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1948

FEB 6
BUS. ADM

ESTABLISHED 1839

library.

Ree. tr. S. Pat. Office

Volume

New York, N. Y.,

167 Number 4670

Price 30 Cents

Thursday, February 5,. 1948

Cites Deflationary

Stock Maiket-The Finale

Copy

Demand Performance and the

Dangers in Use of
Treasury Surplus

a

Chicago
of estimated $6 to $8

use

billion

surplus will have

found

effect

on

our

a

developments of past year and, on basis
and assumptions, conclude "we are about to enter the
distressing phase of decline in the bear market which began in
September, 1946, which has potentiality of developing later into a '
depression of great magnitude/' Holds government bonds, despite :
Treasury's efforts, may be driven below par; and major break in
stock prices is distinct probability Within next six months.

of analysis

economy

The Government has within its
a
"tremendous anti-infla¬
tionary force" in the form of an
cash surplus of $6 bil¬
lion to $8 billion for the current

grasp

estimated

A

ago, the authors of this article submitted an
domestic economy, entitled '■ Demand Performance

analysis
of the
and. the
Stock Market" (see "Chronicle" of April 3, 1947), in an effort tc
demonstrate that neither present income nor accumulated savings
year

<£-

Quarter, according' to an article
in the February issue of "Business
Comment," the bulletin of The

the

that

use

is

It

by the Federal

This would

banks.

an

anti-inflation

surplus of $8 billion
used entirely to redeem debt helc
"A- cash

Federal

the

could cause

Reserve

banks

decline in the

9%

a

aggregate demand deposits of in¬
and corporations, with
collateral effects on interbank de¬

dividuals

posits," the article points out. Sev¬
eral factors, however, would prob¬

ably limit these effects and lessen
their severity.
Continued heavy gold imports
and a decline in money in circula¬
tion would increase deposits as
well as reserves of the commer¬
cial
of

Gilbert M. Haas

James J, Quinn

in the hands of consumers would
be

sufficient

to

current

move

prod uction at current prices
beyond the early part of 1,948. The
analysis concluded that the con¬

sequent effect Of such a condition
would result in a profound down¬
ward readjustment of the stock
market as well as the economy.

While

we

firmly

believe

that

banks.
Secondly, expansion developments during the past year
bank loans and purchase of not only continue to support but

securities from the public by the

reinforce

greatly

those

conclu¬

this article will endeavor
prove, there are many who now

sions,

(Continued on page 31)

or

inevitable, of

course,

.

.

.

to

as

assert

that the proposed European

Recovery Program provides
/'

cognizance of the gross over¬
the markets of the world.
of opinihn as to the wisdom
of the precise measures now adopted in Paris, but that some¬
thing had to be done no one can well doubt. All this was
as true of the franc as it wag of the lire and is
today of the
pound sterling and a numbfer of otlier currencies whose

(Continued

on page

official "values"

are

no

red

The real question has to do with whether any such
steps as those now taken by France and due sooner or later
in London and a number of other countries will place the
currencies of these nations on a sound basis, or even prove
to be helpful in reaching that goal. Upon inquiry the answer
to this question is soon found to depend less upon currency
devaluation than upon other and far more basic considera¬
tions.
It, of course, may be taken for granted that what
has now been done in Paris, or correspondingly similar action
in the other capitals, even if more wisely and expertly de¬
vised, will of itself not cure the underlying ills of

a new

.

(Continued

.

on page

24)

*

,

Established
—

★

and
ob¬

structions.
:

Every

wants
,

iames

D.

a

.

one

reduc¬

tion in taxes.

Mooney

This is not

altogether
in'
flated prices and costs are making
selfish desire,
difficult

it

their

for

The present

workers

to

meet

bills and for many
businesses to keep in the black.
Political leadership has promised
daily

Economic

reduction.

tax

a

business necessity

and

dictate the need
hold

for tax reduction in order to
up

purchasing power and reduce

costs to avoid a slump, in business.

(Continued

on page

26)

„

State and

28)

R. H. Johnson & Co.

tape

eliminate

a

less than fantastic.

the

interests

of the country
to cut through

that the French authorities

later would take

Havana

Lithographing Go.

will

serve

best

valuation of their currency in
There may well be differences

of

great proportions,

by

was

sooner

con¬

move

It

require lead¬
ership with a
to

Inevitable, of Course, But

that it will be used

to retire debt held

stitute

We See It

coun¬

more urg¬

determination

profound effect on
the
economy," adding that the
present intentions of the authori¬

Reserve

try

a

ties indicate

this

of

As

it

of

made

do.

can

when strong and far-seeing leader¬
ship rises to the emergent necessity of reducing the budget to essen¬
tial needs and eliminating political luxuries. - Never before was a
strong,/forthright determination to solve the economic and finan¬
cial problems

ent.

surplus," the bank states,

have

Communists
Tax reductions will be easy

EDITORIAL-'.^

Northern Trust Co. of Chicago.'

will

sharpening of budget axe to reduce taxes 20%/
sufficiently stimulate business and raise income until
total government revenue would exceed present amount. Analyzes
important budget items and points put possible reductions and pos¬
sible economies,; and concludes, with high cost of doing business
incentive for risk-taking and new business is being destroyed, and
danger signals point to readjustments which may shake our econ¬
omy and do more harm to our prestige and foreign relations than

Mr. Mooney urges

which would

Investment analysts review

pro¬

employed to redeem debt
held by Federal Reserve Banks
could cause 9% drop in demand
deposits.
■;

"and

i

Investment Counsel With Mol & Co., Members N. Y. S. E.

and if

"This

President and Chairman of Board, Willys-Overland Motors, Inc.

By GILBERT M. HAAS and JAMES J. QUINN

Northern Trust Co. of
holds

By JAMES D. MOONEY

;

STATE

1927

and

Munici

MUNICIPAL

BONDS

—

INVESTMENT SECURITIES

Hirsch & Co.
Members New

York Stock Exchange

BOSTON

and other Exchanges

25 Broad St., New York 4, N.

;

London

Cleveland

Geneva

Y.

Teletype NY 1-210

HAnover 2-0600

Chicago

64 Wall Street, New York S

Troy

Bond Department

THE NATIONAL CITY BANK HART SMITH &

PHILADELPHIA

Albany

Buffalo

Wilkes-Barre
Woonsocket

(Representative)

OF NEW YORK

Scranton

Harrisburg

52 WILLIAM ST., N. V.

Bond

Dept. Teletype: NY 1-708

,

HAaovsr HW

Common
*

BANK

INVESTMENT

Underwriters and
Distributors of

SERVICE

Municipal

and

Appraised *•

Air

Products, Inc. Com. & "A"

Detroit Harvester Co. Com.

*DeWalt, Inc. Common

Emery Air Freight Corp.

and

Analyzed

Montreal

30 Broad

Common

Corporate Securities

OTIS & CO.

Tele. NY 1-809




Reynolds & Co.

(Incorporated)

INVESTMENTS

Established

Street, New York 4, N. Y.

Tel. WHitehatr 4-5770

THE CITY OF NEW YORK

OF

{Toronto

Bond

1899

Members New York Stock Exchange

CLEVELAND
New York

Cincinnati

Chicago

Columbus

120

Denver

Toledo

Buffalo

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

NY 1-635

New England

Brokerage

Service

Public Service Co.
A

for Banks, Brokers
and Dealers

*Prospectus on request

Gordon Graves & Co.
INSTITUTIONAL

NATIONAL BANK

Bell Teletype NY 1-895

New York

*ABC Vending Corp. /

Specialists in

Accounts

THE CHASE

New York Security Dealers Attn.

Springfield
Washington, D. C.

CD.

Members

Syracuse

Hardy & Co.

new

Analysis

study

upon

request

ira haupt & co.
Members New York Stock Exchange
and other Principal Exchanges
"

Members New York Stock Exchange

Members New York Curb Exchange

30 Broad St.
Tel. DIgby 4-7800

New York 4
Tele. NY 1-733

111

Broadway,

REctor 2-3100
Boston

N. Y. 6

Teletype NY 1-2700

Telephone: Enterprise 1820,

2

THE COMMERCIAL

(598)

Common

Stock

&

.

•'/:

;/

'

/

Afr/iV

Handy reviews origin and growth of Community Property Laws in the various states, and points
adoptions of this principle have been taken in states to obtain Federal tax advantages for
inhabitants. Sees dangerous implications in community tax laws if extended to estate taxes, and con¬

AT NET PRICES

NY

remedy situation by annulling community property principle in all Federal

can

taxes.

Bought—Sold—Quoted

of the world's oldest ethical systems

the tenth precept lays down the rule:
"Thou shalt not covet." And yet covetousness is one of the motivating sources of economic
progress. The desire to keep up with the Joneses is actually a dynamic force for good—or

Corporation
Teletype

Congress

In

Broadway, New York 5

one

for
'for

perhaps

1-583

evil.

1

;

'

•"

■'

•

ex¬

it

of

ponents

'' '

"

1

-

■•";

■■

■■

ries, he. makes his wife not only
the partner of his joys and sor¬
rows but also, of his
income and

in

chorus

the

has

of

rates

the

tax

louder

grown

possessions.
than

and^

fewer dulcet tones are heard.

form.

dees

mula

This

the

far morh

means

standardized

contained

in

Members

New

munity

the

will

Tel. REctor 2-7815.

The

Because

Handy

The international Bank

eight
to

States
in the
married cou¬

preferred
tax
position
whereby their financial burden
was reduced the wedded residents

ples

For Reconstruction

a

of the

Development

other 40 States asked their

with a greater or
lesser degree of fervor, "Why the
discrimination?" Why should those
Congressmen

21/4% due 7/15/57

chief

feature

of; the

partnership, each takes his

or

half.

NY 1-1557

to

branch offices

our

wife

and

members

of

vides,

in

as

the

However, : in,

'.

these

her

regarded

are

marital partnership.

com¬

as

of

Bought

The law
of

case

pro¬

every

are community and
property.
In the la Per
class there are included generally

partners.
The two spouses again
under the law, must be treated as
equal partners and hence all in¬

agree

the partnership

must be

consisting

of 1 two

regarded

as

equal parts:

part belonging to
the husband and the other to the
wife.

Quoted

-.

Separate

tances.

be

the partners may
that certain property shall
separate property of one

the other.

cise

rule

But there is

that

no

all

governs

the decisions of the

as

the
;

120
.

>

(Continued

on page

Bell

Teletype NY 1-1227

pre¬

cases,

courts

community jurisdictions

-

Broadway, N. Y. 5

WOrth 2-4230

,

the

or

man

Members Baltimore Stock Exchange

Also

a

one

That is, when a

MO

III!

gifts, devises, bequests and tiheri-

of

Sold

Business

of

vary

27)

Detroit Canada Tunnel
Detroit Irit'l Bridge

:

Prospects and Distribution Trends

WM. E. POLLOCK & CO., INC.

By C. F. HUGHES*

Street, New York 5, N. Y.

HAnover 2-8244

Business News

■

5?

Editor, The New York :"Times"

on

and notes increasing competition

Aetna Standard Engineering

.

American Time Corp.

Artcraft Manufacturing

Manufacturing

got

Electric Bd. & Share Stubs
■

Hood Chemical

age

Kirby Lumber

f

Punta Alegre Sugar

Taylor Wharton Iron & Steel
-

\
V

United Artists Theatre

?

tyorks

Taca Airways

as

<

Telecoin Corp.

&Teeue«vACompan.u
Members N. Y. Security Dealers Assn.

months.

tainty

A

deal

good

of

uncer¬

registered concerning
the second half of the year. There
was only small mention of the in¬

the

was

that

over

these

reviews

from

test of prices and supply and de¬

and, in¬

mand conditions will appear some
six or seven months from now.

fluence of

have
improved.
They are not

C. F.

Hughes

bombastic

pieces of pollyanna
ballyhoo
and
short
which

once

instances.

a Presidential election,
perhaps it is believed that the

so

they
They

were
are

One notion expressed in some of
these forecasts reminded

the

Advertising

.

more

Hughes be¬
and

Sales

Executive

University, Columbus,

Conference,

of

12 months

that I hedged it

ago

rather nicely

and without too

—

Stock
Curb

York
York

Exchange
Exchange

Cotton

Commodity

playing of the "handy game"
which goes like this: "Now .on the
hand

one ;

now

—-

hand."

'

the

on
•

,

•

•

of

New Orleans Cotton

N.

And other

Y. Cotton
NEW

Inc.
Trade

Exchange

Exchanges

7What Happened

other

4, N.

Y.

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND




5

Mike?"

ye,

What I
some

mean

quarters

so

And Mike

far!"

is that business in

is

feeling

little

a

too

cocky, perhaps, because
of 1947 predictions did not
true.

You will recall

variously

that

called

a

a

lot,

Minn.

Placer

& Ont.

Paper

Development

Canadian Securities

Kingdom 4%

spring of 1947 and it

and

of

the

Mgr.

..

;y..

>

York

Curb

Stock

Broadway

Digby 4-3122

'

•

f

New York 6

;

.

Exchange

Exchange

Teletype NY 1-1610

Giant Portland
Cement Co.

crop

Prospectus

coal-

ised

to -hold

request

news

the

off

on

;

A v:" Firm trading Market;

sag

in

|

Common-—Rights—-Warrants

ex¬

ports under the "dollar squeeze."^
The coal-wage agreement led to.
higher steel prices which invited

;

•

Members,

■

.

.

come

"reces¬

'90

(Continued

,•;■

on page 44)

Bankers

to

the

Government In

Scophony, Ltd.

•

26, Bishopsgate,
London, E. C.

in India,
Burma, Ceylon, Keny4
Colony and Aden and Zanzibar

Paid-Up
Reserve

NEW YORK 6, N. Y.

The

Bank

banking

and

every

exchange

description
business

Trusteeships and Executorships
Teletype NY 1-672

also

Common

undertaken

V

*

!'''

Raytheon Manufacturing Co.

;

$2.40 Conv. Preferred

*UniversaI Winding Company
90c Conv. Preferred

*Prospectus

£4,000,000

Capital
£2,000,000
Fund—___._^_£2,300.000
conducts

^Georgia Hardwood Lumber Co.

Twin Coach Co. $1.25 Conv. Pfd*.

Office:

Branches

Department

1

T'1

Solar Aircraft Co. 90c Conv. Pfd,

Kenya Colony and Uganda
Head

-.-n

Teletype—NY 1-376-377-378

v."

of INDIA, LIMITED

Securities

New York Security Dealers Ass'n
;

NATIONAL BANK

Goodbody & Co.
Telephone BArclay 7-0100

New

Chicago

Mar¬

quick

the

Subscribed Capital

115 BROADWAY

Members

39

was

some¬

Exchange and Other Principal Exchanges

;

Joseph McManus & Co.

pointed < to sustained high food
prices. The Marshall Plan prom¬

Gaumont-British

British

Asst.

v

s

the late

settlement.; The

are

KANE,

•;,-v..

in 1947

wage

"How

friend

Rhodesian Selection

Co., Ltd.

MICHAEL HEANEY. Mgr.
WALTER

The fact is" that there was the
beginning of ■ 'a readjustment in

Plan,

Powell River

Members N. Y. Stock
CHICAGO

NEW YORK

HAnover 2-9470

Securities

v

announcement

United

Department

Exchange Bldg.

YORK

U

,

shall

his

past

lower beam, Pat yelled,

Noranda Mines

Exchange

Exchange,

Board

1923

Curb Exchange

York

Curb and Unlisted

much

crop,

whizzed
a

We Maintain Active Markets in U. S. FUNDS for

Members

New

ST.

Teletype NY 1-1140

was

H. Hentz & Co.

•

/

at least

on

thing

O., Jan. 30, 1948.

or

readjustment,

he

so many

now

moderate

a

As

in

Promotion
Established 1856

bit

sion,'' a' "shakedown,"

thought to be quite likely. I think
I made a few suggetsions on that
order myself, though I find on re¬
reading of my year-end offering

Pat

on

Ohio State

York

Established

WALL

only saved from growing by three
major developments—a short com

yelled back, "OK,
fore

a

me

off

Teletypes—NY 1-1126 & 1127

*An address by Mr.

t

.

Concludes, with current uncertain

of that old story of Mike, who fell
the top of a new skyscraper.

long on
facts—

—

Hanover 2-4850

St., N. Y. 5

optimistic, particularly
respect
to
the
first
six

the years

the

Swasey

were

rule

a

with

dustry

Merchants Distilling
Warner &

we

whole I would

trade

U. S. Finishing com; & pfd.

Business forecasts for 1948

out
only
a
token section.

say

Title Guaranty & Trust

-

putting

On

Time,Inc.

United Piece Dye

<

realistic, tell what happens and
a
reasonable appraisal of
plans and possibilities.

per¬

and

were

N orthern N e w England

Pacific Telecoiii

and confusion in merchandising.

offer

The

short¬

still

sists

Newmarket Manufacturing

Chicago

.

•

international situation, business forecasting "is downright guesswork."

others

didn't.
paper

International Detrola

New

''

the

into

paper,

General Aniline & Film "A"

New

'■;

>,

v:' *

Members
64

engaged on the paper in putting together a small busi¬
section—something to accommodate advertisers and not chew
too much newsprint— and we were knee-deep in reviews and forecasts. Some of them

up

Clyde Porcelain Steel

New

'

Frank C. Masterson & Co.

financial annual

and

ness

Boston & Maine R.R.

•

.

Holds boom is at tag

About six weeks ago we were

Baltimore Porcelain Steel

Bell

Common
•

-

:V

•

end, because: (1) supply pipe,
lines, with few exceptions, are full; (2) bank credit is jumping too fast, and (3) competitive imports
will increase under Geneva Agreement. Sees concern regarding continuation of consumer demand

Qctual~fflarkets Qu

37 Wall

y

v.

current business forecasts, Mr. Hughes reviews trends in }947, and ineffectual efforts

of retailers and manufacturers to balk inflation.

,

Hoving Corp.

-

Teletype NY 1-2846

Commenting

Bates

■

classes, these

a

other partnership, the acquets and
gains shall be divided between the

come

Pfd.,;;v\ ';

Tobin Packing

20 Pine

„

property and income fall into two

species

Com. &

;

due 7/15/72

3%

•

Elk Horn Coal I:

States

band

being

,-?y\

accorded

Union

and

Albert

great inventions, the epic-making
discoveries, mostly find
their
source an this state of mind.
i

>

wires

has

property

munity property rule is that hus.-r

has

which he

desires.

5

The

his

which

.

com.-; rights upon her. In the community
fundamen¬ property Sta-es the law is that, a]s
tally nothing to do with tax rates. on the dissolution of every other

things

and

BROADWAY, NEW YORK

120

all

envy,

man

neighbor

York Curb Exchange

Direct

seated belief to the contrary

forts to attain

and

New York Stock Exchange

HAnover 2-0700

for¬

put forth tre¬

after

.

Exchange

the

mendous .ef-r

is

York Stock

St., New York 4, N. Y.

New Orleans. La.- Birmingham, Ala.

marriage
people are entitled to. ceremony, "With all my worldly
preference according to the law, goods I thee endow"; / Usually th£
as
interpreted by the courts, be¬ wife never gets anything substan¬
cause
they live in
community tial by virtue of this provision; ajt
property States.
Despite a deep- least these word3 confer no leg.^1

only

McpONNELL&fo

25 Broad

These

Covetousness

Bought—Sold—Quoted

Steiner, Rouse &Co.
Members New

live perhaps

crease

in its most de¬

praved

chosen to

who have

Stalin

have been

'"

—

•

in California, perhaps in Texas, be
favored over us?
With the in¬

Hitler-

and

Longchamps, Inc.

Alabama &

r

Louisiana Securities

recent

cludes

request

New York Hanseatic

7-5CG0,

,

Formerly Lecturer in Taxation, New York University

out

BOUGHT—SOLD-QUOTED

BArclay

Thursday, :February 5,-1948

•

Mr.

♦Expire close of business Feb. 10th.

120

CHRONICLE

■

•

on

i;,

By ALBERT HANDY

■

•

Rights

Prospectus

FINANCIAL

Community Property and the Split Income Tax

Gulf Oil Corp.
.

&

on

& Common

request

Reynolds & Co.
of

Members New York Stock Exchange
120

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

Teletype:

NY

1-635

•

♦

Volume

167

Number 4670

*,v,,

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

(590)

3

'

t:

I N D EX
Articles, and
A Reduced

.r r

,i

News".V..-Pa*e

Demand Performance and the Stock Market—The Finale

By WESLEY LINDOW*

"

::

■y —Gilbert M. Haas and James'J; Quinni;^l_L^_--______Cpver

Mr.

Handy

2

Business Prospects and Distribution Trends—C. F.
Current Business

Situation—Wesley Lijrdo w

_ _ _

21'|";

Hughes"!

_

3

—

_t

_

^

_

-r

Market Speculation, and

—rjtancis

Aaains

Venture

Capital

Western

In

,

the end

1

Cowan.2^.2—._

every

9

Trends—Myron L. Matthews.

This Talk About Anti-Inflation—William

9

had

corrective

a

11

Cession.

Congress and the Materials Shortages—A. W. Zelomek-^..

12

Outlook—Alan H.

Temple..

13

:__22222u.__

:

15

.....

__

15

_____

The Change in the London Stock
Exchange Organisation*
—A. M. Sakolski
2:

of

game
Cites Deflationary Dangers in Use of
Treasury. Surplus___Cover
James J. Caffrey Recommends Investment
Bankers Publicity

Campaign
Metals—1948

■

■

1

begin.

Rep. Sundstrom Proposes

':■> Hoarding

___

A. F. Davis Seeks Test of Status of Federal

Canadian Exchanges to Resume
Saturday
But How Do We Know It Will Work?
FIC

Banks

Place

Reserve NotesL

See It

sion* at

20

^

S.essions__.____rJ_.

.

_

Canadian

most

reasons

From

Funds

Banks and

Wilfred

Reporter

May___

Railroad

._

.The

State

of Trade

:<

COMMERCIAL

FINANCIAL
CT.

Reg.
WILLIAM

Dominion

B.

and

DANA

COMPANY.

New York

8,

<HERBERT D.

Bank

$25,00

per

the

SEIBERT, Editor & Publisher

rate

RIGGS,

Business

per

forces.

1 Thursday,- February 5,

■j

per

year.-

various

overall

extra.)

Monthly;

—:

account

of.

exchange,

the

fluctuations in
remittances for for-

New. York

funds.

.

>.

"2

:

*

at

Offices:
135
S.
La
Salle St.,
Chicago 3, 111.' (Telephone:** State 0613) ;'
1 Draper^ Gardens, London, E. C.,
Eng-^
land,; c/'o Edwards & Smith.
^

i

Copyright
*2
*

1948 by William
Company ""

«

Reentered
ary

25,

YoRc,
i, 1879.

1942,

N.

Y.,
.,

V".'

at

post

the.

lender

the

office

Act

'*.

*.

•

at

of
■.,

Subscription
in

Bond &
>

Union,

and

$35.00

N. Y. Title & Mtge. Co.

U.

Members
per




Prudence Co.

year;

The

S.
o1

in

com¬

Members N. Y. Security Dealers Assn.

WHitehall

St., New York 4, N. Y.

3-0272—Teletype NY 1-956

Now, let

cf

companies

rising to-

new

ris¬

this

level

under

In

1947,
twice —

range

it

outlook

point

fore

the

Men in

York

SOLD

QUOTED

—

FIRST COLONY
CORPORATION
52 Wall St.

New York 5, N. Y.

Tel. HA 2-8080

Tele. AY 1-2425

capacity is planned for
in
1948
and * 1-949.

are

is

scheduled.

seems

for

a

to

me

Central Public

Never¬

that

the

continuation

tight supply situation in steel'
time.

•

Southwest Gas Producing
Commonwealth Gas

•
.

Another bottleneck

on

the

Utility 5y2s

Southwest Natural Gas

of

some

side

shortage

United Public Utility
(Commoir)

unusually severe win¬
ter has brought this to a
head,,
and everybody knows about the
tight supply. situation in petro¬

Edward A. Pureed & Co.

of suoply is
of fuel. Our

the

the general

Members New York Stock Exchange
Members New York Curb Exchange

leum and heating gas. Here
again,
the shortages are

occurring in the
face, of unprecedented.production,

by Mr. Lindow be-

New

-

University

Demand

New York
r >

Finance Club,

—

peaks.

the

spring and again toward the end
*An address

new

for

or

present
in

even

BOUGHT

prices

that steel ingot ca¬
the United States was

theless, it

reached

once

Forming
Corporation

been

There have also been increases in
coke capacity and important new

"

at

Metal

and

scrap,

have

completion

demand
*

pig iron, which
largely to a short¬
Also, there is a

by
almost
3
million
tons. An additional 2 million tons

review

us

in

increased

to

price

show

supply

190-192

conditions.

We

are

'■i-. j

'•

faster

has simply/moved up
than capacity. * The same

(Continued

on

page' '42)

50

Broadway WHitehall

.Bell

System Teletype
New

York

4,

NY

N.

i

*

4-8120
! '

1-1919

Y.

•

T
l.l

/

' ';

i

interested in offerings of
'

"

>•

•'

& Trust

PREFERRED STOCKS "

"

15 Broad

New

■York

St., NX 5

Bell

Teletype

Stock

& Co.

25

Neio-York

Stock

1-2033

Exchange

Members

Broad Street, New York 4
Tel.:

HAnover

2-4300

'

New

York

135 S. La Salle
•,

\

Tel.:

Curb

Exchange

St., Chicago 3-

FINancial

2330

Teletype—NY 1-5

"jL-v-v"

—Boston

-

Glens" Falls

«

C. E.
Members

61

-

Worcester

analysis

on

regnest

Unterberg & Co.
N.

Y.

Security

Dealers

Aie'n

Broadway, New York 6, N.Y.

Telephone
Schenectady

Company

of New York

"

Spencer Trask & Co.

Exchange

WHitehall 4-6330
NY

y

Year-end
*

f

i

(

The Public National Bank

'/■

•

"

"

Newburger, loeb
.

shortage is

shortage of steel

pacity in

.

Members

Members

States,

Mtge. Guar. €o.

Lawyers Title & Guar. Co^

New

v

spring

Lawyers Mortgage Co.

March

Rafes

United

Territories

Pan-American

i

"CERTIFICATES^;

second-class matter Febru¬

v

Subscriptions
Possessions.

B. Dana

*

as

the

25 Broad

TITLE COMPANY

■"

f 'Other

DUNNE&CO.

—

wartime

-

it is reported

production
apparently
difficult time going above

a

Every Thursday; (general news.and ad-2

issue) and every Monday (com¬
plete statistical issue -^--market quotation
records, corporation news, feank clearings,,
"state and city news, etc.).,;
.-

in

tons

Meanwhile,, the steeL industry
increasing its plant ca¬
pacity. During the past year alone,

capacity

continues

(3)

City, Feb. 3, 1948.

▼er.tising

Susquehanna Mills

has been

ceiling be¬

a

is

dustrial

the

postage

"Lea Fabrics

annual

an

ket in order to keep
scrap

situation

to

has

"•

Sugar

Warren Brothers "C"

sire to stay out of the
scrap- mar¬

about present levels of production.
The Federal' Reserve index of in¬

Manager

1948

formid¬

the

near

reached

steel

from

today.

supply, the facts
pretty clearly to a ceiling

Record—Monthly,

(Foreign

pressure.

As

48

Punta Alegre

Hydraulic Press Mfg.

torn between the desire to
buy up
the scrap they need and the de¬

f.
;

dif¬

.'

90; million

coke.

mcreases

35

year.

severe

.year.,-(Foreign; postage extra.)

in

.WILLIAM DANA SEIBERT, President
D.

.$38.00

Earnings. Record

of

made

our

of

the

The Production Index

oign subscriptions- and; advertisements
must

ufe

WILLIAM

Quotation

year.

Note—On

.'•/

'

.

per

Monthly

Publisher

Y.

and

The

weeks, tlie* output

very

situation

look

conclusion,
I
briefly the
supply and de¬

and
factors in further detail.

Other Publications

j
>25 00

N.

of

Canada,
Countries, £42.00

'

CHRONICLE

REctor 2-9570- to 9576

.

;

•

Patent Office

S.

Park Place,

25

Weekly

Other

The

'

Twice

opt.i-

still

continues to

the

5

i

(Walter Why te Says) __i'2_*___2____j___
and You.__
i-\L

Published

|

and Industry _LJ"_

Tomorrow's Markets

-Washington

is

rate

age

the side

on

bearish

Demand

ing

44.

System Teletype N. Y. 1-714

un¬

expansion

ingots reached

in turn is due

the

at

>

18

__

Broadway

Bell

seems

present

of 1944. The steel

tc*

1908

much above

almost

peak

that

the

of

forces

supply.

barometer

12

Corner___2_2

Securities Now in Registration._i
-

(2)

exceed

8

1

Salesman's

is

you

one

production,

levels.

46

__

;___

Securities

Securities

fwither

recent

of

the

review

present

29

_2_

it

go

future.

near

in

machine

which

is apparently close to

47

.___

Utility Securities

but

can

bottlenecks./'

the

-

tell

this
to

hard

vote

bullish

like

The

5

Established

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

slightly

move

rate

al¬

hesitate

may

of steel

may be summarized in three short
statements as follows: (1) Supply

L-_-_

-Prospective Security Offerings__2
-Public

am

my

mand situation

21

Governments-.J

on

I

cast

support

cause

____!

'___

Our Reporter's Report

'Our

is

14

Bankers—_2_

J.K.Rio«\Jr.&Co.

in
of course, that many of
component parts of our eco¬

Within

we

16

^_-_v__-__-2_-____

Observations—A.

that

I

highlights of

;

Engineers Public Service

knew, one of the most
important of these bottlenecks is
steel, although steel production is
setting new records for peacetime.

reces¬

It

-

•

well

as

the

too

•

may

should

7

;

-

inflation

that

8

.____

—

About

people

stronger than the

41

Notes

News

some

outset

8

Recommendations

Electric Bd. & Share
(Stubs)

VAs you

the

on

and

time.

same

To

Washington Ahead of the News—Carlisle
Bargeron

NSTA

inflation

20.,-

Securities

Kingan Com. & Pfd.

are,

able

•

31

Indications of Business Activity"
Mutual

of

ihists.
i

*

'

4-6551

plicated by a number of corollary
shortages. There is a tight sup¬

I

14

'

Dorset Fabrics
(w.d.)
U. S. Finishing Com. & Pfd.

are

ply

tight

Cover

WALL STREET, NEW
YORK

to-7 be

proved

they fear they might usher in the
33

*

'

in¬

recession.

31

Stocks___

Investment

half

though they were
thing.
And
one
of

same

)

pay

for itT

Telephone: WHitehall

the

reached

1948

the

nomic

we

as

23 2 i

Coming Events in the Investment Field_______
Dealer-Broker

and

:

the

20;.

(Boxed)

(Editorial)

Business Man's Bookshelf.

recession

have talk

-

Debenturesc____L

Insurance

day with

this

on

The result of all this is that

?0

Regular Features

and

1948

other side;

R

Bank

other

economists! and

so

in

the

question.
As. you might suspect, the results
were
just about half predicting

v

As We

or

195

19

_

Australian Pound Discussed by Chifley____

|\

lunch the

dozen

a

_____

higher in

likely that it

polled ourselves

Stephen M. Foster Estimates 1948 Lite Insurance New
Capital"
Absorption at S5 Billion
"_i
18

N. Y. Chamber of Commerce Committee
Urges Delay on
Return to Gold
Standard_______,__^__i

had

soon

index

1948

a

18

Col. II. Murray-Jacoby Suggests Three
Moves to Avoid War
With the Soviet.
*

Wesley Lindow

that

I

New U. S. Currency to Reveal

a

___

This

ficulties

___

99

since

figures. I have cited
seasonally adjusted rates.

not 1948 before Nov. 2.

14

Ever

a
post¬
peak of 192 in November, to
by 191 in December.

1948 is the year. Others
ray 1548 is not the year—at least

.

have been

we

All of the

Some people

First National Bank of Boston Calls Swollen
Budget"
National Security Threat
^17

.'V; '

time

production

war

recession

say

at

ob-

up

any

and

Obsolete Securities
Dept.

be followed

will

12

Sumner Sllchter Commends
Taft-Hartley Act, but Warns of
Abuse

trial

try-

the

11

him

and the index of indus¬

erroneous

in g to pick
the time when-

/:•

;___

guy

take

offer

you

,

some

terpretation

we; are
still
Engaged, in a
^ a s c'i nating

16

____

t'o day,

So

He'll

*

/

r

;

interpreted as the birth of
long awaited .recession. That

appear,
t

junk

the

to

Street!

good money

yeu

wave
of
doubt
and
hesitation
which began in the spring. As
you
know, this wave has sometimes

taking a
long time to

13

Saltonstall

Problems of Postwar Monetary Policy
—Woodlief Thomas and Ralph H.
Young

This

recession

is

The Problem of Rising Prices—Paul H.
Nystrom
A Year of Decision—Sen. Leverett

the

solete

of the year. In
between, however,
the index- dropped off to a low
of 176 in July,
reflecting a broad

time, however,

Economic

Wall

hanging heavy over
logical expectation, of course, for alter

a

re-

Witherspoon____

The

.

99

referring

we

war

have

Home Building Costs and

This has been

IS A DOPE
We're

;

" *

.

may be called the battle of the recession,
of the war, there has been a recession

heads.

pur

7

THE GENTLEMAN

■

;

will be

pressures
wages.

having what

6

Europe in the Balance—John L.'Simpson....

look stronger than bearish
forces,

present

the business and financial world for

6

New Era of Prosperity Ahead—Gen. Robert
E. Wood_2

Utilities Face Their Gravest Test1—David

to

-

r

.

1

iiusiow_____l

Lindow points

higher labor costs? and concludes inflationary
increased by new round of higher

V

4

-

Stock

r

_

The Franc Crisis^alld International
Monetary Fund
Emest H. Weinwurm
_/
_"j
2 ^J ..._2_

Economist, Irving Trust Company, New York
City

capacity production demand still
exceeding supply, and rising prices. Sees further shortages of
steel,,
fuel and transportation, and
rising demand for more expensive
foods as growth of income makes it
possible for * consumers to
spend more. Predicts greater outlays for capital goods to offset

.

Responsibility in Flow of Investment Capital—;
^

—John A'. Murphy

v

Contending bullish forces still

Community Property and the Split Income Tax

Ys —Aioert

Brokers'

Cunent Business Situation

•

Budget Before Tax €uf—James D. Mooney__ Cover

BOwling Green 9-3565
Teletype NY 1-1666

4

THE COMMERCIAL

(600)

CHRONICLE

FINANCIAL

&

Thursday, February 5, 1948

.

.

The Fianc Crisis and International
Brokers' Responsibility in
Flow of Investment Capital
Monetary Fund
"V

By JOHN A. MURPHY*

;

Partner, Reynolds & Co.,

Weinwurm, in holding franc crisis found both the Fund and
American financial high-command unprepared for
emergency, urges
efforts should be made to improve the Fund's organization and
pre*
pare it for future troubles.
Sees mistake in acceptance of unreal¬

not only paying

are

ting only about one-half of share

istic

can

markets and

employing

more

middle-man between the accumulator of savings and
legitimate business purposes, such as expanding their
people. In this basic function of the formation of capital or

in the original

of

%

about

only

the

for the needs.

(3) A vast expan¬

distribution of

included,

securities

gigantic outlays necessary can be
met out of reinvested
earnings.

sion

Therefore, corporate business has
been forced
to seek billions of

higher standards of living.

to

general

the

b 1 i

p u

broker

the

c,

plays

little
part, but there
very

is

a

dual

in-

the

vestment
banker
sense

in the

that the

broker should
contribute

part in creat¬
a future

ing

John A. Murphy

for

liquid market
that invest¬

securities

new

his

Stockholders'
Not

know
ease

they

because

confidence

with

they can be liquidated with
in a broad, continuous and

Association
of
an
analysis

National

The

in

only

share

the

they
1938.

are

the national income

of

received between 1929 and
Percentagewise, their share

dropped fr6m 6.1%

has

to 3.1%,

benefiting

they

are

nor

through

enhancement of the value of

the

their

equity

or

struction and

care

of

more

prices

of

con¬

can

not take

than half of the funds

needed simply to replace

on

facilities
This situation,
top of the requirements for in¬

they

wear

to

and

Capital

utility and industrial

Fire

insurance

commercial

with

the

out.

com¬
cap¬

compan'es

banks

faced

are

problem.

same

in

recent

has

years

the

lowered

ratio of capital and surplus to pre¬
mium volume in many fire insur¬

companies

ance

forced

to

the

news

of

by

financing to

be

of the com¬
depressing effect

some

panies has had
on

that they are
capital.

so

additional

seek

a

the market value of their stock

price

have been
considerably

indicated

stockholders'

though

even

selling

at

below

many

a

equity.
Mr.

ventories which have doubled dur¬

Marriner

the

S.

Chair¬

Eccles,

Board

Governors

of

its

Says there
members

weeks

for

the

first

time

Department

on

tional
t

Mone-

of

most

Retained earnings amounted

While Roughly, the new capital was
the latter figure may seem large, of equity money and % of debt
its inadequacy is revealed in De¬ money.
The Brookings Institute recently
partment of Commerce data that
estimates business expenditure for stated that three factors will make
to

a

little

$10V2 billion.

over

y

to

expansion in capi¬

producers' equipment and indus¬

for still further

trial and business construction has

tal

been

advances in wage and other

running at an annual rate of
around $22 to $23 billion. In addi¬

tion, there is an estimated inven¬
tory increase of about $7,600,000,000 for the year.
It was further
shown

that

even

if

funds

from

current depreciation charges were

requirements: (1) Still further
costs
will necessitate a larger supply of
funds for payroll and other work¬
ing expenses. (2) An unusual vol¬
ume of replacement of worn-out
and obsolete

is

necessary

plant and equipment
—

all

of which

will

life insurance, U.

S. Savings bonds,
trusts and savings banks,

that

so

these

available
The

for

monies

financing.

equity

economic

not

are

that

will

of

consequences

capital

equity

not

survive

business

of

a

would

laws

be

regulating
(Continued

could

of

test

One partial
amend the

depression.

solution

the

to

life
on

attention

the

f

o

insurance
page 24)

address by Mr. Murphy at

Forum sponsored by The

Investors
Philadelphia, Pa.,

League,

Inc.,
Jan. 29, 1948.

serves

that

seemed

adequate on
'30's are

the low-cost basis of the
not

now

likely to prove sufficient

oublic

small group

experts

as

proved

the Fund

of

spect

ports

French

well.

If the

cur¬

Fund had

postponement of a franc par value
the
recent
dispute would have

the

strug¬

ther designed

arisen in the first place.

never

Ernest H. Weinwurro

gle. Obviously,
they were nei¬

As

matter of fact, the trends which

a

forced the recent devaluation

were

able to convey
any full or adequate coverage of
so
highly technical a subject. It

apparent a year ago.
But they
were
disregarded
for
reasons

is

of

still

an

far

nor

too

early

venture

to

which-

solely

last half
be useful
the high¬

,The

velopments

the

during
Yet it

deal

with

may

of

some

lights and draw a few important
conclusions preliminary to a more
exhaustive discussion of the whole

.

the

When

in

Fund

December,

original par
values in accordance with article
1946

published

there

IV,

the

were

doubts

grave

whether it had followed the best

(though

French

the

not

franc

easiest)

which

was

already

overvalued at that time.

Indeed, the Fund expressed its
in an accompanying

reservations

statement

as

well

as

in its Annual

Bowser Com. & Pfd.

Durez Plastics & Chem.

in

terms

but were

not

based

such considerations.

on

Devaluation Plan

French

The

Oxford Paper

scheme

French

two

principal

ond,

a

free market for convertible

(hard) currencies principally dol¬
lars for all transactions excepted
half

value of

the

of

imports

f'red

r-ew

exports and
exchanged at the

be

to

of

rate

214

to

The Fund did not object to the

first

part of the plan. But some
provisions of the second met with
the

from

particularly

opposition

strong

British who

were

sup¬

ported by a majority of the Fund
members.
One

,

of

Fund"

as

the

"Purposes of the
enumerated in Article I

of the Charter is
"to

promote exchange stability,
orderly exchange

maintain

to

arrangements

members,

among

avoid

to

and

competitive

ex¬

change depreciation" (par. III).,
The

the

Fund

majority

plan

French

with the

accord

spirit of these basic
had

thus

and

to

pro¬

dis¬

be

provided for in Ar¬

as

IV, sect. 4.

•

.

,

doubt

no

was

the

that

in

not

was

with

agreed

contention

British

there

Com. & Pfd.

francs

the dollar.

Such was the legal

Stromfaerf-Carison Com. & Pfd.

involved

features.

First, a
straight devaluation of the franc
by some 80% (from 119 francs
to 214 francs to the dollar). Sec¬

ticle

Crowell-Collier Pub.

explained

were

economics

adequate appraisal of the de¬

Art Metal Construction

Carey (Philip) Mfg.

and

day-

on

position and
that

it

was

legalistic point of
view. .But probably more impor¬
tant is an analysis of the real mo¬
tives of the parties behind their
formal argumentations.
^

feasible from

FOR

re¬

franc

number of other'

a
as

approved

Company

with

erroneous

the

followed those who recommended

events

n

doubt

no

re¬

to-day
in

were

to

rencies

a

was

con¬

developments
that the policies of

is

subsequent

have

a

us-

of

;

the basis of

on

There

perhaps
There

flood

sound

as

that

rather

than merely

However, it defended its

visions

Buda

news

operations

siderations.1

general

Depreciation re¬

high-cost basis.

started

statistical data and economic

have^to be constructed on a new
*An

American

headline

were

they

decision

method
in accepting the ''official" parities
be serious.
Concerns will be un¬
without Vany adjustments.
This
able to expand or will end
up
was
particularly true
for
the
with grotesque capital structures
shortage

since

future.

the

of this is channeled through

oensmn

the

Reports and emphasized the pos¬
sibilities
of
adjustments in the

Fund
brought
the
a r

.

ient.

glaring lack of

a

with

two years ago.
The franc devaluation and the controversy
between the French Government and a majority of the members of
<$>Interna¬

ing the past few years, makes the of the Federal Reserve
System,
Com¬
problem more acute.
not long ago stated that banks
merce's figures recently declared
problem as will certainly develop
Recently, there has been heavy with low ratios of capital to risk
that profits of corporate business
during the months to come.
are
proving inadequate to meet recourse to borrowing and risk assets should build un their canthe requirements of current busi¬ capital is becoming increasingly ital even if thev had to sell addi¬ Determination of Franc Par-Value
This is not always
ness
Was Premature *
expansion.
It was pointed difficult to obtain.; This is a dan¬ tional'stock.
out that while profits are higher gerous trend because in times of easy to do because the stocks of
Article IV of the Fund Charter
than prewar margins, out of the prosperity, we should be paying nigny of' the largest banks have
sets the framework for the con¬
$28 billion of corporate profits, off debt and the portion of equity been selling at prices below their
troversy on the franc devaluation
be rising.
This book value.
Federal and State corporate taxes interest should
It provides for both determination
absorb $11,200,000,000 and $6,200,- month's National City Bank letter
The heavy rate of individual
of par values of member curren¬
000,000 was paid out in dividends showed that the percentage of saving during the war has given cies
(sect. 1) and changes in those
that were again taxed to the recip¬ capital raised by selling bonds and way to a present low rate and
par values (sect. 4).
notes in 1947 rose 50% from 1945.

based

was

and

almost

to

of

man

recent

of January.

the

and

the

The

sharp increase in premium volume

undertaken

equipment, current

depreciation charges

ital.
and

Fund

Activities of the Bretton Woods organizations
in

latter

companies are not the only
panies in need of additional

Yet

shares.

advanced

With

as

orderly market.
Manufacturers

Burden

stockholders pay¬
ing income taxes amounting to
about % of their dividends, but as
a group they are getting about V2.

so

float additional
public will buy

the

that

All Businesses Need More

Railroad,

ment bankers can
issues

economic* progress

further

,

re¬

sponsibility
with

financing.

dollars in new

is indispensable

program

between

administration, which should be corrected quickly.

those savings for

use

par-value for the franc.

liaison

,The investment banker is .the

-

those who

-V?

WEINWURM

II.

Mr.

one-third of their dividends in taxes, but, as group, are get¬
of national income as compared with prewar days, Mr. Murphy
denies corporate profits are abnormal, and points out need for higher corporate depreciation and inven¬
tory charges because of higher prices. Sees more investment capital demanded by all business under¬
takings, which, because of inability to float securities, must borrow from banks, thus accelerating
inflation. Upholds securities salesmanship, and urges investors organize for protection.

Asserting stockholders

ERNEST

By

...

Members of the New York Stock Exchange

a

,

Bought

Primary Markets in
Unlisted Securities
Direct

f™

'Phone

to

BUFFALO
BOSTON

Enterprise

j

Quoted

:

Exchange and Other Principal Exchanges
105 West Adams St.. Chicago
*
Teletype NY 1-672

Wires

LOS

Ward & Co.

Crude

Oil

Guarantee

Telephone: REctor 2-8700




practiced

been

had

those

(especially

of-; Dr.

and there

determination to

a

Each
one

a

fixed

do

away

currency

price.
to

Any

the

(Continued

Bought—Sold—Quoted

devaluation

another

lower) fixed rate.
principle was

& Trust

should have

price and it should be

lead

should

(though

Undoubtedly,
a sound one;

on page

43)

"Exchange Rates and the Interna¬
tional Monetary Fund" by Lloyd A. Metzler in "International Monetary Policies,'*
one
of a series
of "Postwar Economic
1 See

1926

York Security Dealers

Ass'n

Seligman, Lubetkin &> Co.
INCORPORATED.

Broadway

as

the 'thirties.
There 'was
strong recollection of their

all.

Foundation Co.

Title

Members New

a

only

Cities

General

120

during

with those practices once and for

DuMont Laboratories

ESTABLISHED

schemes
then

was

Accepted in Most of the Principal

the

Woods

agreements were opposed to both
multiple and fluctuating currency

Schacht and the Nazis)

ANGELES

Electrol, Inc.
Deliveries

Bretton

the

of

that

doubt

little

is

There

abuses

PHILADELPHIA

and

2100

-

Goodbody & Co.
Members N. Y. Stock

115 Broadway, New York
HARTFORD

Sold

drafters

Telephone BArclay 7-0100

FROM

-

New York 5

Studies"

41 Broad Street

Teletype: NY 1-1286-7-8

New York

4, N. Y.

ernors

published by the Board of Gov¬
the
Federal Reserve System

of

(Washington,
September 1947) for a
thorough presentation of the statistical
background supporting the Fund's de¬
cision.

,

.

...

...

I

Volume

THE COMMERCIAL

167 Number 4670

FINANCIAL,. CHRONICLE

&

(601)

5

John H. Anderson With
Steel

The

Observations

.

.

By A. WILFBED MAY

*

.

Production

White, Weld in Chicago

Electric Output

Carloadings
Retail

State of Trade

(Special

Trade

to

Chronicle)

Financial

The

ILL.—John H. An¬

CHICAGO,

Commodity Price Index
pood Price Index

Public Relations Warfare Is Extended to Investment
Must Political

and Industry

Banking

derson has become associated with

Auto Production

---

White, Weld & Co., 231 South La

Business

Failures

Salle

Strategy Also Sabotage the Satisfaction of Industry's
Pressing Need for Capital?

J

This week's urgent call by former SEC Chairman Caffrey on the
investment banking industry to embark on a nation-wide self-adver¬

production held to a very high level the past,
week and compared favorably witji the like week of 1947, scattered
strikes through the country, coupled with bad weather and indus¬
trial gas shortages, served to retard output to some degree.
In fact, postponement of the scheduled resumption of industrial
gas service to plants this week will again work to keep down output
of automotive factories another week.
Transportation delays, too,

highlights the

tising campaign

growing need for defensive "public
relations" effort here as well as in so many other sections of the
community. The need for self-protective 'strategy
is made acutely pressing now by the
institution of the government's suit against 17 of
in this

area

the most active investment bankers

monopoly

on

well

the

as

our

whether

their

best

the

of

mended

forward;

from

a

court

proceedings

is

be

to

With

com¬

.

to

wants

the

end

sorely-needed insurance

may

modus

effectively making
funds available to industry. He is
operandi

company

now

also asking

that the investment bankers be forced to act either as an
or
as
a
financial adviser;'which such mutual
exclusion would, unlike the functioning of a medical doctor or an
architect, force the investment banking machinery to act, if at all,
issue-merchandiser

in

a

vacuum.

While

'

.

the

run

over a

capital

of

wide

very

President Truman's figure of $50

billion

requirements

range,

we

and

needed for industrial

as

the

need only accept
ex¬

pansion, to appreciate the financing difficulties which a successful
prosecution by his Department of Justice would impose. In particular
industries,

key

billion by

such

the

as

utilities,

will

which

of

other

require

over the possible
functioning in the

political trafficking which has engulfed tax policy and so many
of our problems.
For it may be asked why, after the oft-

the anti-bigness and monopoly thesis in the
so-called Pecora investigation leading up to the Securities Act of
1933, again in the much-publicized fulminations from the TNEC
arena
in 1939, and after long and continuing supervision by the
SEC this new show should
be scheduled for public production

"repeatecl

airings

of

shortly before Election Day in 1948.

clothed with stringent powers to cur¬
malpractice (as detailed in this columnist's

"Observations" of Nov. 6 last), but the

Commission has affirmatively

given the industry the green-light for its present standards. Is the
puzzled public to believe the Commission, or the Department of
Justice which, in the words of one of its interested high officials,

recently excused the present suit to this writer on the ground that
"the SEC is really only a bankers' agency"?
Intra-Government
Or

Disagreement

other hand,

the

how is Mr. John Public to evaluate the
following critique of the government's action recently uttered by a
member of the Federal Trade Commission, Mr. Lowell B. Mason:
"The

on

Comintern

loves

it

when

the

men

of

America

who

govern,

put themselves against the men of Amefrica who produce. . . . The
present anti-trust laws are the basis for certain antique court rituals
which have little

or no

effective connection with the

and democratic needs of

our

social, economic

people"?*

■

expression from the Federal Trade Commission is in line
with the apparently unenthusiastic reaction from the Securities and
Exchange Commission toward the Attorney General's action.
And
like the SEC, the FTC has jurisdiction over at least the fringe of
the unfair trade and monopoly spheres concerning which its sister
branch in the government is concurrently complaining.
The FTC
would, for example, certainly seem to cover the matter of a banker's
interlocking directorates, and the lessening of competition through
his membership on more than one company board; which are cited
as a serious abuse in the Attorney General's present suit.
Maximum
t

Cure Would Be
i

i '

,

The
-

public

also get

may

a

shade below.

number

large

the country,

.

v/V/:-';';

;

:

gathered in the wholesale centers
Retailers were generally unrestrained in

buyers

of

throughout the nation.
placing moderate orders, but evidenced considerable caution when
large orders were involved.
Wholesale volume in the week was
modestly above the level of the previous week and moderatly ex¬
ceeded that of the like week a year ago.

000

the

from

consumer

end

of

December,

1946.

This form

of credit covers

charge accounts and loans repayable in a single sum as
ments.

1

„

to

olis.

With Commerce Trust Co.
(Special

firms who

mentioned

in

lo

CITY, MO.—Jack E.
added

been

has

the

to

Com¬

Trust

Commerce

of

Chronicle)

Financial

The

KANSAS
Dillard

10th & Walnut Streets.

pany,

With King Merritt &
(Special

ST.

to

is

He

Street

well as instal¬

with

connected

Co.,

&

408

previously

was

Olive
with

Slayton & Co., Inc.

Weinert With du Pont Co.
to

Financial

The

Chronicle)

Arthur
J.
Weinert
has
become
associated
with Francis I. du Pont & Co., 200
ILL.

CHICAGO,

South

La

—

He

Street.

Salle

was

formerly with Mitchell, Hutchins
& Co.

'

..

'T\

substantial
of credit although instalment deals showed the

increase in each type

With S. A. Sandeen & Co.

about the
articles

same

such

as

(Special

automobile sales rose $60,000,000, or 5%,
as in November, to a total of $1,159,000,000, and on
furniture, refrigerators and washing machines in¬

Loans repayable in a lump
$2,697,000,000.
Charge accounts, the biggest single item of consumer credit,
increased by $295,000,000, or 9%, to $3,598,000,000.
This was "sbmewhat more than the customary seasonal amount in December," the
sum

The

Wermuth is
deen

$1,684,000,000.

$231,000,000 to

to

Financial

&

Chronicle)

with S. A. San¬

now

Co., Talcott Building.

Board said.

STEEL OPERATIONS AFFECTED BY

SEVERE WEATHER

contributing to higher scrap prices and gray market
activity has been removed in the past few weeks by some steel pro¬
ducers. Steel firms which have converted ingots from outside sources
and have been well paid for the processing have become extremely
shy towards such deals, according to "The Iron Age," national metalA

major

prop

Brown

Canadian Pac.

-

In some cases the matter has gone so

far

as

Rwy. ^Vzs) 1951

Steep Rock Iron Mines, Ltd.

to produce outright

ingots for conversion. This does not mean
strictly legitimate conversion operations where a producer and his
own
customers benefit, states the magazine, but it may mean an

Company 5's, 1959

5

Yz's

1957

refusals to accept any more

companies in indiscriminately
engaging in the conversion of steel ingots.
1,
It has become apparent this week that as long as fabricators
insist on keeping their operations at a high level and the supply of
steel falls below total demand, the elimination of gray steel markets
will prove difficult.
Added pressure on steel deliveries has driven
the gray market price of sheets further upward. A few months ago,
the trade paper notes, $200 a ton was a rough average price for gray
market sheets and $300 a ton is a good median now, which means that
in many cases much higher prices have been paid.
Despite extreme pressure for steel deliveries, steelmakers have
made friends.
Stopping of shipment on certain proprietary shapes
long used in manufacturing operations, has produced considerable

HART SMITH & CO.

abrupt change in the policy of these

the St.

in

Louis

area.

Carelessness

on

52 WILLIAM ST.. N. Y. 5

Bell Teletype

HAnover 2-W80

ail

Toronto

LAMBORN&CO.,Inc.
99

.

WALL

STREET

NEW YORK 5, N. Y.

the part of some

overselling their output and then not being able to
good on delivery promises, "The Iron Age" points out, has
provoked suffering consumers, while a policy of complete candidness
by other steel mills has made fast friends in spite of reduced deliv¬
eries.
V'V'
v ,-,/
•vV...In the conflict over scrap prices, consumers have played their
companies in

SUGAR

make

(Continued

on page

33)

;

i,;

=

Raw—Refined—Liquid

i

>

Exports—Imports—Futures

DIgby

..

4-2727

}{•

Kingwood Oil Co.

if the charges

A

American Maize Products Co.

oil

crude

has
over

the

producer

continual

had
.

past

that!

.

earnings^,

seven

yearsj |,

Bought—Sold—Quoted
Market

are not

by Mrv Mason before the
of Commerce and Industry.




-

2%«%

the

address

V'-f."

,

NY 1-395

Montreal

New York

:

-

Analysis Available

FREDERIC H. HATCH I CO., INC.
-Established

1888

'*

PETER MORGAN & CO.
31 Nassau Street

Association

,

increased $20,000,000 to a total of

Moreover, the relief asked for would not touch the conduct of

'From

P.

ILL.—Robert

ROCKFORD,

'

Chicago

Business

Problems

i/■'

School

of

•'

(Continued pipage,.47)
t

'

V'

,

defendant issue

•

:
F.

MO.—Alvin

now

Merritt

King

Co.

Chronicle)

Financial

The

LOUIS,

Hansen

v

wonder how, even

defendants in the suit.- (This is the
complaint as the total number of nonmanagers; the "Investment Dealers Digest" of Oct.
19, 1948 states that last year alone 317 investment banking firms
•managed issues, and 820 formally participated in their distribution.)
number

Brown

Chronicle)

RICHMOND, 1ND.—Howard T.
Duffey is with Sherman J
&
Co., 10 North Eighth
Street, members of the Chicagc
Stock
Exchange.
He
was
for¬
merly with Slayton & Co., Inc
and in the past was with W. E
Shumaker & Co., Inc. of Indianap¬

Time Inc.

functioning, the charged "club-ism," mutual back-scratch-

ment banking

•

J.

Financial

Brown

largest percentage gains.
Instalment credit on

and inequitable allotment and apportionment of new issues
would be eliminated from the behavior of the remaining 258 invest-

•

The

J.

>ing,
•

to

(Special

credit established a new record of $13,368,000,000 at the close of December, 1947, the Federal Reserve Board
reports.
Increasing $739,000,000 in that month, it was up $3,202,000,-

Outstanding

Limited

should be substantiated in the courts and the cited 17 firms estopped

'from their

A

bitterness

This

i

volume remained

working weekly.-

Not only has the SEC been

tail investment bankers'

cold and heavy snows in many parts of

generally continued to seek winter items and evidence
little interest in early promotions of spring merchandise.
The dollar
volume of retail trade rose slightly in the week.
While dollar volume
was a trifle above that of the corresponding week a year ago,
unit

creased

-

public might also be justifiably concerned

immersion of the status of the investment bankers'
sea

likely

1952, the problem of new-capital provision would become

particularly acute.
The

severe

Sherman

(Special

According to the Federal Reserve Board there was a

estimates

experts'

paucity of savings

was

consumers

May

well be worried over the effect of
successful
hamstringing of our only proven investment banking
machinery on the country's imminent financing needs. The Attorney
General

With

staff

A. Wilfred

Anderson

castings.

but the
possibility of labor trouble over wage
proposals presently being formulated by the United Steelworkers of
America, CIO, to obtain higher pay for its members.

ethically and strategically sound, or
whether they are perhaps mistaken in habitually "ducking" under
fire. At any rate, in one-man protest against this over-emphasis on
public relations strategy, this writer herein is going to examine the
direct effect on the objective public interest of some of the vital issues
raised by the Attorney General's suit.
■
! , •
;
example, the public

production since

to

industry's greatest worry is the

as

For

block

stumbling

equal to about 5,000,000 tons a year of steel ingots and
This loss is causing much concern among steel producers,

publicly putting
is, whether their
embroglio in ad¬

that

newspaper

another

is

the bankers are

foot

abstention
vance

not

or

be

to

or

bankers, unfortunately quite typ¬
present-day political set-up, are dom¬
inated by public relations calculations. The At¬
torney General, it is understood, was given the
green light to go ahead by a mere one-vote ma¬
jority decision of the Cabinet that the suit would
produce a net gain for the Administration. Simi¬
larly most current comment is concerned with
as

ical in

proving

inability of the snow-bound carriers to get raw materials into plants
fihiShed goods out, tends to slow production lines.
In the steel industry the present lack of scrap and coal is respon¬
sible for a loss of close to 5% of the country's steel capacity which

Moreover, the proceedings by the government

Mr.

vice-president of Har¬
old E. Wood & Co., St. Paul.

industrial

While

are

charges.

Street.

formerly

-""CV

MEMBERS

the
63 Wall

\
"V

T.

N.

Y.

SECURITY DEALERS

Street, New York 5, N. Y.

•

ASSOCIATION

New \ork 5, N.

j |'i
i
Vl

:

Bell Teletype NY 1-897

Tel. BA 7-5161

Tele NY 1-2078

6

(602)

Stock Market

New Era oi

Speculation and Venture Capital j
FRANCIS

By

President,

,

ADAMS

New

York

TRUSLOW*

Curb

low ebb of public interest in stock markets, Mr. Truslow points out for this reason ;
venture capital can't be raised and business is relying more on debt financing.
Sees danger in thiav
development, and defends speculation as factor in growth of venture capital. Holds stock market
Commenting

To open my

particular subject, I would like
published early this month.

comments which

call

to

of

This

their

tinued

by

statement

48% of all

course, and
for
the
year

by
that

whole

a

in

1946

in

change.

markets

stocks

of

trad¬
more

than

a

third

from

1946."

Francis

A.

Truslow

tional

long-term

manifested
of

stream

purpose

in

capital
the

are

increased

security issues for the

raising

of

capital.

new

the tendency to rely

on borf
rowing—through sales of debt ob¬

ligations—for the bulk of new
requirements is striking."

money

,!An address

a

Forum

by Mr. Truslow at
by' The In¬

sponsored

vestors League, Inc.,

Philadelphia,

ebb.

Venture

;.

circulated

about

stock market—and when I

market"

"stock

word

I

the

mean

the stock

know

What

are

venture capital?

stock

market

c

an

of

them

inactive

think

prevent the raising

effect

and

facts,

be¬

exist

relationship

or ans iiK,vy

both merely
same

manifestations of the
conditions—namely, a public

unwillingness to risk capital or a
lack of capital to risk?
If economics were a science, in
mathematical sense, we could
up
statistics and
get# the
answers from the footings.
Fortu¬
any

nately, it is merely
human

fallible

as

other attempt to
the motives of the

any

to

up

commentary
just as

a

behavior -and

the

that

Some

establish

I

small

a

is
-of

usually referred to as "they"
as the "insiders,"
get, together

men,
cr

and "r determine

whether

stock

market prices will go up, down or

sideways.
Volume
The
York

the

Exchange
Curb

York

changes

two

York

the

.New

and

floors

about

trans¬

these

of

the

of

90%

NeW

New

Exchange,

the

on

the

of

exchanges,

Stock

act

New York Exchanges

on

members

t

n

r

y

entry into

Peart

ex--

total

belt

corn

advance

enormous

design and use of agricul¬
machinery; how completely

7

A

factor, which has been accen¬
tuated during the postwar period,

Harbor

decentralization

the

.s

of

There

enormous

has

increase

facturing..

position adead
issue, and 'I,

Wood

E.

this

in

an

the farm has been mechanized.

opposed

•

the

m

tural

,

made that op¬

the

group

this

World War II.

an

.It

prices.

encounter

to

that

of

u

our

16

seem

Governors

uncommon

conviction

add

on

another.

to

Exchange
not

of venture capital? Does' amr
tween these two

o

what

there has been in the last 10 years

busi¬

of

ness

to

the sources

Does

the

of

never-

means

know

-

from towns and

are

located

Cities

section

cross

Within the, last few

else.

someone

word

that

bankers who

unique

a.

on

These of you

25% fewer workers.

its

officers to get

in this talk

exchanges—that I

what

products,

enables

the,

for stocks

market

— agriculture
we
are
getting.25% more production from

industry

except

goods
lood

the

use

aid

our

of prosperity ahead.

y I am not a banker or economist and presumably I cannot speak
any authority before a gathering of bank .officers,
But the
of the business of Sears, Roebuck & Co., which has stores
and mail order plants in every section of this country, which deals
: .in
practically^
every l'ne of iS equally true that hi our greatest

much misin-;

so

Holds

needs.

its

nature

do

What

facts.

the

are

market essential to the raising

add

Pa., Jan. 29, 1948.

There has been

finance

stabilization in Europe should precede

currency

each;

and in past decade

to

resources

and ccncludes nation has long period

months I have met people who
thought we dealt in cattle, others'
of stock market transactions?
Is who thought the exchanges bought
an
active interest in
the stock securities from one group and sold

Those

i
;• i
The N atlonal City Bank of New York in
its/''Monthly Letter" for January
1948 pointed out:
"
"TT
"Corporate demands for addi¬

"

low

capital it must have.

they mean?

v

.t-,

at

stock

the

to obtain the

ing fell

ume

is

in

vol¬

the

we
can
get some help with
questions by enquiring into

our

formation

interest

"ebb,

at

But

the

of

capital—equity ^capital—can't be
raised,
so
business has turned
more and more to debt financing

was

low

and

73%

1947.

Public

Pub¬

reached

and

total

lic interest in

1945.

capital was raised

new

accumulated

with

human units it tries to rationalize/

selling bonds and notes, but how the stock market functions
this percentage rose to 58% ' and how venture capital is raised.

they
showed
virtually
no

a.

immediate

"During the last quarter of 1947

illustrated

was

has

section

;V

speculation

In its ''Monthly Review" for January

chart showing that in

a

indecisive

as

ing and finance is benefiting country

<$>-

con¬

industrial technique :

\our

,

•

attention to two year-end

your

greatly improved

war

and, because of increasing wealth, nation can well bear immense
•National Debt. Says accentuated decentralization in marrufactur-"

.

were

1948, the Federal Reserve Bank of New York states:
stocks

intelligent

Chairman of the Board, Sears, Roebuck & Co.

j ^

Gen. Wood holds

need of removal of artificial barriers ham¬

sees

Stresses value of providing data for

pering risk investment.

prices

j

on

speculation is guide to placing of venture capital, and

.^

V.-

;

,

*

.

^v.VV By GEN. ROBERT E. WOOD*

:V>.

■v

Exchange

Prosperity Ahead

of

manu¬

been <>.n
manufac¬

the Pacific Coast, a
growth in the South
and Middle West, and the begin¬
what effort I could toward winning nings
of growth in the "transthe war. History will decide who Missouri region.
All this is
was right.
But I did rightly an¬ healthy and to the best interest of
the nation..
ticipate the results of the war. I
7777 7777, 7v:;'.7;
predicted in 1-940 that our national
I believe that we are also seeing
debt would rise to: $250 billion as
a
decentralization of f nance and
a
result
of
the war,
a
figure of financial power. In the past 10
Gen.

R.

turing

yr\.ir --t vy ;y7:-';;' like ■ every
other good American, cbntributeu

on

substantial

.

thought fantastic at that time, and
also ' believed " that
potentially

years;

Russia; with its type (if govern¬
ment
and its resources,
would

cial

form
to

far

a

clcal. .with

than Germany

to finance the needs

resources

their

of

dangerous power

more

each region of the country

has accumulated sufficient finan¬

It is

territories.

own

no

longer necessary for industrialists

and

from every

Section to run to New
capital.. This
I was deeply, pessimistic -after change; is also ."to the benefit* of
country. The balance of the trans¬
actions take place on the several we entered the war, not-as to w nour country.
-;
,-SVk'i
regional
exchanges
located
in n:ng the war, which I felt sure wr
You will - recall the ' gloomy
other cities.
could do, hut as to the aftermath
Essentially our ex¬
prophecies
of
our 7 government
changes are simply market places cn our economy—the effect of this economists and many of our pri¬
stock

exchange

business

pf

the

Japan combined, i

York to

secure new

.

V

BOSTON

ST

LOUIS

.

B

&

Boston

which

to

&

buy

to

order."

Stix&Co.
SECURITIES

INVESTMENT

But because

OLIVE

at

St.LouisI.Mo.

Walter J. Connolly 4 Co., Inc.
ItT

Ludlow

I

New

Analysis

was

for

Wrong,

mania-

our

New

York

Stock-

Exchange,

economists, that

vate

overproduction

great

,

facturirig techniques and our-farm
production that-today this natior
can
produce wealth on a scale
unexam.plel Lit history and can

sufficient
factured
and
we

a

and

'

Amalgamated Sugar

—

is

Dividends

years

see

no

signs

production, except in

a

of

Wei have serious; problems be¬
fore us.
One of these problems is
the State
the question of our aid to Europe,
of the Union. I was discouraged
the so-called Marshall Plan.
I am,
because that message ireacbe j an
not going to bore you -with a dis¬
ail-time low. of demagogy.
; h
cussion of the pla n. >, It i s very
Few understand what an enor¬ ablv treated in a
monograph, "Will
mous
improvement occurred in Dollars Save the
World?",; by
our
tools, equipment and tech¬
Hehry Hazlitt, which I recom¬

last message

ident's

on

-

prices result froni
selling
opinion of a literally innumerable
group of individuals and institut

Federal
New

tions

—

a

who

these

use

It

markets.1

mistake to think that

common

(Continued

on page

t

25)

established

-

1b99

160 S. MAIN STREET

Telephone—

Salt

lake

SYSTEM

City

PAINE INDUSTRIES, INC

V

1, Utah

TELETYPE

SU

464

•

Stabilization v7v:,!: '7 7; V
There

■

by

♦An address
at dinner

tional

General Wood

given by The Fiyst Na¬
of Chicago at Con¬
Bank Correspondents,

Bank

ference

of

are

a

few

po.rts

currencies.

Unless

(Continued

the

European

31)

on page

5

-!

PEABODY COAL COMPANY

Callable @105
5% Prior Convertible Preferred $25 Par

SPOKANE. WASH

38,880 sh. outstanding.
i.

■

.>•

NORTHWEST MINING
American Air Filter

,

American Turf Ass'n

1

Consider II. Willett

,-

of

Murphy Chair Company

Immediate

Exchange

Varnish

A.M.,

Pac.

other

Reliance

Execution

from

,

of

Quotes call TWX Sp-43
10:45

mately

Floor

on

to

Time:

have

3.6

requirements
covered

been

r

Market:

at

Detailed

54

—

and

description of

56

its operations

ested dealers

on

this

Incorporated

,

1st

Floor, Kentucky Home Life Bldg.

LOUISVILLE 2, KENTUCKY

Long Distance 238-9

Bell Tele. LS 186




of

Brokers

-

Stock

Spokane

Dealers

-

-

:

••

Bought

—

Sold

—

Quoted

'

request.

ACAUYN'-">COMPANY
Incorporated

Exchange

COMSTOCK & CO.

;

'7; ::;.::

Underwriters

CHICAGO

Peyton Building, Spokane
Branches

'

•

available to inter¬

CORPORATION
Members Standard

1

h

company

STANDARD SECURITIES

ca

-

11:30

Sp-82

Co.

BANKERS BOND

..

■

issuance, -i

since

times

..

of*

a'pproxi-

Orders

hours.

Std.

dividend

$156,000

SECURITIES
For
or

Annual

231 So. La Salle St.

at

Kellogg, Idaho and Yakima. Wn.

*

Teletype

4, ILL.
Dearborn

CG 955

7.1
1501

.

7

New York

Minneapolis.

•

;

CHICAGO

Boston
..

Omaha

which

might he mentioned briefly. As ,a
sine qua non condit'on, there is
the
question -of stahili7ation of

Chicago, 111., Jan. 29, 1948.

4% Preferred
$100.00 par

LOUISVILLE

It

cept in the building industry.

-1

& COMPANY

Street, Boston
York

★

EDWARD L. BURTON

BELL

i

over¬

few minor

lines.

the conflict of buying and

$6.00

REctor 2-5035

m

a

in¬

manu¬

this

Stock market

is

DAYTON HA1GNEY& CO., Inc.

,

an

our

Now/nearly two
after V-J Day,

goods..

half

still

faced

we

for

market

variety of opinion it. reflects

Mfg. & Sales Co.
@$%

Private

I

improved

so

nique during the war.i It is true mend to be read by every one
pricing function that that in somelines of industry., interested; it is fully treated by
is of interest to us today and it is 'productivity per worker has de¬
Mr) Hoover's ^ecent statement, 'y-j*
clined, though ! believe the extent
essential that we fully appreciate
of this has been exaggerated ex¬
Question of Currency
{ V2;
the

available upon request

75

the

on

the New York Curb

It

i

debt.

iwar

.

business.

Common

.1947

and

major cross-section of American
V y

a

•

7

buy

pricing function of those mar-*
kets provides
a
continuous ap¬
praisal of the value of shares In

'•TV**'*.,.

_

to

the

place,

one

in

on

SALT LAKE CITY

100 shares

orders

the

Tele. BS 128

We offer, subject to confirmation:

of

Exchange and 836 different issues
Members St. Louis Stock Sxcbango

'

„

exchange

our

a

dealt

Traded in Round Lots

Tel. HUbbard 2-3790

his

send

can

colossal

they have beV* carry this debt provided we have
major pricing mechanism a reasonably intelligent leader¬
in
our
I onus*
economy.
And because ship in our government.
1,397 different issues o£ stock are confess that after I read the Pres¬

STREET

come

Federal Street, Boston

trading,

centration

sell
509

24

to

facilities permit a very great conr

RR.

Prior Preferred

/

wants

stock',, which Is-ad*•

a

initted

'

Maine

sell

or

who

anyonpj

,

1

•

V-:

:f v"7'7 7-7 i

Philadelphia

- -

Milwaukee

Kansas City :Flint.

;

*

'■(603)

Western

on

Ahead

1

much

so

of the News

spondent has had

irresponsible

reason

in

babbling

on,

-

your

years, occasionally to doubt the
doubt, it seemed to
adding to the confusion. But when

cam¬

paign

for

Presid

enc

you've

got

conclude
f

r e e

d

they

contented

'

•-/

a

in¬
Take,
example,

rating

Carlisle

the

-

ceive of

that

because

other way

no

could

he

I

con¬

can

in. the world
the

attained

have

be

done

classed

ments

he

be

sent

have ' taken

may

■

place by the time this article is
published^ V",, - :

.

•/.
\'

:

In that«event, Henrys Wallace
will have accomplished a good of
no small proportions. It will have

r,

justified. the -freedom of speech
:
\yhichv has made Henry and his
;•
shenanigans/ possible;.*:;/It will,t in
v„ v. fact, have-justified most anything.
i;.'■ >.4* Pressmany of course, is not the
only man to make the ;CIO a
vehiclect propaganda and activ-

1

a

migity
challenge of
the

In those good old

days, too, the
lobbyist or the lob¬
the Constituent' organ¬

L.

for

could

to

go

alone to attend to
In addition

did

and

see

•bor, and get favors.
Now, in

one

whole, has figura¬

a

tively barred the portals of

^Nevertheless, at
we

than two-thirds of
Congress to its
representatives.
What
good
is
there for the A. F. of L.
lobbyist,

as

Events have

way

remove

has

labor

lobbyists nre rue¬
this out.: Plying

choice of

numerous

on

We

disregard

encouraging

any rate they
hamstring en¬

vastly

important

subject

selves if

they

all.

Some

hard

now;

are

If

considerably
will

alone

certainly not!
food,

commodities

rials, if they

and

Arguments

Against

the

playing

be thriftier, and better for
Europe in the long run, to con¬
fine our aid to private
charity and.
governmental

some

mate¬

are to be tided
crisis.

this postwar

the trouble.

cease

would

Dol¬

dollars

in

root of all

Europeans would

States to refrain from wasting its
substance in a hopeless cause.
It

to

But the equivalent
they must have,

some

subsidizing—
policies which

even

That being the case it is
considered, by those who reason,
thus, far wiser for the United

them—

save

—

Plan.

working

harder.-

not

over

food

when

donations

our

breeds

facts

and

If strictly orthodox business

con¬

ditions could be met, loans might '
be negotiated with the Interna¬
tional Bank

Plan

circumstances,

oi!

absolutely necessary.

floated in the pri¬

or

The foregoing conclusion, which vate capital markets as of
linger
glorious new con-lf0 many seems
supported by the Europe should be advised

our

to

as

help.

politics with economics, and puli
up their socks and go to work,
they would not need a Marshall

of

have

at the

are

to be helped at

people are
others will

extent

an

ill-conceived

the

the European Recovery Program,
the Marshall Plan. The European
nations of course must help them¬

work

At

is likely to defeat its own end by

specific

These observations lead back to

lars

reckless improvi¬

or

both.

no

are

neighbors' ruin; for
despair .and
rage
which overstep frontiers.- Today
as

The prob¬

but

con¬

smack

Quite to the contrary, goes the
argument, such outside assistance

work

thing about specific
problems is that they lend them¬
selves to specific remedies.
the

or

is

devices

such

terprise to such

a

entangled in the Restiny of all mankind. We dare not

ruin

finding

a

of rolling orir The great globe

tinent-jbut

fully

certain point

issue, realistically,

Who

!1 The

a

grim alternatives.
has dwindled. '

c-;ry.

affairs.

inclined to be¬

always obliged to face the

are

iter example, to go into the office
ofany Senator-or congressman

fact.

are

"at

are

of

more

already been, declared
1 utside the pale, and ajsk him to
do anything? - What
effrontery, in

our own

are

we

woes.1

fell swoop, organ¬

as

safely ignore
Europe. The

that

of produc¬
It

render futile any outside

and the good

lieve that Europe's mistaken pol¬
icies, both political and economic,
are
the source of many, of her

go to see members of Congress,
labeled far and wide, as an.i-la-

ized labor

can

Western

L. Simpson

question, which has presented itSelf in one form or another sev¬
eral times during this century, is
always a painful one. Most of us
would
vastly prefer being left

is amazing, too, how
they can
dig up such convincing arguments.

dence

interferences

commerce.

of Socialism

decline.

and

after World War I.

cis

lems

they

of

decadence

Recuperative forces

John

and

tended

to

these repre¬

All

course

stifle initiative and

general

fronted with

fate

difficult
accumulation

Nevertheless in my opinion this
is by no means one of

Americanpeople are con¬

the

is

it

situation

Once

more

local

ruins

budgets.

governmental

tion

whole.

a

events.

in

sent

exaggerate the
of
difficulties which beset Europe as

rheto¬

ric but repre¬

•It

by edging

side^Yet -it may

it

and

true

than

did

Phil's

to

close

not

are

empty'

^

influence

many

to whether

izations

currencies, high tariffs
ami
trade barriers, and unbal¬

i; These state¬

campaigns manned by
A. F. of L. leaders, each insisting
'that his man is labor's real friend.

byist

other

with the natural

the

are

the problem as

of

of

and

stakes.

j.

F.

The

British

anced

You
find
Republicans
Democrats among the A. F. of
leadership and it is a great joke
lm Washington that both political
parties always have their labor

A.

of

:

—

stand alone.

can

role

German coal in the European eco¬

we

divisions in

.

;

-—-—:

of them

traditional

nomic system, and its present
lack,
furnish but one example of this.
With Britain weakened and Ger¬

which

live,

never¬

fayors for the

;
one

in

100%

as

the

Western world

the

ahd

-

..

this

to

eader.

Bargeron

'1 -1
goats fibm uie sheep and similar
expressions
by
which
men
so
vividly express what they have
inexactly in their minds.
It is reported around Washington
that
Henry, is pulling Lee
Pressman away frpm the influen¬
tial position he has long held as
the Bergen of Phil Murray. Lee, it
is said, is to resign and join up
openly with Henry.
It is diffi¬
cult
for
your
correspondent to
believe

it

'anti-labor," but who "had

theless

chaff from the

•

could

record
-

the

wheat,

leaving

invariably worked at cross
Purposes." Some of them, indeed,
i.vould be found playing ball with
a congressman
who on his voting

thing,

for

circulating

almost

a

how he is sep-i

-7

with

and

of

oraer

units to determine what they
vanted to do,
These local leaders

;■

deed.
•'

and

Points out private loans
required to provide needed margin

assistance.
is

European economic revival.

$

very.

structure

ocal

wonder-

very

itself

Congress

pf

is

The

he voting records of members of

,•

to

rh

o

sparingly.

big, unwieldly A. F. of L.,
the other hand, has in the past

on

Plan

designed to promote economic recovery and maintain political
independence in the participating countries of Europe. Its aim is to support and sustain
those nations most closely allied with ourselves
by ties of tradition and common cause.

The

that

speech
ful

their power

lishing

furnishing them needed

for

Ously opposed but they have used

ac-

p

his

c o m

in

SIMPSON*

The Marshall Plan is

<S>-

Henry

Wallace is

past mistakes should not detract from

recent

think"

you

L.

-would be inadequate to remedy situation, and Marshall

i

corre¬

wisdom of freedom of speech.
At these times of
be accomplishing no more than
what

JOHN

Simpson upholds Marshall Plan as emergency measure to save western Europe from economic
and political collapse and from domination by Communism. ^
Analyzes arguments against Plan, and
contends they can be overruled. Holds European nations have been
working for recovery and their

:

going

By

-Mr.

By CARLISLE BARGERON
With

Europe in the Balance

'

•

7

is

not

the

fallacies

cialism.

of

Statism

yore.
as

and

to

So¬

And

Universally accepted. - The belief
incidentally,
the
is held by some that despite the sooner this country sets a really
of the war European pol¬ good example itself with regard to
icies followed since the war are such things, the better for all

havoc

heretofore Americans must de¬

primarily
responsible
for
the concerned. %
.t
Capitol cide,- not whether we are glad to present difficulties.,
ityJor nearly every Leftist "enter^;
There is matter here to appeal
Hence, it is
the' in¬ dct, but whether we dare refrain.
argued, the Marshall Plan must to
prise with which the country has
many:- Americans.
Whether
consistency of their position is be¬ ■I A recent visit to several West¬
been' plagued inv recent years.
be regarded as ill-suited to ac¬ one's political leanings be to the
Its
coming manifest.
Legislation is ern European countries
gave me complish the desired result and Right or to the Left, the criticism
high councils are saturated with
always pending, not of .the. head¬ an
--.■•-academic minds who have considopportunity to make a few di¬ as a sheer waste of good Ameri¬ of excessively high tariffs and
line ./yariety,
that- affects them. rect observations.
ered the organization their forum
As usual the can dollars.
other trade barriers, and of arbi¬
How can they go to a Senator and
known facts, both business and
instead of a bona fide labor or¬
5
Mf.
Henry
Hazlitt " has
ex¬ trary and fictitious exchange rates,
esk him to vote for or
against, political, stand in relief when
ganization. But he has been shoul- when the
pounded this view in a book en¬ makes a great deal of sense. Prac¬
Senator can logically
Studied at first hand. Never did it
ders above the rest'of them.
If
titled, "Will r/Dollars Save"; the tically everyone agrees that trade
say: "Why should I listen to you';
seem
to me more apparent that
you could oversimplify the shape
World?" He and those who share should be encouraged, not ham¬
nothing I can do will get your
this labor movement has taken
the./-European countries are de¬ his ideas attribute most of West¬ pered. Some will no doubt sym¬
Support." ;,y
into the/ handiwork of one man,
pendent on a network of inter¬ ern Europe's troubles to price con¬ pathize with other points of the
'after the late
Sidney Hillman, r Perhaps it is significant that
argument.
Most of us, certainly
relationships among themselves trols, rationing, priorities, alloca¬
the A. F. of L." executive
V.
you i would have to put your fincouncil,
most American business men and
tion
of
materials,
foreign
ex¬
meeting in Florida, is now refer- and with the world at large. No
ger on him. \
change regulations, overvaluation
(Continued on page 32)
ing to its campaign as one against
It was Pressman's design, to no
the
small extent, that organized labor
Taft-Hartley Act, and also in : *Mr. Simpson is Executive Vicesupport
of
the
Marshall
has been jockeyed into its drive,
Plan.
President of J. Henry Schroder
They seem to - be diluting their Banking
in which millions are to be spent,
standard gas & electric
Corporation, New York
against not only the Act but Those original crusade.
City.

/' i,
•

7

,

theif Trade -through the
con idors
day after day,

'

.

'

-

.

,

for

voted

who

drive

the

is

of

mean,

legislative
.

'

than

both House and

•"\j»

the measure.'

•:

Pressmari ' put

Senate -voted for
"A '■'<

the

campaign over on the CIO; at
least;--it was mostly he, ' and the
A. F.; of L. 'and the Railroad or-

•

organizations,' finding themselves
up against the proposition of lack
of
aggre:siveness, / have / tagged

-

*

.

along;-'':--;

h •?'
r
-

-

WHAT'S HAPPENING
THE BOND MARKET?

next year, betwo-thirds' of

the ddea^ of

•}

v-

;I;,;7 1 bb'.

L;--%'•b'/b

set

up

-separate

:iL

still
be-a

You

But

it

is

v

apparent

to

■

•

ers

and

those-Of

a:>
<

brotherhoods

of

The.

Big

Four

railroad

or-

'"ganizations
have
always
been
quite effective in-knocking off

rates?

subscription
many

bond

to

to

whom- they

were




wigor-

At

Are

we

what point

5686-Sta.

V

request

other

York Stock

Exchange

Principal Exchanges

,

NEW

1700

1

YORK"

One Wall

Street

Bowling Green 9-1432

■,

'
•;<.

Corporates
We

Standard

&

Poor's

Bond

announce

with

pleasure that

Mr.

Ralph H. Weseman

now

associated

Outlook.
•

is

with

us

in

our

Trading Department

MAIL THIS AD TODAY FOR VALUABLE
DESCRIPTIVE

BROCHURE AND COMPLETE INFORMATION

:

:

on

231 S. La Salle Street
Ran.

headed toward

will

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CHICAGO

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STANDARD & POOR'S CORPORATION

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Street

*

"

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'

.

those

and

v

econ-

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proxy

Members New

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confronting bankers, insurcompanies, investors,- businessmen and brokers.

the tailf oad or¬

the

Government stabilize the

of

for early,, reorganization plan

way

buy?

trial

ance

j,

ganizations that they don't relish^
the undertaking upon which they

haye-rembarked.

Preference

Hicks & Price

'

can

Answers

anyone

who talks to the A. F.-of L. lead-?

■

Preference

Prior

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apply our expert analysis to your own situation....
This special Study comes to
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and

Prior

$6

*

•

Settlement

completely-/new

body

-more

cause

-

a

$7

r

lexxxixiixxxixxiixxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxs)

shall

that/ we

course,

dlmost

have

it in Congress. If
successful, it will

.

v

'■."•••

"

14, N. Y.
A658—127

LXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXl

t

fc

-

Goldwater & Frank
39

Broadway, New York 6?1 N. Y.

Telephone HAnover 2-8970

.

Bell System Teletype NY 1-1203

*

THE COMMERCIAL

(604)

&

CHRONICLE

FINANCIAL

Thursday, February 5, 1948

.-MP

COMING

rakerInvestment

Dealer-B

EVENTS
■

Recommendations and Literatu re

investment Field

In

It is understood that the

Federal Water and Gas
Federal Water &

Gas has already liquidated a substantial part

sof its system as "required under the Holding Company Act. In 1945
»the company sold its holdings in West Virginia Water Service, Ohio
■Water Service and Peoples Water & Gas, and in 1946 Mississippi Gas
Chattanooga Gas were sold<£

^nd
to

Southern

Natural Gas. The
interest in New

stock

,common

York Water

Service

was

Court, the question as to
Chenery and his as¬
sociates can be paid off at $313,190
(cost plus interest to Oct. 31, 1941)

preme

lost in

still

.65

between one-half share

ence

(about

54% interest) and ScranBrook Water

interest).

(79%

Service

July,

In

1947

Southern Natural Gas distributed

its

(to

stockholders

(including

unsettled. The differ¬

seems

cipally of Southern Natural Gas
ton-Spring

share

Scranton

of

the

approximate amount which is
in this litigation.
If the SEC agrees to the smaller
fraction
of
Scranton,
and
the

Water &

1947 filed

Gas

to distribute to each
own

stock

Nov.

on

plan with the SEC

a

.78 share

share of its
Southern

Of

Natural Gas, the same amount of
Southern Production, and onehalf

to

share

.65

$prihg

Brook."

of

Scranton-

variable

The

amount named for Scranton

re¬

flects the long-standing litigation
over the terms to be accorded to

the preferred stock held by cer¬
tain officers of the company, in-

deluding President Chenery. The
;SEC decided that these holdings
•Should be "Deep Rocked," i.e.,
♦reduced in value to the-cost price

plus interest. On

certiorari, the

the

State

then

of

Delaware

and

will*

distribute the
three stocks as a first liquidating
distribution (stock certificates be¬
ing surrendered for- stamping).
After
the- Chenery
and
other
claims are
cleared up
a
final
liquidating dividend will be paid
to stockholders.

;

However, the issue was further

complicated by an informal com¬
promise agreement among coun¬
sel for various groups of stock¬
holders at a hearing Jan. 20 before
the SEC.. Under this agreement
the company would retain 5% of
the assets subject to future rul¬
ings of the SEC or the Courts, and
would

make

immediate

an

dis¬

of Appeals in the resulting litiga¬
tion. On Dec. 12, 1947, the Court

representing the holders of
5,500 common shares, proposed

of Appeals, pursuant to the

however

son,

distribution should

that

firmed the order of the Commis¬ visement.
sion dated Feb. 7, 1945, which
It would make relatively little
provided that the preferred stock difference as to the value received

pany's proposed distributions, or
the Jackson proposal, should be
accepted. Federal Water is now
quoted about 26-7. The three prodate of the plan.
nosed initial liquidating dividends
;
Despite the fact that the litiga¬ would be approximately as set
tion has twice gone to the Su¬ forth in the accompanying table:
Price

Proposed Distrib.
About (1)
(2)
(3)

Indicated Values
(1)
(2)
(3)

Southern Natural Gas__
Southern Production—*

22y2

.78

.78

9y2

.78

.78

.70 $17.60 $17.60 $15.80
.70
7.41
7,41
6.65

Scranton-Spring

10%

.50

.65

.70

5.25

6.80

7.35

—

—

$30.26 $31.81 $29.80

—_

.Judging from the tenor of the the Chenery claims, and it seems
§®C notice of hearings the Com- to be assumed that further de¬
jjpission appears to favor making lays, including another appeal pe¬
the larger distribution of the two

riod

4^roposed by

enforced

3b© present price I of
compared
with
the

However,
Federal as

after

a

the

Federal

final

Court

SEC

has

decision,

will
prove
necessary—with the
potential possibility remaining, of course,
indicates
that that the whole affair will remain

&rjeak-up

values
stockholders are still puzzled

re¬

garding the legal ramifications of

FT.
WAYNE, IND—Wolf &
Pessauer Co., 923 South Calhoun
Street, is engaging in a securities
•business.

W. Johnston Opens
JT. WAYNE, IND. — Ira W.
Johnston is engaging in a securi¬
ng business from offices in the

Antral Building.

ysis—Reynolds & Co., 120 Broad¬
way, New York 5, N. Y.
Annual Review of Business and

Feb. 7, 1948

(New York City)
Association

Cashiers

the Security Markets and Forecast
for

Wall

of

Street annual dinner at the Hotel

tied

up

in the

'time.

