Full text of Commercial and Financial Chronicle : February 6, 1947, Vol. 165, No. 4566, Section 1

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—J

Reg. TJ. S. Pat. Office

.Volume 165

New York, N. Y.,

Number 4566

Thursday, February 6, 1947

Budget Must Be Aspects of the Economics oi
Over-Full Employment

•St.#

1947 Stock Market

By Dr. BERTIL OHLIN*

By Hon. JOS. W. MARTIN, Jr. *
Speaker of
House of Representatives

■

of Stockholm

Federal budget can be
trimmed without foregoing essen¬
tial services and tremendous sav¬

Mar¬
tin urges total
saving be dis¬
Speaker

vi?.;

T^'IV

|
$:

be¬

tributed

■

and

impossible to have over-employment without bottle¬
advocates control of in¬
vestment. Would have employment only high enough to stimulate
business men into rationalization, and concludes a balanced econ¬
omy can be maintained only when number employed equal jobs.

tax

which

re¬

the

good neigh¬
policy in
labor-manage¬

■

Hon. J. w. Martin, Jr.

■f'

ii'
fi

Strangle

correct

to say

eCO-

that the

fashion

changes

Congress, functioning
under a complete new committee
system, has been organized with
dispatch. The committees have
settled down speedily to the seriejus tasks of shaping new policies
and programs designed to put our
country back on the American

and in many instances, completely

(Continued

•

on page

753)

But;; in economic
seem- inclined: to
overemphasize the things that dif-

(Continued on page 760)

;•

*A talk by

Speaker Martin be¬
County Republican
Wellesley, Mass., Feb. 3,

Norfolk

fore

Club,
1947.

*An address

by Dr. Bertil Ohlin,

titled

"The

Case

th£

Vanishing

en¬
Paycheck."

in, the best Earle Stanley Gard¬
ner manner, one naturally expects a "Who-dunit." This expectation Is borne out by an explana¬
tory note which relates that it is a tale of robbery.
The hero is being robbed by unfair taxes. The
rolfr of Perry Mason is taken by the shopr steward.
The case of the vanishing paycheck is said
to have been prepared by a "tax expert," but the

Dir. Harley L.Lutz

author is not'otherwise credited or identified.
errors,

In view of the numer¬

is offered

and the non sequitur which

as a

conclusion,

anonymity is merciful.
The tract deals with the experience of Johnny Poore who, upon

Julius Beer lectures at Columbia

title,

general

1947

Problem

"The

R. H. Johnson & Co.

'jy

if
*

Prospectus

(Continued

STATE

standing " of
wiil f
te prove helpfulv
'in attempting 4
to project the *
.

probable

64 Wall Street, New York 5

Members New York Stock Exchange
and other Exchanges

BOSTON

2-0600

Teletype NY 1-210

Geneva

Troy

on page

t h e i market. *:
Thus, for the sake of the past and
the future, it fs desirable to have
a thorough
understanding of the
following technical facts:
; i ^ ^
1. The: big. bull- market.: of 19421946 was bigger than generally
.

realized.

"(Continued on page 1759)

See Pictorial Insert!forPictures

Taken at Mid - Winter Dinner of
Bond Traders Club of Chicago

775)

State and

AND

NATIONAL BANK

1.17

Branches

*Air

Products, Inc. Com. & "A"

FINANCE

SECONDARY
MARKETS

Burma. Ceylon, Kenya
Aden and Zanzibar

Paid-Up Capital
Reserve
The

Bank

Fund
conducts

banking and

description
exchange business
every

Trusteeships and Executorships
also

undertaken

Gearhart

£4,000,000
£2,000,000
£2,200,000

•

Members

Security Dealers Ass'n

45 Nassau Street
Tel. REctor 2-3600

New York 5

Teletype N. Y. 1-576

Philadelphia Telephone:

Enterprise 6015

■

;* 777V ..'J

•

HAnover 2-0980

1-395

Montreal

•

120

New England

Brokerage

Public Service Co.
.r

■

Com.

y-!^

' *r:

Analysis dated Jan. 27, 1947

request

upon

and Dealers

•
•

•

•Vv-:77^^^,jcL' hv,v'r-{

request

Hardy & Co.
York

OF THE CITY OF NEW YORK

for Banks, Brokers

Reynolds & Co.
Members New

ifi--.';

•.*

it-:-

NATIONAL BANK

Toronto

■

^Universal Winding Co.

•

Dealers Assn.

Service

$2.40 Conv. Preferred

Company

INCORPORATED

Common & Preferred

•Prospectus
Subscribed Capital

Bond

Raytheon Manufacturing Co.

India,

Security

New York

NY 1-708

*Emery Air Freight Corp.

26, Bishopsgate,
London, E. C.

York

WILLIAM ST., N. Y.
Bell Teletype NY

Bond Dept. Teletype:

Office:

Colony and

Kenya Colony and Uganda

THE CHASE

Members
New

OF NEW YORK

Wilkes-Barre

Woonsocket

Bond Department

THE NATIONAL CITY BANK HART SMITH & CO.

Harrisburg

Scranton

\.r

Syracuse

CORPORATE

of INDIA. LIMITED
Head

Dallas

Baltimore

Williamsport Springfield

(Representative)

Bankers to the Government

Buffalo

Municipal5

MUNICIPAL

PHILADELPHIA

Albany

Pittsburgh

London

Cleveland

fu-;
§ ture course of

James F. Hughesv

BONDS

Hirsch & Co.

Chicago

history

INVESTMENT SECURITIES

HAnover

technical

past
;

Bonds

Established 1927

request

25 Broad St., New York 4, N. Y.

under¬

some

Employment Stabilization."

Havana Litho. Co.*

'"I

occurred.

Furthermore,

Aerovox Corp.

e x

returning from the army, took a wife and went back to his old job
at a wage of $45 a week, as against the $32 a week he had been
receiving when he joined up in 1940. We are told that the union
had won a strike at Johnny's plant while he was away which, of

the first of the

will include six lectures under the

Vacuum Concrete

The Cl5 has

series of

University, Feb. 3,1947. The series

-Y<

.7 ..
4
recently-issued a: brochure

Since the title is

ous

CIO leaders for tax information.

economic

important.
science we all

University

tion, thus leading to reduced purchasing power of
workers' dollar. Warns workers should hot depend

are

and

reconsidered,

helps
p 1 a i n
why and how

Paycheck," pointing out what he considers false or misleading state¬
ments.
Says brochure pads tax payments which
workers make and distorts figures. Contends opposition to flat percentage tax cut may lead to re¬
newed Federal deficits and further monetaiy infla¬

By this comparison I do
not
mean
to imply that these
changes are arbitrary or artificial.
As we change clothes with the
climate, so economists vary their
track. Policies which have been
problems when
new
economic
built up under 14 years of the situations
make
them
relevant
be

this

decline

ical at least in

Ohlin

the

back

JLutz attacks CIO brochure entitled "The Case of the Vanishing

Dr.

rapid and rad¬
Dr. Bertil

Paycheck

By HARLEY LUTZ

science.

must

the stock market were shocked and be¬
violence of the early September decline.
<S>
A1 study V of

interested

Professor Public Finance, Princeton

new

W
>

long

probably

New Deal

jhk

even

20
years.
How¬
ever, it would

nomic progress.

Jfeii
■,

last

group

any

The Vanishing

does

not

power

People

wildered by the speed and

——

social

sciences

relations

without

the impres¬

technical facts

widely
accepted in

bor

ment

following previous 'Vnultiple-climax*' collapses, we [
can now expect significant market.
Igglj

some

has

been

Iff,

previous abrupt telescoping of the price struc¬
Concludes that, similar to market; behavior

scientific truth

duction. Wants

fl*».

any

ture.

Norwegian dramatist Ibsen has made the statement that a

The

truth usually lasts about 20 years.
Sometimes one gets
sion
that
a<S>

debt

tween

Contends it is

for .j

cation for the 1946 concentrated collapse. than

necks and maladjustments, and therefore

ings accomplished by many small
economies,

Market analyst traces the historical background of
recent market break. Sees less fundamental justifi-

situation of this kind arises from excessive demand for investment.

Holding

By JAMES F. HUGHES
::^ 1 ' , . »* ~ ' J- : • .*

Defining over-employment- as a condition where vacancies in jobs
exceeds unemployed workers, noted Swedish economist holds a

:■»

Professor of Economics, University

Stock

Exchange

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

1-635

Members

"New

Members

New

York
York

Stock

Exchange

Curb

Exchange

30 Broad St.

New York 4

TeL

Tfile.NY l-73a.

Dlgby*4w7800

ira haupt & co.
N*v> v '*>
r* bange
and other Principal Exchanges

Metpk*r*

111

Broadway, N.

REctor 2^-310ft

Y. 6

Teletype NY 1-2708

FINANCIAL CHRONICLE

THE COMMERCIAL &

734

Trading Markets in:

■

Preferred & Common

By WALTER E.

Old Reorg. Rails

Spahr, contending there is no justification for change in our economy, denouices movement toward
powerful central government and its interference w*'h political and ec .nomic free j 3m. Upholds
free and fair system of competitive economy and maintains no governmini can ha ,e efficiency or

Common

Dr.

Amer. Phenolic

SECURITIES CORP.
Established 1920

Security Dealers Assn.
Securities Dealers, Inc.

TELETYPE

BELL

Members

cannot solve

since the adoption of our Constitution, th? people of this country
highest level of living of any nation on earth. They have accomplished
and have done it in less time than any other people in the history of the world.
158

years

have reached the
more

Corp.

Cassco

cedented

Com.

Co.

marked

Rhodes Com.

atmo-

sphere

May, McEwen & Kaiser
M.

launched

was

Corp.

Kendall

Stock

and

Savoy Plaza

Walter

The system

Savoy Plaza
Class "A"

Vanderhoef & Robinson

*An address by Dr.

Spahr at the

University of
Pittsburgh^ Pa., Feb.

Problems—1947,

Pittsburgh,
5, 1947.

Campbell

W. L.

Common

*Prospectus

American Overseas
Airlines

Bell

Teletype

d i

the

1-1843
120

Com.

fal¬

nores

Dr. Melchior

Palyi

AB1TIBI

Pfd.

BROWN COMPANY, Com.

Railroad Employees
J

Class A

POWER & PAPER, Com. &

What
in

Pfd., 5 %

& Pfd., 5%

1965

1959

Northern New England Co.

MINNESOTA & ONTARIO PAPER

between

Frank C. Masterson & Co.
Established 1923

York Curb Exchange

Members New

Members N.

can

general

stated

way

safely

HAnover 2-9470

Teletype NY 1-1140

Curb and Unlisted
Securities

is that monetary

Reduction

volume has the

the

MICHAEL HEANEY, Mgr.

KANE, Asst. Mgr.

WALTER

loseph McManus & Co.
Members New

York Curb Exchange

Chicago Stock Exchange

anc

stimulates
spending
so under conditions oi
a
high level of employment and
of liquidity. Under those circum¬
stances, costs and prices tend to

New York 6;

39 Broadway

Teletype NY 1-1610

Digby 4-3122

Haytian Corp.

monetary

opposite effect. A

stopping of the rise might
do the trick, depending on the
volume
of
speculative commit¬
ments. However, the impact of a

mere

money-quantity up
on page 766)

Punta Alegre

Bell

Members N. Y. Stock Exchange and Other Principal Exchanges

Teletypes—NY

Hanover 2-4850
1-1126

NEW YORK 6, N. Y.

115 BROADWAY

1127

Teletype NY 1-672

Telephone BArclay 7-0100

Quotations Upon Request

article

*An

"Chronicle"
an

for

written

which

based

the
on

Palyi before the
Chamber
of
Com¬
Muskegon, Mich., Feb. 4,

address by Dr.

Muskegon
merce,

Members
New

York

New

York

120

New

York

Curb

For

POWER & LIGHT

Brokerage Service

lfe:

Alloys, Inc.

Conv. Preferred

^Detroit Harvester Co.

Com.

Solar Aircraft Company
90c

Common

Banks and Dealers

Exchange

WALL ST., NEW YORK

TEL. HANOVER 2-9612

COMPANY

Detroit Harvester

for

Exchange
Member

Assoc.

Sugar

1947.

PUGET SOUND

Banks, Brokers & Dealers

CO.

Stock

Exch.

Coffee

Acme Aluminum

A Complete

Sugar

(Continued

Canadian Securities Dept.

Goodbody & Co.

Y. Security Dealers Assn.

WalljSt., N. Y. 5

NEW YORK 5

WALL ST.

FARR

SreeueanACompaTvu

—

balanced and

budget; whether the
machine operates on a

change in the

Standard Thompson Products

★

willingness of the expansion
spend and invest.
It especially

BULOLO GOLD DREDGING

Pfd.

between

content of the dollar (the
Roosevelt-Morgenthau illusion
underlying the devaluation).

ig¬

monetary velocity, i.e., the

—

or on

rise.

Works

Common

the gold

We Maintain Active Markets in U. S. FUNDS for

Stpd. Pfds.

York 4, N.

Hotel Waldorf-Astoria

liquidity basis as in the
the opposite pattern as
at
present; whether or not the
currency
is depreciating "agains
gold: etc. It is just as naive as it
counterpart: that the price leveis
automatically determined bj

Boston & Maine R. R.
United Piece Dye

Teletype NY 1-1919

System

narrow

20's,

es a

greater or lesser

public

Broadway WHitehall 4-8120

in full employment anc
with under-employec

economic

rel¬

been

lacies.

Tel. REctor 2-7815

Exchange
Exchange

Aspinook Corp.

unbalanced

quantity
which

economic

BROADWAY, NEW YORK 5

Curb

loaded

resources;

sup¬

e a

difference

economy
one

total

museum

York Curb Exchange

Stock

Citizens Utilities Common

essential questions,

such

the

ha t

egated l.o n g
ago to the

York Stock Exchange

New

WHitehall 3-1223

Telephone:

has

Members
New

York

Detroit Int'l Bridge

neglects

theory

MC PONNELL & CO.

York 5

York

Members New

New

<£>-

price
what¬

level,"

naive

H. 6. BRUNS S CO.

Members New

and computable relationship
general price level. To fore¬

fixed

r£viyakoi>.4fee

Bought—Sold—Quoted

request

mechanically

"equi¬

librium

Wells

20 Pine Street, New

ply, as some
analysts
d o,

Preferred
on

cast

money

Douglas Shoe

Strutters

There

basis

Common

Edward A. Pureed & Co.

balanced budget, stability of dollar's

between the volume of money and the

means, on

Common & Preferred

Commonwealth Gas

762)

rock underlying all monetary

ever

Common & Preferred

*Dazey Corporation

seen—

ever

page

gold content is
considerations of our market place.
Concludes inflation per se is no boon to stock market unless profits
are inflated and says either a "bang" will come soon, or the mar¬
ket may again advance.
in view of

amidst a

Institute of Business and Econom¬
ic

has
on

investment funds make,

York 5

NY 1-1548

probably

(Continued

Says huge volume of liquid savings and accumulation of
"a cheap money policy tick." Maintains,

kets.

progress

belief in the virtues
of free and fair competition, the

Telephone COrtlandt 7-4070

which

capitalism,

private
such

widespread

York Curb Exchange

Red Bank Oil

Central States Electric Com.

commodity prices and loans flawing into commodity mar¬

rise of

of private enterprise

freedoms were exercised

against

possible,
rested upon the corner stones of
private property, freedom of con¬
tract, freedom of enterprise, and
freedom of exchange. These basic
made

American Gas & Power

between volume of
money and prices, Dr. Palyi points out expectation of increased
money volume is factor in raising price level. Holds there is paral¬
lel between decline in security loans and security quotations and

ments.

and

world

the period and

aside from

Higgins Inc

Asserting there is no computable relationship

autocratic govern¬

strong central

3/6s, 1956

Bell System Teletype

branch offices

our

Willys Overland Pfd.

Bell

E. Spahr

Continent

the

of negro slavery in this country, gradually spread and probably has attained the highest degree of acceptability ever reached
in any country in the history of

By DR. MELCHIOR PALYI*

people
here,
in
England,

81 Nassau Street, New

La.-Birmingham, Ala.

Direct wires to

area

Money and the Security Markets

series of

rebellions

Members New

Exchange

NY 1-1557

and at the end

1-1227

qualiiies

herited
status

the

of in¬
economic

individual, regardless

the

private
e n t e r p rise,

Exchange

Teletype

New Orleans,

Yet, in the face of these grca
attainments—the greatest that the

in the freedom and

free¬

virtues

Broadway, N. Y. 5
WOrth 2-4230

Bell

and

dom

MitcMU Compiy
Baltimore

Stock

HAnover 2-0700

the world.

competition. Belief
importance of

to insure such

indi¬

vidual

120

growing
lief

Members

generally-accepted
theory and!
practice of government being that;
government should lay down and j
enforce such rules and regulations
as were necessary to preserve and 1

ac¬

complishment

Society A

Jones Estate

York

St, New York 4, N. Y.

This unpre¬

Feltnian & Curme
Intl. Acc.

New

25 Broad

1-423

In the

Request

Steiner, Rouse & Co

conch_cj laws alone

Keynesian and "pseaJo economists" and

private enterprise. Criticizes
economic problems.

tion with

HA 2-2772

PI.. N. Y. 5

40 Exchange

Analysis

intelligence of whole people, who are free to vote their dollars as (hey ihirk test. Holds govern¬
ment's function is to provide peace, and not pe.mit "trial by baltle" as exemplified by strikes and
labor violence. Objects to compulsory arbitration or labor coarts, and oop.s.s g^v-ramem competi¬

king & KING
Nat'l Ass'n of

Bought-—Sold—Quoted

Amer. Barge

Members N. Y.

Rockwell

Manufacturing Co.

Economists' National Committee on Monetary Policy

Vice-President,

Executive

Standard G & £

SPAHR*
York University

of Economics, New

Professor

Preferreds

Commons

and the Science of Economics

The'Good Economy

Electronics Corp.

Thursday, February 6, 1947

Conv.

Preferred

♦Twin Coach

Trading Market

Conv.

Company

Preferred

BOUGHT—SOLD—QUOTED
*Prospectus on request

Troster, Currie & Summers

C.E.deWillerc&Co.

Member New

Members New York Security Dealers Assn.

120 Broadway, N. Y. 5,

REctor 2-7630

N. Y.

Telephone HAnover 2-2400
Priwtaf* Wire* to

J-G -White 8 Company
INCORPORATED

Association:

74 Trinity Place, New York 6, N.

Tekdype NYKS61

York Security Dealers

Teletype 1-376-377-378

Buffalo—Cleveland—-Detroit—Pittsburgh—St Louis

Reynolds & Co.
Members New

37 WALL

STREET

NEW YORK 5

ESTABLISHED 1890

Tel. HAnover 2-9300

Tel?. NY 1-1815

120

York Stock Exchange

Broadway, New York 5,
Telephone:

N. Y.

REctor 2-8600
NY 1-635

Bell Teletype:

; i;

Volume 165

Number 4566

THE COMMERCIAL &

News

Page

Technical Background of the 1947 Stock Market
—James F. Hughes

Cover

The

Cover

Vanishing Paycheck—Harley Lutz
Aspects of the Economics of Over-Full Employment
—Bertil

Mr. Parkinson traces insurance
company experiences with real estate!
mortgage and equity investments, and cautions against
extravagant use;
of recent
authority given life insurance companies
i
to make real estate
investments.
Holds Federal
regimentation and interference has hindred
housing

Cover
734

734
735

development, and attacks

•"Open the Door, Mr. Hanrahan. and We'll All Go to Never,
Never Land!"—(Letter to "Editor")
735

ahd local

Adjusting SEC Requirements to Business—James J. Caffrey 736

of Federal Fiscal

1,T

iui

uuKiitiucou

DVJ-

*f9G,

737

i'lvt^iuiuic

iod

ourti't'b—n.

^Cw.

..i

ix.

xjui

tun

Current Conditions Affecting Investments—Marcus Nadler 738
Survey of Potential Municipal Issues—Frederick Tilney, Jr. 739

its encroachment

Points

powers.

out

state

thought in the early '20s that

activities in
to

the real

investment

estate

field

our

Foreign Demand for Dollars Grows—Herbert M. Bratter
Tax Revisions for Small Business—James F. Newcomb

743

Company "Private Lending"—Wm. W. Bodine__

Paramount
A

Railroad

740

Problems—Roy B. White

when

Challenge to Management, Labor and Capital

that

UFE Offers to Arbitrate Differences With

Co.—Edmour

A. M. Kidder

747

mortgage

limited

learned

investors

mortgage
that

become

£vw; -v.-

optimistic

788

follow the advice of

Weighing Desirability of Closing

Saturdays and

Lengthening Trading Hours
Haskell Reinstated

and

responsibilties

the

tate

accidentally incur¬
of

:;:An

739

Trade Agreement Hearings End

before

740

Copper Excise Tax Suspension Seen Neaa*

740

Senator Taft Explains Position on Taxes and Labor

the

by Mr.

Real

Estate

Board

not

dollars worth

want

life

York, New York City, Feb.
1, 1947.

ultimate

and

whole,

New

743

into hands of

ment

Parkinson

perience

jr. •

ii'

Broadway, New York, N. Y.

HAnover 2-8970

suf¬

real

sale.

serious

page

York Security Dealers Assn.

New

National Assn. of Security Dealers, Ino.

es¬

insurance

through that

came

without

(Continued

Teletype NY 1-1203

Member

loss

Colonial

the
ex¬

Sand & Stone

778)

742

A Plan to Reduce Underwriting "Standby" Losses

address

■

GOLDWATER & FRANK
39

companies and other mortgage in¬
vestors and imposed upon us the
problems of operation, manage¬

man-

Says Anglo-Canadian Wheat Pact Does Not Violate
US-UK Loan

T. I. Parkinson

experienced many new thrills
foreclosures put hundreds of

million

ring

739

by in¬

owners

direction

738

Customer's Broker

are

danger of becoming

But

hA rfp:■

Mortgage Certificates

fered serious detriment.
Certainly

Germain

WHitehall 4-6551

Title Company

give the impression that

too

optimistic appraisers, they
NYSE

agement.

when

our

Offerings Wanted

voluminous foreclosures became
necessary'
had really bought an awful lot of
real
when we thought we were<S>

interest.

one

STREET, NEW YORK

Telephone:

investing

746

Universal Military Training "A Must"—Robert P. Patterson

Britain Reassures U. S.

Loan Agreement

Conscription

"Open the Door, Mr. Hanrahan, and
We'll AUGoto Never,Never,Land!"

747

Nation's Expanded Money Supply Called Major Problem.__

748

Switzerland and Bretton Woods

749

Rep. Clair Engle Wants Free Market for New Gold

749

Calls Budget Record

750

of Extravagance

779

SEC Consents to Trial Liberalization of Rule Restricting
Floor Trading at New York Stock Exchange

788

Regular Features
Page
Business

Insurance

Man's

Stocks

748

741

Bookshelf

■Canadian Securities

NSTA Notes

Our

Center

Railroad

734
Wilfred

Real

Reporter on Governments.. .786

Our Reporter's Report

787

Published Twice Weekly

Salesman's

Securities

Now

Y.,

Possessions,

February

Offices:

135

Salle

Canada,

Company
1942,

second-class matter Febru¬

the

post

office

Act

March

and

TRADING MARKETS
Thiokol Corp.

Drug Products

Kinney Coastal Oil

are

National Shirt

hmioD
Members
170

brokerage profession, when it comes to knowing what
actually all about there is only one word to

States,

and

$35.00

Bank

$25 00

and

Members
per

$38.00

year;

per

year.

(Foreign

account

postage

interested in

are

1-84

Punta Alegre Sugar

offerings of

U. S.

High Grade Public Utility and Industrial

extra.)

remittances for for¬
eign subscriptions ahd advertisements must

Sugar

Commodore Hotel

^Fidelity Electric Co.
Class A Common Stock

PREFERRED STOCKS

the fluctuations in

the rate of exchange,

Susquehanna Mills

be made in New York funds.

•Prospectus on request

Spencer Trask & Co.
Graham-Paige 4s
Willys-Overland
Preferred

New

Lea Fabrics
We

Record—Monthly,

Teletype

Eastern Sugar Assoc.

Publications

Quotation

WOrth 2-0300

System

year.

[o.Wct

Haytian Corporation

page 776)

year.

Note—On

(Foreign postage extra.)
Earnings
Record — Monthly,

per

(Continued

Shops

New York Security Dealers Assn.

Broadway
Bell

this business is

St.,

25.

Other

$25.00

^Chicago 2, 111.
(Telephone:
State 0613);
.a Drapers' Gardens, London, E. C., Eng¬
land, c/o Edwards & Smith.

Reentered as

the

Countries, $42.00 per

Monthly

1947

Every Thursday (general news and ad¬
vertising issue) and every Monday (com¬
plete statistical issue — market quotation
.-(records, corporation news, bank clearings,
estate and city news, etc.).
Other

777

Territories

Dominion

RIGGS, Business Manager

Thursday,

789

737

United

Union,

Other

9576

WILLIAM DANA SEIBERT, President
D.

Pan-American

8IERBERT D. SEIBERT, Editor & Publisher
WILLIAM

under

Reilly & Co.,
Incorporated

New York 8, N. Y.

REctor 2-9570 to

756

1879.
Subscriptions

DANA COMPANY, Publishers

Park Place,

Corner

Subscription Rates

Patent Office

746

Whyte Says i
Washington and You

York,

FINANCIAL CHRONICLE
B.

750

Securities

Reg.

740

Securities

Estate

The COMMERCIAL and

WILLIAM

785

Registration..
737- Tomorrow's Markets
(Walter

May

such nice fellows," boys and girls of the se¬
curities business. "All of them are nice, no
fooling!" They
are
personable, use words fluently, excellent companions to
hoist a drink with, hail fellows well met, and all-out
good
sports in most every way, these various commissioners,;
lawyers, and sundry spokesmen who represent the SEC.
But by all that's sacred to even the most gullible and im¬
pressionable members of this unholy investment, banking

745

Prospective Security Offerings...
Public Utility Securities

752

Funds

"They

Banking

742

Recommendations

Observation—A.

754

Dealer-Broker Investment

Mutual

Page
Einzie—London

J. F.

If I were an editor writing an article on the
speech SEC
Commissioner, Edmond M. Hanrahan, made last Wednes¬
day before the Association of Customers' Brokers, I would;
choose as my title, "Open the Door, Mr.
Hanrahan, and
We'll All Go to Never, Never Land!" and it would read
something like this:

751

World Bank Reports on Finances

and

Request

and Assets

Bank

Editor, Commercial & Financial Chronicle:

Foresees Renewal of Upward Trend in Bank Deposits
.

Prospectus

Letter to the Editor:

746

Rep. Landis Wants World to Abandon Peacetime

Members

York Stock

Exchange

Tel.:

HAnover

Boston

Harrisburg Steel

Members

New

Exchanye

DUNNE & CO.

St., Chicago 3

Members New York Security Dealers Assn.

York

135 S. La Salle

Curb

Teletype—NY 1-5
Glens Falls
Schenectady

25 Broad St., New York 4, N. Y.

Tel.: Andover 4690

2-4300

WHitehall 3-0272—Teletype NY 1-956
Worcester

Private

Wire

Boston

Sport Products

CERTIFICATES

New

Broad Street, New York 4

Albany

TITLE COMPANY

Bond & Mtge.

Lawyers Title & Guar. Co.
N. Y. Title &

Mtge. Co.

Prudence Co.

(Atlanta)

STRAUSS BROS.
INC.
Members

Broadway

Security

NEW YORK 4
DIgby 4-8640
Teletype NY 1-832, 834

Newburger, Loeb & Co

Telephone: 3-2137

U Members New York Stock Exchange '
B«U Teletype

WHitehall 4-633«

NY 1-2033

Teletype CG 129

Request

*Year-end

ESTABLISHED 1914

Bldg., Miami 32

request

Unterberg & Co.

Members-. N,

Trinity Place, New York 6, N. Y.

.Telephone:
BOwling Green 9-7400

analysis

National Radiator Co.

C. E.

Specialists in Soft Drink Stocks

Teletype MM 80

York—Chicago-—St. Louis
City—Los Angeles

Kansas

HOIlROSE S IkgSTER

Harrison 2075

Circular

^Public National Bank
& Trust Co.

Circular

CHICAGO 4

Textile, Inc.
**Offering

growth type equity in the soft drink industry.

Dealers Assn.

Direct Wire Service
New

St. N.Y. 5

**Stern & Stern

Board of Trade Bldg.

Pan American Bank

15 Broad

Red Rock Bottlers, Inc.

Guar. Co.

Lawyers Mortgage Co.

99 WALL

confined

estate

Insurance

739

Magill__ 740

Equitable

were

741

Industry—W. Averell Harriman

What Business Wants in the Tax System—Roswell

ary

Send for

—Ody H. Lamborn

739

(•/•':*L

,,V:!V

"Varga" Memo Pads

inflationary effects

741

Status of Aviation

••

the top
off your fountain
pick up the phone.
In any
case, you'll get top quotes from us
on
your obsoletes.
>
—take

pen,

mortgages on property which
other people bought and sold and
managed. We
used to emphasize the fact that we
could not buy
real estate; that is, could not
buy the equity in
real estate. We
found, however, in the early 30s,

Interest Rates May Be lower—M. M. Mattison

OPEN THE DOOR,
RICHARD

Policy, and criticizes pattern of
low interest rates. Sees
danger of further inflation
and another depression.

wage rracueauie in Sicei/

Right and Wrong Ideas About Stocks—L. O. Hooper
i

AND COMPANY

By THOMAS I. PARKINSON*

Cover

Political and Monetary Aspects of Real Estate Situation
—Thomas I. Parkinson

v,iO ociiiaiiu

"tlCHTfliSTfin

President, Equitable Life Assurance Society of New York

Ohlin

Budget Must Be Cut Deeply—Rep. Jos. W. Martin, Jr.
The Good Economy and the Science of Economics
—Walter E. Spahr
Money and the Security Markets—Melchior Palyi

"'..735^

Political and Monetary Aspects of
Real Estate Situation

I N D E X
Articles and

FINANCIAL CHRONICLE

Y^fiecuritv Dealers Ass'n
61 Broadway, New York 6,N.Y<

Teletypes:

Telephone BOwling Green 9-3563

NY 1-375—NY 1-2751

Teletype NY 1-1666

THE COMMERCIAL &

FINANCIAL CHRONICLE

Thursday, February 6, 1947

BUSINESS BUZZ

Adjusting SEC Requirements

Mp '
+■

To Business
CAFFREY*

By JAMES J.

Chairman^ Securities and Exchange

Commission

pointing out need for mechanism to pro¬
vide channel for flow of savings into production, holds aim should

Commissioner Caffrey, in

provide continued health, vitality and honesty in securities
Holds regulation is no bar to legitimate business and

be to

markets.

Armstrong

Outlines methods of securities registration
and plans for streamlining registration statements and easing proc¬
ess of offerings.
Calls for more protection of stockholder's rights.

management to public.

Rubber

Cinecolor

Chicago R. I. & Pac.
Old

One

tifies

stability" of markets may deter¬
particular financ¬

mine whether a

the

extent

General Machinery

jus¬

itself

only

Batteryt

channel between

process

Diebold Inc.*

functions of our financial mechanisms is to
savings and production. The financial

of the> major

provide

Pfd.

Gen 1 Dry

responsibilities of corporate

should be implementation of

purpose

Abitibi Power

that

planned by

ing

agement may be

well

serves

business man¬

accomplished at

the investor to

particular time and will have a
direct bearing on the price of the

find

issue.

the

Gt. Amer. Industries
H. K. Porter

need

profit¬

able outlet for

Haskelite

his
and

Higgins Inc.

savings
need

the

industry to

have access to

Hoover Co.

Hoving Corp.

easy
to see
when you are

Lanova*

Long Bell Lumber
Majestic Radio & Tel.

Maryland Casualty

ties markets.
J.

James

Caffrey

Michigan Chemical
Minn. & Ontario Paper

Missouri Pac.
Old Pfd.

Moxie

N.Y. New Hav. & Hart.
Old Pfd.

tradi¬

securi¬
busi¬
call upon inves¬

And as long as

continues to

savings it will be necessary

the American inves¬
that he can buy
on the basis of
adequate
knowledge about the
facts, trade them in markets free
of manipulative
influences, and
hold them without fear that in¬
siders are abusing their advan¬
to

keep

his

confidence

tor's

investments

"There's

Commissioner

£ common
nance

(Continued

Feb. 6, 1947.

Mr. Friedman holds that

Taylor-Wharton*

Art Metals Construction

Towmotort

Upson Corp.*

Bought

U. S. Air Conditioning
U. S. Fidelity & Guar.

Sold

guaranteed annual

wage now

demanded

Members N. Y. Stock Exchange

United Drill&Tool"B"

115

Vacuum Concrete

erty, America
freedom.

could stabilize employment at high wages under
I.

The CIO Demands

and Other Principal Exchanges

Telephone BArclay 7-0100

experiments should be encouraged. Concludes whereas
employment at starvation wages and loss of lib¬

Russia stabilized

105 West Adams St., Chicago

Broadway, New York

guarantee. Asserts, however, more stable employment is possible
and would benefit workers, employers and the entire economy, and
that such

Quoted

Goodbody & Co.

United Artists*

contract

now

Guaranteed Annual Wage in the new

Is such a guarantee

being negotiated.

Teletype NY 1-672

ployment

Amer. Gas & Power

What

native?

the

are

Cent. States Elec. Com.

pros

*Hungerford Plastics

*Metal Forming Corp.

*Dumont Electric

Elec. Bond & Sh. Rts.

Stabilized

Employment

Iowa Public Ser.
Pub. Ser. of Ind.

Needed

Both

Em¬

ployees and
E mployers.

*Prospectus Available

Puget S'nd P. & L. Com.

demand

The

stabilized

for

Southwest Natural Gas

employment

Standard Gas Elec.

FIRST COLONY CORPORATION

Tide Water Pwr. Com.

52 Wail Street

New York 5f

Tel. HAnover 2-8080

tProspectus Upon Request

Elisha M. Friedman

Circular upon request

based

the

require¬
of

ments

N. Y.

Teletype NY 1-2425

industry

But

subject

orders and

violent fluctuations in

output. Therefore, wages
correspondingly. Herein

fluctuate
lies the

the employer needs
employment. It helps
him to keep his organization in¬
tact, to retain key men and effi¬
cient workers. Indeed, the entire
But

II.

^District Theatres

ter.

dilemma.

cons?

and

Derby Gas & Elec.

steel

possible? Is sta¬

em-<£-

bilized

feasible alter¬

by steel union cannot work; that no guarantee has been successful
except under very limited conditions and only in consumers' goods
industry, and that steel industry is not the place to begin a wage

Taca Airways

*Bulletin

Guaranteed

By ELISHA M. FRIEDMAN
Consulting Economist

776)

Purolator Prod.*

past me, Mr. Boodle,

he's in conference!"

Wage Practicable in Steel?

standards of coron page

in trying to sneak

told you

Is CIO Demand for

interest in the mainte-

sound

use

that business and investors have
address

Caffrey before American Manage¬
ment Association, New York City,

Philip Carey

our

equally true of those parts of
financial mechanism
which
are concerned with trading in se¬
curities already issued; that is,
the securities exchanges and the tages.
broad trading markets apart from
Regulation No Bar to Legitimate
the exchanges—the so-called overBusiness
the-counter markets.
These mar¬
kets have a direct and material
It is the short view that securi¬
effect on the financing of indus¬ ties regulation is a bar to legiti¬
try.
The "tone," "temper" and mate business. It is the long view
is

*An

Pathe Industries

ness

tors'

looking at un¬
derwriting, whose primary func¬
tion is to effect the public dis¬
tribution of new securities. But it

As long as there

investors there will be

are

the

Com. Pfd;

industry

tional methods.

pools of sav¬
ing. That is

Hydraulic Press

broader sense the continued

American

national

the

health, vitality, and honesty of
the trading markets are essential
to
the
continued
financing of

the

worker's

family budget. He has
constant and continuing require¬
ments for food, clothing and shel-

even

stabilized

needs stabilization. For
employer is affected by the
discharge of the workers in other

economy
every

industries.

Stabilization of wages was

first

urged by employers. Indeed, prac¬
tically all plans were undertaken
at their initiative. The CIO de¬
mands

are

encouraging sign
becoming in-

that the workers are

continued

on page

764)

CTIVE MARKETS
Bought—Sold—Quoted at Net Prices

AMERICAN
E5T.

GAS

ELECTRIC

American Overseas Airlines

COMMON

50 Broadway

Kingan & Company

1926

3-6-46

PENNSYLVANIA POWER & LIGHT COMMON
MemlersN.

Standard-Thomson Corp.

ySicurit} Veaitrs Assn,

ELECTRIC BOND

Prospectuses

Central National

1-1286-1287-128*
.

Buff. 6024

request

22 East 40th
..

J.K.Rice.Jr.&€o.
Established

Street, New York 16, N. Y.

Bos. 2100

Bldg.

lst-2nd-3rd

lst-2nd

Corporation

ESTABLISHED 1927

ENTERPRISE PHONES
Bartfc! 6111

Chanin

Finishing Com. & Pfd.

2 Park Ave.

REctor 2-8700
Pnila

Rights
U. S.

120 BROADWAY, N.Y. 5

Direct Wires To
* •.
Ch'^aeo & Lo« Angeles

& SHARE "A" and "P"

Telephone: LExington 2-7300

Members

1908

Security

REctor 2-4500—120

Teletype: NY 1-2948
.

Dealers

Assn.

SIEGEL & CO.
89 Broadway,

N. Y. 6

DIgby 4-2370

Broadway

Bell System Teletype N

1-714

Teletype NY 1-1942

;a-^>5fp*','./•<&'■< -v

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

737

C. F.

Gourlay Rejoins
Hemphill, Moyes &Co.

on...

PHILADELPHIA,
Behind-the-Scene Interpretations
from the Nation's

Capital

/W n

JL~A.ll\A/

Atrophied since 1933, Republican congressional leadership finds
mental—or muscular—coordination

function

effectively in majority control. That explains the rash of selfappointed policy proclaimers, rthe conflicting public pronouncements
whjch confuse the public. GOP steersmen lack toughness, persuasion,
and cohesion.
They'll be at the mercy of Democratic gadflies until
they consolidate their ranks.

<§>

publican steersmen. This lack of
This

ing

Republican

free

wheel¬

leadership

especially
notable
on
three major issues: (1) tax re¬
vision,
(2) labor reform.
t3>
is

tariffs.

scientific

needed

refurbishment

national

manding
be

economy.
❖

the

also

trade

be expected to

can

their

scheme

ment.

THE

hesion.

pledge Sen¬

any

licans

ate Republicans will do likewise—
and

probably Senate Republicans
That

won't.

Right

stimulates

State

this

date,

negotia¬

Major change in the trade
looks unlikely.

and

reduction

even

the

House

the

fact

that

not

yet, two months after Con¬
convened, have those

gress

Re¬

Minority

(Continued

re-

771)

page

Stockholder

in the

Day

New
Sun

the demand

enlivening has taken the form of dramatic events
the
presiding officer of one of the world's largest

banks that dividends be increased

part to

counter¬

employees' cost-of-living bonuses;

minute delay occasioned
by a motion for
week

adjournment

32-

are

session;

and

activities

CANADIAN

these

meetings are not of them¬
selves crucially important or
effective, they are
significant in highlighting the broad political and
economic implications- of the owner-stockholder
relationship. Hence we shall first depict some of

MINING
A.

Wilfred

the activities and purposes of the most active of
these gentlemen; and then
weigh the significant elements

STOCKS

May

composing

the background thereof.

margin
The

amount

chandise

in-

52 WILLIAM

con¬

cerning

each

corporatio
and

each

curity

handled,

taken

grandfathers

dealt.

formerly had
public; today

se-

10%

has

New York

the

relatively

probably

This year he expects to attend between 90 and
meetings of leading companies of which he is the registered and

beneficial holder of from 10 to 100 shares. If the time or locale of dif¬
ferent meetings happens to conflict, he sends his
younger brother
or

other

some

fellow-investor

fisticuff

sympathetic

his

cause

and

technique, to act in his place.

His past conduct at
bout

with

meetings has ranged all the

the President of

Mr.

Gilbert

way

from

a near

company

new

least

population

either

actually

is
or

inter

poten¬

tially, from time to time in what
is going on in the financial mar¬

security

ana¬

kets.

lyst,
former¬
ly
hardly

than

ly
ions

has
are

result of these

(Continued

regarded

head

behalf of

expert

respected

rather

whose
even

high¬
opin¬

if not al-

changes, the

page

from

fore Massachusetts

tension

Course

Boston

Conv. 5%,

and

Philippine

Mining Issues

entirely different cate¬
of stockholder-protector than the former prevalent variety of
"strike-suit" lawyers, most of whose efforts were devoted to court
(Continued

page

754)

MAHER & HULSEBOSCH
Brokers
In

TRADING

American La-France

MARKETS

Maxson Food Systems*

Buda

Teletype
NY

1-2613

Branch Office

113

Hudson St.,

Jersey City,

N. J.

Pratt's Fresh Frozen Foods*

Florida Portland Cement

Standard Milling*

General Public Utilities

Standard Stoker

Giddings & Lewis

Suburban

Tenn. Gas & Transmission *

Grinnell

United Transit*

F. BLEIBTREU &
BROKERS

Propane Gas*

—

CO., Inc.

DEALERS

Foreign Securities
Domestic Unlisted Securities

Public

G. A. Saxton & Co., Inc.
Street, New York 5, N. Y.

Foreign Exchange
•
.

Gold

f x
—

•

i* $

Silver

•

—

Platinum

Teletype NY 1-609
79 Wall

St., New York 5, N.Y.

Telephone HAnover 2-8681-2

American Gas & Power

TRADING MARKETS
HAILE MINES

Central Ohio Light & Power

BRITISH TYPE INV.

Northern Indiana Public Service

CENTRAL STATES ELEC.

Tennessee Gas & Transmission

LAVA CAP GOLD

ELECTROL

RED BANK OIL

QUOTED

STANDARD
SOUTH

OIL

THOMSON

SHORE OIL

FREDERIC H. HATCH & CO., INC.
1888

G0ULET & STEIN

SECURITY DEALERS ASSOCIATION

Members Nat'l Ass'n of Securities Dealers, Inc.

Established

BROADWAY, NEW YORK 5, N. Y.
Teletype: NY 1-583

REITER FOSTER

Bought—Sold—Quoted

New York Hanseatic Corporation

Securities

Telephone
WHitehall 4-2422

1947—1948—1950

Telephone: BArclay 7-5660

Dealers

New York 5, N. Y.

Marmon-Herrington

Dictaphone

England Gas & Electric Assn.

120

Investment

€ 2 William St.

1975

—

Teletype—NY 1-1248-49

Domestic, Canadian

1961

SOLD

5, N. Y.

Specialists in

These attenders of meetings constitute an

5%, 1960

—

Exchange

gory

Manufacturing Corp.

5%,

Stock

Telephone: BArclay 7-3500
Beu

distribute an annual report, "Our Activities At Stockholder Meet¬
ings" (consisting of six pages in 1946), in which are cited the most
significant happenings encountered by them. These two kinds of
report, together with the requests for proxies, are the only communi¬

Associated Electric Co.

BOUGHT

York

be¬

University Ex¬

Library, Jan. 15, 1947.

New

ings, particularly when management fails to issue an official report
like Standard Oil Company of New Jersey, he issues his own sum¬
marized version of the proceedings. Additionally he and his brother

Waltham Watch Co.

New

Members

Gilbert reports to his group of small-stockholder clients (whom
he serves without compensation) in several ways. After some meet¬

WHitehall 4-4970

Solar

Laird, Bissell & Meeds
120 BROADWAY, NEW YORK

757)

address

Candy Corp.

specific; and-presiding corporate officials deem it
his questions as fully and patiently as possible.

70 Pine

5%,

Diimont Laboratories

Loft
eccentric nuisance

*Prospectus available to Dealers and Bankers only

^Extracts

become

trained

Hooper

amateur libra¬

rian,

Joseph Bancroft & Sons
Central States Elec. (Va)
Christiana Secur. Com.

stove.

answer

the

manyfold. The

good policy to

Trading Markets In '

the Bethlehem Steel Company,

utility

still

small

Toronto

Minority Stock¬

100

mer¬

business

Montreal

holder Number One."

Girdler

ested,

increa sed

The

HAnover 2-0980

Teletype NY 1-395

The most aggressive and active of these individuals
appears to be
Lewis D. Gilbert, sometimes known as "America's

im¬

ST., N. Y. 5

Bell

Minority Stockholder Number One

The ethics of the

constantly
have
The quality of the

average, is very much better than
that
in
which
our
fathers
and

formation
available

followed.

proved.

trading.

HART SMITH & GO.

cations Gilbert has with his "proteges."

business

SECURITIES

annual

existence

negotiations; objection to election of a di¬
juggling expense accounts; and,
conversely, extending praise of one institution's

directed and

ways

co-

CANADIAN

en¬

Philadelphiav

their

AMERICAN MADE

rector accused of

attenders

and has

duty

organization

MARKETS

tract

report.
While the

active

the

pro¬

(with one bank
president characterizing that talk as "cockeyed");
a suggestion that stockholders sit in
on union con¬

quarters, with the passage of time his activities have become

There

from

rejoined

office.

some

The essential character of the stock
market has changed since
the 1920s. We no
longer have pools. Insider manipulation has been
ended by laws
<S>which

phia for the Navy, has been re¬

two-

Market Analyst, W. E. Hutton & Co.

forced.

Commander USNR and formerly

manager

By L. O. HOOPER*

an¬

that stockholders could read

the annual report in advance of their
tests against officers' salaries

While

frequent portfolio changes.

Exchange,

leased

Such

housewife-stockholder who needed

factors in measuring value and
prices, and cautions against too-

Stock

that Charles F. Gourlay,

shareholder.

to successful intercession with

Analyst describes changed character of the stock market, mostly
resulting from New Deal securities legislation; and offers practical
suggestions regarding constructive attitude to be shown by investors.
Notes long-term decrease in Stock
Exchange turnover. Urges
investors to improve their own
psychological approach to their
investment policy. Cites fault of
overemphasizing non-recurrent

York

nounce

Director of the Port of Philadel¬

John,

About Stocks

Has

"meeting season" once more is on in full bloom.
the annual gatherings of banks and
corporations are
being enlivened by.the handful of protesting minority stockholders
who are the self-styled
protectors of the "downtrodden" American

versed in his

Right and Wrong Ideas

SEASON

unwilling to cau¬
on
any primary

over

emphasizes

weakness of

woeful

have

men

approach to labor law alterations.
Notable

tax

concur

program

Republican family brawl

labor bill. To

Republican boss

MEETING

company

once

voluble

:j;

the floor with

De¬

cus

tions.

competing for attention
issue, are racing to be first

their

kind

Senate and House Repub¬

been unable

continue

that

now

are

partment tariff negotiators to haand

Labor legislation likewise
high¬
lights absence of Republican co¬

asking President Tru¬
to postpone tariff reductions.

man

and

resolution

They're without

reform,

high bracket

The

And

reformer holds the tiller.

toothless

social

the

release

proceed with

pass

de¬

rescheduling

thereby
dis¬
risk capital
needed for industrial develop¬

In fury, House Republicans

awry.

unlikely,

coalition

for

penalize

taxpayers

:j:

pact revison
Republican leadership

finds

the

that tax

vehicle

may

courage

Reciprocal

revision

strengthens

It will retard, may bend

unity makes

revenue

PA.-Hemp-

Co^;Fidelity-Phila-

delphia Trust Bldg. members of the ;

Jl IP U>
The

itself today without

hill; I^oyes

=By A. WILFRED MAY=

Vy^lf

MEMBERS
63 Wall

Street, New York 5, N. Y.

Bell Teletype NY 1-897

William

St.,

HAnover 2-7768

)•%<

•

Tele:

rr1"

»-

--V'

•*

5
NY

'■

;•>

1-1055

FINANCIAL CHRONICLE

THE COMMERCIAL &

738

Thursday, February 6, 1947

T.v

BALTIMORE

Baltimore Transit Co.
All

Edward L. Burton & Co., Salt Lake

Asst. Sec'y and Asst. Treas.,

Monumental Radio

cites

Writer

National Sash Weight

sell

stein bros. & boyce
BALTIMORE 2

Bell Teletype BA 393

3-3327

BOSTON

sugar

ago,

years

one

of the

greatest hazards in the beet sugar
was the possibility of a
failure. Crop failures were
not primarily due to climatic con¬
ditions, but rather the result of
pests which attack healthy beets
during the growing season. The
losses from the attacks of pests,

industry

Company

leading manufacturer
fittings and valves

transmission

the

for

Outlook
cates

industries

for

hydraulics.

indi¬

served

prospective earning

substantial

power.

available

less

despite
in

ment

particularly the white fly, became
serious in some areas, that sev-

basic

stock

40%
price in

approximately

offering

original

than

1940,

crop

At current quotations, common

tremendous
position,

LOUISVJLLE

improve¬
approxi¬

American

Turf

Ass'n

upon

request

Girdler

Corporation

Murphy Chair Company

PRICED ABOUT 8

Lovett Grocery

Winn &

to be almost

proven

Pont, Homsey Co.
31 MILK STREET

Incorporated
Floor, Kentucky Homo Ufa Bldg.
LOUISVILLE 2, KENTUCKY

1st

BOSTON 9, MASS.

•

Teletype BS 424

HANcoclc 8200

Bell Tele. IB 186

Long Distance 238-9

N, Y. Telephone CAnal 6-8100

stabilize

The second major

our

economy.

No group of

people was harder hit during the past few years than
the recipients of pensions and individuals dependent on income from
tixed-income-<^

bearing

secur¬
ities. This ap¬

plies to

and beet tonnage per acre.

tent

Labor

large

number

development,

Statistics,

rose

from 98.6 in

1939, to about 152 at the

August,

present time, The return on AAA
corporate .bonds decreased from

beneficiaries

farming, appears to be of equal
significance.
In
former
years,;
sugar beet culture has required an

1939, to about 2.65% at the present

of hand^
labor. The. natural beet seed usu¬
ally contains one to four germs,,
so
that
when
planted,
several
beets may germinate in each seed:
cluster.
The beets grew so close
together that machine thinners

restricted

mechanization

the

extremely

sugar

beet

not

planting, mechanical thin¬
pullers, toppers, and load¬
ers.
Sugar beet farming has pro¬
gressed to a point where beets
are
now
planted and harvested
v/ith very little hand labor. It is;
that

believed
of

beet

sugar

mechanization

this

culture

(Continued

will

page

ma-

754)

trust

deeds,
the

large amount

block

iSl BANKERS BOND E

means

in order to increase the sugar con¬

ners,

an end to inflationary forces.
Advocates among other
balanced budget, high taxes, increased productivity and
lower farm and commodity prices as well as more imports. Favors
giving more discretion to trustees in matter of investments and rec¬
ommends favoring life tenant rather than remainderman. Sees no
hedge against inflation by individual and calls for better ways and

is still being improved

seed

interest

urges more

bringing

the white fly.

dustry has perfected segmented
seed, which enables the farmer, toi
plant single germ
seeds rather
than
germ
clusters.
This new
seed
has
permitted
mechanical

Consider H. Willett
available

has

resistant

practical and strenuous
"stoop" labor was
required to
thin the beets.
Recently, the in¬

share.

Circular

This

were

American Air Filter

of indicated book value
and at less than net working capital

mately 40%
per

which

100%

Several

of tube couplings,

appraisal of leading beet

the present market

processing meth¬

Nadler, in calling attention to hardships created by inflation

pensioners and life tenants under trust funds,

things

equities does not take into account important developments
which have taken place in the<£
industry in recent, years. These eral sugar factories had to be
developments are:. (1) the per¬ abandoned or moved to other
fection
of
resistant
beet
seed, areas where pests were not so
(2) the mechanization of sugar prevalent. Over a period of years,
beet farming and, (3) improve¬ a new beet seed was developed,
ods.

Appliance Company

Dr.

mechanization;
equities should

sugar

ments

The Parker

Consulting Economist, Central Hanoyer Bank and Trust Co.

higher price-earnings ratio.

It is believed that

Stock

Members New York & Baltimore

Exchanges and other leading exchanges

on a

University

Professor of Finance, New York

City

industry:

favorable developments in beet sugar

(1) perfection of pest resisting seed; (2) farm
and (3) improved processing. Holds beet sugar

Preferred

New York Telephone BEctor

By MARCUS NADLER*

By R. H. BURTON

Davis Coal & Coke

CALVERT ST.,

Shares Affecting Investments

Beet Sugar

Issues

Bayway Terminal

• S.

Current Conditions

Favorable Factors in

where

trustee

his

is
in

invest-

the

ments

purchase

of 3.25% in September,

average

time.

Notwithstanding these

de¬

drastic

re¬

velopments
duction

the

and
real

trust

income

beneficiaries, if during this periocl
trust company

the

estate

intact

kept the value of
in terms of dol¬

obliga¬

lars, it fulfilled not only its obli¬

tions; namely,

gations to the beneficiary but also

bonds

the

legal

and

m o r

The

Dr. Marcus Nadler

t g a ges.

bene¬

ficiary
trust

wishes

has

income

one

not satis¬

tenant whose real

the life

fied is

testator

the

The only

grantor.

halved

been

over

hit by the sharp

decline period of less than a decade.
in the purchasing power of the
Inflation, or a constant decrease
dollar, by the reduced return from in
purchasing power of a cur¬
high grade bonds, and by the sub¬
rency, is the greatest menace to
stantial increase in taxes.
the
beneficiary of a restricted
Since 1939 the purchasing power
trust fund, the pensioner and the
was

of the dollar has been cut in

published

:;:An

half.

of the cost of living,

The index

the

address

Bureau

by Dr. Nadler be¬

fore Mid-Winter Trust Conference
of the American Bankers Associa¬

individual who

large extent on the pur¬

very

chasing

the

power

currency

and. yet how often does a testator

grantor consider this factor and

(Continued

Feb. 5, 1947.

tion, N.ew York City,

depends on a fixed
depends to

welfare

His

income.

page

773)

MONTGOMERY, ALA.
SALT LAKE CITY

Lime Cola

New

NYSE

Weighing Desirability of Closing Down
Saturdays and Lengthening Trading Hours

Analysis

Many members of Exchange, particularly in New York, would want
Bought—

Boston

Maine RR.

Amalgamated Sugar Co.

Sold—Quoted

Upon Request

Prior Preferred

Circular

Request

thornton, mohr
& company

Walter J. Connolly & Co., Inc.
24 Federal

The

request

of Prospectus on

Copy
on

Telephone

Tele. BS 128

3-6696

edward l. burton

Lake City

SYSTEM

Utah

TELETYPE

464

ST. LOUIS
TRADING MARKETS

WHEELOCK & CUMMINS

for

INCORPORATED

BROKERS and DEALERS

Iowa Power &

Co.

Stix

Light Co.

INVESTMENT

UTAH MINING

STOCKS

SECURITIES

OLIVE

509

Established

ST.LOUISI.MO.
«

Membera St.

1898

W.H. CHILD, INC.
Members Salt Lake Stock Exchange

Louis Stock

BROKERS

Stock
Salt

Exchange
Lake

•

SPOKANE, WASH.

♦—♦—•—♦—I—0—«—•—

Foremost Dairies, Inc.

Common & Preferred

UTICA. N.Y.

SECURITIES
Quotes call TWX Sp-43 on Floor
Exchange from 10:45 to 11:30
A.M., Pac. Std. Time: Sp-82 at
or

Jacksonville

f Long Distance 47
?

U":

Branch—St.

Florida

Teletype JK 181
Petersburg,

i»

Fla.

reveal

Consequently,
the
Exchange is moving slowly
and cautiously in the matter. Emil
Schram, President, who has been
visiting
different
par s
of
the
country on Exchange business has
been discussing the subject, too,
opinion

with

exists.

those

members

the

Ex¬

CORPORATION
Members Standard Stock Exchange
ot

Brokers

Peyton

Spokane

Dealers

Underwriters

Building, Spokane
Branches at

Kellogg, Idaho and Yakima, Wn.

in contact.

come

The Mid¬

generally is rather cool
to the proposition since Saturday
is an important business day in
that region but the West Coast is

dle

West

favor

it,

he has

re¬

ported.
Closely allied with the subject
of

is another
the Exchange
has advanced that perhaps trading
Saturday

suggestion

closing

which
be

extended—if the

Exchange is likewise seeking out
opinion
through
numerous
in¬

BOUGHT—SOLD—QUOTED
Circular

Barnett Nat'l Bank Bldg.

subject

Cotton Mills, Inc.

MOHAWK VALLEY
INC.
238 Genesee St.

Tel. 4-3195-6-7

Tele. UT 16

the

va¬

suggestion

that

trading

The half
either at the be¬

whole hour each day.

hour could

come

at the end of the day,
that is, the market could be kept
ginning

either from 9:30 a.m. to 3
from 10 a.m. to 3:30 p.m.
Were the market to be kept open
an
entire hour more, the trading
p.m.

:
could

hours
3:30

p.m.

from 9:30

known

brokers in the West are

a.m.

that

now

generally

opposed to the earlier opening of
since, in their opinion,

the market

they

must

enough
on

is.

the West Coast at pres¬

ent are from

a.m.

to 2:30 p.m.

opposition would
rule out the possibility of

Western

This
tend to
an

working
Trading

commence

early
hours

than

earlier opening

now.

fact, in San Francisco this week,
Mr. Schram did say the Exchange
would
not
consider
an
earlier
opening hour.
tors

some

That there are fac¬
credit,

the

debit

the

if there
side of

are

the

ledger on this issue so far as the
West Coast brokers are concerned
is indicated

ther

by Mr. Schram's fur¬

statement

San

Francisco
of add¬

that the primary purpose

ing more time to the trading day
is to benefit the West, as the se¬
curities business,

tion,

appears

with the popula¬

to be moving west¬

ward.
It

will be the Board

of Gover¬

which will have
the final say on these matters. At
the moment, it would seem that
the Board won't even attempt to
nors

reach

course

decision

these

ques¬

immediately, perhaps not
until June or so. One likely pos¬
tions

hours be extended a half hour or

open

Utica 2, N. Y.

with

rious members.

INVESTING COMPANY

discussions

formal
The

request

STANDARD SECURITIES

the

Utica & Mohawk

Florida Municipal & Corporate Securities

Exchange does close Saturdays—
and on this suggestion, too, the

other hours.

Clyde C. Pierce Corporation

held

opinion on the question, even
in
New
York, is by no means
unanimous.
A healthy difference

hours should

NORTHWEST MINING
For Immediate Execution of Orders

>Winn & Lovett Grocery Co.

seems,

Exchange to close

Building

City, Utah

^eletyp^t^67^^^^^^Phone^-617£
•

been

inclined

Exchange

Bell Tele. DM 184

JACKSONVILLE, FLA.
*♦

that

he has

STREET

Bought——Sold—Quoted

Phone 4-7159

Exchange,

the

change in other cities with whom

3.30% Preferred Stock

EQUITABLE BUILDING
DES MOINES 9, IOWA

Saturdays if the banks did.
Informal discussions which have

160 S. Main Street

Salt
BELL

DES MOINES

Company

that New York banks will
York Stock Exchange

possibility

certain

weigh the desirability of Satur-*

bers

would want the

ESTABLISHED 1899

Teletype

L. D. 53

practically

Saturdays is, in effect, forcing the New

day closings for itself. Many mem

Montgomery, Alabama

Street, Boston 10

Tel. Hubbard 3790

Exchange to close if the banks did. Opinion divided on question,
however. Brokers in Middle West reported opposed to proposition.

sibility is that, should the Board;
decide
it
that way,
permanent
Saturday closings may be initiated

merely
closing

as an
on

extension of summer
Saturdays, provided

naturally the Exchange decided
first to keep open only five days
a
week this coming summer as
last.

.Volume

165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

Haskell Reinstated

Status of Aviation

Customer's Broker
Returns
By FREDERICK TILNEY, JR.
York City

Mr.

Tilney reviews conditions which point to expanded state and
municipal borrowings during the present and coming years and
points out total emissions to the end of 1951 will
approximate
$19 billion. Foresees large issues for housing and airports and
new

Tomorrow

was

greatly curtailed.

years

The

ri1y
shortages

materials

labor.

Exchange because in General Ses¬
Court, where he had been

all

the

war

older.

the

With the

country

—

who

of your public—as one of the millions of Americans
deeply interested in aviation but who are not professional
•

members

its

you

was

neglected during the

These

and

the

political

ning,

has

broker

should

again.

and

this

All
the

New

Hutton

Co.

sues

once more re¬

quality to admit

rare

made

was

recently

one

upon

which public

has

been

forcused

for

I have

share
of
responsibility

in these
I

things

about to

W. Averell Harriman

say.

First, I want
to make it clear that I share with

all

you

Emil Schram, President of the Ex¬

implicit

and

present

time.

some

Com¬

merce,

Haskell,
too,
very
likely, pleaded his case well with

by "The

Secre¬

tary

error,

especially

aspects

ation.

was

attention

of future potential is¬

survey

real¬

of the present
status of avi¬

changed.

accelerated.

manner

some

new

climate

istic

reported inclined to agree with the
are
now
accepted func- justice of the action taken by the
tions of Government and will con¬ Exchange in the matter. It takes
tinue to grow and increase even big-mindedness and
statemanship

though

normal

with

customer's

war.

risen tremendously
municipal and state

all

want

Now, apparently, all has been
forgiven and Haskell becomes a

have

that

"gambling business."

as a

of$>

fraternity

discuss

and

the

faith

future

the
avia¬

Aside from my vital interest
aviation as a part of official

Daily Bond Buyer"

and

enthusi¬
were soon to be issued. Since that
have been willing to go at least astic advocate of it for personal
Long before
time, a number of items have been half way in making such amends and business uses.
as
the Exchange and his former the war, I was using the airways
(Continued on page 756)
to facilitate my work, and during
employers thought necessary.

state

1946.

of building
and improvement can be made up.
In theory we will have to add 10%
to our municipal and state plants

indicated

4 V2

over

programs

of Nov. 15,

that

billions

total

bonds

new

change, and the others and must

Since the entire Haskell incident

Interest Rates

one which will
probably not be
forgotten immediately, it is fortu¬

May Be Lowei

nate

By M. M. MATTISON

Writer contends fast growing

that

After

With Montgomery, Scott & Co.

has

happy ending

of the

travel

based

not

reason

wishful thinking.
Many institutions including life
insurance companies and savings
banks, with enormous investment
demands

depend largely

on bonds
Many wills and
specify
bonds
and

investment.

for

funds

trust
bonds

only for investment.

above-mentioned

the

growing
refunded,
refund

fast.
When an issue is
and most issues are a
old bonds, the bond¬

able

When

retired

the

pur¬

held

issue

the

bondholders

elsewhere

look

bonds

many new

old.

wholly
must

seldom

are

the

are

holders

chase

All of

funds

for

invest¬

ment.
•

new

money

stocks

is needed the

rather

than

bonds

For

favored.

years there has
tendency to reduce bonded

been

debt

whenever

surplus funds

are

available.
The Government has beer, cred¬

ited

with

rates.

lowering

really

ha^

the

and

thereby

raise

the

funds

month

each

seeking

been
the

less

been

greater.

has

that

what

Haskell

All

was

two

If the Government

reduce

its

porations
be

will

funded

airlines

make.

every

family,

by air—with

also,
full ap¬

From

the

national

economic

standpoint, aviation is already a
vital necessity, and it will every
year
become more so.
By the

with

speed

which

his

speed of mail and

size of

riman

before

Aeronautical

City, Jan. 27,

Institute

the

Sciences, New York
1947.

stocks which

tain.

manufacture

distributors had

and

ers

tp main-i
orj

Air shipments of special

emergency freight will make ai
additional contribution to the ef
ficient

functioning of the nation'

assembly
system.

lines

and

distribution

Also, in international
both commercial and

relations^

political, the

speed of air travel has proven of

importance.

paramount

therefore

subject

of nature,

one

that

appear

Says Anglo-Canadian

important law

that cannot be leg¬

islated; namely, the law of supply
demand.

and

bond

prices will

vance,

obvious

relations—it
solute

has become an ab-f
necessity without which the

United Nations itself could

continue

ad¬

by
prices, and interest rates de¬

cline,

unless

new

moneys

In
of

the all-important
commerce
aviation

expansionj;

world

stocks,

which

seems

un¬

likely, and unless the large in¬
vesting institutions are permitted
to invest in preferred and common
stocks.

cocious

Jjifant. Yet in actual

Howard

Buffett

Nebraska

of. people directly affected,
excluding military aspects, avia-f
tion

just beginning to glimpse*

at its almost unlimited future pos-i

sibilities.

Growth of Aviation

Kingdom 4%, 1960-90

pressing the Administration's view
that

the

Anglo-Canadian

agreement
involve

last

violation

July
of

the

Loan agreement.

wheat

does

British Securities Dept.

not

US-UK

Goodbody & Co.
Members N. Y. Stock Exchange and Other Principal Exchange*
NEW YORK 6, N. Y.

115 BROADWAY

swim¬

Teletype NY 1-672

Telephone BArclay 7-0100

continues to

debt

and

BRITISH

cor¬

investors

to go into the

BOUGHT

•

SOLD

SEMINOLE OIL & GAS CORP.

QUOTED

•

A Producing Company

Security Dealers Ass'n

brokerage service

MEMBERS:NEW

YORK

STOCK

PROSPECTUS

REQUEST

EXCHANGE

in ail Unlisted Securities for
25

BROAD

Banks and Dealers

STREET, NEW YORK 4, N. Y.

F. H. KOLLER & CO., Inc.

-CORRESPONDENTS IN

LONDON
60 Wall

Street, New York 5

Telephone: WHitehall 3-7830

MANILA

Teletype Nos. NY 1-2762-3

•

AND

AMSTERDAM
BUENOS AIRES
OTHER

•
•

SHANGHAI

Members N. Y. Security Dealers

Ass'n

MONTEVIDEO

EUROPEAN CITIES

111

BROADWAY,

BArclay 7-0570

impossible, of course, to:
aviation with other forms;
transportation in many ways.;
But I was interested to note that!
(Continued on page 767)
j
compare

Scophony, Ltd.

ex¬

num-;

bers

Gaumont-British

inquiry, Secretary

is!

making its contribution. However,,
by comparison with other forms
of transportation, aviation is still
an infant. True, it has been a
pre-,

Snyder has written Representative

are

-aised by the sale of bonds rather
than

reply to

except where hindered

hardly!

function.

Rhodesian Selection Trust

Violate US-UK Loan

that

United

fact]

aviation is not merely an impor-f
tant convenience to international

businessmen

by Secretary Har¬

de-.

cargo

industrial

efficiency is
substantially increased.
On this'
latter aspect, I can speak with;
some
knowledge as I have seen'
from close range the industrial
ef-j
fects of improvements in rail deliveries of freight.
In the yearsj
following the first World War, the
increase in the speed and preci-?j
sicn of railroad freight deliveries!
had a revolutionary effect on thej

*An address

HAYDEN, STONE & CO.
a

the
ago—

the

liveries,

trips and byy

the Gov¬

likely to discourage that drift. It
would
are

I SJEIlMRGMo.
We render

reported

make necessary

ernment., with its huge debt is not

SECURITIES
Members N. Y.

re¬

coming true.

interest

been

likewise,

compelled

for

return

ming with the current.
.

wrong,

of Wall

weeks

would

the

means,

proval.

"rumor"

travels

occasion

old job on Feb. 7—is

brought the

interest rate down; and

trip

have been

find

that

him

using

expression of

mere

indeed.

"Chronicle"

investment
has
That, rather than

Government

must

merely

and

slower

still

of his

penalized

would

joicing

For several years the supply of
bonds, except Government Bonds,
has

have

wrong,

Street

price of bonds.

call

When

sale

market

been

opinion

seem

had

to¬

severely for

opinion e

upon

and

very

but

job had I not been able to

large financial institutions throughout the
country and Wall Street in general have been expecting an up-turn
would

have carried

business to which he has devoted day, whenever it is possible, I

the

That

not

forced

rates.

could

travel by
air.
Time would not
have permitted most of the some
30 trans-Atlantic crossings that I

life.

interest

war

made

larger demand for bonds in relation to supply and forces interest
vea^

guilty

rates dowrt.
manv

the

not

was

the last ten years and

For

responsibilities, I

of any breach of the ethics

funds of savings banks and insurance

companies, combined with refunding of Bonds into stocks creates

all, Haskell

■

can

tion.

turning to something like normal,
the deficiencies in the municipal

Commerce

one

are

—I

obsolescence

Government activities.

was

curtailed

rate of obsolescence

issues

j added to local, State and Federal

are

Main-

tenance
Tilney, Jr.

five years1 services

now

Frederick

juror

building programs will cost con¬ York Stock Exchange and E. F.
Hutton & Co. are to be compli¬
siderably more than in 1941.
During the years of the New mented for reversing their original
Deal,
many
innovations
were
position in the case. In the begin¬

u p

the time of

prospective

kell had referred to the securities

rovements

completed

such

industry

care

Costs

about

and

amount

professional football players, Has¬

that

the public imp

the

—

population in¬
1 0

catch up on the maintenance work

During

creased

called

the trial of Alvin J. Paris
charged
then with attempt to bribe two

take

t i lities

o s

;

to equal our growth in population.
At the same time we will have to

and

em¬

broker was cancelled a
month ago by the New York Stock

the normal flotation of tax-free bonds

pri-*

m a

Haskell

sions

reduction

due

was

tomer's

exceed maturities in next five
years.
During the past five

William

ployers, E. F. Hutton & Co. at 61
Broadway.
It will be
recalled,
Haskell's registration as a
cus¬

municipal bond issues will greatly

noting its growth, contends

goes back to work for his old

almost 4 billion dollars for soldier bonuses. Breaks down
analysis

f, f

Secretary Harriman, though stressing importance of aviation and ;
we are not yet in the Air Age. ( Scores
J
"overselling" the public on status of industry, but maintains in- 4
dustry is on a sound basis. Blames airplane lines for advertising
when facilities were
inadequate. Poses as problems of aviation: i f
(1) improvement of facilities and services; (2) new methods of 4
control; (3) making possible consistent all-weathers operation,
and (4) increased safety.

.Tomorrow

Tilney & Company, New

,by states and concludes

Secretary

Former Job

Industry

By HON. w. AVERELL HARRIMAN*

NEW YORK 6, N. Y.

1-1026'

Thursday, February 6, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

740

Trade Agreement

What Business Wants

Hearings End

In the Tax

Committee hearings were amica¬
ble.

Oklahoma Gas & Electric
the Holding Company
entire equity interests in certain
subsidiaries, the proceeds to be devoted to retirement of the bank
Joan incurred some time ago in connection with retirement of the
bond issues. The company has proposed to sell Oklahoma Gas &
Electric, California Oregon Power, and Mountain States Power.
.Oklahoma was registered earlier^
this year, and sale was first an¬ eluding amortization of plant ac¬
ticipated for early February but quisition adjustments, etc., may be
Jias apparently
been postponed taken into account in determining
Standard Gas & Electric is required under

until the latter part of the month.

dividend

possible, in fact, that the
order of sale might be changed,

ments have been made since

seems

with

The

other issues ap¬

of the

one

needs

'include

750,000

the

both

stock.

new

the present
000

1%%

1975,

(par $20)

preferred

generated

hearings,

little

very

and

the

well

state

known

production, its farm income
the

twice

than

income

Manufacturing is largely
oil and farming, some

industries being
refining, meat pack¬
ing, flour milling, cotton seed oil
milling, metal smelting, vegetable
canning, glass, machinery, and
dairy products. Electric revenues

stock

the

principal

residential.

31%

about

are

for

appeared

the program. Such
counting" would be mis¬

against

"nose

Administration officials
feel, for while many individual
companies voiced opposition,

leading,

trade associations which

numerous

represent a much larger fraction
of
American
foreign trade ap¬

peared before the CRI to ask for
from other countries.

concessions

dates

ing the

other

from

concessions

taining

countries this time exceeds that of

new

includ¬

Regarding

.an

the

intervals;

amounted

Nov.

30,

1946,

kwh

for

per
was

earlier red herring prospectus

residential

3.97£, and the

954 kwh.

tion statement) payments for 1947

which the company is

per

share.

its

However, amendment No. 2 omit¬
ted

this

statement,

matter indefinite.
?ments

Quarterly

last

at the annual

were

and

the

for

leaving

considering

half

the

to be

company

charges

the
the

earning

plant

account

1946

(omitting intangibles and includ¬

ing

substantial

some

working

the idea of suspend¬
removing, the excise

even

imports, there is
regret in Administration cir¬

some

copper

that the

that direc¬

such

plea

this would be

urgency, for

useful

move

with

comes

delegation

use

Geneva.

net

estimated allowance for
capital).

Plant

account

relieve

hopeful that the import ex¬
cise
tax
on
copper
will
be
suspended for the period of the
present shortage. The move, said
to have the backing of important

consuming

ests, is looked for in the Senate,
the
House
already having ex¬
tended
the
life
of
all
existing

surplus

account,

in-

being amortized.

tative

Trading Markets in Common Stocks

and

Liberty Aircraft Products

Bausch & Lomb Optical Co.

^Crowell-Collier
Foremost

Rockwell Manufacturing Co.

'Tennessee Gas & Transmission

Dairies

inter¬

Patterson

(R.,
bill to re¬
the excise tax on imported

told

the

"Chronicle"

by Representative Patterson, some
action
of

each

tion,

is imperative

with them their
their

carry

their

and

education

sensible

Paine, Webber. Jackson & Corhs

"Already

Finance

the

fore

Mr. Bodine recounts progress

SAN

FRANCISCO,

pany

offers, and chief advantage to insurance company
higher income return.
that I am going to make witty respect
funds in corporate securities may startle

The analogy

life insurance

along.
Just

Co.

BROADWAY, NEW YORK 6, N. Y.

Direct Wire to
Chicago

the

human

body
proper

food,
is

and

care

attention

was

for¬

remain

sound

and

operate

peak efficiency, so does
the
corporate
Bodine

one

call

in the other, capital.
the

quate capital
tained

Herget

our

homes, or

the

let

health;

Without good

hand

and

ade¬

the other, neither
The first is main¬
daily activities, in
in our hospitals; the

prosper.

one

case

merly sales manager for the first
California
was

cisco

& Co.

Co.

and

prior

thereto

charge of the San Fran¬

office

George

Grant

is addi¬

to investing
you. 1 can

only hope that<$
~
~
"
it will clarify second through internal financing,
or
through resort to the market
itself as we go

can

Mr.

direct

tional investment outlet with

Ralph W. Herget has become as¬

Building.

of life insurance companies in

Cites chief advantage to

made.

body.

CALIF.—

Mutual Life Insurance Co.

supervision and follow-up after loans are
borrower is service insurance com¬

importance of

stresses

William

Financial Chronicle)

BODINE*

lending under private negotiation. Says leading ^influ¬
ence has been need by insurance companies to expand their indus¬
trial investments.
Points out methods of negotiation and debt
contracts are similar to those used generally by underwriters, and

Staff of Denault & Go.
The

affairs as well as in

business.

corporate

sociated with Denault & Co., Russ

Gilbert J. Postley

ship in fiscal

Financial Vice-President, Penn

health

6/50 & Prior Pfd.

WM. W.

another be¬

Herget Joins

(Special to

Portland Electric Power

all odds the best system for
and I believe we can prove
But we won't do
without leadership, and leader¬

it to the world.

Lending"

"Private

me," said Mr. Patterson.

believe in

Insurance Company

ing hit by the copper shortage."

Ral|

since

enterprise, we must do all we
I believe it

to make it work.

us;

Feb. 5,

City,

condition

American Gas & Power Bonds

can

(Continued on page 769)

month, the Library of Congress

informs

My first and major prem¬

that,

ise
free

Conference

York

New

failing at the rate of 5%

are

Russia, of course, is commu¬

nistic.

American Management Asso¬

the

electric

can

national

is by

1879

England Public Service Pfds.

and

by Mr. Magiii be¬

address

*An

by the week

"The auto industry is

New

approach

problem, like the
tax system, with first a clear state¬
ment of the speaker's premises.
For in matters like this, in which
modern

great

By that date, he stated,

exhausted.

shops

ESTABLISHED

hopes

It is as refreshing

for the future.
as

prejudices,
their

and

exoerience

needs

Request

Employment to¬
is a

income
has
reached
unprecedented
heights.
All of us are living pretty well.
Our economy operates on the
free
enterprise
system; ours is
certainly the most important free
enterprise economy in the world
today.
Indeed, it is one of the
few that is left, for Great Britain
is working on a socialistic State;

individual likes and dislikes,

the stock of copper will have been

'■Prospectus

Magill

officials and ex-Treasury of¬
like
members
of
the
Management Associa¬

ury

In gen¬
the war

is unusually high, there
for more than we

produce,

February 17th, if drastic effects
industry and business are to be

avoided.

u. S. Potash

producing

introduced

copper.

Manufacturing Co.

Roswell

of them

demand

Olympus. Ac¬
tually, Treas¬

On Feb. 3 Represen¬

James

Conn.),
move

*Bates

day

most
losses.

through

amazingly well.

sum¬

Mount

pear

which

broadcast

mit

shortage.

emergency

came

from the

WASHINGTON, Feb. 5.—(Spe¬
cial to the "Chronicle")—Usually
well-informed quarters here ap¬

cost with the exception of an item

$4,000,000

losses,

tax

remove

has been written down to original

than

eral.

being

1947.

ap¬

less

not obvious

Copper Excise Tax
Suspension, Seen Near
expected to

but

were

I expect

The

great

business man,

living in a disorganized
war cost this country

are

cience,

ciation,

Senate

major ones.

world.

very

bargaining counter for the

American

excise taxes.

sym¬

a reasonable rate. How¬

it is understood that special

ever,

data

However,
available

appears

return

earning

about

increase in earnings, $2 would
pear

the

exact

pay-

rate of $1.75,

the

base.

rate

basis

the

annual

It is impos¬

was

state

service

average

sible

tax

most

are

the average price

usage

estimated

In the 12 months ended

(amendment No. 1 to the registra¬

were

estimated

the

1946

$834,000,

payments,

tion

reduction

all-important

dividend

pathetic
ing,

cles

quent

earn¬

ings would run about 40-60 cents
higher ($4.07 for the 1946 period).

matter

Oklahoma

officials

not

the address

their

While

The company makes rate reduc¬
tions on a voluntary basis at fre¬

stock; based

money

(Fort

1971

unlimited).

previous trade-agreement oc¬

1951.

the total number of

the old number of shares

(the most important) ex¬
in 1955 and Muskogee in

City
pires

1946, the figure for the September
period being $3.43. These figures

1948

from

Smith

omnis¬

sumed

premises are much the same
yours.
Here they are, at least

as¬

ficials,

various

certain

American

casion.

expire

The

icle," the American interest in ob¬

any

Franchises

Bud¬

Also, it is learned by the "Chron¬

miscellaneous.

rural,

increasing from
in 1938 to $18,281,000
in the 12 months ended Sept. 30,
1946. Share earnings during 193845
averaged between $2.00 and
$2.50 but increased
sharply in

While I

I work for business men.

the

who

witnesses

Hugh

statistics

for

ord with revenues

be outstanding,

portant as the conclusions.

The

Senator

$13,272,000

based

well

opinions and judgments differ,
the premises are almost as im¬

ac¬

with

week

30% commercial, 21% in¬
dustrial, and 12% wholesale and

shares to

are

customed

speak

to be very
—

Treasury offi¬
cials

initial shock. On

Ex-

Tax

petroleum

The
ccjmpany has enjoyed
a
better-than-average growth rec¬

are

reflection, however, the title seemed to

Federal

stock.

common

erally, much pleasanter than they
Unlike some re¬
cent
Congressional
pronounce¬
ments
on
the subject, the CRI

chosen.

System,

$7,000,000

890,000 shares

and

further

number

from oil.

semi-annual instalments to 1953),

$13,500,000

The title of this luncheon address gave me an

Officials found the hearings gen¬
had anticipated.

Urges drastic trimming of Federal budget,
expenditure of $20-$25 billions as ultimate goal.

with annual

CRI

(due in equal

notes,

miscellaneous reforms.

get

for oil

consist of $35,000,-

2%s due

1st

serial

govern¬

Butler (R.,
Neb.) wrote the Chairman of the

While

new

financing, the capital

•structure will

the

negotiating the
trade agreements with 18
other
governments
at
Geneva
next
Spring came to an end on Jan. 31.

kogee.

will be

completion

for

Federal

used to reduce the issue of serial

^construction.

interests

ment's guidance in

heat, the "Chronicle" is told. Last

some

portant

About half

bank notes and about half for

other

and

cities served are Okla¬
homa City, Fort Smith and Mus¬

the proceeds of the latter

also

business

wholesale
business.
About 92% of the business is in
Oklahoma. Some of the more im¬

does

by Standard Gas and 140,000

held

and

Arkansas,

Western

and

new

public

the

and

furnishes electric

company

in 224 communities
and suburban areas in Oklahoma

offering
when it makes its appearance will

capital

pay¬

1908.

service (only)

pearing first.
Oklahoma

Dividend

policy.

the

determine

American

views

*»

authority, terming particularly important income levies'
impact on individuals, calls for drastic revision of surtax rates.
Recommends ending of double tax on corporate dividends; continu¬
ance and perfection of excise
taxes; improved bureau administra¬
tion; reversal of undistributed profits tax philosophy; and other

WASHINGTON, Feb. 5 (Special
"Chronicle")—The hearings
the Committee on Reciprocity

Information

of the Treasury

Former Under-Secretary

Eminent tax

to the

System

By ROSWELL MAGILL*

unusual

demanded

number of concessions.

Act and SEC orders to dispose of its

"An

address

Mr.

Bodine at

meeting of the Ameri¬
Association
of
University

the annual
can

Teachers

Insurance,

phia, Pa., Jan. 24, 1947.

Philadel¬

place, which I am going to liken
the hospitals' ward, semi-pri¬

vate,

private services, the last
subject of our dis¬

of which is the

cussion.

