Full text of Commercial and Financial Chronicle : February 3, 1949, Vol. 169, No. 4774

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BUS. ADM,

LIBRARY

1948

ESTABLISHED 1839

Volume 169

New

Number 4774

Double Taxation,

Trttmait for

Investment
AndEnterprise

Planned

essential that

our

Implications oi National
Secuiity Programs
By RALPH J. WATKINS*"

Director of Off ice of Plans and Programs,

Professor of Economics, Graduate School of Business Administration,
New York

President, in impromptu address,
distinguishes it from controlled
economy and says it is absolutely

Dr. Haney pictures acuteness in

ture

Stresses America's interna¬

responsibilities and extols
operations of National Employ¬

lack of venture capital which he

impromptu talk before
the National Planning Association
an

in
•

one of the nation's great problems
"venture capital." This "Venture capital" is the
supply of funds ready to go into new ventures such as television or
into risking some expansion of plant capacity that may never pay.

Everybody

will involve expenditure of at least $22 billion in fiscal year
a higher total is in prospect for 1951. Concludes impact
of Security Program will exert pressure on steel output only, and
will not create serious manpower shortage.
gram

1950, and

record
o

in g

the

acuteness of

The
the

Preside nt's
address

fol¬

lows:
I

remember

some

let's

—

see, I
has

think it
been

about six years ago, I was present

meeting of this organization,
plans.

war

You

That

was

1943.

worried about what jvas

were

going

discussing post¬

were

happen

the

after hostilities ceased.

country

You

were

wondering how many people were
going to be put out of work, and
you were wondering how many
(Continued

36)

on page

will

Corporation
of

ferable

Common

Bought

Stock,

1949

Sold

•

Prospectus available

And What

not

Hand!

sarily

neces¬

reflect
viewsof

the
the

■

National

Security Re¬
sources Board,
with

which

have

had

high-grade
common
begging at 6-7%.

stocks

condition has

measure

never

begun to taper off.
can't get venture

tions

the sale of stocks,

been

Corpora¬
funds by

because of the

fear and hesitation among inveson page

honor

the

associated

part-time

basis

Ralph J, Watkins

the

over

and with

past year

still associated

which I

the

same

basis.

placed in the hopper. Apparently the sosecurity program would be amended to reach,
approached,
except
perhaps
in if not "from the cradle to the grave," then something not
deep depressions.
very far from it, and it would bring into its embrace, willyAs a result, the growth of in¬
nilly, the cowboy, the farmer, the peddler, the doctor, the
vestment in plant and equipment
professor, and all the others alike.
has
Such

25)

address

by Dr. Haney at
League Meeting, New
City, Jan. 27, 1949.

now

called social

What

are

the National Security

Programs?
It

appropriate

(Continued
*An

address

that

on page

make

28)

Mr. Watkins
Management
New York City, Jan.
by

before the American

The

thoughtful n^n with the good of his country at
Association,
heart can hardly do other than to hope that Congress will
20, 1949.
insist upon having a mind of its own concerning these mat¬
ters, and that its mind will prove much superior to that of
the Chief Executive. Details may well be left to those with
(Continued

on page

30)

State and

Municipal

Franklin Custodian

trans¬

Funds,

only as units until

October

;

they

consisting of 6% Inter¬
($50 principal amount) and

York

each

Note

one

market

pre-

arid! that

Newly elected President Truman has now really begun
to ■•tip his hand"—^and what a hand it promises to be! Take
c q'm m on
stocks tell the only two of the numerous measures which the President
has urged upon or will soon urge upon Congress, the Taftstory.
;:
For the first
Hartley .repeal bill and the suggested revision of "old age
time
in 7 our
and survivors" legislation, &s examples.
The labor bill is
history, we see
Lewis H. Haney
affair, a form' of legislation
banks paying technically a "orie-packageY
which the unions are supposed to have opposed in this
only 1 Vz to
2% and people with savings clam¬
instance, but, whatever may be said to "save face." we can
oring for decent interest, while
scarcely conceive of labor leaders really objecting to this

'::An

As We See It

is' the

Investors'

Gas Pipe Line

this

own

great

(Continued

Transcontinental

Units,

I shall express

capital,
T h e
low prices of

text of

beginning

that the views

econ¬

people."

you

-<j»the

for venture

welfare of the

when

personal opinions.

sentation

con¬

omy on ground
it was "for the

calls for some latitude in the expres¬
In consequence, I should like to state at

which by its very nature

sion of

in*

which

trolled

one

EDITORIAL

problem
in the
stock market,

from

Truman

which I must speak this morning — "Implica¬
Business Planning" — is

appears

-a

planned econ¬
omy, but dis¬
tinguished
it

President

this

fa-'

subject

tions of the National Security Programs for

evi-^

One
dence

Feb. 1, Presir
Truman went on

Washington
dent Harry S.

The

recognizes that

now

lies in the supply of

Act.

ment

of National Security Program along
with their budget authorizations and estimated costs. Holds pro¬

tional

Security Resources Board

Mr. Watkins lists components

by gov¬
Keynesian New Deal ideology. Scores
double taxation of corporation profits, and advocates collection of
all taxes from corporations be * made in one operation. Denies
corporate profits are excessive.

remain sound and prosper¬

ous.

University

under domination of

ernment

National

attributes to destruction of incentive to private investments

economic struc¬

Copy

Business

By LEWIS H. HANEY*

Economy

Price 30 Cents

York, N. Y., Thursday, February 3, 1949

Bonds

A Mutual Fund
Quoted

•

COMMON STOCK FUND
on

request.

PREFERRED STOCK FUND

Members Sew York Stock

Amsterdam

FRANKLIN

DISTRIBUTORS, Inc.

HART SMITH & CO.
32 WILLIAM

OF NEW YORK

Prospectus on request

64 Wall Street, New York 5

Buenos Aires

THE NATIONAL CITY BANK

INCOME (BALANCED) FUND
,

Chicago Philadelphia Providence

London

UTILITIES FUND

Exchange

40 Wall Street,' New York 5
Boston

Bond Department

BOND FUND

White,Weld&Co.

ST., N. Y. 5

Bell Teletype
Private

Bond

Dept. Teletype: NY 1-708

New York

THE CHASE

HAnover 2-0980

NY 1-395

Wires Connect

Montreal

Toronto

NATIONAL BANK
THE

CITY OF NEW YORK

NATIONAL BANK

EUROPEAN

of INDIA, LIMITED
Bankers

Branches

Underwriters and

Office:

26, Bishopsgate,
London, E. C.

Colony,

Distributors of Municipal

India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
'

and

Zanzibar

Subscribed Capitals

£2,000,000

UTILITIES

and

FOREIGN SECURITIES

Reserve
The

Bank

CapitalFund
conducts

description
banking and exchange business
every

Trusteeships and Executorships
also undertaken

Available

OTIS & CO.

sutro bros. & co.
Est. 1896

(Incorporated)

Dominion Securities
Grporation

Members New York Stock Exchange

CLEVELAND
New York
Chicago
Denver
Cincinnati Columbus Toledo Buffalo

COMMON
Prospectus and analysis

Inquiries Invited

Established 1899

•

£2,500,000

bonds & stocks

Corporate Securities

£4,000,000

Paid-Up

MISSOU

and other

the Government in

Kenya. Colony and Uganda
Head

CANADIAN

New York 5, N. Y.

120 Broadway, New York 5

New

111

York

Stock

NT 1-702-3

Boston

Exchange
Exchanges

Broadway, N. Y. 6

WOrth 4-6000
Bell System Teletype

request

IRA HAUPT & CO.
Members

and other Principal

40 Exchange Place,
Telephone REctor 2-7340

upon

Teletype NY 1-2708

Telephone: - Enterprise 1820

(550)

COMMERCIAL

THE

FINANCIAL

CHRONICLE

Thursday, February 3, 1949
i' f'■

i laiket in 1949
Business and the Stosk L

Central Public

x;.

ANTHONY GAUfik

Alabama &

Anthony Gaubis & Co.

Utilities 5U/52

Investment counsellor asserts business activity will remain high until next

Fall, when short and sharp
Regarding stock market, Pdr. Gaubis predicts any recession will be
although perhaps violent. Expects stock prices will range between highs reached in 1946 and
a
1948 on the upside, and above 1946 lows on the downside.

readjustment will get under
BOUGHT

SOLD

—

brief

QUOTED

•

*1:

Louisiana Securities

Bought—Sold—Quoted
For the first time since October

find ourselves somewhat less optimistic about
the business outlook for the next 12 months than are most of .the government and financial
economists. Specifically, we believe that businsss- activity will hold at
fairly close to the high

New York Hanseatic

Corporation
120 Broadway, New York

way.

levels

1946,

Steiner;Rouse&Co
Members New York Stock
Exchange

inasmuch as / last
year's
bumper European crops have per¬
mitted most countries to build up

eight to ten
months,
but
we

nessmen

can

t: a s

frjc pONNELL & Co.
Members
New

York

New

York

Exchange
Exchange

Stock
Curb

belief

Copper Canyon Mining

General Tin Invest.

•

William

be summarized

Tel. DIgby 4-2190

City 2, N. J.

Tele.: NY 1-1055

•

/■

•

•••

Refining Co.
Stock

Common

and Sold

Bought

Standard Oil Ky.
Bought and Sold

BANKERS BOND ^
Incorporated

1st

Floor, Kentucky Home Life Bldg.

LOUISVILLE

Bell Tele. LS 186

•'

A decline in

new

9 9

STREET

WALL

contracts over

during the first-half, as this would
permit acceleration of work on
projects already started.

Freight car production shows
promise of exceeding year-ago
levels during at least the next six
to
eight
months,
but
unfilled

NEW YORK 5, N. Y.

orders

are

where they

about 15%

SUGAR

rent rate.

were

last

Exports
over

the

are

x.:

race

likely to increase
months, partly

because of the recent acceleration

of JERP fund allocations.

However,
the probabilities favor a reduction
in the export of food products, a
very
important item in foreign
trade, during the
coming crop

1856

New

York

Stock

York

Curb

Exchange

Cotton

Exchange

New

York

Commodity

Exchange,

Board

Chicago

CANADIAN

and that there will

incomes.

fiscal
be

taxes

However,

masses

many

from

harvested

crops

incomes

farm

coming

the

There is

definite possibility ol

certain

industries

key

and

refunds

individuals during the next

NEW
CEICAGO

YORK
DETROIT

GENEVA,

■

particularly: in the coal indus¬
try, when present contracts ex¬
pire on about July 1.
:

record

The

shows

that

strikes

a busi¬
inflationary
(because they reduce the supply
of goods at a time when demand
is on the upgrade), but that they
are deflationary when they occur
during the advanced stages of a
business boom (because of ine ef¬
fect of reduced buying power on
our
economy when supplies are
in balance with demand.)

ness

recovery

are

Government

estimates

The "Political Cycle"

ex¬

are

penditures for plant expansion in¬
dicate that this type of spending

of the
in

levels dur¬

now

the

SWITZERLAND

QUOTED

Incorporated
150

Broadway

New York

Cleveland

Member

Union

Stock

Exchange

;

Commerce Building
CLEVELAND

NORTHWEST MINING
SECURITIES
or

Immediate

Execution of Orders

Quotes call TWX Sp-43

from

Exchange

A.M.,

10:45

Std.

Pac.

Time:

Floor
11:30

Sp-82

other hours.

STANDARD SECCBITIE!
CORPORATION
Members Standard Stock

Exchange

ol Spokane

Brokers

Peyton

Dealers

Underwriters

Building, Spokane
Branches

•

Kellogg, Idaho and Yakima, Wn.

BUY

January,'

SAVINGS

BONDS

1937. At that time,
planners surround¬

economic

ing

President

that

that the re-election of their sponr

plant expansion programs of
the larger corporations are nearing completion, and that there
will
be
a
sharp contraction^ in
industrial construction during the
last six months of

Any

increase in

1949.;

Markets

Roosevelt assumed

constituted

sor

step

"mandate"

economic and

social re¬

'/'J

forms.
It may

be in order to recall that

corporate tax

For:

election campaign of
1936, we were told that "Business
did not just happen to be good;
we planned it that way!"
A year
later, we witnessed one of the
sharpest declines in the Federal
during

the

Index

Reserve

Production

the history of that index.

MINING

pertinent
OILS

Exchange and Other Principal Exchanges
NEW YORK 6, N. Y.
-

Incorporated

by Royal Charter 1727 /
v,y-.

note

It is also
that following

Teletype NY 1-672

HEAD OFFICE—Edinburgh
Branches throughout

LONDON
B

OFFICES:

Bishopsgate, E. C. 2

8 West
49

Scotland

Smithfield, E. C. 1

Charing Cross, S. W. 1

World War I, and as l$te as Feb¬

Burlington Gardens, W. 1

1921, high Government of¬
accusing the steel in¬

64 New Bond Street, W. 1

ficials

SECURITIES

BROADWAY

Royal Bank of Scotland
•

Goodbody & Co.
Telephone BArclay 7-0100

SOLD

WM. J. MERICKA & CO

as we- were

the

ruary,

115

Corporation
BOUGHT

point

same

"political cycle"

at least the first-quarter of
1949. However, there is evidence

INDUSTRIALS

Members N. Y. Stock

|pl The igSi;

during the early stages of

were

dustry of deliberately creating an

PITTSBURGH

Telephone—
/,/ -

4-2463

Expansion

CANADIAN

Bldg.

WOrth

crop

strikes

year;

Exchange

Cotton Exchange

York

New

are

during

artificial shortage of steel.

For
5

until May 1, and that

Plant

disposable

personal
should be

few months.

75 Federal Street, Boston
Private
-

Bingham-Herbrand

However, present indications
that

against taxes
withheld during
the first four
months of 1948 will be paid ito

American

BRITISH

cer¬

during the preceding .year. Such
spending wil be at a very high
level during the first half of 1949

year's tax reductions op per¬
sonal incomes were mot felt by
substantial

DAYTON HA1GNEY & CO., Inc.

o:j

other

and

decline in total
therefore a decline

and

received

last

Inc.

And other Exchanges

purchase

Spending by farmers during the

England Lime Common

this

first half of any year is, of course;
related primarily to the income

further

New

Boston Terminal Co. 3l/zst 1947

Agriculture

remembered that the full effect of

CANADIAN

Ojj

retail trade.

of the

Trade

New Orleans Cotton

payrolls,

round

Exchange

New

Maintain

the

tainly result in

individual in¬

current

the

during

Holding Pfd.-

Boston Edison

Any contraction in the activity

and/

H. Hentz & Co.
Members

tnose

ing the last half v/ould almost

tively small; that Marshall Plan
spending for the 12 months begin¬
ning July 1 is likely to be scaled
down from the funds to be spent

the

Boston Railroad

of the heavy goods industries dur¬

general re¬

for

automobiles,
semi-durable goods.

ing

six

ratio

budgets, but

liomes,

will be above year-ago

Exports

4-2727

Established

the

mitments

third

the

with

*.•,V- r':>

......

Boston & Maine Prior Pfd.

income.

year, and therefore
income of farmers in
the closing months of 1949, will
be substantially below year-age.
The probabilities are that any.
fourth round of wage increases levels."
Strikes
will be both selective and rela¬

duction in taxes

Jan. 1,

Exports—I mports—F utures

1948

probably be offset by
increase in instalment com--

comes; and the enactment
Marshall Plan.

below

1948,
although they are equal to about
10 months' production at the cur¬

Raw—Refined—Liquid

DIgby

now

were

increases;

wage

reductions

the near-term will not materially
affect total construction activity

LAMB0RN & CO., Inc.

stimulants
of

the

line

office*

■

total dollar sales

will

billion)

world-wide rearmament

family

factor

or Congress balks at raising taxes
high level of activity through at
least
the
first
eight
or
nine by $4 to $6 billion.
months of this year. We have in
Boom Stimulant
mind specificially the automotive,
It is recognized by most busi¬
construction, railroad equipment
ness
students that the continua¬
and petroleum equipment indus¬
tion of any business "boom".' re¬
tries, as well as the steel industry.'
In the case of the automotive quires new stimulants from time
to time to keep the "boom" going
industry, sales during the next
nine
months A are
likely to be During 1948, the three -principal

about

sure

sharply before the end of the
if we come to any sort of an
agreement
with
Russia
which
would
permit 4 a check in the

only by prdductive ca¬
pacity, for all of the /• leading
models. The rate
of production
during this period should exceed
1948 levels, by perhaps as much
as 5% to 10%, if additional steel
becomes available. However, the
seasonal letdown which may be
expected late in the year could
be the beginning of a moderate
cyclical decline in this industry,
particularly in the case of the
higher priced cars and the prod¬
ucts of the independent manufac¬

Trading Markets

:
probably hold

national

mean

branch

our

food costs should reduce the pres-4

for ar¬
be only

year

demand

turers.

KENTUCKY

Long Distance 238-9

that

are

There is a danger that-even,
the planned level of expenditures
for armaments might be cut back

sufficient pent-

indications

year.

limited

Ashland Oil &

follows:'

the first six months of 1948. Lower

Inc.

5, N. Y.

St., N. Y. C.

1 Montgomery St., Jersey

-Present

for the products of
highly cyclical and normally
seasonal industries to ensure a

STEIN & COMPANY
Members Nst'l Ass'n of Securities Dealers,

government expenditures
maments during 1949 will
moderately
(about
$3
above
the expenditures!

the

AND OIL STOCKS

This should

are

probably get underway during the
closing months of the year, carpi

four

below

to/, disposable

enjoyed
years, 1916-

Armament

the-

There is still

Regent Oil Corp.

at, slightly

type

.'.".V

during the first six months which

Anthony Gaubis

Pent-Up Demand

Gaspe Oil Ventures

MINING

that

Qoldfield Deep Mines

the

this

wires

particularly'

Retail "trade will

was

surpluses

ac¬

•

Standard Gas & Elec. Com.

Direct

•_

1919.

long
awaited
downward
readjustment in th$
total
volume
of
business
will

TRADING MARKETS IN

each

effect

MY 1-1557

la.-Birmingham,Ala.

Mobile, Ala.

Enact-i

year.

•

activity declined sharply

export

New O leans,

undistributed'

jV:;v ' Retail Trade

sharp decline from the $3 to $5

billion

tivity until next Fall, and for our

2-7815

REctor

Tel.

level

business

the
on

spending.

expecting

tax

profits would have

export surplus is likely

about six months before there

continued

high

BROADWAY, NEW YORK 5

120

■

St. New YorK 4, N. V.

HAnovar 2-Vm

will also tend to

corporate expenditures in

adverse

net

our

25 Broad

until sometime in the

last-half

ment

estimated

business

Our reason's

for

the

net

by 1950. In the 1919-1921 period,

whole.
-

1947. A further substantial decline

fort he

year

well sustained

working'inventories.

(which probably will not be

voted upon

export surplus during
at $5.5 billion,
compared with $9.6 billion in

over-all aetivit y

Our
1948

be confident of

—A—

reduce

longer

feel that busi¬

SCRIP

second-quarter)

their

another

for

rates

year,

■

the

past two years

Teletype NY 1-583

BArclay 7-5660

•

£153,656,759

The War Threat

;

In the above

discussion,

have

mention of the possibility
that the cold war which has been
made

TOTAL ASSETS

(Continued

on page

41)

•

Associated

Glyn

Mills

Banks:

Williams Deacon's

Co.

Bank, Ltd.

J
y j

Volume

169

Number 4774

THE

COMMERCIAL

FINANCIAL

CHRONICLE

,(551),

I N D E X
Business

Double

Page

Watkins.

.>Cover

Taxation, Investment and Enterprise—Lewis H. Han ey..... .-Cover -■

We Have Reached

Basically Strong—Hon. John W. Snyder

Breaking Point in Government Spending!

Lull

forays alarming., Abolition advocated.

Inflation—Thomas I. Parkinson............:......

tive

Factors in Trend of Interest Rates -Claude L Benner...............
Tax Increases Both Harmful and
Our Banks and

The

Free Gold

ness

Common

courts wherein

Tom

Free

Security Markets—Col. Allan M. Pope.
Does—Rep. Fred L. Crawford
;

What Double Taxation

Current and Future

Capital Requirements—Dexter M. Keezer. .;.\V.;CV 14
Enterprise Has Not Solved Housing Problems
—Sen. Robert A. Taft.
.*,;;>15.:Si
Outlook for Building Materials—Melvin H. Baker..
.".A.\'v "17"'-'
Synthetic Food Production—Roger W. Babson.
;
19 '

dium to

Planned

Economy....:
(Editorial)

;..

All this

1948

Agents'

Committee,

Headed

by Robert
Reports Downward Price Trend More Pronounced
Nadler

Inflation

■>

and

Have Run

Rowland

Collins

Swanlon,

Course

if.

Haines

Normal

Permanent

Excess

Profits

Tax

and

Cut

( Boxed I

First

National" Bank

Boston

Contends "Welfare

State"

.Admiral

Ben

William

Million

■>

Morreell

Maude

Suggests Way
Savings

of the

repudiation of

Southern Production

under-

SIEGEL & CO.

At best the dispute is

the

decision of

Judge Letts of the

diction of

private one conthe administrative

Teletype NY 1-1942

Judge James W. Morris of the
KENTUCKY UTILITIES

SOUTHERN PRODUCTION

subpoenas.
knew, and to,all.this it was a party.
judicial determination now reads

CENTRAL
PUB. UTILITIES

5VsS

Bought—Sold—Quoted

court has held that the NASD

same

40 Exchange Place, New

(3)

Young & Gersten

Judge Morris to prevent that disclosure;

Judge Morris has ruled that disclosure of "These priv¬
ileged communications must be denied to the SEC; and

York 5

The U. S. Court of Appeals has enjoined the SEC from

Telephone WHitehall 4-2250

24 '

Banks

v......

strictly hands

(

1948

DIgby 4-2870

Broadway, N. Y. (5

may not compel the disclosure of these confidential comV-munications. if such disclosure- contlicts with the juris¬

MARKETS

;j*.

Expedite Steel Industry..'. ."
Deposits Gained $612

Reports

(1)

Throttles

Incentive
-Eugene G. Grace Sees; Steel Demand Tapering Off.
Analysts' National Body to Meet March 8

follows:

;

Phillip Carey Mfg.

secrecy

Picture

Industry Basically Strong, Say J. Cheever Cowdin
Blumberg.;......
Guaranty Trust Co. Criticizes Truman Budget and Tax Plans.)..,..;

YORK

Lithium Corp.

To date the roster of

20* '

and N. J.

out

All this the NASD

in
20

the Federal Payroll!

NEW

denied the Commission's effort to enforc3 its

19 9

Corporate Tax..

14,000,000
Motion

Favor9

19
;

Kentucky Utilities

United States District Court, District of
Columbia, to stymie
the forced disclosure of confidential communications for he

Henry J. Kaiser Sees S500 Billion Annual Income Possible
-Reno Odlin Foresees No Major Depression
C.

It took

............

Causes

arose

bodies should have adopted a neutral and
off policy until judgment is rendered.

Hold'Basic

penetrate; the sacred right of

ducted by reputable litigants, and

and

T adjudication.

Purchasing
Marcus

....

STREET,

ACTIVE

'U-

A.. A

Lynch, Pierce, Feuner & Beane Reports on 1948 Net Income..
1948
Underwritings and Corporate Capital Flotations for 1948/.
SEC-FTC Report Higher Manufacturing
Earnings in Third Quarter

decision

T writing agreement, in which the rights and equities are
presently before the United! States District Court for

Cover

Merrill

the

attorney and
client: have been entitled since the
early common law.

for

leave

to which confidential communications between

Administrative Intrigue

for

cash

Telephone: WHitehall 4-6551

invade

Private

Truman

WALL

they embarked upon a one-sided punitive ex¬
pedition against Otis & Co., via hearings bereft of the basic
right of cross examination, and attempted through this me¬

Instead

grand'

propei

similarly.

Double Taxation and the

wad

whole

The SEC and the NASD would have done well to react

Economy

C. Clark

opportunity will be afforded under

there.

Building—Wilson Wright
9
Why Double Taxation?—Benjamin A. Javils
11
The Railroads—A Case of
Simple Arithmetic—G. Melzman.......;12
—hon.

safeguards to submit all evidence.

Home

Threat of Economic Concentration

I'm taking you out in

style tonight, for I've just gotten

obsoletes."

we
have emphasized, we take no sides in that dis¬
The parties have placed their differences before our

pute.

Stocks—H. William Knodel.

embracing the Kaiser-

Economic

Outlook for

KATE...

,A;

Frazer, Otis & Co. dispute.

Consequences of British Socialism
—Geoffrey G. Crowther
Current Asset Replacement Value vs. Book Values
Highlight Cheap¬

"KISS ME,

Again we envisage the conduct of those two administra¬
police partners operating out of the same precinct, the

SEC and the NASD in their activities

Unnecessary—Murray Shields
Market-^Josep/i Stagg Lawrence

AND COMPANY

j should be hands off. SEC has outlived usefulness. Unjust punitive

;•

.—Rep. Frederic R. Coudert, Jr...
The

Seek

compel disclosure of confidential communications'despite re¬
straining orders. Otis & Co. institutes further injunction proceed-,
ings. Evasion decried. Dispute with Kaiser-Frazer private. Policy

Business and the Stock Market in 1949—Anthony Gaubis....
Economic Situation

licHTtnsTtm

proceedings against Otis & Co.

Implications of National Security Programs

—Ralph J.

SEC and NASD flout court in

Articles and News

•

Lasdon

Direct Course

City College

Credits and Finance...

Handy and Harmon Sees Silver Situation Unchanged
Bank Grants Lo.qn to Brazilian Traction Co. and
Reports
Increase.in Net Profits.
.L
1....,..
Time to .Cut Costs; Says National City Bank
).;.. i 1... \./
-Italian Republic Bond Exchange Offer Still
Open..
FTC Banks Place Debentures.,
.i.... .'..,,9..'..

25-

prosecuting

;

hearing involving the alleged subject mat-

ter of these communications,

<■'/ L:

EWorld

....

"3•Ty

...

ljnpact

See It

,V.'i..

(Editorial).,.......,..,..........,

Marv's

Business
Canadian

Bookshelf.'.

.:.....

.V......

„.......

.......

.7.7.7....
.

Banks

and

Salesman's

Securities

•

Now

Twice

Weekly

..-...

and

Gardens,

Edwards

c/o

WILLIAM
25

Park

DANA

REctor

WILLIAM

2-9570

8, 1879.
1

9576

SEIBERT,

RIGGS,

.Dominion
Other
:

Thursday Ygeneral news and ad¬
issue) -and every Monday .(com¬
plete statistical issue — market quotation
state

and

Other

Chicago

city

news,

Offices:

111.

news,

bank

etc.).

135

(Telephone:

;;

Salle

State

;

St.,
0613>;
-

per

Monthly

$25.00

per

Note—On

year: in
per
year."

New

full year's

subscription to the Monday

own

office memoranda

on;

the

disputed,

and Thursday issues of the

"Chronicle"

interorganization conferences have they
on

page

35)

will

give

you;

Record—Monthly,
postage

Record

(Foreign
of

York

are

interested in offerings of

galore and

pay

liberal

■

PREFERRED STOCKS

per year.

the

extra.;

Monthly,.

postage

extra.)

fluctuations

funds.

Spencer Trask & Go.
Members

New

York Stock ^Exchange

25 Broad Street, New York 4
Tel.: HAnover 2-4300

135.S, La Salle St., Chicago 3

(
,

Commercial

Financial

Chronicle

Members New York-Curb Exchange

rate of exchange, remittances for for¬
eign subscriptions and advertisements uiuat

made

High Grade Public Utility and Industrial

of I

the

INVESTED in

These

dividends.

March

S. ;

$38.00

(Foreign

account

Ner

Members
per

Publications

Quotation

year,

••

interest.

our

ideas
We

State?,:'U.

and

$35.00

Canada,

Earning?

$35

Enforced NASD

one.

Rates

United

Union

year.

are as

activities excite

(Continued

Febru¬

office" ai

the tAct

Countries, $42.00

and

What

Eng-

•

$25.00
■

clearings,

issues?

B. Dana

matter

post

Territories

•

! Bank

Every

C.,

camera

lishing their

Other

vertising

records, corporation

the
under

Subscriptions

Pan-American

Manager

Thursday, February 3, 1949

■

Possessions,

President

Business

second-class

Subscription

SEIBERT, Editor & Publisher
DANA

25, 1942,
York,
N.
Y.,

N. Y.

ion,

by William
Company

ary

COMPANY, Publishers
New York 8,

Place,

HERBERT D.
WILLIAM

Patent Office

These two

Smith.

1949

CHRONICLE
Reentered

Reg.

NY 1-1404

example by pub¬

Tele.

all the issues

have tried to pierce without success. Will these
gen¬
tlemen who fLout the courts and seek to invade the veil V
of confidential communications set an

33
/.

40 Exchange Place, New York 5
WHitehall 4-8937

George Birkins Company
■

knowledge. This the Maloney Act makes plain
gives to the former, in statutory form, complete dom¬

Their in,

.Drapers'

and,

FINANCIAL

overruled ;the NASD

ination of the latter.

.v.

description.

common

Industry
(Walter Whyte Says)....

nur

now

subservience operates to make them so., .•>'•

......

Registration

COMMERCIAL

the NASD

which

46
....

for

by the order of Judge Mor¬
by the order of Judge Letts

Washington and You

denied to

decision

for it

i........

Corner.

Tomorrow's Markets

Published

"
Send

attempts to relitigate."
The privity that exists between the SEC and the NASD

16,

The State of Trade and

The

and
a

Securities

which its order

Securities

i t

ris
^

Business

Bankers

ilfred May
Our Reporter's Report
Our "Reporter on Governments
Prospective Security Offerings
Public Utility Securities
Railroad

:v-:
I.-1'

has been denied the Commission

Bonds

the

....."..)

—Harry I. Prankard, 2nd
About

and4

disclosure of these privileged communications
and, if
successful, will furnish to the SEC the information which

Observations—A. W

•

1st Mortgage

Available around 50% on the
H
dollar to yield about 10%

....

Prominent' Personalities in Mutual Fund
News

8 A.

Recommendations/

U Indications of Business Activity..

;

the .jurisdiction

,•

Einzig—"Wiil Western Europe Have ^elf-Sufficiency in 1952?".
"From Washington Ahead of the Nevts-^-Carlisle
Bargeron
.

interference-with

proceeding brought by Otis & Co. to restrain the
NASD, it is alleged:
vv"r
«... •..•••.
•
A
-"By;its order, the NASD ■ is now attempting to force

.3.7

.F.*.

Dealer-Broker—Investment

Mutual Funds

serious

...In

,12

Coming Events in the Investment F ield

and

.Cover■ I
)....

Securities

victor fuel co.
5%

judgment of the Court.

Bank.and Insurance Stocks.

38 A

Regular Features

«...

Gold Inflow of Bank Reserves.

jX,■•* Payments

;45 Years of Interest

Despite these decisions the NASD has instituted a dis¬
ciplinary proceeding against Otis & Co. in which it attempts
to 'relitigafe the same issue.
u
^
C "
We call this contemptuous
conduct, indecent haste,

Teletyper—NY

1-5

Tel,financial 6-2330

25 Park

Place
REctor

New York 8, N. Y.
2-9570

(552)

COMMERCIAL

THE

FINANCIAL

CHRONICLE

We Have Reached

Economic Situation Basically Strong
By HON. JOHN W. SNYDER*

Asserting

nat.cn continues

highly

and economic situation basically strong* Secretary Snyder

prosperous

By HON.

FREDERIC R. COUDERT, JR.*
U. S. Member of Congress from
New York

holds return to buyers' market should not mean depression*

but rather furnish impetus to more efficient
productive methods and new products. Says Administration's program is directed toward high level
economy through encouraging healthy business development and restraining excesses of past.
Sees
need for. construction of more utilities and public works.

RepuWican House member, after defending Taft-Hartley

attacking Federal Government inroads

drift toward statism. Says

commit-

tees

work

i t h

the

11 e r

interest.

addition

these

regu¬

commit¬

lar

various

tees,

groups are
consulted

time with

rer

gard to details
t he

John W. Snyder

t's

v/:'•

fiscal program.

organized com¬
mittees have been set up for vari¬
Other formally

ous specific purposes. In connec¬
tion with the savings bond pro¬
gram, for instance, 19 committees

views

the

groups

ideas

and

such

agriculture,

industry,

newspapers,

advertis¬
organiza¬

education,
ing

to present

been established

have

other

and

groups,

tions.

govern¬

is not merely the
responsibility of its chief officers.
It is the responsibility and deep
concern of the entire nation. The
agency

government

have in this coun¬

that
and 148 million other Amer¬

try is the kind of government
you

icans have made it.
The

I
a

Debt

National

should like

talk with you

directly concerned. And, one
the

vital

most

of these

prob¬

lems, and a principal responsi¬
bility of the Treasury Department,
is the management of the public
debt—a debt which was expanded

by the requirements of war fi¬
nancing to a peak of $280 billion
in early 1946. In spite of its ap¬
preciable reduction in the post¬
war years, our debt still exceeds
$250 billion.
visible

The

evidence

this

/debt, of course, is in the govern¬
ment bonds, notes, and other se¬
curities
held
by
individuals,

banks, insurance companies and
institutions.

other
of

this

The

debt

requires
expenditure

Federal

$3^ billion

servicing

annual

some

in interest.

Before the war, the

public debt
was less than
25% of all public
and private debt. Today, it con¬
stitutes
debt

tionate
makes

55%

some

the
size
it

nation.
the

the total
The propor¬

debt

Federal

dominant

factor

determining interest rates

pri¬
vate debt and the return on pri¬
vate investments. Thus, the prices

Federal

the

period,

the

postwar

•

securities

have

far

greater influence than ever before

Every

sound

those

which

financial

lack

recent

years.

My major objective and respon¬
sibility as Secretary of the Treas¬
ury is to maintain the financial
the

soundness

States

United

involves

This

Government.

two

separate lines of action: to de¬
velop a sound fiscal policy; and
to
maintain
confidence
in the

government's credit.

fiscal

sound

policy

this

system that will meet the cost

prescribed governmental func¬
tions, and at the same time pro¬
vide adequate funds to reduce the
public debt.

believe

which have

that

the

measures

been taken to

main¬

tain ,a sound fiscal

policy and to
promote confidence in the govern¬
ment's credit have made

contribution
which

into

our

have

marked

the
prosperity
enjoy. We are well
and

now

fourth postwar year,

maintained

continued

high levels of production, employ¬
ment and incomes. This condition

is evidence of

remarkable basic

confidence throughout the nation.
Arid I believe.it can be reason¬

ably said that the management of
the public debt since the war, and
the maintenance of a continued

period of stability in the bond
market,
have
contributed
ma¬
terially to this situation.
A

primary credit for the

con¬

tinued stability of business levels
must be given to the good sense
of the American people in refus¬

ing to be stampeded into over¬
buying and excessive speculation;
to

war

industries

which

were

general

business

little affected.

;

level
,

Economic Situation Strong

that

the

mains
that

economic

situation

re¬

basically strong. It is true
prices which, had been

some

out of line

with their normal

level

have

nearly

various

credit

restrictions

which have been placed in effect

the

general

re¬

price
back

recently come
into balance.

true also that

more nearly normal
buyers' markets and competitive

conditions have returned in vari¬

lines,

ous

this

but

something
which must be regarded as part
of

the

process

normal."

"getting

which has

back

that sales¬

means

been

pretty

much

neglected since 1941, must
again be brought into play.
The fact is that the nation

con¬

tinues
on
a

highly prosperous. We are
the alert against the hazard of

"boomi and

bust."

There

are

great opportunities for business in
the years immediately ahead. Our
population is increasing steadily.
creative genius is con¬
tinuing to develop new materials
new techniques
and to pro¬

and

new

consumer

by maintaining

goods, there¬

industrial fron¬

tier of the greatest promise.
The

demand

for

these

new

other demand that may

Such

up
a

follow the
wartime shortages

replacement

weakening its effectiveness.

more than a
Pilgrims' sages,
-h three of Dr. Butlers last'addresses his theme was the industrial
Civil war menacing free institutions in
the United States. He

eyer-

S w e

11 i

labor

alization

unions

last

the

tion

Coudert, Jr.

law,
by an unjustly maligned
Congress. Now, a brief two years
later, a postscript appears in the
offing—repeal or emasculation ol
Such action would

country

back

where

put

1946, wholly at the mercy o±
such labor leaders as might choose
to
exercise
their
great
power
without regard to the public wel¬
fare.
Surely we cannot have for¬
gotten certain of the strikes which
the' very

life

people of the country,
railroads

and

shipping!

of the
in coal,
A

sure

way to destroy free government is
to permit the existence of groups

within
the
community
strong
enough to successfully defy gov¬
itself

ernment

and

hold

the

community to ransom. The TaftHartley law was an honest at¬
tempt to bring organized labor

fairly within the law, as our other
citizens.
If
these : organizations
again freed from all orderly

are

restraints,

will

sad

day

Maintenance

orderly

labor

relations within the framework ol

fair and equitable laws is essen¬
tial
to' the
survival of a
free

person

group

and

process,

new

and

(Continued

attractive

Pilgrims in
1948, when he stated that: "Na¬
tionalization can have no place in
our
economic vocabulary!"
Na¬

tionalization,

of course, means the
end of economic
freedom and the

substitution

successfully integrate
organized labor within the Amer¬
ican democratic system of law is
the

granted.

*An

the

the Annual JLuncheon

States, New
1949.

Congressman

Pilgrims
York

the very

Art Metal Construction

government control

Stromberg-Carlson, Com.

Georgia-Pacific Plywood*

Texas Eastern Trans*

Prospectus on Request

Bought

—

Sold

—

guarantee
I

hope

-115 Broadway, New York
Telephone BArclay 7-0100

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

freedom

indeed

that

speech,

our

own

United States is not going to em¬
bark upon the primrose path that
leads to statism.
But we have in
recent

far

moved

years

direction.

The American

people, I

am con¬

fident, would not knowingly
render

that

their

liberties

sur¬

for

the

seductive
mess
of
false security offered
by totali¬
tarianism.
If
the
issue
were

squarely
no

posed,

doubt

would

there

of the

outcome.

instant

the

United

City, Jan.

26,

and

would

There

resounding

repudiation.
Ourselves

Into

Bankruptcy
There

the

same

end.

wittingly

into

can

to
un¬

spend
bankruptcy and
There

danger to America.
matter

ef¬

road

recklessly

themselves

very

people

totalitarianism.
No

■

is, however, a
though indirect

how

lies

the

worthy

pealing objectives

ap¬

they
be attained by driving to
breaking point the dynamic
may

be,

cannot

the

free economy which has built this

country.

No- government

economy can match in produc¬
tion a free economy like ours, but
it can and invariably does sup¬

all personal liberty.
The United States is attempting

press

the

same

shattered world and
time

rebuild

post¬
Either assign¬
be a
large
order.
To attempt both at the
same time without great restraint
or too rapidly would be to court
disaster.
The
survival of our
essential
liberties
is
dependent
ponements of

Stix 8c Co*
INVESTMENT

SECURITIES

OLIVE

STREET

Quoted

Goodbody & Go.

neces¬

fered from the neglect and

509

Members N. Y. Stock Exchange and Other Principal Exchanges

of the

home establishment that has suf¬

Portsmouth Steel

Central-til. Pub. Serv*

was

sities of daily life.
The power to
deny a ration card is more per¬
suasive
than
any
constitutional

Grinnell Corp.

sup¬

liberties which could not
long
live without it.
Paper guarantees
of liberties cannot, be
very con¬
vincing in the face of complete

at
.

always

foundation of individual

to rebuild

Aw on

totalitarian

have

that economic freedom

posed

great

address

Coudert at
of

economy.

fective

Failure to

page 37)

*An address by
Secretary
Snyder before the National Sport¬
ing Goods Association, Atlantic
City; N. J., Feb. 1, 1949.

speaking before the

resist
Taft-

Hartley.law. -■•':(

for

contagious and agree with
Ambassador Gerard,

Spending

( For my own part, I shall
all attempts to weaken the

not

already

former

law.

only way for Americans
conspicuously
to lose their precious liberties—
under way.
•
<
liberties which are so easily taken
The return of normal buyers' for
granted. The radical changes
markets should give impetus to which have taken place in the
past three years in. Britain should
more efficient production methods
warn us against taking too much

fact,

look

deceptively

indeed for America.

democracy.

not

course, that nationaliza¬

was

threatened

does

livery

iSr Britain's

not be
Hon.

Hartley

the

bar¬

the

own
problem, I
certainly hope that example will

Taft-

that law.

servants

extension of the liberties
subject. ,-Nor, I imagine,

While, of

form

the

dressing

taverns

will it improve the
taste of beer!

speech
iin 1946, there
was
a
fitting
postscript
in

And

civil

pf the

labor

Economy

least,

nation¬
major activities from

economy.

tenders

$ u-r- v i v a 1
Of democracy.
After his

steel--making to the practice of
medicine does not look like free

equilibri¬
under law
vital

Free

Superficially,

threat to

the

Inroads

power

referred'
cu'

course,
course,

the

must be allowed to rise above the

products, and for improved types
of many kinds of consumer
goods,
should replace any reduction in
filling

of anything before the Pilgrims that will
postscript to earlier observations of

American

duce

Cites late President Roosevelt's
warning against

passed

There is every reason to believe

time must be based upon a reve¬

the

and

manship,

Result of Sound Fiscal Policy

nue

the

lationship

striking

particularly

since

temporarily over-extended com¬
pleted their adjustments rapidly,
was

contrasted

those

But

development of nations-ygovernments are fi¬

nancially

year-end

been

are

It is impossible to speak

(■'/.

marked by a wave of
apprehension over 1 the/, business
outlook for the following year.
The end of 1948 was no exception.

has

those whose

Federal

problems of the

Government with which all of us
are

businessmen

priations Committee

the

And, I do not need to call your
attention to the different degree

little about certain of those fi¬

nancial

soundness of its government.

confidence. The evidence has been

management of a

ment

economic development of
people is based upon a foun¬
dation \ of confidence — a confi¬
dence in national institutions, in
certainty of their jobs, in safety
of their investments, and in eco¬
nomic security. Above
all, the
economic development of a nation
must be based on the financial

with

The

inflationary borrowing;
sensibly cautious, at¬
titude which has prevailed among

The

■

in taxation.

crease

reduce

industries.

any

gov-

e r n m e

and

economic environment.

time

from

all

This cautjous business attitude,
.public debt in the interest of the
economic well-being :6f the coun¬ which is derived in
large part
try. Only through careful "opera¬ from a desire to avoid the busi¬
tion," with the help and coopera¬ ness losses experienced
after
tion of many groups, could the World War I, has been a most im¬
Federal debt be managed in such portant stabilizing factor in our
a way as
to become a source of economy. It has led to cautious
(stability and confidence in our inventory programs in nearly all

interests

financial

1 These figures and comparisons
point to the compelling necessity
for
careful management of the

De¬

Treasury
partment

the

Act and
warns

financial instability, and attacks
reorganization of House Appro¬

<§;
us.

free economy,

spending ourselves into bank¬
ruptcy and totalitarianism and people cannot stand further
in¬

In carrying out the duties of my office, I have found it essential to enlist the coopera¬
tion of many groups. In helping to work out problems relating to government financing,
for example, the representatives of banking, insurance, and industry have organized adviso.ry

Breaking
Spending!

Point in Government

Secretary of the Treasury

Thursday, February 3, 1949

St.LouisI.Mo.

ment

alone

war.

would

upon maintenance of a healthy,
free economy.
That demands re¬

straint in public spending
Members St. Louis Stock Exchange

with its

attendant inflation and taxation.
Americans
are
in * substantial
agreement

upon

ultimate

objec-

(Continued on page 33)

Volume

169

THE

Number 4774

COMMERCIAL

The Lull in

Inflation
By

THOMAS

I. PARKINSON*

Electric

Trade

Commodity Price Index
Price

Industry

TRANS-OCEANIC CONFUSION

Business Failures

Asserting current emphasis on de:
flationary trends ignores real na¬
and

ture

cause

The

inflation, Mr.

in many

supply, persists. Says dan¬

also lies in enhanced turnover

of money

claims

supply and in continued

peo¬

During the last quarter of 1948
postwar inflation showed some

signs of slackening. Certainly, the
prices of some commodities de¬
compared
midsum¬

prices,

and

t h

workers

Statistics. '

•

against

total

The

e r s

•

only

;

'/■'•

:v-

Wholesale

appeared
to
be definite

This

buyer

resist¬

was

ance,

.though
fig¬

and

the

158.8%
3.5%

final

prices for the week ended Jan. 25
of

end

the

of the

1926

average.

were

had shown
Labor

Bureau

ignorant—is
pouse

below

2.1%

was

down 0.3%.
decline.
a

the

drop

caused by lower prices for live¬

was

absurdity

not

the

confined

all

to the United

White

States., Strikingly attest¬

the address made by Geoffrey Crowther, editor of "The Economist" of London, last
week before the Economic Club of New York—•
was

by ,the enthusiastic reception
greeted by the huge attending
audience of American businessmen. (The full text
and

particularly

with

which it

page

was

address

Crowther's

Mr.

may

found ton

8 of this issue of the "Chronicle.")
authoritative witness of Britain's

na¬

This

fundamental
error of tieing his appraisal thereof to the factor
of workability in lieu of principle. "In past times
the
case
for capitalism was grounded on , .its
efficiency in contrast to the impractical idealism
tionalization

May

Wilfred

index

month ago

ing this

from

Statistics'

reduces

polemics over the direction of our society.
Unfortunately such confusion—wilful or merely

level

below the like week in 1948.
Bureau said

The

the

week

word

pronounced by the Chief Executive of our

TOTALITARIAN,"

\• •**':* 'VV;'"- .v: \•'''•

the fifth consecutive week they

was

.At

the

••

1 A'V'&va' ■#

instead

that

great nation, supplies a front page "economic" maxim for this morn¬
ing's newspaper readers. Headed by the caption "TRUMAN ADVO¬
CATES PLANNED ECONOMY—HE BARS CONTROLLED SYSTEM

thousand

per

separation rate, the Bureau revqals, declined
thousand manufacturing workers. This was a

per

slightly. There

the

same

1949 A. D.

The above nonsense,

in October, states a
turnoyer report released by the Department's Bureau of Labor

labor

••

rose

the

Feb, 1,

slightly below the rates prevailing in the preceding 10 months...
Hiring by manufacturing industries in November was at the
lowest rate for any November in history, the Bureau of Labor Sta¬
tistics study reported.
In the October to November period the hiring
rate dropped from 45 to 39 worker:? per thousand.

lit¬

mer

for

22%

approximately

difficulty

the

that

'planning' the people who find fault with us when we talk about
planning for economic purposes are thinking about controlled
economy, not planned economyk
The distinction is different, if
you analyze
it closely—Harry S. Truman, President of the
United States, in a talk before the National Planning Association,

Layoffs by manufacturers increased during November to 14 per
thousand

our

tle

increase

think

in 1947.

hopeful of lower prices.

with

reilecting

For the month of November, 1948, one out of every 70 workers
manufacturing industries was laid off, according to the U. S.
Department of Labor. This doubled the layoff rate of the like month

ple becoming price conscious and

result of fractional increases

industries.

Federal Reserve at pegged prices.

creased

period.

purchase of government bonds by

Lays present inflation lull to

mild advance

Manufacturing output as a consequence moder¬
ately surpassed the level of the comparable period one year ago.
Latest reports on continued claims for unemployment insurance
in the week ended Jan. 8 show a rise of about 15% with initial

tors, particularly in growing

ger

for the country as a whole

industrial production

pace

last week reflected

Parkinson holds inflationary fac¬

money

By A. WILFRED MAY

Index

Auto Production

and

Assurance Society of the U. S.

Observations

Output

Carloadings
Retail

Food
v

■

Steel Production

Stave of Trade

President, The Equitable Life

(553)

CHRONICLE

•

The

FINANCIAL

experiments made the

More recently the converse

of socialism.

premise has been followed

namely, that while socialistic big

in the controversy,

government and

authoritarianism may be more efficient than laissez-faire ("after all,
stock, metals and grains.
;
Mussolini got the trains running on time"), capitalism offers the
larger
than
Corn, barley and tallow were selling for less than OPA prices
moral compensation ot preserving liberty.
:
expected re¬
in June, 1946, tne Bureau of Labor Statistics added.
Hog and steer
Now these two approaches are being compromised and muddled
tail trade dur¬
prices were at the lowest since OPA controls were removed in
by the British Crowthers. On the one hand he discovers great doubts
ing the holi¬
November, 1946.
T. I. Parkinson
day season.
Although the monthly prices had gone down for four straight abouti the efficiency of labor, about the government's ability to run
These devel¬
months as of December, the Bureau said that it may be a few months the coal mines and transport; but on the other hand, he is struck
by the fact that nothing looks very different under government di¬
opments
fitted
nicely into the before this drop is reflected in any change in the cost of living.
thinking of public officials and
rection, and stresses his finding that to date there have been "no
economic consequences at all" of the British nationalization schemes.
economists who have been warn¬
Although there was a seasonal rise in the rate of new business
ing that deflation is more to be
This confirms the characterization of the British as "people who
incorporations during December, the volume continued below that
feared
than inflation.
We have
will change anything except the appearance of things." Even though
of a year ago for the twelfth straight month.
New stock corporations
heard
frequently
from
both
Sir Stafford Cripps may keep his promise not to repeat last year's
chartered during December numbered 7.421, an increase of 15.7%
sources that "the peak of the in¬
capital levy in name, it will nevertheless be continued in effect.
over November's 6,413, but a drop of 26.7% from the December, 1947,
flation is passed," and that there¬
Through' the country's income-tax rates which surely are entailing
figure of 10,126, according to Dun & Bradstreet, Inc.
'
showed

ures

fore

avoid

must

fiscal

and

monetary policies that might bring
about

recession.

The curious part of current em¬

phasis

deflationary

trends

that it ignores the real nature and
of

cause

inflation.

Inflation

did

not begin

with high prices; infla¬
tion began with the great increase
in our money supply which made
available
to
the
people of this
country at the end of the war
more
than $150 billion of spend¬
able
money.
That huge money
supply

was

reduction

increased despite

some

in the public debt

until
it passed $170 billion at. the be¬
ginning of 1948.
During the early part of 1948 a
Treasury surplus and the volun¬
tary efforts of the bankers to re¬
strain expansion of bank credit re¬
duced that total money supply by
$3 or $4 billion. But during the
last months of the year the trend
again upward.
While final
figures are not yet available it is
probable that the total money sup,ply at the end of 1948 will again
be in the neighborhood of $170
was

billion.

With new incorporations showing consistent declines from the
previous year during every month of 1948, the total for the entire
year fell to 96,101, from 112,638 during the 12 months of 1947, or
a drop of 14.7%. 'A decline of similar proportions occurred between
the

1947 and 1946.
The 1948 aggregate of 96,101 company
formations represented a decrease of 27.7% below the record number
of 132,916 companies that were organized in 1946.

that

means

being held

while

prices

reduced during
the last quarter of the year the
total money supply and the total
or

of personal incomes were again
climbing upward. In other words,
the inflation of the money supply
has been and is continuing.
The

prices
mands
: now

situation

with' respect

and the lull in wage de¬
only illustrates what by

should be plain to all. Every¬

many

parts of the nation, total

retail volume

rose slightly in the period ended on Wednesday of last
Aggregate dollar volume slightly exceeded that of the similar
year ago and clearance sales and other promotional events

week.
week
were

instrumental in

stimulating

consumer

purchasing in

Total wholesale dollar volume remained

many areas.

that of the

preced¬
ing week, but dropped slightly below that of the comparable week
last year. Spring bookings were made in a large volume and deliv¬
eries generally, were more prompt than a year ago.
Collections were
slightly slower than last year.
STEEL OUTPUT SCHEDULED AT

near

100.9% OF CAPACITY

FOR CURRENT WEEK

The

government's case against steel on
to be rapidly tailing apart.- Though
it, the steel market is trending quietly
supply and demand and too many months may

capacity- and
Washington

know

This

does

not

that

mean

one

every

wants in the next few months.

does

toward

get

can

mean,

all

*A statement by Mr.
released

Parkinson
Continental
Press

Syndicate, Brightwaters, N.

balance

the

steel

few months there will be little difference between the steel market

and

years

furor

times

when deliveries
for

1936

were as

"capacity

There

1938.

far behind

and

output,

periods in those

were

22 weeks, but there was

states

this

trade

authority.
In

the present case the momentum

steel—which

for

the

third

week

of the unprecedented output

has

been

annual

rate

97,000,000 ingot#tons—is scaring some economists and chartists.
course
they scare easily.
But when steel consumers are, for
first

time

since

the

Greasing the Track to

the

Likewise,
events

here

the

Socialism

public's misunderstanding of obvious significant
United States is greasing the track of our own

the New Deal-isms

unwitting gradualistic slide into socialism through

Hoover, Roosevelt, and Truman. Even the capitalist business and
banking interests go along with this when they themselves get into
trouble—as with our private coal operators' pleading with the gov¬
ernment to take over and nationalize their mines in 1933. Motivated

as they are by the tests of self-interest, the capitalist as well as the
underprivileged do not offer any effective opposition to the inroads
Of collectivism and authoritarianism. Liberty and the other ideals

thus

merely constitute terms to rationalize their particular self-in¬
Thus it follows that an audience of business leaders will ap¬

terest.

of a Crowther which
self-interest.
y,
This bland overlooking of the decisively basic evils of socializa¬
tion, with the encroachments of bureaucratic government and its
bribery of the electorate through strategic subsidization, perhaps
accounts for the vacillating and inconsistent on-the-spot editorial
plaud to the rafters the wishful-thinking words
qualms about their immediate material

soothe

attitude
Labor

even

This does not

For

output.

war,

gray

mean

every
many

career.

in Old Bottles" it worried that "Mr. Attlee has
in for boldness or for experiment: Both in its
personnel and in its structure, his new government is conservative,"
not

and

all

after

gone

reviewing

"moderate

and

not

the

King's

the

main

concerned

concluded

Red

Revolution."

that
But

was
subse¬

of qualms over the several suc¬
"Economist," along with other wish¬

fully-thinking

appeasers,

finally

(Continued

last

became

November

on page

frankly

39)

7;;

the

talking

that the country is in for a

who

are

Time Inc.

big dip in steel

Kingan & Co.

aie

Continental Airlines

getting

McGraw

the

FREDERIC N. HATCH & CO.,

supports to
oil

and

(Continued

the
gas

steel

Estabiished

market

far

the

industry and this week at

on page

(F. H.) & Co.
:

Bought—Sold—Quoted

fed up with

•

One

quently, after intermittent raising
cessive nationalization steps, the

high cost conversion
deals.
Some steel users have forced the prices on conversion down.
Others have withdrawn from this high-priced market.
'Others still
need steel so much that they will be in the conversion market for

future

speech

instalment

market steel

some

awhile.

after, the announcement7of

the caption "Old Wine

cancellation this week, and for/weeks to come,
who will want the coveted space on the mills.

are

week

The

polls in July 1945 that publication maintained
that "the,'risk is not that the Labour party will change British society
too much, but that it will change itself too little."' A week later under

A close check by "The Iron Age" this week shows that the auto
companies hope to continue their heavy buying of steel. But in the

auto center there

of London throughout the present

the "Economist"

Government's

Labor's victory at the

about not taking some of their
is going begging, it looks as
trend toward easier times is setting in.
and when

quotas,

Ancj there are still parts of the country that think they
less steel than they need, the trade "paper adds.

people could produce
(Continued on page 31)

may

however, .that within

there will be

American

output

not
in
not elapse before the
evolution is complete, according to "The Iron Age," national metalworking weekly.

appears

body who gives

depends on two main factors—
first,
an
increased
or
inflated
money supply and second, a rapid
turnover of that money supply.
Even a smaller money supply
than
that
now
enjoyed by the

the 250
annual

income.

Despite unfavorable weather in

to the

any consideration
subject knows that inflation

expropriation of the capital of those citizens other than
"ebonomic royalists" with more than a £5,000

remaining

years

then

This
were

the

net

MEMBERS
63 Wall

SECURITY

:v;

i'i

1883

DEALERS ASSOCIATION

Bell Teletype NY 1-897

Street, New York 5, N. Y.

27)
.

•.

'SAV.fsv

.,.'4

•'

•

.i*

UvrvLKHV.;5ii-.

:fS,

(554)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Factors in Trend of Interest Rates

Thursday, February 3, 1949

From

Washington
Ahead of the News

By CLAUDE L. BENNER*

Vice-President, Continental American Life Insurance Company

Insurance executive, in analyzing trend of interest ratss, holds, because of Federal Reserve Policy, no
material

upward change is Lkely, but,

buisness activity tend downward, monetary
make money cheaper. Looks for present level of business in
1949, with higher government spending offsetting reduced consumer outlays.; For long term outlook,...
however, foresees scarcity of world capital and trend toward higher levels of interest rates.
contrary, should

authorities will again take positive steps to

By CARLISLE BARGERON

Paradoxically enough, with the cattle freezing

From the title of the
fcr this

subject "Supply and Demand and the Price of Money," assigned
discussion, it would appear that those who arranged the program believe that the

price of

is determined by the law of supply and demand. I cannot believe, however,

money
they are

that

so.naive

this

ment

termined

ply

mand

ing

de¬
ork-

out

never

our

the

arbitrary

been

con¬

during

the

these

controls have
all been operating in one di¬

Moreover,
not

rection.
time

the

and

one

same

certain controls, such as

in¬

creasing bank reserves, have been
put into effect which tended to
decrease the

very

and

money

rates, while at the
time other controls,

same

such

Federal

the

supply of

interest

raise

Reserve

market,

bond

that

tuted

support
insti¬

were

increased

the

money

supply and made for lower rates.
Om

the

would

surface

appear

things

though

our

authorities
did
exactly
just
what

monetary
know

wanted to

rates

sible, of

not

they

increase interest

—

lower

them.

pos¬

that there might
unani¬
mity of opinion among the various
governmental agencies about i
not

course,

have

been

complete

the pi oper action to follow,

the

level

been

statements

made

the

and

expansion

credit

bank

ever

that

end.

nection

thinking in this
opposed to mine

would do well to base all

you

ealculations

the

fact

your

that

will make

ture

price,

monetary
frightened at

our

became

cause

decline in
authorities

bonds

government

would

this

pros¬

and, by their policy of sup¬
porting government bond prices,

pect

tive

less nullified the restric¬

effects

the

actions

which

Trend of Interest Rates
I

suppose

such

program

speaker
what

inherent

this

the

that

be expected to tell you
thinks the trend in the

price of money is going to be in
the days immediately ahead and
to

the

forth

set

belief.

much

indulge

for

reasons
as

dislike

forecasting,
little faith

his

interest rates

the

higher than it- isj
at the present time. There may be I
a

little

and

change

interest

rates

the

pattern of

between

long term

short

very

but nothing

paper

of any'great

significance.
Assuming this to be true there
are
oniy two fundamental queson

[here

interest rates about which

tomtit

can

have

less

tell

the

instance where I

hesitancy
what I

you

interest

trend

than

usual

think will
for

rates

est

rate

rates

then

the

place,

must

remembered that the present Ad¬
ministration
is
determined
that
the

money

trolled

and

market

will

managed

during

days ahead.

It will not be

market.

fact, in

any

con¬

the
free

discus-

fore

address by Mr. Benner be¬
the Mortgage Bankers As¬
of

America, New York

hiive^sity, New York City, Jan.
\ 1949.

the

its

bonds,

Federal

ei»
Reserve banks can go,
therefore, m supporting the prices
ot g9veri?Fient honds and in maintaming the present structureof
low interest rates will, in the final
analysis, depend upon how long
they can continue to pump theii
9redit into the money market and

inciease

cuiiency

and

bringing
stationary price rise.
It

de-

in-

doubtful if-there is

single

any one

factor

supply.

which exercises a
control over our wnole

activity than the

The

overall

intelligent

any

bank
on an

money

objective of
policy

the
and

Reserve

being equal, an
supply tends to make prices go up.
It can be definitely and categoric¬
ally stated, therefore, that the
which

the

ment

such

conditions of full employ¬
and
scarce
raw
materials
have

for

savings on such a scale as
place during the past three
years, inflation is bound to result.

willing to increase the money
supply of the nation and, conse¬
quently, endanger the price level.
In other'words, the danger of in¬

than

what

when
at

that

it
an

the

government

the

supports
interest

which

rate

would

bond

lower
estab¬

lished by a free market.
In

considering,

whether
*o

not

there-fore,

interest rates will

somewhat higher over the im¬

mediate

;hat

future,
should

turn

consideration

which
ment

will

seems
our

determine

attention

the

factors

the

move¬

of prices during this period
If one feels that there is

if time.
any

appreciable danger that prices

will continue to go up and

that the

million

*
Norris ran as a Republican from
Republican primaries, so that made him a
there, however, that the resemblance ended. It

in the

won

was

brought about the Republican wreckage in the 30's,

from which the party hasn't: completely recovered.

age

the

used

Republican machinery of their States because it

machinery to
York

Similarly,

use.

City ,and the .Soyth

nothing in

men

the

was

find arch conservatives from New

we.

running

Democrats

when

they have

with their New Deal brethren.

common

Governor Peterson and those others who would like to

Republican

wreck¬

These

Party

something, to

the

get

organized

have the

labor

vote

apparently do not realize what has taken place in this country
recent years.

by it.

nurtured

that.

This so-called labor organization is not essentially

wing of the New Deal.

The CIO was created by the New Deal and has been

politics sake,

for

They

power.

Its leaders

have

come

are

fairly

politics for

pull

the AFL

in bed with them.
it would

interesting to

see

just how those so-called Republican
would

idea that

the

they would be better off by switching en bloc over to the

Republican Party.
In the

last Presidential campaign, these labor politicians had an

issue in the Taft-Hartley bill.
is that

realized

have
a

found

bill

Truman

not.

seem

to be generally

issue of some kind, they would

was

the

whether there
New

Deal

part of this conglomeration, just as dependent

are a

their continued
are

justification for supporting Truman

Taft-Hartley

They

But what does not

they would have

political

power,

for their livelihoods,

was

nominee.

upon

it for

to speak,

the officeholders.

The Republicans can't get this organized vote regardless of what

they do,

any

than they

get the

can

controlled vote

Man¬

took

competent

student

money,

hattan, Jersey City
can

was

not

Dangers of Expanding Bank

stitute for

scarcity of captial in
a period such as we have
just gone
through. No doubt, in a period of
depression when there is a large
number
of
unemployed,
when
commodities

are

and

abundant

when the economy is--not running
at full capacity, bank credit can
be substituted for
tle danger.
total

for

savings with lit¬

It tends to add to the

money

mand

supply, Increases de¬

goods

and

has

ten¬

dency, other things being equal,
to
step up production, increase
output and not disturb prices.
But
at
no

when

full

business is operating

capacity, when

there

unemployed, when
(Continued on page 26)

men

politicians turned out their maximum strength and it

seerr^

dangerous sub¬

are

corn-

they

enough in states like Pennsylvania, New Jersey and Michigan.'

There
a

And the last election showed

They can't win without it and also the farm vote.

It should be discounted in the

Credit

Bank credit is

Chicago.

win without it.
The labor

credit and prices denies it.

who

cans

existed

during the
last three years, total production
could be increased only very slow¬
ly, probably at a rate no higher
than 2 or 3% annually. The Fed¬
as

pend upon the degree to which it

flation

wear,

lot about the granite conserva¬

should be to control the

government

control interest rates will de¬

can

I've heard

those agrarian sons of the wild jackass in the guise of Republi¬

was

monetary

as many as may

Other things
increase in money

Under

what

Nebraska.

inflation
^

shining example of the
"Republican".only in the

unblushingly takes CIO support.
For years, the late George

larger, and Republican.

become greater and
The extent to which the

He is

they are a "gimme" folk. There aren't
people up there. For years, Aiken's most
issue has been his efforts to get them a. TVA,...hardly ~ a
conservative enterprise.
His colleague, Flanders, a business man,

the

Aiken

Republican label is traditionally the label to

but. about half

ever

that

successful

that

greater.

reveal

tism of the Vermont folk but

ever and

was

two party system.

Vermont to get elected.

the. result

dangers

supply of the nation.

*An

sociation

buy

market

first

to. support

issues

that the

with

happen eral Reserve Index Number of
to be offered to it at this price. Physical Production for the last
Without
attemtping
to
explain two years seems to show this. If
how it works, it is a fact that such within such physical limitations,
purchases by the FedeVal Reserve the supply of money is increased
banks tend to increase the money through substitution of bank cred¬

the

year.

decide

article

es¬

only way the

ever

. ...,

Aiken

"rock-bound Repub-

They
money Liberals would go about getting this organized vote.
supply in such a way as to make have just as much chance of selling the horde of Bureaucrats
it neither redundant nor; jscarce.'

control the inter¬

for

have

runs

coming

the

can

it wants

various

gen¬

eral, and as
as I have
in anyone's ability,,including my
own, to do the job at all success¬

fully, here is

Stripped down to its barest
sentials, during the past year
that

and

sense

coroe

proper
differential
in
interest
rates that should exist at the pres¬

seen

ever

greater

Government

economic

have

that

result

The other is to decide what is the

limits

our

the

tempt to keep the general level of i

banks

they had previously taken.

will

anomalies of

lar&erincrease takes place in bank
'deposits and bank cash, that the
i dquid resources of individuals be-

always being reelected from that State?
'
'
\
;(
It seems to me that the editors could render a much better serv¬
ice by clarifying the atmosphere rather than
by encouraging this
continuous propaganda to make the Republican Party over. A little
examination

the

Senator from

money

possible at¬

every

thinking behind

that here is

■

ernment

government in the foreseeable fu¬

But

which

rates

the

con- :

and

Bargeron

Peterson

his ideas.'

^
lican State"
Never has it broken from its
Republican moorings; it even stuck by Landon. Then where could
you find a more authoritative Republican than a Senator who is

our

tliere

offers from the editors to Governor
The

financing the war
nothing mysterious
technique
of
cheap
money and it also should be ap¬
parent what the limits of the gov¬

But at the moment,

the trend of

to elaborate upon

are if it attempts to make
cheap, should the economic
forces
of the nation be making
for dearer money. The technique
as it can.
Frankly, I think that in
is nothing but an ever-creation of
spite of our large Federal debt, it
more and more
bank reserves by
is a mistake to put so much em¬
the Federal Reserve banks with
phasis upoy the necessity of low

interest rates.

bOnd^

after

alopg ,'with the

considerable

;v article by Senator Henry Cabot Lodge along the
-y; same lines.; Undoubtedly there will be all sorts

that

about

Administration.

became apparent late in

interest

be apparent

experience

Federal

when it ent time among various classes of
1947 that j. investments such as bonds, stocks
such steps would lead to a rise in and real estate mortgages.
toward

•

Washington

It should

Board of Governors of the Federal !
opinion. The first is to determine
Reserve System, we know that it what are the limits to the Governto
Govern¬
wanted to restrict the excessive ment's control of the interest rate.

since the latter part of 1948 and it
instituted
various
steps looking

government

reverse.

rThe "Saturday- Evening Posf'Thas just had-an

;

from,

article'by Senator George D. Aiken of Vermont,
telling the Republican Party what to do to win.

Carlisle

has

rates

established

fires

not

;'v:
The editor of a business magazine was dis"cussing with me the other day-the; idea of an

Technique of Cheap Money

all know,-

interest
less

case

the

celling below par.'

Moreover, I think that it can be
jaken for granted that the present
Administration is going to want
to Keep interest rates low as long

from j rirm«

the

you

Veterans

the

par.

Housing

past.

recent

below

fuel

added

result

nearly $12
bonds in
prices from

their

keep

mortgage loans,

many

these

government

going
Claude L. Benner

Since

year

billions

has

last

^
V

ment bonds at par;

agency con¬

purchased

order

market been

which

should

it may, with the return of the big¬

Washington
being heard of a
speech made out there by Governor Val Peterson
of Nebraska, castigating the Republican
Party and
advising it to out-sell the'New Deal.

centra,

inflation, merely to keep govern¬
The harm That
would result from any appreciable
further
inflation
is
infinitely
worse
than any harm that might

real

banks.

institutions

has the money

trols

tude

the rate

countenance

during the comim
of the same kind of magni¬
as
took place in 1948 and

year,

bonds is the

Reserve

mid-November

history,
cer¬
tainly
never
in
peacetime,

of the

not

situation

correspondents,

oank activities

pi ay

bonds
mortgages. The

Federal

country s

subject to

by the free

trolling the rate

For

would

not de¬

are

long-term

estate

market.

free

-govern¬

some

fact whether it is

the

forces of sup¬

and

Tr.ey

agency.

have further inflaI. believe the public

may

then

non,

forces of supply and demand. Tnis

the

controlled

are

c e—

is the re-

raie

country

ulways be kepc in mind that they

the in'te rest

sult

such

Be that

wigs
today it muse

or luieies^ rates

jiun

that

p r

that

believe

and starving to

death out in the Great Plains and'the people not
being able to get
out of/their doors, the
Republicans got out to Omaha and back with a
minimum of inconvenience. There would seem to be a touch of
irony

office-seeking
country, for

Republicans' plans for the future.

to be a widespread feeling

Republicans

that

there

among

quite

whether they

licans, in the philosophical meaning of the term,
is

the

crowd calling themselves Republicans to take over the

reins of government, regardless of

ably there

professional

yearning

this feeling

among

those

who

actually Repub->

are

not.

want

Dealers out in order that they can take their jobs.

Unquestion¬
get

the

New

But it should not be forgotten that there are still millions of
people in this country who are not on the government payroll, and

God permitting, have no intention of getting on it.
not concerned whether
a

government job.

the

They

than 2,000,000

Joe Doakes
are

not concerned about the personalities of

Just why certain Republicans should

people

are

holding down

jobholders.

support by being New Dealers js
The

These people

Doakes Joe is

think they will get popular

something difficult to understand.

vitally concerned in Whether

Republican philosophy is to prevail in Washington.

New Deal

Volume

169

COMMERCIAL

THE

Number 4774

Tax Increases Both Harmful

FINANCIAL

CHRONICLE

(555)

Out Banks and

ysvo.

Free Gold Market

By JOSEPH STAGG LAWRENCE*

And Unnecessary

Vice-President, Empire Trust Company, New York

By MURRAY SHIELDS*
^

r-i

Vice-President, Bank of the Manhattan Company

Asserting independence of banks has suffered because of abandonment of the gold standard, economist
points out bulk of bank assets today represent government borrowing, and this means banks must deal

v »

Bank economist calls proposals

for higher taxes downright destruc- ■
tive and blueprint for depression. -Lists factors against new and";
additional tax levies, and holds government revenues ample' for
defense program and continuation of large scale foreign aid. Warns,
higher taxes, by contracting individual and corporate savings, can almost automatically put brakes on economic expansion, and tUrther
anti-business, anti-sa rings and anti-investment taxation can force

nation into socialism.

•/t

with

debtor that has

dominant power over them. Foresees
possibility of further government borrow¬
ing,-with banks forced to subscribe, and recommends as check on fiscal extravagance gradual restora¬
tion of gold standard.
Favors intermediate free gold market, while Treasury withholds its gold front
■%
;
' circulation.
.' X:/., -Xf:'..,
'
a

;
In 1933 this country abandoned
diated its obligations payable in
ciated and the
namely,

that

the
A great debate

is about to start on the subject of taxes, for Con¬

been requested by the Administration and urged by several

gress has

powerful labor organizations as well as others to make, a number of
far-reaching and highly significant changes in our tax structure.; It
is

not

too

Congress takes

material increase in them is
likely to have seriously depressive
effects on the willingness of busi¬

with

nesses

present levels of expenditures for

much

any

say

that the action

respect
these sug¬

gestions will

plant

prof

and individuals to continue

equipment and for resi¬

ana

o u n

d 1 y

dential construction.

affect the

eco¬

duction

nomic

Nation

the

for

This is

t h

the

levied. A reduction in tax rev¬

gested

Shields

and others reelect

passage

some

lack of under¬

of the basic

eco¬

problems with which:

the

nation is faced.

by one or¬
ganization, for example, that about
25 to 30 million taxpayers be ex¬
empted from the tax rolls, that in¬
incomes

middle and high

raised

above

wartime

levels, that corporations
subject to stiff excess profits

taxes

tion

that

and

levied

incomes.

sented

special

taxes

undistributed

The

corpora¬

program

pre¬

recently to the Congress by

the President did not go so far as
this but lie did request that a tota;
of $4 billion be raised by

highei
corporation taxes and by highei
taxes on the upper and middle in¬

tax brackets, and that Social
Security tax revenues be raised
substantially.

come

Factors Against Tax Increase
In my
one

view it is time for

who

the

has

some

every¬

understandiriE

dangers involved

such

know

not

number of factors to which it if

wise

and

that

any

be adopted. Among
important of these are:

program
more

(1) An increase in tax
is

tax
the

revenues

not

necessary to maintain the
budget in approximate bal¬
ance, the surplus—on a cash rather
cash

than

budgetary

basis — being
by competent students
at $2.8 billion for the current fiscaT
estimated

year

and

$1.5

billion

for

fiscal

1950.

year

should be

These
estimates, it
emphasized, allow for a

substantial increase in the defense
program and for a continuation oi

large-scale foreign aid.
The tax
burden of about $55 billion—in¬
cluding state and local govern¬
ments

well

ernment—is

the Federal Gov¬

already

heavy that

it should be increased only if the
need is obvious and urgent.

(2) We

close to the point
of diminishing returns in
peace¬
are so

time taxation that it is not
by any
means

foregone conclusion that

if tax rates
tax

were

revenues

to be

"An address

acceptable

bill

President—which

liie

might

he until mid-year-rcan be

to
not

serious¬

disruptive, tor unuer sucn con..ltions sound financial housekeep¬
becomes almost impossible
urgently necessary tha'

ing

view

Jos.

cnt

Stagg Lawrence

today

from its

emphasis

great
inflation

the

and-

misleading efforts
for me to labor
dollar we have

Tne

different

smaller

1 la

'♦

redeemability, than
had

However,

the

prior to

■

tax
of

will

and

turn

much

"too

out

effects.

deflationary;
much

evidence
the

that

/iew

late"
violently

too

and
have

the

position

other

less evident.

Let

statemenl

deterioration

banks

our

explain.
change which
has taken place In our banking
picture seems to .warrant a pre¬
cisely contrary conclusion, namel^,
that the

vastly

banking position today is

superior

inflation

have

was

fact

that

is prior to 1933.
support " the ; This is based
of

what

the

There

forces

1933.

On the surface the

risk that if large
increases are adopted as part
an anti-inflation program they

"(4) There is

purchasing
dishonest dollar

taxpayers be reassured that they
will not be subject to a retro¬
active tax.

dollar,

power,
a
more
in terms of its

the dollar

approximately. half

with

banks

themselves at leasi
temporarily, and it may well be
that the tide is turning from in¬
flation
to
deflation,
in
which
event a deliberately punitive tax
increase
could have devastating

business
and more certain earning power
than we had a generation ago.
r
It is based on the more liquid
position of our banks.
A major

will be well ad¬
vised to go slowly in increasing
taxes
until the position
of the
economy with respect to inflation

holdings of government securities

spent

lave

effects. Congress

deflation

than

clearer

it is

material

from

labor

and

resources

should be
designed to force a reduction in
consumption rather than in busi¬
peacetime

use

investment

ness

fraction

—is
at

will

the

should at all costs avoid

reduces

which

taxation

the

amounts of undistributed

available

for

earnings
expanding

use

equipment or Which
savings by individuals
in the high-savings brackets.
A
plant

cuts

and

back

forced

contraction

individual

bank

the

banks

for 56%

Let
25

FDIC

less

favorable

than

would

sheet

found

discounts amounting to

70% of its total loans and invest¬
Its U. S. securities would

account for

little

than 13%

total, and other securities
approximately 17%.

the

and corporate savings can almost
automatically put the brakes on
economic
expansion, f . Thus the

for

present would appear not to be an

secured by
valuable collateral, tangible assets
and the earning power of the bor¬
rower.
The same was certainly

appropriate time to increase the
tax

burden

business

investors

indirectly. *

matter of the greatest

for "a squeeze on
we

would

have

.This

importance,

profits" such

taxes

cor¬

Here

was

bank? whose

rested largely on loans to

in¬

summer

•

words,

this
a

one

relative

position in the bank statement to¬
day four times
25

was

years

You

important

ago.

"How does this spell
In the first place,

say:

deterioration?"
let

admit

terioration
must

that

must

qualified

word de¬
It
the extent

be qualified.
to

liquidity in and of itself

stitutes

con¬

assets

controversy

raged between one insurance ex¬
ecutive on one side and almost all
on

other

other insurance ex¬
other regarding

the

responsibility for inflation.
This
vigorous protagonist of his own
theories alleged that inflation in
this country was due to an in¬
crease in the supply of money and
that this increase was due largely
to

expansion of bank credit, to an

inflow of

gold, and to the support

of bond prices by
serve Banks.
It

not

the Federal Re¬
;

such

tance

that at the height of this quarrel

this

quality.

banks

to meet the

must be able

purpose

I wish only to point out

versy.

and

largely as a result of it, one
important banking publication
our
clients for
cash.
The
law suggested that the sale of govern¬
places no limit upon our creditors, ment bonds was strongly affected
when they ask vus to pay off. In with the public interest, that the
a
strictly technical sense, the item Treasurer\of the United States
of U. S. securities in our portfolios should be given the power to con¬
does assure us, provided present
trol the bond portfolios of banks
conditions continue, the ability to and insurance companies. In other

current

meet

potential

the

demands

con¬

demand oi

mass

our

own

creditors.

Every

banker,

good

however,

should look under the surface and
search for the true
statement

which

give him.

accountants

Actually that

bank

which

earning

aver¬

represents
borrower who

power

meaning of that
to other clients.

56%

the

holds

now

U's

meaning of the
his

securities

editorial spokesman
limitation upon the
right of banks and insurance com¬
panies to sell their government
this

words,

suggested

within the

term as applied
His ability to pay¬

off depends, first, on a capacity to
tax the people of this country and,

whenever

bonds

and
an

for

13%

invested
asset

I would

tion

like also to call atten¬
the

Federal

In
Marriner Eccles pro-,
posed
secondary reserves for
member banks whose composition*
this

report

would

within

rest

the

make

been

spent by

the bor¬

entirely
for unproductive purposes.
In a
sense we have here the paper of
and

rower

client

that

represents

dead

horses.

Dominant Debtor

has

This

tions.

Has Power

Banks

Over

disturbing

means

there is

implica¬
no

possi¬

bility of liquidating the assets of
this borrower in order to make
his I O U's good in terms of real
values.

Dangers of Increasing Federal
Budget

almost

spent

It means also that we are

Further

probing

of the future
yields disturbing possibilities. The
President has just submitted a
budget—an open end budget, if
you please—for $42 billion.
The
welfare items in this budget, ac¬
counting for only 6% of the total,
by themselves almost equal the
average total outlay of the Fed¬
eral Government

during the '20's.

These welfare items, plus

(Continued

on page

The

Undersigned Announce the

Formation of

J. F. Reilly & Co.
Members New York Stock Exchange

11 Wall

final value

Street, New York

DIgby 4-0290

John F. Reilly

depended upon the paying ability

Member New York Stock

Exchange

com¬

possible for business to
increased

costs

(Continued

pass

the

on page

39)

im¬

the
con-

*Ari

address

by Mr. Lawrence
at the Annual Mid-Winter Ban¬
quet of the Connecticut Bankers

Association,
Jan.

New

27, 1949/

•

Haven,
-

Conn..
~

made other

petitive. conditions

discretion,

of the Federal Reserve Board.

individ¬

its total

Reserve

Board's annual report for 1945.

position did it

whose

however

and

they pleased.

proposals, the net ef¬
second, on "his technical ability tc fect of which would place the con¬
multiply indefinitely the paper trol of a bank's bond portfolio in
tokens which by law are tender the hands of the Federal Reserve
for all debts. Actually the money Board.
which these I O U's represent has

Only to the extent that

accounting

analyze the merits of this contro¬

bank held U. S. securities

have

here

important virtue in the
position of a bank. I have no dis¬
position to minimize the impor¬
an

true of the item called "other se¬
curities."

During

spell this out.

past

uals and corporations,

loan

increases and when

States, today account

likewise.

Let

and

already

to 1924 and looking at
position of the average report¬
ing bank. On the asset side of its

ments.

forced,

the

this country under
government may be
thinks it is being forced,

ecutives

stahds

years

balance

government

govern¬

the

bankers

the

loans and

the

of its total loans and

the

illustrate by going back

develop

1924.

and

Government

client,

United

age

of Bank Assets Are Loans

Bulk

lit¬

8%,

that

almos:

cash

pre-1933 days?

to remain

then

into

statement that the position oi

our

economically strong,
which is the indispensable basis
for
a
high
military
potential,

assets —tbeii

be¬
hind the banks with its guarantee
of deposits up to $5,000, assuring
against the possibility of any ma¬
terial loss on the part of deposi¬
tors. How, therefore, do I derive
my

1924.

item represented in the ear¬
The I O U's of its prin¬

has

convertible

Finally,

proved industrial capacity. If we
are

their

any amount.

im¬

new

many

than

dominant borrower has

the

point.

70%

debtor

repeatedly in
other parts of the world. It is the
part of elementary prudence to;
recognize that circumstances may

vestments, compared to 13V2% in

upon

spectacular

The fact

power.

which

cipal

1935-39 level.

placed

two, repre¬
35% of the

only

compared

the

decline of 43%

today

dominant

ments have done so

lier year.

