion in credit. We are thus

reduce

the

with

confronted

the

of

dilemma

support,
or a possibly severe decline in the
values of government bonds that
would produce widespread capital
market

inflationary

an

their

ment bond market without caus¬

ing panic or losses in asset values,
we could at once remove a great

inflationary threat and restore to
the Federal Reserve System its
of credit

orthodox function

con¬

Others have pointed
out that public confidence in the
solvency
of
these
institutions
might be impaired or destroyed,

(3) It would

increase the cost
The total annual

debt service cost is now about $5

Vs to 1/7 of the budget.
The present annual interest costs
on a total of $118.5 billion of mar¬
ketable Treasury bonds are slight¬
billion,

or

ly under $2% billion. If the prob¬
is only to keep all issues at

A

simple, logical, and realistic
solution of the dilemma would
seem

to be

ernment

refunding of the gov¬

a

at

debt

interest

higher

rates.

rising.
Government itself
rates

Interest

Federal

The
has

are

partly met the reality by permit¬
ting the rate on its one-year paper
to rise from the wartime-induced

of 1% to'1%%, and in

rate of %

the past year

has let the rate on

eligible, taxable bonds rise on in¬
from

maturities

termediate

1%% to 1%%, and on long ma¬
over 2%%.

turities from 2V&% to
the

"Barron's"

time,

same

rate

only eleven of the longer issues
need refunding.
The increase in
cost

interest

nually. If the problem is to main¬
present prices on all issues,
means
premiums up to

tain

interest

in

crease

In

lows.

risen from 2l/z% to

3%; in France,
from 3% to 4% %; in Italy from
31/4% to 4%%; in Sweden and in
Holland, the ^governments have
stubbornly maintained a 3% rate
in spite of vigorous opposition by
business leaders, economists, and
investors; in Switzerland, the rate
has risen from 3% to 3%%; and
in Canada, from 21/2% to slightly
over

2%%,

although

support

at

The present 2%% rate on long-|

,

term government bonds is

tedly artificially low.

this

for

admit¬

We cannot

all indebtedness of V2

on

of

1%, the increase in debt serv¬
ice costs would be about $1^4 bil¬
This

compares

since

increase

of

1939

$936 million annually in the

ex¬

panded general government ex¬
penditures by a thousand depart¬

Objections to Increased Interest
Costs

his

In

before

statement

the

Joint Congressional Committee on
the Economic Report, November

25, 1947, Mr. Eccles said, regard¬
ing the additional cost of debt
service if rates were permitted to
rise: "If that

it might

quence,

the only conse¬

were

be argued that

would be

justified because infla¬

tionary borrowings would

cease.

However, this is only one aspect
matter.

leaving Government securities to

mestic

suming

Apart from infla¬

and

an

do¬

international,

as¬

orderly world of multi¬

lateral trade and free internation¬
financial

al

which

we

transactions,

are

toward

striving, will force

If

the

monetary

our

authorities

cannot, without monstrously

mon¬

etizing the entire goverment debt,

indefinitely

maintain

the

2 %%

In

the free play of
the

be

the

of

process

variable forces in

the Treasury would

market,

confronted

with

continuing

a

puzzle in all of its constantly re¬
current

refunding

operations.

It

could not tell from day to day at

what price

it upward.

ties.

It would be entirely at the

mercy

of uncontrolled factors in

the

market, if, indeed, conditions

did

not become

so

confused

and

level, this is the best time to make
the

ly

any

refunding operations."

Admirable
Effects
♦

An

the

of Refunding

offer to present holders

to

of

privilege of exchange for iden¬

tical bonds
rates

up

bearing higher interest
to

3%

on

long-term

bonds, if that is the present real
level,

would

have

the

(1) Most importantly, it would
remove

some,

ties

and

as

the

necessity of market




or

be deter¬
continuous, rigid

cannot

price

without

not
government supporting its
own market, can foresee at what
price it will sell its securities one
year hence, let alone five or ten
No one,

ity

insulated

vacuum

in

fairs

lives

the

the

all

from

financial af¬

economic and

other

of

moreover,

Government secur¬
do not exist in a

hence.
markets

years

Against increases in debt serv¬
costs, at present possibly as
low as $250 million and as high
as $1V4
billion annually, must be
weighed the larger increases in
ice

to avoid the uncertain¬
vicissitudes

of

the

fu¬

ture, it is questionable whether it
is

possible

and

to

economic

piecemeal.

regulate

Wholly

whether

we

economies

even

sire

have

whether
in

this

financial

affairs

we

of

men

apart

the

in

nations and

of

costs

to

with

each

in

cost

$118.5 billion
bonds, there are

of

marketable

$52

of
non-marketable
Of these, the larg¬
amount, $31 billion, is in the
billion

savings bonds.
est

If the real market

Series E bonds.

is 3%

the

toto,

have

the

country to do

to

and
de¬

so,

it

of

twenty-year bonds, the

on

on these ten-year savings
bonds would still be more attrac¬

marketable

on

ones

maturity. Although

of comparable

the overall annual return on these

the

2.9%,

is

bonds

re¬

demption values are such that af¬
ter the first year their retention
is

annual

3.15%

a

return

maturity; after the fifth year
(when
their
maturity is five
years) it is 4%. This means that,
after five years, the redemption
value of the E bond is such that
the holder who cashes it would
to

small

turity.