-

•

■:'

:

courts

'• >

■

•

for some
•:> ,V: •'
i-iP ,;:-

Ewing and Danielson With
Wheelock & Cummins

Bank

have

' become

Wheelock

&

associated

.

with

Cummins,

Inc., 135
South La Salle Street.
Mr. Ewing
was for many years with Rawson
Lizars & Co.
with F. S.

Mr. Danielson

Moseley & Co.

Federal Water & Gas

was

&

Co.,

60

Stocks

Year-end

—

61

(Atlanta, Ga.)

Meeting of Board of Governors

Feb. 13,

24th Annual

ciation
ner

Winter

Din¬

Bond Club of Chicago 37th an¬
dinner and meeting of the

nual

Chicago Club.
Feb. 20, 1948

Bond

winter

party

Club

N. Y.

the

at

Milwaukee

Feb. 23, 1948

'

Feb. 27,

1948

Bonds

—

available

are

(Philadelphia, Fa.)

Philadelphia

Ratios and Yields on
123 Public Utility common stocks.
Earnings

High Grade Bonds—or Cash?—
Study of the "worth" of capital-

Wood,

Walker

Co.,

&

63

Wall

x

Twenty-fourth

Also

available

Railroad

is

Week.

Wall

leaflet

a

sociation

the

for

22nd Annual Dinner

&

New York.

1948

((Toronto,

Traders

a*

Ont..

at

the

Oil

Kingwood

Co.

—

Special

survey—Peter Morgan & Co., 31
Nassau Street, New York 5, N. Y.
;
New England Public Service Co.
—Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.

Northern

Engineering Works—

Stocks—

Operating Earnings and Ratios of
20 Stocks—Laird, Bissell & Meeds,
120 Broadway, New York 5, N. Y.

pany—Analysis—J. R. Williston &

New York

City Bank

Northern

Co.,
Railroad 'Earnings—Analysis

of

^States

Power

Com¬

115 Broadway, New York 6,

Y.

N.

estimated earnings of 20 selected
railroad companies for the year

King Edward Hotel.
Nov. 15-18, 1948

analyses^ of

are

Co., Wellman Engi¬
and Tennessee Products
& Chemical.
V;

neering,

Memorandum—Fitzgerald & Com¬
pany, Inc., 40 Wall Street, New
York 5, N. Y. -v

the Toronto

Association

available

Foundation

36 :Wall

Co.,

Street, New York 5, N. Y.

Astoria.

Dinner of

Annual

1948—Outlook

Industry—Bache

Canada)
.

Graham-Paige Motors Corp.—
Analysis—Seligman, Lubetkin 8c
Co., 41 Broad Street, New York 4,

the

,

Security Dealers As

March, 12,

Bond

equipment for aviation and indus¬
trial uses—Seligman, Lubetkin &
Co., Inc., 41 Broad Street, New
York 4, N. Y.
V.-v;

of

of

Developments

Metals

Benjamin Franklin Hotel.
March 5, 1948 (New York City)

the Waldorf

120

Co.,

Electrol, Inc.—Analysis of man¬
of
hydraulic
control

Income Mortgage Bonds—Anal¬

Annual Mid-Winter Dinner at the

New York

&

valuation

a

and appraisal of Railroad Equip¬
ment Certificates and the Price-

ysis—Vilas & Hicjcey, 49
Street, New York 5, N. Y.

party.

Investment Traders Association
of

Ward

Street, New York 5, N. Y,

..

Dealers Association

of Houston annual

—

Broadway, New York 5, N. Y.

(Houston, Tex.),

Investment

Laboratories

DuMont

B.

Circular

Also

annual

Athletic Club.

Philadelphia
and

appraisal—Stroud
& Company, Inc., 123 S. Broad
Street, Philadelphia 9, Pa.

(Milwaukee, Wis.)

Milwaukee

of

Valuation

Also

Feb. 18, 1948 (Chicago, 111.)

&

ufacturer

City

at the Hotel Somerset.

—

1 Wall Street, New York 5,

Co.,

Allen

analysis
of
group
of
country's leading banks—Blyth &
Go., Inc., 14 Wall Street, New
York 5, N. Y.

1948 (Boston, Mass.)

Boston Securities Traders Asso¬

Memoran¬

Cudahy
Packing Company
Memorandum—A. M. Kidder

com¬

parative

Of Association of Stock Exchange
Firms. '

(Dallas, Tex.)

T National Security Traders Asso
ciation Convention.
-

Pathe Industries, Inc.—Detailed
description of company and its
New York 6, operations—Comstock & Co., 231

1948—McGinnis, Bampton & Sellger, 61
N. Y.' ■"

Broadway,

Chicago 4,

South La Salle Street,
111.

Railroads hnd Their Outlook for

Iowa In v. Bankers

RAPIDS, IOWA—The

held

at the Montrose Hotel,
Rapids, Iowa, op Jan. 29
and the following officers were
elected for the new year and also
Cedar

four

Directors:

new

Portsmouth Steel Corp.—Data—

Buckley Brothers, 1240 Walnut
Street, Philadelphia 2, Pa.

—

York 5, N. Y.-

annual meeting: of the Iowa In¬
vestment : Bankers
Association
was

Memorandum— Stanley

Heller & Co., 30 Pine Street, New

1948

Elect New Officers

available is late informa¬

Also

Special Situation—Analysis of tion on Du Mont Laboratories,
85-year-old New England com¬ Gruen Watch and Buffalo Bolt Co.
pany with large dividend accumu¬
lation—Raymond & Co., 148 State
Public National Bank & Trust
Street, Boston 9, Mass. * ,> :
Company of New York—Year-end
analysis—C. E. Unterberg & Co.,
Stocks for 1948—Discussion and 61 Broadway, New York 6, N. Y.
Suggested Portfolio—Hornblower
& Weeks, 40 Wall Street, New
Shepard Niles Crane & HoistYork 5, N. Y.
'[
Report—'Troster, Currie & Sum¬
mers, 74 Trinity Place, New York
What's Happening to the Bond 6, n. y.
.

,

Harry
Des

Graefe,

Graefe

&

Co.,

Moines, Iowa, President.

Thomas

Crabbe,
Thomas L.
Co.,
Cedar Rapids,
First Vice-President.:

Crabbe

&

John.' H. : Ruhl,
Davenport, : iowa,

Quail & Co.,
Second Vice-

W.

Fowler, Iowa-Des
Bank,
Des

National

Moines

Moines,

Secretary-Treas¬

Iowa,

urer.

New

Directors:

Kosek,

Ernest

Ernest Kosek & Co.,

Cedar Rap¬
Victor
F.
Becker,
Becker
&
Cownie,
Inc.,
Des
Moines, Iowa; Thomas J. Landstorfer, McCrary-Dearth & Co.,
Inc., Des Moines, Iowa; Carl Stutz,
White-Phillips Co., Inc., Daven¬
ids,

'

Market?—Study of problems con¬

fronting bond investors including
"Can the Government
stabilize
the

Sherman

Herbert N.
N. Danielson

—

Hentz

—

Smith & Co.,
Broadway, New York 6, N. Y.

—

Feb. 12-14, 1948

President.

Special to The Financial Chronicle

CHICAGO, ILL.
Ewing and David

1948—H.

Pacific

Canadian

dum—Zuckerman,

Beaver Street, New York 4, N. Y.

New Yorker.

Iowa,

& Dess&uer Co.

St.

of

Hotel.

CEDAR
-

company.

Club

Traders

Louis annual dinner at the Chase

by stockholders whether the com¬

rendered to the company for re¬
tirement at cost plus 4% from the
■dates of purchase to the effective

Totals

(St. Louis, Mo.)

Security

Percival Jack¬

date of the United States Supreme be Changed to seven-tenths share
Court, set aside and annulled its of all three companies. The SEC
decision of Feb. 4, 1946 and af¬ now has the matter under ad¬

Brook

Kansas

Aluminum
Industry
and
the
Reynolds Metals Company—Anal¬

Feb. 6, 1948

immediately

tribution of 95%.

held by Mr. Chenery and others
in ihe management should be sur¬

of

Club

tied up

Supreme Court on June 23, 1947
.reversed the decision of the Court

man¬

Traders

Meuhlebach.

and

represents

Federal) stock of Southern Pro¬ amended plan is approved by the
duction Company, which owns U. S. District Court, Federal will
filU a certificate of dissolution in
gas wells and acreage.
Federal

Bond

firms mentioned will be pleased
the following literature:

interested parties

send

to

(Kansas City, Mo.)

City annual dinner at the Hotel

whether Mr.

that company's reorganization.
Remaining assets consists prin¬
a

Feb. 5i 1948

Iowa;

the

and still maintain
2%%. rate? Are we headed
economy

toward ■■still higher interest rates?
at what point- will Corporates be a

buy?"—In eight instalments with
a trial subscription to Standard &
Poor's Bond Outlook—Write for

descriptive brochure and complete

•.

■

■ •

Gas

Standard

Electric—Re¬

&

analysis—Hicks & Price, 231
South La Salle Street, Chicago 4,

cent

Illinois.

Company

Brothers

Warren

—

appraisal
—Kalb, Voorhis & Co., 15: Broad
Street, New York 5, N. Y.
Review and investment

information—Refer to "A658-127"

Corporation,

—Standard & Poor's
345 Hudson Street,

New York 14,

Y.

N.

With Central Securities Co.
(Special

to The Financial

OMAHA, NEB.
man

What

port, Iowa.

f

International

the

Bank

You—Descriptive book¬
of Public Relations,
International Bank, 1818 H Street,

Means to

is

ities

now

Chronicle)

Harold Hult-

—

with Central

Secur¬

National

First

Company,

Bank Building

.

let—Office

Southwestern Public Service
Central Illinois Public Service

Ralph C. J. Somers With
Shearson, Hammill & Co.
Hammill

Shearson,
Wall

Street,

&

New

York

So.,

members of the New York

Exchange

Gilbert J. Postley
.

&

29 BROADWAY. NEW YORK 6, N. Y.
Direct Wire to




Co.

stock

other

City,
Stock

principal

and

commodity exchanges,

announce,

that Ralph C. J. Som¬

ers

Chicago

and

14

has

become

associated

the firm in its main office.

with

N.

W., Washington 6, D. C.
»

Amalgamated

*

*

V

Sugar

—

Graham & Co., Pittsburgh
PITTSBURGH,

■

■.

„

New

Analysis—Edward L. Burton &
Co., 160 South Main Street, Salt
Lake City 1, Utah.

Sterling

Graham

PA.

—

E.

W.

formed

has

Graham & Co. with offices in the

Granite
the

Building,

securities

to

engage

in

business.

With E. H. Rollins Staff
American Water Works & Elec¬

tric—Analysis—A. M. Kidder &
Co., 1 Wall Street, New York 5,
IN. Y.

(Rneciol

to

The

Financial

Chronicle)

MIAMI, FLA.—William J. But¬
ler

is

now

connected

Rollins & Sons,

Inc.

with E.

H.

THE COMMERCIAL

Volume 167 Number 4670

FINANCIAL

&

(605)

CHRONICLE

9

Utilities Face Their Greatest Test Home Building Costs and Trends
>

1

'

,

By MYRON L. MATTHEWS*

By DAVID COWAN*
'

1

'

new

will take $4-$6 billion of

years

Mr.

generating capacity in next four

whose raising will

new money,

both.

in

form, there

some

be

can

■

maintains, because

Matthews, after analyzing present day construction costs,

constitute wages

re¬

'

■

>
,

Mr. Cowan asserts need for

1

Vice-President, The Dow Service, Inc.

Utility Specialist, Shields & Co.

.

1

.

'

,

.

construction

reduction until wages drop or productivity increases,
program.
Points out some building costs may be

no

Sees»inadequate apprenticeship training

quire joint cooperation of Federal Government, local rate-making

or

agencies and private lending institutions. Believes bonds and high-

pegged, and contends, with construction costs 104% higher than in 1941, situation is not alarming and
>
;present construction costs are not out of line.

grade preferred stocks

be absorbed by life insurance

may

panies.. Advocates modified revival of holding

•

ship pattern.

com-

company owner-

Home

building costs have been discussed so often it is becoming increasingly difficult
importance to what has already been stated over and over again at such
imme¬ conferences as this one. We will deal.today with a discussion of some of the factors con¬

Electricity has become essential to our living.; We expect
delivery of this current to our homes and factories when we
need it.
Not only do we determine our own time-table, irrespective
of the hour, weather or season, but we really don't care much about
m a

n's

needs

undertones, the Holding Company

*:<*

the

at

Act of 1935 recognizes this by vir¬

s a m e

of its Section 30 which paves

time. Complex

tue

problems stem

the

from this sim¬

„

and consolidations.

for

way

from

financial

'

I

-i

costs

which

out to be

clearly above
the fog envel¬

lars.

association

old

here

not

a

sweep¬

the

and

1948

Between

of

end

.1952, some 23,000,000 kw. of new

.capacity are projected, of which
perhaps 80% will be installed by
private companies. It is a boost
of nearly 50%. The increase alone
measures up to our total generat¬
To

bill

the

foot

invested

20

years
will cost

earnings.

thirds

•

.

quite freely

that pyramided companies,

wish

call

to

it

that,

if

you

created

an

earnings leverage with the ex¬
pected results marketwise. There
be

need

fact.
the

The

this

blinking

no

low

in

return

of

rate

plain

utility business is compen¬
for by the regularity and

sated

relative certainty of income. Now,
capitalizing on this
way might appeal to

from here
sold a like
two-

but

In

new-money
issues
$538 million in 1947 and $173
million in 1946, both active years.

comparison,

investors

of

street for
a

who

in a limited
a large group

won't

cross

the

straight 4% return or

a

25% market play in the next 36

months.

were

the

does

How

the

tackle

to

industry propose

we

the

We do know that

don't know.

on

financial

be

will

Plainly,

problem?

key roles

scene,

by life insurance

played

companies,
investment
bankers
C naturally, by Federal and State
Commissions and particularly by

Technical Achievements
The remarkable thing about the
utility industry has been its abil¬
ity to lower the unit price of its

spiraling
costs.
There is nothing to equal
it in our economy.
It still takes
only about $4 to produce $1 of
revenue.
Abnormal
conditions
product in the

face

of

ing under the shadow of the Hold¬

of this
achievement; such as for example
use of capacity ordinarily held in
reserve. Also last year, fuel plants
operated on an average nearly

ing Company Act, they speak to
their

considered very high for an aver¬

of all four.
'

i

in

analysts

the

employ

•

y

During this period utilities can¬

not play a

Still liv¬

passive role.

public in carefully chosen
words; perhaps too much so. The
highly mechanized nature of the
•'

utilities

lowed

to

securities in

of

which

market

new-issue

•

sell

three

has

al-

figure.

age

part

there

But

fundamental

more

are

traceable

reasons

to

engineering and technical refine¬

billion

$4

for

account

may

ments.

with

Just

years

as

the old steam engine was

'

a

of effort

minimum

not

and

cost, is

good conditioner for hardier

a

"

ahead.

weather

The

next

few

require a sales job and
publicity program the like of

•

years may

;

a

has

which
•

been

not

seen

since

the

days of the National Electric
Light Association. And there is
much to favor such a campaign
now in view of the industry's rec¬

displaced
the

and

because

now

there

is

little abuse possible

in the
framework of a regulation which
overlooks nothing.
very

The

holding company pattern of
ownership may well have to be
revived

and

soon.

The

character

of the business makes it

desirable

ly

over

holding

convenient

where
often

have

operations

large areas under single

trol and the
a

to

frequent¬

way

actual

was

not.

con¬

company was

to

effect

physical

this

merger

look

son's 208,000 kw.
State

at

fore the Boston

Mr. Cowan be¬

Security Analysts

Society, Feb. 2, 1948.




triple shaft unit

the large
turbine generally in use today is
more
nearly in the 160,000 kw.
class.

from
an

Line,

pressures,

600 lbs.

per

of

heat—no
to

more

Estimated

air

shovel

to

coal

and

Builders

overhead

Costs

doesn't

you

don't mind having it

into

the

door

fit

clinic today.

The

There is

price

cessity

we

peek at

a

%

x

■9r

simply

like

most

other

and

machine

say

Incx*ease

in

Increase ;

of

everything.

houses, and
But

it

now

we

find

in

1948.,

lbs.

climbed
inch to
lbs. In the

have

1500

<

Electric

of

Mat'l

Labor

Total

$5,214

$3,561

$8,77-5

97.9

90.9

1,000

85.0

——

the air

to our dream
cost-wise? It's hard

They

go

may

or

up

some¬

100-story skyscraper,'
It is merely a con¬

a

labor.

materials

here.

•

What

building costs

labor and the bal¬

being X%

ance

we

have

mean

to

as

done

say

is

the cost of materials delivered

at

we

the site of construction is so much

the

If

assemble them is

cost to

much.

cost

is

of

wages

whether

we

one

not

or

referred

look behind the

we

material

to

will

kind
the
as

that it

see

another,

or

components

more
seems

pressures are

Trade

t

l
.

!

%

'

■

and

the

Class

:

''

11

Excavation, Foundation,
and
Landscaping

31

nally, transmission voltages were
some years
ago stepped up from
110,000
volts
to
220,000
volts.

10

Carpentry
Brickmasonry

17

Plumbing

3

Electrical

6

Plastering

F

American

in

Gas

some

&

cases

Electric

is

ex¬

now

with 500,000 volt

transmission.

delivered

produce

it

now.

a

kilowatthour in 1919

30)

$

at

Bathroom

100

c/o

$

form

one

Kitchen
_

25

240

$

725

75

67

898

33

493

55

395

it

follows

the total

cost is

product of labor's wages.

We can
toy with such terms as the cost of
management and the employer's
overhead and profit as something
separate and apart from labor but
for purposes of discussing con¬
struction costs, these things mere¬
ly confuse thinking. Carrying this
line of reasoning a step further—
sale prices of homes being predi¬
cated
age

upon

compound percent¬

a

mark-up over site cost—what

the

purchaser
/

♦An

to

agrees

(Continued
address

on page

pay

is

35)

Matthews
of
Insured
Savings

by Mr.

at the Management Conference

Council

the

of

Associations
York

of

York

New

State,

City, Jan. 23, 1948.

_

1,000

*

500

67

33

145

55

120

60

218

40

57

50

75

20

57

50

293

.

STOCKS & BONDS
Bought

—

Sold

—

Quoted

80
25

350

263

75

87

328

75

110

25

475

75

158

25

$8,775

—i—
•

REAL ESTATE

45

326

633

_

X-——

ALL

45

$5,214

$3,561

(100)

(59.4)

(40.6)

shades,

accessories,

Distribution

since the
wages in

m

_

_

________

all wages

another,

that construction

—

438

and

cabinets

_

materials

site is

the

or

land.

of

>

1,822

114

screens

Totals

965

368

.
.

Hardware,

Labor

Amount

265
;

Steel

equipment
8

—

—

c/c

544

_

___

&

Material

Amount

.(Including

,

Roofing

5

•—

1,500

Miscellaneous

the

of

cost

ACTIVE MARKETS

2,720

_

Painting

only 1.3 pounds, at
which fj/gure it has remained ir
on page

^

878

work

4

takes

(Continued

the

TODAY

Grading

Insulation)

4

While it took 3.2 pounds of coal

Const.

:

Heating

&

1

perimenting

purchase

Therefore,

Site Construction Cost Breakdown

'

'

93.8

breathe out in the open

we

spaces.
Construction cost starts
with the claim of the raw material

salary,

wages,

interest, insurance, dividends,
taxes, freight, depreciation on in¬
vested capital, or what have you.
The origin of every product is
raw material, which prior to
ac¬
quisition was as free of cost as

had

$3,561 $11,625
■

venience to refer to

are

$5,214

assembly cost is also all

is all

na¬

$6,000

in the broad sense, and,

house

so

$1,865

»—

—

"cost

the

and

.1,000
100.0

to remember at all times that
to build,"
whether a

sary

see

1.850

conclusions it is only neces¬

such

95.0

■-V

Ex¬

Indiana

square

-

Total

$4,500

500

(700 Sq. Ft.—21M cubic feet) 25' x 28' x 30'

Estimated Average

and fi¬

1000°

per

1948

—

To understand the basis for

1941 $6,000 HOUSE

THE

follows:

as

Labor

exactly, but we feel that

say,

what.

.

to produce more

below

$1,865

building costs will not come down

man

we

whittled

—

__——_—

Increase

to

the victims of
many dollars
chasing too few houses.
That's
what we're being told nowadays.
right along

be

,

$2,635

_r—,

What will happen

tional economy, are

us

could

Development

house in 1948,

dollar-chasing—too

They told

—i

Will Costs Rise?

pre¬

present

it

$11,500. y.y. 1
Summarizing this set of figures

$2,635,

that houses,

the

and

r/o

differ¬

products of

hood

Construction, Management and Land Summary

;

fo

our

and

this one could easily reach
$12,000, but there is little likeli¬

vary

will

estimates

cost

as

Increase,
Finance, Overhead, Sales
and
Profit—-—-—

■

Land

sell for $12,000. Per¬
haps rather than recite all the
lurid details it would be simpler,
and certainly much more chari¬
to

1,000

$11,625

pense

how it got to

table,

100)

land

Design,

spaces

our

$6,000 dream house

war

.$1,850

—^______„_$10,625

profit
development (40

1941

will talk about both.

take

us

130
1,500

Mat'l

as

Let

$

with

$11,625 is somewhat below

Construction

know, between (1) sell¬
and (2) cost.
Of ne¬

ence, you

ing

and Above

—

including

Estimated

out

run

a

a

Labor Costs

profit-——^—'

cost

Land

price

Inasmuch

What makes it cost

little under?

with

'

220

and

$12,000 figure used in our
opening remarks but the practical
difference is slight in relation to
the convenience of a round figure.

$12,000?—pardon, please—I mean
what makes it sell for $12,000, or
a

walking

.

Average Charges Over

the.

ashes

This is the house for

and such.-

dollars

cane:

L

and

Sale

unless

window

or

bitious

cur-

Taxes—

builder's

Land

gleaming white science wall cabi¬
nets, sink, cooking range and re¬
frigerator in the kitchen with an
all-year
round
supply
of
hot
water, pretty little bedrooms that
furniture

mated to have been $2,635 and the
labor, $1,865. Let us take a look
at things which must be added to

very

or

the

$4,500 site cost in 1941.
cost
then
is esti¬

Total

Total

nice tiled bath and upaverage quality fixtures,

to-date

the

Supervision

and

Design
Interest

conditioned

.

and

45%

material

Material and

gadgets, it's

more

its

than
The

get into talk¬

we

ing about how to manage the

one

inch. Steam
temperatures have been increased
to

But the

carry,

square

station

Branch

& Michigan
2400

with

of the

respectively, in relation to
selling price and is 95% higher

New

average

Twin

though

Analyses of Construction

"

Steam

For all its critical

An .address by

The

it has

at,

modern

part

site is

the 1948 site cost, which, in the
aggregate, indicate the sales price
—if
we
keep
those
over-am¬

a little more com¬
probably
prettier > to

It's

the

them down.

smaller today,

pact.

but

1948 cost of material

at

30%

which
It's a bit

just under $12,000—the
sold in 1941 for $6,000.

The

labor

chasing,
the
demand,
quite so aggressive. Sort
of seems to me like attempting to
shoot a gun s-l-o-w-l-y.
Anyway,
it's supposed to reduce the dollar
supply thus discouraging further
price
increases,
if not pulling

they
long
enough and that at the end of
such period the house will still
be standing.
We will talk about
the house which sells today for

so

been

60,000 kw. unit of 20 years ago is
dwarfed by Commonwealth Edi¬

to
*

itself

changed in design and size.

ord, its unassailable financial po¬
sition

has
greatly

turbine,

by the

turbine

say is theirs—their
provided, of course,
up
the
payments

keep

5000 hours and this 56% factor is

security

to

presents

story.
and

won't be

have not here¬

able

This

cane,

a

to

comparatively simple

dream house.

our

the

and

conclu¬
which

own,

average of

refunding.

that for

of

re-

to rebuild on old
admit

also

us

hobble along with

has to

introduce

it* becomes

dissection of construction costs of

that it

so

—

easier

the

handle

have too many dol¬
much
demand,
not

Too

the

rency*

we

foundation of the dollar

program.

more near¬

securities

of

volume

com¬

ultimate

The

figure may prove to be
ly $6 billion, a yearly
about $1.5 billion say
on.
Last year, utilities
•

ago.

billion aside from

$4

panies
-

only

capacity

ing

Let

—

turned

Take a few of the
supporting credit-bricks out of the

one

time, it seems,
foundations.

culprit has

enough supply.

oping the sub¬
ject., We will,

sions

1

—

-

real

the

emerged

Is there tofore been
way to ease the fi¬
They are cer¬
definite ly
nancial problems of the smaller
tainly an inpinned down
fluence
in
operators by fitting them into —matters
to
newly-created systems?
having made
which
but
In 1929, it was possible to show
steam and wa¬
fleeting
ref¬
that five top
ter power the
corporations con¬ erence is cus¬
Myron L. Matthews
trolled
virtually all the power tomarily made.
p referred
business of the country.To what
sources
of
We will talk about home building
extent this concentration, so much
electric enerDavid
Cowan
costs— not housing in the broader
the target for attack, was in the
gy.
'.i
':
sense, which includes rehabilita¬
hands
of
investment
As their part of the franchise
companies
tion, modernization and repairs to
contract, utilities then must be rather than holding companies as existing
structures,
and
apart¬
we understand the term, is prob¬
ready, always, to give efficient
ments and large scale apartment
ably immaterial. But as an old
public
service.
How
are
they
projects and temporary emerg¬
equipping themselves
to fulfill saying goes: "Desperate evils call ency housing. We will talk about
this obligation over the next few for desperate remedies" and in a that dream house
every man and
years?
First,' let us look at the period of reform, the industry woman and child has a right to
reaped the whirlwind. Now is the assume he or she will one day be
magnitude of the task.
and

———

that

have

some

being cut loose

are

ing divestment

technical.

regroupings

future

Companies

ple fact. They
are

cerning

<♦>-

other

•
•

to add much of

.

diate

the

■'

costs *

'

SIEGEL & CO.
89 Broadway,

N. Y. 6

Teletype

DIfby 4-2370

NY 1-1942

10

(606)

THE COMMERCIAL

.

&

FINANCIAL

CHRONICLE
'

latter

Buffalo Bolt Company

Thursday.,., February 5, 1948

saving

consumers

than$700,000annually.

more

nounced

i '■*

> -

Gruen Watch

Fuel

Company

High Bridge

Shortage Cripples Phila. Industry

DuMont Laboratories

Joseph

According

Data

on

to Hudson W. Reed, President of Philadelphia Gas
Works Co., only the fullest measures of
public cooperation can pre-*
vent a complete breakdown and
shutting off of gas service of 4,000
industries, 5,000 commercial users and 480,000 homes in Philadelphia

Request

BUCKLEY BROTHERS
Members New York, Philadelphia and
Los Angeles
New

'1420

"in

Walnut

Angeles
^Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253

matter

'

than

cipal hike

the second

cent cash

straight record-break¬
ing day last Saturday, the com¬

Wire System

between
Philadelphia, New York and Los Angeles

warned that it

pany

the bottom

scraping
its perilously short

of

was

oil

supply. Fuel reserves were re¬
ported at about 3,000,000 gallons,
with daily consumption
exceeding
850,000 gallons.
The company is

Philadelphia
Bank & Insurance

pressing for quick delivery of its
February quota of 9,000,000 gal¬
lons in order to keep the district's
giant production plants in opera-

Stocks

tion.

Philadelphia Transportation Co.
3-6s 2039,

-v

j Last

Pfd. A Common

H. N. NASH & CO.
Chestnut

/

WHitehall 4-2400

Teletype PH 257

Power
a

pro¬

Philadelphia

via

the

Big Inch pipe line to be mixed
with manufactured
^as, thus re¬
ducing the fuel oil cost of pror-

New York Phone

Locust 7-1477

Federal

approved

designed to bring natural

into

gas

Street, Philadelphia 2

Phila. Phone

the

"Commission
gram

1421

fail

•

during the mixture.

-

oil shortage

present

works

gas

Before the

developed,

spokesmen

thought

that requirements could be met
without natural gas for enrich¬

American Box Board

ing purposes

Botany Mills

-

fall.

Empire Steel Co.
Empire

Southern

Hence

offered

the

-

the

Federal

Nazareth Cement

not been pledged to

Warner Company

PHILADELPHIA

view

would

give

foot of

Stock Exchange Bldg. Phila. 2

gas

Teletvne

RIttenhouse 6-3717

PH

of

the

emergency, an
earlierr order

OFFICE

Telephone

The

on.;

73

be

far

feet

a

current

is

sought

Philadelphia

available from Feb. 9

pipeline extension will

from

its

50,000,000 cubic
day capacity at that time

chairman

decision.-

Said

re¬

Leland

D.

cents

Jr.,

Commission,

perior
to

Court

has

is

the

-

and

He

-

something like $7,000,000 greater

<•

rate

base,"

Oct." 31,

Mr,

Siggins
an allowable
$2,393,379 per year." The
schedule is estimated to

said, "would support

produce

approximately" $500,000
f:;
The PUC, Mr. Siggins said, has^
been abreast of developments im
the Pittsburgh Railways Co. and
Commission
at

were

acted

hand

had

thoroughly studied.
permit
rates

public

a

to

in¬

do

not

produce

return in

a

for

been

fair rate," lie,.concluded..,
r

■

Water Rate Raise

An

increase

of

into

enacted

law

has
be¬

and

effective.jFebi 20. y

'' ;•

/

1/ Warner C o m p a n y, s a n d, f
gravel, (concrete and lime prod¬

.

ucts,

income

reports ; net

taxes

of

$1,580,534

^equivalent to $3.33

previous

share.

after

per common

This compares with

391,791

and

$2.92

$1,in

share

per

//

/:

•*/

'.//V. ■•'/.
Cement

Giant

of

30

have

received

and

common

added

Port¬

„

titling Jhe

*://>?■■

an

additional

at

;/•/'/'•"/

warrant

holder

$2.20

to

crease

share

of

1,

;

10% in water rates has been asked

books,

was

11%

an

1946.

over

dividends.

in¬

income

Net

/

-

;

1

common

The

1951.

"j

subscription price of the unit is

approximately

the

en¬

ti>. .purchase

Oct.

to

year

business

new

■f amounted to $13,912,316, of which
$11,200,000 is earmarked for 1948

rights to buy

one

During the

$273,626,959 in

units consisting of two shares of

of

president.

•son,

.

;

Spencer Trask & Co.
86th

$4.10. V;-

Anniversary

Spencer Trask & Co., New York
Co., serving 100,000 families in
Earnings of Pittsburgh Consoli-;
parts of Delaware, Chester and dation Coal for 1947 are estimated; investment and brokerage house,
Montgomery counties. If granted at about $6 per £ hare,mof e than • Feb. 1 celebrated the 80th anni¬
versary of its founding. Organized
by the Pennsylvania Utility Com-; double 1946 net. ./■
shortly after the close of the Civil
mission, the new rates will be-,

relation

mands

2

N. Y. Phone
7-6814

of

to

the

other

needs

and

in

come

Philadelphia Electric
in

serves

adjacent

156,000

Chester

counties,

announces

not

faced

gas

Delaware,

gomery,
-

de¬

communities

Appalachian area."

which

Exchange

with

a

that

/

■

■

Hi

$

as

it

cannot

costs

continue

the
to

It

was

that

com¬

but

never

turned

is

sold.

the

The

Stock

to the

in

aside"

about

adopted

Spencer

One

its

of

the

Trask,

Trask &

as

present

/:;7;/:\y*z*

for

name

/v/;./
/•;
interesting

most

chapters in the early h'story pf
Spencer Trask & Co. is the part
question -is"
played in the commercialization qf
be

re¬

the electric

orig¬

:
a

by

ago,-

years

should

$240;000.

1868.

firm, first known

in, 1881.,

Steel

estates of the

" An appeal from

cial

|

an

was

backers

while Mr.

lower court

light.; Mr. Trask

of Thomas A. Edison's finan¬

one

during the 1870's
Edisop was .perfecting

-incandescent

lamp

for

com¬

decree in favor of the company
;

mercial

use.

brought bv Provident Trust

became

President

Electric

Illuminating Co. of New

was

Co,

of

and

trustee

r

Philadelphia,

Abraham

.

Available Publications

Lukens

inal holders. Current market value

reductions

have been made since 1932, the

shares

originally "set
employees 32

whether

.

rate

10,000

sale; to

pointed out that rates
five

the

Pennsylvania Sup r e m e! Stone,
Court is pondering the
disposition;'

have not been raised since 1920
and

"

y

The

render

..

War.

Tlve $64 jQuestion

-

adequate and satisfactory service
at its present rates."

Higher Fares in Pittsburgh

Jersey
Municipal Bonds

;

stock

greatly increased

The increased schedule of
fares
filed with the
Pennsylvania Util¬

and New

'•

customers

of-

pany

by¬
\

to

the conclusion that in the face of

com¬

-'■■■'

mailed

consideration, which have led to

is

•

*

effective March 29.

letter

states "This action has been taken

crisis.

a

Suburban Water

only after careful study and1 due.

Bucks

similar

"■
..

A

Mont¬

and

is manufactured

product of coke.

Co.,
users

The gas distributed by the
pany

Pennsylvania

}

the

of

F.

executor
estate

Huston,

of

In

1884

Mr.^ Trask

the

of

Edison

York, the company formed to dis¬
tribute
electric .current in" New

former

president, who died in
Joining in the appeal are

Telephones:

Philadelphia—PEnnypacker
New

Bell

1930.

Electric

executors of the estates of Ben-

which

jamin

ratus for Edison's electric system,
^and was on* the executive corn-

.'

Miller,

Huston,

RAILROAD EQUIPMENT CERTIFICATES

and

Teletype—PH

Charlesanna

Robert

B.

if

4

299

f

Valuation and Appraisal

:

CITY OF PHILADELPHIA BONDS

L.

Haines,, 3d,

Mary H. Haines.

5-4646

York—HAnover 2-9369

System

Valuation and Appraisal

York. He

.

Dolphin & Co.

company
.

Fidelity Philadelphia Trust Building
PHILADELPHIA 9

Harshaw

*Nor.

Ind.

Phila.

Price-Earnings Ratios and Yields

dec. Com.

Chemical

Pub.

Com.

Serv.

Elec. Co. Common

Co.,

■*

CORRY, Pa.—The Corry-Jamestown Manufacturing Co. has an¬

■

A

*

Offered

Incorporated

-•///'

Copies

on

Request

;

*

1528 Walnut St., Philadelphia 2
Boston

/

Chicago

■San Francisco




PHILADELPHIA 9; PA.
PEnnypacker 5-7330

CHAPLIN
•

V '

and

r

Pittsburgh

REctor 2-6528-29

PITTSBURGH 22, PA.

Lancaster

Scranton

attention

Electric

COMPANY

Members

10th Floor,.Peoples Bk. Bidg.

•

'

appa¬

present
-;•

/

joined

who

and

became' a

also

devoted much
to

the

the 'Edison

early

Electric

Light Co. and the Edison General

•

,

€1 Broadway

f

-j

Bowling Green 9-3987
4«3

a

He

represented the

director

of

a

number

country's major public util¬

J ity (corporations, among them the

j

NEW YORK, N. Y.

Bell System Teletype—PG

Co.

as

of the

Pitts. Stock Excb. ;

New York Curb Exch. (Assoc.)

NEW YORK 5, N. Y.

1881

He

and

operations -of

Issues

N. Y. Stock Exch,

120 BROADWAY

Grant 3900

Allentown

in

firm

Incorporated
123 SO. BROAD STREET

M/ Bulkley,

house

the firm;

Direct Wire to New York City

STROUD & COMPANY

concern

the

-contemporary of Mr. Trask,

time

>!. ,•;

">

,

PEnnypacker 5-0100

York

v

Western Pennsylvania

Mander Common

£. H. Rollins & Sons

»•

■

/

partner in 1887, is still active with

Trading Department Active in

only by prospectus

Bought—Sold—Quoted

New

on
'*

the

Co.,

predecessor of the
Electric- Co. -

Edwin

Utility Common Stocks.

trustee of Edison

a

manufactured

General

:;

;

ftichmotid Cedar Wks. Com.
Roberts &

123 Public

Com.

was

Light

mittee of Edison General Electric

#■■

the
Atlantic City

v

194?;

for

at the /:1946.://./'

were

Scranton>

ordinance

tax

,„«•//. .•

land Cement Co. of record Jan.

the ;

.

excess

y

Jit

Giant Portland

Stockholders

;;

its rates if such increased

company

; a

utility

//

/
1

-

"We cannot, by law, refuse to

crease

detri¬

any

sales.)

:[

been ,//,

/<•;/

income

comes

$29,336,257;

the

Export sales

had

on

highest, volume in the history of
the company.
It is/planned that
Penn Mutual Life Insurance;
approximately $1,000,000 will be ;
Insurance in force of $2,540,947 ■spent for plant, improvement and 422 at the year-end marks a new
replacements in 1948, comparing high f^r Penn Mutual Life Insurswith $530,000 so spent in 1947.
; ance
Co., reports John A. Steven-;

figures

on

and

Co.

son

have

SCRANTON—City of
1 %

according to David H. Har¬
shaw, president of John B. Stet¬

less than is "allowable."

that

at

above

to

mental effect

year,

return of

present

reported

-

43%

were

con¬

outlook

appear

.

Sales for the fiscal year ended

than the current established value:

have

;//

John B. Stetson ;

«

sales

advances, ranging from $100 to
$700 on truck chassis, do not

,

bar the erection of

Commission reported that
receipts of $18,107,133 were
the greatest in the; bridge's his¬
tory.
The previous record was
$16,886,413.in 1946. ' \/(,

.es¬

and

is further bright-./
by increased prices posted
by the company recently.
The

1947

and prove a rate-making
base of about $36,898,147, which is,

a

Output

ened

construction

■

share, compared with $2.40
1946 period.

a

tinued upward trend in January

$4,75

pound.

a

high

were

share in the

a

tablish

"Such

$3.26

'i: The

Pitts¬

burgh Railway!* system could

'

another bridge for "eight to ten

established >

that

21 cents

production

the 9 months ended Sept. 30, were

,

yard to $51
structural
from

and

,/■ Counteracting
higher:material costs
wage increases granted em¬
ployees last June/;"Earnings for

that

.-yeare.>/

614% on the fair
investment.v
' "V ■'

believed

to

costs would

public utility is entitled

a

value of its
It

a

return of

a

oubic

a

and

advanced

thought that

4-page letter to
all interested parties pointing,/
out that the Pennsylvania Su¬

that

has

sales

and

risen

r

,

expenses.

factors

>

steel

.

<

in

Samuel K. Phillips &Co.
COrtlandt

Siggins,

the

1926

had

use

;

•

by Philadelphia

the

Philadelphia

John
of

has addressed

;

chairman, "The needs of
Philadelphia for emergency gas
supply will have to be weighted

Hershey Creamery Com.

Bldg.,

plaints,

underwater

equipment.

Olds,

Lehigh Valley RR. Annuity 4%

375

com-

>

j

1

for

a

and company's program to 1

reduce

tunnel

.or

construct

V Autocar Company

;-

I trend

construction, said that concrete
from $16.75

since

City's

help Philadelphia substantially,
is believed.

served

A. M. Greenfield 5-1954

Teletype

deliyer enough,

The Power Commission has

Phila. Transportation Issues

Stock

every

the

bridge

and other

increased

:

new

creased cost of

be

-

Answering

which

to

1500 Walnut St. 6-1950

Philadelphia

critical

it

Cambridge Bldg. 3s 1953

Packard

com¬

amendment of the

but will be able to

Members

other

schedule

a

'-/"Mr. Ccstello, in citing the in¬

rescinded,
but, in so doing, has brought to
light the fact that even higher
fares might be justified.
•

the

H. M. Byllesby & Company

PH

Power

munities.

In

;

was

Philadelphia
should
receive
only the natural gas that had

Sterling Motor Truck

/

coming

objection

Commission's order of last Oc¬
tober that, prior to Aug. 1, 1948,

Gas

Pittsburgh Rys. Co.

to

until
no

rate;

City of Pittsburgh, fighting
the fare rise, has petitioned that
new

made,

was

bridge or, jn the al¬
ternative, the widening ' of. .the
present structure from six to 'eight
lanes.
Cost of the latter project is
estimated at $3,000,000.
;

The

the

:

$37,000,000

.

tion of

will

According to C; R. C. Custer/
vice-president r. and treasurer; of
Autocar Co., earnings improved in
the last quarter as the result of

'

at a .meeting of the Joint Com¬
mission:; which discussed the erec¬

was in a straight 104
fare, replacing the for¬

3-tokens-f or-a-quarter

mer >

i

of ;

The statement

it

River

states

cost

in 1926.

became effective Jan. 5. The prim*

190,000,000
cubic feet of gas into its mains for

Delaware

the

with its actual cost of

Appeals^
being made ity
Commission
by
Pittsburgh
advertising and ra¬ Railways Co. last December were

more

,

that the ,replace¬
the present span
would be $100,000,000, compared
ment

approved by the Commission and

Pouring

of

Bridge,

are

.

K.

-

manager

of -days."

newspaper

dio.

Los

•Private

conservation

by

Street, Philadelphia

New York

a

for

Stock Exchanges

Also Member of
York Curb Exchange

/. •
ture
Costello/ general!

'

that

$1,000,000 plant; here
for i the
manufacture of metal Office furni-y

Portsmouth Steel Corporation

! i.

Detroit

Edison

Co.,

Cleveland

Electric Illuminating Co., Milwau¬
kee

Co..

Electric

Railway

Wisconsin

'Edisen

North American Co.

and
'Co.

Light
and

Volume

167 Number

THE COMMERCIAL

467Q

This Talk About Anti-Inflation '
By WILLIAM WITHEftSPOON

I

.

Statistical and flese&rch Department,
Newliard, Cook & Co., Members New York Stock

'
Exchange

\
f

&

FINANCIAL

CHRONICLE

at least not be reduced any faster
th?n bank loans are expanded.
What do
nea;

to

Government's

if, because of

income

million

people

The

President

has

addressed

the

out

occasions during the past week and'each

be

'ff'ff --.'l-iff''-**

Congress

three

on

different

time called for anti-infla¬

tionary

legislation.. But why?
Way is the spirai of innaiiou so
dangerous to the welfare of our nation? "Is it because of the large
segment of ?'-—J—-

_

receipts
en t s i

their

budget

being
squeezed

beyond

nition? V; V
Yes — It is

probably

ino

tivated by tv<
desire to art '
f i ei

ally

verse

nue.

re¬

this

up¬

ward trend

in

the

eascning is

win

the plaudits of
t he nublic and

possibly the

number of

necessary

votes to continue residence in the

White

House

for

additional

an

why

reason

net reduederr

federal
more

ire

rev-

expanded bank loans, and

the

retirement

as

of.

a

the

aceorapl shed at
rapid rate than bank loans

the main support
will be weakened,

jf our economy
its strength will be impaired

and

amounts

xpans on.

of

•.

Could

Administration

resppc*

contraction

it

and

be that -the

is not gware

that
t
program
of anti-inflation, or
eflation, will bite the hand that
.is feeding it with tax revenues?
-,y this, the writer* does not wish

four year s.

terms

dolla;

of

els

revenue

at more

i

rates.

The

might be main¬
than adequate lev¬

in the face of lower tax

even

argument,

course'

of

demption would

cause

This

a

re¬

decrease

permitted in advance of date of registration.

iSecurities and Exchange Commission, who is now a member of the
law firm of
Gordon, Brady, Caffrey & Keller, recommended that
*

i

5- ^

Ks

•»,*•*+

bankers

ii

v-'

enter

cated the requirement

of the filing
reports with the Commission by
large corporations whose securi¬

icn-

upon a ma

of

wide publicity
a m p a i g p
similar to that

ties

undertaken by
cue

are

New York

Stock

Ex-

in

the
un*

restriction

of

con sum ei

bus rsesej its red.scoum
rate from 1% to 1lk %. This las
dysaem

.

development is almost inconse¬
quential at the present time, but
any credit reptrict'ons, beyond the
'normal restrictio.ns of sound bank¬

;he writer wishes to make is that

a-

federal debt held by banks should

keeps people in jobs.

large

volume

of

business

and

What better

the

function
in vest

was

C. J. Devine & Co,

of

m en

t

James

J,

Caffrey

James J.

sociated

Mr.

Caffrey criticized the

if sales of

securities"

York

prac-

and

"bunching

an I

the

also

offerings
stated

quired

in

and

the

thereto

was

SEC

Of dn Pont
BOSTON;

Homsey Co.

Darling' has

ciple of money and the votes will

president

take care of themselves. Congress¬

Co., 31 Milk Street.

politicians, attention!

been

of

du

elected

Pont,

have had

a

decided effect

may

legally offer tjiese Shares in compliance 'with the securities laws of the respective States.
If •?* ''M,l'Ct,H'S'i•.

ou:

on

A- reduction of $35 tc
$40 billicn jn Federal debt in i
few years' time, without a canes

economy.

res

ponding increase in bank loans
might reduce our money supply
a level where it would have 1
difficulty in supporting business
That Is, it would have difficulty

to

ip support'ng business at its pres
ent annual volume as measured by

4.3% Preferred Stock

$240 billon of gross national prod-

upt.. You cannot expect a defla¬
tionary reduction in the money
supply without a contraction in
.

the dollar volume of
.

Examine

also

conditions in

(Par Value $100

.prevailing

the re,ta 1 trade in?

Price $100 a Share

not

part'cularly worrie - about
their inventory position th's Janu¬
ary.
"Business Week"
says, ".
stocks are just about
are

.

in

not much

money

slow-moving items

or

tied

up

be obtained from

Ifl'fffi-fi'f

mark-downs to sell

inventory

.

may

only such of the undersigned

legally offer these Shares in compliance with the

M'.securities laws of the respective States.

about post-Chr st-

worry

extended

V

seeonov

relieved these stores of their per*
ma6

\

and

..

rate merchandise.". The public has

ennial

and accrued dividends

.

in line with current sales

there's

Share)

business.

the

It is reported that stores

dustry.

per

Vr

:

.

as

' ;:

-

t

an -over*

Of

course;

the buyers were wary in 1947 and
held
inventory ; to a
minimum

MORGAN STANLEY & CO.

(possibly sub^miiumur,r), but the
important factor in this healthy
inventory position was the spend¬

ing of the public.
sible because

supply.

Such

could

ness

of
a

not

This

THE

volume of bus*
been

.

.existing

BLYTH &

Jn. -this

country prior to the .wjwv hut cur-

in circulation and bank de¬
posits were s'welladbwtbe rapid
growth-pf and-, partial pion.etizgtion' of the Federal deb.fr-.during
rency

the

war

years.;

\

KIDDER. PEABODY & CO.

,

CO., INC.

W. C. LANGLEY & CO.

ff

STHNE &

'■

GLORE, FORGAN & CO.

■

MERRILL LYNCH, PIERCE, FENNER & BEANE

WEBSTER Mrr/?/n£X

:

•.Now the President w?n'.s to s*od

the demonetization vi the debt
"by the further retirement ofthank-;:
-held issues through-ah excess of
up

.

FIRST POSTON CORPORATION

sup¬

ported by the "$00'to'$65 billion of

moneysupply

HARRIMAN RIPLEY & CO.
Intxurporatvd.

the large money
have

f:-} Iff*f f 11

SMITH, BARNEY & CO.

pos¬

was




Februaryr--f ?l>: l!
11 ■

'(ii.»'.! c "

.

-'11:
U

H H m

j,.

«nn

ipfijinmiin m

^
'>*'i

nu' »■

'i

.

^in.imiw.ni

Homsey

with the firm for many years.

-

'

I

'
1

fn.minwi
i

n»i

M.

vice-

He has been

JThisM-ii ummeim ent 'is neither -an offer to sell nor a solicitation of an
offer to buy any of these Shares.
f' The offer is made only by the Prospectus. This is published on
behalf of only such of the undersigned
as

the

MASS.—Rodney

■

4k

Inc.,

with

Rodney M. Darting V.#.

pay

to understand this economic prim*

and

Co.,

securities. He
changes -are re¬
rules, and advo¬

is therf
envelope: and
vice versa? However, votes or nc
votes, the public should be made

men

trading de¬
&

of

that

good

a

prior

of

Lobdell

Guaranty Co. of New York.

vote-getting propaganda
than

manager

partment of

un¬

willingness of many underwriting
concerns to handle small or mod*
erate

as¬

bond

department of C. J. Devine &.
Co., Inc., 14 Wall Street, New;
City, it is announced.
Mr.
Ryan formerly was vice-president

"the distribution of secur.tiej

oinvestors for purpose cf raigng
paoital needed by business." >
ices of underwriters in

Ryan has become

with the municipal

in the money

supply, just as it did
from early in 1946 to the'raiddU
of 1947..
At that time it
did, hot'
do any particular damage to ou
economy, but if the reduction Ix '
dCvt had continued; for severa
years at a faster pace than ,tb'
expansion in 'bank loans fe fe
crease in our money supply wouic

permit¬

James J. Ryan

banking. This
function, Mr. Caffrey" emphasize!

a

also favored

tration.

tenjng

credit to prevent further p'iee ad¬
vances and the
Federal Reserve

ex¬

wide¬

and

numerous

He

the

be adv¬

principles

on

shareholders

ting oral solicitation of sales be¬
fore the effective date of regis¬

M r,
sa'd
public

Te

listed

whose

fairlv

spread.

chaise.
Caffrey
should

not

but

are

changes,

der lying

.....

debt could be redeemed.

Feb..

on

public should he

Wants oral solicita¬

luncheon interview held at the Bankers Club of New York
3, James J.. Caffrey, recently resigned Chairman of the

a

applies to the anti-inflationary
jkaracter-stics of credit restrieio"5.
The Admup'stratic n s fps '

However, what do you :o imply that the expansion of the
ing practice, will at least hamper
think would happen if, like King'
federal debt is a desirable method
the further expansion of business,
Midas,
the
President's
desires- if increasing the money supply,
to say nothing of its effect on the
were
granted and deflation re¬ aven though it is based, upon an
money supply.
V*v
idequate gold stock. The-. more
placed inflation?
Would this be
good? No! Then we really would: iconomically efficient expansion k:U there is something that should
>f commercial loans would prob- worry the President, it is the pos*
have an economic headache!
's ;
sibility .of deflation in the event
■J Consider, -for example, the con¬ .bly.,result in a better balanced that some of his
I anti-inflation
tinuation of a high tax rate which fponomy. However, the expansion
policies be enacted.
Inflation of
produces an abundant income to )f the Federal debt is now an ac¬
the type currently existing in the
the Government—so abundant that
complished fact. The point that United States at least produces
a" substantial block of the Federal

tion of sales
At

ocated

;■"
same

says

informed of functions of investment bankers.

,

brough the more rapid tuinove"
will increase personal
and' Corporate income so tha, the

>h tained

.economy

in

Caffrey, former SEC Chairman,

1

an evej

business

of

Yf ;nicn:y,

debt ..is

expanded,

enlargement

volumes'

when viewed

our

otuea

a

is .dollar

ilireei'proportipndb the

thereby
Witherspoon

a

me

on

possible further enlarge¬
ment" cf the money supply through

the fallacv rf t

seen

to

vhole. .If

cost-of- '.•if
*
ivc
living
and

William

However

-clat'nn

a

one

disburse-:

the dollar .airourt of tax

n

recog¬

is

This

over

does not want

e

hand,

rreater

people who are

finding

brought down into lower tax
brackets by their relatively lower

saaaneg.; rxowever,

James J.

few

thrown

were

a

Investment analyst warns proposed anti-inflation measures might ; of work?
Even if present tax
rates were ma'ntained, is it not to
lead to disastrous deflation and cause loss of
employment and ;> be
expected that the taxes paid
income and lowering of government revenues. Seps need of exby thesh: persons would be cut
panded bank credd offsetting national debt reduction, if business ff Off, and that other persons would
volume is to be sustained.

Campaign

deflation in money

a

supply and.buying.power,

11

Recommends Investment Bankers Publicity

think would hap-

you

the

(607)

pui i m

12

THE COMMERCIAL- &

(608)

FINANCIAL

CHRONICLE

Thursday, February 5, 1948

Congress and the Materials Shortages
A.

By

W.

ZELOMEK*

Economist, International Statistical Bureau, Inc.

Mr. Zelomek, in commenting on political situation, predicts unless
prices continue to rise vigor¬
ously into second quarter, there is unlikely to be action by Congress on further domestic controls. Says
trend of general business in 1948 will be more important in most markets than
government action,

New York Central had another notably poor year in 1947, with
the December results particularly disappointing. It is obvious from
the figures that at least in part the showing for the final month was

aggravated

weather conditions. The transportation
jumped to3>——
—
—-—-—-—-t
52.9% which was even a little erating costs although in railroad
higher than that of a year earlier accounting they are not included
and more than six points above therein.
Last year Central's net
the November 1947 level.
The debit for hire, of equipment and
November transportation ratio, in joint facility rents was just nom¬
turn, had increased more than inally below $20 millions.
The
two points over that of October,
net result of the heavy direct and
reflecting incidence of the in¬ indirect costs of doing business
creased wages for some of the was that the company was able tc
operating brotherhoods.
<
carry only 2.6% of gross to net
Even allowing for the influence operating income before Federal
ratio

for

by

the

the

.

December

on

results

the

of

ex¬

New

York

Central

last

year

gives little encouragement to the
road's security holders. It is true
that the company reported a mod¬
est net profit in 1947 in contrast
to a net loss of over $10 millions
in the first postwar year.
This
1947 net income, however, was
realized only
through the expedi¬
ent of a
credit adjustment for
1943 Federal income tax accruals.
the

For

there

1947

year

was

a

as

a

net credit of

whole
$6,072,-

223 for Federal income taxes.

In¬

cluding this credit net income for
the year amounted to only $2,306,082, or $0.36 a share on the out¬
standing stock.
For the year as a whole the
transportation 1 ratio stood
at
This

45.4%.

somewhat better

was

r<

income taxes.

traordinary storm costs, the record
of

There is

'

to hope that the

reason

will show some im¬
provement in the road's operating
performance
although severe
weather probably also affected
results
in
the
opening month.
The road will be reaping the cu¬
current year

benefits

mulative

stallation of
of

a

the

from

in¬

substantial amount

equipment, and,delivery of
other units still on order. More¬
new

transportation ratio
of c47.1%,
but was still signifi¬
cantly higher than the 40.0% in¬
dicated
for
the
industry as a
whole.
The
overall
operating
ratio last year was 86.2% which
was about eight points above the
estimated operating ratio of all
I

carriers.

Had

York

New

Central's operating ratio been in
line with that of the industry as a
the

whole

been

have

$56 million.

pre-tax

would

net

increased

than

more

The extent to which

Central's status in relation to the

industry
orated
that

as

is

a

whole

has

deteri¬

apoarent from the fact

during the 1930's its operating

ratio

running only one or two
points above the Class I average.

the net Federal income tax credit
more

way

ed
the

than $6 million, total rail¬

tax accruals in 1947 amount¬
$52,435 502. For one thing
road has a
relatively high

to

labor factor which involves

cor-

a

respondinglv heavy debit for pay¬
roll taxes. The full year's figures
are not yet available but for the
11 months through November this
item albne amounted to $29,153,837.
This
was
up
more
than
$8 million from a -year previous.
There does not appear to be much
hope that these rates will be re¬
duced significantly.
The second
factor is heavy property taxes,
of them

some

on

bious productive
Aside

from

facilities of du¬

worth,

taxes

v

any

corresponding
Even with

costs.

in

crease

in¬
these

debits

actually

represent

must be considered

as

what

direct op-

bright

and

resump¬

Bonds

Special Securities

OHIO

CINCINNATI,

—

Chester

the

two




I

how

A- w- Zelomek

great

compliment

a

invitation had been. You had
on

to

me

Washington

will

tell

do,

what
because no
you

in

Washington knows.
Well, gentlemen, I don't
either, but I am willing to
one

You

know,

answers.

Now I

know
guess.

they know all
am

not afraid

and I am not ashamed to
but I don't like to pick

can

has

masterpiece.
And
naturally, since this is my home
town, I feel that nothing less than
a

you or

Controls

by

believe

our

first

as-

Chester T. Terrell

of

the

the world's markets.

to be

last

late

expressed

in

This is the

the

Annual

impossible, in view of

conflicting forces at work in

nomics, to predict price trends for
the coming year.
Bache & Co.,
urges executives that in planning
their inventory
programs,
they

raw

not
of

only

of

radical

quite sincere when they
view

the

that

the

express

President

has

exaggerated the inflationary dan¬
gers, and that the price level may
turn downward

well before

elec¬

tion, particularly if world weather
conditions remain favorable.
But

regardless of what I think,

of what Republican spokesmen

#r

actually believe, they had no
choice, politically speaking, but to
line up on the other side. They
may

choice

no

a

that

chief

but

to

tell

the

buying

cause

of grain
of high living

costs; that he had not used all the
powers he already possessed; and
that the situation did not require
and drastic controls.

for

heavy, in prepa¬
Fall' and Holiday

were

the

selling period.
(4) A declining trend of retail
sales continued until
was

reversed

when

ments, .were made

August, but
heavy

to

(5) Building activity increased
after restrictions

were

to

assure

supplies

adequate

Speculation

(6)

was

renewed

and intensified.
As

of these de¬
velopments, the economic climate
was
entirely different when the
special session met, from what it
had been when Secretary Mar¬
shall first made
his statement
a

consequence

adverse

the-risks

price

move¬

*An

by Mr. Zelomek
Purchasing Agents As-

address

before the

sociation of

Rochester, Rochester, i

N. Y., Jan, 28* 1948.

*

first

What

the

will

commodities,

ip

can

our purposes.

Government

be

summed

agribe

affecting

two,

1

u r a

lumped together for

influence

this field
can
be
in two statements:

up

(1) Purchases of farrh commod¬
ities

come

the

Department
this

under the influence of

of

influence

Agriculture,
will

continue

clearly in the recent past
history of the grain markets, In
ordinary commerce, itjs consist¬
ently true that the large buyer
has a distinct advantage in the
market place, especially if sellers
are widely dispersed and relative¬
ly small.
During the past season,
the Government has been the big¬
gest single buyer of wheat and
flour.
Its purchases, iri fact, ac¬
counted for about 35%

;

further action by Congress on
question of domestic controls.

any

Even

if prices should continue

upward, I am inclined to believe
that Congress would go slow in
voting really strict controls on
materials.
I believe that it might
be

more

in

tion

likely to take new ac¬
field of credit con¬

the

trols, with the aim of controlling
demand rather than supply.
i »'
This

has

a

certain

amount

of

We found out in our war¬
time experience that simplified
controls over supply were worse
than useless. The only real suc¬

logic.

cessful ' materials

control

of

the

No one wants to go back to that,
even

of the to¬

tal crop.

But instead of using this
buying
power
to
keep
wheat
prices at around the support level,
which last Spring was $2.10 per
bushel, it bid the price up, higher
and higher, until it reached the
present price of $3.00. The record
is

clear

that

least, wants

the

Department, at
high price for the

a

(2) Nevertheless,

The politics of the

not

removed.

the

farmer.

qses^ajnd -because non-essential
uses were strictly limited.

ration

orders

And

rather

pay¬

by retailers

new

prices.

line with the real economic pros¬

pects for 3,948. I believe that some
of
the
Republican leaders are

.veterans in
September and October.

(3) Third-quarter

materials, but also to, pro¬

tect themselves against

ments.

not

period was the Production
Requirements Plan, developed pri¬
marily by purchasing executives
to overcome the failings of the
earlier systems.
That worked be¬
cause it went all the way in con¬
trolling and allocating a large
number of materials to essential

both the domestic and world eco¬

step

protect

to

war
•: •:

second is in support

and

order

the

mentioned

The
cult

controls;

dustrial

me

Marshall

The publication contends that it
the

do

I

The

agricultural

to favor high prices for the farm¬
er.
I think the record is written

v

With

is virtually

earlier

situation in¬
dicate that this position will not
be
changed unless a change is
forced.
A loophole has been left
to institute meat rationing.
But
unless prices continue rising vig¬
orously into the second quarter, it
seems unlikely that there will be

first

relief.

believe, person¬
ally, that this position is quite in

-new

At the time, business was
experiencing a mild recession. In¬

success

view

Now

was

guess

Metals-1948

The

in

powers

President

Congress

production declined l}k %
between
April and July.
The
several
other
wholesale price average declined
Cincinnati firmc. He is one of the
founders, and on several different fractionally, and some commodi¬
ties were off rather sharply. But
occasions has served as a trustee
between late Spring and the asr
of the Cincinnati Stock and Bond
Club, an affiliate of the National sembly of the special session,
there was a rapid succession of
Security Traders Association. Ar¬
nold is a past President of the stimulating developments:
(1) Bad weather cut the size of
Association and Hall, head of the
the corn crop at the same time
firm is a recently elected member
that the Goverhment increased its
of the Executive Council.
purchases of wheat.
(2) Coal mine wage increases
led to price increases in coal, steel
and the mass production indussocated

new

a

masterpiece will satisfy
justice to me.

was

since,

been

create

removal of

that he would have to have broad

Spring.

the

Herrick Co. in
1928 and

Good

Congress has already taken
its stand, which will be changed
only
if
circumstances force
a
change.
Here is what I mean.
The Marshall program as such

the

of

air.

that

Cincinnati of¬
fice

the

Or will it stand pat?
The answer seems to

be¬

in

ness'

of

must
be about what Congress may do.
Will it pass new restrictive laws?

of

extends

out

gress was responsible for prema¬
ture

buying of wheat,

first! thiJdessential materials. strategic
is stockpiling'of
and

the

the domestic economy.

forecasters

some

science and that

the

had

inflationary pressures had
strengthened; that European aid
would
cause
further
sharp ad¬
vances; that the Republican Con¬

of

realized

fully

President

One is the

flour arid other food products for

move, and chose the position that

the

Doubtful

men

themselves

1-1063

left

The

the oracle that!

I

yond 40 years.
Mr. ' Terrell
entered busi¬

of

Teletype NY

had

presence

New

ex¬

perience

CBAtAHTEED KAILKOAD STOCKS-BONDS

Telephone" BOwling Green 9-6400

only

J. Arnold. The

combined

Republi¬

of

;

-

the

moment, there are three
phases of commodity pur¬
chasing carried on by the Govern¬
main

following line-up:

it
was
after I

men,

had

ing, as Assistant to Henry

and

Democratic

know, gentle¬

get

do

Build¬

Trust

the

can

an art.
And as in any
art, you must have good materials
as well as inspiration before
you

Terrell, nationally known in
trading circles, has joined forces
with Clair S. Hall and Co., Union

issue,

ment.

to

so

Commodity Purchasing

it. And do you

mined

„

only under the pow¬
already posseses.
'■ \

it

ers

Congress took opposing posi¬
tions.
The opening of the politi¬
cal campaign brought about the

guesses

T.

this

—.———:——

it will do

At the

day.

Administration

deter¬

was

guessing is

With Glair S. Hall

sible

New York 4, N. Y.

I

guess,

must of necessity take every pos¬

25 Broad Street

issue of the
On

you

and the do¬

nearer;

truth, and
nothing
but
the truth, and

to guess,

Chester T. Terrell

months

was some

mestic situation became the main

a

appear

Metal Review published by Bache
& Co., Metal Department.

Guaranteed Stocks

six

you

not-

Plan in aiding in the

on

knew

don't like that word guess.
They
like to pretend that economics is

rehabilita¬
income, the company has
tion of war-torn economies abroad
large debits for hire off equip¬
will be an important factor in
ment and joint facility rents. To
a
considerable degree these net governing demands for metals in
those

I

The date of

wanted the

considerations, however, the pros¬

tion of dividends seems remote.

can

accepted the
I headed straight for the source of

-—~—:—_-—

about European aid.

the Presidential election

itself.

pects for development of any sub¬
stantial earnings on the stock do

than

other

mouth

—

■

horse's

the

called

without

likely to be effective, but export allocations

invitation, I caught the first plane for Washington.
all knowledge,

your

the second emergency in¬
freight rate increase went
into effect early in January and
will materially bolster revenues

not

are

;
I considered it quite a compliment when you asked me to come here and tell
what the Government would do about material
shortages. As soon as I had

over,

was

On top of its high direct oper¬
ating costs, New York Central is
also
traditionally
saddled V with
other heavy expenses. Even with
of

voluntary domestic allocations

and will be used to hold prices down.

terim

than the 1946

Class

contends

and

severe

month

the Administration. And

Congress, I believe, if it is forced

by circumstances to do anything
more, us likely to calculate that a
reduction of over-all demand
through some new restriction on
bank credit would be a lesser evil

real

there

whether

doubt

ment will be

as

is '■>

a

factor

in the wheat market in-1948
was

are

in

to

a

as

it

World

1947.

off

a

the Govern¬

important

good

grain crops
start.
Unless

weather deteriorates

quickly this
price move¬
ments
seem
more
likely to be
reversed than duplicated.
Stock-piling of strategic and
critical materials will probably be
a
more
important factor in the
supply situation than it has been
in the past.
Only $11 million
were
spent in fiscal 1947.
It is
Spring,

last

year's

that expenditures will
million in fiscal 1948 and
$305 million in 1949.
These amounts are not large
when spread over the great num¬
ber of materials that will prob¬
ably be accumulated.
But their
expenditure may have a dispro¬
portionate effect in some markets,
estimated
be $110

since

will

it

v

secrecy.;

be

shrouded" iA

-vV

.

On the whole, stock-piling ac¬
tivities will help to keep tight the

supply of

many

industrial mate¬

Sellers Will make the most

rials.

of these

activities, arid rumors of
purchases may be as much Of &
market factor at times as the ac~

tudFSbuying is. * We have seen
during the last 60 days or so how
this encourages buyers generally
to

come

in and take

a

little more

just in case.

^

■

'-'

X"X""

The ERF

^
,

This

program will determine
the extent to which domestic al¬
locations

are

needed.

I

believe

personally that this need will be
andx a simpler mechanism than
the'bureaucracy of supply con ¬ small, particularly if export allo¬
cations

trols.

My first guess, therefore; is that
the Government may indeed in-

fluence the. supply problenrdur^
mg the next few months,

but that

are

properly made.

Your guess may be as

good as
of
I

mine, regarding the amount
hinds Congress will authorize.;

(Continued on page 29)

„

Volume 167 Number 4670

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

(609)

The Problem of

The Economic Outlook
By ALAN H. TEMPLE*

By

1

Vice-President, National City Bank of New York

Professor

*

Chairman,

of

Marketing,

Nystom

Council

Columbia
National

of

University

Retail

Associations

Asserting inflation will continue

is in its last

Rising Prices

PAUL II. NYSTROM*

Central

Holding peak has not been reached in either business or prices,
Mr. Teriiple contends, however, there are indications present boom

13

as long as purchasing power increases faster than production, Dr.
regime of self-imposed economic austerity to stem the tide. Recommends (1) restric¬
tion of bank credit and loans for consumption; (2) instalment credit controls; (3) encouraging of
thrift; (4) sharp reduction in government spending; (5) careful scrutiny of outlays for relief,

phase and financial changes portend in long run a de¬
cline in capital expenditures. Says banking system is strong and
liquid, but foresees brakes on bank lending which increased by
In either

physical terms

servative corporate

dollars, business activity at the open¬
ing of 1948 is the greatest in our peacetime history. This is contrary
to majority expectations a year or even half a year
ago. Then people
were
expecting high prices to check the movement of goods and the
or

volume-

of *>-

Whether they

for

in

drop

a

exports, for

a

•v.

have jobs

people

and

money.

will have jobs and
money in the second half as well
as
the first half of 1948, .depends

halt to inven¬

primarily

tory increases

the Present Inflation

The national income has risen

as

Many

looked

(6) encouragement of imports; (7) reductions of exports; (8) con¬
(9) public resistance to price rises; and (10) granting wage increases
only with increase in productivity.
>

dividends;

The Extent and Trends of

——

construction.
fas

a

pensions and social security;

$7 billion in 1947.
-

urges

of the

than three times what it
as

business

volume

the

upon

sharply since 1939. In 1947, according to the estimates
over $200 billions, or more
in 1939. This national income is made up of dollars.
But,

Department of Commerce, the total income was well
was

knows,

of

oncv^

every

properly and vigorously, we
stop it. Let us be realists in

the
dol¬

of

value

can |

carried out by the Department of
Commerce, under the law enacted

spending for plant and
equipment, the amount of home

lars

clining capital

building, and

clined sharply

also be

expenditures.

ports.

since 1939.

ing what to do and'then resolute

program

The wholesale

in

tions will be the result of volun-

and

for

de¬

These

pre¬

dictions

went

The

wrong in part

of

too

ex¬

^

boom

end

may

businessmen

because

they

the volume of

decide

because

that

the

equipment is
high in relation to prospective

markets

supporting in¬
H.

fluence of the

Temple

great strength
and

liquidity of the financial sit¬

uation

and

of

the

tremendously

expanded

money
supply.
They
also went wrong because
develop¬
ments around the middle of the

changed

year

tions.

business

The short

corn

expecta¬

country and short wheat

Europe

started

in this

crop

food

in

crops

prices

up¬

ward.

The second round of wage
increases was passed on in prices.

Expectations of falling prices dis¬
appeared.
Development of
the
Marshall program diminished

pectations

of

an

Business went ahead with capital
investment, merchants went ahead
with

commitments,

went

ahead

The
of-

with

builders

and

construction.

1947

acquired
a
momentum
shows in continued large

which

unfilled
ume

orders and

heavy vol¬

a

of construction contracted for

The

strength

mobile

of

steel

demand

premium

is

prices

and

auto¬

reflected

for

second

they had better get
along with what they have rather

gone

in

hand

far

as

curring

is

as

debt

they have
prudent in in¬

in

relation

to

the

capital

they

It

end through tightening of
insufficient
saving,
and

may

credit,

have

or

attract.

can

consequent
inability to finance
capital expenditures. It may end
through a decline in the export

surplus,

with

demand
In

and

obvious

E\re

now

appearing.

These

the

most

significant

are

business developments of the past
few
months.
Cash
and
liquid
held

declined

owner's

by corporations

and

the

have

ratio of- debt to

capital has increased.

difficult

more

even

to

n

borrow.

strong
now

offerings.

The

banking

system

is

and

liquid, but banks are
carrying softie $7 billion more

Public utilities and the
loans that a year ago and the Fed¬
oil industries are in the midst of
eral Reserve and Treasury author¬
great
expansion programs. The ities have
made it clear that they
railroads
urgently
need
equip¬ believe the brakes should be
put
ment.

•and

Farmers

have

Housing
written

the

continues

by

machinery
to

to

Mr.

it.

buy

be

Federal

a

which

program
called

need

means

under¬

financing

Eccles

"possibly the

has

infla¬

most

tionary factor in the present sit¬
uation."

goods

Even,

of

.some

industries,

the

including

your

It is hardly conceivable Ithat
general state of activity which is
so strongly
supported can change
much in the first half of 1948.

a

This state of affairs constitutes
boom.
The fundamental

ques¬

tion before people who must
make
business dicisions

today is

when

the boom will end and what wil

it.

stop

It

incomes

may

of

too

end

because

the

people

lag

many

behind the rise in

prices, thereby
shutting them out'of the markets,
while at the

same

time the filling

of pipelines and the satisfac¬
tion of accumulated needs reduces
up

the

of

demand.

boom

would

urgency

thought the
1947

for

these

reasons.

Many
in

end

The

fact

that this expectation proved mis¬
taken in 1947 does not mean that
it will be wrong through all of
1948 also.'
.

Certainly further shifts

in; consumer
one

expenditures

line to another will

1948.

and

them

will

occur

suffer

sumer

expenditures

may

pected to continue heavy

be
as

•

v■•From

an

credit

H.

Paul

into the last phase of the upward

ex¬

long

address by Mr. Temple
forum and dinner

On

the

hand,

other

indication

every

phase

will

cooperative

be

there

that

controls

under

government

this

it

always

trends

does

behind

the

prices, on
In other
1939, -as
measured in terms of retail prices,
is at present worth only about 600.
Nov.

15, stood at 164.9.
words,
the
dollar
of

in

measured

As

of

terms

restrictions

The

This is inflation. Its trend is still

into
tion

can

The end is
not yet
Most people hope that

be

curred

stopped. Nothing has
has

nor

done to stop it.

anything
'*

,

e

inflations,

is dangerous. Inflation has a way
of

ending in

an

inflation

been successful in

the deeper the

do

not

inevitable.
cur.

If

inflation is stopped
this nation to disaster.

this

we

think

that

set about it

are

some

in

emergency.

It

correct

promptly,

economic

an

seems

strom

address

by

a

before

the National Potato

Chip

Institute,
Jan. 28, 1948.

New

ing

a

We

them.-

enforce

City,

York

are

to

wake

tragedy

incomes

deep loss, with mere loss to come.

Every purchaser

a

see

(Continued

modified version of such controls,

last

The

available for capital pur¬
in 1948 will be second only
1947, and they will be large

enough to support a huge volume
business spending. The export
surplus, while probably smaller

of

When you want to

than

Firms in the United States and Canada,

in 1947, will continue
huge
throughout the year. The support

CIRCULARIZE the Investment
Remember Us!

given by housing, augmented by
local government and institutional

construction,
influence.
to

the

not

will

These

be

a

powerful

things lead

been

yet

business

reached

in

before

the

produce

within

Probably
about

as

1948

of

the

the

indexes

will

high in 1948

1947.

as

::Y;V

•

and

not

list

and

is

charge

States

year.

or

SPECIAL
selected

accepted
average

All

they have

We

/

•

Cities,

Our

reces¬

.

stencil In

metal

our

mailing department

bank listed In "Security Dealers

firm and

arranged alphabetically by States

America"

the

within

daily

revised

by

Cities

and

offers

firm

names.
the most

you

up-to-the-minute service available.

appears

calendar

of

a

every

North

This

any

will

considerable

most,

business
in

end

any

have

for
of

either

prices;, and that

or

declining tendency which

sion

We

me

opinion that the peak has

at

N.

A.

States

addressing
can

a

also

complete

addressing

for

Canada)

Is
D.

S.
or

$5.00 per
LIST

per

completed within

supply

the

list

small additional charge.

thousand.

(main

Cities $6.00

on

(United

list

only)

offices

or

thousand.

24 hours.

gummed

roll labels

..

Schafer 50 Years

NYSE Member
York

the

members

have

held

tile Merchants of New

50 years.

the

York, New
City, Jan. 30, 1948. -

Herbert D. Seibert & Co., Inc.

Myron Schafer, member of the
New

Stock

Exchange,

ultra-exclusive
of

the

their

has

list

Exchange

25 Park Place

who

He has boosted to eight
-'•/

-

;

•M*

New York 7. N. Y.

REctor 2-9570

of

membership for

half-century roster.

T'Vfi

sill

sal

1'

:V

•
^

.(1*1

M

.-.c.

U

i"

-i

•

produc¬

.

of regulations

by Professor Ny¬

the

behind, such as white collar
teachers, civil service
employees, hospitals, schools and
churches.
Everyone who owns
anything bearing the dollar sign,
whether money, notes, securities
or bonds has
already suffered a

law, creating a govern¬
setting up a number
and then appoint¬
few thousand prosecutors to

passing

than

lag

ment bureau,

*An

faster

workers,

to

disease

so

increasing hardship
to all who live on
such as pensions,
income from savings, relief funds,
insurance and all persons and in¬
stitutions whose income generally

risk

easy

so

its

and

application of totalitarian con¬
trols for the sake of meeting the

oc¬

its

as

fixed

ex¬

would

who

just

The tide of the inflation will leave

countries,

totalitarian

inevitably

nation

tion of useful goods and services.

the

is

disaster

Calamity need not

in

there

Unless

it will carry
I

peftce times

cept

crash.

will

and to spread

this

the

increase

are

fact that such controls have never

crash. The higher

a

goes,

in

In the present
some
who
think that we, should again go
back to price controls, some form
of rationing, or at least priorities
and allocations.
In spite of the
there

difficulty

to rise

over

dollars, purchasing power,
form
of salaries, wages,
profits and government spendings

long

or

should help us out.

oc¬

been

v,

This inflation, like all

threat

depression, there are many
who believe that the government

advance.

inflation

continue

a

as

on

and

This

Controls

nation, we get
difficulty, whether of infla¬

Whenever,

upward. Every month and almost
every week since 1939 has shown

it

business, employ¬
prices, such as price
controls and rationing, but rather
by removing some of the regula¬
tions that
still
hang over our'
economy, and which are actually
contributing to the inflation.
I
shall come back to this again.

Fallacy of Looking to the

Government for

opinion, by placing further

ment

is, too little production.

...;.■/SyOW:::

sight.

"help stop this inflation, but not,

in my

prices, it is worth less than

in

to

mys¬

whole¬

sale

an

nothing

They may be
They are due
to the fact that there is, on the
one hand, too much money, pur¬
chasing power, which people are
trying to spend; and, on the other
hand, to shortages of goods, that

wholesale

of

is

terious about them.

poses

to

possible
without

are

vThere are, to be sure, some
things that the government can do

are

easily understood.

prices, lagging
as

There

inflation

is

the
one.

long

a

-

the approval of the Department of
Justice.

funds

York




de¬

swing of this business cycle.

annual

of the Association of Cotton Tex¬

*■>

and

of this

causes

simple.

consumer

Nystrom

expan¬

judgment these fi¬
nancial changes portend for the
long run a decline in capital ex¬
penditures. They mark our entry

joined
before

overall

my

any

this

business

in

from

though others gain.'
In the aggregate,
however, con¬

;

In

of

,

The

index:of

from

even

some

sion.

soft

have heavy unfilled orders

own.

further

on

out

are

causes

attempt to make this kind of
approach.

an

It

has -long'been difficult to raise
equity capital and of late it has
become

24,

However,'
come

cooperation rather
than of police orders.
Don't for¬
get, however, that no voluntary

an

Jan.

stood at 224.3.

on

influences

tary

may

of priorities and alloca¬

have been

its

these

when

December.

good that

termined, to correct the evil by
removing its causes. This will be

The

-

degree these restrictive

some

seem

then,

500.

effects

prices here.

in determin¬

an

find out what

ing

than pay such high prices for new
homes.
It may end because bus¬
that

last

us

the week end¬

people who want houses de¬

decide

let

- •
evil, any evil, it
good sense to try to

meet

would

but

1935-1939, for

that

inessmen

100

constructive

doing it.
To

index,

danger,

the

average
for
the years

cut

cide

assets

upswing in the second half

and

cause

ex¬

decline.

export

earnings,_

ognizing

represents the

their programs accordingly, or be¬

the

and

de¬

which

in

construction and

underesti¬

Alan

price

cost

mated

has

rec¬

j J
•

m-

m

•*

-

of

a

war

on page

22)

bond

.

14

THE COMMERCIAL

(610)

&

FINANCIAL. CHRONICLE

Thursday, February 5, 1948

TABLE II
:

•

•

Equivalent
Price as of

Jan. 30, '48

Bank and Insurance Stocks

Jan. 30, '46

j i Price

"

i;v

v

By E. A. VAN DEUSEN

Manhattan!.

of

.

25%

1

Bank of New York

Eankeis Trust

This Week—Bank Stocks

1 370
+

Chase

r

Table

shows

1

as

I

Price

;

for SI

1-30-46

B. V.

B. V.

12-31-45
3..utk

of

New Ycrk__l

Bankers

Trust

Central

Chase

35%

47.77

Hanover

112.63

National

B. V.

B. V.

$

40.57

32.24

25%

0.80

6.5

0.81

4.6

0.80

5.2

121.46

92

3.76

7.8

1.18'

43.52

53 %>

1.34

43.26

31%

.94

58.81

22.67

234h-

1,04

24.5 G

67%

1.27

Corn

Exchange
first'National
Guarsnt.y

Irving

347.42

Trust

^National

Trust

XT.

3.

0.82

8.3

13.8

53%

0.92

1.13

48.18

1.15

107,33

1.02

,

54.25

813

1.06;

0.0
2.5

1'5.3

3.7.
9 4

_

increase in

average

41

t771.82

0 85

8 1

86V2

0.31

7.5

__

1

Trust

S.

|

l'l'.O

19.5

0.74

0:5
+7.2

B.

value

X?

the

of

v;KY::

stocks

over

the

"The

should
to

public con¬
cern.
The rapid growth of unions
during the last 15 years makes the
right to belong to a union a mat¬

Up of an Employees Retirement Fund to which was
contributed from
capital funds art amount equivalent to $40 per share.

ratios to current

ter

of public

the

"book values they bore two
years ago to the book values of Dec. 31,
1945, they would have to appreciate approximately 39%. The calcu¬
lated percent increase for each of the. 17 stocks
under review is as
shown in Table 2.
■•./>..

admission

be affected

and

concern

rules

with

a

of

Workers.

(Special

LOS

'

ter

to

The

Financial

With G, H. Chance & Co..

chronicle)

(Special

ANGELES, CALIF.—Wal¬

M.

Bohme

with C.

is

A. Botzum

Seventh

connected

now

Street.

Co., 210 West
He

.

was

pre¬

viously with Livingstone & Co. I

to

The

Financial

FRESNO, CALIF.-—Thedctore
Wiberg has joined the staff
G. H.

ing.

ing

Chronicle)

The act

E

a

oi

Chance & Co., Helm Build¬

He

was

& Selland.

•%v

would

by

makes

CIO

this,

and also

to divide

be

the

the

ap

ex¬

practice
economy

into two parts—one part made up
F* of L. firms buying Lorn

and

hold

a

will surely vote to reject the
employer's 'last' offer, because to
do otherwise would mean repudi¬
ating their leaders.
Tne proce¬
dure puts the government in the
ridiculous position of conducting
a vote on the. question of whether
the
national
health
and
safety
shall be imperiled.: That is bound
to be interpreted by the workers
as
government sanction for their
strike.

to-

v\

"The government cannot afford
be in this position when the

national

health and

safety are at
responsibility of
protecting the national health and
safety.. If the men reject the em¬
It has the

stake.

ployer's

'last' offer, as they un¬
will, the act provides

doubtedly

that the President shall submit t<?

Congress a full
report of

sive

selling to only other A. F. L.
and another part made up

firms,

and
the

comprehen¬
proceedings

with such recommendations
see

imagine

a

he

as

fit.
One can scarcely
better way of making
relations

football

a

of

politics' than to throw important
unsettled disputes into the lap of
Congress.
No body of 541 men
can be expected to deal with such
an
issue."
v /
'
;

.

NSTA Notes
BOSTON

require¬

SECURITIES TRADERS ASSOCIATION

The following committee

oupointments have been announced by

the Boston Securities Traders Association:

••.

affected

with

a

union

public in¬

a

terest because there

Oitr

r

are 11,060,000
jobs in American industry which
may be held only by workers who
are
in
good standing in ^unions/
.

■■

i

Year-End Comparison of

Operating Earnings
and

NEW JERSEY

Ratios

The
i

|

SECURITIES

20 New York City
on

to

Members New

York

Stock

■

regular union

pay

that

J. S.

Exchange

Rippei & Co.
Established,

BROADWAY, NEW YORK 5, N. Y
Telephone: BArclay 7-3500
Bell

attempts to protect meri
losing their jobs because of

establishment

Request

Laird, Bissell & Meeds
120

act

from

loss of good standing in the union"
for any cither reason than failure

Bank Stocks
Circular

•

made

of A.

affected with

are

interest."

right to remain in

is also

.■(

r-

i

public

"The

yv-i,:"'

n
i,

admission

example, refuse

of

is directed to

Continuing, Prof. Slichter stated:

formerly with Bailey

,v*!

the

Board

industrial

extension

dealing

lockouts which im¬

or

among

may

an

the

parts of

the provisions for

of

public interest

big step forward in recogrizf
that

are

unions which practice it to
damage suits. The logical result

that the act goes too far in
respect, but I think that act

ments of unions

ttnion.

goods

think

a

men

poses

to

act," he continued, "is its attempt
Maximum calculated potential
appreciation, on the basis assumed,, to operl the doors of unions to all
is the 58.8% of First
persons | without
discrimination.
National; comparatively, this vis ap unrealistic
The act attempts to protect work¬
figure in view of the banks' slim divided coverage and the
consequent ers from
being denied the oppor¬
drastic decline of its stock
during the past two years. The potential tunity to work for
any
reason
-percent appreciations shown for each of the other 16
banks appear to other than failure to pay regular
be fairly reasonable, on a
union dues and initiation fees,
i
comparative basis."
/v/rv'Y
:,

is

boycotts

or

to. free

to

unfair labor practice

"One of the best features of the

this

strikes
used

one

or

handle

to

;

.

or

be

Labor unions, for

causes

unions

leave

another

matters of

as

not

and to join
punish them; for
joining the* 'wrong' union.
"Some American Federation of

Taft-Hartley Act," Prof;
said, "is not its specific
provisions but the matters which

Slichter
it treats

the form

on

;

important" thing

about the

Ul S. Trust is distorted by reason of the
setting

same

,

t

Act,

ers

Congress on strikes or lockouts affecting na¬
they?>%^
days, is j flict. .This is also a step forward
of making industrial For example, economic coercion

m o s

the

the workers on the
employer's 'last' offer.
This is a
ridiculous proceeding. The work¬

President to report to

value.

prices to bear the

39.3%

—

political football.

relations "a football of politics.";

-by

peril the national health of safety.
Taft-Hartley Act permits such
strikes or lockouts to be enjoined
for 60 days.
At the end of that
period, if no settlement has been
reached, the National Labor Rela¬

tional health and safety, after
have been enjoined for 60

the best way

of

defects

the worst

vote

it

coercion

The

Addressing a campus forum of the University of Cincinnati ;on
Jan. 30, Prof. Sumner H>. Slichter stated ' that
although the TaftHartley Act had commendable features, the provisions requiring the

includes

V.

of

tions

—22.4

from

employers."

act

and

.30,1

$0.32

-at¬

with strikes

30.1

—

is

37.6

,

776

__L_.

whether

.coercion,

42.8

55%

_

570

economic

of

32.9

1231/2

401/4

"One

measure as
opening union's doors to all
protecting workers against discrimination, but warns provisions
dealing with strikes affecting national health and safety may make

24.5

0.74

Exchange,
Manufacturers Trust and Public
National, made well above-average
gains in book value, and moderately below-average declines in mar¬

With C. A. Botzum Co,

-

to choose

from

Slichter said:

Prof.

38.3

-

or

Regarding

Y

38.1

v,

Act, but Wains of Abuse

Guaranty's book value shows the greatest increase, with a
gain
of 15.3%, after adjustment for 11.1% stock
dividend, while the mar¬
ket decline of it's stock was well below
average.
Corn

In order for bank stock

44.5

-

Harvard economist lauds

was 7.2%, While the average decline in their asxed
prices was 22.4%. Maximum decline was the 35.3% of First
National,
whose gain in book value Was the
lowest, after U. S. Trust.

oook value of

1

+

"

21%

them

unions

''

Slichfer

18.2

86%
40%
570

,

.

book

}

__

Trust--__^-

AVERAGE

21.1

two-year period

The

541/2

25.Q

O.ST.

Trust.

ket

72%

City

York

393

v

0:

free

regardless

economic

tects

37.4

."58.8

52V2

20.1

0.69

"Adjusted for. 11.1% stock dividend. ; fFor comparative
purposes,
S4o-transferred to Pension PUnd.
includes City Bank Farmers

The

25.9 v*

-

'

2,065

,

41

35.3

0.75

$1.14'
,

73F8

11,300

Trust

I

AVERAGE

251/2

53*%

2 0.4

0.95

1,300

5i'Vu

50%

,

19.4

60.03

114%

767.74

20.0

' 302
15%

1.21

50

20%-*

33.1/

22.3

7.3

20%

.

M00.70

44.59

Trust—___>

7.3
8.1

0.71

2 2'. 90'

.66%'

48.89

0.84
C.99

41%

1.367.46
v

99.82

Trust._______

Bublie.

36 Va
"43

58,12

1.51

1.39

21

54.85

<

City

York

2.010,

,1 378

22.08

Manufacturers
New

53.34

1,333.79

__-_i.__

Trust

"

!

coercion

;;

entitle^'

ar

unions

with

only

ers
only against interferences; by
employers with their freedom, of
choice;, the Taft-Hartley Act pro¬

34.9'

.

55%

24.6

47

T;\'

.

18.3

1.08

34.32

&

42.7

56" /-v v

v

-

:

-21,6

40

40.02

Ik.

iJi%

43'

dealing

tempted by employers o.; unions.
The Wagner Act protected work¬

38.4

%

27.2'

370

50.25

Commercial

"Continental

.

1

'

456.03

CheQ'ical Bank & Trust
National:—

•' 92

15%

U.

; Mkfc.

1.08

122

■

501/2

I

Public

% Change-

1.17

55:! 4

& Trust

:

their
that

46.9

+

S

1.17

472

436.20

_______

for $1

H

$

30$26

Manhal'tftiw.

Bunk* of

Price

Price

1-30-48

r

(272

New

B. V,

33.1

58%

.

I

National

12-31-47

36%

41.I/2'-

■

_>

Manufacturers

A-ikcd

.

•

Irving Trust

Market.'