Index,

shows

invest¬

with

who has us in his power.
It is.
beside the point to retort that this
borrower
will
never
abuse his

this

Its pur-

chasing

Living

and

dealing

likewise ap¬
proximately half of the 17% which

of wage

City, Jan. 28, 1949.

tle

that there has been

increase^

fore the Annual Forum of The
Association of Cotton Textile Mer¬
chants of New York, New York

1933.

loans

Other securities account for

what
before

f hus it is

actually rise.' porations were increased at a time
high as they are, when labor forces another round

by Mr. Shields be¬

only

was

necessary

would

With tax rates

o9%
it

total

is not

has gotten around to actual

(5) Taxes to provide funds for a
defense-foreign aid program ' of
such size as to require diversion

total

senting

months of 1949 will be until Con¬

today.

prudent

gold

group

same

ments has been cut in

dollar

government to check it, it

and

earnestly hope that When
Congress considers the tax pro¬
gram it will make allowance for

terms

(he

of the

proposals to speak out about them
I

the

client,

banks today, we find that the
proportion of loans and discounts

nominal value
of

single

Looking at this

and

beyond
dis¬
pute.
The

bill for the early

their tax

what

It has been suggested

dividual taxes

will

individuals

and

gress

nomic

high price

(3) The threat that corporations
Murray

are

downright
destructive, others are little more
than a blueprint for a depression
standing of

for a punitive * and unneces¬
increase in tax rates.

sary

base

would

enues

pay

measures sug-

evident

integrity of

namely, Uncle Sam.

are

true because
some

would

depreci¬
is self-

ated,

and

national income and,

long while to
come.

And any re¬

outlays

has

currency

magnified effect power,' meas¬
therefore, ured
by the
against" which taxes B.L.S. Cost of

probably have

prog¬
of

ress

such

the gold standard and the Federal Government repu¬
gold. In the interval the currency of this country has depre¬
independence of our banks has suffered. The first part of this statement,

Harold M. Masius
Member New York Stock Exchange

February 1,1949

the so-

34)

(556)

COMMERCIAL

THE

FINANCIAL

CHRONICLE

Thursday, February 3, 1949

Current Asset Replacement versus Book Values

Dealer-Broker Investment

Highlight Cheapness of Common Stocks

Recommendations and Literature

By H. WILLIAM KNODEL
••

It is understood that the

Lionel D, Edie & Co., Inc.

firms mentioned will be pleased
the following literature:

send interested parties

Market economist maintains sharp rise in construction costs and use of "Lifo" for inventory account¬

ing

are causing great understatement of assets, which he calculates at 50% since prewar in the case of
companies comprising the Dow-Jones Average. Asserts this overstates currently reported earnings, and

will

later rise in equity prices to reflect much higher asset replacement values.

cause

The subject of present day replacement value of industrial company assets is receiving
increasing attention. The sharp rise in construction costs since the prewar period has obvi¬
ously made the replacement cost of plant and equipment much higher than the original
cost

which

they

are

ried

<$>-

First,

car¬

the

balance sheets
of

much

value of assets should

use

reflected

depreciation charges are usually
on
original cost, current
provisions made are far too small

''Lifo"

the

method

for

values.

immediately

after

peak of 242 for 1920, subse¬
quently falling to 192 for 1921

in order to

and

the replacement

cover

of these assets at the current

Aviation

Corp.,

Railroad

In¬

low

178

1922.

for

Co.,

640

R.
Spring

South

Street, Los Angeles 14, Calif.
Airlines

—

Discussion

specu¬

lative

appeal with brief data on
American
Airlines,
Northwest
Airlines

and

price

A few conservative man¬

levels.

under¬

—

the common stocks of most

com¬

panies far above the actually
ported book values.

In the

According to

case

the net replacement book

value is estimated at close to 305,
which compares with the reported
book

value

the

1948

Values

indexes

the

calculate

(American Appraisal, Associated
General, Aberthaw, Austin. Fruion
Colnan, Fuller, and Turner), costs
advanced steadily from the 1935-39
prewar period through 1948 with

the 30 Dow-Jones industrial stock
average,

construction

Leading

Present Replacement of Book

of seven

an average

well-known

re¬

value

book

ment

industrial

Jones
1948

replace¬

the

Dow

the

average

cost level, let us
sonrte
significant

price and

first

net

examine

Banks

Trust

Com¬

panies of Northern New Jersey—

Semi-annual

Parker

and

comparative study—
Weissenborn, Inc., 24
J.

Commerce Street, Newark, N.

end

York

Banks &

—Comparative figures

Trust

Cos.

New

York

downs

Consequences of British Socialism

City Banks—Break¬

government bond port¬
sources of growth
in¬

folios

Prominent British editor and publicist traces

Stocks

must be

judged

Minimizes net economic

its merits.

Oils

New

York

City

—

Discussion

"What's

Wrong with the Oils"—H. Hentz
&
Co., 60 Beaver Street, New
York 4, N. Y.

to date.

consequences

Plastics

Chemicals,

Co., 209 South La Salle Street,
Chicago 4, 111.

Ft. Lauderdale, Fla. 4% mu¬
nicipal recreation revenue bonds
(new issue) —Circular — Munici¬
pal Department, Allen & Co., 30
Broad Street, New York 4, N. Y.

Utilities

Kentucky

Company—

Analysis—Doyle, O'Connor & Co.,
135 South La Salle Street, Chicago
3, 111.
Kingsburg

Cotton

memorandum
&

Oil

Card

—

Bennett, Spanier
105 South La Salle
—

Co., Inc.,
Street, Chicago 3, 111.
Also
dum

available

memoran¬

Portsmouth Steel.

Northern

Pacific
Analysis of
"junior" bonds—Goodbody &
Co., 115 Broadway, New York 6,
—

the

N. Y.

Also

available

leaflets

are

Union

Gas,

and

Steel.

Paramount

Pictures,

Inc.—An¬

alysis—E. F. Hutton & Company,
61 Broadway, New York 6, N. Y.
Republic of Italy External Dol¬
Bonds—Circular—Sutro Bros.

lar

& Co., 120 Broadway, New York
5*, N. Y.

Also

available

external

circular

dollar bonds

the

Re¬

public of Mexico.
South Jersey

case

Durez.

Inc.—Circular—William A. Fuller

5, n. y.

course of the eight nationalization schemes introduced.
evidence of employees' greater willingness to serve government than private employer, cit¬
ing continuing absenteeism and disputes in coal-mining, with slightly improved output being due to mech¬
anization. Maintains there is little significance in who owns industry, but in how well it is run, and each

Reports

1948

Laird, Bissell &
Meeds, 120 Broadway, New York

Editor "The Economist" of London

„

and

come

Bank

By GEOFFREY CROWTHER*
••

•

Street, Philadelphia 2, Pa.

of Dec.

around 150.

The Economic

—

Brooklyn
New

total rise of 108%.
Because of changes which have occurred in
31, 1948 on leading New York City
this, all plant and equipment in- the financial setup since 1939. banks and trust
companies—New
To the security analyst, the sub¬ stalled previous to 1948 now has a Working from the financial stateYork Hanseatic Corporation,
120
ject is important for two reasons. much higher replacement value.
1
(Continued on page 35) *
Broadway, New York 5, N. Y.
at

Toronto

Coral Gables, Fla. Tax Partici¬
pation Notes — Memorandum
Buckley Brothers, 1420 Walnut

Airlines.—

Eastern

Lawrencp Tiwnure & Co -Blv+h

Thereafter, it recovered to 202 for Bonner, 50 Broadway, New York
1923, which level was substan¬ 4, N. Y.
statement
o f
agements are meeting the situa¬ tially maintained over the next
assets.
If al¬
tion by setting up a special re¬ several years.
H. William Knodel
Thus, after World
Banks
Year-end comparative
lowance were
serve out of net earnings to take
War I, construction costs experi¬
analysis of a group of the coun¬
made for these two factors, net care of these higher current re
enced a correction of about 17%,
try's leading banks—Blyth & Co.,
replacement value of the assets placement costs, but this is not from the peak annual level, and
Inc., 14 Wall Street, New York 5,
would be far above that actually j generally the case.
stabilized at slightly over 100%
N. Y.
The problem has its origin in above the prewar costs.
reported. This in turn would lift
the net replacement book value of the phenomenon of rising costs.
the

Street,
\

Airlines—Analysis—William
Staats

War I
construction

viously built at much lower costs,

also

Bendix

Chemical

World

the average of seven

the plant and equipment pre¬

inven¬

contributes

indexes advanced from 100 in 1913

stock

based

(lastin-first-out)
of
accounting
tories

level

Since

Corp.,

analyses

are

Potash

Greyhound

of course, carry the
replacement cost to a

will,

theoretical

substantially lower than it
would be at the peak. During and

tend to

available

Co., 330 Bay
Ont., Canada.

some

ment

over the longer term, the
higher net replacement

the

extent,
spreading
of

second,

lesser

earnings

current

quate depreciation allowances; and

companies.

reported

Also

American

come
Mortgage Bonds, Southern
point the rise in con¬ Railway Co., and Texas Eastern
struction costs will culminate and Transmission Corp., and a leaflet
a correction ensue.
This develop¬ of current Railroad developments.

overstated because of inade¬

are

Airlines—Analysis of outlookEastman, Dillon & Co., 15 Broad
Street, New York 5, N. Y.

dum

—

Walnut

Gas

Memoran¬

—

Newburger

Co., 1342
Street, Philadelphia 7, Pa.

Strawbridge & Clothier—Mem¬
orandum—H.

The

Outlook—Discussion
subject on which you have invited m2 to speak to you is "The Economic Conse¬
of British Socialism." Now "Socialism" is not an exact term; different people often possibilities in "Stern

quences

it in very, very

use

the

term.

ished products

with the maximum

Treated

economic

broadly,

imum

taken to cover

long words and long phrases. Pernaps I can more clearly identify

so¬
cialism can be

great

in¬

forms

the

State

nomic

whether

Geoffrey Crowther

they

come

the

from

there

also

Socialism

exclusively

narrower

which

identified

labor contracts—have

entitles

in common,

them

means

exchange" is the classical
pression of this doctrine; it
the

historic slogan

Labor

the

Party in its

was

of the British

years

of propa¬

secure
on

that they are necessary
social

advance

social

welfare

justice.

Socialism,

this broad definition, is an or¬

der of

thought that stands in re¬
against the purely economic
conception of industry and com¬
volt

merce

that

ruled

in the

last

cen¬

doubt

that

definition

it
of

was

this

Socialism

narrower

that

you

the

part for the hospitality you have

the

land,

*An
before

industry

factors

was

production—

labor and capital—into fin-

address

Economic

York Jan.

little fur¬

that this par¬

argue

ticular doctrine of the State

In the same issue is

and

brief

Mr.1 Crowther
Club

26, 1949.

New

shown
to

answer

set me:

if I did not do my best

the question

you

what have been the

have
eco-

nom*c consequences of the BritIish nationalization schemes? But
when I have done so, I hope you

M. Byllesby & Co.,
Exchange Building, Phila¬
delphia 2, Pa.
*
Stock

Also
on

an¬

available

John

memoranda

are

Stetson

Warner

and

Company.

alysis of Southern Natural Gas.
Victor

own¬

Public

ership of industry is only a corner
—and not in my view the most

S. Steel Directors

Discussion—Jacques Coe & Co.,

39 Broadway, New York 6, N. Y.
important corner — of
a
much
wider tendency of our time, the
Public Utilities
Discussion of
economic consequences of which
current situation
Ira Haupt &
are by no means confined
to the
Co., Ill Broadway, New York 6,

Fuel

Co.

Descriptive

—

literature—George Birkins Com¬
pany,
40 Exchange Place, New
York 5, N. Y.

—

eastern

shores

the

North

At¬

Eight Nationalization Schemes

N. Y.

Since

the

Labor

Government

Railroads

Of these

Annual review

and

J. F.

Reiily & So.
Opens in New York

forecast—Smith Barney &

John F. Reiily and Harold M.
Masius, both members of the New

Wall

York

—

Co., 14
Street, New York 5, N. Y.

Stock

Also available is a bulletin dis¬

j took office in the summer of 1945,

cussing

question

the

railroads

the

event

Exchange,

announce
the- formation

whether

of J. F.

fixed

earn

can

charges
decline,
Wheeling
&
*

f i

City.

number

—

land, and I do not think

need

any time this evening dis¬
puting the right of the State to

its bank of issue if it chooses

The

so.

nationalization

ernor

weeks' time.
as

office

few

He has been chosen,

have been, by his colleagues

the Court of

personal

Directors, for his

qualities

technical

competence, and if the agreement
of

the

Government

(Continued

was

on page

42)

this

Reiily

recently
been
doing

business

Volatility in 1949—Comparative

and mutual fund
shares
Arthur Wiesenberger &
Company,
61
Broadway,
New
York 6, N. Y.
figures

on open

d i

floor

prior
he

King

& Co.,
Broadway, New York 6, N. Y.
♦

Amalgamated
—New
ton

analysis—Edward L. Bur¬
Company, 160 South Main

Telephone

Company

business.

been active

Mr.

Canada—Circular—Milner, Ross &

part¬
Marx

Co.

and

his

conducted

invest¬

has

Masius

individual floor

broker; in the past he was a part¬
ner

Skali, Joseph & Miller.

Formation of the

own

ment

Company

Street, Salt Lake City 1, Utah.
Bell

John F. Reiily

♦

Sugar

was a

ner

Western Canada Oil IndustryData—Charles

i dual

broker;
thereto

—

the Governors of the Bank al¬

ways
on

take

York
-

has

Building, Tulsa, Okla.

spend
own

Street,

''New

Tulsa Banks—Five-year analy¬
of concerns.
One of these is the Bank of Eng¬ sis
Evan L. Davis, Kennedy

small

c e s

t Wall

in the hands of one concern, or a
very

Reiily

& Co. with of-

traffic

eight, three represent the
purchase by the State of enter¬ and a circular on
prises of a special kind already Lake Erie Railway.

the past three and a half years. It
would be a poor return on my

turn

chiefly had in mind in suggesting
the Bank of England, so far as I
my subject tonight, since it is on
this narrower plane that we have know, has had no effect whatever
on
the way in which the Bank
been having such spectacular ex¬
conducts its business. A new Gov¬
perimentation in Great Britain in

tury, the economic conception that
purpose

and

ther

with

ganda.
Indeed, it still is the
grouped under the Socialist ban-, Party's slogah in its
years
of
ner, is that they are all advocated,
power,
in the sense that it has
by those who believe in them, on never been abandoned.
I do not
score

allow

the! eight nationalization schemes have
production, distribution i been introduced into Parliament

and

ownership of industry, or govern¬
ment regulations, or labor laws or
what

it has

distinct

the ownership of industry by
State.
"Nationalization of all

s—

public

and

definition

inter -

will

Facts

Figures"—Stern & Co., 25 Broad
Street, New York 4, N. Y.

lantic Ocean.

But

proc¬

What

vention

—

Right.

eco-

these

are

by the broader def¬

of the Left—as
known

or¬

esses.

the

broad definition and a nar¬

—

ganizations,
with free

mean

These

loss.

inition of Socialism by saying that
I use it to cover all the doctrines

labor

efficiency and the min¬

economic

what I

many

tervention

definition

row

different meanings. In particular, there is

market

new

firm

was

previously reported in the Financial Chronicle of Jan. 27.

COMMERCIAL

THE

Number 4774

Volume 169

Europe Have
Sell-Sufficiency in 1952?

however, country

Britain.

;:v

ing the next few weeks.
influence

the attitude of

" to¬

Congress
nation

■'

self-sufficiency and not to satisfy

aid.

Jud g

ate

interim

in disguise as far
other
continental

Paris, the an¬

Paul

Dr.

and

small

Einzig

are

has

deficit, even though the
size of the deficit is expected to
"become materially

three

reduced during

The

years.

re¬

of Congress to this finding
of the interim report is awaited
with
some
anxiety
in
Europe

sponse

pends

are

is the main

cause

of the industrial

and social unrest.

The root of the

trouble is distrust

in the national

which is due in part to
wrong level of the parity and

currency,

the

building
ma¬
terials, the

from those which have been expe¬

to do about the

contractors,

rienced

ings.

the

and

not

make

wide

riety
si d

by
va¬

con-

1 i

the

not

are

market

for

buildings.
Consequently,

c o

extremely

important
the

with

New

con¬

outlook

when

sessed
live

nclusions

Wilson Wright

because

higher
mere

than

that

The
the
wrong
method of "currency than a period of prosperity.
stabilization, and in part to the origins of this boom are to be
found in both, the disturbance of
budgetary deficit. To a large de¬
gree the remedy lies in the hands production and consumption dur¬
bring pressure to bear on the
of the governments and parlia¬ ing the war years and to the dilu¬
O. E. E. C. to adjust the plans so
ments concerned, but unpopular tion of the money supply as a re¬
.as to ensure that self-sufficiency
sult of wartime finance.
These
measures would be accepted more
is reached by 1952. What is more,
are not the origins of a period of
it
is
feared
that dissatisfaction willingly if the American author¬
ities insist on them. There is am¬ prosperity nor are these the ori¬
with the effort of Western Europe
gins of a period of stability in
ple scope for constructive and
to put itself on a sound basis may
economic relationships.
Because
perfectly justifiable intervention
strengthen Congressional opposi¬
of these,. among other ideas,
I
in these spheres on the part of
tion to the Marshall Plan.
■
think it is necessary to assume
Congress and Administration.
that the current volume of pro¬
Beyond doubt,
it is feared that the Ad¬
ministration will
be forced
to

the gov¬
ernments concerned must comply.
How the balance of payments will
work

out

practice remains to

But surely it is most un¬

be seen.

satisfactory if the gap is not meant
to be filled even on paper.

tendency towards un¬
complacency in Western Eu¬

the

United

States.

Western

ments

largely met out
of

Eastern
in

Europe

of the

against

Europe,

raw

pay¬

manufactures.

absence of food and

was

resources

the

material

imports from Eastern Europe, the
countries west of the Iron Curtain

will have to

ments

cover

their

largely from

require¬

the

Western

may

not find

pursued the dual aim of making
the
British workers realize the

Hemisphere. -They

gravity of the situation in order

it easy to sell there the manufac¬

induce

them

work

harder

claiming credit for the prog¬
achieved. With the approach¬

and
ress

ing general election the tendency
is to concentrated on the second
of

these

speeches
logs

credit
tives

ing

are

ments.
these

two

Ministerial

aims.

are inclined to be cata¬
achievements,,;for which
claimed, and Conserva¬
sharply attacked for try¬

minimize
There

these
a

boasts will tend

which

for

would

hence

the

Eastern
natural

perennial

this

Europe

market;

deficit.

would

study of expe¬
rience in the past.
We already
have lived through several unique
developments.
Among
these I
may mention the attainment of a
peak in equity prices about 30
months
ago—30 months during
which corporate sales and earn¬
ings have been substantially in¬
A

creased.

second

unique

say.

the

state

export

to Soviet Russia

countries

1948, new family forma¬

But; in
tion

reduced
by approxi¬
mately 20%, and, in 1949, the an¬
nual reduction apparently will be
was

necessary

more than 30%. Probably the aver¬
age annual level of new family
for formation in subsequent years will

The abil¬

it is

tion because

circumstance

which the proponents of a
economy

number

and
of

called

restrict

who

the low level of
lished

politically estab¬

interest rates

the

that

peak

what is

sometimes

during

perienced
about

the

experienced

and

15%

about

average level ex¬

same

the

1930's, or
family forma¬

the

•

method of tion in the
period 1920-29.
have been
My next subject is the current
,
;: '
supply of dwelling units.
At the
assuming that we are in¬ very beginning of my comments I

Keynesian
analysis really never
willing to recognize.
I

during

of the large higher than the

many

persons

themselves

half

about

planned

terested

what

various

persons

wish

performing

kind

will

different
functions
About using,, producing

obliged to use.
The collection of
original data ^concerning the con¬

and

purchasing buildings; ..Conser

warn

you

statistics

concerning the
which

struction of all kinds of residential

buildings
country
Because

all

never

expensive.
been

have

willing to pay for the collection
of complete information of this

kind,
ways

the statistics available al¬
should be treated as rough

approximations
accurate

rather

than

we may

From available data it may be
computed that approximately five
dwellings
of conventional
type were built in the non-farm
areas- of
the country for every
estimate the apparent supply of
four
new
families
during
the
residential building and to exam¬
decade ended in 1929. During this
ine the use which is being made
period we built to satisfy a de¬
of our inventory of this kind of
mand for residential construction
construction.
My final step will which was deferred
during the
be to appraise what potential pur¬
previous war.
But, in addition,

chasers of residential construction

probably will be willing and able

are

—

are

new

also built

(Continued

substantial
on page

33)

STOCKS

BANK
—

returning yields of 4V2% to 5%%

now

selling close to their 1947-1948 lows,

prices substantially below book values

2We maintain
in the

war

these and other important respects

to encour¬

ernments. But since they too need

the current boom is much

strategic materials which

ent

can

from

that

which

trading markets

folloiving:

Bankers Trust Co.
Bank of

(New*York) Guaranty Trust Co. of New York

America, N.T. & S. A.

Bank of the Manhattan Co.

Irving Trust Company
1 ManufacturersT rustCo.(NewYork)

differ¬

might

expected from a study of business
cycles and postwar periods in the
past. > For
these - among
other
I think we are warranted
assuming that
developments

National Bank of Detroit

Chase National Bank

(New York)

First National Bank

(New York)' National City Bank of New York

Security-First National Bank of Los Angeles

reasons,

during

period of recession will
important respects

be different in

*Part

of *

address

<•

Mr.

Wright at Conference of Mortgage
Bankers

Association,

New -York

City, Jan. 26, 1949. : ' V

begin.

and the group

and of the Western-European gov¬

With

measurements.

this note of caution

histori¬

material postwar boom has been prolonged
of for at least 40 months since the
by
Soviet end of active hostilities in com¬

the

parts

extremely

controlled

are

char¬

acteristic of the current period is

affairs the cally high level of production and
revival of trade across the Iron prices.
A third matter for con¬
Curtain is essential.
Needless to sideration is the fact that the
remedy

supplied by Eastern Europe there
is scope for departures from the
principle of a ban on war ma¬
terial exports, on a strict basis
terially, to the detriment of the of reciprocity. The choice from an
export drive. Moreover, the addi¬ American point of view rests be¬
tional wages will increase internal tween tolerating a certain amount
consumption, and the volume of of such trade or vetoing it at the
exportable surplus will decline.. cost of covering the chronic de¬
The government seems to be help¬ ficiency of the Western European
less in face of the wages demands. balances of payments even after
from ' Washington 1952. "
A
reminder
•

which

that

from

expected from

that

danger

tures

ent

Russia would be contrary to the parison Iwith less than half that
In
achieve¬ foreign policy of the United States period after November, 1918.

slackening of the national
effort. Already a number of labor
unions have' put forward wage
claims
which,
if granted, will
raise the cost of production ma¬
age

however,

are,

rope.

especially in Britain. Hither¬
British Government publicity

Because

functions.

economic

essential if are making these changes, I sug¬
Western Europe is to achieve selfgest that our experience during
sufficiency.
Before the war the
periods when business activity is
food an*d raw material require¬
reduced will be somewhat differ¬
They

ment

There is a
due

resentment

the

high level may be
compared with the increment of
750,000 thousand families in 1941.

quently, their abilities and expec¬
little pressure
An
intensification of national
duction and many of the relation¬ tations will be the important cri¬
from
Washington
on
Western
efforts could go a long way to¬
ships which may be observed be¬ teria to be examined. Employing
Europe might prove to be salutary.
wards improving the prospects for
tween different elements of the the broadest
terms, we may as¬
It would strengthen the hands of
balanced trade by 1952. Much de¬
sume that the volume of building
economy are unstable.
the governments to reach unpop¬
pends, of course, on unforeseeable
Another concept which I wish activity will be determined by the
ular decisions at home.
Several
factors.
Trade with Eastern Eu¬
to recognize is that we are in the number of people who are willing
countries have adopted too am¬
rope is one of the most important
and able to purchase construction.
process of altering the organiza¬
bitious capital investment plans,
of these factors.
During recent
tion of
our
economy.
We are Following this line of thought, it
to the detriment of their prospects
months a number of trade agree¬
rapidly
changing
our
culture, is appropriate to begin with an
of self-sufficiency in the not too
ments have been concluded be¬
changing our ideas concerning the appraisal of the probable changes
distant future.
Also their pro¬
tween countries on both sides of
to be made in the number of new
proper and desirable relationship
posed imports of consumers' goods the
Iron
Curtain;
prominent between
because
new
individual
production families formed,
fail to take adequate account of
amongst them is the recently con¬ and
remuneration, and changing families are the units of popula¬
the' self-sufficiency drive. There
cluded British-Polish Agreement.
tion which use dwellings.
Fol¬
the rules by which individuals are
is
fair scope
for scaling down
Possibly these pacts may cause
guided in the performance of their lowing this, it will be desirable to
some of the import programs em¬
the interim report.

million

added

were

This

total.

the E. C. A. insists on it

than

be 500,000 to 600,000 per annum.
ity to defer expenditure is an at¬ Possibly a figure of 575,000 may
developed from a comprehensive tribute of the people of any econ¬ be used in
computations for which
estimate of the economic situa¬ omy where what we call a high
figures are required.
These sta¬
tion.
scale of living has been devel¬
tistics indicate that a peak in new
oped.
Consequently, the economy family formation was experienced
Another of my preconceptions
is that we have been living in a in which they live always may be more than a year ago and that
considered as being unstable.
I new
period which may most properly
family
formation
for
an
be called a postwar boom rather bring this matter to your atten¬ indefinite
period of time will be

where

bodied in

formation was
high level in 1947,

much

scale

subsistence alone.

little

persons

many

economic

Family Formation

families

new

purchase of build¬

family

brought

for

building.
In our economy a ma¬
jority of the population is at
liberty to expand or defer some
part
of
their
expenditure
for
either investment or consumption
at
practically
any
time.
Our
ability to defer expenditure for
consumption or investment is pos¬

rations

which

peaks

New

nection

their decisions
unaffected

The fourth of my preconceptions

construction
do

after

activity.

pur-

chasers

con c erning
Rations are too
the outlook for building must be
regularly dis¬

not

so that everybody de¬
the black market, which

tributed,

substantial

dollar

much

too

produced inland.

ex¬

pected to have

the

countries

imported because the government
is unable to lay hands on food

Western
is

that

ble

France and

There the main trou¬

concerned.

is in the!

Europe

a
stern note from
would be a blessing

Likewise,

O. E. E. C, in

be most

Washington

the

negative;

standard

the

pose.

report pub-'

increase

immedi¬

living, might serve a useful pur¬

ing by

the

in favor of

pressure

Marshall

enough dwelling units in building and in prospect for new residents, and
lower level of privately-financed construction during 1949.

The several conclusions which I intend to

.V .V

It will be discussed by Congress, and is likely
$
that the purpose of Marshall aid
is to
enable Britain to achieve

contin-

whole

now possesses

it is therefore reasonable to expect

LONDON,
self-sufficiency by 1952? That question will occupy a prominent place
in the minds of European and American statesmen and experts dur¬

1952

willing and able

are

purchase construction, Mr. Wright estimates 600,000 dwelling units a year will be required to shelter
additions to population and still more, if new structures are to be built in place of existing ones. Holds,

offer for your consideration probably will
properly introduced by stating certain of my preconceptions. Buildings are neither
ENGLAND—Will Western Europe be able to achieve produced nor purchased irrespective of the general economic situation. The producers of

*'■

swer

by wilson weight* ;;

Assuming volume of business activity will be determined by number of people who

selfsufficiency in 1952, contends pressure from Washington to combat
complacency might prove salutary and would strengthen Marshall
Plan nations in reaching unpopular decisions at home.
Sees ten¬
dency of too much complacency in Western Europe, especially in

lished

(557)

Economist, Armstrong Cork Company

Einzig, pointing out indications point to continued lack of

wards

';i-v

■

By paul einzig

CHRONICLE

FINANCIAL

Outlook for Home Building

Will Western

Dr.

Trading Department

Merrill Lynch, Pierce, Fenner & Beane
70 PINE STREET,

NEW YORK 5, N. Y.

Offices in % Cities

num-

COMMERCIAL

THE

(558)

Thursday, February 3, 1949

CHRONICLE

FINANCIAL

deposits of $60,058,955,

total

had

with
$58,945,026
the
previous1 year. In 1938, the figure
was $19,338,828, and in 1928, $14,compared

Pennsylvania Brevities

needs

all

fiiled

being

are

present.
*

■

The First Boston Corp., Phila¬
Pennsylvania Railroad and Wabash Railroad on Jan. 26 filed
delphia National Bank and A. E.
698,570.
an application with the Interstate Commerce Commission for author¬
TAX PARTICIPATION
The bank paid dividends total¬ Masten & Co. on Jan. 26 offered
ity to acquire the outstanding common stock of the Detroit, Toledo &
NOTES
ing $5 on 15,000 shares owned by $700,000 City of Erie water bonds
Ironton Railroad from Pennroad Corp.
434 stockholders.
Approximately of 1950-69 at prices to yield from
The
application discloses the<$>
Meino
on
Request
0.80
to
1.75%.
The group ' was
holders
of $70,348 was allocated to a profit
Electric
Co.
and
to
Pennsylvania
RR.
will acquire
sharing retirement plan for em¬ awarded the issue on a bid of
outstanding common.
200,000 shares of DTI common
ployees, and $237,547 added to 100.769 for l%s. y < :
BUCKLEY BROTHERS stock at $105.50 a share, or a total
*
*
*
undivided profits and reserves.
Members New York Stock Exchange
cost
of
When the public offering of Af¬
$21,100,000, through its
'
The public offering of 490,000
Kt
Hi.
and Other Principal Exchanges
wholly
owned
subsidiary,
The filiated Gas Equipment, Inc., pre¬
shares of common stock of Rop1420 Walnut St.
120 Broadway
The Penn Mutual Life Insur¬
ferred and common shares was
Pennsylvania Co.
'
per Co., Inc. on Jan. 10 met with
Philadelphia 2
'
New York 5
Philadelphia ance Co. reports a new all-time
Wabash will buy 45,329 shares announced Jan., 13
a good reception
PEnnypacker 5-5976
BArclay 7-7835
and the. issue
Pittsburgh
banking houses high record of insurance in force
of DTI common at the same price, and
Private Wire System between
was quickly oversubscribed.
were
well represented, including in its annual statement for 1948.
or a total cost of $4,782,209.
Philadelphia, New York and Los Angeles
Of the 75 underwriting houses
John A. Stevenson, President, in
Buckley Securities Corp.
In a separate application, The
his report to policyholders, said at participating in the distribution of
*
'
*
Pennsylvania Co, asked the ICC
stock
45
Philadelphia and
the
close
of 1948
insurance
in the
for authority to issue $16,000,000
The Pennroad Corp. reports net
force reached the record total of Pittsburgh houses were included.
collateral
trust
sinking
fund
income (excluding gains or loss on
5[:
*
$
$2,659,013,126,
an
increase
of
bonds, to be dated Jan. 1, 1949,
investments) for 1948 of $2,718,$118,065,704.
Assets totaled $1,Paul G. Benedum, oil executive
and
maturing
Jan.
1,
1969.
000, compared with $2,126,891 for 180,836,775, a gain of $54,817,678.
has been elected director of the
Bonds or proceeds will be used
1947; and the net realized gains New business totaled $229,783,837.
Peoples First National Bank &
in part payment for DTI stock.
over book cost on sales of securi¬
which represented a slight decline Trust. Co., Pittsburgh.
Mr. Ben¬
ties for 1948 of $496,000, compared
under 1947, but a 24.4 % increase edum is President and Director of
A total of $5,100,000 balance of
with $144,930 for 1947.
The ag¬ over the
average for the previous Hiawatha Oil & Gas Co., Pennthe cost of the 200,000 shares of
gregate earnings of $3,214,000 are five
DTI common, will be met in cash
years.
Ohio Gas Co., Bentex Oil Corp.
approximately 64 cents a share on /* ' "" y - ■' ' *
*
• ' " '
V • '
Philadelphia Transportation Co.
and Melben Oil Co.
by The Pennsylvania Co.
the 5,000.000
shares outstanding
United Gas Improvement Co.
3-6s 2039, Pfd. & Common
*
*
*
The Pennsylvania Co. also filed Dec. 31, 1948, compared with 44.8
reported net income of $2,381,
The
Pittsburgh plant of the
an application for authority to ac¬
cents for 1947. ; The estimated net
422 for 1948, equal to $1.52 a
Fisher Body division of General
quire from Pennroad Corp. 5,100 asset value pen share of Common
share, compared with $2,859,754,
Motors Corp., to be erected near
shares
of
Springfield Suburban Stock outstanding Dec. 31, 1948, is
1421 Chestnut Street, Philadelphia 2
or $1.83 for 1947.
the Irvin Works of Carnegie-Ill¬
PhUa. Phone
New York Phone
RR. at $39.3-1 a share. Springfield approximately
$11.70, compared
inois Steel Corp., will produce a
Locust 7-1477
WHitehall 4-2400
Suburban is a switching railroad with
$10.27 Dec. 31, 1947, and
Teletype PH 257
Pennsylvania Turnpike,
it is full line of stampings for the body
operating in adjacent territory, $11.37 June 30, 1948.
stated, "may not come to market of one of the models of Chevrolet.
with over half of its carload traf¬

CORAL GABLES

The

•-

Philadelphia

Bank & Insurance
Stocks

■

H. N. NASH & CO.

for

with DTI.

fic interchanged

The Bell Telephone Co. of Pa.

time for the money with

some

which to extend the

DTI, which extends from
Detroit to Ironton, O., operates 463
miles of first main track Between
The

American La France

Bausch and Lomb

Hydraulic Press Manufacturing

★

coal, coke, iron and steel products,
petroleum products, soda products
and automobiles and parts.
More

DTI's interchange
traffic is with the Pennsylvania,
Wabash and Ann Arbor railroads,

—

40%

than

Stromberg-Carlson Co.
—

freight traffic is

60 and 70% of its

Dayton Malleable Iron
Haskelite Manufacturing

of Wabash.

the latter a subsidiary

H. M.

Byllesby & Company
OFFICE

PHILADELPHIA

Phila. 2

Stock Exchange Bldg.,

Teletype

Telephone

PH 73

RIttenhouse 6-3717

applicants argue that they
have
substantial investments in
the
Detroit area, and
are
de¬
pendent upon the DTI for a large
volume of the traffic they receive.
The

••

"?yy y'c!v'

I-'V,';

The

Cambridge Bldg. 3s 1953
N. E. Walnut &

Juniper 5s 1963

Phila. Warwick Common

Pittsburgh Railway 5s 1953

/•

:■

-V \h

■

r. '

City of Philadelphia an¬

nounced Feb 1 that it

ceive

bids

Feb.

would

re¬

bond

$44,200,000.
The
be dated March 1,

issues totaling
bonds

will

Jan.

1949, and will coifte due on

1, 1950 to 1999.

Lehigh Valley Coal

application pending be¬

the

fore

sion to issue and sell
in 25-year

The
Power

Samuel K. Phillips &
Members

Packard

Co.

Exchange

Stock

Philadelphia

directors

Co.,

Penn

West

electric operating

struction

for its

plan

1949 con¬

The

Bldg., Philadelphia 2
The

N. Y. Phone

Teletype

COrtlandt 7-6814

PH 375

plan

present

bids for

is to

open

$10,000,000 of new first

mortgage bonds and $5,000,000
of new preferred stock
on or

Com.

City Elec.

^Interstate Power Co. Com.
Merchants Distilling Com.;
Nor. Ind.

Pub. Serv. Com.

Approximately $2,000,000
be

obtained

tional

is to

by the sale of addi¬

common

to the

West Penn

the

Bell

issued

American

Wks.

Cedar

*Offered

National Steel Corp., in a pre¬

deben¬

to
final audit, reports net income
for
the
year
1948,
after all
charges, of $40,121,506, equal to
$16.35 per share on 2,453,900

Tele¬

financing

expansion

pro¬

y.i'v /y /■; .

ceding year of 826,838,788,

&
&
Co., W. H. Newbold's Son & Co.,
Townsend, Crouter
Dixon & Co., Janney

Sherdian Bogan Paul &
all

Co., Inc.,

Philadelphia and Glover
MacGregor, Inc. and McJun-

kin, Patton & Co., both of Pitts¬
burgh, were among the under¬
who,

stock

17,

Jan.

offered

Southern

In¬

diana Gas & Electric Co. at $19.50

share.

per

The Commonwealth Trust Co.
of

$20.84

per

pared

net

equal

shares.

000

$17.78

accrual for vacation pay

in part on services

based

that

the

are

Weir

Mr.

com¬

not anticipate
1949
equal 1948, but that

earnings

in 1948.

hoped for.
the bank

At the end of the year,

Bought—Sold—Quoted

this

end

being

turing operations on one floor and
cafeteria, locker rooms and other
such facilities on a second level,
y'-'vyy y

■: '.-'yy

Steel Corp.,
largest

steel

announced Jan. 25 the
highest net profit and sales for
any year in its history.
The

had

Company

net in¬
equal to

$31,222,451

come

$?2.01 per common share for the

ended Dec. 31, 1948, com¬

year

come

an adjusted net in¬
$19,225,184 or $7.17 per
share for 1947.

with

pared

common

profit, reported originally
has
been reduced by

The

1947

for

$3,158,407, to reflect the applica¬
of vacation wages and other
costs determined last year to have

tion

accrued in 1947,

for

Sales

sales

The

the company said,

$446,with adjusted

the year were

compared

$350,132,366 in 1947.
nearly

firm

steel

doubled *

profit during the fourth quar¬
of 1948
compared with the

not

ter

purposes.

fourth

nation's

the

tax

provision

& Laughlin

producer,

its

special

feet, with all manufac¬

000 square

payments are
deductible for Federal income
the

the

Currently,

year.

graded. The plant
when completed will contain 600,is

site

for1 deprecia¬

$10,500,000
for depreciation in
made in addition to the
1948,
regular provision, $4,000,000 was
charged to fourth quarter opera¬
tions.'
Mr. Weir explained that

only by prospectus

1950, although the plant itself ac¬
tually may be completed at the

tion and retirement

Com.

ship, will become available about
June. The first stamping will be
turned out in the early Spring of

057,301,

pointed out that the

provisions

special

be used in the erec¬
plant in Mifflin town¬

The steel, to
tion of the

actual disbursements made

to the

President,

in 1948

The accrual
in addition

was

pay

for this purpose

McFall,

charges

payable in 1949.

stockholders

favorable

the
amounts of $10,500,000 for addi¬
tional depreciation; $1,000,000 for
retirement payments, and $2,100,special

after

vacation

does
earnings to

Weir,
Chairman,
stated that the 1948 earnings were
T.

Ernest

but

share in 1947.

pany

ings of $6,935,133, equal to $3.11
per share on. 2,230,817 shares in
the final quarter of 1947.

for

$266,735,

fourth

1948 were $12,920,071,
equal to $5.27 per share on 2,453,900 shares, comparing with earn¬

share, last year, com¬

with

William

the

for

earnings

Net

quarter of

model has not yet

been chosen.

Jones

$312,547,

per

showed

Pittsburgh

equal

The particular

2,230,817

to 812.03 per share on

Haven

with earnings in the pre¬

pare

Graham, Parsons & Co., Stroud
& Co., Inc., Yarnall & Co., Har¬
rison & Co., ^oenning & Co., De
Bodine,

1948 earnings com¬

The

shares.

gram.

subject

statement

liminary

parent,

its

Telephone

Phila. Elec. Co. Common

Richmond

000,000 bonds was marketed.

graph Co., to cover advances for

told

about March 8.

Atlantic

August last an issue of $134,-

debenture bonds, due

proceeds

profit

program.

$25,000,000

it is understood is still alive.

ever,

tures will be used to retire notes

subsidiary of the West Penn Elec¬
tric Co. on January 26 approved a

financing

Public

60 miles westward.

April 15, 1974.

common

Allied Gas Common

Pennsylvania

Commission for permis¬

Utility

writers

sj!

1954-64-74

•' ;

has

superhighway
The deal, how¬

1947

quarter.

'A net profit

$10,973,134 equal to $4.28 per y
share for the fourth quarter com¬
of

pared with $5,700,853 or $2.16 per
share
in the fourth quarter of
1947.

Sales for the last

.yr.

quarter were

special provision was made to $130,588,685 compared with $96,recognition to higher con-, 621,722 in the like 1947 period.
A dividend of 65 cents on the
struction costs and the abnormal

the

E. H. Rollins & Sons
1

give

Underwriters and Dealers in

Incorporated

use

PEnnypacker 5-0100

1528 Walnut St., Philadelphia 2
New

York

Boston

and

plant

equipment re¬

sulting from capacity

Equipment Trust Certificates

■f

Chicago

•v

■

)■'■'{■'t

' \

•

,;.;y V'V

Lober

Edw.

operations.
•

Stokes

-V;

Co., Phila¬

dicate

Western

Pennsylvania

>•:

Robert

CHAPLIN

and

York City

of the

Graham,

„

New York Curb Exch. (Assoc.)

10th Floor, Peoples Bk. Bldg.
PITTSBURGH 22, PA.
Grant 3900
Bell System

PHILADELPHIA 9

WHitehall 3-4000

Teletype—PG 473

ALLENTOWN

•

PITTSBURGH

NEW YORK

SCRANTON

•

that

Parsons

LANCASTER

Co., both of

Co., and
Philadel¬

phia were among the underwriters
who on Jan. 11 offered the com¬
mon
stock of Gulf State Utilities
Co. at $16.80 per

share.

President

recently an¬
the oil industry

J. Barth & Co. to Admit

Walter Lawrence

reduced. In¬
creased
production,
he con¬
tinued, has changed the oil sup¬
ply picture from a "tight situa¬
tion" a year ago to one in which

;

New York

profits

61 Broadway
NEW TORK, N. T.

Dunlop,

Yarnall &

to be entering a new
phase of the economic cycle in
which
both prices and dollar

Pitts. Stock Exch.
•*

appears

Incorporated

Members

N. Y. Stock Exch.

Sun Oil Co.

nounced

STROUD & COMPANY

COMPANY

hold¬

was a

headed

Issues
Direct Wire to New

been declared, pay¬

to holders of record
A preferred dividend of

$1.25 is payable April 1 to
ers of record March 4.

& Co. Inc. which
Trading Department Active in

has

able April 5

Feb. ,18.
;

member of the syn¬
by Halsey, Stuart
offered $10,000,000 Central Illinois Public Serv¬
ice Co. first mortgage bonds series
C 3Vs% on January 19.

delphia

common

will

Partner

ANGELES, CALIF. — The
Stock Exchange firm of
J. Barth & Co. will admit Walter
LOS

Lawrence

to partnership as

charge
the firm's Los Angeles office.

Feb, 10.

Mr. Lawrence is in

Volume

169

THE

4774

Number

These

Why Double

just spoken about
who

Mr. Javits

deplores lack of soli-

darity

investors

special

and says it is job of or¬
ganized investors to destroy dou¬
group,

dividends

and

thus foster free enterprise system.

Holds

double

against

taxation

crime

and

investors

govern¬

fare better financial¬

ment would

ly without taxation of diyidends.

nots"

special group of people who have
considered

never

vestors.

One

themselves

in¬

diffi¬

great

our

investors1

are

the
to

lower

A Job

can

the

for

deluded
could

happens.
it

ever

centuries

done

breaks

under

get

this

something
scheme.

with

field

clothes
The

fakers

the

the
investors,
their
fighting

away"

riding

are

the

govern¬

medium

taxes for all it is worth.
have

the "takers away" of to¬

building

done

Tax in¬

wonders

various

parts

the

with

■

bond

bank

could

man.

.yqu

the

individual.

stay. in

business

who

goods in the back of the
dollar

one

and

then

walk out the door made you

another

pay

walk out.
tion

dollar

And

and

simply

with this ques¬

double

dends.
sition

taxation

divi¬

fraud, an impo¬
injustice.
No

American

should

that

kind

the

whole

who

subjected to

treatment.

fact,

tax

system
in
this
unsound.
Politicians

is
mostly the "takers away"

are

and their satellites

co-conspir¬
ators, must be given a lesson not
by .organized
minority of
our
American people but an organized
majority who are our investors.
or

millions

holders,

farm

United

holders, in¬
owners,
savings

policy

depositors,

home

owners,

the

eral

investors,

their

rights?

nition?
own

Are

they

affairs?

questions
who

The

could

but do they get
Do they get recog¬

"No."

not

and

get

(Continued

direc¬
and

under¬

that

have

investors
I

mmz

integrity

too.

NSURANCE

personally

have preached
the

Benjmin A. Javits

doctrine

that

until

freedom

is assured,
the

cause

investment

freedom is safe be¬

matter of title

own¬

ership to an opinion or a religion
is exactly the same title of owner¬
ship

applied to

home

share of stock,

farm.

Certainly, the

average farmer does

himself

investor,

not consider

average home owner.

true,

the

does the

nor

If that

were

picture

nationally and
internationally would be consider¬
ably changed.
There
the

difference

"takers

nots."

between

away" and the "have

The "have nots"

come

special
to

category and are entitled
consideration that we
give them.
In fact, it is the

every

can

free

enterprise

United

States

the

out

the

system

that

holds

great promise for the "have nots."
It is the job of the free enterprise
system of this country to destroy
the class of "have nots" by mak¬
ing every "have not" a "have."
v

But

the

totally
are

"takers

away"
category.

different

the

incubus

the

are

American

body.
They are
groupi that have discovered a
racket

and

Whereas the

the

of old

ison, Texas, and Oakland, California,

less

than

branch warehouses,

llour and feed mills,

would

either put before him the innocent
maiden or an innocent child to

help him do his dirty work and
protect him in his evil ways, the
"taker away" is the man that uses

throughout the Southern

For

the

solely

first 40 years,

ment

have

World

War

"alloy" of
took

company

Ballard 8c Ballard operated
T decreed

over

scheme.
The

provides

psychology

the

s
•

■

•

„

that

flour

for

should

•

away" is to make the
generally feel, especially
the "have nots," who are innocent
victims

have

gone

all

the

sytsems

before and not of

capitalist
system
"takers
away"
are
from

away

give to the

can

else

"have nots."

from
own

the

packing of feed in dress print bags for

In addition to the
of

almost

now
■

Ready Biscuit division operating in 48

million

states,

company's elevators with capacity

bushels and

and

popular.

Louisville

Nashville,

its
a

present large mills in

new

mill

costing $2,400,000 and equipped with the

girl of the organization is the booming Oven-

ern

Louisville,
most

8c Ballard in 1949.

turn¬

This

another advertisement

Securities

the Kremlin through to our
Communist and venal groups

states.

economic

right

Corporation

Southern

and

development

the

featuring

Equitable
of

will

the

series

published for

outstanding
welcome

South

industrial

and

opportunities

supplying capital

than

10 years b.y Equitable

commercial

concerns

contribute
funds

sound

the

further

enterprises.

everywhere.
We must not fool ourselves that
there
own
_

are

camp.

venal groups in our
Too many American

corporations, although the number
is small, are manned by
people
who

motivated
*From

Javits

by
an

before

less

degree are
venal
impulses.

address
a

Forurrt

Mr.

NASHVILLE
DA

KNOX VI

UV/°VTTTm

ORLEANS

T)T

T^-

MEMPHIS

NEW

YORK

HARTFORD
CHATTANOOGA

GREENSBORO

Securities
Brownlee O.

sponsored

by the Investors League, Inc., New
York City, Jan. 27, 1949.
V

LLE

B1 R M I N G HAM

NEW

322 UNION STREET, NASHVILLE 3.

mod¬

machinery, will be placed in operation by Ballard

take

This

the great fraud which stems

factory

that

entitled

they
somebody

own

the

alone,

because

power

that

Glamor

has its

rural customers.

feed mill. While "Obelisk"

are
.1

company

making and printing sacks and bags, and pio¬

neered

wheat, the

conserve

"takers

people

and hot rolls; soft-wheat

crust,

of live stock feeds. The

of the South's best-known trade

one

marks,."Insurance" feeds

whole

products include "ready

company

pie

at Den-

well

mill next door, subse¬

corn

flour

devilish

meal to

corn

sweet

Other

mixes" for cakes,

states.

flour mill. Then because the Govern¬

quently turning it into

upon

Louisville.

flour, buckwheat flour, pancake flour, and all sorts

government and political position
to protect himself and to put a
face

in addition

new

scheme.

new

villain

ing out ready-made biscuits by the millions

headquarters in Louisville, Kentucky, today

They

economic

Organized in 1880, BALLARD & BALLARD, with
operate

AND

Corporation

JACKSON. MISS.

Currey, President.

TWO WALL STREET,

himself

page

corpo¬

stand

great

lot of broken glass and

are
workers,
lawyers, doctors, engi¬

they

throws this powder into the

has

others

other direc¬

some

make

rations

week

great Senator

grinding machine in which

puts

then

squirt

great young frankfurter,

proceeds

small
he

$50

great Congressman

office holder in
tion

their

to these

Some

earn

suddenly becomes
or

running

answer

people who

neers,
tors of

owners,

etc.
This majority
American people are the
industrial
GI's.
They are gen¬
of

culties in the

been

States

stock

Investors

League

majority of our American
are certainly the investors

surance

despicable

country

centives

type

same

It is in this

on.

"takers

were
as

ment

the gold in their

system,
again
put

forward

The

people
—with

government doing what would be

that the GI's of the in¬

now

must

percentage of the silver in

money

destroy.

dustrial

You

something

nothing. The kings and fakers
gone day who chipped off a

money

and

store for

their

build tip people in their own per¬
sonal operations. We cannot pros¬

sold you

(559)

country. - Tax incentives are abso¬
lutely --necessary and r essential to

per

for Organized Investors

in order

does

anysystem,

that

away

price of safety in every .field,
vigilance is a mighty neces¬
sary word in the lexicon of the
investor. r To vigilance must be
added militancy, especially in this
day and age wnen the agencies of
government are being used to tax

been

that

in¬

contsahtly

the

that

because

cannot

for

idea

and

■

and

nothing
-The fact is that when¬
is

happen

the

done

has

nothing
our

Here, too, is a great job for
organized investors.
Vigilance is

stance, without corresponding in¬
crease in production.
The whole
world

must

CHRONICLE

girded for this battle.

in¬

that they

that

vestors

the

FINANCIAL

day.;, Something for
happens and it "is

the people

idea

never

give them something for nothing;
that they can raise wages, for in¬

certain

Investors of this country are a

sold

bracket group

come

Director, Investors League, Inc.

taxation

have

"have

By BENJAMIN A. JAVITS*

ble

arethe

/-''j'y.T"• Yv.

These "takers away" that I have

Taxation?

people

enemy too.

COMMERCIAL

NEW YORK 5.

39)

COMMERCIAL

THE

(560)

FINANCIAL

CHRONICLE

Thursday, February 3, 1949

tributed and percent earned on capital funds.

Bank and Insurance Stocks

Dividend
''

Bank

JOHNSON

Central
Chase

Week—Bank Stocks

This

Hanover

1947

$1,20

$1.20

$2.65

$2.06

45%

58%

7.9%

3.08

3.00

5.6

4.00

office

Byllesby

6.0

5.5

1948

1947

1948

6.86

6.68

5.5

1.60

2.57

2.51

5.8

1.80

2.89

2.61

6.5

6.0

2.00

3.41

3.66

5.7

6.2

______

Trust

Gentry Daggy, of the Phila¬

delphia

6.4%

1.80

___:

Bank

Commercial

The

1948

1.80

National

Cap. Funds

1947

Trust

Chemical

•"

#.'• if

Percent Earn.
on

1948

Manhattan____

Bankers

H" > 4'

Paid in Divs.

Earnings—

■■

Pet, of Earn.

Operating

•—Payments—

National

5.8

meetings of shareholders of New York

4.93
City banks
". 2.80
2.80
Corn
5.03
57
56
8.6
8.2
Exchange ______^
77.09
80.00
80.00
85.36
104
First National
94
6.2
5.4
have been marked by an unusual
12.00
17.98
12.00
17.42
67
4.8
69
4.9
Guaranty Trust
policies of the various institutions.
0.80
0.80
1.36
59
1.26
5.5
63
5.8
Irving Trust
In response to questions of shareholders, presiding officers, in a
2.40
2.40
5.19
Manufacturers
Trust
4.72
46
51
7.9
8.3
1.60
1.60
3.37
number of cases, indicated that the managements would consider a
"National
3.25
47
6.8
49
6.5
City __vi
4.00
4.00
6.50
New York Trust_^_____
6.54
62
61
6.1
'
5.9
larger payment during the coming year. In other cases officials
2.00
2.00
4.68
Public National
4.25
43
47
7.8
8.2
stated that present policies would not be changed, (although dividend
35.00
35.00
45.16
36.56
78
5.0
96
6.1
U. S.
Trust-i
requirements were earned by a substantial margin) unless the level
"Includes appropriate figures of City Bank Farmers Trust Company.
of earnings changed.
The above figures reveal that there has been little change in
This matter once again brings up the subject of bank capital and
dividend payments in the past two years. Recently Bank of Manhat¬
dividend policies. For the past several years bank supervisory offi¬
tan paid an extra of 10 cents a share which will raise the annual rate
cials have encouraged additions to the capital funds of banks. Inas¬
to $1.30.
Also Manufacturers Trust paid a stock dividend of one
much as the market for equities has been somewhat depressed, the
additional share for each 11 held.
J. Gentry Daggy
principal source of new capital has been the retention of earnings.
V:
During the two-year period operating earnings have been rela¬
With only 50% to 60% of earnings, in most cases, paid out as divi¬
tively stable and the percentage paid out in dividends has remained and Company, Incorporated, suf¬
dends, the additions from this source have been substantial.
about the same.
fered a heart attack and is under
Now, however, most New York City banks have built up their
The individual needs of the various banks will be a dominant
care at Pennsylvania Hospital. Mr.
capital to the traditional ratio of one to ten and the question arises, factor in the
determination of future dividend policies. However, it
Daggy,
who is well-known in
in view of existing conditions, as to the necessity and desirability
is believed that an arbitrary policy of retaining a certain portion of
of further adding to bank capital by retaining a considerable per¬
trading circles, is now off the crit¬
earnings should not be followed. It may be that a greater proportion
centage of earnings.
ical list, but is still allowed no
of earnings than the present 50% to 60%
(possibly 70% to 80%)
In order to obtain some idea of the present capital funds position
visitors.
could and should be distributed.
.v
of the various banks, the following tabulation was prepared. It shows,
as
of Dec. 31, 1948, the total capital funds which includes capital,
surplus and undivided profits. Also shown are the total deposits and
the ratio of capital to deposits. In addition to this customary ratio,
a risk ratio has been computed.
This ratio takes into account the fact
By G. METZMAN*
that cash and U. §. Government securities constitute a considerable
portion of the bank's assets. In general these securities are short:
President, New York Central System
term and are relatively free of risk.
By deducting these items from
Asserting railroad rate increases have not kept pace with rising costs, and gap of $1 billion annually
deposits, you obtain what might be called risk deposits.

annual

held during the past three weeks
amount of interest in the dividend

■

The Railroads—A Case of

DECEMBER 31,

1948

>(J,
,

'
r

Bank

Central

"Chase

National

Chemical

387,974

National

21,077

183,678

8.7

45,037
141.587

772,123
523,323

17.1
3.7

366,890

2,311,139

11.6,434

1,113.182

6.3
9.6
17.2

Exchange
National

_____

Guaranty Trust
Irving Trust
Manufacturers

Trust

129,566

320,795

13.0

2,223,383

______

City

York

Public

.16.5

4,327,000
1,435,190

Corn

...

13.2

110,727

'First

New

1,400,785

8.0
10.7

Tr.

Bank

\ Commercial

"National

14.7
9.7

130,550

___

16.9

1,325,472

327,764

Hanover

$1,127,930

164.879

4,731.275
642.399
515,991

Trust

65,896

National

31,316

5.9

$393,011
444,082
361,698
1,429,597532,109
24,651
58,360
45,645
689,089

importance of

dynamic, progressive railroad industry

2.7

Unfortunately, most businessmen generally are so busy coping with immediate and
piecemeal matters that there is a lamentable tendency to let the "long-run" or future take
care of itself.
We often are so busy "putting out fires," so to speak, that we find it diffi¬

2.8
4.4

4.8

1.2
1.3

cult

0.3

the^

1.9

planning

that

'333,063

2.9

would

pre¬

530,327
1,436,983

4.1

those

vent

4.5

fires from

2.9

.Y 190,729,

oc¬

with

pace

rendering
month,

Just

last

Emergency Board appointed
by President Truman, in its report
the wage case of the nonoper-

4.1

curring in the

Trust

110,136'

4.5

133,239

29,679

23,103

"Includes

iirst place.

ating

appropriate figures of City Bank Farmers Trust Company.

can

seen

the above table eight of the

from

close to the traditional ratio of
Seven

one

15 banks ire

educator

dollar of capital to ten of deposits.

that figure is used

much."

much time on

their fuel, steel products and

things

necessities."

are

;

that
Gustav Metzman

While

should—and
time

Now let me give you

with

NEW JERSEY

SOURCES OF

SECURITIES

INCOME 1948
BANK STOCKS
request

J. S.

Laird, Bissell & Meeds
Members New

York Stock

Established

Exchange

120 BROADWAY, NEW YORK 5, N. Y.

Telephone:
Bell

BArclay

Teletype—NY

Rippel & Co.
1891

18 Clinton St., Newark 2, N. J.

7-3500

MArket 3-3430

1-1248-49

N. Y. Phone—REctor 2-4383

(L. A. Gibbs, Manager Trading Dept.)

every

today

business,
concerned

are

want

railroad

industry which
are
urgent and important—to the
railroads, and to you.

largely because the rev¬
actually received from an
increase do not in practice equal
And,

the

services..

period, you have
facing constantly rising ex¬
So

have

the

railroads.

fact

increase

NY 1-2*75

ing

CLEVELAND

Schofield Building

annual

revenues

op¬

has

less than $3 billion. Thus a
serious gap has developed, of more
than $1 billion a year.
Railroad

Rates Have

IV. Seventh

210

SAN FRANCISCO 4

whole have not been partici¬

in the general national
prosperity. Let me be quite spe¬

Russ

Building

The

Michigan 2837

YUkon 6-2332

CV-394

LA-J086

for

reason

is,

that

prices the railroads receive
t'heir services have not kept

SF-S73

WIRE

CLEVELAND,
TELEPHONES

SYSTEM

CONNECTING

PHILADELPHIA,
TO

ST.

LOUIS,

NEW YORK,

Hartford, Enterprise 6011

Providence, Enterprise 7008

BOSTON,

LOS ANGELES,

SAN

quote once more from
of the Presidential

Emergency

Board.

The

Board

said:

"... the carriers have not pros¬

net

course,

and

report

other

Kept Pace

the

Street

railroads

traffic—the

pered to the same degree as have

Not

CG-ios

SUperlor 7644

PRIVATE

annual

been

••

LOS ANGELES 14

peacetime

unprecedented

volume

the

FRanklln 2-7535

postwar

have been successfully carry¬

cific,

rise

•

WHltehall 3-0782,

the

the
period

despite

pating

CHICAGO 4

BS-X)7

that

231 S. La Salle Street

HUbbard 2-0650

result—and

the

NEW YORK 5

industries.

incomes

When
net

ratio

worths

of
are

compared for the past 3V2 years,
Class I railroads averaged 3.3%
while

leading

corporations

manufacturing averaged over four
CHICAGO,

FRANCISCO

Portland, Enterprise 7008
Detroit, Enterprise 6066

corporations

facturing
a
in

But

en¬

1948—

much larger volume

railroads

had

return on net worth of only
tions

manu¬

were

first half

the

business—the

return

return of 10.7%.

despite

and

6.2%, while

3.9%,

manufacturing corpora¬
enjoying an average

were

return

19.1%!

In other

words, while the return

of manufacturing

corporations

was

profits make the
I am concerned

for

profits,

wheels go round.

about the unrealistically low level
of

railroad

the

industry's profits.

the railroad industry urgently re¬

of your own industries;
equally true of the railroad
industry.
true

Since just before the war, for ex¬

67 Wall Street

level of an increase,

general

the average revenue

erating costs of $4 billion, while

Office Square

worth

enced

BOSTON 9

Class I railroads had
net

Investment

period, America's

levels,

rate

enues

ample, the railroads have experi¬

10 Post

Return

including jumping from 10.7% to 19.1%, the
the interim increase granted last return of the railroads was slump¬
week, have gone up only about ing from 6.2% to only 3.9%!
half as much, or 52%;
I
am
not
complaining about
Freight

that is

penses.

INCORPORATED

In the 1925-29

whereas

follows:

rates we must meet,

wage

Just

In this postwar,

GGYER & CO.

1939,

slightly

received for
Any business—whether it be a handling a ton of freight one mile
large manufacturing concern or has gone up only about one-third.
the corner grocery—must in the Thus, the increase in the average
long run make a reasonable profit prices which we must pay is about
or
three times as large as the in¬
go out of business. No industry
can
long exist, and remain useful, crease in the prices which we are
on a
semi-starvation basis. That permitted to charge for our freight

been

BANK and INSURANCE STOCKS

Decline

and

neglect those, and the prices we must pay for
truly urgent, we fuel and materials, have increased
must—spend more an average of 99%;

transportation,

the

with

The

call your attention to some factors

rates

necessarily have
but even so, the
situation,
as
compared

based

reasonably comparable times
national prosperity:

are

of them in

but since

AND

those

Freight

comparison,

two

other joying

passenger fares
been increased,

to i present

considering
those
things
are
important. There are

many

GOVT BOND PORTFOLIOS

cannot

things which

which

BREAKDOWNS

left

-..v.' spend
important."

are

have

none

that

urgent

are

table on 15 New York City banks
has been prepared which shows figures for the past two years on

Sent

have

railroads

deducted from deposits

securities

For purposes of comparison a

N. Y. CITY

the

the basis of the ratio, a different picture

Thus, while most of the banks are considered to have adequate
capital under present conditions, there is also the matter of return
on
capital invested. At the present time the rate of return is rela¬
tively low. This raises the question of adding further to capital when
the funds cannot be employed profitably.

different

holding the price line much

effectively than have the
shippers whom they serve and
from whom the carriers purchase

risk of capital funds.

GROWTH

been

generally
"spend
so

high

is presented. Although risk assets in the form of loans have expanded
sharply in the past three years, it does not appear there is any great

words:

com¬
in these

situation

the

$17 of deposits to

showed higher ratios, with two as

When cash and government

has

employes,

railroad

mented

expressed
it,
Americans

$1 of capital.
and

prominent

2M> times

also regulated about

the

0.8

128,017

cost

the

services.

these

only true hope for rela¬

tively lower rates, and attacks subsidizing of competitive carriers. Cites New York Central's heavy
outlay for improvements and new equipment.
f
'

Deposits

000's

$734,919
881,390
1,03^,087
2,897,403
903,081
159.027
713,763
477,678
1,622,050
780,119
1,693,056
3,294,292
451,670

$66,623

Trust

Risk
of Capital
Deposits to Risk

prominent rail executive lays blame to slow process in permitting rate

revenues,

Stresses

advances.

Ratio

Governments

to Deposits

000's

Manhattan.

Bankers

Ratio of
Capital

Total
Deposits

Capital
Funds

,
,

railroad

exists

Cash and

Total

Simple Arithmetic

*An

before

address

the

Silver

Mr.

Metzman

Jubilee

Anni¬

times

and

Mid

times

Board, Chicago, 111., Jan. 6, 1949.

much

almost four

versary

Luncheon Meeting of the
West
Stunners
Advisory

other

(13.7%), mining
times as much, retail

wholesale
as

much

public

trade

over

five

(16.7%), and even

utilities

which

are

in your own business, the

railroads

have

must

around—and go around in yoiir

service.

The

same

business

sound

their

level

profits

make

fair

wheels

principles

which

apply

of
to

other industries apply with equal
force to the railroads. That is why
a substantially higher av¬
annual return than it is now
earning in order to continue to

quires
erage

and

progress

fully

serve

your

needs.
;

There

are

two principal reasons

why the railroads as a whole have
not been participating in Amer¬
ica's

general prosperity.

these

reasons

subsidized

the

One of

problem

competitors.

This is

of
a

complicated subject, and there is
not time to discuss it now. But I
would like to leave with you the

while all forms of
transportation have their spheres
of usefulness, those which require

thought that

blood trans¬
public purse are

and receive constant

fusions from the

inordinately expensive in the long
run. They increase your tax bills.
To the extent
that they divert
traffic
haul

the railroads can
efficiently, they also

which

(Continued on page 39)

Volume

169

THE

Number 4774

COMMERCIAL

Threat oi Economic Concentration

To Free

Economy

Former investment banker attacks double taxation of dividends

as leading to scarcity of
equity capital. '
Says it does not help our financial security and does not even give to the poor what is taken awoy from vj
the rich. Holds pet loss of revenue to government from elimination of dividend tax would be
insignifi¬
cant, as impact of tax affects adversely low income groups as well as those in higher brackets. Predicts

power,

Attorney General asserts people have right to expect sincere
and vigorous efforts to be made to reverse the process in favor of
free and unrestricted economic opportunity. Says Sherman Anti¬
trust Act, because of its flexibility, is admirably suited to meet the
problems of today, and calls on businessmen and lawyers to co¬
operate with Justice Department.

repeal of dividend tax would

economic

instances we can proceed
only after the monopoly has been
formed.
A striking example of
that is the recent antitrust suit

the

welfare.

Judge Learned

Hand

B( .|||

aptly

against

tms

||B

opinion in the
11

passing

the
Sherman Act I,
Congress
.

not

nomic

the

and

ness

Tom

tion of the

alone.

pre¬

being

from

bar

its

make

can

greatest contribution to the solu¬

Clark

eco¬

motives

And it is here that busi¬

formed.

actu-

but

freedom

monopolies

vent

nec¬

essarily
ated

business

<§>-

because

incentive

^^Bp|K|iB

cluded

fore

rations,

sup¬

Bu®Br^^B
^B^ '■] A
HHBJBBRi

vantage
from dividends.
They
cannot afford to invest in such for

arid
^

uals

receive
while

this

country'ate
of'trie

hands

Pop.

ago.

taxation

corporate profits which

income

receiving an'ihcome of $25,000 or less and nearly
30% of all dividends paid to indi¬

for

have

capital
double

source

tax

realize

gains.
on

people who

If they
dividends

viduals
hands

relatively minor

concern

to them.

Going to the bottom end of the

are

ladder

not

income

brackets

inc'orrie

thfe

between zero and

$5,000

-fiftd

progressively less financing and-®
lesser proportion of all financing
througn equity money than1 in
past years of generally similar
characteristics.
Of
course,A in

Dividends?

Receives

the

while

taxed

people

Per annum.
In the security markets

substantial, but have been, for the
most par, long ago acquired.
Who

are

brackets

Their

dividends.

taxed

possible

the

providing income.
buy tax exempt se¬

present equity holdings are quite
Allan

Today there¬
addressing myself to

over $200 billion
about $7 billion.

I
stop long enough here to
point out as directly bearing upon
our
discussion, that the figures
quoted show that about half'of
all the dividends which individ--

nearby brackets.

received

tax—this double

vestment

dividends

curities
,

Capital available for equity in¬

I realize that the eco¬

often

They must

year

distributed

problem.

the purpose of

taxation of di-

this

not,

The very rich obtain little ad¬
.

mardouble

lowest income brackets and others

security

those

tax to soak the rich, it
nearly soaks those in the
a

Toaay on the
subject of the
effect on the
ket

this

posed,

was

lacking largely because of
existing
taxation.

ance,

——

The result vidends
w e
is that the average antitrust suit are
pickings
costs upward of $200,000 and re¬ out
one
parquires from three to four years of ticular tax
litigation.
The remedy is not to from several
change the system at the sacrifice which I in¬

Aluminum

was

b 1

Electric Company.

ern

the

case

Telephone

American

Telegraph Company and the West¬

when

concept

he said in

—.

In many

ed to enhance

expresseu

The antitrust laws are a moral

<S>

design¬

avail-

made

controversy concerning

mirably suited to meet this problem.

potential flow of capital in secondary equity markets.

enormous

thereabouts I addressed a Forum under the auspices of this League, in
Philadelphia and the subject was an allied one, namely, the scarcity of venture capital. I
said then that there was no scarcity of venture
capital but there was a decreasing amount
a

considerable

assure

A year ago or

the ade¬
quacy of the Sherman Act to cope with the problems of monopoly. By
and large, it is my belief that the Act because of its flexibility is ad¬
and

•!

Chairman, Finance Committee of New York University

;

Warning of constant trend toward concentration of industrial

force

Security Markets

By COL. ALLAN M. POPE*

U. S.

been

(561)

By HON. TOM C. CLARK*

has

CHRONICLE

Double Taxation and the

Attorney General of the United States

There

& .FINANCIAL

find

among those receiving be¬
tween zero and $5,000 net income

years of extreme depression, > we
would expect to find less of any

wanting today
kind of financing for new or 'old
of
business
is any more than it was a year ago. an increasing number of persons undertakings.
Why is the inter¬
this motive plus It is not being offered however estimated as receiving about $104 est in equities declining?
system of
imagination,
initiative
and
in¬ freely and as a result the lack of billion of our national income and
We are now in the stage in our
receiving about $1.5 billion ot
dependent for his success upon genuity that has made this coun¬ it is affecting our economy.
economic
development
wherein
his own skill and character, to try the world's leading producer.
The question before us is thai dividends out of a total of $5.3
we find the money for investment
•billion
received
by
individuals
one
in which the great mass of However, the desire to accomplish of
the
elimination
of
this
tax
in equities held
by a different
those engaged must accept the di¬ this economic
purpose
at times which on the face of it seems with net income.
group of people.
Before income
rection of a few. These consider¬ becomes so intense that some con¬
It was used as a basis''for dis¬
unfair,
seems
illogical
and
to
taxes were imposed the great bulk
ations, which we have suggested sider public policy good or bad, some degree is unique as a form cussion, as I recall it, not many
of new
equity money for new
only as possible purposes of the vigorous or ineffectual, practical of taxation.
I doubt if we would
years ago by leaders of a political
enterprises or for new. undertak¬
Act, we think the decisions prove or visionary by the. effects on impose such a tax today if we party that no man should be per¬
ings of old enterprises came from
to have been in fact its purposes.''
were
profits.
seeking additional revenue mitted to receive over $25,000 per the wealthy and they were
annum.
As that seemed to poli¬
Self interest is a human trait. and had not already imposed it
Our
great
American
society
wealthy. This, I am satisfied, has
rests
In 1758 an If that is true, it is just as bad to ticians socially-minded to set a been shown not to be true today.
upon
the idea of limited And, it is not new.
sible,
cial

because of

pos¬

indirect

its

course.

so¬

nomic

effect, to prefer a
small producers, each

profit.

moral

This

power.

expressed in

philosophy
our

principal

source

freedom.

is best
Constitution, the
of our cherished

These

moral

concepts

purpose

anonymous

writer expressed this

"It is found by sad

thought:

perience that in trading countries
attention

the

individuals

which

and this ideology of limited power

show to their private

apply to industry and every other

comes

segment of American

regard due to the public.
Hence
at such times as the honor, the

erty

society, Lib¬

endangered when either
or
politicial power is

economic

concentrated

the

hands

of the

few.

We Want Free Enterprise
Most

people

this

that they want free eco¬
nomic
enterprise, full employ¬
ment and equal economic oppor¬
tunity. Unfortunately, many only
agree

lip service

pay

believe

to the principle.

economic

interest, be¬
destructive of the superior

welfare, and the very being of a
nation is at stake, the influencing
question too often is: What shall I
now get or lose?"
,
That

country

free¬

was

indictment

serious

How¬

not think it can be
leveled at industry in this coun¬
ever,

try.

The

strated

war

has amply demon¬
and capabili¬

desire

the

ties of American business to come
to

reasonable

to initiate.

believe

note

first

degree

struck,

one

when

ventured

might create

they

single popular
this tax was

such
or

tax

$122

which again
telling reason for

hits

at the

well-to-do

wealthy people.
Following Mr. Hitler's

sup¬

untruth

often

it will be
believed, I would say that, with
no
reflection
on
anyone
other
than a slight dig at their ignorenough

for

from

uals

lion

somewhere

$2.8 bil¬

near

dividends declared out of

possible total of $5.3 billion oi

dividends received by individual?
with net income.
Here I invite

zero

tion.

seeks

must

•

can

A-

accomplish this in two

such

ings,

with

those

ment allowance,

people
servers

have

First, through the continued

ways.

vigorous enforcement of the anti¬
trust
laws,
to
which
I
have

That self interest which
profits must be tempered by

preservation of

which

impels

the

their

personal

income

received by

all

classes of individuals, not corpo-

for the

The Department of
not

the

job alone.

address

*An

Forum

ple. The preservation of business
freedom, so fundamental : in our

blindest hour if

our

year-end comparative analysis of
sent to

learn those lessons which have

enforcement of the antitrust, laws.

eral

Clark

by Attorney Gen¬

before

the

Antitrust

Section of the New York Bar As¬

sociation,
26, 1949.

New

York

City,

Jan.

NEW

Avoid Weakness From Within
We

address

now

group

available. A

copy

of thr
will be

you upon request.

Blyth & Go., Inc.

been shown to us in the blood and

heritage, necessitates a suffering of all the world.
complicated and costly method of

*An

purchase and sale of

country's leading banks is

American

facilities'

our

nation

need

strength from without
we

avoid

That is

weakness

not

from

fear

long

within:

greatest foe. That was
the hope of the fifth columns; it
our

(Continued

page

38)

YORK

PORTLAND

CLEVELAND
HOUSTON

£AN

•

FRANCISCO

BOSTON

•

INDIANAPOLIS

DALLAS

FRESNO

•

CHICAGO

;•

SPRINGFIELD
•

SPOKANE
SAN

JOSE

•

PHILADELPHIA

LOUISVILLE
•

•

LOS ANGELES

•

OAKLAND

DETROIT

•
•

PASADENA

EUREKA
•

Col.

36)
Pope

spon¬

sored
by the Investors League,
Inc., New York City, Jan. 27, 1949.

failed

con-

saviftgs.

Double Taxation

Hitler, and a To jo to extricate
Justice can¬ them.
The prob¬
Surely history would record this

lems of enforcement are not sim¬

limited
on page

BANK STOCKS
Our

small retirriso on. These

come

our

pledged myself. Second, indirectly which each of you in your capac¬
through you, the American law¬ ity of legal advisor to business can
yers, with your great traditions of and must present to your client.
public service. As leaders of so¬
There is too much recent and
ciety, you have a social responsi¬
tragic world history not to im¬
bility to capitalism and democ¬
press upon us the dangers in fail¬
racy.
The antitrust law is no
ing to meet this problem. In Italy,
stranger to American business¬ in
Germany, in Japan the same
men,
and
certainly
it
is
no
disastrous cycle of events tran¬
stranger to their lawyers. Within
spired.
The forces of monopoly
the spirit of the law, rather than
became so entangled in their own
within the limit of the law, there
web
of
greed
that they were
must be preserved complete freeforced to turn to a Mussolini, and
dom and independence.
a

and

(Continued

specialize in and offer

economic free¬
dom. This is the long range prob¬
lem for business.
It is a problem

school

properly been

problem?

interest

retired

group

Yet, does indudstry realize the
implications
of
this
monopoly

self

dividends

received by those in the
$5,000 bracket.
We find

are

of strife.

all

received by individ¬

teachers, the widows living on a
limited inheritance, those retired
from business living on their sav¬

attention to the fact that I

talking of dividends and in¬
received only by individ¬
uals, not by corporations.
Total

30%

from equities

zero

find

take

of net income we find
receive somewhere around
billion of our $133 billion

receive

your

posed formula that if you say an

brackets

of total individual net income and

its continuance

today.
That note
is the politically popular one that

level

man,

$25,000

upon,
a

those

safely say that there was one
strong argument advanced and to
some

income

semi-socialized

retrospect we| can

the aid of its country in times

do what is abso¬
lutely necessary to make it pos¬
sible—that
is, preserve,
restore
and
continually create competi¬
dom,

•

then and it would be now.

continue it

ex¬

•

SEATTLE

PITTSBURGH

MINNEAPOLIS

•
•

SACRAMENTO

' SAN DIEGO

COMMERCIAL

THE

(562)

FINANCIAL CHRONICLE

Thursday, February 3, 1949

Double Taxation Does

News About Banks

By HON. FRED L. CRAWFORD*

U. S. Congressman from Michigan

CONSOLIDATIONS
NEW BRANCHES

Congressman Crawford attacks view double taxation

Bankers

and

ETC.

NEW OFFICERS,

REVISED

does not distribute all earnings to

James

Vice-Presi¬

Trenary,

of New York since 1942, was

loaning officer for several

senior
years,

pany

elected to the Board of Trustees of

institu¬

t n a t

•v

tion

Jan.

Mr.

27.

joined

nary

the
in

Tre-

Company
Chair

the

man

Trust Division

the

Y ork

elected a Director in
and Executive VicePresident in June, 1947. Mr. Ward
completed 47 years of. service with

1946

institution

'the

New

October.

last

Through successive promotions he
became President Jan. 1, 1919 at
the age

for

dent

becoming

years,

in 1942. He

the

n,-

e r

Executive

the

Co. of New York,

Trust

organization meeting of

the

ciated

New

York

Jan.
20,
following
the
annual
meeting of stockholders, William
N.

With the* rank: of Lieu¬

Before

tenant at the end of 1946.

ing

Co.

the

announces

Thomas V. Flynn as

the Board of Directors of the Irv¬

Trust

billion

annu¬

McCabe

Mr.

war

asso¬

was

Trust

Guaranty

the

with

father was an

Co.. where his late

billion,

arid

certain

where

the

assistance

such

vision

pro¬

our

accurately

what

will

be needed,
and I have therefore included no
allowance in the" Budget."

be-

Again he

Crawford

;
————
place the government finances on
a sounder footing.
"On the basis of existing tax

legislation, Budget receipts for the
year 1950 are expected to
total $41 billion."

fiscal

The President's program as now

before

says:

"Defense

certainly

balance.

You

im¬

national security.
is.; not possible now to predict

that

one

of un¬

familiar with the per¬

are

sonnel of the Council of Economic

Advisers to the President—.Messrs.

Nourse, Clark and Keyserling. The
Council's
Annual
Report - w a s

placed before Congress only' a'Tew
days ago; consisting of two parts.
First, the President gives his po¬

expenditures to main¬
tain the present program are ex¬
pected to be higher in. 1951."
'.
"it must be recognized that ex¬
penditures in the fiscal year 1951
are likely to be larger than those
for
1950.
Expenditures for na¬

ending June 30, 1950
shall h"av6 passed, the hiidget will
be nearer $50 billion than $40
billion, or even greater.
■
Uncle Sam, and by this term I
mean
you bond-buyers and tax¬
payers, tramping down the high¬
ways of this world finds this fan¬
year

nonpplitical views on the economic
conditions present and prospecf

tional defense

before the
fiscal

countries

portant

Twenty years
ago it was $4
believe

countries

other*

sub mitt ed.

tive.

„

rise

be expected to

can

and. -at¬

views

litico-economic

tempts to harmonize some with his

legislative program. Secondly, the
Council gives? its cautious arid,

The

substantially above the level

President

speaking; of

estimated for 1950."

corporation profits says:;
"As I pointed out a year ago,
such profits are in excess of the
^
^*
* • •"
"Finally, it must be apparent levels needed to furnish incentives
equity funds for industrial
that in times like the present we and
and to promote sus¬
must be in a position to make new expansion
tained economic health, although
plans if conditions change. I do

tastic

debt and budget as but a
heavy ball and chain on both his

And

continuing from

his mes¬

sage— •;

feet.

•

officer for many years.

the President's Budget Mes¬

sage

Enstrom,

those

$42 billion,
s U been

Atlantic

North

this objective, I

expect later to request funds for
providing
military supplies
to

■

ceased,
calling

and

the

To further

area.

World

been

security

etime

for

bearing Federal debt of about
As
trillion dollars, calling for an interest service

discussing with some
of the Western European countries
measures designed to increase the

The fourth

ties

direct interest

•

ally.
p e a c

quarter of a

have

major hostili¬

terms.

President of

Arthur S. Kleeman,
Colonial

exceeds

$5.5

War II

the Navy
the

about

Clearing

York

New

Association for two

House

now

alone

budget since

appointment, of
Assistant Sec¬
Committee of retary
and Assistant Treasurer,
and Eugene J. McCabe, Jr., as As¬
the Trust Di¬
James M. Trenary
vision
of
the sistant Manager of the Interna¬
American tional Division. Mr. Flynn, who
Bankers Association, and a mem¬ has been with the bank for two
ber of the Executive Committee of years, : waas formerly
associated
the Banking Division of the New with • City' Bank
Farmers Trust
York State Bar Association.
He Co. and has had 24 years' experi¬
Mr.
is a past President of the Corpo¬ ence in the financial field.
rate
Fiduciaries
Association
of McCabe has been with Colonial
Trust Co. since his release from
New York City. ■ ^
> V--0
^
m e m

charge

had

Just prior to our entry into World War II this debt was about $49 billion.

well know, it

you
of

entered World War I

Presi¬

was

State

t i

When

$1.5 billion.

In this capacity he

of 39.

Chairman

Bankers Assoc

was

Feb.,

served

He is

1923.

Vice

business, has been its

bank's

the

dent of United States Trust Com¬

corporations is needed because management

Says corporations should not be distinguished from
individuals, and that taxation of dividends promotes unsound corporate financial structure. Defends
corporate plowing back of earnings, along with, growth in size of business organizations, and holds
dividend taxation is a tax on job creation.

CAPITALIZATIONS

stockholders.

few

Flagg
Gregory,
VitePresident in charge of the Empire

branch
of the
Lawyers Trust Co. of New York,
died on Jan. 27. He was 61 years

United

Crawford

Mr. Gregory became a
messenger in the company when
he was 13 years old, the institution
then having been known as the

West, who has

days

find

the

therefore.

ago

this language:

Title Insurance Co. He..became an

who has

Lane

been

President

for

years,

elected

was

the

ojff'ice
the

Chairman

Board.

Richard

Building

State

the past seven

age.

*An

address

the

by
New

Execu-

Assistant Secretary

V i

c e-

President

and

member

"Board

strom

years.

elected

was

N. Enstrom

;;; V

•

President.
becomes

thus

chief

executive

West

the

: 'A

Mr.

the

officer

Officer,
v

En¬

Irving's
and Mr.

administrative

officer.