ing in the amount of $3 billion*
have a lower retention value. Af¬
first

the

to

return

seven

the rate of
is 2%% and

because of

ther below it, not only

the natural trend of money rates,

years) it is 3Va%. Series G

billion,

of

pay

2 V2 %

below

values

redemption

redemption values are such

These

that the bonds offer future
to maturity
Series F

be

bonds; that is, after five
there would

advantage in cashing them

no

unless
bond

similar to those of the

for example,

years,

yields

one

could buy a seven-year

yielding

over

five years the

After

3*4%.

future yields

on

all

three series increase still further.
It is most
market rate
is

so

able

to

unlikely that the real
government bonds

on

high that it would be profit¬
to

cash

these

reinvest the

able

issues

of

savings bonds

comparable

ma¬

G bonds

came

close to that possi¬

upon

the

cash,

not

Then

dollars.

its

that

in

shall have

we

stage of inflation—the

final

in
of debt service must be

The relatively small increase

the cost

weighed against the danger of
courting that final stage of infla¬
tion and against the immeasur¬
able

of

costs

such

in

disaster

a

cost of debt serv¬

increase in the

ice is too

price to pay to
avoid further gross monetary in¬
great

a

System the credit
control which the Federal Reserve
Reserve

eral

Act

here, of

concerned

with the question whether

course,

the System should sell bonds now
in the open market to contract

credit.

But we

if such action

observe that

may

becomes neces¬

ever

if any, on higherbonds would be less than

losses,

sary,

coupon

the

present low-coupon bonds.
Also, once the System is relieved
of the obligation to support the
on

market, the mere restoration of its

on

the dif¬

grade bond average.
It is

possible that

even

this

common

the

to contract credit may be
sufficient psychological deter¬
rent to
excessive credit expan¬

impermanence because
of material and of

their

ily

of rising costs

sequel of an inflationary climax,
is inevitable, rapid defla¬

which
tion.

On

the

other hand,

mere

existence of the

make its use unneces¬

of confidence felt in the

skill with which the monetary au¬

thorities will execute their control
of credit so

of Increased Interest

One important result would

(7)
be

return

to

to

investment

debt

necessary

the

price rise with little or no
of
compensation.
The
plight of our universities, for ex¬

ample, is serious.

preservation through the use
own
judgment.
It has
been estimated roughly that the
their

commercial
sets

alone

banks

be

would

shared

cordance with the scale of

Interest

on

distributed

to

in

ac¬

our

tax

the

cember

24, 1947, when they sud¬

denly lowered price pegs. Invest¬
ment managers cannot

who

are

an

as

capital formation,

which
strengthening to¬

greatly
day.
such

a

a process

needs
Over the years, therefore,
distribution of taxes is of

high, long-term
country's whole

benefit

to

the

in policy changes,
opportunity for exercis¬
ing their judgment when markets
are pegged.
Nor can they dump
neither

voice

the

nor

Market

would

assets

an

of

cause

a

them

employ

sudden

markets.

These

have been

falling for the past two
independently of the gov¬
of

the

government

judgment

re¬

may

bonds, depending upon the varied

requirements of different institu¬
tions, and upon market changes.
When long-term bonds are prom¬
ised support, there may be press¬

ing

invitation

to

banks

shift
But
not
into

to

from short to long maturities.
if such artificial stability is

banks

shift

may

maturities

short

and

the

leave

to investing institu¬
tions which require less liquidity.

longer ones

Precision Not Essential

It

may

mine

difficult

be

$118.5

billion

deter¬

bonds would

It is not our

termine
the

to

precisely the levels at which

the

purpose

exact

settle.

here to de¬

rates at which

refundings should

be

made.

The soundness of the program, if
it is sound, does not depend upon

mary object is to withdraw gov¬
ernment support and to release
the bonds to present market real¬
sell at about par,

one

in

quire, for example, and opportuni¬
ties may arise, for periodic shifts
of
holdings between
long and
short
maturities
of government

ities in such

is

war¬

money

bonds,

municipal

cline

the

to such
extent that they are compelled

fall in the corporate and state and

bond

by

of

their

because

swelled

are

creation

time

section

troublesome

the precision with which the new
rates
are
determined. The pri¬

economy.

Corporate and Municipal Bond

(5) It

be respon¬

sible for such losses, for they have

in¬

individuals,
important source of

well

as

as¬

De¬

on

public

those

vestors, public and private insti¬
tutions,

lost

$400 million by the action

of

of the Reserve authorities

assured,

The increase in the cost of debt

is

man¬

the responsibility for capi¬

agers

Investment

Payments

debt

tip too far in

not to

as

the direction of deflation.

to

.

structure.

stock

prices would sensitively reflect the

a

service

expanded

require

which

working capital and new financ¬
ing, and because of the sudden

investments,

Distribution

On

Present valu¬
discount heav¬

price level..

ations of earnings

such

power may

re¬

there would
greater confidence than there
is now in the stability of profits,
as
a result of
the prospect of a

their

The

on

interpretation,

power

Their de¬
downward

loss

figured

notes.

the same group of stocks
greater by as much as 5%. The
yield on "Barron's" 50stock
average
is about 2%%
greater than that on its 10-highpresent

a

part of this is funded, the extra
cost is to be

consisting

and

and

on

is

of

not

are

loss

debt,

certificates

billion

that

tal

intended.