Price-

492 %.

Guaranty. Trust—:

'

Market

i

National ___Y

First National

;

.TABLE

+

.

Continental Bank

Values and market, prices of; 17 New
of today, compared with two .years ago.

Askrcl

!

Corn Exchange

book

the

C.ty bank stocks

Hanover

' 40-

•

Chemical Bank & Trust--1
Commercial

46.6%
"

Nationak

Central

Not everything has moved up' in- price tinder inflationary ptes*
For example, book values of leading New York
City bank
stocks are selling
nearly 30% lower than they did two years ago.
Currently,- ode dollar of book value can be bought for an average
ci $0.82, compared with a cost of $114 on Jail,
30, 1946.
.,

siife.

'

firms

"Workers

Appreciate

37%
'

CIO

other CIO firms.

Potential

•

'

Bank

York

of

Asked

•A
'r».*

1891

18 Clinton St., Newark

Teletype—NY 1-1248-49

principle

administration

of

disi*

pline by unions is affected with a
public interest is an important
step

2, N. J.

the

The

dues.

the

of

forward.

to limit the

The

area

law

Benjamin

attempts

of industrial

A.

Baileyv

John

L.

Shea,

Jr.

Sumner

R.

Wolley

con¬

MArket 3-3430

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

N.

Y.

Phone—REctor

2-4385

Royal Bank of Scotland
Incorporated by Royal Charter 1727

WHOLESALE MARKETS IN
BANK and

V'

INSURANCE STOCKS

HEAD

OFFICE—Edinburgh

Branches

throughout Scotland

LONDON OFFICES:
3

fiEl'ER

CO.

8 West

49

.INCORPORATED

NEW YORK 5:

67

WHITEHALL 3-0782

BOSTON 9

CHICAGO 4

SAN FRANCISCO 4

231 S. LaSalle Street

210 West Seventh Street

tyUbbard 2-0650

FRAtiklih 7535

Michigan 2837

YUKon 6-2332

BS-297

CG-105

LA-W6

SF-573

Russ

Providence,

Enterprise




7008

.

>

'

ASSETS

Portland, Enterprise 7008

Detroit, Enterprise 6066

£141,823,667

Wilfred

Associated

;

„

Williams

Deacon's

Day

;

.

%

Banks:

Glyn Mills & Co.

N.

Membership:' Benjamin A. Bailey, Dayton Haigney & Co., Chair-,
man; James A. Morrison, Baliou,- Adams & Co\ y -1
; •
.
*
v • • v Quotations:
John L. Shea, jr.LSftea: & Co., Chairman; Frank S.
Bre*eh, Schirmer, Atherton & Co.; T. Edmund Williams, Hooper Kimbali;, Mc.; LR>yd B!, Waring, Kidder,' Feabody & Co.
;
%
;

«

PRIVATE WIRE

Hartford, Enterprise 6011

TOTAL

Building

SYSTEM CONNECTING: NEW YORK,
BOSTON, CHICAGO,
CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO
TO:

.

,

64 New Bond Street, W. /

NY 1-2875

10 Post Office Square

TELEPHONES

Smithfield, E. C. I

Charing Cross, S. W. I

Burlington Gardens, W. I

IWall Street

LOS ANGELES 14

I

Bishopsgate, E. C. 2

*

Bank, Ltd.

,

.

.

v"
.National; Comrnitfeemeri: ' Sumner R. Wolley, Coffin & Burr,. Incr.y
Ahtqh E;< Homggy,.; du Font,I Homsey Co;; Paul B- Monroe,. Hunnewell
t & Co.; Wilfred N. Day,: Chas. A. Day & Co. „. ',,
'

...

t

>.

'

"

'.f »■.'* f,

r '< >..f

■

t

'

«*

.

"

,

Volume

•

167 Number 4670

"

THE COMMERCIAL

&

.jj£ S. Senator.from- MassachusettsSenator Saltdnstall cites

'c

the pressing issues

as

1'jy;

*

\

-

r*1

• .<

before

;

Ok

:

i

not for."
•

^

^

-

,

''
"

'

•

favor,

our

of

from

the

endeavors

of

the

Federal

now?

ased

-his

very

treasury
i 11
b e

your

i

w

be

to

.

.

I ask you
guess

Sen. L. Sa! tons tali

ed

u

h

w

I

authority to act

my

ihdiviiuais
ja-t,

dis-

as

that

affect

der

Thomas

Ralph. A. Young

-

i

the

lished.1
could

System

Founders
have

not

estab¬
System
all the

was

the

of

foreseen

system, government can-; exigencies with which monetary
It was not and must not make
all tne:de- policies would have to deal during
ng on the ji i^io. s for a*I of us on all
subjects; the -years to follow. They were
floor of the Senate Jan. 6, 1848,
For ill is we thanK God'
impressed with the needs for an
100 years ago, ' We were then at
ji.A>7 h"hlWv elastic currency, for the mobiliza¬
War with.Mexico.. Yet, how truly <
tion of the scattered reserves of
do his words apply to
present-day ,i ;
the banking system, for reducing
Whal Xe
conditiors,
The
government is
ike reliance of that system upon
\ h' t must be imade? by ^
asked to spend
than
1948,

it

but

wasn't.

our

.

heavily
before in peacetime; the de-.
more

V

;

ever

mands

crnment in the

aid

Tinge

'

;

upon; our

industry

our;

stock-market credit

1948? LongEurope aah GhKia,-

to

heney

are

ihese

purposes

serve

System

our

>

and Sicily—insurrection in

;/;• Prague and Rome.

ill

appropriation
possible fer -our

Berlin,,

Prussia

was

at

bills

making .it
government 3^to

'to* create
*

preparing; / forwar
■?\±:eagainst Austr ja/candV-^herewere
were

disorders :in rlreianct;;

'made

were

that-

toward

Federal

given
money; This
was-

Re

power
power

through; the lending
and ' investing
activities of the
Federal? Reserve
■

>

J For.

ieo

paper

\y

Banks:
t

.

wh ich
7

.

-vV-' .S-,

description of this development

a

the

serve

;"

"Three

Decades

of

Federal

Re¬

Policy," by Karl R. Bopp, the hrs
in this pamphlet.
*

•

.he

U.

In

consider'hg these problems
to. remember

that

ik something

government

our

live

to

Federal

Reserve

System.

present-f

the

general,
thinking behinc
followed by
the
3 stem during recent years, although the
Explanations
given
are
those
of
the
it

aims

to

of

■many

the

policies

c greater political
unity and greater UNDER and not ON. authors and- should not be considered as
#V-f freedom - in: Italy<$ France, AGer;
Last autuhmi -as' a; member of ,-epresenting the official views of the Sysem authorities
collectively or individually
many, Austria and Hungary, and
t^e Sciate Committee on AppiOr-A: the events of-1848- had "the effect
.^riations,.. i ; v i:sited England,
;:'Reprinted from "Postwar Eco¬
..'
of contributing toward the resur¬
Fra ice.: Germany, /
Austria,,, the nomic Studies, No. 8;' November,
gence of political unity and indi¬
ree
city of Trieste- Grbece and
vidual freedom.
1947; entitled. "Federal Reserve
What is under
Ttnly.v;-V'In all these countries";we
debate in Europe
today is not en¬ talked with' the Prime
Ministers Policy"/and issued by the Board
tirely dissimilar.
-nd other officials.
of

1:

;

.

,

'

We went into

*

1849

Europe

the

immigration from
America* was at the

to

rate of 1,000 a

day. People wanted
of Europe 100 years

to

ago

•

...

I

get out
AND COME

saw

TO

AMERICA.

plenty of people in Europe

last autumn who want to

America

in

'

1948.,

come

'? ..."~ ?;/ '

-

to

^v'

Two1 hundred years ago, in 1-748,
the Peace of Aix-la-Chapelle was

signed;
the

:

7

;

Spain

and

Prussia

only gainers by that

were

war.

i
i

carried

off

40,000

?

In the year

say.

Experience

for

serve

'48,; for the past 300

today- ''history repeats itself.'';

that effective limitation

commercial

through require-

to reserves,

as

notes, and

that

collateral for

types of assets to be
System was also given

The

certain

discretionary

in

the

fixing

It

appears

of

powers, as
rates.

it

is

formulated

discount

Federal

the

the

from

discussion

preceding and accompanying

pas¬

Germany
failed

to

;

v -.

"

.

,

work out

and/Austria
date.' 'We

We

are

country
:

a

and

We
of

came

chatted

women

horpe to

the

on

where

our

men

we
we

government., If

i

are

want
we

with

of

Governors

the

Federal Re¬

System.

serve

to

free
to

to
run

don't like

total

Jail."'15-,:i'94'8-.




by

the

authorities

for

of bank credit and money,: as well

Reserve Board, that some degree
of judgment and discretion was

credit

expected

to be exercised in the
determination of the System's pol¬
icies and that the general objec¬

of

tives of these policies were to be
the maintenance of sound

banking

by the Federal Reserve System in
efforts to meet the ever-changing

and monetary conditions in the
'interest:of economic stability. It

requirements of the credit system
has brought about the develop¬

Was widely recognized at the time

ment

that the

Various

previously existing bank¬
ing and. monetary system in* this
country had intensified the devel¬
opment of booms and depressions
bid had been responsible for the

Spectacular panic phase of
cyclical variations. :
,

those
;

;

tations in the Act apparently were

with/ the

thought

tors,

that,

Federal

discovered

to

credit

expansion

practice, and at¬
eliminate or moderate
found expression in

many

amendments to the Federal

of

the

said

Taking the history

as

its

that

the

in

Act.

Act

/'oTars

through

the

months

rf

half

over

to" carry

System

,

cold

this

the

■

■'

the

be

prevented.

Federal

History

Reserve

System

of

a

proved Interim. Aid
knew

that

would be

no

on

recovery

i"

,

a

id

has

shown,: however, that these me¬
chanical limitations have in prac¬
tice not operated in that

They

have

often

been

strictive when restriction
desirable

little

or no

restriction

have

and

manner.

most

re¬

limitations

We

restraint at times when

the

of
in

not,

chance for

a

-

Plan,; before

us..

-

we

We

we

there

specialize in and offer

our

■_

ifi.

,f,

t1

\■

.

for the

■'

have that

On. the

Senate

M

"V'

'*

of all these- great problema^

sonally; -t; feel- that;
ment

must

aid

our-

/I*'/

banking

a

way

of

defects

1929-33.
was " a

Banking
the

Acts

Securities

purchase and sale of

BANK
Our

Per¬

,

■

STOCKS?

an

year-end comparative analysis of

country's leading banks is

un¬

y;

that is

now

sent to you upon

a

request.

of the

group

in- print. A

recently;
jhihg that is really hap-?
pening, therefore, is that through
of

the

descendants

of

European
immigrants,! the
divided, uneconomical, conflicting
of

Europe';; have

brought together in

a

" been

common en-

tPiiHricp that hn-o-nncci-hilifi^c

terprise that haspossibilities
?s.'••••. (Continued on page 34)

o\'7c>n

even ;i.

••

\

r

•9

14 Wall Street

copy

will be

;;;v*|;;

inv.

New York 5, N. Y.

Telephone REcto.r

2-/000

Reserve powers, as

not

dealt

with

of

objective

these-

the
of 1933 and 1935 and of
Exchange ^vct of 1934.
1

facilities

New York "Times" wrote

initiative

initial

mechanics^

Correction

major

(Continued

administratively

the

the

these

structure

■

govern-:

Europe in

derstanding way-f-ii

Reserve

previous legislation, were sharply dem¬
by the financial and banking-

;

side it is being
actively considered
imder, .the leadership of Senator

in

Federal

decision

long-range European

plan; Now

by

in¬

authority

onstrated

needed. 'As a con¬

was

on

ap¬

because

did-

we

making

the

be

been

well as in the scope of the System's dis¬
cretionary authority and in certain aspects

crisis

was un-r

contributed

defects

hungry

>

can

has

Federal

implicitly

2 Critical

countries

winter.

of

explicit

to

billion

a

these

whole, it

a

evolution

direction

of

unsound

effec¬

policy have been

in

have

granted

would

,

policy.

the

on

them

creasingly

and

Reserve

limitations

tiveness of credit

tempts

y

of discretionary powers

use

of

reliance

limitations.

and

The

main

rather than fixed !:

System,

iby setting bounds to the exercise
discretionary power, excessive

the

be

must

the

rules

Reserve

,

Automatic and mechanical limi¬

designed

the specific availability of bank
in particular strategic sec¬

as

Congress and approved an-ap¬

propriation of

nations
i:'An address by Senator Saltonstall be'pre the Econolhic Club of

York,

pursued

of

special session

a

"

New

provide

sage of the Act and from its grant
of broad powers to the Federal

have Vjothing; "r- As James.;,Restore of tbe

yet

live in a.

we

to

influencing the
supply, availability, and cost

streets.

treaty with Japan/ V;; J'The big

proud that

choose the

but

have

and

Reserve

purpose

.

•'

impossible

specifically in-any credit and mon¬
etary statute for all future con¬
tingencies. Consequently, policies

■

'7

exces¬

on

sive and unsound bank credit ex-;

w

'

;

demonstrated

as

and ; financially
7 -i's; f. M jl 94&'w4?h a vie?^aeexti^attes; Found—over i the
nexf; few [years.:
signed with' Italy, ;;Bulgarihi ^Ru-i X am firmly convinced that it-is a
>'
mania, and- • Hungary.
Wei have far better .risk tor attempt'1 to
tried to work but treaties with ahead with
some plan; than to, do

;

statutory limiV
banking

has

The

years; peace, and. war .have been
viV the vital .issues.; Soy we can truly
rn

factories .', and

men

.

yandenberg, who has proved" himVelf ; to
|be a- truly patriotic,
thoughtful
and : understanding
revolted ; and, American
citizen in the handling

prisoners.

J Ukraine Cossacks
defeated the-

.

the

in 1948

Three hundred years ago, in
1648, the Peace of. Westphalia was/ signed, > and ;pfinciple of the bal¬
ance of poweriin'
Europe was fi rst
recognized; yet the Khan of iCrimea raided Russia and Poland and
;

-

>

base

these

.

•

In

reserve

which

in

tations to meet changing
conditions.2

-

; This paper,- represents the results of
study- and work by many persons within

?Beginnings -welwanf'-

year /

new

the

exercised

S

.;'f?.war with,JDenmark-tThe Hungary;

;vA,:-ians '£

market, and for avoid ng
panics, . To
accomplish

money

^

-

the central

as

year

agriculture and
;'he strength bf our-Armed Forces,
the greatest in
n particular the future size of
history. Let's take, a look at
pur
j - ir arm, taxes, the. whole question
Vr; ''the; year; '48 inv
f . One hundred
f
inflation^ rent bontrol, miniyears ago; in 1848,
mum wages/,
housing^ health: and
;,V: • we signed' a treaty of peace with
Mexico on Feb. 2; yet in. that same Jadrcutional programs,, reciprocal
v?year there were1 revolutions in I rade agreements, protection/ of
V- Vienna, Budapest, Poland, Frahce j:'n lividua! fights and nece^safily,i'/

terations

•

Senator; Calhdiin, speak

h

funds

field.
which

i/nust be made by government and
in tmust
be made'by individuals. Ufn-

the United States Senate in Janu¬

cost of

rnents

all

us

with

eral Reserve Act

Woodlief

this statement

ary

sequence, during the life of the
System there have been many al¬

to., their re¬
the Reserve

pansion under changing economic
and banking conditions must be
";v,y accomplished primarily by the ex¬
Certain largely automatic limi¬ ercise of discretionary authority
tations upon the System's opera- gather than
by automatic or me¬
ions were imposed by the Fed¬ chanical
means,
for the reason

free to think and

are

decisions

balances

the

-

e n

It could have been

made.

was

perform the public duty for

be

can

bank credit.

one-

.an

ever

add

to

or

and

was

-

Statistics,

to

the-lending and in¬
vesting activities: of commercial
banks by
regulating the supply

the
Governor. Thus,, in. a year of dei /ion in a country where such a
to j cvernment still exists and where

where

and

because

y a plurality of less t
kird of 1%; yet no one

drained to the

h lpttom.

true

and

System

influence

can

Governor of Mass ichusetts -

e cted

.

,

authorities

banks. 'The-Reserve banks in turn

-the

i'oy

great;
danger ;
that
at ; last t

-

Reserve

by member banks to obtain

serve

we have always abided
will
of
the
majority
.with, a drain; whether it is a big majority or a
both ways / h->"e:y small one. I
personally.know;"

is

Reserve

currency

We-Likewiie

stan di n o w

there

Federal

.

in

•

'

the

make available funds that

.at'jNVhgt. t'lesedgovernment officials
X ' the .other. But,
o, .we can vote-td kick them out
I' Ahpw stands the ,s of all-ice .without fear of violence;
case

of

I
Federal Reserve policies have-evolved from experience in coping with the chang¬
ing problems of the 30-odd years of the System's existence. This evolution has developed

money market at present?
An unfortunate famine in Europe

agricultural products. .The' balance
of one end of the sub"it
-^"7... V-: * .V

treasury,
;V poured

Governors

YOUNG*

,

If money poured out

'

5

Board

■

H.

Research

analyze financing policies in transition period and consequences of low interest rate
policy. Discuss
proposals for additional credit controls/ and conclude credit situation in postwar period is likely to
;;; be unstabilizing influence upon the economy and some further credit controls arfe required.

h

"Now, sir, what is the condition of the

of trade was in

RALPH

Research officials of Federal Reserve Board review System's credit
policies arising out of war finanwar loan drives and wartime expansion of bank credit and
money.
They

;

Asserts necessity of Marshall Plan, bat it must be backed ;
up with our armed strength and economic might.

Last year it? was most
flourishing.
; created a great demand for our

15

icing, stressing the effects of

■

J:>- /*

;
;

,

I;;';

AND

Director and Assistant Director, Division of

/

V

govern-;*
v'
ffyi mailtLong-range aid to Europe and; China, strength of our Armed
.Forces^ taxes, inflation,:rent control, minimum • wages/ housing/
; t
trad? agreements,' and health and education; in settling of which
vj
we must remember that "government is something to Jive undel' and?

(611)

By WOODLIEF THOMAS

:

;

our

CHRONICLE

Problems of Postwar Monetary Policy

|i;
By HON. LEVERETT SALTONSTALL*

FINANCIAL

..

I

on page

36)

of

.

16

THE COMMERCIAL; &

(612)

FINANCIAL

CHRONICLE

Barbour, Smith Co. Adds
(Special to

The

The

Change in London
Stock Exchange Organization

Chronicle)

Financial

LOS ANGELES,

CALIF.—Bar¬

Smith

& Co., 210
West
Seventh Street, members of the
Los Angeles Stock Exchange, have
added Dorothy J. Reilly to their

bour,

By A. M.

staff.

By HENRY HUNT

$1,311,000,000 to
increase of $98,000,000, despite a shrink¬
age in market value of portfolios (after distributions of some $22,000,000 in security profits) of $80,000,000. Gross sales of hew shares
totaled $267,000,000 as compared with $370,000,000 in 1946. However,
liquidations reduced net sales to $178,000,000 as compared with $226,-

your

the two

upon

request from
or from

NATIONAL
RESEARCH

&

SECURITIES

above average

growth:

*

-

Fund—-

% Increase

1947 Year End

Sponsor—

During 1947

New England

:7:;.J:

Fund

:

Lord, Abbett

49%

W. L. Morgan

34

*$32,877,000
48,908 000
Fundamental Inv.
**Hugh W. Long
27,589,000
E. & Hi Balanced
Eaton & Howard
31,408,000
Putnam Fund Dist.
George Putnam
23,062,000
Nat'l Securities Series Nat'l Sec. & Res. Corp.
45,538,000
Boston
Vance, Sanders
27,987,000
Tnvestors Mutual
Investors Syndicate
.108,612,000
Manhattan Bond
Hugh W. Long
26,673,000
Chemical Fund
/;
F. Eberstadt & Co.
23,365,000
*

ORGANIZED 1931

"

*ExcIuding $9,000,000 bank loan.
.7
**Sponsors distribution of shares only.

;

General Distributor

;

best

Incorporated

1947
.

BOSTON

i 7''

NEW YORK

funds

PORTLAND
BANGOR

the

In

number

posi¬
tion, Affiliated Fund is currently
invested

in

one

stocks, and
the only mutual fund with direct
leverage, i.e., bank loans.
Wel¬
lington Fund, the runner up, is
an ably managed, fully adminis¬
common

Bonfl fund

Here's

to

continued

INC.

1948,

growth

it witness
the Mutual

may

in

Fund business.

Required Reading
"Let's
E.

Wilson,

by
of

Charles
General

be

may

obtained from the company with¬
out cost. The following is an ex¬

At:

S T11T

NE W

YORK

5

is

cerpt:
x

HUGH W. long & CO.
V.

N

"What

what

Americans

this

have

with

Fund;

a

statistics
an

area

population

on

2%

see

the

compara¬

U.

times

some

50%

S.

S.

ours

R.

and

greater

than that of the U. S.

Chili today and hot tomale.

investment funds

16

.

14
14
*

12

CSeries B1-B2-B3-B4)

preferred stocks

is

the

has

sea

it

past

useful purpose
to
the
Ex¬

bers could in

mem¬

to the

value to the Stock Exchange mem¬
bership which would afford more

or

some

way

gamated it would give

be amal¬

capital

a

security to engagements between

the

members

and
assure
a
greater
community of interest and more

year
A. M. Sakolski

don
Stock
solidarity to the institution. Con¬
has
already
Exchange, which is said to have siderable progress
toward this
been formally organized in 1773, been accomplished
but whose activities as an organ¬ end by the
requirement put in
ized body does not go back of force that each Stock Exchange

1798,

was

meeting in the Rotunda

of the Bank of England or at the
Stock Exchange Coffee House on

Street.

Because

of

trade

member subscribe to< shares in the

owning and operating
organization's premises.
At
the present time there are 20,000
company

the

shares with a par

value of £720,-

000 ($2,880,000) but with a market
value of around $15 millions. 90%
of the shares are held

of the Exchange.

;

by members

/

■.

,

-

/

Though there is still no actual
accomplishment of
the
London
Stock
Exchange
reorganization,
there has been a practical merger
since 1945 on a provisional basis
of the two traditional bodies—the

"Trustees and Managers of the
"Investors, too—whether they ture. A* group of the Stock Ex¬ Stock Exchange" and "The Com¬
mittee ior General Purposes" into
Jarge or srtlall—are charged change members
having acquired
with responsibilities.
new
Times have "a centrical location" in Capel a
general
administrative
not
nor will they
change Court raised £20,000, which they body, known as "The Stock Ex¬
for
them.
For
always
'these divided into 400 shares of £50 change Council."
7, 7
be strange waters' in which they
As stated
in Harold Vincent's
each and founded what is today
.

.

sail.

.

Even

courses

the

.

and

the struc¬

own

.

most

beset

are

shoals, adverse
ing currents.

familiar

with

tides

and

hidden

known

the London

as

change.
have

of

increased

been

and

recently published little book on
the London Stock Exchange, "The

venture

Stock Exchange Council is the full

Stock Ex¬

capitalization

The

chang¬ number of shares

"We like to think of those who

the

from

time

to time, as the size of the quarters

body
cisions

responsible for major de¬
on
policy.
To deal with

enlarged.
Moreover*
the routine matters; it sets up a num¬
were
distributed/among ber of committees, which handle
matters
as
admission
of
the members as well as outsiders.. such
These shares have paid relatively members, j commissions,
country
handsome dividends.
7
- 7 ■ v
>£ exchanges, the Stock Exchange
Lists, new issues, disputes and* so
The shareholders are in effect
on.
Finally, I must mention the
the proprietors and operators of
Share and Loan Department. Thisthe building, which is occupied by
"The House" (the membership of oddly named department does a
mass of routine work, the volume
the Exchange).
Through initia¬
of which was greatly increased
tion fees, assessments and dues
be mine.
But I know I need a obtained
during the war years by reason
from
Stock
Exchange
of
the securities control duties
pilot aboard—some one to help members they operate the struc¬
guide my investments through the ture and pay the wages and sala¬ undertaken on behalf of H. M.
rough waters and ill winds.'" ;
ries of the employees of the Ex¬ Treasury and the; Bank of Eng¬
land.
But it does a great deal
change. /;■/:'•v>:/; ■
'///.
more than routine work. .Its Sec¬
College English
"A";
invested

have

Putnam

Fund

in

shares

of

The

as

was

shares

.

.

According to the New York The Government of the Exchange
"Herald Tribune," in reply to a
The general membership of the
survey
among coeds
as to why Exchange has
its own separate
women
go to college one wrote: organization and has been gov¬
"I
came
to college to be
went erned by a "Committee of Gen¬
with, but I ain't."
eral Purposes," 1 consisting of 30

of

99%

stocks

Chicago,
it

if

or

we

are

a

bear

The historical odds

beginning to favor

termination, of
the
some time this year.

Keystone Company

in

already is longer than
of the preceding 12

and

is

a

As

of

Dec.

31,

strongly'a

down-trend

Secretary.

more

cer

or

less

a

The Secretary
permanent offi¬

and handles the affairs of the

than

one.

To

He

is,

among

other

ture

a

a

somewhat disconcerting in¬

fluence in their interviews! Cooke

it

is

who maintains

contact with

the Press, handles Stock

him

;'s

"The Dual Control"

Exchange

nothing

Francis

sleepy

about

Major

Reform

Cooke."

This

"dual sovereignty"

the
system has been called has been
attacked

on

a

number

of

as

No

occa-

As

in

1948, The New

England Fund reported net assets

things,

aplications
for membership are made and he public relations generally, and is
responsible for 'ideas' at large.
promulgates
and
executes
the
He has a habit of blinking ,at you
rules and regulations governing
sleepily
through
horn- rimmed
the members.
spectacles.. But, believe me, there
organization.

average

bear markets.
are

Francis .Cooke, is £ sur¬
prising young man in more ways
retary,

connoisseur of pictures,
and he hangs his favorites on the
walls of his bffice/l.At orie time,
they included a portrait of Joe
members that are elected annu¬
Notes
Stalin, of all people.. Hardboiled
ally. This committee elected its
Tory stockbrokers found the pic-,
in market value < of own
Chairman, Deputy Chairman,

longer.

the
Prospectus from

time

some

be

market

(Series S1-S2-S3-54)

for

of the shareholders and the mem¬

of

According to "Selections," pub¬

common stocks

been taken to abolish it.

ever

However,

has been held that if the interests

Threadneedle

history of

tradition

lished by Selected Investment Co.

bers of the New York Stock Ex¬

already

the

stated, this change

London

administrative

Stock

structure

Exchange
is

hot

a

$2,855,000 divided as follows: change states: "In our opinion, the measure of reform nor does it
governments, 23%; other open-end type of investment trust ind;cate any pronounced change
bonds, 1%; preferred stocks, 8%;- provides a most suitable security in the present British Labor Govunder current circumstances for ernment's attitude toward the m*
and common stocks, 68%.
In a recent bulletin on mutual the average person who has idle
j stitution. It may lead to the inI
(Continued on page 40)
funds, A. M. Kidder & Co., mem- funds."
of




London Stock Exchange as a selfgoverning body, no definite action

at

tion to build

(Series K1-K2)

Boston 9, Massachusetts

al¬

century
half,

which

policy. to interfere as little
possible in the affairs of the

as

1802, the Lon¬

now held
by M. I. T.
paid dividends last year and over
81% have paid dividends consec¬
utively for the last 10 years or

Congress Street

for
a

ment

ex¬

a

In

/7./>/''''

"Old as the

itself

the

bonds

50

structure

which has

■

Over

in

of Boston

slons during the last century, but
in line with the British Govern¬

public.

■;// /-7V

investing their capital

tke

<S>-

change
an
original
plan

bers

16

The following is a good exam¬
ple of the facile writing of Charles
M. Werly of The George Putnam

accom¬

Mexican Weather Report

Certificates of Participation in

local investment dealer

This proposed reorganization should
It is merely
a
"reform measure."

change

17

Fund:

7*

"

the present
time serves no

having taken a
For whether their
of the world's area and 7 % of pilot aboard.
savings be but a few
the world's population, we have invested
46% of its electric power, 48% oi hundred, or many thousands1 of
its radios, 54% of its telephones
dollars, they have in effect said
I have59% of its steel capacity, 60% of this: 'This is my cargo.
its life insurance policies, 85% of gathered it not only for myself
Its automobiles and 92% of mod¬ but for my family. • I know my
destination—my course is planned.
ern bathtubs."
The security of a safe harbor can
We would like to

ian
Oustoai

of

record

plished sis compared with the res
of the world?
Briefly, with 6%

tive

your

reorganization.
interpreted as

to

move

and

22

Taking the Pilot 'Aboard

.

Free,"
President

Stay

Motors, copies of which

Prospectus from your Investment Dealer or

a

a

be

way

unsatisfactory facilities, the mem¬
'taking bers decided to build their own
the pilot aboard' while traveling
structure for transacting business.
in
strange waters.
Actually, to But it was
necessary to obtain the
tered fund (bonds, preferred and
shipmasters charged with the re¬
necessary funds for the purpose.
common) that has maintained for sponsibility
of« their
cargoes—
As the Exchange itself was an un¬
everal years a sizable cash posi¬
representing in many cases great
incorporated body, it could not,
tion which it is now beginning to
fortunes—the sight of a pilot clam¬
as an organization, erect the struc¬
invest. Fundamental Investors as
bering up the ladder was a wel¬ ture
or
borrow money for the
a
rule is fully invested in com¬ come one. even in familiar chan¬
purpose. Accordingly, a plan was
mon stocks and has an excellent
nels. But the sea is not alone in
conceived of forming a corpora¬
long-term performance record.
this tradition.

Manhattan

■i-j

28

the^——'—"■

showed

quite dissimilar in char¬

were

acter.

HARTFORD

which

largest percentage growth during

undergo

no

and

Generally speaking, balanced and income type funds enjoyed the
demand last year. However, it is interesting to note that the

three
A

Founded 1898

in

most

'

Coffin & Burr

soon

isted

Affiliated

Wellington

120 BROADWAY, NEW YORK 5. N. Y.

administration structure.

Reports are coming from London that the stock exchange, there,
probably the oldest organized securities exchange in the world, will

of

Net Assets at

CORPORATION

measure

a

and compact

an

000,000 in 1946:
Although the overall gain in net assets was only 7%%, the fol¬
lowing funds with assets in excess of $20,000,000 each showed well

investment dealer,

proposed change in London Stock Exchange
to reform it, but simply to merge
governing bodies operating it and to effect a more efficient

Organization is not

Net assets of leading mutual funds rose from

$1,409,000,000 during 1947,

SAKOLSKI

Dr. Sakolski points out

Assets Gained $98,000,000 During 1947

Frotp*c*n

Thursday, February 5, 1948

cash and

THE COMMERCIAL

Volume 167 Number 4670

First National Bank of Boston says

staggering,

so

we

are

National Debt and Budget are
vulnerable than quarter century ago.

more

CHRONICLE

A. S. D. District 11

Budget National Security Threat N.

Calls Swollen

FINANCIAL

&

"stagger¬ been elected chairman of District
ing," and holds "every conscientious effort" should be made to trim No. 11 of the National Association
items, or our national security will be threatened. The bank con¬ of Securities Dealers, Inc. v
\
tends our fiscal capacity will be^
J. Murray Atkins, R. S. Dickson
so
impaired by the size of the magnitude to spend beyond our & Co., Charlotte, N. C., was chosen
and
Martin
J.
budget "that we might not be able means in peacetime only to find vice-chairman,
to meet the financial requirements
that our fiscal capacity has been Bayly of Philadelphia, secretary.
so impaired that we might not be
in the event of another war."
The District also announced the
Commenting on the budget, the able to meet the financial require¬ election of Richard P. Dunn, Auin its latest issue scores the Administration's 1948 budget as

"New

ments in the event of another war.

England Letter" states:

"The1 President
mitted

recently

sub¬

budget of nearly $40 bil¬

a

lion for the fiscal year

beginning

July 1, 1948. ' It amounts to about
$2 billioa more than for the cur¬
rent fiscal year, and is more than
four and one-half times
in

as

the

fact,
the

the

amount

In
spent in

be

to

much

as

1939.

year

We have reached the stage where

Parker

&

Redpath,

quirement, namely, the credit of

Washington, and C. T. Williams,
Jr.*: C. T. Williams & Co., Balti¬
more, as members of the Commit¬
tee representing the district for
three year terms.
They succeed
George D. List, Robert Garrett &
Sons, Baltimore, and James H.
Lemon, Johnston, Lemon & Co.,

the nation.'"

Washington.

fiscal policy is inseparably linked
with national security. Or, as Sen¬
ator Byrd has
not

allow

perpetuated
devour

the

phrased it: 'We

wartime

in

time

primary

can¬

extravagance
of

to

peace

military

re¬

>

Model, Roland & Stone
To Be NYSE Members

Formation

Co.,

44

Wall

dealers,
&

Co.

in

the

Butler, Moser &

of

as

is

Street,

announced.

firm

are

Herman

securities
Shepard
Principals

William J.

and

Butler have

been

for

in

over

the

Stone

A/Cone

the

and

firm

of

of

New York

bers
are

in¬

of

City will become

the

Leo

exchange.

Model,

Herman

H.

Rolf

Stone,

.

R.

Herman

Frankel
will
continue
with the new company as trader.

Joins
.

Two With Hutton Staff
(Special

LOS
lene

L.

to

The

Financial

ANGELES,
Du

Four and

Groszkruger

;

Chronicle)

Bailey, Selland Co.

(Special

SAN

t.

to

The

Financial

Chronicle)

FRANCISCO, 'CALIF.—

Ellis O. Thorwaldson has become

CALIF.—Ar^

associated with

William F.

Bailey, Selland &

Davidson, 155 Sansome Stret.

have

joined
the
staff of E. F. Hutton & Company,
623 South Spring Street.

131

J

was

Co. and Blyth &

Co., Inc.

:

; to trim them down.

►V "It is to be expected, of course,
jthat Governmental costs will be

(Considerably
the

higher

u

before

tnan

because of

war

interest

on

1'

huge debt, international tensions,
and the

vailed

Similar conditions

after the close of

World

War

smaller

although

scale.

on

that

At

(j*

pre¬

nation's

finances

m

much

a

time, im¬

on

.

i /*:••

sound

a

of

thermore,

1922,

than

or

j ^

•'

.

/
t

jr- *

•

de¬

a

80%.

~

fmy

■■

,j!

Fur¬

indebtedness

Federal

reduced

was

by

more

a

■■■>

Federal expenditures were
reduced from $18.5 billion in 1919

crease

i

pi/
'

basis.

>to $3.4 billion

r\\j
'

tne first

mediate steps were taken to place

the

■r*

providing of aid for world

recovery.

qgN^t y

.

irlipf

a

almost

40%

during

the period 1920 to 1930.
"It

is

debt

gering,

and

we

times

burdens

our

greater.

mucn
our

that

true

changed, that

in

are

have

are now

inasmuch

But

budget

are

much

a

as

stag¬

so

more

vulnerable position than we were
a

quarter

should

of

ago/ We
fiscal

century

a

therefore

our

realistically

problems

face

and

chal¬

lenge all items, with the objective
of

eliminating

waste,

extrava¬

and non-essentials which in

gance,

the aggregate run into several bil¬
lion

dollars.

In

the

make-up

of

the next fiscal

year's budget, about
$31 billion, or nearly 80%, repre¬
sents
expenditures for defense,
veterans'

benefits

"cWANE

and

services,
foreign aid, tax refunds, and in¬
terest

on

about

debt.

$9

able'

items

and

are

real

any

getting

If

are

we

progress

financial

our

pur¬

'untouch¬
interest charges

refunds.

tax

make

other

only

the

to

toward

house

in

order, it will be necessary to shave

IRON

PIPE

COMPANY,

McWANE

tons

special

achieved

That leaves only

billion, for

But

poses.

CAST

incorporated in Alabama in 1922, has now

pressures,

per

day,

a

production of approximately 300

and is nationally recognized

the

as

and

leading producer of small diameter cast iron pipe.
The Company developed the manufacture of
cast

specializes

iron

pipe than

pipe,
any

and

currently

produces

factory-made

pipe: with

for

suitable

various

which greatly facilitate, installation jobs
particularly

are

equipping

in

joints,

helpful

shortage and high wages.

in

times

of

labor

-

2-inch
The

such

more

Company's 10 sales offices, strategically situ¬

ated

other foundry in the world.

throughout

the

distribute

nation,

pipe

to

all the other items.
McWANE'S huge Birmingham plant

National Defense
1

"National

the

largest

defense

state in

every

the U.

the

of

S.

and to

many

its Utah

and

foreign countries. In little

constitutes

item

single

practically

than

more

a

quarter of

subsidiary, Pacific States Cast Iron Pipe Company,
a

manufacture

pipe in sizes ranging from

century McWANE has become

through

Byrd of Virginia has said: 'There

leading producer

l^-inch
of cast iron pipe,

budget. It is placed at $11 billion,
28% of the total.
As Senator

a

with

an

annual output valued in

and special castings.

or

12-inch

diameter,

together

with

fittings
the millions. And the Company's growth continues.
At present it is

vast

opportunities for econ¬
omy in the Army and Navy, and
while
we
admire, respect, and
have great confidence in our mili¬
tary leaders, yet we in Congress
are

The

Company's

underground

for

cast

iron

gas,

pressure

water

is

pipe
other

and

its

used

liquids.

adding

Provo, Utah,

a new

and modern plant to

properties, which

will result

in

still greater productive capacity.

must realize that these leaders are

accustomed
it

'and

is

waste, even

in

degree,

to

the

waste

of

war,

Another

continue such
though it be in lesser
to

easy

time

of

peace.'

Southern
ern

advertisement

industrial

industries,

is

in

the

series

developments.

ready

to

do

its

by

Equitable Securities Corporation featuring

Equitable

part

in

has

helped

supplying

to

finance

others

with

many

capital

South-

funds.

The

Senator goes on to

point out that
in 1947 the Army and Navy had
times

five
i

as

ployees as in
average
cost

many

civilian

em¬

1939, and that the
of maintaining a

NASH VILLE

N

DALLAS

HARTFORD

KNOXVILLE

GREENSBORO

BIRMINGHAM

CHATTANOOGA

member of the armed forces was

much

Furthermore,

NEW ORLEANS

two
as

and

one-half times

before the

war.

as

the over-all cost per man in

the

armed

ex¬

services—including all

penditures for ships, planes, am¬
munition, and all other items—
was
only slightly below that of
the war period.,
"It

would' be

folly of




the first

MEMPHIS

Securities Corporation

E W

Y O R

K

AND

JACKSON

BROWNL<£E O. CURREY, PRESIDENT

322 UNION

STREET, NASHVILLE 3, TENN.

He

formerly with Livingstone &

n

"

""

Roland,
Frits

and

spent

staggering that tney must be subjected to the closest scrutiny, and
every conscientious effort be made

mem¬

Partners

20 years.

our

'

Model,

Roland & Stone, 76 Beaver Street,

in the first 124
Republic.
The pro¬
posed Federal expenditures are so
was

years

10

Feb.

on

Exchange membership of Herbert

Can-

dee, George A. Butler and Edna
Moser, the latter a former partner
of Shepard & Co. Messrs. Candee
vestment field

H.

will acquire the New York Stock

to

successor

fiscal year is 62% more

next

than

prewar

chincloss,

17

Formed in New York

BALTIMORE, MD.—W. Carroll
Mead, Mead, Miller & Co., has

The"New England Letter" of the First National Bank of Boston,

.

Butler, Moser & Go.

Names Meade Ghm.

>

(613)

TWO WALL STREET,

NEW YORK 5, H. Y.

18

.THE COMMERCIAL

(614)

Bond Club of

Chicago

(Gels Slate for Officers
CHICAGO, ILL.
seventh annual

.*/

.

U,

I

'

•

•

u

,

v

I

»

~

♦

CHRONICLE

FINANCIAL

&

I

,

'1

<

.

Proposes

t

Securities Salesman's Corner

dinne^ and meet¬

^ '

Rep; Sundstrom introduces bill in Congress calling for exchanged
of present dollars for new currency.
Treasury officials view pro-;

r

By JOHN DUTTON

ing of the Bond Club of Chicago

'

Posa'

'

will be held

at the

Chicago Club

Are

'

Wednesday, Feb. 18. i At that

on

time members
will

not

vote

the

on

for

cers

and

If any group of citizens should know and
which lie ahead it is those of us who are in
the investment business.
If organizations which represent our in¬
dustry such as the Investment Bankers Association, the Security
Dealers Association, the various Bond Clubs and Dealer's Associa¬
tions, the Associations of Customer's brokers, and the Organized
National Exchanges, do not realize these dangers—WHO IN
THE
WORLD CAN WE EXPECT TO GIVE US LEADERSHIP?

year:

ident:

r e s

L.

Martin, Burns
&

.

r

n

e,

Co. Treasurer:

Cummings
L.

George

Parker, Glove,

Martin
s

■■

Officers,

to

Doyle,

Leo

and

one

serve

year:

Doyle,

O'Connor & Co., Inc.; Perry Dry-

den, Paul H. Davis & Co.; Austin
Jenner, First National Bank of
Chicago; William D. Kerr, Bacon
:

Whipple & Co.; Nathan D. McClure, Harriman Ripley & Co., In¬
corporated; Nelson M. Utley, Hal•sey, Stuart & Co. Incj
A

proposed amendment to the

constitution and
be voted

by-laws will also

on.

The Club does not plan to have

guest

a

dinner.

the

at

speaker

mation, Key to America's Prosperity." It is not an alarmist's docu¬
It has been written by a group of leading economists, and

based upon recognized source material. The con¬
clusions are definite and the logic unassailable.
UNLESS TAXES
ARE REDUCED SUBSTANTIALLY ON INCOMES ABOVE $10,000
findings

are

WE WILL CONTINUE TO HAVE A WIDENING DEF¬
FORMATION IN THIS COUNTRY;- Un¬
circumstances inflation can only become more violent

annum,

per

ICIT

NEW CAPITAL

OF

such

der

production will decline, and an economic debacle combined with
flight from the dollar, is the final end in sight. This report makes
no such conclusions—but anyone who knows history, who has seen
the results of France's version of our existing New Deal economic
real

a

who knows anything about the way England destroyed
ability to produce through her refusal to accumulate better
tools and machinery, can come to only one evaluation of the future.
UNLESS OUR TAX LAWS ARE AMENDED SO AS TO EN¬
COURAGE THE INVESTMENT OF VENTURE CAPITAL TO A
MUCH LARGER EXTENT THAN EXISTS TODAY, WE ARE GO¬
ING BACKWARD AS SURE AS NIGHT FOLLOWS DAY.
'
policies,

her

or

own

.

generated

and intramural enter¬

enlightening figures taken from the NAM
report.
Do you wonder why the new issue market for common
stocks is in the doldrums, or the stock market
here's your an¬

tainment"

has

swer.

However,

will

which

dinner,

be

at

7:00

at

Members

6:15

.

.

of

incomes

with

the

Dean

the

Union Trust

G. Hamilton

&

Beasley VP

f

V(

.

/v.;

•

of consumption and 80c of

savings.

practically all VENTURE SAVINGS.

risk-enterprise

But these 80c of savings are
In other -words they go into

(common stocks).

-

to

over

U.

foregoing

the

The source

government.

S. Bureau of Labor Statistics.

*

is two studies made by the
s
a •
t

Street and

South

CALIF.

G.

—

Street,

Spring

So go

.

.

Exchange,
charge of

give

vice-president in
the underwriting de¬
as

of the

private capitalism, continue with their destruction

thing that makes American capitalism work. By your silence,
consent to those who keep on saying, "SOAK THE RICH."
is what they are doing
soaking everybody with an income

very

That

.

.

.

$10,000 a year. Soak them until they have no incentive left,
And that day is almost here . . . LOOK AT YOUR
NEW ISSUE MARKET
.> LOOK AT YOUR STOCK MARKET!

partment.

of over

to fight back.

even

.

Are

For

Profit
Preferred

85-year-old New

which

stock

of

an

England com¬
a
dividend

has
of

$77

share.

a

Earnings over the previous ten
years have
averaged $21.30 a
share.

of years,
nine of the past
covered annual divi¬

years

dend

are

number

requirements by

a

you

Write to

Ten-year
the

•
"Europeans and Asiatics always,
hoarded American" dollars,
both while; in their native land,.

strengthened""

There

ing them

atic

to

Frank

L.

the

accuracy

ability

$4.07

Recent

a

share.

to

Democrats
WHY DON'T YOU MEN THAT HEAD

.

.

ASSOCIATIONS

AND

EXCHANGES

waiting for? ? ?
the NAM and

/

ask them for

a

industry?

*=*'■"''; i"'"V.

copy

"

■

■'.;v

of their report on

Their address is 14 West 49th Street New York

,

'

it

States

government
would

huge

a

otheiwise

•

i

N.

Y.

Telephones:
aud

culation. No

them

knows how much

one

of this amount is

time

over

to

new

private

pointing

hoarded abroad

by

and

persons

our

HAnover

WHiteluill

business

interests.

partly

Estimates

work of

aVe

Established




^

.

supply bl
well

as

the

engvaving v/ould present

1

,,/: V

Stephen M. Foster, Economic Advisor of New York Life Insurance

Co., holds $800 million of amount will come from sales and
demptions of government bonds and remainder from excess of
sums

over

to

mortgages, building operations and loans to

business.

;>>•/->■

V

46 Front

rere¬

Sees large

payments, together with interest accruals.

committed

-y./;

■

.

Finance of the American Manage¬
ment Association in New York City on Jan. 14, Stephen M. Foster,
Economic Advisor of the New York Life Insurance Company, gave a

Speaking at the Conference

on

favorable estimate of the role of life insurance companies as a source
«>of new (funds
for

is

business

expansion.

In

discussing the
situation, Mr.
Foster
"I

during

year

Of

sense,

other

1948.

the life insur-.

,

investors.

Accordingly, it
to distinguish
disposal rof assets

important

-seems

between

business

ance

difficult.

vestment;

estimate

the

more

providing funds for rein¬
(/However, such sales
normally have the effect of di¬
minishing the investible funds of

a

stated:

that

little

a

course, to the extent to which we
sell some of our assets, we are, in

for

able

means,

the

our

and

s

..

municipal

■;■;

Street, New York 4, N. Y.

San Francisco

voluntary

one

bonds,

curity that we dispose of is bought
in or extinguished by the obligor.,

•

"First

(

and

as

to mortgages.

The life

mortgages, for both
new money and refunding, some¬
thing like $5,0 billion. But. since
this figure is somewhat higher
than most estimates of the avail¬

insurance business held about $8^

insurance invest¬
money,
I should like to
it down to
show .' you its

amortized, matured or otherwise
repaid, - one would; expect that
something in the neighborhood of
$1.0 billion might be returned to
the life insurance industry from

estate

real

ability

of

end of

life

have

new

in¬

funds

beetween

being the
the life in¬

for

all

purposes

In

in

the

Judging by the rate
in this group
,

past few years been

source, for reinvestment in *
capital markets during 1948. "Next, as to bonds and stocks L

the
-

■

other

than

of

those

the

Government., At the end

the

State

Federal;
of

insurance/business

life

almost

$18

and

1947

held1

billion of corporate,
municipal and foreign
few stocks. We might

bonds, and

billion; in 1947, it is estimated at
$3.2 billion; in 1948 it will prob¬

have, from this

ably be much the same at about
$3.2 billion.
■"
"The question of how to handle,

available

for the purpose

ernment security

of this discussion,
the liquidation of existing assets

•

this

It represents

insurance business has to

1947.

at which mortgages

life

is very simple.

,

billion worth of mortgages at the

merely the new, funds which the

difference

1913

other

or

the

call, prepayment or other causes
our control, where the se¬

t ock s,; v;1

Stated and

sale
on

beyond
Stephen M. Foster

•

Chicago

the

that

out

Estimates 1948 Life Insurance New

penditures

2-7914

dollar for

unpreceded difficulties.

pre-War Ameri-

on

industry's total receipts
from all sources and its total ex¬

3-9030

government and

currency,

the necessary paper, as

foreign

surance

Teletype BS 259

:

My

dollar, in exchange therefor." Y '
v; Commenting
on - Rep.
SundCongressman Sundstrbm said: V > { strom's proposal Treasury officials
: "As of
are
reported to have termed it
Sept., .1947, $28,567,000000 in U. S. currency was in cir¬ highly ( impractical /. and
costly,'

vest—these

For 35 Years

price 7

request

:

confi¬

quired for European relief.
..In making his announcement;

break

Over-the-Counter Quotation Services

St., Boston 9, Mass.

Tel. CAP. 0425

v

nationals.;

be. turned

receive

re¬

constituent. parts.

NATIONAL QUOTATION BUREAU, Inc.
State

which

unreserved

own

1946 this excess amounted to $3.5

148

today

require that, within :a
limit, these hoard¬
into the-central
government,: which would turn;

ings

sum

be

the

its

Asi~:

or

would

certain

of

selves; and would save the United

ment
t

Descriptive analysis of this
special situation mailed
on

of

States;

European

a

should

'plan would rob no hoarder, but

these governments to help them¬

which

not

here,

United

;

.government

dence

"The first part of the total fig¬

Common

is

commands

Sundstrom

Corn-.,,

munism and help to avert a Third
World War; would determine with

ure

in

enter1".; the

they

more

arrival

after

:and

hand, and, on
the
other
hand,
our
/ disposal;
through h- amortization,
maturity,

wide

earnings

of

:,J,, * '

N;y:■„

through

you

price 37

average

this

to make avail¬

.

margin.

Recent

that

billions

should be able

,

You are SUPPOSED to be the leaders of our

Capital Formation.
20, N. Y.

.

BROKER

AND

TELL THEM?
What

paid for a
earnings in
ten

Republicans alike.

DEALER

into

leaders of the

,

predominantly believers in our enterprise system—both
and

believe

run

represent Wall Street?

going to do anything about this

going to send some qualified, men before the Congress

you

v

have

■government
thereby enabl¬

greater

will

dollars.
.

explain what is happening to your business?
Are you going to tell purchase: of
hem what lies ahead for this country if PEOPLE REFUSE TO BUY- new issues erf
COMMON STOCKS, OR DO NOT HAVE THE MONEY TO BUY corporate
THEM? You have a Congress today that is composed of men who are
bonds;,'loans

dividends have been

no

you

various Associations and Organizations who
Are

While

amount

ceipts

...

conclusions are based upon what would have
happened to the dollars, the various groups paid in taxes, if these
ax dollars could have been retained by them, instead of being paid
The

members of the Los Angeles Stock

accumulation

authorities

effectively

•■

|' change manipulations. Competent

na¬

sending

resist

:

■

.

tions to which

$10,000,..the fax dollar < represents 20c V

ABOVE

Co.,

ANGELES,

pany,

******

the

those,

—

Capital Absorption at $5 Billions

Hamilton Beasley has become as¬
sociated with William R. Staats

GF Wm. R. Staats Go.

$5

oD

1

„■

properties;.(military expenditur'es by our government and, by
our overseas military personnel in
World War II; current tourist exh
penditures, and international ex-

g.o vernments

v:.

ahead if you like it that way ... sit tight and do nothing
go to the meetings of your various associations-. . . but be sure
to sit still and keep quiet. Let the New Dealer's, the Reds, the Pinks,
the Commies, the left-wing, politico-economic advisers, who sur¬
round the President, and all the rest of the congenital haters of Wall

The

nancially

currency and give new cur¬
Mr. Sundstrom claims that if the

■■<$>

Pig>; can

Would greatly
strengthen fi¬

.

McCormick,

■Savings Bank, and T. E. Hough.

640

it

-

States

-

•

,

$5,000 and $10,000, the tax dollar rep¬
consumption and 60c of savings.
Again all

of

incomes

On

new

Kebbon, McCormick & Co.; James

First

40c

savings are NON-VENTURE.

nominating

D.

LOS

United

below. $5,000

incomes between

On
resents

slate

were

.into .{.'law,.

based

-v--';

•<'.

.•

the' PERSONAL INCOME TAXDOLLAR, represents 80 cents that would be spent, and 20 cents ?
that would be saved. BUT ALL OF THE SAVINGS GOES INTO
NON-VENT,URE INVESTMENTS, such as savings banks, insur-:ance
companies, postal savings, etc.

Cocktails

p.m.,

presenting

Feeley,

■;;;

On

the

p.m.

committee

P.

very

....

served

dinner

some

are

.

greatly enjoyed. Din¬

coats will be worn.;

will

at

Here

directors

the

which

and

arranged

announced

be

feel will be
ner

been

"self-

of

program

a

in all

exchange.therefor;

.

ment.
the

Forgan & Co.
Directors

Treasury to call
rency equal in"

bill is enacted

comprehensive, fair, and unbiased reports ever dollars in aid;
issued by any fact finding organization regarding the dangers to our :w
q u 1 d i neconomic survival as a free enterprise society, was issued by the
crease
confi¬
National Association of Manufacturers. It is entitled ''Capital For¬
dence in these

Harris, Hall &
E.

a

One of the most

Hempstead
Washbu

Congressman Frank L. Sundstrom (R-N. J.)'on Feb. 3 introduced
bill in the House of Representatives
directing the Secretary of the

y/e are

Corbett, Inc.

Secretary:

7/

;S:

Do you care whether or

with the follies and the foibles

up

impractical and costly,,

as

you

understand the dangers

rectors for the

P

depression catches

Are

country?

your

washed down the drain?

di¬

George

your

future of
business?

day and age, and as a result, even the basic freedoms which
Americans have come to take for granted may some day be

we

offi¬

coming

the

of this

following

slate

future

a

future of

in the

interested

in

interested

you

New lb S. Currency to

a

VlV-

The thirty-

—

•Thursday, February 5, 1948

like

issues.
~"I

•*.:

am

ysis in

a

source, something *
additional $200
milliori

an

to put
•■'
•

going to

a

into

new

capital

*

come

to the Gov¬

part of this anal¬
moment, but while I am

THE COMMERCIAL

167 Number/4670

Volume

that the life
is

how

in-] the life insurance business

appar-

its loans to

as a

of

j whole may very properly and dp-

ently in the process of increasing

policyholders, whereas

for the past many years such loans

Nazism

and

second

a

World

propriately give up, either through War had. we not dilly-dallied.
maturity,/call or sale, something Even^the subsequent loans were
like $800 million of' Government !nOt sufficient to counterbalance
the bad timing.

With this lesson
One would j securities during 1948, and that it
probably expect that only about may do so without having the de- 'of history before us and the ex¬
cline in its holdings' of Govern¬ plosive dangers that surround us
/< ' $100
million of the total: funds
available, within the life insurance ment securities any more rapid at present it is imperative that
;,.,o business would
be required for than the decline in the balance of our/ legislators must once again
the
this particular purpose.'/ In addi¬
privately held Government as- they did patriotically during
have been decreasing.

V

'

,

tion

t.K

fr.i-

insurance

apparently
operations

.

own
iir

life

the

will

-

business

require ■ for v its
in the field f of

residential ,a.nd other rental prop¬

'

•

$100 million in 1948;'
"If these various estimates are
some

from increase in assets, plus

million

from

reduction

$1,000.

of mort-:

gages, plus $200 million from

liq-

uidation

/other

stocks' minus $100

bonds

,

million for in-r

in policy loans, and minus

crease

$100 million for

expenditures

on

enough

formed

we

coalitions

ahead

crisis instead of after.

General

man

Staff

been too realistic

known

ever

the

-

large
of

the

The Ger¬

would

have

to attack had it

be

able; to/supply

to 'the

capital
mostly for the financing

markets

to

receive Mr. Stalin at any time

in

of

homes, other construction, new
plant, new equipment and new

capital

Washington

improved

have

could

if

upon

been

neutral point

a

would be chosen where both

part-

other Vies could explore differences with
kinds—for improving the stand¬ a sincere
attempt to get back to
ard of living of our great country;' the
pre-Stettinius fairiy satisfac¬
"One further point.
While it is tory:: relations with Russia," he
requirements

of

-

19

poten¬
confronting it in advance. We
could
have stopped the second
World

War

cold

had

we

made

a

defensive

lateral

treaty guaranteeing the in¬
dependence of Ethiopia as sug¬

gested by the speaker in the New
York

11,

"Herald

1935,

would

Tribune"

of

Sept.

which

if carried out
liquidated Mussolini

have

internally with corresponding
percussions

re¬

the Hitler regime

on

Manufacturers Trust
Promotes Ohlmuller
Manufacturers

York

City,

in Germany.

Staff

Co.,

New

that Frank

Ohlmuller, formerly Assistant
Secretary has been made an As¬

sistant

Vice-President
and
in
charge of

•

has

placed

bank's

the

Security Analysis Depart¬

ment.

-

•

Mr.
Ohlmuller was associated
with George H. Burr & Co. from
1926
to 1934 when he came to

Manufacturers Trust Co. He was
an
Assistant Secretary in

made

-1942

and

Collateral

placed in charge of the
Loan Department. He

later made

was

Officer

Trust

in

an

charge

Investment

Assistant Trust

of

bank's

the

Division.

For

the past two years, he has
majored in investments at the Rut¬
gers

of

University

Graduate School

Banking.

,

]

,

This time the Rus¬

sian

Trust

announces

P.

been

eventual

tial

.

to the

and

of

had

envoy,

treaty with Great Brit¬
debt.
'• / ' •"«
the War" achieve fast and decisive ain during the phony war
period
."If the $800 million proceeds of action,1 proving again that democ¬ as suggested
by this speaker at the
such moderate disposals by the racy can successfully meet the test time.
We likewise could have re¬
<
tarded it had we made a multi¬
life insurance business: aroadded of crisis.

$4,200 million amount that ,,v: As. a second remedy, Col. Mur¬
we had previously accounted
i l
foiv ray- jacoby
suggested
a
direct
'Ti'/i correct, then thus far in the dis¬ we arrive at a grand: total- of about meeting between President Tru¬
cussion we have accounted for the $5.0 billion as the amount Which man/and Marshal Stalin.
"The
following funds:'' $3,200 million the life insurance business may implied invitation by Mr. Truman
erties

(615)

would arise ip; Central Eu-t tions if ; we are pressed
to
it
rope with all the danger that this through the course of
events, and
implied.
"In other words," said only then.
Col: Murray-Jacoby,
"we could
:"We could have prevented both
i, ave
prevented the eventual rise World Wars, continued the former

§till on the subject pf the pccrual;-securities as, likely, to "be reduced

surance; business

FINANCIAL 'CHRONICLE

tents

pf inve^stito.':Xurids'•:'Joj reasons by. something like. $800 million.or
other than through the voluntary | more during 1948.
/
1
sale of existing assets it is only
' "It seems logical to expect that
fair to point out

&

in

General

advance

should

With Hayden Stone & Co.

know

just what the

poten¬

[

Hartwell P. Morse has become.

""

rental

properties—a total of $4,200

true ihat

':>•'

million.: \'•■■■'I'.

ably become

^ "That brings us finally to the
question of'the amounts that the
insurance

life

ically
for

to

expect

the

business

available

make

purchase

of

log¬

can

private

new

securities,

mortgages, bonds and
stocks—through the disposal of

billion

$20

only

prob¬

stated.

a

better climate.

for mortgages, building .oper¬
ations and loans to business; Some
estimates

the

to

are

President

ally

it

million
due

were

these

of

during the next 12 months,
theless there is, I think:

a

might

jump

conclusion

the immediate ability or

never¬

of life insurance

real
think

the

into

:as;Tb

inability

coming

are

perience
which

(1)

proposes:

(2)

the

Col, H. Murray-Jacoby,

about

in

swift and unemasculated

former U.

The former envoy

vantage

be

to

first

The

move

he

felt

of

the

tion

would

measures

type.",,

Hungarian

-

"This

of

Europe

moves

loan

to

Smith

engaged

income

the

as

in

that

Charles
and

Dewey

the

of

doctrine

his

ievel."

v.

on

"Under

the

external

of

circum¬

these

"the prediction
of Congressman Eaton and Sena¬
Ball

tor

cannot

that

the

Congress before
ominous."

June

or

index

Plan

from
fore

in

hope

for

street

of

themselves.

mere feeding will not do
trick. / Just as in the early

'20's,

Europe is

now

a

vast,

ma¬

chine without lubricating oil and
with
After

led
in

its

plant

partly*-"destroyed.

World War

over

a

Central

I, the Quakers

million children

Europe and

a

day

the

full

a

in¬

Stalin

in

got

himself

his

Stasserr

the

off

such

and

po¬

side

have

interview,
with

beam

bit of

a

his

We should

confidence

efficacy of the
Sermon

if

in

principles

of

the

on

the

Mount,

par¬

alternative

is

a

an

attempt at reconciliation

would fail and end
up

here

one

are

then

;

Suppose each' bag contained ten

every

make

$1,700,-

—

vestors

have; furnished for the

two

years;

"In

,

with

top speed create a system of pro¬
the tective quasi-alliances among the
democratic powers.
/ /
The conduct
of Miv Bidault at the recent Lon¬

regard to the timing," Col.

don j Conference and the recent
Murray-Jacoby 'continued,
"the
Harding Administration blundered courageous statements of Mr.
.

Bevin and Mr. Morrison would in¬

the

Central

European

the New

Aug. 21,
dicted

tion

a

York

if

were -not

a

vast army

of

of

the

United

Section
a

function

under

51

the

Nations,

of

two-thirds
ex

frame¬

the

majority

Veto;

i.e.,

i

or we

ings by direct diplomatic

user

a

in

reason- -

Every telephone

shares the benefits in

and better

and

j telephone business has been
built

by the savings of the

many

rather than the wealth of the few.

The
<

large

sums

that have been

put into new facilities

in the

more

telephone service.

some

idea of

alone give you
the cost of provid-

ing telephone service. The instrument in your home and the

few wires
small part

see are only a
of the $257 invest-

you

ment behind every telephone.

can

could

negotia-]

every

just like yourself. The

Charter

create these concrete understand-

imme-

malcon¬

proceed

money

telephone business in the

able return.

where

stabiliza¬

out

their

the

either

invoke

"Times," dated

carried

Investors put
the

of

last two years

\

hope of security and

work

statement of his

currency

'

We

Armstrong Plan within the

1922, in which: he pre¬

that

.

could

currencies

have been successfully
stabilized." " The
former
envoy
then read from

1

dicate that this could be done.

could still

in

year.

* Further substantial
being invested this

walk of life and in

women

expansion and improvement of

amounts are'

r

should

we

hundreds

section of the country—men

i

the amount that in¬

000,000

System, the term

means

thousands of small investors in

million dollars.
That would

the Bell

investors

telephone service in the last

-

■

In

hundred and

seventy bags in this picture.

in another

Godsberg,

to believe that

TI

slaughterhouse.

"Third," continued Col. MurrayJacoby, "if we would find that
such

telephone facilities in the last two years

acknowl¬

attempt at reconcilia¬

an

$1,700,000,000 from investors for new

realization

exist

can

on

national

economic

renewed human

curing and stimulating poten¬

Ex-Presi-1-diately,




together

by
they have always done and

ticularly

period

.

put back on the beam of prosper¬
the

million

.

'

the

by sending Dawes to Europe in
be 1924 instead of 1922 at which time

ity, and

10

the

by the end

The

Europe has to

Russia just

its

get

systems

as

tion

We have there¬

reason

to

different

Mr.

but

low of around

same

can

highly successful
provided
timing is right." ' v
"
j ; /

principal hope," continued

keepers, business men and farm<ers in Western Europe could see a
new

every

the

how

your

the

the former envoy, "is that a large

main

in

120.

new

in gen¬

economy

hardheaded

with

edged

agricultural-industrial

to

costly

a

Hungarian adventure.

other words, it dou¬
those eight years.
The

rose

80

a

to

tials of the Marshall Plan will be

July is
/ •. ' •

entrepreneur group of small shop¬

in

from

dollar

a

Russia, cannot afford

so

of

that

In

composite

expected to get out of

be

"Our

Marshall

1928.

bled

stances," he said

rose

of

/'And

litical

Index

60 in 1921 to above 120

duction

is

go

afford

terest

Number, published annually by
the Cambridge Associates and of

test

have

one.

as

stated, "and

a

which

annuities, savings

from

?

which the speaker was then a co¬
author shows that European pro¬

expect

would

our

would

side

100th anniversary of the inauguration of ; Communism
by
Karl Marx,"/Col. Murray-Jacoby
we can

us

depression

due

size

.ubsidiary functions.

is

tatives in the investment depart¬
ment.
.1

that basis, were

on

such

basis

Hungary;
the
loan to Poland

*

world."

alFsources

recovering

Jeremiah

Jacoby-Stillich

naughton and * Claude Z. Hilmer
have become registered represen¬

suffering

doctrines

from

dead

for

the League of Nations spon¬
to Austria plus earlier

"The

A.

another war,

credits; the Dawes
the

still hovering

and

haywire.
That if
we, the wealthiest of all countries
with a steel capacity three times

French short-

Germany;
loan :. to

■

wait

to

Robert C. Cease, William G. Con-

the

ex¬

recent

our

that all

eral

undertaken.

had

of

billion

deposits and the

sored loan

the
.

other

most miraculous
ever

term industrial

the

year

of

such

against the Communists, thus in¬
counter

program

correspondent / department.

road

of

equivalent of the total

of

one

war,

Yet, the fundamental reconstruc¬

auguration of the Marshall Plan.
"We can expect," he said, "new
pressures vin
the • spring
when
fighting in the Balkans is apt to
accelerate;
and
particularly
if
the Czechoslovagian elections
would, as they are likely to, go
viting

Hoover

relief

the

swift and unemasculpW in¬

a

Herbert

the greatest and

danger
conflict with Russia.

open

dent

believes that

as

dealer

this showing and our $260 billion
debt we would now pile up an¬

.

could be made to ad¬

the

passing period of tem¬

on a

.he U. S.

■"■■•-x~

avoid

moves

of

income; and that if in addition to

Ambassador-at-Large, in
Delray Beach, Fla.,
--■on Jan. 20, on "A Policy With Respect to Russia," suggested three
alternative moves that could be advantageously made to avoid danger

three

Exchanges,

theoretically to return to such
conditions, not a living person in

President

S.

Russia.

peace

a'prostrate

over

and

Stock

manager

we

address at the Delray Beach Women's Club,

of conflict with

channels, with

into sounder,

Boston

assistant

liberalism
protects

impact

buciget of $40

a

Stalin; and (3) if reconciliation should fail]
formation of protective alliances by democratic powers.

;

middle

and

porary despair. That we now have

Truman and Marshal

an

applied

incidentally

national

meeting between

of practical

years

in

years and

Murray-Jacoby

process

and

an

and not ahead of us; that we have

enjoyed 154

War With the Soviet
inauguration of Marshall Plan;

hufnane

eventu¬

through

with Hayden, Stone &
Co., 25 Broad Street, New Yorlo
City, members of the New York

we

Suggests Thiee Moves to Avoid
H.

evolutionary

of

itself

was

as

Franklin and Thomas Paine; that
have our revolution behind us

•

resting

Col.

ally.'stabilize

not the country of

we are

against

IT.

true of the Mexican one,

person¬

feelings

revolution could,

associated

the robber barons but the country
of
Thomas
Jefferson, Benjamin

at

their possession."

that

dollars

that

say

companies to in¬

vest

possibility that we should
of our holdings
of Government

Russian

munist Chief, and its burning de¬
sire lor peace.
Where he could

I offer this1 filial

you

erroneous

some

callable

or

lest

could

the

American main street to the Com¬

as

months of 1948.
remark

Truman

Interpret

be already

:

they become avail¬
able, through the first three to six

that

appears

A meeting where

that

effect

most of the funds may

committed

harm,"

no

Colonel, "but might clear
atmosphere and produce a

the

already commit¬

are

"This could do

said the

considerable

very

.

$100

some

will

ted

of- Government

While

securities

funds

available,5 it is also

to

extent, they

of 1947 the life insurance business

held

that

true

Government securities. At the end

securities.

these

tials ^re; for in that manner the

BELL

TELEPHONE

SYSTEM

1

20

f

THE COMMERCIAL

(616)

r

(V A ryj /, r<TTV.

y,*y

&

A-!"''. •.f'TVf V

FINANCIAL

CHRONICLE

sales of the proceeds of bond re¬

demptions on the one hand, and
purchases for fresh industrial in¬

Canadian Securities

vestment in Canada

In the final analysis the maintenance of the
existing sterling
parity is in the best interests of Canada. Similarly as far as this
country is concerned the stability of the pound and the avoidance of a
world-wide currency war, is also of paramount importance.
The
question of British financial pres-^
tige
and
the
mixed
blessings pool would prevent the collapse

which would result from devalua¬

of

tion would

the vast foreign trade area consti¬
tuted by the sterling and dollar

ing

suggest that the hold¬

the

of

sterling

would

line

likewise prove in the long run to
be
beneficial
from
the
British

groups of

sustain

now

the

proved

Woods

week

the

external

to

impotent

internal sections of the

ket

schemes

remained

Free funds

cope

dull

movements

exchange stabilization and it is
logical in consequence to endea¬

cross-currents represented

to

rebuild

dom-Canadian
has created

an

As matters
tion

is

drastic
would

choice
tion

in connection with his request

triangle

but

ful

Secretary
Dear

it

valuation of the pound, and
same

time

assure

smooth

a

of trade between the

dollar

de¬

sending

this

$10

the United

In

inscribed

States Treasury

accordance

the

or

you

with

at
at

-

12818

Coit

state¬

me

Very truly

yours,

A. F.

You

fined

DAVIS.

in

first

rency

series of artificial

situations, the establishment of a
exchange

Service

Washington 25

United States

•?

A.

!

"•

11, 1947

F.

Mr.

Dear

Davis

1, Ohio

of

Federal

Reserve

one

United

for

)

Davis:

closure

dollar

ten

of
en¬

compliance

as

GOVERNMENT

of

The

V

,

your

re¬

legal

makes
of the

Resolution

coin

States

other

tender

of

or

currency

The

types

$5 United

States note

is

returned

herewith.

M. E. SLINDEE,
Acting Treasurer.

BOSTON, MASS.—Vance, San¬

Shaw

vy

Carter, Jr., Herbert I.
Kimball Valentine to

and

partnership in the firm. All have
been associated with Vance, Sand¬

Service

Fiscal

Co., Ill Devonshire Street,
Thomas A. Baxter,

A.

John

Acting Treasurer
Treasury Department

ers

& Co. for some time.

two

which'
letter

ful

$5

are

we

States

interpret

we

•

.

notes,

from

to be considered

money

Are

United

your

as

to infer from this that

the Federal Reserve notes are not

lawful money?
I

NY-1-1045




am

notes
note

enclosing

which

you

that it states

—The

urday

:

NEW YORK 5,

RECTOR 2-7231

MONTREAL,

has

1933 should

one

of the

on

me.

Montreal

I

the face:

"The United States of America

also

resume

ing sessions

on

the

difference,

form

$1,-

of. U.

S.

and

The

so-

'free'

gold, carried in the
general fund of the Treasury, was
$1,027,782,071.17 on Sept. 3, but
even this, is really not free since it
is an asset item helping to offset
in
part other liabilities of the
Treasury.
the

gold

certificates

held

by
the
Federal
Reserve
Banks, the latter, on Sept. 3, had

State of New

tion

York has been

that

"a gold standard is the
satisfactory monetary system
the standpoint of the Amer¬

most
from

ican

people as
equivocal
and
However,
your
lieves

that

advocate

is

un¬

uncompromising.
Committee
be¬
is

it

the

whole'11

a

to
gold

premature

return

to

standard at this time.

the

The

mone¬

tary systems of many nations of
the world are fraught with un¬
certainties
and
confusions
and,
with

the U.

the

as

S. dollar

principal

now

acting
base,

currency

change that would upset the

any

present money situation must con¬
sider the effect such action would

have

the

on

Another

currencies

of

other

direct

the past year, many recom¬
mendations pertaining to the gold
have

made

been

by

officials.

Sats.

Some seek

the immediate return to this sys¬
tem

by

the
take

U.

Government;

S.

the

view

the

that

present is too uncertain; and a few
believe
that the
gold standard
•should be abolished.3
Jan. 22, 1947,

at the direc¬

tion of the Chamber, the Commit¬
tee
on
Finance
and
Currency

began

study of the feasibility of
to a gold standard.
In
the months following, much time
a

return

a

sober

and

given to

thought
have
been
responsible answer.

a

The basic

philosophy underlying

recommendations

the

for

a

use

of

confi¬

in our monetary system.4
implied lack of confidence in

dence

Stock

Exchange

U. S. money seems to stem from

resume

Sat¬

starting

Stock

the

misapprehension that there is

1 Letter

National

of

Dec.

Committee

Resolution

by

9,
on

fidence in

over
the govern¬
and abuse of the public

our

a

gold;

individual

every

to
approval

power

has the
approval or dis¬
the
government's

express

of

-

management of fiscal affairs.

:

The basic right of the people to

register their
of

confidence or lack
confidence in the dollar is not
t

to be questioned.

Committee

However,

believes

that

your

the

res¬

toration of this

when

privilege at a time
dollar is being sought

the

world

over, and the United
efforts to control inflation

the

of

money
supply not yet.
demonstrated, would be unwise at

this time.
The

question

of

whether

the

United States should go back to its
former

basis

gold standard, but on the
gold values at $35 an
is constantly being brought

of

ounce,

forward by

those who have been
monetary position.
However,
with
the
conditions
which prevail in the world at the
moment, it would seem betted to
studying

our

hold this matter up

tion until
made in

eign

some

for considera¬

headway has been

straightening out the for¬

exchange

relations

of' the

principal countries of the world
it is

entirely possible that at

such

time,

action

United States

taken

as

some

by

the

in connection with

its gold position might be tremen¬

dously helpful in stabilizing the
whole world monetary position.

Respectfully submitted,
Committe

6,

-

gold-coin

paper money, it can
gold-coin standard so
register its doubts by demanding

under

1947, Economists
Monetary Policy.

Colonel Proffitt, March

1947.

a

purse.
This system provides the
people with
a
choice
between
gold, silver, other coins and paper
currency.
If the public lacks con¬

pres¬

gold-coin standard

re-establishment

that

control

ment's

States'
In

is

standard provides the people with

the

countries.

standard

increasingly prevalent

observation

of

Commerce

The

morning sessions,

Toronto

of

Chamber

CANADA

it has been announced.

$5 will

called

urge

now

on

Finance and

Currency,

>
'

2

Exchange

Chamber

3

"Monetary
Notes,"
I.
Parkinson,

November 1933.
Dec.
1,
1947;
Commercial and
Financial Chronicle, Oct. 30, 1947; "Find¬
ings of Discussions -with Government De¬
partments."
4 "Monetary Notes," Dec. 1, 1947.

Saturday

morn¬

Feb. 7th, except

during the months of June, July,

August, and September,, ^

^

,

5 The

JOHN M.

Bulletin,

Thomas

sent to

the

$20,534,115,gold certifi¬

ad¬

been

the champion of sound money for
nearly two centuries.
Its convic¬

is

Feb. 7th and until further notice,

The

in

"Against
fol¬

standard

QUE.,

law¬ and Curb Market will

•'

TWO WALL STREET

N. Y.

gold

ent return to a

Sir:

Can. Exchanges Open
Receipt is hereby acknowledged
of

the

the

Washington 25, D. C.
Dear

The

On

have admitted

Mr. M. E. Slindee

v.r.

return to this system.

a

others

ders &

Cleveland, Ohio

,

suggestion

government

Admits Four Partners

Cleveland

ties

economists, monetary experts and

Very truly yours,

yours,

Dec. 23, 1947

INCORPORATED

re¬

M. E. SLINDEE,
Acting Secretary.

"Plain Dealer"

MUNICIPAL

A. E. AMES & CO.

May

and
Aug. 27,
provides for the exchange of

States notes

Mr. Russell J. Weisman

CC:
■

CANADIAN STOCKS

Act

Vance, Sanders & Go.

PROVINCIAL

CORPORATION

cur¬

amended by the Joint

(s)

CANADIAN BONDS

the

States

Joint

transmitted herewith.

(s)

States

ceived with your letter of Dec. 23

with

Very truly

legislation.
It
prior to 1933

of sVich coin or
currency, the term "lawful cur¬
rency" no longer has such special
significance.

($10)

Note.

quest two $5 United
are

term

use

Since

12, 1933,

1937

is
acknowledged
letter of Dec. 9 with

In

dol¬

not

was

United

Receipt
your

the

Resolution of June 5, 1933,
all
coins
and
currency
the

Coit Road

12818

that

United

some

<,

replying please quote JLS:mw
Dec.

into

reserves.

Office of Treasurer of^

Cleveland

five

de-

legal tender but
could be held by national bank¬
ing associations as lawful money

TREASURY DEPARTMENT

Mr.

of

a

' '

Federal

came

flow

'exchange
stabiliza¬
tion.
In place of a global plan
based largely on idealistic theory
and involving vast expenditures

••

advised

are

when

In

payment
.

on

of

form

Even

on

Reserve

outstanding $24,622,738,000 of Fed¬
eral Reserve notes and $18,236,215,000 of deposits — a total of
the many organizations and groups
$42,858,953,000 which is more than
that protested abandonment of the
twice the gold stock of the United
gold standard by the U. S. Gov¬ States."
The

ernment in

"lawful money" has not been de¬

.

the

Road

'

the

on

the

in

States

Federal

vanced from various sources1 that

$5 United States Note with
'

•

lows:

States

Receipt is acknowledged of your
letter of Dec. 23, transmitting one

lars.

however,

The text of the Committee's re¬

Mr. Davis:

Dear

$10 in

send to

proper.

port

1, Ohio

mand*for

,

this

money.

:

1947

United

the

230,885,000, is not 'free' gold at the
disposal of Congress, since there
are some specific offsetting liabili¬

Text of Report

replying please quote JLS:mw

Federal

Federal Reserve Bank."

lawful

Dec. 29,

Cleveland

ment, will

sterling and

K.-Canadian

is

note

United

In

were

the

Treasury notes of 1890.

its approval of a return to the
gold
standard
when
conditions

Mr. A. F. Davis

world-wide

S.-U.

herewith via

one

at the

By thus placing once more on a
working basis the old U. S.-United
Kingdom-Canadian exchange tri¬
angle a long step forward would
be
taken
towards
the
goal of

U.

000

cates.

Committee,

Washington 25

is redeemable in lawful money

any

DAVIS.

Fiscal Service

>

you

Mail

Fiscal

a

1947

is legal tender for
debts, public and private, and

the

F.

3,

Banks held claims
John M. Schiff

of

fol¬
lowing
a
fixed
policy
of
the
Chamber in past years, expressed

The

of

Sept.

principal countries are nor¬
mal, the privilege given to the
public to exchange paper money
for gold coin "would be unwise

-

Office of Treasurer of

areas.

to bolster up

9,

"This note

therefore that
re-establishment of a

a

stock

in-

rnational

operations

TREASURY DEPARTMENT

Sir:

am

On

appear

obviate

unstable,
until

'free' gold at its dis¬

Most

as

confused

e

as

of the gold held in
Treasury already has claims,
Treasury liabilities, against it.
Against the $21,7-35,000,000 gold

are

and

writes

the

at this time."

A.

follows:—

following:

tend to divide
two competitive

also

posal.

hereby demanding $5.

law¬

Reserve note.

all

would

"in

University,

"The U. S. Government has lit¬

exchange

re¬

dollars."
am

York

tle so-called

Very truly yours,

I

of the Treasury

Registered

step in the direction

only the
practical currency arrangement
between Canada, the United King¬
dom, and this country would suc¬
cessfully solve not only the imme¬
diate Canadian exchange problem

five

.

I

groups.

but

New

follows:5

relations

t

will pay to the bearer on demand

Washington, D. C.

the contrary would

would

Treasury

Federal Reserve note be

a

Honorable John W. Snyder

of freer multilateral trade but on

It

the

that

among the na¬
tions
of
the

drilling results in

new

the Yellowknife area.

$10 Federal Re¬

redeemed

Dec.

into

promising

Cleveland, Ohio^-

a

correspondence

of these solutions moreover would

world

be

of*

sides

both

on

and economic drawbacks. Neither

the

rallied
assisted

money" at the Treasury or'at
Federal Reserve* Bank.
The

any

accomplishment.
Likewise the participation of Can¬
ada in the sterling area at the
present time has many political

a

by

also
was

movement

—•

wide

gulf between our dollar
and
our
gold reserve.
Such a
gulf * does not exist.
Walter E.
Spahr, Professor of Economics at

was

on

States to

United
1

a

standard.

ground

the

<£>

currency

Treasury arising out of

note

serve

early

represent

the

his request that

the border is still too great to per¬

its

of

has much in its favor

course

opposition

mit

F. Davis

from

something approaching an econo¬
mic union with this' country. The
latter

this time for

at

present

that

has sent to the "Chronicle" copies
of
letters sent to and received

outright associa¬
sterling bloc or

the

feasible

or

coin

taken

Currency of the Chamber of
by John M. Schiff of
a year's study, that it

Feb. 2 reported, after

on

the

A.

stand the situa¬

pressing to permit a
change of policy which
involve
an
embarrassing

with

and

the

to

and

issues

gold

this

deemed in lawful money as stated on its face.

too

between

return

the

A. F.Davis furnishes "Chronicle" with correspondence with

urgent problem.

now

not advisable

was

Finance

on

;

State of New York, headed

Kuhn, Loeb & Co.,

and

S.-United King¬

exchange

of the

This view

a

paper,

the

time-honored U.

Return to Gold Standard

on

Committee

substantial rally led by
liquors, and utilities.
Following the French devaluation
staged

Seeks Test of Status of Federal Reserve Notes

Canadian
standpoint the breakdown of the
From

by the

The

•

Commerce

world

of previously successful exchange

systems.

markets

foundations

the

on

governed by the

were

stock

Urges

Group, headed by John M. Schiff, advises action be deferred until
some headway has been made in
stabilizing foreign exchange rela¬
tionships. Sees difficulty in world-wide scramble for the dollar.

gold

Canadian

The

inactive.

and

with the problem of international

vor

mar¬

irregular and the

were

nificance.

the

and

Bretton

have

that

nations.

During

point of view.
The

systems

esting to note that as a result of
mounting apprehensions in this
country concerning the possibili¬
ties of acute shortages in basic in¬
dustrial requirements, the recent
important oil discoveries in Al¬
berta and the vast potentialities
of the Quebec-Labrador iron deporits have taken on added sig¬

Thursday, February 5, 1948

Delay

the other.

on

'.

N. Y. Chamber of Commerce Committee

In the latter connection it is inter¬

By WILLIAM J. McKAY

the

"V

Commercial and Financial Chron¬

icle of Sept.. 11,

1947.

;

,

•

,

V

JOHN E.

^

SCHIFF,
Chairman,
BIERWIRTH,

ALEXANDER C. NAGLE,
JOSEPH P. RIPLEY,

-

-

•I,:'" ERNEST STAUFEEN,.JR.

<

•

Volume

167

Number 4670

COMMERCIAL

THE

CHRONICLE

& FINANCIAL

Bank Club. William H.

Moorhead,
continues as a

Cashier,

formerly

Vice-President of the bank.
*

4:

•Charles Diehl,

City

Empire
York

Trust

Company will be operated
the Lincoln Rochester Trust
Company.. Plans for the merger
referred

President of the

Savings Bank,

City, and John

S.

New

Roberts,

Jan.

to

in

issue

our

Jan. 12.

on

4>

$108,000 to $100,000 it also
same day took further ac¬
tion vfhereby tne capital was in¬
creased

elected Chairman and Vice-ChairThe death

W.

Feb. 2 of Thomas

on

Lamont,

Chairman

of

the

Board of J. P. Morgan & Co.

Inc.,

removes

from

outstanding

an

the

financial

figure
business

and

Banks

the
System on Jan. 21. Robert Matherson, Jr., Walter R. Williams, Jr.
meeting

to three trustees. He
paper financially un¬
til he sold his stock in Jan., 1922 to
over
backed the

paper

0,

Mr.

Lamont

was

of
Mr.

in the American School of Classi¬

Born

1 8 7

77

Lamont took

Mr.

years

age.

syndicate.

a

appointed

of the paper

30,

Sept.

on

dent and

cal Studies at Athens,

in

was

his

at

sleep

11:55

had

1945, he was a mem¬
ber of the Research Committee of

His

8.

meeting of the Morgan
which he had attended

Lamont's

;\ Mr.

spent in

directors

on

Dec. 17.

boyhood,

Claverack, N. Y., where
father, Rev. Thomas Lamont,

A

his

was
Methodist minister. A sketch of

ago,

year

destruction

He

was

by

no

finance

business.

figure

conspicuous

a

con¬

means

and

noted that in the world of affairs
his

career

application
two

effort through
and numbers of

and

great

constant

of

one

was

wars,

booms and panics.
In

Mr.

1903

business

as

of

urer

Bankers

Less

the

than

organized

newly

Trust

Pierpont

32

entered the banking
Secretary and Treas¬

old,

years

(hen

Lamont,

Co.

of

seven

later

years

Morgan

York.

New

J.

him

a

made

partner in J. P. Morgan & Co., and
in

short time he became

a

the
20

world's

stock.

became

latter's

Chairman

he

Board

•

and from Harvard in 1892. In his

college holidays he took jobs on
and after his gradua¬

newspapers,

in

reporter
une"

on

After

and

he

1893-4

worked

as

a

the New York "Trib¬

serving

Treasurer

as -

Secretary

the

of

Bankers

Trust

Company from the time of
organization,
Mr.
Lamont

its

later became
the

end

of

two years

he

there

became

Dec.

he

a

Vice-President. At

1908

National

First

31,
was

bankers

a

1910.
■

as

financial

and

after

Vice-President,

Morgan partner on
In the 1907 panic
of

the

under

Davison worked
the

the

entered

Bank,

one

who

he

on

of

the

younger

Henry

P.

directed

Manufacturers

Magno. He held honorary degrees

of

(LL.D.)
from
Union
College
(1921), Rochester (1929), Harvard
(1931), Columbia (1932), and New
York (1934).

Trust

Company

Frank P.

as

Potts said

fered

the

real

a

Bishop's

bank has

suf¬

through

Mr.

loss

entrance

according
made
by
President.

"Research,

additional

become director of the

Planning and Development Board
of

the

btate

of

South

otted

Carolina",

present

*

*

Corn

New

York,

that

announces

Ohlmuller, formerly As¬
Secretary has been made

sistant

*

Exchange

later.

made

was

married

Corliss in

are

Thomas

Florence

Trust

S til well,

bank's

di¬

a

later

was

1895. His chil¬

Officer
trust

rector and Vice-President of J. P.

For

Morgan & Co. Inc.; Corliss, wellknown for his activities on behalf

majored

friendlier

of

between

relations

the United States and the

Austin,

a

Assistant Secre¬

daughter,

married to C. C. Cun¬
ningham, Director of The Wadsworth
Atheneum
Art
Museum,
Eleanor,

Harford, Conn.
his

15

grandchildren, one,
Thomas W. Lamont II, was lost
in the submarine Snook during the
Second World War.

in

department.

charge

two

A

years,

he

has

at

the

University
*

Brand
been

:

*

New

Graduate

^

;

4:

booklet

new

the

of

division.

investments

in

'

Assistant

an

investment

past

Rutgers

made

School of Banking.,

physician and research

kins, Baltimore; and one

the

U.S.S.R.;

worker in medicine at Johns Hop¬

Of

an

of the collateral loan

Mr., Lamont
Haskell
dren

He

Company.

<

entitled

"A

Mortgage Plan" has
Savings

issued

of

New

York

City. The plan, known as the "City

Savings Mortgage Thrift Club,"
explains in simple language how
regular savings money may be
combined

with

mortgage

pay¬

ments. The announcement says:
v!■*

Albert J. Egger,
years

a

f:!'v

\

for the past 14

Chase National Bank of New York
was

home owners are eligible
join the club whether. City Sav¬

the ings and Loan hold the mortgage

of

Vice-President

"All
to

appointed Vice-President and

or

not.

While

dividends and

Cashier of the

at

bank

by

'cushion'

by the

directors

on

Mr. Davison1 and Mr. La¬
mont, under the younger Morgan,
were largely responsible for nego¬
tiating and handling the loans
made by the American public to
came,

the

of

; War

board

Jan. 28. Mr.

senior
of¬

Egger,

and

be

time,

any

ficer

of

the

bank, has been
a

member

of

savings draw
may be withdrawn
it also acts as a

for emergency

National

of

for home

repairs,

education, medical
other purpose."

pense or any
'

/

•,

*

*..

ex¬

I
..,

j

Through a stock dividend of
$300,000, the First National Bank
of

New

Rochelle,

N.

Y.

has

in¬

entitles

additional

the

stock.

a

Ac¬

cording to the terms of the trans¬

subscription

which

accompanied

type of check

a new

records

o'clock

noon,

Sale of

this

for

lieve

income

tax

rights
be

other

or

Officials of the bank be¬

purposes.

that

the

the check

"plus"

book

be

of

in

some

bank

no

the

on

'visable

unusual

stubs,

as

binder.

Iowa-Des

glance for

a

check-back

a

Des

leafing through

ment

on

run-down

previous

conventional

check

and surplus ot
$3,000,000. The un¬

sis

resources

as

$57,842,-

4i

Jan.

28,

Moines

Moines

the

the

of

name

National

Bank

National

Bank.