Harry E. Ward, President for 23
years
and Chairman since Jan.,
1942, retired as an active officer
of the bank and

elected Hon¬

was

Chairman. He will continue
to be a member of the Board, will
serve
on
important
committees
and
have
an
office
at Irving's
headquarters, One
Wall Street.
Mr. Enstrom has spent virtually
orary

of his business life at the Irv¬

all

ing.

has had broad experi¬
phases of the bank's

He
in

ence

all

business, having served in every
division
came a

West,

activities.

its

be¬

native New

Yorker, re¬
number of

mained in Europe for a
years

after

his

World War I.

army

service

With headquarters

Paris, he was engaged in indus¬

trial

reorganization during the re¬

conversion
the
has

dent of the

company.

the

succeeds
as

elected

was

period.

Since joining

Irving's staff in 1930 Mr. West
participated

League, Inc.,
City, Jan. 27, 1949.

all phases of

Vice-

Mischanko,

President and Cashier of The Na¬
tional

Bronx

has been

Bank

elected

board of directors,

New

York,

member of its

it is announced

Harvey L. Schwamm, Presi¬
dent.
Mr. Mischanko, who had

been

principal N. Y. State hank
examiner, as well as a Special
a

Superintendent of Banks
for two years, joined the bank as
Vice-:Presideht
March
15; 1948,
Deputy

arid two; months later
Cashier

was

elected

The retirement-under the pen¬
system of the Albany Ex¬
change Bank of Albany N. Y., of
Carl

M.'CrOnk, .after 43

service, the last .five

years

.years, as

Sec¬

retary Treasurer and Trustee, was
reported in the Albany "TimesUnion'" of "Jan. ll.'It is stated that
the

also

board

election

the

announced

Addison

Keim

yield 5.30%

President

the

bank,

was

formerly- with the National Com¬
mercial Bank & Trust Co. Mr. St.
John

has

with

been

Albany

the

Exchange Bank for several years,
and was formerly Assistant Secre¬
tary of First Trust Co., Albany.

survey

of business needs for

I wish I did.

the

annual

shareholders
National

Bank

of the
Rockland-Atlas

"meeting

of Boston, on Jan.

least

u m e

what

would

regard

page

32)

Company, Inc.,

plants and equipment, Mr. Keezer estimates amount at

new

that the participants know where the
Very frankly, I
most haunting fears is that the money will not

of my

one

—-—-—'

1—:

1949 but over

think

satis factory

that

saying

immodest

not

that

such

com¬

government to

prehensive survey-has;ever been
undertake n,
or
at any rate
completed.
I'll be glad to send a
copy to anyone here who wants it
free of charge, and, also, to enter
into talk or correspondence about

build,

any; of the

e r-m s.

n o

r. e

that
i

sup¬

say

the
steel

money
can

con-

Dexter

Keezer

would

it won't be
'.'
!«**.

forecast that
supplied.
'
to

I do know
rent

and

something about cur¬

future

capital

require¬

ments.

fact, I don't believe I
ever arrived at a meeting quite so
well prepared as I
am
on
this
point. For today our Department
of Economics at Mc'Graw-Hill is
releasing the results of
of

survey

"Business'

national

Needs for
I*t covers

plans for capital expenditure not
*

*Excerpts from

NEW YORK

solidation, directors were re-elect¬
ed
as
follows:
Roger
Amory,

can

Management

New York

discussion by

given before the Con¬
Finance of the Ameri¬

Association,

City, Jan. 21, 1949. V ;

limit

few

this

highest of the high
our
findings
about

Needs

Equipment."

answers

companies

for

New

They

Plants

based
to our questions from
employing
about
are

5,000,000 industrial workers. That
is about a fourth of all industrial
workers.

60%

Among them are about

of the

workers in that part

American

facturing,
and

industry

which

mining,

much

is spent

That,' let

;

statement

checked
election.

actually

are

the major findings:

(1) A few weeks ago American
industry, as represented by manu-

forecast. It is

which

plans,

rechecked

Whether the

after

the

plans will

be carrried out depends

political and economic
developments still to be unfoldedj
on

many

If the tax

corporate earnings

is sharply increased I think it is a
safe
assumption that the plans
will be cut.
that

reason

constitute

That is for the simple

business

the

profits now
principal source of

funds

for purchase of
equipment.

and

(2) If

new

continue to have

plant
pros¬

perity American industry plans to
keep on making large expendi¬
tures for new plants and equip¬
to

Here

and

over

some¬

hasten to add and

underline, is not
a

Plans

panies represented are large com¬
panies, but we have found previ¬
ously that the expenditures of
smaller companies follow the gen¬
eral pattern made by the expen¬
ditures of .the large.

That is

last year.

ment

and

plant and
(in 1949) as

new

year

where in the neighborhood of $14
billiori.
>
;."*v

spends about two-thirds of all of

spent for new plant
equipment. Most of the com¬

for

equipment this

the

money

transportation

.utilities, planned to spend al¬

most

rriore than hit

of the

"Business'
and

to which I

myself

juncture I can do no
places

satisfactory terms.
That, however, is not equivalent
regardsy as

points covered.

the few minutes

intend

ably be

supplied
what

g a r d

mills,
c e

ference

the next
five. years.
It also deals with
hopes and fears about how
the
money required will be obtained.

o n

anything

Mr. Keezer

34)

(Continued

may

only

sufficient vol-

25, the first since the recent con¬

on page

In fact

Kenney & Powell

(Continued

plans

<£

Plants and Equipment."
At

warns

available

Treasurer,

Cronk.
is

succeeding
Mr.
Mr. Keim, whose father

plant and equipment, in-

ventories, and customer credit re-

subject of this symposium rather implies

don't know.
be

plied
sion

ment in

to meet current and future capital requirements is coming from.

money

well.

have been changed because of recent political and economic
developments. Says there is tremendous room for improvement in America's industrial plant and equip->
ment, but primary reliance for industry's capital funds now is from its own resources.

the - branch office
Empire State build¬

$14 billion in 1949, but

Gregory

The

TIFFANY & CO.

McGraw-Hill Publishing

Mr. Carson

Secretary and Raymond St. John

Investors

Report.ng

ing.
Arthur

balance.

times like the present,
we should take the necessary steps ;
tb -reduce the public debt and'

not thrived

nearly as well as others."
Continuing the President says:
"Corporate financing of invest¬

By DEXTER M. KEEZER*

manager

located in the

precarious

prosperous

businesses have

some

Director, Department of Economics,

Vice-Presi¬

Mr.

late

even

Lawyers

Vice-President in 1919. Mr.
a

Congressman
sponsored

Forum

Company held on Feb. 1,
Rober N. Carson, formerly a Trust

rectorsfor

several

prudent under such

circumstances for the government
finances to
be in unbalance, or

Trust

Di-

Committee

ecutive

bank's

the

not consider it

Current and Future Capital Requirements

special meeting of the Ex¬

York

Vice-President in 1942.

v e

Charter

Nations,

in 1926, and a

been
t i

the

"Under

that

over

the

five

years.

about $55 billion
period are already on

spend

books.

my mind that was the most
interesting and most significant
thing we found out. As you know
there has been (and I
^uess still

is)

widespread feeling that- the

rate of
and

expenditure for new plant
equipment since V-J Day has

-•

;

(Continued on page 37) *

Volume

169

COMMERCIAL

THE

4774

Number

FINANCIAL

CHRONICLE

(563)

Has Not Solved
Merrill

Lynch, Pierce, Fenner & Beane

1948 net income

announce

j as $3,678,913, compared with $1,827,952 in previous year. Capital
L funds are stated at $15,500,000 and assets placed at over
•

5v:;.;yv;.v$141 million.

Senate

Republican leader, maintaining private enterprise has failed to solve housing problem, and
defends 'Taft-Ellender-Wagner Housing measure.
Admits it is socialistic, but denies public
housing program would compete with or interfere with private
housing industry. Wants role of Federal Government limited to financial assistance, leaving adminis-

Fenner & Beane reported its net

ticipated in the profits,

are

income in 1948, as $3,678,913 com¬
The firm's partners, of whom 84 par¬

reported to have fared almost three times

better than in

commodity commission ; in*
come;
the
Southeastern
States

lotted $1,704,513, compared
with
in

contributed

2,905

received
than

tne Western

m's

profit

sharing plan.
'The
1948

firm's

anc

some

mythical "Wall

round-lot Stock Exchange volume

Merrill

with 8.7% in 1947.

eompareu

dividual

business.

transactions

were

In¬

According to this
the Northeastern
States,- including New York.
Pennsylvania, New Jersey and the

over

New

its capital funds at $15,500,000 and

k d

r e a

tion, of course,
deeply in-

o w

<£-

ties, and the inadequate construc¬

tion

than

the

investment

lions

million

securities

England

States, contributed
of the total security

Mil¬
con-

difficulty they
in

there has been

secur¬

Robert A. Taft

ply

tion.

situation.

23%

1948

total assets as

Underwritings and Corporate
Capital Flotations Show Slight Decline

"Chronicle" tabulation however shows year's

outlay

one

of most

noteworthy in U. S. history, having been exceeded only in five

full
'

year

amounted to

1948,

according

the

Banks

can

before

long
In

came

1943

subcommittee

Committee

the

Chairman

was

the

Postwar Economic

Planning

and

the

housing

public

"Chronicle's"

Tnis rate of financing

computation,
slightly lower

was

ate

but failed

rank

the

656,563 exceeded.
1929, with

were:

The other years in

the order of their magnitude

record of $10,026,361,129; 1928, $7,817,877,031; 1927,

$7,319,195,804; 1946, $6,652,069,681 and 1947, $6,317,917,517.
Tne figures for the last 23 years representing new capital and
refunding operations follow:
Year:

New

1948

Capital

Refunding

$5,984,598,532
:4,831,046.013
3,564,441,065
1,272,716,733
672,482,693

1947

1946

1945___
1944—

Un¬

1,863,858,807
312,836,500

160,717,178

220,866,478
318,533,720
825,516,700
528,875,877
1,386.921,569
>1,738,274,615

—

1932—-,—-—
1931

325,361,625
1,763,448,723

1930.

4.944,403,166

1929

8,639,439,560

1928.

6.079,602,416

1927

5,391,008,544
4,357,002,750

1926.,

wisdom of his views.

taken,

one

thing

the

measures

have not solved the housing prob¬
lem.

top

permanent

the

problem, we have now an emer¬
situation arising out of the

gency
very

low construction in the thir-

:;:An address by Senator
a

dinner conference

gage

Bankers
•

Taft at

of the Mort¬

Association

■

2,267,428,765
491,094,449
381,583,656
643,895,345
2,588,965,423

Publishing Company has
put with the first issue I of
Heritage,"
much-ctiscussed
new
$30-a-copy, $150-a-

1,928,187,260

942,550,970

seven

The

almost

pounds, numbers 220 pages,
largest format of any

America.

Largely

graphic, it, is intended to

give

dramatic,

colorful

picture

all,

Fort

Lauderdale

Building.

Kidder
National

Mr. Delin

was

lions

high

through

schools,

public

YMCAs,

hospitals,

plant recreation rooms, etc.
eral

hundred

among

Sev¬

corporations

the charter subscribers.

are

strongly

funds.

The

I
j

Stoetzer, Faulkner Adds
(Special

to" The

Financial

however, that the difficulty is not
so

much

with

fundamental
investment

ing

housing

failure

in enterprises involv¬

degree

risk.

turers and utilities find

that fami¬

it is a
securing

Manufac¬
difficulty

offer to sell

or a

solicitation of

offer to buy these securities.

offering is made only by the Prospectus.

'■

Light, Heat and Power
Company
Bonds, 3% Series Due 1979
Due February 1, 1979

Prospectus may be obtained in any State in which this announcement is circulated from only such
of the undersigned and other dealers as may lawfully offer these securities in such State.

Chronicle)

v.
DETROIT, MICH. —Francis H.
Ford is with Stostzer, Faulkner &

•

(Special

The

HALSEY, STUART & CO. Inc.

Exchange.

W. W» Blackburn Opens
Financial

Chronicle)

!
y

OTI^S

& CO.

CLEARWATER, FLA. —W. W.
Blackburn
906

has

opened

Eldridge Street'to

securities

business.

offices

BALL, BURGE &. KRAUS

■

engage in a

FIELD, RICHARDS & CO.

(INCORPORATED)

WM. J. MERICKA & CO., INC.

HILL &. CO.

February 3, 1949.

how

I believe,

formerly

mil¬

libraries,

very

available

show

Price 102.39% and accrued interest

Co., Penobscot Building, members

expect it to be available to

will

in the stock and bond department
Of H. D. Knox & Co. in N. Y. City.

of the Detroit Stock

publishers

hard

are

can

February 1, 1949

Co.,

phases of the heritage that belongs
The

the

doubt experience with the laws

Bank

Americans.

financing for rental
housing of this character, although

FT. LAUDERDALE, FLA.—Eu¬

and has the

magazine

today

FHA

getting people to invest their
subsidized, and that they money in stocks and equities. Tax
should' pay for the capital invest¬ rates are so high that wealthier
ment at current rates of interest. people have little interest in put¬
The FHA has done a good job in ting their money into a risktenbringing about a large reduction terprise, and would rather buy
in the cost of financing homes. If government bonds and get 2!/2%
industry and labor had done the for certain. One of the things
same
job, we would be a long way which Congress is studying today
is some change in the tax laws or
on the solution to our difficulties.
Certainly, we should provide a other laws which will make it
secondary market to the extent more attractive to invest money
necessary to tide over a tempo¬
(Continued on page 30)
not

The Union

Dated

with „A'.

magazine.

loans

$5,000,000

R. Delin has become associ¬

.weighs

lack

First Mortgage

ated

magazine

5,299,553,720

gene

illustrated

for

further

7,817,877,031
7,319,195,804

"Nation's

new

providing

restrictions

5,473,279,043
10,026.361,129

come

year

something

lies able to pay their rent should

The

$l50-a-; Eugene Delin With
A. M. Kidder in. FlaMagazine

Forbes

have gone

the unwillingness to raise
the rate\)f interest rather than to

This announcement is not

First Issue of

Year

would prefer to rent.
We
about as far as we can

many

meet, but I believe that this is

due

page

old

family which is

every

believe

certain—we

legal

NOTE—Complete details of financing negotiated in
December and for the 12 months of 1948 appeared in the "Chronicle"
Monday, January 31,

housing for middle income groups.
facility for Nearly everyone who wants a
new
homes home is forced to buy it, although

rehabilitation

the

market

EDITOR'S

there is every

the field of

any

Housing Problem Not Solved

1949.

178,257,949

1933—-

is hard

to feel confident of the

Regardless of all

largely

have

4,631,945,681

403,569,958

—

programs

be improved.

violent prejudices, that it

;

failed, that of encouraging rental

passed

2,433,692,159

1,214,950,299

1934

solution.

they

1,208,679,946

1937

1936.
1935.

ernment

field in which gov¬

one

since

3,416,995,382

1,356,603,363
2,026,195,056

1938—

There is

recently

for anyone

join with others to

America, New York City, Jan. 25,

1,062,201,383
736,382,782
383.453,032
873,348,950
1,225,012,213

1939—

such

in
secondary

2,140,494,689

417,637,250

1940—

can

should

the housing problem
complicated in itself, it has

1,812,713,388

4,985,870,721

642,883,026

1941

perhaps,
insist

ought to
be solved within the principles of
free enterprise. Your Association,

fortunately,

1,267,145,739

3,087,628,616

2,508,595,838
702,995,786

—

1942—

have supplemented the

This

field where our problem

two

past

mortgage

organization.

with

$6,261,656,563
6.317.91.7.517
6,652,069,681
6,258,587,454
3,181,078,531
1,080,868,131
1,042,520,276
2,618,804,746
2,762,577,838
2,196,166,420

377,872,345

1943—

the

service

able to pay a rental commensurate
with present costs.
Perhaps we

Grand Total

$277,058,031
1.486 871.504
V

During

homes for

$6,317,917,517 reported for 1947. The 1948 figures, however, been approached from so many
of the most noteworthy in history.
Only in five other angles and with so maqy panaceas
according to our records, were the 1948 figures of $6,261,- for solution, it has created such

years,

get us back to the nor¬

construction

and

one

Loan

of the FHA and the Fed¬

believe

than the
*

the

Home

collectionsv' of

and

eral Home Loan Banks, so that I

bills

in the House.

assistance

Federal

war.

powers

the

years, we

consider
housing problem. I have par¬
ticipated in the drafting of most
of the bills that have been passed,
Policy

remedies sim¬

mal situation which existed before

Senate

with

try

which have twice passed the Sen¬

securities placed in the United States during the

$6,261,656,563.

and

other years.
New corporate

FHA

been interested in the

Senate.

of the emergency
I believe private indus¬

burning issue in politics. I have
subject my¬

$141,341,000.

long term of amortization. That

field where
subsidy is justified. It would
put the government into the mort¬
gage business with all the expense

caught

because

self

about

anybody the money

reasonably cheap houses
very low rate of interest and

would be subsidy in a

many

But

unsound permanent

accommoda¬

to have

seem

in others, there is a shortage.
we ought not to be led into

up;

ing satisfac¬
tory housing
It

units.

700,000

some

locations

net gain

danger¬

build

rather

some

ernment lend

at a

tion,

the

are

proposals today that the gov¬

ous

all through private indus¬
try and with little slum elimina¬

be¬

And

•There

800,000 units
about a
million

year

housing.

Last

units,

anc

this

to be developed
point where it represents a

government investment in private

year

families,

new

it ought not

to the

provided

and

cerned
cause

million units

stringency of mortgage funds,

but

situation will

few years. It takes

provide for

year

fam¬

are

itself in

rary

Undoubted¬

war.

temporary

nearly half

during the
this

cure

and

277,000 in commodity trades.
The firm on Dec. 31, 1948 reports

ly,

view of fi¬

nancing!

ilies

In 1948 the firm did 9.4% of all

geoChas.

University and the Mortgage Bankers Association of America to speak to
the subject of Federal aid to housing. The Mortgage Bankers Associa-

te rested

Street."

graphical
its

18%.

area

Conference

much the invitation of the Graduate School of Business Administra¬

very

tion of New York
your

housing.

not

ana

gives the first

breakdown

th(

appreciate

subject
from the point

report

detailed

chine is owned at the grass roots

mil¬

lion under the
f i

Mid¬

while

tration of public housing under local authorities.

Acording to Charles E. Merrill
directing partner, figures indicate
that
the
financial
industry hac
deep roots in every part of the
nation, and that the industrial ma¬

the

and
20

contributed

Southcentral

Em¬
num¬

bering

22%

section

western

$659,703

1947.

ployees

and

1947, being al¬

-••'A-.-,./

government programs thus far have been ineffective,

The nation's largest stock brokerage firm, Merrill Lynch, Pierce,

pared with $1,827,952 in 1947.

Housing Problem

By HON. ROBERT A. TAFT*

': ■■■■ ■ ■;U. S. Senator from Ohio

■;•

iff-;-<"

•

■

•

...

iW'ii

wwr**m vr*.my

*"< m

trnrmwi?><r.fp

\<*}yw t>

•

(564)

COMMERCIAL

THE

FINANCIAL. CHRONICLE

Thursday, February 3,

1049

Prominent Personalities
(Fourth of
IIARRY I.

SECURITIES

Series)

PRANKARD

2nd

President: Affiliated Fund; American Business Shares,

By HENRY HUNT

and Union Trusteed Funds

Prospectus
your

upon

investment dealer,

NATIONAL

120

from

SECURITIES

RESEARCH

'48 Sales Up

request from

CORPORATION

BROADWAY, NEW YORK 5, N. Y.

21/2%; Year-end Assets Up 7%

Harry Prankard, just turned 46, is nearly six feet four
inches tall when he stands up straight—which isn't often.
Harry likes to sprawl in his chair and walks with a stoop

During 1948 gross sales of 80 odd mutual funds amounted to
$274,000,000 as compared with '47 sales of $267,000,000, while yeara new high of $1,506,000,000, against $1,409,000,000

end assets reached

Due to relatively heavy liquidations particularly among
industry group and specialty funds, net sales amounted to only $146,-

the

000,000,

$32,000,000 under the 1947 figure.

some

The following tabulation

shows the steady growth of the busi¬

Assets

1948

Bullock

Fund, Ltd.

1,409,000

267,000

Dividend Shares, Inc.

1946

1,311,000

370,000

1945

1,284,000

292,000

882,000

1943

:G<

116,000

73,000

312

401,000

53,000

293

seven years,

while

CALVIN BULLOCK
Established 1894

assets

approximated

closed-end

$2,250,000,000.

prosper.

and

funds

mutual

May

business

the

Manhattan
INC.

understand

different

Divisional

our

'Management

stocks

Managers

Investment

our

Department.

issues.

that

seems

substantial

to the

Department

the

sent

original investment amounted

of money.

sum

However, the letter from

list

also

English.

I've

but

O « ■■

".
been

pretty

N f W

causing

following developments con¬
cerning them
or determining whether it would be a good time
to sell my bonds and buy stocks, or vice versa
to do any of the
things that go to make up sound investing. So
>'■
:
.

...

profusely

■

illustrate his

they need—by buving

Stock Prices in Terms of
"Investors

-Mutual

who

watch

the

level

Earnings

of stock

market

prices without

apt to get a distorted view of
dearness of stocks. Charted below is the priceare

cheapness or
earnings ratio of Barron's 50 Stock Average over the last 2d years.
It will be noted that only twice before in this period has the ratio
sunk below eight times earnings; once in the depths of the 1932
depression and again during the lows of 1942. "
"There is

recently, I suddenly realized what had
worries—I just hadn't had the time I should have

thinking about it

spent in analyzing my securities

relating those prices to earnings

bought stocks and bonds for years
not in large
substantial for me.; Sometimes I've made out
well, sometimes not
but whichever way it turned out, I've
usually had a, lot of worries and headaches.
Well
.; •
r v
.

sales punch into
Presi¬

"D. G." Booklet called "I Never Knew."

the real

and graphs
V. 7

charts

the kind of full-time attention
Funds!—From

very

How to Sleep Better
amounts

injects far

Investment
simply 'All 18

Manager stated very
Securities Were Worthless'."—From "The. Mubual Investor."

HUGH W.LONG SCO.

dabbles

our

Divisional

frospvctui from your Investment Dealer or

his late

All of these issues

In the letter he asked our Invest¬
Department to get the latest market prices on these various

ment

the

filled

a good game of golf and hits a long ball
although his second shot seldom finds the green.
in oil painting in his spare time and has
turned out some recognizable portraits of his friends.
When asked his opinion as to the growth of the mutual
fund business over the next few years he replied, "By 1955,
mutual fund assets should be" at least triple their present
figure of $1,500,000,000."
'

Pay?

recently

held by a cuStpmer of his.

were

well

Harry enjoys

Pictorially the Wellington report must be seen to be appreciated.
job well done and a report that stockholders will

Does Investment

has

horse early in
the former's

off the tee

enjoy reading.

Harry

dents, using
points..

new

"One

shoes of

That

his reports to shareholders than do most mutual fund

Suffice to say, its a

Bond Fund

Harry Prankard, 2nd

Following

over

sponsors.

and low pressure in his delivery, he has the happy
faculty of being able to point up the advantages of buying
mutual funds, particularly "Affiliated," in simple, easy to

beauty,
a

organ¬

mutual

Precise

new

assets at

other

many

leadership, which have amounted to nearly
$82,000,000 during the past three years.
For a C. P. A. Harry is a surprisingly talented salesman.

style "visualized" annual report that is really a thing
Wellington Fund celebrates its 20th anniversary with
high of more than $64,000,000 while 1948 sales rose to
the record level of nearly $19,000,000., conversely liquidations were
gratifyingly small, amounting to only $1,195,000.

management

funds under his

year-

continue

well

predecessor is evidenced by the record sales of Lord Abbett

fund

mutual

duties.

Wellington Reports
In

the death of
Andy Lord, who was killed falling from
1946, Mr. Prankard was selected to take

as a

Combined
end

investment
as

fund

result of. preferred stock redemptions as well as buy¬
ing in of common shares.
It is also interesting to note that the
average closed-end shareholder owned over $2,400 worth at the end
of the year whereas the mutual fund shareholder on the average,
owned $2,080 worth.
nearly 34%

first job

(in

would

Abbett

shareholders of mutual funds have increased 146% in number,, stock¬
holders of closed-end
investment companies have decreased by

Investment

other mutual fund Pres¬

ization

interesting to note that during the past

hard

probably more

not the case.
For some years prior to
accepting his present position, Harry was
head of Prankard, Zimmerman, an ac¬
counting firm that serviced the Lord,

341

653,000

It is

Harry is

1946) is his present one.
appear that he started out at
the top to learn the business, but such is

'421

488,000

from

Dealers

Harry's

'497

1941

Prospectuses
evailable

business.

any

executive
It

1942

—

than

580

169,000

1944

fund

672

Nation-Wide Securities Co.

He has

clearance.

six foot

ident

722 '

$274,000

1947

often

No. Shareholders

Sales

$1,506,000

—

than

more;

worker and hits the road

(000 omitted)
Year

door had

jaw of

mutual

during the past seven years:

ness

pugilist, but a receding hair
line gives him a scholarly appearance,
not belied by his knowledge and un¬
derstanding of the problems
of
the

year ago.

that of 1942.
shadowed

a significant parallel between the present situation and
Then, as now, apprehension about events abroad over¬

industrial

spending huge
profitability

activity at home.

sums

conversion to

which

was

unknown.

In
war

1942, industry

was

still

production, the ultimate

industry

1948,

was

still

...

within 48 hours after I

step—and

eystone

ished.

For

with that step, the
I had

seen

to it

'woke

cause

that

up,' I had taken
my

positive

financial worries

ploughing back huge
production to

sums

new

out of earnings

peacetime

thereafter my securities would get

Custodian
F unas

pleased

to announce the

appointment of

B. J. Van

51st CONSECUTIVE

Certificates of Participation in

tlieir capital

(Special

Ingen & Go.

The

Financial

Chronicle)

JACKSONVILLE, FLA.—Harry
F. Murchie has become associated

DIVIDEND
A. MOYER

KULP

The

INVESTMENT FUNDS
investing

1949 should

Harry F. Murchie With

SECURITIES,INC.
are

demand.

van¬

CROUP
We

level

and borrowings to step

following 1st quarter dividends have

been declared

Vice-President and Director

payable Feb. 28, 1949
15,1949.

shareholders of record Feb.

f Regular *Extra Total

Class

Agricultural
Aviation

(Series B1-B2-B3-B4)

PREFERRED STOCKS

ALVIN

(Series K.1-K2)

J. WILKINS

.12
.07

Elec.

.07

Chemical

and

.09

Building

BONDS

.09

Automobile

.14

Equip

—

.07

Food

—

.09
.09

.07
.12

.07
.14

.07

Fully Admin

(Series S1-S2-S5-S4)

.10

General Bond...

Vice-President

COMMON STOCKS

.09

Indust'l Mach..

Institute Bond.

.09
.09

Mining.

.08

Petroleum

107 NO.

CAMDEN, N. J.

1420 WALNUT STREET
PHILADELPHIA,

PA.

.10

Railroad Bond...

.03

Railroad Equip..

.08

Railroad Stock..

SEVENTH STREET.

.09

Steel.

Boston 9, .Massachusetts

.10

Merchandising..

Ilie Keystone Company
50 Congress Street

.09

Low Priced.....

Wellington Fund

local investment dealer or

of Boston

—

Investing Co.....

Prospectus from
your

WELLINGTON

—

.01

.08

Tobacco

.06

Utilities

.03

—

•—

—

.10
.10

.12
.09
.10

.09

Harry

.09

net

profits

Murchie

.10

with B. J. Van Ingen &

Co.

Mr.

the

.03

7.08
.09

Murchie

was

formerly

Trading Department of Clyde C,

.08
.06
.03

Pierce Corporation, with which he
had been associated for a

1 From net investment income

"■From

.08

of years.

number

Volume

169

Number

4774

THE

COMMERCIAL

FINANCIAL - CHRONICLE

(565)

benefit in productivity and profits from this new expansion.

At all
events, the chart indicates that the lows in investor confidence are
very brief. .They can also be very profitable to those who do not wait
too

Outlook for Building Materials

long."—from the Farker Corporation "Letter."
*35 '36 '37

1023

*38

'39

'40 *41

'42 '43 *44

By MELVIN H. BAKER*

President, National Gypsum Company

*45 '46 '47 '48

Asserting there are indications of some leveling off of building costs, together with a decline of from
5% to 10% in building volume, Mr. Baker sees mflre building labor available as v/ell as more modern
methods used by builders and contractors. Says
output of most materials has been steadily increasing,
but price outlook is clouded by demand for higher wages and by
uncertainty over domestic and foreign
V"''

vCy'y

political situation.

for

1948

any

than

time

aware

construc-

the
on

and

the

money

site

dur¬

war

years un¬

der that

Joint SEC and FTC financial report

til

they

of what lies

porations estimates in third quarter profits

tions

income

after

estimated

was

taxes

all

billion

$2.9

U. S.

manufacturing
the third quarter

for

Baker

1948,

view the
mine

high

-in 1939.

corpora¬

are

than

Melvin

net

post¬

get

may

ahead, let

last few

what

or¬

better view

first

years

supply

my
function

to explain or
attempt to justify these higher

according to the quarterly report just made public jointly by the
costs.
Securities and Exchange Commission and the Federal Trade Com¬
There are indications that 1949
mission.
This rate of profit was^
will
see
some
leveling off in
about $60 million higher than for to 6.9%, while the ratio to stock¬
building costs. Before I turn to
the preceding quarter and about holders' equity ,was
16% oh an
the subject of my report to you,
$480 million above the profits in annual basis. As regards the dif¬
I should like to take a moment to
the corresponding quarter of 1947. ferent size classes of corporations,
point out a few of these indica¬
The increase in profits from the the
smallest
and
largest
size
tions^ Most experts with whom I
second to the third quarter re¬ groups showed increases from the
have discussed the
outlook
for
flected higher sales more than off¬ second to third quarters in the
construction
in
1949
seem
to
setting higher costs and expenses. profit ratio's offset by declines in
agree that there will be a falling
According to the report, total ill j mei.ium size classes.

merce

has

and

records

the

for

months, indications
1948
production of

first

six

that the
construction
materials was in the neighborhood
of 5% higher than that of 1947.
are

It must be remembered that the

1947 recorded the highest
output of any year since 1915, ac¬

year

cording

the

■

Commerce

Index.

Department

This Index

for

off of from 5 to 10% in volume. July, 1948 showed an increase of
cor¬ V
There was not too much differ¬
If this appraisal is right, there 8% over
July, 1947 and about 54%
the three months ence in the rate of return related will be a
corresponding slacken¬ over production in 1939.
;
July through September are esti¬ to stockholders' equity for the
ing in the demand for construc¬
Despite the steady climb in pro¬
mated at $42.1 billion, a 3% in¬ various size
groups of corporations tion; materials. This should bring
duction, prices of most materials
crease over the previous
quarter, during the third quarter. Indus¬ us to a
point where prices will rose
substantially
during
the
while costs and expenses amounted
tries with the highest rates of re¬ hold to their
present, or slightly years since 1939. The Bureau of
to $37.4 billion. Of the $4.6 billion turn
were
motor
vehicles
and
Labor Statistics has reported that
lower, levels.
of net profits before Federal in¬
parts, lumber and wood products,
There are other factors that will the composite price of all con¬
come taxes, there was $1.7 billion
and petroleum and coal products.
materials
was
117%
help to reduce the over-all cost struction
provision for such taxes, $1.0 bil¬ The transportation equipment in¬
to build in 1949.
First of all, it higher in June, 1948 than it was
lion was paid out in dividends,
dustry (other than motor vehi-r appears that there will be more in 1939. This increase has resulted
while retained corporate earnings
cles) again showed the lowest labor available in the coming partially from the record-break¬
amounted to $1.9 billion for the rate.
demand and partially from
year.
The
apprenticeship
pro¬ ing
quarter.
gram on which the Unions and the impact of the postwar infla¬
Total assets of all manufactur¬
the Industry have so fortunately
tionary forces.
ing corporations were estimated
Resigns Post
Behind this story of increased
cooperated since the war should
at $106.7 billion and stockholders'
Frank L. Scheffey has resigned
production
and
higher
prices,
begin to pay off this year, bring¬
equity at $73.5 billion at the end as Vice-President of George R.
ing hundreds of young, skilled there are certain trends to be
of September 1948. Of total assets,
workers into the building trades. noted. in the records for specific
about
$28.9
billion was
in the
materials.
In order to plan con¬
Secondly, the growing tendency
form of inventories, representing
struction for 1949 intelligently we
among
contractors,
large
and
an increase of more than $800 mil¬
must consider these trends and
small, to use more modern meth¬
lion over the preceding quarter.
their effects.
ods, machines, and materials, will
Net working capital rose by $1.2
Let us look, first of all, at lum¬
cut
into
costs.
Builders
have
billion to the record level of $39.7
Estimates based on the re¬
learned that they can build faster ber.
billion, while net property, plant
ports
of the
National Lumber
and equipment increased $1.1 bil¬
Association
in¬
*An address by Mr. Baker be¬ Manufacturer's
lion during the quarter.
It ap¬
fore
the
American
Society
of dicate i that total production of
pears that about 85% of the ex¬
1948
amounted
to
Civil Engineers, N'ew York City, lumber * in
pansion in net working capital
about 37% billion board feet. This
Jan. 20, 1949.
and
net
property,
plant
and
sales

all

porations

output

1939.

However, lumber needs for

billion feet

month

construction in 1948

new

exceeded 26

billion

the present rate

in the

Interest exempt

prices

been

7% in the third quarter compared

Cooley

Co.,

recent years
contributor to

higher cost of construction.
September, 1948, the average
wholesale
price of all building

materials listed

the Bureau of

Labor Statistics Index

showed

increase of 117%

1939.

over

and he

crease

article

Review

that it

vember,

three

demonstrates, in an

Dun's

New York City.

size

formerly

corporations

tially

showed

essen¬

change. Reflecting the
profits after taxes

110

trends in sales,

Executive

Secretary

principal factors.

available

source

most
one

sections

District No. 13 of the National As¬

increased

each

the

whereas

by" about

sociation of Securities Dealers.

medium

size

10%,

industry; basis,

either increased

tically

unchanged

sales

remained prac¬

concentrated
limited

free."

This

much

than

area

which

for all

indus¬

tries except textile mill products.
The picture

its

was

the

with respect to prof¬

less uniform and 9 out of

23%

mill

died at his home at the age of 67
after
Mr.

produced,

change

has

added freight

about

Secondly,
"Research
in
the
properties of wood and in timberengineering has created
lective

demands

Griffith

had

been

vania State Chairman

products and

26% increase
parts.

The rates of

lation to
were

tional

Conference

profit, both in re¬
investment and to sales,

essentially

second

the

same

quarter of

1948.

For

all

grade, moisture content, and so
by lumber buyers." Because of

the

increased

this

has

services

definitely

unit price.

per

lumber,"

Colean

points

"has been increased wages.
1939 through 1947, wages
forests

112%
the

the

and

mills

Company,

135

South

Exchange,

Paul

during the third quarter amounted

Saalfeld to

Adelson

have
and

partnership.

admitted

not include

whole."

Harry

during 1948.
'
.\\
These factors, added to the un¬
demand, made lum-

usual postwar

(Continued

on page

A. C. Allyn and Company
Incorporated

Incorporated

These

raises made in wages

application

John W. Clarke

in the

advanced

against 85% for wages in
goods manufacturing

Levy

Salle

Street, members of the New York
Stock

Stifel, Nicolaus & Co., Inc.

price
out,
From

durable

industries

CHICAGO, ILL.—Rothschild &

the

"The final element in the

•

Christians

Rothschild & Co. Admits

involved

increased

and Jews in 1947.

manufacturing companies prof¬
its after taxes per dollar of sales

Price

se¬

Pennsyl¬

of the Na¬

to; species,

Tax Anticipation Warrants

1949 Tax

brought

and growing

costs.

COUNTY, ILLINOIS

Various Purpose

one

than

rather

regulations and decisions

illness of several months.

drop in profits for textile

for motor vehicles and

the

Griffith, associated with

industry groups experi¬
enced lower aggregate profits. The
two most striking changes were
a

Leo G.

before and

V/t% -2%- 2Vi%

Kay, Richards & Co., Pittsburgh,

hand

country, to
where commercial growth is

Leo G. Griffith Dies

groups

showed declines of from 3 to 16%.

COOK

First

the

for the smallest and largest classes

No¬

caused

of all, "Over the years lumber has
been transformed from a free re¬

$11,900,000

Mr. Scheffey was

for

has been

Wali Street,

his address will be 52

with the second. The intermediate

Dur¬

ing
the
same
period,
lumber
prices
jumped
251 %.
Miles
Colean, of the Construction In¬
dustry
Information
Committee,
has carefully analyzed
this in¬

Temporarily

Inc.

chief

from present Federal Income Taxes

under existing

even

lower volume

retained

Frank L. Scheffey

.uses

•

equipment during the third quar¬
ter of 1948 was financed through

earnings.
'
by the report, the
sales of manufacturing corpora¬
tions in the smallest and largest
size classes each rose by about

Consid¬

the

manufacturing

shown

over

probably

feet.

during 1949,

a
*

Lumber

have

for

face

building.

about

re¬

to deter¬

happened to the
prices of the princi¬
pal building materials.
In general, the output of most
materials
has
been
increasing
steadily since the close of the war.
Based on the Department of Com¬

not

increased

lumber, these figures indicate that
output must be continued at about

However, I want to talk about

the

reveals

ering the non-construction

Outlook

the outlook for materials.

ing

The

fabricated

in the factories.

Materials

have mounted

twice

be saved by

can

assemblies

use

costs

steadily

spent

more money was

—

also

tion

that

course,

expensively by using
power tools and machinery, and
they have discovered that more

that

for U. S. manufacturing cor¬
were $60 million higher
preceding quarter and $480 millions above profits in
corresponding period of_1947.

aware,

our

history.

Reports Higher Manufacturing Earnings in
Third Quarter of 1948

less

and

other

year

BARRON'S 50 Stock Average..

buildings

than

•'

day dollar and cents problems which
specifically, I shall lifnit my discussion to the sup¬

ply and cost of construction materials.

Source.'.

\ '■■■;,

It is my intention to talk about some of the
every
face in building construction. More

29)

THE

(566)

Purchasing Agents Report

iron,'hose, lumber, papers,
fittings, wire.

National

Downward

of Business Survey Committee of
Association of Purchasing Agents gives composite opinion
of members on business conditio^.
Robert C. Swanton

mittee

of the

National Association
end of January:
M

t u r i.n g

December.
Pur

chasing

tos products, caustic potash, dyestuffs, fluorspar, mercury, nitrate
soda, metallic pigments, starch.,

gree

Employment

Some few who re¬
inventories attribute
them' to
some
stock-piling of
scarce materials which are being
received .under voluntary
allot¬
survey.

ary

port higher

payroll population or

Contending that the original causes of inflation in this country
run their course and the economy in the period ahead should be

marked by a

greater degree of

stability than has been the case during

past three years (unless new measures are taken by Congress and
the Administration which would^
——v.
——
be much more inflationary than
500,000 people.
Should there be
the

those

are

of inflationary nature.

have

5
ventories

Internationa! Finance foresee a greater de¬
of economic stability, unless Congress and Administration take
measures

supply:

tight

York

Collrns and Dr. Marcus Nadler of the New

University Institute of

Employment continued to drop
in January and at a faster rate
than in December. 47% report low¬

Agents reports as

did
bound
back from the high turnover rates established in
1948. This is, perhaps, the health¬
slump of No¬
vember
and iest trend showing in the Janu¬

business
not

Dean G. Rowland

keeping in balance
with lower production activity, is
shown in the maintenance of the

of Purchasing

few important commodities
reported up: Ammonia, asbes¬

Com¬

Director of Purchases of Winchester Repeat¬
Corporation and Chairman of the Business Survey

follows at the

are

Aluminum,
steel,
lead,
copper,
zinc, tin,
nickel, ammonia, cellophane,
chromic acid, nails, pipe; but im¬
proving, spiegeleisen.

Robert C. Swanton,

ing Arms

valves

and

$
ojr

Chairman

Thursday, February 3, 1949

CHRONICLE

COMMERCIAL & FINANCIAL

reduced

that have been

far pro-

posed), Dean G. Rowland Collins,
Director, and Marcus Nadler, Research Director of the Institute of

another round of wage increases
not accompanied by a corresponding increase in efficiency of management and labor, this too will
naturally constitute an

working time.
Productivity is
increasing—fewer strikes, skilled
and semi-skilled-workers are now
available in several areas.
This,

ary

inflation¬

element in the economy.

The forces of

deflation, of equal

strength and importance,

accord¬

ing to the authors, are:

declining cost pi
(1)
The increased productive
living, indicates the fourth wave
capacity of the country, which
of
wage
increases may not be
will make it possible for Ameri¬
ments and are in excess of cur¬
such a serious threat to further
in
production
can factories
to produce a larger
rent production requirements.
inflation of production costs and
and
a
con¬
volume of commodities
than at
; /
j
tinuing
de¬ With supply exceeding demand in prices.
any time since the war.
To this
Canada
cline in back- many lines, 'and the easing posi¬
should be added the fact that bus¬
Canadian production increased
order
sched¬ tion of event.,the most critical in¬
iness inventories have continued
Robert C. Swanton
ules.
The de¬ dustrial materials, any proposal in
January,
but
back orders
to increase, reaching a record to¬
for
government controls should slipped almost as much as in the
clining trend
tal of over $55 billion at the end
be unnecessary, unless this situa¬
States;;
commodity prices
are
of
prices is more pronounced.
of November, 1948.
•
tion is reversed by events.
trending down faster than in the
Employment is somewhat lower
,;(2) The larger crops harvested
United^ States.
Inventories are Or. Marcus Nadler Geo. Rowland Collins
than
December.
While, gener¬
Buying Policy
during 1948, not only in the United
being
reduced;
employment i£
ally, the consensus of the reports
Forward
commitments remain
sharply off.
Buying policy is International Finance of New States but also throughout the
is
not
encouraging, there is a
well within 90 days with the ac¬
strongly on the near side of the York University, in a bulletin en¬ world, and the favorable crop
bright spot in
the satisfactory cent on 60
days and under.
The "hand to mouth
to
90 - day" titled "Inflation and Economic outlook for 1949. On this matter,
"purchased inventory" condition
policy of keeping inventories at bracket.
Stability" conclude that at present however, it is altogether too early
of industry.
Greater reductions
the lowest possible working mini¬
the inflationary forces are being to make any definite statement.
in inventory are reported a.nd the
mum
requires
a
most careful
counteracted
by
deflationary
turnover
ratios
are
increasing,
(3) The narrowing of the gap
screening of requisitions.
The Mark
forces.
Inflationary factors still between exports from and imports
despite the lower production and
greater availability of many more
persisting are:
into the United States.
In part,
employment. 62% report this fa¬
items
gives
purchasing agents
(1)
Support of farm prices, this is due to the increased pro¬
vorable situation.
more time
to negotiate for price H. M.
which not only will prevent a fur¬ ductivity of Europe, which has
As to the effect on business of
values, better quality, considera¬
H. M. Byllesby & Co., Inc., Ill
ther substantial decline in farm made larger quantities of manu¬
the proposals in the President's tion of new
sources of
supply. Broadway, New York City, an¬
prices during 1949 but will also factured goods available for ex¬
Fair Deal message, the general
Buyers do not now have to search nounce that Mark A. Borgatta has cost an estimated $866 million
port, and partly it is due to the;
opinion is that it is too early to for competition, as increased sell¬
become associated with the firm
during the fiscal year 1948-49 and policy of most European countries
make any realistic appraisal; the
ing effort brings it to them in
$538 million in 1949-1950.
The to curtail imports from the dollar
presently reported attitude is to most lines. :v\
^act that the cost of living, par¬ area.
.'X'i-'v-.!K
"wait and see."
However, there
ticularly of food, cannot declihe
is a strong opinion expressed that
Specific Commodity Changes
(4) If the inflationary forces
materially and reflect the forces
much of the proposed, disturbing
should gain strength, it may be
The list is predominantly down,
of supply and demand has an im¬
assumed that Congress will pass
legislation may not become law. in January, except for the effects
portant bearing on wages and
On the whole, the present situa¬ of increased.'* freight rates.
legislation increasing the powers
Pre¬
hence on prices of manufactured
tion
calls for extreme caution, miums for lead, copper and steel
of the Board of Governors of the
goods. -Y
'•
which seems to be evident in the have about disappeared.
Federal Reserve System over the
Many
current
short-range buying' and more products are in easier sup¬
(2) It is probable that Congress money markets and over member
will
pass
legislation increasing as Vwell as non-member banks.
inventory
policy of purchasing ply.
i,v
executives.
public housing construction. To Whether this is done by granting
On the down side are: Acetate:
some
extent, however, this may the Board power to increase re¬
Commodity Prices
alcohol,
burlap
bags,
belting,
be counteracted by a decline in serve requirements or to impose
materials,
corrugated
Except for the increase in building
private construction and expendi¬ a special reserve in the form of
freight rates, the price trend is cartons, caustic soda, cable, chip¬
tures for plant and equipment.
government securities is immate-.
down for January.
To a consid¬ board, clothing, cocoa butter, cot¬
ton buffs, coal, fats and oils, food¬
(3)
The
European
Recovery rial., The net effect would be the
erable extent a buyers' market is
V
Mark A. Borgatta
In the same category be¬
Program, which will continue un¬ same.
in evidence.
Competition is stuffs, steel forgings, furniture,
til 1952.
During the coming year, longs the power of the Board to
fuel oil, gelatine, scrap iron and
stronger in many lines. Voluntary
in its investment department. Mr.
moreover, the demand for Ameri¬ control consumer credit which the
alloying charge on lead
allotments of critical materials by steel,
was
previously with can commodities under the pro¬ President asked to be prolonged,
mixtures, lubricants, lumber, Borgatta
producers are covering more con¬
Granbery, Marache & Co.
gram is likely to undergo a change. the proposed power to curb com¬
sumer
requirements.
Outside manufactured parts, paper, ply¬
There will be smaller shipments modity speculation, and continu¬
markets are offering price induce¬ wood, printing, rubber, salt cake,
of
commodities
which are ; in ance of rent and export controls.
soap,
stearic acid, gray
ments to move inventories. Price shellac,
market steel, tallow, small tools.
abundance here such as food and
(5) In his Budget Message the
protection is being obtained on
farm products, and an increased President asked for a substantial
Easier
to
get:
Automobiles,
long-term commitments.
demand for machinery and equip¬ increase in taxes, to be borne by ;
trucks,
brass,
cartons,
cement, Formed in Hew
Inventories
ment, which are still in short sup¬ corporations and by individuals in;
electrical
equipment,
oils, pig
Adams, Sloan & Co., Inc. has
That
purchased industrial ^in¬
ply in the United States.
the
higher income brackets. - A
been formed
with offices at 72
(4) Large national-defense ex¬ material increase in taxes on cor¬
Wall Street, New York City, to
For the fiscal year poration profits will lead to re¬
conduct an investment business penditures.
duction in capital expenditures.
specializing in public utility se¬ ending June 30, 1950, nationalThis advertisement is neither an offer to sell nor a solicitation
curities
and
investment
trust defense expenditures are estimated An increase in individual taxes
will cause a decline in the demand
shares.
The firm will also main¬ at $14.3 billion as compared with
of an offer to buy any of these securities. The offering
for certain types of luxury goods
tain a branch office in Sarasota, $11.7 billion for the year ending
is made only by the Prospectus.
June 30, 1949.
Military expendi¬ and also for equities. Both of these
Florida.
factors will exercise a deflation¬
Officers are William L. Adams, tures are inflationary since they
New Issue
President;
S.
Alan Sloan, Jr., create a demand for scarce mate¬ ary effect. Moreover, the Presi¬
Vice-President, and John Di Mat- rials while the goods produced dent also called for a budget sur¬
1,500,000
tina, Secretary and Treasurer. Of¬ are not available to the consumer. plus of over $2 billion, to which
should be added the excess of
ficers of the firm were all for¬ Moreover, an increase in the per¬
revenues over expenditures of the
merly associated in the firm of sonnel of the military services re¬
duces available manpower for pro¬ various trust funds and agencies
Adams, Keister & Co.
agents reporc
a
slight fur¬
ther reduction

coupled with the

Borgatta WifSi

;

Byllesby & Go.

York I

;

Southern Oil Corporation

duction of

commodities and serv¬
the civilian popu¬

ices for sale to

Common

Stock

Uhlmann & Latshaw to

lation.

$1.00

per

Open in Kansas City

MO.—Uhlmann
the New
will be
formed as of Feb. 10 with offices
in the Board of Trade Building.
Partners will be Paul Uhlmann,
KANSAS CITY,

Prospectus may be obtained from the undersigned,
or from
any other broker or dealer' participating in this issue, who
is a member of the National Association of Securities Dealers, Inc.,
and is a
registered or licensed dealer in securities in this State.

Copies

the

PETROLEUM EQUITIES
Member National

Association of Securities

595 Madison Avenue

CORP.

Dealers, Inc.

New York 22, N.

MUrray Hill 8-4441

Latshaw, members of
York
Stock
Exchange,
&

the

Federal

Government.

surplus can be effec¬
tively utilized to reduce the vol¬
ume

(5)

benefits

of commercial bans

paid by the

government

This applies par¬ Pearson
ticularly to expanded §ocial secur¬
Dreyfus

individuals.

Exchange member, ,and ity benefits, Federal aid to educa¬
tion, and national health insur¬
John Latshaw. Mr. Uhlmann in
ance. Moreover, it is fairly certain
the past was a partner in Uhl¬
that Congress will pass legislation
mann & Benjamin.
Mr. Latshaw increasing the minimum wage rate
has been manager of the trading from 40 cents an hour to a much
department of the Kansas City higher level, which will increase
the purchasing power of about 1,office of Harris, Upham & Co.

Jr.,

the

budgetary

deposits

The social measures recom¬
and the reserves of member banks,
mended by the President in the
and
thus curtail the purchasing
State-of-the-Union Message and
in the Budget Message are to some power of the people and the credit
extent also inflationary in char¬ expansion power of the banks/* o
!
acter
since
they will increase
-

Price

•.

With Dreyfus Co.

& Co.,. 50 Broadway,
City, members of the
New York Stock Exchange, an¬
nounce that Samuel M. Pearson is
now associated with the firm as a
New

York

customers'
was

broker.

Mr.

Pearson

previously with Jerome Mel-

niker & Co.

Volume

169

Number 4774

THE

COMMERCIAL .&

A $500 Billion Annual National Income

■

'•,

Henry J. Kaiser, pointing

■

out. nation's

■■

production of goods and

ices has doubled every 20
years, says
tain this historic pattern is

all that is

John

unleashing tlie forces of vitality and

address

Dealers

builder

and

San

before

the

Kaiser

been

duction

There

and

services
te

years.

Think
Gen¬

days

eration
after

gen¬

eration,

from

1869

date,

our

Henry J. Kaiser

people

have

doubled

what

national

gross

output

called

product

years.
■. '/ ■
"In 1948, our
gross

our

every

all-time

rich

billion

a-year

country

should
raise
its ; vi¬
sion to attaining a $500-billion-aeconomy
within the next
of years. Can we do it? Al¬

ready

have surpassed the

na¬

tional

employment figure of 60
million jobs—a goal that
skeptics
not
long ago jeered as a wild
dream.

Now

tion

unleashing the forces of
and expansion, in order

vitality
that

this

becomes

country

maintain

its

doubling
20

will

ques¬

least

historic

pattern of
national
output

the

every
"It

years.

can

done,

and

yet

step, there must be battled

every

those

who

drag

their

'impossible

groan,

—

feet

and

can't

California

that will last for

iron

generations,

it is investing $35V2 million
expansions. Indeed it was said

and
in

that

"Now this 250

average

ship, month after month.

per

Moreover,; it was branded a rash
undertaking to
build
the
only
basic steel industry on the West
Goast, though .today that steel
plant is doubling its potential pig
iron
capacity; it is
mining
a
ore

high of
$250 bil¬

exceeded

lion.

score

could

mountain

20
,

foolhardy

was

try

break into the aluminum

industry,
though
today
that
business
is
running at the rate of more than
$80 million a year and is supply¬
ing 20% of the country's primary
aluminum
to
hungry
markets.
Likewise, when it seemed that the
team of production men who had
broken

records

production

ought to have something
contribute

the

real to

automobile

in¬

dustry,

skeptics said the oppor¬
tunity for newcomers to compete
no longer existed jn this
industry.
: "The
point is that you, in ad¬
vancing your own business, or the
nation's leaders,
an

in struggling for
ever-growing economy, always

must

combat

tion,

retraction,

the

forces

fear

and

little

Major

in balance. Reports earnings of bank at $11.02

Weyerhaeuser and Hill

reporting the operations of the
of Tacoma, Wash., to shareholders, Reno
tution expressed the view that despite
in the present economic situation, no
was
impending.
"Among econ-e>
omists and other authorities there

the

rather general feeling that the
'war boom' has passed its crest."
a

Odlin stated in his printed
report,
which will be widely circulated

in the country's finan¬

cial circles because of his
as

the

representative

Federal

12th

position

from

Reserve

the

District

per

Many factors
direction. To

working in

are
a

Cofemar

Right

Rev.

Director

Catholic

Charities.
serve

Committee

New

George

annual

appeal of

and will conclude with

families by

upward

itself

farm

work,

road

of food

for

the

energy,

nature

every

is
en¬

products which

eating, by

eat. Af¬

reverse

process,

sun's

energy is turned back
again into human energy by elec¬

trical

forces within our bodies.
This is the entire story if you are

ex¬

vegetarian.,

case

eat

you

meat, fish, eggs, etc., then there is
also another intermediate
process;
but even then your
energy

My and Williams
With Newborg & Co,
that

David

with

the

Sun, water and air are already
Hence, it will be necessary

become

firm.

Both

partners in Edward J. Duffy

Hentz Adds D. Kolb
H.

Hentz

spend

minerals and
—to

create

Co.,

Beaver

for

certain electric rays
human energy. This

cept far bulk and

depend

necessary

hopes that
will

tration

wisely

the

pills.

carefully

move

maintain

to
the

ments, and reach

"As to

Of1 the
ment'

the extent and

'recession'
there

of opinion.

wide

duration

're-adjust¬

difference

inclined to think

the

This

that

there

need

was

consumer

ments,

Lands

now

The

the

need

would

ex¬

of the labora¬

Commission

such

dream.

show the

may

discovery there

fundamental

present

physical
We would continue to get
from the sun; but a
percentage'i-of the present

large

viously with Goodbody & Co.

cost

especially

true

showing

ap¬

Bank

earnings

products, fertilizers, farm
machinery, etc., could suffer. On
the other hand, other lines
such
as
building, clothing, fuels, auto¬
mobiles, recreation and real estate
in sunny states could have a
great'
boom.
This confirms the need of
broad diversification in our in¬

vestments which I have constant¬

ly preached

our

energy

raising

ditures,

national

defense expen¬
continued extensive for¬

eign outlays, the farm price sup¬
port program, heavy public works

spending

units,
vast

local

etc.—not
purchasing

hands

government

mention

the

power still in the
individuals in the form

this

milk

may

present

grown

tables
much

foods

would

With

which

birth

the

could

and

election

World

upset

would

fact,

that

scientists

real

Orders executed by

board

Sound

National Bank of Tacoma.

directors

the

Puget

Street, New York 5, N. Y.
WHitehall 3-8140

Jan. 27, 1949

for

Com-

world

peace

disappear.

reasonable

Then
believe

work.

PRICE $1.00 PER SHARE

Weyerhaeuser,

could

plans.

electronic

Tenn., have this thought as their
incentive which keeps them at

HENRY P. ROSENFELD CO,

Jr., President, Weyerhaeuser Tim¬
ber Co., and Curtiss L.
Hill, Pres¬
ident, Tacoma Transit Co., to the

HI?

Argonne, 111.,
Brookhaven, L. I., and Oak Ridge,

25%

Member Nat'l Ass'n of Securities Dealers

and

arguments
have

War

today

Russia's

control

EQUIPMENT CORPORATION

37 Wall

eat

powerful United Nations. In

munism

the

should

discovery

COMMON STOCK

Following the stockholders'
meeting, Mr. Odlin announced the

than

can

more.

foods,

funds.

liquids, yet
equal
properly
whole fruit and leafy vege¬

juices

110

healthier

300,000 SHARES

TELEVISION

column.

one-enriched

can

velopment—among them the high
levels

course, this change is not coming
at once.
Electronic juice and

all

announced

were

and

purposes

in value. Railroads

ISSUE

credit and trust depart¬

the latter

fruit

depend largely upon the
transportation of certain agricul¬

never

set-up.

and

re-adjust¬

for

agricultural

decline

completely
one

atoms

With such

change

economic

sound equilib-

the

luxuries. Our

Atomic

working

carbon

$11.02 per share from which
major depression, was paid the annual dividend of
immediately ahead. Many factors $2 per share, the balance being
seem to weigh against such a. de¬
added
to
reserves
ahd
capital

prehension, of

used

now

other

some

increase.

weight of authoritative opin¬

ion

considers

one

now

Adminis¬

business

certain

forced into other occupations.

fields," operation by the bank, pointing to
a
substantial growth in business.

many

Odlin continued.

demand

engaged in the raising
and processing of
products now
sold as juices,
many million people
might be thrown out of work and

When

labor

What About

David Kolb has become associated
with the firm. Mr. Kolb was pre¬

finally caught up with de¬
^
Mr. Odlin reported the comple¬
mand, and the sellers' market of
recent years has
turned into a tion of a highly successful year of
market

Such

way.

NEW

prod¬

vegetables
and
fruits.
Our stomachs require bulk which
cannot be satisfied by
juices or

government.

"One

upon

We, moreover,

eacn

the actions of

products.
and

"whole"

rium."

buyers'

soil.

tronically and
be hungry.

would

leading Stock and Com¬
modity Exchanges, announce that

continue

the

appetites would be satisfied elec¬

Street, New York City, members
and other

little

very

to eat the products of the soil

Stock Exchange

might make it unnecessary for

of the

New York

sun.

free.

only

Reilly and

Williams have

from the

comes

an¬

plastic

tural

ter

really

Exchange,

will

table

lifg'jpf the City.

Stock

would

which

ecutives in the buiness and profes¬
sional

York

pulp,

always be dependent

air, water and minerals, is stored
by photosynthesis in the vege¬

was

Newborg & Co., 30 Broad Street,
York City, members of the

lands

industrial

ucts

electrical energy, supplemented
by

The Special Gifts Committee is
organized in trade and industry

from

en¬

building construction, factory

this

funds

mental

energy,

farm

many
other manufactured materials
will

could

announced.

solicit

may

ergy come?
It comes from the
sun in a wonderful
way. The sun's

15,000

April 5, it

although this

based and, in fact, exists.
But from where does
your

Archdiocese starting on March 27
on

Rayon,

physical energy. This last

agriculture

workers in the 376 parishes of the

terminating

spiritual

this need

intensive

door-to-door, solicitation of Cath¬

your energy,

Roger W. Babson

measured

your

and office jobs and even home
cooking or bed making! To de¬
velop energy is the reason for eat¬
ing, drinking and breathing. Upon

Special Gifts Committee in
the Empire State Club on Feb. 9

a
discovery would
economically I leave |o
imagination!
A
limited

for

and

Assistant Treasurer. A

thirtieth

groups

such

shows

Treasurer of

and

of the

and

What

value

ergy or

the Archdiocesan charities organ¬
ization will open with a meeting

olic

tasty

wanted

goal of $2,500,000 was announced
by Monsignor Weldon.
The

manner.

What Would Happen to
Business?

amount

York

Frank

and

greater extent than

make

Executive

far

taste

the sun's energy
cheaper and more effi¬

Your

announced

Schaefer

give

present pioducts

prospects for the future

our

is already

showing 'soft spots'

Fund

Walker will

will

cient

healthier

tories

delicate balance between
inflation
and
deflation.

which

great many places where supply

John

Monsignor Christopher J. Weldon,

the

and

exceed

certain

cial products.

for

Appeal, it
was

will

than the prese n t
commer¬

Thirtieth

Annual

and

Laity

These

nutrition

will

I believe that

"The economy appears to be in

climate 'in

l's

enriched

product

directors.

(Pacific Coast states) to the Fed¬
eral Advisory Council of the Fed¬
eral Reserve System.
"A
re-adjustment period
ap¬
pears to be at hand. The economy

has

& Co.

share,

like."

seems

the

fruit,

mineral¬

new

the
n a

Committee

were

saving accounts, War Bonds and

ever

of
d i

The first step would
apply these experiments to
juices of various kinds and
later perhaps to
dairy products.
be

canned

ized electrical¬

Charles J.

-•

pretty

re¬

I have in mind elec-

eliminated.

juices
whereby the

associated

Puget Sound National Bank
Odlin, President of the insti¬
development of "soft spots"
immediate major depression

iurther

nounce

Odlin, President of Puget Sound National Bank of Tacoma,
though admitting soft spots in situation, points to heavy public
spending and vast consumer purchasing power as tending to keep

canned

Gifts Committee

cost

other

of
Special

other "ism."

everv

vegetable and

spectively,

the

Chairman,

greatly reduce

Executive

the

and

experi-

Chairman and

New

Reno

and election of

York,

all are

Capitalism, Communism

tronic

New

Depression

and quoted

Ex¬

reac¬

faith."

West Coast Bank President Foresees No

economy

New

in¬

organization

year

when

those who said

were

cliem

it:

life

river, could not build
the
world's largest cement plan
from
scratch,
could
not
build
ships in less than six months,
Jiough it proved possible to build

doubled about
every

Stock

Spellman,
Archbishop of

heard, 'You can't do that.',

dam

not

has

experienced

United
a

York

Francis Cardi¬

speak from personal ex¬
because
there's
never

time

haven't

p r o-

goods

perience,

stated:

"Our

New

worrying about Russia and World War III, we
must not forget that at
any time some great revolutionary invention
may develop which will take
everyone's attention, for awhile, off of

nal

done.'

S t

named

jn prospect for the United

was

the

While

change firm of Adler, Coleman &
Co., have been

Automobile

Com¬

menting
on
this,
Mr.

the

on
Jan. 25, Henry J. Kaiser, noted
ship¬
manufacturer, expressed the belief that a

$500 billion annual national income
States.

Association

Francisco

automobile

man

National

By ROGER W. BABSON

Burke, President of B.
Co., and John A. Cole¬

Altman &

expansion.

•

,.{

(567)

Synthetic Food Production

Charity Drive in NY

serv¬

main¬

necessary to

CHRONICLE

Coleman, Burke Aid

J1-..,

FINANCIAL

COMMERCIAL

THE

(568)

FINANCIAL

14,000,009

Canadian Securities

CHRONICLE

Thursday, February 3, 1949

the Payroll!

Sponsors Sales Course

"One of the

things which I think all of our cit¬
izens ought to realize is not only the enormous
extent of penetration of government
as
it now
stands in the daily life of all citizens but that in the

16-week

in the funda¬

course

mental principles of

economy

selling as ap-»
specifically to the invest¬
banking industry will 'be
conducted at Boston University,

extent

685

By WILLIAM J. McKAY
It

plied

ment

becoming increasingly evident that the Canadian
build-up of necessary or un¬
has unrivalled prospects of dynamic expansion. To some
of the inherent possibilities has been more marked
necessary
services about 14,outside the country than within.
Foreign industrial interest and
000,000 of our people are today
particularly
those
immediately^
receiving regular checks from
In view
south of the border have readily
of its connection with
the Federal Government.
foreseen the advantages of their virtually every economic activity
*
*
*
establishment within the Domin¬
of
the
country,
the
Canadian
ion. As a result Canada during the
Pacific Railway Company consti¬
"That number has increased
past few years has rapidly passed tutes the backbone of the Cana¬
from somewhere about 2,500,000
from the primary producer stage
dian economy. Consequently the
18 years ago.
to become also one of the most
holder of the ordinary shares of
:Js
*
highly industrialized countries in this
unique
railroad
possesses
the world.
what is tantamount to a general
"This nation cannot exert its
Canadian industry has been in
stake
in
Canada's
future
pros¬
full strength either in peace or
the happy position of being able
perity.
'
in war unless that government
to draw on the technical skills of
Occupying
a
leading
place
can
function
this country and Britain; in some
among the railroad systems of the
effectively.
I,
Herbert Hoover
cases
it has introduced its own
world, the C.P.R. operates 17,000
therefore, on behalf of my1 col¬
improvements, and in others has miles of line in Canada, and over
leagues, pray for your support [in plans for recombined
the
best
of
both.
A
3,000 miles in this country. In re¬
organizing the Federal Government].
notable example is the Canadian
cent years however other interests
North Star transport plane which
of the Canadian Pacific domain
incorporates with remarkable re¬ have assumed greater importance
"For you taxpayers to carry forward this work
sults British engines in a U. S. than the railroad from the share¬
to ultimate fruition means billions.
It is not mil¬
airframe. The Dominion is thus holder's point of view. These in¬
lions, it is billions."—Herbert Hoover.
now
at the stage where its in¬ clude ownership of the Canadian
comparable natural resources can Pacific
Express
Co.,
Canadian
Next to a full scale pruning of the Federal estab¬
be
employed
to
full
account Pacific Steamships, Canadian
lishment and of the activities it undertakes, a thor¬
within its own borders.
Pacific Air Lines, various subsid¬
Already the northward flow of iary air lines, and Lethbridge Col¬
oughgoing overhaul in the name of efficient and
U. S. industrial capital has played
lieries. But the brightest single
effective operation is vitally needed.
an
outstanding role in the de¬ jewel in the C.P.R. crown is per¬
In heaven's name, must the nation have 14,000,velopment of the Canadian econ¬ haps the 51% (1,682,500 shares)
000 on its payroll?
interest in
Consolidated Mining
omy but it would appear that the
movement is still only in its ini¬
and Smelting Co., the return on
tial
period, Further vast enter¬ which alone is sufficient to cover
Letter to the Editor:
prises involving the outlay
of the $1.25 dividend paid on C.P.R.
now

awareness

enormous

sums

planning

level.

summation
trial

the

scope

expanded.

are

now

With

their

Canadian

the

will be enormously
is logical therefore

that the attention of the U. S. in¬
vestor

will

rected

the

Consolidated Smelters gives its

stockholders
vast and

and

interest

direct

base-metal producer in

investor
south of the border has profited
to substantial degree as a result
of participation in Canadian min¬
ing enterprises. On the other hand

private

investment

Canadian

recently become

the world
major pro¬

graph and
Thus

proved to be more attractive. On
the

other

hand

considerable

there

unwise

in:many glamorous
gold ventures.

has

been

speculation
but empty

Canadian
sult

will

investment

benefit

the

most

industrial

potentialities
There

Pacific

dian

however

the

medium
as

one

Canadian

equity the position of which is
absolutely unparalleled elsewhere.

the

C.P.R.
a

unquestionably

valuable stake in

most

During
strength

economic

promising

section

external

inactive.

Free

broke out of their
narrow

It would

was

internal

The

range

was

dull

finally

funds

long maintained

in the neighborhood

71/2% and strengthened to 7%.
corporate-arbibtrage rate on

the

other

the

hand

eased

equitable<S>-

tend

stabilize

corporate 'net earnings.
"V
(c)
It would be
based to

greater

such

degree

the

(d)

would

tend

higher prices than

ability
to

are

prevent

necessary.

It would—if adopted

(e)

along

right to earn a fair profit
capital invested in the

the

business.

the

following

International
Oil

Petroleum-Standard

total

with

CORPORATION

irregular

with

base-metals

steady,

leave the

dustries

factors

that

and

Western

art of selling.

Therefore

in such train¬

course

ing seemed to be imperative. Act¬
ing

this premise, the Executive

Council,

(2)

Impose

Tax

25%

Excess Profits
the excess of 8%

of
Total
Capitalization (capital,
unappropriated sufplus, and longterm
debt)
over
earnings
less
other taxes paid plus the interest

paid

Industry

with

conferred

evolved.

this

and
will

Boston

Course

—m,

Bldg. Equip.
Bldg Material
Chemical

stock

Elec. Equip.

:-.V;
v

ecutive

for

Associates

tional

Sales Training Ex¬
of

tial Life Insurance Co. and
in

Salesmanship

University
three

selling of

Meat Packers

$44,386
280,238
29,784
23,377
210,030

59,352

53,003

Non-lerrous Min.

88,967

102,853

30,028

29,557

30,017

32,899
279,999

Rail

Retail Grocery

Retail Stores
Rubber

Shoe

144,976

___—

53,876

—

Equip.

43,708

129,551

—

113,525

6,838

5,502

37,097
196,821

37,236
196,971

—59,264

64,079

in¬

at Bos¬

the

conduct

will

direct

The

classes.

goods will be

consumer

the subject of the next lecture

and

divided into two parts.

■

Movies

Na¬

Training
Donovan
Emery,
Manager, Pruden¬
Sales

Sales

structor

Fuel

President

and

Executives.
District

Gas

Eastern

Society

it will

44,890,537

$7,042,825

lecture.
The second
be given by Wallace

Strathern,

first

The

conducted

22,981

20,068

192,064

171,755

Hensle, Boston Division Manager,
Fuller

Brush

and

Co.

the second

McCrossin,

Hillary

part

seventh lecture, devoted to

23,144,777

(8%)

Exemption

lecture will

71,544

$20,000,000

$88,035,314

oils firmer,

troductory

44,830

Rails

golds

Tax as

Proposed

Federal
Reserve
give the in¬

Boston will

.45,828

___

Food

Public Utility

Research,

Bank

Division

FarmMach.

Alfred

Dr.

37,780
95,568

Co.

Day

32,997
94,162

______—._

Sales Director of the New

Drugs

ment Club who is associated with

80,643

Office Equip.

Clair

Mr.

34,050

Oil

Surplus

will

Pontius, President, Boston Invest¬

75,953

Long-term debt

Economics,

70,411

Containers
Distillers

example:

Department

—34,989

will be

Douglas H. Bellemore, Chair¬

next
Total

reported

185,644

_____

into

divided

two 8-week semesters.

ton

$46,407
296,189
28,312
21,837

Auto Mfgr.

Caterpillar Tractor

industrials

the

omitted)

For

corpora¬

debt.

long-term

the

for

to stockhldrs.

corporate

increase

No. of

cor¬

1947 Tax

Auto Equip,

sys¬

of education in the

ordinator

Provisions

Reduce the maximum

(1)

New

lower,

was

tematic and constructive program

following list shows:

Cos.

man¬

by the vari¬

men

firms

investment

man,

industries

those

so,

one

was

training of these

Dr.

individual

and

tions

study
proved
of the chief
lacking in the

This

conclusively that

ous

year

and money to the employ¬

firms.

ing

industry after

resultant loss of both

power

government of $500,000,000.
The
impact of such taxation would
differ widely in its effect on in¬

porate normal tax to 30%.

Common

and

high percentage of young

College o'x Eusiness Administra¬
tion, Boston University. The Co¬

4M>%

( 000

The Tax Proposal

Jersey exchange operation. Stocks
were

training period

—

PROVINCIAL
MUNICIPAL

men

(using 1947 figures)

Club, its officers made a study
the reasons causing

determine

increase
taxes

pay.

nize the

recent

The

GOVERNMENT

following the termination of
After formation of

Neal, Vice-President and Director

the lines suggested below—recog¬

bonds

the other hand

It would be

following demand on

account.

European

the

week

the

accentuated

and

CANADIAN BONDS

one

prospects in world history.

re¬

expansion
Dominion.

terest

investment firms
I) pioneered in

World War II,
the

capital.

Club,
course

World War

ness

its Tax simultaneously with a reduction in the normal corporate tax
would in my opinion have the following advantages:

(b)

accordingly—an in¬

this

forming the first CJJub for younger
men
entering the securities busi¬

The permanent establishment of a Federal Corporate Excess Prof¬

(a)

Company

Railway

develop

constitutes

sponsoring

individual

after

Editor, Commercial & Financial Chronicle:

course

spectacular expansion * the Cana¬
will

viewpoint
of
the
average private investor it is dif¬
ficult, especially in the light of
past performance, to select the
which

inevitable

its

the

From

corporations exceed 8%,

economy

the Canadian

follows

services.

news

Investment

Boston

(the first of its kind since the spe¬

30% and
imposition of Excess Profits Tax of 25%, when surplus earnings of

land

similar domestic investments have

not

under

taken

Rights, Tuition for
will be $25.

cialized Bond School Course given

Corporate Tax ''

interests

(including Alberta oil sites),
world-famous
hotels,
and
tele¬

has

This

produced re¬
markable returns, and in general

industry

The

which

C. H. Haines proposes reducing normal corporate tax to

ducer of chemicals and fertilizers.

extraordinary diversity of
by no means exhausts
C.P.R.'s economic repertory which
also
extends
into ownership
of

can

non-veterans

Tax and Cut in Normal

precious metal mining empire

has

the

and

The professor in charge

Dominion. In addition this largest

Canadian investment possibilities.

past

credit

It will
university

p.m.

the G.I. Bill of

which extends to all corners of the

the

two

Ayenue, Tues¬

9:00

hours

carry

Favors Permanent Excess Profits

constantly growing base

di¬

increasingly
consideration

University

The C.P.R. major participation
in

7:00

from

since 1945.

con¬

indus¬

Comonwealth

day evenings commencing Feb. 1,

Electrolux

England

Corp. The

adver¬

will be given by James
Thomas
Chirug,
President
of
James Thomas Chirug Co.
The
tising,

last

lecture

will

min

the

Redfield,

conducted

Benja¬

Northwestern Life

Co..

Insurance
The

semester

first

list

names

lec¬

the

.of

turers for the second semester will
be

published

when

this

68,711

ninth

and

70,681

devoted

prior

March

semester

The

starts.

Anglo-Canadian

by
a

new

which

high at $5.35.

(after

Income

Less Normal

ATTsubsid.

$15,685,000

ATTconsol.

74,381

4,705,500

taxes)--

other

Tax of

Steel

Textile

38,355

45,231

led

touched

Tobacco

56,350

49,890

ing and public relations. The men

Despite my advocacy of .the
principle of an excess profits tax
based on excess earnings on total

conducting these two classes will

—

30%

—

$10,979,500
Add

canadian stocks

interest

$11,379,500
Less

Western Canada

(8%

Exemption

Total

7,042,825

Capital)
Excess

Oil Industry

A. E. AMES & CO.

earnings taxable at 25%

Excess

Tax

Normal

INCORPORATED

Information

YORK

5, N. Y.

pany

Charles King & Co.
Members

WORTH 4-2400

1-1045

Toronto Stock Exchange

Broadway, N. Y.

$1,084,169
4,705,500

Tax

Taxes

Amount

WALL STREET

NEW

(25%)

$4,336,675

Available
Total

TWO

400,000

long-term debt

The

WHitehall 4-8980

Direct wire to Toronto

Proposed—___

provided for per

the

companies

$5,789,669

basis

which

study of 120

representation

about one-fifth of all cor¬
porate income taxes received by
pays

81,709

_______

—

capitalization a substantial normal
corporate tax must be retained to
assist in giving stability to the
government income which sup¬
ports our credit structure.
The
above

com¬

5,728,443

leport

________

tax

proposals

represent

Investment

study of advertis¬

fourteenth

conducted

been

successful

Co.

lectures

men

who

in the sell¬

outlined
personal

ing of securities and who will im¬

H. HAINES

evening

knowledge

based

class will be devoted to

lectures, and
be

histories. The fifteenth

Dept.

Trust

the summarization of all

Cambridge, Mass.

fhave

case

this

indicate

will

their

27, 1949

industry. The eleventh

the

part

Harvard

would

investment

through

their

Jan.

will

ally engaged in this phase of the

affiliations.

the

classes

be drawn direct from firms actu¬

views and not those of any of my

the Collector of Internal Revenue

proposal

tenth

examination will

given the final evening.

Volume

169

Number 4774

Motion Picture

Industry Seen Basically Strong

Blumberg, President, and J. Cheever Cowdin, Chairman of Uni¬
Pictures, cite reduced foreign earnings and decline in domes- *
tic theatre attendance as temporary and a leveling off of abnormal
peaks of 1946-47. Say economies have been effected to offset
higher labor and material costs, which have now become stabilized.
versal

The

many factors of underlying strength in the motion picture
industry often seem to be ignored in current appraisals of the indus¬
try's condition and outlook, J. Cheever Cowdin, Chairman of the
Board of Universal Pictures Company, Inc., and N. J.
Blumberg, Pres¬
ident, assert in their analysis of<f
the motion picture industry, which motion pictures has made necesis contained in the company's an¬ sary rigorous, industry-wide econ

nual report.

While
in

omies to offset the decline in both

1949 is for

dollar

immediate

"the

outlook

further decline in

remittances"

from

in-

the

foreign

and

entire production industry is
making every effort to effect sav¬
ings wherever possible without
sacrificing
the
entertainment
value

the product.

"The results of these

however, will not
important
of

the

any

income

time

some

the fact that the

has

appear

degree

statements for

economies,

industry still

backlog of pictures made or
committed for at high costs one to

two
to

years

have

that

ago

earnings until
liquidated."
"At

this

"there

Blumberg

dustry's foreign markets, the Uni¬
pictures executives stated,

versal

"there

some reason to
believe
that we
may be nearing the bot¬
tom of the trend."

They

pointed

out
that "pros¬
increased flow of
dollar remittances are tied
up with
the improvement in
general world

pects

for.

economic
pean

conditions."

The

Recovery Plan, the

improvement

Euro¬

economic

various

foreign

countries

recently and the nar¬
rowing of the gap between U. S.
imports and exports were cited
favorable

developments.

The
fundamentally favorable
longer-term aspect of the foreign
situation, they said, has been ob¬
scured by the immediate
impact
the economy of the

the

sharp

drop

that

arises

"the

solely

industry of

dollar

tances from abroad.
out

current

from

remit¬

dilemma

shortage

exchange," and that Ameri¬
films
actually are doing a
good

very

business

foreign

markets.,,■'"'■%;';.v'
"In

terms

popular

demand

and

patronage by peoples
throughout the world, American
pictures continue to dominate
markets by

seas

they said.

"This

over¬

wide margin,"

that

means

the

American motion picture
industry
has tremendous earning-power in

foreign markets which is dammed
up
temporarily through restric¬
tions

the

flow

dollar

ex¬

change."
The decline in domestic theatre

attendance, Mr. Cowdin and Mr.
Blumberg
stated,
"contrary
to
general
opinion," was probably
less

than

last

10%

year

com¬

pared with 1947.
"This
be

should

not

trend, but rather

probably

much

leveling off

from the abnormal peaks of 1946-

47," they declared.
continues

come

"National

in¬

high and current

social trends toward

wider dis¬

tribution of income and increased

leisure time for the vast
of

majority

people tend to stimulate

recre¬

ational activities of which motion

pictures

the

are

most

popular

form."

Regarding- television,
they
stated, that "while it is still diffi¬
cult to tell

what

direction its de¬

velopment will take, it is

reason¬

able to believe that, as in the case
of radio,

tion
tion

form of collabora¬

some

between

television

and

pictures will develop that will
advantage of both

industries."

ecutives pointed out that "the

basic

labor

which

steadily

for

have

six

and

been
seven

Emphasizing that "only through
the

wholehearted cooperation of
all groups in the
producing indus¬

try,

can

the industry maintain its

economic

health," they expressed
producing-distri-

doubt "that any

buting company, exclusive of its
theatre

operations,

making

today."

money

Mr.

adjust itself within

can

able

time

meet

One of the

ticularly

reason¬

changing

"American movies
bassadors
out the

est

world—they

salesmen

and

goods
is

con¬

build

greater
in

faith

basic weaknesses that brought on the financial crises in the first
place.
so Chicago, Rock Island & Pacific.
This is one of the few roads in
its class which have apparently emerged into the postwar era as en¬

tirely different properties.

Their

Traditionally Chicago, Rock Island & Pacific had been a notori¬
ously poor operating property. It was this inability to save any appre¬

these

helping to re¬
peoples in all

among

ciable amount of gross revenues for net operating income that was
largely responsible for the road going into bankruptcy in 1933. It was
one of the earliest of the major carriers to succumb to the
depression.
The reorganization was long drawn out—it was consummated and the

lands."

Central States IBA

securities issued only about a year ago. With this long relief from
necessity for making interest payments, and further aided by the
war boom in
earnings, the company was able to expend large sums on
the rehabilitation of the road property. A particularly good job was
done in the way of line relocations^ reducing or eliminating serious
grade and curvature problems. Also, considerable money was de¬
voted to the purchase of new equipment.
new

the

Conference Scheduled
CHICAGO, ILL.—The thirteenth
annual

conference

States

Group

Bankers

the

Central

Investment

Association

America

The

.very substantial property expenditures of the bankruptcy
have been paying substantial dividends. Practically up to the
outbreak of the war the road had a consistently narrow margin of
profit. In 1935 it had a net operating deficit (very rare in the railroad

scheduled

'or

years

Wednesday

and

Thursday,

17,

and

was

This was well below the industry
During the war years the profit margin was above
showing of the industry as a whole. More important than the
wartime showing has been the success of the management in keeping
expenses under control in the postwar years of spiraling wages and
the

by
G.

fuel and material costs.

Becker &

Co.,
Incorp.,Chairof

m an

than

advancement,
the
industry must
work
more
efficiently so that
over-all productivity in
the in¬
dustry scan be raised, costs low¬
ered, and waste and

extravagance

eliminated.
Demand

for

Industry's

bankers,
airily from

"The
unemployment that has
developed in Hollywood and in
other sectors

of the

industry

em¬

phasizes the need 'for the industry
to act promptly.
Demand for the
industry's product has not dimin¬

full

become

Cooperation

present

rev¬

will

There

Thursday;

theatre-owners

from

share of

proper

pro¬

revenues

picture, and in promoting
effectively the pictures shown, is
particularly essential, Mr. Cow¬

luncheon,

has the advantage of

ture.

At the outset the ICC imposed

debt

tic

reduction

Then with

the

claims

ad¬

senior

year

the

man

Central

the

lar.

addition

Baird,

they

Washburne,

are:

Harris,

Chair¬

was

the

able to

some

Finally,

below, $35,377,600. This

originally planned at $80 millions and

the

actually issued

was

$74 millions early last year.

sharply
in

senior

reduced
the

road's

capitalization

operating

analysts.