The

standardized

war

service

represents the more or less im¬
personal public offering of securi¬
ties
through
underwriters in a
form which meets the general re¬

quirements of the investors. This
is particularly true of public of¬

competitive bid¬
underwriting fra¬
possibly be ex¬
know intimately the af-^

ferings involving
ding where the
ternity cannot

pected to

fairs and the

managements of the

great number of companies whose
securities they are called upon to
evaluate.
Then let the

semi-private serv¬

represent so-called private of¬
ferings where an investment house
acts as financial adviser to the
ice

corporation and in turn places its
securities with a limited number
of institutional purchasers. In that
(Continued on page 755)

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

With A. G. Edwards & Sons With
Link, Gorman & Co.

Paramount Railroad Problems

(Special

President, Baltimore & Ohio Railroad Co.

competing with railroads.

Holds

ST.
Manual

the de¬

was

velopment

confident

that

and

36th

Na¬

Fourth Edition

—

Association, 12

Street, New

York

16,

with

through
that lie ahead they will

prosper and fulfill their

has

Norris & Kenly Add

MO.—Herman

(Special to The Financial

CHICAGO,

associated

become

Reihmer

Friedman, Brokaw & Sam-

Employment
in
a
Society—Committee Report

Free

the

International

Commerce

—

Chamber

are

has

the

Mutual

understanding and good
is a great and
pressing need
today in effecting the adjustments
in individual, in
national, and in
internationally relationships if our
future well-being as citizens and
as a
country is to continue.
During and since the cessation

must

one

spring the
well-being of
the

other.

Down through

that have

New

the

York

was

Exchanges.
formerly

La Salle St., members of the. New

Louis

St.

and

with

York

Reinhard

Mr.

and

Chicago

public

In like

nized

consciousness
as

manner

never

has

before

recog¬

that

White

Mr.

of all people

upon

mutual

understanding

Club

good

will

adjusting

Pittsburgh,

Shields

^Jvtxqeruhl

Wages and Prices—Jules Backman

Co.

c/,/

and

(Continued

page

interna-

768)

40 Wall
WHitehali

Now With Herrick Waddell
(Special

The Financial

KANSAS

now

Private wire

affiliated with

announce

Herrick, Waddell & Co., Inc., 1012
Baltimore Avenue. In the past he
with

James

Teletype
to Draper,

Sears & Co., Boston

Ross

the opening of offices in:

PHILADELPHIA, PA.

Co.

E. Weltner & Co.

Walnut

1500

Street

Teletype PH 16

Dempsey-Tegeler Adds
(Special to

ST.

freedom,'"
Labor, Capital

of life,
advertising and

recent election may mean

only a "respite" and should
relaxation of opposition to forces of discord*

not

(Special

ST.

man

The

Financial

LOUIS,

Calkins

lead to

the expression "One World" was brought forth
lives. It is well that it was, for it undoubt¬

the

Louis

St.

Stock

MO.—Edmund
affiliated

now

Van Tuyl
72 Wall Street,

(Special to The Financial

announces

those

and

whose idea
of

business

the

life

ended

the

PRIVATE WIRES

dwell

out¬

Chicago

skirts of their

little

own

Cleveland

and

CHARLES D. OGDEN and ARNOLD J. WECHSLER

communities
and their

the opening of

Chronicle)

which

esses

Teletype NY 1-1499

Telephone HAnover 2-6627

DENVER,
COLO.—Leonard
Wigton is now with Investment
and
work
together Service Corp., Security Building.
peaceably for their mutual ad- Mr.
Wigton was previously with
(Continued on page 772)
Boettcher & Co.

proc¬

New York 5, N. Y.

with

With Inv. Service Corp.

—

Abbe

Chronicle)

species to find the formula by
men
might gain freedom

thought

ATLANTIC CITY, N. J.

PA.

Ex¬

Herrick, Waddell & Co., Inc., 418
Locust St.

our

—

and

With Herrick Waddell

educational work and not leave* unopposed
propaganda of govern¬
ment bureaucrats and subversive organizations.
Warns results of

€>

WILKES-BARRE,

changes.

and Management cooperate to preserve our freedom and
way
and holds task of businessmen is to foster it
by

HARRISBURG, PA.

EASTON, PA.

ALLENTOWN, PA.

Chronicle)

MO.—Frank

sey-Tegeler
&
Co.,
407
North
Eighth St., members of the New
York

Mr. Lamborn points out U. S. today, as "only island of
is beset by ideologies which threaten freedom.
Urges

concept in
stimu-

Financial

been added to the staff of Demp¬

President, Lamborn & Co., Inc.

new

The

LOUIS,

Flotron and Rolla J. Gittins have

By ODY H. LAMBORN*

A few years ago

NY 1-2073

Chronicle)

MO. —Leroy

CITY,

L. Lichliter is

Street, New York 5, N. Y.

3-9060

Pennypacker 5-8328

Challenge to Management
Labor and Capital

Announce their withdrawal

own

Goldwater, Frank

circumscribed

& Ogden

—

partners from

OFFICES OF

January 31, 1947

interests.

cayne, bobbins & co.

But the idea
was

hardly
We

new, for ob¬
viously the

this particular planet
world—spiritually, real¬
istically and economically. Spir¬
itually this is the case, for under
our religious teachings we are all
brothers; realistically, because it
is the indisputable fact; econom¬
ically, because the actions of pro¬
of

people
of

one

ducer

and

affect

producer and

another

—

consumer

one

any

39 BROADWAY

geance

piece, the re¬
provided it with a ven¬

and

It has

ever

one

indelible

soon

CHARLES

Mr.

OGDEN

ARNOLD

Notice

Lamborn

Baltimore,

Md.

Jan.

28,

UNDERWRITERS

Members New York

UNDER

DISTRIBUTORS

ralph

39
™

11!

now

our

permanent

Broadway

offices

New York

CORTLANDT 7-4400

SOUTH

OFFICE

TELETYPE N Y 1-2494

bloom

PARTNER

CHICAGO 3, ILLINOIS

SALLE ST.

PRIVATE WIRES TO VAN

OHIO

OUR

RAnaolph 8924

14,

CV 348

DIRECTION

RESIDENT

Security Dealers Association

1947.

CLEVELAND

AND

Aetna Securities Corporation

Exchange

BLDG.,
CHerry 7445

of Change of

the Potomac States Bakers Asso¬

ciation,

COMMERCE

CHICAGO

colors

Cayne, Bobbins & Co.

WECHSLER

Address, Telephone and Teletype

fade out.

before 31st Annual Convention of

FORMATION

THE

ANNOUNCING

Member Cleveland Stock

been the hope, ambi¬

address

N. Y.

HAnover 2-5865

UNION

tion and basic problem of the hu*An

Co.

NEW YORK 6,

Telephone:

prove

fabric is all of

Members National Association
of Securities Dealers

society of the
illustration were
that the world

world.
needed

that will not

the formation of

Ogden, Wechsler

groups in the human

cent war

announce

area

consumer

individuals

pleased to

Ody H. Lamborn

two billions of

are

Broker and Dealer in Securities

single copy, 10 copies, $7.00; 50
copies, $32.50; 100 copies, $60.00.

and A.

Compuntf

INCORPORATED

Foundation for Economic

—

Education, Inc., Irvington on Hud¬
son,
New York—paper—750 for

was

Pa., Jan. 28, 1947.

Ex¬

Announcing the formation of

Opportunities in Finance—Sam

the

everywhere depends

the Annual Dinner of the Traffic

edly

Stock

changes. HO, Was previously with

Mercantile-

Commerce Bank & Trust Co.

Shulsky ■— Vocational Guidance
Manuals, Inc., 45 West 45th Street,
New York 19, N. Y.—paper—$1.00.

welfare—indeed the very safety—

connected';

International Cham¬

of hostilities of World War
II, the

passed, they

have grown and shared their wel¬

become

Commerce, Inc., 590 Madi¬
Avenue, New York 22, N. Y.

son

will

the

well-being

es¬

good will.

de¬

understanding of the

sential interests of each other and
a
continuation of the spirit of

transpor-

out

Chronicle)

ILL.—Clarence

ish, 711 St. Charles St., members with Norris & Kenly, 209 South

—paper.

ex¬

pendent, for

La Salle St. Mr. Phillips
formerly with Paul H. Davis
& Co. and Blyth &
Co., Inc. ':!?

Ex¬

Friedman, Brokaw
LOUIS,

Reinhard

Stock

mutual

tation

address

Stock

ber of

the

mutually

*An

Louis

N. Y.

respective destinies in the propor¬
tion that there is between them a

rail

fare side by side.

Investments

Maximum

the years

possible.
Pittsburgh and

years

Relating

commerce

lines

the

Laws

American Bankers

tension of rail

made

R. B. White

tional Banks

mutually

that

commerce

Loans

it was, that

meagre as

was

St.

and

changes.

East

beginning,

great development and extension of domestic
possible,
and$>
——

South

York

rail transportation in the

was

the

(Special to Tbk Financial Chronicls)

Eighth St., members of the New

equality in bargaining with labor and calls for an
understanding between labor and management so each may share
fruits of industry without disrupting the economy.
made

Chronicle)

LOUIS, MO.—Richard C.
CHICAGO,
ILL. — Irving
B.
Stickney has joined the staff of Phillips
has
become
affiliated
A. G. Edwards & Sons, 409 North with
Link, .Gorman &r Co., 208

Leading rail executive, holding our economic well-being depends on
lasting settlement of pending domestic problems, lists as matters
effecting railroads: (1) conflicts of labor and management and im¬
pending increased wage demands; (2) insufficiency of rail rate
Increases and declining earnings; and (3) government subsidiza¬
railroads have

to The Financial

ST.

By ROY B. WHITE*

tion of airlines and other carriers

741

CG 616

TUYL & ABBE, NEW YORK CITY
FEBRUARY 1, 1947

Thursday, February 6, 1947

FINANCIAL CHRONICLE

THE COMMERCIAL &

742

Title Guarantee & Trust Co.

Red Rock Bottlers, Inc.—Circu¬
1420 Walnut Street, Philadel¬
lar—Hoit, Rose & Troster, 74 Trin¬
phia 2, Pa.
Also available are memoranda ity Place, New York 6, N. Y.
on
the
Gruen Watch
Co. and
ers,

■

J'!,.-

Dealer-Broker Investment

International Detrola

Recommendations and Literature
interested

to send

Commodore

mentioned will he pleased
parties the following literature:

Hotel, Inc.—Circu¬

Inc., 41

and appraisal of City of Philadel¬
Jacques
phia Bonds and a compilation of
39 Broadway, New
Pensylvania Legal Bonds.

ket Forecaster
Coe

Stock Mar¬

Prices As A

Bond

valuation

available are a

Co.,

Study

—

Esky-Pads—Memorandum pad
with the Varga girl on the cover—
B. S. Lichtenstein & Co., 99 Wall
Street, New York 5, N. Y.

Rights

Outlook—Discussion

Securities
of topics

of interest to the investor

business executive

and

circular

York 5, N.

New

—

Portfolios

Bond

Government

Break¬
down for 19 New York City Bank
Stocks 1946 — Laird, Bissell &
Meeds, 120 Broadway, New York
and Sources of Income

—

S, N. Y.

circular

Late

—

Bros., 32 Broadway, New York

Greyhound Corp.

Amalgamated Sugai: Companyanalysis and 1947 out¬
look—Edward L. Burton & Co.,
160 South Main Street, Salt Lake
Financial

Railroad Developments — Cur¬
rails—Vilas
& Hickey, 49 Wall Street, New

pany—Analysis indicating attrac¬
tive possibilities — Newburger &
Hano, 61 Broadway, New York 6,

research item
Co.

Also available is a

Manufacturing

Rockwell

Company—Study of cur¬
situation
in
"The
Adams

Journal"
South

231

Co.,

Adams

—

Salle Street, Chicago 4,

111.

Hydraulic Press Manufacturing
Co.—Detailed Analysis—Comstock
& Co., 231

South La Salle Street

Co.

prehensive analysis—Brady & Co.,
49 Wall Street, New York 5, N. Y.

York 5, N.

Aspinook Corporation—Circular
—Ward 4c Co.,
120 Broadway,
New York

EtfUiptftfcftt certificates

—Valuation and appraisal—Stroud

123 South
Street, Philadelphia 9, Pa.

Co.,

Inc.,

Broad

Also

5, N. Y.

available are memoranda

Co.; Hart¬

W. h. Douglas Shoe

hawk Rubber; and
on

Taylor

United Artists.

Association

National

Member,

Corp.;

Pfaudler

Ind.;

Diebold,

Bausch & Lomb—Memorandum

—~J. G. White &

; Middle West

—

Pacific Coast

Co., Incl, 37 Wall

Street, New York 5, N. Y.

Maryland Casualty Company

—

Analysis—Sills, Minton & Com¬
pany,
Inc., 209 South La Salle
Street, Chicago 4, 111.

New

England Public Service Co.

—New

analysis—Ira Haupt & Co
New York 6, N. Y.

Boston

Circular

SECONDARY

&
—

Parker Appliance Co.—Circular
—

Walter J. Connolly &

Co., 24 Federal Street, Boston 10,

MARKET

—du

650 S. Spring St.

State 6502

Michigan 4181

CG 99

LA 255

Colorado

Milling & Elev., Com.

*Trailmobile Co., Com.

ports on Divco Corporation, Fed¬
eral
Motor
Truck,
MacFadden
Publications, Glenn L. Martin Co.,

Street, Boston 9, Mass.

*Prospectus

Available

Request.

'52

and

Paul H.Davis & Go.
Established

Public

and

Gas

cago

South

Utility

Consolidated

Pfd.

study and
form—Fred
208

1916

Members Principal Stock Exchanges

N. Y.
Fred

5%s

Electric

Prophet

Grand

Tornga,

Rapids National Bank
Grand Rapids 2, Mich.

Building,

Comprehensive
analysis in brochure
Fairman

W.
La

Co.,

Salle Street,

Chi¬

National

Unterberg

Co.,

York 6, N.

New

available

Also

circular

Bank

Trusi

analysis—C.

Broadway,

legisla¬

tion.

When

C00,000 in the budget and said this
could be accomplished by cutting
individual items of the budget. I

questioned
the

whether

income tax cut

would

think

Stern & Stern Textiles,

We're

so.

study

making

Inc.

previous belief that

of the budget
probably three and a half billion
dollars which is necessary if you're
out

cut

can

going to get a 20% cut in the in¬
come tax—personal
income tax."
"Where do you think it's com¬

Where's the cut com¬
from?" Sen. Taft was then

ing from?
ing

asked.

item

the

except

and

debt,

public

nearly

but

in¬

also be cut," he

think

final

lar

—

Lerner & Co., 10 Post

Office

Broth- Square, Boston 9, Mass.

pf the union and thereby
without

some

his "job

fair treatment, that

right to a secret ballot,
to elect the officers, to determine

he has

You might—I say you
about it by prohibiting
the closed shop in which a man
can
leave and union and go on
with his work if he's agreed. But
policy.

may—go

going

you're

say

closed

shop is proper and he must stay
in that union, then
I think we
have some responsibility
to see
that he has fair treatment in that

ernment

can

15%

one,

an¬

another, and none
It will have to be a

general policy rather than
determination."

order

further

broadcast, issued the fol¬

I mentioned the

figure 10%, 15 %,

and ho per cent,

in referring

the possibility of cuts

in sepa¬
budget.

court.

would

say

specific

question before
general policy I

that the United States

Government

should

to make a man

not

able

work for another

unless he wants to

man

to say

him if he's

the question of

performance is a
the

point in the broadcast

against

if he's contracted

instance,

citizen to

statement

broad

they can't order

that

his —for

clarify

one

citizen

the Senator replied:

his will,"
"It's

order

another

for

work

further as to

questioned

When

work for

him."

TELETYPE NUMBER IS
We Maintain Active

Freo.W.FairmanCo.

his

that in that union he has

see

rights, that he can't be thrown out

"the United States Gov¬

have different features;

"At one

20%;

and that no man can work
A unless he's a mem¬
ber of the union, then we must

for company

whether

position on income tax reduction,
Senator Taft, almost immediately

Circu¬

admit that a closed shop

"If you

union."

another.

fairly
a

the

idea

the answer, "I don't
It will have to be dif¬

10%

mean,

his

is legal

was

so.

ferent,

shop and union democracy,

asked.

"No,"

rate items of the over-all

OUR

I'm

both of them

replied.
"Is that going to be an acrossthe-boards
tax
reduction?"
he

SINCE 1908

every

interest on the
I have some
bill and

services,

armed

can

query,

closed

stated:

its

from

think

lowing statement:
—

Indianapolis, Ind.
Rockford, 111.
Cleveland, Ohio

:j I

at the pres¬

moment, but I see no reason

ent

after the

4, 111.

—Memorandum—Buckley

shop," Senator Taft, in answer to
a

detailed

Regarding outlawing the "closed

Robert A. Taft

Senator
replied:

kept,

emphasized that a reduction of the
budget would have to precede any
cut in income tax."

promised Re¬
publican 20%

offering

of $3,500,-

reduction

labor

po.nted out that a 20% cut
would have to be

income taxes

based

other, 20 %

Co.—Year-end

be the basis

not

could

sound tax reduction policy.

tax

no per cent
of income. That

15, 20 or

10,

obviously
of

and

Co.—Circular

Larson

—DeYoung,

—

Colorado Milling and Elev. Co.

Teletype CG 405

was

Ralston Steel Car Co.

10 So. La Salle St., Chicago 3

Mem¬

74 Trinity Place, New York

mers,

Chicago Board of Trade

Tel. Franklin 8622

—

orandum—Troster, Currie & Sum¬

Public

Central
of

views

the

and Pfaudler Company.

*Jessop Steel, Pfd.

California Cotton Mills—Special

report — Walston, Hoffman &
Goodwin, 265 Montgomery Street,
San Francisco 4, Calif.
Also available are special re¬

"'Seismograph Service Corp.,Com.

in different levels

clined to think that

LOS ANGELES 14

135 S. La Salle SL

porters, ex¬
pounded
briefly his

doubt about the veterans'

Pathe Industries, Inc.

CHICAGO 3

Milk

Homsey Co.,

Pont,

Mass.

DISTRIBUTION

Railroad

Maine

tion

111 Broadway

For

UNDERWRITERS

that

reduction

leading

reported in some cases
meant income tax reduc¬

was

inter¬

to change our

of Securities Dealers

Wholesale Distributors

"It

viewed by re¬

when

you

Whart¬

Steel; Purolator Prod¬

Iron &

ucts; Upson Corpj Alabama Mills;

CARTER H.C0RBREY&C0.

Ala.

ery 4,

the Press," over the Mutual Broad¬

Jan. 31, Senator Robert A. Taft of Ohio,

kesman,

p o

data—

Co.—Late

Cola

Lime

Empire; Lanova Corp.; Mo¬

ford

will be

Opposes closed shop for undemocratic unions.

In the radio broadcast, "Meet

casting System
Republican

Taft

Thprnton, Mohr & Co., First Na¬
tional Bank Building, Montgom¬

Taxes and Labor

6, N. Y.

tive circular—Seligman,

Explains Position

"across the board."

rent

American Gas & Electric Com¬

rent developments in

Sen. Taft

New York

& Co., Inc.,

;

leaflet of Trade Suggestions.

Supports proposed 20% tax cut but does not think it

Lubetkin
Chicago 4, 111.
41 Broad Street, New
—Memorandum for banks, brokers
Also available are analyses of
York 4, N. Y.
and dealers—Truster,
Currie &
Long
Bell
Lumber
Co.,
and
Also available are circulars on
Summers, 74 Trinity Place, New
Miller Manufacturing Co.
Wellman
Engineering;
Fashion
York 6, N. Y.
Park, Inc.; Upson Co.; and Osgood
Illinois Zinc Company — Com¬

Inc.

Straus-Duparquet,

Street, New York 5, N. Y.
;
Also available is an interesting

Corp.—Research item
—Goodbody & Co., 115 Broadway,

Hoe &

Argo Oil Corporation—Descrip¬

Nathan

G. A.

Roller & Co.,

—

Grinnell

N. Y.

data—F.

Ill Broadway, New York 6,

Inc.,
N.

Engineering Co.
Luckhurst &

Company.

Electric
and
Power
Analytical circular —
Saxton & Co., Inc., 70 Pine

Virginia

—Late

5, N. Y.

York

New

Street,

Gen¬

—

Guide to the Perplexed—a chal¬

list of suggested stocks for income
and capital appreciation—Strauss

ley Investing Co., Inc., 238
Street, Utica 2, N. Y.

esee

Seminole Oil & Gas Corporation

Inc.—Detailed
1

Foremost Dairies,

Mohawk Val¬

New

Avenue,

N. Y.

memorandum—Cohu & Torrey,

—

Mills,

Cotton

Mohawk

Circular

—

Company

City 1. Utah.

lenge to the barrage of pessimis¬
tic
statements—bulletin with a

Fifth

350

Inc.

Corporation,
York 1,

Distillers

Schenley

Analysis — B.
& Co., 25 Broad Street,
4, N. Y.

York

Utica

Chronicle.
in care of

in the
to Mark Merit,

running

Write

Lackawanna RR.

—

Circular—
Hicks & Price, 231 South La Salle
analysis in brochure form — in¬
Company, Inc., 40 Exchange Place,
cluding a summary of 47 "Stand¬
Street, Chicago 4, 111.
New York 5, N. Y.
Also available are circulars on
by" offerings of common stock
Also available are circulars on
1943-1946 — Shields & Company,
American Bank Note Co. and The
Buda Company, Kearney &
44 Wall Street, New York 5, N. Y.
Muter Co.
Trecker Corp. and the Fresnillo
—

United Public Utilities Corp.—

Co., 52 Wall Street, New York 5,

been

Jersey

W. Pizzini
New

Wall

Aetna Standard

A critical

D. L. & W.
of

outlook—Amott,
150 Broadway,

Memorandum—L. H. Rothchild &

Distillers Corporation
—Brochure of articles they have

Foundation Co.

G. H.

—

Wall Street, New,

Walker & Co., 1

With

Financing of Stock Issues

Preemptive

New York 7, N. Y.

Co.—

Steiner, Rouse & Co.,
Street, New York 4,

available

Also

analysis

—

Report

Schenley

—

York 6, N.

and

Annual

1946

Baker & Co., Inc.,

N. Y.

4, N. Y.
Also

—

Broad

Lubetkin & Co.,
Broad Street, New York

lar—Seligman,

that the firms

It is understood

Manufacturing

Rockwell

Analysis

Features of

Markets in

CG 301
DEEP ROCK OIL CORP.

Central Public

A. A. Harmet

Utility

Company

CHICAGO SO. SHORE &

SO. BEND RR Com.

NORTHERN STATES POWER CO.

NOT INC.

Common

6% & 7%

Pfds.

5Ws of '52
Write for

our

Investment Securities

Brochure

analyzing these Bonds.

208
208

SOUTH

CHICAGO

SALLE

4, ILLINOIS

Telephone Randolph 4068
Direct Private Wire to New York
v,

Bell

System

587

South

Salle

H. M.

Street

1 2

ST.
CHICAGO; 4/
ALFRED A.
REAL

HARMET

ESTATE

ISSUES

Byllesby and Company
Incorporated

ILLINOIS

135 So. La Salle

JOHN
INDUSTRIAL

J.
&

COLNITIS
PUBLIC

Telephone

State 8711

UTILITIES

New York

Philadelphia

Street, Chicago 3

Teletype CG 273
Pittsburgh

Minneapolis

rVolume 165

Number 4566

THE COMMERCIAL S FINANCIAL
CHRONICLE

A Plan to Reduce

743

Underwriting "Standby"

H. J.

By HERBERT M. BRATtER

Correspondent reports while articles of agreement provide for ob¬
taining views of other international economic bodies, institution
complete independence in loan decisions. Contradic¬
between political and economic considerations
reported to split

tion

A plan for common stock

NAC officials.
Repeatedly in

meetings of

with economic matters

international

organizations dealing
hears expressions of
hope that the World

one

Bank

will*/

bring

its

re-

j ter recently submitted a second
to! report covering the period
through
bear on this or Oct.
31, 1946. The report, which
that situation. was issued without
publicity, was
At the London sent to the
Congress by President
meetings of Truman on Jan. 13 and has been
sources

the

prepara¬

printed

tory

commit¬

53.

tee for

world

conference
trade and

ployment,

for

example,
reported
the

disclosed

a s

"Chron¬

icle"
Herbert M. Bratter

em¬

the

time, various
delegations

their

expectation

that

the World Bank would make loans
to facilitate the work of the
pro¬

posed ITO.
of

the

preparatory

Bank to play in FAO affairs. LikeWise one hears that the European
Coal
Commission
expects
the
finance

shipments

American coal to Europe.
A good many of these
Jare

doomed

conception

the

erroneous

World

Bank's

and

assigned functions.
This week the writer had an
op¬

portunity to discuss with an offi¬
cial of the Bank the likelihood of
its financing coal
shipments. The
(Official commented as follows: "It
is true that the Bank has consid¬

erable

leeway in granting credits

"in special circumstances'
as

coal

nanced

headings.
Bank

loans,

either

But I do

will

not

that.

fi¬

these

expect the

Much

likely is the financing of coal
shipments under a specific proj¬
ect.
Just to take a hypothetical
example or two, let us assume
that the Bank is undertaking to
help finance the rehabilitartion of
Danish agriculture as a
project.
That would involve in part fi¬

nancing imports of feedstuffs
presumably fuel as well. Or
might allow for
nection

with

"Actually,"
"coal

coal in

some

steel

the

been

Bank

officer
is

project

the mining

31,

Fund

and

1946.

con¬

contin¬
a

any

coal

437

obtaining the views

international
with

bodies

economic

but the Bank of

The

of the
con¬

stock

summer

was

by the Nation¬

Conference

Board.

reporting
that
the

worked

Now

their

five

346,

days per
80%, report

office

workers

five-day week.

are

wartime

blk- and' 6-day

work weeks.

the

dropped
morning"
work

"Saturday

Of the firms surveyed, 154
reported their wartime schedule
week.

called for 5%
days.
Since V-J
Day, only 54 continue on the basis
of the "Saturday morning" work

the

de¬

fair

profit

for

the

tance

under¬

with

commensurate

potential productivity. This
factor is of considerable
impor¬
In

would

the

plan,
rights

buy
the period

underwriters

retical

method

present

mally

the

that

underwriters

stabilize the stock
both

without

time

which

offering from the
purchase agreement is

the

signed becomes the underwriters',
and one unsuccessful
offering is
enough to wipe out their gross
profits on five or six successful
ones,
without considering
head expenses and interest

nor¬

merely

over¬
on

the

capital employed in making these

the rights or

aggressively

point

expected to decline.

was

The risk of the

The plan differs from

the

dilution

the stock

ing market.

the

reviewed,

aggressively
offering to
stockholders, exercise these rights
and, from time to time prior to
their expiration, sell the security
being underwritten at a price that
during

half

underwritings
the underwriters
al¬
lowed themselves less than 10%
margin of safety below the theo¬

the

involved."

Under

during the 'standby period'."
over

commitments.

pur¬

ekercising

them

distribution

purpose

and

prior

The custom among un
derwriters now is not to make any

the

securities

discussed

was

Exchange

Commis'sion and with two leading
New York law firms and, it is

tion date.

at the

plan

with the Securities and

makihg
expira¬

the

hew

The

stated,

practical or legal objec¬
tion to its application was found

except

"The

proposed

method,"

the San Fran¬
Henry J. Laverty

objection

which

that

the

B. G. Cantor

system,

present

similar

work-week

that only

work "all

now

14 of the

day Saturday."

writers

is immobilized

riod

ten

for

pe¬

cers ^re

Woolfolk, Huggins

(Special

NEW

The

Financial

ORLEANS,

Figueira has been

Chronicle)

BALTIMORE,
Building,
i orK

whether

ber, 839 Gravier St., members of
the New Orleans Stock

sell

Louis

dent;

tails such

John

Cantor

Mr.

hanges,
the

opening of a
municipal
bond
departm e n

the

under

manage¬

ment

Gus-

tav Klein. Mr.

Klein

was

merly

for¬

with

Mackubin,
Legg & Co.,
and
prior
theretb
with

w a

Lanahan
Co.

and

Gustav

Klein

Alex.

Brown

Sons.

Incorporates

Active

R. Hoe &

G. Behr, Vice-Presi¬
J. Fitzgerald, Execu¬

was

The

the

study contains an analysis
47 offerings
of common

holders

the

New

York

Stock

manufacturer

and magazine

the

country.

printing

Now

news¬

presses

booked

ca¬

pacity for more than two years and
turning out presses in record volume.

also associated. Mr.

Circular

Request

With Jones, Holman & Co.
(Special

The

Financial

Chronicle)

PORTLAND, MAINE.—Richard
P.

Knight has become associated
Holman & Co., 57 Ex¬
change Street.
Mr. Knight was
formerly with Townsend, Dabney
&

existing common stock¬
on

oldest

paper

partner in the

with Jones,

The

Co., Inc.

Class A and Common Stocks

Behr was with Coburn & Middle-

revising the present

compensating under¬
readily be worked out
the new method is put into

Trading Markets in

Tyson and Harry A. Rounds &

ADAMS 6> CO.
231

SOUTH LA SALLE STREET

CHICAGO 4, ILLINOIS
TELETYPE CG 361

PHONE STATE 0101

Co.

Exchange.

purposes,

Two With
(Special

ST.

the

provi¬

sions of the Bretton Woods
Agree¬
ments Act, which created the Na¬
tional Advisory

Council, the lat-

The

Slayton

Financial

PUBLIC UTILITY COMMON STOCKS

Chronicle)

LOUIS, MO.—Will A.

Den-

vir and John J. Scherrer have be¬

connected

come

with

Slayton

Central Arizona

Light & Power Company

Central Illinois Electric

Burgess Battery Co. Com.;

Gas Company

Jhgo. Auro. & Elgin Ry. Units

Gulf Public Service Company

Co., Inc., 408 Olive Street.

Aeronca Aircraft Corp.
Baltimore Transit Co. Pfd.

Black Hills Power & Light Company

Decker Mfg. Co. Com.

*Iowa Public Service Company

Howard

Lake Superior District Power Company

ARKANSAS MISSOURI

Michigan Public Service Company
Missouri Utilities Company

POWER

INDIANA

PUBLIC

*Prospectus available

SERVICE

Sioux City Gas &

Electric Company

Southern Colorado Power Company

COMMON

Miller Manufacturing Co.

Oil

Southwestern Public Service Company
"Tucson Gas Electric

Exploration Co. Com.

Trailmobile Company

Texas Public Service Company

upon request.

Corporation

"Long-Bell Lumber Ccwipan*

Public Service Co. of Indiana, Inc.

"CENTRAL & SOUTH WEST COMMON

Industries, Jnc.
Hydraulic Press Mfg. Co.

Old Ben Coal

Northern Indiana Public Service Company

MISSOURI UTILITIES COMMON

NORTHERN

New

brook.

can

stock

the
,

.Stock

announce

Vice-President; and Jack J.
Bernstein, Secretary-Treasurer.

writers

tive

exercise

effect.

Woolfolk, Huggins & Sho-

x c

members
bal-

anu

timore

rights."
The view is ex¬
pressed that certain technical de¬

once

ID.- Mead,
Co., First National Bank

Miller &

their

LA.—Wilbur
added to the

Light and Power Company
•Detailed analysis available on request

*Prospectus Available

DOYLE, O'CONNOR & CO.

INCORPORATED

135
,

SOUTH LA SALLE

ACAUXN^COMESNY

CHICAGO 3, ILLINOIS

Telephone: Dearborn 616f

STREET

■

Teletype: CG l£O0

Chicago

New York

Incorporated

Boston

...

Milwaukee

Minneapolis

COMSTOCK & CO.
; CHICAGO
4;g|J

231

Omaha

So.

La Salle

St.

Dearborn 1501

^Teletype CG 955

■-.*

ss,,a«.wi

capacity.

Mead, Miller & Co.

B. Gerald Cantor, Presi¬

dent;

the stockholders
their minds and de¬

make up

cide

system

With

Rollins

thereto-

way,

Bernstein

437

prior

and

Giisfav Klein Now With

predecessor firm, with which Mr.

office forces worked "daily except
Sunday." Since V-J Day, however,
five-sixths
dropped
the
longer

Inc.

with Dean Witter & Co. in

was

G. Cantor & Co., 61 Broad¬
New York City, is now doing
business as a corporation.
Offi¬

powerful dis¬
tribution machinery of the under¬

tact the right of

the

Sons,

the

During the war, 84 of the
reporting companies stated their

decline
of

case

cisco office of
E.

the

study finds, "answers the principal

At the same time, it preserves in¬

the

trading

department of

issue price.

cult, if not impossible, to foresee.

previous¬

manager of

mum

period in which the new capital
will not be employed at its maxi¬

6-day

sharper

even

was

o c

fore, be a certain period of steril¬
ity for the new capital or, at best,

days to three weeks
while their capital is committed
and at the mercy of a sharp break
in security prices which is diffi¬

week.

S t

the

new

new
money cannot be put to work
in toto at once. There
will, there¬

obtaining cor¬
expansion, the study de¬
clares "it is high time to review

offering

"Nearly two-thirds of the num¬
ber which worked 5V2 days
during
the war report they have

capital
all these
underwritings.
"In
most cases," the study
finds, "the

porate

chasing rights for the

"The trend toward shorter hours
both among firms which

cisco

was

instead

gratis

means

and San Fran¬

Exchanges.
>
Mr. Laverty

Emphasis is placed
layed productivity of

experience,
several
investment
firms, according to the study, have
established a definite policy
against further "standby" com¬
mitments. Describing this form of
financing as
an
essential
and
valuable

10%

being sold, little or no value being
placed on the earnings and divi¬
dends potential of the new
capital.

of last year's

consequence

within

stockholders

and fall of 1946.

is noted

Street,

the New York

retically sell if presented to the

would be in line with the prevail

"During the war, the office
staffs of only 141 of the companies
week.

declined

Montgom-.

members

the price at which it would theo¬

of them suffered during the

many

commercial

265
ery

This shows that in almost
three-quarters of the offerings the

means

Walston,

Goodwin,

prices.

reducing the
cost to corporations
undertaking
financing of this character and of
safeguarding underwriting firms
against substantial losses in
"standby" commitments such as

risk

showed that:

survey

course

with

and

Jan. 27

Industrial

always re¬
serves full
independence of loan
judgment."
accordance

industrial

released

staff of

agreement

writers,

growth of the

companies in 20 cities which
al

the

plan

adoption of the

become
assoelkted
Hoffman

Exchange. "Exchange which were made from
February, 1943, to October, 1946,
a
period of advancing security

pany, recommends

CALIF—

has

with

The study, written by
Eugene P.
Barry, partner of Shields & Com¬

day week for office workers since
V-J Day is revealed in a
survey

Bank's articles

5-Day
Help

J*: Laverty

financing where preemptive rights are
made public by

the present outmoded method and
to attempt to devise a new and
modern system which will work

the

week.

help,

Oct.

substantial

"As for the desires of other in¬
ternational bodi^fe for Bank

cerned

States

Trend Toward

other

activities

United

Poland.

ball for

predominantly
the ExportImport Bank, its latest report is
confined to the scope of its title,
Report on Participation of the
the

project

production

self-liquidating
be

has

noted

likely project for a World Bank
loan.
Probably as promising a
would

labeled,
perhaps
anachronously,
"Top Secret," will look in vain
through
the
recent
report
for
light. Although the NAC's work

and

Luxemburg.
ued,

what

SANl FRANCISCO,

Henry

involved is set forth in a
study of the subject just
Shields & Company, members
of^—-—
the New York Stock

^genda

were

shipments could
under

well

currency-stabilization

and

goes on behind the closed doors of
NAC when it considers its

hopes
disappointment*

being predicated
^resources

interested

No.

com¬

Washington some of
the speakers placed great
empha¬
sis on the role they
expect the

Bank

Persons

Document

In the recent meetings

FAO's

mission

House

Walslon, Hoffman Co.

Eugene P. Barry, of Shields & Co., recommends
adoption of system
for reducing cost to
corporations and avoiding substantial losses
to underwriters in their
commitments.

its

reserves

Laverty Now With

M -■
fapV.sV,,

period of years. The Berks

over a
~

Colorado Milling and Elev.

The Gruen Watch Company

the first time in the
from

I:BUCKLEY BROTHERS
Members
:S

Philadelphia and

York,

New

Stock Exchanges
Also Member of
York Curb Exchange

1420 Walnut Street,

Hagerstown, Md.
Telephone—WHitehall 3-7253

Private Wire

System between

Philadelphia, New York and

Los Angeles

about

$3.72

per

effective

creases,

freight in¬
July 1, 1946,

insufficient to offset sharply

were

higher wages and other increased
President M. W. Clement has
estimated
state

additional

that

Philadelphia Transportation Co.

1945

cover

H.N.NASH&CO.

revenues

1946

Street, Philadelphia

Chestnut

Locust 7-1477

New York Phones
HAnover 2-2280

Teletype PH 257

WHitehall 4-2400

Phila. Phone

were

$114,445,826

$3,884,000,

about

charges
for
1947.
It
therefore seems reasonable to as¬

lowered inter¬
above outlined, will
considerably reduced through
refunding."
that greatly

sume

est

charges,

Pennsylvania Power & Light
4

Preferred

Vz%

Gross

bonded

debt of the

City

Securities Corp.

$129,100,000 during the past
12 years and on Jan. 1, 1947 stood
at $439,700,000. This is one of a
number of striking facts set forth
in an analysis of the city's fi¬
nances
just completed by
the
Philadelphia investment firm of

Pennsylvania Power & Light
Common

Inquiries Invited

BOENNING & CO.
Philadelphia 3

1606 Walnut St.,

PH 30

PEnnypacker 5-8200
Private Phone to

N. Y. C.

COrtlandt 7-1202

Yarnall & Co. Net bonded debt of

$334,000,000 at the beginning of
the present year represented a
reduction of $103,000,000 during
that period.
Through reduction in size of
debts, and also through lowered
interest
rates,
annual
interest

week

Empire Steel

1934

compared with $3,684,059 in 1945.
After taxes, per share earnings

equivalent
162,987
shares
preferred stock
to
$37.19 per

Members

Philadelphia Stock

Exchange

2-4552
Bell System Teletype PH 220

N. Y. Telephone HAnover

$20.25

per

$47.25
It

per

.419 Wood Street

Empire

Corp.

con¬

idle.

While

the

its willingness

approved purchaser,

guarantees that the yard's
facilities will be main¬

for

any

Warner Co. Sales at 15-Year High

Reflecting

flying attack

61 Broadway

possible

Builders

Iron

manufacture cinder
blocks
from piles of ashes ac¬
cumulated by the parent company
to

company

System Teletype—PG 473

Southern Gas

the

business existent in

struction

the

preliminary
1946
released
by
Warner Co., indicate gross sales of

Philadelphia
figures
for

area,

sales

1930,
when
000,000.

$12,-

topped

Subject

profit

net

audit,

984,
tion,

all

rents

Interest
after

and

Arrangement Committee — Ed¬
M. Fitch, Jr., E. M. Fitch &

ward

$899,600 for income taxes. This
is equivalent

the

to $2.92

475,284

per

common

Co., Chairman; John F. Bunn, Jr.,

share
shares

Bioren &

$440,000

The

Available Publications

share.

ney

H. M. Byllesby & Company

last ditch

Delayed

Hike

Fare

effort

the

City of Philadelphia to
general increase in street¬
fares in Philadelphia, which

car

PHILADELPHIA OFFICE

RAILROAD EQUIPMENT

have

automatically

gone

Telephone
RIttenhouse 6-3717

Valuation and Appraisal

Teletype

Miller, E. W. & R. C. Miller

Chairman; Eugene Arnold,
Ripley & Co.; John H.

& Co.,

effect

Harriman

with

Blye,

yesterday, has
met
least temporary success!

Superior Court "Judge Chester HI
has

Rhodes
writ

ments
are

signed

ordering

temporary

stay until argu¬

appeal by the City
heard February 15.
on

all

favorable driving
to

extent,

some

trickle of

ing

new

motoring,

conditions, and,
the increasing

bined

gates.

41,528

& Sons;

ley

After

preferred

was

equiva¬

Class

shares.

and

24,000

The company has

J. B. Clement, Jr.,

Dolphin

Co.;

Weeks;

D. Winsor,

Committee

CITY OF PHILADELPHIA BONDS

and

common

the

Class

a m e s

Co., Chairman; Winthrop H. Bat¬
tles, Battles & Company;
V.

Gallager,*Yarnall

Harley

Rankin,

Herbert
& Co.;
Boston

First

and

Corporation;

Charles

Schaufler, Moncure Biddle & Co.

Committee

Publicity

Chairman;

—

Loring

& Co.,
Chauncey P. Colwell,

Eastman,

Dam,

Dillon

Lynch, Pierce, Fenner &

Beane; and John

Co.
—

3rd, Biddle, Whelen &

Merrill

William

and

Jenks Wright, Blyth &
Elective

Horn-

L. Morris,

$1.75

per

Sulzberger

Hallowell,

George

blower

Leo M. Dol¬

Co.; Henry R.

doubled the 1945 dividend rate of

PH 73

Co.;

H. Rollins

Walter W. Buckley, Buck¬

Brothers;

W. E. Hutton & Co.;

automobiles reach¬

highways, traffic over
this important North Philadelphia

Dulles

Wurts,

Hallowell,

complete lifting

the

toll

Jr.,

Willard S. Boothby, E.

phin,

Palmyra Bridge

restrictions

common

Stock Exchange Bldg. Phila. 2

Attendance Committee—R. Conover

into

lent to $5.11 per share on the com¬

CERTIFICATES

Co.

would

Co.;

Wilde, Janney &

Bertram

and

Peabody

Kidder,

Rauch,

part

the

block

dividends, net profit

Valuation and Appraisal

& Co.; Samuel K. Phillips, Jr.,
Phillips & Co.; Alfred

Samuel K.
P.T.C.

the

Wawaset Sec. Co.

Raymond H. Gage, Jr.,

poration;

link ex¬
in 1946.
A total of 3,355,451 vehicles cross¬
ing the span left $1,057,993 at

Sterling Motor Truck

William L.

Kerner;

Paine, Webber, Jackson & Curtis;
Norbert W. Markus, Smith, Bar¬

Southern New Jersey
ceeded all past records

Nazareth Cement Co.

Day, Drexel & Co.; Paul Denckla,
Stone & Webster Securities Cor¬

taxes,

income

for

Co.; L. Paul Close, Ram-

bo,

comparable
figure
for
1945
was
net
of
$551,206,
after
provision
of

outstanding.

an¬

appointment of club

committees for 1947 as follows:

ground

and

provision

Philadelphia,

the

nounces

deple¬

depreciation,

after

Club

Bond

for 1946 is calculated at $1,388,-

Company

R. Conover Miller

Edward M. Fitch, Jr.

future

Philadelphia & Reading Coal &
Co. has formed a subsidiary

NEW YORK, N. T.

huge backlog of building and con¬

Tacony

Block

Empire Steel

Warner

expansion program.

Reflecting the

Bowling Green 9-3987

Barclay, Jr.

company

upon

ment and

Win. K.

domestic restric¬
has
em¬
$1,000,000 better¬

many

The

barked

emergency.

PITTSBURGH 22, PA.
Bell

lifting of
tions.

Exch.

Grant 3900

Botany Worsted Mills

now

are

New York Curb Exch. (Assoc.)

American Box Board

par¬

were

year

equivalent to $1.16 per common

the

sell to

tained

COMPANY

current

the

for

ticularly good in view of the re¬
appearance of imported grains and

that

reported

reliably

it wants

Members

Pitts. Stock

year.

preferred share and
share on the common.

Securities

Bankers

essential

N. Y. Stock Exch.

amounted

dividends

Direct Wire to New York City

and

}

As of Dec. 31, 1946/ accumu¬
lated

Navy has indicated

Issues

CHAPLIN

of participating
outstanding and
share on 60,000

shares of common..

which

BIdg., Phila. 2, Pa.

Stock Exchange

to $21.88 on the

purchase
of
the
Cramp
Shipbuilding
plant
in
Philadelphia from the U. S. Navy.
During the war, the Navy invested
some $22,000,000 in the properties,

Western Pennsylvania

%. duplet & €o.

the

were

sidering

Trading Department Active in

Established 1895

board. Before
1946 income was $7,607,740,

taxes

reduced.
Whereas
the city's debt
amounted to $24,000,000

Common

(See.

Greenfield,

Albert

Chairman

substantially

they were $17,000,000 in 1946 and

were

of the corporation,
as
shown by the annual report
transmitted to
stockholders last

interest charges on
in

share in the preceding fiscal
President Carl G. Vilsack
told
stockholders that prospects
per

in the history

charges of the city have also been

Trading Markets in

Bankers
the largest

earnings

1946

The

Philadelphia has been reduced

Securities Corp.

Bankers

customers

Brewing Co., which
reports net income of $929,272,
equal to $7.72 per share on the
120,302 shares of preferred stock,
for the fiscal year ended Oct. 31,
1946.
This compares with $5.58
of Pittsburgh

approximately $11,700,000.
This
figure has been exceeded only
once in the company's history, in

Philadelphia Debt Cut 22%
12 Years

thirsts

the

whet

interest

preceding year.

In Past

justments apparently served only

of the total estimated

about 24%

from

refunded

downs and such incidental malad¬

saving would

the yearly

2%,

amount

de¬
the
1945 figure. Net railway operat¬
ing income was $25,917,224, a
decrease of $61,263,315 from the
cline

$7,175,000.

amounts

bonds

at
Gross

callable between Jan.

are

Assuming they were all

reported at $822,007,584,

1421

but

volume,

prospects
for
city's in¬
terest charges the analysis states:
"Of the gross
bonded debt of
$439,700,000 outstanding Jan. 1,
1947, over 60% (or $267,912,000)
bore coupons ranging from 4% to
5%%. About $164,000,000 gross of
4-41/4-41/2-43/4 and 5% bonds ma¬
the

Discussing

further reduction of the

2, 1947 and Feb. 16, 1955. Annual
interest
on
these
short-term

might not be enough
increased costs since

this

shows.

ture

1947,

revenue

upon

pro¬

may

$100,000,000

incurred.

Pfd. & Common

3-6s 2039.

January

duce approximately
based

Stocks

in¬

freight

the

by the Inter¬
Commerce
Commission,

effective

Bank & Insurance

that

granted

creases

amount to only
1947, the analysis

$16,000,000

slow¬

Labor troubles, stoppages,

1945, equiva¬

expected

are

Moderate emergency

costs.

Philadelphia

PHILADELPHIA, PA.—William
Barclay, Jr., partner of Stein
& Boyce, President of the

Bros.

if.

Committees Named

Pittsburgh Brewing Co.

$9,500,000, after taxes and

commons

share.

Los Angeles

Pittsburgh, Pa.
N. Y.

100 years

Iron.

Phila. Bond Club

operations.

charges and after carry back credits of over $19,000,000.
This will compare with net income of $49,008,238 in
lent

Philadelphia 2

New York

Pennsylvania Railroad, for
of its history, will report a net loss

The tentative deficit has been set at

Lot Angeles

\<r.

shares,

Unofficial estimates indicate that the

Request

capitalization of 1,500 common
par $100,
all owned by
Philadelphia & Reading Coal &

Pennsy's 1946 Net Loss, $9,500,000

International Detrola
Memos

Building Block Corp., • Reading,
Penna., has been incoporated with

Pennsylvania Brevities

Co.

Thursday, February 6, 1947

FINANCIAL CHRONICLE

THE COMMERCIAL &

744

A. Murphy, Rey¬

nolds & Co.

stocks.

Compilation of
Alden Park Land 3s 1954

Phila. Elec. Co. Common
*Nor. Ind. Pub. Serv. Com.

PENNSYLVANIA LEGAL BONDS

Harshaw Chem. Co. Common
*

Pennsylvania

Market St. Nat. Bldg. 5s 1959

Request

and New Jersey

Phila.

Roberts & Mander Common
*Offered only by prospectus

Copies

Bought—Sold—Quoted

Cambridge Bldg. 3s 1953

STROUD & COMPANY

Phila.

Transportation Pfd.

Transportation 3-6s 2039

Municipal Bonds

Phila. Suburban Water Com.

Incorporated

E. H. Rollins & Sons
Incorporated
;

PHILADELPHIA

PA.

PEnnypacker 5-0100

(528 Walnut St.,
New

123 SO. BROAD STREET

York

Boston
San

■-f

Philadelphia 2

■+>

Chicago

Francisco
•

'ifa-'M ■'*

PEnnypacker 5-7330

120

BROADWAY

NEW YORK 5, N. Y.
REctor 2-6528-29

Dolphin

Samuel K. Phillips & Co
Members

Allentown

Pittsburgh

Lancaster

Scranton

Teletype
PH

Philadelphia Stock Exchange

Packard Bldg., Philadelphia 2
375

N. Y. Phone

COrtlandt 7-6814

Co.

Philadelphia Trust Buildjng
PHILADELPHIA 9

Fidelity

Telephones:
Philadelphia—PEnnypacker

5-4646

New York—HAuuver 2*9369

Bell

System

Teletype—PH

299

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL
CHRONICLE
periodical

London i&s Banking Center

recent loan

wholesale

without

defaults.

objection

that Ham¬

reason

which

not

was

the

au¬

are

John Tobias Now Willi

l!»:

thorities likely to make difficul¬
ties to genuine self-liquidating ac¬

of the few London banks

was one

by London banks to

within

credits

Sterling Atea. 'Nor

bros Bank figures prominently in
the revived postwar activity.
It

By PAUL EINZIG

Dr. Einzig, in commenting

not

745

Weslheimer &

ceptance credits outside the Ster¬
ling Area, once 'they liquidate

caught in 1931 in

French woolen industry, points out this does not mean that London
will or wants to resume its former role as world banker. Contend

the German Standstill Agreement

themselves in three

leading

Britain does not profit from international banking, though nation

of the

and do not involve loss of foreign

the

the machinery and technique for the transactions.

possesses

The granting of a large banking credit to the French woolen in¬

dustry by

London banking group headed

drawn

The question

Hambros Bank has

the

were

the

question

London's
as

role

interna¬

tional

banking

center.

After

the

first

Wo rid

there

War
not

was

the

slightest

doubt

the

minds of most
Britons

that

This is the view

official and

widely held in
political circles. The

bankers themselves

can hardly be
however, for deploring
the passing of London's glory as
a banking center.
For while that

blamed,

function

may have resulted in a
dead loss to the national
economy
it earned good commissions to the

bankers themselves—if
they were
careful enough not to allow them¬
selves to be caught in one of the

actions

before

indication

granted

certain.

transaction

scale.

must

Every

hence

the

single
the

especially in the City, that
or,

permission
to

given to
ahead with
There is no

large credit deal.

Representative.

sup¬

•

later,

somehow

asso*

Registered

Mr. Tobias is the

partner of the firm.
Cincinnati

and

He was born
went to th6

Phillips Exeter Academy Prepara¬

and Dartmouth

tory School

Col|

years ih
Corp and was
with the Second Marine Division
U.

the

served

lege.

sooner

London

of Charles H. Tobias, present

son

banking activity, enough to pre¬
vent London's highly
developed
technical apparatus from becom¬
ing too rusty. Vague hopes are
entertained in various quarters,

the official policy to assist France,

its

were

certain amount of international

Treasury's full approval. Presum¬
ably it was in accordance with

Hambros Bank

Germany

Evidently there is likely to be

One

meet

now

ciated with them

posed to be self-liquidating.

the

prewar

Tobias has become

John

however, that be¬
acceptance credits

the

There

resumption of
granting
of
credits

1931

trans¬

smaller

it, and there is

for

systematic
abroad on

thing

few

remember,

fore

resumption

activity?

prewar

only

is, does the French

Company

OH IO—Westt
heimer & Company, 322 Walnut
Street, members of the New York
Stock Exchange, announce ^hat
CINCINNATI,

six months

exchange.
This, at any rate, is
the theoretical position. It is well

'20's.

transaction indicate

atten-<S>

tion*

to the complete freezing
large credits granted during

three

Marine

Soyjih Pacific and in the

the

occupation of! Japan.

may

Mr. Tobias will serve as assist-*

find its international banking or¬

ant

ganization

partment.

once

useful.

the

Unlisted Trading

De-*

London would
resume

Paul

Dr.

the

leading

posi¬

tion

Einzig

■■

had

occupied

world banking before 1914. It was
for the sake of that end that the
American

debt

war

settled

was

terms that compared

very un¬

favorably, from the debtors' point
of view, with the debt settlements
concluded

the

United

with other countries

States

with those

concluded by Britain with its own
debtors.
It was for the sake of

resuming London's lead that Brit¬
ain returned to the gold standard
at

the

that

parity, "in order
should look the

prewar

the

pound

dollar

still

large creditor nation with

the

face."

Britain

was

favorable

trade
balance, and
though its position compared
unfavorably in this resoect with
even

that

was

the

United

doubt

Britons

States

the

that this

there

minds

was

than

offset

by London's superior ex¬
perience and technical organiza¬

tion.

Experience and technical
ization

still

assets.

But

else

left

there

after

the Second

eign

constitute
is

the

are

curred

little

very

sacrifices

World War.

investments

owns

offset by

organ¬

London's

Britain

still

considerably more than
the foreign liabilities in¬

since

1939.

And

its prewar role

resume

international

ter,

How,

well be asked, could Lon¬
expected in such circum¬

stances to
as

Southern Lumber for World Markets

the trade

balance is decidedly adverse.
it may
don be

The for¬

even

banking

second

cen¬

center after

and

FROM a modest beginning twenty years ago,
the

The present Government

enthusiastic

is not

about

the

centers

international
Mr.

servative

banking

Baldwin's

Government

Con¬

was

banking center is not nearly

profitable

proposition as it
generally assumed. Even with

was

the

interest

ing

the

rates

prevailing dur¬

margins of profit
On

row.

London

profit

its

pounds.
1931

nar¬

©f the country's leading producers, distributors and

poles and piling.

bad

tured and sold through a subsidiary, Georgia In¬

materials.

ternational

'V. I

roofing, wallboard,

Approximately

one-third

paint, builders' hardware, in¬

sulation and other similar products.

pany's

business

done

foreign markets.

were

than $13,000,000.

retail

percent of

other

the

lumber sold

manufacturers

and

sales

division,

general

handles

and building

equipment.

purchased from

distributed

through

The

highly specialized

stores

At least
merchandise

Another sub¬

Net
sidiary,

sales for 1946

distributes

also

Com¬

the

which

Corporation,

maintains

Company

offices

New

York,

organization.
Washington, Houston and Portland, as well as in

The

Company

owns

and

operates

seven

Buenos

plants in

Aires,

Belfast,

Havana,

Cairo

and

Cape

1939, it lost

the profit of decades of good years.
The
profit
was

North

and

South

Carolina,

Arkansas,

Town.

Mississippi

really
earned
long-term the
on
short-term,

re-lending on
money borrowed
which

was
decidedly
unsound
banking.
And even that profit
only amounted to a few millions

Another

Southern

industries,

pounds per annum. In any case,
capital losses in defaulted foreign

Industrial

the

series

development.

ready

its

Equitable

Securities

helped

Equitable

has

part

supplying

Corporation

finance

others

many

with

featuring
Southern

capital

funds.

loans
and

wiped out the commission
interest earned on long-term

loans.
Those

who

not

are

the

role

realize

the

least

the

these
sorry

world's

facts

see

banker

transferred to New York. Indeed,
the view is held that it would be
worth

Britain's

United States
tion

many

in return for

don
of

the

having

banker.

while to

pay

the

annual contribu¬

millions of

NASHVILLE
DALLAS
KNOXVI LLE

NEW

EQUITABLE

NEW ORLEANS

dollars

act

nuisance

and

•

the
*>

world's
"

YORK

MEMPHIS
HARTFORD
S:W

BIRMINGHAM

GREENSBORO

Securities Corporation

CHATTANOOGA

BROWNLEE O. CURREY, president

having relieved Lon¬
burden

i
(

Building materials are manufac¬

exporters of lumber, plywood and related building

business

good year a
hundreds
of

few

such

the

very

acceptance

made

thousands
year

period

were

hardwood

Southern pine, plywood, veneers,

lumber,

one

inter-war

are

cypress,

years ago.
For in the meantime
it has been discovered that to act
as

associated plant in Belling-

ham, Washington. Principal products

Company,

Lumber

re¬

storing to London its old role
one

Hardwood

Augusta, Georgia, is recognized today

New York?

nearly

Georgia

Alabama and

322 UNION

STREET, NASHVILLE 3, TENN.

TWO WALL STREET, NEW

YORK 5, N. Y.

CHRONICLE

THE COMMERCIAL & FINANCIAL

746

the OPA or Congress

sooner

ceilings from new dwel¬

removes

will

circles of

Wall Street close to some of the innermost

not

that

proposes a tax program to aid small busi¬
providing for: (1) graduated reduced tax rates on earnings
up to $100,000 to permit accumulation of tax-free reserves; (2) a
carry-forward provision for small businesses to make them more
depression proof; and (3) accelerated depreciation allowances for
small business within closely defined limits. Holds without small
ness

can

seri¬

nature of things

the

Printing trade executive

investments in new

buildings—investments

top-ranking politicos in Washington contend that ceilings on housing
rents will be lifted only gradually and in a progressive fashion, start¬

President, Printing Industry of America, Inc.

shortage.

Wide-scale
Sources

By JAMES F. NEWCOMB*

sooner
effective dent be made in

the housing

Tax Revisions for Small Business

the

believed,

lings,

them.

before

lived

have

others
The

of
of luxury accommodations first and drop¬ present structures—must be made
ping down in successive steps to other, less pretentious, classes of before people generally can get
living quarters later.
any genuine
relief from the in¬
ously detract from the values

ing with the higher types

informed

The

Street,

Wall

ex-'

in fact, no longer look to any

lifting of the ceilings on
the low-rent dwellings. The best
tensive

proprietors of the typical
tix-floor old-fashioned
type of
non-fireproof
structures
which
abound in so many of the residen¬
tial sections of New York, for in¬
stance, can ever expect to receive
is a 5% relief in the amount of
rents which they can charge, it is
which

thought.

borrowed funds to carry

their

Philadelphia Exchange

prises.

water

Contest for Governors

I want to dis¬

long ago.

Demand
cial

want to expand
will be from five

years

Somewhere in
this progression, it is felt, too,
ceilings will be lifted from newly-

the

at the annual meeting
with 11 nominees run¬
ning for
10
vacancies on the
board. Nominated for governships
were:
William
K.
Barclay, Jr.,
Stein
Bros.
& Boyce; Harry C.
Dackerman, Dackerman & Waber;
Robert Y. Guarniery, R. Y. Guar-

governors
March 3,

enough

new

buildings
for

demands

it is

character,

sites

mence,

meet

space

niery & Co.; Ralph E. Pendergast,
Inc.; John A. Murphy,

this

Paul & Co.,

Before this

said.

construction

before there
construction

commercial

new

Last on the
list to receive consideration, it is

even

can

must

Reynolds & Co.; Charles Sheridan,

com¬

acquired

allowed

leases

and

process)

out

run

the

Co.;

struc¬

believed, will be the sort of low-

cock,

tures now standing on those sites.
Moreover, the New York zoning
mentioned above.
:
Washington rental
authorities laws, too. impose such limitations
are
beginning
to realize that, on size of the upper floors, in
though they may be able to keep the interests of adequate lighting,
rents down artificially by govern¬ as to make some of these top
ment edict, low rents do not stinv rioors comparatively unproductive

qf the

ulate the construction

new

really

necessary

construction
buildings.

the

the problem posed

way

shortage.
new construction—and

commercial

lot of it

However,

•r-which will take the American
people out of the housing dilemma
which

they

find

now

rents

once

of all

selves.

types will commence going

in great numbers, it is believed.
are plentiful for new apart¬

ment

James J. Ryan has been

suitable

structure

the building industry to build by

charged
the

for

location

New

the

builders

of construction

idential sites

plained,

experiences

themselves.

move

proc¬

the

put

costing

than

was

they have

50%
orig¬

the

specialists
and

Ryan

for

ever

small

but

today is

tance

for

the

one

"An

of vital impor¬

whole

every

the

not

business. Here business in¬
is being developed, ex¬

big

itiative

It
of

address

be true that two-thirds

may

wealth

economic

our

pro¬

duced by

big business; by a com(Continued on page 770)

troit, Detroit, Mich., Jan. 27, 1947.

has

Britain's Reassurance to

with

been

time in

some

municipal

U. S.

charge

Loan Agreement

Chancellor Dalton writes Secretary Snyder that seeming

violation

from Anglo-Argentine agreement is hypo¬
thetical and remote, which explanation is termed irrelevant. Briton
accedes to Mr. Snyder's demand that similar objectionable clauses
be omitted from future agreements about sterling balances, and
that in event of Argentine deficit respecting sterling area, UK make

Litzel

the

firm

institutional

Mr.

of the

to the "Chronicle")—Secretary

(Special

upon

exchanges of

Treasury Snyder today released the texts of two

Litzel

himself

between

ietiers

Chancellor

formerly with Hardy & Co.

was

Feb. 5

WASHINGTON,

de¬

the New York sales

Broadway.

appropriate adjustment.

with

associated

now

the

partment of

office,

that Chas.

announces

the

and

Exchecquer

Dalton
concerning
the
Anglo-Argentine Agreement.

Hugh

his first

expressed
B
(6) of

section

that

Agreement vio¬
terms of
the US-UK

that

the

lates

Mr. Snyder

letter,

concern

j Loan Agreement, which requires

f sterling to be made freely avail'i able for current transactions in
has

(This matter

request

discussed

been

issues

the

in previous
"Chronicle.")

Replying to Mr. Snyder's first
of Oct. 31, Mr. Dalton on

Dec.
John W.

Members

York

New

Security

Dealers Association

Broad

Street, New York

HAnover 2-2100

violation

Broadway-Trinity PI. 4l/2s, 1963 WS

Sherneth Corp. 5%s, 1956 WS

Broadway &

41st

Westinghouse Bldg. Part. Ctfs. CBI

Gov.

2s,

Grant

Bldg.

Hotel St.

St. 4y2s,

2>/2s,

5'/2s,

51
51

1963 WS

National Hotel Cuba 6s,
York Towers 3s,

1959 WS

1960 WS

Savoy Plaza 3s, 1956 WS
870

West 42nd St. 4%s,
Wall

1957

George 4s, 1950

Lincoln Bldg.
New

1954

1952 WS

East

Ave.

Realty 5s,

165

4'/2s,

5s,

1966

42nd St. 3s,

1953

WS
1956 WS

Broadway Corp. Stock

500

7th

St.

1949 WS

Broadway 4%s, 1958
5th

Ave. 4s,

1961

1957 WS

mindfulness

under

Incorporated
150
Tel.

Broadway
BArclay 7-4880

New York

7. N.Y.

Teletype NY 1-588

Secretary

agreement

was

the

Britain's

Loan

ob-<S>

Agree-

Snyder Writes Again

Jan.

Secretary

wrote Mr. Dalton
I

1946.

—

Agreement

the

again

follows:

letter of Dec. 17,
In response to my letter of

care

Snyder

have read with Great interest

and

Hugh Dalton

sterling

any

bal-

freely
available for current transactions

Secretary
On

Sir

hypothetical and suggested
be deferred. He expressed

released

1946, with reference to the
Agreement signed by the Govern¬
ments of the United Kingdom and
on

Sept. 17, 1946.

I am

area.

May I now advert to two points
in your

cial

your

Oct. 31,

any

will

currency

ances

Argentina

Amott, Baker & Co.

Montgomery St., San Francisco 4

loan

ment.

OFFERINGS WANTED

the

probability of the Ar¬
gentine Agreement resulting in
the

advised

the

that further consideration of the question

ligation

Clinton

that

Snyder

Incorporated

his

would

perience gained.

by Mr. Newcomb
before The Economic Club of De¬

Seligman, Lubetkin & Co.

Dlgby 4-4950

EXbrook 8515

ours

competi-r

of free

core

opportunity it still is;
"Nothing
ventured,
nothing
gained,"
is the true motto of
small business. That makes small
business the proving ground for
land

economy.
It
industrialist — re¬
gardless of the size of his enter¬
prise—and it affects each wage
earner
regardless of whether he
is employed by one of your giant

affects

Tele. SF 61 & 62

business
important

the

letter

Exchange

J. S. Strauss & Co.

there

free

—

because the problem of small bus¬

any currency area.

Members New York Slock Exchange

155

"Smell

land

typical

are

problems

Universal Camera Corp.

SHASKAN & CO.

Real Estate Issues

Without small business this

Waldorf Astoria Hotel Common

*Circular

California & New York

instead.

business

small

enterprise in
these United States.
Small busi¬

with you, not only be¬
the problems of my indus¬

Firm Trading Markets:

clas¬

ness

trading department.

Hill & Co.

than

SECURITIES

Teletype NY 1-953

small

being

be proud

should

Without

would

discuss

many

resent

such.

They

man¬

Hence

tion.

Hill & Co. in New York

acquiring homes for

REAL ESTATE

Bell

evasive

Business"

Hotels Statler, Inc.

40 EXCHANGE PI.,N.Y.

sound as its

cause

^Foundation Company

Members New York Curb

big busi¬

labor.

It is not

sified

g-oing

is only

business

manner.
business men

Newcomb

small business—be it
or

chain

business.

ing
F.

James

service industries—be it
ness or

happy term. The
word is often used in a patroniz¬

ing,
distribu¬
tion,
or
the

agement

then

term.

economy:

concerns

strong as its weakest
it is equally true that

Small

our

truly

If it is true that

economy

small

^Commodore Hotel, Inc.

only

bearing

business

us.

link,

it manufactur¬

Charles Litzel With

iest do not hesitate to move into
apartments, for instance, where

are

every

branch

ex¬

plar ventures plenty of capital is
available but had the promoters

revealed,

all of

of US-UK pact arising

and

inally estimated as necessary. It
so happens
that in these partic-

have

direct

themselves

groups

better

City,

Mr.

bonds.

into lodgings a notch higher

themselves

York

the firm

anything
had before. People
as a whole do not object to mov¬
ing into space previously occupied
by someone else. Even the wealth-

which

newer,

middle-income

in excellence,

res¬

Manhattan Island,

into

move

lower-income

Two

choice

The

expensive, quarters, it is

structures is dem¬

recent

he wants to erect.

wealthier

can

elected

The Weak Link

Small

Lobdell

Government

housing needs of the great bulk
the population has ever been
met in this way, it is said. As the

the

which

apartment houses in the

new7
ess

rents

on new

onstrated
of

restrictions

for

Company, Inc., 20 Exchange Place,

industry or of
any single in¬
dustry.
They
are
problems,
I
believe,

delay in building should be occa¬
sioned
by anyone's inability to
find

Vice-President

houses,"for instance, and

impetus to the construction of
new dwellings.
How necessary it
is to give some encouragement to

amount

renominated

was

or by the
shop
tucked
away in an obscure side street of
your great city.

companies

printing

Sites

Lifting the ceilings from the
luxury apartments would impose
no hardship upon the tenants but
it
would
provide much-needed
i

removing

Harden,

Weeks

automobile

smallest

with you

iness

Baker, Baker,

James Ryan Now V.-P.
Of Lobdell & Company,

homes

new

President.

OPA limitations

dwellings,

Sparks & Co.

<$>-

far beyond

Wright, try

and John S. Wynn,

new

removed from newly-

are

constructed

them¬

Jr.,

Wright,

& Co,;

Frank

& Co.;

Woodcock, McLear

Wood

many

Snyder & Co.; Harold P. Wood¬

Spencer

types and descriptions stand ih the

to solve
by the housing
It is not low rents but

homes

Difficulties

revenue.

Edward

Barney

But

problems

those

E. Snyder, Jr., Geo.

George

rent housing

Smith,

Jr.,

Smith,

must

& Co.;

Sheridan, Bogan

(and this isn't the easiest part of
the

the

cuss

PHILADELPHIA, PA. —The
Philadelphia Stock Exchange, for
the second year in a row, will
have a contest for the board of

care

stores everywhere are ex¬

can

it is thought, the ceil¬
be lifted from apartinents which rent for $300 or more

constructed dwellings.

take

going up.
There
probably isn't a chain store of any
kind that isn't looking for more
slow

very

year.

heavy and

very

this demand must of necessity be

seven

per

in commer¬

space

construction

ings will probably be lifted next
from other classes of hotel rooms.

room

for

buildings is

new

panding
size, but

free enterprise.

I am

margin of profit they would have
themselves in financial hot

space,

will

business there would be

coming to you today as the representative of an industry—the printing industry—which is made
up principally of small enter-

found

coming Saturday, according to the
official announcements. The ceil¬

ings

annoyances

present housing situation.

the

they

projects and had

based their calculations on a 10%

Ceilings will be lifted on hotel
transient rooms a week from this

After that,

and

conveniences
relied
out

Thursday, February 6, 1947

letter which give me espe¬

concern.

suggest, first, that "it is
possible to separate the terms

You
not

any

agreement

...

in this dif¬

ficult field from the circumstances
of the

negotiations,

the trade with

the facts of
(con¬
you
that I

the country

pleased to have assurance of your
understanding
that
Section
10

cerned)."

Agreement
of Dec. 6, 1945, provides that one j
year after the effective date of •

appreciate

fully

involved in the negotiation of the

(11.)

of the Financial

assure

(Continued

the

difficulties

on page

785)

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

747
——

Universal Military

World f0! Abandon Peacetime

Training "A Must"
By

HON.

ROBERT

PATTERSON*

iffers
Rep. Landis offers House resolution calling on President and U. S.
calling on
delegate to United Nations to work for international agreement to
abolish

Secretary of War

State

sal

United

immediately with trained
million

case

war

Wants volunteer

men.

to -go

into action

army

and analysis allocation of $6.7 billions

men

over one

the

Army budget.

community has
just delivered

property
of

stunning de-

feat

the

ization.

These

Now

set

international

police

Robert P. Patterson

re¬

ing

from mankind the threat of
In

and

there

about

war.

forces of

evil, that would
ruthlessly if they dared.
To the pioneer community of set¬
tlers, those dangers were warlike
use

are

power

tribes,

desperadoes,

bank

robbers

bullies.

and

road

plain

agents,

frontier

To the international

com¬

munity, they are totalitarians, dic¬
tators,
schemers.
All
have
the
*An

address

otic

before

evil, in the

them

in¬

the

by Secretary Pat¬
of

National

Washington, D. C., Jan.

the

task

members

who

one

vidual
means

the

community,

concert.
any¬

the indi¬

his

private

of defense before sufficient

protection

available

was

would be looked upon as

fool

suspect.

So, in the community
nations, America must retain

her

national

defenses

condition until

are

established firmly.

Army

national

our

instrument

defense. It

since the time of

26, 1947.

sound

competent inter¬
police force and system

justice
The

(Continued

com¬

mili¬

has been,

George Washingon

752)

page

tions."

The
as

text

this

Resolu¬

concern

ev¬

American is the security of

ery

and

shall

henceforth

provision

for

make

the

con¬

tinuous maintenance of such

se¬

curity; and

necessary

consider

compulsory military

service

the

United

States

permanent part of our insur¬

ance

against unpreparedness in

the event of sudden war; and
Whereas

compulsory
would

restrictions
activities

the

over

military
in greater

result

lives

and

people, would
impose
heavy
burdens
on
them, causing greater taxes and
profound changes in their way
of life; and
Whereas

our

compulsory

military

service has long been customary
in

NSTA Notes

many

European

elsewhere,

but

has

states

and

been

con¬

This is under

BOND TRADERS CLUB OF CHICAGO
The Bond Traders Club of

midwinter

dinner

outof-town

guests.

Special

Regional Administrator
officers

and

Victor

National

the

Mosley

Stroud

attendance

honor

Securities and

was

490,

with

the

organization

Hess, Blizzard & Co.

Open Municipal Dept.
PHILADELPHIA,
PA. — Hess,
& Co., 123 South Broad

United

desire

Blizzard

S t

our

Nations

formed;

will

opening

purposes

United

international

buy,

Depart¬

them

Russell
Dotts

se¬

man¬

of
the 1
department.

peace;

The

the

nations

eliminate
sory

the

between
world

systems

firm,

all

resources

for

this year

Whereas

countries;

merly
Co.

the

way

or as a

solicitation of

The offer is made

only by

partners of Herbert

HOBOKEN, N. J.—Theodore H.

Joffe

service in

Joffe

has
&

formed

Co.

Bloomfield

international

as an

the

Theodore H. Joffe & Co.

and

precludes the mainten¬

of national

and

H. Blizzard & Co.

their

abolition

world-wide

compulsory military

ance

•

energies and

rebuilding

war-devastated

Stock

Exchange, was
early
by Arleigh P. Hess, for¬
partner of Boenning &
formed

plain peonies of the world, and
would release their

Phila¬

Russell M. Dotts

conducive to that

desired

the

delphia

compul¬

restoration of peace which is so

profoundly

has

membership

military service would it¬

self be greatly

ager

which

agreement

the

ssociation '

with

and
an

i p a I 1

and

agreement

permanent

ment

better time than the present pe¬
riod following the cessation of

hostilities in World War II to

an¬
the

Bond

and
be

never

et,

r e

nounce

leading part

was

there

Whereas

the

with

Street

Theodore
offices
to

engage

706

the securities business.

offering of these Shares for sale,
any of such Shares.

or as

offer to buy,

means

of the Prospectus.

were
Thomas Plart,
Exchange Commission

Security Traders Association, including
& Co., Philadelphia, President of the

150,000 Shares

ceremony

the evening

was

officers who will

new

the introduction to

assume

office

the

March 1.

New York State Electric & Gas

Corporation

Lawrance

are

Marr, E. H. Rollins & Sons, Inc., President;
Rickey & Co.. Vice-President; Stanley Dawson-

Rogers,
Smith, Straus & Blosser, Secretary; and Paul
Bax, Kidder, Peabody

3.75% Cumulative Preferred Stock

& Co., Treasurer.
25

which

looking

from

years

the'people

States

circumstances to be construed

offer to

the

all

fulfilling the great

WThereas

whereby

Association.

The main

John

Total

guests

the

National

membership of the
These

Chicago held its twentieth anniversary

28.

Jan.

immediate in¬

eliminated

system
a

and

United

cure

Whereas, in accordance with this
firm determination, it has be¬
come

than

the

war

President to take

for

Whereas the American people are
determined that their Govern¬
ment

and

Nations

the
first

efforts

greater

member

wholly

tions.

WThereas the United States has be¬

RESOLUTION

the Nation;

before to abate the fear and

to come;

agreement

policies and practices of all na¬

likelihood

follows:

the

and

make

ever

Gerald W. Landis

come

Whereas

than

Austin*

compulsory military service shall

most of the nations of
the world have expressed their
desire for peace, and resolved

icies and prac¬
tices
of
na¬

tion is

rather

war

Warren

unceasingly for
ternational

na¬

Whereas

training
from the pol¬

service

peace;

before thecompulsory

be, and hereby are, urged to work

suspicion

causes

fears to grow between

men

pulsory

organization,

prevented war
elsewhere but, on

tions and inclines the rulers of

elimina¬

proper

community,

advocated that

relinquish

police

for
an
international

tion

Re¬

our

never

Europe or
contrary,

and

ingly

the

tradition

compulsory military

the

and order. When

In the pioneer

the Women's Patri¬

Conference

Defense,

com¬

upheld by the law-abid¬

national

terson

individually

community

every

must

forever

move

lives

the

the community has not
yet devel¬
oped sufficiently to have adequate
police protection, law and order

the United Na¬

the

community

maintaining law

and system of
justice through

unceas¬

tary

forces of

delegate

force

tions,

folk

the

pioneer community, are restrained
only by the strength of the honest,
peace-loving people of the com¬
munity.
When
there
are
com¬
petent courts and adequate police,

seeking

we are

dominate

decent

ternational

civil¬

our

and

seize

munity.

hostile savages
who
threat¬
ened

the

purpose—to

American

founding of

service has

Or¬

agreement for

base

same

Whereas

United

"work

to
the

That,

States adopts

military service, the President of
the United States, the Secretary
of State, and the United States.
Delegate to the United Nations

public; and

ganization

Today the community of nations which make up this world are
in a position analogous to a
pioneer community of early American
history. This

trary
since

States

Nations

Resolved,
United

<£-

the

and

delegation

Pleads for public support and greater interest in the soldier.

international

27, Representative Gerald W. Landis (R.'-Ind.) offered a
(H. Res. 73) in the House of Representatives
directing the

President, the
Secretary
of

—

military forces adequate for;
safeguarding national or collec- j
tive security; Therefore be it

compulsory military training.

Resolution

Conscription
—

On Jan.

Secretary Patterson, in noting three basic requirements of an army
for this day and
age, viz: (1) universal military training;
(2) a
volunteer regular army; and (3) adequate
funds, contends univer¬
training is "a must." Cites need in

<S>

valuable

prizes

awarded,

were

wagon, fully equipped,
Reed of E. H. Rollins &

and

costing about $2,500,
Sons, Inc., Chicago.

convertible

was

awarded

(Par Value $100

Share)

station
to

Roy

(Pictures taken at the Chicago Bond Traders Club
dinner appear

Price $102 Per Share

in the Pictorial Insert.)

(plus accrued dividend)

NATIONAL SECURITY TRADERS ASSOCIATION
The National

Security Traders Association held its annual mid¬
winter meeting in Chicago, followed
by local meetings in Kansas
City and Minneapolis. The Eastern group was headed
by R. V.
Mosley of Stroud & Co., Philadelphia, National President.

No. of RR.

Employees

Declines to 1,353,389
Employees of Class I railroads
of

the

United

States,

the

middle of December, 1946, totaled

1,353,389,

decrease

3.12%

compared with the corresponding
month

1945,

and

2.07%

under

November, 1946, according to a
report issued by the Bureau of
Transport Economics and Statis¬
tics

the

Interstate

portation

(other than train, en¬
gine, and yard), which shows an
increase

1945,

decline

2.12%.

tages of decreases

The

is shown in the number of

-employees
for
every
reporting
group with the exception of trans¬

■

J 3
J

Harriman

•

Ripley & Co.

Incorporated

Eastman, Dillon & Co.

Hallgarten & Co.
R. W.

Pressprich & Co.

Union Securities Corporation

Shields & Company

White, Weld & Co.

Clark, Dodge & Co.

Schoellkopf, Hutton & Pomeroy, Inc.

Tucker, Anthony & Co.

Equitable Securities Corporation

Estabrook & Co.

Commerce

December,

are:

A. A. Harmet
under

lh
11

percen¬

Executives, officials, and staff
assistants, 0.36; professional, cleri¬
cal and general, 1.22; maintenance
of way and
structures, 8.63; main¬
tenance of equipment and stores,
4.36; transportation (yardmasters,
switchtenders, and hostlers), 4.06,
and transportation (train and en¬
gine service), 0.92.

Commission.
A

Copies of the Prospectus may be obtained from only such of the under*
signed as may legally offer these Shares in compliance with the
securities laws of the respective States.

Teletype

CHICAGO, ILL.—A. A. Harmet
Company, 208 South La Salle
Street, announces that their tele¬

Alex. Brown & Sons

type number is CG301.

February 6, 1947.

EARNED

PERCENT

Thursday, February 6, 1947

CHRONICLE

THE COMMERCIAL & FINANCIAL

VALUE

BOOK

1945

6-30-45

Bank and Insurance Stocks
DEUSENi

VAN

Bank Stocks

—

York—

3.12

10.6

30.96

2.56

8.3

33.11

7.8

441.65

25.97

5.9

3.39

7.2

48.38

3.10

6.4

105.96

8.79

8.3

113.63

8.04

7.1

39.50

2.36

6.0

41.81

2.59

6.2

13%

3.07

8.3

40.91

2.87

7.0

deposits

10.0

Trust
Hanover

Central

National

Chase

This Week

29.45

36.90

New

tChemical

—

Corn

First

analysis-of the operating statements of 15 leading in¬
stitutions. The average operating ratio of these banks was 64.9% in
1945 and 66.7% in 1946, and average profit margins were 35.1% and
33.3%, respectively. This difference results from higher operating
costs in 1946, mainly in the category of pay-rolls.
How individual banks fared, is shown in the accompanying tabu¬

Manufacturers

according to

lation,

52.10

5.43

10.4

54.79

93.65

7.5

1,349.24

92.54

6.9

19.06

5.6

352.75

20.08

5.7

200%
of

1945

Bank

Trust

Central

Trust-

29.8

36.8

69.4

33.4

40.4

54.7

61.2

36.7
36.3
31.9

29.3

75.5

26.0
38.9
23.7

63 6

40.7

profit mar¬

First
National has the lowest operating
ratio

margin of

highest

the

and

that

observed

profits in bank operations, while
Bank of New York and Public

operating ratios
and the
lowest profit margins.
Offhand, one might suppose that

have the highest

this would indicate that First Na¬

funds
would be higher than in the case
of the
other two
banks, while
tional's earnings on capital

Bank

would

each other.

par

sb, for in 1946 First National's net
operating profits represented a re¬
turn of 6.9% on capital funds, as
measured by book value at the
mid-year point, while Public's net
operating profits yielded 9.6% on
book value,
and Bank of New
York's

It is evident,

only 5.9%.

therefore, that operating ratios of
themselves can be misleading and
by

taken
Bank of New York,

bank

info account.

First

National

tional,

must

Public

and

Public National is approxi¬
mately 70% greater than that of
of New York

Bank

interesting

tional City, for
tions

are

with

Na¬

tional

moderately lower

But

Trust

Manufacturers

Exchange,

National

Public

and

isons. It will be noted that

ratio

operating

69.4%

Corn's

ing yield on book value of 10.0%
is highest of the three. Manufac¬
turer's operating ratio is some¬
what better than that of Public,
the

but

latter

sponsored

The

men

the

returned

commu¬

camp

strangle

face of

the greatest

na¬

debt in the

country,

history of any
cannot risl^ pitfalls

attention has been

create

primarily

cen¬

would

cause

to collapse like a

our

Economy

house of cards.

private enterprise the green light
make

ceed.

the

American

Private

have

suc¬

way

enterprise

should

full

our

encouragement to
employment for our

full

tered in recent days. It would be
a mistake to consider these
ques¬

millions of veterans, war workers
and all the people who need to

tions

work.

the
pro¬

problems
consider in the

aims

to do about these

today we shall
light of the future. This is the
long-range plan of the Congress.
Americans

workers,
but

citizens

and

with

greater

stricted

alone

not

are

farmers,

or managers, or

broader

aims

than
of

purposes

needs

the

any

re¬

narrow

economic group. Progress will be
achieved in America by us all

drawing together in the spirit of
community action and community
cooperation on common problems.
A

Common

Sense

The

approach
Budget must be

Approach

the

one

Federal
common

combined with proper con¬
sideration for the fiscal and eco¬
sense

nomic

the

problems

war.