An¬

by the institution of

being made simply for

name

the convenience of
;

■'

••

4s

The

of

customers.

our

4s

First

Omaha,

pay¬

by check.

in

28.
will

change states that the opera¬
tions of the trust department will
not be affected, the
shortening of

are

many pages

a

stock

the

This minimizes both the carrying
forward of balances and the need
stubs for data

additional

nouncement

previous checks.

on

Feb.

on

& Trust Company of Des
Moines,
Iowa, has been changed to Iowa-

de¬
as a

stubs

12:00

(EST),

4:

check

of

.15

as

must

before

or

$528,096 and total

Effective

Through

positioning

many

visible at

principle

same

record'

letter

Feb, 2 all

of Dec. 31, 1947, stood at
781.

in¬

is

and

on

to

creased goodwill toward the bank.

'STUBFAX'

the

warrants

divided profits of the bank amount

The bank further says in part:
"The new checkbook, for which
named

the

exercised

the

prac¬

of

measure

under

warrants
on

)ring the capital

features of

will

help to individual depositors
particularly, and that its usefulness'*to the depositor will be re¬

4s

National

Neb.,

Bank

of

increased

has

its

capital from $1,500,000 to $2,000,000 by a stock dividend of
$500,000.

by

The

the

weekly

Office

bulletin

of

issued

Comptroller

of

thet Currency at Washington

re¬

ports that the increase became ef¬
fective Jan. 20.

books

\

sis',' ■ J''

4s

"...

;4:

•

,

'

.• ■

Instead, they

are confined to oneAccording
to
the
St.
Louis
the overall depth of the
"Globe Democrat," W. M.
Harlan,
When the last check on a
Jr., was recently elevated from
page
has been used, the blank
Vice-President to the Presidency
perforated section at the lower

fifth

of

page.

left

is

the

stubs

'STUBTAX'

all of its
*

11
4<

elected
liam

the

offices.

Trust

annual

Company

was

Vice-

:'V

Kennedy and
:-yr. ('./'i''1

W.

'

*

Wil¬

Clyde

v,'":

r

,:;V '

were

Cashiers:

4«

*

stockholders

of

At

the

annual

meeting

of

the

Directors of Mercantile-Commerce

meeting of Land Title Bank and
Pa.

Assistant

ran

Assistant

E.

Johns^'

•

At'

made

was

President, and the Following

deposi¬

tors in

St. Louis,

Directors, Elmer J. Nonnenkamp

check

books available at cost to

of

elected Chairman of the Board of

are visible at a glance.
Exchange National Bank

making

Bank

succeeding John S. Wood, who

for the

in the unit
The Corn

Manchester

of

detached, thus uncovering

following page
of checks. When the fifth page is
reached, the stubs of all 15 checks

Bank

and

Trust

Philadelphia,

Company, of St.

Louis, Mo., on Jan. 15, Joseph C.
Jan, 26 Van Horn Ely, Jr.,
Ganser, Jr." was elected Cashier
elected a director. Mr. Ely is
and Treasurer. Mr.
Ganser has

on

was

•

Secretary
and
Director
Philadelphia
Surburban

the

of

been employed

by the bank con¬
tinuously since 1916. He was ap¬

Water

Company; Director of the India¬
napolis Water Co. and the Ameri¬
Water

can

New

Works

York, and

Board

of

Medical
■■

pointed
1941

Co.,

Inc., of
member of the

a

Trustees

lowing

Jefferson

of

Assistant

an

and

promoted

Vice-President in

Cashier

to

1944.

appointments

in

Assistant
The

fol¬

also

were

confirmed:

College and Hospital."
J.' 4:
4:
4:
\v

was

■

Henry E. Jenkins, Jr.
appointed Assistant Cashier.

.

The

Board

Bryn

of

He

Co.,

of

having

Bryn

Farm

on

Jan. 27

the election of William R.

Mooney

Chairman

DeHaven

came

to the bank in

Directors of The

Trust

Mawr

Mawr, Pa., announced
as

,

al-

purchase one-fifth of

simplifies the
finding
of
bank
balances
and
facilitates the keeping of simple

as

purchase
been

ferable

recently
depositors

purposes

if the individual elects,
modernization,

may,

used

personnel

Great Britain and France prior to
the entry of our country into the

the

stockholders

sent to stockholders

of

Boushall,

to
have

the

by the City

Borough

Rights
shares

to

share

Dook which it states

an

share,

an¬

availibility of

and Loan Association, of Jamaica,

Queens,

C.

to ' its

nounced

is

per

announcement

an

Thomas

Philadelphia,

Bank,

is

,

at $33.33

to

Feb.

on

a

owner

,

Trust

on

sale

on

pro-rata basis, where¬
by each share of stock owned by

his native state.

The

of Jan. 31,

Bishop will

field of endeavor. Mr.

of Virginia at Rich¬

placed

was

another

into

The 'STUBFAX'
an
Assistant Vice-President and
check book is made up of a series
has been placed in charge of the
of units consisting of five pages
When Mr. Lamont was 75 years bank's Security Analysis Depart¬
of checks, with 3 checks to the
old, he wrote his reminiscenses of ment. Mr. Ohlmuller was asso¬
his
childhood.
"The
Atlantic ciated with George H. Burr & page. The stubs for these checks
however, are not placed imme¬
Monthly" published them in ab¬ Company from 1926 to 1934 when
diately to the left of each check
breviated
form under the title, he
became
associated
with
the

by
World

Mr.

or

him the Grand Cross
Order
of Saint Gregory

the details of

rescue

J. Pierpont Morgan.
When
the
first

1937

stowed upon

tary in 1942 and placed in charge

Mr.
Lamont
graduated
from
Phillips Exeter Academy in 1888,

tion

offi¬

an

of Honor in
Pope Pius XI be¬

Legion

May, 1946, with Harpers to bring
them out as a book some months

death
the

of

In

1918.

made

was

2 to the 743 stockholders of record

signed

Rutan, Executive Vice-Presi¬
dent, Bank for Savings, New York
City; William A. Scott, Executive
Vice-Presidert & Treasuier,
Cohoes, N. Y Savir gs Bank.

4s

Vice-President, effective Feb. 15.

of The Bank

patent application has been made,

Manufacturers

Senior Officer.

and

the

'

4i

15,000 shares of additional stock
mond

D.

late

-v.r

,

4s

Bank,

Rowe, President, Kings Highway
Savings Bank, Brooklyn; Harold

For

leading bankers.

the

Lamont

of

cer

the

President,

Oneida, N. Y., Savings Bank;
Ralph J. Mills, President, Yonkers,
N. Y., Savings Bank; Daniel T.

the

:/;,y-■ >,r

••

McCouliff,

The

$100,000 to $200,000
$100,000 of new

of

of Philadelphia, Pa. announces the
resignation of Louis W. Bishop as

flected

J.

sale

the

Potts, President of

tical

"My Boyhood in a Parsonage," in

before the death of the
late J. P. Morgan in 1943 he was
second
only to Mr. Morgan in
shaping the policies of the Firm,
after

1947,

by

necessary
wrought in

H. Coleof
The

of

one

years

and

■

.

Mr.

in

different fields. It is further

many

war.-

f*

and

Diehl

A.

Philadelphia National

Thomas

$500,000 for the fund for
restoration of Canterbury Cathe¬
made

partici¬

The

Western
Savings Bank, Buffalo;
George C. Johnson, President, The
Dime
Savings Bank, Brooklyn;

of

sun

activities

were

4,

banks

System, in

are:
William
Vice-President

stoqk,

placed at the disposal of the
Arcnbishop r of
Canterbury, the

dral,

to

Feb.

on

Messrs.

to

Roberts,

R. Markle
He frequently inter¬
Mary

he

the son's career points out that his
fined

addition

drives,

cational

participating

Other Trustees of the

ested himself in welfare and edu¬

was

he was born

a parsonage;

at

a

and

Foundation.

the

lowed

John

the

Thomas W. Lamont

the South fol-

of

pating employees.

dent of the Board of Directors of

for

departure

:

trustee of The

York home, on

re¬

Vice-Presi¬

Executive

and 700 in the number of

He was active as a
Academy of Politi¬
cal Science and of the Metropoliton Museum of Art, and as Presi¬
velopment.

gone

were

Treasurer,

number

Committee for Economic De¬

the

from his New

Jan.

War,

from 1942 to

home, at Boca
Grande, where
he

World

second

the

During

p.m.

Florida

his

at

a

of

respectively.
The
Trustees reported the Sys¬
tem's assets, as of Jan. 1, 1948, of
$6,100,000 and participation in the
plan by 76 banks and 3,600 em¬
ployees. This participation repre¬
sents
increases during
1947
of
$1,850,000 in assets, 11 in
the

of which he
trustee dnd Vice-President.

Lamont died

Trustees

the

Treasurer, Secretary and

Assistant

keen interest

a

of

and William W. Sullivan

He sold the bonds
that he still held to
Cyrus H. K. Curtis of the "Satur¬
day Evening Post" on Jan. 1, 1924.

world.

respectively, of The Savings
Retirement
System at a

man,

Vill'ard.
He
turned the direction of the news¬
Garrison

Oswald

Frederic

were re¬

from

by

*

President of the Flatbush Savings

Bank, of Brooklyn, N. Y.,

the

on

,

H»

Dec. 23

on

from

of

Corning bank approved the

plans

reducing its capital

in

1, page 19. The stockholders

of the

21

District National Bank of Chicago

oy

were

*

,

(617)

of

the

Develin

in

the

Administration

and

Agency in Wash¬

ington and

President.

The Philadelphia "Inquirer" states
that Mr. Mooney had been Presi¬

Credit

Federal Security

and

Board

as

May, 1947,

previously served

Lieut. Colonel in

the office
,

of

Air

as a

of /The Assistant Chief

Staff

for

Personnel.

Her¬

dent since 1935; Mr. Develin has man- A.
Orlick ; was
appointed
capital from $300,000
war in. April,'-1917.
been
connected -with
the
bank
38
:
years.' He to $600,000 effective Jan. 22, it is
Assistant Cashier. He J has been
since 1931. "
Following the- ending :of the
vj pined the learned; from the weekly bulletin
employed by the bank since 1924;
; jg.
first World War; the Secretary of
:r\J ■■■ •*. *•. •
E q u i ta b I e of the Office of the
Comptroller
the Treasury asked Mr. Lamont to•The Western National Bank of Thomas L, Ray was appointed As¬
"Tr ust^Corh- of the.Currency. V "
*
•'*
go to Paris as; one of the two
*
"* V- "• •York, Pa., has increased Its capi¬ sistant Manager of the bond de¬
^pany as a
representatives of the Treasury
Lincoln Rochester Trust Com¬ tal from $225,000 to $540,000. Part partment. He has been with the
junior clerk
upon the American Commission to
in 1910, was pany of Rochester, N. Y^, absorbed 'of the increase was brought about
Albert J. Eggerbank since Dec., 1945; .WiUi&m R.
negotiate peace. Later he was in¬
appointed
an the : Corning - Trust
Company of by a stock -dividend of $225,000
while the additional $90,000 was Mclyer was, advanced from As-j
timately associated 1 with the ef- Assistant Secretary in 1924 and Corning, N. Y. on Jan.
14,. the
forts made under the auspices of
became Equitable's first personnel Board of Governors of the Fed¬ realized through the sale of new sistant. Cashier, to- Assistant Vice-r
the Allied powers to finance the
stock. -The. Bulletin of the office President. He came to the bank
officer. He was elected an Assist¬ eral
Reserve " System
has
an¬
recovery of Austria and strengthen ant Vice-President in
of. the Comptroller. of the Cur¬
1930 and a

the staff for

creased

its

"

-

■

.•

.

'

.

-

the Germany of the Weimar Re¬

public.
In

1918 Mr. Lamont

"Ncw

York

nounced.

Vice-President of

in

1934.

He is Chairman of the bank's personnel committee and of the ad-

bought the
Evening Post" from' visory




Chase

committee

of

the

Chase

r

In connection with the

^absorption, the former main of¬
fice of. the Corning'Trust Com¬
pany

merly

as

well

as

operated

the branch for¬

by

the

Corning

from

reported that the enlarged
capital became .effective Dec. -17.

the

pany

in

rency
'

;

.

„

-Following

*

*

the

*

;v,

f

action

of

.

,

the

pointed

Cleveland' Trust

Jan.,'1945,
an

Jan.,-1946.'

Assistant
-

•

—.

Conn

and-was
•

ap¬

Cashier

in

\

4

.-yr

22

THE COMMERCIAL

(618)

*

FINANCIAL* CHRONICLE

&

Thursday, February 5,; 1948,
the

in

The Problem of
back in the war days has to date

value

of $4U in

robbed

been

ment

spendings sooner or later
as purchases that com¬
pete with current demands and
are, therefore, inflationary. Sev¬

on

$100 bond by this inflation.
There a're at least 10,000,000 and

reappear

each

probably more nearly 15,000,000
people in this country who have
already been seriously hurt by
these price increases.
Their nor¬
mal purchases have been sharply
curtailed. They have been "priced
out of the market" for many kinds
of goods.
If this inflation continues, if it
as
not stopped, others will find
their purchasing power restricted.
Those who are hurt will go to
20,000,000 and then to more. The
demand for units of goods will
decline. Costs per unit of produc¬
tion will go up.
Prices will go
still higher.
Unemployment, will
increase.
Unemployment insur¬
ance

will

reserves

be

used

eral

such;
If

of

offices

of

comes

begin with

a

shall

we

fidence

in

will be

likely to

wane,

Expenditures
for
this
purpose
should, in a time such as this, be
kept to a minimum. Every one
who can do any productive work,
even
only a little, should do so

the

Russia

retire

of

we

WPA

in build¬
ing up long-time credit balances
against this country. Every nation
that

ible

people

( /)

j

.:

If the respons¬

the

the

demand,

will have

end.

before.

come

If,

to

after

.

in

increases

tional

are now

minimum

Such

inflation.

Exports should be curtailed
bare necessities of taking
of

of the most urgent needs

by law

no

of

The

rate.

Minimum Wage

fers

current

Con¬

and in several of the States
for an increase in the /minimum
has

c
wage

and

bearing

a
a

M

deserves

seeking

are

to

present minimum wage

States.

Where

No minimum

j

efficiency of, or the worth
Z0*/ the^ employee. A minimum
JS
^
compel any
from 40c
?,
/ wages and/
per hour. j0.,
former em-the l

to 75c, or at least to 65c,
The same influences are at work

in the

made

any

powerful
raise / the

the

c

w

W^^er marginal/.em-

•

the

enactment

such

of

Clearly,

laws.

if

there

is

a

all employers

are

ancing

of

our

own

stimulate further

an

or

economy

from

ily

inflation.

There is much more

to a mini¬

the

by

increased

tinue to hold their jobs.

may
»-

mand and the supply sides of the

present

situation.

First,

let

us

seemed

fixed ' at

of the things that
would restrain the inflationary ef¬
some

a

law

.

f

.

■

,

.

,

in the
the minimum
employees en¬

adjusted

more,

feel

some

,

.

,

,

*

.

(4) Government spending lines, have gone




up.

When wages

ential is

due

to

factors of value

rate."

After; the establishment of

un¬

while others

than the

propor¬
un¬

employees who

/that-whatever

in¬

they might obtain arte in¬
adequate.
Consequently an en¬
tirely new set of arguments about
inequities would arise accompa¬
nied by employee irritation and
industrial dissension which would
require considerable time for
rection.

cor¬

V:'//// /'

,

Finally,

■■

-V'''

there would certainly

be black market violations of the

minimum basic wage law.as
have been in the past and as
are

at

will

there
there

the

present time;
There
be evasions of various

also

kinds from
creases

think

paying the proper in¬

in

differentia,Is./ Don't
there/won't'! be. The

that

reports of the Federal
Wage, Hour and Public Contracts
annual

Division

for

the

past two years,

the years of greatest

employment

and

highest wages we have ever
had, shows that more than three?
quarters of all the employers op/
erating under the Federal mini¬
mum wage of only 40c per hour,
a 40-hour week and time and one/
half

for

half

overtime

violations

more

are

and

guilty

more

of

than

of

"major violations."
One
be very sagacious
that raising the mini/
wage by more than 50% wilj

desn't have to
to foresee
mum

increase the violations.
you

want,

fiasco?

another

Or will

this

What do

prohibition
law

be fol¬

lowed by the establishment of an

overpowering inspection and en¬
forcement i, government. depart¬
ment?

u

-

,

j

creases

only/ 25c ^per hour, in
prohibiting employment at Spite of increasing demands for
any rate below a fixed minimum* goods and increasing employment,
fects
of
too
much
purchasing wrong.
.;;•
/; • ■ 'I wage, a wage high enough to' there'• were,, according to Elmer {
power.
j Andrews,, then Administrator, of j
(9) There should be every pos¬ cover the necessities of life. ; /^
sible resistance to price increases
the Wage and Hour Act, from 30,- '
How Purchasing Power May Be
Unfortunately this idea has not
on every hand and at every inch
worked in just the way that its 000 to 50,000 persons thrown out
Restrained
of the way.
out of work because of the mini¬
If you are going to advocates would have liked.
The;
(1) Bank credit and loans for
fight inflation you can't do it by establishment
of
a
minimum mum wage. If the minimum wage
consumption purposes should be
were now to be increased at pne
raising prices. You must keep
severely restricted. A beginning prices down. You must resist wage, particularly if widely ap¬ fell
swoop by 50% or more, it
plied and enforced, sets off an en¬
lias been made in such restrictions
every
unnecessary
addition
to tire series of effects which in the seems inevitable that this would
by the Federal Reserve System. costs. This is the time for serious
be accompanied by considerably
long run leave the intended bene¬
This type of restriction/deserves
review of every expense of do¬
ficiaries, the marginal workers of greater disemployment.
national support.
ing business and the sharp elimi¬ our
7 Another inflationary effect of
economy, as badly off as they
(2) Installment and credit sell¬ nation of every burden that can
the establishment of a minimum
were before, but with. other ef¬
ing controls should, I believe, be be justifiably cut out.
Ransack fects that hurt a great many other wage at a higher amount is the
Teimposed, but preferably by vol¬ your business for possible econo¬
Consequent necessity for adjusting
people.
untary action of those engaged in mies so that you can sell for less,
other wage rates to this new base
Here is the way that a minimum'
the credit business, rather than by or at least so that you can hold to
rate.
When a basic minimum
wage, or an increase in a mini/'
the government.
i your present prices.
This is not
Wage is increased from 40c to 65c
Both of these controls may slow only good business, but it is also mum wage actually works. / A
minimum wage, however it may per hour, it also becomes neces¬
up certain types of sales some¬ patriotism. 1
"' *
/"
be set,
whether by law or :by sary to change all of the previ¬
what at present, but in doing so,
(10) All wage and salary in¬ the processes of, market bargain-' ously existing differentials above
this will help to preserve the en¬
40c per hour to; higher rates of
crease? that are not accompanied
ing, constitutes the base wage
tire country from further infla¬
by more than proportionate in¬ rate. This is the wage of the mar¬ ;pay/';//.///;'•/•> ' /,/;/
'■ > 'i
tion.
.'
/ .,/:/
creases in productivity should be
ginal worker.
All. wage" rates" //whenthe. base - rate has been;
(3) Widespread thrift. should discouraged,
The drives of or¬ above the basic minimum I wage moved up frpm/40c .to, 65c. per
be
encouraged
by urging in¬ ganized labor for higher wage rate constitute
differentials/paid hour/employees who; formerly re¬
creased purchases of both public? rates at the present time without
for differences in skill,
experi/: ceived 45c,: 50c, 55c, and 60c per
.and private bonds, stocks and. in¬ relation to present or future in¬
ence,
efficiency,
dependability," hoirr,/are- entitled to: have :their
surance,
and
by setting aside creases in productivity are purely responsibilities
carried/ / special; Wages , raised .-not merely to 65c,.
more
money as savings in the inflationary,
> .
abilities, and so on. •'Yfhef^vef/ but /to: s differentials above :65c,;.
regular banks, savings banks, pos¬
Ever since 1939 wage costs, per there is a wage that is/high,er; correspbndiilg td -their/ differen¬
tal savings, and so on.
/ unit, of production, and in piost than the basic wage tiie differ¬ tials abbve! the preceding .base,
enumerate

even

as

less

get

would
)

easy

that seemed necessary was,to pass,

com¬

differentials would

doubtedly be

solution;^ >^^ai^^eian(i Hqui/La^ih4Sf38,/
problems of low paid workers. Alf | Wben the minimum wage /was
an

uneven¬

tionate increase. There would

.

policy, at present, to force corpo¬
rations to pay out a large part of
each year's profits in dividends.
For an economic period such as
we are now in, this policy is dead

to

would

-

look at both the de¬

be

doubtedly get

.

us

less

concern.

Some

rate.

titled

„

"Let

would

base

But under .conditions of a buy-/
(8) Corporations should pursue mum wage regulation than apinflation is checked, production1
a conservative policy with refer¬
pears on the surface. The original ers' market, when customers are i
continues to rise it may be rea¬
ence
to payment of dividends to
purpose
of the minimum wage indifferent as - to making pursonably expected that the ordi¬ stockholders. This is not time in was to increase the incomes and
phase's at present prices and un¬
nary forces of competition coupled
which to increase dividend pay¬ to improve the standards of liv- willing to pay higher prices, then "
with improvements in technology |
ments. Corporation profits should, ing of the least skilled, least em-; it is inevitable that some, if not
will thereafter lead to a gradual
so
far as possible,
be held for j ployable, the lowest paid, in other,: mqst,/ of the marginal workers
decline in prices in line with the
use in making needed extensions
words, the marginal workers, inl whose wages have been arbitrar- j
historic trend of our econpmy.
;|j in plan and equipment, exten¬ our economy Most people qf ily. -raised by regulation will be
Let us consider now some of sions which
may in turn be used
good-will have been favorablly; thrown,out of work.
j
the things that can be done to to increase production.
The impressed by, and are sympathetic;
Within three months after the'
stop
this
present
rose.
to some it nas:
inflationary Bureau of Internal Revenue has a to, this purpose.
To sdme li has effective date of the present Fed-

trend.

to

proportion

same

con¬

'

more or

concern

rates

subject to the;

law

are

Not all of the differential wage

levels,

economic effects.

effects

graphic area to area, from
munity to community, and

sellers'

market, such, as there is at the
present time, and if goods can be
sold at higher prices, then, sinces

they are passed this,
will be followed by the setting
of
minimum
wage
rates at or
about the same as the Federal

If and when

Economic

ly operative / / < •,/■////; /. ^/.\
There will, of course, be a time
lag between the establishment of
the basic minimum wage rate and
the adjustments of all the differ¬
entials. This time lag would cer-r
tainly vary somewhat from in¬
dustry to
industry, from geo¬

already have minimum wage laws-ra fc^ePenc*s entirely
upon whether the employer ^an
the effort is to increase the mini¬
ih
sbme
way
secure
increased
mum, wages for marginal workers
productivity
from
such
e mup to 75c, or at least to 65c, per
hour.
In
the
20-odd States ^ in ployees, or on whether he can se¬
cure increased prices to cover the
which
there
are
no
.minimum
increases in wages fixed by the
wage laws you are certain to see
■Jaw. ;
an intensive
and concerted drive
for

actness.

nearly always the results of pres¬
sures more or less unevenly dis¬
tributed and

will be ^employed at a

States

level,
increases would have to be
all
along
the
line
up
through the entire wage structure,
i
It is not to be assumed that
these far-reaching adjustments in
wage differentials, following the
adoption of a new or a higher
minimum basic wage rate, occur
witb the precision and accuracy
of a mathematical formula. There
are very
few, if any, economic
situations that may be described
with complete mathematical ex¬
wage

ad¬

trarilydoes' not increase the pro-'

inflation

attention. / At

Federal level there
interests

on

guar¬

are

gress

relatively

a

short time, following the increase
in the minimum basic wage

wage law of¬
protection.
Those who
employed at the former rate
may be laid off at the new rate.
Raising the minimum wage arbi-

.

in

demand

provides
employment.

increased. * Within

i

arbitrarily

antee

The Inflationary Effect of the

The

rate

vocates of minimum wage legisla¬
tion say that it provides protec¬
tion.
This is obviously' inaccu¬

wage

;

An increase in the

wage

fixed

productivity

the most important cause

further

of

employment.

are
purely
inflationary.
increases without propor¬

tion,
Wage

(

of

inflationary

movement

Not

care

the

care

excess

This movement both at law, even though competitive in
the Fgdpral arid the State levels [ all other respects, they will ^11
l^not something merely incidental; raise their prices to cover their
or
sporadic.
It is well planned increased
common
labor costs,
set up and put to work in this
and carefully organized. If it goes Under these conditions employees
country merely postpone the bal¬ through it will have far-reaching . whose wages have been arbitrar

be turned the other way.
If and when the production in¬

sufficiently to take

be

of household equipment, of ex¬
pensive textiles including nylons,
of food products where they are
not actually needed, and of mech¬
anical equipment that should be

every

can

creases

money

people elsewhere, and for the pur¬
pose of maintaining our interna¬
tional position among the nations
of the world.
Exports of automo¬
biles both new and second-hand,

em¬

country will
effort to the
restraint of purchasing power and
tc the increase of production, the
tide

country

gold.
to

of this

"feut bend their

this

or

urged to pay its debts
by the shipment of goods rather
than by the shipment of cash or

ployers, employees and consumers
simply will not follow the dictates

.

owes

should

world communist economy.
,
None of this needs to happen.

common sense.

ex¬

as

increases should be discouraged.

purchases elsewhere,

but this seems to be just what
they would like. If and when our
economy goes to smash, the Soviet
system expects to be on hand to
pick up the pieces and to build a

■of

for workers to take

ports at least for such time as will
permit productive mechanism to
catch up with demand.
Imports
should be paid for, so far as pos¬
sible, with American dollars and
with the understanding that these
funds should be used in making

to

Soviet

will be because

time for men to

in

Of the minimum,, basic wage rate

and more per hour.
:
| •.
paid to such employees constitutes '/ But following these adjustments
they have done since 1939, they
for the wage earners who previ¬
become inflationary. Pay foils, in the economic meajure of need, de
sir ability, or productivity
the manufacturing industries «"-ah,btv «r-nmd.ict.vitv of such ously earned more than 40c, but
r»f «.ri
less than 65c per hour, it would
which may be taken as typical for workers, as compared to marginal
all employment are now.over 3 workers.
There are always some,' also be necessary to raise the
of; those who formerly
times as high as they were in 1939. and there will always be some, j wages
Wherever wages have gone up employees who are worth twice, earned more than 65c per hour.
faster than production, production or ; many times, as much as the After marginal workers have h.ad
their wages increased more than
in units of goods have gone up, marginal workers., If you want
prices have gone up and inflation them. to. work for you, you will 50%, and after those employees
have to pay them what they are who
formerly earned from 40c to
has been increased.
/
worth.
65c per hour have had their wages
'//// V
The increases in wages since
Let us consider the effect of
proportionately increased, it
1939 have not been the only cause
changing the present1 minimum would be neither fair nor practic¬
of our present inflation, but they
able to expect workers of higher
wage rate from 40c to 65c per
have been
an
important cause.
hour.
Such
an
increase means competence to continue their em¬
Further wage increases without
the raising;of the base wage rate
ployment
without
similar
in¬
increases in production, or what
more than
They, too,
50%, (62%% to be ex¬ creases in their pay.
amounts to the same thing at in*
act).
First there is the effect on would have to have their wages
creased cost per unit of produc¬

productivity,

than

faster

rise

(6) Imports should be encour¬
aged.
Our tariff laws should be
revised to permit increased im¬

predicting for this
They not only believe
are headed for a smash,

If it does it

or

no

tended vacations.

are now

country.
that

economists

This is

now.

pretty picture, but this is just

what

is

dollar for .this purpose

every

spent for essential human welfare.

the crash will be due. This is not
a

their

and reexamined to make sure that

financing
and then

government

where

helpful in raising

(5) All relief expenditures now
to
be
carefully examined

had then. Con¬

we

gov¬

need

much larger govern¬

ment debt than

of

production.

and

have

stores

and

work would be

had back in the 1930's.

as we

that

sort

some

thousands

employees should resign

their government jobs and go out
to work on farms, in factories, in

exhausted.
The govern¬
ment may then attempt to bolster
the vanishing standards of living
of the unemployed by the estab¬
lishment

hundred

ernment

finally

'

ferentials dfi wage rates

should be sharply restricted to the
most urgent needs.
All govern¬

(Continued from page 13)

new base rate, such employees
would,. therefore, be entitled to
Wage rates of 70c, 75c, 80c, 85c

production for which the em¬
ployer is willing to pay. The dif¬

/

r

When

a

new

t-

and higher mini¬

basic

wage rate is, estab¬
lished, it simply creates a situa¬

mum

tion

that

makes.it,

persistently

logically necessary < to v pay
similar increases throughout the
entire wage- structure. When con¬
fronted < byi-ane w/minimum; wage
regulation .^intelligent - and ' fair/

and

minded -employers-, wil.1 promptly,
recognize the-logic as; < well as the
,

Volume <167 Number 4670

rieecUor

of

&

THE COMMERCIAL

*

tively

raising wage differentials

highly

skilled workers if they
possibly do sq.> If they fail
to. do so, their better
.employees
will, sooner or later, seek employ¬

j

can

to.

dangerous

>t_heir. more V competent/ and jeconomy. " >/.'

entire

^our /

all* agree that high
real wages, are desirable.
One of the most important meas¬
We

can

wages,

since

tion

made

1930

take

CHRONICLE.

(619)

-

that,

care

are

Ji

I

hesitate to estimate the

this

20c

increase

25c

to

cost of

in

"Dire

capi¬

extremities

inevitably

is
the.large' increases'/in"
inflated money,
The need is very
wages/real wages, that have been
great. : /;/ 1
y./
y, „/:
-by ' American /workers.
The money with which to re¬
Real wages are/now at a higher
build our capital equipment must
point in this country than uiey
be
found.
Whatever
prevents
have ever been before:' - They are
such accumulations of capital and
at a higher point than'in any
expansions of plant? and equip¬
other country in the entire history

require bold action and we are
definitely faced with dire extrem¬
ities (in Europe). This is no time
for equivocation or 'pussyfooting.'
The challenge facing us is unmis¬
takably clear. Either we meet it
now or
we postpone decision
to
alater .date which may f be too

establishment, of
a
higher
minimum wage rate is, in fact, a
powerful and effective lever for

of

late.

hoisting the

been

ment

not

in

the adjust¬
differentials are

wage

corrected

themselves,

try

by- the .employers

theneed

^

for

such

CIO and the AFL.

this it

From

will

be

that

seen

the

marginal workers but
"workers/ throughout
the
wage

structure.

After

wage

rates

been

have

all persons who

of

all

is

It

our

common

achieved

always

by increased pro-'

increased,

been

is

It

increases

no

man-hour

ductivity that has made
no

h)ffn

natvwe

pro¬

possible

ebr -an: nmm

A -1

It is man-hour

rate.

in

need

now.

us

never

forget this.

differential wage rate will, un¬

der

the new condition, have a
logical claim for a wage increase,
which may be
effectively urged

How -ProAuction

>
The

either

individually or collectively.
wage
demands, based, as
they are, on what is both logical
granted.

The

minimum

not

are

later have

or

most

fundamental

enough

less food, fewer

tomobiles,

,J/}:/,;/:■//'./; ;//,■/■•';;

:

,

fact

of

present inflation is that there

our

Such

May Be

Increased

fewer

motninp

sk

goods,

We

have

houses, fewer

au¬

refrigerators,
Ip.qq

anq

almost

oi

law is, in
of the most potent de¬
wage

everything that people want to
buy. Consequently, prices are too
securing, high and they are going higher.
wage
increases, not merely for The real
answer, the only answer,
marginal workers, but also for all to this
problem is more produc¬
other higher skilled
and
better tion. // =
v//:/;///•;,
paid workers.This, r I suspect,
-If this country is to get out of
may be one of the reasons why
this inflation safely it must pro¬
the unions,
especially during re¬ duce more than it has ever pro¬
cent years, have been so
eager for
duced before.
We must distribute
minimum
wage //legislation.: It
more-than we* have ever
dis¬
makes their job in bargaining for
tributed/before, We must sorhe/
higher wages much easier/ /,/;//// how do this more
economically
X"' Higher wages without, increased than we have ever done so
before:
productivity simply mean higher This is the way to cure this1 in-?
production costs. /Higher produc¬ flation:v.'/ '■: :/ //
fact,

one

vices

invented

ever

for

tion costs

must, in turn, find their
(1) In order that there may be
„way into higher prices.v. Every •increases in
production, there is
increase, in wages without an in¬
feed for large expansions of fac^
crease in.
productivity tends to be tory plant capacity. There is need
purely: inflationary.
The mini¬ for a great deal of new and more'
mum wage is not the
only cause efficient equipment.-J For most of
vof the present inflation, but it is the
past 19 years, especially dur-.
a s
.contributing
factor.
If - in- ing the war
years, the capital in-;
creasedfrom40c to ,65c. per hour;
vested Jn productive enterprise in
it will become a major cause,
v
his countrv was used uo :faster.•
:

v

It is

few!

amazing that there
other

are

than

than it could

so

be

replaced./, Plant

and

labor

inadequate production,

it is at

only

capital

need. / Such

present

can

from savings.
A re¬
duction in the tax rate would per¬

mit

come

in

increase

an

should

savings which

be

ductive capital.

There

into

turned

then

tax reductioits for those who
and

their savings

make

for

building

save

available

the nation's

up

pro¬

should be

cap¬

ital. yy/■'.///

"(4) One

of

the

most

the device of the minimum

sale

wage.

are

really would be. It is even
amazing that there are so
business
have
of

men

effects

on

The

their

following

typical

appeared

is

textile

as

of

asked

by

mittee

the

before

ed

a

business

"f

ing the

know what you

mean," the

facturer replied. /.

•

,1

Total

was

and

65c;

per

ended,

so

y,

new

financing in stock
bond issues during 1946 and
averaged

financing back in the latter
of

the

less

1920's.

than
To

half
be

of

sure,

long enough to adduce
some

000.000

in

and

men

women

industries directly

this

Act,

-

Who

another
in

and

and

trades

10,000.000
retailing,
agricul¬

even

petition with interestate indus
tries, are now working 40 or less
hours per week.
It is absurd to
ssume that our productive econ¬
can

40

on

turn out

hours

they could with

much goods

as

less

or

-

We

per

week

as

48-hour work
told by the Bureau

Labor

of

are

a

Statistics that

manu¬

we

have

employment,
As a matter of
fact, it is only full employment
at part-time work.
::y ,y/
is

There

greater

serious

danger

than

the surface in the 40-

work

hour

law.

week

There

is

question, that no one re¬

sponsible for the short work week
has tried to answer, whether the

this country, or of
any
other country, can produce
enough goods on a 40-hour work
week to take care of the needs
of its own people. In this country
there is qdded responsibility for
it is not only supposed to - pro¬
duce enough for itself, but also
to
supply the
needs of other
people.
//■ ////yyy/y; \:/y
economy

of

y: A

repeal of the 40-hour-week,
time-and-a-half provision in the
Wage and Hour Law would open
the

to a much needed inin:, production and at the

way

'crease

of

business

con¬

same

c

' time

men

provide opportunities
earnings to millions

and

employees
working only 40

women

plowing / back their, who are now
earnings into their own /busii : hours per week or less, but who
nesses. y There
may be mote:, of
would gladly work longer hours
such .intra-company ' investments? at,reasonable straight-time wages.
than there were in the 1920's,
but; This law prevents such employ¬
even so, the totals; of
capital out/ ment./ It is time, to get rid of
lay are still less' than - they were/ •this, handicap upon our productive
Don't forget that capital equip¬
capacity..., .
ment during, the past 19 years
h^s y." (5) On/the chance that the 40
cerns/

,//

are

,

•

being advocated will really do what is expected

engaged

ture^ whose hours are set in com¬

omy

evidence and

some

solid argument to show that what is

covered by

are/ engaged

service

well

individual

and the

present

for increased

as

Senator,

the like

new-financing may not' be the full
story.
-Many / corporations,as

don't

hour.

war

production dur¬

part

his'question by. asking whether it
would make any difference to the
manufacturer's/operations if the
minimum wage were to be raised
or

so

the

such

The Congressman then clarified

from 40c to 60c

do

of

1947

was

v:'/;/:/

not

It has not done

war.

since the

a

///;//Xs;.-,

don't /.understand.? - I

did

depression

ment for civilian

by the minimum: wage
provision in the Fair Labor Stand¬

%

It

now.

the

a

affected

ards Act of 1938.

This

helpful if the

Standards Act of 1938. About 20,-

inadequate

appears on

1930's
It certainly did not make
investments in capital and equip¬

member of the Com¬

whether his

right

during

In the

discussion, he

stores.

be

.

others too, would leave off talking in catch-phrases
about "too little and too late," "bold action" and

pare

country
is falling far short of making the
capital investments that are need¬

manufacturer

witness

a

more

than in 1939. /

a

probably

Congressional Committee.

retail

and

minimum

A few weeks ago

case.

well-known

course

more

many

businesses.

own

so

stores

Our
crying need is for more
capital in the form of buildings,
machines, equipment, trucks, lo¬
comotives, box rears, warehouses

understanding
the

retail

condition today than

<hey were,in 1929, and

employers who

of

the

and

worse

ticularly

the business economy, or

wage on
even

and

apparent

no

the

plants
in

would

It

serious

production
at the present time in the short¬
age of labor due to the short work
week fixed by
the Fair Labor

causes/?of

full

munity leaders who have in the
past favored the application of the
minimum wage device had any
real knowledge of what its effects

*

as

to

seems

in the Congress and

the Administration to get to¬
Irvln« M. Ives
gether in resolving questions of
differences which may exist (about the so-called
European Recovery Plan). There appears to be a
determination on the part of the leadership, in the
Senate at least, that Republicans and Democrats
alike—as many of us as possible—shall be granted
the opportunity to reach agreement of this program.
"The great effort of Senator Vandenberg and
Senator Connally is already showing results in the
plan of administration suggested by the Brookings
Institution, which may/well be a plan on which
most of us can agree. > /
;
;/
y / /"The other big stumbling-block of contention
is the amount of money to be appropriated for this
undertaking/ Even here, however, there seems to
be a growing feeling among the large majority in
the Congress that, without adequate appropriation,
no
plan can succeed."—Senator Irving M. Ives.

present, the case is altogether dif¬
ferent./.:-More /capital
is
the

tems^ the warehouses/ the whole¬

It

•

more

;

*

in

Revisions should be prompt¬
our tax laws so as to
make it possible! to use some of
the'
money
now
going > to the
government for capital pur¬
poses.
Normally, high tax rates
are
preventives of inflation, but
when the cause of the inflation is

economists, who

may
be
sincerely " doubted
whether most liberal minded com¬

.

for

should be
liberally for pro¬

purposes,

ly made in

understand and properly evaluate

<

restricted

be

sis,

."A concerted effort

.

duction and distribution of goods.

week.

leaders and their

I

should

extended

equipment on farms, in fac¬
tories, on the transportation sys¬

persons,

*

be under way

loans,

(3)

productivity
Let

:

which

and

credits-

/ :-

s

,

consumption

had

production.

employee who formerely. earned

be

encourages the formation of
such capital should be permitted
and urged

ever

there

basic

formerly received

and fair, will sooner

ment should be eliminated. What¬

"/(2) Bank

tional wage rate increases.
Every

to

equipment over what we had
in the 1920's in terms of present

ductivity. There would have been
no
wage gains in this country if

differential wage rates are en¬
titled to and should have
propor¬

a

world.

real wage gains have

But

entire

the

the

hope that this trend will continue.

wage rates not merely

of

tal

gained

corrections will very soon be ex¬
plained to them by-representa¬
tives of the

of the progress of this coun¬

ures

elsewhere.' V If

ments

,

23

being
by other nations.

us

upon

to

and

demands

the

of

•

FINANCIAL

.

^No.- Not at allr'X the manufacfurer replied. ;"i am already pay- ,suffered great losses due to. wear hour, time-and-a-half
provision
.and tear, to depreciation and to
ing all of my employees more
;may.not be repealed soon enough
obsolescence./ ,-:
than 65c. per houL"/./-:./*-•'Z/"■ •.
to-help solve the present inflation,
-'Our y provisions y 'for //capital
With-: all due/respect to this
Congress should, as an alterna¬
equipment for nearly' all forms of tive, be urged to change its immi¬
and
to
other
businessmen" for
civilian uses have fallen far be¬
gration laws at once so that per¬
their .ability
to run
successful hind.
We must not merely re¬
sons who are idle or inadequately
businesses/ their thoughts on the build what we have lost since-the employed in other countries and
1920's, but we must also build an who are competent and willing to
mininum wage, if like those of

eries

and

it

way
an

the

on

farms.

Jn

be possible to

may

increase

in

labor

this

secure

power;

and

of

production so much needed in
this country at the present time.
There is something economical¬

ly simple-minded about proposals
now

being made in this country to

been made, production

pendent

greater labor productivity. There
something wrong about a trend
which, for example, accounts for
a
brick layer who back in the
is

draw upon our supplies of goods

1920's laid

to

the

take

countries

other
same
no

of

care

time

needy
who

in

persons
are

at

the

unemployed and have

immediate prospects of secur¬

ing employment. We should bring
them

over

here in sufficient

num¬

ber to produce

at least the goods
equivalents of the goods
that are to be exported under the
the

or

Marshall,

or some

is almost

sure

y

other Plan that

to be adopted,

desirable effects.
It would
help this country to increase its
many

production and so put an end to
the inflationary trend. That would
be

for every one in this
Such
working
immi¬
grants might, after a period of
service
in
this country, be
re¬
a

in
a

gain

country.

turned to their former homes with

their savings of

their earnings at
American
wage
standards
and
with their, improved work knowhow
from
experience
under
American conditions of produc¬

2,000 bricks

day; m
day; and.

a

1930's 1,000 bricks a

1947

laid

less

than

bricks

500

day. X
We must in this

country somehow

learn that the final solution to the

present

problem of rising prices;
squarely upon securing more
production per man, more pro¬
rests

duction per man-hour,' and pro¬
duction at lowered unit costs. We
must

immigration would have

Such

is still de¬

work,efficient*
competent, intelligent, willing,
"hard work.
There is
need
for
upon

all

more

no

learn that there
to

will

be-

than is pro¬

consume

duced, and that every obstruction
placed upon increased productiv¬
ity whether that be in restriction
of hours of work, in loafing on
the job,
or in
demanding more
money except for increased production,

is

injury

an

to

The
are

-

inflationary trend that
I

.

we

experiencing is danger¬

now

ous.

must

minimize

not

tragic possibilities.

It

its

end;

could

in disaster.

This is what the

mies of

our

economic system want

tion. This, in turn, would, no

to see.

However, it need not ef.d.

be

in disaster.

doubt
raising production
help to end the
threat of a permanent United Na¬
tions' WPA to be supported by
this country. Such changes in our
immigration laws should be en¬
acted at once.
' /
: ?
/
V (6) Credits provided by this
Country to other nations under the
Marshall;
or
any
other
Plan,
should so far as possible be used
in

helpful

abroad

and

so

.

by those nations in making their
needed
purchases
in
countries
than

other

sion

of

our

demand

own:

ene¬

It will not end in dis¬

aster, if the people of this

coun¬

will * but exercise
common,
sense, and if business people, errrployers and employees, will but
consider
their
long-run
rather

try

Above all,

work,
than

immediate

their

than

interests.

what is most needed i-s

work,

more

before.

ever

more
work
Our national

for the next
10 years
should be, "Let's go to work."
slogan

This diver¬

will

help

us

to

Four With

Capital Securities

■

this

industrialist, represent sheer

economic

ing,

or

illiteracy,

;

Such think-

lack of-thinking,-is




posi-'

increase
the

of

from

20%

to

25% in

care

work

admitted to this
raise production
not only in the factories, but also
of the increases dn popula-/in the forests, the mines, the fish¬

physical productive plant and
equipment of this country to take

may

be

country to help

accumulate the stocks of goods we
need

which

for

our

own

people

will take the pressure

from rising

lightened by countless

technological
with

all0 the

improvements,
"advances

that

but
have

to

E.

CALIF.—Oscar E.

Llewellyn J. Reese, James

Smith

have

Chronicle)

The Financial

OAKLAND,
Baan,

prices here.

At the broad base of pro¬
duction
is labor,
human labor.
The burdens of producing goods
(7)

have been

(Special

and
off

and

been

Capital

,

ojr.

economy.

Frank

added

to

L.
the

Securities

Broadway.

Mr.

staff

Co.,

Smith

viously with Waldron

Wilkins

was

& Co.

of

203ft
pre-

24

Thursday, February 5, 1948

CHRONICLE

& FINANCIAL

THE COMMERCIAL

(620)

lacking either the ability or the willingness to produce
this way, they can not possibly escape this.consequence

and

As We See It
(Continued from first

page)

-

relationships are but an

which

deranged currency
symptom.

in

outward

relief after which the "necessity"
matter of course. It
of thing which happened repeatedly in the

such
manipulation that such devices
and it was to prevent

epidemics of currency
as the International Bank and the

man's

be those

reasonably well-informed, helps
to adjust prices to intrinsic values.
We can not pussyfoot on this or
straddle the issue.
We have to
take a stand that speculation is

International Mone¬
great help to Europe. It may be that neither the people
of the United States nor those of Europe will attain the
created, and numerous "agreements" or
"understandings" reached about currency management.
position of economic abundance easily enough attainable
It was obvious from the first, however, that all this con¬
in other circumstances, but our shortcomings are not likely
cerned itself with symptoms, or at the most superficial¬
in the long run tp provide a way out for France, Britain
and the rest of them.
ities, only, and that the various countries which entered
These are, of course, matters which must be borne
into the arrangement (with the hope, of course, that
carefully in mind in arriving at any conclusions con¬
largesse from the United States would make it worth v
their while) had no intention of doing anything which
cerning the steps taken by France, Italy, Britain, or any
would oblige them to take the fundamental steps really
of the rest of them to "protect," to "stabilize," or to
do something else with their currencies. They are also
necessary for the cure of the ills responsible for currency f
difficulties.
considerations which must not be neglected when the
Remains to Be Seen

.

of the rest of them can
bring themselves to do that which is necessary to bring real
relief or to save them from the "permanently lower standard
■

living" about which so many pseudo-economists in Wash¬
ington and elsewhere are so fond of talking. This is hardly
the place to undertake any extended or technical analysis
of the factors which fix the value of one currency in terms
of other currencies.
Volumes have been written on the

But in this modern

.

'

.

a

"closed

curred

economy"

day and time no

folio devoted
vestments

well
„

•

people can thrive

rather silly efforts

in mind it is possible

identify those factors which will determine whether the
franc, left to its own devices, will presently settle down at
to

fairly solid and stable level and whether it will remain
that point indefinitely. There are all too many, or at least
it seems to us, who in their just advocacy of a free

some

at
so

If you took away from
markets what little is left of

speculator's activity, the nonspeculator type of securities buyer
could hardly expect to have his
business executed as cheaply as
he now does, and as thin as the
the

markets presently are,

they would

jnuch thinner without

be that

the

speculator. '
The Role of Salesman

alternative

only

that the investor would
ized

both

further,

would be
be penal¬

buying

and

selling, due to wider spread be¬
tween bid and asked prices un¬

■

compensation were
to go out and
numbers
to narrow those markets; in either
event, the absence of the specu¬
lator increases the investor's cost
of doing business.
Even though

less

higher
to

salesmen

stockholders and

bondholders to¬

million
Under present tax laws, those may far outnumber. labor union
other
members, they have not organized
states, and possibly savings banks, groups who have supplied most of themselves to a point where they
the risk money in the past are no
so that they might be permitted to
can hope that even under the most
longer able to do so. A good bit
put a part of their assets in equity
paternalistic schemes of our plan¬
of England's troubles today stem
capital, j Jhis is not a departure
ners,; they are going to be guarfrom her high individual tax prcfc.
from reality!'
In the first place, it
anteed a minimum price for their
gram since
World War I.
Had
can be demonstrated that a port¬

to "save", their currencies.

With such considerations as these

our

from page

talling between 15 and 20

4)

companies in New York and

—

by such foreign countries in their

his
of the

respected for

is

he

country.

The

Responsibility in Flow
Investment Capital
(Continued

least of all those nations whose
currencies are today most seriously in question. Nor is there
the slightest likelihood, whatever may be the superficial
appearances or the. hopes of foreign politicians, that the
United States of America will or can meet the deficits in¬
in

that

contribution to the economy

Brokers'
Of

Suffice it to say here very

"

see

find investors in greater

reading./'-

simply that the exchange
value of the currency of any nation is fixed, certainly
in the long run, by what that country has to offer the
outside world relative to what it demands or bids for
from the outside world.
Any country can have any
exchange rate it desires if it has no dealing with the
peoples or the economies outside its borders. Any coun¬
try can fix the value of
its currency at any point it
desires if it can find some outside party able and willing
to make good the difference between what it is able to
sell to the outside world and what it buys from the

•

.

■

illegal.

or

paid

of

outside world.

be futile.

legal

illegal, let the laws come out

operations of the
ternational Bank

(or,

rather, the French people) or any

subject, and some of them will repay

If it is
and
say
so
and let them close the
Exchange if this is their wish, but
if it is legal, let us uphold the
good name of the speculator and

either

International Monetary Fund, the In¬
or the so-called European Recovery
Program are studied. Any attempt to appraise any of
these undertakings, or any other related to them, with¬
out careful study of such factors as these will inevitably

'"V■

;/'*■

whether either France

camera,

tures,
etc., might have been
delayed for years. Normal specu¬
lation, when well balanced be¬
tween the bulls and the bears and

tary Fund were

It still remains to be seen

speculators, inventions like
steamboat, George East¬
the moving pic¬

no

Fulton's

petition which the European exporters are required to meet
in the postwar world may for this reason not be of the most
vigorous. All this may be, and, we suspect, is true, but it
scarcely has the effect or can have the effect of bringing

of further devaluation comes as a

•

will

There

furnishes temporary

early and middle 'thirties,

had

doubtless who will say that we
ourselves are not engaged in any miracles of productivity,
and that despite a high rate of activity and of production
at this time, are not in any position to throw stones at other
economies of the world. They may even add that the com¬

experience shows one thing clearer than any
other, it is, perhaps, that currency devaluation without
appropriate supporting action in the domestic economy
of the country devaluating its currency merely at most

this sort

risks, but we
going to destroy our roads
just because a few people are in¬
jured or killed in automobile acci¬
dents on these roads.
If America
are not

Shortcomings Not Helpful

Our

If

was

States does or does not do,
and all planned economies,
all the rest.

regardless of what the United
and equally regardless of any
foreign supplies of capital, and

Of course, there are

exchange market, appear to take it for granted that the
(and any other currency left to itself) will
find some level short of practical zero and stabilize itself

French franc

to fixed income in¬

will

as one

not always

do

so

containing some equity

since

investments,

investment errors

the inevitable
not be com¬

can

taxes not been so

of

of

trustees

seems

to

cries

textile

her

saving devices in order that she
could compete in the world mar¬
kets.
With tax rates as they were,
most individuals
hardly felt it

Furthermore, the portion

wealth and savings in the

securities

plants, her coal
mines and other industries by the
introduction
of
modern
labor-

ize

pensated by bonanzas.
This ad¬
mittedly is only a partial solution
becaues the type of stocks these
institutions would buy would only
be
the
highest grade seasoned
issues.

high she might
to modern¬

have raised the money

hands

be continu¬

ally increasing and funds that are
channeled into the debt form of

was

has

market

high-grade bond

recently

'■

years.
Bank

and,

become

Borrowing Inflationary

therefore,

that

their

cause

of

the

things they buy with the proceeds
of that dividend, is preserved at
the 1932 level or even at the 1939
level.

People should not be even

slightly encouraged to believe be¬

listed on the
Exchange they
the protective
temple whose priests

cause

they buy stocks

New

York

have

Stock

come

roof of some

under

going to see that their capital
preserved, but on the other
terests and it is up to the brokers hand, I question whether it is good
and investment fraternity to lead economics or sound business prac¬

tendency of

/The Industrial Securities Com¬
mittee of the IBA stressed the fact

parity, so
purchasing power, be¬
increased prices of

justed to some 90% of a

the de¬
mand on the market for equity
securities are not only new yearly
capital is likely to become greater.
savings, but the savings of former Now is the time to reverse the
"sticky"

of Amer¬

stock that their $9

dividend, which today is only the
same
as
in 1932, should be ad¬

Needed for Progress

The long-term,

have we heard any

the holders

ican Telephone

worth the gamble.

Speculation

nor

from

the

penalizing equity in¬

fight in creating a

favorable

are

is

tice for the Exchange to

take over

venture capital. the role of investment advisor in
that the reliance of business on
Doing this need not invite a repe¬ advising people, even by impli¬
capital markets for new money is
tition of the practices of the '20s, cation, about speculation in things
not in the long run inflationary
because the healthiest thing for like low-priced stocks.
since such a move results in tap¬
While I do not question the mo¬
our
markets is to see that they
ping the accumulated savings of are
entirely free from manipula¬ tives or the sincerity behind such
individuals.
It does not result in
tion, such as painting the tape, statements, I am fearful that good
background

for

bank de¬
spreading of rumors, creating ac¬ intentions such as these may be
hence, an increased
misunderstood.
Pepsi-Cola once
tivity to induce others to purchase
money
supply.
When business or
We are, of course, quite convinced that in no other
practices of any such kind. We sold around $1 and only a few
cannot
raise new money, it is
should want the capital markets to years ago, aside from things like
way is it possible to find out how much the franc or
foced to curtail expenditures or
Missouri-Pacific bonds which sold
perform their economic function
borrow
from the banks.
Bank
any other currency is really worth in the foreign mar¬
and I insist that risk-taker will at 1% of their face value and are
borrowing does have an inflation¬
kets, and no other way of setting up a currency system
generally lose
interest in the now worth many times more, you
ary
aspect in that this process
enterprise when it has become had any number of stocks selling
which will work out in actual practice. But, and this
creates new deposits and by build¬
successful and sell out to more around $1. such as the following:
is the main point we wish to make here, such a step
ing up the money supply, puts an conservative investors.
American Power and Light. Amer¬
inflationarv squeeze on the level
while necessary for such a result may or may not prove
We must do whatever is neces¬ ican Water Works and Electric,
of commodity prices.
Within
Curtis Publishing Company, Engi¬
sufficient to produce such a result. It can do the latter
sary to educate the people to have
moderate limits, when loans have
neers Public Service, International
a respect for stock and commodity
only if supported not by market manipulation, but by
been subnormal, the expansion is
exchanges.
.Never for any pur¬ Telephone and Telegraph, etc.,
an economy which, vis-a-vis the remainder of the world,
desirable and natural.
However,
many of which, even
after the
poses of appeasement or political
when
loans
and
deposits
are
is able to stand fully on its own feet.
long decline in our securities mar¬
reasons should we take the.atti¬
already at high levels, further tude that we do not encourage kets of the last 15 months, are
increments
become
undesirable
their
The Real Trouble
normal speculation by those well- selling, roughly, 10 times
and inflationary.
Creditor or debt informed and able and willing to price of a few years ago.
After
The real trouble with France and even more so with financing is at present encouraged
take the risk.
Only if speculation all, there's nothing sacred about
Britain is, first, that income they were at one time able to by the Federal tax system through reaches such heights that undue the fact that a stock is high in
the deductibity of all interest pay¬
remember
use
of the nation's bank credit price, because we all
draw on to help meet their bills from the outside world is
ments.
Since dividends distrib¬
takes place should it be curbed, .when Electric Bond & Share sold
now
not available to them, and, second, that there is no uted are not deducted from cor¬
180, American Super Power
but that condition hardly exists at
clear indication that the French people, the British people, porate net income for Federal tax
today.
Speculation is what made at 70 and Radio at 500. A high
purposes and interest payments to America and if speculation ceases price does not insure the virtue of
or the other peoples understand that they must work more

there.

increased

posits

commercial

and

m

diligently and produce more effectively than they have
a century or reconcile themselves to a "lower
standard of living." And wanting such an understanding,
done for half




bondholders

are

equity financing is
over

so

deducted,

discriminated

against creditor financing.

to be

in the blood of the average

American, then, in my opinion, we
would be suffering from dry rot.

any

stock and I think

the uninformed

that while

should not be en¬

couraged to come into

the stock

Volume 167 Number 4670

THE COMMERCIAL

market, if ;the public will- follow
the. Exchange's slogan of-/'Inves¬
tigate Before You Invest," that
from then on they should be al¬
■

-f;

lowed to risk their money as
they
fit,<
: -

see

,.

It might be well to
compare the

inactivity of the stock
relation

dices.

,

to

broad

Whether

production

economic

pr

,

indices, the rate of

stock

trading

wires

New

to

York,

the

stock 16% and,
buy or sell 1,000
shares/finds it quoted 16-17 Va, 100
side.

each

on

Last

to

year's turnover in

listings

only

was

about 20% of that of 1926.
1926
is the year used as
the. base in the
of
wholesale
commodity

index

prices

by

the

U.

S.

Bureau

Labor Statistics and it'is
less looked upon
our

of

more

or

period when

as a

economy as a whole

func¬

was

tioning well.
In
i929, the sales of Montgom¬
ery Ward were $267 million—last

they

year

ran at a rate of about

billion and
buck

sales

quarter; Sears, Roe¬
up from $355 mil-

a

$2 billion last
Motors sales since

over

General

1929

a

are

lion in 1930 to
year.

have doubled

from approxi¬
a
half to

mately $1

billion

$3 billion.

Electric kilowatt-hour

and

urged to "Get the facts before

invest," they do just that and

the facts
too

thin

for

comfortable

are

opera¬

The thin markets have dried
up

point where,

a

large block

of stock is for

if

any

sale, it

usually has to take the form of a
secondary or a special, with no
similar machinery devised for the
man
who wants to buy a
large
block of stock.

A person is almost
afraid to buy at the market
5,000
shares of
anything

today for fear

he

will run the stock
up unduly
and, therefore, subject himself to
a
barrage of questions the next
day as to why he bought it, etc.
If traders had

latitude, this

more

shouldn't

happen because the
traders would probably make the
stock available within reasonable

limits,

if

they had to go
short, but why should they do so
when short-sale profits, since
they
even

always short-term, are figured
at 100% for capital
gain purposes?
Of
course, we all realize the
are

about

but

$85

billion

in

1929

to

roughly $200 billion today. Trans¬
actions

on

the New York Curb Ex-

change have dropped from
of 476

ure

million

million

shares

in

in

1936

fig¬

a

1929

to

134

and

last

declined further to only 72
million
shares—just about 15%
from where they were 18 years
year

ago and almost half of where

they
were 10 years
ago.
Forgetting the
boom days in 1929, the value of a
franchise

to

business

do

the

on

New York Stock Exchange is only
35% of what it was in 1936 when
seats

still sold at $174,000.

are now

They

/ .This

is

Do

is

to

tax

as

should

try to do
something about—not only as an
obligation to the people employed
in this industry, but for, the sake
of

our
customers and the whole
American, economy.
High-speed
tickers, electric boards and with
1 bids and offers from hundreds of

Cities

all

the

over

world

real

the

at least the
the

all

England,
through
gains.

such

any

legislation

as

It

deduct

losses

your

put
tax

capital
nearly so

on

be

were

in

taxes
never

matter

no

gains

screwball

wouldn't

devastating

rates of the tax

what

the

if you could

against ordi¬

income

nary

or,
least,
against
dividend income and interest from

securities,
ally looks

as

an

individual natur¬

upon these two sources
to at least offset losses which are

bound to occur.
Take a
with a capital of $50,000—if

flowing

$100,000 during the year,
spends $20,000 to live and pays
$70,000 in taxes, he has $10,000
If he loses $50,000 in securi¬

ties

during the year, practically
all his capital is gone because he
can

only

deduct $1,000
of his
losses—whereas, if he could de¬
duct the whole

$50,000, he would
on $50,000
income instead of
$100,000.
only

pay an

income tax

Speculation and
Venture Capital
(Continued from

exchange members and their part¬
ners are the principal
buyers and
sellers, on exchanges. For the
past
eleven years the New York Stock
the
Curb
exchanges have ob¬

tained

a

volume
very

.

and

sales

by

their

partners.
shown that

have

participation in the total
of

the

slightly

about

932

member

dents

reports

member

corporations,
investment trusts, 217 banks,
220
foreigners,
296
specialists,
floor traders and odd-lot
dealers,

purchases

members
These

non-financial

187

dealers

and

market

and

171/2%

on

change and 16%

.

fluctuates

has

the

averaged

Stock

why stock
market volume or prices increased
or decreased on a
given day. The
opinions and requirements of too
many thousands of people are in¬
volved. But
the

we

do know each day

simple facts of whether

or not
the volume of stock market
specu¬

lation, or the price average, is in¬
creasing or is decreasing.
It is
possible, I believe, to show the
direct effect which the stock mar¬
ket has on the
raising of venture

capital by charting,
tive

basis,

new

stock

on a compara¬

the monthly sales of
issues, the volume of

stock market transactions and the

of stock market prices.

average

Such charts

different
and

indicate that in

months

between

1947 the sales volume of

comparison

months. These

months of marked

increases in the sale of
issues

almost

rise

a

in

market

volume

of

or a rise in
price average, or
only three instances out

of

In

the

71

months

of

marked

prior deecline in both

a

and price.

Ex¬

and

and

and

non-member

their

wives, depen¬
discretionary accounts

and 732 unclassified accounts
par¬

ticipated in purchases and sales or
both on that
day.
It was a day
of heavy
volume, but there is no
to believe that the

reason

variety

of participation would alter mate¬

both

volume

and

price

had

is, of course, not always
followed by an increase in the
average,
flow

of

sale

of

venture

capital. But the
capital issues almost

new

invariably shows
crease, only after
volume

marked/.in-

a

price has first led the

or

Such

charts,

of

than furnish

more

semblance of

a

banker. The stock market reveals
the
public's
attitude
toward
whether

not

or

to

venture

and

thfeir

bankers

whether

little

A

reflection

will

indicate

why the flow of venture
stock

that

market.
the

I

should

of

use

the

point

word

ownership is

ac¬

capacity

the

was

same

as

usual

the day

on

Exchange
mission concluded a study
single day's trading on the
York Stock Exchange. This

of

a

New-

study
ever

made to assemble and tabulate all

the details of

one

change. Even this

day

on

one

enormous

of work, which took about
prepare,

reached

ex¬

piece

a

year

only part of

the information about the
Studied.
It does show,

one

day

however;

that

17,603

domestic

individuals,




Stock Market

ment

of capital is smoothed out
into convenient averages, it gives

the

of

appearance

flow

(or

funds

into

continuous

a

perhaps

a

corporate

trickle)
and

use

Stock
even

cation
as

to

able

market

more

however, venture capital

goes to
work in separate groups'as par¬
ticular issues of securities are of¬

as

transactions

to motive than

origin.
to

are

But it

assume

they

seems

that

are

reason¬

most

pur¬

chasers buy stocks because
they
believe they will increase in value
and most sellers
anticipate a de¬
cline in
price.
In seeking out
what effect stock market
specula¬
tion may have on the

raising of

venture

a

a

sign is
offering

work to another group of venture¬

investors,

some

be

decision

a

made

capital, it is fruitless

attempt to sub-divide

stock

ket

whole

transactions

as

a

decision

matter of

impossible of classifi¬

to

mar¬

into

purely
theoretical
degrees
of
speculation.
The important fact

of
se¬

curities into private hands. In
fact,

This

Transactions

re¬

Com¬

represents the greatest effort

Motives of

of

way

pic¬

turesque than accurate. When the
spasmodic character of this move¬

by the prospective
ployer and his advisers.

studied.

specialists and odd-lot dealers.

maining 83% of the stock market
purchases and sales which are
made by non-members.
Recently

to

centage of member participation

in¬

more

percentages is

per¬

"flow"

savings and wealth into

stock

Ii&lf

counted for by members' transac¬
tions in their professional

the

out

describing the transfer of

dividual
new

factory,

that

capital

is dependent on conditions in the

Before

the Securities and

they

can go forward, or must
wait, in
their plans to raise equity capital.

sold.

the

its

capital. It flashes the green or the
red lights, which tell
companies

at

of

no

statistical proof of facts which are
self-evident to every investment

out

sources

do

course,

and

available

of

movement

other

soundly
will depend on a correct
appraisal of the attitude, at that
the thousands

of

ture

of

on

people

pany

is

not

must
em¬

simple
deciding that the com¬

needs

more

ployment they
owners

want.

capital to work

the

can

of

afford to offer

the

capital

they

They must decide whether

the terms

able.

The

likely to be accept¬
banker, who will buy

are

securities

from

the

company

and

reimburse himself by resell¬
ing -the issue, is particularly in¬
terested in whether the offer will
attract

buyers.

If he misjudges
conditions, he will find
his own capital tied up indefi¬
nitely in an issue of securities,
market

obstacle which

an

But there
Fear

possibility of loss of capital in the
hope of larger income and capital

may

future.

We

remove

these

answer

make

current

or

guess at

information

of

source

The

away.

they
have
accurate and

broad,

a

this barrier. Both

seem

to

working in that direction.

There is also the brush pile of
many false doctrines to be cleared

unless

answers,

available

banker

questions,

intelligent

an

oppressed by our
responsibilities. Only
good statesmanship can
are

world

new

time and
be

the

\

uncertainty as to what
happen in the world make it

against loss of capital in exchange

cannot

be reduced.

can

other obstructions,

are

and

for their dollars?

even

availability of

difficult to be confident about the

increase? Or will people only ac¬
cept securities providing a fixed
income and maximum assurance

their

the

on

our

of teaching that
become static

years

has

economy

and that growth is behind us must

as

be overcome. Leadership, which '
"public" is thinking. has failed to encourage thrift, and
The
stock
market provides this hard work and
self-reliance, must
information.
It
is
continuous, be forgotten. Here again only time
moment to mcment, expression of can clear
up this rubbish in the
opinion — a Gallup Poll on the path.
//■'.//■/, ././■ ' V../,
'
scale
of
Paul
Bunyon. It is a
There may still remain the ob¬
highly reliable cross-section of the stacle of mistrust of our financial"
to what their

prevailing opinion
group in which the

the

of

very

machinery, although great changes
and
time have
already gone a
long way toward removing thia
can
express
his opinion in the once
serious
impediment.
Wise
stock market poll without
backing leadership in finance, earnest ef¬
it up with his
forts to spread knowledge of what
property.; Selling
opinion must be shown by actual the machinery is for and how it
sales
buying opinion must be works, and a continued demon¬
supported with real purchases. stration of fair dealing are the
its banker

company

and

interested. No

are

one

—

The price level rises or falls under
the aggregate pressures of people
who

best

risking their property in
support of their opinions.' /; /
The record makes it clear that
though

even

bankers

There
I

securities imposed
government.
The
high wall
these

its

take

advice.

stock for

stantial body of opinion from

of

pression

capital demonstrates

new

this. We have
record

of

not

were

no

the

equally complete
securities

sold; but, if

had,

I

l

|

lieve

be

it will

most

poll.
There

direct

is

beyond

question

cause-and-effect

a

relation¬

ship
between the
volume
and
price trends of the stock market
and the so-called flow

of venture

difficult

stable

or

market,

either

a

re¬

relatively

rising price level, is

a

a

condition precedent to any active
movement
of
capital into
new

stock issues. When public interest
the stock market is "at low

in

ebb"
be

it

as

was

in 1947, there need

surprise

no

that

capital

new

not raised in sufficient quan¬
tities. There need be no astonish¬
was

ment that such

new

obtained in 1947

capital as was
73% invest¬

that

the way of ven¬

speculation, it is astonishing and
ridiculous that
tion of evil. I

sulting -.in

of

of the

capital is the inhibition

word

stock

one

one

which has been instilled in
people
against taking a risk. In an econ¬
omy which is based on individual
risk, which has grown up on

actions

the

be-

political

obstructions

across

capital. A broad volume of trans¬
in

I

that

me

intangible and

ture

stock

ex¬

must

and

when

But it seems to
the most

has fallen

the

It

considerations permit.

against

of

market.

reduced

market

offered

were

advice

the

eventually be

which

we

in

would expect it to show that these
the

by
of.

sub¬

a

to

period of increased sales of

every

restrictions excludes

best

record

The

on

exchange

consistently

their

wholly artificial, and
unjustified barriers, in/

are

believe

stock market tells them, they have

done

keeping this part

the form of credit restrictions

companies and
hot like what the

may

for

means

of the path clear.

are

should give the

we

"speculation"

Russians
ulation"

Foland,

the

using the
to

drive

of "spec¬

cry

freedom

to support

or

connota¬

understand the

can

tion of the ruble.

out

of

devalua¬

a

But

rely on

we

the

willingness of people to risk,
capital. Our whole economic
system would collapse if people
their

ceased to speculate — ceased
tor
take risks with their capital. Yet
politicians seem to court preestige.

by calling

their

rivals

>»/•

"specula¬

tors"

and

demanding bonds,
and
only 27%
venture capital
willing to accept the hazards of a

they

never

stock interest in the

such people is that they are either
ignorant
or
hypocritical.
But,
since they build a psychological

ment

While it

the

prices
the

seems

business.

clear that

level

are

in¬

of

stock

market

conditions precedent to

arising of venture

should
broad

an

in stock market speculation

crease

and

was

capital

capital, it

be
equally clear that
speculative interest and

a
an

optimistic attitude toward the fu¬
ture

of business are prerequisites
rising stock market volume and
prices. The stock market reflec¬
to

tion

of that interest and

after

may.

a

attitude

protracted

rise,

protesting
owned

loudly
.

The

best that

barrier
which

is

can

against
our

the

•

be

inclined to consider them

more

traitors

to the system that
ports them and all of us.

must, of course, continue to
provide all the data necessary for
an

informed

which

are

opinion

offered

or

on

dealt

decisions

will

stocks
in

so

that buyers and sellers may spec¬
ulate intelligently. We*must en¬

people to base their

business

sup¬

We

ulative

that

for

risk taking
requires, one

economy

courage

fidence

of

VY*//..

said

ingness to speculate and the

con¬

that

share

a

stock.

magnify their size; but the will¬

a

in its business. The directors must
first decide what terms of em¬
the

attitude toward the future

capital to risk. Our tax system is
certainly a major obstacle, per¬
haps the major obstacle, and it is

stocks? Will people accept the risk
of an uncertain income and the

directors and

crush¬

incentive to speculate*

on our

our

and indeed

who may have capital which
they
wish to put to work. Is that atti¬
tude favorable toward purchase of

The

Capital

discuss;the

ing effect of the present tax strue-

made

time,

Venture

will

securities

way.

hung

analyzing the

market

stock

fered

practical

not

exhibited a prior increase.
A rising volume of stock i mar¬
ket transactions, or a
rising price

proof

is

Others

the
•

,

rially at lower volumes. At least

no

volume

In only eight instances

period. About

is

in¬

the stock market exhibited

crease,

the Curb dur¬

There

stock

transactions,

on

as

stock

new

invariably followed

the

year

these

new

substantially
with
preceding

ing the eleven
of

71

1919

stock issues increased
in

in

6)

page

346

weekly report of the vol¬

of

financial power.
No one can
know

Obstaoles to

nancing
issues.

Whether the decision is

people, and that they result
prices which represent the
composite appraisal of so many
people that they are beyond the
powers of control, or even predic¬
tion, of any special interests or
groups regardless of political or

Venture Capital and Stock Market

Stock Market

ume

num¬

ber of

earns

left.

orders

in

both.

capital

tax

a

of

25'

(621)'

instead of being available for fi¬

an

the stock market

holding period.

heavy
have

they

the

on

indeterminate

an

problem

the

of

core

eliminate

or

With

he

something that,

brokers,'/we

placed by

number

venture,

the

man

Should

daily transactions

CHRONICLE

stock market are the result of

usually

quoted around $59,000.'

What Brokers

.

that the markets

are

lion and the national income from

'

r

i.

the

deterrence such things as high in¬
dividual taxes and double taxation
of dividends have on risk

consumption has gone up in this
period from 90 billion to 200 bil-

.

*'

fool

are

trading to

relation

•

We can't

tion.

stricted.

'•

sees

the last sale of
when he
goes to

important element in providing
liquidity for the revolving fund of
risk capital, is
being severly re¬

i

who

that

is

FINANCIAL

indeterminate

consolation

no

customer

poor

been declining so
that the
breadth of the market, which is an

has

.i

are

you

in

income, volume
other economic

thousands of miles of pri¬
to some little corner

over

vate

public forever because, when they

in-

measured

terms of national

of

market in

in
in

&

grow

not

profitably must be present first.
If the raising of venture capital,
so essential to our national
health,
is depedentf on increasing
stock
market
speculation
or
rising
stock market prices, and these in

on

spec¬

knowledge,

out

turn -depend

fidence

and

ulate, what
these
the

vital

on

widespread

willingness to

con¬

spec¬

be done to restore
ingredients and start

can

moving? There is, of
course, no one reason for the un¬
willingness to risk capital and the
uncertainty
about
the
future,
process

which
across

are

the

real

barricades

the path of venture

capital.

But

rumor.

we

should

speak

bedly, not in defense, but^ in
commendation of the speculative
motive

—

of

the

willingness

risk capital.
Until the revival
that

we

work

are

to

a

of

to

confidence

growing nation with

be

done and profits to
made, until the-resurgence of
the speculative spirit, the willing¬

be

ness

to

calculate

the

chances

of

profit and the dangers of loss of
our
venture
capital, interest in
stock market speculation will not
revive and the movement of ven¬

ture'capital-will be held
ing for the green light. '

up
•

wait¬

/:p»u

26

&

THE COMMERCIAL

(622)

FINANCIAL

afford,
pro]-;
by the Federal Government
figures, that is the expenditures
unless they are essential and hot.
■for promotion
of the Merchant
Marine, but if this item is ex¬ being well done in other research
cluded, these expenditures would laboratories? It would be fine to;
remain almost constant up to 1946 have the luxury of undertaking :
with an upward trend thereafter. research on any idea or any proj¬
Omitting the item for promotion ect which the imaginative brains
in

A Reduced

Budget Before Tax Reduction

business

stimulate

the

until

come

sufficiently

and

in¬

raise

government

total

would exceed that which

revenue

allowances

other
of

armed

the

ex-members

to

forces

for

which it is admitted had

nection whatever with

causes
no

con¬

serv¬

war

to take the

ers.

one

was

item

There people's

$81.4 million.
which

distorts

bills

risk, rather than being
charged up in the
the

American

of

received

be

the

by

present

ices,

so
"Times"

the

says

,

expenditures for veterans should they have different functions as
like an individual or a corpora¬ be just and the public will ap¬ set
up
and the Export-Import
tion, must adjust its budget to the prove these expenditures and will¬ Bank is our own creation, but all
essential needs and eliminate un¬ ingly pay the necessary taxes as of them lead directly to the same
as
these expenditures are purposes of lending and spending
necessary expenses in the budget, long
and the government services re¬ administered carefully and prop¬ American
taxpayers'1 money
sulting from the war, and luxuries erly distributed to deserving vet¬ abroad, to stabilize foreign cur¬
erans.
It is certainly not asking rencies, to provide capital, and to
which no
government can long
afford to charge to the taxpayers too much that a thorough account¬ finance international trade. An¬
in a democratic country.
ing and examination be made of other question that seems worth
•r
By comparison the budget items the items both in the best interests raising is whether or not many
of the various
departments and of the veterans and the taxpayers of the functions being performed
services of the Federal Govern¬ who must foot the bill.
by these banking and financial in¬

'

for

ment

government,

the

But

grounds.

1948

and

1949

when

astronomical

set

so

are

down

by

items in the

the side of the

same

budget of 1930

or even

the

conclusion

drawn

that

on

perform

government

ditures for national defense really

did the

for the best interests of those who

before

never

its

respon¬

sible tasks, or the present expen¬
are excessive luxuries and

receive them

Is

welfare?

of the national

and

not

it

for

the

best

ditures

interest of the veterans and all the

They seem
all the more unnecessary and be¬
yond our ability to afford these
operating expenditures when we

rest

entirely unnecessary.

Federal debt still

realize that the

exceeds
service

$259,000,000,000 and the
charges at this date at the

present low rates of interest are
than

more

$5,000,000,000 per an¬

num.

;

/

,

Briefly, let us examine some of
the present budget items. One of
the largest items is for national
defense. The budget for that item

this

at

But
time?'

at the

vote

some

a

present time, and de-:
our energies in re¬

of

learning how to restore'
and healthy economic and:

sound

financial

of

structure

production

distribution which will make

make

In spite of the useful¬

.

proj-'

search to

budget which have been increased
beyond what seems reasonable or
and services of the Labor De¬

of these luxurious

some

ects

and

ness

it

Would it not be better to cut down

taxpayer ought to get a break.
There are many other items in the

necessary.

conceive,.

can

afford

we

American to

it possible for every

in his own way
and. keep that freedom which has1
made possible all of these devel-r
opments and; American progress.:
living

,a

At the present time there is a
partment, the Bureau of t Labor
Statistics, the Bureau of Internal great lack of sound research and:
Revenue, the Department of the application of sound principles in
Interior, the Department of For¬ our money and financial practices.
eign and Domestic Commerce, it The impaired relations of our ex¬
does seem that the proposed budg¬ cessive money and bank deposits
ets
exceed all justification at a in relation to our production and
time when the government should consumption, as dangerous.
This
There are many other embar¬ stitutions could not be performed
cut expenditures for the best in¬ can create an economic explosion
and
with
less
costs
rassing questions that could be quicker,
terests of the people who pay the which will impair our ability toasked. Are these expenditures for through the already existing pri¬
taxes in order that a sound econ¬ pay taxes and carry on the develinstitutions which
veterans and some of the expen¬ vate banking
omy may be restored and tax rev¬
opments necessary-.for',, our na¬
have their

1939 that
quickly be

must

Americans

can

work¬

New
York are
dence has been made available to
(April 1, 1947).
Why to how "far we can go without
tax rates.
me
that justifies this increase in
should
these
outlays
be
con¬ impoverishing our own people.
the government expenditures for
Sharpening the Budget Axe
tinued at the public expense and
Do we need the Export-Import
transportation
and
communica¬
There
is no
expenditure that also at the expense of the really Bank, the International Fund, and
tion.
Here is a place where the
disabled
war
veterans?
The the International Bank? It is true
cannot
be
defended
on
some

will

we

ects

and

of

Can

money;

to add to these new research

these

of the Merchant Marine, the ex¬
penditures amounted to $423,000,Some "foreign expenditures 000 in 1939, $466,000,000 in 1944,
No evi¬
essential, but there is a limit $1,053,000,000 in 1947-.

socialized
tax

1930

"is

Administration's 1949 budget pro¬ ity it seems quite probable that
(Continued from first page)
A business depression at the pres¬ poses $6.1 billions. A careful anal¬ the expenditures for capital would
ent time would cut heavily into ysis of these costs is called for. be more easily met and cost the
the
government revenue.
It is Then there are millions of dollars American people less if placed in
the hands of those who are willing
readily plausible that a reduction in the budget for pensions and
of 20% in taxes would

Thursday, February 5, 1948

CHRONICLE

of

that

us

we

build

a

sound

America with thriving
enterprises, steady em¬

and strong
business

ployment

regular

and

order that we may be

the

in

taxes

emergencies
afford

we

income

in

able to pay

to

be

enue

in

every

country

in

stable and continu¬

more

tax-paying public

vitality of the

and business enterprises

in order

to overdo what seems like gener¬

the

the

well-intended
American

purposes,

but

sible • service

in

this

our

Federal

bi#£it seems also quite possible
ning to wonder when he is going tfegg* the ways and means of col¬
lecting

way

any

revenue

might

be over¬

hauled and become more efficient

-

with

reduced budget. A

a

in

the- dollar

buying

,

to

power

about* 50%. of-its buying power in

H)39;i'rv<This

rise

in

and:

costs

department, prices

taxpayer is begin¬

war veterans?
This in no to get a handout.
.:
suggests that we should avoid
The Budget of the Department
obligation to the veterans, but
alone is
more
than $11 billion, in keeping our obligations to the
kk '■') t ! ■ V of Agriculture/ 1 -•«: 'p-more
than 10 times the amount veterans we should also keep in
? It is rather difficult to compare
spent in 1939 and is one of the mind our obligations to help the the present' budget items with
items that may indeed be fully veterans help themselves as real those
prior to 1939, because of the
We owe it to rearrangement of items, the break¬
necessary; but in spite of the needs American citizens.
for strong national defense, it re¬ the veterans to help them get an
up of departments and general ex¬
mains a fact that each succeeding education.
We should help them pansion
which
seems
to
have
war has been fought with differ¬
get jobs.
We should help them grown without limit in recent

osity to

While

tional welfare.

ous.:/One can easily present a debt is over 535% of what it was^
good /argument for the services in 1939 and all other items in our.
of such departments
as that of financial structure have been in¬
these
countries that understand
Labor and Commerce, but whether creased out of proportion to our,
the
needs
local
perhaps better
these services should be expanded production and distribution, prices*
than governmental employees can
ancf" charged up to the taxpayer and costs of living have only par-*
ever understand them.
at
this time
when
tax charges tially adjusted to this unhealthy;
The
budget
for international have reached the point of discour- condition. These rising prices and,
affairs and finance in 1948 was
aging production is doubtful.*, Jn costs have-reduced the value of?
Moreover, these private
institutions have a personnel in

and " meet estimated at
$5,533,000,000 and the the case of the Department of In¬
they occur? Can proposed budget for 1949 is $7;- ternal Revenue it is
easy to un¬
sap
the economic 009,000,000, and no one questions derstand the need for the best
pos¬
future

as

branches and financial

connections
the world.

.

revision

of the methods of collecting many

is a tax indirectly upon;
every
producer and
consumer.Out of such maladjustments and-

spirals great depres-,
developed. If a depres¬
sion ^should develop out of the-

wage-price
sions have

government;

conditions,

present

,

and

instruments

ent

tech¬

new

While large expenditures

niques.

for defense purposes may be nec¬

at

reasonable

costs

provide ways and means for
places

and

them to take their rightful

brains

as

armed

essary, the best research
in the government and the

homes

build

years.

combined

received

resources

41.4

excise

taxes

well

might

?to save the government
money. In many of, these taxes it
is quite possible that -the cost of
prove

collection
much

as

amounts

the

almost

to

revenue.

*

.

as

.

r

By

Research

-

Expenditures

the Government

*

Proposed

million

dollars.

In

Everyone approves expenditures
1948 for scientific research and educa¬

the

that the results of the large pres¬

whether the economic effect upon

ent

our

not going to

are

be obsolete before there is another
emergency.
v

Navy

Are

the

and

Army

enterprises in which the vet¬
must earn a living may not

erans

ultimately cost the veterans more

and expendi¬ than they are. apparently gaining
the forward look¬ from the present government ex¬
ing needs of the best interests of penditures? The most important
the country? No one doubts that service we can contribute to show

organization

tures keyed to

this is the

intention, but it is

to be self-satisfied
and

while

easy
there is

and

luxurious

pleasant
jobs that have no

use

whatever

in

no

war

perpetuate

future

national

defense.
In

1939 the

armed
per

expenditures of the

forces

were
about $3,600
These expenditures, of
increased rapidly during the

gratefulness to the veterans is
help them properly find their

our

to

places in a sound, stable, economic
society and help them get produc¬
tive jobs through which they can
have the pride of earning an in¬
come in their own
way and de¬

veloping their

own way

of life.

man.

course,

Expenditures for International
Affairs

Should they not decline dur¬

war.

ing peace time? But the estimated
Our proposed budget expend¬
expenditures per man in 1947 are itures
for
international
affairs
only slightly lower than 1945 and are, of necessity, much larger
the expenditures per man in 1948 than
before
the
war.
While
were

increased

to

a

figure

even

genuinely
help the homeless and
hungry people in the war-torn
that if the expenditures per man
countries to regain their rightful
could be kept at the level of 1947,
places in society and become pro¬
more than $1,000
per man could ducers of the
goods they need,
be saved and a budget reduction this is an
expenditure where care¬
item of $1,600,000,000 saved to the
ful control is necessary to see to
taxpayer.
it that the funds are used to help
higher

than

that

of

1945.

Upon

careful examination it will be

The

expenditures for veterans'

services and benefits in 1948 were
the

second

largest

item

in

every

wishes

American

to

seen

the

the needy and to further produc¬
tion

which

will

help

the people

000,000 the estimates at mid-year.

help themselves. To what extent
expenditures should be made
by the government beyond that
which is for charity and to what

The estimates of expenditures for

extent

veterans

should

1946 these expendi¬
tures exceeded by about $1,000,budget. ~ In

these

$906,000,000 and $1,626,000,000. In
considering these items we should

we

in

present proposals
comparison with expenditures
research
already developed.
examine the

1946

began




at

$4.2

investments

me

It:

it would be the part,

ment

which are so r
agreeable and do.

expenditures

and

pleasant

research
financial

stabilize

on

our

government inconje,

production

employment" and
all

•.

of us.;•;

Tax

Demand, for
The

been

titled

and'
for
;.: }■

*

Reduction,! *
has!

taxpayer feels that he

promised
he

Moreover

of

economic;

which will

system

to

the

a

tax

a

reduction.-

feels that he

is

en¬

reduction because

tax

hardships he has endured

high taxes and reducing
his standard of living ever since
industry World War II began. At present a
with a substantial budget for agri¬
spends well over a billion dollars
large percentage of the people are
culture and the preservation of annually in scientific laboratories
unable to pay their
bills.
This
natural resources.
for research.
This research has
includes those in the high income:
The American farmer certainly been generously shared with the as well as in the lower income:
deserves all the help that he can government upon request.
Any¬ brackets. Where the established
get in a sound way from either one can name leading American costs of living cannot be met prop¬
mil¬ erties
Federal or State governments, but industries that appropriate
; are ' being
abandoned and*
is it possible that some of these lions every year for research. The debts created that will never be
government is already appropri¬ paid. The loan sharks are doing aexpenditures
are
unnecessary,
have
outlived
their
usefulness, ating large sums for reasearch big business. The government taxare duplications, and
greatly ex¬ through the Departments of Agri¬ take and high prices swell their'
ceed any service or usefulness to culture, Commerce, Interior, Navy, business.
•
:
'
'
"
either the farmer or the American Army, War, and the Atomic Energy
With the present high costs of
people. Are many of these serv* Commission. In addition there are
doing business the incentives for'
ices political creations which the large sums
appropriated by the
risk-taking and new/business en¬
self-respecting
farmer
wo u 1 d Federal Government to aid the
deavors-are
being v, destroyed as'
rather not have?
How can we research being carried on in the
indicated by the decline in new:.
justify the hundreds of millions, of Departments of Agriculture and businesses
incorporated.! ; Many1
dollars in the proposed budget for experiment stations of each state.
going businesses are in danger of
sustaining farm prices and regu¬ These/'include all. forms of J re¬ a
rapid conversion from profits to"
lating farm production when farm search from that of soil fertility
losses. ^Reserves for depreciationprices are at an all time high arid to product improvement, chemical are not
adequate, >. reserves for
the farmers' income has broken all analysis and a great variety of
contingencies are/too Small, ade¬
records? It is the belief of many projects too numerous to .name.
quate surpluses have not been1
farmers, and I share this belief, Then there are research depart¬
built up, new capital for the small
that most of the present subsidies ments in every college and uni¬
business, and even large corpora-1
on farm products will in the long
versity worthy of the name.- Isn't
it fortunate that we have so many tions, is almost impossible to get
run boomerang on the farmer and
under ' today's
uncertain -money
at the: present time are an un¬ research departments actively en¬
market conditions.
A small de¬
necessary burdensome tax cost to gaged in new worthwhile discov¬
cline in business, or just a decline,
the
farmer
and • all
other; con¬ eries? - The results of these; re¬
in prices will remove many, busi¬
sumers and producers.
'.
' searches soon become public prop¬ ness
enterprises from the tax pay¬
erty.
The present /expenditures
Transportation and
for research far exceed that which ing class, and multiply the list of
also

has

remember

a

that

department

of

state
agriculture

every

for

At

the

present

paying

time

.

_

Communication

and
loans
seems possible
by a government
In the budget
for 1948 these
by private indi¬
such as ours which has known
billions
and
were
increased
to viduals willing to take the risks items are $1,563,000,000, and the
no
limit to luxury and; ambition
$6.2 billions in August. This item involved is a debatable question. proposed budget for 1949 calls for
for 1948 was $6.6 billions and the But beyond the necessity of char¬ $1,646,000,000. A comparable item when it came to spending other
in

to

of wisdom to cut down on govern¬

their

important and useful citizens in

budget for
respective communities. The agriculture and agricultural re¬ tion where the public receives
forces
should
be
summoned
to
question I am raising is whether sources received $614,000,000 and the benefit of such knowledge in
overhaul thoroughly these expend¬ the present ways and means of
natural
resources
not
primarily the form of increased production
itures and see to it that
there helping the veterans-are really
agricultural $1,179,000,000.
The and useful services that raise our
is no deadwood being carried and
helping them as they should and proposed budget for 1949 calls for standard of living. But suppose
expenditures

seems

some

•

would decline sharply.

revenue

and
New

But in the budget of 1930

agriculture and natural

the

of

failures.

it

is

United

all

most

/ \

.

,

Above

be made

.

-

'

considerations!
important that the.
other

States

a sound and
There is a def-

keep

healthy economy.