There

are

status,

and

the

mate¬

common

The latter has been

$0.75 quarterly dividend basis but a more liberal policy

tinctly possible

Co.,

ings

are

the intermediate term.

over

indicated about $11.40 against $9.29,

appears

Last year's share
pro

forma in 1947.

Newport News Shipbuilding and Dry Dock Company

motion picture, and in
justify this risk, must be

Quarterly Statement of Billings, Estimated Unbilled
Balance of Major Contracts and

proportion of
picture earns.

commensurate

the

They declared that "the current
challenge to the motion picture
industry is a serious one, but there
is Reassurance in the fact that the

industry

realizes

what

its

prob¬

in the vigor with
which it is attacking these prob¬
and

are,

lems.

"There

too,

reassurance,

Number of Employees

the

revenues

Thirteen Weeks Ended
Dec.

Billings during the period:

31, 1948

Year Ended

Dec. 31, 1947

Dec. 31, 1948

Dec. 31,1947

1,888,239

$20,249,123

$15,118,057

14,147,511

;

$ 9,076,588

Ship conversions and repairs

7,540,404

45,794,235

35,601,927

Hydraulic turbines and accessories

1,871,706

1,396,467

5,804,685

3,316,078

Other work and operations

2,495,549

2,417,712

7,886,785

5,176,445

$20,984,247

$19,849,929

$79,734,828

$59,212,507

Shipbuilding contracts.

;

Totals

the way the

industry has met and
triumphed over other major chal¬
lenges in the past—in the early
1920s,

radio:

then

the

transition

At Dec.

Estimated balance of ma|or contracts unbilled at the
♦he

from silent film to sound; the de¬

pression

conditions

and the troubles of the

the

1930s,

early

war

years."

Moreover,

industry

the

motion

picture

certain, inher¬

possesses

The estimated

The

ex¬

—and

the

its

human

'movies'

provide

most

popular

need

It is

balance of major contracts

period will therefore
any

•

1 2,028

unbilled at December 31, 1948 includes the award from the Department of the

aircraft carrier in the tentative amount of $1 24,000,000, the cost estimated by the Department.

vary

from the billings

the percentage-of-completion basis; such income for

the contracts. Billings and unbilled balances

this
„

inexpensive.

$54,182,957

11,753

Government contracts

are

adjustments which might result from statutory repricing and profit limitations.

form,"

"Its appeal is to the

whole„,family.

Company reports income from long-term shipbuilding contracts

subject to

essential

31, 1947

$ 199,074,127 (Note)

employees at the close of the period

Navy for the construction of

ation

At Dec.

31, 1948

NOTES:

ex¬

period

Number of

January 26,1949

and

705,382 shares of the $5 preferred and

1,409,346 shares of the common outstanding.

Vice-Chairman; Richard A. Keb-

off

nonequipment debt is down around $26 million

rely

making

pay

reorganization.

issued the company has been

4V2S have been reduced to,

improvement

railroad

Co.,

bon, Kebbon, McCormick &
Secretary-Treasurer.

preferred stocks have attracted considerable favorable notice from

Hempstead

Hall

was

With

recently in¬

were

consummation

since the securities were

in the amount of

rial

earnings the company

war

interest

Fixed

issue

States

the road about the most dras¬

imposed^on any major carrier in reorganization.

before

and the income

Thursday.

Officers

com¬

active in purchasing, and retiring, the income bonds in particu¬

very

in its operating status, the

particularly conservative capital struc¬

pany

informal dinner and entertain¬

duction end of the business alone
bears the major financial risk in

lems

being

are

earlier.

Aside from the vast improvement

formal
dinner
in honor of Hal H.
Dewar, Robertson & Pancoast, San
Antonio, President of the IBA, and

din
and
Mr.
Blumberg
stated.
They pointed out that, with exhib¬
itors able to pick only pictures
of known popular appeal, the
pro¬

able

year

Wednesday

ducted.

imperative."

exhibitors, in affording

ducers

dresses, and afternoon discussion
meetings on both Wednesday and

Group for 1949

has

November, however, the profit margin increased to 17.2% from 14.9%

handled by George S. Channer,
Jr., Channer Securities Company,
Chairman of the Group's Meettings and Entertainment Commit¬

commensurate

and

country

arrangement

ment

enues

the

point above the Class I average. Detailed figures for the
are not yet available.
For the 11 months through

1948

year

expected to attend. The

are

ished, but the necessity for turn¬
ing out a quality product at costs
with

7.9% and 12.4%, respectively. Moreover, the 1947 transpor¬
was two points below the industry ratio of 40%.
prewar year 1941 the road's transportation
ratio had been

than

Andrew M. Baird

section

conference

Product

the

ment

tee.

Has Not Diminished

company

tation ratio of 38%

invest¬

well,

for

•

postwar year, 1946, the

years was

other

the first full

carried .12,7%
of gross through to net operating income before Federal income taxes.
This was increased to 15.5% in 1947. The Class I average for the two

Group.
200

through to net operating in¬

of 15.2%.

average

Baird,

1936-1940, it carried

years,

revenues

before Federal income taxes.

come

an¬

nounced

of only 5.4% of gross

average

Hotel,

Chicago,

and in the subsequent five

industry)

the

Drake

into

Not

ideals

yet developed.

times

am¬

the great¬

are

A large number of the roads that were forced

bankruptcy during the depression of the 1930s but staged strong earn¬
ings comebacks during the war years, have again fallen victim to the

through¬

American

even

troubled

serve

will

good

reorganized railroads that has been able to do a par¬
job in the postwar years has been Chicago, Rock

good

Island & Pacific.

ditions.

any

of the larg¬
is by nature flexible and
one

opportunity
everyone
in

they stated.

distribution

est.

business,

last

up.

Illinois, Indiana, Iowa, Nebraska
and
Wisconsin, but from every

need

and

cash

qualities of great basic sta¬
bility, they pointed out. "Recre¬

entering into the

of the

Blumberg
emphasized that if people in the
industry are to have security and

and

costs

Cowdin and

one

things that people will give

Andrew

cessively high level of basic labor
production

ent

Costs Becoming Stabilized
The two Universal Pictures

other

indications

some

it is

strated that

March

mo¬

work out to the

entirely

are

costs,

order to

decline

regarded

rising

they

years."

They pointed

dollar
can

are

material

continue

influence

time," they continued,

stabilization

J. Cheever Cowdin

will

adverse

huge mass market em¬
social and economic
demand
persists in
good times and bad.
Experience
in
the
last
depression demon¬

because

(569)

every

revenues.

The

CHRONICLE

The

value

domestic

FINANCIAL

serves a

bracing

level.

N. J.

;

COMMERCIAL

THE

By Order of the Board of Directors

R- '■ FLETCHER, Vice President and Comptroller

on a

dis¬

earn¬

(570)

COMMERCIAL

THE

New

Public

Utility Securities
=

taken

Wellington Fund
Our

By OWEN ELY

full time basis

Vice-President

charge

quickly

exchange

cash.

and

very few securities appearing as prices softened.
It is indicated that
large buying orders for ail of the longer-term
obligations are in the market and Federal is the only important
;

supplier of these securities.

Savings banks
ernments

larger

preferred stock will be retired through
Consumers Power, Central Illinois Light
stockholders will receive an initial distribution

through

The

stock.

provision is

company's principal holdings

made

for

consist

now

the

Esti."

Value

4,035,000

Consumers Pr._

800,000

Central 111. Lt._
Ohio

2,052,000
12,020,000

the following

PfdT

291/2

"71/2

Co.__

Mr.
.

the

$60

$310

$160

for

many

is,

the

and

that

national

Fund.

Wilkins.

Mr.

officer

the

about

their

was

distri¬

During the

served

U./S. Navy.

acting

Now
full time

annual

rate

600

and

iQdQ

DWv

the

dividend rate, a price around 9 or 10
might be anticipated.
The value of the package to be received for each share of

ferred stock under the plan may be estimated
2.8

shs.

0.55

Consumers

sh.

Central

Power

Illinois

Light at

tee since the Fund

;

33_._

Cash

1948

Total

sociated

sh.

Ohio Edison

0.35

sh.

Southern

at 29%

$1.77

Company at 7V2

management
was

with

Total

investment

2.63

the

bank

loan.

Dividend

present is
month/about half of which

for

10 years

Edison

(assuming that the full amount

Hence

distributed

for

acccounts

Trust

stockholders and

the-company dissolved..

The preferred stock is currently selling around
mon at 314-%.
Assuming that the above estimates

During the past
has also added

97 apd the

who

com¬

Wellington

was

Mr.

sistant

During

the

period

same

the

;

GA.—Owen

the market for. these securities.

World
in

panies
in

Some

institutions

Bank

the

bonds, especially

movement

and

some

out

commercial

limited amounts.

There

...

the

long

corporate
banks
are

many

maturity,

being

are

bonds, with trust

going

into

this

com¬

obligation

market followers

money

who regard the World Bank obligations as
very attractive secur¬

ities, particularly
LOANS

when

compared

with

bonds.

corporate

...

CURTAILED

Although loans and mortgages
banks
are

and

savings banks, many

being made by commercial
being turned down than

are

being made because these institutions have become

and

selective

their

operations in this field.

very careful
There is not the

pressing need to get funds invested in loans

and mortgages as
savings deposits in many
institutions, for the time
carry on quite well'from the

in the past despite larger disbursements on
instances.
It is indicated that these
...

being

least, are in a position to
angle, by putting funds into government securities.

It is believed

that

Treasury obligations in

long

it is possible to get a yield 011
of 2.15% the smaller commercial

excess

banks and savings banks

can meet the larger payments on savings deposits and still have something to spare.
This probably
explains to some extent the purchases that have been made
.

recently by savings banks in the 2%s due 1959/62.
MARKET

OPERATIONS

(

Demand for the partially-exempts is still
good, with the out-oftown banks reportedly the
largest buyers of these securities.
.
The 2%%
due
1960/65 is getting the lion's share of the
.

buying

although the 27/gs due 1955/60 are being well taken.
1952/54 are going out of the market and
price dips
many

have

of these buyers
come

far

Non-bank

are

The

2s of

just what

looking for, although not too many bonds

are
on

the

investors

minor

continue

setbacks.
to

sellers

of the eligibles
with the proceeds going into the taps.
However,
the amount of bank issues that are available for
sale outside of
Federal seems to be quite limited.
The 2%s due 9/15/67/72

as¬

run-ups

With Merrill Lynch

ATLANTA,

following the policy of selling as many corporates as the market
take without disturbing prices too much and then
buying cor¬
responding amounts of Treasuries.

are

Mr.; Joseph, E. Welch,

Glancey -is

Executive Vice-President.

and

now

SAN FRANCISCO, CALIF.—Ef¬
fective Feb. 1, the firm name of

Bailey, Selland & Davidson, Stock
Exchange Building, members of
Francisco

Stock

Ex¬

LOS
C.

with

tion

has

First
of

become

Investment

Merrill

Crawford

being bought by

now

many

banks that have been largely in

shorts, with certificates and near-term bonds being sold in order
to

take

the

longest eligible obligation.

are

Lynch,'Pierce,

fice, 23 North Pryor Street.

Corp.

Olsen

firm's

ANGELES, CALIF.—Aaron

Clark

with

Fenner & Beane in the Atlanta of¬

Aaron Clark Joins Staff
Of First Investment

William

was

Crawford

associated

previously

New
was

York

with

office:

Mr.
the
Mr.

with them in Texas.

Corpora¬

changed to Bailey &

Charles A. Clark, Jr., With

Montgomery, Scott & Co.
PHILADELPHIA,

PA. —Mont¬

gomery, Scott & Co., 123
Broad Street, members of

stock

pal

Los

Angeles* 717 North
Frank Hardt Dead
La Cienga Boulevard, investment
Davidson. A. L. Selland and Dud¬
counsellors. Mr. Clark was previ¬
Frank
M.
Hardt,
partner
111
ley Hayes have withdrawn from
ously with Selected Investment Montgomery, Scott & Co., Phila¬
partnership in the firm, which has Co. and Daniel Starch & Staff in
delphia, died at his home at the
discontinued the San Jose office.
Chicago.
*
age of 69.
"
J
was

Bailey & Davidson

San

year

to its management

countants.

sen

change,

government bonds,

will

ex¬

formerly associated with
Main & Co.. Certified Public Ac¬

preciation possibilities would be about 14%
and 30% for the common—less expenses in both
cases. If Southern
Company be taken at a future estimated value around 9% (a 70c
dividend and a 7.4% yield), the value of the common
package'w<5uld
approximate $5.09, making the percentage of potential gain about
50%.
'
.
V
;•

the

organization Thomas F. Glancey,

•

prove-correct, ap¬
for the preferred stock

Now

Research,

the

was

•

Investment

Lloyd, Director

well-established re¬
search.
and
analytical
contacts
which Wellington enjoys.

retained) would
a month after income taxes and moderate ex¬
this basis it should not take many months to clear

common

1949..

of breadth

revenue

the remaining bank loan, after which the Ohio Edison would be

27,

taxable

many commercial banks are also taking advantage of the ^4..™,,-41-,
strength
in corporate bonds to move into selected
government issues.
One deterrent to more switches out of
corporate bonds is the lack

same

panding

yield about $300,000
penses.

as¬

two

nate with Rawson

accruing at the rate of about $1,750,000 a
can probably be retained after
expenses, taxes and preferred dividend
requirements. Thus by June 1, allowing for possible cash on hand,
the bank debt might be reduced to some
$1-$2,000,000. Income from
Ohio

Jan.

long

yield

Association

$4.40

income

The narrowing of the yield spread between long governments

field.

(Philadelphia); a Di¬
rector
of
industrial
companies;
Edison may be withheld until the bank loan is
entirely paid off. and a Trustee of private Trust
Commonwealth will have left (outside of the distribution to the
Funds.
Mr. Kulp joins the Well¬
common
stockholders) some 32,000 shares of Ohio Edison and 324,ington Fund organization on a
000 shares of Southern
Company, which it could sell for. about $3,- full time basis and will, also serve
000,000. The company probably also has some cash on hand (in excess
as Executive Secretary of the In¬
of the amount needed for the
preferred stock package), despite a vestment " Committee ahd coordi¬
payment

2.71%

Funds,
individuals
and
institu¬
tions, including banks, insurance
companies, colleges, etc. He is a
Director of the Financial Analysts

The 35/100 share of Southern Company will
probably be distrib¬
uted soon after the plan becomes
effective, but part or all of the Ohio

recent

CORPORATES

SWITCHING

established

was

leading Stock
In his manage¬
ment capacity he has had a broad
experience in the supervision of

follows:
0.06

VS.

Exchange firms.
would be

In other words the yield spread in these
averages between
long Treasuries and. the highest-grade corporate bonds has gone
from 0.42 on Oct. 28, 1948 to 0.30 on Jan.
27, 1949, mainly through
a sharp decline in
yields of AAA corporate bonds.

Previous to his investment counsel

$111
stock package

common

as reported by
Moody's Investors Service, has gone from 2.45% to 2.41 %* a decrease
of not too great importance.

used

investment

estimated value of the

average

Kulp nas had many years
experience in the financial and

activities he

The

appear
to have made more progress
(in the same
than Treasuries which should be the bellwethers of what

Mr.

$92

tap bonds.

place in the market for the highest-quality income-bearing
obligations.
According to Moody's Investors Service, the average
yield on AAA corporate bonds has declined from 2.87% on Get. 28,

20 years ago.

pre¬

follows:

for

quest

the

Xnin

and Directors of the Fund during
the period from li29 to 1937. Al¬
public; but if the present rate of increase in though Mr. Kulp was engaged as
earnings continues, a higher dividend rate might be anticipated, per¬ an
independent investment coun¬
haps in the second half of 1949. However, it appears likely that; under sel
for the Fund ior the past 10
present market conditions, the stock might sell initially around 7%
years, he served as one of the key
to yield 8%.
Eventually, with market seasoning and an increase in men on the Investment Commit¬

distributed

eleemosynary

and the best <luality corporate bonds has already brought about
vi«i'
oL nn^r. I switching from the latter obligations into the Treasuries and there is
wTwYiim'cJnnttwh Mr -^nin
doubt that this trend will continue.
Savings banks have been
wL nnp nf thA oH^inal officers1 amonS the most important institutions in this operation although
was
one
01
me
uiuiiiceis
nTkn«ir,.
r>„

910

on the
stock, and it is expected that this rate will continue after the stock

joined

institutions.
and

experience

currently being paid

are

hav£ also

these

companies

in training
helping - dealers
productive sales organiza¬

build

on a consolidated
basis* it is understood. This is despite the
2,000,000 shares to Commonwealth & Southern during the year
1948 (1,000,000 in the
spring and 1,000,000 in September). Dividends

the

most

insurance

takes

assistance to dealers in
Mr. Wilkins has had

salesmen

sale of

leading buyers of long gov¬
deposits which have been

bonds

direction)

sales.

extensive

the

/ Although the action of government bonds in recent weeks has
been very
satisfactory with rising prices and declining yields, cor¬

tions.

earned

increase

;

basis he will be able to given even

greater

Power.

1948

the

smaller

also,

Wellington

years

program

war

year

expected

was

the

TREASURIES

been active

distribution

bution

$150

market value

Company in the calendar

Kulp

primarily responsible for the in¬

(wholly owned by Commonwealth) is as¬
as Consumers
Power, though this as¬
sumption may be on the conservative side. However, the stock may
require some market seasoning before it sells higher than Consumers.
In the 12 months ended
Sept. 30 $2.91 a share was earned on Central
Illinois Light, while Consumers Power earned
$2.72 on the average
number of shares, or $2.45 on the
outstanding shares. Central Illinois
Light is expected to pay $2 on its common stock, the same rate as
Southern

bank bonds still are the most
sought-after issues with the
longest eligible obligation again the market leader.
Volume
in this security has been
very sizable.

porate

Wilkins has

Fund
:

Central Illinois Light

Consumers

Distribution.

Moyer

Morgan & Co., the National Dis¬

itial

same

tributor.

$133

Total

signed the

Wilkins

tional

Com.

$133

of the

...

Allocated Under Plan to

(Millions)

Edison

Southern

Total Value

Value

•

dividend

warrants.'

Vice-President and Director W. L.

Market

Shares—

of the amount

measure

The

stocks of subsidiaries:

common

institutions

Company stock, and possibly some of the Ohio Edison
It may be necessary to retain part of the Ohio Edison
pending
retirement
of
the
remaining small bank loan
that

Some

seem

because

than

Some

Southern

from

stock.

income

The

assets.

package

Common

takings of high income governments by investors can be gathered
from last week's sales
by the Central Banks of issue due in more
than five years, which exceeded
$329,000,000.
The authorities
may be running low on the eligible 2Vis and 2V2S.

possible, through dividend income -and sale

quote-downs, with

June 1.

firm-to-buoyant tone

continues in the government market,
with investors still
looking for securities in order to maintain income.
Reactions have been short-lived and very
moderate, largely

Na-

The capitalization of the
parent company now consists of a
$9,000,000 bank loan, $144,125,000 $6 preferred stock (with arrears
of $24,497,000),
33,673,000 shares of common stock and 17,589,000
warrants to buy common.
The company will of course pay off the
loan

Governments

By JOHN T. CHIPPENDALE, JR.
A

certainty that an appeal to the Circuit Court will not be
by the Snyder Committee, the heavy cost of printing the
might be a deterring factor. Assuming that the plan is ap¬

proved before March 1, it might be in effect by May 1

bank

Reporter

1949,
Alvin
J.
Wilkins
joined
Wellington Fund, Inc., 1420 Wal¬
nut Street, on

of miscellaneous

-Thursday, February 3, 1949

PHILADELPHIA, PA.—In Jan.

Commonwealth & Southern's dissolution plan is now before the
Federal Court at Wilmington, and in the opinion of close observers
a
decision by Judge Leahy might be expected in February.
While

record

CHRONICLE

Executives Appointed

Commonwealth & Southern

there is

FINANCIAL

changes,
with

Jr.,
Mr.

princi¬
commodity
ex¬

announce

them

as a

and
of

South

the association

Charles

Clark,

registered representative:

Clark

securities

has

been

active

H. J.
H. J.
the

New

York

will be formed

Open

Stock
as

Exchange,

of Feb.

10 with

offices at 61 Broadway, New York

City. Partners will be H. J. Kenny,
Jr., who will acquire the Exchange
membership
William

the

business since graduat-.
ing from Harvard in 1920.

Kenny Co.

Kenny & Co., members of

ner,

Mark

Haas;

Bellinzoni, general part¬

and Mary Jane Kenny, lim¬

ited partner.

Volume

169

Number

THE

4774

Criticizes Truman

COMMERCIAL

future

Budget and Tax

FINANCIAL

welfare

one's

Instead it becomes
tion for the

Guaranty Trust Company of New York in current "Guaranty Survey"
says burden of Federal taxes are heavier than in wartime and may
reach

25% of national income, the i.mifc of tolerance in

CHRONICLE

open invita¬

indulge .in malingering and
loafing and to take a free ride at
the

our system

expense

the

rest

Securities Salesman's Corner

the

population.

of private enterprise.

But there.is a point
beyond which the majority would

By JOHN DUTTON
The

•

The

by the

current issue

of the

"Guaranty Survey," published monthly
Guaranty Trust Company of wew York, analyzes President

Truman's budget and tax

proposals, and

that with further in¬

warns

interest"

'' / '

would

efforts

the drones. Then

pri¬

in Federal taxation, "tne limit of tolerance in a system of
is being reached.
<£——■

crease

vate

lack the incentive to put forth the
necessary

be less and

for the next fiscal year. But 'mini¬

would

mum

requirements'

magnitude

term,

the

that

plans

and

pros¬

pects, as outlined annually by the
President, are a matter of vital
the

concern

national

economy.

The
estimates
and
p r o p os a 1 s
placed before Congress this month
certainly do not make an encour¬

aging picture.

Nearly four years

after the end of the

try

will

which

enter

the

war

fiscal

the

coun¬

period in

government's

tax

levy

the
public, on the basis of
existing income-tax legislation, is
expected to be only 8V2% below
the wartime peak.
Yet this tax
on

load is expected to fall
lion
short of
meeting

$873 mil¬

tures,

wipe

the

and

deficit

order

expendi¬

out

and

provide a surplus
for debt retirement the President
recommends

increase of $4 bil¬

lion

in taxes, exclusive of about
$2 billion of social-security taxes.
Such an increase, on the basis of

the official
in

tax

burden

budget

than

nearly

of the national

three 'times

ap¬

proximately the limit of tolerance
a system of private enterprise.

Federal, State and
in

the

United

might

discuss

local taxation
is

States

that level.

about

fact,

now

view of this

appropriate

EventuaRy
would
form

subsistence

the

1.V-

Utopian

swallowed

all

level.

scheme

some

normal

false

mistake

let

lull

what

der

prospect
based

upon

society

the

force

the

climate
tree

world.

must

enterprise

main¬

that

face the future with

can

confidence and faith, and thus be

impelled to make long-term
mitments
the

that

only true

will

com¬

furnish

source

jobs,

of security."

this

one

the

a
Treasury deficit
higher tax rates."
Answering the question "How
High Can Taxes Go?" the "Sur¬
vey" continues:

"The

President

annoying
that such

tional debt
does not

should

"The;
taxes

na¬

reduced.

will

ed.

surplus must be obtained by rais¬
ing taxes above the wartime level

and

enterprise; but

;

between

higher

All

budgetary deficit is

can

that

one

follow, however, that the

choice

and should be avoid¬

that

required

is ade¬

quate appreciation of the need for

The budget message describes the
amounts of contemplated

economy

and

sufficient

determi¬

First

National

Bank

CHICAGO, ILL — The ThirtyEighth Annual Meeting of the
Bond Club of

Chicago will be held
at The Chicago
Club, Thursday
Feb. 10, 1949. Cocktails, 6:15
p.m
and dinner

Nominating
Committee,
John
S. Loomis,
Illinois Co. of
Chicago; Edward C. George, Harriman Ripley & Co., and William
A. Fuller, Wm. A. Fuller &
Co.,
will

'submit

loafing.
In

the

current

"New

England

National Bank of
Boston, there is
man's blueprint of a welfare state.

attack

open

ing from the

Like other

projects, this proposal

starts with

modest

sum

set aside

for the first year or
so, and then,
because of pressure for expand¬

ing

payments,
ball.
ence

and

coverage

This

grows

has

of other

liberal

been

sfiow-

the

experi¬

countries that have

tried the experiment. In

Germany,

capita cost o'f health insur¬
ance rose 300% from 1914 to 1929,
per

and

Great

Britain, 250%

;ing this period.

dur-

In New Zealand,

where

the
most
comprehensive
system has been adopted, the cost
of the program now is five times
as

much

the

original estimates

look for

THERE,

but

tional

the
In

rev¬

family

get

back

I'd

can

and quit.

President Tru¬

experience of
other countries, our taxes are al¬
ready as high as can be carried
without

the

First

when

and, because it IS ACTUALLY

The

First

Colony

Corp. and their idea,
a bit further.
After
we have to have a

expand this thought
develop business today

stocks

was then getting ready to collapse?
selling at much above book value,
earnings for three to five years?
Or

are

average

is it when you can buy them in some
cases at less than net-quick, at
two, three, or five times earnings?
What if earnings drop?
What if
business collapses?
What if the U.S.A. goes totalitarian?
What if'
the

Russians bomb us?

ing millions of people

What if all the

things that today

keep-,

are

the sidelines actually do happen
AND
if they do?
WHEN YOU CAN BUY"
ASSETS IN ESTABLISHED COMPANIES THAT ARE THE BACK¬
THEY

WON'T

BONE

THE

GREATEST

THE

DOLLAR

ARE

OWNING THEM

AND

LET

THE

10%

EARTH

FOR

INCOME

OTHER

IF YOU ARE

What if this sort of
us

NATION

OBTAIN

ASSETS IN DOLLARS.

let

but what

500

WHILE

FELLOW

WRONG HE WILL BE

thinking is wrong?

ON
YOU

KEEP

HIS

TOO!

(I don't think so!)

But,

for argument's sake that it could be.
What then?
You
in the securities SELLING BUSINESS. Securities
are OUR
MERCHANDISE. If we don't think our stuff is worth
say

'and I

are

buying todays

then

should go out and sell something else!
Isn't that so?
Can
you sell something you don't believe in?
I can't!
So, let us make
up our minds to one thing.
Either we believe that securities are
the

best

BUY

THE

WHOLE

COUNTRY

THING, AND GO OUT AND SELL THEM
BEFORE.

OR LET'S

...

TODAY

BAR

EVERY¬

LIKE WE HAVE NEVER

QUIT THIS BUSINESS AND SELL

Chicago,

newspaper ads.

Treas¬

bargains.

"Amazing."

"Priced far below the original wholesale cost!"

inventory sale! Up to 60% off original prices."
up to 50%."
They reproduced these clippings upon
.

"Pre-

"At reductions

letterhead size
They followed up with a story about bargains in securities.
They wrote, "We too in the security business are merchants. We are
not just order takers but we have an obligation to tell the
public
a

page.

about the values available in the merchandise

why

that

sell.

That is

sending this letter to you." They listed nine stocks that
they liked. They showed what one dollar could buy of net current
assets, - other assets, total assets, of each one of these companies.
we are

Like this:

."A'\ A

■

ONE DOLLAR CAN BUY

,
,

Net Current

Motor

Then

Truck

dividends paid,

1940

able

and
a

buy

interest in

net

Total
Assets

$1.59

$3.98

the next page with current market,

and earning record for each year back through

all nine stocks.

been

buy

Other

$2.39

_____

they followed

.V.

Assets

Na¬

Fred

eventual

our

past

"The

fundamental

The

new

business

short

very

Walter

headed
some

will

Then they concluded:

much for

little

"Seldom have invest¬

cost.

Not

only

can

you

of the established corporations for less than

some

working capital but

you

absolutely nothing for plant

pay

equipment whose replacement value today generally would cost

great deal

the

unusual entertainment

very

"Bond

"The

Club

Follies

Journal

to Life."

1948"

Comics

than such assets

over

enabled

they

these

pay

addition,

are

carried

many

ourselves

see

have thrown in

you

the books of these

years

considerable

these

power

value

which

avail

bargains should be handsomely rewarded.
economic future of

this

country,

lack the faith then all

themselves

flow of

purchase
and

should invest in its industry.

hold dear is lost."

'aa A MEN!

Brought
others

With Standard Inv. Co.
(Special

The

Financial

Joins Lester Staff

Chronicle)

(Special

The

Financial

Chronicle)

PASADENA,
CALIF. — Ray¬
mond J. Monjon has become af¬

Davies &
(Special

staff

Co.

Chronicle)

Financial

George S. Wallace has joined the

filiated with Standard Investment

Mejia Adds

The

California,

117

East

orado Street.
SAN
Ethan

the

FRANCISCO,
has

Bernstein

staff

New

York

CALIF.—
&

members

and

ANGELES,
Lester

CALIF.—

621 South
Spring Street, members of the Los
Angeles Stock Exchange.
Co.,

Mejia,
of

the

Francisco

San

Col¬

LOS

added

been

Davies

Building,

fresh

the

Stock Exchanges.

Over-the-Counter Quotation Services

equipment that

jobs

For 36 Years

capital into the
necessary

provide

tools
new

andj increase production. So

the net result is that

allocated for

Hopkins With
Raymond Hall

larger slices

smaller cake

are

life.
"If

security is guaranteed on a
basis, there is no incentive

practice. thrift, to save for a
or to provide for the

rainy day,

such

have faith in the

heavy taxes that severely restrict
the

has

from which

the part of investors gives

values, buyers who

us."

see

but

dividends and increase their earning assets."

recognition

will

good

expense

companies to achieve the earning

"Once the attitude of indifference

the

You can't afford to miss

this—"To

Russ

wealth is throttled by

built

planned, which might be entitled

; : •
weakness of

crea¬

companies.

Committee,
by James P. Jamieson, has

time the

same

Co.:

meeting

multiplied manyfold,

are

while at the
tion of

Fitzgerald, Jr., Blunt, Ellis & Sim¬
mons; M. J. Hickey, Jr., Hickey &
Co., Inc.; George L. Martin, Mar¬
tin, Burns & Corbett, Inc.

radical

the proposals put forward is that
claims on future wealth for social

welfare

Collins

break-down

and

economy

•Tulien

change in government.

say

That is

top of the bull market which

1948

Glore,

Directors, the officers and:

(Spen.U.i

The

...FRESNO,

broad

per

pessimists,

have

out and sell it.

10, 15 and 20 times

their

For

1939.
In that country, social se¬
curity payments absorb more than
cost

curl

going to
We have to OFFER something out of the
ordinary. When
real bargains around?
In the spring of 1946?
In 1936 at

1929?

are

there

urer.

with

governmental

Jenner,

Bank

Hopkins

total

STORY.
are

can

want

before

all

ors

Austin

can

silver lining in the clouds

for

Wiltberger, Blyth

Parker,
Forgan & Co., Secretary.

protection against the viscissitudes

35%

can

such

anybody can be a defeatist. In fact, a lot of people do it every¬
day, and some of them are in the securities business. Or we can

White

Cummings

at the time of its establishment in

enue, so that the

going to pot,

com¬

B. Carpenter, John Nuveen
Co.; Richard M. Delafield, the
First Boston Corp.; Perry Dry den,
the First

"While Government officials have
prepared blueprints that would
revolutionize American life,"
says<$>
> ■ ■
' ' ■
•'"-A'-V-A
the "New England Letter," "no seriaverages around $210 a year.
ous
consideration is given to the
"This 'welfare state' program is
cost of such a
program or its im¬ launched
at
a
time
when
the
pact upon our economy.
boom has perhaps passed its
It has
peak
been
estimated
that
socialized and when our Federal debt is
medicine will
eventually cost $7 more than $250 billion, with incal¬
billion a year, while the
aggre¬ culable but staggering future com¬
gate cost of the various phases of mitments scheduled for various
the social security program in a
purposes here and abroad.
Judg¬
decade or two hence
might ulti¬

mately amount to $20 billion, or
roughly about $400 per family.

periods

Letter," published
an

following

year:

Alfred

broad

Says an economic
^system which provides high level of employment is more effective
in providing social
security than one encouraging malingering and

:■

the

Co., Inc., President.

welfare program, holds if individual
security is guaranteed
basis, there is no incentive to practice thrift.

at 7:15 p.m.

The

Boston, in discussing President's social

easy,

"Sale."

adopt

can

They took clippings from

ing

Contends "Welfare Stale" Throttles

Now to FIRST COLONY and their
presentation of

officers and directors for the

nation to achieve it."

expen-

world

that

SOMETHING ELSE.

become

matter to the test.

when the government should
have
the

what point

point exists is beyond
-motion, and wise policy will cer¬
tainly refrain from putting the

budgetary surplus and

burden

fatal deterrent

right in in¬
sisting that a time of large income
and
full
employment is a time
a

foretell at

can

attitudes

whole

taxation will drop accordingly. No

and

real

SOLD

tendency continues, as eventually
it must, the ceiling of tolerable

Colony Corporation of New York we think has hit
selling idea that is in keeping with the times. There

today in the securities markets.

creative

business

the

of progress, and the
individual energy un¬
stimulus is the most

such

tained for

is,

reward

mainspring
release

and

into

Human nature be¬

war

directions.

numerous

ing

favorable

security concern¬
ing the taxpaying capacity of our
economy.
Already the intensity
of demand is subsiding notireably

1941

into business.

ab¬

sense

taking so that there
adequate flow of funds back

the

conditions of the
years

wards for risk

contribution

capacity rather
than minimum requirements."
v
Concluding
the
analysis,
the
"Survey" contends "it would be a
disastrous

economy tick.
Toward this end there must be re¬
our

First

two

are

totalitarianism.

making

upon

"Social

choice between

less to share until

individual

total, room cannot be found for
savings sufficient to obviate the

estimates

budgetary

terms of maxim

billion,

the

income marks

heavier

$42

de¬

for

security and ecohomic
progre.-.s are not incompatible but
"The ability of our economy to ; are
closely interrelated. The more
supply money for governmental f effectively our economic
system
purposes
has never been fully ' functions
and
pro /ides
a
high
tested, but students of economic; level of employment, the less need
history have found reason to be¬ there will be for welfare aids. So
lieve that, as a general rule, 25%
the
emphasis should be placed

than any experienced in wartime.
It is impossible to believe that in
a

relative

of which

pends not only on need ior money
out
also
on
ability to supply
money under existing conditions.

estimates, would result early postwar

Federal

meaning

provide

situation would

whereby production
slacken, and there would

diture as 'minimum requirements'

created

Government," says the
"Survey," "have attained such a

"The financial operations of the

Fedeial

indigent and shiftless

(571)

children.

Financial

Chronicle)

CALIF.—William

has

become

Raymond

Helm Building.

associated

Hall

NATIONAL QUOTATION BUREAU, Inc.

Sons,
Mr. Hopkins was

Established
46 Front

previously with Walston. Hoffman
&

Goodwin,

Co.

and

E. F. Hutton &

Chicago

1913

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

(572)

COMMERCIAL

THE

have been only one-fifth of what

Sees Steel Demand Tapering Off
E. G.

Grace, Chairman of Bethlehem Steel Corporation,

cancellation of orders has already appeared and
is

definitely off.

Fears

of demand

plant in that year.
proposed; change,"

this

"Under

Admiral

Moreell

declared,
"the
would not lose tax

government

in the long

money

"we have been building too much steel

capacity."

spent

says some

pressure

CHRONICLE

FINANCIAL

interview in New York City

press

the

Steel

Bethlehem

rather than £
too little steel

capacity."

tio ned

m e n

there

had

been

some

cancellationof
orders with his
and

concern

though

prod uction
schedule

will

be full through

the

first

six

months of the

don't

year,

what

know

will

Eugene G. Grace

happen

after

the

cause

pressure

that be-

definitely

off."

Discussing

prices,

stated: "There

Grace

Mr.

can

decrease

steel

there is a
decrease in the cost of producing

prices

until

would,

the nation's

fact, gain because
industry will be able

the

have

fact

that

softened.

keep

tries will

whole

would

chance to build for

And stronger indus¬
protection of

assure

em¬

ployment, production, and share¬

these steel prices."

holders' investments."
The

proposal was contained in
E. Coe Kerr Dead
a
letter .being
sent
to
all
J&L shareholders and employees.
E.
Coe
Kerr, member of the
It closes with a suggestion that
New York Stock Exphange, died
those who agree with the proposal
at his home at the age of 62.
Mr. should write to those who repre¬
Kerr

senior

was

partner

the

has recently been

active

sent them in Congress and suggest

and that they support it.

former firm of Kerr & Smith,

dividual floor broker.

Wall

Street, New York City, an¬
nounces the appointment of John
Matteson

.as

manager of the
institutional v investment

The National Fed¬ firm's
held on Tuesday, department.
Mr.
Matteson % has
The sessions will comprise a lunch¬ been with the firm since 1934 and
afternoon r™md table conferences at Schwartz' has considerable experience in the

March 8, 1949, in New York City.

Restaurant, 56 Broad Street, fol-?—'
7—
handling of portfolio analyses of
lowed by a dinner meeting at the ing and convention are being sent banks
throughout the country.
Authorities in

Statler Hotel.

investment

va¬

will

fields

approximately

of the Federation

2,000

members

which comprise

all-day* conferences. The New York Society of Security
The luncheon meeting will fea¬ Analysts, Investment Ana 1 y sts
ture a symposium on "The Out¬ Club of Chicago, The Boston Se¬
look for the Securities Markets." curity Analysts Society, Financial
The: afternoon conferences will Analysts of Philadelphia and the
address

the

with

deal

the

petroleum, public
utility, construction and railroad
industries.
The general
subject
of the dinner meeting is "Looking
Ahead."

Invitations to the annual meet-

Statisticians'Associa¬

Investment

tion of Los Angeles.

New officers

the Federation will be elected

that

the

business

annual

also

company

Hallett

statistical

Dolan,

announces

research

analyst with the

and

firm

since

1934, and Albert C. Baur,
formerly with Moody's Investors
Service, will be associated with
Mr.

Matteson.

Mr.

Dolan

origi¬
nated, prepared and supervised
the printing of the book on U. S.
Government Securities issued by

meeting
the firm for
which will be the first order of
at

some

years.

Mr. Baur

specializing in municipal invest¬
ment
ratings and portfolio an¬
alyses, particularly for banks.

San Francisco Exch,

change in Federal Tax law that will permit the write-off
of new equipment more rapidly.

urges

Standing Committees

announced the

may now.

because

said,

the present tax sys¬

doesn't

take

account

the

rising price of equipment. We

are

deductions

for

allowed

make

the higher costs of

terials and labor.

gives

have

relief

and

plant

operating
for

equipment

than

"For all the

ma¬

But the tax law

of
they

costs

and

doubled.

apparent prosperity

value of the

ments

"Our company

Ethics and Business Conduct:
will need more
cash," he added, "and be assured Joseph Hauck, Chairman; John I.
that the problem is not ours alone.
Dakin, Sherman Holescher, Wal¬

"My proposal to meet this need
a simple one and a fair one for
government and business alike.
is

"At present companies write
cost

equipment

off
the

over

period

today," Admiral Moreell
continued,
"industries
that are

gest

keeping pace with America
caught short of cash.

amortize the cost in shorter time.

ter

have

"What

aside

for

are

have been able to lay

company

"does not

begin to meet what

must spend for new plants.

"During the last three years
Laughlin has spent $104,000,000 to replace and improve its
plants. And we are already com¬
mitted to spend $106,000,000 more
in the next four years.
can't

use,yesterday's tools

ness

Jones

vast

in busi¬

tomorrow," the Admiral de¬

clared.

steel

and be

'
&

Laughlin, like other
companies,
has
borrowed

sums

for

modernization

and

increasing capacity since the war's
end, Admiral Moreell explained.
The

company

heavily

upon

common

ceiving

has

also

drawn

profits that ".

shareholder
annual

now

return

life.

sug¬

that

propose

allowed
half of

write

companies
off

Floor

to five years, as they choose,
that they be allowed to deduct

so7

"There should be

limit

the

taxable

before

year

deducted.

the

this

the

a change should
temporary meas¬

the

present

Moreell

told

would

have

change
&

how

_v.

the

affected

Laughlin if it had been

"Our profit

for the year would

have been cut $14,880,000 and our

re¬

taxes

would

$9,120,000.

...

unusual

feature

have

been

which

deposit

accounts
are

ings

the

school

mutual savings banks
14,600,000 are regular

mainder

(

nearly 19,000,000

now

and

the

re¬

made up of the sav¬

year's activity," Mr. Maude added,
"was the emergence of three dis¬
tinct patterns of deposit growth,

other
The

total

which

both

children

and

in¬

clubs

and

regular,

followed

dividuals in

succession.

represented

level one-fourth be¬

low that

during the corresponding
The mid-year in¬
augurated a sharp change, with
deposit increases slumping to $63,000,000 during the third quarter,
as
compared
with
$192,000,000
gained for the same period in
1947.
Despite the fact that na¬
income

continued

special

accounts.

purpose

number

accounts,

Further

readjustment
of
the
banks investment port-,

savings

period of 1947.

tional

Christmas

school savings and
club accounts rose by over half
a million
during 1948.

During the first six months de¬
posits gained $450,000,000, which

folios

occurred during the year,
reflecting increased demands for
real

estate

ing,

and

corporate financ¬

according

Mortgage

the

loans

report.

$696,000,000

rose

14%, and corporate and mu¬
nicipal securities $481,000,000 or
or

high

28%.

levels throughout this period, peo¬

Funds

for

obtained

were

these

from

purposes

the

ple
limited
the
amounts
they
placed in liquid savings, and the

gain in
liquidation of
$480,000,000 of U. S. Government

mil
in deposit gains continued
tnrough October. Deposit growth

securities.

$.05,000,000

$223,000,000

the

last

months

tWo

deposits

1948

sharply, although re¬
maining under the levels attained

in ,1947.

The last quarter gain re-

the

and

The 1948 changes com¬

with

pare

recovered

increases

1947

mortgage

loans,

corporates

and

micipals, and $239,000,000 in U.
Governments.

Lasdon to Direct Course at

Johnson

and

Earl

man;

T. Parrish.

Chair¬

Calvin E. Duncan, Palmer C.

Macauley, Victor T. Maxwell and
Elwin

Purrington.

courses

cut

City College
and Finance

York

covering

Listing: Paul A. Pflueger, Chair¬

Also

beginning Feb. 14.
The

comprehensive

program

will

feature

a
practical "learn-by-doapproach to all courses. In
the field of Credit, they include

ing"

Credit

Mercantile

and

Collection

available

students,
Service

man;

Robert M. Bacon, Stanley R.

ert

Lloyd

Sinton,

Stevens

and Frank Dunn.

Relations:

Public

Frank

Chairman;
George
W.
Davis, Albert A. de Martini, Mark

Walker,

Elworthy

Smith.

and

Ferdinand

With John B. Dunbar & Co.
Jerome

ated

CALIF.

HILLS,

Goldsmith

with John

now

associ¬

Dunbar &

at their office located at 443

Co.

North

Credit

will

Retail
Manage¬

Collection

and

by a counselor with
of business experience who
specific
programs
to

plan

meet the individual needs of each

ment.

student.

These
specialists
will
give a realistic appraisal of the
Finance, Principles
of
educational
requirements neces¬
Public Finance, Business Finan¬
sary to break into or advance in
cial Management, The Securities
the field. The Mercantile Credit
Market, Investment Banking, Prin¬
Council will serve on the evenings
ciples of Investment, Mathematics
of Jan. 27, Feb. 2, 3, and 8, from
of
courses

include Princi¬

ples

Finance, and Economics of In¬

for

two

may

additional

courses,

Con¬

p.m.

The

Council

ternational Trade.

will

offer

Jan.

But this tax cut would

George D. Baker Dead
George

Baker,

with

Retail
their

27, Feb. 2 and 8

Credit
services

at the

same

time.

*1 v
Investment Problems,
All further information on the
Banking Practices.
Mr. Ru¬
courses and advisory service may
dolph L. Weissman, former con¬
be
obtained
by writing to the
sultation expert of the Securities
Evening Session Office, Citv Col¬
Exchange Commission, and econo¬
lege School of Business, 17 Lex¬
mist with Franklin Cole & Co.,
ington Avenue, New York 10, N. Y.
will instruct the investment

temporary

:>4*

.:*

v,1

•;

and

course,

and "Mr. John

State

Moynahan, New
Banking Department,
All
ac¬

registrations

companied

by
the

made

payable

should

check

amount

money

the

$17.50,
Board of

Higher Education, and must
completed before Feb. 4. .-

D. J. Lambert Co. Formed
SYRACUSE, N. Y.—D. J. Lam¬
bert

engaging

securities

business from offices at 348 Forest
Hill

Drive, under ihe firm name

of D. J. Lambert &

Co.

Personal

Camden Drive.

connected

will

interviewed
years

order
BEVERLY

prospective
Advisory

new

provide free
job opportunities
and training requirements in the
field. Applicants for training are

Collection Management and

York

the

which

counselling

Management, Advanced Credit and

Students

phase of Credits and Finance will be offered

every

by the Evening and Extension Division, City College School of Busi¬
ness during the 1949 Spring
Term^

Finance

law in 1948:

the

less

are

accounts in

figures by $350,000,-

mail

only
period of need."

Jones

that

amortization

cover'

Admiral

ex-

1947

Maude

William

will teach the banking course.

considered

ure

Wm.

Finance: John R. Hooker,

the

for

Trading:

■

"Perhaps such
be

income

and Dickover, Robert H. Scanlon, Rob¬

I propose it be set at one-

year.

ceeded

■

There

one

amortization deducted in any one
half

Harold

and

Bacon,
Chairman; Warren H. Berl, Harry
E. Jonas, John C. Traylor, Joseph

one-

equipment costs within

amortization from taxable income.

Jones &

"We

useful

law to allow them to write off

replacement," the steel
President
explained,

for today's work

its

Hamshaw

Williams.

change in the Federal tax

following appoint¬
Standing Committees of

the Exchange for the current year:

stock."

the

figures."'

1947, with¬

drawals

but

tinue at levels well above prewar

were

$5 0,0 0 0,00 0
greater than
in

1947,

Journal,"

SAN
FRANCISCO,
CALIF.—
plan to help the steel industry modernize faster is suggested by
Douglas G. Atkinson, Chairman
Admiral Ben Moreell, President of Jones & Laughlin Steel Corp.
of the Board of Governors of the
He proposes a change in the Federal tax law to allow companies
Francisco
Stock
Exchange,
to write off the cost of. new equipment more- rapidly than they San

tem

credits)

1948

than 3% on the asset

dend

Under the direction of Oscar Lasdon, member of the New
Stock Exchange, and Associate Editor of "The Banking Law

"The change is needed," he

deposited (ex¬
cluding
divi¬
in

1948

in both years. In my opinion, the
pick-up in the closing months of
1948 indicates that the mid-year
slump was temporary and that
savings may be expected to con¬

amounts

Evening Division

of Jones & Laughlin Steel Corpora¬

Admiral Ben Morreell, President

out

that "although
total

the proportion of the annual gain
in the fourth quarter was the same

said,

pointing

much

proportion

has been with Moody's since 1943

business at the convention.

Suggests Way to Expedite Steel Industry
tion,

The

Mr.

000."

C. J. Devine

rious

be-

7,"

"An

The second annual meeting and convention of
eration of Financial Analysts Societies will be

the third

over

194

Maude

in¬

as an

The

lowthatof

nation

prices emergencies.

scrap

We have to

increase of 60%

quarter.

of the
yearly gain occurring in the third
quarter was relatively only half

gain in stronger industries which
would have

ap-

producing steel except two things:
improving methods of efficiency

and

was

savings

new

one-third

of Finan¬
Analysts Societies will be held in New York City.
-

meeting

gain

to pay more taxes.
"The

Maude, President of National Association of Savings
savings now reach peak of nearly $18V2 billion.

says

bank deposits gained $612,000,000 during 1948
high of $18,400,000,000, according to a report just
issued by William L. Maude, President, National Association
of
Mutual Savings Banks and President, The Howard Savings Institution, NewarK
liocted this improvement, showing
(N. J.).
"The
reach

today
would contribute to lower costs of

picture

Afternoon and evening meetings of National Federation

eon

Mutual

proxima t

anything in the
that in any way

Appoints
To
Analysis' national Body to Meet MarcSi 8 §| C. Institutional Dept.
J. Devine & Co., Inc., 48
cial

Banks,

to produce more and thus be able

I don't see

steel.

and

"our

Uncle Sam would not lose.

years.

William

Reduc¬

run.

ment.
If a company used up its
on Jan. 27, E. G. Grace,
Corporation, the second largest tax deduction for write-off of
steel proaueer in America, expressed anxiety regarding the future de¬ plant now, it could deduct less
taxable
income
in future
mand lor steel products, and said he feared "we are building too much from

Chairman

Reports Savings Bank Deposits Gained $612
v
Million in 1948

tions during this period would be
no more than a deferment of pay¬

Thursday, February 3, 1949

at
the

one

time

Guaranty

Company, died at the home of his
son at the age of 82.

registration will begin
Feb. 5 from 11 a.m. to 3 p.m. and
continue through the evenings of
Feb.

5-10

the

Auditorium,

School

from

8:30

City

p.m.,,in
College

Business, 17 Lexington

Avenue, New York City.

L. V. Shaw
FALMOUTH

Opens

FORESIDE, ME.—

Leigh V. Shaw is engaging in a se¬
curities

business

Edgewater Road.

from

offices

•

Volume

169

Number 4774

THE

Sees Silver Situation

COMMERCIAL

advise their stockholders that

Unchanged

had

better

take

Handy & Harman, bullion dealers in 33rd annual review of silver
peak but point out even at
present high levels of consumption, support is required to absorb
supply.

CHRONICLE

FINANCIAL

they

the" government

let

over.

!./%...

;

The Remedy '

market find industrial silver demand at

The

remedy for these evils of

double taxation—the stagnation of

the

venture-capital

market

and

thus reduce

(573)

dependence upon

our

$4 in' dividends, which puts .it on
an
8% basis.
But the $50 price
(2) Inflation and the depre¬ represents only $25 worth, and the
ciated dollar affect profits as tney $4 dividend represents only $2
do wages. The profit dollar is only
worth, which is 8% on $25.
50 cents worth.
Thus profits in
Keynesian Economics
dollars are only half as large as
I charge that the foreign eco¬
they seem.
;
nomics of Lord Keynes dominates
(3) High prices make necessary
the politicians in power at Wash¬
larger charges for depreciation
ington, and that the Keynesian
and larger allowances for expan¬
ideology is hostile to private sav¬
sion of plant and equipment.
ing, to private investment, and to
(4) Socialistic government pol¬
private enterprise.
These have
icies hurt the stock market, and
been the three pillars of Amer¬
make
it
impossible
to
finance ican
economic
democracy.
The,
growth by selling stock. Thus cor¬
means used to sap these pillars
porations have to finance expan¬ are fiat
currency, the "easy-money
sion out of net earnings. "
policy" (now called debt manage¬
(5) Heavy double taxation ment), and discriminatory taxa¬
makes it necessary to pay high
tion. Not the least of these curses
yields to keep stockholders. About of Keynes is the double taxation
the

high-cost producers.

According to the 33rd annual review of the silver market by the destruction of incentives to
Handy and Harman, leading bullion dealers, silver consumption in saving, investment and enterprise
1948 reached a peak of 110 million ounces, or 10% over 1947 and the —is simple. All it takes is to look
general situation in the silver bullion market has remained relatively

realities.

in touch with

at the facts and get

stable.
"It

has

been

demonstrated," states the review, "that industrial
silver demand in the U. S., even at present high levels, is inadequate
over a period of time to absorb all supplies offered without additional
support. This support has once again come from the Bank of Mexico,
and we believe that the bank's future policy will be the key to the

big

The review states the Bank of Mexico has

given indication of a
willingness to absorb the. Mexican silver production for coinage pur¬
poses and "under these circumstances, we believe that the price of
silver in New York will be maintained close to the present level. How¬

if the bank should withdraw its support and no compensating
changes were to take place in the demand or supply picture, we can¬
not see how lower prices for silver can be avoided."
ever,

these?

are

Outstanding

one

the

that the stockholders and the

dends
tax

cor¬

one,

are

and

tax

The

fact

and that divi¬
part of profits. Thus a
dividends is a tax on prof¬

poration

its,

1949 market."

What

profits,

being

the

nave

tax

resent

profits

dividends.

Dividends

and

and whole,
They rep¬

part

same

source.

enterprise,

equities

and

therein.

Accordingly, the obvious proce¬
dure is to tax the

common source.

30%

dividends,

and

15%

taxes.

come

mon

Taxation, Investment
And Enterprise

They

row

from

thus driven to bor¬

are

the

insurance

com¬

panies.

But only the larger and
well-established enterprisers can

hold

surance

assailed

for

selling their

govern¬

tax

We with¬

the

source

employee's

Why,then, should

not

stockholders'

dividends?

(2)

money.

crush

private

rival!

Here is the way it works.

Sup¬
$10,000,000 corporation has

earnings of $1,000,000.

Such

puts

its

the

operation.

withhold the tax

taxes

net

corporation net in¬

one

wages.

ousiness

pose

I second the proposal

collected

and

DISCRIMINATORY

do much in this way.

(And the in¬
companies themselves are

spenctiiig

taxes

come

(Continued from first page)
tors.

sense,

that

Double

of economy and com¬

name

It has

cost of collection and loss

evasion.

The

low

through

But far better than

that,
would it not make logically im¬
possible the farce of taxing the
same
thing twice—once in the
hands of the stockholders' agents,

price

stocks

com¬

pared with dividends reflects the
fact that the dividends themselves
are

value of dividends is
two

dends

dividend

uncertain

(1)

and

inflation.

who fail in

yield

used to

dividend is only worth
purchasing power, or say

50%.

all that

Soon

"the govern¬

left will be

ment"—the

A $4

will be

the

The dollar

of what money

terms

be.

opportunity.

divi¬

(2)

dividends is worth about 50 cents
in

saver.

ment

those

where

place

business, go.

dollar, like other profit
has depreciated on ac¬

count

in turn, due

namely,

facts,

are

is doing worse
the rentier-—the
It is killing invest¬

things than kill
small

low in REAL VALUE. The low

dollars,

single tax would reduce

capital and free enter¬

Keynesianism

In the

of venture

profits, goes to the politicians at prise. It is slowly destroying bus¬
Washington through personal in¬ iness.

result of this, it takes

merely

Bennett, Spanier Elects
Two New Officers
CHICAGO, ILL. — Bennett,
Spanier & Co., Inc., 105 South La

Salle Street, announce that Pat
in order to make to pay a tax on this of say $380,- and once in the stockholders' own
equivalent to a normal 4%.
Spanier has been elected Vice'
loans.) Thus investment op¬ 000. Since the company must set hands?
A stock that used to sell at $50 President of the firm and Hans R.
But at this point someone asks,
portunity suffers. The tnreat of aside funds for replacement and
and pay $2 in dividends was on a Buhrow, formerly with Paul .H
business recession hangs over us. expansion (and keep prudent re¬ what about the loss of revenue
4% basis. Today, the same stock Davis & .»Co., has been elected*
In the end looms the possibility of serves for threatening new wage that would result from correcting
still sells at $50, but has to pay Treasurer.
and tax demands), only half of this double taxation?
Keynesian "stagnation"!
the remainder can be paid out to
Aside
from
the
answer
that
How the Government Destroys
stockholders, or $310,000. But be- some might give, namely, let the
Private Enterprise
fore the stockholders can spend government spend less, I have two
The reason for all this is
.clear their dividends they must give up observations: (1) By increasing in¬
Third grant to a Latin American country is for $75 million, payable
enough. It is not lack of money about 30% to the government, or vestment and net earnings, the
in 25 years and guaranteed by Brazilian Government. Funds to beremoval
of
the
or
of savings.
It is not lack of $93 000.
discriminating
securities or desire to secure ven¬
Thus a double tax is imposed double-tax on profits would great¬
used for hydro-electric development. Profits of bank in last half of
ture capital by selling stock. The upon corporation profits.
In this ly a'dd 'to' the government's re¬
1948 above $4,800,000.
reason is that the government is
There
case, the stockholders Who own ceipts from income taxes.
The International Bank for Reconstruction and Development an¬
would be expansion of production
destroying the. INCENTIVE TO the corporation, pay out of their
nounced on Jan. 27 it had granted a loan of $75 million to the Brazil¬
PRIVATE
INVESTMENT.
(1) net profits of $1,000,000, total in- and efficiency which would more
ian Traction, Light & Power Company, Ltd. The purpose of the loan
The
savings of the people are "O^e taxes of $473,000—nearly than proportionately expand tax
is to assist in financing the expansion of hydroelectric power facilities
revenues of the nation.
being diverted into public debt. half.
telephone
installations
in —-—
•
—"-r—-—In all matters of income, this and
Another result of the excessive
(2) Venture investment in com¬
Brazil. The loan is guaranteed by I
With
these
authorizations
a
mon stock is being
taxation
of
prevented.
corporation is a law: Better a large income at
(3) double
the United States of Brazil.
total of four member nations, in¬
Enterprise is being destroyed — profits is the demoralizing effect a low price than a low income at
cluding the United States, have
The loan is for a term of 25
that is, private enterprise.
it has on management. Such taxes a high price.
Let the politicians
approved the use of their cur¬
years and carries an interest rate
from
business:
Better
a
% As to savings, the debt-ridden tend to demotivate enterprise. For learn
rencies paid in as part of their
of
3V2%.
The
bank will
also
government is doing all it can to one thing,
when taxes are too large tax income at a low tax
capital subscriptions. In August,
force them into carrying its debt heavy, so that the more it makes rate, than a low tax income at a charge a commission of 1% an¬
the Belgian
Governmentnually to be set aside in its spe¬ 1947,
(bonds). One of the arguments is the more the government takes, high tax rate.
agreed to the Bank's use of the
This will be denied only by the cial reserve fund, in accordance
that if we reduce taxes on private the management is apt to feel that
equivalent of $2 million in Bel¬
with the Bank's Articles of Agree¬
radical
reformer who
seeks
by
profits, people will sell govern¬ economy of operation is of less
gian francs. The Bank hopes to»
ment. Amortization
of principal
ment bonds and buy stock.
The tendency is to taxation to prevent the private
obtain in the future further au¬
So, to importance.
will begin on July 1, 1953, and is
protect the bond market, the gov¬ put things into operating expenses receipt of profits. But if such be
thorizations
from
its
members,
calculated to retire the loan by
the basis of this double tax on
ernment
pushes people into its that might otherwise be left out.
thereby
broadening
the
inter¬
maturity.
national character of the Bank'3
debt, and taxes heavily the in¬ Again, the officers and directors corporate profits, i i is time for
ment securities

the

World Bank Grants Loan to Brazilian Traction

come

from

have less

private profit.

venture

investment, the
government is destroying the in¬
centive

buy

This

stocks.

sound

common

does

several

ways, but I can here mention only
the heavy taxes on net earnings
and

dividends,

the threat of

and

increased

taxation.

invest

stocks

People

know

tnat

who

they

"venture" investors. They take
business risks. These must be off¬

are

set

by high NET returns to them.

But the government prevents this
in two ways: First, it reduces the

amount

earnings available for
dividends by high taxes and high
wages, and by creating uncertainty
to

future

Second,

turn

the

holder

hands

ciating the

say

real

his

dividend

in which the

paid).

climax, it takes 25% of

cap
any

the
gain

Finally,
the

root

Keynesian

to enterprise, we find
the evil.
It is the

New

Deal

ideology
concerning private profits and in¬
terest.

This relies

"investment"
most

Thus

any
a

which

government
includes

al¬

spending.
government

government

New

Deal

dominated by Keynesian ideology

does

two

HEAVY

things:

taxes

(1)

business

puts
to

get

substantial
own

They feel the

equity interest in the

is lost.

sibly

bonuses

rush

for

the

double

the

holding

company,

pensions

foregoing

and

taxation

motive

other

the

same

and

that

sure

which

investors

destroys
to

buy
stock, also reduces the incentives
of the management.
It

ready

wonder, then, that al¬
find the President of

the United

States

in his message

seriously proposing to extend the
deadly hand of government sub¬
sidy to private corporations.
It
would be much

to the

the double

reduce

observation

discrimination

tax

point

burden

Even

the

evil

government

forego a billion or
spending for the mainte¬

the

Bank's

farm

main

one

purposes

This

the

member

third

time

the

Bank

has granted loans for development
purposes

in the American Repub¬

lics.

discriminatory

fied.

Profits of Enterprise Not Too High

this connection, I often hear

the

charge that profits are exorbi¬
tant. The common thought is that

profits, after taxes,
that

and

therefore

are
we

too
can

high
not

complain.
But

this

charge

unfounded.

Look at stock prices.

They prove
profits were
high, stock prices would be high.
The following list of points will
explain the situation to you.
its

falsity.

real

$34,100,000 for electric
development in Mexico.
The

•&
to

Brazilian

Traction.

power

Light

Company, Ltd. intends
purchase with the loan pro¬
substantial

amounts

in the United States,
Canada, the United Kingdom and
Continental
Europe. The
Cana¬
dian
Government has given its
approval to the use by the Bank
in its loan operations of up to
eight million Canadian dollars out
of
Canada's subscription
to the
Bank's capital. The Government

equipment

of the United

make

money!
To
0,
he
would
rather
go
through the motion of adding 2

and have

Kingdom has given
approval to the use by the
Bank of up to
£500,000 out of
the United Kingdom's subscrip¬
tion to the Bank's capital. It is

They

the intention

and

Prices have to be

the

Bat
wants

profits of industry.
your

bureaucrat

handle

subtracting 2,
than
leave
things alone at 0. His motto is
"Better to

have

than

to have taxed at all."

never

If we go

the

and

are

several

companies, all of which are re¬

always

the

taxed

(1) In each industry

spent,

further along this way,
corporation managements will

quired
Some

to
of

supply

these

are

the

market.

less

efficient

higher costs than others.
make little or no profit.
high enough to

their

costs, and this gives a
bigger profit to others. But the
big profit is necessary to induce

cover

the
use

efficient

companies

their capacity to the full, and

its

the

Bank

to dis¬

Jan.

net

profit

for

$4,804,057

$2,444,629

amounting to
income
Special Re--

the

gross

set aside in the

bringing

the

total as of
that date to $5,529,559. A commis¬
sion of 1% per annum has been
serve,

charged by the Bank
made by it.
During
gated

period
aggre¬

Bank

Since

December

increased

billion

the

for

electric

194S.

than

Total

Dec.

has
a

this total has

$525,000,000.
date

the

since

dollars.

commitments

that

of Dec. 31,

operations

beeh
half

$499,087,858

began

the

bringing

$29,032,107,
to

all loans

loans

total disbursements
1948

six-month

the

disbursements

$634,100,000

last-half of the

commissions

1948,
were

the

and

1948

with

$12}compared with $7,474?,-/%
period ended Dec. 31i

loan agreement to be made by

Canada

In the

since

1:1

Gross income amounted to

735,974

with purchases eligible under the

Kingdom respectively.

compared

$439,925 for the
preceding year.

were

United

and De-

last-half
as

■

International-

velopment reported that it had

burse these amounts in connection

company

The

31,

Bank for Reconstruction

878.

Power

ceeds

Bank's Net Profits Increase
On

countries.

Previously the Bank had
approved loans of $16 million for
double tax burden on investors
hydroelectric
and
agricultural
and enterprisers, would be justi¬
development in Chile, and loans

the removal of this

operations.

—

namely, to encourage the develop¬
ment of productive facilities and
resources

prices or the dig¬
ging of the St. Lawrence ice way,
nance

in accord with

The loan is

party!

second

itself.

evident in recent years

that

were forced to

might be less if officers felt that
in stockholding they could secu¬
rely provide for their future.
ways,

(2)

holdings,

And I would add that pos¬

the

Boston tea

Thus the

from

comes

com¬

burden

their

stockholders.

any

incentive that
an

made if he sells the stock.

double taxation
as

re¬

stock¬

nothing of depre¬

currency

wages.

the

taxing

and

the

reduces

heavily (to
dividend

taxes

panies.

to be

their

reason

stockholders

power

in Mexico and Brazil.

31, 1943*

This

figure

increased

result

loan

loano

development

COMMERCIAL

THE

(574)

FINANCIAL

CHRONICLE

(Continued from page 6)
modifies

are

might
price

shudders to think what

one
,

to such an ex¬

scarce

place

taken

have

our

able

are

tent that they are hampering pro¬
ductive efficiency, in such a situa¬
tion to add to current savings by

monetary au¬
thorities stubbornly continued to
follow the policies which they

expansion of bank credit only
leads to inflation and rising prices.
This situation has been apparent

pursued in 1947 and 1948.

of industry during
two years and particular¬
ly in the housing industry. An at¬
tempt was made to put more
money
into housing than there
was
building materials to build
houses

laborers to erect them.

This attempt
vital factors
the

has been one of the
in pushing upward
of
residential
real

prices

estate.
In

Means of Stopping Inflation

What business investment is in

things
is

article

"The

Cost

three

savings,

current

excess

called for if inflation
stopped.
(1) Business

are

borrowing must be made less at¬

through
increasing its
(2) Savings
should
be
through in¬

tractive
costs.

made more attractive

(3) the
government securities
permitted to decline

creasing its rewards, and

price
should

our

would

there

that

less
foi

Credit and

incentive

openly admitted that bank cred¬
was being substituted for capi¬
tal on a large scale and that this

corporation bonds and real es¬
tate mortgages.
Not one of
these
three
things was per¬
mitted
to
take
place
in
1947
and 1948 to the extent that was

Capital" in the March
1948 Federal Reserve Bulletin, it

substitution

contributed

the

general rise in prices, - The Federal
Reserve has always been honest
about this situation.

Our money

supply is still

exces¬

that has taken place since the war

essary

will

higher than it
preceding the

It may not cost any more to

service

the

low

public

because

debt

interest

but

rates

certainly costs more to live.
Recently the Secretary of the
Treasury said in defending the
bond support program that if the
interest rate was permitted to go

It will,

and the evil results which

from

will

with

how

some

the

told

than they did and abandonment of
the pattern of interest rates on

don't they?
Is

which

duces

for years.

the

war

was

financed

would have prevented a good

deal

.of this increase in the money sup¬
ply.
Little

attention

of the

the burden

could

aid

once
ques¬

this

that

obvious

not

the expense

ing

were

rich have the money
The poor borrow it.

"The

tion,

other

One of them
in discussing this

poor.

The willingness to
permit interest rates to rise faster
us

re¬

poor

Noth¬
from the

of the rich."

farther

truth.

viding

left

money

•>

■

given number of dollars
to
a
beneficiary

income

ishing.
I shall illustrate the cost
of maintaining enough Ordinary
Life insurance issued at age 35 so
that if the insured dies during the
twentieth policy year when his
wife is age 55, she will be guar¬
anteed a monthly income of $100
a

month

life

for

income certain.
settlement

insured

what

with

ten

This is

years

typical
producing
a

option

somewhat

income

smaller

dies earlier and

the

some¬

in the event

larger income

studies the impact of low interest

tilities to the close of 1947.

At that

rates

an all-time peak
$113.6 billion. It is true that the

ance.

~^time it reached
of

Insurance

the

The

surance

cost

when

ownership of life in¬
not

centered

the

application of Treasury surplus in
the first quarter of 1948 to the re¬
tirement of Federal Reserve bank
„

rich.

ance

held debt reduced the

money sup-

ply to approximately $107 billion,

The

excluding
of

average

policy,

industrial

life

is not large and the

life

insurance

in force

even

insur¬
billions
in this

country is owned by the rank and

the file of our average ordinary citi¬
supply has increased again zens. Anything that increases the

until it reached nearly $110 billion
at the close of the year.
Is there
any
?

wonder

prices

have

risen? There was no increase in
production comparable to this in¬
crease

that

During
close

the money supply.

the

period

hostilities,

since

bank

cost of life insurance is

which

the

average

man

burden

has

bear.

Recently, we had our actuaries
prepare the net costs for a term
of

the

loans

increased by nearly $17 bil¬
lions and non-bank investors sold
were

20 years on - an ordinary life
insurance policy issued at age 35,

based on the premium and divi¬
dend scales in force in 1929 for
the ten largest participating com¬
panies, excluding industrial cpmpanies, doing business in the State

situation''such

economic

I have

In a world
the widows and characterized by a capital scarc¬
orphans who are the principal ity, there are only ihree ways
beneficiaries
of
life-insurance that the available capital can be
policies.
■.:>'< i^vSv': distributed. (1) By rationing. This
/
' ' V-, i' 'l
:V1
VI.'
V",'"
lets the government decide what

afraid,

just described.

it is going to be

•

Why

•

Interest

Rates

Should

Rise

While for the next few months
or

long

tivity

business

as current

ac¬

may

believe

that

rate

are

decade

opinion

longer.
the

present

the

road

who is to have the available capial and trusts the workings of the

that

industries

the

are

Western

ruins and

World

still

lie

be rebuilt if any

must

No free

Socialism.

system
capital

enterprise

capital hun¬
gry world. Not only does much of
we

the

not

may

serfdom, but it certainly

base

fact

road

this

slow

that may last for

upon

much.

long en¬
due with
distributed id
this
manner.
(2) The
interest
rate can be permitted to go up.
This lets the market place decide

gradual upward movement of the
interest

to be expanded and

are

how

recede, the outlook is
higher, but even lower,
interest rates, in the long run I

for

industries

price

free

what

to be expanded.

are

economic

way

determine

system

the

can

enterprise

and

liberty,

democracy.

mits bank credit to be substituted

during the past decade is making
a
demand for huge sums of cap¬

for

ital.

ruination

than

$309

vide
of

mentioned,

number of

same

1929

Today, to pro¬

year.

per

the

dollars

income, the policyholder would

have to buy $22,950 of life insur¬
ance,
the net cost of which for

insured and then in the direction
of

increasing

death

the

Insurance

greater

beneficiary

the

his

after

cost

of the insured.

Life

the

because

longevity
well

The 1948

Fact

Book, pub¬
lished by the Institute of Life In¬
surance, shows that expenses over
this period had increased by only

the

premium and interest
hence little of this in¬

Nor

the

cost

due

higher

rates.
this

can

cost

increase

59%

providing

the

same

number of dollars of monthly in¬
be dismissed with the state¬

come

ment that it is
of

just part and parcel
general increase in the

the

cost

the

increase

place
In

but since March of last year,
money

should play

that the interest rate

vances

one

insur¬

life

often, I

does

it
would
have been necessary for
this purpose to buy a $17,500 pol¬
icy, the net cost of which for
20 years, according to 1929 pre¬
mium and dividend rates, would
have been $6,178, or an average

death.

expense

This is shown clearly

interest

previously

crease

Costs

low

Treasury

reasonable standard of

later

income;

Low Interest Impact of Life

for

the

too

Using the aver¬
ages for the same ten companies

paid to the
fact that in spite of the Treasury
surplus during the last two years,
the money supply increased over
$11 billions from the close of hos¬

pay

20 years, according to 1948 rates,
doubt, continue
would be $9,823, or an average of
excessive for years to come and be
$491 per year.
In short, the cost
a
potential danger to our price
of providing such a life income
structure. The stupendous growth
has increased 59%.
in these items should always be up, it would increase the cost of
servicing the public debt. This is
This 59% increase in the cost
kept in mind. During the years
an
obvious statement that I as¬ of
providing a life income of the
1942-1945, the money supply (that
sume no one would wish to
dis¬ same
number of dollars is a fair
is, total demand deposits, adjust¬
pute.
But if the Secretary in¬ measure of the impact of lower
ed, plus currency in circulation
tended
to convey
by his state¬ interest
outside banks grew from $48.6 bil¬
earnings on those policy¬
ment that the maintenance of our
lion to $102.3 billion).
holders who buy life insurance
No one
wants to criticize the way the war artificially low interest rates was for the income it will produce.
a net gain for which no one had
was financed.
More of it, I think
Substantially all of this increase
could have been done from sav¬ to pay the cost, then it was indeed
in cost is due to lower interest
a
misleading statement.
rates.
ings than was the case. But on the
Although there has been a
The advocates of low interest
considerable
whole, the job was not bad.
improvement
in
It is the increase in the money rates from the inception of our mortality during this
period, the
cheap money policy in 1932 have net effect of such improved mor¬
.supply that has taken place since
the war that is the cause of cri¬ always assumed that the burden
tality is quite small; for it oper¬
ticism. Certainly a large propor¬ of low interest rates was mainly ates in the direction of
reducing
tion of this increase was not nec¬ felt by the wealthy classes and the cost before the death of the

began.

•

And today the cost

boom.

ing is about 72%
immediately

sive, in spite of the price rise and
the increase in total production
*

to stop the inflationary
of liv¬

necessasry

wai.

them

substitute

was

Money Supply Excessive

them.

The increase in the cost of pro¬

even

All

not.

through insurance is really aston¬

in many lines

the past

had

structure

rates

rate that the insurance companies
with

price

the

pays

Factors in Trend of Interest Rates

Thursday, February 3, 1949,

living

the

order

quantity

and

typical
has

which

taken

level.

general price

provide

food,

the

same

shelter

^nd

clothing that was provided by an
income of $100 a month before
the war; it is now necessary to
provide

income

when

which,

in dollars, is increased
proportion to the increase in

expressed
in

the general price level.
In other
words,
the
policyholder
who
wants

come

for

vide

insure
life

his

wife

sufficient

in¬
pro¬

living is to

be regained, but the rapid ad¬
made industrial technique

The

long-term

secular

problem in this connection
to

seems

scarcity of savings,
rising prices and inflation, rather
me

oversavings, abundance and

deflation.

Moreover, all the social and po¬
litical trends today seem to be
working to increase consumption
at

increased.

the
its

faster

rate

social

output

state

schemes

standard

the

and,

the

and

middle

the

class.

regret

state, the most likely method to
be followed in

country political¬

ly organized as ours.
Moreover,
it is the road that we have been

the

during

following

few

last

years.

short, I believe in the long
country as well as the

run

this

rest

all

the

circumstances

most

the

World

Western

makes

that

political

caught up in social and

raising

living

prices

rising
of

easiest

with

for

savings. It insures continuing

inflation,

can

emergence

welfare

manifold

the

than

The

Control the interest rate but
do not ration capital.
This per¬
(3)

our

pressing long-term economic

and at the same time cut¬

masses

problem that of maintaining a
ting down their hours of labor, stable value for our currency. Two
plus the threat of war which is
many of our economists are still
calling for the expenditure of stu¬ living in the atmosphere of the
pendous

sums

armaments,

makes the prospect of

upward
most

the

what

world,

prices

movement

inevitable.

30's when oversaving appeared to

long-term

growth

one

could

al¬

surveys

apparent than that the masses of
mankind are striving for a stand¬
ard of living which the present
capital equipment of the world is

In spite of the

problem.

our

of insurance, our masses
not saving enough. They are

are

being lulled into
by

false security

plan of Social Security.

our

spite of the fact that

hear

good deal about the excess rev¬
enues
that are collected on ac¬

inadequate to furnish. In
labor
now

essence,

governments such
in force in Western

are

Europe

attempting to guarantee their
peoples
a
standard
of
living

count of social

enues

supposed

are

higher than they

afford. This

can

is the basic economic
of the so-called

How
is
it ever
going to be
possible to meet these world-wise
demands
ards?

for higher

economist that it

living stand¬

obvious

not

any

only be done
by increasing the rate of invest¬
ment.

The

world

of British

case

needs

Consider

industry. Here

find it generally admitted that

practically all her factories need
be
re-equipped
with
more

modern

tools of production if the

standard

living for her people

is to be maintained. The so-called
nations

backward

want to industrialize.

trial
the

revolution
march

will

these

the

world

The indus¬

again be
nations

on
a

year or two.
Is is not obvious
that all these processes are going

for

call

savings

rather

than less and is there much chance

that

the

capital

them

about

from

any

can

government

needed to bring
be forthcoming

other

place

America.

•

than

make for

it is still

fact that the financing
security as it has been

simple
social

bonds,

its inception has
substantial sav¬
accumulation.
has been collected in

from

operated

not made for any

ings

capital

True, more

payroll taxes than has been paid
out

benefits.

But the

so-called

that the

mains

can

capital goods, not less.
the

our

back

reason

"Shortage of Dol¬

lars."

security taxes, and

the market that these excess rev¬

(the

fact

bonds

government

re¬

reserves

the

trust funds that we hear so much

about)

are not

government assets,

but government

liabilities. If the
paid, as now prom¬
ised, future generations will have
to provide the money to pay the
promised benefits.
benefits

are

one

visable

apparently deems it ad¬
tell the public in un-

mistakeable

have

been

that

terms

social

outset

the

about

one-third

should

have

were

arial

basis.

what

operated
is

the

taxes

average

been

Here

from

security,

only
they

system

on an actu¬
accumulating

heavy unrecorded and unfund¬
debt
for
old
age
and sur-

vivior?
shown
Would

insurance
on

the

not

that

Treasury

seem

from

is
not
books.
all this

that the long-term

Surplus of Capital

secular mone¬
tary problem facing the country
is
scarcity
of
capital,
rising
prices and inflation, rather than
oversaving, stagnation and declin¬
ing prices, and does not such an

the same quantity of food,
Moreover, these demands are
clothing and shelter, must now
being made at a time when there
not only provide a larger num¬
which was the Federal Reserve
of New York. We had them pre¬
is no surplus of capital in this
ber of dollars of monthly income
banks.
Business investment was
country. In order to finance it¬
pare a similar cost for this type
—larger in proportion to the in¬
overall economic situation make
exceeding current savings at a of
self here,
policy and for the same com¬
industry during 1948
crease in the general price level
tremendous
rate.
This
should
rising interest rates rather
retained for that purpose approxi¬ for
panies according to the premium —but
each dollar of such monthly
have called for a much greater in¬
than declining ones?
and dividend scales currently in
mately 65% of their total net
income now costs him 59% more
crease in interest rates then took
force.
We found that the cost of
earnings only paying out 35% to
Conclusion
place and these increases would insurance on the account of the than it did 20 years ago. In short, their stockholders.
One cannot
he must carry about 70% more
have occurred had not the Treas¬
Bearing in mind.that the money
reduced interest rate alone had
help but wonder what American
insurance and at a 59% increase
market will continue to be con¬
ury and the Federal Reserve so
industry would have been com¬
gone up 21%.
in cost.
trolled
during the coming year
stubbornly protected the prices of
But this is not the whole story
pelled to pay for its capital had
This 59% increase in cost is the
long-term government bonds at
it paid out all its earnings to its just the same as it was in 1948,
as
to the increase in the costs
measure of the
added burden on stockholders and then made the any material change in interest
par.
It must not be forgotten also
If a large and increasing number of
rates on the up side is very un¬
that during this period of time, of insurance by any means.
attempt to finance its expansion
the Treasury had a net cash op- the insured wants to provide the policyholders due solely
Do not plan on it. When
to the and re-equipment by calling on likely.
reduction in the interest rate, a the
one
considers with what reluc¬
money market for the funds.
income for his
^.erating surplus of approximately same monthly
tance
reduction which, incidentally, is
our
monetary authorities
Looked at from this angle, money
$13% billions and still the money beneficiary, he must now carry
due largely, if not solely, to the
permitted interest rates to rise
supply increased by over $7 bil¬ more1 insurance than he did in low interest policy of our Federal was not so cheap in 1948 after all. during the past two and one-half
This now brings us to the role years, when the demand for new
lions.
Without this cash surplus, 1929 because of the lower interest [ Government.
Verily,
someone

nearly $7 billions of Treasury se¬
curities, the ultimate purchaser of

Volume

169

Number

4774

funds' for

business invesment

exceeded

tne

you

will

demand

should

not

interest

anything

rates

decline.

ably" wilt be

up it the
investment

business

tor

there

And

prob¬
decline in busi¬

some

ness

investment during 1949. It is

with

regiec, tneretore, that I feel

competed

ring

iittie

tor tne

coming

Moreover,
pattern

for

interest

the

year.

the

business

months

immedi¬

tne

the

ahead

ately

cnance

upwara movement in
rate

ex¬

again put
imlation to work,

as may once

forces

the

bar¬

mat

you

increased armament

suen

penditures
there

tell

readjust¬
ment, if tne total volume of pri¬
vate

one

construction declines

likely

seems

and

now

inventories

stop increasing and there is some

slackening in the overall rate of
business
activity, then interest
will

rates
ward.

tend

down¬

move

Moreover, I believe that if

situation

should

come

pass

where there is considerable vol¬

least

oil

one

Executives of another oil company told "The Iron Age" that they
on their tough pipe requirements b,y the middle of
this year.
This is a surprising statement since many oil concerns

hope to be up
in

the
the

have

past

beyond.

had

conversion

markets.

serious and

of 1949.

precipitous drop in steel output during the greater part

lending

invest¬

and

The

outlook

for

the

interest

rate, therefore, depends

upon

companies having 94% of the steel-making
of the industry will be 100.9% of capacity for the week
beginning Jan. 31, 1949, as against 101.1% in the preceding week,
the new rate at the start of 1949.
The Institute reports the schedule
capacity

of operations is down 0.2 point, or 0.2%

This ^week's

ingots

operating

and

castings

and

the

rate

from the previous week.

equivalent

compared

1,860,100

1,863,800

tons

week

ago,

1,802,500

tons, or 100% a month ago, and 1,694,300 tons, or 94%
of the old capacity one year ago and 1,281,210 tons for the average

1940, highest

for
of

movement
ward

business

prices.

movement

the

TURN

LOWER

LATEST

OUTPUT

WEEK

ATTAINS

ENDED

NEW

ALL-TIME

HIGH

RECORD

of interest

movement
also

cease.

rates

the

other

hand, if prices continue their

decline,

should

increase

business
terest

and

activity

government's

the

slow

will

rates

not

economists,

know

events

the

safe

making ready

either contingency.
For myself, I am

so,

they

OUTPUT

the

FURTHER

SLIGHT

GAINS

during

past

trucks

the United

estimated

and

cars

week

States and

115,512

units

was

460.500
in

the

units,
U.

with
and

332,000

8,400

112,500

and

cars

and

7,600

trucks to

trucks

The agency'*; prediction for February is a total

Canada.

output of 448,500

units.

tivity will remain

ac¬

high level

in spite of the soft
spots that will

from

appear

time

and

year

time.

will go through

industries

during

the

period of

readjustment, both in the volume
of their business

the

in the

and

products

which

out.-

Government

will

increase

price

effects

expenditures

somewhat

government

just

offset

the

business

should

decline

outlays.

pattern

not

change materially during the

coming

bonds

ment

little

will

govern¬

continue

good

par,

bonds

around

sell

grade

3 %

and

mortgage loans will

con¬

tinue about where they

are at

the

present time.
The

long-term
•;/;1.