Common

dictate that
of

debt

the

left

and

would

sense

lighten the burden

taxes

citizens

fruits

from

over

enjoy

their

labor.

the savings which will permit the
lowering of taxes, balancing the
budget, and the beginning of a
program of debt reduction.
Everyone must realize that in a
Federal

budget which amounts to
$37 billion there are many places
omy.

aims

we
can
accomplish econ¬
We need not forego any es¬

sential governmental

services, but
budget must be cut and cut
deeply. The achievement of many

of the Federal government
a
sound basis and en¬

the

individual

initiative

we can
ap¬
proach the problems of manage¬

ment

and

labor.

Industrial

har¬

would wish these

one

fail—unless

wishes

powerful and strategically placed
minority in our country which
seeks

to destroy
our
American
system and set up in its place, a
system of Communism or some
closely related form of Fascism.
That

their

way of attempting
to personal power.

to climb

They are the enemy within our
gates, but we must defeat them.
They do not work in the open.
They have wormed their way into
of power from which they
try to shape government policies
and influence public opinion. Our
task

find

them and

them. That is what

remove

propose

,■

•

;

'■

charge of the Ticket Committee,

;

Ber¬

tram

Seligman of Ward & Co., is head of the Advertising Committee.
comprises: Chester E. deWillers, Chairman;
Richard M. Barnes of A. M. Kidder & Co.; Otto Berwald, of Berwald
& Co.; George L. Collins of Geyer & Co., Inc.; Tracy R. Engel of
Buckley Brothers; Irving L. Feltman of Mitchell & Company; Her¬
bert D. Knox of H. D. Knox & Co.; Frank H. Koller, Jr., of F. H.
Koller & Co., Inc.; Stanley L. Roggenburg of Roggenburg & Co.;
Herbert Singer of Luckhurst & Co.
The Ticket Committee

Committee
comprises:
Bertram
Seligman,
Amott of Amott, Baker & Co., Inc.;
James Currie, Jr. of Troster, Currie & Summers; Frederick D. Gearhart, Gearhart & Co., Inc.; Leo J. Gold water, of Goldwater, Frank &
Ogden: Hanns Kuehner of Joyce, Kuehner & Co.; T. Reid Rankin of
R. H. Johnson & Co.; John F. Sammon of J. F. Sammon & Co;;
The

Advertising

Ward & Co., Chairman; Harry R.

A. Searight of Aetna Securities Corp.; Erwin Stugard
Goodwin, Inc.; Melvin S. Wien of M. S. Wien & Co.

George
Bond &

Editor
room

O'Kane, Jr., John J. O'Kane, Jr. & Co., is Chairman of

John J.

Ginberg, Strauss Bros., Inc., is

the Entertainment Committee; Frank

Year

the

Book;

Wellington Hunter will be in charge of

With

all

the

that

the

economic

reservations for out-of-town guests.

lie

before

scientific

oppor¬

Joint FTC-SEC Business

with

us,

advancements

improvements, with
all the potentials of atomic power
and

electronics, and agricultural
research, we need only to deter¬
mine to work
and

together in freedom
justice to achieve a fuller

life and
for

all

new

age

of abundance

Americans.

Wm,

Lock wood Honored

By New York Curb Exch.
of

William A. Lockwood was guest
honor at a luncheon held at

the

Lawyers Club in celebration
of his 25th anniversary as general
counsel

of'the

York

New

Curb

Exchange.
The

luncheon

tendered

by
the
board and President pro tern of
the Curb Exchange, and was at¬
Edwin

Posner,

was

Chairman of

tended

by Francis Adams Truslow, who will assume the Presi¬
dency of the Curb on March 1.
the other guests were
Werle, recently nomi¬
nated for the Chairmanship of the
Among

Edward C.

Board

Exchange,
President

Governors of the

and
of

Fred

the

Curb

C. Moffatt,
Exchange

Curb

Securities Clearing Corp.
Colonel
Lockwood,
as

Survey Planned

One of the first instances of President Truman's plan for

and technical

teamwork between

government agencies which

closer

compile statistics is

the Federal Trade Commission and the Se¬
with the aid of the Budget
Bureau, of the most complete business condition reporting systems
yet devised, according to Associated Press advices of Jan. 20 from
Washington. Under the plan tht$>
-£
Trade Commission is embarking hope that when these detailed figon
a
three-way figure-keeping ures on industrial costs and prof¬
the working out between

and

curities

Exchange

Commission,

project, viz:
"An analysis of OPA records to

its

supply a picture of wartime busi¬
ness profits; a survey of industry's
1946 financial position, and simi¬
lar surveys for 1947 and future

between

made in abbreviated quar¬
statements followed up by
comprehensive annual reports,
"The OPA records already have
years

terly

transferred

been

the

Trade

The FTC collected
somewhat similar data before the
Commission.

war

OPA do the job be¬

let

but

ginning in 1942."
The

result

expected to be

available

become

to eliminate

serve

and

lead

they

some

employers

smoother

may
argument
unions

and

collective

bargaining.

Harry Fahrig Back
Trading Desk

PHILADELPHIA, PA. —Harry
H. ("Happy") Fahrig, Jr., manf
ager
trading department^ Reyinolds & Co., 1500 Walnut Streethas curtailed his vacation at

over-all report on what
happens in the nation's industrial
general

Fortj

his duties
Chairman of the Special Events

Myers, Fla., to

Committee

The Associated Press
also had the following to say:
"The SEC will share in the job
with FTC in collecting data from

New

Investment

the

phia.

approximately 10,000 concerns in
532 different types of industry.
Both agencies have powers to re¬
quire answers to their question¬

assume

economy.

naires.

First

forms,

due

mailed out in the next few weeks,

will seek data on 17 different cost

items rather than two as did the
FTC's

prewar

Officials

expressed

Philadelr

Preceding the Association's
annual dinner at the* Benjamin J
Franklin Hotel Friday, Feb. 21|
the local bowlers
York

are

keglers

hosts to the |

Thursday;

evening. Aside from the prepara¬
tion for the Special

above,
his

Mr.

task

Events noted

Fahrig has

resumed

laying out the? floor

plans of Reynolds' new offices at

form."

have

Association

Traders

the

1528

Walnut

Street.
•1

•

'•

;, • f
••••

"t ■ j

Chester L. deWitiers

Seligman

do.

Mondays with a new outlook.
mony will be achieved in a spirit
he is
The
tempo
of
the
maneuvers of mutual
fairness and tolerance. known to his
associates, assumed
speeded up. Morale soared. Sol¬ What we need is
a good
neighbor the post of chief legal adviser to
diers who were needed for vic¬
policy in labor-management re¬ the Curb Exchange at this time
tory regained that spirit without lations. Good
neighbors respect in 1922, not long after the Curb
which victory is impossible.
each other, are equally responsi¬ moved into its
present quarters to
It was recognition of the great
ble to each other, and work to¬ become an indoor
securities marmilitary value of civilian commugether for their mutual improve- ket.
on

Bertram

Wellington Hunter

of C. E. deWillers & Co. is in

posts

this

back

disagree with these

can

tunities

must cut down the Federal budget
and
so
find in those economies

where

one
—

America to fall. We recognize that
there is a very small, but a very

free
more

Special Services offi¬ of all
Americans to bring about
cers, desperate or inspired, turned
healthy business expansion, full
to
the civilian agencies
in Los
employment, and better real in¬
Angeles.
There they found co¬
comes and wages
for all.
operation. Army trucks took the
soldiers into Los Angeles over the
Proposed Labor Legislation
weekends for well-planned recre¬
In this same attitude
nity.

George Geyer

progress

courage

•

O'Kane, Jr.

people of America.

the

social

power

harmony.
Upon these subjects — budgets,
debt, taxes, and labor — public

nances

camp

economic

industrial

coming from the community. In¬
small economies will add
up to a
stead, the citizens, disturbed by
tremendous total saving.
the soldiers' efforts to find their
This saving must be distributed
own
amusement, showed resent¬ with
wisdom and fairness between
ment
The soldiers, hurt and be¬
debt reduction and tax reduction.
wildered, in turn reflected that
We must begin to put the fi¬
resentment by their behavior in
Sank lower and lower.

John J.

We must struggle to avoid depres¬
sions at all costs. We must give

support of the Army is illustrated
by this report of a wartime inci¬
An

the

lighten the rigors of
taxes, of encouraging full produc¬
tion through the achievement of

American

abroad.
The

monopoly

of debt and to

pose

ple

equal justice and equal responsi¬
bility in labor-management rela¬
tions. No special group or groups
can
be
permitted
to
enjoy
a

which

recreation centers

gress is now engaged in the prep¬
of legislation to achieve

aration

economies in the Federal govern¬
ment so as to reduce the burden

only as problems
present. Therefore, what

are

in production.
Toward this essential goal, Con¬

tional

and

recognizes

common interest in the
fruits of the job both in wages and

of the

And so, the community forgets.
The
canteens
are
closed.
The

tors

leadership

j basic and

Cogress is beset by many
serious
and
far-reaching prob¬

to be

ment. Good management and wise

labor

lems.

Americans

they

intend to

hasty,

• ••

*.*.*-..y**

§mm

THE COMMERCIAL' & FINANCIAL CHRONICLE

754

Drexel & Go. Admits

Thursday, February 6, 1947

Observations

'I?

Steel and Barlow

(Continued from page 737)

Walter H. Steel and Clarence

WILLIAM J. McKAY

admitted

been

have

Bartow

general partners of Drexel & Co.,

Canada in the initial stages of the Atomic
Age is truly symbolical of the Dominion's future world position. The
U. S. A., by virtue of its resources, its size and population, its initia¬
The part played by

Investor Lacks Pressure Group Backing

and its natural genius for leadership
Disregarding the in¬
calculable potential of Russia, the only other country which gives
promise of maintaining the mod-<^
immediate rival in world preeminence.

pace of progress
Even today despite

era
i

is Canada,

This in its turn will tend to stim¬

its lack of

ulate

farm

production

and

vestor as an exception in our American political structure, which is.
bnmful of blocs and pressure groups, is wholly disorganized and
hence without^ political or economic power.

population, its immature develop¬ greater capacity to absorb agricul¬
ment and its youthfulness as a tural and forestry labor.
Finally
he; greatest of the Canadian eco¬
world power,
the Dominion > is
nomic handicaps will be overcome
pressing close on the heels of this
country. Canadian science, tech¬ by the establishment of a broad
nology, and industry have wisely domestic market for the Domin¬
avoided the mistake of striving ions prolific production. Thus the
for Canadian individuality and
shape of things to come in the
have taken advantage of the prac¬
tical

experience
and of Britain.

In the case of the

this

country

development

of the atom bomb, Canada was not

only

partner with this country

Britain

and

the

scientific

re¬

it was also the Do¬
minion that supplied the essential
but

material.

In the field of aviation

northern

neighbors made no
attempt to evolve an original de¬
sign, but have achieved a notable
success in adopting the best com¬
mercial air-frame produced here
to which they added the
best
our

available British motor.

Following in the path of this
country the Dominion is in course
of attracting within its borders
the cream of the world's industry.

world of tomorrow casts

dian

In his relationship vis-a-vis the government, remarkably little
has been dohe toward organization; For example, it would seem logi¬

cal to expect
have

proportions.
During the

rapidly
the

week

activity

Cana¬

section

of interest and
carried

price level
through par.

point

the

3onds

supply

one

consequence

there

still

return

for

afford

the

February;

Co.

York

resident manager of their
Office, having previ¬

since 1935. Fol¬
lowing his graduation from the
University of Chicago in 1925, Mr.

Freres & Co., Inc.

was

strong rally in free funds and
the rate moved up sharply to 4%
discount. It is interesting to note
that with the rapidly growing in¬
terest
in
internal
Dominions,
which

ously been associated witih Lazard

"arbitrage"

over-absorbed and pur¬
were
made over the free

New

associated

became

Drexel

1946,

the

was

chases
rate.

with

attractive

with Halsey Stuart

career

& Co., Inc.

joined the National City

Company and two years later be¬
came associated with Brown HarCo.

June

Mr>
elected President of the

riman
Steel

this

business

his

started

Steel

1932

was

1946,

high-grade form
3%, there is the Municipal Bond Club of New York
distinct possibility of the free rate for the year 1946-47.
Mr. Bartow is resuming an. asso¬
In others it is the natural conse¬ moving into line with the official
If would appear that ciation begun in 19321 when he
quence of the unrivaled ability of quotation.
the Dominion to provide the best we are nearing the end of the entered the employ of Drexel &
available factory sites backed by transition period
following the Co. following his graduation from
a
wealth of virgin natural re¬ revaluation of the Canadian dol¬ Williams College. On Sept. 1, 1938,
lar, and with the waning of the he transferred to J. P. Morgan &
sources.
In

such as the indus¬
trial flow from Britain, the migra¬
tion is the result' of dire necessity.
some

cases,

of investment of

bearish sentiment in both the New

Co.

York

markets,

iated

with

the liquidation of Canadian stocks

tered

the

December,

flow of skilled artisans will lead

by holders in this country is likely
appreciably to diminish. As a re¬

sult the flow of

As this situation develops

hot

it will
long before Canada will

compelled to adopt a policy
for planned immigration.
An in¬

growth of

new

industrial cities.

and Toronto

stock

"arbitrage" bonds

brought down from Canada in
change

ex¬

likely

come

time affil¬

at that

was

Drexel &

United

Co.

en¬

States Army

private and
released from active duty as

captain

1941,

as a

July 2, 1946, at which

time he returned to J. P. Morgan
&

which

was

with both management and stockholders, will properly or-?
ganize for the task, the original economic and political fundamentals
of our country can be preserved."
But action in those quarters re¬
contact

mains non-existent.
Steel

Mr.

sustained demand

the

Dominions

new

office.

The inter¬
again the center

was

will be resident at the
Street, New York City

Wall

two

The

announced.

partners

the dearth of supply.
nal

lead

Bankers Association, the National Association of Securities Dealers,,
well as the American Bankers Association, who possess the closest

Walter H. Steel

Gfarence W. Bartow

market

limited

still

was

of the investment industry's trade associations to
in combating Federal encroachment. Witness

some

the

example the unheeded call to action uttered last October by
Wr Wymond Cabell, outgoing President of the Association of Stock
Exchange Firms: "If we, members of the exchanges, the Investment-

for external bonds continued firm
3ut

taken

for

growing

shadow

The current group of non-professional individuals expends
almost all its efforts "speechifying" at meetings; often even praising
as well as criticizing.

Wholly apart from detailing the colorful individual activities of
such one-man
committees, as well as those of several "protective"
organizations such as the Investors' League and the American In¬
vestors' Union, the background motivating their very existence must
be understood.
This background consists of the fact that the in¬

tive in the field of technology,

has

actions.

Incorporated,

Co:,

Assistant

The basic difficulty lies in the intrinsic separation of the func¬
of corporate management from ownership.
As pointed out a

tions

decade ago by

Messrs Berle and Means, the major financial decisions
publicly held companies, no less than their routine
administrative acts, are determined by officers and directors who,

and policies of our

even

aggregate group, usually own less than 10%

of the out¬
Hence permanent conformity of directors' policies
the genuine interests of the owning- shareholders
basic goal.

standing shares.
actions

and

with

still remains
It

that while the corporate technique has been extensively
developed on the financial side, it has remained stunted in its social
and political phases, as an affirmative instrument of democracy. Not so
much

the

seems

matter of legal right for the individual

constructive

benefit

stockholder, as for
system as a
would make

the

corporate capitalistic
whole, genuine enfranchisement of the small investor
the electorate realize

that "big business" is also its business.
Surely
ihis would- be enhanced by providing a system for all stockholdersmaking effective their will regarding all important questions in the
same way as they exercise their political rights and obligations; in
lieu of merely using the proxy system as a means of getting over the
nuisance of electing directors periodically, and of preserving the
legal amenities with the minimum of trouble.
Pending the formation of some trade association, group or otheij
body that will be really effective in protecting the stockholder against

government and rival pressure groups, and until some mutually fair

technique for adjustment of the stockholder-management

relationship

arrived at,

the protective legislation residing with the SEC must
But, efficient and fair overall corporate control by a
Washington agency is prevented by the United States Constitution's
relied

bar

on.

against

main

corporation

federal

Hence in a large area our
be placed on the instru¬

law.

must meanwhile continue to

reliance

ment of full

publicity

preventative of inequitable situations.

as a

Vice-President.

abrupt halt.
Internal stocks developed a sud¬

CANADIAN BONDS

den

flurry of activity reminiscent
the

gold

boom

days

Toronto exchange.

GOVERNMENT
PROVINCIAL

sion

the

move

important

new

the

On this

occa¬

discoveries of cop¬

per-nickel deposits at Lynn Lake

MUNICIPAL

Northern Manitoba.

quence

CORPORATION

panies in this
ritt

conse¬

the shares of mining

com¬

notably Sher-

area,

Gordon, registered wide

four

After

Commander

the

terially reduce farmers' costs and

service
U.

•

Naval

turned

the

Boston

general ad¬

by William H. Long Jr.,

A. E. AMES & CO.

Marx and V.

have

formed

with

INCORPORATED

the

Edson

was

for

three

of Ships in

Bureau

years

Wash¬

offices

the time of rapidly expanding ship

Birmingham
Hugo Marx, Jr.

Hugo
in

Marx

the

He received

construction.

Hu¬

Co.

Brown-Marx

tion

cita¬

development

the

for

and

maintenance

of production

charts

the

status of the

entire

showing
Naval

Shipbuilding Program.

TWO WALL STREET

Building to

NEW YORK 5, N. Y.

ties business.

Mr. Marx, Sr. since

to Japan for four months with the

1911 had been

Naval Technical Mission, and then

HECTOR 2-7231

NY-1-1045

Co.,

also

engage in the securi¬

with

principal of Marx

which

associated

his.

son

was

charge of the

the

industry,

This

first

the

nate

spent six months in- the Pacific in
the atomic bomb

and

lime

ment.

The

Co.

the

install

this

new

this

making

100

years.

elimi¬

in place of the
sulphur treat¬
Sugar

manufacturer

a fac¬
The full signifi¬

process on

tory-wide basis.
cance

ing the beet sugar industry more
firmly than ever as a basic part of

sugar

Amalgamated
first

new

method

not

since it is still in the

yet known,

development stage. However, pro¬
duction, to date, is sufficiently
greater

reasonably

expect

better
quality sugar, and a reduced cost
production.
The new process
simplifies the manufacturing op¬
sugar

previously enumerated three im¬
portant developments are of farreaching significance in intrench¬

is used to

non-sugars

former

but also from po¬
a "protected" in¬
believed that the

of
beets.

process

major improve¬

Synthetic resin

ion-ex-

the

method

the

Following V-J Day, he was sent advanced

connection with

from

sugar

ment

organolite

of sugar,

dustry.

development,

major

beet sugar in more than

ington as assistant to the head of
the Shipbuilding Division during

BIRMINGHAM, ALA.—V.

Another

President.

which is just now being pioneered

Company

Mr.

Formed in

litical factors of

division of Doremus &
change
as
account executive
and director of research, it is an¬ making

vertising

vances.

CANADIAN STOCKS

price

greatly stimulate the raising
beets in future years.

sugar

Reserve, Nathan W. Edson has re¬

nounced

ad¬

years'

Sugar Shares

(Continued from page 738)

To Doremus & Go.

provoked by

was

Favorable Factors in Beef

N. W. Edson Returns

recovery,

national

our

production,

beet

with foreign off-shore
The beet sugar indus¬

compete
cane

sugar.

try should have more stability so
that earnings may
be predicted
with greater certainty.
As time
goes

the public becomes
the dynamic ad¬

and

on,

aware

believed that beet
sugar equities will sell on a higher
price-earnings
ratio
than they
have

former years.

eration

and

eliminates

some

Ralston Steel Car Pays

TAYLOR, DEALE

inedible
been used

former
had

loans

1946
to

100,000 as of
total amount

Bank Loans

Car

Co.,

outstanding

had

the amount of $1,-

Jan.
was

15,
paid

1947,

the

off.

Ap¬

only in livestock feed and the fer¬

parently the freight rate decision

mentation

has had

been several other improvements,
in
recent
years,
in beet sugar

3-1874

payable

semi-annually
to

United

States

Funds

yield 3.75%

CANADIAN

Wood, Gundy & Co.
Incorporated

Municipal
14 Wall

Corporate

bank

the
which

15,

Steel

4% Perpetual Debenture Stock

SECURITIES
4

edible high-quality syrup,

place

Ralston

Canadian Pacific Railway Company

Price

Government

Sept.

molasses,

interest

Provincial;

made

$125,000

Street, New York 5

WHitehall

Off OutstancPg

into

Non-Callable

& COMPANY
64 Wall

costly machinery now being
used.
Also, the residue product,

the

test at Bikini.

been

have

which

vancements

made,

after sugar recovery, can be

bond department.

The low¬

economy.

both in
farming and sugar process¬
ing, should enable the beet sugar
manufacturers to more effectively
cost

ered

Toronto

Montreal

Street, New York 5

Winnipeg

Vancouver

London, England

industry.

There

have

processing which have increased
plant capacity and reduced the
cost of production.
In past years, beet sugar equi¬
ties have always sold on a low
price-earnings ratio because of
the inherent hazards of the in¬
dustry.
The risks resulted not
only from the uncertainty of the
volume of
production and the

favorable effect

or¬

the company has, since
the
decision,
received
several
large orders and is bidding for
many others.

ders,

Edw. Sellers

Oneonta

ONEONTA, N. Y.—Edward L».
Sellers is engaging in the securi¬
ties business from offices at 1 Taft
In the past he was with
Wainwright & Co.

Avenue.
H.

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

Insurance
(Continued from page 740)

the company selects its own
"physician" who knows the habits,
medical history and
case

idiosyncrasies

the

client, and where there is

somewhat
treatment

with

those

which

ex¬

effec¬

tive.

many
of which
received
impetus in the war period

ones,

their

were

their

strong enough to stand
financial feet

own

depression

come

times,

and large
enough to' command good man¬
agement and to support adequate
research in their field.

Finally

to the private
whether
the

we come

service.

Here,
be brought in
by his
family doctor or not (and in my
opinion he should be), he has the
"patient"

benefit

the

versified

objective

services

and

di¬

hospital

clinic to evaluate his present con¬
dition based on the past health
records

of each part of his cor¬
porate body and activities.
This
is not to suggest that
anything is

and

wrong

large units of capital but would
extend through numerous smaller

but

greater opportunity to
balance his preconceived ideas of

perience has shown

cure

determine

dure

meet

necessary, but
sound proce¬

mortgage

Company "Privale Lendittg"

existing conditions

and provide what would
appear to
be a healthy program for the fu¬

desirability of interchange of in¬
between

departments to the extent
that it may be proper.

is the

order

extent

the day, nor to

public utilities
where that procedure is required

iaries unless

commercial

for

the

great

majority subject to

the jurisdiction
and

Exchange

Federal
in

But

was

fertile

field

mates of

the future

are

words

just that,

and

no program can be static. Pe¬
riodic check-ups are desirable and

there

must

flexibility

for

changes in conditions and future
requirements.

commercial

There

plenty of business for all of

and

per¬

continuing

relationship, but based on the
short-term turnover of inventories
and the seasonal requirements of

business, fixed capital require¬
having
been
provided

ments

through equity

long-term obli¬

gations.

With the rapid develop¬
ment of industry in the
1920s, fol¬
lowed by the depression and the

Industrial revival of the '30s, and
nurtured by public regulation, the

banking system gradually adopted
the practice of

granting credits for
more
than
the customary 60-90
days or one year, extending out to
three

five

years).

(often

years

ten

Parenthetically, the bor¬
forced

rowers,

honored

circumstances,

short-term

credit

the letter than in the spirit, re¬

newals or switches

the order of

having become
the day.

During the late '30s life
ance

companies,
pricked up their

some

insur¬

fail to

If the

lending, the type of agree¬
provisions, super¬
and follow-up, and advan¬
tages versus disadvantages.

were

growing

turban

standably
Iqans

out

were

farm

apace;

mortgages
of

favor;

decreasing;

and

under¬

were

policy
Federal

debt had not yet moved into

high

municipal securities were no
longer attractive due to tax pol¬
icies; tired mortgages that had be¬

gear;

come

real

estate

being liq¬
uidated; the railroads were heavy
with debt, in red figures and fac¬
ing receivership; the banks were
were

buying longer-term securities and
lengthening out their lending into
the field of institutional investors.

These

were

the factors

doubt

some

acquired

years

Utilities,

the

lending

banks to

indicate

great difficulty

gradually acquiring medium
and longer-term loans, at least so
far as existing clients were con¬
The market

cerned.
in

their

business

short-term

less,

they

carried

at hand

was

depositors

borrowers.

have

years

our

organization,

in invest¬
in
general

ment
policies
and
thinking, andvI do not know that
anybody has as yet undertaken
the job of studying and document¬
ing the practices and methods of

those life insurance companies

gaged

greater

only offer

thinking
Until

Penn

private
lesser

extent.

can

and

our

years

ago

generally

lim¬

security investing to pub¬
offerings and open market

lic

purchases.

When

undertook

in¬

friends

commercial

business, in the

the

future
a

had

the

with

want

to be represented
investment house.

ally

past

it becomes

known

such loans.
rect

that

come

are

gener-

making

We have done

advertising

nor

have

and inventions

have pointed out to

invest¬

spect to maturities.
increase in return,

3. Some

in
ex¬

to the client, assump¬

penses

agreements
the time-tested

curity

may

conventional

the

unsecured

may

most

customary form of term loan.

note—the

ing

mind

that

the

jority of such loans
trial

companies for

keep¬

great

are

ma¬

to indus¬

the purposes
for plant ex¬

First

the

mm*

describe the note

date,

(i.e.,

maturity,

in¬

stalment

payments, interest rate,
often the purpose of the
borrowing), the form of note be¬

and very

A";

then

the

details of

Then

have what

covenants

call af¬

with

state¬

Also

fulfilled.

that

The

officer's

insurance

view
the

statements

annual

jected

to
to

with

mation

The financial

data

sistent

was

the

and

the

basis

made.

statements

are

which

unusual aspects that

the

negative

sume

noteholder

the

create,

guarantee

bor¬

as¬

additional indebtedness

ex¬

holders for whom

bank loans maturing with¬
in 12 months and often limited in
cured

tees.

have

are

trus¬

standard

forms.

in the

usual

course

business;

discuss

them

interfere

the

with

6. Last

with

man¬

know

what

are

praise the
prospects.

con¬

is going
position to
company and
a

on
ap¬

its

perhaps the great¬
— pay-out or
sinking fund. The pay-out is
an
important element as it
est

and

advantage

provides some shorter ma¬
turities, a more even sched-|
ule of inflow of funds, and!
most effectively insures se-f
curity of principal and in-f
terest.

As the loan is stead-!

it becomes less!
to the "client"!
higher
investment
quality and safety to the in¬

ily reduced,
of

and

burden
of

surance

company.

John G. Nesbett Co. inN.Y.
Co., Inc. has)
offices at 25

John G. Nesbett &
been

Broad

formed

with

Street, New York City, tofc

engage in the securities
Officers
are
John
G.

President and Treasurer;

business. m
Nesbett, U
Berrian

Posener, Vice-President, and
Bess M. Nesbett, Secretary.
Mr.;
Nesbett was formerly with Carl
P.

Loeb, Rhoades & Co.

Admits New Partners
CHICKASHA,
OKLA.--R. B.
Nunnery, Jr. has been admitted to
partnership in R. B. Nunnery &
n-

Corollary advantages are:

statements, analyze
if deemed advis¬

and

tinuously

may

particular conditions and yet
adequately protect the policy¬

cept as specified (generally unse¬

rela¬

client-company

not

and

discussed with
spirit of mutual
helpfulness, and other information
necessary to clarify the situation
may
be requested.
We like to
think of our supervision efforts :n
terms of being a type of preven¬
tive maintenance, and the old say¬
ing. "An ounce of prevention is
worth a pound of cure" is just as
applicable to this field as it is to

things,

rate.

agement but

turn up are then
the company in a

covenants;

will not do certain

rower

such

the

same

is that we provide
a service, first learning the re¬
quirements of the client, present
and future,
and then recom¬
mending a "tailor-made" plan
which would seem to meet his

been

management, as well as all.
aspects of their business. We

"going over" for the purpose of
preparing a brief report on the
progress, or lack of it, made by
the company as compared to pre¬
vious periods.
Any

have

We receive the client's

able

con¬

given

the

them,

reduce

At the

many

financial

infor¬

standard form

with

the loan
time

detail

amount

such

tion.

received is not always

uniform

the

pur¬

in
5.

covenants, affirma¬
negative, have been com¬

securities are
publicly offered with wide
open terms which do not ade¬
quately protect the investors
or for which they do not re¬
ceive adequate compensation

financial

plied with.

having,

ascertaining whether all

tive and

ket

sub¬

are

scrutiny

books

public offer¬
ing where the work of in¬
vestigating and documenting
is largely done by others.
4. Terms of private vs. public
offerings. In a seller's mar¬

Upon their receipt, the quarterly
and

securities

may

Our theory

Then

chase

cer-

force

the

greater than the

course

determine that the
company's
property has
been
properly safeguarded against fire
and other contingencies.

ance."

sent

the loan

auditor's and

respect
(less often
current ratios,
generally limited
to the payment of dividends); ap¬
the field of medicine.
plication of proceeds from prop¬
erty sales over a certain amount;
Advantages
ta^es or liens; insurance, compli¬
These I am going to list as we
ance
with laws and regulations;
maintenance of properties; finan¬ see them and leave further elab¬
cial statements and other infor¬ oration for the discussion period,
mation as requested; the legality a. Advantages to the client (please
of the transaction and the lawyers'
note that I choose to call him
over-all clause of "further assur¬
"client" and not "borrower"):
to net working capital

ing substituted for market¬
ability), The cost of putting

company within a
time after the end of

quarterly accounting period,
annual audit covering each

zation

in
we

amount,

financial

the

all terms of the agreement are be¬

It is the last that I will discuss in
terms of my own company,

furnished
of

ing

corporate mortgage, or it may be
a
loan collaterally secured, or it

marketability (we must live

officer's certificate to the effect
that to the best of their knowledge

that is, that without the prior con¬

Gen¬

with respect to type
and businesses and with re¬

cov¬

our

in¬

and

capital

ments

qualified to "open the way," and amount); dispose of assets except
we

2. Diversification

practice to require that

fiscal year.

from

and

of in¬
coming

We have,
however, spread the
gospel through those of our real
estate mortgage supervisors and
correspondents whom we deem

debt

with the investment through¬
out its term, amortization be¬

our

each

situation,

di-

"traveled the country," nor do we
have branch investment offices,

ments, many of which were aceentuated
by war requirements

inquiries

enterprise
system, it was going to be largely
in
diversified industrial develop-

restricted necessarily to the
very

particular

general pattern

dentures

firmative

direct

so-called free

(i.e., chemicals, oil,
electronics, etc.).
Further, that
these developments would not be

each

ment.

borrowings

re-set

their

crease

to indicate

the affirmative

one

reasonable

panies, and within companies to

banks, and in invest¬

long-term

present clients

progress

always

are

our

tion of total risk, and lack of

com¬

delivery of the note and the "clos¬
ment
houses, principally in the ing" or settlement; provisions for
Philadelphia
metropolitan
area, repayment whether annual, semi¬
that we had equipped ourselves to annual, or less often quartely; the
i^nter this field on a modest scale. mandatory amount, any contingent
It seemed to us that while some amortization and any prepayment
managements might prefer to dis¬ privileges
to
the borrower, all
cuss their
entire financing direct without premium; then the pre¬
with one lending
mium provisions for other retire¬
institution, there

___

that if this country was
goto continue its expansion in

insurance

"Exhibit

between

assets, and were concentrated
As we have gone
in,
along it is
a
handful of large national
and'only natural that an increasing
international units.
It appeared number of

tinder

ing attached to the agreement

would

as late as 1943 repre¬
sented little more than 3% of our

ing

tions

"private lending." without diving
in head first, we let it be known
our

but

recognition of decreased

doubt varia¬

are no

ing capital.

had

present time.

needs increase.

But prudence dictates other¬

ments

example.

ited its

seem

the

life

much

—

Not only are new loans added
as the service becomes better

loans and

our

funds

enants, I have mentioned financial
statements and other information.

three

one

about

size to whom private borrowing
might
be
more
advantageous
than public offering of securities
through underwriters but who

course

vestments

While there

refinancing, or
pansion, or for additions to work¬

company

Mutual

lending

en¬

their normal commercial

very

industrial

Provisions

down

The companies vary

needed

receipt of
opinions, docu¬

wise.

insurance companies,
I must assume there is no general

size,

additional outlet for

insurance

they and their accompanying
be filed away and forgot¬

ten.

to life

pattern.

1. An

prior

have

wide

to the insurance
(I don't call us ''the

company

papers

Types of Agreements and Their

there

which
a

lender"):

known,

It is

meet

ex¬

the company.

principally

banking activities.

service

answers

b. Advantages

ready

Now that

thorough both with
respect to the business, past, pres¬
ent and prospective, the manage¬
ment, and the financial position of

pers and

in the local newspa¬
trade journals, as an aid
expanding their lending and

collateral

supplies

hope to have more, what do we do
about them?
The path of least

and

advertising,

publicly-owned securi¬
!,.

ties.

to make the loan is

the
other

that

amination

with

^" Supervision
and Follow-Up

must

answer

6. Financial adviser to the client

ments, etc.

tentative "yes," after which

Neverthe¬

recent

extensive

and

resistance would

and

large
Governments, Rails and

but

banking
connections, and finally, that there
another important were many companies of moderate

inducement. We had in the
volume of

they had

limited

try to make it 'early
in
the
game,
and
if
possible,
frankly to state our reasons.
We

others who would consider
it desirable to combine their short

inducing life insurance

pany, there was

private

the commercial
that

said

were

companies to take up private lend¬
ing. In the case of my own com¬

been

ance company

pective client unless the

Procedure

variety of practical questions.

legal

lenders and then
answer

when such
may be desirable — a wellnigh
impossible
procedure

—a

do not take the time of the pros¬

■V

has

lend.

"no,"

;

5. Ease of revision,

prin¬

adversely
affecting
the
company's business or assets. Fin¬
ally, the obligation of the insur¬

are

ments and their

vision

them,

ears. It may have
been because life insurance assets

lic financing.

default

ments

hope,

banks.

From its beginnings it was
sonalized service and

in¬

ourselves out

evolution

Private lending is nothing new.
It has long been one of the
prime

for

to the procedure of pri¬

Enough

Not New

and

usual

respect

struggle along

and issue the note; representation
of
balance
sheet
and
earnings
statements as submitted; agree¬

to Penn Mutual pro¬

vate

Corporate Private Lending

purposes

lending

the

with

would

"as is" without adequate cap¬
ital rather than resort to pub¬

ganization, business, rights, au¬
thority to execute the agreement

moving slowly, and I
soundly.
Over-aggressive
crease
in our industrial invest¬
solicitation may entail problems
ture.
Right here it is important ments.
of public relations.
to keep in mind that while we can
We are quite
So much for the background of
selective and our screening prompt
analyze the present based on past
need and
opportunity. Now a few and thorough. We should not hold
history (or think we can), esti¬
private

companies of only moderate
size, there being many such
which

substantially wholly

come

opening up of a source
supply of capital funds for

cipal and interest payments, cov¬
and
warranties,
bank¬
ruptcy or insolvency. We also re¬
quire representations and warran¬
ties with respect to corporate or¬

our

4. The

enants

cities.

Enough

for

provisions

cedure in acquiring loans.

duction of expense.
3. Non-disclosure of figures and
details of business.
^1

owned, etc.

mortgage loan
the details of corporate
loans with a view to their acting
as field supervisors in both
capa¬

the
and

State Commissions.

cases

here

Securities

Commission,
Commission,

Power

some

the

some, of

or dispose
assets; acquire

dividends or retire stock
except out of income subsequent
to a specified date; create subsid¬

mortgages and the growth of
larger mortgage loans to indus¬

men

make loans of

Simplification of the trans¬
action, with consequent re¬

pay cash

ness

ing

negotiations. ,M;';

than a limited dollar amount, ex¬
cept U. S. Government securities;

With the decrease in volume of
the smaller residential and busi¬

enterprises
where the prosperity of the busi¬
Limitations of Private Negotiation
ness
is just as important as the
Obviously private negotiation real, estate security, we have felt
does not lend itself to Govern¬ that
mortgage and corporate lend¬
ment financing, nor to the rail¬
ing activities could well be cor¬
roads where
competitive bidding related. To this end we are train¬
lesser

its business

securities

the two

and

Flexibility and expedition of

other corporation

any

contacts

property,
limited excep¬

to purchase money mort¬

gages; merge or consolidate with

formation

trial

pledge

sometimes with

tion

eral Agents in industrial areas the
and

755

TVmlrHncf

THE

756

Survey oi Potential Municipal Issues

Securities Salesman's Corner

theory and practice in the
other profession that requires a
certain amount of skill. It is sometimes amusing to read the articles
concerning what salesmen and customers'men should do that are pre¬
pared by those who have had no practical experience to back up their
advice. Last week was a case in point when an SEC Commissioner
(quite likely with the best intentions in the world) suggested at a
meeting in New York that customers' men should literally sit down
with their customers and read them the prospectus page by page. It

The over-all
in

475

411

2,100

2,511

177

350

527

$13,871

$18,771

Buyer" Inventory

since

Bond

"The

arriving

the

under miscellaneous public

Included

net

which

categories and
250
million
of
Housing Authority bonds added
since these are to be marketed, it

rushed

is reported, by

way.

war

additional

issues

with

mates

the

under

Act

Federal

the

calls

for

Airport

for

eral

municipalities. The Fed¬

will

Aid

50%

equal

for

50%

projects.

larger

With

around New

doubt be made and

continuation of

assures a

housing

low-cost

PROJECTED

program

STATE

AND

Alabama

Population

many

be expended by Au¬
major airport devel¬

Federal

aid.

projects

consideration and

one

are

While

Florida

at least will

$20

186

200

100

300

The result was to
an

387

350

sure

100

400

could be attracted to

The

winter

786

150

were

120

300

100

110

160

5,471

270

2,497

3,556

457

2,125

Nebraska
-

Carolina-

Dakota

—

13
5

408

794

450

192

510

100

4,201

6,873

—

196

520

130

10
200

12,584

531
__

3,504

Mexico

York

452

Jersey-

New

159

Hampshire

1,198

—

2,080

125

250

300
60

Oklahoma

2,034

Oregon

1,206

9,193

196

300

350

758

2,879

6,787

185
3

Pennsylvania
Island

South

Tennessee

Texas

Over-the-Counter Quotation Services

Utah

617

West

BUREAU, Inc.

Established 1913

Chicago

■,,

San Francisco

the

turn

commercial banks

and

municipals as a source of earnings.
The intelligent buying of this type
of investor will improve the mar¬
ketability of
to

municipals and tend

fluctuations. While the
of pending new issues is

reduce

amount

forgotten
resources of commercial
have greatly increased in

imposing, it must not be
that

the

100

360

15
5

100

Hanrahan to Address

2,089

2,952

100

of State

Bonds.

types of

General

existing facilities.

1,193

2,764

4,739

641

issues

following

2,441

924

approved—

and State bonds to be issued in

acquire

will

1,724

bonus

Balance

Authority

vestments

Rocky Ml. Group of IBA
COLO.—Edmond M.
Commissioner of the
Securities and Exchange Commis¬
sion and former member of the
New York law firm of Sullivan,
Donovan and Hanrahan, will ad¬
dress a luncheon meeting of the
Rocky Mountain group of the In¬
DENVER,

Hanrahan,

NOTE—The

46 Front Street, New York 4, N. Y.

debt

300

1,565

As the

retires short - term
without furnishing other in¬

banks

247

Soldier

NATIONAL QUOTATION

years.

many

the last five years.

Wyoming

time in

Government

municipal portfolios

Virginia

Wisconsin

first

bank

additions

commercial banks for the

3,079

made to

the

310

Vermont

Virginia
Washington

For 34 Years

555

1946 did increase

1,906

Carolina

South Dakota

buying and fairly heavy

4,183
_

Montana

the market.
the fall and

during

decline

1
41

1,740

banks

commercial

before

sary

2,456

Massachusetts

Rhode

of taxes on

ping and with the supply increas¬
ing, a price adjustment was neces¬

120

drive prices to
With the pres¬
individuals drop¬

high.

time

100

all

levels, forcing individual investors
seek refuge in tax-free bonds.

2,578

Maryland

Ohio

2,259

North

500

—

North

3,438
—

12
9

7,721

Maine

New

100

286

Nevada

$50

$15

2,385

—

Local

Miscell.

3,191

Indiana

New

Bonus

1,786

—

Illinois

the war
period, the
market had to absorb
only small amounts of new issues
and bonds were maturing far fast¬
er than new emissions were being
offered.
Taxes rose
to fantastic
During

Sta te

Local

1,120

well.

municipal

Bonus Incl'd

8,823

Idaho

mature

flotations will be

new

Delaware

Georgia

the

heavy, only a portion of them will
actually increase the outstanding
tax-free debt on balance.

under

FLOTATIONS, 1947-51

MUNICIPAL

will

issued

number of other types

Authority

1,780

Mississippi

55 LIBERTY STREET, NEW YORK 5, N. Y.

area

During
the next
five years,
bonds currently outstanding
will mature and many of those to

area

York over $250 mil¬

without

money

easy

prevails and care is exercised in
timing flotations.

630

—

Missouri

Co.,

high,

remain

taxes

2,812

Minnesota

that

State

State—
'

Michigan

Herrick,Waddell

may

opment
of

cities

Additional Issues

Louisiana

request

being more than the
outstanding total, no
precipitous fall in tax-free bond
values
seems
likely so long as
years,

currently

(In Millions)

Kentucky

lions

thorities

tremendous

will

supply of
securities
in the next

tax-free

issues

five

based

Metropolitan

the

fall

increased

the

While
new

In
regard], it is interesting to note

funds will

are

now

are

in line.

projects under discussion.

this

Kansas

Prospectus

larger

the

improve

that

Iowa

Common

which

create

must

organizations

all others will have to

bonus

the figure
governmental pro¬

low-cost

new

the increase

additional

only those
included where

issues

been

actively campaigning. The feeling
among Veterans is rapidly rising
that
if
one
State hands out a

million home units

seven

economic lever, the full use of the

aviation

cost

the

case

bonus

have

Veteran

rep¬

next five years,

airports

the

of small airports and less than

case

the

figures

the

States

jects would appear conservative.
The figures for projected Public
Authorities
including the
huge

by the Federal Treasury of over
$500 million to be matched by the
states

soldier

be financed in the normal

The projected

in the

expenditure

to build

The figure appropriated by Con¬
gress

some

are

family units to be con¬
structed during the next five years
at an average cost of $5,000 per
unit. Since the nation is expected

figures for State
supported in a
separate tabulation.

Aid

require
market.

that

450,000

issues

local

and

ready

distribution. These

have

approved and will
time to reach the

been

are

resent

esti¬

broad

are

not

can now

the Federal Public
Housing Authority. The probable

issues included in this group

for
those
projects
completion during the
defense housing but which

issues

plans under

obvious needs. Bond

yet

bonds

for immediate

WILL tArizona
GIVE THEIR BUSINESS TO SOME OTHER BROKER AND HE'LL Arkansas
California
BE MAKING COMMISSIONS WHILE YOU'LL BE TRYING TO Colorado
TEACH THE DEAR OLD PUBLIC HOW TO TAKE CARE OF THEIR Connecticut

Airline Foods Corporation

amount

The figures have
been separated into independent

either

based

discussion

approximate

the

represents

two.

Every time Jhe

ings to make up for some of the slow ones that soon follow after such
a splurge.

series of estimates. These estimates

was

will reach the market in the next

few dollars left after

different you'd better take the busi¬

issues under consideration

gaining headway be¬
fore the war. The inventory figure

foregoing
table,
the
figures shown as the adjusted
inventory represent issues which
year

the

above

issues

additional

ing

authorities in the table covering Potential Munic¬

the

GIVING OUT SOUND ADVICE THEN YOUR CUSTOMERS

are

The portion of the table cover¬

are

protecting

You will need those few good months earn¬

1946

inventory figures is admittedly a

any

Until times

15,

items

for the specific benefit of veterans.

virtually

when you can get it.

Nov.

The Authority

figures.

and certain special bond

"Soldier bonus includes bonus

they come into the securities markets in droves and are buying almost

ness

ket in the next five years.
of

inventory

Buyer's"

local

ipal Borrowings.

free ride.

INVESTMENTS.

justed inventory figures and esti¬
mates of all types of issues which
can be expected to reach the mar¬

$323
in

contained

withdrawn

State and local figures,

4,577

11-15-46

Authorities

been

facilities

existing

acquire

"All
have

Under such conditions reading a

support the over-all
the follow¬
ing tabulation is included to show
the comparative position of each
state. This table includes the ad¬
In order to

2,500

4Hfall probability the municipali¬
ties will spend far more than the
producing element in our country, would rather gamble on a
25% capital gains tax than strive for income. That is why they bought figure indicated.
The great shortage of housing
so many new
issues of very doubtful quality last spring—all they

Borrowings According to States

531

2,250

Increase

retail¬

stock that has a likely story attached to it, look out, we are get¬
ting ready for a downturn in prices. Trying to stop such a stampede
is impossible, for stampede it is. If you are selling securities you may
try to persuade those of your customers that haven't lost their sanity
completely to take it easy.
BUT IF YOU ARE GOING AROUND

7,180

$4,£00

situation that has

(4) There is a saying that the public is never right.

4,739

job

was a

$5,522

bonds

today's punitive taxes that are levied upon the business creating and

wanted

$3,957

par¬

"Bond

investors.

2,764

250

Authority

likely to continue and
large projects have already
the preparatory stage.

seems

reached

Issues

victim
of labor strife, or some government inspired
attack either through the Department of Justice, unsound tariff poli¬

who have

purchase of existing facili¬
Authorities or direct¬

several

Total

$1,193

Miscellaneous Pub. Authorities incl. airports

the

(3) The majority of people

Additional Issues

11/15/46-12/31/51

2,441

programs

parts of the country.

ties through

Probable

1/15/47

Airport bonds other than Authorities

it's stratospheric.)
be able to
industry in
this ever changing world, when government encouraged class warfare
takes its toll of one business after another. What may be a pretty
sound picture of the past at the time that you read a prospectus, two

prospectus thoroughly doesn't go very far as a method of

exclusive

Issues

Housing

municipals for the past decade

cies, subsidies to competitors, etc.

Millions)

(In

924

airports
tially financed with Federal aid

(2) The best protection any investor can have is to
shift his securities from group to group and industry to

become

in other

$1,565
Local

porate securities today whose primary concern is safety of principle.
Punitive New Deal tax rates levied on the investing class has forced
most of these investors into the highest grade municipal bonds. (Note

months later may turn into another deteriorating

BORROWINGS

$641

Soldier bonus**

ing securities and unless you recognize them and direct your selling
operations along lines that will meet with the favor of your market
you will not be conducting your own business in a manner which will
give you a maximum return on your investment. As far as we are
concerned we believe in the profit motive. That is another economic
fact of life we should drum into our people if we are going to educate
them how to be more successful investors. But to get back to those
realities, here they are:
(1) There are very few simon-pure individual investors in cor¬

the price level of

MUNICIPAL

of the Pennsylvania

number of ambitious

Total emissions may

years.

equal 19 billions.

issues—General

State

class but the entire population from economic

few realities that exist today when it comes to

along with esti¬
the

The

chaos.
a

Turnpike, started before the war,
has already led to a discussion of

Inventory
Adjusted*

plus funds which they invest in all types of property is a laudable
objective. We in the securities business should do our part and slowly
we are beginning to educate the public to
know that investing in
securities should be done with care and understanding. But first cf
all our primary job as securities men is to make a good profit out of
our business.
In order to accomplish this end it is necessary to face
ihe realities of our market, striving as we go along to inculcate not
only sound investment ideas among the investing public, but also
those economic ideas which are of long range importance in protect¬

Here are

success

five

adjusted inventory

millions of dollars is included
POTENTIAL

probably was the Commissioner's idea that this sort of thing would in
some way add to the investor's knowledge of the security he was
buying, which no doubt it would, providing the investor had the
patience to go through with the ordeal.
Educating the American people to do a better job with their sur¬

ing not only our investor

be ready for public

The

inventory but which should reach
the market sometime in the next

billions.

There is a vast difference between

securities business as well as every

financing.

soon

mates of issues not included in

in the table below

(Continued from page 739)
reported which will increase the
total of the inventory to almost

By JOHN BUTTON

Thursday, February 6, 1947

COMMERCIAL & FINANCIAL CHRONICLE

issues

were not

Included in the table:

1. Municipal

conjunction with Federal Airport Program.

Authority

Bonds.

Bonds

all

types

2. Housing

issued to

vestment
Feb.

Bankers

Association

Volume

165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

for

buying a stock: first, to obtain
income; second, to "attain appre¬

Right and
(Continued from
turnover in

737)

page

ownership in

common

and preferred stocks
steadily has
decreased. Stocks are traded less

often.

Ownership is

stable.

The market is less active,
In 1928, the average turnover of
i

the stocks listed

the New York

Stock

Exchange was 1.22 times.
There
were
757,300,000
shares
listed

the New York Stock Ex¬

change at the end
total
Was

reported

of 1928, and the

volume

trading

930,893,000 shares. Statistical¬

expressed, the turnover was
122.92%.
By 1930, the turnover
fiad shrunk to 62.5%; in
1931, to
32.4%; in 1934, to 24.8%; in 1938,
to 20.8%; in 1939, to
18.2%; in
1940, to 14.2%; in 1941, to 11.6%;
and in 1942, to the
abnormally low
level of 8y2%.
markets

In the

increased to 18.7%
an

as
!

turnover

in 1943, 17.6%

1944, 23.7% in 1945, and 20.5%
1946. The following tabulation

worthy of study:

MEASURE

MARKET

ACTIVITY

Percentage
of

Total

Reported

Listed

Listed.

IDec. 31

Volume

(000's

1924

1925

284,044

491,615

1926

omitted)

433,448

Trading Traded
(000's'

omitted)

65.53%

459,717

93.51

585,641

1928

451,868

77.16

654,999

1927 1

581,702

88.81

757,301
__

1930
1931

930,893

122.92

1,127,682

1,124,800

ownership of common stocks is a
thing both for the country

810,632

62.51

and

for the

other
not

corporation.

make

for

prepared

efficient

quickly.

makes

smaller and

less active.

the

broker

market

It makes

talks

markets, he refers to the in¬
ability of the market to meet the
for

market

back with

Stock
and

Exchange

the

the New York

changed
appraisal

market

hands,
of

all

listed stocks declined $7J/> billion.
What would have happened last

September if 10%

or 15% of all of
the stocks owned by investors, in¬

stead

only

forced to find

2y2%,

had

been

ning

With

Aug.

and. ending
Sept. 21. ' The following tabula¬
tion, taken from my article in

the Nov.

1,311,881

425,234

654,816

50.63

1,305,421

323,845

24.81

1,317,847

381,635

28.96

1936

1,360,349

496,046

36.46

1937

1,412,002

ceive

29.00

20.89

1940

1,454,761

207,599

14.27

1941

1,463,295

170,603

11.66

1942

1,470,502

125,685
278,741

8.55

1943

J,489,367

known

store

sell.

People buy leisurely in bull mar¬
kets; they sell hurriedly in bear
markets.
The market, therefore,
is fiidre thin on the way down
thafi 'On the way up.
It often has been said that stocks
s&re "made to buy and sell," rath¬
than to hold.

If this is

true, the

t)ublic certainly is not convinced.
In

interest in

busi¬

better

trouble

with

some

Not

"dabble" in

standard

stocks, the annual
ownership often is less
thah
10%
of
the
outstanding
shares.
In other words, 90% or
turnover in

common

3.60%

31.9%

11.00

0.80%

15.9%

24.50

common

General

Motors

18.7%

29.00

Products

Oil

U. S.
U.

Steel

■_

Bros.

Picts.__

Woolworth

much
#

3.50
9.00

28.6%

7.50

18.0%

29.50

0.49%

Playind Card

12.3%

21.5%

0.98%

Pacific

Union Pacific

3.70%
2.00%

4.60%

17.2%.

40.00

3.20%

21.6%

7.50

4.90%

13.8%

3.00

11.2%

17.00

0.73%

anxious not to

time

up too

use

discussing

the

changed character of tHe market.!
I

have

tried

show:

stocks

that
fre¬

(1)
less

changed hands
quently in the 1940s than they did
in the 1920s, (2) that the market
is much

declines,

thin, particularly
our

present

purged

repu¬

my opinion, common stock
of this type probably rep¬

owners

Motors

and

There

own.

in the world

investment in General
investment

in New York Central and

between.

Southern

Pacific

Bethlehem

Steel,

General

and

Lake

seem

more or

standard

to regard themselves

less permanent owners

With only an academic interest in
day to day, month to month, and

old

the

days of free trading, and it
(3) that the securities
regulation legislation of

follows

market

the

1930s

has

been

much

successful in

protecting the buyer
than in protecting the seller.
Investors' Attitudes

year to year fluctuations.

The turnover in American Can

Common stock has averaged less
4han 10%

was

per annum for the

past

ten years. Stated another way, it
takes over ten years for all of the

company's capital stock to change
tiands once. This is also true of

The second part of this lecture
will deal with the attitudes in¬
vestors
stocks.

take

common

shares, I have learned that
use

them and others

When I

Wealth

has devoted

amazes

some

abuse them.

stop to think about it,
that my profession

American Tobacco,

CommonEdison, Diamond Match,
duPont, Hershey Chocolate, In-

toward

In dealing with owners of

much time to the

study of equities themselves and

igersoll-Rand, International Busi¬ exerted so little effort to teaching
ness
Machines, Procter & Gam¬ investors as to how to use them.
Oil of

indicated

for

issues

about the functions of

stocks, and

have

ventures.

come

As stocks be¬

"seasoned" and better

distributed, as they acquire more
•"'quality," market activity usually
automatically decreases and own-,
crship becomes mor$
-

Obviously, Reason"*

Few outsiders realize the high¬
ly personal character of the in¬

vestment business.

The broker has

nothing whatever to sell

except
services.

his

personality and his
One investment house can execute
an

dtf&er just

effeciently

clients

One

vary.

the business.

are

judgment

smarter

than

am.

More seriously, without endors¬
ing astrology as an aid to security
analysis, I think this man's suc¬

idends, another uses most of earn¬
ings to reduce debt or for rein¬
in

who

Some¬

has

cess

is being "dressed
up" while at other times earning
power and assets, for one reason
company

been

due

measure

the

tried

fit

his

■or

another, actually

fact

small

that

securities

has

hisi

are

stocks.

difference

Your presence at

stockholders

ing or in selling individual secur¬
ities,;
always
keep
in
mind
whether the action you contem¬
.

United
cations.
15

record

the

States, eliminating dupli¬
That

million

means

that there are

different

investment

specifications to satisfy. At the
same
time, there probably are
several hundred thousand differ¬
ent types of common stocks, pre¬
ferred stocks and bonds, each one

which

has

different .qualities

and should be employed to

somewhat

different

meet

objectives.

The task of the investor and the

plate taking fits, into your pro¬
task of the investment advisor is
gram. Ask yourself why you are
to arrange combinations GT these
buying this particular security.
There are three mfcin reasons securities to fit
•

as an¬

over,

money, and i
the years not

Consolidated

is much faster.

learned

I know he

case.

lot of

to try to inflict my

The ob¬

management tries to pay high div¬

his

are

jectives of management

vestment

applied astrology and

personality. I wish more of my
being con¬
clients would do the same thing,
cealed. Some companies, like Gen¬
all the people who own shares in
without necessarily employing a
eral Foods, provide complete in¬
American
industry.
The other,
star gazer.
'
formation about their affairs, and
98% Or 99% Regard themselves as
hi
others, like New Jersey Zinc, tell
invfc&Ors rather than as traders.;
I am sure that too many peo-*
just fcs little' as they can and still
HoWever,
this
Camp-follower
pie confuse price with funda¬
get away with it.
type of market participation often
mental value. The price of a se¬
Passing from the company to
accounts for as much as 10% or
curity and its intrinsic worth, ares
20% of total day to day trading, the. security, most stocks have well
not as closely related as most peo¬
defined and individualistic habits.
especially in active low price
Just think of the fundamental ple assume.
resent not more than 1% or 2% of

I know of nothing more essen-i
Edison, Conti¬ about the functions of individual
nental Oil, General Motors, Ken- stocks in
specific investment port¬ tial than a serene approach and a
aiecott Copper, Anaconda Copper, folios. Our
profession is hew and serene attitude toward a common
Kroger,' Lambert,
Montgomery we still have a lot to learn. As stock commitment once it has been
Ward, and Pullman. In specula¬ the profession evolves, we must made. One way to maintain a
tive stocks, of the type of New
apply our talents more at the in¬ serene approach is never to make
"York Central, American
Rolling vestor level without neglecting decisions under pressure.
Mil, Donglas Aircraft and Radio knowledge
at
the
corporation
Secondly, each investor should
Corporation of America, the turn¬ level.
have a unique objective. In buy¬
over

has made

Some companies are institutions

times

discussion of the pos¬
of cosmic rays on

effects

says he has
it works in

Shore

Mines and Hollinger Gold.
and others

basis

human nature and other scientific
claims of astrologers.
My client

Standard

and

between

the bottom!

stocks

holders of

sible

between Wal¬
Childs, between

Foods

Brands,

scientific

ter-analysis. So far as I am con¬
cerned, I don't wish to be in¬
volved in

Santa Fe, between U. S. Steel and
dorf System and

mitment in Pennsylvania Railroad,

turnover

of the

than

the. finer
For this reason, my.

whatever for this type of charac¬

com¬

there

and

commitment

ble, Socony Vacuum Gil, Standard
Physicians are just as much
California, Standard Oil of concerned about skillful medica¬
3tew Jersey, United Fruit and tion as
they are about medicines
Wool worth.
A
slightly higher themselves. We should say more

tnore

markets

providing

always makes money in gold and
silver mines, in amusement en¬
terprises, in sugar shares (provid¬
ing the sweet things of life),' in
objects of art and in stamp, col¬
lections. Now, according to a-re¬
cent issue of Life, all astrologers
are
either charlatans or "fakes,'*

competing
industry
has

in. the type of market
this lecture in¬
you have in American Telephone,
dicates a serious interest in the
with
over
600,0001 stockholders,
art of common stock investment,
none of whom own a large part of
I am goipg to outline a serious ap¬
the outstanding stock,
and the
proach to the whole matter. Many
type of market you have in an¬
of the things I shall say you have
other investment, issue such as
heard before. I hope, however, to
Gulf Oil, in which the Mellon
put them together in a way which
family and its affiliates probably
will be at once interesting and
own 80% of the outstanding issue.
convincing.
You might also contrast the kind
of a market which eirists in a big,
n.
widely distributed issue like Sin¬
Self-Study by Investors
clair Oil, with the market in the
The first thing a common stock shares of a small company like
investor ought to do is to study McCord
Corporation.
Certainly
market
for
an
investment
his own personality. Not all of us the
are so constituted as to make riskstock like Diamond Match always
taking a comfortable avocation, will contrast most sharply with
too many make a decision with¬ the market for a highly specula¬
out
m u c h
investigation
and tive issue of the type of Kaiseror
Transcontinental
&
thought, and then worry about it. Frazer
1
To worry is to lose perspective. It Western Air.
is this type of stock trader who
It 'may be estimated that there
often buys at the top and sells at are
approximately
15
million

SEC

successful, quite wealthy, re¬
bank vice-president client

very

each
any

Chrysler, between

stock investments in this

consciously, give equities a
tation they do not deserve.

social

a good one with a nation¬
reputation — advised h i m

engaged

each common
different type of

is all the difference

frame of mind, consciously or un¬

0.80%

Ward

National

but
in

between

approach.

Electric

told

purely by

was

things of life.

does

stock represent a

stocks is that

thfcy have the wrong
They think they are

ing

only

business,

who

General

The

moment he

ago,

porations, concerning which they
know next to nothing.

usu¬

Ex-Cell-O

Montgomery

years

tells me, in all seriousness, that he

drug

You

29.00

Warner

with

cider mill.

management, a
better history, a more assured out¬
look, and often you deal with
more honest, or less shifty, people.

ness

Chang¬

mellow

tired

10.2%

tnore

than

the unknown managements of cor¬

stock than in pur¬

part interest in

owa

self with ventures and enterprises

man¬

in which people are willing to
entrust their savings .in the care of

well-

0.42%

Southern

buy

take
a

nonchalant

ner

company

Kodak

too, that
spends more
inonths advancing than declining.
That is another way of
saying that
the in-and-out public always has
always

buying

should

that, because he was born under a
certain star, he was of the esthetic
type and therefore would always
make money if he associated him¬

def¬

Sometimes

the

characteristics of its

60.00

Eastman

bull markets thhn in bear markets.
It is a matter of record,

time

common

chasing

probably

you

risk

who

accident, he became interested in
astrology. An astrologer—he says

objec¬

security has

yourself.

country cider mill.

16.3%

DuPont

market

0.31%

20.53

portfolio

bought, held or
objective in mind.

every

amazed, at

When

buying a
price rather than a value, and in¬
tend to sell a price rather than to
continue to own a part interest in
a
corporation. Those who make

Mill

functional

should know your, security as well

you

5.00

363,709

the

stock

$2.00

1,771,399

17.63

larger

common

19.4%

Am.
Rolling
Chrysler

proprietorship.

evi¬

23.2%

23.71

always

broker

5.40%

263,074'

377,563

Turnover

Actually,

Traded Decline Hands

1,492,277

1,592,111

stock

less than

8.30%

18.72

1944

Third,

Worth

Issue

security
have

inite personality of its own which
should be studied. carefully.
You

stock.

your

more or

smaller

of Stock

Part of

1945

1946

nothing

common

buy

store

Dollar's

18.25

effort

conscien¬

buy
part ownership in a business just
as truly as if you acquired a part
interest in an unincorporated drug

Per

297,466
262,029

409,464

clients

from

dence
you

Trading in 21 Sessions, Aug. 22-Sept. 21

1,424,252

sincere

nothing

STATISTICS

1,435,404

1938

1939

serve

mysterious
It is just
a fraction of ownership in a cor¬
poration. The certificate you re¬

Appraisal

Each

should

that

she

There

few other stocks:

MARKET

certainly

wide

ally acquire

THIN

tive and should be

about

Decl. in Mkt.

1935

figures for

43.74

576,765

but

sold with that

tiously.

32.41

1,293,299

that of his

banker, his lawyer or
physician. Actually, I know
businesses or professions

where

Chronicle," gives similar

1,318,729

place in the life of

secure

dealer

safety,

would buy neither one if I sought

few

made

7, 1946 "Commercial and

Financial

Biscuit, preferred hoping to

his
of

owners?

new

The worst part of the break oc¬
curred in the 21 sessions
begin¬

investment

people

ing stock—and at present he owns
at
least a dozen / sugar
shares.
Now, I think that most 1 of yon
know that sugar shares and min¬
ing shares are about as specula-*
tive as anything one can buy. One
day I asked this man howJi.e de¬
veloped his peculiar prejudices*

commercial

the

the shares listed

broker

his client

collapse

month
of
September,
approximately '2%% Of all

either appreciation or a high yield.

can' occupy a

of last Sep¬
tember, I will show you what I
mean by a thin market.

1946,

Chemical.

achieve

tional

Monsanto

the

issue, or to ab¬
selling,. without the trade's
having too great an influence on
prices.
the

applies himself to his business, if
he is scrupulously
conscientious,

sorb

If you will go

stock

might buy Monsanto Chemical,
hoping, to obtain long pull appre¬
ciation, in spite of the fact that' its
yield is very low.
I might buy
General Motors preferred or Na¬

educated, have a thorough knowl¬
edge of securities, and understand
their functions. If he is alert, if he

about

thin

demand

cus¬

information

the market thin.
When

his

It follows that the broker must
be a superior type of person. It is
imperative that he should be well

offerings

the

renders

providing

the

and advice;

markets

absorb

them. f

principal;
I run into some amusing idea*,
third, to achieve safety for about investments. I have a man
one's savings.
I might buy Con¬ who will never
buy a railroad
solidated Edison to obtain yield,
stock because it is too speculative,
but it certainly is not a growth
but he will buy any kind of a min¬

competes with another is in the

tomer

value

and

The place where one brok¬

services

hand, stable ownership does

1933
1934

the

1932

other.

good

99.74

1.296,794

1929

ciation in the

active

1943-1946,

757

When

stop to think of it,
the very liquidity of listed com¬
mon

you

stocks overemphasizes price.-

you

think

own

how

house you seldom
much

worth*

It is not quoted every day on the
financial pages of the newspapers*

If you are sole, owner of a busi¬
ness, years

market

may pass

without its

appraisal bothering you.
hand, if you own a

On the other

stock,

and you see. the price
change from day to day, week to
week, and month to month, this
suggests to you that you have
made money or lost money in the
market. You are tempted to think
the stock Is worth

>■

orless^

fo how it is Quoted.
time you buy a
stock yoii register your opinion
that, the market is wrong—that it
is too low.
When you sell, you
register your opinion that it
too high.

according

Actually,"

every

Most

toward

our

common

wrong
stocks

attitudes
originate

their
extreme
liquidity,
which, in itself, is a great investment advantage. Because of this
extreme liquidity* prices fluctu-?
ate very widely. This leads.thousfrom

ands of
more

men

and

women

;

to think: /

hi terms of price than

li$

terms of essential investment val¬
ue.

Too many of us, consciously

unconsciously, always are buy¬

ing a quotation rather
tion of ownership ^ ^

than a frac¬

Incidentally, most of us frequently
hope to sell a quotation, tdo... .,^4;

'(Continued

on page

758)

Thursday, February 6,

FINANCIAL CHRONICLE

THE COMMERCIAL &

758

There is always more room, and

''.T®1'

Right and Wrong Ideas Ab rat Stocks

(Continued from page 757)
i
Everyone
knows
that stocks
were too high in 1929, in the early
|

months of 1937, and just before
the Germans invaded the Low
Countries in 1940. Everyone also
knows that stocks were too low

in the summer of 1932, in
of 1938, and in early
1942 just after Pearl Harbor.

investment

know, or has
made a serious at¬
tempt to find out, when they were
priced "just right"? If we would
make an attempt to
determine
just what U. S. Steel is worth,
year in and year out, we would,
perhaps, then know enough to
buy it when it is too low and sell
does

But

During my

of financial writing ex¬

28 years

perience, practically every stock
think of, at
some time has sold too high and,
at some time, has sold too low —
and most of them have been far
and every bond I can

too

Overemphasis

high

least

half

dozen

times and far too low at least as
many.

The

discussions!) in the outlook for a

temporarily
over-expanded
in¬
dustry.
The aircraft shares, if
they are good ones, probably are
essentially cheap.
You will ob¬
serve
that they have not gone
down
as
much
as
most other
stocks in the recent market un¬

Non-Recurring

Factors

anyone

it when it is too high.

Market

The most fatal error in common

think, arises
from overstressing non-recurrent
favorable or unfavorable condi¬
stock

appraisal,

tions.

A recent example, it seems

pleasantness.
There's a reason.
has been the over-appraisal
They were down before the de¬
the worth of most probably

to me,

cline started.

earnings

non-recurrent very large

very
one

stock,

dict of the market

place, concern¬
which people love to talk?
American Telephone & Telegraph
could have been bought as low as
98% in 1935 and sold as high as
ing

and

the

changes

obviously
back

values

might

enter¬

always makes money
pays good
The quotation for the

rapidly and more
the

stable

most

stock always

dividends.

that dur¬

names,

prises.

recently

The company is one

America's

ing the first half in 1946, in par¬
ticular, the market was doing
some dizzy things in capitalizing
non-recurrent profits.
name

by its decline

to around 44.

part of them eventually
probably will be lost in some in¬

Let's not

is indicated by its rise
in 1942 to 62% early

last year, or

dends and

21 y2

from

them will be distributed as divi¬

Woolworth

ably they are not worth even as
much as that because not all of

seems

investment

the

best, are not worth more than
times their face value. Prob¬

situation. It

such change
position of F.
Company capital

There has been no

distilling and department
store companies.
Non-recurrent earnings, at the

for the

evitable correction of an abnormal

Verdict

What about this bloodless ver¬

"grand" word that is in security

ever

anyone

value, manu¬
facturing know-how, or even the

growth possibilities in the most
when
the
company
represented dynamic of all America's indus¬
was
having the best year in its tries. Why? Because current earn¬
history and faced a further period ings are abnormally low, and there
are a lot of "uncertainties" (what
of prosperity.

in 1921,

the spring

said

It could

1936.

have been

someone

The same

of it.

for

hundreds

The influence

because
with

of "vogue" often

the very

to 44 in 1939.

After Pearl Harbor

in 1942 it declined

low

21 %.

Last year it sold up to 52 and back
down to 33%. The intrinsic worth
of General

Electric

capital stock

certainly has not changed as vio¬
lently as the price.
The stock
many times has been too low and
it often has been too high in re¬
lation to its average earning pow¬
er and its
year-in and year-out
ability to pay dividends.
It

much

difficult,

to obtain any ideas re¬
garding the intrinsic worth of
highly
speculative
securities
yvhidh fluctuate even more widely,
course,

'if
v;

How

stock at somewhere

can

Over a period it has
enriched
many
people to buy
shares of growing companies and
hold them through bear markets

times

five

and

it be otherwise when

power?

Based

the

record

•

already

has

would now have 18

investor

ments.

petite of a Franklin, the enthusi¬
asm and vigor of a Roosevelt, the
rugged honesty of a Cleveland, the
pioneering spirit of a Wright, and
the simplicity of mind of a Lin¬
coln. He also should have a cast
iron contitution to give him the
health necessary to work unbe¬
lievably long hours. It is neces¬
sary not only to develop the art
of
gathering information from
people, but also to acquire the
ever more difficulty knack of im¬

$34 a share
on the initial offering in Novem¬
ber, 1927. I found that if he had
kept all of his stock dividends and
stock splits and not taken advan¬
of

tage

any

now

shares worth, at $62 a
444.

privi¬
2,362
share, $146,-

subscription

own

In the meantime, over a pe¬
of

years,

was

traded, the total

mar¬

ket appraisal of the company de¬

paiJy

never

will

get

$68

shares, infinitely better

doubt

have

they sold at about five
their meagre

10 times

net working capital,

ar£e aPPraised at from 40% to

clined $964,000.
This, of course,
eir
is an extreme case 'but' it is sig¬ Thi
This gives no recognition what¬
nificant that. it happened in an ever to any value for physical

°i

net working capital.

that

every

of information and knowl¬
edge one gains in any field, even
in the field of personal relations,
at some time or another is useful
scrap

for

general practitioner in
analysis. Over the past

the

security

I have been forced many
obtain quickly a work¬

28 years

times

the

received

investor
$27,919 in

that there

but

are

ing

knowledge

shown,

factors

hidden

somewhere among the equities

today other issues which will re¬

patient investors very liber¬
ally in the future.

ward

have

the

essential

to 60, and back to 40

influencing

working knowledge of the

ought to be
chemist.
explain the nature of an in¬

chemical

industry, I

something of
To

vestment in two or

three specific

companies, recently it was neces¬
sary for me in a few evenings to
I like to talk about the profes¬
gain a layman's working knowlsion of the security analyst.
It
edge of what is meant by atomic
is something new under the sun.
energy. I have had to delve into
No one ever tried to devote him¬
such things as the size of radio
self exclusively to it, or to make
audiences, the relative merits of
it
a
means
of livelihood until
black-and-white and color tele¬
about 50 years ago. The early an¬
vision, jet propelled engines, the
alysts really were not much more features of different types of air¬
than custodians of security man¬
craft, the complications of subsi¬
uals.
Then they got to playing
dized shipping, the economics of
with figures, and everyone called
publishing a book, the future of
them statisticians.
Gradually it
The Security Analyst Profession

paring young men to become se¬
curity analysts.
If there were such a school, of
what would the curricula
I

suppose

tensive
^

courses

you

consist?

would suggest in¬

courses

economics,

in economic history, in ac¬

counting, in the anatomy of a cor¬
poration, in corporate reorganiza¬
again.
That was a fairly active tions, in the operations of the se¬
stock. He might do the same thing curities markets, in the work of
the investment banker, in the the¬
in some of these formerly popular
railroad stocks like New York ory of interest rates} in trade
Central, Missouri - Kansas -Texas cycles, in labor problems, and in
preferred, and Baltimore & Ohio. similar related subjects. A man

tinental & Western Air were sold
from 40 up

true

hundreds of
different kinds of business.
cash dividends and would have
To know railroads, 1 must un¬
been able to sell his rights for
derstand
geography as well as
around
$6,576 more.
In other
bond indentures and earnings. To
words, he would have received a
understand utilities, I must have
cash
income
of
approximately
an
intimate
knowledge of the
$35,000, while he was realizing an
character of the territory served
average appreciaton of about $6,as well as sources of energy and
089 per annum for a perod of 20
consumer rates.
To judge retail
years. That is a pretty good rec¬
stores, it is essential to know the
ord for a $3,400 investment.
type of merchandise handled, the
One could present similar fan¬
kind of people who buy it, and
tastic long range figures for Gen¬
the types of distributor competi¬
eral Electric, Sears Roebuck
&
tion.
To have any sense in ap¬
Co., and United Fruit. I would not
praising drugs, I must know the
want to predict that these same
acceptance of trade names and
securities would behave in the fu¬
have ideas concerning the possi¬
ture as in the past, but I have no
bilities in new ethicals. To reaHy

would

stocks than before the war when

literally

Required

Knowledge

Vast

fared had he bought

100 shares of stock at

and because the stockholder

probably

good security analyst has to
intellectual ap¬

have the insatiable

Chemical

Monsanto

would have

just isn't enough market to absorb
more
than a small part of the
share
in
cash
dividends
from capitalization of any company.
If your instructor wants to give
them.
Right in this market we have you a research project, I suggest
another extreme. Half a dozen or that he put you to work finding
more aircraft manufacturing comout how many shares of Transcon¬

years

of the
require¬

exacting

profession's

parting knowledge and opinions
computing-Tabulating-Re- effectively. Some of the analysts
cording Corporation) for 118 early who do the best job gathering in¬
in 1925, you would now have ap¬ formation and formulating opin¬
proximately
8.91 shares worth ions, I have found, often fail utter¬
ly in the task of putting their ac¬
about $1,871.
I recently worked out how an complishments to profitable use.

fair.

pr 15/100ths of 1% of the total
number of shares issued, the market
appraisal of the company
dropped $5,790,000. While 99.85%
of the stock outstanding was
neither bought nor sold, for every
dollar's worth of stock traded, the
market appraisal of the company
dropped $141. To state it another
way, every time
100 shares of

all of those things

though, and still fall short

(then

•

been

Let

present stock, which
recently were worth $1,638.
If you had bought one share of
International Business Machines

Portfolios Should Be Kept Intact

would say, $6.00 a share would be

•

bull markets.

you a

in 1935, you
shares of the

seven

Well, what is the company's
normal, bread-and-butter earning

few examples.
If you had bought 10 shares of
Abbott Laboratories for $585 early
give

figures show that, in the case of
some issues, as little as 2% to 10%
times the current annual rate of
of the outstanding capitalization
earnings—at somewhere between
200 and 280; and some thoughtless changes hands in an average 12
months period—so much for the
people would have been asking
idea that price often is a poor
why should this stock not sell at
measure of value.
<
;
400 in a big bull market?
between

well

master

could

Perhaps that's too much, but most people buy stocks to keep,
lets
assume
that
the
whiskey not to sell. You people in New
business
really has grown and England know that is true of their
that the company's position in it own favorites such as American
but does any reasonable person
has improved, and let's assume Telephone
& Telegraph, United
think for one minute that the low
that there won't be a period of Fruit,
United Shoe Machinery,
priced highly speculative stocks,
came to
be realized that figures
losses after this present highly Pepperell Manufacturing, Boston
were not far too low in 1941 and
were only a very small part of the
abnormal
boom in
whiskey is Edison, Chapman Valve, Spring¬
1942 and far too high in 1945 and
field Fire & Marine, to mention game. A good background in eco¬
over.
early 1946?
nomics
seemed
desirable;
and
R we do this, we will assume only a few. Only the minority feel
; The price of any stock is estab¬
some of us, without the benefit of
that $34 a share of the company's that portfolios should be disturbed
lished by the "time incidence" of
a degree of Doctor of Philosophy,
current earning power is non-re¬ frequently.
As time
supply and demand, and usually current and $6.00 a share is re¬
And that is fortunate. It is phys¬ were called economists.
went on, however, it became rec¬
by the motivated emotions of a
current, or "dependable."
Then ically impossible for everybody to
very small part of 1% of all the we have to ask how
long these be "out" in a bear market. Some¬ ognized that a specialist in the
holders of an issue. Those who do non-recurrent
earnings will last. one always has to own every judgment of securities was more
not sell and do not buy are only
Stocks are than a librarian, more than a stat¬
Lets guess two years. So we mul- share of every Stock.
passive factors in establishing a tiply $34 by two and get $68, never homeless, although I have istician and more than an econo¬
quotation. The quotation itself is which we set
up as the proper or seen the time when some of them mist; and such specialists became
established only by those who
known as analysts.'
■
sensible valuation of the non-re- have been unwelcome guests!
There are divinity schools, law
actually trade. The influence of a current earnings. Then we say
This leads me to another obser¬
few people, or of a small amount
It is never possible for schools, colleges of business ad¬
that norma1 earnings of $6 a share vation.
©f buying and! selling, can, jat ought to be worth 12 times (take very many investors to sell out at ministration, schools of account¬
times, be spectacular.
another multiple, if you like) their the top of a bull market.
Most ing, colleges which turn out ex¬
librarians,
and
schools
For instance, oetween Aug. 22 fac® vatae, or $72. Adding $72 people who think they will sell in cellent
and Sept. 9 of last year, U. S.
the last 20% of a bull market or which manufacture teachers on an
a? J?8, we arrive at a "fair" value
assembly line basis. So far as I
in the first 20% of a bear market
Playing Card dropped from 74 to of $140 for the stock. Probably
59 on only 600 shares which traded that is
only about two to five know, on the other hand, there is
very generous, because the have
not
for a gross amount of about $41,- non-recurrent
anywhere in the world a
earnings may not chances out of a hundred to ac¬
000. On transactions of 600 shares, run at the present rate for two complish this
objective.
There school devoted exclusively to pre¬

stock

mentioned.

early 1946 market would have ap¬

praised such

who buys the right stocks and

riod

other stocks.

be suffering

may

one

keeps them.

drastically than leges, he would

distorts the price-value equation.
Investors are just as tempermental
stock or stocks taken as
bought again in 1938 at 111 and
Instead, let's imag¬ about different types of specula¬
sold at 175 in 1940. It might haye illustrations.
tive stocks as women are about
been purchased again at 101% in ine a fictitious corporation, the
their hats and shoes. Stocks def¬
1942 and sold at above 200 in 1945. Good Whiskey Company. It has
initely are "in vogue" or "out of
Yet during the whole period from an earnings record back in 1933,
vogue." Think of the vogue that
1935 through 1945, it has paid div¬ earning $4 a share in 1933, $2.50
the oils had in 1919, that the radios
idends at the rate of $9.00 a share, in 1934, $3.00 in 1935, $3.50 in
experienced in 1926, that utility
earning it each year by about the 1936, $4.00 in 1937, $2.50 in 1938,
holding companies enjoyed
(to
same
margin. Is there anything $3.00 in 1939, $4.00 in 1940, $6.00
their sorrow) in 1928 and 1929, of
in 1941, $5.40
in 1942, $6.00 in
logical in this "bloodless verdict
the liquors in 1937, or of the air¬
1943, $6.00 in 1944, $18 in 1945
of the market place"?
lines in 1945. These vogues some¬
and in the first half of 1946, with
y Again, General Electric sold as
the excess profits tax repealed and times partake of the nature of
low as 167/8 in 1934, only to ad¬
fads and they often result in a
everything favorable, earned at
vance to 64% in 1937. Then it de¬
the annual rate of $40 a share. subsequent deflation in values as
clined to 27 % in 1938, only to rise
What is the stock worth?
The they did in each of the cases just
190

speculative things on the
way up than there is time to sell
them on the way down.
The successful investor is the
these

type stock which has plants, going concern

paid dividends every year since
1896, and it happened at a time

time, to buy

there is always more

1947

penicillin and streptomycin, the
impact of excise taxes on con¬
sumption of certain goods, the
formula for a soft drink, the trend
in

preferences for alcoholic bever¬
the birth rate and its influ¬

ages,

the consumption of baby
profit margins in burial
caskets, the problem of smelting a
new type of refractory copper ore,
the willingness of negotiators of

ence

foods,

their debts, the
engines versus
Diesels, whether the ball point pen
is a fad or really a revolution in
writing instruments, and the prob¬
able life of oil wells in Saudi
small loans to pay

economics of steam

Arabia.
At

times

knowledge

have

obtained

employed
fishing

trips and at funerals, gathered at
cocktail parties, snatched from
sermons,

picked up from novels,

gleaned from classical literature,
acquired from the rough and
tumble of local politics, remem¬
bered from a high school labora¬

and painfully learned in
spending my own money. This is
a
profession where everything is
grist that comes to your mill, and
one
where a retentive memory
and constant thoughtful observa¬
tion pays off.
What I am trying to say is that
the investment analyst is expected
to know more than it is possible
for anY human being to learn. His
profession is a gruelling one be-

tory,

Volume

165

Number 4566

he has to

cause

sometimes

sleeping.

much ter¬

cover so

ritory and keep

THE COMMERCIAL & FINANCIAL CHRONICLE

wide awake—

when

feels

them down.