Volume;. 167

inite

limit

Number

luxuries

the

to

THE COMMERCIAL

4670

of,

spending

needs

sonably

to work and produce,

with

unbalanced

high prices andt costs are danger
signals pointing'to a readjustment
which may bring reduced incomes,
deficit financing on the part of the
government, rising interest rates,
declining bond prices, unemploy¬
ment

in

and

retribution

general

tive

with

effort

all

the

resources

at hand, and abandonment

regulations
tion

and

abroad.

ital

of silly
produc¬

restrict

trade both

at

home and

following rea¬
economic policies

sound
will

the

having

that

Countries

-

any

to

are.

need.
A little, money
the right ideas of gov¬
ernment, work, thrift, investment,
and honesty in meeting foreign
obligations might save the Amer¬
ican taxpayers billions of social¬
on

ized

the

funds,
whether
domestic
or
foreign,
whether to pay a salary check or

15

past
of

harm

to

Any

years.

events

would

such

do

a

prestige and foreign

our

relations than all the Communists

do.

ever

can

Foreign

losses.

Every

more

make

a

countries

■

...

Federal

of

use

gift to charity, should be

with the U. S.; Tax-

labeled "Paid

seeking our help have .other needs
even greater than gifts of Ameri¬

the

fact that

dents

calls attention to

assuming

that

the

with

one-half

a

share

of

such

community property it is in
flict

with

the

con¬

Declaration

of

Payers' Money and Labor."

in this

same,

detail,

the

as

the

stitution.

Con¬

owner

complete. conflicting and incon¬
sistent' in its provisions, that it is

and

be

held

to

be

and

as

to

number

a

of

issues,

.♦Origin
In

2)

page

,

The proposal to establish

of Community Property

the

Eastern

States

there

is

Political expediency always

had

be

to

dictates that the greatest number
voters be satisfied.
So a law

of

was

allowed

which

enacted

the

but small understanding of the married citizen to elect whether
community property system. Sev¬ ■he would report on the community
eral -years
ago students
in the or individual basis. This contented

writer's

classes

in

taxation

were

the politicians but it did not con¬

queried as to their knowledge of
the subject. A majority had never
heard of it, others had the vaguest

tent the Commissioner of Internal

ideas

to what it really. was.
people think it is new.
If

as

Some

will turn

you

back

the pages

history for 40 centuries
learn

that

is

record

it

existed

found

in

of
will

you

then.
the

> The

code

Revenue and the

invalid.

of

which

laws

is

B. C.

Community property
appeared in Europe early in the
Christian era.
The Spanish ordi¬
nance.

gothic

codified

as

code

in

the

about the

Viso-

middle

of

Latin' America. > Subse¬

quently -it

reached

Mexico

and

'

constitute

solid

a

belt

ex¬

southward

along the Pacific and
along the Mexican, line

eastward
and

the Gulf to the mouth of the

The

States

include

Idaho, Washington, Oregon, Caliornia,
Nevada,
Arizona,
New

Mexico,Oklahoma,gon

and

:

Oklahoma

community

Texas

and

Of these all but Ore¬
are

property

original

States,

but

these two may be logically re-!
munity property States. It would garded as members of the group
being geographically contiguous
appear that the Louisiana system
had its origin in Germanic cus¬ and entertaining, to a considerable
tomary lawr Thereafter it was in¬ extent, the same social philosophy
corporated in the Code Napoleon,; as their neighbors.
'!77!:7yv
In* 1947 four more States joined
'after which the Louisiana Civil
was

patterned.

In

it is apparent that the

any case,

community

concept is purely

a creature of the
stranger to the com-;
law, which is the basis of the I
legal system of the Eastern and
Middle Western States.
" •7

civil and is

a

mon

this

just

group.*

These

mentioned,

were

Oregon,

alsoNebraska,

Michigan and Pennsylvania. These
all
sought the
tax ; advantages

relief

families

to

;

ar.d

why

not in any case control
devolution
of
property
in

various

states.

It

institutional provisions.
would be the effect of

Yet
a

the

reduce taxes.

If

a

Texan had

income of $25,000 he
could

each

report

an

and his wife

to the

statute
case

was

declared

invalid

in

a

by the Supreme Court of the

State.1

i

In

its

opinion the court

stated "at the outset that the

man¬

Federal

their

income

combined

tax

incomes

and

his

wife, would

on

taxpayers

uniform

a

in

basis.

all

Curi¬

Mississippi, although bills to
this

purpose

in¬

were

Special Tax Study

'sufficiently

an

Federal

large > to render- the'
commuilitypi an notably attrae,




Willcox, Jr. v. Penn Mutual Life
insurance Co. (Supr. Penn, (11/26/47)
Ta.

St.

•/-'

J'"

the

amended

was

property

In 1942
provide

spouse.

the

Federal

amendment

to

mary

to

in

that

pri¬

perience.
was

;

in

entire

value

property

of

the
community
includable in the

was

community

that

his wife. That

was

state
not

a

deserted

But

news.

the deserted wife asserted and

en¬

forced her right to half his wages.
That was news. The miner was
both surprised and aggrieved.

He

his

grievance in a big
That did not help him. He

confronted

with

the

law

of

y."-'7

.

Then there

for the

pur¬

of the Federal estate tax. The

legislative history of the chal¬
lenged statute, as disclosed by the
committee hearings
and reports
and the Congressional debate, can

being to better the

ation

of the

criminated

structure

tax

oper¬

and

to

"Examination of the

against."

The

that

the

was

the couple who

started married life in. Texas. The
husband c worked
hard
and
ac¬

'

purpose

enacting
of what

it

was

be¬

was

unequal distribu¬
burdens of estate

which

taxes

led Congress to ap¬
community property the
principles of death taxes which it

report

then continues: "With the present
scale of taxation we have put the

ply

had already applied to other forms
of joint ownership on the death

men's

on

dangerous
that

in effect that

was

miner in

the state.

the

community
property on the husband's death
had all been accumulated through
the husband's
efforts, the wife
having contributed nothing. The
Supreme Court decided that the

provements in the tax system, the
purpose

'

The

court stated:

incentives

to

a

•

the .Pennsylvania

assorted

until

state

death.

break

•,

the brief period

property law

by
priof

the

continued

and

pose

itself

In

residents

married

husband's

The

challenged

Texas.

A two

case

live

Government.

was

and

husband's tax estate

concerned

degree

piling

by

heavier and heavier burdens upon
them
It

as

they climb

describes

up

the

as

one

tax

problem "the equitable ad¬
justment of tax rates and exemp¬
tions"

and

economy
must

we

that

states

Ls to survive and
to

see

it

that

encouraged to work
*

*

*

"if

our

prosper
are

men

and produce

We recommend

a

reduction

to

of the

joint owners."

The

the ladder."

number

just

report,

referred

tate taxation, husband and wife
living 1 in
community
property
states enjoy a preferential treat¬
ment

those

over

community
is

due

to

living

property

the

fact

erty
after

that

efforts

in

by
the
through
community

a

state is treated

non-

all

marriage

balance of

in

states.

acquired

all, with due regard for the cost
of living of those in the lower in¬
come tax groups and for the need
of the

to,

contains this significant statement.
"For the purpose of Federal es¬

of individual income tax rates for

This
prop¬

husband
his own
property

if one-half be¬

as

the

economy."
longed to the wife. In non-com¬
Next it notes that the Treasury munity
property states all such
quired a competence. That was has described the various possible
property is regarded as belonging
prior to the present confiscatory methods for solving the
problem entirely to the husband. The dif¬
rates of income tax. The wife died but
has
nof definitely
recom¬ ference in the amount of Federal
leaving a will by which she gave mended any one of them for estate tax is enormous."
all her property to her mother.
adoption. Five methods are listed.
It is also noted that "the inThe

husband

learned

to

his

sor¬

The fifth is to grant permission tc

equity

spouses

in all states to divide the
combined income' between them¬

spouses

selves. The tax of the two spouses
is the sum of the taxes on the

than

considerable number of the Amer¬
ican

a

commonwealths

have

had

Even

community
as

Governor

late

as

of

New

unless

of

here remarked:
to

the

income.

It

is the

only one possessing a con¬
siderable popular appeal, and that

majority of those presently
clamoring for the community sys¬
tem envision this system as the
practical workings of the com¬
munity property plan.
A

measure

has been introduced

York

plan and it is reported to stand

the

titled. V "The

Tax

Family Income."
serts that the.

Treatment

The

report

of
as¬

present income tax

states

counterparts id

Congress

by

the

Ways

Means Committee embodying

and
this
a

large chance of adoption irrespec¬
tive

of

the

attention

would

be

states

other

on

occasions."

Finally the court concludes "that -f
the

here

tax

laid

fate

of

the

other

proposed

recommenda¬

avoided.

This

plan in¬
dicates no tendency to subordinate
the
lowering of tax rates and

with

respect to

community property infringes
constitutional
A

eliminate

income
and

the

non-community

has not
neither

act might

inequality

between

tax

legal

nor

in

community

Why

states.

Congress acted?

pediment to

no

provision

like Congressional

then

There is

constitional im¬

such

legislation.

To

repeat, why has it not been done?
The

amendments proposed.

Other

other

has been brought to Congressional

the

property law.
1947, the
asserted

inherent in! allowing
in community, property
to bear a lighter burden

"The last solution

us

in

Nov.

is

by all odds the best."
It might have been added that it

seems

under consideration the enactment

of

halves

two

munity law emanates in its funda-

1 Mark

handed

marily with major structural im¬

in many cases unsuspected un¬
the
citizen
has
learned
his
lesson in the hard school — ex¬

that

income1

of

Committee,
chairmanship of Roswell Magill, was appointed. This
the

community states he would cause tions of the Committee involve the
^pay a tax of almost $6,500, while,
a
community property law for the method of taxing trust income, the
mental
concepts
from .Spanish
..the : Oklahoma couple were re¬
state to be introduced at Albany. averaging of personal income over
quired to pay. in excess of $9,000,! sources, and that the effort to en-/ Probably he has no such
intention, a period of years, a system which
ja. difference of nearly 29%. (This
graft it upon our own system nec¬ but the political effect was good. has worked well in England, and
.amount/ it is .to be noted, results
essarily results in fundamental However, the Federal government the elimination of double taxation
"in the highest percentage of sav¬
has not been idle. Last June the of dividend income, whereby the
conflicts with principles !of the
ing.)
Oklahoma . was
disturbed
Federal
treasury transmitted to taxing of the same source of in¬
common law. centuries old."
Here the Chairman of the House
/by the migration of hei; wealthiest;
Ways come in the hands of both the
/citizens. 7 However,; everyone in: then is succinctly; stated the basic and Means
Committee a study en¬ corporation and the stockholder
-Oklahoma did-nobhave

the law

Louisiana

purposes,

placing

under

such

Federal govern¬
'Government $12,500 with a conse-' ifold instances of the problems ment enacted
legislation which
here
involved arise largely
'quent saving in taxes of approxi¬
by would abolish discrimination be¬
mately $2,600.
That is the man reason of the fact that the com¬ tween the
community and non-

Trom. Texas

one-half

eliminate manifest inequities
in
community property system really
it. "Since the tax burden is so leave no doubt
is. It may, and in fact
usually does,
reduce the tax paid by married heavy it is particularly important of Congress in
that like incomes should bear a
the elimination
couples, but it does not stop there.
lieved to be an
It creates new obligations as well like burden; that no taxpayer and
no
kind of income shall be dis¬ tion of the tax
as new
privileges. The obligations

was

Court

belonging to each

Louisiana

a

offend

demand which has swept
the country, for a
community tax
law has
rested
upon
an
insuf¬
ficient
knowledge of what the

way.

decisions

two

generally that community prop¬
erty is within' the taxing power

troduced by Senators from several
of the Eastern states. Also, in 1947

The

which

months after its effective date the

to

Supreme

basis of

report

effect

community property law.

coal

inhibi¬

constitutional

no

according

the

Committee

would

:

community property State.
They did more than envy. They
Jmoved across the line in order to

of

an

-

a

tions

of

the

the

were supposed to inure to
row that he had lost not
only his
the' inhabitants of the1 community.; wife but
half of his hard earned
States.
•"
savings which, under the com¬
It did not take the inhabitants
v
As already: indicated the re¬
munity property law, belonged to
surgence of the community prop¬ long to discover the truth of the! the -wife. Most of the
people of
aphorism—legislate in haste and the
erty idea has occurred during the
country don't want the com¬
:!last decade primarily, because of -epent at leisure. Soon there came munity property system, although
the income tax plague. Oklahoma; Qiutterings from Nebraska, mur- a large number think that they
Was the first of the non-commu-; murings from Michigan. In Neb¬ do. "What they really want is to
raska it was proposed that a spe¬
be placed on a basis of tax
'nity ...States to adopt the idea.
equal¬
cial session of the Legislature be
Many citizens of Oklahoma were
ity with the residents of the com¬
called to repeal the law. Pennsyl¬
making large fortunes in oil. They
munity property states.
r
>
1
'saw with envy their Texas con¬ vania did not wait for the slow
During the past two years a
freres across the border who lived legislative processes. Within three

;in

presents

these

save

ously all these states/with the ex¬
ception of Illinois, were west of

per¬

reasons

good

are

may

It

That

overlooked.

taxpayers about down about two years ago.2 Here
average of $150 an estate tax was involved. Prior
for each family, which is much to.1942 estates of residents of com¬
better
than
President
Truman's munity states were taxed on the

states

is

this may not be done. One is suf¬
ficient. The Federal government

tending from the Canadian border

.then Texas and other of the com¬

Code

Fed¬

til

Today the community property
States

Louisiana.

considerable

12

or

a

law

are

fundamental law. of

of

made

Community Property Belt

Mississippi.

part

again.

community system obligatory
upon the citizen and the Treasury
Department smiled approval.

the Seventh Century, was prob¬
ably brought to the southern por¬
tion of
this hemisphere by
the
eonquisadores
and #became 1 the
a

law

a

of

about

dated

tried

which

Oklahoma

■

enacted

the

Hammurabi, that Babylonian code
2100

highest court of

the land held the elective feature

She

less feasible. There

haps 10

.But

something

community property

even

tive.

million

wife,

been

disregarding the community
system and taxing those in the
community and non-community
states on the same basis. This plan

lation

Community

eral

/

,

afford

in¬

of

has

come

is by

and as¬
serts that during 1947 eight states
requested Congress to enact legis¬

Property Law

done.

considerably

•

rom

division

a

method

bringing about equality with¬
diminishing the Federal in¬

fested in the plan to grant spouses
in all states the option to divide

must

inoperative

Proposal for Federal

:

five

would

for

(Continued

to

would

indicates, however,
that the greatest interest is mani¬

void."

Community Property and the
Split Income Tax

looks

between husband and

which

Equality

simplest

equally

consequently * * * it

;

may

subject of criticism. Further,
various plans of tax saving are
discussed, chief of which is that

The

judicial enforcement

or

This statement

suggested $40 allowance.

incapable of either rational inter¬
pretation

out

splitting.
well become
to

the

Strangely
of

readily

more

$750 million,

the law is "not only vague, in¬
definite and uncertain, but so 'in¬

A Plan to Bring About

itself

nearly

without due process of law.

Finally, the court concludes that

,

states.

income; and
(3) because invested income lends

come

ing of private property from the

elimination

the

to

inequality of tax burden on
married
couples in the several

invested

and

which

prohibits the tak¬

This

Federal

com¬

reforms

of the

property States; (2) on
the basis of different treatment of

the

14th

Amendment to

of

other

27

munity
earned

statute actually vests each spouse

(I) between resi¬

non-residents

and

fami¬

between

respects. These were

discriminations

not

for bad economic management for
turn

The court-then

discriminates

lies in three

Rights of the Pennsylvania Con¬
trouble to get the cap¬ stitution which is substantially the
recover

they

spent,

law

and-

stable

are

(623)

CHRONICLE

capital.
These reason why the community system
political govern¬ may not be adapted to those States
ments/stabilized currencies, a re¬ the jurisprudence of which has an
turn to the maximum of produc¬ essentially*;. JSn g 1 i s h
foundation.
dollars

can

the " taxpayers'
money
here at home and giving it to the
foreign needy/ That limit is> the
point - where
the- stability
and
soundness of our own economy is
impaired.
Many would say that
we have already passed that limit.
The present federal debt, scarcity
of risk capital, impaired incentive
,

FINANCIAL

&

cynic will perhaps reply: in¬
taxes

come

come

out

the

of

pocket-books of living men, death
taxes

of

out

men,

and

the

—

estates

dead

men

of

dead

cast

no

votes.
2 Fernande
??6

U.

S

v.

340.

Samuel G. Wiener (1945)
f6

Sun.

C.

178;

United

Henry Rompel, Jr., ad'm. (1945)
326 U. S. 367, 66 Sup.
C. 191. In the
latter case the point was made that when
States

Texas,

v.

then

annexed

to

an

the

independent nation,

was

United

was

States

there

that the local laws,
including the community property sys¬
tem, should continue without impairment.
a

solemn

agreement

V--^

28

THE COMMERCIAL

(624)

Thursday, February 5, 1948

CHRONICLE

FINANCIAL

&

Table III

Demand Performance and the
Stock Market—The Finale

BUYING

Median

sentiment

business

reversed

fact

was

Therefore, since we con¬
that neither the foreign aid

17%

than

rather

23%
A.

in order.*

would appear to be
:

2,400

17%

3,350

+

1%

16%

900

$4,000—$4,999

8%

4,400

+

3%

12%

1,400

$5,000—$7,499

6%

5,500

+ 20

$7,500 and over

4%

10,250

+

100%

$2,300
3,220

which the United

export balance

enjoyed since the end

States has

All income groups
Mean average

.

,

No. of

Classes

%

13%

2,750 ?

26%

7,250

+

15%

100%

+

40%

Spend Units

Under $1,000

7.9

15,400

—18%

11.6

9%

27,900

+

7.9

+ 14%

26,100

$4,000—$4,999

3.7

+ 16%

16,300

+

$5.000—$7,499

2.8

+ 22 %

15,400

durables.

$7,500 and over

1.8

+

28%

18.400

46.3

+

All classes

being the other
the coin of effective de¬

Consumption,

bust

or

side

of

Change
1945-46

—100%,

+15%

tion?

35%.

—13%

$3,000—$3,999

+

9%':

+

Savings

1945-46

$2,000—$2,999

—15%

+

Median

Change

$4,800

—14%'

$470

AM C

Income

1945-46

—

2,350

Median

Change

2%.
4%,
2%,

—

3%

TV/nili

Income

•83%

—

^

$420

85%;

—

5,600

+

13%;

7,100

+

i5%»

19%

5,100

+

+

22%

7,700

+

24%

+

28%

13,100

+

30%,

$39,020

+

ii%;

10%
'

1%

" $124,300

Aggregate personal income/holdings

177,200
$52,900

10%

136,100

Difference

boom

—

■

480

-

17%

25%

$3,000—$3,999

of durables, which, since
January 1946, increased 37%, con¬
trasted with a 13% gain for nonBut, what of consump¬

$40

11%

3%

+

—100-%

$97,080

+ 11%

.

i

buying power, a sec¬ mand ("desire—accompanied by
NOTES—Figures are for calendar 1946; figures are rounded; figures exclude cur«
tor which has traditionally pro¬ means of payment"), is controlling
cency; "Mean averages" are post-dated on 1945 relationship to "median averages."
"»
vided the overwhelming market in the situation today. The steady
for our industrial output, usually wearing away of effective demand amounts are held by such a rela¬ year 1946 were closely similar t<>
through declining real wages be¬ tively small part of the consumers' the indicated intentions of th®
over 90%, and which in the final
analysis has always determined gan in late 1945 and was accele¬ market that they cannot be con¬ surveyees to purchase such goods,
of

In the first piace, the enormous

v;

1,450

Change
1945-46

Average

5%

;•

__

10.6

must be
looked for in the economic sector
to

swer

metaphysical effects

$600

.

% of Total

$1,000—$1,999

output

spring, there can be do tend
dispute. However, for any realise program nor domestic capital ex¬
tic appraisal of foreign spending pansion can be relied on to sustain
as
a
"new economic factor," an the current high rate of business
appreciation of its actual physical activity throughout 1948, the an¬
last

late

1945-46

$1,000—$1,999

the greater

accounted for by

Average

Under $1,000__

(Continued from first page)
set
of
economic circumstances
capable of deferring into the in¬
when the tightened relationships
definite future the inevitable day
of money demand to money sup¬
July bottom (178 FRB Index),
of reckoning for present excessive
again stepped up to where it at¬
prices and unprecedented profits. ply force Treasury bonds below
tained a new peacetime high in
To the extent that psychologically par, a development that we be¬
the month of November 1947 (192
the announcement of the Marshall lieve can only be avoided by an
collapse
of commodity FRB Index.) Most of this increase
Plan visibly strengthened and in early
prices.

—Liquid AssetsMedian '* *

Change

% of Total

Income Classes

$2,COO—$2,999

V ;

LIQUID ASSETS—1946

Income-

sumption of durable goods. Total
industrial production,
after de¬
clining from the postwar peak in
March 1947 (190 FRB Index) to a

policy is responsible for
the sharp decline in government
bonds will become painfully clear

money

POWER AND

of the War has been financed by

consumer

,

the

Government grants-in-

S.

U.

aid to the extent of four fifths for

world

as a

the trend of real
present
American
wages since 1940, the last prewar
prosperity is the maintenance of
a high rate of production and conyear.
.
k_.t tf/iuLf

Recovery Program will not, as
commonly believed, provide
new
support for our internal
so

which

47.5

50.4
53.8

.

1

culable

146

135

153

1,800

187

141

133

1.890

196

181

108

1,910

198

186

106

the medium gradients. The decep-

1,940

201

192

104

tiveness in this apparent improve¬

99.3

109.4
113.7

112.8

58.0

^Calendar

tOctober

(est.).

year

?,7

(latest).

Index—Dun

Price

Food Component of

the

for

&

Take

of the problem

crux

of de¬

most

living and wages and salaries.
As the footnotes under the table

real wages

its

and

of

their

on

a

low

more

starting
increases

and

th^t

development
emphasizes. It un¬
the fact that since 1940,
important

is what Col. 6

nummerical basis in

personal income status is
by

the

reductions

that

have been for

buyers' market.

a

trial

durable equipment

to producers'

'.{which,:?in addition to its impor¬

would

index

(Col. 6) about 100, indicat¬
improvement over prewar

tance dollarwise to overall capital

ing

formation, has in the past exer¬
cised a peculiarly decisive influ¬
ence
upon
the economy as a

whatsoever.;

whole.

,

;

no

table

Not only does it appear unlikely
any significant expansion of

and

having bank deposits at the
beginning of 1946, 42% sustained
reduction in their holdings by

a

the

end

the' year,

of

topping

numerically the 38% that enjoyed
increases.

have probably declined

The eyeopener in these

(about 3%-4%)

be

capital

can

be expected from

cur¬

historically high levels, but

the

contrary the rising trend

£©i interest rates portends a severe
contraction ahead. During recent

'months,
and

as

commercial,

consumer,

individual

It

of
can

over

also

that from 1945, total "take

seen

salaries have
8%, whereas the
price index (as ad¬
has risen 49%. For the
and

wages

increased

only

consumers'

justed)

of consumers, this trend sig¬
nifies that their aggregate ability

mass

loans have suces- to purchase goods and services out
highs, together of income has fallen materially
below what it was two to three
with the record-breaking flota¬
tion of new capital security issues, years ago. As a matter of fact,
on
a
the resulting pressure on the mon¬
per-employee basis, due to
mortgage

sively risen to

ey

new

supply has become increasingly
evident throughout the en-

.more

,tire credit structure.

flationary-ihspired

That this in-

expansion

of

private capital rather than a de¬
liberately contrived managed

the

increase

in

the

number

of

people employed, individual buy¬
ing power has declined even more

(Estimates of
-

,

the

PRIVATE

drop

DOMESTIC

'

in

salaries

and

wages

per

INVESTMENT

■■'

V

-

of dollars)

2

1

4

3

9.5

10.4

7.2

8.7

8.9

9.3

equipment---

9.1

11.5

13.2

15.7

16.6

17.8

18.0

Change in business inventory—

2.3

2.0

4.9

5.4

2.7

1.5

2.0

18.6

22.2

27.0

30.4

29.6

28.8

30.4

construction

Producers'

durable

&
Totals

——.

liquid assets,

in
the top 10% of the Spending Units
by Table III, occurred

Published
sales

Bond
one

in

figures
vs.

on

Savings

redemptions lead

to believe that a net increase

mass

ownership is being

these units gain most
in income but also in savings. The

in, we submit, lies the real ex¬
planation for the tremendous gap
between postulated Personal In¬
come and Personal Holdings, based
on

medium averages, and the ac¬

tual figures for the year (see sec¬
ond half of

this

table).

contrast

If nothing else,

demonstrates

appliance
nounce

prices

10'x
t.

to

an*

sensationally the cut in
much of the

Sometime

appliance

falling

this year, a

later

off

in

the fantastic increase in build*

to

A

ing costs that still continues.
six-room

standard

house

frame

cost $5,894 to build in 1939;

today,

it costs over

jump,'

$13,500,

132%

a

This

factor, combined with a gen*
erally tightening money supply,
the
ever
increasing credit

and

hazards; of

jnortgage loans, will
bank enthusiasm to pro*
accommodations, regardlesg
of the desperate need of the ap*
plicants.
,,
V V
,

dampen
vide

.

Inflation.and Industry Break*

Even Points

;

The lack of
to
at

consumer

capacity

absorb, current peak production
present price levels raises the

question of industry's ability t<j>
adjust to even a moderately lowei*;

level; of output. Thd ' degree ot
flexibility in this respect varies
- How*
ever, the constant rises in operate
ing costs due to the leap-frog; at*";

from, industry to industry.

tempts,; to have wages ' catch up
with mounting commodity' prices

*

T-W

'

•,

1

i t

£7

l'l

the

Actually

for all of 1946 and since

;

in Financial Position and Buying

of Consumers (October 1947
issue of the Federal Reserve Bul¬

Plans

letin)

/th'e^vwormal^ymdst •

fields/

Consumer Buying Plans

The Federal Reserve discussed

what the effect of present

efficient' concerns as well'/'if; hi
lessor degree. The rise - Sin^e^pref
war? in basic

excise taxes, social
security' taxes, pension fund;' exf'
pense, etc.,-but most; of; all' the ••■?

laborf injectf ai '

strength of union

high prices, for durables particu¬

appreciating how larly, has had on the buying pub¬
earnings (40%) lic's future intentions. This is one
and liquid assets (67%) are con¬ of»the most; important
subjects
centrated in relatively few hands treated in the overall 1947 Federal
Reserve's Survey of Consumer Fi¬
(18%), thereby in actuality se¬
verely constricting the size of the nances. Its dependability as an in¬
dicator
of
actual - execution
of
mass market for consumer goods.
Put another way, the great differ¬ consumers' plans is attested to by
ence

between median income and

the

recheck

made

on

the

1946

in such

of

'r'

a

sales

situation should volume

fall

off

even

10%-15%. has. been

afjib '-hs
cbg*

taken

nizance, of

by. the stock "market
since, mid-1946.v If normal unit o|

production profit ratios were,

Survey's figures on this aspect of

and

hand, and actual personal income
liquid assets on the other, in

of durables and houses of the va¬

capitalization v ofr actual

effect is immobilized because these

rious

power

liquid assets

the

on

the

study.

The

actual purchases

Spending Units during the

-

ref

established, the current stock pric$

one

median

level would

and

be

seen

to be: a-high

earning

nsk-potbntial./ Uhfor«-

'7 3

*•»*,.

'in' *"

1

"

seen.

April of 1947, a net decrease in
Series "E" holdings was experi¬
enced. Most significantly, monthly

■

i

manufacturer

so

on

the rate of
construction of new housing can
be anticipated. This is due chiefly '?

1

i

or slow turn* '
leading electrical

a

of

<
•




in-»

have caused break-even points to
jump to levels never before seen
in industry at a peak volume of
converse is true of the lowest in¬
The inevitable drop in
output.
come groups,
numerically almost
the profit ratio per unit of prof
twice that of the top 10%. Paren¬
sales of the $25 denomination of
duction
has
been
progressing
thetically, it should be noted that Series "E"
("the poor man's bond")
steadily since fearly 1946? This apf
the difference between the more
have declined 84% since the peak
plies not only to the innumerable
popularly quoted "mean" average in 1944, while the
$1,000 denomi¬
marginal producers that postwar
and the lesser known "median"
nations have declined only 11 %'.r
inflation, hUs
brought' into -all
average figures is striking. There¬

Not only did

-1947-

3

2

10.3

New

first article.

income and

their $25,000

an

much individual

-1946l

in

importance

thanthe aggregate fig¬
imply because of the actual

Seasonally Adjusted Annual Rate by Quarters

*

our

expenses on
annual incomes.

The most notable changes since
1945

sharply

Department of Commerce in billions

v

length in

ures

Table
GROSS

living

shown

1948, the

decline

a

32% in buying power.
home"

on

r k'

.

the

that

shows

sustained

that

rent

'■■■

,■

1945 to January

From

has

,

...

real wage

the

make

caused

line.

bonds

months,

It is

statesmanship

over

sharp

holding government

some

teresting question whether indus*

have occurred in liquid assets. Of

changes is contained in the mo¬
instead of rising tivation for these reductions. Over
substantially the amounts pro¬
(to
the
30%-plus
levels),
as 57% o'f all such income
posed, the net economic effects indicate, we have adjusted the
groups
■would
be no more
inflationary food component of the BLS Con¬ many are led to believe.
used their liquid assets for gen¬
sumers' Price Index, since from
than has been that of our postwar
Rises in the level of commodity eral living expenses.
Naturally,
foreign trade to date, Thus it is 1940 to date this index fails ma¬ prices since 1944 have been breath¬ most of such spenders are con¬
reflect taking in speed and sharpness, tained in the below $2 000-a-year
apparent that this important ele¬ terially, we contend, to
actual changes in food prices in most notably since the start of the
ment of capital formation will at
level, 67% of which so expended
best
remain approximately
un¬ the interim. Moreover, the other third quarter of 1947.
That this their savings; 55% of the $2,000components of the BLS Index, has left its mark on the purchas¬ $4,999 group joined them; and,
changed throughout 1948.
of the
Similarly, the other compo¬ particularly house furnishings and ing power of the mass market is strangely enough, 34%
nent^, of capital fomatiori, "as the miscellaneous, are viewed almost evidenced by the further erosion $5,000-and-over level also had to
as
skeptically.
Our preliminary in the reserve buying power and cut into their
.slowing rate of expansion in the
liquid assets for liv¬
researches show that if these two liquid assets of the Economic Man
ing expenses. In this connection,
^accompanying table suggests, are
later components were properly
(i.e., the most typical individual the January 1948 "Fortune"# dis¬
unlikely to appreciably better the
reflective of actual price changes, for each of the income classes, in¬
.1947 third quarter rate, even un¬
cusses under "$25,000
Year: A.D,
der a continuation of the most fa¬ the estimated consumers' price in¬ dicated by the "median" as against 1948" the situation of seven typi¬
dex for January 1948, shown in the "mean" averages), whose
vorable
circumstances.
This
is
cal executives who cannot meet
the table, would be about 200. plight was
examined at some
particularly evident with respect
This

be absorbed at

prices. Miscellaneous dur«

in

•

i

400-500 thousand

can

and

those

employee in the interim. This lat¬

ship between the trend of the cost

Program,

Index

Price

Large Cities,

ap¬

Recovery

European

Food

to

Actually, far

occurred

Price Index for Moderate

FRB Br.'letin, December 1947, p. 1543.
Home
Pay—Wages and
salaries less Social Security taxes, etc.,
of income taxes withheld by employers.
in

Families

proval by Congress anticipated in

the

of

favor

basis.

ment in

Wholesale

Bradstreet

the BLS Consumers'

derlines

in

solely

revealed
NOTES—Consumers'

The

re¬

due
p.-

(est.).

JJanuary

ter

solved

grades gained most,, but that was

206

59.2

than

number

1,990

be

to be

the

C- 105.1

political risks, domestic as
were

in

52.8

57.7

to be. produced at a 4.3-*

are

ables—washing machines, ranges,
vacuum cleaners, and radios, have
come
levels but the lowest two. already attained all-time record
Percentagewise, the two highest output rates. Most of these are,
increase

1945_____

55.2

/■

Automo*

of individuals contained in all in¬

155

amount

foreign,

a

130

'*;?

biles

4.5 million pace,

current

There has been

table).

202

1946_„„

time in mid-1948.

some

more cars

1,950

*1947

Reserve

Federal

the

on

the various income classes (second

1,810

if all of the incal¬

as

within

occurred

98.9

clining real wages is reflected in
Col. 6 which shows the relation¬

well

has

during

the redistri¬

105.2

Income

can

that

in

54.0

substituted

the current year 1947."

it

126

129

bution

seen

54.5

tl948__.__

foregoing,

114

123

be

can

1944

than levels
which have been reached during

even

111

155

The effect of wage rises
1946

1943

substantially less

the

126

•:

Based

mass mar¬

purchases.
Individuals can July 1947 Survey of Consumer In*
only own and enjoy just so many tentions, it is our belief- that at
houses, cars, refrigerators, wash¬ present rates of production, real
demand for durables will be met
ing machines, etc.

188

equal and most of the time will

that

108

99

107

1,210

80.5

tl947

From

100

Wages
Col. 4 + 5

100

available for

as

ket

general

Real

Price

=

1,500

60.9

1942

=

$1,030

$48.9

1941___

Council concluded "will at no time

seen

Employee

1940___—

nomic Advisers,

be

Billions

Employees

Year

Per

sidered

half of

6

Index 1935-:

1935-39

Total

would, in the authoritative opinion
of the President's Council of Eco¬

produce a maxi¬
mum export surplus of about $12
billion a year, a surplus which the

THP Ind.

Take Home Pay

<

-»§

Index

Consumers

Marshall Plan

the

under

:

5

3

2

Furthermore, the maximum
amount of additional aid contem¬

plated

v?

TABLE II

but rather continue one
it is already geared.

economy,

shows

which

of

keystone

pean

to

This

by the table below

illustrated

is

it-should be clear that the Euro¬

a

demise of OPA in

by the

mid-1946; it still continues.

generally agreed that the

It is

•grants now almost fully exhausted,

it is

rated

American Buying Power

these

from

resulting

balances

economic health.

the state of our

and two thirds for the
whole. With the dollar

Europe

*»

?

•.•T:

uv-

?-"^

Volume 167 Number 4670
tunately, the

of reestab¬

process

lishing such ratios does
without
fect

drastic

a

net

on

THE

not

(7)

income.

Even

the

in

Summary

ness

(1) The Marshall Plan (E. R. P.)
support for

a new

internal

our

economy, for even
under the most favorable circum¬

stances, it
to

only continue

can

which the

one

the

rate

of

in

expansion

the

ciated

expansion

bank

loans

U.

S.

continue
of

is

tinuing the boom

driven

below

\;.v\

'/

V

'

(3) Due to the inflationary-in¬
spired expansion of private capi¬
tal, the rising trend of interest
rates reflects the

tightening rela¬

tionship between

money

and

an

supply.

money

(4)

V

demand

Contrary to popular belief,

study of all com¬
ponents of the cost of living indi¬
cates an actual decline in real
since

wages

1940.

> (5) Contrary also to
popular be¬
lief, the once insatiable market for
consumer

exists

durable goods

because

no

reserve

longer
buying

power of the mass purchaser of
•durables has been vitiated
by the

need, due to runaway living costs,
to finance
living expenses out of
Wartime accumulated
savings.

77 (6)

Consumer intentions to
buy
durables fall far short of the
op¬

timistic 1948 production plans of
industry in general.

As

stock

market

of

break

probability at

time

some

within

first of April new

pressure
on
agricultural
prices, asuming that the world
crop outlook continues as favor¬

began in Sep¬
tember
1946, which indicates a
major adjustment of the economy
is in the
of

able

it is

as

(Continued from

large

it

will

be

will

the $6.8 billion requested

as

for the first fifteen
months, and I
-do not believe it will be
ready by
the first of April.
It is

certain, therefore, that to¬
tal exports will be less this
year
tharV last./ The decline in net ex¬
ports may be even sharper.
>/It is more difficult to estimate

made, and the State Department
worked

amount

out

considerable

a

of

detail about what it
Would like to get for Europe. None
of these
programs,

be

final

its

work.

however, can
Congress finishes

until

In

general,

however,

the potential impact of ERP seems
to have been exaggerated.
Insuf¬
ficient allowance is made for the

following:

(1) In

(

77 7

great

a

many cases, pres¬

ent plans do not visualize
any in¬
crease in shipments to
Europe.
<

(2) In

great many cases where
Increase
in
shipments
to

&n

a

Europe is planned, the additional

of

this

port allocations could

put

continue

and

men

I

worried
inclined
to

were

amount
at

bankers

point

of

gray

talked
about

with

it, and

estimate

market

the

supplies

fairly high levels.
No

exactly how
steel, for example, has been
moving in the gray market.
A
trade publication estimates the to¬
tal at two million tons or
more.
I

believe

supply

that

gray

market

redistributed,

if

probably

this

would

eliminate

what

appear

to be

now

taken

from

^domestic supply, but from
ments to other areas. -7//

ship¬

many

will

7;In.the

not

be

:.

/

of steel, for example,
increases in export and no

few

case

{decline in domestic supply

were

Visualized by the Harriman Com¬
mittee. Yet

have already heard
a great deal about domestic allo¬
cations and reduced supply for
we

some

purposes.
When I look at

It
some

seems

to

me,
of last year's

export ■ figures, that the whole
thing is bolstering the seller's po¬
sition

to

an

unjustified

extent.

If ere are a few facts:
(1) Shipments of finished

7

tnore than

ada
a

,

more

little

steel

35% of the total, Can¬
than

more

demand,

15%, and Europe
,7-

than 25%;

] (3) Quarterly shipments were
{ess than two .million tons, or the

they

argue; it makes little differ¬

whether

ence

gray

or

market
chan¬

one

another.

/

,

It

seems

there

are

sidered.
market

to

other
Who

things to be

are

-

however, that

me,

con¬

the chief gray

buyers? I believe you will
they are smaller con¬

that

sumers

who for

one

reason

or an¬

other lost out with their custom¬
ary

source

war

period.

of supply during the
In many industries,

for

example, vertical or horizontal
integration took place, with the
result that certain
large sellers
now control a larger
portion of the
supply than in the prewar period.
Smaller
were

resources

absorbed in

in

many

cases

these-integra¬

was

as

as

doubt premature to forecast the

making its top, last

...

year.

.

.

.

being held in cash

or

with

more

venturing into the l/£s due

to

and

certificates,

slightly firmer in

/

..

either

are

ones

of

some

the

courageous

t

1950, which have been stable

market that has been

a

being put

are

a

;

street—

one-way

straight to the Federal Reserve Banks.
The closeness of the
price of this security to 100 and its definite maturity are apparently responsible for the minor interest in the lM>s due 1950.
.

.

.

1

,

j

...

Scattered buying is beginning to appear in certain other
eligibles

[

at slightly above pegged levels.
The partial exempts have
been in fair demand at advancing prices. ...
.

McCABE

FAVORED

.

.

|

77/7/"

The selection by President Truman of Thomas B. McCabe to be
Federal Reserve Board in place of Marriner S.

head of the
who carries

on

Eccles,
Vice-Chairman, created plenty of discussion in the

as

financial district.

.

.

The announcement of

.

new

a

Chairman for the

Board, however, was viewed with favor in the money markets,
although it is not believed that it will mean any important change
in policy on the part of the
monetary authorities, for the time being
least.

.

.

7/7777/7/A777'77/;/7/^^

.

7/7/77 ''-7;/7''7'

DECISION BELIEVED NEAR
The

New

speech by President Sproul of the Federal Reserve Bank of
York State Bankers Association, was

York/before the New

looked upon as a very clear presentation of what the authorities

trying to accomplish in the money markets.
the task is

reduction

be

in

larger

a

list

of

Voluntary • domestic

are

allocations
likely to be too effective.

not

Business and the government con¬
fer

together to establish a short,
preferred-use list, and the pro¬
ducers

then

attempt to meet the
of

these

using

fields,

standards

in

There is

.

On

customers

their

in
own

and thankless one, with a great deal of
hope
waiting for the "breaks" that might come in the

a

the

other

.

upward

spiral

.

.

should

continue 7

despite the action of the authorities, it is believed in
new controls will have to be obtained from

Congress, if prices of governments

levels.

.

The

.

.

indications of trends should

some

.

.

.

be

7 :

•

FAVORABLE

7

/

I

The increase in reserve requirements in New York
City and
Chicago should not only offset the inflow of gold and the return of
currency
(which will probably slow down soon) but should also
tighten the credit base.
This is a favorable development for the
monetary authorities because the funds that would be used to offset
,

the effects of these two
in

the

retirement

markets.

ating

.

.

.

reserve

of

.

.

building forces can now be employed
which will further restrict the money

reserve

debt,

While the member banks still have the

means

of

cre¬

balances because of their large holdings of government

securities the monetary authorities can neutralize this action
by re¬

tiring Federal-held securities with surplus funds of the Treasury.

..

largely certificates due Jan.

had

$2,100,000,000 and

time.

.

Producers of oil equipment
farm

and

equipment

ination

of

gray

than

preferred

same

will

:now

treatment. Elim¬

markets

offset any

would

increase in

7 7'/

uses.

and

1

bills

of

.

j
}

.

1, and Feb.

approximately

1, amounting to about

$400,000,000.

.

1

»

.

By increasing Treasury deposits with the Federal Reserve Banks
using government surpluses to retire Central Bank owned se¬

curities the powers that be have tightened the money markets
through the redemption of more obligations than they have bought
in supporting prices of government securities.
More of the same
can be expected as
long as there is a surplus of Treasury funds which
.

unlikely that
major supply changes will occur
year because of government

will be

action.

All in all, it seems

•

During the first six weeks of 1948, it is indicated that the

customers.

receive the

;

7

railroad
a

;

appearances

"

,

.

<

j

long in coming since

making their

government has retired about $2,500,000,000 of public debt, which
was owned by the Central Banks.
These redemptions were

In the case of steel,
equipment
firms have
preferred postion for some

/'

to be held at pegged

are

should not be too

answer

in the next few months.

:

the

if

some¬

then considerable will have been
being followed.

measures,

program now

hand,

If the

...

quarters that

some

allocating

the re¬
mainder of their output to other

the

unabated

are

doubt

no

minor recession in the general business picture.
that be are able to cut down the inflationary forces

through monetary
gained by means of the

may

for

.

a

what

total

strengthened to the
country quotas are

where

.

difficult

a

interwoven with
form of

not

commodities.
:

used

to

pay

held by Federal.

.

.

off all

or

.

.

part of maturing

.

or

7

7

this

callable issues
'

•

•

,

does

not

SPECIAL RESERVES

may

not

important think is what buyers
believe. Within the past month or
two we have seen many buyers

larger primary reserves are topics of con¬
money markets at this time, with many
holding the opinion that these or other restraining measures will
have to be sought in time from the Congress, if the money managers
are to regain control of the
money markets. .
These views are
held despite the indicated opposition of Treasury Secretary Snyder

frightened by talk of stock-piling

and New York Federal Reserve Bank President Sproul.

mean

the

supply travels through
nel

m




un¬

substantially
greater than supply.
Therefore,

amount

estimated, to be moving
the gray market; ." -;v/ 7* 77

exist

was

does

chance that export con¬

a

established

more

market could not

find

products last year were about 11 %
of total production.
(2) Latin America received

markets.

Many people
object to
this
viewpoint. ■ They contend that a
gray
less

Europe

requirements

knows

one

much

now

widespread

as

.

and

can

lites. During the next few months

Fall, when I
the country's major

very

from

stop the ship¬
ment of some luxury goods, or of
supplies to Russia and its satel¬

trols will

were

to

any

there is

cities, at the extent of gray mar¬
ket activity. Most of the business¬

no

bills

Some

strategic stocks

up

allocation?

shipments, but

a

shortages. I believe this
is true, not only in
steel, but of

amount

suggest

naturally, export allo¬

visted most of

small.

taken

ended.

whatsoever

amazed last

was

but

probably will be used to hold
prices down. Requirement of an
export license on any shipment

ex¬
be used to

Black Markets
I

While it is

.

into

powers

cause

funds

involve

period of domestic/scaH-

Export

sort,

cations can be used to
redistribution of trade.

be

be

building

on

cities has

Latin America has been
shrinking.
But if exports to these areas do
not decline

to

may

until the

help the domestic buyer.
Supply
of dollar
exchange in Canada and

the probable effects for individual
items.
Various studies have been
has

situation

a

also

purchases,

abroad under the ERP. but in any
event real pressure will not be

12)

page

In

as

.

the amount of these has been and

depression of great magnitude.

Congress and the
Materials Shortages
that

will

commodity

some

supplies

Ho not believe

now.

Stock-piling

.

mediate-term maturities.

at

offing, and which because

cost

inflexibility has the po¬
tentiality of developing later into
a

cause, a

ward

that

confused

as

long, long time with bearishness

...

direc¬

prospects
down¬

crop

easily begin to

may

The financial district is about

.

coming increase in reserves in Central Reserve Cities, is
bringing in some selling by New York City banks, especially the
trust companies recently, which have been
subjected to the same
reserve requirements as New York
City commercial banks, by New
York State Superintendent of Banks Elliot V. Bell.
While some of
the longer maturities have been
disposed of by New York City and
Chicago institutions the heaviest liquidation has been in the inter¬

not like¬

Polidy of the Department of
Agriculture will continue to be
stimulating price-wise. However,
the actual movement of agricul¬
tural prices will depend on new
crop conditions this year and less
on
government buying.
By the

(4) We are about to enter the
distressing phase of decline in the
market

the

.

a

The

individual markets.

the next six months.

bear

main

influence

.

in

been.

ever

time when the market

tion of the wholesale price trend,
but will have an effect in some

distinct

a

has been

it has

These
are

to

uncertainties.
it

existing authority, the

government's actions

anticipa¬

is

me

restrictive

more

ly

coming events is tradi¬
tionally superior to the commod¬
ity markets', a major break in
stock prices preliminary to a com¬
price

to

seems

sharply into the second

Under its

of

modity

any

By JOHN T. CHIPPENDALE, JR.

Liquidation of government bonds continues but at a slower
pace
although trust companies have joined the commercial bank and in¬
surance
companies in letting out the more distant maturities of
Treasuries, in what is now termed "playing it safe" in view of the

selling in the intermediate and long Treasuries, the fact that
nearly all of the so-called experts are on the bearish side could be a
very favorable sign since this same group was
just as bullish at the

quarter.

major decline in general commod¬
ity prices.
-7 /-; 7^ 777-7-,■ -.7 ■

(3)

pass

to advance

supply of money within six
months, and the-initiation of • a

tion

it

up,

Governments

on

end of

legislation unless prices continue

the

objective

summing

will

present

exhaustion

an

gray

/,■■'•

than government action.'
It seems doubtful that Congress

the expansion of bank loans

indicates

pay

activity in 1948 will be a more
important factor in most markets

in the interim.

which, if continued at the

rate,

prices.

to

that the trend of general business

Timing of the collapse in
general price level depends

upon

may
even

Conclusions
In

will

on
longprobably
be

par'

or

of

The other

is forced

and

pressure

bonds

rate

will

ahead

Reporter

con¬

type of
however, has lost his
resources, has short sup¬

market

(2)

„

the

.

2y2%

far

excesses.

Our

in

care

supply viewpoint and

a

covered

plies,

and

the

find

we

commercial

reversed,

they

this

consumer,

despite the efforts
Treasury to maintain in¬

the

violate

tic capacity to absorb current
pro¬

in

Government

terms,

duction.'-.

we conclude

of

One is well taken

prewar

other components of Capital For¬
mation shifts the buiden of con¬
onto the domes¬

be

(1) Until such time as commod¬
ity prices collapse and the asso¬

on

(2) The unmistakable slowdown

foregoing,

from

have

29

customers,

markets two classes of

many

(625)

were

result

a

sumers.

that:

is already

economy

geared.
in

From the

former

CHRONICLE

full

a

As

Conclusion

Will not provide

FINANCIAL

frequently not
share in the. supply
now furnished by the
integrated
organization.

sales, underlies the unwilling¬

process.

deflationary

&

Their

given

of the stock market to capi¬
talize at normal ratios historically
high earnings.

operations in the black during that

-

tions.

however,

high break-even points and rais¬
ing the risk of deficit operations
upon only a moderate down turn

most

[

The, inflexibility of most
costs, causing record

production

occur

transitional ef¬

highly regarded companies
in
practically all industry will
have a difficult time
maintaining

COMMERCIAL

have

This,
that

an

however,

such

impact

Psychologically

and

action

on

markets.

"Special reserves"

siderable

speaking,

the

domestic allocations into

'7V..-'7.c

interest

to

or

the

.

in¬

It

is

being

.

.

.

.

only way the monetary
recapture their lost control over the money marpointed

out

that

the

creasing their purchases. This has

authorities

been true

|

kets is by getting new and adequate powers to limit the creation

fairly generally in the

non-ferrous

have been

metals,
and
similar buying

from time to time in

some

there

These

of the

bulges in demand, how¬

have not improved the basic

position of these industries. But in
some cases

—

reserves

i

by the member banks.

waves

fats and oils markets.

ever,

of

can

certain brass prod-

ucts, for example — we see the
paradox of manufacturers looking

actively
same

for

time

new

that

orders at the
they raise ;the

The

price.

Purchasing agents,
will continue

past, to base their policies on
facts, not rumors, but to recognize
the part that rumors can play in
temporarily tightening a market.

as

I

am

sure,

they have in the

next few months,

will be

a

I am sure,
great period for rumors

of this kind.

30

THE

(626)

&

COMMERCIAL

Thursday, February 5, 1948

FINANCIAL CHRONICLE
examined, given

Utilities Face Their Greatest Test
*

their quota of wor¬
and their

utilities had

(Continued from page 9)

5 years. It is obvious that
the central station has traveled far
the past

them

lookT to

must

we

money,

mainly for debt absorbing ability.
Without appearing to over-sim¬

ries after World War I

subsequent experience may be a
guide for the future. One lesson
was already learned.
There was a

common

Tax authorities have been

of

forward.

entered World War II with a sub¬

kilowatthour.
Of

*

there is very good
that this long time

course,

possibility

of economies has bottomed

trend
out.

cost

The

the

cost

f

of

money

generation and

transmission

of

inching

are

have

However, it is a great and fitting
record that at this very moment
we

less for

pay

shows

I

an

retail value of commonly
appliances.
Their average
price is considerably above 1936
levels—a large part of this may
be due to improved models, but
used

fortable margin of

model improvement or no
model improvement it costs ma¬

them now than
Do we know
anything comparable in our daily
lives? Average cost of a vacuum
cleaner has risen from $56 to $76;
its' average cost to
operate has
cents

a

rators

nine

year
are

$9.58.

mal means

years

Cost to

down from 70 cents

than half

dollar.

a

proposition is sound in a com¬
prehensive way, the impact is
much less severe if new, more ef¬
ficient
units
displace the old,
which will then become the re¬

a

a

Do

giving

have

to

to many

were

in for

hard times. Their problems, freely
aired, have gained a wide audience
and we are not going to minimize

them;

placed on the market and their

ating the securities now or to be

but let us see things in
proper
focus.
Station operating
efficiency is the highest in a 65year history. Rates are the lowest
they have ever been. Credit is of
the best, with Aaa utility bonds
running
close
to
governments.
is

word,

a

now

sound

very

healthy industry.

and

,

have

not'

panies raise their sights on utility

quarters.

preferred holdings, which are now
about. $280 million, .or only slight¬
ly - over one-half of one percent
of their total assets? Where nec¬

industry

,

of the Problem

very

In

The

growing,
instal¬

immense figure by any stand¬

It

ard.

never

was

exceeded

lations

permitted during the
war, therefore, accentuating the
shortages 5 years later; and it also
is traceable to

fore

postwar level of

of

our

economy,

Many industries are only back to
or
only slightly above prewar

peaks.
power

In

comparison,

electric

output of 255 billion kilo-

watthours in 1947

double the

was

us now

margins of safety, the
preferred can be a very worth¬
while instrument for both sides of

minimum

a

the

output, all in

Previously, it had taken 14

years.
year

to double the output.

Since

It is refreshing to recall that our

the big

are

TABLE

insurance

life

certification of property as an

(2)
do

''

...

good sales appeal but ducks the
point in the sense that it is worth

11)36

Consumpt'n

1947

$56.00

$76.GO

;

Cost

.

159.00

66.00

240.00-

164.00

Vacuum Cleaner....
Radio

—

—

Washing Machine
Refrigerator

10.50

Toaster

130.00

230.00

♦Computed

from

80

$0.61

,

„

in

appearing:

2.46

0.74

■1.12
14.50

975

V

9.58
1.96

2.98

0.70
-

29.93

>-

"Electrical Merchandising:."

Load '

Generation
'-r'i

'4

1

Peaks

Factor

(Million kwh.)

(000'skw.)

<%>

1939—....

1940_——

28,750 V

.127,642
141,837

1941

164,788-

1942—

185,979

1943

217,759

1944

228,189

1945

222,486

1946

223.130

1947.

255,394

♦Estimated.

:■

30,800
34,650
35,850
40,100
40,650
39,550
45,000
*49,000

Data




from

Edison

of the system. That
is the acid test. If used to excess,
earning

power

discouraging any play in the
common
it defeats itself.
Pur¬
chase warrants exercisable above
the market are
something else.
More in mind > is the long-term
debenture which is not so bad as
some made it out to be.
American
Gas & Electric 5s of 2028 had an
deep

record,
depression.

even

during the

virtue

of

keeping capitaliza¬
tions simple down the line; One

the

Year-End Capacity
Total

fundamental

the

tem, the long-term debenture has

Contributing to Public Supply

Non-Coincident

than

Upon the holding company sys¬

TABLE II
All Plants

more

no

enviable

0.46

45.34

15

Range
data

$0.93
.3.72

.20

24

Irons

17.00

.

(3.07*! kwh.)

64

4.50
5.80

.

Operate
1947

312

_

to

1936

.

k 4.65*1 kwh.)

(kwh.)

Appliance—

67.00

55.00

ex¬

%

Reserve

of

Peak

—(000's kw.)

50.7

38,863

10,113

35

52.4

39,927

9.127

there

7,755

54.3

54,7

42,405
45,053

62.0

47,951

63.9

49,189

64.2

50,111
50,304
51,647

9.203

56.6
—

of

be

Elec.

Institute.

*2,000

may

find it seriously inconvenient.

To

with

the

draw

a

parallel

again

past, the theory of- re¬
earnings

could

be

re¬

sity f actors be changed and
inter-connection
between

make
inde4

pendent companies less desirable?
It is not worthwhile to think of

reassembling the piece* into per¬
missible integrated holding sys-

which allow Companies to

terms

still

keep their local identity and

the benefit of central plan¬
ning and, very likely, lower cap¬
reap

ital costs;v

■

Ohio .'Power

'

4

Appalachian

and

jointly > a
each to own

Power ' are t building '

-25.0.000,-k.w,
half the

station

*

It is projected

capacity.

that way very likely for the econ-*
omies
it>; achieves.
Separately

could

companies

managed

pre¬

do the same, but it is
simpler to effect where, as in this
case,
they are u n d e r common
parent ownership,
r

sumably

-

Conditions

need

for

dictate

todav

modif'ed

a

the

*

of

system

holding company, now resting on
a
solid base.
Property valuation^
have been

to the bone and

oared

synthetically from the pieces
after passage of the Act.

12 years

V .To summarize, the power indus¬

has its operational problems.
successfully met previous
of pretty large dimensions:

try

has

It

ones

The

•*11 elements: Federal

on
their own initiative
rate increase may be needed

a

full study of the facts. The
burden of proof would rest on
after

a

consumers

to
prove
otherwise.
it is the company which
been on the defensive.
.

Until now,
has always

Electric

Potomac

serves

original cost of property.
Its se¬
are highly regarded, yet
a recent bond issue was sold at a

curities

price than many had ex¬
pected.5 - Previously, its bonds had
been re-rated from Aaa
to Aa.

lower

still, of course,

which; is

quality

high order.
To what extent
the severe earnings restriction in¬
fluenced the change is a matter
of

a

if these are clouds,
the horizon no bisger than a

of opinion, but
on

man's/ hand,

prefer

we

to have

bank

story is often told of how
runs
have
been
stooped

local

merely, by showing, plenty
of bullion at the teller's window.
The Holding

Company Can Be

Reconstituted

r,

1

Remarks

made

were

,

companies have proven
when properly man¬

Holding
their

worth

aged

and

where interests of the
investor are rightly

and

was-

emergency power
up as

and

if

pools were set

efficiently as they were, the

ostensibly

and
Co¬
especially of the firstis needed for raising large
of equity money.

operation.
two,
sums

The industry must

this

_

had

1930.

breaking

up,

disavow cer-i
but hold to

former practices,

tain

certain

princinles firmly and with,
conviction.
To do so may reauire.
it

take

to

stand

indeoendent

an

and administrative

fiscal

on

mat¬

ters and not

merely trumpet other,
neople's notions.
Utilities are a
fourth estate, so to speak.
They,
cross

boundaries..

political

many

What's in their own best interests
is in the best interests of the pub¬

lic and industry thev are
to

tor

the

obligated,

that,'

I sincerely believe

serve.

record

this pomt

proves

it

At

so.

might like to know

we

is

tion policies and on

on

anti-infla-r

material allo¬

cations.
Much

which

Electric Light

National!

the: old

Association had to

say can be said today, but with
the assurance that it will reach a:

wider

earlier
about the need for regrouping now
isolated operating companies.
This- ;is
not- a
backward step.
*

Government^

rate-making agencies
private lending institutions.

short

;

new

what their stand

they stay there.
The

of

the

capital of the nation. Its rate of
return
is
5¥2%
of depreciated

and

more

audi-;

receptive

Twenty vears of brilliant
chapters, have been added to a

ence.:

'

long story of achievement.

r

j

finally, while we believe
the holding companv system has
merit, cnis does not» whitewash !
.

And

many of its former abuses.
tain- companies today -are
order

dissolve

to

or

to

Cer-*
under

narrow,

their circle of influence.-Compli¬
ance
some

has been slow.

securities

are

It means that

suspended in a'

largely fog of doubt which balks discern-1
Though ing analysis. Their market gyra-i

holding

tions

are

not
.1

calculated to
i ti

at

help-

.and

companies Were the dominant fac¬

finance

tor

pressing needs of operating. Com¬

-

invested

Will load diver-?

station location?

suggest

responsibility and

'"v been completed by

(3> Virtues of Reinvested Earn¬
ings:

planned

affect

that

that

all too much" framework for
-

V;

-

will

;How

pattern is de4

same

raising of perhaps $6 billion
money in the next four'
years will need the cooperation of

voice their dual

The war record of

The smaller company

veloping. *

Illinois,

In

others.

and

somewhat the

up

sound
discouragingly
like a stretcher
case.
Better, it would seem, that
with the plain facts of higher gen¬
erating, transmission and capital
costs
before them, Commissions

outstanding

27

5

signal benefit.

Emergency rate increases

safeguarded.

preferreds.

on

power

utility stock prices are well de¬
flated, not I ke the 38 times earr¬
ings of 1929.
American Gas &
If that looks politically inexped¬
Electric,
New England Electrc
ient, though economically sound, System, Central & South West,
then something like a public dec-" others also,
have been given' a
laration < of
policy
to
indicate clean bill of health. But we still
awareness of the problem
would have to see a maior system built

utilities

in that direction.

12

V

fully

is

by
rate-making bodies
and they might well take time by
the forelock
by suggesting rate
increases where found necessary

have 9 bond issues and 4 series of

The tendency now is

21
'

The set

consumer

20

10,561
5,304

better time than now to

large operating company may find
it not too inconvenient today to

26

.

7,851'
8,539

a

implement these views?
of facts described here

30
22

War

tion Of Rate Commissioners.

by

Average Annual

Annual Power

the con¬

type, or" the "doublefeature."
Convertibility
carries

companies

lenders of long-term

Estimated

''

not necessarily mean

vertible

(1936 and 1947)
;

When

Use of Debentures:

think of debentures here we

we

Average Retail Sales Value of Popular Home Appliances Compared
With the Average Cost of Electricity to Operate Them

■,

channel worth

a

knowing how much of a security
is held in the^ territory^''; v
"

which provide

sinking furids,

alternative, and which forces cash
outgo when cash is most needed.
Straight-line depreciation is it¬
self a very effective protection for
the preferred.

I

♦Avg Retail Value

This without the need

of

quality class, the best bonds
fetching 5% compared with 2%%
today.

matter of 8

a

deal.

no

in the

1939

under

to preserve

The budget, be¬

looks like

pretty

alone

any circum¬
Cloaked with restrictions

paper

stances.

4 years,
Capitalraising as you can guess was also
a
problem then. Our population
was smaller, national income and
savings were far less and installed
capacity a third of what it is to¬
day. Interest rates were high and
besides, utilities were not exactly

business baffling the experts. We
hear about stepped-up production
in other sectors

From 1924 through 1928,

$4 billion.

often

good

of $6 billion in the next
one 12-month period less.

than

are

earned 7 to 9 times which is

the cumulative total reached more

were

charges

dividends

ferred

un¬

til 1947.

ratio of
covered after

taxes" obscures the fact that pre¬

utilities

an

re¬

used

commonly

"over-all

1924, the capital expenditures
reached $908 million,

of

be

vised to favor this.

the Financial Side

on

could

state, laws

essary,

Comments

that only urgently needed

a

pro¬

known

ferreds. Could life insurance com¬

nancial" and second "Regulation.*'

,

stopped

in

few of the pos¬

a

doubtlessly

are

Suppose We start With a few. They
come under the class first of "Fi¬

The pressing needs for expan*
sion are due to the fact that utili¬
ties

ideas

and

welcome

diagnosing what

we are

a

views

examine

us

(1) More Institutional Holding
of Preferreds: No one knows for
sure how much the higher yields
will
stimulate
buying of pre¬

right to be articulate on this topic.
To them falls the burden of evalu¬

In

would

_

sibilities.

Security analysts representing
both buyers and sellers have a

suddenly occurred

that utilities

vide but it is

this

all too many cases. The banker is
still ' very
much ' interested
in

Let

utilities meet the test?

Within the last few months, it*

:

seems

Service

foi

has almost faded into oblivion in

a

^:

tice, but with perhaps enough of an
outline to fill the canvas.
Will

Where We Stand Now

~

to-Cus¬

decelerated govern¬

view of

However, debt is not all. Pre¬
ferred and common may have to
be sold to the tune of $1.8 billion.

incomplete to do full jus¬

far too

their power,

away

..

then for the picture,

much

So

why some people think companies
are

of the future.

serves

wonder

we

-

knows

could be
made for allowing them to ; buy
The Regulatory Aspect
^
more
preferreds
and v common.4
The 1947 year-end ratio of 14.3%
| " -That regulation plays ah im^
has been exceeded four times since
portant role in utility affairs is sc
1940 so that, actually, expansion, eyideht as!to; need:no laboring
in utility holdings has not kept
the
point: - State
Commission^
pace with their asset growth. If
have made it very plain that their
the
16.7% ratio for 1951 looks duty is to protect the interests not;
high, compare it with the 19% only of the consumer but of the
once held in farm mortgages, 30%
! investor as well.
Words to that
in "other"
mortgages, 25% for¬ effect appear quite frequently in
merly in rails and 40% now in individual rate cases or in pro¬
governments..;: ■
V;,■'. ■. ■:
; ceedings of the National Associa¬

the

toaster is
year to less

use

much

one

in utilities
of ; assets.

16.7% ;

be

then

invested and a good case

of getting back to nor-,
more idle plant. While

the process

cost to operate, down from $14.50
to

$60 -bil^

-

1951; and. a

how

sure

Company
No

*

of

these,• to¬
gether with Public Service of New
Jersey, having formerly been tied
in closely with United Gas Im7
provement.
Now they go;, their
separate ways. In Ohio, seven or
eight independent companies will
be, supplying power following di-»
vestments by Columbia Gas, ComT
monwealth
&Southern,
Cities

•

Sales:

*

/

from $164 to $240;

up

35%. In 1946,

Some, therefore, argue that all
the capacity now going in may
not necessarily earn its board, for

from 93
to 61" cents. Refrige¬

in

say

of

end

Direct

tomer

financing, it would in fact
be
interesting to
know where
these life funds are going to be

rebuilt.

be

must

placed af

the

ment

margin dropped to 12% and
last year it was 5%. This reserve

use

rate-of-gainyiotal assets

(4)

1,

ploring. Somehow the customerownership phase of utility oper¬
ations, once so widely heralded

In

the

it did 10 years ago.

at

would

kw., leaving a com¬

million

If allowance is

$10 billion investment

peak load was figured at 28.8
million kw. next to a capacity of
38.9

be

nngnt
lien

the

still,

dropped

for slower

14.3%v ^f
made

constituted-

.,

their assets.

physical reserves above
peak loads in addition to allow¬
ances for greater use of installa¬
tions around the clock.
In 1939,

average

terially less to

common,

capacity; that is,

reserve

actual

than

power

our

Table

before.

ever

stantial

depended for -its
Philadelphia Electric,

tive to the special needs of power

the costs

12%

like
has

recep¬

been mounting and now

with its

1882

of

station

St.

load factor and 10 lbs. of coal per

effect

the

ahead,

is • hard to
In the East; a company
Delaware Power and Light

measure.

well stand pbstponed income.

very

lies

broken " relationships

stocks have appeal might

companies and could relax Sec¬
plify, we may look to the life
tion 102 of the Code in their favor,
companies putting away $21A bil¬
f Kept. within
limits,-y regular
severe
power
shortage
during lions of utility bonds through 1951:
stock dividends can furnish inves¬
World War I; not so in this war. They have never stopped growing
in 40 years of which we have rec¬ tor income,' if income is needed.
One reason was that in 1914, fac¬
Its use was demonstrated by North
tories were supplying 85% of their ord; thpy have been. expanding
American which became one of
power needs,
buying only 15%.. their assets lately by over - $3%
the soundest holding companies in
The balancp has now tilted far billion yearly. At the end of last
the nation.v Today its operating
year they owned around $7 bil¬
over the other way but the process
lion of utility bonds; ^thaty with companies are being handed over
of shifting was one of the major
in the finest possible condition. A
headaches of the 1920 decade. We modest amounts of preferred and

since Edison's Pearl

in efficiency

which

lustre. The
utility

new

class of investor for whom

during the

In the

war,..

period of rapid expansion

the

e g

n>

e*

panies, "or build up confidence in

Volume

167

Number 4670

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

(627)

v

.holding: company Issues,given the
■green;, light.
■
:'y v/The

initiated, may,! know

around,

way

In Use of

potential buyers of utility equii-1;, '>; '■ ;•; V;':
•.''
I*>• '•:' <:
';/ I.
•,! The public
utility industry faces commercial' or
a
real problem in raising addibanks

themselves of

of their prop¬

some

WithouL belittling
this
problem, the industry has on its
side
an
extremely high credit
standing, an. enviable record .of
meeting the abnormal needs of

erties..

.

,

the

war

the

and

nostwar periods

the unique ability to have cut
the price of its product in the face
of general inflation.
It perhaps
and

.

J gives the industry
i degree
than it
.

today a greater

nationwide

of

:

^as

had before and

ever

this is worth

goodwill

preserving,

I

v

Hold Annual Meeting
Association

Inc.,

will be

•Hotel
'

ing

New

have

of

held

Wall

Feb.

|

Yorker.

Street,

7

The

the

at

follow-

been

selected; by the
i nominating committee for election
*as

officers:

Robert J:

Humphrey,
& Co.,
president; Godfrey H. Maurer,
'City
Service
Corps.,
1st vice:

Jr.,

Francis

I;

du

Pont

•

*

president; John J. Boyen, Joseph
McManus &

.

*

&

Co.,

Co., 2nd vice-presi-

'mond

Inc.,

secretary,

and

Ray-

Brode,

Blair

&

Inc.*

Co.,

{directors
<

Marvin

are:

W.

as

Wald-

billig, Halsey, Stuart & Co., F. Wi

\ Q. Birtwell, Stone & Webster Se¬
curities Corp., Thomas B. MacDonald,

>

'liam
•

Blyth

S.

&

Co.,

&

,

Co., Inc.;

Co.,

C.

and

F.

Russell

•Berger, G. A. Saxton & Co.f

Now
1

Scheffmeyer & Co.

Effective Feb.

1

the firm

name

,.of Scheffmeyer, McKinney & Co.,

,20

Broadway,

New

Yoik

City,

members of the New York

Stock

"Exchange,
meyer

Edwin

was changed to Scheff¬
& Co.
Robert McKinney,
S.
McKinney
and
Eva

Moody McKinney having retired
from the firm
i

:

v

With

Newburger, Loeb & Co.,
bers of the

nounce

New

that

Reserve

banks/

"When
is held
the

the

debt

being

net

result

is

about

when it is owned

as

retired

by the commercial banks,

Reserve

the

same

by the Fed¬

banks.

The

taxes

■>f the banks will be sustained and
the Treasury will have less funds

with

ury's account at the Federal Re¬

:his, the bank states, the deposits

which

to

velopments

Federal

off

pay

cleserve-helcl debt.

"Whatever de¬

be,"

the article
bankers : have
srepared themselves by having a
may

concludes,

"most

backlog of short-term Treas¬

arge

"The latest

budgetary

receipts

for

the

plus ,of i $7.5
six months

budget

full

text

•

of

;;j

■./■/

estimate of Federal

expendi¬

and

fiscal

next June 30 shows

ending
budget sur¬

year
a

billion.

In

the

first

surplus

was

billion in the current six months,
/an. l-June 30. Since tax re¬

ceipts

much heav

are

in the the

er

:irst three months of the calendar

than

year

in

the

second

quarter,
nost, if not all, of the surplus
vill
be realized in /the current
quarter./
-/-//I'M
-

"The

cash

surplus of the Fed¬
is usually larger

eral/Treasury
the

budget

surplus.

Some

budget expenditures, such
cruing

interest

-eries

as

ac¬

outstanding

on

banks.

banks

have

of /funds

not

series

'C'

tax

notes

are

used

to

income taxes, or other Treas¬
obligations are used to pay

'nheritance

taxes.

Cash

The

to

by

commercial

this

drain

some

asset,

meet

selling

chiefly U. S. Government securi¬
ties.

The

assets

liabilities of
vVnen

well

as

the

banks

the

as

down.

go

tne

Treasury then pays off
maturing debt held by the banks,
the banks change the type of as¬
sets
held
but deposits
are
not
thereby increased. The money has
disappeared.

York

mem-

Stock

Ex¬

is

the; debt / heing/ retired
by i investors other than

held

the commercial

banks,

Federal Reserve

or

however,

the

does
not disappear., The Treasury col¬
lects money from taxpayers and
pays
it to holders of maturing
debt./ These

proceeds in

money

holders

deposit the

the

banks

the

deposits

recover

portion

a

and

of
lost

reserves

when tax checks were cleared.

In

effect, deposits have been shifted
from the accounts of taxpayers to
the accounts of holders of matur¬

ing debt.
invest

The latter

can

the money as

spend or

they

see

fit.

"Thus the ownership of the debt

being redeemed is of the utmost
importance.
A
large
Treasury
cash

surplus, used to retire debt,

is not necessarily deflationary. It
is deflationary on the
money sup¬

only to* the > extent that it is

ply

receipts,

Federal Reserve banks, the money
tually
will simply disappear. The Trea-:

•Street.

iither

in the form of payments
goods and services, or by reieeming debt held by the public.
'or

The

Tie

office
' In

the

at

the

57

firm
-

West

^past he

57th

with

was

:S»rtorius, Engel & Co.

it,«

at

\

Treasury will accumujate the
in

^onev

its

Federal

then
ties

pay

held

banks.-

-

deposit

account

Reserve

off

banks

at

and

government securi¬

by the Federal Reserve

When

this

is

done

the

•kinds-do not go back jt'o the public
but vanish, being used to cancel
iff liabilities of the Treasury to
he Federal Reserve banks against

labilities

those

of

Treasury.

banks

"

/■'

to

the

•//■

\«

"Last

year, also, the Treasury
large cash surplus, amountto $5.2 bilLon in the.first quarer of 1947.
This surplus was also
used to retire maturing debt. But
-ad a

ng

'

Concept

-

of

-

the

Corporation—

-Peter F. Drucker—John Day Com-

•.pany,

New York, N. Y.—Cloth. '

/

New Departures in Freight Rate
.Making—G., Lloyd Wilson—Simt

last year the effects were far diferent from those that will occur

his year, if the Treasury retires
•lebt held by the Federal Reserve
banks. Last year the debt retirenenbwas

accomplished

deeming., all

.mons-Boardman

'ssue

i30 Church

certificates,

Publishing Co.,
Street, New York, N. Y.
.—cloth—$3.00;
'
:

held

Fibers

Industry, The

.—Volume VIII of An Engineering

Interpretation
and

of

the

Economic

Financial

Aspects of Ameri¬
can
Industry—George S. Arm¬
strong & Co
Inc., 52 Wall Street,
Tiew York 5, N. Y.—paper.
,




and

a

them.

$2.6
Synthetic

Sec¬

billion,

by-re¬
maturing note
portion of maturing
irrespective of who
of

a

The
.or

result

44%,

was

that

of the $5.6

billion of debt redeemed in cash
rn

the

first

quarter of

1947

(in¬

cluding the April 1 redemption)
was

owned by

the

commercial

serve

banks.

investors other than
and

Federal

Re¬

Another $2.1 billion

Federal Reserve banks would

deposits

thus

and

counter-influence.

the money to invest in
then the demand for

use

securities,

cantly shifted. On the other hand, j
if

individual

an

pays

heavy taxes out of funds that
otherwise

would

vested,
own

have

these

and

the

of

some

the

corporation

or

flow

money

been

taxpayers

in¬

also

maturing debt
is

not

vitally

changed in passing through the
Treasury, although the taxpayers
the

are

poorer.

They have

some

of the
sets

money back but their as¬
in the form of government

securities
The

less.

are

the

of

cash

surplus, and the
difference
in
ownership of the debt being re¬
deemed, may make the situation
this year far different than last.
The demand deposits of the com¬
mercial

assets,

banks, and their earning

likely to decline more
extensively.
A cash surplus of
$8 billion used entirely to redeem
debt held by the Federal Reserve
banks

are

could

cause

9%

a

in the aggregate demand
of

individuals

and

decline

Thirdly,,

of the maturing debt
by them to mature. Cor¬
holders
may
need
the

porate

in their business, or other
attractive opportunities for

the

Treasury and Reserve authori¬
ties may change their
policy and
decide to pay off a portion of the

is

quite

will

be

just

indicated.

gold

imports

money

in

unlikely
as

that

severe

Continued
and

a

circulation

as

the
that

heavy

decline
would

having

large

a

commercial
a

banks

less

are

year ago, caused

than

by debt retire¬

(those
year)

buy

New Era of

less

than

a

New York City
banks must prepare

Chicago

ments similar
announced

actions

to

term

-

in

themselves not only for the tax
drain but for a possible additional
4% increase in reserve
require-r

use

cash

short

larger.

are

the

accumulating

of

maturing

to the 2%

Jan.

moves

24.

are

anti-inflationary

increase

Altogether
tremendous

a

if used in

force

manner

suggested by recent
the authorities."

of

Prosperity Ahead

(Continued from cage 6)
countries stabilize their currencies
and do it at once, dollars
given to

them will be of

permanent aid.
The question of administration of
the aid ranks equal in

importance

to

the

the

amount

and

character

of

aid furnished.
administer

it is

the State

De¬

partment, which fundamentally is
a
policy making department and
not

custodian

a

of

Govern¬

Nothing would be further
the

truth.

Ours

is

still

a

country, it is capable of
development. Between
souri

Certainly, the last organization
to

tically

ment securities.

no

River and the
there is an empire

oped;

the

from

young

enormous

the

Mis¬

Coast Range,
to be devel¬

Southeast, the

South¬

west and the Pacific Coast are
all

susceptible of great growth and
administrative department.: development. In our
great Middle-

an

Our State Department is archaic in
its own organization, it is full of

west, much remains to be done.
predict it will take all the

inter-departmental jealousies;

that

un¬

I

savings

our

people

make, to fur¬

can

til recently at least, it has been
honeycombed with subversive fel¬

nish

the

capital

vide

the

buildings,

low travelers.

ment and facilities that the
Amer¬

all

ican

Whether they have
cleaned
out, I do not

been

know.
less

But I believe that, regard¬
the amount and character

of

of a'.d determined

fartd

I'believe

should

be

learned

the

own

amount

substantially reduced)

greatest

of

error

his

career

many

tion.

after V-J Day,

years

budget calls for
diture

of

greater

our

defense

annual expen¬

an

$11,000,000,000,

than

baF

a

sum

that

things

If industries

ture

a

for

the

have

about

our

not

do

contin¬

ually replace and improve their
tools, the industry or the company

control.

Two and

require

The example of Eng¬
land has shown how fatal obsoles¬
cence is to the
economy of a na¬

American

Our other great serious
problem

pro¬

equip¬

system.

when
he
stated
that
the
plan
should be adopted in its entirety
and
left under his department's

is that of Russia.

will

to

tools,

next 10 years.
As a result of the
war, we

by Congress

on

that

the
administration
of
that
aid
should not be under the State De¬
partment. General Marshall made

the

people

needed

that

fails

vive.

to

The

will

so

industry

not

sur¬

power

and

of

agricul¬

the war, and the
superb

won

tools

do

productive

and

equipment, managerial
"know-how" and intelligent labor
of America created this
produc¬
tive power.
To do what should be done for
our

expended by
any nation in the world in peace
time; and that does not include

will

to

tries

se'ven^biiiions'spenTon/jur^etIf
did not have
the

erans.

we

threat of Russia, we could reduce
our debt and
our
taxes substan¬

tially,
cial

and

still

so¬

the

sooner

nated, and
live

no
or

type of cold
to

adequate

Not

purposes.

facts, I have
but

have

for public works and for

sums

be termi¬

must

war

must either be able

we

on

knowing

solution to offer,
later the present

friendly

Russia and reduce

face

or

terms

our

with

defense

ex¬

showdown

a

with her.

but for the public
facilities,
hospitals and high¬
ways for this new America.
the

schools,

I believe the
banking profession
will enter into one of its
greatest
eras.
The bankers of this coun¬

try were its leaders in the great
development of our country in
the past when we
swept from the
Atlantic

Seaboard to the Pacific
Our bankers have an
equal

Coast.

opportunity in the future that lies
ahead of
ties

us.

that

And the same

were

inherent

quali¬

in

our

great

Country Will Continue to Prosper
The

rapidly growing population,
require immense amounts of
capital, not alone for our indus¬

of

recovery

Europe,

and

relations to Europe, constitute
two major problems, but I believe
that in spite of these
two, so far
unsolved problems our country is

bankers of the

acter,

courage
and
vision — are
will be called for in the

what

past—char¬

next 10 years.

our

going

to

continue

and

prosper

that

will

economy

to

gain

our

continue

successful offering of an is¬
of debentures for the Federal
Intermediate Credit Banks was

sue

to

made Jan. 21

grow

New

apostles

assured

A

and
domestic

stronger.
The

FIG Banks Place Debs.

us

ours

the

New

solemnly in

was

there

of

a

Deal

the

30's

finished country,

were-no

longer

any

York,

banks.:
of

The

by Charles R. Dunn,
fiscal agent for the

financing

consisted

$58,015,000 1.55% consolidated

debentures dated Feb. 2, 1948 and
due

Nov.

1,

1948.

The issue

was

ac¬

counted for by sale of U. S. Gov¬
ernment securities to the Federal
Reserve banks.
"It

of

Treasury
Available figures indi¬
cate that although total U. S. Gov¬
ernment security holdings of the

these

that

effects

short-term

it may be that the trust funds will

that

decline

by

backlog

securities.

maturing debt irrespective of who
owns it, as they did last year.
Or

corporations

the

themselves

may

prepared

and

correspondingly,

of

have

tained and the Treasury will have
less funds with which to pay off
Federal Reserve-held debt.
Again

Earning assets

most

bankers

most

issues

deposits.

with

debt.

developments

funds,

bank

shrink

Treasury to retire Fed¬

Reserve-held

"Whatever

be,

avail¬

ment and other uses for the

effects

-

eral

This

so.

too would reduce the cash

able to the

holdings

collateral

would

special obligations to do

investment may arise. To the ex¬
tent that investors do this, the
deposits of the banks will be sus¬

with

inter¬

non-

money
more

Treasury bonds in the open mar¬
ket, and they may even redeem

a

portion

a

owned

deposits

on

in¬

be

investors, instead of accept¬
ing an exchange offer proposed
by the Treasury, may well allow

penditures,

size

greater

oi

bank

their banks and thus

used to retire debt held
by the
however, include the excess of commercial and
Federal Reserve
cash
receipts over expenditures banks. That
portion used to retire
of the trust funds, which are usu¬
debt held by other investors is
ally invested in special obligations returned to the
money supply. The
of the Treasury.
Unofficial esti- effect on the
economy lies in the
nates of the cash surplus of the
difference in the way the new
Treasury during the current quar¬ owners of the
money use it, in the
ter run as high as $8 billion.
aggregate, as compared with the
"This surplus and the use that
way taxpayers would., have used
is made of it will have a profound
the money, if they had not had to
offect on the economy. If, as now
pay as. heavy taxes.
If the tax¬
eems to be
the intention of the
payers
would have
used
the
authorities, this cash surplus is
money to buy consumers' goods,
ased to retire debt held by. the
but holders
of retired debt ac¬

with

•associated

branch

an¬

Charles

reserves

public by the commercial

"When

'C'

to
'F' savings bonds,
require immediate cash
outgo. On the other hand, not all
tax receipts are in cash, as when
do

are

serve

the fiscal year the

of

$1.7 billion,
so
that the Treasury expects to
realize a budget surplus of $5.8

S.; Pollard,
representative,is now

-registered

i

by commercial
banks.
Only about $1 billion or
18% was owned by the Federal

,/■
./•' •/': eral
investors do that

will collect the money from
individuals and corporations and
vill not give it back to them,

Newburger, Loeb

change and other Exchanges,

*

owned

was

ary

'it

i
:•

Jan. 31.

on

38%

or

he

crease

paid by customers of the
banks reduce bank deposits as the
funds are shifted from deposit ac¬
counts of taxpayers to the Treas¬

pay

Daniel Breitbart,

Eberstadt &

,

'■

To the extent that

ury

Hughes, Blair

deposits

investors, in¬
accepting an exchange
by the Treasury,

mature.

Wil-

Trust Co., Joseph F.

increase

-nay well allow a portion of the
maturing debt owned by them to

Manufacturers

Vanek,

Inc.*

Reserve

proposed

than

treasurer. Selected for election

.

Federal

counter-influence.

a

Treasury Surplus

(Continued from first page)

•

non-bank

of

aifer

dent; Walter > Sullivan, Fitzgerald

i

.

stead

tures

-The annual dinner of the Cash¬
iers

-

be

Thirdly,

■

ury securities."
The
.he article follows:

Wall SI. Cashiers lo%^

would

thus

ind

cated by the need for the remain¬
ing holding companies to divest
;

as

banks.

expansion of bank loans
purchase of securities from

and

.

tional capital during the next few
years. ,v This
is
further compli-

well

as

commercial

ondly,

ties.

.

deposits

of' the

but; at imputes toe
knowledge by

much ^specialized
*

crease

their

31

in

in-

frontiers, that

ours

was

a

mature

economy/

Lord Keynes sold

of

to

goods

our

a

President;

placed

at

par.

$41,940,000

like amount of debentures matur¬

ing

$16,075,000

main

the

instrument for employment

would

ing.

bonds and

be

in

Government

proceeds,

the

outlet of the people's savings must
Government

the

bill

be

in

Of

spend¬

The banker would be prac-

Feb.

Feb.

2,

2

and

used

the

was new

to

retire

balance

a

of

money. As of

1948 the total amount of

debentures
to

was

outstanding amounted

$365,920,000.

S2

THE COMMERCIAL

(628)

Thursday, February; 5; 1948

CHRONICLE

FINANCIAL

&

stimulates and sets in process

Europe in the Balance

Western

(Continued from page 7)
women, believe that our country's
vast achievements and incompar¬
due

living are

of

standard

able

largely to the individual decisions
efforts of millions of private
citizens.
"Free enterprise" is no

and

mere

claptrap phrase: it is a prin¬

ciple

which has worked in this

country and elsewhere to produce
the greatest advance in the mate¬
rial condition of man recorded in
the history of the race.
We

all willing as

are

diers

good sol¬

principle of

the

forego

to

private initiative and private en¬
terprise in time of war; but no¬
body has yet persuated the vast
majority of Americans as to the
wisdom of doing so in time of
We assume that if these
things are good for us they are
good for others as well.
Hence
there is a certain .appeal in any
criticism of the European Recov¬
peace.

pri-

Program which takes the

ery

principle as its
point of departure. ' If Europeans
are indeed pursuing policies which
enterprise

7 vate

believe to be unfruitful,

we

is it not true that they need

why
prin¬

cipally to mend their own ways
than"; to receive from us

rather

subventions for their errors?
Just here in my

-

cardinal
which

is

of the

criticism

the

based

principles

The

application.

opinion lies a

the error of mis¬

error:

may

be sound

as

on

Plan

prin¬

ciples and for conditions we re¬
gard as "normal." (Although even
in normal times we have accepted
the

modifications of

necessary

many

How¬

of laissez-faire.)

rule

ever, to propose dealing with the
devastated Europe of today on a

individualism

basis of free-for-all

is

farfetched

as

a war

on

as

Surely some

indispensable in a
abnormal and impov¬

controls

are

situation

as

erished

the

as

present European

in order to spread as evenly
as possible the available supplies
of the necessities of life and to

one,

prevent the whole society suc¬
cumbing to the law of the jungle.
This is not a question of socialeconomic doctrine. It is a matter
of common sense in the

handling

A businessman
may
have some handy maxims
tacked up on the walls of his of¬
of

a

crisis.

grave

When

fice.

confronted

with

a

special problem, however, a sen¬
sible man pays more

tempted to summarize sounds very
hardheaded and realistic. It is, on
the contrary, academic and theo¬
retical. Europe at this moment is
a

special

and is not to be
throwing the rule book

case

treated by
at

it, our rule book
The

In the

or any

other.

Ravages of War

first place let us recog¬

nize that Europe's

state is the af¬
greatest war in
history. What should be the most
striking and obvious aspect of the
entire question seems to be welltermath

of

the

nigh ignored by most of the crit¬
ics of the Marshall Plan.

litt,

for

"Will
was

instance,

Dollars

Save

Mr. Haz-

whose
the

book

World?"

mentioned above, says a few

sympathetic words at the outset
regarding physical destruction
and other war damages, and dur¬

without the facts

had

r

countries

Certain

than

doubtedly

:

even

and figures.

fared

worse

countries
have been able to pursue policies
impossible
elsewhere.
Belgium
others,

and

trade

for this

Britain.

or

One

reason

Belgium, happily,

is that

less devastated and economi¬

was

cally sapped than either of those
countries.' One must study and
analyze the specific kind and de¬

of injury in each case and
the concrete problems.

gree

It is

impossible to appraise with

degree of accuracy the

any

The

conclusion

one

the

which

clearly from such calcu¬
lations as have been made is that
the losses are of staggering di¬
mensions.
An overall figure, if
one
could be established, would
be enormous.
For instance, Pro¬
emerges

fessor

and

weather of last winter fol¬
lowed by the summer droughts.
As an example of the effect of
these climatic conditions on agri¬
crop

■—was

Pigou, using figures from a
White
Paper,
estimates
the
United
Kingdom
has

cut almost in half.

The

As

their

own

means.

were

be

ac¬

not

mental

Euro¬

term

By

al.

truism and if h

a

The

by the figures
recommended
for

amount

first

the

pean

months of the

15

Recovery

billion.

that

for

the

four

$6.£

the

of

years

Plan

(but since eliminated as a defi¬
nite figure) was $17 billion.
The

-

and

merely

due

seizure

You

do

cut

who

man

a

ha?

automobile that all
is plenty of fresh air ana

by

he needs
to

tell

not

an

down

alcohol

on

and

to¬

bacco.

help them? V
effect"- ad¬

to

"moral

for it*is

visedly

jnost important.

above the material

mentioned

quantities of goods involved - are
relatively so small that they can
only fill vital and critical needs,
provide a certain amount of plant
and equipment and stimulate lo¬
cal production.
Yet the United
States'' evidence of interest and
will surely give

show of strength

multitudes in their time

heart to
of

-;-fi'

trial. ;v

The fact that the Soviet leaders

bitter opposition to

manifest

the

European Recovery Program perT

not itself

haps should

ehlistvour

support for it. Americans follow
with difficulty the? workings of
these men's minds and we do not
know
the
exact
motivation V of

program^
indica¬
directed

the

to

hostility

their

The Communist Drive

fail

would
include

I

As

effect of the Marshall

moral

Plan

emer¬

an

purely on the basis of what
believe to be sound advice.

been hit

How could it be that the material
and

However, there is every
tion that Russian policy is

by

to

the

enemy

.