•

*.:*'•

economic

out-

,•"•••

••

look, however, is still for higher
There

rates.

will

scarcity of capital for
Social

and

political

world

years

ahead.

trends

are

overstimulating the propensity to
consume

the

expense

sav¬

ings. The commitments, expressed
and

implied, of

present

Ad¬

ministration makes inflation

still

the

But

long-term

whether
pe

our

danger.

rising interest rates will

permitted to correct the situa¬

tion,

one

at this time

output, consisted

ago

year

can

tell.

In slow

the

Earlier in the

week.*

with the cash article dropping to 14.2(1 cents a

trading, hogs continued to weaken
low points.
-

season's

consecutvie

lowest

since

week

lower for the

beef steers sharply

marketings forced

Heavy

prices dipped close to

fourth

with

prices

average

reported

the

1947.

May,

prices touched new lows for 1948-1949, reflecting weak¬
producing countries and reports of lessening demand for
chocolate products.
Although movements in the cotton futures market were some¬
what irregular last week, spot prices and the nearby months devel¬
oped a stronger tone and rose moderately over a week ago.
Spot
quotations at New York advanced 65 points to close at 33.91 cents
in

ness

pound, which compared with 35.10 on the like date a year ago.
supporting influence was attributed to short covering and
price-fixing against previous sales of the staple to foreign countries.
Domestic demand was more active and mill buying showed some
a

The main

trade

Export

quite

was

with

active

sales

reported

Bureau

of the

Census reported

This contrasted with consumption of 685,000 hales
and 755,000 in December, 1947.

anticipated.
in November

Cotton ginnings from

the 1948

FAILURES

101,044 units and

was

and 26,950 trucks
2,102 trucks in Canada.

cars

and

cars

SLIGHTLY

OFF

last year.

which the government held about 3,950,000 bales, or 31%.
WHOLESALE

RETAIL AND

LATEST

LEVEL IN

TRADE MAINTAINED

Failures involving liabilities of $5,000
from 128 last week.

They stood at 69

ties

with

any

week since 1943 and

under

or more

year

mark-down

slightly

fairly successful.

special promotions continued to attract shoppers, retail
apparel volume remained steady at a very high level.
Consumers

favorably

responded

Small casual¬

ago.

well above the 14 in the previous

The Middle Atlantic States reported an increase in failures to 41
from 33 in the preceding week.
This region had more casualties
any

other

week

the past

five

in the New

England States which had 20

Slight

years.

of men's

shirts

wool

and

as overcoats, suits and dre^y
presented at price levels acceptable to many

were

slight rise in the demand for shoes.
slightly increased their food purchases the

There

was a

Housewives

past
closely approximated that of the com¬
parable week last year. The consumer interest in low-priced meat
cuts rose slightly.
There was a slight expansion in the demand for
fresh fruits and vegetables.
Bakers' goods were sold'in an increased
and

week

food volume

retail

There*

frozen foods

was

marked

change in the

sales

the

retail

the

iimited

last

week

Lard, cottonseed oil, hogs, lambs and rye turned slightly
this week, but these advances were more than offset

upward

sugar, cocoa,

corn,

oats, beef, hams, butter, cheese,

beans, currants and steers.

Index represents the sum total of the

per

pound of 31 foods

year

LATEST WEEK

and

Grain
movements

index

half,

markets
were

small

4 to

from

since July

were

narrow

lowest

point

touched

somewhat unsettled; price
the trend generally downward, mainly
and

that

of I

levels of

6, Northwest down

1 to

Southwest

unchanged.

The volume of wholesale orders in the week continued close
that

the

preceding week with total dollar volume dipping frac¬

tionally below that of the comparable week
of

buyers attending

many

wholesale

The number

a year ago.

noticeably

markets decreased

during the week, but was more than half again as large as that in
the similar week last year.

Department store sales

..
^

country-wide basis,

:
taken from
.

the Federal Reserve Board's index for the week ended Jan.

showed

increase

of 2%

compared with an increase of 5%

for the year

22, 1949, sales increased by 4% and

period

the

one year ago

increase

of 5%

week of 1947.
was

recorded

Board's

index,

(revised)

was

registered

department

In the preceding
over

increased by

For the four weeks ended Jan. 22, 1949, a
over

4%.

the weekly period to Jan. 22, 1949,

1% from the same period last year.

advanced by

week dipped

with department store

6% under last year's business.

Federal Reserve

store sales in New York City for

This

(revised) in the preceding week.

to date by 5%.

According

week

22, 1949,

from the like period of last year.

the similar

15, 1947, when it stood at 264.02.

irregular
with

the

from

continued

Wednesda'

above

7, South and Pacific Coast

sales estimated at close to

represents

radios

Here in New York retail sales volume the past

prices, as measured by the Dun & Bradstreet
wholesale commodity price index, averaged slightly lower last week,
closing at 264.42 on Jan. 25, as compared with 266.13 one week
earlier, and with 301.01 on the corresponding date a year ago.
year

and

Household soft goods

by the following percentages: New England up 4 to v7:

ago

8, East

The general level of

latest

sections.

estimated

below the comparable

COMMODITY PRICE INDEX SHOWS FURTHER RECESSION

The

change

Regional estimates varied from the corresponding
a

in general use.

offered

appreciable

appliances

The

some

country in the period ended on

For the four weeks ended Jan.

price

was

increased volume.

The

areas.

many

year ago.

down

point since the ending of OPA controls, more than two
To find a lower index, it is necessary to go back to
Oct. 8, 1946, when the index registered $5.40.
The current index
Cell 1.8%. from $6.02 a week ago.
It is 19.7% under the July 13, 1948,
high of $7.36 and compares with $7.17 on the corresponding date of
last year, or a drop of 17.6%.
*

electrical

was

levels of recent weeks.

began

slightly with

rose

There

be leading items in many

FOOD PRICE INDEX AT LOWEST LEVEL IN OVER TWO YEARS

by declines in flour, wheat,

volume

Midwest

ago;

keen interest in furniture.

promotions

sets

prices.

Retail volume for the

compared with 36 and
compared with 16.
All

lowest

television

reduced

moderately

other regions reported a mild clip in failures.

years

furniture

February

volume

demand for

consumer

canned goods.

and

Medium-priced occasional items sold in

increases

Further weakness in foods and farm products last week lowered
the Dun & Bradstreet wholesale food price index for Jan. 25 to $5.91,

hosiery.

apparel increased fractionally

shoppers.

mark-down offerings of
The sales volume

women's winter coats, scarfs, sweaters and

to 26, the highest in

$5,000 increased

were

declined to 110

week.

than, in

AT HIGH

WEEK

sales
continuing in many areas, shoppers
than in the previous week and total retail
volume in the period ended on Wednesday of last week slightly
surpassed that of the similar week a year ago, states Dun & Brad¬
street, Inc., in its current review of trade.
Although most shoppers
were apparently more selective than in recent years, clearance sales
With

bought

traditional

Commercial and industrial failures dipped to 136 in the week
ending Jan. 27 from the preceding week's postwar peak of 142, Dun &
Bradstreel, Inc., reported.
While casualties exceeded the 91 and 52
which occurred in the comparable weeks of 1948 and 1947, they were
considerably below the prewar total of 385 in the same week of 1939.

liabilities

reported at 14,141,789 bales,

crop

11,384,700 from the 1947 crop ginned to the same date
Stocks of all cottons on Dec. 31, as estimated by the NeW
York Cotton Exchange Service Bureau, amounted to 12,646,000 bales,

against

Shoppers continued to reveal
BUSINESS

of cotton

consumption

during December at 681,000 bales, somewhat less than had been

volume.

of .84,202

built in the United States and 2.258

its

above

corporate
rates

interest rates will

Long-term

year.

1941, 124,400 units.

occurred in the Pacific States which had 38

the

week of

week's

belief, therefore, that

Last

over

increase

expenditures

about

private

the

in the like

they turn

present levels, but riot materially.
The

Output in the similar period

in¬

clined to believe that business

the

toward

pound, the lowest since June, 1945. Stocks of lard were said to be
mounting steadily as the result of continued heavy hog marketings.

compared

Ward's estimates that January car and truck production will
reach

oils

liquidation, in lard futures sent all deliveries to new low

levels for the season,

Canada

to
units in the week preceding, according to "Ward's
Automotive Reports."
'

built

1949.

vegetable

period,

very

marked

and

of many goods were

113,820 (revised)

are

working

MAKES

Production of
for

to meet

the assumption that neither infla¬
tion
nor
deflation will be

Flour prices were fairly steady.
Domestic demand for bakery
family flours remained slow throughout the week.
The export
flour market was quiet at the week-end.
There was a somewhat steadier undertone to prices for lard
and

LATEST WEEK

these

and

side,

AUTO

includ¬

program

The

apparently

for

years ago.

in¬

Council

which

prepare

rate

down,

decline.

ing
the
President's
Economic
Advisors,
do

re¬

unemployment

volume. The outlook for the new winter wheat crop
reported improved by moisture in the dry sections of the South¬

west.

JAN. 29

and power industry for the week ended Jan. 29 was estimated at
5,810,034,000 kwh., according to the Edison Electric Institute.
This
represented an increase of 41,100,000 kwh. above output in the pre¬
ceding week; 380,832,000 kwh. or 7.0% higher than the figure re¬
ported for the week ended Jan. 31, 1948 and 1,032,827,000 kwh. in
excess
of
the output reported for the corresponding period two

cent

ELECTRIC

and there is no longer
danger of inflation, the up¬

will

was

The

The amount of electrical energy distributed by the electric light

ward

was

WEEK

Loadings of revenue freight for the week ended Jan. 22, 1949,
totaled .709,585 cars, according to the Association of American Rail¬
roads.
This was a decrease of 23,687 cars, or 3.2% below the pre¬
ceding week and a decrease cf 61,554 cars, or 8% under the corre¬
sponding week in 1948.
It also represented a decrease of 112,343
cars, or 13.7% below the similar period in 1947.

stopped
any

wheat

moderate volume.

up¬

prices

stocks of grain still in farmers' hands.
The CCC
purchaser of corn during the week, but buying of
small.
Applications for government loans on corn con¬

active

increase.

prewar year.

the

outlook

Steel Institute announced this week that

the operating rate of steel

steel

was

Cocoa

The American Iron and

CARLOADINGS

private

books running into 1950 and
firms have been heavy supporters

gas

Age" this week reaffirms its report of Dec. 15 that:
Output of steel and steel demand will be heavy for at least the first
half of this year.
All signs this week point more than ever to this
outlook, but, concludes "The Iron Age," signs do not point to a

the

ing.

the

"The Iron

that

late

orders

Furthermore, oil and

week in

money cheaper in order to stimu¬

not

had

(575)

tinued in good

expected to be able to get
certain types of pipe until much later this year was offered tonnage
for spring delivery. This is not uniform with all companies, but it is
a fact
that involves at least one major company,
y
which

company

unemployment, and this is
possible, it is my further belief
monetary authorities
again take positive steps in
way
or
another
to
make

Industry

(Continued from page 5)

;

one

CHRONICLE'

reflecting large

The State of Trade and

ume

will

FINANCIAL

far.

savings,
tnat these au¬

be certain

can

thorities
make

supply

COMMERCIAL

THE

rise of 2%

that of last year and for the year to date volume

Thursday, February 3, 1949

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(576)

President's

recommended

involves

establishment
these programs for Fiscal 1950 has
(Continued from first page)
clear to you what I mean by the been recommended by the Presi¬
Estimated
words,
"the
National
Security dent at $23.2 billion.
Programs." A first answer is that, expenditures for Fiscal 1950 ag¬
for my purposes here and on my gregate $21.8 billion, or an in¬
crease over the estimate for Fis¬
own responsibility for so classify¬
ing them, the National Security cal 1949 of $2.2 billion. It must
Programs consist of the following be noted that the cited figures in¬
clude
$800
million
in
recom¬
budgeted programs:
(1)
The
National
Military mended obligational authority and
$600
million
in estimated
ex¬
Establishment;
penditures for universal training,
(2) The Stockpiling Program;
a wholly new program not yet ap¬
,(3) The International Aid Pro¬
proved by the Congress. On the
grams;
(4) The Atomic Energy Com¬ other hand, it must also be noted
.hat the cited figures contain no
mission;
(5) The Merchant Shipbuilding estimates for the probable cost of
providing
military
supplies
to
Program;
Western Europe and to certain
(6) Economic Readiness Meas¬
jther countries, for which pur¬
ures
in the Federal Budget for
(a) expansion of power generat¬ pose the President -stated in his
ing facilities; (b) construction of judget message that he intended

strategic

highways;

(c) modern¬
of Federal airways;
(d)
•exploration and development of
scarce
minerals; (e) development
of certain strategic areas; (f) de¬
velopment of synthetic fuels; and
(g) others of a like nature.

ater

ization

it seems safe to
expenditures for the
Security Programs in

that

National

Fiscal 1950 will amount to not less
chan $22
billion and that these
expenditures will represent an in¬

the level for the

over>

rent fiscal year of at

the amounts involved?

arc

summary,

assume

crease

What

request funds.

cur¬

least $2 bil¬

lions and probably more.

What, it

be asked, do these

may

amount

programs

Let

to?

and

similarly

the

figures
on
obligational
authority and estimated expend¬
itures for fiscal 1950, or the year
beginning on July 1 next, from
the Budget Message of the Presi¬
recommended

new

dent submitted to the Congress on
Jan. 10, 1949. These figures, with

increments
in the
I

shown

are

accompanying tabulation.
unable

indicated

include

readiness

this

figures

tabulation

for

economic

because of the

measures

difficulty of differentiating
developmental and

tween

be¬
con¬

struction programs included in the

budget for national security

rea¬

and those included solely be¬
of their peacetime contribu¬

sons

cause

tions.

Most

of such

programs, in
national security

fact, have both
and
no

peacetime

criteria

justification,
available

ar.e

for

but
ear¬

marking each such proportion. It
clear, however, that economic

readiness

measures

indicated

the

earlier

sorts

listings

must^vvount tn several 'hundreds
of

millions, and possibly to
fialf billion."
For

one-

example,

the

programs

source

(exclusive of the

natural

re¬

Atomic

Energy Commission) and
transportation and communi¬

the

cation programs

(exclusive of the

gftipbuilding program) call for
timated

expenditures

1950 of
be

$2.6 billion.

that

finds

es¬

Fiscal

It may well

one-fifth

that

total

national security justifica¬

tion.

these
economic
readiness measures, because of the
uncertainties
the

are

referred

magnitudes

what

to,

involved

Security Programs?
obligational authority for
BUDGET

AUTHORIZATIONS

FOR

SELECTED

How may we

assess the signifexpenditure of $22
way is to note that
.his sum represents 52.5% of the
estimated total of the
expendi¬
ture
side of the Federal Budget

.cance

aillion?

8.7 %

ust

the

Product

the

for

Nat'l

calendar

year

closed,

produced
endar
the

1948.

Cal¬

is clear, then,

aggregates
National

the

Nation

the
It

deal

that

with

Security

Programs
significance
to
the
economy.
Likewise, the
stated increment of $2 billion or
more
is significant in itself and
gains in significance when it is
of

are

very

that

known

material

this

increment

must

superimposed on an economy
operating at a high level, partic¬
ularly in those industries most
intimately affected by National
Security Programs. Moreover, it
must be pointed out that the Pres¬
ident

his

Budget Message has
put the Congress and the Nation
notice

that,

to maintain
the
present
program,
"Defense
expenditures
are expected to
be higher in 1951, as a result of
expanding programs now under
way and the large orders already
placed
for
aircraft, ships, and
on

even

other

material

and

equipment,

which will be

delivered and paid
for in the next few years."
And

the subject of military supplies
for Western Europe and certain
on

countries,

the

AND

Fiscal

That

1950,

uncertain

ESTIMATED

SECURITY

uncertainty,
surely be

can

for

later

years.

EXPENDITURES

ACTIVITIES

Millions)

1950

Supporting

Stockpiling
Universal Train'g

t$14,516

Increment

8734

1949

1950

813,136

effective

835

525

—310

influences

termath-of-war
been

the technological revolution

that

certain

elecronics and

notably

This

industries.

chemical

the

occurred

has

fields,
in

has

National

Defense—

(Mostly

foreign

aid and

tion to

peacetime industries of the
telescoped
progress
of
science
the

under

impetus of

This

war.

technological revolution has rep¬
the practical utilization

resented
over

brief period of the scien¬

tific

and

engineering
develop*
accumulat¬

ments that have been

ing

the 1929 crash.

since

(2)
tive

The

with

their

rising

superimposed

because the

trend, must

economy

capacity of

our

rials

has

grown

op¬

particularly
affected

Programs;

Budget; and

in fields primarily
National
Security
slack in the Federal
slack in the Fed-

share of goods already
eral debt of $252 billions.

larger

still

have

recent

tends
more

vivid

past,
to

memories

and

lead

Here

the

each increase
expectations of

again,

time

permits

only

brief summary statement.

Problem

pressures.

1814,653

1815,877

81,219

$11,745

,814,268

$2,523

136

170

121

824,348

TOTAL

$23,188

$1,160

$19,622

821,823

$2,201

Source:

The

for
'

*New

the

belief

inflationary

Despite the fairly gen¬
that the major infla¬

influences have largely
spent their force, the National
Security Programs for fiscal 1950

Fiscal

of the United States Government
Ending June 30, 1950.

Year

includes actual and recommended net new appropria¬
tions and other authorizations (e.g., contract and loan authorizations), and excludes
appropriations to liquidate prior year contract authorizations,
tlncludes $2.9 billion
{largely aircraft) for 1949 program provided in fiscal year 1948 supplemental; excludes
$279 million being made immediately available in fiscal year 1949 to cover increased
cost of completing authorized naval ship construction program, which is included in
fiscal year 1950 figures.

NSRB/OPP—January 20,

1949.

will

mand

raise

deficits,

short

from

Apart

is moderate in most

materials

The

instances.

certain

stockpiling

pro¬

ferro-alloys

and

steel supply will continue

sure

primarily from the civ¬
including the se¬
curity-supporting
vo 1 u n ta r y

come

ilian

economy,

the
analysis
the following

supports

ditures

of at least $22 billion in
1950, or an increase of at
least $2 billion over the level of
the present fiscal year.
(2) These programs in the ag¬
gregate reflect rising trends over

fiscal

the past two years, and it has been
indicated that higner totals are in

prospect for fiscal 1951.

(3) The impact

materials.will

be moderate

generally, apart from
the
stockpiling program, which
will, however, exert significant
pressure on the supplies of certain
ferro
alloys
and
non - ferrous
-

metals, which will continue to rise
in fiscal 1951.

(4) The real pressure on steel
supplies will continue to come pri¬
marily from the security-support¬
ing
voluntary
agreements
and
from

the civilian

economy

gener¬

ally.
The

(5)

national

security

will in themselves

grams

serious

pro¬

pose

problems,

manpower

cept possibly as regards

no
ex¬

some spe¬

cific skills.

The

(6)

national

security
be appraised as

must

grams

proj

pari

current high-level

which is partic¬

one

these

expenditures

weighed

against

must

current

the

parts of the

some

les¬

pressures

economy.

What is the rationale of the Na¬
tional

Security Programs?

should

consider

Security Programs in their bear¬
ing on business planning. In his
Budget Message to the Congress,
the

President has made clear the

the national policies
following. For ex¬
ample, he stated that "The princi¬
pal objective we should have in
mind in planning for our national
concept

which

are

at this

defense

foundation
which

Problem of controls. Con¬
trols are repugnant to the whole

riod

(4)

the broader aspects of the National

can

strain

time is to

military

build

strength

be sustained for

pe¬

without excessive
productive resources,

years

on our

concept of a price system or to the and which will permit rapid ex¬
market procedures of a pansion should the need arise." He
peacetime economy. But the hard has likewise referred, in discuss¬
normal

we face is whether we
attain our National Security

question
can

consequent disruption of price re¬
lationships.
What

are

the possible

controls

ing the large international items
in the Budget, to the "strong eco¬
nomic support we are extending
to the free nations of Western Eu¬

whose

recovery is the key to
independence,; and to
safeguarding freedom in many
other parts of the world" and that
rope,

continued

"our

investment

European re¬
many times
in terms of increased strength and
improved organization for peace."
covery

With

will

repay us

reference

his

intention

later to request

80th

funds for provid¬
ing military supplies to Western
Europe and certain other coun¬
tries, he added that "in existing

program may

circumstances, economic strength
is not enough to assure continued
independence to free peoples."

would

first.

probably
The

among

the

agreements

voluntary

under Public Law 395,
Congress, will doubtless be
extended, pursuant to the Presi¬
dent's recommendation, but this

program

untary
a

basic

not suffice. The vol¬
agreements are subject to
in

weakness

on only one
scale of demand; that

each

that

they

end of the
is, the intro¬
preferred

new

non-ferrous give to voluntary arrangements..
controls may be necessary,

in the

this point let me reiterate
emphasize that the opinions
and interpretations expressed
in
this presentation are my own and
are made on my personal respon¬
sibility. This caveat applies with
special force to what I shall say
from this point on.
It must be
At

and

clear

i't

i'i' >

all

the

world

American nation is not
for

war.

Only

that

the

preparing
nation

an aggressor

that has made the decision to wage
war

can

ward

direct

all its energies to

preparation for war. A free
society, on the other hand, can
plan
only
for
those measures

•

recapitulate,
far

agreements programs.

Selective price and related wage

en¬

Pro¬

generalizations:
(1) The national security pro¬
grams will involve Federal expen¬

done
increase

generally program results in setting aside an
of increased part of a limited supply,
consumers
but subtract from the thus
intensifying
the
scramble
supply of goods available for pur¬ among non-preferred consumers
chase by consumers; and (b) op¬ for the remaining supply. In my
erating through market processes judgment, the principal advantage
since these programs will require of mandatory allocation. powers
in short supply,
such as steel, would be the impetus they would

The

needs, the impact of
National Security Programs

the

grams.

thus

stockpiling
the

Security

incur

can

term

materials.

programs

(2) Problem of manpower.

Nationai

that mate¬ sening of inflationary

taxes

little

but

the

must

than dollars.

even scarcer

can

over

be
It

will add to the money incomes

and

concomitant

de¬ affectea by national security ex¬
felt in penditures; and the rising trend in

counteracting

particular,

are

will

taken.

are

authority."
controls, including
highly prob¬

appear

consequence,

unless

iields

noted,
rials

pressures

these

measures

duction

ferro-alloys,

that

would

stepped-up ularly active in the industries most

through

operate

metals.

able

larged

the
con¬

added

spirit that I

Certain fiscal

impact, either and parcel of
maintenance of present economy and

through

ing through monetary mechanism
thess

President

this

have their greatest

develop some additional in¬
flationary pressures: (a) operat¬

since

Budget

cbligational authority

security programs will

which the

higher taxes,

But these are the fields in

have to be resorted to?
Mandatory allocation of selected
materials, reinforced by
What are the problem areas in critical
limitation and conservation orders,
the National Security Programs?

eral

—

power-generating equip¬

and

er,

ment.

that may

175

non-ferrous

ferro-alloys,

metals, coking coal, electric pow¬

follow.

600

—510

today

Program objectives without some
psychology of rising
selective controls; or whether we
expenditures
can do so only at the cost of in¬
be taken into account. We
flation in certain markets and the

—58

725

capacity.
in

plant

bottlenecks

security

6,709

are

The

(3)

600

632

basic

non-ferrous metals. The real pres¬

faster

not much slack in prices,

grams;

525

7.219

and

mate¬

much

supply of raw materials;
no slack in plant capacity in our
basic industries of primary im¬
port to National Security Pro¬

130

terials

chiefly

than the

792

ex¬

indus¬

trial plant to chew up raw

350

6,349 —2,543

corresponding

erating at near-capacity levels. In gram, however, will exert signifi¬
cant pressure on the supply of a
short, there is little slack in man¬
number
of
criticial
materials
power; no slack in raw materials,

800

662

1949, the
the labor

pected increment for Fiscal

scarce

and prospec¬
Security Programs,

present

National

—5

8,892

one-

about 800 thousand

the

pressures.

will

workers;

pressures

represents in part the applica¬

800

for-

force

eign relief)
VAtomic Energy Commission
|U." S, M. C. Merchant Shipbuild¬
ing Program

year

addition

expected

technological revolution is in part
itself an aftermath of war; since

tionary
Total,

noted, for Calendar

af- steel,

those

81.806

International Affairs and Finance

neighbornood

There

abetting

and

____

into

wants

demand.

Aiding

(1)

(proposed)

the

half million workers. Against this
incremental demand it must be

The

administer the

for
man¬

unsatisfied

these

vert

Increment

811,330

maxi¬

the

demand

indirect

adjustments without
imposition of price

trols."

the National Security
in the aggregate will

Programs
be

that

and

Report, to "encourage vol¬

"it

incremental

direct

both

nomic

untary
actual

1950
is expected to be somewhat small¬
brought about by war, and not by er,
between
700 thousand and
our cleverness.
And what of the 800 thousand.
In summary, it can
second
half
of
this seven-year "be said
that
the
expected in¬
span, or the past 3% years?
Al¬ crement to the labor force will,
though I am willing to impute to ill the aggregate, more than take
national
policy
its
appropriate care of the incremental demand
share of the credit, I am con¬ for
manpower
for the National
vinced that objective analysis must
Security Programs.
Thus, on an
point to the aftermath of World overall basis the National Security
War II as the primary influence.
Programs will create no man¬
What do we mean by this after¬
power
problem.
It
is
likely,
math of war?
Just two things:
however, that there will be man¬
(a) The
enormous
accumulated power problems affecting specifie
shortages at the end of the War skills since to a large extent the
of
both
capital goods and con¬ indirect manpower demands will
sumer
goods; and (b) The un¬ be for skilled workers, some of
precedented
volume
of money whom are in tight labor supply
savings
from
the
War period fields.
which made it possible to con¬
(3) Problem of shortage of ma¬

Estimated Expenditures

Defense:

Other

(1) We have experienced "full
employment"
or
near-capacity
operations in our economy for
about seven years.
For the first
half of that period, we must ad¬
mit that this full employment was

1813,782

regard

salient:

President

predict accurately what will be

estimated

mum

words of the President in his Eco¬

1950

personnel.

power

economy

which

factors

less

Na¬

time, I shall merely state briefly
the

must

for

interest

the

national

needed

the basic factors in an¬

are

Fiscal

for

mate¬

full-time military personnel.or
It

What

alyzing the impacts of these
tional Security Programs?

stated that, "It is not possible now

Defense—

Military Establishment

Activities

All

National

Gross

i.e., 8.7% of the total
/alue of all the goods and services

Years—In

1949

national

Still another way

to note that $22 billion amounts

increase

rial

civilian

Fiscal 1950.

:or

trend.

One

''New Obligational Authority

magnitudes?

NATIONAL

(Fiscal
.

National

New

What is the significance of these

other

Disregarding

the

Ill

us,

then, examine the figures on new
obligational authority and esti¬
mated
expenditures
for
fiscal
1949, which ends June 30 next;

rising

Here, again, we may face a

pro¬

Military

National

the

for

gram

Volume

169

which

determined to be

are

Number

for mobilizing

sary

in the event of

its

4774

THE

neces¬

resources

Nor does the

war.

conscious national decision to

against
carry

plan
contingency of war
implication whatever

the
any

that

war

inevitable

even

probable. On the contrary, I think
it is abundantly clear that the fun¬
damental program of the Ameri¬
can

government is

one

of planning

for peace/not war. Despite the al¬
location of more than half of the
Federal

budget

defined

what

for

"National

have

Security

Programs, it must be emphasized
our
total national activity is
overwhelmingly dedicated and di¬
that

rected
to the requirements of a
peace-time economy and a world
at peace. For this comparison, the

National Security Programs of $22
billion must be compared with a

national

gross

product

excess

of $250 billion.

Government, busi¬
agriculture, and the

labor,

ness,

professions

alike

must

recognize
that our basic strength lies in our
moral and economic potential and
that our continued emphasis must
be in the direction of strengthen¬
ing this moral and economic po¬
tential.
VII
Where does the National

ity

Resources

fit

Board

Secur¬

this

into

National

Security

Act

also

FINANCIAL

CHRONICLE

estab¬

charge the obligations of this lead¬
ership through positive programs
Act of 1947. The National Secur¬ aimed at maintaining intact the
ity
Council,
consisting
of
the heritage of free societies and at
President, the Secretary of State, the ever-widening extension of
the
Secretary
of
Defense, the the area over which free societies
Secretaries of the three Armed prevail.
Likewise, our policies
Services, and the Chairman of the must be positive and affirmative
National
the
ever-widening
en¬
Security Resources toward
Board, has the function of advis¬ largement of economic and politi¬
ing the President with; respect to cal freedom, here and abroad.
the integration of domestic, for¬ These policies, in my judgment,
eign, and military policies relat¬ will call for our leadership in fur¬
ing to the national security, in thering a world-wide extension of
order
to
permit mord effective scientific, economic, and manage¬
cooperation among the
depart¬ ment techniques through which
ments and agencies of the govern¬ standards of living throughout the
ment
in
matters
involving the world may be elevated.
national security.
Government
must
spearhead
For the
long run I am con¬ this positive program, but indus¬
vinced that the policies and activ¬ try,
labor, finance, agriculture,
ities of these two Presidential ad¬ and the professions must partici¬
visory agencies in the field of na¬ pate in its planning and in its
tional, security will have a pro¬ execution.
And, above all, this
found impact on
business plan¬ program must be fitted within the
ning. Through these policies and framework of our free institutions
activities we may, T believe, look and must conform to the logic of
lished

was

Security

National

the

forward to the

continuing formu¬

lation and strengthening of posi¬
tive

through which the

programs

American people

can exercise ef¬
fectively and constructively the
role of leadership among the free
peoples of the earth which Prov¬

idence and

signed to
It

picture?
The

Council—which

COMMERCIAL

history have

us.

now

our

repeat then that, for the
long pull, I regard these broader
aspects of our National Security
me

Programs

impact

as¬

ning than

is incumbent upon

to dis¬

profound

business plan¬

specific

the

before

now

far

the

programs

Congress.

1947 established the National Se¬

Outlook for

concerning the coordi¬
nation of military, industrial, and
civilian
mobilization,
including
advice to the President

certain

specific matters having to do with
effective mobilization of
in the event of

war

resources

and with

tain economic readiness

against

the

cer¬

measures

contingency

war.

Thus these functions make of the
National Security Resources Board
an
economic
mobilization
plan¬

ning agency set
President.
that

the

It is

the

should

distinction

has

the

advise
I

to advise the

important to note

Board

functions
sense

term;

operating

governmental

its duty is to

President.
like to make clear the
between

mobilization

and mobilization

ber

prices

BuildinglMateiials

principal contributor log of contracts for the next six
to inflated building costs.
How¬ months in excess of 1 million tons.
Observers in this industry have
ever, lumber supply is beginning
to catch up with the demand.
As noted a falling off in demand for
in the case of many other ma¬ steel for new industrial structures,
terials there are signs that lum¬ but they point out that stores, of¬
ber
prices have
reached
their fice buildings,
public
buildings
peak. For instance, the seasonal and highway bridges will more
drop in prices this winter began than make up for this.
earlier and went deeper than in
Steel prices have not increased
recent years.
beyond the general level of com¬
modity
prices.
In fact, during
Steel Production
1947, the wholesale price of struc¬
The steel industry has made an tural
steel was only 25% higher
impressive postwar record of in¬ than it had been in 1939. In July
creasing output. Based on figures of 1948 it had risen to 48% above
for
the

the

first

six

months

1948

Industry's

production of fin¬
ished products last year exceeded
the

wartime

high

million

planning. In dic¬ tons. Year-end
reports from the
tionary terms, mobilization is de¬
Industry indicate that almost 90
fined as the "act of assembling,
million' tons of
raw
steel were
equipping, and preparing military
produced during '48 and that this
and naval forces for active .hos¬
figure will be surpassed in 1949.
tilities." It is scarcely necessary
The monthly average shipments
to say that the American nation
of fabricated structural steel were
is not engaged
in mobilization;
38%
higher for the first seven
nor are we preparing for mobili¬
months of 1948 than the corre¬
zation.
Mobilization planning is
sponding seven months for the
quite another matter.
five-year average of 1936 to 1940.
Economic mobilizating planning
This increased production is the
may be defined as the process of
estimating
needs

the

requirements or
of appraising the

war;

direct result of the work
far

the

Industry's

done

$2 1 billion

the

The

aluminum

through

its

association, indicates
supply of its materials
remain
tight and may be
tighter during 1949. This be¬

that

the

will
even

lief

industry,

based

the

shortage of
el-ectric power available and the
ever-increasing demand. Primary
aluminum

pound

which

sold

for

20c

1939, has followed a
unique course in the past several
years. In 1947, it was 15c a pound,
but in 1948 it

later to 17c

rose

first to 16c and

pound.
Further in¬
crease may be necessary, but the
industry is not able to state, at
this time, what will happen. a

means

available

for

26%

over

1939

index showed

43%

years.

only about
and, in July, the
was

increase of about

same

time

of the

one

means

of in¬

creasing the likelihood of winning
a
war, if the Nation is forced into
war.

which

the

In
we

dence do

uncertain

world

live,
no

we can with pru¬
less than to take

japimprove jour
economic
readiness
position
against the contingency of war
and to lay plans for the rapid
propriate

steps

and effective
resources

mobilization of
the

event

our

war.

Mention should be made also of
another

agency—the

national

National

security

Security

put.

supply

this

steel prod¬

trend

will

continue.

foreseen.
The

fabricated

board

gypsum

and gypsum

lath, which was con¬
short of current needs
in 1947, increased materially dur¬
siderably

ing 1948.

It is estimated that the

combined

output of ■,these two
products reached more than 5 bil¬
lion. feet in 1948, against prewar
total of 2.7 billion feet.

This
industry, of which my
Company is a part, has increased
its board capacities 95%, all of

which is
safe

board

in production.

now

that

say

lath

and

supply

easy

Plaster

both

will

It is

gypsum
in fairly

this year.
in

was

the

past

communities.

short

supply

year

many

New

capacities have
now been
completed, sufficient to
raise
the
supply
around
50%
above prewar.
This commodity
be

amount

available

to meet

sufficient

demands for the

current year.

treatments

have

advanced

price an average of 36% over
prices at which they sold in 1939.
Manufacturing
costs
are
now
fairly well stabilized and unless
.

their

tor these

up, prices

commodities
about

uniesa

-j.

labor rates go

should

continue

levels:

present

country.

In 1949, the cement

po~ ■;

expect

subsidized

and

tions.

This

housing,

government

price

alloca¬
7

•'

the outlook for
building materials in 1949 would
survey

be far from

complete if I did not
briefly the new
and improved products which are

discuss

least

available. Many of these were
designed to bring about more effi¬
new

cient

building and to reduce the

cost of the total structure.

Already, builders have noted
savings in time and money result¬
ing from the use of such materials
as
ready-mixed
cement,
light¬
weight aggregates, and pre-finished flooring. During the months
ahead, further gains will be made
through the wider acceptance by

manufacturers

four

common

inch unit of dimensions.

This will

permit the assembly of materials
of

different sort without the cost

for

cutting

and

waste.

Already
such

available in modular sizes

doors,

wallboard
insulation.
As

are

brick, tile, sash and

and

wool*

rock

materials

become

abundant during 1949, the effect of
these improvements and of others
still
and

will

come

become

evident.

It will become

clear that the materials industry
by greatly increased capacity, k.
by
the diversion of millions of dollars
to research for better

quality and
the lowering of
costs, is doing a
monthly | tremendous job to maintain a high
all asphalt roofing level of construction.
materials
during
the
first
six
months of 1948 were about IV2
Housing Construction Must
I,
times as large as shipments dur¬
Increase
The

Department

that
shipments of

reports

ing

the

Commerce

average

month

average

1939.

properly

house

people,

our

However,

construction must continue for the

off

shipments have fallen
slightly from 1947 levels. The

several

first six months' total of 42 mil¬

years at levels even
higher than the $18 billion record

lion

for last year.

squares

the

total

million short

was

'47.

for

the

same

period

shortages

Most

producers

making

are

prompt shipment and it now ap¬
pears that sufficient asphalt roof¬
ing will be available for all
strutcion needs in 1949.

increases

Prices for

indicated

are

for

this

type of roofing.

struction
any

While

Question

gathering
discussion

was

struck

leaders,
despite
their
general optimism about high out¬
put and lower price, warned about

leaders

recent

for

weeks

increased

terials

warning that indus¬
have
is

emphasized in

that

the

outlook

availability of

clouded

labor

ma¬

by uncertainty

con¬

most

meet

you may

require.
rec-*

big job to reduce
costs. Through installation of ma¬
terial handling, machinery, plant
extensions,
new
processes
and
other

technical

improvements,

manufacturers

have

been

keep prices comparatively

low.

by the frequency with which in¬

The second

ready

ognize there is

information
I

situation

many

dustrial

trial

and

The producers of materials

able to

Wages

this

materials

forests, the materials end of

con-

asphalt roofing remained steady
during late 1948 at about 10%.
higher than the 1947 level.
No

for

Except for possible

required in the plants, mines and

The

supply should be adequate to meet
industry, which has the facilities construction needs, although again
to fabricate and erect well over shortages
may
prevail in some
2 million tons of steel in 1949, is local
areas
until the
problems
currently operating with a back- arising out of the Supreme Court
steel

foreign

must

We must also carefully
the effects of possible
on such mat¬

for

materials

price

the

structural

European Recovery

Congressional action
control

On the other hand, if wage in¬
of raw copper, now 23J/2C a
creases
become
general
during
ucts for construction in 1949 will pound, is expected to remain at
depend on several factors, par¬ that level throughout this year, 1949, we will be faced with fur¬
ticularly the continuance of the indicating that no increase in ther increases in the price of ma¬
voluntary allocation program and price of copper building mate¬ terials. Basic industries such as
the development of the defense rials is now anticipated.
steel have adopted a policy "of
program.
However, steel leaders
Cement
production
in.
1948
say at this time that most steel reached an all-time high, exceed¬ compensating every cost increase,
such as higher wages, with cor¬
items, including sheets, pipe and ing
estimated -consumption
by
fabricated
structurals
will
be from 3 to 8 million barrels.
This responding price increases. Steel
available in adequate supply dur¬
figure can be stated despite the prices, for example, were about
ing this current year. They make fact that there were reports of
15% higher at the end of 1948 than
this statement in spite of the fact
local shortages
which produced
that no slackening of demand is
at beginning of the year.
gray markets in several parts of

The availability of

the

industry.
watch

ters

1939.

over

The

recent

over

level

planning, both military and eco¬
nomic, rests on the premise that
a
state
of
preparedness is one
of the means of lessening the like¬
lihood
of
an
aggressive attack
against the Nation and at the

situation.

that both

rials available to the construction

stable

1947

postwar
improvement
program.
which would
This industry-wide drive to ex¬
Miscellaneous Materials
meeting these
two
influences
that
might turn
pand capacity will be completed
In
most
other
needs; of measuring deficiencies
materials, the their
plans awry. First of all, it
by the end of 1949 and, at that
revealed
outlook is brighter both in respect
by the comparison of
was repeatedly
said that the de¬
time, the domestic mills should to
needs with means; and of deter¬
supply and price. Authorities termination to hold
prices down
be capable of producing approxi¬
in the copper industry expect that
mining the steps necessary to bal¬
in '49 would be defeated by any
mately 97 million tons of raw
ance
needs
with
means—all to
consumption
of
their
products material
demand
f 0 r
steel and more than 70 million
higher
the end that there may be avail¬
will continue on as high a level
wages by mine and mill workers.
tons of finished items annually.
able
well-articulated '-,:jplari$'vf0r..
as in 1948.
However, despite gov¬ As one spokesman, my friend
;
Increased demand for non-con¬ ernment stockpiling and the For¬
mobilizing the resources of the
Donald Dallas, Chairman of the
Nation in the event of war.
It is struction uses, however, imposed eign Aid program, it appears that
Board of Revere Copper & Brass,
important to stress the words "in heavy drains on the steel-produc¬ sufficient material will be avail¬
puts it, "this moderately optim¬
the event of war."
We are not ing industry during
1948.
It is able in '49 for industrial uses,
in¬ istic view becomes possible if we
consumption' of cluding that needed for fabrica¬
engaged in planning "for war"; estimated that
assume
that
comparative tran¬
rather, we are planning against steel products of all kinds by the tion of building materials.
The
Construction
the contingency of war.
Industry amounted industry's
will exist on the labor
output
in
'48
was quility
to only 13% of the total 1948 out¬ double
The philosophy of mobilization
prewar and leaders expect front."
resources

foe

the domestic and

fairly
The

level.

'39

litical

Program and the defense program
will cut] into the supply of mate¬

cal

(Continued from page 17)

President

over

Materials
produced
by
my
Company, such as gypsum, lime,
insulation, metal lath and acousti¬

curity Resources Board and as¬
signed to that Board the statu¬
tory
function
of
advising
the

prices
V'

29.

prices, although some¬
what unpredictable because of this
Court
action,
have
remained

should

their

point

Cement

during

Let

basing

have been resolved.

system of fundamental free¬

doms.

decision

(577)

;

And,

when
appraising fulare
you should keep in mindTr

trends
that

there

certain

are

ments in cost,

fixed

ele-'

as wages,

such

high

freight, fuel and something

than 40 cents of each dollar

profit

taxes.

defend

It is

not my purpose

present

prices.
I would,
however, point out that future
prices must include these infla¬

tionary elements and provide fair
compensation for
services.

We
the

the

goods and

can

be proud of the record

construction industry has es¬

tablished

these

three

postwar

Despite criticisms from all

years.

sides,

we,

have

done

in the construction field,
tremendous

job

meeting the needs for this
try's

biggest

most

and

varied

building program.'
I

can

assure

you

coun¬

Ithe producers

of materials will continue research

for
and

and less costly

new

find

methods.

materials

economical

With these and the vast

experience gained in meeting past,
emergencies
lies

your

American

will be

efforts

your

to Jjive

people the best in

al¬

the
con¬

struction.

Finally,

you

need have

mis- -*

giving about ability of the build¬
ing

industry

the

best

world.

housed

keep

Americans

people

the

(578)

THE

COMMERCIAL

for them. The general tenor of these
quite enough to condemn them both.
outline

broad

would lift

the

enactment

virtually all restrictions

of this

the

find

This
measures

suppose,

labor bill

that to

can

time

has

been

would

Many

this have

falsification

others

or many

course,

its

the

est

and

That,

—

term.

similar
bills

materials.

new

cannot

neg¬

success.

know

reached

all

stimulate

cannot

mate¬

nor

the

certain

that

height of

building in the construction
houses, but that long

900,000

before the depression this number
had declined rapidly because the
market

doing, of

course.

Indeed it is difficult to know what else the
Federal Govern¬
ment could do with these

the

current

course,

lected, but

The Real Source of
Payment

The

methods and

new

the old age and survivors insurance
program.

"reserve's"

reduc¬

any

reductions.

1926

owner

lengthening

provide for research

there

proportion of
families.
So, per¬

But neither contractors
rial men have made

"reserve" funds of

nothing criminal in its

even

same

Through the FHA we have, in
effect, reduced the'cost of hous¬
ing by reducing the rate of inter¬

con¬

home

houses

probably in

tion in cost.

its

There

All of the

haps, the basic remedy is

the

could

much

and

condition,

could

third-hand

newer

lower-income

were

and

remain

IOU's and

own

slums

better

been acting

life insurance company

reserves

home,

quickly at the bottom.

of "bad faith."

new

second-

Federal Government does with

of the responsibilities that free speech is
supposed to impose would remain in full force and ef¬

Undermining State Laws

there

employ the
funds so obtained for its own
purposes—well, one need
not finish the sentence.
Yet this is
precisely what the

many

fect; the old combination of closed union and closed
shop would be fully restored; secondary boycotts and
jurisdictional strikes would be forbidden only when
"unjustifiable," which leaves, it questionable whether
they would ever be under the ban.

of falsification of books
sure

all

"invest" its

existing virtual exemption of unions and their leaders
from

ington.

the

that

which

one

between the "reserves" held
by ordinary insurance com¬
panies and those held in the trust accounts in Wash¬

provided for employers by the Taft-Hartley law
same

afford

eliminate

knowingly in bad
faith. They have
merely been permitting themselves to
be misled by
bookkeeping, and by certain false analogies

would be taken from them at the

quite

are

cerned

such immunity; unions
could with impunity demand pay for their members
for work not performed; whatever freedom of speech
was

haps 75% of all the families

and are encouraged by apologists to
suppose,
deny the existence of such real reserves is to

books, and doubt whether Congress

some way

all, although employers have

accumulated

elementary fact is apparently

accuse someone

to have ordinary State
they have not been able to
do in the past; unions could henceforth refuse, as some
of the more arrogant of them have done, to bargain at

dispute,

and local laws enforced

will be

great many find it difficult to grasp or to believe.

picketing—
involved in

on mass

unless the injured parties, often in no way

accumulated

gctual; practice could well be accumulated against the
obligations assumed, or to be assumed.

stomach

been

Thursday, February 3, 1949.

(Continued from first page)
a

FINANCIAL-CHRONICLE

have

serves

As We See It

moneys—if it must carry them as
least without
presently finding itself the
large part of the assets of the country. But

for

hausted.
the

again

was

ex¬

certain that

condition

same

recur

homes

new

It is almost

very

is likely to
short time. Houses

pricing themselves

are

out

of the market.

very
the cold fact remains that
payments of these "b&nefits" will

The proposed

Direct Government Action
legislation would, moreover, go as far as
Essential
legislation could under our Constitution (as interpreted depend upon the taxing power and the credit of the Govern¬
Until the cost is
by a Roosevelt-appointed Supreme Court) to render null ment of the United States, and upon
reduced, there¬
nothing else.
fore, I see no way in which to
and void numerous State laws designed to hold rampant
Some day, of course, sad
experience will reveal the
cure the
situation, except by some
unionization in control.
The President himself would ap¬
cold facts to eyes which are reluctant to
direct government action at the
see—and the
fiddler will then present his bill.
lowest income levels to
parently be left with some part of the powers he has been
replace
slum dwellings with
public hous¬
using at times with good effect during the past year or two,
ing, and thereby supplementing
but, so far as the layman can see, with not very much of it
efforts to get more new houses
—or at all events without
very much ability to enforce his
built by private builders for those
with adequate income.
rulings in the courts or, for that matter, anywhere else.

such

Private

All

this

in.all, it

appears

self-evident to us that should
to the statute books without

be taken
major alteration, the country will be left dependent
upon voluntary restraints which the unions decide it is
program

wise

for

them

impose

themselves.

upon

Such

re¬

straints have not in the past been of much account.';It
could be that experience gathered in the first postwar

two have taught the unions and their leaders

year or

good deal; it could be that they have learned little
nothing.
Social

Turn

now

to the

assume

responsibility for the old age needs of virtually the entire
population. Indeed, if any escape its all-inclusive embrace
it would apparently be because the framers of
the'proposals
are
unable to provide a system of administration which
would "catch" certain small groups or elements in the
pop¬
ulation. It would, moreover, leave the individual no choice
and he

must

what he is

make

his

come

in whether he wishes

"contribution"

getting for his

money

Federal
not

the

emergency

is that
with

very

whether

is worth the cost

factory.
day

not.

Administration, the obvious reply

real truth the scheme itself interferes

of employees) upon the

individual,
employer,

the first
has to

inevitably detracting from what the individual
provide for his own future and the second giving

rise to waste of

resources.

Attacks

are

now

being made

from many quarters upon the size of the benefits under
the existing system on the ground that inflation has re¬
duced

their actual

value to

which it has in fact done.

very

small proportions

—

Wasteful government

expendi¬
tures, financed from social security contributions, tend
to perpetuate this process.

relative

Only thoso who do not understand the intricacies of the
are likely to be misled by the notion often advanced
that all this is being paid for, or would be
paid for, as we
go. Net only does no one really know the "present value"
or

obligations being undertaken—and could not

know for the reason, if lor

other, that politics have

now

dictated—and doubtless will from time to time in the future
dictate—substantial increases in such
obligations without in
any way

the basic

affecting the "reserves" held against them. But
fallacy in this "reserve" idea is that no real re¬

that

see

will have

nor¬

was

problem of high
Incomes to¬

permanently higher than
but the cost of homes

permanently higher.
The
position of cost and in¬

come

probably will not be greatly
different, and so we face the same
problem
In

1940,

in 1940.

rural

the

cen¬

29,000,000 urban

were

about

half

United
a

States

live

course,

just

families

afford

can

the

buy

house, even of the simplest
The other half can only buy

new

type.
or

the

secondhand

good

the

rent

other
is

the

new

hand

not

the

much

non-farm

residential

have

running water cer¬
tainly indicates a very low stand¬
ard of sanitary living conditions.
Many of the homes which do not
ure

meet

minimum

standard of

de¬

unless

the

been

which

made

reduced

plumbing
we

this

and

defects

the

other

and

have

during the war

older and

ilies which
mum

finally reach fam¬
only

can

rent.

sub-standard

pay

mini¬

1940, the 6,000,000
hopnes were rented

rents

averaging

less

than

$15

month.

The rent paid is not suf¬
ficient to keep the houses in good
a

but

seems

result

the inevitable

conditions.

present

While I am a
great believer in
the system of free enterprise, this

happens

has failed to find
Even

field

where

which

solution

except

and

their

be im¬

can

there

destruction

the

low

obtained

income

the

so-called

Low Income

Groups

Deteriorating
The

housing for those who
last

many

low

hand-down.

rents

the
are

get
Of

houses

problem

compared

food,

clothing, medicine and the like is
that shelter is absolutely essential
for every famly, and yet the cost

course,

renting

satisfactory.

and tenants will

for

Some

Other

tion

keep any

house in good condition.
houses are saved by their

location,

difficulty with the housing

the

theory works, but it works
provide highly undesirable

kind of

Housing for

from

In other
hand-me-

groups.

owners

replacement.

rents

even

poor.

industry
condition

left
has

improvement.

though the condi¬
under private
to itself, the slum
But

continued

I the cost of housing

without

could reduce
so

that

per¬

pri¬

care

through
this

does

have socialized

whole,

The

the

public

sense

socialization of the
or

building in¬
of the housing industry.

whose income is

only those

low

to pre¬

vent their

renting the minimum of
decent
housing.
We - have long
recognized government's obliga¬
tion to give food and
clothing re¬
lief to

families unable

them.

to pay for
long recognized
obligation to give

have

government's
free

medical

and

care

hospital

service to those unable to
pay for
it.
We have long

recognized the.
obligation to educate children, no
matter

how

Shelter is

life,

their

poor

one

parents.

of the necessities of

perhaps

food.

government

the greatest
quite true that
has not often

taken

the

mum

shelter

after
local

under¬

job of providing mini¬
it

has

that

clothing, food and medicine,
the

reasons

favor

of life

are

just

but

strong in

providing this necessity
the others.

course,

faced

down

the

Many

can

words,

imum standard.

others

that

It is intended to reach

solution.

because

appear

For

medical

income, they get older dustry,

less

and

cluded that about 6,000,000 homes
in 1940 were below a proper min¬

proved.

not mean

But

program

have

the

poor

hospitals.

evidence
con¬

provide med¬

the

housing

surroundings

But as these houses
handed down to families with

still

lowest

direct

public

that
to

deteriorated.

conditions,

Committee

our

education

relative

and secondary schools.
We
socialized medical care to

are

the

city tears down the
quality of the residence is accen¬ slum dwellings and a private in¬
tuated by the bad surroundings..
dustry builds a similar number of
It is possible that improvements new
houses,
other
slums
will
have

public

mary

have

profession.

in city slums where the

cency are

socialized

care

these, nearly 4,000,000 condition, and they deteriorate
as
needing major re¬ further.
pairs and are, therefore, in bad
It is quite true that some kind
physical condition.
All those in of shelter is provided
by our pres¬
good repair, over 3,000,000, have ent system at rents which can be
no
running water of any kind. paid, but the lowest income
group
2,400,000 more have no private has necessarily gravitated to the
toilets or baths.
Perhaps a ma¬ sub-standard housing, for the most
jority of the homes without water part in city slums. No one is say¬
are in rural areas where they are
ing that the private builders are
entirely satisfactory, but many of to blame for the present situation,
in cities where the fail¬

We have long

medical

house

so¬

matter.
our

extent

reduction

public
or

question of socialism is

the

but

ones,

denounced
communistic

cialistic enterprise.
Of course, to
a certain extent it is true
that it
is socialistic in nature.
But this

ical

are

have
as

listed

them

Many
housing

are

houses.

of these houses

many

by 6,000,000 low income families

according

there

units.

system

of the risks

were,

is also

but

The Reserve Myth

are

they

and

effectivness *of any plans or programs which
the individual may have developed for his own
protec¬
tion. It not only imposes a tax upon such an
case

problem, I

cost and low income.

thinks

the

but also (in the

has

problem,

better situation that

sus,

be said that there is

issues from the

Banks

slum

to think

reason

not,

nothing to prevent any
individual providing for himself in his own
way in addi¬
tion to what is required of him under this scheme which
now

Loan

the

the problem of the lowest income
families.
When we have solved

are

If it

Home

solved

mal before the war, and that nor¬
mal situation was wholly unsatis¬

proposed social security program. Un¬

He must

(Continued from page 15)
in productive enterprise. But the is out
of line with the income of
good work done by FHA and the most
of
the
population.
Only

any

Security "Protection"

der it the Federal Government would undertake to

in the matter.

Enterprise Has Not
Solved Housing Problem

with

Congress

the

further

are

question

whether the Federal Government
has any function in this
program.

Housing like food, relief, medi¬
cine, is primarily the obligation of
the States and local governments.
Even if these programs are the
proper

said

tion

function of government, it
that

they

within

under

duties

Federal

not
or

our

fall

Constitu¬

primarily

powers

Government.

the

of
is

little

late, however,
for us to
argue
the place of the Federal
Government in the picture.

Under

President

Hoover, we set up the
Federal Home Loan Bank
System
to assist Building and Loan Asso¬
ciations to finance
housing more
adequately.
Under
President
Roosevelt, we established the Fed¬
eral
Housing
Administration
which, by mortgage insurance, has

revolutionized

the

financing

' of

THE

Number 4774

169

Volume

who

his

homes.

than the

gram

cannot avoid the responsi¬
of considering the whole

gress

bility

problem.
Furthermore, f believe that the

man

earns

own

It
lish

that

said

is
a

estab¬

standard, and
Federal
Government

gives aid, the standard will be
responsibility for preventing the steadily raised and the cost to the
suffering and hardship resulting Federal Government will rapidly
Of
course
that
is
a
from
extreme
poverty at
any increase.
point in the United States. I be¬ danger, but it is a danger I would

Federal Government does have a

lieve the Federal Government has

in seeing that every
substantially equal op¬

interest

child

has

rather face than refuse all assist¬

the States.

provides that

method of dealing with
cases, this is 'satis¬
factory, but rent certificates will
not eliminate slums. No man will

hous¬

invest his money in new buildings
on
the chance that rent certifi¬

Inflation

the

and

There

system.

level and

a socialism,
there would be

equality under
certain

lower

take

out of the
might be more

progress

standards

let those

who

reasonably

pected to pay the rentals in de¬
cent private housing.
It is not
intended to deal with transients

are

ex¬

amount

down

cut

helpless individuals, but with
families
receiving
some

"let. the devil take the hind¬
and

cannot

much

living for the

great majority of workmen.
The
philosophy the other way
most"

250,000 a year. To my
this changed the whole
character of the program. Two
hundred
fifty
thousand
units
would be 25% of the 1948 con¬
struction.
Some
materials
and
labor are still short, and the ma¬
terials and labor to construct this

problems.
public housing program is
intended to deal only with those

public housing would
the number of private

housing

steady income at the lowest range
of the income scale.
The most

built. I have always

un¬

could

which

units

those

said that the

program should not exceed 10%
to keep up suffer poverty
of available housing. As a matter
hardship on the theory that helpless group will have to be
of fact,
I doubt if more than
in the end general progress will taken care of in public institutions
One 125,000 units could be efficiently
be
faster.
Without arguing the or through rent certificates.
built for several years to come.
economics
of this theory,
it is of the objections to public hous¬
This is no time to force up the
enough to
say
that it offends ing is that it competes with pri¬
price of materials by excessive
every
humane
sense,
and that vate renters by admitting families
able to live in privately owned building. In short, I believe that
Americans are humane people.
homes.
This condition arose out many of the objections of the
How Federal Government Comes of the war when it was impos¬ private builders are completely
Into Picture
sible to move the families of war unsound as to a reasonable pro¬

able

somewhat

tion, medical care and housing, to

all a minimum standard
of decent living and to all chil¬
dren a fair opportunity to get a
start in life. But if we accept this
give

theory, it is obvious that a large
number of the States do not en¬

joy the high production or the
high resulting income which will
enable them to maintain such a
standard.
The Federal Govern¬
ment comes into the picture, be¬
a great difference
ability among our
States.
The average in¬

there

cause

financial

various

in Connecticut, is more

come

twice the

average

than

income in Mis¬

We saw how in extreme
cases
like
the
unemployment
crisis of 1934, the cost of an ade¬

sissippi.

quate and necessary program was
far beyond the resources even of
the wealthier States. It is beyond

other
States today.
States do not have
the taxing power which the Fed¬
the

resources

Government

eral

many

because

has,

the.y cannot reach the most lucra¬
tive sources of income or main¬
tain

rates

tax

than the

materially

higher

surrounding States with¬

out driving

wealth away from the

State.
If
ever,

for

its

lion

plete

this theory, how¬
wish to avoid a com¬

adopt

and

centralization

of authority

there must be cer¬
tain definite limitations, and we
must adhere to the basic doctrine
that the role of the Federal Gov¬
ernment is only one of financial
in Washington,

First, the Federal

I doubt if it
accomplished
any
purpose.
It is hard to see
how
you
could
prevent
the
builder or the owner from adding
this amount to his profits by re¬

Government

because

supporters,

might

workers housed at gov¬

ernment

expense.

character

some

The

radical

of the person¬

nel of the Public Housing

Author¬

also justified criticism.
after all, this support does

has

ity
But

not

my/ mind give any argu¬
against public housing if
there are sound arguments for it.

ment

Limit

Expenditure

Public

housing is
being too expensive.

vide

bill

der

which would

Ellen-

permit the

expenditure of about $12,500 per
housing unit are very high indeed.
Four

room

homes

can

all

make

housing

Other methods of
dealing with the housing situa¬
tion may be developed. Many low
income families have found homes

low

at
are

cost

low rental which

satisfactory for their children,

particularly
since

cities

the

environs

automobile

spread the population over a

has

wide

area.

the
edge off the problem at the bot¬
tom, destroy many of the existing
My belief is that if we take

set

and

slums

example

neighborhoods, it will not
be necessary to extend the public
housing program beyond a total
of perhaps a million homes in the

be built for

course

have

seen

Cleveland,

which

have

perhaps
$6,500.
Some
housing projects perhaps improved all the homes in the
have to be fire proof and involve
neighboring section, new stores
greater expense. But if this pro¬ have been built and a standard
gram is to avoid public criticism, "established extending far beyond
$7,500,
public

must

carried

out

most

places at far below the Ellender
We ought not to give
a
man who is admittedly unable
to earn earn anything like an av¬
erage wage better housing than

the number of homes covered

public housing.

bill limits.

the

man

builds his

who

works

own

too

participation
small

and

home.

It is contended

the State

hard

that

the finan¬

required

local

from

authorities is

other

sible

Proposed Alternative Remedies

they pro¬

Practically
charitable

arrangement.

have

found

alternative to

The monetary authorities

money.

and

commentators

most

appear

the people to avoid
use
of the money

content to urge

inflationary

available to them.

The result has

been that the

people have become
cautious,
price
.conscious,
and
hopeful of lower prices in the near
future.

This, we believe, accounts for
the present lull. Those who inter¬

public

pret the situation as proof
flation' has run its course

these at the bottom of the income

that in¬

the peak

housing as a method of
providing low income rentals to
scale.

Public

that

of the inflation is passed
may
be
expressing only pious
wishes and also may be taking

housing is still ex¬
the experiment
has been very much confused by grave responsibility for the action
of those who are influenced by
the
intervening of the second
their interpretation.
World War and the large amount
Meanwhile,
emphasis on the
of war housing
constructed di¬
continued inflation of the money
rectly or indirectly by the govern¬
is
discouraged
by thement.
Many of the complaints supply
against the public housing sys¬ threat that it is deflation that we
perimental

tem

relate

and

this

war

housing.

Few cities have been able to
the

give

housing program a
trial, and many cities re¬
quire the urban redevelopment
assistance provided in the Ellen¬
public

proper

der

bill

order

handle

the

slum

question properly.
Those of you who are at this
meeting are largely interested in
private
housing.
There
is
no
reason
why the public housing
program should compete with or

have to fear, not inflation.

Never¬

theless, the huge money supply re¬
mains with us;

it is not being reW

duced. and there is

probability

that it will be reduced in the fore¬

seeable future.

It is much more*

likely to rise as Federal

expendfc

tures increase and the defense and

foreign aid programs expand.
We

again emphasize our belief

that the

inflationary trend in this

with the
country has developed to the point
industry,
any
more
than general hospitals in¬ where the monetary problem must
terfere with the practice of the be
tackled, because we cannot rely
private physician. I know of no on the continued restrain of infla¬
one

who

shelter

does

not

problem

major

way

feel

that

the

providing tionary spending

only be solved by pri¬
vate industry. I believe that those
who

can

opposed to public hous¬
ing have done their own industry
a
disservice by their indiscrimi¬
nate and unreasoning opposition.
are

They should promote the plan and
spend
their
energy
and
their
funds in confining it to its proper

controls

government

prices and allotments.

The monetary sources

of infla¬

the purchase of

gold and

tion

—

support of government bonds~-so

obviously

are

in need of modifica¬

tion that it is difficult to believe

opposition to public hous¬
they could
has proposed from time to
in current
a
number
of alternative scope in making it more of a
remedies. A great many sugges¬ local enterprise clearly devoted in current
the
lower
income
problem. and in the
tions try to reduce the interest to
rate and cost of financing, usually They have invited more radical discussions
through an indirect subsidy from housing measures and have as¬
The

ing

con¬

money

our

They confined them¬
the symptoms and ef¬
inflation, manifested by
current prices, wages, and the lull
in buying and business expansion.
Nobody in authority seems to
want to decrease the supply of

selves

nature could be led to build under

such

problem.
fects

vide and the character of tenants

sources

increases

supply seem to be ignored by offi¬
cials,
bankers,
and - economists
who currently discuss the inflation*

by the government of the
rentals
which they charge, the

they
accept.
institutions of

obvious

These
tinued

lation

only

holders

large

of the bonds.

apartment projects under a sub¬
sidy
agreement,
because
they
have to submit to complete regu¬

whom

and

companies

of govern¬
to turn them in, or as Mr.
Eccles says to "monetize" them,
thereby increasing bank deposits
by four or. five times the sale price

,to get tax exemption for the

accommodations which

ments

property itself. In general, few
people are interested in building

next. 10 years. I interfere in any
housing
public housing projects private
the

and
elsewhere,
changed the whole
character of the
neighborhood.
Private owners have come in and

income families.

middle

for

insurance

and

subsidies, however,
has been big enough to secure
really low rents such as are fur¬
nished by public housing. They
would
have
to
be
larger than
direct Federal subsidies, because
the money borrowed is necessarily
taxable and it is not always pos¬

public

pegged
price, thereby encouraging banks
at

bonds

government

private

buy

continues to

Federal Reserve

None of these

many

criticized as
It does seem

to me that the limits in the

■

three

subsidy

paid for the gold and pro¬
reserves
which may
bank deposits by another
or four times that price. The
bank

vides

apartment
owners
and
builders
and,
of
course, something of this sort has
been done in the way of tax ex¬
emption in several States to pro¬

unnecessary.

un¬

homes.

too

our

increase

We considered various methods
of

condi¬

became

amount

selling the house unless we have
a complete system of fixing prices

public housing,
build

and

real

This, I certainly do not admit. As
I have said, the reduction of costs

questionably
there
are
among
those supporters many who want
all housing to be socialized, and
want all

have

1948,

have

•

turnover

time

be persistently ignored

government proposals,
annual
more or

bank

reports,

less academic

of economists.

admit that the campaign to

percentage. Again, I the government. When these plans sisted the critics of free enter¬
administhink the criticism is justified, but are analyzed, they never get the prise in the United States. The urge our people to avoid inflation¬
tration of these various welfare
we
must remember that housing rent down to the point where they American people, in my opinion,
ary use of our huge money supply
services, but must leave it with
is a new government activity, and
will take care of really low in¬ are determined to adopt a housing
the States and localities so that
is showing results in current cau¬
that State and local authorities come families. Many other plans plan which will substantially pro¬
the communities themselves may
tion. But we fear that this will be
have found little
place in their recognize that a direct subsidy of vide for every child who is born
work
out
their own solutions.
by
another wave
of
budget for housing subsidy, and some kind is necessary. Some in the United States decent home followed
Second, the minimum floor which
that their tax revenues are very have
proposed that the low in¬ surroundings, so that he may ac¬ spending, and that the brake now
we
provide must not be so high
difficult to increase. If we are to come
problem be dealt with by tually enjoy the freedom and applied
as to destroy the incentive to im¬
will be useless
unless
must

been

cial

assistance.

>•

ciferous

will

its

page

inflationary

follows of course that
very large money sup¬
ply a rapid turnover would very
quickly bring inflationary condi¬
tions wholly out of control.
During the past few months lit¬
tle if any attention has been given
to the monetary phase of infla¬
tion. The Treasury still continues
to buy gold by a process which
increases
bank
deposits by the
with

built to reduce
a $500 subsidy
at least $500 mil¬

home

every

rapid.

maintenance.

serious

tions

cost, but even

would

total of
from three to six million homes.

The

would have cost

the

principle

objected

templates

the

that the whole
socialistic and con¬
socialistic community.
cause of public housing has
injured by some of its vo¬
is

program

very

stimulate

other forms of subsidy.
might be a direct subsidy

There

clearly

sities

(Continued from

Rent cer¬
pri¬

years.

not

Our committees have considered

within the neces¬
situation; but they
would be sound against a program
which seems to look towards the
socialization of all housing.
It is said that if we once admit
gram

issued

building, and the most we
could hope is that they might lead
private owners of slums to spend

and

I
believe
that
the
American workers, no matter how much
people feel that with the high they earned. The present bill re¬
production of which we are now quires a constant survey to see
that,
families remotely
able to
capable, there is enough left over
housing shall
to prevent extreme hardship and rent good private
maintain
a
minimum
standard not remain in the public housing
floor
under
subsistence,
educa¬ projects.

will

vate

mind,

The

who

rate

these social

but I

extreme

is to

continue

tificates

substantially raised the ante
total of 1,050,000 units at the

year

own

dead

same

life

all

the

many

fault. The event in the other four-fifths. Al¬
philosophy of socialism is to raise lowing for all this, however, I
all to the average, which neces¬ believe the Federal Government
must
assist the States to meet
sarily will bring all others down
their

will

cates

portunity, regardless how poor his
parents may be. Under American many sections would lead to a
been greatest in a city like New
principles of freedom, we have general distrust in oar whole eco¬
York where public housing was
built up the highest standard of nomic system, certainly a demand
before
the
Federal
that
the
Federal
Government undertaken
living in the history of the world
Government came into the pic¬
—on the average.
But its success take over completely the admin¬
ture.
is based on adequate reward for istration of these activities.
Our
original
report
recom¬
Of course the program does de¬
those who
are
more
intelligent,
mended 125,000 units a year for
better workmen, more diligent or prive the lowest income group of
incentive and freedom, but most four years, and that was the pro¬
superior in other ways.
Some
vision of the Taft-Ellender-Wag¬
must
necessarily
fall
behind, of the incentive and leadership in
ner bill. The Administration this
either from misfortune or lack of the nation will be found in any
ability

relief

few

posed by the Federal Government
officials without any real inter¬
est or decision from the people
of the community. Its success has

I feel

The Lull in

can

(579)

emergency

for

quite certain
that the suffering and hardship in

some

ing, it ought to be prepared to put
up some contribution, either in the
way of tax exemption
or direct
cash subsidy. One reason that the
public housing program was so
unpopular in so many sections of
the country was that it was im¬

entire matter

leave the

and

ance

provide

be done, except upon the
express request of the local gov¬
erning body. If that body believes
that its city requires public hous¬

minimum

the

once

The bill

ing

the bill.

once

part of the necessary funds.

way.

work harder to pay

ought

munity

Third, the cost must not be
so great as to bear too heavily on
the other four-fifths who have to

The public housing pro¬
has been in force for more
than eight years.
As part of the
Federal Government, we in Con¬

CHRONICLE

FINANCIAL

COMMERCIAL

not

take over the

prove
one s
conditions
one's own efforts. The
is

aided

must

through

who
not be better off

man

maintain

the

effective

control

Federal-aid

local

interest

essential

system,

the

and

com¬

the
to

all

issuance

be used
or

rent

certificates

by the holders to pay

part of their rents. As an

equality of opportunity to secure
which

our

America.

forefathers

came

sound

adopted.

monetary

policies

are

(580)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

been

What Double Taxation Does
(Continued from page 14)
quired $26 billion in 1948, $2 bil¬
lion less than in 1947, but that
part

riches

substance

investment

new

into

plant

which

Went

and

equipment
total, 65%
internally financed."
creased.

And

housing

in¬

the

was

Truman

Mr.

"The

housing

creased

by well

idential

supply

was

in¬

million

res¬

units

over a

during 1948.
But
since last May the number of new
housing starts has been falling off
rapidly.

This does not
housing shortage

the

Rather

overcome.

that

mean

has

been

means,

have pointed out in previous re¬
ports, that the construction indus¬
try has been pricing itself out of
market

homes.

all

for

but

continued

expensive
decline

home building would constitute a

threat, not only to the improve¬
ment of living standards for mil¬
lions

of low-income families

still

are

also to

inadequately housed, but
the maintenance of maxi¬

employment

mum

who

the years."

over

But the Council has this to say:

"The volume of residential

con¬

struction accelerated rapidly after

the

war.

14)

From

(See

appendix table C-

low of about

142,000

in 1944, the number of permanent
nonfarm
units
started
in
new
structures

rose

estimated

025,000 in 1948. Adding to this the
units provided by conversions and
remodeling, it appears that well
over a million completed residen¬

reasonable standard of comfort."

Canada

Australia?

and

pouring billions and

are

billions of dollars
into

England

and

worth

dying
Western

Socialist

Europe;
There
are
millions
of
people
to
be
moved to other lands where they
crowded

areas

decay.

produce and help satisfy their
The

demands.

cannot

alone carry

the load for the whole
world. New areas must be opened.

But

President's

the

would

prevent this

and

cial

structure

direct

Here

People must be constantly told
that
corporations
derive
their

strength from individuals

and the

very

countries

two

have

vast

rich

corporations

This would

resources.

make

way

employment, provide
millions of people with an oppor¬
tunity of expression and a chance
to
acquire goods to meet their
great

wants.

would

the

answer

to the spread of communism.
But
our
President constantly

for the Welfare-State. Mr,

presses

the

Truman,
warns

and calls
tax dollars,

and

greater

for more and
thus reducing

budgets

the internal

promisor,

great

greater

of strength of

source

corporate enterprise system.

Not

only

does

President

the

further
direct
taxes
against corporate income, but he
propose

has Senate Finance Commit¬
Members

seriously discussing

disastrous

will

that

effects

20% payroll tax to cover
old age and survivors in¬
a

siphon off surance and more unemployment
promote the Welfare- and disability insurance.
evidenced by his pressure
The
matter
of
applying
the
Croup promises, and at the cost of rates on incomes up to $4,800,
corporate enterprise and future would, on a 20% basis, tax em¬
economic balance and production
ployees $40 dollars per month—
of needed goods.
Business wants in addition to all the other taxes
and must have profits to replace
he must pay.
old, or build more modern plants.
Such a payroll tax would add
From
time
to
time
powerful
greatly to manufacturing costs;
minority blocks have placed their
further
advance
price
levels;
own
interests above that of the
while a buyer's market would op¬
general welfare. You recall the
erate
against
profits,
reducing
contest
which
precipitated
the
taxable income and government
Civil War; the trust builders of
revenue.
the
late
nineties; the financial
He would take away from the
manipulators of the 1920s with
their mergers and consolidations. corporations their retained earn¬
ings available for expansion of
These were private forces.
•
by
management.
Or
he
Now comes the labor monopoly. plant
But who or what set of gov¬ would tax the dividend recipient
for that margin the stockholder
ernment
machinery could more
to

completely buttress the monopoly
of labor than that

supplied by the

late Mr. Roosevelt and the present

Mr. Truman? Is there anyone here
who would now contend the ob¬

jectives
leaders
the

the

squares

general

labor monopoly
with the good of

welfare?

They de¬
simultaneous¬

mand

higher wages
ly with lower prices, and has not
the President promised them just

invest

would

this

program

dent is wrapped

in confused

pur¬

which

Double

Taxation

Does

given for assessing
taxtion
on
corporations

excuse

returning

not withheld

this

country

isted under the
save

the

Wagner Act, God

United

ized labor is

to
ex¬

States!

If organ¬

pack the Sen¬
ate and House Labor Committees,
now

write the labor laws, act as ambas¬
sadors

otherwise

foreign

countries

dominate

and

our

economy,
that will seal the doom of our en¬

terprise system and you will need
little about the tax burden
on corporations.
worry

Can

you
think of one single
thing possible of being done by
our
people at this very moment

this

that

material

could

butter

basic, of
nature

proceeding
our

funds to

world

than

ours

have

come

our

from

during the past

proprietorships
and
partnerships are not subject to
this type of double tax. So, from
this standpoint there is inequity.
With

the

Profits

reappearance

Tax

normal

rate

added

tax,

of Excess
the corpo¬

along

with the

taxing of the dividends, the trend
from corporate enterprise
Furthermore,

corporations

which

continue

operate as such, will use every
device possible to obtain the nec¬

funds

through

borrowing

that the interest paid on loans

may

deducted in arriving at

taxable income. At the same time
the

individual, who' might be a
will further refrain

stockholder,

Continent

equities. All of this will certainly

—

the

store

house

average

corporation is

From

what

source

its original capital? That
corporation is taxed 80% the

poorest
taxed

stockholder,

likewise

80% ? And that if the

cor¬

poration fails—- it is the stock¬
holder who

loses—simply because
purely fictitious person known

the

corporation

stockholder?

behind

has

How

can

it
be

that

Management in its advertis¬
ing
and
educational
material
placed before the reading public

—why is it that trade associations
industrial

and

failed to
to

tell

institutes,

and

our

economy

use
every
opportunity
to
poison the minds of all the people
—even
stockholders—against the
whole corporate
enterprise sys¬

tem.

Why would it not be entirely in

corporation to allo¬
cate a portion of its advertising
budget and point out that the
double taxation of corporations is
a

infinitely

inequitable; and that
when the Congress and the Treas¬
ury Department look upon a cor¬
poration for tax purposes as an
entity quite separate and distinct
its

taxing

the

and

sense

that

stockholders

entirely

common

realm

equity.

75%

the

are

authorities

outside

The taking of
90%

cor¬

poration's
earnings
for
coupled with a further tax

taxes,
on the

from

purchasing

common

stock

defended

people rise

once
the
in opposition to the

unsound scheme of such

method

taxing.

double

taxing

program

people with
of invest¬
is little, if
any, while others, perhaps not so
sagacious, will place their funds
in adventures carrying great risks
to

cause

funds

seek

where

ment

many

ail

still

natural

type

hazards

rea¬

of the

The net result of this is

invest in
expand
buildings, machinery and provide

machine

enterprise

tools

must

enable

to be employed and
carry

workers

production to

the

heavy

tax

Suppose

that during the past
corporations had
not
permitted to "plow back"

years

been

their

earnings?

Suppose
dens

holders

the

it calls for from

The

taxes

base

billions"

the

per

$40 to $50

with

annum

the

last

the

"dance

billion
Federal debt. The people are told
nothing about how this debt is
to be juggled.
Certainly there is
nothing in the President's three
messages of the last few .weeks
that indicated he has any serious
thought about substantially re¬
ducing this debt. He either does
not know what is going on, or he
has not read his
he

thinks

are

$252

own

messages, or

few

American

people

continually rig the financial mar¬
kets incident to the management
the

the

President

the pegs for more
debt and taxes,

and more

Yet

debt.

sets

This

all

tax

corporations and
(to sa.y
nothing

bur¬

and

Truman is

those

which

There

President

which
later

will

for.

ask

several other

are

announce

call

billions

for

tional.

dollars

addi¬

Furthermore, Mr. Truman
he
knows anything—
are

seller's

market, the consum¬
people, have to pay
Why does he not tell
the people
that?
There are no
"free riders" and if you will look
a

all

the

Have

armament?

been

not

Presi¬

The

from

land, France, and Germany in
supplying the goods to be con¬
sumed by the people of the world?
We
made
rapid progress.!
The
present foundation of our produc¬
tive capacity was established. Our
of-

sheet

flow

goods

consumer

into operation—all before—

came

before

the

tax

our

variety

present

control. '

into

came

Before

what?

gathers

Through his three messages, the
served notice on capi¬

President

tal that if his

policies are to pre¬
expanding
capital
cannot

vail,

survive in the United States.
what

The

President

this

strike.

fear

Now,

point will capital go on
has

Here

some

the

proof.
In
sage

ity

of the Union Mes¬

his State

under the heading "prosper¬
threatened" he recommends
of legislation cov¬

enactment

the

eight propositions, the last

ering

of which reads:
".

to authorize an immediate

study of the adequacy of produc¬
tion
facilities
for
materials
in

those taxes.

critically short supply such as
steel;' and, if found necessary, to
authorize government loans for

closely

cilities

ers,

will find the real
story at the bottom of the ticket
printed in fine print.
^
But in all this, the substance
you

will

tax job

bring

the

discouragement

expansion

try fails to meet our needs."

And, believe it or not, the Pres¬
specifically advocates this

ident

step
ment

with

produce

the

skilled

hands

may

mankind

goods;

wants."
Here

have

his

from

which

jobs

their

President;

worrying

But in

workers.

about

the

words

maintaining
in

being taken by our govern¬
the

for
the

about

million

breath

same

he proposes
a
plan of taxation that strikes at
the very heart of our whole en¬
welfare,

terprise system upon which not
tnis country, but presently,
whole world depends for its
lifeline. This tax proposal of the
President
stunts
the
growth of
our
enterprise system, it makes
men who think, want to liquidate,
allocate what they have over their
remaining life span and refuse to

calls

you

themselves

rid

ernment

gov¬

participations in those
private enterprise

fields in which

functions most

efficiently and ef¬

fectively.

concern

expresses

hour

same

taxpayers and bondbuyers to dig up another $6 bil¬
lion
this
coming fiscal year to
help the 16 Western European na¬

upon

tions

workers

of such facilities di¬

rectly if action by private indus¬

enterprise, who would main¬
the
plants, the machinery,
the machine tools, so that willing

tain

fa¬

construction

those who would invest in Ameri¬
can

production

relieve such shortages,
and furthermore to authorize the

"We will

creation."

further

conclusion

Let

—

say

representatives here that my
earnest
approach to this whole
problem is evidenced by the fact

you

that I

ready to introduce

now

only

the

provisions which you think would
be suitable and all for the specific

take

further

This

risks.

carrying the

this

with

problem.
where it is

arrived

America

Industrial

today through

years

work,

tough
Brains

and

has

absent

American

the

Bill

dealing

purpose

crazy

President

the

notice

House

the

sweat
and
tears.
guts have not been

all

which

this

has

people that for the long pull he
to
confiscate
their
wealth.
If you care to take his

happened the last 170 years.
We know, however, that if we
are to hold what we now have, to
say
nothing about gaining new

budget message, analyze it care¬
fully, square it with our past his¬
tory, lay it alongside the report
of his Economic Council, I feel

ground, that we shall have to
fight those who would destroy,
first, production, and
secondly,

the

this evening, we meet as
representatives of "Investors
in American Enterprise."

proposes

you

definitely

will

conclusion

come

that from

here

employment of your wealth in
enterprise is a fatuous perform¬
ance.

sound finance.
Here

the

course

there

are

those

who

This
strike

the

and

your

further

spending

make^your

business

volume

will

if the private
drops. But this

Federal debt, the
tax burden and increase the over¬
add

the

difficulties.

I should think

would feel there has been

And

enough

and

too,

administered

enormous

credit

strength of the banks
factors

upon

these

can

tential.

Under

are

prices
making
looked

strength.