He can't separate him¬

fluctuations

and

fluences

before

morning.
His field is the world's knowledge
and he must keep up with
every¬
thing.
up

But in- all of this, he cannot for
moment

one

factor.

neglect

Every

the

human

corporation

has

management, and that manage¬
gives it a personality.
The
analyst,
therefore,
must
know
people and develop an ability to
judge them. I know dozens of sit¬
uations which look inviting
in
every way but one; they simply
lack
that
indispensable human
ment

factor.

I know

other situa¬

some

inclusive that
scious of

that

splendid

human

much
is

potentialities in

just

men

function to know

our

mine

job to judge

our

factor

It is

ore

some new

And then there is the securities

itself.

market

much

than interest rates, booms and de¬

pressions, earnings and dividends,
the national income and the

plexion

the

com¬

governments

Washington and in Moscow. Those
not the

ticker

mind

con¬

After

market

commentator

things that make the

chatter prices up

scowl

Causes of This Decline

Ended

perform¬
strate¬

in¬

the total number of shares listed
the New York Stock Exchange
were
hurled
upon
the market
on

there was some fairly wild and
irresponsible talk about the possi¬
bility of a war with Russia and a
clusion of the two previous rec¬
tendency, increasing as the price
ord-breaking
intermediate
up¬ collapse progressed, to take more
swings. After the 14-month ad¬ seriously the probability of a sec¬
vance that ended in
October, 1922, ond round of increased wage de¬
the market in the next 12 months mands
by organized labor. There
staged three intermediate swings was no important credit
pyramid
—a
one-month reaction of 11%,
supporting the structure of se¬
a
recovery amounting to 14.5% curity prices when the
panicky
and finally a 19% decline from
selling swept over the market,
March to October in 1923 that is
leaving 98.3% of the total number
usually but inaccurately referred of shares listed still held by the
to

the bear market of 1923.

Following

the

termination

same

ments

sions from Aug. 27 to Sept. 10, the
more insistent becomes the suspi¬

every

savings,

cion

run¬
miss ideas that may
enable my clients to profit.
ning to about 13%, followed by a
This absorbing endeavor is my resumption of the recovery trend
life work. I invite you to make it which by the end of February, 1927

your

amounted to

happy avocation!

ruary-March,

secondary

corrections

the

history of the

major
regarded

3. The

1946

tioned

far

the frequently

excess

23%,

amount lost

men¬

which
is
the
by the Dow-Jones

was

quent advance. By February, 1945
it had exceeded its 1937 high ol
346
and
by May, 1946 it had

in¬

period of concentrated
collapse in the price structure
a

1942

relative
ments

exceeded

intensity
the

during
1929.

1946

the

New

eight

achieve¬

Era

market

1921

years

In 1921 the number of low-

priced

securities

available

much smaller than

markets.

the

vance

Jones

industrials

from

1921

was

average,

inter¬
correction in
was

rupted by only one
excess of 10%.
This

was

the 11%

July-November decline in 1943.

Never

lic utility common stocks,
low
grade preferred stocks with divi¬

the

the maintenance of
free from

moves

the 1941-1942 lows proceeded, ac¬

total

months

tive trading interest concentrated

for the three

the

most

part

these low-

priced securities.
Bull

Market

three

swings in
compared
with
16
exceeding 10% in the 45

preceeding April, 1942, ten
years 1935-1937, 19
during the three years 1932-1934,
18 for the

1931.

Concentration

intermediate

months

and

The

three years.1929-

market

from

the

end

Low-Priced Issues

April, 1942 to the end of Janu¬
1946 certainly gave the im-^
pression that it had abandoned
ary,

The

Dow-Jones

industrial

av¬

erage started its major advance
from a level of 92 in the
Spring of

1942.

In December of

nally exceeded
194

and

added

the

its

1945 it fi¬

1937

high

next five months

10%

mere

more.

Most

people knew this technical record
hut only a few had any clear con¬
cept of the revolutionary change
in

speculative

the four years

practices during
1942-1945. For the

first time in market

history good

its

wild,

unpredictable,

specula¬

tive way of life and settled down
as a

respectable investment mech¬

anism to

discount, without alarm¬
ing intermediate corrections, the
widely-publicized monetary in¬
flation
and
generally expected
postwar prosperity.
By the

end of January, 1946,
the market had
decisively broken
the New Era records for duration
of intermediate
upswings. From

quality, higher-priced, so-called
May, 1924 to February, 1926 the
pivotal equities were virtually ig¬
market, in a 21-month advance
nored by speculators.
uninterrupted by a 10% reaction,
The result of this was that the broke the
previous record of 14
Dow-Jones

never

flation

Which

industrial

reflected

in7) the
was
;

average

the degree of in¬

more,

price

structure,

accurately
-

■■

re-

and

months that had been established
in the first phase of the New Era
bull market from August, 1921 to

October, 1922, The regulated

mar¬

between

was important be¬
represented the price
reached by a sharp reaction on
July 23, which penetrated by five
points a clearly-defined support

the
prices

200

around

area

maintained

that

to 205.

major

that

had

been

for

the July 23 reaction
interpreted as a false
move.
But to support this inter¬
pretation the market had to stay

rail

could

declined

average

rail

34%, the
group 45%,

bond

Barron

the

and

industrial

between

Dow-Jones

and

must

technical

considered

nificance

understood

centrated

collapse

character

during

fact

its

and

the

that

sig¬
con¬

the

price
trading

ten

about

three-fifths

the

through this point

186

level

15%

advice

tions,

upon

the

commentators

de¬

1937

was

all

financed

industrial

planned that
manent

way

for sound per¬

prosperity,

disintegrating.

recovery,

was

In may,

rapidly

substantial

number

,|t

[ J

;

' f I

the

Why ten days in the life of the
have such a

revolutionary
economic

able

effect on respect¬
forecasting—there

justification for exploring fur¬
the haunting suspicion that
ten
days which wrecked a
four-year bull market were dom¬
inated
by short-term technical
considerations that had very little
is

ther

longer-range economic

to do with

In this connection it must
admitted that the decline in

logic.
be

the

market made far more

stock

dynamic progress during the brief
period when it was impelled by
the technical bearishness created
the violation of

the 195 and
subsequently

186

levels

was

able to do with the help of a

than

fundamental, well-rounded theory

major deflation embracing the

decline ih

orthodox sequence of a
the securities
markets

followed

by falling commodity prices, and
ultimately by business recession.
The relatively minor additional
reflected
in- the Dow-

industrial

beyond

average

unfortunate

were

than

less

that

were

bear market.

blamed
Within

for
a

the

were

•

•'

Bear Markets

;yAs the record now stands, four
months after this indication of a

major decline, it is obvious that
the response t of the market in
1946 lacked the enthusiasm which
it exhibited under similar tech-,
circumstances

nical

1937.
1929

and

in .1929

io the ;;
price collapse the average atv
In the ten-day climax

its low oh Oct. 29 xw$us 34%*,below
the closing level for
at

the

cepted

time,
as

was

Oct. 4 which,
generally ac-*}

the bottom of

intermediate

normal

correction.

the

Oct. 29 low the average was

27%

below the close for May 27,

192$

the low reached on the

which

was

final

intermediate

correction

the New Era bull market.
In 1937, at the low for

Oct. 19,

which marked the end of the

col¬

lapsing phase of the decline^ the

new

average was

few weeks,

..-'f

Comparisons With Previous

30% below the June

closing level of 165.51. "It was

the penetration

replaced,- by the more fiti- ■ ~8i:<
'

the

low

bear market.

ten

jumped aboard the major beartrend bandwagon.
In the midst
of the early confusion Russia and
labor

closing

;

Sept. 10 the
low of 166.64
10.4% below the
important technical level mark¬
ing the start of a Dow theory

now
basing their
mechanistic indica¬

was

the

average reached
which was just

these two critical technical levels

another time
problem-—-

until

consideration

the price collapse on

in¬

market

1940, the however, these early explanations

market collapsed as the Nazi blitz-

The Technical Explanation

Deferring

February break, which was I86.O
in the average. At the climax of

points apart.
exceeded in intensity for com¬
On Aug. 26 the industrial average
parable periods of time only by closed at 19-3.99. The next
day
the breaks of October, 1929, Octo¬
ushered in the beginning of the
ber, 1937, and May, 1940. In 1929
concentrated price collapse as the
at the climax of the price collapse,
average broke through 195, clos¬
the average lost 33% in ten days;
ing with a net loss of nearly six
in 1937 the climax decline in 11
points at 191.04.
Four trading
days amounted to 17.3%; and in
days later, the average broke
1940 the ten-day loss was 23%.
through 186 and closed that ses¬
A detailed comparison of the sion at 177.68 for a net loss of
fundamental economic or specific IOV2 points. Five days later the
n e w s
developments
associated concentrated collapsing phase of
with these four concentrated price the decline came to an end with
collapses leads to a suspicion that the average reaching an intra-day
the panic of 1946 was the most low of 166.64 on Sept. 10.
capricious and least justified in
Changing Explanations
the quartet. Preceding the Octo¬
ber, 1929 collapse was an eightMarket performance during the
year
record-breaking peacetime six trading sessions from Sept. 4
prosperity that had inspired the to 10 revolutionized speculative
greatest speculative pyramid in and investment psychology. Hardhistory, partially supported by headed realists accepted the dic¬
$8 billion in brokers' loans. By tum of
the
market
place and
too obvious that the Government-

cycle.

tion

view

crease

This abrupt and violent collapse
the price structure has been

mid-October

beyond the low of the
concentrated price col¬
lapse that popularized the concept
of a major turn in the economic
decline

the immediate period of

lowest

the

was

Critical Technical Levels
In

cline in the average.

circum¬

entire

place during these
ten days when trading in 23 mil¬
a

trading days. The lowest closing
price of
163.12 established on
Oct. 9 was a mere 2% additional

Jones

took

lion shares resulted in

break

the

market.

sessions from Aug. 27 to Sept. 10.
In terms of the industrial average

decline

than

technical
excitement may have some funda¬
closing price established on the
mental significance.
The general
10% intermediate break in Feb¬
price collapse reached a climax
ruary. Virtually all technical ad¬
on Sept. 10, just five trading days
visers had this spot marked as of
after the Dow theory indication
special significance, with the de¬
of a major bear market had been
cisive
break-through
giving
a
Dow theory indication of a bear given on Sept. 4 by the penetra¬

Time

stay

briefly below the 166.64 low that
recorded on Sept. 10.
The
average
has closed lower than
this level on only / four different
reactions involving a total of 11

decline.

Collapse Was Concentrated
fourth

able

been

was

decline

The

ing the action of the market after
Sept. 10 is that, despite the formu¬
lation and widespread acceptance
of the major "bear market and
business
depression philosophy,
the industrial average has never

dicating the probability of further

ranged
one-half.

most

interesting technical fact concern¬

would have to be accepted as in¬

rail

averages

one-third

Under

195.

stances

Prior

above

low-priced stock
to 1929, major

index 40%.
declines

On the basis of this per¬

formance,

bear

Dow-Jones

The

the

1942. and

declines

qualified

defaulted

major trend

10% reversals.

in arrears, the defaulted
railroad bonds, were selling at less
than $10. As the recovery from
dends

stock

Over a period of 45 months the
major advance, as reflected in the

industrial

The 195 level

cause

that

securities

suffered

the 500% ad¬
high-priced Dowas

history of the
1942
average had there been anything
including industrial, rail and pub¬ approximating such persistence in

for

1946

amount

noteworthy

occurred

While perhaps not

the Spring
when hundreds of issues,

tion

soared to 662.

1929, the 620% gain in four years
that seems to have had a much by the Barron
low-priced index
higher technical content than was more truly representative of
the collapses of October, 1929 the great bull market of World
and October, 1937, with which War II.
w,
:»
<
'
a detailed comparison is inev¬
The Second important technical
itably invited.
item to keep in mind is the rec¬
In tremendous percentage gains
ord-breaking
persistence,
free
registered by a great number of from
conventional
intermediate
individual
securities,
bonds
as
corrections, of the bull market
well as stocks, the bull market that started in the
Spring of 1942.
from

decline

the

around 195 and 186 in

were

nearly
four
months.
However,
immediately
substantially exceeded 23%. Those
following the five-point penetra¬
sections of the financial markets
tion of July 23, the market turned
in which the most active specula¬
around and in 16 sessions rallied
1946

This index also started from

However, it

special emphasis is

industrial average.
1946 market decline

4. The

cluded

ing

1947, or at the very
Autumn of 1947.
The

stock market should

the average.

advance, was generally
as
the beginning of a

The third technical item deserv¬

by the comparatively ob
Barron low-priced stock in¬

before
Spring
latest Ly

lower prices would be seen
the end of 1946, or by the

levels

Decline Exceeded 23 Percent

1942 low of 92.

bear market.

much more dynamic on the subse¬

average.
decline was

coming

that

major

proportions, the
industrial average broke through
two
generally accepted support
levels that had acquired impor¬
tant technical significance. These

secondary

yond

did after four and one-half years

vealed
dex.

1926,

sold

were

trend t of the market
had been reversed and that much
the

the

that extended the decline well be¬

10% rally from the

that

one

panic of 1946 was
primarily a technical phenome¬
non. In the course of the ten days

other intermediate correction

studies

develop¬
during the ten market ses¬
more

after Sept. 10 on the theory

ten-day

in February, 1926, the market dur¬
me I must keep
minute lest I lose ing the next 12 months compen¬
something—lest I fail to absorb sated for the abnormal persistence
something that will help me to of the preceding upswing with a
help others to safeguard their 17% break, a 23% recovery, an¬

scure

serious

the

dramas, and tells

est

from

end

awake

February, 1946 ended the long¬
advance free

the

The

(Continued from first page)
reaction

owners

ten-day deluge.

the 12-month intermediate advance

Technical Background oi the
1947 Stock Market
intermediate

those

strictly in conformity with its
performance following the con¬

the generation.
I would not trade this
profes¬
sion of mine for
any profession in
the world.
It is stimulating and

some

during 1947 which the stock
was discounting in 1946.

Millions

politi¬

comparable to

1929, 1937 and 1940, drove the
market into the ten-day price col¬
lapse between Aug. 27 and Sept.
10, 1946?
Well, as 1-3/10% of

intermediate lows of the previous
October. The 17% break in Feb¬

2. The

disaster

activity

business

cline

market

cal

double-cross

important de¬

ished concept of an
time

as much
by the psychology of
by the economics of

with

complete
by the

world

for

rations to compensate for the long
stretch of abnormal stability. This

moves,

the

What major economic or

was

domination

Hitler dictatorship.

vestment confidence by staging a
series of violent intermediate gy¬

fascinating. It supplies

much

disarming

position

gic

therefore, often must be
hour

this

the market

ance

them, or resolve
their full significance.
Those who buy and sell stocks
are
those
v/ho
really establish
prices.
They are influenced to
act by
reason, but also by fears
and hopes originating
in every
sphere of political, social, econom¬
ic, financial, business and personal
experience. Fears and hopes are
emotions, and emotions are not
always logical. The area in which
the

advancing

Stability

all-

can

months without
10% setback.

box seat at all of the world's
great

product.

are

and

records

all of

the

for

complicated

dominated

which has been added.

vious

issues

determined by the impact of
constantly changing panorama
inter-acting and conflicting in¬

less from

investment factor but

individual

are
a

tions, too, which would be worth¬
an

threatened

krieg

alive and human.

self from his work when he
goes
home at night. The briefcase has
to go too—and it has to be opened

cleaned

It is

something much ket of World War II advanced for
14Vk
months,
reacted
for
4%
The market's
gyrations, and the months, and then- broke all pre¬

759

of this point cn

(Continued on 4>age 760)
?

' '

»• n ■

t:-: • ft

Thursday, February 6, 1947

FINANCIAL CHRONICLE

THE COMMERCIAL &

760

whole labor force is

*fV

(Continued from page 759)
Sept. 7 that gave the Dow theory
Indication of a major bear market.
•

liquidation
resulting
the collapse of the credit

Forced

from

Sept. 13. The low for April 11,
1939 remained the lowest level

1937 to

the low of Nov. 23,

from

of 97.46 established on
March 31, 1938.
This low at the end of March,

the

low

1938 was the

touched

bearish psychology
-adverse

generated by

technical performance.

months

showed

the

which

course

during

extreme

138.77 reached

average
recovery

Nov. 8,

Conclusion

supply and the scarcity of
rent prices of the present supply foreign erchange. With this reser¬
vation we may have the present
of goods and services?
Does not
demand depend on income and British economic situation in mincL
does not income depend on and It has recently been stated that in
Great Britain the current volume
vary with the volume of output?
that, income is de¬ of
purchasing power for con¬
production though not sumption purposes is about £7,entirely on the volume of goods 000,000,000, whereas the currertt
that are put on the market in the supply of the consumption goods
present period, but rather on the and services is not much above
volume of productive activity that
£6,000,000,000. We may assume a
smaller
discrepancy
is now going on. And the demand somewhat
It

and

1929

fer from what

have been used

established

the

fundamental basis for
the
1946 collapse in
the price
Structure. Therefore, despite the
fact that thus far the technical
from the September col¬
lapse has been the least impres¬
sive ever recorded from similar
technical situations, there is am¬
ple justificaton for emphasizing
the past record of price recover¬
ies from concentrated collapses.
recovery

shows that for

12-

month
of

period following the low
price collapse the probabili¬

the

immediately

preceding period.

quential

This record

the

volume

present

they want to buy for consumption
may well exceed or fall below the
value of the forthcoming supply
of

goods and services at current
prices. It is not necessary to com¬

ular in the last decade.

the 1930's perhaps the dom¬

inating problem for economic sci¬
ence, to the extent that it wanted
to be a basis for policy, was to
analyze the causes of widespread
unemployment and to find a cure
for it. As unemployment, and a
depressed economic state in gen¬
eral, was found to be due to in¬
sufficient demand for goods and
services, the question became how
to

achieve

cient

and maintain

volume

there is

mechanism

automatic

which

guarantees that the sum total of
what people want to buy for con¬

small

also be expressed
by saying that the

planned
or

investment

may

exceed

fall below the planned

but I

saving,
think the former way of ex¬

pressing it is more easily under¬
standable.
If the aggregate de¬
mand is too large,

relative to sup¬

13 the

average

re¬

corded a 52% gain from the low
of that day

whereas the maximum
decline registered in
4he next 12 months was only 14%,
the average on Nov. 10, 1930
Teaching a low of 168.32.
additional

must exceed

Savings
Let

de¬

low of the
price collapse was 115.84 on Oct.
19. By Oct. 29 the average had

rebounded

22%

141.22.

How-

| ever,| this
technical
snap-back
failed to hold and the absolute
low of the decline in the autumn
of 1937 was hot
23

112.54.

reached until Nov.

the

November

decline the average closed below

the Oct. 19 low only

three times

and following Nov. 23 the average

staged
vance

20%

intermediate ad¬
to 134.95 on Jan. 15, 1938
a

emphasis has usually been placed

and within 12 months had reached

for a total gain of 41%.
gain compared with a net
additional decline of only 13%
158,90

This

that

order

ujtn 1937, the climax

unemployment should
be kept on a sufficiently high
level. Beveridge put the goal to be
aimed at in the following way:
"Permanent full

fined

as a

there

employment de¬

state of affairs in which

always more vacant
jobs than unemployed men." The
Delegation on Economic Depress
sions appointed by the League of
are

Nations has

stated

that

the

one

objective of economic policy Is to
assure
man

"that insofar

woman

possible

tin

time

employment

longer

able and willing

to work should be unable to

for

than

periods
needed

now

at what hap-

the owners of these stocks refuse

sell.

the

domestic

case

half-finished

materials

raw

pro¬

bottlenecks

from

one

occupation

ducts

sion

pressed
this

employment from

state.

lecture

the

de¬

course

shall make

cur

of the difficulties which
in

maintaining
everyone
easy

that
conditions

country

oc¬

aims at
where

Some cases of excessive invest¬
ment

for

are

flation

willing to work finds it

to obtain a job.

My subject is not the conditions
of a relatively high degree of em¬

well known. This is true,

instance,

of the ordinary

movement.

ob-

Prices

in¬
rise,

investment expands,
prices rise still further in a cum¬
ulative process. Obviously if we
want to avoid development of this

wages go up,

are
specific in a war economy
called over-full Hence it is probably more inter¬
employment, or, for the sake of esting to analyze a state of af¬
brevity,
overemployment. It is fairs of overemployment as a per¬
manent situation in peacetime. It
not, of course, incompatible with
is important to know what kind
the existence of some structural
and
seasonal
unemployment; it of state controls are required in
order to make such a situation
means simply that there is always
permanently possible. We also
a much greater number of vacan¬
want to know which economic ad¬
cies than people looking for jobs.
or
disadvantages will
The first thing we have to ask vantages
follow from a system of this kind
ourselves is how such a situation
compared with one where a some¬
can be brought about.
The answer
what less complete employment is
is obvious.. If the total, demand
to be found.
for goods and services exceeds the
Let us consider therefore a case
current supply, producers will be
that is common in Europe today
anxious to expand output and will
i.e., that the prices of the most
therefore increase their demand important goods and services are

even

if practially

the

controlled.

Wages,

appli¬

productive

new

houses, etc., is delayed.
The total volume of investment
will be smaller than planned and

The state of affairs which I am

labor

ances,

to analyze can be

for

it is obvious that the invest¬

ment

Cases of Excessive Investment

at¬

tempt to describe or characterize
some

sure,

ment purposes.

pro¬

overcome

look

the commodity markets,
It is inevitable that commodity
stocks should be reduced, unless
speculative considerations make
pens

ployment which we should aim at comment upon but it is better not
employment for- everybody and therefore might, for practical to study the case of economies in
in occupations that are useful and;
times of war. There are too many
purposes, call full employment.
desirable in a state of peace.
special
circumstances
and
too
In
Over-Full Employment
many psychological
factors that
dealing with this question, the
the difficulties to

supply.

Effect of "Unintentional"

vide

firms

employed therefore brings a con¬
siderable extra profit.
In these
conditions the demand for labor

war.

policy that Would

reigns.
marginal costs of

if true monopoly

most

sumption and for investment will
be exactly equal to the value of
current output at present prices.
in another way

"perfect

competition." The marginal sell¬
ing costs are zero. This is so, even
if the number of competitors is

12-month

lowing Nov.

most

for

supply,

called in economic theory

demand

exceeds

develop ' for
ply, and if we grant consumers the
there are always some lines of
right to determine how much they
quire a new skill."
will buy, then one can say that production where capacity is rel¬
It is only natural that the diffi¬
what makes total
demand "too atively smaller than in other lines.
culties involved in maintaining a
great" is the fact that investment Buyers of certain goods like ma¬
situation of so complete employ¬
chinery that is made to order are
purchases are kept on an exces¬
ment or labor has not as yet re¬
sive level.
In other words, the put on waiting lists. Thus in spite
of the use of overtime, which to
ceived as much attention as the state of
overemployment is due to
difficulties in causing an expan¬ an excessive demand for invest¬ some extent alleviates the pres¬
transfer

mand. Some people think that this
has been done only in times of

to outline

conditions.

the

and traders find it easy to

Sir William Beveridge, for ployment as experienced in good kind as a result of an excessive
instance, has made the statement periods of business conditions be¬ investment demand, it is necessary
that the only sovereign remedy tween two world wars. I assume to apply various controls by the
for unemployment that has been a state where;the number of va¬ state. This has been tried in al¬
developed in liberal economic so¬ cancies is as large as three, four most every belligerent country
'f. Comparison With 1937 and 1929
cieties is war. While this is no or five percent of the total em¬ during the last war. Both wages
The climax low of
the 1929
doubt an exaggeration and was ployment, whereas the unemploy¬ and prices were kept down and
collapse was 212.33 reached on
meant to be one, it contains an ment due to movements of labor the result was an acute feeling of
'Oct. 29. Before a substantial in¬
element of truth.
from one occupation to another scarcity both with regard to labor
termediate recovery started, there
is much lower than the number and commodities. From the point
were only two days that the aver¬
Maintaining Peacetime Em¬
of vacancies. An analysis of a sit¬ of view of the labor market it is
age closed below the Oct. 29 low.
ployment
uation of this kind may throw obvious that in such countries the
These days offered buying op¬
The fact that employment con¬ some
light on the question how total demand for products which
portunities for an ultimate recov¬
ditions have almost always been to maintain a reasonable
high and is an indirect demand for labor,
ery that ran from a low of 195.35
exceeded the supply of labor at
on
Nov. 13, 1929 to a high of good in periods of war but unsat¬ even employment and it may also
the current wage rates. This is the
297.25 on April 16, 1930.
Thus isfactory during long periods of help us to understand how high
kind of situation I am going to
period fol¬ peace is a challenge to economists it is reasonable to fix the em¬

Within

situation

try first to characterize
the market situation under these
Let

recovery in prices
substantially in excess of any ad¬
ditional decline.

ties favor

rationing

another or, when necessary, to ac¬

suffi¬

aggregate

consumers' goods.

It is suf¬

ficient to point out that

(Continued from first page)

situation re¬
flects the comparatively inconse¬
of

But

there

producers
sell at
savings. Therefore the sum total current prices more than the^
of what people are willing to buy have. From their point of view the
for investment purposes and what situation
is
similar to what is
lation

Aspects of the Economics of
Over-Full Employment

well be that the elementary

arithmetic

of it.

part

This thing can

1937.

visualize

production are below price which
is equal to the marginal revenue*
Every new laborer that can be

lapse of 1946 suggests that it may to and sometimes to neglect the
:*iot belong in the same category general truths that have
been
of

in order to make it

one

analysis of saving and investment
of the kind that has become pop¬

practical

portion of the decline coming in
the final seven days accompany¬

Thus, a detailed technical analy¬
sts of the concentrated price col¬

those

than this

ready had major corrections and,
finally, recalling the erroneous
major trend diagnoses of 1923 and
ing a Dow theory indication of 1926, there is justification for be¬
a major bear market.
In the 12 ing a bit skeptical about accept¬
months
following
this concen¬ ing the market's 1946 ten-day
trated crack-up of the price struc¬ technical "wild oat" as a guaran¬
ture the average rallied 31% from tee of a major bear market and
business depression in 1947.
a low of 120.04 to a high of 157.77

the basis of

price which indicated a major de¬
However, this marked the

may

goods depends on

cline.

.as

consumers'

for

plicate these matters by a detailed

decline.

additional

Recovery Anticipated

goods

Another concentrated price col¬
signal given on March 31,
1939 during the course of a con¬ lapse (previously referred to) was
centrated price collapse, when the produced by Axis
invasions of
Industrial average broke through Czechoslovakia and Albania. From
the low of a previous intermediate March 10 to April 11, 1939 the
decline which had ended at 136.42 average lost 20%, with the major

ceeded 30%.

true

volume of credit has no fixed re¬

sessions ended
collapse during
the industrial average lost
The record of the subse¬
price

14-day

of the

for more than a year and
.within six months the average
had staged a recovery that ex¬

purchases for
investment purposes are not fi¬
nanced exclusively by current in¬
come.
A large part of investment
is financed through credit and the

quent 12-month period reveals a
recovery of 63% from the low and

;iow

with regard to raw ma^

war

terial

experience with five previous ex¬
amples of what may be techni¬
cally
termed
multiple - climax
price collapses, it has always been
wise to capitalize on the oppor¬
tunity offered by the post-col¬
lapse price recoveries rather than
to continue apprehensive regard¬
ing the amount of additional de¬
cline during the following year.
Adding this record of action fol¬
lowing previous concentrated price
collapses to the obvious fact that
those segments of the securities
markets in which speculation ran
Wild from 1942 to 1946 have al¬

which

technical point, the average
on March 31, 1939 broke through
; 136.42 and closed at 131.84. Six
trading days later it closed at
121,44 which was 11% below the

the

what
aggregate
demand exceed the value at cur¬

where

Thus

These six trading

ory

is it that will make the

pendent

the

at its high of
1940.

amounting to 25%

not subject to govern¬

are

ment

possible

jon, Jan. 26. With the now familiar
fanfare that goes with the pene¬
tration of an important Dow the¬

the next 12 months.
the blitzkrieg price

was

ensuing

hand,

regulation. We are not con¬
cerned with the after effects of

therefore

income and the willingness to save

22%.

Technically,
the
September,
; 194-3 indication of a Dow theory
bear market is more reminiscent

collapse was reached on Many. 21,
1940. However, the absolute low
not recorded until June 10
at 110.41.
This low held for the

result of a concen¬

trated price collapse precipitated
pyramid in 1929 and investment primarily by the Nazi annexation
selling in 1937 based on the con¬ of Austria. Without the help of
current spectacle of collapsing this menacing foreign develop¬
pates of industrial activity gave ment
it
is
open
to
question
a genuine major impetus to the
whether the November 1937 av¬
stock market declines in those
erage
lows
would
have been
years. In 1946 the absence of a broken. As far as the time ele¬
dangerous credit pyramid or any ment was concerned the penetra¬
immediate threat to the physical tion was relatively brier.
Only
rate of industrial activity, resulted
six trading sessions were involved
in relatively meager additional
in the decline from the day the
general decline in the securities November low was broken until
markets beyond the few days in the absolute low for 1938 was
which the price Structure was recorded.

subjected to the concentrated sell¬
ing pressure resulting from the

for

Climax

em¬

becomes the following one:

Background of the 1947 Stock Market

Technical

already

problem

The

ployed.

the other

anticipated. Some of the consum¬
ers'

purchases

are

also

delayed

goods
immediately.

because the desired type of
is

not

found

words, unintentional sav¬
owing to the putting off of

In other

ings

purchases appear. In some indus¬
tries profits may become unex¬
pectedly large and in that way too
unintentional savings are caused.

investment

Thus the volume of

with the volume
of savings although much more
investment
was
planned
than
would correspond to the planned
savings. It is possible that part of
the investment is financed by the

is made to agree

upon foreign exchange
For the excessive de¬

drawing
reserves.

mand

rise
the
is

will tend to make

imports

fall off. To
extent that the price control
whereas exports

incomplete or ineffective,

prices

This may increase the
savings and reduce the volume of
goods that are consumed. Consid¬
erations of this kind lead us to an
important conclusion. It is impos¬
sible to have a situation of over¬

will go up.

employment, without getting bot¬
tlenecks in the domestic economy.
There are not sufficient goods to
be had and the degree of insuf¬
ficiency will be very uneven.
it is necessary

to expand the ca¬

pacity in certain lines, the short¬
age in supply may be intense. In
fields supply can be more

other

easily adjusted.
Labor Market
The

Maladjustments

conditions

soon

the labor
I shall speak

market about which

will, however, make

ments in

adjust¬

production more difficult

than what we are

used to under

of less

complete em*

conditions

.Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

ployment. In countries which have

scanty

out that

reserves

foreign

ex¬

change, bottlenecks will appear
also owing to an
insufficient sup-

Pjy °f imported

other

raw materials and
If
larger
buffer

goods.

stocks

exist at the time when the

period of
then

investment begins,

ever

the

Sweden in recent years bears

back

also

have

certain

develop. If

not

regulated,
they
rise consider¬
ably, particularly in the case; of
materials. For it is better to

raw

a high price
production.

pay

than to curtail

It is not unlikely that the most
serious
bottlenecks will
appear

with regard to half-finished prod¬
ucts for which capacity is insuf¬

ficient.

Supply of

often inelastic

such

goods

the building of

plants

new

may require several
If many countries are in
this state of overemployment the

years.

.effect on raw material prices on
the world market will be unavoid¬
able.

It is difficult to

considerable

but

how

see

rise

uneven

such prices can be avoided. As the
pressure

it will
be in¬
difficult to maintain

grows

creasingly
control

prices without ration¬

ing. Besides, the volume of investment will tend to grow, and if
the

situation

tirely

shall

out

hand

control

necessary

not

en¬

run

will

investment

activity.
Let

add that the

shortage of

labor cannot be abolished through
immigration. Let us assume that
there

are

cancies

country 100,000 va¬

that

and

number

therefore

the

forth

and

not

only reduces
the
output of the workers in
question but to some extent ham¬
pers the work of other laborers
who are dependent on the former.

appearance
of btrttlenecks may be
delayed. But sooner
or later
shortages will

prices are
will tend to

such arbitrary migration

avoid that

hard to

seems

people who take very little

some

interest

work

their

will

not

stimulus as usual
best, if they know
that they can any day quit their
present occupation and immedi¬
strong

ately find
It

their

that

will

labor

hold

little of such

very

employment and
tend

firms will

many

their

workers

even

they are not needed at the time.
They will fear that it would prove
impossible to get them back later
The

psychological obstacles to
movements from one place to an¬
on.

other

will

come

difficult

sufficient

thermore, if rents

over¬

scale.

Fur¬

controlled

are

and not allowed to rise to

rela¬

tively high level—and this is al¬
most

true—one has to count

ever

with

excessive scarcity of. labor. It
sad conclusion that the smooth

adaptability of the economic
tem

shortage of housing. Hence
industries situated in places where
this shortage is acute will find it
particularly difficult to attract
new labor.
The ensuing difficulty
in transferring workers causes a
a

tendency for business to establish

large extent to depend

the

transition from the

employment to
employment.

full

The

control of

inevitable

lead to

table

insuffi¬

cient. It is true that the total vol¬
of

savings will grow, as a
part of the increased income will
ume

saved,

but investment will
tendency to rise also as the
need for housing will increase.

have

of Employment

have

the

compare

briefly

now

conditions at

situation I
outlined with

moderate? but rel¬

atively high level of employment,
find that there

are

several ad¬

connected

vantages

the

with

former.

First, the very full em¬
ployment is in itself an indication
that

production

relatively
large. Secondly, the scarcity of la¬
bor acts

stimulus to rational¬

ization. These kinds of investment

that

increase

stant

labor

output with

force

con¬

given pref¬
erence both
by businessmen and
by the government agencies that
has a say on investment policy.
Furthermore, trade unions will
probably become less adverse to
labor-saving
devices
and
may
even
be
strongly interested in
methods that increase efficiency
and
earnings.
Thirdly,
selling

tions with regard to cost of trans¬

that

public

and

sure

Of course, firms and

unused
productive capacity will be able
to expand their output more easily
than others which are dependent
on the building of new factories.
There is a prior likelihood that
the former

always those which
can add mdfct to the national prod¬
uct.
On the contrary, it seems

magnitude of 1

of the

the other hand,

one

cannot

national income.

offsetting

there

influences

are

several

which

tend

to reduce the effectiveness of the
economic

system.

mentioned

that

I have already
bottlenecks

and

waiting lists for deliveries of ma¬
chinery,
half-finished
products
and

some

inevitable.

raw

materials

This

means

will

that pro¬

duction will be slowed down, per¬

haps

result of

a
a

whole

industry,

temporary lack of vital

commodities.

somewhat

unbal¬

Over-Employment and Business
Expansion

Experience

unfavorable

they

cause

less

lie

are in
secretly to

above

what

collective
the

lower

but

revenue

cost in

position

pay wages that

fixed

agreements.

their
some

efficency of production
than

for

even

the

them

small

firms

the

marginal
may exceed the marginal
state of overemployment.

also

obvious

that

it will be

difficult for an industry to
expand unless it is a high-wage
industry, particularly in countries
where the number of people in
the working age is not increasing.
very

For

instance,

textile

goods are needed, and I think this
is the

day.

case

the

in many countries to¬

textile

industry never¬
difficult to
expand
its
output because its
wage rates are relatively low.
It
may even lose labor to other in¬
dustries in spite of unsatisfied de¬
theless

finds

very

To transfer
important industry from a rel¬
atively low wage status to a high
wage is, of course, extremely dif¬

factor

state

reaching

overemployment.
Even
Russia, where conditions are
different
from
the
capitalistic
economies, there is a complaint
that
capricious
movements
of
workers from one job to another
reduce efficiency. The experience

and

to indicate

culties in finding the needed labor
force, small firms can expand be¬

ficult

Sweden

seems

that while large firms have diffi¬

the excessive labor turnover that
seems
to be characteristic of a
in

countries

other

Turnover

the expansion of
compared with de¬

mand for its products.

Over-Employment and Labor
Another

will

anced.

that

probable

cases

This may be a saving of the order

overlook

are

output when
mand

un¬

der ordinary economic conditions.

industries
an

and

would

have

consequences

far-

the

whole wage level.

Obviously there
are several reasons why one must
expect a relatively slow adapta¬
tion of supply to demand. It can
be done

much

quickly in

situation where there is not such

control

should

general

particularly

those

keep low prices will be
in the
case
of
such

stronger

products and producers will find
it tempting to expand the output

in collective agreements. In

Sweden the rise in earnings of in¬
dustrial workers in 1946 is esti¬
mated at 8%; of which one
is

inflation is to be avoided.

is also wage control or a
very conservative wage policy on
half the part of the unions, price levels
such will nevertheless get a decidedly

supposed to be due to
"overpayment," e.g., in. connec¬
tion with the fixing of price rates
that

not

are

determined

the

Oy^r-Employment ;Can

collective agreement.
When

Unless

there

;;

The general impression one can

new

wage agreements are
negotiated in a state of overem¬
ployment the tendency will be for

considerations of this
experi¬
ence of European countries in the
last two years but independent of ;;

wage increases; It is improbable
that they Will be content to accept

that

increases

2-3%
crease

of
the
magnitude of
that correspond to the in¬
in productiveness during a

year, .h Hence, to the extent that
profit margins cannot be reduced

there will be
to

rise.

The

pressure on

prices

experience of the
United States, Sweden and many
other countries in 1946 bears this
-

gain from

;

sort—based largely on the

the

affects

after

war—is '

the

state of over-full employ-

ment cannot dast for a consider¬
able

unless

period,

system of
regula¬

rather strict government
tions used..' ■ <-

Furthermore, it seems highly
whether a reduction of;
the number of unemployed from
doubtful

what it will be when the aggre¬

very scarce.

gate demand is the highest com?
patible with the condition that is
balanced by current supply will
at all increase the volume of out-?
put. The idea to keep the "vol-

ume

bor

above this "equilibrium level" is
evidently not such a brilliant o^e,
as many people have thought,
On the contrary, one is incline^
to think that it is wise for eco¬

out.

The

employers resistant to
large wage increases will probably
be

relatively weak when labor is

Low wage industries,
particular, may be willing (per¬
haps anxious) to raise wages in
order to keep or expand their la¬
force.

The

"•

purchasing power" well

expand capacity will be
similarly directed into channels
that are not advantageous from
the point of view of society as a

existence of price control
will, of course, tend to reduce this
willingness to lift wages. But the nomic policy to aim at the ap-?
fact that marginal revenue is for propriate level of total .demand*
many firms higher than marginal where the factor of scarcity plays
costs will
nevertheless lead to its customary role as a balancing"
wage increases. Under such condi-? and economizing force.
The air-

whole.

tions it is

other, less severely controlled

commodities.

Even

new

invest¬

ment

mentioned

that

certain

re¬

duction in selling costs is possible
when the demand for most goods
exceeds supply. This saving will,

however, be more or less offset
by the increased difficulties in¬

buying the right kind of

must

remember

that

commodity stocks in some lines
will
be
relatively
low. Hence

be the most effective

and the

the

which enter largely into the costs
of living indices. Hence the pres¬

what

one

of the

use

for the consumption of the

consumers

expansion of industries producing
goods that are needed in larger
quantities may be difficult.

conditions

less effective

port or in other respects. Hence
the location of industries will not

are

costs will be much lower than

is relatively sat¬
though this district
less favorable condi¬

which happen to have

Conditions of Moderate Level

where

prices which is

under

directed primarily towards goods
and services that are important

may

continue

stage of
of over¬

productive resources. It is inevi¬

workers but as consumers as well.
Thus demand will grow and sup¬

will

one

overemployment
will,
in
most
countries, be confined to the more
important commodities. This may

volved in

ply

upon

Price Control and Unbalanced

goods.

districts

even

offer

upon

the unions to ask for considerable

full

isfactory,

depends

certain amount

However it is
important to stress that the dis¬
advantages mentioned above seem

the labor supply

factories

new

of unemployment.

immigrants are
admitted into the country. These
newcomers
appear
not only as
same

extent

some

the existence of

sys¬

Production

somewhat of a
mobility of
another type tends to be relatively
low where overemployment rules.
In
the
past, unemployment in
some occupations has been an im¬
portant stimulus to transfers to
other places and occupations. Dur¬
ing a period of overemployment,
there

a new one.

perhaps

paradox

761

from

one

will

often

have

shop to another to find

they need. Similarly profes¬

sional buyers will have to spend a
considerable amount of time in

unlikely that

the

ceiling

trade unions will

is, of course, impossible to
say whether the economic advan¬
tages that follow from overem¬

ternative seems to be

syateiHujpl

all

they aiq?
important prices can be controls and, unless
maintained in the long run. When tightened step by step to include
it is broken in one way or other, wage policy as well as finally
con¬
*, '
prices may rise considerably.
If siderable inflation.
it is maintained for a long period
Thus: to keep up total demand >.
and if employers, therefore, re¬ at a level where It is very easy
fuse to grant the wage increase for anyone to; find a job is HQ
outcome may

accept, the
be large labor con¬
think, be denied

panacea for our economic ills,
is better to set a different goal;

maintain

and

flicts. It cannot, I

create

that the risk of either considerable

economy,

ft
fe

balanced

where total demand

price movements or large conflicts large enough to provide employ-?
much greater when a typical ment for all labor that is available
seller's market reigns on the labor in the appropriate places and oc¬

market, than it would otherwise

finding the right sources of sup¬ be. This is a serious weakness of
ply and to persuade producers to the system of maintaining over¬
put out the wanted products, etc. full employment. If people should
Present conditions in Europe offer come to expect a long run ten¬
ample illustrations of this phe¬ dency of rising prices, this may
have consequences for the lines of
nomenon.
It

investment

chosen

well

for

cupations, but-where there is no.
considerable number of vacancies
in industries paying an appropri¬
ate wage.

■

;

Life Ins. Purchases
At New High in 1946

in both
will not by
Life insurance purchases in the
ployment, that is, the more com¬ commonly accepted standards be United States last year reached an
all-time high, the 1946 total of »
plete utilization of labor, or the regarded as advantageous.
various
disadvantages
I
have
$21,342,860,000
comparing | with
The Effect on Interest Rates
touched upon will have the great¬
$14,139,729,000 in 1945 and $12,In a state of overemployment
est
economic
importance.
The
062,035,000 in pre-war 1941, it was
and
insufficient
capacity there
only thing one can say is that it is
reported on Jan. 22 by the Life- ;
will
be—as
experience demon¬
Insurance
very
doubtful whether an
in¬
Agency
Management
strates—a tendency in many in¬
crease
of employment from, for
Association, of Hartford, Coral' •
dustries
to
increase
capacity.
The Institute of Life Insurance,
instance, 96 or 97% to 99% will
Hence the volume of desired in¬
add to the volume of output. The
making this information available, ^
vestment will tend to grow. If it
loss in efficiency may more than
on Jan. 23, said:
;
is to be kept at a level compat¬
offset the increase in the number
"While the aggregate of life in-? '
ible with moderate overemploy¬
of hours worked. Personally I am
surance purchases last
year w$s|
then either the interest
inclined
to
think
that
output ment,
51% over the previous year, pur?
level has to be adjusted, credit
would in the long run be maxi¬
chases of ordinary life insurance
restrictions applied or investment
mized at the level of employment
accounted for
$15,092,307,000, a
It is quite probable
which is high enough to stimulate regulated.
gain of 55%; industrial life insurthat when the state of overem¬
businessmen
to
rationalization,
ance
purchases were $3,970,35L?
'
but not so high that one could call ployment and excessive demand
000, a gain of 29%; and group life
has
lasted
for some time,
the
it over-full employment.
insurance purchases were $2,280,*
tendency to increase investment
196,000, a gain of 76%.
Problem of Price Stabilization
will be so strong that if credit
"December purchases were $1,investment restrictions are
Let me turn now to another as¬ and
962,873,000, compared with- $1,not to be used, the interest level
pect of the economic system that
449,014,000 in the corresponding
is characterized by over-full em¬ has to be raised to a considerably month of 1945-and $1,629,069,000
ployment. Is it probable that a higher level than under ordinary in the corresponding month of ,,
relatively stable price level can conditions.
1941.
The December totalw was 4
It seems obvious that an eco¬
be maintained in the long run? If
35% over December of 1945. Pur?
the answer is in the negative; and nomic situation of this sort is in¬ chases of ordinary life insurance
|
if we find—as I think we shall do herently very unstable.
in December were $1,196,725,000,
-—that a considerable rise in price
If for one reason or another the
representing an increase of 27%
levels is probable—then this must volume of investment is suddenly over a
year ago; industrial life in? ■
in itself be regarded as a weak¬ reduced
or
a
consumer's strike surance purchases were $290,439,the

willingness to

cases

save;

the consequences

of such a system. For such begins and, therefore, the total
price
movements
call
forth demand 'for goods and services
changes in the distribution of in¬ declines, a strong tendency to a
come which are by most people
recession will set in, which will
agreed to be undesirable. Further¬ call for a drastic reduction in in¬
more;
strong
price movements terest rates and other measures.
make it difficult to maintain a Many European
countries have
balanced
economy
and increase preferred to use investment con¬
the risk that some day a violent trol
rather
than
high interest
recession will set in. This would, levels that would exercise a dis¬
of course, involve a great loss and turbing and unpredictable influ¬
we are entitled to put the risk of
ence on house building.
It is not
ness

the

item

the debit side of

surprising that the pressure of the

system of overemployment.

excessive demand which is char¬

have

000, an increase of 10%; and group
insurance
purchases
were

life

$475,709,000, an increase of 94%.,?

(Special to Thh Financial Chbonxcu)-,*

CHICAGO, ILL. — Albert A. ihas become connected with; -

Lau

Slayton
La

there will be

tendency for em¬
ployers to "overbid" i.e., to pay

higher

wages

than

are

agreed

economic policy of this sort.

We have seen that
oKcrvlntoliir

price control is

nDPOccQw

st.rnTif

Street.;

Edward

Merritt!& Co. *
has been
King Merritt

Kulesza

added to the staff of
&

South

135

Inc.,

Co.,

Salle

With King

acteristic of overemployment leads

already mentioned that

Co. Inc'

With Slaytoii

Co., Inc., 55 Liberty Street, New

York City."

762

Thursday, February 6, 1947.

THE COMMERCIAL & FINANCIAL CHRONICLE

■v.:.'-;

this impairment of

what respects

and the Science of Economics

The Good Economy
~the

basic

instruments

that have

made these accomplishments pos¬
sible

and have been, par¬
during the last dozen
years, under severe attack by those
who would offer devices for liv¬
are now,

ticularly

decades.

that of free and fair competition.

people to attain the stand¬
living and the degree of

these

which

freedom

158

years

have

brought to the people of
these United States. Indeed, it is
substantially accurate to say that,
although it has been the great in¬

the

scourge

for

Clamors

And

these

the

yet

events

those

who

more,

not

basic

seem

determined

lessons
lost

twice

the

last thirty

to
rescue peoples and nations of Eu¬
rope from the onslaughts of auto¬
cratic governments, we find vo¬
ciferous groups urging that we re¬
place these institutions of freedom
years

those of autocratic

with

govern¬

ments.

There

are

the recent

and

vices

that

known

are

evil

and a danger to the well-being of
the individual and of a people in

general.
~-*The

multitude
which

history

for

reasons

those things

people

throughout
struggled to free

have

themselves

toward

perhaps be

can

marized

under the

ing

sum¬

general head¬

shortsighted view of
thirty years. The
depressions and dislo¬
cations, the most severe of which
.are perhaps the result chiefly of
wars, seem to have caused many
people to lose their perspective.
;events in the last

economic

situation

which

such

large proportion of people, here
and
elsewhere, have been de¬
pressed, harassed, tired, and dis¬
couraged, political
demagogues,
amateur
and
politically-minded
economists, and others have found
a

fertile

which

field

they have

cultivated day and night. History
seems to have been forgotten, or
not

understood,

base

misinterpreted.
strong tendency

There has been

"reform"

programs

upon emotion rather than upon
the methods /pf science. The les¬

ions; of "hundreds of years have
beeii junked by those who have

sbeen willing to rate their antici'

pated

realized personal gains of

no,

private enter¬

the individual and

the

This

Good Economy?
raises
questions
the proper aim of

such

the

material

It
if

well-

all

others.

and fair
injurious

fair

competition

appear

that the
weak and the honest be protected
against the strong and the dis¬
honest, to the end that that com¬
in

similar

fields;

the

are

order

the

power

another is

over

individual

one

insidious

and

corrupting thing. It places a great
responsibility
upon
the
person
with whom the power rests. Where
economic and political democracy

freely and fully, the
power of one individual over an¬
other is sharply curbed. Power is

operates

concentrate it if economic and

pulsion, plays its beneficent role.
Society

Cooperative Enterprise

All

agents and individuals en¬

reflect accurately society's gaged in the production, exchange,
appraisal of the value to it of and consumption of goods and
these goods and services.
services, and in the distribution of

of his
physical and
capacities and to safe¬
guard the same freedom for his
fellows.
The justice and desir¬ to fix the weight of, and conse¬
ability of such freedom are recog¬ quently the metallic price for, the
nized by all truly enlightened and monetary unit used as a standard
free people. When we curb this in its currency system, and (b) to
freedom, we take a step back¬ fix the rates charged by public and
ward. When we find new ways to
private monopolies which are per¬
enlarge this freedom, we progress. mitted to operate in lieu of com¬

last

dozen

recognizes, above

national

the

both

income

com¬

pete and cooperate with one an¬
other. In production, employers,
employees, and owners of natural
and capital equipment
must cooperate. All are necessary,

resources

and.', it is as futile t^ argue that
one of these agents of production
is

the

important than any one

others

that

would

leg of a
four-leg table is more important
than any one of the other three.
contend

one

any

!&'-

ii
m

widespread

and

destructive

no'

nation did the people as indi-

Vviduals

Vote for

have
or

opportunity

against this

war.

to
Their

{rulers decided for them. The lib.%<ertfes of people, already sharply
curtailed

autocratic

dictator-

;;J fihip, were progressively and
t idly reduced to something

|proaching

zero.

war

| that the world has ever seen.

rap-

Millions had

ap-

a.
#

seems

reasonably clear that

government

cannot

aid

raising the general level of liv¬
ing in society and protect and
enlarge the scope of individual
liberty unless it fosters free and
fair

tions have been swept away. De¬
struction and waste have seared

| the face of the globe. Debt has
been saddled on the
living to an
extent never before seen. Taxa¬
tion has become destructive. Few

the other is

any

considerable degree.

our

interests

encouraging

individual

develop¬
than by
fostering equality of competition,
impelled perhaps chiefly by the
profit motive, and by providing at
ment and social progress

pro¬

the

how

impaired—-how our freedom to
spend our dollars for goods and

own

Human beings apparently have
devised a better means of

economic democracy has been

that

never

operate largely with

restricted in

On all sides today we see

ties in which it is inoperative.

{people and homes anywhere on the same time the means of
{ this earth have escaped bitterness tecting the weak against
despair,

and

well if

take from

Free and Fair Competition

neither can

paired,

competition and applies the
standards yielded by such com¬
petition when regulating activi¬

\ choice but to lose their lives. Sav¬
ings of a lifetime and of genera¬

and bate and,

services

has
us

been

curbed.

Taxes

by compulsion much

would like to
or as our

use

our

desires sug¬

gest. A multitude of government
regulations and the inability to
get the customary goods and serv¬

ices, in large degree the result of
these controls, have placed sharp
limits upon the proper operation
of economic
democracy in this
country. And, as one considers
how the taxpayers' funds have
been used by our government,

strong ;an$ the honest .against the Shppld: be

pqsy • to, qn^stand t

agency

one

duction—the

J >■■■■'■}

if'tsifir

mim

err-i -

means

pro¬

interest

devices

vide justice and

they
quickly by

appear,

eliminated

that

will

pro¬

restore peace. In

this means that courts
provided to which peo¬

ple with conflicting interests may
repair, since adjudication offers
more promise of ensuring justice
than does resort to force, except
as
used by the State to enforce
those of its laws which are based!

the principles of equal jus¬

upon

tice for all.
In

recognition of these facts, a

good government will never cease
cultivating and improving upon
the devices and rules which will
aid

cooperation

facilitate

and

better understanding of its neces¬

sity and virtues. It will always oc¬
a neutral position with re¬
spect to the importance or inter¬
ests of any one of the classes of
the agents of production in recog¬

cupy

nition

the

necessary,

fact

that

all

are

that all should cooper¬

ate, that all are equally entitled
to justice, and that this justice
probably can be obtained in no
better
way
than
through the
smooth operation of free and fair
competition, with its consequent
automatic and largely unconscious
cooperation, and through the en¬
forcement of the objective stand¬
ards yielded by such competition
in the fields in which it does not
exist.

Today we find

widespread ac¬

this country of the
that strikes must not- be
in

ceptance
notion

prohibited. If intelligence is su¬
perior to brute force, then the
is

there

that

notion

valid
lockouts or
some

defense for strikes or

picketing or some similar and re¬
lated
manifestations of force is

rational foundation.
provisions
for strikes can be defended is a
sad commentary on human intelli¬
gence and the state of our civil¬
without

any

The current fetish that

ization.
In

practically all but two fields

of human

activity we as a sup¬

intelligent

posedly

people

have

steadily to end trial by
battle.
Our courts are assumed to
be a monument to the substitu¬
worked

for force; and
respects are
authorized to reach into the in¬
nermost aspects of our private

tion of intelligence

these courts in many

•lives.

- \

Trial

Battle

But in two large areas we

have

It persisted in retaining the primi¬
advertised itself as the champion tive system of trial by battle: One
and friend of the job receiver and is in our international relations,
job seeker, and constituted itself and at present we are hoping that
the
disciplinarian,
if
not the the instruments of peace and jus¬
enemy, of the job provider.
In tice will finally be substituted for
The other is the field off
large degree, government com¬ war.
pulsion replaced encouragement of industrial or labor relations. Butt
incentive. The task of the job pro¬ here we seem to have been doing
vider was made harder, not easier. little or nothing beyond keeping
Class struggle and social and eco¬ the way open for, if not actually
nomic disruption, not cooperation, fostering, warfare.
There appears
were and are some of the results.
to be nothing good that can be
for this
manifestation of
Today we have a situation in said
which

one

cannot
we

leader

labor

have

cannot

says we

employee

have

group.

says

another

coal,

steel,

says

another

cannot have automobiles,

another says we

cannot have for¬

eign music, another says we can¬
not

have bus

transportation,

benefits to the con¬
and the attempts to obtain
the best sharing of the national
income all require peace.
When

sumer,

general,

The

pro¬

ensure

of the greatest

must

would interfere with the
operation of economic, as
well as political, democracy.

that

agencies

The
best
cooperation
the agents of production,
operation of our instru¬
ments of exchange, the assurance

free

may

limits

the best

day,

competition, to the end that they

mental

Such freedom

mentation

An
enlightened government,
petition may be fair; and that earnestly striving to increase the
prices, with certain exceptions, be well-being of society, will recog¬
neither fixed nor controlled, but nize and conform to the fact that
the results of this free and fair society is a cooperative enterprise.

Examples of appropriate ex¬
ceptions to the rule against price
fixing are found in the necessity
for the government, in order to
establish a standard of values (a)

those

should

political democracy has free play.
Furthermore the system of incen¬
tives, instead of government com¬

and

erty, including the freedom neces¬
sary to develop his personality to

Provide

government will

good

conflicts

proof rests upon those who,
periods other than war time,
when maladjustments and
regi¬

yield

vide

fort to obtain the results that free

lib¬

Should

Peace

den of

these stand¬ widely diffused, and it is difficult

requires, for example, that
monopolies be regulated in an ef¬

erty has in general been consid¬
ered a priceless heritage.
It has
been man's perpetual aspiration.
He has struggled for ages to en¬
large the scope of individual lib¬

the

stand¬

objective

The application of

their

Individual

the

of inefficiency,
waste,
malajustment. A heavy bur¬

ards

worldly goods, and even their
lives, to obtain freedom for them¬
selves

deviations

all

from

provided by free
competition have been
to social well-being.

centuries,
have
people
fought for liberty as strenuously
perhaps as for material goods.
One
may
find
food,
shelter,
clothes, safety, and security of a
type within the walls of a prison,
but at the price of liberty. Many
sacrificed

quite clear that most
by govern¬

seems

not

ards

have

ments

For

men

revealed

standards

made in any objective manner.

not, in addition to con¬
to

part,

competition, that the selec¬
what is superior can be

tion

people in general, pro¬
tect and foster individual liberty.
being of

genus,

cation

short, what is a good economy.
(a) It seems reasonably clear
that no social organization is good

tributing

tend

of which competi¬
is rivalry. And
rivalry is universal in life and
operates in some form in any type
of society. It is only by free and
fair competition, or by the appli¬

social organization, and what
good type of government—in

any

they

not

and

tion

conflict

what is

elements

The

continuation

with improve¬
ment, that we have experienced
through most of our last 158 years.
a

Government

among

whether

each the same freedom in compe¬

progress,

What Is

that given

free to spend
their dollars for this and withhold

tition.

for

greater freedom

than

guidance

petitive enterprises. It is probably
more
years
The
better
the
cooperation
above the long-time welfare of all things, the sacredness of one's desirable, also, for a government,
their respective nations. The po¬ personality. Probably every im¬ in time of war, to fix prices of among the agents of production,
the better is the well-being of so¬
litically ambitious saw an oppor¬ portant religion in the world has those products in which a rise in
tunity to elevate themselves, to recognized arid clung to this great prices will not bring an increase ciety promoted. A fostering of
become bosses, to exercise power fact. It ran like a theme through in production. But such govern¬ free and fair competition facili¬
tates
such
cooperation.
The
they never had before and prob- the teachings of Christ. It lies at ment price-fixing should utilize
the
competition,
the
the bottom of that courtesy with as objective standards the prices smoother
v ably never expected to have. Dic¬
and profits revealed under condi¬ more effective is the cooperation.
which the refined person deals
tatorships sprang up abroad and
Cooperation, under conditions of
and unprecedented march toward with his fellow men. It is prob¬ tions of peace-time competition.
free
and
fair
competition, be¬
an
Free
and
fair
competition
unconstitutional, totalitarian ably one of the most vitally fund¬
comes
practically automatic and
; form of central government de¬ amental elements that make hu¬ cannot function properly unless
veloped—even in this country. man existence worth while.
there be both economic and polit¬ largely devoid of conscious effort.
When competition
operates less
Slogans, promises, programs, and
(b) Other aspects of a good so¬ ical democracy. In a political de¬
policies were made to fit the needs cial organization and a good econ¬ mocracy, the individual is free to freely and less fairly, cooperation
„.of the rulers who did all in their omy appear by implication as we cast his political votes as he becomes more difficult and re¬
quires
a
progressively
greater
I power to keep themselves in po¬ examine the criteria of a good thinks best. In an economic de¬
amount of conscious effort.
sitions of authority.
government, which can be good mocracy, the individual is free to
In this country we have had in
only if it protects,1 fosters, and vote his dollars as he prefers.
,r, The ambitions ,of the leaders of
these autocrats soon clashed; and' operates within the limits of, a Democracy is incomplete in so far recent years, if not today, a gov¬
ernment
that
has
allied
itself
as either of these aspects is im¬
they led their people into the most good social organization.
the

for

work

if it does

this reaction
from

cur¬

rent attempts to turn our coun¬
try's clock of progress backward
—back to the employment of de¬

less,

better

when all buyers are

peace.

prise, and those, on the other side,
who wish to arrest this Jtrend and

cannot have tele¬

Judgment

please and when producers must
respond to these indicated prefer¬
produce the conditions that would ences. Apparently every departure
prevail if the competitors had from this method of buying and
equal strength and accorded to selling injects into the economy

one

lessons in history

that justify

pects of this dictation by people
given monopoly powers by a par¬
No government, no government tial government should be obvious
organization, no government bu¬ to all mature and thoughtful peo¬
reaucrat or collection of bureau¬ ple. It is a manifestation of the
flowing
naturally
crats can begin to compare in ef¬ consequences
ficiency or in intelligence with from the operations of a govern¬
ment that chose to depart from
the mass of people who are free
to vote their dollars as they think neutral, even-handed, intelligent,
best. Producers can never obtain and high-minded statesmanship.
Guidance of Mass

the fairness of these rules is found

this country, we are experiencing

—and

manner.

impaired our

competition implies conformity to
the rules of fairness acceptable to
them from that. Buyers can never
that society which is endeavoring
be served as well as when they
to foster competition. The test of can
vote
their dollars as they

nist,, or totalitarian in some form

enterprise

this

competition of it¬
is not enough;
competition
also be fair. And fairness of

must

ment, and for less, not more, free¬
dom for the individual. Today, in

this

private

and

freedom

than

self

keep clamoring for
less, central govern¬

country that have been employed

individual

Freedom

services

and

Indeed, the only objective stand¬
ards of value and price known are

Central

sharp conflict between those, on
side, who clamor for more
government — Socialist, Commu¬

stitutions

commodities

Government

the world's history have ever en¬
ard

probably no
better means of determining the
social value and proper prices of

ing that nowhere at any time in
abled

There

dishonest.

that auto¬
cratic leaders in government have
brought to millions and millions
of people in this world in recent
This

(Continued from page 734)

other says

also phone or telegraph service, and
political democracy. so on and on. The unfortunate as¬

economic democracy has

our

an-;

ineptitude.

human

look at

our

An objective

policies, practices, and

warfare in the field of

industrial

relations should reveal that in so
far

fundamental principles aare

cpncef)ae)|(iwe have i^Vrisen mucBj

Volume 165
above

the

Number 4566

practices of primitive

man.

It is

probably

an open

question

whether provision for
replacement
of trial by battle in industrial
re¬
lations

by institutions for
ful judicial determination

peace¬

of jus¬
tice needs to involve the
dangers
which are

commonly alleged to be
compulsory arbitra¬
tion. Relatively little effort seems
to be made by economists in the
inherent

field of industrial relations to de¬
vise programs for peaceful settle¬
ment of labor disputes and for the

elimination

of any dangers that
might be involved in some pro¬

vision for compulsory arbitration.

Instead, it

appears that many, if
most, labor economists, like
many others, take it for granted
that strikes are a right and a
necessity.
It seems reasonably clear that

not

the

first

and

fundamental

most

consideration

whether, in hu¬
man efforts to obtain
justice, trial
by battle is to be regarded as su¬
perior to the exercise of human

intelligence. If intelligence means
anything, then it would appear
that trial by battle
should be
ended.
If this be granted, it nat¬
urally follows that our tasks lie in
the creation of the instrumentali¬
ties that will insure justice in the

peaceful settlement of all disputes.
In

faV

the economic world

this principle is ordinarily been .for the most part a util¬
recognized, but often, if not usu¬ ization of the services of, those
ally, matters of economics, such so-called economists, and of those
various
People do not wish to be deprived as questions involving money and economists, who, for
of opportunities to gain a liveli¬ banking,
tariffs, public finance, reasons, found it expedient to
hood, and they do not, in princi¬ labor, agriculture, public utilities, embrace and to advocate the eco¬
maturity - underconsump¬
ple, willingly organize an agency and transportation, are not sub¬ nomic
which will deprive them of these mitted to economists and others tion
oversaving - Key nesian - So¬
having long and practical experi¬ cialist doctrines. Those doctrines,
opportunities.
Those who regard this principle ence in these matters, but to the and the theories advanced in sup¬
as
questionable, or who suggest general public or to so-called port of them, are in most respects
that the State should be free at economists with a certain politi¬ thoroughly fallacious, for the sim¬
its option to compete with, or to cal
allegiance.
Some economic ple reason that available evidence
enter into "partnership" with, the questions
are
as
intricate
in either refutes them or provides
people who provide it with its nature as any in the fields of inadequate support in science.
When a severe business depres¬
authority, open the door to Social¬ the so-called exact sciences, and
ism—a form of government which the period of'training required of sion engulfs a nation, it is com¬
cannot meet the objective tests as the economist before he is com¬ mon to see laymen embrace many
to what constitutes good govern¬ petent to render valuable opinions or most of these doctrines, partly
ment and a good economy. Unless as a scientist regarding the best for the reason that it is easy to
this principle is recognized and solutions may be even longer than confuse symptoms of a depression
But for
adhered to, we have no criterion that required of the chemist or with its basic causes.
These are what seems to be the first time in
by which we can define the extent high-grade physician.
our history we have the phenom¬
to Which a government may ap¬ facts often overlooked by govern¬
propriately enter into competition ment officials. Because economists enon of a large group of so-called
with citizens or deprive them of generally employ words in com¬ economists and of economists, who
their opportunities to make a liv¬ mon usage, rather than such spe¬ vigorously assert their scientific
ing without being employees of cialized symbols as those charac¬ qualifications, allying themselves
the State.
terizing chemistry, many laymen with the supposedly unscientific
When a government enters into seem to suppose that they
are notions of the untutored mind as
competition with its citizens, or automatically admitted to an un¬ they are generally revealed dur¬
creates a government monopoly in derstanding of most or all eco¬ ing a severe business depression.

this society

desires, as a means of
protecting individuals in their ef¬
forts to live and to make a living.

those

are

yielded

under

business in which private enter¬

prise could be

efficient or more
efficient than the State, it substi¬
tutes
government
monopoly or
as

ownership for regulation. This is
evidence
that, as a regulative
The

government's

function

conditions of free and fair compe¬

regulate,

tition;

important
that all courts charged with the
responsibility of making just

and

awards

problems for all concerned than
does government regulation. Gov¬
ernments rarely count with any
high degree
of accuracy their
costs
of
doing
business; their
losses are levied upon the tax¬

and it

required

the

most

economic

statute

field

find

and

to enforce such standards.

Without

such

objective

standard to guide, all standards of
justice become subjective in na¬
ture.
There is, then, no standard
of

Tightness

that

except

deter¬

mined by the court. Justice would
still be determined by the power
of some individual uncontrolled

by objective standards.
The fact
that the power happens to reside
with a court does not alter the
nature

of the power

cised.

being exer¬
subjective,
and, therefore, according to objec¬
tive standards, arbitrary and un¬
just. It would simply be a case of
"Hoc
volo;
sic
jubeo; sit pro
ratione voluntas" ("This I will;
thus I order; let my will be in
place of reason").
can

still

In recent years we have seen

multitude of instances in the fields
of administrative and case law in
which this has been the dominant

characteristic of the standards of

justice
employed — in
principle
nothing more than the subjective
'"This I will, and thus I order."
That practice should be ended;
and it should not be permitted to

not to own, business;
ownership and operation of

business

government

difficult

and

create

are

the forces which usually
penalties for inefficiency in
management and in service prac¬
tically cease to operate; and so¬
ciety suffers as a consequence.
There are limits beyond which
cooperative activities through the
agency of government bring more
disadvantages
than
advantages;
and it is at this point that the gov¬

payers;

exact

should

ernment

to act for the

people
operative agent.
A

very

large

activities

human

efforts

its

cease

their co¬

proportion
can,

with great

advantage to all, be left to private
arrangements in which people are
free to
enter
into contract;
to
exercise

their

ingenuity

pro¬

duction, invention, and discovery;
to pursue their pleasure in music,
art, literature, entertainment, and
recreation; to choose their friends
and associates through the organ¬

ization of clubs, fraternities, part¬

similar organiza¬
organize for religious
enter
into
syna¬
any
provisions for purposes their churches,
courts of arbitration in the settle¬ gogues,
cathedrals,
and
taber¬
ment of labor disputes.
nacles; to pursue knowledge
A
good government will ex¬ through the establishment of edu¬
ercise only those powers granted cational institutions; to save by
savings and insurance
to it by the people being gov¬ creating
erned.
The State is the organic institutions; to engage in humani¬
tarian activities
by establishing
agent of society, created by that
society to promote its best inter¬ hospitals, fundations, and ellemosests.
Thus a government which is ynary institutions.
granted

usually in the
constitution, for the pur¬
pose of aiding society in attaining
ats aims, cannot step beyond the
scope of the authority granted it
by that society without ceasing to
form of

nerships,

good

government.

Briefly

stated,

a good government will be
constitutional government.
It
will neither exercise powers nor
a

engage in interferences with social

practices when such governmental
acts exceed the provisions of the

organic

law

according to which
that society has decided that it
expects
its
government
to
be
guided.

Government is not
a

A good government will under¬

end; it is

Its function is to

means.

serve

that

well

private individuals

can

better

associations.

regulations and the enforce¬

ment of these

regulations, which

political science, and inter¬

ogy,

national law.
It is the duty

unintelligent

A government becomes

particu¬

larly untrustworthy, and even ex¬
tremely dangerous, as an agent of
the people, when it not only sub¬
mits involved questions to the in¬
competent general public for a
vote on what the answers should

further and
appeals to the emotions of the
untutored people, or enters into a
deal with groups having large vot¬
ing strength, in an effort to obtain
but

goes

that

vote

even

maintain

will

the

party in power, even though this
be at the expense of the national
welfare.
When a government in¬
dulges in such practices, the in¬
tellectual

resources

country

utilized, the
methods
lead in too
many instances to the wrong an¬
swers
and policies, the govern¬
not

are

properly
employed

ment ceases to be a reliable

agent

people, and the prospects
the effective function¬

of the

Competent Advice
A

good

confronted with a wide variety of
questions. They may involve mat¬
ters falling into the provinces of
chemistry, physics, geology, me¬
chanical engineering, hydroelec¬
tric engineering, civil engineering,
naval and military affairs, eco¬
nomics, constitutional law, insur¬

and so on.
No government
nor is it pursuing the
course, when it
submits

wise,

proper

questions

chemistry

In the

exact

sci¬

govern¬

seriously impaired.
large proportion of the

before

questions

government

falls in the field of economics, it

naturally follows that the scien¬
tific economist should be of great

of England had provided a new
technical terminology with which
to encase these old, simple, unten¬

able, lay, depression, undercon¬
sumption-oversaving theories. This
jargon gave his followers, chiefly
those youngsters who as econo¬
mists converged upon Washington
in the 1930's, tools with which
they were able to create for them¬
selves an atmosphere of severe,
austered erudition — perhaps one
should describe it

as a new

varie¬

tiye. descriptions; and t appraisalsthe dominating feat
tures of many if not most of our

have become

seeking

and

supplying

movement

what the

welfare

removed

far

science of human

to teach.

seems

embracers

these

old,

disreputable, lay theories of busi¬
depressions offered them as
something new, although essen¬
tially all that was new in them
ness

was

terminology,

distinctive

the

provided chiefly by Keynes, and
a
related
orgy
in the use of
formulae

mathematical

thesis lying perhaps

some

in the field of

prove

chiefly

imagination or some

contention that available evidence
would

answer,

much

better

and

possibly refute.
Perhaps, as a
part of the new economic jargon
developed during the 1930's, men¬
tion should also be made of that

provided by the Semantic Guide,
used in connection with the hear¬

probably can¬
properly be regarded as in¬

not

dicative of

years.

increased

reliance

government upon
economists : during

our

scien¬
those

Rather, it seems to have

subjective for the objective
standards of science not only in

administrative and
in our statute
lawmaking. Many of the so-called
economists in the Federal Gov¬
ernment in recent years must ac¬
cept a large share of the responsi¬
bility for
situation.,
,
The government, the country,

the

fields

law but also

case

Economics have

and the science of

immeasurable harm in
recent years from this apparently
unprecedented moral, ethical, and
scientific slump in the field of
Economics.
It should not be sur¬
suffered

prising,

consequence,;:

that

layman who
chooses to write on an economic
subject seems to have no hesi¬
tation in regarding himself as an
economist.
It is not his training,
experience, and
knowledge of
economic facts and principles and
of the requisites of science that
determine whether he should offer
himself as an economist; it - is,
rather, the nature of the subject
with which he chooses to deal.
Emotion, wishful thinking, and
unsupportable assertions become
for such people quite satisfactory
substitutes for generalizations de¬
rived scientifically from adequate
practically

any

evidence.

Many find comfort in the assur¬
of William Cullen Bryant
that "Truth crushed to earth shall
ance

again." Sometimes it

requires

long time to produce the truth
a convincing manner, particu¬

larly when it runs counter
ular political movements.

to pop¬
Proba¬

bly no one could predict with ac¬
curacy just how long it may re¬

quire to make clear to a

sufficient

what the essen¬
tial facts and principles are re¬
garding the economic maturityunderconsumption - oversaving Keynesian-Socialist and closelyrelated
theories that have,
as
number of people

pestilential visi¬
this country in

something like a
tation,

afflicted

recent years.

Fortunately

economists

' some

unqualified loyalty. to the
methods of science are putting out
evidence that should reveal the
with

(

unscientific nature of these
unfortunate doctrines.

ample, a
Economic

recent

most

As an ex¬

study

Research

entitled
and

of the Temporary

Economic Associa¬

the American

tion's

officers,

view, and its annual

convention

programs, and to a large propor¬
tion of our college and even high

school textbooks in

Economics.
of

The virtual alliance

dominating

porarily

and

For

tem¬

pursues

conflicting

the
objective
measurement and

instance,

standards

for

appraisal which the methods of
science are supposed to yield have
steadily dwindled in textbooks on
Economics until, in some of them,
such
scientific
standards have
nviofidollTr

Schumpeter's analysis.

/UcoYYnPQT'prJ

SuhiftP-

its quarterly Re¬

principles, would seem
The
unprecedented influx of to constitute a serious blow to the
field of science.
The mischief in¬
many people calling themselves
economists (some of whom were volved appears to be far reaching.

the last dozen years

similar substitution

ship with the
of the

the
National Keynesian Thinking of Our Times,
Economic Committee.
It was em¬ by Dr. Arthur F. Burns of the Na¬
ployed to disarm those who could tional Bureau of Economic Re¬
be confused by the use of a new
search, should have a salutary in¬
terminology or a familiar termin¬ fluence if enough people read it.
All economists, who really wish to
ology used in new ways and who
might otherwise have recognized be scientists rather than parroting
and challenged the theories being followers of a political fad, im¬
propounded.
properly wearing the cloak of
Through the use of these de¬ scientific Economics, should ob¬
tain a valuable lesson from Pro¬
vices, among other things, these
Schumpeter's
article on
Kenesian economists were able to fessor
"John Maynard Keynes" in trie
exercise a dominating influence,
American Economic Review
qf
in so far as economists were in¬
volved, in directing the policies September 1946, unless they can
of the Federal Government.
This be misled by the extraordinary
dominance was also extended to politeness which characterizes Dr.

ings

economic

genuine scientific economists) into
our
Federal Government during

nomics has an

vocates

Pseudo-Economists

supposed to be

rise

from

field of what
scientific Eco¬
intimate relation¬

This trend in the
is

the guiding "scientists"
in what was in nature a popular

political

standard works in

recent so-called
Economics. '*■*?.

ty of academic ostentation—and to
appear as

faction of
the
proper
answers.
But this what is supposed to be a scientific
would be true only if he is a body with a political party that
thorough-going and experienced happens to be in power, particu¬
larly when the party in power ad¬
scientist.
value

tific

fields of the

representative

are

Since

government will seek
competent
advice
on
intricate
matters.
Every
government
is

portion of the people has no clear
understanding.

Keynes Influence
The late John Maynard Keynes

These

government to submit all such
questions to the best trained and
most reputable scientific people
at its disposal, and then to take
appropriate steps to inform the
general public regarding those
matters of which a very large pro¬

ing
Seek

mists.

visers

ment

Should

the

activities

in fact be nothing but de¬
of, and agitators for, the
policies which they think will
help the government, of which
they are a part or with which they
are
in sympathy, to remain in
power.
The same is true of im¬
portant and really intricate mat¬
ters in constitutional law, sociol¬
may

society which creates it.

A fundamental purpose of govern¬
ment is to provide society with

performed

questions to a group who may call
themselves
economists but who

Government

those
who are not competent che lists,
or engineering questions to others
than competent engineers, or eco¬
nomic
questions to other than
competent and scientific econo¬

take

nomic principles.
Consequently
governments, unless they are care¬
ful and wise, often arrive at their
answers to, and policies regarding,
economic questions of major im¬
portance, not by consulting the
most
competent
and
objective
economists, but by arranging for
the general public to vote upon
the issues or by submitting the

of insuring

the

ance,

Government Should not Compete
With Private Enterprise

and

tions;

powers,

ences,

involved, objective standards of agent, it has not been successful.

justice

763

THE COMMERCIAL & FINANCIAL CHRONICLE

Until

the

basic

what constitutes a

'
1

criteria as, $0
good social ojr

ganization and a good government^
in relation to that organization are
clearly understood and generally
accepted by the majority of goyernment officials, it becomes ex¬
tremely difficult to enter upon^a
profitable examination of whether
this or that activity should be
undertaken by private enterprise
or by government, or whether cer¬
tain regulatory devices of govern¬
ment are wise or unwise. Further¬
more, even

with accepted criteria

us, there appear to be a
considerable number of problems

before

regarding which their closest stu¬
dents find it difficult, because of
inadequate evidence, to state with
a high degree of assurance what
the best or proper answer is. It is
/Prmtirmprl

nn?P

7641

(THE COMMERCIAL & FINANCIAL CHRONICLE
to pause today to consider
possibility that the "Reaction¬
ary" may be reacting against cor¬
ruption, dishonesty, and stupidity.
We prefer to read our labels and
run rather than to distinguish be¬
tween poorly-considered emotions
and careful thinking.
As a consequence of the wide¬
spread thoughtless reliance upon
labels,
the
word
"liberal" has
seem

The Good Economy and the Science
Of Economics
(Continued from page 763)
for these

that the several

reasons

large issues now confronting this
country are passed over here in
deference

some

basic

which

it would

examination

principles

against

that

these

problems should be viewed

as we

seem

examine them, one after another.
Laws do not Solve Economic

drift

our

from these
social organ¬
good type of govern¬
a

widespread

away

proper

pessimism

fear

and

regarding the future; and the con¬
sequent development of a great
weight which for the last dozen
or

has had the ap¬
bearing down more

years,

pearance

heavily upon us each
The question arises
in

Problems

criteria of

of freedom in many directions; a

the

end

year.

to wheth¬

this

piling of law
upon
law, combined
with the
deluge of administrative rulings,
may not destroy much or all that

ization, a
ment, and a good economy—as¬
suming the soundness of these cri¬
teria— another phenomenon has
become conspicuous: It is the re¬
liance of our people upon laws—
not law, but laws—to solve their
problems, whether business or

is worthwhile and healthy in our
economic, social and political life

otherwise.

stitutes

When difficulties

reaction

arise, the first
people, in general,

There
laws

and

not

soon

this

reverse

ings

which

tribute to

not clearly con¬
well-being as indi¬

cated in the criteria of what
a

con¬

good government and

with

become strikingly true of the Fed¬
eral Government.
At some ses¬

sions of Congress a thousand or
ihore laws are passed.
The accu¬

Connected

misleading,

amazing commentaries

modern
in

the

marks

are

ous

derstood by a large proportion of
our

people, presents a problem for
psychologist.
We are
being swamped with laws; we

the social

have

many on our statute books

(to say nothing of administrative

rulings)
what

pretense of reading
know when we

obeying

and yet there appears to be
sistent clamor for more.

them,
a

per¬

We have been
living in a period
of frenzied
legislation, particular¬
ly .legislation by Preamble in
which
to

supposedly laudable

pur¬

set forth at great

are

length
k gullible

iSin Jhe stfpjJdft of

public, the vague notion of guperstitution being thfit if
only We can
pass a law—its economic
sound¬
ness

they

insidi¬

social disease which is slowly

undermining our general social
lealth and well-being and point¬
ing toward some form of social
retrogression.
They clearly indi¬
cate

increasing amount of

co¬

ercion, much of which undoubt¬

edly of

often

the

vague

most

part by

Socialists, Communists, advocates
planning,

an undesirable sort.

with its increased coercion of the

individual, and into

social retrogression.
The battle in this

country to¬

stood^ generally.

under¬

stable

income.

level of

living in the long run, as
against a short run, and which im¬
pair, rather than enlarge, the free¬
dom of the

individual,

gressive in nature.

Among

these

reasons

may be an undermined
confidence in the virtues of com*
petition and
self-reliance, and a

lack^ of understanding

and

per¬

spective regarding the unwise acts

of governments in

economic
ments.

be,

and

are retro¬

Most unfortu¬

Stable Wages Benefit

Employers,

Consumers

Community.
worker

velops

The

Whatever the

seem

nation

ticularly

law

maladjust¬
reason

have

may

become

worshipers—par¬

laws

and

pronounced.

are

the

de¬

feeling of security and
can plan ahead for
buying a home
and educating his children. In the
a

worker's

Shoe

Company,
earnings

annual

the
are

higher than for the average shoe
worker, even though the wage
rate per hour is lower. The wage
assurance plan has brought other
benefits to the employee. It taught
the workers the difficulty of guar¬

anteeing wages an<Lgave them an
understanding of the economic
fluctuations in

cause

dressed up with
persuasive and,
sometimes, appar¬

coercion and

often

production

requires less reserve
plant capacity and less
overhead
expense.
Overtime
penalty and unemployment insur¬
and

idle

ance can

be reduced. Workers

are

fear that the

themselves

call

Stable

operation

nomical.

ently dishonest, Preambles which
have no legal
significance what¬
ever—a fact

general

regarding which the

public

seems

quite

un¬

aware.
same

time, these laws
slowly bending, if not break¬
ing, our backs. They have
brought
upon us greater
costs; destructive
taxation; an unprecedented and

are

mounting public debt;
ernmental

ment;

toward

more gov¬

supervision;

bureaucracy;

trend

growth

pronounced

personal

govern

development of class

con¬

sciousness, class strife, and class
hatred; a startling spread of demagoguery in politics; a serious de¬
cline
o;

objective statesmanship,

insidious attack
upon the vir¬
tues of hard
work, thrift, and self-

reliance;

conspicuous disregard

for economic facts
and
a

growing

has

been

associated

with

that long, painful
struggle
humanity to free itself from
regimentation, coercion, and au¬
A

great number of people to¬
day—in the United States as well

principles;
and disturbing com¬

plexity in life, and business; a-loss

in Europe—have fallen under

the spell of words.

eco¬

Label

Labor

becomes

Production

per

efficient.

man

rises. Labor

As a result, a
experienced labor
supply is available.
Therefore,
spoilage of material and damage

trained

and

machinery by

green

hands

diminished.
Where annual wage plans have
been
operating for some time,
labor

unrest

Procter

diminishes,

The

Gamble plan of wage
stabilization
has
produced
un¬

doubted benefits. According to its
President, "Good labor relations
result. Procter & Gamble Com¬

thing

"progressive"

and

pany has not had a real strike in
60 years." Imagine the

people in general will follow, ad¬
vocate, or pursue it as though

nancial and social, if such a condi¬
tion became nationwide.

hypnotized.