We

If

unfunded

bills,

total of $47.7

bonds,

yield

flation and to restore to the Fed¬

of

of

a

stocks is actually
on
high-grade
at other times the

than

less

degree

this country.

pressures on

serious

a

way

that they will

in order to avoid

capital losses.

Thereafter, the Federal Reserve

System ought to use its huge pow¬
ers
through a policy of flexible
stabilization

permitting

orderly

losses in

price to

There is

At times the

groups.

grade common

labor,

general flight from money.

the latter.
The real
portfolio values, another
for the debt reform,
would be difficult to estimate, for
many of them would be only a

by raising the future redemption

prices.

two

dividend yield on a group of high-

stable

of public

danger

ernment bond market.

call

the

on

loss of
the artificial
stability of the government bond
market, but in the future worth of
the

be

confidence,

prevent

sudden

yield from bonds, there is no

fixed relation between the yields

of the debt accelerates there will

years

a

are

be

bility, they could be adjusted, to

Treasury for $18 billion in

stocks

comparison with

a

moval of the inflation threat.

policy of

funds in market¬

Even if the Series F and

on

market supnort is
self-aggravating. As monetization
The

means

cost, except in the event of death.

the

when

times

are

purchased

stocks would advance

of whom have lost real income in

maturity

a

there

port itself, which is inflationary.

annually, but have

(with

Stock Market

(6) It should have little, if any,
effect on common stocks. Though

but also because of the very sup¬

interest at the

maturity

bonds, outstanding in the amount

rate

we

(4) The proposal to refund the
now at higher
rates, where
to
withdraw
market
support, would increase the earn¬
ings of banks, and the income of
insurance companies, institutions,
and of individual bondholders, all

year,

after five years

cash

which

living

sary.

holding the bond to ma¬
Series F bonds, outstand¬

of $15

advance

and the real market will sink fur¬

sion.

of

con¬

expect if we continue ex¬
panding our money supply. This
expansion must result if we con¬
tinue to support a market which
is already above its
real level

bet¬
ter than 4% to do better than he

have to reinvest his money at

ter

of

must

men.

In addition to the

from

wisdom

millions

annual

We must decide whether a 20%

turity.

the desire may be,

manage

following

results.

price,

a

a

even

it could sell its securi¬

chaotic as to demoralize complete¬

adjustment.

Alternative Risks

would by

ments, bureaus and agencies.

several years.

requirements,

the

at

floated

be

increase

of

capital

cannot

country

this

securities in

prime

value

hope to maintain it for the next

tion,

by logical inference they
would mean, that the first of the
mean, as

discount

the extra cost to the Government

level is tentative.

latter

c^st

would be $592 million an¬
nually.
Finally, to take a most
unlikely extreme of an overall

annually.

risen

price of a new issue. The real
problem is whether the securities
can be floated at' all.
Mr. Eccles'
remarks should not be taken to

purpose

an

have

exact

before fixing the

tive than that

with

bonds

last hour

until the

wait

sometimes

ditions

been falling sharply, may fall fur¬
ther, though not necessarily.

might be lk of 1 % higher or more.

yield

lion

artificially induced
Great Britain, it has

professional investor knows. The
most astute judges of market con¬

eight
points,
then,
assuming
roughly an increase ot % of 1%
on all outstanding bonds, the in¬

to over 3%.

their

prevent the flotation of securities,
as
every investment banker and

which

bond yield has risen

government

purpose

about $250 million an¬

would be

high-grade

from

this

for

from 2%%

Throughout the world, rates on

a

continuing price

puzzle 1 in refunding operations,
the uncertainty of price does not

bonds,

longest

the

for

assuming

then,

better,

or

3%

are

As regards the

support.

of debt service.

other, related
net also regulated.

and the real rate, which

of 21/2%

sumers

conditions

mined

Debt Service

single arti¬

a

of

multitude

a

at¬

any

must fail so long

ficial condition

that

with resultant panics.-

par

Refunding Proposed

the

impair

and

lem

trol.

In

assets

their capital.

losses.
If a way can be found of with¬
drawing support from the govern¬

This would

books at the market.

to maintain

tempt
as

that

admitted

be

must

Thursday, February 19, 1948

FINANCIAL CHRONICLE

&

of
as

pay

paper

profits

and

not

a

stocks,

which

in

lieu

of

have

a

policy

of

rigid price-fixing. The new policy
should

assure

not only a continu¬

ously orderly market, but also, in
the present and in the

regards actual cost.

Preferred

changes,

cessful

future,

suc¬

refundings at going rates.