But

add to the inflation po¬
-

■,

the

President's

program

hour

with

all

for
of

you

the

force

combined strength.
To
delay or longer fail to

put great faith in the efficacy of

about

now advocating be ap¬
plied) had prevailed during the
peacetime of the past 50 years?
Suppose corporations had not

less

here on, under his
plan, are to be reduced.
Through what means did the
United States jump ahead of Eng¬
capital

and

assessed

the cost of goods sold

into

enter
in

taxes

of such.

the

less

the

and

dent well knows that the wages

"projects."

date, the cost of which will

stock¬

President

the

article,

goods

years?

strike?

billion budget is not

$42

the

for

building

dupes.

the

Top level statesmen today must

all

present

those which prevailed during
war,

mentioned

Federal

burden.

the

supported

years

which to finance the' deal?

program

that the person who does

flow,

box,

goods there will be consumed.
From what source has the greaj
demand for goods come these past

served

but
carries considerable risk by

corporate

through

demand

type

where the operation borders on

the

that

last

past

risk

the

the ^"investment"
of

transfer

operation of the tax

ises, with all of its "free tickets"
for everything from the cradle to
the grave that the present Admin¬
istration boldly tells the people
they must have and will have, and

of what the President says is "we

from

bear your

type of program with all its prom¬

that when

tick.
The opposition has never failed

for

are

thrift,

the

knows—if

people? Why is it that too
of our leaders have been
lulled into a sleep to the effect it
is not necessary to tell our people

order

ize,

from here on, to exercise
invest take your chance,
losses if they material¬
and if there is a gain, you

you are,

the
the
Welfare-State To
expand Social
Security. And the more of this

have

our

40%

eco-.

the Amer¬

ican people have made? Just what
would
now
be
our
material

story

the

retell

many

what makes

coun¬

What social and

be?

now

nomic progress would

derives

away

will be accelerated.

opening up
instance, Alaska, the Africa^

for

of how

constituted?

son

Single

whom

practical "thinking

any

concept"

business.

bread and

heavily of
bring about the rapid
and development of.

earnings, just where
expansion
of plant

24 months?

essary

that

the

would

important,

invest

happened
is it that

by wealth) do

as measured

have

not

financed

are

people

serves

mind

the one-sided situation which

in¬

employed by corporations and

This

simply because Management does
not distribute all earnings, does
not hold water. Had corporations

van¬

has

How

people—(millions

cur

and ill considered action.

pose

If the President has had in

have

Just what

country?

adequately

all

forced to the conclusion the Presi¬

ished.

will

are

dividend paid by the corporation
stated, he proposes a to the
stockholder, is indefensi¬
designed to drive men
ble, unreasonable, inequitable, and
of vision, courage, judgment and
under our system
it cannot be
guts from the active market place.

The
if
labor
eliminate all re¬ double

Government

taxes

Simply

What

Free

be
cor¬

are

program

furthermore,

monopolies can
straints as they now demand, then

the busi¬

into

ness.

that?
And

back

this

they hear that

soaked" when

creased?

try

billion

are

dollars

many

means.

tell me why it is that
of our people really
the thought that "the

many

policies,
thrifty
citizens would
provide the necessary capital for
the development of the natural

the

and

—

seem—from

may

individuals,

small

porations

now

glory

The President would

State,

strange

undeveloped areas. If
the respective governments, now
working together in some respects,
would only follow sensible taxing

tee

the

pointed out that our
corporations do not constitute an
independent source of revenue.

very

have England

States

the

these

our

country.

will

cause.

develop¬

closely af¬
filiated. Under the combined flags

for

this

It has been

millions

production of this

mass

strength had this country during

Taxation"

Can you

United

unsound

"Double

program

new

definitely further pro¬
corporate finan¬

very

mote

ment.

tial units were added to the hous¬

ing supply in 1948. The provision
of
adequate
plumbing, heating,
and other facilities and of major
repairs
further
increased
the
availability of dwellings meeting

in
we

can

says:

the

Here

permitted to grow from little
into big ones? Where would

ones

the

Thursday, February 3, 1949

case

before the bar of

judgment of the American people
is no lens than a violation of your
trust

industrial managers.

Pusillanimous
will

presentations

longer suffice.

We have

arrived at the crossroads.
Investors

of the

American

En¬

terprise System let the 81st Con¬
gress

that

hear your voice to the end,
this

Republic

may

be ,pre-

Volume 169

COMMERCIAL

THE

Number 4774

FINANCIAL

dwelling units to be in

Outlook for Home Building

the

residential

the

which

quantity

used

units

excess

could

existing conditions.

apparently

This

why in
the decade of the '30's, only two
new
dwellings
of
conventional
type were constructed for every
three

families.

new

Still another

be considered

not

should

construction

dential

large unless it is

large replacement
market can be developed, which
is quite a
different thing from
what we ordinarily consider .to be
deferred demand.
-1
thought that

reduced

was

such

position
for new

Considering

building.

supply and use of
dwelling units, it is evident that
present

people

some part of
expenditure for

defer

may

current aggregate

Fourth:

lower

sold

these

wished

that

expect a

privately-financed

become

space

owners,

being the demand

materials, labor, and
produce

construction

who

persons

residential

rent

and for the time

manage¬

residential

new

was

stimulated to the

point where the

prices for these

things

sequent years if only the prospec¬

Changing Ideas of Residential

low

Because

owners.

obliged

were

evident
to

new

developments,

ment

prices and the

dwelling units offered
was reduced as they were

for rent

lor

reasonable

level

currently inflated

so.

they wish to do
would

construction

residential

new

(581)

number of

construction during 1949 and sub¬

why residential construc¬

reason

tion

was one reason

that the amount of deferred resi¬

expenditure

residential

(Continued from page 9)
ber of

reduce

CHRONICLE

The

tive level of family formation and
the
current
supply and use of

outlined

increased

were

developments

rapidly.

which

have

scribe the series of
developments
which the proverbial man from
Mars

might consider to be the
in which we contrived a;

way

crisis

problem

ourselves.;
air

Our

and

lieve

been

the

housing

housing for
publications and

have

waves

comment

filled

subject

problem.

Our

with

the

socialists

other people who do not
in the private

be¬

ownership of

property used in production have
this situation to plead for political
investment and ownership.

And,

levels

'30's

during

and

The

income.

which

measurements

Accommodations

period

of the
the low level of produc¬

was

tion

the

have used

struction of
ventional

statistics
intended

were

the

con¬

dwellings qf con¬
Families, how¬

new

type.

While

tions

are

recognized in appraising the prob¬
able magnitude of the future de¬

less

residential

for

mand

building.

of housing more families,
converting non-residential
so
that it may be

purpose

construction

residential

for

used

purposes,

by renovating dilapidated houses,
or

construction

the

even

Dwelling Units Added Since 1940

of
evidence concerning the supply,
condition and use of housing are
the

disposal in the

our

complete

taken

Census

way

Housing

April,
1940,
the
sample Census of Housing taken
in April
1947, and the sample
Census of Housing taken in April,
during

1948.

addition

formation,
on

the

units

why

reasons

One

have obtained

almost 2 million

than

accommoda¬

desired.

dwelling units in

convening
existing non-farm construction is
by

years

cost of building new
structures has been considered to

tnatythe
be

high.

which

this

will be

probably

the

Nor

future.

near

idea
changed
an

various

For

this

in¬

have

also

reports
dwelling
which construction was
we

number

estimated

started,

new

published

and

tion of temporary structures built

by the government during the war
even though many of these
are still being used. An allowance
of 305,000 units has been made for
years,

demolition

fire

and

indicate

loss.
about

six

been
for each additional

dwelling

con¬

have

units

structed

that

This

families during the period
which

cated,

lasted

for

five

indi¬

almost

nine years. In 1948 alone approxi¬

iy4 million new dwelling
were produced.
year
the production of
dwelling units was about
50%

mately

units of all kinds
In

this

larger than family formation. Not
only have

additional

dwelling

units

been

since

1940, but
indicates
that
the

data
residential

national

capita and

per

inventory

dwelling units is in better condi¬
tion than at any other time for
which

have records.

more, this
stantiated

conclusion
by
of

sees

one

traveled

Further¬

can

be sub¬

the common sense
looking at houses

approach
when

try

These conclusions

widely held.

uation

them.

have

everywhere in the

during

the

but it has been

past
a

year

not

coun¬

matter of

so,

data

and

the

-peculiar

situation

which

developed in respect to the use
residential; structures during

was

and since the
how

developed

some

our

ideas

popular

To understand

war.

regarding
"housing prob¬

what is called the

into
the

favor

conversion as a
means of acquiring dwelling space.
Another
important change in
upon

is seldom mentioned

culture

our

when

discussing the outlook for

residential

the

construction.

This

increasing

trailer

acceptance of a
piace to live.
In the

1948 alone, the trailer pro¬
ducer industry manufactured ap¬
proximately 100,000 new units. Of
these some four-fifths apparently
were used as residences.
Not only
year

are
a

trailers used

large

them

number

from

dwellings, but
of people use

p r e

the

measure

number of

fami¬

the

military services during
years and, thus, tempo¬

war

rarily

were not

vilian

part of the ci¬

community.

While

these

millions of young men were with¬
drawn from the economy, the in¬
comes

tially

increased.

civilians

familiar with
incomes

substan¬

were

You

the

quite
in which

are

ways

increased

were

by war¬

time finance, so I will not enlarge
upon this factor.
It is important
to

note, however, that, civilians
were provided with more
money
than they wished to spend for the
assortment
able.

the

of commodities

avail¬

They did,N however, bid
prices

commodities

their increased
result

that

with

One of the most

popular price controls
im posed upon rents. As

result,

incomes, with the
attempt was made

to control prices.

rented

was

that

natural

residential

space

Bargain

rented

space

lavishly, and the owners
of buildings rented learned that
they could not increase the price

ices

were

tilities

mately

6%.

indicate that
of married

approxi¬
calculations

These
a

8.1%.

smaller proportion

couples

living
"doubled up" than was the case
in April, 1940.
Consequently, it
is

doubted

dwelling units

are now

that many new

be- produced

can

for occupancy by families who are
now
"doubled up."
Pertinent

We may use my preceding com¬
ments to develop four pertinent
conclusions.
First:

The

production of

600,000 dwelling units
be required to

ditions

spective

about

a year

will

simply shelter ad¬

the

population irre¬
quality and location

during the next five

This

years.

within

families will be formed
basis

the five

years

veterans

were

the civilian economy
matter of months. They

tained.
It is a matter of record
that in the latter part of 1945 the
civilian population apparently was

using
capita

dwelling

than

before

new
a

net

beginning

space

the

per

war.

tal
to

borrow

The members of

with which

money

purchase homes.

The

passage

of this legislation set in motion a
new chain of events. The veterans

and

did

pay

possibly $6,000

house for which the market

price would have been about half
of

that

sum

before

the

war.

in 1949 and ending in 1953 and Through this transaction the seller
comment that people have
that approximately 200 000 dwell¬ of
the
property
acquired
the
painted, repaired and improved
ing units will be lost through fire, equity capital with which to pay
an
exceedingly large number of
demolition
and
disaster
during $15,000 for & prewar $7,500 house;
owner-occupied dwellings during
this period.
and the seller of the second house
recent years'. It is estimated that
Second: The production of obtained capital to use in paying
the number of non-farm dwelling
for
a
prewar
$15 000
units appraised as needing major dwelling units in excess of 600,000 $30,000
Meanwhile the owner of
units per annum presumably will house.
repairs was reduced by more than
rented residential properties rea¬
% from 1940 to 1947, while the depend upon the rate at which
new
structures will
be
built to lized that tnev were being offered
number of non-farm units with
an
opportunity to escape from
replace those now in existence.
no installed plumbing was reduced
unprofitable
situation
by
Third: The population
by 1/5• In view of the available
of the their
mon

evidence,

may

concluded

country

now

possesses

enough

see

pro¬

been

our

problem,

our

the

construction

activity

affected.

gressively higher standard of

life

relied

all

But

and

wreck

the

at home.

free,

productive

by imposing unbearable

economy

burdenj

upon

will

the

Appropriation.*

Committee of the House has been

Americans

page

Heretofore

for

upon to act as a wholesome

brake upon spend¬
proclivities.
In earlier Con¬
necessary

ing

gresses the Committee acted

with

neither.

surprisingly little regard for party
politics. The members of the Com¬

Aid;; to
the
world—yes,
but
within the limits of our means.
Federal spending for various pro¬

shoulder whether Democrat

domestic

grams of

reconstruction

but again only

—yes,

economy

accomplish

icans would like to

far

stand

can

it.

the

Amer¬

better and

see

mittee

stood

publican.

largely

I11

shoulder

great

many

case*

came

the appropriation bills

out of

unanimous committee.

sult,

this

Re¬

Committee

has

re¬

the

past saved untold billions of

tax¬

housing, better and more payers' money and exposed enor¬
mous
lo,s?\s
resulting from bu¬
schools, better and more hospitals,
reaucrats
but let us not forget that the
incompetence, such a*
only
more

sure

source

is the

that

these good

things

freely, productive

has

made

economy
United States

the

what it

is; that production alone
provide the goods and services

can

necessary.
No

the $8 Kllion for which the Mari¬
time Commission has beer, unable
to account.

-Last week, however, the* House
Democratic
majority

ruthlessly

undertook

one

can

surely

how

say

steps

Committee

and

the

wreck

render

quite

incapable of fulfilling

much

spending and taxation the
its tradi-.
can
This operation was
safely endure over a tional role.
performed doubtless for the pur¬
period.
My own guess is
that we cannot now stand
pose of assuring passage of ad¬
any
increase in taxation and that the ministration spending bills with¬
government should be forced to out interference or independent
live within its present income
scrutiny.
Unfortunately, it will

nation

long

and very

soon indeed

ail

duce

along

Franklin

"Too

Roosevelt

1933

things

these

often

liberal

plan to re¬
line.
The

the

very

so:

recent

governments

history

have

been

favor.

"Unless the people through uni¬
fied action arise and take charge
their

find

government,

their

that

and

will

government

taken charge of them.
ence

they

has

Independ¬

liberty will be

gone and

the

general public will find itself
a condition
of servitude to ag¬
gressive,
organized
and
selfish
minorities.
in

also

clear

bills that

the

for

way

even

spending

the administration

not want.

may

The sub-committee set-up that
had functioned well for years haj
been completely
scrapped and re¬
placed by an utterly unworkable

selling

their

properties

the

committees

handled

"For upon the financial stabil¬
ity of the United States Govern¬

ment

depends

stability of
employment and of the

trade and

entire

the

banking, saving and insur¬

system of the country."

ance

Believe

not,

Roosevelt was
when

the

speaking at

Federal

and local "axes are taking more
than one-third of the total income

seven

men

there

can

tion

appropriation

under

there

the

past.

serious examina¬

these

requests

conditions.

intended

each

volume of
Obviously,

great

work

be!

Nor

The

reor¬

ganization, furthermore, will re¬
minority Republican mem¬

move

bers from the fields of government
which they have become familiar
with

past

energetic

somehow

lest

But

years.

committee

member

overcome

these

a p p a r e 1111 y insuperable
handicaps, the Democratic major¬
ity has discharged the highly com¬

petent staff of professional inves¬
tigators and accountants who have
acted

President

this

manage

time
budget of $c
Congress, having these matters billion
represented an insignifi¬
brought to their attention, estab¬
cant percentage of the total na¬
lished
legislation enabling vet¬
tional
income.
Today, Federal
erans possessing little or no capi¬
to rent quarters.

for

com¬

young

property and well satisfied with
the bargains which they had ob¬

mating

2,800,000

We all want to

reduced without fear and without

found the people who had
stayed
home housed in rent controlled

could

about

in the

peace

and national governments must be

But at the end of hos¬

the

returned

figure; has been obtained by esti¬
that

want

increase

the other hand, the returning vet¬
erans found it
extremely difficult

Conclusions

all

Presumably this les¬

encouraged

their prices.

been

this ratio

has

for

and

the

be rented.

about

de¬

outlook

actions

our

wrecked on the rocks of loose, system.
For example, two sub¬
committees of five members will
commodity which they fiscal policy. We must avoid this
be loaded with some 60% of the
provided, even though many per¬ danger.
sons, providing other kinds of serv¬
"All the costs of local, State total national budget. • Four sub¬
of

By April, 1947, the percentage had
to

world.

used

livingv with:

increased

statement

(Continued from
tives.

clearly and said

war.

because

Breaking Point in Govt. Spending!

the
was

terms.

will

We Are at

understood

groups.

But* by the end of 1948,
had
been
reduced
to

however,

made one of -the best bar¬
gains available before the end of

was

other
family son in equity will not be immedi¬
In April, 1940, approxi¬ ately forgotten by numerous in¬
mately 6.5% of all married cou¬ dividuals who had invested their
ples were living "doubled up." savings in residential property to
lies

words,

result

emotional

described

are

different eval¬

existing

the disagreement is

part
of

seem

In part this dif¬

ference is due to

ordinarily

quite dif¬

are

ferent from others which

construction will continue to look

produced

census

is being used

space
that

the

7.100,000

considered.

are

pertinent reasons, it is logical to lem," it is necessary to review
suppose that individuals consider¬ recent history. In the first place,
ing the purchase of residential about 11 million young men went

f e r e n c e, even
though some of the buyers during
sources
of information
which I the past several years have
will use in appraising the .current thought of their trailers as tem¬
supply of dwelling units. In addi¬ porary quarterS. In the future if
the trailer industry produces only
tion, I wish to acknowledge my
indebtedness to Mr. Miles Colean, 57,000 trailers a year to be used
as residences, this quantity would
housing consultant, who has pre¬
house approximately 10% of the
pared a study of the housing sup¬
annual increment in new families
ply from which I have derived
data. Using the sources which I during the coming decade. This is
a
change in the living habits of
have mentioned, we may estimate
our
population which also must
that a p p r o x i mately 7,100,000
be recognized when comparing the
dwelling units were added to the
production of new dwelling units
housing supply between April,
with new family formation.
1940, and the end of 1948.
In
Another means of appraising the
arriving at this total no allowance
current use of dwelling units Vis
has been made for the construc¬
by the U. S. Bureau of Labor Sta¬
tistics.
These will be the major

would

dwelling units

with

trailers.

and

residential

kind

the

Dwellings are also created by con¬
verting existing structures for the

changing

been

economic pnilosopny, we have also been chang¬
ing our ideas concerning wnat
political

our

housed in other kinds of
dwellings, and this factor must be
ever, are

have

tee

the eyes of the Commit¬

its

scrutiny of department

and agency affairs.
Without them
the Committee will be quite help¬

less.

But

they

replaced

are to be

by others!

And such others!

Committee

employees from
government

borrow

one

The

Federal

department of

investigate

traveled far since 1933.

other
departments.
This furnishes the
comic spectacle of bureaucrats in¬

The Budget Message of Jan. 10,
only the first instalment of 1949-

of waste!

of the

people.

We have certainly

50 demands, makes

it abundantly

clear that the United States
stands
do

not

the

soon

crossroads.
commence

now

If
to

seri¬

ously limit

national spending, it
may be too late to avert disaster.
One can expect little help from
the

new.

from

Congress

the

members

spenders.

House.

vestigating each other in pursuit

—

certainly not

Rank

and

file

Congress are largely
This is not surprising

How

States

lic
of

much
can

longer the United
stand the pace of pub¬

spending without collapse is,
course

anyone's

guess.

the

breaking point. If citizens do
now
rise
against increased
taxation, if they do not demand
that the government live within
its present enormous income, then
not

those

same

citizens will have only

Some 104 members of the present

themselves to blame if their

House

sonal

row

were

margins.

sensitive
sure

elected by very nar¬

They

to the

groups.

are

demands

naturally
of pres¬

should guess that we have reached

liberties

oblivion
dom

sible.

with

are

the

swept

economic

,that alone made them

per¬

into
free¬
pos¬

COMMERCIAL

THE

(582)

Our Banks and

FINANCIAL

Thursday, February 3, 1949

Free Gold Market News About Banks and Bankers

expenditures of

aU the rest of

forced to

us are

the

government, together account- do.
ing for 24% of the total, exceed, *_
r' u
the peak outlay of the Federal!
Re-establish the Gold Standard ,
Government in the '30's at a time
A second step is to compel that
...

Charles B. Barnes, Jr., Stanley M.

Donald

.bbisifcr,

Charles Brewer, R.

Bowersock,

Amnii Cutter,

000, from $400,000, by the sale of
$400,000 of

ing was the election of Arthur B.
Bare, -associated with the bank
since it opened in
tant

(Continued from page 14)

(Continued from page 7)
called "ordinary"

CHRONICLE

stock.

new

The week¬

ly bulletin of the Comptroller of

1932,

Assis¬

Vice-President, and William

Miller,

who joined the trust
department in 1945, as Assistant
Secretary. Other officers, headed
by Mr. Webb and Seymour; H.

Falvey, Seth T. Gano, the Currency indicates that the
Executive
Vice-President;
Joe
W.
Gerrity,
H.
Frederick enlarged capital became effective Hoff,
were re-elected.
Jan. 3..
when billions were being spent to! government
to re-establish the Hagemann, Jr., Ernest A. Hale,
Charles
E.
Hodges, Arnold W.
prime the pump." Adding defense gold standard from which it deW. L. Alexander, Jr., was elect¬
With reference to the.increase.
outlay and the cost of past wars, parted in 1933.
In spite of the Hunnewell, W. Frank Lowell, El¬
ed President of the State Bank of
more I. MacPhie, Edward Motley,
effective Jan. 17 in the capital of
we have a total that accounts for, wisdom and incorruptibility which
Toledo, Ohio, on Jan. 20, filling
Harrison
G.
Reynolds,
Bayard the Tradesmen's National Bank &
approximately 20% of the national1 our money managers profess, the
the vacancy created by the death
Trust
Co.
of
Philadelphia from
income
I world contains no present dem- Tuckerman, Jr., Quincy W. Wales,
on Jan. 9 of Claire H.
Speck. Mr.
Samuel H. Wolcott, Jr. and George $3,993,000 to $4,232,580, referred
A distinguished elder statesman
Alexander, who had been ViceL. Wrenn, 2d. All officers were re¬
to in our issue of Jan. 27, page
whom I am not at liberty to iden™
President and Treasurer, will con¬
appointed, with the following ad¬ 474, the annual report, Jan. 11 of
tinue as Treasurer, according to
vancements:
Howard A. Loeb, Chairman, and
Ralph L.
M demonstration The and William H. McCabe Donnelly, James M.
the Toledo "Blade," which added
budget, without
y
to Assis¬
Large to the stockhold¬
rd
only known effective check upon
that
the
directors
named
tions
merely carrying forward
Ray
thn
fiscal aYfraxrQty;jTlno
Walter E. ers referred to the recommenda¬
extravagance in the past tant Vice-Presidents;
commitments already made by the
McDermott, Assistant Cashier, to tion by the directors of a stock Peirce, a member of the board, as
has been the
Wallace J.

'«£££

fVtUSitboiifb anv'^nev^addi—

Federal Government—cannot pos¬

sibly be less than $62 billion in
1952.

gold

cramps

the style of the boys who

know what is best for

particu-

this mean,

does

What

standard.

be sure, it limits the freedom and
It may

us.

well be that that is its major

vir-

Lewis R.

capital

appointed

was

Cashier.

dividend

Assistant

Trust Officer.

Assistant
Power

and

the

Webster and Atlas National

larly if in the interval we have a tue.
Bank,
under the name of the Rocklandbusiness depression and the earn-'
What will happen if this coun¬
Atlas National Bank, effective Oct.
ings bases on which the bulk of
try returns at once to a metallic
our Federal taxes rests are sharply
15, was referred to in our issue of
standard?
Will there not be a
Nov. 4, page 1873. On Dec. 31 the
reduced?
rush for conversion which will
consolidated institution
reported
It means, of course, that our denude the mint of all its gold?

accustomed

government,

having

itself

Rolls-Royce

living

standard, will be both unwilling
and probably unable to reduce its
living costs in line with national
income.

It means, therefore, a re¬
newed resort to government bor¬
those

circumstances, what

role the banks will play in

financ¬

ing government requirements and
whether that role will be

tary role.
to

volun¬

be wise for us

may

start thinking about the word

"allocation"

it in

It may well
be that many men and women
with folding money who have be¬
come
increasingly distrustful of
its ultimate value may seek refuge
in the haven which gold has immemorially provided.

I cannot help wondering,

rowing.
under

That is a

and

entirely

thinking

about

context.

new

possibility.

Against that possibility
pose

intermediate

we pro¬

Let

step.

the Treasury cling to its present
stock of gold and hold it for con¬
version purposes at some future

total deposits of $84,075,000.

Stockholders

National

the

of Commerce and

Bank

Trust Co.

Providence, R. I. voted

liquidate

the

Rhode

Office

Commerce

Island

Hospital

Trust

National Bank of Providence after
the close of business Jan. 31.

"Journal"

The

Jan. 19
date
when a
stampede is less
in indicating this, also said:
likely. There is no reason why we
"Sale of the bank to the Rhode
cannot do what was done in this

country in the period from 1861 Island Hospital Trust Co. was am
1879 and permit the operation nounced last Dec. 16 when it was
of a free gold market. In such a revealed that the latter firm ac¬
market the gold currently pro¬ quired more than two-thirds of

Government-Held Bonds-—A
False

God

It is also my view that a great
.deal

the

ments

worship

bonds

govern¬

ideal

com¬

ponent in a bank's portfolio is
worship at the feet of a false God.

duced

the

mines

America

other

parts
of the world can be freely bought
and sold. There is no reason why
sent

and

from

here

Americans should

With all the qualities of liquidity
which such bonds have, the fact

the

their

bank
portfolios has given many bank¬
ers in recent years distinctly un¬
easy moments.
A year

presence

last December

ago

Reserve authorities

the

their wis¬

dom decided that the peg on gov¬
ernment bonds would have to be

lowered.

It appears that through

subtle and to

some

hensible

osmosis

price

housewife

yield

was

hamburgers.

The

the warpath be¬

was on

food

cause

the

bond

government

the

incompre¬

prices

too high.

were

Our masters

on the Federal Re¬
Board reasoned that a de¬

serve

cline in the bond peg would bring
relief
As

the harassed

housewife.

result of that action it was

estimated

that

the

portfolios

privilege which the Mexican
the French peasant, and the
now enjoy.

peon,

value

real

overnight.

simply

This

may

isolated, positively

non-recurring incident.
to

forget that for the

affected

have

the

It is hard

average

value

bank

almost

-three-fifths of its loan and invest¬

portfolio.

ment
;

about

this

uncomfortable

David

Connolly

elected

eral

was

President

Trust

Co.

Jan.

the

Fed¬

Newark,

J.,

dollar

and

the

yellow holdings of the
Treasury and will make possible
selection

deliberate

the

some

point in the future where it will
be safe and

practical for

try to return to
have

I
a

gold basis.
such

about

will

make

suddenly

for

our

This will

government economize.

change in the concept

devel¬

government which has

oped during the past decade and
a

It will call for

half.

tion

Sam

cannot

director.

Mr.

borrow

and

support

population

our

vulnerable

position?

and

first

emphasize

tend

and obvious step is to urge upon

debt-creating

Mr. Mindnich, President

1933, start¬

ed with the institution

keeper in 1904.
ports that he
flected

the government some measure of

government.

self-control in expenditures. Pos¬

Uncle

sibly the ideal

of security from

the cradle to the grave,

our

It will place back of

Sam's

present I

O U's an

ultimate, solid, tangible value.

Board.

President and
&

gin

Myron D. GogVice-President
and
a

board

members

Trust

Co.

of the West

Newark,

N. J.,

Side

school
On

children

the

other

commendable.

those

hand,

have tried in the past

Utopia

always

come

fiscal

who

to achieve

shortcuts

have

to ask

and

under

will

promote

which,

company

Secretary

since
since

troller, since 1937, has been elect¬
ed
Second
Vice-President, Paul
Anderson, Assistant Vice-Presi¬
since
1945,
succeeds
Mr.

Gardner

Controller.

point

where

can

once

I doubt if

our

govern¬

ment to live within its means

just

attain those dimensions

will

Plainfield, N. J., has been elect¬

director

the

State

Trust

which

power

to undermine, and possibly

destroy,

our

deny

him

the

free banking system.

Cashiers.

join
1

Correspondent

according

nouncement

ginia

Mr.

from

Jan. 28

The
anics

capital of the First Mech¬

its

the

Louisville,

Assistant

Vice-

President. Hartwell F. Taylor, As¬
sistant Vice-President in charge
of the South Richmond

branch of

the Bank of

meeting

the stockholders of the

Jan

Cleve¬

land Trust Co. of Cleveland, Ohio
tal from

an increase in the capi¬
$13,800,000 to $15,000,000.

Cleveland

The

that the

$1,200,000

"Plain

old.

Dealer"

capital increase of

provide

will

one

stock

share of

stock for each IIV2 shares of
dividend it

Stock

would be paid Feb.
of record Feb.

was

added

15 to holders

This makes the

Reserve

officers,

President

the

elected

been

Parent

are:

Davis, President;

Bank: Chester C.
F.

five-year

for

officers

The

terms.

Guy Hitt, First Vice-President;
M.
Attebery;
William
H.

Stead

and

Vice-

Peterson.

Weigel,

Howard

Presidents;

Sec¬

Assistant Vice-President and

retary;

Hall,

F. Gilmore, Frank
O.
Hollocher,
J.

S.
G.

N.
H.

Gales, F. L. Deming, Earl R. Billen, and John J. Christ, Assistant
Vice-Presidents; Joseph C. WotGeneral

awa,

Carstarphen,
succeeds

resigned

Auditor. Lewis H.
whom Mr. Weigel
Secretary,
recently

Secretary and General

Counsel to devote more of his time
his

affairs.

own

Counsel

Carstar¬

Mr.

continue as Special
a part-time basis.

will

phen

Branch officials are: Little Rock

Wood

and

President

and

ViceClifford

Stewart,

Manager;

Childers, Assis¬
Louisville Branch:

Clay

tant Managers;

C. A. Schacht, Vice-President and

Fred

Manager;
tant

and

Moore

Arthur,

Assis¬

Managers. Memphis Branch:

Paul E. Schroeder,
and

Lee

Burton,
K.

Vice-President

Manager; S. K. Belcher, C. E.

Martin

and

Anderson, As¬

sistant Managers.
W. L.

Hemingway, Chairman of

the Board of the Mercantile Com¬

represent

Reserve

Advisory

Federal

the

Co. of St.

Trust

Federal

Louis

St.

District

and

elected

Action
toward: increasing
the
capital of the Ohio Citizens Trust
Co. of Toledo, Ohio, from $600,000
to $1,000,000 was taken at the an¬
nual meeting on Jan.
18 of the

Hemingway
suc¬
ceeds James H. Penick, President
of the Worthen Bank and Trust

stockholders. The additional $400,000
said the Toledo
"Blade" is

Advisory Council during the past

Mr.

Council.

Co.

Rock,

Little

served

who

Ark.,

member of the Federal

as a

three years.

being transferred from surplus to
capital

account

and
a

new

stock

five-for-three

result, the number of

$20 par shares will be raised from
30,000 to 50,000. From the "Blade"
we also quote:
'"One

expected result of the
said Willard I. Webb, Jr.,
President, is to lower the market
price of Ohio Citizens stock and

At the annual

meeting of the Di¬

rectors of theMercantile-Commerce

National

Bank

St. Louis, Gale

President, announced
the following promotions among
the personnel of the bank: Ralph
D. Griffin, formerly Vice-President
was promoted -to Executive ViceF. Johnston,

Mr.

President.
member

Grif'fin

the

bank's

Board

has

make it more attractive to smaller

Directors

and

investors. Announced at the meet¬

President

since

First

and

Vice-President who had previous¬

Trenton,

Bank

13, the

Jan.

Federal

Branch:

At their annual

the

Olin

Kelly comes to Vir¬
the Citizens Fidelity
was

meeting

directors

been increased to $800,-

National

N. J., has

Presidents of the bank.

an¬

by Thomas

Bank and Trust Co. in
where

Bank

President

Boushall,

bank.

staff of The
Richmond.

Vice-President

Relations,
C.

the

Louisville,

Virginia ' at

Feb.

charge

Kelly,

pro¬

were

Bank of St. Louis elected

move,

bor¬

rower

will

Ky.,
Bank

basis.
F.

ing system

Maynard

meeting from
Assistant\Cashiers to Second Vice-

except

distributed

Guy Rutan, Secretary of the
Wigton Abbott Corp., engineers

be reduced to

Assistant

additional

moted at the recent

the

this dominant debtor of the bank¬
can

Harry G.
Harman was elected Cashier; Her¬
man H. Leisman was reappointed
Assistant Cashier; and Charles R.
Alexander, J. William Barnhart
and John W. Crist were appointed

original $500,000 in 1894.

the

time, the importance of

regret,

was

Co. in Plainfield.

to grief.

this situation has changed. It may
be time for

course

debt,

William

with

accepted

William A. Howe and

Commerce.

Bank

and will continue in that
David R. Gardner, Con¬

conditions

for

tinuous service with the bank, was

Detroit Board of

President of the

Louis,

been

De¬

announces

merce

Goggin, who

Bank

elected President

was

bank has been increased from the

1945,

ernment

lunches

troit, Mich.,

ninth time the capital stock of the

has

ernment-provided medical atten¬

meeting of the Manu¬

National

was

1929

post.

William A. Mayberry at the re¬

Jan. 27 by Ray E.

Newark "News." Mr.

The

$50,000 to $100,000.

Rutherford, as Vice-President and
Cashier, after 60 years of con¬

new

tion

subsidized

Harrisburg, Pa.

dividend in ratio of

The election of

bank

$300,000.

the

at the recent annual

noted

pencil

Newark,

in¬

that succeeding Charles A. Ranter, who
meeting Jan. became Chairman of the Board.
12 of the directors, the retirement Mr.
Mayberry, formerly Execu¬
due to ill-health of Howard A. tive Vice-President of the bank, is

Director of A. W.

Co.,

dent

and

Bank

approved

manufacturers.

gov-

National

Harrisburg

member of
Banking Ad¬
Mr. Mindnich is
a

Driscoll's

Governor

will tend to limit the total of gov¬

with

The

re¬

recently re¬
Clearing House

raised from

facturers

book¬

was

Committee, and is

Faber

as a

The "News"

the

visory

over

$200,000

the

of Chi¬

voted

Chicago "Journal of Commerce"
reporting this, iff its Jan. 21 issue,
stated that the surplus is to be

cent annual

currently is Vice-President of the
American Institute of Banking.

dent, and in 1938 took

the has been with the

check

—

propensity

Jan. 7.

meeting

111.,
capital

the

crease

200,000 to $4,500,000. The dividend
was paid to stockholders of record

"News."

Vice-Presi¬

Mayham, President and Chairman
of the Board,
according to the

tend—and

profits to surplus, increas¬
latter account from $4,-

the

tant Vice-President since 1946. He

1934

tive functions.

will, however,

ing

the

Trust

announced

vided

annual

Chicago,

from

added duties of Treasurer said the

eral

indefinitely,

recklessly,

large segments of

approved, $239,580, will be trans¬
from undivided profits to
capital, and $300,000 from undi¬

ferred

Virginia, is being pro¬
moted to the Correspondent Bank
Division to assist Mr. Kelly.
Mr.
Taylor has been with the Bank of
Virginia since 1933 and an Assis¬

citizens that Uncle

our

spend

recogni¬

remains

of the Trust Co. since

I do not think that by it¬

step.

self

illusions

.no

our coun¬

but

Connolly, formerly identified with
the management of the Newark
Clearing House, went to the Fed¬

without reference to their produc¬

Is there anything that can be

done

18, page 2085.

which to return
It will avoid a stampede

to gold.
for the

been

the

basis

proper

lost

value

issue of Nov.

their

stockholders of the Bank

from undivided
surplus.
If the stock dividend is

Va.,
26

$300,profits to

000,

Clark
our

transfer

outstanding

Reference to the plans appeared
in

the

offer of $135 a share."

his part succeeding Frank C.
Mindnich,
should have the right to sell his
President for the last 16 years,
gold to the Treasury at $35 an who has been named Chairman of
ounce or wherever, under condi¬
the Board. This is learned from
tions of a free market, he can get
the Newark "News" of Jan. 26,
a better price.
Such a market will which states that Harrison P.
provide a test to determine the
Lindabury retired as Chairman,

call

$400 million in market

gold producer

The

commercial banks in this country
some

17,000

stock

not be granted

Chinese coolie

that

the

Vice-President.

cago,

the

Co. and the Rhode Island Hospital

Providence

authorized

Jan.

institution,
of plans for its oper¬

in pursuance
ation

6%
increasing the
indicated, and added:

"The boaird of directors has also

The consolidation of the

National Rockland Bank

been

1939.

also

Vice-

Frank

Volume

169

Merget,
formerly
Cashier
who
made Vice-President and Cashier.
Mr; Merget entered the Safe De¬
posit Department of the bank in
1935, became Assistant Cashier in
1942

and

Cashier

Mitchell

President.

Mr.

associated

1945.

Mitchell

with

the

1,936.

Guard

during the

served

been

bank^since

with

the

Vice-President

William

from

Impey

Assistant

Vice-President.

bank in 1938 and

was

1948.

joined

Kaltwasser

the

made Assis¬

tant Vice-President in

ter

promoted
Vice-President to
was

1946. Wal¬

promoted

was

from Assistant Cashier to Assistant

Vice-President.

ployed

the

Commerce

first

was

National

the

tutional

1929 and

rise

President,

the election to

Fortunately, because Otis & Co. can stand the gaff,
precedents are being established for the entire
securities industry.

beneficial

We have
Its

occasion urged

present role

administrative

this barnacle.

remove

com¬

prising this average, these changes

30 Dow-Jones Industrials

12-31

1947

1939

Gross Plant*

Plant*

Net

Through a stock dividend of
$140,000 the First National Bank

Net

of Cape Girardeau, Mo., increased

its capital, effective Dec. 22, from

1948

197

220

128

114

Inventories A-----:.

Book Value

Senior

worth

Capital!
Working Capital

*Fixed

150

139

t Funded debt

assets,

and

pre-

stock.

ferred

estimate

named Ex¬

was

Memphis,

Tenn.,

the

Commerce

annual

the

meeting of directors on Jan. 11,
B.
Pollard,
President,
an¬
nounced
following the meeting.

The

Memphis "Commercial Ap¬
peal,"
from
which
we
quote,
noted that Mr, Ross, who was
Vice-President and a director, be¬
4

Vice-Presi¬

Trust Officer.

dent and

the

Anglo

California

National

the

Bank,

head office, San Francisco, opened
for business on Jan. 29, it was an¬
nounced

Allard A. Calkins,
opening marked
the completion of many months of
by

President.

planning
which

The

and

have

version

construction work,

resulted
the

former

the

con¬

Holland

Building, purchased by the Anglo
-Bank in

1946, into
bank

attractive

modern and
office, build¬

and

the purchase of the Bank

Amity

Amity,

Yamhill

County, Oregon, the United States
Bank? of Portland, Ore.,

National

has

added

state-wide

37th branch 4n its

banking system, E, C.

President,

Sammons,
nounced.

its

has

an¬

The Yamhill County fi¬

institution opened Jan. 3
Amity Branch of the United
States National.
H. W. Torbet,
President of the Bank since 1941,
became
Manager of the branch
under the new set-up and Frank
nancial
as

Chambers,
cashier,
Assistant Manager.

became

This is indicated by
the increase in the gross plant fig¬
ure, which was 128 at the end of
considerably.

1939. and increased

I'. J. A. Hogle & Co. Adds
(Special

The

Financial

ANGELES,

Chronicle)!

CALIF.—I.'S.

to around

163

1946,

that

173

succeeding

plant

year

put in place at higher costs.
is

fair

probably

assume

that

plant and equipment in ex¬
istence in 1939 had by that year
been

ture

book value should

the

amount

net

price.

TABLE 1
NET

REPLACEMENT

ment

regulation TD 4422 directing
firms to re-appraise the remain¬
ing life of their fixed assets. The
purpose of this was to reduce de¬

was

insufficient

take

care

the needed replacement and
corporations had to increase their

investment

merely to maintain
existing plant. Thus part of
the increase in gross plants now
on the books represents this added
cost.
The same would apply to
new plant added each year since
1939 which required replacement.
the

the

estimated

220

gross

plant at stated book value for the
30

Dow-Jones

industrial

average

at the end of

1948, it is estimated
that the extra cost of replacement
represents
20,
and
new
plant
added represents 72. In addition,
the

128

original

plant
1939, but
of this 41 represents replacement
-—

forward

which

third

means

the

1939

from

that

about

one-

plant has been

At 1948 construction cost

Valu'e

Middle

Price

Earnings

•. .>■

9.22

128

114

148

133

9.74

1944

130

119

157

144

10.07

1945

135

123

165

174

10.47

1946

159

131

206

188

13.50

1947

188

139

263

175

18.63

1948

208

150f

305

180

22.00f

construction cost in¬

serve

measure

*At

year-end.

aggregate index
prewar period
would
1939 plant worth that
the

the;

made

which

year

put in place.

this

method,

condition would
have

147

the end

book

estimated

and

Inventories of the 30 Dow-Jones
industrials

the

1947

end

with
Replace¬
ment value at the present time is
estimated about 10 points higher
because some of the companies
carry
inventory below current
cost or market. A perusal of the
1947
annual
reports of the 30
Dow-Jones
industrial companies
55

the

96.

139

$ 9.11

133

10.92
*

11.64

tApproximate.

this

replacement
value of 267. Improvements and
additions to the 1939 plant with

end

compared

1939.

revealed that four used the "Lifo"

E. K. Diahl Joias

Arch R. Morrison With

Walston, Hoffman Co.

T. Nelson O'Rourke

(Special

LOS

for

most

their

The

Financial

ANGELES,

Chronicle)

(Special

CALIF.—Ed¬

ward K. Diehl has become associ¬
ated

with

Walston,

Hoffman

BEACH,

FLA.—

Arch R. Morrison has become as-

Diehl,

formerly

was

with

Buckley Brothers and prior there¬
was

fornia

officer

First

Cali¬

Company.

With J. H. Goddard & Co.
(Special

The

Financial

Chronicle)

BOSTON, MASS. — Frederick
W. Doyle is now with J. H. God¬
dard & Co., Inc., 85 Devonshire
Street.

With Hannaford & Talbot
(Special

SAN
Glenn

The

Financial

FRANCISCO,
E.

Burton

has

CALIF.—
become

filiated with Hannaford &
519 California Street.
was

af¬

Talbot,

Mr. Burton

sociated with T. Nelson

O'Rourke,

Inc., 356 South Beach Street. Mr.
Morrison was formerly with Ranson-Davidson Company

in Miami.

previously with Sutro & Co.

Johnson & Co. Formed
(Special

SAN

The

Financial

FRANCISCO,

Chronicle)

CALIF.—

Stefan Johnson has formed JohnSoil

Arch R. Morrison

Chronicle)

Fred 0. Fleischer Joins

Ames, Emerich & Go.
(Special

Co., with offices at 235
Montgomery Street to engage in

Fleischer

the securities business.

with

With Brereton, Rice Co.
stipulated inventory reserves. Of
(Special to The Financial Chronicle)
13 carried inven¬
DENVER, COLO. — Lyle L.
tory "at lower of cost or market,"
Brush has joined the staff of Bre¬
four "at or below cost," five "at
cost," and one "mostly at retail reton, Rice & Co., Inc., First Na¬
inventory method." In addition to tional Bank Building.
the three which had specific in¬

William S. Beeken Adds
(Special

The

Financial

Chronicle)

WEST

PALM

The

Financial

ILL.

CHICAGO,

105

the remainder,

reserves.

Chronicle)

Financial

inven¬

ventory reserves, 19 carried con¬
tingency, postwar, general, and

The

DAYTONA

Goodwin, 550 South Spring Street.

tories and three others had set up

other

rk:')

1943

has

bers

the

Fred

Co., Inc.,

Salle

Street, mem¬
Chicago Stock Ex¬

change. Mr. Fleischer was for¬
merly an officer of First Securi¬
ties Company of Chicago.

Two With Herrick Waddell
(Special

The

Financial

Chronicle)

William'S.
Carpenter and William P. Harrell
TAMPA, FLA.

—

have become associated with Her¬

staff

;

y yyy:.

Ian R. Rice has been added to the

value of the 30 Dow-Jones indus¬

associated

become

Emerich

Ames.

South

Chronicle)

—

BEACH, FLA.— rick, Waddell & Co.

Finally, coming down to the
problem of the net replacement
trial

stock

should

there

average

be added to the stated book

which

around
mated

the

150,

the

increase

end

value,

1948

esti¬
points in

foregoing
of

145

plant value and the esti¬
10 points increase in in¬
ventory value. This yields a fig¬
gross

of 305. The estimated

placement
since

1939

value

for

together

William

Beeken

Co.,

BEACH, FLA.

—

Ken¬

neth W. Hewitt has become affil¬
iated

Dean White & Co. Formed
WALLACE, IDAHO
White

Co.

has

—

been

Dean

formed

with

offices

the

Civic

Center

John

Ahbe

Co.,

268 South County Road.

With Conrad Bruce Co.
(Special

with

net re¬

each year
with other

With John L. Ahbe Co.
PALM

Guaranty Building.

was

mated

ure

levels,

1935-39—100

Book

107

the
prewar plant of 128
if maintained in substantially the

method

Replacement

Value

Average

140

Following
original 1939

Book

108

years

Double Prewar

Est. Net

Cost Indexes

Mr.

figured

VALUE

125

since

ASSET

1942

were

value

re¬

120

1948

122

Present Replacement Value

tend to

fully in the market

107

present time;
and the improvements and addi¬
tions to plants calculated for each
year since 1939 would be worth
more
by the extent of the rise
occurring in the aggregate cost

same

the

can

108%

competitive condi¬
longer term fu¬
high net replacement

the

flected

replacement

220.

depreciated to the extent
where
annual
depreciation and
obsolescence charges were equiv¬ book value of 72 would have a
alent roughly to the annual re¬ replacement worth
of 98.
The
placement at costs then prevail¬ figures indicate that plant im¬
ing. Book values of assets in the provements and additions since
1930's had been lowered by many 1939 now comprise 27% at physi¬
cal plant account.
companies to accord with govern¬

the aggregate plant of the 30 Dow-

■

Over

OF THE 30 DOW-JONES INDUSTRIAL AVERAGE

by the end of

West Sixth Street.

•

tions.

the increase in value. The advance

It should be realized

1948.

each

good account of it¬
earnings standpoint

103

seven

the end of 1947,
estimated 220 by the

197

give

from

normal

drop

115

of the

index

rebuilt.

<; /

self

under

ESTIMATED

in the 1939
condition and (2) any improve¬
ment to the plant as it existed in
1939
together
with
additional
plant constructed is considered
new
plant. The annual average

these

The
expansion program

Schlesinger has been added to the
staff of J^-A.: Hogle & Co., 507
;,

should

as¬

The

present plant about 70 points from

present
be

succeeding

postwar plant
carried this to

carried

LOS

was

by the time the war ended.

there

the

106

the

off
!.: With

20%.
be

1941

much

ing. The bank occupies a large
portion of the ground floor and preciation charge-offs.
basement of the four-story build¬
The depreciation rate in 1939
ing.
Since its establishment in
was
equivalent to 3.7% of gross
1946 the Anglo's Fresno office had
been located temporarily in the plant; in 1947 it was 3.6%. This
former U. S. Post Office building. rate was adequate in the prewar
but subsequently, how¬
Anglo's Fresno staff is headed by period
A.
B.
Nordling,
Vice-President ever, as construction costs in¬
creased, the depreciation chargeand Manager.

1940

capacity of the 30 Dow-Jones in¬
dustrial companies was expanded

was

home

Fresno

new

and

war

than

can

the

It
The

let

case,

would

(1) the original 1939
maintained throughout

make

end of

Assistant Trust

this

104

since

partment, then

later

oc¬

subsequent

1939

demand, plant

and

the stimulus of

Under

immediate postwar

gan his connection with the bank
in 1923, serving in the Bond De¬
Officer

included

replace¬
calculated by

cost

plant

present

correction

would, of course,

much

dexes

$140,000 to $280,000.
Ross

the

represents a good
American busi¬

companies

30 Dow Jones Industrial Average

Jones industrials

shown below:

are

Est.

Bank

17%

The

7 Construction

Ralston

Vice-President

the

<"
industrial

represent large enterprises which
usually are the leaders in the in¬
dustry. The plant and equipment
represent mostly modern and effi¬
cient
producing capacity which

(Continued from page 8)
the 30 companies

Co.

James L.

year

section

ness.

period of stability.

Highlight Cheapness of Common Stocks

Co.

National

high

average

cross

was

Current Asset Replacement versus Book Values

Hardware

ecutive

the

compares

Dow-Jones

stock

comparable
1948
year-end
figure, and hence decrease by a

assuming

about

The

the

ment

Purina

225

at the 1948 year-end.

construction

the downside. It

here assumed and

with the stated book value of 150

curred in construction costs from

Shapleigh

Vice-President,

correction

scope

average

latter

around

after

the net replacement worth of the

Congress would do well

President,

Stuart,

cost

correction

effect

Shapleigb,

Lewis

body in the securities field the

SEC has outlived its usefulness.
to

the

value but

sume

persecutor confirms our judgment.

too,

the abolition of the SEC.

the board of directors of A. Wessel

and

Dow-Jones

pointed out that after World War

Henry-, E., Jenkins, Jr.,

announces

this

come

even

higher. However, it is reasonable
at some point to expect a correc¬

Na¬

The Boatmen's National Bank of

the

Commodity

Nevertheless

still

would

value

he starts.

ments
!

value.

in commodity prices.
This,
will affect net replacement

tral Service Division of the Bank.

St. Louis

the net replacement

in¬

Dow-Jones

average.

prices would also drop and affect
inventory values, ihus further re¬
ducing the net replacement book

costs

and

Assistant Cashier promoted to As¬
sistant Vice-President in the Cen¬

construction

the

dustrial

further and this in turn will

carry

tional Bank in 1934. Other promo¬
tions announced were: Howard E.

Barr, Manager of the Credit
Department made Assistant Vice-

value

■

1949

shown

tion

transferring

Mercantile-Commerce

Dow-

stocks

grinding of this upper and nether millstone in
unjust forays is depressingly alarming. Only wealth can
stay it. The small fellow hasn't a chance. He is licked before

Bank

privileges?

the

rising trend, the re¬
placement value of the plant will

The

joining; the

1927,

Mercantile-Commerce
Trust Co. in

•

data

continue the

place at these conferences.? Is NASD
Is it the view of
the NASD that its members by the mere act of joining
have waived their fundamental legal rights and consti¬

yV*

■■

(583)

industrial

in Table 1.

strategy the product of SEC direction?

em¬

Bank

(Continued from page 3)

Jones

What took

had?

Coast

Assistant Cashier in 1947 and As¬
sistant

'iyj-frj';

and became

war

CHRONICLE

pertinent

Vice-

has

FINANCIAL

Administrative Intrigue

John

elected

was

COMMERCIAL

THE

Number 4774

SAN

The

Financial Chronicle)

FRANCISCO,

Building to engage in a securities

Stuart L. Greenberg is

business.

rad

Rrnpp

Co..

Russ

CALIF.—
with Con¬
Building.

COMMERCIAL

THE

(584)

ployed

Truman lor Planned Economy

raise

going to

were

go to the

wall because they diun t nave
any

government contracts.
And it turned out that most

those worries
We

had

not necessary.

were

find

that

out

ex¬

for the

that we are
in a different position now than
we have ever been in our history.
We

I have

been interested to

life.

understand

meant.

You

which
we

plan

the

word

going to live—

that

the

plan

difficulty is
word "plan-

the

people

when

ning for
thinking

who

economic
about

find

distinction

purposes

controlled

different,
analyze it closely.
And

started

think

out

ing to plan
so

fault

talk about plan¬

are

econ¬

not planned economy.

omy,

that

And

welfare

tried

the

become

stand

dress,

that

the

to what

actually
in

leaders

world

set

could "in

have

international

the

whole.

out

the

clearly

Inaugural Ad¬

responsibili¬

our

the

have

them

must

think

And- I

that

the

work

only
Maybe I can

now.

what

trying to ac¬
complish.
I have been interested
in county and city planning, and
I

you

are

interested

planning

for

now

the

world

welfare

the

that

ahead

because it is

ninth

else

that,

necessary

back to
can't

century. And

afford to do that. I don't want to

I want to thank you very much
for asking me to come over here.
I

wish

could

the

job

United

the

that

States

America, to meet the responsibili¬
ties which God gave us in 1918

have

with

been

for the dinner, and I wish I
could stay longer, but I have to
go back
and put in four more
hours

make

these

eighteen

hours.

The

(Continued from

legislation that we have had in
history of this great nation

have

And I think that before

disaster with which we may

faced

about

comes

will be

position to meet it.

have

economists

ablest
the

and

some

most

practical

this

arid

ablest

the

some

situation.

working

are

faced

men

_13)

page

of this double taxation in

There

part, at

the

security

market

learned may have been through a
as often they have

problem in

become the easy mark
of un¬
scrupulous promoters. I doubt the

Nothing to Lose by Elimination of

wisdom

the

investment

ing business setting out to urge
them into equities today.
I am
the investment bankers have

sure

not
I

will not try to do so and

nor

quite

that if

sure

they did

nut shell.

Tax
What

bank¬

have

the

invoke

Obviously,

To the present

all

Council

States, Mr. Hoover, has been work¬

group,

legislative
committee in the Congress known

ing with great effort, and who I
am
sure
is coming forward with

large

doubt

uations,

such

have

through in the last ten
We

have

and

now,

years.

Economic

have

been

the economic committee.

those

people

And

trying to an¬
alyze the situations with which
we
are
faced, to see if we can

meet

those

■

they

are

situations

difficulties.

cause us

You

before

remember

after

the

Jack¬

now

ernmental

who
the

followed

Jackson.

between the

war

Buren,
after

And

States,

1873

along; and then in 1893—
no
good reason at all that

came

for

-anybody
—we

could

had another one.

Then in 1907

panic, which
niest

ones

history

time

that
bank

out

they had
in

understand

ever

had

was one

the
I

the

1907 that I

nobody

ever

of the fun¬
had in the

country,

was

bankers'

working

Kansas

and

City.

And
most difficult time
ever

heard of. And

understood* the

cause—

that

pro¬

presented to the Con¬
gress we will have all sorts of
cries and wails from people who
anxious

certain

spe¬

position in which they are
have already had a stack

same

mail

have

pets of their own left in the

cial

reau

that

fully

are

efforts

what the

forth

have

the

enterprises

informed
are

great

from which
can

today?

the

organization plans to the Con¬
gress of the United States while
I had the power to do that, and
I think only one of them was ap¬

aggregate
today is
future

equity

unseasoned

equity market at
However, eliminate

time.

any
their

tax

dividends

the

re¬

regis¬

chance to

the

cream

crop

Let

remember that, in gen¬

eral, industry which produces the
the

source

taxed

revenue

discussion

prefers
equity
when possible.
We

potential

flow of
secondary equity

the

well be enormous.
to

come

and

those

whose

in¬

indicate well-being but not

comes

wealth—incomes

over

$5,000

but

under $25,000. They are undoubted¬
ly proportionately larger per capita

investors in equities. I venture to
are not, as a class, ex¬
equity financing.
They
are rather like a newly-developed
country.
In such a country of
pioneers the interest of the people
in investments lies primarily in
what they know the most about,

say

they

perts

revenue.

However,

What do

place
an

for

we gain in the market
equity securities from

elimination of

would

such

the tax?

How

gain enhance
entire economic picture?
a

our

Not

many years ago I had a
with the present Secretary
of the Treasury during which my

talk

note

caution

probably
gard
stock

sounded,

unnecessarily, with
possibility of

market

inflation

was

the

headaches.

catching
resulting

re¬
our

in¬

revenue,

By the total elimination
we might, reduce the

revenue.

this

tax

by an estimated

revenue

to $214 billion
certainly would not
reduce it by either amount net.
I mean by "gross" and "net" that
if the tax in question is elimi¬
nated, while it will create loss of
revenue, the loss will be offset in
part
by
revenue
from
other

bilion

$1.6

gross

gross.

sources

which

the

very

will

increased

eliminating

act

this tax.

by eliminating
healthy incentive will
to purchase equities

example,

For

the

tax

restored

be
for

investment

for

and

businesses

new

income

These

tions.

cient

funds

This

now.

for

and

established

pansion

are

means

ex¬

corpora¬

insuffi¬

added

opportunity to expand old enter¬
prises
and
start new ones or
undertake

lines of endeavor

new

through new equity capital.
undertakings
cannot
but

Such
mean

business, more payrolls and

profits. Salaries, Wages and
profits are taxable and that added

the

fever

revenue

dizzy

ment

I mention this to show

merely that I am not now speak¬
ing as an advocate of a stock mar¬
ket boom nor

solely

presumably

resulting in producing more funds

minds.

some

unfair tax that is imposed

but which hinders
equity financing which increases

administration this

merely soak the rich to¬
day it may well be a less popular

be expected to absorb

capital

has

present

equity offerings when they come
into the market place.
I doubt
under any circumstances the wis¬
dom
of such
investors
entering

markets may

ought to

many

source

or¬

for

sent

business

you

that sort of plan¬
ning we will have the usual re¬
sult of nothing accomplished.

put

investment

assure

ganization and that organization,
which ought not to be disturbed.
And I imagine that unless the

that

group

percentage

bu¬

high about this
bureau, this

that

and

that
a

capital

that when

gram

people
a

which

the Government of

sure

now.

Van

the United States.

tration

Martin

planning,

operation

are

Gov¬

some

great program for the economic

Administration, from 1828 to
eight years later, they had a tre¬
mendous panic in the Adminis¬
son

with

the

does not

tax

initially
will lose

important.

expensive to cover them.
So that
group,
that
ever- expanding

lose from

tax, which I said

beginning,

would

elimination of

the former President of the United

have had after other sit¬

industries.

Federal

least.

they would lose money in the
undertaking for it would be too

that

often

today

tough lesson

ours.

give the public

tion

Security Markets

equity money and what they have

cost

buy into its business, thereby ex¬
cluding
the
ordinary
investor
from a chance to invest in what is

crease

being taken, is one of the
most
forward-looking pieces of
the

excessive

the

this

Double Taxation and

They have been used to savings
banks.
They know little about

are

thus

tering them with the SEC rather

financing

Employ¬

taken

been

Industry finds it better to
privately to a few, its inter¬
est-bearing
securities,
avoiding

have in the so-called double taxa¬

and

have

tive.
sell

than

that happen.

see

try- to sell equities

market made difficult by our

government's reduction of incen¬

the

rather than distribute

back

We must

it.

will continue just

sure,

that

assume

them

them and then

you

whole world.
And

assume.

given to

it out.

carry

not

again

now

We must

us.

did

it;

have

And

appreciate the privilege of com¬
ing over here.
I am very much
interested
in
this
organization
and

which

and
We

now.

eco¬

which

under

Act,

measures

any

difficulties

day

had

can

Thursday, February 3, 1949

under the United Nations

are

meet

has

can't tell you how very much

nomically sound.

you

harder.
a

put in 20
I

do.

CHRONICLE

set-up, and in order to meet those

The

program of try¬
economic future

our

won't

should

for—the welfare of the people.

responsibilities we must ourselves
be in a position to meet them;
and in order to be in a position

instead

whatgovernments

ment

think

with

much

not

buildings.

travelers.

jring"

had

over

ties

But, when we talk about plan¬
ning the things we want to do
economically we are charged with
being Communists and fellow-

that

which

events

days.
And then
public buildings and

these

cities now—and towns.

to, due to

Control.

enough

what

are

our

private

our

old

was

afford to build one, and

can

can't,

plan¬
all my

know we plan our
We plan the houses

day's work.
in

said

life—ever since I

reason

We have become the symbol of

ning all
to

have

most of

perience.

;

simple

FINANCIAL

salary and he

18 hours

(Continued from first page)
businesses

little

received

Cheaper Financing Without the
Tax

anything approach¬

ing

by the govern¬

helps to offset the loss from
the eliminated tax.

it.
We need sound reasons
for
investment, not unsound
reasons
for
speculation and in¬

Further, through elimination of
this tax and an increase in conse¬

vesting in seasoned equities

vestment in

be far from so-called

Yet
all

the

field

speculating.

investing we
speculate in the future

must

for it is the future that alone

folds

may

the

value

investments

un¬

present-day
whatever
kind

they may be.

of funds available for in¬
the ownership of in¬

quence

dustry there results in often safer
and

invariably cheaper financing

for the
the

present,

future!

expenses

continuing into

Any decrease in such

means

gain

in taxable

corporate profits which again add
to revenue and decreases

the gross

capital wherein loss of tax money if this tax is
it
rests
in
land, mortgages, risks
are
greater,
at a
forum eliminated.
And then, after World War I,
mortgage bonds and government last
year under the auspices of
We should talk about a net loss
in 1921, we had a very difficult
bonds as investments.
It takes
this league, Mr. Lammot duPont of revenue in this case, not a gross
situation.
I was in that one, to.
time
to
educate them.
If this
showed that, counting risks and loss.
That was when the business man
comparison
is
sound,
then
in average fatalities together with
Let us argue all we want about
got into politics—ran on a plat¬ ernment on an economic basis.
time this group will possibly be¬
the taxation existing at the time,
form in my county, a busted mer¬
this subject.
Let us talk from a
Now, this organization can be come
more
equity-minded.
If the odds
against an investor in socialistic
chant
viewpoint or from any
against a very able and of great assistance in getting an the stock market goes plunging
venture capital were 7.5
to 10. other
angle. Let us talk from any
distinguished banker — and won efficient setup for the Govern¬ forward they will rather quickly
The odds the popular gambling
the election.
income
bracket you
ment.
There
are
an
immense become equity-minded.
please.
It
We have
games gave were about 8.3 to 10. remains an unfair tax.
The tax
Then, in 1929, and 1930, 1931 number of boards and bureaus observed such a phenomena in the
Venture capital then had a better
does not help our financial secur¬
and 1932, you all remember the that have the authority to report late 20s.
I put many of this group chance at the modern
equivalent
situation
with
which
we
were
to
the President of the United
ity, it does not even take away
in the category that can be ex¬
of the once famous Canfield's.
from the rich to give to the poor.
faced at that time.
And some of States.
If I spent my time talk¬
pected to buy at the top and be
As
to
investing in seasoned At least about half of the income
the people in government and in ing to every one of those organ¬
forced to sell at the bottom of a
equities or equities of seasoned on which that tax is based is re¬
business decided that maybe we izations I wouldn't do anything
market, and many who are a little
risks
play a lesser ceived by people with less than
might be able to head off a situ¬ else but talk to them, and prob-> too cautious or not sufficiently companies'
ation
of
that
sort
after
this ably not
get much more done acquainted with those behind the part, but taxes play one substan¬ $25,000 net income per annum,
and let us not forget that some¬
terrible war which we have just than is done without talking to
scenes
to get in on the ground tially the same.
what over $iy2
been through and we have been them.
billion of divi¬
floor of good new industrial ven¬
Need a Survey of Incentives
dends are received by those re¬
You know, they talk about the
tures.
There are in this group
endeavoring to the best of our
We need in our economy a sur¬
ceiving $5,000 or less per annum.
ability to s+ave off the situation powers of the President of the potential buyers of equities, but
vey of the results of our method
In the name of heaven, why not
with
wh' K we
were
faced
in
United States.
You know what
they are not among those to be
of government-created incentives.
study the question first with a
1921, ana :n 1931.
And to some those
powers
are
principally? counted on—they are not stand¬
For example, the government in¬
view to continue what greater in¬
extent 1 think we are succeeding. Trying to get people to do what
ing by, so to speak, ready to sup¬
centive to corporations is to fi¬
centive to a thorough examination
port* new issues of sound equity
And I am of the opinion that they ought to do without being
nance by borrowing because it is
of the tax and its results by the
asked to do it!
financing, they are not standing
this
organization
can
make
a
cheaper tax-wise.
For many in¬ Congress can we ask for?
around jingling their money
in
The President spends most of
very great contribution to the ef¬
vestors in equities it is cheaper
forts which are being put forth his time kissing people on
the their pockets waiting to use it tax-wise to gamble on a capital
by the economic advisers to the cheek in order to. get them to do when a good opportunity offers.
gaim for income rather than to
In the higher and highest in¬
President and by the Economic what they ought to do without
invest in equities for income. For
come brackets
we find
the more some it
Committee of the Congress of the getting kissed! First on one cheek
is more alluring to gamble
United States, and probably meet and then on the other.
sophisticated
buyers,
the men in drilling fdr oil than in buying
the situations before they really
who jingle their, money, but the into
(Sneciftl to The Financial Chronicle) r
And if we can get this efficient
a
manufacturing industry,
the why or wherefore of it.

The others were all dis¬
approved because some pet or¬
ganization had a lot of ability to
put out propaganda to prevent
the
reorganization of the Gov¬

proved.

venture

Earl K. Madsen With
A, 0.

develop into disaster for the
omy

econ¬

of this great nation.
is

has

with,
been

which
working

Mr.
into

operation then maybe 'we can get
without any persua¬
sion on the part of the President,
absolutely sound and prosperous, .and can do the job that he is em¬
the

absolutely

economic

essential

structure

that
the

United States of America remain

organization
Hoover

it to operate

higher
group

we go up

the

present
less

and

in this remaining

incentive

equity
less

holdings

add

becomes

until it almost dis¬

appears because

of taxes—because

the government gives a
exemption to increase the
production of oil which it fails to
give to an investor in equities.

Allyn & Co., !nc.

OMAHA, NEB.—Earl K. .Mad^
has become associated"" with

because

tax

sen

Madsen

Allyn

and

was

Inc.,

formerly with Buff eft

industry it often is better to
earnings and. plow & Company for

accumulate

Company,

First National Bank Building. Mr.

number of years%

Volume

FINANCIAL

THE • COMMERCIAL

Number 4774

169

panies, the union
ployees.' •
'v;":

Economic Situation

and

the

CHRONICLE

Basically Strong

price

Current and Future

relationships in

wage

Capital Needs

(Continued from page 14)

others, is the balance of

and

em¬

.V;".'..'V..,*':

"What is at stake in this case, as
in many

(585)

been

much

too

private utility services, homes,
schools, hospitals, highways, and
other construction, that these fac¬

high to last. The i activity to suggest that we need
Prices of the idea has been that industry is
] some device to get the new rich to
goods produced
by these mills rushing to catch up on plant and do at least a little of their
betting
have dropped below the peak by equipment
purchases
postponed on American industry. I suspect
nearly half in some constructions, by the war, and when that's done that the thing can be done, too.
and by 30 to 35% on the average, capital expenditures come falling
I hope my
colleagues who are
the decision says. Many prices are down with a disastrous bang.
masters of finance will not dis¬
Our survey produces facts (I be¬
down to OPA levels, but Professor
miss the suggestion as
flippant. It
Brown noted that wages are 26£ lieve for the first time)
which really involves

tors alone will be

an;

the whole economy.

(Continued from page 4)
products,

which

broadening of

will

lead

with the nation-wide wartime lag
in constiuction, have created such

demand.

consumer

Administration Program
The

promising,business outlook
is supported by an Administration
program which has been, and will
continue

need for

expansion of public and

influence

powerful busi¬

for

several

hour higher than at that time.

Despite the price decline, largely
at the expense of profits, the mills

directed toward
maintaining a high level economy.
An
important
Administrative

objective has been to prevent the

fore it.

development of

demands of

inventory,

and

with

operations

some

ditions that

be,

unbalanced

might lead to

ness

con¬

recession, as has been the
perience
on
many
occasions

ness

ex¬

the

past.' I do not recall any re¬
cession that has not been preceded
by

period of excessive specula¬

tion, or by over-buying, overborrowing, or over-expansion.
At

evidence
Inventories
levels
by cautious buying policies. Bank
loans in the past year showed only
present, there is
speculation.

of undue

have been kept at moderate

Neither business

moderate rise.

nor

yet

construction

residential

expanded

enough

present needs.

has

meet

to
n'1

'«

prosperity in the
ahead can be promoted by
encouraging a healthy business
development, while continuing to
past .have

responsible

been

business recessions.

is,

which in the

excesses

Such

for

policy

will continue to be, the

and

during

the

war.

must build new homes, new hos¬
pitals, new churches, and new mu¬
nicipal facilities. We must rebuild
thousands of miles of highways.
In addition to all this, we must
do our part in the great task o:'
world reconstruction, and we must
build a powerful defense estab¬

lishment, to the end that normal
international

relationships,

free

from the threat of war* -may be¬

re-established

come

throughout

the world.
An important cornerstone

our

can

one

extent

young

American

recreational

influenced

the

activities

American

charac¬

ter.

Surely there is no more pro¬
ductive
source
of
training
for

fair, no matter how intense the
competition. We learn to abide by

against a declining consumer
The farm price support

Wo learn singleness of
purpose.
And
what we learn
serves
us
well, individually and
collectively, when we reach ma¬

alone

lies not
their actual support to

these

measures

incomes, but in the sense of eco¬
nomic security which they give
to consumers, thus encouraging a
continued
sumer

high, volume

of coh-

demand.

Currently, a business factor of
growing importance is the longdeferred construction programs of
States and municipalities, which
large part had been
held up by material shortages.
The great shifts of population
during the war years, ; together
to

date,

In either case additional

Americans in the team
of which I spoke earlier.
sports we learn to play

our

rules.

the

learn

pull

to¬

gether.

points out that though many
business

from

consumer

Says National Gity Bank

Business

;

"The

"Bank

Letter"

"is

duction will go on

whether

the
pro¬

and payrolls be

maintained, and the answer is that
they will if the price and quality
of output are such that people
can sell to each other.
Since the
inflation

with

has

lagging

priced many people

incomes out of

market, the essential matter is to
keep costs and prices down.
"The general situation makes it
plain that demands for fourth
round
wage
increases are un¬
timely.
An example was set for
all

the

handed

America

Union

continues

industries
down

Jan.

decision

Television

River

and

mills.

New

Weighing

the

from

Bedford

arguments,

the

Bookshelf
Causes of Industrial Peace Un¬

Collective

Bargaining—Hick-

Co.
and
Amalga¬
Clothing Workers of Amer¬

ey-Freeman
mated

ica—Donald

Straus—National

Planning Association, Washing¬
ton, D. C.—paper $1.00.
Guideposts in Time of
—Some

for

essentials

American economy

Toward

United

Change

sound

—

Chamber

and

industrial

This is not surprising

plant

and

in view of

and

William
Brown,
Secretary,
formerly associated with RCA
Laboratories,
Industry
Service

was

lower

cost

Trade—

studio

great depression and then during
World War II.

tary and educational applications.

Three-fourths

the

manufac¬

companies surveyed said
that a piece of equipment must
give good promise of paying for
itself within five years before they

turing

'A mistaken granting

a wage

increase at this time, followed by
no

increase

CHICAGO, ILL.

New

York

Hornblower

insufficient in¬

nies.

employees
.

and

Taking into

compa¬

account

the

present situation in

the industry,
weighing as best I can the
probabilities in the immediate fu¬
and

ture, I

of the opinion that the

denial of the wage increase at this

the time is in the interest of the

—

George A.
39

Weeks,
He

was

South

formerly

with Cruttenden & Co.

With Television Shares
to

com¬

Financial

The

CHICAGO,

ILL.

Television

—

jr.,

Chronicle)

i;J,

Fdgar N.
now
with

is
Shares
Management

Greenebaum,

both

Street.

Company,
.demand, would open the
Street.
door to the possibility of serious
unemployment and loss of income

crease

last

new

Some
that

information

business'

about

(Special

South

The

Financial

BOSTON, MASS.
Vaughan,

of funds

greater

are

for

new

also

takes

where my associates
much better informed than I

am.

But—on

of funds

glad to defer to them.
the

—

subject of sources

I have

camera

have

fields

indicated

will

market

provide

for

Salle

Jr.,

has

Chronicle)

Charles F.
become asso¬
—

ciated with Charles A. Day & Co.,

equipment
rapidly expanding tele¬
vision broadcasting market.
than

the

Mr.

Mautner

there is almost
social

ern

pointed

and

the

that

industrial

which will not find

for this

out

phase of mod¬

life

application

unique equipment. Among
obvious uses are aseptic

observations

of.

surgery

.in

hos¬

pitals! and medical schools, moni¬
toring of industrial
operations
.

where extreme

hazards

oper¬

ating personnel are encountered,
such as testing of rocket motors,
atomic

reactors

and

water

exploration.
applications would

under¬

Commercial
include

ad¬

vanced

display and merchandising
department stores, and audi¬

tioning facilities
agencies.

for

advertising

Pittsburgh Bond Glob
Sport Night Dinner
E.

some

amateur

O. Dorbritz, Moore, Leonard

Lynch,

President

the

Bond

Club of

Pittsburgh, announces that
the annual "Sports Night" dinner
of

the

Club

will

held

Fri¬

which I hope to give" an air¬ day evening, Feb. 11, 1949, at the
ing during the course of the dis¬ Pittsburgh Athletic Association.

ideas

cussion.

One

of them

is that we

need rather

desperately a sort of
$2 window in the security mar¬
kets to give some competition to
the $2 window at the race tracks.
As a purely scientific pursuit, I
have been looking into the in¬
crease
of betting on the ponies.
It's gone up by leaps and bounds
over the past decade.
At the same
time
the
activity on the stock

The speakers

will include coaches

and athletic directors of the local

universities, representatives of the
Pirates Baseball Club, sports edi¬
tors of the Pittsburgh newspapers
and

others

active

the field

Bob Prince will be master
ceremonies.
The Bond Club's

sports.
of

"Sports Night" is considered one
the outstanding events of the
winter season and has always at¬
of

market has declined about as pre¬

tracted

Committee in charge of the

large

attendance.

The
affair

investment consists of: W. Stanley Dodworth
inclined to.,
(Buckley
Brothers),
Chairman;
resent
my
mentioning the two
Arthur F. Humphrey (First Bos¬
phenomena in the same breath.
They insist the $2 on the nose is ton Corp.), Frank H. Kirk (Hemp¬
something quite different than an hill,
Noyes &
Co.),
St. Clair
My. friends in
banking business

the

are

investment in American industry.

Cooper, Jr. (Moore,
they are right, too—up
Lynch),
and Louis
point—but there is enough in
common between the two types of, fleisch.

Inc., Washington at Court Street,

Of course,

members of the Boston Stock Ex¬

television

and associated

cameras

area

normal

commercial, mili¬

authorities
these

the

use,

have amassed

needs

addition

cipitately.

135

Charles A. Day & Co. Adds

change.

finding perhaps • con¬
highest • points of the

the

into the

Mandis has become affiliated with

LaSalle

That

cludes

sources

Street,

heretofore

will have many

57th

East

those

television

plant and equipment and ways of
meeting them. By dealing with

22, N. Y.—paper—25c.

than

available.

Associates, Inter¬
Chamber of Commerce,

national
20

World

Freer

until recently

was

Transmitter Division Manager for
Allen B. Du Mont
Laboratories,

the years of skimping on invest¬
ment in this field, first during the

Com¬

States

(Special

Professor Brown said:

Equip. Corp.

equipment. '
''
Division.
Facts produced by the survey
The corporation's present
suggest that somewhere near $100
pro¬
billion would be required to bring gram includes the production of
a
the plant and equipment of Amer¬
simplified and improved tele-f.
vision camera at a
ican industry strictly up to date
considerably

Fall

textile

sub¬

our

Offers Public Sfk. Issue

and Vice-President,

There is tremendous room
need Of improvement in

(4)

der

replacement

for

America's

20 East 57th Street, New
York 22, N. Y.—paper—25c.

forward to a<S>

for

merce,

made

question,"

utmost relevance

That fact should

modernization.

in the current issue
Bank of New York
factors are operating to maintain per¬ Joins Hornblower & Weeks
(Special to The Financial Chronicle)
buying power, there has been a shift

to each other."

(3) Industry is shifting rapidly
purchases
of
plant
and
equipment to expand capacity to
purchases to improve efficiency.

considerations

the

ject.

from

increased supplies of

;

need

possible by permanent arbitrator, Professor
merchandise Douglass V. Brown of Massachu¬
setts Institute of Technology, in
and shortening of delivery dates,
the case of a 100 an hour increase
and therefore it is time to cut
costs in order "that people can sell requested by the Textile Workers
basis,

current

crash

prosperity, in¬
dustry already has plans which
will sustain capital expenditures
at a high level for years.

would

analysis of general business conditions
of the "Monthly Bank Letter," the National City
sonal incomes and

such

John Mau¬
rice Clark—Harper Brothers, 49 will devote their limited invest¬
ment funds to buying it.
That is
East 33rd Street, New York 16,
another very significant gauge of
N. Y.—cloth—$3.00.
the wide room for improvement
turity and assume the responsibil¬
Nation's Heritage—New maga¬
in plant and equipment.
ities of American citizenship and
zine issued every other month—
(5) American industry is relying
our governmental responsibilities.
published by Heritage Magazine
Your industry loses no oppor¬ Incorporated, a division of the B. primarily upon its own resources,
largely profits, to pay for its new
tunity to encourage the cleanest C. Forbes & Sons Publishing Co.,
plant and equipment.
conduct of our sports; to help see Inc., 120 Fifth Avenue, New York
Three out of four of the manu¬
that American youth gets from 11, N. Y.—$30.00 per copy; $150.00
facturing companies surveyed will
his games the maximum mental
per year.
depend primarily on profits. A
and spiritual as well as physical
Partners in Production—A basis fifth of them reported that they
benefit.
for Labor-Management U n d e r- would like to raise money by sell¬
In this close identification with standing—The Twentieth Century
ing common stock, but only 9%
character building, your industry Fund, 330 West 42nd Street, New
thought they could. The utilities
plays a vital role in our .American York 18, N. Y.—cloth—$1.50.
and
railroads
expected to rely
economic life.
Simplifying U. S. Customs Pro¬ much more heavily on outside
cedure—United States Associates, financing.

"Monthly Bank Letter" points out shift of business from a forward
to a current basis, arising from increased merchandise supplies.
Holds this means prices must be kept down, and rounds of wage
;
increases ended.
In its

Given

now

International

Time to Gut Gosis,

costs, and
shrink profits

that

eventuate.

Television
Equipment
Corp.
dispose of thle with
headquarters at 238 William
curtailment
could
be
expected. widely-cherished notion that if Street, New York, N.
Y., manu¬
When the markets will no longer industry could get the money to facturers
of
television
cameras
carry out its plans for capital ex¬ and other
absorb
their
television transmission
products, ' workers
pansion it would build itself and
who seemingly
gain through
equipment,
is
offering
300,000
us
into
a
depression
through shares of
higher wage rates must expect to
capital stock at $1 per
over-expanding capacity.
share through
give up the gains through unem¬
Henry P. RosenIn 1946 and 1947 most of the in¬
l'eld
ployment.
The markets narrow
Co., 37 Wall
Street, New
vestment for new plant and equip¬
York.
because other people do not, and
ment went
to
expand capacity.
in
most
cases
cannot,
receive
The corporation* is headed
But
last
by
year
more
than half
equivalent increases in income.
John B. Milliken,
President, who
(58%) went for replacement and
Some, as -farmers, are receiving modernization. And over the next has been active in the television
smaller incomes,"
industry since he founded United
five
yearsabout
three-fourths
States Television
Manufacturing*
(74%) of expenditures for new
Corp. in 1939. Leonard Mautner,
plant and equipment
planned

sports
have

laws, and other safeguards for la¬
bor, will also serve to maintain
incomes and to protect the econ¬

cut their
A wage in¬

would raise

would raise prices or

further.

rightly estimate the

which

work

ness

have
25%.

proauce.

you

purchasing power of wage
earners during any period of un¬
employment. The minimum wage

effers a similar protec¬
tion to agriculture. The effective¬

now

accumulated

character are
qualities which are evident in
your
industry and in the goods

tain the

program

crease

sell "their

have

They

the .American

and

demand.

unable

been

output.

show

of the qualities which make

many
up

strengthened by strong elements
of protection that were not avail¬
able in former years. Unemploy¬
ment insurance will help to main¬

omy

have

hopes for the future is the Amer¬
ican
character.
May I say that

situation

economic

huge task be¬

We must meet the normal

out

worn

Administration's program.
Our

nation has

a growing population
high living standards.
We
provide
additional
plants
machinery to replace- those

must

High-level

years

restrain the

come.

The

busi¬

years

Leonard

Haupt-

CHRONICLE

FINANCIAL

COMMERCIAL

THE

(586)

Thursday, February 3, 1949

cited about. Technically there
look

Whyte

vance

throws

lows

the

think

Steel

means

that there is little likelihood

Trend

Some people ean.

Some

saw

"One-tenth of 1 %

gave

from

world's

blindness.

similar

warning

business

of all report¬

I limit this to

comment

[The

expressed in this
necessarily at any

views

the

possibility that the article do not
split and the \time coincide with those of the
extra—wasn't good news at Chronicle, They are presented at
those of the author only.]
_

Steel news—the
Last week

all.

that

wrote here

Jas. J.

Mclfulty Forms
Own Inv. Co. in Chicago
(Special

.xl

The

Chronicle)

Financial

CHICAGO, ILL.—James J. Mc-

Nulty

has

Company

and

still further, if the news was

formed with offices at

bad; then the action of the

market

after the

be considered in
different

must

news

altogether

Street to

securities

South

in the

engage

Officers

business.

are

James J.

McNulty, member of the
New York Stock Exchange, Presi¬
and Treasurer, and William
McNulty, Vice-President and
Secretary.
Both were formerly
B.

❖

This takes

Salle

135

been

dent

light.
us

back

the with
Ames, Emerich & Co., Inc.

If the

opposite view is taken
mar¬

ket refuses to act in conform¬

ity with it, the assumption is
that underlying strength is
greater than indicated.
*

now

have

(Special

The

Chronicle)

Financial

CHICAGO,

ILL.

—

Leslie E.
to

Co.,

Bookout

has

added

been

Salle

Street.

200

South

was

previously with Blyth & Co.,

Inc.

Walston,

(Special

SAN

The

trend

broad

picture the
nothing to get ex-

CALIF.—

the

Francisco
was

New

York

and

Stock

Exchanges.
with Bailey,

previously

'(Special

The

Chronicle)

Financial

ron

has been added to the staff of

Frank

Newman

Co., Ingra-

ham Building.

(Special

The

MIAMI,

Dooly

Financial

FLA.

—

Chronicle)

Carlton M.

Baumgardner, Jr. has become af¬

they could be much more startling.
How many times do we have to
witness
this
spectacle in other
countries before

sibility
within

Members

seething

Exchange
Chicago Board of Trade

14 W«ll Street

New York 5, N. Y.