Label
or

a thing "con¬
"reactionary," and

they will mark it down
bad.

once

Such

gullibility and faith
are a
striking commen¬
the degree of our intelli¬

saving, fi¬

Workers

prefer

regular lower
irregular higher
wage rates, according to two sur¬
veys. An annual stabilized wage
wage

rates

in labels

makes labor

tary

conciliatory on vital issues such
as
wage increases, reduction of

gence.

People in general do not stop to
ask the

self-styled "Liberal" what
it is that he is liberal about. Often
it seems to center
chiefly in dis¬

tributing

other

people's

money

among himself and

fpiends. The
character of the "Progressive" is
rarely defined. It
may
mean
merely movement, or movement
in

good

Conservative

bad direction.
is

rarely

The

asked

what it is that he wishes to con¬
serve.
There
is
little
concern

about the

economic

the

for political

democracy;

for

government

operate

standards
been

and

that

accordance

and

here

possibility that he

may

wish to conserve the
very things
that contribute most to the
gen¬
eral welfare.; Nor do

many

people

abandoned

were

only
prolonged

years.

decline in business

two
serious

and

break any

can

Every Successful Plan Involves
Limitations.
cover

Guaranteed

after

one

plan.

goodness which

presented

plans

goods

with

briefly and inadequately.

The

guarantee

for

may

definitely limited number

fixed percentage;

limited

specified

be valid
either a

may

period,
of

number

weeks

certain portion of the year. Or the

guarantee may apply to a spe¬
cified wage per year or to a cer-;

tain
percentage
of
the
basic
hourly rate. Some plans become
Federal, State and Local govern¬ invalid in emergencies like fire

What

reasonable and

hours, introduction of labor-sav¬
ing machinery, scientific manage¬
ment, jurisdictional disputes, in¬
terference with the management,
bonuses and incentives to increase

output. Labor becomes resource¬
ful and develops initiative.

Benefits

accrue

the History

also to the

com¬

munity

enjoy such benefits. In

Stabil¬

the

manufacturing
only 2/10ths of 1%.

industries,

feasible in companies mak¬
ing
and
distributing consumer
goods because the demand is con¬
more

stant. The above government sur¬

showed that about 31% of the
plans were in retail trade, 18%
vey

wholesale

trade

and

20%

absent.
The

Gamble

Com¬

oldest and most successful. But it
is

flexible.

very

limited

the

The

plan

permanent

lower-paid

jobs.

Further,

reserves

both

reon

the

right to discharge workers and to
the guarantee to 75% or
36 weeks gross.
"The Company

the

Are

Difficulties

Guaranteeing Annual

private

enterprise,
the

assumes

man

loss

business¬

the

risk

and either

takes

a profit. The
against a crop

insure

can

Wages?

failure.

The

against

unemployment.

worker

insure

can

the

But

businessman cannot insure against

bankruptcy. Under private enter¬
prise, he must "hold the bag.'*
Yet, workers are now demanding
of

him

guarantees for
year's pay,
not

full

almost

some

minimum level of annual income,
but at the peak wage rates of

But the

basis

insur¬

and stabilization is that the

ance

beneficiary foregoes present bene*
fit to provide against future risks*
What

will

union

leaders

now

forego?
VII.
Some

Compromise

Must

De¬

velop.

Instability of employment
repercussions, not only op
the workers' families, bdt also Oft
the industry. Furthermore, it agr
gravates social and political un¬

has evil

rest.

led the world

has

America

mechanical

invention and

re¬

at its sole

sulting rise in workers' wages and
living standards to the highest in
the world. Can we be equally in*

this

ventive in

must

and

does

qualified

the

reserve

right,

un¬

exercised

discretion, to withdraw
guarantee at any of its fac¬
tories, or to terminate or to mod¬
ify this guarantee at arty time."
This guarantee depends not on a
contract, but on good faith. How¬
ever, the Company has kept the
faith and the employees are con¬
tended and cooperative.
The Hormel Company is a meat

packer.
antee

Its plan

wages,

ployment
nual

does not guar¬
stabilizes em¬

per year.

labor

ment

but

cost

The total an¬
each depart¬

estimated

and

divided

social mechanism.

our

The unions have

ity. corresponding

flexible

responsibil¬
their de¬

leaders

union

The

mands.

abandon wishful

must

thinking and in*

demands and be realistic

Wage- stabilization
flexible terms of em¬
ployment. The program requires
concessions on all sides. Any plan
for employment stabilization em¬
phasizes the obviously mutual in¬
terest of employer and employee*

in ^practice.
presupposes

The unions must choose. If the
serious about stabiliz¬

equal weekly portions.
Though the hours vary from week

unions

responsibility

into

the pay remains the
weekly pay is an ad¬
vance
against work to be done.
The
plan allows for balancing
week,

The

same.

undertime

against overtime. But
penalty rate for over¬
time. The hourly wage rate is not
guaranteed. The labor force is

there is

flexible
ferred

and

from

men
one

be trans¬
department to

may

The Nunn-Bush

ufactures

shoes.

Company man¬
plan guar¬

Its

antees 52 variable pay checks. The
amount of the pay check depends
upon

put

the^value of the shoes sold.

specified

into

Fund"

end

are

ing employment, will they accept

corresponding to
If they insist Oil
maintaining the highest hourly
rate in history and the resulting
higher "break even" point in op*
erations, they must also accept in¬
evitably earlier
unemployment.
Or are they willing to accept a
lower rate per hour to obtain
their demands?

fuller

employment

per year as
warkers ' have? Will

Nunn-Bush

another.

of his share of this total. At

.stabilization.

the

reduce

ployee may

wage

em¬

guarantees only employment not
wage rates. The company reserves
the right to transfer workers to

bilized wages stabilized the sales

duced the dole and the burden

VI.
What

ployees, who have been on the
payroll for 2 years or more. It

of stores in factory towns.

thermore,

"serious decline of business."

history.

Procter

makes soap. Its plan is the

pany

wholesale value

Fur¬

processing. Heavy industries
steel making were notably

and to the government.
good-will has resulted
in
several
companies that de¬
veloped annual wage plans. Sta¬
Consumer

bank¬

upon

sale of the business
other
cases,
upon
a

suffers

wage stabilization

strikes,

upon

farmer

Obviously,

food

and,

survey

covering 8 million workers, only
42,500, or lk%, were covered and
in

floods

ruptcy,

ized Employment and Guaranteed
Annual Wages? A government re¬
port shows how few employees

;' At the

philosophy
tyrants,

characterized

servative"

the

experience

controlled;

management

Workers

dictators,
and
coercionists
throughout human history.
True

"liberal"

com¬

consumers'

and

The

When

job may disappear.
Output is increased. Labor is mortfe
ready to accept new machinery
and technological improvements.

spirit

cent years and

personality; for free and fair

only
industries.
Yet most wage guarantee plans
failed. The number of plans that
remained in operation for 20 years
or more has been insignificant. No
plan in effect in 1929 to guarantee
wages or assume employment has
survived, except for the Procter &
Gamble Company and the Colum¬
bia Conserve Company. Some of
Plans have been successful

petition, with monopoly watched

Workers,

benefits

retrogression, in re¬
today, is frequently
called UberdllSffti ttttd the advo¬
cates of this coercion and authori¬

spreading

contributing to thoritarianism.

social

of the sacredness of the individual

IV.

less inclined to restrict output for

liberalism

wider recognition

ment.

this

has

individual

scope of

III.

employer
benefits
also.
temporary peak loads are
amply clear that those things
Stable
which do not raise the general eliminated, costs decline.
Time and experience have made

that

possible, the

freedom; for

least two years

(Continued from page 736)
terested in the benefits of

turnover declines.

statutes

well-

Wage Practicable in Steel?

styled, but false, Liberals is that
the individual must be regimented
for his own sake—a

Is CIO Demand for

I*9ne may advance several plauffigg reasons for this remarkable
iaw
nor

social

with

service.

Again, the guarantee

cooperate in
solving plant production problems.

virtues

and

books. The plan is limited to em-*

of workers

But this return to coer¬
cion is the antithesis of
liberalism;
it is illiberalism and
retrogression.
The
philosophy of these self-

the

economic

our

being by protecting and widening,

have

Liberals.

that are neither
read

those, on the other hand, who are
fighting for an improvement in

period of

being not a paramount
consideration1— our problem
or
problems will be solved and we
shall be saved from our
troubles.

ing to head this nation in the di¬

will

government,

try¬

are

rection of social retrogression and

constitutional

autocratic

business.

tarianism

toward

forces which

False Liberalism

nately,

government coercion and

who are
trying to lead the people of the
United States back along the path

Nunn-Bush

to be that

seems

this

;

them; we do not
are
violating or

poses

liberalism

indicative, rather, of

that we do not know
they are; the general public

makes

The fact

efficacy of lawmaking, especially
in the value of thousands of stat¬
utes that are neither read nor un¬

used

of so-called government
and a variety of others

our

country.

Our present faith

for

with

outright dishonest,
problems, is a wide¬
spread notion that both develop¬
ments are symptomatic of prog¬
ress.
Often they are pointed to
to solve

mulation of statutes,
particularly
during recent years, is one of the

times.

Today

good economy.

able reliance upon statutes, many
with Preambles that are laudable,

meaning.
word

ployees

pass more

law should be

dissociated from its historic

been

day is between those, on the one
hand, who are clamoring for more

our

respect to
things.
This has

appears

increasing tendency to
and

(a)
our
un¬
fortunate, if not dangerous, drift
away from the principles of good
government and (b) our remark¬

to be that

seems

passed.

trend and embark upon a program
of repeal of all statutes and rul¬

the

Thursday, February 6, 1947

percentage
of

shoes

the

sold

Production
Each em¬
draw weekly l/52nd
"Share

pay

wages.

the year,

the union's

the unions' rules permit

fer

lower

men

wage

the trans¬
jobs at a
per hour? Or
workers being

other

rate

will they insist on
immobilized at their machines at
the

high

basic

forced to take
Will

the

minate the

involved

unions

rate

and

thus

cut to the dole?

tolerate

ter¬

jurisdictional disputes

such

shifts?

the

work week is guaranteed, will the

ac¬

unionfe Jpermit offsetting

countants examine the Company's

"under¬

time" ¥&ainst "overtime" without

%4r
W-'i

jVoluine 165

Number 4566

■

THE

penalty? Will the unions agree not
strike during the life of the

Will they eliminate the
restrictions
of
cratt

contract?
artificial

unions

permit

shifting

from job to job? Will the unions
recognize that the worker's wage
rate per hour can come only out
of

his

productivity?

unions,

Will

therefore,

'featherbed

rules"

the

suspend
"make

by taking employee's straight-time
average hourly rate of earnings
and multiplying it by 40 hours.
If the employee works for less
than 40 hours a week, he is to be
given his regular weekly wage
nevertheless.

Continuous high production at a
loss must bankrupt the employer.
then
cease.
Not only
the

need

The

union

demanded

work

is available

to make

from

made flexible

was

the

not

volume

Work

fairly

care

Wage rates

guar¬

Instead of

that

dertaken

Wages have the first claim on the
of
sales. The
risk-taker,
or employer,
has the last claim,
dollar

anything is left:.
employment
and •

To stabilize
wages,
costs
must become flexible. The selling
price is now the only flexible
element in our economy. It is the
competitor who fixes the selling
price. But wages are the largest
item of cost. When wages become
rigid, deficits result. Then follows
unemployment. To guarantee an¬
nual wages,
hourly wage rates

and

all

the

not

accept the

What

further

production

proportion
so

would

to avoid

ployment

the

cost

decline

selling prices
deficit, high em¬

could

viously,

the

Ob¬

continue.

even

the

workers

owned

the plant, they could not
themselves a
wage
which

pay

would

end

would

deficit.

They

merely

be owing them¬
A wage guarantee
balance between wages,

selves

money.

requires a
selling prices and profits. Some¬
thing must yield. If wages are
rigid, employment yields. But if
employment is to be constant,
wage rates must

yield. The Nunnstabilization plan of

Bush

wage
"Share the production

based

wages"
flexibility of costs.

must

only

flexible

costs, not
but
also

wages,

flexible charges for maintenance,
depreciation
and
taxes.
Thus,
labor would not have to make

great
concessions
in
wages
if
other costs were also flexible. The

Treasury
will
have
to
permit
higher charges for depreciation
and maintenance during
booms.
Therefore, boom profits subject to
tax

will

lower.

This

practice

will

permit, during depressions,
lower charges for maintenance,
depreciation and taxes so as to re¬
quire

smaller

needed

cuts

avoid deficits

wages
and

What

deficits.

the

Stabilization

Employment? It must be based on
experiment and gradual develop¬
ment. Every successful plan was
preceded by careful study and its
introduction

maximum

of weeks is

to be

now

required

mean?

Steel

number

ated

annual

terms.

1945,

the

several

Much

summer

Company

This is

small

only

employees.

having

The

Several

the

strike

the

safety

clauses

the

with 20

ment

workers

assured

are

justifiable

the

contract

with

large

made

were

sales

the

policy after

What
for

criteria

years

of study.

"The industry should not be com¬
plex in organization, like the rail¬
road, automobile and building in¬

The demand for the
products must be relatively stable
.

periods of time. There must
be direct and sustained consumer
demand.
."
over

IX.

Industry Faces Spe¬
cial
Difficulties
in
Stabilizing
Employment. What did the CIO
forecast

1944 steel

ing
Each

its

wage

provisions

demand?
case,
were

the

the follow¬

specified.

employee in the companies

concerned

shall

guaranteed

minimum weekly
wage for each
week during the life of the
con¬
tract. The wage shall be
computed

Demand

fluctuates

Important customers of

fluctuate

even

average of steel

As the government report

com¬

least

from

two

stages

re¬

consumer

direct

de¬

mand, has had tremendous varia¬
tions."

There

possibility

States

other guarantee,

limits

are

the

guarantee

by a
The widely fluc¬

tween

plants

and

even

That is the place to
R. Deupree, President
Gamble

find

with

been suc¬
stabilization,

wage

to operate
evenly and add to
plants or build new
as

Com¬

which has long

way

consumption

"If

can

our

factories

stability at our high
living and under full

standard of

freedom if there will be coopera¬

capital
face

goods

Yet the

the

policy, any
industry is powerless

difficulties

superable.

(ibid):
been

industries.

government

company or
to stabilize.

in¬

not

are

As Philip Murray said
because it has not

Ogden, Wechsler & Gc.
Formed in New York

"But

proof that the

dependable

yearly

income for wage earners and their
families is insoluble."
He did not

Announcement

solved

problem

formation

made

the

Ogden, Wechsler fit.
with offices at 39 Broadway,

Co.

say a guaranteed annual wage.

XIII.
An

Experimental

Steel

present

sistence.

the

But

unions

Approach

union

spokes¬

demands, with in
they make no effort

help work out

take

peace

procedure. Let

propose

workable

income

statements

industry for the twen¬
1919 to 1938.

years,

demand

for

Let

ClO-type

fixed

annual

our

present

rises,

evenly,
will
the
steel
we

it
possible for
producer to operate more evenly."

official of

stated:
j

Charles D.

wage guarantee can be met with¬

Ogden

Arnold

J. Wechsle»*

out

bankrupting the employers
and thus ending employment. Let
them show under what conditions

program

stable wages

and

employment
can
develop.
Certainly, the steel industrialists
would not oppose a workable plan.

They do not

say

that stabilization

should not be sought.

They

say,

program should be

adopted, but
adopted.
Are the
willing to try out a plan
temporary and experimental
it

New York

Partners
and

with

adequate
"savings'
experience is ac¬
quired to perfect it?
until

We must have

practical not

doctrinaire approach.

Ogden

Wechsler.

Both

formerly partners in Goldwater,
Frank
&
Ogden, from
which they withdrew as of Jan. 31.

Schulz Heads Dept.
At M. B. Vick & Co.
CHICAGO, ILL.—M. B. Vick
Company, 120 South La Sail©

apply to all alike. Certainly,
the original CIO formula of 1944
to guarantee 52 weeks of 40 hours
at the peak wage rates of history
will not work anywhere. We must
experiment toward the goal. This
requires time, trial and study.
Various types of wage and em¬
ployment stabilization measures
could be attempted.
Out of the
varieties of methods may emerge

suit

different

and

Street,

indus¬

tries.

announces

Schulz
them

that

Fred

associated

now

with

Manager of our Municipal
Buying Department.

No formula

will

patterns

can

clauses"

Charles

are

Arnold

were

unions
on

City to conduct a busi¬
investment
securities.

ness

mere¬

"Show us how can it be
carried out."
Similarly, the union
should show not merely why such
ly

Mr. Schulz has been

business

vestment

in the in¬

for

years,

starting with the old Illinois Mer¬
chants

Trust

Company, in the
buying department and continu¬
ing after its merger with the
Continental Illinois Company.

has

recently been connected with
Blair & Co., Inc., Chicago office.
Anthony Trenning will be asso¬
ciated with

the firm

as Manager
Buying Department

of the Illinois

and

James

O'Donohue

the

Sales Department.

XIV.

Stabilization

Wages

Fits

With the American Way

steel company

"Stabilization

must

start

with the customers of the

steel

between'industry.

bilization
ment

of Life.

The steel industry itself

does

barbarism.

from

and

wages

not

concern

W. D. Sullivan Forms

Sta¬

merely in production, but in its
democratic
ideals, both in war
create for the year 2000?

Can

private

enterprise
of

the

ment?

the

boldest

human

created

States

builders.

Co.

the

United

inventors

America

ele¬

and

pioneered

William
had

wide

senior

Sullivan, who 'has I

experience in the U. S.

Government

securities

partner of

the

field,

U. S.

with

Army Anti-Aircraft Unit

World

Captain.

firm.

new

Mr. Sullivan served 4V2 years

private

pioneer also in social inven¬

production.

announced.

can

Sullivan

Street, New York
specialize
in
United
securities, it ia

mechanics

Broad

City,

the

firm

has been formed with offices

States Government

What kind of America

shall

considerate

The

steel

United States leads the world not

and peace.

New Inv. Firm in N. Y.

employ¬
the

industry alone.
It is part of our
social
and
political
goal.
The

ones

make

interchange of
departments, be-

achieve

tion and concessions by all inter¬
ests involved.

be stabil¬

of the total

confirmed this view.

Again, within the factory, labor
policies were designed for stabil¬
was

can

stabilizing the con¬
goods industries which

Procter

cessful

the incentive.

There

of guar¬
employment.

the

pany,

were devised to
increase production in dull times.
Sales campaigns were set
up in
slack periods with
special dis¬

ity.

in the worldi, stable

Security and stability distinguish

were

Sales stimulants

workers between

en¬

civilization

begin.

have not been organized

adopted by individual companies
departments at various times.

stabilized.

program

industry

production.

counts

stabilized

amount to about 85%

vidual companies have taken
steps
in
this
direction.
True,
these

They

wages

steel

sumers'

employment and, for years, indi¬

wide.

labor's powers

centrated

for stabilization of production and

and

wages

fore, the first effort should bel con¬

industry appreciates the need

industry

ized only after its customers' pro¬
duction has been stabilized. There¬

Already in the Steel Indus¬
try and Could Be Extended. The

measures

yndertake

The

Wages

Exists

steel

must

Obviously, steel should not be the
first industry required by unions
anteeing

United

Corporation in the
depressions, 1921, 1932

production

XI.

Stabilization

the

Steel

Demand

com¬

(soap)

Company and the Columbia Con¬
serve (jam)
Company.

Partial

for

stabilizing
employment
heavy industry in general.

goods

figures

depres¬
None did, except

consumers'

discourage risk-taking,
production, and employment in

basis

cases

moved

Wildman agreement.
that the Wildman

1929-32.

the' highest

courage or

how

1938, present the difficulties

two

taxes,

hours, and

and

Steel

sell¬

three

The

to be found only in

last

sion

wages

profit.

all

the

doubtful

the

oloyment is possible only because
are
powerless*
The
State insists on a profit and: fixes-

the ! unions

policies

outstanding

fixed in the

drastic

American,

high material and spiritual price
for stability.
We should be able

stabilization

tuating

Soviet Russia regards

workers'
living standards and
American production methods as
the goal of its Five Year Plans.
But in Soviet Russia, high enw

of the business cycle., In this the
government is involved.
Federal

poration, for the two depressions
1937-38, met the terms

or any

element v

employment at an annual wage
Instability of the steel industry requires flexibility.
The Soviets*
is aggravated by forces outside have achieved stability of em¬
the
business.
Stabilization
of ployment but sacrificed workers?
wages and
employment in the standards of Hvihg and freedohtC
steel industry depends on control America will refuse to pay this

admits, "The demand for steel,
arising as it does from a wide va¬
riety of industries and in almost

1920-21 and

would survive

stabilize employ¬

them show whether the

steel company.

antee wages
ment.

ment, the United States Steel Cor¬

human

low enough to leave a
At that starvation level of
Shapes and wages, prevailing even in the best
lengths depend on the orders. Pro¬ years since the Soviet Revolution,
duction for inventory and
storage of 1917, stable employment is pos¬
is impossible.
Therefore, the steel sible. At the high wage rates per
industry cannot as readily guar¬ hour in the United States, by far

The

are

trades,

users.

like the United States Steel
Corporation?
Without any agree¬

are

government report states:

dustries.

as¬

pany

prerequisite
wage stabilization program?

As the

can

area

steel

ing

obligations under
compare

violently than the

treme demands.

panies, Procter & Gamble

changes
Company's

that the union does not in¬

sume

the

is not predictable.

use

basic

For

industry, like building
construction and freight car build¬

tend to adhere to its original ex¬

because

both

fundamental

the

year.

wide

success

plans

wage

over

activity.

stabilization.

In view of the union contract with

Wildman,

extended

violently.

the
some

weekly income for the entire

Gamble or Hormel can thus sta¬
bilize production, employment and
wages.
But most steel products
are
far from standard.
Future

the

annual

The nature of the steel
industry
does
not
readily lend itself to

week,

for

Procter &

ants

plans

With

flexible

companies manufacturing
ing consumers' goods."

de¬

law,

Pennsylvania

production

of the steel

their

weeks of unemploy¬

compensation of $20

under

periods,

21.

Let the union account

operations.

guarantee of wages for 30 weeks

and

are

program.

business

by employees who quit or
discharged.
Hours
of
un¬

ducted from the guarantee.
a

dull

men

guarantee concerning the
The guarantee is for¬

are

inventory is possible.

Necessary.

under

even

whether

company

guarantee,

quired,

in¬

applied

absenteeism

They

York, Harper, 1940, p. 122), "Ex¬
perience
to
date
raises
doubt

feited
are

order.

','1,

of production.

are

ized Labor and Production," New

strikers.

warranted

Do the Unions Begin

plan. Indeed, Mr.
Philip Murray, President of the
CIO, stated in his book, ("Organ¬

1,200-hour guarantee.

relieves

Why

wage assurance

years

are

goods

made

remain

325

(1200 hours),

Overtime

consumers'

chicken

canned

standard products. Future demand
is certain and constant.
Therefore,

industry has unique problems in
seeking to develop stabilization of
employment.
Difficulties would

more.

cluded.

workers but not

some

making

But

of the entire staff, cover¬

ing workers employed five
or

en¬

wage stabiliza¬
possible even in

not

and

tion and

•'•"

''"'"4

■

With the Steel Industry? The steel

company guaran¬

tees 30 weeks' work
for 70%

wages

XII.

of Nor-

ristown, Pennsylvania.
company

should

work on a less fluctuating
basis, as in the manufacture of
nails, wire, mesh, poultry netting
and fencing.

obtained

U.S.W.A.

Manufacturing

Experi¬
of

could

mod¬

very

the

preparation is re¬
in the plant and
among customers. The Procter &
Gamble plan is successful
only

years.

Steel

cooper¬

contract with the Wildman

new

industry do

Soap

On the other hand, some depart¬

guaranteed employment clause in
a

Some

has proven

ments

guaranteed

plan

wage

erate

the steel

machinery can give steady work
some employees as
watchmen,
repairmen, skilled key workers
and office help.
A guarantee is

One

CIO

actually

setting

would

In¬

With

The

Union

un¬

give

to all.

Made

Has

Company.

who

men

stabilization

possible to

Compromise

Workers'

heavy industry.
The makers of
steel, electrical equipment or farm

telligent

times

employment

tion

only with flex¬
ible wage rates and flexible num¬
ber of working hours.

Union

work

lower

stablization?

couraged.

guaranteed,

actual experience for a

Prerequisites of

for

demands

it will be possible

How

Are

Plan

do these

and

The union wishes maximum wage
rates even if the employer has

this

VIII.
What

repeats these union demands.

now

slack

can
on

ments

un¬

employment.

Any

does

other
at

otherwise be idle.

1947

against

Accounting points the way. If
employment is to be constant,
there

But it

employment

responsibility for the result. The
Wage and Policy Program

year.

repair of plants would be

weeks per

The

elements

hour,
week,

must be flexible.
If

rigid number

per

they

men,

wage rate. Extensive maintenance

rigid number of hours

wage rates per

made flexible.

were

avaliable

was

required even in Soviet enter¬
prise. Profits depend on wages.

are

rigid

equally between
Companies would

discharging

retained

were

whether the

and

must

orders.

to be dis¬

hiring new workers to take
of temporary peak loads.

employee does it. The union de¬

risk-taker

the

avoid

manded

but

work week

to conform to

incoming

all the workers.

be compensated for effort. Profits

worker

shared

was

tributed

weekly income at the
straight-time hourly rate for 40
hours regardless of whether the

is the last place where much can
be accomplished."
"V
? ;

idle, to

transferable

busy departments. The

train¬

were

so as

them

overtime. If an em¬
ployee works more than 40 hours
a week, he should
(apparently) be
paid the basic rate plus one-half.
antee

Jobs

time

companies. Employees
ed for several skills

be offset by

work" devices which restrict pro¬

ductivity?

Idle

•"■ '•■■

CQMlplRCIAL S .FINANCIAL CHRONICLE

War

and
'

II, enlisting as

rising

rank

' "

§tf

of
?

iSH-t

Thursday, February 6, 1947

[THE COMMERCIAL" & FINANCIAL CHRONICLE

766

home

the depreciation of

and

which the banks hold

some

80-odd

It is billions of federal paper, with the
selling at 20% or more discount "printing press' standing by to
converf them into cash. Without
question is unanswerable. Statis¬ possible simultaneously with last against the dollar in spite of all
(Continued from page 734)
official
pegging
measures
and the inflated portfolio of the Retics provide figures and may show year's $127 billion
spending on
or
downward
is
likely to lag
serve
System—$23 billions—and
strict foreign exchange restric¬
their
correlations, but it takes consumer goods, because the vast¬
somewhat, unless it had been ex¬
tions.
So much so, that for the without its readiness to buy more
"insight" to interpret them. Pres¬ ly inflated hoard of liquidity is
pected, in which case it may be
first time since the pound deval¬ paper outright or loan on more

Money < jid the

discounted in advance. Indeed, it

kept in mind that it is
not only the actual rise or de¬
cline of that volume that matters,
should be

expectation that it will

the

but

continue.

Volume

Money

Now, then, consider the current
situation.

best

The

measure

monetary volume is the monthly

figure, published by the Federal
Reserve

Board, of "total demand
adjusted and currency

deposits

outside banks.1 It has risen stead¬

ily from $29.6 billions in Decem¬
ber, 1937, to $106.3 billions by No¬
vember, 1945. In the following
month, it dipped suddenly and for
the first time in eight years, by
4 billions. It fell further to

"low"

$101.1 billions in March, 1946.
Since the figure is rising again
month by month; at the latest re¬
corded
date, last November, it
reached the new all-time high of
$109.5 billions.
The 12 months'
monetary increase should be more
than
$3
billions;
in
addition,
savings deposits increased by well
over $5 billions. A total monetary
expansion (actual and potential)
of

about

billions

has

taken

place.
Bank Loans and Prices

The increase of money-quanti¬
ty during 1946 has a great deal to
do with the expansion of bank
loans. True, in the first half of the
year, security loans declined in all
insured banks from $6.8 to $5.1
billions; but this was more than
offset, since commercial, mortgage
and other loans rose in

period by

the

same

2.7 billions.

Secnrity

new

by early September—when the
stqck market gave way sharply.
Since, security loans move down¬
ward, and the stock market re¬
mains "weak."
As

the increase in member banks' re¬

loans

(com¬

mercial,
rose

first
and

mortgage, etc.)
they
slowly but steadily in the
months of last year—

seven
so

did

commodity prices.
"jumped" in the crucial
months from August to Novem¬
Both

ber. And both slowed down to¬
ward the end of the year.

Briefly, there is

bonds held

by non-bank investors,
etc. On top of it all, large seg¬
ments of the financial community
disturbed

the suddenly
emerging prospect of a balanced
budget, implying the possibility
that the policy of pegged interest
rates might be abandoned.
The
result was cumulative liquidation
were

the

side, and reluctance of
institutional buyers on the other,
adding up to a fall of the most
popular issue, the 2V2S due 1972-67,
on

one

well

yield

under

from

102.

The

average

long-term taxables rose

2.08 in April to 2.27
1.

Dec.

unmistak¬

able parallel between the decline

of security
(especially
tations

loans

and

common

well

commodity

security

stock)

and

kets.

The "coincidence" of

tary

and

price

enough

thought. But

quo¬

between the rise

prices

loans

flowing into the commodity

mar¬

mone¬

developments

give

per se,

food

it is not

is
for

con¬

clusive. Which is the cause, and
which the effect? Did the
change
in loan
volume, or the

expecta¬

tion of such

change, bring about

the corresponding

markets,

change

or was it the

the

other way

around?

Raised in such broad
terms, the
t

have
or

around

1 Adjusted
demand
deposits—
total : demand
deposits
minus
•

Federal and bankers' balances and
items in process of collection.

this

was

securities

trimmed

been

there

one-third

process.

doubt,

"deflation"

intentional

at work,
especially by way of
debt-redemption procedures, and
by pressure exerted on specula¬

tive

holders
or

to
liquidate.
But
later, they had to li¬

quidate anyhow, and without the
pressure the process would have
been merely more orderly. Bond
premiums may not have declined
as

fast and

The

direct

much

role

of the

they did.
monetary

factor

was important only in this
temporary sense, as indicated by

the

fact

have
an

yields.)

requirements due to the
Treasury's use of War Loan ac¬
counts
to
redeem
outstanding
serve

sooned

business

over

For

peak.
Security
loans fell by almost 1.5 billions in
May, and by another 1.4 billions
a

sterling abroad.

(at par), "managed money" would
at the outset of the war,
London financial papers openly collapse like a house of cards. It
quickening pace.
So
discuss the necessity of a new de¬ is a house of paper, and more
purposes,
shall be discussed in long as this monetary set-up is
valuation (arguing that the dollar money must be "printed" not in
their relation to monetary factors:
maintained, and it could not be
should be devalued, too).
any relation
to sound economic
the markets (a) for riskless, and changed without violent financial
London is largely an inflation- growth, but in proportion to a
upheavals, U. S. 2V2S cannot fall
(b) for risk-investment.
market, different from growing demand
for
financing
below par; there is no reason on spirited
the other hand why the premium the Continentals only in degree. rising prices, international boon¬
U. S. and High-Grade Bonds
An
doggling,
internal
entirely different monetary
construction*
should rise much farther.
"Technical"
factors
last
year
psychology motivates the Ameri¬ consumer purchasing, etc.
(High-grade corporates follow, can market in stocks and credit
played a substantial role on the
We first inflated the monetaryof course, the lead of the gov- bonds.
markets for riskless investment, to
volume by selling bonds to the
ernments.
wit: the necessity to unload the
High-grade tax-ex¬
1. No prospect of changing in¬
banks; we now keep on inflating
billions
of
empts acted out of tune for a
government
bonds
terest rates
affect
our
rate
of it by monetizing the certificates
while, due to the expectation of
bought on credit by speculators
capitalizing dividends, one way or held by the banks (and others)1.
and dealers in the last drive, hav¬
forthcoming large issues and of the other.
The American public
The difference is that the amount
income tax reductions.
But the
ing pushed the premium to un¬
does not invest in long-term gov¬ of "primary" inflation depended
financial community grows in¬
precedented height; pressure by
on
the size of the deficit, while
ernments; and their yields could
the
authorities
to
hasten
that
creasingly
confident
that
$2 not be lowered
any further.
Mis¬ the current "secondary" inflation
billions or so could be absorbed
process,
such as by effectvely
givings about the possibility of is determined by the volume of
in the course of 1947, perhaps
raising the rediscount; the liqui¬
rising yields may have had some credit demand and the bankers'
600
millions
dation of $500 millions of bonds
by
the
banks,
of
risks—the
latter
depressing influence last summer, selection
without
held by social security agencies;
necessitating
higher but
they have been dispelled since.

reached

the pound

being monetized piecemeal—
uation
slowly
but surely—and
turned

ently, the two major open mar¬
kets, which control the flow and
allocation of funds for long-term

However, the speculative hold¬
the year as a whole, the net in¬ ings
have been gradually "di¬
crease in all loans of all banks is
gested";
insurance
companies
estimated at $5 billions (decrease could not
stay out of the market
of security loans at 3 billions). A
indefinitely; the large-scale re¬
more detailed picture is provided
demption of bonds reached its
by
weekly
reporting
member completion (unless a huge budg¬
banks in 101 cities, which account
etary surplus should arise, which
for the bulk of security loans (but is
most
improbable); and em¬
only for one-half of deposits). phatic assurances came from the
Their loans on securities started Reserve
Board, the Treasury, and
dropping at the end of 1945; by the President, that the policy of
late February, 1946, they had de¬ supporting the "yield pattern" at
clined fyy some $1.3 billions—and
par will be—as it must be—main¬
the security markets took their tained.
Accordingly, the market
first beating. Security loans re¬
recovered, and it might rise fur¬
covered to their previous high in ther.
May—and the stock market soon
Bank loans
some

Markets

that

been

spite

loans

bond

stiffening
continued

prices
lately
in

decline

U. S. bonds.

Risk

short, the foundation of

bond

market, and of

its

stiffening

mercial

Securities
our

low in¬

terest rates, is the gradual mone-

bull

short-term com¬
only disturb

rates

could

market

the

rise

very

substantial, but that is out of the
question.

minor

increase

short rates has occurred, and a
of the colossal national
little more "defrosting" may come
with the Reserve System with
mounting volume of com¬
acting as "residual buyer." More mercial
loans, as hinted by Mr.
or less loans on U. S. bonds are a
Sproul of the N. Y. Reserve Bank.
subsidiary element only; their de¬
Note,
however,
that
mortgage
cline last year
reflected rather rates declined
during '46 in spite
than caused the decline of the
of a rising volume of fresh mort¬
bond market.
gages).
The same holds a fortiori for
2. Stability of the dollar's goldtization

debt,

loans "on other securities."
these loans

were

flationary

True,

content

the

solid

under¬

rock

pressure

under actual de¬

lying all monetary considerations
since
May, of our market place.
Especially
when margin requirements were
so,
since budgetary balance has
raised to

100%.

But the

new

re¬

quirements were slow in taking
effect, and the margins were very
high to begin with. The loans at
stake amounted

at the peak

even

of the recent stock boom to a bare

$1.3 billions, scarcely 30% of all
security loans, compared to $8.9
billion brokers'

loans

the 1929

boom. They could not have played
decisive role either in the re¬

cent

decline

rise

the

stock

the

market.

But

became

the

definite

middle

reality,

last year.

since

Almost

simultaneously,
slip.

Could

stocks began to
it be that the coin¬

cidence is merely accidental? This
much is certain: that so far as the

Exchange is concerned, devalua¬
tion prospects are simply non-ex¬
istent.

The fact that dollar notes

actually depreciated abroad—
in
Bombay between $70 and $80 per
ounce,
with Zurich
lower and
Paris higher (for reasons to be

its

influence,
shown in the fear of higher in¬

billion and

half to mutual

sav¬

ings deposits, provides a substan¬
tial market for long-term bonds.
This growth of "cash" reserves,
that permits also a trickle of net
sales of

war

savings bonds, is only

scene?

bearish

the

American

In the first

billions in

our

budget, and prob¬
the next.
Com¬
expansion
pro¬
Inflation-conscious¬

ably higher in
mercial
gresses,
ness

credit

too.

permeating

the

country

knows

(a) that there is
and
(b)
that,
therefore, credit expansion should
come to
an end,
sooner or later,

deficit;

that is the

pessimistic

rational, if any, of the
outlook expressed in

the flood of recession-forecasts as
well

in the

stock market's be¬

havior.
4.

Even if no automatic "break"

should occur, the authorities could

bring it about artificially by credit

regulations and other deflationary

they did in 1937. Of
the trend is in the direc¬

measures, as
course,

tion

relaxing

on
restrictions;
likely to be reversed in
elections;
5. Inflation, per se, is no boon
to the stock market unless profits
are inflated, not just wages. Labor

and is not

the face of presidential

trouble

the crucial

was

issue last

it stays with us, but is great¬

year;

Anyhow, since last
net earnings
running at record highs.

ly moderated.

corporate

summer,
are

are

again,
the
indirect
impact
of
monetary
(and
fiscal)
policies, discussed on another occasion)—
actual or expected, is essential to
is either ignored or else is re¬
understand the market behavior.
garded as a nonsensical panic that
A brief comparison with the Lon¬
might be subdued by a "little"
don Stock Exchange may illus¬
sale of gold.
trate the point.
3. Budgetary
balance has the
The London Exchange has been
further consequence that internal
booming
for six and
one-half
inflationary expectations fade out.
years
almost
uninterruptedly, For all practical purposes, mone¬
trebling from the low of 1940. tary "inflation" is taken by all
(The first relapse of any size oc¬ and
sundry to mean money-print¬
curred recently.)
During these ing, open or concealed, by the
years, Britain's wealth has been
government. "Credit inflation" is
decimated, her standard of living an academic term, unknown to
greatly reduced, her international most businessmen.
It would be
position shaken to the roots. The
presumptuous to assume that the
unions in power nationalize large
rank and file should understand
segments of industry, put the rest the
meaning of debt-monetization;
in strait jackets, enforce the closed
it is "Greek" even to a majority
shop, keep up high taxes, and of professional economists.
No
raise social expenditures in the
more deficit—that is all they see
face of reduced labor productivity
and grasp; budget deficit is what
and increasing manpower short¬
they have learned as the source
age.
But the stock market keeps of
"inflation."
Money
created
up at a peak level. Why this con¬
("printed") to finance a national
trast

indirect

All

The

the dollar price of gold varies

deficit
stays in
circulation for
place, the Brit¬ good, unless it is taxed out (de¬
ish public holds consols in sub¬
flated), while credit extended by
terest rates, is most significant. It stantial
volumes,
and
unloads the banks is supposed to be liqui¬
should be kept in mind that the them (on institutional holders) as dated as soon as the goods are
the Exchequer cuts the yield of
bond
rate
structure
is
entirely
sold, the production of which it
artificial and might be changed new issues to 2V2%; the proceeds has financed. Budgetary deficits
fertilize the stock market.
Then, are man-made, arbitrary in size
by fiat—if and when the debt had
been reduced so that the rates too, socialistic policies are no un¬ and
duration, while credit expan¬
diluted
drawback:
the
govern¬ sion
may be raised without closing the
is
supposedly a "natural"
ment virtually guarantees profit
banks. And what makes this cheap
process that merely accompanies
margins, disciplines labor, outlaws
money policy tick, if not the huge
subsidizes fresh capital the growth of trade, and must
volume of liquid savings? Individ¬ strikes,
ual savings amounted in 1946 to equipment, forces industrial con¬ reach a natural end as soon as the
centration.
But these are minor
about $17 billions, half of the pre¬
credit base (gold reserve) tight¬
comparatively
vious year's level, and approach¬ considerations,
ens.
ing that of 1929. The incessant ac¬ speaking. Progressive inflation is
All
that
alleged
difference
at stake. Britain's budgetary def¬
cumulation of fresh savings alone,
icit in this fiscal year will be over between
unsound
governmental
adding an annual $4 billions to
£2.5 billion, equivalent to $7 or $8
life insurance funds, and another
money printing and "sound" bank
But

greatly reduced by governmental
guarantees. But the market place
is not aware of such "subtleties."

credit

expansion

books

which

part and parcel of

tion.

It has little

in the text¬

live.

banking tradi¬
applicability in

through mounting black markets this managed money situation in

Stock

Market

Paradox

Briefly, the stock market oper¬
ates—since May—on the dogmatic
assumption that the gold value of
the dollar will remain stable, and
on
the theory that the monetary
flood will

stop, or actually recede.
Inflation should stop automatically,
there

because
and

deficit,

deflation is either likely to

the "natural" followbe brought about by
monetary
controls.
Commodity
prices are too high already, or
soon will be;
sellers price them¬
develop
up,

may

selves "out of the markets," espe¬

of
of
hampered by politics.
Either by its own weight, or by
man-made deflation, the boom is
cially

unionized
which

under the pressure
labor, the control

supposed to bust.
These hypothetical assumptions,
based on past experience rather
than on rational analysis, explain
the market's "stagnation" in spite
of

Republican

victory,

high

net

on the labor front,
stabilized interest rates, prospec¬

profits,

lull

reduction,
unrelenting
expansion, and a fantastic
volume
of
pent-up demand at
home and abroad. But the "bang"
must come soon—or else the mar¬
tive

tax

credit

ket

change

may

its

mind

(up¬

ward).

Aetna Securities Moves
To Permanent Offices
Aetna

Corporation;

Securities

recently formed investment bank¬
ing firm, has now located its per¬
offices at 111 Broadway,

manent
New

York

City.

Officers

of the

firm, organized in December,
are

George

1946,

Krupnick,

Ira

President;

Searight,

Vice-Presi¬

dent and Secretary,

and James D.

Colyer, Vice-President and Treas¬
urer.

The

three

principals

were!

formerly officers of First Colony

Corporation.

'
■

':'fcrtSgsi

Hi;

Volume 165

Number 4566

ETHE COMMERCIAL ft FINANCIAL CHRONICLE
equipment until: 1945., That was
an unavoidable three-year delay-

Status oi Aviation
(Continued from page 739)
in numbers of
registered civil air¬
craft in 1945 aviation in this coun¬

try

was at about the same

place

the automobile in 1903 when
there were about
30,000 automo¬
biles.
At the end of 1946, the

was

the fact that the mileage

of scheduled airlines has gone up
while the accident rate has de¬

clined substantially, does not reg¬
ister. Such statistics do not make

number of registered aircraft had

headlines.

almost

ference

doubled;

number
In

the

number

and

had

automobiles

intervening

the

years

registered

hicles has risen to

the

1904.

motor ve¬
30 million;

over

The private automobile led in the

development of the expanded
of motor vehicles.

use

Because of the

time which

With frequent headlines abouhair
disasters
in
every
part of the

globe,

tween

Neither

dif¬

safety

record

scheduled

the

be¬

does

non-sched¬

and

uled

operations impress the
age man very much.
The

aftermath

aver¬

disillusion¬

ment has been

a decline in
airline,
patronage, and it is also reflected,
I understand, on the order books

nature of aviation, however, com¬

of manufacturers of

mercial airlines have

planes.

rally taken the lead
with private flying.

quite natu¬

Incidentally, it is interesting to
note also that travel

Scheduled airlines in
doubled the

total of

travel

busses
a

almost

1945 figure, reaching
six billion passen¬

air

But

passenger

still less than

total

1946

over

miles.

ger

domestic

rail

tenth

one

travel.

the

And

running the railroads

are

close second.

Regardless

of this impressive
however, those various
figures show not only how well
our
newest
major industry has
done but also that we have a long
way to go before aviation takes

record,

its proper place in the life of the
nation.

Over-Advertising

filling airlines
airplanes were

New

they

could

not

capacity.
order, but

delivered

Meanwhile, advertising, in¬
following the lead of tele¬
phone companies who advised the
public to be patient a while longer,

once.

stead of

Was

calling for

when

reservations

in 1946 the fatality

40%

was

less than for 1945.

facilities
ment

killed in

cident;

ac¬

distance equal to nearly

15,000 round trips across this con¬
tinent: by a single passenger. This
fact should be taken into consid¬
eration whenever

the

other

side

passengers

almost

were

impossible to get. Also, and this
is important, everyone in the bus¬

efforts to accelerate avi¬

our

factors

were

confusion

ation progress there are a number
Of things we can learn from the

But

record

cerned

the

development

other forms of transportation.
One of the first hurdles of the

industry was in ob¬
taining public acceptance of their
new, and annoying, product,
We
all

remember

while

the

accept
mention

for

the

hurdle

was

roads

the

took

quite

horses

automobile,—not

their

ficient

able

that

even

Another

owners.

the

provision of suf¬
services

and

automobile

en¬

that

the public had to accept the
automobile—understand
its val¬

its requirements and its lim¬

ues,

itations—before

would

support

has resulted

yet

limitations

and

The

public

the

commercial air op¬

our.

been

tion and

news

every

oversold

communica¬

dissemination have

man

conscious of the

airplane and its uses while the
magnitude of the military air ef¬
fort has
given an exaggerated
idea of the real status of aviation
for

commercial

use.

This

ties but which do not always make
it clear that the promises do not

apply

course, it

that

they

the

present

is always said

day.
or

implied

promises of things
to come in the new Air Age, but
the public, I feel, gained the im¬
pression that we were now in the
Air Age.
are

This has resulted in the
present
confusion
and
disillusionment.

After

having known or heard of
the progress during the war, and
after

being led to think in terms
of giant, all-weather
aircraft, with
deluxe ground facilities and

serv¬

ices, the beginner air passenger is
shocked to discover that we have
not

yet reached the forecast con¬
dition.
Others who do not ride,
but who are potential converts,
learn

the

some

Remains

must be

delays at terminals, of
flights, and particularly
accidents, and they lose

of their benevolent interest.

the

gotten

picture

to the public
well as the

over
as

opportunities, and a clearer un¬
derstanding of what is being done
what

and

the

move

the

should

done,

difficulties

re¬

realize

and

opportunities.

those

all

what

Of these fatalities 75

tional.

scheduled

were

airlines.

domestic

should be considered in

improve

and

services.

cilities

existing fa¬

develop

additional

airways, airport facilities, and new
methods of control.

safe

make

-possible

weather

efforts to

our

consistent

all-

operation

of private and
aircraft.

commercial

We must give concentrated at¬
tention to all the human and tech¬

nical factors which will accelerate
the
record
of
increased
safety
which has been made in
We

past

great
we

can

the

should

not

the

accomplishments—nor

afford

underestimate

job ahead.

buslines.

American

But

engineers

pio¬

neered

reducing accidents on
the railroads just as they have
pioneered in reducing accidents in
all other

phases of

ized civilization.

our

industrial¬

In that

connec¬

safety is the kind
of tough fight in which this coun¬
try excels.
The same principles
which
have brought success in
other fields will bring us success
in aviation.

I have full faith that

the record of air safety can, in the
not too distant future, equal the

fine

present

and

record

busses.

face is simply:

take,

rail¬

question

how long will

how

and

the

of
The

can

best

hurry it along.
the

needed

field

to improve

airway aids
safety, I want

point out that I am not posing
an
expert.
But I have flown
enough in military and commer¬

Among
is

the

things

extensive

that

are

have

proc

experimental

and

development program on new
devices with which I am sure
you

are

familiar.

Naturally, there

are

differences of opinion as to
the relative merits of the various
some

items, but the

cial

aircraft

common

objectives

all—increased safety and de
pendability of air travel—will, I
believe, lead us to success.

realize

what

Just as rapidly
possible, we must have equip¬
ment
installed
on
the
airways
which will enable us to operate
are

against.

regularly and safely at minimums
substantially below those in force
today.
We must devise a method
for expanding the capacity of the
airways between terminals as well
as

at the terminals.

ways

been done, or which
ess,

the past

minimize

the

or.

the

future,

commercial and governmental

reached

gradually

being

tests prove or disprove
the contentions.
as

The

conversion

the

radio

ranges to VHF, slowed by the war
and by delays in material deliv¬

eries,
the

should

entire

system

completed over
of airways by

the

We must continue

time

use

middle of 1949. If the rate of
riding in an
automobile over comparable dis¬ delivery of material speeds up this
tances—yet 'even the most timid date may be advanced. Of course,
installations for trunk air¬
of us think nothing of riding in the
car.
Overall, motor vehicles ways will be completed much
have
killed
yearly since
1927 earlier. The ILS (Glide path and
about 30,000 persons in various localizer Instrument Landing Sys¬
tem), now-in actual operation at
forms of highway accidents.
twice

over

must

most suit¬

are

commercial

present

re¬

traveled.. By that method, it may
be shown that commercial flying
on scheduled domestic airlines is

must

some

are:

for

agencies

roads

know

things

which of the items

scheduled, domestic and internar

The fight for

Be Done

whole

difficulties

—the

We must find

an automatic control
similar in purpose to the
systems in use on all railroads.

And
a

we must aggressively pursue
development program aimed at

truly safe all-weather flying for
the commercial opera¬
tor and the private flyer.

everyone,

Modernization of Airways System
In contrast to its effect

most

recently, the record for improve¬
ment
now

has
very

been

much

impressive.
safer

scheduled airlines than it
the

average

the

years

fly

was

before

1943.

Military requirements made
it impossible to obtain the mate¬
rial for the program—in fact, most
of it

was

transferred to the armed

services—and
to

resume

was

not

installation

Civil aviation is

aviation.

civiL>

prompting

$800,000,000

now

ajfc

the stage where it, too, must have. *

and-better ^roads/'if. I may?
that; term to include all air~

use

As
for

and terminal facilities.

ways

out. earlier,

pointed

followed

automobiles

ceptance of the

new

roads
public

ac¬

vehicle, ancfc

with-, in**
calculable benefits to; the country?:

industry,

enoirmous

and to each

citizen, resulted from-

those expenditures. The same can
be done in aviation.
*
/
These things are
bilities

joint responsi¬
government and the

aviation

made

airports by next summer, and
hope for an additional 55 next

will

installed

We believe that this system

year.

should

the

backborm

our

instrument approach facilities be¬
cause it seems

perform

to be the

most

one

system

can

also

most useful function at

ment's

conservative

the*

forecast, the picture looked very,

many airports where
traffic is good. In 1946, however, the per¬
heavy enough to justify the very formance, in passenger miles, ex¬
considerable expense*of installa¬ ceeded the forecast and was al¬

tion

and operation.
Three new
type GCA sets on loan from the

most half of the estimate for 1955;

Army will be in operation before

lating

the winter is

over

for service tests

at New

York, Chicago, and Wash¬
ington. It is expected that recom¬
mendations will be made for oper¬
ation and ultimate purchase of 20

informed
able

they

Army has just
make avail¬

can

loan.

the

which

might be well

note here

that not all wartime developments
in their military form were im¬

mediately adaptable to peacetime
uses on our airways, and GCA was
one
of them.
Not only was the
its

requirements

were

for

difficult to maintain,

set

war

for

but

operators

that probably 25 men
job alone would have to

such

this

be employed and

trained for each
using airport. The GCA operating
cost for the whole airways system
would thus be very high.
The
new types being installed for test,
however, have been modified and
refined so that only a fraction of

(13.2 billions).

That is

stimu¬

achievement which gives
rise to hopes that we hardly dare
express—but which should spur
all of

greater efforts.

An essential condition to prog¬
in aviation is the financial,

ress

the industry, both in:
operations and in manu¬
facturing. We all know that here
again there has been some undue
optimism.
There isn't time to¬
night to discuss this problem, but
I want to mention it as having an
all-important bearing upon our
ability to seize the opportunities
health

airline

before

achieve the re¬

and to

that the public has a right

sults

expect.

attain

our

objec¬

common

must work together.
There is need for aggressive lead¬
ership in government and in in¬
dustry.
I am fully conscious of
the great responsibility and the
opportunity of the Department of
Commerce. I personally intend to
that number of men should be re- give to the problem my earnest
quired.
' ^attdntion. I ask you of the indus¬
Other devices and systems too try to give us your continued sup¬
port and cooperation.
numerous for me to discuss here
are

either under consideration

Expects

Innovations

Meanwhile, existing services and
while

waiting for the new inno¬
vations which eventually will add
to

safety and otherwise bring us
to

being able to fly in all
It is not enough

kinds of weather.
coast

the

present

status

while waiting for newer and
ter

Brooklyn Savings Bank
Elects Officers
Gilbert C.

Barrett, President of

and

repont
nounces

Clinton

Streets,

an¬

that several officers were

are

nearer

the Brooklyn Savings Bank, Pier-

facilities must be improved
we

tives, all of

being developed. Among them is
the fog-dispersal system which is
of particular interest to me be¬
cause I followed its development
in England during the war.

facilities,

but instead,

bet¬

every¬

sound

investment

from

the

standpoint of speeding civil avia¬
tion's

progress

toward

ultimate

nothing of its

possible

self-support, to

importance from the standpoint of

new

up-to 1945; the

Government spent about

Federal

radar talk-down

airports,

100

and means of developing for

system

In all. oL the. years

adaptable to the ultimately neces¬
sary automatic approach.
It
appears
that
the
GGA
(Ground
Controlled
Approach)

airways

our

governments an additional $35,-*
000;000,000, which made possible

industry.
The govern¬
responsibility—whether it
be municipal, State, or Federal-—
can be discharged only with pub¬
lic support. The public must never,
be forgotten. We must make every^
effort to give the public a well^
balanced understanding of what
is required before the full prom¬
ise of the Air Age can be attained;
In 1945, the CAA made an esti¬
mate of progress and opportuni¬
ties to be expected in civil avia¬
tion for the following ten years.
Although a deliberate effort waff

thing must be done to see that we
phases of aviation, the war seri-.
are
getting
maximum
benefit
Before discussing the efforts to ously delayed the modernization from what we have on hand. This
of our airways system.
At the
improve aviation's performance
applies to the operators as well as
time of Pearl Harbor, we were
perhaps I should touch on the
to the government agencies con¬
just beginning a program for the
safety record as it now stands
cerned.
installation of VHF
(very high
The cost of the whole program,
frequency)
ranges
and
instru¬
Flying Accidents
while large, is very small in terms
ment landing systems throughout
In spite of the attention that
of our essential expenditures on
the country — a program which
flying accidents have attracted was scheduled for
completion in military aviation. It should prove

canceled

There has been

difference of opinion as to

some

erations in 1946,—scheduled, non-

ahead.

What

exag¬

gerated picture in the public mind
has also been fostered by popular
magazines and public statements,
including some advertising, which
depict coming services and facili¬

down

things

Somehow

aviation.

knuckle

the universal use .of automobiles;*

ous

tion, it is worthwhile noting that
railroads and highway transporta¬
Before they will accept the in¬ tion combined cause a great num¬
conveniences of the moment and ber of non-passenger deaths and
retain their enthusiasm for avia¬ injuries, while aviation has caused
tion as a whole, the public must
practically none. This hardly sup¬
understand the problems and be ports the fears expressed in some
satisfied that proper action is be¬ objections to the establishment of
hew airports.
ing taken.

is not

requirements.

present
status
methods of

has

Modern

made

there

thorough understanding of

its

because

will

various

You

public has already an en¬
thusiasm and understanding of the
values of aviation, yet confusion

and

even

tunities

the construction of roads.
The

produced
disillusionment;

that must be
done
to regain loss
in prestige
and to prepare for the real oppor¬

gen¬

erally usable, but that came after
public
acceptance,
and
I
shall
touch on the problem of its avia¬
tion counterpart later.
For the
moment, let us merely remember

have

safer and easier.

overcrowding

the present situation can
be turned into an asset if all con¬
the

automobile

that

proximately $6,500,000,000 on: the
highways; and State and local

but agreement between the vari¬

all of

safety and the national defense*
Our Government's policy of as¬
sisting new- forms of transporta¬

radar equip¬
properly
adapted to commercial use,, will
help materially in making flying
on

when

able

examined—the. numbers killed.
192 passenger fatalities occurred

—

Public Response to Aviation

based

which,,

As I have said before, my fam¬
ily and I have no hesitancy in
of present airways and terminals using the airlines at every oppor¬
would preclude the handling of a tunity.
much
Still, in aviation we have a long
greater passenger volume
at principal airports regardless of way to go to make the air safety
the number of available airplanes. record
compare
favorably with
Resultant poorer service, plus the the safety record of other common
the railroads and the
unfortunate series
of accidents, carriers
iness knew that the

must be made up;

On the other hand, the war did tion; has stood the test of time.
a great contribution im the
From-1921 to 1940, the Federals
development of air navigation Government -alone: has» spent', ap*

each

passenger

now

make

Last, year these airlines flew over
80
million passenger miles for

lation to the great volume of miles

The immediate postwar demand
was

the war, and
rate

This

compared

private

even

,.:..;.i.a|IS3g067

say

and others

elected

duties

new

The

bank's

officers

board

meeting.

annual

the

trustees

assigned

were

the

are

now

follows:
Warren E. Garretson,

George

ident;

and

President
Estate

Vice-Pres¬

Bender,

Vice-

Mortgage -Real

Officer; Leslie G. Cheshire;

Cashier;

Henry D. Mohr, Comp¬

Charles

troller;
sistant

P. Seaman,

As¬

Cashier; Arnold'W. Koike-

beck, Auditor; Richard H. Kess-

Assistant Cashier;

ler,
H.

Raymond

O'Connell, Assistant Mortgage

and

Real

F. Rost,

Estate

Officer;

Joseph B. Dodge, Assistant

| ier.

James

Assistant Comptroller and

Cash-

THE COMMERCIAL A FINANCIAL CHRONICLE

maintain

Paramount Railroad Problems
(Continued from page 741)
relationships
m
the new
one-world tnat is now being made.
N

fair

play—of equal chance with¬

tionai

out unfair

We have viewed with keenest ap-

to any participant—is so ingrained
in the American way of tninking

uur.ng ine peace ne¬

prenensmn,

gotiations of tre past year, every
semblance of departure

from these

principles in a seeming

pursuit of

selfish interests.

province
attempt to discuss international

It is
to

relation©.
'
^

purpose or

not my

only to point out

wish

that the principle of mutual un-

handicap

that any

outright advocacy of un¬
equal barganing power would not
be long tolerated once the public
mind begins to act.
But lip service to the idea of
equality of bargaining power will
not create such

equality. There is
reality to the claim of equality

conference table

derstanding and good will—which
is so generally recognized by our

when

right

while

rela¬

from similar laws.

people

the

essential to

international

settlement

tionships—is equally deserving of
our acceptance if a right and last¬
ing settlement is to be made of
those

paramount domestic

lems

which

upon

our

prob¬
eco¬

own

nomic well-being depends.

Management

these
the

monizing

economic
that

none

necessity

the

Such discrimi¬

painfully brought home to the
public consciousness how really
unequal and unbalanced are the
bargaining powers and responsi¬

se¬

in¬

and

come

between

in our regulated
transportation that must be

rail

secured

tinue

the

public

have

the

type

con¬

rail

transportation it requires. And if
far-reaching domestic prob¬
lems are to be adjusted in the way
these

that is best for the parties
directly
concerned, and best for the coun¬

whole, it is indispensable

as a

that

there

mutual

under¬

standing of all interests and that
in the adjustment fair treatment
shall be mutually accorded to all.
If this fundamental
principle can

observed, I believe it will be

found

that

what

best

for

the

One side in these controversies

in the

long

run, best for the

is,

other,

and that individual

liberty and the
good under our Amer¬
ican system are not
incompatible.
common

There is

litical
the

significance

generation of this
than the unprecedented

growth

power

of the

fact of greater po¬

economic

past

country

pose

and

the

organization

labor.

the

and

growth

organizations for the
of

bargaining

pur¬

collectively

imperiled.

ter of equality of power and re¬
sponsibility under the law, there
are
even
deeper economic ques¬

re¬

only

save

the
it is a

will of those who
possess

dangerous thing.
Labor
Of

age

has

far

matured

and

than

come

did

in¬

dustry.
Whatever

formerly may have
labor's disadvantage in size
Or power in its
dealings with in¬
dustry, there is none such today.
The problem of the relations of
been

labor and industry is therefore a
problem that is posed by the con¬

flicting interests, or assumed in¬
terests, of two gigantic forceslabor and

business.

;

The principle

itself

to
at

Will it, in
really benefit labor

its

use

this

great power to
another round

time

increases? Can the up¬
spiral of higher wages and
higher living costs in this country
wage

ward

mutual

understanding

that, each

these

requires

great

forces,
having attained the strength and
virility of full manhood, should
now,
willingly or otherwise if
need

be, assume the responsibil¬
ities to itself and to
society that

attach to man's estate.
is done there can

Unless this

be, in the very
nature of things, no
equality at
the, bargaining table. And I say
to

you

power

that
and

without
of

equality

face

each

other

gaining table

purpose—without

equality
of
responsibility
those»two great forces as
the

—

they

the

across

bar¬

existing

flood
only be ad¬
justed contrary to the sound in¬
terests of both in the long run.
of their conflicts will

J The irony of the situation
Js
that both sides, profess
the principle of

ence-to
of

bargaining

today

adher¬

equality

The rule of

power.

•

;

c,
•

wages are demanded, on account
of increased cost of living, will,

i</J

of other

use

agencies of carriage at less than
The public conscience would
rightly shocked by any pro¬

cost.

posals of like public assistance for
railroads, yet paradoxically

the government continues

its dis¬

criminatory
assistance
to
other carriers, although
they
well
passed their pioneer

stage

and

should

then-

own

feet.

stand

now

the

have

consideration

the

by regu¬
otherwise, which reflect

real

and

economy

different

fitness

investors

while

the

use

in disaster.

said

It cannot be too often

that

repeated

only end

can

in¬

wage

the

there

need

mutual

for

compelling

understanding

and good will; and

that

will

danger
the

extent

national

our

American

either

side

make

which

en¬

life.

either

For

interest

not

economy

way

demands

cessions

will

exact

con¬

inconsistent

are

allowed

public expense,
inadequate com¬

The service that is of¬

by the carriers thus favored

is artificial and

uneconomical.

because it is made available

those

who

use

less

rates

full

its

cost, while the tax¬
payers at large, many of whom do
not use the service, pay for the
balance of the cost in the facilities

they

provide
treasury.
But

recognize that

are

pensation.

than

permanently.

fered

equally

others

facilities

either free

about

earn

readily

They

one

by com¬
pensating productivity can at most
benefit only a portion of labor
temporarily. They cannot benefit

unaccompanied

creases

investments.

the railroad plant.

tion

action

responded by paying over par for
and in the decade of the
twenties invested over $6 billion

omists to know that the continua¬
such

willingness

stocks,
in

investors'

their savings into railroad
plant is what investors are willing
to
pay
for railroad securities.
Prior
to
the depression
of the
thirties
railroad rates permitted

turn, through increased prices,
bring further increased cost of
living. We do not have to be econ¬

transportation

its

put

agencies,
must pay its own way in
full, provide its own facilities, and
to
pay
taxes on them besides,
if

deserved
importance de¬

The best test of railroad credit
and

their

Rates cannot be fixed,
lation

credit

been given the

mands.

the

not

to re¬

railroad

out

the

public

face the artificial and uneconomic

competition that is

born only of
unequal treat¬
preferential subsidy and

government's

ment and

high taxes themselves for the
privilege of dong so. No subsidy

pay

lessen

can

investors

the

of the

cost

trans¬

is the record for

During

thirties.

got

this period
of only
the

return

immediately prior—with
they were unwill¬
higher than an average
for railroad stocks, and be¬
of this lack of confidence in

period

the result that

ing to
of 65
cause

pay

railroad cred¬

railroad earnings, or

it, the railroad plant instead oil
attracting any new capital, actu¬
ally suffered a reduction of $250
million in the investment in its
and

equipment.

our

road

inequity does not end
Carriers by rail must also

Rail Securities

about half of that received in

the

there.

the

Return

How different

country

continue

heavy construction
using heavy goods must go on in
a big way.
Railroads are the na¬
tion's
heaviest
users
of heavy
prosperous

only prosperous rail¬

goods, and
roads

buy them.
industry stripped

can

A railroad

earnings

the

necessary

o£
to attract

with the attainment of this objec¬

portation.

tive

of the favored service must all be

continue

still

one

paid—part

prise. I shall not bore you with
figures, but if you who would
fully understand this problem will
examine the available figures, yois
will discover that the net railway

higher

living

continued?

costs—safely
convinced

will

the

benefit

end

more
than temporarily
injure all permanently.

and

is "No" and that
deep eco¬
nomic questions is the best an¬
swer for the country as a whole
and unquestionably the best for
the personal self-interests of all
an

answer

who work for wages.

What
now

both labor and industry
sorely need for their own

welfare

need

and

the

from

surcease

end

Railroad

to these

the

strife.
turmoil

irreparable losses to

in¬

dustry, to the public and to labor

that

must

fur¬
ther inflation of prices from what¬
ever may be the cause.
accompany

any

What greater economic

boon

greater
labor's

blessing

this country, what
could there be to

come

self-interests, than

own

honest, old-fashioned opportunity
for all of us to work continuously
for a long period and avoid the
losses

which

terruption.

inherent

are

Such

losses

are

in¬

gone

balance

can

what is

more,

fore,

How

tragic it is to waste it

have

done

during the past year!

The need

for and the rewards to
to everyone from continuous

I believe, almost beyond
measure.
The pentup demands of
our
people are far more than
labor

and

industry can produce.
today more money to
spend than there are things to
buy.
What a pity it would be,

There

what

all,

loss

unnecessary

fail

take

full

ad¬

vantage of such an opportunity by
continuing at work and building
up production.
How much better
off

all shall be, business, la¬
and every one included, if
go ahead now and uninter¬
ruptedly work in producing this
we

bor,

great volume of needed goods and
services for sale and purchase at

prices made to fit the job
done.

to be

The enlightened self-inter¬

est of all of

calls for

concentration

through

sound

steady

the
work

and

lowering prices
medium

increased

*•!.-*

when

the

lack

unfair
We

pro¬

is,

all

fair
out

—is

balance

itself

discriminatory.

play—of equal chance with¬
unfair

handicap

advantage
way.
Yet as
or

American

the

the different transpor¬
tation agencies that today com¬
pete for traffic, can you in truth

you survey

say

that it is

field in which all

the contestants stand
merits and

are

Is it, in fact,

free from

their

own

treated alike by

the

field that

handicaps and pref¬
you
see in this

ent.

The real advantages and disad¬

vantages that

and

expense

any source

without

help

from

all the plant that they

trying to compete with other
of

transportation
which
have
important
parts
of
their
plant provided for their use by

ognized and preserved under such
a system of public preference and
advantage.
And when it is rea¬
that

lized

Henry Hazlett, a nationally
economist, so clearly de¬
a system

when

the

case

says—"It

obvious

subsidy that the tax¬

payers must lose

precisely as much
industry which is subsi¬
dized gains. It should be equally
clear that, as a consequence, other
as

handi¬

unnatural

such

caps
add directly and unneces¬
sarily to the effort to secure that
balance of railroad
income and

outgo upon which the continuance
of the

industry under private man¬

depends, it will be ap¬
parent how great should be the
concern of the public and railroad
labor in the removal of such han¬
agement

dicaps and in the placement of all
competing carriers upon their own
real merits in
the field of fair

the

play.
Sufficiency

Doubts

of Rate

Increases

Recently the lack of balance in
this respect is one
lel.

with

Happily,

operation,

without paral¬
your fine co¬

Com¬

Interstate

the

granted

has

Commission

merce

It is necessary, how¬

some

relief.

ever,

that neither the public nor
labor be lulled into a

railroad

false
of

that

the

security

relief

has

been

plish the balance of income and
outgo upon which adequate pri¬
vately managed railroad service
is dependent. In fact, the antici¬

than

less

huge

fear
of

the

already expended by
nor of the nearly

sums

$800 million

this

that it proposes

year

to provide and

that

rate

increase

of
I

one-half

the increased costs since

unmindful

100%

50%

and

greater

It is neither

sible

reasonable nor pos¬
that the railroad

expect

industry, or any industry, can re¬
main

private

and

ownership

management unless its operating
results satisfy the public, whose
continuous investments are nec¬
to the building and main¬
of the industry, and thati

essary

tenance

reasonable prospect

there is some
of receiving a

investments.

fair return on those
American sys¬

The

system of free enterprise,
the
touchstone
that
vitalizes and maintains it is the

tem is a
in

which

and the rail¬
the finest in
the most
outstanding example of what pri¬
vate enterprise can do.
Without
this
energizing
prospect,
the
stream of inflowing capital from
the investing public will naturally

motive of fair profit

roads of this country,

w7hole

dry up and

world,

are

disappear. And when

private management
powerless to improve
and keep its plant in shape to
meet the never-ending public de¬
mand
for
better
and
cheaper
that

otcurs,

will be left

transportation,

and

that un¬

happy day only socialization
the railroads can be expected

of
to

Shippers,
railroad employees,
and the whole public, in my opin¬

amount

not

great and relieving the authorized
rate increase is, it does not accom¬

sidized industry gains."

are

handled

follow.

Only

industries must lose what the sub¬

You

and the traffic to be
greater in pas¬

than in 1929,

limited knowl¬
edge of the figures is needed to
make clear the fact that, however
obtained.

pated additional revenue to be de¬
rived from this rate increase will

Airline Subsidies

of new*

put into it since the thir¬
ties is today bigger by $2 billiora
more dollars of
investment in it
money

the

measure

Mr.

the railroad plant because

sengers

must be apparent

scribes the evils of such

notwithstanding the fact that

true

freight.

national

the

sense

known

long as a private enter¬

operating income under the new?
rates on the business in sight for
1947 will be almost 50% less than
it was in 1929.
And this will be

transportation

the government with money col¬
lected
from
the
taxpayers,
it

how unequal in
fact is the competition.

cannot progress nor

capital

new

policy to recognize and preserve,
cannot, in any true sense, be rec¬

field, as you must if you look, rail
carriers, who are large taxpayers,
obliged to provide at their own

forms

inherent in the

of carriers, which

When

erences?

use,

are

different kinds

1939.

sufficiency of the
too likely to be

the

Stake in Railroad Income

ion,

have

stake

come

from

duce

them

■

!/\

.v.,U'siiJ'/C.
t,':

-»4

f."
'

continue

pour

capital into the railroad in¬
dustry. In no other way will this
industry be able to continue, un¬

new

the

supreme

that is left for the inves¬
after labor's share and all
else is paid, will be enough to in¬

der

by its ability to cover
out-of-pocket increases
in operating costs, and that its in¬
ability to provide returns on rail-

maintaining the in¬
service that

railroad

tors,

only

the

therefore

the part

measured

>•'».
(■ !V I

tion whose competition, thus ar¬
tificially stimulated, add another
and unnecessary burden to the un¬
aided railroads, on whose service
the public is yet chiefly depend¬

•-

and

all believe that the rule of

to expend

necessary

income

the government

duction.

if..,

the

Particularly is this so
thing that contributes

everyone.

real

some

this

secure

between

the railroads is, there¬
matter of real concern to

there is

be done about it.

and,
rea¬

the outgo of

it is created

is gone and

achieved

its continuity

Anything that makes it dif¬

public?

can

sonably assured, the benefits of
private management of railroad
service will inevitably be lost both
to the public and to railroad la¬

forever. Time not used the instant

nothing that

anomaly of

that today the American public is

being taxed to provide assistance

balance

through

user

for certain agencies of transporta¬

ficult

The

large.

as calling equally for mu¬
understanding and good will
is the one of balancing railroad
income
and
outgo. Unless this

It is wasteful and destructive. We

all

the

tioned

do not want to continue to

tual

bor.

dangers

Solvency

The other problem I have men¬

itself, that attend industrial strife.
destroy
—we want to build and grow—to
produce and have. We need to

In the end, the full cost

the subnormal rates he pays, and
the balance by the taxpayers at

that the answer

such

i
:

highways, for the

necessary

retain

and

today—followed, as would be the
case,
by still higher wages and

work are,

of good will and

increased

such

force

has

spiral of the

wherein

tions to be considered.

come

Equality of Bargaining Power

circle

the long run,

could

faster

vicious

understanding
both la¬
bor and management may share
in the fruits of industry only to

necessarily

control

that the upward

increases,

But wholly aside from the mat¬

But it is the lesson of all
that power that knows
or

necessarily push upward, through
the resulting increased prices, tne
level of their own living costs.
Economists are constantly warning

demanding another round of wage

Boost?

free ourselves from the economic

straint

Boosts

So in considering the wisdom of

Can We Stand Another Wage

with the management of
industry,
there can be no sound objection.

history

Wage

investment

road
store

all

be and have been

can

curing that balance

our

and

labor

first rank also is the need for

preferences preclude
equality. Recent occurrences have

har¬

management, not alone in
railroading, but in all industry. Of

by cer¬
country
expressly exempt

and

airports, air navigation

facilities and services, waterways,
and

Wage earners who are naturally
apprenensive because of the rising
cost of their living, cannot over¬
look the fact, in tneir own inter¬
est,
that the incessant upward
pushing of the wage level will

can

for

interests

bound

laws

labor

nation

and

try

basic

and welfare

great

questions, there is
outrank

industry is

tain

elsewhere

bilities of these great interests and
how seriously the public safety

Harmonizing Labor and

Among

advantage

Prices

Thursday, February 6, 1947,

private management, to serve
nation not only in the most
modern, efficient, and satisfactory
manner, but also in the way that
O'

Volume 165

THE COMMERCIAL & FINANCIAL CHRONICLE

"Number 4566

is required by the progressive de¬

velopment

the

this great country.
A

chapter in the economic
country is unfolding.
Unable as we are to see exactly
the shape of things to come, we
new

life

that

have

the

assurance

"past is prologue"

that

and

the best charts for the future
the
as

(Continued from page 740)
makes
free
enterprise
Essentially
the
driving

our

nevertheless

lessons

past. Mindful
be therefore that in

must

the past America has grown

prospered
did

wages

and

proportion as
transportation,
proportion as her high

her

and

are

the

only

means

buttressed

were

ex¬

production, let us not
any misunderstanding of
these great lessons imperil the
economy of the America of to¬

panding
through

morrow.

What
work?
force

ment.

that

the

and

business manage¬

take

pride in the fact

of Jan. 31 the stock

which

Dreyfus,
quin

Jac-

&
that

and

will

That boy gets

used, however, that as a result the

than that amount. To

top by being a little more
vigorous and intelligent, by pro¬
ducing more goods and by making

double tax still remains in effect.

authority to
preciation at

once

purchase

new

to the

all

for

produce

consumers

to the good.
The
American business

all

whether

us,

laborers

promoting

stock¬

good

and

particularly

and

encourage

The

ex¬

civic inter¬

ests.

Mr. Lew¬

isohn

also

Chairman
Ten

Sam.

Lewisohn

e s s e e

Corporation,
American

President

Gold

South

Platinum

Co.

mining companies. Well
known, too, for his work in prison
industrial

and

relations,

lie will continue his long standing
interest in those fields.

The

plans

the

other

in Lewisohn & Co.

ners

announced.

David

part¬
also

were

Heyman,

President of the New York Foun¬

dation,

President

Health

Research

the

Health
New

the

Insurance
York

Plan

and

Mem¬

ber of the New York City Board
of

Health, will devote himself to

these and other civic interests.
will

maintain

with

Mr.

the

his

Broad¬

Greenburgh

hold

mining

office

present

Lewisohn

John

way.

•continue

they affect the details of the tax
system? Doubtless the tax system
is secondary in importance in its
effect on incentives, but it still
plays a major part. A tax system
of any kind is bound to act as a
brake on the private economy. As
becomes

profits of
rates

executive

companies

will
posts

with

the

are

the braking effect
and

Income taxes

are

who

take

the risks

Riggs will become partners in the
new

firm

successor

form

of organization.

1. You

are

all

intimately famil¬

iar with the present surtax rates.
The

bracket rate

$10,000.

the

central

New

transfer

York

service

The bracket rates

dollar

at $44,000.

Curb

Exchange
Corporation
was expanded on Feb. 1 to include
11 New Jersey transfer companies
located in Jersey City, Fred C.
Securities

Clearing

Moffatt, President of the Curb Ex¬
change Clearing Corporation, an¬
nounced.

The

advices

from

the

Exchange said:
"The service has grown

since

steadily

its inception last Jan. 6 and

provides

now

clearing members
of the exchange with centralized
delivery of securities to and from
105

transfer

facilities

located

Manhattan uptown as far as 57th
The service originally in¬

Street.

cluded 42 transfer agents and was

previously
cover

some

enlarged Jan. 20 to
75
agents.
Today's

Of the next

individual

the

earns,

Treasury gets over two-thirds and
the earner keeps less than onethird.

The

bracket

rates

reach

nearly 77% at $70,000. Of the next
dollar

individual

than

gets

the

earns,

than

three-

keeps less

earner

one-fourth.

We all know that the incentive
and to

earn

various
a

save

inner

man

less, it is

in¬

than half.

want

The

the Treasury gets

drive

Exchange

50%

earns,

reach 68%

Df N. Y. Curb

reaches

Of the next dollar

dividual

the

Central Transfer Serv.

who

get the work done, whatever the

Dreyfus,

Jacquin & Co.

and

only

extra

which

Neverthe¬

important
that

one

forces

forward.

to insure

that

one.

will put
which will

plest

keep production high, we had bet¬
ter give them a greater stake in
their own earnings than they have
today. It is a common saying that
an

income

work

well

In my

tax

with

system
rates

will

over

50%.

judgment, Congress would

do well to heed that maxim.
revenue

tax

not

produced by the top

rates

is negligible.

The
sur¬

yield of the surtaxes on incomes
in excess of $100,000 was
$628
millions in 1945, against the $15.5
billions total yield of the individ¬
ual income tax. The proposed 20%
reduction

across

the

board

good start in the right direction.
Ultimately, Congress should re¬
vise the whole surtax scale, so
that the top bracket is not over
50%.
One way or another, the
surtax rates should be reduced.

Let the corpora¬

marks the first central

de¬

livery of securities to transfer fa¬

n. ^

Taxation

Corporations

entirely futile, for, on the one
hand, the taxpayer is entitled to
recover back, sooner or
later, the
full

cost

the

of the

machine

other, he can't

and,

recover

over one-third
Three years after the

peak expenditures of World War. I,
budget
expenditures
had
been
brought down to one-sixth of th£
peak.
/
The budget can only be reduced
by courage and, indeed, ruthlessness in cutting expenditures. Bu¬

degree, "they want.
heavy de¬ to present

encourages the

;

chiefs must be told that they
cannot have as much money as

reau

some

deduct

machines.

the income tax and the estate tax,

They 'must be asked
a

for

program

bureaus based

their

the expenditure

and

The

pay

off debts. All of them

but I shall mention

fronted

them.

Congress

rule for distributions.

stock

purchase

only a few of
ought to make
plans
possible

again by restoring the fundamen¬
that income

rule

is not real¬

purchase, but only on a
sale.
Congress should make it
plain that the income of trusts is
taxable only under the specific
provisions on the subject, not un¬
der the vague generalities of the
definition of gross income, as the
a

Court

Supreme

discrimination

has held.
The
against insurance

the

with

the

are con¬

Bureau's

70%

To be sure,

penalty tax for unreasonable

accumulation
often

applied,

earnings
and

the

not

Deputy

Commissioner has promised not to

apply it to corporations whose di¬
rectors honestly believe that the
earnings retained are needed for

the

business.

There is always an
uncertainty, however. No

area

business

likes to guess what

man

examining

two

about

moved; and provision should be
made whereby an individual may

agent

three

under the estate tax should be re¬

will

decide

from

years

The
1948
budget
should
be
brought down by several billions,
to as near $30 billions as Congress 1
can
get. In the next few years,
expenditures should be further

trimmed.

A normal Federal bud¬

get of $20-$25 billions should be
aim.

our

business

man

looks

it, such a program of expendi¬
tures is liberal. On the other hand,
the revenue system can be enor¬
mously simplified and strength¬
ened, if expenditures are brought
down to these levels.

now

surplus.

accumulate

fund

insurance

perhaps government securities

fund

the estate tax, the

to, pay

itself to be free from tax.

the

The

reasonableness

his

plenty of provi¬
special taxation of
personal holding companies. They
sions

for

the

be left alone.

can

But in the

ordinary business

case

corpora¬

tion, should not the present bur¬
Excise Taxes
4.

den of proof be reversed?

Finally, what about the excise
The place of the excise or

taxes?

sales tax in

the

Federal tax

sys¬

tem has

steadily decreased in im¬
portance. In the President's bud¬
get for 1948, only $6 billions are
to
be raised
by excises out of
$34.7 total tax revenues. The ex¬
cise tax is the most stable, as well
most

the

part
tax

readily administered

tax

the

while

pression,

income

vanish.

enues

system.

Excise

decline little in de¬

revenues

learned

this

excises

much

than

The

tax

British

rev¬

There
that

are

lesson,
more

and rely on
extensively

number of excises

produce little revenue, are a

and should be elimi¬
nated. But the general productivity
nuisance,

of the excise tax side of our rev¬
enues

must

maintained.

shall not always

collect, year after

the great

income tax rev¬
Moreover, even
of our national

year,
enues

today.
the bulk

today,

income is untaxed.

which

can

The only taxes

effectively be imposed

of our citizens are excise
and no doubt many such
citizens prefer them to the com¬
plications of income taxes. Con¬
gress should review the excise tax
system, and perfect it, but the
on

earnings by an ordinary busi¬
corporation is unreasonable?

ness

If the Commissioner had the bur¬

den

proof,

business

tain

men

would

revenue

could

Government should

con¬

tinue to collect $6 or $7

billions in
excises, so long as the budget re¬
mains at present levels.