Destruction

of

the

productive

capacity of all Europe was in part
the result of military operations,

including Allied aerial bombard¬
ment aimed at the enemy. Aside
from this the conduct of the Nazis

entire system of
production and distribution. Cap¬
ital equipment was in many cases
deliberately
destroyed
or
re¬
disrupted; the

the United States with

son

tle

half

over

'say

a

lit¬

that

population
has a cut rent

144 million)

national income of about $200 bil¬
lion.

Such calculations

strictly

reliable

be used too
^uron^an?

and

literally.

are

no<

mors

than 20 times their Marshall Plan

Communist

controlled

-

is

drive

directed at

Western

Eu¬

and Americans find once
again that the jeopardy of the
Western European nations is ou.
rope,

jeopardy.

world at
Europe as
well.
There are indications of a
great desire to do so on the part
of the populations on both sides

internally and with the
large, but with Eastern

the

ment, in

Curtain. An improve¬
economic conditions in

Fascists, deliberate ef
forts are being made to under¬
mine the institutions ard inde¬

Western

Europe

further

movement

formity

Perhaps the

oroduce

can

never

should

Moscow

in

As

Nazis

of the Iron

the

palmy

of

days

and

stimulate

may

lead to a
receipts, or in any event more in
development of i n te r c o u r s e
terms of human satisfactions if
moved.
The war ended with the
pendence of these countries. For throughout the entire continent.
not in dollar values.
However
transportation system of the en¬
example the vigorous and well- That would be a result in con¬
tire continent in a

of

disrepair

in

the

case

and foreign

centuated

deplorable state

and even ruin. As
of Britain, shipping
investment losses ac¬

of
a whole.

the impoverishment

the European system as

impediments to re¬
mistaken
governmental

Whatever
covery

policies
may
have interposed,
Europe's main trouble is that it
has recently been a battlefield.
This is the first thing to remem¬

that may

be, it is difficult to es¬
the conclusion that the Mar¬
shall
Plan
presupposes
a
great

cape

European effort on the one hand
a
modest standard of living

and
on

the other.

Communist

financed
in

is

France

organized

something initiated,

ful

and

ruthless

It is

of French society

fabric

a

assault

included:•

and the

portion of the recipients' national
production and national require¬

clude

ments.

aid.

plete

misconstruction

Marshall

of

the

program. *

has been struck down
by the impact of a calamity. We
are dicussing an
endeavor to as¬
sist it to its feet. This is a neigh¬
Europe

If

It

the

in

will

aid

any

case

represents

but

a

small fraction of the total require¬
ments—it
is
urged—why
could
not

by

the

the

harder

whole

matter

be

settled

Europeans working 10%
10% longer hours and

or

producing

10%

more?

This

never

<

v

ly with them. If they should be
into communist re¬

transformed

gimes

we
to

would

not

hand the emergence
Communist-dominated Eu¬

On the other
of

a

would be ominous in the ex¬
United States. That

rope

to con¬

the

that

policy

Soviet Russia
reappochement,
not

divergence.

the

existing French government.
the United States

American

with

all nations,

from

on

Clearly, the American assistance
will constitute only a small pro¬

For

toward

that desire and

skill¬

conducted

and

outside the frontiers.

present French
government is of no interest to
be,
us because we disagree with some
necessary for them to do most of
of its regulatory policies, would
the job
themselves.
The small
be most unwise.
The conduct of
ber^ not the first thing to forget.
"proportion of aid, however, is of
the internal affairs of any nation
crucial importance in generating
This Is an Emergency
is a complex matter, and circum¬
recovery.
It means just the dif¬
stances
differ from
country to
The second point I would like
ference, materially and morally,
country and from time to time. It
to emphasize is that we are not between
trying to start alone after
dealing here with a chronic state a disaster or feeling the friendly is not the internal system of the
U. S. »S. R. but its machinations
of decreptitude but with an emer¬
pressure of a helping hand.
and
its
subversive
activities
gency.
This is a further develop¬
At the same time this does not
ment of the thought that the en¬ mean that a little additional ef¬ abroad, which concern and alarm
us.
The governments of Western
tire problem arises out of the war. fort on the
part of our European
Europe are ghilty of no such ac¬
There is no question of the United friends would
neatly solve their
tivities, socialistic or semi-social¬
States' underwriting a permanent
problems. That is one of the mis¬
condition of
European ineffici¬ leading arguments which is being istic though they may be.- They
are
friendly
in
their
attitude
ency and incompetence. Any such made currently against American
toward us. One can live pleasant¬
supposition proceeds from a .com¬

the




do not deal with

You

of

It is a sad but plain fact that
destruction national production
between
the
Western
of
the
16 relations
toward the continuation of con¬
have countries. That would mean that Powers and Soviet Russia have fusion and chaos in Europe. The
been estimated as high as $21: bil¬ the nations included in the Plan
deteriorated greatly during the attitude
of
opposition
would
themselves
lion.
Such damages do not in¬ would
produce
26 past
two
years.
Our friendly therefore seem to indicate Mos¬
clude capital deterioration due to times the value of their receipt.
hopes of 1945 have been badly cow's fear that the Plan will pro¬
.'
'
lack of manpower and raw mate¬ linger the ^lan.
used by the Kremlin since the mote
European recovery.
If they do so, and if the result meeting
rials and general dislocation of
of the armies on the
Despite the difference in am¬
aconomic relationships.
The fig¬ be computed in dollars, the 270 Elbe. Against all desires of the bitions between the Soviet Union
ure for France obviously reflects
million people of the 16 nations vast majority of Americans we
and ourselves, the program if car¬
only a portion of the total im¬ will have a total annual "national have been drawn into a diplo¬ ried out
may tend to reduce some
income" in the neighborhood of matic and political struggle by the
pairment of the country's econof the tensions which exist. West¬
The ern Europe should trade not only
$100 billion. By way of compari¬ leaders of the U. S. S. R.
omy.
losses

entire -remainder of his borly undertaking, common and sounds sensible but is quite fal¬
again refers to the decent " among
individuals
and lacious. The answer is that what¬
war or its effects!
Whatever one sensible among nations.
Should ever Europeans do by their own
our European friends find them¬
efforts -must be within their own
may think of government controls,
selves eventually unable to stand countries, and certain of their im¬
and I happen to be among those
alone even after such initial help, mediate urgent needs can be sup¬
Who dislike and distrust their ex¬ we
may be forced to take another plied
only from abroad.
They
cessive use, we have to recognize view.
At
the
present moment must have some food and fertil¬
there is no evidence at hand that izer, some critical equipment and
that after all there was a war.
that will be the case.
machinery, some foreign exchange
Anyone who saw the Port of
On
the
contrary,
practically to "get going." In the long run
Naples after the Germans left it, every Western European country they will have to produce and ex¬
or
who has had any first-hand showed an impressive economic port to acquire these things. * But
view and comprehension of the comeback during the first period this is a short run, a crisis. As in
Liberation.
Industrial so many other crises, in the lives
destruction of cities, ports, trans¬ following
production
and
transportation of both individuals and commu¬
portation systems, industrial es¬ made good records and in some nities, it is the injection from
tablishments and the very land instances came close to prewar without
of
a
relatively
small
The picture would un< amount of vital substance which
itself in Holland — must under¬ levels.
ing

book

Nobody

you

includes the sacrifice of American official estimate is that
an
amount
of
assistance
foreign investments = as well as such
physical. destruction. The Herter would constitute only a small pro¬
Committee states that in France portion—some 5%—of the total

figure

short-

flood con¬
dreamed of advis¬

long-term

gency

originally

sum

Administration

the

by

ol

ing the inhabitants of the Valley
rely on free
competition and the law of sup¬
ply and. demand forythe solution
of their problems.
'
-

Euro¬

is

Program

total

The

rehabilitation-and

skillful manipu¬
propagandists,
decent
people are

are

struggling valiantly to avoid fall¬
ing under the yoke of tyranny.

in that great crisis, to

truism it could easily

a

activities

in

Their

master

and

Millions

in large amounts not
relief, but for funda¬

•

and

trol.

demonstrated

oroposed

deprived of approximately
25% of its national wealth. This

provided
only for

struggle for

to

salvation.

This is

British

been

have

will

the

stated,

already

immediate

the

Their fate is

communism.

antagonists

the Red Cross, Federal funds were

countable for the weather.

peans

since.

pro-

democratic nations

for the

Europe will help them to re¬

lators

ing from the Mississippi Flood of
1937
was
handled
with
greater
humanity and intelligence. Apart
from

matter, 7'
s-'-.;-T > ■

sist

country
ever

that

economic

the balance at this moment.

re¬

Fortunately the disaster result¬

bui

them

cannot hold

really

we

it

from

Similar

sins,

many

the

and

for

our

War

Civil

fumbled, and the South
have suffered

gram was

course

gram

quired a wise and generous pro¬
of reconstruction. The pro¬

governments

European

committed

Of

of

well

as

,

waste of money?

a

was

Southern

Our

the

after

Eastern

gram

failures throughout Western
Europe struck heavy and untime¬
ly blows at the recovery move^
ment.
"'/:l
have

well.

some

States

crop

total

amount of damage caused by
war.

terrible

the

for

been

not

more

set up a freer culture, France's 1947 wheat crop
than that of either —the food-staple of the country

regime

Holland

some

it

improved

have

has

instance

for1

attention to

the problem than to the placards.
The type of criticism of the
Marshall Plan which I have at¬

this

stand

to try to fight

that basis.

the
recuperative forces from within.
Plenty
of
emergencies
have
arisen to perplex our forebears.
Some have been handled
badly

treme for the
way
we

indeed lie the dark risks. As
learned from all our

have

dealings with

dictatorships, it is in

weakness that the

lies, not in
stiffen

our

If we can
friends' resistance and
themselves from
preserve the
And

help them to save

despotism,
status

and
all

with

time,

may

we

quo

modify

greatest danger

strength.

buy time.
its hazards,

compose
rible issues of this hour.
We

or

even

support Western

must

may

the ter¬
Eu¬

because wevdo not dare con¬
template the Iron Curtain being
hung where the Atlantic Wall once
Stood.
1" " '
rope

.

.

Can

Private

Loans

Save

the World?

The

most

unrealistic argument

need five

against the European Recovery
Program is that the job should be
ence.' '
7:7.
done, if at all, by private lending.
Nor is it correct to assume that This idea seems to take no account
assistance
to
friendly neighbor either of the nature of the trans¬
nations is bound to be futile. Cer¬ actions or ; of the condition of

minutes

recognize the

differ¬

■

tainly that has not been our ex¬

American capital markets. f; ;rr ,.,'i,,
perience in the past. When we
The program envisages that spe¬
were
confronted with Nazi arid
cific repayment be required to the
Fascist infiltration into the West¬
extent that it is feasible and con¬

Hemisphere we sought by all sistent „with the objectives.,; On
at our disposal to aid and
the other hand it is clearly rec¬
support. our
friends in Latin
ognized that a demand for com¬
America. We sponsored vast eco¬
plete repayment of all items in all
ern

means

nomic projects

for. countries under

from

totalitarian quar¬

pressure

counted not the cost;
Who can say looking back at the
war
that that policy was a fail¬
ure? Who can argue that the ex¬
ters

and

pense

of

democracy
Western

backing the forces
and freedom in

Hemisphere,

and

of
the
the

likelihood

would

be

self-defeat¬

aid

The proposal therefore is that
be extended partly as loans

and

partly

ing.

as

grants.

Such safe¬

guards and conditions as may be
adequate and reasonable
are to be established.
The United

deemed

States

will

seek

its

recompense

*

95 •

Volume/167 Number 4670

THE

mainly in the^constitution of a
healtnier wogld.
\y. *y
••
:
Apart from the essentially pub-

..r,

lie

nature

and

.

of -the

grants;

markets

proposed

the

private

well

as

tional Bank

the

as

Interna¬

are

obviously now in¬
capable of providing such funds in
such amounts. The
record of

longforeign financing after the
first World
War, while, not so bad

-

term

$s generally ; supposed, was suf¬
ficiently discouraging to dampen

,

make

..

public program

a

would

prevent

cludes.
ciown

openhearths

of

pices
nomic

a

95.2%
9x4%

neglect the pos¬
gradual resumption

of

engaged

the

in

finance

or

should

have the temerity to un¬
dertake to handle
through private
channels
any
such
large-scale
Program as

quite

out

this.

of

The idea

seems

perspective, at least

at the present time.
- a

•;

•/'
.

The International
Bank, by its
nature, size and dependence on
the capital markets, is also comPdled to play a limited,- though

extremely; useful, role.

..
.

fact °f the matter is that
country is contemplating em-

:

this

barking

.

upon

economic

high

:

v

a,
,,

to

mg
and

being.

avoid

to

We

are

another

preserve

attemptcataclysm

our

by

peaceful
cost will be high in

order

one

of

The

means.
sense

but

/; small in comparison with the $330
billion we paid for World
War II.

/Thus regardedthe price of the
Plan is not too great. -.There is
.

/only

possible

,one

.Which

from

source

find
the
money:
the
States Government
acting
to

United

//in its financial capacity.
i

:

Many words

and

v
•

Pcan

being written
spoken regarding the EuroRecovery Program. Its every

its final action. That is
■

be.

V

.

For

the

crossroads

world

as

it should

stands

at

a

of

destiny and today's
decisions will travel
through long
future years.
v.

;>

.

It will be wise

.

■

not to be blinded

in the heat of the
argument to the

background against which the
•

sues are

displayed/There has

the

basic

circumstances

question is: what

•

do about it all?

...

.

s

are

,'

; r

and

the

going to
r..///.
*'1 •

we

The Marshall :plan is the
reoly
%o the circumstances and the question.
■
./; />
,

It is

an

attempt to break through

vicious circles of want and weakness
and to provide the
needed

margin for economic revival.

„

nave

It is

instrument of American

an

•

•

.<

'

1

With Milton C. Powell Co.
(Special

to

The

Financial

steel

week's

PASADENA, CALIF.—Fred
Milton

is

C.

now

connected

Powell

Co.,

B.

with

Security

Building.

in excess of

94.8%, while

was

1.3%.

A month
operating rate of

or

an

rate

is

based

the

on

revised

capacity

operating

tons

one

year

is

equivalent

against

as

ago

1940, the highest

ELECTRIC

rate

castings

for

1,694,300
the

for

tons

tons

SAN

to

The

Financial

DIEGO,

Chronicle)

CALIF.—Charles

C. Leigh is now with
Wesley Hall
& Co., First National Building.




The

RECORD

HIGH

RETAIL AND

.;

•

>•

ft

ft

ft

"*'•

•*.

••

-

•;

//•' ./ ••v

•

•

».

39,294 cars, or 4.8% below the preceding week.
It also
represented a decrease of 49,936 cars, or 6.1% below the correspond¬
ing week in 1947, but an increase of 63,438"cars, or 9.0% above the

output

of

cars

and

trucks

the

in

SHORTAGES

United

States

and

Canada'the past week amounted to 96,010 units, "Ward's Automotive
Reports" states.
This compared with 109,8b5 units,in the preceding
••

;./;■'

/

•••

Last week's total

in the United

///,./

,

comprised 69,096

,/

its

in

cars

and

overtime work

on.
.»

continued

to

Dun & Bradstreet, Inc., reports*
week.

Citrus fruits

buying.

demand.

while

•

•••

Sv/• f.'

'

•

•/•■"<vy/-"

sections

sales

seek

moderately

'• :•.

•

ances

industrial failures

men's

suits

week

Bradstreet, Inc., reports 91 concerns failing, against 109 last week
65 in the corresponding week of 1947.
Despite the sharp rise
from the failure level in the past five years there were
only a, third
as many businesses
failing as in the same week of prewar 1939.
week's

failures

involved

Totalling 69, failures of this size

were

liabilities
less

of

$5,000

numerous

a
week
ago when,* 95 were reported,
but exceeded
failures occurring in the comparable week last

the

than

50|large

year//>/.^//-/

Small failures with losses under $5,000 increased in the week

just ended,

running contrary to the general decline. Concerns
failing in this size group rose from 14 last week to 22, the most
small failures in any

week in

failures

predominated
turing failures declined sharply.

over

evident in

furniture

favorable with handbag and jewelry
Promotional and clearance

was

haberdashery stimulated the demand.
in

some

the

supply of branded major
with demand

areas

and

scrapers

of

most

•' /.

'

../////::/

generally eager to obtain moderate quantities
but considerable caution was displayed in the

were

goods,

ordering of large amounts of merchandise.
Wholesale volume

that of the

exceeded

•

•The Middle Atlantic

States

had

the

most

failures

in

the

week

In nearly all regions, fewer concerns failed than a week
ago with the only exceptions appearing in the two North Central
Regions and the Mountain Region.
/■/////■/ /y//'/;. /

WHOLESALE FOOD PRICES INDEX DROPS
WEEK

1.1% in LATEST

Continued weakness in leading food markets resulted in
decline in the general food price level.

a

markets throughout the country were well attended,
ies were somewhat slower than in previous weeks.

Department store sales

a

on

country-wide

increased
with

by 3% from the like period of last

The chief function of the index is to show the general trend of

COMMODITY PRICE INDEX FALLS
RECENT PEAKS ////'' ./•
weakness

$':///• ///■/'

developed

in foods, grains and cotton last
commodity price index, compiled by
Dun & Bradstreet,
Inc., continued to recede from the record high
levels of mid-January.
The index figure fell to 301.01 on Jan. 27,
from 303.86 a week previous/ It compared with 233.95 on the corre¬
sponding date of last year.
the daily wholesale

markets

nervous

and

irregular with sizable net

After displaying a firm tone until
mid-week, wheat turned
downward despite sustained government buying of the cash article.
From then on prices continued to work lower
aided by reports of
large supplies of cash wheat on hand and
snowfall

over

parts

of

the

advices

Southwestern

showing

winter

tour

year

in

trade

last

New

week,

York

extremely

but the

volume

previous rates of gain over

According

to

the

a

Federal

store sales in New York

increased 4%
an

increase

weeks
date

above the

of

ended

5%

cold

sustained

was

year

weather retarded retail
at

close

to

the

ago.

aO'

Board's

Reserve

period last

This compared with

year.

in the pregeding week.

1948, sales increased 3%

-.

~

the four

For

and for

the year to

t

Australian Found Discussed by

£100 sterling.
tion

of the

Chifley

Mr. Chifley said:

pound

"Only in the event of the deprecia¬
sterling would^the

change rate.

British

Treasury

the

on

ex¬

pound.

Press reports in Australia
suggested that because of

have
the

devaluation

the

French

of

the

franc

Government

by

similar

steps would be taken here."
Mr.

Chifley added:
shares

the

"The Gov¬
fear

of

the

British Chancellor of the Excheq¬
uer over the decision of France to
introduce

the

double

franc.

Un.-

Ralph H. Weseman How
With Goidwater & Frani
Ralph H. Weseman has become
with

associated

Frank,

City, in
where

&

New York

trading department,

the

he

Goidwater

Broadway,

39

will

specialize

in

real

less

controlled, it could be ex¬
tremely dangerous to international

estate securities, all other unlisted

trade.

Government

securities, and all types of liqui¬

when it de¬

dations.

ment

displayed marked strength most of the week* but prices
sharply in sympathy with the weakness of the bread grain and

department

;Prime Minister Joseph B. Chifley stated on Jan. 30 that the Fed¬
eral Government was not considering
any alterations in the exchange
rate of the Australian pound, which now stands at £125 Australian to

In the closing sessions the decline was
accelerated by the
devaluation of the French franc and fears that other countries
might

join in the movement.

index,

City for the weekly period to Jan. 24, 1948.
same

(revised)

Jan. 24,

by 9%.

rose

made

Corn

24, 1948,

.

wheat

belt.

fell

taken from

(revised)
weeks ended Jan. 24, 1948, sales increased
by 6% and for the
to date increased by 9%.

ernment
were

losses recorded in the leading cereals.

beneficial

as

year.

justment to the present rate of 25
shillings ($3.20) to the sterling

SHARPLY FROM

//,

Grain

basis,

"This compared
in the preceding week.
For tlte

increase of 4%

an

1.1%,

food prices at the wholesale level.

and

though deliver¬

the Federal Reserve Board's index for the week ended Jan,

further

A drop of 8 cents, or

brought the Dun & Bradstreet wholesale food price index for Jan. 27
to $7.17, from $7.25 a week earlier.
A fortnight ago, on Jan. 13, it
reached an all-time peak of $7.28.
The latest index figure contrasts
with $0.18 on the similar date a year
ago, an increase of 16.0%,

week

/

,

slightly during the week and moderatelycorresponding week a year ago.
Merchandise
rose

a

just ended.

Decided

appli¬

generally remain¬

floor coverings continued to sell well/ Snow
and small plows were eagerly purchased, with very
heavy demand for some automobile supplies and-equipment exceecN-

shovels,

Here

during the week, while manufac¬

clothing remained in very

substantial.

very

four years.

In wholesale trade, the mortality
decrease while little change appeared in construction
and commercial services.
• /;.// ////y/'
//
r
,«). •
.

,

Branded radios with phonograph attachments were heavily pur¬
chased and the volume of records remained large.
Nationally adver¬

and

the

and

improvement

was

Retailers

the

groceries,

coats and sportswear were sought^
proved popular.
Activity in main

resortwear

and

ing the supply.

in

suits,

departments

ending Jan. 29

and

priced

attracting considerable attention.

of

tised

•/•iV

•

remained

plentiful and reasonably priced, though*
lagged somewhat.

were

Women's

lingerie
blouse

floor

26,914 trucks built

///*■■//'■. ///■;/.;///;.•

Unit volume

ago.

the demand for fresh vegetables

declined slightly from the preceding week's high level, but exceeded
those in the comparable week of
any other year since 1942.
Dun &

rate showed

year

Smoked and canned meat/fish and poultry sold well with sligM
the prices of some dairy products serving to stimulate

Some

BUSINESS FAILURES DECLINE SLIGHTLY

of

a

declines in

ing

later

CHANGE

cheaper cuts of meat and meat substitutes.

States.

Two-thirds

a year ago,
trade for the past

of

survey

\

Curtailment of industrial gas, it is understood, was not
wholly
unexpected and plants will be able to make up lost production with

Commercial

SHOWS LITTLE

Weather-resistant footwear and heavy

AUTO OUTPUT AFFECTED BY INDUSTRIAL GAS

Retail

Sales

United States

■;///•//

t^e corresponding week

large
Estimated

/;

■

somewhat below that of

week in 1946.

numerous

good demand but offerings were limited.

Unusually cold weather and heavy snows continued to hamper
shopping in many parts of the country. The dollar volume of retail
traae rose slightly during the week and
slightly exceeded that of

Consumers

ot

more.

Fine

WHOLESALE TRADE

FOR WEEK

Loadings for the week ended Jan. 24, 1948, totaled 771,992 cars,
according to the Association of American Railroads.
This was a de¬

or

last week with greater
spot wools in the r>oston

strong

showing keen interest. .'/Imports of foreign apparel .wooite
uoston, New York and Philadelphia continued in large volume.
total for the week ended Jan. 16 represented 13,499,700 clean
pounds as compared with 11,675,000 in the preceding week.

/

some

was

The

FREIGHT LOADINGS OFF 4.8% FROM PREVIOUS WEEK

;•

market

the Australian wool auctions remained active with

the record

' •:.

■

futures

wool

shown in distant months.

buyers

SLIGHTLY BELOW

electricity exceeded the 5,000,000,000 kwh. mark, and the 12th such
the history of the industry.

week.,

irregularly downward last week.
Medium
readily, but offerings of lower grades were

Easiness in the

at

PRODUCTION

■

same

demand.

tion of foreign currencies and fears that the
European Recovery
Program mignt be delayed for some time and result in reduced

in

week in

crease

but hogs and sheep registered minor losses.

market continued in

average

Thjs was 7,228.000
high figure of 5,436,430,000 kwh. reached in
the preceding week, but exceeded the
4,777,207,000 kwh. turned out
in the
corresponding week of 1947 by 651,995,000 kwh., or 13.6%. The
Jan. 31, 1948 week was the fourth consecutive week that
production

;

liquidation

early part of the week reflectert
in other markets and liquidation induced by new profrposals for controlling inflation.
Continued bearishness in later trac¬
ing was influenced by uncertainties over the effects of the devalua>-

strengtn

kwh., according to the Edison Electric Institute.

'

under

Cattle closed the week slightly

Price-fixing against sales of cotton to the Army for export
Japan and buying by mills against textile sales helped to check
the reactionary trend to some extent.

The amount of electrical
energy distributed by the electric light
industry for. the week ended Jan. 31, 1948 was 5,429,202,000

of

bakers' sales.

downward

to

and power

kwh. below

trend

weakness

the

•/ '

prewar year.

continued lag in

a

to

volume of exports.

1,716,000 tons last week,

1,281,210

ana

to

crop

With Wesley Hail & Co.
(Special

a week ago,

better qualities sold

off.

worn

continued

Cotton prices moved
and

a year ago.

ingots and

1,633,700

Chronicle)

*

Nicholas

prices

the Government consider any ad¬

Its central purpose is to
tip the
balance of Europe in favor of the
forces of democracy and western
civilization.
/

statecraft.

from

up

scrap mar¬

a

of Jan. 1, 1948, with 100% operations equaling 1,802,
weekly output.

as

week in

is-

been

/ a terrible war; /A grave crisis is
smoldering.
.We are confronted
by a harsh dictatorship. These are
•

steel firms

feed.

induced by weakness in fats and oils.

-.

of

are

facet will be discussed and rediscussed before this
Congress takes

•

rate

shown

current

This

of

our

things

-

Nby

both/political parties
Who have sponsored the Plan
that
it is essential to protect the Occidental, civilization in which we

/, have
n

dictated

.

of public policy/' it
considered opinion of the

Vleaders
,

program

was now or never some

reasons

the

vis

international

,an

Lard

476 net tons of

It is greatly to

banking

pay

from smaller

feeding requirements resulting
on

recent easiness in wheat and

con¬

would shut
higher prices the cry of

reduced

livestock

S3

Flour prices worked lower and domestic bookings continued^
a slow pace.
Bakers were inclined to hold back due to the

at

.

(629)

of

numbers of

consumers

scrap

decrease of 1.2 points,

ago, a

indicated

was

industry

lending under the aus¬
improved political-eco¬

actually

some

they would

Knowing it

week

one

the

ago

surprising, however, if

anyone

business

""

The American Iron and Steel Institute announced on Monday
of this week the operating rate of steel
companies having 94% of
the steel-making capacity of the
industry will be 94.0% of capac¬
ity for the week beginning Feb. 2, 1948.
This compares with

The

conditions.

prospects

prospects of softening when present

essential

be hoped* that such
resumption
will occur and that
it will supple¬
ment the government's
efforts.
It
would be

before

cold weather effects have

That is not to

of

arose.

hinted that

was

CHRONICLE

Industry

taken off openhearths rather than breathe
new Lie into
ket which has begun to show the

'

sibility

Wnen it

"bluffing"

private sub¬
scription of these billions of dol¬

of private

/ (Continued from page 5)

~

the

lars.

FINANCIAL

trump card in the past few weeks, the above trade authority

investors',, enthusiasm.- Th^e very
political\ considerations
which

;

&

The State of Trade and

loans

capital

COMMERCIAL

The
a

valued

the

had

learned

Italian

similar

at

lira,

no

but the experi¬
good results." It is

Canberra

will

be

the

Australian

no

move

that

consultations

there

between

Government

and

been

Mr.

Weseman,

trading since 1928,

who

has

was

for¬

merly with Pynchon & Co., Munds,
Winslcw

&

Potter, and

more

re¬

cently with P. J. Steindler & Co*.

tu-

34

THE COMMERCIAL

(630)

.

&

FINANCIAL

in

eminent;

of

A Year
(Continued frOm page 15)

in government notes and
bonds. So we can't afford to have

demand

that

nomically unsound.

back that enter¬

we

We should

not have

realize without

now

shadow of

doubt that

a

make

ands

isolated prosperity in an

supersonic instruments and
atomic energy. For the protection
our

able

citizens* we must be
this plan is not TOO

with

dollars

not

up

with

but

America—and
armed

it

back

to

I

Admin.stration

and

might.

powers

cision;

only

difference

some

domestic

learn

far

so

this

is

to

:

|
by

a

Massachu-

,

tax

those

commodities

vital

to

all

must

should

Versus

have

HCL

countries

together in
trying to solve the problem of the
let

partisan
of

not

devastated

Taxes

;

taxes.

We must not

considerations

the

welfare

of

stand

all

the

creased exemptions,
I believe in
the fairness of community
prop¬

sell

in

should

the

be

willing

domestic

market

erty taxes.

the

President

the overall tax suggestions that the
President made to Congress. That

the

export control

forego for a time the extra
profit. If they are unwilling, then

clearly should

benefit of the American
We

do not want to

use

will

for the

power

there

jority in Congress has been much
criticized.
It is alleged that we
are trying to hold back the mon¬

need

of

with

agree

this, .aToday the Ad¬

ministration
to do much

to

combat

has

the

more

legal

power

than it has done

inflation.

"We

in

gov¬

ernment in

our

own

the firture peace and
the world.
( •
f

We must be

that

My present

or

ever,

cut both

ways.

We all know that inflation

comes

when there is

to

buy things than there

to

buy.

!

Handling
debt is

;

money

things

are

;

great government
of the vital decisions

our

one

combating inflation. The Fed¬
eral Reserve banks in their effort

to peg the market for government
securities may have lost a
great

opportunity to reduce the supply
of money in the possession of the
commercial banks; yet we all fear
price of

a

serious drop in the

government

The

bonds.

pull

the

plug—have

no

support of any kind for its
bonds and let the whole structure
its

seek

level—or

own

is

such

a

policy failing the people who have
been

induced

ings in

the

ment?

Is

to

place their

trust

the

of

sav¬

govern¬

the protection

of

those

government

savings a continuing
government responsibility? If that
is so, government must maintain

be met and

must be

dollar

December
Rent
,

Still

fair try-out.

a

Credit

and

another

must

do

continue

must

controls

and

production
up

about

in

com¬

credit

form

continue
standard
of

controls until

closely

more

we

of rent

believe

I

some

by

government

{government
method

do

can

people

market.

What is to

be

effort

to

decision

the

spending?

Administration

made

cut the

Part

a

Has
of

Federal Government?

In his

ested. in

mes¬

sions,

of government. His plans
anywhere from 10 to 20 bil¬
The

government.

just presented

us

President

savings

the

it

same

is

our

the Federal Reserve Bank dropped
their support price two points on

long-term

bonds

minute

billion assets of
rememberwhen

our

after

and

two

or

wiped

some

half

people. I well

World

Liberty Bonds

lows 80's,

our

ture

war.

budget do reflect
the effects of

efforts

to

Yet there

prevent
are

a

War

were

because I sold

I

in the

some

of

that

the

for

almost

are

those

of

the

$2

(effective

4 Want to

bill'on

current

of

our




banks

In

followed

war

the part

plays in

in¬

our

as

see

of ?

octopus

centers in

initiative
left

to

as

possible. ?; We do not

it centralized id/ an
bureaiwhWcy{ ^ wlixeh

Washington; I iyajiti the
as

the

far

as

possible to be

individual.

f

fiscal

ment aid through government dic¬
tation to the State and the iridic

vidual is all before

hnve

td

tfot

re-

Voluntary

assistance

can

be

im¬

strengthened so that
government aid- will be in addi¬

tions, all increase the big demands
goods or keep the prices at

effort and voluntary aid.

an

artificial

level.

Government

tion to:

not in

place of, individual

So far I have discussed decisions

There, that must be made by your gov-

-

-

must

cam

^

in Our

«

r

;

v*

svs-

X

tem of government nangs on u e

the fatigue of supporting it."

Hard Work and Production

:

Needed
In

a

decisions

each

that

of

one

most

-

of decision there

year

must

us as

be

are

made

by

individuals. The

important decision., with, the
is

fear o.f inflation confronting us

deteinninatibn. to :.work hard

the

produce all i he goods, that we
consume-- and-: thus- funda¬
.

.

th(,

f

the interest

So it behooves

n:aj0rity.

think care-

u t0 think and to

fully and to understand as thor¬
oughly as we may the problems.
that face us today in gpyernpaent,
If we do this and do our part in.

-

to

which is iri

d 0ne

mentally ^id;'Wrselves^of;the basic
danger of iiiitationThe Uought

help.ng

.

public

our

officials : te

; solve' them, then :we personally
wilt have made- a wise decisionand

helped

m

our

government tq
will be
country. Grover

make its decision one that

benefit to

of

Cleveland,
Pres

dent,

our

Democrat ani a great
in 1882 said": "Let us;

a

.

guidance to the principlestrue democracy which are en¬

look for
of

immediately^^fpssesr y^F mind* as during because they afe right and;
it does
rnin^/Jibwv^n':w« do this invincible because they are just.'v
when

w^ haye >0-:

tions

to

many

obliga¬

:^e^^eommbdities

manufactured
1929 many

=

goods

,/an d

abroad;

economists told

us

In

that

Commitee
HJ

DETROIT^ MICH.—Armin

Vogel, A. H. Vogel & Co., newly) 1.
elected
Detroit Stock
Exchange',

President,; has just announced "the ;;
heads of various Exchange Com-' / :;
W8.; Paul [I. • More-;
cause
only initiative and foreInrki? Molbland & :Go., Vice-Presiifbt
sighted planning and imagination
denL (tf the.Exchange, 'will again /: ;/
lionr.

can

the
can

these figures be¬

I mention

give this country

continue to

production which it needs and
continue to make Us strong."

These responsibilities are in your
hands.

roittees: for

be.

:C& airman./of V the

sVn'Business' Conduct

7p
'

Edward T. Ben-

Committee with

*,

nett, Jr.,. M:. A. Manley; & Co., ;rsv'/-

They are responsibilities
V.ice^-Chairman.v,Samuel Hague,
that come with the: privileges that
Smith,s Haguef &' Cb4>wlll super-/ / ;
we
have as free American citi¬
Ivxte i.iO«r trading as head Cf theI do not pretend that our
national income will necessariiy

zens.

be maintained at its present level,
but I do know this—that Ameri¬
can

ingenuity,

American

and

American

know-how,

brains:
if

all continue to work together

we

Coimrittee on Arrangements

and,

/

•

i^s Trepsurer cf the Exchange, w IV
be

on

Committee with-

the Budget

President

Vogel

dent. Moreland,
announced were:

and Vice-Presi^- i/ '
Other Chairmen1
/
Max J. Stringer,'

will

Watling Lerchen & Co., Commit—
tee
drl/ Adrhissrons;; George
McDowell, Mercier^ McDowell &.
Co;, Committee on * Stock <, List^ ;
think that the populat ion of this Clarence A. Horn, First Michigan:
country has doubled in. my life¬ Corp.. Committee on Secondary.
time. when I think of all the in¬ Distribution; Dan Byrne, Paine,ventions which have come in my Webber, Jackson & Curtis. Publiclifetime that we accept as com¬
Relations Committee; and W lliam.
monplace, I am positive that opti¬ Moore, McDonaM, Moore & Co.^
mism not pessimism can and w:ll
Committee on Trading.
Fred J./I !
continue to make this country the Oppat and John O. MacFarlane
land of opportunity.
; comprise the Committee on Audit..
We feel today a certain fear of 'j—
■'
——•
give greater comforts to our chil¬
dren and our children's children
than we have known.
When 1

We witness it in the

the future.

actions

of

the

stock

the & commodity

and

market

exchanges.

;

tries to, get the last
his ; investment or
from his efforts/; That makes the
cost of living increase and starts
the spiral of inflation going again.
We have seen this happen in the
everybody

from

penny

months/- If bdsine&
labor

petition

are

eliminated.

sell America short.

Individual
'

v

|

'

^

(Special

to-Thb^ financial

CiironicleV

This is

Must

Be

Let us
/ * h/

Respected

truly a year of decision
not only for our government bu*
for each one- of us.
But, neither

,

i

:

'

'CALIF;—/
Jerome F. Hanshue - and' Forrest // ^
P. Moran have become affiliated: /. >
with Conrad, Bruce & Co.* Russ: /if
SAN

FRANCISCO,

Building. Mr. Hanshue tras pre->
Viously with Blyth & Co/; Inc.

'

/;/ / >

leaders,; together

ficialsvof government./will

never

Two With;C6itfacL 5 >1

So

us

proved and

/;

nne to feel initiative withirt

cqmmru'ty or '^y riven

bus.ness

m

Govern¬

close scrutiny. Government subsi¬
dies, government lending through
independent government corpora¬

spending adds to inflation.

assets

of the

^

not the
We

//;■

individual,^.-, We have got to, re- £act lhaj lhe dccision of the groat
«heb b.asic philosophy^which .
jorit' of our people, when they
•T,e"-rnXeP ®
1801-when he said: "Those, who, understand a problem, is Correct

with of
wiselv
in this year
exercise the powers now at their
year. The printed budget has 1,353.
Of decision.
I want the decisions
pages, just 65 pages less than the
command/! We? are bound tn take,
to
favor
administration -by the
Manhattan Telephone Directory.
a
long step towards avoiding
States for the individual not .dic¬
It is now our duty to read that
harmful"/depression.
Everyone
tation
to
the.
individual ; from
book page by page, column by
must do his part to see thai, only
Washington.
We must carefully
column and figure by figure. All
legitimate business is conducted
consider how far the system of
these figures must come up for
and: that chiseling and unfair com¬
asks

above

50 %

the

of depression

years

We want to see this aid made

for

>

present system of living.
years

that government

President

mine at the very bottom price on
the very lowest day. Today over
of

compensa¬

dividual lives has much: increased.

the

about 990

the

that will? im¬

measures,

unemployment

by the

war

fu¬

of

all inter¬

the

with the highest

war,

are

our

has

expenditures

whose

a

and

welfare

We

to the blind and other
forms of individual aid are part of

our

real

protect, and can lead to
complete control of our banking
system by the government.
On
the other hand, on Christmas Eve

out in

of

costs

out

tion, aid

manned by an army of over 2 mil¬
lion divilian employees. The total

desire to

the

1949

in
re¬

prove the health of our children.
Government aid for old-age pen¬

expenses

lions of dollars to the cost of

factors

high
is the health,
of

living

and:

young and old.

the

sage oh ; the State of the Union
the President called for increased

add

parcel

of

education

sufficient

exnerses

these

All

(

and

standard

on

the

ultimately stifle the
growth of the country;
to

world.

duction.

Government Expenses
government

cycle if we wish to
enjoy
the
highest
living in the history

be carefully considered
determining- the amount of tax

government bureaus and agencies

harm

the

to

of

must

catches

with demand.

That

will

economic
it

the

of

support

bond

capital comes
With individual in¬

this business

controls

rent

credit controls.

and

Venture

savings.
itiative it made this country the
greatest producer of goods in the
history of the world.
We must
continue to give encouragement to

Controls

decision

Plenty has been

earn.

from

bating inflation is to decide what
we

we

h.s best hi-

I cannot state too

individual

that

in

written about the lack of venture

passed in

we

the

indefinitely

ment and

All these factors-

considered

capital.

give the bill

happens^ But I, for

do not agree
will be: maintained

reduction in debt

some

individual freedom if government
taxes continue to take out of our

is "no." How¬

answer

budget in peacetime. Over 75%
of the expenditures called for in

certainly
that people's savings

debt service will

our

be made.

may

I do not deny that conditions

the market and hold up the price
of its bonds regardless of what
one,

our

research, foi* Euro¬

anced—that

require some modification of
this decision if any one commodity
becomes too scarce.
I
certainly

management of our national debt
is one that is vital to all of us who
have savings in this country. Shall

government

for

may

in

the effect of

security of

want, to

more

sufficient funda for

are

•

the:govern-

we had reached the ultimate peak
of consumption and the ultimate
voting for
peak of income. In 4hat year oui
tioning with" all that it connotes. a tax reduction bifh* But, it is a
national income
?87:4 billion
I still remember the decision of nmple ?fact that we cannot long
yet( in the second half of '1947'it
the people at the polls in- 1946. hiaintain individual initiative and
was at the rate of over $200' bil-

help

can

to

concerns
the return of price control and ra¬

considering this ques¬
high prices and inflation
must always keep in mind that
policies of government can either
They

vital

sure

aid and the civilian func¬
tions of government. > We want to
know that our budget will: be bal¬

/ A top decision in 1948

of

hurt.

is

economy

evplutioh-iqf dictator-

the individual serves

in

We must look all the facts

defense,

of fuel, but we must at all,
times remember that the strength

tion

>'■

reduction

a

pean

ster of inflation by a thread. I dis¬

,

effect

in the face.

in

learned^the^^gMh^|&^e,

can

taxes,

consumer.

fail

not

I do hot approve of

ft' can very
a tieCis on

be

strongly
I.have always felt anci I /r-

terest
that

to

out

increase;*; We cerely hope I will cont

bureau

I believe

that people in the lower income
tax
brackets
should
have
in¬

business

step
Con¬

turn,

shife where go^ernmi^it ?1e:ad$/^

all is;

I • hope'there

reduction,

some

next

expect to reap the blessings , of
trcedom must like men, undergo

bidding more than the fair
and going domestic prices, I be¬
are;

giving
relief where we* must, to those
people who are starving and in

citizens. But, our Republican ma¬
.1

Personally,

will be

by w^$

us

the

have- watched, bu¬

we,

upon

tone in the

■».-

A decision that affects

what

word""burei^

siderations in mind,
:

citizens,

tellew

his

1

analysis //.; "
"

the last

which, will be against

individual.

and

work

/high cost of living.

:

,of government expenditures must
ke decided w^th all these con-

our

,

to

Cooperation

ahead

and

lieve

reduction

top priority.

We

strength

,

forhlsr fnd.vidua!

well

sequently,

mili¬

our

.

when they are in
funds, when they are at a

is, they 'phone Washington.

world today. The ultimate amptanr

power has been used to screen
with sufficient care the exoort of

economy and in short supply.
I
of Massa- 1 d0 not
want, in normal times, to
considered
the restrict
any business.
But when

the Marshall Plan and 9%

think

economic

and

problem of government which';
that- individual* irt ; /
our system- of life.
The dec sfonS
of the government must be for
thh 'best interests of all our citi-. *.
ztfr.s>: The ' decision ''of the inTi- '//;
is ^supporting:

know

to

loss

de¬

the

When they are in doubt as

what to do,

section of reau
increasing 'i. ave

or

against

country

tary

that 47%

Ten per cent considered it

be

balance

group

try. We cannot maintain

our exports

to

'here is very serious doubt if that real peace and

i

m

must

ore

ing of the; problem of the indi- "■>
v^dua,1 in bur system of'life chid? •"
the

ment.

need of

before

the inflation for the whole coun¬

Exports

;.phusetts citizens
high cost of living the most imj our own citizens are suffering for
portaut issue facing their govern- ! want of much-needed articles and
ment.

of

billion

miieklv

a

conducted

,

reliable organization
setts showed

We

sires

$18

yeafof

we

also

.

poll

1952.

opinion exist

for

,

if it is not also for the ber efit of: -

yesterday morning
the report of the Presi¬
Committee on Air Policy

calls

,'/,'

vidual "may be
benefit> butV; in

believe that all their prob¬
lems,' can be solved by govern¬

Ration The President has have that, which the government
complete control over exports yet miSnJv be able to afford if we had

,

A recent

of

that

we are

government nor we caa make our
decisions'-,alone.'-' They must ber
made with, a mutual understand¬

years

Only

dent's

if.

Too many people in recent

wcrk.

read

you

is another
the great decisions in combat-

of

come'"to' disculs

''"Presidential'decision "
esiuemidi decision.
'

Handling

can

particularly' parti-

we

oroblems

that

other.

the

this point.

cn

mean—

'

■

When

cne

it needs to make this de¬
although I recognize that

economic

Nothing I have said
considered

Sav¬

has

now

and better sci¬

new

weapons
with' which ; to
these forces, we must balance
desirable ideal against an¬

know

we

govei

at a

entific
arm

our

strength

san.

great need of

as

nment. Toaay too many peo¬
ple forget that "this CO untr y: has
been made great on the principles
cf: individual initiative arid hard

Armed

maintained

be

free

to maintain our present system of

strength than ever before
peacetime, when there is the

in

it

thous¬
institutions

many

individuals,

■

be

for

must

.

individual ,is

greater

are

the

strong

a

that

by

Forces

our

Washington in the
These decisions must
a
system where the
.

.

on

ff

Thursday. February '5, 19-13

freedom in this country

But today wheii

do.

everybody knows that

the foundation of our
system of freedom. I believe that

LITTLE and TOO LATE. We must
be

decision

savings of

to

based

be

great many things that

a

1948,

year

theoretically and idealisticaily

desirable

must

industrial corporations.

ings

own

that

sure

of

and

age of
of

careful

a

affects the

can¬

we

may be
are

Truly in .this

the Administration

instance

prise.
a

,

a completely free market; yet we
can't afford a market that is eco¬

prosperity of our own citizens

and

Decision

are

,

greater than the events of 1848."
I believe that the future welfare

"

CHRONICLE

With Crocker First Eiatkmal /;/;

1: ^'/(-Sjjecial .to-' ymV-'FiNAsNciA^

f!rSAN:;?iFEANCisCro..;CMa^^
Howard Locks, has been added to

,

the staff of the Crocker First Na¬

tional

1

-

Baiik'i

of::;San/:;Franci8eow?;

Joins Eaton & Co.
/
;

'

Montgomery Street.>;

Staff

(Soecial to The Financial OhiionicleK
SAN

Reynold
staff

/
/;: ' /,

FRANCISCO/"vCALIF.//-: ^
Oeschler has joined the

of

Eaton

gomery

Street.

&

Co-:,- 400 Mont¬

/

; ;

Veluwre f67 Number 4670'

total

dollar

THE'COMMERCIAL

page 9)

essentially

job for

a

under 45

men

reflection

wages im-

cost

will

qualify for journeymen's cards

come

non-residential work.

down.
If, on the other hand, it is
[believed that wages will hold or

increase before they level

building costs
.where
costs

will

they

and

be

bearing
costs

drop,

or

prices

are

because

it

riods

a

'lnately tied in

raids

be

labor

supply

681

/ Little Hope For Cost Reduction

in

Second,

be

can

-this

to

duction

anticipate

in

that if reductions

.they will! be

general

a

Fourth^ there

re- '

Wheiein

rates, it is clear'1

wage

the

product

of

in¬

creased

all*

productivity per man-hour
along the route from the un¬

claimed

now

J.

these

(3)

Balancing, of supply of

it

is

(notwithstanding talk

in relation

dropped,
over 1915, and

volume

to

the 1 question we
leveling mind when

soared

what?

That is

ought

to

talk

we

struction costs;

to

the

in

keep

about

and when

con¬

we

an¬

alyze costs of other commodities,

previously unheard of heights(
disproving all the warnings that
high building costs would seri¬

find

we

building

high,

are

over

their

though

costs-,

not out of line.

or

the

Tomorrow's

a

/

and officers

Market
number of

expect

Of

I

course

readers

buy

to

the

entire list.
If they did,
they wouldn't need this col¬

issues

stabilizing with a
stocks pointing up¬

On
now

1

recession

look like

1

A

buy.

stocks

Last week I sounded off

of

word

warning:,

The

stops weren't put in as fillers.
They
mean
something.
If

certain

have

break

and

sinking

a

their

wave

they
despite
theoretically have no place in the changed market outlook
a column
supposedly devoted accidents can happen.
on

economics and politics which

the

to

the

stock

market. But in

final

-

stops,

sold.

More next

(4) Elimination of cost-hiking aries and dividends, labor at site,
hobbling the dollar),,
and
labor portion of material cost and
this ;?j productivity
clean-up/ and/or • competition-stifling pro¬
that will affect the market
includes
visions of buildirig codes.
taxes
on
profits from material!
management
at
all
;
./ft
and the stocks that make it
stages,- plus corrections of per¬
up. I
(5) Encouragement of standard sales, amounts to 11.1% of today's
sale price of a house when built
centage mark-ups applicable to sized and
I'm not so naive,, however,'
designed products.
total costs, wherever
in groups of 50.
The tax in 1939
indicated, at
as to
(6) Development of

.concerning

be

to

are

analysis it is what
happens,, or is being planned,

sal¬

on

category;

don't

By WALTER WHYTE s

ward.

buiiuers

individual tax

price

umn's advice.
<

stockholder, s

profits,

find stocks that fit almost any

Whyte

Says—
s

His report

1939.

prewar

already larger
than I usually give. It has one
virtue, however; in it you will

war

Walter

In

fact the list is

Markets

1941

$742 represent¬

.

sinking pains but I

can't mention all of them.

$1,714—$1,215

*

,.

Corporate

ma¬

con¬

of

one

trades

indicates that taxes upon

terials with demand.

said

out

125%

construction

Hartwig,.

that

out,

difference of

against

was

priced

takes

more,

Otto

for

studied.

are

1920 it

was

Costs

off at about

clear the cost would be
$1,241 for
labor, not the 38% higher actual
labor bill of $1,714 for the 7 trades

mulated costs at each such
stage,
(2) Productivity per man hour.

material to the ulti¬
mate purchaser of the
completed
raw

structure

the

vulnerable, namely: ft vft^ft/ft v ' i
In another study Mr. Hartwig
(1) At the progressive stages of breaks
down the impact of taxes
percentage markups upon accu¬ we all have
to deal with now as

be expected

can

to

ing increases in the hourly wage1
rate.
Thus, if current productivity was as good as prewar it is

areas

costs

cost

the

In

market

more, an increase of 243%.
$4/5
of the $1,215 is chargeable to low¬
ered productivity per man hour,

there

limited

are

construction

points

$499,

one

In 1948

building dollar is worth

struction

Secretary of the Insti¬

labor

illustration

.reason

1941

49 cents.

Seven

Now it

hours

increase.

tute,

reduction
the
distress in
construction costs until
wages
presents
there I
drop or productivity increases, or
.remains some little
hope for cost I both.
Third, apprenticeship train¬
.reductions,
and
resultant
sale
j ing programs are not sufficiently
.price reductions. Inasmuch as to- '
extensive to
suggest success in
.tal
building, cost is the sum of all*
higher
productivity
campaigns.
wages and inasmuch as there is no

Nothwithstanding

*;

similar

discussed.

Executive

substantial

no

the

about

hours of these trades to

hours—165

32%

in

by the commercial and
industrial field.
Let us reduce what has been
stated to capsule size.
First, total
construction cost is wages
form or another.

here.

35

Today
things
high costs retarding con¬
struction activity—but activity is
increasing, true to pattern. High

building dollar in 1920 at

ion' the cost peak was 36 cents.

are

house

a

have

we

stage for

with wages as to
inseparable. Construction cost
the product of
wages.
Con¬
struction costs will not arop until
wages do.

'.is

them

use

516

build

housing

the

upon

trades

took

retards

fair supply
non-residential
the

are

the 1915

analyzed: brick¬
layers,
plasterers
and
tenders,
lathers, painters, carpenters,,
plumbers
and
steamfitters, tile
setters and helpers.
In 1940 it

a

manpower for
woik and thus sets

to

basic

on

This has

further

of

inti-

so

,

uncr

(631)

suit of runaway wholesale
prices." ously retard the industry.
The postwar purchasing power of we1 are
hearing the same

ilarity of the cost and productivity
levels prevailing during these pe¬

residential building

upon

quick attainment of

supported

Construction

are.-

sale

CHRONICLE

iy4J-194>V there is re^sonSblh

.

building

FINANCIAL

figures'prta^xi Leu

of .years of age; and this presents
;wages.:: y, ' the probability of the further acj
cumulation of production
-t-ow then can there ba
senility
any hope
with its inherent higher costs. It
for an important
reduction in sale
.prices of homes?. If it is believed takes from 3 to 5 years for ap¬
a general
prentices in different trades to
reduction in

:ptrads,

&

Building Costs and Trends

(Continued from

;
;lhe

'

And

Thursday.
—Walter

[The

views

article

do

Whyte

expressed

not

this

in

necessarily at arty

"

the

numerous

progressive

large scale

stages

purchasing advantages for major

where they are applied between
process inception and culmination-.
The latter becomes involved since
good

a

,

■ft
as

part of it is* itself,

home builders.

,

wages,

modular schemes

of

construction,

or

attainment is

not

are

scribe to the

lished

of

one

those

distribution

discarded.

system

take

sub¬

in

upon

alternate

end

cost

situation
we

1940-1947,

i
,

whose

(Based

.

on the

1948—

Pending formulation,

if not

hostility.

('ft' Tax

large

scale

dential

developers

communities

of

to

to

-

'

■

Slowdown—

balancing supply with demand

improved degree for such
short supply items as soil
pipe,
nails, ' millwork, hardwood floor¬
ing, electrical motors and elect

trical

accessories,

plumbing fix¬
auguring
for

tures,

*

quotations.

Amount

Increase

factors

-ft

1

(.

i,

(

Apprenticeship
training
pro¬
thoroughly inadequate

in relation to potential
.

quirements'iThis

has

construction

upon

volume) rea
beating

costs

.3

There

today perhaps 110,000 to 115,7000
apprentices m training
throughout the United States,, or
are

about

5%

of

the

total

estimated

cm-site

•

employment. 7'his rate is
enough to counterbalance at¬
trition due to deaths,,
illness, en¬
forced
idleness or,
not

productivity

impairment due
age,

The
■*

and

to the ravages of
desertion of the trades.

inadequacy of apprenticeship

training

is a double-edge blade
offers;'little hope toward
improvement", of productivity at
for

the

it

site

of

Would', stem
vigorous

construction
from

blood3,

"

new

plying




sucn

,

as

young

what •< is

up. Only the speed, and the
timing, would be affected.

Sale PricT

?

1

981.00

/'ft-.

I've

1; 187.0 J!

? •/ ft/;

/

UOo.U)

,

with

duction
Actual

$1,076.40

$1,000

1,865.00

1,000.00

500

Increase
of

taxes

&

labor

item

Percentage Increase

' Items

included '

land,

an

and

$ft 76.40

86.3

15.9

ft ft,'.ft

1948

$

$ 3,148.00'

500
1C0

7.6

'' 'ft ft 8T.-0;'

extra $76.40 to the build¬

labor, and

materials.
We are not
currently in posses¬
sion of information with which to
rationalize this last figure.
How¬

in

increased

ft

90.9

be

85.0

What kind of general conclusion
can be drawn from all these
con¬
that

most

of

It will be noted

them

point to con¬
tinued support of the present cost
level.

Some of them suggest even

higher costs.;
which

we

There

are others of
have not spoken which

alsq belong to this group, notably
the, very real, possibility of an¬
other

round

of

wage

increases at

off site points thds
year.

Notwith¬

standing

are

areas

of

godd

all this

there

some

building cost which offer

Opportunity

to

peg

costs

where

they are—net, after some
of the yet to .materialize factors
have been met—or to

slightly.
very

*

all

'

93.8

any

^tangible

result.

As

we

to

era

'■:./;/1 ft'ft ;ftft

ft,;

way.

from

pass

another

ft ft

we

given

are

to

firmer
base

predictions

which

upon

upward notwithstanding
forecasts

their

Humankind,
to

it

resist

cating return
the

time

earlier

always

i seems,

to what

period,

the dire

economists.

advance

be

to

a

at

been

a

for

by

yet

advo¬

seemed

at

desirable

more

Hellman, member of

York

the

Stock

of

age

member

Exchange,
He

71.

Of

the

had

exchange

than 40 years,:

more

up

stocks

not

with

clear.

But

as

of.

I

history

dis¬

Soher, Walston, Hoff¬
Goodwin, San Francisco,

&

been

has

Feb.

on

the

stay of two

a

..ft: /V' ft./1,:

ft;ft-ft

With

Blyth & Co., Inc.

(Special to The Financial

added to the staff of

ftv

B.

Van

Arsdale

has

been

Blyth & Co.,

Inc., 215 West Sixth Street.

stops

Clark Davis Co. Adds

care

stocks advisable for

Chronicle)

ANGELES, CALIF— Nie-

land

following

,

i———»

„

num¬

use

York

New

in

6th, after

weeks.

(Special

to

MIAMI,

consider

visitor

a

City, and will leave fort the Coast

ft

I

•

Hubert J.

show

a

which

up than down, although;
all important "when" is

so

v

man

LOS

more

the

H. J. Soher N. Y. Visitor

a

of

The

Tampa is

Clark

Financial

Chronicle)

FLA.—John

O. Perry
associated with

now

Davis Co.,

Lanford Bldg.

if*

Buy

Stop

Amer. Brake Shoe.

38

Amer.

Chain

Locomotive.

Pacific Coast

1914-20*4 18

Amer.

-39

37

•

Anaconda

_____

__5_-___

Avco

18

-19

17

T

Securities;

3114-32 (4 29
4
414 314
-

Bethlehem Steel
__

28

-22

20

29

Boeing
Briggs _L_.

30/ -31
21

j_

-30

28

Orders Executed

Caterpillar Tractor 54

-55

-13

Douglas

50

-52

Dresser Industries.

21

-22

,

*

'

■'

"t

''

11

lookdubious

4

53

Ccnsol

on

Pacific Coast Exchanges
i

closes it
never
does.
Only in
retrospect do these things, which
sert

in

the

present

(as¬

themselves.

We hear today that
building is
pricing itself out of the market.

Nationally, contstruction
104%
1941.

higher
The

alarming

reduee

after
costs

'Iffy" and it probably will

of

New

died

purchase
as, and when, available at
of the future,.
And yet past specific prices:,/..

foundation

which is unknown.

seeks

come

of

to

making comparisons with the past.
Probably because the past offers
a

I've
ber

ft)-', /ft' ft.:.-.ift / the "when" will be taken
economic

one

E. A. Hellman Dead
Edgar A.

trying the

on

the

"iffy" factors should
simultaneously become possible
an important cost reduction would
follow, but it will not happen this

The potential of this is

even

planning

temperature ' for
couple of weeks.

considerable time before

some

there Will be
If

100

through local supply outlets to the futures in relation to their
pasts
job site.
ft.ft /(• ft
j • •' ft'/ • '] .. have always moved onward and

flicting; factors?

am

52.5

.

profit.

a

reasons.

and
ft

indica¬

an

Florida

ft

____

found

297 04

|

labor

er, an extra $297.04 to
an
extra $2,274,56 for

be

two

6.00U.001

de¬

after

was

see

I did this for
First, because I
like profits and, two, I'm
just
about fed up with the weather

9,148.00

$

the market

over

magnifying glass to

in what there

other

$2,274.56

1939-41—taxes

vs.

:

from

gone

a

tion of

$2,162.04

at $2 150, up $150
previous sale.
ft

one

the last

1,jsO.Ooi

206.00

wages, marketing and distribution
the producers'' level on

grams, are
'

Land

Si,000

567.60

3

$10,333.00

costs iiom

'

Builder

$li,S50.0O

417.96

for

1939-41

Percentage

1 would

Apprenticeship Training

♦

Labor

"

from

the

Whichever way I
figured it, the trend would be

House)

|3>561.00

$4,909.56 V

'

Chicago Exch. Membership

while but then it would

a

go up too.

$1,000

.
etc.
Also
ever, in passing, it is probably ac¬
lower cost- are promises of future i curate to observe
that much of it

deliveries at today's

to labor.

wages

$1,282.40

Areas of construction cost
This would show,
then, that the
Whichoffer hope - for mid-1948 - remaining extra
$3,148 sale price
iurrds thereafter are: the
probability: over 1941 is divided $500 extra for

In some,

for

$3,143.04

-

stay

as

I've

$2,000 and

and!

(44.0)

.<

of

material

(32.4)

/ft,.

want to

race

things one way, prices
eventually bound up. If
it does
things i another way,
the price trend
may be halted

"

|

•

V
■

ft/ 2,635.00

plan is an entirely different mat¬
ter and probably will receive spe-"
<jial consideration.

for

$4,909.56'

Deducted

or

If I

rat

I'd like
think they
as

runs

that

(23.6),

.

be,

things

of the

presented
those of the author only.]
are

will

dtte simply to 'in¬

prices

increased

304.44

*

be'

builder

-

generalization

are

Dow Service "Test"

;

Tdday's- C6st$ —Cofredbed,

direct-J

manufacturer

Labor

oi'

1939

in

resi¬

ought

given the (advantages of ft large
scale purchases upon some
-

Costs—Taxes

Cost

The proposal that

'

$5,214.00

invent
Distributiont

Today's

pre¬

and testing of a betters
system, we had best consider the
proposition with some suspicion,''

creased

are

cost

to

this

m'

sounder explanation of cur¬
sale
prices than is found

a

high costs

j

Materials

MLfl. Taxds ndt

sentation

fer

| alone in the

are

on

should be.

adaptations of
which are applied

New Taxes and Labor Loss Add $2V4t7 to Dream* House1

,

*

be

whereas -the

plan

sale

made

figures

rent

|o stop to

palatable is difficult to visu-; Today's Costs--

more

alize.

from

a

us

r

cause

inventory of where

for

the

would

portray

pleaded. While these estimates

industry ought to be
An

area

which should

theory that the estab¬

construction

Impact

who-

that

the

those

with

They

got 'to
CHICAGO, ILL.—Arrangements
to the clinical house we are dis- figure on how things are and were completed Jan. 28 for the
cussing today.
While the result¬
sale of two memberships in the
what they're
likely to be.
ant figures
suggest what might
Chicago Stock Exchange; one at
have been, but is not, they do of¬ I
Last week I said if
Congress

practical field experience in

upon

certainly important and desirable,
are long-term
enough to put them
beyond any immediate hope. We

have

these

by manufacturers and suppliers. II
Productivity figures prepared
by the Long Island Home Builders
Institute during 1947 and based

Peripheral fringe matters such
cost-hiking building codes and

whose correction

a firm quota¬
future deliveries

policy for

of

them

We

{*1} A return;*to

;

tion

1.9%

price.

'

•

to

amounted

coincide

time

Chronicle.

war

as

years

it

I,

are

were

in

not

is
'

In

172% above the 10 pre¬

ending 1915,

as

12

48

-

20

Lockheed

13

-14

12

G. L.

15

-16

13

No.

Martin......

Amer.

Sinclair

Aviat'n

Oil

7

-

8

,

6

14

-15

ft 13

Aircraft.23

-24

the

re-

United

,

..

'ft,//1
New

Members
York

Stock'

There

are

a

number

Chicago Board of Trade
14 WaH Street

New York 5, N. Y.

of

Private

that

stocks

„

not In the

list,,

Monterey

look like they've gotten

.

Teletype NY 1-928

Wires to Principal Offices

Saw Francisco

other

Exchange

York Curo Exchange (Associate)
San Francisco Stock Exchange

New

COrtlandt 7-4150
r

.

Schwabacher & Co.

22

as

1920,
construction

seems.

War

eosts

they

situation

World
were

than

,

Vultee

—-

—

Santa

Oakland
Fresno

—

Barbara

Sacramento

2(

tary liquidity seems certain to
persist for many years to come.

(Continued from page 15)
Federal

namely,
powers

legislation,

Reserve

to use its discretionary
in the public interest un-

ance

credit,

■

der

changing economic conditions.

METHODS

at the

tion

CONSE¬

AND

had

the

System been
organized before it was faced with
serious

the

problem

This

nance.

task

of

been

not

had

fi¬

war

foreseen

by the founders, but the
country would have been greatly
handicapped in prosecuting World
War

I

had

not

serve

System

Also,

the

the

Federal

in

Re¬

existence.

adjustments following
difficult as they were,

war,

would

the

been

have

been

greatly aggra¬
vated and perhaps disastrous had

there been
/System.
In
r

System
aid
-

was

Federal Reserve
World War II the

no

called

finance—even

war

again to

upon

ex-

more

acting in its development that the
former effort—and

again the

now

country is facing the problem of
adjusting monetary conditions dis¬
torted by war to the peacetime
needs of

the economy.

J 'One of the inevitable conse¬
quences of war is an abnormally
"rapid expansion in the supply of
money
and
other
such as government

liquid assets
securities and
savings accounts. Because of this
financial heritage of war, the pestwar
economy is exposed
to the
risks of serious instability from
monetary causes. The amounts of
new
money and other liquid as¬
sets generated during the Second
World War surpassed all previous
absorbed

Unless

duced

effectiveness

in

least,

of recurrent infla¬

or

collapse, at the worst,
require well-conceived and

firmly pursued policies of mone¬
tary and debt-management opera¬
tions. '''/
i'ty: V.
a
result of the heritage of
finance, the Federal Reserve
System is greatly restricted in its
capacity to perform the functions

As

war

which

for

namely,

it

control

was

established,

exercise

to

effective

an
volume

the

over

bank

of

credit and the money

supply., The
of the System's

re-establishment

capacity

influence credit and

to

monetary conditions in the inter¬
est of
stable economic develop¬
is

ment

lem.

a,

primary postwar prob¬

re¬

or

by serious

used

a last resort and
minimum
extent
necessary to provide the increased
money supply needed by the ex¬
panding and abnormal war econ¬
omy. Nevertheless, the banks had
to be relied upon to a considerable
extent. A high degree of liquidity

only

only

the

banks

tain

to facilitate the

producing and supplying goods

that

not available for general

are

War expenditures
consumption.
paid for currently. No
country has ever imposed upon its
citizens

much

tax

a

provide

for

half

as

burden

war

of

that would

expenditures as
national

—-the amount spent

income

by this

coun¬

try during the war just ended—
nor
has any country in wartime
able

been

between

ance

taxes.
forts

to

borrow

the

of

expenditures

made

in

ef¬

war,

this

country

as

cost

taxation and by borrow¬
people's savings.

"In

sive.

much

as

possible of its

Fiscal and monetary authorities

Chart

retrospect,"

the

the

32d

Annual

of

Board

Federal

Reserve

order to raise

the

more

system

them

cated the

serves.3

the

of

to

absorb

issued

Government

by

all

curities

cost

the

on

(4)

and

very,

3 Actual

?

the

1905

1900

1910

1915

1925

1920

1930

1935

«940

1945

YIELDS ON U. S. GOVERNMENT SECURITIES
FER CENT

Weekly avewaoes or daily figures

3

i!

The interest-rate structure gen¬

is shown in the Chart (I),
was
characterized
by very low
rates on short-term money, a wide
spread between them and rates on
long-term securities, and the low¬
est levels of long-term rates in the
history of this country. This un¬
usual interest-rate pattern came
into

15 YEARS

of recovery

amount.
Moreover, since nonbanks, which hold their required
reserves
largely
with
member
banks,
share in this process of credit extension;
and
since time deposits, against
which

required

large
time

for

are lower, may in¬
than demand
de¬
multiple expansion in
deposits may greatly exceed
the ratio
of seven to one.
During the period from
June
1940
to
December
1945, the ex¬
pansion in total deposits at all banks,

posits,

gold

of

and

imports

new

tainment

local

of

acquired issues to banks. During
drives, banks had excess re¬
serves
because deposits against
which
reserves
were
required

the

by depositors
of
securities,
while Treasury deposits, against
which no reserves were required,
increased.4 The resulting reduction
in member bank required reserves
and the investment of these freed
drawn

were

the

in

upon

purchase

the

increased

reserves

assets of banks.

/}.

consequence,

a

posits

reshifted from Gov¬

were

ernment

Reserve to

Federal

the

account,

private

to

other

was

than

interbank

and

U.

S.

Govern¬

deposits, was about nine times the
increase in required reserves of member
banks.
For
member
banks
alone,
tne

ment

in

same

multiple expansion in total deposits over
this period
was
about eight times the

swelled

bank

increase

in

their

required

meet the

higher reserve requirements. The
net effect was an impetus to ex¬
pansion in bank holdings of Gov¬

the

ernment securities throughout

period.

war

/.

wartime

Money.—Viewing the

period

whole, banks

as a

expand their hold¬

able to

were

Bank

of

Expansion

and

Credit

securities by

ings of Government

amount they could obtain be¬
cause the Federal Reserve System,
in following its policy of support¬
any

is¬

ing the market for short-term
sues,

serve, to permit a much further
expansion of bank reserves. Thus
under policies pursued in war fi¬
nancing, the banking system was
not only permitted, but encour¬

to expand its holdings of
States
Government
se¬
curities on the basis of reserves

aged,

United

supplied

freely

the Reserve
the struc¬

by

System in maintaining
ture of interest rates.

Total funds raised by the Treas¬

in the period from the mid¬
to the end of 1945

ury

of; 1940

dle

to

amounted

40%

$383

About

billion.

$153 billion of this amount
from taxes. Nearly $230 bil¬

or

came

lion

obtained

was

by borrowing,
billion came

of which about $104

the banking system, includ¬

from

ing mutual savings banks as well
as commercial banks and Federal
Some of this

Banks.

in¬

sales

of

reflected

large

securities during
Drive

the Victory Loan
the end of 1945. During

at
and

1946

the

to

some

Treasury

use

Most

debt.
were

from

of i the

retirements

commercial bank hold¬

^■

MONTHLY WtillCl

wartime

The

•>LU0« OF DOLL AM

OF BOLT FIFUM*

30

.f'N.-F'"

MONTH*

increase

Federal

in

billion

RESERVES

the

of

balances built up from the
Victory Loan to retire maturing

ings. -I•;

BANK CREDIT. REQUIRED AND EXCESS
OF MEMBER BANKS, AND CURRENCY

1947

extent in

made

large

reserves.

$22

of

Reserve

hold¬

ings of Government securities, to¬
gether with a decline of over $5
billion in

excess

banks^

reserves

of mem¬

is shown in Chart II/
largely provided for increases of

ber

as

$21 billion of currency
CURRENCY

in circula¬

tion and of nearly $8

billion in the
total amount of required resejrve^
at member banks. This growth iq
required reserves reflected an ex4

0.

NOTE—Securities

*rences

to

and

data,

1945,

p.

classified

their

1947

earliest call or due date.
and composition, are given below.

according to

sources

1946

pansion of $44 billion, in

United

paper:

U. S. Government

A,

Table

deposits

in

10, column 5, pp. A141-61.

1945, pp.
Bulletin, October

1947,

pp.

see

Treasury Bulletin, January 1945, p. 56, and July 1947, p. 59.




at

all

1942

RESERVES

counts

1940

1941

1942

,

1943

"

1944

1945

1945

1947

de*

tim&

commercialiitan4
The growth

deposits and currency

ii

in Chart III.

Special wartime legislation enacted iif
exempted
war
loan
deposit
ac¬
of the Treasury in member banks
from reserve requirements.
This exemp¬
tion expired at the end of June 1947...
4

1251-53.
EXCESS

position of series,

total

shown

December 1944, Federal
483-90; for January 1945 through September 1947,

Corporate high-grade bonds: data for years 1933-41, Banking and Monetary
Statistics, p. 471, note 2; for 1942-43, Federal Reserve Bulletin, February 1945,
159; for 1944-46, Federal Reserve Bulletin, February 1947, p. 181.
For com¬

Government /:

mutual savings banks.

securities: for January 1942 through

JReserve Bulletin, May

federal Reserve

States

posits, and of $19 billion in

High-grade railroad bonds: Annual figures computed from, monthly figures
g^ven in Frederick R. Macaulay, Movements of Interest Rates, Bond
Yields,
aid Stock Prices in the United States since 1856
(National Bureau of Economic
Research), Appendix

demandj

deposits, excluding interbank an4

-HsU.

for years 1890-1941, Banking and Monetary Statistics
of Governors), p. 448;
for 1942-44, Federal Reserve Bulletin, February
159; for 1945-46, Federal Reserve Bulletin, February 1947, p. 181.

Commercial

(Board

are

to

1945

1944

1943

1942

■

re¬

reserves
increased and
sold sufficient securities to

quired
banks

crease

M CIRCULATION t

V

de¬

ing drives. Between drives,.as

Reserve

total

30

r\

earnings

banks in*,
creased their holdings of Govern¬
ment securities substantially durAs

CERTIFICATES OF INDEBTEDNESS

*

sold

quotas,

substantial amounts of previously

requirements
rapidly

the

at

ftUMM «r MUJUW

»-lt

in¬

in order to subscribe to
issues and thus help the at¬

vestors,

Chart II

RESERVE

Nonbank

drives.

loan

war

.

from severe de¬

investment

volume,

expansion developed out
practices pursued during the

more

crease

TAXABLE

savings

bank

to

credit

the

reserve

flation, when demands from bor¬
rowers
were
small, the flow of

OR MORE

of requirements;

excess

member

being during the prewar pe¬

riod

required of all mem¬
currently amount
to about

the funds thus
pass
to another bank which in turn can
expand its assets.
This multiple expan¬
sion
might be less than the seven to
one
ratio mentioned above, if successive
banks retained reserves in excess of the
in

war, as

1895

ad-

15% of total net demand and time de¬
posits, or a ratio of expansion to reserves
of nearly seven to one.
When one bank
obtains
a
deposit, which at' the same
time brings that bank additional reserves,
it can lend or invest all of those reserves

erally maintained throughout the

J890

pre¬

of

problems

reserves

banks

ber

levels

have

yields

special

levels.

postwar

low

long-term

sented

growth in bank and other inves¬
tors' earnings from their publicdebt holdings.

especially by banks, tended
the yield on longerissues below prewar

of

Government's

limit

a

depress

The/

buying

to

As

securities.

short-term

term

curities; (3) to keep down the in¬
debt;

stimulus

wartime

other

cient, if resold to the Federal Re¬

to

(2) to assure a strong and
active market for outstanding se¬

war

•

long issues by all groups of hold¬

rates;

terest

securities would not be per¬

;

keeping down short-term
rates, and facilitating war loan
drives, made additional reserves
almost automatically available to
banks. The volume of short-term
securities outstanding was suffi¬

-

ers,

(1) to
of se¬
who might
.awaited
higher

have

long-

of

>

Effect of War Loan Drives—An¬

banks and other in¬
to prefer long-term
against short-term securities,
and
the shifting from short
to

by investors,

otherwise

implied

An

prices

as

fourfold purpose:

prompt

that

vestors began

Besides facilitating bank

a

relation

consequence,

securities not

purchases of securities this policy
served

rates.

interest

institutions.

dowed

Wartime

short-term

in

level

low

a

in

extent

portant di stinction between longand

newly

other

encourage

some

mitted to decline removed an im¬

levels existing at the beginning of
war.

the

long-term rates also tended to
a further decline in long-

term

to

maintaining the interest-rate
at
approximately
the
the

at

assurance

structure

RATES

maturity

postwar period.
of

term

investors.
This
decision involved the necessity of

THE STRUCTURE OF INTEREST RATES

purchas¬

induce

Rates.

sufficent to

reserves

to

and

Maintenance

to

them

to

continued

rates

the declared determination to

volume

of

"monetization; of

the

pivotal Federal Reserve
policy in facilitating war finance

a

process

resulted in a kind of

has

essential to

easy access

re-

securities

these

between

groups, it
automatic

—One

was

this

Banks

Reserve

such

of

public debt" - without regard to
the economy's needs for addi¬
tional
money.
Such
automatic
monetization of the public debt

justments.

provide banks with

volume

Because

yields

of the cost of

Interest

for a de¬
the banking
whole of six to ten

by

ing longer-term issues was occa¬
sioned
by
the
differential
in

buy and thus compli¬

of

a

the basis

reserves,

provided

selling ; short-term

problem of postwar ad¬

Maintenance

as

the

times

financing procedures adopted en¬
couraged banks to purchase more
have

bank

expansion

posit

through taxation and to
restrict bank purchases of Govern¬
ment
securities."
Many of the

was

policy of keping short
Since purchases

was'thereby

war

securities than it

purchased by

by the Reserve System create ad¬
ditional

the

of

were

rates from rising.

System,

taken

I

LONG- AND SHORT-TERM INTEREST

with their

to quote
Report of

Governors

short-term securities

The

by banks

the Federal Reserve Banks in line

"it is
evident that more vigorous poli¬
cies should have been adopted in

enable

price inflation, redundant mone¬

sold

and

the

to raise

by
ing the

terest.

exces¬

was

of in¬

bearing higher rates

sues

general sale

occurred

pos¬

was

securities and buy longer-term is¬

for

that

credit, because it

sible for banks to sell short-term

expansion

,

amount

bal¬

the

Throughout
were

out

entire

savings

people's

bank

these reasons a
of the banks'
holdings of Government securi¬
ties and
thereby in the money
suonlv was necessary, the actual
Although

sizable

depres¬

stimulated expansion of

sion

issues.

new

established' during

rates

market

securities

between

long-term interest

short-term and

and

active

differential

wide

the

purchases by
needed to help main¬

were

an

and
of

interest rates later.
Maintenance during the war of

tion of higher

sold

securities

for

public,

justment for life insurance com¬
panies and other savings and en¬

paper,

as

essential

was

to

extent

term

to 1 the

from

Financing of war is inflationary
because
people receive incomes
for

be

invested in shortpartly
to
retain
liquidity and partly in anticipa¬

large

financing
through banks, which results in
the creation of new money, should
that

,

have to be

7 •"

<

records.

interest rates, and prices,

and

will

QUENCES OF WAR FINANCE

Hardly

the period ahead avoid¬
of disruptive fluctuations in

During

Available funds were to a

needs.

Policy
agreed

were

current

beyond

far

to

reserves

Problems of Postwar Monetary

-Thursday, February 5, 1948

FINANCIAL CHRONICLE

THE COMMERCIAL' &

(632)

Volume 167 Number 4670

COMMERCIAL

THE

&

FINANCIAL
•

r-

From

banks,

1940 to
as

increased

States

Government
the

commercial

seven

securities

$75

debt

are

much

as

before the

as

bonds

and
notes,
than half of this

more

total, are redeemable on demand
and, as long as the Federal Re¬

and

retire¬

Banks

serve

and early 1947 bank

ment in 1946

Savings

which

by

billion,

substantial

times

war.

in Chart IV,
their holdings of United

approximately
after

1945

is shown

the

stand

marketable

ready

to

buy

securities, these
freely convertible

time bank loans collateraled

same

great significance from the mone¬

purchasing

tary point of view.

ment

period loan expansion was to
large extent to finance pur¬
of

un¬

ber

has

serve

banks

increased

substantially.
curred

their

While

additional

Servicing

the

of

To

in

more

borrowing

Banks

at

the

for

the

holding

or

securities

had

finance.

war

the
their

These

in¬

xk%

of

rate

short-term

Govern¬

securities. This preferential

during

put

was

into

the
to

war
to
utilize their

in

effect

the

encourage

banks

purchase of shortsecurities, rather than to
keep them idle. It was no longer
needed, and its elimination made

in the absence
adequate taxes, could only be

counteracted

rapidly

by

direct

controls

demand, supplies, and prices
services, since these

over

serves

excess

re¬

term

of goods and

est level

be in equilibrium during war and
its aftermath.
In the war period
serious inflation was avoided by

applicable to such borrowing.
Notwithstanding these develop¬
ments, expansion in the public's

the

of controls, as
through the public's exer¬
cise of voluntary restraint and in¬

deposits continued to occur, al¬
though at a slackened pace. This
expansion resulted in part from a

vestment

brisk

market factors

record.

War financing was responsible
for a very rapid and large expan¬
:

sion of liquid assets held by the
public.

The holdings of total de¬
posits and currency by individuals
and
businesses
increased
from
mid-1947

to

by $100

ratio

the

to

annual

total

value

goods and services,

of

accompanying chart.
total
deposits and

the

ury

The

chart

uals and

shows

that

billion

$80

of

the

in

'•

Government
of

be

generating
Early in

a
large-scale pro¬
to - retire debt from its ac¬

cash-

balances, and by
it

year

was

project additional

strained

1947,

sure on

regular

possible

debt

further

retire¬

downward

pres¬

long-term interest rates. In

of

rate

revival * of

1%

bank

lending to businesses, to property
owners, and to consumers; and in
part from the Treasury's retire¬
of securities held outside of

ances

banks, which involved the trans¬
fer

of

Government

expansion

during

close

postwar

to

record

levels,
financing

re¬

mainly the
of
expanding production and distri¬
bution

of civilian goods at rising

prices, it

also due, to

was

determinable
tive

and

extent,

excessive

in¬

an

specula¬

to

commitments

induced by bottlenecks and short¬
ages

affecting

The

many

further

goods.

.

,

to

sell

absorb

would

increase

Re¬

these

to

to

reserves
an

the

attempt

amounts

in

Re¬

purchase

any

bank

the

Refusal of

or

additional

to

in

have

short-

situation with regard to
Treasury debt-management op¬
erations, and to Federal Reserve
credit policies.
NATURE OF THE POSTWAR

Whenever
it
could,
without
abrupt stiffening of money rates,
the System made vigorous use of

available
the

PROBLEM

methods

credit

of influencing
outstanding bank

of

amount

selected

of

Superabuandance of money, to¬
gether with potential further ex¬
pansion in the money supply—•
resulting from wartime growth in
the public
debt—presents a con¬

tinuing problem for the postwar
period.

types.

It

en¬

couraged the liquidation of loans

tion to the total
have
and

maximum

made

to

powers

quirements

for

these

requirements
market

current

its
re¬

purchasing

securities

corporate

of

margin

use

determine

listed

by
fixing
at 100%
of

value of

the

col¬

lateral.

It maintained, with some
adjustments and revision, its spe¬
cial

wartime

control

over

credit, particularly

sumer

con¬

over

in¬

stalment credit, until such regula¬
tion was ended by legislative ac¬
tion.

Partly

as

result

a

selective

of

these

significant

measures, a
contraction
in
bank

credit

for

carrying securities took place and
the expansion of

consumer

restrained somewhat.

was

whole,

Federal

credit
On the

Reserve

policies

left banks considerable

in

flexibility
the transition

accommodating

credit

needs

business,"

of

and

commerce

while

bringing

about

contraction in over-all bank credit
and some slackening in the rate
of

growth

hands.

■

of money
I::; v.."

,

in

private

ly normal working levels, making
further debt retirement dependent
upon
current
budget surpluses.

transition.

Pressure

was

other

liquid

the result of

subject

the" already

volume

assets
war

rapid

to

of

ex¬

super¬

and

money

available

as

ing

process

the

in

and

shifting

Government

higher returns ^ was substantially
restored.
By selling short-term

further credit

addition,

the

to

assets

the

Federal

stated

as

offering

Reserve

earlier, -banks

obtain additional reserves

of

which

six

ex¬

use

into

securities

basis

In

moderated

banks

reduction.

quantitative restraints that could
pansion.

of

short-term

System,

on

thus

was

latitude

from

debt-retirement

securities

inflationary pressures generated
by so large a volume of liquid as¬

imposed

the

from

sets were altogether too strong to
be
effectively checked by any
be

bank reserves result¬

on

finance and not
The

This

by

expand

of

amount

credit

ten

times

to
such

of

on

bank

the
may

the
Some

reserves.

ment

close

public

In

wide

stable market values

on

this debt

had become

a major central bank¬
ing responsibility.

In this situation there
more

the

same

;

\

V? '

'

,

/

■ '

#

an

.70

maintaining

orderly and stable market for

develop¬

shifting into
other higher-yield assets, the Fed¬
eral

Open

Market

Committee

current

short-term rates to

tributed, to

a

more

rise

and

con¬

flexible money

need

would

be

pressures

'•

V

'

*

H*0

J

•

To prevent mone¬

tary redundancy from increasing
and

to re-establish conditions

der

which

further

credit

un¬

expan¬

sion may be more closely related
to the expanding needs of agri¬

culture, business, and consumption
important tasks of fiscal, pub¬
lic-debt, and monetary manage- j

are

ment

and

now

perhaps in the
These tasks must
be accomplished without permit¬

coming

years.

ting instability in the distribution
and

value

of

disrupt the
operations.
In

the

public

view

of

this

debt to

financial

economy's

situation,

the

central
problem
that
confronts
the Federal Reserve System in the

postwar period
the

System's

is

to

re-establish

primary

function,

which is regulation of bank credit

expansion.

At the

time the

same

System must be able to fulfill its
new

responsibility, inherited from
finance,

war

of

maintaining

,

a

stable market for the public debt*
With the postwar level of com¬
mercial bank holdings of market¬
able Government securities at $70

billion and with $88 billon held by
businesses and individuals, it is

difficult for the System to exercise
effective control over the total

volume of bank credit

holdings

the Reserve Banks.

tional bank

be

long

as

as

be readily sold

can

reserves

The

that

addi¬
thus

can

generated at the initiative of

banks

and

basis

for

others

could

be

in

expansion

an

the

bank

credit and deposits of from six to
ten times the newly created re¬
serves.

A

policy of maintaining shortinterest
a

rates

wartime

at

differential between

short- and long-term

complicate
of

credit

rates would
postwar problem

the

control.

It

would

con¬

tinue inducements that holders of

short-term

securities

have,

had

early in the recent war to
sell them and purchase longerterm, higher-rate issues. Further¬
more, the Federal Reserve System
would purchase
the short-term

LOANS AND.INVESTMENTS OF ALL COMMERCIAL BANKS
to

*

:■

f

■

.

>r'«0

securities

eo

M40
?

v:

.

t,

t—

—L_.I

.

!

1

-V

•

.r.i

•

1

°.

1

f

.-1,1,11

national

product:

For

■

1-1-

i

...f"

are

i„. i

'v/vk

40

xrviHo »t*ia

r

given below.

1916-18, U. S. Department of Commerce
Estimates based on National Bureau of Economic Research estimates of the pro¬
duction of finished goods; for 1919-28, Federal Reserve
Bulletin, September 1945,
■j»i 873; beginning 1929, U. S. Department of Commerce estimates in Survey of
Current Business, National Income Supplement, July 1947.
Figures are annual
to tals for years 1916-38 and
seasonally adjusted quarterly totals at annual rates
thereafter.
'
years

Deposits

terest

and

Federal Reserve figures for all banks in the United
to exclude interbank deposits and items in
Figures through 1941 are from Banking and Monetary
Statistics (Board of Governors), pp. 34-35; for later years from
monthly issues
Of Federal Reserve Bulletin.
Figures are for end of June, 1916-38;. for end of
dune and December," 1939-42 ; for end of March, June, September, and
December,
1943-46} 'for last Wednesday of March and June, 1947*
Figures subsequent to
Pecembef 1946 are preliminary. *
•
V
U. S. Government >.securities held by individuals and businesses:
Federal
Reserve estimates based on banking and corporation data from various
sources.
For 1916 '.through June 1939 figures are from Banking and
Monetary Statistics,
p. 512; thereafter -from Federal Reserve Bulletin, September 1947, p. 1104.
Figures
ore for the end of June,
1916*35; for end of June and December thereafter.
Esti¬
mate for June 1947 is preliminary.
currency:




..

the

ence

capital
be

markets

esses.

debt

demands
an

1928

1928

1930

1932

1934

1938

1938

1940

1942

1944

1948

of business

inflationary

and

would

influ¬

security

otherwise

disruptive to financial proc¬
Monetization of the public
stimulated

could result in
1924

rather than by

in the real estate and

prove

.

long-

by the pressure

surplus of current savings over

would

collection.

in

decline

A

rates.

of credit expansion
a

States, partly estimated, and adjusted
of

reserves.

term rates caused

•

process

thereby

bank

*

'v NOTE—Sources of data presented in chart
Gross

t.

V.'.'

sold

by these holders
create
additional
In this way, the
policy would contribute to fur¬
ther credit expansion and to a
further decline in long-term in¬
and

/vfry>t

.

interspersed with down-*

ward reactions.

since

Chart IV

•

"

j

of

bring about; but in
adjusting
to
a
redundancy' o£
money, the economy is likely to
experience recurrent inflationary

levels with

Treasury certificates were
These
actions permitted

from

to

term

>>v/

»-

level

difficult

Subsequently issuing rates

12-

debt

ply is the Federal Government
debt, a decrease to the economy's

early in July terminated its policy
of buying Treasury bills at %%.
on

such

permanent invest¬

more

TO

.".'K
'V

time fulfilling

of' this

able to further bank

raised.

at

its responsibilities for

Govern¬

ment and also of conditions favor¬

while
80

t

by the

consequence

month

:90

f

done

little

longer-term

bonds appeared toward the
of the retirement program.

Federal Reserve System to coun¬
teract inflationary developments,

DEPOSITS AND CURRENCY AS A PERCENTAGE OF THE GROSS
NATIONAL PRODUCT

weurr

that could be

was

be

can

contrac¬

a

Since
the
principal
basis of the expanded money sup¬

to

Government

its
of

money

expansion.

declining

securities and, because of the huge

for

shift in

a

banks to

these

outstanding and
distribution,
assurance

of

only through

tion in public debt held
by banks

evidence of increased demand by

debt

volume

reduced

banks

of

pointed out
illustrated by the accom¬

are

available quantitative instruments
of control would have resulted in

prices

national product

been

It

inflationary
pressures
that 'developed - from
many caifses during the postwar

than the current credit

already

panying chart.