COrtlandt 7-4150

Teletype NY 1-928

Offices

San Francisco>—-Santa Barbara

Monterey—Oakland—Sacramento

economic

unhealthy

symptom

Then

concentration.

comes

restlessness,
effective

most

to fight

way

Communism is by removing the
injustices upon which Communism
feeds.
Revolution
tured

alone

not be manufac¬

Politboro

Revolution springs from

Moscow.
an

can

present sense of economic
social injustice—an absence

ever

He said:

"During the war, this long¬
standing, tendency toward eco¬
nomic

concehtration

rated.

find that to

accele¬

was

consequence, we now

greater extent than

before, whole industries

ever

are

dominated by one or a few

organizations
production

which

and

employment
power."

large
restrict

can

the

profits

higher

fertile

his message to

Jan. 6, 1947.

interest
thus

reduce

purchasing

and

present, the philosophy of the

alternative makes little difference.

Infectious insecurity will find ex¬

previ¬

was

Lucius H. Miller Dead
ated

Hopkins Miller,

associ¬

witty. E. H. Rollins & Sons,

Inc., New York City, since
died suddenly at his home
disease at the age of 72.

1923,

of heart

political

dictator¬

tive market.

This is

goal.

our

In the achievement of this

goal

lies the challenge to business!
In the enforcement of this goal

lies the obligation of Government!

iAnd

the

fulfill¬

successful

ment of this task lies the need for

the efficient cooperation
lawyers of America.

the

With the encouragement and the

assistance
and

men

struggle for
be

American

business

American

lawyers that
free economy will

won.

Italian Republic Bond
Offer Still Open
The representatives of the Ital¬
ian

Republic have filed with the
Securities and Exchange Commis¬
sion a supplement dated Jan. 21,
23, 1947, concerning the bond ad¬

justment offer. The Foreign Bond¬
holders Protective Council, Inc.,
90

Broad

received

offer

enemy we

have to fear.

It is the

New

many

gard to whether

remained

has

York,

inquiries in

re¬

not the Italian

that

open

deemed it advisable to call public
attention to the fact that the offer

continues to be open and will con¬
tinue until termination by 90-day

public notice

as provided in the
prospectus. The representatives of
the Republic informed the Council

that

Italy does not intend to close

the offer for the present and that

adequate notice will be given be¬

con¬

the most dangerous

centration

Street,
so

closure.

any

The supplemental prospectus re¬

ferred to above reports that as of
Jan. 15, 1949, acceptances of the

greatest threat to our system of
free enterprise.
In the Antitrust

offer had resulted in the issuance

Division

Italian

have

been

making

effort to combat this threat
through our Merger Unit, which
prospectively
reviews proposed
mergers. Members of the Bar may
every

down and talk with

come

when

say

tion

of the

new

bonds of the

Republic issuable under
the offer, and 69.7% of the new
bonds
for

the

Public

Credit

Works

Consortium

issuable

under

the

offer, and 53.4% of the new
bonds of the Public Utility Credit
Institute issuable under the offer.

its

The Council continues

recom¬

mendation of acceptance.

that through the coopera¬

Bar,v our
with

of 72.3%

have received from the
Merger Unit has met

some

Continued

success.

FIC Banks Place Debs.

co¬

A successful offering of an issue
and understanding of of debentures of
the Federal In¬
problem by the Bar termediate
Credit
Banks
was
munism or something else.
will be of considerable aid in the
made Jan. 18 by Charles R. Dunn,
A people's aspirations
toward
greater success of our merger pro¬ New
York, fiscal agent for the
justice cannot be curbed either by
gram.
banks. The financing consisted of
denying the existence of injustices
$62,000,000 1.55% consolidated de¬
nor by denouncing those who of¬
Small Businesses Gobbled Up
bentures dated Feb. 1, 1949, due
fer an alternative.

pression

doctrine

whatever

demagogic

it Com¬

handiest—be

report of the World Council

Churches, meeting recently in
Amsterdam, pointed out the two
chief factors which contribute to
the crisis of

operation
the

merger

our

age.

—

which under

is
mainly economic,
under 'Communism
is both

statistics

ized there

and

except

economic and political.
"For such

V1*

show

that

small

businesses, one after another, have
bden gobbled up by the big cor¬
porations faster than ever during
the past few years.
That is ex¬
actly what happened in Germany,
in Italy and in Japan. When eco¬
nomic power becomes too central¬

capitalism

are

those

it should.

there

Under
oppor¬

lead

loss

liberties.

favor of

but

chattels

of the

State.

Under

were

unrestricted economic

listen

can

duty to
that

maturing Feb. 1
is "new money."
As of the close of business Feb. 1,
1949, the total amount of deben¬
tures outstanding was $474,665,000.

$7,430,000

Harlow With C. S. Hall Co.
(Special

opportunity.

be done,- I feel

warn

The

Financial

CINCINNATI,
Harlow

with

has

Clair

Chronicle)

OHIO

Roy C.
associated

—

become

S. Hall

Trust Building..

Co..

Co,

the

past

was

all who will

With Conrad Bruce Co.

Monopoly handcuffs the in¬

guides who professed to know the

the

people—the indi¬

with

Saunders, Stiver & Co.-

Southwest Alder Street.

was

previously with L. M. Greany &

staff of

benefit
vidual.

Union

Mr. Harlow

We believe in human dig¬

largely in the fact that our
government is established for the

our

placed

debentures

and

have

trend toward free and

Unless that

was

Of the proceeds $54,570,000
used to retire a like amount

of life is in
increasing danger. Just
years ago we stood by help¬
lessly and watched what Hatton
Stunners called "These voluntary

strength

rests

nity.

1,1949. The issue

at par.

tunity for the people-^-they are
the American system our

Nov.

few roads ahead

which

The people of this country

conditions", said the

Report, "social evil is manifset
the largest possible scale."

communism

Lucius

mainten¬

ship, but resting firmly on equaity of opportunity in a competi¬

fore

This constant trend toward

ability to act

graham Building.

ExchangeA Associate)

Fresno

own

nation's

Truman

ously with Merrill Lynch, Pierce,

Oscar E. Dooly, In-

New York Stock Exchange San Francisco Stock

our

the pos¬

see

pattern forming
gate?
The first

the

another

President

pointed it out in

greed

the

1949, to the prospectus dated Dec.

Fenner & Beane.

Schwabacher & Co.

Private Wires to Principal

I doubt if

be available.

seem

warning

clear.

than

Congress

eco¬

right to expect that a sincere
and vigorous effort will be made
to reverse the trend toward con¬
Justice is immobilized by the
centration of economic power in
inertia of men. It then lacks the

filiated with

New York Curb

comparable fig¬

the rise of the Fascist and
Nazi dictatorships but they do not

tration of power

With Oscar E.
Coast Exchanges

have

One of these is the vast concen¬

Securities

Pacific

our

internal danger more

ominous

Surely

This is

The

MIAMI, FLA.—Alex B. Came¬

concen¬

country.

When these conditions of unrest

Selland & Davidson.

;

Orders Executed

this

ing

Frank D. Newman Adds

Pacific Coast

life."

could be

strength.

for Italy and Germany dur¬

ures

are

Chronicle)

Financial

FRANCISCO,

members

San
s-s

nomic

dominant

they have merger problems which
hope, of faith, of christian liv¬
they feel might result m violations
ing.
of the antitrust laws. I am proud

forth, and from where I sit, it William E. Drew has become con¬
doesn't seem likely you'll be nected with Walston, Hoffman &
able to make anything out of Goodwin, 265 Montgomery Street,
:'fi

corpora¬

all, and that 8% owned

been trying to get

and

two Hoffman Co.

one.

about

reporting

:ome

thoughts to shuttle back and

either

tration

the

staff of Francis I. du Pont &

With

you

With Francis I. du Pont

news.

that this is bad and the

assets

vate

our

tions still owned about 52% of the

perform

in accordance with the

the

1945,
one-tenth

field for Communist doctrine.

above-mentioned axiom about
markets which don't

later,

years

There is the picture of

times

signal the beginning of
a
major distribution. If this is
the case at present, the news
on
Steel changes its cornplexion entirely. Carrying it

ten
of

that

informed

91% of the assets of all.

stock split may some¬

vigorous economy free
from the domination either of pri¬

the

concerning

now

strength of the United

depends

ance

the

anything happening in the ing corporations owned 52% of
The members of the National
day I might have written immediate
future
to
give the assets of all of them 5% owned Temporary Economic Committee,
something different. Perhaps either the bears or the bulls 87% of the assets of all; one-tenth in
making their final report in
I wouldn't have been pessi¬
of 1% earned 50% of the net in¬ March 1941, said: "It is quite con¬
anything to shout about.
come of all; and of all the manu¬
ceivable
that
the
democracies
mistic, but I doubt if I'd have
facturing corporations reporting, might attain a military victory
been optimistic. It's this lack
You still hold United Car¬ less than 4% of them earned 84% over the aggressors only to find
of foresight that makes the
uiemselves under the domination
bon 36-37, stop at 34; U. S. & of the net profits of all."
market what it is.
And in case it should be said of economic
authority far more
Foreign 21-22, stop at 19, and that these statistics are meaning¬ concentrated and influential than
Cooper Bessemer came in be¬ less because the stock in these that which existed prior to the
There's
an
old
market
tween 27-28, stop at 25.
So corporations is widely held by the war."
axiom to the effect that mar¬
And
again
that
Committee
long as these hold above their public, let us consider one Addi¬
tional fact: In 1929, ?8% of the warned us that there was "no
kets which won't go up on
hope
stops, maintain your posi¬
dividends reported by individuals of
preventing the increase of evils
good news, will go down on tions. If they break, get out.
went to three-tenths of 1 % of our
directly attributable to monopoly
bad. I'm not applying this in
population.
unlesn our efforts are re¬
More next Thursday.
the present case.
I'm just
What has been the-trend in this doubled to
cope with the gigantic
—Walter Whyte
commenting on it. The rea¬
past decade? Let us see.
aggregations of capital which have
son

And the
States

domestic situation.

the
was

have

also

the

a major extent on the
strength of the United States.
•'"<

cannot

wondering

into

depression

depends to

inevitable approach of World War

refrain

lead

The strength of the world today

shaping the policies of today?

warning they

statistics for the year 1935:

history al¬
to be learned only by the

within our own generation
interpret some facts of yesterday

keep our¬

following

the

we,

nations.

The Bureau of Internal Revenue

reported

lessons

they

has ever known.
It
serious then, but a repetition
might be calamitous.

II, and as we read certain books
today and see there the clear

Concentration

❖

Summing it all

new up
Had I waited an extra
a

must

...

the

ways

is the real economic cancer which
attacks and destroys great

disastrous

third and fourth generation? Can't

selves strong."

news

would

world

Are

Weakness from within

successful

interpretation of a bear
they'd have to go
down about seven points.

way"
most

We must have vision—hindsight
combined with foresight!

symptoms now

dangerous

Dow

immedi¬

beginning of

move.

the

apparent.

democracy.

It is a, tool of totalitarianism.

cannot afford to close our eyes

market,

suspicion

Last week the
made

made

less

are

above their
right after the

away

dividual and enchains

(Continued from page 13)
again the hope of the prole¬
tarian dictatorship.
We are ex¬
pected to succumb suddenly to
our own capitalistic system. And
is

ad¬ election. In order for the in¬ As President Truman said in his
dustrials to signal full blown
move
inaugural address, "If we are to be

outlook.

ate

might

week's

last

point

rails

the

that

out

than

market

vein

point out that while the
Dow theory isn't shouting any
warnings, it might be pointed

By WALTER WHYTE=

Failure

technical

also

Says—
=

good.

this

Markets
Walter

touple of tops that don't
And while I'm in

are a

Tomorrow's

way

grave and

(Special

The

PORTLAND,
E.

Watson

Financial

Chronjcle)

OREG—Richard

has been added to the

Conrad, Bruce & Co., 813

Volume

169

Number 4774

THE

COMMERCIAL

flected in the

The Railroads—A Case

CHRONICLE

(587)

the

same

the

way,

Observations

railroad

investments of today, and the sav¬

of Simple Arithmetic

t.. •

bills.

yourf: railroad

freight

While these subsidized

petitors

com¬

railroads

the

may

''save"
one

you a little money from
pocket, it is quite likely that
taxes and in railroad freight

bills,

they

than

costing

are

from

money

your

you

other

pocket

"save" from the first
pocket. Nobody really gets any¬
thing worthwhile for nothing, and
the cheapest transportation, in the
long run, is the kind that can
you

stand

does stand

and

its

own

feet.

would

industry's

give

The second

principal

reason

why

the railroads have been receiving

only

fraction of the fi¬
nourishment they should
be deriving from this period- of
prosperity is the tortuous and
time-consuming process through
which we must go before we can
advance our prices.
small

a
nancial

Effect

Delayed Freight Rate
Increases

than

But when

our

reached

the

starting line.
We
much time and ef¬

expend

preparing for public hear¬
ings at which we almost auto¬
matically are opposed by numer¬
ous
industries and by some gov¬
ernmental agencies.
These inter¬
ests
frequently
contend
that,
while

titled

railroads

the

may

en¬

higher rates to meet
higher costs, those higher rates
should
not
be
imposed on the
particular commodities in which
they are interested.
Eventually
of

quently,

obtain

relief,

but

far

meas¬

too

fre¬

only after our
to the point
that
still another application
is
necessary. 'As a result, the rail¬
roads in this postwar period have
habitually been at the end of the
have

comes

increased

procession in their efforts to ad¬
just selling prices to costs.
If

have

gained little else
during this postwar period, we
have gained some experience. As
Henry Adams said, "All experi¬
ence
is an arch, to build upon."
we

Building upon that experience, it
is becoming apparent that serious
consideration should be given to
the desirability of permitting the
railroads to adjust their prices to

the

interest

accom¬

way

greater effi¬

ciency and long-term lower-cost
transportation, the railroads have
been making, and should continue
to make, large expenditures for
modernization

their

more,

see

"urgent."
that

four-year

same

pe¬

tion's

have

railroads

possible

only

financial

Crime

built

roads

during

the

war

years—after 10 years of depres¬
sion earnings and expenditures.
These reserves, consisting of total
cash and temporary cash invest¬
ment, declined by $1.2 billion from
the end of the war to the end

Industrial GI's

Against

which

taxation

respect to
assault

the

and

it is
the in¬
plainly and

of the Investors League upon

crime against

It is

dustrial GI's.

palpably unfair there should be
no problem
about getting it cor¬
rected.
The Investors League can
this

job.

cut

and

out

1948,
the latest
figures are avail¬

patterned for that sort of an ac¬
complishment and the people in
this
room
are
the people who

they find the need is obvious. The
traditional
elaborate
hearings,

This serious working capital de¬
cline of well above $1 million a

subsequent deliberations
and final decisions on the precise

especially can help us do it. These
people are largely either trustees
for
investors
or
important in¬

day,

conform ;

their

with

costs

when

the

and

nature

degree of the adjust¬

ments, could be the second proc¬
ess
instead of the first one —
and
without serious damage to

anyone.
•

rates
ent

anxious

are

low

with

fair

September,

able.

three-year period, is
indisputable proof that the rail¬
over

roads'

rate

made much

must

much-needed

their

modernization

were

Railroad

•

are

essential to efficient transpor¬

higher at the end

And even if we did not

things.

it to do.
"

believe

fair rates—fair to the

factors

the

picture

today.

Competitive Factors
These

competitive factors have

fact

to very sizable importance
the last two
decades.
They

virtually non-existent when

the

has

that

increased

railroads,

over

were

the present system of rate regu¬
lation was established. Nor could

the rapidity and extent of today's
cost increases be foreseen at that
time.

Permitting the railroads to

price their product, and then go
through the hearings and subse¬
quently make whatever modifica¬
tions • as
are
ruled
necessary,'

reduced the

cost

of produc¬

ing transportation far more than
charges upon the additional
capital
invested.
From
19^.1
through 1947, Class I railroads in¬
creased their output of units 6f

service

freight
their

only

investment

92%.

increase

162%,

other

the Tax

fact

The
law

that

this

penal

that the govern¬
ment would be so much better off

And

stripped of all temporizing sophistry, it is undeniable that
of portions of the population throug redistribution is
predicated on decisive political direction as to who gets what—an
entirely different process than the Truman or British fantacy of
enrichment

noncontrolling plans.

words,
output

Tax Inczeases Both Hazmful
And

the
was

nearly double the increase in in¬
vestments — all of which is re-

Unnecessary

(Continued from
would

almost

surely set
slump in business.

changed

would

dissipate

some

of the

gloom and fears which are the
only things that are keeping us
back from going to heights be¬
our

in control and
there is no Lochinvar—no leader
to free the masses of our people
"takers away"

are

this dastardly

injustice.

(Special

ST.

socialization

its growth, it should be
possible, when the threat of war
for

tax

falls heaviest

growth industries.
is to be

strong

the

If the nation

it must be in

of "cold war," when the pros¬

era

pects for durable
as

peace are not as

hoped

be, then it is

industries

couraged to expand
can

enable

now

nology
trial

that they

industrial

tech¬

developed indus¬

The

LOUIS,

Westen

Morfeld,

Financial

Olive Street.

sion

for

in the

those

healthy

economy.

debt
en¬

expan¬
„

considerations

which

ample

and

favorable

have

such

enumerated

that we are likely to find sound
guideposts for a realistic tax pro¬
gram.
We have in the techno¬

(7) The undistributed"earnings
tax is plainly an abomination, for

years

the know-how and the

re¬

of plowing earnings back into
business, without which industrial

provide the basis for
expanding economy and a
steadily rising standard of liv¬
ing for our people for many,

expansion

could

many years

ahead.

held

high

the

for

it strikes at the heart of the proc¬
ess

not

possibly be

level.

The

less

sources

means

heard about this sort of tax in the

shall

future, the better off the nation

strength

(8) We should look to reduced
expenditures rather than in¬
creased

with

tax

rates

which

for

the

reduce

funds

our

now

colossal government debt. Waste¬
ful government expenditures and
than

maximum

government

efficiency represent an unneces¬
sary
diversion of precious re¬
at

sources

every

time

ounce

strength to build
lend

material

when
our

our

need

economic

defenses and

The

support

our

recommendation

the Hoover Commission should be

reason

to believe that if this were

to be done
ernment

make

and

time

that

for the free
in

world
a

center

what

turbulent

and

The point of my
we

can

stop the

revolution

dead

its tracks by enterprise-inhibiting
taxation such as has been re¬

cently proposed.
That we will
actually do so I cannot bring my¬
self

believe, for

expansion
much

dition

and

growth

progress

and

are

part of the economic tra¬

and

the

economic lives of

the American people that it would
be incredible if

they

were

mit the application of tax

per¬

policies

which would hamstring the most

dynamic and productive economy
the world has

ever seen.

Joins Louis G. Rogers

emer¬

(Special

unnecessary

great

The

Financial

Chronicle)

CHARLOTTE, N. C. —William
Should Be Reassured

time for

authority to
our

technological

(9) It

the

dangerous time.
remarks

gency.

People

the
power

could reduce gov¬

increases

promises

expenditures enough to

tax

except

and

remain

nations

will be.

And, we have
insuring that we

reassure

business

someone
our

Lyerly, Jr., has joined the staff

of Louis G. Rogers &
in

ton

years ahead.

Co., Johns¬

Building.

people

concerns' that

With

That should not be

too

(Special

Reynolds & Co.
The

Financial

Chronicle)

WINSTON-SALEM,
Dorothy M.

McKaughan

—

is with

difficult, for unless devastat¬
ing anti-business, anti-paving and

Reynolds & Co., Reynolds Build¬

Hartnett, 721

anti-investment taxation is to be

ing.

used

merly with Harris, Upham & Co.

connected

Moss and

vironment

leave

reduction

redemption and

with

MO. —Edward

now

would

for tax

room

logical advances of the past few

resources.

ward to other than; a
steady suc¬
cession of tax increases over the

Chronicle)

done

were

en¬

to maintain the lead

have

and

our

should

which

they
growth

special economic assist¬
us, to reduce govern¬
ment expenditures by from $10 to
$15 billion per annum.
If that

they have something to look for¬

With Morfeld, Moss
,

from

put into effect immediately as a
blueprint for a reorganization of
our
government, and there is good

hold

state

ance

belong to investors could be put
back into the enterprise system.
It would do more than that.
It

from

into

need

friends.

yond

page

tion

is reduced and the world has less

by millions upon millions of dol¬
lars after the first year or two
when the funds which rightfully

while

increased

service

Without

wildest dreams.
The
whole system of our economy and
investment our
people is shot through with
the years, one fear and another because the

the

grown

Transportation

instruments of the Socialist State.-

less

Off

Better

Government

Improvements Mean Low Cost

buyer, fair to the seller—we could
not disregard, the substantial com¬

petitive

ganize and mobilize this group of
trod-upon.

programs.

tation, to truly low-cost transpor¬
of the war, and in many instances tation. And they are essential to
were
lower, than when the war the nation, whether in peace or in
began. Subsequent increases have war. The iron horse must be kept
come after, and not before, the in¬
healthy and well nourished to
creases; in
the prices of other continue doing the job you expect
rates

is up to

have

return.

programs,

followings for investors.
you to help us to or¬

enormous

greater to permit con¬

tinuance

return

vestors themselves who have

These
generally
speaking,
only
been
well
started.
keep our
possible, consist¬ They must be continued, for they
-

■

month for which

Similarly in America, what

Simply stated though they may be, it is these questions which
give the direct denial to the pleasant possibility of washing away the

propitious

find ourselves with

that

going to vote

payments?

(6) Excess profits taxation has
obvious disadvantages even
It has no place at all
in a peacetime tax program for

terrible situation in

double

which the rail¬

Britisher is

in wartime.

all live.

The

substantial

the

reserves

that the

him hospital and medical care gratis?

na¬

made

been

real world

farmer is going to wash out subsidies for his products, or what homerenter is objective enough to vote to remove the ceiling on his rent

would
our

that the

(all too-common)

National Health Act which gives him free-of-charge eye
examinations and wigs, or to throw out a bureaucracy which confers

such

which
A

modernization

some

riod.
Such

practice of

the stage for a

Taxation?

the

imagined in

AGAINST

sumer,

rolling stock received or ordered
since the start of 1945, and the re¬
(Continued from page 11)
mainder
for
improvements
to
roadway, structures and equip¬ gears of the economic machine by
in

Kipling:

Why Double

ment

is this credo

nonsense

million reasons
failure, but not a single ex¬

the

undertaken

con¬

do.

you

"We have forty

largest im¬ for
provement program of any rail¬ cuse."
road—our expenditures and com¬
mitments for improvements total
more
than $345 million for our
system and affiliated companies.
This includes more than $293 mil¬
lion for new motive power and

have

What absolute

"in

of Rudyard

the New York Central—where we

about the

much

the

democratic process will wash away "what is proved to be in error"!
For who is going to throw away handouts to his self-interest?
Can

keeping in mind

And,

know about

of free men."

today already walks to¬
morrow," let us, in conclusion,
heed well these, immortal words

rehabilitation

and

physical properties.

industry will, more
and act on the ne¬
cessity of keeping the railroads
strong and useful—in industry's
own self-interest,
and in the in¬
terest of a greater and more se¬
cure America.
Only by taking a
far-sighted view can we fully
carry out our mission to look at
the things which are "important"
as
well as the things which are

ized.

only

than

transported

enlightened

and

provided

in the

the

provement, adequate earnings are
essential.
I have faith that self-

our

fort

costs

best

values

Progress
is possible only
through improvement, and for im¬

improvement must be fully real¬

reprice

you

product is
obvious,
we
have

ure

must

the

ex¬

repricing

must

there

utilized

and

already

the

time since such figures first
were compiled.

minimizing the

Without

relation

think

highlighted

washed away, and that what is good will add one more stone to
that great edifice of human achievement that we call the society

lower

are

Laiundered Out?

Indeed, some people think you got the
idea from us in the first place. I ask
you to believe that what
is proved to be error in the present socialist experiments will, be

payments for

result,

any

only true hope for rela¬
tively lower rates is in a dy¬
namic, progressive railroad in¬
things

"We

increases in freight

transportation

commodities

want

increase, and the need for

product.

penses

The

many

railroad

plant, equipment and facilities,
and the opportunity for constant

increase,

expenses
your

ally.

kind

democracy

despite

For

habit.

pushing of its steel-national¬
in the case of steel, Mr. Crow-

fuzzy rationalization is
cluding thought of Mr. Crowther's address:

has been only one-third as much
as the increases in prices gener¬

in¬

you

Socialist Errors to Be
This

rates, their total climb since 1939

Inadequate

that

pernicious

the necessary

neither of these.

plished,

general thing, when your

know

find it necessary to

page

the government's recent

over

izing legislation. But, now again, even
ther manages to find consolation in the fact that the steel
companies'
directorates are to be left intact, and that the final enactment
may
possibly be blocked by a change of government in 1950.

The "automatic no" can be

costs.
a

(Continued from
alarmed

segments

some

adjust their prices to meet their

inadequate mod¬
ernization.
Inadequate modern¬
ization can mean only a high cost
of performing transportation, and
an
inferior quality of service as
well.

from

industry and government when

the railroads

mean

dustry.

means

level

rate

earnings.

run.

long-rang interest

own

arise

often

time, it actually would save you
money—and probably consider¬
inadequate

Thus

tomatic cries of protest

This might, of course, cost your
businesses slightly more money in
the short run.
But at the same

earnings

deter¬

deafening abatement of the au¬
which too

flexibility which the great
majority of industries rightly en¬
joy, without decreasing in any
degree our recognized responsibil¬
ities as public carriers.

able money—in the long

possible,

would best be served if there were

of the busi¬

some

ness

adequate

make

mine the rates of tomorrow.

(Continued from page 12)
increase

they

ings

relatively low rates

today.

you pay

FINANCIAL

deliberately to force the

na¬

Miss

McKaughan

was

for¬

THE

(588)

COMMERCIAL

Thursday, February 3, 1949

CHRONICLE

FINANCIAL

Indications of Current Business Activity
The

following statistical tabulations

shown in first column

are

cover

production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date) :

either for the week

Latest

AMERICAN

IRON

Indicated

Feb.

capacity);

(percent of

operations

steel

Equivalent to—
ingots and castings (net tons)

Ago

Ago
94.0

100.0

101.1

AMERICAN

Year

Month

Week

100.9

Feb.

Gteel

Week

INSTITUTE:

STEEL

AND

1,694,300

1,802,500

1,863,800

1,860,100

Crude

output—daily average (bbls. of 42 gallons each)—
to stills—daily average (bbls.)--—■

Jan.
Jan.
Jan.
Jan.

runs

(bbls.)

output

Gasoline

5,640,750

5,418,950
115,556,000

5,428,300

5,721.000

5.784,000

17,961,000

18,432,000

18,175,000

2,354,000

22
22
22
22

2,762,000

._Jan. 22

7,944,000

7,749,000

8,744,000

9,187,000

9,121,000

Jan. 22
Jan. 22
Jan. 22
Jan. 22

111,587,000

Jan. 22
carsU—-Jan. 22

Kerosene

output (bbls.)
i_
Gas oil and distillate fuel oil output
fuel oil

Residual

and unfinished

Finished

(bbls.)

Kerosene

Residual

oil

fuel

:—;

gasoline (bbls.) at
'

(bbls.)

distillate fuel oil

and

oil

Gas

(bbls.)

output

(bbls.)

5.336,287
5,446,000

TION

All

42,402,000

85,075,000

85,609,000

36,181,000

51,094,000

709,585

733,272

609,239

771,139

631,290

640,012

590,534

668,373

109,219,000

22,125,000

CONSTRUCTION

ENGINEERING

—

construction

Private

State

;

municipal

and

Federal

East

coal

lignite

and

$78,100,000

$96,601,000

$212,157,000

$99,683,000

64.829,000

60,115,000

31,688,000

147.328.000

36,486,000

46,412,000

46,614,000
53,069,000

71,797,000

30.954.0C0

35,451,000

43,115,000

75,531,000

5,532,000

10,961,000

9,954,000

(tons)

coke

Beehive

—Jan. 22

11,415,000

*11,775,000

9,536.000

Jan. 22

860,000

1.C50.000

967,000

Central

SALES

STORE

Jan. 22

158,100

*156,300

139,700

130,600

INDEX—FEDERAL RESERVE

SYS¬
Jan. 22

AVERAGE—100

TEM—1985-39

United

York

Outside

Ycrk

New

(in

output

STATES—DUN

Jan. 29

INC.

STREET,

226

473

*244

230

COTTON

steel

iron

BRAD-

Jan. 27

—

lb.)

(per

ton)

(per gross

Scrap steel

—

(per gross ton)

public

York)

(New

tin

Lead

(New York)

Lead

(St. Louis)

Jan. 25
Jan. 25
-Jan. 25

142

128

3.75628c

3.22566c

$46.82

$46.87

$46.91

$40.17

$40.58

$40.92

$43.C0

Jan.

_Jan.26
Jan.26

23.425c

_Jan.26

(DEPT.

BANK

21.500c

21.300c

17.500c

1C0.99

408:

236

daily),

(average daily),

112.00

113.12

118.80

119.00

118.00

31
seasonally adjusted as of Dec. 31

117.00

sales

117.00

112.19

112.19
105.34

104.14

103.64

108.88

109.06

107.09

116.61

Number

112.37

114.85

113.50

117.20

Feb.

1
1

Feb.
Feb.
Feb.

1
1
1

Feb.
Feb.
.Feb.
Feb.

1
1
1
1

Aaa

1—
—

—

Railroad

Group_:

Utilities

;

_—

———

Group

Industrials Group

2.43

Durable

All

products

Livestock
Fuels

Miscellaneous

commodities

Textiles

Metals

Fertilizers

Durable

2.70

2.87

Farm machinery—
——
All groups combined—

2.80

2.84

2.94

3.05

3.13

3.16

3.44

3.43

3.50

3.53

3.23

3.22

3.33

3.43

2.98

2.99

3.02

3.04

2.79

2.82

goods

Durable

goods

turing industriesmanufacturing

238.6

171.5

169.2

190.6

278%

237.4

236.2

244.9

271.6

312.5

313.4

305.5

331.C

202.5

206.6

210.8

310.2

233.9

248.4

259.1

goods

Nondurable

29
29
29
29
29
29
29

Jan. 29

Jan. 22
Jan. 22

237.2

239.6

INDEX

190.4

190.6

217.9

227.1

146.3

151.3

162.1
233.f

149.0

-r

155.2 V

213.1

155.2

214.3

,<•

—

——.——

foods—'

than farm and
products
i—.
lighting materials
Metals and metal products

All commodities other
Textile

217.1

225.9

139,128

172,225

182.892

goods

Building

327,700

337,149

285,601

All

other

—

...

_____„__ —

Special indexes—
Grains

——

—

Livestock
Meats

—2—

—

.Jan. 28

141.5

*141.7

142.0

—

——

skins_.

^Revised figure,

—

>■

Jan. 25

———'-

fIncludes 372,000 barrels of foreign

crude runs.

167.9

170.1

159.2

162.2

159.3

161.9

*$1,371

$1,27.9'

...

1,452

1.3SC

*1,282

1,196".

1,288

PURCHASES — INSTITUTE
— Month
of Decem¬
$1,478,120!

$1,317,963

*—__•_

287.203:'

300.385

—:

623,554

;

...

104

STOCK

435,592'

$2,200,915;

$2,242,407

Total

EXCHANGE—As of Dec. 31

omitted):

(000's

164.f

'179.2

^Total

196.3

169.6

176.2

153.6

153.0

-152.5

143.6

144.2

145.1

carrying margin accounts—
custmores' net debit balances

137.1

137.5

175.3

173.7

201.8

200.1

191.6

133.5

133.6

133.0

139.9

customers——..:

and

customers'

v^lue
value

of
of

banks

free

credit

$551,440

balances-

borrowings

other

60,997'

361,412

400,702"

587,310

563,441

613,121

67,048,278

65,466,288

68,312,500

$577,877"

49,183

351,963

—

listed shares
listed bonds„___

131,306,126

131,233,680

136,206,807"

price Index, 12-31-24=100—
—
Member borrowings on U. S. Govt, issues—
Member

$551,101

52,218

S.—-—

Stock

154.6

200.8

hand

Market

130.7

177.9

extended

Market

147.8

133.0

collateral

—

73.0%

71.4%

76.8%

$170,896

$118,085

$57,276."

250,591

228,614

243,585.

NON-FERROUS

CASTINGS

(DEPT.

COM¬

MERCE)—Shipments, month of November:
166.6

164.0

200.4

40.8".

$1,378
1,459

goods

Industrial

148.4

218.3

41.7"

*39.1

Member firms

158.8

206:5

41.2"

*40.3

omitted)—

(000's

Credit

Jftn- 2§
-Jan. 25

*39.7

40.7

INSURANCE

LIFE

Group

150.(

Jan> 2n

——-—

ond
*

____

goods

INSURANCE

LIFE

1926-36

48.7S'-

39.1

Nondurable

423,160

25
25
25

56.52"

*50.17

39.9

goods
2goods

Durable

188,00'

Jan.
Jan.
Jan.
—Jan-

materials

$52.74

*58.53

50.42

Hourly earnings—
All
manufacturing

188,717

Jan. 25

——

Fuel and

*$54.47

59.32

136.6
"

174,319

Jan. 2,5
——Jan. 25
Jan. 25
Jan. 25

products

$55.01

—

...

—

manufacturing

Cash

commodities

8,062,000'

142.6

1926=100:

Foods

8.194,000'

*8,279,000

...

Nondurable

OF LABOR—

S. DEPT.

*8,319,000

8,148,000

Durable

138.(

150.8

All

155.:

1,42.8

143.4
151.3

•

■

147.8

143.4

—

SERIES—U.

8,301,090

goods

Nondurable

Total

NEW

PRICES

WHOLESALE

16,256,000'

—

Hours—

219.1

225.8

196.0

Jan. 22

PRICE

*16,598.000
*

...

of December:

Month

—

Durable

181.4

195.2

171.7

195.7

194,092

Jan. 22

—

312.8:

....

Earnings—
All manufacturing

228.f

172.1

240.1

170.9

191,306

—,

REPORTER

395.0'

331.2

240.1

155.6

LABOR

NEW YORK

DRUG

*434.1

AVERAGE

(tons)—

OIL,
PAINT AND
AVERAGE=100

353.4

EARNINGS AND HOURS—WEEKLY
ESTIMATE—U.
S.
DEPT.
OF

FACTORY

ASSOCIATION:

Percentage of activity—
Unfilled orders (tons) at

140.4

*282.1

16,449.000

...

goods

Ordinary

Production

186.87

143.1

of employees in manufac¬

number

All

227.3

goods

Nondurable
Estimated

2.91

222.2

(tons)

received

*189.0

140.3

—

goods
indexes—

ber

NATIONAL PAPERBOARD

160.8".

188.6

329.1

Payroll
All manufacturing

2.71

219.7

Jan. 29

—

6,430,000"

*163.3

378.1

Nondurable

Jan. 29

•.

13,176,000-'
6.746,000'

6,554,000

428.3

3.13

443.8

Jan. 29
—Jan. 29
Jan. 29

materials
Chemicals and drugs
Fertilizer
materials

Building

*6,824,000

•

indexes—

manufacturing

3.06

394.7

—Jan.
Jan.
—Jan.
Jan.
Jan.
Jan.
Jan.

Grains

*13,378,000

161.5

2.75

——Jan. 29

Cotton

13,234.000
6,809,000

•

DEPT.

goods

3.00

COMMOD¬

oils

38,248,940-

goods

2.41

INDEX BY

and

40,389,677

6,425,000

...

3.00

385.8

Feb.

Foods

18,726,158:
$18,726,158;'

November:

manufacturing

All

2.41

384.8

INDEX

FERTILIZER ASSOCIATION—WHOLESALE
GROUPS—1935-39=100:

NATIONAL

20,510,530
$367,712,000

40,557,945

—

Nov.

PAYROLLS—U.

AND

LABOR—Month

;

ultimate customers

EMPLOYMENT

2.43

Jan. 29
Jan. 29

COMMODITY

20,677,615
$375,038,200

customers—month
.__

Durable

MOODY'S

consumers—

omitted).

(000's

ultimate

November

105.34

112.75

113.31

Feb.

Baa

ultimate

November

from

Employment

232.'

110.15

________

211

242

114.27

110.70

INSTITUTE:

ELECTRIC

Revenue

115.63

116.22

Government Bonds

unadjusted^.
seasonally adjusted—

110.70

416.

Stocks

100.69

DAILY AVERAGES:

Average corporate-,

12.000c

101.29

101.31

Stocks, unadjusted as of Dec.

;

(average

Sales

monih

.Feb.

December:

unadjusted

monthly),

Sales

14.800c

17.500c

•'

FEDERAL

Y. —1935

278

21.500c

FED¬

(average

DAILY AVERAGES:

Bonds

YIELD

BOND

MOODY'S

DISTRICT,

RESERVE

ll,384,70Oi

14,141,739

SALES—SECOND

STORE

Nondurable

COMMERCE):

215

15.000c

.Feb.

Farm

21,420,000"

*242*

94.000c

.Feb.

All

70,426;

21,231,000

229

21.550c

^Jaa:26 v~

PRICES

BOND

Orders

54,425

20,776,000

i
31

298

23.425c
103.000c

_Jan.26

.Feb.

116,968

292,871

69,091

292

23.425c
103.000c

103.000c

105.17

113,854
348,667

5.499,200"
101,421
214,056:

;

245

Sales

.Feb.

Farm

2,162,114-

1,653,888

422

21.200c

.Feb.

■

8,434,988

414

23.200c

.Feb.

Fats

754,847

685,166

1,649,284
8,811,476

(exclusive of linters) prior to

bales

DEPARTMENT

.Feb.

ITY

680,670

Dec.

$40.83

GINNING

Running

RESERVE

Government

Public

COM¬

December

public storage as of Dec. 31
spindles active as of Dec.

Kilowatt-hour

MOODY'S

Cotton

EDISON

YORK—

as of Dec. 31
month of December

AVERAGE=10«—-Month

-Jan.26

consuming establishments as of Dec. 31

136

DEPT.

establishment

storage

Linters—Consumed

& M. J. QUOTATIONS):

(E.

Electrolytic copper—
Domestic
refinery at—
Export refinery at

60,794,688;

BALES—

month

consuming

5,429,202

5,562,232

5,768.934

5,810,035

NEW

—

MERCE—RUNNING

ERAL

METAL PRICES

Straits

$287,000"

5,308,082

COMPOSITE PRICES:

AGE

Finished

Pig

$287,000

16,528,716:

62,546,025-

THE

thousands)

(in

LINTERS

AND

COTTON

IRON

10,12G

56,169,736;
36.996,411

OUTSTANDING—FED¬

BANK

RESERVE

December

INDUSTRIAL)—DUN

AND

6,413

$269,000

NEW

28,408,783:

BRADSTREET,

December

PAPER

ERAL

kwh.)___

000

(COMMERCIAL

IAILURES

7,421

City

INCORPORATONS,

COMMERCIAL

ELECTRIC INSTITUTE:

Electric

247,151,270.

States——

City

Lint—Consumed
UDISON

$307,945,958.

49,415,458
233,559,114

;
i.

Total
New

14,371,187

DEPARTMENT

$282,974,572

46,214,077
229,326,357

33,366,499

1,180,000

—

$275,540,434

48,167,799

12,200,000

—:

85,044,819"

21,478,565

INC.—Month

(tons)

(tons)——

$16,943,386;

72,082.825
25,962,852
46,548,545
26,698,603
16.039,423
14,430,964
53,293,276

Central

UNITED

Pennsylvania anthracite

$17,918,084

6,436,683
59,809,331

DUN

—

CITIES—Month

INC.—215

Central

BUSINESS

Bituminous

66,275.

—

Pacific

BUREAU OF MINES):

COAL OUTPUT (U.

*80,147

$14,063,380

etc

VALUATION

PERMIT

Mountain

—Jan. 27
Jan. 27
Jan. 27
Jan. 27

——

construction

Public

167,07a

68,582

77,846,990

alterations,

Atlantic

West

Jan. 27

269,56T

*230,118

Atlantic

South

RECORD:
Total

$502,921

*274,548

165,142

——

England

Middle

NEWS-

ENGINEERING

*$581,813

238,955

■&.

December:

South

CIVIL

$472,679

—

Month

—

omitted):

___

BRADSTREET,

RAILROADS:

freight loaded (number of cars)
Revenue freight received from connections (number of

Revenue

91,704

VALUA¬

THE

LABOR

000's

nonresidential

BUILDING

New

AMERICAN

ASSOCIATION

191,544

11.997,000

68,746,0C0

214,457

116,748

construction———

Additions,

100,586,000

2,987,107
2,608,912
233,368
144,827

residential

New

Ago

2,746,606

2,463,358

PERMIT

AREAS

(three

building

New

24,306,000
79,271,000

Dept.

November

7,718,000

22,593,000
70,491,000

URBAN

Month

2.844,921

CONSTRUCTION

—U.

Year

3,176,126

—r

sales (M therms)
therms)—

gas

sales

gas

BUILDING

9,182,000

100,286.000

therms)_

sales (M therms)

gas

Manufactured

16.747,000
2,403,000

2,542,000
7,776,000

(bbls.)
:
Jan. 22
Stocks at refineries, at bulk terminals, in transit and in pipe lines—

Latest
Month

gas

Mixed

AMERICAN PETROLEUM INSTITUTE:
Crude oil

Total

Natural

month

ASSOCIATION—For

GAS

December:

209.0

221.0

202.9

Aluminum

34,550

248.4

228.7

243.2

Magnesium

192.5

240.1

Zinc

(thousands of pounds)——
—
Lead die (thousands of pounds).——:
*Revised

figure.

—

34,683

81,80.7

708

602"

35,931

Copper "( thousands

91,311

728

of pounds) ——
of pounds )„a
——
(thousands of pounds)—

252.7

221.4

35,542

86,497

(thousands

170.9

38.407

33,617

1,152

1,366

1,209.

Volume

THE

Number 4774

169

COMMERCIAL

FINANCIAL

CHRONICLE

(589)
market

the Stock Marl ket in 1949

ai id

Business

V' paganda-inspired, fears of a col¬
in progress during the past two lapse in business activity and in
commodity prices similar to the
years may result in the outbreak
of open
of

hostilities before the end

1949.

confident dur¬

were

witnessed

declines

within

two

following the end of World

years

•

supporting
elements in our economy (includ¬
ing Federal spending at tne rate
of more than $40 billion a year, a

War I.

continued

wLch

(2) Continuation of the "cold
war," and the publicity given by
the
Administration,
before
the

the
products of several of the
highly cyclical industries, etc.), it
seems
reasonable to expect cor¬

This

elections,

porate earnings to hold at not far
below last year's levels for at least

ing 1948 that the Berlin Blocade
would

not

war,

lead

spite

immediate

the

war

scares

were
so widely publicized.
conclusion, as stated in our
periodic "reports to clients, was

based

partly

information

tained from individuals who

nence

(3) Re-election of

ob¬

were

to the possible
of a shooting war,

whom

immi¬

President in

businessmen,

during
1949

the

Fall

and

Winter

that there would

were

funds for investments

in equities.

Restrictions

(5)

amount

the

which can be
listed securities; and

money

military clash during 1948, borrowed on
thing, Russia will have
(6) Realization that the profit
materially improved her defensive
Position by late 1949, as more margins of many companies are
quite vulnerable, in view of the
armament
plants are placed in
production in the Urals. She will high level of "break-even" points.
no

For

one

probably also be in
tion

prevent

better posi¬

using China
as'a bombing and military base.
In

the

third

being made

place, the progress
in rearming Europe

that

suggests

our

Russia

will

have

progressively less chance of over¬
running Europe in any sudden at¬
tack by 1950 or 1951 than she is
conceded

time.

have

brief, while
avoid

can

for

the
we

present
hope that

Unfortunately, these factors will
undoubtedly continue to exert an
unfavorable influence

the level

of stock

prices during 1949. How¬
it does not follow that they
are likely to prevent the market
as a whole from extending its ad¬
vance to above the highs touched
by
the
Dow-Jones
Industrial
Average during 1948.
ever,

the

basis of the

actual

de¬

velopments of the Past two years,
obvious that the
years, we do want to make the investing public has been over¬
point that logic calls for less com¬ emphasizing the unfavorable fac¬
placency about the outlook for tors as listed above. Partly for
hostilities before the end of 1949 this reason, we believe investors
than was justified during 1948. are justified in continuing to place
Any development in the direction emphasis on equities rather than
least

either

with

war

another

Russia

five

ten

gradual reduction

tension, or leading to a showdown
With Russia,
will have to
be
watched carefully as the year pro¬
gresses, and
particularly in the
Summer and Fall months.

Any major change in the status
as
regards our relationship

quo

with Russia would, of course, have
material effect on our economy.

the

moment, however, it ap¬
to be a reasonably safe as¬

pears

sumption that the status
be maintained

will

quo

during at least the

first half of 1949.

Looking ahead past the -next
eight to ten months, we believe
that the prospects are for

tively short but sharp cyclical ad¬
justment in business similar to
that

experienced

There

1937—1938.

danger of any real
credit stringency (as was the case

1919,

and

extent in
of

much

the

Administration

Federal

Reserve

an easy

policy would be resumed

money

few

months of any sub¬

stantial letdown
ness

and

authorities

indicates quite clearly that
within

greater

1929), and the attitude

both

the

general busi¬

activity. Furthermore,

15%

decline, in

10%

business

ac¬

tivity would almost certainly
sult

comparable

revenues, and therefore
imiationary Federal deficit of

at least

$500 million to $600 mil¬
lion a month.
(This is virtually
inevitable,, under current condi¬

tions, because of the magnitude of
the Federal budget and the large

proportion

which is based

Federal

revenues

corporate prof¬

fixed-income securities in their

investment

its and individual incomes.)

will

and

for

belief

our

marized

from

depreciation

bring them
prewar

reported

additional

earn¬

allowance

charges

for

order

to about double the

levels.

The failure of the

market

reflect

during

the

past

the

sub¬
stantial improvement in earnings
two

very

years

be attributed

may

primarily to the fol¬
lowing factors:
(1) Frequently recurring, pro-

months.

cor¬

gradual

nar¬

represented in the Dow-Jones

are

Industrial

Average will

within

1948

levels

first

half

about

during

probabkv

20%

1949.

of the

the

least

This

spite of the continued
of

ence

would

earnings at the rate of about
$ 17—$ 18 a share on a reported
basis, or about $15 a share if an
allowance is made for deprecia¬
tion charges on approximately a
replacement-cost basis.

forces

which

have

rel itionships
r.uring the past two years,
to

vance

193.16

above

pectancy

the

to be

seems

1948

180, the Dow-Jones Indus¬
trial Average is selling for the
equivalent of only 12 times this
minimum

estimate

$15

rate

ad¬

high

minimum

by sometime

this

oi
ex¬

year.

The probabilities favor a rise to
within 3% to 5% of the 1946
high
of

212.

The

nine

and

the

basis

long-term
Studies, there is a real
danger that a cyclical peak will
be seen by March or
early April
particularly if the market as i
1948

well

above

highs by

studies

so-called

"unreal"

increment

"inadequate" depreciation
charges.)
..e

the

These

that

there

moderate

stocks

represent

one

which

available to the Amer¬

are

If world historv

past fifty to one hundred

is any guide, it
of time before

is only

over

years

question
prices will

Mr.

New

Nelson

Central

■■

success,

York

super¬

Hogenauer,

Hanover

Company;

the

Bank

Trust

John Fowler, Jr.,
Dillon, Read & Co.; and Mr. M.

Mr.

Peckar, of the Banque Beige.

COMING
EVENTS
Investment 'Field

Feo. 10, 1949

(Chicago, III.)

Club of Chicago 38th an~*
meeting at the Chicago Club.

Bond

nual
Feb.

11,

1949

(Boston,

;Boston

sociation

highs

Mass.)

Hotel Somerset.

to be

are

at least

mately

this

seen

Spring,

to approxi¬

recovery

"double

top" by next
(A high by March or April
called
for
by the consistent
a

Fall.
is

record of the duration of the ad¬
vances

following

since

ever

broad

1900.

The

base

possibility

moderate

experience

during

the

decade

1879,
and

extension

the

ninth

since

stock

the

every

1870's—

1889, 1899, 1909, 1919, 1929

these

1939. In each of

highs
later.)

years,

in September

were seen

Feb.

Securities
Annual

As¬

Traders

Dinner

the

(Pittsburgh, Pa.)

11, 1949

Bond Club of

Pittsburgh annual
"Sport Night" Dinner at the Pitts¬
burgh Athletic Association.
Feb. 12,1949 (New York City)

Friday Night Bond Club Annual
Dinner Dance at the Hotel Penn¬

sylvania.
Feb. 14,

1949

New

market

year

any

(New York, N. Y.J

York

Annual

Curb

Exchange

Election.

Feb. 15, 1949 (Detroit, Mich.)
Detroit Stock Exchange Annual

Dinner at the Hotel Statler.
Feb.

(New York City)

15, 1949

Tryouts at the New York Chesj

conflicting fac¬
tors, it will obviously be more
necessary than ever to follow a
policy of extreme selectivity in

Club

for

dam

Stock

the

scheduled for March 5.

ican public.
the

vising the American teams will bo

sion of the advance past whatever

In view of these

hedges against inflation

exten¬

Inflation Hedging

Common

proves

playing
Exchange.

Officials

1947—

time.

that

indicate

possibility of

of the few

match

by
re¬

the chances greatly favor
London Stock

Timing

whole

the

our

Spring rise, or of at least a double
top by next Fall, stems from the

this

175,

of at least 14 times earnings dur¬

the

of
the
year
should be somewhere between 17(

ing only five of the past twentythree years. (It will be noted that
wo
are
leaving out of earning!

spectively.

lows for at least the

adjusted earnings. This Aver¬
age has failed to sell at a high

2 boards will be
played
Mr. Kashdan and Mr. Jackson

months

mean

pre¬

reaching
to earnings

prewar

No.

pres¬

vented the market from

first

increase

billion in taxes

for

rowing of profit margins, earnings
for the type of companies which

management

portfolios during

investment

1949.

membership on Ameri¬
can
team to play for New York
Stock Exchange against Amster¬

Feb.

21,

Exchange

1949

match
'

(Philadelphia. Pa.)

cyclical

eventually
of

reflect

the

level

new

costs,

and, therefore, the per¬
manently higher level of dollar
sales.)

the

Stocks

currently selling on
yield basis of more than twice

are

that

offered
by investments in
high-grade bonds. This is partic¬
ularly significant, since dividend

payments have been representing,
on

the average, only between 40 %

and

50%

earnings,
long-term

com¬

with a
average
rate of disbursements of between
pared

yields

the

been

within

high-grade
peaks.
The

Stock

make

Industrial

5.8%,

while the

return

Dow-

the Dow-Jones

even

still be

divi¬

5%.

over

increase

the

divi¬

earnings

asset

value

strength of corpora¬

tions.

have

been-

because

capital

the

and

retained

necessary,

of the

quirements
level.

earnings

increased

course,

working

plant expansion re¬
at the higher-price

The fact remains, however,
each share

that the assets behind
of

tween

80%

stock

our

above

prewar.

This

higher level of corporate
dollar sales.
New competition
will
be
restricted
unless profit
margins, after taxes, justify addi¬
means

tional

much

corporate
than

plant

and

higher average rate oi
earnings, after taxes,

not

advance

at these
new
price
This in turn will mean

would

did

investment

equipment

have been

the

have

permanent

this
and

costs

case

prices.

Timing

the

basis

Timing

our

Studies, the probabilities favoring
on advance to above the highs o*
past ty/o years, by sometime

have increased

material¬

during recent

because

NYSE & Amsterdam
Last February, 1948, there was
international chess match be¬

1946

lows

dustrial

the

these

out

Without
bull

1948

have had eight

since

markets

started

In¬

not

time in 1947

Specifically,

base.

would

Average

broken at any

have

Dow-Jones

1900

with

exception,

markets

which
broad

As¬

The Broadmoor Hotel.
Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association
Annual

Convention at the Holly¬

New

Exchange,

consisting

played from

men

of the New York

Wall

sterdam
the

Amsterdam

Moves

were

type.
Due

sixth floor

the

floor

Stock

made

Exchange
by RCA tele¬

Amsterdam
to

5%-4%

won

difficulties in

coding, the
match was rather long drawn out
and the results were not particu¬
larly conclusive. Due to improved
transmission facilities, no such de¬
lays will again be encountered.
A return match has been sched¬
uled

for

a.m.

Saturday, March 5th, ai

It is expected that either

Schram, President of the New
Exchange, or a lead¬

York Stock

ing officer of the Stock Exchange
will make the first

York,

the

and

Amsterdam

for New

move

President

Stock

the

Exchange

for

Amsterdam.

Petroleum
Madison

offering

(par

Oil

Corp. at $1
being offered
The

with

$1).

and

com¬

Southern

Stock is

speculation.

organized,
capital of 50,-

was

stock

common

Aug.

595

York,

share.

per
as

authorized

issued
per

lc)

company

shares of

000

Corp.,

New

1,500,000 shares

stock

mon

Equities

Avenue,

11,

sold

(par

1948,

company
cash
at
$.1

for

share 11,500 shares of

common

stock.
The

initially

classified
basis

11,500

stock

100

of.

issued

common

were

re¬

Aug. 27, 1948, on the
shares for one, into

1,150,000 shares of

common

stock.

L all the shares
are

sold

presently offered
shares outstanding will

2,500,000.

Corporatfon

was

Delaware Aug.
ern

Gulf

Oil

incorporated in

9, 1948,

Corp.

South¬
amend¬

ment to its charter dated

Sept. 28,
changed to South¬
Oil Corp. It is qualified to do
business as a foreign corporation
in'.Mississippi.
Application
for
1948,

name

was

ern

Try-outs for the American team
will be conducted at the Manhat¬

qualification

tan Chess

probably be made.
The company is engaged in the
business of purchasing
and ac¬

ruary
or

Club

15th, at 7

Tuesday, Feb¬

p.m.

All partners

employees of New York Stock

other states will

Kashdan, International Grand
Master, and Mr. Schuyler Jackson,

producing and nonprointerests in oil iand gas
properties, oil and gas leases, the
producing of oil and gas, and is
also engaged
in the drilling of

former U.

wells for

York Stock

the
Stock

from

men

record since the enactment of the

selected

Exchange.
Street, and the ten Am¬

Exchange

Ex -

ten-man teams. The ten New York

beginning of the base), with the

years

Stock

new

highs by sometime during the
twenty-sixth and twenty-eighth
month of the advance (from the

of retained

Y ork

Southern Oil Corp.
Slock on Market

all

reached

the

change and the Amsterdam Stock

Mr.

not only SEC being toward a moderate ex¬
earnings, but tension of the rise past the twentyalso because of the appreciation in
eighth month.
From' the point
the value of both fixed and cur¬ of view of this record alone, we
rent assets.
should look for new highs in the

Traders

Convention

Chess Match Between *

just as strong as were
probabilities that the October.

"bull"

Some

Security

Annual

the

National

sociation

wood Beach Hotel.

the

ratio

regulations,- and the tendency

speculators to follow the crowd.

in 1949, are

disbursements
to

would

Ratio

conservative

dend

210,

which stems
colossal national
debt, will permit a permanent
doubling
of
fundamental
costs
vwages) and, therefore, will sus¬
tain a price level of at least 70%

high- f

our money

largely from

On the basis

prospective

Industrials,

The

supply of

increase

Average is about

and

dends, the yield

the

grade bonds is 2.9%.
current

the New

Exchange
is
now
yield on the 30

which

Jones

all of the

listed

The

6.4%.

stocks

yields on
at
cyclical

yield

the

expect),

levels.

average
stocks

about

have

of the

bonds,

common

York

In the

stocks

not

substantial reduction

to be the natural result of

appears

national debt (which we do

70% and 80% of earnings.

past,

our

in the second quarter of

case

1940, and during the last half of
1946.
This type of market action
SEC

Barring

Yields

tends

that

follows:

and financial

deduct

order

stock
prices
will
be
reached during 1949, can be sum¬

the

ings

peak

Jones '

for

the

4.1

From a longer-term point
Investment Traders Association
of
stock
of Philadelphia Annual Mid-Win¬
fully reflect the real change view, the probabilities would seen:,
to be quite strong that some type
ter
Dinner
at
four months, particularly in the in
the
Benjamin
the value of the dollar.
(The
of cyclical readjustment will be Franklin Hotel.
event of a near-term- advance.,to
failure of the public to recognize
above the highs of the past two
March 16-17, 1949 (Chicago, 111.)
the nature of the change in the underway before the end of the
There is a chance that at
years.
value of the monetary unit for so year.
Central States Group
of IBA
least the latter stages of any re¬
Our reasons for expecting an long a period is not unprecedented:
Spring Meeting at Drake Hotel.
adjustment in the market will Oct.
advance to above the
1947-1948 hoy/ever, it
would be unprece¬
5-9, 1949 (Colorado Springy,
highs in the market as a whole, dented if stock prices did not again be brief and violent, as was
Colo.)

emphasis

The Outlook for Stock Prices

preceding 20 years, the DowIndustrial
Average
fell
short of what might be considered
minimum
"normal"
levels
b,y
about 20%.
This is true even if

shift in such

sometime within the next three

Dividend

On the basis of the relationship
of stock prices to earnings over

However,

programs.

also believe that

re¬

decline

Federal
an

it appears quite

rela¬

about

demand

nine

porate incomes and

hold

six

Allowing

generally

able to get behind the propaganda speaking,
have very little con¬
"curtains," and partly on our own fidence.
analysis of the logic of the situ-,
(4)
The very high level of
alion.
Very frankly, we do not taxes,
particularly
against
in¬
feel as confident that a real show¬
comes
which
normally
provide
down with Russia chn be avoided

the

during

aumm?ry ard Recommendation

In view of the many

unsatisfied

sometime

next three months.

Future Profits

(Continued from page 2).

;

firms,

Exchange,

the

are

New

eligible.

The teams will be selected

by Mr.

Amateur

expected that

our

Champion
No. 1 and

quiring
during"

itself and for others, as

contractor.

(590)

THE

that

occasion given formally and pub¬

licly,

that
plicit and

is merely making ex¬
a state of affairs

open

that has long existed.
a

long

very

time

It must be
since

indeed

Governor of the Bank of England
elected without the approval

was

of the Government of the

other

tions

day. An¬

these minor nationaliza¬
that

less, the

Cable

Wire¬

and

all the other

willingness to

ernment

major

has

the Gov¬

cases,

compulsorily

pur¬

existing

to exist.

cease

the

steel industry, it is proposed
purchase the capital of the ex¬
isting companies, but to leave each
to

of them

intact, with its

directors, though of

board

own

the

with

course

shareholder—the

one

much

schemes.

varied

competitive

But I

can

see

question of prin¬

nature

Those

Gov¬

and

the

sieel

the

are

You

are

minor

tion, and only

one,

would

not think

minor, but we

do, for the reason that civil avia¬
tion in Britain has always been—
and from the circumstances of the

has

not

major

that

see

sults of

the coal scheme

also

published

year's trading.

only

in actual opera¬

merely completed

but

year

five

will

three of them

that of civil aviation. Perhaps you

full

the

re¬

The ba¬

sis of ascertained fact for any firm
conclusions is thus very narrow.

Nevertheless, I think a certain
al¬ number of at least provisional
must be—subsidized by the judgments are possible.
which

case,

from

different

are

those in this country, probably
ways

Government.

•-

Perhaps I ought first to tell you
what point of principle I
the
making of judg¬

from

Major Nationalizations
That

five

leaves

approach

indus¬

major

trial nationalization schemes. Coal
the

was

first,

the

been the sole

and operator of coal

owner

ments.

would

that I approach

National principle.

and
now

Coal Board has

truer

it from

I have

say

lack of

been able

never

to convince myself that the

public

mines

ownership of an industry is either
right in principle or wrong in
years. The second, chronologically, principle.
That the state should
was Transport. The British Trans¬
own all
industries, or the majority
in Great Britain for two complete

Commission

port

istence

Jan.

just

and

ex¬

ago,

year

operated the railways

is gradually

powers

and

From that date it has

1, 1948.

owned

into

came

over

assume

operation

freight traffic

exercising its
the ownership
and

passenger

the roads of the

country and of the docks, harbors
and

canals.

shipping,
hands

does

not

cover

which remains in
private enterprise,

the
ex¬

cept for the cross-Channel routes
operated
nies.

the

railway

compa¬

The British Transport Com¬

mission is

vising

the owning and super¬

but

body;

operation

the hands of five subsidiary exec¬

industries, I

But

far

is wrong.

sure

particular in¬
dustry is concerned, I don't think
as

any

any of us can afford to be abso¬
lutist and say that there is no
form of economic activity that
the

state

properly conduct.
We have accepted that it can and
should
be
responsible for such

things

the mails, the highways
and the schools, all of which were
as

originally privately owned or at
least let out to private contract.
I find it impossible to believe that
list

this
final

and

Executive,

Inland

Waterways

exceptions reached

limit,

appointed

by divine
law, about the last quarter of the
19th Century.
There may be ad¬

Hotel

the

Executive

to the list.

tude,
serve

tive

each

for

the

politan

special
in

problem of
the metro¬

traffic

passenger

area.

The

third

scheme

major

chronological
order
was
elec¬
tricity, which came into effect on
April 1 last. You must remember
that the wholesale distribution

electric power—that is, the
wide
high-tension
grid,

buys

power

nation¬
which
the generating

from

stations and sells it to the distrib¬

uting

concerns—was

many

years

ago,

nationalized

Conserva¬

tive Government and, I should in
fairness
add, has been a very

great.

success from every point of
view, "both financial and technical.

So that the

nationalization

of the

rest of the
so

industry was-not quite
complete a novelty as might be

thought.
now

The whole

owned

the

industry

British Elec¬

tricity Authority, which operates
through regional boards. Fourth¬
ly, there is the nationalization of
the gas industry.
There is no na¬
tion-wide gas grid in Great Brit¬

ain,
is

the nationalization scheme
localized

with

super¬

visory Gas Council at the center.
This

scheme

has

been

enacted

into law, but it does not take ef¬
fect until April 1 next.
Steel

Finally, there is the bill for the
nationalization
steel

industry.
will

before

possibly

as a

almost
can

even

the

This is

Parliament and
tion

iron

now

before

General Elec¬

certainly

take

and

occur

effect—

and

before it is enacted

The only correct atti¬
seems
open

judging

think there is

run

whole

robm,

board

doubt that

the top

methods

reaucratic

But when

the merits,
to

industry from one
with political pres¬

evident at

sures

to me, is to pre¬
mind and judge

its merits.

case on

comes

operation

lasted

enough to register in
of the statistics. In the coal
mines, for example, absenteeism is
as great and
disputes are as fre¬
quent as under private enterprise,
and if there has been a slight im¬
any

provement

lower

bu¬

and

procedure

down,

of doing things.

output

shift, that is at least
be

due

been
to

made

man¬

likely to

that

progress

has

mechanization

better morale.

any

fact,

The

trade

disappointed

are

the fruits of nationalization.

with

all

the

per

its

schemes,

the

govern¬

ment has very

against

rightly set its face
direct representation

any

the

unions

the

upon

the

workers

controlling

boards.
Trade unionists have indeed been
appointed to, them,, but in their
personal capacities, and they have
been required to resign all their

posts

in the

union

own

industry.
They say that it is not nearly the
same
thing to discover that it is
the nation's

industry; indeed,

they complain that the old private
owner, for all his faults, was vis¬
ibly there to be complained to
to be stormed at; he was not

and

the

helpless agent of

soulless
old

board

argument

London.

handed

their

and

would

would
is

men

real

up.

too, and I
there is no

that

being

sense

productivity
This argument

bunkum

say

they

run,

that

and

shoot

were

the

with

work

industry

over

union

satisfaction

The

reappearing

the form that if the

really

remote and

treated

glad to

sign

its

bunkum bv the Labor Party. But
the fact that it can be heard at
all illustrates how dead

belief

that

the

is the old

assertion

mere

Socialists and it will

nate for the

amusing to watch them, in the
election
campaign
that
is ap-

proacning, trying

civil

the

is
a
lormer
permanent
servant, who therefore has
politics. The Chairman of the
Electricity Authority is the former

new, and a

General

for them to

Union

Secretary of the Trades

Congress,

this

alone,
of the
three major cases, coulu
be called a political appointment.
But though these men and their
colleagues are men of ability, who
have
do

been

and

honestly

think

not

appointed,

anybody

noticeably

woule

claim that their standard of

petence

com¬

accusation'

minded

the loss has been the
somewhat*smaller post¬

railways,
result

with the
rigid level, to. which
pushed during the war.

.traffic ^combined

war

were

as a board or
It is true that private

is also managed by
boards of directors, but a private
board consists of
cause

work

the

well.

interesting

very

from

beginning to
British experience.

been

the

among

practice

fashion

for

con¬

emerge

has

time

some

Socialists to
decry
the
of
private industry of

electing

short,

economic

the

tell

against

boards

department
tions—-such

But

great deal

the

short

run.

evidence

date

fully

con¬

the mere

firms the judgment that
fact of

owners

was

makes

difference

The

What

largely of whole-

members.

to
nationalization

consequences

nationalization.

of them

none

consisted
member

•

date of the British

The earlier nationalization boards
very

Consequences

the question you
have put to me, "what have been
In

ownership of an industry,
nonspecialist whether it is public or private, is
of directors. of little or no importance at all«

part-time

members

time

taken

had

schemes," the nearest I can get to
a candid answer is to say, ncne at
all.
Certain tendencies have beep
revealed and on the whole they

Regarding the Professional
Directors
Another

Economic

opposite

principle of reflecting many dif¬
ferent points of view. It requires
a
chairman of quite outstanding
personality to make such a board

clusion

nationalization

before

effect.

men

can

constituted

work

mining indus¬

In the coal

States.

try, the first year's loss was due
to increases
in wages conceded

together,
publicly appointed board

Something of the same sort, I be¬
lieve, is happening in the United

chosen be¬

they

while

fair-,

must admit that the

have - suffered have
been. .their -ba<j :luck-Trather than
their bad management;. On the

costs

having to work

think

they

private
industry.
Moreover
they suffer from the disadvantage

industry

the defensive.

man

losses-

and

committee.

Nevertheless,

high

to escape from
that
socialism

bankruptcy. It Will be a
chastening, experience

brings

that

above

Moreover,

every

put in charge of one
of the board's func-

they

the

industry, whoever

run

it.

are,

vital

the

how

matter

does

And
is

date

that

evidence

only

the

point

available

that

pub¬

licly-owned industry is run in
much the same way as a
privately-owned
industry,
cer¬

as
production, sales,
personnel, research, etc.
Inevi¬
tably these men tended to regard

very

themselves less

tainly

board

members

with collective responsibil¬

ity than

heads of departments

meeting 4n conference but with

but ties of

anything

Tne

before

taking
Nationalization, to the or¬
dinary miners down the pit, has
always meant that the industry

now

pre¬

mission

office.

would become their

politics, would
Conservative.

loyalty

their

mined

the cohesion

depart¬

This under¬

mental subordinates.

the

board

that

proof
worse.

Indeed, I make a grievance out
of this lack of change.
If there
was
no
intention of making a

change in an industry's
of
operation, what on
the point of taking all

drastic

itself and it made life very diffi¬

method

cult

earth

for

the

subordinate

regional

better, but there is no
it is run very much

public ownership would automati¬

and district boards, each of whose

the

cally

soecialists—the district sales man¬

was

trouble

nationalize

it?

you

improve

the

psychological

district

the

atmosphere of an industry. In¬
deed, it may be that it has the
opposite effect, for a politically

manager—was

appointed board, subject to direc¬

board in London.

tions

the

from

government

and

ager

ship with
try,

this

under

the maintenance of industrial dis¬

with

cipline.

It may turn out to be the
greatest weakness of nationalized

timers.

industries

their

birds

that

they are
unions, and

the

sitting
that p
one
in

nationalized

industry

which

costs

constantly

labor

are

form

there

and

has suffered
organization,
definite reaction

has

board

admixture of part-

large

rediscovered

been

unions,
lack

the

petition in recent years in British

industry)—in

private

sense.

In short-

there has been far too little com-f

these

common

beyond all else—
competition (though

and—above and

have

knowledge

industry
Political

your

deference to the trade
committee
government

pressures,

there

broad

that

slowly deteriorate.

that

and

ripened judgment and in non¬

technical

seems

will

specialists

limitations

virtues

are

functional

that

The coal indus¬

nonspecialist

the

towards

member of the central

particular,

consisting in part of ex-trade un¬
ionists, is inevitably a weak body
in
collective
bargaining and in

production

in direct relation¬

merely substitute public for
private ownership, and do noth¬
ing else, then the probability

factors

their effect.

decay

time

offset,

thing big you want to do to
all

there

then

these,

all
have

will

Unless there is some¬

case

Other
pushed up, to the detriment of the it has been discovered that pri¬ for nationalization.
things being equal, a nationalized
consumer
and the community.
I vate enterprise knew rather more,
The Things Needing Doing
industry will be an inefficient in¬
say that may turn out to be a and the theorists rather less, about
dustry. It is only, therefore, when
It so happens that, in each of
industry than had
weakness.
It certainly has been how to run
other things are not equal, when
been supposed.
so in the past two years in Brit¬
the three big industries that have
they are sufficiently unequal to
ain, but then in a period of over¬
In all these ways, then, the ar¬ been nationalized in Britain, it is
outweigh these
internal weak¬
full
employment and of urgent guments in favor of nationaliza¬ possible to see something big that
nesses, when there is something
universal demand, all employers tion in principle have been dis¬ needs
doing and that only the
that needs doing in the industry
tend to be weak bargainers. Un¬ proved, and the belief that there state can do.
In coal, the argu¬
that only the state can do—it is
less I am misinformed, examples was -some magic in the mere fact ment is no doubt familiar to you*
only when there is some strong
of rapid rises in labor costs, at of
The British' coal-mining industry
public ownership has faded.
specific presumption in favor of
is very old and geologically very
the behest of the unions, have not But I think it is equally true to
nationalization that it can be re¬
been
Years ago it
entirely unknown in that say that the arguments against difficult to work.
garded as a good thing to do.
citadel of private enterprise, the pubic ownership in principle have should have had a massive trans¬
United States.
also—I won't say been disproved, fusion of new capital, but there
Experiences Thus Far
but I will say that they have been was plenty of cheap labor avail¬
I
believe
our
experience
in
Effect on Management
so
the industry went that
discovered to have very little im¬ able,
Great Britain is already confirm¬
poor

way

ing the soundness of this way of
looking at things.
Certainly it
has already exploded many of the
arguments that are usually ad¬
vanced in favor of nationalization

principle.
always said
the

For example, it

that

workers

the

was

morale

badly affected
by the knowledge that they were

were

working for the community,

there
less

would

fewer

absenteeism

improvement

a
general
keenness
and

productivity.

We
us

bunkum.

disputes,

and

what

most

Another

guments
tion

now

know—

suspected—that
Keen

eyes

have

the

favor

traditional

ar¬

nationaliza¬

principle has always been
an industry is no longer

mediate application.

tionalization.
these

managed by those who chance to
be its owners, but' a
deliberate
selection of the best men available

made,

the

management

quality of the ton
will improve. This

also, I think, has been disproved.
do not wish to deny the quality
of the men who have been ap¬

suppose,

certainly

not

Chairman
Board is

inevitable

obtrusive.

the

National

—

The
Coal

former coal owner who

in the

gram

of cases, by

majority

have

been

shareholder

one

the expropriated

zation.
that

detect

companies, is
any
difference

result of nationali¬

Some

people would say
one
big difference.

there

Each nationalized
at

industry in turn

year.

Now this is very unfortu¬

loss

in its first

oPPrr>s

run

the

industry needs a gigantic pro¬
of rationalization, of re-^

identically equipment

they were
before, and in exactly the same
way.
The ordinary resident in
England, unless he happens to
people—as

same

whatever

of labor willing to
mines at any price—i

insufficiency

managed by the same sort
people—in the overwhelming

have

the

cheap labor—indeed, an

work

their

selection, though it exists—

contrary,

Now that there1 is

instead.

way

continued

unable

is,

the

industries

pointed to the new boards. Cer¬
tainly, the political element in

Certainly no

disasters have followed upon na¬

that, when

was

working for employers who were
inspired by the wicked profit mo¬
tive and that once they knew they

—it must not be taken for granted this is

and the London Transport Execu¬

not

can

utives, the Railway Executive, the ditions that, through changing cir¬
Road
Transport
Executive, the cumstances, can properly be made
Docks

part
it has

of the

unions,

ciple involved.

The third of these
nationalization schemes is

greater
the

it been large

the

industry.

fairly

serve

tight frame¬
work of governmental regulation.

within

evidence

some

and

ernment's Iron and Steel Corpora¬
tion.
This is proposed because of

ate

tion,

nationaliza¬

new

wound

assets

I can

against the actual public
ownersnip of a concern which
must in any case necessarily oper¬

weeks

companies, most of which will

the

only

and

few

employees. But if so
beyond the customary
length of a honeymoon, nor has

chased

There again,
arguments of expediency

see

Thursday, February 3, 1949

Chairman of the Transport Com¬

thought they detected, in the first

munications system.

company

sumably be

through.
But the
scheme proposed has one inter¬
esting variant on the otners.
In
win

which owns and
operates the British overseas com¬

for

CHRONICLE

FINANCIAL

Consequences oi British Socialism

page

if he has any

The Economic
(Continued from

COMMERCIAL

the

past

and

lowest-cost

made

been

concentration:
pits.

has

clear over the:
that this task was

quite

30 years

beyond the powers of the private
owners of the industry
The eco-I
homic

justification for the nation-^

alization of the mines is that it is:

only

the

state

provide
through the'
To say that only

that

can

the capital and carry

reorganization.

the state can do it is not the same

thing

saying that the state will

in fact do it.

That remains to be

Volume

169

But if it does,

seen.

offset

it will reap

than enough to
defects < of „ political

^"economies

the

weakness arid of cumbrous man¬

agement that are inherent in na¬
tionalization.
'

-In transport also

there is

sim¬

ilar

argument. Great Britain-, you
must remember, is a tight little

island,

larger than the States

York and Pennsylvania
combined, but with one-third of
the population of the whole United
States in that area.
By the end
! of the 19th Century, the island
bad been equipped with a .railway
^•system adequate, and more than
adequate, to carry all the inland
,

THE

Number 4774

of .New

COMMERCIAL

conclusion that I might have

the

reached

•

transport business of the; country;

•

demonstrated durwar, the. British railways
still carry .nearly all the traf-

Indeed,
ing the

can

was

Nevertheless'..

;fic of the country.
there has grown

-■

;
■

;

FINANCIAL

I said "under

CHRONICLE

Impact of Gold Inflow

leave

the

narrower

definition of. Socialism and,

of the

''"Monthly Review"
procedures of Treasury gold buying, and concludes, in 1948,
retirement alone of government securities held
by Reserve Banks
reduced bank reserves by three and half times the increase in U. S.

with the other and the

one

in rny .birth .of off spring that takes

some¬

concluding

minutes,
say
some¬ thing from each but has its
thing about the wider issues that life.
involved.

But

there

the

The

between

rail

the

Federal Reserve Bank of New York, contains an informative
analysis
of the effect of gold inflow on the nation's bank reserves.
According

194768

„

are

the

and

curity, between the Efficiency of
road, in order to reduce the vol¬ the
economic
system
and
its
ume of transport capital that has
equity. It is the contrast between
;to be maintained and the numbers the gospel of work and the en¬
of transport employees who have
dowment of leisure, between the
to be remunerated.
Such a sortpremiqm that our fathers put
1 ing out of tasks might be. the
upon thrift and the stimulus -that
means to a great reduction in the
the present age gives to consump¬
overall cost of transport in Brit¬
tion.
It is the conflict between
ain. Clearly it could only be done
Samuel Smiles and Karl Marx.
■

if both systems

-in
<

the

of transport were

ownership,
and
equally clearly the only possible
role

same

owner

the

not follow, once

be
•

dore;

does

again, that it will

would

State.

not

over-

optimistic about it. But if it were
c'one, the nationalization of transrort

ing

might be the

means

secur¬

great economy for the Brit¬
ish nation.
a

Similarily in the

of elec¬
tricity the British electricity sup¬
ply industry got off on the wrong
case

foot in the 1890's

:
"

•

]

owing to the ex¬
cessive parochialism that was then
inflicted upon it by Parliament.
The subsequent process of consolir ation
has never fully succeeded
in putting this right, very largely
because of the
impossibility of
consolidating municipal undertak¬
ings which are almost standard
practice in the cities, and com¬
pany undertakings in the small
towns and rural
hitherto

been

areas.

far

too

There has
much

va¬

riety, not merely in charges and
rating systems but also in tech•

nical factors such

frequencies.
real
>

which

voltages and

Here again there

economies
may

large

In each of these three cases,
then, there are some arguments
for nationalization.

There are, so

•

speak, strategic advantages to
be Teaped that may be enough to
.'offset
-

•

the

this

fundamentalists

conflict.

the
do

one

other

wholly

think

not

could

are

But

wrong.

cannot

so.

nationalization.

They

may

industries

that

tionalized—but

are

already

na¬

that

depends on
what they do with their industries
that

now

them.

nothing;

proves

duct

they have

nationalized

The fact of nationalization

this very

every
mean

future

con¬

different from

Socialist

liberty... That seems to
logic-r-unless you

ex¬

loss of

some

to be

poor

are

pre¬

pared to admit that the American

public school system,

the United

States Post Office, the State Bank¬

ing

Commissions

time
limbs

the

Mari¬

all of

them

and

Commission

are

tyranny.

Certainly

no¬

aside.

from

think

the

that

one

those
to

who

the

amount

amount released

within

now,

months

election

from

most

that

will

all

systems

government

are

there

error in the socialist experiments
tack to it will be corrected.
the Right. But there must be both
The lawyers have a doctrine oi
elements in our twentieth-century Uberrima Fides.
I am no lawyer

the

course

the time is due for

shall spend the and
perhaps
I
misconstrue
it
rest
of our lives learning how But as I understand
it, the doc¬
they can be trained to double trine is that, within a jurisdiction,
-rociety,

and

harness.

this

antithesis,

great

of the

issue

the

every court must accord the ut¬
most faith to the acts of every

public ownership of

other court.
However queer and
industry, which I have been dis¬ misguided the other court's deci¬
cussing with you, is only one of sions may seem to be, they must
the

manifestations.

not

even

one

of the more impor¬

what

for

tant,

Indeed, it is be accorded the utmost faith that
all

will turn

fundamental suggest that

are

the ideas and the

aspirations of

that

evolve

the Left, not the particular peace

rima

Fides

of social mechanism through which

racies.

show

dislike
the discount at which the present

they

themselves.

government of my country values
such

things

efficiency
the
one

cause

and

enterprise, and
thrift.
But the

socialize

move

its

industry is not

this

discount, it ris

effects.

you

look

If, therefore,

upon

exotic

ifestations

it may

be different

in different countries,

dency

that

present,

twentieth

century,

where

are

men

it is

ten¬
this

Year*

20,529

free

Hbn;>-'were re-elected—I
supposing—to
a*.fourth, and
of *•office.

tion

even

Would

think

1,701

1947, in particular the
of
the European Re¬

adoption

Program,
lessened
the
foreign gold reserves.
Europe's
dollar
payments
for
imports from the United" States
were thus reduced very substan¬
tially, while offshore purchases
under the program also resulted
covery

strain

increase

some

services

the

dollar

this

country,

then

de¬

about

people
from
you

do.

think

you

Indeed,

got

idea

the

in the first place.

some

I ask

to believe that what is proved

to be

error

in the present socialist

what

will

add

stone to that great

edi¬

achievement

tha'

human

good

call the society of free men.

least

short interval between the

authorities are credited
proceeds of their gold

foreign
with

the

sales and the date when the pro¬
for the payment
goods and services,
Ultimately, however, the foreign
ceeds
of

used

are

American

balances
Bank
ber

the

are

bank

Federal

Reserve

drawn down and

deposits

and

mem¬

reserves

increased.
provide
potential credit ex¬

correspondingly

are

pansion,

"Even

though gold sales to this

country last year were consider¬

smaller

ably

than in 1947,
problem of

member

increase

they
some

bank

reserves

like amount. Every such ad¬
dition to reserves in the past year,
when
average
reserve
require¬
ments varied between roughly 20
and 25%, became the base for a
potential four to fivefold increase
in credit to the public. It is ap¬
by

propriate, therefore, to review in
some detail the process by which

gold imports—the most important
source
of additions to the gold
in

stock—result
serves,

added

bank

re¬

and what steps can be and

"Some of the

the

United

States.

becomes

general account balances
with the Reserve

of the Treasury
Banks

tend

decline

the

Treasury makes payments for the

gold

purchased. At the

same

time, there is a rise in the dollar
balances owned by the sellers

Consisting of net imports, adjusted
for net changes in the total of gold ear¬
marked for foreign accounts at this bank.
2

Treasury

Federal

cash

Reserve

1'reasury.

the

includes
notes,

General

free
gold,
Treasury
Fund of the

and

the

increased

base

for

examine

"To

reserves

the

procedure

detail, the purchase of gold
by the Treasury involves
two
additional
steps
not
mentioned
more

above.

First,

when

the

Treasury

purchases

gold,
Treasury
cash
holdings2 increase by the amount
of
the
purchase,
while
total
Treasury funds (including bank
balances) remain unchanged. Gold
simply replaces balances with the
Reserve Banks

the books, of the

Treasury. The second step is the
Treasury's issuance of gold certi¬
ficates

the

Federal

Reserve

System.
Upon
their
issuance,
Treasury cash is reduced by an
amount equal to the gold certi¬
ficates issued (since the gold is
no longer considered as cash but
as
a
100% backing for the gold
certificates) and balances with the
System are restored. This process
of transferring gold into and out
of the General Fund of the Treas¬

gold imported into

for
purchase by the
only when the foreign
country involved decides to re¬
lease the gold from earmark in
order to acquire dollars.

currency

subscrip¬

time when the dollar accounts of

began to decline toward the
of, current, yvorld. jgolc( pro¬
duction
(outside of Soviet Rus¬
sia).
try

level

Treasury

you

tlncrease

gold at the Federal Reserve Bank
of New York. Normally there is at

These

available

-11195

meanwhile, rose considerably. As
a
result, gold sales to this coun¬

"The

fice

country?