Very little
Indeed,

lost.

counted upon

losses

to exceed

the

rev¬

enues.

The Budget

people is not

that

now

you can argue

American

to travel.
always easier to spend than
save, and the Federal Govern¬
an easy one

has

ment

all

had

too

much

ex¬

perience in spending. Moreover; it
is sobering, and even frightening,
to know that year after year we
shall have to meet with taxes

ex¬

least three times
those of the
thirties, and1 per¬
haps four or five times. Like all
other governmental problems, the
fiscal
problem demands
strong
leadership for its solution, backed
by an intelligent electorate.
My
whole purpose today has been to
put you in possession of some of
penditures

the

in law,
problem

In busi¬

understanding
is the first step

toward its solution.

foundation?

Bond Club of

whole

The foundation of the

Federal

fiscal

problem

the expenditure side of the

budget.
No one can seriously advocate tax
reduction, unless expenditures are
brought down. Even advocates of
free Federal spending in times of

depression would advocate a bal¬
anced budget in times like these.
What

be done about expendi¬

can

tures?

Expenditures
be

budget

be and must

can

reduced.

The

President's

barely balanced, with
rigorous taxes, almost the highest
have

known, applied to
greatest national income we

the

have

ever

reason

known.

high?

balance

there

that

good
na¬

always remain

Or should

budget now

still

believe

tional income will
so

To Hold

not trim

that

when

are

CHICAGO, ILL.—-The 36th an¬
dinner and meeting of the
Bond
Club of Chicago will be
held on Thursday, Feb. 13, in the
Crystal Ballroom of the Blackstone Hotel.
Guest speaker will
be
Mark
A.
Brown, Executive
Vice-President of the Harris Trust
and

enable

him

are

judge the

Nevertheless,
facts he knows point to
the conclusion that several billions
few

should be

squeezed out of those

expenditures.

Federal

numbers

than twice what it

following slate of officers

and directors for the coming year

has been presented:
President—Nathan D.
Harriman

McClure,

Ripley & Co., Inc.,.

personnel

Secretary—George S. Channer,
Jr., Channer Securities Co.
>
D.

can

necessity for them.

the

Savings Bank.

The

Treasurer—William

times

astronomical, and he has little

data

Chicago
leefmg

nual

settle your tax case

for Amer¬

the

It is

Kerr,

Bacon, Whipple & Co.
Directors to

Good

of the Bureau of Internal Revenue

and

properly say at this
point that the design for the house
looks good, but what about the
may

tax administration is not quite so good? The answer is
important to business men pretty obvious.
as tax provisions or tax rates.
I
Expenses Must Be Reduced
am
glad to have participated in
one
major improvement in ad¬
The ordinary citizen is
easily
ministration during my term in confounded and baffled
by Fed¬
Washington — the decentralization eral expenditures.
The amounts
5.

quite

business

ican

ness,

You

Federal fiscal pro¬

gram that will be good

the facts and the issues.

the

Improved Administration

taxpayer,
more cer¬

business development

possible

any

the

not

would feel

their ground.

the gains to

many

taxes;

Should

given the
retention

burden of proving that a

have

do.

not the Commissioner be

Conclusion
The road to

Code has

—so

Double

revenue
agents about
depreciation. In the long
run, such controversies are apt to

that is

has been too

and
at home, and
cilities outside Manhattan."
2. Corporate income distributed you don't have to go to Washing¬
Another important reform
A number of additional Curb in dividends is subject to two in¬ ton.
Exchange
member
firms
have come taxes. It is taxed to the would be the adoption of an ad¬
signed up for the service in re¬ corporation and it is fully taxed ministrative policy of giving more
cent weeks, according to Mr. Mof¬ again to the stockholder. No other effect to the taxpayer's audited
statement
and
balance
fatt
form of income is taxed twice. In income
move

with

after the peak expenditures

years

of the war,
of the peak.

improved of millions less money* Few indi¬
Bureau's
policy vidual Federal expenditures are
rigid, and it has cost wholly bad or wrong, but plenty
tax and. the individual
his, as at present; but give the too much controversy and wasted of Federal administrators have
individual a credit for the tax the effort.
Everyone would gain by budgeted on the basis of the freecorporation has paid on any divi¬ a change.
spending days of the war.
For
dends he receives. Thus, dividends
example, we all know that veter¬
Undistributed Profits Taxation
will
be
fully taxed, but taxed
ans'
expenditures,
budgeted.^ at
6.
once, not twice.
Many corporations need to $7.3 billions, can be materially cut,
retain their earnings today to en¬ without any actual
injury to the
Other Reforms
able them to expand their
plants, veterans' basic needs. The same
3. There are numerous other re¬ to build
up inventories, to finance thing is true of many other less
forms which should be made in growing accounts
receivable, to defensible items in the budget.

Federal

The total

accomplishing" the

way

tion pay its

men

effort

corporate dividends

result is the best.

con¬

individuals, for it is individ¬

upon

uals

fourths and the

Oscar

especially

ing

Under the circumstances, the sim¬

cerned, I think, with their impact

Max

and

first lien upon

today, income taxes
major cost of doing busi¬

Treasury

Jr.

severe.

kind, and with the

any

which Mr. Lewisohn is connected.

Jacquin,

have

We must

ness.

Public

Institute

City of New York, Vice-President
•Greater

Individuals

matter

equity. There has been such great
discussion among the experts in
Washington on the method to be

ized

tax rates go up,

and other

reform

Impact

other forms of income?

should be removed, as a matter of

tal

Granted these premises, how do

well

business¬

enter-

| prises,

develop the

American

to work and to produce.

men

panding min¬
ing and cor¬
porate

labor,

at stake than the third.

vote all of his

time to his

management.

matter of fact, the first two

incentives

de¬

now

sense

gians and Texans.

Co.

the

My second premise is, then, that
the tax system should be so drawn

by the firm of

the
adoption of a depreciation
capital, as we do, what is policy, provided it will stick to
of taxing the income such
policy consistently thereafter.
from venture capital more heavily For too much time
is spent argu¬
venture

double tax

have

succeeded

More¬

encourage

fact, there is
pretty general agreement that the

groups,

partner,

was a

was

rates of

vested

Lewisohn, President of holders. Consumers and laborers
the Miami Copper Company, con¬
and stockholders are all interested
as

removed.

have

firmed that

want

than

not

to preserve or to increase his in¬

exchange firm of Lewisohn & Co.,

of the two

one

should

over,

in¬

centives

Time to Corp. Interests

ordinary fairness,

taxes

privileged classes over
here. The boy from the farm or
tne small town has just as good a
chance, perhaps a better chance,
to reach the top, as the son of the
well-to-do city family. New York
City is full of Iowans and Geor¬

terests and

managers

Sam

incentives

the

and

competition

them better and cheaper than the
next fellow. Whatever we can do

Lewisohn to Devote

totaled in 1939. "The budget ex¬
penditures are* four- or five times &
what they averaged during the
sheet. In particular, the
taxpayer thirties before the war. "The Presi¬
should be given great freedom in dent proposes
a
budget,- " three

What Business Wants in the Tax System

commerce

769

The

officers

serve

and

for

Leo

one

year:

Doyle,
Doyle,
O'Connor
&
Co.,
Inc.;
Richard A. Kebbon, Kebbon, McCormick & Co.; John S. Loomis,
The Illinois Co.; George L. Martin,
Martin, Burns & Corbett, Inc.;
Richard W. Simmons, Lee Higginson Corp.;
and Nelson M. Utley,
Halsey, Stuart & Co.
'

Members
Committee

of
were:

the

Nominating

Ralph Chapman,

Farwell, Chapman & Co.; P. A.
Walters, Stone & Webster Securi¬
ties

Corp.; and Paul L. Mullaney,

Mullaney, Ross & Co.

- •

THE COMMERCIAL &

FINANCIAL CHRONICLE
has in mind a plan to raise

per¬ structural
changes impossible—
exemptions to at except in^the extreme case that
the tax
thus provid¬
burden can be reduced
ing in effect a "cost of living to an insignificant total. And that,
bonus."
Because this particular of course, is a dream that neither
item is of more or less marginal we nor our children are
likely to

Tax Revisions for
-

sonal income tax

Small Business

least prewar levels,

***"*"i

of small business aside as "spe- take a direct financial interest in
((Continued from page 746?)
cial" privileges and contrary to | it, that may easily turn out to be
paratively small number of indus- j
the spirit of equal rights for all. the first 1 step towards becoming
nrkl
in
trial giants — say about 5,000 of
Such a ^philosophy may be con¬ a subsidiary—in fact if not in
them.
1
name.
trary to the tradition of "the devil
But where would these be—-if
An Independent Businessman
take the hindmost"—but the in¬
it were not for the other third
terrelationship of big and small
If
the typical small business
which is the result of the cumula¬
business as
well as labor and! man cherishes anything, it is his
tive effort of our small businesses
small business is so close that a
—over
independence.
If he believes in
3,000,000 of them every¬
small business program his business, he does not want to
where: in retail and wholesale proper
could benefit the whole economy, j share the fruits of his efforts with
trade, in service industries, and a
Small business can use guidance I
anyone.
large number of important manu¬
in such matters as technological
These, gentlemen, are the rea¬
facturing industries, such as ap-<
information, managerial practices, sons why equity financing is vir¬
parel, printing, foods, furniture
and what is called the "strategy of
tually closed to small business.
and lumber, mining and construc¬
enterprise."
The Small Business Where, then, are the funds for ex¬
tion.
Division of 'the
Department of [ pansion and for needed increase
"Small Business" — that means'
Commerce
is working on
this in working capital to come from?
10 million people;-8 million wage
problem.
Loans from banks merely offer
earners and 2 million active prop¬
*

Together they account
for 35% of total production and in
so

doing give employment to 45%
total manpower in these in¬

of the

dustry groups.
More Than Lip
If

we are

ever

Service Needed
to attain the goal

employ¬
we had
minds that we

full production and
ment in peacetime—and

better make up our
must

unless

want

along between booms

to stagger

and depres¬

need a strong small
business.
If we look for permament employment for 60 million

sions

—

people, we won't find places for
all of them in the 5,000 leading
industrial enterprises of the coun¬

character insofar

-—

rietors.

Thursday, February 6, 1947 *

•businesses

will affect

which

capable

are

employing people, I shall not in¬
clude it in the programmatic part
of this talk.

it for

think

granted that such

can

take

a measure

is "in the works."

Aid

From

this

the Tax

Structure
an

address

audience

same

Sept. 16, 1946, pointed out that his
company
had 2,853 major sup¬
pliers and another 3,000 lesser
suppliers.
Eighty-five per cent
of the total could, he said, def¬
initely be classed as "small busi¬

ness."
He stressed the fact that
needs a
temporary stop gap.
Even as¬
the stability of his large business
more flexible and broader system
suming that the mechanics for
of credit facilities—both for short small business loans can be im¬ and, in fact, employment in the
industry,
and long-term requirements.
depended
It proved, loans have the habit of automobile
needs ready access to working
upon stability and employment in
falling due at the most inoppor¬
small business.
capital credits and venture capi¬ tune moments.
Business prefers
As long as we agree that the
tal loans.
It is my understanding risk capital to debt.
that American Bankers Associa¬
If a large company needs work¬ economy needs sound small busi¬
ness
if full production and em¬
tion is engaged in active effort on
ing capital, equity financing fre¬
the local level to expand private
ployment is to be reached, a basis
quently offers the way out. It not
can and must be found to trans¬
credit facilities for small business.
only
permits
consolidation
of
There has also been discussion of bank loans, but often also cuts late the financing needs of small
Federal insurance for bank loans down the cost of such funds.
No business into a sound integral
to smaller enterprises on the same such recourse to
refinancing is part of the tax structure.
Any tax proposal must be with¬
principle as FHA loans.
open to small business.
in budgetary realities. There is no
But even these measures would
No wonder, therefore, that most
still fall short of a real solution small businesses shy away from use asking for the sky, or for a
tax millenium, as long as we know
to the small business problem.
using bank loans even where their
that budget needs remain large
What the small business man need
is, primarily, for an increase

business

Small

true.

come

There

against
cut

valid

very

reason

across-the-board

tax

this particular time.
If it
made now, it might easily
the scope of any structural

were

limit

changes in the tax law later

Mr. Henry Ford II in
before

see

also

is easier to keep a

on.

tax rate up

than

to put it back up again once
it has been reduced.
Yet adjust¬

ments of inequities in the tax law
at

later date may involve reve¬
losses which would require

nue

offset

through

numerous

ent

increased

tax yields
There are
in the pres¬

higher rates.
inequities

law.

tax

There is the

inade¬

quate treatment of the withhold¬
ings of

earnings for business

pur¬

the part of small busi¬
There is the double divi¬

poses

ness.

dend

taxation under tne present
corporate tax structure and there

inadequate loss offsets. Until
inequities such as these have been
eliminated there is a strong argu¬
are

for

ment

board

avoiding

cuts

and

across-the-

for

concentrating
selective measures along sound

over-all

lines.

economic

rates, brought
the-board cuts

about

law

tax

across-

now, most

certainly
changes in

would make structural

the

Lower

b.v

difficult

later

on.

Small

Business

Needs

Real

come.
Help
places for really wants is a chance to be¬ in working capital and an actual
A typical example of a special
Any tax relief must benefit
building a come a bigger business man and or potential boost in business vol¬
everyone of us, either directly— measure
which
certainly would
sound and strong foundation for finally, maybe, a big business man. ume is in sight.
on
an
Take this dream away from him
equitable basis—or indi¬ qualify as being sound econom¬
the existence and lasting pros¬
The Answer: Internal Financing
and you take the foundation away
rectly by proof that the ecoonmy ically is the proposed increase in
perity of small business.
Thus
That leaves only one way for as a whole would benefit by a the personal income tax
from small business and from the
exemp¬
far, we have not licked the small
free
tions
in preference to an over¬
enterprise
system
as
we small business to get the funds to selective tax cut.
business problem.
We have not
Here is the choice before the all cut in the tax rate. Such
cherish it in this country.
grow on. That is internal financ¬
even started to lick it; we are still
step
Yet that is exactly what is be¬ ing.
The money for expansion country today. As the budget bur¬ would contribute materially in
merely paying lip service to the
must come out of its own opera¬ den becomes lighter, a progres¬ maintaining
ing done now—maybe inadver¬
purchasing power
problem.
tions.
sive easing in the tax burden will where it is most
urgently needed.
There was the war, of course. tently, but very effectively, none¬
theless.
Every business — be it big or become possible. This will permit And, due to the fact that small
Many small manufacturers played
How shall these business for the greatest
What gives small business its small—tries to finance itself as cuts in taxes.
part is
an important part in war produc¬
far as possible through the plow¬
be distributed
during the first carried
on
tion — either as sub-contractors, economic, social and psychological
by
unincorporated
phases of this trend?
importance is its ability to grow. ing back of its own earnings. x
firms, it would also benefit a
working for the big fellows—or
There are important differences,
large proportion of small busi¬
on their own.
Nevertheless, the Take that away from it and you
Across-the-Board vs.
have destroyed one of the most however, between big and small
ness.
war saw a tremendous shrinkage
Selective Cuts
business in this respect.
They
However, such a measure would
in small business enterprises be¬ important pillars of our economic
Should there be an across-theapply to the extent to which in¬
hardly go far enough in strength¬
cause
many
small businessmen strength.

for

try—but we may find
them if we succeed in

went to

war

The

and others into war

production because they felt that
they could serve their country
better
by taking jobs in war
plants.
From 1941 to 1944 there
was a drop of 15% in the number
of small businesses in the country.
Now
the trend has changed
again.
Veterans have been re¬
turning.
So have war workers.
Many of them once more want
to be their own bosses. Since the

chance for small

business

Financing Growth
Here is the reason why.
ness

can

money to

grow

Busi¬
only if it has the

finance such expansion.

Money for expansion is usually
and generally should be obtained
either from the capital market
through the flotation of capital is¬
end of the war the number of new sues or out of a
company's earn¬
small businesses has been jump¬
ings.
That is elementary.
The
ing by leaps and bounds.
This first method is called equity fi¬
year it is estimated 550,000 new nancing—the second "internal fi¬
establishments will get started—
nancing."
BUT 400,000 will go out of ex¬
The difference between these
istence.

two—equity financing

side participation? Get a partner,
or invite one of its best customers

Such mortality rate has far
been accepted as in¬ to acquire an interest? It has been
It is time that some¬
suggested also that a private or
thing be DONE about it.
Government investment corpora¬

up.

too

long
evitable.

Small Business Must Grow

tion be formed for the purpose of

purchasing
with small busi¬
ship shares
We all know the pet
All these
bad management, poor
to destroy

today?

answers:

planning, under-financing, inade¬
small
quate supplies.
An economist, of the Federal
There is a grain of truth in each
Reserve Board expressed this re¬
of them, but even put together,
these explanations do not tell the cently as follows:
full story.
The heart of the trouble is that
small business

today has no even
^chance to grow—as it should be
allowed to do if it is to play its
role

as one

of the cornerstones of

the

For

small

business

raise

its needed capital by forfeiting
its independent status would be
to

aboli'sh

that

which

has

primarily sought to preserve."
There can be no doubt that in
the case of small business the sale

economy.
It is really that
simple.
of any form of part ownership
As long as we
consider the would carry with it a consider¬
problems of small business under able amount of control.
Even a
the heading of "small versus big" minority share would
have a;
—we'll never find their solution. voice in the management of a I
Small business is a vital problem small business.
Silent partners;
for big business, too. It would be do not always
stay silent, and if>

very short-sighted,
brush proposals for

typical example of the
and staying power of
small business even in the face of
offers

strength

toward

trend

concen¬

against too
much internal financing on the
part of big business is that too
large withholdings in times of de¬
pression would cut down consum¬
ers' spendable income consider¬
ably.
That is the economic rea¬
son why at times extra taxation
A

second

reason

undistributed

income

cor¬

translate

certain

nomic

policies—such

eco¬

ening

the

small

financial

business.

The

position
same

would

porations has been resorted to.

rest?

of mod¬

would profit
across-the-board tax cut.

by an
There

The Traditional Method

size

erate

strong pressures in Congress
now for just such a course.
It is
claimed that only such procedure

are

Yet

tive treatment

possible tax cut.

treatment

would

Congress
tax

to finance

why

its
earnings without being penal¬

ized.

This

has

ditional

always been the tra¬

method

ness

created

however.

taxes

small

busi¬

and

special

special groups.
I
want to go before
ask

for

commercial

time

businesses

rather

than

The

need

there

that

tremendously

problem,
to increase

in order
financial

the

gress,

good
new

well

reason

selective

And

believe

Republican
as

for

Con¬

the Administra¬

sources

tion, are largely sharing this view.
Let us take this argument apart:

war

mdbilize

all

our

re¬

for the financing of the
effort, greatly limited the op¬
portunity for small business to fi¬

deny the justificaucu^
tion for selective tax cuts at any
we

were

10
to

time to DO

something about it if

road

successful

business,

cleared

development

for

just for today

not

small

and

tomorrow but perhaps for a gen¬
eration to

Small

come.

business

chance

must

grow

be given
bigger by

making it possible once again to
"plow back" a greater part of its
earnings into its business—instead

being taxed out of any chance
financing larger sales or capi¬
tal expansion out of earnings.
What Kind of

rate

because

tax cut at this time, we argue

serious

business. '

across-the-board

small

reconversion to full peace¬
production has been delayed

by industrial disputes.
Yet, if we argue for a

for

There has been enough lip serv¬
ice to small business. Now is the

special

lower corporation tax

other

chances

of taxation for small

printers

than you would go and argue that
automobile manufacturers should
a

To bring about a real

the

financing, it is necessary
develop a broad new program

the
no

Here is where the something entirely different.

to grow.

war

for

for
more

for

cut

have

itself through

should

There

your

own

reason

and selec¬
in the distribution

ures" for special groups

small

tion

the

and more rec¬

business
to

the

ognized now that there is a great
difference between "special meas¬

business must be put into a posi¬

than

That

"equitable."

would be

back.

change

No doubt, business even

But the real difference between

business has not.

argument tion

the weight of the

does

OX xne
therefor, <to one of the .cmex customers ,ux .ai iuoiwc itself out °f
chief customers of ,a nance
the assistance small business were permitted toil
It seems clear that the Congress

board cut or should an attempt be

made

and holding owner¬
big and small business lies, of
in small businesses.
course, in the fact that big busi¬
proposals would tend
ness has access to equity financ¬
the independence of I
ing from outside — and small
business ownership.

What is wrong
ness

time to

the pro¬ hold true of
any across-the-board
of
economy,
we
must
guard tection of mass purchasing power cut that might be possible at this
or the economic strengthening of
time. The 20% tax cut that is be¬
against too much concentration of
economic power in the hands of small business—into specific tax ing talked about would
bring yio
relatively few companies.
There measures? Whatever is to be done, marked relief for small business
can be no
doubt that there is a the decision must be made now— because taxes stili would .remain
trend toward such concentration before Congress acts.
so high that the accumulation
,of
Congress is now wrestling with reserves out of
and if large corporations are
earnings for ex¬
given too much leeway in the tax- this important problem.
pansion would not be stimulated
Therefore, let's pause here for sufficiently to solve the small
free withholding of profits for in¬
ternal
financing
purposes,
this a moment. If the choice must be, business financing problem.
at this particular time, between
trend may well be pushed along
Small businesses still would be
an
across-the-board tax cut or a
further.
handicapped tax-wise in compari¬
Fortunately, my own industry system of selective cuts, where son with small business a genera¬

in¬
general
It is obvious that we have not ternal
financing—often represents
yet licked
the small business the difference between big busi¬ tration.

closes for each new one that opens

desirable

it is possible.

to preserve our form

are

versus

problem. This year's balance sheet ness and small business.
will be moderately better than
It has often been asked: Why,
what is considered as "normal." if small business needs
money for
Normally,
one
small business expansion, doesn't it invite out¬

to the extent

grow

into the business.

financing

ternal

rests with its ability to well
If
"plow back" part of its earnings

some

Plan

Any plan offered as the solution
for this problem must be:
Simple in concept.
Possible in point of costs to the

Treasury, and

Reasonably

easy

to administer.

We—that is the printing indus¬
try believe that we have such a

plan.

We offer it today for your
not as a tax plat¬
form for the commercial .printing
industry—not even as a platform

consideration,

for

general small business tax
but as a platform "for
-—
-—

reform
--

sound business taxation behind
would freeze ithe tax sys- [ which, we believe, all,businesses—
tem once and for all and make big or small—should rally because

time

Volume

165

highly

THE COMMERCIAL & FINANCIAL" CHRONICLE

beneficial to the whole
It would benefit every

economy.

business at least indirectly and—

through providing
expanding
small

jobs in
businesses—it

would benefit labor

These

Accelerated depreciation would
tax-free investment
of earnings or a flat be particularly important to small
and
new
businesses
because
it
corporation tax exemption for in¬
corporated small business would would
materially
reduce
their
be a more liberal graduation of risks in connection with capital

accomplish- something proposal

would

ij;

Number 4566

proposals

corporation tax rates which would
favor

well.

would

ap¬

small

the

than

company

heretofore.

plied generally have value to all
business.

for

out

reserves

general, we are thinking in
of reaching the maximum

postponing the

great impairment of national rev¬

tax

fathomable

thus making the entire pro¬
impractical and secondly,
because the needs of small busi¬

15% for the second $10,000 of net
income and be advanced by cate¬

cerned,

gories of $10,000

actually

first
with

concerned

cer¬

because

avoiding

too

enues,

gram

ness

most acute

are

and, properly

must be

given first consideration.
The goal of this program is to
generate
self-financing
on
the
part of small business.
businessmen recog¬

Most small
nize

that

the

structure

tax

longer permits them the means to
grow through internal finance. No
doubt dozens of suggestions have
been made for correcting this sit¬
uation. In analyzing the problem,
Printing Industry of America has
considered

tions

most

this

and

these

talk

sugges¬

pre¬

senting these ideas which appeal
most strongly to us. Perhaps there
are other techniques for reaching
the same goal, but we will favor
these until we can accomplish the
and

convenient

That

better,

through other,

ends

same

means

means.

that small business

porated—must be given
withhold

—tax

chance

its earnings
purposes of
inin the business.
of

part

free—for

Vesting

them

At present

business earnings are
taxed regardless of whether they
be

are

with

not,

this

used

the

enterprise
exception—and

relatively limited im¬
portance to small business—that
the portion of corporate income
within

retained

business

the

double taxation

avoids

rate

under

the

income tax laws.

rate

mum

The

start

than

until the maxi¬

reached at $100,000.

unfair rise between
and
$50,000
should
be

present

$25,000

eliminated

and

duced

the

general

maximum tax rate should

re¬

step in the direction
eliminating double taxation.

All

business

would

benefit

from

this program.

Third

step

overall

tax

program for small business should

provision to help overcome
the considerable degree of vul¬
nerability of small business to

Net Earnings

changes in general business condi¬
tions.

Small

business

less

such

way

that

busi¬

small

given the opportunity
taking
a
special
deduction

nesses

are

based

net

business

earnings reserved fcr

than big business
—again primarily because it has
no
cushion against business re¬
pression-proof

verses

the

That

form

financial

clearly dem¬
onstrated by the fact that smaller
can

show

businesses

much

larger

percentage of current debt to
nual total sales than

an¬

larger enter¬

percentage could reason¬
ably be set at 25% of net income
derived

therefore, shows
sharp swings in net earnings from
year to year. Therefore, it would
be only fair if small business taxes
based

are

an average level of
The established mech¬

earnings.
anism

such

for

treatment

"cari^y-forward
provision" which permits business
to carry forward losses from one
year over a specified number of

business

from

But it

was

but not

eral

1921-1929

the

such

use

limited

the

reserve

year—but

the

for

lag

should

reserve

business

same

time

two

permit¬
use of

necessitating

The small
businessman should be permitted
years.

to pick

the opportune time for a
capital investment but such dis¬
cretion must be tempered by ad¬
ministrative considerations
ministration

would

such
too

become

ad¬

lav/

tax

cumbersome,

if not

impossible, if the period of
grace for the actual investment of
accumulated

such

reserves

set

have
Also, a
invest¬
ments for which such funds might
too

long

and

books

would

remain open too long.

clear definition

used

would

of proper

required.

It has been contended that while

this

proposal

economically

desire

provision

and

small

business

sev¬

again

(In

war.

1939-

1941.)
in

serving society by assuming
and expanding production,

are

risks

rather than all businesses regard¬

their

productive activity.
That puts such a provision into
the category of selective tax cuts
—with

decided overall economic

earnings from

one

provision
perhaps seven years.
It is possible that

overwhelming
business

the

despite

most

the
Treasury Department or the Con¬
gress
may
feel that it involves
too great risk to the Government
in maintaining a proper fiscal bal¬
In

ance.

that

event

necessary

carry-forward

suggest
retain the

provision

business

small

measure
only, a
placed on the amount of
paid which may be used for
carry-forward
purposes.
This
might be fixed at $50,000 and

limit

taxes

little

tax

measure

the

first

could

$10/000

have particular

aging

value in encour¬
enterprises.

new

recognizes

that

cor¬

ation

rates.

taken

the

used

such

piece

same

porate taxes are double taxation.

—another closes

This double taxation falls heaviest
the

small

ness.

incorporated busi¬
We, therefore, propose that

move

the

direction

eliminating double taxation and
placing the smallest incorpo¬
rated businesses on a parity with
unincorporated business, the new
4ax law should exempt the first
$10,000 of corporate income from
corporate income taxation. It is
worth noting that this principle
was accepted in connection with
the excess profits tax structure
where an exemption on the first
$5,000 and then upon the first
of

$10.000
The

was

granted.

logical counterpart to

the

income several times
As

for

down.

This leaves only one

proposed

our

overall

small

more point
platform for an

business

tax

pro¬

gram.

are

to make
newly ac-:
quired asset chargeable against
taxes during the first five years
of its life—the other 50% over
the

cost

its entire normal life.
A

second

plan

would

charge off 35% of its value in the
first year, while depreciation of
the rest of the cost would be dis¬
tributed

over

the

plans

life

normal

the other is merely a
degree. A 35% immedi¬

small' business.

small

businesses.

war-time

for¬

importance of
and the in¬

industry

American

market

concessions
land

when

by Swiss watches into the
of

trade

through

the

tariff

House

and

Senate
:i:

Economy Note: While the gov¬
selling heaps of desks
typist
chairs
as
surplus
through the War Assets Adminis¬
tration,
other Federal agencies
ernment is

and

buying

are

brand

Commission

hold

buying

expects

hypodermic

for-

shortly.

once

The

expiration

last

indicates

war

level

such

facilities

maintained

the

the form of

(1)

(2)

credit

brief:

system should permit
business to accumulate
out

reserves

earn¬

ings for investment in the bus¬
tax system

should include

graduated scale of corporate

which

would

the

part of small incorporated bus¬
inesses.
The tax system should

contain
a
seven-year
carry-forward
provision for small business in
order

to make them more

de¬

gency

tax

limits.

not only for the com¬

mercial printing industry but for
small business generally.
We believe in this
such

other

join

program

degree that we are inviting
small business groups to

effort

put

across.

And

future emer¬

any

differ both in char¬

may

oiLthe last war."
*

Si!

si!

Planning Paradox: Potatoes al¬
ready are in mountainous mar¬
ketable
surplus
and
Federal
economists foresee huge surpluses
of
other
crops
within
two
or
three years.

believe

the

consumer

30.

Congress

controls, and

chance the Board may

liberalize them in the interval.
*

strongly in

being dissipated by cost of
living rise. Money in circulation
aggregated $28,265,000,000 the last
of January, a $900,000,000 drop

are

Christmas

since

Eve.

decline

record

for

This

was

similar
period.
Watch
for
February
figures to confirm the trend.
*

any

Nonetheless, Interior
Secretary Krug tells Congress un¬
counted millions must be spent to
reclaim
and
irrigate new farm

Every dollar of savings bond
sales in excess of redemptions

the

eral debt unless Treasury plans
capsize. In the past 11 months

before

lands

1967

si!

that

si:

with

filled

1947's

cloakrooms

smoke

plenty

sprouted

—

have

—

that

talk

era"

"new

this

industrial

sincere,
by

(2)

(1)

part

would-be

au¬

liberals

did want labor laws

never

revised. It can't be disregarded,

Treasury

sound labor legislation.
-I'

Federal Reserve Board may

but

hurt

will

Banking

Committee

They're

publicans.

mauled

haunted

not
by

dollars,

which

was

economic

obstacle

installation and utilization
of radar blind landing devices by
commercial airlines is pilot re¬
sentment. When landing by radar,
pilots must relinguish plane con¬
the

trol

this practice

ground.

They objeqt,
would relegate
them to subordinate role of mere
CAB

chauffeur.

Re¬
Federal

directive may be

to convert the fliers.

necessary

Reserve

Banks

may

learn from Congress

they

national

na¬

rapid

lapse, blame the Board's policies
part for this specter. Don't be

the

seven-eighths

soon

Fed¬

held by the banking

element

Human

col¬

fear

dedicated

reduced

fear

enactment

complicate

bank-held

system.

by tough labor legislation. That
talk isn't just hot air, is

tional debt by more than 20 bil¬
lion

should not be endangered

peace

can

'Will

year

retirement

the

si!

Congressional

why

assessed

are

pay

the
pub¬

$12,000 yearly salary of

sober

surprised if the commitee hears
proposals that the Board be

eral

abolished.

assistant to the Chairman. He's
if

some

lawmakers

dangerous

More will
be
heard
of
this
philosophy
when the Banking Committee's
currency

licity

rationing.

carried

man

Reserve

former

Board

manipulation
of member banks is viewed by
Reserve

spondent

Board's

the Fed¬
roster

Washington
and

said

corre¬

the

highest paid public information
specialist
roll.

inquiry

the

Federal

pay¬

Congressmen pressing

into

for

government

projected inquiry into the Board

publicity and propaganda want
to know
(1) why the Board

materializes.

needs such
if

accelerated

tax program

June

restric¬

credence to the doctrine that per¬
sonal savings from high war pay

quirements in

pression proof.

defined

Money circulation figures give

favor

earnings

for investment purposes on

over

extend the

should

that

won't
there's

Reserve Board

productive

tax

small

could

tions

House

another

installment

modification

the

typist

new

chairs of streamlined upholstered
aluminum costing $45 each.

op¬

Congress
"The part played
by the domestic watch industry
.

ac¬

fact.

(unless

:i!

Washington

Tariff

position checks them.

Switzer¬

1936

sponsors

that- to

inatory. They'll elbow it through

agreement.
#

The

who

submitting four specific
designed in their en¬
tirety
to
bolster
the financial
strength
and stability of small
businesses—both incorporated and
unincorporated.
Here they
are
are

proposals,

We believe that this is a sound

It is the

roads

part

has
directly
to
do
with
the
strengthening of thfe capital struc¬
ture of small businesses.

Strangely, this
posted by the U. S.

was

Commission

bloc

Farm

knowledge

competition.

invitation

thored

Summary

That is another provision which

proposal for accelerated deprecia¬
tion of new equipment purchased
by small businesses.
Here again
the principle in¬
volved is to permit a larger share
of earnings be used for a strength¬
ening of the capital structure of

eign

over

and

Even so, they deny it's discrim¬

nurtured in this country and pro¬
tected from destruction by for¬

hungry may be fed.

depreciation plan would be of
particular value, however, if it
should become necessary to pull
business out of a slump.
This, then, is our tax program
for

can

evidence that certain vital na¬
tional defense industries must be

The advantages of one of these
matter of

much

they might

crop

sell.

system should permit
depreciation
for
small businesses within closely

Depreciation

how

canners

given

lenged to pit their philosophy
against indisputable World War II

acter and magnitude from those

open.

would

plan

4. The
Accelerated

chal¬

capacity could be expanded. Re¬

handling
depreciation, two al¬

accelerated

One

equip¬
against

over.

the method

ternatives

not

care

ment could be written off

and

see

been

that

accept as inevitable the fact that
for each small business that opens

tell

have

credit

accumulation

specific alternative:

:J:

talk

to all commodities. The legisla- z
tion would allow producers to

industry capable of making time
instruments and other precision
devices. But there is no way of
determining at what peacetime

applied

rates

must

processors

facilities if
these are transferred merely for
the purpose of increasing depreci¬

not

the

traders

Food

controls

that

taken

tax

waste

h -: ::?

long and convincingly to block >
the
Hope
bill extending
the i
marketing agreement formula

Board

a provision would cut down
mortality rate of small busi¬
considerably. It is a tremen¬

economic

under¬

another straight jacket

need for maintaining a domestic

ness

dous

for the nation's economy.

must

the

Everyone

$15,000 of

acquired in any one year.
All
businesses—big
or
smallwould enjoy this benefit to this
extent, however. This plan would

such

propose

restricted

assets

2. The

doubt

and near-great of their party.

watch

stabilizer.

little

and restraint by informal,
friendly contacts with the great
green

Free

thority

and

where

the

business

small

iness.

can

lawmakers

freshmen could rub off

the

remain

smaller business an added role

economic

old

ing

Accelerated depreciation, in or¬
der

tax-free

There

for

social

abuse.

would thereby cover a vast ma¬
jority of the Nation's enterprises.
This limiting feature would give
an

arranged
for the

GOP

new

warded to congressional tariff law
writers this week a report stress¬

vear

(measure,

ordination

Here again, however, safeguards
must
be
introduced
to
prevent

ate

support
this

for

asked

Washington And You
(Continued from page 737)
sponsible
for
Republican co¬

Tariff

the asset.

next,

I -bould not

standing audience.

benefit.

administer.
a

con¬

depreciation

grow,

it would be too difficult to
Accordingly, if such
plan cannot be accepted, we

are

temporary reduction in revenue
would directly benefit those who

sharp vari¬

the carry-forward
should be extended to

the

sound and furnishes an answer to

the

straight

periods before the

ations

without

use

Due to the frequent

Accumulation should be
ted

also

plea'sed to present

was so

this prpgrhrh to

small.

50%

provision is nothing new
and nothing startling.
It was in
effect during
the war, coupled
with a carry-back provision un¬
der the excess profits tax system.

why T
have

for the Government. Such

revenue

the

earnings

$25,000.

exceed

rectly,

prises.
Small business,

of all business—big or
That is one of the reasons

get-together

revenues

involves merely a tem¬
loss, or even more cor¬
only a postponement of

Care

carry-forward

purposes.

This

future.
tax

accelerated

porary

de¬

This

The tax law should be changed

As far

subsequent years.
Deduction

recovery of capital
distant and totally un¬

the

until

less

A Carry-Forward Provision

reserves.

—both incorporated and unincor¬

this

inviting the

are

corporation tax rate at $100,000
earnings. We suggest that the

limitations

tain
are

here

stress

soundness
we

support

Rapid depreciation increases the
probability of recovering capital
during the reasonably forseeable
future and avoids the necessity of

will

economic

program that

investment.

terms

the

771

(2)

ij!

Congress won't OK in a hurry
Hampshire Senator Tobey's

a costly press agent,
why member banks should

pay

his salary.
if

New

proposal that loan guarantee au¬
thority be shifted from the RFC
to the

12 Federal Reserve Banks.

Portal pay legislation seems to
be

flowing

channels

into three general
thought: (1) limita¬

Early hearings are to be ordered
by Tobey, Republican Chairman
of the Banking Committee. Con¬

tion of portal pay claims to hours

gress will want assurances from
him that (1) the Federal Reserve

Board

would

allow guaranteeing

accepted by custom and practice
as work time, (2) one year statute
limitation,
(3)
compromise
settlement of claims out of court
without

hazard

now seems

would

legislation.1 '

not

utilize

this

new

au¬

employers. It

safe to guess that may
the final shape of portal pay

type of loan guar¬
anteed by RFC. and (2) the Board

the unorthodox

THE COMMERCIAL &

772

fective,

Ift Challenge

(Continued from page 741)
Tne progress in this di¬

rection

centuries

the

over

has

painfully slow and the path
tortuous. And it will so continue
for the road to the millenium is
beset with tremendous obstacles
—chief of which is the lack of un¬
been

derstanding amongst men.
We have understood but little
of the
true functioning of the

society.
Where progress
made,
it has come

Jhuman

been

has

through inspired, enlightened and

dynamic leadership and education.
When that leadership and drive
Jhave been lacking, progress and

-enlightenment have lapsed, and
we have slipped a little lower into
the well of darkness, painfully to
begin again the slow climb up¬
ward when leadership once more

appeared.
of Freedom"

An "Island

in those nations
where oppression exists and en¬
lightenment is discouraged or for¬
bidden, the eternal yearning of
Today,

man

even

is, and ever will be, for free¬
freedom of all types—

dom—tor

for, if denied, it removes him only
step or two from the state of the
animal, and the dignity of man is
destroyed.
In this matter of freedom the
a

rapidly becoming

United States is

"island"

This

mentation.

sur¬

un¬

"grapes

tion

the

system

outstanding

the

the evils of either system may be,

identified

freedom

with

only

either absolute
slavery or some degree of slavery
with the latter—depending upon
the degree to which the latter sys¬
tem has gained control.
But the
two forms of government cannot
long exist together in one country,
and

former

the

and

sooner

later

the

one

light

beacon

freedom,
here, has

shining brightly
been extinguished in many coun¬
tries and is being dimmed rapidly
in other lands.
And we have

still

psuedo-Americans in our
midst who would dim or put out

many

the torch of liberty here—and will
do

we are

not eternally vig¬

ilant!
I believe strongly that through
leadership, example and precept
we should help our world breth¬
ren to keep their lights burning
or

with all my

soul and

mind that above all else we should

fight like crusaders of old, here
and now, to keep our own flame
of freedom strong. Only by keep¬
ing intact the American corner¬
stones of the arch of freedom can

the oppressed of the world possess

Freedom

understood the

facts, would rather
in a capitalistic

ditchdiggers

that
tic

fascist state,

for, based upon
under such a sys¬
tem is completely regimented and
is subject to "liquidation" without
or

all reports, life

dom?

ration.

But

about

worried

become

can

the

termites'

that

same

the

de¬

dren.

our

has

Freedom

most

Soviet

become

would

well

Western

talists

Republics

the

with the stat¬

agricultural

car¬

Soviets

The

e o p

and

the

achievement of

dictatorship of the prole¬
tariat, constitute the political

foundation of the USSR

"Article 4. The socialist system
of

and the socialist
ownership of the means and in¬
struments of production firmly
economy

established

result

the

tens

millions

workers

munistic pot,

controlled by

dic¬

tatorship; our 3,000,000 business
enterprises, large and small, would
be liquidated and all the millions
of stockholders and bondholders,

the

abolition
man

the

ex¬

by man, con¬

Constitution

above?

Might it

tion

Task

stitute the economic foundation
of

the USSR
"Article 6. The land, its nat-

ural ;

deposits,

waters,

forests,

future,

and the important part I

utterly neglected.

appalling price—their all in the

anxious t<

cleverly

coin of Freedom.

We know that

informed pub¬

and Management

become

and

that little that is gooc

possible without cooperation
that class war breeds hatred am

destruction; that each of the three
is necessary to maintain and im
prove the standard of living for
the public at large; that the gif
of freedom brings with it the re¬

sponsibility of freedom; and-thai
the type of freedom that we have
is not possible except under our
system of cooperative effort where
free to do creative think¬

and

results

constructive

their

for the benefit of all.

form

creativeness

Quite nat¬

urally
the closests
cooperation
and sympathetic understanding is
required on all sides if the team
coordinate

the

are

active

most

all

disseminating

the

properly,; be ef¬

It is called

tures I have ever seen.

"Deadline

For

Action," produced

by the United Electrical and Radio

mind

CIO organiza¬

Union—a

Workers

effect

The

tion.

created

by this picture was one of
worker
ground
under the

capitalist heel. It seemed to me
to be of an inflammatory nature.
If it had been designed

and writ¬

by the best propaganda agent
in Moscow a better job could not
ten

have

been

from the com¬
view, in attempt¬
ing to destroy the confidence of
our people in the American way
of
life.
An
ordinary workman
could not fail to get a distorted
viewpoint of business, manage¬
done,

munistic point of

and stockholders.

ment

businessman, stockholder
unconvinced of the
dangers that lie before us needs
only witness "Deadline For Ac¬
Any

worker,

tion"

awaken to the peril and

for
sleeps in

the effective work being done

gets the views only of those who
have gone to the trouble and ex¬
pense
of presenting their own
ideas.
Thus the public has well
balanced and complete informa¬
tion or unbalanced and incomplete
information on any subject, de¬

"earnings" and "dividends."
In the face of these develop¬
ments it seems to me that the bus¬

who is and who is not
public opinion can
never be any better than the facts
possessed by the public when it

pending

And

vocal.

forms its

and

views
affairs

on political
from poli¬

spokesmen

government

and labor leaders—either directly
or

his

false

inessmen

through commentators

the

and radio.
Although the American business¬
man sometimes discusses .publicly
oolitical and economic matters, it

press

paradise

the

nation

"sales,"

are

su¬

pinely permitting the story of free

enterprise to be told too often in
distorted fashion by radicals and

demagogues without any effort to
counter this technique by an ef¬

presentation of the values
System,

fective

of the American Business

matter

the

judgments.

get their
economic

ticians,

Labor, capital and managemenl
conscious

horts

free press, the free radio and the
free
motion picture—the public

In the main the American peo¬

Capital

Sources

Propaganda

eventual chaos while he

ple

dynamic public and that
an uninformed public is impotent.
But we also know that although
we have excellent media for the
dissemination of information—the
lic is

traveler?

concrete

For that neg¬

if he persists in it, he and
eventually pay

lect,

placed there b:
pro-communist and fellow

need

the American businessman,

all Americans will

with chips on shoulder—especiall:
where the chips in so many case;

Labor,

that

perforce, must play in it, a part
that to a very great extent he has

serving what we have and im
proving it, instead of going arounr

of Businessman

background I
talk specifically about the
States,
its welfare and

think

cooperate with each other in pre¬

much

Too

the

United

Americans to think a bii
soberly about their advan
Ane
tages and their freedoms?
them to be

victory'."

with

want to

good

cause

Churchills

the

revolu¬
preparing for struggle

are

Now

as
quotee
inspire al

not

Neither

—and for

the

great deal—much too

agen¬

rades, the forces of our

citizen, in accordance with the
principle: 'He who does not

Russian

(head

strengthened now that it would
to operate underground.
'Throughout the world, com¬

young or

work, neither shall he eat'."

Yudin

publishing

have

ing, free to move and act, and.
through cooperation, express in

ploitation of

elected

himself

get

men are

and

in order

to office.
We all know that, because we have
to

their views to
public.
They get out pam¬
"..
When the Communist In¬
phlets; they write for magazines;
ternational was ostensibly abol¬
they produce motion pictures with
ished, in May 1943, I was no an anti-business slant. Their views
longer working in the Sovnar- on economics, witness the recent
kom.
But the explanations at
Nathan report, are widely pub¬
the closed meetings of impor¬
licized by press and radio; and
tant Communists were consistent
many of their statements are nat¬
with what men like Yudin had
urally biased.
told us.
Only in the formal
Labor leaders, indeed, have a
sense, we were given to under¬
plan of action and are dynamic in
stand, had the world-wide or¬
its execution.
For example, re¬
ganization been ended.
In fact,
cently I viewed one of the most
the personnel and integration of
amazing and startling motion pic¬
the International must be

of economy, the abrogation of
private ownership of the means
and instruments of production

Hemisphere.

that should be necessary,

seen a

ist and 'labor lackeys' can stop it.

abolition of the capitalist system

the march here

ex¬

people astray on fundamentals, if

—of it.

others.

people of modest means; the
savings
of these
same
people
would be poured into the com¬

enlightening

few

Party and
citizenship.

and Roosevelts nor their social¬

Should Cooperate

Soviet

frequently the government
cies but now representing the
bureaucrat is only interested in
propaganda section of the Cen¬
perpetuating himself in a govern¬
tral Committee of the Party)
ment job, and, therefore, becomes
takes the floor. We listen with
an expert in that type of rational¬
every pore of
our
bodies. In ization which will
justify his being
England and America, Yudin continued in his
job. One seldom
tells us, a mighty tide of faith
finds
a
government bureaucrat
in the Soviet System is rising
who will admit that he or his de¬
among the masses.
He quotes
partment has made a mistake.
J. B. Priestley, Harold Laskiand
The labor leaders and their co¬

and

are

•

"Comrade

the

in other nations of the

1 e's Deputies,
grew and
attained
strength as a result of the over¬
throw of the landlords and capi¬

ridicule

minority, but it is an
energetic,
vocal
and
insidious
minority, which is always more
potent and effective than an in¬
dolent/ indifferent, and inarticu-

Union

which

£ So far, the communist group
here

Socialistic

Working

anyone's suggestion that we might
it. And so, like anything in
abundant supply, we are indiffer¬
ent to, or careless about, it. But if
I interpret the news correctly we
individually and collectively, must
become vigilant, for the enemies
as

tel

the

The

socialist state of workers and

lose

of freedom are

read to you a few

"Article

breathe.
much

accordance

utes

peasants.

of our everyday lives that
Americans

Let

"Article

part

for

stitution:

Born and bred in freedom as we
are here in the United States, it is
so much a part of our lives that
few of us are any more conscious
of this most priceless of assets
we

strip

excerpts from this Russian Con¬

of the air

comic

—

breed of termites to our own

we are

Soviet Socialist Repub¬

just one
hour
he
would
be
amazed,
shocked, and enlightened. And he
would be on guard for himself
and, above all else, for his chil¬
or

bouse.

than

the

lics—if he would give up the radio

may

the Constitution of

Union of

neighbor's house
fail to see and stop
the destruction being done by the

struction of

adult American would
one hour only

time out for
read

his

government

are

If every

Communist

connections

for themselves:

busy planting lots and
I can't see in that provision any
lots of acorns of dissension.
As freedom or
liberty for the working
dissension grows and spreads here
man!
our
enemies can follow the old
Don't you think it would be ol
"divide and conquer" technique.
incalculable value to our nation il
And what fools we are to fall
every American had placed before
for it!
him at least these Articles of the
they

quote

his

cerpts from his book, which speak

old, widowed or orphan¬
ed, would be wiped out.
notice.
This is the picture from the side
But how much do you think the of private ownership and, as we
American masses know about the all know, practically every adult
insidious forces at work in the American is a capitalist in one
United States which are planting degree or another. Now what is
seeds of discord, insinuating them¬ the picture from the side of the
selves into important departments workers? And they are capitalists
of
our
Government and
labor too.
Well, here is article 12 oi
unions,
inspiring programs the the Communists Constitution:
outside coating of which is sug¬
"Article 12.
In
the
USSR
ared, with the inside kernel bit¬
work is a duty and a matter ol
ter gall and basically anti-free¬
honor
for
able-bodiec
every

and

possessing the freedoms
with it, than to be the

society,

take

work, creativeness or other aspi¬

—in

our

the

In addition to

farm enterprise,
every household in a collective
farm has for its personal use a
small plot of land attached to
the dwelling and, as its personal
property, a subsidiary establish¬
ment on the plot, a dwellinghouse, livestock, poultry and
minor agricultural implements

Sovietism

vs.

Americans, if they really

Most

severed

renounced

obtain complete su¬
Under a constitution like this in
In the capitalistic so¬ America, the homes and lands,
ciety we find freedom of religion, automobiles and tools of millions
freedom of movement, freedom of upon
millions of small people
the press, freedom of speech, and would be taken from them; the
the many other freedoms. In the millions of farmers in America
state dictated society the freedoms would
relinquish
their
farms,
must be eliminated or greatly cur¬
houses, cattle, and farm machinery
tailed by the very nature of that
to
the state; our life insurance
type of government.
companies would be destroyed,
taking away the protection given

segments of that areh.
Every true American is against
system which enslaves people
anywhere and takes away their
right to free expression of them¬
selves, whether it be in religion,

with

the

premacy.

ihe hope of rebuilding their own

any

...

tician will not hesitate to lead the

later

must

other

These radicals know that great
rekindle those snuffed out But oaks from little acorns grow. And

believe

chasing Commission. Eight months

municipal

collective

lic,

in¬

and

well

its basic income from the pub¬

controvertible fact that, whatever

highest "Deputy" of a communis¬

The

"Article 7.

Without getting into the vast in¬
tricacies of either system I would
observe

property, that is, belong to
whole people.

socialism.

state

versus

like)

froms

affairs

economic

and

cal

politicians,
government spokes¬
named
Victor
Kravchenko who men, and labor leaders, it is nec¬
came to Washington, D.C., in 1943
essary for all of us to be ever con¬
as
a
member of the Soviet Pur¬ scious that the demagogic poli¬

enterprises and the bulk of the
dwelling houses in the cities and
industrial
localities
are
state

capitalistic

so-called

which, under one system or an¬
other, one "ism" or another, have
herded, or are herding, their peo¬

us.

the

Expressed in the simplest terms,
the
world
ideological
struggle
seems to revolve around the ques¬

permit the

is synon¬

Freedom," a book written recent¬
ly by a former Russian communist

machine and tractor stations and

thistles."

that figs grow on

strike

post,

plucked from thorns and

can

that

convinced

become

more
involves the

because

basic conditions which

operation of a free society.
On this question of the people
ymous with a bed of roses should
take time out to read "I Chose getting their information on politi¬

banks,

transport,

air

important, and much

serious

who

American

gullible

thinks that communism

telegraph and telephone,
large
state-organized agricul¬
tural enterprises
(state farms,

rounded, in most cases, by nations

ple as we herd sheep here. The
malignant disease
is spreading
rapidly and now
threatens to

and

ter

the Pied
Piper's tune of false doctrines and

it happen in Germany, to

of state supremacy and regi¬

sea

masses,

The

wa¬

warned, can succumb as we saw

kind of "island of freedom" in a

The

majority.

late

mills,

make good progress

and

down the road of better living.

to Management, La bor and Capital
factories, mines, rail,

vantage.

Thursday, February 6, 1947

FINANCIAL CHRONICLE

educational

public relations along
broad lines the businessman is the
work

and

His new role, if he
be one where
he takes over his proper share of
the burden of telling the public
the facts as he sees them—abput
missing link.

will assume it, must

America, about the American Bus¬
iness System, about the values of
our freedoms, about the curse of

concerned

regimentation, about the evils that
grow out of the bureaucratic sys¬
tem, about the value of free mar¬
kets,
about the importance of
ethics and high morals, about the
importance of the homely and

himself with the making and mer¬

fundamental truths of life, about

of his products, and
has done a magnificent job in both
cases.
But his articulateness has

the importance of work, about the

comparatively

rare

occur¬

and his is not the stentorian
beguiling voice of the others.

rence,
or

Nor has he made

have

the

others.

art of it

The

businessman has chiefly

American

chandising

been

ing
vear

mostly confined to the sell¬
of his own products.
Last
he spent

approximately $2,-

500,000.000 talking about the qual¬
ity, merit and price of his prod¬

the radio,
and through other media. But fhe
problem we face is much broader,
uct—in

the

press,

importance to us all of our main¬
taining the cooperative effort, and
the

about

many

important to
tain

Tbe

should
ened

other factors
we are

to main¬

free America.
American
do

all

this

businessman
in

enlight¬

self interest, if for no other

reason.

After

all,

the American

businessman «an perform

his work

■

•

Volume 165

Number 4566

under the present American Bus¬
iness System only so
long as that
system is permitted to continue.
If

and

thinks

wants

it is good system
continue efficiently

to bake
bread, make steel or fab¬
ricate automobiles under
it, then

should

out

and

"sell"

the

system as effectively as he sells
the product he makes. If his is

their

eye

the net profits

dividends, and that,

hired

they,

the

Election

Only

Respite

Last November the American
Business System was given a re¬
spite—but not for long;
controls

ment

Govern¬
slowly chok¬

were

ing it to death. It

well

was

its

ice in

trasted with that which

lowered

being

conceive that there is

cannot

stockholder,

any

large

this

small,
to have

attitude
kind

and

interested

has

dividends

those in favor of a "planned econ¬
omy," regimentation and a system

the

tion

are

the

per¬

society-which

own

"State"

The

controls.

Roman

stockholders

this

more pro¬

labor

the

relations,
great deal

marvelous

work

it has

done and

classes

workers

within

its

of slums in New York City
erecting fine apartments for
people in low income brackets.
But

na¬

wide

thinking about this
subject, if they are sitting back in

has

one

find

look

even

far

and

examples

of
character of educational and

Emperors' idea of "circuses and
bread," the guarantees of all types,
including the promises of freedom
from
responsibility,
were
the

dividends, if they do not recognize
the perils of the
future, then it is

We must remember always that
it is better for private industry

"come

on"

obvious

numb

men's

'"planners"
the

anesthetic

the

—

brains.

the

And

actually aided by
fraternity either
latter's indifference,

were

business

through the

their willingness to go along pro¬

smug

better

that

start

holders
real

interested

way

only

businessmen

perspective and

steam ahead

tivity on the part of businessmen.
That, generally, was missing. No,
the travesty of it all is that the
public gave the respite because
their palates and stomachs craved

full

It should be very

vince

the

simple to

stockholder

switchover

that in

the

communistic

related system he would be
time

loser, first

ican.

and second

free

two

has

been

possessor of

main

products.
|

that

is spent

money

only

of this

benefits

modest

total

per-

expenditure

program of edu-

the

directly and

derived

in-

j directly from our American busi-

great deal of time j of living not even approached in
to complaining about many of the
| any other country, and the reaunsavory
and dangerous condi-1 sons why we should continue it,

suspected

that

government

controls and regimentation
be

the

them.

trols

their

might

not

getting
This time government con¬
cause

directly affected the indi¬
vidual that he revolted against
the regimentation which was in¬
terfering with his normal life.
so

The fact is that many phases of

regimentation

artfully hidden

are

that the public is not conscious
<of their existence until they begin
:so

Tto

And

squeeze.

rtoo

late.

then

Those who

are

may

favor

tof America's

;after

patterning its system
planned economies of
and Asia will persist in

the

Europe

their attempts,

especially driving
Ihardest at a time when the public
is not affected by a scarcity of
essential foods, clothes and hous¬
ing. Eventually the totalitarians
well may be able to take over on
a permanent basis.
After all, in Germany the busi¬
interests

ness

the

beginning

(either cooperated with, or, by de¬

fault, permitted, the Hitlerites to
get control.
It is well to remember that the

public has

short

memory.

tions

what
of

bureaucrats

would

happen to the price
butter and other com¬

meat,

modities

OPA

controls

were

taken off, and we returned to the
law of supply and demand, it will
all be forgotten in another year
or

two by

forgotten
sumes

them. But it won't be
if the businessman as¬

his

education

responsibility
the

their

number of business leaders

who tell

that they are greatly

worried about the outlook and

are

unfor¬

govern¬

whereas

public

helping

educate

fundamental

facts,

constant, active, and

interest

profound

of the nation

the welfare

whole.

have

progressed

technical

research,

America

mass

have

in the way

—that

they

their

the work
that it should be done
would

subject

the criticism of their
that stockholders

stockholders;
constantly have

fields.

national

There

scene

and

ex¬

are

alarm

were

up,

would

frontier,

that, whereas

standpoint of the mechanical
still

are

kindergarten
relations.

Educational Advertising
There has been
work

a smattering of
along the lines I am
about.
For example, in

done

talking

direction

Amer¬

Summary

Summing

have graduated from college from
we

fellow

icans and urge them to action.

businessmen have

in the matter of human

danger,

I would

I not to express

in the field of human relations.

arts,

see

be
derelict in my duty as an Amer¬

seem

danger, ahead.

grave

stupendous job before

educational

ad¬

vertising, not concerned with

spe¬

then, American
an undeveloped
entirely unex¬

almost
plored, in the matter of their re¬
the various seg¬

lationships with

of our society.
Business¬
individually and collectively,
must take such steps as are nec¬
essary to halt the forces of dis¬
ments

men,

cord which

are

rapidly developing

America and will envelop it if

not

checked.

men

must

American

begin

business¬

devote

time,

money

and energy to take action

cific brands or

the

and

products, but about
industry that has and is ren¬
dering great service to everyone
the

nation,

the

electric

light

and power companies have recent¬

sell

the

business
way

American
of

value

life

of life

American

making that
possible.
American

system

way

the

businessmen must

help the public
in America to avoid being misled
by false prophets. American bus¬
inessmen must forge the missing
link

run

out

the

advertisement pointing
service those com¬

great

have rendered over the
to the public. I quote a part
the

trates

idea

"selling" the
American business system, as fol¬
lows:

"When

Edison

first power-plant

opened
in

tricity cost 25 cents

inventor's

price

across

cents

the

1882, elec¬
kilowatt-

the
per

birth,

the

household

average

electricity

country is only 31/3
kilowatt-hour.

"Thanks to Edison's imagina¬
tion and enterprise—'hanks to

the

between

courage

and

initiative

many men and women,

the

business

American

educator
of

which

and
he

has little real knowledge.
In

that

must awaken

to the fact

his

importance in the com¬
not dependent solely
whether he makes cheaply

munity
upon
a

benefited

handecf

heritage

from which

which

and

have

in all

we,

good faith, must protect and harnl
down to those who will, in a very,

few years, follow us.

very

Investments
(Continued from page 738)
how often is

possible change in
power of the cur¬

purchasing

mentioned in

rency

will

good loaf of bread, a good can
or a good ingot of steel.
importance is not solely de¬

States

fared

reason¬

real

income

obvious,

trouble themselves to consider the

reduced.

There

need

pendent upon whether his stock¬
holders get as many dividends or
this year than last year, but
an un¬

derstanding of fundamental truths,

j principles, and economics which

working 1 will insure the stockholder's abil¬

men

bring this

considering those countries where
the

Prices of

was

wild

that

political

conse¬

well ask: "Why
now? The danger

may

inflation

and

Is Inflation Over?

Trust

drastically

was

seems

commodities

over.

begin¬
there are

are

purchasing power ning to decrease, and
reasons
to believe that the pur¬
entirely.
In
France, for example, a country chasing power of the dollar will
rich in natural resources, and with increase, accompanied by a mod¬
erate firming of interest rates."
a very thrifty population, official
Such a question seems justified
commodity prices today are about
eight times higher than in 1939. because, as conditions are at pres¬
Prices in the black market are ent, the principal cause of infla¬
destroyed

the

currency

tion seems to be over, at least for
substantially
higher.
In
1939
the time being.
The budget for
commodity prices in France were
the current fiscal year is, for all
about six times higher than
in
practical purposes, balanced.
In
1914.
Hence, 100,000 francs today
have as little purchasing power the Budget Message for 1947-48,
at official prices as 2,100 francs a modest surplus of $200,000,000
The lowest point in.
had in 1914.
An individual left is envisaged.
rates
has
been
passed.
with a trust of 100,000 francs in interest
1914

still

may

the

have

number

francs

whereas

the

average

same

but

today,
return

i.e., 4,000
francs, enabled its owner to lead
100,000 francs

1914,

With the return of

buyers' mar¬
articles have
already begun to decline and the
quality of commodities is im¬
ket, prices of

many

proving.
But

life, the

relatively comfortable

particularly

the

because

income derived from 100,000 francs

immediate danger of inflation has

at present is not

passed,

out
one

even

sufficient to eke

miserable existence for

month.
above

The

illustration

clearly

seems
ripe to*
question from two
angles: (1) how to bring about a
decline in prices of commodities;

the

consider

time

the

thereby increasing the purchasing'
purchasing power of a currency power of the dollar, and (2) how
prevent another inflationary
can
affect
the owner of fixed- to
income-bearing
securities
and period.
beneficiaries of trust deeds which
Prices are too high, and a re¬
restrict the trustee to the pur¬ duction is necessary in order to>
chase of legal obligations.
increase the real income of many
people.
Demands
are
already
Pensioners Increasing
arising all over the country for
higher wages which if granted but
The effects of inflation or of a
not accompanied by increased pro¬
decrease in the purchasing power
ductivity, are bound to lead fc>
of a currency are more far-reach¬
still higher prices or, under the
ing today than ever before.
The
best
of
circumstances,
will
at
number of pensioners is constant¬
least nrevent prices from declin¬
ly increasing, due primarily to the
The farm bloc is again active
fact
that
more
and more com¬ ing.
in its efforts to prevent a decline
panies find it desirable to estab¬
in prices of agricultural commodi¬
lish pension funds for their offi¬
ties.
Now is the
time for all
cers and employees. Pension funds
those who have been adversely
economically sound and

indicates how much the decline in

so¬

are

cially highly desirable.
business

ments

Manage¬

concerns

have

recognized this fact, with the re¬
sult that pension plans are being
adopted in increasing number by

Mil¬
protected

American business concerns.
lions

Americans are

by the provisions of the Social
Security Act, and more will be
added in the not distant future.
of

size

the

estates

has

affected
in

the

dollar

decrease,

them

by the constant decline
purchasing power of the
do everything possible?

to
bring
prices.

about

reduction

Second, now, when the peak of
inflation

seems

have

been

passed, and when there are rea¬
sons
to believe that the cost of
living will decline, is the time tn
measures
to prevent a
recurrence.
As a general rule,
consider

to increase.

affairs,

have

entrusted

standing is huge and growing at
a rapid
rate.
Holdings of assets
expressed

fixed number of

dollars, such as time and demand

deposits

-i

the number
The middle nothing is done during neriods
class
in
the United
States has of good business activity to pre¬
clude an
emergency;
but when
grown in recent years; and many
one
arises, hasty measures are
people, realizing that they are not
We have by
no
means
competent to handle their own taken.
tended

is bound

capable trust companies.
The volume of life insurance out¬

helping to create

obligations,

In other countries, he
wiped out entirely or

either

his

has

financial

trust

of soup,

rather

ment

are very great.
therefore, that a
great
many
people
should be
deed?
Yet in periods of
great more interested than they are in. 3
changes, economic and political, the purchasing power of the dol¬
a change in the
purchasing power lar. Despite the fact that the wel¬
of the
currency is the most im¬ fare of so many people is involved
portant determining factor over¬ in the constant gyrations of the.
shadowing all others, so far as purchasing power of the dollar,
the beneficiary of a trust is con¬
however, it is not receiving the
cerned.
attention
it
deserves,
and few

the

His

Current Conditions

While

word, the American busi¬

nessman

anniversary of the great

funds

detail

should

pro¬

This year, as we mark the

carry

not

are

duction, efficiency, and other arts,

the

relations generally, for those

man

ican citizen

is self-evident that, much as

the

managers

problems effectively if given the
"go" signal by industry.
How¬
ever, I do try to follow closely the

and to take

for

not

business¬

100th

the

business

perts in each who will tackle the

hour.

the idea
"something" should be done.
However, they contend that as
"'hired" management they cannot
to

do, either in education work, labor
relations, public relations, or hu¬

that

appropriate

necessary.

But
what

quite in sympathy with

-companies

gently

business¬

for

not

busy

but rather for all of them to

man

circles,

the
ur-

to educate another

man

the

step

one

need

get

labor

and

ment

the

about

developments

chiefly

long

| right direction—a step that is

weakness

sneak

kind

own

tunate

of this advertisement, which illus¬

subject of indus¬
try's doing its part in educational
work, I have discussed the matter
with

businessmen

j it would be

years

the

this

think

too.

standard

panies

for

electorate.

Industry's Educational Work
Now

precious

Even

ly fooled and misled by the state¬
our

So far

upon.

however,

see,

little has been and is being done
by them to counteract them. Then,

though the people have found, in
that they were bad¬
of

can

system, including

I have touched

the past year,
ments

devotes

man

i ness

that, far surpassing

the importance of money and ma¬
terial things are the spiritual free¬

was

they

business-

and the truth

down to

ably well.

meat, butter and other things, and

American

our

true^and priceless assets

possess—a

quences.

the

average

We must renew in
consciousness the knowledge

United

earlier, the ad¬

this

devoted to

were

society.

the

are

and

job better
the fumbling

j eating the American people
experi-

mine

but

the

Amer- j centage

I don't know what your

free

preserve and to protect our

economic

by business in talking about the
quality, utility and the price of its

capital.
ence

ing to

Relatively speaking, the bene¬
ficiary of a trust deed in the

vertising bill of the nation is ap¬
proximately $2,500,000 per annum.

con¬

Let
us,
then, rededicate our
lives to the task of actively work¬

and

the

As I mentioned

the necessary pro¬

con¬

exists in

semi-slave countries.

dom* the educational freedom, the
creative freedom, and the moral
values giveri us in our Constitu¬
tion and the Bill of Rights. These
freedoms dignify mankind. j They

can

industry

cheaper than
bungling bureaucrats.

in¬

effort.

Private

over.

always

grams.

the

work and intense interest and ac¬

take

ing of what is developing in this
country. If this is done no think¬
ing

relations

move
ahead with progressive
steps in the interest of the public
welfare, than to have the "State"

understand¬

didn't go along,

public did not give the
respite to the American Business
System because of any educational

would

stockholder could fail
sist that hired management

And it should be borne in mind

human

educating the stock¬
that they will have a

vided they got "theirs," or through
their fear of harassment if they

that

this

as
us

■a

labor relations, why it
fine "family" spirit among

areas

not

free method of life

our

slave

.i','1"

and

money

invest it.

free

our

organization, untroubled for many
years by labor disturbances.
Another example of very con¬
structive public service is that of
some of the great insurance com¬
panies who are tearing out great

must

our

all

important
to the stockholder than
earnings
and

interest

doing

divi¬

richer, safer,

field

acter of work

system. Of course, the stockholder
watches the earnings of manage¬
ment

And

the American Rolling
Mill Company. It is understand¬
able, when one reviews the char¬

not encourage hired management
to go
out, in a two-fisted way, to
defend
the
American
business

dends, but surely

the

done

would

world.

have studied with

stupid

narrow-minded

the

are

ductive."

dis¬

placed.

permits him

the public

management,

earnings,

sales

done

ity to possess money and stock
as the retention for all of

well

most and the best electric serv¬

petuation of

job

business

lifes

way to gradual but certain liqui¬
dation
through
the
excellent
—

American

this type of work, they would be
subject to the risk, because of

situation

in his ledger or his

the

system—this country enjoys the

spent funds of their company for

with his

The

l&h™

who could be

bankbook.

under

per

share and the

the thought of "after me the de¬
luge" then he should continue
nose

^:v;

THE COMMERCIAL & FINANCIAL CHRONICLE

United States Govern-

eliminated the swings of the

cycle.

ness

busi^

emergencies

Other

will arise in the future;

they

and when

much

they

do,

serious than in the past be¬

cause

the

may

public debt will be

(Continued

page

774)

fso|:
,

afford

Current Com

litions

Affecting

ing
of inflation.
Should
any
(Continued from page 773)
one suggest to them that they rob
larger than it was in 1930
a
widow or an orphan, steal the
when the last depression set in.
food from an old man living on a
A
second
question
may
be
pension, they would shudder in
asked: "If inflation is so serious
horror, yet this is exactly what
and has such an
adverse effect
they are doing.
This is actually
on the welfare of so many people,
what higher prices and the de¬
why don't more of them com¬
cline in the purchasing power of
plain
about
it?
Why doesn't the dollar do to people who live
Congress act to prevent it?" This on a moderate fixed income.
To
question,
too,
is fair.
Despite be
sure, inflation does not destroy
sharp increases in prices, little
wealth; it merely redistributes it.
was heard from our Congressmen,
It robs the creditor; the thrifty;
although some lip service was
the individual who holds fixedrendered. The question of infla¬
income-bearing
obligations, life
tion and its effects on the broad
insurance, savings deposits, and
middle class of the United States
<

much

played

role

during the

last

a rule
question, "How

Trust officers as

election.

did not hear the

inflation?" but
rather, "How can one protect one's
self against inflation?"
The phe¬
can

prevent

inflation

nomenon

for

was

granted.

and

workers

Organized

asked

for

wages,

hoping that it would pro¬
against ravages of in¬

them

and

assure

them

debtor

the

understand

who

all

mean¬

ing of inflation and who can and
take

nomenon.

this phe¬
wasteful

advantage

helps

their rising prices lead to higher na¬
higher tional income in terms of money

leaders

flation

those

trusts deeds—for

benefit

well

and thus make the

Obviously,
like

not

instances, allow a higher
phans.
standard of living than
before.
many

carrying of the

easier.

much

debt

con¬

sistent standard of living, and,

The foreign trade policy of
States should favor

(6)

United

Recip¬

both

exports and improts.
rocal
trade
agreements

which

foreign trade in general
tend to keep prices down through
the free operation of international

foster

tention

the

from

emerging

gradually

world

the

when

now

greatest catastrophe in history and
when influential voices are being
to
scrap
the
reciprocal
agreements. It is desirable
strengthen the forces of com¬

raised
trade
to

petition,
which

encourage invention,
leads to write-offs

and equipment and cre¬
demands for new machinery.

civilized
rob

people

widows

and

do
or¬

Obviously, those who last
withheld

summer

lines

all

kinds

Some of

too high.

are

developments will occur bry
themselves if left to the forces in¬

these

herent

the

private

system

order to achieve
public conscience
have to be aroused.
In

enterprise.
the

others,

will

the

realize that their actions
goods in expectation of higher
spiral between prices
prices, those in government who
and
wages?
While they could
so recklessly spent billions of dol¬
protect themselves momentarily
lars, labor leaders who constantly
against the adverse effects of in¬ ask for increases in
wages with¬
flation,
their
savings
suffered.
out increasing productivity, do not
free, play

various

the

skilled

most

the

even

to make mistakes.

dent

man's

rule

measures

sug¬

Warren York

Opens

Office in New York
PA.

PHILADELPHIA,

T he

—

Philadelphia Stock Exchange firm
of Warren W. York & Co., Inc.,

bound

are

Hence the pru¬
is

advisable

order not to hold trust companies

responsible for things
have

not

gates is

been

that could

foreseen.

states

some

may

Surro¬

have to

The

prac¬

measuring the performance
by market values of

trustees

trusts

accounting days in

parison

with

inception

com¬

values

does

not seem to be sound, par¬
ticularly in periods of rapid eco¬
nomic and political changes. Such
a
practice fosters too great cau¬
tion

the

expense

Notwithstanding
and

hazards
in

ment

zation,

of initiative.

the

invest¬

and

modern trust

as a

is, such

company

policy does offer better

protection

the

beneficiary

rapidly

changing world. If a
trust company has freedom of ac¬
tion, is not restricted by the fear
of revision suits, and if it is well
a

equipped, it

Fredericks, Jr.

Pa.,

Allentown,

the

announces

opening of an office in New York
City at 39 Broadway, under the
management of Paul C. Freder¬

Vice

Jr.,

icks,

Fredericks

The firm also main¬

closed.'

now

Harrisburg, Scran-

tains offices in

Easton, Pa.

and

ton

Mr.

President.

formerly in charge
Philadelphia office,

was

firm's

the

protect the pur¬

can

power

estate

with

than where it is
restricted entirely to the purchase

greater

difficulties

involved

equities, if handled by a
well-trained organi¬

skillful

chasing

of Public Debt

Reduction

of commodities witnessed
the
greatest increase since the
outbreak of the war, yet prices
of equities declined sharply. In¬
vesting in equities is not easy, and

turn

of plant

many

prices

phase of our
change their attitude.
particular at¬ tice of

competition.
This
deserves

economy

Did they

fostered

against

ties of life.

the

adequate

example,

during the last six months of 1946,

industry, labor
cooperatives, particu¬
larly those which handle necessi¬
taken

complete and
however.
For

hedge,

government which has borrowed ates
taken
and spent freely and which has
Measures could be taken to reduce
increased the public debt, because costs
of
distribution
which
in

union

tect

beneficiaries

the

Investments
as

Thursday, February 6, 1947

CHRONICLE

THE COMMERCIAL & FINANCIAL

774

success

C. Harold

Thompson

reduction in the of fixed-income-bearing obliga¬
public debt during the period of tions.
prosperity is probably the most
CHICAGO, ILL.—Cruttenden &
What is said about equities ap¬
important. The pent-up demand
Farmers wanted
a
of
plies with equal force to credit Co., 209 South La Salle Street,
for a moment think they are ren¬
for housing and durable goods and
the law of demand and supply so
members of New York Stock Ex¬
bonds which tend to appreciate
dering any harm to some of their the
large demand from abroad
long as prices were going up.
rapidly in periods of rising prices change and other principal ex¬
fellow citizens. Those who clam¬
cannot last indefinitely. Sooner or
When commodity prices began to
and
prosperity
and
to
decline changes, announces the association
ored for more featherbedding, for
later we will have to live an cur¬
decline,
they
requested
their
when prices decrease and busi¬ of C. Harold Thompson with their
more
subsidies, actually claimed rent income, and competition from
firm.
Congressmen to take measures to
ness activity is downward. All this
they were working for the people abroad is bound to be keener. We
Mr. Thompson began his invest¬
protect farm income, despite the
may be summed up briefly as fol¬
and did not consider that they
simply cannot afford to allow an¬
fact that farm prices have risen
ment career with Folds, Buck &
lows. Trust companies must have
might hurt others or themselves other depression of the magnitude
much faster than any other group
Co. in 1924 and was subsequently
the
legal power as well as the
in their old age when they will
of the early '30's.
If we Wish to
of commodities.
The individuals
Vice-President of Max McGraw
ability to adapt their investments
be unable to earn a current in¬
who lived on a fixed income suf¬
preclude the coming era of pros¬
& Co.
Prior to the war he was
to rapidly changing economic con¬
come.
fered quietly, and very little was
perity from becoming merely the
head
of
Thompson,
Davis
&:
ditions. Above all, it is necessary
Indian summer of the system of
heard from them.
They truly are Inflation—An Economic Disease
to impress on everybody the fact Phipps which firm was absorbed
the "forgotten men."
private enterprise, we had better that one cannot obtain individual by Cruttenden & Co, in 1942. Dur¬
Inflation is probably the great¬
give careful thought to the pre¬
ing the war, Thompson was en¬
security unless there is collective
Little Interest in Inflation Process est economic disease and has far vention of a
depression in the fu¬
gaged in the manufacture of ma¬
security and that we all have
The relative lack of interest in reaching economic as well as po¬
gested

above,

With Crutfenden & Go.

ture.

the process

of inflation is due to

several causes, principal
is human

of which

greed, or, if one is char¬

itably inclined, human weakness.
Second is the lack of understand¬
ing of the full meaning of a con¬
stant decline in the purchasing
power

of the currency.

Which of

these two factors is the more im¬

litical

tions

and

prevailing in the rest of the
will

world

this

An analysis
political condi¬

consequences.

economic

prove

the truth

statement.

What
such

soon

can

done

prevent
distribution
of

unjust

wealth and income and what tasks
does this impose on

trust officers?

portant is impossible to state.
It The prevention of a redistribution
is certain, however, that human of wealth through inflation is pri¬

played a very important marily the task of society. The
role, for many individuals un¬ present task is to reduce prices
doubtedly profited from the rise of all commodities. I am not un¬
in prices.
The owner of goods mindful of the law of demand and
sees
in constantly rising prices, supply,
of the huge productive
greed

higher profits. The farmer sees capacity of the country, nor of the
his land and equipment appreci¬ fact that competition is bound to
ating in value and prices of com¬
modities raised by him constantly
increasing.
While he, too, has to

be keener in the future than

I am apprehensive, how¬
that the law of demand and

higher prices for commodities supply may not be permitted to
which he buys in the open mar¬ operate when commodity prices
ket, yet during the last few years, begin to decline. Above all, now is
prices of commodities sold by the the time to eliminate those factors

pay

farmer increased much faster than

which

for

the

prices of commodities bought by
him. The factory worker and the
union leader see, in rising prices,

increase in the cost of living.

(1)

prosperity, full employment, and
the possibility of higher wages.
Representatives of the Govern¬
ment find that rising prices are
accompanied by prosperity, high
national income, large tax collec¬
tions,
and
the
opportunity
to
spend more and more and therer
by "win friends and influence
people."
The owner of equities
finds that rising prices are often
accompanied by rising prices of
stocks and larger dividends, and
cares very little that he pays more
dollars for food, clothing, shelter,

with

and luxuries.

Little

do all these

were

responsible

The budget must be balanced, not
with

surplus of $200,000,000 but

substantially larger sur¬
plus, thus enabling the Govern¬
ment to retire maturing obliga¬
tions held primarily by the com¬
mercial banks.
(2) This is not
the time to reduce the high ex¬
cise taxes on luxuries. (3) Now
a

is the time to increase productiv¬

ity of machine and labor in order
to reduce costs of
make

possible

prices.

This

production and
reduction
in

the

management as well
it

has

standard
as

direct
of

whole.

function
as

mean

living in

are

rapidly chang¬

ing world, physically and spiritu¬
ally.
Who, for example, can tell
how atomic power

will in the fu¬
present
economic

affect

ture

Who

values?

tell

can

whether

which prevails in
some countries, controlled capital¬
ism in others, and the system of

State capitalism

enterprise in the United
States, will be able to cooperate?
Because we are living in a rapidly
changing world, the policies of
trust companies also must be flex¬
private

ible

and

adaptable

changing

conditions. The lessons that I wish

drive home,

briefly,

these:

are

First, it is unwise on the part of
grantors or testators to restrict
trustees to the acquisition of legal
obligations only.
intended

This provision is
the estate

preserve

merely in terms of dollars without

considering its real value in pur¬
chasing power. It is intended to
transfer

the

estate

intact

the

remainderman, irrespective of the
effect it may have on
ant who is
ent

the life ten¬

depend¬

the income from the trust

the former.

than
use

probably

principal

The rule

seems

not to

unwise. Often

The

Flexibility
second

lesson

Trusteeships
that

learn

(4)

absolute discretion to the trustees

the

Now is the time

Conclusion
Beneficiaries of trust funds have

hit

hard

been

rise

the

prices,
the
decline in interest
rates, and high taxes. The decline
in the purchasing power affected

this group of people,
however, but also those who have
not

only

savings

life insurance or come
provisions of the Social

under the

And yet, despite the

Security Act.
the

that

fact

chasing

the

decline

power

caused losses to almost

pur¬

dollar has

of the

everybody,

of our economy has re¬
only little attention pri¬

this phase
ceived

marily

because

groups

many

thought they not only could pro¬

against

themselves

tect

the armed forces.

for

terial

decline

purchasing power of the
currency but also that in the end
they would profit from it.
Trust
companies
must
drive
home to their customers the facts
that:

Harold Smith's Estate
WASHINGTON, Feb. 5 (Special

"Chronicle")—In

the

recent

the Executive Directors
of
the
World Bank decided to
make a payment to the estate of
the late Harold Smith, who served
as the institution's Vice-President
meeting

for

Bank officials

months.

seven

decline

disclose the amount of

pri¬

payment, considering it a

the

matter.

vate

learned,

the

payment almost approximates

Mr.

far

can

Smith's $22,500 annual rate of pay.

the life tenant than the
remainderman; (2) that in order

give the beneficiary of a trust
modicum

some

against

ing

N. Edward Veron Joins

Goldwater & Frank

it is more important to

(1)

protect
to

World Bank Payment to

the

protection

decrease in the purchas¬
of the currency,

power

their

investments must not be restricted

principal, by legal stipulations nor must
even
though the remainderman they be under the constant threat
receives less. This is particularly
of recission suits.
Well-equipped
true in periods of rising prices.
trust companies, with freedom to

living of the people

stable economy.

Veron,

Edward

formerly

with Dunne & Co., is now

with

ated

Goldwater

specialists in real estate
He

associ¬

Frank,

securities
City.

Broadway, New York

will

handle mortgage

and

cates

wholly

owned

certifi¬
mort¬

it is desirable to reduce

is that in matters of investments,
the grantor should grant full and

bearing

for

to the

simply that

trust officer? It means

labor, for

people realize the harm this pro¬ to restudy the entire agricultural
cess does them, how it affects their
program and to adopt measures
savings and the security of those which not
merely push prices up¬
dear to them.
The claim that a
ward or prevent them from de¬
mild dose of inflation is good for
clining, but which also make pos¬
body and soul.
sible a decline in prices whenever
/ This
attitude on the part of the supply is larger than the de¬
so many
is due to the fact that mand.
(5)
Monopoly and free
few individuals take the trouble
competition do not mix. Strong
to
understand
the
full
meananti-monopolistic measures should

all this

ever

before.
ever,

work

What does

order to enable them

adapt

themselves

to
rapidly changing
This, of course, raises
question of equities versus

while

act,

the

nally,
can

the

tion

bonds and mortgages.