By mid-1947 Treasury balances

important, how¬

these

ors; it can be further increased,
on the other
hand, by bank credit

had been reduced to approximate¬

More

of

or

expansion of bank
the

magnitude

changes in their rela¬

carrying Government securi¬
ties, purchased in war loan drives.

for

somewhat

to

The

forces and

term money rates.

credit to private borrowers added

• M..0M Of MUM*

240

the

flected

abundant

tlUIOM «Pt0LUft»

to

transition, which carried loan vol¬

pansion

GROSS NATIONAL PRODUCT AND THE MONEY SUPPLY

deposits

private accounts. While bank loan

ever,
Chart III

240

discount

postwar

ume

redeeming securities held by Fed¬
eral
Reserve
Banks, created
a
drain on bank
reserves; this
helped to check continued rapid
expansion .of bank credit and re¬

individ¬

middle

to

a budget
surplus dur¬
ing the ensuing year. The Treas¬
ury's debt-retirement program, by

having greatly expanded holdings
of
deposits and currency, held
over

-

ment from

businesses, in addition to

securities

factor

pressures.

the end of the
to

50% in the 1920's, a period of ac¬
tive business and
full employ¬

!W'~ ':■)

;^

the

ment from accumulated cash bal¬

possible for the Treas¬

was

cumulated

unemployment vand unused
resources, and with a little over

many

to initiate

gram

able

in

and

war

were

quickly ceased

dominant

1946 it

national product attained a
level of 80% during 1946 com¬
pared with less than 70% in the
late 1930's, a period of consider¬

Govern¬

restraints

diminished

inflationary

to

gross

ment.

these

quirements

The ratio of
currency

in

With the end of war, financing
the
Government's fiscal re¬

of

shown in the

savings

abandoned.

cases

all

of

over

greatly

the

of

production

possibly

securities, but after the

was

inflationary potential in the ex¬
panded money supply is roughly
indicated by the increase in its

not

as

ment

billion

could

maintenance

well

to 2 Vz times the prewar level. The

country's

securities

resulted

by

securities

Banks

during 1945 net profits in relation
io capital funds reached the high¬

1940

short-term

more

lateraled

through

37

market

customers, banks had to sell
Banks.

of

than expenses, with the effect that

on

their

serve

in

were

result of

the expanding loan demand from

serve

Govern¬

Banks

the debt-retirement program and
for this reason, as well as to meet

Federal Reserve Banks' preferen¬
tial discount rate on advances col¬

ment

debt.

some pressure as a

of

effected

was

Government

Re¬

purpose

flationary effects,

increased

demands, total

increased

in

seeds

infla¬

after

financing

war

THE

PERIOD

developments

of

end

IN

considerable extent

a

tionary

in¬

expenses

greatly

Wartime monetary

earnings

TRANSITION

earnings

banks

POLICIES

(633)

4

April, -1946 by elimination of the
FINANCING

Government securities.

The rapid growth in the assets

bank

and

\var

chases

At the

by such securities showed a sharp
reduction
from
the
high level
reached in the Victory Loan Drive.
.<
Some discouragement to mem¬

Since the end of 1944, to the high¬
est level since 1929.
During the
a

'

the reduction in reserves

which

new

a

-

of Government securities.

into cash.

situation

'

under

compared with $16 billion in 1940.
Bank loans also expanded, mostly

This is

'

addition, debt retirement directly
holdings

issues also

precedented

\

reduced commercial bank

holdings still exceeded $70 billion,

are

CHRONICLE

'

a

by

this

policy

huge additional

(Continued on page 38)

38

THE COMMERCIAL

(634)

&

FINANCIAL

CHRONICLE
System

Problems of Postwar Monetary
of

(Continued from page 37)

v

limit the availability of

decline in long-term

times

levels.

to new low

Various

been

have

measures

would

System in order to purchase long¬
er-term securities in the market.

in order

might

began

to

eventually

be

to

meet

neces¬

tained

'

Monetization of the debt
could be permitted
to continue
until long-term interest rates de¬

stalled.

clined to

would

at which

level

a

rates

buy

and

securities

short-term

(4) Adoption of one or more of
proposals made by the Fed¬
eral Reserve Board in its 1945 An¬
the

provide

Report
would
of restricting

a

assets

which

to

limit

thus

could

and

extent

should be

the

proposals
subsequent

various

These

fhe

in

unless

rates

pr

a

investment funds for

tions of this paper.

Even

in

these

circumstances

vWds

of

Determination

level

the

of

ference x>f

perhaps

mone-

among

l

tary authorities and theorists as
the

to

-effectiveness

rate variations in

of interest- 1

encouraging

or

discouraging borrowing and lend¬
ing.
this

that
not

Without attempting to settle
may be said

controversy, it

monetary management

ignore the effect of interest-

both short- and

rate fluctuations,

'

can¬

long-term; nor can it depend entirely upon interest-rate policv to
accomplish its objectives.
The
postwar situation, moreover, pre¬
sents many new aspects of the re¬
lation

interest rates and

between

monetary policies.
Flexible
—rThe"

Interest-Rate
of

nature

the

Policy.

postwar

declining long-term
To supply capital
through
this
process

demands

wouj^

contribute to inflation

The

would

.causes

return

and

the

pend

incomes

Lower

resulting

availability of credit in inflpenc-

ing expansion and contraction of
bank credit than -noon the cost of

credit.

It

is

difficult,

however,

except through certain types of
selective controls, to influence the

availability of credit without hav¬
ing an Effect uppn Interest rates.
Thus adherence to stability of in¬
terest rates as the prime objective

such

a

if rates

did not rise.

of

on

.needs.
s

In

expected

faced

of

have

as

against future consumption.

individuals

degree

some

are

resoonsive in

monetary

to

and

PUBLIC SECURITIES,

MARKETABLE

assume

for

increasing

an

for

would

such

he

have, to

at

es

level

some

rates)

of

not

possible to know how
fhrpch .cf a rise in rates -might be
to restrain .sale? to the
With a substa^t'al yol-i

necessary

System,
-

government .obligations.'
virtually every month,

of

we

atux ng

Tederal Reserve
i

policies must also
;nto account Treasury re-,
liurding. operations..
*
,
?
ake

risk

Another

-

*

,'n

a

situation in

.

the operations of financial

organizations

are

Public debt is

;;

the

dominate!

by

.bilitv that'

noss

substant:alrise in shortrterm'

nates might

HOLDINGS

I

some

be accompanied by a
While the

'

NONBANK

W.

I HOLDINBS 'v/

CERTIFICATES

RESTRICTED ISSUER

of

degree

"SgfpV

rrrr^NONBANK ym.
>^^HOLOIN«a<%^
OfWNtTIHCTII ISSUES

NOTES

COMMERCIAL BANK

rise

in

interest rales

carried

without

could

not

seriously upiThe events of

setting the market.
1946, when long-term ben I nrdces
fluctuated within & range of fouf
toints. indicate that! purchases of
/hesp bonds at premium prices are
not without some rigk■ If
«s -dif "icult to know frow much
f a rise in yields'
government
xecuriilps would be needed to"iiis-

•

pura«,e banks from"selling these
recurities ip order to im ake.private

pans- or to
wds .' when

to

errand

i

nonbank

ae'ive

an

-

Fxoc-riencfe

Federal

.or

bill-buying

"ective restramt against credit ex-

holdinos

UNftCRTJIICTCO

.credit.,

rates have <not always exertei e'-

!

i

-is

there

increases

d'scount

Reserve

WITHIN I YEAR

invest, in. corporate

for

t,h"f

BY EARLIEST CALLABLE OR DUE DATE

0#

bonds

:

M H0LDINS9 «

Chart V

v-hg5

selling at substantial premi¬
ums, there sis a limit peyond which
be

TOTAL PUBLIC AfcjD PRIVATE DEBT

uncertainty, for

bartio.ul3vlv

are

a

;v;

to

'ong-term interest rates would be

HOLDNMS

and

seems

toward this end

in short-term rates and

rse

we

responsi¬

individuals

would

be desirable, and

BANK

so¬

Government

'

consequence

*'se In long-term rates.

become

the

securit
It. is

BONDS

and al¬

It

patterns.

essential

*

prepared to purchase government -if.

my
mLMH or DOLLARS

The

System

serve

vhich

END Of MONTH FIGURES

COMMERCIAL

declines

and

dis-^

broadly

debt,

■

-

al¬

economic

by-

on

To prevent wide fluctuations -j^
•hcrt-term rates, the Federal Re¬

Demands for credit by bus nesscs

readjustment >" be¬

established

of-1

taken

not

of at¬
tempting to use such .a remedy
might be more harmful tf.an the
disease.

the salisfac-

difficult

tions of such institutions,

bility

the

jirqdpctiyity of inve$j>

these individuals, impair the func¬

cial

©f

of

Further

ter

basis

.the

ton

income from

with

Federal

predict.

ion that,consumers get from pres*

BILLS

yields
expansion

institutions

been

.

oreventfon of further declines in

declining interest rates.
would seriously
affect the livelihood of many of
cause

private debt

contrast,

incurred

savings,
life insurance
compa¬
nies, and educational and :other:
endowed

-

tributed among banks, busi esseSj
investment institutions, and indi¬

•likely to be influenced materially
by regulation of the supply, avail¬
ability,, and cost of credit. In fact
central
banking
policies
need
rather to b.e adjusted to puhlic

risk-taking would be desirable to
maintain economic stability. In¬
living

for

others, then interest rates

long-term interest rates

vestment at times when increased

dividuals

vast
\

,

securities

government
sale and

fered

These changes are po,

Merest.

endowed

that de¬
from invest¬

credit

r

1

BY CLASS OF SEOUfUTY
AtLLIOM or DOLLAAS

'

•

Meanwhile, should the Federal
System refuse to pure

ehase

vas

®

Chart VI

40

instability
of the

T?'xe
three Par'S viduals at nearly all levels of in-:
Fede]rel debt to two parts private come, {he possible effect of widely
anc* other debt, discussion of cus- fluctuating interest rates upon
t°m£*ry Res(rrve. System mstru- operations And actions jpf .thess
P°^cy 1S put into a new folders,-.and upon debt-manage{fame
reference.» Changes m rent expedients is diff cult to

.

be incurred

value

able

ent

would

.

Reserve

.

refunding of maturing h.gh-ccupan issu^
with
issues
bearing lownr ra'"»s
fenu to reduce ithe total interest payable.
evertheicss, a r.se in s..ur.HL-.iii; la.e
wcu d
mean
larger interest
than

aggregate

ttotal

undue

market

:

"Vr-'

the economy's
,

.nent in business and

the

reduce

one-fifth

over

would tend to discourage risk in¬

problems

bank

just

against

public debt.

country stood at a
up to
that time, it

investment

from

policy to
"^late greater emphasis upon the
Gentral

case,

-monetary -expansion,

long-

further

earnings

on

ments.

any

aspect of the postwar problem

the

lished
in. the

structure

Government

current interest cost
public debt mirli. not b
increased above the present level, because
on

savings institutions

ready

for

in

from

rates

debt

family savings and de¬

on

crease

In

OWNERSHIP OF 4JL 5. GOVERNMENT

decline

renewed

interest

predominant factoi

Federal

and

economic instability.

term

...

through changes in interest
are
resumed,
appropriate

rates

volume of public debt result
of dis- ; Primarily from war and other opselling ®ratlon,s conducted an the piabLc

namely, .purchases by the Reserve

rates.

monetary problem makes it neces¬
sary

make

even

interest
,

opinion

would

the satisfaction of part
of the existing demand fhrough
bank credit expansion at low or

ditionally been considered an im¬
portant
instrument
of
central
bank policy;
at the same time
there has been considerable dif.

of

process

debt

protections will need to be estab¬

this

Wit>>

raising

further

changes in the amount cf private

over

shown in Chart V.
„

Reserve

"

influencing

of

botf
public and private debt would bd
subject to wide fluctuations. Wit a'
worm War TT
thp Fadtwas- 50% la'rger than approximately $230 billion of pub¬
bed^
debt.
These
changes are licly-held marketable and redeem- y

other

compared
In view,

traditional

If

methods

the

still

PurreH

the

possible

short-term interest rates has tra¬

.

monetization

debt

of

described

j

short-term in¬
terest rates would cope with only
one

pol.cies.
System

large as large as private and other
debt.:: By mid-1947, following retirement of part of the debt in-

short-term securities

on

of

5 The

previously

POLICY

INTEREST-RATE

levels as
periods."

securities.

policy

expansion, or unless any
gap in demand is offset by an
increased willingness on the part
of the public to hold liquid assets.

are

high
former

ment

correspondingly large

capital

sec¬

com~

need

way

.stimulated

or

of

when' private indebted¬

level

record

restricted

interest

public welfare.
There is little, if any., econorrii
justification' for considering pub¬
lic and private debt on ti e samp
basis with regard to the applica¬
tion of customary central banki; g

ex¬

supply developed

the
in

was

,

and would

the

the end of World War. I,

at

debt

may be a desirable means
couraging
banks
from
more profitable assets and further
monetizing
short-term
Govern¬

there

for

demand

monetize the public debt.
discussed

ex-

securi¬

Government

interest

lower

could

banks

below

even

ties, as well as future current sav¬
ings, will exert pressure toward

long-term securities or to loan

to

decline

short-term

the ability
of banks to shift from short-term
means

to

,

to

regulation .an4

to be

higher-

securities

nation's

the

when

however, of the postwar decline
in bank earnings, the increase in
their expenses, and the likelihood
of a further decrease in earnings
if holdings of higher-coupon maturing issues are refunded into
lower-rate issues, somewhat high-

postwar situa-

i,sting unprecedentedly low levels.
The large wartime accumulation
by the public of funds held in
currency,
ba^k deposits, and

longer issues.

nual

the

tion, as already explained, is the
tendency for long-term interest

banks

longer be induced to sell

no

with

Inherent in

,

,

sbort-rerm deb

fully developed, which more
flexible policies might have fore¬

(3)

i

was

Even

plicate the Treasury's refunding
problem.5 It would also increase
bank
earnings, which have at¬

after it

nad

long-term rates.

.

,

become

in

a

short rates to rise
to prevent further mone¬
of the public debt, for

tization

re¬

needed, it

situation

a

such

Permitting

to resort to drastic action in

sary

order

in

ness

example, would increase the cost
fo ;the
Treasury of carrying its

quantitative

when

make

period

a

policy difficult to follow.

situation

short-term

the money

long-

postwar

Gredit

securities
investors

purchase

The Federal Reserve System's
general instruments for regulating
the expansion of bank credit anc

it,erm rates, other elements in the

strictions

of' new
is¬

amounts

Sufficient

levels in relation to

at low

to

pand other assets.

rates

of

changed

term

(2)

short-term

(maintenance

tions of credit supply and demand.
If interest rates were
held un¬

banks would

long-term securities could be
sued
to
check
the
decline

of

above-

problem

gradual adjustment of the
money market to changing condi¬

longer be induced to sell shortsecurities
to the
Reserve

no

tiie

about

securities to rise

at which

level

Flexible Interest

on

Policy.—While

prevent the adoption of
policies flexible enough to bring

The Reserve System

a

help bear their

mentioned aspects of the

borrowing and lending,
complete avoidance of variations

could
permit short-term interest rates
to

Rate

order

yielding longer-term securities. It
would
not prevent,
although it
might discourage somewhat, sale

costs.

Limitations

was

of

ume

The more important are as

Government

necessary

credit at

limitation

such

to

terest

follows:

on

when

in

Although small changes in in^ of interest rates indicate the de¬
rates might in themselves
sirability of a flexible interesthave little influence on the vol¬
aate policy jn preference to rigid

with these
problems of debt monetization
and declining long-term interest

(1)

and

desirable.

suggested for dealing

rates.'

the

vent

bank credit and a
interest rates

of

expansion

policy might pre¬
adoption of policies to

short-term

of

sold by banks and other

Policy

functions

monetary

Thursday., February 5, 1948

ISSUE

oansicn generated
demands.
be

Ruch
less

eve.i

;

by -speculative

increases

erJ'ectiv«e jn

•where their primary

wo$uld

a

situ a-

effect would

bp upon pripes of outstanding gpvern'^eot "securities, rather than

upon; private borrowers.

ii'i"^j

;-

>{Experience with brokers' loans,
served ,as 'liquid sec¬
ondary reserves for tin's country's
banJkinc system, thus prpyiding a
fvpg of central baik'ng service,

HQLDipOS
PUBLIC DEBT

OVER 10 YEARS

l-$ YEARS

.

shows -that
funds

banks

the

from

will

withdrawv.

central

\
of i;

money

order to' take pare

market id

•Jthe demands of their business and
Sil

OF

RfITHtCTf 0

not be

discoxtrage f imhf doing so -»

by'having :V iokego Mghim^ey
hates.Tin',the

PRIVATE DEBT

case

absorb: pabed
1BA4

J946-,.

-

;

•

"194?.

of

.1933
Ml 041* II

N.OTJE—Gross .public

E>f Commerce

on

the

basis

and
of

private debt

data




from

as
various

estimated

U. S.

Goyfiffiment spcunities, published in Treasury
bulletin for October 1947, pp. 4312-13.

Federal Reserve

by the U. S. Department

governmental and

private

agencies.

1944

|94f

Treasury's monthly Survey ;qf Ownership
Bulletin and summarized, -in
Postal savings and prewar
bqnds are included; guaranteed-securities^are excluded.- X>ata understate.cpmmercipi
La.V,i holdings i,Mptcw..at and .pvers^ate, n on bank holdings.I
NOTET-Basic data,are frpm ithe U4 S.

■*

t

-

bft brokers'loans *'

.other lendgrs had .to be. found to '
ISA?

-fftfif TIM

v

other customers and that thev Ayiil :*

STATE AND LOCAL DEBT

'nonbankholoinbs

1929

'

wbxh long

forced to
the

loans

:

^vsecurities

be k'quidated,".

case of

the hanks

:

while fnd

governnruent seourities ]
.ppuid ,ireadily

.

.,

hbtain,;

additional' <rpserv£'&: ftb! take

Pare •>< *

Volume

1-67

Number 4670;

THE COMMERCIAL

of the needs of their customers
by
celling some of their securities to

below those that other holders
will pay, changes in the volume of

Jthe Federal Reserve

bills offered wdl

System.-

i

...

xf interest rates to postwar

and

bank
the

letary policy leads to the follow¬
ing conclus on s:/'Continuance of a

^pattern of interest rates in
'short-term

rates

which

to

levels much below
long-term rates
/is conducive to further
declines in

long-term interest
expansicn of

rates

bank

based

credit.

pansion

over

well

as

to

as

continuing downward

bill
as

movement

of

term

interest

i view

•pubi

debt

c

•broad
•

rates,

ofthe

r

short-

declining
funds

debt,

and

widely

fluctuating rates would greatly
/ complicate the Treasury's task of
refunding its large maturities. Fi¬
nally, it is important to recognize
that higher levels of short-term
interest rates would not prevent
shifting

by

banks,

corporators

and others from the vast

holdings

of

government securities in order
to meet private demands
for credit
if these demands are

particularly
strong or banks are competing ac¬
tively for such business. lib other
words, while sale of short-term
government

ties to purchase

secur

longer-term issues might be pre¬
vented by diminishing the
exist'ng
spread between short- and longterm
interest rates,
the higher
short-term
vent

rates

sales

of

would

rot

pre¬

government securi¬
private debt.

ties to expand

present

condition's
terest

foreseeable

an'

some

rates

flexibility in in¬
is desirable. In view

of the limitation to which flexible
interest-rate policy is subject as

a;heritage of

are.,

ment

use

the

however, other

war,

measures

reeded
of

to supple¬
tradit'cnal Fed¬

eral Reserve instruments of credit
control. 1

.////•

a

the

Treasury

short-term debt. Even

case,

were

sue

however, if the is¬

sufficiently

attractive,
some holders of
outstanding bankeligible issues would be likely to

pari drives.

tional

;/, /

•

Consequently, addi*

offerings

sues;

stricted

is¬

;•
they be "rer
purchase by banks

to

as

of long-term

nevertheless result in further

may

debt monetization.

Late

•

tin

Treasury

introduced:

1947,ythe
variation

a

balance

bonds, /which

are

nonmar-

redeemable, have fea¬

similar

the

to

Series

though with

bonds,

ferences

factors

G

dif¬

eligibility for pur¬
chase, purchase limits, and maturt es.
They were issued to absorb
the savings of the public in the
hands
lot

of

institutional

investors

betag invested in private out-

'ets.

The

of this

use

type of

in localized eredit areas
may hot
be apparent in total bank credit
soon

enough for action to be taken

in time to prevent

serious weak¬

a

ening of the eredit structure.
of

use

The

general credit instruments

to rectify a credit
development
that is narrow in scope might re¬

sult

in

where

areas
was

undesirable
the

pressure

credit

in

situation

,

essentially sound.

For

the

correction

of

unsound

conditions in

permits

the

of liquidation

before maturity. At the same time,
type of security safeguards

Jiis

the

Treasury
coupon

ments

Its

paper

to

have

management or of
further monetary poli¬

been-discussed

in

paper

this

and

subiect

in

another

It

is

series.6

Treasury

agement of

the

debt

could

do

a

J great deal to influence monetary
developments.
In; view
of
the
1 large
portion of the public debt
that is of short

the

of

within

within

term—-$52 billicn

marketable
one

five

debt

management policies

""

clear

mented

by

struments.

be

special

supple¬

selective

discussed

fully

more

in

particularly

They in¬

controls

stock-market credit and
sumer

credit, which
effectively used. To
also

be

added

by
as

*

?

various

of

are

are

government

Federal

Re¬

ment

the

needs

legitimate

these

of

real

loans

nature, is the

certain

has

guar¬

of

bank

against loss by the lender.

fully and
case

types

of

on

used success¬

was

of

various

investor

groups./ In addition, this program
should facilitate the adoption of
credit policies designed to restrict
excessive bank credit expansion
and at the

orderly

time maintain

same

market

securities.

for

*:"1/'..//**

readily subject to change

marketable

issues

of

various

types and maturities held by the
various major groups of investors
Chart VI.
Within

/

the

demands the
ence

the

years are
:

.

v

limits

Treasury

shown in

an

Government

•

V V■'/

;!
of

In view of the limitations
upon
the use of traditional methods of

credit

large scale in the

a

been

extent

by

various

agencies.

'■/ /'

/,/>/• '1 / U /

peacetime

/:/;://;./

•.

Selective
instruments
of
the
type described are helpful ad¬
juncts to the general instruments

"
•

to

market

can

influ¬

distribution of the debt

various groups
holders
by its choice of securities to be
~i3sued.
For
example, Treasury
tbUls are almost wholly owned by
among

bank

credit

eoonomic

sult

of

may

contribute

instability

undue

as

expansion

or

a

re¬
con¬

traction

in.its total amount, as p
result; .of undesirable conditions
that are largely localized in
par
ticular credit sectors, or as the re-

*

'

*

:

Federal

long

Reserve

banks

as the System
ficient amounts of

)and,

as

purchases sufbills

at




rates

6 See

Roland

Aspects1 of
Public

(December
this series.

I. "

Robinson,

National

Finance

and

1945),

the

would

require

nessary to

could be

so

applied

inflation

present only in
of the
economy.

or

deflation are

particular sector

a

They

stRutes Tprithp
ments. however,

not sub-

are

only

be introduced where the costs and

economy

are

in

fairly

well

advance.-

de¬

These

characteristics apply to regulation
of security loans and
consumer

eredit,

as well
of bank loans.

ity

to

to the guarantee
Permanent author¬

as

regulate

consumer

credit

and adoption
of guarantee' loan
provisions
would
therefore
be

constructive

measures

that would

In

view

of

the

banking

monetary heritage of
the

Federal

faced with

and

finance,

war

Reserve/System is
twofold responsibil¬

a

timely

reserve

Board

Governors
eral Reserve
System

statutory

serve

of

such

Debt

"Mon«»tanv

Full

Policy," s in
Employment

third

®

'

might

same

time

to

credit
assure

and

at

reason¬

able stability in the prices of the
large
volume
of
Government
securities
outstanding.
There
.

should be limits to the ability of
banks and others to convert Gov¬

It would not be
possible to ac¬
complish both of these objectives

through

exercise

of

existing

powers of the Federal Reserve

thorities.

au¬

To assure effective dis¬

charge .of the System's basic longrun
responsibilities,
additional
instruments of general credit reg¬
ulation such

pamphlet in

as

those proposed in

7 Ca«l 4F-

af

National

Instruments
Credit

Policy."

not

fall

an

far

the increase in
required

of

20%

established

would

assure

demand

principal
would

for

be

of

which
bank

such

securities sufencourage or discourage

ficent to

rpQ

1

faciiitate
,

transition
ell

to

the

reguiar ad_

as

of bank positions

re¬

by
interbank flows of
fund®, bunk® ®h°uld be permitted
to hold additional reserve balwith the Reserve Banks

ances

Seltzer and

staff

a

of

nomic

certain
amount
of
short-term
Government securities from com¬

or

the

by the economic

Committee

Development,

for

Eco¬

would

be

necessary to make the plan effecr
tive
as
a
limitation
on
bank
credit expansion.9
Otherwise it

mercial banks to Federal Reserve

Banks,

level

a

commercial

a

the

(1) to shift

at
a

de-

Sub-.

could

major feature distinguishing this
plan from those proposed by Law¬

of

reserves.

effects

demand

hsabills % is
lieu °f c which
cates.
This provision,and certifi"

amount

short

net

credit expansion or to maintain a
desired level of rates without Federal Reserve purchases,

rence

The

measure

and

(2)
to
reduce
the
would be necessary for the Treas-,
multiple credit expan-j
ury to supply bills or certificates
sion
on
the
basis
of
a
given, -to banks
needing them to meet
amount
of
reserves.
It
would.. their
secondary • reserve require-,
therefore, diminish the amount of
ments against expanding
deposits,
short Governments available for
ratio

of

This would result in further
pressure for bank credit
expanion and

sale to the Reserve Banks
and
also reduce the
degree of multiple
credit expansion
that would be

possible
serves

The

the

on

created

plan

basis

of

any

deposits growth rather than in
restraint, which it is the purpose

re¬

of the

by such sales.

could

be

applied

to

while

support
could
keep
short-term interest rates on.Gov¬
securities

some

from

same

manner

of

as

funds

to

the

to

make

t/
tion

in

from

plan

would, in conform¬

flow

holdings of

limiting their ability to sell

these

ity with present banking prac¬
tices, be relatively simple to op¬
erate, and permit adjustments to
interbank

substantial

oAler

rising

pre-determined level.

measure

retain

short-term Government securities,

Reserve

ernment

plan to provide.

The secondary reserve plan has
the advantage of
permitting banks

to

discourage further purchases of
long
term
issues
or
increased
lending by banks, while Federal

This

the

Reserve^ pmchase^

Federeal
that

a7

In £rve re(Iuire.rr'?i;ts

short-term,

securities—probably

to

Int°rdter justments'

mfo-M

a

their

posits would be sufficient.
sequently the percentage

small margin for further
increases I
at central reserve

in k^,±°/: rm lnte,rest rtCS
,fr0m

of

as

io%

be

m

holdings

banks

Government

has

banks

to retain the bulk of

present

fully utilized since early in
war, except, for a relatively

cRy

level that would in-

a

£ommercial

group

pre-

requirements

jn addition to balances with

*n

initially at

pos-

within

Reserve
Plan
required re-

a

duce

been
the

Secondary
establish

This percentage might be placed

Fed-((

already

require-

Banks, which might be
Treasury bills and certificates equal to a specified percentage of net demand deposits.8

limits, but its authority to

increase

The

serve>

The

the

reserve

Reserve

power to vary re-

requirements

scribed

above

expansion of hank

<

Plan.—

requirements.

of

sesses

between

banks.

supplementary
authority to increase commercial
bank

As stated, simiwould have to

requirements

parity

instru-

Reserve

require-

types

imposed on nonmember banks
in order to prevent a
growing dis-

This plan involves

ity for the longer

run: to prevent
otherwise excessive

lar

'

Primary

flexibility

different

different

on

ments of member and nonmember

.

The

administrative

reserve purposes.

overtraditional

should

be

Pc0W- heId

of

It

counting of vault
and provide for

of deposits and in classifying banks for

L r rdUefP?nw
moderate but

use

the

imposing

would

(

higher

reserves

greater

j in

j?ny one'

5hfnt

authorizing

reserve

;

requirements.

as

to | ments

to leave

rinapf/v

speculative

or

cash

Federal Reserve

crm^

gains to the credit system and to
the

present

HjeJ

lu ilofrof

of

authorize

nf

f fvL

a

member

on

requirements
might also include provision for
amending various aspects of the

ability to accomindustry, and
fact, only if ap-

short-term securities in
should

and

Legislation

plied in this way would the
Sys-

nnrnnSl

interest

reserve

levels

commerce,

agriculture; in

applying
plan for pay¬

reserve

troduction would be increased.

legisla¬

as

by

balances, amounts
paid to the Treasury after its in¬

all commercial banks, not
only to
member banks of the Federal Reserve System.
Each of these powers

of

bank

have

apply the provisions

re¬

backed

made in

were

primary

ment

that should permit
consider¬
able administrative
flexibility be-'
cause of the wide
differences be¬
tween individual
banks and
groups of banks.- It would also be

of

policy under the changed ernment securities into additional
situation brought about by war, bank
reserves
and
these
limits
increased reliance may. need to he should be
imposed without bring¬
placed on other methods of credit ing about
widely fluctuating in¬
control.... Banking history shows terest rates.
that

adoption
tion

war

production loans, and
employed to a limited

the

many similarities and also
impor¬
tant
differences.
In
each
case

might

which,y however,

This instrument

invest¬

held

agencies

to form and maturity.! Amounts

idvrma recent
;

meet

proposals

collateral

not

Treasury. Therefore, unless

provision

plan.
(3) A bond limitation plan.
three

the

and

increase the receipts of the United
States

,

These

of

excess

39

gold certificates.
As a result of
this policy, any increase in Fed¬
eral Reserve Bank
earnings would

the

reserve

been

Another type of selective de¬
vice, of a stimulative rather than
of

in

quirements

re-establish

/(2) A,secondary

over con¬

would entail difficult administra¬
tive and jurisdictional

restrictive

the
ur¬

System's functioning along tradi¬
tional central
banking lines.
The three basic
plans proposed
by the Board for consideration
by
the Congress
may be designated
by the following terms:
(1) A primary reserve plan.

over

have

regulation

.credit,

are

of
are

another

paper in this pamphlet.7
clude

estate

in¬

These instruments

-

ily developed.; Another element in
the situation is that $33 billion ;of
SELECTIVE CREDIT CONTROLS

and

;

be read¬

can

government ~ securities

'

matures

and

$95 billion
years—flexible debt-

year

and

to

modate

to

authorities, through joint
strengthen the System's ability to
planning of policies and opera¬
r
serve
the purposes for which it
DEBT-MANAGEMENT
tions,'. should
carry
forward
a
:: - //•;
/POLICIES
;/•. V;;;: •' debt-management program that was established. Permanent regu¬
1
| Since the problem of postwar will preserve the taxpayers' in¬ lation of security loans is already
monetary policy is so closely tied terest in maintaining a low level authorized by law.; •/; / • / ; /■/.;:1
ip with the value and distribution. of interest cost, provide the Treas¬
PROPOSALS FOR ADDITIONAL
r: of the
public debt,, proper man¬
ury
with ihe necessary funds,
CONTROLS
serve

serve

banks adequate

terminable
does

exhaustive discus¬

an

Some aspects of the

;hat

a

debt

of

use

cies.

paying

l:quH invest¬

th's

of

scope

permit

sion

on

to temporary holders..

.The
not

aga list

rate

would

struments

need

Report
Board

Treasury

while also protecting them against
case

Annual

Reserve

special credit areas,
the Reserve System's
general in¬

se¬

the income of bona fide investors

capital less in

1945

(635)

gently needed. These instruments

Developments

Reserve System policy.v-*sir^
to' they
permit application of policies
nay an appropriate rate for genu¬ of
limited objective and also dif¬
ine long-term savings and pro¬
ferentiation in credit policy when
vides an instrument for protecting
forces of

curity

the

Federal

jn the whole

to

as

of

economic situation.

antee

through the issu¬
Series A Investment bonds.

savings

such de¬

bank, reserves ana
thereby the availability, supply,
and interest levels of all
types of
eredit, their use and timing is
necessarily influenced by the net

a

tures

not

problems.

September,

ketable and

if

the amount of

?f this proposal

These

in individ¬

occur

is difficult

velopments by tiring general cred¬
it instruments.
Also, since these
ins ruments operate
by affecting

ance of

high
Under

which

provide

then purchase the new issue/ This
n
fact occurred during the war

Maintenance of
substantially higher interest rates
.furthermore, would raise the ccst
public

such

n

end

.

its

and

structure.

the

with

Could retire

-

•of

further

sectors.1 It

impossible, to deal with

keep long-term interest rates from

sell these securities to banks and

outstanding

"

would

in

private debt was a
important part ;of the total

•debt

such" .securities

of

when

more

for

mand

volume

•throughout the economy withoul
exerting the same influence upon
borrowing ant lend ng as in the
'past

It has been suggested

however,

large

distribution among owners
have serious repercussions

would

savings.

long-term bonds to satisfy the de¬

mit.gate unstabilizing tenden-,
teies in the money -market.; ' !/'./
in

use the b 11
instrument of

flexible

more

that issuance of enough additional

adj ustments
to
•changed situations moderate va/riaticns in the pattern and levels
•of interest
rates might forestall

variation

offerings and to

a

bonds ' ineligible for purchase by
banks could be offered to holders

mitting '• gradual

Substantial

the amounts of

vary

At the other extreme, long-term

long-term interest rates grow-:
tag out of monetizaticn of the
public debt.
Moreover, by per¬

;

re¬

market instru¬

a

as

This

debt management.

in

•

nearly consistent

more

Treasury to

a

or

bills to rise

on

ment and made it possible for the

ex¬

prevent

level

a

stored the bill

on

Flex¬

credit

taken

on

Reserve

with other market rates.

ible policies
allowing some varia¬
tion in the spread
between, and
levels of, short- ard
long-term in¬
terest
rates
would help to <reestabl sh- control

Federal

permitted the rate

Stabilized at

are

Act

-reserves.

by
System in
July/1947, to eliminate the fixed
%% buying rate on Treasury bills

raon-

ual

CHRONICLE

failure of desirable credit

a

developments to

be reflected di¬

rectly in Federal Reserve holdings
hence affect the supply of

;;
Conclusions as to Interest Ratal
—-This discussion of the relation

suit of

FINANCIAL

is

Reserve

Its
the

that

Banks

other

loans

in
and

principal distinc¬
primary reserve

under

its

operation

the commercial banks could

con¬

tinue to hold the short-term Gov¬

the

ernment securities whereas in the

at present.

The proposal would tend to re¬
duce the
earnings of commercial
banks and increase those of the

primary plan the Reserve Banks
would hold them. This plan would

establish

Reserve Banks.

If the plan were
adopted it might be desirable for

short-term

securities

the Reserve Banks to have
power
to pay some interest nn
reserve

position
term

in

other types of short-

over

paper

Government

preferred market

a

and

thus

permit

in-

balances,. in

case
bank earnings
lj
*
jttj
should be unduly reduced. Under
Ji

a

policy

J

adopted

in

April

earnings
T
^

1

dends

over expenses
J

at

and divi-

the

statutory rate are
Treasury. This
is accomplished
by use of a propaid

over

Vision

Of

to

the

law

authorizing

the

Board of Governors to
impose
interest charge on the amount

outstanding Federal Reserve

an

of

notes '

reserve

required to be held in

special is4ue
of
Government
would serve the same purpose.

1947,

the bulk of Federal Reserve Bank

8A

I

j
®f

some

securities
.

,

9 Lawrence H. Seltzer, "The Problem
0ur f:*c.essiye ®anki"f Reserves,"

Journal

of

sodation,

the

American

March

1940,

search staff ( Melvin G.

Statistical

pp.

24-36;

As-

Re¬

DeChazeau, .Albert

9- Hart' T9ar,diner 9*

^Sa), Committee'To'r

Ho,ward

Economic at

velooment, Jobs and Markets (New York,
1946), pp. 90-95.

(Continued

on page

40)

*■

40

THE COMMERCIAL

(636)

Thursday, February 5. 1948

CHRONICLE

FINANCIAL

&

tential, is disproportionate to cur¬
rent output and incomes, even at
permit needed expansion but present inflated prices, and also

sential for sound

Problems of Postwar Monetary
without

(Continued from page 39)
on

vidual

adopt whatever

lowing fluctuations in other rates,
This proposal has . been criti¬
cized because it would purported¬

sition

their

of

v

holdings of Government

the

securities whenever there was an

of

amount

increase

would

expansion

.

to

held, just as it does now, and
banks would have the same alters
native as they have now of liqui¬

foe

APPLICATION

,

would set off a large part of

Once established, any such
plan could be fairly rigidly main¬
tained,
while
traditional open
market and discount rate instru¬
ments were largely relied upon
for
current
policy
in affecting

Limitation
Plan
would limit the amount of longterm marketable securities, both
Bond

might justify or re¬

in

It would have to cover obli¬

gations of State and local govern¬
ments and of corporations; other¬
wise ' United
States
securities
have

would
market

disadvantageous

also

might

It

real estate

and

estate

real

cover

a

position.

banks in¬
vest large portions of their time
deposits and capital.12
in which

loans,

Adjustmeants

many

of

reserve

posi¬

tions between banks would not be

particularly complicated by the
limitation
plan,
although
some reduction in bond portfolios

bond

might be necessary if banks lost
deposits, particularly time depos¬
its, and increases in portfolios
would

of

permissible in case
savings deposits.

be

additions to

de¬
specific bank
lending activities, except as re¬
gards
their effects on overall
While

signed

of the plans is

none

restrict

to

expansion, this; measure
probably have less direct
restrictive effects than the others,
credit

would

except on real estate loans, and it

It
is primarilydesigned to restrict
shifting from short-term securi¬

might even encourage lending.

long-termsecurities,

into >

ties

10 See,

for

formulae

proposal

posits.
but in

would

are

York,

Annual

general terms

in

the

relation

securities

to

of
net

for

possible

Report

of Governors in describing

formula

Jong-term

32nd

The

plan.

the Board

a

In¬

Policy

.

11 Various

this

Federal Reserve
Company,
New

Trust

< Bankers
■*1946).

Riddle,

example, J. H.
and

Rates

terest

this

suggested
holdings

demand

of
as

of

de¬

A somewhat more complicated,
practice more satisfactory, formula
relate such
holdings
to savings

plus capital accounts plus some
percentage of demand deposits other than
interbank
balances
without
adjustment
for collection items.
This formula would
avoid
penalizing
banks holding
large
amounts of cash items in process of col¬
lection and also avoid permitting banks
to
hold long-term assets against inter¬
deposits

bank

balances.

estate

this

way,

account could

loans.




However, there are but
banks in Canada

chartered

ten

effectuated
by
administrative arrangements
more
readily there than in this
country with 14,000 banks. Other
plans can be

and such

have

countries

ments

based

on

similar

arrange¬

informal under-

standings or well-established
banking traditions.1?

point of emphasis is
primary purpose of the

Another

the

that

(Continued from

rates on

should

economy

institution

was

as

page

16)

adding
further —"The
existing
body of rules and regulations Rave
been formed with much care, and

done in France

with the Paris Bourse more thar

century ago. Despite the specu¬
lation excesses that has prevailed
a

in

Great'

Britain

from

time

vigilant

body of persons intimately ac¬
quainted with the needs and exi¬
gencies of the
community for
whom they have legislated.
Any
attempt to reduce these rules to
the limits of the ordinary law of

1877 thai

body of the London Stock
Exchange "can hardly be inter¬

de¬

the

and

a

the

and

land, or to abolish all checks
safeguards not to be found

Parliament without in that law, would in our opinion,
freedom of self-gov¬ be detrimental to the honest and
is the very life
of the organization," and, efficient conduct of business.'7

fered with by

that

losing

ernment
and soul

which

it would

supply of savings, then
be

Royal Commission in

such

experience,
attention of a

the result of long

are

to

available

the

exceeded

mands

a

in

be

investment

where

position

preferable for interest rates on
securities

marketable

rise

to

somewhat than for bank credit tc
be forced into

an

inflationary

ex¬

It would, on the other
hand, be possible to support the
market for long-term Government
pansion.

bonds and at the same time offset

the effect

the supply of

on

of

reserves

any

bank
Reserve

Federal

It would likewise be
possible to prevent a repetition of

purchases.

undue decline in the4 level of

the

interest

rates

caused

by

an

ex¬

pansion of credit in the early part
of

1946.

loans.

would

instruments

These

unduly

not

restrict banks in making
It is the purpose of the

proposals to restore to the System
limit excessive credit
expansion—the function it was
created to perform but is no longer
able
to
fulfill.
Any limitation
either on the supply of bank re¬
serves or on the ability of mem¬

the power to

ber

banks

to

has

rediscount

its

effects through exerting a restric¬
tive
influence on bank lendmg.
The effects of the proposed instru¬

in

this

plans is not to save interest costs

ments

to keep
down bank earnings from invest¬
ment in that debt—although they
would contribute to these results

respect from those for which all
credit regulative
powers of
the

the

on

public

debt

or

is

enable

to

System to deal with the

serve

control

oyer

general bank

would

Federal

differ

not

Reserve

are-de¬

System

signed.
banks

If

the

Reserve
monetary
situation resulting from the huge
public debt.
The major task of
postwar bank credit and monetary
policies is to re-establish condi¬
tions % under which Federal Re¬
—but

the

needs

times

want
of

when

to

their
there

care

of

customers

at

take
is

active

an

demand for loans but when over¬

all credit expansion is not
it

would

desired,

the

ma<n

credit struc
for them to sell securities of

tenance
ture

the

better .for

be
of

a

stable

kind that non-bank

investors

expansion can be. effective¬
would absorb rather than of the
ly exercised through traditional
kind
that
the
Federal Reserve
central banking instruments.
In
banks
would
have
to
absorb.
accomplishing this task, it is im¬
Through the one process there
portant to recognize that the Sys¬
would be no net credit expansion,
tem is Obliged to facilitate debt
whereas through the other there
management by the Treasury at
would be a growth in bank re¬
low cost and with minimum unserves which would
permit mul¬
stabilizing effects.
The central

credit

problem, therefore, is to free the
market
for private credit from
excessive

influence

of

public

credit and to further reconversion

operations of banks
other financial organizations

of the current
and

from

basis.

a

public to a private credit
Adoption of one, or some

of these proposals,
essential step toward
reinstating the traditional instru¬
ments of monetary
regulation—
combination,

appears

be taken
in the statutory formula of existing na¬
tional
banking law with regard to in¬
vestment
in banking
premises and real
12 In

Limitation of bond
holdings is achieved under a spe¬
cial
agreement with the banks
that
confines their holdings of
bonds to a percentage of savings
deposits.

employment: niay
jeopardized." 1,*ji-l}-

on

the

If .the

holding.

bank

seriously

Change in London
Stock Exchange Organization

permitted to fluctuate without the
danger
that
these
fluctuations
would cause serious repercussions.

gle-payment

tion.

po¬

The

debt, could be traded freely
active money market ana

vate

in no way
revolutionary or drastic and their
application
need
not , interfere

apply to

should

be

supply, actual and

time, and the strong socialist prin¬
bonds
and marketable ciples that have spread among all
Government obligations. Market¬ segments of the population, the
British Government is still fol¬
able public-debt obligations hela
outside the banks, as well as pri¬ lowing the principle laid down by

These proposals are

bonds, or probably to

supply and use of bank
control, the
national objective,, as declared by
Without such

credit.

savings

all sin¬ with the ability of banks to sup¬
marketable securi¬ ply the credit needs of the econ¬
ties having a final maturity of
omy. They are designed to adjust
more
than one year at time, of
the banks' greatly expanded lend¬
issue, but it might be more limited
ing capacity to those needs. Com¬
in scope.
Bonds within a year binations of the secondary reserve
or
perhaps within five years of and bond limitation plans are, in
maturity might be exempt from
effect, already being applied in
the limitation, but such exemp¬
Canada. Regulation of secondary
tion would cause sudden adjust¬
reserves of banks is accomplished
ments in the market and in the
by distribution among the banks
banking position as large issues on an allotment basis of special
passed from
under the limita¬
short-term issues exclusively for

all

to
control

production and

seriously periurb institutional and
other permanent investors holding

quire.

assets.

*

The money

free them from the
changing
interest
In all likelihood, variations

rates.

tion, with requirements and limi¬
tations being varied as bank cred¬
it
and
developments
monetary
and prospects

effective

izing influence upon the economy.

in market interest rates would not

cost, and supply oi
private purposes.
these
new
plans
could be flexible in their applica¬

would merely extend
the principle, recognized in bank¬
ing law and pursued during the
war, of restricting investment of
demand
deposit funds in long-

the

Congress, of economic stability at
the highest sustainable levels of

of

influence

Alternatively

plan

of

needed

is

the

over

money-

the credit situation in the postwar

would partly

credit for

bank

redundant

more

.

more

or

described

,

availability,

public and private, that any com¬
mercial bank could hold- against
its demand deposits.11
In a sense

limitation

the

restore

it may be said that

a

prospective needs.
resulting

one

war,

that portion corporation of the Exchange by though r recommending} that the?
however (a Stock Exchange be incorporated;
of the public debt held in the ac¬ Act of Parliament,
tive money markqt. These meas¬ recommendation made by a Par¬ it cautioned that "any external
control
which might be intro¬
ures are designed to set off a large liamentary Committee as far back
as
1877), but there are no pro- duced by such a change should
part of the public debt and of
bank investments in a way that oosals as yet to nationalize the be exercised with sparing hand,"

paper.

hills, certificates, or cash/ or en¬
tirely in the form of balances with
the Resreve Banks,

interest

"defrosting", of

ply of bank reserves and in in¬
terest rates on private marketable

requirements, which could
held in part in the form of

reserve

The

y..

from

period Is likely to be an unstabil-

proposed may be necessary before
policies can be adopted which
would
accomplish; an
effective

plans private debt and

various

foreseeable

In view of the situation

supply and the vastly increased
capacity for further expansion,

plai

some

of

because

patterned along the lines of those

public debt im such a way as to
free Government securities from
the effects of changes in the sup¬

They would use the proceeds of
these sales to meet their increased

term

these

of

Any

credit policy. But

eral

THE

OF

PROPOSALS wl.

ings of Treasury bills and certifi¬
cates, unless they had an excess,
fout would have to sell long-term
issues
out
of - their ( portfolios.

this

banking

to

harmful expan¬

measures

In summary,

securities, v In

policy.

..

The

ment

or

sion.

except

general

the yse of the customary
instruments
of
central

dating some- other assets or of
borrowing
from
the .'Reserve
Banks,
They
would, ; however,
not be able to reduce their hold¬

he

..tightening

of

,

in a position of
corresponding power

no

to arrest undue

..

rates,

power

itself today

having

'V'V\ :
<:■
any one of the pro¬
posed measures would not neces¬
sarily mean relative rigidity in
the level and structure of interest
icy.
Adoption of

has

System

finds

market oper¬

open

fact, such
cjredit conditions and consequently rigidity would be inconsistent with
would not provide as much lati¬ a restored use of traditional Fed->
tude as the alternative plans for eral Reserve instruments of gen¬

the

required

reserves

effects

the

from

Bank loan

tion is not well taken.

to

perhaps in certain
market categories of short-term Govern¬

securities

government

objec¬

This

loans.10

expanding

rturn.. The plan
short-term

highest net

would not insulate the

deposits resulting from

increase in

maturity compo¬
investment port-

rates,

adequate

ations, and changes in reserve re¬
quirements—as sensitive, flexible
methods of Federal Reserve pol¬

folios,\and whatever distribution
among various types of bonds and
real estate loans, would yield them

to

ly require the banking system
increase

discount

restricting lending., With
to bank investment, indi¬
banks would be free to

regard

Government se¬
curities to be stabilized, while al¬
rates

terest

Policy

credit demands.

The

13

an.

England and

Belgium

are

examples.

tiple

credit

expansion.

Entrance to London

Bartow Leeds Co.
admission

The

partner

Admits
Feb.

1

Bartow

as

William Street, New
York City; dealers in U. S. Gov¬
serve
System of any one of the ernment and municipal securities,
proposed
powers
could,
and is announced today. Mr. Bartow
should be so regulated as to pro¬
became associated with the combanks with adequate funds
meeting the economically de¬

vide

sirable needs of commerce, indus¬

Leeds Co., 57

panv

ing

(Special to The Financial

LOS

a

Application by the Federal Re¬

for

Johnson With Dean Witter

oi

general
in the firm of Bartow

K.

Philip

on

Stock Exchange in Capel Court

in February, 1946.

Johnson

W.

Witter

try, and agriculture. It is the Sys¬ in the United States Navy in No¬
tem's task
to supply the banks vember,
1945, he rejoined
the
with
enough
reserves
to meet Guaranty Trust Company of New
those needs, while preventing ex¬
York with which he was asso¬
pansion in the available supply of
reserves
beyond the amount es¬ ciated from 1936 to 1941,

is

Co.,

He

with Dean
South Spring
with

now

632

was

formerly

Lynch, Pierce, Fenner &

Beane.

>7

' /'v

With J. Barth & Co.

Follow¬

his release from active duty

&

Street.

Merrill

Chronicle)

ANGELES, CALIF.—Ellis

;

(Special

to The

Financial

Chronicle)

'

CALIF.—
—Henry W. Wagner, Jr., has be¬
come connected with J. Barth &
SAN

Co.,
bers

FRANCISCO,

482 California Street, mem¬
of the New York and San

Francisco Stock Exchanges.'

Volume 167 Number 4670

THE COMMERCIAL

following statistical tabulations

shown in first column

cover

steel operations

Equivalent to—

Week

Kerosine
Gas

oil

(net tons)

Feb.

9

1,694,300

Jan. 24
24

Jan. 24

fuel

oil

output
(bbls.)

I

(bbls.)

Jan. 24

oil

and

Residual

distillate fuel

fuel

oil

1,708,600

CONSTRUCTION PERMIT

5,285,440
5,543,000

—U.

4,671,550

5,344,000

(bbls.)

oil

(bbls.)

Illlllllll'IIIIjJan.'

at

4,760,000

16,236,000

17,013,000

S.

building

2,489,000

2,334,000

7,496,000

7,041,000

9,698,000

98,751,000

91,269,000
16,293,000

non-residential

Additions,

14,528,000

24

42,402,000

44,482,000

50,324,000

51,601,000

51,896,000

V

'

'

•

./•:!

•

Total

U.

S.

' V :

•*!

/•

V-'•*.

CONSTRUCTION,

State

and

260,000, 000

"343, 000,000

150 000,000

41 000,000

153.000 000

"166 000,000

73 000,000

etc.————;—-

64,000 000

87 000,000

40 ,000,000

17,000 000

,000,000

10 ,000,00©

6,000 000

,000,000

9,000 ,000

,000,000

9,000,000

2,000 ,000

,000,000

1,000,000

$20,937,000

$12,574,000

$7,217,000

-—:

.

-—

etc.---—

alterations,

FAILURES—DUN

'

Manufacturing
811,286

599,357

821,928

Wholesale

666,119

690,251

641,578

699,596

Retail

'vjV::0

'

».

771,992

Jan. 24

ENGINEERING

-'"J

BRADSTREET

&

Jan. 29

$99,683,000

Jan. 29

46,614,000

53,069,000

$118,949,000
67,823,000
51,126,000

$54,364,000
26,057,000

—.Jan. 29

1

~~

municipal

29

43,115.000

40,171,000

23,611,000

9,954,000

10,955,000

4,696,000

25,334,000

jan!
1 Jan.

Federal

•.

—

number

service

——

Manufacturing liabilities

18,828,000

29

"

:

——

number

Commercial

.

number—

number

number

Construction

NEWS

construction

construction

263 000,000

non-residential

Jan. 24

Private construction
Public

82 000,000

88, 000,000
"596, 000,000

construction———

residential

Additions,

150 000,000

"168, 000,000

162,000, 000
66,000, 000

INC.—Month of December.

Revenue freight loaded (number of
cars)
Revenue freight rec'd from connections
(nuihber of cars)

ENGINEERING
RECORD:

———

alterations,

building

New

47,805,000

$273, 000,000

$494,000, 000 "$603, 000,000
"347", 000,000
266,000, 000

477,000, 000

——

_——.

New

50,670,000

51,094,000

etc

building construction

residential

New

98,030,000

12,975,000

'

v~

alterations,

Federal—all

11,997,000

of

.

New

8,260,000

100,586,000

Ago

S.

construction

Non-Federal—all

5,414,000

8,880,000

U.

LABOR—Month

OF

residential

Additions,

2,231,000

7,718,000

THE

OF

non-residential

BUSINESS

CIVIL

DEPT.

New

ASSOCIATION OF AMERICAN RAILROADS:

•

AREAS

URBAN

Year

Month

VALUA¬

November:

14,422,000

Jan. 24

at

IN

Previous

Month

1,633,700

9,182,000

fuel oil output
-Jan. 24
refineries, at bulk terminals, in transit and in pipe linesFinished and unfinished gasoline
(bbls.) at
Jan. 24
Kerosine (bbls.) at
;
Jan. 24

of that date):

are as

Latest
BUILDING

New

16,747,000
2,403,000

stocks at

Gas

93.4

94.8

5,326,137

5,446,000

/an

__

Residual

1

41

month available (dates

or

of quotations,

cases

Ago

Ago

1,716,000

5,336,287

Jan. 24

(bbls.)

average

(bbls.)

distillate

(637)

Year

Month

95.2

in

or,

All

(bbls. of 42 gallons each)

average

(bbls.)

output
and

94.0

that date,

TION

stills—daily

output

9

Week

on

INSTITUTE:

Crude oil output—daily
Gasoline

Feb

Previous

•

/

PETROLEUM

to

month ended

or

Latest

'percent of capacity)

Bteel ingots and castings
produced

Crude runs

CHRONICLE

production and other figures for the latest week

either for the week

are

AMERICAN IRON AND STEEL INSTITUTE:

AMERICAN

FINANCIAL

Indications of Current Business Activity

The

Indicated

&

$94,514,000

—

—

!———

317

313

1

967,000

U98.000

7,796,000

'Si'S™
cnl'nnn
505,000

'5JJJ

1,232,000

$25,499,000

$16,345,000

$17,105,000

2,400,952
1,364,919

*

2,447,422
1,406,761
1,095,648
311,113

3,249,950
1,153,040

1,067,970
296,949

—-

43,983

43,017

252,966

268,096

246,48t»

1,215,970

1,231,561

1,497,904

279,182

284,497

262,25»

25,977

number

Total

25,405

18,879

7,334

7,406

7,124

39,763

39,980

22,583

79,345

76,982

72,210

50,352,000

28,307,000

Wholesale liabilities

44,162,000

Retail

liabilities

1,!25'SSS
^5,000

———

liabilities

Construction

Commercial

————

liabilities--—-.-—

service

-

Roi'nno
801,000

COAL OUTPUT (U. S; BUREAU OF
MINES):

Bituminous

coal

and

lignite

(tons)

anthracite

.——Jan. 24

.

12,200,000

13,080,000

8,500,000

1,180,000

1,210.000

746,000

1,198,000

132,200

"140,500

103,500

117,800

(tons)

(tons)

_

*

STORE

SYSTEM—1935-39

:

SALES

INDEX—FEDERAL

OF

RESERVE

AVERAGE—100—

AGRICULTURE

"232

all (bu.)

Wheat, all

220

Winter
All

(bu.)

•

—Jan. 31

—

5,429,202

5,436,430

4,868,011

(COMMERCIAL

STREET,

AND

INDUSTRIAL)—DUN

&

AGE

(bu.)

Finished

PRICES:

Rice

steel

(per lb.)

Jan. 27

3.18925c

3.18925c

2.87255c

$40.17

$40.08

$37.98

S30.15

——.Jan. 27

—...

3.18925c

Jan. 27
...

'

.

;
—

$40.83

$41.33

$40.00

$31.00

(bu.)

(bu.

F.axseed

Pig iron (per gross ton)
Scrap steel (per gross ton)..

.

Rye

—..Jan. 29

COMPOSITE

—

(bu.)

spring

Buckwheat

IRON

—-—

Barley (bu.)
(bu.)

BRAD-

INC

*

(bu.)
(bu.)

Other

4,777,207

Oats,
FAILURES

—————•

(bu.)

spring

Durum

000 kwh.).

of

issue

—

"'

KDISON ELECTRIC INSTITUTE:

£ Electric output (in

U. S. DEPT.

—

Report

—

omitted)—

(000's

17—

Corn,

.——.Jan. 24

S.

CROP PRODUCTION IN U.

Dec.

DEPARTMENT

-

13,200,000

Jan. 24
jhn. 24

Pennsylvania
Beehive

coke

Total liabilities

.

(bu.)

i-—

—

all (ton)
wild (ton)

'

Electrolytic

copper—

.V'*7

Domestic

refinery at
Export relinery at
Straits tin (New York)
Lead (New York) at
'Lead (St. Louis) at_.
Zinc

(East St.

Louis)

Peanuts

.Tan. 28

21.200c

21.200c

21.200c

19.425c

Potatoes

fan. 28

21.500c

21.425c

21.425c

20.100c

94.000c

94.000c

94.000c

70.000c

15.000c

15.Q00C

15.000c

13.000c

Sorgo

Tan. 28

14.800c

14.800c

14.800c

12.800

Tan. 28

.

at

12.000c

10.500c

10,500c

10*500?

'':

•'

PRICES

DAILY

ii-.1/-' J(:4'C-J

Average

—

corporate

—-—1—„

—

.^ph

100.69

3

100.69

100.69

^eb.

A

3

110.70

110.70

3

115.63

115.82

115.24

3

.114127

114.27

113.70

?eb.

Public

Group

Utilities

;

3

109.97

109.97

3

103.64

103.64

117.60

JJ.

103.13

117.40
.

Cherries

110.88

Apricots

Cranberries

3

105.34

105.34

104.48

113.31

reb.

3

112.37

112.56

112.19

118.80

yeb.

3

114.85

114.85

114.46

Aaa

Pecans

OF

:

.

.

MOODY'S

INDEX..

—

3.13

3.16

2.77

2.89

2.56

Durable

2.97

2.63

Non-durable

3

2.87

2.86

3

2.94

2.94

3

3.17

3

V

All

'

3.53

3.17

..

3.20

3.53

'

2.78

3.56

3

3.43

3.43

3.48

3

3.04

3.03

ITY

3.05

•

2.99
2.71

3

2.91

2.91

2.93

2.62

3

•442.2

444.4

450.8

BY

382.5

and

;—;

Livestock
Fuels

1

;

Metals

_

—.

materials
and

Fertilizer

j

All

1

259.1

L

341.9

300.8

316.2

305.3

200.7

269.1

230.4

,

"221.1

215.7

*

Orders received

:

v

181.5

179.9

Non-durable

Production

219.4

220.6

Unfilled

:

(tons)

162.1

,

161.5

January
All

"341.5

298J2

384.5

379.3

331.1

306.1

304.6

266.0

15.861,000

"15,831,000

15,271,000

"7,925.000

7,721,000

7,875,000

"7,906,000

7,550,000

■

—

employees in manufac¬
—

goods

—

FARMERS

BY

S.

—

DEPT.

INDEX

—

AGRICUL¬

OF

1909-July, 1914=100—As of

products

142.3

213.0

Food

156.4

^154.7

Feed

137.7

125.5

141.8

133.6

138.5

142.5

.

,

.

137.2

134.5

134.5

"225.2

225.3

189.4

hay__—————

■

Feed

124.3

224.5

■

—i-

:

and

grain

'

—

WHOLESALE
All

PRICES—U.

S.

DEPT.

188,717

162,359

114,444

155.432

Foods

193,150

126,659

173,720

Textile

and

104

104

71

101

423,160

431,880

406,738

557,140

150.0

150.6

149.4

151.5

crops

and

Metal

eggs

j

,

Building

metal

and

165.5

163.0

140.3

199.2

201.5

197.0

164.2

■

181.2

177.8

155.9

Net

201.4

203.4

170.7

Other

145.7

146.9

135.7

Jan. 24

130.0

153.9

153.2

152.0

Manufactured

|

191.3

191.1

189.1

165.5

139.3

140.8

127.7

98.5

133.Q

137.2

136.9

135.3

122.5

123.6

123.0

121.5

110.0

articles
•

commodities other

than farm




products and foods

.

A

Jan. 24

183.4

157.1

157.4

157.6

155.0

136.0

157.5

155.4

135.1

147.6

147.4

146.0

156.5
*1

.Jan. 24
Jan. 24

186.0

156.7

Jan. 24

;

:

All commodities other than farm products
Ail

292

2C'l

■

210

164

223

232

$76,433,363

$47,968,461

204

271
288

'
,

270

197

Contingent
/'

Net

f

156.5

.

'

152.1
,

.

138.6

charges

; 127.0

—

of

income

&

defense

common

stock

preferred

stock

of

income

"Revised figure.

to

99,459,914

61,717,502

2,906,783

3,510.409

48.903.591

equip.) —
projects——
—

.

20,146,956

58,207,153

•29,341,103

29,486,338

28,423,734

1,355,393

1,336.568

1.083,441

32,706,844

20,381,450

8,232,599

12,551,813

——

9,676,324

3.828.360

7,915,305

1.189.238

6,173,905

2.44

1.64

2.64

.

—

—:

fixed

2,428,437

58,832,859
23,053.739

3.857,363

—

taxes-

On

3,294,298

.

charges——.

structures &

appropriations:

16,633,347
101.888,401

3,997,711

89,345,429

income——-

——i—:
(way

14,158.696
62,127.157

52,760.954

—

from

$85,255,054

16,909,777
93.343,140

—-

charges—__—

On

Ratio

October:

fixed

for

fixed

income

Depreciation

Dividend

of

deductions

after

OF

income-———

L——

Income available

Income

ITEMS

(Interstate Commerce

——-—.—

income

Amortization

184.8

INCOME

RYS.

income

Federal

Jan. 24

I

operating

railway

Miscellaneous

127.4

Jan. 24

Jan. 24

;

products,

•

299

—-

—

SELECTED

CLASS

Total

137.7

.Jan. 24

1 Jan. 24

1

130.4

Jan. 24

commodities

Raw materials
Semi-man'ul'actured

262

147

Commission)—Month

177.4

145.5

Special groups-r...

S.

U.

201.5
'

products

Housefurnishings goods
Miscellaneous

164.4

Jan. 24

products

allied

306

311

•

277

—————

——

Poultry and eggs—

Jan. 24

;

materials

Chemicals

281

352

231

—

crops

Dairy products

Jan. 24

products.,

products
and

320

313

—r.---

—

■

adjusted—

RAILROAD

r; Fuel and lighting materials

!

336

379

products-

and

196
238

367

328

—

products

149

294

377

135

:

—

animals

Poultry

Seasonally

-V

Jan. 24

leather

240

320

————

Dairy

Jan. 24

——

Hides

!

V 275

164

LABOR—1926=100:

products

.

39P

:-vsV

267

crops

Meat

188,022

Truck

commodities

Farm

193

377

377

—

Fruit.

24

-f

223

350

"

.Jan.30

PAINT AND DRUG REPORTER PRICE
INDEX—192G-8G
AVERAGE=100_

256

305

366

Crops

grain
grain

260

281

318

318

Cotton

139.8

.

301

322

307

^

Tobacco

"155.3

"233.3

Fruit

OIL,

344.8

—-—

284

farm

160.8

236.3

155.3

*

Jan. 24

,

132.5

15:

142.5

,

Jan. 24

———

176.7

"138.2

Unadjusted—

..Jan. 24

at

"180.5

———

—

of

RECEIVED

Livestock

activity

orders

152.0

182.1

137.6

goods

NUMBER—U.

213.3

233.6

i... ...... Jan.
....

6;070,009

•?156.8

7,986,000

number

Oil-bearing

(tons)

-6,379,000

—

goods:

TURE August,

ASSOCIATION:

(tons)

Percentage-of

"6,518,000

"6,331,000

6,574,000

——

manufacturing

PRICES

153.6

219.1

—..Jan. 31

'

v.

.6,302,000
157.2

indexes—

Truck

.NATIONAL PAPERBOARD

12,449,000

12.876,000

—-----

—

goods

Non-durable

157.6

181.4
■

Jan. 31

__

combined.

groups

330.2"
261.7

■

220.8

31

Jan. 31

-.

"12,849,000

in

229.4

Jan. 31

materials

machinery

278.6

Jan. 31

.".

Fertilizers
Farm

278.6

Jan. 31

drugs

goods

Durable

211.1

280.0

274.4

310.2

Jan. 31

u_Jan.31

242.1

282.0 '

'

.Jan. 31
;

—l„Jun.

___

239.2
.

331.0

■

Jan. 31

Miscellaneous commodities

Chemicals

271.9

Jan. 31

I

Textiles ;

Building

278.9

—Jan. 31

...a....—

Grains

238.8

..Jan. 31

———————

workers

turing .industries—

Ian. 31

Farm products
Cotton

76,7W.

857

"

All

oils

104,271

.

DEPT.

S.

;——•—

—

COMMOD¬

Jan. 31

Fats

U.

production

All manufacturing
Durable goods

GROUP—1936-39=100:

Foods

of

Employment indexes—
All manufacturing
Durable goods
Non-durable goods

Estimated

FERTILIZER ASSOCIATION—WHOLESALE

INDEX

100,209
—

manufacturing

Payroll

.

3.12

.Feb.

...

756

manufacturing industries—

;

NATIONAL

number

; 3.13

...Feb.

.......

COMMODITY

230

339

196

LABOR—Month of November:

3

Feb.

:...

...

3,120

183

5

.

785

(bbl.)

PAYROLL

AND

2.21

^eb

.

—

86,64*3
34,447

3,029

.

181

(lbs.).-.

States)

(12

2.45

Railroad^Group:—Feb,'
-.

v

83,857
35,350

3,094
199

(ton)

States)

(5

2.45

Feb.

Public Utilities Group
Industrials Group

,

—.

(ton)—*.

States)

2.45

^eb.

u

119,410

35,350

—————.

States)

3

"?eb.

'

—

Baa

112,503

:

Feb.

;

t

10,562

53,171

82,981

(12
(3

Estimated

——

A

12,384
47,244

44

(bu.)

crop

:

Feb.

—

Average corporate
Aa

12,248

120.63

'

Bonds

24,450

50,098
112,503

——*■

(bu.)

(bu.)
Grapes: (toil)*

YIELD DAILY AVERAGES:

BOND

Govt.

S.

;; 5,967

V

•

;

EMPLOYMENT
MOODY'S

11,934

5,459

19,365

——-—

■Pears

120.43

.^eb.

Group

Industrials Group

Peaches

121.88

'is

109.42

^eb.

ii

Railroad

5,353

r
"

(ton)

(ton)
(lb.)
Apples, commercial

104.34

110.15

.^eb.

;

...

a

Aa
Baa

66,424

2,319,409

'20,270

(ton)

(gal.)

.Hops

reb.

Aaa

58,316

*

■>

9,885

1

484,174

379,886

2,190,746
11,423

57,178

(gal.)

beets

Sugar

201,273
2,038,355

Broomcorn

AVERAGES:
"

Vr S. Govt. Bonds—...

177,379

2,125,205

2,167,702

——

—

Sugarcane sirup

6,75©

181,362

(bu.)

Sugarcane for sugar & seed
.

6,542

2,251,640

(bu.)

sirup

11,544
15,859

6,513

384,407

Sweetpotatoes
Tobacco
(lb.)

Tan. 28

.

100,730

16,828

——

——■———

—

Tan. 28

;

at

'

MOODY'S BOND

(lb.)

106,941

13,179

17,164

(100 lb. bag)
field (100 lb. bRg)
Soybeans for beans (bu.)

85,950

101,804

13.306

—

—

dry

Peas,

(E. A M. J. QUOTATIONS):

35,830

95,609

—

Beans, dry edible

METAL PRICES

282,321

102,500

(bu.)

grain

Sorghums for

Hay,
Hay,

———-

—————

)

870,72b

—

charges—--———

;.v":

.

42

THE COMMERCIAL

(638)

FINANCIAL

&

CHRONICLE
this

whether

Current Business Situation
striking demonstration of the tre¬

(Continued from page 3)

It.

is

note that
petroleum re¬

interesting

both in the

to

of

case

of elec¬

case,

fining and electric power output,
capacity has quadrupled in the
last 30 years, but
been multiplied

consumption has
about seven or

Another

item

side

the

on

of

supply is the freight car shortage.
Freight car loadings last fall ex¬
even
the
wartime
ceeded
peak,
yet the shortage of freight cars
to

acting

serious bottleneck
situation has

as a

production.

The

improved lately mostly because of
the
seasonal downturn in
agri¬
cultural shipments. There l^s also
been an improvement in the pro¬
duction of

cars, with
running al
most 10,000 cars. It seems pretty
clear, however, that the shortage
of freight cars will be a recurring
now

are

examples

of

the

on

industrial

side.

same

kind

food.

Farm

of

short¬
The

thing is true about
capacity

output is at

and it is hard to increase the sup¬

ply

of

meat, grains, and other
products
beyond
present

farm

time.

ent

that

we

ther

levels. Today's supply is substan¬

tially above prewar experience.
The shortages exist only relative
to a vastly expanded demand both
at home and for

export.
Habits

Food

is,
in

pres¬

however,
practically
to

resources

fur¬

output. Hence,
gains in output will have to" come
either

from
or

our

improved
longer

a

The

extension

has

been

William

of

Federation

of

week

by business
also by Mr.
American

the

Labor.

of

week.

work

recently

Green

effi¬

labor

work

the

proposed

leaders- and

Mr.

Green's

proposal was subject to certain
important qualifications, but it is
interesting that he mentions
longer week as a possibility.

a

let

Now

to

turn

us

demand. I shall review

in

developments
mand

side

of

briefly the
de¬

the

major

categories.

First of

all, let

The

from

con¬

is very closely tied to

sumers

of income

flow

look at con¬

us

demand

the
I suggested in

as

agricultural
supply.
Total personal income continued
vO expand to the end of 1947 to
set new peaks. The latest figure
we
have is for November, when
discussing

of $205 billion. This was a
high except for an abnormal
figure in September when the

rate

new

of
armed forces
leave
provided a non-recurring

been

of income.
The continued growth of-income
has
made
it
possible for con¬

was

consumed

Consumption expenditures reached
a new high of $172 billion annual
rate in the fourth quarter of 1947:

year

„

by civilians at the rate of 156

prosperity has
changing our food, .habits.
Millions of people have shifted
from cheaper foods to more ex¬
pensive foods. Meat, for example,

pounds

capita
and
•

capita,

per

than

mote

here

at home

1935-39

.turkeys

about
7
prewar level.
each one of us
up

more

year than before the

against

demand for

more

there have been
such

been

in

expensive foods,
decreases

in

the

of

products,

etc. The

corn,

decreases, however, have
than the increases,

that

in

the

have

we

total

also

physical

had

rise

a

volume

of

food consumed per capita.
This year's overall supply

of

agricultural products is not likely
be any higher than last year's.

to

In the

that
-i»i

of

case

the

meat, it is estimated

supply will be down to

146. pounds per capita from last
year's 156 pounds. The height of
the shortage will come this spring
; when the supply of meat will be
down
sharply from last year's
figure. The talk about meat ra¬

tioning is going to grow consider¬
ably in the next few weeks.

Fortunately, there has been con¬
siderable improvement in the out¬
look

for

the

Planting
slow

an

crop.

fall got off to a
largely because of in¬

moisture.

important

wheat

wheat

last

start

sufficient
the

winter

area

extent

Conditions

south-west

in

winter

have improved to such
that a heavy yield of

winter wheat is

foreseen.

now

This

followed

the

last

item

for

on

agriculture; The
the side of supply

I wish to mention is that

practically
in

labor

our

we

have

unemployed people
force.

In

the

last

key question here is what
will happen to the ratio of spendings to consumers income after
about

saved.
been

is about

as

employment
the

fact

can go,
that there

people

some

in

the

low

as

un¬

considering
are

always

process

of

changing jobs.
to

employment con¬
increase
during
1947

and reached

a

new

high of 51 mil-

lion persons in December. This
was

yejar

about

low of

of the
being

was

ratio
steadily

has

spendings

increasing

since and is
Some

a

height
25%

means

ever

about 94%.

now

feel

people

will

and

soon

They

decrease.

that consumer spending has
been temporarily enlarged by the
use
of accumulated liquid assets

argue

and

big increase in

by the

con¬

2 million

more

than

a

earlier, and about 5 million

above the wartime

peak. This is




a

1920 to

beat

to

order

I

high cost of clothes. This type

thing could happen again, but
do not expect it to be an imT

portant factor in the broad eco¬
nomic picture this year. It is more
as demand for high
products falls off-, .it will
lower priced goods and
manufacturers will change their

likely

that

priced
shift

to

demand

in

suits

leads

mand

for

it in

to

for

Thus, a de¬
high priced

increase

.an

inexpensive

in

de¬

suits.

We

big growth in bpsement
store sales of men's clothing,. In
the first 11 months of 1947, sqles of
men's and boys' wear in basement
see

a

the

in

stores

District

Reserve

sales

while

increased

main

in

Federal

York

New

45%,
went

stores

only 7%, which was probably
enough to maintain physical
sales
volume,
considering
the
higher prices;,
up

not

It

to

seems

kind

this

they

that

me

are

very

shifts

of

healthy since

in the direction of keep¬

are

high unit volume. They
provide an example of the con¬
stant readjustments which repre¬
sent such a healthy aspect of our
ing

up

free

The Gross National Product;,,!;
"

So much for demand froni cJCttir

Next,
briefly

I

sumers.

touch

ments of

should
the other! Seg¬

on

this

for

been

On

is

belief

has

that- there

revolutionary

almost

an

other hand,

the

change in the distribution of in¬
come in recent years.
Before the

it

war,
more

was

for

%

or

of American families to have

incomes

V3

typical

$2,000

with

more

than

less

less

or

than

receiving

of

$2,000. Today, those figures have
been reversed. Less than V3 of our
families

receive

$2,000 and

more

below

incomes

than %

are

get¬

ting above $2,000.

has

huge' increase

the

occurred

income

groups receiving
$2,000 and $5,000. The
proportion of families receiving
between

incomes

such

j/4 in 1929 to

has

present time.

7%

increase

has

of

group

15%
which

also

in

'.
in

incomes

been

1929, 4%
the latest

was

from

than lk at the

families

our

in

increased

more

above

substantial.

were

in

this

in 1941, and
study made,

for 1946.

come,

plus

the

impact

of

high

Federal income taxes in the upper
groups,
has
been
to
push
up
spendings and-retard savings. Ac¬

cordingly, it

seems

to

me

that the

spendings ratio will remain-high
until there are structural changes

ca¬

pacity and replace equipment with
and

timistic

better models.

I

am

op¬

this for 1948. I believe

on

that equipment purchases will

b*.

gross

Gross National Product

—

reached

high at art annual rate of
$242" billion in The fourth quarter
new

of

Consumers

1947.

absorbed about 70%

The

expenditures
of this total.

30% covered all
services purchased by
governmental agencies and the
broad group of private expendi¬
remaining

goods and

tures

for

what

The figure

customarily

are

goods.

for government

pur¬

chases of

goods and services was
billion annual rate in the
fourth quarter. Contrary to popu¬
lar impression, this is an area of
demand which I expect to see in¬
$29

this

crease

year.

actual

appropriations. But I ex¬
pect to see Federal outlays remain
high so long as the world situation

about

government

the

cutting

sharply.* We are all in
favor of economy in government.
But in the interest of realism, we
.

remember

should
tions

of

that the

government

func¬

have

ex¬

panded
considerably
over
the
years. If we want to see govern¬
ment
expenditures
reduced we

large increase in marriages com¬

a

ing after

period when housing

a

construction

we

want

them

to

cut.

Meanwhile, I think the total pur¬
chases of goods and services by

There

low.

was

-

are

several million more families to*

day than in 1940. High prices ate

of

resisted,

Lie un¬
prosperity >'

but

course,

of

level

precedented

has increased the

ability to afford

and

more

houses. It seems

obvious that the

relative demand

better

for houses is still very

We have

,

dence
from

by

somp interesting evi¬
the early part of 1948
new
formula developed

for

high. Here

a

mathematical

a

lhe

formula

economist.1

of machincry and
equipment six months ahead. It is
not necessary to

plicated

explain its com-

makeup,

that it" is based

except

to

say

the size of

on

cor¬

porate profits and the level of in¬
terest rates

well

as

the relation¬

as

Inventories

hh

-

The next item of demand is in¬

growth was in the fourth quarter5 >•
oi 1946, when d-e physical volume
of inventories increased at an an¬

nual rate of $5^-

first-half

the

in

very closely to actual figures for
all years since World War I ex¬

leveled

of

the

course,

in

period

Suggests that equipment expendi¬
tures

will

about

run

the first-half of 1948

high

as

in

they were

as

running in 1947.
Of.

may be some
equipment pur¬
in 1948. Many

there

course,

tapering

in

off

later

on

people are ...becoming .concerned
thatdcorporations are running into
a
shortage of capital. According
to Secretary Harriman, corpora¬
tions ?-invested
$26V2
billion
in
capital goods last year. About $15

The- bulk

allowances.

mainder-came

the

of

from

re¬

borrowings

partly
by
private,
placement
through insurance companies, etc.,
partly <. by r public
flotations
of

bonds,

•

and

sizeable v sum,

a

from bank

course,

Of

leans.v.frrtiyk

a

small amount came: from stock is-,
■sues;

-.V

of-1947

the

as

important.-

became

inventory growth has
at
annual rate of

out

about $2% billion.
It would

reasonable to ex-,

seem

pect this rate of inventory growth"
continue

for

some

Inventories

arc

still

to

in

and

sales

to

time ahead.
relative;

low

lines

some

are

critically tight. This is particularly
true in the case of steel products,:
and

Of

;

building materials.

some

could» '

inventories

course,

easily become excessive if a busi¬
ness
recession were to develop.

;

However, the fear of excessive in-'
ventories has
acted
as
a
very

restraint
speculation so far.
healthy

:

inventory:

.

like

v

"

■

should

I

Finally,

to

',

,

refer

to

briefly to the export situation. As
know, we have been selling
more : abroad
than

;

hpve been buying. This repre-

•,

you

,

considerably
we

a net foreign demand on OUrA,.
productive;/ capacity,and
is ; >a
strong inflationary factor, which

sents

,,

Jast year hit a peak annual* rate
biilion in the second

^-artnuaj rate of $81^ billion of;
net }ioxeign- -p«rchases in the last
may be
cut down^m5;l948;.^™?f
quarter;;J am referring to the net
government
;beeril:
was: financed-Trum*
up bank reserves in its campaign amoupt
Some of these

control

to

sources

of .fittids

inflationa^'TpressurrtsW

It has been

increasing short-terni

interest rates and the Federal Re¬

prices

support

serve

have

bonds

term

for •longreduced

been

sharply. All of these actions have
objective of reducing the sup¬
ply of available capital and mak¬
ing it more expensive to use it.
It seems likely that corporations
the

will find it

more,

funds

from

difficult to raise
loans

and

from sales of securities. Also,

this

both

is likely
vate
for

bank

to be true both for pri¬

placements of securities and

public flotations of securities
is

be

to

will

balance

hoped
be

that

struck

a

here

nice
be¬

legitimate productive de¬
new capital and the re-r

tween

mands for

duction "of

serious
battle

and
of

it

the

may

recession

will

ulti¬

on-fiqal decisions
in this area by government

mately
made

uses
of
is extremely
well be that

inflationary

This problem

funds.

turn

routes other than the U. S.

this
in

rate

private construction of all kinds
was running at an annual rate of

Treas-

will not

be

maintained

The

1948.

European recovery
program will shift some of these

about

$11V2 billion in the fourth
quarter. Residential construction

at

machinery and equip¬
an

billion. This
times1

widely

the

annual

rate

was more

1929

rate.

divergent

of

lhan three

There

views

months has been very close to the

shortage of available funds. There
may
also^ be some .• increase in*
American imports as a source of
funds

are

on

».

1 See

American
nometric

of
before

paper

29,' 1947,^

Charles F. Roos, Dec.
joint meeting of "the

Economic

Association

Society, Chicago, 111.

and

Eco¬

1
:

'

to

foreigners for making
purchases here, however.

*

If the amount of the net foreign
demand declines further in line
with

expectations,; there

will be
easing of inflationary pres¬

some

This

sures.

could

bearish factor
siori.

be

cited

leading to

However,

I

a

do not

as

a

reces-

believe

the decline will be drastic enough. *
to cause a downturn in business,
since

I

believe

domestic

demand

is sufficient to absorb the bulk of ;
the probable decline in net for**;;"
;i i

^v.

Conclusion;-

.

••

•

■

.•

'

In. conclusion; it seems to me ~ ;
that ^demand v continues
to 6ut'-*.>
weigh probable supply in the eco-1 '
.

nomic

is

outlook.

If

my

reasoning

the

correct,

Automobile
for

$19

*

-

exports to Treasury accounts,-p'
but some of them will probably
drop
out
altogether under
the:

.

ment

'

net

".LL.'//• ■/V eign purchases.

officials.

.

uryv-The increasing dollar short¬
age abroad, makes it obvious that; ~

inflationary eie-'
ments in
the business situation;
all levels of government Will in¬
accordingly will continue to out*
crease
above the $29 billion an¬
especially has been very ,strong
nual rate in the fourth quarter.:,
notwithstanding the price prob¬ weigh possible downward pres- •
sures
for some time.;:, Also, in¬
lem. There were 82,000 dwelling
Capital Goods Demand
flationary
pressures
will
be
units
started
in
November
or
increased by the third round of
Now let us turn to the demand about the'-same as,in
August; alT
for capital goods, beginning with
wage increases which is already
thougpA|pereT.i^; usually a, sharp
machinery and equipment. In the seasonal decline in the fall. The under wa.y. As an illustration, I
fourth quarter of 1947," business numbei4 of units started in recent might mention that the
United
purchased

1

.

^fv.llQ^

quarter, The.figure tapered off to

v....

;•

fear

Recently,

con*

trols were in effect. The formula

billion. The rate

of increase was cut down sharply

recession

World War II when Federal

inventory

The peak In

ventories.

ship of equipment prices to prices
generally. The formula works out

cept,

.

tightened up too much.

forecastsr business

purchases

>

choked off if availab.o credit were

start

functions

,'
v

is enormous. We have had

course,

inefficiency.

by looking squarely A ■;••■;.Construction
at the respective functions and 1: Now let us turn to construction
then we should tell
'our repre¬
which has
been- an element
of
sentatives in Washington which considerable strength lately! Total
should

of

houses,

new

taining adequate capital funds.
The
housing
boo
could
be

It

budget

for

need

The

again, however, it is necessary to
point out the problem of main-

by the desire to fight
against high labor costs and lab-"-'

is unsettled.
There will be considerable talk

of the middle
'■

all-time high level

twenties.

stimulated

national prod¬
uct. The total output of goods and billion of this came from retained
services — technically known as earnings and current depreciation
our

State and local
governments afe enlarging their
I expect to see further increases
.expenditures
for
highways,
in consumer credit this year and
we
still have a large amount of schools, etc. And the Federal gov¬
ernment budget for the fiscal year
liquid assets spread among all in¬
beginning next July 1 is obout $2
come groups.
billion higher than in the present
1 do not believe that the spend¬
fiscal year. This may be reduced
ing ratio will decline much if any
somewhat as Congress makes the
in 1948. One of the main reasons
credit.

sumer

to increase

endeavor

chases

enterprise system.

called capital

this

that

spendings ratio is abnormally high

The effect of these shifts in in¬

Non-farm

tinued

the

at

The

$5,000

This

sons.

^-*4

75%

war—which

dropped to about 1.6 million per¬

1947,

the

of

a

The

The

of

new sav¬

ings made since the war period.

unemployment

part
•

no

and

continue

year.

new

more.

consistent

a

sharp reduction in

was a

in

Employment
much

and

more

increase since the end of
war.
Correspondingly, there

A

So

spend

sharp

dry beans,

smaller

so

to

taxes? This ratio reached

increases

cheaper
foods,
potatoes, sweet potatoes,

as

wheat

eggs last

war.

these

consumption

;

the

On the average,
ate almost 7 dozen

As

chickens

of

was

above

Per

average*

consumption

pounds

pounds

30

or

last

source

sumers

in

overalls

wear

personal income was at an annual

large

The high level of

member the movement in

cline

the

will

rate

Some people consider
the present level highly temporary
and expect a decline.
Others ar¬
in the income flow or tax burden
gue
that business neeas VaStiy
in the opposite direction.
more capital equipment.
.: ;
There is no doubt that present
What About Buyer's Strike?
capacity is not adequate in a great
p This leads me to another ques¬ many industries—as I noted in
tion
about
consumer
spendings,
discussing the Supply situation.
however. What are
the chances
The question is how much will
of a buyer's strike? You may re¬
business

emphasis accordingly.

The Demand Side

bonds

Changing

fact

throw

increase

cashing

s-

The

human

more

no

workers at the

can

sumers.

problem in 1948.
ages

use

freight

new

monthly output

These

ability of the economic

ciency

eight times.

was

mendous

system to

thing is true in the
tricity.

this

Thursday, February 5,

25c,

30c

a

an

would

would

Workers

are

calling

hour raise, of which

be basic

represent

other allowances.

pay

and 5c
and

medical

Also, it is likely

\

Volume 467. Number 4670
that

*

consumer

incomes will be entor additional
spending by

form

some

of

year.

Of
,

an

,«

be

tax

■.

t

-

.

no

unavoidably following

danger of

that there is

recession

a

CHRONICLE

or

longer

that

be

creased

absorbed

subsidies.

temporary interruptions

in

•

which they should have
been

no

points

■

.

.

,

.

.

of

wave

the government
surplus for the fiscal year will be

.

realized

#

.

iii

these

This will be

a

three

very

The

major difficulties for

would

months.

strong defla-

backfire

a

inflation
and

suit

in

Nevertheless,

;

ment

amount

.

it

should

be

re-

; membered. that this
be of a

tightness will
seasonal, temporary char-

.

acter.

Leaving ! aside

porary

interruptions, it

that the

me

nomic

main

events

such

will

be

particularly if they reputting
an
excessive

of

pressure

blunt.

quickly substituted

un^ed

of

hitting

fully will
things.

situation.

present

and

The Franc Crisis and International

i was

5

:

peace

post-war

adjustment

the

"advocates

of

planners
stricter

ever

in discrimination of the trade
of other members and set a
dam

Government-reacted

probably

that

was

basic

ful

feeling

.

methods

*

that led them to believe that the1

are

principle

>

aims

present

not

was

realistic

under

of

available

trade

to

those

as

'

achieve

goods

.

which

.

(2) Avoid
of

the

lack

of

refused

wage

to

?

appropriate

determining
new

frpp
tree

to such

the

that

a

They

free market would have been too
thin and not

truly representative
real forces of supply mid
-demand.
This may not have suf-

.

>V-

fieiently

assured

•

French

jority

of

gold
and
foreign exchange
to let
that they actually receive a fair
price level, valued forf the foreign
"on a free market
but, at the same
they may be willing to sell. It is
time, - have ^exporters surrender well
the franc find its

once

p

,50%

of

their

foreign

'

receipts at the
of 214

*

*

francs

new

to

known that the French

exchange

official

the. dollar.

rate

sider

a

strong: inducement for
repatriation as the very

franc

That

of

core

foreign exchange would be available for the purchase of essential

famports.

francs., to the dollar imports

.

chased
;

der

with

again

is easier to

of

the

the; ~ U.

.agreement,

S.

,

v

All

un-

Winston

months and

thus to assist in

bilizing the French economy
level. '

new

The

-bering,

were accused

of having deliberately sta^bilized the franc at a low level
with a resulting drain of gold into
France at

Now

the expense of Britain.

they tried to avoid that "mis¬
by letting the franc find

take"

'its

own

again

level

and

arousing

yet
British

ure!;,'.
As

-'
a

they "are
displeas¬

■

"

•'

■'?

June,

but

dramatic

during
1940.

the

It

•

is

war

true

to

the

whole

European Re¬
covery Plan.
Why should it harm
British foreign trade so
greatly in

years

ago

France

of

that the French plan
represents a
real threat not
only;, to Britain

sta¬
on a

remem-

twenty

to

crisis

■

French, it is worth

Churchill's

flight

designed to help avoid large
price increases for essential im¬
ported goods during the next few

•were

=

view of the fact that
export prod¬
ucts
of the
two
countries
are

hardly competitive.
Britain's

anxieties

-

be

can

rectly appraised only with

a

cor¬

view

to

the basic economic
philosophy
of the Labor Government.
British
socialist planners feel that

price

stability
economic

matter of

is

paramount

for

and

political
willing to go

both

reasons,

fact, there is no They are
to any
of determining the true value4
length to preserve it and they are
of a currency under conditions of
spending several hundred million
artificially set prices and wages oounds a
way

fight for those aims.

even

more

%rlSiS. sl^e

direii-

its first

was

started operations.

Surely, it won't-be the. last

one.

This

crisis has all the attributes
of growing pains. It
may be
a
good thing after all, if the man¬
agement uses the
opportunity for
a
thorough stock-taking, a full
investigation of deficiencies in
,

methods, procedures

and

human

performances and a vigorous de¬
termination
to
make
a
better

showing in the future.
-

Therefore,

-

an

analysis of some
of the
principal mistakes that re¬
quire .improvement seems
morp
important than extensive argu¬
ments
rors.

for

recently

been

adopted
"reluctant"
blessings of the .Fund. (The Ital-

by. Italy: and. given

Par value had been established for

ready when needed
improvise them in

over

past policies

of

avail

no

and efforts

hurry

a

could

as

cast

his

that

the

director

vote

of

with

the

majority against the French

pro¬

posals while the State Department
and

the

Treasury issued state¬
ments expressing satisfaction with
the French plans.
Indeed, such
an attitude would have been
fully
consistent

with

American

the

policy

of

accepted

favoring

all

steps toward
kets

free exchange mar¬
abolishment of restric¬

and

tive trade
The

measures.