2,986

that have been

measures

third,

know

you

that

own

521

§Includes

growth in the credit base.

about the practice of dem¬

much

not under at¬

—$159

taken since

fifth term

second,

Total

Fund

368

1.057

fExcludes gold held for international account,
transfer of $687.5 million dollars gold
the International Monetary Fund,
fi Increase in earmarkings.
Fund.

have been taken to offset such a

only

zation

Accounts

1,8-36

worse

Decrease

in Stabili¬

Foreign

available.

yet

Various

and

for

312

Uber¬

democ¬

spair of the Republic?

and

in your

between

countries were,
severely depleted.

consequently,

Imports

§2,225
1,489

24,243

♦Not

If you

one

tack

might do

doctrine

best.

of many

reserves

464

22,754

Stabilization

Increase

you

do you perhaps believe that en¬
terprise and efficiency and hard
are

the

everywhere experiments will be washed away,

free to think.

heavily on their-gold
help
finance their
huge volume of imports. The gold
to

in Gold

believe in democ¬ this
country is purchased by the
believe that it puts its
Treasury immediately; most, how¬
errors
right in the end, " This
ever,
is placed under earmark.
experiment has not yet appeared When
imported gold is earmarked,
before the court of first instance.
it is physically set aside in the
Let us suppose that the American
vaults
of
the
Federal
Reserve
people were to elect to office an Bank, of New York
(which acts
administration pledged to experias the agent for the whole Federal
me<its.,ofa novel and, as many Reserve
System in international
spqpplethought, dangerous kind, banking transactions) and does
and suppose that that administranot enter into the gold stock of
racy,

respon-. ocracy

sible movement of human thought.
And for another, though the man¬

for

out

its

drew

reserves

Net

constituted

us,

tries

End of

magnitude for the Federal Re¬
serve System since they tended to

error.

was

JReduction:

States

Ear-marked

correction

to hold
that history has set

United

peak in 1947, when foreign coun¬

receipts of certain Western Hemi¬
sphere countries. Exports of goods

the

Monetary Gold Stock

endangered

billion

$1.4

postwar movement of gold

-Selected Factors of Change-

too far and

we are

"The

Analysis of Increases in United States Gold Stock, 1946-48
(In millions of dollars)

liberties

are

about

were

smaller than in 1947.

Left of the last 20 years has gone

that, if

fore,

1947

was

that, but only democracy provides
deliberate opportunities for the

movement

of
earmarkings.
Actual
purchases of foreign-owned gold
by the Treasury in 1948, there¬

excess

released

whereas

earmark,

the total

possible

the

exceeded

body in England thinks the basic

work and thrift

the

the industries will prove

everything.
But

liberty,

periment must

ideas of the Left for
Democracy, after all, is a systo sweep them: tern of trial and error.
Perhaps

in the

tury

perfectly legitimate and

able to provide the proof—for the

complete

say

socialism as.mn.
disease,
like
typhus * or
scale, bureaucratic, monopolistic
beri-beri, the symptoms of which
organization.
But while the tac¬
it may be interesting to have-de-tical disadvantages are almost in¬
scribed by a visiting traveler,
evitable and make their appear¬
which can be kept out of your
ance at once, the strategic gains
own country by quarantine regu¬
will have to be worked for, arid
lations at the ports, I submit you
in any case will not mature for
are making a
great mistake. For
some time.
The onus of proof is
one thing, is is not a disease, but
quite definitely on the advocates
a
that

loss of

means

as free—and, I would
add, as un¬
simply go back to the nineteenth
century. There is far too much predictable, as anywhere' irP; the
world
of the logic of the twentieth cen¬

tactical

disadvantages
inseparable from large-

would

Life

Communism

that one socialist experiments we have had.
of them
will be
order of ideas is wholly right and All
submitted,

easier

ire

reached

enough

not believe that any of us

afford

are

outweigh the, characteristic defects
of public ownership.
.

I do
can

Electricity

February issue of the "Monthly Review/' published by the

^ world today, a real battle to the to the article:
death. It often appears in the dis¬
"The postwar inflow of gold
witnessing, in our times
•and within our own democracies, guise of a battle between differ-, to this country continued during
[ent:,systems of economics. But 1948, but was on a substantially
a ;great struggle of icfeas; Western
that-is a trap set by the enemy lower level than in 1947. Net im¬
industrial civilization,' as we know
and designed to foster unneces¬
ports, valued at $1.7 billion, were
itr; grew; up under'the domination
only about one-tenth smaller than
of a system of ideas that we now. sary quarrels in the ranks of those
who oppose him. If the main dif¬ in 1947.
However, as the accom¬
call those of the'Right.
It was a
ference between the Soviet Sys¬ panying table
indicates, the total
system of ideas that exalted ma¬
tem, .and our own were simply amount of gold earmarked here
terial
progress.
and
production,
that they believed in the public for
and
under
it
more
wealth has
foreign account during 1948
been created than was ever before ownership of industry and we did
The Struggle of Ideas

up-in the last 40
not- we eould agree to differ and
years a second transport system,
;imagined^;i But it was also a sys¬
on the roads, which can also move tem that took little notice, of the- vea^h^mind his own business. But
very large. traffics.
Beyond : any miseries and the injustices1 that- :We.';VnoW " that is -not what is at
c'oubt, Great Britain has • more were the price; of its progress. We issue. ' It is human liberty that
we
cannot agree to differ about.
transport than it needs.
If both
ave therefore in the last genera¬
It is not the public ownership of
these transport systems are to be tion
seen the rise of the opposite
kept fully maintained and fully doctrines of the Left, which exalt industry that we fear, but tyran¬
s affed, there will be great waste
aggression
the security and social welfare of ny and the military
that follows in its wake.
of resources. You have a pale reWhat
the individual, even at the cost
divides us from the Soviets is not
f lection of the same problem here,
of economic
efficiency and the
but. with your vast distances and maximum creation of wealth. This their views on the matters I have
been discussing, but their views
your still rising population, it is
is one of the great antitheses of
not nearly as severe.
There is in our time, which reappears in in¬ on my right to discuss them.
Britain at least a case for work¬ numerable guises.
I have sometimes heard the ar¬
It is the an¬
ing out-some differentiation. of tithesis between Progress and Se¬ gument in this country that, since
task

monetary gold during year.

own

battle

current

traces

Bank Reserves

^Federal Reserve Bank, of New York in

are

where

(591)

attack"—but that

you had asked me to is the wrong word, for it suggests
"The Economic Conse¬ a battle. And this issue of Right
quences of American Private En¬ and Left is not a battle that can
terprise"—that it all depends on be won by either one killing the
the quality
of the management other. It is rather a problem that
and' the policies it pursues?
This bas to be resolved by the mating

speak

ury

has

bank

member

balances.

Member

effect

reserve

bank

reserves

affected

are

at the time when the

only

proceeds of

the gold sales are paid out
foreign monetary authorities,
"When the

Treasury has com¬

pleted the operation by replenish¬
ing its balances with the Reserve
Banks through issuance to them
of gold certificates in the amount
of the
course

gold purchased, there is of
no net drain on Treasury

deposits with the Federal Reserve
System. In the meantime, member
deposits and reserves have
been increased by the amount of
the
government gold purchases
(as foreign holders spend the pro¬
ceeds of gold sales in the market),
and thus a potential basis for in¬
creasing bank credit has been
provided.
bank

"The

effects

increase

the monetary

gold stock on bank
reserves
are
no
different today,
when the Treasury alone may buy
gold, than under the system that
existed prior to 1933, when the
commercial banks

were

the major

buyers and sellers of gold. Under

(Continued

page

47)

THE

(592)

COMMERCIAL

•

INDICATES

Registration

Now

Securities

ISSUE

SINCE

ADDITIONS

Thursday, February 3, 1949

CHRONICLE

FINANCIAL

Affiliated

Inc.
Jan. 24 filed 10,000,000 shares
Underwriter—Lord,

Co.,

stock-(par $1.25).
York.
Price,

common

Abbett

to finance part of the construction program
the company and its subsidiaries.

.notes and

Fund,

Aircraft

Mechanics,

Dec.

non-cumulative

(letter of notification) 240,000 shares of common
To be sold at $1.25 per share.
No underwriter.

stock.

construc¬
off bank borrowings. Expected

To operate company, purchase an excursion
of other transportation

ton, D. C.

boat and invest in the securities

operating capital, retirement trade accounts and cur¬
rent RFC loan and for equipment.
For

amusement companies.

Mines

Ltd., Toronto, Canada
first mortgage bonds
(convertible into common shares at rate of four shares
to dollar, or at a price of 25 cents per share).
Under¬
writer—James T. De Witt Co., New York.
Price—95.
Proceeds—To pay off, in part or in full, outstanding in¬
debtedness and for general working capital.

(letter of notification) 50,000 shares ($2 par) 6%
preferred stock.
Price, $3 per share.
Underwriter—Lawrence R. Shepherd & Co., Washing¬

Inc., Colorado Springs,

Colorado
Jan. 24

' :'

;

•

15.

Erndale

Jan. 4
O

J-

Capital City Boating Corp., Washington, D. C.

Proceeds—For investment.

market.

tion expenses and to pay
Feb.

New

lion program, reimburse its treasury for past

filed

$100,000 5-year 6%

Central Maine Power Co.
Allied

•

Oil Corp., New York
notification) 1,200;000 shares of common
lc).
Underwriter—Atlantic Securities Co.,
Price—25c per share.
Acquisition of oil

Western

stock

(par

New

York.

leases, properties, drilling, etc.
<9

Alondra Park Country
25

such

Club, Los Angeles, Calif.

Jan.

filed

Jan.

stock

common

(par $1).

•

Light & Traction Co., Chicago
Railways Co. filed 634.667 shares
of American Light common ($25 par).
Underwriter—
XYone.
Offering-^-The shares will be offered at $12 per
share to holders of United Light common of record at
the close of business Feb. 7, on the basis of one share
American

American

Light

United Light common.
American

five shares
Rights will expire March 9.

common

Steel &

each

for

lawful purposes.

Jan.

—To

indebtedness

retire

per

Inc., Ann Arbor, Mich.
115,315 shares ($10 par)

Argus,
filed

City

Clarostat

filed

convertible
comomn

57,144

•

cumulative

preferred stock and 57,144 shares

•

Mining Co., Tonopah, Nev.
(letter of notification) 1,500,000 shares

common

stock.

Price—20 cents per share.

(5c par)

Underwriter

—Batkin & Co., New

York. To repair and renovate mine
exercise option to purchase processing
mill and move and erect such mill on the company's
property and for working capital.
California

Electric

Power

Co.*

shares of 5.Vfc% convertible pref¬
erence stock,
1949 series ($20 par). Underwriter—Wil¬
liam R. Staats Co., San Francisco, Calif.
Proceeds—To
Jan.

finance
®

Jan.

1978.

filed

100,000

property additions and betterments.

California
28 filed

Electric

Power Co.,

50 cents per

$3,000,000 of 3% first mortgage bonds, due
to be determined through

bidding. Probable bidders include Halsey,
Stuart & Co. Inc.; Shields & Co.; Kidder, Peabody & Co.;
Blyth & Co., Inc. Proceeds—To retire $500,000 of bank

'V.

Gauley Mountain Coal Co., New York

filed 10,666 shares of capital stock, of which
shares will be sold in behalf of the company and

Jan.

19,

1,381

9,285 shares will be sold by Norgreen Associates Inc. and
others. Underwriting — None. Proceeds — Company will
use

its proceeds for additional

Hamilton

Jan.

Fund,

filed $4,000,000

working capital.

Denver, Colo.

periodic investment certificates^

series H-DA.

Harwill, Inc., St. Charles, Mich.
(letter of notification) 125,000 shares of common
(par $1).
Price, par.
Underwriter — Charles E.
Bailey & Co., Detroit.
To pay current liabilities, pur¬
chase property, building and equipment and for working
capital.
.
/Cv;:
Oct. 27

stock

Colorado

•

Proceeds—For drilling operations.

ceeds—$600,000 to be used for spectator grandstand and

Heller Brothers Co.,

•

Jan. 27

filed

stock at $50 per share or $8,156,650
of
3%
convertible debentures,
due 1959.
Offering—
Stockholders will be allowed to purchase^ for each eight
shares held, either one. share of common at $50 or $50
of debentures for $50 in cash.
Unsubscribed shares
will be reserved for conversion of debentures into

Scranton
of

Underwriters—Putnam

stock.

mon

& Co. and Estabrook' &

underwriters

Co.;

com¬

Chas.

Cot will head a group

in purchasing the

unsubscribed deben¬
to the payment of

Warshoff

derwriter

—

Cantor, Fitzgerald & Co., Inc., New York.

February.

N. Y.

Plastics

Co.,

St.

'L'-V-x-

Louis,

v'4

■•/V.

Mo.

(letter of notification) 11,000 shares of 6% pre¬
(par $25).
Price, par.
No underwriter.

stock

additional

For

Inc.,

.-.

Price—$3 per share.
Proceeds—To develop, exploit and
distribute a television innovation. Expected
early in

ferred

Mines,

For development ol

Inc., L. I. City, N. Y. (2/15)
Nov. 3 filed 160,000 shares ($1 par) class A stock.
Un¬

Jan.

Silver

Corp.

Hotelevision,

outlays.
Consolidated Caribou

Mines

Newark, N.

Co.,

$2,570,000 of bank borrowings and to future construction

applied

Gold

mining properties.

Household

Lake

(letter of notification) 100,000 shares of capital
Price—$1 per share.
Underwriter—Charles W.

•

Proceeds—To

tures.

($100 par)

To be exchanged l'or 7%

(par $100).

stock.

alternative to issue either 163,133 shares

common

preferred stock of Heller Brothers Co. of Ohio (a sub¬
sidiary) on a share-for-share basis.
Underwriting-^
None.
'
4 v;

Dec.

Power Co.

Newark, N. j.

(letter of notification) 3,000 shares 7% preferred

Norwood

Light &

Underwriter—None. Pro¬

Price—$100 per share.

$100).

Connecticut

Heidelberg Sports Enterprises, Inc.,
Pittsburgh, Pa.
June 25 filed 5,000 shares of class B common stock (par

stock

Tunnel, Inc., Denver, Colo.
Jan. 24 (letter of notification) 120,000 shares ($1 par)
common.
Price—$2.50 per share. No underwriter.
To

•

:v: <

Des Moines, Iowa
Jan. 20 (letter of notification) 4,000 shares of $10 pre¬
ferred stock, to be sold at $50 per-share. Underwriters—♦
Becker & Cownie, Inc., and Shaw, McDermott & Co.;
Des Moines, Iowa.
Hawkeye Casualty Co.,

balance for related purposes.

Travel

construct tunnel.

Dec.

Ltd., Montreal, Canada

200,000 shares of capital stock.
Price—
share in Canadian Currency. Underwriter

—P. E. Frechette.

•

Riverside, Calif.

Underwriters—Names

competitive

unit.

per

Mfg. Co., Inc., Brooklyn,

(letter

(no par)

cf company and to

$15

16 filed

Jan. 31

Bradshaw

Oct. 8

company.

Coleraine Asbestos Co.

Aug.

•

shares of 5%

N. Y.
notification) 37,400 shares of 500
cumulative convertible preferred stock.
Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc.

Aug. 26

($21 par) :
(no par)
stock, to be sold in units of eight shares of
each class at $169 per unit. No underwriting. Proceeds
—To buy equipment and set up plant ready for operation.

Jan.

general funds of

Class

Co., dated Jan. 1, 1649.

Insulating Boards Corp. of Palestine,
York

one

„

purchased company will issue a purchase warrant en¬
titling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
Underwriter^—Leason & Co., Inc., and First Securities
Co., Chicago. Proceeds—For working capital.

New

and

City Securities Corp., Indianapolis, Ind.
Jan. 26 (letter of notification) $250,000 5% sinking fund
debentures.
To be issued by City Securities Corp. under
a plan for rearrangement of finances of Advance Paint

preferred stock.

Bi)<!atl

...

■

capital.

Ex¬

5V2% cumulative
Offering — To be offered
Initially for sale to stockholders at the rate of one pre¬
ferred stock and purchase warrant for each 3 x/i shares
Di common stock held.
With each share of preferred
Nov.

on the closing or last sales
offering, but not below $4.25 per share.

lower, based

•

For

pected financing plan will be revised.

convertible

Corp.

Underwriter—Emory S. Warren & Co., Washington, D. C.

Proceeds

and for working capital..

Radio

($1 par) common stock. Un¬
Corp., New

Hastings (Minn.) Gas Co.
27
(letter of notification) $14,000 first mortgage
sinking fund 5% bonds, due Aug. 1, 1960. Underwriter—
Braun, Monroe & Co., Milwaukee, Wis.
For working

Class

share.

Washington, D. C.
notification) 2,200 shares of Class A
stock, ($12.50 par) and 2,200 shares pf Class B
($25c par). To be sold in units of one, share of

common

Pump Corp.

Price—$8

Television

(letter of

common

Sept. 21 filed 200,000 shares ($2 par) convertible class A
jtock. Underwriters—Herrick, Waddell & Reed, Inc. and

Sills, Minton & Co., Inc.

market

the date of

Citizens Credit Corp.,

federal estate and

—

notes, the proceeds of which were used for the acquisi¬
tion of property, the construction of facilities, and other

Jan. 10 United Light &

pay

Proceeds
To pay past due debts, to reestablish
corporation's credit position and for general corporate
purposes.
Price—The ceiling price will be $5.75, or

stockholders, the rights to subscribe to which have not
been exercised.
Proceeds—The net proceeds are to be
applied by company to reduce its outstanding short-term

Proceeds—For investment.

ket.

the estate of Joseph Hecht.

The First Guardian Securities

—

York.

by New England Public Service Co. of its pre¬
emptive rights, in the proposed issue and in addition,
for the purchase by the underwriter at the conclusion
of the subscription period of those shares offered to

Underwriter—Lord, Abbett & Co., New York. Price, mar¬

the

waiver

Inc.

Shares,

2,500,000 shares

filed

Farnsworth

derwriter

—Company proposes to enter into a contract with an
underwriter for the purchase by the underwriter of the
shares made available for sale to the public by the

of the costs involved in a pro¬
gram to improve and expand a pulp and paper mill. Ex¬
pected about Feb 9-10.

Shops, Inc., Davenport, Iowa
notification) 12,000 shares ($1 par)
Price—$6,625 per share.
Underwriter—
of

Jan. 12 filed 270,000 shares

underwriter.

presently held and five shares of common stock
for each six shares of 6% preferred stock. It is proposed
that the subscription rights be negotiable.
Underwriter

convertible sink¬

15-year 414%

Business

sale to

Bake

(letter

state inheritance taxes

stock

tion and to pay for part

American

for immediate

capital stock.
Quail & Co., Davenport, la.

to purchase

states

pursuant to their preemptive rights in the ratio of one
share of common stock for each six shares of common

ing fund debentures. Underwriter—Paine, Webber, Jack¬
son & Curtis.
Proceeds—To pay off a long-term obliga¬

company

Company proposes to,offer the remaining 67,300 shares
to its other common and to its 6% preferred'stockholders

Board Co.

$5,400,000

However,

available

vL';:':

American Box

stockholders have preemptive rights

stock.

Federal

Jan.

that it believes
New England Public Service Co., which holds 77.8% of
the common stock, will waive its preemptive right to
purchase 219,196 shares of the total issue, making such

stock.

ferred

(letter of

clubhouse.

mon

notification) 10 870 shares ($2 par)
common and 10.870 shares ($10 par) preferred.
To be
offered in units of one share of each at unit price of $12.
No underwriter.
For construction of golf course and
Jan.

(by amendment) 286,496 shares ($10 par) com¬
Offering—Company's common and 6% pre¬

Jan.

Jan. 19 (letter of

working

capital

general

and

corporate

purposes.

Jan. 21

(letter of notification) 78,750 common shares (no
Price—$1 per share. For development.of mining
properties.
No underwriting.

Idaho-Montana Pulp & Paper Co., Poison, Mont.

par).

Nov. 23
mon

^Delaware

Jan.

Power

31 'filed 232,520

Light Co., Wilmington,

Del.

(by amendment) 258,675 shares ($10 par) com¬
Underwriter — Tom G. Taylor & Co., Mis¬

stock.

soula, Mont.

Price—$10 per share.

Proceeds—To erect

shares ($13.50 par) common stock.

Offering—To be offered to common stockholders in ratio
of

-one

new

for

each

five

held.

Under¬

writing—Unsubscribed shares will be sold at competitive

The First Boston Corp. and
Blyth & Co. (jointly); Morgan Stanley & Co., Harriman
Ripley & Co., White, Weld & Co.. and Shields & Co.
(jointly); Lehman Brothers. Proceeds—For construction.
bidding.

Jan.

Probable bidders:

Dividend
28

filed

Proceeds—For

Shares,
5,600 000

Inc.,
shares

New
(250

pe^
CO

York
par)

capital

Vow

stock.

York
th*

investment.

:stock

Duke

Jan.

Power

Co., Charlotte, N. C. t (2/13)
24 filed. $40,000,000 first and .refunding mortgage

bonds, due 1979.

Underwriters—Names to be determined

through competitive bidding. Possible bidders include:
Morgan Stanley & Co.; The First Boston Corp.; Halsey,
Stuart & Co. Inc.; Stone & Webster Securities Corp.
Proceeds—To

complete part of the company's construe-

brokers

nd Bosto"

hanZeS
Cvu

C^'°

dealers

underwriters

Eos

TO*

Volume

169

THE

Number 4774
n

COMMERCIALS & FINANCIAL

•

Mid-Continent

Jan. 20

NEW ISSUE CALENDAR

stock.

(EST)

Jan.

Power &

Common

1949
Equip. Trust Ctfs.
(EST)_„-Equip. Trust Ctfs.

a.m.

mortgage

bonds, due

1979.

determined

through com¬
Probable bidders: Shields & Co.; The

Boston

Corp.; Halsey, Stuart & Co. Inc.; Lehman
Brothers; Kidder, Peabody & Co.; Glore, Forgan & Co.;
Harriman Ripley & Co. Proceeds—For construction or to
pay
off short-term bank borrowings.
Expected about

•

10,

Texas & Pacific Ry., Noon__

Virginian Ry., 11

•

Inc., New

To reimburse the

treasury, in part, for past outlays*

(3/7)

•

•/

Rare

Jan.

Minnesota

Power &

Earths, Inc., McCall, Idaho
(letter of notification) 300,000 shares

(100 par)
Price—$1 per share. No
To complete the purchase and installation
dredge and other equipment.

common

Renaissance Films Distribution,

Inc.,

Montreal, Que.

•

non-assessable stock.

underwriting.

Oct.

Equip. Trust Ctfs.
February

March 7.

February 8, 1949
Chicago Indianapolis Louisville Ry-,

(CST)

First

Light Co.

filed $4,000,000 first

petitive bidding.

1949

February . 7, 1949
Atlantic Coast Line RR., 11 a.m. (EST)_Eq. Tr. Ctfs.

Noon

(593)

chase warrant attached
entitling the holder of each $1,000 bond to purchase 10 shares of common
stock at $20
per share. Underwriter—W. L. Canady &
Co.,
York.

capital.

Minnesota

Underwriters—Names

..-■•A

for construction and additions to facilities.
®

-Equip. Trust Gtfs.

February
Major Television Corp..,,

Mo.

1949

New York New Haven & Hartford RR.,

Noon

Inc., Kansas City,

(letter of notification) 13,273 shares of common
Price—$6 per share. No underwriting. For addi¬

tional working

February

Airlines,

CHRONICLE

filed

40,000

(par

$25)

cumulative

convertible class B preferred stock and

Light Co., Duluth, Minn.

Jan. 27 (letter of notification) 9,090 shares (no par) com¬
mon.
To be sold at $21 per share to stockholders.
No
underwriters.
To reimburse treasury for construction

expenditures and for other, corporate purposes.

10,000 shares of
(no par). Underwriting—None. Offering—Class
B preferred will be offered at
$25 per share with one
share of class C given as a bonus with each 4
shares of
class B purchased.
Proceeds—To pay balance of current "
liabilities and working capital.
C stock

February 15,
Columbia Gas System, Inc

1949
/.-.-.Debentures

Duke Power Co.—

-Bonds

Hotelevision, Inc.
Monongahela Power Co

Class A Stock

Bonds & Preferred

Rockland Light & Power Co

February

Bonds

16,

(EST)__Equip. Trust Ctfs.

February

24, 1949
Northern Pacific Ry., Noon (EST)-.Equip. Tr. Ctfs.
•

Business Machines Corp., N. Y.
(letter of qotificatioft) 299,000 shares of common
(par $10c).
Underwriter—Mercer Hicks & Co.,

Jan. 21
stock

New

York.

Equip. Tr. Ctfs.

March

7, 1949
Minnesota Power & Light Co

Monarch

Bonds

purposes.

early in April.

Machine Tool Co.

Underwriters—F.

Eberstadt

•

Mono

March

West Penn

Power

1949

Ry.

1949

Staten Island Edison Corp.

Jan.

Bonds

22, 1949
New England Telephone Co
March

24,
Corp

operate

Debenture

1949
Preferred

•

bleached sulphate pulp mill with

200-

day capacity.

($10

working capital.

For

his family at $8.50 per share.

Johnston

Mutual

No under¬

Bids

for

•

Keystone

Boston.

Custodian 'Funds,

Inc.

Proceeds—For investment.

Las Vegas
25

filed

(Nev.)

Underwriting—None.

cumulative

preferred

stock (no par).
sold in units of

common

Offering—To be

share of each at

land and

$5 per unit. Proceeds—To purchase
construct racing plant and for working
capital.

Macoil

Jan.. 26
common

July 14 filed 65,000

notification)

($1

New York

•

for

each

two

held.

Lazard

Freres & Co. and Newmont

Mining Corp. have agreed to
purchase any unsubscribed shares, but have no intention
of making any public
offering thereof. Proceeds—Pro¬
funds

with

which

company

vestment in San Manuel Copper

may

Corp.,

increase its in¬
a

subsidiary.

Major Television Corp., New York (2/4)

Jan. 28 (letter of notification) 299,600 shares of common
stock
(par 250).
Underwriter—Mencher & Co., New
York.
Price—$1 per share.
To finanee manufacture
and sale of television receivers and cathode
ray tubes.

(letter of notification)

100,000 shares (lc par)
common stock.
Price at market.
Underwriter—Cromer
Brokerage Co., Salt Lake City. To liquidate a loan which
was obtained to
pay rentals on leases and to pay future

borrowings.

Blyth & Co., Inc.
off

Trotting & Pacing Association, Inc.,
Hill, Md.

$200, to present stockholders of

the Association

pre¬

Un¬

to pay

Expected about March 7.

Los
Jan.

stock.

Tooth

Brush

Corp.

of California,

200,000 shares of

capital

To be sold to 28 persons without underwriting. To

liquidate

indebtedness
the

Nevada

acquired

with the

business

•

Gas

Electric

shares of

Offering—To
of

one

new

offered

Co.
common

share for each

stock (par $25).
at the

stockholders

par

held.

Pepsi-Cola Bottling Co. of Washington, D. C.
21 (letter of notification) 31,500 shares (100 par)
common
stock to be sold to public at $3 per share;
40,000 shares to be offered to trade -accounts; 27,500
shares to be offered on behalf of a stockholder at $3
per share and 10,000 options at 10 per share.
Under¬
writer—Willis E. Burnside & Co., Inc., New York.
For
working capital arid /payment of taxes. Expected about
/ March 1.
■/•:
Dec.

■■■•

Playboy Motor Car Corp., Tonawanda, N. Y.
Dec. 29 filed 1,000,000 shares of class A 20-cent prefer¬
ential dividend series ($3 par) common stock and 1,000,000 shares of class B

offered

(50 par)

units of

one

com.

stock. Offering—To

each.

Underwriting—

By amendment.
Proceeds—For purchase of equipment
and working capital.
•

Public

Service

Co.

North

Inc.

Jan. 24 (letter of notification) $135,000 5% general mort¬
gage

bonds, due Dec. 1, 1951, with

common

Carburetor Co., Dallas, Texas
(letter of notification) 4,519V2 shares of common
capital stock. Price—$40 per share under a share for
share pre-emptive rights offering to stockholders. No un¬
derwriting. To purchase equipment" and materials; and
to develop sales organization.
•

Russell

(F. C.) Co., Cleveland, Ohio
(letter of notification) 6,000 shares ($1 par) com¬
Price, market. Underwriters
McDonald & Co.,

Jan. 20
mon.

and

—

Saunders, Stiver & Co., Cleveland.
St.

Anthony Mines Ltd., Tordnto, Can.

Aug. 6 filed 1,088,843 common shares (par $1). Price,
40 cents per share. Underwriter—Old
Colony Securities
Ltd. of Toronto.
Proceeds for gold mining operations.
•

Sedberry

(J.

B.), Inc., Franklin,VTenn.

Jan. 24 (letter of notification) $250,000 6%

10jyear sink¬
5,000 shares (no par) capital
$10 per share. No underwriting. To
retire bank loans and for
expansion purposes.

ing fund

debentures

stock to be

sold

Southern

California

Angeles
Jan.

(letter

common

ment,

and

Textile

Industries,

•«

Price, par.
cotton and working capital..

Southern

Los

-•

60,000 shares ($5 par)
No underwriter. For equip¬

stock.

raw

-i

notification)

Union

Gas

Co., Dallas, Tex.

Dec.

16 filed
107,430 shares ($1 par) common stock.
Offering—To be made to holders of outstanding stock o£

Jan.

basis of

one

new

for

each

held, plus the privilege of subscribing for addi¬
tional shares not purchased by other stockholders. Under¬
writing—None.

Proceeds—For construction and

betjter-

ments.
•

T G

& Y

(letter

Stores

Co., Oklahoma City, Okla.
of notification) 15,000 shares ($20 par)
5V2% preferred stock, series A. Price, par. Underwriter
—R. J. Edwards, Inc., Oklahoma City, is the stock broker
handling the sale. To pay part of a long term bank loan
and

increase

working capital.

Taylor Food Co., Raleigh, N. C.
Dec. 17 (letter of notification) 17,000 shares ($1 par)
common stock, of which 7,000 shares would be sold at
$1,121/2 and 10,000 shares at $1 per share. Underwriter—
Griffin & Vaden, Inc., Raleigh, N. C.
For additional
working capital.
•

Tip Top Foods of San Francisco, Inc.,
Emeryville, Calif.

Jan. 27

(letter of notification) 5,000 shares of common
$10).
No underwriter.
For
Price, par.
materials, working capital and general corporate ex¬
stock

(par

penses.
•

■

Transcontinental

Western

Jan. 28 filed 404,112 shs. ($5 par)
To be offered for subscription by

Air,

stock pur¬

Inc.

stock. Offering—
stockholders at rate of
one-fifth new share for each share held. Hughes Tool Co',
(owner of 74% of outstanding shares) will exercise sub¬
com.

scription rights to purchase 297,304 shares.
Carolina,

payment

Under¬

Proceeds—For extensions, additions, etc.

v-'-vV'.'

Underwriter

and

Russell

Jan.

Pacific

construction

and

corporation and to provide work¬

Jan. 28 filed 754,038

non-stockholders.

Angeles, Calif.

(letter of notification)

five

and

Proceeds—For

$100,000 loan.

record

One-Use

of bank

Rosecroft

—None.

•

Proceeds—For construction

temporary borrowings.

(jointly).

retirement

Expected about Feb. 15.

1,086 shares ($100 par) common and 1,086
shares of $6 cumulative preferred
($100 par). Offering—
Stock will be offered in units of one share of each class
for a total unit price of

(jointly); Glore, Forgan & Co.; The First Boston Corp.;

Mayflower Co., Salt Lake City, Utah

rentals.

($50 par) convertible
dividend, by amendment.

(Wis.) (3/7)
first mortgage bonds, due 1979.
Underwriters—Names to be determined through com¬
petitive bidding.
Probable bidders:
Halsey, Stuart &
Co. Inc., Kidder, Peabody &. Co. and White, Weld & Co.

shares
and

Northern States Power Co.

writing—None.

Jan. 25 filed 204,000 shares of common stock.
Offering—
To be offered for subscription
by stockholders in ratio
share

Price

par)

stock

new

stock.

Kidder, Peabody & Co.

Proceeds—For construction and the

equipment,

$3,000,000 of bank loans and general corporate purpose!.
Temporarily deferred.

rate

one

Improvements,

ing capital.

1,000. shares

market

Magma Copper Co.,

Jan.

derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis. Proceeds—To retire

assets

Corp., Paramount, Calif.

(letter

being sold by a director at over-theprice.
Underwriter—Dean, Witter &
Co., San Francisco, Calif.
counter

•

opened

National Battery Co.

Manufacturing Co., Rochester, Mich.

(letter of notification) 12,700 shares ($1 par)
common.
Price, at market. No underwriter. For work¬
ing capital.
■

vide

(par $1), of which 70,000 will be offered in behalf
of the company and 20,000 shares on behalf of others.
Price—$2.50 per share.
Underwriter—Buckley
Securi¬

•

McAleer

•

Jan. 28 filed $10,000,000

Thoroughbred Racing Assn.

500,000 shares 6%

stock (par $5) and 500,000 shares

Jan.

expected

Fund, Inc.

B2, 75,000 of series K2, 150,000 shares of series S2 and
30,000 shares of series S3. Underwriter—Keystone Co. of

•

bonds

Corp.,
Philadelphia.
working capital.

Jan. 24 filed 10,000 shares Keystone Custodian Fund Cer¬
tificates of Participation series Bl, 15,000 shares of series

one

the

Montgomery Chiropractic Hospital, Inc.,
Norristown, Pa.
31 (letter of notification)
90,000 shares of common

ferred

Jan.

Electric Co.

15?

ties

Jan. 24 filed 16,000 shares capital stock
(par $1). Under¬
writer—None. Price, market. Proceeds—For investment.

•

West Penn

Inc.; Merrill Lynch, Pierce Fenner & Beane and
Hallgarten & Co. (jointly); Harriman Ripley & Co. and
Lazard Freres (jointly); Blyth & Co., Inc. and Goldman,"
Sachs & Co. (jointly); Kidder, Peabody & Co.; Glore,
Forgan & Co.; Lehman Brothers; Salomon Bros. & Hutz-

Jan.

writer.

sold

Probable bidders for bonds: Halsey, Stuart &

stock

Credit Co., Cleveland, Ohio
(letter of notification) 20,000 shares of class A
par) common stock.
To be issued to James M.
or

•

stock to

common

Cleminshaw

filed

1978.

Jan. 28 filed

$6,000,000 30-year first mortgage bonds to
through competitive bidding and 67,000 shares

(parent).

Industrial

Jan.

due

•

(2/15)

filed

sold

ler.

ton per

Light & Power Co. (2/15)
$7,500,000 first mortgage bonds, series C,
Underwriting—Names will be determined by
competitive bidding.
Probable bidders: Halsey, Stuart
& Co.. Inc., Harriman
Ripley & Co., Merrill Lynch, Pierce,

Dec.

pur¬

about Feb.
and

For

par)

($1
corporate

Co.

March

Staten Island Edison

are to be offered by
company, and!
166,025 shares by 15 selling stockholders. Underwriter—
Blyth & Co., Inc. Proceeds—To company from the sale
of the 105,000 shares will be added to
working capital,
except about $275,000 may be advanced to a new sub¬
sidiary to be used by it in making part payment of the
option purchase price of one-half of the stock of Conifer
Timber Co., Fortson, Wash.
Indefinitely postponed.
'
'

Oxon

10,

underwriter.

Monongahela Power Co.
Equip. Trust Ctfs.

March

poses.

1949

stock.

which 105,000 shares

Fenner & Beane and

Mines, Inc., Oakland, Calif.
of notification) 73,419 shares

(letter

common

Bonds & Preferred

March
Southern

Nov.

Plywood & Timber Co., Everett,
Washington
filed 271,025 shares ($1 par) common
stock, of

Rockland

stock (no par).
Inc. and Prescott,

common

Co.,
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
by certain stockholders. Offering indefinitely postponed.

Jan.

Corporate

share.

per

Bonds

Northern States Power Co

•

Price—$1

Expected late in March

Robinson

underwriting.
are
subject to delivery under the stock subscriptions now ex¬
istent.
Price—$5 per share. Proceeds — To construct
ammonia plant.

Sept. 13 filed 26,000 shares of

March

3, 1949
Delaware & Hudson RR. Corp

Miss.

(par $5).
Offering—Of the total 660,000 shares

Mohawk

1949

Denver & Rio Grande Western RR.-Equip. Tr. Ctfs.

Pennsylvania RR., Noon

Mississippi Chemical Corp., Jackson,
Jan. 3 filed 1,200,000 shares common stock

—Merrill

Underwriter

Lynch, Pierce, Fenner & Beane, will head
(Continued

on page

46)

•

■

46 ; (594)

THE COMMERCIAL

(Continued from"page 45)
of

group

underwriters

Tucker's

Foods,

Chicago Indianapolis &. Louisville Ryi

•

company has issued invitations for bids to be re¬
ceived by noon (CST) Feb. 8 at its office 608 So. Dear-"

Nov. 26 filed 200,000 shares of

common stock (par $2.50)
of which 80,000 will be sold
by the company and 120,000
shares by certain stockholders./ Underwriter—Rauscher,

Pierce & Co., Inc., Dallas, Texas.

(2/8)

The

Sherman, Texas

Inc.,

CHRONICLE

St., Chicago, for the purchase of $4^500,000 equip¬
trust certificates to be dated March 1, 1949 and to
mature in 15 equal annual instalments from March 1,
1950, to March 1, 1964. Probable bidders: Halsey, Stuart

Utilities

Proceeds—For general

Specialty Corp.

Hutzler.

(par $1) and 33,000 stock purchase warrants (to be sold
at 10 cents each). Underwriters—George
R. Cooley & Co., Inc., Albany, N. Y., and others to be
named by amendment.
Price, market.
Proceeds—To

Jan.

stock

(par $9).
through com¬
petitive bidding. Probable bidders include Kidder, Peabody & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber, Jackson & Curtis (jointly). ProceedsWill go to selling stockholders. Consolidated Electric &
Gas Co. and Middle West Corp. will sell 120,000 shares
and 34,000 shares, respectively; Copper Range Co., 34,000
—

Waburn

common

owners

•

11,200 shares.

Underwriting—None.

establish

Jan.

24 filed

Proceeds-^-For
Western

Morgan

common

Co., Inc.

stock

Jan.

and

used

the

(no

par)

common

•

Halsey, Stuart & Co. Inc.; The First Boston Corp.; Kid¬
der, Peabody & Co. Proceeds — To prepay short-term

notes, refund 3H% first mortgage bonds due 1954 and
pay short-term promissory note.

Prospective Offerings
Bids

the

for

purchase

RR.

$10,665,000

equipment

trust

certificates series J will be received up to 11 a.m. Feb. 7

at 71 Broadway, New York. Certificates will
1, 1949 and well mature $711,000 March

company

be dated March

1, 1950-1964. Probable bidders include: Halsey, Stuart &
Inc.; Salomon Bros. & Hutzler; The First Boston

new

Harriman
(jointly).

Ripley

and

Lehman

Brothers

;v.Bell Telephone Co. of Pa.

the.Pennsylvania Utility Com¬
mission an application for authority to issue $25,000,000
25-year debentures on a competitive basis." Proceeds will
be applied
can

to the payment of advances from the Ameri¬

Telephone

Telegraph- Co.

for

additions and improvements to plant.

expenditures on
Probable bidders:

Morgan Stanley & Co.: Halsey, Stuart & Co. Inc.; The
First Boston Corp.; White, Welo & Co. and Union Secu¬
rities Corp. (jointly).

Cambridge Electric Light Co.

White, Weld' & Co.; Glore, Forgan & Co. and
W. C. Langley & Co.
(jointly); Lehman Bros."; Harris,.
Hall & Co.
(Inc.); Halsey, Stuart & Co. Inc. (bonds '
only); Harriman Ripley & Co., Inc.; Dillon, Read & Co.
New England Telephone Co*. (3/22) > i
18 directors authorized the preparation of a
regis¬
tration statement covering $35,000,000 25-year deben¬
Jan.

ceeds will be used to redeem

notes,
the interest rate to be determined through competitive
bidding. Proceeds will ba used to retire $1,750,000 bank
notes and to restore replacement funds borrowed to fi¬

plant

improvements.

Probable

Stuart

Boston

bidders:

Halseyr
Co.; The.First

Corp.; Kidder, Peabody & Co.

•

Co.

Central

Inc.:

Harriman

ft*afne

Ripley

michael,

Co., Augusta, Me.
Feb. 1 asked SEC permission to sell competitively $5,000,000 of first and general mortgage bonds.- series R,

Haven & Hartford RR.

Conn.

Vice-President,

Certificates will

Meadow

dated

St.,

(2/3)

New- Haven,

Feb.

15, 1949
Probable
Stuart & Co. Inc.; Salomon Bros, &
Harris, Hall & Co. (Inc.); Harriman Ripley &
Lehman Brothers (jointly).
■ •
$140,000

Feb.

15,

1950-1964.

Halsey,

Northern

and will
bidders:

Hutzler;

Jan. 31 company
State
Railway Commission an application for an increase in
capital, preliminary to a planned offering of 406,000
basis of

one

underwriter:

common

for

to present

each five

Dillon, Read & Co.

stockholders

held.
•

The

First

Boston

Corp.

Proceeds

stock.

from

the ?

•

Probable

bidders

March 10
■■tV.'-Y'V-

and

the

preferred

...

stock by ./V/-'■

"v"; VlAvH 'V-C

Electric

Products, Inc.
?
considering the issuance of additional,
a part of its television expan- *

stock1 to finance

offering will-be announced later.
Underwriters^Paind, ? Webber;/Jackson &t\
Curtis; White, Weld & Co.
V<
Traditional

'■

•

•V•'

Texas

Pacific

Ry. (2/lG)V
Company will receive bids until noon Feb. 1-0" at Roorrn
2216, 233 Broadway; New York for the purchase of$2,250,000 equipment trust certificates series F t© -'be '
.

dated March

1, 1949 and due $225,600 annually March I,

•

four

6,000 h.p. diesel road freight locomotives and one •
4,000 hp. passenger locomotive. Probable bidders: Halsey,'

Stuart & Co.
&

Co.

Inc.-; Salomon Bros. & Hutzler; Harris, Hall *
Harriman Ripley & Co and Lehman
(jointly).
+1'
'
j

(Inc.);

Brothers

Power

Light Co.

' /

Jan. 21

reported company is expected to sell $6,000,000
bonds in April to finance its plant expansion. Probable

:
*

bidders:

Lehman Brothers and Bear^. Stearns &~CoM
(jointly); Halsey, Stuart & Co. Inc.; White', Weld & 'Co.;,
Harriman Ripley & Co., Inc.; Salomon Bros. & Hutzler; ■The First Boston Corp.; Blyth &
Co., Inc,: Company is '
expected to raise new money through sale, probably in *

May, of 148.000 additional-shares of
stock

will

first

stockholders.

offered

for

common

stock.

The

subscription by present

Probable bidders: The First Boston

Corp.;

Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fen- 1 *
& Beane (jointly)*; Harriman
Ripley & Co. ' /

ner

Virginian
Bids

will

Ry.

(2/10).

received

v*-

■

(EST)

Feb. 10 at
1109, 44 Wall St., New York for the purchase of •
$3,800,000 ;* equipment trust certificates', series A datedFeb.

a.m.

1, 1948, due $380,000 each Feb.
1.
1950*1959. !
equipment to be covered by the certificates will 1.

The

consist of 1,000 steel hopper cars and 25 cabooses. Probable bidders: Haley, Stuart & Cot, Inc.: Harriman Rioley '
& Co. and Lehfnan Brothers

(jointly); Salbmoh Bros. '

Hutzler; Harris, Hall
West
1

stock

Co.

onen

ma- -

Co. (Inc.).
Co.

(3/8)

SEC

permission to issue $10,C00 000 first,
series N and $5,000,000 of new pre-:
ferred
stock series C,
to be sold through competi-"
tive
bidding, and
70,000 shares additional cn^rnon;
bonds

(no'par)

(parent); and

certificates, to be dated March 15, 1949, and to

Penn" Power

asked

mortgage

common
,

•

trust

and

Corp.;

■

program', according to Don. G„ -Mitchell,' President.

Probable

Inc.; Coffin

Inc.

sion

Feb.

Gas Co. :;:4
~y.
has filed with the Nebraska

due 1979. Proceeds would be used to reduce outstanding
short-term n^c- Probable bidders: Halsey, Stuart & Co.

Burr,

preferred

new

Sylvania

■

•

Northern Pacific Railway (2/24)
Company has issued invitatiops for bids to be received
before noon
(EST) Feb. 2% for $6 000.000 equioment"

The size and date of the

Co. and

Natural

shares of additional

Power

Pro¬

June

Bids for purchase of $2,100,000 equipment trust certifi¬
cates will be received up to noon Feb. 3 by G. T. Car-

•

;

Room

New York New

nance

Iv 1949, $35,000,000 (
outstanding first mortgage 5s. Probable bidders: Morgan '
Stanley & Co.; Halsey, Stuart & Co. Inc. Expected com¬
pany will open bids March 22.

mature

Jan. 10 The Massachusetts Department of Public Utilities
authorized company to issue $2,750,000 25-year

Utah

reported company is planning sale of $14,000,000
bonds and $7,000,000 in preferred stock. Probable

bidders:

•

(jointly); > The First Boston

1950-1959. Proceeds will be used, to finance purchase of .*

RRv

tures; to be sold at competitive bidding in March.

Jan; 3 company filed with

March 24.

meeting March 31

Co.

Corp.;

received

amendments to the certificate of

Michigan Consolidated Gas Co.
1

;

preferred: W. C. Langeley & Co.; Kddier, Peabody & Co.;
Stone & Webster Securities Corp. hFrd White, Weld fir Co. *
(jointly); Lehman Brothers. Bids on bonds are to be -

common

28 reported company
planning sale of $6,800,000
equipment trust ctfs. in March, Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Harriman Ripley & Co. and Leh¬
man
Brothers (jointly); Harris Hall & Co.
(Inc.); The
First Boston Corp.; Salomon Bros. & Hutzler.
•

Co.;j

bonds: Halsey, Stuart & Co. lncl; The First Boston Corp.; ;
Harriman Ripley & Co.; Kidder, Peabody & Co. On ;

privately to two

Jan.

Feb.

(2/7)

pos¬

bonds would retire the company's short-term indebted- *
ness and provide funds
required ior expansion. ProceedsV

Central

Brothers

$4,000,000

Proceeds will be

aggregate amount thereof shall be less than 75% bf the
capitalization.
Illinois

Southern Ry.

recapitalization.

total
•

inarket,

the

®
Staien Island Edtison Corp. (3/10-24)'.
Jan. 28 New York P. S. Commission authorized corpora¬ '■s
tion to issue $2,750,000 30-year first mortgage bonds and (

•

annual

Co.

to retire obligations of units tin. its
Probable bidders:-. Halsey, Stuart'& Co.

Jan. 28 company is

their

Gas

be in

may

Salomon Bros. & Hutzler.

Depart¬

shares of preferred stock unless after such issuance the
-

company

with-funds

Lehman

Corp.
at

reported

„

Electric

from preferred stock would be used by company to carry r
cut its
plan of

to be dated March

par

Service

(3/9) Bids for the purchase of $11,850,000 equipment'trust cer^ifibates^wilT be received March 9. Probable bidders:
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co. and

authority to issue $3,500,000
are

Prob¬

The

investors.

stockholders

(EST), Jan. 18.

Co., Inc.

Massachusetts

plans to issue the notes at

Florida Power

to noon

First Boston Corp; Morgan .Stanley,
Kuhn, Loeb. &. C<*. and Lehman. Brokers (jointly).

$1,300,000 short-term notes and provide
with $2,200,000 for plant additions. Com¬

company

$667,000 from Nov. 1, 1949-1963,

sibly in April, with some $42,000,000 first and refunding
mortgage bonds. Proceeds, will be used, to provide com¬
pany

reincorporation to provide for increasing* the authorized
preferred stock from 80,000 to 120,000 shares; increasing
the authorized common stock from
1,210,000 to 1,600,000
shares and restricting the issuance of additional in¬
debtedness maturing more than 12.
months, or additional

Light Co., Cambridge, Mass.

Line

(2/16)

&. Co.

Salomon Bros. & Hutzler, Halsey, Stuart &

utility system.

Electric Light

The notes

will consider proposed

stock.

Jan. 26 filed $2,150,000 first mortgage sinking fund bonds,
series A due 1969. Underwriters—Names to be determined through competitive bidding.
Probable bidders:

Atlantic Coast

;

retire

institutional

Underwriter—Hemphill, Noyes & Co., New York. Price,
by amendment.
Proceeds—Will go to selling stockhold¬
ers.
Offering postponed.
Worcester Gas

pany

Co., Pittsburgh

Jan* 25

Associates

petitioned the

Public

Inc.:

1949; and will mature March 1, 1959.

The

(Edwin L.)

company

10-year 314% notes.

Wichman

Kidder, Peabody

Inc., The First Boston Corp., Harriman Ripley & Co.,
(jointly).
•» ,

company

ment of Public Utilities for

Philippine Mindanao Development
Co., Cebu City, Philippine Islands
Jan. 5 filed 2,000,000 shares of voting capital stock, one
centavo par value. Price—25 cents per share (U. S. cur¬
rency). Underwriter—F. T. Andrews & Co. Proceeds—
To provide funds for plant construction, diamond drill¬
ing, exploration and repayment of loans.
^

•

Fuel

Fitchburg Gas &
Jan.

200,000

Co.

Halsey,' Stuart & Co. Inc.; Blyth &
Kidder, Peabody'& Co. (jointly).

Wiegand
Sept. 28 filed

able bidders:

(jointly). Date for opening

bidders:

Fields,

■

include

received by company at Room 1811 Broad Street

Station, Philadelphia,

asked' SEC permission to sell com¬
petitively $12,000,000 25-year bonds, the proceeds to
provide funds for its construction program. Probable

common.

Gas

will

(jointly).

Inc. and Lehman Brothers

Denver & Rio Grande Western RR.

Eastern

applied toward the purchase."'If bond^ sold

bidders

15 annual instalments of

RR,

bids expected to be March 3.
•

will be

Hutzler. Bids expected Feb. 16.

Inc., Denver, Colo.
(letter of notification) 1,000,000 shares (lc par)
Price, 10 cents per share.
Underwriter —
John G. Perry & Co., Inc
Denver, Colo. To drill a well
and acquire additional properties.
■
Jan.

Hudson

& Co. and Lehman Brothers

com¬

Price, market.

''Pennsylvania- Co.->■■*&+;.■
:-/!
wholly ovyned subsidiary railroad
company of Pennsylvania RRy applied to the
ICC for authority -to issue
$16,000,000 collateral-trust
sinking fund bonds in connection with purchase of De¬

,-Pennsylvania RR, (2/16)
Bids for the purchase of $10,005,000 equipment trust
certificates, series W, dated Nov. 1, 1948, and due in

$9,203,860. Probable bidders: Halsey, .Stuart & Co.
Harriman Ripley & Co. and Lehman Brothers
(jointly); Harris, Hall & Co, (Inc.); Salomon Bros. &

(par $1).

Kidder, Peabody & Co.

;

Inc.;

investment.
Oil

Delaware &

•

900,000 shares of

Underwriter—W.

15,

cost

Wellington Fund, Inc.

March

•

Feb. 1 company asked ICC for
authority to issue $6,900,000 of certificates, series N, to help
pay for seven diesel
locomotives and 775 freight cars which, are expected to

purchase machinery and supplies, etc.

pany,
•

instalments from

annual

•

and Drexel & Co.

Stanley

freight cars which are ex¬
pected to cost $6,492,925. Probable bidder^: Halsey, Stuart
& Co. Inc.; Salomon Bros. &
Hutzler; Harriman Ripley

Wechsler

common.

Hall & Co. Inc:);

probable

approximately
It is presently con¬

29 diesel locomotives and 600

Oil

Machine Corp.; Newark, N. J.
(letter of notification) 5,000 shares 4% cumula¬
tive non-voting preferred stock (par $10) and 2,000 com¬
mon shares (no par).
Price, par for preferred and $1.50

equal

March 15, 1964.
Probable bidders: Halsey,
Stuart & Co. Inc.; Harriman Ripley & Co. and Lehman
Brothers
(jointly);. Salomon. Bros. & Hutzler; Harris,

and proceeds

(3/15)

Inc.

Corp. (3/3)
Feb. 1 company asked authority of ICC to issue
$4,800,000
of equipment certificates to help finance the
purchase of

Jan. 31

for

System,

Pierce,
White, Weld & Co. (jointly); Leh¬
man Brothers,
Goldman, Sachs & Co., ana Union Secu¬
rities Corp. (jointly); The First Boston Corp.

penses.

Gas

company announced plans to sell

Fenner & Beane, and

Corp., Shawnee, Okla.
Jan. 10 (letter of notification) 980,000 shares (100 par)
common
stock, together with 150,000 option warrants.
Stock will be sold at 30 cents per share. Underwriter—
Dennis H. Petty & Co., Oklahoma City, Okla. For drilling
and cost of completing wells.
<
', 1

troit, Toledo & Ironton RR. The bonds are either to be
delivered to the Pennroad Corp. in part payment for the
stock of D. T. & I. or are to be sold in" the
open market

•

construction program. Probable bidders: Morgan
& Co.; Halsey, Stuart & Co.
Inc.; Merrill Lynch,

Names to1 be determined

shares and several individual

templated that competitive bids for the debentures will
be opened on or about March 15. Proceeds from the
pro¬
posed sale will be used to finance part of the company's

bank loans, working capital, etc.

Sept. 28 filed 200,000 shares of

$20,000,000 of debentures due 1974.

Upper Peninsula Power Co.
Underwriters

Columbia

to underwriter

repay

holding

Co., Inc.; Harriman Ripley & Co. and Lehman Brothers
(jointly), Harris Hall & Co. (Inc.); Salomon Bros. &

125,000 shares of common stock

1950,

Jan. 28 the
company,,.a

&
United

tures

born

ment

corporate purposes.

Oct. 15 (by amendment)

Thursday, February 3, 1949

(jointly); Salomon Bros. & Hutzler; Kidder, Peabody &
Co.; Harriman Ripley & Co.; Merrill Lynch, Pierce, Fen-,'
ner & Beane and
White, Weld & Co. (jointly).—..V;-

purchasing any unsubscribed
shares of remaining 106,808 shares not taken by stock¬
holders. Proceeds—For general funds.
Mrs.

FINANCIAL

stock

spld

The

West

Penn

to the public holders of

$28.50^

per

share.

Electric

outstanding

Present

plan' is to ',

bids for the bonds and nreferred" stock on or about

March

8, 1949. Probable bidders-: Halsey, Stuart & ;Cb. /
(bonds only); Kidder,. 'Peabody & Co.:. Lehman •
Brothers; The First Boston Corp.: W .C. Langley & Co.;:
Inc.

Smith, Barney & Co.; Harriman, Ripley & Co.

COMMERCIAL

THE

Number 47T4

169

Volume

Northern States

adopted another procedure which,

issue

of $10,000,000

though its aims are much broader,
also achieves the sterilization of

first mortgage

bonds, due in

gold.

Power Co.

for an

SEC
of
30

and

years

first

000

and

Meanwhile

issue of $25,000,000 of 25-year

These

new

hanging more than
little' heavy on their hands.
time

ing

New

Co.'s

Edison

in a substantial way for
equipment money, issues of
this type are appearing with con¬
siderable frequency.
new

Pennsylvania

re-

slow

44 ken

has

stacking

stitutional

attitude

major investors.

They point out
sought
the Consolidated Edison issue, for

ment

and

very sub¬
of
invest¬

cross-section

banking thinking.

The

•

constitute

between the high

spread

low bids, it is

Juve

the

made

noted, would
difference
in

yield only 0.01 basis point, indi¬
cating that their combined judg¬
ment
J

ready

evidently

notions

be,

what

despite

not

are

yield from

potential

the

But

line.

buyers,

•

pretty much along the

ran

yet

their

own

should

yields

pressure

funds in hand.

idle

1
.

impact of Gold Inflow |
On Bank Reserves
the former procedure,

a commer¬

cial bank paid for

for

reserves

bank

credit

al¬

the books

were

opened and the firm found itself
with

orders

amount

for

the

times

four

being offered.

"In

week

could

the

and

the

market.

following week gives
of

developing

these

One

activity

bit

bank

reserves

least

the

sterlization

for

that

one

period.

its projected $40,000,000 of

Indications

now

are

new

Feb. 15.

Duke

Power Co. has called for bids

that

four

large groups will be after this

one

vvhh the situation holding promise

producing really keen competi¬
tion.

;

•

probability trans¬
to commercial
banks (from their accounts in the
the

three and

half times the increase

United

the

...

Federal

Reserve

commercial
no

greater

banks

balances, the
are

reserves

taxes

such

the

sterilizing
the
Treasury's
purchases but is also off¬
setting in substantial part the

only
gold

various other factors

making,

largely in the form of moderate-

sales

and

tended

such

expand

Federal

is arrested

the

ury

Eastern Gas & Fuel Associates

first

and

$12,000,000 of

collateral

trust

new

bonds

same

(1)

with

left

support

bonds
in cir¬

The

series

applied to th(

due

15,

Aug.

1949,

The

company's
business
in the Commonwealth

solely

Kentucky, where it renders serv¬
ice to approximately 50,000 elec¬

bonds range from 106% %

new

prices

Kenton,

Campbell and Boone, and to 7,300
in

customers

water

Campbell

County.

DIVIDEND NOTICES
United

Shoe

Machinery

Corporation
The

Directors

declared

this

special

the

•

record

Corporation
of

dividend

have

37Vic per
stock,

capital

Common

1949, to stockholders
business February

close of

at the

1949.
WALLACE

KEMP.

100%, while special redemptior

is
of

tric customers and 43,000 gas cus¬

payable February 28,

prices for

redemption

Regular
the

It also fur¬

purposes.

wholesale.

ownec

pany's construction program.

Treasurer

scaled from 102 %% tc

are

100%.
Union

The

Co.

Power

Light,

Heat
ane
principally

is engaged

■

purchase, transmsision, dis¬
and sale of electric en¬

in the

residential, commercial

for

Virginia Dare
V*
r;i

Stores

tribution

■

•'

Corporation

DIVIDEND

NO.

serve

Banks;

(2)

(4)

Board

The

gold

Treasury

and

ELECTRIC COMPANY

the

one

per

payable

Class

Debentures (Payment

Re¬

change
(3)

in
in¬

certificates facili¬

expansion;

and

Preferred Stock Dividend

close
New

January 10, 1949

-York,

;

and

recent

the

years

System

the

have

REFRACTORIES COMPANY

ending

for

quarter

PER CENT oy $1.50 per
PREFERRED STOCK, payable April
(1V2%)

to stockholders of record April
a
DIVIDEND of FIFTY

declared

Also

6, 1949.
CENTS

share on the NO PAR COMMON STOCK,
payable March 1, 1949 to stockholders of record
February 10, 1949,
per

CORPORATION
Dr

1949
declared

have

1949,<3IVIDEND of ONE and

March 31,

1949

20,

L AN

31,

January
Direotors

ONE-HALF

ENAMEL

Pennsylvania

Pittsburgh

Board

Enamel
a

($.35)

Cronmiller,

Jr.

Secretary

O H I O

Corporation has this day de¬
Dividend of thirty-five cents

I One Dollar Eighteen and Threequarter Cents ($1.18M)t>er share for the
quarter ending March 31, 1949, on the
4%% cumulative Preferred capital stock of
the Company, issued and outstanding in
the hands of the public, has been declared
out of the surplus net earnings of the Com¬
pany, payable April 1,1949, to holders of
such stock of record on the books of the
Company
at
the
close
of
business

per

stock

common

THE regular quarterly dividend of

of record

INTERNATIONAL

the outstanding

HARVESTER

the

Company, pay¬
shareholders
March 10, 1949. ;

able March 25, 1949,
on

G- W• WALLACE, Treasurer

January 19, 1949

COMPANY
The Directors of

International Harvester

Company have declared quarterly divi¬
one dollar and seventy-

dend No. 122 of
five cents

EATON

MANUFACTURING COMPANY

March 4, 1949.

Ohio

Cleveland 10,

H. D. ANDERSON, Secretary

stock

($1.75) per share on the preferred

payable March 1,,.1.949, to stock¬

holders <of record at the close of business
on

February 5, 1949.

DIVIDEND NO. 99

GERARD

J. EGER, Secretary

February 2, 1949.

The Board of Directors

^urd&tiA
DIVIDEND

No.

156

Company has declared a dividend of
Fifty Cents ($0.50) per share on the
1,792,520 $2.00 par value common
shares of the Company issued and out¬

standing, payable February 25, 1949,
to shareholders of record at the close
of business,

share has been declared

per

capital stock of The Borden
Company, payable March 1, 1949,

February 8, 1949.

dividend of sixty cents

interim

(60^)
the

Declared

STUESSY

Secretary

Jan. 28,1949

and Foundry Company

New York, N. Y., January 27, 1949

Directors this day declared

dividend

extra

Plaza

Rockefeller

dividend of $1.00 per

quarterly

share has been declared on the

15,

of record

1949

stockholders

the close of business March 1, 1949.

Babbitt, Inc. has declared a

regular

quarterly dividend of 30c per
on

the Common Stock

pany,

B. T.

of the Com¬

payable on April 1, 1949

will be mailed.

Checks

Common Stock
A

quarterly

has

dividend
been

per

the

corporation,

stockholders of record at the close

of business on

March 10, 1949.

payable

March 5, 1949 to stock¬

holders

record

February 2, 1 949

the

business February 19, 1949. Checks
will be mailed.

W. GEISMAR, Treasurer.

CLIFTON

Vice

clared

quarterly dividend of
share on the

40 cents ($.40) per

Common Stock of this

Corpora¬

tion, payable March 1, 1949 to
stockholders of record February

lJ5, 1949.'
$.50

declared

Common Stock of this

Hi1tm
IHmHP

The Board of Directors has de¬

of this

Corporation, payable on March

Company

mm mi

J COMMON

Directors

COMPANY

Preferred Stock

May 31, 1949

August 31, 1949
November 30, 1949
February 28, 1949

February 2, 1949

Board

of record

February 28. 1949

United States Pipe and Foundry

New York 20, N. Y.

QUARTERLY DIVIDEND

to holders

payable
Quarterly
March 21, 1949
June 20,1949
..September 20, 1949

THE FUNTKOTE

The

(25^) on the outstanding Common Stock of
the Company, payable as follows:

March 21, 1949

Treasurer

CONSECUTIVE

(75(0 each
twenty-five cents

four dividends of seventy-five cents

and

The transfer books will remain open.

NOETZEL

January 25. 1949

The Board of

Extra

February 11, 1949.
E.

United States Pipe

''December 20, 1949

stockholders of record at the close

of business

Manufacturing

Eaton

LEO

supply.

1949,

HARBISON-WALKER

(No.

the
net earnings for the yeai
at Room No. 3400, No. 20 Ex¬
New York 5, N. Y., on and after
1949.
The dividend on the stock
to stockholders of record at the
business February 4,
1949.
W. W. COX, Secretary, y

33),
out of
1948, payable
change Place,
February 16,
will be paid

clared

26th,

January

The. Board of Directors of the Ferro

AMERICAN GAS

—

APPLEBAUM,
Secretary

RALPH

de¬

of Five per cent (5%) to be payablr
Capital stock, and
three-quarters of
cent (% of 1%)
to be the amount

dividend
on

C l E VE

AND

Directors

clared Five per cent (5%) to be the amount pay¬
able on Class A Debentures (Payment No. 53): i

Cumulative Preferred Stock

increase in the publicly-

"Actually,

fixed

has

Directors

Board

RAILROAD

&
WESTERN
COMPANY

BAY

GREEN

FERRO

time.

Federal

member bank reserves;

held money

declared a dividenu 01 iuc per snare on the outstanding
Class A Common Stock, payable February
28th, 1949, to stockholders of record at the
close of business February 14th, 1949.

DIVIDEND NOTICES

Chronicle)

Financial

DETROIT, MICH. —Robert J.
Langlands has been added to the
staff
of
Hornblower
&
Weeks,
Penobscot Building.

Sav¬

change in Treas¬

balances at the

monetary

sell

will

$2,295,700 principal amount of
company's 6% first mortgage

ergy

81st

the

public

nishes water service at retail and

tomers in the counties of

bonds

With Hornblower & Weeks

Sterilizing gold with funds ob¬
tained from the public, therefore,

tating

pians

other

The

{

crease

bank reserves,

Reserve

government

than they had

Series E

panies. Several of these were put
in
registration within the past
-

the

which have

individual income

sized issues for public utility com¬

week.

monetary

ings bonds); then deposit growth

Smaller Issues Registered
"A growing backlog of potential
business" is

States

proceeds

involves:

new

sale

cial, industrial and municipal and

by The Cincinnati Gas & Electric

operation. As al¬

sources

fire

Co., parent company. The balance
of the proceeds will provide funds
for financing, in part, the com¬

ready noted, after the Treasury
pays for the gold it has purchased,

first refunding mortgage bonds*

bid

the

proceeds from

to be opened

the1

and

offering is definitely

securi¬

ties held

methods,

prior to the gold purchase by the
government. This method of off¬
setting gold inflows is particularly
effective if the Treasury receipts
used to pay for the gold are ob¬
tained
from
the
public
(from

sizable

in¬

awardec

by the Federal Reserve
Banks—reduced bank reserves by

retirement of government

the gold purchase by the govern¬
ment is completely neutralized by

its

But the

The

however,

are,

"trough" of the current dullness Federal Reserve Bank of New
in new undertakings since only a
York). If the Treasury now with¬
handful of miscellaneous offerings draws from the commercial banks
now
appear
likely
to
r.e a c h an amount sufficient to replenish

promise

sale

competitive

accrued

were

101.69.

money

alterna¬
tive
possibilities
open
to
the
Treasury for avoiding the infla¬
tionary effects of gold purchases
under the
present gold bullion

fer

mark

and

bonds

public purposes, and in the pur¬
chase, distribution and sale of na¬
tural gas for residential, commer¬

bonds, series A and series B, both

1948, one factor alone—the

the sellers in all

Duke Power Calls Bids

102.39%
The

DIVIDEND NOTICES

"There

"The effect

snapped

was

expansion.

supply.

dealers.
The stock

multiple expansion

which was resorted to under quite
with
bond
yields different circumstances in 1936hardly such as to attract the in- 38, is the sterilization of gold; if
dividualv investor's capital, com¬ the Treasury's net receipts are
mon stocks of good-name corpora¬
sufficient to cover the cost of the'
tions; appear to get liberal atten¬ gold purchased, it can refrain
tion on public offerings.
from issuing gold certificates. The
A" banking
firm % this week Treasury
can
instead
transfer
brought out a secondary offering funds to
the
Federal
Reserve
involving 25,000 shares of Gulf Banks from its commercial bank
OH Corp. priced at 66 V4 a share accounts in order to rebuild its
w ith a concession of $1 a share to
balance with the Reserve Banks.

most as soon

basis for credit

serve

gold purchases
by crediting the accounts of for¬
eign sellers, with a resultant in¬
Willem van Marie Opens
crease in the money supply. While
the bank's required reserves also
Willem van Marie will form his
rose, this deficiency was normally
own investment
business in New
made good through the sale of the
York City shortly.
Mr. Van Marie
gold to the Reserve System. Most
of the proceeds of the sale, how¬ was previously a partner in Benever, became available as excess dix, Luitweiler & Co.

.Naturally

•

1979

terest.

cannot

(Special

(Continued from page 43)

standard.

Oversubscription!

Heavy

today $5,000,000 The Union
Light, Heat and Power Co. first
mortgage bonds, 3% series due

payment, in advance of maturity

purchases

March.

these

lic

industrial and municipal and othei

that the three groups which

stantial

$6,-

method soon,
Central
reported

same

issue of $6,800,000 in

Halsey, Stuart & Co. Inc. and
associates are offering to the pub¬

mainly to nonbank investors. Thus, the reserves
that are created by the Treasury's

culation."

and

men

Bankers are a bit nonplussed

example,

expected to seek

Illinois

with

Halsey, Stuart Offers
Union Light Heat Bonds

and security sales

and the decline in currency

against in¬

portfolio

adamant

sponsor¬

their judgment of values.

the

•

not in the posi- f

are

Western

planning

banking

the

instances

groups

Denver & Rio Grande

And the

equity deals.

common

deposits

collections

obtained from tax

gold stock during the year. Thus
debt and monetary policy is not

' 900,000 via the

fortunate enough to have

these

tion

Opera¬

year

those

commercial banks; these

hardly

- v. v

■

current

kinder

groups

ing

the

date

baen

•'

has

Railroad

$10,005,000 of certificates
maturing in equal annual instal¬
ments of $667,000.

several

and
have

"out-the-window"

proven
tions.
To

pace,

offerings

balances
deposits with

from

transferred

bonds continue to move at an ex¬

tremely
smaller

deemed out of Treasury

called for bids to be opened Feb.

mortgage

refunding 3%

forecasts

recent

ing government securities are re¬

market

eeiniy floated issue of $50,000,000
firsthand

with

are

(595)

gold purchases are absorbed and

Equipments Set

line

receipts

available for this purpose, matur¬

are

com¬

that the railroads would be in the

exceptionally dull, only a smat¬
tering of small issues coming up
for bids, including another run of
railroad equipment trust certifi¬
cates;.• r,v,.' y-.;
%,■ v.vi
Consolidated

years,

naturally, in

petitive bidding.

The bond end of the business is

for

run

and to be sold,

corporate issues
and investment bankers are find¬
the field of

debentures

days

drab

rather

are

proposed to the
Utility Commission,

Public

State

Co.

Telephone

cash

net

Treasury

has

Penna.

Bell

System. To the extent that

serve

years.

government se¬
the Federal Re¬

curities held by

mort¬

general

bonds due in 30

gage

consists of

This'procedure

the retirement of

Maine

Central

!Power Co. seeks to sell $5,000,-

Report

CHRONICLE

(Wis.) has filed with

due in 25 years.

Our

FINANCIAL

Pres.

GREGG,

and Treas.

N. C. HAYWARD, Secretary

}Jan.

20,1949

(596)

THE

COMMERCIAL ,&

FINANCIAL

CHRONICLE

Thursday, February 3, 1949
'

BUSINESS BUZZ

that Mr. Truman wants which is

reported

out

committee.

body

•..

lose

stand

legislative

It will not
an

let any¬

opportunity

"to

and be counted in the

good old Democratic way."

Behind - the -Scene Interpretations

from the Nation's Capital

change

the

course

its

committee

may

mind, particularly if
of Congress should in

the control

fact pass from

thexradicals.

" • .*

WASHINGTON,
dated"

President

behind, there is
Governmental

credibility

Truman

landslide

least

really prevail in the Senate,

when

the

ingly

Deal"

"Fair

pro-

President

that unless

said

privately

the

set

cratic

labor,

other

fighting

This delay

conflicting promises, and jeopard¬
ize his program and the stability
of the country.
1
/■■

the

that

fact

rather

Congress

leadership

can't

the

So far

ceeding

the

scarcely turned
moved

Ways

The

subjects.

and

Means

that

housing,
some
modified
phases of the health program, a
broadening of social security, and
Federal
aid to
local education,

extreme pro¬

one

(To

thus far

can

attributed to the

selecting its

personnel

staff,

and

trols

committee

new

and

have

on.

However, the outlook ahead is for
delay. How determined
this is can be illustrated best by

affair
matter of

the

rights."

the Senate

So far

Rules

change

prevent

rule

its

the

rules

southern

filibuster.

that

It would only mean

filibuster

the

transferred

versial

question

would

have

contro¬

Jitself ( and

amendments, rather than

tion

would

scarcely

consider, and

mo¬

Interfere with the

ca¬

pacity of the southerners to talk
a

civil rights bill to death.

private

ators,

even

axiom

among

It is

Sen¬

if it isn't explained

could

pletely
.

whole

the

thing

taken

apart.

and

month

v&...

this

regarded

outlook.

' '

the

has

the
some

backing., This

until

will
proved.

heat

veter¬

65, is pending
Vetef&ns
Affairs

Ordinarily

under

before

age

normal

not

serious

1955

this

procedure
proposition
1956

economic

will

erans,
•

Hence

finger

depression."

the

going to stick
dike for the

benefit of President Truman.

The

pension bill'is expected to be re¬
ported out.-

this

the

caused

tween

part
New

fight

cash

Since with Truman's

connivance that horrible old Rules

vet¬

lend

were

embar¬

Rankin's

annoying pet labor and
.Deal boys while he was a

the

row

be¬

companies

govern¬

pegs

when

get

commercial

may

Mr.

—

hadn't

Celler

tackle

the

oc¬

before he
insurance

companies.
;

(This column is intended to

re¬

tivities

Ac¬

Committee.
Rankin's

Mr.

flect the "behind the scene" inter¬

pretation from the nation's Capital
qnd may

lesson

also

may

to1 be expensive for the
country, for it will move the pros¬
pect of a pension another five to
six years closer. *
•
' V !,"!!
!

or may

not coincide with

"Chronicle's"

the

own

views.)

prove

of the

Members

Trading Markets:

House

Ralston Steel Car

Rules

;

Committee,
incidentally, "have
privately slipped the word out

Oregon Portland Cement

cut

Riverside Cement A & B

that

since

down

the

their

legislation
House

leadership

veto

power

over

which
the
White
benevolent,
the

Spokane Portland Cement

deems

has

determined

that

it shall stand in the way of vir¬

tually

nothing.

Tentatively the

committee has made up its

mind

that if will facilitate considera¬
of

LERNER & CO.
-

Investment Securities

10 Post Office

Square, Boston 9, Mass.

Telephone Hubbard 1990

Teletype BS 69

everything

virtually

President

Teletype—NY 1-971

HAnover 2-0050

■>

,'!' A

Firm Trading Markets

Hill, Thompson & Co., Inc.
NEW

;

YORK 5

'*»\

FOREIGN SECURITIES
All Issues

Executive & Underwriting

WALL

Offices

STREET

Tel. WHitehalL 4-4540

tentative
still

has

r.ARL MARKS & r.O- INC.

of control. Likewise-it
expected that the rant¬
ing, rooting "liberals" will stay
quiet too .long.

Trading Department

FOREIGN SECURITIES
SPECIALISTS

50 Broad Street

restricted"—so goes

argument

started

will

member of the Un-American

tion

every¬

latter "selling

under

banks

the

The

not:

insurance

the

curred

the

over

ments

Senators in the

occasioned

the monetary authorities

and

Yet

year.

times

as a cur-

regulatory

One thing the proposed inves¬

probably

Administration

100

later

want

tigation

record,

terrific.

the

committee
Mr. Rankin is not

his

veterans

be doubted that this

may

thing in 1949.

and aroiund $90

out

cannot be

bill to provide $60 a

the

■

Legion is
for

plenty of time to take a hand in
affairs and keep them from get¬

ting

Committee.».

serious

tempers

the

only

The

pensions

become

House!

picture as it
is seen now on Capitol Hill, one
month after the new Congress, it
..While

■

Affairs, this
;. ! -■; •.

might

very 'com¬
*

**7

.'\

House

mentioned

Administration

Senate;

arouse

where

adopted—and

out.;

before

steam roller, the

will

Rankin

n,c e

month at age 60
a

Activities

Now the American

hand, at the expense of running
over
the
House
boys with
a

If such

S i

advocating

bottle of nostrum's. On the other

this

the

him

ans,

committee couldx serve

Un-American

the

parliamen¬

forsin

Chairman

ex¬

school

leadership concocted
ex
post facto on

rule

that

gnash their teeth and
probably
swallow
the
whole

"liberalization"
on
principle—it would not prevent,

fight

visited

would

not

'50 election, built up by the

labor lead¬

decided to hoist

rassment

So the

shut

separate

This

Chairman of Veterans

high

have

the
Democrats "obviously

were

the

shoot

will

was

Committee.

the boys under a rigid rule will

motion

on a

legislation.

all.

tactics,

tary

proposed

Senate

filibuster

consider

lot

5% of

majority will feel impelled to
for it.
In the Senate the

the

State Department

former

trick

will

take

affiliations

and

important

that

piecemeals

cellent

Committee

getting

with

headlines

items

going
"civil
!

shadow-boxing

along

harder

even more

bill

one

way

mem¬

affiliations

communist

Rankin

put

Congress

this

con¬

into

all

maybe

not

will
On

killed

the

de¬

price, and credit

location,

ities.

one-

you

it.

will

■;!•'
if

that

theory

White

the

that

raiser

doesn't

ballot.

secret

Rankin from Un-American Activ¬

playing

for

standby materials, rationing, al¬

physical delay occasioned by the
process
of organizing the Con¬
gress,

significant.;■:!!

that

some

legislation, will be approved by
Congress, simply if for no other
reason
than that the leadership

will

hating it privately as they will,

Rankin

Mr.

employees, it

wants

final

political

* It

membership

House

vote

pension

former

The

House

recently

have

may

tain

vote

leged

is for this proposi¬

established

his

the

interfere

upon.

secret ballot

helping to make the Admin¬
istration unhappy by exposing al¬

if it is;broken down be¬
fore emerging,! the fact that the
President is reputedly backing it

tion,

slowness

this

extent

some

the

Whatever

was

don't

but

was

indica¬

backs

investigation.

proposed investigation
•

his ideas out all

man

When

ers

been

pass.'

ber of the Un-American Activities

prom-

President

that he has

bill.

cision

the

old

It""will; be "voted

prerogatives."^

t»,

strongest

with

package
economic
stabilization
bill, including all the controls in

posals failed. Yet none of these
propositions has got to either
House for a vote, and only aid to
education seems imminent,, ,!,
ft

the

that

of his

'■ ;•;'/

•

islation, Rankin will get the pen¬
sion bill on the floor of the House.

political rule entitled,

want,

you

back¬

is not

any

"all"

lour

■

"Cuss

appear¬

around with this notion of

this Congress even

down

tion

tagged, as "relatively noncontroyersial" propositions slated
more

President

Probably

•were

the

Democrat, is busy

object lesson to illustrate

to give a public facade

the

ing

give

prevented from "bottling up" leg¬

Democratic

and

accepted

ises.

lic

to go through
if some of the

con¬

of consistency to the Pres¬

ident,

the allocation
metals, and so on. Pub¬

of scarce

Truman

ing it

Committee of the House has been

conserva¬

for the White House
-leadership- anv

preparing
*

of Missis¬

sometimes

the

tive southern

Congress

ance

untary controls on

sippi,

the?

and

to expand

political

"Manny"

doubted

filled the water cooler this morning?"

John Rankin

Rep.

said,r

has

makes

even

necessary

of the law legalizing vol¬

tension

House

the

Even with White House back¬

economic reason
shouldn't make
good on the President's cam¬
paign promises. This stand has
endured
beyond
the
point
no

the temporary ex¬

port controls,

"Just WHO

pro¬

time, as though there was

same

why

Congress is fussing with
control, ex¬

cal trade.

tract bank credit at one and the-

the extension of rent

Mr.
and

literally

though

legislation

has taken up recipro¬

Committee

the

Harry

operations,

White

be inferred

proposition,

it out,

the

should

may

since

farmers mad, that he mmst have

busying itself in the main
relatively non-controversial

been
with

everything

control

has
vvheeU Hardly,

Congress

consequence
has
The Congress has

of
far.

•„'

' ?

not

proposition

there

toward

the boys on the Hill

dope

can

meant
ft

known.

White

anything

the

They

that he must have standby price ;

Actually

•

rush

brink.

the

over

time.

•*

•.

far.

agenty
what phase of the

"investiga¬
tion" of insurance companies will
not get further than the
hear¬
ings on the question of whether

groups,

investigators
to deter¬

company

Unless

away

trying

same

pressure

reined

government

regulate

this

before it is too late

expect

gets

enough

that

the
precipice
and expect Harry to
lasso them before they have fallen

with the
ride off on
their political' horses in two or 1
three antagonistic directions at
running

Bhow

won't be

and they have goile too

phreys, the Douglasses, and all
fche
other
"progressive"
boys
from

with

far

what

insurance

to take, a hand in the
that-if they normally
out to make political hay too

House

what

proposed

gone

shall

the

director¬

sort

one

that

the

mine

White

Hum¬

the

keep

even

they

ing caution. It had been ex¬
pected before the opening of the
session that the President would
have to use his prestige and

at the Capitol is

rush

jt White House which is display¬

not

However,

shooting at.

fast

be
than- the
to

appears

House

does

"interlocking
etc.,"

idea

have

game,

the

appearing

Of scarcely less credibility is

eiC

this.

Ac¬

Celler,

the

Committee,

admit

vision,

pur¬

poseful

Emanuel

ates, lack of government super¬

being

are

companies

Chairman,, of

money,

em--

of large
unregulated pools of investment

if not conspiratorial.
By common consent the smart
boys on Capitol Hill have come to
realize that Harry Truman isn't

an¬

carrying out bf the

the

over

one

Vair

law,

pro¬

when he talks hungrily

the

,-v

his

Federal

bill,
in abeyance.

held

but

anti-lvnching

anti-segregation

and conDemo-!

farmer,

elements

flock

headlines,

practices

ployment

imblic request for his wide proGram of conflicting and extrava¬
gant campaign promises, he will
rervative

questions

legislation,

his

tempers

getting

hot

that

the

regulation.

Rep.

quite

time, talk¬

insurance

Judiciary

the

case

is killing

ing,

the

this

investigation

Federal

new

legislation

some

committee

This
appears
incredible
because virtually all seasoned ob-

Gram.

overwhelm¬

majority

want

Capitol

companies,
particu¬
companies, is to

the

tually

ft'

the

life

the

bring

can

objective

insurance

filibuster

special

under

groups,

passed.

have

posed

that

sure

leadership in the interests of mod-

rervers

the

real

carefully in public to the pres¬

On the

two counts.

his

said

larly

oration

outline

the

as-though the President has-no
thought whatever of using his

tentative

which defies^

one

hand it is beginning to appear

one

freshly-"man¬
Democratic
Congress

ahead.

course

his

and

the

month

one

emerging at

now

The outlook is

C.—With;

;

•

120 BROADWAY

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

——

Tel. REctor 2-2020

„

Full text of Commercial and Financial Chronicle : February 3, 1949, Vol. 169, No. 4774

FRASER