There is

protection against
cline

the

constant de¬

purchasing power of
than fixed-incomebearing obligations. They do not
the

currency

dollar,

purchasing power

can* at

least

seek

partial protection for him; (3)

conditions.

question that equities offer better

the

all

learn

must

the

fi¬

that there

hedge against

individual,

infla¬

that the

seeking

real

protection

lies

ways

and

fo prevent wide

means

swings in

commodity

stabilize

possible.

our

prices and

economy
-

Completes Half Century
Of Service in Wall St.

much

bers of

Dominick,

Dominick

against a

beneficiary

protect the
decline

entirely

cannot

they

gages.

change, announces
of

mem¬

the New York Stock Ex¬

Harold

the retirement

Blakelock

after

his

completion of 50 years of continu¬
ous

service with

that firm.

Since

beginning his association in 1897,
Mr.
inick

Blakelock
&

pacities,

has

Dominick

finally

of the firm's

served
in

being

Dom¬

many

ca¬

charge

private wire system

which at times was nationwide.

Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

than,

The Vanishing Paycheck

(Continued from first page)
Johnny's address, it would have
course,
was
the only reason of to be "Erewhon," which is the
any importance for the pay in¬ way Samuel Butler spelled "No¬
From

crease.

sound

the

moment

wedding

the

bells

away and Johnny had re¬
ceived his first pay
cneck, his fi¬
nancial troubles began.
We are

taken

through

dozen

some

thickening

gloom,

pages

with

each

step into the fiscal murk set

succinctly in cartooon and caption
The first blow is the withhold¬

ing tax which, with the social

9nd

taxes

Johnny

will

weeks

than five

the

out

$236.60,
right off

for the
This should

year

Federal government.
have started him thinking
made

hole

effect.

and

cause

him
in

But

at the

sore

about

the

his

earnings.
The story of income tax and

so¬

cial

security tax withholding is
told by exhibiting a supposed fac¬
simile of

wage statement as run

can

Johnny is supposed to have paid
in

1946.

out

by the CIO tax expert:

Here

list

the

set

taxable income after

exemption of $2,000 to

married

cents per

gallon.

This
tax

does

The

state.

not

State

exist

,;ib^ahy

W^i^ngton

of'

since

wages

cents

not

have

gallon, but it

per

increase

net

1936

should

put

$470.16 after taxes, which is
of

increase

indicated

the

way

which this tax bill from Erewhon

padded by including
and

taxpayer

one

non¬

income

one:

place to another,
including some places not on the
1946 tax map.
A further minor
instance of such padding may be
It

one

estimated

that

the

Poorer family will use 1,000 gallons
of

come

ing

tax. Thirty states were tax¬
individual incomes, in 1946,

gasoline and 12 gallons of en¬
gine oil in a year.
The retail

price of the new car was $1,120,

does

combination of
to

married

them*-is

none

individual

in¬

there

$2,000 exemption

person

with

ini¬

tial rate of 2%.

Moreover, all but
eight of these states allowed de¬

which

that

indicates

was

light-weight
model
that
would operate at 18 miles or so
to the gallon of gasoline. On this
small,

basis, it will be necessary to tra¬
off on the ordinary business ac¬
duction of Federal income tax in vel some 18,000 miles, which is a
counting machine.
The miscel¬
lot of mileage for anyone who
determining taxable income for
laneous heading under deductions
does make his living' on the road.
state tax purposes.
Johnny's tax
carefully left blank, which sug¬
expert did not tell him about this The couple live on the edge of
gests a rigged exhibit in view of
deduction in figuring his state in¬ town, so the travel to and from
the general use of the check-off,
the job and the markets would
come tax.
or
withholding of union dues by
not
account
for
it.
Moreover,
Since we cannot find a local
the employer. As we have noted,
Johny must have been stuck with
for
our
out-of-luck
this is a tale of how Johnny was habitation
an
oil burner,
if his new car
taxpayer, except in "Erehwon," it
robbed by unfair taxes.
Yet, he
must have almost a quart of oil
seems
proper to re-christen him
can
get,
from
the
President's
per week during the year.
as
"The Little Man Who Wasn't
budget and the annual Report of
So much for the story. The data
the Secretary of the Treasury a There."
detailed

accounting of what
money that the

happened to the

government takes from him than

he is

likely to get from his

ever

union

officials

for

the

money

which they take from him

through

the check-off.

Johnny's

Increases

his taxes

soreness over

he learns about state

income tax, sales tax, excise taxes,
and the

real

estate tax which his

landlord is supposed to be passing

along

to him

various

are

in the

There

rent.

this

story

return

errors

pres¬

than

required for
efficient performance of the

the

federal functions.

done,

Very little has
yet, to reduce the

federal

agencies

that

created for special purposes

were

during

the

Very

war.

been done to

little has

reduce the number

30%.

have

levies sales tax at 3% and gasoline noted.
tax

The

Vthe tioned witK
approval; Therewpuld

are

greater

shop steward with his puzzles and

about from

,.v;yw~

far

number

recurring items and by switching

combinatio^qfetixes and

rates

reck¬

reasons men¬

In other words,
high because the
federal spending is still at a rate

been

troubles.

justified

above.

taxes

our

ally, Johnny always goes to the

has been

(2) A state sales tax of 3%;
(3) A state gasoline tax of

should be

$309.84, and not at $496.24,
which was what the shop stew¬
ard's figures indicated. Incident¬

person;

1936

oned at

A state income tax, levied

(1)
at 2%

tioned

but

only

size

location

by noting the com¬
state
taxes
which

total

discovers

that he must work

bination

se¬

curity tax, takes $4.55 out of the
weekly $45. For the year these

illusory

demonstrated

out

form.

Federal

This

had

died

where."

paid in

can

grounds and for the

taxes over what he estimated that

775

employees on the federal pay¬
roll, even where there is little or

nothing for them to do except to
draw their salaries.
Very little
has been done to reduce
nate

the

federal

subsidies

elimi¬

which

originated in, and were to some
justified by, the depression

extent

conditions of the

1930's, notwith¬
standing the vast change which
now
renders such payments un¬
necessary.
Since
we

Poore
at

we may as

forget about him and look
at the tax program which his cre¬
ator and sponsor, the CIO, is ad¬
The principal point at
is§ue here is the manner of mak-^
ing the tax reductions this year.
Everyone agrees that such action
as

be taken

can

promptly must be

sorts.

his

tax

increase

$498.24 in the
net

wage

$283.76,

from

1936

has

been

time, leaving
increase after taxes
same

only
1946.

18!/2%

Johnny

ment.
and

simple and involve as little struct¬
change in the tax law as
possible. Not even the CIO can

while

people

like himself

There

two

are

quire
ences,

and

its

maintained.
the

list

rious

examination

taxes brings out
in

error

which

are

set out

facts

are

possibly have been

henceforth, as long as the present
system and the existing rates are

this

of
se¬

fraudulent

to
set up
the non¬
recurring taxes paid on durable
equipment as part of the regular,

annualjfamily tax bill.
The

connection.

For

example, Johnny had done
the right thing by getting both
an engagement ring and a wed¬
ding ring.
suit
and

shortly

she put

which add

re¬

its

infer¬

fine lot

The second

conclusion, which is like¬
guilty of missing the main

issue.

her savings into

It is understood that the

and

taxes

family

these

capital

assets

whose

tax

Johnny

woes

set

are

although

person,

the

find

56.00

27.60

Furniture

23.40

Refrigerator
Luggage

12.00

principal

document

purpose

not

much

the
to

plain, honest account of
the effect of the present tax sys¬
tem
upon
the
average
wage
present

toaster-_

paying
too
much,
regardless of the costs of govern¬

earners

these

taxes

items.

The

.50

suggested

buying

caution

that

us¬

for

year

durable

consumer

equipment, will not again contain
of them for years to come.

Hence

come

under

accurate account of

any

extra.

person

is purely accidental.

sumably,

Johnny
worker

who

those

But

who

the

Pre¬

the

earning

car,

refrigerator
Neither

the

special and

ex¬

that the out¬

the fur coat, and
were special and
these

costs

nor

the taxes paid in respect of them
will be present in the next

year's

budget

family

expenditure.

however,

They don't tell Johnny this.
purpose is better suited by

The

case,

and

burdens
be

living

represents

problems

letting him

it.

week. In this

tax

resem¬

recognized

same way

lay for the

family in¬

existing taxes would

which

one

character

of heavy

any

blance

that

are
non-recurring
family's regular tax

bill, after the first

ing, to the effect that

the

prepared

the

average

alleged tax

ex¬

material

boil

over

about

just

becomes necessary,

revise

the

the Poore

however,
regular tax bill of

family.

did not stop with average or
typi¬
cal tax situations.
On the other

the

hand, he

rates,

On the basis of

and

could

gave Johnny the works
by combing the country and pick¬
ing out all of the taxes to be

found anywhere and loading them
into this one taxpayer's account.

So,

are

ment.

$186.40

Nowhere

the

person.

corporations are not paying
fair share, while the wage

their

2.50

Electric

It is much more to their
point to have him get good and
sore
at
the way in
which his
money vanishes in taxes. So the
story ends with his acceptance of
the CIO contention that employers
and

6.90

Radio

ually supplied with fictional writ¬

should

given

Automobile

tra, in the

pert

forms

Jewelry

his

re¬

$57.50

imaginary

the

were

Fur coat

above tax items

average

fur coat.

follows:

$45

when

car

forth in this CIO document is
not

newl.yweds they bought furni¬

ture

the steady drain on the

Poore

new

costs

the

wise

honeymoon trip,
after getting settled

Total

misleading

Of misrepresentation.

The lady bought
for the

case

should

first

one

were

look

for

CIO

TAX

PLANK

Revenue Loss

(Billions)
of

exemptions

bracket

instead

rate

19%

$10-$11

taxable

income

(3)

Repeal excise taxes

ne¬

cessities

Total

1.5

loss

revenue

$14.5-$15.5

The President's budget for the

fiscal

1948

year

Heroic

billion.

$37.5

will be required
to get it down even as low as $30
measures

force the

under

Congress to engage upon
general tax revision at this time.
The first plank in the CIO pro¬
gram is one of violent opposition

For the fiscal year 1949 a
budget of $25 billion is possible,
further

severe

fiscal

At current national in-?

the

rise

stpry which
The

comment.

errors

national

current

levels:

points about this

amateur detective

wide

the government.

run

they

too

mark

income

but

not

real; they are garbled and dis¬
paid by The Little Man Who torted; and they are not represen¬
tative or typical of the taxes which
Wasn't
There
implies that the
total shown was the regular, an¬ any given family at this income
nual
tax
burden
to
be
carried level would pay. It is particularly

The story about all of the taxes

that could not

govern¬

matter what

the

and

billion.

flat

percentage cut. This
and simple method of
quick tax relief. There was a 25%
tax cut, across-the-board, in 1924,
and

easy

similar 5% cut in 1946.

The

data

provided in the pamphlet,
regular tax bill under existing

assuming that Johnny
enough places to get
caught for income tax, sales tax,
and gasoline tax at the rates in¬
in

dicated, would be $548.40, and not
$734.80. The increase in Johnny's

Suppose, now, that instead of
falling into the hands of the kind
of tax expert that the CIO em¬
ploys, Johnny had met up with
some one who was prepared to tell
him all of the facts, and keep them
straight, rather than needling him
with
a

sales tax at breakfast,

The

Poore's went to

night club

where they were caught with the

entertainment tax. An intel¬

20%

lectually honest guide through the
tax maze would have said: "Sure,
taxes

are

high,

much

higher for

from

non-recurring receipts such
of surplus property and
collections of back excess profits
sales

taxes.

The

CIO

tax

program

reduction is not a would reduce the yield of the Fed¬
eral tax system to some $20.5-$21.5
proper substitute for a thorough
revision of the surtax scale, but billion. It is an utterly unreal and
it is not offered as such. Under it fantastic set of tax proposals when
measured against present needs,
everyone would pay 20% less in¬
come tax.
Johnny Poore's federal however prudently these needs
income tax
at existing rates is are defined. The CIO badly needs
a couple
of new, and better-, tax
given as $213.20. With the 20%
cut, he would pay $42.64 less, and
take-home

his

The

CIO

milk

simon-pure

cocoanut

oozes

out

the

the
next

It is a demand that
the exemptions be raised to $2,000
for married persons and to $1,000
for

the
at

plank.

single persons, while keeping
exemption for each dependent

In short, the CIO does not
want to pay income tax. The rev¬
enue
loss at present national in¬
$500.

tax

levels

and

under

bil¬

such

ex¬

billion,

were

emptions granted. It would large¬
ly destroy the individual income
tax as a revenue producer.

given in support of
higher exemptions
is that the cost of living has gone
The reason

the demand for

up.

But

demoralization of the

federal revenues, through making
such

tions,
further
would

increase

compel

would

the

tragic element in the situa¬
leader, counselor, and
substantial segment of

the

friend of

the workers.
to their

These

workers look

union heads for help and

advice.

Johnny Poore is depicted
consulting his shop steward at
various stages as his tax troubles
unfolded. The members who rely
as

for

and

information

factual

counsel

taxation

about

wise

such

union leadership are
for bread.

getting stones
getting phony
claptrap
about
tax
program
that

They

are

fraudulent

and

taxes

and

would wreck the national finances.
When

the

blind

lead

the

blind,

both fall into the ditch together.

Ernest Cornell Resumes
Practice of Law
CLEVELAND,
OHIO — Ernest
Cornell, chief of the Division of
Securities of the State of Ohio in
1945 and

1946, announces that he

is resuming the

practice of law at
Building.

1145 Union Commerce

exemp¬

resort

financing.
This
the inflationary ex¬

deficit
renew

The

tion is that the CIO has set itself

existing

rates would be some $10

lion to $11

experts.

pay

place.

5 cent

gasoline tax at lunch, and
excise tax at dinner. Oh, yes!

come

flat percentage

come

less,

pay

estimates,

levels, the normal revenue
yield of the existing Federal tax
system is about $36 billion, aside

comes

pay

un¬

decides that employers

corporations should

terms

surgery.

paying too much in taxes,

regardless of the costs of

to the conclusion that wage earn¬
ers are

proposals

indicative

are

ural

essary.

Johnny has
everything, he finds

tax

preliminary

vocating.

sales

when

CIO

their effect upon the Federal Rev¬
enue.
The following figures are

expert has laid

him,

excise

wants

necessities repealed. They

mention expressly the taxes on
telephone service, cigarettes, auto¬
mobiles, refrigerators, radios, and
toasters. There would go another
large chunk of Federal Revenue.
Suppose we put together the

well

that

tale,

Finally, the CIO
taxes

First

Federal excise taxes and the state

sad

tax, or who would pay it.

(2)

modeled bungalow was ready. The

it appears that
added

the

not told what kind of tax

are

Increase

His
wage
increase
since
1936 has been $780, but he figures

conclude

might be substituted for the sales

(1)

is today the principal source
of revenue for a number of states.

all of the taxes which the CIO tax
on

wants all
repealed. This type of

tax

pay

that he will pay $734.80 out of
bis yearly income in taxes of all

ently.

shall

exemptions.

Then, too, the CIO

that, because he could not live

anywhere in this country and

would
be
earner as
it is to foment resent¬ greater by this amount. The CIO
ment and channel this resentment gripe is that the president of the
along
the
particular
direction company would have a bigger cut,
desired by its sponsors. Hence, it in dollars, than any of the em¬
does
not
suit their
purpose
to ployees. But he earns more money
have Johnny ask himself or any¬ than any of them, and none of
them
is
competent to take his
one else why such taxes are nec¬

which

ing the

sales taxes

know that Johnny
fiction, and pulp fiction

go much of the little income tax
yield that would remain after rais¬

pansion of credit, and eventually,
of prices. And where would all of
the Johnny Poores be then?
They
could lose more income and pur¬

Joins Schirmer Atherton
(Special

to The Financial

BOSTON,

Chronicle)

MASS. —Hadley

Ward has been added to the st^ff

they were in
of
Schirmer,
Atherton
&
Co.,
1936.
But you remember, don't
members of the New York and
you, that we have had a war. We
Boston Stock Exchanges, 50 Con¬
chasing power by engaging in
have a public debt on which the
another round of costly and de¬ gress St.
interest alone is more than the
structive strikes, but this would
entire cost of the Federal Govern¬
not
save
them.
Poor Johnny
With Lincoln McRae
ment 15 years ago.
The war is Poore's paycheck would vanish
(Special to The Financial Chronicle)
over but the peace is not yet here,
completely during the strike, and
ROCKLAND, MAINE—Harold
so
we
must keep a reasonably its
buying power would be much H.
Harrington has become affili¬
strong army and navy. The coun¬ less after his anion leaders had
ated with Lincoln E. McRae, 449
tries that were wrecked by tine won another
victory for their fol¬ Main Street.
war need help."
lowers.
everybody

Such

than

guide would have point¬

ed out that for reasons like these
our

taxes

must

higher

than

But he
would also have said that they
are higher, in the opinion of com¬
petent students of public affairs,
they were 10 years ago.

Another

plank iff the CIO tax

platform is a reduction of the first
bracket tax rate on such income
as would be taxable after increas¬

With King Merritt
(Special to The Financial

Chronicle)

MO.—Eding the exemptions. No specified win D. McCammon has been added
degree of reduction is specified, to the staff of King Merritt Co.,
but the prewar rate of 4% is men¬ Jefferson Building.
JEFFERSON

CITY,

THE COMMERCIAL & FINANCIAL CHRONICLE

776

addressed

("v

(Continued from page 736)
norate
ate
honesty,
full disclosure,

decent'markets"

Keep those
and enforce them
vigilantly and you keep open the j
flow between savings and enter- I
prise.
Debase them and abuse
them and you block that flow.

and

standards high

that

calls

its

uoon

information to Investors
.

These provisions are keyed to
for the the view that an honest business

business]

modern

sense

security registered on a national
securities exchange and every
holder of 10% or more of such
security have to file reports showing changes in ownership of the
equity securities of the company.

managers

! will tell investors what they
up
should know about what they are
manship." You all recognize what buying and about what they are
I mean when I say that the cor-j voting on, and will afford invesporate manager is no longer a tors an opportunity to reach their
superforeman whose function it fellow investors on important coris to see merely that the machines porate problems. They are keyed
are well oiled and in good work-, to the view that the special act¬
ing order. The American corpora- vantages of position and informa¬
tion has become the focus of a tion occupied by corporate insidgreat many social interests. Those ers are advantages held in trust
qualities best summed
I believe in the word "states-

exercise of

loggerheads for the company.
They are natand the reconciliation of their conural standards legislatively exflicts in the light of the best pos- pressed and administratively and
sible efficient and honest running judicially enforced,
of the business has come to re-}
Sometime last month I sent to
quire the exercise of qualities of i the President of your Association
statesmanship. And in the mean- 1 a letter inviting your Association
ing of that word lies imbedded the to send representatives to a meetinterests are often at

ing with the Commission to dis¬
a program for formulating a

responsibility.

notion of

cuss

Responsibilities of
A

good

many

doubtedly
iterated

weary

you

Management

of you are un¬
of having re¬
over and
over

the idea that, as business
men, you have obligations extend¬
ing beyond the metes and bounds
of
your
plant.
For once you
would like to hear what those in
again

and do¬

government are thinking

ing in recognition of their respon¬
sibility to the American economy.
I will come to that, and I think I

the fullest meas¬

can

promise

ure

of satisfaction in what I have

to
a

you

But I would be striking
note, I would be giving

say.

false

you a thoroughly inadequate piclure of where we stand and where

if I did not place my
their proper setting.
TThere is, in corporate ^manage¬
ment, as in all other fields, a set
of
temptations to
which mere
human beings may easily yield.
The greatest of these is to forget
the responsibilities that are im¬
plied in the manager's position, to
forget that the ultimate owner¬
ship of the business may be in the
hands of large, unvocal interests,
to ..forget that when he adminis¬
ters the affairs of the enterprise
we

must go

remarks

tie is not

doing so on his own be¬
half, but on behalf of others.
There
our

certain

provisions in

laws

designed to implement
responsibilities.
I
the word "natural" advisedly.

those
use

are

The

natural

Securities

Commission

and

did

not

invent these

requirements, and not
Congress which passed
invented them.
see,
are

Exchange

I think

review them,

even

the
laws

the
you will
that they

the inevitable consequences of

set

desirable

changes

1934 for submission to the

Your Association

Congress.

was

selected,

together with others, as
representative of the issuers of
securities
as representative of
that

segment

which

registration
under the Securities Act.
Those
securities

have

into the waste basket,
as we have done the

gone

and

soon

others are to go, and
will be consolidated;

basic work,

others

still
and

under

the

similar general program

time

the

lined

used for
known

have

stream¬

frequently

most

form

registration

the form

—

That form, which

S-l.

other forms.

for

way

same

previously consisted of two parts,
has been boiled down to one part;
and

that

has been re¬
duced to eliminate from the form
even

been,

data which have
experience, of only

deal of

good

part

our

interest

casual

eliminated

lengthy descriptions of underwrit¬
ing contracts previously required,
cut out miscellaneous information

describing the charter, killed some
of the items with regard to re¬
muneration

higher employees,

options, share ownership, funded
debt, historical financial informa¬
tion and

The

on.

ap¬

proaching the basic minimum that
can be required for adequate dis¬
closure. That minimum when con¬

and

form

will

intel¬

the

readable

into

ligible

pros¬

pectus.
Changes in Offering Methods

economy

our

capital for produc¬
tion and expansion and which calls
upon
the American investor to
provide that capital. It is part of
our
program to confer also with
investors, underwriters, and the
national securities exchange.
We
are still in the process of confer¬

ring and soliciting suggestions and
by no means prepared at
this stage to state what the specific

Proposals have been made look¬
ing toward changes in the law
relating to methods of offering
securities publicly.
Underwriters
have proposed, as a basis for dis¬
with
the
Commission,

cussion

changes

proposals
however,

be.

will

general,

discussion is

some

pos¬

sible of the broad problems being
faced.

is
to

permitted by the law so as
facilitate primary distributions.

What

will

after

of
Under the Securities Act of 1933

accomplished by
the filing of a registration state¬
ment on a prescribed form.
Un¬
less otherwise ordered, registra¬
tion

becomes

days

effective

after

such shorter time

the

Commission may, under particular

circumstances, fix.

The Commis¬

sion does not "approve"
ance

It exercises

of securities.

judgment
whether

the issu¬

whatsoever

securities

fit

are

sold; it limits itself to
tion of the information

over

inspec¬

with

respect to the securities to
determine whether that informa¬

tion meets the statutory standards
of

adequacy and

accuracy.

be registered

fered

tion and the corporate manager.
If you plan to make a public is¬

tration, and

cannot be of¬

sold in advance of regis¬

recommenda¬

know*n only

can

have completed the pro¬

But I

can

tell

seeking

you now

has

Commission

place

burdens

that

intention

unnecessary

companies

supplying data, that the Com¬
is sincerely in sympathy

mission

the

with

desire

improve

the

securities distribution mechanisms,

that

and

will

wholeheartedly

join in recommending to the Con¬
such

gress

proposals
those ends

complish

serving

will

while

fostering

and

aims of the laws

the

now

ac¬

pre¬

basic

drawn to

protect the investor.
I have

given

you

only the barest

sketch of the problems that might

be opened up in our forthcoming
statutory revision study.
I invite

those of
in

give

Under the law securities which

additional

submitted

ultimate

the

tions

gram.

registration

earlier

now

the

What Registration Means

permit

would
investment

the stages of registration than

are

which

solicitation

you

use

us your

and

who have

interest

opportunity to
individual comments
your

suggestions.

But

before

close tonight I want to talk

about

briefly

segment of the program
which is, in our opinion, vital.
one

they may not be in¬
itially sold without the use of a
Proxies and Reports
sue of securities with certain ex¬
statutory prospectus. The aim of
ceptions, you have got to file a the statute is unimpeachable and
I
think it axiomatic that the
its general purpose has received,
registration statement which gives
public security holders of large
the basic facts an investor needs as far as I am aware, universal
corporations should be informed
to know to appraise the invest¬ acceptance.
That does not mean, about the affairs of their
company
ment.
If the facilities of a na¬ however, that the statute and our and that their
tional

legal

rights

have
been opened up to your company's
securities through listing and reg¬

procedures under it cannot be im¬

voice in its affairs should

proved;

plemented

istration, certain disclosure, proxy,

tion and of facilitating and easing
the burdens of compliance.

securities

exchange

insider trading requirements
must be obeyed.
Listing can be
and

both

securing

better

the

direction

investor

protec¬

decent

tation.

the

standards
The need

have

be im¬

of
solici¬

application

adequate

proxy

stockholders

information

Improvement can take place in about their companies' affairs, and
accomplished only through the fil¬ several directions: in continual re¬ their need to be given an adequate
ing of a full registration state¬ appraisal of our forms to cut down statement of facts and issues when
ment, and, after listing, certain the variety of information re¬ they are called upon to vote does
current reports must be filed.
If quired to that which
is really not, in any real sense, depend on
a
security is listed neither the essential for the protection of in¬ whether a company has securities
company's managers nor any other vestors, and in continual reap¬ listed on a national securities ex¬
persons seeking to solicit proxies praisal of the effects of our
These are needs that are
regu¬ change.
from the holders of the listed
curities may do so without the

se¬

lation

use

accomplishing

whether

see

are

job well and
of a proxy statement
disclosing efficiently.
To
a
great extent
material facts necessary for an
improvement does not require re¬
^intelligent vote, to afford ample course to statutory change but
opportunity to indicate prefer- may be procured
by internal read¬
;

rcnces, and to make certain facili¬
ties available to security holders

who

wish

circulate

short

justment.

tory
Let

im!rdirectors.?f taken

some

may

review

for

extent statu¬

necessary*

to the security holders
large companies whose se¬
curities are widely held by public
investors.
Further, if the legal
concept that a stockholder has the
right to voice his views on mat¬
universal

of all

ters

management policy is to
a real right, the security

be made

of holder should be provided, at his
the,steps which have already been expense, an opportunity to circu¬
late
among
his fellow security
bv the Commission under holders a
equity its existing powers,
reasonable
statement
1

statement to their fellow
security

-4Uiy company that has

changes

our

you

some

will
of

corporate

considered

the

revision program.
issues in that

our

the

not

other

they

course

scrutiny
in

the

best

fairest

and

way

pos¬

sible.

idea.

The

businessmen

and it repre¬
What I have

SEC

honest

and

engaged in
a
common endeavor—the protection
of
the investor.
The SEC has
never

are

conceived that the interests

honest business and the inter¬
of investors conflict,

SEC

considered openly
they will be laid on
subjected to full
in order to shape tnem

live

vacuum.

ests

and

good topic

tried to get across to you today is
that that idea makes no sense in a

Like all

will
table

sents

program

and squarely,

the

will

never

and the

abandon its duty

protecting the investor from
submarginal fringe in busi¬

ness

choice

tower

finance.

We face

the

doing that in an ivory
of soliciting the help

and

The

topic suggested to rne by
President for tonight's talk
was "Adjusting SEC Requirements
to Present Day Business Needs."
your

suggestions of those who can
fruitfully contribute to our work.
My presence here today is an in¬
dication that we have chosen the
latter

course.

"Open the Door, Mr.Hanrahan,and
We'll AllGo to Never, Never,Land1/'
(Continued from page 735)

describe

the

philosophy and advice given out by most of
them, and that is PLAIN NUTS!
Last

form

registration

densed

general

the

have

investor.

needs

must

new

several

scrapped

—

position into which his¬
tory has nut the modern corpora¬

the

Registration

for

forms

workable

and

the Securities Act of
1933 and the Securities Exchange

Act of

Reforms

Recently

policies.
revolutionary pro¬
vision, it has been in operation
for years under SEC regulation
and it is an important part of the
companies bill now being consid¬
ered by the House of Lords in
England.
These, and
other protections,
That

Adjusting SEC Requirements to Business

Thursday, February 6, 1947

Thursday's "Chronicle" carried the speech made
Commissioner, Edmond M. Hanrahan, before the
Association of Customers' Brokers, New York City, Jan.
29, 1947. I didn't hear it. I only read it in "The Chronicle.'7
Now there is no good point in attacking anyone personally,
and this is not an attack on the well-meaning Commissioner.
It is what he advocated that is going to be taken apart not
only here but by every experienced broker, dealer, or cus¬
tomer's man who heard the speech or who read it in last
week's "Chronicle." And the result won't be flattering to
Mr. Hanrahan—the poor guy is living in a dream world—Someone should edit his speeches from now on—someone
who knows something about this business, and not an SEC
ghost writer either.
by the

new

Now let's get down to it! Point number one: Get this?
(Quote): "As Chairman Caffrey indicated in his address be¬
fore the Investment Bankers Association on Dec. 4, 1946,

objectives in the Securi¬
customers' brokers will literally sit down
with an investor, open the prospectus for him, explain what
it is, what it contains and actually guide him through it."
Caffrey said it first — Hanrahan follows.
CAN YOU
IMAGINE A CUSTOMERS' MAN SELLING SECURITIES
THIS WAY?
If I had a salesman, or customers' man who
this end can best be obtained (the
ties Acts) if you

on trving to sell securities in such a
manner, the
thing I would do is TAKE HIM OFF A DRAWING
ACCOUNT AND LET HIM PEACEFULLY STARVE TO

insisted

first

know very much about SEC law but
20-odd years of all kinds of security selling
experience in every type of firm, from large Stock Exchange
members to underwriting houses and the small organization
I am running today, that if you sent out salesmen to bore
hell out of people trying to sell stocks or bonds by sitting
down with them at their desks and laboriously turning the
I may not

DEATH.

I'll stake my

of income accounts, balance sheets, records, history,
various sense and nonsense that is contained in

pages
and

the

those

prospectuses, it wouldn't be long before your
tell you to take your prospectuses and

would

man

sales¬
jump

in the river.

Look, little boys at the SEC, there is

only

one

thing

prospectus is good for, AND THAT IS TO ENLIGHTEN
THE PROFESSIONALS—THE INSTITUTIONAL BUYERS,
a

As far
waste

BROKERS

THE

AND

DEALERS

THEMSELVES.

general public is concerned, they are just "a
paper, printing and time.
THE ONLY PERSON
the

WHO CAN PROTECT THE INVESTOR IS THE
OR THE DEALER.

tomers'

man

BROKER

The successful broker or dealer, cus¬

salesman doesn't ask his customer whether

of every good point concerning a security and
accepts every consideration that is unfavorable. TheTacts are
that most investors don't want to pick out their own securities.
—they rely upon their broker or dealer. The only investor^
that I've ever known who wanted to sit down with me and
he approves

pull securities apart before they bought them were people
with an engineering, statistical or technical background.
If
I would have tried to do what Messrs. Caffrey and Hanrahan
suggesting I would have long ago been a failure in this
selling securities. Such a procedure would make
failure inevitable.
That's putting 20-odd years at my game
of SELLING STOCKS AND BONDS up against SEC theory
—and I've tried both methods in my day.
are

business of

Why does every one of these fellows
speech is complete unless they talk down to
audience.
TO LECTURE, IF YOU WILL?
I don't

Point number two:

think that
their

think I

any more

sensitive than the rest of the people

Volume 165
who

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE

making their livelihood in the securities business,
honestly believe that most of us are getting mighty
well fed up with the same old
preaching about the "few
disreputable representatives that we have in this business"
and that we've
got to be so careful, oh, so careful to take
care of our customers and treat them
right. JUST WHAT
are

but I

777

THESE

SEC

SINGERS

PSALM

THINK

THAT

ANY BUSINESS LEFT?

backed

statements

now

ing that most of this, 10-point
by financial advance was fed by these de¬
coming to the velopments. '
fa#

But

Walter

DO IN THIS BUSINESS, SIT UP NIGHTS TRYING TO
FIND WAYS TO FLEECE OUR CUSTOMERS SO THAT

fore.

Markets

But

Whyte

EVENTUALLY WE WON'T HAVE ANY CUSTOMERS OR

also

Tomorrow's

despite

the

cheerful

outlook

markets

count,

cannot

the

or go up, on

dis¬
same

that appears all
news twice.
There must^be
around, particularly with the
something else to constantly
market acting as it
does, all feed it.
Basically the prob¬
the bullish
signs are on the lem of
industry is still the
surface.
Underneath
there same. To
produce for the de¬
seems

Says—
=By WALTER WHYTE=

Isn't it about time that the whole

Break-through on up side, as
to be
forgot that once they had a case before the
something boil¬ mand but at the same time
forecast, merely follows a
U. S. Court of Appeals against some fellow
by the name of technical
pattern. It doesn't ing which doesn't fit into the not produce so much
HUGHES?
Who $ was
(as to
HUGHES, anyway,
bullish picture. What this
KILROY'S
is, damage the
point to higher prices. It may,
price structure.
BROTHER?
I can't
say. And it isn't mod¬
*
*
*
instead, lead to a reaction.
Mr. Hanrahan rightfully says (quote): "We all know
esty that prevents my telliing
To become bullish at this
A year or so
ago it was
that,, like the chain with the weak link, the securities busi¬
you.
time appears the easiest thing
common
*
knowledge that there
ness, in the eyes of the public, is often only as respectable
in the world. Not only would
was a
as its most
huge latent demand for
disreputable representatives." Then why does
Last week this column said
consumer
the SEC shove out press releases with such abandon when¬
products like autos,
that the market was close to
ever it
refrigerators, washing ma¬
gets a chance to tell the world that some broker or N. Y. State
a
break-out on the up-side.
Electric &
chines, etc.
In the interim,
dealer has broken a rule, violated a technicality or in some
But this up-side
break-out
however, the prices for ne¬
other way given the agency a chance to GET ITS NAME
Gas Preferred Offered
would
probably not lead to cessities have climbed so
IN THE PAPERS.
If even 5 to 10 % of the securities in¬
high
any large advance. What was that
the average
buyer of
dustry was off the beam, it would probably be in line with
more
likely was an advance consumer
most other businesses in the
heavy equipment
country, including the legal
A group headed by Harriman through
the old highs fol¬ no
longer has the money for
profession. But I'll venture the guess that the ethical stand¬ Ripley & Co., Inc., are offering lowed
by a decline before the that new
car, ice-box, wash¬
ards of the securities business are higher than almost
any publicly today 150,000 shares of advance
really got going.
ing machine, etc.
other line.
WHAT DO THESE FELLOWS WANT—THAT New York State Electric & Gas
❖
Surveys
ifi
of potential markets have al¬
Corp. 3%% cumulative preferred
WE SHOULD WEAR WINGS?
stock at $102 a share and accrued
Up to this writing you have ready shown that. Shortage
Point number three:
Somewhere in that speech Mr. dividends.
The
group
won
the
Hanrahan stated that the seller should go over the material preferred stock on Tuesday on a already seen the advance and of cash has also been demon¬
you have also seen a hesita¬ strated by the
bid of 100.139.
on
heavy cash-ins
page one of the prospectus first with his client before
tion across the old
highs. This of series "E" War Bonds.
Part of the proceeds from the
he starts in on that long, tedious grind of
wading through
*
i'f
sale of the preferred stock will alone is suspicious. A market
*
20-odd pages or more of black, thick mud. (Quote
again): be used by New York State Elec¬ all
ready to advance doesn't
One way out of this is a
"After considering and explaining the information concern¬ tric &
Gas for the redemption of act that
way.
After it has return to credit
ing the offering appearing on the FACING PAGE, I would all the oustanding 120,000 shares built a
selling. The
pattern during which
cumulative
turn to the financial statements, etc." WHAT HE MEANS of 5.10%
preferred
buyer can put down a deposit
it absorbs stock for sale, it in¬
a lot
IS THAT WE SHOULD POINT OUT HOW MUCH UNDER¬ stock, par value $100 a share.
quicker than he can pay
General
Public
Utilities
Corp., creases its tempo by bidding all cash.
There is some effort
WRITING PROFIT IS INVOLVED IN THE DEAL FIRST.
parent of New York State Elec¬ for the
higher stock. In such being made to reduce restric¬
That is a honey, isn't it?
CAN YOU IMAGINE ANYONE tric & Gas Corp., is making a
situations this bidding usually
tions on partial payments.
IN ANY OTHER BUSINESS SAYING TO HIS CUSTOMER, capital contribution of $7,500,000
If
to the corporation. The corpora¬ attracts the public who see it
"I WANT TO SELL YOU THIS CAR, OR NECKTIE, OR
succeeds, the market will
tion recently sold $13,000,000 new only a translux
moving up. It get another shot in the arm.
BEDSPREAD, BUT BEFORE I DO
HERE
IS
THE first mortgage bonds, 2%% series
is the public who, remember¬
But right now it looks like
AMOUNT OF GROSS PROFIT THAT I AM MAKING BY due 1977^ with the proceeds from
ing all the bullish yarns, then the market is
SELLING IT TO YOU"?
Start an argument right away, the/sale of these bonds to be used
coasting along
to redeem all the issued and out¬ hops in.
on
put your cart before the horse, beat your brains out, but
ifi
ifi
ifi
past glories rather than on
standing first
mortgage
bonds,
do it because the SEC wants it that
way.
I SAY NUTS, 3%% series due 1964. After funds
future prospects.
This pattern isn't new.
It
AND NUTS AGAIN.
I say it is nobody's business HOW have been deposited for the pay¬
t'fi
ifi
i'fi
is as old as the market. Only
MUCH underwriting profit there is in a deal. I SAY THAT ment of the preferred stock and
bonds to be called and for the the people who
You now hold two
buy and seil
WHOLE PROVISION SHOULD BE STRICKEN FROM
stocks,
payment of the redemption pre¬ are new.
Occasionally a new Anaconda and Dresser Indus¬
SEC DICTUM BY CONGRESS.
If not, then every other
miums, dividends, interest and
business in the whole United States should be forced to dis¬ certain costs and expenses of the development, in the shape of
tries, neither being exactly a
news, gives'the impetus an
close its gross profit on everv item sold to the
public/ IS financing, the balance remaining,
I would per¬
added fillip. It might at times world-beater.
estimated
to
be
approximately
THAT SENSE, AND IF NOT, WHY NOT?
WHO ARE
$9,100,000, will be deposited in even distort the picture. But haps prefer to recommend1 the
THESE PEOPLE WHO SELL SECURITIES FOR A LIV¬
lot

them

By Harriman Ripley

-fi

for

escrow

ING?

ARE

THEY

FROM

ALL

OTHER

WHICH
SELL

THEY

LEPERS

AMERICANS

BUY

OTHERS

APART

WITH

NOT

THEIR

AND
THE

OWN

PROPERTY

DIFFERENT

PROPERTY

MONEY

THAT

HAS

AND
THE

New

York

will have

RIGHTS

PROTECTION

STITUTION AS ANY

OTHER

UNDER

THE

CON¬

PROPERTY?

Maybe Mr.
Hanrahan, and Mr. Caffrey, and the others should look into
this
or should
Congress do it for them?
Well it's off my chest
and this isn't a joke, son.
"If you want to learn how not to sell securities see the SEC!
(Signed)
AN ANONYMOUS DEALER.
.

B-.

MacCulley
Assistant

has

been

Vice-Presi¬

dent of
2

Equitable Securities Corp.,
Wall Street, New York City.

He 'has

with

been

the

firm

for

time in charge of preferred
stocks.

some

A. B. Harrison Associated
(Special

to The Financial

Chronicle)

rison has become associated with

Daugherty, Cole & Co., 729 South
west
was

Alder

Street.

Mr.

Harrison

000,000.
& Gas

stock of

common
a

no par

stated value of $22,-

New York State Electric

Corp. is

operating util¬

ity engaged principally in the pro¬
duction,
purchase,
transmission
and

distribution and sale of elec¬

tricity, natural

BOSTON, MASS.—Raymond L.
Myrer has become associated with

gas and

manufac¬

The

Crosby Corp. Mr. Myrer was
previously with the Parker Corp.
and prior thereto was Vice-Pres¬
ident of the Keystone Corp.

The

BOSTON,

Financial

Chronicle)

MASS. —Ernest

Johnson is now with Kidder, Pea-

body
&
Street.

Co.,

115

Within
serves

the
these

387 towns
ous

area
areas

of
the

the

state.

company

cities, 145 villages and
which

include

Van
Tuyl & Abbe,
Street, New York City,
the opening of private

the

offices

Wall

announce

wires

were

at about 170.

going to get caught in

light ahead.

weeks

about

they

ago

During the

they advanced these 10

points the margin rules

were

continue

lican

picture

took

With it

Repub¬

Congress started to beat
for

drums

Added
bullish

lower

together

taxes.

made

package. I have

also

changes.

you

keeping in mind that the

stops given you in the past
still

apply.

More next

Thursday.
—Walter

[The

views

expressed

Whyte
in

this

article do not necessarily at any
time coincide with those of the
Chronicle.
those

They are presented
of the author only.]

feel-

Securities

H. Hentz & Co.
LAMBORN & CO.
99 WALL

STREET

New

York

Stock

Exchange

New

York

Curb
Cotton

Commodity
Chicago

SUGAR
Exports—Imports—Futures

Executed

Pacific Coast Exchanges

Exchange

York

New

NEW YORK 5, N. Y.

Orders

Members

Exchange

Exchange,

Board

Inc.

Schwabacher & Co.

Trade

Members

Exchange

And other Exchanges

New
New

San

N. Y. Cotton

Exchange Bldg.

NEW YORK 4,

N. Y.

Stock Exchange

York

York Curb Exchange

Chronicle)

Ex¬

So I suggest

Established 1850

New Orleans Cotton

LOUIS, MO.—John P. Cummings has been added to the staff
of Newhard, Cook & Co., Fourth
& Olive Streets, members of the

day¬

Pacific Coast-

tral, eastern and western parts of

Co. in Cleveland and Chicago.

ST.

holding both stocks*

changed and the labor-man¬
agement

But I'm

numer¬

Cayne, Robbins &

the motors.

situation until I

rural areas in the south-cen¬

Van Tuyl & Abbe Wire to

Devonshire New York and St. Louis Stock

time

not

181.

few

steels

the state.

(Special to The Financial

(Special

❖

hold

reasons

The averages are now

the

Joins Newbard Cook Staff

With Kidder, Peabody Co.

rosier hue.

gas.

previously with the Oregon

State Department of Securities.

Gas

doesn't

long, and the basic
again take hold.

35%

With Dausfherty, CoIe&Co. Cayne, Robbins in Cleverd
PORTLAND, ORE.—A. B. Har¬

Electric

distortion

for

company's oper¬
ating properties are located en¬
tirely within the State of New
York, and serve areas approximat¬
ing 16,700 square miles or about

MacCulley Elected
Raymond Myrer With
By Equitable Securities Crosby Corporation
Ira

State

outstanding $53,387,000

value with

tured

elected

such

debt; 150,000 shares of
preferred stock; and 46,484

shares of

...

construction.

of funded
new

SAME

new

Following the refinancing plan,

(Associate)

Stock Exchange
Chicago Board of Trade
Francisco

New York 5, N. Y.

14 Wall Street

Teletype NY 1-928

COrtlandt 7-4150

Private Wires to Principal Offices

CHICAGO

DIgby 4-2727

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

Santa Barbara

', ;

San

Francisco

Monterey

—

Oakland
Fresno

—

Sacramento *

THE COMMERCIAL & FINANCIAL CHRONICLE

778

Political and Monetary Aspects
Real Estate Situation

in the immediate future.

Now, as you no doubt realize,
in the life insurance business

authorized

are

estate

real

by law to invest
equities, that is,

directly and deliberately instead
of accidentally through fore¬
closures. We are authorized by
the
laws of
New York,
under
operate, to invest up to
10% of our assets in housing and

which

to 3% of our assets in income-

producing real estate for domestic
commercial housing. You have
seen
a recent
illustration of the
exercise of this new power in the
or

purchase by one of our companies
of a large department store on
Fifth Avenue. This type of invest¬
ment is a substitute for our pre¬
vious
take

mortgage investment. We
the title at a price with a

term lease at a net rental
which gives us a fair return on
the amount we invested, plus ad¬
long

which we can use
to write down the investment on
ditional

our

sums

books.

properly limited, this type of
investment of life insurance funds
in real estate equities protected
If

by the obligation of a dependable
leasee seems to be an excellent
substitute for a

mortgage invest¬

limited to twoappraised value. But

ment which

was

thirds of the

speaking for my own company at
least, I assure you that we are
not going to use this power to
invest in real estate too freely.

expect to confine it to those
cases in which we have the obliga¬
tion of a lessee whose debenture
we would be wanting to buy for
We

period similar to the length of
all of which means that

the lease,

in buying such real estate, we are
depending not alone on the value
of the land and building involved,

indeed, principally,
of the busi¬
conducted in the property.

but also and,

the earning power

ness

for it.

investment

which

we
au¬

The

other

thorized

field
own

equity

the

real estate is that used for domes¬

funds

our

reasonably justified by present
probably future conditions.

One of the difficulties encountered

engaged in private
enterprise is the extent to which
everything we do these days is
subject to some kind of govern¬
ment control and regulation, and
tion

this control and regula¬

much of

in foolish, if not

founded

is an unfor¬
there are so
many instances in which unsound
economics seem to be sound poli¬
vicious, theories. It
tunate

thing

tics.

There

fare

that

our

five

own

subway

that

not

date it has

proved to be good politics. Then
there

raise wages
which

that

idea

the

without raising prices,
in

nonsense

but which

can

you

seems

economics

to date to be

notwithstanding

city,

costs

creased

and

maintenance
continue

choose to

come

in¬

construction,

operation,

provide

can

those

who

to New York with

housing at constantly level or re¬
rentals.

duced

economics

unsound
moment

tics.

feel

the

sound

poli¬
that in the long

sure

clearly

economics

sense

but

seems

that which

run

is all utterly

This

will

non¬

rec¬

equally foolish as a
basis of public policy or as a plat¬
form for politicians.
ognized

We would like to provide more

than

housing

presently

being
It
that the

made available in this country.
is

interesting

note

Businessmen's

Small

Senate's

Committee

yesterday
passed
a
resolution containing several rec¬
ommendations.
that

rent

One

them

was

ceilings on new con¬
ought to be abolished. It

seem

that

any

ably sane community that recom¬
mendation ought to be finally
adopted and put into effect within
hours.

Certainly

that

should

the

public service. Indeed, in the past
we, as mortgage investors coop¬
erating with you as builders,
and

owners

have

brokers,

pro¬

vided practically all of the hous¬

ing that the people of this city
and of this country now use and
enjoy. Only a small portion of
presently existing housing has
come
from that activity which
call government.

Our friends
who run the government, national
and local, talk a good deal about
housing but they have not been
strong on production. Every poli¬

tician in
a

housing

but

few

out of office has had

program

them

little of the housing that we
;have produced in the past, we may

fairly be asked why are we not
presently producing housing of
similar
quality
and
quantity.
There

are

which

some

have

reasons,

over

control, for
i our recent hesitation in the housno

ting field.
Difficulties of

Good

Politics and

private

one

difficulties has been that
confronted

our

are

it.

^thrifty people in

our

population,

with

There

are

certain

housing

our

place, there is the
this country to

first

the

trend

recent

place too much power in the Fed¬
eral

government. That

national

never intended
to have control over local matters.

government

previous speaker has
Federal government, un¬
Constitution, is one of

your

said,

our

der

was

our

limited

extra-ordinary

which

but

for

emergencies would be of
subject to
local

war

local

which

war powers

matters

extend

the

in those powers are

Included

the

and

powers

concern,

government. The time has come to
recognize the fact that the war
is over and that war powers ought
;o come to an end. Our Supreme
Court ought to so

declare, if Con¬

does not shortly do so.

gress

Typical of Federal government
regulation resting wholly on war
powers is its control over rents.
That control ought speedily to be
returned to the local governments.
I

that

realize

control

State

may

control but

similar to Federal

it will have to be reasonable and

local condi¬

therefore adjusted to
tions.

easier

the

for

distant

to justify his controls in
general than it is for the local
legislator to justify his control
in particulars.

expert

another

method

our

Federal

government

There

which

during the war years, been
drawing
into
its
own
hands
has,

that

be done, and especially
things that need to be
by those who are responsi¬
ble for public policy in this coun¬
try. Speaking generally, I'm sure

need

interstate

the

chief

Federal

One,

commerce.

powers

vested

government

interstate

over
a

was

been

subscribe heartily to
idea
which

are

not

phase

Real estate

at¬

your

the

monetary
investment.

estate

investments

are

nec¬

long term
investments
long term investments

expressed in terms of money,

are

those who take the responsibility
for such investments must neces¬

sarily

have

soundness

which
and

confidence

the

currency
in
contracts are written

our

are

performed

the

future.

Now,

what

the

position of
in this coun¬
try today? I start with a declara¬
money and currency

tion

after

which

you

may

question mark if

you

choose.

Until

this
the

our

effort

the

possible

Congressional
to regulate

power

commerce.

and

left of

Acts of Con¬

decisions of

what

Supreme Court sup¬

port these widened definitions of
interstate

put a
We

commerce

and

re¬

duced

large volume of moftey
while got away with it.
So long as the people have con¬
fidence in it, it is money even
a

and for

though it does not represent any
existing contribution to the eco¬
nomic life of the community. It
represents nothing and yet it has
to
be recognized
as
purchasing
power in the hands of those who
hold it.

Well, it is true the com¬

mercial banks, by their purchases
of government bonds on the mar¬
ket in

$50

which has exceeded

sum

billions,

amount

added' that
supply of

have

the

money

the country for no other purpose
and with no other result than the

ings.

bank

coins

have

deposits

circulation.

$170

billions

and

money

billions

$27

billions

About

and

about

money are in
circulation
about $142 billions of bank

paper

and

deposits
draw.

which

That

someone

can

the

get Federal regulation of

Act

Standards

National

and

Labor

the

Wagner
Act

Relations

ought to be amended to confine
provisions to that which is
in
reality interstate commerce;

their

is,

transportation and

munication
There

over

are

state lines.

other

tions of public

com¬

illustra¬

policies developed,

Reducing Money
If I

much

too

money,

values have been

our

then

Supply

right in saying that

have

the

earnr

too much

liquefied,

question arises how

can

money supply
of this country today.
Before the war the money sup¬

the

ply

You

tion

dollar to buy as
or services when

and

using that surplus to pay off

around $40 billions.

was

cannot

expect

much

there,

are

goods

when

$170

billions

there

of them.

$40

were

Long

ago

them

billions

Governor of

South Carolina said it is notorious
that

the

value

like
inverse

money,

everything else, bears

ratio

This

supply

its

increase.

huge

resulting from
the financing of the war just na¬

turally
higher

money

brought

higher

prices,

larger funds
seeking investment. It affects all
and

wages

real estate operations and it is the

principal
rate of

interesting to con¬
sider how did we get that huge
supply of money. We got it be¬
the

commercial

the

cause

banks

create

they

buy

other bonds

money

new

government

make loans to the

government or to other borrowers.
They bought government bonds
from the government until they
were

It is important to note

holdings

government
bonds
billions of cur¬
resulted from these

and therefore $50
rent

money

purchases
own

for

market

the

banks

earnings.

Much of the money made
able

the

of their

purpose

the

banks

went

which

was

avail¬

government by the
war
production

into

destroyed.
mil¬
lions of government bonds they
paid for them not by using exist¬
ing money but by creating bank
deposits in favor of the Treasury.
promptly

When the banks bought $100

When

the

Treasury

drew

down
out

those deposits and paid them
for

materials,
the
payments became
a
part of the money supply of
the country.
Take for example
such deposits drawn out by the
government to pay for a great
wages

and

amount of such

surplus out of

these

mercial

alone

bonds

banks.

body
means

keeping

com¬

how

surplus, let
budget.
It

taxes that

no¬

nobody wants to bring
in
general,
and
get the surplus, there

except

down,
when

the

wants to keep up and it
bringing down expendi¬

tures which

you

lot of

are a

crea¬

revenue,

know

You

balance

means

reduced?

government's

the

hard it is to produce a

people who would like

use

for

some

much

than paying
off prosaic existing debts.
interesting

purpose

The only other way

that

you

bring down that money sup¬

can

ply is for the government to sell
long term bonds to non-bank in¬
vestors and use the proceeds to
pay

held
that

country

when

only two ways.

are

some

insurance

insurance. It is

supply

money

There

declining

life

for

reason

interest

investments resulting in decreased
dividends and higher net cost of

off some of those bonds now
by the banks because, until

paper

taken

few

days

ago

of the
reduction

out

banks, there will be no
in the money supply.

Mr.

Eccles,

Chairman of the Federal Reserve

announced that the peak
money
supply had been

Board,
the

passed,. that the inflationary dan7

the

ger was. over; and therefore
Board would permit a 25%

margin on security op¬

crease

de¬

erations.

the . facts are
the money sup7
ply of this country was $175 bil¬
lions, or thereabouts. There was
the same $28 or $29 billions of
paper money and coin and $148
billions of bank deposits. Of these
bank
deposits, $24 billions be¬
longed to the Treasury of the
United States and
$124 billions
Now,

submit

these. A year ago

belonged to the people and their
corporations.
Today, or in the last report of
the Federal Reserve Board, the

supply of the country was

money

$170 billions. $142 billions of
was

bank

that

deposits, of which the

of the United States
billions and the other
$137 billions were held by the
corporations and the people who
were depositors.
In other words,
the money supply in the hands of
the people, as distinguished from
Treasury

held

the

$5.7

United

Treasury had
$124 billions to

States

from

carrier like the Hornet which per¬
formed magnificently for a few

increased

great holding of money, of liquid
purchasing power, is an inflation¬
ary force, as it is, it is greater
today than it was a year ago.
Mr. Sproul, head of our New
York Federal Reserve Bank, in a

tion

new

money have the same result as
if a gang of counterfeiters pro¬

improvement in the banks'

cally. Specifically, the Fair Labor

that

money

have too much money in the coun¬

months

tion. In the past, the problems that
confronted a builder df housing

call

extent

when

sult,

of the government. Now as a mat¬
ter of practice, we have come

want

real

essarily
and

one

That

purely local matters and nation¬
wide dealing with labor condi¬
tions that ought to be settled lo-^

and

just

tention.

the

(the Mayor of Cincinnati)
has
presented
here .tonight.
Namely, that government is or
ought to be an instrument of the

people

to which

His

Honor

the

much

control by

gress

all

money.

control

commerce.

deliberate

interstate

done

fundamental

There

Southern

the

Company said
day, speaking of this
situation, that these bank

deposits and their creation of

.SgL^that nearly $50 billions of bank

few

certain

Investment

prohibited from subscribing
in 1943. After they lost the right
powers
that
our
Constitution^ tesssabscribe to bond issues, they
meant to leave to the State and
bought government bonds on the
local governments. This is through market. And the combination is
a
modern, broadened definition responsible for this huge supply

field brought under

things

Monetary Phase of Real Estate

Edison

other

try today;

thusiastically

widen

Regimentation

poli¬ dangerously near to the position
cies,, rules and regulations that that
the
government planners
may be good politics but certainly determine in detail too many mah
are bad economics. We who invest
ters that ought to be left to in*
othfer people's money, most often dividual conscience and discre¬

savings? of thfe

might proceed en¬

plans.

has

Evils of Government

government

the. hard-earned

otherwise

the

should not be considered the tools

^Speaking generally,

government controls which
involve these political questions
and
make
us
hesitate
where
and

owners

people;

Bad Economics

mention

few of the public policies

years
ago our Supreme
desirability of pri¬ Court and
Congress interpreted
being encouraged by the
phrase "interstate commerce"
Congress and everybody else to
narrowly and excluded from it
provide housing, both domestic such matters as manufacture or
and commercial,
but you can't local
production. Under that re¬
encourage private
enterprise to stricted definition of interstate
provide such housing and espe¬
commerce, Congress had no power
cially
administrators
of
other to
regulate labor standards in
people's money to take the re¬
buildings in which goods were
sponsibility
of
providing
such manufactured to be later
shipped
housing merely by talking about in interstate commerce. During
its desirability or recommending
the last few years, however, there

scribe
vate

in his pocket
produced

ownership to
develop housing to meet the needs
of the people. We would all sub¬
encourage

have

houses to meet the existing needs
even of our veterans. If we boast

I'd

tonight,

just

reason¬

like to pro¬
housing needed in this icy, if private enterprise is to
city and throughout this country. provide new housing. Another of
Committee's
recommenda¬
It would be a good investment this
for our funds as well as a great tions was that Congress should

vide

future, if the future is completely
in the control of politics.
In the brief time available to

generally
good professional politics. It is
those powers relate to matters as
said that owners of housing in
distinguished from local concern.
this

be the cornerstone of public pol¬

tic housing. We would

and

reasonable

affairs

The President

California
the

today is that we have

practical men, but what will be
the political situation in the fu¬
ture. Every problem is so satu¬
rated with politics that one has
to be a politician or a prophet to
predict or foresee the results of
present housing plans. We busi¬
nessmen are not experts in poli¬
tics and we cannot predict the

cent

does

certainly is bad

pay its way. That
economics but up

would

life insurance folks are now

and

struction

Housing Projects

We must be sure that

call

the

Our

the

responsibility of
providing housing just because it
is needed or just because poli¬
ticians and government officials

by all

the

busines world and its trend.

vate production and development
of housing.

to
predict not what will happen in

take the

cannot

consideration

reasonable

trouble

(Continued from page 735)

original investment and with
a wealtn of real estate experience
which we think will serve us well

our

could

j which

the solution
predicted

problems

| were

Thursday, February 6, 1947

then

to the

went

of the Pacific. I

bottom

not emphasiz¬

ing the fact that this

war produc¬
destroyed. I'm calling to
your attention the fact that the
money
created to pay for the
Hornet did not expire with its
destruction. That money created
for the purpose of paying for that
carrier
still stalks through the
was

United
with

States

some-

and

will

continue

until the government by

method

takes

out

"out of

house,

produce the

our

control." I do not

exactly whom he meant by

"our". But what he
are

.banks

deposits which paid for the vessel.

sold

was

know

the

couragement and progress in pri*

were

speech to the Jersey Bankers the
day, said that the matter

other

bonds

commercial

which

the

by politics in recent years which
make for dpubt and delay in en-

banks

$137 billions and in so far as that

said

was

longer master of our own
our
are

hands are tied.
in control of the

The
ex¬

pansion of bank credit and, there¬
fore, of the total money supply in

Volume

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4566

165

the

in the Federal

country.

Reserve

do nothing.

can

then

Well, that is true only because

We Are in

Inflationary Period

which it does not wish to change.
hands are not tied by what
anybody else has done. Its hands
are tied by what it itself has done.

Its

The Federal Reserve

has the

now

to take control of this mat¬

power

ter of money

supply in this coun¬
try, but it does not do it. Why?
Because of the political decision
that the interest rate

govern¬

ment bonds must be kept down
all

costs.

in in¬

increase

any

But my

adopted and

that

given to us provided you
except to support the Treasury's pen then the Congress of the
desire to borrow these huge sums United Stater Might to study' this Wanted • to' preserve it.- That does
Of money at a ridiculously loW mattedprMtiptly and thoroughly* mean you and me; there is no¬
rate of interest, whatever the con¬ ought to study the present situa¬ body else to do the job, unless we
sequences otherwise to the public tion of the money supply and the do our share individually and per¬
welfare of the country.
Democracy is not some¬
currency of the country, ought to sonally.
I submit that unless somebody study the operation of the Federal thing
that is God-given; it is
does something about it we are in Reserve System to see if it op¬ something you must work for. It
for a wonderful ride for a while erates as the Federal Reserve Act is something that individuals must
oh this big and expanding money intended; and if not, to reorganize make ior UreihseiVes;^ Th^ iiS the

you some more.

of the policy the Federal Reserve
Board has heretofore

has

agent will very efficient¬

our

ly sell

point to
in

are

tonight is

you

inflationary

period because of this huge sup¬
ply of

moneyJ which is left to us

after the

not

complaining of that.
just asking you to recognize supply, and then we are in for a

now

situation

the

and its financing.

war

that

have

that

inflation

of our

soundness

future
and

currency,

our

that somebody ought to do some¬

terest rates takes place, say those thing about it.
The Federal Reserve authorities
Federal Reserve officials, it will
be on the short term stuff held have surrenedered to the Treasury,
the
principal borrower
in
the
by the banks and not on the long

the non-bank¬

term stuff held by

ing investors. This means an en¬
couragement to the banks to con¬
tinue to hold government paper,
to
continue the
present money
supply

its increase, to the detri¬
elements in the

ment of the saving

increase

their

for

rate

interest

non-banking in¬

term

long

less
and

but the same or a

vestments.
return.

inflationary

This

unfair

saving

thrifty,

the

What

have

refers to the

said

existing supply of money result¬
ing from bank holdings of govern¬

months

been

similar reduction

the

INTERNATIONAL

BANK

ASSETS—
Due

currencies

serve

United

for

Accrued

at any

Calls

Due

our

increase

produces

prices,

can

Now

insurance

days

tell

Due

cinch for them to write

much

depended upon to do that for

Which you

bought it?

Our agents

have sold life insurance to men

send

their

children

through

securities.

233,206.16

others

Directors

taxes

salaries

and

expense

59,399.98

,290,218,289.68

office

and

75,453.57
27,289.83

purchased
supplies

5,566.80

and

maintenance

alterations,

rented
12,736.98

quarters

230,672,120.32

charges

Expenses

1,968,950.00

Board

deferment

whether the amount of money
he will receive at

that

policy

will

education, and

that

that time under

buy

12,857.73

expenses

937,267,870.00

Pa "able

lars,

member

$158,750,000.00

memobr
United

than

Expense

over

•

$432,022.03

Income

gold,

Individuals

230,775,000.00

States

obligations

Miscellaneous

Total

the

47,859.28

Assets.

$7,790,172,628.61

Assets
AND

Income
rose

and

payable

accrued

ex¬

$129,809.00

of Commerce an¬

$229,809.00

—Authorized
Subscribed

par

value

$7,790,500,000.00

77,905

for

sea¬

mounted to 259.3
October's pre¬

high of 254.5 (1935-39 = 100).
straight month
the index of individual

This made the fifth

shares—

100.000

payments,

allowance

in November from
vious

Capital—•
stock—$100.GOO

makes

sonal influences,

100,000.00

than offset the

Jan. 13—The Depart¬

ment's index of income

credit- -Note

and

payments to individuals
new high in November,

the Department

which

penses

Capital

nounced

CAPITAL

Liabilities-

Deferred

increased

High in November

6,232,400,000.00

Bank

LIABILITIES

Accounts

New

which

incomes

Deficit—

exceeded

the

Novem¬

during

expanded

Rising factory payrolls and
disbursements by trade
service establishments more

ber.

United States dol¬

other currencies required

also

Income Payments to

currencies—

6,621,925.000.00

Deduct:

Excess

currency—

Stales
in

meet

•

721,911.60

6,777,500.00

398,764.580.32

wartime

military

continued decline

and

civilian

federal

payrolls and the loss of wages to
bituminous coal miners resulting
from

the

work

stoppages

which

began in November.
"For

11 months of 1946

income

payments, to
individuals were
equivalent to the annual rate of
$163.7 billion, almost 2% above
the 1945 annual total of $160.7 bil¬
lion. The decline of wage and sal¬

ary income, which for 11 months
reached in Febru¬ of 1946 was 6% below the com¬
ary,
1945. The November index
the
six
months
ended
Decem¬
parable 1945 period, is wholly at¬
ber
432,022.03
represents a 13% increase in the tributable to shrinking military
31, 1946
557,180.39
postwar low of September, 1945
and
federal
civilian
payrolls.
The
Department under date of
$7,789,942,819.61
Net
Capital
Wage and salary payments made
Jan. 13 added:
by private industry in this period
Total Liabilities and Capital
$7,790,172,628.61
"Income payments to individ¬
were more than 6% greater than
uals include wages and salaries,
Note A—Converted to U. S. dollars at rates of exchange in effect
during the 1945 period.

Balance,
Excess

July

$125,158.36

1946

expense

dates of

Note

over

income

peak of 245.2

for

net

deposit.

B—Member

Governments

were

permitted,

upon

the

Note C—2%

of the subscription to the

incomes

unincorporated

(both farm and nonfarm), dividends and interest, net
rents received by landlords, and
business

ap¬

proval of specified documents, to substitute non-negotiable, non-inter¬
est-bearing ^demand notes for such amounts of currencies required to
be paid on the 3% and 5% stock subscription calls payable on or be¬
fore Nov. 25, 1946, as were not then necessary in the operations of the
Bank.
The amount of such currencies for which notes could not be
substituted was 1% of 18% of the subscription of each member.

was

capital stock of the Bank

of individual incomes.
Agricultural income which has
been the dominant factor in the
other types

increase of total income

payments

over

ued

such

subscriptions, payable in the currency of the

of the

Bank, were called as

such subscriptions,

respective members

of June 25, 1946, and Sept. 25, 1946, re¬

on or

before Nov. 25, 1946. A further 5% or

payable in the currencies of the respective mem¬

"Total income payments to in¬
in
November
were

dividuals

equivalent to an annual rate of
$174.2 billion, compared with the
annual rate of $170.9 billion in
October and of $158.3 billion ih
November, 1945."

the last five months contin¬

rise

November. * Al¬

payable in gold or United States dollars,

college spectively, for payment

if it won't, well,

10,455.21

Governors

Miscellaneous

596.000.00

41,078.33

and storage of gold
(other than travel) annual meeting

Handling

1946

and

printing
charges

Cable

Repairs,

31.744.04

quarters

equipment

Stationery,

$158,750,000.00

member

deferred—Note

16,712.76

Furniture

currency
Uftited States

5,424.68

Alternates

and

Directors

51,100.80

Alternates

and

Governors

80,220,28
Rental

currencies

December 31,

Others

1947:

25,

$6,982.04

Alternates

Executive

Subscriptions To Capital Stock-

Uncalled

col¬

The

and
3,882.06

for

1/100th of 1% of the though prices received by farmers
declined slightly, a less than sea¬
policyholder had better give care¬ subscription being payable at the time the agreement was signed and
sonal drop in the volume of crop
ful attention to the question of the balance being payable on or before Aug. 25, 1946. 3% and 5% of
lege 15 or 16 years from now.

$128,020.65

Alternates—

and

Directors

and

Transportation
and moving to and from
seat
of
Bank—Executive
Directors
and

capital

for

investment

allowances—Executive

Board

States,.T_

Feb.

than

earned

Provision

„

Payments

1946

$289,889.57

Travel:

B—

States

request

—Note

ENDED DEC. 31,

LOSS FOR THE SIX MONTHS

$361,226.81

Pending

AND

Salaries:

currency—

member

prior

PROFIT

Alternates

C—

—Note

life

the insurance that you now carry
be

—other

agents that it ought to

larger volumes of insurance than
were ever written in the past. Can

STATEMENT

$248,285,000.00

before

Payable

really go places.
-

paid 5% of its subscription which has not

allowances

notes—Note

United

-United

in¬

follows
the other. It results that you have
prosperity for a time; we are hav¬
ing a wonderful time now in the
primary or early stages of infla¬
tion. With this big money supply
in wages, and one

provisions of Art. II, Section 8 (a) (ii). Deferments until June 25,
1951, have been granted to five mefribers for the payment of xk% of
subscriptions pursuant to the provisions of Art. II, Section 8
(a) (i).

their

384.098.75

creases

24, 1947, of the balance of 1V2%

subscription of Czechoslovakia has been approved pursuant to

Expense

$147,316,172.95

States

Payable

expressed?
Well,
we
cannot if we proceed along the
current lines.
If we continue to
increase the money supply, there
must be continued inflation, be¬
cause that is what inflation is, in¬
flation of the money supply. That

early date.

less pro¬

premiumi-_

subscriptions

whether we manage
real estate, deal in real estate, or
invest in real estate. Can we de¬

come

Note F—Deferment until March
of the

in 'tfiember currencies—

stock—Note

other

contracts,

request is still under consideration.

$538,503,289.68

which we are

member

than

United

which our
holdings, our in¬

payment at

E—Yugoslavia has requested deferment of the balance of
1V2% of its subscription pursuant to Art. II, Section 8 (a) (ii). This
Note

Executive

hon-interest-bear-

demand

Payaoie

pend on the money in

Subsequent to

had
1%
Dec. 31, 1946, Uruguay has advised that it has

made arrangements to make

Members—

From

other

it has lost it by mainte¬
policy of blindly

all interested,

thereof.

Officers

interest—

United

the money sup¬

That is an issue in

1946, and Venezuela, which became a member on Dec. 30, 1946,
paid on its subscription only the initial deposit of 1/100th of

Certificates

(at cost

amort,

Non-negotiable;

Reserve, get addi¬

cost.

Honduras and Uruguay had not paid
payable in their currencies onorbefore Nov.25,

Deduct:

of its own

nance

'»

Expenses—

77,462,773.80

147,700,271.70

of which may
and currently does maintain or in¬
crease the money supply. It is true
then that the Federal Reserve has
ply but

of December 25, 1946, for payment on or before

the 8% calls which were

Interest

than

treasury

of Indebtedness

control was

supporting the Treasury's fanatical
desire to have low interest rates

called

•'?::

25, 1947.

Securities—

States

vision

tional funds, the use

lost its control of

was

;ii_

'•

Note G—Costa Rica has

$83,231,627.63
Investment

their short term government paper
to the Federal

administration of democracy.

Republic that the Constitution

yet been called.

$5,768,853.83

States_

other

—

States—Note

Payable

Federal Re¬
policy, the banks which sell

opportunity to

participate in the preservation and

tonight, that tihs

Income—

currency—"United

United

probably meant when he
present

AND

1946

U. S. Dollars

Member

Mr.

under

that

31,

Member

Payable

Jsaid the banks are in

DEC.

Banks—

From

ing.

Sproul

gov¬

chance and where

the people have an

His

that

the

by Venezuela.

RECONSTRUCTION

FOR

SHEET,

ernment has

Receivable

What

reminder

fine

Honor gave you

DEVELOPMENT

ment bonds ahd have made larger

loans.

subscribed

the

profit and loss statement as of Dec. 31, 1946

BALANCE

supply. That is because the
banks have bought other govern¬
Commercial

1946,

31,

Dec.

follows:—

government redemptions

money

ended

tions for 350 shares by Colombia and 105 shares

portfolios the losses resulting from

of ma ur_
ing government obligations are
increasing the money supply or at
least
preventing
the
reduction
which ought to take place as the
government reduces its debt. Dur¬
ing the past year the Treasury has
reduced the government debt by
over
$20 billions but there has

Bank for Recon¬

capital stock of the Bdnk increased $120,500,000 as a result of the in¬
crease of 750 shares in the subscription of France and the subscrip¬
The balance sheet and

was

representative

where

ment

Now, just one other word. That

Note D—As of Dec. 31, 1946,

profit and loss statement to

International

Directors* of the

three

States.

Feb.

Reports on Finances

30 that the financial state¬
Bank, which include the balance sheet as of Dec. 31, 1946
and the statement of profit and loss for the six months ended Dec. 31,
1946, have been submitted to the forty Member Governments.

restore

this

struction and Development announced Jan.

pur¬

bonds on the
to
their

chases of government
market

bank

Current

bonds.

ment

painting tonight about
this country, about

ments of the

the

tors of it in a

the history of

forty member governments.
Executive

During

people.

been

has

Submits balance sheet and six months

The

in and put

bers,

World Bank

companies get

insurance

depres¬

great republic, will fall in
smash, and only a dictatorial gov¬
country.
The
Federal
Reserve ernment can pull us through.
If we are not to have this hap¬
policy is nothing whatever at all

banks and
not

savings

The

country.
life

what

will

currency,

the

endangers

it and the administra¬ reason that I so emphatically say
position where they to you that the trend towards
sion it will be! Nobody Wants that
government, * toward
operate it for the general centralized
Sort of thing, because if that kind good of the whole people of the expert government on the banks
United States, rather than for the
of a crisis comes in the money of
of the Potomac should cease, and
the United States, then all of these good of a particular administra¬
we should return to local govern¬
beautiful pictures that His Honor tion of the Treasury of the United

depression—and

this

huge supply of money, that it rep¬
resents

and

livestock marketings boosted

cash income above October levels.

With F. L. Putnam & Co.
(Special to The Financial

BOSTON,

Cheonicle)

MASS.—Edward

Barlow is now with F. L.

Putnam

& Co., Inc., 77 Franklin St., mem¬
"Non-agricultural income pay¬
bers of
the Boston Stock Ex¬
ments, which comprise the bulk of
income payments to individuals, change. •

THE COMMERCIAL & FINANCIAL CHRONICLE

780

Securities
N

Acme Electric

June

132,740 shares ($1 par) common stock.
Underwriters—Herrick, Waddell & Co., Inc., and First
Colony Corp.
Offering—To be offered publicly at $5
a share.
Proceeds—Company will receive proceeds from
the sale of 68,880 shares and four selling stockholders
the proceeds from the sale of 63,860 shares.
Company
also will receive proceeds from the sale of 20,000 war¬
rants for common stock to underwriters at an aggregate

Of the net proceeds ($292,940) $50,000
will be used to pay current bank loans; about $20,000
will be used for machinery and equipment, and the re¬
mainder for working capital.
price of $200.

by amendment.

Agau Mining Co.,

Carson City,

These provide for escrowing the sum
$2,200,000 to cover the call premium on the preferred
stock; increase in terms to Community Water Service
of

Co.

share. Underwriters by later notification. For

mine exploration and development.
•

Air

Power

Club

Bulletin,

Inc.,

Paterson,

Feb.

(letter of notification)

5,000 shares of common
Underwriters—None.
Price—$15 per
To publish a bulletin for and about aviation, etc.

(no

share.

par).

American
June

Broadcasting Co., Inc., N. Y.

filed

950,000 shares ($1 par) common stock.
Underwriter—Dillon, Read & Co. Inc., New York. Offer¬
ing—A maximum of 100,000 shares may be sold by com¬
pany to persons, firms, or corporations with whom the
corporation had network affiliation agreements on March

$1.

The remainder will

be offered

publicly.

Price by

.amendment. Proceeds—To prepay notes payable to

ac¬

quire radio station WXYZ> to construct broadcast trans¬
mitter for station KGO at San Francisco and for
working

capital.
American
Nov. 5

Building Corp., Dover, Del.
(letter of notification) 20,000 shares each

($19
par) 5% cumulative preferred and no par common. Price,
$10 a unit consisting of one share of preferred and one
share of

Underwriter—E. M. Fitch & Co., Phila¬
Proceeds—For additional machinery, working

common.

delphia.
capital and other corporate

Water

Underwriter—White, Weld & Co.

new

common

Community outstanding.

use the funds for its building and expansion
Offering date indefinite

American Locomotive Co., New York
July 18 filed 100,000 shares each of $100 par prior pre¬
ferred stock and $100' par convertible second
preferred
otock. Underwriting—Union Securities
Corp., New York.
Urice by amendment.
Proceeds—Net proceeds, with
other funds, will be used to redeem
$20,000,000 of 7%
cumulative preferred stock at $115 a share plus accrued
dividends. Indefinitely postponed.

American Water Works
Co., Inc., N. Y.

2,343,105 shares of

common

(par $5) plus

additional number determinable only after the re¬
sults of competitive bidding are known.
Underwriters—
To be filed by amendment.
Probable bidders include
Dillon, Read & Co. Inc., White Weld & Co., and Shields
on

Sept. 6 filed 336,550 shares common stock (par $1). Un¬
derwriting—No underwriting.
Offering—Stock will be
the

for

ratio

subscription

one

stockholders

common

additional

for each

two

held.

Unsubscribed shares will be offered for subscrip¬
tion to officers and directors of the company
Price—By
amendment.

Proceeds—Working capital.

Offering in¬

definitely postponed.
•

capital

For mine

Price,

filed

$1.25

Western

16,197

Rollins & Sons Inc.
the public.

Engine Co., Oakland, Calif.

(letter of notification) 8,500 shares common on
behalf of Lucille E. Simon, Los
Angeles. Price—At mar¬
ket. No
underwriting at present. If underwriter is se¬
lected, name will be supplied by supplemental letter.

•

Australia

selling stockholder.

(Commonwealth of)

(2/19)

Jan. 30 filed $45,000,000 of
15-year 3%% bonds, due 1962.

Underwriter—Morgan Stanley & Co., New York. Price—
By amendment.

Proceeds—Proceeds will be used to re¬
$44,902,000 of Commonwealth of Australia 4y2%
gold bonds external loan of 1928, due May 1, 1956.
In

deem

lieu of cash payment for

from

the

bonds, the Commonwealth will

underwriters

Commonwealth

Aus¬

New York

gold bonds external loan of 1928, due May 1,
1956, with coupons due May 1, 1947 and subsequently, at
1021/4%.

(2/7)

240,000 shares

share.

($1 par)
underwriters.

development, etc.

Arkansas
June

Inc.,

(letter of notification)
stock.

Atlas Imperial Diesel

tralia 41/2 %

Ameri-Cana Mines

Jan.

•

Jan. 27

Proceeds—Go to the

American Zinc, Lead & Smelting Co., St. Louis

Bachmann
Nov.

Gas

shares of

Co.
common

stock

(par $5).

Uxbridge Worsted Corp.

27 filed

45,000 shares of 4% preferred stock (par
$100) and. 200,000 shares of common stock (par
$1).
Underwriters—Kidder, Peabody & Co. and Bear, Stearns

Co.

Proceeds—Will go to selling stockholders.

by amendment.

Price by amendment.

are

being sold

by six stockholders.

Basic

Armour and Co., Chicago

Food

Materials, Inc., Cleveland, Ohio
notification) 5,000 shares (no par)
common, to be offered to stockholders; 295 shares of
($100 par) preferred, 4,750 shares (no par) common and
$50,000 10-year 5% debenture notes, all to be offered to
Nov.

July 12 filed 350,000 shares (no par) cumulative first
preference stock, Series A; 300,000 shares of convertible
second preference stock, Series A, and 1,355,240 shares
common stock (par $5).
Underwriter—Kuhn, Loeb &
Co., New York. Offering—The 350,000 shares of first
preference stock will be offered in exchange to holders
of its 532,996 shares of $6 cumulative convertible
prior
preferred stock at the rate of 1.4 shares of first prefer¬

Price

Offering date indefinite.

Offering—Stock will be offered to

(letter of

the public. Prices—$5 per common share to

$10

per common

stockholders;

share to public, $100 per preferred share

and debentures at face.

underwriting.

To increase

working capital.
•

Bassett

(Pa.)

Furniture Industries

Jan.

of first preference not issued in exchange will be sold

Va.

Price—$34

to underwriters. The 300,000 shares of second
preference
stock will be offered publicly.
The 1,355,240 shares of

Bassett, Jr., 1st Vice-President.

stock for each share of

ence

will

common

offered

stockholders of the
of

new

$6 prior preferred.

for

company

share for each

subscription to common
in the ratio of one-third

common

share held.

Unsub¬

(letter of notification) 2,941 shares of common.
Underwriter—Scott, Horner & Mason, Inc., Lynchburg*
share.

To be sold

behalf of

J. D.

Beaunit Mills, Inc., New York

Sept; 27 filed 180,000 shares ($2.50 par) common. Under¬
writer
White, Weld & Co., New York. Price — By
—

scribed

purchased by the
underwriters.
Price—Public offering prices by amend¬
ment.
Proceeds—Net proceeds will be used to retire all
unexchanged shares of $6 prior stock and to redeem Its
outstanding 7% preferred stock.
George Eastwood, President, in letter to stockholders,

total, 140,000 shares are
being sold by St. Regis Paper Co., New York, and the
remaining 40,000 shares are being sold by I. Rogosin,
President of Beaunit Mills, Inc.

Dec.

said

Sept.

"we

common

have

not be necessary to
stock" as part

mon

will

the

conclusion it

will

issue any additional shares of
of company's refinancing plan.

com¬

come

amendment. Proceeds—Of the

Berbiglia, Inc., Kansas City, Mo,

upon

conversion of preferred. Underwriter—New-

burger & Hano, Philadelphia. Price—$25.50 a preferred
share and $12 a common share. Proceeds—Company will
receive proceeds from the sale of all of the preferred
and 100,00 shares of common. The remaining 50,000
shares of common are being sold by three stockholders.

net-proceeds of $2,300,000 will be used by
the company to pay off bank notes of about $1,100,000
and to purchase additional machinery and equipment
in the amount of $1,200,000. Offering date indefinite.

York.

stock.

Underwriter—Smith, Barney & Co., New
Offering—Stock will be offered for subscription

common

preference

stockholders

the

basis of

notification)

41,000

share. Underwriter—Estes, Snyder & Co., Topeka,

one

stock for each nine shares held.
Unsub¬
scribed shares will be sold to the underwriters who will
reoffer it to the public.
Price by amendment. Proceeds
—A maximum of $15,540,000 of the net proceeds will be

common.

tools and
•

(2/7)

(letter of notification) 74,531 shares 10c par)
Price—$4 a share. Underwriter—E. F. Gilles¬

pie & Co., Inc.
raw

Proceeds—For acquisition of machinery,
materials, and for working capital.

Berkey & Gay Furniture Co., Grand Rapids,
Mich.

Feb. 3 filed 733,575

shares ($1 par) capital stock. Under¬

writing—None. Offering—Company said all of the shares
are issued and outstanding.
The purpose of the registra¬
tion statement is to enable holders to effect sales by
use

Philadelphia

Oct. 29 filed 293,000 shares ($100 par) cumulative pref¬
erence

Berg Plastics & Die Casting Co., Inc.
Oct.