French

were

by

means

no

the

only ones who were shocked
by these apparent inconsistencies
of
American policy.
There are
indications that they were led to
believe
that
the
United
States

would support their plans for free

exchange

markets

expectation

that

and

was

this

contributing

a

factor in their strong
those plans.
No

defense of

Cause

for

Defeatism

Fund

the

launched,

was

the experts had no doubt that this

difficult

ments

into uncharted

fields.

as

Fund

over

to

were

natural

a

Therefore, there is
pessimism

Disappoint¬

failures

and

expected

no

be

result.

for

reason

the failure of the

machinery to give

perfect
performance when facing its first
emergency.
Much time will be
required to gain the necessary ex¬
perience and achieve the appro¬
priate improvements of the or¬

to

were

readily

be

a

Lack

and

;

er-

\

First, the old rule needs

1

A

the

this

of

difficulties

the

has

recog-

nitioh and re-affirmation that the
easy way out in the short run is

hot always the best one from a
longer range viewpoint. The Fund
anxious to avoid trouble
accepted
the unrealistic franc ;
par
value,

to

American

principal

upon

Certain
foreign
reportsex¬
pressed the opinion that the Fund
had suffered

fatal

Leadership

responsibility
the

of

United

Fund

States

loss

heavy and perhaps
prestige. It is hard

a

of

believe

that

familiar

anyone

with the intricacies of the subject
would agree with such statements.
This is a field where perfection
is feasible only in theory but not

for
falls

although

been

not

emphasized by in practical application which can
the polite and well-educated for¬
always lead only to compromises
eign representatives who
which will give complete satisfac¬
were
protagonists of the recent struggle. tion to nobody.
Under present world
the strength and

natural in view

fact that this

that Sir Stafford

Cripps, Britain's
economic czar, decided to drama¬
> aid;
tize the struggle and to re-enact
these- measures

provided
transitional

had

ones

the age-

proves

The attitude of the Fund^^
tors is

persistent

are

Washington

Fund

When

ma¬

in favor of
hold • experiment. Though
may. he. general agreement
on broad principles, there are al-Ways, those. wb° are afraid to go

Objections

the

Which

even

expected.

maintenance

out and

plans

v<5v,r

^bere

Why was the French plan so
strongly attacked by the British

pur¬

funds

j

their plan.

Britain's

Moreover, it was de¬
cided to sell at the old rate of 119

con-

to

provided

as

executive

and

are

holdings;Vstatus^ ***** than

^

there

in

American

was a new venture

,,

suPP°^t for. J more passive

d^pbey

own

detailed

nart

experienoe that it

Therefore, they decided

;

^ tde

ever iead 10 suc~

reluctantly) 'case was

The decisions of the Fund

owners

appro¬

no~ propose any new methods or
solutions
Indeed, very similar

Gov-

Its Organization

,

monetary

be the

whenever an emergency
After all, the French did

anses.

in

who

Fund

ready

Growing Pains of the Fund a Pre¬
liminary fer Improvement of

restricted

a

Labor

will

oper¬

way

no

of
the the lira but, the, technique
was
J31
n
dmiiar v.
Force" ..Govenr- i.wry »milar* But apparently no
well-thought-out
plans
were
ganization.

+

been

Fund.

the

indispensable

1

com,

have

would

But

by the French Socialists

marmar-

pf the

cor-

rate of

-

to

felt

Ihp
the

,.

the

remote contingencies to have them

from

unworkable

be supported (though

transactions but.

agree

which

acceptable

arbitrary:

rpstrirt
restrict

non-trade

probably

; rectly in advance the
the franc.

of

an

any

for:

ket to

unavoidably1 promise

franc in the face

new

*

^ yardstick

large*

essential

round

fixing

rate for the

,

of

would

lead to another
increases.'•

,

tn
to

nvp^qiirp
piessure

sudden

any

price increase

as

planning

This

Prepare

that those "liberal" policies would

,

.

(1) Avoid

and more
away

member

tice of the .military staffs

ernment probably did not expect

-

scale

more

peacetime.

They thought ■ French Government.
;•<
'
i
*they had to do two things at the
The French were under
strong
same time:
• •'

,

lPPr

anri

.

so

similar

,

™ f™"',

.Second, the rund experts should
learn from the long-standing prac-

in

by; the

intended

»•

^

turned

"dirigisme"

regulations

conditions.

govern

Advisory

Council

•

.

less harm-

and

^

hparimnHm

case Wlli

vigorously
The French have a
long-stand-,
to the
French
proposals.
The
ing reputation for being the mostgerous precedent. Moreover, they: French during recent months
had
; realistic
of,,-all nations and > it believe that other

*

those

to Tor} out compromise proposals
I advance theirown ideas for
dealing with conflicting interests.
PaiTS have .been

,

.Realistic-suit;

j

to

priate stage for the Fund experts

con-

with

rumors

analyze those reports anc
findings to other in¬

reforms.

and

-4:**
the free market.
They feel strong-.* "capitalistic" America. ','•Here is
:ly that to permit this would re- the true reason why the British
Proposals Were.

French

.

the. British

turmoil

prosperity. -I • ;..,J

;

ii

member.1

terested members who should ther
have a chance to
present theii
own reactions to
the Fund and tr

reluctantly the

practical one under condir
tions not foreseen
by the framers
©f Bretton Woods Who
dreamed of
m "one world"
economy of*

keep

the

for by statute.

However,
to

those

transmit its

*
(of
course
in
camera
only)
two principles of .whether they have not followed
multiple currencies and a free an illusion by putting all their
franc
market - on- a ' temporary chips in the fold of
"socialistic
basis as long as trade transactions
stability" which was so effective- !
would have been excluded from Ay compared with the

only whether it

tn

should

trols whose leader is Sir Stafford
Cripps to reconsider their posiWon and to
weigh the question

(Continued from page 4)
was

a

and

t

forced

Monetary Fund
■"

;

..

the question

;

TJ ^
whQ

The French devaluation
has now

Since

itself.

supposedly as¬

National

secretly, there is

tives

mail

5thf with men
distant

i

irpnnrt<,

fluctua¬

the

determine whether he discussed
the matter and issued any instruc¬
tions to the American representa¬

success¬

two

Administration

„r:+u

f.SjL

contr^u-

unavoidable

tions of the

.

do

have

with

representatives

period.

.,

to

regulationsolan^
pr0^ai4dOns The Funr
questionable
preparations.
Ihe Func

storms

our

will

it

touch

ates

to meet fu¬

more

by

Council.

is

was irresistible to the Labor party

ments

sured

■

Pinners. > et is was
from the outset whether stability
could be maintained during the

in

have

jLIJ*

It was |

broader than expected.
It is to
be hoped that the authorities will
take care in using these instru-

in-

emergencies

breakdown of liaison

or

the

Such cooperation is

for reason.

The-Fund, in order
ture

First,

to continue war-time

They have a
harder": and

plete lack

by

emotion

Fund.

within

Once

approved

and

...

ty
lend-ieai*
pons from Ameuca.
lemptation

The instruments of credit

formally

paramount

close

to maintain stability during
closed war economy bolstered

plan.

a

government, considerations ol
prestige and personal pride be¬
come

No country in the world is more
dependent on international exchange and sensitive to fluctua-

a

of

a

easy

corporate

on

i

tions abroad than Britain.

govern-

are

habit

eco¬

the

on

the

of

anti-

control

to

seems

the

capital.

tem-

stream' of

the possibil-

from

efforts

tionary factor which will reduce
bank
deposits
substantially.

r

to lie in

seem

ity of

1948

43

But this is not the whole story.
There seems to have been a com¬

during the preliminary
stages

it has been

transactions.

Practically all of

is

drafting

the

of

pecting long before.
Obviously, the time for recon¬
of ciling different positions and
view¬

Vhowever,
that inflationary economic consequences,
for^s^are more Tikelyio
l
French have promised

see

ex¬

through inThey
would

ion-

a

(639)

prised* when opposition
developed decisive importance for the future

adjust-

an

ment of the
pound value could

;

This is not to. say

:

FINANCIAL

to
doubt' and -hes^ .^predominate-.this .yearfvthan.. to.<Cacahsde the
pound from their new
itation-somewhat similar to;< the be overwhelmed by deflationary
iree,i<exchange market. But Paris
one
which occurred last
year in forces. I want to remind you.
jthat (is the leading exchange market
industrial production. This
might tnis postwar period is" different on the Continent and quotations
occur
as
an
outgrowth of the from our usual experience in that there <even if
unofficial) could no
heavy concentration of tax col- it is the first time we have gone
longer be dismissed as unreprelections by the government
in the from a fighting war into a cold sentative and
reflecting only infirst quarter of the
calendar year. war.
I significant

.

-

•JorVsome^.ljpqe-

&

things seldom -"go oh' the recession has"' been indefin-! mean the end of the
program
-straight tine.' There may; ,#eiy postponed.^ ara of the opin-!
stability with all its political and

another

\

side

course,

even

main trend.!. This- year
'ihay

;

j-iationary
ahead.k^

reductiorf this

,v

THE COMMERCIAL

>

The

conditions,

influence of the

determined by the
vigor and enlightened attitude cf
American

leadership.

This

valuation may

a

year

purpose as
concerned that

were

appropriate

reached

and

reorganization

heavy burden

a

worked
are

American

struggling

with

the

site

by

anyone

policy
the

-

at

for

(Special

SAN

making

of

international

repre¬

organizations

The

Weiner

Street.

and

to

Financial

Chronicle)

FRANCISCO,

CALIF.—

Maynard C. Froemke is

throughout

Fund

future

Joins Ted Weiner Staff

Ted

the

policy-making set¬
indispensable prerequi¬
a
more
satisfactory and

who

familiar with

Therefore, the American

the

monetary relations and policies.

upon over¬

the worlds

sentatives

an

effective

innumerable

actual, conditions

of

an

American
as

up

hardly

the

use¬

a

urgent
improve the
organization of both the Fund and

dificult problems at the same time
but the fact as such will
be denied

future

need to overhaul and

an

was

officials

the

Fund will be beset with troubles.

carried out. The situation at the
Fund is not identical
by any means
but
similar in many ways. It may
throw

was

reminder to all

a

However, there will be

There the necessary

ago.

which

have served

ful

obvi¬

ous
fact was
recognized in the
instance of the International Bank

conclusions

showdown

brought about by the franc de¬

Fund will. be

C.

the

L.

He

was

Vertin

Brothers.

of

&

now

with

Co., 41
Sutter
previously with

Co.

and

Buckley

"

.

.

Administration

will have to
realize that theirs is the outstand-

Carl H. Freeman Is Now

ing responsibility for the func¬
tioning of the Fund regardless of

With Central Republic

the-nationality -of the leading of¬
ficers of

that

institution.

(Special

to

The

DENVER,

Financial

COLO.

Chronicle)

Carl H.
rThey hoped to get around a minor •> In the
scarcities of essential
Freeman has become associated
goods
circumstances, it was dis¬
internal-price level (at least for showdown- and they got a
major
with Central Republic Co., U. S.
services, as are now prevail¬ goods
couraging to see that the Ameri¬
included in the cost-of-liv¬ one in return.
ing in Europe.
The "purchasingcan
representatives at the Fund National Bank Building. He was
ing index). This very
stability
Second, recent events showed instead of
power theory" which in spite of„
taking a lead in work¬ an officer of Geo. W. Vallery &
would be threatened
by an adjust? the urgency for
its numerous deficiencies
strengthening li- ing for a solution of the crisis Co.t Inc., in the past.
provides men,t of the external
value of aison between
the Fund and its tended
some sort of crude
yardstick and, sterling. The British
originally toward a posi¬
banked upon
principal members.
The
Fund tion of
fwas widely used after the First a price decline within
"neutrality" and probably
two years
R. L. Hughes Opens
management did not
World War is virtually useless of imported materials
deny that considered
the
whole
matter
(such as they w^re
(Special to The Financial Chronicle)
"under conditions as now exist in
surprised with a final something of a family
; happened
quarrel
after the First
WorldFrench plan submitted for conFrance and elsewhere.
1
DENVER, COLO.—R. L. Hughes
among the members from Western
; C'
War) and were disappointed inJ
"•
siderat'on and approval on a takeis engaging in a securities busi¬
Officials of the Fund point out
Europe. Only gradually they ap¬
expectations. Further steep at-or-leave-.it
that they
basis. The French, pear to have realized that here ness from offices at 509 Seven¬
would have accepted price
increases of imported goods,
in
turn, appeared greatly sur- was a question of
great and even teenth Street.,
year

and

to, maintain

a

stable

,

-

and

,

,

^

-

•

,v

,

,




,

—

44

THE COMMERCIAL

(640)

their

and Distribution Trends

Business Prospects
(Continued from page 2)

keep

price inflation to
spiraling.

although many of the
products are still in short supply.
If this trade opinion is correct

petitors

■

right on

last-minute reprieve; So
perhaps it would be useful to sum¬
marize
the
developments then.
out

any

Industrial

for

manufacturer

It declined

sale

commodity

three months.

July

saw

Back of these

figures

little anxiety

a

the

ufacturers

was more

among

man¬

Hhe rapid accumu¬

over

lation of inventories and particu¬

larly their unbalanced condition,
industrial
purchasing agents
curbed forward orders, escalator
clauses began
to disappear and
firm prices became more general.
Retailers staged a buying revolt

prices their
quoting on
fall goods.
They had just come
through post-Easter clearances

sgainst

higher

the

supply

sources

were

with

raised hob

net

Boom

I would

prices could not be modified. Out¬
standing orders for a group of 296
department stores slumped to $351
million in
May compared with

1 The tug-of-war between retail¬
and their merchandise sources

ers

ended in

sons:

(1) Supply pipelines, emptied by
war. are full again except for

the

items, notably steel.
And
feel the effect of a curb¬
of capital goods expansion.
European Recovery Plan, it
develops, will take no scrap
less raw steel than expected

few

may

ing
The
now

and

earlier.

(2)

frown

and

it

Let

still

remarked

be

however, that at every
hearing before the Congressional
•sub-committees last fall, promi¬
nent retailers were positive in tes¬
tifying that they did not dike pre
vailing prices.
"
Balk

to

Efforts

battle

as

the

wanting, might be phrased this
"Millions for production, but
not one cent for hoarding."

small

price

reductions

to

balk the inflation rise in response

Truman's

President

urging.

Lately they have been compelled
to

themselves

reverse

-rising costs.
which

were

due, to

The escalator clauses
banished last spring

rooms.

who

over

the

Thus, we

hear the sales manager

of one of

largest appliance manufac¬
turers say that retailers in his line
number two and one-half to three
times what they did before the

our.

He

war.

in

this

predicts a high mortality
field—anal

over-crowded

These go by the name of

occasion"

merchandising,

shortly by the National Retail Dry
Goods
Association
will
furnish

specific information on this
question.

more

personal

Easter

prices.

About half
involved.

will

trade

So it will be

furnish

a

a

contest of
Prices."

tribution

and

some

of

them

are

Get them and you will find that

good campaigns on good products
prices will score hits

at the right

and fewer duds.
I

hope

there

my

over

rambling here and

the

fields

of business

distribution trends, the
coming buyers' market, has not
confused you too much.
A busi¬
forecasts,

ness

commentator

today,

as

one

analyst puts it, is often like good
Lord Ronold, who flung himself
on his horse and
rode off madly
in all directions.

With the inter¬

national situation what it is

today,
forecasting is not only
truth, department stores.
We hazardous—it is downright guess*
see the mail order companies ex
work.
1
,'
;i
panding their retail store opera¬
If the shakedown, quite gener*
tions to a point where over-theally foreseen, does not prove too
counter sales exceed by a good severe—if it is the moderate re¬
margin their catalogue business.
cession which was predicted so

setting up bigger stores which are,

business

in

generally a year ago, then another
opportunity will be offered to
selling and now there is a veri¬ American industry to make good
table hodge-podge of distribution, on its slogan of "more goods to
was
18%
above
1946,
Durable
goods volume, of course, climbed with no knowing who is selling more and more people at ever
From December, 1945 to lower prices." Unfortunately, this
more
sharply than non-durables. what.
Automobile sales increased 75%. June, 1947 according to the Com¬ principle, which is the keystone of
Food sales gained 23% with most merce Department, home furnish- our system, has been too often
of the increase
represented by ing stores increased by 41%, auto¬ honored in the breach, rather than
higher prices. Apparel sales Were motive dealers by 38%, and the practiced over the recent past, a$
only slightly above 1946 and unit building and hardware firms by profit figures testify, ' 28 %.
The overall retail increase
volume was lower.
'
1
Of one thing' business can be
was 17% in new stores.
v. ,i
certain
the Cold War is on in
Mail order and chain sales ran
"New

the

are

result of these factors, one

of the big stores
specialize, to open bridal and
resort shops, antique corners, Deb

to

business

For

Look

versus

1947, retail sales set a new
$118 billion which

Some time ago we heard jokes

about what

the drug stores were

all-time peak of

can

imagine that on the demand side
we will have in industry less of
the expansion that calls for men
and materials to build plants and

equipment for still greater out¬
puts. I have not been impressed
by the argument of several indus¬
trial leaders who have maintained

that as long as their friends were
General
going ahead with big building
type by
Now men who promote sales deadly earnest.
plans the business skies were clear 19.3% ahead of 1946 in the "Times"
Our system and
requiring price at time of ship¬
and serene.
This seemed to me
our way of life have
been chal¬
compilation; while the department will try and know where these in¬
ment
on
heavy apparatus, but
like getting the cart before the store gain was only 9%. This can creases have taken place so that lenged. We must surely, each one
limiting the rise to 20%. Shortly
horse-—like in 1929.
their efforts are directed to the and all of us, give a little more,
be readily explained by the reap
thereafter GE reduced prices an
Plants are built to make goods pearance of hard goods, The chains right spots. Their advertising plans so that we may share the more, all
average of 5% on consumer appli¬
We must prove in the Cold
and catalogue houses felt the ab¬ will take account of population of us.
ances.
Some trade opinion
was to sell to people—and if people
War that the right principles are
reported that this was done to don't like prices, or are fairly well sence of these goods in the war growth and shifts, the growing
bring prices into line with com¬ supplied with goods, or can wait, but now they have caught up and age of our people, the variation in Freedom, Democracy and Plenty.

have! been

returning.

—

Electric brought in a new

rA

that

As the supply side improves as
a

to

Agreement.
imports

the upper ranks

stay. in

troublous times ahead.

taking. 34.1%

now

pretty good indication of how con¬
(3) Competitive imports will sumer demand may be expected
begin to have their effect, slowly to act for the rest of the year. The
at first, but with increasing vigor stores have the. "New Look" in
as
a
result of the- rate cuts that fashions to help them sell goods,
became effective Jan. 1 under the but they also have new and higher

merchants

ternational

with

What the

banking authorities want,

dutiable

tendency is to move into

im¬

is

customer and a customer

a

will

Well, we see the department
of
income, ac¬ stores moving along several
cording to the Commerce Depart¬ fronts against the competition of
ment, against 26.5% in 1941 and specialty stores, chains and inde¬
23.9% in 1929.
pendents. The chains, meanwhile,
In retail trade there is a feeling are pushing ahead with mass dis¬
are

disposable

organized bankers join them

was

Last spring Ford and In¬
Harvester attempted

up.

which

to

ago

in

our

put

months

commodity speculation.

Geneva

Inflation

In the industrial field there

such

clothing and home furnish¬
ing goods are too high. The rea¬
son
might well be food 'prices,

way:

in passing,

no

The fault may not be that cur¬

loans for real estate and

on

central

was

several

probably true in the

was

rent

Examiners were

it down.

their

is

always been a danger signal which sooner or later will occur.
retailing since the days of 1920. The answer in several quarters
It is the reason why merchants was that it gave good promise of
don't like current prices.
sticking. A survey to be completed

have been taken

instructed

rise,

consumer

t

job of seeing that the "man who
sells the man who uses the goods"

to

jumping

was

too fast and steps

push of the inflation forces made
boom wards.

credit

wage

'

portant. He is the final judge. But
of almost equal importance is the

has

\

Bank

victory for the manu¬
facturers when the three-pronged
a

it clear that the direction

for several good rea¬

to .hold

$934 million in May 1946.
:

say,

salary' payments

their

!

.

end,

The boom is at tag

outlook.

to steel

get
better qualities and lower
prices for fall. Manufacturers in¬
sisted
that
costs
were
up
and

which,
represents my subcon¬
thinking on the business

suppose,

scious

as

ultimate

The

the

phases of

the brands mixed up in the bank¬
but
ruptcies will be mixed up in trou¬
appear to represent is
day everything isn't readily sold,
ble too.
a
as you are well aware, and there
try at specialty store business.
It is with this thought in mind
Similarly, the department stores that I offer the suggestion that
is entirely too big a ratio between
what a modern plant, can make in are expanding their branch store one
of
the
most
remunerative
production and the purchasing operations, a move on the chain types of advertising just now
Again, the big stores would be directed at finding sound
power released by its building. Or store order.
have taken up advertised brands
so it seems to me.
and trouble-free distribution, and
in a big way, which might be in¬
distribution which will carry the
Concern Regarding Consumer
terpreted as a stroke at the inde¬
good product through the time of
Demand
pendent store type of operation.
stress which is surely ahead.
}
But capital goods expansion is
Selling is not a lost art in thig
Increasing Competition
ebbing and the main concern on
country but the experts agree that
Now I was interested enough to
the demand side is consumer de¬
it has developed callouses in the
mand.
Here the story in general ask on your behalf whether the
seat of its pants and not on its
merchandise
lines
is
that high jump on the band-wagon was just
feet over recent years. When the
a
passing fancy or whether
it
prices are taking their toll of unit
"Phony War" is over and the
volume.
Sales are ahead in dol¬ might be expected to live through
Blitz begins, you will want mer*
lars but behind in items sold. That the
era
of
price
competition and not mice on the firihg* line,

A word slipped out then

I

and

other

market.

what they

End

At Tag

have

materials higher price brackets.
people earn is the
Certainly there is a tendency in

early days when everything that
made was readily sold.
To¬

especial¬

;?

their

special targets of the

are

natural

I

argument offered to ex-

unions

labor

was

boom.

ly at the tag end of a

mar¬

determined

were

That

profit

must be met and beaten,

a

They

gins.

little

a

stores

purchasing power that takes care
of production.

business

competitively his aim and drive is
to stay on top. Competitive prices

.

which

and what these

But a big
in

against

advance resumed.

than

not

an

of

And

market.

be

ple mine or harvest the

to bulwark himself
the
time
when
more
money is needed for promotion,
for new machines to cut costs, for
a
dozen other contingencies, but

extra

149.5 in March and reacted in the
next

is

He may take

future.

the

reached

prices

heard

may

and

income

consumer

1

the theory advanced

stores
themselves out

pricing

and

\;

department

traditional

people make the machines, peo¬

to

premiums

pay

passing those of

are

I have seen

that

be built all

can

right, but they may find no mar¬
for what they are equipped
to make.
Of course we have the

just today, he has a close eye on

176 by Juiy

to

loss of about llk%. Whole¬

a

would

sumers

measured by the Federal Reserve
index.

plants

kets

goods can still be short and con¬

production hit a post¬
get-what'they want.
of 190 in March, as

peak

war

the

then, in perspective, it may turn
out that the GE move marked the old principle o£ classical economics
turning of the page from a sellers' that everything comes from pro¬
People make the plant,
to a buyers' market. Products and duction.

in the spring of
again and with¬

What happened
1947 will happen

then

gains

department stores.

the

1948

Thursday, February 5,

CHRONICLE

FINANCIAL

&

Securities

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

Acme

Broach

Corp., Ann Arbor,

Mich.

(2/9)

(letter of notification) 40,000 shares ($5 par)
common. Price—$5 a share. Underwriter—Dean W. Titus
Dec.
&

2,

Co.,

■and for

Arbor, To build
working capital.

Ann

American

factory,

pay

obligations

All

Industries,

be

changed to American Steel & Pump Corp.) Under¬
writer—Herrick, Waddell & Co., New York.
Price by
amendment. Proceeds—To pay off indebtedness incurred
in the acquisition of the

Inc.,

•

American

Public Financing

•

29

Atlantic

Hostess,

Coast

Inc.,

Fisheries

2

filed

Akron,

O.

convertible

par)

common

Co.,

Boston,

Mass.

general mortgage and col¬
166,950 shares ($1

$556,500 4V2%

trust

Buffalo.

bonds and

Underwriter — Doolittle & Co.,
bonds are being offered to
for each 1,000
stock held. The stock will be reserved

stock.

Offering

—

The

stockholders at the rate of $1,500 of bonds
shares of

The

common

conversion of the bonds. Unsubscribed bonds
will be publicly offered by underwriter.
Proceeds —
General
corporate
purposes. - Business — Commercial
fisheries.
*
;' l\7
against

FIRST BOSTON
CORPORATION
Boston

.

;

7

New York

Chicago and other cities




Pittsburgh

•

Automatic

Dialing Corp.,

Del.

Dover,

(letter of notification) 6,000 shares (50c par)
common.
Price—$3 each. For working capital./ / ; ;;
Jan.

30

•n-'. •'

:

1

vr

•.

Aztec Mining Co. of Nevada

V

•

k

)

*

,«■«

■

•.'vi'-sw-:-.

,;/r

./•;i

S/vt

of notification) 300,000 shares of:.,non«
assessable treasury stock. For mine requirements.
26

•

(letter

Bates

mon

(letter of notification)

lateral

Feb.

•

Jan.

Jan. 30

230 shares ($100 par)
common
stock and 750 shares ($100 par) participating
preferred stock. For working capital.

Jan.

Corporate and

capital stock of A. D. Cook, Inc.,

Lawrenceburg, Ind.

New York
C?ct. 30 filed 100,000 shares ($1 par) common (name to
.

Registration

in

Now

Manufacturing Co., Lewiston,

Me^';'^'

(letter of notification) 200 shares ($10 par) coin*
Price—$33. Underwriter—R. W. Presspridj)

stock.

Volume 167 Number 4670

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

Dogpaw Gold Mines Ltd., Toronto
22 filed 1,000,000 shares
($1 par) capital stock.
Price—400 per share. Pro¬
ceeds—To develop mining properties in Flint Lake local¬

February 6,
Chic. Rock Island & Pac

Underwriter—Tellier & Co.

Domestic

Cond. Sales Agreem't

Monsanto Chemical Co

Dec. 29

--—Preference

February 9,

1948

offered

be

to

Corp.___
...........Common
Cameron Aero Engine Corp,.._...-r—-Common

Eastern

em¬

Gas

&

Water

Iowa Power &

Class A Stock

.•

Dec.

Investment

16

filed

900,000 shares

(no par) common. Under¬
Offering—Stockholders of record Jan.
given the right to subscribe for the new stock

to repay

23

21
on

the basis of

in

Edge

•

29

Philadelphia Electric Co

Jan.

___„BoncIs

19

shares

This stock is being sold by Herman

P. Ruhm, Jr., Lewiston, Me.

($5 par)

common.

Underwriter—Robert L. Mit-

Investments, Denver.

ton

To supplement working cap¬

ital.

stock.

Price—$15.

Bath

Jan.

and

Tennis

Club,

Inc., Palm Beach, Fla. <
(letter of notification) 2,650 shares of class A

26

($100 par) preferred stock. Offered
only.''To repair hurricane damage.
•

to

club

members

/(.■•■'VVi-'y

Bennett-Ireland,

Inc., Norwich, N. Y.
Feb. 3 (letter of notification) 500 shares of 5% cumula¬
tive preferred stock (par $100) and 1,490 shares of com¬
mon stock
(par $20).
Price—Preferred, $100; common,
$33,333.

This is partly a recission offer.
tal and general corporate purposes;
•

Black

Jan.

30

common

par).

Working capi¬

Mountain

Tramways, Inc., Portland, Me.
(letter of notification) 10,000 shares ($2 par)
and 2,300 shares of 5% preferred stock
($100

Price—Par

in

tramway and develop

each
a

To /construct

case.

Markets" in Los

Aero

eral

Fraser

ceive

Products Co.,

12

Cement

Co.,

Philadelphia,

ment in

return

for cancelling $15,000 open account for
Price—$2 per share. Underwriters—R. A.

machine tools.

Keppler & Co., Inc. and Henry P. Rosenfeld & Co., New
.York. To provide operating funds, etc,
•

-

'

Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common. No underWriting.
Price—$100 a share.
Proceeds—To purchase'

given

the

right

to

subscribe

for

stock

and

each share of common stock held.

Proceeds

a

securities

one

•

Price—$4.10

per

unit.

To

construct

a

tavern.

•

Cincinnati

(Ohio) Economy Drug Co.
(letter of notification) 12,000 shares

26

common

stock.

Price—$12.50 each.

capital.
(la.)

!

,

•

■

Industries,

Inc.
Dec. 15 filed 210,000 shares
($1 par) capital stock.
Underwriting—None. Offering—Shares are to be offered
in exchange for 300,000 shares of Obear-Nester Glass
Co.,
St. Louis.
<
•

Columbia

Gypsum

'

Products,

Inc.,

Bremerton,

^

Washington
(letter of notification) 300,000 shares ($1 par)
common.
For mining development.
:

Jan. 28

Commercial

Finance

Co., Mount Rainier, Md.
Jan. 16 (letter of notification) $68,000 of 6% debenture
.bonds.

Underwriter—Emory S. Warren & Co., Wash¬

ington, D. C.

'

writing—None.

•

Coolidge

Corp.,

Middletown,

O.
shares ($100 par)
cumulative preferred stock and
5,000 shares ($10 par)
29

(letter of notification)
stock.

common

Price—Par

in

capital and general, corporate
Coosa

River

none.

each

case.

For

working

purposes.

(par $50). Under-

common

Offering—Stock will be offered direct

public through directors and officers. Price,

par.

to

Proceeds

-—Erect and operate mill for manufacture of
newsprint.

tfrom Southern pine. Company also contemplates the sale

J©f $16,000,00.0 4%

1st mortgage bonds.

Cowles Co.,

Inc., Cayuga, N. Y.
(letter of notification) 5,000 shares of capital
(par $5). Price—$30 per share. Underwriters—.

Jan. j 13

Stocfc

Norie.' Offering—4,000 shares to be offered to stockhold¬
ers^ record Jan. 13 in ratio of two new shares for each
three shares held.
Rights .< expire Feb. 20.

Working

capital.
•'
Curtis Publishing Co.,
Philadelphia
J^in. 28 (letter of notification) 4,125 shares of common
stock. To be offered at market (about
$8), by Mary
Curtis Zimbalist through
Granbery, Marache & Lord,

New York.

•

.

•

.

Dayton

(Ohio) Power & Light Co.
Dec. 5 filed 170,000 shares ($7 par) common. Under¬
writing—None. Offering—Offered for subscription by
v

Stockholders of record Jan. 30 on the basis of one share
for each nine shares held. Rights expire Feb. 25. Price
$24 per share. Proceeds
To finance
construction
—

program.

,

_

/




.

.

.

share.

•

Hacienda

Jan. 26

Under¬

Underwriters—Walston, Hoffman

Ltd.,

terests

•

Sherbrooke,

.

.

(CST) Feb. 16.

Kansas-Nebraska Natural Gas Co., Inc.
Jan. 23 (letter of
notification) 2,200 shares of $5 cumu¬
lative
preferred stock.
Price—$104.
Underwriters—
Cruttenden and Co., Chicago, and the First Trust Co. of
Lincoln, Neb. To pay indebtedness.

Kansas Soya Products
Co., Inc., Emporia, Kans.
Dec. 3 (letter of notification)
3,157 shares ($95 par)
preferred. Price—$95 a share. Undewriter—Kenneth Van

Sickle, Inc., Emporia. For additional working capital.
•

Jan.

Kramb
26

common

chinery,

Manufacturing Corp., Reno

(letter of notification)
stock. -Price—Par.
raw material

and

20,000 shares ($1 par)
For leasing a factory, ma¬
operating capital.

Kuner-Empsom Co., Brighton, Colo.
Jan. 19 (letter of notification) $125,000 first &
refunding

subsidiary

and

affiliated

companies.

products.

/.

;.

.

Limb

Corp., New York.
(letter of notification) 1,000 shares of non-voting

Thomas Wentworth Boykin, Jr., of
Greenwrich, Conn.
Working capital for manufacture and retail distribution
of

Iowa Power & Light Co. (2/16)
Dec. 22 filed $6,000,000 first mortgage

Johnson Bronze Co.* New
Castle, Pa.
Nov. 10 filed 150,000 shares common stock
(par 500).
Underwriteri—Lee Higginson Corp.
Proceeds •— Stock
being sold for account J. P. Flaherty, a stockholder.

certain

.

—$1 each.
Proceeds—To construct milling plant and
purchase equipment, Business—Asbestos processing.

—

in

cumulative preferred stock
(par $100).
Price—$100.
Underwriting—Portion of issue will be distributed by

($1 par) common stock.
Frechette, Hartford, Conn., is the
authorized agent and principal underwriter. Price

Construction. Bids
Bids for purchase of the
bonds will be received by company at suite
2200, 105 W.
Adams St., Chicago, up to noon

be

National Action

Jan. 28

1,500,000 shares

bonds, series due
Underwriting—To be determined by competitive
bidding. Probable bidders: Blyth & Co., Inc.; The First
Boston Corp.; Halsey, Stuart & Co.,
Inc.; Glore, Forgan
& Co., and A. G. Becker & Co.
(jointly); Harriman
Ripley & Co.; Kidder,: Peabody & Co., White, Weld
& Co, and Shields & Co.
(jointly); Salomon Bros. &
Hutzler; Lehman Brothers. Price—By amendment. Pro¬

& Goodwin and Hart¬

&

to

Business—Food

Quebec

—

Ura-

Co., San Francisco.
Offering—<63,785
publicly offered (25,000 on behalf of
and 38,785 for account of Marcus
Nalley, Chair¬

are

company

Underwriter—Paul E.

ceeds

stock.

man).; 20,000 shares will be offered to employees, execu¬
tives and directors and
35,367 shares are to be issued in
acquisition of all publicly held stock or partnership in¬

Humphrey-Ketchen Co., Boise, Idaho
f
21 (letter pf
notification) 1,000 shares ($100 par)
preferred stock and 1,000 shares ($100 par) common.
To buy new equipment
and.pay indebtedness.
Co.,

Rogers

shares

Jan.

filed

common

NalSey's Inc., Tacoma, Wash.
119,152 shares of common stock (par $1.25),

ley,

•

30

$6.75.

Minnesota Power & Light Co., Duluth

•

doing business as Hacienda Manana Hotels filed
1,000,000 shares ($1 par) preorganization subscriptions.
For hotel .costs.

Jan.

—

Jan. 15 filed

Hotels, Denver
(letter of notification); Charles Whitfield David¬

Asbestos

Brothers,

Price

corporate purposes.

Proceeds—For

Manana

International

filed

Barney & Co., New York. Price by amendment. Proceeds
repay $10,000,000 of bank loans and for general

son,

•

Mo.

—To

artificial limbs.

•

Nevada-Stewart

Mining Co., Spokane, Wash. /
(letter of notification) 100,000 shares of non¬
assessable capital stock.
Price—32 cents each. Under-

Jan.

1973.

Newsprint Co.

Dec. 23 filed 238.829 shares of

-writing

1,000

a

City,

Nov.

equipment and working capital.

U. S.

Jan.

Price—50 cents

Kansas

Monsanto Chemical Co., St. Louis
(2/6)
28 filed 250,000 shares
(no par) cumulative con¬
vertible preference stock, series B.
Underwriter—Smith,

Jan. 26

Guyana Mines, Ltd., Toronto, Canada
($1 par) common.

Inc.,

purposes, which may include payment of
porary bank loan.

.

Nov. 26 filed 303,587 shares

ba

outstanding old

Price—By amendment.
$6,000,000 construction program and for other corporate
a $750,000 tem¬

*

Goidfield-Cripple Creek Mines, Inc., Denver

'($10 par)

Additional working

'

/Clinton

#

like amount of

by competitive bidding.
Proceeds—Toward financing a

capital
Jan.

Offering—43,383 shares will
a

Feb. 3 filed 100,000 shares (no
par)
dewriters—To be determined

(letter of notification) 100,000 shares (par 10c)
stock.
Underwriter — Harry
Joseph Newton,
Denver.
To pay loans and -taxes.

rolling mill, equipment and for working capital.

30

•

■—

Price—$100.

Co.

New York, holder of
23,000 warrants.
Business—Women's apparel chain.

•

•

&

exchange for

Co., Inc., New York
59,000 five-year-bearer warrants to pur¬
(50c par) common stock by April 15, 1950. Offer¬
ing—By seven holders, headed by Lehman

To develop a plant and facilities for' the
company's subsidiary, Carolina Giant Cement Co., Harleyville, S. C.

stock.

gen¬

chase

for

Golden Leaf, Inc.,
Aspen, Colo, h a.
JanA;28' (letter ' of notification) 400 shares rof 'common

For

Miiler-Wohl

Jan.

unit

warrant

Francisco.

shares.

Mid-Continent Airlines,

filed 564,906 shares ($1 par) common and
282,stock purchase warrants.
Underwriters—

consisting of two shares of

be

San

/

Jan. 9 (letter of notification) 30,601 shares
($1 par) com¬
mon
stock.
Price—$6 per share. Underwriting—None.
For working capital and
equipment.

common

additional underwriting consideration and.
7,500 shares
Will be issued to American Die & Tool Co. for
invest¬

;

Unexchanged shares and the additional
31,617 shares will be sold publicly. Price —
$13.75. Pro¬
ceeds—Toward paying off bank loan.
•
*

Craigmyle, Pinney & Co., New York; Winslow, Douglas
& McEvay. New York, and
Jenks, Kirkland & Co., Phil¬
adelphia, Offering—Stockholders of record Jan. 30 will

as

Corp.,

Corp. (2/11)
75,000 shares of class A stock. Underwriter'

Walker

class A

Pa.

Engine Corp.
(2/9-13)
Dec. 29 (letter of notification)
101,000 shares of common
stock (par $1), of which 85,000 shares will be sold to
the public; 8,500 shares will be issued to underwriters

H.

offered in

proceeds.
Portland

Calif.

Merchants Acceptance

—G.

filed

Giant

Securities

Jan. 20 filed

'

Detroit, Mich.
100,000 shares ($1 par) common.
Under¬
writers— Campbell, McCarty &
Co., and Keane & Co.,
both Detroit.
Price—$5.25 per share.
Proceeds—The
shares are being sold by 14 stockholders who will re¬
Oct. 21

Pasadena,

corporate purposes.

.7

Angeles, Riverside, Colton and San Ber¬

nardino County.

453

Cameron

—Guardia

"Super

Jan.

resort.

Underwriting—Officers, direc¬

tors and employees of the company will offer the stock
friends and associates.
Price—$100* per share.
Pro¬
ceeds—To retire 7% preferred stock. Business:
to

ski

a

($100 par).

par)

Proceeds—For additional
working capital.
Mercantile Acceptance
Corp. of Calif.
Jan. 19 (letter of
notification) 2,092 Va shares of first
preferred 5% series stock. Price—$20 each. Underwriter

Fitzsimmons Stores, Ltd., Los Angeles, Calif.
Feb. 2 filed 10,000 shares of 6% cumulative first
pre¬
ferred stock

Basket,

($1

For indebtedness.

exercise of common stock
purchase warrants issued in
July, 1945. Price—Two shares per warrant at
$6 a share.

•

•

•

$10 per

Dec. 30 filed 27,788 shares
(50c par) common. Under¬
writers—None. Offering—Shares are to be issued
upon,

cu¬

mulative, non-convertible ($100 par) preferred and 5,000
& Co., New York.

Corp., St. Louis
notification) 20,000 shares

of

Market

(letter of notification) 2,500 shares of 4J/2%

at

States funds.
Rights ex¬
building expenditures and

Aircraft

(letter

common

Finance Corp., Denver, Colo.

1948

two shares held

United

bank loan.

-

February 17,

for each
or

Proceeds—For

McDonnell

Jan.

capital.

one

Canadian

pire Feb. 18.

Realty Corp., Irvington, N. J.
notification) $30,100 of preferred stock.
Price—$100. Underwriting—None. To increase working

Bonds

are

share

Jan. 30 (letter of

1948

Light Co., Noon (CST)—

?

McColl-Frontenac Oil Co., Ltd.,
Montreal, Can.

.

February 16,

For

($1 par) common treasury
To be supplied by amendment.
Proceeds—To develop mining;

—

share.

a

properties.

•

February 11, 1948

Denver,

writing—None.

Jan.

New York Chicago & St. Louis__Equip. Trust Ctfs.

Merchants Acceptance Corp

Underwriting

Price—50 cents

Co., PSiila.
(letter of notification) $125,000 51/2% de¬
bentures, due Feb. 1, 1978. Underwriter—Bioren & Co.,
Philadelphia. Price—Par. To advance subsidiaries funds
for capital improvement and
working capital.

1948

Inc.,

June 27 filed 300,000 shares

stock.

ployees, executives and management personnel/ Price—
$3.49 a share.
Proceeds — Company did not state how
proceeds will be used.

Broach

February 10,

Chicago
($1 par) Class A Common.

Offering—To

Christensen,

Legend Gold Mines, Ltd., Toronto, Canada

Credit Corp.,

filed 150,000 shares-

Underwriters—None.
Acme

—Peters, Writer and
plant improvement.

ity of Ontario.

1948

45

mortgage 41/2% sinking fund bonds and 5,278 shares of
6% cumulative preferred stock
($10 par). Underwriters

Oct.

NEW ISSUE CALENDAR

(641)

>,

28

writers—H. M. Herrin &

Co., Wallace, Idaho.

Co., Seattle, and Pennaluna &
For developing mining claims.

Northeast Airlines,

Inc., Boston,

Mass.

'Dec. 24 filed 83,333 shares (no par)
$1 cumulative con¬
vertible preferred. Underwriter—Atlas
Corp., owner of

100,000 shares of the registrant's common stock, has
agreed to purchase all shares not subscribed for by other
stockholders. Offering—Offered for subscription by com¬
mon stockholders of record Feb. 2 at
$20 on the basis of
share for each six common shares held.
Rights expire
March 1. Proceeds—To pay off indebtedness.
one

Ocean

Downs

Racing Association, Inc.,

Berlin, Md.
Nov. 28 filed 34,900 shares ($10 par)

common.

No

un¬

derwriting.
Price — $10 a share.
Proceeds—To build
trotting and pacing race track near Ocean City, Md.
Ohio

Public Service Co.

Dec. 22 filed

$10,000,000 first mortgage bonds, series due
be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp.; Harriman Ripley & Co.; Blyth
& Co.; W. C, Langley & Co., and Glore, Forgan & Co.
(jointly); Lehman Brothers; Salomon Bros. & Hutzler.
Price—By amendment. Proceeds—To be used for con¬
1978.

Underwriting—To

struction. Expected later this month.
•

Jan.

Pacific
29

Gas

filed

;

and

Electric, San Francisco
686,953 shares ($25 par) common
(Continued on page 46)

stock.
j

46

THE COMMERCIAL

(642)'
(Continued from page 45)

holders

held.

10

Proceeds-^To

program.

finance

construction

a

-"

■

.

Parkview

CHRONICLE

*.

>

&

Co., St. Louis, Mo. Price—$6' for the
and' $2.50 for the common.-..This stock

-

'

-

Under¬

Thursday, February 5,'1943

.

securities to be sold include $20,000,000 in first mortgage*
/bonds, $5,000,000 in debentures and' common shares sui~f
ficient to bring the over-all proceeds from the financing;
prefer: ed stock
is being offered by stockholders who are members ofto $28,635,500, The
company ' ha§" be en discussing the/
the Belt family.
Business—Chain of retail restaurants. - financing with investment bankers: 1 • !\
^
writer—White

Offering—To be offered at par to
outstanding commonstock at rate of one snare

on

each

FINANCIAL

sold and the remainder reserved for conversion:

Underwriting*—none.
for

&

■

Drugs*Inc^ Kansas City,

Mo.
Jan. 27 tiled 100,uuO shares of preferential cumulative
35c
participating stock
($4.50 par).
Underwriter—

Union Trusteed

J

NewYorki,/'v';'i'r1' jjv. Laclede Gas .Light Co.-.:/v^>y::;;;
Feb

Funds, Inc.,

21

stockholders will vote to authorize

$6,084,050'of
Underwrit¬
ers—Lord, Abbett & Co., Inc., New Yobk* is selling agent.. convertible debentures, $4*000,000 -of - new bank credit!;
and such additional fir&L mortgage bonds as may be per- ;
Price based on market prices.
Proceeds—Formnvest- "
mitted under-the-indenture. Company will have.to .spepd'i...
ment.
Dec. 29 filed 657,500 shares of capital stock.

•

Straus

s

&

Blosser,

•

Chicago.

Proceeds—$140,000 will

Price—$5.25

share/

per

used to- reimburse

be

company;

...

for funds used to purchase

McFarland Drug Co., Topeka,
Kan., and the $332,500 balance will be used for working
capital and expansion of business: retail drug stores.

Wisconsin

Dec.

bonds, due 1978. Underwriter—To be offered under

bidding.

Stuart & Co.

&

Co.,

and

Boston

Probable

Bidders

include

Underwriters—Only the bonds will be
competitive bidding terms. Probable

amendment.

-'•//"*••

(letter of notification) 385 shares ($1 par) com¬
$38,000 of 20-year 3xk % debentures, due July
15, 1965. Underwriting—None. Price—$30.83 each for ine
and

and

porate

$102.63

;i"

'

'

.

Alleghany Ludlum Steel Corp.

Underwriters—Kuhn, Loeb & Co.; A. G. Becker & Co.,
Inc. and Hemphill,, Noyes & Co.
Price by amendment.

shares and offer rights to stockholders in ratio of one

To refund

•

Production

Jan.

30

(letter

///,

Aids,

Inc.,

a

•

Pubiic

,

-

Co. bank notes, and for expansion purposes.

com¬

the offering

on

bank

loans.

Funds

the

from

be used to take

care

additional

'

stock.

common

•*

.

equipment and working capital.

Price—80

W. Bennett & Co.

:

For

9

Underwriters

—$7.

of

debentures

•

to

provide funds for the

1948

names

to.

be

filed

by

Gulf

States

with

Price

•

from
private sale of $600,000 of 4%% debentures and $253,000
of 6% subordinated debentures, will be used to pay

•

off

indebtedness.

Business—Hand

lift

funds

trucks

and

•

Sherman

of

common

sim-

equipment,

ital.

■

/.

South

i

tooling costs

and

working

Electric

&

Gas

Feb

cap-

Co.

basis.

l-for-10 basis and the

Unsubscribed

shares

will

common

be

on

,

Nov.

5

19

/

Proceeds—To

•

Stanton
3

vertible

finance

Feb. 2 filed

"n

Shake,

Inc.,

Bioomington, III.

40,000: shares of 50c cumulative convertible

participating preferred "stock,
($1
par); and
160,000shares (50c par) common stock, of which 40,000 will be




•

San

Co.

Diego Gas & Electric Co.

Segal Lock & Hardware Co.,

-

12

stockholders

for

basis,

at a
offered the

l5i

authorized

Inc.

creation

/
of

$2,000,000'"

convertible sinking fund, debentures, to -be*:
subscription by stockholders on a pro rata- i
discount. Unsubscribed debentures will be

public at par. Proceeds would' be used toU
retire.$415,000 short-term loan and lor expansion.
•

Southern Co.

*

,

The SEC Jan. 28 gave the company permission to'
mego- '
tiate privately for the sale of about $20,000,000 of addi-;
tional shares ($5 par) common stock. Company is a sub¬

of Commonwealth

stock of its

& Southern Corp^ Proceeds
by Southern to buy common
operating' subsidiaries, Alabama Power Co.

Georgia Power" Co.
//''•'■■
'""v/.r■»
The money, gained, by these subsidiaries- through'the
of their stock to Southern will be used-for con-

sale

petition asking

are

Otis

&

Co.

,

\

(Inc.);
V

•

Lehman

,

•

* i
■
-

no-

have all the money we can

bond issue in mind and for the immediate

International

Harvester

usefully employ."

Co.

,•/:,/./'//■:•■/;•

Southern Natural Gas Co.

//•/:./:■•■'.■.!■

Ry.

••.

•

Utah

Power

&

Co..

f?

market conditibhs.•
;Union

Prrhnnlfc

Light Co.

.

''

Feb

•

-

Interstate
3

reported

Power Co.

plans

tp;filq. a registration
statement with the SEC shortly covering new securities
required to put its plan of reorganization-into effect. The
company

"1'
cer-

*

tT^ 1

Corp. .(Jointly);

aaxr

C!i»«r4

f."

-

/

r,

PA'-

■>

Co. and Equitable

,h.Barney.proC Co. antf
timS.;)yltnioJ( &
White,~Weld:& Co.:

"

Petroleum Corpr.

reported company contemplates new'financing in:

forjp. of convertible preferred stock,
Fenner &

will vote Feb. 20
on

;

Ripley & Co.

Warren

Pierce,

»

.

hiH/-lpra

Securities

Harriman

Feb 2
"

•

C'.;i

Jan. 28 reported company
working on plans for $3J)00;,000 new mortgage bohds,
"plxis $5,000,000 new. ideben-

.^euritieH

•

>
■

tificrat.es, sexdes "NN," to mature in 20 equal jsemi-annual
installments, will be-received at company's office, Room
20.18, 70 Bine. St., New York, up to-noon (ESll> Feb: 18.
Probable bidders: Halsey* Stuart & Cot
Inc:; Salomoni
Bfos. & Hutzler; The First Boston Corp.;
Jiarrimafg
Ripley & Co.; Harris, Hall & Coi (Inc.),
;
/

Fenner: & Beane, R. W. Presspfieh &

&

.

/;■.■;>?•;

-(2/18') ..
Iof $10,680,000 equipment trust

timing will depend

of the company's business. Probable underwriters: Glore,
Forgan & Co.; Harris Hall & Co. (Inc.); William Blair

-

'

;:v- v,/•; n;//

9*. Southern

Bids for -purchase

000,000 to $100,000,000 in new capital through permanerit
financing; It has not yet been decided when the financ
S + f
-f
when the linancing would be done or what form it w;
011

///':;/'/

Peabody & Co.
Stuart & Co. Inc.; The First Boston

Corp./..

misinterpreted recently, Mr. McCloy said1 that

we

./'/

,

(jointly); Halsey,

.

28, stockholders approved a proposal giving
d^.c- ;
authority to issue convertible debentures.,
already had authority to issue eitheTsCommom st£«k.
'
ordinary debentures. Company plans to raise from

,

J

used

and

^

tors

non-con¬

stor'k

Electric

Feb. 4 reported company has plans under consideration,
for raising some $10,000,000 through sale of a "new'

offered

the:

Jan.

Chemicals, Inc., New York

(letter of notification) -1,766 shares of

Steak

1

International Bank for Reconstruction ancF

•

construction

(par $100) and 1,883 shares of common
(per 100), Price, par for each." Underwriting, none. Con¬
struct plant,, working; capital, etc.
•

bonds

"we have

program.

Feb.

program.

future

Inc., Lehman Brothers and Lazard Freres&Co. (jointly);
White, Weld & Co. and Kidder, Peabody & Co. (jointly):
Blyth & Co.. Inc. and Stone & Webster Securities Corp;
(jointlyk; Glore. Forgan & Co/and W. C. Langley & Co
(jointly): Harriman, 'Ripley & Co.;. Merrill Lynch, Pierce:
-

bid for the

had been

$7,000,000 30^year first mortgage bonds,
Underwriting—To be determined at competi¬
tive bidding.
Probable bidders: Halsey,* Stuart & Co

Beane.

&

units with present distribution facilities.

9

in financ¬

Development •'—*•=
.'
' *
/
Feb. 3, John J. McCloy, President said that he wanted to
make it "quite clear" that the Bank was not contemplat¬
ing another bond issue at present; Contending- that he

filed

&

for

basis'

Unsub- v

Jan 29 reported company contemplates sale of $20,000,000
bonds and debentures in near future. Probable bidders
include Blyth & Co. Inc. and Kidder,

Bros.; Blyth & Co., Inc./.

series B.

Fenner

Gas

sidiary

in- bidding

tlm

'to

Dec

offered

/'.?'/-//

Oklahoma

15-year 5

company

on

held.

struction.

may

l-for-2

a

& Web¬

Salomon
'""Si Beane
,

told! the Indiana PS

interested

new

shares

from the <sale will be

be

shares

bonds carrying a coupon rate-of 3 V8,%ia year, including:
Halsey, Stuart & Co. Inc. Other investment houses who

Southwestern Gas & Electric Co.

-

would

stockholders

common

share for each 3J/2

Co.

Inc.,

Hampshire

permission of the Commission to sell the entire $8,000,000
issue do the Metropolitan Life Insurance Co. at
par, the

publicly.
Price by amendment. Proceeds—Proceeds together with
other funds will be used to purchase all of the outstand¬
ing common of South Carolina Power Co. from the
Commonwealth & Southern Corp.

Stuart &

initially to

new

& Light Co..

The company had filed a supplemental

Underwriter—Kidder, Peabody & Co., New
York. Offering—Shares initially will be offered for sub¬
scription by company's common stockholders, the pre¬
a

3, Halsey,

;

money" bond issue. It is thought that the offering will be *
ready for the market- by the end of March. Probable '
bidders include: Halsey, Stuart & Co. Inc.; Blyth & Co., '
Inc.; The First Boston Corp.
.' '
"

$10,000,-

-

Commission it

preferred.

on

7":; /

Electric & Gas Corp.

bonds, maturing in 1971. The proceeds wo "Id he
build
a
-7,500-Kilowatt generating plant in Scott '
County, Mo., and a transmission line to conxiect cne new *

„

f

.

one

•

£

;

Co.

$8,000,000 bond issue planned by the
ing part of its $38,000,000 expansion

Dec. 2 filed 80,858 shares ($50 par) cumulative convert¬
ible preferred and 404,293 shares ($4.50 par) common
for sale, and 687,293 shares reserved for conversion oi

ferred

Power

>,'•/ Indianapolis Power

./'//

Carolina

eacli'v

on

The company has applied to the Arkansas P S Commis- r
sion for authority to issue an additional $2,500,000 314% :

.;

2

Z& Co.

—

For

10 years,

would be sold to an underwriting syn¬
by Kidder, Peabody & Co. anci Biyui oe •
Co., Inc., for resale to the public.

bidding. Probable bidders include: Halse^, Stuart & Co,
Inc.; The First Boston Corp.; Harriman, Ripley & Co.,
Inc., and Glore, Forgan & Co. (jointly), and White, Weld

Products,

Stoetzer, Faulkner & Co. and Bennett, Smith & Co., De¬
troit.

V?/;,;'

company

scribed

company asked the SEC for permission to sell
$15,000,000 of first mortgage bonds. The interest rate and
price cf the bonds would be determined by competitive

Inc., Roval Oak, Mich.
(letter of notification) 150,000 shares (par $1)
stock.
Price
$2 per share. Underwriters —

26

Jan.

Illinois

Feb.

ilar equipment. /■•';/:, -/./

,

annually foj?

.,•

Public Service Co. of New

be offered

Utilities Co.

ster Securities

amendment.

together

/■

asked the SEC for permission to issue:/'
199,627 additional shares of common stock (par
$10) and use the proceeds for construction. Shares would

expansion

Jan. 28 reported company plans an offering of
000 new money bonds. Probable Bidders^—Stone

working capital.

Proceeds—Proceeds

mature

and sell

program. It is expected that the registration statement
will be filed shortly and bids will be called for around /
the middle of March. Probable bidders include:/Morgan

Corp.; Halsey, Stuart & C
} • r Service Carter & Truck Corp., Albion, Mich.
/ Bros. & Hutzler; Merrill Lynch, Pierced
Jan. 30 filed 80,000 shares of common stock (par $1).
and White, Weld & Co. (jointly).
;

will

New York State

f

Jan. 31

finance four Diesel passenger locomotives, under a conditional sales agreement.

Stanley & Co.; The First Boston Corp.

Underwriter—Frank

cents.

/

trusti

dicate headed

,

Corp., New York
notification) 180,000 shares (50c par)

(letter of

and

common

of business expansion in

Reiter-Foster Oil
Jan. 16

(2/10)

_

April 1. Proceeds of the bonds will be used to

<\ •
Columbia' Gas & Electric Corp. Jan. 30 reported corporation expects to offer $45,000,000

Regira

chase of aircraft and

opening of bids

at its Chicago office for the
lowest interest rate at
which bidder will provide not to exceed $1,240,000 to

& Hutzler.

Proceeds—Prepayment of $1,700,000 of bank notes due
i- April 20 and
$1,375,000 of Oklahoma Power and Water

;

St. Louis RR.

^
t
Pennsylvania Telephone Corp. /
Jan 30 reported
company
may
sell 40,000 preferred,
shares, with Paine, Webber, Jackson & Curtis and Stone
& Webster Securities Corp. as underwriters.

Chicago Rock Island & Pacific RR. (2/6)
v
Company will receive bids up to noon (CST) Feb. 6

Glore, Forgan &

Cargo Airlines, Inc., Brooklyn, N. Y.
Feb. 2 (letter of notification) 277,500 shares of preferred
stock (par $1) and 500 shares of common stock (par $1).
Price, $1 per share for each. Underwriting, none. Pur¬

&

$1,400,000 serial equipment

/•

Halsey, Stuart & Co. Inc.
(bonds only); Blyth & Co., Inc.; The First Boston Corp.;
Merrill Lynch, Pierce, Fenner & Beane.:./'-

(jointly); HarriCentral Republic
Bros.

of

construction. Probable bidders include: Halsey, Stuart &
Co. Inc.; The First Boston Corp. /

1949. Probable bidders include:

•

•

on

retire

Co* of Oklahoma, Tulsa, Okla.
$10,000,000 first mortgage bonds, series B,
due 1978. Underwriters to be determined by competitive
bidding. Probable Bidders—Halsey, Stuart & Co. Inc.;

,

stock. Plans call for.

public

Service

Co. and: White, Weld & Co.
Ripley & Co., Blyth & Co., Inc.,
Co. and Lee Higginsori Corp. (jointly);
Co., the First Boston Corp., Salomon

"

March 30, with bonds and stock being offered to the

on

30 iiled

Shields &

fqj-

underwriter, The First Boston Corp.

mortgage bonds and 100,0000 additional shares of
mon

v'0 stock, will

man

purchase

$6,000,000 of preferred stock. The preferred would have '
the benefit of a sinking fund of 2.%%, according to presn
ent plans. The new secuirties are to be sold through;

107,383

,

stock and
14,987
stock, and 25,000 shares ($1 par) common reserved for
conversion of the preferred. To be offered in units of
one preferred and one common share at
$6 per unit. For

Jan.

register

York Chicago

for

competitive bidding. Proceeds would be used to finance

.'5'

Hollywood, Cal.
14,987 shares ($5 par)
shares ($1 par) common

„

plans to

California-Oregon Power Co. \ > ; ~ ~
Feb, 3, A. S. Cummings, President stated company has a
tentative working schedule for sale of $4,500,000- first

North

additional working capital.

Company

9

of notification)

preferred

stock.

12. Probable

outstanding first mortgage bonds.

-Temporarily deferred.

preferred

$1,620,000*

Feb 3 company filed an aplicatiort with the New York PS/
Commission for authority to issue $10,500,000 bonds and

Jan. 26 stockholders authorized an/ssue-of 200,000 shares ;

'

•

1^

•

of

—

New

March 1,.1949-58.

Prospective Offerings
•

-

certificates will be received at company's office, Cleve-'
land up to Feb. 10. Certificates will, be dated March

i:'

,

Nov. 20 fileu $>o,5UU,UUU of first mortgage bonds, due 1967.

Proceeds

9

-Bids

•"'/"
v"'v.. - '
■! ''■ <*, ;■•/ -^/j ' .-■># :../7/-..:
;
.
' ' .
7 'v V

1948,

$100 debenture. For general cor¬

per

r

RR.

equipment trust certificates in connection with the pur-'
qhase of equipment'costing $2,027,440. Probable, bidae"rs:4
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler.
t

•

purposes.

Pittsburgh Steel Co.

_

//;-'''

r

financing will be used to-pay off $6,500,DOO off
the change over program., •*• i

Missouri-Kansas-Texas

Proceeds—To pay bank indebted¬

and for construction costs,
,'./
A ' -V/'■

:■

Jan. 28

stock

9

while stock will be offered to holders of 4%% preferred.
Price by

•

new

Feb. 4 company asked ICC authority to issue

Co., White, Weld & Co. and Kidder* Peabody & Co.
(jointly); Blyth & Co., Inc.; The First Boston; Corp.;
Shields & Co.
Offering—Bonds will be offered publicly

—

property dnd.

new

bank loans and to pay for

and Harriman Ripley &

Pittsburgh Consolidation Coal Co.

mon

"dn the

Bidders—Halsey, Stuart & Co. Inc.; Glore, Forgan &.COi.
Co. (jointly); W. C. Langley &

com¬

Halsey,

$12,500,000 for

$3,00,000 to convert customers to the use of straight!
'natural gas to replaceMhe mixed manufactured and na-y
tural gas now being served in the territory.' Proeeeds^

$3,000,000- 30-year -first

ness

•

ih the next five years

Light Co.

mortgage: bonds
B, and 30,000 shares ($100 par) 43£% cumulative

Series

Inc.; Morgan Stanley & Co.; Glore, Forgan
W. C., Langley & Co. (jointly); the First

about Feb. 17.

&

underwritten under

Corp.; White, Weld & Co. Price by amendment.
To-finance expansion program. Expected

Proceeds

filed

Power

preferred stock.

Philadelphia Electric Co* (2/17)
Jan. 20 nlca $25,000,000 first /and refunding mortgage

■a,.

petitive

29

/;.,k;

■

Beane

as

v

with Merrill, Lynch;/.;,

underwriters.

Stockholder*-!

on
creating a new preferred issue and
increasing authorized common stock.

:

Volume 167 Number 4670

!

THE COMMERCIAL

xXx
v'i:. V,Vt

ij
'

(Continued r'rom page 5)

&

FINANCIAL

CHRONICLE
prise

Morgan Stanley Offers

$180,000,000

first

and

re¬

802,990

shares

of
$1: Dividend
compaint by implication seem
common
stock
and
Morgan Stanley & Co. heads a preference
neglect of their stockholders' interests group of 63 underwriters that
js I
shares of common stock.
'through coiiusion or rank stupidity. Such
tn
thp
nnhiip
tndav i
complaint against business, /vffpHncr
offering
to
the
public
£ addition, subsidiary companies
•management would likewise pertain to its non-use of
competitive (February 5) 150,000 shares of had outstanding as of Oct. 31,
'bidding, which the Attorney General wants to make universally
Philadelphia Electric 4.3% Pre¬ 1947, an aggregate of $40,168,185
I'compulsory, in disregard of the higher pricing which would be ferred Stock
(par value $100 per principal amount of long-term
debt.
pj foisted on the community of inexpert investors.
x'>J'vt'- •
share) at $100 a share and accrued
ip
In any hvent, the complexity of such phases of the situation is
Gross income and net income of
dividends.
!so great, and practical experienced knowledge of actual trade
the company
Net proceeds from the sale of
prac¬
for the first ten
tice is so essential, that the determination of the
future of this-im- the new
Preferred, as well asf^odths of 1947 amounted to $19,portant segment of the economy should be controlled by the
Congress from the sale of $25,000,000 of ['127,469 and $15,973,516,/respec'or one of its established specialized
agencies, rather than ex cathedra new bonds expected to be offered
tively, as compared with $22,840,"by the Attorney General.
V;"
'x'x.'x-' by the company at competitive 318 and
$17,711,096, respectively,
bidding on Feb.. 17, 1948, will be
for the full year 1946.
frey & Keller, noted the good that used to provide new capital for
the company's planned construc¬
had come about under the Truth
•

:

company officials, who throughout the
to be charged with wanton

9.72(^240

(Special

to

MIAMI
A.

Thk

Financial

Canon has

staff

of

/

;

Chronicle)

BEACH, FLA.—Robert
been

added

Atwill and

to

the

Co., 605 Lin¬

coln Road.

With Buckley Brothers
(Special

SAN

The

to

Financial

Chronicle)

DIEGO, CALIF.—O. Wen¬

,.

^

47

Joins Atwill Staff

funding -mortgage bonds;' 724,720
shares
of
preferred, $100 par;

Hula, Electric Pfd.

•

(643)

dell Larson is now
affiliated with

Buckley Brothers, 625
Broadway.

'

.

in Securities Act and its adminis-r

tration by the

Securities and Ex*

change Commission and declared

pany's

himself all for the operation, %
admitted

there

still

things, to be done from
istration standpoint,

ceeding
rules

The

taste

of

institutional

in¬

with

and

simplification

bidding

issues

in

the

have

interval

-

with little

up

de¬
:

attraction

for

people's
money.
In¬
variably of serial maturity they
afford the opportunity for
filling
out gaps in investment
portionos.
general

a

too

large

rule

they

and

have

cost of such assets.

Insurance
counts

banks

trust

have

in

the

sues over

a

record

period of

Averaging
maturity

to

trust

afforded

from

2.95%

offering
:

recent

to

about

year

ranging

2.35%

on

Ohio

&

a

is¬

the

effering such securities in
to

the

detriment

market..

'

*

'

.

pro¬

the

of

';

-

It hasn't

happened recently but

there have been
far

intervals, not too

back,' when

bankers

were

investment

at their wit's end to

figure out how they were going
to compete for several issues of
securities
As
once

on

a

given day. - '

matter of

a

the

fact,,

situation

became

than
such

that

potential issuers had to be
prevailed upon to revise their of¬
fering schedules in order to avoid
a

difficult

situation...

than

for

that

kind

be

of

with

who lament this recurrent

ention...

cont¬

that

why
get

he

is

unable

corporate

to

D.

Oil

Co.

of

themselves caught in such

position.

Bankers

have

up is not conducive
I results for the issuer.
<

a

the

to

Yff?-'''.

Mr.
law

over

has

that

under

inquiring

firm

of

Gordon, Brady, Caf¬




trust

of ^counsel

the

new

foi
pre-

legal investment

a

funds

and

being

are

from

bolstered
of

and

the

has a call on; the
$75,000,000 bank credit

a

J.

of

two

"subscription rights" substantially

in

full

it is

indicated

in current

Southwestern Public Service Co.

been

declared

has

totalling
135,389 shares for its offering of

103,115 shares

'•]

'■

mon,

Meanwhile

,,

Electric Co.
for

-

of additional

' *

: ■

com¬

v

.

Cincinnati

Gas

PKEFERRED

ho'.ders

by the company,
of the total.

On January 27,

1948,

to

.

The

the

Preferred

or

L.

has

to

The

Financial

Co.,

Financial

become

Financial

Chronicle)

with

135

Kid¬

South

Stock of

this Company,

has

fixed

Chronicle)

affiliated

Chronicle

Morgan is with Herrick, Wad¬
dell & Co.,
Inc., Merchants Bank
Building,

CO.

and

de¬

close

of

January

business February 6j
W.

15,

1948.

1948.

COX,

Secretary.

^

"THEATRES EVERYWHERE"

January 30th, 1948
rP HE Board of Directors
has declared

a

-*•

quarterly dividend of 371/(»<j per share
on the
outstanding Common Stock of the
Company, payable on March 31st, 1948,
COMMON

to stockholders of record
business dn March

STOCK

has

declared

regular

a

at

12th,

will

be

the

close of

1948.

Checks

mailed.

The Board of Directors of DeWalt,

CHARLES C. MOSKOWITZ,

quar¬

Vice President & Treasurer

terly dividend of forty cents (40(')
the Common Stock of

per

share

corporation, payable March 10,

1948,
the

on

stockholders

to

close

of

-

—

business

Wilbur

of record

at

SOCONY-VACUUM

February 25,

OIL COMPANY

Gardner, Secretary

INCORPORATED

Dividend

payable

No. 148

THE FLINTKOTE

Checks will be mailed.

Rockefeller

American

Standard

Radiator

Sanitary
Pillilurqk

of Directors today
quarterly dividend of
25^ per share on (he outstand'
ing capital stock of this Com'
pany, payable March 15, 1948,

Plaza

February 4, 1948

quarterly dividend of $1.75

on

per

stockholders of record

payable March
of record

close of

at
:

1, 1948, to stockholders
business

on

quarterly

share

has

dividend
been

Cumulative

of

$1.00

declared

Preferred

15,

1948

at

the

to

close

W. D.

the

Stock

payable

March

31,

1948,

to

Febiuary 27, 1948.

^

Bickham, Secretary

of

on

March

stockholders of

record

of

business

March

1,

1948. Checks will be mailed.

NEWYORK STOCKS, INC.

Common Stock

The

following distributions have been

declared
A

quarterly

share

dividend

has. been

of

$.50

per

on

the

declared

on

the

Special Stock of the

Company from Investment Income,
able

Common Stock of this
corporation,
payable on March 10.1948 to stock¬

of

Treasurer

holders

as

of

the

of record at the close of
business February 25, 1,948. Checks

close of

business

February 5, 1948.
Agricultural Series

$.09

Automobile Series

CLIFTON W. GREGG,
Vice Pres. and Treas.

Aviation Series

AMERICAN GAS

*

.

.

•

•

.

•

.

January

the
4M% cumulative Preferred capital stock of
the Company, issued and
outstanding in
on

the hands of the public, has been declared
of the surplus net
earnings of the Com¬

such stock of record

on

close

at

the

the "books of the

of

business
'

Common Stock Dividend

THE regular quarterly dividend

for
I the quarter ending March 31,1948
of Twenty-five Cents (25c) and 2/100ths
f

of

The

Oil Series

share of the Common Stock of Atlantic

a

City Electric Company on each share of
the Common capital slock of this
Company,
issued and outstanding in the hands of the
public, has been declared out of the sur¬
plus net earnings of the Company, to be
payable and distributable March 15,
1948, to the holders of such stock of record
the books of the Company at the close
of business February 11, 1948.

on

i

H. D.

ANDERSON, Secretary

February 4, 1948.

PREFERRED

87'/a

.04

.

•

■

•

,

•

•

•

•

•

•

.07
.09
.12

-.15

...•••••

.06
09

*

.

....«•••

-09

.12

Diversified Investment Fund

•

•

•

.18

•

•

•

.09

Corporate Bond Series

•

.....

.07

Diversified Preferred Stock Fund.

.15

Pacific

SECOND

share

-

.02

Diversified Industry Shs.

STOCK

STOCK

cents per

•

Steel Series

shore

3V2% CONVERTIBLE

•

......

Railroad Equip. Series

Tobacco Series

PREFERRED

•

..........

Railroad Series

4% CUMULATIVE PREFERRED STOCK
$1 per share

cents per

.08

.10

Public Utility Series

of Directors of this
Corporation,
has declared the
following regular dividends:

87'/a

•

Metal Series

CORPORATION

CUMULATIVE

•

.......

Merchandising Series

Board

3Va%

•

•

10

Machinery Series

BURLINGTON
MILLS

.

Government Bonds Series

out

payable April 1,1948, to holders of

.09

Insurance Stock Series

($1.18%).-per share for-the

ending March 31, 1948,

.07

.08

Food Series

30,1948

Notice

i One Dollar Eighteen and Three-

pany,

•

Electrical Equip. Series

Dividend

.08
04

*

Chemical Series

•

THE regulcr quarterly dividend of

quarter Cents

•

Building Supply Series

:

pay¬

February 25,1948, to stockholder*

record

will be mailed.

JOHN E. KING

quarter

13,

-.sj?

per

on

,

stockholders of record at the close of
busi¬
ness

A

1948.

February

A dividend of twenty cents
(20^) per
on
the Common Stock has been

declared

the

at

close of business February

this Corporation, payable

share

the Preferred Stock has been
declared

a

Preferred Stock
$4

COMMON DIVIDEND '
A

1948

The Board

to

CORPORATION

Feb. 3,
>

declared

New York 20, N. Y.

Company

INDIANAPOLIS, IND. —4Lewis

,

at the

York.

February 2, 1948

Preferred Stock Dividend

Herrick,

Snecial

WESTERN RAILROAD

Directors

LOEW'S INCORPORATED

30

^

Waddell & Co.
.".

&

of

W.

quarterly dividend of
declared on

//

Neergard, Miller & Co.

With

FETERS, Secretary.

ecord

4cw

ANII ELECTRIC COMPANY

PETERSBURG, FLA.—Carl

Cook

with

The

business

of

COMPANY

roughly 92%

Street.

to

B.

close

BAY

Five

percent to be the amount
Class *'A" Debentures (Payment No.

R. A. BURGER, Secretary.

Neergard, Miller Staff

(Special

has

Company
1948, . to

April 1, 1948, to Stockholders of record at the
close of business March 18, 1948. Transfer Books

March 4, 1948.

ST

v

.

the

at

WM.

offered

,

&

Treasurer.

Bank Stack Series

associated

Peabody

With

record

CAMERON,

per cent was

.;

Co., in the statistical department,
has become
Salle

a

three-quarters

and

&

With"

Partlow

der,

of

rc

STOCK

holders have entered
common

.

payable
April
1.
1948.
and
a
per share upon the outstanding

40c

CO.

a
meeting held
dividend of 50 cents
stock payable March
of
record
February

payable
52) and
a
dividend of Five
percent to be payable on
the capital
stock, out of the net earnings for
,hfe year 1947, payable at Room
No. 3400, No.
!0
Exchange Place,
New
York 5,
N. Y.,
on
md
after
February
16,
1948.
The
dividend
in
the stock will
be paid
to stockholders of

on

4, 1948.
share 'upon-the out-

per

„

187,924 of the 204,000

shares additional

(Special

of

LEATHER
at

a

1948.

Board

clared

Wis., February

$J.75

par value Common Stock of this
been
declared
payable April
1,

com-

share

subscriptions

of

out¬

CA.3 COMPANY.

20, 1948.,

received

KEMP,

'

Company

standing Preferred "Stock of this Company
$25

STATES
Directors

the exist¬

PREFERRED DIVIDEND

accruing

M.

1948.

utilities

their

Secretary.

the

Taking Down Stock

exercised

BELL,

(Incorporated).
Racine,

dividend

**

1947.

Stockholders

O.

I. Case
-

A

of

C.

GREEN

AMERICAN

fltuiljarl,

have

UNITED

Board

January 28,

The

have

source

cash

still

company

bulk

that

de¬

business February 18, 1948.
C.

DIVIDEND NOTICES

advances

treasury

the close of

ing School District personal prop¬
erty taxes in Philadelphia and
Pittsburgh.
Following the Preferred Stock

by
Arabian-American Oil plus divi¬
dends

have

in

sonal property tax and

will remain open.

.

of

1948

of. Directors of this
Company ha
declared a dividend of Twenty (20c
share
on
the
outstanding capita,
stock, payable March 15, 1948 to shareholders o'

Pennsylvania
exempt from the existing
mill Pennsylvania
State per¬

one

firms

Corporation

January 28, 1948, declared
per share on the Class A
,15, 1948, to stockholders
13, 1948.

per

is

says

comfortably fixed for needed

Repayment

the situation

now with the

>

„

this

Common

THE

The

STREET

Board

'dividend

the. Opinion

capital

no

consideration

D.

Caffrey, who is

Hivi
aivi

"

of

special

WALLACE

day

31,

in

set¬
best

Over-The-Counter

Looking back
.

to

a

main¬

The

this

Cents

money

turned away since the company
is

officers

tained right along that such

nnprnpH

accrueq

underwriters,

California

CoI,lier, Chairman,

company

plans

understand

finance

nlna

plus

IV.O,

near

the

La

1

Dec.

a

dividend of $1.00 per
share
capital stock, payable
February
28, 1948, to stockholders of record at
the close
of business February
3, 1948*

Dec.

a share; and on or
1958 at $102 a share;

rncp
case

BROAD

New York, January 29,

share; there¬

before

or

30

Inc.,

Meeting

with a group of re¬
porters the other day, he declared

j.

before

Machinery Corporation

Directors

the

on

PIPE LINE
COMPANY ;

will

company's
standing capitalization will

CHICAGO, ILL.—E. C. Patrlow,
formerly with Smith, Barney &

he -joins those

on

1957, at $103
pnrh
eacn

or

a

NOTICES

The

BUCKEYE

,

.

record at

Stock

financing "the

purities and Exchange Commis-s

now

but

on

$104

after Jan. 1,

4

deal,

handled

Kidder, Peabody

at times. For

after

and

$20,-

James J* Caffrey, recently re*
signed as Chairman of the Se«;

sion, must have been giving that
problem
considerable
thought,

1952, at

ferred will be

compact groups.

orders

more

redeemable

for

reports.

Bunching New Issues

Preferred

future, it is telling in¬
quiring investment firms.

The bankers' fondest hope now
is that carriers do not
get around

fusion

less

can

obtained in

sue.

to

of

exacting

looking for any new
likely will not have

and

is¬

Lackawanna's

Chesapeake

too

funds.

this

yields

on

like

they

Standard

10-years'

market

have

is

is not

ac¬

certificates

new

THE

Wet Blanket

shown

these

point

one

-

writers
since

years.

about

the

brought

of

be

31,

In

hardly shows this to
true.| On the contrary under¬

more

lively interest in this market,
finding ample basis for the opera¬
tions

about

'

The record
be

II.

companies,

and

-.The

in
1"

.000,030.

the

against, normally cover¬
to about 80% of the total

up

York

transactions

added

ing

Caffrey made

are

pull of being secured by
actual equipment they are

and

$50)000,000 is planned for 1948.

the

New

p

type of security naturally

issued

T

on which he
probably would get
plenty of argument, namely that

and

or no

other

the

*

.

expended in 1947

dendS.

those who have the job of invest^

not

--

was

law. Mr.

competitive

considerable

As

,

contem¬

expenditures of approxi¬
mately
$235,000 000
during
the
six-year period, 1947-1952,* inclu-r
sive,, of which about $48,000,000

Hestrongly:: favors bringing
the unlisted securities under the

been

lay by the ultimate holders.

ing

of

issues,
once
they
have
been
awarded, provided the potential
buyer gets a prospectus before the

through

.

snapped

has

pro¬

\

such

offered

This

as

procedures.
He' ex¬
pressed himself as $11 for oral
solicitation
of
orders
for
new

.

Eight

v

admin¬

an

such

-

running, strongly
to railway equipment trust issues
Since- thq turn/pf the yeair, it was
pointed out in market circles this: sale is closed.
week.

were

overall -program

United Shoe
clared

Treasurer.

plates

He

•

vestors has been

DIVIDEND

tion program through 1948 and
the early part of 1949. The Com¬

DIVIDEND NOTICES

.13:

Coast Invostiqent Fund

.

.

COMMON STOCK ($1

par value)
(44th Consecutive Dividend)

37'/a
Each

cents per

dividend

share

is payable March
to Stockholders of record
at the
business February 6, 1948.

STEPHEN

L.

1, 1948,
close

of

UPSON, Secretory
41

WALL

STREET, NEW YORK

5, N. Y.

& FINANCIAL

COMMERCIAL

THE

(644)

48

Thursday,; February 5, 1948

CHRONICLE

jority" for Mr. Eccles'
largely academic.

BUSINESS BUZZ

>:«

Eccles'

Miy

on

•

t

cleared

:

the
'

,

|

ee/ifi© or omcrm

';;v-

V,/ * '

Eccles

;

(

e/w*
What has
been

you

are

business.

.777-

'

;

important thing is that
what has been happening most re¬
cently doesn't point the way to
the final turnout of legislation,
let

or

know

you

whether your
cut off.

business head will be

$

Federal

the

and

vestibule

Reserve

asked,
them

Mr.
to

go

Potomac,

.r

7

'-'A

firmly con¬
that the Marshall Plan

vinced

merchan¬

political

popular

effect daring the

He is in

dise.

is

Truman

Mr.

is

tell
the

Truman would
chuck it into

Congressional majority to try to
snip off a billion or so.
He
knows that at least a billion is

off the foreign

going to be cut
aid

appropriation. And unless
most daring of politihe will actually ring up the
notwithstanding.

he is the
cos,

sale

trying to do
appropriation for for¬
eign aid as close to his dollar fig¬
ure as possible.
If he is right on
All Mr. Truman is

is to get an

his

political

of

brand-line

mer¬

chandise, the nearer he can suc¬
ceed the better for him.
So if
foreign aid is

popular the more

for

Eccles'

The

scheme.

mariner.

ancient

for

That

that

He

be

couple

that

is

Eccles
and
Matt Szymczak, were innocent¬
walking

at

anybody

known,

came

or

said

and

news

men

John

Snyder.

so.

had

only

plausible

gressional majority which seem¬
ingly is reluctant, the greater his
prestige and popularity with the

just got tired

for

or

that

looking at,

or

and wanted

are

compromise. The Brookings pro¬
posal for an official of Cabinet
rank to handle foreign aid sounds
like the independent agency most
of the Congress has been wanting.
Seemingly
the
Administration
would
go
for this, because it
looks like something that didn't

with

originate
majority.
•.

^

Republican

the

7'7.,7;

v"r,v...

■

v.

Then, too, there was this hint

that General Marshall might be

to

willing
program

-

go

for

without

one-year

a

four-year,

a

$17 billion authorization.

Then

Mr. Truman cast doubt on this

one

knowns

we

other

any
-

the

of

write

us

very

few

can't quote !
quote,

phone

i"*

*

-

❖

-

;:y777

no

the

dollars

for

getting the absolutely correct

an¬

collect

silver

64

swer

to this riddle.

who

knows

the

The

one

answer

man

neither

in his sleep nor at cocktail
parties, and he doesn't keep any
talks

columnist pets.
"'I sS

■

One

thing

''

.

which

(except

the

■'

the. Eccles-

would
and

Federal

things

Reserve

since

doesn't

without

do

Treasury

South Shore Oil & Dev.

un¬

For

H. & B. Amer. Mach.

us,

Pitts. Steel

or

Pfd. &

;

(1)

are

ration¬

ing of scarce foods,

7;i\7 ;7<l'77-;' i:m

price control.

so

catch

would

avoid

to

later

Old Reorganization

Rails

a

—

his die
an

as

Domestic &

predicated

argu¬

on

The President tried to

port
to

in

issue

the

side-step
Re¬

a

re-write man

excellent job

an

New Issues

his Economic

hiring

by

do

of syn¬

views
on credit restraining.
It pleased
both sides, who quote it in sub¬

M. S. WlEN & Co.

thesizing the pro and con

to
spot,

Foreign]

Securities

in¬

on

their

conviction

that the President is

ESTABLISHED
Members
40

N.

Y.

1919

Security Dealers

Exchange PL, N. Y. 5

Ass'n

H.A. 2-8780

with them.

stantiation

of

Teletype N. Y. 1-1307

Congress

controls

these

for the high cost of

body
*

continued
inflation, not on preventing it
by
promoting some deflations

provi¬
credit);

the

on

the

knew
enact

whole

now

prevention

flation

ment,

Truman

Mr.

collapse

Truman has cast

the controls
openly.
This
the only tenable

Congress

If Mr. Eccles had not

blame

the

living.

.

v

secondary

talk

to

continued
the

reserve

might not have come to a
Mr. Eccles acted, however, as head. Now it has. Basically pow¬
though he thought the President erless on its own initiative to af¬
really meant to curb the expan¬ fect credit conditions, the Reserve
sion of bank credit. He vigorously Board must sell its argument to
pressed his proposal to require the Treasury. The Reserve Board
commercial banks to hold short- has now discovered that there is

Trading Markets:

thing

term securities

reserve.

such

an¬
pro¬

to

that

he

to inspire more confidence. Even
though Mr. Eccles shouldn't take
all the rap for dropping the pre-;

the

as

not

of demand

long-terms,

consumer

the

Federal
Reserve Dogma—is not part of
the
Truman dogma also.
Mr.

not

if

McCabe shift is expected to do is

miums Con The

"This

U

recession

A

bit of staff

least

opposed

because

that
will

who ma.y not

explained it:

collapse."

worse

proposed the controls solely

put
*

pretty good hunch
bright newspaper man
a

Indiana Gas & Chemical

VIRUS-X
is.

;'77v:

.

It's

comes

the

suggested

pitch of voice.

already large signs
that when the time comes, the
Administration will be willing to
There

since

but

time

economist

whether

is

will

political
in.
Every

the President
"ten-point"

conclusion

different

a

the

officials

a

then

the

Here

point up clearly that

covertly

maybe listening to, Marriner S.

Eccles,

Vice

direct

a

his

done

part

is

identified

be

1(2) that nearly all Mr. Truman's
subordinates were for the most

shift that maybe Harry Truman

reason

plan.

sions

the

as

has

planning to operate the

Of¬

explanations leave

to

demotion

also

of the Executive agencies

none

Johnny

loves Marriner, he said

Eccles'

since

gram

couldn't

circumstances

plan to cut the head off the
business boom and the question

nounced

it

maybe

been

ernment

is

maneuvering

because

been,

plan of the secondary re¬

sign

It

the

worried about

are

one

They didn't see 'em. Some radio
was

who

un¬

from behind
tripped
them
up.

and

credit

serve

up

will

suggested that
told that curbing bank rationing had not yet been de¬
a
proposal, as one gov¬ cided upon, certainly not without
the

at

understand

bearing upon the secondary re¬

on

names

a

has

Chairman

or

spitting
any
one.
All of a sudden
or
two bad boys, identity

faces

calling

prompting,

many gents worried
about
prices of these bonds are the

Mr.

Washington.

making

not

if

serve.

along the thin ice
They weren't

ly
of

these

Under

getting that he advocated

Eccles

Reserve

Board

Reserve

squirming and the President, for¬

same

a

much less de¬

And when that

if ever, the Treasury

Federal

administrative

the

Marriner

boys,

fijUCiV

7 TP

good

All

line.

Federal

of

have

conventional increase

sing the same tune.

clearance

gleaned from offi¬

plump

it can

risking,

more

time comes,

and

just wanted

explanations

them

additional reserves

flationary degree.

President

-

official

is the

can

cial

a

Administra¬

Then if the

worth

are

navigator.

new

the tax collec¬

is off the banking

tion feels that

re¬

ficial

-si

the whole subject
control will be held in

pressure

system.

credit navigation of his

the

al.,

Unless Messrs. Tobey, et

credit

of

Tom

nearly he succeeds in his objec¬
tive, especially by pushing a Con¬

voters.

of the inflation pic¬

get too direct,

system,

secondary

entire

the

considering

in reserves but to a

Mr.

serve.

liked

a

in

ture.

Chair¬

with

him

replacing

system

delay

The
official
explanations, de¬
Presi¬
dent's stand on foreign aid, for in¬ signed to conceal the true objec¬
stance.
Mr. Truman seemed to tives, are a source of considerable
amusement here. Nobody had any
say he would buy full-scale for¬
objective in mind for doing it.
eign aid and not a cent less. If
The
change accomplished noth¬
the Congress didn't want to give
Mr. Truman is still yes and
Mm all the $6.8 billion that he ing.
no

Reserve

that the way is clear for a

.credit phase

this matter of the

Take

the

of

means

Governors

of

„'

.

Fundamentally the passing of
Eccles from the front door to the

McCabe.
*

»:<

<s

tion

Board

a

confirmation.

the same alley is
of Marriner S. Eccles

the

of

man

of

hearing on his

down

from his well-worn seat as

for

Thomas McCabe comes up

storage until after

the hoisting

be

that hunter

should

*

Right

The

the

to

secondary

The

even

may

shortly

have a business or a

They don't add up to much>
apparent compromise.
Sure he
not decisive. And if you
should.
He
hasn't
yet
been
think
that,
you
probably
are
called and until all the money, is
right. For what is showing up is
on the table he doesn't have to
a
great deal of enveloping
of
show his cards.
later objectives, a pushing from
this place to that, the taking of
As for the Republican conten¬
steps
designed
to
cause
later tion that they couldn't think of
steps that will put the other fel¬ binding future Congresses to carry
low behind the 8-ball,
and get out a four-year commitment, this
a
one's self out from in back of it. is
maneuver,
too.
After all
It's a little on the soterie side for millions of babes not yet born are
even
the sophisticated outside of committed to pay taxes for the
this center of the political trade. "social
security" of those now
But the obscure steps are part of living.
the

sem¬

a

affirmed
for
plots, Chairman Tobey of the
Banking committee, ask his cus¬
tomary
blunt questions when
reserve

sense.

They

Vice-

as

give

demand for curbing

credit.

bank

of

of the

purely maneuver phase

the

profit over which
politicians have been fighting, recent developments look like non¬
If

political battle of 1948.
the

of

asking

consistency

President's

happened in this capital during the last several days
intensification

an

first,

at

for

on

to

was

of

blance

,cs~"

reason,

hang

to

Chairman

This

reserve.

admitted

be

7

has

dropping

for

way

the

because

mM

has

not

may

.

JL C/W

xJLf l/\A/

from the Nation's Capital

^

JM

A

Behind-the-Scene Interpretations

8-,v

'

passing

secondary

s>
.s

the

is

views

>:«

>;t

equivalent to 25%

deposits

The

as a

secondary

President

was

re¬

peatedly embarrassed by people
asking where did the President
stand in view of Treasury oppo¬
sition.
7 ,7
r7 Mr.

Truman

probably

didn't

a
er

reality to the logic of the great¬
force.
Its independence and

coequality in credit
about
the same as
Canada's international independ¬
ence would be if, say, the Domin¬

Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

]

Spokane Portland Cement

theoretical
matters

ion

is

proposed r an

Russia.

alliance

Hence the FR Board

with

LERNER & CO.
Investment

10 Post Office

Securities

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Telephone Hubbard 1990

"ma-

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