Estimated

Atlantic Refining Co.,

(letter

ing postponed indefinitely.

convertible preferred and 150,000 shares ($1 par) com¬
mon. It also covers shares of common reserved for issu¬
ance

cumulative convertible $6 par preferred. Offering pricey
Kans. To pay outstanding indebtedness and expenses and
to open five additional stores in Kansas City, Mo. Offer¬

Sept. 27 filed 53,648 shares ($25 par) 4%% cumulative
pre¬

Price

pates it will

March 30 filed

stock of the

common

Co. for each 20

Artcraft Hosiery Co., Philadelphia

amendment.
Proceeds—Net proceeds initially will
#je added to general funds,
however, the company antici¬
program.

share of

one

Works Holding

offered

applied to redemption of the company's cumulative pre¬
ferred stock, convertible 4% Series
A, at $105 a share.
The balance will be added to general funds for
corporate
purposes including repayment of obligations, acquisition
of additional production, and expansion of
refining,
transportation and marketing facilities. Offering tempor¬
arily postponed.

Cities

the issuance of

purposes.

American Colortype Co., Clifton, N. J.
Aug. 12 filed 30,000 shares ($100 par) cumulative
ferred stock.

Ohio

Water Corp. preferred stock to
share, respectively, plus accrued divi¬
dends at 7% annually from Nov. 1, 1945,
compared with
$135 and $120 a share offered in the original plan; and

(3/1)
Mock

and

$180 and $159

Underwriters—Rauscher, Pierce & Co. Inc., and E. H.

Nev.

Jan. 20 (letter of notification) 295,000 shares of common.
a

Jan. 23, company filed with the SEC
recapitalization plan as suggested by

amendments to its

the Commission.

Bedford, Mass.

Aug. 22 filed $1,500,000 of 5% sinking fund debentures,
due 1961, and 50,000 shares ($1 par) common stock.
Underwriter—Ames, Emerich & Co., Inc., and Dempsey
& Co., Chicago. Offering—The debentures will be of¬
fered publicly. The common shares will be issuable upon
the exercise of stock purchase warrants for purchase of
common stock at $2 a share above the bid price of such
common on the effective date of the registration. Com¬
pany will sell warrants for 25,000 common shares to the
underwriters at 10 cents a warrant. The remaining war¬
rants will be sold to officers and employees of the com¬
pany. Price—Debentures at 98. Proceeds—Company will
use $1,025,000 of proceeds of debs, for payment of an
Indebtedness to Bankers Trust Co., New York. Balance,
will be added to working capital.
An application is
expected to be filed shortly withdrawing statement from
registration.

Price—$1

(jointly), and W. C. Langley & Co. and The
ijointly). Uttering—Price to public

jrfoatuii vA«'p.

iTiH

Aerovox Corp.,

Registration

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

& Co.

Corp., Cuba, N. Y.

filed

Now

Thursday, February 6, 1947

the

prospectus.

Berkey & Gay said the shares had been sold in 1944
and 1945 to a group of about 50 persons who represented

they
for

were

ket

purchasing the shares for investment and not

distribution.

far, 231,204 shares have been sold in the open mar¬
the Commission had raised the question as to
such sales had the effect of making the entire

and

whether

offering public.

The Commission staff stated that regis-

.Volume 165

Number 4566

THE COMMERCIAL & FINANCIAL CHRONICLE
Braunstein

(Showing probablm

date of

New York. Price

February 7, 1947

Capital Stock
Common

Helicopter Corp

Capital Stock

February 10, 1947
Ross-Frederick Corp

Common

February 11, 1947
Forest Units, Inc

Stock
Preferred

February 12, 1947
Rhoades, Inc
1

Preferred

February 13, 1947
Gordon Foods, Inc

Common

Lake

for

common.

being sold by

ferred shares and

C. K. Pistell & Co., Inc.,
share for preferred and $11
—

Proceeds—7,000 preferred shares

company, the remaining 5,500 pre¬
all of the common are
*»eing sold bj

present stockholders. Net proceeds to the company, es¬
timated at $147,500, will be used to
prepay to the ex¬
tent possible outstanding
$149,300 mortgage liabilities.

Equip Trust Ctfs.

United Air Lines, Inc

Noon

are

$25

—

Offering date indefinite.

New York Central RR

Wheeling

Commonwealth Telephone Go;, Madlsony Wis-

Erie

Ry.

(EST)

Equip Trust Ctfs.

Brooklyn

(N. Y.)

Union Gas Co.

4.30% dividend. Harriman Ripley & Co. and Mellon
Securities Corp. bid 100.779 for a 4.40% dividend.
In¬

definitely postponed.

February 19,
Australia, Commonwealth of

May 24 filed 312,000 shares of common stock (no par).
Stock will be sold
through competitive bidding. Under¬

Bonds

writers—Names by amendment.
Probable bidders in¬
clude Blyth & Co.,
Inc.; The First Boston Corp.; Harri¬

1947

Southwestern Public Service Co.__Pref & Common
York Corp.

Preferred

February 20, 1947
Deerfield Packing Corp
Debentures and Pref.
Hercules Steel Products Corp
Common

March
Air

Power

Club

Bulletin

1947

March 3,

man

Ripley & Co.

Standard

Common

Capital Stock

satisfactory.
bid of $28.33

any

for

investment.

Blumenthal

(Sidney)

Co.

Inc.,

Aug. 30 filed 119,706 shares (no par) common and sub¬
scription warrants relating to 30,000 shares thereof.
Underwriting — None. Proceeds—For reimbursement
of

Offering—Stock is

being sold by
Co., parent, of California.

Electric

Blyth & Co., Inc., and First Boston Corp.
a share, ahd Harriman
Ripley & Co. bid

(letter

common.

Hartford, Conn.

notification) 29,968 shares ($5 par)
a share.
No underwriting.
To

Price, $7.50

reduce bank loans.

Carscor

treasury for
funds
expended
in
re¬
3,907
shares
of
7%
cumulative
pre¬
ferred on April 1, and for funds
deposited in trust for
redemption on Oct. 1 of remaining preferred shares. Al¬
though it was proposed to offer the stock for subscrip¬
tion to stockholders at
$10 per share, company on Sept
decided to withhold action at this time.

filed

300,000

(3/3-7)

and six

stockholders, including Harry Scherman, Presi¬
dent, and Meredith Wood, Vice-President, are selling
the remaining 200,000 shares.
Price by amendment.

Proceeds—Company will

use

common

stock.

the

purposes

Under¬

public

share in Canadian funds. Proceeds—For
in connection with exploration,

•

a variety
sinking of

and other

raw

materials

and

book

inventories.

Jan.

(letter of notification)

Price—10 cents

mon.

share.

1,500,000 shares of
No

com¬

underwriting.

For

preferred and 500,000 shares ($1 par)
writers—Paul

Davis

Offering—Preferred

will

Co.

and

have

cumulative
Under¬

Stroud

Co., Inc.

Central Soya Co., Inc., Fort

Aug. 21

filed 99,000

offered
one

shares will

for subscription to common
stockholders at
share for each 7% shares held.
Unsubscribed
be sold to underwriters.
Price by amend¬

Proceeds—Net proceeds, together with other funds, will
(be used to pay the company's 2% subordinated note In
the principal amount of $5,268,750 and accrued interest.

Offering date indefinite.

•

Chadbourn Hosiery Mills,

Inc., Charlotte, N.

($1 par)

common.

Under¬

writer—Van Alstyne, Noel & Co., New York.
Price—By
amendment. Proceeds—Stock is being sold

holders who will receive

proceeds.

share¬

Inc.,

Binghamton,

N. Y.

without

underwriting,

par,

about Feb.

Proceeds

will

be used for the purchase or exchange of
preferred stock of company now outstanding.

Crown
22

$75,009

Capital Corp., Wilmington, Del.

filed

250,000 shares

($1

par)

class A common.

Underwriter—Hodson & Co. Inc., New York, will act as

selling agent. Price—By amendment. Proceeds—Net pro¬
ceeds will be used as capital for company's subsidiaries
engaged in the small loan or personal finance business.

common

stock (par $1)«
Offer¬

Underwriters—Sabiston-Hughes, Ltd., Toronto.

ing—Shares will be offered to the public at 75 cents m
Proceeds—Net

proceeds, estimated at $300,000^

Dearborn Homes,

Jan.

Inc., Lawrenceburg, Ind.

(letter of notification) 1,000 shares ($100 par)
common and 1,000 shares 4%
($100 par) preferred. Price
—$100 per share. No underwriting. To finance business
of company.

Deerfield

Packing Corp., Bridgeton, N. J.

(letter of notification) 800 shares ($1 par)

mon

behalf of R. H. Moeller; Vice-President.
Under¬
S. Dickson &
Co., Charlotte.
Price—$12 a

com¬

writer—J.

share.

Proceeds go

•

to the selling stockholder.

Chesapeake Airways, Inc., Salisbury, Md.
(letter of notification) $75,000 2-year 4%%

underwriting. For acquisition of property
ments, discharge of all bank loans.

Colonial

con¬

improve¬

29 filed $2,500,000 3%% sinking fund debenture^
1962, and 3,750 shares ($100 par) 4%% cumulative
preferred stock.
Underwriters—Central Republic Co.

(Inc.), and A. C. Allyn & Co., Inc., Chicago, and E. H.
Price—By amendment
Proceeds—Company will receive proceeds from the sale
of the debentures and 2,000 shares of preferred stock.
The remaining 1,750 shares of preferred are being sold
by a stockholder.
Company will use its proceeds to
redeem its outstanding first mortgage 4% sinking fund
bonds due 1956 and apply any balance to general cor¬
porate funds.
Rollins & Sons Inc., New York.

Airlines, Inc., New York

Detroit

Parker

& Redpath,
Washington,
Weeks, New York. Price by
amendment. Proceeds—Net proceeds will be used to
pay
off a $550,000 loan to the Continental Bank & Trust Co.
D. C. and Hornblower and

of New

Jan.
due

Jan. 30

York; purchase equipment and development

writer
a

holders

Boston.
•

working capital.

Packing Co., Merchantville, N. J.

per share. Working capital, acquisition of
land, buildings, machinery, etc.

Inc.

filed

convertible

150,000 shares ($4 par) 30c cumulative
preferred stock, convertible into common

stock in the ratio

initially of 1% shares of common for
preferred. Underwriter—Floyd D. Cerf
Co., Inc., Chicago. Offering—Company offered 59,585%
shares for subscription to present common stockholders
of record Aug. 6 at $4.50 a share in the ratio of one share
of preferred for each share of common held. Rights
expired Aug. 20. Stockholders subscribed for 735 shares.
The offering to common stockholders excluded the two
principal stockholders who waived their rights to sub¬
scribe.
The
remaining 90,414% shares and 58,850%
shares not subscribed to by common stockholders will
be offered to the public through underwriters. Price—$5
a share. Proceeds—Approximately $50,000 for payment
of Federal taxes; $250,000 for payment of Lincoln-RFC
loan; $50,000 as a loan to Palmer Brothers Engines, Inc.,
a
subsidiary; balance for purchase of machinery and
equipment and working capital.
each

who will
For

—

receive

proceeds.

working capital.

Diamond Portl'd Cement Co.,

Middle Branch, O.

(letter of notification) 24,000 shares ($1 par)
common.
Underwriter—Merrill, Turben & Co., Cleve¬
land.
Price—$12.50 a share. To finance general rehabil¬
itation and expansion program.
Edelbrew

Price—$100

Columbia Aircraft Products

($1 par) common. Under¬
C. G. McDonald & Co., Detroit. Price — $5.5W
Stock is being sold by six share-'

ex¬

Jan.

June

—

share. Proceeds

crease

Colonial

Typesetting Co., Detroit, Mich.

Sept. 25 filed 70,920 shares

penses of Bermuda route. The balance will be used to in¬

Jan. 20 (letter of notification) 2,000 shares of 7% cumu¬
lative preferred stock (par $100). Underwriting none.

Inc., Philadelphia

Milk Co.,

(letter

(2 20-21)

writer—Auchincloss,

end 95,000 shares are reserved for issuance upon exer¬
cise of outstanding warrants. Price—By amendment.

Bowman Gum,

notification) $75,000 5-year 5% de¬
benture note (authorized $500,000).
To be sold privately

itely postponed.

com¬

total common, 375,000 shares will be
offered for sale for cash. 30,000 shares are reserved for
(Issuance upon exercise of warrants attached to preferred

Sept. 27 filed 268,875 shares

Crowley's

Proceeds—Working capital, etc. Offering indefin¬

Oct. 25 filed 150,000 shares
($1 par) capital stock. Under¬

stock of the

Inc., New York

(letter of notification) 270,000 shares of common,
stock (par $1). Underwriter—Newkirk & Banks, Inc.
Price—$1 per share. Proceeds—Property improvements*

•

(no par) common. Under¬
Offering—Common shares initially will

writer—None.
rate of

Wayne, Ind.

stock

purchase warrants for purchase of 30,000 shares of
mon

Christina Mines,

will be used for mining operations.

common.

non-detachable

Offering date indefinite.

Dec. 9

share.

vertible notes to be offered to stockholders at
par.

Boston Store of Chicago, Inc.
Sept. 10 filed 30,000 shares ($50 par)

stockholders.

May 31 filed 500,000 shares of

mine development.

Jan. 30

Offering date indefinite.

Cyprus Mines, Ltd., Montreal, Canada

Canyon Lode Mining Co., Walla Walla, Wash.

its net proceeds for work-

ing capital to be used for expansion of inventories of
paper

selling

($1.25

par) capital stock.
Underwriter—Eastman, Dillon & Co., New York. Offerling—Of the total, the company is selling 100,000 shares

Is City, N. Y.'

9 filed 300,000 shares ($5 par) common stock.
Underwriters—First Boston Corp., New York. Price by
amendment.
Proceeds—Go to Joseph Levy, President^

Jan.

Offering—To

ment.

Book-of-the-Month Club, Inc., N. Y.
Oct.

Crawford Clothes, Inc., L.

Aug.

Porcupine Gold Mines, Ltd., of Toronto,

June 24 filed
400,000 shares of
writer—No underwriters.

For working capital.

Continental-United Industries Co., Inc.
Aug. 2 filed 150,000 shares ($1 par) common. Under¬
writers—Aronson, Hall & Co. Price $8.25 per share.
Proceeds—To repay demand loans and for general funds.
(Originally company filed for 80,000 preferred shares
par $25 and 350,000 common shares.)
•

Ontario

company's

demption

Sherman & Co., New York.

Jan.

Capewell Manufacturing Co.,

shafts, diamond drilling and working capital.

New York

public offering. Price—$2 a com¬
a
warrant.
Underwriter—L. XX

cent

one

•

For

additional working capital.

share,

exploration, purchase of machinery, working capital, etc.

Gas

unsubscribed

Corp.

$24,031 a share. Stock will again be put up for sale
when market conditions
improve.

Business—Manufacture of furniture.

Co., Birmingham, Ala.
Jan. 15 (letter of notification)
45,509 shares ($2 par)
common.
Price—$8 a share.
For pro rata subscription
foy common stockholders: Southern Natural Gas Co. will
purchase

and

Bids Rejected—Standard Gas & Electric Co.
rejected
June 25 two bids for the
purchase of the stock as un¬

Feb.
tration is required if any of the
remaining 733,575 shares
are to be sold.
Price—At market. Proceeds—Go to sell¬

Birmingham

year after present

mon

1947

Book-of-the-Month Club, Inc

ing stockholders.

Gas

Inc

Car-na-var

California Oregon Power Co.

Common

Morton Oil Co

Continental

one

May 3 filed 70,000 shares of cumulative preferred stock
($100 par). Underwriters—To be filed by amendment.
Bids Rejected—Company
July 23 rejected two bids re¬
ceived for the stock. Blyth & Co.,
Inc., and F. S. Moseley & Co. and associates submitted a bid of 100.06 for a

Common

February 15, 1947

—

(letter of notification) 132,500 shares ($1 par)
common and
35,000 warrants for purchase of common

February 14, 1947
Highway Automobile Association

Sept. 23 filed 16,071 shares ($100 par) $4 cumulative
preferred. Underwriters
Paine, Webber, Jackson &
Curtis and Stone & Webster Securities Corp. Offering—
Shares will be offered for exchange for $5 cumulative
preferred, on a share for share basis, plus cash adji»fement. Shares not exchanged will be sold to underwriters.
Price by amendment. Proceeds—To redeem at $110 a
share, plus divs., all unexchanged old shares.

Nov. 4

..Common

Missouri-Kansas-Texas

Miller &

stock. Underwriter

common

offering)

Ameri-Cana Mines, Inc
Berg Plastics & Die Casting Co
Piasecki

(Harry), Inc., Wilmington, Del.

Sept. 25 filed 12,500 shares ($25 par) 4%% cumulative
convertible preferred stock and
50,000 shares (200 par)

NEW ISSUE CALENDAR

781

Brewery, Inc., Brooklyn, N. Y.

5,000 shares ($100 par) 5% non-cumulative
preferred. Underwriters—None. Offering—To be offered
at par to customers, officers and employees of the com¬
pany. Proceeds — For corporated purposes including
modernization and improvement of the manufacturing
Dec. 31 filed

plant and machinery and equipment.

Edwards
Jan.

Brothers, Inc., Ann Arbor, Mich.
of

(letter

notification)

20,000 shares of 5%%

preferred.
Price—$10 a share.
Stock not underwritten but to be sold through Watling,

cumulative

convertible

Lerchen & Co.,

Detroit. Of the total the company will
from 12,739 shares and J. W. Edwards,
family will receive pro¬

receive proceeds
an

officer of the company, and

ceeds from 7,261

shares.

The company will use its pro¬

ceeds for additional working

capital.

Empire Millwork Corp., New York
Aug. 28 filed 50,000 shares of $1.25 cumulative
ble

common

converti¬

$25) and 150,000 shares of
stock
'nar $1). ITnderwr*^ar«—Van Alstyo®,
(Continued on page 782)

preferred

stock,

(par

THE COMMERCIAL & FINANCIAL CHRONICLE

782

(Continued from page 781)
Noel & Co. Proceeds—Corporation will receive the pro¬
ceeds from the issuance of 50,000 shares of the common
stock which will be used to increase productive

new lines of products and expand the business. The
remaining 100,000 shares of common stock and the pre¬
ferred shares will be sold by present stockholders.

Falk Mercantile Co.,

plant.

stock

to retire debentures and for expansion purposes.

Co., York, Pa.

(A. B.)

Farquhar

•

Inc., Philadelphia. Price—By amendment. Proceeds —
Proceeds will be used to redeem $355,350 4%% sinking

1957, to pay off
certain contracts and chattel mortgages of $72,000 and
$800,000 to reduce principal on outstanding bank loans.
mortgage

Films Inc.,

Aug.

due

bonds,

New York

June 25, filed 100,000 shares

($5 par) class A stock and

300,000 shares (10 cent par) common stock, of which
200,000 shares reserved for conversion of class A. Each
share of class A stock is initially convertible into 2
shares of common stock. Underwriters—Herrick, Waddell & Co., Inc., New York. Offering—To be offered
publicly at $8.10 a unit consisting of one share of class A
stock and one share of common stock.
Proceeds—$201,000 for retirement of 2,010 shares ($100 par) preferred
stock at $100 a share; remaining proceeds, together with
other funds, will be used for production of educational

Florida Airways, Inc.,

Jan.

(letter of notification) 60,000 shares ($1 par)
common.
Price—$5 a share. No underwriting. To retire
indebtedness, purchase hangar, shop and equipment and

working capital.

notification)

To provide expansion capital.

Griggs, Cooper & Co., St. Paul, Minn.

($1 par)
St. Paul.
Price—$25 a share. Proceeds — For improvement and
modernization program. Offering indefinitely postponed.
(letter of notification)

Sept. 3

•

amendment.

Proceeds—To

be used to redeem

15-year

3%% sinking fund debentures, due 1959; and $2.50 cum¬
ulative preferred at $53 a share.
Balance will be added
to working capital.
Temporarily postponed.
Foreman Fabrics

Corp., New York

July 29 filed 110,000 shares ($1 par) common stock, all
outstanding. Underwriters—Cohu & Torrey. Price by

12,000 shares

Jan. 30

Homes, Inc., Bridgeport, Conn.

(letter of notification) $300,000 of 5%

non-cum¬

ulative preferred. Price—$50 a share. No underwriting.
For junior financing of garden apartment development
in
•

Bridgeport, Conn.
Forest Units,

Inc., New York

(2/11)

Feb. 4 (letter of notification) 91 shares of common stock.
Underwriters—None.
Price—$500 per share.
Proceeds

Grolier

Society, Inc., New York

July 29 filed 18,500 shares at $4.25 cumulative preferred
stock ($100 par),
with non-detachable common stock
purchase warrants entitling registered holders of shares
of the $4.25 preferred to purchase at any time 64,750
shares of
common

stock at $16 a share at
shares for each preferred share
common

the ratio of 3%
held; and 120,-

000 shares of $1 par common stock.
Underwriters—H.
M. Byllesby and Co., Inc.
Offering—Underwriters to

purchase from the company 18,500 shares of preferred
20,000 shares of common; and from Fred P. Murphy
and J. C. Graham, Jr., 100,000 shares of issued and out¬
standing common. Prices, preferred $100 a share; com¬
mon
$14 a share. Proceeds—To retire $6 cumulative
preferred, pay notes, discharge a loan. Indefinitely post¬
poned.
and

Gulf

Utilities

States

Co.,

well

Dry Foods, Inc., Columbia,

common

stockholders

Gulf

States'
The

Engineers Public Service Co., New York.

share of Gulf States stock
for each share of Engineers common held.
Price—$11.50
a share.
Proceeds—Purpose of offering is to carry out
a provision of dissolution plan of Engineers approved by
subscription basis will be

of cum. con v.
preferred and 50,000 common stock purchase warrants.
Price—$5.50 a preferred share and 2 cents a warrant.
Underwriter—Amos Treat & Co., New York.
To exer¬
cise options for purchase of five variety stores, to retire
notes and for working capital.
Illinois Power Co.,

one

Aug. 30 filed 450,000 shares (100 par) common. Under¬
writer—Newkirk & Banks, Inc. Offering—Of the total
company is selling 350,000 shares and two stockholders,
Roland E. Fulmer and Louis H. Newkirk,
Jr., are selling
the remaining 100,000 shares. Price—$6 a share. Proceeds
—For

purchase of sweet potatoes, plant expansion, addi¬
tional storage facilities, research and development work
and working capital.
Offering date indefinite.
Glencair

Mining Co. Ltd., Toronto, Can.

of preferred will be used to reimburse the com¬
pany's treasury for construction expenditures. Net pro¬
ceeds from the sale of common will be applied for re¬

demption of 5% cumulative convertible preferred stock
not converted into common prior to the redemption
date.

The

Funds).

Proceeds—For

mine

development.

Glensder Textile Corp., New York

Proceeds—Net proceeds will be used to redeem

its

outstanding 6% cumulative preferred stock at an
cost of $213,258, exclusive of accrued divi¬
dends.
It also will use approximately $402,000 toward
the purchase of a manufacturing plant in Chicago; bal¬
ance for working capital. Offering date indefinite.

Kaiser-Frazer

Inc., Los Angolos

(Mich.)

Kingan & Co.,

Company has also issued 55,000
stock purchase warrants to the selling stockholders at
10 cents a share entitling them to
purchase up to Aug. 1,
1949, common stock of the company at $11 a share. Price
by amendment. Offering temporarily postponed.

Inc., Milwaukee, Wis.

July 31 filed 50,000 shares of $1.25 cumulative converti¬
ble preferred stock series A ($20 par) and
150,000 shares
(10c par) common, all issued and outstanding and
being
•Old by eight selling stockholders.
Underwriters—Van
Alstyne Noel & Co. Price by amendment. Proceeds—
To selling stockholders.
Offering temporarily postponed.

Food?, Inc., Atlanta, Ga.

(2/13-14)
150,000 shares ($1 par) common. Under¬
writers—Johnston, Lemon & Co., Washington, D. C.
and Allen & Co., New
York, are principal underwriters.
Jan. 14 filed

Offering—Company will offer 125,000 shares
lic at

to the pub¬

$6 a share and the remaining 25,000 shares will be
sold to the principal underwriters for
investment at $5
a share.
Proceeds—Company will
net proceeds

apply $350,000 of the

purchase the Driscoll Food Products

Mich.
shares

Inc.,

Indianapolis,

Ind.

cumulative pre¬
ferred and 174,625 shares ($10 par) common.
Under¬
writer by amendment.
Price by amendment. Proceeds
—All of the securities are being offered by stockholders
who will receive proceeds.

Kiwago Gold Mines Ltd., Toronto, Canada
shares (no par) common. Under¬
Price—70 cents a share,

underwriting

discount will

amount to 21 cents a
and development of

Proceeds—For exploration

mining property and for administrative expenses.
•

Jan.

filed

120,020 shares

writers—James S.

Drake,

Pittsburgh,

($1

par)

Under¬

common.

Borck, Bridgeport, Conn.; George E.
Pa.; William E. Stanwood, Boston;

and Seaboard Allied Milling Corp., also of Boston. Offer¬
ing—Of the total, the company will offer 45,020 shares

Lapaco Chemicals, Inc., Lansing, Mich.
27

(letter

common.

Price—$2

notification) 21,666 shares ($1 par)
a share. No underwriting. For plant

expansion and working capital.
•

Macco

Corp.,

Clearwater, Calif.

(letter of notification) 1,200 shares ($1 par) capi¬
Shares will be sold by Edward A. Pellegrin, a

Jan. 31

employees of the company for subscrip¬
share.
The balance of 75,000 shares will
be offered for subscription at $8.50 a share to common

tal.

tion at $8.50 a

director, to Dean Witter & Co., Los Angeles. Cover short
account for sales previously made to public.
Proceeds

stockholders

the basis of one-fourth of

new

com¬

basis

preferred, Class A and Class B stocks
one-fourth

common

to make

new

common

for

the

each

share into which their shares has been changed.

they

costs

are so

constructing new bakeries in Boston,
Worcester, Mass.; Cohoes, N. Y.; and Providence, R. I.
Business—Baking business.

Macco Corp.,

Clearwater, Calif.

of notification) 1,000 shares ($1 par) capi¬
tal.
Stock to be sold by Fred H. Brown, Vice-President*
Treasurer and director, to Dean Witter & Co. to cover
short account.
Proceeds go to the selling stockholder.* *
Jan. 31 (letter

said the underwriters do not presently intend
public offering of the shares at this time but

offered they will be sold at the
market price.
The underwriting discount is 50 cents a
share.
Proceeds—Proceeds will be used to pay a portion
the

•

Mada Yellowknife Gold

that when

to the selling stockholder.

share for each share held and to holders of certifi¬

company

account

of certain stockholders.

Gordon

Willow Run,

proceeds.

Jan. 24 filed 6,564 shares ($100 par) 4%

Jan.

Hathaway Bakeries, Inc., Cambridge, Mass.

issued and outstanding and being sold for the

—

Industries

receive

stockholder.

The subscription offer will expire Feb. 28. Unsubscribed
shares will be sold to underwriters at $8 a share.
The

Glen

will

Offering—Exchange of voting trust
certificates for outstanding common.
The trustees under
an agreement to be dated Feb. 10 and to expire Aug. 10,
1949, will be Joseph W. Frazer and Henry J. Kaiser.

the

(letter of notification) 300 shares ($2 par) com¬
behalf of Peter De Paolo, Los Angeles.
Price,
share.
No underwriting.
Proceeds go to selling

purchase warrants.
Underwriter
Van
Alstyne, Noel & Co. Offering—The 300,000 shares are

stock

stock (par $1);

writer—Jack Kahn, New York.

Manufacturing Co.

common

($1 par) common.

share.

$16

funds.

treasury

Offering—Price $10 per share?.

Corp.,

Dec. 3 filed 1,000,000

Hastings

Jan. 20 filed voting trust certificates for 4,750,000

filed

100,000 shares ($1 par) common stock.
Underwriters—Van Alstyne, Noel & Co., New York, and
Johnston, Lemon & Co., Washington, D. C.
Offering—
To be offered to the public at $8 a share.
ProceedsCompany is selling 60,000 shares and stockholders are
selling 40,000 shares. The company will use its proceeds
to pay the costs of opening additional stores and to ex¬
pand merchandise in its existing stores. Offering tem¬
porarily postponed.
•

added

Proceeds—Selling stockholders
Offering date indefinite.

estimated

cates for

Aug. 28 filed 355,000 shares ($1 par) common, of which
55,000 shares are reserved for issuance upon the exer¬
cise

will

Underwriter—Otis & Co.

($1 par) common.
Under¬
writer: Paul H. Davies & Co., Chicago. Price by amend¬

mon
_

balance

Company has asked the SEC to defer action on its fi¬
nancing program because of present market conditions.

to officers and

Oct. 2 filed 300,000 shares ($1 par) stock. UnderwriterMark Daniels & Co., Toronto. Price—40 cents a share

(Canadian

competitive bidding.
Probable bid¬
Blyth & Co., Inc.; The First Boston Corp.;
Hutton & Co. Proceeds—Net proceeds from the

Underwriters—By
ders include

Aug. 28 filed 140,000 shares of

Co., Chicago

Aug. 8 filed 80,000 shares

June

III.

International Dress Co., Inc., New York

Hammond Instrument

ment.

Decatur,

June 17, filed 200,000 shares ($50 par) cumulative pre¬
ferred stock and 966,870 shares (no par) common stock.

sale

1,909,968 shares (no par) common.
Under¬
writer—None.
Offering—The shares will be offered for
to

Hy-Grade Supply Co., Oklahoma City
Dec. 3 (leter of notification) 54,350 shares

mon

S. C.

D. C.

25,000 shares

capital. Price, $3 a share. No underwriting contract, how¬
55,000 shares to be issued to or through H. R, O'Neil
of Buckley Bros., Los Angeles, will be sold by one or
more of the following firms: Buckley Bros.; Durand &
Co., Tucson, Ariz.; J. Earle May & Co., Palo Alto, Calif.

Jan. 31

Fresh

(letter of notification)

Oct. 16 (letter of notification) 119,500 shares of ($1 par)

La.

Baton Rouge,

Jan. 20 filed

—For purchase of

plot of land, Forest Hills, N. Y., as
building erected or to be erected thereon.

Hollywood Colorfilm Corp., Burbank, Calif.

Underwriters—Kalman & Co., Inc.,

Hartfield Stores,

Forest Park

and

ever,

amendment.
•

of common

Price'—$10 per

($10 par)
preferred and 25,000 shares ($1 par) common. Price—
$11 per unit, consisting of one share of each. No underwriting. For working capital.

Inc., Philadelphia

Aug. 5 filed 60,000 shares ($15 par) cumulative preferred
stock.
Underwriters—Eastman, Dillon & Co. Price by

7,500 shares

Underwriters—None.

(lines-Frederick Corp., Washington,

Jan.

the Commission.

Food Fair Stores,

notification)

($10 par)

5,500

Price—$10 a share. Underwriting—To be
W. W. Greer, President, on behalf of the com¬

parent,

to provide

(letter of

subscription

Orlando, Fla.

(letter of

(par $10).

Proceeds—To be used to advertise, open
operate branch offices throughout New Jersey, etc.

Dallas, Texas

6% preferred.

common.

Sept. 26 filed 30,000 shares ($25 par) cumulative con¬
vertible preferred; 45,000 shares ($5 par) common; and
an unspecified number of common shares to permit con¬
version of the preferred. Underwriter—Stroud & Co.,

fund

Jan.

pany.

Idaho. Proceeds

(2/14)
4

share.

Greater Southwest Corp.,

•

Oct. 21 (letter of notification) 3,000 shares of 4%% pre¬
ferred ($100 par).
Price—$100 a share. UnderwriterRichard Meade Dunlevy Childs, Boise,

Highway Automobile Association, Camden, N. J.

Feb.

sold by

Ltd., Boise, Ida.

•

Cincinnati, O., from its co-partners, John J. Driscoll and
Clarence H. Wolfe, and approximately $400,000 to fi¬
nance an expansion program of its new Louisville, Ky.,

capacity,

add

Thursday, February 6, 1947

Dec. 16 filed 50,000 shares ($10 par) 5Ms% cumulative
prior preferred and 40,000 shares ($10 par) common.
Underwriting—None. Offering—All preferred and com¬
mon
will be offered publicly.
Price—$10.15 a pre¬
ferred* share and $10 a common share. Proceeds—Pro¬

ceeds will be used to build and equip hotel and health
facilities and to

Hercules

acquire

Steel

mineral water supply.

Products

Jan. 16 filed 180,000 shares

Corp., N. Y.

(2/20)

Under¬
writer—Dempsey & Co., Chicago. Price by amendment.
proceeds together with a $650,000 bank
loan will be used to repay indebtedness to the Marine
Midland Trust Co., New York.
Proceeds—Net

(10c par) common.

capital stock (par 40c>.

Undewriters—Mark Daniels & Co.

Offering—Stock will
(Cana¬

publicly in the U. S. at 40c a share
dian money). Proceeds—Proceeds, estimated at
will be used in operation of the company.
be offered

Maine Public Service

Health Institute, Inc., Hot Springs, N. Mex.

Mines, Ltd., Toronto

June 7 filed 250,000 shares of

$75,000,

Co., Prequo Isle, Mo.

150,000 shares ($10 par) capital stock*
Underwriters—To be determined through competitive

June

filed

bidding.
Probable bidders include The First Boston
Corp.; Kidder, Peabody & Co., and Blyth & Co., Inc.
(jointly); Harriman Ripley & Co; Coffin & Burr and
Merrill Lynch, Pierce, Fenner & Beane. Proceeds—The
Shares are being sold by Consolidated Electric and Gas

Co., parent of Maine Public Service, in compliance with
geographic integration provisions of the Public Utility
Holding Company Act.
•

Maple Leaf Gold Mining Co., Inc., Spokane,
Wash.

Jan. 24

(letter of notification) 400,000 shares of common.
Underwriting—Ernest H. Carl-

Price—15 cents a share.

Volume 165
i

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4566

783

President

son,

director.

of company, and Lane G. Candler, a
exploration and development of mining

For

property.

Michigan Gas & Elec. Co., Ashland, Wis.

and

120,000 shares ($10 par)

stocK.
Underwriters—To be determined by competitive bidding.
Probable bidders include Blyth & Co., Inc.; Kidder, Peat)ody & Co.; The First Boston Corp.; Harris, Hall & Co.
(Inc.); Merrill Lynch, Pierce, Fenner & Beane, and Ira
Haupt & Co. Offering—New preferred will be offered
on a share for share exchange basis to holders of Ita
outstanding 7% prior lien, $6 no-par prior lien, 6%
preferred and $6 (no par) preferred.
Of the common
Stock being registered, company is selling 40,000 shares,
Middle West is selling 57,226 shares and Halsey, Stuart
& Co. Inc., New York, is selling 22,774 shares.
Proceeds
—Michigan will use net proceeds from bonds to redeem
$3,500,000 3%% series A first mortgage bonds, due 1972,
at 106.75 and interest.
Net proceeds from sale of com¬
mon and from shares of new preferred not issued in ex¬
change will be used to redeem $375,000 Vk% serial de¬
bentures, due 1951, at 101.2 and interest. It also will
redeem at 105 and accrued dividends all unexchanged
•hares of prior lien and preferred stocks.
common

selling

New

England Gas and Electric Association

July 11 filed $22,500,000 20-year collateral trust sinking
fund Series A bonds, and a maximum of 1,568,980 com¬
mon shares
($5 par).
Underwriters—By amendment.
Bidders may include Halsey, Stuart & Co. Inc. (bonds
only), Bear, Stearns & Co. (stock only), First Boston
Corp., White, Weld & Co.-Kidder, Peabody & Co. (jointly).
Offering—Bonds and common stock are being offered in
connection with a
compromise recapitalization plan
approved by the SEC, on June 24, 1946, which among
other things provides for the elimination of all out¬
standing debentures and preferred and common stocks,
and for the issuance of $22,500,000 of bonds and 2,300,000
of

new

common

bonds and the

the

shares.

common

Aug;

company

the purchase

for

Bids

of the

withdrawn

were

Aug.

Price by amend¬

rights to subscribe to 5 new common shares at $9 per
share. The present plan does not affect the status of
original plan, but determination as to which will be used
will be left to the SEC and the court.
Hearings on the

($100 par)

Underwriters—Scott

Co., Inc., Richmond, Va.

(2/12)

cumulative

pre¬

900 loan,

will be used to retire $1,387,750 of mortgage
indebtedness and the balance to reduce temporary bank
loans of $4,375,000.

Business—Department store.

alternate plan are
Morton Oil
17

Price—25 cents

scheduled by the SEC for Dec. 19.

Underwriter—John

For development of oil

Aug. 29

filed

70,000

issued and outstanding

par)

common stock.
Offering—All shares

($2

Underwriter—Cruttenden
are

Co.

and being sold for the account

of present

holders. Trice—$16 a share.
Proceeds—To
selling stockholders. Offering temporarily delayed.

Mountain States Power Co.
June 6 filed 140,614 shares of common

stock (no par).

Underwriters—To be determined by competitive bidding.

Probable bidders include Blyth & Co., Inc.; Kuhn, Loeb
& Co. and Smith Barney & Co. (jointly); Harriman,

Ripley & Co.; The First Boston Corp. Offering—Shares,
are owned by Standard Gas & Electric Co. and con¬
56.39%

stitute

the

company's

outstanding common.

Sale Postponed—Standard Gas & Electric Co. asked for
bids for the purchase of the stock on Sept. 4, but the
•ale has been temporarily postponed.

Murphy

(G. C.)

Indiana

Northern

Public

Service Co.

Co., McKeesport, Pa.

Northwestern Public Service Co.

Underwriter—Smith, Barney & Co.
Price by amend¬
Proceeds—Redemption of outstanding 4%% pre¬
ferred stock at $109 a share plus dividends. Indefinitely
ment.

Dec. 20 filed

26,000 shares

($100 par) 4V2% cumulative

preferred and 410,000 shares ($3 par) common. Under¬
writers—The First Boston Corp.
Offering—New pre¬
ferred will be offered in exchange for

postponed.
Mutual
29

notification)

30,000

share for share basis. Only first 26,000 shares
offered in exchange will be accepted. Unexchanged new
shares and all of the common shares will be sold to un¬

ferred,

Aviation, Inc., Buffalo, N. Y.

(letter

capital stock.

($1

par)

To be offered to public at $3 a share and

for subscription to stockholders at $2.25 a share in ratio
of one share for each 10 shares held.
No underwriting.

For equipment.

on a

is selling
110,000 shares and the remaining 300,000 shares are being
sold by Bear,
Stearns & Co. Price—By amendment.
Proceeds—The company will use its proceeds to redeem
derwriters. Of the total common, the company

old preferred stock.

Nampa Tower Hotel, Inc., Nampa, Idaho
20

stock.

(letter

of notification)

Price—$10

share.

not disclosed.

names

Blade Co.,

Inc., New York

par) capital stock.

Inc.
Offering —
225,000 shares are outstanding and are being sold by 10
stockholders, and 2,500 shares are being sold by A. L.
Marlman to all salaried employees. Issue may be with¬
drawn.

Palmetto

Fibre

Corp., Washington,

August 16 filed 4,000,000 shares
stock.

Price—50

cents

30,000

be sold

($10

For construction and

equipment of

unspecified number

($2.50 par) com¬
mon shares. Underwriters—First Boston Corp., New York,
and Lee Higginson Corp., Chicago. Price—By amend¬
an

cost of

ment. Proceeds—The stock is issued and outstanding and
is being sold by shareholders. Names of the selling

June

filed

85,000 shares ($1 par) common stock.
Underwriters—Newburger & Hano, and Kobbe, Gearhart
& Co., Inc.
Price, $6.75 a share.
Proceeds—Net pro¬
ceeds to the company from 62,000 shares, estimated at
$350,200, will be applied as follows: About $111,300 for
retirement of outstanding preferred stock; $41,649 to
purchase 100% of the stock of two affiliates, and bal¬
ance $197,000 for other corporate
purposes.
The pro¬
ceeds from the other 3,000 shares will go to selling
stockholders. Offering temporarily postponed.

stockholders and the number of shares to be sold by each
be supplied by amendment.

will

new

factory near Punta Gorda, Fla., at
It will set aside $150,000 for

about $951,928.

Co. withdrew

underwriters.

Peninsular Oil Corp., Ltd., Montreal,

National License Plate Corp.,
31

(letter

Price, $180

share.

notification)

Petroleum

Stamford, Conn.

Heat & Power Co.,

shares ($2 par) common. Under¬
writers—None. Offering—Shares will be offered in ex¬

Dec. 30 filed 912,464

change for entire outstanding capital stock of Taylor Re¬
fining Co., consisting of 8,946 shares (no par) common
with an underlying book value of $2,458,224 as of last
Sept. 30. At a meeting of stockholders, Dec. 23 company
authorized an increase in common stock from 1,000,000

2,000,000 shares and also authorized the issuance of the
present offering in exchange for the Taylor stock, Ap¬
proximately 70.9% of the common stock is held under
a voting trust agreement of Aug.
15, 1945, which it If
expected will be terminated upon the acquisition of the

Taylor stock.

Newark, O.

Pharis Tire & Rubber Co.,

Sept. 27 filed 100,000 shares ($20 par) cumulative con¬
vertible preferred. Underwriter—Van Alstyne, Noel &
Co. and G. L. Ohrstrom & Co., New York. Price—$20 a
share. Proceeds—For payment of loans and to replace
working capital expended in purchase of building from
RFC and to complete construction of a building.

Co., Inc.

Philadelphia Dairy Products

(letter of notification) 2,907 shares of first pre¬
stock. Underwriters—Stock will be
sold out¬

Dec. 26
ferred

Stroud & Co., Inc., Butcher & Sherrerd, and
MacGregor, Inc. who will sell same to their
exceeding $102 per share
Proceeds—Will be used for working capital.

right to

Glover &

customers at market but at not

•

Sharon Hill, Pa. (2/7)

Piasecki Helicopter Corp.,

(letter of notification) 31,811 shares of capital
To be offered for subscription to stockholders.

Price—$9.30

Underwriters—None.
—For

share.

per

No underwriters.

common.

For development

of patented license plates and cases.
National

Plumbing Stores Corp., New York

Jan. 15

(letter of notification) $250,000 15-year 3M>% in¬
Price—Par. No underwriting. For general
corporate purposes.

come

notes.

National
Jan. 27 filed

Tank

Pig'n Whistle Corp., San Francisco
Dec. 26 filed

vertible

50,000 shares (par $7.50) cumulative con¬

Price by amend¬

Co., Los Angeles.

Proceeds—23,481 shares are being issued by com¬

ment.
pany

($1 par)

& Co.; Lehman Brothers, and Blyth & Co., Inc. (jointly);
Harriman, Ripley & Co.; Kuhn, Loeb & Co., and Smith,
Barney & Co. (jointly).
Offering—750,000 shares will

and proceeds will be used in

Chi

four

connection with recent

sold by Standard Gas & Electric Co., parent, and
140,000 shares will be sold by the company.
Standard's

holdings in Oklahoma Gas
common.
Price—By competitive bidding.
Proceeds—
Oklahoma will use its net proceeds to prepay part of
comprise

its

entire

common.

Under¬

outstanding serial notes.
The balance will be used
for property additions.
Bids—Expected call for bids
early in February.

writer—Paul H. Davis & Co., Chicago. Price—By amend¬
ment.
Proceeds—The shares are being sold by Jay P.

Walker, President, who will receive proceeds. Business—
equipment for production fields of the
petroleum industry.
Manufacture of

Oro Yellowknife Gold Mines Ltd., Toronto,
Jan.

filed

2,000,000

($1

par)

Underwriter—Tellier & Co., New York.
a

Newburgh Steel Co., Inc., Detroit

share.

Proceeds—For

expenses

and

capital

Can.

stock.

Price—60 cents
exploration and

($1 par).
troit.

stock

(par

$10),

and

30,000

common

Underwriter—Charles E. Bailey & Co., De¬

Pacific Power & Light Co.,

Portland, Oro.

100,000

company.

Underwriters—By amendment. Probable bidders include

Blyth & Co., Inc., White, Weld & Co. and Smith, Barney &

(500

Price—500 a share.

Ltd., Montreal

par)

capital stock.
director of

Montreal,

Soden,

tion and development of

Proceeds—For explora¬

mining property.

Ltd., Toronto,

Realmont Red Lake Gold Mines,

Canada
Nov. 20 filed

800,000 shares of common stock ($1

par),

public. Company has
underwriting contract. Proceeds-

Offering Price—$0.60 a share to
not entered into any

Development of mining properties and
•

Rayner Publishing

Jan. 28

unit

exploration work.

Co., New York

(letter of notification)

500 shares each of $100

5% preferred and $1 par common.

Price—$101 per
and one share

(presumably one share of preferred

of common). To be

July 10 filed 100,000 shares ($100 par) preferred stock

issued and outstanding and are being

filed

Underwriter—Robert

par

sold by Maurice Cohen and Samuel
Friedman, President

are

Quebec Gold Rocks Exploration
Nov.

development.

Aug. 2 filed 30,000 shares of 6% cumulative convertible

preferred

and cocktail
Springs and San

restaurants

Diego and for working capital.

Underwriter

prior preferred $2 dividend stock.

—G. Brashears

its

Co., Tulsa, Okla.

139,700 shares

Probable bidders: The First

par) common. Under¬
competitive bidding
Boston Corp.; White, Weld

Proceeds

working capital, etc.

purchase

Oklahoma Gas and Electric Co.
Dec. 23 filed 890,000 shares ($20
writers—To
be
determined
by

Boston
shares

Canada

Sept. 3 filed 600,000 shares of common (par $!). Under*
writer—Sabiston Hughes, Ltd., Toronto, Canada. Price--60 cents a share. Proceeds—Net proceeds will be used to
purchase drilling machinery
and other equipment

lounges in Long Beach, Riverside, Palm
•

com¬

research and development purposes and the balance will
be used as operating capital.
Underwriter—Tellier &

stock.

Nugent's National Stores, Inc., New York

par)

through agents,

National Aluminate Corp., Chicago

Jan.

preference

Proceeds—The

share.

D. C.

(100 par)

estimated net proceeds of $1,473,000 for

use

purchase of

Jan.

hotel.

Sept. 27 filed

pany will

39,852 shares (par

$100) 7% cumulative preferred and 6% cumulative pre¬

Jan.

Pal

June 28, 1946 filed 227,500 shares ($1
Underwriters —F. Eberstadt & Co.,

384,016 shares of common
stock. Underwriters by amendment as shares will be
offered under competitive bidding. Probable bidders in¬
clude Blyth & Co., Inc.; The First Boston Corp.; Stone
& Webster Securities Corp., and Harriman Ripley &
Co., Inc. (jointly). Of the shares registered, 182,667 are
being sold by Midland Realization Co.; 54,426 by Mid¬
land Utilities Co., and 146,923 by Middle West Corp.
Aug. 28 filed maximum of

June 13 filed 250,000 shares of common stock (par $1).

•

ing price—To be supplied by amendment.

Mfg. Co., La Crosse, Wis.

Northern Engraving &

750,000 shares (10c par)

share.

G. Perry & Co., Denver, Colo.
wells and for working capital.

Jan.

•hare for share, with cash adjustments, for the new pre¬
ferred stock of Pacific, the surviving corporation. Offer¬

(2/15)

Co., Casper, Wyo.

(letter of notification)

common.

•

for the pur¬
refinancing at a lower dividend rate the 67,009
outstanding preferred shares of Pacific and the 47,806
preferred shares of Northern Electric Co., in connection
with the proposed merger of Northwestern into Pacific.
In connection with the merger, the outstanding preferred
stocks of Pacific and Northwestern will be exchanged

receive for each share held 8 shares of new common with

30,000 shares

stock.

Galleher
ment.

issue the 100,000 shares of new preferred

pose of

12.

An alternate plan filed Nov. 25 with the SEC provides
for the issue of 77,625 convertible preferred shares (par

Proceeds—Net proceeds, together with a $2,500,-

ferred

Co. (jointly); The First Boston Corp., W. C. Langley & Co.;
Harriman Ripley & Co. Offering—Company proposes to

stock which were to be received

Stringfellow and

filed

Jan.

each

$100) and 1,246,011 common shares (par $8). Under the
proposed plan consolidated funded debt would be prac¬
tically unchanged from that provided in original plan,
the Association to issue $22,425,000 coll. trust bonds.
These bonds and*P.referred stock may be sold, subject
to an exchange offer, to the holders of present deben¬
tures on a par for par basis. Present preferred would

Miller & Rhoads, Inc., Richmond, Va.
Jan.

respectively,

common.
Price—$10 a share for the preferred and $6, a share for
the common.
$204,047 of the proceeds shall be paid to
the company to discharge their indebtedness to it.

June 24 filed $3,500,000 of series A first
mortgage bondi,
due 1976; 14,000 shares ($100 par) cumulative preferred
ltock and

Secretary-Treasurer,

15,p00 shares of preferred and 15,000 shares of

sold through officers of company.

publication of magazine, "American

Culture."

(Continued on page 784)

For

[THE COMMERCIAL & FINANCIAL CHRONICLE

784

Southwestern Public Service Co., Dallas, Texas

•

(Continued from page 783)

(2/19)

•

Raytheon Manufacturing Co., Newton, Mass.

Feb. 3 (letter of notification)
mon.

Price, at market.

Proceeds to

be added to general funds.
•

Refrigerated Cargoes, Inc., New York

ferred and 25.000 shares (no par) common.
Martm

Underwriter

director of
company.
Price—The stocks will be sold at $105 per
unit consisting of one share of preferred and one share
of common.
Proceeds—To be used in organization of
business. Business—Transportation of fruits and vege¬
tables by means of refrigerated vessels and trucks.
Vice-President

Rolph,

and

mon

behalf

market.

John

Mass.

President.
Price at
Alstyne, Noel & Co., and

Daly,

Oil

Corp.,

(letter of notification)
Price—85

common.

cents

New

York

105,800 shares

Federal Corp., New York.
For working capital,
for business expansion purposes.

initially will be offered for subscription to

com¬

ratio of

one

writer—Federal Underwriters, Inc., Dallas; and Trinity
Investment Corp., Fort Worth.
For additiona3

stockholders. The subscription rate will be disclosed

Unsubscribed shares will be offered to
Price—By amendment. Proceeds—Net pro¬
ceeds, together with other funds, will be used for con¬
public.

Utah Chemical & Carbon Co.,

struction of additions and improvements to properties of
the company.

It anticipates spending approximately $9,~
300,000 for expansion program during fiscal year ending
Aug. 31, 1947.
Of this amount $1,734,801 was expended

225,000

covers

originally

filed

July

covered

184,821
cumulative convertible preferred ($10 par)
and 277,231 shares (50c par) common
stock, with Sterling,
Grace & Co. as underwriters.
Company has decided to
issue 454,465 shares of common stock only, which will be
offered for subscription to stockholders of record
Sept.
not

•

one

the

debentures.

Boston.

stock.

25,000

(letter of notification) 50,000 shares of capital
Offering—25,000 shares at 45 cents each and

$250,000 of 4%% 15-year convertible sub¬
debentures, due 1960, and 60,000 shares ($1
Underwriter—Sills, Minton & Co., Inc.,
Chicago. Price—By amendment.
Proceeds—For addi¬
tional working capital.
Business—Commercial credit.
par)

cents

each.

common.

Stone Container Corp.,

underwriting.

stock

share.
new

(2/1C)

(letter of notification) 300,000 shares of common
(par $1).
Underwriters—None.
Price—$1
per
Proceeds—For working capital and purchase of

tools, dies, patents and development of

(Calif.)

30,000 shares ($25
Underwriters—To be determined

par)

prod¬

new

stock.

common

by competitive bid¬
Probable underwriters: Kuhn, Loeb &
Co., and
Union Securities Corp.
(jointly); Blyth & Co., Inc. Price
—By competitive bidding.
Proceeds—To restore work¬
ing capital and to finance part of the cost of future

ding.

Street & Smith Publications,

Dec.

(letter of notification) 53,000 shares ($1
par)
Of the total 31,000 shares will be
offered pub¬
licly at $1 a share, 16,000 shares will be transferred to
Alex. Wilson and Wayne
Voigts for their interest in

Flying Service, which is

flying field and

airport, and 6,000 shares would be issued in cancellation
of partnership indebtedness.
No
underwriting.
For
operation of airport business.

Swern

Jan. 27

(letter of notification) 295,000 shares of
capital
stock (par 25?).
Underwriter—Willis E. Burnside & Co.,
Inc.
Price—$1 per share. Proceeds—General corporate

& Co., Trenton, N. J.

28 filed

195,000

for

(letter of

405,600

shares of

notification)

common

voting

preferred

(par 25?).

(par

trust
25?)

Jan.

Inc.,

Good-

(letter of notification) 25,000 shares ($1
Price—$1 a share. No underwriting. For
pecting and developing ore deposits.

certificates
and

pros¬

writers

(O.)

series

cumulative

(par $20).

Stuart & Co. Inc.

Edison Co.

additional

(bonds only); Blyth & Co., Inc.; and

bidding. Proceeds—Net proceeds together with $4,-

500,000 bank loan and if necessary, the $5,000,000 to be
contributed
to redeem

by its parent, Cities Service Co., will be used

outstanding debt and preferred stock, involv¬

payment of $53,906,590, exclusive of interest and

manufacturing
working

capital. Offering temporarily
postponed.

of common held

same

unsubscribed

chares by amendment.
Proceeds-For expansion of
plant
facilities and for additional

working capital.

($1 par) capital stock.

Price—25 cents

yet.

developing

mining

writer

D. C.

Un~

share.

Pro¬

Business-

property.

($1 par)

Under¬

common.

Auchincloss, Parker & Redpath, Washington*

—

Price—$7
of

Airlines, Inc., Seattle, Wash.

Sept. 2 filed 245,000 shares

share. Proceeds—Will be used for pay¬

various

Western
Nov.

repayment

expenses,

bank

loans,

Air

filed

Lines,

1,200,000

Inc.

($1

par)

capital

stock.

Underwriter—Dillon, Read & Co. Inc. Price by amend¬
ment.

Proceeds

number

Offering

—

consists

being sold

by the

unspecified

company

and by

being offered by each will be stated definitely by amend¬
the

and

total

number

will be reduced if the

smaller

stated
num¬

its proceeds estimated

use

$6,500,000 together with

$7,500,00©

loan, toward payment of its promissory notes and

to finance company'*:
program

White's Auto

filed

preferred
stock

equipment and facilities expansion

under way.

now

Aug. 29

Stores, Inc.

75,000

stock

(par $1).

($20

cumulative

and 50,000

par)

is offering

common

Offering—Company

75,000 shares of preferred; the 50,000 share®
are

common

dividuals

convertible

Underwriters.—First Colony Corp. and

Childs, Jeffries & Thorndike, Inc.
of

presently

offering consists of

Company will

minimum

will be

Transgulf Corp., Houston, Texas
13

(letter

of notification)

Price—$10

30,000

(no par)

share. Underwriter—South & Co.,

•

Tri-United Plastics Corp.,

outstanding and being sold by four in¬

for their

own

Price by

account.

amendment.

Jan.

28.

20,000

(50c par)

common

Price—At market.

provide funds for

behalf

Lines, Inc.

(Chicago)

filed

ferred.

York.

94,773 shares

($100 par)

sold

Underwriting—Harriman

Ripley

Co.,

New

will be

ratio of

given the right to subscribe for the stock in the
one

share for each 19.5 shares of

Rights expire Feb. 25.

held.

common

Unsubscribed shares will be pur¬

chased by underwriters.

Price by amendment.

—For general corporate purposes.

spend about $70,000,000 for

new

Proceeds

bidding.

competitive
Probable

& Co., and

White, Weld &

Co.; Glore,

Harriman Ripley & Co.

The Wisconsin Co., and Dillon,
Part of the shares

Underwriters—By

include Merrill Lynch,

bidders

Beane;

Fenner

Forgan

Offering—Common stockholders of record Feb. 11

Light Co., Madison, Wis.

May 21 filed 550,000 shares ($10 par) common stock to

amendment.

cumulative pre¬

wholly-owned sub¬

capital. Expected to file new financing plan at early date,

No under¬

(2/11)

ployees Profit Sharing Trust, and for additional working

Wisconsin Power &

to the selling stockholder.

used

sidiary, retire loans from banks and from White's Em¬

Irvington, N. J.

Read & Co.

to be sold

are

(jointly);;

Proceeds-

by Middle West Corp.*

top holding company of the System, and part by

pref¬

stockholders of North West Utilities Co., parent

erence

of Wisconsin, who elect to
which

common

dissolution

will

sell such shares of Wisconsin

distributed to them upon th®

West

North

Utilities

Co.

The company plans to

flight equipment,

Wyatt Fruit Stores, Dallas, Texas

new

Nov.

U. S. Television Manufacturing Corp., New York
con¬

Emerich & Co.,

unsubscribed shares will be sold
to underwriters at

price

agree¬

shares (par $100) preferred stock,

12 filed 5,000

Underwriter—Rauscher, Pierce & Co. Proceeds—Will be

Inc., Chicago. Offering—To be offered to
common stock¬
holders for subscription at
$25 a share in the ratio of
one preferred share
for each five shares

postponed.

derwriter—None

ground facilities and communications equipment.

Sept 3 filed 40,000 shares ($25
par) 5% cumulative

Public offering

purchase

Proceeds—Proceeds from the sale of the preferred stock

Manufacturing Co., Detroit, Mich.

We- **r'ce

the

Mining Corp. for acquiring

dividends.

Jan.

facilities in the amount of
$600,000; for additional inven¬
tory amounting to $400,000, and for
additional

Underwriter—Ames,

Victory Gold Mines Ltd., Montreal, Canada

con¬

tion of outstanding series A
convertible preferred stock
which are not converted into
common stock.
Such pro¬
ceeds also will be used for

vertible preferred.

Clemenceau

syndicate andfc

Mining Corp. Price—

effectuate

Nov. 13 filed 400,000 shares

bank

Smith, Barney & Co. Price to be determined by competi¬
tive

Under¬

Alstyne, Noel & Co. Price by amendment.
Proceeds—Net proceeds will be
applied for the redemp¬

Soss

the

Pierce,

offered privately

mining properties in Arizona.

Probable bidders include The First Boston Corp.; Halsey,

United Air

Van

stock,

with

ber of shares.

489,400

David Coleman and Robert

80,000 shares of $1.12%

preferred

Proceeds—To

par.

ment

Toledo

Samuel Saline, New York.

vertible

Offering—To

capital stock. Under¬

par)

common.

Manufacturing Corp.

filed

ment

writing. Proceeds to
June

working

William A. Coulter, President and Director. The amounts

Mining & Development Co.,
springs, Nev.

Houston. For development of oil and gas properties.

Thiele, trustees.
Solar

for

stock

common

Tinto

Jan.

working capital.

Signature Recording Corp., New York

Feb.

Inc.,
plant

purchase of equipment and for working capital.

(par $1).
Offering—Com¬
pany is selling 45,000 shares, and eight selling stock¬
holders are disposing of the remaining 150,000 shares.
Price—$10.50 a share.
Proceeds—From 45,000 shares
sold by company will be applied to working capital
initially. Offering date indefinite.

common.

•

Co.,

Exploration, Ltd., New York

writer—None.

Underwriter—C. K. Pistell & Co., Inc.

ing

Signature Recording Corp., New York

purposes and

and

small group of subscribers to the
original

ment

Underwriters—To be determined by competitive bidding.

Sky Park Airport, Inc.

common.

Santa Cruz

Verde

West Coast

and

(Calif.)

equipment

Jan. 20 filed 405,000 shares ($1
par)

Inc.

July 17 filed 197,500 shares of common stock.
Under¬
writers—Glore, Forgan & Co.
Offering—The offering
represents a part of the holdings of the present stock¬
holders. Indefinitely postponed.

Oct. 25 filed $32,000,000 first mortgage bonds, due 1976,
160,000 shares of ($100 par) cumulative preferred.

expansion.
Santa Cruz

also

Acquiring and developing mining properties.

Water Works

filed

purchase

Proceeds—For

ceeds—For

•

San Jose

amendment.

working capital.

For

ucts.

Jan.

Underwriter—Carver

Price—By

total, company is selling 200,000 shares and stock¬
are selling the remaining 100,000 shares.
Price
by amendment. Proceeds—Of net proceeds, company will
use $1,225,000, plus a
premium of $12,250, together with
accrued interest, for payment of a bank loan, and $493,500, together with accrued interest, for discharge of its
10-year 6% debentures.
Any balance will be added to

Aug.

Ross-Frederick Corp., Mineola, N. Y.

Feb. 3

statement

reserved for conversion

to stockholders of the Clemenceau

Chicago

Oct. 24 filed 300,000 shares of ($1 par) common.
Under¬
writer— Hornblower & Weeks, Chicago. Offering — Of

mining operations.
•

The

common.
common

filed

ordinated

share for each five held. Issue will

underwritten.

Rochester Consolidated Mines Co.,
Dayton, Nev.

Jan.

Feb.

par)

capital.

Corp., New York

the

shares of $1

5 to the extent of

Standard Factors

($1

105,000 shares of

to last Nov. 30.

Salt Lake City

Dec. 20 filed $700,000 15-year convertible debentures and

holders

Republic Pictures Corp., New York
Registration

(no par)

to be offered to stockholders at $5 a share in the
share for each three shares held.
Under¬

common

by amendment.

the

(50c par)

Underwriter—The

share.

capital.

•

Torrey, New York.

Reiter-Foster
8

Underwriters—Van

Cohu &

Jan.

Whitman,

(letter of notification)9,000 shares ($1 par) com¬

30,000

Bond

filed 20,000 shares

ferred and 64,438

construction,
Regal Shoe Co.,
Jan. 8

Dallas, Texas

(letter of notification)

($100 par) cumulative pre¬
shares ($1 par) common. Underwriter
—Dillon, Read & Co., Inc., New York.
Offering—Pre¬
ferred shares will be offered publicly.
The common
Jan.

mon

Feb. 3 filed 25,000 shares ($100 par) 6% cumulative pre¬
—John

Universal Corp.,
Dec.

1,050 shares ($5 par) com¬

No underwriting.

Thursday, February 6, 1947

Offering

Nov. 4 filed

vertible

50c).

200,000 shares (par $1) 25c cumulative

preferred and

230,000 shares of

con¬

share.

Of the

common

30,000 shares

the exercise of warrants up to Jan.

are

super

part to equip three new

markets and to increase

Em¬

reserved for

15, 1950, at $3.50

per

•

Jan.

York
30

vertible

(Pa.)

filed

Corp.

and Stone & Webster

preferred.

prepay

Underwriters—Names by amendment.

share for preferred.

Price

Proceeds—For working cap¬

ital and expansion of business.

will

($50 par) cumulative con¬

preferred. Underwriters—Union Securities Corp,

—By amendment.

per

(2/19)

160,000 shares

share and 200,000 are reserved for the conversion of the

cafeterias, to remodel iti
working capital.

(par

common

Price to public for preferred $5 per share.

ployees will be permitted to purchase preferred at $4.50
per

used in

Securities Corp., New York.

Price

Proceeds—Proceeds will be used to

$7,000,000 of bank term loan notes.
added to general funds.

rpfri aeration and air

The balance

Business—Engaged in

conditioning business.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4566

[Volume 165

785

:y-

Prospective Security Offerings

(NOT YET IN REGISTRATION)
INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

(Only "prospectives" reported during the past week are
are not repeated)

given herewith. Items previously noted
•

American Tobacco Co.

•

planning an issue of substan¬
proportions, thus placing it in a position to take

Feb. 5 reported company
tial

requirements, which

inventory

its

care

Traditional underwriter,

through bank loans.

financed

have been

Idaho

management proposes to offer the new stock in
enough not to jeopardize its dividend poli¬

•

Feb.

•

reports state that informal discussions

South

has issued invitations for bids to be re¬
for $3,900,000 l-to-15-year equipment
The certificates are designed to finance

company

held
•

Montreal

Feb.

Government,

United States

Corp. is expected to head the

•

C o,

BUFFALO

•

PHILADELPHIA

•

CHICAGO

•

PITTSBURGH

•

CLEVELAND

•

ST. LOUIS

such

clause

l.B.

(6)

The

Loan Agreement

(Continued from page 746)

balances
sterling balance settlements. These
difficulties cannot, however, be should contain provisions similar
accumulated

regarded

commit-

justifying

ments which contravene the terms
<of the financial

agreement.

Oth-

sterling

in intent to that of clause l.B. (6)
| of the Anglo-Argentine Agree-

| ment. I would therefore welcome

erwise, as I am sure you will! some statement from you indiagree, the entire agreement could eating that your Government has
no
intention of including such a
foe rendered meaningless.
clause in future agreements.
Secondly, you point out that in
the past Argentina has regularly
May I also point out that if and
been a large net earner of ster¬ when there is reasonable prob¬
ling and that the probability of ability that Argentina will incur
a

between

deficit

the sterling area

Argentina and
during the next

deficit with

current

the

sterling

resoect

this

area,

Govern¬

is hypothetical. Your ment would expect the United
accordingly, that Kingdom to make appropriate ad¬
the inclusion of clause l.B. (6) in justments
with
the
Argentine
the Anglo-Argentine Agreement Government, so that no discrimi¬
nation at variance with the United
has little practical significance.
While this may prove to be the States-United Kingdom Financial
case, this argument overlooks the Agreement would in fact, arise.
fact that clause l.B. (6) itself may
I have spoken frankly because
four

reasonable

that Argentina

deficit

rent

and when
probability

would incur

with

United

the

Kingdom to make appro¬

priate adjustments with the Ar¬
gentine Government, so that no
discrimination
at variance
with
the

Financial

U.S.-U.K.

ment

would

readily

assure

always be

our

though
more

once

say

think that this is
not

can

you that it would
desire to avoid such

discrimination,
bound

Agree¬

arise.

fact

feel
that I

theoretical but

practical contingency.

incentive to Argentina of my fear that instances of this
payments deficit vis-a¬ kind, if permitted to recur, may
vis the sterling area.
Moreover, make more difficult the mainte¬
I must confess that I am unable nance of further development of
to reconcile with the spirit of the those close and friendly relation¬
an

to incur a

United

States-United

Kingdom

ships between our two countries
Agreement any commitment which which, I am sure both of us wish
under certain contingencies, even to foster.
though remote, might require ac¬
tion at variance with the Agree¬

Chancellor Dalton's Reply

ment.

On
Insists

Strict

Observance

light of the not incon¬
resistance that had to
be overcome before we obtained
the

siderable

ratification of the
Financial Agreement, I think you
Congressional

Feb.

communicated

Chancellor
to

Dalton

Secretary

Sny¬

der as follows:

Thank

Jan.

you

about

for

your

our

letter of

agreement

Argentina. I
am glad you have written frankly
can realize our concern over this
to me; I am more anxious than
matter
and
the importance we
yourself to maintain and develop
must attach to the fulfillment of the most close and friendly rela¬
the obligations undertaken
in by your

Government. I

there¬

am sure

Sept. 17, 1946, with

tions
In

between our two
your

countries.

will appreciate also the diffi¬

letter, von ooir

*or

General Index Limited

intention of

including

comparable concerns;

industry

indicated, accord¬

Council

The

ing to the same advices that:
"A general misapprehension of
its position on the use of the busi¬
ness index had arisen as a
result
East Texas Motor Freight

the

Lines

case,

index

the

which the use of

formula had

been

Referring to a number of recent
profits tax relief cases, the

Excess Profits Tax Council
Jan. 27 that corporations

ruled

should

not, except in unusual cases, use
general
business indexes as a
measure
for
supporting
their
claims to tax relief. Use has er¬

roneously been made by
corporations to prove that
own
earnings should have
higher than they actually
in the so-called profits tax
period years.

some

their

ap¬

from

Commerce"
we

use

the "Journal of

Washington

advices

quote: "It is believed that its
in that instance may have led

the use of
this formula is acceptable as regu¬
the assumption that

procedure," the Council

com¬

indexes should be
employed, the Council stated, only
other supporting data are

when
not

available.

gave

its

vices

merce"

The

stamp
the

from

Council

thus

of approval,

"Journal
its

"However, this is not the case.
The Council has made no change
in
the bulletin
(issued by the
another

ad¬

Com¬

Washington

bu¬

pointed out, to earlier regu¬
lations by the Bureau of Internal
which

call

for

recon¬

1. The taxpayer's own

reduced excises in July.

The

would

continued,
follows:

apply as

the

legislation,(

proposed
advices

same

Liquor—Prevent

drop in the

excise levy July 1 from the pres¬
ent rate of $9 a proof gallon to $6.

this respect."

Toilet

Luggage, Jewelry
and
Preparations—Hold the tax

20%

forestalling

retail,

re¬

duction to 10%.

Admissions

(to

theaters, sports

cent

events, etc.)—Keep tax at 1
for each 5 cents charged,
of

cents

instead

cent for each 10

drop to 1

paid at the ticket window.

Night Clubs—Continue at

20%,

instead of 5%.

Wines—(Varied

reductions

tax

the Council
according to type would be fore¬
denied a company could take ac¬
stalled.
count, in computing base period
Beer—Remain at $8 a barrel,
earnings, of the operations of new
stores which it opened in early not dropping to $7.
1940, to which it was not already
Telephone—Long distance, rate
committed on Dec. 31, 1939. The
stays at 25%, not dropping to 20;
ruling was made notwithstanding
the fact that, due to its fiscal year, local service, 15% instead of 10%.
the

company's

tended to July

base period
31, 1940.

ex¬

Transportation

Persons

—

15%, not 10%.
Dues

House Passes Excise Freeze
Wartime levies on liquor, furs,

jewelry and many other items are
to
continue
indefinitely
under

provisions of legislation voted by

Membership

and

20%, not

Fees—

11.

Fees—20%, not 11%.

Initiation

Electric Light Bulbs and Tubes

20%, not 5%.
Domestic

Telegraph,

Cable

or.

Dispatches—25%, not drop¬

the House on Jan. 29 by an over¬

Radio

whelming vote of 373 to 35, ac¬

ping to 15%.

cording to Associated Press Wash¬

reau

Revenue

were

ruling,

been

The general

businesses

many

suffering while consumers de¬
layed purchases in anticipation of

Furs,

Likewise

were

base

clared that the bill was necessary

proved."

excess

Probable
Salomon Bros. &

300,000,000 annually, according to
the bill's author, Representative
Grant
(R.-Ind.), who also de¬
because

experi¬

ence.

Revenue Bureau) in

As Tax Relief Basis

an assurance

agreements involving settlements have

closely

mented, adding:

that, in future agree¬ structing base period earnings in
culties which must arise if future ments about sterling balances, we the fallowing order of pre^ono-

you

experience

combined

Appropriate

lar

suggests,

furnish

a cur¬

respect

area, the United States
Government
would
expect
the

sterling

years

letter

there

that,

experience

3. The

& Co. Inc.;

Stuart

Halsey,

bidders,
Hutzler.

comparable concern;
several

note

also

(2/13)

has issued invitations for bids to be re¬
ceived before noon (EST) Feb. 13 for $1,680,000 in equip¬
ment trust certificates.
The certificates will mature
company

serially from Sept. 1, 1947 to March 1, 1957.

Anglo-Argentine Agree¬
ment. I am happy to give you this
I

Inc.

approved splitting company's out¬

Wheeling & Lake Erie Ry.
The

(2/11)

the

stockholders

1,500,000 shares.

Kuhn, Loeb & Co.

assurance.

U. S.

by the parent.

100,000 shares and the 50-cent par value common stock

syndicate of investment banking

Central RR.

New York

Britain's Reassurance to

used to

Chesapeake & Ohio Ry. is inviting tenders for the sale
to it of New York Central RR. stock.
Sealed tenders

SAN FRANCISCO

•

Proceeds of the sale would be

probably $50,000,000, to be floated in the

houses headed by

NEW YORK
BOSTON

issue,

approved
shares of

publicly 200,000

standing 300,000 shares of common stock (par $1) into
600,000 shares
(par 500), increasing the authorized
cumulative ($100 par) preferred stock from 49,214 shares

plans may be revived for a sizable

American market by a

INC.

The First Bos¬
underwriting group.

Netherlands, Kingdom of

Feb. 4 rumored that
bond

Commission

sell

Thrifty Drug Stores Co.,

Jan.

outstanding higher cost debt.

ton

Corporate Securities

Blair &•

•

expected early filing with SEC of registration
covering $77,811,000 new bonds for purpose

of retiring

(City of)

statement

State, Municipal and

proposal

construction program. All
600,000 common shares now outstanding are owned
by Commonwealth & Southern Corp.
No definite plans
have been formulated as yet with respect to sale of new
common by South Carolina or to divestment of its stock

Stuart & Co. Inc.; Salomon Brothers & Hutzler.

sey,

Power Co.

Carolina

South

help finance the company's

portion of the purchase price of new equipment costing
estimated $4,875,000.
Probable bidders include Hal¬

;

the

underwriters.

of Colorado

Corp. and Halsey, Stuart & Co. Inc.

Carolina

stock.

common

Feb.

ceived

the

company's

trust certificates.

Morgan

market of an issue of bonds.

in the American

Stanley & Co. may be

have

bankers for the flotation

place with New York

(2/11)

Missouri-Kansas-Texas RR.

The

Harriman Ripley & Co.

First Boston

& Co.

•

taken

Service Co.

Glore, Forgan & Co.; Blyth & Co., Inc.; Harriman Ripley

with

Denmark, Kingdom of

Feb. 4 press

Corp.

Loiseau, President, stated that $8,750,000
will be spent during 1947 for extension, construction,
etc., which will necessitate raising new and additional
capital. Probable underwriters of securities include The

filed an application with the SEC seek¬
ing authorization to sell, competitively, $22,000,000 of
first mortgage bonds due in 1977.
Probable bidders
include Halsey, Stuart & Co. Inc.; The First Boston Corp.;

Feb.
•

and $20,000,000 "new money" loan in the
market. Probable underwriter, The First

Public

Electric Co.

Iowa-Illinois Gas &

Feb. 4 company

being discussed for float¬

sizable bond issue in the American market,
Morgan Stanley & Co. as probable underwriters.

ing

$10,000,000
Boston

struction.

Belgium, Kingdom of

Feb. 4 rumored that plans are

Norway, Kingdom of

American

cies, yet sufficient to meet cash requirements for con¬

•

(EST) Feb. 11.

Feb. 4 press reports state that discussions with American
bankers have taken place for the issuance of between

amounts small

in Australia's refunding
plan will come, probably in June, with an offering to
replace the $36,000,000 of 5s due 1957. These bonds will
become subject to call on Sept. 1 at 102.
Probable un¬
derwriter, Morgan Stanley & Co.
+

•

licly from time to time to finance a substantial portion of

1, the next and final step

Room

noon

100,000 shares of preferred stock and 450,000 shares of
stock. The additional shares are to be sold pub¬

The

Feb.

common

Australia, Commonwealth of

to be submitted to R. J. Bowman, President of C&O,
745 Chrysler Bldg., New York, on or before

are

the cost of extensive property expansion now under way.

Morgan Stanley & Co.
•

Power Co.

May 7 stockholders will vote on authorizing an additional

ington

advices.

concurred

Leased Wires—25%, not

Wire and Equipment

15%,

Service—,

by the Senate the freezing of high 3%, not 5%.
excises
vent

indefinitely

would

pre¬

automatic rollback July 1

experience; that would cost the Treasury $1»-

Billiard

and

Pool

Tables

and

Bowling Alleys—$20 per year per
table or alley,

not dropping to

$10,.

THE COMMERCIAL & FINANCIAL CHRONICLE

786

Thursday, February 6, 1947

ings of the banks should not go, which could result from

rapid retirement of the debt.
"

Our Reporter on

Also there

too

to be enough government securities available for

seem

the

unnecessary

especially directs

from running away, which would appear to make
immediate issue of long-term securities for market
control purposes.
In fact all that has been needed is to talk
about a new long-term issue, and down go prices.
an

in that area.

tions staying so long

There

place last year.

and

getting

and since both parties have their eyes on 1948,
be a very careful weighing of the indicated

measure,

there will probably

apparently well

effect of

dealers as to why the market should
through recent tops, and was vulnerable to a sharp and siz¬
able setback.
"Open Mouth Operations" were going great guns,
and was a bit puzzling why prices remained around previous highs
with all this bearishness in the situation.
The market was being
talked down, but it had not given ground yet. . . .
.

place.

supported

not go

such

increase

President

Then

was

published reports that a new issue of long-term bonds

came

due, and down went prices of government securities. . . . There
nothing definite, positive or official about this predicted new

interest

charges, before they take

position of the
market,

markets

money

also be

must

well

considered

the

government

making a change in
the certificate rate.
Would split rates hinder "roll overs", would
they have an adverse effect on the whole debt conversion program?
What would happen to long-term interest rates, with short-term rates
.

going up?

-4

of the recent conferences

Eligible Bonds," has

not already known by even casual

of securities that was

offering

issues

Treasury

some

satisfactory expansion of
intermediate-term securities
a

eligible for the commercial banks, there could develop between
now and 1951 a scarcity of bank eligible obligations.
.

government market.

they both have an effect on the

Assets

the situation, "Open Mouth Operations" can be
conditions that will serve the purposes of the

useful to help create
.

531

mutual

sav¬

It will be very much with us in the future.

President of the National Associa¬

tion

Mutual

This

brings mutual savings bank
a new high total of $18%

Savings

Banks.

assets to

advices

The

billions.

from

the

Jan. 27 further

re¬

view of the

circumstances

the excerpt from
hereinbefore
quoted,
payers

may

herein

Section
that

and

be permitted to allo¬

cate the amounts of overtime

and

pay

liquidated damages for prior
years necessitated by the

taxable

decision

will be the results of this campaign
of talk that creates hesitation and then uncertainty remains to be
seen.
The threat of a new issue of long-term bonds will tend to

"The largest part of the increase
in assets was reflected in an addi¬

Clemens Pottery Company, supr.,
to the year or years in which the

keep the market in line and prevent a runaway price advance such
market because it could be used to stop the market on the up-side

vestments

and lasting

abandonment of

while talk of the

quotations.

new

issue would tend to rally

GAINS ELIMINATED

on very

decline

the

quotes.

well

light volume, with the most substantial amount
prices being accounted for by the drop in

The Feb. 1 money squeeze was a contributing factor
psychological market condition,
some lessening of demand as prices pushed ahead.
.

all the gains made since the end
of last year, so that the effects of the January investment buying
on the market have been quite fully eliminated.

The recession wiped out about

With

sharp setback such as this one, on very light

prac¬

tically no trading, there is again a feeling of caution and even out¬
right admissions on the part of some of the inability to figure out
the future trend of prices.
This scarce has caused others to expect
.

the

other

hand,

investment

managers

whole

are

looking for buying spots, which may be right here, or at slightly
lower levels.
to be

made.

Scale purchases have been and will continue

The level of prices is favorable and, despite

the uncfertainties, the

technical position of the market is good....

NEW ISSUE NOT IMMINENT
Also until the budget

has been decided

and

expenses

and income

long-term issue, in the near future, there is very likely to be little
if anything done until the trend of business and commodity prices
is clearer than it will be for some months ahead.
.

The Treasury
inflation fear

does not need money and the passing of the

particularly,

the monetary authorities,

among

quite likely to mean that debt reduction will be confined pretty
much to maturities and very little resort to refundings through
the sale of long-term issues to non-banks, unless inflationary
trends should develop..
;

■O

Also until the budget has been decided

and expenses and income

agreed upon, the Treasury is not in a position to do very much.
Cash
surpluses of the trust funds must likewise be known in order to
guage the amount of debt that can be retired.
While it is believed
that about $5 billions of debt could be retired this year, the amount
and the aggressiveness of the debt elimination policy will be deter¬
mined by basic economic conditions.
A recession in business would
not be helped by deflationary decreases in bank deposits..
.

Then again there are

Gov¬

Holdings

1946

1945

Changes

815

606

11,745

10,650

1,257

116

Mortgage Loans

4.451

ated

payments

Jan.
the

forming

tinues

the

levels below which the short-term hold-

Associated

one

the

Press

saying:

nation

con¬

firmness and

other pleadings thereto filed by
employers may be regarded as di¬

amount of overtime work

proper

to be compensated
a

denial

liability

for rather than

contest

of the fact

the fundamental ba¬
sis of computation."

greater

this traditional form
for savings bank

Secretary of Agriculture Ander¬
told
the House
Agriculture
of

the

Jan.

restriction

that

be¬

against

selling government-owned wool at
less than parity prices, imported
wool, free of sales restrictions, is
crowding American wool from the

market, and requested that Con¬
gress immediately pass legislation
permitting the sale of government
stocks under parity. Mr. Anderson
informed the Committee, accord¬

must

pay back wage claims
portal-to-portal suits may
charge the payments off against
taxes for the year involved.
Inas¬

under

corporate taxes

were con¬

higher

than since that

profits

through
1945
time, because the

tax

was

then

ing to

Associated Press dispatch

Washington, that Commodity
Credit
Corporation owns about
460,000,000 pounds of wool out of
more
than
1,250,000,000 pounds
purchased since 1943, and that
with the increase in parity in re-f

from

cent months the

government sell¬

ing price has
been
forced up
sharply.
As a consequence, the
Secretary
continued,
American
mills

buying large quantities
imported wools because they

effect, higher refunds will be the

result than if the deductions

are

were

taken from current tax rates, the
Associated Press pointed out in

its dispatch from

Washington. The

advices also said:

cheaper. A "disastrous" situ¬
ation may result two years from
now
if
the
government owned
wool is put on the market at the
end of the parity price control
program, Mr. Anderson declared.
(Parity is calculated to give a
farmer a favorable return for his

profits tax imposed
a net levy of 85%% on
corporate
earnings
above
the
1936-1939
average.
The regular income tax products, in terms
for corporations through 1945 was 'to pay for goods.)
excess

40%. Effective with 1946 earnings,

take

ac¬

York

the follow¬

Ladies

Auxiliary

the

Jewish

War

Veterans, Gold Star Mothers,
National
Auxiliary
of
United
Spanish War Veterans.

"Instalment Loans to
Small Business"
Robert
the

Hanes, Chairman of

Small

Business Credit Com¬
mission of the American Bankers

Association, who is also President
of

the

Wachovia

Bank

Trust

Co., of Winston-Salem, N. C., anr
nounced on Jan. 15 the publication
of a new bank study entitled "In.stalment

ness,"

Loans

Full text of Commercial and Financial Chronicle : February 6, 1947, Vol. 165, No. 4566, Section 1

FRASER